Cornell University Law Library The Moak Collection PURCHASED FOR The School of Law of Cornell University And Presented February 14, 1893 IN nenoRY of ' JUDQE DOUGLASS BOARDMAN FIRST DEAN OF THE SCHOOL By his Wife and Daugliter A. M. BOARDMAN and ELLEN D. WILLIAMS KD2149.W5Tr"'™™"''-"'™'^ '■'•''; European Assurance arbltratlon.(Befo 3 1924 017 814 512 M Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924017814512 X ^-/fc 'f r-A 7 •<.& 7i ■ .-/J "'^—e^A I J^7y THE EUROPEAN ASSURANCE ARBITRATION. (BEFORE LORD WESTBURY.) EEPOETED BY E. MAEEACK, ESQ., BAEEISTEE-AT-LAW. ' Eukopeai^Assueance] Ruthin Guakdians' Case. [Akbiibation. ^ ^ • ■ Tmsday, Oct. 22. , Etjthin Guardians' Case. Gwatimtee assurance company — Guarantee policy— OlAm'Hm policy against a reserved fund — Pro- prsffqrs' fund — Assurance fu/nd — I^iterpretation of me word " affect." Ther^tpas a section vn the European Assurance So^3fy ' Arbitration Act, giving the arbitrator power Jo apphj or distribute or otherwise deal with the assets of the European Society and the amdtgamated companies, including any gua/rantee fimd, imdenifiity fpk^,iorlother special fund ; but the section ,contained a proviso with reference to a fwnd of the ^jttropean Society, set apart and called the " Re^^ed Fund," that "nothing hm-ei/n, contained shall affect the Reserved Fund, and the application thereof under tlie recited Act;" the recited Act being tlie European Society's Act of Pa/rlMMoent. Tlds proviso was interpreted to mean that "nofhiing herein, conta/i/^ied shall give power to the a/rbitrator, or shall enable the arbi- trator to give to. .the Reserved Fund, directly or indirectly, any application which is inconsistent with the application directed by the recited Act." Under , am assu/rance company's deed of settlement, its assets were sepa/rate^ into two distinct fwnds ; one, the " Proprietors' Fwnd," consisting of the moneys paid up on the sha/res, and the other, the " Asswrance Fund," consisting of the premiu/ms. Under its Act of Parlla/ment, a fu/nd was to be set apart out of its assets, and called tlie " Re- served Fu/nd," and it was provided that the " Re- served Fu/nd shall be liable after the Asswa/nce Fwnd is exha/u,sted, but not before, to make good the gua/rantees granted in pursuance of the Act." Before the viinding-wp of the com/pa/wij, a swin of money became d/ue on a guara/n,iee policy, one of the conditions of which was that the general fund and property of the company for the time being, and the subscribed capital, should alone be liable to answer and make good any claim on tlie policy. In the winding-up the policy holder claimed to be entitled to be paid i/m/mediately out of the Re- served Fund, so as not to have to wait for the decla/ration of a dividend out of the general assets before claiming against the Reserved Fund. The elamn was grou/nded on the fact that there was no longer any Assurance Fu/nd, and that the Reserved «d was Buffioient to defra/y all cla/i/ms on it. Held, that the ReservedFund was a collateral secn/rikj, but that recourse was not to be had to it till the principal fund was exhansted. And this principal fund was the property of the comparmj, applicable to the pa/yment of its debts. The dis- tinction between the Proprietors' Fund and the Assurance Fund was disregarded, the assets of the company, under whatever name they are entered, . being applicable to, the payment of the debts. Thus a was held that the policy-holder was entitled to prove for the amount dMe agamst the general assets of the company, and to receive a dividend thereon. After receipt of such dividend, liberty to apply again foo- the payment of the residue out of the Reserved Fund. This was a question as to whetlaer the claimants on a policy were entitled to immediate payment out of a reserve fund. The European Assurance Society was established in 1854, with the name of " The People's Provident Assurance Society," under a deed of settlement, for the purpose, inter alia, of granting assurances guaranteeing the integrity of persons in situations of pecuniary trust and confidence. The deed provided that two separate funds should be formed, to be called respectively "The Pro- prietors' Fund " and " The Assurance Fund," the former to consist of all moneys arising from the payment made upon the shares, and the latter of the produce of premiums and profits arising from policies. And there was a provision that all charges, claims, demands, disbursements, and expenses of every kind and description whatsoever to be incurred in the "conduct, management, and carrying on of the business of the society were to be paid out of the "Assurance Fund," with a proviso that, if this fund should at any time be insufficient to defray these expenses, the sum required was to be advanced out of the Proprietors' Fund, and the advance, with interest thereon, returned to the Proprietors' Fund as soon as it was convenienL In 1859rthe " European Assurance Society's Act 1859 " was passed, changing the name of the society to its present name. Subject to the provisions of this Act, the society was to continue established and be regulated under and according to the deed of settlement. The Act contained a provi- sion that the Poor Law Board and all guardians THE LAW TIMES. [Not. 23, 1872. EUBOPEAN AsSUBAKCE] Ruthin G-uabdians' Case. [Abbitbation. and other officers acting in the administration of the laws for the rehef of the poor might accept, instead of any bond or other security of any person or persons required to be given by any officer accountable to any guardians or other such officers, the guarantee or security of the European Society Before issuing any such bond or policy of guarantee the society was to set apart out of its assets or income the sum of 20,000?. as a " Reserved Fund," and annually to add 2000L thereto, until the Reserved Fund should amount to 100,000Z. And it was further provided that Sect. 20. The Eeserved Fund shall be liable, after the Assurance Fund of the society is exhausted, but not be- fore, to make good the guarantees or securities of the society granted in pursuance of this Act, and for no other purpose. And all sums from time to time taken from the Eeserved Fund for the purpose of making good any such guarantees ox securities shall, as soon as possible, be re- placed from the assets or income of the society, or both, so as to' keep the Eeserved Fund always up to the amount thereof required by this Act ; and any sums from time to time appropriated or carried to the Eeserved Fund may be taken either wholly or in part from, the Proprietors' Fund and the Assurance Fund of the society, or either of them, as the directors of the society think fit. 20,000L was duly set apart to form the Reserved Fund, and additions had been made thereto from time to time. The Reserved Fund now consisted of 34,332?.^ 18s.- 7d. Consolidated Three per Cent. Annuities, standing in the names of four trustees. In 1870 the society granted to the guardians of the poor of the Ruthin Union a policy guarantee- ing to the limit of 500J. the integrity of S. Owen, who had been appointed assistant overseer for this union ; the policy containing a proviso that " the general funds and property for the time being, and the subscribed capital according to the deed or deeds of settlement of the society, should alone be liable to answer and make good all claims in respect of the policy." S. Owen subsequently became a defaulter, and the amount of the loss occasioned by his default was certified on the 3rd July 1871 by the poor law auditor of the district, in accordance with the provisions of the poHcy, to be 241L 2s. 7W. and interest thereon. On the 10th June 1871 a petition was presented to wind-up the society. Pending the proceedings on this petition the sum claimed on the policy was not paid; and on the 21st Oct. 1871 the Ruthin Guardians filed a bill in Chancery praying for the payment of the sum out of the " Reserved Fmid." The proceedings in the suit were stayed by the order to wind-up the society on the 12th Jan. 1872. The Ruthin guardians now claimed that they were entitled to have this sum paid primarily out of the " Reserved Fund," and that, inasmuch as the fund would be sufficient to defray all claims that could be made on it, they were entitled to im- mediate payment. In the European Assurance Society Arbitration Act 1872 there was the following section : Sect. 7. The arbitrator shall have power, for the purposes of any scheme or any other purpose of the arbitration, to get in, or direct the getting in, and to apply or distribute, or dh-ect the application or distribution of, or to other- wise deal with, aU or any part of the assets of any of the several absorbed or scheduled companies, including any guarantee fund, indemnity fund, or other special fund bel&nging to, or held in trust for, or estabhshed for any purpose of or relating to any of those companies, and all matters in question as between aU parties to any suit or proceeding pending at the passing of this Act relating to any such fund as aforesaid, and every such suit or pro- ceeding shall be comprised among the matters by this Act referred to arbitration : Provided always that nothing herein contained shall affect the Eeserved Fund, and the application thereof under the recited Act [the recited Act being the European Assurance Society's Act 1859]. Benjamin, Q. C. and H. M. Jachson forj applicants. — If a dividend be taken first out of the Assurance Fund, there would be merely a circuity, for, the remainder being taken out of the Reserved Fund, the surplus of that fund must ultimately go ^ back, and form part of the general assets of the | society. I Lord Wbstbuki. — If I acceded to this applic^ tion, should I not be giving a different destination to the Reserved Fund from the destination givei to it by the society's Act of Parliament ? Tha proviso in the 7th section of the Arbitration Aci lies in your way— it bars you at the threBholdl you must get over the bar before I can listen t A the application. It is a most unfortunate proviso,! because at the first blush of it the conclusion woulc'/ be that I could not listen to your application. Benjamin. — The proviso means, you may ejfec J the application of the fund, you may not»q,fect it • you may carry out the original scheme, youmaj\ not impair it. The word " afieot " is used not with its strictly etymological meaning, batypith its meaning in ordinary language — impaifij alter, change adversely, injure. Lord Westbuby. — Or improve. ^^ Benjamin. — If this be the iuterpretatioi 6f the Act then the Assurance Fund being at the present time exhausted, the policy is to be p9.id out of the Reserved Fund. , Lord Wbstbuby. — All that may be quite right, supposing that the concern is a going concern, and that you come with a pdjicy and with your certificate, and you say " 250Z. is due to me." You apply to the directors to pay it out of the Assurance fund ; the directors say, " The Assurance Fund is nil." Then you say, " Pay me out of the Reserved Fund." Possibly that was the intention of the Act of Parliament. But how are you in a con- dition to satisfy me that there is not at this moment, or was not at the time of the winding-up order, any money standing to the credit of the Assurance Fund, seeing that 'there would fee brought into the Assurance Fund all the unpaid capital of the shareholders of the company, which is now the subject of a call ? All that would fall within the compass of the Assurance Fund ; all that is still to be collected. Then your Assurance Fund cannot b6 exhausted. Benjmnin. — The Assurance Fund that is to be collected is not exhausted, but I say that the meaning of the section is not the sums that may be coming in hereafter, but the cash in hand. I ought not to be told to wait. The application of the Reserved Fund before the Arbitration Act, and before the winding-up, was in immediate payment. Suppose this company to be a going concern. We go with a policy; does your lordship think that under the 20th section of the Act the company, as a going concern, could say to a guarantee policy holder, " We have no Assurance Fund now, but we shall have hereafter, and you must wait till we get it ; " because I think that that is really the question. Lord Westbuby. — That is not the condition of things now. The company has been put a stop to, and the whole of its assets will be apphcable to the purposes to which the Assurance Fund is dedi- Nov. 1872.J THE LAW TIMES. ijinoPEAN Assurance] Ruthin Guardians' Case. [Arbitbation. fed, and all that you can have now will be a pro-, ^ortionate part of those assets in payment of your debt, when it is ranked with other debts. I am afraid that must be so,- and that I could not possibly determine that there is any other mean- ing to be given to the Act of Parliament. You see, I doubt very much whether I can interpret the Act of Parliament. It is a very dif&oult thing altogether. It is the fault of all our Acts of Parliament now, that words are stuck in at the end without any reference to their oongruity with what precedes them or follows them, and then the courts are left to the hopeless task of deriving some regular purpose out of inconsistent words. BTow, suppose I go with you so far as to hold that the true interpretation of this proviso is this : — "Provided always that nothing herein contained shall give power to the arbitrator, or shall enable the arbitrator, to give to the Reserved Fund, directly or indirectly, any application which is inconsistent with the application directed by the recited Act." Suppose I so interpret the words— and I assume a very considerable judicial power, in giving that interpretation of the words ; still I will do so, for any other meaning would be irrational, because it would lead to this difficulty and this sort of non- plus ^at I should be in — for this fund stands in the way of so many applications — that I should have the whole of that subject excepted from my jurisdiction altogether if J could not deal with the Reserved Fund, subject only to the limit 6f not im- posing on it any kind of apphcation that was in the smallest degree inconsistent with the language of the society's Act of Parliament. It is now reduced to the question, can we say that the Assurance Fund is already exhausted, or that there is no Assurance Fund ? Benjamm. — Under the deed of settlement the Proprietors' Fund and the Assurance Fund are two distinct funds, and it is premiums only that go to make up the Assurance Fund ; thus there is no Assurance Fund. [Lord Westburt. — If the Pro- prietors' Fund wSs to be the feeder of the Assur- ance Fund, then you cannot say that there is no Assurance Fund, until you find that there is no water in the well of the Proprietors' Fund.] One . fund was not to be supplied out of another fund. [Lord Wbstbury. — Suppose there was no winding- up order, and that apoUcy became due and payable, do you mean to say that it was to be paid out of the Assurance Fund exclusively ?] If there was an Assurance Fund, it would be paid out of that ; but if there was none, there is nothing in the Act to relieve the shareholders from paying up. Lord Westburt. — All these things are operative only as between the directors and the shareholders, but as between them and the external creditors they operate nothing. The whole funds of the society, whether you enter them under one heading or another in your book-keeping as between you and the shareholders, are applicable to the payment of the external creditors. It could not mean that you, were to exhaust only that which might be entered under the particular heading of the Assur- ance Fund ; it must have meant what is expressed in the latter part, namely, that that fund was to be replaced when apphed in your favour out of the Assurance Fund or the Proprietors' Fund without distinction. Benjamm. — I should not contend if the com- pany had in its hands proprietors' funds as a going concern, and when I applied for the payment of the policy, answered " I have no assurance fund, only proprietors' money, and I will not pay you," that it would not be in the power of the court to force them to pay out of that fund. But I should say that these provisions, appropriate as they are to the action of the directors on the shareholders, and of the members of the society inter se, are not to affect creditors beyond their precise languag:e, and that we, as creditors, have a right to come in and say, " Here, by the provision of the Legisla- ture, is a fund which is created as a collateral security to pay us ; the principal debtor does not pay us ; here is the money for us ; we ask you to give us the money specially pointed out as the source into which we might put our hands a,nd take out what belongs to us ;" and the other side are not entitled to say, " You cannot do it at all ; wait and see if you can be paid in some other way ; we admit we are insolvent. ' Napier Biggins, Q.O. and Montague Ooohson appeared for the official liquidators of the Euro- pean Society, and Hemming for the Treasury, but they were not called on. Lord Wbstbury. — Mr. Benjamin has used an argument exactly applicable to the subject. This guarantee fund was originally declared to be a collateral security ; it was to be a surety fiind, to which' you might have recourse, but to have re- course only on the ordinary terms of first exhaust- ing the principal fond. Now the principal fund is the property of the company applicable to the pajrment of its debts. I wholly disregard the words " Proprietors' Fund " or " Assurance Fund," because, whether the assets of'the company are entered under one heading or whether they are entered under another, they are applicable to the payment of debts, and the substance of the whole thing is this, that you have got a special surety fund, and that you are not to touch that surety fund until you have exhausted the principal fund. The principal fund is the general property of the company applicable to the payment of debts. Now I do not mean to prejudice your security, but I shall propose, subject to what I may hear, to make an order of this kind : Declare first the true construction of the proviso in the manner that I have already expressed ; declg^re that you are entitled to prove the debt certified to be due as the amount of Owen's deficiency, that you are entitled to prove that against the assurance com- pany and to receive the dividends rateably thereon. Let the rest of the application stand over until after such proof of receipt, with liberty to apply again. I think in that way I shall not, either directly or indirectly, alter the application of the guarantee fund under the Act of Parliament. But that is the substance of the thing. We must not be hoodwinked by ail this machinery, which is introduced only, and available only, as between the directors and the shareholders ; but we must be guided by the original purpose for which this Re: served Fund was created, which was to give to Government and other public functionaries a per- fect security that the policies would be ultimately payable. The costs of the application were allowed ; but with regard to the costs of the suit. Lord West- bury said that, although there was great delay between the presentation of the petition and the court making the winding-up order, yet the guardians ought to have awaited the time when the court might deem it necessary to make an 4 THE LAW TIMES. [Not. i 1872 EUKOPEAN AsSDHiNOE] Opobto Mining Company's Case. [AbbiteatiqiS^- , order. There was no justification for the prema- tiire bill, and the costs in Chancery would not be allowed. Solicitors : Boohs, Kenrich and Sarston, for the applicants; Mej-cer and Mercer, for the official liquidators of the European Society. Tuesday, Oct 22. Opobio Mining Company's Case. Asswra/nce company — Gua/rcmtee poUoy — Wimdmg- wp — Interest on sum, 'payable on policy. Where a svrni of money was to he payable on a guaramiee poUoy, on the Vice-Chancellor's chief cl'erh mahvng a certificate as to the sum, dMe in case of a defalcation, and on a defalcation oeowr- rimg, the date of the certificate was subsequent to the presentation of a successful petition to wind-wp the assurance convpamy. Held, that the policy holder was not entitled to prove for interest on the sum, certified from the date of the certificate. This was a claim on a guarantee policy, and the chief question involved was whether interest was payable 6n the sum claimed. In 1868 the Oporto Mining Company was ordered to be wound-up, and E. Addis was ap- pointed official liquidator. The European Society was approved of by the Vice- Chancellor as his surety. And accordingly by a bond dated the 8th Aug. 1868, the European Society became bound unto Lord Romilly and Sir J. Stuart in the sum of lOOOJ., subject to a condition for defeating the bond if Addis or his heirs, executors, &o., should duly account for what he should receive or become Hable to pay as such official hquidator, and pay the same, with a proviso that a certificate of the Vice-Chancellor's chief clerk of the amount which Addis should as such official liquidator be liable to pay, or should not have paid, was to be conclusive evidence of the truth of the contents of the certfficate, and that the bond had become forfeited to the amount of the sum so stated, and that the sum should be a charge on the funds and property of the society. Edward Addis subsequently misapplied moneys received by him, and in Nov. 1871 the Vice- Chancellor's chief clerk certified that 7611. 12s. 9d. was due on the bond. As in the Buthim Ouardiams' case {am,te, p. 1), the present official liquidator of the Oporto Mining Company claimed to be entitled to immediate pay- ment out of the reserved fund. He further claimed that in any payment out of this fund he, with the others who have matured claims, will be entitled to priority over the general creditors of the society, and over creditors having contingent claims against the fund. This question, however, was not considered ; the only question considered was whether he was entitled to prove for interest on the sum from the date of the chief clerk's certificate. The date of the presentation of the petition to wind-up was the 10th June 1871. Whitehome, for the applicant, referred to Be Hatfield Patent Cask Company, 11 W. B. 971 : 2 N. E. 502; Be State Fire Insurance Compomy, Times Asswrance Compwmy's case, 2 H. & M. 722. Montague Oookspn, for the official hquidators of the European Society, was not called upon. Lord Westbuby. — Here the debt is rSB ascertained, and does not carry interest until after the proceedings for the winding-up. When the debt did arise, it became due by reason of the certificate of the chief clerk on the 11th Nov. 1871. , There was no person from whom the debt could be demanded, for no person had the power at that time to pay it. The debt, therefore, was not withheld from you by reason of the refusal or the negligence of any person liable to pay the debt. I cannot, therefore, give you interest, which would interfere altogether with the distribution of the assets. In all other respects your case will be governed by the decision in the Buthin Ouardiams' case (s«p.). I think you must have your costs here. Senmivng, for the Treasury. — ^The Crown has not been served with this case. If the order is to embody the order in the other case, it is necessary that the Treasury, who have a veto over any such matters with regard to the Reserved Fund, should be served with this case as well as the other. Lord Westbuby. — What have the Treasury to do with it ? I am not desirous of encouraging the Treasury to come into court when they are not wanted. Solicitors : Lewis, Mum/ns, and Longden, for the applicant; Mercer and Mercer, for the official hquidators of the European Society. Wednesday, Oct. 23. Be Bbitish Nation Indemnity Claims. Life assurance com/pa/ny — Amalgamation of com,- pcmies — Wvnding-urp — Claims for indemnity — Covenant to indemnify — Costs of winding-up. The deed of settlement of the IE. Life Assurance Company provided that in every policy and in ' every contract to be entered into on behalf of the company there should be" a proviso lAmiting the scope and e^ect of the contract thereby created, so that the capital, stock, and funds of the company should alone be Uable to answer and inahe good all claims in respect of any policy of asswrance, or poUcy of guarantee, or other contract, as the case mdght be, and that no shareholder of tlie company should in any manner he personally liable or sub- ject to any such claims or demands, or he in any wise charged by reason of such poUcy beyond the amount of his or her sha/re or sha/res of such capital, stock, or funds." Another clause of the deed provided that the directors might, upon such terms, for such considerations, and in sucji manner generally as to the directors should seem expedient, pwrchase the business andproperty of any other assurance company, and thereuponundertake, pay, or perform, all or any of the existing assur- ances, or other engagements or Uabilities wliatso- ever, of such other company, and enter into such indemnities, 8fc., as should be requisite or deemed expedient for the pu/rpose of effectuating the pwr- chase. Another da/use ga/ve special powers to the directors for the increase of the business, with a proviso that these powers were not to be exercised so as to alter the provisions of the deed with re- spect to the liability to losses, so as to render the shareholders liable to such losses, otherwise than in proportion to the amount and number of the re- spective shares held or subscribed for by them in the stock of the company. Tliis company bought the business of the B. Asswr- ance Association, and by the deed of transfer it Nov. 23, 1872.] THE LAW TIMES. JjUKOPEAN Assxtbjlnce] Be Beitish Nation Indemnity ' Claims. [Akbitration. » covenanted to pay all the existing debts and Uahilities of the B. Association, and further to indemmfy the Association " against all actions, suits, proceedings, costs, damages, claims, and demands whatsoevm' for, upon account, or in respect of the same, or otheituise in relation thereto," with a proviso that the subscribed capital of the E. Oompav/y should alone be liable to a/nswer any claim,s made in respect of this deed. Subsequently tlie E. Oompany was ordei'ed to be wound-up, and thereupon the B. Association ob- tained an order for a vohmtary winding -up, under the supervision of the cov/rt. Tlie B. Association claimed to be entitled, under the covenant, to an indemnity, without li/mitation of liability, against all claims and demands on them. Held, that the indemnity was limited to the capital stock or funds of the E. Company. The B. association further claimed to be entitled, under the covenant, to be indemnified against the costs of its winding-up. In a case in the Albert Arbitration (Re Indemnity Claims, Beilh/'s Reports, p. 17) a coi-responding claim had been disallowed. The arbitrator' concurred in an opinion expressed in that case, that the winding- up of the B. Association would settle nmny things with which the E. Company would have nothing to do. But at present he felt inclined to differ from that decision on one ground, inasmuch as a part of the costs of xoinding-v/p the B. Associa- tion would necessarily be attributable to a breach of tlie covenant on the pa/rt of the E. Company. However, it could not yet be ascertained what this part of tlie costs would amount to. Leamewas ac- cwdingVy given for a future application for the purpose of proving for such part of the costs when ascertained. This was a question as to whether the European Society was, under a deed of amalgamation, bound to indemnify another company against all claims without any limitation of liability; and, further, whether the indemnity was to include the costs of winding-up the second company. The deed of settlement of the European Society, dated the 2nd Sept. 1854, contained the following provisions : Clause 24 provides that the directors may grant policies, &c. ; provided always. That there shall be contained theiein, and in every other contract to be entered into on behalf of the oom- pany in or abont the premises, a reference to these presents, and a proviso limiting the scope and effect of the conlxact thereby created, so that the capital stock and fnnds of the oompany shall alone be liable to answer and make good all claims in respect of any policy of as- surance, or policy of guarantee, or other contract, as the case may be, and that no shareholder of the company shall in any manner be personally liable or subject to any such claims or demands, or be in anywise charged by reason of such policy beyond the amount of his or her share or shares of such capital stock or fnnds. Clause 104:— That it shall Joe lawful for the board of directors specially called for the purpose to contract for and com- plete the purchase or acquisition, upon such terms, for such consideration, and in such manner generally as to the said board shall seem expedient, of the goodwill or business, and all or any part of the stock, assej;B, or pro- perty of any other company or companies, ' society or sooisties, established or created by special Act or Acts of Parliament, or otherwise howsoever, for any purposes or objects, the same as or resembling all or any of the objects or purposes of the company herein set forth, and thereupon to undertake, pay, or perform all or any of the existing assurances, annuities, endowments, guarantees, or other engagements or liabilities whatsoever of such other oompany or companies, society or societies, and to enter into, make, and execute all such agreements, arrangements, and indemnities, acts, deeds, matters, and things whatsoever as shall be requisite or necessary, or be deemed expedient for the purpose of effectuating any and every such purchase or other acquisition as afore- said, and for such purposes or any of them to dispose of or assign, or change the pecuniary funds or capital for the time being of the oompany, and all or any of such shares in the present or future capital thereof, as by reason of forfeiture, non-allotment, or otherwise shall for the time being be vested in or under the control or, at the disposition of the Ijoard, and to deal with such last- mentioned shares, or any of them respectively, either by altering the amount, value, or denomination thweof, or by sub-dividing or amalgamating the same or any of them respectively, or by granting peculiar or exclusive rights or privileges or benefits to the holders for the time being thereof respectively, or in any other manner which to the said board of directors, if and when they shall from time to time be duly authorised as aforesaid, shall appear expedient. Clause 105 : ■ That an extraordinary general meeting called for the purpose shall (provided t*o-thirds of the votes at such meeting, to be ascertained by show of hands or by ballot as hereinbefore is provided, shall be in favour of the same) have power to increase the business of the company by authorising the board of directors to undertake and carry on any other business of a similar or kindred nature to those hereinbefore mentioned, which the said board may law- fully undertake and carry on, and also full power to make any laws, regulations, and provisions for carrying into effect such increase of business, and generally to make any new laws, regulations, or provisions for or respecting the company, or to amend, alter, or repeal either wholly or in part, all or any of the laws, regulations, and provisions for the time being of the company, whether contained and expressed in this deed of settlement, or made in pursuance of the powers herein contained, subject, nevertheless, in all ca^es to. the provisions and restric- tions of the said Act (7 & 8 Vict. c. 110), and to the pro- viso hereinafter contained: Provided always that the powers hereinbefore given shall not be exercised so as to affect or alter the provisions of these presents respecting the rateable division of the profits and liability to the losses of the company as between the shareholders, so as to render the shareholders entitled to such profits or liable to such losses otherwise than in proportion to the amount and number of their respective shares held or subscribed for by them in the capital stock of the company, or so as to aifeot or alter the provisions hereof for the indemnity of the officers or as to the dissolution of the company. In 1865 negotiations were entered into for the transfer of the business of the British ^Nation Life Assurance Association to the European Society. The terms' proposed for the transfer were these : 1. That the British !^^ation and the European combine and constitute one united and amalgamated company. 2. That all present appointments of agents and others remain undisturbed, it being one of the chief considera- tions of the union that the present goodwill and valuable business connections, producing as they do a new busi- ness, yielding an annual income of more than 55,000t. a year, and a gross income of exceeding 300,000!. a year should be preserved to the united company. 3. That, the European having obtained an Act of Par- Hament securing certain special advantages, the united companyibe worked under the European deed and Act of Parliament. 4. That the shareholders of the Britisli Nation, on signing the European deed, be allowed three shares of 21. 10s. each, with 10s. 6d. per share paid thereon, for each one share held by them in the British Nation Association. ' The shareholders of the British Nation, numbering say 300, when thus added to the shareholders of the European, numbering say 800, will represent a proprietary of upwards of 1100 shareholders, and a subscribed capital of more than 600,0002. sterling. 5. That seven directors of the British Nation Associa- tion join the board of the European. THE LAW TIMES. [Nov. 23, 1872. EUKOPEAN AsSUEANCE] Be Beitish Nation Indemnity Claims. [Aebiteation, At meetings of the board of directors and of the shareholders of the British Nation, and at meetings of the European board of directors, resolutions were passed approving and accepting these terms. The arrangement was carried into effect by the deed of amalgamation, which was dated the 16th March 1865. By this deed the business and pro- perty of the British Nation Association were transferred to the European Society, and it was further witnessed that : — In consideration of the nnion, amalgamation, or oou- soKdation aforesaid, and of the premises, the European Society doth hereby for itself, its successors and assigns, covenant with the Association that the society, its suc- cessors or assigns, will from and after the execution of these presents iindertake, pay, or perform all and every of the existing bond and'other debts assurances, annuities, endowments, guarantees, and other engagements or liabilities of the association,, and will at aU times here- after save, defend, keep harmless, and indemnified the association, and the individual proprietors of shares in the capital thereof, from and against all actions, suits, proceedings, costs, damages, claims, and demands what- soever, for, upon account, or in respect of the same, all, any, or either of them, or otherwise in relation thereto respectively. And there was a proviso that : — The true intent and meaning of these presents is that the subscribed capital of the society remaining at the time of any claim made in respect of these presents, or by any holders of any policies, or by any annuitant or otherwise by virtue of any of the covenants, clauses, and agreements herein contained, shall alone be liable to answer such claims, and that no director or other pro- prietor of the society, his heirs and executors or adminis- trators, shall by reason of any of the covenants, clauses, and agreements hereinbefore contained, be in any wise individually liable to pay any such claim or claims against the society beyond the amount of the unpaid part (2 any) of his particular share or shares of the subscribed capital of the society. On the 12th Jan. 1872, an order was made for winding-up the European Society; and subse- quently an order for the voluntary winding-up of the British Nation Association subject to the super- vision of the court. The questions now for consideration were, first, Whether the liability of the European Society to indemnify the British Nation Association was limited to the subscribed capital of the society or wholly unlimited. Secondly, whether the Euro- pean Society was liable to indemnify the British Nation Association against the costs of and in- cidental to the winding-up of the Association. Millar, for the British Nation Association, con- tended that the liability was unlimited. Lord "Westbuey. — Look at clause 24 of the deed. That clause says that in every contract to be made by the company there shall be inserted a hmitation clause. You see they could not get limited liability by the existing law at that time, and therefore they substituted for it this arrange- ment and contract inter se. They provided that the habUity of the shareholders of the European Society should never be carried to any extent beyond the extent of that stipulation. If that be so, would it not resolve itself very easily into this conclusion, that, if the deed of amalgamation be in conformity with that stipulation, then undoubtedly there is no unlimited hability ; but if the deed of amalgamation be in any respect inconsistent vrith the deed of settlement, then, so far as it is in- consistent, it was ultra vires of the contracting parties. MiUa/r urged that there was nothing in the pro- posal to amalgamate, nor in the resolutions of the companies, which showed that the liability was to be limited. "With regard to the second ques- tion, the terms of the covenant to indemnify were extremely wide. The costs incurred by the British Nation in its winding-up would be incurred in con- sequence of the European not abiding by its covenant to pay the debts of the British Nation. Lord Westbuey. — Some of the costs for which you contend are costs which result, not from the refusal or inability of the European Society to pay, but from your own inabihty to pay. How can I throw upon the European Society the costs that have been the consequence of your inability ? Millar. — The winding-up of the British Nation is the direct consequence of the failure of the Euro- pean to pay ; it is not for the European to say that they are not liable to pay the costs, because it might be necessary to collect money from the British Nation shareholders under a possible existing liability. Lord Westbuey. — Let us look at it again in this way. I feel the equity and justice of what you contend for — all you say may, be very reason- able; but I cannot go beyond the limit of the words. Now, what does the word " costs" mean ? The costs of the British Nation being compelled to do what the European engaged to do. Now, the costs of the British Nation doing what the other society failed to do would be the costs of payment to the creditors of the British Nation ; but you have not paid them. Let me suggest another view of the case to you, which does not, I think, appear to have been presented to Lord Cairns according to this report (Reilly's Reports, p. 17, Indemnity Claims), and I beg your attention to it. Tou have been attracted by that word costs, and have built your argument upon it. Suppose we put that aside for one moment, and look at this. The covenant is to indemnify " against all actions, suits, proceedings, costs, damages, claims, and demands whatsoever, for, upon account, or in respect of the same." The " same" is the con- tracts or Habilities of the British Nation. Now, then, suppose you call the liquidation to which you have been subjected a proceeding against you, and suppose you call, therefore, upon the Euro- pean to indemnify you against the costs of that proceeding ; how would it stand then ? Does the European Society dispute that the proceedings to wind-up the British Nation have been occasioned by the inability or refusal of the European to pay these debts ? Napier Biggins. — I rely upon the fact that the winding-up of the British Nation is a voluntary act on behalf of that body, and also that their winding-up will effect many things with which the European have nothing whatever to do. Milla/r. — It was with a view of anticipating the catastrophe that has occurred, and in consequence of the failure of the European to meet, the engage- ments it entered into with us, that the British Nation, so to speak, called themselves together, and passed a resohition to wind-up. Lord Westbuey. — Take the word " proceeding" in connection with its companions, "actions and suits," does it not mean an adverse proceeding by an individual against you ? You met together as a mode of precaution, in order to determine the amount of your own contributions. You instituted this voluntary proceeding ; can this be brought within the meanmg of the word " proceeding." Nov. 23, 1872.] THE LAW TIMES. 7 EuiiorE*j Assurance] lie BiUTisu Nation Indemnity Claims. [Arbitbation. Millar contended that it could. Lord Westbury. — Have yon paid anybody j" Millar. — I presume not yet ; the European have our assets, with which the debts ought to have been paid. Lord Westbuhy. — How are you to bring any action at law without having paid anyl)ody? I should be quite with you if you had paid. You come here at the present time telling me there is a proceeding under which your liability may be very considerable, but at present that liability has not been matured and enforced against you. Tou have paid nothing, and the only damage that you have at present sustained is the self-inflicted damage of this proceeding to wind-up. Millar contended that it was not self-inflicted; it was merely anticipating something worse. What was now asked for was something in the nature of a declaration as to the effect of this covenant of indemnity. Lord Westbury. — What would be the good of that declaration P A general declaration of an unascertained liability could not be made by me, because any declaration I now make would be directed to assist you, or enable you to prove against the assets of the European Company. How can I make a declaration that would cover all the expenses of your winding-up, and throw them upon the European, when it has been found, or may be found, that the winding-up has been made applicable to other purposes than the purposes of paying the debts of the European ? Moreover, you cannot tell me what any of your costs are, neither can you teU me what they will hereafter be found to be, neither can you tell me what propor- tion will be attributable to each of the claims ; therefore the order which I at present propose to make, and which I state now only that you may argue it, is an order of this kind: — "Having regard to the fact that the engagements, against which the European covenant to indemnify the British Nation, have not been paid or satisfied by the British Nation, and having regard also to the fact that the costs of the proceedings to wind-up the British Nation have not yet been ascertained, I refuse to make any order at present ; but with- out prejudice to any future application on the part of the British Nation, after the winding-up is complete, for the purpose of proving against the European such part of the costs incurred in that winding-up as can be proved to have resulted from the non-payment of those engagements by the European." I cannot make a general decla- ration now, which will terminate in nothing, which will define nothing, and, give you no right ; but I can reserve to you the right of making your claim when the amount of damage recoverable under this covenant has been ascertaiued. Millar objected to the words " after the wind- ing-up " in the proposed order. Lora Westbubt. — I reserve to you liberty to come whenever you are able to show what part of the erpenses of your winding-up has been occa- sioned by the refusal or the inability of the Euro- pean to pay. Napier Higgins. — I suppose it will not be taken that the European liquidator has consented to the view that any costs can come upon the European. The whole question will be open. We shall rely upon the decision of Lord Cairns in many similar cases in the Albert arbitration. Lord Westbuby. — I entirely concur with Lord Cairns in this part of the judgment, that the wind- ing-up will settle a great many things with which the European have nothing to do. 1 do not at all give ajiy decision at present. It is subject to your argument, Mr. Higgins, if I should ever hear it, namely, that mo claim can be made for costs. If Mr. Millar were able to come to me now, and say, " Our winding-up is complete, we have paid or satis- fied, upon the principle that proof is payment, all these contracts that you ought to have settled; the expenses of doing so have been so much" ; I could not possibly refuse it. Also, if he should show me that the amount, or a proportionate part of the general amount of these expenses had been occa- sioned by the European refusing to act, I could not possibly refuse it. Napier Higgins, Q.C. and Montague Coohson appeared for the ofl&cial liquidators of the European Society. Lord Westbuey. — With regard to the first ques- tion, I think there is no reasonable ground for making any such claim. It is quite clear that the powers of the directors of the European Society would be limited by the restrictions imposed upon them by the deed of settlement, and which restric- tions are followed in the deed of amalgamation. The deed of settlement never contemplated that the shareholders could, by force of any contract made by the directors, be subjected to a liability beyond the amount of the liability in respect of their shares. There may possibly be an ex- ception of contracts made by the directors for the purposes of the company; with those I do not deal, but I am dealing here with the contract for purchase, ,or for the amalga- mation or union with the European, of a very large and similar undertaking, namely the British Nation ; and any contract for that purpose under the 24th clause of the deed must be a contract that shall not avail to throw upon the share- holders, even in name, any liability beyond the liability to which they were then subject in respect of their shares. It is quite clear that this was purfectly well known to the British Nation at the time of the engagement, and accordingly it was the basis of their mutual agreement. The deed of amalgamation faithfully represents that course, and in that deed of amalgamation there is the express stipulation appended to the covenant by the society, restricting any larger application of that covenant, and limiting the effect to that open by the deed of settlement, namely, that it should throw upon the shareholders of the European a liability only to the extent of their unpaid capital. There was therefore no pretence for saying there was unlimited liability upon the part of the European shareholders ; and if it had not been for the engagement under which you all mutually came — which I desire always to promote, because the European will gain, by promoting arrangements of that kind, much greater benefit in the dispatch of business and in avoiding a lapse of time than it will suffer loss from paying the costs — if it had not been for that arrangement and my desire to promote it, I should have made the British Nation pay the costs of the case. But, having regard to the manner in which it has come here, I give the British Nation their costs of the case out of the estate of the European. With regard to the costs incurred by the British Nation in its liquidation, there is a much more difficult question. In point of reason 8 THE LAW TIMiJS. [Nov. 23, 1872. European, AssimAucE] Pownall's Case. [AkbSdbaiion. and in point of justice, I think that I ought to give some effect to the covenant of indemnity so far as that covenant extends to the costs that may be ' sustained by the British Nation in consequence of the refusal or the inability of the Europ&n to fulfil its engagements ; but, as I have already ex- plained, it would be idle for me to make a general declaration upon the subject of the costs, when that declaration could not conclude in any distinct direction the amount of damage sustained by the breach of the engagement by the European. Here I find a claim made for the general costs of the whole of the proceeding, which proceeding is di- rected to a number of objects beyond and exclusive of the object of coming to be indemnified for the costs incurred by reason of these particular debts not having been paid. I cannot, therefore, deal with that question in a final manner; for a general declaration, without pointing to the sum to be proved, would be a barren one. I cannot deal with that till the whole amount of , costs in- curred in that proceeding by the British Nation has been ascertained, and until the British Nation can come here with a definite state- ment that the whole of those costs, or some definite part of them, has been incurred by reason of a breach of this covenant on the part of the European; that portion of the case must stand over, with liberty to the British Nation to apply. Solicitors : Uyre and Go., for the British Nation Association; Mercer and Mercer, for the Official Liquidators of the European Society. Wednesday, Oct. 23. Pownall's Case. Life Asewoffhce Gotnpcmy — Amalgamation of com- panies — Wmding-up — Contributory — Liability of shareholders m old company after amalgamation with another company. The deed of settlement of the B. Life Assurance Association contained a provision giving the di/rectors power to transfer the business tind assets of the Association, under certain cvixumstances, to some other assu/rance company. Lil865the business and assets were aacwdingVy transferred to the JS. Assurance Cotnpa/ny, a^d, in accordance with the provisions for the amalgamation, tJi/i-ee shares in the B. Company were allotted to P., a shareholder of the B. Association, in respect of each of his shares, and the certificates for the B. Association's shares were given wp to the E. Com/pany, but P.'s name remained on the B. Association's share register, which had been handed over to the E. Gom/pany, together with the other property of the B. Association. In tlie winding-up of the two companies P. was placed on the lists of contribu- tories to both. On an a/pplication to have his name removed from the B. Association's list, it was Held that his namie must remain on the Ust. Notwithstanding the provision in the B. Association's deed giving the the dii'ectors power to amalgamate, it must, in order to bind u, creditor by the amal- gamation arrangement, be shown that the creditor Jmew of the proposed discharge of P. and others from the cha/racter of B. Association shareholders, and that he consented to such discharge. Moreover, the a/rgument that P. had ceased to be a holder of B. Aseodation'e shares on the ground that the amalgamiation Jiad m reaUty effected a transfer to the E. Company, was not tenable. This was a question as to whether the names of the applicants should remain on the list of oon- tributories to the British Nation Assurance Asso- ciation. The deed of settlement of the Association, dated the 28th Feb. 1855, contained the following pro- visions : Clause 80 : / Tliat the votes of three-fourths of the qualified associates present, and not declining to vote at two successive extraordinary general meetings or at the ballot or ballots which, for the purpose of ascertaining the sense of the qualified associates at large, may be taken in con- sequence of being demanded at such meetings or either of them, shall be requisite to authorize the amalgamation of the association with any other company or society or the dissolution of the association. Clause 222 : That an amalgamation of the association with any other association or society, if the same can be legally ejSeoted, shall only take place upon the recommendation of the board, and with the approval of two extraordinary gene- ral meetings, and in the event of the circumstances and prospects of the association being such as, in the tmanimous opinion of the actuary for the time being of the association and three other actuaries to be chosen, as hereinafter mentioned, would preclude the probability of the success of the association if left to its own resources. ' Clause 223 : That if after one-fourth of the said capital of 300,0002. shall have been called up and paid, it shall appear to an extraordinary board that the ciroumstances and prospects of the association are such as to preclude the probability of the success of the association if left to its' own resources, and that it is in the power of the aBsocip,tion to amalgamate upon favourable terms with some other association in the same line of business, it shall be lawful for the board to come to a resolution recommending such amalgamation with some such other association to be named in such resolution, and upon certain terms to be therein specified, and thereupon the said board shall call an extraordinarjr general meeting for the ^urpos^ of taking into consideration such recommendation, and if such extraordinary general meeting shall come to a resolution that such recommendation ought to be adopted, the same shall thereupon be referred to the actuary for the time being of the association, and three other actuaries to be chosen by the said general meeting. And the said four actu6.ries shall be requested to advise : first, whether in their opinion the oircumstauces and prospects of the association are such as to preclude the reasonable probability of the success of the association if left to its own resources. And if so, then, secondly, whether the proposed amalgamation of the association with the asso- ciation named 'for that purpose in the resolution of the board, and upon the terms therein specified, is likely to be advantageous to the associates. AnA in case the said four actuaries shall differ in their opinion upon the said questions, or shall not send in a reply thereto in writing to the offices of the association within six calendar months from the date of such general meeting, then the recommendation of the board shall be considered as ipso facto rejected by the association ; but if th,e said four actuaries shall within six calendar months from the datq of such general meeting state in writing, and deliver at the office of the association their opinion in favour of the affirmative of the questions so to be submitted to them as aforesaid, then and in such case the board shall call a second extraordinary general meeting for the purpose of confirming or rejecting the resolution of the previous general meeting in favour of the proposed amalgamation, and such second general meeting shall be held within forty days next after the said actuaries shall have delivered their opinion at the offices of the association, and if such resolution for amalgamation shall be con- firmed by such second general meeting, then the same shall, according to the terms proposed, b? carried into effect by the board. The deed of settlement of the European Society Deo. 7, 1872.] THE LAW TIMES. .9 EUROPBAS AsSTJUANCE] PowNAii's Case. [Akbitkation. in its 104th. clause gave the directors power to purchase the business, &c., of other assurance com- panies : (Vide Be British Nation Indemniiy, sv^., p. 4) In 1865 the business and assets of the British Nation Association were transferred teethe Euro- pean Society. The deed of amalgamation provided, Clause 3 : That the directors of the European Society shall, imme- diately after the execution of these presents, allot to each shareholder in the association three shares in the capital of the European Assurance Society in respect of each of his or her shares in the capital of the British Nation Association, and every share so allotted shall be deemed to have the sum of 10s. 6d. paid up thereon, and the holder thereof shall be entitled to participate in the next and subsequent dividends on shares in the European Assurance Society pai-i passu, with the holders of the other shares therein. In accordance with this provision the directors of the EuropcEm Society allotted European shares to the shareholders of the British Nation Associa- tion, and amongst them to the applicants, Mr. Pownall, Mr. Eyre, and Mr. Sworder, three Euro- pean shares being allotted in respect of every one British Nation share. The certificates of the British Nation shares were given up to the Euro- pean Society, but the names of the applicants were not removed from the British Nation share register, which at the time of the amalgamation was handed over, together with the other property, to the European Society. Dividends had been received by, and calls were now being made on, the appli- cants in respect of the European shares so allotted. In the winding-up of the British Nation Associa- tion the names of the applicants were included in the list of contributories, and an application was now made for their removal. Milla/r appeared for the applicants. Montagite Gookson for the official liquidator of the British Nation Association was not called on. Lord 'Westbubt. — There is no ground for this application; the application is noiade to me by three gen- tlemen who appear at present to be share- holders, and have been put upon the list, according to the case, as contributories to the British Nation, which is being wound-up. The British Nation is liable to a variety of contracts and engagements. The British Nation in the year 1865 united itself with the European Society ; that union, or amalgamation as it is commonly called, was in conformity with the' powers contained in the deed of settlement of the European. I will take it that it was also perfectly within the competency of the directors and the slijareholders of the British Nation. It was a term in that amalgamation that in Ueu of the shares then held by the shareholders of the British Nation, other shares should be given to those, shareholders in the European. It is con- tended, and it may be the fact, that according to the contract between the parties, the character of -shareholder in the British Nation was to cease, and the character of shareholder in the European was to supervene, and be substituted for the original status of the shareholder as a member of the British Nation. I do not enter into the question whether it is the strict interpretation of the deed or not; it is the interpretation that has been contended for, and for the purpose of this case I am willing to accept that interpretation. The question is whether this arrangement between the British Nation and the European has any effect whatever upon the persons, who at that time held the shares of the British Nation, liable to its contracts and engagements. Now it is ingeniously suggested that the creditors may be considered as bound because the creditors had notice of the deed of settlement of the British Nation Association, and were aware that it con- tained a power, under which power that which was actually done — that is, the arrangement actually made between the British Nation and the European — might legally be done; but it is impos- sible for me to impute to a creditor' knowledge of the details of an arrangement which might pos- sibly come within a power contained in the deed of settlement. The creditor has no business with, nor has he any means of prosecuting, any inquiry as to what is done under that power. To bind the creditor you must prove that the creditor knew of this proposed substitution, or rather of this sup- posed discharge of the persons from the character of shareholders of the British Nation, and that he consented to those shareholders being so dis- charged. There is no pretext for any such thing ; there is nothing from which you can impute to any creditor existing at the time acquiescence in his debtor being released from his engagements, and the debtor being convertpd into another person who would not be liable for that engagement. The whole thing fails utterly. If this has been brought here by arrangement between the parties, I will give Mr. Pownall his costs out of the estate ; but if it has not been the subject of arrangement there is so little pretext for it that I should not allow him to receive his costs. I must advert to one other argument, which is this . It is contended that, under the agreement, in reality there has been a bond fide transfer of the shares of Mr Pownall inthe British Nation totheEuropean itself, and that therefore he has ceased to be the holder of shares. The amalgamation deed is not at all a transfer made or effected in the manner in which it would be competent to a shareholder in the British Nation to transfer his shares to another individual, nor was the European ever entered in the Share. List of the-British Nation as the holder of those shares ; it could not by any jjossibility be so, because the whole thing was transferred bodily from the British Nation to the Europeain. The man has parted with his shares, but he has re- tained his liability, and therefore he must still re- main in the character in which he originally was, namely, as a shareholder of the British Nation, until all the contracts and engagements to which he became a party in that company have been dis- charged. How has this case been brought for- ward? Montague Coohson.—l believe that a large number of cases are in the same position as Mr. Pownall's, and your Lordship's ruling will apply to them. LoKD Westbuuy. — If that be so, you must have your costs. Montague Goohson. — ^The costs of course will come oijt of the British Nation funds, it being an application in the British Nation, having nothing to do with the European. LoB.D Westbuet. — Yes, the costs out of the assets of the British Nation. Solicitors : Eyre and Go. for the applicant ; Mercer and Mercer for the OfiB.cial Liquidator of the British Nation Association. 10 THE LAW TIMES. [Deo. 1, 1872. EuEOPEAN Assurance.] Be Indian and London Life Asstjbance Co.; Ex parte Dyke. [Abbiteation. Wedmesday, Oet. 23. iJe India and London Lipb Assitbakce Company ; Expa/rte Dike. List of contributories ordered to he settled at once — Refusal of application to have a separate liquidator appointed for this company — No absorbed com- pany has a right to appear separately. TfflB was an application for the appoiiitinei;t of a separate liquidator of the India and London Life Assurance Company. This company became amalgamated with the European Assurance Society in 1860. There were now only three creditors of the company, in respect of annuity policies. The applicant, Colonel Dyke, was one of these, and had obtained an order to wind-up the India and London Com- pany. Ga/rdner, for the applicant, contended that it was not just that the payment of these three creditors should be delayed by the procciedings in winding- up the European and the otlaer companies. A separate liquidator should be appointed for the India and London Company, and the winding-up completed speedily. Lord "Westbtjut.^ — Is it necessary to have a sepa- rate liquidator ? Why should I not direct that the list of contributories in the India and London Company should be forthwith settled ? Oa/rdmer.—Ii your Lordship will do that, and give us liberty to attend the proceedings, we shall be satisfied. Lord Westbubt. — Tou can attend the proceed- ings immediately upon giving proof of your debt. Napier Higgins, Q.C., and Montague Coohson appeared for the official liquidator of the India and London Company. Lord Westbtjet. — Let the joint official liquidator proceed at once to settle the list of contributories in the India and London Company. Let the applicant be at liberty to bring in such proof as he thinks he can establish in the ordinary, way. All I can do by this order is to accelerate and have done immedi- ately that which there is no reason for delaying, and that which, being done at once, will facilitate the objects of justice by removing this little com- pany, on the payment of its few debts, from before me. I cannot give you any costs of this matter, Mr. Gardner, because there has been no refusal. You come here for your own benefit to get the matter accelerated, in order that you may be paid. It is very right and very fit to come here, but at the same time, there has been no delay and no defp,ult, and therefore I cannot take the money out of the pockets of the European Society to pay you for your individual convenience. Tou will bear your own costs : you will have them from your own company. Gardmer. — I suppose we may add our costs to our proof against the India and London Company ? Lord Westbubt. — ^Tes. Upton appeared for the firm who had been the , solicitors to the India and London Company before the commencement of the winding-up, and con- tended that the costs ought not to be borne by that company, the application being wholly unnecessary. Lord Westbubt.— I do not think it is at all an unnecessary application. If you could have proved to me that you had said to these gentlemen, "We will have the list of contributories settled immediately, and we will make a call and raise money to pay you," then I should have said the applicant was in too much hurry in coming here ; but you have done nothing of the kind. The order will stand as I have pronounced it: but I still incline to the opinion that Mr. Higgins must have his costs out of the estate of the European. It must not be considered from what I have done to-day that I recognise the right of any one of these absorbed companies to come h^re and claim a locus standi in any independent capacity. If Mr. Hig- gins had told me that he represented the India and London Company, I should have abstained • from recognising the gentleman who appeared. I mention this so that it may not be brought into a precedent. Napier Siggins. — The gentleman who appeared was from the office of Messrs. Upton, who were the solicitors before the liquidation began. I now appear for the joint official liquidator of the India and London Company ; that was the reason why I thought that your Lordship might give us the costs out of the estate of that company, as the European do not oppose. Lord Westbubt. — I shall not make them pay your costs. I do not think anything has been said against that company with regard to any other costs. I mention it only that it may not be sup- posed I shall recognise the right of any absorbed company to appear separately. Solicitors for the applicant, BoMgerfield and Frazer. Solicitors for the official liquidator of the India ■ and London Company, Mercer and Mercer. Friday, Oct. 25. Read's Case. ' Oompcmy — Winding-up — Gontributory — Informal transfer of sha/res — Transfer of sha/res to WAvn of sir am — Alleged neglect by di/rectors — Unpaid calls. The deed of settlement of the E. Company contained a provision whereby a shareholder might submit for the directors' approval the name of a proposed transferee of his sha/res, and if the proposed transferee should be approved of, or if the directors should not within fourteen days propose some other person to tahi the shares at the ma/rhet price (in which case the persou so proposed should be con- sidered as approved of by them), then the sha/re- holder might, accordimg to a form to be sanctioned by the di/rectors, iramsfer his sha/res to his own proposed transferee, who thereupon might, on executing the deed of settlement, or a covenant to abide by the provisions of the deed, be entitled to call upon the directors to place Ms name on the register of shareholders as the proprietor of such shares ; with a proviso that no sha/res should he transferred umtil all instalments or calls actually dntA and poAjoble in respect thereof had "been paid. And there was a further provision that no sha/re should be transferred to amy person who had not been first approved of or considered as approved of by the di/rectors, and that if amy transfer should he made or attempted to be m/ide to any person, who had not been so fin-st approved of, such transfer should be void. On the 28th April 1871, after tlie presentation of am, unsuccessful petition to wind-up the company, and shortly before the presentation of a successful petition, B., who held 400 sliares in the company, Deo. 7, 1872.] THE LAW TIMES. 11 BuEOPEAN Assurance] Read's Case. [Aebithation. executed a transfer of them to Ms employe A., in consideration of tlie sum of 5s. The same day R.'s solicitor sent the transfer to the company for registraUorp. On the 29tfc April the secretary of the company returned the transfer, and informed the solicitor that all such transfers must be on the special form provided by the company, and which was only issued after an application had been sent vn and approved of by the directors. There- iipon, tlie solicitor, on the %id May, gave notice in writing of B.'s wish to transfer his shares to A., and requested that the form of transfer might he forwarded. However, the notice did not state tlie calling of the proposed transferee, as the deed of settlement required. A day or two afte/r the solici- tor's clei-h had an interview with the secretary, and was told by him that tlie directors proposed taking into consideration many recent applications for transfers. The secretary, on being informed that an informal notice had been sent, dispensed with the special form of notice usually re- quired by the directors, and desi/>-ed that the solicitor should again comm/imicate with him in writing, requesting a reply to his letter of the 2nd May. This was done by a letter from the solicitor, dated the 8th May. On the 20th May a call of 5s. per share becams due and payable, and on the V)th June the successful petition to wind-up the company was presented. On the 14th June the solicitor again wrote, ashing for a special form of transfer, and stating thatB. would pay tlie call when the transfer was forwarded for registration. Pending the proceedings on the petition to wind-up the eompa/ny the directors refused to take amy action with reference to the transfer of the shares. On the 2&th Jime if. sent the original informal transfer to the company, together with a cheque for 1001., the amount of the call dvs on the shares. In the wi/ndAng-%i/p B.'s name was still on the sha/re register, and he was placed on the list of eonh-ibutories. He applied to have his nam,e removed from the list, on the ground that on the eaypi/ration of a fortnight from the giving of notice he was entitled to transfer Ms sha/res, either to h/is proposed transferee or to a transferee proposed by the di/rectors, and that thus the transfer would have been effectually completed before the presentation of the petition to wind-up, but for the neglect of the directors in not sending the special form of transfer. Held, that the name must rema/in on the Ust of con- tributories. In such a transaction the whole equity of the shareholder depends on Ms being able to show that he had completed, diily andregulaHy, a legal transfer of Ms slia/res, before the presentation of the successful petition to wind-up. Not being able to do so, B. had no grounds for having his name removed from the list of contributories. With rega/rd to the alleged neglect of {he directors, the letter of the Uth June of itself showed that there was no ground for imputing to them wilful delay in completing the transfer. And, fiMrther, if the form of transfer had been sent by them, it could not ha/ve been made a/oailable until after the call was paid. No weight attached to the decision in Bargate v. Shortridge (5 H. L. Gas. 297). This vas an application for the removal of Mr. Joseph Read's name from the list of contributories to the European Assurance Society. ' The Society's deed of settlement contained the following provisions, with reference to the transfer of shares. Clause 96: That it shall be lawful for any shareholder in the com- pany, and for the husband or any female shareholder, and for the exeoutors, or administrators of any deceased shareholder, and for the assignees of any bankrupt or insolvent shareholder, to procure some person or persons to become a shareholder or shareholders in respect of all or any of the shares for the time being belonging to such shareholder or which belonged to such deceased shareholder, or to such bankrupt or insolvent share- holder, and when, and as any such shareholder, husband, executors, administrators, or assignees shall have pro- cured some person or persons who is or are willing to become a shareholder or shareholders, such shareholder, husband, executors, administrators, or assignees (as the case may be), shall give notice, in writing, at the office of the company, of his or their having done so, and re- quest the board to certify their approbation or disa.ppro- bation of such person or persons, and shall describe in such notice the full name and profession or calling, and place of abode of the proposed shareholder, or of each proposed shareholder, if more than one, and the number of shares in respect of which he, she, or they shall be proposed to become a shareholder or shareholders, and if the person or persons shall be approved of as hereinafter mentioned, or if the directors shall not, within fourteen days, propose some other person or persons to take the share or shares proposed to be transferred at the then market price for the time (in which case the person or persons so proposed shall be considered as approved of by them), then and in such case such shareholder, husband, exeoutors, administrators, or assignees (as the case may be) may transfer the same share or shares to such person or persons so proposed and.approved, and thereupon each or any such person shall, upon executing, at the office of the company or at such other place as the board of diiectors shall require, these presents or a deed of covenant to abide by the provisions herein contained, and the rules and regulations of the company, be entitled as regards the share or shares so transferred to him or her, to can upo4 the board of directors to enter his or her name in the register of shareholders as proprietor thereof, and the board shall accordingly do so, and upon such entry being made, he or she shall become the pro- prietor or proprietors thereof, provided nevertheless that no share or shares shall be transferred until all instal- ments or calls actually due and payable in respect thereof shall have been fully paid up. Clause 97 : That as well every transfer of a share, as every deed of covenant, to be executed as aforesaid, shall be pre- pared according to a form or forms to be sanctioned and approved of by the board of directors ; and no share in the company shall be transferred by any shareholder, or by the husband of any female shareholder, or by the executors or administrators of a deceased shareholder, or by the assignees of any bankrupt or insolvent share- holder, to any person who has not been first approved of, or considered as approved of, as aforesaid, by the board of directors, or a committee of directors, appointed by the said board for the purpose. And if any transfer of any share or shares shall be made, or attempted to be made, to any person who has not been so first approved, any such transfer shall be void ; and as well every transfer of a share as every deed of covenant to be executed in the cases as aforesaid, shall be executed at the company's office, or such other place as the board of directors, or the said committee of direc- tors, may require or approve of ; and such deed of cove- nant shall at all times be prepared under the direction of such board or committee^ and at the expense of the person entering into the covenants therein contained; and every such transfer and deed of covenant shall be deposited at the office of the company, or other place appointed by the board, and kept by them ; but any per- son for the time being claiming under any such transfer may, by writing under his or her hand, require the same to be produced to him or her ; and it shall be lawful for the board of directors to den^ind and receive from the seller of any share or shares a fee on each transfer pre- paratory to the approval of the shareholder, not exceed- ing Is., such fees to be applied and disposed of in such 12 THE LAW TIMES. [Dec. 1, 1872, EUEOPEAN AsSUILiNCB] Eead's Case. [Abbiteation. manner as the board of directors may from time to time see fit. In 1869 and 1870 petitions were presented to ■wind-up the society, but they were unsuccessful. In 1871 Mr. Read held 400 shares iu the society, and on the 28th April 1871, he executed a transfer, whereby he, the said Joseph Read, of 74, Lord-street, Liverpool, in consideration of 5s., transferred his 400 shares to William Atkinson, of 74, Lord-street aforesaid, book-keeper, and WiUiani Atkinson agreed to accept the shares. On the day of execution, the 28th April 1871, Mr. Gill, the solicitor of Mr. Read, forwarded the transfer to the secretary of the society in the following letter : — Sir, — I beg to forward yon transfer of shares, which I shall be glad to hear has been registered, and to receive fresh scrip in place of the three certificates of the , People's Provident Assurance Society, which I also in- close.— -Tonrs obediently, J. H. E. Gill. The Secretary, European Assurance Society. (The People's Provident Assurance Society, being the old name of the European Assurance Society.) On the 29th April 1871, the secretary of the society, sent the following reply : — Sir, — I beg to return this transfer, as all such deeds must be on the special form provided by the society, and which is only issued after an application has been sent m and approved by the directors.— Yours faithfully, J. H. E. GUI, Esq. D. Easum, Secretary. On the 2nd May 1871, the applicant's solicitor again wrote to the secretary : — Sir,— Mr. Joseph Bead, the holder of shares in the European Assurance Society, in place of 400 shares for- merly standing in his name in the books of the People's Provident Assurance Society, wishes to transfer them to Mr. William Atkinson, of 74, Lord-street, Liverpool. May I trouble you, therefore, to forward me the form of transfer used by your society for this purpose.- Tours °''«^iently, j. h. E. Gill. ine Secretary, European Assurance Society. A day or two after, Mr. Gill's clerk called at the office of the society and was informed by the secretary that the directors proposed to take into consideration many recent applications for transfer of shares. The secretary inquired if any notice of the wish to transfer had been sent to the office, and was told that a notice had been sent. There- upon the secretary told the clerk that a special f orm of appUcation was supplied to shareholders, but if notice had been given it was sufficient, and he further desired that Mr. Gill should communi- cate again with him in writing requesting a reply to Mr. Gill's last letter of the 2nd May. Accord- ingly Mr. Gill wrote to the secretary on the 8th May 1871, as follows : Sir,— Eef erring to my letter to you of the 2nd, I shall be gla^ to receive forms of transfer for the shares Mr. Joseph Bead wishes to assign to Mr. William Atkinson. -J™" faithfuUy, J. H. j;. qill. Ihe Secretaiy, European Assurance Society. On the 20th May 1871, a call of 5s. per share became due and payable. And on the 10th June 1871, the successful petition to wind-up the society was presented. On the 14th June 1871, Mr. Gill wrote to the secretary: Sir,— Eeferring to your letter to me of the 29th April, and my reply of the 2nd May last, I shaU feel obliged by your at once forwardmg me the special form of transfer referred to in your letter, so that I may send you a transfer of the shares held by Mr. Joseph Bead, of No 74, Lord-street, Liverpool, to Mr. Wm. Atkinson, of No. 74, Lord-street, Liverpool, book-keeper. Mr. Bead wiU pay the call which has been made since his application, when the transfer is forwarded for registration. — ^Yours obediently, J. H. B. Gill. The Secretary, European Assurance Society. The secretary replied on 15th June 1871 : Dear Sir, — We do not appear to have received a notice of transfer, so inclose one herewith. At the same time, I had better state it wiU be quite impossible for the directors to entertain it until all c ills now due are paid. —Tours faithfully, D. Eabtjm, Secretary. J. W. E. Gill, Esq. On the 17th June 1871, Mr. Gill again wrote to the secretary : Dear Sir, — I must remind you that at your interview with the writer on the 5th May, you stated that a letter containing information as to the proposed transfer, and which you were told had been sent was sufficient as a notice. I have, however, filled up the form with the date of my original application on behalf of Mr. Bead. The application having been made prior to the call, the directors cannot have declined to entertain the application until the calls were paid. The calls, however, wiU be paid when the transfer is forwarded. I shall be glad to hear from you by return of post that the directors have approved it. — ^Yours faithfully, J. H. E. Gill. ■The Secretary, European Assurance "Society. To this the secretary replied, that pending the proceedings on the petition to wind-up the society, the directors could not take any action on these or any other shares, and that no notice of transfer could be brought before the committee until after all calls were paid. On the 28th June 1871, a clerk to Messrs. Chester and Urquhart, the agents of the applicant's solicitor delivered to Mr. Bristow, an officer of the society, the transfer before alluded to, and a cheque for lOOZ., together with the follow- ing letter : Dear Sir, — We hand you herewith transfer herein of the shares held by Mr. Bead in your society for registra- tion. We also hand you herewith our cheque for lOOJ. for the amount of calls due on these shares. We must beg you to understand that Mr. Bead will stand upon his rights, and consider the notice of wish to transfer as of the original date in May last. — Tours truly, Chesteb and Uequhabt. The Secretary, European Assurance Society. The clerk stated in his affidavit that Mr. Bristow handed back the cheque for 1001. with directions to pay it into Messrs. Hopkins, and Oo.'s bank to the credit of the society, and this was accordingly done. On the 3rd July 1871, the secretary wrote to Messrs. Chester and Urquhart as follows : — Gentlemen, — I am in receipt of yours of the 28th. I have f uUy explained to Mr. Gill the reason no transfer can be passed ; consequently I am much surprised at receiving yours. I beg to say that the papers are informal (aa I have before told Mr. Gill) and therefore return them.— Tours faithfully, D. Eastjm, Secretary. In ihis affidavit, the clerk stated that no en- closures were sent in this letter, and on attention being drawn to this, no reply was ever received from the society. The order to wind-up the society was made on the 12th Jan. 1872. The transfer of Mr. Read's 400 shares was never registered, and they accord- mgly still stood in his name in the share register. His itame having been included in the list of con- tributories, he now applied to have it removed. Hemming for the appUcant. Lord Westbury.— Does Mr. Atkinson appear? I cannot leave a blank upon the register. If I taJ^ Mr. Read's name off, I must put another on. Hemming. —There are precedents for taking a name off without another name being put on. Lord Wesiboty.— Not a precedent arising from a transaction such as yours. Ton say you trans- Deo. 7, 1872.J THE LAW TIMES. 18 BuKOPEAN Assurance] Bead's Case. [AUBITEATION. ferred the shares to Mr. Atkinson. I cannot de- cide the case completely without Mr. Atkinson being here. It makes your case stronger if Mr. Atkinson says, " I am of the same opinion with Mr. Bead, that the transaction was complete, and in evidence of that I am willing to be substituted." I think if you will appear for Mr. Atkinson, having authority to do so, we may proceed. Hemming (after consulting with the applicant's solicitor,) stated that he could proceed, as he was instructed to appear for Mr. Atkinson also. He contended that the first letter of the applicant's solicitor was a valid, though an irregular notice of the wish to transfer ; and in any case the notice of the 2nd May 1871, was a good one. After re- ceiving the notice it was incumbent on the direc- tors either to approve of the proposed transferee or to substitute another name within a fortnight. Neither course having been taken by them, the proposed transferee must be considered as approved of, and at the expiration of the fortnight,, and therefore long before the presentation of the peti- tion to wind-up, the applicant had a perfect right to transfer his shares to Mr. Atkinson. He was prevented from doing so by the neglect of the directors in not sending the form of transfer, and it is in consequence of this neglect that his name is now on the share register. Lord Westbusx. — ^Then you throw overboard and abandon your transfer. That being so, the case comes before me with no transfer executed, and your sole ground is this, that there has been no transfer because no answer was sent to your letter requesting the form of transfer to be forwarded. Tou may have a remedy against the directors, but you have no right to say, as against all persons interested, that you have parted with the character of shareholder. Hemnm/ng. — If a shareholder has done all that he can to get rid of his shares, and fails to do so only because the directors have omitted their duty ; if he can show that but for their omission of duty he would have been free before the winding-up, he is not too late merely because his name is on the register ; he is entitled to have his name removed. Smith V. Beese R/i/aer Gortvpany, L. Eep. 2 Eq. 264 ; 16 L. T. Eep. N.S. 264 ; Re Overend, Chi/mey amd Co.; Ex parte Odkes S; Peek, L. Eep. 2 H. L. 325 ; 15 L. T. Eep. K. S. 652 ; Be The Agriculturist Cattle Ingwrance Compawy, Bush's Case, L. Eep. 6 Ch. 246 ; 24 L. T. Eep. N. S. 1. Lord Wbstbtjbt. — Tou ■ see, Mr. Hemming, this is the case of a voluntary transfer You have no equity. If you had completed all the legal solem- nities, well and good, then you might go ; but if you have not completed those legal solemnities, you have not a particle of equity or merit to have anything left undone done for you; and as to delay, your letter of the 14th June, four days after the presentation of the petition to wind-up, pre- cludes you from saying you have any complaint. Seimmmg referred to Be Joint Stock Discov/nt Company; Fyfe's Case, L.Eep. 4Ch. 768; Ban-gate v. Shortridge, 5 H. L. Cas. 297. Lord Westbtjby. — I have great reason to re- member the last hearing oiBa/rgate v. Shortridge, by reason of the difference of opinion between Lord Cranworth and Lord St. Leonards, which left the law in a worse state than it was in when the appeal was presented. It was one of the oases, in which we struggled to have a re-hearing. The law lords who heard the case were only two, and they were divided in opinion, and we thought that it ought to he reheard. I do not attach any weight to that case, because it was decided on the technical rule of prmsumitv/r pro negante. Hemming further contended that, even if Mr. Atkinson were a man of straw, it woijld not afiect the question ; for the deed of settlement provided that, when any transferee was proposed, whether a man of straw or not, the directors were bound either to approve of him or to subsitute another person within a fortnight. The meaning of such a clause is explained by Lord Justice Mellish in Be Accidental Death Insurance Oompamii ; Cha/ppell's Case, L. Eep. 6 Ch. 902 ; 25 L. T. Kep. N. S. 438. Montagite Gookson appeared for the official hqui- dators of the European Society, but was not called on. Lord Westbuby. — The claimant in this case is a gentleman hold- ing 400 shares in this society, who, at a time full of doubt and uncertainty with regard to the position of the company, forms the design of transferring his shares for a nominal consideration to his servant, in order that he himself mjght be relieved from future responsibility. If he had a right to do so, and if he had taken pains com- pletely to do so before his proceedings were inter- cepted, probably his design would have been effectual; but there is no pretence made to me that this was intended to be, or was in fact, a bond fide transfer of shares to a gentleman of eqmil respeotabihty with Mr. Read. Mr. Bead comes now to be relieved from his liabUity on the ground that he really did intend to transfer these shares to his servant, and he complains that he has not been enabled to consummate that attempt by reason of the default of the directors. The argument before me is that everything must be considered to have been done which would have been done if the direc- tors had used perfect diligence, and that if they had used perfect diligence, this transaction would have been completed, and therefore Imust take it to be so. This is a case in which no court would feel dis- posed to abandon or set aside any description of legal difficulty in the way of such an applicant. His whole equity depends on his being able to show that he had completed duly and regularly a ' legal transfer of his shares before the presentation of the winding-up petition. Now, I am quite willing to take it upon the ground put by his learned counsel, who has argued the case most ably. I am quite willing to put it upon this, that he shall have the credit of having done everything which, if the directors had been diUgent, he really could have done. That is all that is contended for, and on that basis I am willing to take it. This society provides a mode by which the shares of its shareholders may be transferred. When a man, who is a shareholder, desires to^ part with his shares, he has to give notice to the company of his desire so to do, and he is particularly to specify the name of the person to whom he proposes to transfer his shares, and then, as I read the deed, three things may be done. First, the directors may refuse the application ; secondly, the directors may propose another person to be substituted as assignee of the shares ; or, thirdly, the directors may omit for fourteen days after the notice to assent or dissent, and in that case it shall be con- sidered as against them that they have acceded to the application, and are willing to adopt the pro- 14 THE LAW TIMES. [Dec. 7, 1872 European Asstjbancb] Ebad's Case. [Arbitbation. posed transferee of the shares. I quite agree with Mr. .Hemming that no special form of notice of the intended transfer is required by the deed, and therefore I cannot insist on the necessity of this gentleman having adopted the notice which the company had prepared. Instead of giving notice of his intention to transfer, the first step taken by him is to make a complete transfer — to execute a deed for that purpose. Now, I must impute to this gentleman, as a shareholder, knowledge of the provisions of the deed of settlement. Accordingly he knew perfectly well that he had no right to make a transfer until he had preceded it by a preliminary notice, not in any special form, but a notice that should be sufficient to give to the directors information of the position and status of the individual to whom the shares were proposed to be transferred. He does not do so ; he makes a deed of transfer in his own form to Atkinson, his servant. Atkinson signs the' deed, and then the deed is not forwarded to the company by Atkinson, who, if there be bona fides in the matter, is the person interested ; but it is forwarded to the com- pany by Mr. Gill, the solicitor of Mr. Read, by a letter of the 28th April 1871. That is answered by the secretary on the 29th April — there was not much delay there — in which he says that the special form of transfer provided by the society is only issued after an application has been sent in and approved of by the directors. The application there referred to is plainly the notice of the in- tended transfer, with the name of the transferee. Now that, I suppose, was received in due course by Mr. Gill— perhaps on the SOth of April— and then comes the letter of the 2nd of May, which Mr. Gill writes to the secretary, in which the position in life, the occupation in life, of Mr. Atkinson is not stated. With that letter the proceedings must be taken to begin, because there Mr. Gill, on the part of Mr. Eead, does send a notice for leave to transfer and a notice of the intended transferee, and he applies for the proper form of transfer. That was probably received by the secretary upon the 3rd of May, and is followed by the interview between the clerk of Mr. Gill and the secretary, which we will suppose to have taken place on the 4th of May. In the conversation which then took place, the secretary dispenses with the necessity of using any special form of notice, and taking the letter of Mr. Gill on the 2nd of May to have been a sufficient form of notice, the fourteen days would have to be calculated from the 3rd of May, the date of the receipt of that letter. But the secre- tary informs Mr. Dumville, the clerk, that the directors intended to hold a meeting for the purpose of considering the applications made to them, and their interview concludes by his _ desiring _ him to communicate with him again in writing on his return to Liverpool, requesting a reply to Mr. Gill's last letter of the 2nd May. Mr. Gill accordingly acquiesces in that by a letter of the 8th May, which appears to be a repetition of what was contained in the letter of the 2nd, with the addition of a request for the form of transfer. Now, before the fourteen days had expired, computing them from the date of this letter, upon the 20th May a call of 5s. became due and payable, and the necessity of paying that call before any transfer could be made was imposed by the 96th clause of the deed. If, therefore, the form of transfer had then been sent, that transfer could not have been made available until the call of 6s. per share, which became due on the 20th May, had been paid. We come now to the letter of the 14th June, and this is a very material letter with reference to the complaint so strenuously insisted upon at the bar, that there had been wilful delay on the part of the directors ; the wilful delay must have been delay in sending the form of transfer. I have already said, if the form of transfer had been sent, nothing could have been done with it until the call had been paid; but when a party thus complains of delay, the material inquiry is in what view the matter was regarded by his own solicitor previously to the present complaint. The solicitor, writing upon the 14th June, a long while after the 20th May, and a longer time after the date of his letter of the 8th May, writes to the secretary of the company in the following words : Sir, — Eeferring to your letter to me of the 29th April, and my reply of the 2nd May last, I. shall feel obliged by your at once forwarding me the special form of transfer referred to in your letter, so that I may'sendyou a transfer of the shares held by Mr. Joseph Read, of No. 74, Lord-street, Liverpool, to Mr. William Atkinson, of No. 74, Lord-street, Liverpool, bookkeeper. Mr. Bead- will pay the call which has been made since his applica- tion, when the transfer is forwarded for registration. Now, I must hold that that letter was written by a gentleman who did not consider that he had any ground of imputing wilful delay ; who was very willing to go on with the transaction it a form of transfer were then forwarded to him, and did not imagine that he had a right to treat what had previously occurred as dispensing with the ne- cessity of any transfer at all ; for that is the argu- ment before me. It is indisputable that the ■ necessity of paying the calls intervened, and that the obligation to pay the same was not for a moment proposed to be fulfilled, until this letter of the 14th was written by the solicitor, four days after the time when all transactions in the com- pany became impossible, and when the request contained in this letter was one that it was no longer in the power of the directors to accede to. I am willing to take the case precisely upon the basis put by Mr. Hemming, and I say that there is not a pretence for imputing to these directors wilful delay in completing the transfer anterior to the 14th June. If there had been such a delay, you would not only not have written the letter of the 14th June, but you would not in that letter have requested a transfer to be sent to you, that you might now proceed upon it, nor would you in that letter of the 14th June have admitted your liability to pay the caU, and have promised to pay it when the transfer was completed. There is no justification for any part of the case. I may add, without casting the slightest imputation upou Mr. Eead, that when a man is in the unfortunate position of being a shareholder in one of these com- panies, and more especially when he is in the un- fortunate position of being a shareholder in such a company as this, whatever the law allows him to do may be done without reproach, but he takes his chance of completing his legal escape by making it perfect in aU particulars, and if he has failed to do that, he cannot escape, and he ought not to attempt to impute to others the cause of his own failure; there is nothing to justify it. I must, therefore, refuse this application. I do not want to enter into any argument, but I should be glad if I could feel my way to treating this case as the means of deciding any other, because then I would not make you pay any penalty for having Deo. 7, 1872.] THE LAW TIMES. 15 EuEopEAN Assurance] Lancey's Case. [Aebithation. brought it here, but if that is not so, I must make you pay the costs. * Hemming. — There must be a multitude of other cases similar to this. Montague Goohson. — ^This case is so special with reference to the dates, that I am afraid we cannot say on the part of the Hquidators that it is a re- presentative case. Lord Westbtjbt. — I cannot give Mr. Hemming any costs, but will not make him pay any. Solicitors for the applicant, Chester, Urquliart, and Co. Solicitors for the oflBcial liquidators of the Euro- pean Society, Mercer and Mercer. Friday, Oct. 25. Lancet's Case. Life assurance company — -Amalgamation of com- panies — Winding-up — Con^-ibutory — Return of capital — Liability of executor of shareholder in old company after amalgamation with another Company. Ihe deed of settlement of the JB. Life Assurance Cormpd/n/y contained provisions for dissolution and for transferring its business and part of its assets to another company. There were also pro- visions whereby on the decease of a shareliolder the dividends were not to be payable, and the priuileges and rights attending the shares were to remain in suspense, until the executor or some other person became a proprieter of the shares. In 1866 the company transferred its business and part of Ats assets to the E. Life Assurance Society, amd the B. Society undertook all the liabilities of the R. Society, and covffnanted to indem/nify the R. Society against all such liabilities, and further agreed to " pay to each shareholder of the R. Society his original paid-up capital upon each sha/re in full," the slho/reholder to have the option of taking his paid- up capital in sha/res of the E. Society upon certain terms. L. held 100 sha/res m the R. Society, and in Oct. 1866, after the amalgcmiation, he received a circular informing hvm of the a/malgamation, and giving him the option of receivi/ng bach his paid-wp capital or of taking instead shares in the E. Society upon cer- . tain, terms. He took no notice of this circular. On the 7th Dec. 1866 L. died, and in Feb. 1867, his vjill was proved by his widow a/nd executrks, Mrs. L. In April 1867, it was brought to her notice that she was entitled to exercise her option either of receiving cash in respect of the shares or of taking E. Society shares. Thereupon, as executrix of L., she elected to receive cash, and was paid by the E. Society 5251., the cmiownt of the paid- up capital and i/nterest thereon, amd she gave wp the cerHficaies to the E. Society. Her na/me was never on the register of the R. Oom- pamy, but im the umid/vng-wp, L.'s name being still on the register, he was at first placed on the Ust of contributories to the R. Compamy. After- wa/rds the Ust was annemded by the substitution of Mrs. L.'s name in place of L.'s namne. On her application to have h&r name removed from the Ust, it was Held that the name must remain. This was an application for the removal of the name of Mrs. Lancey from the list of contributories to the Boyal Naval, Military, and Bast India Com- pany Life Assurance Society, This society was estabHshed in 1839 under » deed of settlement, which contained the following provisions : Clauses 134, 135, 137, and 139, pro- vided for the shares of deceased shareholders. Clauses 140, 141, and 142 provided for the transfer of shares. Clauses 172 and 173 provided for the dissolution of the society and the transfer of its busiuess and assets to some other society. Clause 134 : That any proprietor of the company may procure some other person to become a proprietor in respect of all or any of the shares holden by him or her in the capital of the company, bnt that the legatees or next of kin of deceased proprietors shall not be entitled to hold in either of those capacities any share or shares in the capital of the company, and in all oases where legatees or next of kin of deceased proprietors shall become entitled to any share or shares in the capital of the company the executors or administrators of such deceased proprietor shall as between themselves and the company be con- sidered as the holder of such share or shares, and shall be the only person who shall be entitled either to become proprietors or to procure any other person to become pro- prietor in respect of such share or shares, and the assignees of any bankrupt or insolvent proprietor shall not be pro- prietors in respect of any share or shares holden by them in the said capital in that capacity, but may in the, manner and upon the terms hereinafter, mentioned pro- cure some person to become a proprietor in respect of any share or shares so holden by them. Clause 136 : That every executor or administrator of a deceased proprietor who shall be desirous of becoming a proprietor in respect of aU or any of the shares holden by him or her in either of those capacities, and also any person or persons who shall be desirous of purchasing any share or shares from the court of directors, shall give notice in writing at the office of the company of such his or her desire, and shall describe in such notice his or her name, and place of abode, and the number of shares in respect of which he or she is desirous of becoming a proprietor. Clause 137 : That every executor or administrator of a deceased pro- prietor approved of by the court of directors as a fit person to be a proprietor in respect of the share or shares holden by him or her in any of those capacities, shall, within two calendar months after such approval shall have been certified to him or her by the court of directors, execute at the office of the company, or at such other place as the ' court of directors may require, either in person or by a/ttomey, a deed of covenant by which he or she shall covenant to observe the regulations of the company, and perform all the obligations of a proprietor in respect of such share or shared, and immediately after the execution of such deed, and not before, he or she shall become a proprietor in respect of such share or shares, but nothing contained in this or any other clause shall be construed to increase the number of shares in the capital authorised to be permanently holden by any proprietor beyond 100 shares. Clause 139 : That all dividends and other profits that may be declared or appropriated on or in respect of any share of any deceased bankrupt or insolvent proprietor, in the interval between his or her death, bankruptcy or peti- tioning to take the benefit of any Act for the relief of insolvent debtors, and of some person becoming a proprietor of such share shall not be received, neither during such interval shall the rights and privileges attending such' share be exercised by any person or persons whomsoever ; but the same shall respectively remain in suspense, and as soon as any person shall become a proprietor of such share the executors or administrators of such deceased proprietor or the assignees of such bankrupt or insolvent proprietor shall, on payment of aU- the instalments which may have been previously called for, and may then remain unpaid on such share, be entitled to receive the dividends and other profits which may have been so suspended as aforesaid. 16 THE LAW TIMES. [Deo. 7, 1872. EUKOPEAN AsSUEAITCB] Lancet's Case. [AUBITEATION. Clause 140: That the holder or holders of any share or shares in the capital of the company, whether such holder or holders shall be a proprietor, or the executors, or administrators, or any one or more of the executors or administrators of a deceased proprietor, or the assignees of a banlrfhpt or insolvent proprietor, who shall have procured some person or persons to become a proprietor or proprietors of all or any of his, her, or their share or shares in the > capital of the company, shall give notice iu writing at the office of the company of his, her, or their having pro- cured such person or persons to become a proprietor or proprietors, and shall describe iu such notice the name and place of abode of such proposed proprietoi or pro- prietors, and the number of the share or of each of the shares iu respect of which he, she, or they, shall- have procured such person or persons to become a proprietor or proprietors. Clause 141 : That whenever the court of directors shaE have certi- fied that any executor or administrator who may be desirous of becoming a proprietor or any person who may have been procured to become a proprietor of any share or shares in the capital of the company, is fit to be a proprietor of such share or shares, the proprietor or the assignees of the bankrupt or insolvent proprietor or the executors or administrators of the last proprietor, shall be at Kberty to transfer the same without delay. Clause 142 : That every transfer of any share or shares in the capital of the company shall be made either at the office of the company or such other place as the court of directors shall requiri and in such manner as the said court shall prescribe, for vesting the share or shares in the proposed new proprietor, and every transfer immedi- ately after he or she shall harve so transferred any share or shares, and shall have paid the instalment or instal- ments (if any) then due or called for in respect of the same share or shares and the interest thereon (if any), due, slmll in respect of such share or shares cease to be a proprietor of the company or the holder of such share or shares, and shall be for ever thenceforth acquitted and discharged from aU obligations and from all the cove- nants and agreements regulations and stipulations to . which by these presents he or she would have been liable in respect of the said share or shares, if he or she had not transferred the same. Clause 172 : _ That it shall be lawful for an extraordinary court of directors, specially called for the purpose, to enter into a resolution recommending the dissolution of the company, and upon such dissolution being so recommended, the sanie extraordinary court of directors shall call an extra- ordinary general court for the purpose of taking itoto consideration the propriety of dissolving the company ; and if at such extraordinary general court a resolution shall be entered into for dissolving the company, then the court of directors shall call a second extraordinary general court for the purpose of confirming or rejecting such resolution for dissolving, and such second extraor- dinary general court shall be holden within the space of fifty days after the resolution for dissolving shall iave been entered into at the first extraordinary general court, and if such resolution for dissolving shall be confirmed at such second extraordinary general court, then, from the time of such confirmation, the company shall be dissolved, and the business thereof shall be concluded. Clause 173 : That immediately upon the dissolution of the company the court of directors shall, out of the funds or property of the company, pay and satisfy all immediate claims and demands on the company, arising from assurances, an- nuities, or other contracts or engagements, and shall (but subject and without prejudice to the provisions herein- after contained) obtain from the directors or managers of some other assurance company or society, an under- taking to pay and satisfy all or any such as the court of directors may think proper of the remainder of the claims and demands on the company, arising from assurances, annuities, or other contracts or engagements, when and as the times for the payment and satisfaction of the same shall respectively arrive, and 'shall cause to be transferred to some of the trustees of such other assurance company or society so much of the funds or property of the com- pany as shall be agreed upon between the contracting parties as sufficient, with the premiums that may become payable in respect of all or any of the existing policies, to enable the company or society, fron^ whose directors or managers the undertaking shall have been obtained to comply therewith, dnd shall make such arrangements with the said directors or managers in regard to the said undertaking as the court of directors shall, in their dis- cretion, think fit ; and shall cause to be done and executed all such acts, deeds and things, as in the opinion of the court of directors shall be necessary or advisable for car- rying the'said arrangement into effect. Provided, never- theless, that the court of directors shall be at liberty to continue, for such period as they may think fit, the busi- ness of the company, so far as regards all or any of the remainder of the cMims and demands on the company arising from assurances annuities or other contracts, and the receipt of premiums, and the benefits of any contract with the company ; and to make and carry out such arrangements with bankers and others for managing the business so continued as to the said court shall seem fit, and to invest such bankers and others with all proper powers with regard to the matters and things committed to their charge or management, and fiom time to time to vary or rescind any such arrangements, and to revoke or vary or enlarge'any such powers, and after every or any such rescinding or varia- tions to act in the manner according to the original powers intended to be hereby conferred on the said court, and to make such allowances by way of recompense for their care and trouble to such bankers and others respec- tively as the said court shall think proper ; and likewise upon the discontinuance of the business in regard to any of the remainder of the said claims and demands, pre- miums, and benefits, to act in relation thereto, and the policies and contracts from which such premiu.ms and benefits respectively shall result, in the manner first authorised by this clause ; and if any funds or property of the company shall remain after answering the several purposes aforesaid, the court of directors shall cause the same or so much thereof as shall not consist of money to be sold; got in, or otherwise converted into money, and shall cause the moneys arising from the said remaining funds or property, or of which the same shall consist, to be paid and distributed at such time or times as they shall think fit to and amongst the proprietors and other holders of shares in the capital of the company according to their respective rights and interests therein ; and not- withstanding the dissolution of the company, these presents and provisions herein contained, and all powers, privileges, rights, and duties of the proprietors and other holders of shares, including the powers to call and hold extraordinary general courts, and the powers to call for and enforce the payment of further instalments on shares, shall, until all claims and demands shall have heen re- spectively satisfied and provided for as aforesaid, and until a final division shall Have been made of the residue, if any, of such moneys as aforesaid, remain and continue in full force so far as the same may be necessary for winding-up the concerns of the company, and for enabling the court of directors to dispose of the funds and property of the company, and to satisfy and provide for such claims and demands, and to make such payments and dis- bursements as aforesaid. In 1866 proposals were made for the amalgama- tion of the Royal Naval, &o.. Society with the European Society. This amalgamation was carried into effect by two deeds, both dated the 17th Sept. 1866. By one of these deeds, called the deed of assignment, the business and a certain part of the assets of the Royal Naval Society were assigned to the European Assurance Society; and by the other, called the deed of amalgamation, the Euro- pean Society undertook to pay and satisfy all the liabilities on life or annuity policies granted by the Royal Naval Society, and all other liabilities present or future of the Royal Naval Society ; there was' also a covenant by the directors of the European Society that the European Society, their successors and assigns, would, from and out of the Dec. 14, 1872.] THE LAW TIMES. 17 European Assukance] Lancey's Case. [Arbitration. property and assets of the European Society, indemnify the trustees, directors, and proprietors of the Eoyal Naval Society against' all liabilities on life or annuity policies, and against all other debts, liabilities, &c., and there was a further cove- nant by the European Society to Pay to each shareholder of the Bojal Naval Sooiety his original paid-up capital upon each share in full, but with- out bonus, by two equal instalments, at six and twelve months respectively, computed from the day of the dis- solution of the Boyal Naval Sooiety, with interim interest from that date at the rate of 5 per cent per annum. Each shareholder, however, was to have the option, to be exercised within six months of the dissolution, " of taking his paid-up capital in shares of the European Society," upon certain terms. Major Lancey held 100 shares in the Royal Naval Society of 25Z. each, on which 5001. had been paid up. After the amalgamation a circular, dated Oct. 1866, was sent to the shareholders of the Eoyal Naval Society, and amongst others to him. This circular informed him that the amalgamation had been carried into effect, and that he was entitled either to take shares in the European Society of 21. 10s. each, with 10s. 6d. per share paid up, in respect of his Eoyal Naval Shares, or to receive his original paid-up capital in cash, one- half in six months and one-half in twelve months from the 17th Sept. 1866. He took no notice of this circular. On the 7th Dec. 1866, Major Lancey died, and in Feb. 1867, his will was proved by Mrs. Lancey, his widow and executrix. On the 15th April 1867, the manager of the European Society wrote the following letter to Mrs. Lancey's son. The European Assurance Society. Dear Sir, — As stated in the circular sent you the other day, the agreement between this society and the Boyal Naval Society provides that any shareholder electing to take cash in respect of his shares is entitled to receive the original amount paid on them in two instalments. If shares are elected to be taken, an equivalent number of shares in this society will be issued according to the original amount paid and the bonns additions thereon. If you conclude to elect to take shares, there is no doubt that you wiU be able to dispose of them, if desired, with- out difficulty. Whether yon elect to take cash or shares, it will save time if you send up the certificates of the shares held by the late Major Lancey in the Eoyal Naval Society. — Tours faithfully, Henbt Lake, Manager. Thereupon Mrs. Lancey, as the executrix of Major Lancey, elected to receive cash in respect of the shares, and, subsequently, she deUvered up to the European Society the certificates of the Eoyal Naval shares, and received from the European Society 525Z. in respect thereof in two instalments. On the occasion of the last instalment being paid she gave to the society the following receipt : — Eeoeived this 23rd Sept. 1847, of the European Assur- ance Society the sum of 262i. 10s., being the amount of the second" and final instalment of my original paid-up capital payable by them to me as the holder of 100 shares in the Eoyal Naval Society on the register of that com- pany on the 14th Sept. 1866 (when the said company was dissolved) pursuant td the provisions, of a certain deed dated the 17th Sept. 1866, between the said Euro- pean Assurance Society and three of its directors and the trustees of the said Koyal Naval Society, with interim interest from the said 17th Sept. 1866, at the rate of 52. per cent, per annum. As witness my hand, Maeoaeet Lancet, As executrix of the late Major WiUiam Lancey. Mrs. Lancey's name was never on the register of the Eoyal Naval Society, and after the amalgama- tion no dividends were received on the shares and she was under the impressio* that the shares had been either annihilated orSaken over by the European Society. y In the winding-up the nam\of Major Lancey was at first placed on the list of'oontributories to the Eoyal Naval Society and Vice-Ohancellor Malins's chief clerk subsequently amended the list by substituting Mrs. Lancey's nama. She now applied to have her name removed from the list. /. W. 0/ii% appeared for the applWnt, and contended that under the deed of settlenjent the Eoyal Naval Society had been effectually di^olved, and the shares released from all liability. Lord Westbury. — A part of the 173rd clause is made material as giving a meaning to the term dissolution. Dissolution, supposing it to be carried by the extraordinary [general meetings, will only amount to a discontinuance of the business of the society m futuro, but the society remains and the partnership contracts remain till the partnership is wound-up; the external creditors having a right to resort to the partners as the persons with whom they contracted, and to press their remedies until they are satisfied. Chitty.- — What I suggest for your Lordship's consideration is whether the terms of the deed are not essentially imported into the , policies so that the creditor's contract is satisfied when the terms of the deed are strictly acted on. Lord Wesibtjey. — What I have also to consider is, whether these clauses in the deed of settlement do not in fact amount to this, that the partnership is to be considered as continued, and all powers for winding-up to remain, until the external debts and liabilities are satisfied. The only difficulty that I have found on reading over the deed of settlement is this : An executor, who has not become a pro- prietor is a suspended owner of the deceased man's shares. What a curious status that is ! How far is he or she liable to calls while in that state of suspended animation ? With regard to the deed of amalgamation, I see it says that the European Society should " adopt and take over in an efiectu- ally binding way, and undertake to pay and satisfy in conformity with the terms of the deed of settle- ment of the Eoyal Naval Society all the liabilities on life or annuity policies, &o." Ton see that con- templates the continuance of the liabilities as engagements against which the Eoyal Naval Society is to be indemnified. Chitty. — There *is a further point that Mrs. Lancey was an executrix, and therefore, according to the deed, in a position of suspense. As an executrix, she was bound either to become a pro- prietor or to sell. What took place was a sale, and the 142nd clause provides that " the holder of such share or shares shall be for ever thenceforth acquitted and discharged from all obligations and from all the covenants and agreements." Lord Westbtjry. — You see that was an obligation or power, whichever you call it, imposed upon an executor to sell ; that means, to sell to another person who may be substituted in the deed of settle- ment for her deceased testator. She did no such thing. I take it — and I mention it now, in order that we may prevent these applications if possible — to be perfectly clear that, if an in- dividual takes shares in a society of this kind, and then that society is dissolved, or dealt with in any manner you please, unless the dissolution or d 18 THE LAW TIMES. [Deo. 14, 1872.