m 1551 I^I | Ml I Ml
AHvasnv^ ^ranw-wn5^ Vmwm-m* tymtmixfr *o\wm\x$
NBS& ^i
% iT
wilds
flOillVJ-JO'^ ^UONVSOV^ 'fyjJflAINIHWV ^OJIIVDJO^ ^OJIl
VJjv
0F-CALIF<% ^WEUNIVERS/a ^IDS-ANCElft*. aOFCALIF(% ^OF-CAUFORto
V£)1 lisR! fctt IMS! SMS)!
*£
l iCiCi
^aMiNftiwv^ ^AavaaiH^ ^avaaii-^ %u3nvso# "%hhainihu^
.^HIBRAKYQ^
3 1 ir-
^omMflfr
Mwms/%.
^UB-ANGElfr*
e? _
^OdlTVDJO^ ^tflMNV-SOV^
^0FCALIF0%. ^HINIVERS/a ^lOSAKGflfr-
^GUDNV-SOV^ "^BAIM-JV^
«$UIBRARY0a
§1 ir
^•UBRARYQa
^OJITYDJO^ %0JITVJJ0^
^OFCAlIFOfy*
^OFCALIF0fy>
^lOSANCEl^
^lOSANGELfju
"^WHAIM-ltf^
<$H1BRARY0a
§ 1 Irf—
"SftlUAINIWtf^ %WllY3J0^
A-0FCAIIF0%
fymm!&
^■UBRARYOc
5
%
^0F-CALIF(%
,»NIVER%
^I0SANCEI£)>
^TOSOl^ %H3AINlH\\V
<A\\EUNIVER%
g-
^lOS«tfj>
^Aavaan# ^rowsov^ %h3aina-3^
<*UIBRARY0a
J 1 1/—^
^OFCAllFOMe
y<?Aavaan#
AWEUNIVFRJ/a
1^
^fOJITVD-JO5^ <rj™$ov^
mmmw/j.
^10SANCEI^>
CO
-<
%JHAlNQ-3ftVs
^UB-ANGHfik
<C?U3HV-SQV^ ^/Hi3AlNIH^N
^UIBRARYQ^ #UBRARY0/,
^OJJWDJO^ %03I1V3JO^
^0FCALIF(%, ^0FCA1IF0%
y0AHvaaiH^ ^AHvaaii-^
^lOS-ANGElfj>
-<
%BAINfl-3\\VN
^E-UBRARYOr, #UBRARYfr
AVK-UNIVERto
vylOSANCElfj>
^/MAIM 3t\VS
^lOS-ANCElfj^
^OFCALIFO/i^
AOF-CAllF0«to
l^rl Iv^l fVP>i f\-£t t/O-'t
,\\\EUNIVERS/a
vVlOS-ANCEtfj>
//l/l/?l
\nf
THE LAW OF COMPANIES,
&c, &c.
c
A TREATISE
LAW OF COMPANIES,
CONSIDERED AS A BRANCH OF
THE LAW OF PAETNEESHIP.
FIFTH EDITION.
THE RIGHT HONOURABLE
SIR NATHANIEL LINDLEY, Knt., LL.D. Ed.,
ONE OF THE LORDS JUSTICES OF HER MAJESTY'S COURT OF APPEAL.
ASSISTED BY
WALTER B. LINDLEY, M.A.,
OF LINCOLN'S INN, ESQ., BARRISTER AT-LAW.
AND
WILLIAM C. GULL, M.A.,
OF LINCOLN'S INN, ESQ., BARRISTER-AT-LAW,
VINERIAN SCHOLAR IN THE UNIVERSITY OF OXFORD, 1883.
LONDON :
SWEET AND MAXWELL, Limited,
3, CHANCERY LANE, AND 8, HELL YARD,
ILafo Booksellers ant) ^ubltsrjrrs.
MEREDITH, RAY, k LITTLER, MANCHESTER;
HODGES, FIGGIS, & CO., AND E. PONSONBY, DUBLIN;
THACKER, SPINK, & CO., CALCUTTA ;
C. P. MAXWELL, MELBOURNE & SYDNEY.
1889.
loxdox :
bradbvry, agnew, & co., printers, whitefbiaes.
T
L6445c
x «».. v .: .. *
PKEFACE.
The present work is the result of an attempt to in-
vestigate the Law of Companies considered as a branch
of the Law of Partnership.
The Statutory Law of Partnership was long in a state
of transition ; but this state may be said to have termi-
nated when the Companies act, 1862, was passed, con-
solidating, repealing and amending most of the statutes
then in force relating to Joint-Stock Companies. The
Law of Companies has so developed since that time that
it has become desirable to devote a separate volume to
it instead of including it in a treatise on the Law of
Partnership as in former editions.
The Companies acts, 1862 to 1886, and the rules
promulgated under their provisions are printed in an
appendix ; and, to facilitate reference to them, a
separate index to their sections and clauses is inserted
immediately before the general index, with which the
work concludes.
It must always be borne in mind, that in order to
determine any legal question relating to companies, it is
indispensable to attend closely to the language of the
statutes by which they are governed ; and although for
convenience, the substance of various statutory enact-
761722
VI PREFACE.
ments has been shortly stated in the text, the reader is
warned not to rely on these abridgments, but to consult
the statutes themselves in every case which he may have
to investigate.
Great pains have been taken to render this Edition
deserving of the favourable reception accorded to those
which have preceded it. The separation of the matter
in this treatise from that in the volume on Partnership
already published has rendered it necessary to recast
the whole work. The former arrangement has been
followed in the main; but those portions which relate
to Fraudulent Prospectuses, Borrowing Money, the
Duties of Promoters, Transfers in blank, Forged
Transfers, the amalgamation and reconstruction of
Companies and Building Societies, have been so de-
veloped as to be practically new. Other portions,
especially that relating to Contributories, have been
rearranged and rewritten. The whole treatise has, in
short, been carefully revised throughout, and adapted
to the most recent decisions.
Notwithstanding, however, the labour bestowed upon
the work, and the anxiety of the author to render it
worthy of the profession to which he has the honour to
belong, the multiplicity and difficulty of the questions
with which he has had to deal are such, that he dare
not venture to hope that he has always avoided error,
or that his work is free from serious faults : and
although it has engaged his unremitting attention for
more than thirty years, he is painfully aware that it
is even now but an imperfect production.
PREFACE.
It only remains to add that this Edition has been
prepared by the author and his son, Mr. W. B. Lindley,
and Mr. W. C. Gull. They have not only revised
the sheets, but have examined the decisions on all
the most difficult subjects, recast some of the portions
which are new, made new indexes, and have thus
greatly diminished the author's labours and contributed
to the utility of the work.
Royal Courts of Justice,
June, 1889.
ANALYSIS OF CONTENTS.
PAGE
Preface v
Authorities Cited xxi
Abbreviations lxxiv
Additions and Corrections lxxv
Introductory l
Book I. — Of the Formation of Companies and of the Allotment of
Shares 11
Book II. — Of the Rights and Obligations of Companies as regards
Non-Members 143
Book III. — Of the Rights and Obligations of Members of Com-
panies between themselves 298
Book IV. — Of the Dissolution and Winding-up of Companies . . 608
Appendix 909
Indexes 1111
INTRODUCTORY.
1 . Nature of a company 1
2. Historical sketch of the law relating to companies 2
3. Different sorts of companies 7
BOOK I.
OF THE FORMATION OF COMPANIES AND OF THE ALLOTMENT
OF SHARES.
General observations ...... ..11
CHAP. I. — Agreements to take Shares.
Sect. 1. — Applications for and allotment of shares . . . .13
X ANALYSIS OF CONTENTS.
PAGE
Sect. 2. — Of the prospectus and departures from it . . .19
[As to fraudulent prospectuses, see infra, Ch. III.]
Sect. 3. — Of the return of subscriptions to companies on the ground of
failure of consideration 29
[As to fraud, see infra, Ch. III.]
CHAP. II.— Of Membership.
Sect. 1. — Who can be members 36
and herein of
1. Aliens 36
2. Convicts 38
3. Infants 39
4. Lunatics .......... 40
5. Married women 41
6. Corporations and companies 43
Sect. 2. — What constitutes membership 43
and herein of membership by estoppel
1. As between the company and an alleged shareholder . 49
2. As between an alleged shareholder and a creditor . . 54
Sect. 3. — Of registers of shareholders and certificates of title to shares,
and herein of the correction of registers. ... 57
Sect. 4. — Of scrip 65
CHAP. III. — Of Membership induced by False Statements.
Sect. 1. — Effect of false statements apart from statute . . . . 68
1. Recpxisites for redress ....... 68
2. Remedy against the company 74
3. Remedy against the individuals who made the state-
ments
criminal 87
civil 88
Sect. 2.— Statutory enactments, 30 & 31 Vict. c. 131, § 38 . . 91
CHAP. IV. — Of Different Classes of Companies.
Class I. Cost-book mining companies] . . . ..93
Class II. Companies incorporated or privileged by the
crown, viz. : —
1. Chartered companies .... 97
2. Companies formed under the Letters
patent act, 7.Wm. 4 & 1 Vict. c. 73 . 99
Class III. — Companies incorporated or privileged by some
special act of Parliament : —
1. Companies not incorporated, but, em-
powered to sue and be sued . . . 101
2. Incorporated companies . . . 102
ANALYSIS OF CONTENTS. XI
PAGE
Class IV. Companies incorporated or privileged by a
general act of Parliament : —
1. Banking companies formed under
7 Geo. 4, c. 46 . . . . 109
2. Registered companies . . . . Ill
1. Companies formed and registered
under the Companies act, 1862 . 117
2. Companies registered under the
Companies act, 1862, but not
formed under it . . . . 1 26
CHAP. V.— Of Illegal Companies.
Sect. 1. — What companies are illegal 130
note on the Bubble act of 1719 (6 Geo. 1, c. 18) . . 130
Sect. 2. Consequences of illegality 1 39
BOOK II.
OF THE RIGHTS AND OBLIGATIONS OF COMPANIES AS REGARDS
NON-MEMBERS.
CHAP. I. — General Principles of Agency as applied to Companies
IN THE COURSE OF FORMATION.
Sect. 1. — Of the liabilities of promoters and subscribers for the acts of
each other 143
Sect. 2. — Of the liabilities of companies for the acts of their promoters 146
CHAP. II. — General Principles of Agency as applied to Companies
AFTER THEIR FORMATION.
Sect. 1. — Who are agents
1. Directors 155
2. Agents who are not directors 159
161
162
166
Sect. 2. — Authority of agents of companies
1. Of acts which are ultra vires . ....
2. Of acts which axcintra vires but irregular
3. Of imperative and directory clauses in companies
statutes and regulations ....■•
Sect. 3. — Of ratification by companies .
172
175
Xll ANALYSIS OF CONTENTS.
PAGE
CHAP. III. — Of the Liabilities of Companies for the Acts of their
Agents in Particular Cases.
Sect. 1. — Cases not involving any tort or fraud and herein of
Admissions 183
Amalgamation . 183
Arbitration 184
Bills of exchange and promissory notes . . . . 185
Bill in Parliament 186
Bonds 186
Borrowing money .186
Cheques 196
Compromises .196
Debentures 196
Deeds 198
Extension of business 199
Indemnity 200
Insurance 201
Investments and loans 201
Judicial proceedings ........ 201
Leases 201
Mortgages and pledges 202
Notice 204
Purchases 205
Representations 206
Sales 207
Transfer of business 208
Sect. 2.— Torts 208
Sect. 3.— Frauds 211
CHAP. IV. — Of the proper Form of Contracts with Companies and
ON THE EFFECT OF FORM ON LIABILITY.
Sect. 1. — Of the rule requiring contracts of corporations to be under
seal 221
Sect. 2. — Statutory exceptions to the foregoing rule . . . . 225
Sect. 3. — Bills of exchange and promissory notes .... 230
CHAP. V. — Liability of Companies in respect of Contracts not
Binding on them but of which they have had
the Benefit 235
ANALYSIS OF CONTENTS. xiii
PAGE
CHAP. VI.— Of the Liability op Individual Members of Companies
to Creditors.
Sect. 1. — Of the liabilities of directors
1. For their own acts 239
2. For the acts of each other 244
Sect. 2. — Of the liabilities of shareholders
1. As to the extent of liability 245
a) of liability at common law and of attempts to
restrict it . . . . . . . . 245
b) of limited liability by statute 251
2. As to the duration of liability
a) commencement of liability 254
b) termination of liability 255
3. On the commencement and termination of liability in
the case of amalgamating companies . . . . 258
CHAP. VII. — Of Actions between Companies and Non-Members.
Sect. 1. — Of actions by and against companies
1. Incorporated companies ...... 262
2. Companies empowered to sue and be sued by public
officers ••...... 265
3. Other unincorporated companies 270
Sect. 2. — Of set-off by and against companies .... 273
Sect. 3. — Of execution against companies and shareholders on judg-
ments against their companies 276
1. Execution against the company ..... 278
2. Proceedings against shareholders upon a judgment
obtained against a company or its public officer
generally 280
3. Proceedings against members of particular companies
under
a) 7 Geo. 4, c. 46 285
6) 7 Wm. 4 & 1 Vict. c. 73 289
c) 8 & 9 Vict. c. 16 290
d) other companies ...... 293
Note on procedure by scire facias 294
XIV ANALYSIS OF CONTENTS.
BOOK III.
OF THE EIGHTS AND OBLIGATIONS OF MEMBERS OF COMPANIES
BETWEEN THEMSELVES.
PAGE
CHAP. I. — Op the Right to take Part in the Management of
Companies' Affairs.
Sect. 1. — Of directors and their powers 298
Sect. 2. — Of shareholders and their powers 303
Sect. 3. — Of the powers of majorities 314
Sect. 4. — Of the constitution and management of particular companies
1. Cost-book mining companies 325
2. Companies governed by 8 & 9 Vict. c. 16 . . 327
3. Companies governed by the Companies act, 1862 . . 333
CHAP. II. — Of the Fiduciary Relation of Promoters and Directors
TO THEIR RESPECTIVE COMPANIES.
Sect. 1. — Of promoters 345
Sect. 2. — Of directors and of their position as trustees . . . 363
Sect. 3. — Of the right of directors and others to indemnity . . . 379
CHAP. III. — Of the Capital of Companies ; of Calls ; of Dividends ;
and of Accounts.
Sect. 1. — General observations on the capital of companies . . . 391
1. Borrowed capital 391
2. Share capital 392
varying the amount of capital 392
the division of capital into shares .... 393
nominal and paid-up capital 394
preferential capital 396
increasing capital 397
3. Statutory enactments relating to the capitals of
particular kinds of companies
the Companies clauses acts ..... 399
the Companies act, 1862 401
Reduction of capital 402
Sect. 2. — Of calls 407
1. The persons by whom calls can be made . . . 408
2. The purposes for which they can be made . . . 409
for starting the company 409
for carrying on the business of the company . . . 411
ANALYSIS OP CONTENTS. XV
PAGE
3. The manner of making calls 414
the resolution making a call . . . . .415
the notice that a call has been made . . . . 417
4. The persons liable to pay calls 419
subscribers 420
shareholders 420
representatives of subscribers and shareholders . . 425
5. Actions for calls 427
Sect. 3.— Of dividends 429
payment of dividends out of capital . . .431
rights of preference shareholders 435
actions for ........ 437
in particular companies 437
Sect. 4. — Of accounts
1. Of the duty to keep and the right to inspect them . 439
2. Of false and fraudulent accounts 446
CHAP. IV.— Of Shares in Companies ; their Transfer and Sale.
Sect. 1. — Of the nature of a share 449
Sect. 2. — Of the amount of a share ....... 455
Sect. 3. — Of a company's lien on the shares of its members . . . 456
Sect. 4. — Of charging orders on shares ...... 460
Sect. 5. — Of the transfer of shares 464
1. Of ordinary transfers ....... 464
2. Of transfers in blank 471
3. Of forged transfers 483
and herein of estoppel by carelessness . . . . 486
[as to transfers on death and bankruptcy, see infra,
Ch. VII. and VIII.]
Sect. 6. — Of sales of shares, and questions arising thereon . . . 487
1. Sales not on Stock Exchange 491
vendor's obligations . . . . ... 491
purchaser's obligations 492
fraudulent sales 496
sales by auction 497
actions between buyer and seller . . . . 498
2. Sales on Stock Exchange 500
1. Of the vendor and of the broker or jobber
who agrees to buy from him .... 503
2. Of the vendor and the ultimate purchaser . . 505
3. Of the vendor and undisclosed and inter-
mediate purchasers 508
4. Of the vendor and purchaser as regards then-
respective brokers 511
XVI ANALYSIS OF CONTENTS.
PAGE
CHAP. V. — Op the Surrender of Shares.
Sect. 1. — Generally 517
Sect. 2. — In particular companies 523
CHAP. VI. — Of the Forfeiture of Shares.
Eight to forfeit 528
Exercise of the right 532
Effect of forfeiture 533
Relief against forfeiture 534
CHAP. VII. — Of the Effect of the Death of a Shareholder.
Sect. 1. — As between the executors and the company . . . . 536
Sect. 2. — As between the creditors of the company and the executors . 539
Sect. 3. — As regards the separate creditors and legatees of the deceased 540
CHAP. VIII. — Of the Effect of the Bankruptcy of a Shareholder 549
Position of trustee and disclaimer by him . . . 553
Proof by companies for calls, &c. 554
CHAP. IX. Of Actions between Companies and their Members
AND BETWEEN THE MEMBERS THEMSELVES.
General observations 559
Sect. 1. — Of the parties to sue and be sued 562
1. Actions by and against incorporated companies . . 562
2. Actions by and against public officers .... 564
3. Actions by one member on behalf of himself and others 565
Sect. 2. Of the rule that the court will not interfere in matters of
internal regulation 574
Sect. 3, Of the rule that the court will not interfere at the instance
of persons who have been guilty of laches . . . . 582
Sect. 4.— Of particular actions . . 585
1. Specific performance 585
2. Rescission of contract and return of deposits . . 589
3. Account and discovery 594
4. Injunctions 596
5. Receivers 602
6. Mandamus 603
7. Other miscellaneous actions 606
ANALYSIS OF CONTENTS.
BOOK IV.
— » —
OF THE DISSOLUTION AND WINDING UP OF COMPANIES.
PAGE
Introductory 608
CHAP. I. — Winding up by the Codrt.
Sect. 1. — The Court having jurisdiction over the winding up of the
Company ......... 615
Sect. 2. — Companies which can be wound up by the Conrt, or subject
to its supervision ........ 616
Sect. 3. — Persons at whose instance a winding-up order will be made 624
Sect. 4. — Circumstances under which a compulsory winding-up order
will be made 628
1. Circumstances under which a winding-up order can
be made 630
2. Circumstances influencing the discretion of the Court . 635
Creditors' petitions ...... 635
Contributories' petitions 639
3. Summary of cases 644
Sect. 5.— Proceedings to obtain a winding-up order and to discharge
it, and to stay proceedings under it . . . 654
Appeals from, and staying proceedings under, winding-up
order 661
Sect. 6. — Effect of winding up as regards dealings with property, &c . 664
1. Commencement of winding up 664
2. Effect of winding Tip on dealings with property . . 666
3. Effect of winding up on legal proceedings against the
company and its members . .... 669
a) As regards companies formed and registered under
the act of 1862 672
li) As regards companies not formed under that act . 682
Sect. 7. — Proceedings under compulsory winding-up orders . . 684
1. Generally 684
2. Extraordinary powers of the Court .... 689
3. Mode of enforcing orders and appeals from them . . 697
Sect. 8.— The liquidators of the company . . ... ('>!)!)
1. Provisional liquidators 700
2. Official liquidators ~°l
L.C. h
XV111
ANALYSIS OF CONTENTS.
Sect. 9.— Proof and payment of debts .......
1. General observations .......
2. Debts provable
3. Set-off
Sect. 10. — Of eontributoriea
1. The list of contributories
2. Who are contributories
General observations
Classification of contributories
A. Contributories as present members .
1. Duly constituted shareholders
As to persons who have not ceased to be members
but whose shares have been sold, surrendered,
or forfeited, see infra, under head B.
2. Persons estopped from denying that they are share-
holders .......
3. Persons who are bound by agreement to become
shareholders ......
4. On the repudiation of shares after the commencement
of the winding-up ....
a) no agreement ......
b) illegally issued shares ....
c) fraud .......
d) non-performance of conditions
5. Holders of paid-up shares ....
6. Directors in respect of their qualification shares
7. Subscribers of the memorandum of association
8. Holders of scrip
9. Trustees and cestuis que trustent
10 Mortgagees
11. Persons under disability
a) companies ......
b) married women and their husbands
c) infants ......
d) lunatics .......
12. Eepresentatives ......
a) executors, &c. ......
b) trustees in bankruptcy ....
B. Contributories as past members
General observations on past members
1. Persons who have transferred their shares to others
a) where the transferee has been accepted by the
company in the place of the transferor .
b) where the transferee has not been so accepted
PAGE
713
713
716
738
745
745
750
750
756
756
756
757
760
767
768
774
776
778
783
790
797
799
801
806
807
807
807
809
811
812
812
815
816
816
823
823
831
ANALYSIS OF CONTENTS. XIX
PAGE
a) where the sale has taken place before the
commencement of the winding up . . . 833
8) where the sale has taken place since the com-
mencement of the winding up 836
2. Persons who have surrendered their shares to the com-
pany 837
3. Persons whose shares have been forfeited . . . 842
Sect. 11. — Calls for debts, &c 846
1. Generally 846
2. Calls for debts 849
3. Calls for the adjustment of the rights of the con-
tributories ......... 852
4. Limit of liability to calls
a) present members 853
b) past members ....... 855
5. Set-off against calls ........ 857
Sect. 12. — Costs 859
1. As to costs payable by the company . . . . 859
2. As to the payment of those costs . . . . . 864
Sect. 13. — Distribution of surplus assets and final dissolution of the
company 867
Note on Building Societies 871
CHAP. II.— Of Winding up Voluntarily and subject to the Super-
vision of the Court.
Sect. 1. —Differences between the various methods of winding up . . 874
Sect. 2. — Of winding up voluntarily 875
Sect. 3. — Of winding up subject to the supervision of the Court . . 886
CHAP. III.— Of the Amalgamation and Reconstruction of Com-
panies 891
CHAP. IV. — On the Abandonment of Railways and the Winding-up
and Dissolution of Railway Companies.
1. Abandonment of railways . . . . . . 901
2. Arrangements between railway companies and their
creditors . . . . . . . . . 904
b 2
XX ANALYSIS OF CONTENTS.
APPENDIX.
. PAGK
1. Foreign Companies 909
2. Industrial and Provident Societies 915
3. Benefit Building Societies 918
4. Chronological List of Statutes 923
Table of Statutes now in force ........ 931
5. The Companies acts, 1862—1886
Companies act, 1862 933
Companies seals act, 1864 1015
Companies act, 1867 1017
Companies arrangement act, 1870 1027
Companies act, 1877 1028
„ 1879 1030
„ „ 1880 1032
„ 1883 1035
Companies colonial registers act, 1883 1035
Companies act, 1886 1037
6. Orders and Bules —
Rules of 1862 ... 1041
1868 1084
7. Life assurance companies acts —
Life assurance companies act, 1870 1095
Do., Amendment act, 1872 1103
INDEXES.
Index to the above Acts and Rules 1111
General Index . 1145
AUTHORITIES REFERRED TO.
[Those pages in which a ease is particularly referred to in the text, and is not
merely cited, are in the following list denoted by an asterisk.
The cases in each sheet have been brought down to the latest possible moment.
It ought, however, to be mentioned, that no attempt has been made to collect cases
decided since the establishment of the Law Reports, and not reported therein.
An attempt has been made to collect under the name of each company the cases
reported in connection with its winding up ; but the references to those cases will be
found, not under the name of the company, but under the names of the persons to
whom they relate ; for owing to the way such cases are frequently reported, it has
been found impossible to make complete lists of them under the names of their
respective companies. ]
PAGE
724, 863, 866
. 117
792, 793, 794*
A'Beckett, ex parte
Abbott v. Rogers
Aberaman Iron Works .
Peek (4 Ch. 532)
Abercorn's case . 15,
Aberdeen Railway Co. v. Blaikie 328,
368
Abraham v. Hannay . . . 564
Abrath v. Nortb-Eastern Railway
Co 210, 216
Accidental Death Insurance Co.,
(7 Ch. D. 568) . . 251, 866
Allin (16 Eq. 449)
Chappell (6 Ch. 902)
Accidental and Marine Insurance
Corp.
Bridger (4 Ch. 266)
Briton Medical and General
Life Association (5 Ch. 428;
Neill (4 Ch. 266)
Accidental Marine Insurance Co.
v. Mercati ....
Acland v. Lewis . . . .
Adair v. New River Co.
Adam Eyton, Limited
Charlesworth (36 Cb. D. 299)
Adams's case 15, 520, 521, 761, 763,
769, 770, 839, 842
Adams v. Great Western Railway
Co 38, 911
Adansonia Fibre Co.
Miles (9 Ch. 635)
Addams v. Ferrick . . . 544
Addie v. Western Bank of Scotland 216
Addinell's case . . . . 16
Addison's case (5 Ch. 294) *782, 806,
838, 840
(20 Eq. 620) . . .853
Addison v. Mayor of Preston . . 280
v. Tate . . 295, 296, 297
691
263
452
272
PAGE
Addlestone Linoleum Co. 334, 396, 401,
736, 742, 754, 787, 789
Adelphi Hotel Co., Limited
Best (2 De G. F. & J. 650)
Adley v. Whitstable Co. 308, 322, 433*,
580*, 597
Agar v. Athenreum Life Insurance
Society . . 165, 168*, 174, 180,
199, 224
Aggs v. Nicholson 186, 226*, 234.
240
Agra Bank's claim . . . 726
and Masterman's Bank (ex
parte (6 Ch. 206)
175, 708,
712, 881
712, 894, 898
(12 Eq. 509)
(2 Ch. 391)
Anderson (3 Eq. 337)
Cannan (7 Eq. 102)
Tondeur (5 Eq. 160)
Waring (W. N. 1866, 399)
Agricultural Cattle Insurance Co.
519
(1 Mac. & G. 170)
(3 De G. F. k J. 194)
(10 Ch. 1) .
Baird (5 Ch. 725)
Belhaven (3 De G. J. & S. 41)
Brotherhood (31 Beav. 365)
Bush (6 Ch. 246)
Dixon (5 Ch. 79)
Official Manager (10 Ch. 1)
Smallcombe (3 Eq. 769)
Spackman (1 De G. & Sm. 599)
(1 M. & G. 170)
Stanhope (1 Ch 161)
Stewart (1 Ch. 511)
v. Fitzgerald
A. G. V. Alexander
v. Birkbeck .
727
838
. 631
686, 702
737, 866
11'.'. \-2J.
'.'11
137
AUTHORITIES REFERRED TO.
A. G. r. Ely, Haddenham, and
Sutton Railway Co. .
v. Great Eastern Railway Co.
163, 165, 315, 317, 318, 321
v. Great Northern Railway
Co. . 264,319,321,580*,
v. (iould . . . •
v. Higgins .
v. Montefiore . . .
v. Norwich
v. Shrewsbury Bridge Co.
PAGE
581
161,
581
, 597
318
•454
450
598
264,
581
Aitchison v. Lee . . • • 613
Alabaster's case . . . 774, 864
Albert Average Association . 702
Blyth and Co. (13 Eq. 529)
Albert Life Assurance Co. (9 Eq.
700) . ... 249, 251
(6 Ch. 381) . . 710, 711*, 712
Bell (9Eq. 706)
Bleacklev (9 Eq. 706)
Cook (9 Eq. 703)
( Iraig's Executors (9 Eq. 706)
Kerr and Stubbs (9 Eq. 706)
Western Life Assurance So-
ciety (11 Eq. 164)
Wilson (9 Eq. 706)
Albion Life Assurance Society
Brown (18 Ch. D. 639)
Sanders (20 Ch. D. 403)
Winstone (12 Ch. D. 239)
Albion Steel Wire Co. .
v. Martin . . 349, 362*
Albrecht v. Sussman .
Alchorne v. Saville
Aldborough Hotel Co.
Simpson (4 Ch. 184)
Aldebert v. Kearns
v. Leaf .....
Alderson v. Clay
Aldhani v. Brown . . 32, 33
Aldred r. North Midland Railway
Co 150
Aldridge v. Cato . . . 252, 910
Alexander's case . . 747*, 826*
Alexander v. Bearne .
v. Worraan . . . .
Alexander Water Co. v. Musgrave
Alexandra Hall Co.
Alexandra Palace Co. (16
D. 58) .
- (21 Ch. D. 149)
(23 Ch. D. 297)
Alexandra Park Co.
Hart (6 Eq. 512)
Sharon (W. N. 1866, 231)
Alison's ease . . . 736, 774, 849
Alivcn r. Furnival . . . . 910
Allard v. Bourne . . 160, 205
Allen v. Graves . . 504, 509, 510
v. London and South- Western
Railway Co. . . . 209
v. Sea, Fire and Life Assur-
ance Co. . . 185, 226, 234*
Alliance Bank .... 727
Alliance Society . . • • 872
Allin's case ..... 829
737, S53
681, 721
365, 368
37
246, 251
184
249
312
420
451
247
911
. 708
Ch.
265, 714
375, 432, 696
852
PAGE
Allison v. Herring . . . . 272
Alma Spinning Co.
Bottomley (16 Ch. D. 681)
Almada v. Tirito Co. 334, 396, 401, 783,
787
Amazon Life Assurance and Loan
Co.
Blackburn (3 Dr. 409)
(8 De G. M. & G. 177)
Hutchinson (25 L. J.)
Ambergate, &c, Railway Co. v.
Coulthard . . . .416
„. Mitchell . 393*, 399, 408, 418
v. Norcliffe .... 416
Ambrose Lake Tin Mining Co. 369*, 695
Clarke (8 Ch. D. 635)
Moss (14 Ch. D. 390)
Taylor (14 Ch. D. 390)
Ambrose v. The Dunmow Union 222
Amsinck's case .... 767
Spottiswood (6 De G. M. &
G. 345)
Anchor Assurance Co. (5 Ch. 632) 260*,
735
Anchor Insurance Co.'s case (2 J.
& H. 408) . . . 261, 735
Anderson's case (17 Ch. Div. 373) 21*,
69, 123, 124
(7 Ch. D. 75) . 118, 783, 799
(3 Eq. 337) .... 738
(8 Eq. 509) . . . ^829
Andress's case . . 784, 785, 789*
Andrew's case (3 Ch. 161) . 821, 856
v. Burnes . . • 861
v. Ellison .... 248
Andrews and Alexander's case (8
Eq. 176) 853
Andrews or Jones v. Swansea
Cambrian B. B. Soc. . . 922
Angas' case . 41, 563, 750, 807, 862
Angelo, re . . . . 451, 469
Angerstein, ex parte
Anglesea Colliery Co. 783
Anglo- African Steamship Co.
Anglo-Australian Assurance
861
785, 852,
869, 882
685, 688
Co.
641, 650*
v. British Provident, &c,
Society . . 169, 184, 201, 586*
Anglo-Australian and Universal
Family Life Assurance Co.
Smith (1 Dr. & Sm. 113)
Anglo-Californian Gold MiningCo. 662
v. Lewis . . . 307, 879
Anglo-Danish and Baltic Steam
Navigation Co.
Sahlgreen and Carrall (3 Ch.
323)
Anglo-Danubian, &c, Colliery Co.
Walker (6 Eq. 30)
Anglo-Danubian Co. v. Rogerson
Anglo-Egyptian Navigation Co. .
Anglo-French Co-operative Society
Pelley (21 Ch. D. 492)
Anglo - French Porcelain Co. v.
Harris ... . .
197,
401
264
659
62
AUTHORITIES REFERRED TO.
XX111
PAGE
Anglo-Greek Steam, &c, Co. 632, 650*,
659
Carralli and Haggard (4 Ch, 174)
Anglo-Italian Bank and De Rosaz 883
Anglo-Moravian, &c, Railway Co.
Dent (8 Ch. 768)
Forbes (8 Ch. 768)
Watkin, ex parte (1 Ch. D. 130)
Anglo-Romano AVater Co.
Wright (5 Ch. 437)
Anon. (2 Str. 696) . . . 604
Apperley v. Page . . . 565, 593
Appleton i\ Binks . . . 240
Appletreewick Lead Mining Co. . 784
Appleyard, ex parte . . . 736
Apps, ex parte . . . 767, 839
Archer v. Harrison . . . 920
Argus Life Assurance Co. 184, 249, 261,
839, 899
Arkwright v. Newbould 70, 73, 90, 91,
92
Armitage v. Walker . . . 916
Armstrong's case iv3 De G. & S.
140) 715
(1 De G. & Sm. 565) . 814, 815
Armstrong v. Burnet . 426, 538, 544
v. Normandy . . . 706
Army and Navy Hotel Co. . . 655
Arnold v. Mayor of Poole . 221, 265
Arnot's case 705, 752, 760, 762, 781,
784, 788*, 795*
Art Engraving Co. . . . 681
Arthur Average Association 621, 623,
662, 722, 849, 853, 859
Hargrove & Co. (10 Ch. 542)
Arthur v. Midland Railway Co. . 59
Artistic Colour Printing Co. . 676
Fourdrinier (21 Ch. D. 510)
Ashbury's case . . . 666, 672
Ashbury Railway Carriage Co. v.
Riche 119, 163, 164*, 176, 315, 334
Ashbury v. Watson 322, 334, 344,
396, 405, 435, 470, 584
Ashby v. Blackwell . . . 483
Ashley's case . . 85, 776, 777
Ashpitel v. Sercombe . 31, 32, 33
Ashton r. Lord Langdalc . 451, 452
Ashurst v. Fowler . . .378
v. Mason . • . . 376, 377, 378
Ashworth's case . . . . 275
Asiatic Banking Corporation . 7 11
Agra and Masterman's Bank,
(6 Ch. 206)
Collum (9 Eq. 236)
Royal Bank of India (7 Eq. 91)
(4 Ch. 252)
Symons (5 Ch. 298)
Askew's case (4 Burr. 2200) . 98
(9 Ch. 664) {. . . 122, 123
Aslatt v. FarquharsoD . . . 276
Asphaltic Wood-pavement Co.
Lee and Chapman (30 Ch. D.
216)
Association of Land Financiers
(10 Ch. D. 269) . . .703
(16 Ch. D. 373) . . 717, 721
Aston, re . . 66, 133, 135, 487, 488
Athenaeum Life Assurance Society
v. Pooley 165, 166, 168, 171, 178,
180, 193, 224, 237*, 247, 249, 250,
275, 737, 740
Athenaeum Life Assurance Society
Chinnock (Johns. 714)
Durham (4 K. & J. 517)
Eagle Insurance Co. (4 K. & J. 549)
Hollingsworth (3 De G. & Sm. 102)
Miller (3 Ch. D. 661)
Painter (4 K. & J. 305)
Parbury (3 De G. & S. 43)
Prince of Wales Life Assurance So.
(Johns. 633)
Prince of Wales Life, &c, Assurance
Co. (3 De G. & J. 660)
Richmond (4 K. & J. 305)
Sheffield (Johns. 451)
Atkins' estate .... 661
Atkins v. Cooke . . . . 661
Atkinson v. Grey . . . 544
v. Pocock . . . . 33, 34
Attenborough's case . . . 203
Attorneys, ex parte the Society of 98
Attree v. Hawe .... 451
Attwood v. Small . . . . 72, 77
Atwool v. Merryweather . 309, 572,
573, 576, 578, 579, 581
Audley Hall Cotton Spinning Co. 865
Augusta (Bank of) v. Earle . 910
Auld v. Glasgow Working Men's
Building Soc. 320, 524, 872, 918, 920
Austin's case (2 Eq. 435) . 778, 792,
793, 795*
(W. N. 1867, 138) . . 839
Austin v. Guardians of Bethnal
Green .... 220, 223
Australasia, Bank of v. Harding . 101
v. Nias . . . .101
Australian Steam Clipper Co. v.
Mounsey . . 191, 199, 203,
315, 317, 398, 406
Direct Steam Navigation Co.
(20 Eq. 325) . 674, 727
Miller (5 Ch. D. 70)
Steam Ship Co. (4 K. & J. 407) 264
Ayers v . South Australian Banking
Co 163
Aylesbury Railway Co. v. Mount 123*
v. Thompson . . .59, 423
Ayre's case .... 80
Bagg.s, ex parte . 487, 522, 840
Baglan Hall Colliery Co. . 783, 798
Bagnall v. Carlton 347, 355*, 357, 359,
361, 362
Bagnalstown and Wexford Rail-
way Co 198, 505
Bagshaw, ex parte . 184, 323, 891, 896
v. Eastern Union Railway
Co. . 29, 163, 320, 321, 571, 572,
598
Bahia and San Francisco Railway
Co. . . .54, 64, 123, 484
Baillie V. Goodwin & Co. . • BOS
AUTHORITIES REFERRED TO.
Baily, ex parti (3 Ch. 592, and 5
Eq. 428) 15, 27*, 122, 769, 772
(15 Jur. 29) . . 529, 843
v. Birkenhead, &c, Railway
Co. . . 412, 577*, 600
r. Macaulay . . .145
v. Universal Prov. Life Asso-
ciation . . .45, 54, 59
and Leetham's case (8 Eq. 94) 865
Bain v. Whitehaven, &e., Railway
Co 58, 105, 106
Baiubridge v. Smith . . 599, 794
Baird's case . . 426, 812, 848
Baird v. Ross . . 29, 32, 33
Bakers case (1 Dr. & Sm. 55) 193, 226,
328, 382*, 384, 388, 811
Baker, ex parte (3 De G. & Sm. 243) 686
v. Plaskitt . . .18, 488
v. Sutton .... 452
Baldwin v. Lawrence . . 440, 569
Bale v. Cleland . . 88, 431, 433
Balfour v. Ernest . . 165*, 171
Balgooley Distillery Co. . . . 402
Ball, ex parte .... 555
Banco de Portugal
Hooper (11 Ch. D. 317)
Waddell (5 App. 161)
Bangor and Port Madoc Slate Co. 400,
435, 869
Bank of Augusta v. Earle . . 910
Bank of Australasia v. Breillat . 190
v. Harding . 101, 266, 910, 913
v. Nias . 101, 266, 294, 910, 913
Bank of England v. Anderson . 136
v. Booth . . . .136
v. Johnson 60, 110, 287, 288, 289
Bank of Gibraltar and Malta . 640,
651*, 693
Bank of Hindustan v. Alison 17, 53*,
184, 774, 892
Bank of Hindustan, China, &c.
Alison (15 Eq. 394)
(9Ch. 1)
Anderson (8 Eq. 509)
Campbell (9 Ch. 1)
(16 Eq. 417)
Groom (16 Eq. 417)
Flicker (13 Eq. 178)
Harrison (6 Ch. 286)
Higgs (2 H. & M. 657)
Hippisley (9 Ch. 1)
(16 Eq. 417)
Kintrea (5 Ch. 95)
Levick and others (5 Eq. 69)
Los (11 Jur. N. S. 661)
Martin (2 H. M. 669)
Mitchell (5 Ch. 400)
Smith (3 Ch. 125)
Swan (10 Eq. 675)
Bank of Hindustan, &c. v. Eastern
Financial Association . . 710
Bank of Ireland v. Evans's Charity
Trustees . 198, 224, 483, 486
v. Perry . . . . 727
Bank of London, &c, Insurance
Association . . . 114, 617
Part (10 Eq. 622)
PAGE
Bank of London and National, &c,
Association
Muggeridge (10 Eq. 443)
Bank of London v. Tyrell 34S, 357, 361
Bank of Montreal v. Bathune . 910
Bank of New South Wales v.
Owston 210
Bank of Scotland o. Fenwick . . 295
Bank of South Australia v. Abra-
hams ..... 192
Bank of Turkey v. Ottoman Co. . 372
Banks v. Parker . . . . 569
Bannatyne v. Direct Spanish Tel.
Co. . . 397, 403, 406, 435, 602
Banner v. Johnston . . 698, 727
Bauque Jacques Cartier v. La
Banque, &c. , de Montreal . 205
Banwen Iron Co. v. Barnett 111, 129,
422
Barangah Oil Penning Co.
Arnot(36 Ch. D. 702)
Barber's case (1 De G. & S. 726) . 687
(5 Ch. D. 963) . . 793, 795
Barber, ex parte (1 Mac. & G. 176) 623,
646*, 662, 663, 684
re (15 Jur. 51) ... 16
Barber & Co 230,729
Agra Bank (9 Eq. 725)
Barclay's case . 66, 133, 464, 468,
487, 619, 621, 622, 799
Barclay v. Wainwright . . 545
Bardwell v. Sheffield Waterworks
Co. .
Barsate r. Shortridge
. 431, 432
52, 56*, 299,
423, 466, 560
744, 786
. . 500
201, 243, 522
. . 540
. 145
. . 145
692, 705
Barge's case
Baring v. Corrie
Barker v. Allan .
v. Buttress
v. Lyndon .
v. Stead .
Barned's Banking Co. .
Andrew (3 Ch. 161)
Andrews (4 Eq. 458)
Contract Corporation (2 Ch. 350)
(3 Ch. 105)
Coupland (8 Eq. 472)
(5 Ch. 167)
Forwood (5 Ch. 18)
Helbert v. Banner (L. R. 5 H. L. 28)
(6 Eq. 509)
Joint Stock Discount Co. (19 Eq. 1)
(10 Ch. 198)
Kellock (3 Ch. 769)
Leech (6 Ch. 388)
Peel (2 Ch. 674)
Shrapnell (M.R. 24 April, 1867)
Thornton (2 Ch. 171)
Barned v. Hamilton . . . 498
Barnes v. Addy- . . . . 362
v. Thrupp . . . . 672
Barnet v. North Metropolitan
Junction Railway Co.
Nicholay's case (15 Jur. 420)
Barnett's case (18 Eq. 507) . 521, 841
(19 Eq. 449) . . .742
Barnett, Hoares & Co. v. Smith . 483
AUTHORITIES REFERRED TO.
XXV
Harnett, Hoares & Co.
London Trams Co.
PAGE
. South
154, 161, 183
206, 218*
143, 145, 606
. 268, 269
798
386
Barnelt v. Lambert
Barnewall v. Sutherland
Baron de Beville's case
Baron Liebig's Cocoa Works,
Limited .....
Baroness Wenlock v. River Dee
Co. 112,238'.
Barrett's case (3 De G. J. & Sm.
30) . . 16, 80, 82*, 213, 214, 762
(4 De G. J. & Sm. 416) 46, 742,
801, 803, 839
Barrett r. Blunt . . . .145
Barrow's case (14 Cli. D. 432) 64, 369,
785, 787, 789
(3 Ch. 784) . . . . 847
Barrow-in-Furness Investment Co. 785
Barrow Haematite Steel Co. . 403
Barry v. Croskey. . . 218*, 488
v. Navan and King's County
Railway Co.
Barry Railway Co.
Barry's representatives, ex parte
Bartlett v. Pentland .
Bartley, ex parte
Barton's case . 322, 528, 529, 534, 761*
trust .... 545, 546
Barton v. Hutchinson . . 149, 262
v. London and North- West-
ern Railway Co. . . .
v. North Staffordshire Rail-
way Co. .....
Barwick v. English Joint Stock
Bank .... 207, 214, 217*
Bass's case .... 703, 708
Bastenne Bitumen Co. . . 652*
Bastow & Co. . . 676, 677
Batard v. Hawes . . . . 606
Bateman v. Mayor of Ash ton-under-
Lyne . . . 186,199,598
v. Mid Wales Railway Co. . 185
v. Service [. 115,909,912,914
Bates v. Mackinley . . . 547
Bath's case . 196, 319, 374, 521, 842,
845, 856
517
904
860
294
861
483
4S3
Batten v. Wedgewood Coal Co.
Batty v. McCundie . . .
Baxter v. Earl of Portsmouth
Bayley v. Manchester and Sheffield
Railway Co. . ...
v. Wilkins ....
Bayliffe v. Butterworth .
Bear v. Bromley ....
Beardshaw, ex parte . . 766
PAGE
Beech v. Eyre ..... 266
Beeching v. Lloyd . . . 568
Beer v. London and Paris Hotel
Co 228
Beldon v. Campbill . . .192
Belfast, &c. Railway Co. v. Strange 424
Belhaven's (Lord) case . 521, 842, 845
Bell's case (4 App. Cas. 550) 42, 80*,
86, 733, 802, 808, 809, 810
(22 Beav. 35) ' . . 80*, 86
Bell v. Francis . . . . 145
v. London and North- West-
ern Railway Co. . . . 183
v. Mexborough . . . 589*
v. Reid 37
Bell and Lang's case (4 App. Ca
547)
865
284
40
209
513*
513*
117
, 861
Londesborough . 670, 706
Beattie v. Lord Ebury 196, 242, 805, 806
Beaujolais Wine Co. . . . 887
Beaumont v. Meredith . . . 575
Beavan v. McDonnell ... 40
Beck's case 17, 25, 26, 769, 773, 774
Beck v. Dean ..... 560
v. Kantorowicz . 346, 352*, 566
Beckitt v. Bilbrough . . 473, 499
Bedford v. Bagshaw . . 88, 496
Bedford Railway Co. v. Stanley . 151
Bellairs v. Tucker
Beman v. Rufford
297. 37;
Bendy v. Harding
Benham's case
Bennett's case
Bennett v. Blain .
Benson v. Paull
Bent v. Young .
Bentham Mills Spinning Co.
758
. 69, 89*
183, 322, 571.
580*, 598, 892, 893
. . 295
Bentinck (Cavendish) v. Fenn
Bentley, ex parte
v. Bates .
v. Craven .
Beresford's case
Berkeley v. Standard Discount Co
Bermingham v. Sheridan
. 840
519, 839
452
280, 603
913
459, 468,
538, 552
369
. 785
. 550
. 360
529, 843
265,
595
466, 491, 493,
499, 505, 511
82*, 84, 759, 860
'. Bank of
766
711
14,
544
222
798
Bernard's case
Berne (The City of)
England .....
Besley, ex parte . 623, 698, 765
Bessemer Steel and Ordnance Co.
Best's case (2 De G. J. & Sm. 650)
15, 769
Best, ex parte (1 Sim. N. S. 193) 747
v. Pembroke . . . 697
Betts v. De Vitre . . 209, 240, 265
Beulah Park Estate
Sargood (15 Eq. 43)
Bevan v. Waterhouse
Beverley v. The Lincoln Gas Co.
Beville's case (Baron de)
Biederman v. Stone . 494,501,514
Bigg's case (1 Eq. 309) . . 533, 844
Bigge's case (5 Jur. N. S. 7) 82, 84*,
Bignold, ex parte 174. 381, 382, 387*,
389, 594, 851
Bill v. Darenth, &c, Railway Co. 332
v. Richards. . . . 284*
V. Sierra Nevada, &c, Co. 324, 601,
!']:;
Bilton Hotel Co. . . 792, 1'X'
Birch's case . 59, 60, 94, 256, 624,
748, 840
Birch Torr & Vitif'er Co. . .
Lawton (1 K. & J. 204)
XXVI
AUTHORITIES REFERRED TO.
PAGE
Bird's case (4 De G. J. & Sm. 200) 15,
761, 769, 791, 796
(1 Sim. N. S. 47) 111, 129, 761, 862
Bird v. Bird's Patent Sewage Co. 894
Birkbeck Life Assurance Co.
Barry (representatives of), (2 Dr. &
Sm. 321)
Birkenhead, Lancashire, &c. , Rail.
Co. v. Brownrigg . 59, 105, 425
v. Cotesworth . . 426, 427
v. Pilcher . . . 39, 422
. v. Webster .... 416
Birmingham Banking Co. (3 Ch.
651) . . • • 156,175,881
(6 Ch. 83) . . • • 669
Birmingham, Bristol, &c, Railway
Co. v. Locke . 49, 51, 58, 106, 421,
533, 534
. . 440
v. White . . • •
Birmingham and Lichfield Rail-
way Co. (18 Ch. D. 155) .
(28 Ch. D. 652) . . 102
Bishop's case . - . 825.
Black v. Homersham . . 490, 493
Black & Co.'s case , 742, 744, 754, 858,
885
20, 25, 84, 749, 772
279
904
828
Blackburn's case
Blackburn Benefit Building Society
v. Cunliffe, Brooks & Co. .
178, 187, 189, 190*, 191, 237"
Blain v. Agar
Blake v. Mowatt
Blake's case
Blakeley's executors, ex parte
872
176,
386,
919
593
592
, 842
. 537,
812,848
. 741*
81'
Blakely Ordnance Co.
Brett (8 Ch. 800)
(6 Ch. 800)
Creyke (5 Ch. 63)
Lumsden (4 Ch. 31)
Metropolitan and Provincial Banks
(8 Eq. 244)
New Zealand Banking Co.
Ch. 154)
Keedham (4 Eq. 135)
Stocken (3 Ch. 412)
(5 Eq. 6)
Blann v. Bell ....
Bleackley"s case
Blewitt v. Gordon
Bligh v. Brent
Blissct v. Daniel
Blood, ex parte
Bloomer v. Union, &c, Coal C<
Blount v. Hipkins .
Bloxam's case (4 De G. J. & S.
447) ... 15, 770
(36 L. J. Ch. 687) . 691, 692
Bloxam v. Metropolitan Cab Co. . 421,
497, 592, 597
v. Metropolitan Railway Co. 430,
432, 442, 568, 571, 580, 597
Bluck v. Mailable . 328, 388, 572, 586,
597, 600
Blundell, re .... 361
v. Winsor . 2, 131, 132*. 133*
(3
542
733
. 266
452, 453
318, 532
. 735
192
426, 544
PAGE
Blyth's case . . 783, 787
Blyth & Co.'s case . . . . 761
Bodmin United Mines, 94, 95, 524, 715,
749, 840
Bog Lead Mining Co. v. Montague 45,
119, 129
Bolckow, Yaughan & Co. v. Fisher 595
Bolingbroke (Lord) t\ Local Board
of Swindon .... 209
Bolognesi's case . . . 881
Bolton Benefit Loan Society . 620,
628, 648*
Coop v. Booth (12 Ch. D. 679)
Bolton v. Madden . . . . 309
Bonar v. Mitchell . . .109
Bonelli's Telegraph. Co. . . .
Collie (12 Eq. 246)
Booker, ex parte . . ■ 200
Booth v. Bank of England . . 136
Borough of Hackney Newspaper
Co. (3 Ch. D. 669) . . . 203
Borough of St. Marvlebone . .
Buck (3 De G. & Sm. 267)
Joint Stock Banking Co.
Stanhope (3 De G. & Sm. 198
Bosanquet v. Graham . 283, 295, 297
v. Ransford . . • • 286
v. Shortridge . 55*, 59, 110,
158, 288, 289, 423
v. Woodford . . . . HO
Boston Deep Sea Fishing Co. v.
Ansell . . . 147, 149, 367
Boston, Newark, and Sheffield
Railway Co.
Williams (1 Sim. N. S. 57)
Boswell v. Gurney . . .721
Bosworthon Mining Co. . 619, 646*,
654*, 659
Jones (6 Ch. 48)
Bottomley's case . 157*, 409, 532, 843
Bottomley v. Fisher . . . 233*
Bouch v. Sevenoaks Railway Co.
. 393, 545'
546
606
205
21, 144, 393
v. Sproule
Boulter v. Peplow
Boulton, ex parte
Bourne v. Freeth
Bousfield v. Wilson . 140, 488
Boussmaker. ex parte ...
Bowen v. Brecon, &c, Rail, Co.
Bowen &; Martin's case
Bowes v. Hope Mutual Life As-
surance Co.
Bowlby v. Bell .
Bowring v. Shepherd
516
37*
194
767
638
453, 498, 513
493, 501, 506,
510
Bowron, Baily & Co.
Baily (5 Eq. 428)
Box, re 544
Bovce v. Green .... 453
Bovle v. Bethos Llantwit Coll. Co. 675,
677, 706, 883
Brackenburv «. Brackenbury . 140
Bradford Banking Co. v. Briggs
k Co. . . 129, 459*, 477, 478
Navigation Co. . 618, 647*, 658,
662
Tramways Co. . .102, 904
AUTHORITIES REFERRED TO.
XX VU
Bradley v. Eyre .
v. Eoufdsworth
v. Warburg
Bradshaw, ex parte
Braham v. Beaehim
Bramah v. Roberts
PAGE
283, 286, 295, 297
. 453
. . 295
192, 197, 665
. . 113
155, 185, 244
Brampton v. Longtown Kail. Co.
746,
904
Addison (20 Eq. 620)
Shaw (In Ch. 177)
Brander v. Brander . . . 545
Branley v. South-Eastern Railway
(o. ' 913
Breckenrid.^'s ease . 122, 125, 748
Breech Loading Armoury Co. (4
Eq. 453) 690
Calisher (5 Eq. 21 t)
Merchants' Co. (l Eq. 453)
Wragge (6 Eq. 284)
Bremner v. Chamberlayue . . 145
Brentford and Islcworth Tram-
ways Co. . . 278, 618, 905
Brentwood Brick and Coal Co. . 727
Brereton v. Edwards . . . 461
Brett's case (6 Ch. 800; 7 Ch.
200; and8Ch 800) 821,
856, 857, 867*
(25 Ch. D. 283) . 792, 793, 795
Brettell v. Dawes . . 699, 670
Bridger's case (4 Ch. 266) . 534, 845
(5 Ch. 304) . . .782
Bridgwater Navigation Co. . 396, 405,
434, 455, 679, 681, 717, 721, 868*,
869, 870, 880, 960, 966
Bridport Old Brewery Co. . . 306,
307, 877*, 879, 887
Briggs, ex parte (1 Eq. 483) . 26, 28, 85
(8 W. R. 110) . . 722
Bright'scase .... 765, 766
Bright v. Hutton 144, 623, 626, 764,
765*, 766, 901
Brighton Arcade Co. v. Dowling . 428,
744, 748, 884, 885
Club and Norfolk Hotel Co. 638,
686
Hotel Co. . . 636, 652*
Lewes, &c, Railway Co. . 656
Conway (5 De G. & Sm. 150)
Hirschel, ex parte (15 Jur. 942)
Bristed v. Wilkins . . 460, 462
Bristol and North Somerset Rail-
way Co 905, 906
Bristol and Taunton, &c, Co. v.
Amos ..... 57
Britannia Mills Co. ... 1029
British Alkali Co.
Guest (5 De G. & Sm. 458)
British Alliance Assurance Corpo-
ration .... 634, 635
British and American Steam Navi-
gation Co. . ....
Goldsmid (16 Beav. 262)
Meyer (16 Beav. 383)
Pearse (8 Eq. 506)
Ward (10 Eq. 659)
British and American Telegraph
Co. v. Albion Bank . . 200, 205
British and American Telegraph
Co. v. Colson . . . • 14
Fowler (14 Eq. 316
British Empire Co. v. Browne . 226
British Fanners' Pure Linseed Cake
Co. ... 61. 395, L022
British and Foreign Cork Co.
Leifchild (1 Eq. 231)
British Guardian Life Assu
Co. ... 694. 695, 696
British Imperial Corporation . 749, 693
British India Steam Navigation
Co. v. Commissioners of Inland
Revenue ..... 196
British Mutual Banking Co. '■.
Charnwood Forest Railwaj Co.
2i7*, 4S4, 486
British Nation, &c., Association,
ex parte the Liquidators of (8
Ch. I). 679 . 4:!. 183, 207, 806, 807
British Nation Life Assurance
Association (14 Eq. 492) . 703, 878,
879, 890
British Provident Lit'' and Fire
Assurance Co. . . 641, 653*
Coleman (1 DeG. J. & S. 495)
Collins (1 Dr. & Sm. 113)
DeRuvigne(5Ch. 1>. 306)
Grady (1 De G. J. & S. 489)
Lane (1 De G. J. & S. 504)
Orpen (9 Jur. N. S. 615)
Rumnev (4 N. R. 48)
Stanley (4 De G. J. & S. 407)
Teete (4 N. R. 48)
British Provident Assurance So-
ciety v. Norton . 313, 328, 382
British Provident and Anglo-Aus-
tralian Assurance Cos. . . 735
British Seamless Paper Box Co. 370, 695
British Sugar Co. . 61, 62, 122, 306,
415
British Waggon Co. v. Lea & Co. . 708,
729
Briton Life Association . 857, 898
Briton Medical Assurance Associa-
tion 674, 676
Briton Medical and General Life
Association
Brittain. ex parte .
Broadbent, ex parte
Brockwell's case
79*,
126. 940, 955
.' 765, 862
550
80*, 82,
87.
861
566
541
660
522,
Bromley v. Williams . . .
Bromsdon v. Winter .
Brooke & Co. (G. F.) . . .
Brotherhood's case, 179, 518, 519*
584, 822
Broughtou v. Hutt . . . 813
v. Manchester and Salford
Waterworks Co. . 136, 185. 220
Brown's case (9 Ch. 102) 788*, 792, 793,
794*
(19 Beav. 97) 316, 758, 831, 841*
Brown's claim (9 W. R. 366, & 10
ib. 662) . . 180, 237*, 735
Brown, Ex parte (3 De G. & Sm.
590) 555
XXV111
AUTHORITIES REFERRED TO.
PAGE
736, 742
. 839
680
156
511
513
132
38
•205
Brown, ex parte (12 Ch. 823)
(8 De G. M. & G. 607)
Bayley & Dixon (18 Ch. D.
649)
v. Andrews
v. Black . . .509
v. Byers . . 185, 192, 244
v. Dale 867
v. Hall ....
v. Holt
v. London and North-
Western Railway Co.
r. Savage ....
Browne v. Collins . . 430, 544, 545
v. La Trinidad . 148, 157, 158,
176, 302, 305, 567, 602, 792
v. Monmouthshire, &c, Co. 430.
572, 600
Brownlie v. Campbell
v. Russell . . 524
Browning v. Great
Mining Co. .
Brumfitt v. Bremner .
Brunton's claim
Bryon v. Metropolitan
Omnibus Co.
70, 241
872, 918, 920
Central
149*, 160*
. 173
. 740, 741
Saloon
190, 191*, 317,
398, 406, 600
r. Warwick and Birming-
ham Railway Co. . . 372, 571
Buchan's case 426, 549, 53S, 806, 814
Buck y. Buck . 131, 140, 487, 516
v. Robson . . . 813, 848
Budd's case . . . 826*, 864
Budden, ex parte . . 553, 815, 816
Buenos Ayres Railway Co. v.
North Railway Co. of Buenos
Ayres 912
Bugg, ex parte 46, 746, 802*, 805, 860
Bulkeley v. Schutz
Bullock v. Caird
v. Chapman
Buhner's case
Buhner v. Norris
Bult v. Morell .
Bunn, ex parte
1013)
Bunn's case (2 De
275) .
Burge, ex parte (1 De G. &
588) ....
Burge's case (2 J. & H. 441)
199
Burgess's case (15 Ch. D. 507)
(3 Jur. X. S.
G. F. &
17, 201,
. 115, 912
910
60, 61, 596
813, 814
. . 452
185, 231, 232*
690
759, 781*
S.
617, 901
178, 180,
, 236, 864
755*,
776, 777
Burke v. Dublin Trunk Railway
Co. . . 291, 292, 296
r. Lechmere . . . 19, 106
Burkinshaw v. Nicolls 64, 396, 783,
785, 787
Burlinson's case . . -42, 808
Burmester v. Crofton . . . 296
v. Norris . . . . 192
v. Von Stentz . . .268
Barnes v. Pennell 29, 49*, 51, 84, 87,
88, 154*, 155, 161, 206, 215*, 217*,
298, 421, 433
Burns v. Poulsom . . . . 209
PAGE
Burnside v. Dayrell . . 35, 145
Burstall r. Beyfus .... 362
Burt v. British Nation Assurance
Co 520, 568, 584*
Burton, ex parte .... 779
v. Tannahill . . . 266, 268
Bush's case (6 Ch. 246 and L. R.
6 Ho. Lo. 37) 52, 316, 466, 749,
758, 822, 824, 832, 841
(9 Ch. 554) . . 783
Busk's case . . . 518, 840
Butchart v. Dresser . . . 317
Butler v. Cumpston . . 805, 809
v. Manchester and Sheffield
Railway Co. . . . 209
v. Withers . . . 450
Butt v. Monteaux 135, 139, 565, 593,
912
Bwlchy Plwm Lead Mining Co.
v. Baynes 422
Byrne v. Van Tienhoven . . 14
Cadiz Waterworks Co. v. Barnett 637
Cadman v. Cadman . . . 541
Caerphilly Colliery Co.
Pearson (5 Ch. D. 336)
Caillaud's, &c, Co. v. Caillaud . 264
Calcutta Jute Mills Co. v. Nichol-
son 38, 911
Caldecott, ex parte . 458, 550, 555
Calder, &c, Nav. Co. v. Pilling
308, 322
Caldicott v. Griffiths ... 606
Caldow v. Pixell . . . . 173
Caldwell v. Ernest . . .712
Caledonian and Dumbartonshire
Railway Co. v. Magistrates of
Helensburgh . . . 151,
Calisher's case .... 742,
Callao Bis Co. ....
Calthrop, re . . . . .
Cambrian Mining Co. .
Railway Co. . . 904, 905,
Coleman (3 De G. & S. 139)
Steam Packet Co. . . .
Cambridge and Colchester Rail-
way Co.
Marsh (1 M. & G. 302)
Cameron Coalbrook, &c, Co. 692,
Bennett (5 De G. M. & G.
284)
Hunt (32 Beav. 387)
Walter (3 De G. & S. 2)
Campbell's case (9 Ch. 1) 53, 344,
(4 Ch. D. 470) 197, 369, 401,
Campbell v. Compagnie Generale
de Bellegarde . 675,
v. London and Brighton
Railway Co.
v. Maund ....
Canadian Land Reclaiming, &c.,
Co.
Coventry & Dixon (14 Ch.
D. 660)
152
744
896
550
690
906
716
849
736,
775
475,
861
677
399
311
AUTHORITIES REFERRED TO.
XXIX
Canadian Native Oil Co
Fox (5 Eq. 118)
Canadian Oil Works Corporation.
Hay (10 Ch. 593)
Cane v. Chapman . . . . 280
Cann v. Will son . . .70, 89
Caiman's claim . . . 703
Cannock and Rugeley Colliery
Co.
Harrison (28 Ch. D. 363).
Cannon, ex parte . 366, 389, 736, 742
v. Trask . . . 304, 309
Canwell, ex parte . . 550, 556, 848
Cape Breton Mining Co. (29 Ch.
D. 795) . . . 346, 350, 358*
— (19 Ch. D. 77) . . 695, 815
v. Fenn . . . . 708
Cape's Executor's case . . 254, 823*
Capel & Co. v. Sim's Composi-
tion Co 92
Capital Fire Insurance Associa-
tion (21 Ch. D. 209) . 628, 649*
(24 Ch. D. 408) . . 668, 692
Capper, ex parte (1 Sim. N. S.
178) . . 765, 766, 861
(3 De G. & S. 1) 626, 627, 653
Capper's case (3 Ch. 458) 123, 810, 828
Car v. Griffith . . . . 10
Card v. Carr . . . .156, 922
v. Hope .... 309
Carden v. General Cemetery Co.
146, 363
Cardiff and Caerphilly Iron Co.
Gledhill (3 De G. F. & J. 713)
Cardiff Coal Co. . . 414,787,854
v. Norton 278, 414, 694, 787, 854
Carew's case (5 De G. M. & G.
94) 664
(7 De G. M. & G. 43) 818, 851
Carew's claim (24 Ch. D. 85) 171, 193
Carew's Estate Act (No. 2), re
(31 Beav. 39) . . . . 204
Cargill v. Bower . . .74, 89, 244
Caribbean Co.
Crickmer (10 Ch. 614)
Carlen v. Drury . . 245, 575*, 600
Calling's case . 368, 781, 782, 788,
790, 795
Carlisle Banking Co. v. Thompson 920
Carlisle v, South-Eastern Railway
Co. . . 571, 574*, 580, 597
Carmarthen Railway Co. v. Wright 45,
46, 50, 59, 107, 420, 421
Carmichael's case . 15, 163, 767, 770
Carnelley, ex parte . . . . 674
Carpenter's and Weiss's case . 693
Carr v. Griffith . . 462, 546, 547
v. London and North- West-
ern Railway Co. . . 48, 487
Carr's case ... . . 734
Carralli and Haggard's claim (4
Ch. 174) .... 557, 743
Carriage Co-operative Supply As-
sociation . 367, 375, 376, 679, 696,
697, 744, 786, 790
Clemence (23 Ch. D. 154)
Carrick's case .... 765, 766
PAGE
Carroll v. Kennedy . . .671
Carron Co. v. Maclaren . . 37, 912*
Carshore v. North- Eastern Rail-
way Co 483
Carta Para Mining Co. . . . 661
Carter's case .... 696
Carter v. Dean of Ely . . 220, 221
Caitmell's case . 156, 161, 17S, 467,
518, 522, 829
Castellan v. Hobson . . 509, 511
Castello's case . . .811, 828
Catchpole v. Ambergate, &c,
Riilway Co. . . . 63, 534
Pathcart, re .... 691
Catholic Publishing ' !o. 385. 637, 638,
648*
Cavendish Bentinck v. Fenn . 358, 695
Cefn Cilcen Mining Co. . . 191
Central Darjeeling Tea Co. . . 710
Cercle Restaurant Castiglione Co.
v. Lavery .... 637
Cesena Sulphur Co. v. Nicholson 38,
911
Chadwick, ex parte . . . 693, 705
Chalk, Webb & Co. v. Tennent . 848
Challis's case . . 53, 759, 775"
Chambers v. Manchester, &c,
Railway Co. . . . 198, 235
Chancey v. .May .... 566
Chandelor '•. Lopus . . . 70
Chandler v. Howell . . . 451
Chapel House Colliery Co. . 636, 648
Chapleo v. Brunswick Building
Society . 88, 166*, 171, 176, 189,
196, 242, 919, 920
7.">4, 782,
805*, 806
Chapman and Barker's case
Chapman's case (1 Eq. 346)
(2 Eq. 567)
685, 717,
730
. 13, 14, 15,
567, 795
268, 427, 565
493, 514, 832
465, 824, 829
. 556
207, 208
372
702,
Chapman v. Milvaiu
v. Shepherd
ChappelPs case
Chappie's case
Chappie v. Cadell .
Charitable Corporation v. Sutton .
Charlesworth, ex parte . . 698
703, 878, 890
Charlton v. Newcastle and Carlisle
Railway Co. . 322, 571, 598, 892
Chatham Industrial Co-operative
Society 91 6
Chatteris, ex parte . . . 687
Chartres' case . . . 831, 862
Cheale v. Kenward . . 473, 492
Cheltenham and Swansea Railway
Carriage, &c, Co. (8 Eq. 580)". 656
Cheltenham, &c. , Railway Co. v.