- Etjeopean AsstjeanceI Oathib's Case. [AltBITEATIOlf. the transfer involves s discharge to the creditors of the dissolving society, which discharge binds those ■creditors, the liabiAty of the partners continues. Whatever you m»y denominate the transaction, vrhether you call it dissolution, or whether you call it transfer, if tbere be a power to dissolve contained in the deed, with a proviso that the dissolution shall not affect the necessary operation of winding- up the sopiety after a resolution to dissolve, and i£ that be also accompanied with power to the direc- tors to accelerate the dissolution — to consummate , the dissolution — by entering into engagements with another company to take over the liabilities ; then if that latter power be carried out, and they enter into an engagement with a company to take over the liability, the liability of the shareholders in respect of those debts which are so taken over imquestionably remains. If, however, the credi- tors of the society so dissolving accede to the transfer and to the proposed indemnity and accept the transferring company, then the indemnifying company are the sole persons liable to the exclusion and in discharge of the persons who originally contracted. Now there is nothing of that kind here, and this unfortunate lady elected to take money for her shares, depend- ing upon the arrangement that had been made with the European. ' The arrangement with the European was that they would undertake the debts, and also indemnify the persons trans- ferring to them ; but in all these cases the old proverb applies, they "reckon without their host," the host being the outstanding creditor, and if he is not brought in and made a party to the trans- action, his rights are not prejudiced : they remain and may be enforced hereafter, notwithstanding the arrangement to indemnify, upon which the original debtor relies. That arrangement is, in itself, a confession and acknowledgment that the liability remains, and that the party liable to it is content to rest upon his security. Ton may •diminish the amount of the oreditoi-s by showing cases of "novation," as they are called. I am sorry that I can give the applicant no relief I am very sorry for it. She is in the company of persons very much wiser who did not know their position and have to pay for it. Montague Oookson appeared for the official hquidators of the Eoyal Naval Society, and said they had considered the case as concluded by the deed, and had accordingly givei* notice that they would oppose the application. Lord Wesibury.— It was very prudent of yon to do that. ^ I think this, lady is in a peculiar situa- tion, being an executrix, and as such executrix never having been upon the register, I think it not an unreasonable thing for her to bring her case before me and have it decided. It will serve as a representative case with regard to all -personal representatives in a similar situation. She wiU ■have her costs out of the Eoyal Naval Society. Solicitor for the applicant, Mortimer. Solicitors for the official liquidators of the Eoyal JNaval Society, Mercer and Mercer. Saturday, Oct. 26. Cathie's Case. ■Gompamj—Gontributory— Amount of call— Bonus merged in paid-up capital—Companies Act 1862, A company's deed of settlement provided that at tie end of every three yea/rs the profits should he ascer- tained, and four-twentieths of such profits should " in the fi/rst place he apportioned equally to tJie credit of the shareholders according to the wu/mher of shares held hy them respecti/uel/y hy way of addi- tion to the amount paid hy them, respectively upon their shares, and that the sha/reholders should receive interest at the rate of 5h per cent, per annv/m as well on the amount of their paid-wp capital, as on such additions thereto, until suck additions sliould amount to a swm equal to twice the amount of the capital paid up at the time of such division of profits, and when and so often as any such four parts or any part thereof should not be required for maintaining such additions at the amount last aforesaid, such four parts of the profits or amy part thereof not required for such purpose, should he divided among the shareholders in money ;" and there teas a provision for payiiui to the shareholders the share capital with the additions thereto, and for converting the society into a Mutual Assuramce Society, in case the triennial additions sliould amount to a sum equal to twice the amount of tlie share capital paid up. Two bonuses of 6d. and Is. were declared on the shares of 21. 10s. each, on which 10s. per sharx had been paid up ; and credit for these bonuses was given to the shareholders in their share account in the boohs of the society. In the toinding-up of the company a call was made on the contributories of all the unpaid share capital. Held, that under the deed of settlement these bonuses became part of and were merged in the paid-up portion of the capital, and that the contributories were liaile on each share to a payment of the 11. remaining unpaid, less these bonuses of Is. %d. The 26Wi section of the Companies Act 1862, which presides for a return to he mude to the Registrar of Joinl-stoch Companies of tlie amount of calls on each share, does not impose on directors the obli- gation of making a return of tlie exact amovmt of the share capital remaining uncalled up. Tuis was a question as to whether in the call that had been made on the contributories to the European Assurance Society of all the unpaid share capital, they were to be credited with the payment of bonuses of 6i. and Is., which had been paid to their credit in the books of the society. The deed of settlement of the European Society, dated the 2nd Sept. 1854, provided that the capital of the society should (subject to certain powers therein contained for increasing the same by the issue of new shares), consist of 200,000?. divided into 80,000 shares of 21. 10s. each. Under these powers the capital of the society was, on the 29th. May 1862, increased to l,000,000i. The deed of settlement further contained the following provisions : Clause 20 : That as to the shares for the time being taken in the company, the board of directors may at their discretion from time to time oaU for the moneys for the time being remaining unpaid thereon at such times and by such mstalmenti as the board shall think proper, and notice of every such caU shaU be given by circular letter to feaoh shareholder, addressed to hia place of abode or business in Great Britain or Ireland, and by advertisement inserted twice at least in some two or more of the morning daily newspapers, published and circulating in London, stating the amount of the instalment or call for the time beinl called for, the day fixed for the payment of the same, and the place or places at which the same is to be paid and such circular and advertisement shall operate as Deo. 14, 1872.] THE LAW TIMES. 19 EUEOPEAM AsSirRANCE] Cathie's Case. [AttBITEATION. notice of such call to all the shareholders for the time being, and all persons claiming, or to claim through or nnder them respectively. Provided, nevertheless, that no one call hereafter to be made under the powers for that purpose herein contained shall exceed 10s. per share, and that successive calls shall not be made at a less interval than three months. Clause 50 : That interest on the paid-up capital of the company at the rate of 51. per cent, per annum shall be paid by the board of directors to the respective shareholders out of the profits of the company in proportion to the shares held by them respectively, to commence running from the date of the payment of the several calls or deposits upon the shares taken and paid upon by the said share- holders, and to be paid yearly or half-yearly, and on such days as the board shall appoint. Clause 61 : That within six months after the 31st Deo. 1860 and within six months after the 31st Dec. in every succeeding third year the board of directors shall cause a calculation to be made, either by the actuary of the company or such other properly qnal&ed persons as they may appoint, of the amount of the profits which have, by accumulation or otherwise, accrued to the funds of the company up to such 31st Dec. in the year 1860, and on the 31st Dec. in every^ third lyear thereafter respectively, and suoh profits having been so ascertained, the said board shall (if satisfied with the correctness of the calculation, but not otherwise) forthwith divide the same into twenty equal parts, which shall be apportioned in manner following — ^that is to say, fifteen of the said twenty parts shall be apportioned among the holders of such policies as shall have been effected on the scale of participation in profits .... Clause 52 provided that one of suoh twentieth parts should be carried to a separate account, called the agents' account, and distributed as extra remuneration among the agents. Clause 53: Thait the remaining four twentieth parts of such ascer- tained profits shall, in the first place, be apportioned equally to the credit of the shareholders, aooordmg to the shares held by them respectively, by way of addition to the amount paid by them respectively, upon their shares, and the shareholders shall receive interest at the rate of 51. per cent, per annum, as well on the amount of their paid-up capital as on such additions thereto, until suoh additions shall amount to a sum equal to twice the amount of the capital paid up at the time of such divi- sion of profits, and when and so often as any suoh four parts or any part thereof shall not be required for maintaining such additions at the amount last aforesaid, such four parts of the profits or any part thereof not -required for such purpose thaU be divided amongst the shareholders in money. Provided always, that when and at anytime after the triennial additions shall amount to a sum equal to twice the amount of the share capital paid up, it shall be lawful for the board of directors, if rthey abaU. think fit, but not otherwise, to call an extra- ordinary general meeting of the shareholders and mem- bers entitiedto vote at any general meeting of the com- pany to ■take into consideration the propriety of altering the provisions of these presents and any other the rules and regulations of the company relating to capital and shares so far as may be necessary, and as it may be lawful for the company to alter the same, so as that the company shall thereafter be a purely mutual assurance company, and provided there shall not be less than thirty shareholders entitled to vote present at such ex- traordinary general meeting, and two-thirds of such shareholders so present shall so agree and determine, and also two-thirds in the aggregate of all those per- sons present and entitled to vote, whether shareholders or members, shall likewise so agree and determine, the share capital with the said additions thereto, and any interest then accrued thereon, shall be paid to the share- holders, according to their respective interests, and thereupon the necessary steps shall be taken for con- verting the said company iniio a mutual assurance com- pany. On the 28th May 1863, a bonus of 6d. per share was declared on those shares on which 10s. per share had been paid up, an\ credit for the bonus was given to each shareholdetdn his share account in the books of the society^ In April 18(37 a further bonus of 1b. per share Vas declared, and the following circular was sen\ to the share- holders : — Bonus Notice. European AssuWnce Society. April, H67. Dear Sir, — I have great pleasure in annotmcing to you that the valuation of the affairs of this soJtety to the 31st Deo. 1865, having been completed, a bonusSjf Is. per share has been declared as the Proprietors' drrision of the profits. This having been credited to your share account V the books of the company, in conformity with the deW of settlement, your paid up capital is raised from 10s. Cd. to lis. Sd. per share, on which latter amount the interest wiU henceforth be payable — Tours faithfully, Henkt Lake, Manager. In the winding-up of the European Society all the unpaid share capital was called up. Mr. Cathie, a contributory, contended that under the 53rd clause of the deed of settlement these bonuses of 6d. and Is. had become part of his share capital and that consequently instead of being liable to a call of 2Z. per share, he was liable only to a call of 2J. less the Is. 6d. per share. An the policies issued by the society contained the f oUovring clause : Provided always that the capital stock of the society, or so much thereof as for the time being shall have been subscribed, and the other stocks, funds, securities, and property, of the said society remaining at the time of any claim or demand made unapplied and undisposed of and inapplicable to prior claims and demands in pursu- ance of the trusts, powers, and authorities contained in the deed or deeds of settlement of the said society, shall alone be liable to answer and make good all claims and demands upon the said society under or by virtue or in. respect of the within written poMoy and all other policies, and that no director, proprietor, or member of the saidi society, his heirs, executors, or administrators, shall by reason of any poUoy of assurance, or instrument secur- ing annuities, or of the whole of the policies of assurance and instruments securing annuities, taken together, wMch any director has signed, or may sign, be in any wise individually or personally liable or subject to any claims or demands against the said society beyond the amount of the unpaid part of his particular share or shares in the said capital stock, or in such part thereof as for the time being shall have been subscribed. The Companies Act 1862 provides for a return to be made to the Begistrar of Joint-stock Com- panies of the calls made on each share. Sect. 26 : Every company under this Act, and having a capital divided into shares, shall make once at least in every year a list of all persons who, on the fourteenth day succeeding the day on which the ordinary general meet- ing, or if there is more than one ordinary meeting in -each year, the first of suoh ordinary general meetings is held, are members of the company, and such Mst shall state the names, addresses, and occupations 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 : (3) The amount of calls made on each shaxe. (4) The total amount of calls received. (5) The total amount of calls unpaid. Montague Ooohson, ior the official liquidators of the European Society. — It is true, that in the books of the society the shareholder is credited with these bonuses as a part of his paid-up share capital ; but the peculiar form of book-keeping adopted by the directors cannot alter the nature of the liability of the shareholder. That liability must depend on the true construction of the deed of settlement. The official liquidators contend .20 THE LAW TIMES. [Dec. 14, 1872. European AssukanceT Cathie's Case. [Akbitration. that the 63rd clause of the deed must be inter- preted thus :— The pmount of divdends not paid out to the sharehoUers from time to time in cash, was intended to 1« detained by the society as a re- servedfund,beariiiginterestattherate of 5 per cent, to which interest the shareholders are entitled as it accrues, bit that until such fund attains the maximum fixed in the deed at twice the amount of the pai(?-up share capital, no part thereof is to be paid to the shareholders in money, but it is to remain in the hands of the society as money in- vested by the shureholders with the society, yield- ing 5 per cent. The clause speaks of the appor- tionment being made " by way of addition to the amount paid by them on their shares," but these words seem to imply that the amount paid up is one thing, and the added fund is another. There is nothing pointing to a substitution of a sum of money laid by for that money which is in the pockets of the shareholders and is demandable from them from time to time in the shape of calls as the exigencies of the society require. It is a fund retained for the shareholders, to which they no doubt will be ultimately entitled when the maximum is reached, or they will be entitled to corresponding benefits by reason of the resolutions of an extraordi- nary meeting which may be passed, and in the mean time it is something fructifying for the benefit of the shareholders in the coffers of the society, and yielding interest at 51. per cent. To construe these words in the manner contended for by Mr. Oabhie amounts in effect, to an authority in the di- rectors to reduce the subscribed capital of the shareholders by the amount so set apart, and so to bring about an alteration of one of the fundamental elements of the society's con- stitution, which fixes the subscribed capital. With regard to the credit given for the bonuses being equivalent to a call of Is. 6d. per share, the deed of settlement provides a special machinery for the purpose of making calls ; they are not to be made except at stated times and at certain intervals, and if these dividends were intended as a substitution for calls, this would have been dis- tinctly expressed. The general assets of the socie ty is the fund to which the policy-holders and other creditors are entitled to look for their security. If dividends have not been received by the share- holders they remain part of the general assets of the society, and are as much applicable to the payment of debts as the amount of calls actually paid or the premiums paid. It matters not how, whether by a special arrangement or by some accident, the dividends of a shareholder have not been received, he cannot claim to set off the amount against his liability for the sum remaining due upon his shares, though he might be entitled to prove against the society in respect of such unre- ceived dividends. As against the policy-holders and creditors of the society, nothing more has been done with respect to these bonus additions than to abstain from distribution. There is no indication in the deed that the bonus is to be deducted from the unpaid capital ; there is to be an addition to paid-up capital, but this addition is made merely to ascertain the total amount on which from time to time interest is to be calculated. There was to , b3 no merger or substitution; that the triennial additions were to be kept distinct is shown by the provision for what was to take place when they should amount to a sum equal to twice the paid- up share capital. Moreover, in the returns to the Eegistrar of Joint Stock Companies, these ad- ditions were not treated as part of the paid-up share capital ; and under the 26th section of the Companies Act 1862, it was incumbent on the directors to make a return of the total amount of calls made on each share, the total amount of calls received, and the total aniount of calls unpaid. [Lord Wbstbuky. — Those are calls actually made. This is not a call. In order to make this ' apply, you must show that it contains an obligation to state the actual amount of the share capital of the company remaining unreceived.] Remaining unreceived in the shape of calls. [Lord Westbitbt. — No ; remaining unerceived, liable, of course, to be paid thereafter.] Any creditor inspecting such a return as is here made, and finding that the call made on each shareholder amounted to 10s. per share, would conceive, as the shares were 21. 10s. each, that there was 21. yet to be called up ; that would be matter of inference, but the fact would be, if your Lordship held that this section is con- clusive in favour of Mr. Cathie, that there was paid up on that share 10s. and Is. 6d. besides, making together lis. 6d. The creditor would be deceived ■ by the return in that particular. He would think he had a fund of 21. per share to fall back upon in respect of share capital, which by the terms of the policy is liable to his claim, whereas he would only have 21. less Is. 6d. [Lord Westbuby. — If that be so — but I do not agree to that being the interpre- tation — he might have cause of complaint against the directors. He could have no ground for for- feiting the amount credited to Mr. Cathie and making him pay it over again.] I will only say in conclusion that the ofl&cial liquidators do not wish to take advantage of any ambiguity in the terms of the deed. The question will involve a very large sum of money. The Is. 6d. is only the basis of calculation. Lemon appeared for Mr. Cathie, but was not called on. Lord Westbuby, — This is V a very important point. It was quite right that the oifioial liquidator should bring it forward. The claim is in efiect this — that the amount of profit credited to a shareholder as an item belonging to the shareholder is not to be in- cluded in the same sum with the item of amount due from the shareholder, but is to be treated as an independent thing. If it were capable of being so separated, or if any meaning could be given to the clear words of the 53rd clause in the deed of settlement that would admit of a different inter- pretation from that which makes the amount of the profit the sum to be deducted from the share capital still due from the shareholder — if anything of that kind could be found, then I admit that the whole amount of the unpaid share capital must be brought in by the shareholder into this liquida- tion, and that he must be left to pursue his remedy in respect of the amount assigned to him for profit in the ordinary way against the society. It could not in that case be made the subject of a set-off. But the matter is concluded ; for the whole operation is distinctly defined by the 53rd clause of the deed. And I think this is the only matter to be appealed to in this question, which is one between the shareholder and the society. Mr. Cookson very properly drew my attention to the fact that if we admitted of these things being done in the book- keeping of the directors, and they did not appear Bee. 14, 1872.] THE LAW TIMES. 21 EufiOPEAN AsSTJEANCE] MicuAEL Bkovn's Case. [AKBIiaATION. in tlie return to the Registrar, a very unfair result would be tlie consequence with respect to creditors consulting the register in order to ascertain the means of the company ; because they would sup- pose, when they found that 4Z., we will say, was due originally from every shareholder, and that 8Z. Only had been paid, that there was II. remaining due. But when we look at the words of the 26th sec- tion, of the Act of 1862, they are certainly not suffi- cient to impose in terms upon the directors the ob- ligation of returning the exact amount of the share capital remaining uncalled for. It is true that there is an obligation to state the amount of the calls, but it is equally true that every persou con- tracting with this society, every person entering into an engagement with the society, must be taken to have entered into that engagement with a know- ledge of the provisions of the deed of settlement, and if attention be directed to this 53rd section, inquiry would naturally be made how much of the share capital remaining uncalled - for has been diminished or actually paid by these direc- tions, which order that the amount of the profit assigned to each shareholder, if not taken by the shareholder, shall be credited to him as an addition to the amount paid by him on his shares. When it is credited to him as an addition to the amount paid, we have described in very accurate language the process of keeping the account. Suppose an account opened with him originally in respect of four shares amounting to lOOZ., then he would be debited on one side of the account with the amount of those four shares, or lOOJ. He would be credited on the other side of the account, let us suppose, with three calls of 251. each, including the original subscription in respect of those shares. His account, therefore, would show that 25Z. remained due from him. Then there is a profit declared on the shares of IZ. on each share, and then, according to the directions of the deed, as soon as that profit is declared, the directors are bound to enter the amount in addition to the amount paid. Suppose the profit be 4f. ; then the last entry would be, after the three entries to his credit of 251. each, 4Z. to his credit ; and then, I suppose that this involves, what is the necessary consequence, that you must sum up the amount on the one side, and sum up the amount on the other side, and the balance will represent the sum that is due from the shareholder. And that balance so represented in conformity with this deed is the amount of the call that can now be made on him, and no more. But then, it is quite clear that the amount of the profits no longer preserves a sepa- rate existence, nor has an independent identity. It is merged in the sum that is paid, by the force of the words that it is to be taken as an addition to the amount paid. After that has been done, it will be no longer competent to the share- holder to call for that as the subject of an individual payment to him. It is merged in the account of what he has paid, and he can no longer get it as a separate debt. Well, then, he is to have interest on it, just as he has interest on the other payments that he has made. So that the whole thing is treated from beginning to end as a sum no longer to be re- garded with reference to its origin — namely, profits — but to be regarded as an additional pay- ment merged together with the payments already made in one total, which is to be deducted from the total of the amount of the shares with which the shareholder was originally debited. We are bound, especially in a matter of this kind, to give a plain, common sense, obvious interpretation to language. But if I had been in the situation of Mr. Cathie, supposing him to have had a profit of 4L which he had not received, but permitted to be thus credited in addition to what he had paid, I should have said, " There is due from me the 25Z. in respect of my shares minus the sum of ■il. which has been credited to me, and is to be deducted therefrom." The balance represents what we are entitled to call on Mr. Cathie to pay. There must be a declaration to that effect, that Mr. Cathie is liable to a call for the balance of the amount of his shares after deducting the sums paid and the amount of the profits which, by the 53rd clause of the deed, is to be added to the amount paid. For the balance he is liable to a call. I suppose this, of course, has been agreed on as a representative case. Montague Goohson. — Yes, my Lord. Lord Westbtjey. — Then, you must have your costs out of the assets of the European Society. Solicitor for Mr. Cathie, /. Tucker. Solicitors for the oifioial liquidators of the European Society, Mercer and Mercer. Saturday, Oct. 26. Michael Bkown's Case. Company — Winding-ii/p — Contributory — Liquida- tion by arrangement — Banhrupt shareholder — - Disclaimer of shaires — Banlcrupicy Act 1869, s. 23 • — Liability of bankrupt sha/reholder to contribute to costs of winding-up a company after disclaimer of shares. A petition to wind-up the E. Company was presented on the 10th June 1871, and an order to wind-up was made on the 12th Jan. 1872. In the interval on the 28th Oct. 1871, a holder of 800 shares pre- sented a petition in, a County Court for liquidation of his affairs by arrangement. Tlie general meet- ing of his credMors was held on the Uth Nov. 1871, and at this meeting a special resolution was passed for the liqmdation of the debtor's affairs hy arrangement, a trustee was appointed, and the debtor's discharge was granted. The E. Company were represented at this meeting by their solicitors, amd proved fo¥ 636Z. 8s. Qd. im, respect of calls then due on the 800 shares, and for 8001. in respect of the liability of 11. per share not yet called up. The assets of the debtor were stated at 4us, if it should be held that the second trans- action fell through, he can fall back on the first. Ihe second transaction was, however, a. hand fide sale of 900 shares to Mr. Fildes, and the transfer would also m this case have been effectually com- pleted but for the neglect of the directors. The applicant is entitled to have that considered as done which would have been done but for this neglect. In that case he would be the holder of ten shares only. Lord Westbtirt.— Is William Minshall before me ? I cannot strike Eobert Jones Minshall off by virtue of the contract, unless he gives me the means of putting the other person on in his place. Hemming contended that the transferor was not to be deprived of his right to relief, merely because the transferee was not present to be put in his place. Lord Wesibttiiy. — By taking a name off and putting no other person on, I do damage to the shareholders, who ought not to suffer for delin- quent directors. Montague Coolcson appeared for the official liquidators of the European Society, but was not called on. Lord Westbusy. — This application is in effect for the specific performance of an alleged con- tract to transfer these shares to Mr. Eildes. I must have Mr. Pildes brought here, in order that my order may bind him to accept the shares, as well as that it may decLire the right to transfer. But inasmuch as on the applicant's own showing Mr. Fildes has got the 700 shares that were the consummated property of Mr. William Minshall, I must have Mr. William Minshall here also, in order that I may bind him by an order declaring the 900 shares to be the property of Mr. Fildes, to the prejudice of the former, who, according to the apphcant's showing, was entitled to 700 of these shares. Now if the applicant wishes to do that, he shall have time. I think it will take a considerable time. Semming. — I should like to ascertain what can be done. If we can get them here, the matter may be put in the paper again. Lord Westbtjby. — I had -better not fix any day, but give you leave to apply to restore the case to- the paper whenever you feel that you have the- power of removing that objection. Solicitor for the applicant. Reddish. Solicitors for the official liquidators of the- European Society, Mercer and Mercer. Friday, Nov. 1. Principles of Novation. After -the argument in Blundell's case (vide- infra), had been heard, and before the commence- ment of Coglilan's case {vide infra). Lord Westbttry said : — I think it would' be desirable that I should mention to the- Bar and to the suitors some conclusions at which I have arrived upon matters of this kind, and which I mention now not as indi- ca,ting the rule that I shall henceforth follow without further discussion, but as intimating what my impressions are, which the Bar will be quite at liberty to deal with, to show that they are mistaken or that they are injudicious and in- expedient. Now looking at the nature of the decisions that have taken place upon this subject of what is called novation, it is at present my im- pression that it will be desirable to have these cases decided with reference to the following rules : — First, wherever there is an alleged case of nova- tion.^it is my impression at present that I must require of the company, which I will call the transferee company, proof that that company had legal powers to grant new policies to the policy holders of the transferor company upon the same- terms as are contained in their policies or to take the policies of the transferor company and adopt Deo. 28, 1872.] THE LAW TIMES. 31 BUBOPEAN AsSTJBANCE] Coghlan's Case. [AUBITBATION. them, and indorse them with the acceptance of the transferee company, so as to make them analogous to original policies granted by the transferee ■company. Secondly, I shall require it to be proved before me that this power of the new company, that is o^f the transferee company, was made known to the policy holder, and that an offer was made to him to accept either a new policy or an endorsed policy -of the transferee company. Thirdly, that the acceptance of such an offer or proposal by the policy holder shall be proved by acts which unequivocally denote his understanding And acceptance of that proposal. Now I use the word " unequivocal " for this reason, that I have to consider and decide matters of this description with a species of guide given to me by the seventh clause of the Life Assurance Companies Act, 1872. It may be very true that I could not hold myself at liberty to adopt that enactment and apply it to the cases to be decided by me ; but I derive this Ught from the enactment, that the Legislature were satisfied that in many of these cases equivocal circumstances had been accepted, unfortunately, perhaps unjustly, as evidence of assent on the part of the policy holder, and that having regard to that, they deemed it right to require more unequivocal proof of the acceptance of the policy holder. Now, by that I may be guided so far as to require acts on the part of the pohcy holder which shall prove to everyone's reasonable satisfaction that he did intend to accept, and did accept, the secu- rity of the substituted company. These rules are, as I conceive, quite in accordance with the prin- ciples of law fully established long anterior to arbitrations of this character. I propose, subject to your argument, to guide myself by those rules; and, if I find no reason to alter them or lay them .aside in consequence of what may be urged against them — and you will deal with them with perfect freedom — then, if those' rules are established as the principles that will guide my decisions, they will prevent very much uncertainty, and possibly will prevent a great deal of costly and unnecessary litigation. The policy holders must understand that if those rules are once established, they will come here with any cases that may be at variance with them at their peril. Now I hope that this' will serve to guide us in a certain degree in our path over the desert that we have to travel, and which we shall have to travel with very great pain, because it is impossible to see that this pro- ceeding will be productive of much benefit to any- , body. This arbitration is an anomaly ; it is only to be justified by its necessity, and its necessity is .a great reproach to the judicial institutions of the country. Friday, Nov. 1. Coghlan's Case.' Jjife assurcmce armpany — Amalgamation of com- panies — Wmding-wp — Poliey — Novation of contract — Payment of premmmis — Beceipts — Bonus circula/r — Protests — Policy holder held, after am amalgamation, to he a creditoi- not of the new compa/ny, Tnit of the old. — Provision in deed of settlement of the old company with respect to an a/malga/mation, not such as to bind the policy holder without his assent. — The company hajving no office, leame given to serve certain shareholders with notice of intended application for winding- up order. A. held a policy granted hy the 0. Life Assurance Company in, 1§48 on his own life. In 1857 he received a circular from the P. Oompa/ny, dated the 1st June, and, addressed to the shareholders and policyholders of the P. Company, and an- nouncing that the arrangement was completed, hy which the C. Company transferred their husvness to the P. Gompa/mj ; there was further a request that those addressed should exert their best powers to help in carrying out the sanguine expectation of the directors of the P. Compamy. This was the only notice recewed hy A. with respect to the a/malgamation, a/nd to this circular he sent no reply. On the 12th Jtme he received a letter from F., a director of the C. Company, requesting him to forward his policy to be exchanged for a P. Company's policy. A. wrote in. reply refusing to exchange his policy. Shortly after he wrote to M. and F., the two directors of the .C. Company that had signed his policy, a/nd requested to know what was to he done with reference to his policy, and to whom he was to pay Jthe premiums on his C. Company's policy. Thereupon a correspon- dence ensured in which he was referred to the P. Company. Bowever, for the premiums that were paid hy A. in 1858 and 1859, he received the old C. Company's forms of receipts signed hy M. and F., the two before-mentioned directors of the C. Company. Before thepayment of the premium in 1859 he again wrote to M. and F., saying he had nothing to do with the P. Company. In 1860 the P. Company transferred its business to the B. N. Company, and A. received from the P. Company a circular informing him of tlie amalgamation, and further stating that the conditions of the P. Company's policies would remain unaltered hy the transfer, and that the policyholders were fully guaranteed by the B. N. Company, hut that they could have their policies indorsed: and that all premiwms were in futwre to be paid to the B. N. Company; he at the same tims also received a circular from the B. N. Compamy, informing him, inter alia, that that compamy had taken upon itself the payment of his policy. Thereupon A. went to the B. N. Company's office and protested to the manager against being transferred to that company, and on the manager's requesting him to have his policy indorsed he refused to do so, and said lie had a C. Company's policy, cmd would not give it Mp. On the first pa/yment of his premium, to the B. N. Company, he requested 'to home a C. Company's receipt, hut he was told that he could he furnished with no other receipt hvt that of the B. N. Compamy; thereupon, after protesting against the transfer, he accepted a B. N. Covi- pany's receipt. The subsequent prenwwms were paid to the B. N. Company, and receipts accepted from them without fv/rther protest. In 1865 the B. N. Company transferred its business to the E. Company, amd the first premium was paid to the E. Company under protest. Subsequently, the premiums were paid to Hhe F. Company, and receipts accepted from them without protest. In 1863 and 1867 bmvases were deela/red by the B. N. and E. Companies reepectivehj, and on each occasion a circular was sent to A., announcing that he was entitled to a reversiona/ry bonus, hut he never took any notice of either circular. In 1872 A. claimed that he had never entered into a. '62 THE LAW TIMES. TDeo. 28, 1872. EUKOPEAN AsSUEANCE] Coghlan's Case. [Akbiteation. new contract with either of the P., B. N., or E. compcmies, and that he would he entitled to claim on his policy against the 0. Company ; hut the official liquidators of the E. Company contended that hy the terms of the C. Company's deed of settle- ment the liabilities of the C. Compa/ny on their poli- cies could he wholly annihilated hy a transfer to another company, loithout any assent hevAg re- quired on the part of the policy holders, and that even if this were not so, there had heen a novation of contract hy the 'policy holder with the E. Company. Held, that the provision in tlie C. Company's deed of settlement for a transfer of liahility ivas not such CCS to hind' the policy holder without his assent, and that there had heen no novation of contract. In order to create a novation, there must he on the part of, the new company a power to make the new contract, and there must he on the part of the policy holder a knowledge of the company's right so to contract ivith him, and where there is an incomplete contract, or where there is no evidence in loriting of any intention to contract, there must he conduct on the part of the policy holder that wnmistakeahhj shows that he intended to accept the new company, and to discharge the old. The onus is not on the policy holder to prove that he did not intend to enter irito a new contract, hut is on the convparnj, alleging a novation, to prove that there was a novation. A. Jurther_ applied to have the C. Company wound- up, hut it was Held that no winding-up oi'der could he made in the absence of the company ; and tlie C. Company having no office, leave was given to the applicant to serve an affidavit, to he made hy him, on certain gentlemen who, at the time of the transfer of the business of the P. Company, weo-e shareholders of the C. Company, and also to tell them tliat an application was going to he made for a winding- up order, and such service was to be considered as service on the C. Company. This was a claim by Mr. Ooghlan to rank as a creditor of the Catholic Law and General Life Assurance Company, and as such creditor to have the company wound-up. In 1848 the company granted him a policy assur- ing the sum of 2001. on his own life. He duly paid the premiums to the company down to the year 1857. Li June of that year he received the follow- ing circular : Confidential CirctJar. Phoenix Life Assurance Company, „ ,, let June 1857. lo the Shareholders and Policy holders of the Phoenix Life Assurance Company, Gentlemen,— We have the honour to inform you that we have this day completed the arrangement by which the Cathohc Law and General Life Assurance Company pass over their entire business to us, and we sincerely hope that you wiU approve of this measure, which is likely to bring us not only a considerable business, but a proprietary second in influence to none, and that, stimu- lated by this increased aid and extended field of action, yon will kindly exsrt your best powers to help us in car- rying out our now sanguine anticipations. Tonr obedient servants, B. H. GooLDEN, M.D., Chairman. Heney E. Addison, Managing Director. To this circular Mr. Coghlan sent no reply. Shortly after, he received the following letter from Mr. Forristall, one of the directors of the Catholic Company : Catholic Law and General Life Assurance Company, London, 12th June, 1857. Dear Sir, — Will you kindly let me have your policy by return of post, and it shall instantly be exchanged for one of equal amount, and having precisely the same advantages, dates of payment, &o., in the Phoenix Life Assurance Company. — Yours truly, M. FOBEISTALL. To this letter Mr. Coghlan sent the following reply, refusing to have his Catholic exchanged for a Phoenix policy : June 19th, 1857. Dear Sir,— I beg to acknowledge the receipt of your letter of the 12th inst., and regret to say that circum- stances have come to my knowledge which render it quite impossible that I can comply with your request. How- ever, as I wish to avoid litigation, 1 am prepared — although I havei not yet ascertained the acceptability of my life by any other office — to surrender my policy when the whole of the premiums I have paid have been re- turned to me. — Tours, &a., Thos. Coqhlan. To this letter no reply was sent. Subsequently Mr. Coghlan wrote, with reference to his Catholic policy, to Bishop Morris, one of the directors of the Catholic company that had signed his policy. This letter and the reply could not be found. On the 28th Dec. 1857, he again wrote to Bishop Morris : Bi^ht Reverend Sir, — I thank you sincerely for your note just received, but fear that in my anxiety to explain how I came to trouble you I did not make sufficiently plain to you the object of my note, which was to learn from you, as one of the directors of fbeS Catholic Law and General Life Assurance Company, what is to be done in the matter of my policy. More than six months ago I wrote to your colleague, Mr. TorristaU, on the same subject, and Mr. Forristall has taken no notice of my letter. Permit me, then, to ask are you prepared, on the part of the company, to give me a receipt as hitherto, or to return me the premiums already paid p I fear that the chance of an answer from Mr. F. depended on the chance of your seeing him, and drawing, as you have kindly promised, his attention to this matter, will scarcely do, as the next premium should be paid before the 13th of next month. Eeqnesting, therefore, the favour of an early answer, — I am, &o. Thos. Coghlan. On the 1st Jan. 1858, Bishop Morris wrote in reply : Dear Sir — Glad as I should be to satisfy any person applying to me for information, I much fear it is not in my power to answer your two questions in the way you might desire. To the first, I am not prepared to give any receipt, as I have no longer any official status or position in any company. However, I am quite satisfied that for any payments you may pay there will be given a receipt satisfactory in every way. To the second, as I have no official status in the com- pany, I can give no answer. — Believe me to be truly yoTir". W. MOBEIS. On the 4th Jan. 1858, Mr. Ooghlan again wrote to the Bishop : Eight Eeverend Sir, — I am much grieved to have still to trouble you about my poUoy. To whom, however, can I address myself on this subj ect but to you or Mr. Forristall ? You alone as directors of the company have signed the policy, and all subsequent receipts. I know no one else as representing the company ; the office in Coventry- street has been abandoned ; Mr. F. does not answer my ktter, nor has he how any residence that I can discover. You alone have had the courtesy to favour me with a reply, for which I tender you my sincere thanks. But in your last, after saying you cannot give me a receipt for any more premiums, nor return me those already paid, you say that you are quite satisfied that for any premiums I may pay there will be given me a receipt satisfactory in every way. Now (you wiU pardon me for saying it) this IS very vague— I might use a stronger term. Who is to give me a receipt satisfactory in every way ? I really ought to know by this time, as it is six months since I wrote to Mr. Forristall on the subject, and the Jan. 4, 1873.] THE LAW TIMES. 33 EuROPEAlf AsSUBANCE] Ooghlan's Case. [Aebitraiion. next premium should be tendered on the 12th mat., as I informed you in my last. — Yours, &o., Thos. Coohlan. On the 6tli Jan. Bishop Morris -nTote in reply : Sir, — I am sorry that my endeavours to prove satisfac- tory have not that result. The more so when you tell me that they are vague — you might even, you add, use a stronger term. Perhaps Mr. Forristall may be more suo- cessfal than I have been. A letter will find Viim at 4, Nort^humberland-street, Strand. Beheve me to be yours, &e., William Moebis. On the 7th Jan. Mr.' Ooghlan wrote to Mr. Forristall, but this letter could not be produced. The following was the reply, dated the 8th Jan. 1858: Dear Sir, — I have received your letter of yesterday's date, respecting your life policy of assurance granted by the Cathohe, Law, and General Life Assurance Company, and in answer 1 beg to state that the above company has amalgamated with the Fhcenix Life Assurance Company, and that you may have a new policy in the latter com- pany on the same conditions contained in the policy you now hold, but should you be disinclined to exchange your policy for one in the new company, you can receive a receipt, as heretofore, signed by two directors, who are directors of the Catholic Company and are still the directors, until the Catholic Company is dissolved, on your paying the premium when due at the office 1, LeadenhaU-street, London. Believe me to be, my dear sir, yours truly, M. Foreistall. It did not appear what was done with reference to the premiums, which became due in Jan. 1858 ; however, no receipt was accepted from the Phoenix Company. In Dec. 1858, he received from the Phoenix Company a renewal notice informing him that the premium on his pohcy would fall due on the 13th Jan. 1859, and on the 3rd Jan. 1859, he wrote to Mr. Forristaill as follows : Sir, — I must again trouble you, for the CathoKc Life Assurance Company has not been wound-up (as you last year stated it would be), to inform me to whom I am to pay the premiums that will be due on my policy on the 12th inst., for the company does not appear to have had a public office for the last fifteen months. Perhaps you will also kindly inform me where and to whom, in the event of my death, my representatives are to apply for the sum for which my life is insured in the above company. — An early answer will oblige your obedient servant, Thomas Coghlan. On the 4th Jan. 1869, Mr. Porristall wrote iu reply : Sir, — In answer to your letter of yesterday's date, I beg to inform you that you must pay the premiums on your policy at the Phoenix life Assurance Company, 1, LeadenhaU-street, London, and, in the event of your death, your representatives must apply to that company, and they will receive most certainly, and as a matter of course, the amount of your policy. — Believe me to be, yours truly, M. FOBEISTALL. On the 5th Jan. 1859, Mr. Coghlan again wrote to Mr. Forristall : Sir, — I have just received your letter of the 4th instant, and must say that, after what has passed between us on this subject, yon appear to be trifling with me. I have nothing to do with the Phoenix Company, and after having read, as you must have done, the petition of Mr. Barlee to the Court of Chancery, I am surprised at your referring me to that company. Again, then, I must beg of you, as one of the directors, to inform me where I am to find the Qatholic Law, &c., Company, as that company is still Uable to me for the premiums I have already paid, and to that companjf only can I pay the premium that will be due on the 12th inst. I am, &o., &c., Thos. Coqhlan. On the 8th Jan. 1859, Mr. Bourne, the accoun- tant of the Phoenix Company wrote as follows : Sir,— Your letter to Mr. Forristall has been duly received by him, and I am desired to inform you that you can pay your premiums at this office, and receive a Catholic receipt, signed by two Directors of the Catholic Company. You are doubtless aware that Mr. Barlee was very glad to withdraw his petition to the Court of Chancery. Your obedient servant, E. H. BOUKNE, Accountant. On the 12th Jan. Mr. Coghlan again wrote to Mr. Forristall : Sir, — I beg to acknowledge the receipt of a letter from Mr. Bourne, in reply to mine of the 6th inst. Referring to your letter of the 8th Jan. 1858, 1 find you speak of the Catholic Company as being about to be dis- solved. Will yon kindly tell me when that event is likely to happen P You win not, I trust, consider this question as out of place, when you reflect that I am asked to pay a premium to the Company, althoughit has had no public office since 1857, and has not made its annual return to the registrar of Joint-stock Companies, in conformity with the Act 7 & 8 Vict, since the year 1855 or 1856, 1 forget which. Trusting you wiU favour me with an answer, I am, &c., Thos. Coghlan. On the 15th Jan. 1859 Mr. Evans, the secretary of the Phoenix Company, wrote as follows : Sir, — Mr. Forristall has handed me your letter to reply to. The business of the late Catholic Law Life Assurance Company having merged into this company, you can send your premiums here, and you will receive a receipt signed by two of their directors. Unless the premium is paid before the expiration of the days of grace, viz., the 12th Feb., your policy wiH lapse. All the business of the Catholic Law Life Assurance Com- pany is carried on at the office.— Your obedient servant, Maueice Evans. On the 10th Feb. 1859, Mr. Coghlan paid the premium due on his policy, and received a receipt signed by Bishop Morris and Mr. Forristall, in the following form : Catholic Law and General Lite Assurance Society. Eeceipt No. 203. ^65 15s. 4d. Policy No. 138. Received this 10th Feb. 1859, of Thomas Coghlan, Esq., the sum of M 15s. 4d., being the premium for 12 months, ending the 12th Jan. 1859, for the assurance of the s^m of ^6200 upon the life of himself, agreeably with the terms of a pohcy of assurance granted the 13th Jan. 1848, numbered as above. William Moeeis I Directors of the M. S. FoKEiSTALL J Said company. Nothing further was done for nearly a year. On the 12th Jan. 1860, Mr. Ooghlan wrote to Bishop Morris : Eight Reverend Sir,— On the 12th Jan. 1859, 1 wrote to Mr. Forristall of the directors of the Catholic Law and General Life Assurance Company, reminding him that on the 8th Jan. 1858, he spoke of the above company as being about to be dissolved, and asked him to have the kindness to inform me when it was likely that that event would take place, also why the company have not made its annual return to the registrar of joint-stock com- panies, in conformity with the 7th and 8thViot. since the year 1856. Mr. Forristall did not answer my note. I received, however, a communication from a Mr. Evans, acknowledging the receipt, and informing me that the business of the Catholic Law and General Company is transacted at 1, Leadenhall-street, and that if the pre- miums be not paid before a certain date, the pohcy wUl become void. 1 now on the 12th Jan. 1860, just twelve months later, venture most respectfully to put the same questions to you as the other director of the company, who has signed my policy, and subsequently all the receipts. When does the company iutend to dissolve ? Why has the company omitted to make .the annual 84 THE LAW TIMES. [Jan. 4, 1873. EUBOPEAU AsSURAKCE] Coghlan's Case. [Abbiteaiion. retnrn to the registrar as required by the statute under which it is incorporated P and I beg to add another ques- tion, — why does the company continue to demand from me a premium in accordance with the profit scale when, having disposed of its business, it can by no possibility, that I can discover, have any profits to divide. Trusting that yon at least will not consider these ques- tions as inopportune. — I beg to .remain, &c., ' Thomas Coshlan. On the 27th Jan. 1860, the Bishop sent the following reply : Sir, — I have received your letter, in which you wish to make some inquiries of me on the subject of your life policy. In reply I am sorry to say that I cannot do more than refer you for information thereon to the office where you tell me you pay the premiums, 1, LeadenhaU-street. — I remain Sir, Yours, &o., Wm. Mokeis. On the 11th Feb. 1860, Mr. Ooghlan paid his premium and received a Catholic receipt just as in the previous year. In 1860 the PhoeniK Company transferred its business to the British Nation Association. On this occasion Mr. Coghlan received the following circular : Phoenix Life Assurance Company, March 22, 1860. Dear Sir, — I believe you are aware from the statement on the renewal receipts that the ' life and endowment policies of this oompahy have been since the 30th June last guaranteed by the British Nation Life Assurance Association. The directors of this company have now come to the conclusion to transfer the life business absolutely to the British Nation. The transfer takes effect from midnight of the 29th Feb. last. The existing annual income of the British Nation ex- ceeds ^630,000, and the capital amounts to more than iE100,000, subscribed by upwards of 300 shareholders. Its new business is also very greatly increasing, and the probability of large bonus advantages is therefore also great. The terms an,d conditions contained in the policies issued by this coinpany will remain in any case unaltered by this transfer. The policyholders are fully guaranteed for aU claims by the British Nation under the deed between the two companies, but any of the assured desiring it can have the endorsement to that effect made on their policies. All communications should be henceforth addressed, and all premiums paid, to Henry Lake, Esq., manager and secretary of the British Nation Life Assurance Association, 291, Regent-street, London. The directors feel that in the steps they have taken they have consulted the best interests of their policy- holders, and have secured for them the most permanent advantages in their power. — I am, yours faithfully, Edmond Beales, Chairman of the Phoenix Life Assurance Company. British Nation Life Assurance Association. . London, March 22nd, 1860. Dear Sir,— By the accompanying letter of the chairman of the Phcenix Life Assurance Company, you are informed that the arrangement concluded some time since fcr the guarantee of the life and endowment policies of that company by this association has been extended to an absolute transfer. As the life and endowment policies of the Phoenix Life Assurance Company have, since midnight of the 30th June last, been guaranteed by this association, the pre- mium, renewal receipts, and the policies issued since that time, bearing that assurance on the face of them, no change whatever is required in the policies, all the terms and conditions contained in them being adopted by this association. Under the deed of transfer made between the British Nation and the Phcenix Life Assurance Com- pany, it 13 not necessary for us to trouble policy holders to send their life and endowment policies for indorsement by this association. Should, however, any policy holder wish it, if he will forward his policy, either direct or through the agent in his district, it shall be immediately (after the succeeding Thursday) returned to him, indorsed, signed by three directors, and sealed with the seal of this association, or if it be inconvenient to him to forward his policy, on hearing that he desires it, a special guarantee policy wiU be issued to him without expense. But it is necessary for me to inform you that all policy holders are perfectly sepure under the renewal receipts, and the terms and conditions contained in the life and endowment policies issued by the Phoenix Life Company remain unaltered by the transfer. The agents of the Phoenix Life OfSce will now become agents of the British Nation. The business of this association has been for some time increasing, and the average of the last three months has been twenty-five policies weekly. The principles which render it thus popular, and the position and prospects of this association, are set forth in the accompanying prospectus and in the extracts from press notices here- with enclosed. I am not desirous of making any observations respect- ing the Phoenix Life Assurance Company, but, as you may have observed that it has been engaged in litigatipn, I consider it necessary to remark that your policy will be totally unaffected by that litigation. The British Nation takes upon itself the payment of your policy, and has nothing whatever to do with the other liabilities of the Phcenix. Tour position as a policy holder, I need scarcely re- mark, will be greatly improved by the arrangements now made. By the union of interests, and by the conduct of joint businesses in one office, and by one official staff, a very considerable reduction of expenditure is effected, which must add considerably to the bonus, while the rate' of new business, large as it is at the present time, will be greatly accelerated by the concentration of interests and income. Allow me, therefore, to express the hope that you wUl, as a policy holder, do all in your power to uphold and increase the business. You will thereby be promoting not only the general prosperity of the institution, but by thus adding to the profit fund, you will be increasing the value of your own policy. — Faithfully yours, Heney Lake, Manager and Secretary. Thereupon Mr. Coghlan went to the office of the British Nation Association, and there saw Mr. Lake, the manager and secretary, and informed him that he protested against and objected to being passed over to the British Nation. On Mr. Lake's requesting him to have his policy indorsed, he refused to do so, and said he had a Catholic Company's policy, and would not give it up. La Feb. 1861 he went to the British Nation oflBce in t)rder to pay his premium. He requested that a Catholic Company's receipt might be given to him ; but a clerk told him that they had no Catholic Company's forms of receipts, and that no other receipt would be given him but a British Nation receipt. After protesting against the re- fusal to give him a Catholic Company's receipt, he accepted the following receipt : British Nation Life Assurance Association, with which is united the life and endowment business of the Phoenix Life Assurance Company. Sum assured, 200J. E«oeipt, No. 1306, 12th Feb. 1861. Policy, No. 138c. Received of Mr. Thomas Coghlan the sum of 51. 15s. 4d., being the payment of annual premium from the 13th Jan. 1861 to the 13th Jan. 1862, tor an insurance of the sum of 2001. on the life of himself, effected by the before-named policy. Annual premium, 51. 15s. id. Hbnbt Lake, Manager and Secretary. Subsequently he paid his premiums to the British Nation Association, and accepted receipts on the ordinary 'forms of the British Nation, the pohoy being referred to as " Policy No. 138, C." On these occasions he does not appear to have repeated his protest. In 1865 the British Nation Association trans- ferred its business to thp. TT.i-.^^^^^-. a--^-. ^ Jan. 4, 1873.] THE LAW TIMES. 35 European Assubasce.] Coghlan's Case. [Abbitbation. this occasion Mr. Ooghlan, to the best ot his belief, received no circular announcing the amalga- mation. In Feb. 1866, he went to the office of the European Society, and paid his premium, as he alleged, " under protest," and accepted the follow- ing receipt. British Nation Life Aaauranoe Association, in union with the Enropeau Aasnranoe Society. Eeoeipt No. 28708. Policy No. 138. Sum assured 4200. Eeoeived the 3rd Feb. 1866, the sum of 51. 15s. id., being the payment of yearly premium from the 13th Jan. 1866, to the 13th Jan. 1867, for an assurance on the life of T. Coghlan, effected by the before-named policy. 51. 15s. id. Henet Lake, Manager. Subsequently he paid his premiums to the European Society, but did not repeat his protest. The receipts in 1869 and afterwards were in the following form : European Assurance Society. No. 18,326. Premium 51. 15s. id. on the life of T. Coghlan. Eeceived the 5th Feb. 1869, the sum above stated, being the amount of premium for the renewal of policy No. 138, for twelve months from the 13th Jan. 1869, according to the tenour of the said policy. J. M. Jones I jy^^^^^^^^^ Geo. E. LambektJ ^"<=^''"^=- An order for winding-up the European Society was made on the 12th Jan. 1872. Mr. Coghlan now claimed that he was not a creditor of the European Society in respect of his policy, but of the Catholic company, which originally granted it, and that, as such creditor, he was entitled to have the company wound-up. A reversionary bonus had been declared by the British Nation Association in May 1863, and also by the European Society in Apnl 1867 ; and a circular announcing the bonus had on each occa- sion been sent to Mr. Coghlan, but he took no notice of either of the circulars. The circular sent by the European society was in the following form : Bonus Notice. European Assxirance Society, April, 1867. Policy No. 138c. Life of T. Coghlan. I am instructed by the board of directors to announce to you that a valuation of the affairs of this society up to the Slst Deo. 1865, has been completed, and that an allotment of reveisionary bonus to that period has been made. I have great pleasure in informing you that the reversionary sum added to the above policy is 21. 8s. You will please attach this notice to the policy as the official declaration of the bonus addition. The business is still rapidly increasing, and it is hoped that at each succeeding valuation the bonus will be materially augmented. Henby Lake, Manager. The circular sent by the British Nation was nearly of the same form. The deed of settlement of the Catholic company contained the following provision : Clause 161 : That whenever two such extraordinary general meetings as hereinbefore mentioned shall have come to a resolution to dissolve the company, the directors shall cease to issue any life or endowment policy, or to grant any annuity, or to enter into any engagement on behalf of the company, and shall pro- ceed, in such manner and upon such terms as they shall think reasonable and necessary, to wind-up the affairs and meet and satisfy or transfer to some other weE established life assurance company the existing engage- ments and liabiUtiea of the company, and shall call in or compound, upon such terms as to them shall seem ex- pedient, all debts owing to the company, and shall cause so much of the funds and property of the company as shall not then consist of money, to be forthwith sold or otherwise converted into money in such manner and upon such terms as the directors shall thint proper, and so soon as conveniently may be after such resolution, so much of the funds and property ■of the company as shall not be required to meet the existing engagements and liabilities thereof shall be paid to and distributed by the directors amongst the share- holders or their respective executors or administrators in the proportions in which they shall be respectively entitled thereto, and immediately after such payment and distribution shall have been completed, these presents and every clause, article, matter and thing herein contained shall thenceforth cease, determine, and be void. The policy that was granted to Mr. Coghlan by the Catholic Company contained the following proviso : Provided, lastly, and it is' hereby expressly declared, that the subscribed capital and other the stocks, funds, securities, and property of the company, which, at the time of any claim or demand being made in respect of this policy, shall remain unapplied or undisposed of under the trusts, powers, and authorities of the deed or deeds of settlement of the company, shall alone be liable to make good all claims and demands upon the company in respect of this policy, and that no director of the com- pany, by whom this policy is signed, shall be responsible for the payment of or for contribution towards the moneys assured by this policy to any greater extent than the funds or property of the company in his hands or power at the time of such moneys being recovered shall be competent to, discharge. And that no shareholder of the company shall in any event whatsoever be liable to or for any demand against the company beyondtthe amount of the unpaid part of his or her share or shares in the subscribed capital of the company, save so far as he or she may be liable under the provisions of the Act for the registration, incorporation, and regulation of joint stock companies. Cutler appeared for the applicant. Napier Higgins, Q. C. (with him Montague^ Oooh- son) for the official liquidators of the European Society. — The European Society has succeeded to the liabilities of the Catholic Company, and con- sequently has an interest in preventing any further expense being incurred in winding-up a mere shadow. We are accordingly entitled to appear and oppose the application. With regard to the guiding principles which your Lordship has suggested for our consideration, they would appear to conflict to some extent with decisions in other cases. Lord Westbtjby. — Pardon my interrupting you. I ought to have added that I carefully exclude all Lord Cairns's decisions, the chief of which you did me the favour to cite and comment upon in Blimdell's case (vide infra). I think those deci- sions, when properly analyzed, are really based on one fact, which Lord Cairns found or considered that he had found in all the cases, namely that there had been a proposal to the policy holder to accept the new company, and that the acts of the pohcy holder, after that proposal, indicated clearly his acceptance of the proposal. Napier Higgins. — No doubt that was so in the majority of the cases, but I should have no diffi- culty in referring to some cases where Lord Cairns was aware of the fact that no communication was made to the particular policyholder, and where his Lordship imputed knowledge to the policy holder from the fact that he had received documents from the company and had taken receipts upon the face of which there appeared to be some intimation of what had taken place in the way of arrangement between the transferor and transferee companies. I shall endeavour to combat or to modify some of the 36 THE LAW TIMES. [Jan. i, 1873. EUEOPBAK AsSUBANCE] Ooshlan's Case. [Abbitbation. principles suggested by your Lordship ; but whether these principles or those of Lord Cairns be. adopted, there was a novation in this case. There are three distinguishing features of this case. First, the Catholic Company was registered under the 7 & 8 Vict. c. 110. That being so, any person entering into a contract with them must be taken to have made himself acquainted with their deed of settlement ; whether he did or not, he must be bound by it. {Ernest v. Nicholls 6 H. L. Cas. 418.) Moreover, in the policy reference is made to the Catholic Company's deed of settlement. Now the clause of the deed contains a provision of an unusual character. It provides that the directors may in their discretion dissolve the company and transfer the assets and the liabilities to some other company without requiring any consent on the part of the policy-holder. It is not unreasonable to give so large a power to directors ; for in case of a dissolution this would be a more advantageous proceeding than to give to each policyholder the estimated value of his policy, or to have the com- pany wound-up in. Chancery. That a policy-holder may be bound by such a provision is quite clear from Mosley's Gaae {Albert Arbitration minutes, p. 953). [Lord Westbuey. — That case was of this nature. Mr. Mosley thought he had a claim against the Times Company. It turned out in the mind of Lord Cairns, according to the true interpretation of the deed and what had taken place, that, before the claim was pre- sented, the Times Company had been effec- tually dissolved and put an end to, and therefore Mr. Mosley brought his claim against a non-exist- ing company.] The reason why the dissolution was eSectual was that these special provisions in the deed of settlement enabled the company to do what it otherwise could not have done — to dissolve itself, and to get rid of all liability to policy holders. [Lord WESTBUEy. — Can you show me anything in the clause of the Catholic Company's deed of settle- ment that requires me to extend its interpretation beyond the ordinary interpretation of a partnership clause ? It is perfectly good between the partners, but although the policyholder knew of it, how is he* bound by it ?] He can only claim against the funds of the company and subject to the trusts, powers and authorities of the deed of settlement. This is a trust, power and authority of the deed of settlement. [Lord "Westbuby. — He can only claim against the funds of the cotnpany, but a provision regulating the appropriation of those funds, which is good mter socios is not good against him, unless he has distinctly consented. It only brings us back to this, whether a power which is good inter socios, can be used to diminish or destroy the rights of a creditor contracting with the company.] It could not be so,used, if the creditor were an ordinary out- side creditor; but a policy holder contracts with re- ference to the funds of the company, and his con- tract is bound by the provisions of the deed of settle- ment. [Lord Westbuby.— Tour case would be a good one, if you could find in the deed such words as these : " And it is hereby agreed that what shall be done under this clause shall be binding on the creditors of the company as well as on the share- holders thereof."] I submit that the clause is equally binding without any such words. A policy holder in such a case is not wholly precluded from objecting to any proposed arrangement with re- spect to the fund ; he cango to the Court of Chan- cery and complain that the directors, the trustees of his fund, are going to make an improper use of the trust fund. Kea/rns v. Leaf, 1 H. & M. 681 ; Bishop v. Scott, L. T. Eep. N. S. 570. The second peculiar feature of this case is that Mr. Coghlan received circulars announcing the amalgamation ; and he subsequently paid his pre- miums to the transferee company, and accepted receipts from them. And there are numerous decisions in the Albert arbitration which show that this was sufficient to effect a novation. [Lord Westbuby. — "Was the Phoenix company constituted in the same manner as the Catholic ?] I have not been able to get the deed of settle- ment of the Phoenix company, and, consequently, cannot say. However, events subsequent to the transactions with this company will displace the necessity of going into that. [Lord Westbuby. — I do not know. If this gentleman never became one of the flock of the Phcenix, how could he be transferred by the Phoenix to the European ? What possible reason can there be for holding him to have been .attached to the European when he did not take part in any one of the inter- mediate steps ?] A man may choose, years after his policy has expired, to adopt some arrangement for the revival of his policy with another oifice ; and whether the arrangement with the Phoenix was valid or not, the course of dealing shows that he went over to the British Nation, and had an incontrovertible claim against them, and subsequently he adopted the European Society. There are many decisions both in the Court of Chancery and in the Albert arbitration which show that, although the arrangement between the companies may not be valid, yet novation may be effected by some transaction between the policy holder and the transferee company. [Lord Westbuby. — Let us understand that. If Company A. transfers to Company B., and Com- pany B. gets the power or has the power to adopt the liabilities of Company A. or to renew those liabilities, or to make them its own by new con- tracts, and it does so, then it is not necessary for the validity of those new contracts to show that the transactions between Company A. and Com- pany B. are unimpeachable. That is all I think your decisions go to. That may be readily ac- quiesced in ; because by the transaction I get a new contract substituted for my old one, and the contract, which is so substituted, is made by a party who has power to enter into it, and therefore between that party and the policy holder it is a concluded transaction. Will you tell me what took place on the amalgamation of the Catholic Company with the Phoenix P Were there two extraordinary general meetings of the shareholders of the Catholic Company ? Until that is shown me, I shall not hold that there was any transfer at all.] I am unable to say what was done on this occasion, but I submit that it would not be material to consider whether the provisions of the deed of settlement were complied with modo et forma ; novation may have been effected by the subsequent act of the parties. [Lord Westbuby. — First, I must get the Phoenix in a condition to novate ; then the British Nation ; and then the European ; and for all and each one of those steps it will be requisite to prove that the whole of the debts and liabilities were transferred, or attempted to be transferred ; first to the Phoenix, then to the British Nation, and then to the Euro- Jan. 18, 1873.] THE LAW TIMES. 37 Btjkopean AssxmAifCE] Coghian's Case. [Abbitraiion, ipean. The first step in the ladder for you to rise by is the Phoenix Company.] In none of the Albert arbitration cases did Lord Cairns require step by step that there should be proof of the valid transfer from one company to another. The principle esta- bhshed by ' Lord Cairus was this : Mr. Coghlan comes to prove oo. a Catholic policy against the Catholic company. He must prove payment of his premiums to the Catholic company ; he cannot do so ; he must then prove payment to some one acting as the agent of the Catholic company ; if he can dp so, his claim succeeds ; if he cannot, it fails. This is the case, even if there are no circulars announcing the amalgamation; but here such circulars were sent to the policyholder. The third feature of the case is that Mr. Coghlan received two circulars offering him a bonus, one from the British Nation and the other from the European. These bonuses were not expressly accepted by him ; but on the other hand they were not repudiated, and Lord Cairns has held in such cases that an acceptance must be inferred, and this •would effect a novation. Knox's Case, Albert Arbitration, 16 S. J. 673 ; Allen's Case, Albert Arbitration, 16 S. J. 657 ; Werivinck's Case, Albert Arbitration, 15 S. J. 767 ; Spencer's Case, L. Rep. 6 Ch. 362. [Lord Westbtjet. — I do not think that these cases will govern anything. The only question I shall have to decide will be this. Pid Mr. Coghlan adopt the European.' Did he come in and ally him- self with the European Company, and accept that company as the persons that were bound to him P I cannot say that he did any such thing.] The only thing that at all tends to show any desire on his part not to novate are his protests, but these were merely verbal, and they indicated a frame of mind from which he could at any time depart ; and that he did actually so depart, is shown by his subsequent payment of premiums without repetition of the protest. Such protests must be ineffectual after the lapse of so many years. The transferee company could not now take advantage of them if the state of affairs were reversed and he were claiming against them. Lord Cairns lays down principles with respect to protests in Eivaz's Case, Albert Arbitration, 16 S. J. 590 ; Warne's Case, Albert Arbitration, 16 S. J. 631 ; Wood's Case, Albert Arbitration, 15 S. J. 693 ; Mchter's Case, Albert Arbitration, Min. p. 756 ; Darning's Case, Albert Arbitration, 16 S. J. 673 ; Howell's Case, Albert Arbitration, 16 S. J. 6^. Lord Wbstburt. — Mr. Cutler, how can I give you an order to wind-up the Catholic Company ? You have not brought them here. Cutler. — There is nobody whom I can serve. Lord Westbtjbt. — ^Why am I to wind-up a thing, which, as far as I know, has no existence P Cutler. — We might find some persons who might be made liable. Lord Westbttbt. — I cannot make an order against the company, unless they appear here. The com- pany do not appear here, and therefore I can make no such order. That part of the application may be brought on hereafter under more favourable circumstances. Of course it will be for you to consider this, because if you deliberately unhook yourself from, or rather refuse to be hooked on to, the European, and deliberately prefer to chase after the Catholic Company, you may or you may not, have a right against the European. No doubt you will be entitled, when you have done that which amounts to substituted service, to come here and apply for an order to wind-up the Catholic Company. Napier Higging. — I would suggest that the most advisable course might be for Mr. Coghlan to ascertain who were the shareholders of the Catholic Company at the date of the transfer to the Phoenix : to ascertain whether any of those shareholders, and particularly whether any directors then acting in the business of the company are now alive ; and, if so, to inform your Lordship of that fact, and get directions as to serving some citation or notice upon three or four of these gentlemen, and then they would, according to the practice of the Court of Chancery, be admitted to represent the com- pany. Lord Wbsibtjky.— 'That is a practical sugges- tion. Cutler. — ^I am indebted to Mr. Higgins for it. I am now in a position to make the application, because I have in my hand a list of names of per- sons of position in the OathoUc Company that can be served. Therefore I take this opportunity of asking your Lordship to make a declaration that service upon the Rev. Thos. Doyle, Mr. Edmond Beales, and others may be good service upon the Catholic Company. ■ Lord Wbstbuby. — If the solicitor will make an aflBdavit that he knows they were members of the Catholic Company at the time of the transfer of its business to the Phcenix, and that they live at such and such places, I will give him leave to serve them with notices and declare that such ser- vice shall be considered as service upon the Catholic Company. Cutler was not heard in support of the applica- tion. Lord Westbttet. — I think the decision in this case will turn very much on the special circumstances. However, it is necessary to observe particularly upon the very bare way in which this matter comes before me, and the paucity of materials in point of fact upon which I shall be compelled to decide it. The question arises in the following form : Mr. Coghlan asks for an order to wind-up a company that I will call the Catholic com- pany : notice of the application being served upon the present joint official liquidators, they appear for the European Society and contend that Mr. Coghlan is not a policyholder of the Catholic Company, but is a policyholder of their own society. Now, the process by which they seek to prove that Mr. Coghlan is a policyholder of the European Society is somewhat of this nature : It is said very truly that after the policy of Mr. Coghlan was effected with the Catholic Company, that company transferred its business to the Phoenix Company, and then it is said the Phoenix Company transferred its business to the British Nation, and then it is said the British Nation transferred its business, which, I suppose, is to be taken as the acciimulated business of itself and the Catholic and the Phoenix com- panies, to the European^ Now what the terms of these transfers were, we are not able to as6er- tain. "We know only the fact that the business was transferred. Whether the Phoenix was authorised to take up, adopt, and renew the liabili- 38 THE LAW TIMES. [Jan. 18, 1873. EUEOPEAN AsSUBANCB] Ooghlan's Case. [Aebiteation. ties of the Catholic Company, I cannot tell. Whether the British Nation had power to adopt and renew the liabilities of the Catholic and Phcenix companies, I cannot tell. Neither can I tell, so far as the case before me is concerned, what were the immediate terms of the transfer of the British Nation to the European. But the question in all these cases is simply this— b a question of the effect of what was done by the policyholder, and of the intention of the policyholder in doing those things. It has been argued at the bar here — and I am sorry to say that some colour is furnished for that argument by some of the technical decisions that have been cited — as if it were incumbent upon the policy holder to prove that he did not intend to adopt and to accept by way of substitution the liability of the transferee company. That is quite an inver- sion of the proper order. It is incumbent upon the company which alleges a substitution, or what has been termed novation, to prove an agree- ment by the policyholder to make that nova- tion and to prove acts of the policy holder in the absence of any definite written declaration, that unequivocally involve the evidence of that intention on the part of the policyholder to accept the new company instead of the old. Now, of any intention on the part of the policyholder to accept either the Phoenix, or the British Nation, or the European in lieu of his own original company, there is not the least trace of proof, but on the contrary there is everything to warrant my finding and deola;ping that it was not the intention of Mr. Coghlan to accept the Phoenix: in lieu of the Catholic, or to accept the British Nation in lieu of the Phoenix, or to accept the European ; and when I am told that he ought to have con- tinued these protests of his down to the last moment, I cannot help contrasting that argu- ment on the part of these companies with the manner — the unrighteous and unjust manner — in which Mr. Coghlan was treated by them. His etters earnestly request in the very outset that he might have a receipt of his own company for his premiums. He requests again most earnestly that he might know where to pay the premiums, in order to be certain it was a payment to the Catholic Company who contracted with him. Those letters are met by the greatest evasion. At length he is driven to the office of the British Nation, and then to the office of the European, in order that he might have some recipient of his premiums. He there begs that he might have a receipt indicating the manner in which he paid those premiums, and some clerk tells him " We shaU give you no such receipt, and unless you take our receipt, you shall have none at all." And then it is argued before me that because the poor man was thus compelled to take such a receipt as those men chose to give him, therefore he de- liberately took that receipt as a thing done in the performance of a new and substituted contract, and that he ought to be held to have deliberately, and with perfect knowledge of what he was about, accepted the new company in lieu of and in substitution for the old. I cannot come to any such conclusion. I cannot find in the conduct of this gentleman the least evidence of an intention to change the persons with whom he had con- tracted, or to accept a new contract in lieu of the old. Nor have these individuals furnished me with the least proof that they had the right or the power to substitute a new contract and to ac- cept from Mr. Coghlan the surrender of the old. Now I wiU certainly endeavour, as far as I possibly can, to have these cases treated in a large and liberal manner, and I will not have technicalities used for the purpose of clouding a case and ob- scuring what any man must discern to be the truth and justice and honour of the case. It is impossible for anyone to read this case and say that there ever was a time at which Mr. Coghlan was willing to accept any one of these substituted companies as his sole creditors in this naatter. Then why am I to fasten upon a man a new con- tract, and to fasten it upon him m invitum ? I have no power to do any such thing ; and if I had the power, I have not the inclination. Ob- serve how individuals are treated by these companies, who assume the power of handing them over from one to another; those who receive them assume the power of ignoring their rights, and refuse to listen to any of their reasonable applications. Then, as in this case, at the end of a great deal of opposition, the policy holder is told, " You have struggled to keep to your original contract ; we have defeated you, and although you came here and paid your premiums in the only manner in which it was possible for you to pay them, although we know perfectly well you did not come voluntarily, that you came here only by the duress of being told that, if yoa did not pay them here, your policy would be gone ; yet we will now turn round and say to you — Mr. Coghlan, you were perfectly well satisfied; you took us, and accepted us with pleasure, you have re- newed or rather made with us a new and sub- stituted contract, you have lost your old one, and therefore you shall not have the benefit of all the efforts you have made to preserve it ;" nothing to my mind is more unjust, more discreditable, and more to be condemned than conduct of that descrip- tion. It then appears that after Mr. Coghlan had announced to these people that in his own mind he was merely the holder of a policy in the Catholic company, one of those companies sent a letter announcing that they had added a sum of money to his policy to be received when the policy became due, and that Mr. Coghlan, acting as every • sensible man would naturally act, took not the slightest notice of the letter. Then I am deliberately told, and cases are cited to prove, that because Mr. Coghlan took no notice of that letter, therefore he, accepted the transaction, and therefore he entered into a new contract with the European, and that alone is sufficient evidence that he regarded himself as a policyholder in the European, and not as a policyholder in the original company. I will draw no such inference, and I am confident that these technical modes of viewing these matters, which have been too numerous, have led to the necessity in the mind of the Legislature of laying down a rule that should save men from having things imputed to them which were directly contrary to their in- tention and to the just meaning of their acts, by adding what on various occasions the law has found it necessary to require, namely, some writing declaring the mind and intention of the party. It had become necessary to prevent the rights of men being defeated by innocent or equivocal acts being tortured into evidence of con- clusions directly opposed to what they themselves held and what they intended to act upon. When, Jan. 18, 1873.] THE LAW TIMES. 39 European Asstjbance] Bltjndell's Case. [Aebitbation. tterefore, I find a case in ■which by unequivocal acts a man has accepted a new company, which has the power of contracting with him, in lieu of the old company with which he contracted, I shall give effect to the new contract ; but to raise that new contract, there must be on the part of the new company a power to make it, and there must be on the part of the policyholder a knowledge of the company's right so to contract with him; and where it is an incomplete contract, or where there is no evidence in writing, there must be conduct on the part of the policyholder that unmistakeably shows that he intended to accept the new con- tractor and to discharge the old. Then that word novation, or what I should prefer, the -sub- stitution of the new contract in lieu and in dis- charge of the old, will be a thing established, and which I can with satisfaction declare to be the fact ; but, unless that is, found to be the case, I must decline to deprive a man by violence of his existing contract, giving him another contract instead, and then mocking him by telling him, "You know that you intended to take that other contract ; that is clear from acts which no doubt you re- garded as having no such meaning as the law, wiser than you, will impute to them, although it be a meaning directly contrary to your intention." The official Kquidator's costs will be borne by the European Society, and Mr. Ooghlan will get his costs, upon a future occasion, out of his own com- pany, if that company should ever be wound-up here. With regaj-d to the method of disposing of this appUcation, I think it had better be disposed of by the declaration I have already made, and which at present may be regarded as a declaration in Mr. Ooghlan's favour, namely, that no liability of the Phoenix, or of the British Nation, or of the European has been substituted or accepted by him in lieu of the original liability of the CathoUc. And with that declaration I give him leave to serve the affidavit, to be made by him, on those shareholders of the Catholic company that have been mentioned, and say he is going to make an application for a winding-up order. CiUler. — Then I presume I need only serve the company. Lord Westbtjet. — I cannot give you any direc- tions about that. Those persons you name to me are very likely to be a sufficient channel to bring your application to the knowledge of all the repre- sentatives of the company. Ncmier Higgins. — ^ According to the practice of the Court of Chancery they ought to be in- formed that by the direction of your Lordship they are served as representing the company, and that they have the duty of representing the com- pany. Lord Wesibxtry. — I cannot at present fix upon them the character of representing the company with the view of having the company represented here. Solicitors for the applicant, Kynaston and Gaaquet. Solicitors for the official liquidators of the Euro- pean society, Mercer and Mercer. Oct. 31 anA Nov. 5, 1872. Blundell's Case. Life assurance company — Amalgamation of com- panies — Winding-up — Policy — Novation of con- tract — Payment of premiums — Receipts — Policy- holder held, after an amalgamation, to he a creditor, not of the new company, hut of the old — Novation of the Civil Law. In 1855 A. effected a policy on his own life with the B. C. Life Assurance Company, through one of their local agents. In 1863-4 the B. C. Company transferred its husiness to the B. N. Life Assur- ance Association, and in 1865 the B. N. Associa- tion transferred its husiness to the E. Life As- sxirance Society. On neither of these occasions did the policyholder, A. ireceive any of the cir- culars announcing the amalgcumation, and he never had any intimation of the arrangements hetween the companies, save what was conveyed by the prem/ium receipts. From 1855 to 1871 he paid his premiums to the same local agent, at the same ofices, a/nd received his premium recei/pts through him. After the amalgamation of the B. C. Company with the B. N. Association, these receipts were headed " B. N. Association, with which is united the husiness of the B. C. Com- pany," ami ultimately ihey were headed " E. Assurance Society." The policy was referred to in all the receipts as "No. 8779," being the number of the original policy. No bonus or in- timation of a bonus ii>as ever received by the policyholder from amy of the com/pamies. In the winding-up A. claimed to prove on his policy against the B. C. Company, which originally granted the policy ; hut the official liquidator of that company contended that there had been a novation, fi/rst xoith the B. N. Association, and then with the E. Society. Held, that there ivas no novation, and that A. was still entitled to claim, agaimst the B. C. Com- pamy. Where there is a transfer of business from one insurance company to cmother, and a policy holder afterwards pays his premiums to the second com- pany, the act is equivocal : he may he regarding that company as autliorised by the f/rst to receive the premAums, or if the transferee compamy has power to grant a new policy identical ivith the old, he may be intending to efect u, novation of contract with that company. The onus of prov- ing the intention to novate lies on the company that alleges it. Unless that intention is shown in the clea/rest manner, the payment of the premiums will he referred to the old contract. Beceipts given in the name of the transferee com- pany are not of themselves sufficient to shoiu an intention on the part of the policyholder to effect a novation. Where ■ a compamy, which is the assignee of the husiness of amother company, amd which has power to grant new contracts in lieu of the old, writes to a policyholder, offering him a new contract, and the policyholder does not return any answer in writing, but immediately goes and pays his premiums to the com/pamy -making the offer, there is an acaeptcmce of the offer, and consequently a novation of the contract. Novation of the Civil Law referred to. This was a question of novation. The British Commercial Insurance Company was established under a deed of settlement dated 40 THE LAW TIMES. [Jan. 18, 1873; EUBOPEAN AsSTTKANCB] BLTiifDEtL's Case. [Akbiteation. the 1st May 1821. This deed contained the fol- lowing provisions with reference to receipts, poh- cies, dissolution, &c. ; Clause 72 : That the receipt or receipts in writing of the trustees, or of the directors for the time being, or any one of them, attested by the managing director for the time being, or the actuary, for any money belonging to, or payable for, any property of the company, and which shall have been paid to the bankers for the time being of the said com- pany, or to the treasurer of the said company, shall effectually discharge the person or persons paying the same money, from being obliged to see to the application thereof, or from being answerable or accountable for the misapplication or nonapplication thereof. Clause 91 : That every deed to insure in any sum in gross, or secure annuity granted by the company, and every deed or instrument to secure an endowment for a child or children, and for securing deposits in the investment fund, and every other insurance on behalf of the said company, shall be signed and duly executed by three directors at least, or the same shall not be binding on the Baid company. Clause 109 : _ That the funds or property of the company for the time being remaining unapplied and undisposed of, in pursuance of the trusts, powers, and authorities con- tained in these presents, shall alone be answerable for the claims and demands of persons assuring with the company, and to their annuity, endowment, and deposit creditors, and the directors signing the policies or the instruments securing the annuities or endowments, or deposits, shall not, except under actions of covenant to be brought as aforesaid, and subject to the restrictions aforesaid, be personally liable to the persons to whom the policies shall be given, or annuities granted, or their executors, administrators, or assigns. But it shall be the duty of the directors for th« time being to order the application of the said funds or property by the said trustees for the time being in discharge of the money secured by the said policies, and of the said annuity endowments, alid also that to the persons claiming under the said poUoies, or to the persons entitled to the said annuities, endowments, or deposits, the proprietors at large of the company shall not be answerable directly or indirectly, further or otherwise than as to their respective shares of the said capital stock of one million pounds paid, and to be contributed as aforesaid, or which shall then remain unpaid. It being the true intent and meaning of these presents that no claim on any policy, or upon any instrument securing any annuity, endow- ment, or deposit, shall be enforced in any other manner or by any other means than expressed in these presents, anything to be made, done, or executed by the court of directors, or any directors or director, or the trustees or other officers, or members of the company, or by any general court of the company, or otherwise to the con- trary thereof in anywise notwithstanding. Clause 112 : That two successive special courts of proprietors, duly called for that purpose, one at the distance of three calendar months from the other, may resolve and decide that the said company shall determine and be dissolved on a day to be fixed for that purpose, and thereupon the same company shall be dissolved accordingly on the appointed day ; and the then actuary, or if there should not be any actuary, then an actuary to be appointed for the purpose, shall cause every existing policy outstanding against the company to be valued, and such valuation shall be sub- mitted to and altered or varied as the patron, president, and vice-presidents for the time being, or the major part in number of them, shall approve, and when so approved such valuation shall be final and conclusive on all per- ' sons concerned in interests ; and all the assets of the company shall be converted into money by sales and other dispositions ; and the directors for the time being, and in their default the patron, president, and vice- presidents, or the major part of them in number, shall make an order for the distribution of the assets, including the capital, whether paid or made up or then due under the said covenants between the persons insured with the said company, and rateably and in proportion to the estimated value of the then policies and insured interest, and without any priority except as hereinafter-men- tioned, and in full satisfaction of the same interests, whether vested or contingent, and whether the event against which such insurance shall be effected shall or shall not have happened, and the deficiency, if any, in the funds shall be borne by the insured rateably and propor- tionately, according to the value of their policies or insured interests ; and the surplus, if any, of the funds, of the said company, including capital not so applied, shall be divided between the persons who shall be the proprietors of shares at the time appointed for the dissolu- tion of the said company, or their respective executors, administrators, and assigns, rateably and in proportion to their shares in the capital of the said company, after an allowance for the demands, if any, on the company on such proprietors for any money due from them to the company. But in the distribution between the persons who shall be insured, persons who shall not be proprie- tors of shares shall be in respect of their insured interests preferred to and paid in priority over persons who may be proprietors, and such proprietors shall be paid rate- ably as between themselves before a division among pro- prietors or shareholders as such, independently of their- being insured. The deed contained no provisions for the amal- gamation with or for the transfer of the business to any other insurance company. In 1859 negotiations were commenced for the purpose of transferring the business of the British Commercial Company to the British Nation Life Assurance Association. This association was established in 1866 under a deed of settlement^ which provided {inter alia) : Clause 30 : That the votes of three-fourths of the qualified asso- ciates present, and not declining to vote at two successive- extraordinary general meetings, or at the ballot, or ballots which for the purpose of ascertaining the jnse of the qualified associates at large, may be taken in consequence of being demanded at such meetings or either of them, shall be requisite to authorise the amalgama- tion of the association with any other company or society or the dissolution of the association. Clause 46 : That an extraordinary general meeting may accfept or take a transfer of or purchase or acquire the business of any other associations, companies, or societies of a similar nature- (wholly or in part), with the association hereby- established upon and under such terms, conditions, stipulations, and agreements as such meeting shall thinJk fit. Clause 46 : That (subject to clause 30) an extraordinary general meeting shall have full power to resolve on the dissolu- tion of the association, and if at such meeting a resolu- tion shall be passed to that effect; then a second extra- ordinary general meeting held -within fifty days after the date of such resolution, shall have fall power to- reject or confirm the same. ; Other clauses provided the method of carrying into effect the transfer of the business to another company. On the 17th Nov. 1859, a letter was sent by Mr. Lake, the secretary of the British Nation Associa- tion, to the directors of the British Commercial Company, proposing a " union of the business of the British Commercial and Britisfi Nation Com- panies " on the following terms : That the shareholders of the British Commercial should be paid off at the rate of 25s. per share, and their shares transferred. That the directors of the British Com- mercial with the consent of the shareholders be paid a compensation of lOOOi. hj this association. That the staff of the British Commercial be retained by the British Nation, and that the directors of the British Kation be at liberty to apnlv to anv director or officer of the Briti sh Comm — = Jto. 1&, 1873.] THE LAW TIMES. 41 EUBX)EEAN AsSTJBANCE] Blundbll's Case. [Arbitbation. such proposed arrangement after the shareholders have decided upon its adoption. That trustees shomd be appointed to hold the assets of the British Commercial pending the completion of the proposed arrangement. That an Act of Parliament should be forthwith applied for, if agreed to be necessary, to consolidate the proposed union. On the 20th Jan. 1860, an extraordinary general meeting of the shareholders of the British Nation Association was h«ld, and it was resolved that the proposed arrangement for the amalgamation be approved ofi and should be carried into efiect, and " tJiat the directors of the British Nation Associa- tion be, and they are hereby empowered to appoint from time to time such trustees, whether share- holders or others, as may in their discretion be necessary, for holding such shares of the British Commercial Company as in the arrangements con- templated may be required to be transferred." On the 21st Jan. 1860 an extraordinary special court of the proprietors of the British Commercial Company was held, and the proposed arrangement for amalgamation was adopted. . Subsequently, by a deed dated the 8th Feb. 1860, certain of the shareholders in the British Commercial Company, holding 11,840 out qf the 12,000 shares, transferred their shares to Messrs. Bermingham and Lake ; and by a deed dated the 7th June 1860 Messrs. Bermingham and Lake declared themselves to be trustees of those shares for the British Nation, and the British Nation covenanted to indemnify them in respect thereof. ■ Finally, by a deed dated the 31st Deo. 1864, after reciting inter alia that the 11,840 shares, so "transferred as aforesaid into the names of Messrs. Bermingham and Lake constituted the whole of the shares subscribed for in the capital of the British Commercial Company, except some few shares, the owners of which were unknown, and the right to which was considered to have been lost by lapse of time and non-claim or otherwise, it was witnessed that the holders of these 11,840 shares transferred and disposed of them to the British Nation Association, and also all their interest in the life assurance business theretofore carried on by the British Commercial Company, " to the intent that the British Commercial Com- pany, and the capital and business thereof, might thenceforth be amalgamated with and merged in the British Nation Association, and the capital and business thereof;" and by the same deed the British Nation Association covenanted with the holders of these 11,840 shares that the association, its successors, or assigns, would pay every debt owing by the British Commercial Company, and would at all times save harmless and keep indem- nified the holders of the said shares against all actions, suits, proceedings, &c. whatsoever, in re- pect of these debts, or in respect of any policy of assurance, grant of annuity, or other security theretofore issued or granted by the British Com- mercial Company. |» In 1865 the British Nation Association trans- ferred its business to the European Assurance Society. This transfer was carried into efiect by a deed dated the 16th March 1865, whereby it was -agreed That on, from, and after the execution of these pre- sents, the British Nation Association and the European Soeiety are and shall be and become united, amalga- mated, and consolidated as one association, society, or company, under the name or style or " The European Assurance Society," until such name or style shall be changed by the authority of Parliament. And it was witnessed that The British Nation Association doth hereby assign unto the European Society, its successors and as- signs, all that the interest and goodwill of the British Nation Association of, in, and concerning all the life assurance, endowment, annuity, and other the business or businesses heretofore oaiided on by the Association, and of and in all matters con- nected therewith, and the fuU benefit and advantage thereof, and aU the estate, right, title, interest, pro- perty, possibility, claim, and demand whatsoever of the British Nation Association, and all policies of reassurance with any other company or companies, and all premiums, ' profits, fines, and other moneys due or to become due to the Association in respect of the said policies and annui- ties respectively, and in respeot of the said business hereinbefore mentioned or otherwise howsoever, together with all moneys or balances due from or in the hands of agents of the Association, and aU stocks, funds, securities, and personal estate, cvedlit, and effects whatsover or wheresoever, of, or belonging, or owing to the asso- oiation. And there was a covenant by the EurapeaiO. Society To undertake, pay, or perform all and every of the existing bond and other debts, assurances, annuities,, endowments, guarantees, and other engagements, or liabilities of the British Nation Association, and to, at all times hereafter, save, defend', keep harmless, and indem- nified the Association and the individual proprietors of shares in the capital thereof from and against all actions, suits, proceedings, costs, damages; claims, and demands whatsoever, for, upon account, or in respect of the same. In 1855 Mr. Blundell effected a policy of as- surance on his own life with the British Com:- mercial Company, through their agent at Castlerea, Mr. Mahoney. Down, to 1871 Mr. Blundell paid his premiums through Mr. Mahoney, at the same offices at Castlerea, and received the premium receipts through him. On neither of the amal- gamations, did Mr. Blundell receive any of the circulars that were issued announcing the amalgamation;, and he never received any inti- mation of either of the transfers of business, save such information as was conveyed to him through the premium receipts. In all the receipts given by the British Commercial Company the policy was referred to by its number, 8779. In 1861 and and 1862 these receipts were in the following form : — British Commercial Life Insurance Company, London, united with the British Nation Life Assurance Asso- ciation. Sum assured, .£400. Policy No. 8779. Beceived the Oth day of April 1861, the sum of ten pounds 18s. 9^., being half the premium of insurance on 400t. and interest for one year, from the 27 March 1861, on the life of Eev. E. Blundell. In 1863-4-5, the receipts were in the following form: — British Nation Life Assurance Association, with which is united the business of the British Commercial Life Insurance Company. Policy No. 8779. EeceiVed this 26th day of March, nineteen pounds and nine pence, being the payment of a yearly premium from the 27th day of March, 1863, to the 26th day of March, 1864, for an assurance on the life of Eev. E. Blundell, effected by the before-named policy. In 1866 the receipt was as follows : British Nation Life Assurance Association, in Union with the European Assurance Society. Policy No. 8779. Eeoeived the 28th day of March 1866, the sum of nine- 42 THE LAW TIMES. [Jan. 18, 187?, EUEOPEAN AsSTOtANCEJ Blotdell's Case. [Aebitbation. teen poiiiids and ninepenoe, being the payment of twelve months' premium and interest from 27th March 1866, for an assurance on the life of the Eev. E. Blnn- dell, effected' by the before-named policy. And from 1867 to 1871 the receipts were in the following form : European Assurance Society. ■ Policy No. 8779. Eeoeived this 2nd day of April 1867, the sum of nineteen pounds and ninepenoe, being the payment of twelve months' premium and interest from the 27th March 1867 for an assurance on the life of Eev. E. Blundell, effected by the before-named policy. There was never anything affixed to Mr. Ma- honey's offices to intimate that any change had taken place in the British Commercial Company, , or that that company had transferred its business to, or had become amalgamated with, any other company, or that the persons receiving the pre- miums were acting as the agents of any other company than the British Commercial Company. No bonus or intimation of any bonus was ever received by Mr. Blundell from any of the com- panies. He now claimed to be entitled to prove on his policy against the company that originally granted it, namely, the British Commercial Company ; on the other laand, the official liquidator of this com- pany- contended that he must claim either against the British Nation Association, or against the European Society. H. M. Jackson appeared for Mr. BlundeU, and contended that there was no amalgamation be- tween the British Commercial and British Nation Companies, and secondly, that, if there was, there was no novation of contract by the poUcyhplder, either with the British Nation Association or with the European Society. Lord Westbtjry. — The affirmative of these two issues is on the other side. The course, therefore, that I wish you to adopt is this : Ton produce your policy, and you produce the evidence of your having paid the premiums under that policy. That will constitute a primd facie case on your part. I accordingly call upon the other side to argue in support of the two propositions, that there was a good amalgamation, and that there was an effectual novation. Narpier Higgms, Q.C. and Montague Goohson, for the official liquidator of the British Commer- cial Company.— There was an effectual amalga- mation, and by it the liability was wholly transferred from the British Commercial Com- pany to the British Nation Association. [Lord Westbtiry.— I wish we could come to a mutual agreement not to use that term "amalgama- tion." Nobody uses it with any definite idea, and you are using it just now as if it involved ' the merger of the British Commercial Company in the British Nation Association. Now that would be directly contrary to all that has been told me, which is nothing more than a transfer of the shares, and of the business in the nature of a purchase, one of the considerations for which was the covenant to indemnify the British Commercial Company— a transaction which involves two things, the continued existence of the covenantee, and the separate existence of the covenantor. Suppose you call it a welding.] Whether or not there was any such welding as we contend for, a novation was created by the subsequent transactions of the pohcy holder with the British Nation and the European Society. [Lord Westbtoit. — Before we come to consider the effect of this gen- tleman's transactions, I must know from you whether you contend that the British Comi- mercifll Company still was in, rerum naturd existing, or whether you are prepared to con- tend that it was absorbed, swallowed up, and annihi- lated in the British Nation Association. In con- sidering the question of novation, we must o£ necessity determine before it arises whether the first company that entered into the contract exists or not. If it does not exist, then the shareholder must seek his remedy elsewhere; but if it does exist, then you say the policyholder dehberately quitted the company with whom he contracted and took a substitute in lieu of the original con- tracting party.] We contend that the British Commercial Company was in law and in fact absorbed' in the British Nation Association, and annihilated, and that thenceforward the poUcy holder was obliged to look to the British Nation Association for payment. With regard to the second question of novation, Mr. Blundell must be taken either to have known all about the ar- rangements between the companies, or to have known nothing. If he knew, then he must have known that the transferee company were treating him as their own policyholder, and he must have paid his premiums on that footing, and with a clear intention to effect a novation. If he did not know, then he had no right to pay the British Nation or the European rather than any other company, and he cannot in that case allege that he had paid the British Commercial anything, and his policy has lapsed. There are many cases which show that this acceptance of receipts by the policyholder is sufiicient to evidence an intention to effect a nova- tion. We may adopt the words of Yice-Chancellor Malins, in Re National Provincial Life Assurance Society, Fleming's Case (L. Eep. 9 Eq. 306) : " If he did not intend to acquiesce in the transfer of Hability, it was his duty to say so. But he did not take that course ; without a word of objection, without remonstrance, he paid his premiums for several years to another office, and does not jus- tice require that he should be considered as having, although not by express contract, yet by silence, acquiescence and conduct,, adopted such a course, as binds him to adopt the new office, and to relinquish the liability of the old one ?" Having adopted the European Society he has no right to prove against the British Commercial Company. [Lord Westbuey. — I always understood that a man" may have a right to prove against two; when he has elected to prove against one he has lost his right to prove against the other, but until he elects, there is no such obligation. This man may or may not have had a right to prove against the European Society. Possibly he may, because the European Society are bound by the contract with him. If he did do so, I should not allow him to prove against 'the British Commercial Com- pany.] The following cases were also cited : Sudden's case, Albert Arbitration, 16 S. J. 462 ; Pagan's case, Albert Arbitration, 15 S. J. 855. [Lord Westbtjey. — There seems little doubt but that Lord Cairns decided Fagam's case on the effect of the circular. I do not think the decision is limited to the words "additional security." Budden's case was decided with reference to the fact that the policyholder, with perfect knowledge. Jan. 18, 1873.] THE LAW TIMES. 