Daniel . 49*, 51, 108, 421
v. Price . . .59, 105, 106
Chepstow Bobbin Mills Co. . 660, 887
Cherry v. Colonial Bank of Aus-
tralasia . . . .89, 243
Cheshire Banking Co.
Duff's Executors (32 Ch. D.
301)
XXX
AUTHOKITIES REFERRED TO.
PAGE
Cheshire Patent Salt Co. . 626
Chester and Manchester Direct
Railway Co.
Phillipps (1 Simons, N. S.
605)
Child v. Hudson's Bay Co. .
v. Morley . . . .
Chillington Iron Co. .
China Steamship Co.
Capper (3 Ch. 458)
Dawes (6 Eq. 232)
Drummond (4 Ch. 772)
Mackenzie (7 Eq. 240)
China (Imperial Bank of) v. Bank
of Hindustan . . .
Chinnock's case (Johns. 714) 803, 826*
Chippendale, ex parte . 236, 381, 384,
385, 387*, 389, 622, 851, 858, 860
Chorley, ex parte . . . 283,741
551
513
311
307
Christie v. Peart . . .
Church and Empire lire Insur-
ance Co.
Andrews (8 Ch. D. 126)
Pagin and Gill (6 Ch. D. 631)
Church v. The Imperial Gas Light
Co
Churchill v. Bank of England
Chynoweth's case . 95, 326,
269
222
460
465, 819,
825, 828
Cilfoden Benefit Building Society 700
City Bank, ex parte 171, 185, 230, 740
City and County Bank . 626, 640, 641,
653*, 655
City and County Investment Co. 208,
864, 895, 896
City of Berne v. Bank of England 909
City of Glasgow Bank . . .962
Bell, Lang and others (4 App. 547)
Buchan (4 App. 549)
Ker (4 App. 549)
Mitchell (4 App. 548)
Rutherford (4 App. 548)
City Terminus Hotel Co.
South-Eastern Railway Co. (14 Eq.
10)
City of Moscow Gas Co. v. Inter-
national Financial Society . 263
Clack's case .... 829, 840
Clark v. Newsam . . . . 66
ex parte (7 Eq. 550) 715, 731, 743,
865
Clarke v. Chaplin ... 30
v. Dickson . . 72, 88, 496
v. Imperial Gas Light and
Coke Co 168*
Clarke's case (W. N. 1866, 254) . 710
(1 K. & J. 22) . . 664. 860
(8 Ch. D. 635) . . 783, 784*
— ex parte (20 L. J. Ch. 14) . 766
(12Jur. 471)
901
re (18 Ch. D. 160) .
547
Clay v. Rull'ord . 177,
183, 272,
322,
323, 567
892
v. Southern
271
Cleare v. Harwas .
716
Clegg v. Edmoudson .
582
Cleland's case .
745, 784
789
Clemence, ex parte (23 Ch. D. 154) 679
Clement's case (13 Eq. 179) . 691, 692
Clements v. Bowes . 565, 569, 593, 610
■ v. Hall
v. Todd .
Clemonston v. Blessig .
Cleve v. Financial Corporation
577
582
33*
37
306,
, 894
Ste-
518.
785
401
267
840, 862
. 260*
Cleveland Ironworks Co.
venson ..... 72
Clifton's case . . . 664, 863
Clinan v. Cooke . . . . 228
Clinch v. Financial Corporation . 208,
571, 580, 581, 595, 891, 892, 894, 895
Clive v. Clive . . 544, 545, 547
Clothworkers' Co., ex parte . 553, 554
Clough v. London and North
Western Railway Co. . . 584
Clowes v. Brettell . 59, 288, 293, 294
Cluff v. Cluff 451
Coal Consumers' Association 679, 680,
717, 720, 721
Coal Economising Gas Co.
Gover (20 Eq. 114, and 1 Ch.
D. 182)
Coates' case .... 783
Coates v. Nottingham W. W. Co.
Cobharn v. Holcombe .
Cobre Copper Mining Co.
Kelk (9 Eq. 107)
Pahlen (9 Eq. 107)
Weston (6 Eq. 17)
Cockburn's case .
Cocker's case .
Cockerell v. Van Diemen's Land
Co 499, 532
Coe v. Wise 209
Cohen v. Wilkinson . . 571, 598
Colborne and Strawbridge, ex parte
171, 230, 665, 725, 740, 878, 889
Colchester (Mayor of) v. Lowten . 198,
207, 224
Cole v. North Western Bank . 475
Coleman's case (1 De G. J. & Sm.
495) . 53, 759, 781*, 841, 844, 845
Coleman, ex parte (3 De J. & S.
139) .... 664, 701
Coles v. Bristowe . 495, 501, 504*, 510
v. Trecothick .
Collen v. Wright .
Collie's claim .
Collingridge, expaite .
Collingwood v. Berkeley
Collins v. Collins . . 450.
;;. South Staffordshire Pail-
way Co 228
, ex parte (De G. 381) . . 550
(8 W. R. 170) . . . 653*
Collum, ex parte . . 66, 800, 843
Colman v. Eastern Counties Rail-
way Co. . . . 200, 571, 597
Colombia Chemical Factory Ma-
nure, &c, Works
Brett (25 Ch. D. 283)
Hewitt (25 Ch. D. 283)
Colonial Bank v. Hepworth
v. Whinney
228
241
158
613
145
541
474, 482*
454*, 551
AUTHORITIES REFERRED TO.
PAGE
B82
113
911
453
593
201
587
589
Colonial and < ieinral Co.
Colonial Life Assurance Co. v.
Home and Colonial Assurance
Co
Colonial Trusts Corporation
Bradshaw(15 Ch. D. 165
Colquhoun v. Brooks .
Colt v. Ncttcrvill
V. Woollaston
Coltman, re ....
Columbine v. Chichester . 500, 51
Colyear v. Mulgrave .
Commercial Bank Corporation of
India and the East . 261, 622, 710,
734
Fernandes' Executors (5 Ch.
314)
Gledstane & Co. (1 Ch. 538)
Smith, Fleming & Co. (1 Ch.
538)
Wilson (8 Eq. 240)
( 'ommercial Bank of London
Commercial Bank of South Aus-
tralia . 622, 623, 636, 644*, 912
Commercial Discount Co. . 660, 701
Commercial and General Life, &c,
A.ssoc
Johnson (27 L. J. Ch. 803)
Commercial, &c, Wine Co. .
Compagnie Generale de Bellegarde
Campbell (4 Ch. D. 470)
Connell, re .
Connop v. Levy . . .
Conquest's case ....
Consols Insurance Association
Benham (13 W. R. 483).
Glanville (10 Eq. 479)
v. Newall . . . .
v. Wood . . . .
Const v. Harris . 317, 318
661
692
284
260*
. 472
. 713
319, 320*,
and Alexandra
.::<■
714
450
625
Constantinople
Hotel Co.
Ebbett (5 Ch. 302)
Reidpath (11 Eq. 86)
Consterdine v. Consterdine .
Continental Bank .
Castello (8 Eq. 504)
Contract Corporation . 43, 157, 224,
225, 473, 660, 691, 692, 759, 807, 836,
846, 847, 850, 851
Baker (7 Ch. 115)
Batemau (1 W. N. 378 and
466)
Druitt (14 Eq. 6)
Ebbw Vale Co. (5 Ch
Gooch (14 Eq. 454)
(8 Ch. 266)
(7 Ch. 207)
Head (3 Eq. 84)
Hudson (12 Eq. 1)
Weston (6 Eq. 1")
White (3 Eq. 84)
Conway's case
Conybeare v. New Brunswick and
Canada Railway Co. . 84, 590*
Cooch v. Goodman . . . . 131
112)
15, 861
156
PAGli
865
732
541
297
329
145
595
626,
Cook's claim (2) .
policy
Cook v. Gregson .
v. Jones
v. Ward
Cooke v. Tonkin . . . .
v. Oceanic Steam Co. .
ex parte (3 De G. & S. 148) .
627, 646*
Cookney's case . . . . 761
Cookson, ex parte . . 641, 650*
Cooper v. Powis . . . .569
v. Shropshire Union Rail way
and Canal Co. . 411, 600
v. Webb . . . 565, 593
, ex parte (2 M. D. & D. 1) . 551
(10 Ch. 510) . . .669
Cope v. Thames Haven Co. 221, 225
Cope's case .... 247, 248
Copeland v. North-Eastern Rail-
way Co. . . 63, 109, 469
v. Stephens . . . 550
Copin v. Adamson . . . 914
Copper Miners' Co. v. Fox . 199, 220,
222, 224, 225
Corbett v. The General Steam
Navigation Co.
Corder v. The Universal Gas Light
Co
Cork and Bandon Railway Co. v.
Cazenove . . . .39, 422
v. Goode . . 425, 427, 537
Cork Constitution, Limited . 655
Cork Shipping and Mercantile Co. 630
Cork and Youghal Railwav Co. (4
Ch. 748) . . 198, 235, 237*,
656,
v. Paterson 23, 24, 107, 410, 420
Cornell v. Hay . . . . 9i; q->
Corner v. Maxwell-Irwin . 270, 559
Cornwall Great Consolidated
Mining Co 313
Cornwall, &c. , Mining Co. y.
Bennett .... 125, 417*
Corpe v. Glyn . 278, 279, 280, 604
Corry v. Londonderrv, &c, Co. . 401,
429, 430
Cosmopolitan Life Assurance Co.
Nickoll (24 Beav. 639)
Costello's case (2 De G. F. & J.
302) . . . 800, 825, 826
Cottam v. Eastern Counties Rail-
way Co 483
Cotterell's case . . . 301 790
Cottle, ex parte . . . 764 766
Coulson, ex parte . . . 549
County Life Assurance Co. 155, 158, 167
County Marine Insurance Co.
Ranee (6 Ch. 104)
County Palatine Loan and Dis-
count Co.
Cartmell (9 Ch. 691)
Teasdale (9 Ch. 54)
Coupland v. Challis . . . 31, 901
Court Grange Silver Lead Mining
Co.
Sedgwick (2 Jur. N. S. 949)
911
296
385,
723
XXX11
AUTHOEITIES REFERRED TO.
Coventry and Dixon's case
PACE
694, 695,
794
. . 715
. 230
case
21, 85, 772*
46,
Cowan's Estate
Cowie v. Sterling
Cox's case and Naylor's
(4 K. & J. 308 and 314) .
Cox's case (4 De G. J. & Sm. 53)
59, 96, 802
(3 De G. and S. 180) .
Cox v. Midland Counties Railway
Co. .....
Cragg v. Taylor
Craig v. Phillips .
Craig's Executor's case 716,
Cramer v. Bird
Crampton v. Varna Railway Co
803
694
161
461
92
732, 733
565, 573
221,
223
846
784
593
916
660
421
223
Crawford v. North-Eastern Rail.
Co 401
Crawley's case . . . 14
Credit Co 343, 658
Credit Foncier and Mobilier of
England, ex parte (7 Ch. 161)
156, 204, 205
(11 Eq. 356) . . 403, 404
Cree v. Somervail . . 801, 805
Crellin v. Brook . . . .271
v. Calvert 271
Cremetti v. Crom . . . 697
Crenver r. Wheal Abraham United
Mining Co.
Wilson (8 Ch. 45)
Creyke's case . . 534, 845
Crickmer's case . .
Cridland v. De Mauley
Crisp v. Bunbury .
Criterion Gold Mining Co. .
Cromford and High Peak Co
Lacey ... 24, 49, 51
Crook v. Seaford ....
Crooke's Mining and Smelting Co.
Oilman (31 Ch. D. 421)
Crookhaven Mining Co. (3 Eq. 69)
684, 852, 869, 870, 882, 885
Cropper, ex parte . 385*, 851, 860
Crosfield's case 747, 812, 813, 814, 862
Croskey v. Bank of Wales 407, 568, 593
Cross v. Law . . . • 286
Crouch v. Credit Foncier, &c. 230
Crowe v. Crisford
Crowley's claim . . . 514
Crown and Cushion Loan Fund
Society
Croxton's case (1 De G. M. & G
600)
(5 De G. & S. 432) .
Croysdill, ex parte
Crumlin Viaduct, &c. Co. 669, 706, 720
Cruse v. Paine . . 505, 510, 805
Cullen v. O'Meara . . . 1 49
v. Duke of Queensberry . 247, 272
v. Thompson ... 88
Cuming v. Boswell . . . . 545
dimming r. Prescott . 301, 454, 545,
794
Cunliffe, Brooks & Co. v. Black-
burn Building Society 190, 196, 386
287
474
542
574
619
824
861
618
Cunningham & Co., Limited
Simpson (36 Ch. D. 532)
Cunninghame v. City of Glasgow
Bank .... 758, 801
Curling r, Flight . . 64, 96, 492
Currie's case . 301, 395, 785, 789*,
791, 794, 795, 796*
Cutteis v. Anchor Insurance Co. . 226,
328
Curtis's case (6 Eq. 455) . 591, 749,
810, 828
Curzon, ex parte (3 Drew. 508) . 747
Cutbill v. Kingdom . . 308, 916
Cutts v. Riddell .... 560
Da Co^ta v. Russia Co. . . . 604
Dails v. Lloyd .... 516
Dale v. Hamilton . . . . 589
v. Martin . . . 321, 989
— ex parte (3 De G. & S. 11) . 656
Dale's case (1 De G. M. & G. 513)
Dalton v. Midland Railway Co.
Daly v. Thompson .
Daly & Co
Dance v. Girdler
Daniell v. Royal British Bank
865
436,
437, 483
61, 63
667
. 146
58,
129, 284
- ex parte (1 De G. & J. 372) 776,
782*, 789, 805
Darnell's case (22 Beav. 43) . 518, 782,
839
D'Arcy v. Tamar, &c. Railway Co. 158,
174, 224, 329
Darlington Banking Co.
Riches (5 N. R. 287)
Darlington Forge Co. .
Davidson v. Bower .
v. Cooper .
v. Tullock .
ex parte (1 Mon.
Gex, 648) .
Davidson's case (4 K. & J.
(3 De G. & Sm. 21)
I)
123
. . 269
268, 269
88, 91, 496
& De
458, 550, 555
688) . 320
780, 782, 801,
803, 805
Davies v. Hawkins . . 319, 320
v. London and Provincial
Marine Insurance Co. . . . 70
Davies's case (4 De G. F. & J. 78) 769,
770
Davis' case (12 Eq. 516) . 189, 385, 516,
919
Davis, ex parte (3 Ch. D. 463) 554, 558
v. Bank of England . . 487
v. Fisk .... 564
v. Haycock . . . 506, 510
Davison v. Gillies . . 432, 597
Dawes's case . . 664. 843, 878, S89
Dawkins v. Antrobus . 303, 528, 577
Dawson v. Malley . . . 715
v. Morrison . . . . 145
v. Wrench .... 248
Day v. Day . .... 544
ex parte (1 Ch. D. 699) 135, 141
(3 Jur. N. S. 1016) . . 698, 849
Dayrell, ex parte . . 852, 858
AUTHORITIES REFERRED TO.
XXX1U
PAGE
Dean v. Bennett . . . 303, 307
v. Mellaril . . . 263, 915
Deare v. Soutten . . . 236
De Bussche v. Alt . . . 377
De Castro's case . . ■ • 831
Dee, ex parte . . 620, 641, 647*
Deffell v. White .... 203
De Gendra v. Kent . . . 545
Delta Syndicate
Forde (30 Ch. D. 153)
Dendre Valley Railway, &c, Co.
.Moss (3 De G. & S. 599)
Denham & Co. . 321, 371, 374, 375,
376, 518, 696
Dent's case . . 119, 798, 799
Dent v. London Tramways Co. . 432,
436, 597
Denton v. East Anglian Railway
Co 222
v. Great Northern Rail. Co. 88
v. Macneil . . . . 69
De Pass's case 468, 800, 825, 826*, 827
Deposit and General Life Assurance Co.
Ayre (25 Beav. 513)
Deposit Life Assurance Co. v.
Ayscough .... 422
De Rosaz v. Anglo-Italian Bank . 896
De Ruvigne's case 367, 696, 789*, 790
Desinge v. Beare . . . 541
Devala Provident Gold Mining Co. 156.
183*, 206
Devereux v. Kilkenny Railway Co. 292,
294
Devon and Somerset Railway Co. 618,
692, 905, 906
De Waal v. Adler . . 490, 491
Diamond Fuel Co. (13 Ch. D. 400) 264,
626, 632, 633, 634, 645*, 662
Metcalfe (13 Ch. D. 815)
Dickinson v. Valpy . . 144, 185
Dickson's case . . . 748, 749
Dickson v. Evans . . . 739
v. Neath and Brecon Railway
Co 282
v. Swansea Vale Railway Co. 741
Diggle v. Higgs . . . .139
v. London and Blackwall
Railway Co. . . 221, 225, 227
Dillon v. Arkins . . . 400, 541
Dimes v. Scott . ... 543*
Dimson's Estate Fire Clay Co. . 678
Direct Birmingham, Oxford, Reading,
and Brighton Railway Co.
Amsinck (6 De G. M. & G. 345)
Best(l Simons, N. S. 193)
Bright (1 Simons, N. S. 602)
Capper (1 Simons, N. S. 178)
Hunter (1 Simons, N. S. 435)
Onions (1 Simons, N. S. 394)
Sichell (1 Simons, N. S. 187)
Spottiswoode (6 De G. M. & G 345)
Upfill (1 Simons, N. S. 395)
Direct Exeter, Plymouth, and Devon-
port Pi ail way Co.
Besley (2 M. & G. 176)
(3 M. & G. 287)
Besly (3 De G. & Sm. 224)
L..C.
Direct Exeter, &c, Rail. Co. — cont.
Hall (3 De G. & Sm. 214)
Hole (3 DeG. & Sm. 241)
Mathew (3 De G. & Sm. 234)
Roberts (2 M. & G. 192)
(3 De G. & Sm. 205)
Tanner (5 De G. & Sm. 182)
Woolmer(5 De G. ,v Sm. 117)
(2 De G. M. & G. 665)
Direct London & Exeter Rail. Co.
D'Urban (18 Jur. 781)
Hollingsworth (3 De G. & S.
102)
Osborne (15 Jur. 72)
Direct London & Manchester Rail.
Co.
Pocock (1 De G. & S. 731)
Direct London & Portsmouth Rail.
Co.
Goldsmith (14 Jur. 734)
Direct Shrewsbury & Leicester
Rail. Co.
Brittain (1 Sim. N. S. 281).
Kiddell (1 Sim. N. S. 402)
Direct Spanish Tel. Co.
Direct West End and Crovdon Railway
Co.
Lloyd (1 N. S. Simons, 248)
Studley (14 Jur. 539)
Disderi & Co. . 786, 789, 796*
District Bank of London (35 Ch.
D. 576) .....
District Savings Bank .
Coe (3 De G. F. & J. 335)
Dixon's case (L. R. 5 H. L. 618)
521, 842, 845
Dixon's executors, ex parte (1 Dr.
397
659
933
196,
& Sm. 225
Dixon v. Evans
v. Wrench
Dobinson v. Hawks
Dobson, ex parte
Dodds v. Hills
Hodgson's case
Dodgson v. Bell
v. Scott .
Doe v. Bold
v. Jones
v. Tanniere
Doman's case .
752, 758, 812
842, 845
. . 461
43
. . 551
476
. 830, 862
41, 110, 289
283, 286-8, 296-
220
. . 194
220
824, 893
Dominion of Canada Plumbago Co. 704,
861, 864, 865
Donaldson v. Gillot
Doncaster Permanent
Society (4 Eq. 579)
(3 Eq. 158)
Dornford v. Dornford
Dosset v. Harding
Dougan's case
Douglas v. Horsfall
Dover and Deal Railway Co.
Beardshaw (lDr. 226)
Clifton (5 De G. M. & G. 743)
Hight (1 Dr. 484)
Lord Londesborough (4 D. G. M. 411)
Mowatt & Elliot (3 De G. M. k G. 254}
476, 487
Building
. 853, 872, 873,
918
918
725
58, 129, 295
774, 775, 891, 892
272
670, 671
XXXIV
AUTHORITIES REFERRED TO.
Dover, Hastings, &c, Railway Co.
Carew (7 De G. M. & G. 43)
Downes v. Ship
19, 20, 26, 122, 749,
772
. 260"
261
814
567
595
541
40
402
Dowse's case
Doyle's case .
Doyle v. Muntz .
Drake v. Symes
Dresser v. Gray .
Drew v. Nnnn
Droitwieh Patent Salt Co.
Curzon ....
Dronfield Silkstone Coal Co. (17
Ch. 76) . 334, 395, 402, 520, 526
(No.2) (23 Ch. D. 511) 703, 861,
865
Drouett v. Taylor . . . 35, 145
Druitt's case .... 691
Drummond's case (4 Ch. 772). 797, 799
Drumniond, ex parte ( 2 Gif. 189) 802
Dry Docks Corporation of London 665,
681, 699
Dublin Drapery Co. . . . 203
Dublin Exhibition Co. . . . 677
Dublin Grains Co. . . . 686
Dublin and Wicklow Manure Co. 395,
784
Dublin and Wicklow Railway Co.
v. Black . . . .39, 422
Ducarrey v. Gill .... 231
Duce, ex parte . . . . 310
Duckett v. Gover . . 563, 570
Duckworth, re . . 557, 743, 754
Duff's Executors' case . 426, 301, 538,
814
Duke's case (1 Ch. D. 620) . 773, 796,
798
Duke v. Andrews . . 16, 32, 410
v. Dive . . 32, 33, 420, 606
v. Forbes . . 32, 33, 420, 606
Dura vile v. Birkenhead, &c, Rail-
way Co 571
Duncan v. Hill . . 501, 514*
Duncuft v. Albrecht . . 453, 492
Dundalk, &c, Railway Co. v.
Tapster ..... 427
Dunlop v. Dunlop . . 456, 457, 544
Dunne v. English . . . . 369
Dunston v. Imperial Gas Co. . 221,
308, 366, 388
Duranty's case . . . . 84
D' Urban, ex parte . . . 847
Durham's case . 246, 248, 250, 251, 412
Durham County Permanent, &c, Society
Davis (12 Eq. 516)
Wilson (12 Eq. 516)
(7 Ch. 45)
Dutch West India Company (The)
v. Moses .... 909
Dutton v. Marsh . . 233*, 243
Duvergier v. Fellowes . 131, 132*. 139*
DyneAOr Duffryn Collieries Co. 661, 711
Eagle Co., ex parte . 166, 169*, 226
Eaglestield v. Marquis of London-
derry 242
Eales v. Cumberland Black Lead
Co 300
Eardley v. Law ....
Earl of Lindsey v. Great Northern
Railway Co. ... 223
Earl of Shrewsbury v. North Staf-
ford Railway Co.
East and West India Docks Co.
618, 905
East and West Junction Railway
Co
East Botallack Mining Co. .
Eastern Anglian Railway Co. v.
Eastern Counties Railway Co. .
Eastern Counties Junction & South -
eud Rail. Co.
Cooke (3 De G. & Sin. 148)
Mainwaring (2 De G. M. & G. 66)
Underwood (5 De G. M. & G. 677)
Eastern Counties Railway Co
337
287
258
147
278,
906
615
186
209
Railway Co. v.
. 258, 900
418, 429
Railway Co. v.
44, 50, 58, 104-6, 824
725, 863
151, 220
Broom
Eastern Union
Cochrane
v. Symonds
East Gloucester
Bartholomew .
East Holyford Mining Co
East India Cotton Agency
Furdoonjee (3 Ch. D. 264)
East Kongsberg Co.
Bigg'(l Eq. 309)
East London Waterworks
Bailey ....
East Norfolk Tramways Co.
Barber (5 Ch. D. 963)
East of England Banking Co.
Bugg (2 Dr. & S. 452)
Feltom's Exors. (1 Eq. 219)
Pearson (7 Ch. 309)
East of England Banking Co. 's
case (5 De G. M. & G. 505) . 426
(4 Ch. 14) .
Easton v. London Joint Stock
Bank .....
East Pant Du Mining Co. v.
Merryweather . . . 309, 573
East Wheal Martha Mining Co. 61, 124
Eastwood v. Bain . . 232, 241
Eaton v. Busker . . . 222, 223
Ebbett's case . . 39, 810, 829
Ebbw Vale Co.'s case (5 Ch. 112) 685,
698, 725
Ebbw Vale Co.'s claim (8 Eq.
14) ... . 204, 206, 222
Ebbw Vale Steel, &c, Co. (4 Ch
D. 827) ....
Eberle's Hotels, &c, Co. v.
Jonas & Bros.
Ecclesiastical Commissioners
Merral ....
Eclipse Gold Mining Co.
Edger v. Knapp .
Edie v. The East India Co.
Edinburgh, fee., Railway Co.
Hebblewhite . 300, 417, 425, 530,
532—534
Edington v. Fitzmaurice 69*, 72*, 88
714
725
431
]•:
403
739
220
869
606
222
AUTHORITIES REFERRED In.
XXXV
Edmonds V. Blaina Furnaces Co.
PAGE
196,
198
916
232
270
186,
, 296
Edwards v. Aberayron Society
v. Barnard . . . .
r. Buchanan
V. Cameron's Coalbrook I !o,
225, 232:
'■. Grand Junction Railway
Co. 150*, 151*, 152*, 153, 258*
— v. Hall . . . .452
— v. Kilkenny Railway Co. 46, 59,
108, 283, 292, 293
— v. London and North West-
ern Railway Co. . . 209
v. Midland Railway Co. . . 210
v. The Shrewsbury and Birm-
ingham Railway Co. 577, 579, 600
Egyptian Commercial and Trading
Co.
Kelson (4 Ch. 125)
Electric Telegraph Co. of Ireland 397,
618, 635, 647*
Budd (30 Beav. 143)
Bunn (2 De G. F. & J. 275)
(24 Beav. 137)
Cookney (2 De G. & J. 170)
(26 Beav. 6)
Hoare (30 Beav. 225)
Maxwell (24 Beav. 321)
Reid (24 Beav. 318)
Troup (29 Beav. 353)
Eley v. Positive Assurance Co. . 148
Elham Valley Railway Co.
Dickson's case (12 Ch. D. 298)
Elkington's case . . . 780, 781
Elliott's case .... 798
Elliott v. Richardson . . . 309
Ellis's case (3 De G. & S. 172) . 847
Ellis v. Colman . . 201, 357, 5S8
v. Shinoeck . . 95, 294
Ellison v. Bignold . . , 131, 575
Elphinstone (Lord), ex parte . . 732
(Lord) v. Monkland Iron Co. 732,
886, 887
Einly v. Lye
Emma Silver Mining Co.
v. Grant . .349
t>. Lewis
Emmanuel, ex parte
Emmerson's case (1 Ch. 433)
235
658, 692
355*, 374
347, 361*
70S
. 494,
836, 837*
700
(2 Eq. 236) .
Emperor Life Assurance Society . 664,
665, 878, 889
Empire Corporation (17 W. R.
431) ....
Empire Assurance Corporation
Bagshaw (4 Eq. 341)
Challis (6 Ch. 266)
Dousran (8 Ch. 540)
Leeke (11 Eq. 100)
Somerville (6 Ch. 266)
Empress Engineering Co.
Empson's case
England (Bank of) v. Johnson
England (Mayor of the Staple of)
v. Bank of England . . . 1
183
147, 589
769, 770
110
Englefield Colliery Co.
367, 372,
377, 696
PAGE
•">7.">,
786
English Assurance Co.
Holdirh (14 Eq. 72)
English ( liaiinel Steam Co. v.
Rolt . . . 192, 197, 395
English and Irish Church and Uni-
versitv Assurance Society . 656, 737
Hunt (] Hem. & M. 79)
English, Irish, &c, Rolling Stock
Co.
Lyon :;"> Beav.
Yelland (5 De <;. ,v Sm. 395)
English Joint Stock Bank . 690, 691
Harding (3 Eq. 341)
Yelland (4 Eq. 350)
English aud Scottish Marine Insurance
Co.
Maclure (5 Ch. 737)
Ennis v. West Clare Railway Co. 112,
116, 148, 618, 805, 901, 980
Entwistle v. Davis . . 451, 452
Era Assurance Society . 176, 184, 200,
258, 322, 891, 892
Anchor (2 J. & H. 400)
AVilliams (2 J. & H. 400)
Erlanger v. New Sombrero Phos-
phate Co. . . . 347, 348*, 584
Ernest v. Croysdill . . 372, 706
v. Nicholls . 154, 165, 183, 207.
225, 226, 258, 259, 322, 328, 715,
891, 892
v. Weiss . . . . 706
Esdaile v. Lund . . . 295, 296
— r. Maclean . . . . 269
>•. Payne . . . 698, 748
v. Smith . . . . 287
v. Trustwell . . 295, 296
Esgair Mwvn Mining Co. . 746, 748
Alexander (9 W. R. 410)
Esparto Trading Co. . 518, 532, 796*,
797, 839, 843, 845
Essex Brewery Co.
Barnett (18 Eq. 507)
Estates Investment Co.
Ashley (9 Eq. 263)
McNeill (10 Eq. 503)
Pawle (4 Ch. 497)
Turnley & Oliver (8 Eq. 227)
Etna Insurance Co. . . 63, 123, 749
European Assurance Society
Cocker (3 Ch. D. 1)
Doman (3 Ch. D. 21)
Dowse (3 Ch. D. 1)
Grain (1 Ch. D. 307)
Harman (1 Ch. D. 326)
Hort (1 Ch. D. 307)
Miller (3 Ch. D. 391)
Ramsay (3 Ch. D. 388)
Rivington (3 Ch. D. 10)
European Bank Co. (2 Eq. 521) . 637,
648*, 659, 661
Agra Bank (8 Ch. 41)
Baylis (2 Eq. 521)
Masters (7 Ch. 292)
Oriental Commercial Bank (5 Ch.
358)
c 2
XX XVI
AUTHORITIES REFERRED TO.
726
Corporation (4
800
207
797
310
724
PAGE
European Bank, ex parte (7 Ch.
99)
European Central Kail way Co.
Gustard (8 Eq. 438)
Holden (8 Eq. 444)
Oriental Financial
Ch. D. 33)
Parsons (8 Eq. 656)
Sykes (13 Eq. 255)
European Life Assurance Society 626,
631*, 632, 649*. 892
British Nation, &c. , Associa-
tion (8 Ch. D. 679)
Arbitration Acts . . 323, 393
Eustace v. Dublin Trunk Railway
Co. 61', 65, 107
Evan v. Corporation of Avon
Evans' case (2 Ch. 427) . . .
See also Preece and Evans
Evans, ex parte (13 Ch. D. 424) .
(11 Eq. 151)
v. Coventry . 250, 251, 303, 330,
372*, 374*, 375, 377, 388, 432,
520, 583
v. Hooper . . . . 559
v. Smalleombe . 178,179,311,
312, 519, 522, 523, 584*, 822, 838
v. Wood . 491, 493, 505, 511
Evens' claim 260*
Exchange Banking Co.
Flitcroft (21 Ch. D. 519)
Exchange Drapery Co. . 455, 736, 870,
885
Exeter and Crediton Railway Co.
v. Buller . 315, 318, 573, 579, 581
Exeter, Plymouth, & Devonport
Rail. Co.
Besley (2 Mc. & G. 176)
Hall (1 Mc. & G. 307)
Hole (3 De G. & Sm. 241)
M.thew (3De G. & Sm. 234)
Roberts (2 Mc. & G. 192)
Tanner (5 De G. k Sm. 182)
Woolmer (2 D. G. M. 665)
Exhall Coal Mining Co. . 674, 679
Bleckley (35 Beav. 449)
Exmouth Docks Co. 278, 618, 625*,
637, 652
Eyre's case .... 831, 840
Factage Parisien Co. . . 641, 650
Faiititle v. Gilbert . . .163
Falmouth, Helstou, & Penzance
Rail. Co.
Clarke (12 Jur. 471)
Family Endowment Society 259, 261,
620, 629, 642, 645, 734
Farmer v. Giles . . . . 916
v. Mottram . . . 295
v. Smith . ... 920
Farrer v. Close . . . .917
Faure Electric Accumulator Co. . 364,
372, 373, 375, 377, 465, 466, 696
Faviell v. Eastern Counties Rail-
way Co 221, 265
814
578
202
PAGE
Fawcett v. Laurie . 432, 574, 597, 600
v. Whitehouse . 346, 351, 365
Fearns v. Young . . . 543
Fearnside, Dean, and Dobson's case
Featherstone v. Cooke
Featherstonhaugh r. Lee Moor
Porcelain Clay Co.
Feiling and Eimington's case 393, 402,
405, 774
Felgate's case . . 118, 119*, 797*
Fell v. Burchett . . . 262, 280
Feltom's Executor's case . 694, 696
Fenn's case . 94, 95, 524, 621, 840
Fenn v. Craig . . . 271, 272
Femiings v. Grenville . . . 319
Fenwick's case . . 538, 802, 824
Fenwick v. Wood . . . 493-
Ferguson v. Wilson . 241, 587, 588
Fernandes' Executors' case . . 713
Fernihough v. Leader . . . 560
Ferraro's case . . . 785, 861
Fewings, ex parte . . . 725
Ffooks v. South- Western Railway
Co 470, 584
Field v. Lelean . . . . 508
v. Mackenzie 58, 110, 2S7, 288,
29S
Fielden v. Lancashire, &c. Rail-
way Co 596
Financial Corporation . . 740, 741
Adams (2 Ch. 714)
Feiling and Rimington (2 Ch. 714)
Holmes (2 Ch. 714)
King (2 Ch. 714)
Pritchard (2 Ch.' 714)
v. Lawrence . . . 556, 815
Finlay v. Bristol Railway Co. 220, 227
Finlay & Co., ex parte . . 749, 864
Finlay Hodgson's case, 26 Beav.
182 799, 804*
Firbank's Executors v. Humphreys 88,
241, 243
Fire Annihilator Co. . 640, 646, 986
Fisher's case (31 Ch. D. 120) . 778*
Fisher, ex yarte (3 De G. & S. 116) 623,
650*
v. Keane . . 303, 528, 577
v. Taylor . . . 235, 397
Fishermen of Faversham . . 648*
Fishmongers' Co. v. Robertson 220, 224
Flagstaff Silver Mining Co. . 629, 645*
Flanagan v. Great Western Rail-
way Co. . . 328, 357, 368, 587
Fleet v. Murton .... 500
Fleming's case . . . 260*, 735
Fleming v. Self . . 916, 920, 921
Fletcher v. Crosbie . . . . 269
r. Marshall. . . . 512
Flitcroft's case . 321, 371, 374, 375,
432, 695, 696, 697, 744
Florence Land and Public Works Co.
Moor (10 Ch. D. 530)
Nicol (29 Ch. D. 421)
Tufnell and Ponsonby (29 Ch. D.
421)
Forbes' case (19 Eq. 353) . 301, 327,
757, 791, 795
AUTHORITIES REFERRED TO.
XXXVll
r wn;
Forbes' case (8 Oh. 768) . 790, 795
Forbes and Judd's case (5 Ch. 270) 798
Forbes v. Marshall . . . 185, 234
Forde, ex parte .... 784
Forest, ex parte . . • . 724*
Forest of Dean Coal Mining Co. 377, 695
Forrest v. Manchester and Sheffield
Railway Co. 202, 317, 318, 567, 601
Forster&Co 730
Forth Marine Insurance Co. . 912
Fortune Copper Mining Co. . . 657
Forwood's claim . . . . 713
Foss v. Harbottle 173, 300, 304, 346,
570, 575, 576*, 578, 581, 600
Foster v. Oxford Rail. Co. . 328*, 368
v. Wheeler . . . .588
Fothergill's case . . 783—5, 799
Fountain's case . 127, 633, 855, 916
Fountaine v. Carmarthen Railway
Co. . . . 174, 194, 197, 198
Fourdrinier, ex parte . . 673, 674
Fourth City Mutual Benefit Build-
ing Society v. Williams . . 920
Fowler's case .... 793, 796*
Fowler v. Churchill . . 460, 461
v. Rickerby . . 283, 296, 297
Fox's case (3 De G. J. & Sm. 465) 46
(5 Eq. 118) . 123, 521, 777, 842
Fox, ex parte (17 Q. B. D. 4) . 717
(6 Ch. 176) 883, 894, 895, 896, 897
v. Clifton . 19, 21, 144, 393, 410
v. Frith 66
France v. Clark . 474, 477, 479*, 480*,
482
Frank Mills Mining Co. . 94. 326, 525
PAGE
121
Frankland, re
Frankly n v. Lamond .
Fraser v. Cooper, Hall & Co.
v. Whalley
Free Fishermen of Faversham
697
497, 498
. 573
581, 597
618, 620,
636
Freehold and General Investment Co.
Green (18 Eq. 428)
Freehold Land and Brickmaking Co.
Massey (9 Eq. 367)
Freeman v. Appleyard . . 453
v. Gainsford . . . 452
v. Whitbread . . .547
Fricker's case ..... 691
Fripp v. Chard Railway Co. . 565
Frowd's case ... . 84*
Fry, ex parte . . ■ ■ 714
v. Russell . . . 129,295
Furdoonjee's case . . . 557
Fyfe's case . . . . . 834
Fyfe v. Swabey . . . 587, 596
Fyler v. Fyler . . 425, 426, 537
Galloway's case . . . . 190
Galvanized Iron Co. v. Westoby 45, 59,
409, 420, 421
Gandy v. Gandy . . . .148
Garden Gully Co. r. McLister 155, 300,
306, 409, 415, 532, 534, 843
Gardner v. London, Chatham and
Dover Railway Co. . . 195*, 197
Garfit's case . . ...
Garnet and Moseley Gold Mining
Co. v. Sutton . 273, 742, 855, 885
Garrard v. Hardey . . . . 133
Garrick v. Taylor . . . 539
Garstin's case .... 710, 825
Gartness Iron Co.
Elphinstone, Lord (10 Eq. 412)
Gartside v. Silkstone, &c. Iron Co. 197
Garwood v. Ede . . . .33*
Gaskell v. Chambers . . . 367*
Gas Light Improvement Co. v.
Terrell 669
Gaudet Freres Steamship Co. 710, 882
Gay's case . . 847, 852, 865, 866
General Co. for the Promotion of
Land Credit 116, 468, 619, 622, 636,
645*, 801
General Discount Co. v. Stokes 555,
556, 884
General Estates Co.
City Bank (3 Ch. 758)
Hastie (4 Ch. 274)
(7 Eq. 3)
Wright & Gamble (8 Eq. 123)
General Exchange Bank 712, 743, 859,
888
Lewis (6 Ch. 818)
v. Homer . . 367, 374, 376
General Financial Bank . 660, 686, 701
General Floating Dock Co. . . 834
General International Agency Co.
640, 651*, 659
Chapman (2 Eq. 567)
General Mining Co. . . . 402
General Provident Assurance Co.
Bridger (5 Ch. 305)
(9 Eq. 74)
National Bank (14 Eq. 507)
General Rolling Stock Co. 636, 637, 645*
Alliance Bank (4 Ch. 423)
Chapman (1 Eq. 346)
Joint Stock Discount Co. (7 Ch.
646)
General Share Co. v. Wetley
Pottery Co.
General South American Co.
Yglesias & Co. (10 Ch. 63
General Steam Navigation Co
Guillan .
General Works Co.
Gill (12 Ch. D. 755)
Genesee Mutual Insurance Co
Westman
Gerhard v. Bates
German Date Coffee Co. .
679
303, 727
914
German Mining Co. . 236*,
910
. 19, 88
. 633, 641,
645*
381, 387*,
389
Chippendale (4 De G. M. & G. 14)
Stone (3 De G. & Sm. 120)
Gibbs and West's case 191, 192, 667,
742, 744
Giblin v. McMullen . . . 209
Gibraltar and Malta Bank . .640
Gibson's case (2 De G. & J. 275) 83*,
86, 206, S60, 862
XXXVT11
AITHORITIES REFERRED TO.
PAGB
Gibson, ex parte (4 Ch. 662) 261, 734
re (2 Eq. 669) . . .541
v. Barton 126, 335, 340, 940, 946
v. The East India Co. . . 221
Gibson & Co. (5 L. R. Ir. 139) 736, 783,
784, 852
Gilbert v. Cooper 183, 323, 59S, 892
Gilbert's case . 377*, 394, 412, 465,
466, 748, 825, 829, 884
Gilbertson v. Fergusson . . 911
Giles v. Cornfoot . . . . 145
v. Hutt . . . 425, 530
v. Smith . . . . 247
v. The Taff Railway Co. 160*, 209.
210
Gill y. Continental Union Gas Co. 461
< rill's case .... 742, 858
Gillan v. Morrison . . . 386*
( rillespie v. City of Glasgow Rank 801
In re .
739
Gilman's case
798
Ginger's case
79"
*, 80
Glaholme's case .
746
Glamorganshire Ranking Co.
Morgan (28 Ch. D. 620)
Glanville's case
832,
837
Glassington v. Thwaites
319
Gleadow v. Hull Glass Co.
850
Gledhill's case
13,
770
Gledstanes & Co.'s case .
709,
739
Globe New Patent Iron, &c, Co.
629,
645*
Glossop v. Keston Local Board
605
Gloucester, Aberystwith, &c, Rail.
Co
723,
724
Maitland (4 De G. M. &
G.
769) _
Glover v. Giles
Ill,
918
Goddard v. Hodges
46,
363
Golf v. Great Northern Railway
Co 160, 209
Gold Co. (11 Ch. D. 701) . 640, 651*,
887
(12 Ch. D. 77) . 689, 690, 881,
967
Gold Hill Mines . 624, 637, 64S*, 657
Goldsmid's case (16 Beav. 262) . 21,
772*, 845
Goldsmith, ex parte (14 Jur. 734) 639,
646*
Goochs case (7 Ch. 207) . 692, 705
(8 Ch. 266) . . 811, 828, 829
(W. N. 1872, p. 227) . . 820
Gooch v. London Banking Associa-
tion . . . 732, 867, 886
Gooday v. Colchester Railway Co. 220
Goodwin v. Francis . . . 241
v. Robarts . . 67, 474, 740
Gordon's case ... . . 758, 824
Gordon v. Pym .... 272
v. Sea, Fire and Life Assur-
ance Co. . . . .185, 226
Gore and Durant's case . 727, 780
Gorgier v. Morris . . . . 606
Gorringe v. Irwell India-Rubber,
&c, Works . 668. 669, 706, 720
Gorrissen's case . . . . 769
PAGE
Gouthwaite's case . 257, 288, 751, 812,
814, 817
Gover's case . . 92, 346, 347
Government of Newfoundland v.
Newfoundland Railway Co. 276, 740
Government Security Fire Insur-
ance Co. .....
Mudford (14 Ch. D. 634)
White (12 Ch. D. 511)
(10 Ch. D. 720)
Gow v. Forster .... 545
Gower's case . . . 532, 845, 860
Grady's case . 52, 178, 313, 830,
840, 841, 844
Graham v. Birkenhead, &c, Rail-
way Co. . . . . 583*
■ v. Connell . . . .462
■ v. Edge . . . 683, 707, 985
v. Van Diemen's Land Co. . 308,
532, 551, 552
Grain's case . . . 251, 260*
Grand Junction Canal Co. v. Petty 163,
202
Grand Trunk Rail. Co.
Apps (18 L. J. Ch. 409)
v. Brodie . . 705, 712, 863
Grant, ex parte . . . . 501
v. United Kingdom Switch-
back Railway Co. . 177, 178, 179
Gray's case .... 805, 806
Gray v. Chaplin . . . 565, 582*
- v. Lewis . 200, 205, 372, 563, 570
. 270, 559
915
728
547
Co.
139, 722
v. Pearson
v. Raper
v. Seckliam .
Grayburn v. Clarksou .
Great Australian Gold Mining
Appleyard(18Ch. D.587)
Great Berlin Steamboat Co.
Great Britain Mutual Life Assur
ance Society (20 Ch. D. 351) . 621,
635, 648*, 738, 1098
(16 Ch. D. 246) . . 634, 635,
663, 738, 752, 757
Great Cambrian Mining and
Quarrying Co.
Hawkins (2 K. & J. 253)
Great Eastern and Western Rail-
way Co., re ....
Great Luxembourg Railway Co. v.
Magnay . . . 357, 360L
Great Monster Railway Co.
Inderwick (3 De G. & Sm. 231)
Great Northern and Midland Coal
Co.
Currie (3 De G. J. & S. 367)
Great Northern Railway Co. v.
Eastern Counties Railway Co. . 892
v. Kennedy . . . 425, 530
— — v. Tahourdiu . . 278, 618
Great North of England Railway
Co. v. Biddulph . . . 416, 419
Great North of England, York-
shire, &c, Union Railway Co.
Carrick (1 Simons, N. S. 505)
Great Oceanic Telegraph Co.
Harward (13 Eq. 30)
642
364
AUTHORITIES UEIEUIUOD TO.
XXXIX
Great Ship Company
Parrs (' De G- J- & lS- 63>
Great Western Extension Atmo-
Bpheric Railway Co.
Wryghte(2 De G. M. & G.
636)
Great Western Forest of Dean Coal
Consumers' Co. (21 Ch. D. 769)
636, 652*
Carter (31 Ch. D. 496)
Great Western Railway Co. v.
Wake .... 200
v. Metropolitan Railway Co. 43
v. Rushout . . 318, 598, 601
Great Western Railway of Bengal
Co.
James (4 De G. & Sm. 183)
Quilter (4 Ik- G. & Sin. 183)
Wolesey (3 De G. & Sm. 101)
Great Western, Southern and
Eastern Counties Railway Co.
Holinsworth (3 De G. & Sm. 7)
Great Wheal Busy Mining Co.
King (6 Ch. 196)
Green's case (18 Eq. 428) . . 793
Green, ex parte (1 Jur. N. S. 33) . 698
(12 Jur. 534) . . . 901
v. Barrett .... 593
v. Britten . . . . 543
v. London General Omnibus
Co 209
v. Murray . . . . 498
v. Nixon* . 282, 283, 295, 560
Greenhalgh v. Manchester and
Birmingham Railway Co. . . 151
Greening & Co.
Marsh (13 Eq. 28S)
Greenshield's case . . 556, 608
Greenwood's case (3 De G. M. &
G. 459) . . . 165, 246, 847
Greenwood, ex parte (9 Ch. 511 . 667
(9 Jur. N. S. 997) . . 725
Gregg's case ..... 800
Gregory v. Patchett . 317, 322, 430,
579, 583, 584
v. Williams .
Gresham Life Assurance Society
Penney (8 Ch. 446)
Grey's Brewery Co.
Grey's case ....
Griffin v. Beverley
Griffith's case
Griffith v. Paget .
589
377
Grimes v. Harrison
Grimwade, ex parte
v. Mutual Society
Grisewood v. Blane
Grisewood's case . 66
. 691
. . 746
145
. 260, 734
321, 433, 868,
895
. 371*, 372
. . 848
861
Grissell's case (1 Ch. 52S)
133, 464, 468,
487, 619, 799
. 666, 672,
736. 742*
Grissell, ex parte (3 Ch. D. 411) . 716,
865
v. Bristowe . . 501, 504*, 510
Groux's Soap Co. v. Cooper
Groyes v. Groves
PAGE
Guardian Permanent Building
Society . . . . 87, 189
Guest, ex parte ' . 639,651*
v. Worcester Railway Co. . 292,
395, 787
Guillemin, ex parte . . 667, 717
Guiness v. Harrison . . . 92<>
Guinness v. Land Corporation of
Ireland . 11'.', 321, 334, 396, 432,
571, 597
Gunn's case . . . 14, 769
Gunn v. London and Lancashire
Fire Insurance Co. . . 148, 149
Gurney v. Rawlins
248
Custard's case
16, 47ii, 762, 770
Guthrie, ex parte
. 267
v. Fisk .
. . 267
v. Walrond
. 541
Gwyn, ex parte (1 Jur.
N. S. 300) 714,
715
Habershox's case (5 Eq. 287; . 669,
743, 744
Hack v. London Building Society 921
Haddon v. Ayres . 201, 243, 522
Haford Lead Mining Co.
Slater (35 Beav. 391)
Hagell v. Currie . . . 372, 675
Hague v. Daudcsun . . 456, 458
Haigh v. North Bierly Union 221, 265
Hakim's case .... 825
Halford v. Cameron's Coalbrooke,
&c, Co. . . . 186, 225, 232
Halket v. The Merchant Traders'
Loan Association 246, 248, 250, 285
Hall's case (5 Ch. 707) . 520, 532, 797,
839, 840, 845
(3 De G. & S. 80) . . 749
(3 De G. & S. 214) . 765, 766
Hall, ex parte (Mon. & Ch. 365) . 550
(3 Deac. 405) . . .565
(1 Mac. & G. 315) . . . 750
— (1 Mac. & G. 307, and 3 De
G. & Sm. 80) . . . 802
— (1 De G. M. & G. 1) . . 860
— , re William (2 Dr. k Sm.
284) ....
— r. Bainbridge
— v. Connell
— v. Mayor of Swansea .
— - v. Old Talargoch, &c, Co
ilall& Co., Limited (A. W.)
. 697
240, 270
440
220
674
396, 787
248, 251
Hallett v. Dowdall . 246, 247
Hallmark's case . 59, 376, 518, 769,
791, 795*
Hallows v. Fernie . 21, 69, 71, 568,
569, 593
Haly v. Barry . . . . 461
Hambro' v. Hull, &c, Insurance
Co. . . . 162, 171, 201, 226
Hamer's Devisee's case . 812,813,814
Hamer v. Giles .... 678
Hamilton v. Smith . . 144, 764
127 ' Hamilton's case, Lord Claud 300, 301,
140 790, 795*
xl
AUTHOKITIES REFERRED TO.
PAOE
Hamilton's Windsor Ironworks
Pitman & Edwards (12 Ch. D. 707)
Hamley's case . . 791, 793, 795
Hammersmith Town Hall Co. . 700
Hampden v. Walsh . . . 139
Hampson v. Price's Patent Candle
Co.
Hancock v. Hodgson
Handley v. Farmer
Hanken v. Bourne .
Hankey, ex parte
Hannuic v. Goldner
Harben v. Phillips .
318, 599
210, 248*
920
. . 192
. 710
. 498
157, 175, 310, 567,
573, 599, 600
Harding, ex parte (3 Eq. 341) 729*, 731
Hardinge, ex parte (1 N. R. 40) . 859
v. Webster . 259, 282, 456, 563.
735
Hardy v. Fothergill 554, 719, 732, 816
v. Metropolitan Land, &c,
Co 372
Hare's case . 26, 27, 53, 773, 775*
Hare v. London and North- West-
ern Railway Co. . 54, 60, 63,
108, 567, 571, 601
v. Waring . . .64, 492
Harford v. Amicable, &c, Asso.
Co 673
Hargrove, exparte . 115, 135, 621, 622,
662, 722
Harman's case . . . . 260*
Harmony and Montagu Tin and
Copper Mining Co.
Spargo (8 Ch. 407)
Harris's case (7 Ch. 587). 14, 16, 770
Harris, re (15 Ch. D. 561) . . 451
i;. Amery . . 114, 135, 450
v. North Devon Railway Co. 377,
520, 532, 600
v. The Royal British Bank . 282
Harrison's ease (6 Ch. 286) . 768, 824,
825
(3 Ch. 633) .... 779
Harrison, exparte (28 Ch. D. 363) 468,
538, 552
v. Brown . . . . 564
- — v. Heathorn . . 132, 133*
v. Mexican Railway Co. . 322,
334, 344, 396, 405
v. Stewardson
r. Timmins
v. Tysan
Hart's case
Hart v. Clarke 95
v. Frontino
Mining Co. .
Hartas v. Ribbons
Hartley's case
Hartley v. Allen
Hartridge, ex parte
Harvey v. Beckwith
«. C lough .
r. Collett
— v. Kay
v. Scott
Harward's case
65
278, 279
. . 286
121, 123, 810, 828
528, 529, 534*, 582
and Bolivia
54, 60, 63, 64, 484
514
. 63, 123, 125, 842
. . 547
601
. . 566
. 95, 97, 127, 683
. 139, 565
64
58, 60, 110, 283, 287,
288, 295
. 15, 761, 796*
fa<;e
Harwood v. Law .... 285
Hassell v. Merchant Traders' Loan
and Insurance Association . 248, 250
Hastie's case . . 556, 815, 848
Hatcher, exparte . 42, 808, 809, 848
322, 598,
600, 601, 892
380) . 825,
826
864
311, 633,641,
645*
Hawken v. Bourne . . . 159, 205
Hawkins' case (2 K. & J. 253) 95, 761
(23 Ch. D. 452) . . .919
Hawkins, ex parte (3 Ch. 787) 678, 694
v. Maltby . . 493, 502, 505,
506, 510, 511
Hawtayne v. Bourne . . . 192
Hawthorn's case (1 De G. & S.
571, and 1 Mac. & G. 49) 817, 818
Hattersley v. Shelburne
Hatton's case (8 Jur. N. S.
— - (10 W. R. 313) .
Haven Gold Mining Co.
(10 W. R. 572) .
840
Hay's case . . 368, 786, 797,
798
Hay v. Willoughby . . . it
, 47
Hayes v. Stirling . . . .
35
Hayman v. Governor of Rugby
School . . . . .
303
Hayter v. Tucker . . 452,
453
Haytor Granite Co. . . 731,
886
Head's case . . . 833,
834
Healey v. Chichester and Mid-
hurst Railway Co. 281, 292,
294
v. Story .... 226, 232
Heathcote v. North Staffordshire
Railway Co 324
Heaton's Steel and Iron Co.
Blyth (4 Ch. D. 140)
Simpson (9 Eq. 91)
Hebb's case ... 13, 14, 841
Heirs Hiddingh (The) v. De Vil-
liers Denyssen. . . . 547
Heirons case . 690, 691, 692, 881, 967
Helbert r. Banner (or Helbert's
case) . 824, 846, 847, 850, 851, 856
Helby's case . . 816, 822, 830*
Hemming v. Maddick . . . 806
Henderson's case . 759, 832, 841*
Henderson v. The Australian Royal
Mail Steam Navigation
Co.
Bank of Australasia
318
v. Gilchrist
v. Lacon
v. Ro}ral British Bank 5'
i\ Sanderson .
Hendriks v. Montagu .
Henessy's case . . 521
Henley & Co
Hennell v. Strong .
Henry's case (2 Ch. 431) .
Henry v. Great Northern Railway
Co. . . . 401, 571, 580, 597
Heraud v. Leaf . . .143, 244
Hercules Insurance Co. (Ir. Rep.
6 Eq, 207) .... 697
222
599,
602
537, 812
. 76*
129, 284
254
113
802, 829
673, 717
543
121
AUTHORITIES REFERRED TO.
Xli
PAGE
Hercules Insurance Co. (11 Eq.
321) 707
Bninton (19 Eq. 302)
Lowe (it Eq. 589)
Pugh and 8hannan (18 Eq. 566)
Hereford and MerfhyrTydviL &c,
EaiL Co.
Maitland (3 GifF. 28)
Hereford and South Wales Wag-
gon, &c, Co. (17 Eq. 423)
(2 Ch. 1). 621)
Herefordshire Banking Co. .
Buhner (33 Beav. 435)
Heritage's case (9 Eq. 5)
Heritage, re (Kay, -\j>i>. 29
v. Paine
Herman v. Jenchner
Herraann Loog, Limited
Heme Bay Pier Co.
Burge (1 De G. & Sm.
Heme Bay Waterworks Co
Hesketh's case .
Hespeler's case
Hester & Co. , Limited
Heward v. Wheatley .
Hewitt's case
Hewitt v. Price
Heyford Ironworks Co.
Forbes and Judd (5 Ch. 270)
Pell (5 Ch. 11)
Heymann v. European Central
Railway Co. . . . . 70
Hibblewhite ». McMorine . 472, 488
Hicheus v. Congreve . 346, 351*, 365,
561, 564, 566
Hickie & Co. s case . . . 727
Higgs's case . 46, 62, 122, 184, 208,
891, 896, 897
Higgs v. Northern Assam Tea Co. 741
Higgins, ex parte . . 714, 723
v. Hopkins . . . 145, 247
Hight, ex parte .... 766
Hildyard v. The South Sea Co. . 483
Hill's case (9 Eq. 605) . 189;
659
722
725
829
7U6
10, 821
139
674
588)
625*, 648*
842, 845, 856
. . 788
. 894
426, 537, 540
792, 793, 795*
. . 4S8
Janet (4 App. Ca. 562)
(20 Eq. 585 and 595) .
Hill v. Bridges
v. East and West India Docks
Co.
London and County As-
235, 385,
919
810, 835
538, 812
721, 732
553
surance Society
v. Manchester and
Waterworks Co.
Hill Pottery Co. .
Hilton v. Eckersley
- v. Giraud
Hippisley's case
Hire Purchase Co. v. Richens
670, 671
Salford
. 168% 312
. . 677
. 917
. . 452
53, 736, 775
708,
766
Hirschel, ex parte (15 Jur. 942) .
Hirtzel, ex parte (2 De G. F. & J.
653) 616
Hitchcock's case .... 862
Hitchins v. Kilkenny Railway Co. 146,
291, 292, 294
Hoare's case (30 Beav. 225) . . 383*
Hoare's case (2 J. & H. 229)
(10 W. It. 381)
Hobbs c. Wayet
Hodge, re
Hodge's Distillery Co.
Maude (6 Ch. 51)
Hodgkinson v. Kelly
P LGB
802
. . 864
539, 589, 805
. . 262
491, m
505,
511
■
627
675, 726
. 836
. 733
451
765*, 862
594, 921
— r. National Life Stock Insur-
ance Co. . 322, 328, 520, 573,
577, 596
Hodgsou v. I'ij wis .
Hodsell, ex parte
Hodson v. Tea Company 197,
Holden's case ....
Holdich's case
llnldsworth v. Davenport
Hole's case .
Holgate i>. Shutt
Holinsworth, ex parte (3 De G. &
S. 7) . . 623, 626, 627, 646*
Holland v. Dickson . 314,333,440,
567, 599, 604
Hollinsworth's cn«p '3 De G. & S.
102) 694
Hollwey's case . . . 522, 841
Hollyford Copper .Mining Co (5
Ch. 93) 697
(Ir. L. R. 3 Eq. 208) . 853, 869
(Ir. Rep. 1 Eq. 39). . . 783
Holmes' case (2 De G. M. & G.
113) . 594, 818, 823, 830*, 861
Holmes's, Pritchard's, and Adam's
cases (2 Ch. 714) . . . 774
Holmes v. Binney . . . 268
v. Higgins . . 143, 363,;606
v. Newcastle, &c. , Abattoir
Co. . . 321, 432
v. Symons . 505, 511, 554, 556
Holroyd, ex parte . . . 698, 849
Holt's" case (22 Beav. 48) 82*, 156, 206
(1 Sim. K S. 389) . 518, 838, 862
Home Assurance Association . 636,
645*, 659, 661
Richards 'case (L. R. 6 C. P. 591)
Home Investment Society . 861, 865
Homer District Consolidated Gold
Mines
Smith (39 Ch. D. 546)
Homersham r. Wolverhampton
Waterworks Co.. . 221,225, 227,
235
Hone v. O'Flahertie . . .
Hoole v. Great Western Railway
Co. . 396, 431, 432, 436, 565,
573, 574, 580,
Hop and Malt Exchange Co. 650*,
Hope v. Croydon, &c, Trams Co.
v. International Financial
Society . 322, 334, 402, 450,
528, 530, 571, 599, 840
Hope Mutual Life Assurance Co. 638.
282
571,
597
659
279
16,
Hopkins' case (4 De G. J. & S;u.
342) .... 698.
Hopkins' trust (18 Eq. 636)
Hopkinson v. Marquis of Exeter
648*
747
545
528
xlii
AUTHORITIES REFERRED TO.
560
917
197
830*
202, 732
247, 254
251, 260*
822,
PAGE
Hopkinson's and Underwood's
cases .... 148, 850
Horbury Bridge Coal, kc, Co. 308, 311
Horn v. Kilkenny, &c, Railway
Co
Hornby v. Close . . . .
Home and Hellard, in re
Horsey "s case (2 Eq. 167)
Horsey's claim (5 Eq. 562)
Horsley v. Bell
Hort's case
Houldsworth v. City of Glasgow
Bank . 74,' 216, 217, 736, 754*
v. Evans . 179, 312, 520, 522,
523, 838, 845
Houriet v. Mori is ... 37
Household Fire Insurance Co. v.
Grant 14
Howard's case (1 Ch. 561) . 17, 156,
771, 781*
Hew aid and Dollman's case (1
Hem. & M. 433) . . . 723
Howard v. Patent Ivory Manu-
facturing Co. . 147,176,177*,
192, 193,197
v. Shaw . . . . 284
Howbeach Coal Co. v. Teague . 157,
158, 300, 305, 309, 319, 336,
409, 411
Hoylake Railway Co.
Littledale (9 Ch. 257)
Hubbersty u. Manchester,
field, &c, Railway Co.
Huckle v. Wilson
Huddleston v. Gouldsbury
Hudson's case (2 De G. & J. 275)
(12 Eq. 1) .
Hudson v. Revett . . . .
Hue, ex parte ....
Hughes's case (1 De G. & £m. 606)
(15 W. R. 476) .
claim (13 Eq. 623) . 725
Hughes, ex parte (4 Ch. D. 34, n.)
v. Thorpe . . 137, 561, 565
Hughes-Hallett v. Indian Mam-
moth Gold Mining Co. . 589, 805
Hulett's case . .180, 224, 741
Hull, Bamsley, &c, Railway Co. 195,
279
Central Drapery Co. . 676, 859
and County Bank . . 659
Flax Co. v. Wellesley . 53, 263,
407, 421, 884
Forge Co 698
and London Fire and Life
Insurance Co.
Gibson (2 DeG. &J.275)
Hudson (2 De G. & J. 275)
Kemp (2 De G. k J. 275)
Humber Iron Works, kc, Co.
(2 Eq. 15) . . 658, 659, 660
^8 Eq. 122) . . . 723
Warrant Finance Co. (5
Ch. 88)
(4 Ch. 643)
William's case (1 Ch. D.
576)
Shef-
. 458, 466
. 916
. 450, 541
83
821
472
861
710
841
728
725
Humble v. Langston
v. Mitchell
Humby's case
Hunt's case (32 Beav. 387)
■ (1 Hem. & M. 79^
Hunt v. Gunn
v. Hibbs .
■ v. Wimbledon Local Board .
Hunter's case (1 Sim. N. S. 435) .
PAGE
423, 472, 493,
495, 506, 510
. . 453
47, 831
518, 584,
822, 838
732, 734
449, 490
. 173
223
851,
861, 866
Hunter, re (L. R. 8 C. P. 24) . 715
v. Stewart . . . 584, 913
Hutchinson's case (1 De G. & S.
563) 746
Hutchinson, re (16 Q. B. D. 515} 461
v. Harding . . . 670
v. Surrey Gas Co. . . 148
Hutt v. Giles 411
Hutton v. Scarborough Cliii' Co. . 322,
334, 343, 396, 405, 597
v. Thompson . 144, 764, 766
v. Uptill . . . .16, 764
v. West Cork Railway Co. . 318,
366, 389, 599
Hvam's case . . 800, 825*, 826*
Hybart v. Parker . . 95, 270, 559
Ibbotsox v. Elam
I. H., re (Ir. Rep. 3 Eq. 245)
Ilfracombe Railway Co. V. Devon
and Somerset Railway Co
544
555
887
291,
292
291
640,
, 897
v. Lord Poltimore
Imperial Bank of China and Japan
642, 651*, 653*,
— — Bank of China, kc v. Bank
of Hindustan . 176, 208,
264. 307, 891, 894, 895
Continental Water Corpora-
tion . . . 689, 691, 692
Guardian Life Assurance
Society .... 652*
Hydropathic Hotel Co. v.
Hampson 302, 344, 573, 600
Land Co. of Marseilles
Colborne and Strawbridge
(11 Eq. 478)
Harris (7 Ch. 587)
Jeaffreson (11 Eq. 109)
Larking (4 Ch. D. 566)
National Bank (10 Eq.
298)
Townsend (13 Eq. 148)
Yining (6 Ch. 96)
Wall (15 Eq. 18)
Mercantile Credit Association
(12 Eq. 504) . 712, 883, 889,
894, 896, 897, 898
(5 Eq. 264) . . . ("693
(W. N. 1866, 257) . 643, 659
Chapman and Barkers (3
Eq. 361)
Clements (13 Eq. 178 n.)
AUTHORITIES REFERRED TO.
xliii
PAGE
Imperial Mercantile Credit Assoc. — cont.
Coleman (1 De G. J. &
Sin. 495)
Curtis (6 Eq. 455)
Doyle (2 H. & J. 221)
Marino (2 Ch. 596)
Payne (9 Eq. 223)
Richardson (19 Eq. 588)
v. Coleman . 367, 369*, 378, 389
Rubber Co.
Bush (9 Ch. 554;
Salt and Alkali Co.
Slatter's executors (5 De
G. & Sm. 34 & 1 D. G.
M 64)
Wine Co.
Shirreff (14 Eq. 417)
Incc Hall Rolling Mills Co. . . 334,
396, 401, 787
v. Douglas Forge Co. . . 739
Inchbald v. Western Neilgherry
Coffee Co. 729, 883
Ind's case . . . .50, 401
Independent Assurance Co.
Bird (1 Simons, N. S. 47)
Cope (1 Simons, N. S. 54)
Holt (1 Simons, N. S. 389)
Terrell (2 Simons, N. S. 126)
Inderwick v. Snell . 302, 577, 579, 600
exparte . . . . 651*
India and Australia Mail Steam
Packet Co. . . 670
Maudslay and Field (17
Simons, 157)
India and London Life Assurance
Co 261
Indian Zoedone Co. . 309, 310, 341,
878, 879
Ingate v. Lloyd Austriaco . . 264
Inglis v. Great Northern Railway
Co. . . 106, 313, 425, 530
Inman v. Clare . . . .727
Inns of Court Hotel Co. . 192, 669, 874,
877
International Contract Co. . . 702
Hughes (13 Eq. 623)
Ind (7 Ch. 485)
Levita (3 Ch. 36 & 5 Ch.
489)
Pickering (6 Ch. 525)
International Life Assurance Society
(9 Eq.316) .... 260*
(2 Ch. D.) ... 737
Blood (9 Eq. 316)
Gibbs and West (10 Eq.
312)
Mclver (5 Ch. 424)
International Marine Hydropathic
Co 470, 682
v. Hawes .... 848
International Pulp and Paper Co. 674,
962
Knowles (6 Ch. D. 556)
Inventors' Association . 638, 652, 657
Ipswich, Norwich and Yarmouth
Railway Co.
Barnet (1 De G. k Sm. 744)
Ireland (Bank of) v. Trustees of
Evans* Charities . . . . 224
Irish Lands Improvement Society
Fry (1 Dr. & Sm. 318)
Irish Peat Co. v. Phillips . 45, 50, 59,
105, 108, 421
Irish West Coast Railway Co.
Carmichael (17 Simons, 163)
Iron Shipbuilding Co.
Iron Ship Coating Co. v. Blunt .
62
300,
337
632, 642, 651
Irrigation Co. of Franco
Fox (6 Ch. 176)
Irvine v. Union Bank of Australia 165,
168, 171, 176, 177, 178, 179*, 191,
197, 312
Irving v. Houstoun . . . 545
Isle of Wight Ferry Co. . 618,636,
645*
Isle of Wight Railway Co. v.
Tahourdin . 302, 304, 305, 306, 327,
332, 578, 599, 602
Ives, re . . 451, 467, 469
Jackson v. Cocker
— - v. Minister Bank
06, 473, 199
304, 377,
578, 599
v. North Wales Railway Co. 222
v. Petrie . . . 848
- — ■ v. Turquand . 16, 770, 824
Jacques v. Chambers . . . 544
James, exparte (8 Eq. 225] . . 738
- (1 Sim. N. S. 140) . 623, 649*
v. Eve . . . . 299, 432
■ v. May . . 804, 805, 879
Jarrett v. Kennedy . - . . 34
Jeaffreson, ex parte . . 786, 861
Jefferys v. Gurr . . 46, 220, 464
v. Smith . . . .608
Jegon, exparte . . . . 436
Jenkins v. Hutchinson . . 241
Jenkinson v. Brandley Mining Co. 198
Jenner v. Morris . . . . 236
Jenner's case . . . 793, 795
Jennings, re (1 Ir. Ch. 236 & 654) 418,
557
v. Baddeley . . . . 397
v. Broughton . 19, 72, 77*
v. Hammond . .115, 135, 141
Jervis v. Lawrence . . . 451
Jessopp's case . . . 522, 830, 841
Job, re 847
Johnson, exparte (27 L. J. Ch. 803) 388
(1 Jur.N.S.913) . . . 693
v. Goslett . . . 30, 31
v. Lyttle's Iron Agency Co. 531,
532, 597
Johnston's claim . . 209, 716
Johnston v. Renton . 483, 486, 487
Joint Stock Coal Co. . 633, 634, 643, 650
Joint Stock Discount Co.
Fyfe (4 Ch. 768)
Hill (4 Ch. 769 n.)
Loder (6 Eq. 491)
Nation (3 Eq. 77)
Reid (24 Beav. 318)
xliv
AUTHORITIES REFERRED TO.
Joint Stock Discount Co. — cont.
Shepherd (2 Eq. 564)
(2 Ch. 16)
Shipman (5 Eq. 219)
Sichell (3 Ch. 119)
Warrant Finance Co. (10
Eq. 113 & 5 Ch. 86)
— v. Brown . 318, 371, 375, 376, 450
Joint Stock Discount Co.'s claim
(7 Ch. 646) . . . 723, 724
Jones' case (6 Ch. 48) . . . 799
Jones, ex parte (27 L. J. Ch. 666) 801
v. Charlemont . . 610, 901
v. Garcia del Rio . . 568
— — v. Harrison . . . . 33*
v. Ogle . . . .10, 547
v. Rose .... 569
v. Scottish Accident Insur-
ance Co. . . 38, 911, 912
v. Victoria Graving Dock . 228
v. Williams . . .721
v. Yates .... 713
Jopp's case 849
Josephs v. Pebrer . . 131*, 132*,
140, 487, 516
Joy v. Campbell . . . . 551
Jury v. Stoker . . . . 88, 92
Karuth's case
Kay v. Johnson
Kearns v. Leaf
792, 793'
794
243
166, 184, 249, 598,
892
Keasley v. Codd . . . . 245
Keene's executors' case . 315, 316,
542, 758, 812, 831, 862, 893
Kelk's case . 528, 530, 800, 819, 843
Kellock's case
Kellock v. Euthoven
Kelly's executors, ex parte
Kelner v. Baxter .
Kelsall v. Marshall 101,
v. Tyler .
Kemp's case
Kempson v. Saunder;
685, 716, 720
493, 506,
510, 710, 821
. 748
. 149, 243
266, 910, 913
. . 916
83
131, 141, 494*
512
279
. . 831
Kendall v. King .
Kennedy, ex parte .
— — v. Panama, &c. Mail Co. . 76, 590
Kensington Station Act 147, -J47, 904
Kent's case . . 428, 668, 785
Kent v. Freehold Land, &c, Co. . 73,
590, 776, 777
v. Jackson . 29, 317, 518, 577
579, 583, 594, 600
Kent Benefit Building Society . 189,
386*, 920
Kent Tramways Co. . . .147
Kentish Royal Hotel Co. . . 657
Ker's case (4 App. Ca. 549, 598) . 758,
802, 806
Kernaghan v. Williams . 321, 598
Kerridge v. Hesso . . . 145
Kerr's case (9 Eq. 706) . . . 733
Keynsham Blue Lias Co. . 673, 674
v. Barker . . . 38, 911
PAGE
Khlut's case . . .42, 808, 862
Kidderminster (Mayor of) v. Hard-
wick ....
221, 224
Kidwelley Canal Co. v. Raby .
24, 107,
410
Kilkenny, &c. Railway Co.
v.
Fielden ....
. 263
Kimber v. Barber .
360
Kincaid's case (11 Eq. 192)
301, 327,
757, 791
— — (2 Ch. 412)
. 26, 28
Kinder v. Taylor .
132
King's case (6 Ch. 196) 802,
803. 827,
843
King, ex parte (3 Ch. 10) .
556
v. Accumulative Ass. Co.
. 247,
248, 249
v. Marshall
. 192
291
676
v. Parental Endowment Co.
Kingchurch v. People's Garden
Co
Kingsbridge Flour Mill v. Ply-
mouth Grinding and Banking
Co 154, 206
King's Cross Industrial Dwellings
Co. 638, 645*, 652*
Kingston's case (Duchess of) . 283
Kintrea, ex parte 123, 124, 466. 685,
827
Kipling v. Allan . . 517, 525
v. Todd . 54, 104, 293, 301, 517,
520, 525, 797
Kirk v. Bell . 156, 157% 174, 200, 409
v. Bromley Union . 222, 227
Kirkstall Brewery Co. . . . 403
Kisch v. Central Railway Co. of
Venezuela . . .29, 72*, 74
Kit Hill Tunnel . . 713, 720, 723
Williams (16 Ch. D. 390)
Kiveton Coal Co. , ex parte . . 698
Phillips (7 Ch. 730)
Knight's case . 313, 533, 822, 843
Knight v. Barber . 453, 469, 490
v. Knight . . . . 541*
Knowledge (The Society of Prac-
tical) v. Abbott . . . 98
Knox's and Nugent's case . . 791
Kollman's Railway Locomotive and Car-
riage Improvement Co.
Beresford (2 M & G. 197, and 3 De
G. & Sm. 175)
Ellis (3 De G. & Sm. 172)
Kuper's Assignees (3 De G. & Sm.
113)
La Banque Jacques Cartieu v.
La Banque de Montreal . 177, 180
Labouchere v. Earl of Wharnclifie 303,
528, 577
Lacey v. Hill . . . 205, 514*
Lacharme v. Quartz Eock Mining
Co 279, 595
Ladywell Mining Co. v. Brooke . 358*
Laing v. Reed . . .189, 919
Laird v. Birkenhead Railway Co. 223
Lake v. Argyll . . . 145, 149
AUTHORITIES REFERRED TO.
xlv
I'AGE
Lama Italian Coal Co. . . 698
Miller (2 Ch. 692)
La Mancha Irrigation and Land Co.
Lord Claud Hamilton (8 Ch. 548)
Lambert v. Rendle . . . 543
Lambton, ex parte . . . 727
Lamert v. Heath . . .512
Lamond v. Davall . . . . 497
Lamprell v. Billericay Union 221, 227
Lancashire Brick and Tile Co. . 626
Lancashire and Carlisle Railway
' Co. v. North- Western Railway
Co 324
Lancashire Co-operative Building
Co 616
Lancashire Cotton Spinning Co. . 680
Lancaster, &c. , Railway Co. v.
Heaton . . . " . .17:5
Lancaster's case (14 Eq. 72) . . 733
Lancaster, ex parte (5 Ch. 1). 911) 310
Land Credit Co. of Ireland
McEwen (6 Ch. 582)
Munster (1 W. N. 252)
Overend, Gurney & Co. (4 Ch. 460)
Trower v. Lawson (14 Eq. 8)
Weikersheim (8 Ch. 831)
Land Credit Co. v. Lord Fermoy 371,
375, 376
Land Credit (General Co. for Pro-
moting) . . . . 116, 135
Land Development Association
Kent (37 Ch. D. 508>
(39 Ch. D. 259)
Landman v. Entwistle . . 247
Landore Siemens Steel Co. . . 675
Landowners' Inclosure Co. v. Ash-
ford . 168, 175, 1S9, 191, 193
Lane's case ( 1 De G. & Sm. 504) 52,
178, 301, 313, 328, 389,
517, 822, 840
Lane, re (14 Ch. D. 856) . . 541
v. Smith . . . . 194
Langham Skating Rink Co. 630, 633,
634*, 643, 649*, 654, 700
Langham's trusts . . . 452
Langley MiU Steel, &c, Co. . 637, 648
Lankester's case
Lanyon v. Smith
829, 840
95, 97, 127, 263,
293, 683*, 819
723
Larking, ex parte
Lame, Belfast, &c, Railway Co.
(14 Jur. 996) . . 646*, 653
Baker (3 De G. & Sm. 242)
Latta, ex parte . . . 627, 646
Law v. London Indisputable Life
Policy Co. . . 249, 251, 412
Lawe's case . 307, 316, 518, 838, 860
Lawless v. Anglo Egyptian, &c,
Co. .."... 209
Lawrence's case . . .26, 28, 771
Lawrence v. Knowles . 498, 551
v. Lawrence . . . 547
v. Wynn . . . 416, 427, 565
Lawson v. Bank of London . . 113
Lawton, ex parte 561, 627, 641, 647*
v. Hickman . . 453, 488
Lee v. Bude, &c. Railway Co. . 292
Lee v. Hah-y 113
v. Neufchatel Asphalte Co. . 431,
600
v. Nuttall . . . 720, 721
v. Sangster . . . .713
Lee and Chapman's case (30 Ch.
D. 216) 739
Lee and Moor's case (5 Eq. 368) . 768
Leeds Banking Co. . 418, 693, 697
Addinell (1 Eq. 225)
Barrett (2 Dr. & Sm. 415)
Clarke (1 W. N. 254)
Dobson (1 Ch. 231)
Fearnside and Dean (ib.)
Eoward (1 Ch. 561)
Mallorie (2 Ch. 181)
Matthewman (3 Eq. 781)
Leeds Estate Building Society v.
Shepherd . 321, 371, 374*, 375, 376,
388, 432, 433, 444
Leeds and Thirsk Railway Co. v.
Fearnley .... 39, 422
Leeke's case . 15, 395, 786, 789, 796*
Le Feuvre v. Miller . . . 173
Lefroyv. Gore . . . . 145
Leggott v. Western . . . 462
Leicester Club and County Race Course
Co.
Cannon (30 Ch. D. 629)
Leicestershire Banking Co. . . 861
Leifchild's case . . . 206, 783
Leishman v. Cochrane . 46, 75&
Leominster Canal Co. v. Shrews-
bury and Hereford Railway Co. 151,
223, 227
Le Tailleur v. The South Eastern
Railway Co.
Lethbridge v. Adams
249
Letterkenny Railway Co.
Levi v. Ayers
Levick, re . .
Levita's case
Levy v. Abercorri's Slate Co
Lewis v. Baldwin .
v. Billing .
v. Carr .
v. Nicholson
, re (6 Ch. 818)
Lhoneux, Limon & Co. v.
Kong Banking Co. .
911
250, 251,
373, 854
. . 905
. 553
. . 678
14, 796
196, 19S
. 37, 909
560
. . 329
. 241
. 457, 458
Hong
265, 909
Licensed Victuallers' Mutual Trad-
ing Association . . . . 761
Life Assurance Co. of England 673, 674
Blake (34 Beav. 639)
Thompson (4 De G. J. & Sm. 749)
Limehouse Works Co.
Coate (17 Eq. 169)
Limerick, &c, Rail. Co. v. Fraser
Limpus v. London General Omni-
bus Co. .....
Lindsev v. Great Northern Rail-
way Co. . . . 151, 223, 258
Lindus v. Melrose 186, 233, 234*, 240
Linford v. Provincial Horse and
Cattle Insurance Co. . . . 161
Linley v. Taylor .... 452
263
209
xlvi
AUTHOKITIES REFERRED TO.
Linton v.
Society
Lintott, ex parte
Lion Insurance
Tucker
PAGE
Blakeuey Industrial
. 263, 915
. 847
Association v.
853, 855
Lisbon Steam Tramways Co. . . 691
Litchfield's case .... 828
Littledale, ex parte 467, 753, 756, S24
Littlehampton Steam Ship Co. 66, 627
Ellis (3 De G. & S. 172)
Ormerod (5 Eq. 110)
Liverpool Borough Bank
Durnnty(26'Beav. 268)
v. Mellor ■.
640, 800
502)
Turner (2 De G. F. & J.
617
Liverpool Civil Service Association
Greenwood (9 Ch. 511)
Liverpool Loan Co.
Bullen (7 Ch. 732)
Liverpool and Manchester Saw-Mills
and Timber Joint-Stock Co.
Ashburner (13 Jur. 691)
Holt (3 De G. & Sm. 99)
Liverpool Marine Assurance Co.
Green shield (5 De G. & Sm.
599)
Llanfyrnach Silver Lead Mining
Co 889
Llangennoch Coal Co. . . 22, 668
Llanharry Hematite Iron Ore Co.
Roney's case (4 De G. J. &
Sm. 426)
Stock's case (4 De G. J. &
Sm. 426)
To thill (1 Ch. 85)
Lloyd, ex parte . .148,722,860
v. Crispe .... 491
v. Dimmack . . . . 589
v. Lloyd .... 675
Lloyd Generate Italiano 622, 652, 912
Llynir Coal and Iron Co.
Hide (7 Ch. 28)
Lock v. Yenables
Lofthouse's case
Logan, ex parte
v. Courtown
Londesborough's case, Lord
. 545
94, 256, 524, 840
. . 731
599, 601
244, 849,
851, 860
626
London Armoury Co. .
London Assurance Co. v. London
and Westminster Insurance Cor-
poration . . . • • 113
London Bank of Scotland, exparte
(12 Eq. 268) .... 763
(\V. N. 1867, 114) . . 849, 884
London and Birmingham Alkali
Co 624, 638
London and Birmingham, &c.
Bank 124, 458
Wright (12 Eq. 331)
London and Birmingham Railway
Co. v. Winter . . . . 223
London, Birmingham, and Bucks
Railway
Curzon (3 Dr. 509)
London and Birmingham Exten-
sion and Northampton, &c.
Railway Co.
Carpenter's Executors (5 De
G. & Sm. 402)
Gay ( 5 De G. & Sm. 122)
(1 De G. M. & G. 347)
Higgins (2 Jur. N. S. 178)
Hopkinson and Underwood
(7 De G. M. & G. 193)
Prichard (5 De G. M. & G.
484)
Weiss (5 De G. k Sm. 402)
London and Bombay Bank (18
Ch. D. 581) . 41, 803, 808*, 811
(1 Ch. 525) . . . 701, 702
Cama (9 Ch. 686)
London and Brighton Railway Co.
v. Fairclough 59, 106, 313, 423, 530,
532, 533, 534
v. London and South- West-
ern Railway Co 202
London, Brighton, and South
Coast Railway Co. v. Goodwin . 258,
900
London, Bristol, and South Wales
Railway Co.
Capper (3 De G. & Sm. 1)
London and Caledonian Marine
Insurance . 684, 870, 882, 885
London Celluloid Co. . . 787, 789
London, Chatham and Dover Rail-
way Co. v. South-Eastern Rail-
way Co 184
London and Colonial Co.
Clark (7 Eq. 550)
Horsey (5 Eq. 561)
London and Continental Assurance
Society v. Redgrave . 23, 25, 411
London Conveyance Co.
Wise (1 Dr. 465)
London Cotton Co. . . . 676
London and County Assurance Co.
Jessopp (2 De G. & J. 638)
Jones (27 L. J. Ch. 666)
Wood and Brown (9 W. R.
366 and 10 ib. 662)
London and County Bank Co. v.
London and River Plate Bank 474,
476, 477, 483
London and County Coal Co. 632, 641,
646
London and County General Agency
Association
Hare (4 Ch. 503)
London and Devon Biscuit Co. . 677
London Dock Co. v. Sinnott 165, 220,
223
London and Dublin, &c. Railway
Co 656
London and Eastern Banking Cor-
poration
Longworth's Executors (Johns.
461)
No. 2 (Johns. 465)
London and Eastern Banking Cor-
poration . . . . .613
\i I HORITTES REFERRED TO.
xlvii
London and Exeter Rail. Co.
Holinsworth (3 De 6. & Sm. 7)
Parburv (3 ib. 43)
London and Financial Association
e. Kelk 163, 177, 179, 200, 364, 373
London Founders' Association v.
Clarke . . . 467, 491, 507
London and Grand Junction Kail-
way Co. v. Freeman . 88, 106
v. Graham 49, 51, 58, 106, 421
London, Hamburg, &c. Exchange
Bank
Emmerson rl Eq. 236)
Evans (2 Ch. 127)
Preston (2 W. N. 10)
Ward and Henry (2 Ch. 431)
Zulueta (9 Eq. 270)
(5Ch. 444)
London India Rubber Co. (5 Eq.
519) 868
(1 Ch. 329) . . . . 875
London and Manchester Indepen-
dent Railway Co.
Barber (1 M. & G. 176)
(1 De G. & Sm. 726)
Bass (1 De G. & Sm. 722)
Pocock (ib. 731)
London and Manchester Industrial
Association . . . . 700
London Marine Insurance Associ-
ation . . 621, 662, 722, 849
Andrews & Alexander (8 Eq. 176)
Chatt (8 Eq. 176)
Cook (8 Eq. 176)
Crew (8 Eq. 176)
Smith (4 Ch. 611)
London and Mediterranean Bank
Agra and Masterman's Bank (6 Ch.
206)
Bolognesi (5 Ch. 567)
Wright (7 Ch. 55)
(12 Eq. 331)
London Mercantile Discount Co. 640,
651
London Monetary Co. v. Smith . 114
London, Newbury, & Bath Direct
Rail. Co.
Cookson (15 Jur. 615)
London and Northern Insurance
Corporation
Stace & Worth (4 Ch. 682)
London and North- Western Rail-
way Co. v. McMichael . . . 39
v. Price . . . .163, 165
London and Paris Banking Corpo-
ration .... 637, 648*
London and Provincial Consoli-
dated Coal Co. . . 520, 797, 839
London and Provincial Law Assur-
ance Society v. London and Pro-
vincial Joint-Stock Life . . 113
London and Provincial Provident
Society v. Ashtou . . . 114
London and Provincial Starch Co.
Gower (6 Eq. 77)
London and Provincial Telegraph
Co 124, 551, 552
PAGE
London Quays, &c, Co. 702, 888, 889
London and Scottish Bank
Logan (9 Eq. 149)
London and Southern Counties,
&c., Land Co. . 157, 158, 223, 300,
319, 409
London and South Essex Railway Co.
Murroll (3 De G. & Sm. 4)
London and Staffordshire Fire In-
surance Co., In re . . 23,999
London Suburban Bank (6 Ch.
641) .... 634, 650
(15 Eq. 274) .... 832
(19 W. R. 950) . . . 676*
London Tramway Co. . . . 483
London and Westminster Insurance Co.
Phillips (3 De G. & Sm. 3)
London and Westminster Wine
Co 655, 657
London and Yorkshire Bank v.
Cooper . . . 692, 870, 970
London Wharfing and Warehous-
ing Co 637, 643
Long v. Kent . . . . 5 11
Longdendale Cotton Spinning Co. 675
Longworth's case (7 W. R. 483) . 84
Longworth's executors' case (1 De
G. F. & J. 17, 31) . 141, 142, 312,
612, 849
Looker v. Wrigley . 189, 191, 196, 919
Lord, re 883
v. Copper Miners' Co.
208, 317,
579, 601
504, 505,
511
62, 122, 896
. . 573
. 213
. 834, 835
Loring v. Davis . 489, 493
Los* case
Lovell v. Andrew .
v. Hicks
Lowe's case
Lowe v. London and North West-
ern Railway Co. . . 220, 227
Lowenthal, ex parte . . . 269
Lowestoft, Yarmouth, &c, Tram-
ways Co 102, 904
Lowndes, ex parte . . 852, 858
v. The Garnett and
Moseley Mining Co. . 383*, 886
Luard's case . 41, 42, 685, 752, 807,
808, 809
Lucas v. Beach . . . 1 43, 606
Luckombe v. Ashton . . . 246
Lucy's case . . . 710, 860
Ludlow (Mayor of) v. Charlton 185, 221
Lund's case .... 800, 825
Lund v. Blanshard . 272, 568, 573
Lumsden v. Buchanan . . 801
Lumsden's case . . 39, 810, 829
Luudy Granite Co. . . 679, 680
Heaven (6 Ch. 462)
Lydc v. Eastern Bengal Railway
Co,
Lydney, &c, Co. v. Bird
Lyon's case
Lyon v. Haynes
Lyster's case .
321, 571, 598
. 347, 349,
356*, 357, 661
29, 410, 411, 761, 771,
773
437, 610
157, 256, 532, 533, 843
xlviii
AUTHORITIES REFERRED TO.
PAGE
Co.
220
99,
593
496
240
243,
247
422
590
508
511
311,
570,
McAkpley v. Irish Iodine Co.
Macbride v. Lindsay .
Macoallum v. Turton
McCollin v. Gilpin
McC'reight v. Stevens
M "Levitt U Connolly
Macdougall v. Gardiner
573*, 578, 581, 600
v. Jersey Hotel Co. . 321, 410,
411, 432, 597, 599
MacDowell's rase .... 730*
McDowell v. Davis . . .706
. v. Doyle . . . 267, 706
McEwan v. Campbell . . .145
McEwen's case . . . 556, 815
McEwen v. London and Bombay
and Mediterranean Bank . 675
v. West London Wharves,
&c, Co. . 44, 104, 801, 824
v. Woods . . . 512, 513
Macfarlane's claim . 713, 716, 721, 732
McGowan & Co. v. Dyer . . 209
McGregor v. Dover and Deal Bail-
way Co. 186, 244
v. Keiley .... 670
Mclntyre v. Belcher . . 247, 249
v. Connell . 2, 9, 109, 462*, 463
v. Miller .... 269
Mclver's claim . 249, 717, 732, 738,
747, 864
MacKay's case . 367, 694, 695, 696,
787,790
Mai hay v. Commercial Bank 216, 217*
McKenna v. Bolt . . .270
Mackenzie, ex parte . 740, 742, 743, 848
v. Sligo and Shannon Bail-
way Co. . 279, 670, 671, 901, 909
Mackereth v. Glasgow and S. W.
BailwayCo 909
Mackley's case . . . . 797
McKewan's case . . . 783, 855
Mackrell v. Glasgow & S. W. Bail.
Co.
Maclae v. Sutherland
Maclaren v. Stainton
909
185, 190, 234*
430, 546*,
909, 911, 912
228
. . 731
561, 564
. 123, 777
144, 145
Maclean v. Dunn
Maclure, ex parte .
MacMahon v. Upton
McNeill's case
Maddick v. Marshall
Madras Irrigation and Canal Co.
(16 Ch. D. 702) .
(23 Ch. D. 248)
Madrid Bank
Wilkinson (2 Ch. 537)
v. Bavley .
v. Belly .
Madrid and Valencia Bailway Co
Chadwick (15 Jur. 597)
James (3 De G. & Sm. 127)
(2M. & G. 169)
Quitter (5 De G. & Sm. 276)
Turner (2 M. & G. 169)
(3 De G. & Sm. 127)
Magdalena Steam Navigation Co.
675
662, 698
695, 708
367, 865
912
180,
237
PAGE
Magdalena Steam Navigation Co.
v. Martin ... 36, 757
Magnus, ex parte . . . . 713
Maguire's case . . 312, 758, 824
Mahony v. East Holvford Mining
Co. . . 157, 158, 160, 167, 196
Mainwaring's case . 16, 778, 861
Mair v. Himalaya Tea Co. . . 601
Maitland's case (4 De G. Mac. &
G. 769) . . .35, 145
(3 Giff. 28) ... 766
Malachy v. Soper . . . . 454
Malaga Lead Co.
Firmstone (20 Eq. 524)
Mallock v. Jenkins . . .920
Mallorie's case . . . 770, 814
Malone, ex parte . . . 815
Manchester Bank
Mellor(12Ch. D. 917)
Manchester Economic Building
Society . . . 662, 663, 698
Manchester and Liverpool District
Banking Co.
littler (18 Eq. 249)
Manchester and London Life Ass. 260*
657, 734
Manchester and Milford Bailway
Co 279
Mangles v. Grand Coll. Dock Co. 412
Manisty v. Churchill . . . 717
Mann's case
Mansfield's case
Mant v. Smith
March v. A. G.
Mare v. Charles
v. Malachy
123, 810, 828
761*, 771, 851, 860
606
. . 452
. 232*
. . 593
Maria Anna, &c. , Coal and Coke Co.
Hill (20 Eq. 585)
McKewan (6 Ch. D. 447)
Maxwell (20 Eq. 585)
Marine Estates Co. . . . 263
Marine Investment Co.
Boole's Executors (8 Ch. 702)
Marine Mansions Co. . 197, 707, 865
Marino's case . . . .121, 836
Markham v. Markham . . 570
Markwell's case . . . 765*, 862
Marlborough Club Co. (1 Eq. 216) 658,
659
(5 Eq. 365) . . . 694, 783
Marlow v. Bitfield . . .236
Marnham, ex parte . . . . 488
Marquis of Abercorn's case . . 301
Marsden v. Kent . . . 548
Marseilles, &c, Land Co. 703, 878, 879,
890
Brandon (30 Ch. D. 598)
Credit Foncier, &c. of England (7
Ch. 161)
Evans (11 Eq. 151)
Smallpage (30 Ch. D. 598)
March's case (13 Eq. 388) . . 867
Marsh, ex parte (1 Mac. & G. 302) 863
v. Keating . . . 483
Marshall, ex parte . . 556, 815
v. Corporation of Queen-
boiough 223
AUTHORITIES KKFKRRF.D TO.
xlix
Marshal] v. Glamorgan Iron Co. 526,
818, 833
Marson v. Lund. . 291, 295, 670
Mil tano v. .Mann . . . . 661
Martin v. Lacon . . .451
v. Sedgwick . . , 454
Martin's casi 2 Hem. & M. 669) 62,
122, 896
Martin's claim (14 Eq. 148) . 761
Mai tin's Patenl Anchor Co. v.
Morton . . . 556, 815, 848
Marty n v. day .... 96
Marylebone Joint-Stock Hank (18
Jur. 281) 850, 851, 852, 863, 865, 866
(25 L. J. Ch. 650) 852, 854, 858
Husk (:; TV G. &S. 267)
Davidson {ib. 21)
Stanhope (ib. 198)
Troutbeck (1 De G. & S. 585)
Walker (1 De G. & S. 585)
Masons' Hall Tavern Co,
Habershon (5 Eq. 286)
Mason v. Bogg . . . . 720
v. Harris . . 571, 572, 579
Masonic and General Life Assur-
ance Co. ... . 624
Massey, re. . . 703, 704, 865
v. Allen .... 691, 806
Master's case . . . 825, 828
Mather, ex parte . . . 141
v. National Assoc. Invest-
ment Society . . 293, 794
Matheson Brothers. Limited 622, 623,
636, 644% 912
Mathew's carse . 15, 767, 770, 861
Mathew v. Blackmore . . . "J 1 7
Matlock Old Bath Hydro. Co.
Maynard (9 Ch. 60)
Matterson v, Elderfield . . . 920
Matthewman's case . .41, 809
Matthews v. Great Northern Rail-
way Co. ..... 401
Maturin v. Tredinnick . 496. ;,:•! . ,v.^
Maude, ex parte (6 Ch. 51) . 852, 869,
885
Maudslay and Field's case . 766, 860
Maughan v. Leamington Gas Co. 434*
Maund v. Monmouthshire Canal
Co 209
Maunder v. Lloyd . . . 913, 914*
Maunsell v. Midland Great West-
ern Railway Co. 184, 186, 571, 598,
601
Mawer's case .... 848
Maxtrd v. Paine
(No. 1, L. R, 4 Ex. 81) . 503, 510,
512
(No. 2, L. R. 6 Ex. 132, and
4 ib. 203) . 491, 495, 500, 501,
504*, 506, 508, 509, 510, 511
Maxwell's case (20 Eq. 585) 783, 855
(24 Beav. 321) . . 811, 829
trusts (1 Hem. & M. 610) . 547
v. Dulwich College . . . 223
v. Port Tennant, &c. 357, 585, 587
Mayhew's case . 94, 254, 471, 823, 831
Maynard's case . . . 785, 798
L.C.
PACK
Maynard o. Eaton . . . 509, 511
Mayor of < lofchester v. Lowten 1T8, 207
Mayor of Kidderminster v. Hard-
wick 221, 224
Mayor of Ludlow v. Charlton 185, 221
Mayor of Stafford v. Till . . 220
Mayor of the Staple of England
v. Bank of England 198, 221, 224,
483, 484, 486, 487
Meader v. Isle of Wight Ferry Co. 282,
292
Medical Invalid, &c, Life Assur-
ance Society
Griffith (6 Ch. 374)
Spencer (6 Ch. 362)
Meek v. Wendt & Co. . . . 241
Meeus v. Thelusson . . . 914
Melbourne Banking Corporation
Brougham (4 App. 156)
v. Brougham . . .223
Melhado v. Hamilton . . . 405
v. Porto Alegre, &c. Rail-
way Co 147
Meliorucchi v. Royal Exchange
Co. . . . 551
Melhss v. Shirley Local Board . 222
Menier v. Hooper's Telegraph
Works . . . 309, 321, 572
Mercantile and Exchange Lank
London Bank of Scotland (12
Eq. 268)
Mercantile Mutual Marine Insur-
ance Association . . 556, 815
Mercantile Trading Co.
Schroder 1] Eq. 131)
Stringer (4 Ch. 475)
Mercer's case .
M< rchants' Co. .
Heritage (9 Eq. 5)
Merchant Banking Co. of London
v. Merchants' Joint-Stock Bank
Merchant Traders' Ship Loan and
Assoc. Co. ....
Chappie (5 De G. & Sm. 400)
Talbot (5 De G. & Sm. 386)
Yelland (5 De G. & Sm. 395)
Merchants' and Tradesmen's As-
surance Society . . 260*
Meredith's case and Conver's case
Merionethshire Slate and Slate
Slab Co
Day (3 Jur. N.S. 1016)
Rye {ib. 460)
Merry v. Nickalls 501, 503, 504
Mersey Docks Co. v. Gibbs .
Mersey Railway Co.
Mersey Steel and Iron Co. v. Nay-
lor & Co. . . 273, 667, 719, 728*,
738, 739
Metropolitan Bank v. Heiron . 374
v. Jones .... 881
v. Pooley . . . . 210
Metropolitan and Provincial Bank 726
Metropolitan Public Carriage, &c.
Co.
Brown (9 Ch. 102)
Cleland (14 Eq. 387)
d
. 690
685, 690
113
702
735
246
20*
510
209
279
AUTHORITIES REFERRED TO.
Metropolitan Railway Junction Co.
Markwell (5 De G. & Sm. 528)
Metropolitan Railway Warehouse
Co. (15 W. R. 1121, L. J.) . 628
("W. N. 1867, 94) . . 646*
Metropolitan Saloon Omnibus Co. 635,
639, 641, 650*
v. Hawkins . . . 563
Meux's Executors' case 183, 207, 813,
824
Meux v. Maltby . . 266, 267, 272*
Mexican and South American Co. 671,
747, 864
Aston (4 De G. & J. 320)
(27 Beav. 474)
Barclay (26 Beav. 182)
Costello (2 De G. F. & J. 302)
De Pass (4 De G. & J. 544)
Finlay Hodgson (26 Beav.
182)
Grisewood <fc Smith (4 De G.
& J. 544)
Hyam (1 De G. F. & J. 75)
Lund (27 Beav. 465)
Shewell (2 Ch. 387)
Wilkinson (2 Ch. 536)
Meyer's case . 21, 521, 772*, 841
Middlesborough Assembly Rooms
Co 628, 639, 649*
Midland Counties Benefit Build-
ing Society . . . 916, 918, 922
Midland Great Western Railway
Co. r. Gordon . 23, 46, 106*, 410,
420
v. Johnson . . 222, 227
Midland Union, &c. Railway Co.
Lucy (4 De G. M. & G. 357)
Norbury (5 De G. & Sm. 423)
Pearson's Executors (3 De G. M. &
G. 241)
Migotti's case . . . . 798
Milan Tramways Co.
Theys (22 Ch. D. 122 and 25
Ch. D. 587)
Milburn v. Codd . . .606
Mildmay v. Methven . . . 725
Miles v. Bough . 300, 313, 330, 415,
417, 418
v. New Zealand, &c. Co. . 459
v. Thomas . 575, 581, 601, 609
Milford Docks Co 624
Lister (23 Ch. D. 292)
Mill v. Hawker . . . . 240
Millard v. Bailey . . . 541
Miller v. Thompson . . . 233*
Miller's case (3 Ch. D. 391) . 260*
(5 Ch. D. 70 & 3 ib.
661) . 789*, 793, 795*, 839, 844
Miller's Dale, &c, Lime Co. . 305, 775
Mills v. British Provident Assur-
ance Society . . . 313
v. Northern Railway of
Buenos Ayres Co. . 278, 431, 602
Milroy v. Lord . . . 500, 588
Minor v. The London and North-
Western Railway Co. . . 911
Mitcalfe's case . . . 367, 696
PAGE
Mitchell's case (9 Eq. 363) . 39, 802,
810
(5 Cb. 400) . 556, 693, 816. 848
Mitchell's claim (6 Ch. 822) . 723
Mitchell's and Rutherford's cases
(4 App. Ca. 548 & 567) . 466, 806,
835
Mitchell v. City of Glasgow Bank 409,
835
v. Moberly . . .451
v. Newall . . . 494, 512
Mitre Assurance Association . 613
Evre (31 Beav. 177)
Mixer's case . 72, 80, 82, 85, 214
Moifatt v. Farquhar . . 309, 377,
464, 465, 566, 597
. 309
. . 514
— - — v. Farquharson
Mollett v. Robinson
Monarch Insurance Co.
Gorrissen (8 Ch. 507)
Monmouthshire Canal Co. v.
Kendall . . . . 310
and Glamorganshire Bank-
ing Co. . . 639, 642, 653*
Cape's executors (2 De G.
M. & G. 562)
Montagu's case (Lord R.) . 746,834
Montreal (Bank of) v. Bathune . 910
Montreal Assurance Co. v. Mc-
Gillivray .... 187
Moody v. London and Brighton
Railway Co. . .156, 160, 161
Moor, ex parte
197
v. Anglo-Italian Bank
. 197, 624
675, 720
Moore v. Garwood
. 14, 31
r. Hammond .
. . 307
v. Metropolitan Railway Co. 209
v. Rawlins . . 117, 533, 922
Moore Gold Mining Co., Sir John
703, 878
Morgan's case (1 Mac. & G. 235 &
1 De G. & Sm. 750) . . 317,
320, 518*, 817, 838*
(28 Ch. D. 620) . 440, 705, 896
Morgan v. Great Eastern Railway
Co 569
Morisse v. Royal British Bank . 282,
295, 671
Morrice v. Aylmer . . . 400, 541
Morris' case (7 Ch. 200 & 8 Ch. 800) 394,
857
Morris v. Cannan . . 473, 488
v. Glynn . . . 451
v. Kearsley .... 492
v. Sadlier .... 537
Morrison, ex parte (De Gex, 539). 158,
319
(15 Jur. 346 & 20 L. J. Ch.
296) 765
v. Glover .... 916
Morton's Gase . . . . 824
Morvah Consols Tin Mining Co.
McKay (2 Ch. D. 1)
Moscow Gas Co. (City of) v. Inter-
national Financial Society . . 263
Moseley v. Cressey's Co. . 32, 568
.mi in mi i ii. s iiei 1:1:1:1. 1» TO.
Moscli'v Green CoaJ and Coke Co.
Barreti ( 1 De G. J. & S. 756)
(4 De G. J. &S. 416)
Fox (5 Eq. 118)
Moss, ex part* 14 Ch. D. 398) .
(3 De G. &S. 599). . .
(] 1 in-. 754)
Steam ( rondola Co.
359
551
622, 654*
15, 54*, 59
112
40
Mostyn v. Calcott Ball Mining Co
Moulton v. Caimoux
Mowah Consols Tin .Mining Co. .
.McKay (2 Ch. D. 1)
Mowatt v. Castle Steel Co. . .197,
198, 723, 784
exparte(1 Drew, 247) . . 851
v. Lord Londesborough . 31, 34
Mowatt and Elliott's case (3 De G,
M. & G. 254)
Mozley v. Alston
780, 851, 861
300, 570, 573, 575,
76*, 578, 581*, 600
. 736
813, 848
46
Mudford's claim .
Muggeridge, re
Muir's case (4 App. Ca. 337)
Muir v. City of Glasgow Bank . 801
Mulkern v. Lord . . . 921
Mulliner v. Midland Railway Co. 202
Monday, ex parte . . . . 748
Municipal Permanent Building
Society v. Kent . . . 921
v. Richards . . . 921
Munster Bank, Limited . . . 805
v. Cammell Co. . 302, 337, 567,
599, 996
Munt's case . 201, 519, 838, 839
Munt v. Shrewsbury and Chester
Railway Co. . 321, 323, 571, 598
Murphy v. O'Shea . . .368
Murray's executors' case . 193, 226, 328,
388
Murray v. Busb . 300, 336, 758, 822,
824, 832, 841
v. East India Co,
v. Flavell
v. Pinkett .
v. Scott .
Murrell, ex parte
Musgrave's case
185, 222
. 589
456
189, 919
652*, 653
121, 500, 749, 835
Mutter v. Eastern and Midland
Railway Co. . 314. 333, 440, 567,
599, 604
Mutual Society
- (22 Ch. D.
(24 Ch. D.
714) . 692, 695, 705
425) . . . 872
Grimwade (18 Ch. D. 530)
Mutual Aid Building Society (29
Ch. D. 182&30Ch. D. 434) . 189, 872
Myers v. Perigall . . . . 452
v. Rawson .... 293
Mysore Reefs Gold Mining Co. . 703
Nacupai Gold Mining Co. . . 659
Nanney v. Morgan . 108, 467, 469,
472, 477, 588
Nanteo's Consols Co.
Thomas (13 Eq. 437)
688, 746
834, 835
• ;-2
Nantle Vale Slate Co.
Job (27 Beav. 32)
Nant-y-Glo v. Grave . . . 367*
Narborough and Watlington Rail-
way Co.
James (1 Sim. X. s. 140)
Natal Investment Co. . .-640,651*
Financial Corporation (3 Ch.
Nevill (6 Ch. 43)
Snell (5 Ch. 22)
Nathan, Newman & Co. . 685,
Nation's case ....
National Alliance Assurance Co.
Ashworth (10 W.B, 771)
National Anns Co.
National Assurance and In
ment Association
Munday (31 Beav. 20o)
National Bank, re (10 Eq. 298) . 694,
696
ex parte (14 Eq. 507) . 203, 726
of St. Charles v. Barnales . 909
National Bolivian Navigation Co.
v. Wilson 30
National Building Land Co. . 865
National Coffee Palace Co.
Panmure (24 Ch. I). 367)
National Equitable Provident Society
Wood (15 Eq. 236)
National Exchange Co. of Glasgow
v. Drew .... 211*, 213*
National Funds Assurance Co. (10
Ch D. 118) . 321, 371, 373, 375,
378, 390, 695, 696
(4 Ch. D. 305) . . 662, 698
National Guaranteed Manure Co.
v. Donald .... 199
National Insurance and Invest-
ment Co.
Abercorn (4 De G. F. & J. 78)
Cotterell (11 W. K. 13)
Davie (4 De G. F. & J. 78)
Munday (31 Beav. 206)
National Live Stock Insurance Co.
(26 Beav. 153) . . . 649*
National Patent Steam Fuel Co.
Baker (1 Dr. & Sm. 55)
Barton (4 Dr. 535)
(4 De G. & J. 46)
Worth (4 Dr. 529)
National Permanent Benefit Build-
ing Society . . . 237, 662
National Provincial Life Assurance
Society . . 260*, 261, 645*, 734
Fleming (6 Ch. 393)
National Provincial Marine Insur-
ance Co.
Gilbert (5 Ch. 559)
Parker (2 Ch. 685)
National Savings Bank
Hebb's case (4 Eq. 9)
Native Iron Ore Co.
Natle Slate Co. .
Nash, ex parte
Nassau Phosphat Co.
626, 662, 863,
875, 877, 887
. . 203
847
. 61, 605
39, 111
d 2
Hi
AUTHORITIES REFERRED TO.
Natusch v. Irving 319*, 321, 579*, 597
Navan and Kingscourt Railwav
Co ". 906
Naylor's case . . . .85, 772
Naylor v. South Devon Railway
Co 535, 597
Neale v. Turton . ■ . . 185
Needham's case .... 821
Needham v. Law . . 268, 269, 286
v. Rivers Protection Co. . 676
Neill's case 845
Neilson, ex parte . . 488, 316
v. James . . . 489, 511
Nelson Mitchell v. City of Glas-
gow Bank Liquidators . . 466
Ness, ex parte
282
v. Angas
4]
, 55
109
289
v. Armstrong
55,
110,
540,
289,
542
V. Bertram .
540
r. Fenwick
295
Nevill's case
821
Nevins v. Henderson
145
Newbigging v. Adam .
New Brunswick Railway
Boore
Co.
v.
Ill
73
119
v. Conybeare
213*
v. Muggeridge
45,
119,
421,
129,
587
New Buxton Lime Co.
Duke's case (1 Ch
Newby v. Von Oppen .
New Callao .
D.
620
662,
265
698
Newcastle, &c, Bank,
re
684,
686
Spence's case (17 Beav. 203)
Newcastle Machinists' Co.
Newcastle-upon-Tyne Marine In-
surance Co.
Brown's case (19 Beav. 97)
Henderson's case (19 Beav.
107)
New Chili Gold Mining Co. . 334,
655
401.
403
679*
New City Constitutional Club Co
Purssel (34 Ch. D. 646)
New Clydach Co.
Newfoundland (Government of) v.
Newfoundland Railway Co. 276
New Gas Co
New Gas Generator Co. . 640.
646, 649*
Newhaven Local Board v. New-
haven School Board . 300, 302, 330,
336
Newington Local Board v. Eldridge
New London Brazilian Bank v.
Brocklebank . . . 450
Newport, &c, Railway Co. v.
Hawes .....
New Quebrada Co.
Newry, &c, Railway Co. v. Coombe
197
740
659
641,
651
603
457
427
124
39,
422
— v. Edmunds . . 416, 419
v. Moss . . .46, 421, 802
New Sombrero Phosphate Co. v.
Erlanger . . 70, 88, 354*
New South Wales Bank v. Owston 210
New Theatre Co.
Bloxam (4 De G. J. & S. 447)
(33 Beav. 529)
Newton v. Belcher
v. Daly ... 9:
v. Liddiard .
Newtownards Gas Co.
New York Exchange, Limited
New York Life Insurance Co.
New Zealand Banking Corporation
Hickie & Co. (4 Eq. 226)
Levi & Co. (7 Eq. 449)
Sewell (3 Ch. 131)
Nicholas, ex parte
Nicholay's case . . . .
Nicholls v. Diamond .
Nichols v. Rosewarne
Nichols' case (W. N. 1867, 77) 26.* 772
(29 Ch. D. 421) . 124, 763, 797
(3 De G. & J. 387 and 420) . 72,
80*, 82*, 87, 156, 206, 211, 214,
215, 522, 749, 751, 824, 841, 861
145
205, 293
145
852, 869
. 636
37
741
^556
765*
232*
463
Nicholson v. Bradfield Union
v. Gooch
Nickoll's case (24 Beav. 639)
222
140
782*,
I, 805
637
Niger Merchants' Co. v. Capper
Nister Dale Iron Co.
Hughes (1 De G. & Sm. 606)
Nixon v. Brownlow . 23, 106, 291, 292,
296, 393
292
291
■1-17
131, 132
. . 767
24, 393, 410,
34*, 597, 599
528,
v. Green
v. Kilkenny Railway < !o.
v. Taff Vale Railway Co.
Nockells v. Crosby 30*, 34
Norbury's case
Norman v. Mitchell
411,
Norrington, re . . . . o4»
Norris v. Chambers . . . 912
v. Cooper . . . 764, 766
r. Cottle . . . 764, 766
u. lrish Land Co. . 61, 280, 603
North American Colonial Asso-
ciation of Ireland v. Bentley . 424*
North Brazilian Sugar Factories
(56 L. T. (N. S.) 229) . . 660
■ (37 Ch. D. 83) . . . 705
North of England Joint Stock
Banking Co. . . 654, 684, 703
Angas (1 De G. & Sm. 560)
Armstrong (1 De G. & Sm. 565)
Bernard (5 De G. & Sm. 283)
Burlinson (3 De G. & Sm. 26)
Chartres (1 De G & Sm. 581)
Crosfield (4 De G. & Sm. 338)
(2 De G. M. & G. 128)
Dodgson (3 De G. & Sm. 85)
Fenwick (1 De G. & Sm. 557)
Glaholme (1 De G. & Sm. 583)
Gouthwaite (3 M. & G. 187)
(3 De G. & Sm. 25S)
Hall (1 M. & G. 306)
(1 De G. M. & G. 1)
(3 De G. & Sm. 80)
Hawthorne (1 M. & G. 49)
Hawthorn (1 De G. & Sm. 571)
AUTHORITIES REFERRED TO.
PAGE
North of England Joint Stock
Banking Co. — continued.
Holme (2 De G. M. k G. 113)
(4 De G. k Sin. 312)
Hutchinson I De <;. & Sm. 563)
Mawer | I De G. & Sm. 3
Reaveley 1 1 De G. k Sm. 550)
Sadler (3 De G. & Sm. 26)
Sanderson (3 De G. k Sm. 67)
(1 M. k G. 306)
Straffon's Executors (1 De G. .M. ,v
G. 576)
n De G. >v Si„. 256)
Thomas (1 De G. & Sm. 579)
North Hallenbeagle .Mining Co.
Knight (2 Ch. 321)
Northampton Coal, &c, Co. c.
Midland Waggon Co. . . 264
North Kent Railway, &c, Co.
Kincaid (11 Eq. 192)
North London Railway Co. v.
Great Northern Railway Co. . 596,
598, 602
North Shields Quay and Improve-
ments Co.
Davidson (4 K. & J. 688)
North and South Wales Bank . 203
North Stafford Steel Co. v. Ward 410,
411
North-West Transportation Co. v.
Beatty 309
North- Western Railway Co. v.
Me. Michael . . 106, 416, 422
North-Western Trunk Co. . 653
North Yorkshire Iron Co. . . 680
Northern Assam Tea Co. . . 702
Universal Life Assurance Co. (10
Eq. 459)
Northern Coal .Mining Co.
Bagge (13 Beav. 162)
Northern Counties of England File
Insurance Co.
Macfarlaine (17 Ch. D. 337)
Northern and Southern Connect-
ing Railway Co.
Mercer (5 De G. M. & G. 26)
Northey v. Johnson . 96, 256, 524
Northfield Iron & Steel Co. . . 694
Northumberland Avenue Hotel
Co 147, 176
Northumberland District Banking
Co. . . . . . 112,617
Northumberland and Durham
Banking Co 708
Bigge (5 Jur. N.S. 7)
Dixon's executors (1 Dr. &
Sm. 225)
Luard (1 De G. F. & J. 553)
Rhodes (7 W. R. 510)
Totty (1 Dr. k Sm. 273)
Norwegian Charcoal Iron Co.
Mitchell (9 Eq. 363)
Norwegian Titanic Iron Co. . 628
Norwich Equitable Fire Insurance
Co 691
Norwich and Lowestoft Naviga-
tion Co. v. Theobald . . 410
PAGE
Norwich and Norfolk Permanent
Building Society . . .92]
Smith's case (1 Ch. D. 481)
Norwich Provident Insurance Society
Bath (8 Ch. D. 334)
(11 Ch. D. 386)
Hesketh (13 Ch. I). 693)
Norwich Yarn Co. (22 Beav. 165) 311,
, 382
(12 Beav. 366) . 628, 633, 647
(13 Beav. 428) . . 715,749
Bignold (22 Beav. 143)
East of England Banking Co. 's case
Nunn r. Clayton . . . 295
'■. Lomer . . . . 296
Oakbank Oil Co. v. Crum . 434, 455,
1022
Oakes and 1'. ek,
(3 Eq. 576) . . . . 84
See Oakes v. Turquand.
(3 Eq. 634) . . 747, 862, 864
(W. N. 1886, 361) . . 849
Oakes v. Oakes . . . . 541
v. Turquand 26, 29, 60, 70, 73,
111, 214, 589*, 590, 753*, 776,
777, 797, 810
Oak Bits Colliery Co. . . 680, 681
O'Brien's . . 104, 757, 791
O'Connor v. Bradshaw . 135, 138
Odessa Tramways Co. v. Mendel . 586,
587*
O'Flaherty v. McDowell . . . 1014
Ogle v. Knipe . . . 450, 541
Old Wheal Neptune Mining Co.
Pulbrook i2 I).- G. J. k S. 348)
Rawlings ^2 De G. J. & S. 348)
Onion's case . . .15, 16
Onslow's trusts
Oppenheimer v. British and Fo-
reign Exchange, &c. Bank
Oriental Bank Corporation
The Crown (28 Ch. D. 643)
767
460
732
673,
717
Guillemin (28 Ch. D. 634)
MacDowall (32 Ch. D. 366)
Oriental Commercial Bank (5 Ch.
358) 204
(W. N. 1866, 283) . 637, 643, 659
(7 Ch. 99) . . . . 728
Alabaster (7 Eq. 273)
Barge (5 Eq. 420)
European Bank (7 Ch. 99)
Maxoudoff (6 Eq. 582)
Morris (7 Ch. 200)
(8 Ch. 800)
— — exparte(3 Ch. 791) . 728,804
Oriental Financial Corporation, ex
parte (4 Ch. D. 33) . . . 725
Oriental Hotels Co. ... 865
Oriental Inland Steam Co. ,.
Briggs - . . . 16, 587
Sciude Railway Co. (9 Ch. 557)
Ormerod's case . . .65, 800
( Irnamental Pyrographic Co. v.
Brown . . . . . 411
liv
AUTHORITIES REFERRED TO.
722
766
528
141
1034
PAGE
Orpen's case . . 467, 824, 826
Orr v. Glasgow Railway Co. . 303, 411,
568, 577*, 596
v. Union Bank of Scotland . 483
Orrell Colliery and Fire Brick Co.
Osborne, ex parte
Osgood v. Nelson . . . 303,
Ottley v. Browne
Oundle Union Brewery Co.
Croxton (1 De G. M. & G. 600)
(5 De G. & Sm. 432)
Outlay Assurance Society . 871,
Overend, Gurney k Co., ex parte
(4 Ch. 460) . 165, 170*, 185, 230
Barrow (3 Ch. 784)
Gibb (L. R. 5 Ho. Lo. 480)
Grissell (1 Ch. 528)
Lintott (4 Eq. 184)
Musgrave & Hart (5 Eq. 193)
Oakes & Peek (3 Eq. 576)
Walker (2 Eq. 554)
Ward & Garni (4 Eq. 189)
v. Gibb . . 372, 373, 374
v. Gurney . . . 373, 374
Owen v. Challis 31, 901
v. Routh . . . . 499
v. Van Uster . . 65, 205
Oxford Benefit Building Society . 321,
371, 373, 374, 375, 376, 388, 432,
433, 696
Oxford and Worcester Extension
and Chester Junction Railway
Co.
Barber (15 Jur. 51)
Morrison (15 Jur. 346)
Potter (1 De G. & Sm. 728)
Sharp & James (1 De G. M.
565)
Oxford, Worcester and Wolver-
hampton Railway Co.
Mel ward (26 Beav. 571)
Padstow Total Loss Association . 115,
135, 141, 621, 622, 623, 647*, 662
Page v. Cox ... . 589
Pagin and Gill's case 745, 784, 785, 789
Paklen's case, and Kelk's case . 530, 843
Paine v. Hutchinson 493, 494, 505, 510
Paine and Layton, ex parte . . 692
Paine v. Strand Union . . . 221
Painter's case . 79, 86, 412, 519, 532*,
534
See Richmond and Painter's case
Painter v. Liverpool Gas Co. . 417
Palmer, ex parte . 524, 736, 860
v. The Justice Assurance
Society .... 295, 671
Panama, &c, Mail Co, . . 197
Panmure, ex parte . 241, 494, 512, 515
Panonia Leather Cloth Co. . . 656
Paper Bottle Co 659
Paraguassu Steam Tramroad Co.
Black & Co. (8 Ch. 254)
Ferrao (9 Ch. 355)
& G.
PAGE
Parbury's case (3 De G. & S. 43). 86*,
862
(3 De G. F. & J. 80) . . 556
Pare v. Clegg . . . 272, 566
Pans v x sri s
Paris Skating Rink Co. (6 Ch
731).
(5 Ch. D. 959)
Park Gate Waggon Co.
Parker, ex parte
545
D.
61, 603
. 637, 648*
70S, 956
122, 123, 464, 835
371, 374
. 366*, 375, 376
. 363
. . 676
123, 811, 828, 829
148
S18, 819, 840, 861
. 541
626
Lewis
— v. McKenna .
Parkin v. Fry
Parry's case .
Parson's case
Parson v. Spooner
Part's case
Partridge r. Partridge
Patent Artificial Stone Co.
Patent Bread Machinery Co.
Valpy & Chaplin (7 Ch. 289)
Patent Carriage Co.
Gore & Durant (2 Eq. 349)
Patent Cocoa Fibre Co. . . 659
Patent Elastic Pavement, &c, Co.
Armstrong (3 De G. & Sm.
140)
Price & Brown (3 De G. &
Sm. 146)
Patent File Co. . . . 203, 207
Birmingham Banking Co. (6
Ch. S3)
Patent Floor Cloth Co. . 655, 887
Patent Invert Sugar Co. . . 344, 402
Patent Paper Manufacturing Co.
Addison (5 Ch. 294)
Patent Screwed Boot Co. . . 657
Patent Steam Engine Co. . 626, 627
Patent Ventilating Granary Co. . 404
Paterson v. Ironside . . . 268
Patrick v. Reynolds . . . 145
Paul and Beresford's case (33
Beav. 204) . . 328, 346
(10 Jur. N. S. 692) . . . 520
Pauling v. London and North-
western Railway Co. . . . 227
Pawle's case . . . 123, 777
Payne's case .... 466, 827
Payne v. Brecon . . . .173
v. New South Wales Co. . 148
Pearse's case . . . 697, 744
Pearson's case (3 Ch. 443) . 667, 699
(4 Ch. D. 222, aff. 5 Ch. D.
336) . . 367, 694, 696, 790
(7 Ch. 309) .... 709
Pearson's Executors' case (3 De G.
M. & G. 241) . . . .767
Pearson v. London and Croydon
Railway Co 399
Peart v. The Universal Salvage Co. 295
Pease v. Jackson . . . . 920
Peddell v. Gwyn . . 283
Peek's case (4 Ch. 532) . . 16, 760
Oakes & Peek
Peek v. Deny . 72, 73, 88, 89*, 90
v. Gurney . 70, 88, 89, 90*, 214,
215, 217, 470, 584
AUTHORITIES REFERRED TO.
lv
PAGE
Peel's case . 26, 29, 111, 771, 773*, 797
Peel v. Thomas . . . 25, 95, 293
Peirce v. Jersey Waterworks Co. . 158,
165, 170*, HO
Pell's case (5 CL 1 1, 8 Eq. 222) . 395,
785 799
— (3 De G. & S. 170). . 704* 861
Pellatt's case . 14, 15, 17, 71 1, 769,
778, 77'.'. 780, 781*
Pelly, ex parte . 372, 375, 696, 697, 744
Pelotas Cotl'ee Co.
Karutb (20 Eq. 506)
Pen'allt Silver Lead Mining Co.
Fothergil] (8 Ch. 270)
Pender v. Lushington . 309,465,566,
I, 597
Pendlebury v. Walker . . 266
Penhale and Lomax, &c, Co. . 125, 615
Peninsula Banking Co. (35 Beav.
280) .... 673, 678
Peninsular, West Indian, &c, Bank
Austin (2 Eq. 435)
Jopp'scase (W. N. 1867)
Penkivel v. Council . . 232*, 670
Pennant and Craigwen Mining Co.
(15 Jur. 1192) . 641, 646*, 647
Fenn (4 De G. M. & G. 285)
Mayhevv (5 De G. M. & G. 837)
Penney, ex parte ....
Penrose v. Martyr •
Pentelow's case .
Pentland v. Gibson.
Pen-y-van Colliery Co.
465
. 231, 240, 253
13, 760
. . 266
624, G37, 648*,
886, 968
. . 676
. 865
Co.
People's Garden Co.
Percival, ex parte
Percy and Kelly Nickel. &c
Hamley (5 Ch. D. 705)
Jenner"(7 Ch. D. 132)
Perkins Beach Lead Mining Co. 676, 677
Perrett's case . . . . 16, 773
Perrier, ex parte . . 352, 852, 853
Perring v. Dunston
v. Hone
Perry v. Barnett
v. Oriental Hotels Co
138
21
48H
603, 675,
677, 706
773, 777
Persee's case .
Peruvian Railways Co.
Crawley (4 Ch. 322)
Robinson (4 Ch. 322)
Peruvian Railway Co. v. Thames,
&c, Insurance Co. . .185, 204
Petre v. The Eastern Counties
Railway Co. ... 150, 153
Pharmaceutical Society v. London
and Provincial Assoc.
Phelps v. Lyle . . 270, 302, 303
Phone v. Gillan . . .499, 806
Philipson v. Egremont 255, 283, 290
Phillipps, ex parte (1 Sim. N. S.
605) . . 639, 646*, 652*
Phillips, ex parte (2 De G. F. & J.
634) 488
(3 De G. & Sm. 3) . . 620, 621,
641, 647*
re (18 Beav. 629) . 670, 671
13S
PAGR
Phillips V. Turner . . . . 541
Phillipson v. Tempest . . 295
Phoenix Life Assurance Co. . 176, 201,
236, 312, 319, 321
Burj i , Stocl 3 (2 J. & H. 441)
Batton (10 W. R. 313)
Hoare (2 J. k H. 229)
Reeve (10 W. B. 817)
Phosphate of Lime Co. v. Green . 179*,
311, 312, 520, 521, 523, 532
Phosphate Sewage Co. v. Eart-
mont .... 355*, 361
Photographic Artists' Association 264,
662
Pickering's claim (6 Ch. 525)
149, 240,
722
. 556
. 453
598, 913
713
454
Pickering, expwrte (4 Ch. 58)
v. Appleby
— v. Stephenson 321, 371
Piercy r. Roberts
Pierpoint v. Brewer
Pilbrow r. Pilbrow's Atmospheric
Co. . Ill, 129, 149, 247, 262, 264
Pirn's case . 521, 802, 813, 814, 829
Pinkett v. Wright . 456*, 465, 551
Pinto Silver Mining Co. . 684, 870,
882, 885
Pitchford o. Dans . 21, 393, 410
Pitman and Edwards, ex parte 190, 197
Pitts r. La Fontaine . . . 861
Planet Benefit Building Society . 633,
638, 639, 648*, 650*
Plant, ex parte
Plaskynaston Tube Co.
456, 458
334, 396,
401, 787
. 677
. 423, 517
liristol,
. 520, 596, 600
. 545
. 613, 662
40)
. 661, 706
642, 652*, 653*
. . 547
. 514*
124, 763
783
Plas-yn-Mhowys Coal Co.
Plate Glass Co. v. Sunley
Playfair v. Birmingham,
&c, Co.
Plumbe v. Neild .
Plumstead Water Co.
Hardinge (1 N R
v. Davis .
Pocock, ex parte.
Pollock v- Pollock .
v. Stables .
Ponsonby's case
Pool's case (35 Ch. D. 579)
Poole's executors, ex parte (8 Ch
702) . . . 712, 894, 897
Poole Fire Brick and Blue Clay
Co. (17 Eq. 268) . . . 673, 674
Hartley (18 Eq. 542)
(10 Ch. 157)
Poole v. Knott . . . . 540
v. Middleton . 465, 499, 500*
v. National Provincial, &c.,
Assurance Society . . 226, 328
Poole, Jackson and WTiyte's case . 364,
377, 669, 787
Poppleton, ex parte . 114, 115, 135, 141
Port of London Assurance Co.'s
case ..... 258
Collingridge (14 Jur. 1129)
Portal v. Emmens . 44, 54, 59, 60,
104, 105, 107, 293, 301, 327,
422, 525, 791
lvi
AUTHORITIES REFERRED TO.
PAGE
Portsmouth Banting Co. . . 594
Helby (2 Eq. 168)
Horsey (2 Eq. 168)
Stokes (2 Eq. 168)
Pott v. Flather . . . . 498
Potteries, Shrewsbury and North
Wales Railway Co. 904, 905, 907
v. Minor .... 906
Potter's case 692
Potts v. Bell . . . . 37
Poulton v. London and South-
western Railway Co. . . . 209
Powell v. Jessopp . . . 453
59, 129, 256, 295.
540, 812
. 58, 129, 284
. 727
. 109, 204
131, 132
852, 862, 866
60, 110, 288
60, 110, 288, 289
.670
Povvis v. Butler
■ v. Harding
Powles v. Hargreaves .
v. Page .
Pratt v. Hutchinson .
Preece and Evans's case
Preseott, ex parte
v. Buffrey
v. Hadow .
Preston v. Grand Collier Dock Co. 412,
532, 571, 580s, 596, 600
v. Liverpool, &c, Railway
Co. . 151, 152*, 153, 220, 258
V. Melville . . . .545
Price v. Anderson . . . . 545
v. Great Western Railway
Co 194
v. Taylor . . . 233*, 234
Price and Brown's case . . S06
Prichard's case (5 De G. M. & G.
484, 495) . . 671, 714, 722, 850
Prichard's claim (2 De G. F. & J.
354) .... 715, 849
Prince v. Prince . . . . 228
Prince of Wales Life Assurance
Society . . . 247, 854
v. Athenaeum Insurance So-
ciety .... 169*
■ v. Harding . . . . 169
Princess of Reuss v. Bos . Ill, 112, 116,
135, 468, 619, 622, 636, 645*, 912
Printing and Numerical Register-
ing Co. ... 678, 719, 720
Pritchard's case (8 Ch. 956) . 395, 784
(2 Ch. 714) .... 774
Pritchard v. London and Birm-
ingham, &c, Railway Co., re
Weiss 706
Professional, &c, Building So-
ciety . 619, 633, 639, 650*, 922
Professional Life Assurance Co. . 251,
737, 742, 866
Progress Assurance Co. . . 681
Prosper United Mining Co. . 94, 326
Palmer (7 Ch. 286)
Pugh and Sharman's case (13 Eq.
566) . . .59, 803, 808, 811
Pulbrook, ex parte (4 Ch. 627) . 704
■ (2 De G. J. & S. 349) . . 878
v. New Civil Service Co-
operation . . . 891
v. Richmond Consolidated
Mining Co. . . 301, 567, 599, 794
Pulsford v. Richards
Purcell's case
PAGE
19, 70, 71, 76*
. 301
Quartz Hill Gold Mining Co. v.
Eyre 614
Quebrada, &c, Copper Co. . . 403
Queen's Benefit Building Society . 619,
655, 922
Queensbury Industrial Society v.
Pickles .... 263, 915
Quilter, ex parte . . . . 724
Rai>e:nthup„st v. Bates
Radley v. Bramall . . . .
Rail and Electric Appliance Co.
Railway Finance Co. .
Railway Sleepers Supply Co. 305
Railway Steel and Plant Co., ex
parte
In re Taylor (8 Ch. D. 183)
270
708
247,
249
700
417,
419
677,
678
677,
Li re Williams (8Ch. D. 192)
678, 719
Railway Time Tables Publishing
Co.
Ralph v. Harvey .
Ramsay's case
Ramsgate Victoria
Goldsmid
v. Montefiore
123
64
127, 819, 820, 986
Hotel Co. v.
. 13, 15
13, 15
Ramskill v. Edwards 349, 374, 376,
378*
Ranee's case 371, 414, 430, 433, 694,
695, 696, 787, 854, 881, 885
Randell v. Trimen . . . 241
Ranelagh v. Haynes . . 588, 589
Ranger v. Great Western Railway
Co 211, 227, 595
. 286, 294
. 137
. . 849
Ransford v. Bosanquet
v. Copel and
Rapier v. Wright . . . .
Rasbotham v. Shropshire Union
( 'anal Co. ....
Rashdall v. Ford . . . .
Rastrick v. Derbyshire, &c, Rail-
way Co. . 60, 104, 291, 292
Rawlins v. Wickham .
Read v. Anderson
v. Blunt
Reaveley's case .
Reddish v. Pinnock
Redgrave v. Hurd
Reece v. Taylor .
Rees v. Ferine
Reese River Co. v. Smith
Reeve's case .
Reeves v. White
Regent's Canal Ironworks Co.
Grissell (3 Ch. D. 411)
Regent United Service Stores
" Bentley (12 Ch. D. 850)
595
242
293
. 72
t88, 469, 512
. . 544
828, 860
. . 565
72, 73
. 460
. . 488
777
841
916
401
125,
197,
656, 679
AITIIORITIES REFERRE1' TO.
lvii
PAGE
. Arnaiul .... 36
y. Aspinall . . 87, 488
•. Bank of England . 604, 605
v. Beard . . . 268, 270
o. Bigg .... 220
r. Birmingham . 172, 173
v. Burgiss .... 268
.-. < iambridge . . . 605
. i axnatic Railway l '<>. 42, 61
■ v. Caster . . . 268, 270
■ v. Cawood . . .130
■ v. Cemetery Co. . . .