43 European Assurancb] Blunbell's Case. [Aebiteatiojj. joint business, and not in a separateSform. — Well, then, the indenture witnesseth that iiv pursuance of the resolutions which are recited, the British Commercial Company and their representatives transfer and dispose of unto the British Nation Association all the shares in the British Com- mercial Company, and all the interest and goodwill of the shareholders and proprietors therein, and all the life assurance business, and other the business or businesses' thereto- fore carried on by the British Commercial Com- pany. And then it is declared that these are assigned to the British Nation Association in order and to the intent that the British Commer- cial Company and the capital an^l business thereof might be henceforth amalgamated with the British Nation Association. Now I pause for a mo- ment for the purpose of indicating here a conclusion to which I shall adhere in the process of these windings-up. If company A transfers its business to company B, the transfer iu my mind involves an authority to comnany B to carry on that btisi- ness, and that woul* involve power in company B to receive, in the case of policies granted by com- pany A, the premiums payable on those policies, and they would receive those premiums by virtue of the authority impliedly given in the transfer by company A to company B. It is part of the carry- ing on of the business of company A. If the business is transferred, it involves all the subsist- ing policies. It involves the right to receive the premiums that became due by virtue of the con- tracts contained in those policies. If the matter, therefore, does not assume any other shape, or is not transferred into any other contract, all the premiums thenceforth paid by the policyholder at the date of the transfer to company B, the transferee company, will in the first place be con- sidered as received by company B under that im- plied authority. And if company B mean to say that they have received them in another capacity, and by virtue of a new contract with themselves, and not by virtue of the original contract trans- ferred to them, the duty of proving the new con- tract and of proving the new relation falls on company B. Well, the amalgamation deed goes on to state a covenant to indemnify by the British Nation Association given to the British Commer- cial Company ; and I beg that it may be observed what that covenant to indemnify necessarily in- volves. It necessarily involves the fact of the continued existence of the policies and annuities granted by the British Commercial Company, their continuance and existence in accordance with the terms of the original contract. For it is against the original contract that the British Nation covenant to indemnify the British Com- mercial. And it is said that they will indemnify them from all actions, suits, proceedings, costs, damages, claims, and demands whatsoever, for, upon account, or in respect of, the said debts and sums of paoney due from the British Commercial Company or any of them, or for, upon account, tinder, or in respect of, any policy of assurance, grant of apnuity , or other security theretofore issued or granted by the British Commercial Company. Nothing can be plainer than a transaction of this kind. The business, the property, the position, the rights of the original company are transferred to their assignee. They delegate to the assignee all the powers requisite for the purpose of carrying on the business andperforming its ordinary engagements. took the last receipts from the Albert alone, and that his first act was to prove against the Albert.] Bivaz's case, Albert Arbitration, 16 S. J. 590. [Lord Westbury. — ^This case appears to me the plainest thing in the world. Mr. Rivaz receives a letter in which the policyholders in the Western are requested and encouraged to become policy- holders in the Albert ; they are told of the benefits that will result to them. No answer to that letter is made by Mr. Eivaz, to whom it was addressed, except this answer, that he immediately went and paid his premium to the Albert, and thenceforth continued those payments ; and Lord Cairns re- gards that, and I think with great reason, as being a practical answer to the letter.] Kennedy's case, Albert Arbitration, Eeillv's Eep. p. 5, 15 S.J. 729; Andrew's case. Albert Arbitration, 16 S. J. 609; Lancaster's case, 15 S. J. 748. [Lord Westbury. — In Lancaster's case, though no circular may have been sent, there was something more important than a circular, namely, the Albert intimated to the policyholder through his solicitor, that they were acting on the assumption that they were to take the policy. Then having that infor- mation, he goes and pays the Albert.] Re Manchester and London Life Assurance Company, L. Kep. 9 Eq. 643 ; 5 Ch. 640. Napienr Biggins further referred to the difficulty there would be in settling a list of oontributories to the British Commercial Company, which was nev«r registered under any Act. Judgment was reserved. Tuesday, Nov. 6, 1872. Lord Westbury. — This case is, I think, singularly devoid of every circumstance that could induce me to hold that Mr. Blundell has adopted and taken the European Society in discharge of the party originally liable to him, ufimely, the British Commercial Company. It appeared that the British Commercial was a company formed as long ago as the year 1821 ; it was an ordinary joint stock company of that day. Then, the British Nation was formed by a deed of settlement in 1855, and the case states resolutions that were entered into at meetings of the British Commercial Assurance Company, and among those resolutions it is stated that one James Ma- honey was the duly appointed agent of the British Commercial Company at Castlerea, in Ireland. Afteriyards a species of union or amalgamation was formed between the British Commercial Com- pany and the British Nation Association. And I read the principal terms of this amalgamation from the deed which is dated the 31st Dec. 1864. By that deed, after reciting that the continuance of the business of the British Commercial Com- pany separate and apart from the business of the British Nation Association, and the severance of the assets of the one company from the assets of the association having been attended with trouble, and having been prejudicial alike to both the par- ties, it was, on or about the 30th March 1863 con- sidered desirable that the business and assets of the.British Commercial Company and of the British Nation Association should be thenceforth amal- gamated and united, and accordingly the business and assets had, since a certain day in the year 1863, been in practice amalgamated and united accord- ingly. — The business of the British Commercial Company, therefore, was carried on as part of the 44 THE LAW TIMES. [Jan. 18, 1873. EuEOPBAlf AsSITilAlfCE] Bliwdell's Case. [AbBITBATIONv and the second, or transferee company, covenant to indemnify tie transferor company against all of these engagements. Of course the transferee company haTe a right to receive, by virtue of that authority, the premiums payable to the original company, and it is perfectly immaterial what dis- charge they give, or what form o£ discharge they give. • If they give a discharge in their own names, it is equivalent only to my attorney, having the power of attorney from, me, signing the receipt in his own name without adding to it as my attorney. The receipt must be referred to the right that he had to receive, and unless it can be shown that he had some other right to receive than my delegated authority, the receipt must be referred to that authority. Now I mention this because I am by no means disposed to hold that, if a receipt be given by the' British Nation Association in its own name, and the policyholder going to pay TipOn his policy takes that receipt, that the policy holder is to be charged with having entered into a new contract, and that it mus^be ascribed to him that he paid the transferee company in its own right, and not in the righo of the transferor com- pany ; and yet these are the means by which we have hitherto frequently arrived ait the conclusion that there has been a novation of the contract. I refuse to recognise in that bare fact any evi- dence of intention by the policyholder to adopt the transferee company in extinguishment of his claims upon the old, and to substitute a new contract with the assignee company for the original contract that he had entered into. Now the Legislature clearly was of that opinion, as I infer from, the enact- ment that was made in the Life Assurance Com- panies Act of this last session {35 &36 Vict. c. 41). (a.) But it is a strange thing that the Legislature in coming to this conclusion, adopted in fact the rule of the civil law, from which law we have "borrowed the term " novation." It was a natural thing to refer to the civil law for the purpose of ascertaining what were the rules which in that law governed this question of novation, and it is plain that the civil law utterly excluded these ■presumptions that have been made, refused to be guided by presumptions and inferences, and ex- cluded all novation where the intent of a creditor to novate was not expressly and plainly declared. The passage is somewhat long. It occurs in the SOth title of the third, book of the Institutes of Justinian, par. 3.(5) I will read it in the original . (o) Where a company, either before or af ter the passing- ■ of this Act, has transferred its business to or been amalga- mated wildi another company, no policyholder 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-men- tioned company on due payment of premiums to such company, or to have accepted in Heu thereof the liability of the other company, unless such abandonment and acoeptanoe have been signified by some writing signed by him or by his agent lawfully authorised. (6) The following is the whole of the paragraph con- cerning novation : — " Prseterea novatione tollitur obli- gatio, yeluti si id quod tu Seio debeaa, a Titio dari etipu- latus sit ; nam interventu novje personse nova nascitur obligatio et prima tollitur translata in poateriorem ; adeo ut interdum, licet posterior etipulatio inutilis eit, tamen prima novationis jure toUatur, veluti si id quod tu Titio debebas, a pnpiUo sine tutoris auctoritate stipulatus fuerit. Quo casu res amittitur, nam et prior debitor Latin, that there may be no doubt about the inter- pretation, but will construe it in a plain manner as I read every passage: 8ed cam hoe quidem inter veteres constabat, tunc fieri novationem cmto novandi animo secundcum obligationem ituin fiierat. The Latin of the Institutes is not always of the most classical kind, and there may be ai difficulty in following it. The translation is this : But inasmuch as this point was well settled among ancient lawyers, that novation was made then, at that time, when the parties entered upon the obligation with an intent of making a novation. Thai; being settled, per hoe autem duhium erat, there was nevertheless a doubt on this point — • namely, quamdo, at what time, mideretwr hoe fieri, this might- seem to be done, animo novandi, with liberatur. et posterior obligatio nulla est. Non idem juris est, si a servo quis fuerit stipulatus ; nam tunc prior perinde obligatus manet, ao si postea nullna stipulatus fuisset. Sed si eadem persona sit a qua postea stipuleris, ita demum novatio fit, si quid in posteriore stipulatione novi sit, forte ai conditio aut dies aut fidejussor adjicia- tur aut detrahatur. Quod autem disimus, si conditio adjiciatur novationem fieri, sic inteUigi oportet ut it& dioam f actam novationem si conditio extiterit ; alioquin. si defecerit, durat prior obligatio. Sed cum hoe quidem inter veteres constabat, tunc fieri nova- tionem cum novandi animo in sucundam obliga- tionem itum fuerat : per hoc autem dubium erat, quando novandi animo videretur hoc fieri, et quasdam de hoc praesumptiones alii in aHis casibus introduoebant. Ideo nostra processit Conatitutio, qnee apertissime de- finivit, tunc solum novationem fieri quotiens hoc ipsum inter oontrahentes expressum fuerit, quod propter nova- tionem prioris obligationis oonvenerunt ; alioquin nianere et pristinam obligationem et secundam ei aooedere, ut maneat ex utrS,que oaus4 obligatio secundum nostrse constitutionia definitionem, quam lioet ex ipsius leetione apertius cognoscere." Justinian's Institutes.-^Lib. III., Tit. zxix., par. 3. Mr. Sandars translates the passage thus : — " An. obligation is alao dissolved by novation, as for in- stance, if Seius stipulates from Titius for that which is due to Seius from you. For by the intervention of a new debtor a new obligation arises, and the former obli- gation is extinguished by. being transferred into tho latter ; so much so that it may happen that, although the latter stipulation is void, yet the former, by the effect of the novation, ceaaes to exiat ; as for instance, if Titius stipulates from a papU, not authorised by his tutor, for a debt due to Titius from you, in thia case Titius loses his whole claim, for the first debtor is freed, and the second obligation is void. But the case is different, If it is a slave from whom he atipu- lates, for then the original debtor remains bound as if the subsequent stipulation had never been made. But if it is the original debtor himself from whom you make the second stipulation, there wiU. be no novation, unless the subsequent stipulation contains something new, as for instance, the addition or anppression of a condition, a term, or a surety. In saying that, if a condition ia added, there is a novation, we must be understood to mean that the novation will take place if the condition be acoom- pUahed, but that if it be not aocompliahed the former obligation remains binding. The ancients were of opinion that the novation only took plade when the second obli- gation was entered into for the purpose of making the novation, and doubts consequently arose as to the exist- ence of this intention, and different presumptions were laid down by those who treated the subject according to the different cases they had to settle. In consequence, our_ constitution was publishedj in which it was clearly decided that novation shall only take place when the contracting parties have expreaaly declared that their object in making the new contract is to extinguish the old one; otherwise the former obligation will remain binding, while the second ia added to it, so that each contract will give rise to an obligation still in force, ac- cording to the provisions of our constitution, which may be more fully learnt by reading the constitution itself :" ■ (Sandara'a Juatinian, 2nd edit. p. 485.) Jan. 18, 1873.] THE LAW TIMES. 45 EuaoPEAn Assitraiicb] BiUNDBtL's Case. Lkbitbation. an intent to make a novation. It was clear that the animus was required ; but it was doubtful at what time, and how you were to look for the animus, et quasdam de hoa prcesumptiones alii in aUis casihus introduceibant, and different lawyers in different cases were in the habit of introducing certain presumptions upon the point, namely, when the animus arose. Ideo nostra ].)rocessit consti- tutio, therefore our decree has gone forth ; oticb apertissime definivit, which has most plamly defined tune solwm novationem fieri, that at that time only was there to be considered as made a novation of the prior contract, guoties, as often as, hoc ipsum,, this very thing, ex- pressum fiwrit, shall have been expressed — not from presumption — shall have been expressed inter contrahentes, between the contracting parties, quod convenerunt that they had met together propterr novationem for the purpose of makiiig a novation, prioris oiligationis of the prior contract; aMoquim, otherwise manere et pris- iiuam obligationem that the old contract would remain, et seeundam,, and that the second contract, ei aceedere, was to be added to it, ut olUgatio maneat ex uirdqiie causa, in order that the duty, the'obligation, might remain from either cause, from either source. It would be difficult to find words to more exactly express the difficulties that were then felt, the ingenuity by which certain presump- tions had been introduced, how the presumptions varied in various cases, and the necessity in the mind of Justinian that there should be a definite rale on the subject, which should exclude pre- sumption. And accordingly he made that rule, which the Legislature has embodied in its enact- ment, that no novation should be arrived at by presumption, but that it must be arrived at by written evidence of the intention of the party. Now this is the old law. If you take the word the law should accompany the word and the applica- tion thereof. Tou have taken the word novation and adopted it. Take, therefore, the rules by which novation, for the sake of general utility, was originally held to be governed. Now, I mean to adhere to that, although I cannot legislate to the extent of saying that I wiU require a writing. But I wiU require evidence of an intention to make a new contract as plainly as if it were ex- pressed in writing. I do not adopt the language ' of the statute in aU cases to the extent of requiring a writing, because I can conceive a case of this kind which happened, I think, before Lord Oairns. A company, which was the assignee of another company, and had power to grant new contracts in lieu of the old, wrote to an old policyholder, cfiering him a new contract. The policyholder did not return any answer in writing to that, but he immediately went and paid his premiums to the company that made the offer. Lord Cairns held, and very justly, that that was to his mind an lacceptance of the offer. And I think also with him that it was as plainly accepted by the thing done, as if the acceptance had been expressed in writing. Now there iS' no difference between us on the principle of law that governs these cases. Lord Cairns held it to be a question of novation, and that novation was a question of fact. I thold, also, that novation is a question of intention, and that an intention is a fact that must be proved. I will not admit of presumptions or inferences, as the media from which I will infer that intention, any more than Justinian did, when he referred to the uncertainty and difficulty that clouded the sub- ject as long as it was possible to introduce\those pre- sumptions, and he superseded the presumptions by a plain and direct rule. Whenever therefore there is a transfer of business by one company to another, and a policyholder of the first company afterwards goes and pays the second company, the act is equivocal. He may pay the second company, re- garding them as the assignees of the business of the first, and as authorised by the first to receive the premiums, or possibly, if the transferee com- pany has power to grant him a new policy identical with the old, he may intend to pay the premiums to the new company with a view of standing in the same relation to them, that he previously stood in to the old company. But that intention must be proved; it cannot be inferred from the heading of the receipt. The obligation — the onus proiand/i — ^the duty of proving, lies on the company that alleges a novation. It is a question of intent to be evidenced in the clearest manner, and, unless that intent is evidenced, the simple payment of the premiums will be referred to the old contract, and. the old rule which will be considered as stiU. kept up by the assignee of the business, who by virtue of that transfer has a right to receive the premiums on old policies, as authorised by the company granting those policies. These are rales which, I think, tend to solve most of the questions that have been presented. But that would be hardly necessary in the case I have before me to decide,, namely, Blandell's case, because in this case the materials for raising a novation aire of the most evanescent character. Mr. BlundeU originally contracted his policy with an agent of the British Commercial Company, a gentleman of the name of Mahoney, who had an office as agent of the British Commercial Company, at a place called Oastlerea, in Ireland. After the union of the British Commercial Company with the British Nation Association, Mr. Mahoney kept on the same office without any alteration. After the union of the British Nation with the European he con- tinued in the same office and apparently in the same character. Mr. BlundeU knew no other per- son than Mr. Mahoney, he went to Mr. Mahoney originally, and he continued to go to Mr. Mahoney and to pay him until the end. There is nothing at all to ascribe to Mr. BlundeU even a knowledge - of the fact of the union of the companies, and, in point of fact, that he should have had such knowledge is entirely excluded by the case, for the case states as a fact that the claimant never received or had any notice whatever of either of the circular letters, which, on the occa- sion of the transfer to the British Nation were, it is said, sent to d;he policyholders, and on the occasion of the transfer of the British Nation to the European were also sent to the policyholders. Even the knowledge that might have been con- veyed by those circulars was not possessed by Mr. BlundeU, the present claimant. He went, there- fore, and paid his premiums as before, and this highly technical mode of reasoning is resorted to for the purpose of imputing to Mr. BlundeU, who knew nothing, oonstruotive and implied know- ledge. It is said that he took on the last occasion from Mr. Mahoney a receipt, which was in this- form: — Enro-pean Assniance Society. Policy No. 8779. Eeoeived this 2iid day of April, 1867, the sum of nineteen ,46 THE LAW TIMES. [Jan. 18, 1873. European J^sstjbance] Blundell's Case. [Aebitration. pounds And nine pence, heing the payment of twelve month/ premiums and interest from 27 March, 1867, for ak assurance on the life of the Eev. E. Blnndell effected by the before-named policy. Now the "before-named policy" is the policy in the margin, numbered 8779, which was the original number of the policy when granted by the British Commercial Company. It is very true that that number may have been entered upon the receipt for the purpose only of denominating, indicating, and causing easy reference to the policy, the premium on which is represented to have been thus received. Well then, I was told in argument, this receipt is headed European Assurance Society, and it was the duty of this policyholder to have ascertained how the receipt got to be so entitled, and if he had inquired as he might, said the counsel, and ought to have inquired, he would have learnt that the European Society sprung from the BritishNation Association, and he wouldhave learnt that the British Nation Association was nothing in the world more than a company that absorbed and consolidated his original company, and then he would have arrived at the fact that he was dealing •with the European Society, and was not dealing ■with any agent of his original company. Now I must entirely repudiate any notion of dealing with men on such principles. Men coming to deal with a plain contract shall be considered as under- standing the contract to be what it purports to be, and I will not deprive them of this know- ledge and impute to them this kind of constructive notice, to the annihilation of the original contract to which they trusted, unless it be proved to me that they knew perfectly with whom they were dealing, and ,unless it be proved to me that they did apply to the new^ company, as being the company that had absorbed their original contracting party, and the company that was able to grant them a new policy and to enter into a new contract, and that they paid the money with the intent and object that that new contract should be entered into. That is pre- cisely what I find here. It is expressed in the Latin very well. Says Justinian, Tou shall prove to me quod propter novationem prioris ohligationis convenerunt. You shall prove to me that they met together for the purpose of novating, of substituting for the former contract a new con- tract. Therefore, if you could show to me that when Mr. BlundeU went to the old accustomed office of Mr. Mahoney, Mr. Mahoney told him : " Oh ! Mr. Blundell, I have got a new character, I am no longer the agent of the British Commer- cial Company, but I am the agent of the European Society. Nay, I am a very Proteus, because there -was another transformation, I was first an agent of the British Commercial Company, and then became the agent of the British Nation Associa- tion, and now I am the agent of the European bociety ; do you mean to enter into a new con- tract with the European Society?'" Why, then, Mr. Blundell would have been aware of what he was about. Then the parties would have met propter novationem; and then if Mr. BlundeU had said "Yes; I will adopt the European Society, i will pm myself on to the skirts of the European bociety, and I pay you this money of mine in the capacity of their agent," that would have been a different thing. But there is nothing of the kind here. He went there believing that Mr. Mahoney was, as in fact he was, stiU an agent of the British Commercial Company. He was an agent of the British Commercial Company, because after the business of the British Com- mercial Company had been tran-sferred to the British Nation Association, the British Nation Association continued him in the same capacity, and he was an agent still of the British Commer- cial Association because when the British Nation Association transferred their business to the European Society, the European Society continued him in the same capacity. Well then, if we find a case in which the parties have met for the purpose of making a novation, in which the company alleging a novation has a clear right to grant a new contract in the same terms as the original, and when it is clear that they offered to the policy- holder to give him that new contract in lieu of the old one, when it is clear also that upon that offer being so made the policyholder, with a knowledge of the facts, paid his money eo intuitu, that it might be received by virtue and on the footing of the new contract, and not of the old, then there can be novation. Men's dealings will rest on a basis of certainty if we exclude presumptions and implications and constructive information, and allow them to have their rights regulated by what they believed and what they knew and what they had a right to adhere to, until they voluntarily relinquished that right and accepted in lieu of it something else. Now, rightly or wrongly, I have clearly stated to you the plain common-sense prin- ciples, which are not only common sense, but nre warranted by the highest considerations of law, by which I shall guide myself in questions of this kind under this arbitration. I may observe, by the way, although it is a little pedantic to notice it, that it is a very incorrect use of the word nova- tion. The civil law tells you that the word ought to be delegation, which is a particular species of novation, and in that sense the British Commercial Company would be the delegating company, the delegated company would be the British Sation Association or the European Society, the term implying that the company originally contracting delegates to its -creditor, that is offers to delegate to him, another contracting party, and in those cases it is laid down in the Pandects that you must have the clearest proof of the concurrence, com- plete knowledge, and mutual consent of all parties, both the company that delegates, the company that is delegated, and the creditor who accepts the delegated company in lieu of the original company. I say, therefore, that these principles are warranted by common sense, and that they are justified by the highest authority. There is no difference be- tween myself as to the mode in which I view these cases in principle, and former judges ; but I have the advantage of reviewing them by the light thrown upon them by the enactment to which I have referred (36 & 3(3 Yict. c. 41), and I have the advantage of being able to trace that enactment to its source in the civU law from which all this doctrine was derived, and I guide myself by the rules that were then estabhshed for the express purpose of excluding those difficulties and uncer- tainties which were found to arise when proceeding upon presumptuous and imputed knowledge and inferences of intention, instead of adhering to the rule that the intention must be proved and mani- fested in the most definite manner. In the case of Mr. Blundell, I hold that there is no ground whatever for imputing to him an acceptance of the Jan. 18, 1873.] THE LAW TIMES. 47 European Assukance] Royal Naval and Militauy Society's Case. [Aebitbation. European Society in discharge of the British Com- mercial Company, and I hold him, therefore, to be a policyholder of the British Commercial Company, and entitled to all his rights as such. Costs of the applicant allowed out of the assets of the British Commercial Company. I Solicitors for the applicant, Baxter, Rose, and Solicitors for the official liquidator of the British Commercial Company, Mercer and Mercer. Saturday, Nov. 2, 1872. EoYAL Naval and Militab,y Society's Case. Life assurance company — Amalgamation of com- panies — Wlnding-wp — Deed of settlement — Amal- gamation deeds — Interpretation of deeds — Tntst fund. — Property transferred, on an amalgamation, hy one insurance company to another, not im- pressed with a trust in favour of policy holders of transferor company. The deed of settlement of the B. Life Assurance Com- pany contained provisions, whereby the directors might, on the dissolution of the company, obtain from some other company an undertahing to pay all thepolicies, ^c, of the B. Company, and might transfer to such other company so much of the property of the dissolving company as should be agreed upon as sufficient, with the future premiums, to enable the company from which the under- tahing might be obtained to comply therewith. The company was dissolved in accordance with these provisions, and part of its assets was transferred to the E. Society, which entered into the required undertahing. In the subsequent winding-up of the two compamies it was contended by the B. Company that the funds transferred were impressed with a trust in favour of the policyholders of the B. Compcmy, but it was Held that the funds were merged in, and formed part of the general assets of the E. Society. The B. Company's deed of settlement was interpreted not to impose such a trust, and upon the inter- pretation given to the deeds of assignment and amalgcmiation, the funds were to belong to the E. Society absolutely in consideration of their cove- nant to pay the policies, ;^c., of the B. Com- pany. This was a question as to whether the assets of the Eoyal Naval and Military and East India Company Life Assurance Society, which had been transferred to the European Society in 1866, were impressed with a trust in favour of the then existing policyholders of the Eoyal Naval and Military Society, &c. This society was established under a deed of settlement, dated the 1st January 1839, which contained the following provisions for the dissolu- tion of the company : Clause 172 : That it shall be lawful for an extraordinary court of directors, specially called for the purpose, to enter into a resolution recommending the dissolution of the com- pany, and upon such dissolution being so recommended, the same extraordinary court of directors shall caU an extraordinary general court for ta3 purpose of taking into consideration the propriety of dissolving the com- pany, and if at such extraordinary general court a resolution shall be entered into for dissolving the com- pany, then the court of directors shall call a second , extraordinary general court for the purpose of confirming or rejecting such resolution for dissolving, and such second extraordinary general court shall be holden within the space of fifty days after the resolution for dissolving shall have been entered into at the first extraordinary- general court ; and if such resolution for dissolving shall be ■confirmed at such second extraordinary general court, then from the time of such confirmation the company shall be dissolved and the business thereof shall be con- cluded. Clause 173 : That immediately upon the dissolution of the company the court of directors shall, out of the funds or property of the company, pay and satisfy aH immediate claims and demands on the company arising from assurances, annui- ties, or other contracts or engagements, and shall (but sub] ect and without prejudice to the provision hereinafter contained) obtain from the directors or managers of some other assurance company or society an undertaking to pay and satisfy all or any such as the court of directors may ^think proper of the remainder of the claims and demands on the company arising from assurances, annui- ties, or other contracts or engagements, when ai)d as the times for the payment and satisfaction of the same shall respectively arrive, and shall cause to be transferred to some of the trustees of such other assurance company or society so much of the funds or property of the company as shall be agreed upon between the contracting parties as suf&cient, with the premiums that may become payable in respect of all or any of the existing policies, to enable the company or society from whose directors or mana- gers the undertaking shall have been obtained, to comply therewith, and shall make such arrangements with the said directors or managers with regard to the said undertaking as the court of directors shall in their dis- cretion think fit, and shall cause to be done and executed all such acts, deeds and things as in the opinion of the court of directors shall be necessary or advisable for carrying the said arrangement into effect. Provided nevertheless that the court of directors shall be at liberty to continue, for such period as they may think fit, the business of the company so far as regards all or any of the remainder of the claims and demands on the com- pany arising from assurances, annuities, or other con- tracts, and the receipt of premiums, and the benefits of any contract with the company, and to make and carry out such arrangements with bankers and others for managing the business so continued as ta the said court shall seem fit, and to invest such bankers and others with all proper powers in regard to the matters and things committed to their charge or management, and from time to time to vary or rescind any such arrange- ments, and to revoke, or vary, or enlarge any such, powers, and after every or any such rescinding or varia- tions, to act in the matter according to the original powers intended to be hereby conferred on the said court, and to make such allowances, by way of recompense for their care and trouble, to such banker and others respec- tively, as the said court shall think proper, and likewise upon the discontinuance of the business in regard to any of the remainder of the said claims and demands, premiums and benefits, to act in relation thereto, and the policies and contracts from which such premiums and benefits respectively shall result, in the manner first authorised by this clause, and if any funds or property of the com- pany shall remain, after answering the several purposes aforesaid, the court of directors shall cause the same, or so much thereof as shall not consist of money, to be sold, got in, or otherwise converted into money, and shall cause the moneys arising from the said remaining funds or property, or of wmch the same shall consist, to be paid and distributed, at such time or times as they shall think fit, to and amongst the proprietors and other holders of shares in the capital of the company, according to their respective rights and interests therein ; and not- withstanding the dissolution of the company, these pre- sents and the provisions herein contained, and all powers, privileges, rights, and duties of the proprietors and other holders of shares, including the powers to call and hold extraordinary general courts, and to call for and enforce the payment of further instalments on shares, shall, until all claims and demands shall have been respectively satisfied, and provided, for as aforesaid, and until a final division shall have been made of the residue, if any, of such moneys as aforesaid, remain and continue 48 THE LAW TIMES. [Jan. 18, 1873. Ettkopeau Asstjkance] Eoyal Natal and Militabt Society's Case. [Abbitbation. in full force so far as the same may be necessary for ■winding-up the concerns of the company, and for enabling the court of directors to dispose of the funds and property of the company, and to satisfy and provide for such claims and demands, and to make such payments and disburse- ments as aforesaid. In 1866 arrangements were made for the transfer of the business of the Eoyal Naval an d Military Society to the European Society. These were carried into effect by two deeds, one called a deed of assignment and the other a deed of amalgama- tion, both dated the 17th Sept. 1866. The deed of assignment recited {inter alia) the 172nd and 173rd clauses of the Eoyal Naval and Military Company's deed of settlement, and a provisional agreement for an amalgamation under these clauses, whereby it was agreed (inter alia) 1. That in the event of and subject tp the Royal Naval and Military Society being dissolved, under and accord- ing to the Eoyal Naval and Military Society's deed of settlement, within three calendar months from the date of the said provisional agreement, and subject to the said agreement being confirmed by the extraordinary general courts of the Eoyal Naval and Military Society, required to sanction such dissolution, the European Society should by deed adopt and take over in an effectu- ally binding way, and undertake to pay and satisfy, in con- formity with the terms of the deed of settlement of the Eoyal Naval and Military Society, all the liabilities on life and annuity policies granted by the Eoyal Naval and Military Society, and on foot, or which, having then become claims, remained unsatisfied on the 6th Aug. then instant, and all other debts, liabilities, claims, or de- mands either due from or current against the Eoyal Naval and Military Society, as at and from that date, and including the capital paid up by the shareholders of the Eoyal Naval and Military Society. ' 3. That the presumed realisable value of the property and assets of the Eoyal Naval and Military Society should be taken at the agreed sum of 98,0601. 7s. 3d., of which 83,951J. 7s. 3d. should be taken as the agreed and sufficient proportion, together with the premiums to become payable on the existing policies of the Eoyal Naval and Military Society, to enable the European Society to pay and satisfy the aforesaid liabilities , debts, and engagements of the Eoyal Naval and Military Society, and such proportion of the said property and assets should, in consideration of and subject to the European Society 80 taking to and undertaking to pay and satisfy such ■liabiUties, debts, and engagements, be transferred to the trustees of the European Society, or some of them, or otherwise be held in trust for that society. The deed further recited the deed of amalga- mation of even date, and also that the portion of the property and assets of the Eoyal Naval and Military Society, that was referred to in the 3rd clause of the provisional agreement as repre- senting 83,951^. 7s. 3d., was set forth in the first part of the schedule thereto ; and then the deed witnessed — _ That in pursuance of the hereinbefore recited provi- sional agreement, and for further and fully effectuating the siune on the part of the said Eoyal Naval and Mili- tary Society, and of the directors thereof, and in pur- suance also of the agreement in this behalf hereinbefore mentioned, and in oonsi<' elation of the premises, and particularly in consideration of the execution of the hereinbefore recited deed of even date herewith by the said iiuropean Society, and the directors thereof, the directors ot the said Eoyal Naval and Military society hereinbefore named as parties hereto of the first part, with the oon- cnrrenoe of the directors hereinbefore named as parties hereto of the third part, [heingthe Directors of the European Society'] do hereby assign to the said European Assurance So- "eiy, and their successors and assigns all the benefits and advantages of the business which until ttie dissolu- tion hereinbefore mentioned of the said Eoyal Naval and Military Society was carried on as aforesaid by the same society, so far as the same are continuing and capable of being transferred, and all books, documents and other papers and writings used in or relating to the same business or the concerns thereof belonging to or in the custody of the said directors at the time of such dissolu- tion, and also all such_ of the assets of the said Eoyal Naval and MiHtarj; Society comprised or specified in the first part of the said schedule hereto as have not been already or shall not be vested in the said European Assurance Society, or in trustees for the said society by the means or in the manner hereinbefore recited ; and all the estate, right, title, interest, claims, and demand of or by the directors of the said Eoyal Naval and Military Society, or of the proprietors thereof, and which they the said directors can bind of and in aU the premises hereinbefore expressed to be assigned (except such assets as were expended or applied by the same directors in paying or discharging as aforesaid such of the habiUtiea as were paid or discharged by them since the exeoutiou of the hereinbefore recited provisional agreement, and except the paid up capital of the same society.) To have and to hold the said premises hereinbefore expressed, to be assigned nnto the European Assurance Society, their suooessors and assigns, absolutely and for their own use. The deed of amalgamation, after reciting [inter alia) the deed of assignment of even date and a provisional agreement for amalgamation, wit- nessed That in pursuance of and for effectuating the hereinbefore recited provisional agreement, and the clauses or stipulations thereof, so far as the same are to be performed or carried into effect by the said. European Society and the directors thereof, and in pursuance of the agreement lastly hereinbefore re- cited, and in consideration of the premises, and in par- ticular in consideration of the said assets of the said Eoyal Naval and Military Society, comprised in the first part of the said schedule to the hereinbefore recited indenture of even date herewith, and amounting as afore- said to 83,951Z 17s. 3d., haying been, except as aforesaid, so transferred, or made over, or intended to be trans- ferred or made over as aforesaid, to the said European Society or the trustees thereof, they, the said European Society, for themselves, their successorsi and assigns, with the privity and consent of the directors of the said society, parties hereto of the second part, and they, the same directors (so as effectually to bind the same company and the property, and assets thereof, but not so as to undertake hereby any personal responsibility, further or otherwise), do respectively grant to and covenant with the said trustees of the said Eoyal Naval and Military Society, parties hereto of the third part, their executors, administrators, and assigns, that the said European Society, their successors and assigns, and the property and assets of the same company, including the assets and property of the said Eoyal Naval and Mihtary Society, assigned or to be assigned as aforesaid, as part thereof, shall undertake and be bound by, and pay and satisfy all the liabilities on life or annuity policies, granted by the said Eoyal Naval and Military Society, and on foot on the 6th day of August in the year of our Lord 1866, or which, having then become claims, remained un- satisfied on the same 6th day of August, and all other debts, liabilities, claims, and demands, whatso- ever, present or future, of, upon, or against, the said Eoyal Naval and Military Society, or the trustees, direc- tors, or proprietors thereof, except so far as the said policy liabilities, and other debts, liabilities, claims, or demands have, since the date of the hereinbefore recited provisional agreement, be,en paid or discharged by the directors ot the said Eoyal Naval and Militery Society as aforesaid, from or out of the assets of the said Eoyal Naval and Military Society, comprised in the first part o£ the said schedule to the hereinbefore recited indenture of even date herewith. And also that the said European Society, their succesaoie and assigns, shall and wUl, from and out of the property and assets of the said European Society, inclusively of the said assets of the said Eoyal Naval and Military Society lastly mentioned, as part thereof (except as aforesaid) save harmlesa and Jim. 18, 18V3.J THE LAW TIMES. 49 European AssuaANCE] Eoyal Navai and Militart Society's Case. [Akbitkaiion. indemnity, and keep indemnifted, the trustees, directors, aad proprietors of the said Royal Naval and Military Society and every of them and their respective heirs, executors, and administratorav and their re- spective estates and eflfects, from and against all the said- liabihties on We or annuity policies, ""and other debts, liabilities, claims or demands re- spectively, lastly hereinbefore mentioned; and from ^nd against all claims and demands, actions, suits, controversies, losses, damages, costs, and expenses in anywise relating to the same liabilities, and other debts, liabilities, claims, or demands respectively, 'or for or on account of any default, n-gleot, or omission to dis- charge or meet the same duly according to law, or any default on account of in respect thereof. Some portions of the assets so transferred still ■existed in specie, but others did not. In the winding-up the trustees of the Eoyal Naval and Military Society submitted it for tbfe -consideration of the arbitrator, whether the assets so transferred were held by the European Society upon trust for the policyholders of the Eoyal Naval and Military Society, or whether after the transfer they became merged in and formed part of the general assets of the European Society. Waller appeared for the trustees of the Eoyal Naval and Military Society, and contended that the society's deed of settlement imposed a trust upon any assets that might be transferred in favour of that society's policyholders, and that, if that were not so, it was the intention of the deeds of amal- gamation and assignment to create a trust. [Lord Wesibukt. — If it had been intended to reserve the trust in favour of the creditors over the property handed over to the European Society, the parties would have taken care that that property should be kept apart, should be .vested in the names of trustees, and should preserve its identity as property of the Eoyal Naval and Mihtary Society, to be applied, pro re nata, whenever the claims of creditors should arise. There is no pro- vision for keeping this 83,951L 7s. 3d. in the names of trustees, apart from the property of the European Society.] Montague Coolcson (with him Napier Higgins, Q.O.) appeared for the oflSoial liquidators of the European society, but was not called on. Lord Wesibtjry. — This case has been very properly brought forward, for it would have been quite impossible to have proceeded with this liquidation with this claim outstanding — until the question cf the validity of the claim, which would have abstracted a considerable portion of assets, had been decided. It has, therefore, been brought forward by the trustees of the Eoyal Naval and Military Society in a very proper manner. But the nature of the case, although it is rather a singular one, does not seem to me to admit of any reasonable doubt being entertained. By the deed of settlement of the Eoyal Naval and !mlitary Society, provision was made for the keep- ing in hand the property of the company. Then by the 172nd section the dissolution of the com- pany is provided for. By the 173rd section the question of what was to be done in the event of that dissolution is taken up-. And first of aU the trustees are directed out of the accumulated pro- perty of the Eoyal Naval and Military Society to pay all those debts which admitted of present pay- ment. There would naturally be with an insur- ance company a great number of debts that did not adtait of present payment : there would be con- tingent liabilities that might or might not ripen into debts. There would be a number of engage- ments that were solvenda in futuro ; therefore with, regard to them no present immediate action could be taken for tho purpose sf releasing the society and the shareholders of the society. Well, then, a very prudent step is next taken in the deed, and it is this : The trustees of the Eoyal Naval and Military Society are authorised, with regard to this portion of its liabilities, to contract with another company that such other company will take on its shoulders these liabilities, and will in- demnify the shareholders of the Eoyal Naval and Military Society from these liabilities when- ever they shall arise. But then it was felt that of course the assets of the company remaining after the payment of the present debts would re- present a fund out of which these future liabilities would have to be paid, if there were no amalga- mation with another company, and therefore it is provided by the 173rd section, that such por- tion of the assets of the Eoyal Naval and Military Society remaining after payment of present debts as would, in the opinion of its own trustees, and the trustees of the directors of any company with whom it contracted, be enough to enable that company to be sure of paying the creditors, that that should be abstracted from the whole- body of the remaining assets, and should be handed over to the company. And the question that arises is this : did they intend, or can it be fairly imputed to them,-having regard to the words used, that the portion of the assets so abstracted from the general mass was still to be kept apart as a separate fund by the directors of the company to whom it should be handed over ? Or was it intended that it should be 'regarded as a consideration by such recipient company for the covenant that they entered into to indemnify ? Avery little more, or a very little less than what we have, might probably have furnished sufficient ground for that contention, but it cannot be maintained consistently with the express words that we have here, first of all, in the 173rd clause, it is distinctly said, that they " shall cause to be transferred to some of the trustees of such other assurance company so much of the funds or property of the Eoyal Naval and Military Society as shall be agreed upon between the con- tracting parties as safficient with the premiums that may become payable in respect of all or any of the existing policies, to enable the company to comply therewith." There is nothing at all ap- proaching to the continuance of a trust, or declara- tion of a trust, in the recipient company — I mean by recipient company, the company that was to receive from the Eoyal Naval and Military Society this agreed on amount of funds. They are to receive it absolutely. They may throw it into their assets. It is an augmentation of their means, and it is in order that they may be strengthened in their solvency and in their pro- perty, and therefore the better able to comply with the undertaking to indemnify, which is the con- sideration to be given by them for the acquisi- tion of this additional property. Then, as if to render the matter clear beyond the possibility of doubt, the next deed that we have is the deed of assignment, and after distinguishing the amount of the property which was to be regarded as the consideration for the indemnity and stating 'its &0 THE LAW TIMES. [Jan. 18, 1873, Bdeopeai*- Asstjeance] Wallberg's and kindeed Cases. [Akbitbation. value, and showing how parts of the assets had been disposed of for the benefit of the Euro- pean ; the entire remaining assets of the Royal ITaval and Military Society are expressly assigned and transferred, by the Eoyal Naval and Mili- tary Society to the European to hold to the European "absolutely and for their own use," words which utterly exclude the notion of any trust being intended, and utterly exclude the notion of that which might be short of a trust, the obligation to keep the property so transferred apart, separate, and intact, to answer from time to time the demands in respect of the future debts of the Koyal Naval and Military Society. Both hypotheses, both con- tentions, are utterly excluded by those words. And no words could have been chosen more apt and more effective to express the thing intended, namely, that the property which was the estimate of the amount of future liability, was to become immediately the absolute property of the European Society. We come next to the deed of amalga- mation, and an argument has been attempted to be founded on the covenant to indemnify con- tained in that deed. Whenever parties who enter into a covenant intend to exclude the per- sonal liability, but to admit the liability only to the extent of the property, that is ex- pressed in the introductory words, and here the covenantor does not intend that he shall be personally answerable, but that he shall be answer- able only to the extent of the property of the company, and, as if to» exclude the possibility of the implication contended for, the property trans- ferred to the European by the deed of assignment is referred to and specified as being part of the property of the Bpropean, and to the extent of that as well as to the extent of the other property of the European the covenant extends. Now I do not think that the trustees of the Eoyal Naval and Military Society would have done right to permit this to pass sub silentio, without taking the opinion of the court. They have done it in the most con- venient form, and in the least expensive way. I decide against them, but as they have brought it forward in a manner which saves the European Society from a great, deal of trouble, I think it right, although I declare contrary to their appli- cation, to give them the costs of the application out of the assets of the European Society. That will be in effect out of the fund. Solicitors for the trustees of the Royal Naval and Military Company, Garrard and James. Solicitors for the official liquidators of the Euro- pean Society, Mercer and Mercer. Oct. 22 ; Nov. 1, 2, and 5, 1872. Wallbekg's Case; Marcus's Case ; Sullivan's and Smythe's Cases ; Trustram's Case. Life Assurance Company — Winding-xip — Policy- Annuity contract— Amount of proof— Principles on which claims are to he estimated— Date of valuation of policy — Interest on unpaid annuities — Claim hy policyholder to home certain premiums paid bach to him. In the winding-up of the European Society and the companies amalgamated therewith, the method adopted for estimating the amount of proof on policies and annuity contracts was that established by the Life Asswra/nce Companies Act 1872 for future windings-up, namely, " An annuity shall he valued according to the tables used hy the company which gramied such annuity at the time of grant- ing' the same, and where such tables cannot be ascertained or adopted to the satisfaction of ihs court then acccordi/ng to the table known as Hie Ooverrmient Annuities Experience Table, interest being reckoned at the rate of four per cent, per annum. The value of a policy is to he the diffe- rence between the present value of the reversion in the sum assured on the decease of the Ufe, including any bonus or addition thereto made before the com- mencement of the winding-up and the present value of the future wrmual premiums. In calcu- lating such present values the rate of interest is to be assumed as being four per cent, per annum, and the rate of moi-tality as that of the tables known as the Seventeen Offices Experience Tables. The premium to he calculated is to he such pre- mium as, according to the said rate of interest cmd 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 cha/rges." The Life Assurance Companies Act 1872, was interpreted to mean that the time at which, the valuation is to he made is the date of the ord&r to wind-up. Where amy po-emium became due and the thirty days of grace also expired before the date of the petition to wind-up, hut the premium was not paid hy the policyholder, the policy was void ; where the pre- mium beca,me due before the presentcUion of the petition hut the thi/rty days of grace did not expire until after that date, and also where the p^-emvum became due at any time during the period of insolvency between the presentation of the petition to wind-up cmd the winding-up order, whether the thirty days of grace expired before or after the winding-up order, im every such case the poUcy holder, who had not paid such premium, was to have the option of paying it on presenting his policy for valuation. In order to prove on a policy, all premiums that heca/me due before the winding-up order were to he paid to the official liquidators ; the amount of the valuation of the policy could not be set-off against unpaid pre- miums. Luring tlie seven months' interval beween ihe pre- sentation pf the petition to wind-up and the winding-up order, the Court of Chancery had made an order " that all premiums on policies to he received by the society he carried to a Suspense Account until further order," and a second order that the premiums might he paid " to a sepa/rate account to be entitled, ' The Renewal Premium Account,' upon the condition that the respective persons paying such renewal premiums may (pro- vided an order be made for winding-up the com- pany) have such premiums returned in full." Those who paid tliei/r premiums in accordance with either of iliese orders were now held to be entitled to receive them back, provided they .aban- doned their claims on their policies ; but if they brought in their claim, such premiums were not to he repaid to them. Luring.the same interval an order was made hy the Court of Chancery that the society might continue to pay all annuities not exceeding 601., and yearly sums not exceeding bOl. on account of annuities Jan. 18/1873.] THE LAW TIMES. 51 EUBOPBAN AsSTjaANCE] Wallbekg's and kindred Oases. [Arbiteation. exceeding that amount. It was now held that these sums were to he retained hy the annuitants, and a deduction made from the amount of their proof. Wheffe an instalment on an annuity hecame due before the presentation of the petition to wind-up and was not paid, the annuitant was entitled to prove for that instalment, together with interest from, the day of fayment down to the presentation of the petition. Where the instalment hecame due after the presentation of the petition, and was not paid, the proof luas to he for the instalment with- out interest. Wallherg's case and Marcus's case involved the question as to the time at which the valuation of a policy is to be estimated in the winding-up of an insurance company ; and also a question as to the repayment of premiums which had been paid by pohcy holders in accordance with orders of the Court of Chancery. The successful petition to wind-up the European Society was presented on the 10th June 1871, and the order to wind-vip was made on the 12th Jan. 1872. In the interval certain orders were made by Yice-Chancellor Malins, in the proceedings on this petition, and on another petition to wind-up that was presented subsequently. The following was an order of the 25th July 1871: The court being of opinion that it has been proved that the European Society ig insolvent, and the European Society by their counsel applying that the further hear- ing of the said petitions may stand over for the parpoae of seeing whether an arrangement can be made under the 22nd section of the Life Assurance Companies Act 1870 or otherwise, this court doth order that the further hearing of the said petitions do stand over until the first petition day in Michaelmas Term 1871. And it is ordered that all actions, suits, and other proceedings against the said society, including the action commenced "by the said Benjamin Mallinson, be stayed until further order, and it is ordered that the said society be at liberty, until further order, to continue the payment of rent, taxes, clerks' salaries, servants' wages, and all other ofSoe expenses, and of the reasonable expenses of the committee appointed at the meeting of policyholders and shareholders held on the 20th July 1871, at the head oiEce of the said society, and it is ordered that the said society be at liberty until further order to continue to pay all annuities not exceeding 501., and in the discretio n of the said society yea/rly sums not exceeding 501. on accownt of annuities, exoeemng that amount, such payments to annuitants to be taken into account in adjusting any claim they may have against the said society. And it is ordereii that all premiums on policies to be received by the soAd society be cwrried to a suspense account vntil further order. Any of the parties are to be at liberty to apply as there may be occasion. The following notice was then issued to the policyholders : Notice. It is particularly requested that the premium men- tioned in the annexed notice be remitted within the days of grace direct to the chief office, No. 17, Waterloo-place, Pall Mall, London, S.W. No deduction of any kind whatever wiU be allowed. The premium will be carried to a suspense account, pursuant to an order of Vice-Chancellor Sir Eiohard Malins, made on the 25th July 1871, in the matter of two petitions against the society now pending before him, unt0 such Tice-Chanoellor may make a further order in relation thereto. On the 17th Nov. 1871 the following order was made : That the said petitions do respectively stand over till the first petition day of Hilary Term next, with liberty for any parties to apply to have them or either of them restored at an earlier day ; and in the mean time it is ordered that C. J. Bunyon, W. P. Pattison, and S. P. Low be appointed provisional offloial liquidjitors of the said European Assurance Society. . . . And it is ordered that the powers of the said provisional official liquidators ba limited and restricted to the followins; acts, that is to say, to call meetings of the policy holders of the said company to consider any arrange- ments or arrangement which have or may bo proposed for their benefit or the beiTefit of the said company, and to give such notices as may be necessary to enable any application to be made to Parliament in the next session with reference to the affairs of the said company, if the court shall hereafter think fit to authorise such to bo given, and to apply to the judge in chambers as to the appointment of a chairman of any meetings of the said company. And it is ordered that any premiums that may be received on any policy of assurance of the said company be continued to be carried to a sepa- rate account, and that the said provisional official liquidators are to continue to carry on the business of the said company so far as is necessary for keeping together the business of the said company, and to collect and get in all outstanding assets of the company. . . . On the 7th Dec. 1871, a further order was made: That the said provisional official liquidators, or the official liquidators of the above-named society, if and when appointed, be at liberty, until further order, to rsqeive from all persons assured with the above-named society, the renewal premiums which may become due on the policies of the said society, and to carry the same to a separate account, to be entitled " The Renewal Pre- mium Account," v/pon the term or condition that the respective persons paying such renewal premiums may (providedan order be made for the luinding-up of the said society), have such premium^s returned in full. And it is ordered that the said provisional official liquidators be at liberty forthwith to issue notices to holders of policies in the said society that the renewal premiums thereoa will be received upon or subject to such condition. In accordance with the provisions of this order the provisional official liquidators issued the fol- lowing notice to the policyholders : European Assurance Society. Sir, — We beg leave to acquaint you that the yearly premium on the undermentioned policy on the life oil yourself will become due on the day of , and to keep the policy in force the said premium must be paid within thirty days from that date at the chief offices, 17, Waterloo-place, Pall-mall, London. ... It is particularly requested that the premium mentioned in this notice be remitted within the days of grace direct to the chief office. . . . The premium will be carried to a sus- pense account, pursuant to an order of Vioe-Chancellor Sir Eiohard Malins made on the 25th July 1871, and con- tinued by an order dated 17th Nov. 1871 in the matter of two petitions against the society now pending before him, until such Vice-ChanoeUor may make a further order in relation thereto. C. J. BuNtON, ■) Provisional W. P. PATTISON. I S^q'SdXrs. S. P. Low, N.B. — Premiums cannot be received after the expira- tion of the days of grace without the production of satis- factory evidence of health and the usual fine. Mr. Wallberg's half-yearly premiums on two policies bfeoame due on the 1 Ith Sept. 1871, and he paid one on the 16th Sept. 1871, and the other on the 19th Sept. 1871, to the " suspense account," in accordance with the Vice- Chancellor's order of the 25th July 1871, and received receipts In tha following form : — European Assurance Society. Premium M 7s. 6d. on the life of W. W. Wallberg. Received, the 16th day of Sept., 1871, the sum above stated, being the amount of premium payable to this society for the renewal of policy No. 5836. for six months, from the 11th Sept. 1871, according to the tenor of the said policy, such sum to be carried to a suspense ac- count, pursuant to an order of Malins, T.C. made ou the 25th July 1871, in the matter of two petitions 52 THE LAW TIMES. [Jan. 18, 1873. Etjropban Assukance] WALlBEEe's AND KINDEED CaSES. [Absitkation. against the society now pending before him, until sneh Viee-ChanoeUor may make a farther order in relation thereto. ^■^•I'Sl^-tors. Mr. Marcus's half-yearly premium on a policy became due on the 26tli Nov. 1871, and was paid •on the 21st Deo. 1871. The following was the receipt given : — European Assurance Society.. Premium .£17 18s., on the life of J. Marcus. Beceived, the 21st day of Dec. 1871, the sum above stated, being the amount of premium payable to this society for the renewal of policy No. 6094, for twelve months, from the 26th Nov. 1871, aooordiag to the tenor of the said policy, such sum to be carried to a suspense account pursuant to an order of Malins, V. C. made on the 25th July 1871, and continued by order <3ated 17th Nov. 1871, in the matter of two petitions ' against the society now pending before him, until such Vice-Chaneellor may make a further order in relation thereto.. For self and Co-provisional Liquidators, , W. P. Pattison. Subsequently an order was made by the Vioe- Chancellor that some of the premiums paid under these order should be repaid to the policy holders. 0.n the 19th Aug. 1872, [an order was made by the arbitrator suspending the repayment of pre- miums. It was now contended on behalf of Messrs. Wallberg and Marcus, that the date of estimating the value of the policies was the date of the petition to wind-up, and that the premiums paid •after that date ought to be returned to them in full ; and that, if the date of the winding-up order were taken as the date of estimating the value of the policies, then the premiums, so paid after the presentation of the petition to wind-up, ought, Tinder the orders of the Vice-Ohancellor, to be returned or to be set-oflf against their dividends ■and not against their proof on their policies. Southgate, Q.C. and Homer for the applicants, contended that the date of estimating the value of the policies is the date of the presentation of the petition to wind-up, and consequently the premiums that accrued due after that date need not have been paid. In Lancaster's case (Albert Arbitration, 16 8. J., 103) there was no intention to dis- criminate between the date of the petition and the date of the winding-up order, for in the case of the Albert Company the order was made withiu a Tery_ short time after the presentation of the petition. "What was meant to be decided in Lan- caster's case was the question as to the mode of making the valuation. Moreover, under the 84th section of the Companies Act 1862, the winding-up IS to be deemed to commence at the time of the presentation of the petition ; and in the Life Assur- ance Companies Act 1872, (a) which estabhshes (a) 35 & 36 Vict. c. 41 s. 5.— Where a life assurance company is being wound-up by the court, or subject to the supervision of the court, or voluntarily, the value of every life annuity and life policy requiring to be valued in such -winding-up, shall be estimated in manner pro- vided 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 cognisance of the winding-up, so order, which order that court is hereby empowered to make, i it think it expedient so to do, on the appUoation of any person interested in the winding-up of such company. First Sched-ulb. Rule for valuing an annuity.— A^i annuity shall be 19-alued according to the tables used by the company the method of valuation for future windings-up the date for making the valuation is not fixed expressly, but it may be inferred that the Act points rather to the date of the presentation of the petition. This was clearly the date taken by Vice^> Chancellor James in Re Albert Life Assurance Gompami, Cook's case (L. Eep. 9 Eq. 703). The same conclusion may also be inferred .from jB« Trent and Humher Gormpany, Ex parte Gamhrian Steam Packet Gompany (L. Bep. 4i Ch. 112). [Lord Westbtjey. — Independently of Gooh's case, are there any arguments, any principles, any ana- logous things, that you can cite in support of your contention PJ It has been decided at law that where one party to a contract has intimated an intention not to perform it, you may sue for breach of the contract without waiting till an actual breach has taken place : {Danube and Black Sea Railway, Sfc, Gompany v. Xenos, 11 C. B., N. S., 162; 13 C. B., N. S., 825). That is analogous to the question that arises in this case. [Lord Wbstbubt.— All that is quite clear; that when one party has to do something for the bene- fit of another; and the other says, " I dispense with that, for I do not mean to perform the contract," he is under no obligation to fulfil that condition.] And you need not wait till there is an actual breach. [Lord Westbukt. ^I am glad to find the courts of law adopt- ing such an equitable principle. That has long been known and settled. The difiioulty I have here is, the obligation of an individual to pay the premium before he can present the policy as a current valid contract.] Some of the payments were made under a distinct contract that the pre- miums were to be returned, and surely these pro mises of the Court of Chancery will be abided by. [Lord Wbstbury. — All these orders are very painful to me, because they have been productive of an immense amount of expense to the company. And why a thing was ordered to be paid one day, and ordered to be repaid another, I am unable to divine, unless it be that there was uncertainty of purpose in the mind of the court as to the time when the valuation was to be made. If the time of valuation is the date of the presentation of the petition, then the orders are accounted for, but if the time of the valuation is the date of the wind- ing-up order, then these orders are wholly imma- terial.] Napier Higgins, Q. C. and Montague Gookson appeared for the official liquidators of the Euro- pean Society, but were not called on. 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 Experience Table, interest being reckoned at the rate of our per cent, per annum. Rule for vahiing a policy. — The value of a 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 bonns or addition thereto made before the joommencement of the winding-up, and the present'valne of the future annual premiums. In calculating aucli present values, the rate of interest is to be assumed as being four per cent, per annum, and the rate of mortality as that of the tables known as the Seventeen Offices Experience Tables. 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 tor the risk incurred by the office in issuing the policy, exclusive of any addition thereto for office expenses and other charges. Jan. 18, 1873.] THE LAW TIMES. sa European Assubance] Wailbbeg's and kindeed Cases. [Ajibiteation. Lord Westbtiry. — I will not have any answer in • tliis case at the present moment, but if there is any other policy holder who wishes to be heard on the points so ably argued by Mr. Southgate, I should like to have an opportunity of hearing him before I finally decide the question. I should not like to decide a question of this great magnitude npon any single argument, however able it is, and therefore, if there is any ot^her policy holder, any individual, or two or three conjointly, who desire to be heard on the point, if he or they will com- municate with Messrs. Mercer, an opportunity of a further argument shall be given before I decide the question. Judgment was accordinglij reserved. Friday, Nov. 1, 1872. Trustkam's Case. In this case it was declared by Lord Westbury that in all cases in which premiums had become due, according to the terms of the policy, before the date of the presentation of the petition, but where the thirty days of grace allowed for payment thereof did not expire until after the date of the presentation, the policyholders should be at hberty in the ivinding-up to pay or satisfy those pre- miums before proof. In addition to his ordinary policies Mr. Trus- tram had two policies, each assuring him 150Z. a year, or with regard to one policy 1678Z. 6s. 3d., according to his option, in case he should, during the currency of the policy, sufier from permanent incapacity through paralysis, blindness, insanity, accident, or otherwise be prevented from following the duties of his ordinary profession. The order to wind-up the European Society having been made on the 12th Jan. 1872, a claim was sent in on these policies on the 10th April 1872, Mr. Trustram died on the 25th June 1872. His repre- sentatives now claimed that, inasmuch as at the date of the winding-up order a larger premium must have been paid to any other company for a similar policy on the assured, who was then of advanced age, they were entitled to bring in a claim on the policies, and that, notwithstanding the death of the assured. Graham, Hastings for the apphcant. [Lord "Westbuet. — Suppose there is a policy assuring 5001. to a man if he has the gout; he sends in his claim in April 1872 for the value of the policy, but before anything can be done he dies without ever having had the gout. Is there anything in that case to value ? In estimating the policies, what are we to do with such a policy as this, a policy against disease ? It does not come within any tables. There is no other company that carries on such a wild business.] The principle of estimating the value of these policies was not laid down. The policyholders will bring them in for valuation, and their value wiU then be determined. Satv/rday, Nov. 2, 1872. Stjllivan's and Smtthb's Cases. In these cases the question arose as to the method of valuing the annuity contracts granted by the insolvent assurance companies. There were also ftirther questions as to interest on certain instal- ments of annuities which became due before the winding-up order, and as to other instalments of' amounts under BOl., some of which in the interval between the petition to wind-up and the winding- up order, had been paid to the annuitants under the order of Yice-Chancellor Malins, dated 25th July 1871. J. W. Ghitty appeared for the applicants, and ia claiming interest on the instalments of annuities that became due before the winding-up order, referred to Watis's and Woodcock's case, Albert Arbitration, 16 S. J. 517. Montague Coohson appeared for the official liqui- dators of the European Society. Lord Westbuby. — Mr. Chitty, what I decide in your favour is this, that as to the instalment of your annuity that became due before the presen- tation of the petition, you will be entitled to prove that, with interest from the day of payment down to the presentation of the petition. You wiU be entitled to add that amount of interest to the proof of the amount of the instalment. Secondly, 1 decide, as to the instalments that became du& after the presentation of the petition, but before the date of the order to wind-up, that you wUl be entitled to prove the amount of that instalment, or those instalments, but without any interest thereon. Thirdly, I decide in your favour that your annuities are to be valued as at the date of the order to wind-up, and that you will be entitled to prove for the amount of the valuatiori. Then as to the pay- ment made between the date of the presentation o£ the petition and the making of the order to wind- up, you will keep that sum of money in your pocket and give credit for it, as against the instal- ments of the annuity that become due before the date of the order to wind-up. Walmerg's Case. Nov. 2. — Bomer now made an application in this case, which stood for judgment, that, if it were held that the date of the winding-up order was to be taken as the date of estimating the policies, the policy holders might have the option of electing to abandon their proof, and to claim the return of the premiums paid between the dates of the presen- tation of the petition and the order to wind-up. Nov. 5. — Judgment was now given in Wallberg's case and the kindred cases. Lord 'Westbttrx. — In this case I have to decide two points, one as to the time when the valuation of policies and annuities is to be made, the other with regard to the dealing with those sums of money that were paid into court under the orders or at the invitation of Malins, V.C, and have not been repaid. Now, on the first point, with regard to the time of the valuation of a policy or annuity, it is a matter of surprise to me that any doubt should have been entertained. Doubts, however, have been entertained by difierent judges even as late as the last Act of Parliament (35 & 36 Vict. c. 41), wherein some indefinite enact- ments may probably be attributed to the exist- ence of that doubt. But if you examine the subject, I think it will be admitted at once that there can be no doubt upon the question. The necessity for a valuation of these claims against the company arises from this fact, that all the property of that company is under the winding-up order handed over for equal distribution among its 54 THE LAW TIMES. [Jan. 18, 1873. ECKOEEAN AsSUEAJSOE] Wallberg's and kindred Cases. [Akbitbation. creditors. Of those creditors annuitants and holders of policies granted by the company are some, and the necessity of making an equal distribution of the assets of the insolvent company renders neces- sary also a valuation of these claims. These are claims to arise, in the case of annuities from time to time m juturo, in the case of policies they are contingent claims, arising upon a contin- gent event, namely, the death of the person to •whom the policy is granted. The Legislature has determined, and in all insolvencies the same rule applies, that in' the course of the administration of the estate of an insolvent company, these debts shall be valued ; they must be valued ; you could not withhold out of the assets of the company a large sum of money and keep it invested or in suspense, to answer the claims when they arise. Tou must have a present value put on these future claims, and ttat present value represents the sum for which the claimant, the holder of the claims, ■will be entitled to rank among the rest of the creditors. Now, then, when does the necessity for this valuation arise ? It arises immediately ou the property of the company, the debtor, being directed to be equally distributed. But when is the property of the debtor company subjected to equal distribution among the creditors ? At the date of the winding-up order. Then, and not till then, is the company divested of its property. In effect the property is handed over to the ofiBcial liquidator to be broken up and distributed in pro- portionate parts amongst the creditor claimants who are entitled. Well, then, it follows imme- diately that the valuation must be made when the necessity for a valuation arises. The necessity arises, as I have said, when the order to wind-up is made, and that therefore becomes necessarily the date of the valuation. Wow some confusion appears to have arisen sometimes, as in BelVs case (L. Eep. 9 Bq. 706), which was decided ou principles utterly foreign to those which govern the administration of an insolvent estate. Some confilsion also appears to have arisen from supposing that the winding-up relates back to the time when the petition, on which the order is made, was presented. For some purposes it may, but the property of the company remains in the administration of the company, subject to any order of the court taking it out of the company's ad- ministration ; it remains in the hands of the com- pany until the time when the property of the company is broken up ; that is, until the order for mudiug-up. I havenodoubt, therefore, if youregard it on principles which should govern it altogether, especially when analogous to the proceeding in bankruptcy, where the valuation is always made at the time of the order for adjudication — I say, if you regard it on principle, you would have lio hesitation in stating that the present value, as it ^® ^^llsd m the Life Assurance Companies Act 1872, IS the value that presents itself, when you are first obliged to ascertain that value, and that is when you enter upon the process of distribution. JSlow, this was recognised by the Legislature in the Companies Act 1862, which provides in the 158th section " In the event of any company being wound- up under this Act all debts payable on a coatmgency, and all claims against the company present or future, certain or contingent, ascertained orsound- mg 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." Well, but the right to be admitted as a creditor must be considered as arising immediately that the property is handed over to the creditors, and no longer remains in the hands or under the administration of the debtor company. That is again at the date of the order to wind-up. Now, the meaning of that enactment was more fully explained in the rules that follow the Act, when by the 25th rule it was said, "The value of such debts and claims as are made admis- sible to proof by the 168th section of the said Act shall, so far as is possible, be estimated according to the value thereof at the date of the order to wind-up the cqmpany." I think that rule was a very correct one; it correctly interpreted the meaning of the Act ; it was perfectly consistent with principle, as I have endeavoured to show, and perfectly consistent with the practice observed in the law, as it had been previously administered, in cases of bankruptcy and insolvency. Lord Cairns observed that rule, and in all the decisions made by him in the Albert arbitration he held that the value must be estimated and ascertained at the date of the order to wind-up, and though the Legislature did not in terms repeat that in the Act that followed the Arbitration Act, the Life Assur- ance Companies Act 1872, yet in effect it has done so by the direction that the present value shall be ascer- tained, a direction which speaks as at the date of the order to wind-up. . I have no hesitation, therefore in adhering to the rule laid down by the statute and followed by Lord Cairns, and I declare that every policy and every annuity shall be admissible to proof in this administration according to the value of the poUcy and the annuity as at the date of the order to wind-up. And I declare that the rules given in the first schedule to the Act of last session (35 & 36 Vict, c. 41, s«tp. p. 52), shall be the rules to be followed in this ai'bitration for the purpose of fully carrying out the valuation of the policies and the annuities as at the date of the order to wind-up. WeU, now, we come to the next point that has been argued before me, and that is, what is to be done with the premiums upon the policies ? My attention was drawn to a decision of Vice- ChanceUor James in Gooh's case (L. Kep. 9 Eq. 703), which, so far as it is necessary for our present purpose, and so far as I recognise it, laid down this rule, that if a premium upon a policy had become due according to the terms of the policy anterior to the date of the presentation of the petition upon which the order to wind- up was subsequently made, if the premium, I say, became due before that date, but the thirty days of grace did not expire until after that date, that premium might be paid by the policyholder in the administration of the' company, and that he would not be liable to incur a forfeiture of the policy by reason of the premium not being paid on the very day on which the days of grace expired. I am speaking of course of a petition followed by a winding-up order, and . I think that was a very moderate and just decision, and proceeded iipon this, that, inasmuch as the future winding-up order was proof that the company was in a state of insolvency at the time when the days of grace expired, it would be an unreasonable and unjust thing to deny the policyholder the benefit of his policy by reason of his not complying li teral ly with Jan. 18, 1873.] THE LAW TIMES. 55 EunoPEAN Assurance] ■Wallberg's and kindred Cases. [Arbitration. the terms of the engagement, and paying the money at the expiration of the days of grace. I mean to follow that, and to hold that in the case of every policy brought forward for valuation, any premiums that became due between the date of the petition to wind-up, and the date of the winding-up order may be received by the official liquidator from the policyholder. That will ex- tend it still further. For supposing that a pre- mium become due, we will say, on the 1st Oct. 1871, the petition having been presented in the month of June 1871, that premium becoming due on the 1st Oct., and followed by thirty days of grace, would have to be paid some, time in November if the company were solvent, and if it was at all reasonable to expect that the engage- ments in the policy would be literally kept by the company. But as that is not the fact, the fact of ^ that any policyholder who has paid his premiums policyholder might have an immediate return made to him of premiums which he paid into the Court of Chancery under the orders of Vioe- Ohancellor Malins. That, however, was followed afterwards by an application made to me the other day from the same parties that u, policy- holder might be at liberty to elect to abandon his policy, and if he elected to abandon his policy, then that he might have a return of these premiums. I felt some difficulty at the time in acceding to that application ; but having re- fard to the very singular terms of the order made by 'ice- Chancellor Malins, I cannot of course claim a right to treat payments made under the strange invitation contained in that order, as if they were voluntary payments made by the policyholder on account of his policy. And therefore I must hold the winding-up order following on that petition ought to operate retrospectively to this extent, to prevent any policyholder incurring a for- feiture. I call it a forfeiture; it will be under- stood that I mean incurring the loss of his policy by failure to keep the engagement to pay the premiums becoming due at any time after the insolvency of the company commenced. I take the insolvency of the company, as proved by the subsequent order, as in fact commencing from the date of the presentation of the petition, and, there- fore, I give the policyholder the benefit of paying the premiums that became due during that interval at any time before the policy is presented for valua-^ tion. The result of that will -be this, that the policyholder presenting his policy for valuation will be obliged to pay all premiums that have become due previously to the date of the order to wind-up. Of course, in the case of a policy the premium upon which became due and the thirty days of grace also expired before the date of the petition to wind-up, and which was not paid by the policyholder, that policy becomes null and void. But in every other case, where the premiums became due during the period of insolvency that precedes the order to wind-up, the poHoyholder shall have the option of paying those premiums at the time when he presents his policy for valuation." But I must require him to pay the premiums before the valuation is made. And I cannot listen to any argument that was presented to me on one or two occasions, that a policy holder ought to be allowed to set off the amount of the valuation as against the premiums. The pre- miums cannot be made a subject of set-off. The pohcy must be valued as a current valid engage- ment. And therefore all premiums, that have become due previous to the date of the order to wind-up, must be paid, and in the premiums so required to be paid I include any premium that may become due and payable before the date of the order, though the thirty days of grace for the pay- ment of that premium would ordinarily not expire until after the date of the order. Now that will be the rule with respect to valuation. I hope I have expressed it so that it will be understood, and that the policyholder will know what is the obligation, the condition that he must fulfil, before his policy is valued. Of course he has full liberty not to present his policy for valuation, in which case the policy will become void, and of course he will be under no obligation to pay those premiums. That leads me to the other part of the application in Wallierg's case, which was that the under that order, but afterwards elects not to prove on his policy, is entitled to a return of those premiums. If the policyholder afterwards proves on his policy, of course I should withhold the pre- miums, because he could not prove without pay- ment of those premiums, and it would be an idle circuity, of which we have already had enough, to hand him out his money only to make him return that money. But where any policy- holder has paid his money into court and it now stands to the suspense account created under and by virtue of that order, if he declares that he does not intend to bring forward any proof in respect of that policy; and voluntarily surrenders that policy to the official liquidators, then I hold that he must receive back the moneys that he so paid. I cannot treat those payments as voluntary conclusive payments, when they were made under the terms of that order. But I can- not repay the premiums to him if he tells me he still means to prove in respect of that policy; for then the premiums would become payable before the proofs would be admitted,, and I could not allow, therefore, of the money being paid back to an individual who tells me that he will put himself in the situation of being compellable to pay that money again. That I think will dispose altogethej- of the points which were raised by Mr. Southgate. I desire to have this rule, as the rule followed by Lord Cairns, fully understood. Every policy and every annuity will be valued as at the date of the order to wind-up, and the valuation will be made in conformity with /the rules given in the first schedule of the Life As- surance Companies Act 1872. I should mention a question which arose in Sullivan's and Snvythe's cases, that any sums of money paid by the provisional liquidator to an annuitant in conformity with the order of the 25th July 1871, will be retained by the annuitant, and he will of course deduct the amount from the sum that he will come forward to prove for the arrears of the annuity in addition to the value thereof. I have only to dispose of the costs of the application, and as it has raised very conveniently a number of points, which I have thought it necessary to deal with in the manner expressed, I think it quite right that the applicants in Wallberg's case should have the costs of the application out of the assets of the Euro- pean Society. Romer inquired as to what would be done with regard to policyholders who had paid their pre- 56 THE LAW TIMES. [Jan. 18, 1873. EUBOPEAN AsSUKANCE] WaLLBERG'S and KEfDHED CaSBS. ' [Arbitration. miums in accordance with the order of the 26th July 1871. Lord Westbury. — They will all have the option of electing. Those who have been fortunate enough to get their money out, will have to repay it if they prove. Those who have not been fortu- nate enough to get their money out, shall have their money so far as it comes within the terms of the Vice-Ohancellor's order, giving them leave to apply, but they shall not have that money, un- less they have previously declared their election. With regard to the time within which the policy is to be presented, I think that must be the subject of a general notice. I was the more desirous of making my order in the form I have done, in order to give an opportunity to the foreign policy- holders to become informed. Montague Oookson. — "With regard to the ques- tion as to interest on the premiums paid in under the orders, I understand your Lordship to say nothing about interest on either side. Lord Westbury. — No. Solicitor for Mr. Wallberg, Kearsey. Solicitors for Mr. Trustram, Halse, Tmstram, and Co. Solicitors for Messrs. Sullivan and Smythe, Wilhins, Bh/th, and Marslamd. Sohcitors for the official liquidators of the European Society, Mercer and Mercer. END OF THE EIEST SITTINGS. THE EUEOPEAN ASSURANCE AEBITEATlON. fBEFORE LORD WESTBURY.) SECOND SITTINGS. EEPOETED BY B. MAEEAOK, ESQ., BAEEISTEK-AT-LAW. Etteopban Asstirasce] Eivington's Case. [Aebitration. Monday, Jan. 20. Eivington's Case.* Gomp'amy — Winding-ii^ — Contributory — Lapse of time and acquiescence — Amalgamation of com- panies — AUem/pt to make a former shareholder in the old company a contributory, on tlie ground that the transfer of his shares to the new company was void, and that the arrangement for amalga- mation was ultra vires. The 0. Insurance Go^rvpany.ioas established in 1821 under a deed of settlement, which provided for the dissolution of the company and professed to give the power of transferring shares in a specified manner. Subsequently it had an Act of Parlia- ment, enabling individual inembers to transfer their shares, and directing that tlie memorial of the transfer should be enrolled in the Court of Chan- cery withi/n a certain time. In 1859 negotiations were entered into for the transfer of the business to the N. Insurance Association. These were I ca/rried out by two deeds, by one of which 174 sha/relwlders covenanted to transfer their 11,014 shares, out of the vShole number of 12,000 shares to two persons, B. and L, B. teas a shareholder in the C. Compcmy, and he executed the deed in respect of his 200 shares. Shortly afterwa/rds B. a/nd L. executed a deed ivhereby it was deda/red that they held all those shares so transferred or covenarUed to be transferred to them, upon trust for the N. Association. Subsequently R. further executed a tramsfer (in the usual form) of the same 200 sha/res to B. one of the same trustees for the N. Association, and received £250 cash, as a con- sideration for the shares. This transfer mas regis- tered a/nd the memorial loas enrolled although not within the prescribed time. Out of the 212 share- holders there were hut twenty-three, holding 210 shares out of the whole -AiMmber of 12,000 shares, that neither executed the deed of covenant to transfer, nor transferred them shares. The C. Gompan/y continued to ca/rry on business for some time, and fmally, in 1864, it wholly ceased to do so, and a deed was executed, whereby the trans- ferees of the C. Company's shares transferred them and all their interest in the C. Company's business to the N. Association, to the intent that the capital and business thereof mdght thenceforth be amalgamated with and merged in the N. Asso- ciation and the capital and business thereof. Some years after, the N. Association transferred its business to the E. Society. In 1872 an order was made to wind-up the C. Com- pany, and the offieial liquidator contended that B. m/ust he placed on the Ust of contributories, on tlie ground that the transfer of his sha/res was in itself imoalid, and that it was also invalid, as being part of a larger transaction, which Was void. This larger transaction, viz., the arrangement for amal- gamation between the two eompcmies, being ultima vires both of the transferor company and of the transferee company, and moreover ha/ving never been completed and ca/rried out : Held that jR.'s name must not be placed on the Ust of contributories. The provisions in the G. Comparvy's deed of settle- ment with regard to transfers being merely directory, their non-observance was superseded by the registration of the transfer and the enrolment of the m,emorial, and accordingly did not invali- date B.'s transfer. After the great lapse of time the twenty-three share- holders, who did not transfer their shares or exe- cute tlie deed of covenant to tiransfer, mMst be pre- sumed to have concurred in the arrangement. The transaction was accordingly a transfer of the whole business by all the partners, and was within the power of any common law partnership and therefore not ultra vires of the 0. Company. The N. Association also had power to hwy such a business. Thus the arrangement was within the power of both the companies. Moreover, after this length of time and after the intricate trans- actions of the companies, it would he impossible to place the companies in the position they were in at the time of entering into the contract ; that being so, the contract would not be declared to be void The transfer would accordingly not be in- , validated on the ground of its being an incident of a larger transaction which was invalid. In this arbitration two principles would he adopted, first, that the lapse of time shall be takeri as evi- dence of acqwiescence and assent, and that, there- fore, what has been done ought not on that grouiid to beinterfered with; secondly, that the arbitrator would not interfere, after a considerable period of time, to anrml a transaction- in the nature of a contract between companies, unless he sam his way to do complete justice by meeting all the conse- quences of that declaration of nullity, and restoring each company to tlie situation in which it was at the time of their entering into the contract that he declared to be null. This was an application on behalf of the official liquidator of the British Commercial Life Insur- ance Company to place the name of Mr. Eivington on the list of contributories to that company. The British Commercial Company was estab- lished under a deed of settlement dated the Ist May 1821 with a nominal capital of 1,000,000? . h 58 THE LAW TIMES. [March 15, 1873. EUSOPBAN AsSUEANCE] Eivingion's Case. [Akbitration. divided into 20,000 shares of 501. each. Only 12,000 shares, however, were subscribed for, and calls to the amount of 51. per share were made thereon. The deed of settlement contained no power enabling the company or its directors to tranfer its business to, or to amalgamate the com- pany with, or to acquire the business of any other company. There were provisions purporting to en- able individual proprietors to transfer their shares. Any one wishing to do so was to give three days' notice of his wish, stating the name, &o., of the proposed transferee ; every such transfer was to be made at the office of the company in the manner prescribed by the directors ; and every transferee of shares was within two months to execute at the office of the company a deed whereby he cove- nanted to abide by the regulations of the company. Clause 112 of the deed provided for the dissolution of the company in a prescribed manner : {Vide stvp. By the local and personal Acts 2 & 3 Will. 4, c. 38, and 10 & 11 Yict. c. 84, the company was empowered to sue and be sued in the name of cer- tain of its officers, and it was enacted that when- ever any transfer of shares should be made, a memorial thereof should be enrolled in the Court of Chancery_ within three months, and that until such memorial should have been enrolled, every member whose name should appear in the last memorial for the time being enrolled, should, notwithstanding any transfer of his shares, con- tinue liable to all judgments and executions until a memorial of such transfer should have been enrolled. In 1859 negotiations were set on foot for the transfer of the business of the British Commercial Company to the British Nation Association. This association was incorporated under a deed of settle- ment, dated the 28th Feb. 1855, and was registered under the 7 & 8 Vict. c. 110. The 45th clause of the deed gave the power of purchasing the busi- ness of any company of a similar nature: {Vide sv/p. p. 40.) I The negotiations for the transfer of the British Commercial Company's business were commenced by the following letter, written to the directors of that company by Mr. Lake, the manager of the British Nation Association, on the 17th Nov. 1859 : Gentlemen, — It has been suggested to the directors of this association and to myself, that a union of the busi- ness of the British Commercial Insurance Company with this -would be advantageous to both institutions, and for the following reasons : Under these circumstances the directors of the association -would be glad if the directors of the British Commercial would consider this letter as a basis of a proposition for a union of the businesses of the British Commercial and British Nation Companies, upon the following understanding. The shareholders of the British Commercial should be paid off at the rate of 25s. per share, and their shares transferred. That the directors of the British Commercial, with the Jnnnf V °L- shareholders, be paid a compensation of lOOOi. by this association. ,, ^^** *''^ It^?. °* ^^^ British Commercial be retained by the British Nation, and that the directors of the British Nation be at liberty to apply to any director or officer of the British Commercial to assist this association in the completion of such proposed arrangement after the shareholders have decided upon its adoption. That the trustees should be appointed to hold the assets of the British Commercial, pending the completion 01 the proposed arrangement after. . That an Act of Parliament should be forthwith applied for, if agreed to be necessary, to consolidate the proposed union. Thus a strong company may be formed, to the per- manent benefit of all interested. Hbnet Lake, Manager and Seeretary. By a resolution passed on the 2nd Jan. 1860, the Directors of the British Commercial Company accepted the offer contained in this letter, subject to the approval of their shareholders ; and on the 21st Jan. 1860, it was resolved at an extraordinary meeting of the proprietors, that the proposal be adopted and accepted. Also an extraordinary general meeting of the British Nation Association was held on the 20th Jan. 1860, and it was resolved that the directors be authorised to take such steps as they might consider necessary for carrying the proposed arrangement into effect. The arrangement so authorised was carried out, or was purported to be carried out by two deeds. The first deed was a covenant to transfer shares ; it was dated the 8th Feb. 1860, and was made between Messrs. Bermiugham and Lake of the first part, and certain shareholders of the British Commercial Company of the second and third parts. After reciting that Messrs. Berming- ham and Lake had agreed to purchase the shares of the parties of the second and third parts, and all the benefit and advantage thereof at 25s. per share, it was -witnessed, that each of the parties of the second and third parts respectively, biit so far only as related to the shares of which he was a proprietor, covenanted with Messrs. Bermingham and Lake that, upon payment of a certain sum stated in the schedule thereto, he would, at the request of Messrs. Bermingham and Lake, transfer into their names or into the names of their nominees, the shares in respect of which he was a proprietor, and would in the mean time hold the shares in trust for Messrs. Bermingha.m and Lake, subject to the payment of the purchase money. There was also a covenant by Messrs. Berming- ham and Lake to accept the transfer of the shares, and a proviso that the deed should be void if the owners of five-sixths of the shares should not execute the deed before the 5th March 1860. The second deed was a declaration of trust ; it was dated the 7th June 1860, and was made between Messrs. Bermingham and Lake, and cer- tain other transferees of British Commercial shares of the first part, the said*Messrs. Bermingham and Lake of the second part, and the British Nation Association of the third part. After reciting the resolution of the 20th Jan. 1860, and the deed of the 8th Feb. 1860, and further reciting that certain shareholders had, in pursuance of this deed, trans- ferred their shares to Messrs. Bermingham and Lake, or one of them, or some of the other persons of the first part, nominated by them, it was witnessed that in further pursuance of the arrangement the parties thereto of the first part did thereby agree that they did take and would thenceforth stand possessed of the shares so transferred to them in trust for the British Nation Association, and to be assigned, transferred and disposed of in all respects as the board of directors of the association, or any general meeting of the association should order, direct, or appoint. And there was a covenant by the British Nation Association to indemnify the parties of the first part against all liability in respect of the shares transferred. March 15, 1873.] THE LAW TIMES. 59 Etjeopean Asstjrance] Ritington's Case. [Abbithation. Out of the 212 shareholders, holding 12,000 shares, there were but twenty-three, holding 210 shares, who did not execute the deed of the 8th Feb. 1860, or transfer their shares, in accordance with the covenant therein contained, to Messrs. Berminghana and Lake, or one of them, or their nominees. None of the transferring share- holders ever gave notice of their wish to transfer, nor was any deed of covenant executed by the transferees, as was required by the British Com- mercial Company's deed of settlement. All the shareholders who transferred their shares re- ceived the consideration for them either in cash paid out of the assets of the British NatioQ Asso- ciation or in shares of that association. From 1857 Mr. Eivington was a holder of 200 shares in the British Commercial Company, and on the 20th Feb. 1860 he executed the deed of the 8th Feb. 1860, in respect of his 200 shares. Subsequently, on the 31st Dec. 1860, at the request of Mr. Lake, he executed a transfer (in the usual form) of the same 200 shares to Mr.'Bermingham solely, and he received 250Z. cash, in respect of the shares. On the Blst Dec. 1860 the trans- fer was registered. Early in the year 1861 he was informed by the secretary of the British Commercial Company that the memorial of the transfer would in a few days be enrolled in the Court of Chancery. The enrolment, however, was not actually made until Feb. 1865. After the execution of the deeds of the 8th Feb. and the 7th June 1860, the business of the British Commercial Company was carried on as a separate business, and its directors issued new policies down to March 1862, and paid claims down to March 1863. On the 22nd Dec, 1864 it was resolved, at an extraordinary court of directors of the British Commercial Company — That the existing amalgamation of the business of that company with the business of the British Nation is adopted and confirmed, and that the trustees of the company be directed to take snoh steps, and do such acts, and execute such instruments as might be con- sidered necessary with a view, to perfecting such amal- gamation, and legally vesting the assets of the British Commercial Insurance Company in the said British Nation Life Assurance Association. This resolution was carried into effect by the "deed of amalgamation," dated the 31st Dec. 1864. After reciting that the shares, transferred into the names of the several persons parties thereto of the first part, were so transferred in trust for the British Nation Association, and that the same constituted the whole of the shares subscribed for in the capital of the said company, except some few shares, the owners of which were unknown, and the right to which was considered to have been lost by lapse of time and non-claim or other- wise under the provisions of the deed of settle- ment. And, further, that divers moneys, &c. were vested in the parties of the second part, as trustees for the British Commercial Company. And further that, it being found that the continuance of the business of the company separate from the business of the association, and the severance of the assets of the company from the assets of the association were attended with much trouble and expense, it was, on or about the 30th March 1863 considered desirable that the busi- ness and assets of the company and the asso- ciation respectively, should be thenceforth amalga- mated and united accordingly, and that the said business and assets had, since the Slst March 1863, been in practice amalgamated and nni'ed accordingly, but no instruments had been exe- cuted for the purpose of giving full eSect to such proposed amalgamation and union. It was witnessed that, in consideration of the covenants by the British Nation Association, the several persons parties thereto of the first part did thereby transfer to the British Nation Asso- ciation all the shares in the British Commercial Company respectively numbered and described in the third column of the schedule thereto (the same representing the entire subscribed capital of the company, except as aforesaid), and all their interest and goodwill in the life assurance busi- ness theretofore carried on by the British Com- mercial Company. To have and to hold the said shares, &c., unto the British Nation Association, their successors and assigns, for over, " iu order and to the intent that the British Commercial Com- pany, and the capital and business thereof, might thenceforth be amalgamated with and merged in the British Nation Association and the capital and business thereof." And it was further witnessed that the parties of the second part did thereby assign unto the British Nation Association all the moneys, &o., vested in them as trustees for the British Com- mercial Company, to have and to hold the same to its own use and benefit. And there was also a covenant by the British Nation Association to in- demnify the parties of the first and second parts against all liabiUty in respect of their shares. After the execution of this deed the British Commercial Company wholly ceased to carry on business. In 1865 the British Nation Association trans- ferred its business to the European Assurance Society. An order to wind-up the British Commercial Company was made on the 19th July 1872, and the official liquidator now applied to have Mr. Eivington's name placed on the list of contribu- tories in respect of the 200 shares. Napier Higgims, Q.C. and H. M. Jackson for the official liquidator of the British Commercial Com- pany. — There was no power given by the British Commercial Company's deed of settlement to enter into, or carry out, the arrangement in ques- tion. The company being a mere common law partnership, a shareholder could transfer his shares only with the concurrence of all the other shareholders. .This concurrence was not obtained. Thus the transfer was invalid. Moreover, the provisions in the deed of settlement with regard to transfer were not followed. These could not confer the right to transfer, but if they had done so, their directions must be followed in order to have an effectual transfer. Further, the transfer, if valid in itself, was an incident of a larger ar- rangement, viz., an amalgamation or a transfer of business, and this was wholly vltra vires of the transferring company. If it were contended that the whole of the members ofthe partnership might concur in transferring all the shares and the busi- ness, yet this was not done, for twenty-three of the shareholders holding 210 shares had nothing to do with the transfer. Again, the transferee company, the British Nation Association had no power to carry out such an arrangement as was proposed. The 45th clause of the association's deed of settlement cannot apply to the case of taking over nearly all the shares of another com- 60 THE LAW TIMBS. [March IS, 1873. BUKOPEAN AsStrBAUCE] Eivington's Case. [AUBITitATION. pany. The want of power of a joint-stock com- pany to take transfers of shares from another company, or to purchase shares of another com- pany, has often been the subject of judicial deci- sion ; for example in — Zulmeta's Case, Be London, Samhwrgh, amd Conti- nental Exchwnge Bank, L. Eep. 9 Eq. 270 : 5 Ch. 444; 22 L. T. Eep. N. S. 84. [Lord WESTBmRx. — There is no doubt you, as a company, could not become an individual share- holder in another company; shares could not be transferred into your name, to be held by you as such, if that other company was a company carry- ing on business, but, if that other company have power by its constitution to sell its business, and a parliamentary power given to its shareholders to transfer its shares, the shares might be trans- ferred to another company, provided the transferor company ceases to carry on business, and it is a mode then only of giving effect to a transfer of the business. Now, here, the British Commercial Company are going to give up business altogether ; they transfer their shares, in order that they may effectually vest in the British Nation Association a right to the business that it was carrying on.] There was no power in the British Commercial Com- pany to sell their business, and the British Nation Association had no power to buy this number of shares and assume the liability on them, even though the technical difficulty were removed by the substitution of the names of the trustees. [Lord ■Wbstbtery. — Admit, for the sake of argu- ment, that there was no power to enter into this contract, the question then remains whether after this lapse of time I cau set aside what has been done, whether I shall have power to do complete justice if I attempt to set it aside, and whetMr I should not be doing the grossest injustice if I annul all the consequences of this transaction, after so great a lapse of time. . . . With rights very much better than yours, courts of equity have been in the habit of declining to entertain cases of this kind after a considerable lapse of time, and also they have frequently de- clined to annul the transaction when they have found it impossible to follow out the order to a legitimate end. Have you a notion of what con- fusion would result from setting aside the contract made, or alleged to be made, or represented to be made, between the British Commercial Company and the British Nation Association P The British Nation Association got a considerable amount of property; they got, as I said before, other share- holders ; then they dealt with that property, and entered into a variety of contracts, all of which would fall to the ground, and in all of which in- numerable rights and liabiKties would arise, if I were to entertain the thought of annulling the entire contract between the British Commercial Company and the British Nation Association.] I am not concerned now in asking your Lord- ship to to make any declaration that the agreement should be set aside. [Lord West- BdKT.— You wish to avoid that, but I can- not accept your second argument, that this transfer to Bermingham shall be considered as a void thing by reason of its being part of and in- cidental to a contract which is void, without in- volving in my declaration the invalidity of the contract, and then there is a perfect chaos.] There are a large number of cases in which contracts have been set aside after a great many years, where a similar state of circumstances existed. In many of the amalgamations with the Albert Life Assurance Company there was as great difficulty as there is here. In the case of Banh of Ohma v. Ba/nk of mndMstan(L. Eep. 6 Bq. 91; 6 0. P. 54,222), V.C. Gififard endeavoured to deal with the difficulty, and although he made a declaration to the effect that the whole of the amalgamation was invalid and void, yet he accompanied it by a declaration that the transferee bank should stand in the shoes of all those who went over from the transferor bank, and should have the benefit of quasi validity as to all those that went over. No acquiescence, no lapse of time can bind creditors, outsiders, who knew nothing about the British Nation Associa- tion ; although it may be that, as between the two companies, such acquiescence and lapse of time may be objections against declaring the arrange- ment invalid. It does not follow that the avoid- ance of the arrangement as against the creditors should necessitate its avoidance as between the companies. Again, it may be asked whom are the creditors to look to for payment P They are not to look to the twenty-three shareholders that did not transfer; nor to the trustees Bermingham and Lake ; nor to the British Nation Association. They must look to the shareholders of the British Commercial Company, who have not relieved themselves of their liability. [Lord Westbuby. — The creditors will be paid by the indemnity of the British Nation Association. Does that association appear ?] Swanston, Q.C. — I appear with Mr. Montague Oookson, for the liquidator of that Association. Lord Wesibtiry. — Do you oppose ? Swcmston. — ^The position we are in is rather a peculiar one. I can hardly tell your Lordship at present whether we oppose or not. The reason for this is that we do not know, until the figures are gone into, whether in a pecuniary point of view it is for the advantage of the British Nation Associa- tion to support or oppose. I suppose there is no man living who can answer that question at once ; and until the liquidators can answer it, it will not be right for them to pledge themselves one way or the other. Lord Westbuby. — I do not apprehend that it is a question of election, it is a question of the validity of a contract. Swanston. — ^We should be in an awkward posi- tion if we were to address an argument against our own interest. We may have our opinion as to the validity or the invalidity of the contract, but at this moment we do not know what our views about the pecuniary part of the case may be. Fry, Q.C. and Millar appeared for Mr. Rivington, but were not called on. Lord Westbuby. — I am very much obliged to Mr. Higgins for the care and ability with which he bas argued this case. It has satisfied me that I have heard everything that can be reasonably alleged against the view that I entertain ; but I have heard nothing that induces me to hesitate for one moment as to the course which it is my duty to adopt. The parties before me are, first of all, the official liquidators of the British Commercial Company, which was an ordinary partnership formed as long ago as the year 1821. At that time the state of the law did not admit of partners transferring their shares without effecting a dissolution of the comnanv. np.it.bfir did it aiim\h of a. vp.rv Invtro i>nrr\. March 22, 1873.] THE LAW TIMES. 