- v. Chester ....
<■. I Hear . . .
■ v. Cockermouth Enclosure
Commissioners
■ v. Cooper
• v. Cumberland . 221, 265
- v. De Berenger . . . 488
- v. The Derbyshire Railway
Co. 282, 292, 296, 297, 604
- v. Dodd . . 131*, 245, 246
- v. D'Oyly ....
- v. Eastern Archipelago Co.
- v. Esdaile . . . 87, 433
- v. Frankland
- v. The Fraternity of Hostmi n
in Newcastle-upon-Tyne
- v. Gaskarth
K.'.i
605
440
605
311
311
99
iss
112
440
300
v. General Cemetery Co.
63, 109,
604
— o. Government Stock Invest-
ment < !o. . . . 311
— v. Grand ('anal Co. . 440
— I?. Grimshaw . . 307
— v. Gurney . . . 87
— v. Hammond . . . 332
— 17. Harrald . . 311
— 17. Haythorne ... 98
— v. Hughes .... 98
— v. Ingall .... 173
— v. Inns of Court Hotel Co. . 466
— 17. James . . . 268, 270
— 17. Kelk 310
— v. Lambourn Valley Railway
Co. . . 603, 604, 605
— 17. Langton .... 112
— v. Larwood . . . . 98
— v. Liverpool, Manchester, &c.
Railway Co. . 61, 466, 605
— v. London Assurance Co. . 604
— v. Londonderry Railway Co.
416, 423, 425, 604
— 17. Mariquita Mining Co. 440, 604
— v. Mayor of Stamford . 221
— v. Mildenhall Savings Bank 916
— v. Miller .... 98
— v. Mott 394
— 17. Osbourne ... 99
— v. Pasmore . . . . 98
— v. Pritchard . . .268
— i'. Registrar of Friendly So-
cieties . . 112, 917, 938
— y. Registrar of Joint-Stock
Companies
(10 Q, B. 839) . . Ill, 113
(21 Q. B. D. 131) 61, 395, 605, 1022
I' AGE
Rochester
. 173
v. Saddlers' Co. .
. 604
i>. St. Catherine Dock Co.
280, 604
17. Shropshire, &c. Canal Co. 604
v. Shropshire Union Rail-
way < !o. .
54, 61, 64
». Stafford .
605
p. Stainer
917
p. Stratton .
131
V. Tewkesbury
. 300
17. Thomas .
. 311
17. Timothy
87
p. Trafford .
. 916
v. Victoria Park Co.
280, 412,
604,605
17. Watson
88
17. Webb .
L31*, 132*
17. Whit marsh . Ill
,117, 128,
131, 138
17. Whitstable Co.
. 604
— v. The Wilts and Berks Canal
Co. . . . 440, 604, 605
v. Wimbledon Local Board. 311
17. Windham . . . . 605
v. Wing . . 423, 425, 604
17. Worcester Canal Co. . 604
17. York 605
Reid's . . . 39, 810,828
R id y. Allan .... 248
v. Explosives Co. . 73
Reidpath's case . . . 14
Remfry 27. Butler . . . 496
Rennie r. Clarke . . . 145
17. Morris . . 501, 503, 510
v. Wynn . . . . 145
Reuss (Princess of) v. Bos 111, 112, 116,
135, 468, 619, 622, 636,
645*, 912
Reuter 17. Electric Telegraph Co. . 160
274
128, 144*
96
456*, 563
'. 41, 807
. 661
. 247, 249
. 638, 652*
626, 64'j . 654
Reynell v. Lewis
Reynolds 17. Bassett
Rheam v. Smith
Rhodes, ex parte .
17. Dawson .
v. Forwood .
Rhydydefed Colliery Co
Pica Gold Washing Co.
Richard r. Home Assurance Asso-
ciation ... . •
Richards & Co. . 677, 678, 711
Richards v. Home Assurance As
sociation .
Richardson's case
Richardson 17. Hastings
17. Larpent .
17. Williamson
Richmond's case (4 K. & J. 305) . 79,
86*, 412, 519, 532*, 534, 839, 845
Richmond's Executors' case (3 De
G. & Sm. 96) . . 518, 838, 862
Richmond's Executors (13 Jur.
727) 814
Richmond Hill Hotel Co.
Elkington (2 Ch. 511)
King (3 Ch. 10)
(4 Eq. 566)
Pellatt (2 Ch. 527)
762
719
14, 770
803, 811
565, 621
377, 573
242. 920
lviii
AUTHORITIES REFERRED TO.
PAGE
192
295, 540
. 749
706
65
291
Ricketts v. Bennett
v. Eowhay
Riddell, ex parte ....
Riddick v. Deposit, &e. Ass. Co. .
Ridgway v. Philip
v. The Security, &c. Ass.
Society ... . .
Ridley v. Plymouth Grinding and
Baking Co. , 154, 156, 200, 226
Rigby v. Connol . . . . 528
v. Dublin Trunk Railway Co. 291,
296
674,
727
Risca Coal and Iron Co. . . 710
Ritso's case
River Steamer Co.
Mitchell (6 Ch. 822)
Rivington's case .
Roberts' case (3 De G. & S.
2 Mac. & G. 192 and 14
539)
Roberts, ex parte (1 Drew
Rio Grande do Sul Steamship Co.
13, 770
824
205,
Jur.
766, 778,
•204) 15,
766, 861, 863
. 710, 821
. 603
. . 26S
861
16,
PAGE.
321, 366-
. 147
v. Crowe
v. Eberhardt
Robertson v. Sheward
Robinson, &c. Brewery Co.
Sidney (13 Eq. 228)
Robinson's case (4 Ch. 322) . 14, 863
Robinson's Executors' case (2 De
G. M. & G. 517) . 759, 776, 782, 812
(6 De G. M. & G. 572) 245, 426,
428, 537, 848
Robinson v. Burbridge
v. Chartered Bank .
v. Mollett .
v. Sheward
v. Thompson
v. Trevor
Robson v. Dodds
v. The Earl of Devon
v. McCreight
461
465
501
269
317
920
568
78, 590
251, 671, 672
Rochdale Property and General
Finance Co. 684, 708
Roe v. Fuller .... 269
Rofl'e v. Roscoe . . . . 475
Rogers' case (3 Ch. 633) . 17, 778*
Rogers' trusts (1 Dr. & Sm. 338) 547
Rogers, ex parte (15Ch. D. 207 . 488
v. Oxford, &c. Railway Co. 321,
568, 601
Rolling Stock Co. of Ireland
Shackleford (1 Ch. 567)
Rolt v. Hopkinson . . . . 459
Rome v. Young .... 727
Romford Canal Co. . 168, 171*, 193,
194, 741
Roney's case . 301, 313, 791, 797
Roots v. Williamson . 476, 477, 479
Rose & Co. v. Gardden Lodge Coal
Co 673
Rosewarne v. Billing . . .
Ross v. Army and Navy Hotel Co.
v. Estates Investment Co.
v. Moses ...
674
488
193,
198
75*
511
91&
596
&G.
912
672
Rossmore v. Mowatt
Rotheram Alum, &c. Co.
Rotherhithe, &c. Society . .
Routh v. Webster
Royal Bank of Australia
Boyds (1 De G. & J. 223)
Cockbum (4 De G. & Sm. 177}
Connell (29 L. J. Ch. 649).
Latta (3 De G. & Sm. 186)
Meux's Executors (2 De G. M.
522)
— (4 D~e G. & Sm. 331)
Robinson's Executors (6 De G. M. &
G. 572)
(2 De G. M. & G. 517)
Sutton (3 De G. & Sm. 262)
Walker (15 Jur. 853)
Royal Bank of India's case 43, 167, 774,
806, 807
Royal Bank of Scotland v. Cuth-
bert .....
Royal British Bank (3 Jur. N. S.
1114)
Brockwell (4 Dr. 205)
Frowd(9 W. R.)
Mixer (4 De G. & J. 575)
Nicol (3 De G. & J. 387)
Walton & Hue (3 Jur. N. S. 853)
v. Turquand 165, 167*, 169*, 174,
190, 199-
Royal Exchange Assurance Co. v.
Moore ....
v. Vaughan
Royal Hotel Co. of Great Yar-
mouth ....
Royal Liver Friendly Society
Ruby Consolidated Mining Co.
Askew (9 Ch. 664)
Rudge v. Bowman . 488, 494, 837
Rudow v. Great Britain Mutual
Life Assurance Society . 621, 677,
682, 985
Rugby, Warwick, &c. Railway Co.
Preece & Evans (2 De G. M. & G.
374)
Rule v. Jewell . . 326, 535, 582
Rumball v. Metropolitan Bank 67, 472,
474
Rumney's case .... 735
Russell v. Croysdill . . 263, 706
v. East Anglian Railway Co. 603
v. Reece .... 240
v. Wakefield Waterworks Co. 563,
566, 570, 571, 572
Russian (Vyksounski) Iron Works
Co 20*, 26
Kincaid (2 Ch. 412)
Stewart (1 Ch. 574)
Taite (3 Eq. 795)
Webster (3 Eq. 740)
Whitehouse (3 Eq. 790)
Rutherford's case . . 806, 835
Ruthin & Cerrig-y-Druidian Rail.
Act 904
Pattter v. Chapman ... 98
Rye's case .... 20*, 772
Ryland v. Delisle . . .428
49 1
693
916
AUTHORITIES REFERRED TO.
lix
PAGE
Sablonieke Hotel Co. . . . 073
Sadler's case . . . .42, 808
Sahlgreen's and Carrall'a case 14, 841
St. George's Building Society 019,647*
St. I (eorge Steam Packel « lo.
Cropper (1 De G. M. & G.
147)
Hamer (2 De G. M. & G. 366
and 3 De G. & Sin. 279)
Hennessey (2 .M. & G. 201 and
3 Dc (i. .v Sm. 191)
Litchfield (3 De G. & Sm. 141)
Maguire (3 De G. & Sm. 31)
Pirn (3DeG. & Sm. 11;
St. James's Club . . . 617, 620
St. Marylebone Joint Stock Bank-
ing Co. See Marylebone.
Walker (8 1 >e G. M. & G. 607)
St. Nazaire Co. . . 663, 698, 748
St. Thomas' Dock Co. . 636, 637, 652*
Salman v. Hamburg Co. . . . 279
Salomans v. Laing . . 322, 571, 580,
597, 598, 892
Sander's case . . 737, 758, 836
Sanderson, ex parte (1 Mac. & G.
306) 698
Sanderson's case (3 De G. & S. 66,
and 3 H. L. C. 698) . 84, 85*, 254,
698, 749, 758, 824, 830
Sanderson's Patents Association . 641,
646*, 649
Sandy's case . . . 787, 789*
Sangster v. Cochrane . . . 920
Sankey Brook Coal Co. . . 192
Kadly & Bramall (12 Eq. 472)
v. Marsh . . . 739, 74 1
Sargent, ex parte . 122, 124, 316, 467,
479, 500
Sargood's claim .... 725
Saunders' case . 780, 791, 795*, 805
Savin v. Hoylake Railway Co. . 147
Saxon Life Assurance Society . . 184,
258, 261, 735, 864, 892
Anchor (2 J. & H. 408, and
1 De G. J. & Sm. 29)
Era (2 J. & H. 408, and 1 De
G. J. & Sm. 29)
Sayles v. Blane . . . 472, 506
Scadding v. Lorant . . . 307
S earth v. Chad wick , . . 569
Schanschieff Electric Battery Syn-
dicate 882
Schibsby v. Westenholz . . 914
Scholefield v. Redfern . . . 547
Scholey v. Central Railway Co. of
Venezuela . . . .85, 777
Schomberg, ex parte . . . 549
Schroder's case (11 Eq. 131) . 395, 786
Scinde, &c, Bank Corporation . 882
Scinde, Punjaub, and Delhi
Corporation
852,
869
Scinde Railway Co.
678
Scott v. Berkeley .
24
v. Clifton School Board
223
v. Colbum .
192,
199
■ — — v. Ebury (Lord)
149,
243
v. Hastings (Lord)
461
BAGE
. Izon . . . ■ • 583
v. Mayor of Manchester . 209
Scottish Petroleum Co. . 21, 124, 157,
418, 777
Anderson (17 Ch. D. 373
Scottish and fTniversal Finance
Bank 20*, 25
Ship'- case (2 De G. J. & Sm,
544)
Scrimgeour's claim . . . -r>l I
Scully, ex parte . 802, 803, 826, 831
Sculthorpe v. Tipper
Sea, Fire and Life Assurance Co.
Greenwood (8 De G. M. & G.
459)
Gwvu (1 Jur. X. S.
1 \ hi of London Assurance Co.
(5 De G. M. &G. 465)
Sea, River and Marine Insurance
Co
Seaton v. Grant . . . •
Seddon v. Connell
Sedgwick, ex parte
Seidler, ex p
Selwyn v. I hi rison
'A7
651*
. . 568
561, 564, 592, 595
388, 627, 646*, 858
. 661
382, 387*
113,
419
59
762
15,
765,
767,
862
305
309
403
139
573
Serrell v. The Derbyshire, Staf-
fordshire, &c., Railway Co. 227, 2321
Sewell's case . . . 393, 402, 7 / 4
Seymour v. Bridge . . . 489
Shackleford's case . . 14, 17*, 778
Shackleford v. Dangerfield
Sharman's case
Sharon's claim .
Sharp and James's case .
Sharp v. Dawes .
v. Stewart & Co.
v. Taylor
Sharpe v. Day
Sharpley v. South and East Coast
Railway Co. .... 584
Sharpus's case . . 664, 761, 771
Shaw's claim (10 Ch. 177) . 147, 722
Shaw, ex parte {18 Eq.. 16) . . 123
(2 Q. B. D. 463) . 121, 123, 124, 500
v. Benson . . 115, 135, 141
v. Fisher . . .64, 473, 492
v. Holland . . . 117, 498
v. Port Philip Gold Mining
Co. 64, 484*
v. Rowley . . 416, 418, 498
v. Simmons . . .114
Shears v. Jacob . . . . 203
Shedden v. Patrick . _ . .283
Sheehy v. Professional Life Assur-
ance Co. ..... 914
Sheerness Waterworks Co. v.
Poison 708
Sheffield's case (Johns. 451) 73, 84*,
85*, 86*, 166, 772
Sheffield, The Earl of v. London
Joint Stock Bank . . .
Sheffield, &c. , Gas Co. v. Harrison
481*
499,
586
Sheffield and Hallamshire Ancient
Order of Foresters
Fountain (11 Jur. N. S. 553)
AUTHORITIES REFERRED TO.
PAGE
Sheffield, &c. Railway Co. v.
Woodcock . 49*, 51, 108, 328, 329,
416, 419, 421
Sheffield Nickel Co. v. Unwin 165, 334,
436
Sheffield and S. York Permanent
Building Society . . . . 524
Shepherd's case . 121, 466, 833, 835
Shepherd v. Gillespie . 493, 505, 510
Sheppard v. Murphy 491, 505, 506, 510
v. Oxenford 133, 135, 139*, 565,
593, 594
v. Scinde, Punjaub, and Delhi
Railway Co 870
Sherrington's case . . . 779
Sherwood Loan Co. . 627, 642, 647"
Smith (1 Sim. N. S. 165)
Shewell's case . . 747*, 799, 804
Shield v. Great Northern Railway
Co 38, 911
Shields Marine Insurance Associ-
ation 621, 655
Lee & Moor (5 Eq. 368)
Ship's case . . 20*, 25, 122, 625, 749,
754, 772
Ship v. Croskill
Shipman's case
Shirreff's case
Shortridge v. Bosanquet
56*
ShrapnelPs case
Shrewsbury, Earl of
Stafford Railway Co.
71*, w.
836
730*, 731
, 61, 423,
560, 596
. 810, 828
North
147, 150, 151,
153*
Shrewsbury and Birmingham Rail-
way Co. v. North Western
Railway Co. . . . 202
r. Stour Valley Railway Co. 323
Shrewsbury and Leicester Direct
Railway Co.
Riddell (1 Simons, N. S. 402)
Shrimpton v. Sidmouth Railway
Co 292
Shropshire Union Railway and
Canal Co. v. Anderson 59, 60,
108, 414, 421
v. Regina . 54, 64, 104, 485
Sibley v. Minton ... 95, 560
Sibson v. Edgworth . 33, 565, 567
Sichell's case (3 Ch. 119) . 124, 125,
806, 836
Sichell, exparte (1 Sim. N. S. 187) 765*,
860*, 861, 862
Siddall, re .... 115, 135
Sidney's case . 761, 763, 793, 797, 839
Silber Light Co. v. Silber . . 573
Silkstone and Dodworth Iron Co. 680
Whitworth (19 Ch. D. 118)
Silkstone Fall Colliery Co. . . 877
Silver Valley Mines (18 Ch. I .
472) 615
(21 Ch. D. 381) . . . 863
Simm v. Anglo-American Tele-
graph Co. . 54, 60, 64*, 484, 787
Simons v. Patchett . . . 241
Simpson's case (9 Eq. 91) . . 122
(4 Ch. 1S4) . . .778
PAGE
Simpson's claim (36 Ch. D. 532) 161,
185
Simpson v. Denison . 321, 323, 571, 598
— — v. Lord Howden . . .153
v. Rand . . . . . 513
v. "Westminster Palace Hotel
Co. . . 202, 317, 566, 570, 601
Singleton v. Selwyn . . . 570
Sir John Moore Gold Mining Co. 878
Skegness Tramway Co. . . . 147
Skinner v. City of London Marine
Insurance Corporation 63, 124, 470,
v. Lambert
Shatter's Executors
Slattery's case
Slim v. Croucher
Small v. Attwood
v. Smith
Smallcombe's case
Smallpage's case
Smart v. West Ham Union
491
267, 427, 565
. 688, 861
13
. . 213
271, 566
. 200, 922
•^19*, 522, 523, 822
. 861
221
Smith's case (2 Ch. 604 & 4 L. R.
H. L. 64)
- (1 Ch. D. 481)
(4 Ch. 611)
(4 De G. & J. 544)
Smith, ex parte (1 Sim. N.
■ (3 Ch. 125) .
(39 Ch. D. 546) .
Smith, Fleming & Co. 's case
123, 771, 777
. . 872
53, 759, 761
66
S. 165) 619
715, 743, 865
14, 156, 157,
158, 305
.85, 709,
739
672, 691
Smith, Knight & Co. , re .
Ashbury (5 Eq. 223)
Gibson (4 Ch. 663)
Weston (6 Eq. 238)
(4 Ch. 20)
Smith, Mackrill, re (3 Ch. 125) . 678
Smith v. Anderson . 114, 135, 141
v. Birmingham Gas Co. . 209
v. Cannan . . . . 549
v. Chadwick . 21, 71*, 89, 590
v. Cork and Bandon Railway
Co 401
v. Goldsworthy . 267, 299, 320,
322, 393*, 427, 565
v. Hull Glass Co. . 154, 159*, 160,
161, 163, 168*, 178*, 205
v. Lloyd .... 916
. Manchester (Duke of) . . 321,
571, 599
c. Morgan ....
v. Pilkington . . . .
v. Reese River Co.
721
. . 920
. 73, 75*, 76,
213, 428, 597
520, 526, 840
550
. . 40
Snell's case
Sneyds, ex pari .
Snook v. AVatts
Societe Generale de Paris
Geen (8 App. 606)
Walker (11 App. 20)
v. Tramways Union Co. . 205
v. Walker . 205, 454, 470, 472,
476, 477*, 479*, 490
Society of Practical Knowledge v
Abbott . . 163, 278, 315, 370*
AUTHORITIES REFERRED TO.
lxi
SomervilL
Snincs v. Currie .
Soulby v. Smith
Southall r. British
Assurance Sm-ictv
PAGE
60, 122, 271, 769
98, 454, 870
. . 267
Mutual Life
367, 598, 601,
894, 895
Southampton Dork Co. v. Arnett 409
v. Richards . 59, 106, 313, 409*,
414
Southampton, [sle of Wight, &c,
Steamboat Co.
Bird (4DeG. J. & S. 201)
Eopkins' Executors ( 1 Do G.
■I. & S. .".12)
Webb (9 Jut. N. S. S56)
v. Rawlins .... 264
South Barrule Slate Quarry Co. . 663,
882, 890
Sou th Blackpool Hotel Co.
James (8 Eq. 225
Migotti (4 Eq. 238)
South Carolina Bank v. Case . 909
South Durham Brewery Co. . . 118,
261, 322, 334, 344, 396, 405
South Durham Iron Co.
Smith (11 Ch. D. 579)
South - Eastern Railway Co.'s
claim ...... 806
South - Eastern Railway Co. \
Hebblcwhite . 300, 409, 411, 414
Southern Railway Co. . . . 279
South Essex Estuary Co.
Chorley (11 Eq. 157)
Paine & Layton (4 Ch. 215)
South Essex Gas Light and Coke
Co.
Hulett (2 J. & H. 306)
Stears (Johnson, 480)
South of France Co.
Baron de Beville (7 Eq. 11)
South of Ireland Coll. Co. v.
Waddle . 220, 222, 223, 228
South Kensington Co-operative
Stores . . . . 680, 681
South Lady Bertha Mining Co. 619, 646*
South Llanharran Colliery Co.
Jegon (12 Ch. D. 503)
South London Fish Market Co. . 464,
620, 628, 648, 825, 829
South port and "West Lancashire
Banking Co.
Fisher (31 Ch. D. 120)
Sherrington (31 Ch. D. 120)
South Staffordshire Railway Co.
v. Burnside . . 551, 555, 815
South "Wales Atlantic Steamship
Co 135, 621
South Wales Railway Co. v.
Redmond .... 200
Southwark Water Co. v. Quick . 595
South "Western Loan Co. v.
Robertson . ... 461
Spackman's case. See Spackman
v. Evans
Spackman, ex parte (1 De G. & S.
599 & 1 Mac. & G. 170) . 617,
649*, 901
PAGE
Spackman v. Evans 53, 179, 312
520, 522, 523, 532, 538, 845
v. Lattimore . 24, 147, 598
Spargo's rase . . . 743, 784, 785
Sparks v. Liverpool Waterworks
Co 535
Sparling <\ Parker . . .1 l'.>. 152
Sparrow v. Fanner . . . 920
Spence's case (17 Beav. 203) . . 426,
— (6 Ch. 362) . . . 260
nt Co.
, 735
650*
26S
269
'.'17
149
. 569
766, 767
303
122,
, 892
220
593
467
Spence's Patent, &c
I 0. New Inn
Spiller v. Johnson
v. Maude
v. Paris Skating Rink
Spittal v. Smith
Spottiswoode's rase
Spui gin /-. White. . . . .
Stace and Worth's case . 17, 53,
184, 323, 759, 774*
Stafford (Mayor of) v. Till .
Staffordshire and Shropshire Rail.
Co.
Bowen & .Martin (20 L. J.
Ch. 856)
Stainbank v. Femley . . 592
Standing v. Bowring .
Stanhope's case 1 1 Ch. 161) . 3D:. 520,
523, 532, 538, 845
(3 De G. & Sm. 198) . . 518*,
838*, 839, 862
Stanhope Silkstone Collieries Co. 678
Stanley's case . . . . 192
Stanley v. Chester and Birkenhead
Railway Co. . . 150, 15
Stapleford Colliery Co.
Barrow (14 Ch. D. 432)
Stapleton, ex parte . . . 861
Stark v. Highgate Archway Co. . 186
State Fire Insurance Co. . 249, 737
Meredith's case and Conver's
case (1 N. R. 510)
Times Assurance Co. (2 Hem.
& M. 722)
Steadman v. Arden ... 30
Steam Stoker Co. . . . 626
Stearic Acid Co. ... 307, 879
Stears, ex parte . . . 226, 328
Stears v. South Essex Gas Co. . 328
Steele v. Harmer . . . . 185
v. North Metropolitan Rad-
way Co.
v. Sutton Gas Co. . . .
Steigenberger v. Carr .
Stent v. Bailis . . . .
Stephen, re (2 Ph. 562)
Stephens, ex parte (3 Ch. 753)
v. De Medina
Stevens, re (Ir. Rep. 6 Eq. 604) .
v. Guppy . . . .
v. Mid Hants Railway Co. .
v. Midland Counties Railway
Co. ... .
v. South Devon liailwav Co.
401, 429, 430, 572, 600
Stevens' Hospital v. Dyas . . 223
324
442
25
494
606
727
498
906
492
906
210
317
lxii
AUTHORITIES REFERRED TO.
Stevenson, ex parte (32 L.
97) .
v. McLean
Steward v. Dunn
v. Greaves
Stewart's case (1 Ch. 574)
PAGE
J. Ch.
. 855
. . 14
110, 268, 269
. 268, 604
. 21*, 26*,
122, 312, 772
520,
(1 Ch. 511)
Stewart v. Anglo -Californian Gold
Co. ... 45, 59, 64
:>,■!
v. Cauty
Stirling's case
Stirling v. Maitland
Stock's case (2 J. & H. 441)
(22 L. J. Ch. 218)
(4 De G. J. & Sm. 426)
529
308
498,
817, 818
. 729
. 178,
180, 199
765, 766
. 301,
790, 795
534
585*, 587
679, 721
124, 458
822, 830*
220, 690
Stocken's case
Stocker v. "Wedderburn
Stockton Iron Furnace Co.
Stockton Malleable Iron Co
Stoke's case
Stone's case .
Stone v. City and County Bank . 753,
776, 877, 880
Storforth Lane Colliery Co. . . 686
Storm v. Sterling .... 230
Stratfon's Executors' case . 52, 316,
751, 758*, 812, 824, 860
Straker v. Wilson . . . 545, 546
Strand Music Hall Co. . .193
European and American Finance
Co. (35 Beav. 153)
Strang, ex parte . . . 557, 743
Stranton Iron and Steel Co. . 309,
464, 465, 466
Barnett (19 Eq. 449)
Stratford and Moreton Railway
Co. v. Stratton . . 416, 417
Stray v. Russell . 467, 491, 493, 496,
501, 506*, 514
Strick v. Swansea Tin Plate Co. . 528,
843
Stringer's case (4 Ch. 475 & 493) . 278,
414, 430, 433, 694, 695, 696, 787, 854,
863
Stringer, ex parte (9 Q. B. D. 436) 459,
466
. 543, 546
441
. . 436
733
. 532, 535*
Stroud v. Gwyer
Stuart v. Lord Bute .
Stuart's Trusts, re .
Stubb's case
Stubbs v. Lister
Studdert v. Grosvenor
321, 322
Studley, ex parte
Stupart v. Arrowsmith
310,
.71, 598, 599
. . 765*
317, 583*,
594
Sturge v. Eastern Union Railway
Co 401, 569
Sturt & Co
Pearcy (13 Eq. 309)
Styles v. Cardiff Steamboat Co. . 205,
210
Suburban Hotel Co. . 632, 633, 634,
639, 641, 650*
pac;k
Suche & Co. (Joseph) . 685, 719, 720
Sudlow & Kingdom, re . . . 670
Sudlowu. Dutch- Bhenish Railway
Co. ... 528, 909, 913
Sullivan v. Mitcalfe ... 92
Sunderland Universal Building
Society . 614, 619, 627, 876, 922
Sunderland Marine Insurance Co.
v. Kearney ....
Sunken Vessels Recovery Co.,
Limited
Wood (2 De G. & J. 85)
Sutton's case ....
Sutton v. Tatham . . . •
Swan's case (10 Eq. 675)
Swan, exparte (7 C. B. N. S. 400) or
v. N orth British Australian
Co. 62, 472, 486*, 487
Swansea Dock Co. v. Levien . 300,
409
Swansea Friendly Society . . 43
246
818
513*
691
Sweeting v. Pearce
Sweny v. Smith
Swift v. Jewsbury
v. Pannell
Swire v. Francis .
Sykes' case
Sykes v. Beadon .
Symes v. Hughes
Symon's case .
515
. 532, 534, 571
207, 217
. . 198
. 217*
. 377, 669, 786
114, 135, 140, 141
139
. 123, 811 828
247, 466, 601
Taft o. Harrison
Tahiti Cotton Co.
Sargent (17 Eq. 273)
Taite's case ..... 28
Talbot's case . 250, 251, 412, 854, 862
Tal-y-Drws Slate Co.
Mackley (1 Ch. D. 24)
Tambracherry Estates Co. . . 403
Tanner's case .... 766
Taunton v. Royal Insurance Co. 161,
163, 318, 599, 601
Taurine Co. . 156, 664, 665, 822, 824,
825, 832, 878
Tavarone Mining Co.
Pritchard (8 Ch. 956)
Tavistock Ironworks Co.
Lyster (4 Eq. 233)
Tayler v. Great India Peninsula
Railway Co. . 62, 473*, 4
Taylor, Exparte (14 Ch. D. 398)
v. Blakelock
v. Bowers . . . .
v. Chichester and Midhurst
Railway Co. .
v. Crowland Gas Co.
497
359,
360
476
139
v. Dulwich Hospital
v. Hughes 52, 56*,
186
38, 148, 280,
911
220, 221
61, 423, 466,
560, 596, 597
. . 254
139
v. Ifill ....
v. Lendy
v. Pilsen, &c, Light Co. 334, 344,
402, 602
v. Rundell . . . 441, 595
a i i iioKiMi.s i;i.ri.l;khi> To.
lxiii
PAGE
Taylor V. Salmon . . . 566
v. Stray. . . . 507,513*
v. Taylor . . . .813
Teasi laic's case . 102,526,530,840
Teete'a case .... 732, 735
Teignmouth, &c, Shipping Asso-
ciation.
.Martin (11 Eq.. 148)
raph Construction Co. . 403, 732
Telegraph Despatch Co. v. McLean 247,
249
Telford v. Metropolitan Board of
Works 324
T mr Valley Railway Co.
Forbes (lit Eq. 353)
Tempest v. Kilner . 453, 498, 499
Tenant v. Elliott . . . . 140
Tennant v. City of Glasgow Bank ! 53,
776
Tepper v. Nicholls . . . 452
Terrell's case .... 126, 148
Terrell v. Hutton 148, 149, 714, 722, 72 1
Teversham v. Cameron's Coalbrook
Co. . . . 193, 226, 328, 388
Thacker v. Hardy . . . 488, 501
Thames Haven Dock Co. v. Hall 221,
265, 415, 428
v. Rose 157, 174*, 299, 409, 415,
428, 604
Thames Plate Glass Co. v. Land
and Sea Telegraph Co. 673, 675, 699
Thames Tunnel Co. v. Sheldon 19, 420
Thetford School case . . . 312
Theys, ex parte 697, 719, 739, 740, 744
Thomas's case (13 Eq. 437) . 520, 840
(1 De G. J. k S. 579) . . 812
Thomas, ex parte (18 Eq. 17, note) 123
(9 C. B. 740) . . . . 848
v. Bishop . . . 231, 232*
v. Clark . . .95, 254
v. Hobler . . . 254, 567
v. Patent Lionite Co. 665, 673, 678,
680, 717, 720, 721, 878, 96S, 969
v. Wells . . . 60S, 672
Thompson v. Harding . 59, 129, 288,
295
v. Norris . . . 671, S50
v. Planet Building Society 916, 921
v. Universal Salvage Co. 1S5, 295,
670
v. "Wesleyan Newspaper Asso-
ciation .... 185
Thomson's case (4 De G. J. & Sm.
749) 778, 779
Thorn v. Croft .... 920
Thornton, ex parte . . . 2S2, 666
v. Ellis ....
542
v. Kempson. . . . .
451
Tierney, re .
922
Tilleard, re ... . .
147
Tilson v. Warwick Gas Light Co.
146
Times Fire Assurance Co. 625,
628,
646*
, 660
Times Life Assurance, &c, Co. (5
Ch. 381) .... 260*
735
(9 Eq. 382) ....
659
Timms v. Williams
916
PAGE
Tipperary Joint Stock I tanking Co.
Ginger 5 Ir. Ch. Rep. 171)
Scully (6 lr. Ch. Rep. 72)
Stirling (6 Ir. Ch. Rep. 180)
Tippetl v. Johns . . . . 95, 96
Tobin, t ' pa/rte .... o7l'
Todd r. Wright . . . . 268
Toll v. Lee . . .95, 96, 294
Tomkinson v. Smith Eastern Rail-
way Co. . . 322, 571, 579, 599
Tomunsonu Tomlinson . . 152
Tondeur, ex parte . . . . 729
Tooke, ex parte .... 416
Topham v. Greenside Fire Brick
Co 196, 198
Torkington, ex parte . . 269, 550
Torquay Hath Co. . . 115, 614, 875
Torrington v. Lowe . . . 509
Tosh v. North British Building
Society . . 524, 861, 872, 920
Tothill's case . . 313, 790, 795"
Totterdell v. Fareham Brick Co.
156, 161, 228, 338
Totty, ex parte . . . . 709
Touche v. Metropolitan Railway
Co 148, 158
Towne v. London and Limerick
Steamship Co. . . . 264
Towns I >rainage Co.
.M,r ]o|
Townsend's case . . . 14, 15
Townsend v. Ash . . . 451
Trade Auxiliary Co. v. Vickera . 578
Traders' North Staffordshire
Carrying Co 680
Trades Bank Co. ... 686
Traill v. Baring . . . 70
Transatlantic Co. v. Pietroui . 913
Tredinnick v. Oliver . . 454, 463
Tredwen v. Bourne 25, 64, 95, 192, 205,
293
Trent & Humber Co.
Bailey and Leetham (8 Eq.
94)
Cambrian Steam Packet Co.
(4Ch. 112 and 6 Eq. 396)
Trent Valley, Chester, &c, Rail-
way Co.
Dale (3 De G. & Sm. 11)
Tretoil & Messer Mining Co. 619, 646*,
670
Trevor v. Whit worth . 119, 206. 322,
334, 402, 432, 520, 526*, 527, 599, 838
Trinder v. Trinder . . . 541
Tring, Reading and Basingstoke
Railway Co., re . . . . 656
Barber (1 Mac. >fc G. 176;
Cox (3 De G. & Sm. ISO)
Trinity House of Hull v. Beadle . 310
Tripp v. Chard Railway Co. . 271
Troup's case ..... 383*
Troutbeck, ex parte . . 642, 646*
Trower and Lawson's case . . 691
Trueman's Estate . . . 704
Tufnell's case .... 124, 763
Tumacacori Mining Co. . 626, 62S, 632,
640, 645*, 651
lxiv
AUTHORITIES REFERRED TO.
I'AGE
Tunis Railway Co. . . . 711, 883
Tunnel Mining Co.
Pool (35 Ch. D. 579)
Turner, ex parte (3 De G. & J. 46) 488
(3 De G. & S. 127) . . . 660
& James, ex parte (3 De G.
& S. 127, and 2 Mac. & G. 169) 622,
623, 646*, 660
v. Borlase .... 593
v. Hill 593
■ v. Metropolitan Live Stock
Co 45
r. Tyacke . . . . 593
Turney v. Bayiey . . . 440
Turnley & Oliver, ex parte . . 698
Turquand v. Kirby . . 707, 813
v. Marshall . 311, 371, 373, 374,
376, 377, 378, 389, 433, 441, 707
Twycross v. Grant . 70, 90, 92, 496
Ulster Land Co., Limited . 693
Ulverstone Railway Co. v. Com-
missioners of Inland Revenue . 469
Underbill v. Devereux . . 281
Underwood's case . 664, 710, 846, 849,
852, 868
Union Bank of Calcutta
Watson (3 De G. & Sm. 253)
Union Bank of Kingston-upon-
Hull . 208, 881, 883, 896, 972
Union Bank of Manchester
Jackson (12 Eq. 354)
Union Bank of Scotland v. Na-
tional Bank of Scotland . . 459
Union Cement and Brick Co.
Pulbrook (4 Ch. 627)
Union Rubber Co. v. Hibbard . 910
United Kingdom, &c. Building
Association . . - 704
United Kingdom Mutual Steam
Assurance Assoc, v. Xevill 46, 428
United Kingdom Shipowning Co.
Felgate (2 De G. J. & S. 456)
United Ports and General Insur-
ance Co 660
Adams (13 Eq. 474)
Beck (9 Ch. 392)
Even (16 Eq. 354)
Perrett (15 Eq. 250)
Wynne (8 Ch. 1002)
v. Hill .... 264
United Service Co 665
Hall 15 Ch. 707)
Johnston (6 Ch. 212)
United Stock Exchange, Limited 659
Philp & Kidd (28 Ch. D. 183)
Unity General Bread and Flour Co.
Hirtzel (2 De G. F. & J. 653)
Unity Joint-Stock Banking Assoc.
King (3 De G. & J. 63)
Universal Bank, re . . . 662
Universal Banking Corporation
Gunn (3 Ch. 40)
Harrison (3 Ch. 633)
Rogers (3 Ch. 633)
Stracy (5 Ch. 492)
PAGE
Universal Disinfector Co. . 678
Universal Life Assurance Co. . 741
Universal Non-tariff Fire Insur-
ance Co.
Ritso (4 Ch. D. 774)
Universal Provident Life Assoc.
Bell (22 Beav. 35)
Daniell (22 Beav. 43)
(2) (23 Beav. 568)
Holt (22 Beav. 48)
Munt (22 Beav. 55)
Universal Salvage Co.
Mansfield (2 M. & G. 57)
(3 De G. & Sm. 58)
Murray (5 De G. M. & G. 746)
Sharpus (3 De G. & Sm. 49)
Smallbone (14 Jur. 103)
Woodfall (3 De G. & Sm. 63)
Universal Tontine Life insur. Co.
Dee (3 De G. & Sm. 112)
Upfill's case (Hutton v. Upfill, 2
H. L. C. 674) . 764*, 765*, 767
(1 Sim. N. S. 395) . 851, 861
Upton v. Brown .... 545
Uruguay Central & Hygueritas
Railway Co. of Monte Video . 625*.
636, 648*
Vale of Neath and South Wales
Brewery Co.
Gordon (3 De G. & Sm. 249)
Hitchcock (3 De G. & Sm. 92)
Hollwey (1 De G. & Sm. 777)
Keene's Executors (3 De G. M. & G
272)
Kluht (3 De G. & Sm. 210)
Morgan (1 De G. & Sm. 750
and 1 M. & G. 225)
Richmond's Executors (3 De G. &
Sm. 96)
Walters (3 De G. & Sm. 149)
No. '2 (3 De G. & Sm. 244)
White (3 De G. & Sm. 157)
Vale of Neath, &c. Joint-Stock Co.
Lawes (1 De G. M. & G. 421)
Vallee v. Dumergue . . . 914
Valpy& Chaplin, ex parte . .203
Vance v. The East Lancashire
Railway Co. . . 321, 323, 598
Van Diemen's Land Co. v. Cock-
erell
Vane v. Cobbold
Van Sandau v. Moore
532
. . 33, 34
266, 561, 564*,
609*
Varney v. Hickman . . .
Venables v. Schweitzer
Venezuela (Directors of Central
Railway Co. of) v. Kisch
Vertue v. East Anglian Railway
Co
Vice v. Anson 21, 65*, 96*, 205,
Victoria Permanent Benefit Build-
ing, &c. Society
Empson (9 Eq. 597)
Hill (9 Eq. 605)
Jones (9 Eq. 605)
139
691
74
194
453
AUTHORITIES REFERRED TO.
lxv
PACK
Vigors v. Pike
. 281,572
Vining's case
842, 897
Vivyan v. Mowatt .
96, 97
Yolhuis v. Fletcher .
. 14, 16
A7 ion Colliery Co., 20 Ch. D. 442 677
\Y\i.\ Wynaad Indian Gold Min-
ing Co 626, 1029
Walburn v. Ingilby 2, 133*, 134, 569
Walker's case (6 Eq. 30) . . 823
(2 Eq. 554) . . 836, 837, 861
(8 De G. M. & G. 607) 244, 839,
851
(2 Jur. N. S. 1216) . . 520
Walker, ex parte (1 De G. & Sm.
585, 1 H. & T. 100, and
13 Jur. 157) . . 640
(15 Jur. 853) ....
Walker v. Banaghcr Distillery Co.
661
704
673,
676
v. Bartlett . 96, 453, 468, 472,
493, 506, 510
v. General Mutual Building
Society. . . . 920, 921
v. Great Western Railway
Co
v. London Tramways Co. 119,
161
315,
334
452
770
14
789
766
31, 34*, 128
1-i,
v. Milne
Wall's case (15 Eq. 18)
Wallis's case
Walsh's case .
Walstab, c.r parte
». Spottiswoode
Walter's case (3 De G. & Sm. 244)
518, 839
(3 De G. & Sm. 149, and 19
L. J. Ch. 501) . . 791, 796*, 824
Walter, ex parte (3 De G. & S. 2). 628
Walton's estate (23 Beav. 480) . 540
Walton, ex parte (17 Ch. D. 746). 553
(3 Jur. N. S. 853) . . . 861
Walton v. Edge . 524, 861, 872, 920
Walton and Hue. . . .831
Walworth v. Holt . . . 565, 594
Warburton v. Hill . . .461
Ward's case (10 Eq. 659). . 14, 769
(4Eq. 189). . . .121
(2 Ch. 431) . . . . 121
(2 Eq. 226) . . 833, 834
Ward and Garrit's case
Ward and Henry's cases
833,
834, 835
470, 500, 833,
835
Ward, ex parte (L. R. 3 Ex. ISO) 44,
121, 123
(20 Ch. D. 356) .
Ward v. Combe . . . .
v. Londesborough
v. Sittingbourne and Sheer-
ness Railway Co. .
v. Society of Attornies 98,
489
545
31
567
323*,
593
v. South - Eastern Railway
Co. 54, 60, 61, 63, 108, 471
Ware v. Camberledge . . . 452
L.C.
PAGE
Ware v. Grand Junction Water-
works . . 324, 601
o. Regent's Canal Co. . . 264
Waring, ex parte (W. N. 1866,
390) .... 717
(19 Vesey, 345) . . . 727*
Warkworth Dock Co.
Phillips (18 Beav. 629)
Warrant Finance Co.'s case (5 Ch.
(4 Ch. 643) .
(No. 2), (10 Eq. 11)
Warren's Blacking Co.
Pentelow (4 Ch. 178).
Warwick and Worcester Railway
Co. (13 Jur. 651). . .
(27 L. J. Ch. 735)
Parbury (3 De G. F. & J. 80)
Pell (3 De G. & Sm. 170)
Prichard (5 De G. M. & G. 495)
Washoe Mining Co. v. Ferguson
Waterford, Duugarvan and Lid
more Railway Co. (5 L. R. Ir
103, 584)
Waterford, &c, Railway Co. (Ir,
Rep. 4 Eq. 538)
v. Dalbiac .
v. Logan
v. Pidcock 45, 46, 50, 59, 60
699
. 725
725, 726
620
723
263
436
903
411
422
105,
107, 108, 420, 421
Waterhouse v. Jamieson. . 395,
Waterloo Life Assurance Co. (31
Beav. 586) . 127, 624,
(4N. R. 207). . . .
Carr (33 Beav. 542)
Paul & Beresford (33 Beav. 204)
Saunders (2 De G. J. & S. 101)
Waterlow v. Sharp . . . .
Waters v. Taylor. . . 575,
Watkin, ex parte . . . .
Watkins v. Clark
v. Huntley . . . .
AVatson, ex parte (re Calcutta
Bank, 3 De G. & S. 253) 561,
622, 639*. 651
787
678
697
191
600
704
275
494
(21 Q. B. D. 301)
163, 177, 189,
190, 191, 919
452
. 569, 570
35*, 145
Watson v. Black .
r. Cave .
v. Charlemont .
v. Eales 417, 418, 424*, 532, 534*,
597
v. Mid Wales Railway Co. .
v. Spratley . . . 449,
Watson, Kipling & Co. . . .
Watts v. Jerfryes
v. Porter . . . .
v. Salter . . . 33*,
Weald of Kent Canal Co. v. Robin-
son 426,
Wear Engine Works Co. . . .
Wearmouth Crown Glass Co.
Webb's case . . ...
Webb v. Commissioners of Heme
Bay. . . 163, 171
v. Earle.
v. Taylor .
275
453
682
461
461
34*
537
654
681
62
193
400, 435
268
lxvi
AUTHORITIES REFERRED TO.
PAGE
Webb v. Whiffin . 394, 754, 821, 851,
856, 857
Webster's case (2 Eq. 741) 21, 25, 26*,
122, 772
(32 L. J. Ch. 135) . . . 843
Wedgwood Coal and Iron Co. . 711, 881
Anderson (7 Ch. D. 75).
Weekley v. Weekley . . 452, 453
Weeks v. Propert . . 89, 242
Weikersheim's case 59, 758, 806, 807
Weir v. Barnett .... 244
v. Bell . ... 88, 89*
WTeiss, re . . . 263, 295, 671
Welland Railway Co. v. Berrie 417,
909, 910
v. Blake. . . 414, 427, 537
Wellington Reversionary Annuity
and Life Assurance Soc.
Conquest (1 Ch. D. 334).
Wells v. Mayor of Hull . . . 223
v. Williams. ... 37
Welsh Flannel and Tweed Co. 847, 879
Welsh Potosi Mining Co. . . 613
Birch (2 De G. & J. 10).
Clarke (2 De G. & J. 245).
Lofthouse (2 De G. & J. 69).
Tobin (7 W. R. 4).
Wenlock (Baroness) v. River Dee
Co. 112, 162, 163, 164, 165, 176, 187,
189*, 191
Wentworth v. Chevell. . 537, 544
Werle & Co. v. Colquhoun . . 911
West's case) . , . 191, 192
Westbourne Grove Drapery Co. (5
Ch. D. 248) . . 720, 732
(W. N. 1878, 195) . . 885
Westcomb's case . . . 863
West Cork Railway Co. . . 905
West Cornwall Railway Co. v.
Mowatt . . . 105, 192, 396
West Cumberland Iron and Steel
Co 665 1029
West Devon Great Consols Mine
(27 Ch. D. 106) 325, 658, 705
(38 Ch. D. 51 )
WTest of England Bank .
Booker (14 Ch. D. 317)
Brown (12 Ch. D. 823)
Budden and Roberts (12 Ch.
D. 288)
Hatcher (12 Ch. D. 284)
West of England and South Wales
District Bank.
Swansea Friendly Society (11
Ch. D. 768)
Dale & Co. (11 Ch. D. 772)
West Ham Distillery Co.
Whittel (2 De G. & J. 577)
West Hartlepool Iron Works Co.
(10 Ch. 618) . . .
(10 Ch. 629)
(34 L. T., N. S. 570) . .■
Gray (1 Ch. D. 664)
West India Steamship Co. .
West Jewell Tin Mining Co.
Weston (10 Ch. D. 579).
West London Commercial Bank .
699
720
637
660
682
344
717
PAGE
West London Commercial Bank
v. Kitson .... 231, 242
West London Railway Co. v. Ber-
nard ..... 313
West Riding Union Banking Co.
Turner (19 Ch. D. 105)
West Silver Bank Mining Co. . 986
West Surrey Tanning Co. 640, 645*
West v. West . . . 108, 467
Western Bank of Scotland v. Addie 72,
211
v. Bairds .... 373*
Western Benefit Building Society 657
Western of Canada Oil, &c. , Co.
(17 Eq. 1) 630, 635, 636, 637, 652
(6 Ch. D. 109) . . .691
Carling <20 Eq. 580 and 1 Ch.
D. 115)
Hespeler (1 Ch. D. 115)
Walsh (1 Ch. D. 115)
- v. Walker ". . . 263
Western Life Assurance Society
(11 Eq. 164) . . . . 735
(5 Ch. 396) . . 702, 704
Willett (5 Ch. 396)
Western Suburban Building Society
v. Martin .... 921
Westman v. Aktiebolaget, &c.
Fabrik 909
Westminster Silver Lead Ore Co.
(Duchess of) . . . 749, 786
Weston's case (10 Ch. D. 579) . 367,
696, 699
(4 Ch. 20, and 6 Eq. 238) . 464,
465, 665, 821, 825, 827, 834,
835, 878, 889
(5 Ch. 614) 800, 803, 811, 828
Westropp v. Solomon . . 494, 515*
Wexford and Valencia Railway Co.
Fisher (3 De G. & Sm. 116)
Wey and Arun Junction Canal Co.
618, 647*
Whaley Bridge Co. v. Green 347, 349,
356*, 361*
Wheal Anne Mining Co. (10 W.
R. 330) 619
(30 Beav. 601) . . 653*
Wheal Buller Consols 148, 301, 792,
793, 795*
Wheal Lovell Mining Co.
Wyld (1 M. & G. 1)
Wheal Unity Wood Mining Co.
Chynoweth (15 Ch. D. 13)
Wheal Virtue Mining Co. . . 686
Wheal Vyvyan Mining Co.
Wescomb (9 Ch. 553)
Wheatley v. Silkstone Coal Co. . 197
Wheeler v. Van Wart . . 609*
Whinney, ex parte (13 Q. B. D.
476) 848
White's case (3 De G. & Sm. 157) 42,
808
(12 Ch. D. 511) . . .785
(3 Eq. 84) . . . 833, 834
White v. Carmarthen Railway Co. 198,
568
Whitehead v. Izod ... 832
AUTHORITIES REFERRED TO.
lxvii
PAGE
Whitehead v. Whitehead . . -r'i7
Whitehouse's case (3 Eq. 790) . 28
Whin-house & Co., re (9 Ch. D.
595) .... 742, 744
Whitfield v. South- Eastern Rail-
way Co.
Whitley Partners, Limited
. 209
19, 119,
797, 935
748
691
138
542
200
295
148
Whittet's case ... 60,
Whitworth'a case . . . 690,
Wigan v. Fowler
Wightwiek r. Lord . . .
Wilby v. West Cornwall Railway
Co
Wilde v. Stannar . . . .
Wilkins v. Roebuck .
Wilkinson's case . 26, 28, 771, 773
Wilkinson v. Anglo-Cahfornian
Gold Co. . . . 45, 59, 64
v. Lloyd . . 467, 491, 493
Willes v. Greenhill . . . 205
Willey v. Parratt ... 33
Williams' case (1 Ch. D. 576) . 802,
803, 805, 827, 828
(2 J. & H. 400) . . . 735
(9 Eq. 225) . . .828
Williams, ex parte (2 Eq. 216) 357, 722
(1 Sim. K S.
v. Archer .
v. Aspinall
v. Beaumont
V. Colonial Bank
7)
652*,
653'
499
. . 286
. 267
474, 475, 481*,
913
550, 556, 708, 848
247
920
720
139
145
440,
598
152*,
224
Salmond . 565, 567, 568
Swansea Harbour Trustees 88
v. Harding
v. Hathaway
— — v. Hayward .
v. Hopkins
v. Jones .
v. Pigott
— v. Prince of Wales
Life Co
v. St. George's Harbour Co.
v. Trye
Williamson, ex parte
v. Barbour .
Willison v, Patteson
Willmott v. London Celluloid Co
488
189, 235, 236,
238*, 385, 919
205
37
197,
669
469
58, 307, 308, 415,
426, 537
267, 427, 565
Wills v. Bridge .
v. Murray
v. Sutherland
Wilmot v. Corporation of Coventry 220,
221
123
733
. 694
45) . . 696
. 699
. . 364
, Railway
425, 427
103
Wilson's case (8 Eq. 240)
(9 Eq. 706) .
(12 Eq. 516)
Wilson, ex parte (8 Ch.
— (7 Ch. 45) .
v. Bury (Lord)
v. Birkenhead, &c
Co. .
PAGE
30, 265, 570
268
. 363, 606
. 499, 802
2071
>6£
241
675
593
. 139
1 19, 176
553
v. Caledonian Railway Co.
Wilson v. Churcli .
v. Craven .
v. Curzon
r. Keating .
v. Miers
v. Natal Investmenl Co
— v. Stanhope
r. Strugnell .
r. Tumman .
— v. Wallani
v. W.-t Eartlepool Rail. Co. 160,
223, 228
v. Wilson . . . 302, 303
Wiltshire Iron Co.
Pearson (3 Ch. 443)
v. Great Western Rail. Co. 668*,
672, 754
Winch v. Birkenhead Rail. Co. 202,
207, 322, 572, 580, 598, 601, 892
Wincham Shipbuilding Boiler and
Salt Co.
Hallmark (9 Ch. D. 329)
Poole, Jackson & White
Ch. I). 322
Winehouse v. Winehouce
Wingfield v. Barton
v. Peel ....
Winne o. Bampton
Winstone's case . 120, 737, 752, 757
Winterbottom, exparte . 550,708
Wise, exparte 561, 631, 632, 639,
651*
Withernsea Brickworks 676, 678, 719,
720
Wittenbury v. Law
Witts v. Steere
Wolesey, exparte
Wolverhampton, Chester and
Birkenhead Junction Co.
Cottle (2 M. & G. 185)
Dale (1 De G. M. & G. 513)
Holroyd (15 Jur. 696)
Roberts (1 Dr. 204)
Stocks (22 L. J. Ch. 218)
Wolverhampton New Waterworks
Co. v. Hawkesford 59, 60, 104, 105*,
421, 427
Womersley v. Merritt . . 135
Wontner v. Shairp . 16,34,145
Wood's case (15 Eq. 236) . . 124
(3 De G. & J. 85) . . 778*
Wood's claim (9 W. R. 366, and
10 ib. 662) 180*, 237, 735
Woodv. Argyll . . . 144, 145
v. Marston . . . . 269
■ v. Wood .... 534
Woodfall's case . ... 780*
Woodhams v. Anglo-Australian
Co. . 180, 275, 283, 560, 563, 741
Woollaston's case 83*, 533, 822, 843,
862
Woolman v. Toby . 32, 270, 607
Woolmer, exparte 623, 646*, 664, 860,
865, 866
Worcester Corn Ex. Co. (3 De G.
M. & G. 180) 235 248, 384, 851, 862
(15 Jur. 960) . . .684
(9
720, 721
293, 294
293, 294
. 220
2S6
545
622, 656
lxviii
AUTHORITIES REFERRED TO.
. 247
353, 709
704, 889
521, 777
. 818
526
224
916
726
203
Worcester, Tenbury arid Ludlow
Rail. Co 663*
Wormwell v. Hailstone . 278, 279
Worth's case (5 Ch. 682) 53, 122, 184
Worth, ex parte, (4 Drew. 529) 83, 84,
215
Worthington v. Sudlow
Wreck Recovery Salvage Co.
Wright's case (5 Ch. 437)
(7 Ch. 55) .
(12 Eq. 331) .
(12 Eq. 336, note)
Wright v. Campbell
v. Desley .
— v. Horton . . 17 .
V. Monarch Investment Build-
ing Society . • 916
t>. Snowe ....
v. Tuckett ....
v. Warren .
Wright & Gamble, ex parte (8 Eq.
123)
Wrighte's case (2 De G. M. & G.
636) . . . 722, 723, 850, 860
Wrighte v. Lindsay . . .848
Wrysgan Co.
Humby (5 Jur. N. S. 215)
Wyall v. The Darenth Rail. Co.
Wyatt v. Metropolitan Board of
Works . . • • 146
Wye Valley Rail. Co. v. Hawes
921
810
545
544
865
291
147
390,
563
555
Wvlam's Steam Fuel Co. v. Street
Wyld, ex parte 561, 619, 631, 639,
J 649*
v. Hopkins . . 128, 144*
PAGE
Wyley v. Exhall Coal Co. . .674
Wynn Hall Coal Co.
North and South Wales Bank
(10 Eq. 515)
Wynne's case 17, 26, 769, 773, 774
Wynne v. Price . 473, 499, 505, 510
Yarborough v. Bank of England
Yelland's case (5De G. & Sm. 395,
and 16 Jur. 509) 47, 757,
(4 Eq. 350) ....
Yetts v. Norfolk Railway Co. 411,
577,
York Buildings Co. , The
York and London Assurance Co.
Hodsell (19 L. J. Ch. 234)
York and North Midland Railway
v. Hudson 321, 364*, 365*, 2
York Tramways Co. v. Willows
158, 302, 337, 409
Yorkshire Fibre Co. . . 440
Yorkshire Railway] Wagon Co. r.
Maclure .....
Young v. Brompton Waterworks
Co
v. Cole . • •
v. Smith ....
Young & Co. v. Mayor of Leam-
ington Spa . . . • •
Ystalifera Gas Co.
209
230
761*
731
412,
600
412
394
157,
996
705
191
265
573
488
223
457
Zulueta's claim
171, 206, 723
lxix )
STATUTES REFERRED TO.
PAGE
PAGE
33 Hen. 8, c. 27 . . . . 315
7 Wm. 4 & 1 Vict. c. 71
21 Jac. l,c. 16 . . . . 723
5
j 20
.
100, 437
29 Car. 2, c. 3, § 4 and § 17 . 228, 453
21
. ioo
, 101,
256, 290
6 Geo. 1, c. 18, § 18 . . 130, 320
22
270
6 Geo. 1, c. 91 . . . . 130
23
270
7 Geo. 2, c. 8 . . . .488
24
101,
255, 257,
21 & 22 Geo. 3, c. 46 (Irish) . . 5, 8
290
39 & 40 Geo. 3, c. 28, § 15 . . 136
25
. 270
4 Geo. 4, c. 76, § 16 . . . 172
26
100
5 Geo. 4, c. 114 ... 3
27
100
6 Geo. 4, c. 42, § 10 . . . 137
29
97, 252
6 Geo. 4, c. 91, § 2 . . 3, 99, 252
32
99, 100
7 Geo. 4, c. 46 . . . . 4, 93
1 & 2 Vict.
c. 96
268
See, in Index, Com-
§4 .
. 458
panies governed by
1 & 2 Vict.
c. 106
, §§ 29,
31 .
36
7 Geo. 4, c. 46
1 & 2 Vict.
c. 110
460, 463, 848
§ 4 . 109, 269, 282, 285,
§ H
. 6
, 9, 461
286
15
461
5 . 109, 110
16
462
6 . . . . 109
17
725
11 ... 252
18
725
12 . . . . 252
3 & 4 Vict.
c, 11
268
13 252, 257, 285, 286
3 & 4 Vict.
c. 82,
§i
461
14 . . . 379, 380
4 Vict. c. 14
36
9 Geo. 4, c. 14, § 6 . 207, 217, 285
4 & 5 Vict.
c. 45,
§17' .
623
1 AVm. 4, c. 66 . . . . 66
5 Vict. c. 5
§4 .
. 6, 4
60, 463
3 & 4 Wm. 4, c. 42, § 28 and
7 & 8 Vict.
c. 32,
§§ 1, 8-
-11, 23
§29 . . 725
29
! 136
3 & 4 Wm. 4, c. 83, § 2 . . 136
7 & 8 Vict.
c. 85,
§19
188
3 & 4 Wm. 4, c. 98, § 2 . . 136
7 & 8 Vict.
c._ 110
4 & 5 Wm. 4, c. 94 . 4, 99, 252
See,
in the Index
, Com
6 & 7 Wm. 4, c. 32 . . . 918
panies governed
by7&*
\
7 Wm. 4 & 1 Vict. c. 73
Vict. c.
110
See, in the Index, Com-
§3
43, 44
panies governed by 7
7
4
Wm. 4 & 1 Vict. c. 73
23
148
§1 . . . .266
25
. 1
48, 253
2 . . . . 101
26
4
87, 488
3 . . 101, 270
29
. 3
28, 382
4 101, 252
30
3
00, 336
5 . . . .100
44
225
6 43, 93, 100, 282, 290
45
225
7 . . . . 100
46
225
8 . . . 100, 101
50
43
9 . . . 100, 101
54
467
10 . 43, 93, 100
66
257
13 100, 270
67
380
17 . . . .100
7 & 8 Vict. c. 11
5, 611,
612, 6
17, 620
18 . . . . 100
901
lxx
STATUTES REFERRED TO.
7 & 8 Vict. c. 113 . .
See, in the index, Com-
panies governed by 7 & 8
Vict. c. nr
§1 •
5
7 .
10
14 .
22
23 .
31
37 .
8 & 9 Vict. c. 16
See, in the Index, Com
panies governed by 8 & 9
Vict. c. 16
§3 .
6
7 .
PAGE
109, 138
410
253
257
380
225
467
412
529
9
10
11
12
14
15
104, 538
. . 103
451
104, 293, 438
103, 282, 333
103, 282, 333
. . 103
. . 103
108, 467, 538
108
16 and Sched. B. 108, 458,
466
293,
468, 488, 538
538
438, 478, 538
399, 420, 426
399, 418, 420
. 414
. . 400
399, 414
. 425, 427
425, 427
. 103, 427
99, 408, 425, 529
. . 529
333, 529
. 333, 529
529
. . 529
529
106, 252, 257, 282, 291,
292, 294, 901
. . 380
188, 194, 203,
332, 399
. 194, 333
194
. . 194
194, 438
50 . • . . 194
51 . . • -194
53 . • . . 195
54 . . • -195
56-58 . . . . 399
61 . • • .399
62-65 . . . . 400
63 . . • .333
65 . • . . 146
66 . . • .330
67 ... 331
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38 et seq.
45
46
47
& 9 Vict. c. 16
§68
69
70
71
72
73
74 .
75
76 .
77
78 .
79
80 .
81-100
83 .
84
85 .
86 .
87
90
91
92
93
94
95
96
97
98
99
100 .
101
101-114
102-108
104 .
108
109 .
110
111 .
112
113 .
114
116 .
117
118 .
119
120 .
121
122 .
123
124 .
128-134
136
138 .
161
Sched. B
9 & 10 Vict, c 28
10 Vict. c. 75 .
11 & 12 Arict. c. 45
§2
3 .
9
10 .
12
16 .
PAGE
. 330
. 331
331, 601
331
331
331
331
331
332
332
332
327
332
309
309, 328
328
332
329, 332, 408
329, 332, 438
. 329
. 329
. 329
226, 329
329
226, 228, 329
. 330
330
. 330
. 332
441
' 332
442
330
330
330
• 330
. 330
441
332, 441
441
. 333, 441
. . 434, 438
414, 432, 438
438
. . 438
332
883
418
331
333
See%
16.
. 5, 901
. 114
. 5, 611
. 619
745, 750
662
. 656
642
. 681
STATUTES REFERRED TO.
Ixxi
11 k 12 Vict. c. 45
PAGE
PAGE
§29 ...
705
24 & 25 Vict. c. 96 .
. . 88
30 .
. 705
§75 .
. 446
39
809
81-84
. . 9
50 .
263, 705
84-87 .
51
. 705
82 .
. . 446
61 . . .
. 858
83 .
. 446
66
. 693
84 .
. . 446
67 . . .
. 693
85 .
447
76
. 832
24 k 25 Vict. c. 98, § 23
. . 66
127 .
623
24 & 25 Vict. c. 134, § 150 et se(/. 555
Form 2 in schedule
. 684
25 k 26 Vict. c. 87 .6
263, 293, 619
12 k 13 Vict. c. 108
. 5, 611
§17 .
. . 614
§1 . .
S19, 670
25 k 26 Vict. c. 89 .
. 933
16 . . .
684
The Companies
act, 1862.
26
. 746
See the act in the Appendix,
32
746
and see the Index, No. 1,
40 . . .
. 623
and also " Comj
lanies go-
13 k 14 Vict. c. 43 . .
. 616
verned by the act of 1862 ' '
13 k 14 Vict. c. 60
in the General Index.
§2 .
. 457
26 k 27 Vict. c. 87, § 14
. 721
5
40
26 k 27 Vict. c. 92
13 & 14 Vict. c. 83 .
. 6, 618
§37 .
. . 891
§§ 1, 2-29 .
901-903
43 .
. 264
§§ 31, 35, 36
903
26 & 27 Vict. c. 118 7,
103, 196, 198,
16 & 17 Vict. c. 70
400
§§ 2, 116, 120, 12£
»
§4 .
. . 530
140-144
40
6-8
. 530
141 ...
467
9
. . 525
142 .
. 467
10 .
525, 530
17 & 18 Vict. c. 25 . . 268, 293
11
. . 530
17 & 18 Vict. c. 82 .
616
14 .
435
17 & 18 Vict. c. 104, § 18
36
21
. 396, 399
17 & 18 Vict. c. 125, § 68 . 280, 603
22 .
188, 203
18 & 19 Vict. c. 32
23-35 .
. . 188
§4 . . .
. 114
28 .
. 333
22 . . .
. 325
Part III. .
. . 198
18 & 19 Vict. c. 133
. 5, 127
27 & 28 Vict. c. 19 .
199, 229
19 & 20 Vict, c 47 .6, 128, 255, 797
27 k 28 Vict. c. 32
. 266, 268
See, in the Index, Com
.
27 & 28 Vict. c. 121, § 3 et
seq. 146, 400
panies governed by the
28 k 29 Vict. c. 78
. . 204
acts of 1856-8
§3 .
334, 343
§19 ...
45, 129
6-11 .
. . 339
20 .
129
21 .
. 339
25
. 755
23
. . 339
41 225, 228
27 .
. 339
62 ...
. 257
31-33 .
. . 339
Table B. .
45, 129
29 & 30. Vict. c. 108 .
188, 195, 196,
20 k 21 Vict. c. 14
6
442
§3 . . .
. 135
30 Vict. c. 23
. . 761
26-27 .
114
30 Vict. c. 29 . 468, 491,
501, 505, 511
20 & 21 Vict. c. 49
§ 1
. 489, 784
§ 4 . . . 114, 138
30 & 31 Vict. c. 38
363
5 . . 114, 135, 138
30 k 31 Vict. c. 68
. . 712
12 .
138
30 & 31 Vict. c. 47 and 131 . 6. 666
20 & 21 Vict. c. 78 611, 612, 710,
30 & 31 Vict. c. 127
196, 901, 904
850
§3 .
905
§1 . . .
671
4
. 195, 278
7 . . .
672
6 .
. 905
12 . . . t
19, 670
7
. . 905
13 .
670
8-14
905, 906
21 k 22 Vict. c. 60, § 17
742
16
. . 905
21 & 22 Vict. c. 78 .
612
17-19
906, 907
22 & 23 Vict. c. 59 .
184
22
. . 907
23 & 24 Vict. c. 28 .
488
27 .
396, 399, 400
23 k 24 Vict. c. 38, § 10
450
30
. . 441
23 & 24 Vict. c. 125, § 20 .
226
31 .
618, 902, 903
23 k 24 Vict. c. 126, § 33
279
32
. 902, 903
lxxii
STATUTES REFERRED TO.