61 European Assubajtce] RiviNGTOu's Case. [Aebitkation. pany suing and being sued by a representative, either as an officer of the company or as a member of the company. Accordingly, the partnership of the British Commercial Company was aided by an Act of Parliament, of which there have been very many examples, which gave power to the company to sue and be sued by the public officer, or by one of its body, and also gave power to the indi- vidual members of the partnership to transfer their shares, accompanying the power with certain condi- tions, namely, that the memorial of the transfer should be registered in the Court of Chancery within a particular period of time, but it was not to become void if not so registered within that time ; the only penal consequence was that the party trans- ferring his shares, and who appeared on the existing register, would, notwithstanding the transfer, remain liable for the debts of the com- pany, unless and until the name of the trans- feree was duly registered and duly memo- rialised in his place. This company carried on business for a considerable period of time. With regard to the mode of transferring its business, it would have the common law power incidental to every common law partnership ; but that power could only be effectually exercised by every member of the partnership concurring in the exercise thereof. Subject thereto, every individual member of the partnership had a right under the statute to transfer his share or shares to a nominee, and the transfer would be effectual, provided the conditions with regard to registration, that I have already adverted to, were observed. In that state of things, and in the month of November 1869, the British Commercial Company entered into nego- tiations with the British Nation Association for the transfer of its business to the British Nation. Meetings were held of the proprietors of the British Commercial Company for the purpose of consider- ing the proposal of the British Nation Association. Meetings were in like manner held by the British Nation Association for the purpose of considering whether they should or should not enter into a certain kind of amalgamation with the British Commercial Company ; that is to say, take a transfer of the business of the British Commercial Company, and thenceforth have an union of the business of the two companies. ■ The words are peculiar : " It has been suggested to the directors of this association and to myself that an union of the British Commercial Company with this — that is, the British Nation Association — would be advantageous to both institutions." That object was accordingly accomplished. The pro- prietors of the British Commercial Company appear all to have concurred in the resolution to adopt the proposal of the British Nation, with the exception of some few. I think they numbered twenty-three in the whole. The reso- lutions on the part of the British Nation Associa- tion, were almost more unanimous, and then came the question, what should be the machinery adopted in order to carry those resolutions into effect. Now it is quite clear that the only machi- nery that could be adopted would be making a transfer of the shares in the British Commercial Company to nominees of the British Nation. The British OommerGial Company was to cease to carry on business as a company, and therefore the transfer of its shares would be a mode only of transferring its business. That course was accord- ingly adopted. Now I may mention by the way that I shall have no difficulty in holding, and do in reality now hold, that after this great lapse of time, the concurrence of the twenty-three share- holders in the British Commercial Company, who did not execute the deed, must be presumed, and I should therefore have no difficulty in holding that the transfer by the British Commercial Company to the British Nation Association at this distance of time is to be treated and regarded as a transfer by all the partners in the British Com- mercial Company. But independently of that, which is not very material for the decision of this case, the shares which were transferred by the British Commercial Company to the British Nation Association must, as I have abeady ob- served, be regarded as a mode of transferring the business ; for, although I quite agree to the pro- position that the British Nation Association, as a company, could not take individually a transfer of the shares in the British Commercial Company, so as to be registered as shareholders in that com- pany, yet it was perfectly competent to the British Nation Association to take a transfer of the shares from the partners of that company, seeing that the British Commercial Company was no longer to go on as a current trading company, I regard the transfer therefore as a mode of transferring the business. Now it appears that a gentleman of the name of Rivington was, at the time of the agree- ment with the British Nation Association, the registered holder of 200 shares in the British Com- mercial Company. He concurred in the proposal to transfer the business of the British Commercial Company to the British Nation Association. The British Nation Association accordingly, when the contract was finally entered into, presented to him a transfer to a gentleman of the name of Berming- ham, and requested him to execute that transfer. He was to receive a certain sum of money as the price of his shares, and he was paid accordingly by the hands of Bermingham, but no doubt out of the money of the British Nation Association. That particular transfer by "Rivington to Bermingham was duly completed in conformity with the requisi- tions of the statute. Mr. Higgins has said that certain preliminary things, which are directed to be done by the deed of settlement of the British Commercial Company in the event of the transfer of shares, were not observed. I cannot pay attention to that, because Iregard these provisions in the deed of settlement of the British Commercial Company as merely directory, and Ithink the inquiry whether they were observed or not, is superseded en- tirely by the fact that the transfer from Rivington to Bermingham, was accepted and duly registered and memorialised in a complete manner in the year 1865 ; I shall not therefore in any way enter into the question of the validity of that transfer by reason of these directory provisions not having been in terms observed, if it be the fact, of which there is no proof, that they were not observed. Then Mr. Higgins, in that state of things, pre- sented to me a case which involves these two propositions. He contends first that the trans- fer from Rivington to Bermingham was informal and incomplete. That is a question which would have no other result, if it were determined in his favour, than the mere removal of Bermingham's name, and the restoration of Rivington' s name to its original position. I try that question first upon the ground to which I am referred, namely, whether according tp the statute the transfer to 62 THE LAW TIMES, [March 22, 1873. European Asstjkance] Eiyington's Case. [ARBITRATION. Bermingliain was formal and complete, and I find no reason, upon the facts before me, to impeach that transfer or the memorial thereof. That being so, Mr. Higgins looks further than the bare transaction of the transfer, and impeaches the ■whole of the dealing between Bermingham and B.ivington, because it was a part of a larger trans- action between the two companies, contending that such dealing was the mere incident and conse- quence of that transaction, and if that be bad, this incidental thing must fall with it. Mr. Higgins, therefore, now calls upon me, in the j-ear 1873, to enter into a consideration of the legal validity of the contract made between the British Commercial Company and the British Nation Association in the year 1859, and to pronounce that that contract was void as being idtra vires of both the contracting parties. If it were ultra vires of one of the contracting parties, and it had been properly impeached within diie time, \t might have been set aside ; but I am asked Jiere, at the expiration of twelve or thirteen years, to undo that contract altogether, to pronounce it to have been ultra vires, and, without any further consideration, to annul it, to pronounce it to be void, and to pronounce this particular transfer de- stroyed, by reason of its having been an emanation from, or a child of, that void contract. Mr. Higgins appeared to be a little alarmed at the consequence of what he was asking, and he strove at the end to say that I might annul the dealing between Ber- mingham and Eivington, upon the ground of the invalidity of the contract, without declaring ex- pressly that the contract was invalid, or without pursuing the implied declaration of invaUdity to all the consequences that must result therefrom. I can do no such thing. If I avoid this particular transaction, upon the ground of the invalidity and nullity of the contract out of which it flows, I must declare that contract invalid, in order to give any reason for the conclu- sion at which I am asked to arrive. Now, in the first place, I am not at all incUned to adopt the argument that the contract was ultra vires of either company. If I take in aid the proposition that I have already mentioned, namely, that after this lapse of time the twenty-three shareholders in the British Commercial Company, whose signatures to the deed cannot be produced, must be presumed to have concurred in and sanctioned the arrangement —a very easy conclusion to be arrived at, for there is no trace, during the years that have elapsed, of their ever having complained of the arrangement made with the British Nation Association. I say, if I make that presumption, and adopt the conclusion to which it leads, then the transaction was clearly vrithin the common law powers of every common law> partnership, and therefore it would not be ultra vires of the British Commercial Company. And then if I look at the deed of the British Nation Association, I find an ample power given to that association to buy and take transfers of the busi- ness of another company carrying on business in a manner similar to that of the British Nation. I am hj no means prepared, therefore, to arrive at the conclusion that there was any lack or want of requisitelegal power of contracting in either of these 1 two companies ; but I am very much more solicitous 1 to point out, at an early period of this arbitration, tha,t I shall give the utmost possible value and Iweight to lapse of time during which transactions tave been permitted to go on unimpeached ; and I adopt two principles ; one, that the lapse of time shall be taken as evidence of acquiescence and assent, and that therefore what has been done ought not on that ground to be interfered with ; and the second principle is this, that I will not inter- fere, after a considerable period of time, to annul a transaction in the nature of a contract between companies unless I see my way to do com- plete justice by meeting all the consequences of that declaration of nullity and restoring each company to the situation in which it was at the time of their entering into the con- tract that I declare to be null. Now, I beg the attention of counsel to what has been done in this case, and to the impossibility of my finding a way to the accomplishment of what is just and right, if I were to begin by setting aside this contract that has now been acquiesced in by both sides for so many years, and then attempt to restore the parties to their original position. Part of the contract was this, that the shareholders who re- fused to become shareholders in the British Nation Association should receive a certain sum of money for their shares. That was done in a great variety of cases. They took the money, they transferred their shares, in order that the business might vest in the British Nation Association, and from that time, the year 1860, until the present time, there has been no attempt to question that part of the transaction. The British Nation Association got, by virtue thereof, a great acquisition of business, and if I annul the contract, how can I restore to the shareholders of the British Commercial Com- pany, who are brought back to their original posi- tion, the benefit of that business ? If I annul the contract, the British Nation Association must account for all they have got under that contract. They got the business, and the profit of the busi- ness, and that is something which they would be bound to restore to the shareholders of the British Commercial Company if I annul the arrangement. How is it possible that that can be done ? But that was one part only. There was another set of shareholders who consented to become and did become shareholders in the British Nation Assosiation, and who were registered as such, and held out to the world as such, and who threw in their lot witt the British Nation Association. How in the world can I undo that, and put them in their former posi- tion, and meet all the consequences that have resulted from their having acquired in the eyes of the world a new position under this contract ? Everybody conversant with the subject will see the utter impossibility of retracing the steps that have been taken in that part of the transaction. But then comes the other thing, which is still more conclusive. The British Nation Association having acquired all this property, and having united this body of shareholders with its own, and having paid oflf those who were unwilling to become so united, in that state of things, proceed to sell their status, their business, their advantages, including the advantages they got under this contract, to the European Society, and the European Society are now the holders thereof. Can I make the Euro- pean Society (Ksgorge, for the benefit of the re- suscitated shareholders of the British Commercial Company, what they, the European Sooietfcy, have derived by reason of the transfer of the property of the British Nation Association, or that which has been acquired by the addition of the property March 23, 1873.] THE LAW TIMES. 63 European Assurance] Gakdiner's Case. [Arbitration, of the British Commercial Company ? It would be hopeless to attempt such a thing ; a restitutio ad integrum, to adopt Mr. Higgins's phrase — and a yery correct one — of the shareholders of the British Commercial Company is utterly impossible under such circumstances. It would be an im- possible thing to trace the different ramifications of interests that have arisen since the contract was entered into, to unravel them, to undo them and place the parties in the position they would have been in but for that contract : and in that way and upon those grounds to annul the transaction itself. Courts of justice have very wisely said that they shall not be invoked after a certain period of time. They have done that, because they hold that the period of acquiescence furnishes good ground for presumption that things have been confirmed, accepted, and agreed to be abided by by individuals, the absence of whom to the original contract might have afibrded ground for complaint against that contract, if the ground had been brought forward within such a period of time as was not sufficient to afford such presumption as I have mentioned. They have also refused it on the other ground, that they will not annul a contract, where the lapse of time has been sufficient, or has given birth to such a variety and complications of interests, derived from and depen- ding upon the basis of that, after so long a period as the period of this transaction now sought to be impeached. They wiU not annul it, if they find themselves utterly unable to place the parties in their original position. Now, it is precisely what I have here. I am justified, nay, I am bound, to derive every reasonable presumption of validity after this lapse of twelve years in favour of the original contract. I am bound to keep my hands from meddling with that original contract, and of imputing to it invalidity, unless I can follow out the first step to all the others that must legitimately follow, and can see my way to do complete justice by the restoration of the parties to their original position. I will certainly never lend any powers that are vested in me to be exercisedina manner in- consistent with those two rules, or that will at all impair their force and validity in a court of jus- tice, much more in a court of arbitration. I now come to the conclusion that the application of the liquidators to strike out Mr. Bermingham's name, to be replaced by Mr. Eivington's, is one without any kind of merit, of law, of equity, or of reason. I refuse the application with costs to be paid to Mr. ilivington out of the estate of the British Commercial Company. I say nothing about the costs of the official liquidators or of the British Nation Association, but I shall reserve the con- sideration thereof with liberty to apply. I may at the same time say that, in my opinion it was the duty of those who instructed counsel for the British Nation Association, to maintain the vali- dity of the contract, and to oppose the strongest ground to the attempt of the client of Mr. Higgins to undo that contract ; and I shall take that into consideration when I dispose of the question of costs of the official liquidators, but I will take care for the future that those gentlemen shall not be placed in a position in which they wiU. have a con- flicting duty, for I will myself regulate, in case of any question arising between these companies, who, I may say, are part of my flock, and are under my control — if there shall be any dispute between tbem — how they shall be dealt with, they shall come to me to know the manner in which I will have that dispute argued and, settled. At present, therefore, I reserve the consideration of the costs of the official liquidators, and -they may apply to' me in order to show me that there was reasonable ground for appearing in a positVjn of neutrality, neither opposing the claim nor supporting it. Mr. Kivington will have his costs." The question of the other costs reserved, with liberty to apply. Napier Siggins. — This decision is to the effect that Mr. Rivington is not to be settled on the list of contrihutories ; that will be without prejudice to any future application in case there should be a B list ? Lord Westbury. — I will not clog the order with any expression of that kind at all ; the order wiU speak for itself. He is not to be placed on the- register in lieu of Mr. Bermingham. Napier Higgins. — In case it should turn out that the persons who will be placed on the list are unable to pay the debts, we may have to resort to others. Solicitors for Mr. Eivington, Umington and 8on: Solicitor for the official liquidators of the British^ Nation Association, J. Tucker. Solicitors for the official liquidators of the British. Commercial Company, Mercer and Mercer. Monday, Jan. 20. Gardiner's Case. Life Assurance Oompaniy — Amalgamation of com- panies — Winding-up — Policy — Novation of con- tract — Novation not created hy Act of Pa/rliament — One of the companies referred to arbitration misnamed in the Act — Parties to am, application to wind-up — Policy that refers to some unknown deed of settlement. The A. Life As8ura/n,ee Oompany tra/nsferred its business to the B. society, and subsequently an Act of Parliament was passed which enacted (inter alia) that the B. soaieiy should be Uable on amf policy, ivhetMr issued by the B. society or by the Ac- company. On its being contended that the Act created a substitution of liability, and that every policyholder in the A. company was compelled by this Act to looh for payment to the B. society only,, it was Held, that tMs was not the meaning of the Act, and that the liability of the A. company still remained. The Hwropean Life Insurance and An/iiuih/ Com- pany held to be one of the companies under the jwrisdidion of the a/rbit/raior, although its name was misprinted in the Wwropean Assurance Society Arbitration Act 1872 as the European Life Assux- ance and Annuity Company — it being dea/rhf a mistake, and fwrther, the Arbitration Act re- ferring to a/rbitration the relative rights, Sfc. of the absorbed, as well as the scheduled, companies. A policy was granted by an insurance coinpam/y,. whereby the com/pany covenanted with Major G.. that it would, on a/nd aftefr his death in the life- time of Mrs. 0., pay to her an annuity of £3.00 dw/ring h&r life, "according to the provisions of the deed of settlement of the sadd company, bearing date the 10th Feb. 1819." Some years after Major G.s' death, his widow brought in a eladni on her poUay against the company, and applied to have it wound-up ; but it was objected on (lie part of the directors representing the company, tJmt, the covenant hawing been with Major G., the per- 64 THE LAW TIMBS. [March 22, 1873. European Asstoeiance] Gabdinbb's Case. [Arbitration. sonal representatim of Major G. ought to he a party to the application. Held, that this was not necessary. On its being fwtlier objected that the policy did not refer to the deed of settlement of the company, dated the lOih July 1820, but to a deed of some prior date, about which nothing was hnown, and which might be the deed of some other company, it was Held that this objection did not affect the claim on the policy, the directors not being able to explain what was the deed that was referred to. The order to wind-up a subsidiary company not made to date from the date of the order to wind- vjp the prvncipal company, but from the actual date of the order to wind-up the subsidiary company. This was an application for an order to wind-up the European Life Insurance and Annuity Com- pany. This company was established under a deed of settlement dated the 10th July 1820. Its name was originally " The European Company," and was afterwards altered to " The European Life Insurance and Annuity Company," but under what circum- stances is unknown. By a deed dated the 8th Dec. 1868 the company transferred its business and assets to the People's Provident Assurance Society. In 1859 an Act of Parliament was passed called " The European Assurance Society's Act 1869," by which the name of the People's Provi- dent Assurance Society was changed to " The European Assurance Society," and it was further enacted Sect. 9 : The society shall be liable to', the rightful holder of any policy issued before the commencement of this Act, and to the obligations of which the society were originally or had become or had agreed to become liable, and whether issued originally by the society or by the European Life Insurance and Annuity Company, as if the society had themselves issued the policy, and every such holder shall have all rights and remedies against the society accordingly. On the 1st Aug. 1832, a policy had been granted by the European Life Insurance and Annuity Company, whereby, in consideration of the annual premium of 93Z. 7s. %d. three of the directors of the company covenanted, on the part of the company, with Major Gardiner, that the funds and property of the company should at all times after his de- cease, in the event of his death in the lifetime of Eleanor Gore (afterwards Mrs. Gardiner), be sub- ject and liable (according to the provisions of the deed of settlement of the said company bearing date the 10th Feb. 1819), to pay to her during the remainder of her life an annuity of 300J. Major Gardiner duly paid the premiums from time to time to Mr. Einlay, the agent at Dublin of the company, and, after the union of the two com- panies, the agent of the European Assurance Society. Before the union, the receipts for the pre- mmms were headed " European Life Insurance and Annuity Company." In 1862 and 1863 the heading was " European Assurance and Guarantee Society." On the 19th April 1864, Major Gardiner died, and the instalments of the annuity were there- after paid to Mrs. Gardiner by the European Assurance Society, and she sent receipts therefor to that society. The form from 1866 being as follows : Eeceived the 2nd day of May 1866 from the European Assurance Sooiety the sum of 150Z., being the amount of one half year's payment of annuity due to me on the 20th April 1866, less income taz. Annuity .£150 Less Income Tax 2 10 .£147 10 Eleanor Gakdiner. Mrs. Gardiner never received any circular or communication relating to the transfer of the business of the European Life Insurance and Annuity Company, and she believed that no such circular or communication was ever received by her husband. She now applied to rank as a creditor on her policy against the European Life Insurance and Annuity Company, and, as such creditor, to have the company wound-up. Notice of the application was served on two persons, who at the time of the union of the businesses were directors of the European Life Insurance and Annuity Company. Gill and Henderson appeared for Mrs. Gardiner. Napier Higgins, Q.O. and Montague Coohson for the official liquidator of the European Assurance Society. — It was the intention of the European Assurance Society's Act 1869, to put an end to the European Life Insurance and Annuity Com- pany, and to create a new body out of the two companies, and to saddle that new body with all the habUities of both the companies. Thus the Act of Parliament effected a novation with the European Assurance Society, and the policy- holder's consent was not requisite. She is accord- ingly entitled to claim only against the European Assurance Society. [Lord Westbuby. — In order to define the measure of their right, the Act of Parliament says, the policyholders shall have the same rights as if the policy had been granted by the sooiety; and you infer from that, very in- geniously, that then the status of the policy- holder is entirely altered, and that the policy is now to be taken by force of this enactment as having been originally granted by the European Assurance Society. That is not so ; it is for the purpose of expressing the nature of the right or remedy, and not for the purpose of altering a policy granted by the European Life Insurance and Annuity Company into a policy granted by the European Assurance Society.] Davey for the directors served with the applica- tion. — The company is described in the schedule to the Arbitration Act as the European Life Assur- ance and Annuity Company. Of course this com- pany is intended, the word Assurance being sub- stituted for Insurance. I don't know whether this is sufficient to exclude it from your Lordship's jurisdic- tion. [LordWESTBiTBY. — There is nothingto bringit into doubt as to what was the company intended by the words contained in the Act. I should have no hesitation in holding that the company called the European Life Insurance and Annuity Company is the company that was intended to be designated, there being no other company brought to my knowledge that has the title of European Life Assurance and Annuity Company, but in addition to that, it is not merely the scheduled companies which are included in the Act of Parliament, but also the absorbed companies, of which this is one.] The policy refers, not to the deed of settlement of the company, dated the 10th July 1820, but to some earlier deed of the 10th Feb. March 22, 1873.] THE LAW TIMES. 65 EUKOPEAS AsSUEANCe] GAEDiNEit's Case. [Abbithation. 1819. It may, for anything known to the contrary, be that this is the deed of some other partnership. [Lord Westbuey. — You received the premiums. How can you say the policy was not gtanted by you ? If there ever was such a deed as that mentioned, namely, of the 10th Feb. 1819, it must have been in your possession, and you are bound to produce it. I cannot listen to any objection derived from the possible contents of a deed which ought to be in the posses- sion of the objecting party.] I appear for two of the directors, and not for the company. [Lord Wbstbtjby. — Nobody can give the explana- tion but yourselves, and if there is any difficulty you have the power of removing it.] We have not the means of making inquiry. [Lord Westbtjky. — Mr. Davey very properly calls my attention to the fact that the recital in the annuity grant mentions a deed of a different date to the deed which is mentioned here in the case ; but he cannot explain to me what that deed was, and therefore I shall not listen to the objec- tion.] The only other point is that the cove- nant is with the husband, and it is doubtful whether Mrs. Gardiner is in a position to sue. Whether her remedy is at law or in equity, it may be open to consideration whether the personal representative of her husband ought not to be a party. Lord Westbuky. — That is very proper to be considered, but I do not think it is open to any doubt. The contract, no doubt, so far as it consists of the covennnt, is a covenant with the husband and his representatives, and the covenant is a further security for the fulfilment by the company of the grant which is subjoined, and which arises in favour of the wife after the death of the husband. It is a grant, therefore, to Mrs. Eleanor Gardiner, to arise, when she shall become free of cover- ture upon the death of her husband, and that contract is very distinct. It runs thus : " The funds and property of the company shall at aU times after the decease of John Gardiner, in the event of his death in the lifetime of Eleanor Knox Gore, be subject and liable (according to the pro- visions of the deed of settlement of the said com- pany, bearing date the 10th Feb. 1819) to pay to Eleanor Knox Gore, or her assigns, during the then remainder of her life at the office of the company, an annuity of 300Z." Now there can be no doubt that, that is a good grant to the wife. Whether it might not amount to a grant at law, as well as a grant in equity, may be subject to some doubt. But it is clear that the grant is one vyhich would give to this lady the independent power of suing the company by virtue of the grant, without the necessity of invoking her husband's covenant, if she sued the company in equity ; because it is distinct — the grant is — they covenant with the husband in manner following, that is, so and so ; then the funds and property of the company shall be sub- ject and liable to pay to the said Eleanor Gardiner. Now Mr. Davey very properly put it to me as if the remedy at law depends upon the hus- band's covenant ; then the only action, that could be brought at common law, would be by the repre- sentative of the husband ; but if the remedy is in equity one capable of being enforced and claimed by the wife, then it would be still requisite that the suit in equity should have the representative of the husband as a party. Now the general rule, no doubt, is that yon must have the holder of tho legal estate a party in equity, in order to bind tlio legal estate, but that rule would not be applicable to a grant of this kind, because the grant makes the funds and property of the company distinctly liable to the wife after the cessation of the cover- ture of the wife with the husband. I do not think, therefore, that even that technical diffi- culty exists. I think the suit would be properly constituted if brought by Mrs. Eleanor Gardiner, the widow, against the society; and therefore, as she could sue in that capacity, whether she might or might not be required to add her husband's representative, would probably depend upon any suggestion being made that the husband had acted in a manner to interfere with the widow's right to sue. In the absence of any such suggestion I think the suit would be propei'ly constituted by a bill by the widow alone against the company. Then the other objection that the widow has accepted the company by giving receipts such as I have had produced to me, is bare of all possible suggestion of there having been a distinct agreement by her to release the one com- pany and accept the other in lieu thereof; and, although it has been ingeniously argued upon the Act of Parliament, yet I cannot for a moment take the Act of Parliament as amounting to a statutory declaration that a policyholder in the position of Mrs. Gardiner shall be deprived, by virtue of that Act, of her original grant made by the grantor, and be driven to rely exclusively and solely on the European Assurance Society. It would be, as I have already said, a monstrous thing to 'impute to the Legislature that they dealt with private pro- perty in that manner, I think, therefore, that she is entitled to rank as a creditor of this society direct, and therefore is entitled to an order to wind it up. Napier Higgms referred to the 4th section of the Life Assurance Companies Act 1872 (35 & 36 Vict. c. 41, s. 4), which enacts that the com- mencement of the winding-up of the prin- cipal company' shall, save as otherwise ordered by the court, be the commencement of the winding-up of the subsidiary company ; and sug- gested that the winding-up of the European Life Insurance and Annuity Company, should date from the order to wind-up the European Assur- ance Society. Gill. — For this particular case it certainly would be for the benefit of Mrs. Gardiner ; but how it would affect other people, I do not know. I do not know that I can assent to it. In presenting a petition to wind-up the company, I am presenting a petition on behalf of myself and all other credi- tors. There may be creditors that are policy- holders, and may obtain a benefit ; and to date it froni the date of the winding-up order may be very good for me, but not for others. [Lord Wbstbuby. — I cannot take this leap in the dark. I must adhere to the ordinary course of having the order that I make to-day dated as of to- day.] The petition was originally presented to the Court of Chancery before the passing of the European Assurance Society Arbitration Act 1872, and has been transferred to this court since. I presume the winding-up will date from the pre- sentation of the petition to the Court of Chancery. The question is one of costs — how we are to get the costs of the original petition that was pre- 66. THE LAW TIMES. [March 22, 1873. EUBOPEAU AsSUKAUCE] Puddicombb's Case. [Abbiiration. seated to the Court of Chancery. [Lord West- bury. — I cannot deal with that at present. I am making an order upon a petition transferred to me by the Act. The directors who appear will have their costs, inasmuch as it was a matter of necessity that the company should be brought before the court before any winding-up order could be made.] Bedall. — I appear for a poHoyholder in support of the appUcation. It is usual in the Court of Chancery to give one set of costs to the creditors who support the petition to wind-up. Lord WESTBTJEy. — A very bad practice indeed. I should not adopt any such bad principle as allowing people to come here and ask for costs. You have come here of your own accord, with- out being required to, and you shall not take any part of the money of the company as a reward for having done that act of supererogation. Napier Biggins. — The liquidators of the European Company were obliged to appear, because it was not certain whether the directors would appear, and it was to our interest to see that no order should be made so as to diminish the funds. Lord Wesibusy. — Must you not take your costs out of the European estate? If you come here in discharge of that duty to the estate, leb your estate remunerate you. I shall not adopt any practice such as I am told exists in the Court of Chancery, which will have the efiect of multiply- ing costs unnecessarily. Solicitors for Mrs. Gardiner, W. T. Manning. Solicitors for the directors, ElUs and BlUs. Solicitors for the ofiElcial liquidators of the European Society, Meraer and Mercer. Tuesday, Jam,. 21. Puddicombe's Case. 'Life AssuroMce Convpany — Amalgamatimi of com- panies — Winding-ii,p — Novation of contract — Policy — Refusal to discharge order of chief clerh ad/milting an annuitant's claim on the old com- pany. In 1862 the W. Life Asswance Company transferred its business to the B. Society ; an order was made by the Court of Chancery to wind-up the W. Com- pany ; amd an advertisement was issued calling on creditors to come in and prove their claims before a certain date. P. was cm annu/itant of the W. Company, but did not make any claim within tlie prescribed time. She accepted the in- stalments on her annuity from the tra/nsferee com- pany, and gave receipts to it down to 1872, when it was ordered to be woimd-wp ; thereupon she obtained leave to prove her claim against the W. Company. She attended before the chief cleric, and the solicitors of the then official liquidators of the W. Oompamy also attended, but did not oppose the application. The chief clerh made an order that P. be admitted a creditor of the W. Company for 326L lis., the value of her policy. The present official liqui- dator, appointed in the a/rbitration, applied to liave the order discharged on the grownd that under the circumstances she was precluded from claiming against the W. Compaivy, and that the solicitors to the then official liquidators ought to heme opposed her application. The application was disallowed, tlie claim beforcthe chief cleric not having been opposed by the official liquidators. This was an application on the part of the official liquidator of the Waterloo Life, Education, Casu- alty and SeK-rehef Assurance Company, to dis- charge an order of a chief clerk of the Master of the Rolls, admitting Miss Puddicombe to l)e a cre- ditor of the company. In 1852, the company, in consideration of 5007., granted an annuity of 461. 6s. to Miss Puddicombe during her life. In 1862, the company transferred its business to the British Nation Association. Circulars were sent to the Waterloo Company policyholders announcing the fact, but none of these circulars were received by Miss Puddicombe. Subsequently to this transfer of business, she received the instalmeats of her annuity from the British Nation Association,[and gave them receipts until 1865, when the British Nation Association transferred its business to the European Society ; after which time she received the instalments from the European Society, and gave them receipts down to 1871. On the 6th Dec. 1862, an order had been made by the Court of Chancery to wind-up the Waterloo Company, and advertisements were inserted in the London Gazette, the Times, and other news- papers in Jan. 1863, requiring creditors to send particulars of their debts or claims to the official liquidator before the 9th Feb. 1863,, and, if required by notice from the official liquidator, to come in and prove their debts or claims at the chambers of the Master of the Rolls at such time as should be specified in such notice,, or in default thereof they would be excluded from the benefit of any distribution made before such debts were proved. Miss Puddicombe made na claim against the co6pany at this time. But after the European Society had been ordered to be wound-up on the 12th Jan. 1872, Miss Puddi- combe, in April 1872, applied for and obtained leave to go in and prove such claim as she could establish against the Waterloo Company, not- withstanding that the time had expired for adju- dicating upon claims. In pursuance of this leave she attended before the chief clerk of the Master of the Rolls, and made a claim for 326Z. lis. as the value of her annuity policies. At that time there were official liquidators appointed by the Court of Chancery. Their solicitors attended before the chief clerk, and did not oppose the apphcation. Accordingly an order was made by the chief clerk that Miss Puddicombe "be admitted a creditor of the Waterloo Company for the sum of 326L lis., being the amount of the present value of a Government Annuity for the sum of 46J. fsx annum, the amount of the annuity of the said Miss Puddicombe piirchased from the above-named company." Montague Goohson (with him Napier Eiggins, Q.C.), for the official liquidator of the Waterloo company appointed by Lord Westbury in the arbitration, contended that lapse of time, coupled with dehberate abstention in taking advantage of the advertisement inviting her to prove her claim, and with the continuous receipt during ten years of sums of money in respect of her policy from companies, as to which she had notice that they were paying because the liabiUty had been trans- ferred to them — all this showed acquiescence and laches on her part such as to bar her right of proof against the original company. Then there Jfflaroli 22, 1873.] THE LAW TIMES. 67 EuROPEAK Assurance] Cokqtjbst's Case. [AEBITaATION. ■was the difficulty that the annuity ought to be valued as at the date o£ the order to wind-up, i. e., as long ago as the 6th Dec. 1862. On the appli- <;ation being made to prove in 1872, it ought to have been opposed by the soUcitors of the then official liquidators. [Lord Wesibtjut. — But it was not ; thus the thing is concluded against them. The shareholders must be bound by the act, unless it is a fraudulent one. Ton see there is a very great deal of diffi- culty as to the present value ; but if I hold that jrou have no ground for discharging this order, or rehearing it, and that you assented, acting as you conceive bond fide, to that being the value, then I should refuse to disturb the order, limiting my decision to the special circumstances of this case.] Cracknall appeared for Miss Puddicombe, but "was not called on. I see no reason for discharging the order after ■all that has been done, but I will not make it a precedent for any future case that comes before me, unembarrassed by a judicial order. I am disposed in this case to refuse to dis- turb the order of the Master of the EoUs. Nobody has regretted more than myself the position which the chief clerks have been permitted to assume. It never was intended that they should exercise anything like a judicial power, yet this practice has sprupg up that when, under a decree for ■administration or an order like this, a creditor brings in a claim and the other side appears and says " We have no objection to this," then the chief clerk, not being desired to refer the matter to the judge or to reserve the matter for the judge, makes the order. It is improperly called an order — he only admits the claim, and makes this memoran- dum of the fact of the admis iiou by him of the claim, the matter not being opposed by the proper repre- sentative of the estate ; and that is a very conve- nient practice, otherwise, under decrees of adminis- tration, and the many thousands of such decrees, if the chief clerk were to be compelled to go to the judge, and say, " Here is a man who has brought in a claim for grocery supphed to a testator amounting to 501., and the executor says it is right," and then it is said, " But I cannot admit it without your authority," that would be an incon- venient practice. But it must not be supposed that this is a judicial order ; it is a memorandum ■of the fact that the claim has been admitted by the chief clerk, it not being opposed, ■and the parties not desiring to have the opinion of the judge upon it. I shall make an order to this effect : Having regard to the special circumstances of this case, and to the fact that Miss Puddicombe was permitted by the Court of Chancery to go iu and prove such claim as she could establish, and to the fact that she did bring in a claim for the sum of so and so, which was admitted and not opposed by the official liqui- ■dators, this court doth refuse to interfere with that order, and doth confirm the same under the peon- liar circumstances of the case. Miss Puddicombe must have her costs, and you, Mr. Oookson, must ■have your costs out of the estate. Solicitor for Miss Puddicombe, G. B. Puddi- combe. ■ V Solicitors for the official liquidator of the Waterloo Oompaiiy, Mercer and M&rcer. Tuesday, Jan. 21. Conquest's Case. Life Assurance Company — AmalgamaUon of com- panies — Winding-up — Novation of contract — Policy — Acceptance of bonus — Amalgamation cir- cular— Policylwlder held not to have accepted the liability of the new company. In 1861, 0. effected a policy on her own life with the W. Life Assurance Company, "with profits, such profits to he appropriated, so as to make the policy payable durimg the lifetime of the assured." In 1863, the W. Company transferred its business to tlie B. Association, arid on this occasion a circular was sent to the policyholders by the W. Company, announcing the union of the two compa/nies, and stating that " the terms and conditions contained in the policies issued by the company will remain unaltered by this arrangement ;" and further that " the union of companies increases business, bonus, Sfc. ;" and that " it has been arra/nged that in all future bonuses they shall participate on an equality with the other policyholders in the con- joint companies. They will thus seaivre not only all the benefits to which they were entitled in this company, but the additional benefits to be derived from the accumulation of income and power." The circular further offered an indorsement on the policy, or a, new policy in exchange. Accompanying this, was another circular from theB. Association, offering an indorsement, or a new policy. The policyholder took no notice of these circulars, but paid her premiums to the B. Association, and ac- cepted receipts from them until 1865, when the B. Association transferred its business to the E. Society. She then paid her premiums to the JE. Society, and accepted receipts from, them. T?il867 she received a circular from the E. Society, an- nouncing that a bonus had been allotted by the E. Society, and that a reversionary sum had been added to her policy. She took no uotice of tlvis bonus circular. In the winding-up, she claimed on her policy against the W. Company, but it was contended that her claim must be against the E. Society. Meld, that she was entitled to rank as a creditor of the W. company. The pa/yment of the premiums was in conformity with the directions contained in the amalgamation circulars; and with regard to the bonus, the policyholder had not, by her silence, accepted it ; but even if she had, she would not have thereby accepted the liability of the E. society, for the amalgwmation circular stated that the terms and conditions of the policy, and therefore the liability of the W. com^arvy, would remain wnaltered, with this further addition, 'that in all futu/re bonuses she was to participate on an equaUty with the poUcyholders-of the conjoint companies. This was a question of novation. On the 22nd May 1861 the Wellington Kever- sionary Annuity and Life Assurance Society granted a poUey for 300Z. to Mrs. Conquest, then Emma Clare, widow, on her own life. At the head of the policy wete these words: "With profits, such profits to be appropriated so as to make this pohcy payable during lifetime of the assured." In 1863 negotiations were set on foot for the transfer of the Wellington Society's business to the British Nation Association, and upon the completion of the transfer the following circulars were sent to the policyholders of the Wellington Society : — 68 THE LAW TIMES. [Maroli 22, 1873.. EUKOPEAN AsSUEAUCE] Conquest's Case. [ARBITEATIOIf. Wellington life Assurance Society, 3, Chatham-Dlace, Blackfriars, London, E.G., 31st July, 1868. Dear Sir, — The proprietors of this society, on the recommendation of the directors, and after very mature deliberation, have decided to accept an offer made by another association to unite the business of the two companies. In adopting this course, the directors feel that they are consulting the interest of all parties in their institution, and that they will obtain larger prospective advantages to the policyholders than could have been secured under the best auspices in a separate condition. This union, which takes effect from midnight of the 15th June last, has been made with the British Nation life Assurance Association, of 316, Begent-street, where, for the future, the business will be carried on. The terms and conditions contained in the policies issued by this society will remain unaltered by this arrangement. The policyholders are fuUy guaranteed for all claims under their present policies by the British Nation by the agreement between the two companies ; but any of the assured desiring it can have the indorse- ment to that effect on their policies, or can receive new policies from the British Nation. All communications should henceforth be addressed and all premiums paid to the receipt of Henry Lake, Esq., manager of the British Nation Life Assurance Association, 316, Eegent-street, London. Should you, however, have been accustomed to pay your renewal premium through an agent, you will still be enabled to do so, as arrangements will be made to empower the existing agents of the "Wellington to act for the British Nation Company. The report of the British Nation for 1862-63, lately issued, shows the following : Annual premium income ^159,821 Invested funds and property ^6277,575 This most satisfactory position is since further im- proved, and the income of the British Nation is now raised to 170,0001. per annum. The great advantages of uniting assurance companies are now being thoroughly recognised and appreciated by the public. They may be summed up briefly thus : The union of companies increases business, income, security, and bonus, and decreases expenditure, competi- tion, and the liability to fluctuation. The business of two companies can be conducted in one offioe, and by one staff, without material additions, and the whole of the saving goes to improve the prospects of a large bonus. The directors feel assured, therefore, that you will perceive at once the advantages, which this union will secure to the policyholders. The "Wellington policyholders will have not only the security of the large annual income of the joint business, but it has been arranged that in all future bonuses they shall pariioipate on an equality with all the other policy- holders in the conjoint companies. They will thus secure not only all the benefits, to which they were entitled in this company, but the additional benefits to be derived from the accumulation of income and power. »■ The directors feel that in the step they have taken they have considered the best interests of the assured, and have obtained for them increased security and large permanent advantages. H. GoBDON, Chairman. C. W. EoE, Manager. The other circular was as follows : British Nation Life Assurance Association. Chief Office, 316, Eegent-street, "W. . London, 31st July, 1863. ji: ^^i ' — ■'■* ^^ announced to you by the accompanying letter from the Wellington Life Insurance Society, that an arrangement has been concluded for the union of the business of that society with this association. Under the agreement, made between the British Nation and the Wellington Society, it is not necessary tor us to trouble the policyholders to send their policies for indorsement by this association. Should you, how- ever wish It, if you will forward your policy either direct or through the agent in your district, it shall be imme- diately (after the succeeding Thursday), returned to you hold. But it is necessary for me to inform you that all the policyholders are perfectly secure under the renewal receipts, ajid that the terms and conditions contained in the policies issued by the Wellington Society remain unaltered by the transfer. The subscribed capital of this association is upwards of a quarter of a million ; the annual income is 170,0001., and the invested funds (irrespective of capital), are upwards of 280,0001. I would invite your special attention to the distinctive principles of the British Nation, which present a most powerful reason for the preference of assurers, and which will certainly gain business wherever they are carefully and peraeveringly advocated. The public appreciation of these principles may be seen hy the great progressive increase of new 4)usiness in each of the following years The income from new business is now at the rate of 25,000Z. per annum. Tour position as a policyholder, I need scarcely re- mark, will be greatly improved by the arrangement now made. By the union of interests, and by the conduct of the joint business in one office, and by one official staff, a very considerable reduction of expenditure is effected, which must add considerably to the bonus, while the new business, large as it is at the present' time, will be continually increased by the concentration of interest and income. It may also be gratifying to you to know that the British Nation and the companies united with it have paid more than 3000 claims to policyholders, amounting with the bonus addition to upwards of a million and a quarter sterling. Allow me, therefore, to express the hope that you will as a policyholder, do all in your power to uphold and increase the business by reverting to the subject of assurance among your friends, and (if it be not incon- venient to you) by rendering aid by introductions and otherwise to the agents in your district. You will thereby be promoting, not only the general prosperity of the institution, but by thus adding to the profit fund, you will be increasing the value of your own policy. Henbt Lake, Manager. Mrs. Conquest received these circulars but took no notice of them. Her policy was not indorsed, nor was a new policy issued in lieu thereof. After the date of the circular, she paid her premiums to the British Nation Association, and accepted receipts from them until 1865, when the British Nation Association transferred its business to the European Society (vide swp., p. 41), after this time she paid her premiums to the European Society and accepted receipts from them, the last receipts being in the following form : No. 25,699. European Assurance Society. Premium £1 5s. On the life of Mrs. Conquest. Eeoeived the 16th June 1869, the sum above stated, being the amount of premium for the renewal of pohcy No. 39,561 for twelve months from the 22nd May 1869, according to the tenor of the said policy. EOBEKT NOKTOnI ti:,„„+™= Michael QuiN | Dureotors. Printed receipts for renewal premiums issued from the chief offioe and signed by two directors, will alone be admitted as vaUd. In 1867 a bonus was declared by the European Society, and the following circular was sent to Mrs. Conquest : Bonus Notice. European Assurance Society. London, W., April, 1867. PoKoy No. 39,651. Life of Miss B. Clare. I am instructed by the Board of Directors to announce to you that a valuation of the affairs of this society up to the 31st Dec. 1865, has been completed, and that an allotment of reversionary bonus to that period has been made. I have great pleasure in informing you that the reversionary sum added to the above policy at this division is 21. 8s. Tou will please attach this notice to Apra 5, 1873.] THE LAW TIMES. 69 BUKOPBAN AsSUBANCB] Conquest's Case. [Abbitkation. the polioy as the offioiaj declaration of the bonna addi- tion. The bneiness ia still rapidly increasing, and it is hoped that at each succeeding valuation the bonua will be materially augmented. Henry Lake, Manager. To Mra. E. Conquest, Or the person legally entitled to the polioy. Mrs. Conquest took no notice whatever of this bonus circular. Notwithstanding that the circular stated that a reversionary bonus of 21. 8s. was added to her policy, that sum was appropriated as profits contemplated by the terms of the polioy, so as to make it payable during the lifetime of the assured, and an entry was made in the books of the European Society that the policy was payable on her attaining the age of eighty-four. In the winding-up Mrs. Conquest claimed to be entitled to prove on her policy against the Wellington Society. The official liquidator, on the other hand, contended that she had effected a novation with the British Nation Association, and then with the European Society, and that her claim must be against the European Society. H. M. Jackson appeared for Mrs. Conquest, and in arguing her case distinguished between the principles laid down as to novation in this arbitra- tion {vide Goghlan's and BlundelVs cases, sup., pp. 31 and 39) and in Kennedy's case in the Albert Arbitra- tion (Reilly's Albert Reports, p. 5). [Lord West- BUEY.7— Do you think there is any real difference between Lord Cairns and me as you have read it to me from Kennedy's case? Now just see whether I have got it rightly. If a company, on the occasion of transferring its business to another, sends a letter to a policyholder and tells that policyholder, by means of this transfer or as a consequence of this transfer you will receive from the transferee company very many advantages that you would not have had by your original contract, if the policyholder, receiving that, does nothing except this, that he goes and pays his premiums to the new com- pany, Lord Cairns is inclined to regard it as an acceptance of the offer and promise of ad- ditional advantages contained in the circular, and, therefore, as an acceptance of the new company in lieu of the old. But then, you see, according to the marginal note. Lord Cairns went on to say and came to this conclusion: when there is no evi- dence that the new company was made either expressly or by implication the agent of the old company for receipt of premiums — and therefore he seems to have said, whenever you can deduce or infer an agency to a new company, payment to it shall not amount to evidence of novation. Have I rightly expressed it?] I read this from Lord Caims's judgment, " But it appears to me that the burthen of explaining the apparent irregularity of the receipts, the apparent variance, the open variance between the payments stated in the receipts and the payments contemplated by the policy, lies on the person who produces these receipts. Ear from offering any explanation, Mr. Kennedy is obliged to confess that there passed, before the payments which are evidenced by these receipts, that transaction to which I have re- ferred, namely, the sending to him and the receipt by him of this circular. It appears to me that this circular containing an offer, and on the face of it stating that payment of premiums to the Albert would be proofs, as it were, of the acceptance of the offer, the moment a pre- mium was paid in "the manner 'invited by the circular, the contract became complete between Mr. Kennedy and the Albert on the one hand, and the termination, on the other hand, of the liability of the Family Endowment, became complete for want of any payment of premium to them."' [Lord Westbuby. — I do not differ from that.] Napier Higgins, Q.C. and Montague Ooohsou, for the official liquidators of the European Society. — Mrs. Conquest received the amalgamation cir- culars ; these were an offer of a new contract. She thereupon went and paid her premium • to the new company, and thereby accepted the offer. Moreover, although she did not reply to the bonus circular, she did not object to the bonus, she acquiesced in it, and thereby she as much accepted it as i£she had written to accept it : Glaeebrook' s Case, Albert Arbitration, Eeilly's Eep. 135; Knox's Case, Albert Arbitration, Beilly's Eep. 132 ; 16 S. J. 673. This bonus was one that she was not entitled to under the terms of her original policy, and there- fore the acceptance of it showed that she was look- ing for payment to the European Society alone : Re Medical, Invalid, and General Life Assurance Society ; Spencer's Case, L. Eep. 6 Ch. 362. Lord Wbstbuby. — ■ It is a very lamentable thing to see how multi- tudes of innocent simple people are dealt with by these companies, and by the legal arguments that are supposed to be justly and rightly based upon the conduct of these companie"s. Now here we have a case that I should have imagined, could not have ad- mitted of any possibility of doubt. The Welling- ton Company unites its business with the British Nation. It sends a communication to its policy- holders of the terms on which that union would proceed. They are first of all assured that the terms and conditions o£ their own policies issued by this society will remain unaltered. Now that is the governing assurance. Mrs. Conquest, therefore, holding a policy from the Wellington Company had a right to say, " By your representation to me, al- though this union will be carried out in the manner that you describe, the terms and conditions of my policy and your liability, therefore, on that policy, will remain unaltered." Now the same circular goes on to describe what would be certain benefits re- sulting from the union of the businesses, and those benefits the policyholdei s are told that they, will have as the result of the union; not as the result of a union the cardinal principle and rule of which was that the terms and conditions of their policies should remain unaffected ; but they are told that the union of companies increases business, and that the Wellington policyholders will have not only the security of the large annual income of the joint business, but it has been arranged that in all future bonuses they shall participate on an equality with all the other policyholders in the joint com- panies. If, therefore, in the progress of things, benefits in the shape of bonus were found to accrue to the policyholders in the conjoint com- panies, the policyholders of the Wellington com- pany were to have the benefit thereof, and the benefit so received wasnot in any manner to pre- judice or affect the terms and conditions of their policies. Now there is a union of business with the British Nation, the Wellington company ceases to carry it on, the British Nation carries it on — carries on the conjoint business. The direction and the agreement to carry on that business in- volves,' Of necessity, this : that the British Nation h 70 THE LAW TIMES. [AprU 5, 1873. EUEOPEAU AsSTJBASCE] Conqtjest's Case. [Abbiteation. were as agents of the conjoint companies to re- ceive the premiums, -and might give discharges therefor. If I give authority to my steward to receive the rents of my property, what matters it whether he gives a receipt for the rent in my name or in his own P If he gives it in my name, he is entitled so to do by the authority he has ; if he gives it in his own name, he is answerable to me for what he receives in the character of my agent. Well now, first, I have had a great deal of, argument founded on a great variety of cases with respect to which it is a painful thing to con- template how much these innumerable reports contribute to the expenditure of time in courts of justice. There is not a single case that I have heard that has any bearing upon the facts of this case ; and if there were a dozen having a bearing upon it, if the facts of this case admit of the plain, straightforward, rational interpretation that I give them, I would not permit that interpreta- tion to be overborne or influenced by any number of decisions. Now, ,it is said that the British Nation Association received these premiums in its own name. It is true they did so. It is true that in so doing they acted in conformity with that agreement, of which they originally gave notice to their policyholders by the circular to which I have so often referred. What the policyholder did, therefore, in accepting the receipt of the amount, was in strict conformity with the request made to him in the original communication that was made to him by the Wellington and by the other combined. Well, then, that goes for nothing. Well, but then I am told, and this, it appears, is only for the purpose of bringing in a decision that it was supposed would influence the case — Nay, but Mrs. Conquest received a letter from the European Society, announcing to her that they had added to her policy a particular bonus, which was a bonus that she could not have expected to receive under the terms of her original policy, and therefore it is evident that in taking that benefit she had agreed to take the benefit of the new company and the new contract with that company in substitution for the old. Now, in the first place, the letter that gives her information that a sum of 2J. 8s. was to be added to her policy was a letter that she was not bound to have accepted at all, neither does she appear to have accepted it, because her original poHoy provided this— that the bonus should be applied in the appropriation of profits so as to give her a title, on attaining a certain age, to the accumulated profit that might accrue in the interim by vii-tue of that appropriation. That title contained in h6r policy, the terms of which were to remain unaltered, is disregarded, and omitted altogether in this circular, and the circular therefore tells her that the Euro- pean Society had done something which they were not at all at liberty to do against her assent. Now she takes no notice of this letter ; she did very well, I think, in not taking any notice of the letter. If a man writes to me a letter, and tells me that he has done something which he had no right to do, I am under no obligation to warn him that I do not accede to that letter. It reminds me of an Irish case in which a man wrote to a pro- prietor of land, and said, " I will give you £20,000 for your estate, and if I do not hear from you by a certain time, I shall consider that my offer is accepted." I do not know whether it was decided that that amounted to an agreement, but if it was decided that it did so amount, I think you will agree with me that the decision is not entitled to any considerable respect, But now if we regard this letter as one that Mrs. Conquest accepted by silence, did she thereby deprive herself of the right to her original policy ? Why, she had a right to fall back on the terms of the circular addressed to her and to say, " I was justified in believing that this sum of money that you told me was to be added to my poUcy was a sum that arose in conformity with your own state- ment in your original circular in which you tell me — whilst assuring me that my policy should remain unprejudiced — you tell me that the Wellington policyholders will have not only the security of the large annual income of the joint business, but it has been arranged that in all future bonuses they shall participate on an equality with all the other policyholders in the conjoint companies ;" and the letter intimates to her that that had been done, and that a valuation had been made of all the afiairs of the European, and that in that valuation a sum of 21. 8«. emerged to her as her proportion, and in conformity, there- fore, with this promise and this representation, she might well have allowed it to be added to the policy without in the smallest degree affecting the terms and conditions of the policy, and she had a right to treat this bonus as a profit accruing to the policyholders by virtue of the business of the Wellington Company having been transferred to the European. But in order to render absurdity more absurd, the argument, that is founded on this letter and the addition of the bonus, is nulli- fied by the next paragraph of the case, because it appears from that paragraph agreed upon between the two parties here, that although they told her it was to be a reversionary bonus, yet they never gave her a reversionary bonus, but they took the 21. 8s., and, contrary to the terms of the letter which I am told she accepted, they added it to the policy by appropriating it as profits contem- plated by the terms of the policy. And the letter, therefore, departed from by the company, their expressions corrected by what they did — 1 am told that the letter and her silence in not answer- ing it are evidence of an assent to the letter, the company having, in fact, repudiated that very letter, and that, therefore, she shall be bound to take the new policy. It is a pain to me to see the manner in which the losses of these innocent per- sons, who knew nothing of it, are augmented by legal subtlety and legal ingenuity, and by the raising of every kind of opposition to their having the simple performance of the contracts which alone they understood and upon which they relied. Then comes that which is the fault of lawyers, and of judges, who are included under the name of lawyers, that subtle conclu- sions have been derived, and I am told that I must impute to these innocent people a variety of conclusions, and a large amount of knowledge, because certain deeds which they never could have got at to read are referred to in their policies and in their transfers, and therefore the knowledge of those deeds and of the construction thereof is to be imputed to them, and their rights are made to be dependent, not vipon what they actually knew, but upon what they were assured, and upon what they might have attained to the knowledge of, if they had been so clever and inge- nious as to perceive the possibility of its affecting April 5, 1873.] THE LAW TIMES. 71 BuROPBAif Assurance] West's Case. [Aebiteation. them, and if consequently they had come under the obligation so thrown upon them, and had made search in order to discover their actual legal posi- tion. All this is a matter of great pain, and there- fore it is that I repeat again, I wiU not transfer a man, who is a creditor, from one person to another and bind him to take that course, unless I have most unequivocal proof that it was done with his know- ledge, and that he has subsequently assented to it, and that with competent information on the nature of the case he has agreed to accept the new debtor instead of the old. Mr. Jackson, you will take your order and have your costs from the ofl&cial liquidators of the European Society. When the Wellington Society is being wound-up, and they are officers of that society also, they may apply to me to have the costs out of the Wellington Society's estate. Solicitor for Mrs. Conquest, W. Stimson. Solicitors for the official liquidator of the Euro- pean Society, Mercer and Mercer. Wednesday, Jan. 22nd. West's Case. Oompamy — Amalgamation of companies — Windimg- up — uontributory — Liability in old company having heem limited, claim hy one, who accepted shares in the new company in respect of shares i/n the old, that his liability was still limited. The B. company, being a company of limited liahiUty, transferred its business to the E. Society, each shareholder in the B. Gompamy tahimg two shares ■i/n the E. Society, in respect of each 11. paid on his slia/res in the B. Company, and the E. Society taking the business of the B. Company, together with the liabilities subsisting at a certain date. A sha/reholder in the B. Company, who had thus received E. Society's sha/res, and whose name re- mained on the register of both companies, was in the winding-up placed on the Usts of contribu- tories to both companies. He claimed that, inas- much as his original liability i/n the B. Company was Umited, the whole of his liability to the two compardes ought not to be extended beyond that limit ; and, fwrther, that he was not to contribute to the E. Society until that society had indemni- fied him against his liability to contribute to the payment of the UabiUties of the B. Compa/n/y. Held, that these contentions could not be considered until all the creditors of the E. Society had been paid. The British Nation Fire Insurance Company, Limited, was incorporated by registration under 1 the Companies Act 1862, as a company limited by shares. The nominal capital of the company was to be 1,000,000L, divided into 50,000 shares of 20L each. In 1865 negotiations were entered into for the ■ transfer of its business to the European Assurance Society. The agreement between the two companies was that the interest, business and goodwill of the British Nation Fire Company should be transferred to the European Society as from the 30th June 1866, and that the company should cease to carry on business, that the European Society should take all risks in force on the 30th June 1866, and that all premiums received since that date should be handed over to the European Society, together with the risks and liabilities thereunder; that the British Nation Fire Company should pay to the European Society 12,000J., and in consideration thereoE and of the goodwill of the business, the shareholders of the British Nation Fire Company should be entitled to .receive two shares of 21. 10s. each in the European Society, upon which 10s. M. should be deemed to have been paid, in respect of each \l. paid by them on shares in their own company. On the 11th and 26th. Oct. 1866, this agreement was approved of; and confirmed by extraordinary general meetings of the shareholders of the British Nation Fire Company. Mr. West held twenty-five shares in this com- pany, and he now alleged that he attended the meeting of the 11th Oct. 1865, and opposed the resolution as to the agreement to transfer the business; and that at the meeting the board of directors was asked whether ■ the transfer of the business would affect the liability, of the share- holders, and that the answer given was that the liability would remain the same as before. In Feb. 1866, he sent to the European Society the certificates of his twenty-five shares in the British Nation Fire Company, and received in exchange certificates for 250 shares in the Euro- pean Society ; he further executed a covenant to abide by the provisions of the deed of settlement of the European Society. His name being on the register of both com- panies, he was in the winding-up placed on the list of contributories to both companies. He now contended that his liability to the credi- tors of the European Society should be limited to the sum of 187J. 10s., on the ground that on the transfer of the business of the company to the society it was stated that the liabilities of the shareholders in the company would not be in- creased, and that he had paid to the company and the society together the sum of 812J. 10s., his total liability to the company never having exceeded 500Z. He further contended that, according to the true construction of the agreement, under which the transfer was made, the European Society agreed to indemnify the shareholders of the British Nation Fire Company from any claims made against them with respect to the liabilities exist- ing or to arise from the business transacted by the company up to the 80th June 1866, and up to the time of the company ceasing to carry on busi- ness ; and that as he would be liable to pay calls to the British Nation Fire Company in respect of risks existing on the 30th June, 1865, and up to the time of the company ceasing to carry on busi- ness, he could not now be required to pay up the balance stated to be due upon his shares in the European Society, until the European Society should have satisfied the liability which he was under to the British Nation Fire Company. And moreover, that he would be entitled to prove as a creditor against the European Society for all moneys wmch he might be called upon to pay to the British Nation Fire Company in the event of the European Society failing to indemnify him from his habilities to the British Nation Fire Company. Willis appeared for Mr. West. Montague Coohson for the official liquidator of the European Society. Lord Westbuey : — It is very hard on a gentleman who to-day is the owner of shares in a company, which is transmuted into another company, and in respect of the first 72 THE LAW TIMBS. [April S, 1873. EuBorEAN Assukanoe] Barnes's Case. [Abbitration. holding is made tlie holder of shares in the trans- muted company, and then, after a certain lapse of time, finds himself charged with a double liability, with his original hability, and also with that which he believed was a substituted liability in lieu of the original liability. That is one part of the case which is very painful and very diflScult to make intelligible to ordinary persons. I have had a great number of letters, in which the writers complain to me and say, — "we considered that we were to stand as members of the new company and were wholly exonerated from the old." Unfortunately they were not advised that by the state of the law there could not be that exoneration until their names were removed from the register of the old company. They permitted that to remain unaltered, and unfortunately the law inflicts upon them the consequence of remain- ing registered shareholders, and they also permit themselves to stand in another and second capacity upon the register of another company. There, again, they are fixed by the law and bound bj' the consequences of that registration. They cannot be relieved. It is a consequence of ignorance of the law ; a consequence of want' of attention to the necessary formalities of exoneration. These in the first company would be, of course, the removal of their names from the register of that company. I commiserate such cases very much, but I have no power to relieve. It is one of the innumerable dangers from neglect in institutions like these companies, which are subject to a very artificial system of law, difficult to be understood, full of pitfalls, but to be perfectly well understood and entirely followed on the occasion of any dealing. That is one part of this case upon which I cannot relieve parties. But then this ■geutlemau comes here and says, "I shall be entitled to an indemnity by virtue of the engage- ment between the two companies that the Euro- pean Society will take the business with all the risks attendant upon that business." I will not say anything to discountenance that contention; the time has not arrived; and I could not give efi'ect to that contention without, in some manner or other, reducing the liability of this gentleman upon his shares in the European Society. That I cannot do ; but when all the engagements conse- quent upon that position are fulfilled, if there should be — which is a thing that will be realised only in the Greek Kalends — any possible surplus of property not belonging to, or not required for, the creditors, then it may be possible that that ■ may be subject to claims of this kind. It is idle to say that that contention can be entertained at the present moment. Then he puts it in another light ; he says : — " I was assured that my lia- bility would not be. increased; my liabihty will certainly be increased ; therefore may I not claim in respect of that augmented liability P" I cannot tell whether it will or will not ; but, if it is in- creased, I cannot give effect to any claim for reduc- tion of that augmented liability, because it is a claim that can only be, as I have said before, ad- mitted for a moment or considered for a moment after all the liabilities, consequent on his being the holder of 250 shares, have been completely settled. I must, therefore refuse the present application, and with costs. Solicitors for Mr. West, Le Biche and Son. Solicitors for the Official Liquidators of the European Society, J/jrcc/- and Mercer. Nov. 2, 1872 ; Jan. 21 and Feb. 3, 1873. Barnes's Case. Life assurance company — ■Amalgamation of com- panies — Novation of contract — Annuity — Attempt to show thai the Uability of the old compa/ny was annihilated on the transfer of business, wider peculiar provisions in the deed of settlemeni and the annuity contract. The deed of settlement of the I. Life Asswrance Com- pany, contained a provision whereby the company might be dissolved, and the directors should there- upon satisfy all the immediate claims on the com- pany, and obtain from some other assurance com- pany cm undertaki/ng to pay the remainder of the claims as they should arise, and should then transfer to that company so much of the property of the com- pany as should be agreed upon as sufficient, with the futwre premiums to enable them to oompT/y with this undertahimg ; and if any property should remain after answering these purposes, then it should be distributed among the shareholders, and, notwithstanding the dissolution, the deed was to remain in force until all claims should home been " satisfied and provided for as aforesaid," Sfc, and should continue in force so far as it might be necessary for winding-up the affairs of the com- pany, Sfc. In 1855 the I. Company passed resolutions for dis- solving itself, and it transferred its business and assets to the E. Society. An annuity contract had been granted to C. by the I. Company, whereby the property of the Company "remaining undisposed of," was to be liable for the payment of the armuity. In 1872 an order to wind up the I. Company was made on the petition of this annuitant, who since the amalga/nation had been receiving the instal- ments of her annuity from the JS. Society. B., a former shareholder and director in the I. Com- pany, was appointed by the Vice- Chancellor to represent that Company on the liearing of the petition. He now applied to the arbitrator to have the winding-up order discharged, on the ground that the annuitant was no longer a creditor of tlie I. Co'm/pcmy, being hound by the deed of settlement, which, it was contended, pro- vided for the absolute dissolution and destruction of the Com/pany, so as to release it from all obli- gations ; and the I. Conupany having been dis- solved in this way, and its liability iransferi'ed to the E. Society. Held, that this was not the true interpretation of that deed ; and further, that, if it had been, the company could not make use of any provision in its deed of settlement, so as to derogate from any grant by it of an annuity. On its being contended that the annuitant, by her acts in accepting payment from the IE. Society, and sending them receipts and certificates, in which the annuity was referred to as " payable by the E. Society," had t^'onsferred the liability to the E. Society, it was Held, that there was no such transfer of liability. The grantee of an annuity-contract takes it with full notice of the deed of settlement and constitution of the grantor Com/pany. Carr's case {SSBeav. 542) and Mosley's case {Albert Arbitration Min. p. 953) distinguished and con- This was an application to discharge an order of Malins, Y.O., under which the Industrial and April 6, 1873.] THE LAW TIMES. 73 EUBOPEAN AsSTTRANCE] Barnes's Case. [AUBITEATION. General Life Assurance and Deposit Company was ordered to be wound-up. The company was established under a deed of settlement dated the 18th Dec. 1849, and was duly registered under the Joint-stock Companies' Eegistration Act (7 & 8 Vict., c. 110). The deed contained the following provisions : — Clause 42 : That two auooessive extiaordinary general meetings, Bpeoially called for the purpose, shall have fnU power to make new laws, regulations, and provisions for the com- pany, or to amend, alter, or repeal, either wholly or in part, all or any of the laws, regulations, and proTisions of the company. Provided such new, amended, or altered laws aud provisions do not extend to amend, alter, or repeal all or any of the laws, regulations, and provisions established by these presents for confining the individual responsibility of each proprietor or other holder of shares in the capital of the company to the amount of the shares held by Mm or her, and subject in all cases to the pro- visions and resolutions of the Act, 7 & 8 Tict. c. 110, and these presents or other special authority. Clauses 44 and 190 provided that the company might be dissolved, after resolutions passed to that effect by two extraordinary general meetings. Clause 191 : That immediately upon the dissolution of the company, the board of directors shall, out of the funds or property of the company, pay and satisfy all the immediate claims and demands on the company arising from assurances or other contracts or engagements, and shall obtain from some other assurance company or from the directors or managers of some other assurance society, or company, an undertaking to pay and satisfy the remainder of the claims and demands on the company, arising from assur- ances, annuities, or other contracts or engagements, when and as the times for the payments and satisfaction of the same shall respectively arrive, and shall cause to be transferred to some other assurance company or to some of the trustees or directors of such other assurance society or company, so much of the funds or property of the company, as shall be agreed upon between the con- tracting parties as will be sufficient, with the premiums that may become payable in respect of aU their existing policies, to enable the society or company, from whom or from whose directors or managers the undertaking shall have been obtained, to comply therewith, and shall make such arrangements with the said assurance company or the said directors or managers in regard to their said undertakings, as4)he board of directors shall in their dis- cretion think fit, and shall cause to be done and executed all such acts, deeds and things, as in the opinion of the board of directors shall be necessary or advisable for carryingthe same engagements into effect ; and if any funds or property of the company shall remain after answering the purposes aforesaid, shall cause the same, or so much thereof as shall not consist of money, to be sold, got in, or otherwise converted into money, and shall cause the moneys arising from the said remaining funds or property, or of which the same shall consist, to be paid and dis- tributed at such time or times as they shall think fit, to and amongst the proprietors and other holders of shares in the temporary capital of the company and the mem- bers, according to their respective rights and interests therein ; and, notwithstanding the dissolution of the company, these presents and the provisions herein con- tained, and all powers, privileges, rights and duties of the proprietors and other holders of shares and members, including the powers to call and hold extraordinary general meetings of the proprietors and members, and the powers to call for and enforce the payment of further instalments on shares, shall, until all claims and demands shall have been repeotively satisfied and pro- vided for as aforesaid, and until a final divisiunl shall have been made of the residue (if any) of such moneys as aforesaid, remain and continue in full force, so far as the same may be necessary for winding up the concerns of the company, and for enabling the Board of pirectors to dispose of the funds or property of the company, and to satisfy and provide for such claims and demands, and to make such payment and distribution as aforesaid. In 1865 negotiations were entered into for the dissolution of the Industrial Company, and the transfer of its business to the European Society. On the 23rd Oct. and the 13th Nov. 1856, extra- ordinary general meetings of the Industrial Com- pany were held, and it was resolved : That in accordance with the recommendation oontained in the directors' report, the Industrial Company be, and is hereby dissolved. On the 6th Nov. 1855 was executed the " deed of amalgamation" with the European Society. This deed recited that the two companies, with a view to confer a mutual benefit, had lately deter- mined to combine and amalgamate their respective businesses ; and, in order to carry such purpose into effect, it had been agreed that the Industrial Company should be dissolved, and that the business, assets, and property of the Industrial Company should be taken over by the European Society upon the terms thereinafter contained. And it ■fras witnessed that the Industrial Company and the European Society covenanted with each other that the Industrial Company should forthwith take such further or other measures as were necessary, or might be deemed expedient, in order to carry into effect and confirm the dissolution of the com- pany with all practicable speed. That immediately upon the dissolution of the Industrial Company, the whole business, assets, and property of the company should be consolidated and amal- gamated with the business, assets, and pro- perty of the European Society. That the pro- prietors of shares in the capital of the Industrial Company should receive in exchange for each of their shares, on which 10s. had been paid, a share in the European Society on which 10s. should be deemed to have been paid. And that the European Society would pay and satisfy all claims and de- mands on the Industrial Company arising from assurances, &c., or other contracts whatsoever, when and as the times for the payment and satisfaction should arise, and would at all times indemnify the Industrial Company in respect of such assurances, &c., or other contracts. In accordance with the provisions of this " deed of amalgamation," all the shareholders of the Industrial Company, ex- cept seven, exchanged their shares for shares in the European Society, and property of the value of 5000 J. was transferred to the European Society, and the Industrial company ceased to carry on. its business, which was thenceforth carried on by the European Society. On the 4th Sept. 1855, an annuity contract had been granted by the Industrial Company to Mrs. Crabb, whereby it was agreed ' That the funds, and other property of the company, shall be subject and liable, according to the provisions of the deed or deeds of settleihent of the company, to pay at the office of the company, to Elizabeth Crabb, or her assigTia, the annuity of 27J. 15s., in every year during the continuance of her life. . . . Provided always that the capital stock of 100,000J. sterling, or so much thereof as for the time being shall have beeii subscribed, and the other stocks, funds, securities, and property of the com- pany remaining, at the time of any claim or demand made, unappKed and undisposed of, and inapplicable to prior claims and demands, in pursuance of the trusts, powers, and authorities contained in the said deed or deeds of settlement, shall alone be liable to answer and make good all claims and demands upon the said com- pany, under or by virtue or in respect of this policy, and all other policies. No payment was made to Mrs. Crabb in respect of her annuity before the date oi" the amalgama- tion. 74 THE LAW TIMBS. [April 5, 1873. BuuoPEiif Asstoanoe] Babkes's Case. [AUBITRATION. All the instalments of her annuity were paid to her by the European Society, and she gave receipts to them in the following form : — Eeoeived of the European Assurance Society 6Z. 18s. 9d., being the amount of one quarter's payment of an annuity due to me on the 4th March 1869. The certificates she sent as to her identity were in the following form : — I do hereby certify that Elizabeth Crabb, of Coggea- hill, &c., and on whose life an annuity is payable by the European Assurance Society, under a deed numbered 16,225, appeared before me this day at CoggeshaU, that I am satisfied as to her identity as the party whose signa- ture is hereunto affixed. ... However, she never received any copy of the report recommending a dissolution of the In- dustrial Company, nor any notice of the intention to transfer, nor of the actual transfer of their business. On the 7th June 1872, Mrs. Crabb was held by Vice-Chancellor Malins to be a creditor of the Industrial Company on her annuity contract, and an order was made, on her petition, to wind up the company. Mr. Barnes, who had been a shareholder and director of the Industrial Company, and had, on the amalgamation, taken shares in the European Society in exchange for his shares in the company, was appointed by the Vice-Chancellor to represent the Industrial Company at the hearing of Mrs. Crabb's petition. Mr. Barnes now applied to have the winding-up order discharged. The case was opened on the 2nd Nov. 1872, and stood over for the purpose of making Mrs. Crabb a party to the application. Jan. 21.— Fischer, Q.C. and Bailey for Mr. Barnes. — ^The annuity contract ought to be read as if it contained on its face the 191st clause of the Industrial Company's deed of settlement. [Loed Wbstbuby.— I agree to do that.] The directions of this clause were strictly followed, and a hand fide provision having been made for meeting future claims and demands, the company was effectually dissolved and annihilated. Moreover, the terms of the policy were, that the annuity was charged on the property of the company remaining undis- posed of, and the property of the company was duly disposed of to the European Society. [Loed Westbuet.— Even if the words were as you want me to hold them to be, it would be the most mon- strous disposition in the world ; the very charge, made by the company having such a power, would be a suspension of the power, and the power could only be executed subject to the charge. There are no such words here ; " disposed of" here does not mean an assignment to another company of the uncalled-for capital of the assignor company, but it means that the charge shall not give any right to recall property, which has been already received and actually apphed and disposed of. If you could read to me out of Mrs. Crabb's annuity contract a proviso containing these words, " Pro- vided always, and it is hereby declared that the grant of the annuity hereby made shall be, subject to the absolute right and power of the company to call in, receive, spend, dispose of, or assign all the property it has, and all the property it may have, without the necessity of making any provision for the payment of this annuity," then I should hold that Mrs. Crabb must follow the property charged, and could have her annuity subject only to the contingency of her finding a part of that property undisposed of.] There are two cases in which the liability of a company was held to be terminated in this way without any concurrence on the part of the policyholder. Be The Waterloo Life, ^c, Asswrance Compa,ny, Ca/rr's case, 33 Beav. 542 ; Mosley's case, Albert Arbitration Min., p. 953. Further, Mrs. Crabb by her acts accepted the European Society in exoneration of the Industrial Company. She accepted the instalments of her annuity from the European Society, and she gave them receipts. The certificates of identity that she sent referred to the annuity as payable by the European Society. In Bale's case (Albert Arbi- tration, 15 S. J. 886; Eeilly's Albert Eep. 11) Lord Cairns based his decision partly on the cer- tificates. [Lord Westbtjey. — I will take it for granted that Mrs. Crabb understood what she was doing ; but I am perfectly clear that by the anterior dealings between the two companies the European got authority from the Industrial to re- ceive the premiums on the policy, and I am satis- fied, also, that Mrs. Crabb might well have received her annuity from the assignee of the Industrial without any conclusion being war- ranted by that fact that she meant to look to the assignee, and the assignee alone.] This case is analogous to the case where a partner in a firm has died, and a creditor has dealt with the surviv- ing partners for several years ; he cannot then make a claim against the deceased partner's estate : Brown v. Gordon, 16 Beav. 302. Lord Westbuet. — In all those cases the credi- tor continues to deal with the only persons who are liable to him at law ; he may also have had in equity a right to follow the assets of the deceased partner, for that was an equitable right. He relies on his legal right, and continues to be satis- fled with that for a number of years. Nothing is better settled than that an auxiliary right in equity, if not enforced within a reasonable time, must be considered as barred by lapse of time. That has no application here, because here the original debtor was bound at law; there the debtor is bound by virtue of the transfer, and if the party receives the money from the transferee, as it was the intention of the transferor that he should, it does not follow that his legal right is released or extinguished. There is a great difference between a legal right and an equitable right. Napier Siggims Q-0., and Montague Gookson, appeared for the official liquidators of the Industrial Company. Bdlin Q.C, and Henderson, for Mrs. Crabb. Lord Wbstbtikt — I shall reserve for consideration that part of the case which refers to the interpretation to be put upon the 19l8t clause of the deed of settlement and upon the point that it gave power to transfer the annuity creditor to the society, with which her original debtor amalgamated, and that she must therefore follow that company and can no longer claim from the other. I will, out of deference to the cases cited, reserve that point for considera- tion ; and if I find it is one that ought to be further considered I will then call upon the counsel for the official liquidators to answer the argument. Monday, Feb. 3. — Lord Westbuey. — Mr. Higgins, out of deference to the learned judges who decided Garr's case (.SS Beav. 542), and Mosley's case (Albert Arbit. Min. d. 963) (although I have snmp. April 5, 1873.] THE LAW TIMES. 75 EiTROPKiN Assurance] Baknes's Case. [Aebitbation. reason to believe that Mosley'a case may be re- heard), I will hear what you have to say on these two cases ; but on the other portion of the case I shall not trouble you. Napier Higgins. — In those oases there was a valuation of the property of the transferor com- pany so as to ascertain its sufficiency to meet the , liabilities transferred. Here, on the other hand, there was no such valuation of the property and of the liabilities, so as to show that the property handed over was sufficient to meet those liabilities ; but, on the contrary, there was rather an amalga- mation of the business of the Industrial Company with that of the European Society. This consti- tutes a material difference between those cases and this. However, it does not appear that the de- cisions in those cases were well founded. [Lord Westbtiry. — It is quite clear that a valuation was intended by the 191st section, because there it is said, " If any funds or property of the company shall remain after answering the purposes afore- said," which purposes aforesaid are to ascertain the amount of the property and the amount of the liability, and then it is provided that, if any portion of the property remain after setting apart a suffi- cient provision for the Uabilities, that should be distributed.] Lord Wesibuet : — It is necessary to state, in the first place, in what form this case comes before me. Previous to the passing of the Arbitration Act, and on the petition of Mrs. Crabb served on certain parties, of whom Mr. Barnes was one, the Vice-ChanoeUor, Sir Richard Malins, made an order for winding up the Industrial Company. That order evolved two things as being established in the mind of the Vice-Chancellor. Krst, that this Industrial Com- pany was a company still in existence and not defunct ; secondly, that Mrs. Crabb was a creditor of that company ; and on the combination of those two things, established in the mind of the learned judge, he founded the winding-up order. Now, one of the parties to that order, Mr. Barnes, comes before me and contends for what, in effect, would discharge the Vice-OhanceUor's order. He con- tends, though he did not there contend any sueh thing, that there is no such company m rerum naturd as the Industrial Company ; that the Com- pany is dead and gone ; dead absolutely ; dead to its liabilities, not merely dead to its shareholders. And, therefore, I am told now by Mr. Barnes that this lady, Mrs. Crabb, is not a creditor of that company, that the company is gone to its account and cannot be cited any more. Now Mr Fischer contends that this Industrial Company, having granted a variety of policies and annuities, which were charged on all its property and all its claims on its shareholders, was founded on a deed which gave it the power, at any time when certain for- malities were complied with, of dissolving itself absolutely, annulling its own contracts, trans- ferring those contracts, behind the backs of its creditors, to some other company not chosen or assented to or acquiesced in by the creditors, relieving itself from the obligation of every grant, and leaving the creditors the power only of pur- suing, if they could, the transferee company, which in the meantime has taken possession of all the pro- perty pledged to the creditors without any obligation to set it aside, without any obligation to invest it, with full liberty to spend it, with full liberty to laugh at the obligations contained in the contracts of the original company, and leaving the creditors in that predicament of absolute helplessness. Now it is contended that that is agreeable to reason, provided it be stipulated. The stipulation cer- tainly, even if it be found, would not be agreeable to reason ; but if the stipulation can be found, why then, I suppose, one must only lament that people were foolish enough to deal with a company that had such a power. But if the power be one de- structive of every contract, if the power be one that would lead at once to an unnatural annihilation of evex'y engagement, I suppose all would admit that one should be very slow in arriving at the oonclu- . sion that anything so monstrous, anything so unreasonable, could be found in any deed of settle- ment, or in the constitution of any company. That being Mr. Fischer's proposition, we will consider in detail some of the material points that have been argued before me ; and the first proposition is, that all these annuities, all these contracts by the Industrial Company, were taken with the knowledge of the provisions in the deed, and that therefore it was competent to the company to carry out to its full extent the provisions in the deed as against its own creditors, the persons to whom it made grants for valuable consideration. Now, I agree that an annuitant takes with notice ; but I deny that the company can use those pro- visions, if its own grant is at variance with the liberty to use them ; that is to say, if the use of them would derogate from the grant made by the company. Now it is abundantly clear that if the society grant an annuity to John Smith, and charge all its property with that annuity, the company is bound to the extent of that grant, and that it cannot make a wanton use and applica- tion of the property so bound, in such a manner as to release itself from all its contracts and obli- gations to John Smith, and to send him preca- riously to seek payment of the annuity at the hands of some other person selected by his grantor, the original company, without any communication with him. I desire it to be understood that, al- though it is perfectly true that the grantee of a company takes with full notice of the settlement and the constitution of that company, yet it is equally true that the company, having made that grant, cannot use any power or any authority in such a manner as that it should have the effect of releasing the grantor from his obligation. Therefore let that be considered in all arguments before me as so qualified. The grantee has notice of the deed of settlement, I admit; but the grantee is at liberty to say with respect to any particular power, " It cannot be used or enforced against me without derogating from your grant to me, and, therefore, your right to use that power or autho- rity is, so long as my contract continues, sus- pended." That was well illustrated by Mr. Higgins, who referred, I think, to the 42nd clause of the deed of settlement, which gave the company a general power to alter even its own constitution. It might have reduced its liabilities. Therefore he asked the question very pertinently — Could the company, after the grant of these annuities, use that power,' and take away the security from the annuitants ? Certainly not ; and, to my surprise, it is contended that that was the thing intended. They handed over the whole of their property after they had charged it, to another company, that that company might deal with it in any manner that they pleased ; they did not bind tha,b, 76 THE LAW TIMES. [April 5, 1873. EpEOPEAN AsSUBANCB] Bakstes's Case. [Absiteation. company to their own creditors in a manner that the creditors could have enforced, but were con- tent to commit all the property, which they had so bound, to the discretion of the other company with whom they dealt, to spend it, squander it, to apply it in any manner they pleased ; and they took from that company no provision for the creditors, but nothing in the world more than the common covenant with themselves that the transferee should indemnify the transferor. But now we come to the deed of settlement, for the purpose of seeing whether anything so monstrous as that which is contended for is found in it, in the sense in which the words of the deed have been interpreted by Mr. Kscher. Nothing is better settled in law than this, that if a partnership be bound — and a company is a partner- ship — to a creditor, although the partners inter se may proceed to dissolve their partnership, the dis- solution is of no avail as against the creditors. Consequently, the common observation by law- yers is this, the partnership, though dissolved de facto inter socios, continues in law until the obligations of the partnership are discharged. And a familiar illustration is given of it in this way : I lend money on bond to A., B., and C, who are partners ; two months afterwards A., B., and 0. dissolve partnership; but if I have to sue them on the bond, I sue them in a court of justice as A., B., and 0., partners, which they are until my debt is paid. That arises, no doubt, from the joint contract. These, then, being the ordinary rules, which approve themselves, I think, to every understanding, we come to consider this deed. Now these deeds of settlement contain provisoes for the dissolution of the Company, and they are powers which admit of different kinds of things ; they admit of an linion, or what has been caJled an amalgamation with another company ; there the two bodies remain still independent and dis- tinct, although by virtue of this union, or rather this joint contract, they are thenceforth partners together in the undertaking of the business they pursue. They permit also another thing, namely, that one company should cease to carry- on business, should hand over that business to another company upon terms provided between the two for the satisfaction to the first of what it so hands over, and that is commonly called by the term " amalgamation." Well now, in this deed of settlement there are powers to carry this into effect, and of course it is obvious that in putting inapower of this kind, the shareholders of the company, in whose deed of settlement it is found, would be very anxious indeed to take some security to them- selves, before their property was handed over to another company. And the framers of the deed and the men who entered into the engagement, were, therefore, very careful to clog and fetter the power of transfer with such conditions as were deemed sufficient and necessary for the security of the shareholders of the first company, Well, now, what does it proceed upon ? Plainly upon this : The shareholders of the first company would say, " We have contracted a variety of engage- ments; if we part with our property and part with our business, those engagements will continue." And it is upon the foundation and basis of there being such engagements, and that they will have vitality and force after the transfer of the business by one company to the other, that these stipulations rest. Now, if they are of that nature, they involve this, that after the transfer, the liability of the share- holders of the company itself to the creditors will remain. It is absurd, therefore, speaking with great respect, to say that such a power contem- plated the absolute annihilation of the company, and its release from all its engagements. It con- templated no such thing. It is called into being by the consideration of the fact that the creditors' rights would remain, and by the apprehension of what would be the consequences of those rights, if, upon the occasion of this transfer, proper security were not taken to the shareholders of the trans- ferring company against those engagements. So far, therefore, is it true that the' provision contemplated and provided for the absolute dissolution of the Company — ^that is, dissolu- tion in the sense of becoming defunct and released from its obligations — that there is not a word in the proviso, that does not contemplate the very opposite, and is intended to guard the parties against the consequences of handing over their property without security for its application. Now that is manifest on every part of the deed, namely, it is said that the directors of the company contemplating dissolution shall obtain from some other assurance company or from the directors or managers of some other assurance company an undertaking to pay and satisfy the remainder of the claims and demands on the company arising from assurances and so forth. The " remainder " means the remainder of their contract obhgations which will not be discharged by the money in hand, which is directed to be first applied. Well, now, what would be the plain duty of the directors under this ? It is said that they " shall transfer to the transferee company or to trusteed of some other such company so much of the funds or pro- perty of the company as shall be agreed upon between the contracting parties " — that is, between the two companies — " as will be sufficient with the premiums which may become payable " — that is, the annual income in respect of all existing pohcies — " to enable the society or company, from whom or from whose directors the undertaking shall have been obtained, to comply therewith." Now, can any man, who understands the meaning and force of language, fail to observe that here the stipulation: is that out of the property of the transferring company there shall be set apart enough to answer its liabilities, taking into consideration, with the property so set apart, the income derivable from the premiums on the policies transferred P Now that would be a rea- sonable thing ; but I agree, if that were done, the creditors, nolentes volentes, would be compelled to accept it ; but I do say that that is a reasonable interpretation of the terms of the deed, and a ■ reasonable condition that ought to be complied with before a dissolution of the company inter socios should be made, and before the directors should attempt to transfer the property to another com- pany. Well, now, if I were to permit for a moment the contention that this proviso contem- plated absolute dissolution — by absolute I mean dissolution m omnibus, as against creditors as well as partners — if I conceded that, I should then say, " But were the conditions complied with ?" And the conditions obviously were that there ought to be a valuation of the liabilities of the transferring company, and an ascertainment of the property of the transferring company, and April 19, 1873.] THE LAW TIMES. ?7 EUKOPBAN AsSTJEANCB] Simpson's Case. [Arbiteation. so muoli of the property secured as ■with the premiums would answer the habilities of the transferring company. Nothing of the kind was done here, and unless it had been done, and hmid fide done, and wisely done, according to the just judgment of the directors, the power of dissolu- tion would not arise. But it is an idle thing even to rely upon that, because it is palpable from the rest of the case that dissolution, annihilation in the sense contended for by Mr. Fischer, is utterly excluded. For after you take the first part of the clause, and you come to the hypothesis that that has been complied with, and that property has been set apart apparently sufficient tb answer the UabUities, the contingency is provided for of its not proving to be sufficient, and it is a contin- gency that necessarily involves the idea of the con- tiuued existence of the society, of its being resusci- tated for all the purposes of its business, and for the purpose of answering its liability ; and, therefore, instead of its being a defunct thing, emancipated from the creditors, and altogether discharged, in this extraordinary way, of the contracts that it had made — instead of that, we find a comparatively rational course for the benefit of the shareholders. " We will not part with our prouerty altogether whilst our liability continues, but if you can pro- vide for the liability out of the portion of the pro- -perty transferred, you may make the transfer, and the rest is to be paid and distributed to and amongst the proprietors and other holders of shares in the temporary capital of the company" — that is . the temporary capital of the transferring company. And then comes the clause which utterly destroys the contention so warmly insisted upon. " Notwith- standing the dissolution of the company" — that means notwithstanding the dissolution inter socios — " these presents and the provisions herein con- tained, and all powers, privileges, rights, and duties of the proprietors and other holders of shares and members " — that is in the transferring company — " including the powers to call and hold extraordinary general meetings . . shall, until all claims and demands shall have been respectively satisfied and provided for g,s aforesaid, and until a final division shall have been made of the residue of such moneys, remain and continue in full force." Now, that is until after actual payment, or until after such a provision as would amount to satis- faction ; until that has been done with regard to every liability and every contract — there is power to rehabilitate the company with all the powers and provisions contained in the deed of settle- Tosat, and call it into operation, in order that it might be made amenable to those debts and con- tracts which are found to be still unsatisfied and unprovided for under the antecedent part of the deed, which requires that provision shall be made. Now, the thing to my mind is as clear as it is possible for anything to be, and this interpre- tation is perfectly consistent with what is reason- able and right and might be expected, but utterly inconsistent with the extraordinary proposition that a company, after it has covered itself lyith debts, and incumbrances, and contracts, is at liberty, by this proceeding behind the backs of its creditors, to sweep away its property, to sell it out and out, to attack those creditors and cut the tie between themselves and the creditors, and hand over the unfortunate creditors, stripped and de- frauded of everything to which they trusted, to the hands of another company, without even taiing the contract between that company and the unfor- tunate creditors who are so committed. Now, I am told that these contentions have been found not so monstrous as they appear to be, and that they are sanctioned by two decisions to which I have been referred. I could not subscribe to the authority of any judgment that pronounced distinctly for Mr. Fischer's proposition. Now, with regard to Garr's case (ubi sup.), there are indications in it that a great deal more was done than appears to have been done here. I hope that that was so. If it was so, as appears to be the case, it distin- guishes the case from that which is before me — not that I should accept it even then. With regard to the other case that came before Lord Cairns (Mosley's case, ubi svp.), I have reason to think that his decision was founded upon the fact of property to a very considerable extent having been handed over in such a manner as to be made available to the creditors. I hav6 also reason to think that that case may be reheard. But putting those things aside, if they are hot well founded, I class that case with Ca/rr's case, before the Master of the Eolls, and I must, with very great respect to those learned judges, refuse to adopt any such conclusions, if the efiect of adopt- ing them would be to make me submit to the pro- position that has been made before me. I have no difficulty, therefore, in pronouncing that the Vioe- Chancellor was right. Probably I ought not to have admitted this argument by one who was a party to that order. I have no- difficulty in hold- ing that Mrs. Crabb is still a creditor of the In- dustrial Company, and that the Industrial is a living and existing company, and has been pro- perly made the subject of a winding-up order. I have no hesitation in making Mr. Barnes pay the costs of this experiment. I hope the decision may be a warning to prevent other speculations of this kind being brought forward. Whether that be so or not, I dismiss the application. [The case having been brought on by arrange- ment, the costs of all parties were ultimately' allowed out of the assets of the Industrial Com- pany.] Solicitors for Mr. Barnes, Chester and Go. Solicitor for Mrs. Crabb, Ghas. Ma/roowrt. Solicitors for the official liquidators of the Indus- trial Society, Mercer and Mercer. Monday, Feb. 3. Simpson's Case. Gompamy — Wmdimg-ii/p — Oontributory — Bond fide trcmsfer—Misdesaription of transferee — Esquire — 0ardener—8heep-fa/rmer — Tramsf&r set aside on account of misrepresentation as to occupation of iramsferee. The deed of settlement of a company provided that a shareholder might transfer feis shares after approval of the proposed transferee by the directors, an/d the notice p/ the wish to ' transfer was to contain '" the full name and profession or calling," 8fc. of the proposed transferee. 8. held 2000 sha/res, and at first endeavowred to tra/nsfer them, to a labourer, who was described in the tra/nsfer notice and the transfer as an FJsqu/i/re. Tlie eompan/y raised the objection that the result of their i/iigwiries into the station in life of the pro- posed transferee was not satisfactory. On subse- quently abandormig this transfer, a notice was 78 THE LAW TIMES. [Apra 19, 1873. ECHOPEAN AsSUBANCB] Simpson's Case. [Abbitration. sent to the society of a wish to transfer pa/rt of the shares to a man described as a-" gardener," and the remainder to another, described as a " sheergfairmer" The proposed transferees were approved of by the directors, and the transfers exempted and registered in April 1870. It im/rned out that the one t^amsferee was aworhing gardener ea/rnvng 15s. a weeh, and the other a shepherd ea/rrvmg 18s. a week. In the immdAng-wp of the society in 1872 it was Heldj that the original shareholder rrmst be placed on the Kst of contributories, the misrepresentation as to the occupation of the proposed transferees being sufficient to lull the directors to sleep, and prevent their ascertaining the real facts. This was an application to place the executors of Sir James T. Simpson on the list of contributories to the European Assurance Society. It was provided in the society's deed of settle- ment that a shareholder, who wished to transfer his shares, should send to the society a notice of his wish, and should describe in the notice " the full name and profession or calling, and place of abode of the proposed shareholder," and on the approval of the proposed shareholder by the directors, he might transfer his shares : (Clause 96 : vide sup. p. 11). In Sept. 1869 Sir James Simpson was the owner of 2000 shares in the society, and employed Mr. Stewart, a broker, to get rid of the 'shares. On the 9th Sept. 1869 Mr. Stewart sent to the manager of the society a notice of Sir James Simpson's wish to transfer the shares to "Mrs. Helen Henderson or Taylor, wife of William 'Taylor, Esquire, contractor," or half to the husband and half to the wife. It turned out that William Taylor was a labouring man, and resided, with his wife in the kitchen of Mr. Stewart's business premises ; he had no regular employment, but was occasionally employed to watch streets under repair at night, and to warn carriages passing by of the danger. A transfer to Wilham Taylor and his wife was executed and sent to the society ; but Mr. Stewart was informed that the directors were " advised that shares ought not to be transferred into the name of a married woman," and that " the inquiries into the station in life of the proposed transferee were not satisfactory." Some time after, this attempt to transfer was abandoned, and on the 23rd April 1870 Mr. Stewart sent to the society a transfer notice in which it was pro- posed to transfer one thousand of the shares to " WiUiam Walker, Randolph Hill, Denny, Stirling- shire, gardener," and the remaining thousand shares to " Thomas Newbigging, Oarstairs, Maine, Lanark, sheep farmer," the consideration in each case being hi. This notice was approved, and the transfersi were executed on the 27th April 1870, and -subsequently registered ; the description of the transferees being the same in the transfers as in the notice. It now turned out that William Walker, who was described as a gardener, was a working gardener only, earning 16s. a week. ; and Thomas Newbigging, who was described as a, sheep-farmer, was the son-in-law of WiUiam Taylor, and was in the employment of some farmer in Scotland, with the wages of 18s. a week. Instead of paying a consideration for the shares, each transferee received a small gratuity from the transferor for taking the shares. The society was ordered to be wound-up on the 12th Jan. 1872, and the official liquidators now applied to have the executors of Sir James Simp- son (who had meanwhile died) placed on the list of contributoines. Napier Higgins, Q.C. and Montague Goohson, for the official liquidators.^ — The approval of the trans- fer-notice by the directors was founded on the statements in the notice. These contained a flagrant misdescription of the occupation of the proposed transferees. The transfers must ac- cordingly be set aside, and the executors of the transferor placed on the list of contributories. Cotton, Q.C. and Kekewich, for the executors. — The only reason that can be adduced for avoiding the transfer is that there was a misdescription in the transfer-notice, but there was no misdes- cription ; Walker was actually a gardener, though only a working gardener. [Lord Westburt. — They had a right to assume, seeing the character from the representation made, that he was a responsible man. The Scotch gardeners and many other gardeners, such as are to be found round London, are men of large property.] There are special cases in which gardeners are rich men, but the description of a man as a gardener is not a representation that he is a man of means. Nor is the description of a man as a sheep-farmer ; many of the Scotch sheep-farmers are persons working in the same way and just as hardly as their servants. If there had been any doubt as to the sufficiency of the proposed transferees, it was the duty of the directors to have made inquiries. 