PAGE
30 & 31 Vict. c. 131
The Companies act, 1867-
See the act in the Ap-
pendix, and the Index
No. 1
31 & 32 Vict. c. 68 . . . 882
32 & 33 Vict. c. 19 97, 615, 619, 654,
689
§3 . . . .325
4 . . . . 326
5 . . . 326, 419
6 . . . . 326
7 . . . .325
8 . . 326, 419, 687
9 . .94, 95, 325, 446
10 326, 408, 417, 419, 446
11 . • .412
12 396, 414
13 95, 265, 419, 425, 426,
427, 559, 565
14 . . 96, 326, 466
15 96, 326
16 . . . 326, 529
16-23 . . .94, 326
21-23 . . .524
24 278, 326
25 . . . 95, 819
32 . . . . 699
33 . . • .701
35 . 96, 326, 465, 825
36 . . • .278
32 & 33 Vict. c. 46 . . 426, 537
32 & 33 Vict. c. 48 . 7, 103, 198, 400
§ 1 . . . 188, 203
5 . . . 396, 399
6 . . . 396, 399
7 . . . 396, 399
32 k 33 Vict. c. 62
§ 4 . . • 462, 696
23 . . • .556
24 . • . . 556
31 . • • .556
32 & 33 Vict. c. 71, § 87 - 678
32 & 33 Vict. c. 96, § 14 . . 458
32 & 33 Vict. c. 114 . . . 901
§ 4 . . 618, 630, 903
§§ 8-10 . . • 902, 903
33 Vict. c. 14 . . • • 36
33 & 34 Vict. c. 20 . . 204, 334
§ 3 et seq. . . 339, 343
33 & 34 Vict. c. 23
§§ 6-10, 12, 21, 30 . 38
33 & 34 Arict. c. 35 . 546, 547, 681
s f\ 9
33 & 34 Vict. c. 61 . 184, 441,
445, 700
§2 . . • -625
14 . . 250, 261, 898
15 . . . .898
21 . . 621, 625, 631,
634, 661
22 . 621, 634, 635, 717
33 & 34 Vict. c. 97 . . .469
§ 3 . 14, 66, 97, 310
69 . . . .469
102, pi. 1 • • • 310
pi. 3 . . . 310
33 & 34 Vict. c. 97
§112 . . • • 920
Sch. Title Conveyance 310
33 & 34 Vict. c. 104 . . 6, 1027
§2
34 Vict. c. 4
34 & 35 Vict. c. 31
34 & 35 Vict. c. 58
35 & 36 Vict. c. 41
§4 .
5
7 .
1st Sch.
2nd .
36 & 37 Vict. c. 66
§5
711
310
115, 917
184, 445
. 184, 445
625, 643, 665, 702
. 634, 733
. 260
. . 733
. 734
[Judicature
Act, 1873]
615
699
676
596, 602, 603, 740
§ IS (3)
24, cl.
25 (8)
26, cl. 6
34 .
49
37 & 38 Vict. c. 35 .
37 & 38 Vict. c. 41
§7 . • • •
37 & 38 Vict. c. 42
Building Societies act,
1874. See Appendix
918 et seq., and also
699
266
918
§4
32
614, 615
614, 615, 619, 627,
638, 887
43 . . • 189, 196
37 & 38 Vict. c. 50 . . . 42
37 & 38 Vict. c. 62 . . . 39
37 & 38 Vict. c. 96 . . . 136
38 Vict. c. 9 . . . .918
38 Vict. c. 39 . . ■ ■ 189
38 & 39 Vict. c. 31 - . . 278
3S & 39 Vict. c. 55
§§ 173, 174 . . . 223
211 .. . 681
38 & 39 Vict. c. 60, § 10 . 201, 918
38 & 39 Vict. c. 66 . . 7, 103, 188
38 & 39 Vict. c. 77 [Judicature
act, 1875]
§ 10 . 678, 681, 685, 716,
719, 725, 726, 738, 739, 742, 858
39 Vict. c. 6, § 2 . . .761
39 Vict. c. 29 . . . • 515
39 & 40 Vict. c. 45
Appendix pp. 915* — 917.
See also as to
§4 .
§10
§11 ■
§12
§17 .
40 & 41 Vict. c. 26
(Companies act,
See the Appendix
40 & 41 Vict. c. 63 .
42 & 43 Vict. c. 76
42 & 43 Vict. c. 76
(Companies act, 1879)
See the Appendix
43 Vict. c. 14, § 8
. 293, 614
. 221
. . 266
43
614, 615, 619
1877)
. . 1028
918, 918, 920
6
1030
915
STATUTES REFERRED TO.
lxxiii
43 Vict. c. 19
(Companies act, 1880)
See Appendix
41 k 45 Vict. c. 59
§4 .
44 k 45 Vict. c. 59, § 4 and r. 74
45 & 46 Vict, c 43
§17
45 k 46 Vict. c. 61
1032
818
662
685
. 198, 203
185, 186, 230, 267,
559, 740
45 k 46 Vict. c. 75
§§ 1 and 6 to 9, 41, 42, 428,
436, 437, 549, 809
§§ 13, 14. . 42, 808, 809
§17
46 & 47 Vict. c. 28
(Companies act, 1883)
See Appendix .
46 k 47 Vict. c. 30
(Companies'
Register act)
See Appendix
46 & 47 Vict. c. 39
46 k 47 Vict. c. 47.
46 & 47 Vict. c. 49
46 k 47 Vict. c. 52
§6.
§§ 23 k 24
31
37
42
1035
Colonial
. . 1035
. 903
. . 915
279, 2S0, 603
40
43
44
45
46
48
50
54
55
. 550
. . 556
556
426, 554, 556, 557,
558, 815, 816
. 721
. 550, 557
454, 550, 551, 557
. 461, 678
. . 678
. 668
. 552, 557
550, 557
426, 553, 554, 556,
557, 558, 815, 816
46 & 47 Vict. c. 52
§92
123 .
148
164 .
168.
41
c. 43
c. 56
454,
97, 441,
47 & 48 Vict.
47 & 48 Vict.
47 k 48 Vict
49 Vict. c. 23
(Companies act, 1886)
See Appendix
50 k 51 Vict. c. 43
§ 2
3 .
4
6 .
9&10
13 .
14
19 .
21
22 . 326, 524,
23 & 24 94, 325,
25 & 26 325,
27 . . 323,
28
32 .
51 Vict. c. 8
§11 •
12, 13, 14
16
17 .
51 & 52 Vict. c. 42, §§ 4 & 10
51 & 52 Vict. c. 48.
51 & 52 Vict. c. 51
51 k 52 Vict. c. 59, § 8 .
51 & 52 Vict. c. 62 . 681,
. 616
610
264, 550
. 668
550, 720
918, 921
103, 915
. 4, 97
. 1037
654, 689
. 325
325, 615
278, 718
293, 294
719
325, 709
. 718
203
326, 525
816, 840
446, 448
326, 446
327, 899
615, 619
. 325
117, 401
. 469
. 469
469, 490
. 451
332
. 282
. 374
717, 718
RULES OF SUPREME COURT, 1883.
Order IX. r. 8 .
Order XI.
Order XVI.
r. 9
r. 11
r. 14 .
r. 15
r. 48 .
Order XXII. r. 17
Order XXXI.
rr. 1 & 5
r. 12
Order XL1I.
r. 10 .
r. 23
PAGE
. 264
911
. 268
. 569
268, 271
271
. 483
. 450
265, 594
. 595
293
281, 282, 286, 289, 291,
292, 293
Order XLII.
r. 31
r. 32 et seq.
Order XLV. .
r. 1
Order XLVI. .
r. 1
Order XLIX. r. 5 .
Order LI. r. 2a .
Order LIII. rr. 1—4
Order LVIII.
r. 4
rr. 9 & 15
Order LXI .
Order LXV. r. 6 .
PAGK
279
282
849
. 697
460, 464
461, 84S
. 675
. 675
280, 603
699
662, 698
. 864
264, 661
L.C.
( lxxiv )
ABBKEVIATIONS.
The following abbreviations frequently occur in the present work :—
R. S. C. = Rules of the Supreme Court, 1883, and subsequent rules.
Bank. Rules = The Bankruptcy Rules, 1886, and subsequent rules.
Buckley = The Law and Practice under the Companies Acts, 1862-1886, by
H. Burton Buckley, Q.C. 5th edition. London, 1887.
Part. - A Treatise on the Law of Partnership, by the authors of the present
work. 5th edition. London, 1888.
( lxxv )
ADDITIONS AND CORRECTIONS.
Pages
72, 73, and\
88-90 . J
93.
113, note («).
123, note (to).
184, line 7.
186, note (b).
217, note {q).
229, note (y).
263.
266, note («).
267, note (g).
302.
431, note («).
464, note (i).
659, note (6).
669.
738, note (h).
785, note (A).
/V-/. v. Ar,-//, 37 Ch. D. 541, is under appeal in the House of
Lords.
Life assurance companies fall under one or other of the Class**
2, 3, and 1, unless they are merely large partnerships, which
is seldom, if ever, the rase. Thev are, however, governed by
the Acts 33 & 34 Vict. c. 61, and" 35 & 36 Vict. c. 41, which
will be found in Appendix VII., pp. 1095 and 1103. These
statutes ought to have been noticed in the introductory obser-
vations in Bk. I. c. 4.
Add Outlay Assuranc: Society, 34 Ch. D. 479.
Railway Times Tab < Publishing Co. overruled. W. N. 1889
p. 77.
Add Export* Smith, 39 Ch. D. 546.
For insurance companies, read Life insurance companies.
For Bk. III. c. 2, § i read c. 1, § 3, p. 323.
British Mutual Banking Co. v. Chamu-ood Forest Rail. Co.
observe that their
company had no p
stock certificates were for stock which the
>wer to issue ; being for stock in excess of
the amount which t be company had power to borrow.
The Companies seals ict, 1864, will be found in the Appendix of
Statutes, p. 1015.
Add Ex parte PoppleAn, 14 Q. B. D. 379
For Bk. III. c. 9, § 3
As to the removal of
Sea Fishing Co. v.
Lee v. Neufchatel Ast
read Bk. III. c. 9, § 1.
Add reference to Ban mrptcy Rules, 1886, r. 258, and cf. p. 549
and 550.
a managing director, see also Boston Deep
Ansell, 39 Ch. D. 339.
halte Co. is now reported 41 Ch. D. 1.
Add but the Court w 11 not grant a prerogative writ of mandamus
to compel registrs tion in such a case, see p. 603 and R. v.
Lambourn Valley Vail. Co., 22 Q. B. D. 463.
Criterion Col, I Mini/ g Co. is now reported 41 Ch. D. 146.
Transfers of shares, see p. 471 and p. 832.
For 37 & 38 Vict. c. 83, read 38 & 39 Vict. c. 77.
See also Jones, Lloxd <i- Co., Limited, 41 Ch. D. 159, where an
agreement to set-c ff against future calls a present liability of
the company to p;y cash was held within the section.
IXXV1 ADDITIONS AND CORRECTIONS.
ict., yeo
Page 902, note (i). For 14 k 15 Vict., bead 13 & 14 Vict.
,. 911 The following cases on income-tax payable by companies may be
useful for reference : —
Last v. London Assurance Corporation, 10 App. Ca. 438 ;
12 Q. B. D. 389 ; 14 Q. B. D. 239.
Ryhope Colliery Co. v. Fryer, 7 Q. B. D. 485.
R. v. Commissioners of Lncome-Tax, 20 Q. B. D. 549.
Lawless v. Sullivan, 6 App. Ca. 373.
.. 916, note (d). Add p. 921 before the reference to notes (c) and (d) in next
Appendix.
,, 929. Add 1886, 49 Vict. (c. 23, the Companies act, 1886.
THE
LAW OF COMPANIES.
INTRODUCTORY.
1. Nature of a company.
By a company is meant an association of many persons who Introductory.
contribute money or money's worth to a common stock and
employ it in some trade or business, and who share the profit
or loss (as the case may be) arising therefrom. The common
stock so contributed is denoted in money and is the capital of
the company. The persons who contribute it or to whom it
belongs are members. The proportion of capital to which
each member is entitled is his share. Shares are always trans-
ferable ; although the right to transfer them is often more or
less restricted.
A company which is neither incorporated nor privileged by Companies
A J i . compared witu
the Crown or the Legislature is substantially a partnership ; partnerships.
and although the transferability of its shares considerably
modifies the application to it of the ordinary law of partner-
ship, still the company, like an ordinary firm, is not in a legal
point of view distinguishable from the members composing
it (a).
A company which is incorporated, whether by charter,
special act of Parliament, or registration, is in a legal point
of view distinct from the persons composing it, and is therefore
regarded by lawyers somewhat as a firm is by non-lawyers. It
sues and is sued by a name of its own, and its continuous
existence is not affected by changes amongst its members.
(a) Part. 110 et seq.
L.C. B
2 LAW OF COMPANIES.
Introductory. A company which without being incorporated is privileged
to sue and be sued by the name of some public officer, is as it
were half-way between an incorporated and an unincorporated
company. So far as its privileges do not make a difference,
the company is a partnership ; and so far as its privileges
extend, it may without any great inaccuracy be likened to a
corporation ; for the main object of these privileges is to
confer upon the company a sort of continuous existence,
whatever changes may take place amongst the individual
shareholders.
Sketch of com-
pany law.
Progress of
joint-stock
companies.
2. Historical sketch of the law relating to companies.
By the common law of this country every association of
persons formed for the sake of sharing profits, is either a
partnership or a corporation ; and a company which is neither
a corporation nor a partnership, is a thing unknown to the
common law of England (b). It has even been said that a
large partnership, the shares in which are transferable without
the assent of all the members, is illegal at common law ; and
although the better opinion is that this is not so (c), still the
courts treat as illegal any association for profit which attempts
to arrogate to itself the privileges of a body corporate (d).
But within the last century associations unknown to the
common law have struggled into existence, and after much
opposition have become legal. These are commonly called
companies, or more accurateky joint- stock companies.
When unincorporated companies, with a joint-stock divided
into numerous transferable shares, began to assume import-
ance, and to force themselves upon the attention of the legis-
lative and judicial departments of the State, the reception they
met with was by no means encouraging. Owing to the then
established rules relating to parties to actions at law and suits
in equity, a joint-stock company could not practically sue its
(b) M'Intyre v. Con mil, 1 Sim.
X. S. 233. Cost-book mining com-
panies are partnerships governed by
special local laws.
(c) See Walbiirn v. Ingilby, 1 M.
& K. 76.
(</) Blundell v. Winsor, 8 Sim.
601. This subject will be examined
more fully hereafter.
INTRODUCTORY.
own debtors, nor could disputes between its members be tvru. m.t,,ky.
readily, if at all, adjusted. At tbe same time, the doctrine
tb.it each member was answerable for the whole of the debts
of the company was studiously promulgated and rigorously
enforced.
Under these circumstances, joint-stock companies were re- Regarded as
nuisauces.
garded as nuisances, and the first legislative enactment relating
to them (6 Geo. 1, c. 18, commonly called the Bubble act)
was an attempt to put them down altogether. This attempt
was simply futile ; and notwithstanding the Bubble act, joint-
stock companies increased both in number and importance.
It was not, however, until the end of the first quarter of the
present century, that the legislature began to retrace its steps.
In the year 1825 the Bubble act was repealed (e), and from Reaction.
that time to the present the legislature has endeavoured by
various means so to amend the law as to give free scope to
a combination of capital, and at the same time to prevent
injustice being clone either to or by its subscribers.
Even when the opposition which joint-stock companies had Charters,
to encounter was greatest, they could always apply to the
Crown for a charter of incorporation. Whether a charter
would be granted, depended mainly on the opinion which the
officers of the Crown entertained of the proposed objects and
constitution of the company. If a charter was granted, the
company became a corporation for all intents and purposes ;
and with this amongst other results, viz., that the members
of the company were rendered personally irresponsible for its
debts. At common law, the Crown had no power to grant
charters of incorporation, and also to declare that the persons
incorporated by them should be subject to the same liabilities
as members of unincorporated societies.
But in 1825 an act was passed, empowering the Crown to 6 Geo. 4, c. 01.
grant charters of incorporation, and at the same time to
declare that the persons incorporated should be personally
liable for the debts of the body corporate (/). This act was, 4 & 5 ffm. 4,
c 94
m the year 1834, followed by another, enabling the Crown,
0) 6 Geo. 4, c. 91. The 2nd 114.
section of the Bubble act had been (/) 6 Geo. 4, c. 91, § 2.
previously repealed by 5 Geo. 4, c.
j; 2
4 LAW OF COMPANIES.
Introductory, without incorporating a company at all, to confer upon it by
means of letters patent, certain privileges, and especially the
privilege of suing and being sued in the name of a public
7 Wm. 4 & officer {()). Both these acts have since been repealed, but
the powers conferred upon the Crown by the act of 1834,
are still exercisable under the provisions of the repealing
act (h).
Special acts of If a charter could not be obtained from the Crown, a com-
pany which desired to be legally recognised as such was
compelled to apply to Parliament for a special act of its own.
The act usually sought to be obtained was either an act incor-
porating the company, or an act which, without incorporating
it, authorised it to sue and be sued by its secretary, or some
other officer.
Acts incorporating companies were sometimes silent as to
the liabilities of their members, and in that case, they were
not to any extent responsible for the debts of the incorporated
company. But other incorporating acts rendered the members
of the company liable for its debts to the extent of their
respective shares of the nominal capital of the company, or of
so much thereof as might not have been paid up.
Acts which did not incorporate companies, but merely em-
powered them to sue and be sued, invariably, it is believed,
contained clauses rendering the shareholders liable for the
debts of the company to the fullest extent.
Until the year 1826, there was no method by which a com-
pany could acquire any of the privileges of a corporation, or
the power of suing and being sued by a public officer, except
by means of a special application to the Crown or to Parlia-
7 Geo. 4, c 46. ment. But in 1826 a general act was passed enabling joint-
stock banking companies to obtain the power of suing and
being sued in the name of a public officer, by simply comply-
ing with certain specified conditions, and making certain re-
7 & 8 Yict. turns to the stamp office (/). And in the year 1814, another
general act was passed, enabling all companies (with some
exceptions) to obtain from an office in London a certificate of
(g) 4 & 5 Wm. 4, c. 94. 47 & 48 Vict. c. 5G, § 1.
(h) 7 Wm. 4 & 1 Yiet. c. 73, and (i) 7 Geo. 4, c. 46.
INTRODU< rORY.
incorporation without applying either for a charter, or for an Ihthoductory.
act of Parliament (A;). But, what is not a little remarkable 7 & 8 Vict,
is, in this very same year, 1841, the legislature retraced its c' l13'
steps as regards banking companies, and compelled banking
companies formed after May, 1844, to apply to the Crown
for incorporation. This the Crown was empowered to grant,
without however limiting the liability of the shareholders (I).
As regards liability to creditors, companies formed under these Limited
acts were essentially partnerships. Their members were liable lbbilit;'-
to their last farthing for the debts of the companies ; only before
recourse for payment of such debts could be had against an
individual member, it was necessary for the creditors to show
that they could not obtain payment from the company to
which that member belonged. Companies which desired
limited liability in any other sense than this, were still obliged
to procure a charier from the Crown, or a special act of Par-
liament, and it was not until the year 1855 (>») that the law in
this respect was altered. In that year, however, an act was is & 19 Vict,
passed enabling companies registered under the general act of0' 133,
1844 (other than insurance companies), to obtain a certificate
of incorporation with limited liability (//).
None of these acts provided for the dissolution and winding Winding up
up of companies. The first act upon this subject was passed acts"
in 1844, and it declared what were to be deemed acts of bank- c. lit. 1V '
ruptcy in the case of joint-stock companies, and how bankrupt
companies were to be wound up for the benefit of their credi-
tors (o). In the year 1840 an act was passed for winding up 9 k 10 Vict,
railway companies projected before July, 1846, and not incor- °' 28'
porated by act of Parliament (p). In 1848 and 1849, two 11 & 12 Vict. c.
statutes were passed enabling joint-stock companies generally v^ta°d Jo* 13
to be dissolved and wound up in equity without the necessity
of a bill to which all the shareholders must have been par-
ties (q). The following year, 1S50, produced another act for 13 & U Vict.
C. b'<i.
(k) 7 & 8 Viet. c. 110. partnerships with limited liability
(/) 7 & 8 Vict. c. 113. („) 18 & 19 Vict. c. 133.
(m) Long before this, however, (o) 7 & 8 Vict. c. 111.
the Parliament of Ireland had (p) 9 & 10 Vict. c. 28.
passed an act (21 & 22 Geo. 3, c. (q) 11 & 12 Vict. c. 45, and 12
46), authorising the formation of & 13 Vict. c. 108.
6
LAW OF COMPANIES.
Introductory, winding up railway companies incorporated by special acts of
their own (r) .
Acts of 1856-7. A rapid sketch has now been given of the progress of joint-
stock company legislation down to the year 1856. In 1856
and 1857 acts (s) were passed, repealing more or less nearly
all the acts which have been noticed, consolidating what were
supposed to be their most valuable provisions, and introducing
Act of 1862. extensive alterations of an entirely new character. These
acts, however, were themselves repealed by the Companies act,
1862 (t), which is now the principal statute relating to joint-
stock companies, and will be found printed in the appendix at
the end of this treatise. In the same year, 1862, a very im-
portant statute was passed relating to industrial and provident
societies (u), and placing them on much the same footing as
limited joint-stock companies.
In addition to the statutes which have been referred to
already, there was an important act passed in the year 1838,
enabling separate creditors of shareholders in public companies
to obtain an order charging their debtors' shares, whereby
payment of their debts can be obtained without the interven-
tion of a sheriff and a seizure by him of the property of the
company (a?) ; and in the year 1841 another act was passed,
enabling the Court of Chanceiy, on a summary application, to
restrain any public company from allowing any specified share-
holder to transfer his shares or to receive dividends in respect
of them {y).
8 & 9 Vict. c. 16. The year 1845 produced three statutes incorporating clauses
usually inserted in special acts of Parliament relating to rail-
way and other companies which interfere with private property;
and of these statutes, one, viz., the Companies clauses con-
solidation act {z) , forms an important part of the law to which
this treatise relates.
Other statutes
1 & 2 Vict,
c. 110.
5 Vict c. 5.
(r) 13 & 14 Vict. c. 83.
(s) 19 & 20 Vict. c. 47, and 20 &
21 Vict. c. 14.
(t) 25 & 26 Vict. c. 89, amended
by 30 & 31 Vict. c. 47, and c. 131 ;
33 & 34 Vict. c. 104 ; 40 & 41 Vict,
c. 26 ; 42 & 43 Vict. c. 76 ; 43 Vict,
r. 19 ; 46 & 47 Vict. c. 28, and c. 30;
and 49 Vict, c. 23.
(w) 25 & 26 Vict. c. 87, repealed
by 39 & 40 Vict. c. 45. A note on
these societies will be found in the
appendix.
(z) 1 & 2 Vict. c. 110, § 14 et seq.
(y) 5 Vict. c. 5, § 4.
(z) 8 & 9 Vict, c. 16, amended by
INTRODUCTORY. 1
111 1865, after a long and arduous struggle, an act (Bovill's [hteodwotort.
act) was passed extending the principle of limited liability to 28 & 29 Vict.
large classes of persons previously excluded from it, and
enabling them to lend their money and render their services in
consideration of a share of profits, without thereby exposing
themselves to indefinite Losses. This act is discussed in the
volume relating to Partnerships.
The criminal law applicable to partners and directors, with
respect to thefts, embezzlements, fraudulent accounts, and
statements, was amended in 18C>1 and 1808 ; and within the
last few years important arts have been passed relating to
Cost-book mining companies and Life insurance companies.
In the appendix will be found a chronological list of the
statutes relating to companies so far as they fall within the
scope of this work, and also a table showing which of these
statutes are now in force.
3. Different sort* of companies.
Associations of persons having gain for their object, will be Different Borts
r if r- of partnerships
found to belong to one or other of the following classes, and companies.
viz. : —
1. Partnerships in the proper sense of the word. Partnerships.
2. Partnerships with more members than usual, and with Lir— partner-
ships,
transferable shares. To this class belong all joint-stock com-
panies which do not belong to one or other of the classes
following.
3. Partnerships governed by certain local customs which Partner-hips
iii i t • -i governed by
exclude those laws, applicable to partnerships generally, with local customs.
which the customs are inconsistent. To this class belong
Cost-book mining companies.
4. Partnerships privileged by the Crown or the legislature Partnerships
, empowered t.>
to sue and be sued by a public officer. These companies are sue and be sued,
sometimes said to be quasi incorporated ; they include joint-
stock banking companies, governed by the act of 7 Geo. 4,
c. 46, joint-stock companies governed by the Letters Patent
26 & 27 Vict. c. 118 ; 32 & 33 Vict. c. 48 ; 38 & 39 Vict. c. 66 ; and by
47 & 48 Vict, c, 43.
LAW OF COMPANIES.
Corporators
proper.
Incorporated
companies.
Introductory. act of 7 Will. 4 & 1 Yict. c. 73, and a number of insurance
and other companies governed by special acts of their own.
5. Corporations in the proper sense of the term, the mem-
bers of which are to no extent liable to the debts of the body
corporate. These must be created either by royal charter or
by act of Parliament, and to them the law of ordinary partner-
ships has little, if any, application.
6. Partnerships incorporated by royal charter or act of
Parliament, but so nevertheless, as to leave their members
more or less liable to the debts of the whole body. Com-
panies governed by the Companies clauses consolidation act
are, and banking companies governed by the repealed act of
7 & 8 Yict. c. 113, were, types of this class.
7. Partnerships incorporated by registration. These con-
stitute the great mass of joint-stock companies, and are of
two sorts, according as the liability of the members for the
debts of the body corporate is unlimited, or limited.
The first sort included all joint-stock companies governed
by the repealed act of the 7 & 8 Vict. c. 110, and it includes
all unlimited companies registered under the acts of 1856-8, or
under the Companies act, 1862.
The second sort included those companies which availed
themselves of the short-lived act of the 18 & 19 Vict. c. 93,
and now includes all companies registered as limited com-
panies under the acts of 1856-8, or under the Companies act,
1862(a).
Limited liability companies again are of two sorts, viz.,
1, those in which the liability of the members is limited by the
amount of their shares; and 2, those in which the liability of
the members is limited by guarantee ; i.e., by the amount they
have respectively undertaken to pay in the event of a con-
tribution becoming necessary in order to discharge the liabi-
lities of the company (b). Companies limited by guarantee
may have their capitals divided into shares or not (c), and are
supposed to admit of greater varieties of internal organisation
Registered
companies.
UiilimitcJ.
Limited.
(«) To this class also belonged
Irish anonymous partnerships, go-
verned by 21 & 22 Geo. 3, c. 4G
(Irish), repealed by the Companies
act, 1862.
(b) 25 & 26 Yict. c. 80, § 7.
(c) lb. § 14.
INTRODUCTORY. Q
than companies limited by shares. The latter, however, are Ihtkoductobt.
much the more numerous.
The following table conveniently exhibits the above class
of companies.
Large Partnerships.
r<>.st-I5<>ok Mining ( Companies.
inking ( !ompanies
verned by 7 Geo. 4,
c. 46.
/ Unincor-
porated,
viz.
Joint Stock
Companies
( lompanies empowered
to sue and lie sued
by a public officer,
including
Companies governed by
t!ic Letters Patenl Acl
(7 Wm. 4&1 Vict. c. 73).
' !ompanies having special
Acts of their own.
Incorpor-
ated by
'Special Act of Parliament, e.g., Railway, ('anal,
Dock, and Waterworks Companies.
In which the members are not lia-
ble to the debts of the company.
Royal Charter
Registration
In which the members are liable
to the debts of the company.
'Without limited liability.
limited by shares.
limited by guarantee.
With
limited
liability
For some purposes, and particularly in order properly to Public com-
interpret certain statutes (</), it is necessary to distinguish panies'
public companies from others. But in this, as in many other
instances, the word public is used with no definite significa-
tion ; and it is extremely difficult to say exactly what the
essential character of a public company really is. It has,
however, been decided that banking companies, governed by
the 7 Geo. 4, c. 46, are public companies within the meaning
of the statute 1 & 2 Vict. c. 110, s. 14 (c) ; and that an in-
surance company governed by a special act of its own was a
public company within the meaning of the Apportionment act
(d) The statutes here referred to members of companies ; 33 & 34
are : 1 & 2 Vict. c. 110, § 14, relating
to executions against shareholders
for their separate debts ; 24 & 25
Vict. c. 96, §§ 81 to 84, relating to
frauds by directors, officers, and
Vict. c. 35, § 5, relating to the ap-
portionment of dividends.
(V) M'Intyre v. Connett, 1 Sim. N.
S. 225.
10 J.AW OF COMPANIES,
Introductory^ 0f iqjq ( /*). jt WOuld however seem that those companies
only are public which are either incorporated, or, if unincor-
porated, are endowed by the Crown or the legislature with some
special privileges, and are bound to make some kind of return
or list of their officers or members which the public have a
right to see. A mere partnership, however large and however
transferable its shares, is apparently not a public company (g).
Companies not Companies formed for merely scientific, literary, artistic, or
charitable purposes, and not with any view to the acquisi-
tion of gain or the avoidance of loss by themselves or their
members do not fall within the scope of this treatise, which
is confined to companies formed for the purpose of acquiring
and dividing profit in some form or other, or, as in the case of
mutual insurance companies, of avoiding loss.
Owing to the course legislation has taken and to the classes
into which companies must be divided if confusion is to be
avoided, it is absolutely necessary to consider companies not
only with reference to general principles more or less applicable
to them all, but also particularly with reference to the statutes
applicable to their several sorts, viz. : —
1. The Banking act of 7 Geo. 4, c. 46.
2. The Letters Patent act, 7 Win. 4 & 1 Vict. c. 73.
3. The Companies clauses consolidation act, 8 & 9 Vict.
c. 16.
4. The Companies act, 186*2.
(/) Can v. Griffith, 12 Ch. D. (g) See the last two ca-'jes, and
655. Jones v. Ogle, 8 Ch. 192.
FORMATION OF COMPANIES. 11
BOOK I.
OF THE FORMATION OF COMPANIES AND OF THE
ALLOTMENT OF SHAKES.
General observations.
A company, so far as it is only a partnership consisting of a Book I.
large number of persons having a joint stock, and associated Companies as
for the purpose of sharing profits, is formed in precisely the fronTpartn •'-■-
same manner as any other partnership, viz., by agreement ; sl"p'-
and after what has been stated in the volume on Partnership,
it is unnecessary to dwell upon the formation of those com-
panies which, being unincorporated and subject to no statutory
provisions have nothing to distinguish them from societies the
nature and formation of which have been explained in that
volume.
With respect to other companies, an agreement to share Agreement the
c, .11 • i , , basis of com-
prohts or to take shares is more or less remotely the basis of pmies.
them all.
Indeed, except where a person is made a member of a com-
pany by some act of Parliament which there is no gainsaying,
it may be safely laid down that no person can become an
original member (a) of a company in the absence of some agree-
ment, express or implied, between himself and the company ;
and further that every person who has agreed with a company
to become a member of it can compel the company to do what
is necessary to constitute him a member ; and can on the
other hand be himself compelled to do what is necessary to
become a member, or to submit to the completion by the com-
pany of those formal acts, e.g., registration, which may be
necessary to make him, in point of law, a member of it.
What is necessary to constitute a binding agreement with a
(n) Members by transfer from other members are not here referred tc.
12
FORMATION OF COMPANIES.
Book I. company to become a member of it, is determined by the
general law of contracts as applied to the'company in question ;
and what is necessaiy to become an actual member of any
particular company depends upon the nature of that company,
i.e., upon its own regulations, or the statutory enactments
relating to it. Each inquiry involves some examination into the
nature of the company under consideration ; for contracts with
it depend for their validity on the authority of the persons who
enter into those contracts on behalf of the company ; and what
constitutes membership depends entirely on the kind of com-
pany which is spoken of. Both of these matters will be
examined hereafter.
Prospectus. Practically the great bulk of companies are formed as
follows. A few persons called promoters form a scheme by which
they sa%- money may be made but requiring considerable funds
for its realisation. To make their scheme known and to raise
the funds required, they publish a prospectus, setting forth the
nature of the scheme and the amount of Capital necessary to
cany it out, and inviting persons to become subscribers.
Sometimes the prospectus is issued before any company has any
legal existence ; at other times the promoters or their friends
do what is necessary to create the company as a legal body and
issue the prospectus after the company has been created. In
either case the prospectus is a very important document ; for on
the faith of it persons are intended to apply, and do in fact
apply, for shares in the company to be formed or already
formed as the case may be.
Promoters. The relation between the promoters of a company on the one
hand and the company and its members on the other is
extremely complex, and will be examined hereafter; but in
order to understand that relation it is necessary to explain the
mode in which companies are formed and the doctrines of
agenc}r as applied to them. These subjects will be dealt with
in Books I. and II. ; and the relation of promoters to their
companies will be discussed in Book III.
APPLICATION l-'OIt SUA, 13
CHAPTER I.
AGREEMENTS To TAKE SHARES.
SECTION I. -APPLICATIONS FOR AXD ALLOTMENT OF SHAKES.
Agreements to take shares in a company about to be formed I;L }■ ChaP- L
(or if technically formed already having its capital still unsub-
scribed), are usually enteredinto by an application for shares on
the one hand and by an acceptance of such application on the
other.
In practice, the application is generally a printed form of Application for
request, addressed to the secretary or directors of the company,
or to persons named by the projectors, and expressing an agree-
ment on the part of the applicant to take a certain number of
shares in the company, or such smaller number as may be
allotted to him. The form is signed by the applicant, and he
generally pays to the bankers of the company or projected
company a small deposit on each share applied for, and obtains
from the bankers a receipt for the payment. The payment is
usually made before or at the time when the application is
sent in.
The application for shares, in whatever form it is made, and Application for
shares revoked
whether accompanied by the payment of a deposit or not, is before allotment.
only an offer to take the shares applied for, and may, like any
other offer, be retracted before it has been accepted (a). Nor
is this right to revoke excluded by the insertion in the applica-
tion of words to the effect that the applicant agrees to accept
the shares applied for, or any less number that may be allotted
to him, and consents to be registered in respect of them; for
(a) Ritso's case, 4 Ch. D. 774, 1 Ex. 109. See, also, Chapman's
where the applicant was a director ; case, 2 Eq. 567 ; HeWs case, 4 Eq.
Gledhill's case, 3 De G. F. & J. 713 ; 9 ; Pentelows case, 4 Ch. 178 ; Slat-
Ramsgate Victoria Hotel Co. v. Monte- tery's case, 7 Ir. R. Eq. 243.
fiore, and Same v. Goldsmid, L. R.
14
FORMATION OF COMPANIES.
bk. I. Chap. 1.
Sect. 1.
Letter of allot-
ment.
Stamp.
Agreement
complete by
allotment and
notice.
such words themselves only amount to an offer and do not
constitute an agreement until the offer they express has been
accepted (b). But a revocation received after notice of accept-
ance has been posted is too late (c), even though the letter of
revocation is written and posted before the letter of application
is received (<l).
If the application for shares is acceded to, a letter of allot-
ment is usually sent to the applicant, informing him that so
many shares have been (or will be) allotted to him, and that a
certain sum, by way of deposit on each share, must be paid to
the bankers of the company.
A letter of allotment requires a pemry stamp (e).
In order that the application and acceptance may constitute
a binding agreement the acceptance must be by persons who
can bind the company (ee) ; and must be notified to the
applicant.
But, unless under special circumstances, notice of allotment
must be given to the applicant or his agent in order to bind
the allottee (/). Notice by post is sufficient (g), even if the
notice should fail to reach the allottee or his agent, either
owing to the default of the allottee (h) or to some casualty in
the post office establishment (i). It is not, however, necessary
to prove express formal notice of the allotment, it is sufficient
to show that the allottee in fact knew of it (k).
(b) See Ward's case, 10 Eq. 659, green's and Carrall's case, 3 Ch. 323.
and Best's case, 2 De G. J. & Sm.
650 ; Chapman's case, 2 Eq. 567.
(c) See Harris' case, 7 Ch. 587.
(d) Byrne v. Van Tienhoven, 5 C.
P. D. 344 ; Stevenson v. McLean, 5
Q. B. D. 346.
(e) 33 & 34 Vict, c. 97, § 3. For-
merly this was not so. See Vollans
v. Fletcher, 1 Ex. 20 ; Moore v. Gar-
wood, 4 ib. 681.
(ee) Infra, Bk. ii. c 2, and Ex
parte Smith, 39 Ch. T). 546.
(/) Gunn's case, 3 Ch. 40 ; Robin-
son's case, 4 ib. 322 ; Wallis's case,
ib. 325, note ; Ilebbs's case, 4 Eq. 9 ;
Shackleford's case, 1 Ch. 567; Ward's
case, 10 Eq. 659, where the allottee
bad si "ned a blank transfer ; Said-
See, also, Pellatt's case, 2 Ch. 527 ;
Shackleford's case, 1 Ch. 567.
(g) Household Fire Insurance Co.
v. Grant, 4 Ex. D. 216 ; Harris's case,
7 Ch. 587 ; Wall's case, 15 Eq. 18.
(h) Townsend's case, 13 Eq. 148.
(i) Household Fire Insurance Co.
v. Grant, 4 Ex. D. 216 (overruling
on this point British and American
Tel, Co. v. Colson, L. B. 6 Ex. 108 ;
Reidpath's case, 11 Eq. 86) ; Harris'
case, 7 Ch. 587.
(/.•) Levita's case, 3 Ch. 36 ; Craw-
Iqi's case, 4 ib. 322. In both of these
the allottee had acted as a share-
holder. See also Richards v. Home
Assurance Association, L. B. 6 C.
P. 591, where the allottee became
ALLOTMENT OF SHARES. 1 5
Moreover, an applicant may dispense with notice of allot- Bk- J,- CuaP- ]-
• . i.
ment or preclude himself from objecting to its non-receipt (I).
Notice of allotment sent to the allottee to the address given
by him will be sufficient, although, owing to the insufficiency
of the address, the notice never reaches him (m).
If no time is fixed for the acceptance of the application, and Tilae forallot-
... . ""■■'it-
it is not accepted within a reasonable time, it will be considered
as having been declined (n). What is a reasonable time must
depend on the circumstances of each particular case ; and a
prudent applicant who does not receive an answer in what he
considers reasonable time, should revoke his application.
The acceptance by a company of the offer contained in an Acceptance
without allot-
application for shares may, it is conceived, be evidenced other- ment.
wise than by an actual allotment. Sometimes the offer by the
company precedes the application, so that the application is in
truth an acceptance of a prior offer ; and where this is the case
an allotment is not necessary to complete the contract, although
it may be necessary to constitute the applicant an actual share-
holder^). But allotment is the ordinary evidence of accept-
ance ; and where there has been no allotment, acceptance will
not be inferred from the mere facts that the applicant paid a
deposit on the shares at the time he applied for them ; that he
obtained a receipt for the amount of his deposit, and that the
money has not been returned to him (p) ; nor from the fact
that as a director he ought to have had shares (#).
manager. Compare Pellattfs case, 17 Sim. 163 ; Mathew's case, 3 De
•1 Ch. 527, where a demand for calls G. & Sm. 234. See, too, Onion's
was lield not notice. case, 1 Sim. N. S. 394 ; Conway's
(I) As in Bloxam's case, 33 Beav. case, 5 De G. & S. 150; Sharp and
529, aff. on appeal, 4 De G. J. & Sm. James's case, 1 De G. Mac. & G.
447. This case is regarded as 565 ; Ex parte Roberts, 1 Drew.
having turned on its own special 204
circumstances, and has not heen (o) See Adams' case, 13 Eq. 474,
followed. See the cases referred to where one company transferred its
above. See, also, as to directors, business to another ; Bird's case, 4
Harward's case, 13 Eq. 30 ; Leehe's De G. J. & Sm. 200.
case, 6 Ch. 469. (p) Best's case, 2 De G. J. & Sm.
(m) Townsend's case, 13 Eq. 148. 650. See, also, Ramsgate Victoria
(a) Ramsgate Hotel Co. v. Monte- Hotel Co. v. Montefiore, and Same v.
fiore, and Same v. Goldsmid, L. B. 1 Goldsmid, L. R. 1 Ex. 109.
Ex. 109 ; Ex parte Bailey, 3 Ch. 592, (q) See Chapman's case, 2 Eq. 567.
and 5 Eq. 428 ; Carmichael's case, Abercorn's case, 4 De G. F. & J. 78,
16 FORMATION OF COMPANIES.
Bk. I. Chap. l. In order that an application for shares and an acceptance
- of it (by allotment or otherwise) may constitute a concluded
Unconcluded .. , . .
agreements. agreement between the applicant and the company or its
directors, it is essential that the acceptance shall be in strict
conformity with the application, and not depart from it in any
material respect. If it does, the acceptance, even if in the
form of a letter of allotment, must be regarded as a new offer,
which the applicant for shares is at liberty to accept or decline ;
and there will be no concluded agreement until the new offer
has been accepted (/■). This has been decided where shares
were applied for and those allotted were " not transferable " (s);
so where the allotment was made subject to forfeiture on non-
compliance with certain conditions (t) ; so where 100 shares
were applied for and only 25 were allotted (u) ; so where 20/.
shares were applied for and 40/. shares were allotted (,r). So
where the secretary of a company wrote to a provisional com-
mittee-man to say that shares had been allotted to him, and
asking whether he would accept them ; and in answer, the
allottee requested that the shares in question might be "re-
served for him," an issue was directed to try the question
whether the answer amounted to an acceptance of the offer or
not (//). There are several other cases illustrating the same
principle, to which however it is unnecessary more particularly
to allude (z).
and others of that class noticed here- "where the new term was accepted
after under the head Contributories. by payment, and with PerreWs case,
(;•) See the next four notes, and 15 Eq. 230, where repudiation came
compare with them Harris case, 7 too late.
Ch. 587; Peek's case, 4 Ch. 532, (») Ex parte Roberts, 1 Drew. 204 ;
where the term as to payment was Re Barber, 15 Jur. 51. The common
held no qualification. form of application now in use, is
(s) Duke v. Andrews, 2 Ex. 290. for a certain number of shares, or
See, too, Wontner v. Shairp, 4 C. B. such smaller number as may be
404 ; Vollans v. Fletcher, 1 Ex. 20, allotted.
and compare Hutton v. Upfill, 2 H. (.<•) See Custard's case, 8 Ecp 438,
L. C. 674. where the bargain as to the 20/.
(t) Jackson v. Turquand, L. R. 4 shares was held binding, but there
H. L. 305, affirming AddineWs case, was no bargain for 401. shares.
1 Eq. 225 ; Oriental Inland Steam (?/) Onion's case, 1 Sim. N. S. 394.
Co. v. Briggs, 8 Jur. K. S. 801, and See, too, Mainivaring's case, 2 De G.
4 De G. F. & J. 191. Compare ]VJ.eK:0. 66.
these with Barrett's case, 2 Dr. & (:) See infra, book iv., under the
Sm. 415, and 3 De G. J. & Sm. 30, head Contributories.
APPLICATION FOR SHARES. 17
Moreover, in cases of this kind, the facts that shares have Ek- l- C,1RP- *•
. 1-
heen allotted to the applicant, and that he; has been registered -
in respect of them and has applied for certificates, do not
conclusively show an acceptance by him of the new terms (a).
Again, if an offer is made to take shares conditionally or Conditional
upon unusual terms, a clear acceptance of these conditions or
tonus must be proved in order to constitute a binding agree-
ment : and the mere fact that shares have been placed in the
applicant's name is not sufficient to biml him. Thus, in
Shackleford's casc(b), a person applied for shares upon the rd's
terms that he should have the refusal of certain contracts and
pay for the shares in goods and not in cash. There was no
distinct evidence that this oiler was accepted. The shares
applied for were, however, in fact allotted to him and placed
in his name; and although no notice of the allotment was sent
to him, there was evidence t) show that he was aware that
shares had been given to him. It was nevertheless held that
no concluded agreement had been entered into, and that the
applicant had not become a shareholder.
The conditions, moreover, must be assented to by those who
are competent to bind the company (see Book II., c. 2). There-
fore, where a person applied for shares upon certain terms
which were assented to by the manager and two directors,
when by the constitution of the company three directors were
required to bind the company, it was held that there was
no binding agreement, although the board of directors had
delegated the allotment of shares to the manager and the two
directors in question (c).
It is a necessary consequence of the same principle that if
the conditions are such that the company cannot lawfully assent
to them there is no binding agreement (d).
An application for shares upon terms not assented to must
not be confounded with an application for shares upon condi-
tions which are assented to but are not performed. In the
(a) Beck's case, 9 Ch. 392. See, (d) See Bank of Hindustan v.
also, Wynne's ceise, 8 Ch. 1002. Alison, L. R. 6 C. P. 54 & 222 ;
(/() 1 Ch. 507. See, also, Rogers' Stace and Worth's case, 4 Ch. G82 ;
case, 3 Ch. 633. Pellatt's case, 2 Ch. 527 ; Sunn's case,
(c) Howard's case, 1 Ch. 561. 2 De G. F. & J. 275.
L.C. C
18
FORMATION OF COMPANIES.
i:k. I. Chap. l. first case, there is no agreement at all: in the second case,
Sect. 1. ' & ' '
there is a concluded agreement, and its effect with reference to
the question whether the applicant has hecome a member or
not, turns on other considerations ; viz., 1. Has the condition
been performed ? if not, then 2. Is the condition precedent
or subsequent with reference to becoming a member? if
precedent, then 3. Has the performance of it been waived ?
These matters will be more full}* discussed when membership
is being examined.
Agreements to take shares can be enforced by action; but it
is a well settled principle of the Law of Partnership (e) that an
agreement to share profits does not create a partnership so
long as anything remains to be done before the right to share
them accrues. It consequently follows that neither the pro-
jectors of, nor the subscribers to, a company in course of
formation are partners (/) : nor are the}-, simply by reason of
their position as projectors or subscribers, liable for each
other's acts as if they were partners (g). It becomes therefore
important to distinguish clearly a company which is formed
from one which is being formed ; and this is by no means
always an easy matter (/<). When indeed a company is incor-
porated by special act of Parliament, by charter, or by regis-
tration, the moment of its formation is coincident with the
date of its incorporation, and is accurately determinable ; but
where a company is not incorporated it is often difficult to fix
the time at which the agreement to form it became replaced by
a contract of present partnership. The test is whether any-
thing still remains to be done before the relation of partners is
created (/).
Efi'ect of an
agreement to
lake shares.
Forming and
formed com-
panies.
(e) Part. 20 et seq. a comj)any can be said to have been
(/) lb. and infra, Ek. II. c. 1, commenced, see Baler v. Plaskitt, 5
sec. 1. C. B. 262.
{g) lb. and infra, Bk. II. c. 1, (i) Part. 23 et seq. and infra,
sec. 1. Bk. II. c. 1.
(h) As to when the formation of
PROSPECTUS. ]!)
SECTION 2.— OF THE PROSPECTUS AND DEPARTURES PROM IT.
( >ne of the first steps in the formation of a company is the Bk. I. Chap. 1.
publication b}r its projectors of a prospectus, setting forth the
nature and objects of the proposed company, the number and ' "''
value of the shares intended to be created, and the amount of
capital supposed to be required. The public is invited to
subscribe to the company thus proposed to be formed : in
other words, persons arc invited by advertisements, circulars,
&c, to enter into an agreement to take shares in a company,
such as that described, when the same shall have been formed.
Those who sign such an agreement, whether by themselves or
by their agent (k), become subscribers to the undertaking in
the proper sense of the word (/).
The prospectus issued to the public must, in the absence of Prospectus not
ti'llicrcJ. to*
evidence to the contrary, be regarded as the basis of the agree-
ment which results from an application for shares by a person
who has seen the prospectus, and an allotment to him(m).
Hence, if a person applies for shares in a company upon the
faith of a prospectus issued by its promoters or directors, and
he receives in answer to his application an allotment of shares
in a company to which the prospectus does not apply, he is at
liberty to decline to accept such shares ; for they are not in
truth what he asked for. Nor will even payment of a deposit Effect of paying
, , . ., ,, ,/ . , . for shares allot-
by him upon the shares allotted be conclusive evidence against ted when diffe-
him of an assent by him to take the shares allotted ; for he is ™£ed fo™ L
entitled to assume that he has received what he applied for ;
and unless it can be shown that when he paid the deposit he
did not act on that assumption, he is, notwithstanding such
payment, entitled to say he has entered into no binding con-
tract (»)•
(/;) Be Whitley Partners Ld., 32, the meaning of an act incorporating
Ch. D. 337. the subscribers to a projected com-
(Z) Burke v. Lechmere, L. E. 6 Q. pany.
B. 297 ; Thames Tunnel Company v. (to) See Putsford v. Richards, 17
Sheldon, 6 B. & C. 341, decided that Beav. 87 ; Jennings v. Broughton, ib.
a person who had signed nothing, 234 ; Fox v. Clifton, 6 Bing. 776,
but had applied for shares and had infra. Compare Gerhard v. Bates, 2
paid a deposit on those allotted to E. & B. 470.
him, was not a subscriber within (n) Dowries v. Sliip, L. R. 3 H.
c -J
20 FORMATION OF COMPANIES.
Bk. I. Chap. 1. The following are leading cases on this bead.
The prospectus of the Merionethshire Slate and Slate Slab
Stete°Company. Company stated the objects of the company to be to work a
particular slate quarry in Wales. The company was formed
for the purpose of working not only that quarry, but any slate
quarry in Great Britain or Ireland. It was held that a person
who had applied for shares on the faith of the prospectus, and
had on his application agreed to execute the company's deed
of settlement, and had had shares allotted to him, and had
paid a deposit upon their allotment, was nevertheless not bound
to take such shares. He never had, in fact, agreed to take
shares in such a company as was ultimately formed (o).
Scottish Finance The prospectus of the Scottish and Universal Finance Bank
described the objects of the company to be general banking-
purposes, and the purchase, importation, and exportation of
specie. The objects of the company as formed went far beyond
this, and included, amongst other things, obtaining concessions
for the construction of railway and other works, and the leasing
or working such undertakings, and the transaction of the
business of a merchant, contractor, and capitalist, as principal
or agent in any part of the world. It was held, first by the
V.-C. Wood, and afterwards by the Court of Appeal, that a
person who applied for shares on the faith of the prospectus,
and to whom shares were allotted, had not agreed to become a
member in the company ; he never having been aware that the
company was formed for purposes so materially different from
those stated in the prospectus (_/>).
Russian Iron The prospectus of the Russian Vyksounski Iron-works Com-
„omi>any. pany stated that the objects of the projected company were to
acquire, work, and extend certain specified iron-works in Russia.
The objects of the compairy as formed were to acquire and
work iron mines and works in Russia generally, and to work
mines, build ships, forge, cast, and roll iron, to construct
wrought and cast iron work, and to manufacture all kinds of
engines and engineering work. It was held, in this case also,
L. 356, 358, and Blaclcbum's case, 3 (p) SMjj's case, 2 De G. J. & Sm.
Drew. 409, noticed infra. 544,-and Doicncs v. Ship, L. R. 3 H.
(p) Rye's car, 3 Jur. N. S. 4G0, L. 343.
V.-C. S.
PROSPECTUS NOT ADHERED TO. 21
that applicants for shares on the faith of the prospectus, and 1;k- *■ Chap. 1.
to whom shares had been allotted, but whose attention had
never been drawn to the variance between the objects of the
company as formed and those advertised, were at liberty to
repudiate their shares on discovering the variation (q).
The prospectus of the Scottish Petroleum Con/puny named TI>e Scottish
G. and R. as two of the directors. Anderson, on the faith of Company.
this statement, applied for shares in the company, but before Anderson's case
any shares were allotted to him both G. and R. had refused to
be appointed directors. It was held that Anderson under
these circumstances was at liberty to repudiate the shares
allotted to him (;•).
Many cases under the older winding-up acts illustrate the
same principle and may still be usefully referred to where the
right to repudiate is not lost by reason of the winding up of
the company (s).
Other illustrations of the same principle arc afforded by Companies
those cases in which the liability of subscribers to projected socm. (
companies for debts contracted by the directors has been dis-
cussed. These cases establish that persons who agree to
become members of a company to be formed upon certain
terms and for certain purposes are not liable for debts con-
tracted by the directors before the company is formed as
contemplated ; unless the subscribers have rendered themselves
liable to such debts otherwise than by their agreement to take
shares.
Thus in Fox v. Clifton (t ), it was held that the defendants Fox r. Clifton.
who had applied for shares in a company, had had them
allotted, and had paid a deposit in respect of them, were not
(q) Stewart's case, 1 Ch. 574 ; case, 16 Beav. 262 ; Meyers case, ib.
Webster's case, 2 Ecp 741. 383.
(r) Anderson's case, 17 Ch. D. (t) 6 Bing. 776. See, also, Bourne
373 ; and see In re Scottish Petroleum v. Freeth, 9 B. & C. 632 ; Pitchford
Co., 23 Ch. D. 413. And compare v. Davis, 5 M. & W. 2 ; Vice v.
Smith v. Chadwick, 20 Ch. D. 27, Anson, 7 B. & C. 409. Perring v.
and 9 App. Ca. 187 ; Hallows v. Hone, 4 Bing. 28, so far as it decided
Fernie, 3 Ch. 467, where the direc- that persons become partners by sub-
tors resigned after the shares had scribing to an inchoate company,
been allotted. must be regarded as overruled by
(.s) Cox's case and Naylor's case, Fox v. Clifton.
4 K. & J. 308 & 314 ; Goldsmid's
22 FORMATION OF COMPANIES.
Bk. I. Chap. l. partners with the projectors of the company, inasmuch as the
- company in which alone the defendants had agreed to become
partners was never in fact formed. The capital was never
subscribed, only a few shares were ever taken up, the deed was
only signed by a comparatively few persons, and by one only
of the defendants. The time fixed for its execution had
elapsed, and it was expressly declared in the prospectus of
the company, and which prospectus was held to form the basis
of the contract into which the defendants had entered, that
every person who should neglect to execute the deed within
the time fixed should forfeit all share and interest in the com-
pany. In answer to the argument that the defendants had
become shareholders in a de facto existing company by pay-
ment of the deposits, it was observed by the Court : —
Effect of paying " the paying of the deposits must undoubtedly be taken to imply an assent
deposit. to tjie Serins of the advertisement ; that is, an assent to become partners
in a company raising a capital of 600,000?. consisting of 12,000 shares, and
to be governed by a deed which should contain the clauses and conditions
to be agreed on in future ; but we think it implies nothing more, and that
it cannot be construed as an assent to the terms of a partnership already
formed. When, therefore, instead of an allotment of 12,000 shares, the
utmost that were ever allotted scarcely exceeded 7500 ; when, out of that
number, no more than 2300 ever paid the first instalment ; when not half
the latter number paid the second instalment, and only sixty-five sub-
scribers signed the deed ; we think the subscribers were at liberty to say,
This was not the trading company upon which we paid our deposit ;
neither the capital nor the number of shares bearing any reasonable
proportion to the original plan and project. And this the more especially,
because, by the terms of the advertisement, they were taught to expect
that the utmost risk which they encountered was the loss of all share and
interest ' in the concern ' upon their refusal to execute the deed ; which
loss they appear to have submitted to."
Change of The foregoing cases must be carefully distinguished from
riseTor ratified. tnose in which the applicant has authorised or sanctioned an
allotment of shares to him, with notice of a difference between
the objects of the company as described in its prospectus and
its objects as ultimately fixed by the instrument creating the
company.
Change of "Where there is a special agreement to take shares, and the
riseTby^edal company as described in the agreement differs in character or
agreement. purpose from that described in the prospectus, the agreement
CHAXGE OF SCHEME. 23
must, in the absence of fraud, be regarded as expressing the Bk I. Chap. l.
Sent. 2.
contract into which the parties have entered ; and to the —
extent to which the agreement and prospectus differ from each
other the terms of the prospectus must he considered as
excluded by those of the agreement («).
Persons who subscribe to projected companies which are to Change of
be incorporated by act of Parliament or by charter, frequently j.-J^ by form of
give the managers very extensive powers, and bind themselves aPPUcallon-
to take shares in almost any company which the managers
may be able to induce the legislature or the Crown to incor-
porate, and which is not altogether of a different nature from
that proposed. When this is the case, and a company is
formed, the subscribers will be bound to take shares, and will
b3 converted into shareholders, if the act or charter so
declares, although the company actually formed differs both
in object and constitution from that to which they sul»-
scribed (x).
In the Midland Great Western Railway Company v. Midland, &c,
Gordon (x), a prospectus was issued for the formation <>f a Gordon?' *"
company to construct a railway from Dublin to Mullingar and
thence to Athlone. The directors were authorised to apply to
Parliament for an act, and to do all that was necessary for
forming a railway as proposed. Scrip certificates for shares
were issued, and the defendant subscribed for ten shares.
The directors obtained an act incorporating the comuan}',
authorising it to make a railway from Dublin to Mullingar
only, and to purchase a canal existing between Mullingar and
Athlone, and to work such canal. The act provided that
every one who should have subscribed to the undertaking or
should be otherwise entitled to a share, and whose name
should be entered on the register, should be a shareholder.
The defendant had sold his scrip, but he was nevertheless
registered by the company as a shareholder, and he was held
to be a shareholder notwithstanding his contention that the
company actually formed was materially different from that to
which he had subscribed (y).
(a) London and Continental As- (x) 16 M. & W. 8J4.
surance Soc. v. Redgrave, 4 C. B. N. (//) Nixon v. Brownlow, 2 II. & N.
S. 524, and the next note. 4.;5, and 3 ib. 635, and Cork and
21
FORMATION OF COMPANIES.
Bk. I. Chap. 1.
Sect. 2.
Again, where a banking company was projected with a
capital of 1,000,000?. to be trebled if necessary, and the sub-
Mitchell. ' scribers signed an agreement reciting that application had
been made to the Crown for a charter and nominating certain
persons with power to arrange the terms of the charter in such
manner as they should think necessary in compliance with
the requisitions of the Crown, and to narrow or extend the
objects of the company as might be necessaiy, it was held
that a charter incorporating the subscribers with a capital of
Gll,O00L with power to increase it to 1,000,000?., with the
consent of the Lords of the Treasury, was one which the
directors had authority to accept, and that the subscribers
were bound by it (z).
Change of Even where the subscribers' agreement is less general in its
scheme autho- pt->t • .,
rised by act of language, the terms of the act ol .Parliament incorporating the
Parliament. company may be such as to convert the subscribers to a com-
pany of a particular description into shareholders in another
company materially different from it. A construction of the
act leading to such a result is to be avoided if possible ; but if
its language is clear and precise no court can lawfully decline
to give effect to it, nor hold that a person expressly made a
shareholder by the legislature is not a shareholder to all
intents and purposes (a). "When two companies are amalga-
mated by an act of Parliament which enacts that the share-
holders of the old companies shall be entitled to shares in the
new company, nothing more is required to make them members
thereof (&).
Change cf A person who has applied for shares and has had them
scheme subsc- . . . . . . . , .
fjueutiy assented allotted to him under circumstances which entitle mm to reject
them, may nevertheless elect to retain them ; and this election
may be evidenced not only by an express agreement but
by conduct. It need hardly be added that if a person
knowing the circumstances which entitle him to reject
Youghal Bail. Co. v. Paterson, 18 C.
B. 414, are similar cases.
(;.) See Norman v. Mitchell, 5 De
G. M. & G. 648 ; and 10 Beav. 278.
(a) See Kidwelley Canal Co. v.
Raby, 2 Price, 93 ; Cromford and
High Peak Co. v. Lacey, 3 Y. & J.
80 ; Scott v. Berkeley, 3 C. B. 925.
(//) Spademan v. Lattimore, 3 GifF.
16 ; and see Cork and Youghal Pail.
Co. v. Paterson, 18 C. B. 414.
ASSENT TO CHANGE OF SCHEME. 25
shares which have been allotted to him retains them without Bk. I. Chap. I.
. . Sect. 2.
objection, and acts as if lie were a shareholder, it will be too -
late for him afterwards to repudiate them upon the ground
that the}r were not what he applied for, or upon the ground
that the terms of the company's prospectus have not been
adhered to (c).
]>ut although a person may acquiesce in a change in the Allotment with
. Tii' n aUeged notice
objects oi a company, yet, where those objects are changed of dmnge in
after an application for shares and before the allotment of M eme"
them, and the attention of the applicant is not drawn to the
change, and he is really ignorant of it, the mere fact that
he receives the shares and pays the deposit on them, will
not preclude him from denying that he ever agreed to take
them (d).
The same principle applies to registered companies ; and it
has been decided that the mere circumstance that the appli-
cant receives a letter of allotment or certificate stating that the
shares are to be held subject to the company's memorandum
and articles of association is not enough to call his attention
to a material difference between the prospectus on the faith of
which he applied for shares, and the memorandum of associa-
tion which fixes the objects of the company (e).
But the strong tendency of modern decisions is that as Delay in repu-
regards companies formed under the Companies Act, 1862, an '
allottee of shares wdio does not inform himself of the contents
of the memorandum of association within a reasonable time,
and who keeps the shares allotted to him without taking the
trouble to ascertain whether there is airy discrepancy between
the prospectus and the memorandum of association, cannot
(c) See Tredicen v. Bourne, 6 M. by the Vice-Chancellor remains un-
& W. 461 ; Peel v. Thomas, 15 C. B. impeached. On the appeal addi-
714 ; Steigenberger v. Can; 3 Man. & tional evidence was adduced and
Gr. 191 ; London and Continental the Court was satisfied that when
Assurance Co. v. Redgrave, 4 C. B. Blackburn paid his deposit he must
N. S. 524. Compare these cases have known what shares he was
with those on p. 21, note (t). taking.
(d) Blackburn's case, 3 Drew. 409. (e) Webster s case, 2Eq. 741 ; Ship's
This case was reversed on appeal case, 2 De G. J. & Sni. 544. See,
(8 De G. Mae. & G. 177) ; but the also, Beck's case, 9 Ch. 392, where
principle on which it was decided the allottee was registered.
26
FORMATION OF COMPANIES.
Repudiation ill
time.
Stewart's case.
Bk. I. Chap. 1. afterwards repudiate the shares (/). In the application, how-
Sect. 2. , .... ,. . . .
ever, of this rule, it is important to distinguish cases m which
the allottee repudiates his shares hefore the company is being
wound up from those in which he does not (g). The following
cases, which arose before any winding-up had commenced, may
be usefully referred to on this head.
In Stewart" 8 case (Ji) the application to be removed from
the list was successful although twelve months had elapsed
since the allotment of shares, and the allottee had in the
interval tried to sell them, and had attended a meeting called
for the express object of altering a clause in the articles
relating to the increase of capital beyond the amount stated
in the prospectus : but both the V.-C. Wood and the Court
of Appeal held that these circumstances did not preclude
the shareholder from having his name removed, it being
clearly proved that he, in fact, knew nothing of the great
change which had been made in the objects of the com-
pany (?).
Webster's case. In Webster's case (/.'), which was another in the same com-
pany, the allottee had exchanged the banker's receipt for a
certificate that he was the proprietor of fifteen shares " subject
to the provisions of the memorandum and articles of associa-
tion : " but even this and the lapse of one year after the allot-
ment, and ten months after the receipt, were held not to
deprive him of his right to be removed.
Nichols' case (1). A prospectus of a projected company
stated (in effect) that its objects were to rear poultry, and to
enable consumers to buy eggs and poultry at half the usual
price. The prospectus stated that the articles of association
might be seen at the company's office ; but neither the pro-
spectus nor the articles referred to the memorandum of asso-
Niehols' case.
(/) See the judgments in PecVs
case, 2 Ch. 674 ; Lawrences case and
Kincaid's case, ib. 412 ; Wilkinson's
case, ib. 536 ; also in Dowries v. Ship,
L. E, 3 H. L. 343, and Oakes v. Tiu-
quand, 2 ib. 325.
(g) Compare with the cases re-
ferred to in the next notes, P< i Vs
c«?>', 2 CI;. 674 ; Hare's case, 4 Ch.
503.
(/;) 1 Ch. 574, ante, p. 21. See also
TFijnn's case, 8 Ch. 1002, and Beck's
case, 9 ib. 392.
(?') Compare Ex parte Briggs, 1 Eij.
483. •
(/.■) 2 Eq. 741.
(/) W. N. 1807, 77.
REPUDIATION IN 1 [MB. 27
ciation. On the faith of tliis prospectus, application was made I5k- {- r,lli'- ]-
' 2.
by Nichols for shares, and tiny were allotted to him. Shortly -
afterwards the company was registered, and by its memo-
randum of association its objects were stated, to be not only
to rear poultry and deal in poultry and eggs, but also " the
dealing in game and wild birds, the cultivation and growth of
vegetables, fruit, and agricultural produce, the acquisition,
use, or sale of inventions for artificial hatching, the preserva-
tion of poultry or meat, and any other purpose connected with
the business of the company, and the carrying on the busi-
nesses of poulterers, egg merchants, dealers, market gardeners,
and farmers." Nichols took no part in the proceedings of the
company, and did nothing whatever except pay for the shares
on allotment. A year after the allotment he, for the first
time, became acquainted with the objects of the company as
formed, and he at once repudiated his shares. The
V.-C. Wood removed his name from the register of share-
holders, being of opinion that there was nothing to put
Nichols on inquiry, and that under those circumstances the
time which had elapsed since the allotment of shares was
immaterial.
In Bailys case (m), a person applied for shares, and paid the Baily's case,
deposit on them ; the company was afterwards registered, and
it issued another prospectus, materially differing from the first ;
the shares were then allotted, but this was some months after
the application for them; the allottee declined to accept them,
and asked for his money back ; nothing further was done for
eighteen months, when a call was made upon him ; he then
applied to have his name struck off the register of share-
holders, and it was ordered to be struck off. This case is
instructive, not only on the effect of delay after repudiation (»)>
but as showing, that even although the memorandum of asso-
ciation and the prospectus may not vary, still a material
departure by the company from the prospectus on the faith of
which shares are applied for, entitles the applicant to decline
to accept them.
(m) Ex parte Bailij, 3 Ch. 592, 503, where the company was being
and 5 E<|. 428. wound up.
(n) Compare Hare's case, 4 Ch.
28 FORMATION OF COMPANIES.
Bk. I. Chap. 1. On the other hand, where a person knowing the change of
the objects of the company delays to repudiate his shares, he
]ate> will be treated as electing to hold them, and any subsequent
attempt to repudiate them will be unsuccessful ; and a delay of
four months has been held fatal, even although during that
time the shareholder had done nothing which was inconsistent
with his repudiation (o). But the onus of proving such know-
ledge is on the persons who made the misrepresentation, and
proof by them that a letter containing a notice of the misrepre-
sentation was sent to the registered address of the person
seeking to repudiate his shares is not sufficient to fix him with
notice of the misrepresentation, if in fact he had no knowledge
of the letter (p). It need hardly be observed, that if after
knowledge of the facts entitling a person to repudiate his
shares he acts as a shareholder, e.g., by attending meetings,
paying calls, or attempting to sell his shares, his right to repu-
diate them will be at an end (q). Further, if a shareholder
knowing of one ground of variance, or having his suspicions
aroused, chooses to remain quiet, it will be too late for him
afterwards to repudiate his shares, and he will be a contribu-
tory (;•)• So will delay be fatal after the right of the share-
holder to repudiate his shares is denied (s).
Application for In all the foregoing cases it will have been observed that the
company is™ application for shares preceded the formation of the company.
formed. Where a company is actually formed, and a person afterwards
applies for shares in it, and they are allotted to him, an agree-
ment between him and the company is thereby concluded, and
in the absence of fraud is binding on both parties. In such a
case a definite thing is applied for, viz., a share in an existing
compan}T, the objects of which are defined by the Company's
act of Parliament or memorandum of association, with which
he can make himself acquainted ; the thing applied for is
acquired ; the contract, therefore, is complete and can only be
impeached, if at all, for fraud (t).
(o) Lawrence's case, 2 Ch. 412 ; (</) See Ex parte Briggs, 1 Eq.
Kincaid's case, ib. See, also, Wil- 483. "
kinson's case, 2 Ch. 536. (r) JVhitchouse's case, 3 Eq. 790.
(p) In re London and Staffordshire (s) Taite's case, 3 Eq. 795.
Fire Insurance Co., 24 Ch. D. 149. (t) See Lord Cairns' judgment in
RETURN OF DEPOSITS. 29
The subject of fraudulent prospectuses will be referred to Bk. I. chap. i.
hereafter (see Book I., c. 8). — — -
SECTION 3.— OP THE RKTURN OP SUBSCRIPTIONS TO COMPANIES, ON
THE GROUND OF FAILURE OF CONSIDERATION.
Before leaving the subject discussed in the foregoing pages,
it will be convenient to consider the circumstances under which
an allottee of shares, who has paid a deposit upon them, has a
right to have this deposit returned, upon the ground that the
consideration for its payment has failed. His right to be
relieved on the ground of fraud will be considered hereafter.
It has been decided by the House of Lords, that if a number Subscriber to a
of persons, meaning to join in a common undertaking, raise a uSyto retire
common fund, eventually to be increased, but commencing by from Lt
a deposit, and they put these deposits for a common object
into the hands of a committee, with directions to them to do
certain acts, it is not competent for any one or more of the
subscribers against the will of the others to withdraw and say,
" I think, or we think, you ought not to go any further." Any
one subscriber who is not of that opinion has a right to say,
" I gave my money upon the faith that we all embarked in
one common undertaking, and till that has been done, which
we agreed should be done, none have a right to withdraw and
say you shall not go any further" (u). It follows from this,
that no subscriber to a projected company can recover back his
money on the ground that the consideration for his subscrip-
tion has failed, until the formation of the company upon the
Peel's case, 2 Ch. 684, and the judg- H. L. C. 497; compare Kent v.
merits in Kisch v. Central Railway Jackson, 14 Beav. 367, and 2 De G.
of Venezuela, 3 De G. J. & S. 122, Mac. & G. 49. As to' the right of
and L. R. 2 H. L. 99; Oakes v. scrip holders to have the money
Turauand, ib. 325 ; and see as to subscribed by them applied to the
the immateriality of altering the purposes for which they subscribed
articles of association, Lyon's case, it, see Bagshaw v. The Eastern Union
35 Beav. 646. Bail. Co., 7 Hare, 114, and 2 Mac.
(u) Baird v. Ross, 2 Macqueen, & G. 389.
61. See, too, Barnes v. Pennell, 2
30
FORMATION OF COMPANIES.
Bk. I. Chap. 1.
Sect. 3.
Unless it has
failed.
1. Subscribers
to abortive com-
panies not liable
for expenses
incurred in
attempting to
form them.
Nockells v.
Crosbv.
terms assented to by him (r) lias been abandoned or has
become impracticable.
But further, 'when a person applies for shares and has them
allotted to him, a contract is entered into between him and
others, and before any question as to failure of consideration
can be discussed, the terms of this contract must be examined
for the purpose of ascertaining precisely for what the deposit
was paid (y). If the contract shows that the deposit was paid
for a share in a company to be formed for certain purposes and
upon certain conditions and no such company is formed, and
the time for its formation (which, if no time is limited, must be
taken to be a reasonable time) has elapsed, then the considera-
tion for which the deposit was paid has failed, and the deposit
is returnable, unless the original contract has been varied with
the consent of the subscriber of the deposit. But if the con-
tract shows that the deposit was made for some other purpose
(e.g. for the purpose of being employed in attempting to start
the company), then the circumstance that the company has
not been and cannot be formed, is no reason why the deposit
should be returned.
The leading case in support of the first of these propositions
is Nockells v. Crosby (z). There the defendants, in circulars
published by them, had proposed to receive subscriptions of 10s.
a week for the space of one year, and to invest these subscrip-
tions and to divide the interest twice a year equally amongst the
subscribers or the survivors of them. The plaintiff subscribed
to this scheme, but there not being a sufficient number of
other subscribers nothing was ever invested, and the defendants
came to a resolution to proceed with it no further, and to
return to each subscriber the amount of his subscription, less a
per-centage for expenses incurred. The plaintiff demanded to
(x) See Johnson v. Goslett, 18 C.
B. 728, and 3 C. B. N. S. 5G9, and
see also Wilson v. Church, 13 Ch.
D. 1, and S. C. under the name of
National Bolivian Navigation Co. v.
JFilson, 5 App. Ca. 17(5.
(y) Hence in an action for the
recovery hack of the deposit, the
letter allotting the shares in respect
of which the deposit was paid, must
be produced, Clarke v. Chaplin, 1
Ex. 26. The defendants will, if ne-
cessary, be ordered to produce the
agreement hetween them and the
plaintiff, Hteadman v. Arden, 15 M.
& W". 587.
{z) 3 B. & C. 814.
RETURN 0E DEPOSITS. 31
have the whole amount subscribed by him returned, and he l;- t. Chap. 1.
• Becfc- '■'■
brought an action against the defendants for its recovery and
was held entitled to a verdict. He had subscribed his money
for one purpose only; it had not been applied, nor was there
any longer any intention to apply it for that purpose, and it
was therefore the duty of the defendants to return it to him in
full. The judgment of Littlcdale, J., upon the right of pro-
moters of abortive schemes to charge the subscribers with
expenses is particularly valuable, and was as follows : —
"I also am of opinion that the plaintiff is entitled to recover, upon tlii-
general principle, that it' persons set a scheme afoot, ami assume to be the
directors or managers, all the expenses incurred before the scheme is in
actual operation, must in the first instance he home by them. When it is
in operation, the expenses and charge of management should he borne by
the concern, and then it may be fair that the preliminary expenses should be
paid in the same way, for then the subscribers have the benefit of them.
The prospectus put forth by thesu defendants stated that the money
subscribed was to be placed out at interest. The plaintiff's sole object in
paying the money must have been to have it so placed out, but during
eighteen months it remained idle at the bankers. Suppose there had
been no subscribers, the projectors must have paid all the expenses.
If, then, one person only subscribes, are all those expenses to be cast upon
him ? The hardship and injustice would be monstrous, yet that would be
the consequence in such a case were we now to hold that the plaintiff was
liable to a proportion of the expenses incurred by these defendants. With
respect to the supposed partnership, it is plain that there could be none
until the money was laid out in execution of the proposed scheme. I am,
therefore, clearly of opinion that the plaintiff was entitled to recover."
This case has been constantly recognised and followed (a) . 0ther cases-
The principle applies, whatever the object of the company
when established may be ; and to companies formed on the
cost-book system as well as to the others (b). Moreover, if an
allottee of shares undertakes to sign some deed which is
referred to, and that deed is not in existence ; but a deed, said
to be the one referred to, is afterwards prepared, he is not
(a) See Walstab v. S})Ottisivoode, (b) Johnson v. Goslett, 18 C. B.
15 M. & W. 501 ; Moore v. Garwood, 728, and 3 C. B. N. S. 569. In this
4 Ex. 681 ; Ashpitel v. Sercombe, f> case the company was actually at
Ex. 147 ; C'oupland v. Challis, 2 Ex. work, and its formation had never
682; Owen v. Challis, 6 C. B. 115; been abandoned. But its formation,
Ward v. Londesborovgh, 12 C. B. on the terms originally agreed upon
252 ; Mowatt v. Londesborouyh, 3 E. was abandoned, and the plaintiff had
& B. 307, and 4 ib. 1. not assented to any others.
32
FORMATION OF COMPANIES.
Bk. I. Chap. l. bound to execute that, if it is inconsistent with the contract
Sect. 3. '
— into which he has already entered. Consequently, where a
person applied for shares in a projected railway and paid his
deposits, and undertook to sign the parliamentary contract and
subscribers' agreement, and a deed was afterwards prepared
authorising the promoters of the company to apply the deposits
in defraying preliminary expenses, it was held, that this was
not such a deed as it was obligatory upon the allottee to
execute, and that, the company having proved abortive, he was
entitled to recover his deposits although it would have been
otherwise had he executed the deed (<■).
No lien for Even where, upon the foregoing principles, a subscriber is
entitled to have his deposit returned he has no lien for it and
cannot restrain other creditors from attaching it (d).
Calls on sub- It need hardly be observed that, if a person has agreed to
SCribers to ... „ ln ....
abortive com- pay a deposit in respect of certain shares, and the consideration
varies. £or j^g agreement has failed, he is not compellable to pay the
deposit (e). But if a person undertakes to pay deposits by a
certain day, it is no defence to an action for not paying them
on or before that day, that since that day the projected compan\r
has become abortive ; for, perhaps, that would not have been
its fate if the subscriptions had been paid as promised, and ex
hypothesi, the promise was broken before the circumstances
relied on as an excuse for its breach occurred (/).
2. Deposits not In the cases referred to above, the deposits were held return-
pS'to^ver'611 aDle uPon tne ground that they had been paid for one purpose
preliminary onlv, and that such purpose had become unattainable. In
expenses.
those about to be referred to, the deposits were held not return-
able, although the company subscribed to had proved abortive ;
for the contract of the parties showed that the deposits were
properly applicable in discharge of the expenses incidental to
the attempt to form the company (g).
(c) Ashpitel v. Scrcombe, 5 Ex. 7 E. & B. 164, and on appeal, 2 E
147. & E. 398 ; see IVoolmer v. Toby, 10
(d) Moseley v. Cresscy's Co., 1 Eq. Q. B. 691, as to "who ought to sue in
405. such cases.
(e) Duke v. Andrews, 2 Ex. 290. (g) See Baird v. Boss, 2 :,1 'Queen,
(/) Duke v. Vice, 1 Ex. 36 ; Duke 63, 69.
v. Forbes, ib. 356 ; Aldham v. Broun,
RETURN OF DEPOSITS.
Garwood v. Ede (//) is a case of this description. There the 1;k- !• Chap. i.
plaintiff had paid deposits on shares in a projected railway, and - —
*• Garwood r. Ede.
liad signed a deed which authorised the promoters to defray
the expenses incidental to the undertaking out of the deposits
paid for shares (i). Under these circumstances it was held
that, although the scheme for the railway proved abortive, the
deposits paid by the subscribers for shares in it were not
returnable.
Clements v. Todd (k) was decided on the same principle ; for Clements v.
K Eodd.
although the plaintiff had not signed any such deed as that
signed in the last case, there was a deed which he had under-
taken to sign, and he had accepted scrip certificates which
stated that he had signed it. lie was therefore held to have
authorised the application of his deposits in the discharge of
preliminary expenses, as mentioned in the deed.
Jones v. Harrison (I) is another instance of the same kind, £>nei! v-
Harris a\.
only the authority to defray preliminary expenses out of the
deposits was conferred by the terms of the letter of allotment,
and not by any deed intended for execution after the allotment
was made.
Upon precisely the same principle it was held in the more Aldham v.
recent case of Aldham v. Brown (m), that where a person had
covenanted to pay a deposit which was to be applicable, amongst
other things, to the discharge of the expenses of forming a com-
pany, he was bound by his covenant, and was liable to an action
upon it, although, before the action was brought, the formation
of the company had become impossible.
The cases of Garwood v. Edc(n), and Watts v. Salter (o), Cases in which
. . . deposits have
which decided that a person who had paid deposits and been held
executed a deed authorising their application in payment of^["™h^e
company's deed
. (h) 1 Ex. 264 ; see, too, Watts v. Edgivorth, 2 De G. & Sin. 73. has bee" S'gned"
Salter, 10 C. B. 477 ; Vane v. Cob- (I) 2 Ex. 52; see, too, Willey v.
bold, 1 Ex. 798 ; Atkinson v. Pococl; Parratt, 3 Ex. 211 ; Baird v. Ross,
ib. 79G. 2 M'Queen, 61.
(i) Meaning the preliminary ex- (m) 7 E. & B. 164, and 2 E. & E.
penses. See Willey v. Parratt, 3 398 ; see, too, Duke v. Dive, 1 Ex.
Ex. 211 ; Baird v. Boss, 2 M'Queen, 36 ; Duke v. Forbes, ib. 356.
69. (to) 1 Ex. 264.
(k) 1 Ex. 268 ; compare Ashpitel (o) 10 C. B. 477.
v. Sercombe, 5 Ex. 147; Sibson v.
L.C. I>
34
FORMATION OF COMPANIES.
Bk. I. Chap. 1.
Sect. 3.
Evidence in
actions for the
recovery back
of deposits.
Evidence of the
receipt of the
money by the
defendants.
preliminary expenses, could not recover the deposits so paid,
are not to be regarded as authorities for the proposition that
the execution of such a deed necessarily, and under all circum-
stances, precludes the recovery back of the deposits. If the
execution of the deed has been induced by fraud, the right to
recover the deposits is unaffected by such execution (p) ; and
although it was said in Watts v. Salter that in the absence of
fraud, the deed, and that alone, regulated the rights of the con-
tracting parties, yet this doctrine has not altogether met with
approbation : and in a later case, where the promoters of a
railway company had in their circulars and letters of allotment
expressly undertaken to return the deposits in full, if the
necessary act of Parliament could not be obtained, it was held,
first by the Court of Queen's Bench, and afterwards by the
Exchequer Chamber, that the deposits paid were recoverable
in full, even by persons who had executed a deed whereby it
was expressly stipulated that the promoters should be indem-
nified out of the funds of the compan}*- and by the subscribing
shareholders against all expenses (q). The promoters, in order
to induce persons to take shares, to pay deposits, and execute
the deed, promised to return all deposits in full in a given
event : and it could never have been intended that a person by
executing the deed should lose the benefit of that promise.
Before leaving this subject, it may be as well to observe that
in order that an action for the recovery back of deposits may
be successful, the plaintiff must prove that the money he seeks
to recover was paid to the defendants or to their agents. For,
in the absence of such proof, however clear the right of the
plaintiff may be to have his money back, he will have estab-
lished no case against the individual from whom he seeks to
recover it.
In Nockells v. Croshy, Walstab v. Spottisicoode, and the cases
of that class already referred to (p. 30, et seq.), the plaintiff
(}?) Wontner v. Shairp, 4 C. B.
404 ; Jarrett v. Kennedy, 6 C. B.
319 ; compare Vane v. Cobhold, 1
Ex. 798; and Atkinson v. Pococlc,
ib. 796 ; Watts v. Salter, 10 C. B.
477.
(q) Mowatt v. Lord Londesborough,
3 E. & B. 307, and 4 ib. 1. In this
case interest on the deposit had
been demanded, and was recovered,
from the time of the demand.
RET1 l:\ OF DEPO
35
proved that lie had paid his deposit's to the bankers appointed by 1;k- i;^1'?,1''
the defendants to receive them, and this was quite sufficient (r).
But it must he borne in mind that the promoters of companies are
not partners (s), and that in order that any particular promoter
may be liable to return deposits paid into a hank to the account
of the company, it must be shown that he authorised the bank
to receive the deposits on the account to which they have been
paid.
Thus in Watson v. The Earl of Charlemont (t), the plaintiff J**8?* <■
J . Charleinont.
brought an action against three persons to recover deposits
paid by him for shares in an abortive company. The three
defendants were members of the committee of management.
The letter of allotment sent to the plaintiff was signed by the
secretary to the company, and contained a list of banks into
any of which deposits might be paid. The plaintiff had paid
his deposits into one of these banks, and had received from
the bankers a receipt on account of certain persons as trustees
for the company. Only one of the defendants was amongst the
persons on whose account the receipt of the money was thus
acknowledged ; and it was held that this evidence was insuffi-
cient to show a receipt by all the defendants, and the action
therefore failed.
(?•) See, too, Hayes v. Stirling, 14 infra, book ii. c. I, sec. 1.
Ir. Com. Law Rep. 277 ; Maitland's (f) 12 Q. B. 856. See, also, Bum-
case, 4 De G. M. & G. 769. side v. Dayrell, 3 Ex. 224 ; Drouett
(s) See Partnership, p. 23, and v. Taylor, 16 C. B. 671.
D 2
3G SHAREHOLDERS.
CHAPTER II.
OF MEMBERSHIP.
SECTION I.— WHO CAN BE MEMBERS.
Bk. I. Chap. 2. Every person who is capable of contracting is capable of
' becoming a member of a company (a). A company may no
doubt be formed on terms which expressly exclude certain
persons or classes of persons from becoming members of it ;
but regulations to this effect do not affect the legal capacity of
the persons excluded. Such capacity depends on the general
law of the country, not on the regulations of any particular
compairy. But notwithstanding the general proposition above
stated, a few observations are necessary with reference to
1. Aliens; 2. Convicts; 3. Infants; 4. Lunatics; 5. Married
women ; and 6. Corporations and companies.
1. Aliens.
Alien friends. There is nothing to prevent an alien, not an enemy, from
holding shares in a company (b). But a public minister of a
foreign state, accredited to and received by the Queen, cannot
be sued here even in respect of commercial transactions in
which he may have engaged ; and if, therefore, such a person
holds a share in a company, he cannot, while so accredited
and received, be sued here, either for calls or in respect of the
debts and liabilities of the company (c).
(a) Partn. 71 ; as to the clergy, see B. v. Arnand, 9 Q. B. 806 ; and 17
1 & 2 Vict. c. 106, §§ 29-31, and 4 & 18 Vict. c. 104, § 18. See, geue-
Vict. c. 14. rally, as to aliens, 33 Vict. c. 14.
(b) A ship may be registered in (c) Magdalena Steam Nav. Co. v.
the name of a company, although Martin, 2 E. & E. 94.
some of its members are foreigners.
ALIENS. 87
Alien enemies stand in a very different position from alien 1;|<. I. Chap. 2.
friends. for when two supreme powers are at war all persons,
who for the time being arc the subjects of either, become, in'
contemplation of the civil tribunals of both, hostile to the
subjects of the other; and so long as the war lasts, the subj'
for the time being of the one country are incapable of entering
into any valid contract with the subjects of the other; and all
remedies available for the one against the other in respect of
transactions before the war are suspended (d). Consequently
while war lasts an agreement by an alien enemy to become a
member of an English company cannot be enforced. The
effect of a person who is a member of a company becoming an
alien enemy by a declaration of war has never been decided;
but Ex parte Boussmaker (e) tends to show that such a person
woidd not ipso facto cease to be a member : but rather that his
lights and liabilities would be suspended during the war, and
might be enforced upon the restoration of peace (/).
It is to be remembered that whether a person is or is not to
be considered as an enemy depends, not on whether there is
war between this country and his native land, but upon
whether there is war between this country and the country in
which he is voluntarily resident (g). A foreigner resident in
this country and holding shares in an English company would
not therefore be affected as regards his shares by a war be-
tween this country and his own (//).
With reference to the legality of trade and commerce, a com- Residence of
pan}* ought, it is conceived, to be treated as resident not only
where its principal place of business is, but wherever it has
any place of business (i). It has, however, been determined,
(d) Albrecht v. Sussman, 2 Y. & (;/) Albrecht v. Sussman, 2 Yes. &
B. 323; JVillison v. Patteson, 7 B. 323; Willison v. Patteson, 7
Taunt. 440; Ex parte BoussmaJcer, Taunt. 440; Houriet v. Morris, 3
13 Yes. 71 ; Putts v. Bell, 8 T. R. Camp. 303 ; Bell v. Reid, 1 M. & S.
548. See the note to Ckmontson v. 726.
BUssig, 11 Ex. 141. (/*) See Wells v. Williams, 1 L.
(e) 13 Yes. 71. Raym. 2X2 ; 1 Salk. 46; and the
(/) Subject to being barred by cases in the last note.
the Statute of Limitations. Whether (?) See Carron Co. v. Maclaren, 5
peace operates retrospectively, see II. L. C. 416, and Lewis v. Baldwin,
New York Life Ins. Co. v. Statham, 11 Beav. 153, from which it appears
3 Otto, 24 (Amer.). that for some purposes at all events
38
SHAREHOLl'KKS.
Bk- *• Ch*v- 2- that for the purpose of deciding whether a company dwells
within a particular district, regard ought to be had rather to
the place where its business is principally carried on than to
the situation of its subordinate offices (k).
A registered company does not necessarily dwell where its
registered office is situate (I).
A note on the subject of foreign companies will be found in
the Appendix.
2. Convicts.
The old law by which the property of felons was forfeited to
the Crown was abolished by 33 & 34 Vict. c. 23 (m). The
Crown, however, is empowered to commit the custody and
management of the propert}- of an}r convict (i.e. a person sen-
tenced to death or penal servitude) (§ 6) to an administrator (§ 9)
in whom all the convict's property then becomes vested (§ 10),
and who can dispose of the same as he may think fit (§ 12).
A convict cannot alienate any of his propert}- nor make any
contracts, nor maintain any action for the recovery of any
property, debt, or damage (§8), except when lawfully at large
under a proper license (§ 30). Provision is also made for the
appointment by a justice of the peace of an interim curator of
a convict's property (§ 21).
Position of the There have not as yet been any decisions on the application
administrator. „ .. . -.i-i-i-it -^
ot this act to convict shareholders. But several important
questions are suggested by it : e.g. Is the administrator, him-
self a shareholder, liable to pay calls and to be a contributory
in the event of the company being wound up ? or is he entitled
to sell and transfer the convict's shares without becoming a
shareholder himself ? Sect. 10 is so worded that it may pos-
sibly be held to make the administrator a shareholder simply
by virtue of his office ; but when the section is applied to the
companies may be considered as resi- 404 ; Taylor v. Crouiand Gas Co., 1 1
dent in more places than one. Ex. 1.
(/;) See Jones v. Scottish Accident (I) Cesena Sulphur Co. v. Nichol-
Insurance Co., 17 Q. B. D. 421 ; son, 1 Ex. D. 428 ; Calcutta Jute
Brown v. Lond. and X. W. Bail. Co., Mills Co. v. Nicholson, ib. ; Keyn-
4 B. & Sni. 326 ; Shield v. Great X. sham Blue Lias Co. v. Barker, 2 H. &
Bail. Co., 7 Jur. N. S. 6:32 ; Adams C. 729.
v. .Great W. Rail. Co., 6 H. & N. (m) Partn. 73.
INFANTS.
39
shares of any particular company, the company's act, charter, l;k- \- Ch;')'- '-'■
Sect. 1.
or regulations may enable the administrator to dispose of the
shares vested in him without himself becoming a shareholder,
and incurring personal liability as such (see also § 12).
:!. Infants.
An infant may be a member of a company, but he can
repudiate his shares whilst he is an infant or on coining of
age (in.
An infant, however, cannot hold shares and decline to pay
the calls in respect of them. He may, if he chooses, repudiate
his shares and so get rid of his liabilities (o) ; but if he does
not repudiate the shares, he must pay calls like any other
shareholder (p). Qui sentit commodum sentire debit at onus.
If a company's memorandum of association is signed by an
infant, his signature is by no means inoperative. The incor-
poration of the company is not affected by it : and he becomes
a member until he repudiates his share (q).
An infant who has had shares in a company transferred to
him, ma}r be rejected as a shareholder by the company on
ascertaining the fact of his infancy (/•) ; but the transfer is
voidable only and not void, and unless repudiated by the com-
pany or the infant will be held good (s).
The Infants' relief act, 1874 (t), which renders invalid pro-
(/<) Co. Lit. 38U6 ; Dublin and
Wicklow Rail. Co. v. Black, 8 Ex.
181 ; and see Mitchell's case, 9 Eq.
363 ; and EbbeWs case, 5 Ch. 302,
and others of that class. If a com-
pany is being wound up and is in-
solvent, of course it will he for the
benefit of an infant shareholder to
repudiate his shares, and so avoid
being made a contributory. See
Reid's case, 24 Beav. 318 ; and infra,
book iv., under the head Contri-
butories.
(o) Load, and N. W. Hail. Co. v.
McMichael, 5 Ex. 114 ; Newry and
Ennishillen Rail. Co. v. Coombe, 3
Ex. •"><;.">. and tin- cases referred In in
book iv., under the head Contri-
butories.
(p) See Cork and Bandon Rail. Co.
v. Cazenove, 10 Q. B. 935 ; Leeds and
Thirsk Rail. Co. v. Feamleij, 4 Ex.
26 ; North West Rail. Co. v. Mc-
Michael, 5 Ex. 114. The Birkenhead,
Lancashire, &c, Rail. Co. v. Pitcher,
5 Ex. 24, is not opposed to these ;
see S. C. ib. 121.
(q) See Nassau Phosphate Co., 2
Ch. D. 610.
(r) See Sijmoii's case, 5 Ch. 298,
and infra, in book iv.
(s) Lumsden's case, 4 Ch. 31.
(t) 37 & 38 Vict. c. CrJ.
40 SHAREHOLDERS.
Bk. I. Chap. 2. mises made by persons of age to pay debts contracted during
— their minority, does not apparently affect the position of persons
who become shareholders before they are twenty-one, and
retain their shares after they come of age.
The position of infant shareholders on the winding up of
companies will be alluded to hereafter when treating of con-
tributor} es.
4. Lunatics.
Although contracts with lunatics are not necessarily void,
and lunatics not known so to be may become liable in damages
for goods supplied to them (it), yet a lunatic cannot be com-
pelled specifically to perform a contract, nor can he obtain a
judgment for specific performance against other people (x).
But a lunatic ma}r become a shareholder without his insanity
being known ; and if he does he cannot repudiate his shares (y) ;
whence it follows that he is entitled to dividends, and is liable
to calls in respect of them.
A lunatic who is so found by inquisition, and whose property
is under the care of a duly appointed committee, is not in a
position to bind himself by contracts or to deal with his own
property. Shares belonging to him remain his, and he is liable
to calls and to be a contributory in respect of them ; but his
rights in respect of them can only be exercised by his
committee.
By the Lunacy regulation act (16 & 17 Vict. c. 70) {z), the
committee can sell and transfer them without himself becoming
a member in respect of them ; and this power is usually exer-
cised if the holder of them is under airy liability to have calls
made upon him.
By the Trustee act, 1S50 (13 & 14 Vict. c. GO, § 5), shares
standing in the name of a lunatic trustee may be transferred
by a person appointed by the Lord Chancellor for the purpose.
(u) See Drew v. Nunn, 4 Q. B. D. [y) See Moulton v. Gamroux, 2 Ex.
661 ; Baxter v. Earl of Portsmouth, 487; and 4 ib. 17 ; Beavan v. Mc-
5 B. & C. 170. As to lunatics so Donndl, 9 ib. 309 ; and 10 ib. 184.
found, see Snook v. Watts, 11 Bear. (.-.) See §§ 2, 116, 120 123, 140-
107. 144.
(.;) See Fry on Spec. Perf.
[ED women. 41
5. Married iromen.
Bk. I. Chap. 2.
Sect. 1.
As regards married women, it is necessary in the first place
to distinguish those who have separate estate from those who
have none.
A married woman without separate estate cannot, except in No separate
a few cases (a), contract as a principal. She cannot be com- w
polled to take shares which she may have applied for; nor can
she be compelled to pay for them. Nor, apart from statute,
is she liable to pay any calls in respect of any shares which
may have been in fact allotted to her and are standing in her
name (/>). Whether her husband is a shareholder or is liable
to calls in respect of such shares depends on the nature of the
company. But if, as often happens, he cannot be regarded as
a member of the company consistently with its regulations or
with the statutes by which it is governed, he will not be liable
in respect of them (c).
A married woman having separate estate which she is not Separate estate.
restrained from anticipating is, as to such estate, in the posi-
tion of a feme sole (d). She can invest it in shares, and make
herself liable to pay for them and to pay calls upon them to
the extent of such separate estate (<?) ; and on the winding up
of the company she will be a contributory in respect of her
shares to the like extent (/). Her husband is not liable in
respect of such shares (g).
A married woman entitled to fully paid-up shares for her
(a) Viz. 1, When her husband is and as to his non-liability to sci.fa.,
a convicted felon; 2, when he is Ness v. -Angas, 3 Ex. 805; Dodgson
judicially separated from her ; 3, v. Bell, 5 ib. 967.
when she has obtained a protection (d) 45 & 46 Vict. c. 75, § 1.
order against him ; 4, when he is an (e) lb.
alien enemy abroad; 5, when the (/) lb., §§ 6 & 7; and see
wife is trader in the city of London. Matthewman's case, 3 Eq. 781 ; Bond.
See Partn. 77. and Bombay Bank, 18 Ch. D. 581.
(6) But see 45 & 46 Vict. c. 75, §§ (g) See 45 «fe 46 Vict. c. 75, §§ 1,
6 & 7, referred to below. 6, 7 ; as to shares standing in her
(c ) See as to his non-liability to name before marriage, see infra ;
be made a contributory, Angus' Luard's case, 1 De G. F. & J. 533,
case, 1 De G. & Sm. 560 ; Ex parte seems no longer law except as re-
Bhodes, 7 W. R. 510. Compare gards such shares.
Luard's case, 1 De G. F. & J, 533 ;
42 SHAREHOLDERS.
Bk. I. Chap. 2. separate use can compel the company to register them in her
Sect. 1.
name (It) ; but she cannot do so if the holding of the shares
involves liabilit}T, and there is anything in the company's act or
regulations which entitles the company to decline to accept
her as a shareholder (i).
By the Married woman's property act, 1882, shares standing
in the sole name of a married woman are deemed to belong to
her for her separate use unless the contrary be proved (k).
Feme sole share- If a feme sole is a shareholder and marries, the law now is
ryi that the shares are her separate estate and, subject to a quali-
fication, to be mentioned presently, she is alone liable in
respect of them (/). Formerly, both she and her husband
were liable (m) ; and even now he is liable to calls made on his
wife's shares, whether before or after the marriage, if he has
in fact obtained by the marriage property of his wife to the
value of such calls (n). Further, in the event of the company
being wound up and his wife becoming a contributory, he is
liable to be put on the list himself (o). His liability to calls
is confined to the continuance of the marriage (p), but not to
the amount of the property acquired from his wife ((f).
The Married woman's property act, 1882, § 17, enables the
husband or the wife or the company to obtain a decision as to
his or her title to shares, by summons or otherwise, in a
summary way, before a judge of the High Court (p).
Date of marriage. It is necessary to mention that the date of marriage is some-
times material ; but on this point it is sufficient to refer the
reader to the Married woman's property act, 1882 (45 & 46
Vict. c. 75).
(h) lb., §§ G, 7; B. y. Carnatic Ex parte Hatcher, 12 Ch. D. 284.
Rail. Co., L. R. 8 Q. B. 29!). (u) 45 & 46 Vict. c. 75, § 14.
(i) lb., § 7. (o) Companies act, 1862, § 78 ;
(&) II)., §§ 6 & 7. Ex parte Hatcher, 12 Ch. D. 284 ;
(I) 45 & 46 Vict. c. 75, §§ 6 & 13. see also Bell's case, 4 App. Cas. 550.
(m) See LuaroVs case, 1 De G. F. & ( p) See the section.
J. 533 ; Burlinsons case, 3 De G. & (q) See Ex parte Hatcher, 12 Ch.
Sm. 18 ; Sadler's case, ib. 36; Khlut's D. 284 ; decided on the Married
case, ib. 210 ; White's case, ib. 157 ; woman's property act, 1874.
SHAREHOLDERS. 43
Bk. I. Chap. 2.
G. Colorations and Companies. -
There is no general principle of law which prevents a corpo- Corporations,
ration from holding shares in a company except the principle partners!
that a corporation cannot lawfully employ its funds for pur-
poses not authorised by its constitution. It has hecn assumed
by the legislature, in many of the statutes relating to com-
panies, that corporations may lawfully be shareholders (r),
and at common law one corporation may be a member of
another (s). Accordingly it has been held that where the
above principle does not apply one company may hold shares
in another (/) ; although not in a benefit building society (m).
Practically, however, it may be said to be prima facie ultra
vires for one company to hold shares in another : i.e., power
so to do must be shown to be expressly or impliedly given
to it (x).
SECTION II.— WHAT CONSTITUTES MEMBERSHIP.
Generally speaking, some condition has to be performed, Who are mem-
r i«i i i t , f l'crs °f con'-
sonie formality to be observed, before a person entitled to ranks.
become a member actually becomes one, and before a person
entitled to retire actually ceases to be a member. What these
conditions or formalities are in any particular case can only be
ascertained by examining the act of Parliament, charter, deed
(r) See for example the Com- surer of a friendly society, Ex parte
parries' act, 1862, § 23, and the Swansea Friendly Society, 11 Ch. D.
interpretation put on it in the cases 768.
cited in note (t) ; the Industrial (..■) See Great W. Rail. Co. v.
and Prov. Soc act, 39 & 40 Vict. c. Metrop. Rail. Co., 9 Jur. N. S. 562 ;
45, § 12(4); 7 Wm. IV. and 1 Ex parte Contract Corp., 3 Ch. 105;
Vict. c. 73, §§6& 10; 7 & 8 Vict. c. Ex parte British Nation, dbjri Ass.',
110, §§ 3 & 7, (8), and § 50. 8 Ch. 1). 679, where it was held'
(••>■) Grant on Corporations, p. 5. that a society to which shares in
(t) Ex parte Contract Corp., 3 Ch. another society had been transferred
105 ; Royal Bank of India's case, 4 by an act ultra vires, could not be
Ch. 252, and 7 E.p 91. placed on the list of contributories
(u) Dobinson v. Hawks, 16 Sim. of that society.
407. A corporation cannot be trea-
44
SHAREHOLDERS.
Bk- ge(Jh<2P' 2' or °^ier instrument by which the company is governed ; and
care therefore must be taken in applying decided cases to
attend to the constitutions of the companies to which they
relate (y).
Necessity of N0 person can, properly speaking, be said to be a member
observing '*■!■•/*
formalities. of or shareholder in a company so long as he has only a right
to become such ; nor "can a person who has become a member
or a shareholder be properly said to have ceased to be one so
long as he has only a right to retire.
If a person who is not a shareholder omits to do what is
necessary to render himself a shareholder, he remains a non-
shareholder, although very little may be wanting to render
him a shareholder. On the other hand, if a person who is a
shareholder already omits to do what is necessary to retire,
he continues to be a shareholder whatever intention he may
have had of withdrawing from the company, and whatever pre-
liminary steps he may have taken for that purpose. In these
cases that which is necessary to change an existing state of
things has not happened : the right to enter or leave the com-
pany has not been exercised ; and until such right has been
exercised membership in the proper sense of the word has not
been created in the one case, and has not ceased in the other.
Subject then to the qualifications to be mentioned presently,
before a person entitled to become a member actually becomes
one, all necessary conditions must be fulfilled.
There are many cases in the books illustrating this principle,
and to which it may be convenient shortly to refer.
7 &^ Vict. The repealed act 7 & 8 Vict. c. 110, defined a shareholder
to mean any person entitled to a share, and who had executed
the deed of settlement, or a deed referring to it (z) ; and it was
held that no person was a shareholder within the meaning of
(y) As to the construction of acts Eiamens, 1 C. P. D. 201 & 6G4 ;
of Parliament, apparently making and as to allotting shares before
payment by an allottee (or some any business can be carried on, see
qualification) a condition precedent Ex parte Ward, L. R. 3 Ex. 180.
to his becoming a shareholder, see (z) See 7 & 8 Vict. c. 110, § 3 ;
East Gloucestershire Bail. Co. v. this definition did not apply to
Bartholomew, L. R. 3 Ex. 15 ; Mc- mutual insurance societies : see the
Euen v. West Bond. Wharves, d-c., section.
Co., 6 Ch. 655, and Portal v.
SHAREHOLDERS. 1 7>
the act if he had not signed the deed, although he might be 1 k. I Chap. 2.
entitled to shares and be registered and returned as a share- -
holder (a).
Other cases, in which the non-execution of the company's Non-execution
deed has been held to prevent a person entitled to shares in a of deed"
company from being a shareholder therein, will be found in
the note below (b).
Again, by the repealed Joint-stock companies act, 185G, it 19 & 20 Vi.-t.
was declared that every person who had accepted shares in a °" "
registered company, and whose name was entered in the
register, and no other person (except a subscriber to the
memorandum of association in respect of the shares thereby
subscribed for by him), should for the purposes of the act in
question be deemed to be a shareholder (c) ; and in the articles
which, in the absence of other regulations applied to companies
registered under the act, it was declared that no person should
be deemed to have accepted any share unless he had testified
his acceptance thereof, by writing under his hand in such form
as the company from time to time should direct (</). Under
these provisions it was held that a person who merely agreed
to take shares, but did not testify his acceptance of them in
the particular form required, did not become a shareholder,
although he was registered as such (c).
Upon precisely the same principle a purchaser of shares in Purchasers of
a company is not a shareholder in it until he has made himself shares'
such by complying with its regulations as to the admission of
members (/) ; and, on the other hand, a shareholder who has
(a) Baily v. Universal Prov. Life heel Iron Co. v. Westoby, 8 Ex. 17 ;
Assoc., 1 C. B. N. S. 557 ; Moss v. Waterford, d-c, Bail. Co. v. Pidcock,
Steam Gondola Co., 17 C. B. 180 ; 8 Ex. 279.
Wilkinson v. Anglo-Californian Gold (c) 19 & 20 Vict. c. 47, § 19.
Co., 18 Q. B. 728 ; Stewart v. Sams, (d) 19 & 20 Vict. c. 47, table B.
ib. 736. The registrar's certificate § 1.
that a person had been returned as (e) New Brunsicick, &c, Bail. Co.
a shareholder was prima facie evi- v. Muggeridge, 4 H. & N. 160 and
dence of his being so. Turner v. 580. Compare this case with Bog
Metropolitan Live Stock Co., 2 Ex. Lead Mining Co. v. Montague, 10 C.
567 '• B. N. S. 481, where no particular
(6) Irish Peat Co. v. Phillips, 1 B. form of acceptance was required.
& Sm. 598 ; Carmarthen Bail. Co. v. (/) Hay v. Willoughhy, 10 Ha.
Wright, 1 Fos. & Fin. 282 ; Galvan- 242.
46
SHAREHOLDERS.
Bk. I. Chap. 2. sold his shares remains a shareholder until the purchaser has
Cestuis que
trustent.
Formalities
complied with
by the company.
Type of a
member.
taken his place (Y/).
Again, where shares are held by A., whether as trustee for
B. or simply as his agent, and B. has done nothing to render
himself a shareholder, according to the terms of the company's
regulations, and has never acted or been treated as a share-
holder, he is not a shareholder, although A. may be in-
solvent (A). But as will be seen hereafter, a person cannot
escape liability by assuming a fictitious name (i).
A person who has entered into a binding agreement with a
company to take shares in it, cannot complain if the company
acts on the faith of the agreement, and complies for him with
those formalities which he has bound himself to observe. Upon
this principle, where a person has agreed with a company to
take shares in it and nothing remains to make him a share-
holder except to register him as such (A), and the company
registers him accordingly, he becomes a member, although he
may have protested against such registration (/). But it need
hardly be observed that persons cannot be made members
without their consent ; and if a company or some other person
has placed shares in a person's name, and complied with all
the formalities necessary to make him a member, he will never-
theless not be a member, unless he has by agreement or other-
wise authorised the acts in question, or ratified them, and
thereby assented to take the shares (in).
The type then of a member or shareholder of a company is
(g) See, for example, Mid. G. IV.
Rail. Co. v. Gordon, 16 M. & W.
804.
(/() See United Kingdom Mutual
Strain AsmLranm Association v.
Nevill, 19 Q. B. D. 110; Barrett*
case, 4 De G. J. & Sm. 416 ; Muir's
case, 4 App. Gas. 337 ; Ex parte
Bugg, 2 Dr. & Sm. 452 ; Neivry
Bail, Co. v. Moss, 1 4 Beav. 64 ;
Jefferys v. Smith, :> Russ. 158, ami
other cases referred to hereafter in
book iv. c. 1, under the head Con-
tributories. Compare Goddard v.
Hodges, 1 Cr. & M. 33, and Cox's
case, 4 De G. J. & Sm. 53.
(i) Infra, p. 59.
(/,-) This is essential, see Waterford,
Wexford, dr., Bail. Co. v. Bidcock, 8
Ex. 279 ; Carmarthen Bail. Co. v.
Wright, 1 Fos. & Fin. 282.
(I) Midland Gt. West. Bail. Co. v.
Gordon, 16 M. & W. 804, and other
cases of that class, noticed ante p. 23,
and post. See, also, Leishman v.
Cochrane, 1 Moo. P. C. N. S. 315.
(m) See, for examples, Edv;arcls v
Kilkenny Bail. Co., 14 C. B. N. S.'
526 ; Fox's case, 3 De G. J. & S. 465 ;
Higgs's case, 2 Hem. & M. 657.
SHAREHOLDERS. 17
a person who has agreed to become a member, and with respect lik- T- Cliai'- -'
Sect ■'
to whom all conditions precedent to the acquisition of the -
lights of a member have been duly observed. Where all these
circumstances are combined, there is membership in the fullest
and most accurate sense. This, indeed, would be too obvious
to require express statement were it not useful to have present
to the mind a standard by which to judge of other cases. In
practice difficulties are only presented where this standard is
not reached; and the important question really is to what
extent it can be departed from, and membership be neverthe-
less constituted.
In the first place, a person bound bv agreement with a com- Membership in
, •, , . equity, though
pany to take shares in it, can be compelled specifically to not at law.
perform his agreement, and on this principle he can often be
treated as a member in equity (n). There are endless cases in
the books in which persons not shareholders in the strict and
proper sense of the word, have nevertheless been held to be
contributories on the winding up of the company (o). But the
equitable maxim that what has been agreed to be done is to be
treated as done, is only a consequence of the more general
principles applicable to the specific performance of contracts ;
and the maxim only applies as between the parties to an agree-
ment of which specific performance can be decreed and their
representatives. If therefore a person has agreed, not with
the company or its agents, but with some one else, to take
shares [in the company, and such person does not perform
those conditions which are necessary to render him a member
thereof, then whatever his position and obligations may be
as between himself and the other party to the agreement, he
will not be a member of the company in equity any more than
at law (j)).
Secondly, the performance of conditions and observance of FaiT.of
n «... ,. formalities.
formalities may be dispensed with; and irregular, as distin-
ct) The subject of specific per- (p) See Hay v. Willoughby, 10
formance so far as it relates to shares Ha. 242. See, also, Humby's case, 5
will be discussed hereafter. Jur. N. S. 215, and others of that
(o) These cases will be noticed class noticed hereafter under the
hereafter. Ydland's case, 5 De G. & head of Contributories.
Sm. 395, illustrates the principle.
48
SHAREHOLDERS.
Bk" Sec^T' 2' Suisliet* n'om vok1> transactions may be confirmed. Conse-
~7 - quently, a person may become a shareholder to most, if not to
Estoppel by .
conduct. " all, intents and purposes, without complying with all the
formalities prescribed in that behalf by the statute, charter, or
deed of settlement constituting the company, and although
there may have been irregularities in the issue of the shares to
him ; for if, notwithstanding these circumstances, he has been
treated as a shareholder by the company, and has acted as a
shareholder, both he and the company will be estopped from
denying that he is a shareholder. So, if a shareholder, having
a right to retire, has in fact retired and been treated by the
company as if he were no longer a shareholder, both he and
the company will be estopped from denying that he has ceased
to be a shareholder, although he may not have retired regularly
and properly. This doctrine of estoppel by conduct has been
frequently recognised (q), but its application is attended with
difficulty, and involves the important question to what extent
prescribed formalities and conditions can be disregarded by
companies, i.e., by the persons who conduct their affairs, and
whose obvious duty it is to observe what is prescribed. Upon
this question opinions have differed, and the non-compliance of
prescribed formalities has frequently been held to be conclusive
upon the question of membership or no membership, notwith-
standing an apparent waiver of those formalities by all parties.
Moreover there are decisions which show that a person who, in
an action for calls, is estopped from denying that he is a share-
holder, may nevertheless show that he is not one when sued
by a creditor of the company.
It becomes necessary, therefore, to subdivide the cases
bearing upon the present subject-matter of inquiry, and to
distinguish those in which the question of membership or non-
membership arises between the company on the one part, and
an alleged member on the other, from those in which the
question arises between the alleged member on the one part,
and the creditors of the company on the other.
(q) The leading authority on the Carr v. Lond. and N. W. Rail. Co.,
subject of estoppel by conduct is L. E. 10 C. P. 307.
EFFECT OF s->\ OBSERVING FORMALITIES. 19
Bk. T. Chap. -'.
First, as between the company and an alleged shareholder. Sect. -■
It has frequently been decided, even at law, that where a Effect of
psrson has acquired a right to become a shareholder, and he toeen%hecum-
has acted and been treated by the company as a shareholder, Pany and the
. , shareholder.
lie is liable to calls at the suit of the company, although he may
not have complied with all the formalities prescribed by the
regulations of the company for the admission of members.
Thus, in Burncs v. Pennell (r), the deed of settlement of a Barnes r.
company required certain acts to be performed by every pur-
chaser of shares, before he could become entitled to exercise
the rights of a shareholder. A purchaser of shares did not
comply with the terms of the deed, but he nevertheless paid
some calls made on his shares, and he was registered as a
shareholder. It was held that he could not resist an action
for further calls on the ground that he was not a shareholder.
Again, in a case where an act of Parliament required that Sheffield, &c ,
the shares in a company should be transferred by deed stating Woodcock.'
the consideration for the transfer ; and a person purchased
shares without taking a proper transfer, the transfer being in
blank, with the consideration stated untruly, but he neverthe-
less signed a prox}*- paper describing himself as a shareholder,
and transmitted it to the company, and was thereupon regis-
tered as a shareholder, it was held, that in an action for calls
by the company he was estopped from denying the validity of
the transfer (s).
80 in The Cheltenham and Great Western Union Railway Cheltenham, &c,
Company v. Daniel (t), an original subscriber to a projected Daniel/
railway company sold his scrip to the defendant. The com-
pany after its formation had notice of this sale from the
defendant himself; he claimed to be registered in respect of
the scrip which he had purchased, and he sent the certificates
for such scrip to the company. The company gave him a
receipt for the certificates and registered him as a shareholder.
(;•) 2 H. L. C. 497. dke., Rail. Co. v. Locke, 1 Q. B. 256 ;
(s) Sheffield, dr., Rail. Co. v. London Grand' June. Rail. Co. v.
Woodcock, 7 M. & W. 574. See, Graham, ib. 271 ; Cromford, dr.,
too, Cheltenham Rail. Co. v. Daniel, Rail. Co. v. Lacey, 3 Y. & J. SO.
2 Q. B. 281 ; Birmingham, Bristol, (t) 2 Q. B. 281.
L.C. E
50
SHAREHOLDERS.
Bk. I. Chap. 2. It was held that he was properly registered, and that he was
Sect. 2. I I J t> >
a shareholder, although the shares purchased by him had
never been formally transferred to him from the vendor as
required by the company's special act, and although the scrip
certificates purported to be not transferable before the obtaining
of the act.
Non-execution On the other hand, in The Irish Peat Company v. Phillips («),
deed. hfty shares, not numbered, nor distinguished from each other,
Irish Peat Co. v. had been allotted to the defendant. He had paid some calls
upon these shares, and he was registered as holder of them,
but he had received no certificates for them, and he had not,
as required, executed the company's deed. He had not done
anything as owner except pay calls. Further calls having been
made, he declined to pay them, mainly on the ground that the
terms contained in the company's prospectus and letters of
allotment had not been adhered to. Being sued for calls, the
Court of Queen's Bench, and also the Court of Exchequer
Chamber, held that the defendant was not liable for them ; but
the two Courts differed in their reasons for so holding.
The Court of Queen's Bench expressed a strong opinion
that neither the non-execution of the conrpany's deed of set-
tlement, nor the non-fulfilment of the terms contained in the
company's prospectus and in the letters of allotment, afforded
any defence to the action ; but that Court thought that, the
shares not having been numbered, calls could not be made
upon them (x).
The Court of Exchequer Chamber did not express any
opinion upon the second point, and intimated considerable
doubt whether the fact relied upon by the Court of Queen's
Bench was material, but held that the non-execution by the
defendant of the company's deed of settlement afforded a com-
plete defence to the action.
Assuming that in the case in question the conduct of the
defendant was not such as to preclude him from denying that
he was a shareholder, the non-execution \>y him of the com-
pany's deed was a sufficient answer to the action (y) ; but it is
O) 1 B. k Sm. 598.
(a?) See, as to this, East Gloucester-
shire Rail. Co. v. Bartholomew, L. E.
3 Ex. 15 ; InoVs case, 7 Ch. 485.
(y) As in Wattrford, Wexford, £x.,
Hail. Co. v. Pidcock, 8 Ex. 279; ( 'ar-
i II l.i I ill Niil OBSERVING FORMALITIES. 51
conceived that the mere fact that a person has not executed ;i 1;k- [■ <Jli:,i>- -•
deed is not sufficient to exclude the application to him of the
doctrine of estoppel by conduct where that doctrine would Phillips.
otherwise apply.
It is true, that in the cases cited below (z), and in all of
which the defendant was held precluded by his own conduct
from denying that he was a shareholder, it would seem that
the company had no deed of settlement which shareholders
were required to execute ; but the same observation does not
apply to The Cro in ford and High Peak Railway Company Cromford, &c,
.,.." . Rail. Co. v.
v. Laccy (a), which does not appear to have been cited Lacey.
in The Irish Peat Company v. Phillips. The Cromford and
High Peak Railway Company was created by a special act,
which in terms incorporated the defendant and other persons
who were in effect recited in the act to have executed a certain
deed which the defendant had not done. In an action for
calls, it was held that the defendant was estopped by his con-
duct from denying that he was a shareholder, and the Court
was particularly careful not to let it be supposed that the
defendant had become a shareholder nolens volens, by reason
of the mere terms of the act. The defendant was held liable
because, although he had not executed the company's deed as
he ought to have done, he had with a full knowledge of all
material facts acted and been treated as a proprietor of shares.
The foregoing authorities are sufficient to illustrate the doc- Application of
.. „ , ,. . .,...., „., doctrine against
trine oi estoppel as applied against individuals. The same companies,
doctrine, however, is applicable against companies, as is shown
by those cases it which it has been held that companies cannot
treat, as continuing shareholders, persons who have transferred
their shares irregularly and improperly, but who have neverthe-
less been dealt with by the company as no longer members of
marthen Rail. Co. v. Wright, 1 Fos. & were actions for calls in which the
Fin. 282. defendant had not executed the
(z) Sheffield Rail. Co. v. Woodcock, deed of transfer. In Burnes v.
7 M. & AV. 574 ; Cheltenham Rail. Pennell, 2 H. L. C. 497, what the
Co. v. Daniel, 2 Q. B. 281 ; Rir- defendant ought to have signed was
mingham Rail. Co. v. Locke, 1 Q. B. not a deed but a minute in the com-
256; Lond. Gr. June. Rail. Co. v. pany's books.
Graham, 1 Q. B. 271. All of these (a) 3 Y. & J. 80.
I '2
52
SHAREHOLDERS.
Bk. I. Chap.
Sect. 2.
Distinction
between irre°
lar and void
acts.
Illegal issue
shares.
ol
it (b). These cases show conclusively that companies cannot,
any more than individuals, take advantage of the non-obser-
vance of formalities which they have not insisted upon, and
have, tacitly at least, dispensed with (c) ; and they show further,
that if the directors of a company, in transacting such business
of the company as they are authorised to transact, neglect to
observe the formalities prescribed by the regulations of the
company, and treat an informal act as a formal one, and thereby
induce others to do the same, the company is estopped from
afterwards disputing the validit}- of what has thus been treated
as valid by all parties. This proposition is also supported by
many decisions upon the question, who are and who are not
contributories under the winding up acts (<1) .
The proposition thus established is perfectly consistent with
the doctrine that companies are not bound by the acts of their
directors in matters as to which the directors are not the com-
pany's agents. The extent to which directors have power to
bind their respective companies will be examined hereafter.
It is sufficient to draw attention^ in the present place to the
distinction between irregular acts and acts which are altogether
unauthorised and are incapable of being confirmed ; and to
warn the reader not to conclude from the decisions just
adverted to, that a company is estopped from disputing the
validity of acts done and treated as valid by its directors, if
those acts are such as the directors have no authority to
perforin and the shareholders cannot ratify (e).
The cases which give rise to most difficulty are those in
which a person has in fact acted and been treated as a share-
holder in respect of shares which the company had no power to
issue. If the shares can, under any circumstances, legally
exist, then, however improper their issue may have been, the
company and the holder of them may be estopped from denying
(b) Bush's case, L. E. 6 H. L. 37,
and 6 Ch. 246 ; Grady's case, 1 De G.
J. & Sin. 488 ; Lane's case, ib. 504.
See, too, Bargate v. Shortridge, 5 H.
L. C. 297 ; and Taylor v. Hughes, 2
Jo. & Lat. 24.
(c) As to how far a company is
estopped by it* own register, see
infra, pp. 57, et seq.
(d) See Straffon's executor's case, 1
De G. M. & G. 576, and the cases in
the last note but one.
(e) See Grady's case, 1 De G. J. &
S. 488, and Lane's case, ib. 504, and
the cases in the next three notes.
El FECT OF N..I OBSEITS IXG l ORJ] M.u m . 5c
their existence and the holding of them by him (/) ; but it' ''•'■• f- Chap. 2.
. Sect. '1.
they cannot Legally exist, the person taking them cannot by -
estoppel or otherwise become a member in respect of them. A Bank of Hindu-
striking illustration of this is afforded by The Bank of Hindustan
v. Alison (g), where one company had, in excess of its powers,
amalgamated with another, and had, as part of the amalga-
mation scheme, issued new shares in excess of the authorised
capital : the issue being held void, it was also held, that a
person who had taken some new shares and paid on them, and
had retained them for some time without objection was, never-
theless, not precluded from denying that lie was a shareholder.
This same principle lias been recognised in equity as well as
at law, as will be seen hereafter when treating of contributories
and of the retirement of members (/<).
[n equity, the mere execution of a company's deed does Estoppel by
not preclude a person from denying that he became a share-
holder (/), and it is presumed that now the same doctrine wil*
apply at law.
In connection with the doctrine of estoppel by conduct, it is Effect of ^n°-
important to consider the effect of ignorance of material facts, facts.
Upon general principles it is conceived that a person who
induces others to act upon the faith of an untrue repre"
sentation innocently made by himself, cannot, as against them,
take advantage of his own want of information ; as between
them and him they ought not to be prejudiced by the circum-
stance that he would not have made the representation if he
had been better informed. But except where a person has
induced others to act on his own representations, ignorance of
material facts on his part affords a sufficient reason for not
holding him bound by what in such ignorance he may have
said or done. Accordingly, it has been held that if a company,
in ignorance of material facts, is induced to register an im-
(/) Campbell's case and Hippisley's (h) State and Worth's case, 4 Ch.
case, 9 Ch. 1 ; Challis's case, 6 Ch. 082 ; Smith's case, il>. 611 ; Spack-
266 ; Hare's case, 4 Ch. 503. man v. Evans, L. R. 3 H. L. 171.
(g) L. II. 6 C. P. 54 & 222. The (,') Coleman's case, 1 De G. J. &
Court of Chancery took a different Sm. 495. It was otherwise at law.
view of the facts of this case ; (see See Hull Flax Co. v. Wellesley,
9 Ch. 1) for the reasons given in 9 6 II. & N. 38.
Ch. 17.
54
SHAREHOLDERS.
Bk. I. Chap. 2. proper transfer of shares, it is not precluded from denying as
— - against the transferee his title as a shareholder (k) ; although
it cannot deny his legal title as against other persons who, on
the faith of the company's register, or a certificate of his title,
have bond fide bought his shares without notice of the impro-
priety in the transfer to himself (7).
Effect of vaiver
as between
shareholders
and creditors.
Moss v. Steam
Gondola Co.
Secondly, as between an alleged shareholder and a creditor.
Whether a person is liable, as a shareholder, to be pro-
ceeded against by the creditors of an incorporated or quasi-
incorporated compairv depends upon the construction of the
statute or charter which enables him to be proceeded against; and
in cases of this kind which have generally arisen in courts of law,
those courts have adhered very strictly to the language of the
statute or charter (m). The doctrine of estoppel has not been
applied in these cases, so as to enable a creditor to proceed
against a person who, though not a shareholder, has been
treated by the company as if he were one, or so as to prevent a
creditor from proceeding against a person who has not ceased
to be a shareholder according to the company's regulations,
but who has been treated by the company's officers as no longer
a shareholder in point of fact.
In Moss v. The Steam Gondola Company (n), a person who
had acted as a director of a company was held not to be liable
to creditors as a shareholder as he had not executed the com-
pany's deed, which was necessary to render him a shareholder.
Upon the same principle, where a married woman was a share-
holder in a company, and her husband was not entitled to act
as a shareholder until he had complied with certain regulations,
(k) Simm v. Anglo-American Tel.
Co., 5 Q. B. D. 188 ; Hare v. London
and North-Western Bail. Co., Johns.
722.
(/) See Shropsltire Union Rail. Co_
v. B., L. R. 7 H. L. 496, reversing
S. C. L. R. 8 Q. B. 420 ; Ward v.
South-Eastern Bail. Co., 2 E. & E.
812; Baliia and San Francisco Bail.
Co., L. R. 3 Q. B. 584 ; Hart v.
Frontino and Bolivia Minimi <'o..
L. R. 5 Ex. Ill, and see also Simm
v. Anglo-American Tel. Co., 5 Q. B.
D. 188.
(m) See Portal v. Emmens, 1 C. P.
D. 201 & 664, and the cases there
cited. Compare Kipling v. Todd,
3 C. P. D. 350, and infra, Bk. Ill ,
c. 6, § 7.
(n) 17 C. B. 180. See, too, Bail- y
v. Universal Prov. Life Ass., 1 C. B.
X. S. 557.
i M i:< l "i NOT OBSERVING FORMALITIES. 55
it was held that he was not liable to be proceeded against as a ,;k- T- chap. 2.
t. 2
shareholder by creditors, as he bad not complied with those •'■ ■' •
regulations, although be bad received bis wife's dividends, and
bad voted at meetings, and otherwise acted as a shareholder (0).
These principles were carried to their utmost extent in another
casr, where a person who bad, in fact, retired from a company,
was sought to be proceeded against as if be were still a share-
holder. The case in question is instructive, as it was litigated
both at law and in equity, and was carried to the House of
Lords ; it moreover shows, better than any other, the different
tendencies of the old Courts of law and equity to hold com-
panies bound by the conduct of their managers and directors in
matters of mere form. The case in question was decided at
law under the name of Bosanquet v. SJwrtridge, in equityunder
the name of Shortridge v. Bosanquet, and in the House of Lords
under the name oiBargate v. Shortridge.
In Bosanquet v. Shortridge (p), as it first came before the Bo3anquet v.
Court, the plaintiff, who had obtained judgment against the
public officer of a banking company, sought to enforce that
judgment against the defendant, who was alleged to be a
member of the company. The defendant had been a share-
holder, but he had sold his shares to another person, and the
transfer thereof to him was registered in the company's register.
By one of the rules of the company no person was to be regis-
tered as a shareholder without the consent of a board of
directors, and in this case no such consent had been obtained ;
and some time after the transfer had been registered the
directors declared the transfer void, and the}r put the de-
fendant again on the list, and returned him as a shareholder.
They did this for the express purpose of enabling the plaintiff,
as a creditor, to proceed against him. In appeared that in
point of fact transfers had been for years registered like the
one in question, viz., without the observance of the formali-
ties required by the company's deed. The Court of Ex-
chequer held that the defendant had not ceased to be a
shareholder ; that he still was a shareholder within the true
(0) See Ness v. Angas, 3 Ex. 805 ; Ness v. Armstrong, 4 ib. 21.
(j?) 4 Ex. 699.
56
SHAREHOLDERS.
Shortridge v.
Bos .in iiiet.
Bargate .v.
Shortridge.
Bk. I. Cbap. 2. intent of the company's deed ; and that he was therefore liable
fcGCt. z.
— • to be proceeded against by the creditors of the company.
In consequence of this decision, the suit of Shortridge v.
Bosanquet (q) was instituted for the purpose, first, of having
it declared that the plaintiff (i.e., the defendant at law) was no
longer a shareholder in the company, that his name might be
erased from its books, and not be returned to the stamp office
as if he were a member; and for the purpose, secondly, of
restraining the creditor from proceeding to execution against
the plaintiff. The Master of the Holls held that, after what
had taken place, the compairy could not insist that the plaintiff
was still a shareholder, or that his transferee was not : and, it
being established that the creditor was proceeding at the insti-
gation of the company, an injunction was granted as prayed by
the bill.
From this decree the creditor appealed to the House of
Lords, but the decree was there affirmed, upon the ground
that the company could not take advantage of the non-
observance by its own officers of formalities required by its
own deed (r).
The decision thus affirmed is in conformity with a prior
decision in Ireland in a case where it was held that a share-
holder in a banking company had, as between himself and the
company, ceased to be a member thereof, although he had
retired irregularly ; and that, having ceased to be a member as
between himself and the company, he was not liable to be sued
as a member b}r a creditor of the compairy, instigated to sue
him by its directors (s).
In both of these cases the creditor was suing at the instiga-
tion of the company. Had it not been for this circumstance
there would have been no ground on which a Court of equity
could have restrained him from exercising his legal rights.
Nor is there any case in which a Court of equny has assisted
a creditor against a person held at law not to be liable to be
proceeded against as a shareholder. Indeed, except under
Taylor v.
Hughes.
Observations on
these cases.
(q) 16 Beav. 84.
(r) Bargate v. Shortridge, 5 II. L.
C. 297, decided by Lord St. Leonards,
affirming the judgment of Sir John
Eonully, Lord Cranworth not con-
curring. -
(s) Taylor v. Hughes, 2 Jo. & Lat.
24.
l;l GIS I ER8 01 SB tftEHOLDERS. 57
very special circumstances, a Courl of equity would have had Bk. I. Chap. 2.
no jurisdiction in the matter. If, however, such a case as
Bargate v. Shortridge were now to arise, the equitable princi-
ples on which it was ultimately decided would be applicable to
the proceedings taken by the creditor.
SECTION III.— OF REGISTERS OF SHAREHOLDERS AND CERTIFICATES
OF TITLE TO SHARES.
With reference to the question whether a person is or is not Register of
a shareholder in a company, the state of its register of share- s
holders is of considerable importance.
Shares in companies being marketable commodities, transfer-
able from one person to another, some method of registration
is indispensable, in order that the persons who are at any given
time members of the company may be known. But a register Register as
of shareholders would be of little use if it were not admissible e^
in evidence both for and against every person whose name is
upon it ; and it is therefore necessary, not only to have a
register, but to make it evidence in judicial proceedings. The
simplest, and at the same time most just way of accomplishing
this is, to compel every member either to write his name in a
book kept by the company, or to give some officer of the com-
pany a written authority to insert his name therein. Another,
but much more arbitrary wa}r, is to make it the duty of every
company, or of some official, to keep a register of shareholders,
and to make that register evidence against any one whose
name may be upon it, without the necessit}- of showing by
what authority it was put there. The former of the modes is
commonly had recourse to in mining districts where partner-
ships with transferable shares have long been known ; but the
latter mode has been adopted by the legislature, and prevails
in most companies governed by acts of Parliament (t). A par-
([) The making of companies' and Taunton, dr., Co. v. Amos, 1 M.
Looks evidence against their mem- & S. 569.
tiers is not a new device, see Bristol
58 REGISTERS OF SHAREHOLDERS.
Bk. I. Chap. 2. liamentary register of shareholders thus hecornes a "most im-
bect. 3. "
- portant document ; for, speaking generally, unless a person is
on it, he is not entitled to the rights of a shareholder, whilst if
he is on it, he is suhject to all the liabilities of a shareholder,
unless he can show that his name ought not to have been on
the list. The acts of Parliament relating to registers of share-
holders are unfortunately numerous and differently worded,
and it is necessary, before determining the effect of being on
or off the register of a particular company, to examine the
provisions of the act which applies to it.
General rules on One or two general rules relating to these registers re-
tlns subject. , ° &
gamed as evidence of membership, may, however, be usefully
adverted to : —
1. The rule that a register or official return shall be evidence
in favour of a company keeping or making it, is contrary to
general principles of evidence and is a great privilege, and in
order to enjoy this privilege, the register or return must
be kept or made as required by the statute making it evi-
dence (w).
2. At the same time, if the provisions of the statute are
substantially complied with, the register or the official return,
as the case may be, will be admissible in evidence, although it
may be in some respects inaccurate or informal, e.g., if a
shareholder's residence is omitted (x) ; if some of the amounts
paid are not entered (y) ; if the numbers of the shares are
omitted (z) ; if the heading of the return is not strictly accu-
rate (a) ; if the return does not purport to be signed by the
person whose duty it is to sign it (6) ; if it was signed at the
wrong time (c). Moreover, inaccuracies as to some persons do
(h) Bain v. Whitehaven, dr., Bail. Bail. Co. v. Bartholomew, L. R. 3
Co., 3 H. L. C. 1. Ex. 1.3.
(x) Wills v. Murray, 4 Ex. 843. (a) Bain v. Whitehaven Bail. Co.,
(//) Bain v. Whitehaven Bail. Co., 3 H. L. C. 1 ; JJosset v. Harding, 1
3 H. L. C. 1 ; Bond, and Grand C. B. N. S. 524 ; Fowls v. Harding,
June. Rail. Co. v. Freeman, 2 Man. ib. 533.
& Gr. 606 ; Birmingham and Bristol (Ji) Harvey v. Scott, 11 Q. B. 92 ;
Rail. Co. v. Bocke, 1 Q. B. 256 ; Field v. Mackenzie, 4 C. B. 705.
Bond, and Grand June. Bail. Co. v. (c)" Henderson v. Boyal British
Graham, ib. 271, Bank, 7 E. & B. 356; Daniel v.
(V) Ib. and East Gloucestershire Royal British BanJe, 1 H. & N. 681.