'I'hey did not, and each transfer is a concluded transaction. , , Lord Wbstbitky. — The case is too plain for any argument. When a shareholder hears or finds that they have come to a decision, and knows in his own mind, as he ought to do, that the facts, material for that decision and to enable them to arrive at it, were not before them, and when in his own conscience he knows that he has made to them representations to lull them to sleep, and to prevent their ascertaining the real facts, which possibly without those representations they might have inquired after and ascertained, then it is plain that he cannot with any propriety appeal to the judgment of the directors ; for they were either deluded men by his misrepresentation, or uninformed men by- his concealment. Now I desire to mark this case particularly with what will be a cardinal principle of my determination. There are cases in which the law permits a man to shuffle off liability on to the shoulders of another, even though that other be a complete pauper. Suppose there be an assignee of a lease, and he assigns it to a pauper, his liability ceases with thatassignment. That has been in some cases so admitted, and the reason is plain, because there is no existing obligation, no duty arising .from the relation between him and the lessor, but in a company there is a duty that is owing from every shareholder to the rest, and he knows very well that this rule of requiring information is put in to protect his brother shareholders, and if he attempts to get a transfer passed either by misrepresentation or by concealment, by the mere fact of silence and not giving the information to the directors, which he knows to be most material for them, he fails in his duty, he violates the obligation of his relation, and even on that ground alone, without mis- representation, I would set aside the deed. But here is a gross misrepresentation. A proposal April 19, 187§.] I^HB LAW TIMI!S. 79 BtlROPBAN AsStJBAlfCE] PatEbsons' Case. [Abbiteation. was made that Sir James Simpson should transfer one thousand shares to his own domestic servant, and that he should transfer the other one thousand to her spouse, dignifying him with the name of Taylor, Esquire, he being a poor wretched man, glad to earn a shilling or two shillings a night by going out and standing in the streets to warn carriages and passengers from dangerous places. That failed altogether. I agree that these direc- tors, i£ they had been prudent and careful men, might have said: "Well, Mr. Stewart is a man who attempted to practise a fraud on us once before ; we will take care and make inquiry now "; but it does not lie in Mr. Cotton's client's mouth to say that. Mr. Cotton's cUent, who had dressed up the poor wretched labourer with the character of an esquire, dressed up the next man who was a labourer in somebody's garden, with the character of a gardener ; but, not content with this, he sends over to a relative of Taylor's, who was a shepherd in the employment of a farmer, and gives him a few shillings to be allowed to use his name, and dignifies him with the character of a sheep-farmer, which anybody, who knows anything about Scot- land, knows to be a person concerned with the buying and selling of large droves of sheep, and not a shepherd in the employment of a farmer at the rate of 18s. a week. A shepherd watching the flocks of his master is not a sheep-farmer ; but evidently Mr. Stewart ingeniously put them on garments that they might pass muster, and they did pass muster, but I will require Mr. Stewart to discharge the obligation of giving to the directors all the material information which he himself possessed, and which it was the duty of his client as a shareholder in this company to give, and if that be not given, much more if it be disguised and concealed by misrepresentation, the trans- action shall not stand. Set aside the transfers and restore the executors' names to the register. The executors were not ordered to pay costs. Solicitors for the executors, Freshfields. Solicitors for the official liquidators of the European Society, Mercer and Mercer. Monday, Feb. 3. Patbbsons' Case. Ccmvpomy — Wmdijng-up — Gontributory — Bona fide transfer — Misdescription of transferee — Svperin- tendent of a colliery — Acquiescence of directors in a shareholder — Transfer set aside on acaovmt of misrepresentation as to occupation of trans- feree. The deed of settlement of a company provided that a sha/reholder m,ight tra/nsfer his sha/res after approval of the proposed transferee by the direc- tors, a/nd the notice of the wish to transfer was to contain " the full name a/nd profession or calling," 8fc. of the proposed tramsferee. A sha/re- holder described Ms proposed tra/nsferee in Ms notice as of " L. ColUery, superintendent." The transferee was approved of, and the transfer registered in May 1870. It twrned out that the tramsferee was a labourer at the colliery, ea/mi/ng 19s. a week. Held, in the vjinding-up in 1872, that the misrepre- sentation as to his occupation was sufficient to upset the transfer, and that the o'riginal sha/re- holder mmst be put on the Ust of contributories. On its being contended that the dArectors had acquiesced in having hi/m as a sha/reholder, in- asmuch as in June 1870 they had had notice of the true position of the t/ransferee, and down to the presentation of the petition to wind-wp in June 1871 had raised no objection to his being a share- holder, it was Seld, thai the time was too short to wa/rrant any presumption of acquiescence. This was a case similar to the preceding one {sup. p. 77). The notice of the wish to transfer described the proposed transferee as " Henry Taylor, of Law Colliery, Carluke, superintendent." He was ap- proved of by the directors, and on the 20th May 1870 the transfers were executed, and subsequently they were registered. It turned out that Heiiry Taylor was the son of the William Taylor of the preceding case, and was a labourer at the colliery, earning from 18s. to 19s. a week. Mr. Stewart, the broker of the transferors, had written to him, and offered him 20s. if he would allow the shares to be transferred into his name for a 'time. Taylor executed the transfers without understanding what they were, and under the impression that his connection with the shares would terminate in a few days. On the winding-up of the society in Jan. 1872 the official liquidator applied to have the names of the original shareholders, the Patersons, placed on the list of contributories. Napier Biggins, Q.C. and Montague Coohson for the official liquidators of the European Society. Locock Webb, for the Patersons. — There was no misdescription of the transferee's occupation, in- asmuch as he was in some sense a superintendent, having some men working under him. [Lord WEsiBTJitY. — Supposing there is a colliery con- sisting of several distinct pits, and pit A. is worked by fifty men, and B. is the superintendent of that colUery, and there is another superintendent at another pit of the like nature— they may all be called superintendents, although they are not superintendents of the whole of the ooUiery ; but here it is a poor labouring man at 16s. a week, with nothing to superintend but the labour of his own hands and the quantity of work that he does.] Even if there were a slight misdescription, the transfer would still be valid. Re jawropean JBcmk, Masters' s case, L. Eep. 7 Ch. 292. Moreover the directors acquiesced in his being a shareholder, after they knew of his true position, for, in an affidavit filed by his brother on the 28th June 1870 in the matter of a petition to wind-up the society, the transferee was referred to as " a labourer at Law Colliery, Carluke." From this time down to the 10th June 1871, the date of the presentation of the petition to wind-up, they raised no objection to his being a shareholder. Lord WBSTBtmT. — No case will ever with me prevail over the obligation to require parties to state the truth. Here there was an obligation on these par- ties to state the truth; they knew that per- fectly well ; but for the purpose of evading the duty they were under, they employ a stockbroker to find out the means of evading -that duty. Mr. Stewkrt accordingly writes to a labouring man, who is the son of another labouring man, who is earning 16s. a week in a colliery, and tells him that he would give him something if he would permit his name to be used. Then he uses the name of the labouring man, who is very rightly de 80 THE LAW TIMES. [April 19, 1873. Btjkopean Assttkance] Davies's Case. [Akbiteation. scribed in that affidavit as a labourer in a certain Colliery, but instead of giving in his right design- ation and description, he clothes him, as 1 have already said, with the character of a superintendent. Now that was utterly inapplicable ; that name was attached to him for the purpose of deluding the persons who would receive it. It is said that the directors acquiesced in the notice. They did so, believing it to be true. It is theii said the directors of this company have acquiesced in this man remaining on the register. Now it must be ac- quiescence for a considerable time — that is, time enough to warrant the presumption. Here it is said that they had the means of knowing the fraud practised upon them in June 1870. In that month the society was in a great state of em- barrassment, and it ended in being wound-up by an order on a petition presented within a twelve- month after. Tou talk of acquiescence precluding the shareholders of the company from asserting their rights; the directors could not by any ac- quiescence of theirs preclude the shareholders from having the misrepresentation followed out to its consequence of removing this man. If there were a considerable period of time, it might be otherwise, but here there was a very short period of time, and it would not have been possible for anybody to have taken advantage of any means to rectify the register within the short period of time that elapsed. Let the name of this super- intendent be removed and the names of the original shareholders be restored, and let the original shareholders pay the costs of this application. Solicitors for the Patersons, Lawra/nce, Flews, and Go. Solicitors for the official liquidators of the European Society, Mercex and Mercer. Monday, Feb. 3. Davtbs's Case. ' Compamy — Winding-up — Contributory — Gomyosi- tionwith oreditors — Bankrupt shareholder — Bank- ruptcy _ Act 1869, s. 21— Possibility of proof- Liability of bankrupt sha/reholder to contribute to costs of winding-up a company after receipt by the compa/ny of a composition. A petition to wind-tip the E. Company was presented on the 10th June 1871, amd an order to wind-up was made on the 12th Jan. 1872. In the interval, on the 26th Oct. 1871 a holder of 100 shares presented a petition in a Govmty Gouri for liquid- ation of his affairs either by a/rra/ngement or by composition with his creditors. The general meeting of creditors was held in Nov. 1871, and it was resolved that a composition of 2s. im the pound should he accepted. The E. Company were represented at the proceedings by their solicitor, ,and they proved for 791. 10s. 2d.'in respect of calls then due on the 100 shares, and for lOQl. 'in respect of the liability of 11. per share not yet called up. On the 12th Dec. 1871 the company received the composition of 2s. in the pound on the two sums of 791. 10s. 2d. and 1001; amd the provisional official liquidators gave a written discharge in respect of these two sums. In, the winding-up of the company, the official liquid- ators claimed that the debtor was still liable to be retained on the list of contributories in respect of, the costs of winding-up the compa.^uu The debtor's^ name being on-theiist, it woj-. Held that it must remain th^re m respect of the costs of windi/ng-wp. Semble, that if the narnie were not already on the list, it would not be placed there. In 1871 Charles Davies held 100 shares in the European Society of 21. 10s. each, on which IZ. lOs. per share had been called up. On the 10th June 1871 a petition was presented for winding-up the society, and on this petition an order to wind-up was made on the 12th Jan. 1872. Pending the proceedings on the petition, on the 26th Oct. 1871 Davies presented a petition in the Ashton-under- Lyne County Court for liquidation of his affairs either by arrangement or by composition under the Bankruptcy Act 1869. On the 31st Oct. 1871 the secretary of the European Society made an affidavit (which was subsequently exhibited to the registrar) in the matter of this liquidation, and thereby stated that Davies was then indebted to the society in the sum of 79Z. 10s. 2d. for calls already made on the 100 shares and interest thereon, and that he was under a further liability of lOOZ. in respect of a call of 11. per share that would shortly have to be made. The general meeting of the creditors was held on the 11th Nov. 1871, and was twice adjourned, until, on the 25th Nov., it was resolved that a composition of 2s. in the pound should be accepted in satisfaction of Davies's debts, and that such composition should be payable immediately after the passing of a resolution at a second meeting confirming this resolution. All the proceedings in the liquidation were attended by the society's solicitor ; and on the 12th Dec. 1871 the cota- position of 2s. in the pound was paid to the society in respect of these sums of 79Z. lOg. 2d. and lOOZ. ; and the following receipt was given by Messrs. Bunyon and Low, who had been appointed provisional official liquidators of the society pending the proceedings on the petition to wind-up : — Beceived from Mr. Charles Davies the stun of Beventeen pounds, nineteen Bhillings, being the amount of com- position of two shillings in the' pound upon and in respect of the liability of the said Charles Davies to the European Life Assurance Society of seventy-nine pounds, ten shillings, and two pence for unpaid calls and interest thereon, and also in respect of the cla.im of the said society for one hundred pounds further for calls not yet made, but to which the said Charles Davies may hereafter become liable upon the shares held by him therein, as respectively mentioned in the proof of the said society filed in the County Court of Lancashire, holden at Ashton-under-Lyne, in the matter of proceedings for liquidation or composition by the said Charles Davies under the .liquidation clauses of the Bankruptcy Act 1869, such composition of seventeen pounds, nineteen shillings being accepted by the society iij full discharge of all liability of the said society against the said Charles Davies in respect of the said two sums of 791. 10s. 2d. and 1001. respectively. Dated this 12th Dec. 1871. C. J. Bunyon, S. P. Low, Provisional official Uquidators of the European Life Assurance Society. The further call of 11. per share was made on the 31st July 1872, but the assets of the society would be, it was alleged, insufficient to satisfy its liabil- ities, and it would be necessary to make a separate call (beyond the liability of 21. lOs. per share) to answer the costs of the realization of the assets, and the other costs incidental to the winding-up. It was now contended on behalf of the official liquidators that the discharge given did not include the liability to this further oaU in respect of the April 19, 18V3.] THE LAW TIMES. 81 EUEOPBAN vAsSTJRAUCb] Davibs's Case. [Aebitbaiion. costs of winding-up ; and that Davies's name ought to be placed on the list of contributories iu respect of those costs! Montague Gookson, for the official liquidators. — This differs from Michael Brown's case(s'wp. p. 21) inasmuch as here there was no trustee, and the shares were not disclaimed ; a discharge was given, and that discharge was expressly limited to the calls already made and the call of 11., then about to bg made. [Lord Westbtjby. — In order to the getting of relief in Miahael Brown's case, you must have set aside the bankruptcy, and you must have revested the shares in the debtor, the bankrupt, whereas the shares were, through the acts of the trustees and the operation of the statute, annihilated. Then the company, which ought to have known all this, went in, in that state of things, and took the benefit of the bankruptcy, and I thought it was utterly impossible in that case to give any relief ; but here this man, who is a shareholder, enters into this arrangment for liqui- dation, and then a proof is carried in on behalf of the company. That proof is limited to two things — the amount that was then due for calls made, and a sum of money which represented an assess- ment of future liabilities to calls, but the ulterior liability, namely, to costs of winding-up, was not included in the proof, and was not any part of an arrangement for the exoneration of the shareholder. Is not that so ?] Cracknall, for Davies. — In Michael Brown's case the assets were but 4Z. and the liabilities were 2393Z. ; this is a iond fide case, a composition of 2s. in the pound having been paid. The effect of the composition is analogous to that in bankruptcy ; though there is no provision for forfeiting the shares in a composition as in a bankruptcy, yet the effect is that the debtor is discharged in the same way as if he were discharged in bankruptcy. Otherwise there would be a constantly continuing liability. Davies is a fuUy paid-up shareholder, and his liability has terminated; the principal liabiUty having gone, that which was only in- cidental to it has gone with it. Be Jjomd Credit Company of Irelamd, McEwen's case, L. Eep. 6 Ch. 582 ; Be British and Foreign Cork CompoMy, LeifcMld's case, L. Eep. 1 Eq. 231 ; 13 L. T. Eep. N. S. 267 ; Be Ma/rlborough Club Company, L. Itep. 5 Eq. 365 ; •18L. T. Eep.N. S. 46. [Lord Westbuby. — You see if the liability as a shareholder is taken away by this proceeding in bankruptcy pending the proceedings to wind-up, the liability by reason of these pending proceedings is not shuffled off, is not removed by the proceeding in bankruptcy. There must be power to put the shareholder on in respect of the hability to costs, because the proceedings have already commenced.] This liability should have been included in the proof of the society. [Lord Westbtjey. — Then what sum is to be set aside ? Tou cannot prove for an imaginary thing, unless that imaginary thing is capable of valuation.] The words of the Bankruptcy Act are very wide, including valu- ations capable of being ascertained only as matters of opinion (sect 31, swp. p. 22). It is the object of the Legislature to give the bankrupt a clear dis- charge from every, species of hability. [Lord Wbstbuht. — Then he should have brought in this liabiUty, and stated it without attempting to define it, and olainied to. have his discharge free of that possible liability, instead of which here is a receipt Umited to the 79Z. 10«. 2d. and lOOZ., and beyond that the operation of the discharge does not extend. That case you cited (McEwen's case) has nothing to do with the point. There the thing capable of proof was the liabiKty as a contributory ; there is no doubt that that was capable of proof. This is utterly incapable of proof. In reason the thing cannot be asserted for a moment. If you will show me a case in which this contingent liability has been held to be capable of proof, and has been admitted to proof, that will be a perfect matter, but to go through all the cases that have nothing to do with the matter is not perfect.] Lord Westbuky. — Michael 'Brown's case (siip. p. 21) is quite dis- tinct from this. I quite agree with Mr. Crack- nail that it would be a work of great difficulty, after the shareholder has fully paid up his shares, to put him upon the register for 'the first time. I shall not deal with that case, because it is not the one before me. The one before me is simply of this nature. This gentlemali, Mr. Davies, was the registered holder of 100 shares at the time of his bankruptcy. His bankruptcy then takes place; the official liquidator proves for the amount of calls then due, and he also proves for a sum of money as the estimated amount of future calls; and the proof stops there. The consequence is that this gentleman must be regarded as having been dis- charged from all UabUity to calls upon his shares, but he is still open to be retained on the register in respect of another liability, and that is the liability to costs, which is a liability ultra the liability for calls in respect of debts. Then Mr. Cracknall has very properly tried to show that that liabiUty to costs at a future time ought to have been brought by way of proof under the proceedings in bank- ruptcy. That is a thing utterly incapable of being estimated or conjectured, utterly incapable of being represented, unless one had the gift of prophecy to foretell what will take place at some indefinite period, so remote that I will not venture to think of it, namely, the time when the costs of this winding-up wiU have to be ascertained. Now the Legislature may have used in this Act of Par- liament (the Bankruptcy Act) innumerable phrases to designate uncertain things ;, but the Legislature cannot make any one of those uncertain things into a thing capable of proof, unless it is possible, in some manner or other, to define the liability; because if you were to put a proof in bankruptcy with no sum whatever, and no possibility of as- certaining what is the sum that an unknown thing represents, what are you to do with the assets ? Can you withhold your hand from distributing the entire assets, because there is an unknown quan- tity which it is utterly impossible to beUeve or suppose will ever become known. It is impossible to have this made the subject of proof except by agreement under this bankruptcy ; you could not have defined it, you could not have stated it in the proceedings, you could not have founded upon the proceedings any limit as to your duty in adminis- tering the assets. I think it would be utterly impossible to bring this contingent liabiUty within proof ; but that is a thing which, in point of fact, it is not necessary to decide. What it is necessary to decide is this, that neither party attempted to bring this indefinite possible hability of the bank- rupt into probf. If the bankrupt says, as he does now by Mr. Cracknall, that it admits, of being proved, why did he not have it brought forward? 82 THE LAW TIMES. [April 19, 1878. BnnoPEAif Asstjbance] Gloag's Case. [Abbitbation. It is utterly impossible for the official liquidator to pledge himself to any statement upon such a shadowy matter as this. Both parties really agreed, or must be taken to have agreed, that it could not be noticed in the proceedings at all. The bank- rupt takes his discharge limited to what is ex- pressed in the receipt. Now I quite agree with Mr. OracknaU it would be quite another thing if I were asked to put this gentleman's name on the list of contributories in the face of aU that, because he would say : " Why, the observations that you have already made are applicable ; how can he be put on the list of contributories in respect of this unknown and apparently incapable of being as- certained quantity ? " But it is quite- clear that, being on the list of contributories, the measure of his obligation and liability is not fulfilled and discharged, until this possible, though at present unascertainable, habihty be ascertained, or be found incapable of having any existence. I must, therefore, leave him on the list, adding only that he is a contributory in respect of the liability to the costs of the realization of the property of the company. I will not make Mr. Davies pay any costs, and I will not give him any. Solicitors for Mr. Davies, Gla4-h, Woodcock, and Bylcmd. Solicitors for the official liquidators of the European Society, Mercer and Mercer. Tuesday, Feb. 4. Gloag's Case Life Asswanae Compam/ — Wmding-up — Loa/n, on Policy — Set-off. Where a policyholder has'horrowed money from the company in which his life is insured, and has de- posited his policy with the compa/ny as secwity for the loan, and has signed a memora/ndmn charging his policy with the repa/yment, on ihe company being wovmd-up, the liquidator is en- titled to sue at once for the sv/m adva/nced, and the poUcyholder is not entitled to set-off against that ■ sum the a/moimt at which the policy may be estimated in the proof. This was a question of set-off. Mr. Gloag was the holder of seven policies, granted by the European Assurance Society on his own life at different times between 1859 and 1865. On the 1st June 1865, the society ad- vanced £50 16s. Id. to Mr. Gloag upon the security of his note of hand and the following memoran- dum of charge upon three of the policies : — To the European Society. In consideration of the sum of ^650 16a. Id. now lent by you to me, I do hereby subject and charge my interest in the policies of assurance, on my life in your society, numbered 22,704, 25,178, and 25,198, and all moneys which may be payable thereunder, to and with the pay- ment of the said sum of sgSO 16s. Id., with interest thereon, after the rate of M6 per cent, per annum, from this date till payment. Dated 1st June 1865. J. W. Gloao. On the 27th May 1868, the society advanced to Mr. Gloag the further sum of £88, upon the security of his note of hand, and a memorandum of charge upon five of the poUcies, in similar terms to the memorandum of the 1st June 1865. The pohcies comprised in these memoranda were deposited at the society's offices, when the advances were made. On the winding-up of the society in 1872, Mr. Gloag claimed to be entitled to set off the value of his policies against his debts due to the society in respect of these loans. Mr. Gloag also claimed to rank as a creditor for the surrender value of one of the policies, which was indorsed with the following special memor- andum : It is hereby declared that should the within-named J. W. Gloag surrender this policy to the within named society during the continuance of this assurance, and after five annual payments shall have been made hereon, the amount which shall be returnable for the said sur- render shall be equal to one-third of the amount paid in premiums. Dated this 21at day Deo. 1859. W. Cleland, manager. H. M. Jackson, Q.O., for Mr. Gloag. — This ques- tion was decided by Lord Oairns in Parlby's case in the Albert Arbitration (15 S. J. 654; Reilly's Albert Rep. 48), but we contend that that decision was based on an erroneous view. To obtain a set- ofi' at common law, you must have the amount of the claim on both sides ascertained, and ascertained at the time of pleading. And here they are ascer- tained. Under the 158th section of the Companies' Act 1862, the liability on a policy is, immediately on the insolvency of the company, converted into a right of proof, and under the 26th Eule the value of this proof is to be estimated at the date of the winding-up order {vide sect. 158 and Eule 25, sup. p. 54). How, then, does this right of proof differ from an ascertained debt ? Surely it repre- sents for all purposes the obligation for which it is substituted by the statute. Nobody ought to be prejudiced by the delay of the officers of the court in working out the arithmetical calculations which will result in fixing the amount of proof. All the data for ascertaining the amount are known, and it is to be valued as at the date of the winding-up order. At that date, therefore, it must be taken as ascertained. Id certum est, quod certum reddi potest. [Lord Westbtjuy. — By the Act of Parlia- ment, upon an order to wind-up the company, all the debts, moneys, and effects of that company are placed .iu the power of the official liquidator, and his duty is to recover them, and to apply them for the purposes of the liquidation. The liquidation at the same time annihilates the policy, and converts the policy into a thing very different from the ori- ginal contract ; for the policy thenceforth is made to represent a right of proving the value of the policy, and of having the dividend, which will be applicable to the proof of that value, paid out of the assets of the company. But in those assets has already been included, by force of the parlia- mentary transfer, the money due from the debtor, the borrower of the company. Therefore it is that your money going into the general fund must be apphoable to the payment of the dividend, and there is no room whatever for the application of set-off, unless you can carry your argument to what I have already suggested, namely, that the right to recover the 400Z. from you must be sus- pended, until the amount of the dividend payable by the company is known.] Assets may not mean in all cases the gross sums of money re- ceivable by the company. In this case the debt may be an asset, only to the extent of so much as may remain, after the obligation of the company of paying the dividend has been proved. [Lord Westbhry. — ^Assets would include aU moneys recoverable by the official hquidator in respect of debts due to the company. Tour debt was April 19, 1873.] THE LAW TIMES. 83 Ethiopiiam- Assueauce] Gloa&'s Case. [ARBITRATION. an independent debt, wholly unconnected with the poUoy ; the money due upon which debt, then, must be swept away by the oflScial liquidator, and carried to that general purse out of which the dividend on your proof will have to be paid.J It is more in accordance with natural justice that there should be a set-off than that the pohcy- holder should pay his debt in full, and receive back only a dividend. It would, moreover, be in accordance with the principles of all the Bank- ruptcy Acts, and the European Society Arbitra- tion Act gives the arbitrator power of doing anything he may deem to be just. Montague Goohson appeared for the official liqui- dator of the European Society, but was not called upon. Lord Westbubt. — I wish very much that I could accede to the very able and ingenious argument that I have heard, because I feel, as has been justly expressed by Mr. Jackson, that the conclusion at which I am compelled by the enactments to arrive will not be quite in accordance with the dictates of natural justice. I could wish very much that these matters in liquidation had been more closely assimilated to the rule of practice in bankruptcy. I have undoubtedly a right to deal with these matters secundum arbitrium boni viri. I have a right to substitute what I deem to be justice for decisions or rules that might be deemed applicable to the circumstances in an ordinary court of justice; a right, which, although it be given me by the statute, would necessarily require ,not to be followed, except in cases where the claims of justice wholly and entirely overbore what would be dictated by the decisions. But I have no right to add to or to detract from an Act of Parlia- ment ; I am compelled to abide by the enactments, which have prescribed and produced the state of things which I have here to deal with under this liquidation. Now, it must be rem^embered that there are here two independent contracts ; there is the contract contained in the promissory notes ; there is the contract contained in the policy ; they are wholly independent of one another ; and it is quite clear beyond possibility of doubt and denial, that if the company were still a solvent or a going concern, and chose to sue Mr. Gloag on these notes, they would be entitled to do so, and must have payment of the money thereby expressed to be secured. Now, in that state of things, the one con- tract not being at all dependent on the other, the company is ordered to be wound-up ; it becomes in- solvent, and then there is substituted for the pohcy another and a different statutory right given to the pohoyholder. The company, after it has been ordered to be wound-up, can no longer receive any premiums. Therefore there would be a breach of the contract contained in this policy, which is that for a certain premium or annual sum being paid by the assured the policy shall remain a subsisting contract for another year. The company is de- prived of the power of carrying on its business, because it is insolvent ; and then the Legislature dooms it to this state, that all its property shall be collected and received, and held as a fund for equal distribution among the persons entitled to claim against the company. Well now the policy- holder, whose policy was still in force, was a person having a contingent right at a future time, when the policy would be matured into liability by the death of the party, to receive a sum of money from the company. Contingent rights, when there is a liquidation or a bankruptcy, cannot be provided for in any other manner than by ascertaining their value, and treating the value as a present debt admissible of proof. The Legislature accordingly proceeds upon that, and it directs that the existing policy, which is the contingent contract, shall be valued, and that the value may be proved by the policyholder as a debt against the company. Now what is involved in the notion of proving as a debt against the company is this — that it is to rank pa/ri passu with aU the other persons who have proved their debts, and to receive a dividend thereon out of the property of the company. But immediately upon the liquidation all the property of the com- pany, presently payable and payable m futuro, is gathered together, and by the 95th section of the 'ompanies' Act the official liquidator is to have the right of collecting the whole of that property. The result, therefore, of this enactment, is that the money due on the promissory note becomes, in- stantly, upon the order for liquidation, by force of that order, part of the common stock of the com- pany applicable to the payment of its debts. Now Mr. Jackson urged that the future right on the policy and the power of having that valued and having the value admitted to proof, ought to be considered as having been gone through, and then a set-off will arise between the money payable on the promissory note to the company and the money payable by the company on the proof tendered. It is an ingenious suggestion; but there is nothing to warrant it in the Act of Parlia- ment. There would be something to. warrant it, if you could hold that, immediately upon the com- pany becoming insolvent, the debtor of the com- pany on the promissory note would have a right to restrain the official liquidator from receiving a payment of that note, until the amount payable to that same debtor out of the assets of the compaiiy should be ascertained. But that would at once strike at the very root of the whole enactment; be- cause in all these enactments, touching the applica- tion of the money of a bankrupt or the money of an insolvent company, aU the directions are founded wholly upon this — that the property of the com- pany shall be distributed pari pa,ssu, and therefore if the property, consisting of the money due on this promissory note, were diminished by the money ultimately to be received by the debtor on those notes from the assets of the company, it would have the effect, pro tanto, of subtracting from the creditors' fund under the insolvency that portion of the fund, which is represented by the money due on the promissory notes, and to that extent it would have the effect of giving priority and preference to the debtor on those notes. That would strike at the very root of distribution under the circumstances. The whole claim is totally prevented and anticipated by the statutory enact- ment, unless you can carry your argument, as Mr. Jackson attempted to do, to the extent of holding that the money due on the note must be considered as suspended property of the company, not to be recovered until the counter liability of the company to the debtor on those notes has been ascertained. There is no power to do any such thing ; there is no power to give a limited interpretation to the words of the 95th section of the Companies Act. The official liquidator has power to sue for and recover the money due on the note, and then he is bound to apply it for the equal benefit of all persons THE LAW TIMES. [Aprfl 19, 1873. BuKOPEAN AssmaAifCE] WiLiiAMs's Case. [AUBITKATION. proving under the liquidation, and if I were to say- that he ought not so to do, but to hold it Until the claim of the particular debtor, who has paid that sum of money, has been ascertained, and then that he was to strike a balance, I should utterlysuper- sede the whole of the enactment, I should violate the principle of equal distribution, and I should give this particular person, who is a debtor on a present immediate contract, the right of receiving, in prefer- ence to the other creditors of the company, the amount due from himself to that company. I regret very much that it is not in some way provided for. It is', unfortunately, the result of the bankruptcy and of the insolvency ; it is, unfortunately, the result of that which follows immediately upon insolvency, namely, that all the property of the insolvent must be distributed fairly and equally among the persons who are entitled to prove against the in- solvent, and the consequence of that is that the original contract is wholly superseded, and some- thing different is substituted for it, and the right of the person, who contracted with the company, is re- duced from what is expressed in that contract to the siniple right of proving the value of the contract as it stood at the time of the insolvency. I give these reasons because, although I have no doubt that there are better reasons in the decision of Lord Cairns, which has been referred to, yet I am desirous in all these matters that come before me, of showing that, though I shall respect and endeavour to abide by and follow the reasons given in perfectly similar cases, when they are cited before me, yet I hold toyself bound in the first place to decide the case according to what I be- lieve to be the law and equity and justice of the case, and therefore I give my decision, founded upon what I have said, which I trust is in harmony with the reasons of Lord Cairns, and I am obliged therefore to reject this application for the set-off. With regard to the other point, I cannot meddle with the policy in order to enforce any particular right under the terms of the poUcy, not claimed by the' policyholder before the insolvency. The thing must stand as it stood at the time when the insolvency was pronounced by the winding-up order.' The policyholder must take his policy as it then stood, and he cannot claim to do something now which he might have done then. The tree is cut down at that time, and the value of the policy, precisely as it stands, must be ascertained at that time ; and I cannot interfere with that valuation by doing anything on the policy, which no longer remains subsisting as a policy contract, except for the purpose of being valued and proved under the insolvency. Mr. Jackson, as this is a represea- tative case, I will allow you to have your costs out of the estate. Solicitor for Mr. G-loag, Bowlmd Miller. Solicitors for the official liquidators of the , European Society, Mercer and Mercer. Tuesday, Feb. 4. Williams's Case. Oompcmy— W'mdmg-wp—Gontrihwtory—Bond fide transfer—Misdescri/ption of transferee— Merchant ■^Misdescription of consideration — Promissory note — Unsuccessful attempt to set aside a transfer on account of misrepresentation as to occupation of transferee and as to consideration. The deed of settlement of a company provided tliat a sha/reholder might transfer his sha/res after approval of the proposed^ transferee by the dAree- tors, and the notice of the wish to transfer was to contain " the full name and profession or calling and place of abode " of the proposed transferee. In 1869 W., who held 1000 shares, sent through his honker's brokers a notice of his wish to trans- fer his sha/res to J,, and in the notice J. was described as a " merchant," and the consideration as 4bOl. The proposed transferee was approved of by the directors, tmd the transfer, which set out the same consideration and the same description of the transferee, was registered. In the winding-up in 18/2, the official liquidators contended that the mdsdescription of the consider- ation and of the occupation of the transferee was sufficient to annul the transfer ; for it twrned out that the transferee had been working in a corn- mill, in the employment of the transferor, for small wages, and had subsequently occupied a small mill, which he worked himself without any servants; although, besides grinding corn, he occasionally sold it ; that the consideration was not 4501. cash, but a promissory note for 450Z., ' upon which no interest had ever been padd; but the transferee now alleged that he had hoped to be able to pay the whole sum in siaj or seven yea/rs, although dt the time he was not worth more tha/n 601. The word "merchant" had been inserted in the transfer-notice, and in the transfer by the trans- feror's banker, without the knowledge of the trans- feror. Beld that the transfer could not he annulled ; under all the ai/rcumstances, it could not he said that the description of the transferee was so untruthful that it nvust have been put in with a view of bUnding the directors, or that it ought to hame satisfied the Si/rec- tors without inquiry ; the term "merchant" being so indefinite that prudent persons ought not to have been deterred from fwrther inquiry. More- ,over, it could not he said that the word was intro- duced with the privity of the transferor. And fwrther, it could not be ,said that the promissory note was a sham, or that the misrepresentation as to the consideration was sufficient to induce the directors to pass a transfer, which they would not otherwise have passed. On its being contended that it was an understood thing that the tra/rosferee was to be indemnified by the transferor, and that the contract was not a bond fide one, with the intention of transferring the sha/res absoluteh/, it was Held that there was no ground for a/rriving at such a conclusion. This was a question as to the validity of a transfer of shares. It was provided in the 96th clause of the deed of settlement of the European Assurance Society that a shareholder, who wished to transfer his shares, should send to the society a notice of his wish, and should describe in the notice " the fuU name and profession or calling and place of abode of the proposed shareholder," and on the approval of the proposed shareholder by the directors, he might transfer his shares : (Clause 96 ; vide sup. P- 11.) In 1869 Mr. Eichard Williams, of Dolgelley, corn merchant, was the holder of 1000 shares in the society, of 21. 10«. each, on which 15«. per share had been paid up, and on the 4th Sept. of that year he sent to the society, through Messrs. Barber May 3, 1873.] THE LAW TIMES. 85 European Asstjeancb] Williams's ,Gasb. [Arbitkatioit. and Co., brokers, a notice of his wish to transfer the shares to " Lewis Jones, of Llywn Mill, Dol- gelley, merchant," the consideration being stated as 4501. This notice was approved of by the directors, and the transfer was executed and regis- tered, the consideratiop and the description of Lewis Jones being the same as in the notice ; and the certificates were sent to Messrs. Barber and Ce. for Lewis Jones. In 1869 petitions were presented for winding-up the society, and ulti- mately, in June 1871, a petition was presented, on which a winding-np order was made in Jan. 1872. In the winding-up the ofiBcial liquidators applied to have Mr. Richard Wilhams placed on the list of contributories in respect of the shares, on the ground that the transfer was not a bond fide one ; and, further, that the directors had been induced to approve of the transfer by the misrepresenta- tion as to the occupation of Lewis Jones, and as to the consideration. It appeared that the consi- deration was not 4501. cash, but was a promissory note for 450J., signed by Lewis Jones, payable on demand, and bearing interest at 5 per cent, per annum. With regard to Lewis Jones's occupa- tion, up to May 1869 he was a working miller only, in the employment of Mr. Richard Williams, for the remuneration of 10s. a week and his food. In May 1869 he succeeded Mr. Williams as tenant of g, mill, the' rent of which was 20J. a year. He did not employ any men, but did all the work of the mill himself. His wife occupied a house at Dol- gelley, which she let for lodgings. At the time of the transfer he was worth in all about 501. or 60Z., but he now alleged that he had hoped to be able in six or seven years to pay the money on the pro- missory note. It appeared that Williams had gone to Jones and had induced him to take the shares. The transfer was prepared either by Mr. Edwards, of Dolgelley Bank, or by the brokers of the bank, Messrs. Barber and Co. Two or three days after the execution of the transfer, Mr. Edwards brought the promissory note to Jones, who signed it and gave it to Williams, the signature being witnessed by a servant in the post-office, and the date the 13th Sept. 1869. He never paid Williams any interest on the note, but about a year after the transfer, Williams had applied to him for interest. Williams and Jones were now examined, and bath swore that the transaction was a bond fide one, with the intention of transferring the shares abso- lutely to Jones ; and that there was no under- standing that Jones was to be indemnified by Williams. They both considered the word " mer- chant" as hardly applicable to Jones. Williams in his evidence further stated that he knew nothing of the insertion of the word " merchant " in the transfer notice, or in the transfer. Mr. Edwards, of the bank, had inserted the word without his knowledge ; he (Williains) could only account for its insertion from the fact that persons, who deal in corn or coal, are sometimes designated, mer- chants ; he stated also that Jones did buy and sell corn, though not to any considerable extent, the grinding of corn being his principal occupation. Napier Siggins, Q.C. and Montague CooTtson, for the official liquidators. — We contend that it was well understood between Wilhams and Jones that no payment of either principal or interest on the promissory note was to be enforced, and that Jones was to be indemnified by Williams aigainst all liability in respect of the shares ; and that the Vol. XXVIII., N.S., 703*. transfer was not, and was not intended to be, a bona -fide transfer, but was a form gone through for the purpose of shifting the liability from Williams to an insolvent person, at a time when the society was known to be in a state of em- barrassment. Moreover, the description of the transferee as a " merchant " was clearly a misre- presentation ; so also was the misdescription of the consideration as 450Z. cash, instead of a value- , less promissory note. These misrepresentations were sufficient to induce the directors to pass the trau.sfer without inquiry, and accordingly the transfer ought to be avoided. Grachnall appeared for Williams, but was not called upon. Lord Westbury — This was a very proper case to be brought before me by the joint official liquidator. It is a case which, if we could probe it to the bottom, no doubt would be found to yield most important materials. But I must deal with it upon the evidence that has been brought before me. If it were clear to me upon that evidence that this was not a bond fide con- tract, entered into with an intention of making an actual transfer, out and out, of these shares, I should undoubtedly refuse to recognise Mr. Jones, and should restore the real proprietor to his posi- tion upon the register. Bat notwithstanding the circumstances, I do not think that I have enough before me to enable me to set aside the whole of this transfer, as being a thing that was in form only, and not in reality. Mr. Jones swore, and apparently in an artless and an honest manner, that certainly he did buy the shares, that' certainly he intended to buy the shares ; that 'certainly he often complained to Mr. Williams of the bad bar- gain that he had been induced to enter into. Well now those are expressions on the part of Jones, which I have no doubt are perfectly true — very natural expressions, but I think consistent only with the fact " of there having been an actual contract and an actual transfer. Then we come to the caseof Mr. Williams, whose conduct appears to me to have been open to great reprehension. He is aware of the unsettled, unstable condition of the affairs of the company. He ^oes not carry his shares into the market, or put them into the hands of a broker to find a proper purchaser for them ; but having had a servant in his employment, working a mill, of part of which that servant had a short time before become the lessee, he' goes "to that man — a man of most limited and imperfect information — and persuades him to buy the shares. Now, I cannot here administer, on behalf of the company, any equity that may exist between Mr. Williams and Mr. Jones. It may have been, and in my opinion it was, a most reprehensible thing to go and persuade a poor man, like Mr. Jones, to put himself in this situation. But because it was so reprehensible, I cannot annul the transaction, which is not complained of by Mr. Jones, but is complained of by' a third person. The third person must annul it upon the rights that he has. He cannot annul it upon any equity or ground of complaint that Mr. Jones may have. For it is a very different thing, the setting aside of a contract, because it was unfairly obtained, and treating a contract as a nullity because in reality it was a sham and never a bond fide transaction. If if were proved to me to be that sham, then undoubtedly I should treat it as a positive nullity. But I find it 36 THE LAW TIMES. [May 3, 1873. European Asstjbjlncb] Williams's Case. [Abbitbation. a transaction much to be condemned, that might well be complained of by Jones, but upon grounds of which the company cannot avail themselves. Well then, it appears that this poor man, who does not seem to have understood even the ordinary terms which are employed in speaking of shares and the dividends on shares, and calls on shares, was persuaded by this Mr. Williams to give him a promissory note for 450Z. He, it is true, swears that he gave it knowingly, and that he believed that he might in six or seven years be able to raise and pay the money. That is a very important circumstance with regard to the reality of the transaction as between Mr. Williams and Mr. Jones. If I am obliged, therefore, to regard the materials before me as insufficient to amount to evidence of this contract being a nullity, I proceed to consider whether the contract was dealt with in such a manner that the company has a right to say they were imposed upon, and ought not to be bound by the contract. I should observe that the counsel pressed Mr. Williams, and also Mr. Jones, on the point whether Mr. Jones believed or had any reason to think, that he would be ultimately indemnified by Mr. Williams ; but I do not fin<^ any trace of any circumstance occurring, or any conversation, that would warrant me in arriving at that conclu- sion. Then now we come to the merits of the case, as affecting the company. The company, of course, must rest their case upon the ground of their having been so imposed upon, that they passed these transfers, which but for the imposition they would not have done. Now the imposition is re- presented as consisting of two facts, the eflPect of two facts taken in connection with one another : the one that Jones, the working miller, is described as a " merchant ;" the other that the transfer bore upon the face of it, that it was made in consideration of 450Z. paid by Jones to Williams. It is very right as Mr. Higgins reminded me, that in judging of the representation, I should take both those cir- cumstances together, the effect on the directors' minds of the man being described as a merchant, the effect on the directors' minds jointly with that of the misstatement that the money had been actually paid. Now although it is true that the money was not paid, yet it is also true that security was given for the money. And I have not been able to find in the evidence anything warranting my pronouncing that the security, that is the promissory note given for the money, was a sham ; on the contrary, the parties swear that the promissory note was a bond fide one ; it appears to have been prepared by a respectable person, who I hope would not have lent himself to a transaction which he had reason to believe was a mere sham; and it is also witnessed by another person, apparently a man of respecta- bility also. I cannot say, therefore, that money being described in a transfer as having been paid which in reahty was not paid, but only acknow- ledged to be due by a promissory note of this kind, amounts to that quantity of misrepresentation that would induce the directors to pass the transfer that they would not otherwise have passed, or enable them to say that they had been imposed upon. It must be always remembered that the 96th clause of the deed (vide sup., p. 11), in specifying what the notice of transfer shall contain, does not at all advert to the necessity of stating truly and explicitly the consideration for the transfer; therefore this circumstance of the consideration can be viewed only in connection with the representation of the transferee being a merchant. Well, now, in the cases that I have had to deal with (Bim/pson's Case, sup. p. 77 ; Patersons' Case, sup. p. 79), there was no doubt of the malus animus of the parties ; there was no doubt a conspiracy. They met together for the very purpose of efiecting a fraudulent transaction. In the one case the party went out and bought a person, in reality, to be transferee of the shares, being a person utterly incapable of meeting any demand. In the other case the transfers were made to servants, or to persons procured through the agency of persons in the actual employment of the transferor. The transaction originated, in every case before me, in, an engagement and union between the parties to get a person by means of a false description, who himself should be accepted by the directors as a fit person to receive the shares. And I laid down this rule, which I mean to adhere to, that a shareholder shall be bound to make a truthful statement to his brother share- holders in a transaction of this kind. He knows the requisition in the deed is for the benefit of all the shareholders in the company, that men of responsibility, and not men of straw, should be received into the body of the company ; and if the shareholders know that the representation is one which is likely to deceive, and is intended to deceive the directors, he shall have no benefit of the transfer that was so acquired. Now I mark those two things. In the cases before me, it was plain that the representation was meant to deceive, as it was most likely to do, and it was also plain that it had in all probability lulled the vigil- ance of the directors to sleep, and therefore the meditated trick had accomplished its object, and had carried out the original wicked intent of the parties. But do these things exist here ? I sus- pect a great deal, but I cannot act upon suspicion. You have not been able to find anything to justify my saying in a court of justice this word " mer- chant " emanated from the parties, and was put in malo ounimo, for the purpose of preventing inquiry, stifling the truth, and leading the directors to a false conclusion. Mr. Williams has sworn, and I hope he has sworn in conformity with the truth, that he knew nothing of the insertion of the word ; and he has sworn that he had no intention in filling up this notice of transfer, to fill it up in such a manner as to deceive the directors. There has been added to that, upon the examination by Mr. Oracknall, the fact that the company had an agent at Dolgelley, near which this mill is, and that the com- pany had therefore an easy means of detecting any misrepresentation. I mention that, not for the pur- pose of jarriving'at a conclusion that, where there is a representation, the directors are bound to inquire ; because the representation, if a sufficiently full one, would naturally put them off from inquiry. But now this word " merchant " would hardly have put off, or ought to have put off, the directors from inquiry. It is a very indefinite thing. Dolus latet im, generaUbus. Mr. Williams says that it was the frequent description of himself and of the tenants or proprietors of mills, who were in the habit not only of grinding com at a sort of price per bushel, but also in the habit of bujring and selling corn ; and he has told us that this man Jones was in the habit pf doing that. Under those circumstances I cannot say that the word mPTp'hg-nf Tgroo i'rJiise dispose of them, and in the meantime the shares should he extinguished. M. was a director of the Bombay Branch of the company, and as a qualification for Ms post, held fifty shares in the company. In 1870 the London H/rectors passed a resolution resoimding the rule that required the holding of fifty shares as a qualification for the Bombay directorate, and at the same time passed a resolution, whereby it was resolved that the calls due upon the shares then held by the Bombay directors not having been paid, the shares were declared to be cancelled v/nder the clause in that behalf in the deed of settlement. M. had notice of the calls that had been made on his sha/res, and not having paid them, had no reason to suppose, and did not svppose that the shares were cancelled for amy other reason than that expressed in the resolution, viz., the non- payment of the calls. In the windmg-vp of the company in 1872, the official liquidator applied to home the cancelment decla/red void, and to have M.'s name placed on the list of eontributories. Held, that inasmuch as the clcmse in the deed of settlement referred only to an actual bon^ fide neglect to pay calls, the resolution to cancel the shares wnder these ei/rcumstances was a misuse of the power eonta/imed in the cla/use, it being a mere pretence that M. ivas a defoMlting sha/reholder. And although M. had no knowledge of the inten- tion of the directors, still he could not take advan- tage of the benefit so conferred ijipon hvm, and his name m/ust he placed on the list of eontributories. This was a question as to a forfeiture of shares. Mr. Henry Manisty was a member of the Board of Directors of the Bombay branch of the European Society, and to enable him to qualify for this post, he held fifty shares in the society. In 1870 arrangements were made for cancelling the rule by which the holding of fifty shares was necessary as a qualification for the Bombay direc- torate. In a letter written on the 16th Aug. 1870 to Mr. Parminter, thet manager of the society, by the society's soUoitors, the following advice is given : — With regard to the shares held by the directors in India, .we think, although there is no legal obligation, yet there is a moral one, to relieve them of their liability, and that the best way to do this wotild be to take a transfer from them at the price of the day in the nume of some third party, have the same registered so as to relieve them fi'otli having their names kept upon the list of members, and return the value they paid for their shares in cash, and pass it through your books as compensation or bonus for services rendered. Fkank Eichakdson and Sadler. The society did not act on this advice, but on the 23rd Aug. 1870, a meeting of the directors of the society was held in London, and the following resolutions were passed : Resolved, that clause 1 of the constitution of the Indian branches, so far as the same relates to the quaUiication of members, &c., be and the same is hereby rescinded. Under the advice of Messrs. Bichardson and Sadler, solicitors of the society, it was resolved that the calls due upon the -shares held by the following gentlemen, now or lately directors of the society's branches in Bombay and Calcutta, not having been paid, the said shares, ac- cording to the numbers set opposite each name, are in terms of the 22nd clause of the society's deed of settle- ment, declared to be, and are hereby cancelled. Under the advice of Messrs. Eichardson and Sadler, solicitors of the society, it was also resolved that a sum not exceeding 158Z. 15s. be allowed to Messrs. Farran, Morris, ,Angas, Manisty, Hay, and to Messrs. Cowell and OoUiss, for special services rendered in connection with the Indian branches. The clause of the European Assurance Society referred to in these resolutions was the following. Clause 22 : That in case any instalment or call upon any share or shares in the company shall (either in the whole or in part) remain unpaid for the space of two calendar months after the day fixed for payment in the circular letter and adver- tisement giving notice thereof, the board of directors may, at any time or ■ times after the expiration of such two calendar months, declare that the share or shares, in respect of which default in payment has been so made, or any of them is or are forfeited, and that, whether the instalment or instalments due or owing shall or shall not have been sued for, and whether any action or actions, suit or suits, in respect thereof shall or shall not be actually pending, and the same share or shares, and all sums and every sum paid thereon, and all benefit and advantage whatsoever attending the same shall, upon the declaration of such for- feiture become and be forfeited to the company, and the board of directors may thereupon or at any time afterwards at their discretion proceed to sell such shares, either together or separately, and either by public auction or by private contract, or in any other manner as they may think advisable, and such share or shares when sold shall without any further act be registered in the name of the purchaser Or purchasers thereof respectively, and such share or shares shall, until sold or disposed of, or re-issued by the board of directors under the power for that purpose herein con- tained, sink and be extinguished, and be, and be treated in the like manner as if the same had never been subscribed for or taken. Provided nevertheless that the board of directors may at their discretion discharge any forfeited share or shares, or any of them, whether forfeited under this or any other provision in these presents, from forfeiture, and restore the same to the proprietors or proprietor thereof on such terms as the board may think proper. Provided also that nothing herein contained shall prevent the board from enforcing the payment of any instalment or call, instalments or calls, due on any such share or shares, notwithstanding such forfeiture l 88 THE LAW TIMES. [May 3, 1873. EXTBOPEAN AsSUHANCe] Manistt's Case. [ARBITRATION. On the 26tli August 1870, the secretary in Lon- don wrote to the secretary in India — In acknowledgment of the special services rendered to the society for some time past by Messrs. Manisty, Parran, , and Angus present, and by Messrs. Hay and Morris late, 16cal directors of our branch, the directors desire me to request you to divide amongst these gentlemen the sum of 12SI. 153. as extra fees. The calls upon the shares held by Messrs. Hay, Manisty, Angus, Farran, and Morris not having been paid, the shares in question have, in accordance with the 22nd clause of the society's deed of settlement, been cancelled by resolu- tion of the board. The following resolution has been passed by the board: That clause 1 of the constitution of the Indian branches, so far as the same relates to the quali- fication of members, be and the same is hereby rescinded. The obstacle to the formation of a new local board being thus removed, the present directors of the Bombay branch can now proceed to fill up the vacancies by nomination, such nomination to be of course subject to confirmation by the -home board according to the clause of the constitution bearing thereupon. Mr. Manisty had no knowledge whatever of the advice that had been given to the London Board by their solicitors. He had notice of the calls that had been made on his shares, and not having paid them, he had no reason to suppose and did not suppose, that his shares were forfeited for any reason other than that expressed in Mr. Easum's letter, viz., th,e non-payment of calls. In the share-ledger of the society there was the following entry in respect of Mr. Manisty's shares : By board resolution of the 23rd Aug. 1870, the above fifty shares were declared forfeited to the society. In July, 1871, Mr. Manisty sent in his resigna- tion of his seat at the Bombay Board. On the 12th Jan. 1872, the society was ordered to be wound-up on a petition presented on the 10th June, 1871. In the winding-up the official liquidators contended that, though the sum allowed to the Bombay directors was not exactly the same as that paid by them for their shares, yet it was nearly so, and that it was the intention of the London directors to make them a return of their capital, and that ■ this was an illegal transaction. They further contended that the resolution to forfeit the shares was not warranted by the 22nd clause of the society's deed of settle- ment, but was merely a device, resorted to for the purpose of enabling the Bombay directors to get rid of their liability at a time when the society was known to be in a, state of doubtful stability. An application was accordingly now made to place Mr. Manisty's name on the list of oontributories to the society. Napier Eiggms, Q.O., and Montague Cookson, appeared for the official liquidators. WUtehorne for Mr. Manisty.— The forfeiture of the shares was not prejudicial to the company, but was to their benefit, the whole transaction was carried out with a view to retaining and obtaming the services of gentlemen of position as Indian directors. The London directors had power to cancel the shares, and the resolution to cancel them was a hand fide act on their part. With regard to Mr. Manisty, he never supposed that the shares were forfeited for any other reason than that assigned— the non-payment of calls. In any case, therefore, he ought to have the benefit of the forfeiture. After the transaction, he could not have gone to the London Board and have said, ;'What right had you to forfeit my shares? I insist on having them bapk again." If he could not have the benefit of the shares, why should he have to bear the liability ? LOED WESTBtTRT. — The shareholders in this company, by the official liquidators, come and complain to me that the directors of the company improperly released Mr. Manisty from his co-liabUity with them in respect of his fifty shares. No doubt the directors were animated by what Mr. White- horne has dilated upon — a very good motive in doing what they did. They received very bad advice ; but they do not seem to have followed it ; and it does not appear, so far as Mr. Manisty is concerned, that any kind of imputation or reproach rests upon him. The directors believed that they could accomplish their object by the use of a power of transfer contained in the deed. And then they resorted to that power, not being averse to Mr. Manisty, but wishing to use the power for the purpose of efiecting thereby a benefit for their friend Mr. Manisty. Well, but the power in question was never intended to be made the instrument for what I may pall such a collusive transaction. It becomes a collusive transaction, although made without the concur- rence of Mr. Manisty, when he claims the benefit of it. A power of forfeiture, contained in a deed like this, is intended to be exercised, when there is an actual hona fide refusal by a shareholder, or an actual hona fide neglect, to pay the calls that have been made upon him ; and then the directors are warranted, if they think it right, to forfeit the shares of the failing or delinquent shareholder. , But Mr Manisty was not in that position, and they knew very well that he never would have been, and that he never was intended to be, but they pretend that' the calls were due from him, which in reality was contrary to the intent. And they pretend that he has made default in payment of those calls, which they knew was not the truth, and therefore they set him in a position, as a man against whom they had to take adverse proceed- ings, and who, by reason of his refusal to recog- nise the act under his liability to the company, had brought himself within the words of the clause of forfeiture. They use, therefore, the words of that clause to the letter, but not in conformity with the truth. Well, now, that has been denomi- nated by courts of equity, which have been very wisely careful upon these matters, as a misuse of the power; sometimes itisdenominatedafraud upon the power, because, in point of fact, fraud comes under , the old definition aUud actum, aliud si/mulatum. Here the almd simulatum was the pretence of Mr. Manisty being a defaulting shareholder, which in reality he was not ; but he was dealt with, as if he had been, whereas the directors knew that they were putting upon him a character which was at variance with the truth. He cannot hold the benefit so acquired, simply for this reason, that the persons, who endeavoured to give it to him through the medium of this power, had no right to do so ; they had no right to rob the other shareholders of the benefit of the co-liability of Mr. Manisty, and Using the power for that purpose was, in point of fact, a misappropriation and a destruction of so much of the property of the other shareholders. It would have been the same thing, and might, if these arguments were worth anything, have been carried to the extent of releasing the proprietor of 1000 or 2000 or 5000 shares. The vice of the thing lies in this — that the directors have taken upon thempelves to release a shareholder, who was CQ^lianlp. ^-ladLtll f.Tl O <^f.V^QT. al,o«nl,^1/^rt^r.__.vpiq i»_tko+. May 3, 1873.] THE LAW TIMES. 89 BtmoPEAN Assurance] Swipt's Case; Kelly's Case. [Abeitbation. respect unjustly to deprive the other shareholders of the benefit of his contribution. A gift so made, and having that effect, is a gift which Mr. Manistyis not at liberty to accept, although the appropriation of the gift, and the notion of it, and the carrying it into effect, were matters with which he had no concern, and of which, by possibility, he never dreamt. He cannot take this improper gift. He must be restored to the register, as the proprietor of fifty shares. He has very much reason to complain of the mode that has been adopted, and the directors have some reason to complain that ,they had not fallen into the hands, perhaps, of better advisers. The result, however, has been that they have done what they ought not to have done, and that Mr. Manisty cannot take the benefit of what the direc- tors had no power and no justification for doing. I shall not make Mr. Manisty pay the costs of this matter, and the costs of the liquidator will come out of his own estate. SoUoitor for Mr. Manisty, H. Bamsdm. Solicitor for the official Uquidators of the European Society, Mercer and Mercer. Wednesday, Feb. 5. SwiFi's Case; Kelly's Case. Life AssuroMce Company — Amalgamation of companies — Wvndvng-%i/p — Policy — Novation of contract — Payment of prem,iv/ms — -jReceipts — Annihilation of company — Am,algamation dr- culai Policyholder held, after an amalga- mation, to he a creditor, not of the new company, hut of the old. ^ S. held a pa/rtieipating policy granted hy the iJ. Life Assurance Oompamy, in 1853, on his own life. In 1866 he received circulars from his com- p any stating that they had made an arrangement with the E. Life Assurance Society for under- taki/ng the obligations of the policies, and that the E. Society would m fuiru/re he the substitute of the R. Society ; and further that, " the terms and conditions of your policies remain of course ■Ufnaltered hy the arra/ngement, and although each policyholder is fully gua/romteed for all claims under the present, policies hy the covena/nts of the E. Society m the deeds between the two com- pcmies ca/rrying out the arrangement, any of the assured desiring it ma/y, for greater secwrity, either home am indorsement to that effect made on their policies, or may have a policy guaranteeing the existing policy, or a new policy of the E. Society." An/nexed to one of these ciroula/rs was a ciroida/r from, the E. Society announcing the troMsfer of business and offering a new policy, or a gua/rantee policy, or an indorsement. The policyholder took no notice of these circulars. The- policy was never indorsed, nor was am/ guarantee or substituted policy issued to him, nor was any bonus ever received in respect of the policy. Subsequently to 1866 he paid' his pre- miums to the E. Society, and accepted receipts from them. In the winding-up in 1872 it was contended, by tfie official liquidator that the oircula/rs contained the offer of a new contract in lieu of the old, and that this offer had been accepted hy the payment of the premiums to the tram,sfyree company. Beld, that there was no novation, and that the policyholder was still , entitled- to claim -ew Ms- policy against the B. Company. Out of the various proposals contained in the circulars the policyholder had acceded to one only — that tlie terms of the policy should remain unaltered. Payment of the premiums to the transferee compamy, in accordance with a direction to that ef'ect, is equivalent to the payment to a hank in accorda/nae with a direction to that effect. On its being contended that the provisions of the transferor compcmy's deed of settlement had been followed so as to effect cm absolute dissolution and annihilation of the company, the case differing from Barnes's case {sup. p. 72) m that a valua- tion had been made of the assets of the trcmsferor company, it was Held, that the power of dissolution contained in the deed of settlement could effect an annihilation of the coTnpany only as between shareholders, and not as against policyholders. These were questions of novation. In 1853 the Eoyal l^aval Military 9,ud Bast India Company Life Assurance Society granted to Mr. Swift a participating policy, whereby the funds of the Society were, subject to the provisions of the society's deed of settlement, to be liable on his death to pay to his executors. &o., the sum of lOOZ. The Royal Naval, &c.. Society's deed of settle- ment contained provisions, whereby the directors might, on the dissolution of the company, obtain from some other company an undertaking to pay all the policies, &c., of the society, and might transfer to such other company so much of the property of the dissolving company as should be agreed on as sufficient, with the future premiums, to enable the company, from which the undertaking might be obtained, to comply therewith : (clauses 172 and 173 ; vide sup. p. 47). In 1866 the Eoyal Naval Society was dissolved in accordance with these provisions ; and, by the agreement for amalgamation with the European Society, it was arranged that "the presumed realisable value of the property and assets of the Eoyal Naval Society should be taken at the agreed suip of 98,060Z. 7s. 3d., of which 88,9512. 7s. Zd. should be taken as the agreed and .sufficient pro- portion, together with the premiums to become payable on the existing policies of the Eoyal Naval Society, to enable the European Society to pay and satisfy " the liabilities, debts and engagements of the Eoyal Naval Society : (clause 3 ; vide sup. p. 48.) In Aug. 1866, Mr. Swift received the following circular from the Eoyal Naval Society : — To the Policyholders and Shareholders of the Boyal Naval Military and East India Company Life Assurance Society. 18th Aug. 1866. My Lords, Ladies, and Gentlemen, — In face of the active competition now so prevalent in life assurance business, and of the union or amalgamation of offloes so constantly taking place, to their mutual advantage by lessening the expenses of management, and increasing their vitality and strength, my colleagues and ^I have for some time past. been most anxiously considering, whether the interests of the ' assured and the proprietors of our society would not be maintained and promoted by the union of its business with that of some other larger company ; and we have arrived at the conclusion that such woujd undoubtedly 'be the case. Started originally in the interest of the Naval and Mili- tary services, the society's business has almost necessarily been of a restricted' character, and though in later years we- have tried to extend it into a more general connection, our success has been but partial. The .society is, however, as it ever has been, in a sonni^ 00 THB LAW TIMES. [May 3, 1873. EunoPBiN' Assubance] Swift's Case; Kelly's Case. [AUBITBATION. and healthy state, and its businees must be a valuable aooes- Bion to any office of greater means and capabilities. Under this belief, therefore, we have entertained over- tures from a company of very large business and undoubted security, who are willing to take over the society's business and responsibilities, under an arrangement, which, after adequately securing as the primary consideration, the society's policyholders, will give the shareholders a return of their original paid-up capital in cash, or at their option, in shares of that company, and in the latter case with a considerable bonus. The constitution of all modern com- panies provides for these advantageous unions or amalga- mations, and this proposed arrangement virtually amounts to union or amalgamation with the company referred to. The society's deed of settlement, though not expressly providing for union or amalgamation, does in effect render it practicable by a dissolution of the society, and, after due deliberation, we have deemed it our duty to call an extra- ordinary_ general meeting of the . shareholders, to take the subject into consideration, as indicated in the annexed notice, and we trust the movement may receive your cordial approval and co-operation. I should add, that the proposed arrangement provides for two of my colleagues and myself joining the board of the other company, in order the more effectually to secure the interests of our assured and shareholders, and that the principal portion of the staff at present employed by the society will go over to that company, and the society's business would continue to ■ be conducted at No. 17, , Waterloo-place until further notice. Pkedekick Smith, Chairman. In Sept. 1866 a second circular was sent to Mr. Swift from the Eoyal Naval Society : To the Policyholders of the Eoyal Naval, Military, and Bast India Company Life Assurance Society. 18th Sept. 1866. • My Lords, Ladies, and Gentlemen,— Adverting to the circular I addressed to you on the 18th Aug. las^ I have now the satisfaction to inform you that the two extra- ordinary general courts of the proprietors, required by the society's deed of settlement for the purpose, unanimously decided upon a dissolution of the society, and that ife dissolution takes place as from the 14th inst. The first duty of the directors was to make, in accordance with the deed of settlement, an arrangement with another company for undertaking the obligation of your policies, and securing the interests of the assured, and they have accordingly made such an arrangement with the European Assurance Society, who will in future be the substitute of the Royal Naval, Military, and Bast India Company Life Assurance Society. General Sir George Pollock, G.C.B., K.S.L, Vice-Admiral Michael Quin, and I join the board of the society, in order the more effectually to secure your interests. The terms and conditions of your policies remain, of course, unaltered by the arrangement, and although each policyholder is fully guaranteed for all claims under the present policies by the covenants of the European Society in the deeds between the two companies carrying out the arrangement, any of the assured desiring it may, for greater security, either have an endorsement to that effect made on their policies, or may have a policy guaranteeing the existing policy, or a new policy of the European Society, AH communications should now be addressed, and all premiums paid, to the European Assurance Society, at the office, 17, Waterloo Place, Mall Mall, where the Eoyal Naval Military and East India department will be con- ducted. Should you, however, have been accustomed to pay your renewal premium through an agent, you will still be enabled to do so, as arrangements will be made by the European Society to continue the agents of the Eoyal Naval and Mihtary Society. The report of the European Society for 1855 shows that the annual revenue exceeds 330,000?., that the capital sub- scribed by nearly 2000 shareholders exceeds 800,000?., and that the new premium revenue for the year 1865 exceeded 62,000?. The great advantages of uniting assurance companies are now being thoroughly recognised and appreciated by the pubhc. They may be summed up briefly thus:— The union of companies increases business, income, security and bonus, and decreases expenditure, competi- tion, and the liability to fluctuation. Tou will perceive at once the advantages which the consolidation of the Eoyal Naval and Military Society with the European Sociefy will secure to you, ,as you not only have the security of the large annual income of the joint businesses for the amounts of your policies, and of the bonuses already declared upon them, but in all future divisions you will participate on an equality with all the other policyholders in the European Society and derive therefrom, in ^addition to the original benefits of your policies, the further advantages arising from accumu- lation of income and power with a diminution of annual expenditure. My late colleagues and I think, trherefore, that you will feel with us that in this arrangement your best interests have been considered. — I have the honour to be, yours faithfully, Feederick Smith, Chairman of the Eoyal Naval, Military, and East India Company Life Assurance Society. To this circular was annexed the following cir- cular from the European Society : — To the Policyholders of the Eoyal Naval, Military, and East India Company Life Assurance Society. European Assurance Society. London, 18th Sept., 1866. My Lords, Ladies, and Gentlemen, — The annexed letter from the chairman of the Eoyal Naval, Military, and East India Company Life Assurance Society announces to you that its business has been taken over, and its policies and other liabilities are now guaranteed by this society. The deeds already executed between the two societies render it unnecessary to trouble policyholders to send their policies for endorsement by. this society. Should you, however, wish it^ if you will forward your policy, either direct or through the agent to whom you have been accustomed to pay your premium, it shall be immediately (after the succeeding Thurs- day) returned to you endorsed, signed by three directors, and sealed with the seal of the-society ; or, if you prefer it, a guarantee policy, or a new policy of the European Society, will be issued in lieu of the one you now hold in the Eoyal Naval and Military Society. AH policyholders are perfectly assured by this society under the renewal re- ceipts issued at present, and the terms and conditions con- tained in the policies, together with all bonuses declared by the Eoyal Naval and Military Society, are guaranteed by the European Society. The capital of tiia society, subscribed by nearly 2000 shareholders, exceeds 800,000s., the annual income exceeds 330,000?., and the invested funds and property amount to nearly three quarters of a million. I would invite your special attention to the distinctive principles of the European Society, which present a* power- ful reason of the preference of assurers. The public appreciation of these principles may be seen by the great increase in the new premium income. (Here follow the amounts of the new premium income in various years.) So that during the last eight years alone the new business of the company amounts to 301,000?. Tour position as a policyholder, I need scarcely remark, win be greatly improved by the arrangement now made. By the union of interests, and by the conduct of the joint business in one office and by one official staff, a very con- siderable reduction of expenditure will be effected, which must add considerably to the bonus ; while the new busi- ness, large as it is at the present time, will be further in- creased by the concentration of interests and income. It may also be gratifying for you to know that the European Society, and the other companies already united with it have paid, in claims to life policyholders including bonus addition's, upwards of two millions sterling. Henky Lake, Manager. Mr. Swift took no notice of either of these cir- culars. His policy was not endorsed by the Euro- pean Society, nor was it sent in for endorsement, nor was any guarantee or substituted policy issued in respect thereof. No bonus was ever received on the policy from the European Society. Prom 1866 to 1871 he paid his premiums to the European Society, and accepted receipts from them. The last two being in the following form : — European Assurance Society, E - - . - . _ .. May 3, 1873.] THE LAW TIMES. 91 BUEOPEAN AsSUKANCE] Swift's Case ; Kelly's Case. [Abbituation. co^soUdated the business of the Koyal, Naval, Military, and East India Company Life Assurance Society. Chief Office : 316, Eegent-street, W., Loudon. (Royal, Naval, and Military Department), 17, Waterloo- place, Pall Mall, London, S.W. Eeoeipt No. — 8615. Sum assured ^£1000. Policy of Royal Naval and Military Society, No. 2638. Received this 8th Jan. 1867, the sum of 8/. 12s. 8d, being the payment of three months' premium, from the 27th Dec 1866, for an assurance on the life of Captain W. A. Swift, effected by the before-named policy, and as now adopted and guaranteed by the European Assurance Society. W. M. Jones > t>- i James Puknell/^'™"'"'^'- Printed receipts for renewal premiums issued from the chief office are alone admitted as valid. European Assurance Society. Empowered by Special Act of Parliament. Chief Office: No. 17, Waterloo-place, Pall Mall, London, S. W. Premium ^£8 12s. 8d. On the life of W. A. Swift. Received the 7th Jan. 1869, the sum above stated, being the amount of premium for the renewal of policy No. 2638, n and m, for three months from the 27th Dec. 1868, accord- ing to the tenor of the said policy. G. Bermisgham 1 _. , Henky DeffellJD'™'=*°™- Printed receipts for renewal premiums issued from the chief office, and signed by two directors, will alone be ad- mitted as valid. The letters " N. and M. " being, no doubt, an abbreviation of " Naval and Military Company." In the winding-up Mr. SwiEt contended that he was entitled to claim on his policy against the company that granted it — the Eoyal Naval Society. Kelly's case was exactly similar to Swift's case, except that Colour- Sergeant Kelly, on receiving the amalgamation circulars, had written to the Boyal Naval Society two letters, in one of which he stated he did not approve of the amalgamation, and in the other that he did "not wish to be trans- ferred to another society. Oracknall and Henderson for Mr. Swift and for Mr. KeUy. Napier Biggms, Q. C. and Montague Coohson, for the official liquidators of the Eoyal Naval Society. — There was an absolute dissolution and annihilation of the Eoyal Naval Society. In the amalgamation the provisions of the deed of settle- ment were strictly followed ; and this case differs from Ba/rnes's case [svjp. p. 72), and resembles Ga/rr's case, re the Waterloo Life, Sfc, Assuramae Oompamy (33 Beav. 642), in that there was a valuation of the assets of the transferor society (clause 3, s-up. p. 48). Moreover there was a novation by the policyholder witb the European Society. The circulars were an offer of a new contract in substitution for the old. By going to the European Society and paying the premiums to that society, the policyholders accepted the offer, and accordingly can claim only against the -European Society. With regard to Kelly's protest, there are cases in the Albert. Arbitration, in which Lord Cairns held that such a protest, not being a continuing protest, did not prevent a novation. Iiord Westbtibt. — There is no difficulty at all either in Swiff s case, or in the Colour Serjeant's {Kelly's) case. Upon a former occasion (in Barnes's case, sup. p. 72) an attempt was made by Mr. Eischer to establish that what was done, under what was called a power of dissolution and transfer, amounted to an absolute out-and-out dissolution ■ of the company — that is not to a dissolution of the company only as among Ijhe shareholders, but to an annihilation of the company not only as against the shareholders therein, but as against creditors who had entered into contracts with the company. I considered that very fully, and I had no diflB.- culty in refusing to accede to it. I said, and I repeat, that that was not the true construction of what the directors were empowered to do, nor was it at all consistent with what they had done, and that what was appealed to as the power of disso- lution, was no such power except as among the shareholders ; and it provided expressly for this, that if at any time after the transfer( effected by what was called dissolution, there should be a necessity of meeting the engagements which the company dissolving itself entered into, the com- pany should be restored to life, and be armed again with its former machinery for conducting busi- ness and requiring payment by its shareholders, for the discharge of its unsatisfied liabilities. Of course Mr. Higgins has forborne repeating the ar- guments which were then decided against him ; but he says that what has taken place under this alleged dissolution, has amounted in point of fact to a con- tract or the offer of a contract to each share- holder ; and that the shareholder paying his premiums for the future to the European Society has accepted that ofler, and has substituted the engagement of the European Society for the original contract of the assuring company. Well, such an argument cannot be maintained on the circulars at all, for the circulars expressly say that the business of the one company was ' to be united with the business, of the other, and there are some words in the circulars, which say — the consolidation of the Eoyal Naval Society with the European Society will secure to you, as you have the security of the large annual income of the joint business, certain advantages. The trans- action was therefore a very simple one. The business of the ^Eoyal Naval Society was trans- ferred to the European Society, and for the pur- pose of making that transfer effectual, the Eoyal Naval Society came to a resolution among its own shareholders to dissolve the society ; that was a mode of assuring the European Society that the business of the Eoyal Naval Society should not be carried on in a distinct form, but should be carried on in a consolidated form by the European Society; but then the letters, which announced to the policyholders what the companies were about to do, aiter saying that it was in accordance with the deed of settlement, say they are about to make an arrangement with another com- pany for andertakipg the obligation of the policies and securing the interests of the assured, and after telling the policyholders that they have made that arrangement, they go on expressly to tell theni The terms and conditions of your policies remain, of course, unaltered by the arrangement, and although each policyholder is fully guaranteed for all claims under the present policies by the covenants of the European Society in the deeds between the two companies carrying out the arrangement, any of the assured desiring it may, for » greater security either have an endorsement to that effect made on their policies, or may have a policy guaran- teeing the existing policy, or a new policy of the European Society. It is impossible, with any reason, to contend in the face of those words that the policy of the Koyal Naval Society was henceforth to be a 92 tsb law times. [May 3, 18W. Etjbopeau Assueaijce] The NiTioifAL Bank's Case. [Ajrbiteation. defunct and inoperative contract, to have its place taken by a new contract witli the European Society. The Royal Naval Society say just the contrary ; all your engagements with us, with its terms and conditions, shall remain un- altered ; we will only give you a further security for the fulfilment of those terms and conditions ; and the security will be the guarantee of the European Sticiety. If you like to have that guarantee expressed in words, it shall be so, and shall be expressed vipon your policy. If you like to have a policy of guarantee, that is, a new policy guaranteeing the old, and thereby admitting the complete, independent, continuing existence of the old, you shall have it ; or if you like, instead of the old, to have a new policy of the European Society, you shall have it. 'Now here are a variety of proposals made to the assured. Mr. Swift received this letter. Did Mr. Swift accede to any of these proposals? "Which did he accede top He acceded only to the proposal that the terms should remain unaltered. He did not write to the Royal Naval Society and say, " I should like to have a new policy of the European Society;" he did not write to say, " I should like to have an independent policy of guarantee ; " he did not ■n;rite to say, " I should like to have an indorse- ment ; " he allows things to remain as they were, upon the assurance of the company, with whom he had contracted, that the terms and conditions of his contract should remain unaltered. It is idle to say that there was any new contract between the assured and the European Society. It is idle to say that the Royal Naval Society have any power of binding the assured to the European Society, and tacking them on to the European Society against their consent. They only endeavour to get the assured to acquiesce in what they were about to do by these three assur- ances : Tour present contract shall not be affected, it shall only be improved by a new security being added ; if you like to have that security expressed, it shall be done ; if you like to have a new policy superadded to your old one, it shall be done ; or if you like to give up the old and accept^ a new, it shall be done. But Mr. Swift did nothing of the kind. Mr. Swift took no notice of that ; he did, as he was bound to do, go and pay his premiums to the European Society, because he was told dis- tinctly that the business of the Royal Naval Society was united with the European Society, which is a representation amounting to this, that the Royal Naval Society would transfer its business to the European Society, to be consolidated with its busi- ness, and therefore, by virtue of that transfer, the European Society became the assignee and agent of the business of the Royal Naval Society,, and was the proper recipient of all moneys that under the original contract with the Royal Naval Society were to be paid at the office of that company. What Mr. Swift did was, therefore, nothing in the world more than an acquiescence in the transfer of that business, and payment of the premiums m accordance with the notice he had received, amounting to no more than this— as if the Royal Naval • Society had told him " Our bankers are henceforth the London and "Westminster, or any other, please to pay your premiums into the London and "Westminster Bank." He did pay his premiums to the assignee, agent and attorney of the Royal Naval Society; he did nothing more. There was nothing that you can fasten upon it. You cannot bind him by any other letters ; for, though there were certain positions offered him, he accepted none. Tou can infer nothing from the payment of the premiums, even if there was not this direc- tion and request of your own, that he should continue to pay the premiums to the persons that represent the transferees of the business. He did so in accordance with your lequest, and nothing results from the payment Of those premiums, that can by any possible reason of law, or any possible argument, be made to result in the proof that Mr. Swift entered into a new contract with the Euro- pean Society. The same thing relates to the unfortunate Colour- Serjeant (Kelly), who trusted with natural instinct, and with a sort of divination of the result, to the name that he was accustomed to deal with, namely, the Royal Naval and Military Company. I cannot say his case is improved by protesting ; but what I do say is, his case does not stand in need of the protest. He did nothing more than Mr. Swift had done, and the ratio decidendi in Swift's case applies to him also. Both those gentle- men must remain, as they originally were, policy- holders of the Royal Naval Society, and creditors of that society, unaffected by the dealing with the European Society ; and the attempt to fasten upon them a new character and a new contract, must be dismissed with costs. Solicitor for Mr. Swift and Mr. Kelly, W. T. Manning. Solicitors for the official liquidators of the Royal Naval Society, Mercer and Mercer. < Wednesday, Feb. 5. The National Bank's Case. Gowpany ■ — Winding-up — Petition to wind-u/p — Notice — XiOfidon Gazette — Companies' Act 1862, sect. 153 — Question as to refundment of money paid hy the directors between the presentation of the petition to wind up and the winding-up order. The directors of the E. Company paid a bond fide debt to the N. BanTc on the lith June. On the previous day, the 13i/i June, a petition to wind-up the company was advertised for the first time in the London Gaxette. This petition had been pre- sented on the \Oth jwne, and in the following Jan- uary a winding-up order was made. In the wvtid- ing-wp the official liquidator contended that the money so paid ought to be rejwnded to the E. Com- pany, the pa/yment having 'been a void disposition of the property of the com/pany v/nder the ISSrti section of the Companies Act, which provides that " all dispositions of the properly, effects, and things i/n action of the com/pamy .... made between the commencement of the winding-wp and the order for wvnding-up, shall, unless the court otherwise orders, be void." Held, that in exercising the discretionary power, enabling the court either to let the 15Srd section, operate or to restrain its operation, the ratio decidendi was whether the recipient of the money had, or ought to have had, or might with reasonable diligence have had, a hnbwledge of the fact of the pendency of the petition to wind-up. It could not be inferred that the N. Ba/rik had notice of the petition, when such inference was to be drawn merely frorn, the fact that the petition was adver- May 3, 18?8.J THE LAW TIMES. 93 EUKOPEAN AsSUKANCB] The National Bank's Case. [Aebiteation. evening anterior to tJie morning on which the debt was paid. Semble, that the inoney would have to he refunded m cases where it could he said that the recipient of the money had, or ought to have had, or might with reasonable diligence have had, a hnowledge of the fact of the pendency of the petition to wind- v/p. This was a question as to the refundment of moneys paid by the directors of the ' European Society in the interval between the presentation of the petition to wind-up and the winding-up order. In May 1870, the National Bank made a claim against the European Society in respect of two policies held by the bank ; and on the 31st May, 1870, the bank was informed by the secretary of the society that the amounts assured by the policies would be payable in three months from the 10th May 1870, provided satisfactory evidence of the title should be furnished. Difficulties were, however, raised by the society as to the title of the bank, and a lengthy correspondence took place between the bank and the society, with respect to this. In the midst of this correspondence, re- peated applications were made by the bank for payment of the amount assured by the policies, and ultimately, on Monday the 12th June 1871, the solicitors to the bank wrote to the secretary of the society as follows : — Policies No. 6317 and 6247. Are we to conclude that your society declines to discharge the claim of our clients, the National Bank, under these policies? We have received peremptory instructions to bring this matter to a conclusion, and, unless we hear from you on Wednesday morning, that you are prepared to pay the money forthwith, we shall, without further notice to you, prepare and file a petition to wind-up the-society. On the 13th June 1871 a reply was written by the secretary that the society were prepared to pay the money, and on the 14th June 1871 the solici- tors to the bank attended at the office of the society and received 648Z, 8s. 'id. in respect of the policies. On the 10th June 1871 a petition was presented by Mr. Greenhough, a shareholder in the society, praying that the society might be wound-up. This petition was advertised for the first time in the London Gazette on the 13th June 1871, the day before the money was paid to the bank. The petition was ordered to stand over from time to time, and on the 17th Nov. 1871 provisional official liquidators were appointed by the Court of Chancery, and, finally, on the 10th Jan. 1872 an order was made to wind-up the society : (See these orders, sup. p. 61.) There were various sums, amounting in the aggregate to more than 17,000Z., that were paid by the directors after the presentation of the petition in respect of claims which had previously matured, and the official liquidators had been advised that they ought not to treat any of such payments as valid, without the sanction of the arbitrator. They accordingly now contended that, under the 163rd section of the Companies Act 1862, this payment of the sum of 648Z. 8s. 2d. was a void dis- position of the property of the society ; and that it ought to be refunded by the bank to tjie society. On the other hand the bank contended that the payment was a bond fide payment made by the society in the ordinary course of business, and in fulfilment of a legal obligation existing on the part of the society, and without any notioe,''on the part of the bank, of any petition having been presented towind-up the society. The provisions of the Companies Act 1862, re- ferred to are the following : — ' Sect. 84 : A winding-up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding-up. Sect. 86: Upon hearing the petition the court may dismiss the same, with or without costs, may adjourn the hearing, con- ditionally or unconditionally, and may make any interim order or any other order that it deems just. ' Sect. 153 : Where any company is being wound-up by the court, or subject to the supervision of the court, all dispositions of the property, effects, and things in action of the company, and every transfer of shares or alteration in the status of the members of the company, made between the commence- ment of the winding-up and the order for winding-up, shall, unless the court otherwise orders, be void. Sect. 163 : Where any 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 commence- ment of the winding-up, shall be void to all intents. Sect. 164 : Any such conveyance, mortgage, delivery of goods, pay- ment, execution, 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 iraudulent preference of the creditors of such company, and shall be invalid accordingly ; and for the purposes of this section the presentation of a petition lor 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. . . . Napier Higgins, Q; 0. and Montague Gookson for the official liquidators. — Under the 84th section of the Companies Act, the commencement of the winding-up dates from the presentation of the petition. And sect. 163 expUcitly enacts that all dispositions of property, &c., made between that date and the winding-up order, shall be void. Under the 163rd section, no proceedings could then be taken against the society by anyone claiming, pay- ment. And under the 164th section, no act done by the directors can give priority to any creditor, where the funds of the company are to be dis- tributed pari passu among all the creditors of the ' company. Whether the payee had notice of the petition or not, the payment is void. And here he must be held to have been afEeotgd with notice, for publication in the London Gazette is notice to the whole world. Great danger might result froni its being supposed that any payment of this kind could be maintained, simply because there was a postponement of the hearing of the petition, [Lord Westbuet. — I quite agree with you ; there- fore it was that I said' at the commencement, the manner in which the petition was dealt with has been productive of evil and perhaps an immense quantity of injustice. See the cases of fraudulent transfers that we have now to deal with. The ordering of the petition to stand over was, as it were,, a warning to all the people to get out of the net that threatened to engulph them ; §4 tttte LAW TIMES. [May 3, 187S. EUEOPBAU AsSUBANCB] The National Bank's Case. [Akbiteation. and so they did — many of them. There are also a number of bankruptcy cases, in which they sought to release themselves by the operation of bankruptcy, in which they were helped by the official liquidators in some cases going in to prove under the bankruptcy.] W. W. Ka/rslake appeared for the National Bank, but was not called upon. Lord Westbuky. — I am desired to recall money that was paid in discharge of a hond fide debt. Now when an application is made for that purpose, you must show that the creditor receiving the money knew, or ought to have known, at the time, that the person paying it had no right to make that payment, and that he was receiving money, which already belonged to other persons, or had' received by law a different destination. The Act, I am happy to say, gives a large discretion to the court, and the court ought to exercise that discre- tion in conformity with what is just and right, and in conformity also with the rules that prevail in the analogous proceeding in bankruptcy. Now, I have pressed again and again for an ansyer, whether there was anything whatever that affected the creditor, who received this money, with notice at the time, that the directors, who paid it, had no longer a legal capacity to do so. And Mr. Higgins has very fairly answered me: — "I am not in a position to say that there was any- thing but the notice in the London Oazetie." The London Gazette used to be pubhshed late in the evening. I think it is so now. It was published late on the evening of the day preced- mg the day of payment; the London Oazette, therefore, issuing in the evening, three or four hours would probably intervene between the time when it might be expected to be seen by the creditor or the solicitors of the creditor, and the time of payment ; and Mr. Higgins has told me it is explicitly enacted, and it is the unquestionable law, that the issuing of that Gazette is notice to the whole of the world, and that notice therefore from the incident of publication will be imputed to parties, who, if they had read the Gazette, would have had actual information of the fact of the presentation of the petition. Now I do not con- sider that to be the law, and, independently, I will not; accept it as the law in a proceeding of this kind. The rule of law is that, where a party may, after a certain period of time, be reasonably pre- sumed to have seen, read, or heard, he shall be in some proper cases fixed with knowledge, although the fact of his having so read, or seen, or heard of the information, cannot be brought home to him. But I think I should be doing the most ridiculous thing in the world, if I fixed upon the National Bank, or on the solicitors of the National Bank, individual notice of the fact of the presentation of the petition, from the circumstance that the Gazette, containing that notice, had been issued to the world three or four hours previous to the time when the payment was made. That is not the law for this purpose ; the law is only that that shall be attributed to a man, which he may be reasonably supposed to have become acquainted with. The state of things is the more lamentable, partly from what the court has done, and partly from what it has omitted to do. When the court directed this petition to stand over, at the same time in condemnation of that act recording its conviction that the company was insolvent ; and when the court knew afterwards, on granting the winding-up order, that the petition hawi stood over for more than six months, and that in the interval of time a great number of transactions had taken place necessarily and evidently properly in the conduct of the business of the company, the court was empowered and ought, when it pronounced the order, to have taken care to have provided that aU bond fide transactions and all bond fide payments made in the interval, at all events between the date of the petition and the appoint- ment of the oflHcial liquidator, should not be dis- turbed. Now the Legislature armed it with that authority, for when it laid down in the 84th sec- tion that A winding-up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding-up, the court is invested with the right to qualify that retrospective operation, and it is accordingly enacted in the 86th section' that Upon hearing the petition the court may dismiss the same with or without costs, may adjourn the hearing, con- ditionally or unconditionally, and may make any interim orderj or any other order, that it deems just. Well, then comes the enactment, which, it is said, has the effect of the retrospective operation of the order, and for that purpose I am referred to the 153rd section, and there it is said — Where any company is being wound-up by the court, or subject to the supervision of the court, all dispositions of the property, effects, and things in action of the company — Whether that does or does not include the actual payment of a bond fide debt may admit of very great doubt ; taking the words " effects" and " pro- perty," and so on, it would be very difficult to hold that the payment of a bond fide debt is the disposition of the property, or effects, or things, in action of.the company. However, let that pass, and every transfer of shares, or alteration in the status of the members of the company made between the com- mencement of the winding-up and the order for wiading- up, shall, unless the court otherwise orders, be void. That discretionary power of limiting the opera- tion of the enactment, of exempting any particular thing out of the operationwhich, on the rules of natural justice, and as I have said, by the analogous rule in bankruptcy, ought to be protected — that discretionary power would enable me to deal with this application, either by letting the sec- tion operate, or by restraining the operation of the section, according as equity would suggest. Now, I cannot say that it must be paid back; for of course the ratio decidendi must be that the recipient had notice that it was not the money of the party paying him, but was money stamped with andther destination ; if the ratio decidendi, if the point in the case be that, I must ascertain that he had, or ought to have had, or might with reasonable diligence have had, a knowledge of the fact of the pendency of this petition, I should then probably be bound to say that it must be paid back, not perhaps irrevocably, but it must be paid back, and yoa must make the best of an application to the court. However, I will not take from him that which he honestly received. The debt was one, be it observed, that was com- pletely matured before the presentation of the petition; the debt was one which, but for the evasive delay, ought to have been paid by the directors before any petition was heard of. The debt was one, therefore, which the creditor had a M»y 3, 1873.] ths law TiMHS. 95 Etjkopeau Assueance] Carpmael's Case. [Aebheation. right to claim the payment of; he has not claimed it in any manner that appears to me to involve any notion of the fact that there was a petition pending. I cannot take it back from him, there- fore, unless I am convinced that he did not honestly receive it. I mean by " honestly," that he received it without a suspicion or any notion that the directors had not full power to pay it. Now, I dare say there are many cases that will stand very differently from this. I confine my decision in this case to the point, that I will not infer that the National Bank, or its solicitors or agents, had notice of the pendency of the petition, when I am asked to draw that inference merely from the fact that the London Gazette had been published at nine o'clock in the evening anterior to the morning when they received this payment. You must pay the costs of this application, Mr. Higgins, out of the European Estate. Solicitors for the National Bank, W. Tatliam and Bon. Sohcitors for the official liquidators of the European Society, Mercer and Mercer. Feb. 5 and 6. Carpmabl's Case. Life assurance company — AmalgamMion of Gom- panws — Wi/nding-vp — Policy — Novation of con- tract — Advertisement held to he notice of wi/nding- up order — Indorsement on policy as to a change in the sum assured — Policyholder held, after an amalgamation, to he a creditor, not of the old company, but of the new — Procedure in a wind- ing-up, where the order was made before the Com- panies Act 1862. The W. Assurance Company transferred its business to the B. Asswramce Association im Oct. 1860. Subsequently, in Ju/ne 1862 an order was made to wi/nd-wp the W. Compa/ny on a petition presented by a creditor m Dec. 1861. Advertisements were accordingly issued in July 1862 callim-g on oreddtors of the W. Compcmy to come im and prove their debts before the Vice- Chancellor, and stating that, until they should so come in, they would be pre- cluded from com/mendng any proceeding for the recovery of their debts. The W. Oompan/y was, however, never wovmd-v/p flnall/y. In 1865 the B. AssociqMon t/ramsferred its business to the E. Society. In 1849 the W. Compamy had granted a policy to C. and another, pdtent-agenls, on the Ufe of N. After 1860 the premvwms on this poUay were paid to theB. Association, and receipts accepted from them; and afterr 1865 {he premiums were paid to the E. Society, and receipts accepted from them. In 1872 the executors of C. held the policy, and brought in a claim onit against the W. Compamy. They alleged that C, the assured, had neiver any knowledge of the winding-up order, or of the aAoertisement, and that the premiums had been paid to the other companies, as agents authorised to receive them. Held, that under the airemmstamces knowledge of the advertisement and the winding-up order mMsi be imputed to him, and the order to wind-up the W. Compamy put an end to any authority that had been given to any other compamy to receive their premmms. Accordingly, the premiums ha/uvng been paid to the B. Association, and receipts accepted from tliem, the contract with the W. Company had been aban- doned, and a contract with the B. Association taken in its place. Moreover, it had been discovered in 1868 thai the "life"' was twoyea/rs older than was stated in the proposal for the policy, and one of C.'s executorn had drOiwn attention to this, and had allowed an indorsement to be placed on the policy, that the sum assured should in consequence of such differ- ence in age be reduced by 241. 18s. This indorse- ment bore the signatures of " Reginald Read, director" amd " Henry Lake, general manager." Mr. Read was u, director of the E. Society, and had, been a director of the W. Company, and Mr. Lake was the General Manager of the E. Held, that this indorsement, coupled with the pre- vious correspondence, would of itself constitute a new agreement, accepting the E. Society in substi- tutionfor the original company. Thus there had been a novation, and the executors were entitled to rank as creditors of the E. Society only. Where a creditor proves his claim against a com- pamy, with regard to which an order to wind-up has been made before the passing of the Companies Act, 1862, but the wimding-up has not been com- pleted finally, a supplemental order to wind-iip will be made, founded to a certain degree on the previous order, 'Omd v/pon the terms of not disturb- ing anything that has been /rightly done under that order. The English Widows' Fund and General Life As- surance Association was constituted under a deed of settlement, dated the 29th Oct. 1847, and was registered and incorporated under the Act for the Eegistration of Joint Stock Companies, 7 & 8 Yiot. c. 110. The deed of settlement contained clauses providing for the dissolution of the association, and for the transfer of the business to some other assurance company. (Clause 258 of the deed is similar to the fi-st twenty-eight lines of clause 173, sup., p. 47.) In the year 1860 negotiations were set on foot for the transfer of the business of the English Widows' Fund, &c., Association to the British Nation Association, which under its deed of settlement had the power of purchasing the busi- ness of another assurance company. (Clause 46, vide sup. p. 40.) The following resolutions were passed at a special meeting of the shareholders of the English Widows' Fund Association on the 29th Oct. 1860, and were subsequently confirmed : — 1. That the contract first read and signed by the directors of the English Widows' Fund Association, and the directors of the British Nation Life Assurance Association, be and the same is hereby approved. 2. That the English Widows' Fund Association be and the same is hereby dissolved. The transfer of the business vras carried out by an agreement dated the 29th Oct. 1860, being the contract referred to in these resolutions. By this deed it was agreed that the British Nation Association should purchase the life assurance and annuity business of the English Widows' Eund Association and the benefit and advantage of their policies, and all premiums and other inoneys that might become due after the 15th Oct. 1860. The British Nation Association also undertook to pay the sums assured by all policies of the English 96 THE LAW TIMES. [May 3, 1873. BUEOPBAN AsBDEAlfCB] Caepmabl's Case. [Abbiteation. Widows' Fund Association ; and further, tp pay 3000Z. and certain other sums in consideration of the transfer of the business. On the 14th June 1862 an order to wind-up the English Widows' Fund Association was made by the Court of Chancery on the petition of a creditor, presented on the 21st Dec. 1861, and intituled " In the matter of the Joint Stock Companies Wind- ing-up Act 1848, and the Joint Stock Companies Winding-up Amendment Act 1857 ;" and on the 23rd July 1862 Mr. Harding was appointed official manager. On the 2nd July 1862 the following advertisement was approved of by the chief clerk : — In Chancery ; In the matter of the Joint Stock Companies Winding- up Acts, 1848 and 1849, and' the Joint Stock Companies Winding-up Amendment Act, 1857; and In the matter of the English Widows' Fund and General Life Assurance Association, Notice is hereby given that all parties, claiming to be creditors of this association, are to come in aiid prove their debts before the Vice-Chancellor Sir William Page Wood, the judge of the High Court of Chancery charged with the winding-up of this association, at his chambers. No. 11, New-square, Linoojn's-inn, in the county of Mid- dlesex ; and until they shall so come in, they will be pre- cluded from commencing or prosecuting any proceeding for the recovery of their debts.' Dated this 2nd July, 1862. Edward Weatheeall, Chief Clerk. This advertisement was inserted in the London Gazette on the 4th and 8th July, 1862; in the Times and Standard on the 4th, 8th, and 11th July, 1862 ; in the Norwich Union on the 5th July, 1862 ; and in the Exeter and Plymouth 'Gazette on the 4th July, 1862. The association was, however, never wound up finally. In the year 1865, the British Nation Association transferred its business to bhe European Society : {vide sup, p. 41.) In 1849, Mr. Poola and Mr. William Carpmael, who then carried on business in partnership in London a.s patent-agents, bad effected a policy of assurance in the English Widows' Fund Asso- ciation, on the life of Mr. Nicholson. Both Mr. Poole and Mr. William Carpmael had since died, the latter being the survivor, and the policy was now held by his executors, Sarah Carpmael, William Carpmael jun., Alfred Carpmael, and Arthur Carpmael. No proof was ever made on the policy against the English Widows' Fund Association in the winding-up of that association, nor was any notice whatever taken of the p,dver- tiseifieut. After the amalgamation of the EngUsh Widows' Fund Association with the British Nation Association, the premiums were paid to the latter, and receipts accepted from them. After 1865 the premiums were paid to the Europeaii Society, and receipts accepted from them. The following are the forms of the receipts on different occasions :— Receipt for 1861. British Nation Life Issurauce Association, with which is united the English Widows' Fund. Chief Offices: 291, Eegent-street, London. Eeceipt No. 7699. 15th June, 1861. Pohoy No. 257. Sum assured 3002. Keceived of Messrs. Poole and Carpmael the sum of sixteen pounds fifteen shillings and pence, being the payment of annual premium, from the 3rd day of June 1861 to the 2nd day of June ^862, for an assm-sinoe of the sum of 3002. on the hfe of Mr. William Nicholson, effected by the before named policy. , Henky Lake, Manager. lot. los. Oo. Countersigned, Jno. Maddem, Cashier. Receipt for 1865. British Nation Life Assurance Association, in union with the European Assurance Society. Empowered by Special Act of Parliament. (E. W. P.) Offices, 316, Eegent-street, and 2, Waterloo-plaoe, Pall Mall, London. Eeceipt No. 13,284. Sum assured 3002. - Policy No. 257. Eeceived this 21st day of June 1865, the sum of sixteen pounds fifteen shillings, being the payment of one year's premium from the 5th June 1865 to the 5th day of June 1866, for an assurance on the life of William Nicholson, effected by the before named policy. Henut Lake, Manager. Countersigned, W. Seymour, Cashier. Receipt for 1870. No. 44,036. European Assurance Society. Empowered by. Special Act of Parliament. Chief Office, 17, Waterloo-plaoe, Pall Mall, London, S.W. Premium, '161. 