RJ <.isi BRS AS ]\ [DEN( i .
59
n<»( preven< the register or return from being evidence against r,k- l chaP- '-'•
,. .... Beet 3.
others us to whom there is no inaccuracy (<1). But if what is
called a register is only a rough memorandum, it cannot be
regarded, although it is sealed (e). A share ledger, however,
has been held sufficient (/).
3. A person who assumes a fictitious name or whose name is
inaccurately stated, but whose identity can be established,
cannot escape liability as a shareholder on the ground of the
inaccuracy (g) ; and the use of a fictitious name only increases
the difficulty of proving identity (//).
4. The register or return is no evidence of the membership
of a person except at and after the date at which the register
or return becomes official (/).
5. Unless the statute making the register or return evidence,
clearly and indisputably makes it conclusive evidence, the
register or return will be prima hide evidence only of the
truth of the statements in it ; so that not only may a person
whose name is on the register or return show that his name
ought not to have been there (/,) ; but a person whose name is
not on it may be shown to have been in fact a member when
(d) Southampton Dock Co. v.
Richards, 1 Man. & Gr. 448 ; London
and Brighton Bail. Co. v. Fairclough,
2 ib. 674.
(e) Wolverhampton New Jf'nt<r-
works Co. v. Hawkesford, 6 C. B. N.
S. 336 ; 7 ib. 795, and 11 ib. 456,
approved by the Exchequer Cham-
ber in Irish Peat Co. v. Phillips, 1
B. & Sm. 638. See, too, Birkenhead,
Lancashire, dr., Bail. Co. v. Brown-
rigg, 4 Ex. 426 ; Cheltenham and
Great Western Bail. Co. v. Price, 9
C. & P. 55.
(/) Weikersheim's case, 8 Ch. 831.
(g) Thomson v. Harding, 1 C. B.
N. S. 555 ; Clowes v. Brettell, 11 M.
& W. 461 ; Pugh and Sharman's case,
13 Eq. 566 ; Cox's case, 4 De G. J. &
Sm. 53.
{h) Arthur v. Midland Bail Co., 3
K. & J. 204.
(i) Aylesbury Bail. Co. v. Thomp-
son, 2 Ea. Ca. 668 ; Cheltenham Bail.
Co. v. Price, 9 C. & P. 55. Compare
Bosanquet v. Sliortridge, 4 Ex. 699.
(k) See Portal v. Emmens, 1 C. P.
D. 212 ; Hallmark's case, 9 Ch. I).
32!) ; Powis v. Butler, 3 C. B. X. S.
645, and 4 ib. 469 ; Galvanized Iron
Co. v. Westoby, 8 Ex. 17 ; Waterford,
Wexford, &c, Bail. Co. v. Pidcock, 8
Ex. 279 ; Carmarthen Rail. Co. v.
Wright, 1 Fos. & Fin. 282 ; Shrop-
shire Un. Canal Co. v. Anderson, 3
Ex. 401 ; Bailey v. Universal Pror.
Life Ass., 1 C. B. N. S. 557 ; Moss
v. Steam Gondola Co., 17 C. B. 180 ;
Wilkinson v. Anglo -Calif or nian Gold
Co., 18 Q. B. 728 ; Stewart v. Same,
ib. 736 ; Edwards v. Kilkenny Bail.
Co., 14 C. B. N. S. 526 ; Birch's case,
■2 De G. & J. 10.
60 [REGISTERS OF SHAREHOLDERS.
Bk. I. Chap. 2. the register or return became official (I) ; so if no register has
Sect. 3. .
been kept (m).
6. It follows that a company is not necessarily estopped by
its own register. This was assumed by the Court of Ex-
chequer in The Waterford and Wexford Railway Company v.
Pidcock (n), where the defendant was held not to be liable to
calls because, though on the register, he had been placed there
before he had become a shareholder ; and because, notwith-
standing the register, he was not entitled to exercise the rights
of a shareholder (o). So where a company has, in ignorance of
material facts, registered a forged or improper transfer, it is
not estopped by its register from denying as against the regis-
tered transferee that he is a shareholder (p).
7. A person improperly registered as a shareholder in a
company cannot be considered as holding himself out as a
shareholder merely because he takes no steps to have his
name removed (q). But as regards some companies, it is
enacted that a person once properly registered as a share-
holder is to be deemed a shareholder so long as his name
remains on the register (r) ; and as will be seen hereafter, a
person once put on the register with his consent may lose his
right of repudiating his shares by delaying to have his name
removed (s).
(I) See Rastrick v. Derbyshire, (p) Simm v. Anglo-American Tel.
&c, Bail. Co., 9 Ex. 149 ; PrescoU Co., 5 Q. B. D. 188 ; Hare v. Lond.
v. Buffrey, 1 C. B. 41 ; Bank of and N.-W. Bail. Co., Johns. 722.
England v. Johnson, 3 Ex. 598; But as to persons acting on the faith
Wolverhampton Waterworks Co. v. of the register, see Ward v. S.-E.
Hawkesford, 6 C. B. N. S. 336 ; 7 Bail. Co., 2 E. & E. 812 ; and Hart
ib. 795, and 11 ib. 546; JVhittefs v. Front ino and Bolivia Mining Co.,
case, 2 De G. & J. 577. The ques- L. B. 5 Ex. 111. See, also, infra, p.
tion whether a person is a contri- 64, note (t).
butory or not in consequence of (7) See Somerville's case, 6 Ch.
being on or off the register will be 266 ; Bullock v. Chapman, 2 De G.
adverted to in a subsequent chapter. & S. 211 ; F>ircJi,s case, '2 De G. &
(m) See Ported v. Emmcns, 1 C. P. J. 10.
D. 201 & 664, which turned on the (r) See Ex parte Preseott, Mon. &
Companies Clauses Cons. Act and a Ch. 611 ; Harvey v. Scott, 11 Q. B.
special act. 92. This subject will be reverted
(n) 8 Ex. 279. to hereafter.
(0) See, too, Shropsldre Union, dr., (.s) See Oakes v. Turquand, L. B.
Co. v. Anderson, 3 Ex. 401, and the 2 H. L. 325, and other cases of that
other cases in notes (/.•) and (/). class.
COltKECTION OF REGISTER.
61
Where ;i company or its officers are required to keep a oLS 3
register of shareholders, it is their duty to keep such register :
1 Correction of
accurately, and it' they refuse to insert the name of a person agister.
entitled to be registered, or to erase the name of a person
improperly registered, in either ease upon complaint being
made to the proper tribunal, the company or its officers will
be ordered to correct the register. Several modern acts of
Parliament contain express provisions upon the subject of
correcting registers, and these provisions will be noticed here-
after when treating of the companies to which they relate.
Ijiit even where there is no statutory enactment expressly
applicable to the case, a mandamus or an injunction will be Mandamus and
injunction.
granted to compel a company, required hy statute to keep a
register, to insert a name improperly excluded (t), or to
compel the company to remove a name improperly inserted («)■
A mandamus will not, however, go to compel a company to
remove its seal from a register which it has sealed, although
it may he shown that the register is incorrect, and that it has
been sealed without authority (x).
A person asserting his right to be on the register must
prove his title to the shares in respect of which he claims to be
registered (y), and his right to be on the register (z) ; but if he
has already been registered, and he complains of being struck
off, the onus is on the company to show its right to remove
his name (</). It has been held that a mandamus will not be
granted in favour of a person wdio seeks to become a registered
shareholder for the purpose of being troublesome (b) ; nor in
(t) R. y.Reg. of Jt. St. Companies, Chapman, 2 De G. & S. 211, the
21 Q. B. D. 131 ; Paris Skating Rink Court declined to interfere, the case
Co., 6 Ch. D. 731 ; R. v. Camatic not being sufficiently clear.
Rail. Co., L. R. 8 Q. B. 299, a case (.-•) Ex parte Nash, 15 Q. B. 92.
of a married woman ; R. v. Shrop- (y) Daly v. Thompson, 10 M. &W.
shire Union Rail. Co., L. E, 8 Q. B. 309.
420, reversed but not on this point, (z) British Sugar Co., 3 K. & J.
L. R. 7 H. L. 496 ; Norris v. Irish 408.
Land Co., 8 E. & B. 512 ; Waul v. (a) See Ward v. S.-E. Rail. Co., 2
S.-E. Rail. Co., 2 E. & E. 812. E. & E. 812 ; East Wlieal Martha
(u) Eustace v. Dublin Trunk Rail. Mining Co., 33 Beav. 119.
Co., 6 Eq. 182 ; Taylor v. Hughes, 2 (6) See Reg. v. Liverpool, Man-
Jo. & Lit. 24; Shortridge v. Bosan- Chester, dr., Rail. Co., 21 L. J. Q. B.
quet, 16 Beav. 84. In Bullock v. 284.
62 REGISTERS OF SHAREHOLDERS.
r»k. I. Chap. 2. favour of a person whose own negligence lias occasioned the
Sect. 3. „ , . . .
— state of things which he seeks to have rectified (c). Moreover,
Correction of . . ,.,... ,, ,,
register. where an important question, e.g., liability to calls is actually
pending between a person and a company, a summary applica-
tion to rectify the register will not be entertained unless it can
be shown that it is necessary to rectify the register in order
that the real question in dispute may be fairly decided (d).
But the mere fact that the application to have the register
rectified involves the decision of an important and difficult
question is not sufficient to induce the Court to refrain from
ordering it to be rectified (e). Nor will the Court decline to
order the name of a person to be struck off the register simply
because his shares are marked forfeited, and his name has
been already removed (/). The order to remove is a great
security.
Where a register is rectified by order, it should so appear
on the register ([/).
Where a person on the register applies to have his name
struck off, and the name is alleged not to refer to him but to
some other person, the Court will not expunge the name until
satisfied upon the question of identity (It).
The right of a married woman to be registered has been
noticed already (i).
With respect to the registration of titles to shares, it has
been held that a company is not bound to register complicated
(c) See Ex 'parte Swan, 7 C. B. of Parliament differently worded
N. S. 400, and Swan v. North Brit. from the Companies act, 1862, as to
Australian Co., 7 H. & N. 603, and which see infra.
2 H. & C. 175. The extreme diver- (e) Higg's case, 2 Hem. & M. 657 ;
sity of opinion of the judges before Los' case, 6 N. R. 327.
whom this important case came (/) Martin's case, 2 Hem. & M.
renders it unsatisfactory as a guide 669 ; Los* case, 6 N. R. 327.
for the future. Compare Tayler v. (g) See Iron Ship-Building Co., 34
Great India Peninsular Rail. Co., 4 Beav. 597.
De G. & J. 559 ; and see the ob- (/<) See IVehVs case, 9 Jur. N. S.
servations of Y.-C. Matins in 11 Eq. 856, where a person was removed
319. from the list of con tributaries, but
(d) Anglo-French Poicelain Co. v. his name was left on the register of
Harris, 5 H. & N. 809; British shareholders.
Sugar Refilling Co., 3 K. & J. 408. (i) Ante,]). 41.
These cases, however, turned on acts
CORRECTION OF REGISTER. 0:5
deeds of transfer, e.g.. marriage settlements, by which shares l!k- \ Chap. 2.
Sect. •*}.
are assigned to trustees upon the usual trusts for the husband
and wife, and their children (k).
Companies are too frequently in the habit of altering their Right of com-
own registers by striking off the names of persons whom they ite register.
do not wish to recognise as shareholders and by substituting
other names in their places. Such proceedings cannot be too
strongly reprobated (I). When once a person is registered as
a shareholder, and his name has been since removed, the onus
of justifying the removal is on the company ; and it has been
held, that even where his title is defective the company has
no right to strike off his name unless his shares are claimed by
a person establishing a better title to them (m). A company
can however rectify its register in order to correct its own
mistakes (»)•
A person entitled to be registered as a shareholder by a Actions for im-
... .. , ., ., proper exclusion
company can maintain an action against the company, or those from or insertion
of its officers whose duty it is to register him as a shareholder, in re=l-stei'-
if they wrongfully refuse to register him. In such an action
it is no defence that the register is full, if it is so impro-
perly (o) ; and if the plaintiff complains that, in consequence of
his name not being registered, his shares have been forfeited
without notice to him, it is no defence that the forfeiture is a
mere nullity, and that the plaintiff has therefore sustained no
damage (})). In like manner a person wTho has transferred his
shares is entitled to maintain an action for damages against a
company for improperly refusing to register the name of his
transferee (q). The principles on which these decisions are
based are, it is conceived, sufficient to support an action for
damages by a person improperly inserted in a company's
(k) Reg. v. General Cemetery Co., 0 (a) Hartley's case, 18 Eq. 542, and
E. & B. 415 ; Copeland v. Xorth-E. 10 Ch. 157 ; Re Etna Ins. Co., Ir.
Rail. Co., ib. 277. Rep. 7 Eq. 264.
(I) See the judgments in the cases (o) Daly v. Thompson, 10 M. & W.
below. 309.
(ru) See Ward v. South-E. Rail. (p) Catchpole v. Ambergate, &c,
Co., 2 E. & E. 812 ; Hart v. Frontino Rail. Co., 1 E. & B. 111.
and Bolivia Mining Co., L. R. 5 Ex. (q) Skinner v. City of London
111. Compare Hare v. Lond. and Marine Insurance Corporation, 14
Xm-th-ir. Rail. Co., Johns. 72± Q. B. D. 882.
Gl REGISTERS OF SHAREHOLDERS.
Bk. I. Chap. 2. register : but the writer is not aware of any case bearing
Sect. 8. , .*''_. .
directly on this point.
Right to register It has been already seen that if a person is bound by agree-
a person against .,, , ■, ■, • , .-,
his will. ment with a company to take shares in it, the company is
entitled without more, to act on the agreement and to register
him as a shareholder (>•).
fVHificates of In addition to the evidence of membership obtainable from
registers of shareholders, many companies are required by
statute to give every shareholder, on demand, a sealed certi-
ficate of his ownership of the shares, to which he is entitled.
The object of this is to enable a shareholder to prove that he
is such ; and particularly to enable him, upon a sale of his
shares, to prove his title to them to the satisfaction of a pur-
chaser, and to show how much has been paid up in respect of
them («). The company cannot dispute the truth of the certi-
ficate as against a person who has bought on the faith of it (t).
But the certificate applies only to the legal, not to the equit-
able title of the person named in it {u). No person is entitled
to demand a certificate of title to shares in a company until he
has done everything necessary to constitute himself a share-
holder in the full sense of the word {x).
Admissions. A person may be proved to be a member of a company by
his own admissions. Thus it has several times been held
that a person who has admitted himself to be a shareholder
in a company constituted by deed, may be rendered liable as
a shareholder without any evidence being given as to that
deed (y).
(r) Ante, p. 46. and Bolivia, dec, Mining Co., L. R.
(s) See upon this subject, Hare v. 5 Ex. 111. Gomp. ante, p. 60,
Waring, 3 M. & W. 362 ; Curling v. note (p).
Flight, 6 Ha. 41, and 2 Ph. 613 ; (u) Shropshire Union Rail. Co. v.
Shaw v. Fisher, 2 De G. & S. 11. 7?., L. B. 7 H. L. 496, reversing
(t) Burkinshaw v. Nicolls, 3 App. S. C. L. R. 8 Q. B. 420.
Cas. 1004, affirming British Farmers' (re) Wilkinson v. Anglo-Californian
Pure Linseed Cake Co., 7 Ch. D. 533 ; Gold Co., 18 Q. B. 728 ; Stewart v.
Si m in v. Anglo-American Tel. Co., Ang.-Cal. Gold Co., ib. 736.
5 Q. B. D. 188 ; Barrow's case, 14 (//) liar,; y v. Kay, 9 B. & C. 356 ;
Ch. D. 432 ; Shaw v. Port Philip Ralph v. Harvey, 1 Q. B. 845 ; and
Gold Mining Co., 13 Q. B. 1). 103; see Tredicen v. Bourne,6 M. & W.
Bahia and San Francisco Rail. Co., 461.
L. B. 3 Q. B. 581 ; Hart v. Frontino
SCRIP. <»■
Admissions, however, arc not necessarily conclusive, and 1;k- '• Chap. 2.
Sect. 4.
little weight oimht to be attached to them if it is shown that
they were made under erroneous suppositions (z). This seems
to have heen the true ground of the decision in the much
debated case of Vice v. Anson (a). There the defendant sup- Vice v. Anson,
posed herself to be a shareholder in a mine ; she had in private
letters and in private society written and spoken of herself as
a shareholder ; she had received certificates stating that her
name was registered in the act-book of the mine, and that she
was entitled to share the profits of it; and lastly, she had paid
deposits on her shares. But Lord Tenterden held that she
had not in point of fact any interest in the mine, and that as
she never represented to the plaintiff that she was a share-
holder therein, she could not be made liable to him simply
because of her erroneous suppositions and admissions.
SECTION IV.— OF SCRIP.
In order to enable persons who do not desire to become Scrip,
shareholders to acquire the right so to become and to transfer
that right to others, recourse is had to what are called scrip
certificates.
A scrip certificate is an acknowledgment by a company or
its projectors that the person named in the certificate (or more
commonly the holder) is entitled to a certain specified number
of shares in the undertaking. The certificate represents a
right to acquire, but not necessarily an obligation to take a
share (b). The certificate must have a penny stamp (c).
(z) See Ridgway v. Philip, 1 Cr. she not entitled as a partner to
M. & E. 415. share the profits obtained by work-
(«) 7 B. & C. 409, and Moo. & M. ing the mine I and what more was
98. See, on this case, Owen v. Van necessary to make her liable to the
Uster, 10 C. B. 318, and qu. if it is supplier?
law ; for though the defendant had (6) Eustace v. Dublin Trunk Rail.
no legal interest in the mine, was Co., 6 Eq. 182 ; Ormerod's case, 5 Eq.
(c) See note (r) next page.
L.C.
66 scrip.
Bk. I. Chap. 2. jn some companies nothing is required to convert scrip-
- holders into shareholders. Companies constituted upon this
Scrip companies. . , n. . . . . ., . ■•
principle are called scrip companies, and m them scrip and
shares are synonymous, there being in fact no difference
between scripholders and shareholders (d).
Scripliolders Usually, however, a person entitled to scrip does not acquire
shareholders. the rights of an actual shareholder until his scrip certificates
have been delivered up and exchanged for share certificates,
nor until his name has been inserted upon the company's
register of shareholders. Generally speaking, after a company
is formed, its scrip is called in ; i.e., the holders of the scrip
are required to exchange their certificates for share certificates,
and to do whatever else may be necessary to render them
members of the company, as distinguished from persons who
have only a right to become members. In such cases as these,
scripliolders are not shareholders, nor are they partners either
with each other or with the promoters of the company (e).
This doctrine results from the distinction between agreements
to form a future partnership and contracts for a present part-
nership (/) ; but as will be seen hereafter, it does not follow
that a company which progresses no further than the issue of
scrip cannot be wound up ; nor that upon the winding up of
such a company scripliolders are not liable to be put upon the
list of contributories {g).
Transfer of scrip. ^iie effect of a transfer of scrip will be alluded to hereafter,
when treating of the transfer of shares. It may, however, be
noticed here that scrip certificates are not negotiable instru-
ments ; but if they are proved to be so in any jjarticular case,
they cannot be recovered from a bond fide holder for value
110 ; Ex parte Collum, 9 Etp 236 ; (e) See the cases in note (b), and
He Littlehampton Steam Shi}) Co., 34 Fox v. Frith, 1 Car. & M. 502.
Beav. 256, and 2 De G. J. & Sm. (/) As to which, see Partn., p.
521 ; Jackson v. Cocker, 4 Beav. 59. 20.
Clark v. Newsam. 1 Ex. 131, shows (</) See, on this subject, Barclay's
that to forge scrip was only a mis- case, 26 Beav. 177 ; Re Aston, 27 ib.
demeanour under 1 Win. 4, c. 66. 474, and 4 De G. & J. 320 ; Grise-
Compare 24 & 25 Vict. c. 98, § 23. wood and Smith's case, 4 De G. &
(c) 33 & 34 Vict. c. 97, § 3. J. 544, and the cases cited in
(d) As to the legality of scrip note (i).
companies, see infra, ch. v.
SCRIP. an
<>7
without notice of any infirmity in the title of the person from ut r. Chap. 2.
whom lie has taken them (A). ,Sect 4-
^ (A) See Goodwin v. Jfoforta, 1 App. pany, and the mercantile usage was
Las 476 ; a case of a foreign govern- proved. Qu., how often will it have
ment loan. In Rumball v. Metro- to be proved before the usage is
pohtan Bank, 2 Q. B. D. 194, the judicially recognised ?
scrip was that of a banking com-
f 2
68
MEMBERSHIP INDUCED BY FALSE STATEMENTS.
CHAPTER III.
OP MEMBERSHIP INDUCED BY FALSE STATEMENTS.
Having now explained the doctrines relating to agreements
to take shares, and what constitutes membership, it will be
convenient to consider the position of persons who have been
induced to enter into such agreements and to take shares by
false, and, in many cases, fraudulent misrepresentations.
Bk. I. Chap. 3,
Seot. 1.
Mis-statements
in piospectus.
Mis-statement
must be of
facts.
SECTION I.— EFFECT OF FALSE STATEMENTS APART FROM STATUTE.
1. Requisites for Redress.
Nothing is, unfortunately, more common than the occur-
rence of serious mis-statements in a company's prospectus.
These mis-statements are sometimes the result of ignorance
and carelessness, but they are sometimes also the result of
deliberate fraud. "Whatever may be their moral aspect, their
effect is to induce persons to take shares on the faith of their
accuracy ; and the question then arises whether the shares so
taken can be repudiated, or what reined}-, if any, is open to
those who have been induced to take shares on the faith of
the truth of the statements.
It will be convenient to consider first those requisites which
must be proved in order to entitle the complainant to any
redress at all, and then to consider what further is necessary
to entitle him — 1. To relief against the company by way of
rescission of contract and indemnity ; 2. to relief in the shape
of damages against the individuals who have misled him.
In the first place it must be observed that statements which
are not statements of fact, but which are expressions of
REQ1 [SITES FOR REDRESS. 69
sanguine expectations are not actionable, although they prove Bk- *■ ' ;haP- :;-
to be unfounded (a) ; nor, are extravagant expressions of -
opinion as to value (b).
In Bellairs v. Tucker (c) the prospectus stated that for ikiiairs v.
reasons given a dividend of 50 per cent, was confidently ex-
pected ; the reasons wore unsatisfactory, and the company
proved a total failure ; but there was no actual mis-statement
of any fact, and an action brought to recover damages from
those who issued the prospectus failed.
It must not, however, he assumed that an expression of an False statement
of intention.
opinion, or of an intention, or of a purpose, may not he a
statement of fact within this rule. If an opinion, intention,
or purpose is not in truth entertained, those who say the
contrary mis-state a fact. Therefore, in Edgington v. Fitz- gJgington v.
maurice (d), where a prospectus was issued inviting subscrip-
tions to debentures for a purpose, which was not the true
purpose for which money was wanted, a person who took
debentures which proved worthless was held entitled to main-
tain an action against those who had fraudulently misled him.
Secondlv, amis-statement of fact must, in order to entitle Statement must
; be untrue.
a person to any relief in respect of it, be untrue when made ;
or, if then true, must be untrue when it is intended to be acted
upon and is acted upon. It has already been seen (e) that if
an application for shares is made on the faith of a statement
which is true when made, but which is not true when shares
are allotted to the applicant, he may refuse to take them.
Further, a statement that an existing condition of things is
likely to last, is not true if circumstances have occurred which
will soon put an end to it ; and a statement that a condition
of things exists may be so expressed as to be intended to lead,
and so as in fact to lead, to the inference that the condition
not only exists now but will exist for some reasonable time to
come. A statement to this effect is fraudulent if the person
who makes the statement knows that permanence in the sense
implied cannot be relied upon, or that the state of things has
(a) Hallows v. Ferule, 3 Ch. 467, (J) 29 Ch. D. 459.
and 3 Eq. 520. (e) Anderson 's case, 17 Ch. D. 373)
(6) Denton v. Macneil, 2 Eq. 352. ante, p. 21. Compare Hallows v.
(c) 13 Q. B. D. 562. Fernie, 3 Ch. 467, and 3 Eq. 520.
0
FALSE STATEMENTS APART FROM STATUTE.
Concealment of
material facts.
Bk. I. Chap. 3. ceased when its continuance is still believed in by a person
— acting on the faith of the statement (/). But in the absence
of such knowledge the fact that what was true has ceased to be
so, cannot entitle a person who is a shareholder to relief unless
indeed there is some contract express or implied guaranteeing
him against the consequences of change.
By the law of this country the duty of a person bargaining
with another to disclose all material facts known to himself is
confined to a very limited class of contracts (g). In all con-
tracts of buying and selling the maxim is caveat emptor ; and
contracts to take shares are apparently governed rather by this
principle than by any other (h). At the same time, if persons
issue prospectuses or make statements, and fraudulently sup-
press material facts which render the statements made untrue,
an action for damages may be sustained against them (■?*).
A fortiori, will such a concealment support an action for
rescission of contract. But such an action cannot apparently
be supported by a person induced to take shares by the con-
cealment of a material fact unless there has been some untrue
statement (k).
Thirdly, the mis-statement of fact must have been made
with a view to induce the person complaining of it or persons
in general to act upon it. A mis-statement made by A. to B.,
but not intended to influence C, nor any class of persons of
whom C. is one, does not entitle C. to redress, although he
may have heard of it and acted upon it and suffered loss (I).
Fourthly, a mis-statement of fact in order to entitle a
person to any relief in respect of it, must be material to the
Intention with
which false
statement is
made.
False statement
must be mate-
rial.
(/) See Traill v. Baring, 4 De G.
J. & S. 318 ; and Brownlie v. Camp-
bell, 5 App. Cas. 950, per Lord
Blackburn.
(g) See Davies v. Lond. and Prov.
Marine Ins. Co., 8 Ch. D. 469, a case
of suretyship.
(/t) See the next note. In l\vy-
cross v. Grant, 2 C. P. D. 469, reasons
are given against this view.
(i) See Peek v. Gurney, L. R. 6
H. L. 377, and 13 Eq. 79 ; Ark-
v- right v. Newbold, 17 Ch. D. 301.
(k) See the last note and the judg-
ments in New Sombrero Phosphate Co.
v. Erlanyer, 3 App. Cas. 1218, and
5 Ch. D. 73, a promoter's case ;
Oakes v. Turquand, L. R. 2 H. L.
325 ; Pidsford v. Richards, 17 Beav.
87 ; hut see 5 App. Cas. 950, per
Lord Blackburn.
(I) See Peck v. Gurney, ubi supra ;
and the note to Chandelor v. Lopus,
1 Sm. L. C. ; compare Cann v.
Wilson, 39 Ch. D. 39.
RKQUISJ lis l OB REDRESS.
contract into which the statement induced him to enter. It Bk. I. Chap.
must be a statement but for which he would not have entered
into it. Mis-statements relating to trifling matters of detail,
or statements which though not true when made were true
before their untruth became important, are not sufficient to
sustain cither an action for damages or for rescission of con-
tract din.
In Ship v. Cro88kill (n) a prospectus stated that more than Ship v.\
half tli.' capital had been subscribed for. This was not true ; Crosskl L
hut it was true soon afterwards, an 1 before the plaintiff
applied for shares. He was held not entitled to maintain
an action for damages against the directors for misrepre-
sentation.
Fifthly, the person complaining of the mis-statement must F<dse statement
in fact have acted on the faith of it {<>). Further, if the state- acted upon.
ment on which he relies is fairly capable of two meanings, one
true and the other false, lie must show which meaning he
attached to it, and that lie understood it in the sense in which Ambiguous
it was false. Smith v. Chadivick (p) is the leading case on Smith r
this point. The statement there was — " The present value of Chadwick.
the turnover or output of the entire works is over 1,000,000/.
per annum." This was true in one sense but not in another ;
and the plaintiff would not say in which sense he understood
it — in truth he evaded that question. The action was for
damages, and it failed. If the action had been for rescission
of contract the result would probably have been the same, for
the plaintiff would have still failed to prove that he had been
misled b}^ the statement (q).
It is not, however, necessary for the person who seeks False ;staten)ent
' * not the sole
redress on the ground that he has been induced to take shares inducement to
by a false statement to prove that such statement was the sole
inducement which led him to apply for shares ; it is sufficient
for him to prove that the mis-statement materially tended to
(»>) See Puhford v. Richards, 17 (n) 10 Eq. 73.
Beav. 87, and cases of that class, (o) See infra.
noticed infra; Hallows v. Fernie, 3 (p) 9 App. Cas. 187, and 20 Ch.
Ch. 467, and 3 Eq. 520 ; Smith v. D. 27.
Chadwick, 9 App. Cas. 187, and 20 (q) Lord Bramwell thought this
Ch. D. 27, as to several of the was proved, but that there was no
grounds relied on. fraud on the part of the defendant.
72 FALSE STATEMENTS APART FROM STATUTE.
Bk. I. Chap. 3. induce him to do so (r). In Edqinqton v. Fitzmaurice (s) a
Sect. l. . / ' w
- person relied on a mis-statement in the prospectus, but he was
Fitzmaurice. also influenced by a mistake of his own ; he was nevertheless
held entitled to redress.
Opportunity of A person who makes a statement to another in order to
truth not ° induce him to act upon it' cannot complain if the statement
material. jg Relieved without further inquiry. The person making
the statement may guard himself by saying that it must not
be taken as true without inquiry ; he may refer to others, or to
books or documents, and leave the person with whom he is
dealing to act on his own judgment (t). But unless this is
done, the person to whom the statement is made is entitled to
believe it and act upon it ; and if it is false he is entitled to
redress, although he might have found out the truth without
much trouble or expense («).
Unless all the above-mentioned requisites are established, a
person who complains that he has been induced to take shares
in a company by misrepresentation is without redress of any
kind. But if he can establish them he will be entitled to
redress of some sort either against the company or against the
persons who made the misrepresentations, or against both
them and the company, as the case may be, and as will be
now explained.
(n) Tn rescind If he can show that the mis-statements have been made under
such circumstances as to be imputable in point of law to the
company (x), and he has obtained his shares directly from the
company, he can rescind his contract and repudiate his shares,
and obtain back from the company whatever money he may
have paid to the company in respect of them ((/), and further
7LL • SW^ I, ^^L^ {ryPeek v. Derry, 37 Cli. D. 541 ; & F. 232; and see Redgrave v.
JL^aU &*— 1 i^xU. Western Bank of Scotland v. Addie, Kurd, 20 Ch. D. 1.
L. E, 1 H. L. (Sc), pp. 158 & 162 ; (u) See Peek v. Derry, 37 Ch. D.
Nicol's case, 3 De G. & J. 387 ; 541 ; Baidins v. TVickham, 3 De G.
Clarke v. Dickson, 6 C. B. N. S. 453 ; & J. 304, and 1 Giff. 355.
Cleveland Iron Co. v. Stevenson, 4 (.>•) See as to this, infra, book ii. ;
Fos. & Fin. 437. Nicol's case, 3 De G. & J. 387 ;
(s) 29 Ch. D. 459, an action fur Mixer's case, 4 ib. 575, noticed infra.
damages. (y) Kisch v. Central Bail. Co. vf
(t) As in Jennings v. Broughton, Venezuela, 3 De G. J. & Sm. 122,
17 Beav. 234; and 5 De G. M. & and L. E. 2 H. L. 99, and others
G. 126; Attv;ood v. Small, 6 CI. of that class referred to below.
NATURE OF RELIEF. 73
compel the company to indemnify him against loss (:). More- ,:k- '■ r|"i'- -•
over, to entitle him to this relief, it is nol necessary to prove -
that the statements were false to the knowledge of those who
made them (a).
With respect, however, to the repudiation of shares, two Loss of right to
points must be borne in mind, viz. : (1.) The right to repudiate
will be lost if not promptly asserted after the factsare known, or
might have been known, if reasonable diligence had been exer-
cised (b) ; and a fortiori will be lost if the shareholder has so
acted after he knew the facts as to have elected to keep the
shares, and to have waived his right to repudiate them. (2.) The
right to repudiate by any registered shareholder in a company
being wound up, cannot be exercised after the commencement
of the winding up of the company (c). This last doctrine
turns on the provisions of the Companies act, 1862 ; and the
cases under the older winding up acts in which shares were
repudiated after the commencement of winding up proceedings,
although valuable as illustrations of principles, are no longer
authorities on the right to repudiate after winding up has
commenced.
If the person defrauded cannot prove all that is necessary to (*>) To recover
repudiate his shares, or if he has lost his right to repudiate
them, he may still be entitled to damages against those who
issued the prospectus. But in order to entitle him to this
relief, he must prove not only that the statements were untrue
when made, but were untrue to the knowledge of the defen-
dants, or at all events that the defendants, in publishing the
statements acted recklessly, and without having reasonable
grounds for believing them to be true (d).
The person aggrieved may both repudiate his shares and
obtain damages if he can prove what is necessary to entitle him
to this double relief.
(z) See Newbigging v. Adam, 34 (6) Sheffield's case, Johns. 451, and
Ch. D. 582, and 13 App. Ca. 308. others of that class noticed infra.
(a) Smith v. Reese River Co., L. R. (c) Oakes v. Turquand, L. R. 2 H.
4 H. L. 64, 2 Ch. 604, and 2 Eq. L. 325 ; Kent v. Freehold Land, dr.,
264 ; Arhvright v. Ncicbold, 17 Ch. Co., 3 Ch. 4.93, and 4 Eq. 588.
D. 301 ; Redgrave v. Hurd, 20 Ch. (d) See Peek v. Berry, 37 Ch. D.
1). 1. See Pollock on Contracts, 541, and the cases referred to below,
cc. 9 and 10. See Pollock on Torts, 236 et seq.
>ee ronocK on rorts, z.io ei seq. , . n
74 FALSE STATEMENTS APART FROM STATUTE.
Bk. I. Chap. 3. With respect to actions for damages against companies as
— distinguished from actions for rescission of contract and
damans against indemnity, there is always the difficulty of establishing fraud
ths company, j against the company as a body. Many eminent men consider
that on principle a corporate body cannot commit a fraud, and
that consequently an action for fraud can never be maintained
against an incorporated company ; but the current of authority,
and in the author's opinion sound principle also, are opposed to
this view, and are in favour of such actions being maintainable.
This difficult subject will be discussed hereafter (Bk. II., c. 3,
§ 3). It is however settled that such an action (or its equivalent,
viz., a claim for damages) cannot be supported against a com-
pany which is being wound up (e).
This doctrine is based upon the winding-up provisions of the
Companies act, 1862, and upon the rights of creditors under
winding-up proceedings, and has no application to actions
against companies not being wound up, nor to actions against
individual directors or other persons.
Having now stated the general principles applicable to the
subject under consideration, it will be useful to notice some of
the more important decisions illustrating, (1) The right to relief
against the company by way of rescission of contract and
indemnity ; and (2) The right to redress against the indi-
viduals who have been guilty of fraud.
2. Remedy against the Company.
Kisch v. Central In Kisch v. Central Railway Company of Venezuela (/), the
SS'rfW prospectus in effect stated, (1) That the company had obtained
zue!a- a concession from a foreign government ; (2) That the con-
tractor had guaranteed a dividend of two-and-a-half per cent,
on the paid-up capital during the construction of the works ;
and (3) That the foreign government had guaranteed a divi-
dend of nine per cent, on the paid-up capital for twenty years.
(c) Houldsworth v. City of Glasgow these decisions.
Bank, L. R. 5 App. Cas. 317. See (/) 3 De G. J. & Sm. 122 ; aff.
also Cargill v. Bower, 10 Ch. D. 502. L. R. 2. H. L. 99, under the name
Observe that these are cases of de- Directors of Central Bail. Co. of
frauded members. Claim- fur frauds Venezuela v. Kisch.
on other persons are not affected by
RESCISSION. 75
The real facts were (1) That the company had for a large sum Bk. I. Chap. 3.
bought a concession made to another company; (2) The con-
tractor's guarantee was limited to 20,000/., the capital of the
company being 500,000*. ; (8) The government guarantee only
came into operation in the event of the company failing,
without any default of its own, to realise a profit of nine per
cent, on its paid-up capital from its business. The memo-
randum of association empowered the company to purchase
concessions, and the agreement for the purchase of the con-
cession already obtained by others was referred to in the com-
pany's articles, but was not disclosed in them. The Court
held that the misrepresentations in the prospectus were such
as to entitle a person taking shares on the faith of it to rescind
his contract, although he was not entitled to rely upon his own
ignorance of the memorandum and articles of association, and
of wdiat was there disclosed.
In Smith v. Reese Hirer Company (g), the prospectus de- Smith "■ Re"^
scribed some silver mines abroad which the company had ^^ Company*
contracted for, and proposed to work as extremely valuable,
whereas in fact they were wholly worthless, and were after-
wards given up by the company for others, which were more
promising. The directors who issued the prospectus did not
know that the mines referred to in the prospectus were worth-
less, they having themselves been duped ; but the Court held
that a person who had taken shares on the faith of the pro-
spectus was entitled to rescind his contract, and to have the
company restrained from suing him for calls (A).
In Ross v. Estates Investment Company (/), a prospectus R°*s »■ Estat.es
was issued by the directors of a company after its formation, 1q2^T
and the prospectus stated, falsely, that half the first issue of
shares had been already subscribed for, and that the company
had contracted for the purchase of two properties, on one of
which the vendor had already spent 70,000/. A person who
had been induced to take shares in the company on the faith of
this prospectus, was held entitled to rescind his contract, to
{[)) L. R. 4 H. L. 64, 2 Oh. 004, directors that their statements were
and 2 Eq. 261. false, ante, p. 73.
(h) See, as to the immateriality (I) L. R. 3 Eq. 122, aff. 3 C'li.
of knowledge on the part of the 683.
76
FALSE STATEMENTS APART FROM STATUTE.
Bk. I. Chap. 3,
Sect. 1.
Henderson v.
Lacon.
Fraud not
material.
Private arrange-
ments by pro-
moters.
Pulsford r.
Richards.
recover from the company the money he had paid to it for the
shares, to have his name removed from the register of share-
holders, and to have the company restrained from suing him
for calls.
In Henderson v. Lacon (/.), the prospectus stated, falsely,
that the directors and their friends had subscribed a large
portion of the capital ; and a shareholder who had applied for
and obtained shares on the faith of this prospectus was held
entitled to repudiate his shares and to have his money back,
and to have his name removed from the register of members,
and to be indemnified by the directors.
Moreover, in such cases as these, the plaintiff is entitled to
relief, although a petition to wind up the company may be
presented after action brought (/).
These cases may be conveniently contrasted with the follow-
ing, in which the misrepresentation relied upon was held not to
be sufficiently material, or not to have been relied upon by the
plaintiff so as to entitle him to relief.
In Pulsford v. Richards (tn), the projectors of a Belgian
railway issued a prospectus for the formation of a company,
stating that they transferred to the company the concession
obtained from the Belgian government, and all the benefits
arising from it, subject to certain specified reservations in
favour of the promoters for reimbursement of preliminary
expenses. The plaintiff, acting on the faith of this prospectus,
applied for and accepted shares in the company, but afterwards
filed a bill against the projectors for a return of all monies
paid by him in respect of such shares with interest, offering
to return the shares and all dividends received on account of
them. The grounds on which the plaintiff sought to rescind
his contract were substantially — (1) that an arrangement
had been made by the promoters with an engineer, highly
beneficial to him and detrimental to the company, and that
this arrangement was in no way alluded to in the prospectus ;
and, (2) that the promoters had appropriated to themselves
(k) 5 Eq. 249. mann v. European Central Rail. Co.,
(1) Smith v. Eeese Hirer Co., and 7 Eq. 154; Kennedy v. Panama, d-c.,
Henderson v. Lacon, vbi supra. Mail. Co., L. R. 2 Q. B. 580.
(m) 17 Beav. 87. See, also, Hey-
RESCISSION. 77
20,000 shares in the company, in addition to the benefits Bk.I. Chap. 3.
expressly reserved to them in the prospectus. The Court,
Fulsford v.
however, held that there was no such fraud as was sufficient to Richards.
enable the plaintiff to rescind the contract into which he had
entered, and his bill was dismissed with costs. As regards
the shares, the Court was of opinion that the directors took
the shares bond fide, and that the number of shares allotted
l>3r them to themselves and the engineer, was not a fact so
material, that the knowledge of it was a matter which the
directors were bound to communicate to the public, in order
to enable them to come to a sound conclusion as to the
probable success of the undertaking in which they were
invited to take a part. As to the concealed arrangement with
the engineer, the Court came to the conclusion that the ser-
vices performed and to be performed by him, must have been
performed by some one ; that he was peculiarly well fitted
to perform them ; that supposing the remuneration agreed
upon to have been excessive, still that would only entitle the
shareholders to have the amount of excess paid by the direc-
tors themselves, and that the non-disclosure to the public of
the agreement made with the engineer, was not the suppres-
sion of a fact which affected the intrinsic value of the under-
taking, or consequently afforded a sufficient ground for a
rescission by the plaintiff of his contract to take shares in the
company.
In Jennings v. Browjhton (//), the plaintiff, who had taken Statements not
.... „ relied on by
shares in a mining company formed by the defendants, sought plaintiff.
to rescind the contract on the ground that he had been induced Jennings v.
Broughton.
so to do, by their representations. The misrepresentations
consisted of exaggerated statements, as to the value and
prospects of the mine, contained in the report of an engineer
employed by the defendants, and which report was submitted
by them to the plaintiff. The plaintiff, however, did not alto-
gether rely on this report, but went and examined the mine
himself more than once, before he purchased the shares in it.
The mine had undoubtedly been described in too glowing
(n) 17 Beav. 234, and 5 De G. the plaintiff also relied on his own
M. & G. 126. See, also, Attwood judgment,
v. Small, G CI. & Fin. 232, where
78
FALSE STATEMENTS APART FEOM STATUTE.
Prospectus not
relied upon by
plaintiff.
Robson v.
Devon.
Bk. I. Chap. 3. colours, and it bvno means came up to the expectations formed
Sect. l. ' J l L
of it ; but the Court was of opinion, upon the evidence, that the
plaintiff had not relied on what was represented to be actually
existing, that he not only had had the same means as the
defendants of ascertaining the truth, but that he had availed
himself of those means, and that his deception was as much
owing to his own error of judgment as to anything else. His
bill therefore was dismissed, and with costs, and an appeal by
him was also dismissed.
In Robson v. The Earl of Devon (o), the plaintiff, a stock-
broker, was induced by the secretary of a company, first to
advance him 500/. on the security of 1000 1/. shares, on each
of which 1/. was certified to have been paid up ; and secondly,
to purchase 1200 other shares. On the failure of the company,
the plaintiff sought to have both transactions declared void,
and to obtain back from the company his 500/., and the money
paid for the purchased shares. The plaintiff rested his case
against the company upon the following, amongst other
grounds, viz. : First, that the company's prospectus showed
that no shares ought to have been issued before a certain
amount of capital had been subscribed ; and secondly, that
nothing had ever been paid in respect of the shares on which
the 500/. had been advanced. But it was held that the
plaintiff was entitled to no relief on either of these grounds.
For, first, it was by no means clear that the capital required
by the prospectus to be subscribed, had not in fact been
subscribed ; secondly, the plaintiff had not parted with his
money on the faith of the prospectus, so that it was im-
material to consider what wras there stated ; and thirdly,
the shares on the security of which he lent his money, were,
as between the holder and the company, to be taken as
paid-up shares, and therefore it was of no consequence to
the plaintiff, whether anything had actually been paid upon
them or not.
Although the cases under the older winding up acts, in which
persons induced by fraud to take shares in a company were held
not to be contributories, can no longer be relied upon where the
(o) 3 Jur. N. S. 567, and 4 ib. 245.
RESCISSION. 70
point for determination is contributory or non-contributory, l;k- '• ChaP- 3-
. Sect. 1.
those cases throw great light on the questions discussed in this
chapter, 'and the following notice of them may still prove
useful.
1. Persons held entitled to repudiate their shares, having ban
induced t<> take them by the fraud <>/' tli<- company.
Ginger's case(p) i> an important Irish case, decided in winding up the dinger's case.
Tipperary Bank. In that case the managing director of the bank, acting
without authority, and in violation of the bank's deed of settlement, issued
a number of shares, entered them in the share register book in the name of
A., and debited him with their price. Of this proceeding A. was ignorant.
In order to induce persons to take these shares, the director issued a
flourishing report, prospectus, and balance-sheet, in which there was not a
word of truth ; he placed these documents in the hands of a friend, wdio did
not know them to be false, and induced him to endeavour to sell the shares.
The friend in question employed agents equally innocent with himself, to
induce people to take shares, and such agents were furnished with the false
and fraudulent documents above alluded to. < ringer was induced by one of
these agents, and by the false documents produced by him, to purchase
shares ; and A. was induced by a trick on the part of the director to sign
transfers to Ginger, who accepted the shares, and was registered as a share-
holder in respect of them. Ginger was held not to be a contributory : first,
because the shares transferred to him ought never to have been issued or
transferred to him at all (q) ; and secondly, because he was induced to pur-
chase them by a gross fraud, imputable to the company. Upon the question
of fraud it was considered, that if shareholders choose to adopt, and seek to
enforce, the contract of a director, and say that he was their authorised agent
to enter into it, they cannot repudiate the frauds of the agent which led to
the contract, and which are immediately connected with, and the foundation
of, the very transaction which is sought to be enforced.
BrockwelVs case (r), which arose in the course of winding up the Royal Brockwell 3
British Bank, was substantially as follows : The bank was formed in 1849
under 7 & 8 Vict. c. 113. Annual reports were made by the directors to the
shareholders, and such reports were from the very first false, to the know-
ledge of most, if not of all, of the directors. In December, 1854, the company
was hopelessly insolvent, and the directors knew it. They nevertheless
prepared a report, and laid it before a general meeting of shareholders, held
in February, 1855, and in such report represented the company to be in a
nourishing condition. In this same month the directors, by false represen-
tations as to the state of the company, induced the Board of Trade to grant
(p) 5 Ir. Ch. Rep. 174. shares issued without authority and
(q) But see, as to this, Richmond's fraudulently, was held a contri-
case and Painter's case, 4 K. & J. butory.
305, where a person who had taken (r) 4 Drew. 205.
80
FALSE STATEMENTS APART FKOM STATUTE.
Observations on
these cases.
Bk. I. Chap. 3. the company a supplemental charter, and to authorise the increase of its
&ect- • capital by the issue of new shares. The report made to the shareholders in
February, 1855, was advertised in the newspapers, and was to be seen at the
company's office, and there Mr. Brockwell saw it. Upon the faith of this
report he took shares in the company from the company itself ; he paid up
his capital and received dividends. In September, 1855, the company was
ordered to be wound up. The frauds committed by the directors, and the
falsity of their reports and representations, were then discovered. It was
admitted that Brockwell would have been a contributory had there been no
fraud ; but it was contended on his behalf, and held, that he had been in-
duced to take shares in and from the company by the fraud of the company
and that he was therefore not a contributory, and his name was struck off
the list, with costs to be paid by the company.
These cases are frequently regarded as inconsistent with, and in effect
overruled by Nicol's case(s) ; indeed the V.-C. Kindersley, who decided
BrochwelVs case, appears himself to have regarded it as overruled (t). But
all that Xicol's case decided was, that a company could not be affected by
the use one of its directors might make of a report which had been laid
before, and adopted by a meeting of shareholders («). In so far as Ginger's
case and BrochwelVs case are opposed to this decision, they may be considered
as overruled by it ; but the broad principles on which they proceeded may^
it is conceived, still be relied upon, and have been recognised and acted upon
in other cases.
BelVs case (.<•). In this case the secretary of a company had, by the autho-
rity of its directors, issued circulars in which the affairs of the company
were falsely and fraudulently represented to be in a flourishing state. Such
circulars were issued for the purpose of inducing the public to take shares.
Mr. Bell took shares on the faith of the statements contained in the circulars-
He obtained such shares directly from the company, which was shortly
afterwards ordered to be wound up. The fraud which had been committed
was then discovered, and Mr. Bell repudiated his shares. He was held not
to be a contributory, although he had executed the company's deed.
Ayre's casc(y). In this case The Deposit and General Life Assurance
Company was desirous, in March, 1854, of issuing new shares. The com-
pany had a manager in London and an agent in Bristol. The Bristol agent
applied to Mr. Ayre to take shares, and produced to him the company's deed
of settlement, also a list of the original -shareholders, who were described as
holding 10,550 shares, and as being persons of considerable property, and
also a report made by the directors of the company, and representing the
affairs of the company to be in a flourishing state. This report was false.
The list of shareholders also contained many material false statements. The
documents shown to Mr. Ayre had been sent from London for the express
purpose of being laid before him ; and on the faith of those documents, and
of the statements made to him both by the company's London manager and
Bell's case.
Ayre's case.
(s) 3 De G. & J. 387, infra, See, (;/) Infra.
also, Mixer's case, 4 ib. 575. (x) 22 Beav. 35.
(f) Barrett's case, 2 Dr. & Sm. 415, (;/) 25 Beav. 513.
infra.
SUMMARY OF CASES DNDEB THE OLD ACTS. 81
by its Bristol agent, Mr. Ayre was induced to hike- 200 of the new shares, Bk, I. CTiap 3.
and to sign the company 'a deed in respeel thereof. Be afterwards, however,
id reason to suspect thai he had beer imposed upon, and he then repudiated
his shares and refused to pay a call made upon him. He further defended
an action brought against him for such call, pleading fraud as a defence to
the action ; at the trial, however, the evidence adduced by him to prove the
fraud was not satisfactory, and the company obtained a verdict, and lie was
compelled to pay the amount of the call, together with interest and costs.
On the subsequent winding up of the company he succeeded in establishing
the facts already mentioned, and it was accordingly held that he was not a
contributory, and that the verdict of the jury was not conclusive upon the
question of fraud. The judgment on this question deserves attentive perusal,
and is an authority for the [imposition that companies cannot be heard to
say they did not know that their own reports were untrue.
Blake's casi (.). There the secretary of the company sent to its brokers Blake's
prospectuses of the company for distribution. The prospectus represented
that several persons were directors of the company. The brokers were in-
formed by the secretary that the shares taken by the directors and others
exceeded the number set apart for person- in L mdon and the neighbour-
hood, and that the London share list was closed ; but that shares might still
lie had by person- residing in the country, and applying through country
brokers. Advertisements to this effect were also published in the n<
papers. This information was conveyed by the brokers to Blake, to whom
they st-nt a prospectus. He bought some shares in the company on the
faith of the above statements ; but his suspicions being aroused by the low
numbers on the scrip certificates sent to him, he made inquiries and dis-
covered that the London share-list was still open, and that there was no
difficulty in obtaining shares in London, and that three out of the eleven
directors named in the prospectus had no shares in the company. Blake
immediately repudiated his shares, and demanded back the money he had
paid for his shares ; and it was returned to him, and a line was drawn
through his name on the register. Two calls were afterwards made, but he
was not retpuired to pay either of them. On the subsequent winding up of
the company, he was held not a contributory. The decision proceeded on
the ground— 1, that Blake had been induced by fraud to apply for shares,
and that such fraud affected the company ; and 2ndly, that he had repudiated
the shares as soon as he had discovered the fraud, and such repudiation had
been acquiesced in by the company.
2. Persons held not entitled to repudiate their shares,
a) Fraud not imputable to the company.
Even where a person has taken shares in a company on the faith of a false Fraudulent
and fraudulent report of the directors of the company, he will nevertheless reP0lts-
be unable to repudiate his shares if such report was not issued or published
(z) 34 Beav. 320.
L.C. G
82
MEMBERSHIP INDUCED BY FALSE STATEMENTS.
Bk. I. Chap. 3. by the directors, or by their authority, in order to induce persons to take
Secfc- lj shares in the company. The unauthorised production of such a report
to a person in order to induce him to take shares in the company, is not
such a use of the report by the company as to render the company guilty of
a fraud upon him, even although the report may have been produced to him
by a director or some officer of the company.
The leading authority on this head is Nicol's case, which maybe regarded
as an appeal from the decision in BroclacelVs case (<<).
Nicol's case. ^n Nicol's case (b), Nicol had taken shares in the Royal British Bank, in
March, 185"), on the faith of the same reports as had induced Brockwell to
take his. Brockwell had seen the reports at the Bank. Nicol Avas shown
them by a director, who made additional statements as to the nourishing
condition of the bank. The Yke-Chaneellor held Nicol not to be a con-
tributory, he having been induced, by the fraud of the company, to take
the shares in question. The Lord Chancellor dissented from this view, and
expressed a strong opinion that companies are not responsible for the frauds
of their directors ; the Lord Justice Knight Bruce was not satisfied that the
Vice-Chancellor's view of the case was correct ; and the Lord Justice
Turner, although differing in many respects from the Lord Chancellor,
agreed with him in thinking that Nicol, having had no communication
with the directors as a body, but having dealt with one of them only, was
not in a position to say that lie had been defrauded by the company. The
whole Court, however, agreed that Nicol's name ought to be struck off the
list of contributories, he having effected a valid transfer of his shares.
Holt's rase. Holt's case (d). The managing director of a company induced Holt to
become a director, to take shares, and to sign the company's deed, by
misinforming him as to the position and prospects of the company,
and producing a flourishing but false prospectus. Holt was held a
contributory.
Barrett's case Again, it was decided by the V.-C. Kindersley in Barrett's case(e), that
where directors made a false report to a meeting of shareholders, and the
meeting adopted the report, and it was afterwards sent to each shareholder,
no shareholder could treat that report as a fraud by the company on him-
self. Consequently a shareholder who, on the faith of such report, applied
for and obtained more shares in the company, was held to be a contributory
in respect of them.
In the following cases, persons who had been induced to take shares in a
company by the fraud of some individual connected with the company, were
held not to be entitled to repudiate their shares. After what has preceded
they will be found to offer little difficulty.
Bernard's case. Bernard's case(f). Bernard, being desirous of purchasing shares in a
(a) 4 Drew. 205, ante, p. 79.
(h) 3 De G. & J. 387. See, also,
Mixer's case, 4 ib. 575.
(d) 22 Beav. 48. See, too, Bigge's
case, 5 Jur. N. S. 7, infra, p. 84.
(e) 2 "Dr. & Sm. 415, and 3 De G.
J. & Sm. 30.
(/) 5 De G. & S. 283. The fraud
here consisted in the payment of
dividends out of capital, rather than
in the statement of the manager.
The Court does not seem to have
been satisfied that there was any
dolus dans locum contractu!.
SUMMARY OF CASKS UNDKI! III! OLD VCTS. S:5
company, applied to the manager for information as to it.- circumstances, Dk. I. Chap, o.:
ami was told, amongst other things, that dividend were being paid. He *" *•
took fifty shares, which were in fa-;t, although he did nol know it, issued
by the directors. He received dividends for three years, and was held
a contributory, although the company was insolvent when he took the
shares.
Gibson's case (g). In this case Gibson had been induced by a promoter of Gibsons case.
a company to take shares in it, and to sign its deed of settlement in respect
of such shares, upon the assurance of the promoter that two other persons
would do the same These two persons, however, refused to join the com-
pany, and Gibson then repudiated his shares. He was afterwards informed
by tin- promoter, with whom he had dealt, that such shares had been trans-
ferred, which, however, was not true. Gibson was held to be a contributory.
in this case there was in truth no fraud inducing him to take shares; for
the persons who were stated to be willing to sign the deed and become
directors were at the time believed to he willing to do so. Further, there
was nothing to show that the promoter, with whom alone Gibson dealt,
ever acted otherwise than in his individual capacity.
IVoollastotfs caseQi). Dr. Woollaston was requested by one of the direc- Woollaston's
tors of an insurance company to become one of its medical referees, and ''a~'''
was told that there would he only two. l>r. Woollaston applied for the
appointment, and his application was accepted. The appointment appears
to have been made without qualification, but to have been confirmed upon
the condition that the appointee should Bign the company's deed for 200
shares, and that the appointment should date from the day on which lie
signed it. The secretary of the company assured Dr. Woollaston that only
two referees would be appointed ; thai every oliicer of the company had
200 shares in it ; and that lie must take a like number. On the faith of
these representations Dr. Woollaston signed the deed for 200 shares. He
acted for the company for some little time, but having afterwards discovered
that two other referees had been appointed, he tendered his resignation, and
demanded back the money he had paid for his shares. This demand, how-
ever, was not complied with. The statement made by the secretary as to
the number of shares held by the other officers of the company was false ;
but it was held that there was no such fraud as to relieve Dr. Woollaston
from his liability to be a contributory.
Ex parte Worth {i). In this case the shareholders of a company had Ex parte Worth.
resolved on issuing preference shares, which they had no right to do. A
certain number were taken by a director, and he sold some of them to a
lady, who accepted them, and signed the company's deed in respect of them.
She was held to be a contributory, for there had been no dealing whatever
(g) 2 De G. & J. 275. Kemp's not a contributory, his shares having
case, and Hudson's case, reported in been forfeited,
the same place, are not distinguish- (i) 4 Drew. 529, as to shares pur-
able from Gibson's. chased from shareholders, and not
(h) 5 Jur. N. S. 617, affirmed on obtained directly from the company,
the point of fraud, 4 De G. & J. 437. see the next page.
On appeal, Dr. Woollaston was held
o 2
84
MEMBERSHIP INDUCED BY FALSE STATEMENTS.
Ek. I. Chap. 3. between her and the company ; she was not induced to take any shares by
Sect. 1. any representation made to her by the company, or made by the company
to the public, and which she had a right to take advantage of as one of the
public.
FrowcVs case (k) is another case of the same class. Frowd was induced to
take shares by the representations of one of the company's clerks, and was
held a contributory.
Sheffield's case (?) may be referred to as an authority, to the effect that a
person who takes shares in a company, and signs its deed, is a contributory,
although the effect of that deed may have been misrepresented to him by
the officers of the company.
Frowd's case.
Sheffield'- cas« .
Case of person
buying shares
from a share-
holder.
h) Fraud by a person not a party to the contract.
[nasmuch as a contract between two persons cannot be rescinded by
either on the ground that lie was induced to enter into it by the fraudulent
representations of a stranger, it follows that if a shareholder in a company
sell his shares to a person who accepts them, and is accepted by the com-
pany as a shareholder in respect of them, the purchaser will be unable to
repudiate his shares, although he may have been induced to buy them by
false and fraudulent reports issued by the directors of the company (m).
The fraud of the company is not imputable severally to each of the persons
composing it ; and the purchaier cannot, therefore, repudiate his shares on
the ground that he was induced to take them by the fraud of the seller.
This explains several cases in which purchasers of shares in companies pay-
ing large dividends when they were in fact insolvent, have, nevertheless,
been held to be contributories (a).
Case of person
not induced to
take shares by
the fraud in
question.
Bigge's case.
c) Fraud of tin: company not the cause of the contract.
Although fraudulent reports may have been issued and published by the
directors of a company, no person can rely upon them as a ground for
repudiating shares taken by him in it, unless he was induced to take the
shares by such reports. Bigge's case (o) may be usefully referred to on this
head. There a young man of the name of Bigge, having money and nothing
to do, was induced by his uncle and friends to become a director of a com-
(/.■) 9 W. E, 328.
(/) Johns. 451, and infra. See,
too, Blackburn's case, 8 De G. M. &
G. 177 ; Conybearev. Neic Brunswick,
&c,Co., 7 H. L. C. 711.
(m) Durantifs case, 26 Beav. 182 ;
Ex jxuie Worth, 4 Drew. 529 ;
Sanderson's case, 3 De G. & S. 66 ;
Ex parte Oakes and Peck, 3 Eq. 576 ;
and see the next note.
(n) Biggt's a se, 5 Jur. X. S. 7;
Barnes v. Pennell, 2 II. L. C. 497.
Bernard's case, 5 De G. & S. 283, is
partly but not wholly explicable on
this principle, for fifty of the shares
in respect of which Bernard was a
contributory, were issued by the
directors.
(o) 5 Jur. N. S. 7. See, too,
Longworth's case, 7 AY. It. 483, where
the shares were taken before the
fraud was committed.
SUMMARY OF CASES DNDEB THE OLD ACTS. 85
pany. He was told that to <lo BO he must take a certain number of shares Bk. I. Chap. 3.
in it. His uncle was himself a director, and transferred to him the neces- ^eot- *•
sary number of shares. The company was paying dividends ; it had issued
reports which contained untrue representations of the state of its affairs ;
and it was, in fact, insolvent. But the shares were not taken on the faith of
these reports, nor upon the faith of any representations attributable to the
company, and Bigge was therefore held to be a contributory (j)).
d) Shares not repudiated when fraud vms discovered.
A person induced to take shares in a company by the fraud of the com- Effect of not re-
pany, will be unable to repudiate them if, knowing or having the means of lJU,JlatinS sl)ares
.. • , . , on discovery of
discovering the fraud, he nevertheless continues to hold his shares. A fraud.
leading case on this head is Sheffield's case (q).
There a person had been induced to take shares in a company, on the
assurance of its manager and its cashier that no risk would be incurred if
he paid up his shares in full. He accordingly took shares, signed the com-
pany's deed, and paid up his shares in full. The deed, when he signed it,
contained a clause limiting the liability of the shareholders to the amount
of their unpaid-up capital. This clause had been fraudulently inserted in
the deed, so as apparently to form part of it, and was fraudulently withdrawn
from the deed before it was registered. He, however, never read the deed.
The company carried on its business for several years, and the shareholder
in question, who had never had his attention called to the difference between
the deed as registered and the deed as signed by him, received dividends
and attended meetings as a shareholder. After the lapse of more than four
years, the company was ordered to be wound up, and it was then that the
fraud above mentioned was discovered. The shareholder contended that he
had never become a shareholder in the registered company ; or that if he
had, he had been induced to become so by the fraud of the company. But
it was held that it was not open to him to say he did not know the contents
of the registered deed ; that other people were entitled to say they had
acted on the faith of it ; and that he could not escape from being made a
contributory (r). The shareholder in this case was held liable, mainly upon
the ground that he might have known, and, in fact, was bound to know,
the contents of the registered deed. Treating him, therefore, as acquainted
with those contents, although ignorant of the fraud which had been perpe-
trated, his acts amounted to an adoption of shares in the registered company.
(|>) See, too, Sanderson's case, 3 and Ashley's case, ib. 263.
De G. & S. 67, and 3 H. L. C. 698, (/•) Other persons who had signed
where the company accepted a pur- the deed whilst the limited liability
chaser of shares as a shareholder, clause was part of it, were held not
although it was on the eve of bank- to be contributories; but the cir-
ruptcy. cumstances distinguishing their cases
(q) Johns. 451. See, too, Mixer's from Sheffield's do not appear. See
case, 4 De G. & J. 575 ; Ex parte CoxJs case, and Naijlors case, men-
Briggs, 1 Eq. 483; Scholeyv. Central tioned in 4 K. & J. 314.
Railway Co. of Venezuela, 9 Eq. 26Gn.,
8G
MEMBERSHIP INDUCED BY EALSE STATEMENTS.
13k. I. Chap. 3
Sect. 1.
Sheffield's case.
The only question which could then arise would he, whether he was entitled
to be indemnified by the company against loss, he having been told by the
manager and one of the directors, that he would not be liable beyond the
extent of his paid-up capital. Such a statement as this, however, could not
affect the company ; for, so far as the statement was true, it added nothing
to what might have been learnt from the deed itself ; and so far as it was
false, it was made by persons who certainly were not the agents of the
company to explain the legal effect of its deed of settlement.
Effect of person
taking shares on
the faith that
others are
shareholders.
Richmond's
case.
Painter's case.
Parbnry's case.
e) Effect of •persons taking shares on faith of others being shareholders.
If a shareholder has been induced to take shares in a company by the
fraud of the company, and since he took such shares other persons have
taken shares on the faith of his being a shareholder, there are three
alternatives, viz., 1, to hold that he, and consequently they, are entitled to
repudiate their respective shares ; 2, to hold that they, and consequently he,
must be treated as shareholders ; 3, to distinguish between his case and
theirs, and whilst holding him at liberty to repudiate, to hold them bound.
Of these alternatives the last was adopted in Richmond's case and Painter's
case (s). There persons had been induced to take shares in a company, the
deed of settlement of which was materially altered after they had signed it.
Other persons had taken shares in the same company, and had executed the
deed in the state in which it ultimately remained, and whilst the j)ersons
first referred to were shareholders. The first set of shareholders were held
not to be contributories ; but the second set were held to be contributories,
although it was contended on their behalf, that they had only agreed to
join a company in which the first set were shareholders in reality as well as
in appearance.
Upon this case it is to be observed that there was no evidence showing
that in point of fact the second set of shareholders had been induced to take
shares in the belief that the first set were shareholders ; for it does not
appear that the shareholders held to be contributories, knew who, in parti-
cular, had signed the company's deed before they signed it themselves. If
the facts had in this respect been different, Sheffield's case goes far to show-
that all the persons defrauded would have been contributories (t).
Such cases as those last adverted to must not be confounded with Par-
bury's case(u), in which it was held that a person induced to take shares in
a company on the faith of its prospectus, which contained false and fraudu-
lent statements, was nevertheless a contributory, inasmuch as it was reason-
able to suppose that there were other persons, equally innocent with himself
and with whom, therefore, he was liable to contribute. Now it is conceived
that if these other persons had, like himself, been induced to take shares on
the faith of the company's prospectus, the only consequence would be that
they and he might all have repudiated their shares. If in such a case some
of those deceived do not choose to exercise their right of repudiation, that
(s) 4 K. & J. 305.
(t) Ante, p. 85. Compare tthe
judgments in Gibson's rase, 2 De G.
& J. 284 ; Bell's case, 22 Beav. 35
BrockwelVs case, 4 Drew. 214.
(u) 3 De G. & S. 43.
LIABILITY OF PERSONS MAKING FALSI. STATEMENTS. 87
ought not to prevenl the others from so doing, [f 100 persons have been Dk. I. Chap, 3.
equally cheated, and ninety-nine of them are content to abide by their Sect- *•
bargain, that is no reason why the hundredth should he held to his (.<•).
Moreover, under tin' older Winding-up acts (under which Parbwry's case was
decided), persons entitled to he indemnified by the company ought not to
be contributories, simply because they may possibly be called upon to bear
debts or losses, for which the company, as between them and it, is primarily
responsible. Parbwry's case, therefore, cannot be considered satisfactory.
But this conclusion does not render it more easy to deal with such crises as
Richmond's and Painter's case; for, ex hypoiliesi, in them, those persons who
are equally innocent are not in the same position relatively to each other ;
Milne of them having become shareholders in the belief that the others had
heroine so first. It is the right of the former against the latter which it is
so difficult to determine, and which cannot yet be considered as finally
settled by decision.