15s. Od. On the life of W. Nicholson, E. W. Eeceived the 30th day of June 1870, the sum above stated, being the amount of premium for the renewal of policy No. 257 for twelve months from the 5th day of June 1870, according to the tenor of the said policy. J. M. E. Smith, 1 t^. , Eeginald Smith,!" ^"•«'=*°"- Countersigned, H. Templeton. In 1867, Mr. Wm. Carpmael, jun., a son and one of the executors of Mr. William Carpmael, wrote as follows : — Henry Lake, Esq. 17th June 1867. Dear Sir, — I am desirous of selling the life policy of William Nicholson, No. 257, and shall be obliged by. your informing me what the European Assurance Society are disposed to give for it — I" am yours truly, William Carpmael. I enclose you printed notice of the premium coming due No answer having been sent to this letter, Mr. Wm. Carpmael, jun., wrote again : — H. Lake, Esq. 1st July 1867. Dear Sir,— I wrote you on the 17th ulto., relative to the disposal of William Nicholson's life policy, but have not been favoured with a reply. If you will send me an answer per bearer, and at the same time inform me the last day for paying the premium thereon, I shall feel obliged. — I am yours, Willlam Carpmael. The secretary wrote in reply : — European Assurance Society. Ee Policy No. 257, Nicholson. Ist July 1867. Dear Sii',— I have the pleasure to forward official receipt for premiums on the above policy, sent with your favour of this day's date. In reply to your inquiry I have to inform you that we can allow 882. 13s. for the surrender of the policy. — I am, dear Sir, yours faithfully, W. Carpmael, Esq., ' J. Hamek Ewens, Secretary. 21, Southampton Buildings. In June 1868, after the death of Mr. William Carpmael, it was discovered by Ml-. W. Carpmael, jun., one of the executors, that a mistake had been made as to the age of Mr. Nicholson, on whose life the policy was granted. He communi- cated this to Mr. Lake, and the following corre- spondence ensued : — European Assurance Society. W. Carpmael, Esq., Southampton Buildiiigs, Chancery Lane. 16th June 1868. Dear Sir, — In accordance with your wish, I beg now to inform you, with reference to Policy No. 257 (Nicholson), in consideration of his being two years older than stated, we will reduce the sum assured to 2752. 2s., and the pre- miums to remain the same. — Awaiting your instructions in this matter, I am yours faithfully, Henry Lake, General Manager. Per J. R E. The reply was:— Southampton Buildings, Ohancery-Iane, W.C. ,H. Lake, Esq. June 17, 1868. Dear Sir,— W. Nicholsbn, Policy 257 We accept the May 3, 1873.] THE LAW TIMES. 97 European Asstjeancb] Oaepmael's Case. [Arbiteation. terms proposed in your letter of yesterday with reference to this policy, and shall feel obliged by your having the alteration indorsed on the policy. We enclose a' cheque for the premium now due, a receipt for which will oblige Yours truly, William Carpmael, for Sakah Oakpmakl, and others. The following memorandum was accordingly indorsed upon the policy : — It having been proved by baptismal certificate that the within-named William Nicholson was two years older at the time of assuring than stated in the proposal referred to herein, it is hereby declared that, in consequence of such difference in age, that the sum assured payable in respect of this policy shall be reduced to two hundred and seventy- five pounds and two shillings ; the yearly premium herein, mentioned remains unaltered. The age of the within-named William Nicholson is hereby admitted. Ekginald Bead, Director. Dated this 25th June, 1868. Entered G. G. Henkt Lake, General Manager. Mr. Reginald Eead was at this time a director of the European Society, but had formerly been a director of the BngUsh Widows' Fond Association, and Mr. Henry Lake was the general manager of the European Society, having previously been general manager of the British Nation Associa- tion, but he held no ofBce in connection with the English Widows' Fund Association. The executors now stated that the assured never had any knowledge of the order of the 14th June, 1862, to wind-up the BngUsh Widows' Eund Association, nor of the advertisement that was issued. Mr. WiUiam Oarpmael, jun., also stated that, by having the indorsement placed on the policy, he had no intention of varying the tenns of the contract, further than was necessary for the purpose of correcting the mistake as to the age of Mr. Nicholson, and that he had no intention of entering into a new contract by ivay of substitu- tion or novation. The executors now claimed to rank as creditors against the English JVidows' Eund Association 1. For such a sum of money as may be adjudged and considered as sufficient and proper compensation for the assured, for the breach by the association of their contract, and their inability to perform the same — or at least, 2. For such a sum of money as the claimants would have been entitled to receive by or in respect of the policy, if they had brought their claim thereon against the association within the time prescribed by the advertisement for credi- tors of that association to bring in their proofs, or as would have been adjudged or considered as sufficient and proper compensation to the assured for the breach by the associa- tion of such contract, and their inability to perform the' same if such claim had been brought in within the time so limited. And if it were held they were entitled onlv to the second claim, then they further claimed either that the British Nation Association and the European Society had received the premiums rightfully, and had become liable, as guarantors of the English Widows' Eund Association, to pay the present value of the policy, less , such a sum as might be paid by the English Widows' Eund Asso- ciation, or that they had received the premiums wrongfully and were liable to refund them. Fooks, Q.C.Jand E. Ga/rpmael for the executors. — The policy is stiU a subsisting policy in the Eng- lish Widows' Fund Association. The assured never brought in a claim under the winding-up of that association, because he never knew anything about the order to wind-up. The premiums ■were paid to the British Nation Association, and after- wards to the European Society, as the' authorised agents of the English Widows' Fund Association. It cannot be said that the order to wind-up was a revocation of the authority previously given to the British Nation Association to receive the premiums. Napier Higgins, Q.C. and Montague Ooohson ap- peared for the official liquidators of the European Society, but were not called upon. ThMrsday, Feb. 6. Lord Westbuby. — When this case was opened to me yesterday on , behalf of the claimants, it appeared tp me to be attended with many technical difficulties, arising from the fact that it was desired to wind-up this company under an order made by the Vice-Ohan- cellor Wood, as long ago as the 14th June, 1862. Now the winding-up directed by that order would of course proceed upon the state of the law which then existed. At that time the Companies Act 1862 had not come into operation or effect ; con- sequently, the limited and very imperfect powers for winding-up the conjpany, given by the anterior statutes, would be all that could be referred to in carrying the order into effect, It ought to have occurred to me that, if the claimant had merits, I could easily provide the necessary machinery reqiiisite for winding-up effectually, by making a supplemental order to wind-up, founded to a cer- tain degree upon the Vice-Chancellor's order, and of course upon the terms of not disturbing anything that had been rightly done under that order. That removes all the difficulty that I felt. I mention it for the purpose of stating, if there be any other case such as this, what would be the course, that I should take, to add to an order to wind-up, made previous to the present statute of 1862 — the course that I should take in pro- viding the means for carrying that order com- pletely into effect. I come now to the merits of this application. The order of the Yice-Chancellor was made on the 14th of June 1862 ; it was published in the London Gazette, and also in several papers ; the publicity required by the law was given to that order. I see it was published twice in the Gazette in July 1862 ; it was published in the Times and the Standard three times in July 1862 ; in the Norwich Union papers on, the 5th July 1862 ; in the Fxeter and Plymouth (gazette on the 4th July 1862. Now the survivor of the two gentlemen who effected this policy was then alive. He was a gentleman intimately connected, by reason of his business, with the legal profession, and more especially with the equity bar. He was a man of great in- telligence, great attention to business, and not at all a persQn likely to be non-observant of matters that affected a portion of his property by proceedings in the courts of justice. Now, that gentleman lived, I think, until the year 1867; therefore, there were at least five years after the making and the publication of this winding-up order. His son, the executor, now comes forward and says that, to the best of his belief, his father had no knowledge whatever of these proceedings in the Vice-Chancellor's Court, affecting the com- pany with whom he had negooiated and effected this policy. No doubt that gentleman speaks the truth according to his belief ; but it is by no means a sufficient statement to induce me to repel the inference, that must arise upon these publications, that I have named, and the notoriety of the pro- ceedings — that Mr. Carpmael must have notice 98 THE LAW TIMES. [May 3, 1873. European Assttraitce] Oarpmael's Case. [Aebitbation. imputed to him of the making of that order and the proceedings under it. Now Mr. Carpmael appears from and after that time to have paid the premiums on his pohcy to the persons who had taken a transfer of the business, or or of the contracts which had been made with the English Widows' Fund Association. That was, in the first place, the British Nation Asso- ciation ; in the second place, the European As- surance Society. Mr. Carpmael paid the pre- miums upon this policy to the British Nation Association in the first instance. The contention on the part of Mr. Eooks is, that he paid them to the British Nation Association as the agents, as the persons authorised by the dealing between the British Nation Association and the English Widows' Fund Association to receive those pre- miums. Well, unfortunately, the moment the winding-up order was madcj any such authority came to an end. The contention before me is, that the English Widows' Fund Association was treated by Mr. Carpmael as an existing society, and that in paying his' premiums to the British Nation Association he did so under the belief that the British Nation Association had still an authority from the English Widows' Fund Association to receive those premiums. Now it is quite clear that, if I am right in imputing to him from the advertisements notice of the winding-up order, he could not have acted under that impression, for he must have known, and his advisers, if he wanted advisers on the matter (which I do not think he did), must have known, that the winding- up order had put an end to the authority con- tained in the antecedent contracts; supposing there was authority to receive the premiums as money payable to the English Widows' Fund Association, he must have known that that authority had been put an end to by the operation of the winding-up order. From and after that order, everything payable tp the Bnghsh Widows' Fund Association would have to be paid to the manager of that association ; or, at all events, if the manager was not entitled to claim them as belonging to the English Widows' Fund Associa- tion, the authority to receive them by the British Nation Association as the agents df the English Widows' Fund Association would be entirely at an end. My impression and conviction, therefore, are that when the order was made, of which I must fix Mr. Carpmael with notice, Mr. Carpmael thought it wise and right to abandon the English Widows' Fund Association, and to elect to take the substitute for them, namely, the British Nation Association. Any argument, therefore, derivable from the supposition that Mr. Carpmael continued to pay the premiums to the British Nation Asso- ciation, as having the authority of the English Widows' Fund Association, is, I think, entirely at an end. But now I do not mean to rest my decision upon that ground, although it would be quite sufficient for the decision I propose to make. But the next thing that we come to is the trans- action between the two companies; and here again Mr. Carpmaiel, the executor, makes oath that he does not believe his father was aware of the nature of that transfer, or of the fact of the contract between the two companies ; so at least I understand his affidavit. WeU, but that is a representation of Mr. Carpmael's belief; I know not on what that belief is founded, but I am quite sure that any ground for that statement is entirely removed by the correspondence, that passed between Mr. Carpmael and his execu- tors and the British Nation Association and the European Society. It is idle to contend that any gentleman receiving, those letters headed as they are — I think first the receipts and afterwards the letcers, " The British Nation," and then afterwards headed " The European Assurance Society " — it is idle to suppose for a moment that a gentleman of intelligence would not of course infer, if he had not already known it, from the heading of those letters, that he was no longer •dealing with the original society, but was dealing with a substituted society. Well, in that state of things comes the material transaction, upon which my decision is founded. Mr. Carpmael's executor discovered the mistake in the terms of the policy, and he applied to the manager of the European Assurance Society to correct that mistake. There was some power of correcting mistakes of that kind, reserved by the original indorsement upon the policy — ^the terms that are, I think, indorsed at the back of the policy. ' Well, that mistake having been discovered, the proposal is made by the one side, and accepted by the other, that there shall be a most material alteration in the contract, and that the sum of money shall be reduced by reason of the age of the assured person being two years more, I think, than the age at which it was repre- sented. That is carried into effect by this indorse- ment, which is a new agreement which was made, upon the policy : — It having been proved by baptismal certificate that the within-named William Nicholson was two years older at the time of assuring than stated in the proposal referred to herein, it is hereby declared that in consequence of such difference in age the sum assured payable in respect of this policy shall be reduced to 275i. 2s. The yearly premium herein mentioned remains unaltered. The age of the within-named William Nicholson is hereby admitted. Then that is signed by a gentleman of the name of Reginald Bead. Some attempt is made by the claimant to suggest that as he, Reginald Read, had been a director of the English Widows' Fund Association, he was regarded by the parties as signing still in that capacity. It is impossible to accept that. I have already stated it is impossible for me not to impute in law to Mr. Carpmael knowledge of the winding-up order. But even that excuse, slight as it is, is wholly removed by the fact that Reginald Bead was, at the time of this indorsement, a director of the European Society, and by the fact that Henry Lake is described here as " General Manager," and he was the general manager of the European Society at the time, and a gentleman with whom the correspondence had taken place, that terminated in the agreement recorded by this indorsement. Now I am extremely un- wUIing, and shall always remain unwilling, to transfer one pohcyholder from his original com- pany to another company, unless I have clear and indisputable proof that the policyholder did deliberately elect to take the second company in lieu of the former, that must be founded upon facts and circumstances that unmistakeably warrant that conclusion. And what have I got here ? I have got a company that has been wound-up, notoriously wound-up, or ordered so to be, at least six years before the date of this indorsement. During those six years I find premiums that have become due on the policy, paid not to any repre- sentative of the original coihpany, but to the May 3, 1873.] THE LAW TIMES. 99 European Assurance] Bentinok's Case. [AUBITBATION. company who had bargained for a transfer of its business and its engagements. I find that whioh is quite plain, that this gentleman, a man of great intelligence, must have considered that it was for his benefit to give up the insolvent company, and to take to what he believed to be the solvent company; and all his actions evidence that. Then I find that capped and concluded by a deliberate agreement with the transferee company,- altering the terms of the original poUoy, and in efiect substituting a new contract for the old. There can be no doubt that this is a case, therefore, in whioh all liability of the original company has been abandoned and given up, and, in lieu and substitution for the same, the engagement of the transferee company has been accepted. There has been great courage in m^ing this application. I dare say that it was an appli- cation, that it was desirable for the estate of Mr. Carpmael to have made, that the question might be concluded, and therefore the executors, I dare say, felt themselves justified, and properly justified, in making it. But it was a hopeless thing, under the circumstances ; and I must dismiss the appli- cation with costs; to be paid by the executors. Solicitors for Mr. Oarpmael's executors, Wilson, Bristow, and Carpmael. Sohcitors for the ofiBcial liquidators of the European Society, Mercer and Mercer. Thwsday, Feb. 6. Bentinck's Case. Company — Windmg-up — Contributory— Bectifica- tion of register — Incomplete transfer of shares — Approval by directors of proposed transferee inferred from their silence. A contract to trajnsfe/r sha/res, which had not been carried into effect through default of the directors, ewrried into effect i/n the windimg-wp by the sub- stitution of the tramsferee' s name for the trans- feror's in the register. The provisions in the deed of settlement of the E. Company, for the tramsfer of shares, were that a shareholder, wishing to tramsfer his shares, was to give to the directors notice of his wish, and to request the directors to certify their approval or disapproval of the proposed transferee, amd such notice was to describe the full name and the pro- fession or calling, and the place of abode of the proposed tramsferee, and if the proposed trans- feree should be approved of, or if the directors should not withim, fov/rteen days propose some other person to take the sha/res at the market price {in which case the person so proposed should be considered as approved of by them) then the shaa-e- holder m/ight, according to a form to be sanctioned by the directors, transfer his sha/res to his own proposed transferee, who thereupon should, on exeauting at the office of the company, or at some other prescribed place, the deed of settlement, or a covenant to abide by the provisions of the deed, be entitled to call upon the directors to place his name on the register of shareholders as thetpro- mrietor of such shares ; and no share was to be transferred to any person, who had not been first approved of or considered as approved of by the directors ; a/nd if any transfer should be mSde, or attempted to be made, to any person who had not been so fi/rst approved of, such trO/nsfer was to be void. On the Wth April 1871, B., who held 545 sha/res in the society, sold 500 to M., and requested the society to take proper steps for t/ra/nsferring them, to H. in their books. He was told in reply that a formal notice of a wish to transfer must be ser\,t by him, and that, when it was approved of, a form of transfer woidd be sent. He sent the notice on the Idth April to the society, together with the certifi- cates a/nd six shillings in stamps. On the 2&nd April, in reply to an inquiry as to the receipt of these, he received a, telegram — " Notice, certificates and stamps duly received ; will be attended to on the 25th April." On the ^iih April he executed a transfer of the shares to H. in consideration of 371. l(is.,butnotim,theform required by the directors. On the 26th April his solicitor called at the society's office, a/nd was informed that " the notice would be laid before the directors that day." On the next day, he was told, that "inquiries were being made in the country as to the responsibility, of H." On the 28th April, being the day of the expiration of fou/rteen days from the receipt of the transfer notice, the soKaitor again called at the office a/nd tendered the transfer for registra- tion ; but it was merely copied. On the 3rd May, he was told that the directors had decided not to accept amy more transfers, until they had taken the opi'nion of counsel. On the 10th Jume, the successful petition to wind-up the society was pre- sented; and on tfie 26th June, B. was informed by the secretai y that " no tramsfer cam possibly be passed wntil after the petition before the Vice- Chancellor has been dismissed." In January of the following yea/r, the order to wind-tip was made. B.'s na/me was still on the register; and it was placed by the official liqmdator on the list of contributor ies. On his applying to have his name removed from the list, it was Held that it rrmst be removed. Withim the fourteen days after the receipt of the transfer-notice, the directors expressed no imtimation of thei/r umwill- ingness to accept H. as a transferee ; they m/ast, therefore, be considered to have approved of H. ; amd thereupon a right to transfer to him arose to B. The informal tramsfer, that was executed, would not be treated as a tramsfer, but as evidence of a contract for vali{,able consideration between B. amd H. This contract would have been ca/rried into effect bitt for the defaMlt of the directors. Since the order to wind-up the company, the' con- tract could not be carried into effect by following the regulations of the deed of settlement; and the only way of ca/rrying it into effect was by substi- tuting H.'s name for B.'s on the register. The same was held with respect to the remaining forty-five sha/res, of which a similar transfer was executed by B. to H. on the Zrd May 1871 ; amd with respect to which, B.'s soUdtor had on the same day tendered the transfer for registration at the offices of the society. A call homing been made on the shares on the 20th May 1871, it was ordered that the alteration in the register should be made, only u/pon B.'s pay- ing this call without interest, within three weeks from the date of this order. This was a question as to an incomplete transfer of shares. The deed of settlement of the European Assur- ance Society provided in clauses 96 and 97, that any sharehol4er inight give notice in writing to the directors of his wish to transfer his shares, and request them to certify theirapproval or disapproval ]00 THE LAW TIMES. [May 3. 1873. European Assurance] Benttnck's Case. [Arbitration. of the person to whom he proposed to transfer the •shares ; in the notice he was to describe the full ' name, and the profession or calling, and the place of abode of the proposed shareholder ; and, if such person should be approved of, or if the directors should not within fourteen days propose some other person to take the shares, proposed to be transferred, at the then market price. (in which case the person so proposed should be considered a ■, approved of by them), then the shareholder mig>.t, according to a form to be sanctioned by the directors, transfer the shares to his own proposed transferee, who thereupon might, on executing at the office of the company, or at some other pre- scribed place, the deed of settlement or a covenant to abide by the provisions of the deed, be entitled to call upon the directors to place his name on the register of shareholders, as the proprietor of such shares ; and no share was to be transferred to any person who had not been first approved of or con- sidered as approved pf by the directors ; and if any transfer should be made, or attempted to be made to any person who had not been so first ap- proved of, such transfer was to be void (vide clauses 96 and 97 swp. p. 11.) On the 10th April 1871, Mr Bentinck, who held 645 shares in the society, sold 600 of them to Mr. Hardman : and thereupon wrote to the secretary of the society, giving information of the sale, and requesting that proper steps might be taken for having the shares duly transferred in the books' of the society. On the 12th April 1871 he received the following letter in reply : Dgar Sir,— I have your letter of 10th instant, and note contents. If you will return me the transfer-notice duly completed, it shall be laid before the next transfer com- mittee, and when approved, a form of transfer will be sent you. Tours faithfully, D. Easum, Secretary. Mr. Bentinck filled up the transfer notice on the 13th April 1871, and sent it to the secretary, to gether with 6s. in stamps, and the certificates of the shares. On the 22nd April, Mr Bentinck had received no reply, and accordingly telegraphed to the secretary to know whether the documents had arrived ; and the following telegram was received from the secretary in reply : — „ . 22nd April 1871. Not7ce, certificates and stamps duly received ; will be attended to on Tuesday next. An oversight in not writing. This Tuesday was the 25th April 1871. On the 24th April 1871, Mr. Bentinck procured an ordinary form of transfer, and filled it up and executed it. He thereby, in consideration- of 37?. 10s., transferred 600 shares in the society to Mr. Hardman, who also thereby agreed to* accept the same. On the 26th April 1871, Mr. Bentinck's solici- tor called at the office of the society with reference to the transfer and saw the secretary, who told nim "that the papers respecting such transfer were all right, and that the notice would be laid before the directors on that day." On the next day, the 27th, the solicitor called again at the office and was told by the secretary that inquiries were being made in the country ^l toJt^K responsibility of Mr. Hardman." ' On the 28th April, being the day of the expiration of fourteen days from the receipt of the notice of transfer the sohcitor again called at the office and tendered the transfer of the shares for registration, but the- secretajy merely took a copy of the transfer. With regard to the remaining forty-five shares, on the 24th April 1871, Mr. Bentinck executed a transfer (similar to the other one) of these forty- five shares to Mr. Hardman in consideration of 3Z. 7s. U. On the 3rd May 1871, the solicitor went to the office and handed to the secretary a formal notice of the wish to transfer these forty-five shares to Mr. Hardman, together with the certifi- cates of the shares. The secretary accepted the notice and certificates, and, as the solicitor now alleged, " admitted that a sufficient tender of the transfer had been made on Mr. Bentinck's behalf, but said that the directors had decided not to accept any more transfers, until they had taken the opinion of counsel, but he did not state on what point." The ' solicitor never received any further communication from the society with respect to the transfers. On the 10th June 1871, the successful petition to wind-up the society was presented, and subse- quently Mr. Bentinck received the following letter : — 26th June 1871. Dear Sir, — Tour transfer not having been passed, I beg to return you 6«. per P.0.0. sent for stamp and fee. No transfer can possibly be passed, until after the petition before the Vice-Chancellor has been dismissed, and the extraordinary general meeting called for the 7th proxo. has been held.— Tours faithfully, D. Easum, Secretary. A call of 6s. per share had been made on the 545 shares on the 20th May 1871, but had never been paid. On the 26th Aug. 1871, an action was com- menced against Mr. Bentinck, in the Common Pleas, to recover the sum of 138Z. Is., in respect of the call. On the 13th Nov. 1871, a notice was served on the society and on Mr. Hardman, of a motion to rectify the register of the society by the substitution of Mr. Hardman's name for Mr. Bentinck's. The motion was heard on the 4th Dec. 1871, and was ordered to stand over, until the winding-up peti- tions, that were pending, should be disposed of. On the 12th Jan. 1872, the order to wind-up the society was made. In the winding-up, the official liquidators placed Mr. Bentinck's name on the list of contributories. Mr. Bentinck now contended that he was en- titled to have his name removed from the list. Notice of the application had been served on Mr. Hardman^ but he did not appear. S. M. Jachson, Q.C., for Mr. Bentinck.— On the 14th April the society received a notice of the wish to transfer the 600 shares. They did not express any disapproval of the proposed trans- feree within fourteen days. Accordingly under the 96th clause of the deed of settlement, Mr. Bentinck had a right to infer that the proposed transferee was approved of {Lloyd's case, sup. p. 26.) He then had a right to transfer; and but for the default of the society, the transfer would have been registered, and Mr. Hardman's name would now have been on the register. The same arguments apply to the forty-five shares. Ilontague GooTcson, for the official liquidators. — There was no justification for inferring the ap- proval of the proposed transferee by the directors. It IS not as if the directors had remained silent throughout the fourteen days after the notice. vVithin that period they intimated that they were making investigations into the position of the pro- posed transferee. It was, at this time, the interest May 31, 1873.J THE LAW TIMES. 101 Etjeopeah Assukance] Bbntinck's .Case. [Akbitbation. of the society to keep the register as it then stood. [Lord Westburt. — Tou cannot found yourself on any such thiag, because, for aught I know, Mr. Hardman is as good as Mr. Bentinok.] I inter that he is not, only from the fact that the one gentleman is anxious to get off the list, and the other does not appear. [Lord Westbitry. — ^Tou are not warranted in inferring that a man is not solvent because he does th9.t. Tou might have shown that this transaction was intended to bring an insolvent man into the place of a solvent one ; but you have done no such thing.] Supposing the proposed transferee has been approved of, he is to execute, at the office of the society, a deed according to the form prescribed by the directors. This was not done ; and the transfers were not in accordance with the form prescribed by the directors, and they were exe- cuted before the alleged approval of the proposed transferee. Thus the measure of Mr. Bentinck's right is exactly that which would be given in a decree for specific performance. The contract cannot be performed specifically and the register amended : because the provisions in the deed of settlement cannot be followed. What should be done, therefore, is to leave Mr. Bentinck's name on the register, and to declare that Mr. Hardman is bound to indemnify him. With regard to the call, this was made on the 20th May 1871, and while it remained unpaid, no effective transfer could be executed. Lord Westbukt. — In this case there is some question with regard to the true meaning and effect of the 96th clause of the European Society's deed of settlement {sup. p. 11). The other ques- tion is, whether anything was done by Mr. Bentinck, which at all postponed, or deprived him of, the right to insist upon the benefit that he gets_ by the expiration of the fourteen days. Now there can be no doubt that the clause is very badly worded ; but I see enough in it to lead me to arrive with satisfaction at a certain conclusion. With regard to the first alternative, I adhere to what I said in Lloyd's case {sup. p. 25), namely, that besides the two things here expressed, there was another thing necessarily implied, that the directors might, at any time during the fourteen days, have intimated their refusal, their un- willingness to accept the person proposed by the shareholder as his transferee. Now it appears that they did nothing of the kind. It appears that they received a notice, which was not quite in conformity with their set rules. And it appears that they sent down another form of transfer- notice expressed in the manner which they had been in the habit of using. That transfer- notice, so sent down by them, was formally filled up by Mr. Bentinck, and it was sent up to the company, and received by them on the 14th April 1871. Now I have to inquire, whether between the 14th April and the 28th April anything was done or said between the parties, which would have the efiect of depriving Mr. Bentinck of the right to in- sist, that at the end of the fourteen days the satisfaction and approval of the directors must be presumed. Now I find nothing of the kind that amounts to that. At first I was disposed to think that the language of the telegram of the 22nd April might amount to this — that the notice would be attended to on Tuesday next, and that that was acquiesced in by Mr Bentinck. But if I should come to that conclusion, it amounts to nothing, because it turns out upon inquiry that Tuesday was the 25th; the 25th, therefore, was well within the fourteen days. I find, therefore, nothing whatever suggested that should deprive Mr. Bentinck of, the right to say: — "Fourteen days are gone, and you must be taken to have approved of my nominee." If that be the true interpretation of the deed, there is nothing here to deprive Mr Bentinck of the benefit of it. This clause in the deed of settlement is intended to facilitate the transfer of shares by shareholders, but at the same time to preserve to the company a check on the transferees proposed, and an oppor- tunity of inquiring into their solvency and their responsibility. Accordingly, the deed gives first to the directors the power of at once rejecting or approving. Then it goes on to give them a limited term of fourteen days. But as, if they had an unlimited term, they might com- pletely stop all transfers by shareholders, it deals with them in this way — if you are silent during fourteen days, we shall have a right to infer at the end of that time, that the nominee is approved of. And that condition of things runs throughout the whole of these two clauses. In the 97th it is again and again referred to: — "Approved of" or " considered as approved of;" and it is clear to my mind, therefore, that the deed means this — that the shareholder should have a right to say : — "My nominee ought to be considered as approved of, if you have allowed fourteen days to pass without intimating that he was approved of, or without requiring me to agree to a longer period of time for the purpose of making the investigation." Now I beg that it may be observed, what is the condition of things, resulting from that view of the case, at the expiration of the fourteen days. Mr. Bentinck had executed to Mr. Hardman a form of transfer. I attribute no weight to that instrument as a transfer, nor could the society have been required to accept it as such. But the instru- ment is evidence of a contract for valuable con- sideration between Mr. Bentinck and Mr. Hardman. And therefore I find that at the expiration of the fourteen days Mr. Bentinck, who had sold subject to the necessity of getting the approbation of the company, bad got that approbation, and therefore the contract between Mr. Bentinck and Mr. Hard- man was free from all difficulty and all impedi- ment, and remained only to be carried legally into 'operation. Now, Mr. Oookson this morning has dwelt very much upon the necessity of that contract being carried into execution, modo et forma, as prescribed by the 96th clause ; and I agree that that would be so, if there had not been interposed an impossibility of complying with those directory enactments, in consequence, of the insolvency of the company, and of the petition to wind-up pre- sented against the company on the 10th June 1871. In the interval of time, between the 28th of April and that time, there is abundant evidence that Mr. Bentinck was very desirous that the contract should be carried into effect. But he never was told, on his application at the . office, or on his tender of the "second transfer, that had been prepared after the regular notice had been given to the company, that they would require him to attend at the office, and there to execute a deed of transfer. I have al- 102 THE LAW TIMES. [May 31, 1873, EimOPEAN AsSTTRAirOB] BENTfifCK's Case. [Abbiteaiicot. ready observed that, before that could be ■done, the company became utterly ■ insolvent — legally insolvent. I may also advert to the com- munication made to Mr Bentinck by the company, antecedently to that time, in ■which they stated that no transactions could be carried into effect, and that was repeated on the 26th June — " No transfer can possibly be passed." There is no xoom, therefore, for the least imputation of delay •against Mr. Bentinck, so as to deprive him df the Tight of having this contract legally perfected. It Twas the duty of the directors to recognise the con- tract, and to admit their vrillingness to carry the •contract into effect modo et forma, as prescribed in the 96th clause. They did not do so. There was mo delay in Mr. Bentinck, and the time came, when it became utterly impossible to act on the parti- "Cnlar directions contained in the 96th clause, l)ecause by the petition and by the order that followed on it, the whole of these requisitions have ibecome impossible, and are in effect utterly swept aiway. The contract, therefore, remains for me to ■perform. The only mode in which it can be per- formed, which it is the clear right of Mr. Bentinck to require, and the clear duty of Mr. Hardman to submit to, is by my ordering the one person to \>e taken off the register, and the other to be put on ; ■for in no other way, under the order to wind-up, can an effectual transfer be made ; and in no way ■whatever can these directory regulations as to the mode and form of transfer, contained in the 96th .and 97th clauses, now be comphed with. If you are satisfied of the validity and binding force of the contract, the ownership of the shares passes from Mr. Bentinck to Mr. Hardman, by virtue of that contract. All the rest is mere -regulation as to the mode in which the legal interest shall be transferred. If the company were not in its ■present state, it would be right to abide by those ■regulations. But now that the company is no ■more, that other powers have usurped the place of the directors, those regulations cannot be com- plied with ; and the only thing that remains is for me to give substantial effect to the existing contract ■of sale, that has passed the property, by directing that the register shall be made in conformity with that contract. An opportunity was afforded to the ■official liquidator, if he could have used it to advan- tage, to show that there was something or other ■between Mr. Bentinck and Mr. Hardman, or some- tthiug in the situation of Mr. Hardman, that would Tender it wrong on my part specifically to perform that contract. Nothing of the kind has been sug- :gested. I am not at liberty to hold that Mr. Hardman is not as solvent a man as Mr. Bentinck. I see nothing to induce me to -believe that the ■company will suffer by Mr. Hardman being substi- tuted for Mr. Bentinck. If there be anything, it -was the duty of the official liquidators to have -found it out, and presented it to me as a reason why the contract should not be performed. The only thing that is r emainingfor me to con sider, is the form in which I shall direct this change of ■ownership to be made, that is, in which I shall direct the contract to be carried into effect. Now, before ■the company broke up, a call was made. At the time of the call, Mr. Bentinok's name was on the register. The call bound Mr. Bentinck, but did not bind Mr. Hardman. That call, no doubt, being •made after the contract between Mr. Bentinck and Mr. Hardman, Mr. Bentinck will have the right, if he pays the call, to recover the money from Mr. Hardman ; but the security of the company is'Mr. Bentinok's name alone. With regard to the other calls, I take it that they attach upon the person who is the real owner of the shares, that is, Mr. Hardman. If Mr. Bentinok's name remains on the register by reason of his non-payment of the call, it will remain there for the purpose of enforcing against him the payment of the calls. But the real otvnership of the shares remains in Mr. Hardman; and, therefore, the call subse- ' quently made must be enforced against him, when he is put upon the. register. These are the plain facts of the case, and the mode in which they must be dealt with consistently with the esta- blished rules of equity, and consistently with reason and justice. The directors no doubt were in default. I will have every solemnity treated as executed, which the directors might have done but for their default. Mr. Bentinck has a right to say, therefore — " These regulations about the transfer being executed at the office were matters that were rendered impossible by the default of the directors, and that default continued until the time when the order was made." Mr. Welsby, Mr. Bentinok's solicitor, in his affidavit states clearly and distinctly what took place at the office, and he says that when the second tender was made, Mr. Easum duly accepted the notice, certificates and money, and admitted that a sufficient tender of the transfer had been made on Mr. Bentinok's behalf; but he said that the directors had decided not, to accept any more transfei-s until they had taken the opinion of counsel : he did not state upon what point they desired that opinion. Mr. Welsby never received any further communication from. Mr. Easum or any' other person. The directors, therefore, put themselves wholly out of any longer having the power to insist upon the transfer being made in that form ; and »o it continued until now it is im- possible to make it ; and I must make it in con- formity with the power vested in me, and there- fore I declare that this contract was a valid con- tract as between Mr. Bentinck and Mr. Hardman ; and I declare that a sufficient notice of the con- tract was given to the company, in conformity ■with the regulations of the deed of settlement and the practice of the company; and I declare that, inasmuch as the company allowed fourteen days to elapse from .the receipt of that notice without making any objection, Mr. Hardman is to be taken as having been accepted and approved of by the company, and that the contract thenceforth ought to have been carried into effect ; and I declare that its not being carried into effect in the manner pointed out by the directions con- tained in the 96th clause, was due to the defa^cdt and refusal of the directors ; and that, inasmuch as those directions cannot now be observed, the only mode of giving effect to the contract is by substituting Mr Hardman's name for Mr. Ben- tinok's upon the register. But I direct that that shall be done only upon payment of the call that was made on the 20th May, within three weeks from the time of the order, but without interest. ■ The joint official liquidator must pay the costs of the aotion-at-law, as well as the costs of to-day, and of the proceedings in Chancery. Solicitors for Mr. Bentinck, Bimccm and Mer- ton. Solicitors for the official liquidators of the Euro- pean Society, Mercer and Merc&r. May 31, 1873.] THE LAW TIMES. 105 EUBOPEAN AsSTJRANCB] Thomas Bkown's Case. [Abbiteaiion. Jan.'i&nd, andi^eS. 6tt. Thomas Bkown's Case. Company — Winding-up— Contributory — Incom- plete transfer of shares — A person, whose name it is proposed to substitute on the list of contribu- tories in place of another's, must he before the court. Wliere an application is made to have A.'s name taken off a list of contributories, on the ground that he was not the owner of the shares at the time when he was put upon the list, hut had bond fide transferred them to B., and that B. was his repre- sentative, then those facts must be proved, unless they are admitted, and they can be proved only by having B. in cov/rt to have the facts established. This was a question as to an incomplete transfer of shares. The deed of settlement of the European As- surance Society provided, in clauses 96 and 97, that any shareholder might give notice lq writing to the directors of his wish to transfer his shares, and re- quest them to certify their approval or disapproval of the person to whom he proposed to transfer the sharei. In the notice he was to describe the full name, and the profession or calling, and the place of abode of the proposed shareholder. And if such person should be approved of, or if the directors should not within fourteen days propose some other person to take the shares, proposed to be transferred, at the then market price (in which case the person so proposed ahould be considered as approved of by them), then the shareholder might, according to a form to be sanctioned by the directors, transfer the shares to his own proposed transferee, who thereupon might, on executing at the office of the company, or at some other pre- scribed place, the deed of settlement or a covenant to abide by the provisions of the deed, be entitled to call upon the directors to place his name on the register of shareholders, as the proprietor of such shares. And no share was to be transferred to any person who had not been first approved of, or considered as approved of, by the directors ; and if any transfer should be made,, or attempted to be made, to any person who had not been so first approved of, such transfer was to be void {vide clauses 96 and 97, sup. p. 11). In the beginning of March 1871 Mr. Brown, who held ten shares in the society, entered into a written contract with Mr. Dunn, of 20, HUl-town, Dundee, iron worker, for the transfer of the shares to him. On the 16th March 1871, a transfer of the shares to Mr. Dunn was executed by Mr. Brown in common form, and was sent to the society by Mr. Haggart, Mr. Brown's solicitor; and, thereupon, the following correspondence en- sued : — 16th March 1S71. Dear Sir, — I send you herewith transfer by Mr. T. Brown, Dundee, in faTour of Mr. Bernard Dnnn, of ten shares, nnmbered from 185,991 to 186,000 of the European Assurance Society's stock, presently standing in Mr. Brown's name, and I will thank you to register the transfer, and send the certificate in favour of Mr. Dnnn of the shares, which now belong to him. Gr. Haggaet. The Secretary,. European Assurance Society. 17th March 1871. Dear Sir, — I have your favour of yesterday, and beg to return you transfer Brown to Dunn as the same is in- formal, the company only allowing transfers on its own special form, and which have been previously approvedl by the directors. I enclose you a form (rf notice of transfer, and if you wOl fill up the same and return it with share certificate and stamp and fee, it shall haTe» attention. D. Eabum, Secretary. G. Haggart, Esq. 20th March, 1871. Dear Sir, — I duly received your favour of 17th instant,,, and now send you herewith notice of transfer by Mr. T.. Brown of his ten shares of the European Stock to Mr. B» Dunn, and will thank you to send me the formal transfer- for signature of the seller D. Easum, Esq. G. Haggaet. 31st March 1871. Dear Sir, — I sent you, on 20th inst., duly signed by- Mr. Thomas Brown, certificate of transfer by him to Mr. Dunn of ten shares European Stock sold by my client. I expected you would ere this have sent me the ofSciali assignation for signature by the seller, but it has not yet reached. Mr. Dunn is anxious to get his title ; and on his behalf 1 beg to intimate that he is to insist on his' name being entered in the list of shareholders in respect- of his purchase. I hope you will send any form of transfer yon wish to me by Monday first, so that I may get it signed; but faiUng your doing so, the purchaser will hold by the legal transfer already executed by the seller, whether it is recognised by you or not. D. Easum, Esq. , G. Haggaet. Ist April 1871. Dear Sir, — In reply to your favour of yesterday, I beg- to inform you that a transfer committee will be held on; Tuesday next, when Mr. Brown's application shall b© duly considered. D. Easum, Secretary. G. Haggart, Esq. This Tuesday was the 4th April, but the committees did not meet on that day, and it was arranged that the next meeting should be on the 18th April,, 1871. Mr. Haggart, not having received any- further communication with respect to the shares^ again wrote : — 12th April 1871. Dear Sir, — I was duly favoured with your letter of the 1st instant, stating that a transfer committee was to meet on the following Tuesday, viz., on the 4th inst., when Mr. Brown's application would be duly considered. I have since been waiting to hear from yon further in tha matter, but as yet I have no information. I will thank, you to inform me at once what was done with the appli- cation, and whether you are to send me a formal assig- nation for signature. At the same time I must inform you that the purchaser of the shares holds the transfer T formerly sent you, and means to insist on it being a legai. transfer to him. G. Haggaet. , D. Easum, Esq. 18th April 1871. Dear Sir, — ^Your letter of the 12th instant is to hand- The share committee, which was called for to-day, did not ^it. I am, therefore, unable at'present to forward yon form of transfer, as you request. G. Haggart, Esq. D. Eastjm, Secretary. On the 5th May 1871 a circular notice of a call of 5s. per share was sent to Mr. Brown ;, and on the 9th May 1871 Mr. Haggart wrote to the secretary, insistiDg that Mr. Brown was no- longer a shareholder of the society, and was accor- dingly uot liable to pay calls. The secretary wrote- in reply : — 12th May 1871. Dear Sir, — In reply to your letter of yesterday, I beg tof say that Mr. Brown's transfer has not been authorised by the directors. Until this has been done, and the oaU paid, it cannot be received. I received your transfer ancL call notice. D. Easumj Secretary. G. Haggart, Esq. On the 10th June 1871, the petition to wind-up the society was presented, on which the winding-up order was made on the 12th Jan. 1872. In conse- quence of the proceedings in this petition, thfc secretary wrote : — 104 THE LAW TIMES. [May 31, 1873. EUBOPEAN AsSURASCB] Thomas Brown's Case. [Akmtbation. 20th June 1871. Dear Sir. — Tour transfer not having been passed, I teg to return the Is. Gd. sent for stamp and fee. No transfer now can be made until after the petition before the Vioe-Chancellor has been dismissed, and the extra- ordinary general meeting' called for the 7th prox. has been held. D. Easum, Secretary. T. Brown, Esq. In the winding-up Mr. Brovra's name Was still on the register, and the official liquidator had accordingly placed him on the list of contributories. Mr. Brown now applied to have his name re- moved from the list and Mr. Dunn's substituted in its place. No notice of the application had been served on Mr. Dunn, who, it appeared had gone to America. Maclachlan appeared for Mr. Brown. Lord WestbuRy. — I cannot take you off, unless I have the power of putting Mr. Dunn on, and for that purpose he must be brought before me. Tou say you did transfer to Mr. Dunn, and you say to the company — " TOu ought to have taken his name and put it on." In all these cases, where the application is that the registered shareholder requires to have another person's name substituted in lieu of his own, you must begin by making out the title of the contributory to have that person's name substituted. Here it is said that you did contract to sell to Mr. Dunn, and that you made a transfer to him. I must have that substantiated, and it must be for that purpose proved in his presence, and therefore you must bring him here, in order to have that done. Maclachlan. — On that point I would refer to Be the Joint Stock Discount Gompanii, Fyfe's case (L. Eep. 4 Ch. 768). Lord Wbsibubt.— The person with whom Dr. Fyfe, in that case, contracted, is shown to have been dead, and shown to have been insolvent, and there is no representative of his estate. It would be an idle thing to contend that you must wait until you have a representative of an insol- vent estate, to put that representative on the register in Men of Dr. Fyfe but here we have a living man, and, according to your statement, a solvent man at the time of this contract, and that man may be reached. It is quite plain, if you regard it upon principle for a moment, and not get bothered by the variety of authorities, it is this : if I apply to have my name taken off the list of contributories, on the ground that I was not the owner of the shares at the time when I was put upon the list, but had bond fide transferred them to somebody else, and that that other person was. my representative, then I must prove these facts, unless they are admitted, and I can prove them o^ly by having that other person in court to have the fact established. That is precisely your case here. It would be very different, if there was an application to the company to take the name off outhis ground— that everything had been com- pleted between you and another person, and that your name had not been taken off by the company by reason of their not performing some formal matter, which it was requisite for them to do, in order to give final completion to your contract. I here being no question as to the validity of the contract, then you might make your application against the company alone. Here the application is founded upon a contract which, as far as I know, has never been duly carried into effect, which the company altogether dispute, and which you cannot proceed to establish, unless you have the person, with whom you have contracted, present as a party to the suit. If you think you can comply with that exigency, I will give you time to try and do so. Maclachlan. — The transferor and the transferee have both executed a transfer good in Scotch law : this transfer was forwarded by Mr. Dunn's soli- citor to the company, and is now in the hands of the official liquidator. Lord Westbuey. — There is no difference betwe en Scotch law and English law upon this point : in both it is necessary to see that any transfer alleged to have been made has been made modo et forma, as prescribed by the deed of settlement. The notice of transfer, that was sent, would have to be submitted to the directors before you would receive the form of transfer. Then you see it is an executory contract, and I cannot deal with it, unless you bring both parties to it here. A con- tract completed, save for the formality which it was the duty of the directors to do, and which you requested them to do, and which they neglected, might have to be decided between the company and you; but an executory contract, left altogether incomplete, I cannot deal with, unless I have both parties to that contract before me. Maclachlan. — I would ask' that the case may stand over, in order that Dunn may be brought before the court. Lord Westbuby. — I warn you that it will be at the peril of costs. Tou have this dif- ficulty in your way, that you have not even the foundation-stone, because the first thing requisite for the transfer would be to show that your appli- cation for leave to transfer, and your nominee, were approved of by the directors. All that is wanting. I point it out to your attention, in order to tell you that, if it is substantiated that there was no approbation by the directors, it would be a fatal allegation; and if you answer me by a delusive argument that that was the fault of the directors and that they are to blame, my answer is, that you must pursue your remedy against the directors personally who were in this alleged default ; but you cannot have a transfer in favour of another individual substantiated, so as to put that other individual in your shoes upon the register of the company. Maclachlan. — After the lapse of a fortnight we were entitled to infer the approbation of the di- rectors. Lord Westbuby. — If there be a fortnight's silence, you may infer approbation ; but here there was not a fortnight's silence, because you were told that a transfer committee had been appointed, . and that your application would be brought before that committee : that is not sUence. Finally, you were told that there would be no approbation. I will let the case stand over for a week, to give you an opportunity of writing to your Scotch solicitor. If your client determines to go on, you shall have, of course, a longer period of time to find out and serve Dunn. If, however, after^con- sidering the case, your client intimates to the official liquidator that he thinks it a desperate matter to pursue, and does not go on, then I must make him pay the costs. Feb. 6th. — Mr. Brown now declined to sepve Mr. Dunn with notice to appear ; and the application was accordingly dismissed with costs. May 31, 1873.] THE LAW TIMES. 105 EuKOPEAN Assueance] John Mukgatroyd's Case — Scarisbrick's Case. [Arbitration. Solicitor for Mr. Brown, T. P. Henderson. Solicitors for the official liquidators of the European Society, Mercer and Mercer. Monday, Feb. 3. John MuEGATRoyD's. Case. Company — Winding-up — Oontrihutory — Married woman — Maii-ied Women's Property Act 1870 — Husband and wife placed on list of coniributories conjointly, m respect of shares held by her when unma/rried. Shares were registered in the name of an im7narried woman ; she married in 1866, but the fact of her marriage was not brought to the knowledge of the company. In 1872 (i he received circulars from his com- pa/ny, stating that they had made an arrangement with the E. Life Assurance Society for under- taking the obligations of the policies, and that the E. Society would in future be the substitute of the It. Company : and furtlier, that " tlie terms and conditions of your policies remain, of course, un- altered by the arrangement, and although each policyholder is fully guaranteed for all claims under the p^-esent policies by the covenants of the JE?. Society in the deeds between the two companies carrying out tlie arrangement, any of the assured desiring it may, for greater security, either have an indorsement to that effect made on their policies, or may have a policy guaranteeing the existing policy, or a new policy of the E. Society." An- nexed to one of these circulars was a circular from the E. Society, announcing the transfer of ^isiness, and offering a new policy or a guarantee policy, or an indorsement. S. accordingly sent in his policies to the E. 'Society, who placed upon them an indorsement : — " It is hereby declared that, subject to the pruciso hereunder stated the funds and property of the E. Society . . . shall he liable for the due payment of the sum of lOOOi. [with profits) assured by the within policy with the a. Company .... Provided always that the future premiums payable in respect of the said policy, be duly paid to the said E. Society at the times and in the mcmner set forth in the said policy." E. was a non-pa/rticipaiing policyholder, and after receiving the amalgamation ci/)'cula/rs, sent his policies to the E. Society, who placed on them a similar indorsement, except that the parenthesis contained the words " without profits " instead of the words " with profits." Subsequently to the amalgamation the premiums were in either case paid to the E. Society and • .receipts accepted from tJiem. No bonus was ever declared by the E. Society on any of the policies. It was now contended that the words "withprofits ' and " without profits " referred to the profits of the E. Society, cmd that, consequently, the indorsement conclusively showed a novation with that society/ : Held that these words " with profits " and " without profits " tvere merely descriptive of the original policies granted hy the B. Company, as partici- pating and non-pa/rticipating policies respectively ; and that there was no novation, the indorsement being a contract in addition to, and not in sub- stitution for, the origimM contract with the It. Com- pany : thus S. and H. were entitled to claim on their policies against the R. Company, which originally granted them. When a policyholder accepts from the new company an indorsement or other contract, which cannot ho included within the limits of the original contract with the old company, hut which is an addition to it, either of cm advcmtage, or of a new mode of proceeding, then the contract so containing this enlargement is, in the c^hsence of amy exprest stipulation relating thereto, held to be in substitu- tion for, and not in addition to, the original con^ tract. A policy containing some provisions ivith respect to the payment of the premiitms in quarterly instal- ments, it was Held that, before presenting the policy for valuation, the whole of the annual premium must be paid for the year current ivhen the winding-up order was made, and not merely the quarterly instalments up to the date of the winding-up order. Novation of the Civil Law referred to. Scott's Case was a question of novation. On the 23rd Dec, 1848, the Eoyal Naval, Military and East India Company Life Assurance Society granted to Major General G. T. D. Scott, a partici- pating policy on his own life for the sum of lOOOI. Subsequently two other policies were granted to him. In 1866 the Royal Naval &o. Society was dis- solved in accordance with pi-ovisions of the deed of settlement, and its business was transferred to the European Assurance Society, which undertook to pay and satisfy its liabilities, debts and engage- ments. (Vide sup. pp. 47, 48.) In Aug. and Sept., 1868, General Scott re- ceived the three circulars that were sent to the policyholders on the amalgamation, in one of which it was stated (inter alia) that " the terms and con- ditions of your policies remain, of course, unaltered by the arrangement; and although each policy- holder is fully guaranteed for all claims under the present policies, by the covenants of the European 110 THE LAW TIMES. [June 14, 1873. EUJBOPEAN AjSSTmANCB] Scott's Case ; -Hoet's Case. [Akbiteation. Society in the deeds between the two companies carrying out the arrangement, any of the assured desiring it may, for greater security, either have an indorsement to that efiect made on their poHoies, or may have a pohoy guaranteeing the existing policy, or a new policy of the European Society." (See these circulars, in Swift's Case, sxip. pp. 89, 90.) Accordingly General Scott sent his policies to the office of the European Society; they were subsequently sent back to him, indorsed with the following : — The European Assurance Society, Chief Offices, 316, Regent Street, London. Eoyal Naval and Military, No. 1649. Memorandum. — It is hereby declared that, subject to the proviso hereunder stated, the funds and property of the European Assurance Society of London, as provided for in the deed of settlement of the said society, shall be liable for the due payment of the sum of lOOOl. (with pro- fits), assured by the within policy with the Eoyal Naval, Military and East India Company Life Assurance Society of London, to the person or persons legally entitled to receive the same. Provided always that the future premiums payable in respect of the said policy, be duly paid to the said European Assurance Society, at the times and in the manner set forth in the said poKcy. In witness whereof the common seal of the said society havingf been hereunto affixed, we, three of the directors and the manager of the said European Assurance Society, haveherennto set our hands this 14th day of March, 1867. Printed receipts of renewal premiums issued from the chief office wiU alone be admitted as valid. John Hedgins, "> Directors of the P. C. Hatwabd, > European Assurance Henbt Depfell, } Society. Henbt Lake, Manager. Seal of the European Aasurance Society. The premiums were subsequently paid by General Scott to the European Society, the following being the forms of the receipts for the years 1866-68 : — European Assurance Society. Empowered by special Act of Parliament. With which is consolidated the busines of the Eoyal Naval, Military and East India Company Lif6 Assurance Society. Chief Office, 316, Eegent Street, W., London. (Eoyal Naval and Military Department), 17, Waterloo Place, PaU Mall, S.W. Eeceipt, No. ^ 8587. Sum assured lOOOJ. PoUoy of Eoyal Naval and Military Society. No. 1649. Eeceiyed this 27th day of December, 1866, the sum of 241. 12s. 6d., being the payment of twelve months' pre- mium from 23rd December, 1866, for an assurance on the lifeof Colonel Henry Scott, effected by the before named poHoy, and as now adopted and guaranteed by the European Assurance Society, 24f. 12s. 6d. John Hedgins, > -r,. , James Pbnnell, / Directors. Countersigned E. G. Beattmont, Agent or Cashier. Printed receipts for renewal premiums issued from the chief office are alone admitted as valid. The forms for 1869-71 were :— Royal Naval, Military, and East India Life Department. European Assurance Society. Empowered by special Act of Parliament. Chief office : No. 17, Waterloo Place, PaU Mall, London, S.W. Premium ^68 Os. 9d. on the life of Col. H. Y. D. Scott. Received the 5th April 1869 the sum above-stated, being the amount of premium for the renewal of Policy No. 2744 for twelve months from the 11th March 1869 aooording to the tenour of the said policy. EoBERT Norton,"! T^• j. MiCHL. QiriNN, I Directors. (Countersigned) J. L. Tbmplbton. Printed receipts for renewal premiums issued from the chief office, and signed by two directors, will alone be admitted as valid. The renewal notice, sent from time to time by the European Society to Mr. Hort, was in the following form : — European Assurance Society (Empowered by special Act of Parliament), With which is consolidated the business of the Eoyal Naval, Military, and East India Company Life Assur- ance Society. Chief offices : 316, Eegent Street, London, W. Eoyal Naval and Military Department : 17, Waterloo Place, Pall Mall, S.W. 186— Sir — I beg leave to acquaint you that the premium in the under-mentioned policy on the life of will become due on the , and that in order to continue policy in force, the said premium must be paid within thirty days from that date at the office of the Eoyal Naval and Military Department of the Society, 17, Waterloo Place, PaU MaU, London. Printed official receipts issued from the chief office, and signed by two directors, are alone admitted as valid, and no other should on any account be accepted ; policy- holders, who pay premiums without receiving official receipts in exchange, do so at their own risk, and on their own responsibility. Heney Lake, Manager. Policy No. — (Eoyal Naval, Military, and East India Company Life Assurance Society), Sum assured — Premium — It is requested that all remittances be made on bank drafts (payable at sight), andfor security crossed " & Co.," or by Post-office orders in favour of the manager; the- expense can be deducted from the remittance. N.B. — The premium cannot be received after the ex- piration of the days of grace, without'the production of satisfactory evidence of health, and the usual fine. Office hours daily 10 to 4 o'clock ; Saturdays, 10 to 2 o'clock. Important. — It is particularly requested that notice of any alteration of address be at once forwarded direct to the chief office, London ; the notice should draw attention to the change, and every notice letter, &c., whether containing a remittance, information, or inquiries, should state number of policy and name of assured. No bonus was ever declared by the European. Society in respect of these, or any other policies issued by the Eoyal Naval Society; the bonus,, that was declared by the European Society subse- quently to the amalgamation, being a bonus for a period of five years prior to the amalgamation. Immediately after the amalgamation in 1866, the European Society removed their business to the offices of the Royal Naval Society; the name of the Eoyal Naval Society was retained on the wire blinds in the window, and the name of the European Society was affixed to the exterior of the building. On the 12th Jan. and the 1st March 1872. respectively, orders were made to vrind-up the European and the Eoyal Naval Societies. In the winding-up General Scott claimed to be entitled to prove on his pohoies against the Eoyal Naval Society. The official liquidators, on the other hand, contended that there had been a novation with the European Society, and that that society was alone liable on the policies. Cradmall and Henderson, for General Scott, contended that the indorsement was in no way a release of the liability of the original company, the Eoyal Naval Society. [Lord Westbuhy. — Ton see there are some very ugly words in the indorsement— " with profits." What are those profits ? Supposing they are taken as designating only a participating policy,, what are the profits? Would they not be the profits of the European Society P] .June 14, 1873.] THE LAW TIMES. Ill Etjkopean AssiraAiiCE] Scott's Case; Hort's Case. ,[Aebiteation. Cracknall. — The words " ■with profits " are de- .Bcriptive of the original policy, which was a participating one ; and they refer to the profits of the company that granted the policy, the Royal Naval Society. There is not a new contract in -Substitution for the old one. General Scott was told merely that his policy was now guaranteed by the European Society. [LoBD WESTBtfRT. — General Scott had a policy in the Royal Naval Society ; under that policy he was entitled, or would have been entitled, to certaia benefits. If the European Society guarantee what he is entitled to, the estimate of what he is entitled to, must of course then be made, as if there had been no union between the two com- panies, and he could have claimed such profits only to be appropriated to his policy as he would have had if the old company had continued its business. And if he had kept himself strictly within that, he would have had nothing more than an additional secuiity for an existing con- tract, which would have made no change in that contract. There would have been nothing ■of what has been called novation, nor anything •which may be called substitution. "Whether the question could have been worked out, so as to have .ascertained, after the business became one, what would have been the profits of the original com- pany if there had been no amalgamation, it may be difficult to see, but that does not affect the question in the abstract. That would have been the state of a mere guarantee superadded to the original contract ; but here I have a case, in which the proposition is, that the funds and property of the European Society shall be liable for the due jjayment of the sum of lOOOZ, " with profits," which I take to amount to this — "Tou shall have the same benefit in our company and its profits, as if you had originally effected your policy with our com- pany." That seems to be, does it not, the whole ■contract? ... I cannot bring my mind to see that this indorsement is merely the expression of a guarantee. If you can make it out to be that, it will be a security for a contract already exist- ing, to which the guarantee is superadded ; but this is not to my mind the mere expression of what is denoted by the term "guarantee," but ■ amounts to an original independent contract . . . Tou see if the indorsement had been limited only to this expression, that the policyholder should be entitled to sue the European Society, just as the Royal Naval Society would be entitled to sue them upon the general guarantee, the general guarantee given by the European Society to the Royal Naval Society, would be a contract, upon which no individual policyholder could sue. Sup- .pose the indorsement then had run thus : " The Royal Naval Society having transferred their business to the European Society upon a con- tract that the European Society should indemnify them against all their debts and engagements, the European Society hereby declare that they are liable so to do, and that the policyholder (No. so ■ and so) shall have a right, by virtue of this in- dorsement, to treat that engagement as having been made with him individually, as well as with the company " — that would have been a mere de- claration that the covenant to indemnify should ■ extend to him ; and if it had been limited to that, I should have said that it would not have amounted to a substitution of a new contract, or of a new liability, in the place of the old. But here I have got an engagement beyond that, that the funds and property of the European Society, as pro- vided by itself, should be liable for the due pay- ment of the sum of lOOOL That may be_ an aggregation of rights in favour of the policy- holder, beyond the simple right that he would be entitled to under the covenant to indemnify. It does not stop there — but it goes on to say that this shall be given to him " with profits." I do not think that these words properly meanwith such profits as the holder of a pohcy originally effected with the Royal Naval Society would be entitled to. . . . Under a covenant to in- demnify, there would be a right of action by the one company against the other, but that right of action is a different thing to the contract con- tained in the indorsement, and might lead to different results. I wUl not have a creditor fastened with a new contract, of which he knew nothing, and his assent to which is to be inferred only from equivocal circumstances ; but if I find a creditor'going in and accepting a document, which I cannot keep within the limits of the original contract, but which appears to be an addition to it, either in the sense of the addition of the new person liable, or of an advantage, or of a new mode of proceeding, then the contract, so con- taining this enlargement, is a substitution for the original contract that does not contain it. If you make out here that "profits" agree with the participle " assured," then the profits will be none other than the profits assured by the original policy. If so, there is no addition. . . . Another element in the new contract is the con- dition that the future premiums be paid to the European Society. This is" a new condition. If I get an indorsement with a new condition, different from the condition in the original policy, is not the contract so far a new contract ? The European Society say: ""We wiU. give you a direct resort against us and our property, provided you give us a direct resort against you for the payment of the premiums."] Cracknall. — The person assured is under no obligation to continue to pay his premiums. Erom the language contained in the circulars announcing the amalgamation, it is clear that this payment of the premiums to the European Society was in- tended to be a payment to them, acting as the agents of the Royal Naval Society. [Lord "Westbtjbt. — The preUminary circulars would not control the language of the contract contained in the indorsement ; it speaks for itself, and the manner in which it presents itself to my mind is this — that after that indorsement given by the European Society, and accepted by General Scott, the relation between the European Society and General Scott was a very different status or relation from that which previously existed, and if there be a different relation, there is in effect a different contract ; and if in a transaction of this kind the policyholder goes and accepts a different contract, and agrees to stand in a different relation, it is a case in which the latter contract is de- liberately substituted for, and takes the place of, the first. Now insisting, as I mean to do, upon the rules, that I have already expressed myself willing to be bound by in cases of novation, I cannot possibly refuse to hold that it is a case of the substitution of the one contract for the other, when -the second contract puts the parties in a different legal relation to each other to what they 112 THE LAW TIMES, [June 14, 187S EUKOPEAIf AsSDEAlfCE] Scott's Case ; Hoet's Case. [Akbiteatiox. stood in by virtue of the original contract. Under the covenant to indemnify the Royal Naval Society, a policyholder of it could not have interfered to prevent the European Society from dealing with its property, but under this indorsement the policy- holders of the Royal Naval Society, being put in immediate privity of contract with the European Society, might have prevented it from doing many things which they could not prevent under the covenant of indemnity ; therefore there was a new relation, involving larger rights on the one side, and new and more extended liabilities on the other. Now, the Roman law says of this, that both contracts shall be regarded as continuing un- impaired, the one by the other, unless it be ex- pressly stipulated to the contrary. General Scott is offered an indorsement (see the circulars swp. 89, 90) : he sends in his policy to receive that indorsement, and he receives it back with the in- dorsement. Now the first rule is : — Tunc solum novationem fieri quotiena hoc ipsum inter contrahentes expressum fnerit, quod propter novationem prioris obligationia oonvenerunt : (Justinian's Institutes, lib. iii., Tit. xxix., par. 3 ; see this paragraph, swp. p. 44.) A novation of the first contract shall be effected only when this very thifig shall have been expressed between the con- tracting parties, namely, that they had met together fm the purpose of maldng a Tiovation of the prior contract, g General Scott sends in his policy for a new in- dorsement. The company make it and send it back. The thing to be done, and which they mutually agreed on, is the thing expressed in that indorsement. If that be different from the former contract, it proves that the parties had agreed on a new contract, that is, on novation ; and if it be not different, then the civil law says : — Aljoquin manere et pristinam obligationem et secun- dam el aooedere {sup. p. 44). Both the original contract remains, and the second contract becomes an adjunct or addition to it. Now follow it out. I must hold that the two parties intercommunicated — that would be the con- vent io— to have indorsed upon the policy that which is contained in this indorsement. Then the in- dorsement must speak for itself. If it be a new thing, that would be a novatio. It is quite clear they intended this new thing to be brought into being ; and if the new thing be another and a dif- ferent contract, then I am afraid I must hold it is a case of substitution for, and not of addition to the original contract. At present I am inclined to decide against you, Mr. Cracknall; but I will not ex- press that opinion until I have considered the matter]. Napier JSiggins, Q.O. and Montague Coohson appeared for the official liquidators of the Royal Naval Society. Judgment was reserved (vide infra p. 114). Tuesday, April 8. Hoe-t's Case. This was a question of a similar kind to Scott's case. The facts were the same, except that here the policies were non -participating policies, and the indorsement placed on them contained in the parenthesis the words " without profits," instead of the words " with profits ;" so that the indorse- ment ran thus : — • Memorandum.— It is hereby declared that, subject to the proviso, hereunder stated, the funds and property of the European Assurance Society of London, as pro- ™ledfor inthe deed of settlement of the said society,' shall be liable for the due payment of the sum of 2001. (without profits) assured by the within policy with the Eoyal Naval Military and East India Company Life As- surance Society of London to the person or persona legally entitled to receive the same. Provided always that the future premiums payable in respect of the said policy be duly paid to the said Euro- pean Assurance Society, at the times and in the manner set forth in the said policy. There was also a further question as to the pay- ment of premiums. One of the policies contained a provision for payment of the premiums by quarterly instal- ments. It recited that the directors of the Royal Naval Society had undertaken the proposed as- surance at a certain annual premium, which the directors had agreed to accept by instalments as thereinafter mentioned ; but subject to the under- standing that the whole premium for any year covered by the assurance should be considered as having become due on the commencement of the year, notwithstanding the agreement to accept such premium by instalments, and that the instal- ments thereof (if any), remaining unpaid at the termination of the assurance, should be retained out of the sum payable thereunder, or in case no money should be payable thereunder, should be receivable or recoverable for the benefit of the society from the assured or his representatives by the directors as a debt due to them. And the policy witnessed [inter alia) that if Mr. Hort should on the quarterly days therein mentioned, or on such and so many as should happen in the lifetime of Mr. Hort, pay to the directors the quarterly sums therein mentioned, and if he should die before the 10th Dec. then following, or if he should live beyond that date, and should on or before every 11th Dec, 11th March, 11 June, and 11th. Sept. during the continuance of the assurance, pay to the directors a certain sum, being the quarterly instalment of the annual premium, and if, in the event of the death of Mr. Hort during the currency of any year ending on the 10th Dec, his executors, &c., should pay to the directors the amount that might remain unpaid for the premium for the year current at his death, then the capital, stock, and funds of the society were to be liable to pay to his executors, &c. the sum assured. The premiums were paid by quarterly instal- ments, and the receipts given by the Royal Naval Society ran as follows : — Eeceived of the Eev. C. J. Hort the sum of 11. 7s. lOd., being the quarterly premium due to 11th Dec. 1865, for the assurance of 2001. on the lite of the Eev. C. J. Hort, the particulars of which are expressed in a polioy bearing the number and date above mentioned. The receipts given by the European Society ran thus : — Eeceived this day of Dec. 1866 the sum o£ 11. 7s. lOci. being the payment of three months' premium from 11th Dec. 1866, for an assurance on the life of the Eev. C. J. Hoit effected by the before-named policy, and as now adopted and guaranteed by the European Assu- rance Society. Received the 13th Dec. 1869 the sum above stated, being the amount of premium for the renewal of policy. No. 3657 for three months, from the 11th Dec. 1869 according to the tenor of the said policy. The other policy contained similar provisions whereby the premiums were to be paid by halE yearly instalments. On the 1st March 1872 the Royal Naval Society was ordered to be woun<^-up. The then current year of one of the policies expired on the 11th Dec. 1872, and the last quarterly instalment of premium paid thereon was that which besainc June 14, 1873.J THE LAW TIMES. 113 EiraopEAir AssuaANCE] Scott's Case; Hoet's Case. [Aebitkation. payable 11th Deo. 1871. The current year of the other policy expired on the 4th Feb. 1873 ; and the last half-yearly instalment of premiums paid thereon was that 'which became payable on the 5th Feb. 1872. The official liquidators new contended that, before being admitted to prove against either of the societies in respect of his policies, Mr. Hort must pay the instalments of the premiums remaining unpaid thereon for the year current when the winding-up order was made, on the ground that, notwithstanding the agreement to accept the premium by instalments, the whole premium was, by the terms of the policies, to be considered as having become due at the commencement of the year ; and, under Wallberg's case (sti,p. p. 50) any premium, that became due on a policy before the order to wind-up was made, was to be pa d before presenting the policy for valuation. Ince appeared for Mr. Hort, and admitted that the premiums must be paid in full for the current year. Napier Higgins, Q.C. and Montague Cookson appeared for the official liquidators of the Eoyal Naval Society, and contended that the indorsement on the policies created a substitution of the liability of the European Society in the place of that of the Royal Naval Society. They referred to two cases in the Albert Arbitration : Hawtrey's case, 16 S. J. 713 ; Eeilly's Albert Eep. 138; Dale's case, 15 S. J. 886 ; Eeilly's Albert Eep. 11. [Lord "Wbstbtjkt. — The indorsement was by way of addition, but not by way of substitution. There is an engagement between the two com- panies. They want to make that engagement palatable to the policyholder. They say to him " Ton may have an indorsement that the European Society, receiving your policy, shall be liable to you in addition to the original contracting party, namely, the Eoyal Naval Society. This man sends in his policy. What did he send it to the European Society for ? Not to be burnt, and to receive a new policy ; but to have this indorsement, and it was returned to him with this indorsement. Is there any trace there that the European Society and Mr. Hort met on the footing of making a new contract that should supersede the old P This indorsement is perfectly consistent with the arrangement be- tween the two companies, and perfectly consistent with the assurance given to the policyholder that, although he took this indorsement, the terms of his policy should remain unaltered. Now, just let me remind you, the difficulty that Ifeltin Scott's case was this — Scott's case had the words " with profits " instead of the words " without' profits"; and at first, probably from want of apprehension on my part, I thought it was possible to contend that the words " wUh profits " meant with profits of the European Society, and under that misapprehension I^ said, if it admits of that interpretation, then it is a new interest and a new contract, added to the original contract, and making the man participator in the profits of the European Society, whereas he was only entitled to participate in the profits of the Royal Naval Society. But looking at this, I am satisfied that the words "with profits" have no more meaning than the words "without profits," and are nothing in the world more than a de- scription of the policy.] Napier Higgins — In this circular reference is made to the participating policyholders ; and I understand, as a fact, that 1^11 the policyholders, who were taken over as bon\is policyholders, did participate in the profits of thk European Society. [Lord Westbuut. — I do not understand how that could be, nor is it stated as a matter of fact, but if it were a matter of fact, it was inconsistent with their relative rights and with the legal title.] Lord Westbuby. — The indorsement is to be taken together with the offer that was made to the policyholder. The offer made to the policyholder is most distinct {see the circulars, sup. pp. 89, 90). First of all, he has this assurance given him : — " The terms and conditions* of your policy remain of course unaltered by the arrangement." Then he is told that, although he is fully guaranteed by the covenants of the European Society in the deeds between the two companies, yet he may have an indorsement to that effect, or he may have a guarantee policy, or a ne w policy. The reason of all this is perfectly plain. The con- tract between the two companies, that the European Society should indemnify the Royal Naval Society though an engagement between the two, of which the Royal Naval Society might sue to have the benefit, would not enure to give the individual policyholder a right to any action or suit against the European Society thereon. The first propo- sition is — " Ton shall have an individual engage- ment between yourself and the European Society, that the European Society will guarantee the Royal Naval Society." That is the one object pro- posed of the indorsement. The general contract between the two companies would be made by that indorsement to enure to the individual benefit and to the augmented right of each policyholder, who desired to have that extension of the general engagement to himself individually. The second thing, that he is told, is that he may have, it he is not satisfied with that, a guarantee policy. Now both those alternatives are built on the basis of the original Royal Naval policy continuing; and they are things superadded to the existing en- gagement. And all the difficulty about this matter has arisen from the misapprehension of a primary principle, namely, that there may be two coherent and concurrent obligations, and that the existence of the second obligation may be perfectly compatible with the continued in- tegrity of the first. There are in this particular cape, and in several others that have come before me, two obligations. The one is supplemental and subsidiaiy to the other. Well, then, novation hunters, when they found two obligations, jumped to the conclusion that the second was to be a substitute for, and to be destructive of, the first. There could not be a greater mistake as to the original principle of novation. There is another passage in the Digest, which may be added to the passage drawn from the Institutes which I have already cited (vide sup. p. 44), and which is more pertinent to the present case. It occurs in the 46th book of the Digest, second title. After the general observation that all things may be- come subject to novation — that means only that there' was no subject that could be made the sub- ject matter of contract, that might not be made the subject of a change in that contract, or of a substitution of a new contract for the original — that general observation is followed by these words : — 114 THE LAW TIMES. [Jane 14, 1873. ExTKorBAN Assuuakce] Scott's Case ; Horn's Case. [Absituation. Damxnodo sciamns novationem ita demam fieri, si hoc agatur, ut novetnr oiligatio — casternm, si non hoc agatur, dnse ernnt obligationes (a). As long as we are ferfecfly aware that a renewal, or a substiiuiion, will thus he finally effectuated, if ifiAs he treated of — if it he the treaty — that the contract he re- newed or substituted ; hut if this he not the subject of treaty, there will be two contracts or obligations. ITow applying that rule, which is the rule of common sense, I ask this question — When Mr. Eort sent in his policy to the European Society, did he send it in, in order that he might receive a new policy in substitution for, in annihilation of, iihe first? No such thing; res ipsa loquitur; he sent it in for an indorsement, which he got. JTow in what light was he to regard that indorsement ? The answer is given by the letter that was ad- dressed to him. (Vide, sup. p. 90.) He may for greater security have an indorsement on his policy. If then we apply the letter, which shows "the terms of the treaty between the parties, we shall be bound to come to the conclusion, that i;here was no question — hoc non agatur, in the language I have read — it was not a question, not a treaty, not an application or dealing on the sub- ject of novation, but it was an application and a dealing to have an indorsement by way of further se- curity. Further security to what ? Further security to the original policy. Well, then, if there was no treaty on the subject of novation, if that did not enter into the mind of either party, why am I to be asked to do anything so unjust, as to fasten on equivocal language, and make it amount to proof — in the absence of everything like confirma- tion of the conclusion — amount to proof that the parties were dealing for a novation, and accepted what was given by the one side and taken by the other, as amounting to novation. Now in the -early part of these proceedings J said I would do no such thing. I will not derive inferences or pre- sumptions from equivocal matters, to the effect of destroying men's existing rights, unless I am clear that they met together and treated one "with the other, with the intention and for the purjjose of efi'ectuating a novation, that is, ef- fectuating the substitution of a new contract in lieu of the old. Now this indorsement, regard Ti)eing had to the position of the parties, is the most innocent thing in the world ; and it would require wonderful ingenuity to pick out of it any circumstance, that should extend it beyond what it plainly means, and make it amount to evidence, that there was an intention to do away with what ■existed, and to substitute something new. Now the position of these two companies, it must be lemembered, was this — the Eoyal Naval Society tad^ transferred its business to the European Society ; the European Society was armed by the Eoyal Naval Society with authority to receive the premiums in its place; the European Society was made the agent of the Eoyal Naval Society to receive those premiums ; and the assured svere in- formed that they might pay their premiums to the European Society, treating the European Society as the agent only, as the authorized receiver of the (a). The following' is the whole of the paragraph : — Omues res transire in novationem possnnt. Quod- cunque enim sive verbis contraotum est, sive non verbis, novari potest et transire in verboram obligationem ex qua cnnque obligatione ; dummodo soiamus novationem ita demum fieri, ai hoc agatur, ut novetur obligatio ; CEeterum 81 non hoc agatur, dnse erunt obligationes.— Digest Lib. M, Tit. 2, par. 2. Eoyal Naval Society. In that state of things, the European Society send back thepolicy, that was sent in for an indorsement of additional security and not for destruction ; they send back the policy with a declaration that, subject to the proviso thereafter stated, the funds and property of the European Society should be liable for the due payment of the 200Z. of the existing policy, without profits. That is the language of the indorsement. Now, do you destroy a contract that A. shall pay B. lOOOZ. by adding to it afterwards, that not only shall A. be liable, but that B. 0. and D. shall also be liable. Well, there you have guatuor ohligationes; here you have dues obligationes, two obligations to do the same thing. The Eoyal Naval Society re- mains bound; the obligation of the European So- ciety is superadded to the existing obligation of the Eoyal Naval Society. But then, as the European Society has agreed to give the Eoyal Naval Society that superadded security, on the condition that it was to be the receiver of the premiums, the condi- tion of the superadded security is expressed in the following proviso, — ^provided always, that the future premiums be duly paid to the European Society. A very necessary proviso, because there is no corresponding contract taken in terms from the assured to pay the premiums. The Eoyal Naval Society was bound, on the condition of its receiving those premiums, to transfer the right of receiving them to the European Society, and the European Society expresses its obligation to be on the same condition, namely, of the premiums being paid to the European Society. Well, now, what is the condition of Mr. Hort? When he took the indorsement, he put it by the side of the letter, and he said : — " Well, I will not interpose, to object to this union, because my situation remains unaltered ; and even if the one discontinues busi- ness, and the business is transferred to the other, yet the transfer does not in the smallest degree affect the liability of the original company ; and the transfer, so far as I am concerned, is only to bring within my reach, as the person liable, the transferee company." I have no difficulty, there- fore, in holding here that Mr. Hort's original policy remains untouched and unaffected ; that his original right continues in all its integrity ; and that in respect of that original right he has a clear title to claim as against the first contractor, namely, the Eoyal Naval Society. I must also say, I think there is no doubt it has been very properly considered by Mr. Hort's counsel, that the premium, that became due and that was only for the convenience of the parties split into four quarterly payments, must be paid in full by Mr. Hort. Ince. — I do not know whether your Lordship proposes to go on to make a declaration as regards the European. Society. The scope of your Lord- ship's judgment is that we have a secondary claim against the European Society. Lord Westbtjey. — I think so, but that is not an immediate subject of determination. There wiU be nothing in the order that wiU preclude you from taking your proper coui'se. Tuesday, April 8. Judgment was given in Scotlfis case also. Lord WESTBtrRT. — ■ With regard to Scott's case I am very sorry that I gave the parties the trouble of coming June 14, 1873.] THE LAW TIMES. 11& European Assurance] Joshua Muegatroyd's Case. [Arjjiiration. here again to hear judgment upon the matter, for I ought to have decided it at the time. Looking at it again, I am astonished that I felt any difficulty, because the words, " with profits " are plainly words that axe a representation only of the desGription of the policies, his pohcies with the Eoyal Naval Society being pohcies with profits, whereas Mr. Sort's policies are with- out profits. I must hold, therefore, that there is no novation in the case of General Scott, and that he also is entitled to claim as against the Eoyal Naval Society. Now, these things have been brought forward, I suppose, by common con- sent, and perhaps it may be useful to have them discussed, in the hope that there may not be another repetition of this subject ; therefore, with that hope, I shall give to the two claimants. General Scott and Mr. Eort, their costs out of the Eojral Naval Society's estate ; and, of course, the official liquidator, who has done quite right in having this fully examined, will have his costs out of the estate also. * Solicitor for General Scott, W. T. Marmmg. Solicitor for Mr. Hort, T. Donnithome. Solicitors for the official Uquidators of the Koyal Naval Society, llercer and Mercer. Thursday, Feb. 6. (a) Joshua Musgathotd's Case. In a case of a simila/r character to Bentinck's case, ante, p. 99, an order was made for the case to stand over, with liberty for the trans- feror, within three lueeJcs, to pay the call that had been made, and so bring himself into tlie position of being able to fitlfil his contract with the trans- ferees. They must then be brought before the court with a specific applicaiion against them to have the contract enforced. There was an important difference between this ease and Bentinck's case. In the latter, on the expi- ration of the fourteen days, the transferor had tried as far as lie could to complete the contract until he was prevented by the proceedings on the petition to wind-up ; whereas in this case from Dec. 1869 to June 1871, the date of the presen- tation of the petition to wimd-vp, no attempt was made to have the contract completed.. This was a case of a similar character to Ben- ivnck's case, sup. p. 99 — with reference to an in- complete transfer of shares. The deed of settlement of the European Assur- ance Society, provided in clauses 96 and 97, that any shareholder might give notice in writing to the directors of his wish to transfer his shares, and request them to certify their approval or disap- proval of the person to whom he proposed to trans- fer the shares ; in the notice he was to describe the full name and the profession or calling, and the place of abode of the proposed shareholder ; and if such person should be approved of, or if the directors should not within fourteen days propose some other person to take the shares, proposed to be transferred, at the then market price (in which case the person so proposed should be considered as approved of by them), then the shareholder might, according to a form to be sanctioned by the directors, transfer the shares to his own proposed transferee, who thereupon might, (a) Heard in the second sittings. on executing at the offi.<» Oct. 25, 1873.] THE LAW TIMES. 127 EUBOPEAN AsSUKAKCE] BuENs's Case. [Aebitbation. agent of Mr. Williams selecting a purchaser in order to accomplish the object of Mr. Williams, clothing that purchaser with the character of being a person of some means, or at least a person that could command some Kttle money, so as to give the transaction the character of a hona fide sale, instead of its being a transfer of liability only, and of nothing like property, with a bribe to the transferee of 21. 16s. to accept that liability. Can Mr. Williams stand ia this room and tell me that it was a proper thing to do to take 1000 shares on ■which there were still calls to be made, involving a great liability, and to go down and pick out a pauper to manipulate the whole matter through the agency of Mr. Bensusan, who carries it out in the best possible manner — that manner however being at variance with the truth. And here Mr. WilUams comes into a court of justice, and in reality tells me this : — " I verily believe that, if the directors had known the truth, and had known who Mr. Gilbert was, had known the manner in which he had been brought upon the stage, if they had known the misrepresentations through- out the whole of this transaction, stUl they would not have been deterred, and ought not to have been deterred, from putting Mr. Gilbert upon the list of shareholders." Now does anybody believe that ? Is there any gentleman in this room, that believes that the directors with full knowledge of these circumstances, would have been bound to put Mr. Gilbert upon the list of shareholders P For it is not merely what they might have done, but it is what they might have been justly and rightly required to do. If giving them the knowledge that Mr. Williams had, you can still say it was their duty to have put Mr. Gilbert upon the list, then I admit that the transaction is one that must pass muster. But it is no such thing; it is plain to everybody that there was a studied desire and attempt by false statements to conceal the truth; it is plain to everybody that, if the truth had been known, the directors would have committed a grievous error in putting Mr. Gilbert upon the list of shareholders. It is perfectly clear to my mind that Mr. Williams, if it were a, case of another kind, would have been the first to have complained of it ; and, therefore, by that I try the case, and I hold that it was an improper transaction to attempt to smuggle Gilbert, a con- firmed pauper, on to the list of shareholders, and that the transaction ought to be condemned and ought to fail; and Mr. Williams must pay the costs of it. Now I hope these principles wiU be recollected ; for I see we shall have a great many of these transfers, and I can see that many per- sons may attempt to escape by adhering to the letter, and not entering into wl^t ought to be the spirit, o£ the rule to be taken therefrom, but I shall try it by that rule of honesty, and where it does- not answer that rule, I shall . condemn the party by annulling the whole attempt, and by making him pay all the' costs. Of course Mr. Williams will be restored to his former position on the list. Tou wiU erase Mr. Gilbert's name, and restore Mr. Williams to his former position as shareholder upon the hst ; and let Mr. Williams pay all the costs of and incidental to the case. Solicitors for Mr. WilKams, Boulton and Sons. Solicitors for the oflScial liquidators of the Euro- pean Society, Mercer and Mercer. Wednesdwy, June' IS, BuKNs's Case. Life Assurance Company — ■AmalgamaUon of com- panies — Winding-up — Annuity -v Novation of contract — Advertisement of winding-wp order — Annuitant held in 1873, after an amalgamation in 1860, to he a creditor of the old com/pam/ as well as of the new, notwithstanding, an aduer- tisement in 1862 of an order to wind-up the old company. In January 1860 an annuity contract was granted to B. hy the W. Assurance Association. In Oct. 1860 this association transferred its husi- ness to the B. N. Association ; and on the Uth June 1862 an order was made hy the Oowrt of Chancery on the petition of a, creditor that the W. Association he dissohied, as from that day, and he wound-up. In July 1862 an advertisement was inserted in various newspapers, calling on creditors to come in and prove their dehts. From 1860 to 1862 the annuity was paid hy the W. Assoaiation, and receipts were given to that association. From 1862 to 1865 it was paid hy the B. N. Association and receipts given to that association. Ira 1862 the business of the B. N. Association was trans- ferred to the F. Society, who subsequently pond the annudty, and to whom receipts were given hy the annuitant. In the witiding-wp in 1871-3, the annuitant claimed on his policy against the W. Association. The claim was opposed hy the official liquidator on the ground thai hnowledge of the winding-up of the W. Association in 1862 must he imputed to the annuitant, and that after dealing with the other companies for tmel/ve yea/rs she . could not turn rownd a/nd claim against the W. Association. Seld, that the annuitant was entitled to her claim. Hemming appeared for the Misses Burn. Napier Higgins, Q.O. and Montague CooTcson for the official liquidator, referred to Fuddicomhe' s case {swp. p. 66) ; and Ga/rpmaeVs case {sup. p. 95). Lord Wesibtjuy. — I never met with anything more reasonably clear. These two ladies were grantees of annuities, which they bought from the English Widows' Association. The English Widows' Association, after those contracts, as- signed their business to the British Nation Asso- ciation. The terms upon which they assigned were perfectly clear : the business of the English Widows' Association became the property of the British Nation Association. The British Nation Association took over all the contracts, and, according to this case, all the liabilities, of the English Widows' Association, and they engaged to keep down and to meet those liabilities. Whether the two annuitants were parties to that is not alleged, or whether they knew anything at all about it. ' The receipts appear to have been given in the old name and in the old man- ner. But it is perfectly immaterial whether they did or did not. They remained creditors o£ the English Widows' Association. Pursuant to the arrangement between the English Widows' Association and the British Nation Asso- ciation, they received their annuities regularly from the hands of the British Nation Association, and in doing so they acted in pursuance of" the contract which had been made between the two companies, and took from the assignee company 128 THE LAW TIMES. [Oct. 25, 1873. EUEOPBAN AsSUB;INCB] BuKNs's Case. [Arbitration. what, by arrangement with the grantor company, the assignee company was to pay. After this had gone on for some time, somebody appUed to the Court of Oiiancery for an order to wind-up the original grantor company, namely, the English Widows' Association, and they got that order. That did not at all disturb the proceeding tiey had commenced under the contract between the two companies, nor did it at all disturb the receipt of their annuities by the annuitants. The annui- tants took annuities from the source which they were directed to apply to, namely, the British Nation Association paid them for and on behalf of the English Widows' Association, pursuant to the engagement which they had themselves made with the English Widows'. Association. What de- fault is to be imputed to these ladies ? What ob- ligation was there upon them to go in and prove under the order for winding-up the English Widows' Association ? They had nothing to com- plain of whilst the annuities were paid to them. They had no reason to apply under the order, whilst they duly received their annuities pursuant to the arrangement that had been made. In that state of things, I have this monstrous suggestion made on the face of this case : " under the circum- stances aforesaid" (the " circumstances aforesaid " being the duo and regular payment of these annui- ties pursuant to the contract between the two.com- panies) " the joint official liquidators contend that the said Eleanor Burn and Jane Burn are barred by laches, acquiescence, and lapse of time." Now, how in the world laches can be imputed to a claimant who is in regular reception of his claim, is some- thing which has occurred to the joint official liqui- dators, but I think I may say never occurred to anybody else. Laches might be imputed, if there was any obligation upon them to prove their debt for the benefit of other parties. But the amu- sing part of this matter is, that the joint official liquidator, acting on behalf of and re- representing the English Widows' Association, imputes laches to his own creditor, who had regularly prosecuted and received his debt pur- suant to the arrangement that was made between the English Widows' Association and the British Nation A-ssociation. Well now we come to another term which has been used here — " acquiescence." Acquiescence in what ? Acquiescence in the due receipt t)f the annuity. Is not that the first time that acquiescence in having received all that you are entitled to, is to be used as an argument against you? And "lapse of time" forsooth. Can there be any lapse of time when, during the whole time that has elapsed, the in- dividual claimant has received all that he was entitled to. I never saw words so misused, and I never saw anything that was marked with such an entire confusion of thought, as to suppose that a creditor who has duly received his money pur- suant to the direction of the debtor, has lost his claim against that debtor by the very fact of the due receipt of the money. There is no ground whatever for imputing anything of the kind. It is true that if a dividend had been declared of the English Widows' Association's estate by the Court of Chancery under the winding-up order, that dividend might have been confined to the benefit of those who had gone in and proved under that order, and therefore these annuitants might have lost the benefit of that dividend by reason of not having gone in and proved. But in reality, there was nothing for them to do, because it was regu- larly paid from another creditor, namely, the person who had received valuable consideration from the English Widows' Association for engaging to pay it, and who had regularly paid it by virtue of that engagement. Now in the lapse of time it became material that the annuitants, having been deprived probably of the additional security, should resort to and enforce the original security. And having kept alive the additional security and claimed the benefit of that engagement involves the keeping alive and the claiming the benefit of the original engagement. I am sorry to see money wasted over such a total misapprehension of facts as is involved in this case. There can be no doubt that there has been nothing like novation. There can be no doubt that there has been nothing like the loss of the remedy by neglect or loss of time. There can be no doubt that as often as the annuitants received money from the British Nation Associa- tion, who paid by virtue of their agreement with the English Widows' Association, they did in reality receive that money from the English Widows' Association. The forbearing to carry in a claim for the value of the annuity under the order to wind-up the English Widows' Association was in my opinion a wise proceeding ; for if they had once proved for the value of the annuity, it might admit of considerable doubt whether, regard being had to the maxim that proof is payment, they would be at liberty to prosecute and demand the payments from the additional debtor, namely, the British Nation Association. I think, therefore, these ladies are clearly entitled to all their secu- rities ; they are entitled now to resort to the original grantors ; they are entitled to maintain the liability of ihe British Nation Association, which contracted to that effect with the original grantor. Upon that ground therefore, they must be entitled to the order they now ask, and they must have the costs of this application. Hemming. — I do not know whether the form of the order is, that they are to have the option to prove against either company. Lord Westbuby — Why should they not prove against both ? If there be no authority for it, what is better than authority is, there is reason and principle. The European Society repre- sent the British Nation Association. The English Widows' Association are the original debtors. The European Society was added to the security of the annuitants. In the lan- guage of that, which it is pedantry to refer to — those maxims that I derive from the civil law, and have repeated too frequently — the liability of the British Nation Association was a cumulated security, an additional security that has devolved on the European Society. My declaration, there- fore, is, that they are entitled to prove against both, and to have the benefit of that proof until they have received twenty shillings in the pound. Napier Higgvns. — The next case involves that question. (Harman's case, vide infra p. 129.) Upon that question your Lordship will have to consider what the efiect of the contracts between the several companies really may be. Will the amount of proof here be only the value of the annuity at the date of the winding-up order ? Lord Wbstbuey. — We must decide that ques- tion when we see the materials. All we pronounce is in the abstract. I propose, unless the argu- ments in the case, that we are now approaching, Oct. 25, 1873.J THE LAW TIMES. 129 EuaoPEAN Assurance] Hakman's Case; Pkait's Case. [AUBITEATION. show me that I am -wrong, to declare that these ladies are entitled to prove against both com- panies, and that they hold the security of both, and that the one has not been substituted for the other. Hemming. — The British Nation Association is also within your Lordship's jurisdiction, so that the declaration will extend to all three. Lord Westburt. — No; the European Society takes by devolution. Napier Higgins. — The question of the basis of value cannot be determined now. Mr. Mercer is anxious to know what he is to do as to the proof brought in. Lord Wesibuht. — We will reserve the question if you like. As to the nature and form of such proof, there may be liberty to apply. The costs of all parties will come out of the English Widows' Association estate. Solicitor for the Misses Burn, /. Bum. Solicitors for the ofiB.cial liquidators, Mercer and Mercei: Wednesday, June 18. Habman's Case; Pratt's Case. Life assurance company — Amalgamation of com- panies — Winding-tip — Novation of contract — Policyholder entitled to concurrent proof against each of several amalgaTnated companies. Where there are four insurance companies, A.,B., C, cmd D., and each of tlie companies A.,B., and G. has made a transfer of its business, A. to B., B. to C, and C. to v., and each of the three transferee com- panies admits'that it is liable on a policy of life assurance granted by the original company A.,' then in the winding-up of the four companies the policyholder is entitled to prove for thefuU amount ■of the claim on his policy against each of the com- panies concurrently — subject to the limitation of not receiving more than 20«. in the pound. In 1866 the Anglo-Australian and Universal Family Life Assurance Company granted a policy for 2001. to Mr. Harman on his own life, and another for lOOZ. to Mr. Pratt on his Ufe. Li 1858 an amalgamation was effected between the Anglo- Australian, &c.. Company, and the British Provi- dent Life and Fire Assurance Society, by means of a deed dated the 1st June 1858, whereby the husiness, property, liabilities, and engagements of the Anglo-Australian Company were transferred to and undertaken by the British Provident So- ciety, without its being necessary to the establish- ing by the holders thereof of their claims (if any) payable thereunder, that the policies or grants of the said Anglo-Australian Company should be indorsed by or on behalf of the British Provident Society, or that new policies or grants should be issued in lieu thereof, unless the holders thereof should require the same, in which case it was thereby declared that the holders of such policies or grants of annuities should determine which, or either, or if both of the methods therein described for the transfer to or assumption by the British Provident Society of these policies or grants of annuities should be made or effectuated. And the deed further provided that the premiums for the renewal of the policies and grants of annuities (if any) thereafter to become due, should be paid and payable only to the British Provident Society, who should cause the necessary receipts and discharges to be delivered for the same. In July 1858 Mr. Harman made an application to the British Provident Society, in consequence of which Mr. Sheridan, the managing director of that Society, wrote him the following letter : Sth July, 1858, Dear Sir, — I forward you the enclosed guarantee to annex to the policy you hold of the late Anglo- Australian Company. John Sheridan, Managing Director. Inclosed in this letter was the following : Anglo- Australian Policy, British Provident Policy. No. 829. No. 3399. British Provident Life and Fire Assurance Society, with which is incorporated the Anglo-Australian and Uni- versal Family Life Assurance Society. Chief Office, 4, Chatham-place, Blackfriars, London, B.C. Whereas George Harman, of No. 32, North-street, Lewes, in the county of Sussex, builder, did, by a policy numbered 829, and dated the 29th Feb. 1856, effect an assurance upon his own life with the .^Jiglo-Australian and Universal Family Life Assurance Company for the sum of 2001. And whereas the said Anglo-Australian and Universal Family Life Assurance Company, being desirous that the said assured should have the additional guarantee' of the British Provident Life and Fire Assurance Society, the said British Provident Life and Fire Assurance Society do hereby at the instance and request of the said Anglo- Australian and Universal Family Life Assurance Com- pany agree to assure the said George Harman on the terms and in manner set forth in the said policy and on the conditions endorsed thereon. la witness, come, before the winding-up of the company, or immediately on his attaining twenty-one, and had. then repudiated the shares, he would have got rid of his liability, because a restitutio in vntegrmn. might have been effected- — another transferee might have been found. But here the repudiation did not come until after the company was ordered to be wound-up, wien. this 144 THE LAW TIMES. [Jan 31, 1874 European Assttbance] Dtmock's Case. [Arbiteation. restitutio could not be effected. He allowed the creditors, that trust to the register, to believe he was a shareholder. And in cases of such mis- representation, courts of equity have held the infant bound, where there could be no restitutio in imtegrwm.' Lord Chancellor Co wper says : "If an infant be old enough and cunning enough to continue and carry on a fraud, he ought iu a court of equity to make satisfaction for it." And in a bankruptcy case, where an infant held himself out to be sui juris, and traded in that character, the court would not assist him. Easparte Wataon, 16 Tea. 265. Moreover, Mr. Bentinck's name cannot be re- moved from the list, unless Mr. Gray be brought before the court. The following cases were cited : Money v. Jorden, 21 L. J., N. S., Ch. 531 ; Wright V. Snowe, 2 De G. & Sm. 321 ; Overton v. Bamister, 3 Hare 503 ; Taughan v. Vanderstegam, 2 Drew 408 ; Kimg's case, 3 De G. & J. 63; Bead's case, supra, p. 10. Lord EoMiLLT : — It is quite settled that an infant cannot be made a shareholder. It is no contract at all, unless after he comes of age he does some act to affirm or to confirm it. Mr. Oookson has put this case, as if it were a case which was like bankruptcy or felony. Bankruptcy depends' entirely on statute. As to felony of course an infant can commit felony, or commit fraud, or commit a robbery. It is no e.Youse to say "I am a boy of seventeen,'' when he is brought up : it is no excuse to say that he was an infant at "the time, if he was old enough to know what he was about. No doubt he would be liable for the fraud he has committed, or for the crime he has committed. That is per- fectly dictinct, and the statutory provisions made the distinction in cases of bankruptcy. There are several cases, where the act which has been done has been considered in the nature of a felony, or in the nature of a crime ; but that does not apply to an, infant where he has taken shares 01- has accepted an interest. The distinction is perfectly plain. Here the fraud is not committed against the company, or against any particular person. It is a fraud that is committed, if an infant goes and sells shares to a transferee and tells him positively "I am of age, and I can prove to you I am of age," and induces him thereby to take the shares. That is a different case; but on his merely taking shares in the company, is the company bound to see that he is of proper age ? In all the cases that have come before me I have always taken the infant's name off upon the mere proof of his being an infant. If Gray were here, there is no question that Bentinck would be taken off and Gray put on. Does his absence make any difference ? It makes this difference, that he might require strict proof that he was an infant at the time. That , proof he is entitled to have, bub he is entitled to nothing further. I think, as Bentinck repudiates the contract, he cannot claim any benefit under it, and he must repay the sums of money he has received. It is not a case in which I can give any costs. It is not a case I can look upon with any favour ; but it is the case of an infant being made a partner, which the Hquidators are not able to mamtam. Therefore I shall make an order that his name be struck off the Ust, and that he repay the three sums of 11. shall be given to him. Solicitors for Mr, Murton. Solicitors for the official liquidators of the Euro- pean Society, Mercer and Mercer. s. 9i. each, and no costs Bentinck, Duncan and Oct. 27 cmS, 28, anA Nov. 26, 1873. Dtmock's Case. Gompcmy — Windrng-up — Contributory — Bond fide transfer — Misrepresentation as to position of transferee, and as to consideration — Transfer set aside wnd transferor placed on the list of contri- hutories. In a company, being a common Iww partnershvo, where the shareholders had power to transfer their shares on the proposed transferee being approved of by the directors, a sha/reholder, at a time when the company was failing, directed his broker G. to dispose of 1200 shares, amd 6. communicated with another broher S. who supplied the name of M. A notice of the intention to trramafer in con- sideration of hi. was sent to the company by the hroTter 8., and the transferee M. was described by S. as " holding a good position in soeietyj as the property he resides on yields to his wife and himself jointly about 450Z. a yea/r." The trans- feree was thereupon approved of by the directors, and a formal transfer was subseguentVy executed. It turned out that M. the transferee had no means, except the money that was allowed him by his wife, and that instead of 51. homing been paid by the transferee, lie had paid nothing, but S. the broker had beenpadd 601. on the completion of the transaction. In the winding-up of the company, it was Held on the evidence that 8. the broher was an agent for the transferor, and that the transfer had been obtained by the misrepresentations of 8., and that the transferor must be placed on the list of contributories in respect of the shares. This was a case similar to Mushet's case, in which the official liquidators of the European Society sought to set aside a transfer. The society was established under a deed of settlement dated the 2nd Sept, 1854, and was subsequently registered under the Registration Act 1844 (7 & 8 Vict. c. 110), and also under the Companies Act 1862. It was provided in the society's deed of settle- ment, that a shareholder who wished to transfer his shares, shall send to the society a notice of his wish, and should describe in the notice, " the full name and profession or callin'g, and place of abode of the proposed shareholder ;" and on the approval of the proposed shareholder by the direc- tors, he might transfer his shares : (clause 96, vide sup., p. 11.) In Oct. 1870, at a time when the sooiety.was reported to be in an insolvent condition, Mr. Dymock, who held 1200 shares in the society, ap- plied to a Mr. Gilmour, a broker of Edinburgh, to get rid of the shares. Mr. Gilmour put himself in communication with Mr. Eobert Stewart, another broker of Edinburgh, and Mr. Stewart supplied the name of Mr. Miiller as being willing to purchase the shares. On the 19th Oct. 1870, a formal notice was sent to the society of the intention of Mr. Dymock March 21, 1874.J THE LAW TIMES. lis European Assurance] Dymook's Case. [Aebitration. to transfer the 1200 shares to Charles William Maxwell Miiller, of Grlenyards, Greenhill-by-Denny, Stirlingshire, in consideration of 51. This notice ■was sent to the society by the broker Mr. Stewart, inclosed in the following letter : Edinburgh, 19th Oct. 1870. Dear Sir, — I inclose notioe of transfer and certificates for 1200 shareH now standing in the name of William Dymock, Linlithgow, N. B. merchant, which I will thank you to order transfers of in favour of Charles Wil- liam Maxwell Miiller, Glenyards, Greenhill-by-Denny, Stirlingshire. This gentleman is a particular friend of my own, and holds a very good position in society, as the property he resides on yields 'to his wife and himself jointly about 450!. a year. I am confident that ha will work with the directors and onrselves in upholding the company. EoBEltT Stbwart. H. P. Farminter, Esq., Manager, European Society. Mr. Miiller was approved of by the directors as a transferee on the 1st Nov. 1870, and on the same day a form of transfer was sent by the society to Mr. Stewart. Thereupon he wrote : Edinburgh, 2nd Nor. 1870. Dear Sir, — I am obliged by your favour of the lat inst., along with transfer of 1200 shares, Dymock to Miiller, and which I have already sent off for the signa- ture of the seller. The moment it is completed I will send in the deed for registration. BoBEBT Stewart. Dalton Easum, Esq., Secretary, European Society. Mr. Stewart forwarded the form of transfer to the other broker, Mr. Grilmour, who sent it on to Mr. Dymock with the following letter : 2nd Nov. 1870. Dear Sir, — I send you herewith transfer of your 1200 shares in the European for your signature. I do not know how Stewart has managed to get this passed. Of course it will be best to say nothuig about it. In the meantime get it sent in as soon as possible to get it through, and get quit of any further responsibility. Please sign and return the transfer without any delay. The 60Z. I will not pay to Stewart until I get evidence fiiat the thing is properly carried through. I must see the certifi- cate before I pay anything. In the meantime please send me 601. Hugh Gilhoue. Wm. Dymock, Esq. And on the following day he wrote again : 3rd Nov. 1870. Dear Sir, — I have your favour of yesterday's date with transfer of European shares. Also draft for 601. sterling. I shall endeavour to see that everything is properly transferred, so far as possible. I must see the certifi- cate, of course, to Miiller, before I pay the money to Stewart. Huoh Gilmoub. Wm. Dymock, Esq. The transfer was executed by Mr. Dymock and by Mr. Miiller, and bears date the 3rd Nov. 1870. It was on that date sent to the society by Mr. Stewart, and on the 8th Nov. 1870, certificates of the shares in favour of Mr. Miiller were sent by the society to Mr. Stewart ; and Mr. Miiller was placed on the register as the proprietor of the shares. The order to wind-up the society was made on the 12th 'Jan. 1872, and in the winding-up the official liquidators applied that Mr. Dymock should be placed on the list of contributories in lieu of Mr. Miiller, on the ground that, instead of bl. being paid by the transferee for the shares, 601. had been paid to Mr. Stewart for getting rid of them ; and further, that there had been misrepresentation with respect to the positiou. of the transferee ; for it turned out that he was a person without any means -except what he received from his wife. Since the execution of the transfer he had separated from his wife, and his only means of living were derived from an alimentary allowance of 120?. a year, paid to him out of her income for the sup- port of himself and his children, and determinable at her pleasure. The law agent of Mr. and Mrs. Miiller stated in his affidavit : " Mr. Miiller in 1869-71 carried on the profession of musical teacher in London, where he was also manager of a bleach works, and Mrs. Miiller resided at Glenyards ; Mr. Miiller came to Glenyards, whenever he had holidays. ... He always came for about three months in the autumn, and at Christmas for about a month. . . . Mr. Miiller held a good position in society ; the property he resided on, together with other real estate, to which he and his wife were enti- tled, yielded to them jointly 4501. a year and upwards." Mr. Dymock stated in his evidence, " that he was entirely ignorant of the arrangement made between Mr. Stewart and Mr. Miiller, and that he was neither party nor privy to the representa- tions made by Mr. Stewart to the directors." Mr. Miiller stated in his evidence : " In 1870, Mr. Stewart represented to me that he was the holder of upwards of 2000 shares in the European Society, and that he was desirous of acquiring more shares therein, but did not wish his name to appear in the application for such shares, as he was already a large holder ; and he requested me to pay some of the shares held by him into my name temporarily On his assuring me that I should run no risk whatever, I ultimately con- sented On the 2nd Aug. 1870, I attended at Mr. Stewart's offices, when he produced a printed transfer, which he assured me was for 1200 shares from his name into mine I then and there signed the transfer. It was never agreed between me and Mr. Stewart that I should pay anything for the shares, nor even that I should become the proprietor thereof." Napier Biggins, Q. 0., and Montague Ooohson, for the official liquidators. — Stewart was in reality the agent of the transferor ; he was paid 60Z. for the transaction, and only when the transaction was completed. The misrepresentations made by Stewart are in effect misrepresentditions of the transferor. The whole transaction was an ar- rangement between the parties for shifting the liability from a solvent to an insolvent person ; and the transferor ought not to have the benefit of such a fraud. E. M. Jackson, Q. C, and Bolland, for Mr. Dy- mock. — Stewart was not the agent of the trans- feror. The transferor's br9ker, Gilmour, sold the shares in open market to Stewart. The trans- feror was wholly ignorant of any misrepresenta- tion made by Stewart. And in fact there was no misrepresentation. Miiller did hold a good posi- tion in society ; and with regard to the 51. stated in the transfer as the consideration, it was per- fectly clear that for 1200 shares this was a nomi- nal consideration, Napier Higgins, in reply. Judgment was reserved. Wednesday, Nov. 26, 1873. Lord KoMiLLY : This case is of the same description as MusJiet's case (sup.), only that it is rather stroi.ger. It introduces again Mr. Robert Stewart. Mr. Dymock was the registered proprietor of I'iOO shares. In October 1870, he employed a brokui- of the name of Gilraour to get rid of his shares. Mr. Gilmour applied to Mr. Eobert Slewarfc for 146 THE LAW TIMES. [March 21, 1874. EUBOPEAU AsSUBAifCE] Joshua Mubgatboyd's Case. [Abbitbation. tliis purpose. Mr. Stewart professed to sell them to one Miiller. Notice o£ transfer was sigped by Bobert Stewart, and forwarded by him' to the society, together with the certificates of the 1200 shares, and a letter addressed to the manager in these words : — Dear Sir, — I enclose " notice of transfer " and certifi- cates for 1200 shares now standing in the name of "WUIiam Dymook, Linlithgow, N.B., merchant, which I ■wiH thank you to order transfers of in favour of Charles ^Uliam Maxwell Miiller, Glenyards, Greenhill-by. Denny, Stirlingshire. This gentleman is a particular friend of my own, and holds a very good position in society, as the property he . resides on yields to his wife and himself jointly about £450 a year. I am confident that he will work with the directors and ourselves in upholding the company. — ^Yours truly, EOEEET StEWAET. This notice and letter vrere taken into considera- ition, and upon the representations of Mr. Stewart the transfer was approved. By this communica- tion it would appear that 5Z. was paid for the «onsideration ; but the Tact was that Mr. Dymock was to pay Mr. Stewart 601. as a bonus for getting rid of the shares. Mr. Stewart is dead. The whole transg,ction appears to me to be a fraudulent attempt to get Mr. Dymock's shares -transferred out' of his name to Miiller, a person -who is wholly incompetent to pay. Mr. Stewart's letter to the manager is an instance of the mis- representation. Mr. Stewart was, in my opinion on the evidence, the agent of Mr. Dymook. He induced the society to transfer the shares to 3Iiiller by clear misrepresentations. The pre- mium for disposing of his shares was, as in .Mushefs case, received and disposed of by Stewart. -Miiller had no property, and the directors, if pro- perly informed, would have rejected him as a transferee. The case, in my opinion, bears inves- tigation in no part of it, and the result is that the transfer is worth nothing, and that Mr. Dymock's name must be replaced on the register for the whole 1200 shares, and he must pay the costs. yac&goTO.— May I ask that the order may be ■ without prejudice to any remedy Mr. Dymock may have against the estate of Mr. Stewart, and against Mr. Miiller ? That is necessary under the -Act of Parliament. Lord EoMiLLY.— If so, you may take that as part of the order. Solicitor for Mr. Dymock, Wijnn".. Solicitors for the official liquidators of the European Society, Mercer and Mercer. June 18, and Oct. 28, 1873. JOSHTJA MdBGtAIBOYd's OaSE. , Company~Wvnciing-wp~Gontributory—Bona fide transfer — Duties of trtinsfsror. — Validity of transfer. In a company, heing a gommon-law partnershvp, where the shares are' transferable on the proposed transferee being approved of by the directors, if a shareholder transfers his shares to a person who he knows is unable to discharge the obligations of a shareholder, the transferor will not be sheltered by the fact that the directors neglected to inquire and were satisfied with the transferee, the transfer will be set aside, and the transferor's name placed on the hst of shareholders. This was a case as to an incomplete transfer of shares. The case had been ordered to stand over for. the purpose of producing the two transferees of the shares, with liberty to the applicant to pay the calls thereon within three weeks : {Vide Joshua Murgatroyd's Case, sup., p. 115.) The calls, to- gether with interest, amounting to 3751. and 49L 5s. 5d., respectiveiy, were accordingly paid on the 20th Feb. 1873, and the transferees had been served with notice of the application. One of them had become bankrupt, and the other did not now appear. Instead of a consideration having been paid by the transferees, lOL had been paid to each of them by Mr. Clegg, the sharebroker. Jaehson, Q. 0. and Henderson, for Mr. Murga- troyd. — The clauses of the deed of settlement {sup. p. 11), relate only to the name, &c., of the transferee, they have no reference to the consideration. Al- though lOZ. was paid to each transferee, the directors were not concerned with any mis-statement of the consideration. With regard to the transferees, the directors having neglected to express their disap- proval within fourteen days, must be taken to have approved them ; moreover they subsequently expressed their willingness to register the transfer on the payment of the call, which has now been paid. Thus Mr. Murgatroyd is now entitled to the same rights as Mr. Bentinck, whose name has been removed from the list of contributories (BentimcV s Case, siip. p. 99.) Napier Siggins, Q.C., and Coolcson for the offi- cial liquidators. Lord WHSTBtTBY. — Tou see I have to deal with a case in which there are facts full of suspicion," most suggestive of some dishonest purpose. The first fact is, that this is not a bond fide sale, at all ; but Mr. Murgat- royd goes into the market and he bids for an assignee of his shares, and he finds two people ready to swallow the bait, if the hook is baited with 101. apiece. Now, is the power given to a shareholder to transfer his shares in the company intended to be applied to the working out of such an arrangement as that ? Jackson, — One of the transferees was the com- pany's own agent, and it is now admitted that the transfers were out and out. Lord Westbuby. — That is nothing at all. , The company may have had a very dishonest or an in- solvent agent. With regard to the transfers being out and out, I have no doubt that they were so. In these transactions, many of which have been argued before me, a view of the case has been taken, in which they thought the man who trans- ferred, and the man who received, were Liable to do nothing more than abide by the letter of the rule, and that anything that was beyond the letter he was not under an obligation to regard. Now if we live long enough, we shall find cases of that kind arising again and again. We shall have sets of judges convened in one tribunal, in which one will be content with the observance of the letter, and the other will insist that, if the letter is ob- served, the spirit will be broken and violated, and the greatest injustice will be done. Now here you have got this case. I will give you an oppor- tunity of getting out of it, if you can honestly. We will suppose that Mr. Murgatroyd may have haji a panic, and that he went into the market and baited his hook for persons to relieve him, and that he gave to one 101. to stand in his shoes, and to another 101. He might have done that probably. March 21, 1874.] THE LAW TIMES. 147 EUEOPEAN AsStfKANCE] JOSHTJA MuRGATROYD's CaSE. [Abbitration. If he told the truth, we should have had to con- sider ■whether that was consistent with the pur- poses of the power of transfer. But you see he not only did that, but he sent in their names. Now what I want parties in this predicament to observe, is this. Originally we know a shareholder in a company, the man who had a share in a busi- ness or partnership, had no power of transferring that share. The Legislature came to the relief of that, and it said, you shall have a qualified power of transfer, but a power of transfer clogged with such conditions and qualifications as will be suffi- cient to prove, if they axe observed to the com- pany and to your brother shareholders, that the persons you represent as fit recipients of their shares are fit persons to enter into partnership with them. Now I particularly want to have this ob- served, that a provision of that kind is something more than describing certain regulations and checks upon a transfer ; it is a provision that contains within itself in reaUty a contract between all the share- holders, that one of the bases of their partnership shall be that no shares shall be transferred, ex- cept In conformity with the spirit of that power. And, therefore, if a man, being a shareholder, sends in another's name, and he knows in his con- science that that other is not a person coming within the description of the transferee intended to be accepted, but by some lucky chance the blot is not hit, and the evil is not discovered, and the transfer is passed, and the new name is put in lieu of the old — yet if I can afterwards find that he knew of the impropriety of the name he sent in, if I can fasten on him any knowledge that the intended transferee was not a person that answered in every respect the spirit of the enact- ment, I will, if it comes before me, undo the transaction and compel him to resume the place from which he hoped to escape by that device. The device may not be discovered, the latent fraud may not be made known ; but if at any time afterwards that latent fraud can be un- veiled and brought to the light of day, the tran- saction shall be undone. Now then, will you accept that condition, and will you make an affi- davit fully detailed to prove to me that at the time, when you sent in these two names, you per- sonally knew they were men of substance, men of good character, men of a position in life to make them fit persons to stand in your shoes, to fulfil the obligation that you were under ? . . . . With regard to the transaction being effected through a broker, what the broker did Mr. Murgatroyd did, and if he gave the broker unlimited licence, and the broker did more than he himself would have done, he shall answer for the broker If the directors did not do their duty, or if they made a rash representation, it shall pot shelter Mr. Murgatroyd, if he has done that which is wrong. I wUl take it much higher up. Mr. Murgatroyd shall not put himself under the cloak of the directors, unless they are directors who are vigilant, honest men, and who have been unable to discover these facts. If Mr. Murgatroyd knew them, and did not tell them, he shall not derive: the smallest possible benefit from the fact that the directors gave him this assurance or the other assurance, and thereby were content with the transaction. . . . Just consider this. Suppose every judge had insisted on perfect faith being observed in this matter, and had held out to the shareholders : " Now, remember you shall not hide yourselves under this man's neglect or thafc man's collusion ; nothing sVall stand the test oL inquiry, but that which is hontet and true." Observe how these companies have bean filled with rotten bankrupt people, how the unWtunate creditors, who trusted them and trusted the conduct of the directors, have been betrayed. The company breaks up, and they find a nur^er of men of straw, that have been brought into the company in this way, who are unable to fulfil aiiy part of the engagement ; some few are able, others are un- able ; and that originates in the neglect of judges to watch over these transactions, and to hold out strongly that they will undo everything that is not consistent with the purest reasons for trans- ferring the shares, and the belief of the trans- feror, that the man he puts in his shoes will be as competent and able as he himself is, or more so — ■ will be fully competent to discharge the obligations of his situation. You would not wish to weaken- that rule. If I am hard on Mr. Murgatroyd, I am. hard because I derive conclusious from his own. conduct, which is open to every doubt and suspi- cion, which is fortified by an attempt to take a circuitous route in getting rid of these shares, and prevent the discovery of the utter incom-- petency and insufficiency of the man that' he put in. I will let the application stand over, with liberty to apply again on such a ground as you may bring forward on or before the 1st of August. The matter stands over for further proof to be adduced by the petitioner. Oct. 28. — Mr. Murgatroyd said, in his affidavit : — " I instructed Mr. Clegg, as a broker, to- dispose of the 500 shares which I formerly held in the society, in the ordinary course of his business,, but it was not with the view of fraudulently shift- ing the liability in respect of such shares to im- proper or indigent persons. At the time I exe- cuted the deeds of transfer of the 1st Oct. 1869, 1 believed that the transferees, Philip Barker and Robert Marshall, were men of substance, fit and proper persons to be shareholders in the society, and capable of discharging all claims upon ihem as such." On cross-examination he said : — " I paid Mr. Olegg 62i!. 10s. for the transaction of selling ; he said it would cost him that. I knew nothing of Barker or Marshall personally. I swore I believed them both to be men of substance, be- cause Mr. Clegg told me they were." Mr. Olegg, the share broker, stated in his- affidavit : " The transfers were bond fide trans- actions, and were not entered into with any frau- dulent intent of getting rid of the liability of the shares, which were sold by me in the ordinary course of my business as a broker, the transferees having applied to me in the first instance without any solicitation on my part. At the time the deeds were executed, I believed Philip Barker and Robert Marshall to be men of substance, fit and proper persons to be shareholders in the said society, and capable of discharging all liabilities in respect of these shares." On the case being again argued, judgment was given by Lord EoMlLLT. — I think I must keep Mr. Murgatroyd's name on the list. It is clear "to me that he has not com- plied with Lord WeStbury's requisition, which settled that he must show they were fit persons who were to be substituted in his place ; and he is . bound, according to that decision, to remain on. 148 THE LAW TIMES. [March 21, 1874 European Asstjkance] Phillips's Case. [Arbitration. the list It is quite clear that Barkei* and Marshall were not fit persons I ani not at all clear that Hurgatroyd knew it That I am not clear about ; but I think that Clegg either knew, or might easily have known, if he had taken pains to in- quire, that they were neither of them fit persons ; and therefore I do not allow the transfers to them. Solicitors for Mr. Murgatroyd, Bladen and Mackenzie. Solicitors for the official liquidators, Mercer and Mercer. Oct. 28, 29, 30 and 1873 ; Jan. 9 and Feh. 2, 1874. Phillips's Case. Company — Winding-up — Gontributory — Bond fide transfer — Misrepresentation — Gentleman- — Whole of the consideration not actually received hy the transferee — Onus prohandi on transferor — Trans- fer set aside and transferor placed on the list of contrihutories. — Validity of transfer. P. held shares in a company, which was a common law partnership, where the shareholders had power to transfer their shares on the proposed transferee heimg approved hy the directors. At a time when his company was reported to he failing, he directed his solicitor to dispose of his shares : his solicitor communicated with a sha/re-dealer, B., who supplied the name of " G., a gentleman," as heing^ willing to take the shares. The solicitor sent in the name ofG. who was thereupon approved by the directors ; and a transfer was executed to him hy P., the consideration being stated as 291. 10s. paid by the transferor to the transferee. The transfer was registered, and within two yeaa-s the company was ordered to be wound-up. It then appeared that G., the transferee, was a pam/per ; and that though he had received the cheque for 29Z. 10s. and had indorsed it, yet he had not had the whole of the 29Z. 10s., for lOZ. of it had gone to the transfer clerk of the compamy, 71. 15s. to G. tipe transferee, and tlie rest to B. the share dealer and his clerk. On the application of the official liqaidators to place P. the transferor on the list of contrihutories in respect of the shares, it was Held that, inasmuch as the onus was on the trans- feror to show that everything that is material for the decision of the directors has been carefully brought to their attention, and as that had not been done here, the transferor must he placed on the list in lieu of G. Quoire, whether a person may not speculate, bona fide in shares that a/re worth less than nothing, tra the hope that something may come out of them, without there being any risk of the transfers to him being invalidated. This was a case in which the official liquidators of the European Assurance Society sought to set aside a transfer of shares. The society was established under a deed of settlement, dated the 2nd Sept. 1864, and was subsequently registered under the Eegistration Act of 1844 (7 & 8 Vict. c. 110), and also under the Companies Act 1862. It was provided in the society's deed of settle- ment that a shareholder, who wished to transfer his shares, should send to the society a notice of his wish, and should describe in the notice the *"'! name and profession or calling and place of abode of the proposed shareholder ; and on the approval of the proposed shareholder by the direc- tors he might transfer his shares : (Clause 96, vide sup. p. 11.) In 1870 the society was ' generally reported to be in an insolvent condition ; and Mr. Phillips, a medical officer of the society, wished to dispose of the 590 shares that he held in the society. HJiving made arrangements for doing so, he wrote to the secretary as follows : 2na July 1870. My dear. Sir, — I have decided on selling my shares in the European to Mr. Thomas Boberts, of the Grange, Walham-green, Fulham, builder, and shall feel obliged by your letting the bearer have a proper form of transfer for me to fill up. I shall be prepared to piEiy up the re- mainder of my call on the transfer being registered in the usual way. Very truly yours, Eichd. Phillips. D. Easam, Esq., Secretary. The name of. Mr. Eoberts was approved by the directors, and a transfer prepared in the office, and the certificates sent to the society ; but the transaction was never completed, in consequence of Mr. Eoberts becoming insolvent. Accordingly Mr. Phillips instructed his solicitors, Messrs. Eivington, to get the shares sold. They applied to Mr. Bensusan, a share dealer, who subsequently sent them the name of George Gilbert as being ready to purchase the shares at 27s. 6d. discount, 26s. 6d. having been paid on each. Mr. Bensusan also told Messrs. Eivington that George Gilbert was then a shareholder in the Society, and was residing at 135, Stamford-street, Blackfriars-road, and that he had for many years previously resided at 152, Tork-road, Lambeth, his name appearing both in the court and street directory under those address ; that he was of no occupation or business, having been formerly a coach proprietor. Accordingly, on the 13th Aug. 1870, Messrs. Eivington sent to the Society a letter, in which they stated that the contemplated transfer to Eoberts had been abandoned, and that they en- closed a notice of a proposed transfer of the shares to George Gilbert " in consideration of 29J. 10s., to be paid to the transferee." The transfer notice stated that the consideration was " 29Z. 10s. paid by me," (the notice being signed by Mr. Phillips) ; and that the proposed transferee was " George Gilbert, of 135, Stamford-street, Black- friars-road (late of Tork-road, Lambeth), gentle- man." Subsequently Mr. Phillips wrote as follows to the Secretary: 19th Aug. 1870. My dear Sir, — I have found a much better man to whom to transfer my shares than the Mr. Roberts whom the directors have approved of as my transferee, i.e., one who is pecuniarily more stibstantial. Will you kindly ask the board to accept this gentleman in lieu Mr. Boberts ; otherwise I must complete the arrange- ments with him before I leave town to join my family. 1 shall also be glad if you will kindly forward me a cheque for the last two quarters' salary, due at Mid- summer last. Eichaed Phillips. D. Easum, Esq., Secretary. The secretary replied : 23rd Aug. 1870. My dear Sir, — With reference to your application for transfer of shares in this society, I am desired to inform yon that until the appeal petition of Mr. Crowe for the re-hearing of his petition is disposed of, it cannot be entertained. Dalton Easum, Secretary. Eichard Phillips, Esq. A few weeks after, the proposed transferee was approved by the directors, a transfer deed was executed by Mr. Phillips at the office of the society, and he was informed by the transfer clerk March 21, 1874.] THE LAW TIMES. 149 European Asstjrajjce] Phillips's Case. [Aebitbation. that Gilbert would be required to attend at the office to execute the transfer, and that the con- sideration money should then be paid. On the 19th 1870, Messrs. Rivington sent to Mr. Bermingham, the transfer clerk, a cheque for 29Z. 10s. "for Mr. George Gilbert." The transfer clerk replied : 21st Nov. 1870. Gentlemen, — In compliance with Mr. Phillips's wish, and with referenoe to your favour of yesterday, I have to-day handed Mr. Gilbert your cheque for 291. 10s., obtaining his signature to the transfer and receipt for consideration on the deed also. Messrs. Eivington. Geo. E. Beeminqham. The name of George Gilbert was thereupon entered on the register as the owner of the 590 shares. On the 12th Jan. 1872, the society was ordered to be wound-up ; in the winding-up the official liquidators applied to have Mr. Phillips placed on the list of contributories in lieu of George Gilbert. I'or it turned out that George Gilbert, the trans- feree, had formerly been a coach proprietor and driver, but having become blind, he was in 1870 wholly without means and without occupation. He had been induced by Mr. Bensusan, the share- broker, to sign several transfers of shares in con- sideration of receiving a few pounds on each occa- sion, Mr. Bensusan telling him that the shares might be great things some day : ( Vide sup., p. 125.) Though the cheque was made to the order of George Gilbert and indorsed by him, he did not get the whole of the 29Z. 10s. -j the cheque was cashed by a friend of Bermingham's ; and Ber- mingham now admitted that he received a portion of the money as a part of the "commission" received by Bensusan ; and it appeared from Ben- susan's evidence that the money was divided in this way: 101. was paid to Bermingham, the transfer clerk; 71. 15s. to George Gilbert, the transferee ; 9Z. 15s. to Bensusan, the sharebroker ; and 21. to his clerk. Mr. Phillips and Mr. Eivington never at any time knew or saw either Bermingham or George Gilbert ; and previously to these transactions they were both equally unacquainted with Bensusan. Mr. Eivington, the transferor's solicitor, stated in his affidavit :— " I had every reason to believe, and I did believe, that the whole sum of 291. 10s. paid by me to George Gilbert belonged to and was retained by him. No arrangement whatever for the division of the said sum of 29J. 10s. between or amongst any person or persons whomsoever was ever made or came to with my concurrence, privity, or knowledge." Nwpier Higgins, Q.C. and Montague Gookspn for the official liquidators. — ^The transaction was not a bond fide one. It was merely a device for getting rid of Philhps's responsibility. The proposed transferee was misdescribed. Lord EoMlLLT. — It is a serious penalty to make a man pay all the calls for calling another a gentleman. Tou had better leave out every con- sideration of that sort. Nwpier Siggins. — At any rate, Gilbert was a person whom the directors, if they had known all about him, ought not to have accepted as a share- holder. But they did not know about Gilbert, because they were misinformed by the agents of Phillips. For Eivington and Bensusan were both in reality agents of the transferor. And with regard to the consideration money, the directors did not know that it was to be shared with one of their own officers. The onus lies on thetransferor to show that the directors knew everything that it was material for them to know about the transferee. And even if they had known, no benefit could arise to Phillips from a disregard/of duty by the directors. It cannot be said that the shareholder had an absolute uncontrolled right to transfer. Any fraud on the part of the transferor, or any ignorance in the directors of what it was material for them to know, or any neglect of duty by the directors, will vitiate the transfer. Moreover, this company is still to a certain extent governed by the Act of 7 & 8 Vict. c. 110 ; no creditor can be affected by a transfer of a share until it is re- gistered in the manner required by that Act. Souihgate, Q.C. and Millar for" Mr. Phillips.— The 7 & 8 Vict. c. 110 is repealed, and, conse- quently, cannot be applicable to this company. Moreover, Mr. Phillips did not become a share- holder until 1865. With regard to the transfer, the law is that, if you, without fraud, transfer your shares before the presentation of the petition to wind-up, although you. do it with the intent of avoiding liability in future, the transfer cannot be impeached. Tou have nothing to do with what the directors do or omit to do. Here the transfer was perfectly bond fide and without fraud. The shareholder instructed his solicitors to sell the shares, and they instructed a share dealer to find a purchaser. The purchaser, whose name was supplied, was wholly unknown to the transferor and to his sohcitors. He was approved by the directors, and the transfer was completed. The consideration was paid to the transferee ; and when the cheque reached his hands, it was wholly in his control ; the transferor is not responsible for the use subsequently made of the money by the trans- feree. The arrangement for the division of the consideration money was wholly unknown to the transferor. [Lord EojvtiLLY. — I -held in Musliet's case, and I stated my intention always to hold in all these cases, that the burden of proof is upon the transferor, and he must prove that the whole money was paid to the transferee.] The following cases were cited during the argu- ment : i Lund's case, re MeaAcan and, South American Com- pamy, 27 Beav. 465 ; 33 L. T. Eep. 85 ; Be Pass's case, re Mexican and South American Com- jjowiy, 4 De G. & J. 544; 33 L. T. Eep. 322; Hya/m's case, re Mencam, and South American Com- pa/iiA/, 1 De G. P. & J. 75; 1 L. T. Eep. N. S. 115 ; Clmwwck's case, re Athenoeum Life Assv/rance Com- pany, Johnson 714 ; 1 L. T. Eep. N. S. 435 ; Costello's case, re MeaAcan and South American Com- pany, 2 De G. P. & J. 302 ; 3 L. T. Eep. N. S. 421 ; Budd's case, re Electric Telegra/ph OompamAi of Ire- land, 3 De G. F. & J. 297 ; 5 L. T. Ee^. N. S. 382 ; Weston's case, re Smith, Kmight, and Compamy, L. Eep. 6 Eq. 238, 4 Ch. 20 ; 19 L. T. Eep. N. S. 337 ; Williams's case, re Imperial Mercantile Credit Asso- ciation, L.Eep. 9 Eq. 225 ; Ea/rrison's case, re Bank of EindustoAi, China, and Japan, L. Eep. 6 Ch. 286 ; 24 L. T. Eep. N. S. 691 ; Master's case, re Euiropean Bank, L. Eep. 7 Ch. 292 ; 25I,.T.Eep.N. S.582; Lloyd's case, sup. p. 25 ; Richard WilUa/ms's case, sup. p. 84 ; Walton Williams's case, sup. p. 125 ; Mead's case, sup. p. 10 ; Mushet's case, sup. p. 139. Monday Feb. 2. Lord EoMiLLY (having stated the facts).— I said when this case was heard, that if all these facts had been stated to the directors, and they had thought fit to pass the transfer in. 150 THE LAW TIMES. [Maroh 21, 1874 ETTEOPEAif AsSUBAUCE] LoBB Digby's Case. [Abbiieation. the hand fide discharge of their office, no com- plaint could afterwards have been made. But when the sum of 29Z. 10s. is parcelled out to the various actors in the transaction, and the whole of this concealed from, or at least not disclosed to, the directors, though known to the transfer clerk, who wa^ one of the principal sharers in the booty, I am of opinion that the transaction is a fraudulent mode of getting rid of the shares, and that it cannot stand. By fraudulent transac- tion, I do not jnean that Mr. Phillips is guUty of any direct fraud ; he employed a respectable soli- citor to get rid of his shares. The solicitor in- quires who is the sort of person he can get to sell the shares ; he is recommended to Mr. Bensusan, who undertakes the transaction and negotiates the transfer of shares, and employs the person to obtain and distribute the money. By saying this is a fraudulent transfer, and one which cannot stand, I do not mean to impute to Mr. Phillips, or to his solicitor, any wUful connivance with the transaction or knowledge of what was done. But they wilfully shut their eyes, they employ Mr. Bensusan without inquiry, and allow him and two or three associates to manage the whole trans- action ; the result of which is, that without in- quiry they are satisfied with the nominal sum of 29Z. 10s. being handed to Mr. Gilbert, although, in truth, the greater part of it was divided between Mr. Bensiisan and Mr. Bermingham, the transfer clerk, without the knowledge of the directors, and nothing about it appearing on the books of the society. I repeat what I said when the case was heard, that, though I disapprove of the practice of throwing the debts of the company on the remaining shareholders, yet I do not mean to lay down that, where a person seeks to speculate in shares that are worth less than nothing in the market, in the hope that something may ultimately come out of them, he may not do so. I repeat that, in all such transactions, in order to make a vahd transfer, which shall bind the share- holders of the company, who trust their affairs entirely to the directors, it is essential that the full transaction shall be laid before the directors in aU its details, and that no officer of the com- pany, particularly one so important as the transfer clerk, who has the care of the books, shall have any pecuniary advantage arising from it. These transactions are very complicated ; and it is the object of the p6rscins who are engaged in them to mix them up in such a manner that it is very difficult to unravel them. It is for this reason I have stated that the burden of proof in them — in which I have followed Lord Westbury — ^lies upon the transferor ; and thai it is his duty to show that everything that is material for the decision of the directors has been brought carefully to their attention ; and in my opinion that has not been the case here, and therefore I disallow the transfer. Solicitors for Mr. Phillips, Rki/ngton and Son. Solicitors for the official liquidator, Mercer and Mercer. Thursday, Oct. 30, 1873. LoKD Digby's Case. Cmwpany— Amalgamation of companies —Wind- ing-up— Contributory— Amomit of call— Return of capital. On the transfer of the N. Company's business 'to the E. Society, it was a/rroMged that the E. Society should tahe over the property cmd business-' of the N. Company, cmd should pay to each shareholder in the N. Company his original paid- up capital upon each share in full, or at hie option shotild allot to him E. Society's shares in lieu of his N. Company's shades. A shareholder in the N. Compcmy, on whose shares of 251. each, 51. had been paid up, elected to tahe cash in respect of them. In the subsequent winding-up he was placed on the list of contribufories ; and it was Held that tlie pa/ymeni of 51. per share was in effect a return of the capital to him : cmd that, in a call of the whole of the wnpaid capital, he was liable to contribute the full 251. per sha/re. This was a question as to whether there had been in effect a return of capital; In 1866 the Eoyal Naval, Military, and East India Company Life Assurance Society transferred its business to the European Assurance Society (see Lancey's case, sup. 16, 17). The arrangement^ was carried into effect by two, deeds dated th& 17th Sept. 1866. By one of these the European. Society, inter alia, covenanted to Pay to each shareholder o£ the Boyal Naval Society Ms original paid-np capital upon each share in fiiU, bat without bonus, by two equal instalments at six and twelve months respectively, computed from the day of the dissolution of the Eoyal Naval Society, with interim interest from that date at the rate of S per cent, per annum. Each shareholder, however, was to have the option, to be exercised within six months of the dissolution, of taking up his paid-up capital in shares of the European Society upon certain terms. Lord Digby held twenty-five shrxes of 25L each, , on which 51. had been paid up. And in Oct. 1866' he received a circular, that was sent by the B,oyal Naval Society, to its shareholders, stating : 1. You are entitled to take shares in the European Assurance Society of 21. 10s. each, with 10s. 6d. per share paid up, and your dividend thereby will be on the sum of }. Or, 2. You are entitled to receive the sum of I., being the amount originally paid up- on your shares in two instalments, viz. : one half in six months and one half in twelve months, from the 17th Sept. last, together with interest at the rate of 5 per cent, per annum. A circular to the same effect was sent hin:i by the European Society. Lord Digby thereupon " elected to take cash in respect of his shares." He delivered up the share certificates to the European Society, and received from them the cash in two instalments. The fol- lowing receipt was given by him : Received this 28th May 1867, of the European Assur- ance Society, the sum of 651. 12s. Gd,, being the amount of the first instalment of my original paid-up capital payable by them to me as the holder of twenty-five shares in the Boyal Naval Society . . . pursuant to the provisions of a certain deed dated the 17th Sept. 186S- . . . with interim interest. On the 1st March 1872, an order was made to wind-up the Eoyal Naval Society, and in the winding-up Lord Digby's name was placed on the Ust of contributories. A call of 71. per share had been paid by him, and the whole of the share capital having now been called up, it was contended by Lord Digby that he was liable to contribute 13Z. only per shajre, but the official liquidator contended that his contribution must be 181. per share. Napier Biggins Q.C. and Montague Cookson for- the official liquidators. — There was in effect a return of capital to the shareholders ; and those- March 21, 1874.] THE LAW TIMES. 151 European Assubancb] LiNEs's Case. [Aebiikation. shareholders, who divided among themselves the •whole of their capital, so far as it represented the moneys which they themselves had paid up, must restore these moneys back to the fund which is liable to the creditors. Lord Cairns decided this in Mwn-ough and Ohamherlain's cases (16 S. J. 483). See also Stringer's Case; Be Mercantile Trading ■Company (L. Eep. 4 Oh. 475; 20 L. T. Eep. N. S. S91). Millar for Lord Digby. — There was no return of capital. The 51. per share was paid by an outsider to the several shareholders of the Eoyal Naval Society for taking over their interest in the business. This is quite clear from Cardiff Coke and Goal Company v. Norton (L. Eep. 2 Eq. 558, 2 Oh. 405 i 9 L. T. iRep. N. S. 186 ; 14 L. T. Eep. N. S. 750). Moreover, Lord Westbury, in Lancey's case {sup. p. 15), was of this opinion, for he said there, " the liability of the shareholders in respect of those debts, which are so taken over, unquestion- ably remains." He did not contemplate the creditors' getting more capital than was liable to them at the time of the amalgamation. Further, what is to be done in the case of those who elected to take shares ? Napier Higgins in reply. — The arrangements in the Cardiff Company's case {ubi sup.) were wholly ■different. The only money paid in that arrange- ment was a sum of 17501., which was applicable ■and applied only in the payment of the debts of the ■ transferor company. This distinction was pointed out by Lord Cairns. Lord EoMiLLT. — I think that I cannot get over the observation of Lord Cairns in Murrough's and Chamberlain's cases, which I have read, and that is the view of the case that I must adopt, (as) On the whole, I think I may look at it as a representative case. Mr. Higgins told me there was an amount of 14,0001. depending on it, and therefore though I give Lord Digby no costs, I think it would be fair to allow him not to pay costs. (a) " It startles me to find, if it can be done, that actual liard money (which every one might have had, unless he preferred investing his money in Albert shares as an alternative) can be given back, the whole of the paid-np capital repaid ; that the man who has paid up the whole can be paid back the whole, and the man who has paid iip the half can be paid back the half ; and then that the rresn^t is not merely to pnt back into his pocket the whole i;hat he has paid, bnt to exempt him from all fntore lia- bility. It is the cleverest operation that was ever per- formed on a joint stock company, if it is a good one. . . . A provision was made which I cannot look npon as other- wise than a provision for the return of capital ; because what was agreed to was this : that after the confirmation of the agrement by general meetings, the Albert Com- pany should pay back to every shareholder, eo nomine, -the amount that he had paid npon his share or shares in the company. If that is not a return of capital, I do not know in what way a return of capital could be expressed. It is the most accurate expression of a stipulation for a return of his capital from the company, which was -taking over all the funds of the company. It is true that that is coupled with an alternative, that he might have, if he preferred it, so many shares in t^e Albert, treated as shares with 31. paid, as would be equivalent to the money he might otherwise have, bnt every shareholder might have his money if so disposed ; and therefore the option to take as an alternative Albert shares appears not to differ the case from the case where there is a stipu- lation to hand back pure money; it makes the share- holder in the Bank of London Company a purchaser, who is to return the money for so many shares in the Albert." — Per Lord Cairns in the Albert Arbitration (16 S. J, -483.) Solicitors for Lord Digby, Bennett, Dawson and Bennett. Solicitors for the ofiSoial liquidator of the British Commercial Company, Meixer and ilcrcer. Jan. 9 and Feb. 2. LiNEs's Case. Life Assurance Company — Amalgamation of com- panies — Winding-up — Novation of contract — Policy — Bonus circular — Advertisement for credi- ' toi's — Knowledge of an advertisement for creditor's in an old winding-up of his company, imputed to a policyholder — Policyholder held, after an amalgamation, to be a creditor, not of the trcms- feror company, but of the transferee. L. effected a policy of life assurance with the W. Company in 1854, and paid the premiums thereon to the company from time to time down to June 1862, when the W. Company transferred its busi- ness to the B. Association. Circulars were then : sent to the W. policyholders by the B. Association and by the W. Company, informing them of the transfer of business, and further stating thai " (he terms and conditions contained in the policies will remain unaltered by this arrangement.'" L. thereupon paid his premiums to the B. Association and accepted receipts from them until 1865, when that association tn-amsferred its business to the E. Society. L. had no notice of this amalgamation, but he tliereafter paid his premium to the PI. 8o ciety and accepted receipts from them until 1872, when the B. Association and the E. Society were ordered to be wound-up. In 1867 a reversionamj bonus of 11 12s.. was declared by the E. Society on the policy ; and notice thereof was given to L. by a circular, but he tooTc no notice of it. On L.'s claiming on his policy against the W. Company, which had gramted it, the official liquidators contended that there had been a nova- tion with the other companies, but it was Held that there had not been sufficient to create a novation. On the 6th Dec. 1862 an order for winding-up the W. Company had been made on the petition of creditors and shareholders ; and in Jan. 1863 advertisements had been inserted in various news- papers, calling on creditors to come in and prove their debts m the vii/fi,ding-u,p. i. did not come in and prove on his policy, and he now alleged that he never Jcnew anything about this windmg- wp. Held, that knowledge of the winding-up must be vmputed to L., arid that although there was no novation, yet inasmuch as he had not gone in, and proved in the winding-up, he must be taken to have abandoned his right of proving against the W. Company, for the pwrpose of adopting the B. Association and the E. Society as his debtors. This was a question of liability on a policy of life assurance. In June 1854, Mr. Lines effected a policy of life assurance with the Waterloo Life, Education, Casualty, and Self Belief Assurance Company, which was constituted under the Statutes of the 7 & 8 Vict. o. 110, and 10 & 11 Vict. c. 78, by a deed of settlement, dated' the 10th Nov. 1851. By the policy it was witnessed that the funds and other property of the, company should be subject and liable, according to the provisions of the deed of settlement, to pay to the executors, administra- 152 THE LAW TIMES. [March 21, 1874 EUKOPEAN AsSTJEANCe] LiKEs's Case. lAbbitbation. tors, or assigns of Mr. Lines the sum of lOOJ. upon proof of his death, with participation in the advantages of the company, subject to the pay- ment of the premiums " at the office of the said company," with a proviso that " the capital stock of- four hundred thousand pounds sterling and other the stocks, funds, securities, and property of the said company remaining at the time of any claim or demand, made unapplied and undisposed of, and inapplicable to prior claims and demands, in pursuance of the trusts, powers, and authorities, contained in the said deed or deeds of settlement shall also be liable to answer and make good all claims and demands upon the said company." In 1858 he effected a similar policy with the same company. He continued to pay the premiums on his policies to the Waterloo Company down to the 21st June 1862, the following being the form of the receipts : Waterloo Life, Education, Casualty and Self Belief Assurance Company, 355, Strand, London, W.C. . 2l3t June 1856. Beceived of Mr. George Lines, of 19a, Bridge House- place the sum of 11. 5s. 8d., being the amount of one half-year's premium payable in respect of an assniancce effected for lOOJ. on the life of Inmself for the whole term. T. G. Williams, Manager and Secretary. In 1862 negotiations were entered into for the transfer of the busincs of the Waterloo company to the British Nation Life Assurance Association, which was established under the same statutes 7 & 8 Vict. c. 110, and 10 & 11 Vict. c. 78, by a deed of settlement dated the 28th Feb. 1855 which contained provisions enabhng the Association to purchase the business of another company (see clause 45, sup., p. 40). There were powers in the deed of settlement of the Waterloo Company for dissolving the company, and for handing over its business to another com- pany (the deed containing clauses similar to clauses 172, 173, of the Royal Naval Society's deed, with the exception that it did not contain the proviso of clause 173 with regard to carrying on business : see clauses 172 and 173, sup., p. 47.) In 1862, the Waterloo Company was duly dis- solved, and on the 31st July 1862 an agreement was entered into for the transfer of its business to the British Nation Association. By this agree- ment it was arranged that the Waterloo Company should transfer its business to the British ^Nation Association, together with the right to receive all premiums on the Waterloo. pol icies ; and that in consideration thereof the British Nation Associa- tion should pay a certain sum to the Waterloo Company, and should " guarantee and undertake unto the Waterloo Company," to make to the Waterloo policyholders, as the times for payment should arrive, full payment of all sums secured by the policies ; that one share in the British Nation Association should be given to each shareholder ot the Waterloo Company, in respect of every twenty shares held by him ■ and that, upon the application of any Waterloo policyholder, the British Nation Association would issue to him a new British Nation pohoy in Ueu of his Waterloo policy, or would place upon it an indorsement of guarantee by the British Nation Association pf the sum assured. No other provision was made for the liabilities of the Waterloo Company, and no declara'.ion of the dissolution of the company was ever made by advertisement or otherwise. In August 1862, the following circulars were sent to the policyholders in the Waterloo Com- pany :— Waterloo Life Assurance Company. 13th Aug., 1862. Dear Sir, — The proprietors of this company, on tho recommendation of the directors and after very mature deliberation, have decided to accept an offer made by another association to unite the business of the two companies. In adopting this course, the directors feel that they are oonsnlting the interests of all parties in this institution, and that they will obtain larger pro- speotive adrantages for the policyholders than could have been secured under the best auspices by remaining in a separate condition. This union, which takes effect from midnight of the 31st July last, has been made with the British Nation Life Assurance Association, of 316, Begent-street, and it is intended to carry on the joint businesses at their ofSces. The terms and conditions contained in the poUcies issued by this company will remain in all cases unaltered by this arrangement. The policyholders are fully guaranteed for all claims under their present policies by the British Nation by the deed between the two companies, but any of the assured desiring it can hare the endorsement to that effect made on their policies. All communications should henceforth be addressed to, and all premiums due on and after the 1st Aug. inst. paid to the receipt of, Henry Lake, Esq., Manager of the British Nation Life Assurance Association, 316, Eegent- Street, London. Should you, however, have been aconatomed to pay your renewal premium through an agent, you will still do so, as arrangements are made which will enable the existing agents of the Waterloo to act for the British Nation. The Eeport of the British Nation for the year ending 31st March 1862, shows the following : Annual premium income 136,9651. Invested funds and property 257,8611. Annual revenue thereon , 9,8651. The annual income therefore of the British Nation, as shown by its last annual Be- port, was 147,000i. This most satisfactory position is now still further im- proved by its subsequent business, and by the union of this company, and the Income of the British Nation is now raised to 170,0001. per annum. The great advantages of the amalgamation of com- panies are now being thoroughly recognised and appre- ciated by the public. They may be summed ap briefly thus : the union of com- panies increases business, income, security, and bonus ; and decreases expenditure, competition, and the liability to fluctuation. The business of two companies can be conducted in one office and by one staff without material additions, and the whole of the saving goes to improve the prospects of a large bonus. I feel assured, therefore, that you will perceive at once the advantages which this union will secure to the policy- holders of this company. The Waterloo policyholders will not only have the security of the large annual income of the joint business, but it has been arranged that in all future bbnusea they shall participate on an equality with the other policy- holders in the conjoint companies. They will thus secure not only all the benefits to which they are entitled in this company, but the additional advantages to be derived from the accumulation of income and power. The directors feel that in the step they have taken they have considered the best interests of the assured, and have obtained for them increased security and large permanent advantages. Joseph Bishop, Chairman. British Nation Life Assurance Association, 13th Aug. 1862. Deae Sie,— It i3 announced to you by the accompany- ing letter of the Chairman of the Waterloo Life Assurance Company that an arrangement has been concluded for the union of the business of that company with this as- sociation. April 11, 1874.] THE LAW TIMES. 153 Etjsopean Assttrancb] LiNEs's Case. [Aebitration. Under the deed made between the British Nation and the Waterloo Cqmpany it is not necessary for na to trouble policyholders to send their policies tor endorse- ment by this association. Shonld you, however, wish it, if yon will forward your policy either direct or through the agent in your district, it shall be immediately (after the Buooeeduig Thursday) returned to you endorsed, signed by three directors and sealed with the seal of this association. But it is necessary for me to inform you that all policyholders are perfectly secure under the renewal receipts, and that the terms and conditions contained in the policies issued by the Waterloo Com- pany remain unaltered by the transfer. The subscribed capital of this association is nearly 300,0002. ; the annual income is 170,0001. ; and the iu- >ested funds (irrespectiTe of capital) are upwards of 257,000?. The new premium income from new business effected during the past year amounted to 16,3642. per annum. The public appreciation of the principles of this asso- ciation may be seen by the great progressive increase of new business in each of the following years : — 1860 Proposals. 1559 Policies. 1096 ... New Income £ 6,828 1861 2144 1665 .. 11,800 1862 . 3003 .... 2356 .. 16.364 Whether regarded for the annual income or for the great amount of new business, so far surpassing the majority of successful offices, the position of this in- stitution is most gratifying. The distinctive princi- ples, which render it thus popular, are set forth in the prospectus, and I would invite your especial attention to the following : 1. The application of the profits to rendering the policy payable during the lifetime of the assured. 2. The avoidance of all uncertainty or litigation by making policies indisputable. 3. The assistance granted to an assurer in the payment of his premium, thus averting the chance of losing the benefit of the policy by forfeiture through inability to pay the premium. These truly popular features consti- tute a valid reason why an assurer should choose to take a policy of this association. Your position as a policyholder, I need scarcely remark, wUl be greatly improved by the arrangements now made. By the union of interests, and by the conduct of the joint business in one oSce and by one official staff, a very considerable reduction of expenditure will be effected, which must add considerably to the bonus ; while the rate of new business, large as it is at the present time, will be still more accelerated by the concentration of interests and income. It may also be gratifying for you to know that the British Nation and the companies united with it have paid more than 3000 claims to policyholders, amounting, with bonus additions, to upwards of a nullion and a quarter sterling. Allow me, therefore, to express the hope that you will as a policyholder do all in your power to uphold and ncrease the business by reverting to the subject of assurance among your friends, and, if it be not incon- venient to you, by rendering aid through introductions and otherwise to the agents in your district. Yon will thereby be not only promoting the general prosperity of the institution, but by thus adding to the profit fund you will be increasing the value of your own policy. Henby Lake, Manager. Mr. Lines received these circulars, but he did not have a new policy or have his policy endorsed ; however he subsequently paid his premiums to the British Nation Association until 1865, when the British Nation Association transferred its busi- ness to the European Assurance Society {vide sup. p. 41), which was registered under the 7 & 8 Vict. c. 110, and was governed by a deed of settlement dated the 2nd Sept. 1854 Mr. Lines now alleged that he had no notice of this amalgamation and did not receive any notices of renewal of his policies from the European Society. But from 1866 to 1871 he paid his pre- miumB to the European Society. The receipts given by the British Nation Association and the European Society respectively were as follows : British Nation Life Assurance .^ooiation, with which is united the business of the WS^rloo Life'Assuranoa Company. Policy Nos. 865 and 2295. , fieoeived this 27th day of Deo. 1S62 the sum of iE2 lis. 4d. being the payment of half Vearly premium from the 21st of Deo. 1862 to the 2l8t daV of June 186» for an assurance on the life of G. Lines, eSsoted by th» before named policy. Henbt LAKK^anager. British Nation Life Assurance Association, in u\vion with the European Assurance Society, \ PoKcy No. 2295. deceived this 23rd day of June 1865, the sum of one pound five shillings and eightpence, being the paymeiit of half-yearly premium from the 21st day of June 1865, to the 21st day of Dec. 1865, for an assurance on the life of George Lines, effected by the before-named policy. Henby Lake, Manager. European Assurance Society. PoUcy No. 2295. Received this 4th day of Jan. 1867, the sum of one- pound five shillings and eightpence, being the payment of six months' premium from the 21st Deo. 1866, for an assurance on the life of G. Lines, effected by the before-named policy. J. WOBTOB, I Directors. Printed receipts for renewal premiums issued from the chief office will alone be admitted as valid. In April 1867, a reversionary bonus of 11. 12s. was declared by the Europeau Society upon each of his policies, and notice thereof was given to him in the following circular : Bonus Notice. European Assurance Society, April, 1867. Policy No. 2295. Life of G. Lines. I am instructed by the board of directors to announce to you that a valuation of the affairs of this society up to the 31st Dec. 1865 has been completed, and that an allotment of reversionary bpnus to that period has been made. I have great pleasure in informing you that the rever- sionary sum added to the above policy at this division; is 11. 12s. You will please attach this notice to the policy as the official declaration of the bonus addition. The business is still rapidly increasing, and it is hoped that at each succeeding valuation the bonus will be materially- augmented. Henby Lake, Manager. To Mr. G. Lines, or the person legally entitled to the policy. Mr. Lines, however, took no notice of this cir- cular. All three of the companies were ordered to be wound-up. On the 24th Nov. 1862, shortly after- the transfer of the Waterloo Company's business, a petition was presented by creditors and contri- butories of that company to wind it up, and a winding-up order was made on the 6th Dec. 1862^ In Jan. 1863 the following advertisement for cre-^ ditors was inserted in the London Gazette, the Times, the Morning Herald, the Sheffield Times,. the Idverpool M&r^ IfaUonal Provincial Life Assurance Society, L. Eep. 9 Eq. BOS ; 22 L. T. Eep. N. S. 465 ; Re The Manchester and London Life Assurance Association, L. Eep. 5 Ch. 640 : 23 L. T. Eep. N.S. 332; Be Times Life AssuroMce Compa/ny, 22 L. T. Eep. N.S. 198; L. Eep. 5Ch.381; Lancaster's Case, Eeilly's Alb. Eep. 95 ; 15 S. J. 748 ; Me Anchor Insura/nce Company, L. Eep. 5 Ch. 632 ; Be Medical Invalid Insurance Society, Spencer's Case, L. Eep. 6 Ch. 362 ; 24 L. T. Eep. N. S. 455 ; Allen's Case, Eeilly's Alb. Eep. 127 ; 16 S. J. 657 ; Ca/rr's Case, Be The Waterloo Life Assurance Com- pany, 33 Beav. 542 ; PuddAcomhe' s Case, sup. p. 66 ; Coghla/n's Case, sup. p. 31 ; Blundell's Case, swp. p. 39. De Gex, Q.C. and Horton Smith for the policy- holder. — In the amalgamation circulars the Water- loo policyholders were distinctly told that the terms and conditions of the policies were to remain unaltered by the arrangement. There was no extinction of the old obligation ; the obligation of the British Nation Association was cumulative and not substitutional. There was an offer of a cumulative security, and that offer was accepted. Thus there was no novation. Moreover this very case has been already decided by Lord Westbury in Conquest's case (vide sup. p. 67). See also Winter v. Innes, 4 My. & Cr. 101 ; Barris v. Farw^ll, 15 Beav. 31 ; Ek parte Jackson, 2 M. D. & De G, 146 ; Swift's case, sup. p. 89 ; Kelly's case, sup. p. 89 ; Barnes's case, sup. p. 72 ; Burns's case, sup. p. 127. With regard to the winding-up of the Waterloo Company and the advertisement for creditors, the policyholder knew nothing about it. In Carp- mael's case {sup. p. 95), Mr. Carpmael had been a patent agent, in constant communication with the Chancery Bar. He was dead, and Lord Westbury proceeded on the assumption that he knew all about the winding-up. Moreover there was an endorsement on the policy in that case, and there is none here. We originally plaimed the premiums paid since the order to wind-up the Waterloo Company. But we do not press this claim. Our claim is to prove against the Waterloo Company for what the policy was worth at the date of the winding-up of that company. Napier Siggins in reply. Judgment was reserved. Monday, Feb. 2. Lord RoMiLLY. — The Waterloo Life Assurance Company was con- stituted under the statutes of the 7 & 8 Vict., and the 10 & 11 Vict., by a deed of settlement dated the 10th Nov. 1851. The capital of the company was 400,000?., divided into 80,000 shares of bl. each. By a policy of assurance of the company, dated the 21st June 1854, it was, witnessed that the funds of the company should be subject, ac- cording to the deed of settlement, to pay to the executors, administrators, or assigns of George Lines, the sum of lOOZ. on proof of his death, with participation in the advantages peculiar to the company, subject to the payment by him of the quarterly premium of 12s, \\d. By a memo- randum dated the 17th Sept. 1854, endorsed on the policy, in lieu of the said premium a pre- mium of 11. 5s. 8(Z. was to be paid half yearly. On the 21st June 1858 Mr. Lines'effected a further policy for a like sum of lOOZ. at the same half yearly premium of 11. 5s. 8d. Mr. Lines con- tinued to pay to the company the premiums on the policies down to the 21st June 1862. A April 11, 1874.] THE LAW TIMES. 155 European Assurance] Stevens's Case; Nuiiall's Case. [Akbitbation. reveraionaiy bonus of 21. 10s. was declared on the first policy on the 29th Sept. 1859, and on the same day a like bonus of 10s. was added to the second policy. The British Nation Associa- tion was constituted under the same statute by a. deed of settlement dated the 28th Feb. 1855. In 1862 negotiations were set on foot for the transfer of the business of the Waterloo Com- pany to the British Nation Association, which were afterwards approved and carried into effect by a meeting on the 31st July 1862. On the same day an agreement, subject to confirmation by the shareholders of the company, was entered into by three of the board of directors of the Waterloo Company on the one part and three of the board of directors of the British Nation Association on the other part, for the transfer of the business of the Waterloo Company to the British Nation Associa- tion. Circulars informing policyholders and an- nuitants in the Waterloo Company were duly issued, accompanied by a regular notice from the British Nation Association. Mr. Lines received these circulars, and paid the premiums due on his policies to the British Nation Association, and received from them a receipt for the payment. In Dec. 1862 an order was made to wind-up the Waterloo Company, and on the 9th Jan. 1863 an advertisement for creditors was settled and signed by the chief clerk, and shortly afterwards the same was advertised. By an indenture of the 16th March 1865, it was mutually covenanted between the British Nation Association and the European Society that after the execution of the indenture the association and the society should be united and consolidated as one company under the name of the European Assurance Society, and that such united society should be regulated according to the Society's deed of the 2nd Sept. 1854, and the fiociety covenanted with the association that it would, after the execution ot that indenture, pay and perform all debts and other engagements, and would at all times keep indemnified the associa- tion and the individual shareholders thereof against all claims and demands whatsoever on account of the same or any or either of them. In the month of April 1867 a reversionary bonus of 11. 12s. was declared by the European Society upon each of thesQ policies, and notice of it was given by a circu- lar, which was received by Mr. Lines. The Euro- pean Society was ordered to be wound-up on the 12th Jan. 1872, and the British Nation is in course of voluntary liquidation under a resolution passed on the 18th Jan. 1872, which was continued under an order of the Court of Chancery, dated the 29th Jan. 1872, subject to the supervision of the court. The policies on the life of Mr. Lines were never endorsed either by the society or by the associa- tion. No proceedings had been taken in the liqui- dation of the Waterloo Company from 1868 until after the presentation of the petition to wind-up the European Society, when one Juliana Pud- dicombe, on the 15th April 1872, applied for leave to go in and prove such claim as she could estab- lish as a creditor in the Waterloo Company, not- vrithstanding that the time had expired for adjudi- cating upon claims. No opposition was offered to ber application, and leave was accordingly given to her to prove, on payment of the costs of the application. No opposition being offered, the claim was carried in and allowed. In this state of circumstances it is contended that Mr. Lines must be taken to have novated with the British Nation Association and the Eui-o- pean Society, or that at all events he must be taken to have had notice in the year 1862 of the order for winding-up the Waterloo Company, and to be concluded thoreby. I am of opinion that, though the subsequent dealings w Mr. Lines with the British Nation Association and the European Society, do not constitute a nova- tion by themselves, yet he must, upon the facts detailed, be taken to have had notice, in the year 1862, of the order for winding-up the Waterloo Company, which has not since carried on business ; and having received such notice, and having omitted to prove in respect of the value of his policies in the winding-up of that company in pursuance of the advertisements duly issued, he must be taken to have abandoned his right to prove against the Waterloo Company, for the purpose of adopting the British Nation Association and the European Society as his debtors, to whom he paid premiums after the date of the order to wind-up the Waterloo Com- pany, and that, consequently, he'ought not to be allowed now to prove in respect of his policies, or either of them, as against the Waterloo Company. With regard to the costs, Mr. Lines will be paid his costs by the official liquidators, the case hav- ing been agreed on as a representative case. Solicitor for Mr. Lines, Gharles Welliorne. Solicitors for the official liquidators, Mercer and Mercer. Jan. 8 and Feb. 2. Stevens's Case ; Nuttall's Case. Company — Amalgamation of companies — Novation — Consideration for the novation of a policy of asswrance. An agreement loas made that the E. Life Assurance Com/pamy should tahe over the business of the P. Life Assurance Company which was being woimd- wp, and should assume all their benefits amd lia- bilities ; and that the difference between the pre- miums payable wpon amy P. company's policy and tlie premiums which would have been payable had the policy been then granted by the E. Com- pany, should be valued as a capital sum with interest at 4 per cent, per annum, and that the amount of such valuation was to be payable to the E. Company by the assu/red, or at his option might remain a charge on the policy with interest at 4 per cent, per annum ; and that every such payment or cha/rge was to be deemed a debt from the P. Com/pavAj to the assured. 8. sivrrendered his P. Compa/ny's poliay, and re- ceived an E. Company's policy m exchange. On the new policy was am. endorsement that it was a condition of the assu/rcmee that Ml. 17s. Id. with interest thereon at 4 per cent, should be deemed a debt due on the policy, and that the Society should be entitled to deduct it when the sum assured became a claim, with a proviso that all sums that might be received from the P. Company should be deemed a part payment of the debt. N. did not sui render his policy, but had his old one indorsed with a similar indorsement. He paid but one premiu/m afterwards, and the policy d/ropped in consequence. He received dividends from time to time decla/red by the P. Company on the debts indorsed on this policy. 8. continued . his policy, a/n,d allowed the E. Company to receive 156 THE LAW TIMES. [April 11, 1874 Etieopban Assuuance] Stevens's Case: Ntjttall's Case. [Akbitration. ihe dividends declared on it hy the P. Company. In the winding-up it was Held, that the E. Company were entitled to recover from 8. the sum charged on his policy, together with interest at 4 per cent, as a deht due from himto the Gom-pany, giving credit for the di/oidends received hy S. from the P. Company. And that with regard to N., the E. Company were entitled to recover from him, the amount of the dividends re- ceived hy him from the P. Company. The facts of this case are sufficiently set fortli in the judgment. Napier Higgins, Q. C. and Montague Coohson, for the official liquidators of the European Society, contended with regard to Stevens, that after giving credit for the sums received by them from the Professional Company, the society were entitled to recover from him the sum charged on his policy, with interest at 4 per cent., as a debt due from him to the society, this being in fact the consideration payable by him to the society for taking over the risk on his policy. But for this consideration, a larger premium would have had to be paid to the society. And with regard to Nuttall, that the society were entitled to recover from him the dividends received by him from the Professional Company ; and also the balance of the amount charged on his policy, although the policy had been allowed to lapse. John Pearson, Q.O. and Waller, for Stevens and Nuttall, contended that no such debts could be recovered by the society ; and, further, that as regards the former, the amount charged on his policy, if declared a debt, ought to be deducted from the amount of his claim against the society, and not from his dividend. In Nuttall's case, a contention was at first raised, but was afterwards withdrawn, that the society's claim was barred by the Statute of Limitations. Roxburgh, Q.C., appeared for the Professional Company, but took no part in the argument, inas- much as the contention on the part of Stevens and Nuttall, was withdrawn, that "in the event of their being able to establish the existence of assets of the Professional Company by the application of the principle of marshalHng, they are entitled to prove against the company for the balances of the debts indorsed upon their respective policies." The following cases were referred to : Re Professional Life Assurance Company, L. Bep. 3 Eq. 668 j Qloag's case, sup., p. 82 ; Price V. Parity, 15 S. J. 654; Eagle Insurance Comipcmy's case, 16 S. J. 483 ; Delhi Bank's case, IS S. J. 923. Lord EOMTLLT. — Stevens's case and Nuttall's case, although not the same, are cases that arise from dealings with the Professional Insurance Company on arrangements being made for the European Assurance Society to take over its policies. Mr. Stevens was the holder of a life policy in the Professional Com- pany, and Mr.Nuttall was the holder of an endow- ment policy. Mr. Stevens's policy was granted in 1850, and Mr. Nuttall's in 1855. The European Society was established on the 2nd Sept. 1854. In June 1861 negotiations were set on foot be- tween Mr. Harding, the official manager of the Professional Company (which was being wound- up) on the one hand, and the European Society on the other hand, whereby the European Society was to take a transfer and assume all the bene- fits and liabilities of the life assurance and other business of the Professional Company, which was being wound-up. A memorandum of agreement was made between Mr. Harding of the one part, and the European Society of the other part, by which, among other things, it was agreed, to this effect, that " with respect to policies issued in exchange for those granted by the Professional Company previously to the 1st Jan. 1857, the difference between the premiums, which will he payable upon any such policy pursuant to the 3rd clause hereof, and the premiums which would have been payable, had the policy been granted by the European Society, according to their table applicable to such policy, and having regard to the present age of the assured, and other material circumstances (if any), is to be Valued as a capital sum upon a computation of interest at the rate of 4Z. per centum per annum, and the- amount of such valuation less 15 per cent, (ex- cept as to endowments, whereby payment is- assured at a specified age, or sooner in th» event of death), and the full amount of such valuation, as to such excepted endowments, is to be payable to the European Society by the assured or other person or persons to whom such policy shall be granted at the time of the same being granted ; or at the option of the assured, or other person or persons aforesaid, may remain a charge upon the policy with interest at the rate of 4Z. per centum per annum from that time, and the amount of every such payment or charge is to be deemed a debt from the company to the assured, or other person or persons makingj the payment, or whose policy shall be so charged ; but with respect to policies issued in exchangs for those granted by the Professional Company sabsequent to the 31st Dec. 1856, no such valua- tion or the difference of premium shall bo made and such exchange of policies shall be made with- out any payment by the assured or charge upon, the policy, the value of the difference of pre- miums which would be payable but for this stipu- lation, and the before-mentioned deduction of 15- per cent being regarded as an allowance or equiva- lent for the goodwill of the business." The agree- ment was on the 13th June 1861, approved and confirmed by the court, and a circular was sent to- holders of polices granted prior to 1st Jan. 1857, informing tbem of the arrangement, and another circular was sent to holders of policies granted subsequent to 1st Jan. 1857. Acting on the sug- gestion contained in the circular some of tha policyholders surrendered the policies which had been effected by them in the Professional Company and received policies in the European Society in ex- change. But the majority, including Kuttall, had their old policies indorsed with the following memo- randum : " It is hereby declared that subject to the proviso hereunder stated, the funds and property of the European Assurance Society of London as provided for in the deed of settlement of the said society shall be liable for the due payment of the sum of 500Z. (without profits) assured by the within policy with the Professional Life Assurance Company of London to the person or persons legally entitled to receive the same when the within named WiUiam Henry Nuttall shaU have attained the age of twenty-one years. Provided always that the future premiums payable ia respect of the said policy be duly paid to the said European Assurance Societv at thfi timea and iti June 13, 1874 ] THE LAW TIMES. 157 BUKOPEAN AsSTTBANCB] Gram's Case. [Aebiteation. the maimer set forth in the said policy. Provided always and it is hereby declared, that it is a condi- tion of this assurance that the sum of 118J. 14s. 8d. with interest thereon at the rate of U. per cent. per annum from the 1st day of June 1861, shall he deemed a debt upon this policy, and that the said Society shall be entitled to deduct the same from the amount assured when this policy shall become a claim. Provided always that all sums which shall be paid by the assured to the said society on account of the said debt, and also all sums which the said society may receive from the estate of the Professional Life Assurance Com- pany upon the same account shall be allowed in part payment of the said debt. 24th Oct. 1861." On the 19th June 1861, Stevens, instead of having his policy indorsed with a memorandum, ex- changed the policy, which was formerly held by him in the Professional Company, for a policy issued by the European Society, and upon such policy the following memorandum was indorsed : " It is hereby declared that it is a condition of this assurance that the siim of 44Z. 17s. Id. with in- terest thereon at the rate of 41. per cent, per annum, from the 1st June 1861 shall be deemed a debt due upon this policy, and that the within (European) society, shall be entitled to deduct the same from the amount assured when this policy shall become a claim. Pjovided always that all sums which shall be paid by the assured to the said society on account of the said debt, and also all sums which the said society may re- ceive from the estate of the Professional Life Assurance Company upon the same account, shall be allowed in part payment of the said debt." Nuttall only paid one premium after his policy had been indorsed, and for default the policy lapsed; but he, with others, received the divi- dends declared from time to time by the Profes- sional Company, amounting, in the aggregrate, to 12s. in the pound upon the debts indorsed on the policies ; but the majority, including Stevens, per- mitted the European Society to receive the first and second dividends, and themselves received the third. Li this state of the case questions have arisen between the official liquidator and the former policyholders in the Professional Company as to the right of proof in respect of policies, either exchanged by them or bearing the in- dorsement already referred to. Upon the whole of this case, I am of opinion that the European Society is entitled to recover the balance of the sums charged upon Mr. Stevens's policy, with interest at 4 per cent, as a debt due from him to the society, after giving credit thereon for the dividends received by the society from the Pro- fessional Company, and that it may be set-off against any dividend payable to Mm by the Euro- pean Society on his proof for the value of his policy. And with respect to Mr. Nuttall, I am of opinion that the European Society is entitled to recover from him the amount of the dividend received by him from the Professional Company. Solicitors for Mr. Stevens and Mr. Nuttall, Stevens, Wilkinson, and Harries. Solicitors for the Professional Company, Tra- vers Smith, and Oo. Solicitors for the European Society, Mercer and Mercer. Thursday, May 14. Ghain's Case, Life assurance company — Winding-up — Amalga- mation of companies — Novation of contract. An indorsement on a polici/ hy transferee company, enabling the policyholder to reside abroad for an additional premium, is not a novation. Where, after an amalgamation of two life assurance companies a policyholder in the transferor com- pany had his policy indorsed by the transferee company with a memorandum, that, in considera- tion of the additional premium of 161., the assured was allowed to proceed to, to reside in, and to return from, Jamaica without prejudice to the assurance, in the winding-up of the two companies, it was contended by the oficial liqui- dator that there had been a novation with the transferee company, but it was Held, that there had been no novation, and that the policyholder was entitled to claim against the transferror company. This was a question of novation. In Nov. 1861 the Eoyal Naval Society granted to Colonel Grain a policy on his own l3e, for the sum of 400Z. with profits. The form of the policy was similar to that on p. 89 {swp.) In Sept. 1866 the Eoyal Naval Society trans- ferred its business to the European Assurance Society by two deeds of amalgamation [vide sup. p. 48). The Eoyal Naval Society thereupon ceased to carry on business, and the entire business of the two societies was afterwards carried on by the European Society. The three circulars, that were sent to the policy- holders on this amalgamation {vide sup. pp. 89, 90), were received by Colonel Grain. No bonus was ever declared by the European Society in respect of his policy. On the policy were endorsed certain conditions ; among others the following : Persons, whose lives are assured, may also reside in any part of the Canadas, Nova Scotia, the Eastern Side of the Northern Seaboard States of the Western Hemi- sphere to the northward of latitude 40°, St. Helena, Ascension, Madeira, the Canary Islands, South Africa without the Tropic, Australia south of the Tropic, Tan Dieman'a Land, New Zealand, or the Falkland Islands without obtaining any special permission from the directors for that purpose, and without paying any additional premium beyond such additional premium for the risk of the voyage to or from any of those places as according to the society's existing rates for the time being shall be payable, or as a board of directors shall specially determine in each particular case for such risk. But policies on the lives of persons assured will become void on their going into any part of the world not above authorised, or going to any of the above - mentioned places out of Europe to reside there, or departing therefrom, or engaging in war, unless the insurance extend to such risk, or not extending thereto unless the assured take the earliest means of communicating every such going or departure, or engag- ing in war, to the directors under such regulations as they may from time to time prescribe, and pay the additional premiums on account of the voyage or other increased risk according to the society's existing rates for the time being,'or as a board of directors shall spe- cially determine for each particular case, such additional premiums being in no case less than for one whole year, unless the directors t.ViinIr proper to determine otherwise. In Sept. 1867, Colonel Grain wished to go to Jamaica, and to reside there; accordingly in order to enable him to do so, the following memorandum 158 THE LAW TIMES, [June 13, 1874. EUKOPEAN AsSUKANCE] "Wilson's Case. [Abbiteation. was indorsed on the policy by the European Society : Memorandnm. In consideration of the additional annual premium of d616, payable on the 2nd Sept. in every year, the within assured is allowed to proceed to, to reside in, and to return from Jamaica, without pre- judice to this assurance. Hehbt Lake, 2nd Sept. 1867. Manager. In the winding-up of the two companies, some years afterwards, Colonel Grain claimed to be entitled to prove on his policy against the Royal Naval Society. The official liquidator contended that by having had this indorsement made he had entered into a new contract with the European Society, which precluded him from claiming against the Royal Naval Society. Napier Higgins, Q.C. and Montague Goohson, for the oiHcial liquidator. — ^Here there was a novation in accordance with Lord Westbury's definition of novation (vide sup. p. 30). The parties met together for the purpose of entering into a new contract, and of releasing the transferor company. It certainly was a new contract with the European Society, for the Royal Naval Society might have imposed other conditions, and have charged a higher premium in respect of his going to Canada. The Royal Naval Society were not parties to this new contract, and it is to the European Society only that Colonel Grain must look for payment. Knox's case, Albert Arbitration, Eeilly's Kep., p. 132 ; 16 S. J. 673 ; Glazebrooh's case, Albert Arbitration, Eeilly's Rep., p. 135; Allen's case, Albert Arbitration, Eeilly's Eep., p. 127 ; 16 S. J. 657. F. 0. J. Millar for the policyholder was not called on. Lord RoMiLLY. — I think there is no novation in this case. It is governed in substance by Lord Westbury's deci- sions. Solicitors for Colonel Grain, Wood, Street, and Sayter. Solicitors for the official liquidators, Mercer and Mercer. Thursday, May 14. Wilson's Case. Life Assurance Company — Amalgamation of com- panies — Winding-up — Novation of contract — Policy. Claim on transferee company and admission of the claim before liquidation do not constitute a nova- tion. After the amalgamation of two life assurance com- panies, a policyholder in the transferor company died, and his executrix made a claim against the transferee company, and the claim was admitted. Subsequently the company was ordered to be wound-up, and in consequence the claim was not paid. The executrix then claimed against the transferor company, but the official liquidator of that company contended that there had been a novation with the tramsferee company. Held, that the claim on the transferee company, and the ad/mission of the claim,- did not constitute an abandonment of the liability of the transferor company. Tills was a question of novation. In 1848 the Royal Naval Society granted a policy of assurance to Andrew Wilson on his own life for the sum of £100 without profits. In 1866 the Royal Naval Society transferred its business to the European Assurance Society by two deeds of amalgamation (vide sup., p. 48). The Royal Naval Society thereupon ceased to carry on business, and the entire business of the two socie- ties was afterwards carried on by the European Society. The three circulars that were sent to the policy- holders on this amalgamation (vide sup., pp. 89, 90), were received by Mr. Wilson. Mr. Wilson never sent in his policy for indorse- ment by the European Society, nor was any new policy issued to him by that society guaranteeing the original policy or in lieu thereof. However, he paid his premiums thenceforward to the Euro- pean Society. He died on the 22nd April 1871, and Mrs. Wilson, his widow and executrix, duly proved his will. Shortly afterwards she made a claim on the policy against the European Society, writing to the direc- tors of that society as follows : — ' Gentlemen, — I have to announce the death of Mr. Andrew Wilson, whose life was assured in the European Assurance Society for lOOJ. ; No. of policy 1598. He died on Saturday the 22nd April 1871, at 1, Eathgar-place, Plumstead Common-road, Plumatead, Kent. Elizabeth Wilson. Thereupon the forms in proof of death, required by the European Society to be filled up, were sent to her, and were duly filled up by her and returned to the society. On the 16th May 1871 the claim was admitted by the directors of the European Society, and Mrs. Wilson received a notice of the admission. On the 10th June 1871 the petition to wind-up the European Society was presented ; and shortly afterwards a correspondence took place between Mrs. Wilson and the secretary of the European Society, ia which she urged the society to pay her the sum assured. It was, however, never paid, owing to the petition and the proceedings thereon and the winding-up order, which was made on the 12th Jan. 1872. The Royal Naval Society was also ordered to be wound-up on the 1st March 1872. And it was on the 29th April 1872 that Mrs. Wilson first made any claim in respect of her policy against the Royal Naval Society. The question for determination was whether she was entitled to prove on the policy against the Royal Naval Society, or whether there had been a novation with the European Society. Napier Higgins, Q. C. and Montague Coohson for the official liquidator. — The claim on the policy was made, and was admitted before the commence- ment of the winding-up. Mrs. Wilson must, there- fore, be taken to have adopted the European Society as her debtor, and to have released the Royal Naval Society. It may be that she had a right to elect against which of the two societies she should make her claim, but, having elected, she cannot now turn round and claim against the other, for the European Society would not be per- mitted to turn round and say, " We are not liable, it is the Royal Naval Society that is liable." This very question has been decided by Lord Caii-ns in Budden's case (Albert Arbitration, Reilly's Reports, p. 120 ; 16 S. J. 462). F. G.J. Millar for the policyholder, was not called on. June 13, 1874] THE LAW TIMES. 159 EuaoPBAJi Assurance] Doman's Case (No. 2) [AllBITRATION. Lord RoMiLLY. — I do not see any abandonment of the liability of the Royal Naval Society. Some aot ought to be proved showing that. Solicitor for Mrs. Wilson, George Whale. Solicitors for the official liquidator, Mercer and Mercer. Tuesday, Maij 12. Doman's Case (No. 2). Life assurance company — Winding-up — Conirihu- tory — Amalgamation of companies — Enrolment Of transfer — A 'policy held to include the com- pany's deed of setttement — Attempt to make a former shareholder in the transferor company a contributory. Where a policy of assurance witnesses that " the funds and property of the company shall he sub- ject and liable {according to the provisions oj the company's deed of settlement) to pay and satisfy " the sum assured, Seld, that the policy includes all the words of the deed. Where on an amalgamation of two life assurance companies, it was arranged that the shareholders of the transferor company should transfer their shares to the manager of the transferee company, and should receive in respect of their shares eitli&r cash or shares in the transferee company, and D., a shareholder, so transferred and received cash, but a memorial of the transfer was not enrolled in Chancery, in accordance with the transferor company's Act of Parliament, which provided that those whose, names should appear in the last enrolled memorial, should be liable to all legal proceedings under the Act as existing share- holders of the company, and the policies we^'e of the above form, on the winding-up of both the companies, the transferee company being unable id indemnify in full the creditors of the transferor compa/rvy, Seld, thai D. was not liable to contribute to the payment of creditors of the transferor company in respect of policies, although he might be liable to creditors in respect of the general debts. The facts of the case are stated in Boman's case (sup. p. 133). It was attempted to make Mr. Doman a contributory to the European Life Insurance and Annuity Company, he having, on the amalgamation of his company with the Peoples' Provident Society in 1858, transferred his shares to Mr. Cleland the manager of that society, and received 8L in respect of each share from the society, but allowed his name to remain on the memorial of shareholders enrolled in the Court of Chancery. On the hearing of the first case before Lord Westbury, his Lordship directed that " Mr. Doman ought to be considered as altogether freed and discharged from the status of shareholder in the European Company," but that declaration was made "without prejudice to any question as to the liability which Mr. Doman might be under, by virtue of his name remaining upon the memorial of shareholders of the European Company, to persons being creditors of the European Company and not having notice of or coming under the contract between the European Company and the People's Provident Society." The circumstances for a future application would, his Lordship said, probably be found to be the insufficiency of the assets of the People's Provident Society to answer all the claims that might be enforced by virtue of that registered memorial against Mr. Doman {sup. 136.) The official liquidator had now investigated the liabilities of the European Company, and had found that they consisted of claims on policies and annuity contracts, amounting in the aggregate to 274.,437i. 8s. dd. The whole of the assets of the company consisted of i2l9l. 49s., which had been received from policyholders in respect of pre- miums between the 12th Jan. 1872, and the 23rd Jan. 1873, the respective dates of the orders to wind-up the society and the company. Nearly all the shares were now in the name of Mr. Cleland, the former manager of the People's Provident Society ; and it was believed that no payment could be obtained from any of the persons m whose names the shares now stood. "With regard to Mr. Cleland, it was never intended that he should contribute to the assets of the company, the shares having been transferred to him as part of the machinery for effecting the amalgamation of the company with the society. And the transferee society would be far from being able to pay in full the claims on the transferor company. The official liquidator accordingly now applied under the reservation of Lord Westbury, to have it declared that Mr. Doman was liable to contribute to the payment of the debts of the European Com- pany in respect of policies, &c., granted during his membership. In addition to sects. 18 and 23 {sup. p. 133) the European Company's Act of Parliament of 1814 contained the following sections : Sect. 9 : That it should be lawful for the plaintiff to cause execution upon any judgment, decree, or order obtained by him in any such action or suit, against any such nominal party as aforesaid, to be issued against all or any of the shareholders tor the time being of the com- pany, and if such execution should be ineffectual to obtain satisfaction of the sums sought to be recovered thereby, then it should be lawful for him to causo execution to be issued against any person who was a shareholder of the company at the time the contract was entered into, upon which such action or suit should have been instituted. But no such execution against any person having ceased to be a shareholder should be issued without leave first granted by the court in which such jpdgment, decree, or order should have been ob- tained upon motion in open court, and, after notice of such motion, given to the person sought to be charged. Provided always that no person having ceased to be a shareholder of the company should be liable for the pay- ment of any debt for which any such judgment, decrep, or order should have been so obtained, for which he would not have been liable as a partner, in case a suit had been originally bronght against him for the same ; nor should the Aot be deemed to enable any party to a suit to recover from any individual shareholder of the company, or any other person whomsoever, any other or greater sum than might have been recovered if the Act had not been passed. Sect. 32 : That nothing in the Act contained should extend to incorporate the company, or to relieve or discharge the company, or any of the shareholders thereof, from any responsibility, duty, contract, or obligation whatsoever to which by law they then were, or at any time there- after might be, subject or liable, either as between such company and other parties, or as between the company and any of the individual shareholders thereof and others , or as between themselves, or in any manner whatsoever. Clause 125 of the European Company's deed of settlement : 160 THE LAW TIMES. [June 18, 1874. European Assukance] Domak's Case (No. 2). lAkbitbation. That every seller of shares in the capital of the com- pany shall transfer the same to the purchaser in such manner as the board of directors shall prescribe, either at the office of the company or at such other place as the board shall require, and every seller, immediately after he or she shall, in the manner prescribed by the board of directors, have transferred his or her shares, and shall have paid all instalments that may then have be- come due on the shares transferred, shall, in respect of such shares, cease to be a proprietor of the company, and shall for ever thenceforth be acquitted and dis- charged from all further obligations in respect of such shares, and from all the covenants, agreements, regula- tions, and stipulations to which, by the deed of settle- ment, he or she would have been liable in respect of the same shares, if he or she had not transferred the same. The form of the policy granted by the European Company witnessed that in consideration of the payment of the premiums " the funds and property of the said company shall be subject and liable (according to the provisions of the said company's deed of settlement, bearing date the 10th July 1820) to pay and satisfy" .... the sum as- sured. Napier Siggins, Q.C. and Montague Ooohson for the official liquidator: — The circumstances, alluded to in Lord Westbury's judgment in Daman's case, No. 1, have now arisen ; the People's Provident Society are not able to pay the creditors of the European Company in full. The company is a mere common law partnership, not registered under any joint stock companies Act, and there- fore the partners are liable to all the contracts entered into while they were partners. Whatever be the provisions of the company's deed of settle-' ment, they do not afiect the rights of creditors, they are only an arrangement of the partners inter se. Creditors are not bound by the deed of settlement, for the policies do not incorporate the deed, the slight reference in them! to the deed does not make it part of the contract : {Barnes's case, swp. p. 72) All that we ask is that it may be declared that Mr. Doman has not got rid of his common law liability on obligations entered into while he was a partner in the company. If this is not done, we shall have the strange result of a company being ordered to be wound-np on the petition of an annuity holder, of the liabilities on policies being nearly 300,000L, and of there being no assets to meet the liabilities. In any case, Mr. Doman must repay to the company what he re- ceived in respect of the shares, for this was a return of capital : Murrough's ami Chamberlain's Case, 16 S. J. 483 ; Lord Digiy's Case, slip. p. 150. H.M. Jackson, Q.C. andF. G.J. Millar for Doman. — In Daman's case. No. 1, Lord Westbury held that Mr. Doman had made de facto and dejure a valid transfer of his shares, and that he was to be discharged from the status of shareholder in the European Company, reserving to the official liqui- dator a right to make an application under certain circumstances. Those circumstances have not arisen. If there were any debts on contract that did not come within the company's deed, then there niight possibly be materials to enable the official liquidator to come here under Lord "West- bury's reservation. But as it is, all the liabilities on the policies come within the deed of settle- ment : Carr's case; Be Waterloo Company, 33 Beav. 5ii; Cla/rlce's case, Albert Arbitration Minutes, p. 788. "With regard to Lord Dighy's case (ubi sup.), and Murrough and Chamberlain's case (ubi sup.), the man remained a shareholder, and in thut capacity was ordered to refund the money he had received. Napier Higgins in reply. — ^The contract in the European Company's policies differs considerably from the contracts in the policies in Oarr's case and in Olarhe's case. There the policies embodied . the deed of settlement, but here that is not so. [Lord EoMiLLT. — I think that that clause in the policy amounts to the same as if it contained the word " alone," to be found in the other cases.] LordEoMiLLT. — • I think all that I have to do in this case is to express an opinion upon Lord "Westbury's judg- ment, and Lord Westbury's judgment appears to me to be conclusive in favour of Mr. Doman, because it is stated by Lord Westbury subject to a reservation in favour of Mr. Jackson in this way : he says, " Those circumstances may probably be found to be the insufficiency of the assets of the People's Provident Society to answer all the claims that might be enforced by virtue of that registered memorial against Mr. Doman." And then Mr. Jackson says that those words do not require an answer; there is no replication, and he says that he will take the order in that way. Now I am disposed to think, looking at that, and at Lord Cairns's decision, that that was a decision upon the words of the deed of settle- ment which I have before me, and that under that deed of settlement he considered that the words of the policy included all the words of the deed. The 125th clause appears to me the clause most favour- able to Mr. Doman : " That every seller of shares in the capital of the company shall transfer the same to the purchaser in such manner as the board of directors shall prescribe, either at the office of the company or at such other place as the board shall require, and every seller, immediately after he or she shall in the manner prescribed by the board of directors have transferred his or her shares, and shall have paid all instalments that may then have become due on the shares transferred, shall in respect of such shares cease to be a proprietor of the company, and shall for ever thenceforth be acquitted and discharged from all further oMiga- tions in respect of such shares, and from all the covenants, agreements, regulations, and stipula- tions to which, by the deed of settlement, he or she would have been liable in respect of the same shares if he or she had not transferred the same." I think that that includes the whole. I adopt Lord Cairns's view : I think that there are three classes of debts which are afiected in these cases, one of which is not included in the covenant at all : first, there are the regular debt/S on the poli- cies which are granted ; then, there are also the guarantee debts ; but, in addition to those, there are things which are bought for the sake of carry- ing on the business of the company, such as that which is sometimes called stationery. The secre- tary buys a ream of paper, which is taken into the office, and is employed for the purposes of the company. That, I think, is not included ; and if there are any debts of that description, no doubt he would be liable for them, unless barred by the Statute of Limitations. The others appear to be included in the deed of settlement. The expres- sions used by Lord Cairns in his judgment in Clarice's case are expressions which I consider Jane 27, 1874] THE LAW TIMES. 161 European Assubance] Anglo-Austbalian Company's Indemnity Case. [Arbitration. applicable to this case. Lord Cairns's observa- tions appear to me to govern the whole of this case ;(a) and Lord Westbury, if he were sitting here and this case were now being argued before him, would no doubt say, " I intended to cover this with the observations that I have already made." I do not think any distinction can be made in respect of the different sort of debt, which Lord Cairns says is of very slight amount, and not of any appreciable value. These are not cases under Lord Westbury's proviso and reservation, and, therefore, his judgment must be taken to be a judgment in favour of Mr. Doman on the point now raised before me, and I shall so declare. SoUoitors for Mr. Doman, Wood, Street, and Hayier. Solicitors for the official liquidators of the Euro- pean Society, Mercer and Mercer. (a) Lord Cairns. — " It seems to me clear that these gentle- men cannot be pat on the list as contribntories in respect of the first or the second class of debts, that is to say, debts on policies, and debts on gnaranteea, where under the deed the liability is limited, and where nnder the deed the ontgoing shareholder on transfer and registra- tion ceases to be liable on the shares. Therefore, these two classes of debts may be put ont of the case. It seems to me upon the construction of the deed, and especially the 210fch clause, the engagement between the outgoing and the incoming shareholder is this, that the liability of the outgoing shareholder shall determine both as to debts then present, and as to debts afterwards to be incurred, and the whole liabili^ shall be the liability of the new shareholder in respect of those shares. In this case it seems further to me that in substance everything was done, as between the outgoing and the incoming share- holder, to which that 210th clause can apply. Therefore, I repeat that taking the two first classes of debts, it seems to me there is no ground at all for putting the retiring shareholder ou the list. A question might arise as to the third class of debts, the general debts, where the liability in point of amount might be unlimited, and not confined to the capital. A question might arise whether in respect of so much of that different class of debts as had accrued before the transfer, the outgoing shareholder would not continne to be liable. But if he were liable (as I have said in the course of Mr. Jackson's argument), it wouldbe the liability of a surety, and the other shareholder in the company, who had come into and was in possession of the shares of the outgoing share- holder, would be the principal debtor, and would be bound without limit of liability to make good anything that the surety would have to pay. That alone would raise a great difficulty as to my sanctioning so useless an operation as patting him on the list in respect of his suretyship. Then there is a further difficulty if he is only to be put on the list in respect of those debts. Before patting him on I should require the official liqui- dator to show me what the debts of this class were which had accrued before the transfer, in order to see whether there was any appreciable amount in respect of which these transferring shareholders could be pat on the list. Bat the official liquidator informs me in answer to my question, that it would be found that there is no appre- ciable amount of debts of that class at this time. Then can I put the retiring shareholder on the list in respect of the costs of the windingrup P It seems to m^ certainly not ; because, in order to o;i^te a liability' for t^ej^osts of the winding-up, you must Save good reason' for putting the retiring shareholder on the list in order to make some payment in respect of debt. It is only because he is found on the list as a person liable to pay some of the debts, that a jurisdiction to m aS^ji im contribute to the costs would arise. For thesenpona I am of opinion that I am not able to put the retiring shareholder, nor in this case the executors of the retiring shareholder, on the list of contributories." (CZarie's case). Dec. 3, 1873 ; Jan. 6, 1874. Anglo- Australian Company's Indemnity Case. Life Assurance Company — Amalgamation of com- panies — Winding-up — Claims for indemnity — ■ Covenant to indemnify not limited to capital of transferee company. The deed of settlement of the B. P. Inswance Com- pany contained a provision that ^^jjf^^hould he inserted in every policy or otjier assurance a pro- vision that the capital should alone he Kahle on the policies, Sfc. Anoth^ company, the A. A. Company, transferred its business to the B. P. Company, and the amalgixmation deed contained an agreement hy the B. P. Company to indemnify the A. A. Compomy in respect of all engagements. On the B. P. Com/pany being woikid-up it was con- tended that the liability of that compcCf^to indem- nify the A. A. Company in respect of policies granted by the A. A. Company was limited to the capital of the B. P. Company. Held, that there was no limitation whatever to the liability. ' This was a question as to whether the British pro- vident Society was, under a deed^of amalgamation, bound to indemnify the Anglo-Australian Com- pany against all claims withAi' any limitation of liability. The British Provident Life and Eire Assurance Society was established under a deed of settlement dated the 14th of Dec. 1850, with, a nominal capital of 100,000Z. divided into 10,000 sbaresof lOZ. ea;ch, and liable to be increased to l,0d^!w8ff The 4eed contained the following provisions : jfe- ;>/' Clause 77: ,«,«,fjp^ That all assurances against lives or fire and other con- tingencies, and all other assurauo es to be granted by the society, shall be effected, and all business of the society shall be done and transacted upon such terms and con- ditions and in such manner as the board of directors shall think proper. Clause 80 : That there shall be inserted in every policy or othet . assurance to be issaed and granted by the society, a refe- rence to these presents, and a clause, condition, or provi- sion that the capital and funds of the said society for ' the time being undisposed of according to the deed of settlement, shall alone be answerable for any claims under such policy, and negativing an unconditional liability, — Provided, always, that nothing herein con- tained shall limit the liability of any shareholder ttee to the performance of such contract, or prejudice the right of any person or persons against any such shareholder in respect of such contract, under or by virtue of the statute 7 & 8 Vict. c. 110. Clause 213 : ^ij That every proprietor and member of the 80oietjfj(hia or her heirs, executors, and administrators, as betwEI^ him, her, or them, and the other proprietors of the society, and their respective heirs, executors, and administrators, shall be answerable and accountablaiSnd liable for or in respect of the calls, debts, losses, or damages of or upon the society, in proportion to his or her share aad interest for the time being of the funds or property of the society, but not further or otherwise. The Anglo- Australian Company was established under a deed of settlement dated the 9th of Sept. 1853, and containing provisions for the dissolution of the company and for winding it up in such, manner as the directors should determine. Both the companies were duly registered and incorporated under the 7 & 8 Vict. c. 110. In 1858 the Anglo- Australian Company trans- • ferred its business to the British Provident Society. ■^»; By the deed of amalgamation, dated the Ist June ' 1858, it was agreed — » 162 THE LAW TIMES. [June 27, 1874. ExmoPEiN AssiTBAifCE] Ajiglo-Atistbalian Oompaky's Indemnity Case. lAjcbitkation. First. — That th^business and property, efiecta, liabi£ ties, and engagom'ents of the Anglo- Australian Assooia- tion as fully set out and particularised in the schedules hereunto annexed, including also all the risks and engagements of the lifeassurance and endowment policies, and also the policies or grants of annuities issued by and now in force of the Anglo-Australian Association, be and are hereby absolutely transferred to, and are, and shall be, undertaken by the British Provident Society. . . . Thirdly. — that the shareholders of the Anglo-Austra^ lian Association shall become shareholders in the British Provident Society, andj^all execute the deed of settle- ment of the said compajiy for the same or any equivalent number or amount of shaxes as are now held by them in the Anglo-Australian Association, and that thereupon, and in oonsideraiipi of the said execution by them of such deed of settlemeill, it is hereby expressly declared and agreed that the moneys or calls already paid by such shareholder^ (so eseoufipg the deed of settlement of the British Provi- dent Society) toH}he Anglo-Australian Association shall be passed to the credit of such shareholders in respect of the shares which shall be so subscribed for by them in the deed of settlement of the said British Provident Society, and thereupon the said shareholders shall out of the funds and property of the said British Provident Society be absolutely held harmless and indemnified againik^nyand all liabilities in respect of the said Anglo- AustJ^Uan Association by reason of the execution as sha)!BlW!|d«^;.or-^roprietorB by themselves or their lawful attorn^s of the deed of settlement of the said Anglo- A^traUan Association. By a subsequent deed, dated the 28th Oct. 1868, all the business and assets of the Anglo- Australian Company were transferred by them to trustees for the Biweh Provident Society. In March, ,1859 tie British Provident Society tranasferred its business to the British Nation Asso- ciation, which subsequently in 1865 transferred its business to the.^ropean Society. In Nov. 1859 a petition was presented by Mr. Collins, a shareholder in the British Provident Society, to wind-up,' the Society. On the 6th March 1861, an order to wind-up was made by Vice-Cha;ncellor ,Jfiiidersley, and subsequently an official "manager was Appointed. A shareholder of the Anglo- Australian Company presented a petition to wind-up that company ; and on the 20th Jan. 1860 tlje petition was dis- missed by Yice-Chancellor Kindersley on the ground that the British Provident Society, of which the petitioner was a shareholder, would have to pay all the debts of the Anglo- Australian Company in exoneration of the shareholders of that company. In June 1860 the Anglo-Australian Company filed! a bill against the British Provident Society, praying that they might be ordered specifically to perform their contract to pay the debts and liabi- lities of the Anglo-Australian Company, and to inHfmnify that company in respect of such debts and liabilities. In June 1861, the official manager of the British Provident Society filed a cross bill, praying that the ieed of amalgamation of the Ist June 1858 might be declared to have been obtained by fraud and misrepresentation on the part of the Anglo- Australian Company, and that it might be declared void, and that the deed of transfer of the 28th Oct. 1868, might be delivered up to be cancelled. On th^ 18th Jan. 1862, Vice-Ohancellor Stuart made a decree that the official manager of the British Provident Society was bound according to the terms of the said indenture of let June 1858, out of the funds and property of the British Provi- dent Society absolutely to hold harmless and in- demnify the Anglo- Australian Company and the shareholders thereof against all liabilities in re- spect of the last-mentioned company by reason of the execution of such shareholders, by themselves or their lawful attorneys, of the deed of settlement of the Anglo-Australian Company. This case came before Lord Chancellor Westbury on appeal on the 15th April 1862, and he made a decree almost in the same terms : that the official manager of the British Provident Society was bound according to the terms of the indenture of 1st June, 1858, out of the funds and property of the said British Provident Society to save harm- less and to indemnify the said Anglo- Australian Company against all liabilities of the said last- mentioned company ; the words " and the share- holders thereof," being thus omitted from the previous decree. By an order made by Vice-Chancellor Kinders- ley on the 22nd April 1864, on the claim of certain creditors of the British Provident Society, it was declared that the Anglo- Australian Company was entitled to stand as a creditor of the British Provi- dent Society in respect of such debts or liabilities as were undertaken by that society by the deed of amalgamation of the 1st June 1858. In pursuance of this order all the liabilities of the Anglo- Australian Company were discha,rged by the official manager of the British Provident Society, except those on certain of the policies raentioned in the schedule to the deed of amalga- mation. Messrs. Harman and Pratt were the holders of certain of these policies, and had been declared by Lord Westbury to be entitled to prove on them against the' Anglo- Australian Company. That company now applied to have it declared that the British Provident Society were bound to in- demnify the company in respect of these claims without any limitation of liability. Shebheare (with him H. M. JacJcson, Q.C.), for the Anglo-Australian Company. — We have an express agreement on the part of the British Provident Society to undertake the liabilities of the Anglo- Australian Company. There is nothing whatever to limit this engagement of the society. It is true that in the British Nation Indemnity Case (step. p. 4 ; EeiUy's European Beports, p. 3) Lord Westbury held that the liability of the European Society to indemnify the British Nation Association was limited to the subscribed capital of the society ; but there the European deed of settlement contained an express proviso that the subscribed capital of the society should alone be liable to answer claims. Here there is no such proviso. With regard to the Albert Indemnity Claims (Reilly's Albert Eeports, p. 17), Lord Cairns there held that in some of these oases there was no power to amalgamate. Here there is full power in both bhe companies to effect an amalga- mation. In others of those cases he held there was no inteation on the part o^ the transferee com- pany tqg undigrtake an unliniited liability ; and if theref'^had ■ been, then they were pro- hibited by their deed of settlement from doing so. Moreover.'n.here it has already been adjudicated upon by the Court of Chancery, which has decreed that the British Provident, Society was bound to indemnify the Anglo- Jlustralian Company. Na/pier Siggins, Q.O., and Montague Codhson for the British Provident Society. — We do not wish to go behind the decrees of the Court of Chancery. What we contend is, that the indem- nity is limited to the capital of the British Provi- dent Society. It was the intention of the amal- June 27, 1874.] THE LAW TIMES. 163 ETmoPEAN Asstjuancb] Bbown and Tylben's Case. [Abbitbation. gamation deed so to limit it. Moreover, the deed of settlement of the British Provident Society clearly prohibited the directors from entering into engagements on policies, except with the re- striction that the capital was alone to be liable. - Clause 80 is conclusive on this point. Thus, this case is covered by the Aliei-t Indemnity Claims {uhi sup.) and British Nation Indemnity case (libi sup.), where the provisions in the deeds of settlement of the transferee companies were to a similar effect, and it was held that an unlimited agreement to indemnify was ultra vires of the directors. Lord RoMniY. — This is an application by the Anglo-Australian Company that the British Provident Society may be ordered, by a call to be made on the contributories of the society, to pay the amounts due to George Harman and George Pratt, in respect of the value of their policies, dated respec- tively the 29th Feb. 1856, and the 28th Nov. 1856, eSected with, the Anglo-Australian Company, and which by the indenture of the 1st June 1858, were undertaken by the British Provident Society, and that, if necessary, an order may be made for winding-up that society, for the purpose of pro- curing the necessary funds. The case of the British Provident Society is, that they are liable only to, the extent of the indemnity entered into by the deed of June 1858, and that the indemnity thereby provided was confined to the subscribed capital only ; whereas the Anglo- Australian Com- pany claim an unlimited liability against the British Provident Society, and, if necessary, an order for winding-up that society in order to pro- vide the necessary funds. And in support of their case, both parties appeal to the decision of Lord Cairns in the Albert Arbitration Indemnity cases (Eeilly's Albert Eep. p. 17), confirmed by the decision of Lord Westbnry in the present matter. The facts there reported show that Lord Cairns's decision turned upon the terms of the contract, and all his argument tends to show that in a contract, similar to that which is before me, his decision would have compelled the British Provi- dent Society to pay the debts incurred by that society on tlie policies of Harman and Pratt. There has been, however, an express decision upon this particular case on a bill filed against the British Provident Society by the Anglo- Australian Company for the specific performance of their contract, which "was met by a cross bill by the Anglo- Australian Company, praying that the exe- cution by the British Provident Society of the in- denture of the 1st June 1858 might be declared to have been obtained by fraud, and that it was void and ought to be delivered up to be cancelled. The Yice-Chancellor did, by decree in Jan. 1862, declare that the British Provident Society were bound to indemnify the Anglo-Australian Company and thejshareholders thereof, in respect of all liabili- ties of the company by reason of the execution of such shareholders of the deed of settlement of the Anglo- Australian Company, and dismissed the cross bill with costs. By the order of Lord West- bury of the 15th April 1862, on appeal from the decree of the Vice-Chanoelior Stuart, the British Provident Society were ordered to indemnify the Anglo- Australian Company against all the liabili- ties of the said company. By an order of the Vice-Chancellor Kindersley in April 1864, it was declared that the Anglo-Australian Company was eiTtitled to stand as a creditor of the said British Provident Society in respect of such liabilities as were undertaken by the said society'by the deed of June 1858. The matter was again brought before Lord Westbury in this arbitration in the month of June last, when leave was given to the said Harman and Pratt to prove for the full amount of their claims, and in case of non- payment to issue a summons for the liquidation of the Anglo-Australian Company. In consequence of that order the Anglo- Australian Company have issued the summons now before me. And the sole question now to be determined is whether the Anglo- Australian Company's liability to pay is limited to the subscribed capital' of the British Provident Society, or whether it has no limit at all. Upon looking at the cases, both that which was decided by Lord Cairns, and that which was decided by Lord Westbury, I am of opinion that they support the applicant's case, and that the reasonings and observations, upon which those cases were decided, applied to the facts of this case as they now appear, make out a decision in favour of the Anglo- Australian Company ; for Lord Cairns decided it upon the ground that there was not in the Albert case any power to amalgamate, and that the directors a,oted' ultra vires, when they attempted to alter the fundamental principles of the original deed by giving to the directors a new authority to cast on the shareholders of the Albert a liability exceeding that which would arise from the amount subscribed on the original shares. The result is that, in my opinion, the cases before Vice-Chancellor Stuart, Tice-Chaucellor Kinders- ley, Lord Cairns, and Lord Westbury, all substan- tially point in the same direction, and tend to show that the liability of the British Provident Society, under the deed of June 1858 is, under the events that have happened, an unconditional liability, not limited to the subscribed capital of .that society, and I shall make the order applied for accord- ingly- Solicitor for the Anglo -Australian (Jompany, Gover. Solicitors for the ofBcial liquidator of the British Provident Society, Mercer and Mercer. Monday, May 11. Beown akd Tylden's Case. Company — Winding-up — Petition to wind-up — Companies Act 1862, e. 164 — Money ordered to he repaid to a company, where it had been paid by the company between the presentation of the petition to wind-up and the wvnding-up order. The proof of a death was sent to an insurance com- pany on the 8th March 1871, and the claim on the policy was allowed by the company on the nth April 1871, and it was ' then arranged that the sum assured should be paid on the Wth June 1871, it being w provision of the policy that it was to he paid within three m,onths after satisfactory proof of the death. On, the 10th June 1871, a petition/, was presented to wind-up the company. On the 22w;Z June 1871, the policyholders' solicitor applied for payment of the money, and threatened to take proceedings if it were not paid. After fu/rther communications a cheque for the sum assivred, dated the 20th Juns, was on the 8th July paid to the policyholders' solicitor, who it was admitted knew of ihe petition. 1^4 THE LAW TIMES. [June 27, 1874 EtJEOPEAN AsSUBA2fCE] Bkown aub Ttlden's Case. [Abbithation. On the 12th Jan. 1872, the order was made to wind-wp the company. Held, that the money so paid must he repaid to the company ; the payment homing been a froMdulent preference of a creditor after the commencement of the winding-up under the Companies Act 1862. This was a question as to the refundment of moneys paid by the directors of the European Society in the interval between the presentation of the petition to wind-up and the winding-up order. , Major A. Brown and the Eev. W. Tylden were the holders of three policies on the life of Mr. John Blyth for lOOOZ., 600J., and 6001. respectively. The policies were originally granted by the Phoenix Life Assurance Company, which subsequently transferred its business to the British Nation Association, which also transferred its business to the European Society. Mr. Blyth died on the 22nd Feb. 1871, and on the 24th Feb. 1871 Messrs. Brown and Tylden made their claim on the policies against the European Society. A formal proof of the death was sent to the office of the society on the 8th March 1871. On the 11th April 1871 the proof of the death was admitted by the directors, and the 16th June 1871 was fixed as the day for the payment of the sums assured by the policies, it being a provision in the policies that the sum assured should be paid " within three calendar months after satisfEic- tory proof of the death of the assured shaU. have been received at the office of the company." On the 10th June 1871 was presented the peti- tion to wind-up the European Societyi It was advertised in the London Gazette, the Times, and other papers on the 13th and 14th June 1871. On the 22nd June 1871 Messrs. Kingsford and Dorman, the solicitors of the policyholders, wrote to the society requesting payment of the sum assured, and stating that otherwise they would be compelled to take proceedings to recover it. On the 23rd June 1871 the petition was heard before Vice-Ohancellor Malins, and reports of the case appeared the next day in the newspapers, and on the 28th and 29th June, and the 7th and 8th July 1871 the case was also heard. On the 1st July 1871 a writ was issued to re- cover the amount, and on the 3rd July one of the solicitors of the policyholders called at the society's office to serve the writ, and the secretary then requested him not to serve the writ, and assured him that the money would be paid without delay. Accordingly the solicitor refrained from serving the writ, and on the 8th July 1871 the sum assured, with interest (2088J. 128.), was paid to him by the law secretary of the European Society outside Yice-Ohancellor Malins's court by a cheque dated 20th June 1871. The order to wind-up the European Society was not made until the 12th Jan. 1872. In the winding-up the official liquidator now applied that the money so paid should be paid back to the society. NapierHiggins, Q.O., and Montague Cookson for the official hquidator.-Under the 84th section of the Companies Act, 1862, the winding-up of the society is to be deemed to commence at the time of the presentation of the petition. And under the 153rd section (sup. p. 93) ail dispositions of the property of the company, made between the com- mencement of the winding-up and the winding-up order, are to be void. Moreover, the payment was in effect an undue or fraudulent preference of a creditor under the 164th section (sup. p. 93). This case differs from the National Banh's case (sup. p. 92), where Lord "Westbury could not impute a knowledge of the petition to the person to whom the payment had been made on the day before the advertisement of the petition in the Gazette. Here the money was received by the solicitors of the policyholder, and they were well aware of the proceedings on the petition. Emmerson's case; Be London Hambv/rgh, ^c, BanTc, L. Bep. 2 Eq. 231 ; 14 L. T. Kep. N. S. 746. H. M. Jackson, Q.C., and Everitt for the policy- holders. — In the National Bank's case (sup. p. 92) Lord Westbury drew attention to the fact that the court ought to protect the discretionary power con- ferred upon it by the 163rd section. And this is a case in which the court would exercise its discre- tion in favour of the payee of the money, who may have spent it and be wholly unable to repay it. Moreover, Lord Westbury ttought it would be a difficult thing to hold that the payment of a lond fide debt was a " disposition of the property " of the company. It has been expressly held that bond fide dispositions of property of a company in the ordinary course of its trade between the pre- sentation of a petition to wind-up and the winding- up order will as of course in the exercise of the court's discretion be confirmed. Pearson's case ; Be the Wiltshire Iron Oompamy, L. Eep. 3 Ch. App. 443 ; 18 L. T. Eep. N. S. 38 & 40 ; Oibbs amd Wesfs case, L. Eep. 10 Eq. 312 ; 23 L. T. Eep. N. S. 350. Unless this were the case, the presentation of a petition would paralyse an insurance company ; and it was one of the objects of the Life Assurance Companies Act, 1870 (33 & 34 Vict. c. 61), to enable an insurance company to carry on its business after the presentation of a petition, in the hopes that it might be sold as a going concern. With regard to the 164th section of the Companies Act, and the contention that the analogous rule in bank- ruptcy should guide the decision of the court, there is no fraudulent preference here, and in bankruptcy the test is not notice of the petition, but notice of an act of bankruptcy ; though the solicitors knew of the petition, the policy-holders knew nothing about it, and they certainly had no knowledge of the insolvency of the company. It was not until the 24th July that the directors admitted the insolvency, and the 10th July was the date on which it appeared in the papers that the Yice- Chancellor held that a prima facie case of insolvency had been made out. And it was on the 8th July, before either of these dates, that the money was paid. Lord EOMILLT.; — I do not think I have any option in the matter. This is a case in which money is paid after petitions are presented to wind-up making violent charges against the company, and, if they are true, the truth of which they must themselves be acquainted with, and which they afterwards admit. I have already had to consider a case of a similar descrip- tion. What is to be done under the circumstances in a case of money paid to a gentleman who sells out of the army and who has mortgaged the purchase-money P The money is given to Messrs. Cox to pay, and, as everybody knows, the priority of making the claim at Cox's gains the advantage June 27, 1874] THE LAW TIMES. 165 European AsstfUANCB] EoYAL Naval Society's Indemnity Case. [Abbiieation. of the payment. Accordingly, on the morning of ■the day on which the money is paid it is known that it will be paid ; and on that morning Messrs. Cox's Banking House is besieged by persons, who wait till the doors are open for the purpose of putting in their claims on the sum of money. When the bank opens there is a gentleman to receive the claims, and he receives some ten or fifteen, all of them coming in at once. The ques- tion in such a case is, who is to be held to be the first. It is asked who was the first to come. All of them coming together or appearing to come together, he says they are all equal, and must all be treated as equal, and you cannot say there is anyone that has priority over the others; and if you were to attempt to do such a thing as that, you would give rise to a lawsuit, because you would have the case of a man who had been perhaps waiting there over-night. Indeed, you cannot specify the time. Now here is a case of a sum of money, which is paid, and which is paid after the petition has been presented a month. If the payment was made at the same moment that the claim was made, no doubt it would assist the case of the applicant. But there is no such thing. It is paid on the 8th July, and the winding-up of the company dates from the 10th June. Well, how is it possible to say that a fraudulent preference in the proper sense of the term was not made ? They make a claim on the company ; the company says : ■" Prove the death : you are a creditor ; we will pay you, we wiU give you a cheque." And then they give the cheque which is dated the 20th June. Then on the 8th July it is paid. They were aware there was such a petition presented. The mere accident that the money was not paid two or three days sooner is a misfortune, but it is a misfortune that everybody is subject to, and therefore it is a case in which the person must take the conse- quences. Solicitors for the policyholders, Kmgsford and Dorman. Solicitors for the official liqi;Lidators of the European Society, Mercer and Mercer. May 14 and 18. EoYAL Naval Society's Indemnity Case. Life Asswrance compa/ny — Amalgamation of com- pamies — Winding-up — Claims for i/ndemnity — Covenant to indemnify limited to capital of trans- feree CMnpany — Amoimt of proof under a covenant to indemnify — Costs of winMng-up the transferor company, probably not all to be paid by tJie trans- feree company. The deed of settlement of the E. Life Assurance Company provided that vn every policy and in every contra^ to be entered into on behalf of the company there should be " a proviso limitvng the scope and effect of the contract thereby created, so that the capital stock and fvmds of the compamy should alone be liable to a/nswer and make good all elai/ms in respect of any poKcy of assurance, or policy of guarantee, or other contract as the case might be, and that no shareholder of the com- pany should in any manner be ^personally liable or subject to cmy such claims or demands, or bein anywise charged by reason of such policy beyond the amount of his or her sha/re or shares of such capital, stock, or funds." Another clause of the deed provided that the directors might, upon such terms, for such consideration, and in such mannei generally as to the directors should seem expe- dient, purchase the business and property of any other assurance company, and thereupon under- take, pay, or perform, all or any of the existing assurances, or other engagements or liabiUties whatsoever of such other company, and enter into such indemnities, ^c, as should be requisite or deemed expedient for the purpose of effecting the purchase. Another clause gave special powers to the directors for the increase of the business, with a proviso that these powers were not to be exercised so as to alter the provisions of the deed with respect to the liability to losses, so as to render the shareholders liable to such losses, otherwise than in proportion to the amount and number of the respective shaves that were held or subscribed for by them in the stock of the com- pany. This company bought the busiryess of the R. N. Company, and by the deed of transfer it covenanted to satisfy the liabilities of the B. N. Company, and to indemnify the shareholders of that com- pany against such liabilities; and, further, to pay the entire expense of winding-vp the R. N. Company, in conformity with the provisions of that company's deed of settlement and with the provisional agreement for amalgamation ; with a proviso that the subscribed capital of the trans- feree company should alone be liable to answer any claims. The transferor company claimed to be entitled, wndtr the covenant, to an indemnity without limitation of liability against all claims and demands on them. At the hearing tliey withdrew the claim, and adm,itted that the indemmity was limited to the capital of the transferee company. The calls on the shares of the transferor company amounted to 51,000^., whereas their liabilities were 168,000Z. They claimed to prove under the indemmity covenant for the whole sum of 168,000?., and not for ilie sum actually paid by them. Their claim was',ultimately allowed by the transferee com- pany, subject to the condition that they should not in any case receive more than the 51,000?., the amount of their assets. The transferor company also claimed to be entitled, under the covenant, to be indemnified in respect of the costs of their winding-up : Seld, that tlie whole of the costs of winding-up could not be attributed to the failure of the transferee company to abide by its covenant, but that when it could be ascertained how much could be so attributed, then the transferor company might bring in a proof against the transferee company for such sum. This was a question as to the amount of the liability of the European Assurance Society, under their covenant to indemnify the Eoyal Naval Military and Bast India Company Life Assurance Society. The Eoyal Naval, &c.. Society, was established in 1839, under a deed of settlement containing provisions, which enabled the directors to transfer the business to another insurance company (sup., p. 16 ; clauses 172, 173). The European Assurance Society was established in 1854, under a deed of settlement containing the following provisions : Clause 24 contained a provision for the granting of policies by the directors, provided 166 THE LAW TIMES. [June 27, 1674. EimoPEAN Assurance] EoTAi Naval Society's Indemnity Case. [Aebitkation. That there shall be contained therein, and in every other contract to be entered into on behalf of the com- pany in or about the premises, a reference to these presents, and a proviso limiting the scope and, effect of the contract thereby created, so that the capital, stock, and funds of the company, shall alone be liable to answer and make good all claims in respect of any policy of assurance, or policy of guarantee or other contract as the case may be, and that no shareholder of the company shall in any manner be personally liable or subject to any such claims or demands, or be in any wise charged by reason of such policy beyond the amount of his or her shares of such capital, st(Sck, or funds. Clause 104 : That it shall be lawful for the board of directors specially called for the purpose, to contract for and com- plete the purchase or acquisition, upon such terms for such consideration, and in such manner generally as to the said board shall seem expedient, of the goodwill or busi- ness, and all or any part of the stock, assets, or property of any other company or companies, society or societies, established or created by special Act or Acts of Parlia- ment, or otherwise howsoever, for any purposes or objects, the same as or resembling all or any of the objects or purposes of the company herein set forth, and thereupon to undertake, pay, or perform all or any of the existing assurances, annuities, endowments, guarantees, or other engagements or liabilities whatsoever of such other com- pany or companies, society or societies, and to enter into, make, and execute all such agreements, arrangements, and indemnities, acts, deeds, matters, and things whatso- ever, as shall be requisite or necessary, or be deemed expedient for the purpose of effectuating any and every such purchase or other acquisition as aforesaid, and for such purposes, or any of them to dispose of, or assign, or change the pecuniary funds and capital for the time being of the company, and all or any of such shares in the present or future capital thereof, as by reason of forf ei- ture, non-allotment, or otherwise, shall, for the time being, be vested in or under the control or at the disposi- tion of the board, and to deal with such last-mentioned shares, or any of them respectively, either by altering the amount, value, or denomination thereof, or by sub- dividing or amalgamating the same or any of them respec- ^tively, or by granting peculiar or exclusive rights or privUeges or benefits to the holders for the time being thereof respec tifely, or in any other manner, which to the said board of directors, if and when they shall from time to time be duly authorised as aforesaid, shall appear expedient. Clause 105: That an extraordinary general meeting called for the purpose shall (provided two-thirds of the votes at such meeting to be ascertained by show of hands or by ballot as hereinbefore is provided, shall be in favour of the same) have power to increase the business of the com- pany by authorising the board of directors to undertake and carry on any other business of a similar or kindred nature to those hereinbefore mentioned, which the said board may lawfully undertake and carry on, and also full power to make any laws, regulations, and provisions for carrying into effect such increase of business and generally to make any new laws, regulations, or provi- sions for or respecting the company, or to amend, alter, or repeal, either wholly or in part, all or any of the laws, regulations, and provisions for the time being of the company, whether contained and expressed in this deed of settlement or made in pnrsuance of the powers herein contained, subject nevertheless in aU cases to the provi- sions a,nd restrictions of the said Act (7 & 8 Vict. c. 110), and.to the proviso hereinafter contained. Provided always that the powers hereinbefore given shall not be exercised so as to affect or alter the provisions of these presents respecting the rateable division of the profits and liability to the losses of the company as between the shareholders, so as to render the shareholders entitled to such profits or liable to such losses otherwise' than in proportion to &e amount and number of their respective shares held or subscribed for by them in the capital stock of the company, or so as to affect or alter the provisions hereof for the indemnity of the ofSoers or as to the dissolution of the company. In 1866 the Royal Naval Society transferred its liusiness to the European Society. The amalga- mation vraa carried out by means of two deeds,, both dated the 17th Sept. 1866. One of these deeds, after reciting {inter alia) a provisional agreement for amalgamation, and also reciting that certain assets of the Royal Naval Society had by the deed of even date been transferred to the European Society, witnessed that in consideration of the transfer of the assets of the Royal Naval Society, contained in the first part of the schedule totheldeodof evendateamountingto 83,961Z. 17s.2d., the European Society thereby covenanted as follows : They, the said European Society, for themselves, their successors and assigns, with the privity and consent of the directors of the said society, parties hereto of the second part, and they the same directors (so as effectually to bind the same company and the property, and assets- thereof ; but not so as to undertake hereby any personal responsibility further or otherwise) do respectively grant to and covenant with the said trustees of the said- Eoyal Society, parties hereto of the third part, their executors, administrators, and assigns, that the said European Society, their successors, and assigns, and the property and assets of the same company, including the assets and property of the said Boyal Society assigned or to be assigned as aforesaid as part thereof, shall un- dertake, and be bound by and pay and satisfy all the- liabilities on life or annuity policies granted by the said Eoyal Society, and on foot on the 6th day of August in the year of our Lord 1866, or which having then become claims remained unsatisfied on the same 6bh day of August, and all other debts, liabilities, claims, and demands whatsoever present or future, of upon, or against the Eoyal Society, or the trustees, directors, or pro- prietors thereof, except so far as the said policy liabilitiea- and other debts, liabilities, claims, or demands, have since the date of the hereinbefore-recited provisional agreement been paid or discharged by the directors of the said Eoyal Society as aforesaid, from or out of the- assets of the said Eoyal Society comprised in the said first part of the said schedule to the hereinbefore re- cited indenture of even date herewith ; and also thai; the said European Society, their successors and assigns shall and will from and out of the property and assets of the said European Society, inclusively of the said assets of the said Eoyal Society lastly mentioned as part thereof (except as aforesaid), save harmless and indemnify and keep indemnified, the trustees and directors and proprietors of the said Eoyal Society^ and every of them, and their respective heirs, execu- tors, and administrators, and their respective estates and effects, from and against all the said liabilities on life or annuity policies, and other debts, liabilities, claims, or demands respectively lastly hereinbefore- mentioned, and from and against all claims and demands, actions, suits, controversies, losses, damages, costs, and'. expenses in anywise relating to the same liabilities and other debts, liabiUtieB, claims, or demands respectively^ or for or on account of any default, neglect, or omission, to {discharge or meet the same duly according to law, or- any default on account of or in respect thereof And further that the said European Society, their suc- cessors and assigiis shall undertake, and shall by and out of the property s^nd assets of the same society (in- clusively as aforesaid) bear and pay and discharge the entire risk and expense of winding-up th* business and affairs of the said Eoyal Society in conformity with the provisions of the said deed pt settlement of the same society, and with the aforesaid provisional agreement, and do whatever may be requisite to vrind-up the same in conformity with such provisions, and save harmless and keep indemnified the trustees and directors of the said Eoyal Society, and all the proprietors of the same society, from all claims, demands,, actions, suits, controversies, damages, and expenses, in respect thereof, or in any way consequent on or arising out of the dissolution of the said Eoyal Society, or the disposition of the assets, property, or business thereof, or the arrangements with the said European Society in reference thereto, and whether by oron the part of any policyholder, creditor, proprietor, or other, person whom- soever. With the following proviso : June 27, 1874.] THE LAW TIMES. 167 European Assubance] Lines's and Leah's Cases ; Deas's Case. [AnBITEATION. Provided always, and it is hereby declared and agreed by and between the said Boyal Society and the European •Society, and the true intent and meaning of them, and -of these presents, is that the subscribed capital of the said European Society remaining at the time of any 'oUiim made in respect of these presents, or by any holders of any policies, or by any annuitant or other- wise, by virtue of any of the covenants, clauses, and agreements herein contained, and the assets and pro- perty of the same society (inclusively as aforesaid) shall -alone be able to answer such claims; and that no director or other proprietor- of the said European Society, his heirs, executors, or administrators, shall by reason of -any of the covenants, clauses, or agreements herein- before contained, be in anywise individually liable to pay any such claim or claims against the said European Society, beyond the amount of the unpaid part (if any) ■of his particular share or shares, of the subscribed capital of the said Exiropean Society. On the 12th Jan. 1872, the European Society was ordered to be wound-up, and also on the 1st March 1872, the Eoyal Naval Society. The total amount of the liabilities of the Royal Kayal Society on policies, &c., with respect to which there had been no novation with the Euro- pean Society, had been estimated at 1(J8,000Z. The amount of the unpaid shares of the subscribed capital of the Koyal Naval Society was insufficient to meet their liabilities ; the sum realised by calls on the shareholders, up to the time of the applica- tion, amounted only to 61,4481. It was admitted tihat the winding-up of the Eoyal Naval Society was caused solely by the failure of the European Society to provide for the payment of the liabilities of the Royal Naval Society. The questions for determination were — 1. Whether the liability of the European Society to indemnify the Royal Naval Society against its liabilities was limited to the capital and assets of the European Society, or was wholly unlimited. 2. What amount of proof ought to be made by the Royal Naval Society against the European Society in respect of the indemnity covenant. 3. Whether the European Society was liable in respect of the costs of the winding-up of the Royal Naval Society ; and if so, to what extent. Jackson, Q.C. and Bevvr, for the official liqui- dator of the Royal Naval Society. — Considering the decisions of Lords Westbnry and Cairns, we do not press the first question as to the liability of the European Society being unlimited. With regard to the second question, the Royal Naval Society is entitled to prove for the 168,000Z. in full against the European Society ; its proof will not be limited to the 51,448L The principle is that in insolvency proof takes the place of pay- ment in solvency ; the estate of the Eoyal Naval Society is really damnified to the extent of the proof against it : Warwick v. Richardson, 10 M. & W. 284 ; Cruse V. Paime, L. Bep. 6 Eq. 641 ; 4 Ch. 441 ; 19 L. T. Eep. N. S. 127. It is a principle in equity that a man who has entered into a covenant to indemnify another, is bound in equity to anticipate the liability and to keep it from, coming on him. As to the third question, though it is true that Lord Cairns, in Be Albert Inckmmiy Glavma (Albert Arbitration, Reilly'a Eep., p. 17 ; 16 S. J. 141), decided that none of the costs of the winding-up of the transferor company should be paid by the transferee company, yet Lord Westbury differed from Lord Cairns on this point in the British J^ation Association's Indemnity casa {sup. p. 4). Lord Westbury held that some of the costs of winding-up ought to be paid. But here the words are much wider than in those covenants ; and all the costs of winding-up ought to be paid. Napier Higgms, Q.C, and Montague CooTcson for the official liquidator of the European Society. — With regard to the second question we do not object to the Royal Naval Society's proving for all its liabilities, provided it be settled that it does not get more than the whole of its own assets. If it were a going concern, it would only have 51,448J. to meet its liabilities : it therefore could not possibly suffer more damage than this. If it proves for 168,000?., it must not receive more than 61,448L Lord Cairns's decision in the Albert Arbitration {ubi sup.) is expressly in our favour on the question of the coses of winding-up, that the European Society is under no hability in that respect. But, if any of those costs are to be paid by the European Society, it is clear, as Lord Westbury laid down in the British Nation Indem- nity case {ante, p. 4), that all the costs will not have to be paid. It would then be advisable to wait until it can be ascertained how much of those costs are attributable to the failure of the European Society to abide by its covenant. When that has been ascertained, a proof can be brought in in respect of that portion of costs. Lord RoMlLLY : — I assent to what Lord Westbury determined in Tlie Bntish Nation Indemnity Case (ante, p. 4). I think it is quite right that we must wait till the individual costs are carried in to see which are attributable to the indemnity covenant, and which are not ; and then you must apportion those costs accordingly, when you have got them. I shall ascertain, when the costs are carried in, which are properly attributable and applicable' to the covenant to keep indemnified the trustees, and directors, and proprietors, of the Royal Naval Society from aE claims, &c., in respect of the winding up or in any way consequent on, or arising out of the dissolution of the Royal Naval Society, or the disposition of the assets, property, or business thereof, or the arrangements with the European Society in reference thereto, and whether by or on the part of any policyholder, creditor, proprietor, or other person whomsoever. Solicitors for the Royal Naval Society, Oarrard and James. Solicitors for the European Society, Mercer and Mercer. May 16 and 18. Lines's and Leah's Cases ; Deas's Case. Life assurance company — Winding-up — Amalga' mation of companies — Concurrent proof on poli- cies — Novation — Covenant to indemnify — Claim disallowed of concurrent proof on a poUm/ against both of two amalgamated ' companies — Official liquidator of transferor company to make one proof of its liabilities against troMsferee company under an indemnity covenant. On the amalgamation of two insurance eampa/rms the transferee company covenanted [to indemnify tlie transferor company in respect of the liabilMies ■ on its poKdes, ^c; in the winding-up of &ie1/wo companies tlie policyholders of the transferor com- pany claimed to be entitled to prove concu/rrenth/ against both companies. 168 THE LAW TIMES. [June 27, 1874. Etjkopean Assubanob] LiMEs's AND Leah's Oases; Deas's Case. [Abbitration. Seld, that the policyholders must not prove against the transferee compam) individually, hut that the official liquidator of the tra/nsferor company must bring in one proof in respect of all its liahilities against the transferee company under the in- demnity covenant. Whatever might he the rights of the indiuidual policyholders, this was held to he the most con- venient cou/rse, and under the extensive powers of the a/rhitrator contained in the European Arbi- tration Act he ordered this cou/rse to he adopted. This was a question as to whetter the proofs on policies against a transferee insurance company should be made by the policyholders individually or en hloc through the official liquidator of the transferor company. The facts of Lines' s case are set forth in pages 151-4 sup. The policyholder effected his policy •with the Waterloo Company in 1854, and in 1862 that company transferred its business to the British Nation Association, which in 1865 trans- ferred its business to the European Society. Lord Eomilly held in Lines's case (sup. 151) that the omission of Mr. Lines to prove in the winding-up of the Waterloo Company, which was advertised in 1863, must be taken to show his intention to abandon his rights against that company. He now claimed to be entitled to prove against the British iN^ation Association, and also against the European Society. The deed of amalgamation between the British Nation Association and the European Society con- tained the following covenant : And tliis indenture lastly witnesaeth that in considera- tion of the nnion amalgamation or consolidation afore- said and of the premises, the European Society doth hereby for itself, its successors and assigns, covenant with the British Nation Association that the European Society, its successors or assigns, will from and after the execution of these presents undertake, pay, or perform all and every of the existing bond and other debts, assu- rances, annuities, endowments, guarantees, and other engagements or liabilities of the British Nation Associa- tion, and will at all times hereafter save, defend, and keep harmless and indemnified the British Nation Association and the individual proprietors of shares in the capital thereof from and against all actions, suits, proceedings, costs, damages, claims, and demands whatsoever for upon account in respect of the same, all, any or either of them or otherwise in relation thereto respectively. Mr. Lines alleged that he had no notice what- ever of this amalgamation, and that he never received any notices of renewal of his policies from the European Society. Leah's case diSered from Lines's case in this respect, that on the 27th Sept. 1866, Mr. Leah sent in his policy to the European Society, and it was returned to him with the following endorsement placed on it by the society : (British Nation) 140. It is hereby declared that subject to the proviso here- under stated the funds and property of the European Assurance Society of London, as provided for in the deed of settlement of the said society, shall be liable for the due payment of the sum of 1001., with profits assured by the within policy with the British Nation Life Assurance Association of London to the person or persons legally entitled to receive the same. Provided always that the future premiums payable in respect of the said policy be duly paid to the said Euro- pean Assurance Society at the times and in the manner set forth in the said policy. Mr. Leah now made the same claim as Mr. Lines. Deas's Case. In this case Sir David Deas held a policy origi- nally granted by the Eoyal Naval Society. On the amalgamation of that society with the Euro- pean Society in 1866, he had received the amalga- mation circulars {vide sup. p. 110), and had subsequently paid his premiums to the European Society, and accepted receipts from them. He claimed to be entitled to prove concurrently against both societies, the Boyal Naval and the European. The deed of amalgamation between the Boyal Naval and European Societies contained the follow- ing covenant : And they the same directors (so as effectually to bind the same European Society and the property and assets thereof, but not so as to undertake hereby any personal responsibility further or otherwise) do respectively grant to and covenant with the said trustees of the said Boyal Naval Society, parties hereto of the third part, their executors, administrators and assigns, that the Euro- pean Society, their successors, and assigns, and the property and assets of the same company, including the assets and property of the said Boyal Naval Society, assigned or to be assigned as aforesaid as part thereof, shall undertake and be bound by and pay and satisfy all the liabilities on life or annuity policies granted by the said Boyal Naval Society and on foot on the 6th Aug. in the year of our Lord 1866, or which having then become claims remained unsatisfied on the same 6th Aug. And all other debts, liabilities, claims, and demands what- soever, present or future, of upon or against the said Boyal Naval Society, or the trustees, directors, or pro- prietors thereof, except so far as the said policy liabilities and other debts, liabilities, claims or demands, have since the date of the hereinbefore recited provisional agree- ment been paid or discharged by the directors of the said Boyal NavEil Society as aforesaid from or out of the assets of the said Boyal Naval Society, comprised in the first part of the said schedule to the hereinbefore recited indenture of even date herewith. And also that the said European Society, their successors, and assigns, shall and will from and out of the property and assets of the said European Society, inclusively of the said assets of the said Boyal Naval Society lastly mentioned as part thereof (except as aforesaid), save harmless and indemnify and keep indemnified the trustees, directors, and proprietors of the said Eoyal Naval Society and every of them, and their respective heirs, executors, and administrators, and their respective estates and effects from and against all the said liabilities on life or annuity policies and other debts, liabilities, claims, or demands, respectively lastly hereinbefore mentioned, and from and against all claims and demands, actions, suits, controversies, losses, damages, costs, and expenses, in anywise relating to the same liabilities, and other debts, liabilities, claims or demands, respectively, or for or on account of any default, neglect, or omission to discharge or meek the same duly according to law, or any default on account of or in respect thereof. The Act under which the Arbitrator sits. The European Society's Arbitration Act 1872, contains the following provision : Sect. 8 : The arbitrator may settle and determine the matters by this Act referred to arbitration, not only in accordance with the legal and equitable rights of the parties as recognised in the courts of law or equity, but on such terms and in such manner in all respects as he in his absolute and unfettered discretion thinks most fit, equitable, and expedient, and as fully and effectually as could be done by Act of Parliament, Be Gex, Q.C. and Morton Sm^ih, for Mr. Lines and Mr. Leah, contended that the British Nation Association had made itself liable on the policies, and that there was no novation with the European Society. The liability of the European Society- was cumulative, and not substitutional in lieu of that of the British Nation Association. Thus the British Nation Association was liable on the policy as principal, and the European Society as surety. Accordingly Lines is entitled to bring in his proof Oot. 17, 1874] THE LAW TIMES. 1-8& Ettropean Asstjkancb"! Talbot's Case; Yivian's Case. [Aebiteation. concurrently against both companies. This Tvas what Lord Westbury laid down in Harmen's case (sup. p. 129). See also Carr's case, Be the Waterloo Life Asswra/nct Company, 33 Bear. 542 ; Sarris v. Farwell, 15 BeaT. 81 ; Scott's case, sup. p. 109 ; Ex parte Honey, BeJeffery, L. Eep. 7 Ch. 178; 25 L. T. Bop. N. S. 728. Napier Siggins, Q.O. and Montague Coolcson for the official liquidator of the European Society. — There was a novation of the contract : the liability of the European Society was substituted in place of that of the British Nation. The receipt of this bonus circular was just as efiectual as the receipt of the bonus itself would have been : {Allen's case, Beilly's Albert Rep., p. 127; Glazebrooh's case, KeUly's Albert Eep., p. 135). It would be hard on the British Nation Association, if, because they hap- pened to act as agents of the Waterloo for three years, they are to be liable to the British Nation for the fail value of the Waterloo policies, extend- ing over a large number of years. However, if there was no novation, the claim of the policy- holder against the European must be under the covenant to indemnify, contained in the amalga- mation deed. This claim can be brought but once. And as the official liquidator of the British Nation makes a claim under the covenant in respect of all its liabilities, the individual policyholder can- not make further separate claims in respect of the same liabilities. The covenant is a general covenant to indemnify one company by another ; and was not intended to operate as an individual covenant in respect of all the policyholders indi- vidually. The powers of the arbitrator, under the European Society Arbitration Acts, are very large, and are sufficient to enable him to direct the proofs to be made once for all by the official liquidator, if that shall seem the most advisable course. John Pearson, Q.C. and George Law for Sir David Deas. — We claim a concurrent proof against both the Eoyal Naval and the European Societies. However, we do not raise any great objection to the liquidator proving for us, if it be settled that we are not to be in any worse position than if we had proved individually. We rely not only on the covenant, but on the amalgamation circular, gua- ranteeing the policies of the transferor company. This created a separate contract with each indivi- dual policyholder; and these contracts ought to be enforced separately, and not en Hoc. Lord RoMiLLT : — These cases have been very fully and elaborately argued, and, to say the truth, I do not think there is now much to decide. I have decided that there is no question of novation, and consequently, so far as it is a question of novation, this is in Mr. De Gex's favour. I also decided that there was a proof to be made; but then the next ques- tion which was raised by Mr. Higgins was, by whom is the proof to be made ? K the proof is to be made by each person individually, there will be every species of conflict between them. One party may claim 10002. for the mere purpose of settling, and another party may say, you are only to claim 800Z. ; and consequently contests would arise between the persons who prove. I was satisfied in a very short time that that would be very likely to happen, and would be a very serious evilr It was also admitted that there could be but , one proof in respect of this one indemnity ; and then it was suggested to me that by my powers under this Act, which creates my authority, I may do as I think fit upon the subject. Accordingly I adjourned the case until to-day, in order to con- sider what powers I had under the Act, because I was quite convinced it would be a serious evil to have a contest between the parties as to the amount of proof, when the proof ought to be settled once for all. Though assenting to Mr. Da Gex's argument in one respect, in other respects I think he fails, and there ought only to be one proof. Upon looking into the Act I find certain clauses which are very satisfactory as to my powers. The 8th clause of the Act, I think, is very decisive : "The arbitrator may settle and determine the matters by this Act referred to arbitration, not only in accordance with the legal and equitable rights of the parties as recognised in the courts of law or equity, but on such terms and in such, manner in all respects as he in his absolute and unfettered discretion thinks most fit, equitable, and expedient, and as fully and efiectually as could be done by Act of Parliament." That gives me ?ower to do anything I think fit upon that subject, think there ought only to be one proof made, and that proof ought to be made by the joint official liquidator. Therefore, if you dispute about the claims, it must be brought before me in another form. I shall determine that in respect of the indemnity there is only to be one proof made by the official liquidator for the whole of the indemnity which the European has guaranteed to- the Royal Naval Society. Siggins. — And so with the other indemnity. Pea/rson. — If the official liquidator makes the^ proof, the policyholders ought not to be in a worse position than if they had carried in their own claim against the European Society. If that is not done, we may make an application. Lord EoMilLT. — -You may make an application, if you do not think the proof includes as much as you are entitled to. Solicitor for Messrs. Lines and Leah, Charles Wellborne. Solicitors for Sir David Deas, Eussey and HmZ- hert. Solicitors for the official liquidator of the European Society, Mercer and Mercer. June 18 and July 8. TAiaoi's Case ; Vivian's Case. lAfe assv/rcmce company— Amalgamation of com' panies — Winding-up — Novation of contract — Indorsement on pdUcy — Mortgage of policy — Policyholder held after an amalgamation to he a creditor, not of the tramsferor company, but of the transferee^r-Mortgagee in no better position thartr mortgagor with respect to novation. On the transfer of the business of the I. Idfe Assur- ance Gomparyy io the E. Life Asswa/nce Company, a circular was received by a policyholder in the transferor cornpany annovncmg the transfer and stating that tlviiransferee company were ready to issue their own^lici'es in exchange for those of the transferor coimpany " without altering or limiting any of the terms or conditions on which those poUeies had been issued " ; moreover those policyholders "who might wish to have their y 179 THE LAW TIMES. [Oct. 17, 1874 EuECSEAir Assukancb] Taibot's 'Case ; Tivian's Case. [AnBITaATION. /policies simphj i/adorsed so as not to disturb amy leg oil instruments with ,wldoh tliey might he in- corporated might heme them, so indorsed and m a manner which would fully secure the responsibility ,and guarantee of the transferee company for the payment of all claims under the policies." Thereupon the policyholder sent in his polioy to the transferee company, who placed upon it an i/ndorsemjeni, whereby in consideration of the policyholder " agreeing to the transfer of the E. . company^ and io pay to that cowpamy all the . future prenwwms" 3fc., the transfen-ee compcmy agreed to observe and perform all the stipulations in iM policy contained on behalf of the transferor com/pany. Subsequently he paid his premiums to the trans- feree company and accepted receipts from them. In the winding-up the policyholder claimed to be entitled to prove on his policy against the trans- feror company, but it was Meld that there had been a novation with the trmis- feree company ; the indorsement clearly showing that that company's liability was in subsUiation for, and not in addition to, that of the transferor compcmy. Where the policy has been mortgaged, and the mort- gagee receives no notice of the amalga/mation, but the mortgagor receives the amalgamcution circular, and then has the policy indorsed and pays the premium to the transferee company and accepts receipts from them, the mortgagee is in no better position than the mortgagor, and there will be a novation, just as if there had been no mortgage. This was a question .of novation. The India and London Life Assurance Company ■was established by a deed of settlement dated the 16th April 184.6, and on the 25th April 1846 it was duly registered and incorporated under the 7 & 8 Vict. c. 110. The deed contained inter alda the following provisions : Clause 163— That an absolute and entire disaolution of the company may take place by and with the consent and approbation of three-fourth parts at least in number of the directors for the time being, and to be testified by some writing to be signed by them, and also with the consent and appro- bation of four-fifths at least of the votes of the share- holders to be respectively present at two successive extraordinary general meetings, the second of such meetings to be at the distance of three calendar months at least from the first meeting, and each meeting to be respectively convened by one month's notice for that purpose in the London Qaaette, and in the outer office of the company ; and that if at any ordinary general meet- ing the company appear by the accounts rendered as hereinbefore provided to have sustained losses and in- curred expenses amounting in the whole to one-tenth part of the nominal capital of the company, the directors shall forthwith convene an extraordinary general meet- ing for the purpose of determining upon the propriety and expediency of dissolving the company, and at such extraordinary general 'meeting a majority of votes present thereat may resolve on the dissolntion of the company, and fix a day for the dissolntion thereof, and that no dissolution shall take place hy any other mode. Clause 164— That after a resolution tha* a dissolution shall take place, the company shall cease to grant any new assur- ances, and proper measures for the purpose of effecting such dissolution without prejudice to the rights of the parties then assured shall be taken by a committee to be composed of the directors for the time being of the com- pany and of an equal number of persons to be chosen by the proprietors, and five persons of each class shall be a quorum of that class to transact business and bind the class they represent ; and thereupon the affairs and con- cerns of the company shall with all convenient speed be wx>und-np and the debts and liabilities of and claims on the company to be satisfied, repurchased, discharged^ or otherwise sufficiently provided for by investment or by transfer to other existing and approved assurance offices, or in such other manner and by such other means as may then be agreed on, and the balance, if any, of the assets of the company, and also-any future surplus remain- ing, after satisfying outstanding demands, shall be divided among tlie pexsons who are proprietors at: the period of dissolution, and their respective executors, adminis- trators, aind'assigns in proportion to the amount at that time of their respective shares. The European Assurance Society was established under a deed of settlement dated the 2nd Sept. 1864. In 1860 the India and London Company, under an agreement dated the 21st Feb. 1860, trans- ferred their business to the European Society. By the agreement the European Society undertook to indemnify the India and London Company against their liabilities on their policies, the re- newal premiums were to be paid to the European Society, and the India and London Company were to pay 14,600Z. to the European Society. Mr. George Talbot was the holder of a policy, granted to him on his own life by the India and London Company in 1850, whereby, if the premiums were duly paid, on his death " the funds or pro- perty of the company were to be subject and liable according to the company's deed of settlement, to satisfy and pay unto the executors " the sum of 1200Z. On the transfer of the business Mr. Talbot received the following circular from his company : India and London Life Assurance Company, 2, Waterloo-place, Pall-mall, S.W., 29th Feb. 1860. To Sir, — The directors of the India and London Life Assurance Company beg to state that they have en- tered into an arrangement to transfer the policies issued by them to the European Assurance Society. The existing annual revenue of that society exceeds one hundred and twenty thousand pounds, its assets exceed a quarter of a million, the subscribed capital amoun ts to two hundred and fifty thousand pounds, and it has a most numerous, influential, and wealthy body of shareholders. Its business also is rapidly increasing, and the plan of the society offers to the insured a greater probability of speedily reaping a bonus than smaller companies, the ratio of whose expenses to their income necessarily forms a considerable tax on their resources. The European Assurance Society is empowered by a special Act of Parliament, and is prepared to issue its own policies in exchange for those of this company, without altering or limiting any of the terms or conditions on which onr policies have been issued. Those parties who may wish to have their existing policies simply endorsed, so as not to disturb any legal instruments with which they may be incorporated, may have them so endorsed, and in a manner which will fiilly secure the responsibility and guarantee of the European Society for the payment of aU claims under the policies. For this purpose all commu- nications should be addressed to Wiiham Cleland, Esq., the .manager of the European Assurance Society, who, in conjunction with the Board of Directors, is empowered to act in this matter. The directors of the India and London Life Assurance Company believe that in taking the present step they are decidedly promoting the in- terests of their policyholders, and they trust that the assured will view it in the same light, and see that the change is one undoubtedly for their advantage. John J. jEEDEru, Chairman of the India and London Life Assurance Company. At the same time he also received the following circular from the European Society : Sir, — The annexed letter from the India and London Life Assurance Company will ii^orm you of the fact of an agreement having been entered into for a transference Oct. 17, 1874.J THE LAW TIMES, 171 Etjsopean Asstjkance] Talbot's Case; Yivian's Case. [Aebitkatipn. of its polioies to this society. Enclosed is a prospeotos and list of shaieholders, and yon cannot fail to perceive that the proprietary body is exceedingly numerous, and includes a very unusual number of gentlemen in the principal manufacturing and commercial districts of England, of known wealth, reputation, and influence, and to this circumstance is no doubt in a great measure due the success of the society. The society is empowered by special Act of Parliament and is the only life assur- ance and fidelity guarantee society whose policies of guarantee are to be accepted by the Government and its departments. The subscribed capital is 250,000/. The uncaUed-up capital exceeds 180,0001. The revenue ex- ceeds 120,0002. per annum, and the assets are upwards of a quarter of a million sterling. With these resources there can be no 4oubt of the advantages to be derived by the policyholders over those of many other com- panies. These advantages are briefly but clearly set forth in the accompanying prospectus. The board of directors will give every facility for exchange or indorse- ment of your policy, and it is hoped that by the continu- ance of that prompt and honourable dealing which has throughout been characteristic of this society, we mjiy succeed in securing your cordial co-operation in ang- menting its prosperity and inareasing its connections. The enclosed documents show the progress and position of the society, but every additional imormation may be at once obtained on application to the manager. Henbt Wickham Wickham, Chairman of the European Society. WrLLiAiE Cleland, Manager. Mr. Talbot, acting on the circular of the India and London Company, sent in his policy to the European Society's office on the 28th June 1860, and it was subsequently returned to him with the following endorsement printed upon it by the European Society : — In consideration of the within-named (xeorge Talbot agreeing to the transfer of this policy to the European Assurance Sociei?, to pay to that society all the futnre premiums as they become due, and to observe and per- form all the stipulations contuned therein on his part, we, on the part of the European Assurance Society, do hereby agree to observe and perform all the stipulations therein contained on behalf of the India and London Xife Assurance Company. It is also declared that the capital stock, or so mudi thereof as for the time being shall have been subscribed, and the other stocks, funds, securities, and property of the said society remaining at the time of any claim or demand made, unapplied and undisposed of, and inapplicable to prior claims and demands in pursuance of the trusts, powers, and autho- rities, contained in the deed or deeds of settlement of the said society, shall alone |be liable to answer and make good all claiins and demands upon the said society under or by virtue, or in respect of the within-written policy, and all other policies, and that no director, proprietor, or member of the said society, hie heirs, executors, or administrators shall, by reason of any policy of assurance (a instrument securing annuities or of the whole of the policies of assurance and instmments securing annuities taken together, which any director has signed or may sign, be in any wise individually or personally liable or subject to any claims or demands against the said society beyond the amount of the unpaid part of his particular share or shares in the said capital, stock, or in such part of the said capital stock as for the time being shall have heen subscribed. Dated tlis 28th day of June 1860. John Hedsins, 1 Directors of the European John Moss, j Assurance Society. W. Cleland, Secretary. Printed receipts for renewal premiums issued from the chief office will alone be admitted as vaUd. Henceforward Mr. Talbot paid his premiums to the European Society, and accepted receipts from them. Before the amalgamation the policy was referred to in the India and London receipts as No. 473. Afterwards the number was 26,145, the receipt being as follows : European Assurance Society. Eeceived the sum of .£23 lis. for one year's premium, from the 6th March 1865 on poHcy No. 26,125. On the 12th Jan. 1872 the European society was ordered to be wound-up, and on the 20th April 1872 also the India and London Company. In the winding-up Mr. Talbot claimed to be entitled to prove on the policies against the India and London Company. The official liquidators, on the other hand, contended that there had been a novation with the European Society, and that that society alone was liable on the policy. Waller, Q.C. and Joseph Beaumont for the policy- holder. — This case is governed by the decisions of Lord Westbury. [Lord Eomiily. — I have changed my opinion very much since I have seen the effect produced by the results of Lord Westbury's deci- sions. I have not followed his decisions latterly.} The reasons given by Lord Westbury in some of his judgments are certainly good law, and are applicable here. We admit that the European Society had power to purchase the business of any other hfe assurance company. But it was not within the power of the India and London Company to transfer their policyholders to another company. They did not even hand over to the European Society all their assets ; what they did was to get the European Society to under- take the liability in consideration of a gross pay- ment of 14,6002. from the India and London Com- pany. The amalgamation agreement was an agree- ment merely as between the two companies ; it was quite regardless of the policyhoHei?s and other creditors, and consequently did not affect them. From the amalgamation circulars Mr. Talbot in- ferred, as anyone else would have done, that all that was proposed to be done was to give him the responsibility and guarantee of the European Society, in addi|ion to, and not in substitution for, what he then had. If the circulars meant any- thing else, they were calculated to mislead. It was on this understanding that the premiums were paid to, and the receipts accepted from, the European Society. The amalgamation circular, after stating that an arrangement for the transfer has been entered into, says : " The European Assurance Society is empowered by a special Act of Parliament, and is prepared to issue ita own policies in exchange for those of this com- pany witliout altering or limiting 'amy of the terms or conditions on which our policies have been issued. Those parties who may wish to have their existing policies simply indorsed, so_ as not to disturb any legal instrument with which they may be incorporated may have them so in- dorsed, and in a manner which will fully secure the responsibility and guarantee of the European Society for the payment of all claims under the policies." The principles applicable in these cases of nova- tion were distinctly enunciated by Lord Westbury (sup. pp. 30, 31). They are illustrated in Blun- dell's case {sup. p. 39), and Coghlan's case (sup. p. 31). In Scott's case and Hart's case (sivp. p. 109) there was an indorsement just as in this case, and there was no novation. See also Crrain's case (sup. p. 15), Wilson's case (sup. p. 158), and Kelly's case, (sup. p. 91). Napier Higgine, Q.C, and Montague Ooohson for the official liquidator. — The India and London Com- pany had power to make a transfer of their business under the 164th clause of their deed of settlement : (See Garr's case, 33 Beav. 542.) Even assuming that Lord Westbury's decisions are binding, this case differs from those thdt were cited. In most of the cases there was no indorsement and in 172 THE LAW TIMES. [Oct. 17, 1874 BuBOPEAN Assurance] Talbot's Case; Vivian's Case. [AuBITaATION. Scott's and Sort's cases {ubi sup.), where ttere was an indorsement, the amalgamation circular was of a peculiar character, wholly different from the amalgamation circular here. It was from the terms of the circular that it was inferred that the understanding was that there was to be no new contract. That cannot be inferred in this case. The indorsement, taken with the amalgamation circulars, conclusively shows that a new contract was entered into. Reference was also made to Glanfield's case (infra, p. 177) ; Dufav/r v. Professionul Life Assurance Company (25 _ Bear. 599). Vivian's case was like Talbot's case, except that Gordon, who effected the policy, had in 1852 mortgaged it to Yivian; and notice of the mortgage was sent to the India and London Company ; and that the indorsement on the policy was different, being as follows : It IB hereby declared and agreed that the funds and property of the European Assurance Society of London, provided for in the deed of settlement of the said society, shall be liable for the due payment of the sum of SOOl. assured by the within policy with the India and Xondon Assurance Company of London, to the person or persons legally entitled to receive the same at the death of the within named Abercombie Lockhart Gordon. Provided always that the future premiums payable in respect of the said policy, be duly paid to the agent for the time being of the said European Assurance Society, at the times and in the manner set forth in the said policy. The circulars were sent to the mortgagor; but the mortgagee never received them or knew any- thing about the transfer. The premiums were paid to the transferee company by the mortgagor. The mortgagee had died, and his executrix now claimed against the transferor company. Jackson, Q. C. and MetJiold, for Vivian's executrix, made use of the same arguments as those inTalhot's case; moreover, they said that the rights of the mortgagor could not be affected by what was done, for he never was cognisant of any of the transactions. Whatever may be the meaning of the indorsement in Talbot's case, the indorsement here certainly does not indicate a new contract. Napier Higgins Q. 0., and Montague Coohson, for the joint official liquidators. — The mortgagee can be in no better position than the mortgagor : (Werninck's case, Eeilly's Albert Reports 101 ; 15 S. J. 767.) Tou must consider the whole of the circumstances — the circulars in connection with the indorsement. The circulars showing that there was to be a transfer out and out from one company to the other, the mere terms of the indorsement are comparatively of slight importance. ' Eeference was made to Conquest's case (sup. p. 67) ; Dale's case, Eeilly's Albert Reports 11: IS S. J. 886 ; Kennedy's case, EeUly'a Albert Reports 5 ; 15 S. J. Judgment was reserved until the 8th July, lord RoMiiii. — Talbot's case is one of those of which so many have had to be decided in this arbitration, namely, on the subject of novation. The policy is an ordi- nary life policy, bearing date the 16th April, 1846 ; it was transferred under an arrangement entered into by the directors of the India and London Life Assurance Company with the European Assurance Society. On this occasion a circular, a copy of which is set out in the case, was sent to the claimant, George Talbot. In June 1860, Mr. Talbot left his policy at the office of the European, whence it was returned to him with an indorsement sealed and signed by two of the directors and the secretary of that society. Mr. Talbot thencefor- ward paid the premiums due on the policy to the European, and received their receipts for the same. In 1872 the society was wound up by an order of January of that year, made by the Vice-Chancellor Malins. The proof of Mr. Talbot against the European Society is admitted. The question I have to determine is, whether since the year 1860 he is not a party to, and bound by the agreement entered into in June 1860 with the directors of the European Assurance Society. The decisions on this point are very numerous and somewhat con- tradictory ; and it was of some importance to re- view them generally, so as to afford for the future a fixed and regular course of decision. The prin- cipal decisions on this subject are Lord West- bury's on the one hand, and Lord Oaims's on the other. An examination of the decisions put me in a considerable difficulty ; and I endeavoured for a long time to discover some plan by which I ' might reconcile them all, but I found this impos- sible, and a ruore minute examination which I have subsequently made of them, only confirms me in a feeling of this impossibility. Having arrived at the conclusion that it is necessary that I should follow either Lord Cairns or Lord Westbury, I have also come to the conclusion that I must follow Lord Cairns. It certainly is with great re- gret and great diffidence that I dissent from Lord Westbury. But ■ there is a case , Pratt's case, (svp. p. 129), which I find totally impossible to separate from Talbot's case. If I found Pratt's case had been followed by Lord Westbury in several cases thoroughly argued before him, I should have been placed in a very great difficulty between the manifest importance of uniformity of decision on the one hand, and the difficulty of reoonciHng all the cases on the other. But this is not so. Pratt's case was decided by Lord Westbury on the last day but one of his sitting ; he was notoriously unwell at that time, and I doubt whether- he had present to his mind all the consequences of that decision, or how he could reconcile it with the views he had stated in some of his former decisions with respect to nova- tion. I have been xinable to reconcile it myself, and I have thought it my essential duty to look at these cases of Lord Westbury's, de novo, as if they had come before me for the first time ; and I cannot but think that the acts done by Mr. Talbot con- stituted a distinct novation, and constituted a fresh contract with the European Society. If this view of mine unsettles decisions I regret it very- much, but I am afraid this is inevitable. In Talbot's case the indorsement says that in consideration of the assured having agreed to a transfer of his policy to the European Society, that company had agreed to perform the stipula- tions of the policy on behalf of the company by whom it was issued. These words seem to me to amount, not to an addition, but to a substitution. The cases which have come before the Court of Chancery point in the same direction. The prin- cipal case as to an indorsement is Griffith's case (L. Eep. 6 Ch. 380). Lord Justice James there explains in his judgment his views of the con- struction of such an indorsement. There are also Dale's case (Reilly's Albert Rep. ; 16 S. J.), and Hawtrey's case (Reilly's Albert Rep. ; 16 S. J.) The result is that the mass of judicial authority is Oot. 17, 1874.] THE LAW TIMES. 173 EuKOPEAN Assitrance] Benjamin Smitu's Case ; Glanpield's Case. [Abbiteation. too strong for me not to hold that there is a nova- tion in Talbot's case. From the views I have expressed, it follows that I adopt the same principle in Vivian's case. A point was raised in this latter case that the mort- gagee had some separate rights, and was in a better position than the mortgagor; but this point was decided by Lord Cairns in the Albert cases. , LordWestbury seems to have held in Blundell's and Coghlan's cases (sup. pp. 39 and 31) and in one or two other cases, that the three parties must concur and all join together to make a fresh contract in order to constitute novation. Now, I shall not hold that doctrine; it is not doctrine that I think is to be found in the cases. Lord Westbury was apparently swayed by the hope of giving two funds to pay the creditor, but the result will be, as far as I can judge, that the creditor will, in many instances, be thrown on a fund where there are no assets at all to pay him. However that may be, I must look rather at what is right in law, and not speculate on whether the consequences will give a greater or a smaller fund to the creditor. I must hold in these cases that there is a nova- tion, where it is a bond fide contract, as it is in my opinion here; and I must hold that the claimant is not entitled to prove against the India and London Company. That is the consequence which results from the view I have taken. I am sorry to say I dissent from Lord Westbury in several cases which he has expressly decided on this question of novation. Solicitor for Mr. Talbot, W. A. Day. Solicitor for Mr. Vivian's executrix, T. B. Bolton. - Solicitors for the official liquidator, Mercer and Mercer. Monday, August 3. Benjahin Smith's Case; Glanheld's Case. Jyife assurance company — Amalgamation of com- panies — Winding-up — Novation of contract — Bonus — Indorsement on policy. Folicyliolder held after an amalgamation to be a creditor, not of the transferor company, but of the transferee. In 1858 the H. Life Assurance Company transferred its business to the J. lAfe Assurance Company, which subsequently in 1861 transferred its busi- ness to the B. Life Assurance Company, which in its t/wrn in 1865 transferred its business to the H. Life Assurance Company. 8. was a policy- holder of the n. Company, and on their transfer of business he received a circular- from that company, announcing the amalgamation, and stating that the effect of the amalga/fnation would ie to give the increased guarantee of the J. Com- pany, the policy being now guaranteed by the J. Compamy, " upon precisely the same conditions and provisions as it stood before ; '' he also received a certifieate certifying that the poUcy was guaranteed by the J. Company, and that the swm assured would by paid out of the funds of that company. Cn the J. Company's transfer of business, S. received from that company a circula/r announcing tlie fact, a/nd stating thai the terms and conditions contained in the policy would remain unaltered Vy the arrangement, and that the policyholder was fullg guaranteed for all claims under his policy by the B. Company, under the deed between the two companies, but that any of the assured desir- ing it, coiild have an endorsement to that effect, made on their policies; moreover, that allthe assured would have the security of the large annual busi- ness of the joint business, but that in all future bonuses they were to pa/rticipate on an equality loith the other policyholders in the conjoint com' panics ; and that they would thus secure, not only all the benefits to which they were entitled in the J. Company, but the additional benefit to be de- rived from the accumulation of income and power. Subsequently to each transfer of business he paid his premiums to the transferee Company, and ■ accepted their receipts. Moreover, in 1863, the S. Company declared a reversionary bonus on his policy, and sent him a circular informing him of the fad, and in 1867 the E. Company did the same. No notice was ever taken of the circulars, and no endorsement was ever placed on the policy. On the policyholder's claiming, in the winding-up ■ of 1872, to be entitled to prove on his policy, it was Held that there had been a novation, and that the n. Company were under no liability on the policy. Where the facts were the sornie as these, with the addi- tion that the policyholder had allowed the B, Company to place on the policy an endorsement wliereby in consideration of the assured having agreed to the transfer of the policy to the B. Com- pany, and to pay all future premiums to that company, the B. Company agreed to perform all the stipulations contained in the policy on the part of the J. Company, and in the stead of the J. Company, it was a fortiori Held that tliere had been a novation. This was a question of novation. The Householders' and General Life Assurance Company was constituted under a deed of settle- ment dated the 3rd March 1852. The English and Irish Church and University Assurance Society was constituted under a deed of settlement dated the 27th June 1853. The British Nation Life Assurance Association was constituted- under the statutes 7 & 8 Vict. c. 110, and 10 & 11 Vict. c. 78, by deed of settle- ment dated the 28th Feb. 1856. (See Clauses 30, 45, 46; sup. p. 40.) The European Assurance Society was estab- lished under a deed of settlement dated the 2nd Sept. 1854. In 1858 the Householders' Company transferred its business to the English and Irish Church Com- pany. In 1861 The English and Irish Church Company transferred its business to the British Nation Association. In 1865 the British Nation Association trans- ferred its business to the European Society : (See Amalgamation Agreement, smji. p. 41.) In 1852 The Householders' Company granted two policies to Mr. Benjamin Smith on the joint lives of himself and his wife. On the amalgamation of- The Householders' Company with the English and Irish Church Com- pany in 1858, Mr. Smith received the following circulars and certificate : — 174 THE LAW TIMES. [Oct. 17, 1874. Bdbopean Assubanoe] Benjamin Smith's Case ; GtANriBLD's Case. [Aebiteation. Householders' and General As^rance Company, 15 and 16, Adam-street, AdelpM, London, September, 1858. SiE, — I have to inform yon that it has been duly resolved to amalgamate this company with the English and Irish Church and University, and the Engineers' Assurance Societies, and that the business of the united companies -wiU henceforth be conducted at No. 345, Strand, London. The effect of this amaJgamation will be to give you the increased guarantee of above 60,000!., uncalled capital, subscribed by 450 shareholders of the greatest respecta- bility, and to raise the income derivable from premiums to 25,O0OJ. per annum, while from the euk.rged connection of shareholders, policyholders, and agents, a great acces-, sion of new business must be anticipated. Tour policy is now guaranteed by the English and Irish Cnuroh and University Assurance Society upon precisely the same conditions and provisions as it stood before, and I have the pleasure to forward you a formal certificate of guarantee which you can attach to the policy. The saving of expense consequent upon this union wiU be beneficial to you by increasing the profits of the society and augmenting future bonuses. The directory, therefore, confidently claim your influence and co-opera- tion in securing new business for the amalgamated societies. The magnitude of the income and share capital cannot fail to impart the utmost confidence in the stability of the undertaking, and render any efforts on your part for extending its operation both easy and successful. — I am, Sir, your obedient servant, EiCHABD HoDSON, Secretary. Householders' and General Life Assurance Company. 15 and 16, Adam-street, Adelphi, London, September, 1868. , Sib, — I have much pleasure in communicating to you as an agent of this society, the union which has been effected between the Householders', Engineers' and Age, and English and Irish Church and University Assurance Societies. These amalgamations have been carried out with the full sanction and approval of the shareholders of the several companies. The business of the united societies will be conducted at the above address, 345, Strand, the name and title being "The English and Irish Church and University Assurance Society, with which.is united the Engineers', Householders' and Age." Among the leading advantages to arise from this union may be mentioned : First, the increase of income fnom premiums which wiU now faD little short of ^£25,000 per annum ; secondly, the addition of more than 400 highly respectable names to our list of shareholders, thereby augmenting the uncalled capital of the company to 60,0001. ; and thirdly, the reduction of expenditure, as compared with the income the since business of the four companies can be managed at little more than was form- ally the cost of one. >' It is quite manifest that this amalgamation of interests win greatly strengthen the hands of every one who has hitherto been acting as an agent for either of the societies, and give him the strongest claims upon public attention, and support in his efforts to procure new policies. The directors confidently rely upon your dissemiriat- ing a knowledge of the fore-mentioned advantages, SJid they do not doubt that the result wUl be a large iniux of new business, beneficial alike to the society and to yourself. — I am. Sir, your obedient servant, EicHAKD HoDSON, Secretary. ^•S. — I enclose you a printed Ust of the directors and officers of the united companies. Pending the issue of new forms, those in your possession can be used. The folJowing vras the certificate : — English and Irish Church and University Life Assurance Society, with which are united the Engineers', House- holders', and Age Assurance Companies. Head Office, 345, Strand, London, W.C. Chairman, W. E. Dobson, Esq., M.A. Deputy-Chairman, Rev. J. E. Cox, M.A. Trustees : The Eight Hon. The Earl of Tarborough (Lord Lient. of Lincolnshire). The Eev. John Edmund Cox, M.A., F.S.A., St. Helen's, Kshopsgate. T. W. Booker Blakemore, Esq., M.P. for Hereford- shire. Capital, 100,0O0Z. We, three of the direo1;ors of the English and Irish Church and University Life Assurance Society, hereby certify that the whole of lite policy 148, on the life of yourself and Elizabeth T. Smith, for one hundred pounds, issued by the Householders' and General Life Assurance Company, and bearing date the 20ti October, 1852, is guaranteed by the said English' and Irish Church and University Life Assurance Society, and that the sum assured by the policy will be J)aid out of the funds of the said society, subject to the conditions and provisions- contained in the original policy. Dated this 16th September, 1858. John Edmund Cox, "> AuausTus G. How, >■ Directors. ElCHAKD WhITTINGTON, ) Anthony Peck, Secretary. On the amalgamation of the English and Irish Church Company with the British Nation Associa- tion, Mr. Smith received the following circular : — The English and Irish Church and University Life Assurance Society, 345, Strand, London, W.C. July, 1861. Deab Sib, — The shareholders of tlus society, on the- recommendation of the directors, and after very mature deliberation, have decided to accept an offer made by another association to unite the business of the two companies. In adopting this course, the directors feel that they are consulting the interests of all parties in their institution, and that they will receive larger pro- spective advantages to the policyholders than could have been, under the best auspices, obtained in a separate condition. This union, which took effect from midnight of the 30th June last, has been made with the British Nation Life Assurance Association, of 291, Eegent-street, and it is intended to carry on the joint business at their offices. The terms and conditions contained in the policies issued by this company will remain, in any case, un- altered by this arrangement. The policyholders and annuitants are fuHy guaranteed for all claims under their present policies by the British Nation under the deed between the two companies, but any of the assured desiring it, can have an indorsement to that effect made on their policies. All communications should hence- forth be addressed to, and all premiums due on and after the 1st day of July instant, paid to the receipt of Henry Lake, Esq., manager of the British Nation Life Assur- ance Association, 291, Eegent-street, London. Should you, however, have betn accustomed to pay your renewal premium through an agent, you wUl be enabled to do so, as arrangements are made to enable the existing agents of the BngUsh and Irish Church Society to act for the British Nation Company. The report of the British Nation for 1860-61 just issued shows the following : 12,020 policies in force, assuring dS3,105,691 Annual premium income 107,037 Invested funds and property 233,164 -Annual revenue thereon 10,633 The annual income, therefore, of the British Nation, aa- shown by its last annual report, was 117,6701. This most satisfactory position is now stiU further improved by the union of this and another company, and the income of the British Nation is now raised to nearly 150,000i. per annum. The great advantages of the amalgamation of com- panies are now being thoroughly recognised, and appre- ^ ciated by the public. They may be summed up briefly in this, the union of companies increases business, income, security, and bonus, and decreases expenditure, competition, and the liability to fiuctuation. The busi- ness of two companies can be conducted in one office and by one staff without material additions, and the whole of the saving goes to improve the prospects of a large bonus. I feel assured, therefore, that you will perceive at once the advantages which this union will secure to the policyholders of this society. AB. the assured will not only have the security of the large annual income of the joint business, but it haa- Oot. 17, ia74] THE LAW TIMES. 175 EUKOPEAU AfiSJUBANCE] iBiEKJAMIN SmITH'S C.ASE J GlANHELD's OaSE. [AUBIIEATIOir, l}eeu arranged tiiat in all future bonnses they shall participate on an equality with the other poUoyholders in the conjoint companies. They will thus secure not only all tiie benefits to which they were entitled in this society, but the additional benefits to be denved from the accumulation of income and power. The directors feel that in the step they hare taken they have considered the best interests of the assured, and haye secured for them increased and permanent advantages. — ^I am, dear Sir, yours very faithfully, W. F. DoBSON, Chairman, British Nation Life Assurance Association, Chief Offices, 291, Eegent-street, W., London, July 13, 1861. Dear Sie, — It is announced tp you by the accompany, ing letter t£ the Chairman of the English and Irish Church and University Life Assurance Society, that an arrangement has been concluded for the union of t-hat society with this association. Under the deed-made between the British Nation and the English and Irish Church Society, it is not necessary for us to trouble palioyholders to send their policies for indorsement by this association. Should you, however, wish it, if you will forward your policy, either direct or through the agent in your district, it shall be immediately (after the succeeding Thursday) returned to you endorsed, signed by three directors, and sealed with the seal of this association. But it is neces- sary for me to inform you tiiat all policyholders are perfectly secure under the renewal receipts, and that the terms and conditions contained in the policies issued by the English and Irish Church Society remain unaltered by the transfer. The subscribed capital of this association is consider- ably more than 200,000i. ; the annual income is 146,0001., and .the invested funds (irrespective of capital) are upwards of 233,000Z. The income from new business is now at the rate of 15;0OOZ. per annum. Whether regarded for the annual income or for tiie great amount of new business so far surpassing the majority of successful offices, the position of this insti- tution is most gratifying. The distinctive principles which render it thus popular are set forth in the pro- spectus, copies of which, with proposal papers, &c., wiU be forwarded upon application to me, and 1 would invite your special attention to the following : 1. The application of the profits to rendering the policy payable during the lifetime of the assured. 2. The avoidance of all uncertainty or litigation by making policies indisputable. 3. The assistance granted to an assurer in the pay- ment of his premium, thus averting the chance of losing the benefit of the poKoy by forfeiture through inability to pay the premium. These truly popular features constitute a valid reason why an assurer should choose to take a polioy^f this association. Tour position as a policyholder, I need scarcely remark, will be greatiy improved by the arrangements now made. By the union of interests, and by the conduct of the joint business in one office, and by one official staff, a very considerable reduction of expenditure will be effected, which must add considerably to the bonus, while the rate of new business, large as it is at the present time, will be greatly accelerated by the concen. tration of interests and income. It may also be gratifying for you to know that the British Nation and the com- panies united with it, have paid more than 2084 claims to policyholders, amounting with bonus additions to upwards of one miUion, one hundred and fifty-four thousand, six hundred and twenty-nine pounds sterling. ' Allow me, therrfore, to express the hope that you wHl as a poKoyhoider, do all in your power to uphold and increase the business, by reverting to the subject of assurance among your friends, and (if it be not incon- Tenient to you) by rendering aid, by introductions and otherwise, to the agents in your district. Tou will thereby be, not only promoting the general prosperity of ' the institution, but by thus adding to the profit fund you will be increasing the value of your own policy. — I am, dear Sir, faithfully yours, Henkt Lake, Manager. It did not appear whether Mr. Smith received the circular announcing the amalgamation of the British Nation Assooiation with the, European Society. With regard to the premiums, down to 1858 Mr. Smith paid them to the Householders' Company, the policy being called in the receipts " Policy No. 1489." From that time to June 1861, he paid them to the English and Irish Church Company aud accepted the receipts from them as follows : — No. 1442'. Policy, No. 149. !Ekiglish and Irish Church and University Assurance Society, with which are united the Engineers', House- holders', and Age Assurances Companies. 345, Strand, London, "W.C. Eeoeived, this 29th day of April, 1859, from Mr . Benjamin Smith, the sum of pounds, nineteen shillings and fonrpence, being the half-yearly premium for the assnr. anoe of the sum of 501., upon the life of yourself and E. Smith, agreeably to the terms of a policy numbered I as above, and due on the 13th day of April, 1859. G. Newman, 1 „. , Augustus G. How, j Directors. Premium D 19 4 Interest £0 19 4 1 Thenceforward to March 1865 he paid his pre- miums to the British Nation Association, and accepted receipts from them in the following form : — British Nation Life Assurance Association, with which is united the business of the English and Irish Church and University Assurance Society. Chief Offices, 291, Eegent-street, London. Receipt No. 5564. Policy No. 148 H. Sum assured lOOZ. 9th November, 1861. Eeoeived of Mr. B. Smith, the sum of one pound, eighteen shillings, and eightpenoe, being the payment of half-yearly premium from the 13th day of October, 1661, to the 12th day of April, 1862, for an assurance of iiie sum of 1001. on the life of himself and wife, effected by the before-named poUoy. ^1 18s. 8d. Henbt Lake, Manager. Countersigned, M. Madden, Cashier. Subsequently he paid the premiums to the European Society, and accepted receipts from them as follows : — European Assurance Society, Empowered by Special Act of Parliament, Chief Office : 316, Eegent-street, London, W. Receipt, No. 18,118 B. Agency C. O. Policy, No. 146 H. Sum assured, 50J. Eeoeived this 27th day of April, 1867, the sum of pounds, nineteen shillings, and fourpenoe, being the payment of six months' premiums from the 13th of April, 1867, for an insurance on the life of B. and E. T. Smith, effected by the beforenamed policy. E. NOKTON, > nf-eotora ^0 19s. id. Wh. Jones,/ ^^^eotors. Countersigned, JJ E.IWalkee. Printed receipts for renewal premium's issued from the chief office will alone be admitted as valid. In May 1863 reversionary bonuses of 2Z. 8s. and IZ. 4s. respectively were declared by the British Nation Association on the two policies, and cir- culars of the following form were received by Mr. Smith:— (Bonus Notice.) British Nation Life Assurance Association, Chief Offices : 316, Eegent-street, London, W. May, 1863. Policy, No. 148 H. Sum assured, .£107 4s. Od. Life of B. and E. T. Smith. SiK, — I am instructed by the Board of Directors to announce to you that a valuation of the affairs of this association up to the 31st of March, 1862, has been completed, and that an allotment of bonus to that period has been made. I have great pleasure in informing you that the reversionary sum added to the above policy, and pay- 176 THE LAW TIMES. [Oct. 17, 1874. EiTBOPBAN Assiteance] Benjamin Smith's Case ; GtANrrELD's Case. [Ajeibiteation. able at death with the aboTe-named amonnt assnied, is 2J. 8s. The biisineBS is rapidly increasing, and it is hoped that at each succeeding valnation, this very satisfactory bonus will be materially augmented. — I am, Sir, your obedient servant, Hbnet liAKE, Manager. To Mr. B. Smith, or to the person legally entitled to the policy. Also in April 1867 the European Society declared bonuses of 2Z. 6s. and IZ. 2g. respectively on the two policies, and circulars of the following form were received by Mr. Smith : — (Bonus Notice.) European Assurance Society, Empowered by Special Act of Parliament. Chief Offices : 316, Eegent-street, London, W. AprU, 1867. E. B.C. E. and J. ■ Policy No. 148 H. Lives of B. and E. T. Smith. I am instructed by the board of directors to announce to you that a valuation of the affairs of this society, up to the 31st of December, 1865, has been completed, and that an allotment of reversionary bonus to that period has been made. _ I have great pleasure in informing you that the rever. Bionary sum added to the above poUoy at this division, is 2Z. 6s. You will please attach this notice to the policy, as the official declaration of the bonus addition. The business is still rapidly increasing and it is hoped that at each succeeding valuation the bonus will be materially augmented. — ^I am, yours faithfully. To Mr. B. Smith, Henet Lake, Manager. or the person legally entitled to the policy. No notice was taken of these circulars by the pohoyholders. In Sept.^1861, a petition was presented to the Court of Chancery by a contributory of the Eng- lish and Irish Church Company for the winding-up of that Company, and on the 4th Nov. an order was made on the petition to wind-up the company under the provisions of the Joint Stock Companies' Acts 1848 and 1869, and the Joint Stock Companies' Winding-up Amendment Act, 1857. A form of advertisement for creditors of the company to come in and prove their debts was settled by the chief clerk in Nov. 1861, and was afterwards inserted in the London Gazette and other newspapers. Mr. Smith never sent any claim on his policies against the company. This winding-up of the company had never been completed. On the 12th Jan. 1872, the European Society was ordered to be wound-up, and on the 18th Jan. 1872, it was resolved that the British Nation Association be wound-up voluntarily, and on the 19th July 1872, the voluntary winding-up was ordered to be continued under the supervision of the court. By an order of the arbitrator, Mr. Arthur Pooley Onslow, a shareholder, and formerly a director of the Householders' Company, had liberty to attend the hearing of the case for the purpose of protecting the interests of the Householders' Company. Mj. Smith now claimed to be entitled to prove on his policies against the Householders' Company ; but the joint official Uquidator, on the other hand^ contended that there had been a novation, and that consequently the Householders' Company was released from all liability. Napier Biggins, Q.C., for the official liquidator, contended that there had been a novation, relying on the knowledge conveyed by the 'circulars, on the payment of the premiums to the transferee companies, on the acceptance of receipts from them, on the effect of the bonuses having been in fact accepted, and on the fact that nothing was done by the policyholder in the winding-up of the English and Irish Church Society. They referred to BoVmes's case, Beilly's Albert "Step. 110 ; Allen's case, EeiUy's Albert Eep. 127 ; 16 S. J. 657 ; Knox's case, Eeilly's Albert Eepi, 132 ; 16 S. J. 673 ; Glajsebrook' s case, Eeilly's Albert Eep. 135; Blmidell's case, sitp. p. 39 ; Rivaz's case, Eeilly's Albert Eep. 104 ; 16 S. J. 590 ;! Kennedy's case, Eeilly's Albert Eep. 5 ; 15 S. J. 729 ; And/rew's case, Eeilly's Albert Eep. 107 ; 16 S. J. 609 ; Lcmcaster's case, Eeilly's Albert Eep. 95 : 15 S. J. 748; Dale's case, Eeilly's Albert Eep. 11 ; 15 S. J. 886; Montague Ooohson for Mr. Onslow. Solerts for Mr. Smith. — There has been no novation. [Lord Eomillt. — I think that the acts and proceedings with regard to the transferee companies, and the making of payments to them operates as a novation.] If anything was accepted by the policyholder! it was not a new contract, it was a further and fresh guarantee or indemnity. . There was no substitution There may have been something additional. The amalgamation circulars conclusively show what was offered. The circular sent on the transfer of the Householders' Com- pany's business says, " The effect of this amalga- mation will be to give you the increased guarantee of above 60,000Z. uncalled capital subscribed by 450 shareholders of the greatest respectability, and to raise the income derivable from premiums to 25,0002. per annum, while from the enlarged con- nection of shareholders, policyholders, and agents, a great accession of new business must be antici- pated Tour policy is now guaranteed by the English and Irish Church and University Assurance Society upon precisely the same condi- tions and provisions as before." And the circular sent on the transfer of the English and Irish Society's business says : — " The terms and condi- tions contained in the policies issued by this com- pany will remain in any case unaltered by this arrangement. The policyholders and annuitants are fully guaranteed for all claims under their present policies by the British Nation under the deed between the two companies, but any of the assured desiring it can have an endorsement to that effect made on their policies. All the assured will not only have the security of the large annual income of the joint business, but it has been ar- ranged that in all future bonuses they shall parti- cipate on an equaUty with the other policyholders in the conjoint companies. They will thus secure not only all the benefits to which they were en- titled in this society, but the additional benefits to be derived from the accumulation of income and Eower." The mere payment of premiums has een held by the Lords Justices not to operate as a novation : {Qriffith's case, 26 L. T. Hep. N. S. 780; L. Eep. 6 Ch. 374.) And with regard to the bonuses, Mr. Smith merely re- ceived the circulars announcing them. He never took any notice of them, therefore it cannot be said that he accepted the bonuses. Tou cannot be said to have assented to a notice unless you have done something to signify your assent. This dis- tinguishes our case from Spencer's case (L. Eep. 6, Ch. 362), where something was done to assent to the bonus. This case, moreover, is different from D»o. 25, 1875.] THE LAW TIMES. 177 European Assurance] Cooper's Case. [AUBITKATION. Talbot's case {sup. p. 172), decided by your Lotd- ship; where there was an indorsement; on the policy. Here there is no indorsement. Our claim is certainly good, if Lord Westbury's decision and dicta are followed. If Lord Cairns's decisions are to be followed, we admit at once that they are opposed to our claim. [Lord Eomillt. — In Talbot's case I decided that Lord Cairns's decisions are to be followed.] Lord RoMiiLY. — I think there is novation here. The case comes exactly within Talbot's case, which I decided after a great deal of consideration, feeling the great responsibility that was upon me in deciding be- tween the different views of Lord Westbury on the one hand, and those o£ Lord Cairns on the other. I decided that I must follow Lord Cairns instead of Lord Westbury, and having so decided after the fullest consideration, I must adhere to my decisioli in future cases. Glansield's Case. This case was decided on the 15th June before Benjamin Smith's case. The facts were the same, except that after the amalgamation of the English and Irish Church Society with the British Nation Association, the policyholder had, on receiving the .imalgamation circulars, sent in his policy on the 27th Aug. 1861, to the Bricish Nation Associa- tion, which had thereupon returned it to him with the following indorsement placed upon it : — In oonsideration of the within named assured having agreed to the transfer of the within written policy to the British Nation Life Assurance Association, and to pay to the said association all future premiums on the same policy as they become due, and to observe and perform all the stipulations contained in the said policy on the part of the said assured, the said association doth hereby agree to observe and perform all the stipulations oontained in the same policy on the part of the English and Irish Churuh and 'University Assurance Society, and in the stead of the said English and Irish Church and University Assurance Society. Provided always that this policy shall be subject to the provisions of the deed or deeds of settlement of the British Nation Life Assurance Association, and that the subscribed capital for the time being of the said associa. tion, and other the funds and property of the said association remaining at the time of any claim made un- disposed of and inapplicable to prior claims in pursuance of the provisions of the deed or deeds of settlement of the said association shall alone be liable to answer all claims of the said association in respect of this policy and of all other policies, and that no director or other proprietor of the said association, his heirs, executors, and administrators, shall by reason of any policy of assurance, or guarantee, or instrument, securing an annuity or annuities, or of the whole of the policies of assurance and guarantees, and instruments securing annuities, taken together, which any director or directors have or hath signed or may sign, or upon that or any other account be in anywise individually liable to any claims against the said association beyond the amount of the unpaid part (if any) of his particular share or shares in the subscribed capital of the said association. In witness, &c., Jas. Fubnbll, "> Directors of the British EOBT. NoKTON, > Nation Life Assurance G. F. Andeeson.J Association. Millar for Mr. Glanfield (after using similar arguments to those used in Benjamin Smith's case, and dwelling on the importance of adhering to Lord Westbury's decisions), said, with reference to the indorsement, this was placed on it by the British Nation Association. There was no indorse- ment by or contract with the intermediate com- pany, the English and Irish Church Society. The indorsement by the British Nation was that they nnilfirtnok the stipulations of the E nglish and Irish Church Society. If there was no contract with that Society, the indorsement could not create one with the British Nation. Napier Wiggins, Q.O., for the joint official liqui- dator ; Montague Gookson for Mr. Onslow. Lord RoMILLY. — I think there is novation in this case. Lord! Cairns's judgments exactly apply to this particular- case. The British Nation Association having adopted the policy, and having acted upon it by the desire of the person himself, as is set out at full length in the case, that binds all those who- have acted upon it. Solicitors for Mr. Benjamin Smith, Smith,. Fttwdon and Low. [Solicitors for Mr. Glanfield, Boohs, Ktnrich arid Go. Solicitors for Mr. Onslow, Wordsworth, Blake,. Harris and Parson. Solicitors for the joint official liquidator, Mercer- aid Mercer. Wednesday, July 8, 1874. Cooper's Case. Insurance company — Winding-up — Reserve fund — Certain guarantee policies not comprised in the • company's Act of Parliament. Under the Act of Parliament of an insurance com- pany, any court or any qualified officer of a court might accept the seowrity of the company in lieu of any security required of any person appointed to any office established or recognised by Act of ' Parliament, or who by virtue of any Act or any order made in pursuance of such Act is required to give security. These security policies were to be paid out of a certain reserve fund set apart by the com/pany. In a Chancery suit G. was appointed a receiver, the- following being the note of the chief clerh : — " It is agreed that G. should be appointed receiver, on understanding that A. and B. shall act as his agents, they giving him security. This is to form, no part of the order." The insurance company gra/nted a guarantee policy, guaranteeing the honesty of A., who subsequently absconded. In the winding-up of the company, G. claimed on the policy against the reserved fwnd, contending that A. had been appointed by what was practi- cally an order of the court ; and that, accord- ingly, tli)^ policy came within the provisions of the Act of Pa/rliament : Held, that G. could claim only against the general assets of the company, the policy not being com- prised in the Act. This was a claim on a policy against the Euro- pean Society's Eeserve Fund. In 1867, a suit was instituted between the General Exchange Bank and the General Provident Assu- rance Company, the object of which was to realise- certain mortgage securities to the extent of about 60,000Z., which were assets of the plaintifi" com- pany, subject to an equity of redemption in the defendant company. In this suit Mr. Cooper, one of the liquidators of the plaintiff company, was appointed receiver j the following entry being- made by the chief clerk on the appointment : Qeneral Exchajnge Bank v. General Provident Assurcmce- Compa/ny. Appeared both. It is agreed that Mr. Cooper should be appointed re- ceiver, on understanding that the two principal agents. 178 THE LAW TIMES. [Dec. 25, 1875. EUEOPEAN AsSUKANCE] Bath Hospitax's Case. [Arbiikatioit. of the defendant company shonld act as his agents, they giving Mm security. This is to form no part of the order. Order to appoint James Cooper, receiver, on giving security — ^two sureties, lOOOl. each. Cooper appointed Mowatt Us agent for collect- ing the periodical instalments payable on the mortgages in Ireland. A guarantee policy was effected with the European Assurance Society in the name of Cooper, whereby the society had agreed to make good to the assured to the extent of 500J. any loss which might be sustained by reason of the criminal fraud or dishonesty of Mowatt in his employment. Mowatt subsequently became a defaulter to the extent of 227Z. 14s., and absconded. Cooper, as receiver, claimed on the guarantee policy against the European Society's reserve fund, the society having become insolvent and having been ordered to be wound-up. The official liquidator opposed the claim, on the ground that the policy was not one of those con- templated by the society's Act of Parliament in its provisions with reference to the reserve fund. , The following were some of these provisions : Sect. 10 : After the commencement of this Act, the Lord High Treasurer, or the Commissioners of Her Majesty's Trea^ Bury, or any three or more of them, or any of Her Majesty's principal Secretaries of State, or the principal officer or officers of any public office or department of the State, or any other Government or pubfio functionary, or any court, by or under whom or in which any person is already or hereafter appointed to any office or employ, ment established or recognised by Act of Parliament, and who, by virtue of any Act from time to time in force, or any order or regulation made in pursuance of any such Act, is already or thereafter required to give security in Tespect of snch office or employment, may, if he or they think fit, accept, instead of the security so required, the guarantee or security of the society, to be given by their bond or policy in the usual form thereof, or in such other form, and subject to 'such conditions as the Lord Higk Treasurer, or Commissioners, Secretary of State, of principal officer or officers, or functionary, or court froip time to time require or approve, and the same, when so accepted and given, shall be instead of the security so required. Sect. 16 : For the purposes of this Act the following expressions and words have respectively the following meanings, that is to say : " Government" or " public ftmotionary" extends to and includes the persons, if more than one, or the sole person, if but one, in whom the discretion from time to time resides, of determining upon the nature, value, amount, or sufficiency of the security to be given by or taken from the person from time to time holding or fiUing, or appointed to, any such office or employment, and extends to and includes the Masters in Chancery, Commissioners in Bankruptcy, Commissioners of Income and Property Tax, Copyhold Commissioners, the Inolo- sure Commissioners, the Police Commissioners, and all other Commissioners already or hereafter appointed under any Act of Parliament, and all turnpike trustees, local boards of health and all municipal and other corpo- Tations, and all bodies and persons acting, whether severally or collectively under any Acts of Parliament, charters, or deeds of settlement. Sect. 18 : The society, before they issue any such bond or poUoy, BhaU set apart, out of the assets or income of the socieiy, or out of both, sums to the amount in the whole of 20,0001., to form a reserved fund j and the society shall, on or before the 1st May in the yeq,r next succeeding the formation of such reserved fund, and on or before the like day in every succeeding year, set apart out of their assets or income, or out of both, the sum of 2000J., by way of addition to the reserved fund, until the reserved fund amounts to the sum of 100,0001. Sect. 20 : The reserved fund shall be liable, after the assurance fund of the society is exhausted, but not before, to make good the guarantees or securities of the society, g^ranted in pursuance of this Act, and for no other purjrose ; and all the sums from time to time taken from the reserved fund for the purpose of making good any such gpiaran. tees or securities, shall, so soon as possible, be replaced from the assets or income of the society, or both, so as to keep the reserved fund always up to the amount thereof required by this Act : and any sums from time to time appropriated or carried to the reserved fund, may be taken whoUy or part from the proprietors' fund and the assurance fund of the society, or either of them, aa the directors of the society shall think fit. Locock Webb, for Cooper. — The society held themselves out as being authorised by this Act of Parliament to grant the guarantee policy; and the policy was distinctly, within the provisions of the Act of Parliament. Cooper was an officer of the court, so he appointed Mowatt his agent, with the sanction of the court. The sum named by the policy is accordingly payable out of the re- serve fund. Napier Higgins, Q.C., and Montague Gooikson, for the official liquidators of the European Society, were not called upon. Lord RoMiLLY said that the court had not ordered Mr. Mowatt to give security ; and that the claim must be refused with costs, the policy not being one of those contemplated by the Act of Parlia- ment. Solicitors for Mr. Cooper, Lawrance, Flews, Boyer, and Baker. Solicitors for the Official Liquidator of the European Society, Mercer and Mercer. Monday, Aug. 3, 1874. Bath Hospital's Case. Insurance company — Winding-up — Reserve fimd — Certain guarantee policies not comprised in the corrt^pany's Act of Parliament — Bath Hospital not a "public functionary." An insurance company's Act of Parliament pro- vided that a Secretary of State, Src, or any other Government or " public functionary," by or under whom any officer was appointed to any offlce established or recognised by Act of Pa/rliarnemt, might accept the gua/rantee of the company in respect of the office in lieu of any security reqwired of the officer ; and the term " public functionary " was to include commissioners appointed under any Act of Parliament, S^c, local boa/rds of health, and " all municipal and other corporations, and all bodies and persons acting, whether severally or collectively, under any Acts of Parliament, charters, or deeds of settlement." A certain reserve fund was to be set apart for the payment of these guarantee policies gra/nted under the Act of Pa/t' liament. The insurance company granted a guarantee policy to the Bath Hospital, which was managed by trustees under a trust deed : Held, in the winding-v/p of the company, that the hospital was not a " public functionary," so as to entitle them to claim against the reserve fund. This was a claim against the European Assurance Society's Reserve Fund. The Eoyal United Hospital of Bath was an in- stitution largely supported by voluntary contri- butions, and managed by certain trustees, who Deo. 25, 1875.] THE LAW TIMES. 179 BuROPEAJf AsSTJRiNCE] Bath Hospital's Case. [Arbitration. •were from time to time aopointed under a trust deed of the 27th Sept. 1834, by which it was declared that certain property was held by the trustees for the benefit of the poor inhabitants of Bath requiring medical or surgical relief. Edward Miller was in 1868 appointed by the trustees to the office of secretary and house steward, or master of the hospital. And in Nov. 1868, the trustees effected a policy with the Euro- pean Society, guaranteeing the hospital against any loss that might be sustained in consequence of the dishonesty of Miller. Miller subsequently absconded, after having applied 1272. 12«. 4(2. dishonestly to his own use. In the winding-up of the European Society in 1872, the trustees of the hospital claimed to be paid on their pohcy out of the reserve fund of the society, which had been set apart for the payment of the guarantee poUuies issued under the society's Act of Parliament : (See the provision of the society's Act with respect to the reserve fund.) This claim was opposed by the official liquidator, on the ground that the policy was not one of those contemplated by the Act. B. M. Jackson, Q. C. and Medd, for the Bath Hospital. — The policy comes within the provision of the Act. The hospital is a " public functionary " under sect. 16. It certainly is a " body acting collectively under a deed of settlement." Sect. 10 authorises such a public functionary to obtain a guarantee policy. The language of that section is peculiar ; but in giving it any other interpretation you would be saying that the Lord High Treasurer and the Secretaries of State are in certain cases to give security. This, of course, cannot be meant. Having taken the policy under sect. 16, the hos- pital is entitled to the benefit of it under sect. 20. Napier Higgins, Q.O. and Montague OooJeson, for the official liquidator. — The hospital is not a "public functionary," so as to be entitled to a guarantee policy to be paid out of the reserve fund. And whether they are a " public functionary" or not, they are not rec[uired by any Act of Par- liament to obtain this kmd of security. Lord EoMiLLT — What is contended tor appears to me distinctly excluded by the Act of Parliament. I have read through the Act very carefully, and it appears to me that in every point of view the Bath Hospital is not a " public functionary," in the proper sense of the term. If the Act of Parliament is so drawn that it requires things that no person ever knew or heard of, such as if the Lord Chancellor were ^ required to do this, it must be taken in the best sense that can b6 put on it, namely, that it is not meant to be personally done by him ; it is to" be taken by his officers. I am of opinion that the hospital is not a public "functionary" within the meaning of the Act. Solicitors for the Bath Hospital, Young, Ma;ples, Teesdale, Nelson, and Co. Solicitors for the Official Liquidator, Mercer and Mercer. I n