3. Remedy against the individuals who made tin' statements.
Directors and others who publish false and fraudulent reports
with a view to induce people to take shares incur serious
criminal as well as civil responsibility. They are liable to he Criminal
t • / responsibility.
indicted and convicted for conspiracy at common law (y) ;
and they are also liable to punishment under 24 & 25 Vict,
c. 96, § 84, which will be found in the chapter relating to
fraudulent accounts (z).
In the notorious case of the Royal British Bank, the
directors were indicted and convicted of the common law
offence of a conspiracy to induce persons to become share-
holders in and customers of the bank by issuing false and
fraudulent reports respecting its condition and solvency (a) ;
and in the equally notorious case of the Eupion Fuel and Gas
Company, the directors were indicted and convicted of a con-
spiracy to defraud by fraudulently obtaining a settling day from
the Stock Exchange Committee, with intent to induce persons
to deal in shares of the company in the belief that it was duly
formed and constituted (b).
(x) See 4 Drew. 214, in BrockweW-i in Burnes v. Pennell, 2 H. L. ('. 497)
case, and 3 De G. & J. 425, in Nicol's p. 525.
case. (b) B. v. Aspinall, 1 Q. B. 1). 730,
(y) See below. and 2 Q. B. D. 48. See, also, R. v.
(:.) Infra, book iii., c. 3, § 4. Timothy, 1 Fos. & Fin. 30, and R. v.
(a) R. v. Esdaile, 1 Fos. & Fin. Gurnet;, Finlaison's Report, and for
213. See, also, per Lord Campbell obtaining money under false pre-
88 MEMBERSHIP INDUCED BY FALSE STATEMENTS.
Bk. I. Chap. 3. Directors and others who circulate fraudulent prospectuses
and reports, with a view to induce people to take shares are
ivil liability.
answerable in damages to those who take shares on the faith of
such reports (c) ; and an action for misrepresentation is sus-
tainable, although the prospectus or report relied on was not
the sole inducement to the plaintiff to take shares (d) ; and
although there may have been no immediate communication
between the plaintiff and the defendant (e), and although the
defendant may have been only a servant of the company (/).
Such an action, moreover, is sustainable in. Scotland and
perhaps in England against executors for the fraud of their
testator (g) . But a director is not liable for the frauds of his
co- directors or of airy other agent of the company, e.g., for a
fraudulent prospectus issued by them, unless he has himself
authorised what has been done (A).
Actions of this class are often brought on insufficient
materials by shareholders whose expectations have been dis-
appointed, and who seek without justice to throw the loss
they have sustained on persons who are as innocent of fraud as
themselves. But the law of this country is unquestionably very
lenient to persons who act honestly, but who nevertheless put
their names to statements on the faith of what they are told by
others and the truth of which they too readily assume. Actions
for negligent as distinguished from fraudulent misrepresenta-
tions are not encouraged ; and the fiction of an implied warranty,
which has been had recourse to in order to make agents liable
for honest mistakes as to their own authority (/), has not been
tences, Ii. v. Watson, 4 Jur. N. S. 117. Compare Peek v. Gurney, I.
14 ; 24 & 25 Vict. c. 96. R. 6 H. L. 377, and 13 Eq. 7!),
(c) Edgington v. Fit :.mau rice, 20 noticed infra.
L4. * £U>~j „ ^JU>~ Ch. D. 459 ;*Peek v. Dcrry, 37 Ch. (/) Cullen v. Thompson, 1 McQu.
JL^4U ^^^l. I i^M D. 541 ; Gerhard v. Bates, 2 E. & B. 424.
476 ; Burncs v. Pennell, 2 H. L. C. (g) Davidson v. Tullock, 3 McQu.
497. See, also, Denton v. Great 783 ; Peek v. Gurney, L. R. 6 H. L.
Northern Bail. Co., 5 E. & B. 860 ; 377, and 13 Eq. 79 ; New Sombrero
Williams v. Swansea Harbour Trus- Phosphate Co. v. Erlanger, 5 Ch. D.
tees, 14 C. B. N. S. 845 ; Jury v. 73, and 3 App. Ca. 1218.
Stoker, 9 L. R., Ir. 385. (//) Weir v. Bell, 3 Ex. D. 238,
(«/) See ante, p. 71. noticed infra.
(e) Clarke v. Dickson, 6 C. B: N. S. (i) Firbank's executors v. Hum-
453 ; Bedford v. Bagshaw, 4 H. & N. phreys, 18 Q. B. D. 54 ; Chapleo v.
538; Bedew Ckland,4 Fos. & Fin. Brunswick Building Society, 6 Q. B.
LIABILITY OF PERSONS MAKING FALSI-; STATEMENTS. 89
applied to other honest mistakes, although they may have Bk- *• (,'>*P- 3.
seriously misled and injured other people. Actions against -
directors and others have constantly failed hy reason of the
evidence of fraud not being sufficient (k).
The case which goes furthest in imposing liability fur mis- Peek r. Derry.
representations is Peck v. Perry (I). There the prospectus of
a tramway company stated that the company had a right by
their special act to use steam instead of horses. This was not
true. The company were by their act authorised to use steam if
the Board of Trade consented, but not otherwise ; and the Board
would not consent to the use of steam except on a very small
portion of the company's line. When the prospectus was
issued, the directors believed that the}' would have no difficulty
in procuring the necessary consent ; but they had not applied
for it, and they had no reasonable grounds for their belief. It
was held that notwithstanding their belief they were liable in
damages to a person who had taken shares on the faith of the
statement kfthe prospectus.
By way of contrast with this decision, and as a strong illus- Weir v. Be'.l
tration of the leniency above alluded to, reference ma}7 be made
to Weir v. Bell (m). There the directors of a company were
authorised by a general meeting to raise money by debentures.
The directors, including Bell, authorised the secretary to
employ a firm of brokers to obtain subscriptions for the deben-
tures. The brokers issued a prospectus which contained
serious mistatements of fact which were false to the knowledge
of the brokers, and mentioning Bell and others as directors.
The plaintiff subscribed for debentures on the faith of this pro-
pectus, and, they proving worthless, sued Bell for damages.
But there was no proof that Bell knew of or authorised these
statements, and the jury found that he did not. It was there-
fore held that he was not liable. Cotton, L.J., dissented on
D. 696 ; Weeks v. Propcrt, L. R. 8 (I) 37 Ch. D. 541. See, also,
C. P. 427 ; Cherry v. Col. Bank of Cann v. Wilson, 39 Ch. D. 39.
Australasia, L. R. 3 P. C. 24. (m) 3 Ex. D. 32 & 238 ; Cargill v.
(k) See Ship v. CrosskiU, 10 Eq. Dov-er, 10 Ch. D. 502. Compare
73, ante, p. 71 ; Smith v. Ghadwick, Peek v. Gurncy, 13 Eq. 79 & L. R. 6
L. R. 9 App. Ca. 187, and 20 Ch. D. H. L. 377 ; Peek v. Dcrry, 37 Ch.
27 ; Bellavrs v. Tucker, 13 Q. B. 1). D. 541.
562.
90
MEMBERSHIP INDUCED BY FALSE STATEMENTS.
Bk. I. Chap.
Sect. 1.
Shares not pro-
cured from
company.
Peek v. Gurncv,
Fraudulent
concealment.
Lapse of time.
Measure of
damages.
the ground that it was Bell's duty as a director to know the
contents of a prospectus issued by persons authorised by him
to invite subscriptions for the company's debentures.
In an action against directors for a fraudulent statement in a
prospectus, it is always material to consider from whom the
plaintiff acquired his shares and from whom he obtained the
prospectus. The object of a prospectus is to induce persons
to apply to the company for shares, and not to enable persons
who have shares to sell them to other people. Accordingly it
was decided by the House of Lords in Peek v. Gurney (n) that
a person who had bought shares on the stock exchange on the
faith of a prospectus which was materially misleading, could
not maintain an action for damages against the directors with-
out proof of some direct communication between them and him.
A fraudulent concealment of a material fact will not support
an action for damages unless its effect is to make what is stated
untrue. This doctrine was distinctly laid down by Lord Cairns
in Peek v. Gurney (o), and has been often recognised since (p).
There is no doubt, however, that the commission of frauds in
the formation of companies is greatly facilitated by this limita-
tion of the circumstances necessary to sustain such actions.
In an action for damages, lapse of time short of that
prescribed by the Statute of Limitations affords no defence (q).
The measure of damages in these cases is the difference
between the price paid by the plaintiff for his shares and their
real value at the time. Their market value may, however, be
and practically always is dependent on the ignorance on the
part of the public of the frauds complained of. In order to
ascertain the real value of the shares subsequent events must
be looked at ; and if these show that the shares were really
worthless, the whole of the money paid for them will be
recoverable. The circumstance that the plaintiff might have
sold his shares at a high price before the frauds were exposed
does not diminish the damages to which he is entitled (r).
O) L. R. 6 H. L. 377.
(o) L. R. 6 H. L. 377 ; see ante, p.
70.
(p) Arkwright v. Newbold, 17 Ch.
P. 301.
('_/) Peek v. Gurney, L. R. 6 H.
L. 377.; overruling on this point
S. C. 13 Eq. 79.
(r)rPeeh v. Derry, 37 Ch. D. 54 L ;
Twycross v. Grant, 2 C. P. D. 409 ;
COMPANIES ACT 1867, SECTION 88. 91
Ilk. I. Chap. 3.
CTION II.— STATUTORY ENACTMENTS. "•
30<t-31 Via. c. 131, § 38.
In order the more effectually to protect shareholders (••>•) Fraudulent
from frauds on the part of the promoters of companies, every '' ' 1"
prospectus of a company, and every notice inviting persons to 30 ft 31 Vict,
subscribe for shares in any joint stock company, is required to c' b 38'
specify the dates and names of the parties to any contract
entered into by the company or the directors, promoters, or
trustees thereof before the issue of such prospectus or notice (t).
The statute which renders this necessary is very badly worded
and lias given rise to much discussion and no little difference
of opinion. In the first place it does not apply to all com-
panies, but only to those formed under the Companies act,
1862. In the next place the information required to be given
is practically worthless: the act only requires dates and names
to be given : the nature and effect of the contracts to be
referred to need not be stated ; but it is obvious that this is
what is most material to be known.
Compliance with the statute does not prevent a false pro-
spectus from being treated as fraudulent if in truth it is so.
The object of the statute is to enlarge, not to restrict, the
doctrines relating to fraudulent prospectuses ; and this object
is sought to be attained by declaring that prospectuses shall
be deemed fraudulent unless the dates and names of the parties
to certain contracts are disclosed. The contracts referred to
are not clearly defined, but it is obvious that only those can be
meant which can be regarded as material to persons who may
become shareholders. The result of the decisions on this
extremely ill-expressed enactment seems to be as follows : —
1. The enactment is not confined to contracts to be per-
formed by the company, but extends to all contracts (u) whether
Davidson v. Tulloch, 3 McQu. 790. is printed in the Appendix.
See, also, Arhwright v. Neicbold, 17 (») An understanding between
Ch. D. 301, fcr Fry, J. the persons mentioned not amount-
(s) Bondholders are not within ing to a contract is not within the
the enactment, Cornell v. Hay, L. E. section, Arhwright v. Xevbolrf, 17
« C P. 328. Ch. I). 301.
(t) 30 & 31 Vict. c. 131, § 38. It
92 COMPANIES ACT, 1867, SECTION 38.
Bk. I. Chap. 3. in writing or not (r), entered into b\T the persons mentioned,
Sect. 2.
and directly or indirectly affecting the formation, management,
capital, or other propert)T of the company, or the position of
the directors or officers of the company with respect to the
company, its promoters or vendors, and which might reason-
ably influence a person in determining whether to apply for
shares or not (x).
2. The enactment does not extend to contracts by which the
promoters themselves have become owners of the property which
they afterwards sell to the company if such contracts in no
way affect the company itself (?/).
3. The words promoter, director, or trustee include persons
engaged in forming the company, or engaged in inducing the
public to take shares in it when formed (z) : and perhaps even
persons who are not so engaged when the contract with them
is entered into, but who afterwards become promoters, directors
or trustees (a).
4. A person who takes shares on the faith of a prospectus,
not complying with the enactment in question, is not entitled,
simply on that ground, to rescind his contract to take the
shares (b) ; but is only entitled to maintain an action for
damages against the promoters, directors, or trustees who
knowingly issued the prospectus (c).
It has become customary to insert in prospectuses a clause
to the effect that applicants for shares waive all claims against
directors for infringements of § 38, but the validity of such
clauses is very doubtful.
(v) Arkvrrifjld v. Newbold, 17 Ch.~ servations of L. J. James on this
D. 301 ; Capcl <£■ Go. v. Sim's Com- last case, 5 Cli. D. 118.
position Co., W. N. 1888, p. 97. (::) Twycross v. Grant, 2 C. F. D.
(x) Sullivan v. Mitcalfe>5 C. P. D. 469. See infra, bk. iii., c. 2, § 1.
455 ; Tvycross v. Grant, 2 C. P. I). («) Sullivan v. Mitcalfe, 5 C. P. D.
469 ; Jury v. Stoker, 9 L. R., Ir. 455 ; Govers case, 1 Ch. D. 182, and
385; Cornell v. Hay,L. R. S C. P. 20 Eq. 114. Sed quaere : see 5 Ch.
328. D. 118.
(ij) Sullivan v. Mitcalfe, 5 C. P. D. (b) lb.
455 at p. 467 ; Craig v. Phillijis, 3 (c) Ibid., and Twycross v. Grant,
Ch. D. 722 ; Cover's case, 1 Ch. D. ubi sup.
182, and 20 Eq. 114. See the ob-
DIFFERENT CLASSES OF COMPANIES. 93
CHAPTER IV.
OF DIFFERENT GLASSE3 OF COMPANIES.
Having made the foregoing observations on companies in Bk. I. Chap.
general, it is proposed to advert to the formation of different Formation of
, . ■, n . , , • i it-i companies,
kinds of companies, and to the evidence by which a person
may be proved to be a shareholder in them.
It will be convenient to take them in the following order :—
Class I. Cost-book mining companies.
Class II. Companies incorporated or privileged by the
Crown, viz. : —
1. Chartered companies.
2. Companies formed under the Letters patent act, 7
Win. 4 & 1 Yict. c. 73.
Class III. Companies incorporated or privileged by some
special act of Parliament, viz. : —
1. Companies not incorporated, but empowered to sue
and be sued.
2. Incorporated companies.
Class IV. Companies incorporated or privileged by a general
act of Parliament, viz. : —
1. Banking companies formed under 7 Ceo. 4, c. 4G.
2. Registered companies.
Class I. — Cost-book mining companies.
Cost-book mining companies are sometimes represented as Cost-book
. . . companies,
differing essentially from ordinary partnerships ; but there is
no authority for this statement ; and it may be said with more
truth that cost-book mining companies are mere partnerships
governed by the general law of partnership, except so far as
that law is excluded by local custom or by special agreement
94 COST-BOOK MIXING COMPANIES.
Bk. I. Chap. i. referring to and embodying such custom («•). A cost-book
- mining company is formed by agreement. A number of adven-
turers who have obtained permission to work a lode agree to
share the enterprise in certain proportions. It is seldom that
they agree on a fixed capital (b). They appoint an agent, com-
monly called a purser, for the purpose of managing the affairs
of the mine, subject to the control of the shareholders. They
Cost- book. write in a book called the " cost-book " the agreement into
which they have entered ; and in this same book are inserted
from time to time the receipts and expenditure of the mine,
the names of the shareholders, their respective accounts with
the mine, and transfers of shares (c). The shares are trans-
ferable and may be relinquished ; they may also be sold by the
company for non-payment of calls ; and these circumstances,
rather than any other, distinguish cost-book mining companies
from common partnerships (d).
Liability to Some persons imagine that the liability of shareholders in
creditors. cost-book mining companies is limited ; that both their past
as well as their future liability is got rid of as soon as they
have transferred their shares, and that they are in no case
liable for the debts of the mine if they have paid the calls
which may have been made upon their shares. All this is
mere delusion ; and although it is true that a shareholder can
as between himself and co-shareholders get rid of his liability
by transferring or relinquishing his shares (e), there is no
authority whatever for saying that the liabilities of the share-
holders to creditors were until lately governed by principles in
any respect different from those which apply to ordinary part-
(«) See Frank Mills Mining Co., (c) See 32 & 33 Vict. c. 19, § 9,
23 Ch. D. 52 ; Prosper United Mining and 50 & 51 Vict. c. 43, §§ 23 & 24.
Co., 7 Ch. 286 ; and as to Cost-book The rules and regulations must now
mining companies, 32 & 33 Vict. c. he filed with the registrar of the
19, amended by 50 & 51 Vict. c. 43 ; Stannaries Court, 32 & 33 Vict, c.
the Readwin Prize Essay on the 19, § 9.
Cost-book, by Tapping ; Collier on (d) 32 & 33 Vict, c. 19, §§ 16-23.
Mines, ed. 2, pp. Ill, etseq. Batten's (e) Fenn's case, 4 De G. M. & G.
Stannaries Act, 1869. 285 ; Mayhem's case, 5 ib. 837 ; Bod-
(h) Mr. Batten in his useful little rain United Mines, 23 Beav. 370 ;
treatise, p. 31, says that a true Cost- Birch's- case, 2 De G. & J. 10 ; Loft-
hook company never has a fixed house's case, ib. 69.
capital.
COST-BOOK MIXING COMPAXIK . 05
nerships(/). By the Stannaries act, 1869 (32 & 33 Vict. Bk. I. Chap. 4.
c. 10, s. 25), however, a past shareholder is not liable to con- -
tribute to the assets of the company if he has ceased to be a
shareholder two years or upwards before the date of the
winding-up order (<i).
Whoever alleges that a cost-book mining company is in any Mining customs
respect governed by a local usage which excludes the applica- noticed,
tion of the general law of partnership, must prove the existence
of such usage (It) ; for the courts do not take judicial notice of
what the cost-book principle is ; and they invariably apply the
general law of partnership to companies formed on that prin-
ciple, unless it is proved that the application of such law is
excluded as alleged (/).
The question whether a person is or is not a shareholder in Proof of member-
ship in a cost-
a cost-book mining company must be determined in precisely book company.
the same way as the question whether a person is or is not a
member of an ordinary partnership (k). The usual mode of
proving that a person is a shareholder in a cost-book mine is
by showing that he has signed the cost-book or an authority
for the insertion of his name in it : and it has been said to be
part of the cost-book principle that a register of shareholders
should be kept, and that every member should sign either the Signing th ■
book itself or an authority for the insertion of his name in it (I).
At the same time, a person clearly may, as between himself
(/) Shareholders in a cost-book Beav. 370 ; Fenn's case, 4 Do. G. M.
mine were held liable to creditors & G. 285 ; Hart v. Clarke, 6 ib.
for goods supplied in Tredwm v. 232, and 6 H. L. C. 633 ; Sibley v.
Bourne, 6 M. & W. 461 ; Newton v. Minton, 27 L. J. Ch. 53, V.-C. Kin-
Daly, 1 Fos. & Fin. 26 ; Lanyon v. dersley. The purser can now sue a
Smith, 3 B. & Sm. 938 ; Harvey v. shareholder for calls. See 32 & 33
Clough, 2 N. R. 204. See, too, Vict. c. 19, § 13. See before this
Ellis v. Shmceck, 5 Bing. 521 ; Peel act, Hybart v. Parker, 4 C. B. N. S.
v. Thomas, 15 C. B. 714; Toll v. Lee, 209.
4 Ex. 230. (k) See Peel v. Tliomas, 15 C. B.
(g) hi re Wheal Unity Wood 714; Tredwen v. Bourne, 6 M. & W.
Mining Co., Chynoweth's case, 15 461; Thomas v. Clark, 18 C. B. 662.
Ch. D. 13, at p. 21. (I) See Tippett v. Johns, Tap-
(h) See ante, note (a), and the ping's Essay, p. 187 ; Toll v. Lee,
cases cited below. 4 Ex. 230. Such a register is now
(i) See Hawkins' case, 2 K. & J. required, see 32 & 33 Vict. c. 19,
253 ; Bodmin United Mines, 23 § 9.
90
COST-BOOK MIXING COMPANIES.
F.k. I. Chap.
CJass 1.
Vice r. Anson.
Transfer of
shares.
and third parties, incur the liabilities of a shareholder without
signing the cost-book or any such authority as that referred
to (m) ; and it is apprehended that a person may be a share-
holder as between himself and the other members although
he ma}r not have signed the cost-book or any authority for the
insertion of his name in it. Indeed there is reason for going
further, and for denying that any such signature is essential ;
for an attempt to prove it to be so is reported to have failed,
the evidence adduced amounting only to this, that it was usual
for every member to testify his acceptance of shares by writing
under his hand (n).
In Vice v. Anson (p), the Court seems to have thought that
a person could not be a shareholder in a cost-book mining
company unless he acquired some interest in the mine, treating
it as land, and that some deed conveying him an estate in the
land was recmisite. But this opinion cannot be supported ;
and it seems clear that shares in a cost-book mining company
are transferable by entries in the cost-book ; and that a person
who is entered therein as a shareholder in respect of shares
accepted by him is a shareholder, although no deed or writing
at all has been executed (_p). Shares in cost-book mining
companies are ordinarily transferred by a document in which
the transferor acknowledges that he has transferred, and the
transferee acknowledges that he has accepted the shares
mentioned. This document is signed by both parties, is
addressed to the purser, is sent to him by the transferee, and
is the authority to the purser to register the transferee as a
shareholder (q).
(m) See Martyn v. Gray, 14 C. B.
X. S. 824, as to holding out ; and
see Cox's case, 4 De G. J. & Sra. 53,
where a person entitled to shares
tried to screen himself from liability
by holding them in the names of
other people.
(n) Northey v. Johnson, 19 L. T.
104, Q. B. 1852. ' That this is usual
there can be no doubt ; it is ex-
pressly required by the rules of
most large mines.
(o) 7 B. & C. 409.
(p) See Tippet v. Johns, Tap-
ping's Essay, p. 187 ; Reynolds v.
Bassdt, Collier on Mines, 124, note ;
Viryan v. Mowatt, 8 L. T. Ex. 480 ;
Northey v. Johnson, 19 L. T. 104 ;
Toll v. Lee, 4 Ex. 230. Compare
Curling v. Flight, 5 Ha. 242 ; 6 ib.
41 ; and 2 Ph. 643.
(q) Toll v. Lee, 4 Ex. 230 ; Walker
v. Bartlctt, 18 C. B. 845. See, as to
parol transfers, Northey v. Johnson,
19 L. T. 104, Q. B. See, also, 32 &
33 Vict, c. 19, §§ 14, 15, and 35.
CHARTERED COMPANIES. 97
r.y 33 & 34 Vict. c. 97, s. 3 ; an 1 schedule, title Transfer, a Bk. i. « haP. 4.
. . .
6a. stamp duty is imposed upon " any request or authority to
the purser or other officer of any mining company conducted'
on the cost-book system, to enter or register any transfer of
any share or part of a share in any mine ; or any notice to
such purser or officer of such transfer " (/•).
Companies engaged in working mines within and subject to Registration,
the jurisdiction of the Stannaries, need not be registered under
the Companies act of 1862 («) ; but if their capital is fixed,
and if there are seven or more shareholders, the}' may be so
registered, with or without limited liability. If the capital is
not fixed, the company cannot apparently be registered as an
existing company with limited liability (t). The effect of regis-
tration under the Companies act, 1862, will be considered
hereafter (u). If not registered under that act, cost-book
mining companies working mines within the Stannaries are
subject to the provisions of '-I'l & •'>:> Vict. c. 19, and if working
metalliferous mines or tin streaming works, to the provisions
of 50 & 51 Vict. c. 43, which will be noticed in their proper
places.
Class II. — Companies chartered or privileged pa* the
Crown.
1. Chartered companies.
The Crown has at common law the power of incorporating Chartered
by charter any number of persons who assent to be incorpo-
rated, and a chartered company is therefore formed as soon as
a charter is granted to, and accepted by, two or more indivi-
duals, enabling them, alone or with others, to trade as a body
corporate (x). The Crown, however, has no power to incorpo-
(;•) The cost-book itself requires see Lanyon v. Smith, 3 B. & Sm.
no agreement stamp. See Vivyan 938 ; and Harvey v. Clough, 2 N. R.
v. Mowatt, 8 L. T. Ex. 480. 204.
(s) 25 & 26 Vict. c. 89, § 4. (a?) See, as to charters, Grant on
(t) See 25 & 26 Vict. c. 89, § 179, Corporations, pp. 9, ct seq. As to
cl. 3, and § 181. charters for a limited time, see 7
(u) As to the effect of registration Will. 4 & 1 Vict. c. 73, § 29, and
with respect to retired shareholders, 47 & 48 Vict. c. 56.
L.C. II
98 CHARTERED COMPANIES.
Bk. I. Chap. 4. rate persons against their will (y) : nor can the Crown force a
Class 2.
— - new charter upon a corporation after it is once established. A
charter which has been confirmed by act of Parliament cannot
be varied by the Crown (z) ; but a charter which has not been
so confirmed may, without being formally surrendered (a), be
varied by a subsequent and inconsistent charter (//), provided
the new charter is accepted by the body corporate (c), i.e., by a
majority of the members composing it (d).
A chartered company is a corporation existing for the pur-
poses for which it is created and no others ; and those persons
only are members of it who are declared to be so by the charter,
or who have been admitted in compliance with the charter and
the bye-laws made in pursuance of it (e). The charter of a
company is a law set to it and to the individuals composing it,
and they have no power by any agreement amongst themselves
to annul or legally do anything at variance with their charter (/).
This subject will be adverted to hereafter.
Chartered com- A chartered company, being a corporation, is not a partner-
panynota ship, although the company may have gain for its object, and
the members of the company may share profits.
Validity of A charter is not necessarily of any legal value ; for it may
have been obtained from the Crown by misrepresentation, or
it may have been granted by the Crown in excess of its pre-
rogative, and in either case the charter will be void. A
charter which has been obtained from the Crown by false and
fraudulent statements may be formally annulled by scire
(y) Grant, pp. 13 and 18 ; Dr. 1 . Coll. 370, an injunction was
Ashew's case, 4 Burr. 2200, per granted to restrain the majority
Yates, J. ; and see Rutter v. Chap- from accepting a new charter. See
man, 8 M. & W. 1. Ex parte The Society of Attorneys, 8
(z) R. v. Miller, 6 T. R. 268 ; but Ch. 163, for the grounds on whicli
see Royal Exch. Ass. Co. v. Vaughan, the grant of a supplemental charter
1 Burr. 155. can be successfully opposed.
(a) R. v. Larwood, 1 Salk. 168. (e) Dr. Askew' s case, 4 Burr. 2200,
(b) lb. ; and R. v. Haythorne, 5 per Yates, J.
B. & C. 410 ; Royal Exch. Ass. Co. (/) See The Society of Practical
v. Vaughan, 1 Burr. 155. Knowledge v. Abbott, 2 Beav. 559.
(c) Bull. N. P. 212, c. ; R. v. As to giving effect to the practice of
Pasmore, 3 T. R. 240. the members and allowing that to
(d) R. v. Hughes, 7 B. & C. 708. control the charter, see Somes v.
In Ward v. The Society of Attorneys, Currie, 1 K. & J. 605.
charters.
CHARTERED OOMPAN] <.)<.)
facias(g); but although a charter which has noi been thus Bk. I. Ch
annulled is to be treated as valid until the contrary is proved,
there is apparently no rule to the effect that its validity is not
to be disputed except in a formal proceeding instituted for the
purpose of procuring its cancellation (h). At the same time
those persons who have accepted or acted on a charter and
treated it as valid cannot, unless in a proceeding to annul it,
object that it was obtained from the Crown irregularly, or by
the misrepresentation of themselves or their fellow-members,
or of their predecessors (i). Indeed, it is said, that neither
those who have accepted a charter, nor their successors, can
dispute its validity ; but this is very doubtful (A).
< barters are obtained by petitioning the Queen in Council. Charters bow
The petition and draft of the proposed charter are left at the "l,t;m" L
Council Office, and are then referred to the Board of Trade.
The Colonial Office, Foreign Office, and India Office are also
referred to, if the proposed company falls within their depart-
ments. If it is determined that a charter shall be granted, it
issues under the great seal (/). But charters are now very
seldom granted to trading companies.
A charter maybe surrendered to the Crown; but a surrender
is of no effect unless accepted and enrolled in the enrolment
department of the central office of the Supreme Court of Judica-
ture (m). After the surrender has been accepted and enrolled
the corporation ceases to exist (»).
2. Companies formed under the Letters patent act,
7 Will. 4 cC- 1 Vict. c. 73.
Letters patent and charters are both Uteres patentcs sealed Companies
with the great seal, and are, in fact, the same thing. But the Lette^patent *
Crown is empowered by the act 7 Will. 4 & 1 Vict. c. 73 (o), act-
{(j) E. v. The Eastern Archipelago Companies, p. 401, ed. 10 ; see, as to
Co., 1 E. & B. 310 ; 2 ib. 856 ; and advertisements, 7 Will. 4 & 1 Vict.
4 De G. M. & G. 199. See, as to c. 73, § 32.
sci. fa. to repeal patents, 2 Wins. (m) See E. v. Oshourne, 4 East,
Saund. (ed. 1871), 231, et seq. 326, and Jud. (Officers) act, 1879,
(h) Grant on Corp. 39, &c. 42 & 43 Vict. c. 78, §§ 4, 6 and 12
[i) See Macbride v. Lindsay, 9 Ha. and Ord. LXI.
574. (n) Grant, 46.
(k) See Grant, 20— 22. (o) Repealing 6 Geo. 4, c. 91, § 2,
(0 See Wordsworth on Joint Stock and 4 & 5 Will. 4, c. 94.
100 CHARTERED COMPANIES.
Bk. I. Cbap. 4. to grant by letters patent to any company or body of persons,
■— - although not incorporated by such letters patent, any privileges
which the Crown might at common law grant to any company
or body of persons by any charter of incorporation. Letters
patent under this act are obtained on application to the Queen
in Council, and notice of the application must be inserted
three times in the "London Gazette," and in one or more of
the newspapers, circulating in the county in which it is pro-
posed that the principal place of business of the company shall
be established, at intervals of not less than one week {p).
Company's deed. Every company formed under this act, is required to be
entered into by agreement under seal, in which are to be
specified the number of shares in the company, the name of
the compairy, the names of its members, the date of its com-
mencement, the nature of its business, the place or principal
place where such business is to be transacted, and also the
names of two or more officers to sue or be sued on behalf of
the company (q). Within three months after the grant of the
letters patent, a return is to be made to the enrolment depart-
ment of the central office (r) of all the above particulars, and of
the date of the letters patent (-s) ; and returns are required to be
made of every change made in the company's principal place of
business, and of every change amongst its shareholders (t),
and of the officers by which it is to be sued (u). These
returns are directed to be registered and to be open to the
inspection of any person upon payment of a small fee (x). A
certified copy of the return is made evidence both in civil and
in criminal proceedings (y).
Such companies Companies formed under this act are not corporations, but
not corporations. are essentially partnerships. Their privileges depend on the
letters patent obtained by them. The possession of a common
seal is taken for granted in the act itself (z) ; but there is
nothing requiring the seal to be affixed to a contract, in order
(p) 7 WE 4 & 1 Vict. c. 73, (t) lb. §§ 7-10.
§ 32. («) lb. § 13.
(q) lb. § 5 (,;) lb. § 17.
(r) In the case of an English com- (y) lb. § 18 ; see, too, §§20 and
pany, see § 26, and 42 & 43 Vict. 21.
c. 78, §§ 4, 6 and 12, and Ord. LXI. (,-„.) See § 27.
00 lb- § 6.
7 WM. 1 AND 1 VK'T. C. 73. 101
to bind the company; and the act is express that the members Bk- *■ chaP- 4-
,, , . . Class 3.
oi the company are to be liable to its debts and engagements,
except so far as that liability may be limited by the letters
patent (a).
Who are to be deemed members is not stated; that question Members,
therefore must depend in each case upon tin- provisions of the
deed of settlement, and of the letters patent by which the
particular company in question may be governed; but when
once a person has become a member, his liability as a member
continues, until a return of the means whereby he has ceased
to be one is registered (b).
The act does not state with any precision how shares are
to be transferred, but a transfer, by deed or writing, is evi-
dently contemplated (c).
This act is seldom had recourse to ; the modern registra-
tion acts have practically superseded it.
Class III. — Companies incorporated or privileged by
SOME SPECIAL ACT OF PARLIAMENT.
1. Companies not incorporated, but empowered to sue and be
sued.
These companies are formed b}r agreement, and by the acts Companies em-
... ... ... -,TT. * . , powered to sue
which privilege them (a), uhether a person is a member or and be sued,
not, depends, in the absence of any special provisions in the
act of the company which may be in question, upon the prin-
ciples applicable to ordinary partnerships.
Banking companies governed by the general act, 7 Geo. 4,
c. 46, may be regarded as the type of companies empowered to
sue and be sued, and the authorities which will be referred to
hereafter, in connection with that act (infra, Class 4), may be
(«) See §§ 2-4 and 24. be sued by a public officer, see Bank
(b) See § 21. of Australasia v. Harding, 9 C. B.
(c) See §§ 8 and 9. 661 ; Bank of Australasia v. Nias,
(d) As to companies empowered 16 Q. B. 717 ; Kelsall v. Marshall, 1
bv a colonial legislature to sue and C. B. N. S. 241.
102
COMPANIES INCORPORATED BY SPECIAL ACTS.
Bk. I. CLap. 4. usefully consulted upon questions arising upon special acts of
Class 3.
a similar description.
Companies in-
corporated by
spi cial act of
parliament.
Promoters not
partners.
Parl'amentary
contract and
subscribers'
agreement.
The special act.
2. Incorporated companies.
A company incorporated by a special act of Parliament
exists as an incorporated company by virtue of that act, and
not otherwise. It is formed by the act, and by that alone,
and those only are members of the company who are made so
by the act.
Persons associated together for the purpose of obtaining an
act of Parliament to incorporate them into a company, are not
partners, although the company, when formed, will have gain
for its object, and although the shareholders will divide
amongst themselves whatever profits may accrue to the com-
pany (e).
It does not fall within the scope of the present work to
detail the method of obtaining acts of Parliament, or to advert
to the rules which have to be observed in compliance with the
standing orders of the two houses (/). It may, however, be
observed, that before an act can be obtained for the incorpora-
tion of a company, a deposit must be made of a certain pro-
portion in some cases of the estimated expense of the under-
taking, and in others of the capital it is proposed to raise.
Formerly a contract had to be entered into by the subscribers,
whereby each covenanted to pay a sum set opposite his name.
This contract was commonly called the " parliamentary con-
tract," by way of distinction from the " subscribers' agree-
ment," i.e., the agreement entered into by the allottees of
shares for the formation of the company.
The act which each company may succeed in obtaining for
itself is called its " special act," and governs the company as
to all matters specially provided for in it. But as to other
(e) See infra, book ii., c. 1, and
Partn. pp. 23, et seq.
(/) The standing orders are pub-
lished annually, and reliance is not
to be placed on any except the last
for the time being. See on this
subject generally, Hodges on Rail-
ways, c. i. ed. 6 ; and as to the ap-
plication of the deposit in payment
of debts, Bradford Tramways Co., 4
Ch. D. 18; Lowestoft, Y.,d-S. Tram-
ways Co., 6 Ch. D. 484 ; and Bir-
mingham and Lichfield Junction
Bail. Co., 28 Ch. D. 652.
COMPANIES CLAUSES ACT. 103
matters the company (if incorporated since the 8th of Mav. Bk. I. Chap. 4.
Class 3
L845) is governed by the Companies clauses consolidation
act (//), which is a public general act passed in .May, L845, and eh^B^aS!"^
is applicable to every English (/<) company incorporated by act
of Parliament since that time, save so far as its clauses and
provisions may be expressly varied or exempted by the com-
pany's special act. In the present place it is proposed to
notice such of the clauses of the act in question as relate to
the constitution of the companies to which it applies, and to
the evidence of membership therein.
A company is supposed to be incorporated by a special act,
to have the amount of its capital fixed thereby, and to have the
capital thus fixed, divided into shares of a certain number and
amount, and numbered progressively from one upwards, so that
each share may be distinguished by its appropriate number
(§ 6). The company is then (by § 9) required to keep a book
called the "register of shareholders," in which book are to Register of
be entered, (1), the names of the persons entitled to shares in blmxholders-
the company ; (2), the number of shares to which such persons
are respectively entitled ; (3), the distinguishing numbers of
such shares ; and (4), the amount of the subscriptions paid on
them. This book is to be authenticated by the seal of the
company (which is to be affixed at ordinary meetings), and is
prima facie evidence against a person registered therein as a
shareholder that he is so in point of fact (see § 28) ; and the
creditors of the company have a right to inspect it (§ 36). In
addition to the " register of shareholders," the company is
required to keep a " shareholders' address book " (§ 10), which
is to be open to the inspection of every shareholder at all con-
venient times (/). On demand of the holder of any share, and
on payment of a small fee, the company is required (§ 11) to
deliver to him under its seal a certificate of proprietorship ;
and this certificate is (§ 12) required to be admitted in all Share certificate.
(g) 8 & 9 Vict. c. 16, amended by discussed in this treatise.
26 & 27 Vict. c. 118 ; 32 & 33 Vict. (h) See Wilsonx. Caledonian Rail.
c. 48 ; 38 & 39 Vict. c. 66 ; 47 & Co., 5 Ex. 822.
48 Vict, c, 43, and 51 & 52 Vict. (?) See as to inspection and taking
c. 48. The Lands clauses and the copies, infra, book iii. c.l, § 3, & c. 3,
Railways clauses consolidation acts § 4. *
have no connection with the topics
101 COMPANIES INCORPORATED BY SPECIAL ACTS.
Bk. I. Chap. 4. courts as prima facie evidence of the title of the person named
Class 3 • • i
! in it, and of his executors, administrators, or assigns to the
share therein specified (j). Provision is then made for the
transfer of shares, for the registry of transfers, for the pay-
ment of calls, for the forfeiture of shares for the non-payment
of calls, and for executing against shareholders judgments
which have been obtained against the company ; all of which
matters will be noticed hereafter.
Who are share- The statute contains two definitions of the term share-
holders. , . 7
holder : —
1. It is declared in § 3, that the word shareholder shall
mean shareholder, proprietor, or member of the company ;
and,
2. It is declared in § 8, that every person who shall have
subscribed the prescribed sum (k) or upwards to the capital of
the company, or shall otherwise have become entitled to a
share in the company, and whose name shall have been entered
on the register of shareholders, shall be deemed a shareholder
of the company.
Upon this section it has been decided that a person may be
a shareholder although he has not paid for his shares, and
although payment is a condition precedent to his exercising
his full rights (/).
Effect of register. As regards the entry on the register, it is to be ob-
served : —
1. The act nowhere says that a person not on the register is
not a shareholder. A person made a member by the special
act is clearly a shareholder although not registered (>») ; and it
is conceived that other persons may be shareholders although
not registered as such («)•
(j) The certificate only shows the 201 & 664, where no shares were
legal title, Shropshire Union Rail. Co. ever issued, and no register was ever
v. B., L. E. 7 H. L. 496. kept. Compare Kipling v. Todd, 3
(/.•) i.e., the sum prescrihed in the C. P. D. 350, and see O'Brien's case,
company's special act, see § 2. Ir. B. 11 Eq. 422.
(I) East Gloucestershire Bail. Go. (n) See the last note, and Bastrick
v. Bartholomew, L. E. 3 Ex. 15, and v. Derbyshire, d-c, Bail. Co., 9 Ex.
see, also, McEuen v. West Bond. 149, and Wolverhampton Waterv. Co.
Wharves Co., 6 Ch. 655. * v. Hawhesford, 6 C. B. N. S. 336, 7
(m) Portal v. Emmens, 1 C. P. D- ib. 795, and 11 ib. 456.
COMPANIES CLAUSES ACT. 105
2. The register is primd facie evidence that a person whose 1!k- T- ('1,fti'- 4-
Class 3.
name is on it is a shareholder.
It follows from this, that the company may put anybody's
name on the register, and throw upon him the burden of
showing that he is not a shareholder (o). But the register is
no evidence that a person whose name is not on it is a share-
holder; and therefore where shares were allotted to " Brown-
rigg and Taylor," who were trustees for anothi c person, and
were described on the register as " Brownrigg and others,"
this entry was held to be no evidence against Taylor (/)).
The leading case on the requisites of a register of share- Form of register,
holders in companies governed by the Companies clauses con-
solidation act, is Wolverhampton New Waterworks Company v. Wolverhampton
New "Welter works
Hatokesford(q). It was there held that a sheet of paper on company v.
which were written the names of some shareholders, and the IIuNvkcsford-
total number of shares held by them, and which paper was
sealed with the seal of the company, was not a register at all.
In this case the shares were not identified by numbers, and in
this respect the register was substantially informal; and the
Court relied much on this circumstance. But it would, per-
haps, be going too far to hold that if a company issues un-
numbered shares, and keeps a proper register of such shares,
this register is altogether useless and inadmissible in evi-
dence (r). And if the shares are numbered the register is
admissible, although it does not contain the numbers of the
shares (s).
A rough share book has been held inadmissible in evidence
as a register under the act now in question (t).
If the register is in several volumes they are all admissible
in evidence, although the company's seal is to be found in the
(o) Waterford, Wexford, <fec, Bail. Emmens, 1 C. P. D. 201 & 664.
Co. v. Pidcock, 8 Ex. 279 ; Bain (r) See the last case, and Irish
v. Whitehaven Rail. Co., 3 H. L. Peat Co. v. Phillips, 1 B. & Sm.
C. 1 ; West Cornwall Rail. Co. v. 638.
Mowatt, 15 Q. B. 528. (s) East Gloucestershire Rail. Co.
(p) Birkenhead , Lancashire, &c, v. Bartholomew, L. R. 3 Ex. 15.
Rail. Co. v. Brownrigg, 4 Ex. 426. (t) Birkenhead, dr., Rail. Co. v.
(q) 6 C. B. N. S. 336, 7 ib. 795, Brownrigg, 4 Ex. 426 ; Cheltenham,
and 11 ib. 456. Compare Ported v. dr., Rail. Co. v. Price, 9 C. & P. 55.
106 COMPANIES INCORPORATED BY SPECIAL ACTS.
Bk. I. Chap. 4. last of them only (u) ; and the register sealed with the seal of
— — the company is admissible in evidence without proof of the
time or place, or authority at or by which the seal was
affixed (x). Moreover, the register is, if sealed and kept sub-
stantially as required, prima facie evidence against any one
whose name is on it, although he may prove that it has been
kept irregularly, and is in many respects inaccurate and imper-
fect (y) ; but the sealed register is no evidence that a person
whose name is on it was a shareholder at any given time
anterior to the day on which the seal was affixed (z).
Register not 3, The register is not conclusive evidence that a person
conclusive. . . . .
whose name is on it is a shareholder. It is competent tor him
to rebut the pui md facie case made against him by the register,
by showing that the company inserted his name in it without
any authority. An express authority from him is not, however,
requisite ; for if he has entered into a contract with the pro-
moters of the company to take shares in it, and if that contract
is binding upon both parties, he may without more be properly
registered as a shareholder, and the contract and the register
will together be conclusive against him. But if he can show
that no such contract was ever entered into, or that such a
contract, if ever entered into, had terminated before his name
was inserted in the register, then the prima facie case raised
against him by it will be at an end. The following cases
illustrate these propositions :
Eight of com- 1. As to the right of the company to register those who
pany o regis i. ^^ eiltitlecl to shares. That a person who is bound to accept
shares may be properly registered as a shareholder was decided
in The Midland Great Western Railway Company v. Gordon (a).
(a) Inglis v. The Great Northern Brighton Rail. Co. v. Fairclough,
Bail. Co., 1 Macqueen, 112. ib. 674 ; Birmingham, Bristol, and
(x) North-Western Bail. Co. v. Thames June. Bail. Co. v. Locke,
M'Michacl, 5 Ex. 855. 1 Q. B. 256 ; London and Grand
(y) See East Gloucestershire Bail. June. Bail. Co. v. Graham, ib. 271.
Co. v. Bartholomew, L. K. 3 Ex. 15 ; (-.) Cheltenham and Great Western
Bain v. Whitehaven Co., 3 H. L. Union Bail. Co. v. Price, 9 C. & P.
C. 1 ; Southampton Dock Co. v. 55.
Richards, 1 Man. & Gr. 448 ; Lon- (a) 16 H. & W. 804 ; see, too,
don and Grand June. Bail, Co. v. Burke v. Lechmere, L. R. 6 Q. B.
Freeman, 2 ib. 606; London and 297; Nixon v. Brownloiv, 2 H. & N.
I OMPANIES CLA1 BES A< T. 107
In tliat case a railway company was projected; the defendant Bk. I. Chap. i.
• ii i-i» Cla
agreed to take snares in it; he executed the subscribers agree-
merit ; and he received scrip certificates. He sold the scrip
before the company was incorporated. Alter it was incorpo-
rated the company placed his name on the register of its share-
holders, and lie was held to be a shareholder, although he had
never authorised the insertion of his name in the register,
except so far as his contract conferred an implied authority for
such insertion (Ji). But a person who has never agreed to
take shares, and who is only the holder of scrip transferable to
bearer, ought not to be registered as a shareholder against his
Will (r).
2. As to the inconclusiveness of the register. A person Improper
whose name is on the register is not a shareholder unless he 1C°
is also entitled to a share in the company ; and in order to
entitle a person to a share, he must have acquired such title
by the company's special act (d), or he must have been an
original subscriber for the share, or have obtained a title to it
from or through an original member or subscriher. An original
subscriber does not become a shareholder by being placed on
the register unless he has acquired a right to be registered ;
and therefore if he has entered into a contract which uives him
no right against the company to be considered a member •
thereof until he has performed certain conditions, e.g., executed
a deed, he does not become a shareholder by being registered
as one before he has complied with those conditions ; for as the
registry would not be equivalent to a compliance with the con-
ditions for one purpose, e.g., as against the company if a divi-
dend were claimed, so it is not equivalent to a compliance with
them for another purpose, e.g., against him who is registered,
in an action for calls (e).
455, and 3 ib. 686 ; Cork and before the act had passed, he retired
Youghal Rail. Co. v. Paterson, 18 from his contract so far as he law-
C. B. 414. fully could.
(b) In Kidwelly Canal Co. v. Rabij, (c) Eustace v. Dublin Trunk, &c,
2 Price, 93, an act of Parliament, Rail. Co., 6 Erp 182.
incorporating the subscribers to a (d) As in Portal v. Emmens, 1 C.
company, was held to have made P. D. 201 & 664.
the defendant a shareholder, he (e) Waterford, Wexford, &c., Rail.
having been a subscriber, although, Co. v. Pidcoch, 8 Ex. 279 ; Curmar-
108
COMPANIES INCORPORATED BY SPECIAL ACTS.
Bk. I. Chap. 4.
Class 3.
Company not
estopped by its
register.
Correcting
register.
Estoppel by
conduct.
Transfers of
shares.
A person who is not yet entitled to share dividends, is not a
shareholder in the company, and does not become one by
simply being put on the register, unless indeed the insertion
of his name there is the only one thing remaining to be done
to perfect his title (/).
It follows from the above that the company is not estopped
by its own register (g). But when a person is put on the
register, the company has no right to strike him off unless it
can show proper grounds for so doing (h).
The Companies clauses consolidation act contains no pro-
vision for the rectification of the register ; but it may never-
theless be rectified both by mandamus and injunction as already
pointed out (i).
The doctrine by which individuals and companies are
estopped by their own conduct from taking advantage of the
non-performance of conditions precedent, and the 'non-
observance of prescribed formalities, is applicable to com-
panies of the class now in question, and to shareholders in
them, as is shown by the cases of Sheffield and Manchester
Railway Company v. Woodcock (/.), and Cheltenham and Great
Western Railway Company v. Daniel (I), which have been
already noticed (m).
Shares in companies governed by the Companies clauses
consolidation act are transferable by deed delivered (duly
executed), to the secretary of the company (n) ; a form of
transfer is given by the act (o) ; and in order that a company
may be compelled to register an instrument of transfer, it
then Rail. Co. v. Wright, 1 Fos. &
Firi. 282. See, also, Irish Peat Co.
v. Phillips, 1 B. & Sm. 598, noticed
ante, p. 50 ; and Edwards v. Kil-
kenny Bail. Co., 14 C. B. N. S. 526.
(/) See Shropshire Union Co. v.
Anderson, 3 Ex. 401.
(r/) See the last case, and Water-
ford, Wexford, &c, Pail. Co. v.
Pidcock, 8 Ex. 279. See, also, ante,
p. 60.
(/;) Ward v. S.-Eastern Rail. Co.,
2 E. & E. 812, Compare Hare v.
Lond. and N.-W. Rail. Co., Johns.
722.
(i) Ante, p. 61.
(/•) 7 M. & W. 574.
(1) 2 Q. B. 281.
(m) Ante, p. 49.
(n) 8 & 9 Vict. c. 16, §§ 14 & 15 ;
Nanney v. Morgan, 35 Ch. D. 598
and 37 ib. 346 ; West v. West, 9
L. B., Ir, 121.
(o) 8 & 9 Vict. c. 16, § 14, and
Sched. B.
BANKING COMPANIES FORMED DNDER 7 GEO. 4, C. 46. 109
must be in a simple form, not differing substantially from the ]5k- T- Chap. l.
r -i i / \ Class I.
rorm prescribed (_/>).
Class IV. — Companies incorporated or privileged by a
GENERAL ACT OF PARLIAMENT.
1. Banking companies formed under 7 Geo. 4, c. 4G.
Banking companies governed by 7 Geo. 4, c. 4G, and formed Banking com-
before May, 1844, still exist, but no company can now be c. 46?'
formed under that act (a). These companies are not mere
partnerships, for they possess many privileges which ordinary
partnerships do not (r). A company of this kind was formed
by agreement, and the privileges alluded to were acquired by
sending returns to the stamp office, of (inter alia) the names
and residences of the members ; and the names, residences, and
titles of office of two or more members resident in England,
who had been appointed public officers of the company, and by
any one of whom the company might sue and be sued (s). The
returns thus made are evidence that all persons named therein
as members were members at the dates of the returns in which
their names appear (t).
The act contains no definition of the term shareholder or who are .share-
member ; but it has been decided that no person is a member bolders-
within the meaning of the act unless he has complied with
all the conditions necessary to constitute a person a member
according to the company's deed of settlement. Thus it has
been held that the husband of a married woman who, with
his consent had become a shareholder, was not himself liable
to creditors as a member, he not being a member according to
the company's deed (»)•
(p)Copelandv. North-Eastern Rail. (s) 7 Geo. 4, c. 46, §§ 4 & 5 ; an
Co., 6 E. & B. 277 ; E. v. General irregularity in the returns does not
Cemetery Co., ib. 415. deprive the company of the privi-
(q) 7 & 8 Vict. c. 113, § 1. leges conferred by the act ; Bonar
(?•) Powles v. Page, 3 C. B. 16 ; v. Mitchell, 5 Ex. 415.
Macintyre v. Council, 1 Sim. N. S. (t) 7 Geo. 4, c. 46, § 6.
225 & 252. (u) Ness v. Avgas, 3 Ex. 805 ;
HO BANKING COMPANIES FORMED UNDER 7 GEO. 4, C. 46.
Bk. I. Chap. 4. The act requires that the returns to the stamp office shall
Class 4" be made out and be verified by the oath of one of the regis-
SmToffice!116 tered public officers, and shall be sent in once a year, between
the 28th of February and the 25th of March (x). But it has
been held that a certified copy of the return is admissible in
evidence, although it may have been made out by a person
calling himself" cashier," and there may be nothing to show
that he was a public officer (//). It has also been held unneces-
sary to prove that the return was verified by the oath of a
public officer, as required by the act (z) ; or that the return
was made at the proper time (a). On the other hand, it has
been held that returns proved not to have been made in
compliance with the act are inadmissible ; e.g., when it is
proved that they were not made until after the 25th of
March (&).
Effect of return. A person returned as a member will, until the contrary is
shown, be presumed to have been a member at the time the
return was made and subsequently (c) ; and if two successive
returns contain the name of the same person, the presumption
is strong that he was a member during the whole period be-
tween the times at which such returns were made (d).
There is nothing in the act which makes the returns
conclusive, either one way or the other ; and a person not
returned as a member may be proved, not only to have
become a member since the making of the last return, but
to have been a member at the time of the making of that
return (e).
The act is silent as to the mode in which shares are to be
transferred.
see too, Dodgson v. Bell, 5 Ex. 967 ; compare this with the last case,
Ness v. Armstrong, 4 Ex. 21 ; Bosan- where it was held that the act was
quet v. Shortridge, 4 Ex. 699. directory only in this respect.
(x) 7 Geo. 4, c. 46, § 5. (c) Steward v. Dunn, 12 M. & W.
(y) Harvey v. Scott, 11 Q. B. 92 ; 655; Ex parte Prescott, Mon. & Ch.
Field v. Mackenzie, 4 C. B. 717. 611 ; Harvey v. Scott, 11 Q. B. 106.
(z) Steward v. Dunn, 12 M. & W. {d) Bosanquet v. Shortridge, 4 Ex.
655.
699.
(«■) Bosanquet v. Woodford, 5 Q. B. (e) See Prescott v. Buffery, 1 C. B.
2iQw 41 ; Bank of England v. Johnson, 3
(b) Prescott v. Buffery, 1 C. B. 41 ; Ex. 598.
REGISTERED COMPAND -. HI
2. Registered companies. Bk. i. Chap, i
Class !.
By far the greatest number of joint-stock companies belong
to this class. They are all now governed by the Companies
arts, 1862, 18G7, 1877, 1879, 1880, 1883 (ee), and 1880. These
acts, like those which they supersede, require for their prac-
tical working, a public officer in each division of the United
Kingdom. This officer (called the registrar of joint-stock
companies) is appointed by, and, to a certain extent, is subject
to the Board of Trade. His duty is to register the various
documents required by the acts to be registered, and to allow
such documents to be inspected by any one desirous of seeing
them (25 & 26 Vict. c. 89, § 174).
These duties will, if necessary, be enforced by man-
damus (/).
Registration incorporates the company (§§ 18, 191, and Incorporation
192) ; and the registrar's certificate of registration, which he is of coml':iny-
required to give, is conclusive evidence that all the statutory
requisitions have been complied with (§§ 18 and 192) (g).
Even therefore if they have not, still the existence of the com-
pany as a corporate body cannot be denied in the face of the
certificate (h) ; nor does the fact that a company was formed
in fraud invalidate the certificate or deprive the company of its
corporate character (i). There is, moreover, no provision for
cancelling the registration of an improperly registered com-
pany ; nor is it clear that there are any means of cancelling
such registration (A).
But the registrar has no power to extend the acts to com- Certificate of
panies not within their scope ; and in order that his certificate Xn notion-
(ee) 46 & 47 Vict. c. 28 is repealed 26, § 6. Cl,,S1VC'
except as to Ireland by 51 & 52 (h) See the last note, and Glover
Vict. c. 62. v- Giles, 18 Ch. D. 173; Nassau
(/) R. v. WMtmarsh, 15 Q. B. Phosphate Co., 2 Ch. D. 610; Ban-
600 ; see, also, R. v. Registrar of wen Iron Co. v. Burnett, 8 C. B. 406 ;
Joint Stock Companies, 10 Q. B. 839 ; Bird's case, 1 Sim. N. S. 47.
R, v. Same, 21 Q. B. D. 131. (0 Pilbrow v. Pilbroic's Atmo-
(g) Peel's case, 2 Ch. 674 ; Oahcs spheric Co., 5 C. B. 440.
v. Timjuand, L. R. 2 H. L. 325 & (k) Princess of Reuss v. Bos, L. R.
354-369 ; Princess of Reuss v. Bos, 5 5 H. L. 176, 193, 197, 202. But see
ib. 176 ; New Bnmsivick Rail. Co. v. Glover v. Giles, 18 Ch. D. 180 as to
Boore, 3 H. & N. 249. See as to Quo warranto.
copies of certificates, 40 & 41 Vict. c.
112
REGISTRATION OF COMPANIES.
Bk. I. Chap. 4
Class 4.
Evidence of
incorporation
may be conclusive evidence of the incorporation of a company
formed and registered under them, it is essential that the com-
pany shall be one which may be duly registered ; neither regis-
tration nor the registrar's certificate is of any avail in the case
of a company to which the acts do not apply (/).
The registrar's certificate, although the best, is not the only
admissible evidence of registration. Registration may be suffi-
ciently proved by other evidence ; for example, as against the
company, by the production of certificates of shares sealed with
its seal (m). But this sort of evidence cannot be relied upon
when it is necessary to prove the incorporation of the company
against persons not connected with it (n).
No two companies are to be registered by the same name, or
by names so similar to each other as to be calculated to
deceive (§ 20) (o). But if a registered company is being dis-
solved, and it consents to the assumption of its name by
another company, the latter may be registered under the name
Power to change borne by the former (§ 20) (p). In the event of two companies
name* being inadvertently or otherwise registered by the same name
or by two names so similar as to be calculated to deceive, the
name of the company last registered may be changed (§ 20).
And any registered company may change its name, with the
sanction of a special resolution of its members, and the approval
of the Board of Trade (§ 13). But the change of name is not
Name of com-
pany.
(I) See Northumberland District
Banking Co., 2 De G. & J. 357.
See, also, Baroness Wenlocl v. Rivi r
Dee Co., 38 Cli. D. 534, which turned
on a .similar provision in another
act. Compare Princess of Reuss v.
Bos, uU sup. As to companies
registered under part VII. of the
act, see Ennis v. West Clare Rail.
Co., 3 L. R, Ir. 94, where the certifi-
cate was held conclusive. See § 192.
(m) Mostyn v. ( 'alcottHall Mining
Co., 1 Fos. & Fin. 334. See Agri-
cultural Cattle Insurance Co. v. Fitz-
gerald, 1(5 Q- B. 432, as to actions by
the company. The fact of registra-
tion is there stated to have been
proved, but hew does not appear.
The certificate, however, was not
produced.
0) See R. v. Frankland, L. & C.
276, as to the proof required in
criminal cases, and compare R. v.
Langton, 2 Q. B. D. 296.
(o) See R. v. Registrar of Friendly
Societies, L. E. 7 Q. B. 741. As to
one company restraining the regis-
tering of another in a name like its
own, see below.
(p) Advantage is taken of this
when it is desired to reconstruct a
registered company. The company
dissolves, and a new company is
formed with a new constitution,
but with the same name as the old
company. See infra, bk. iv., c. 2, § 4.
THE COMPANIES ACT, 1862. 113
complete until a new certificate of incorporation has been Bk. I. Chap. 4.
1 Class l.
issued (fj). '
It is further provided that such existing companies as
register with limited liability, shall add the word limited to
their former name (§ 183, cl. 3, and § 190). But except in cases
specially provided for, a company once registered under a given
name cannot require to be registered under a new name (r).
But an unlimited company may be converted into a limited
company (see the Companies act, 1879, 42 & 43 Vict. c. 76).
A mere change of name does not affect a company's rights
or obligations (§§ 13, 20, and 194). But as will be seen here-
after, the consequences of registering an existing company
under the acts are extremely important.
One company can restrain persons from registering another com- Rival companies.
pany under a name so like its own as to he calculated to deceived);
so a company which has been already registered under such a
name can be restrained from carrying on business under it (t).
The registrar may remove from the register the name Defunct com-
of any company which has ceased to carry on business («).
With respect to the registration of companies under the act Scope of act of
1 fif:0
of 1862, it will be found that its provisions apply, first to all
companies formed under it (r) ; secondly, to some companies
existing when the act came into operation Cr) ; and, thirdly, to
some companies formed subsequently to that date, but not
under the provisions of the act itself (#). It will further be
seen that many companies may be wound up under it although
not registered under it {2).
((/) Shackleford v. Dangerjield, L. The Home and Colonial Assurance
B. 3 C. P. 407. Co., 33 Beav. 548 ; The London
(/•) R. v. Registrar of Joint Stock Assurance Co. v. The London and
Cos., 10 Q. B. 839. Westminster Insurance Corporation,
(s) Hendriks v. Montagu, 17 Ch. 9 Jur. N. S. 843, V.-C. S. ; The
D. 638. London and Provincial Law Assnr-
(t) Merchant Banking Co. of London ance Society v. The London and Pro-
■ v. Merchants' Joint Stock Bank,9 Ch. vincial Joint Stock Life Ass. Co., 17
D. 560. See further as to one com- L. J. Ch. 37, N. S.
pany suing another for taking its (u) 43 Yict. c. 19, § 7. C&J&^ M^sj^t^ -W^. th-tlL^d
name with a colourahle imitation, (v) See the first four parts of theact.
Lee v. Haley, 5 Ch. 155 ; Braham v. (x) Seethe sixth and seventh parts
Beachim, 7 Ch. D. 848 ; Lawson v. of the act.
The Bank of London, 18 C. B. 84 ; (y) See § 180.
The Colonial Life Assurance Co. v. (z) See part eight of the act.
L.C. I
in
THE COMPANIES ACT, 1862.
Bk. I. Chap. 4.
Class 4.
Registration
when compul-
sory.
Carrying on
business. ■
For gain.
Registration is compulsory —
1. In the case of insurance companies completely registered
under 7 & 8 Vict. c. 110 (see § 209 of the act of 18G2) (a).
2. In the case of companies which ought to have registered
under the repealed acts of 1856 — 1858, but which were not so
registered (§ 209). This class includes, 1, all companies regis-
tered under 7 & 8 Vict. c. 110, except insurance companies (b) ;
2, all chartered banking companies formed under 7 & 8 Vict,
c. 113 ; and, 3, Scotch and Irish banking companies formed
under 10 Vict. c. 75 (c).
3. In the case of banking partnerships of more than ten
persons, formed on or after the 2nd of November, 1862, unless
formed under some other act of Parliament, or under letters
patent (§4).
4. In the case of companies, associations, or partnerships of
more than twenty persons (d) formed on or after the 2nd of
November, 1862 (e), for the purpose of carrying on any other
business (except banking) for gain by the company, &c, or the
members thereof, unless they are formed under some other act
of Parliament, or under letters patent, or unless they are com-
panies engaged in working mines within and subject to the
jurisdiction of the Stannaries (§ 4) (/).
Associations of more than twenty persons carrying on busi-
ness by agents are within the act(/y). But persons who are
only the cestuis que trustent of others who carry on business as
principals, do not themselves carry on business within the
meaning of the act (h).
What amounts to carrying on business for gain has been
(a) This gets rid of London
Monetary Co. v. Smith, 3 H. & N.
543, and Lond. and Provincial Prou.
Soc. v. Ashton, 12 C. B. N. S. 709.
The first of these cases was clearly
wrong.
(6; See 20 & 21 Vict. c. 14, §§ 26
& 27. As to insurance companies,
see the cases in the last note, and
Bank of London, &c, Lns. Assoc, G
Ch. 421.
(c) See 20 & 21 Vict. c. 49, §§
4&5.
(d) I.e. 20 when formed or by
subsequent increase, Ex parte
Poppleton, 14 Q. B. D. 379.
(e) As to older companies, see
Shaw v. Simmons, 12 Q. B. D. 117.
( /) The j urisdiction was extended
to Devonshire by 18 & 19 Vict. c. 32.
(;/) See Harris v. Amery, L. R. 1
C. P 148, and the next note.
(/<■) Smith v. Anderson, 15 Ch. D.
247, overruling Sykes v. Beadon, 11
Ch. D. 170.
REG] i 'HA IM\ OF COMPANIES. 1 L5
much discussed (i) : and it is now settled thai mutual marine Bk. I. Chap i.
Class 4.
insurance companies (,/) and mutual loan societies (k) are
within the act; but freehold Land societies are not (I).
Registration appears to be impossible only in the following Registration
when impo
eases, VIZ. :
1. In the case of companies and associations of less than
seven members (§6).
2. In the case of companies and associations having the
liability of their members limited by act of Parliament or
letters patent, and not having a capital divided into shares or a
transferable stock (§ 179, cl. 1, and § 181), e.g. mutual incor-
porated societies, and learned societies, such as the Royal
Societ}\
3. In the case of Trade Unions (;»)•
4. In the case of foreign incorporated companies (//).
Companies which had been alread}' registered under the Companies al-
repealed acts of 1856 — 8 need not register under the act of nn^T tracts
1862, but they may do so; and whether tiny do or do not re- "' l856 8"
gister they are subject to its provisions, except that their own
regulations remain unchanged (compare §£ 176, 177, 206,
208) (o). For some purposes (see §§ 176, 177) however, a
distinction is made, in the case of non-re-registration, between
companies formed and registered under the acts of 1856 —
1858 and those registered but not formed under them. The
former class are placed substantial^' on the same footing as
companies formed and registered under the act of 1862, the
old regulations being preserved (§§ 176 and 206) ; whilst the
latter class are placed on the same footing as other existing
companies which have registered under the act of 1862 (§ 177).
The other clauses which authorise, but do not imperatively Registration
when optional
(i) See the last note and the next (m) 34 & 35 Vict. c. 31, § 5.
three. (?<) Bulkeky v. Schutz, 3 L. R. P.
(j) Padstoto Total Loss Assoc, 20 C. 764 ; Bateman v. Service, 6 App.
Ch. D. 137 ; Ex parte Hargrove, 10 Ca. 386.
Ch. 542. (o) See Torquay Bath Co., 32 Beav.
(k) Jennings v. Hammond, 9Q.B. 581. Of course without re-registra-
D. 225 ; Shaio v. Benson, 11 Q. B. D. tion such a company cannot be con-
563 ; Ex parte Poppleton, 14 Q. B. D. verted from an unlimited into a
379. limited company.
(0 Be Siddall, 29 Ch. T). 1.
I 2
without.
116 THE COMPANIES ACT, 1862.
Bk. I. -Chap. 4. require, registration, are the 6th and the 180th. These appa-
Class 4. .
- rently authorise any seven or more persons, associated for any
lawful purpose, to form a company by registration with the ex-
ceptions above mentioned {p). The circumstance that the
persons are foreigners and intend to carry on business abroad
does not preclude registration (q).
Option to regis- With a few exceptions, eveiy company capable of being
ter with limited . . -
liability, or registered may, at the option ot its members or promoters, be
registered either with or without limited liability (§§ 6 and
180) ; and, in the first case, with the liability limited either by
shares or by guarantee (§§7 and 180). The exceptions are as
follows :
1. No company, having the liability of its members limited
by act of Parliament or letters patent, can register as an un-
limited company, or as a company limited by guarantee (§ 179,
cl. 2).
2. No company that has not a capital divided into shares, or
a transferable stock, can register as a company limited by
shares (§ 179, cl. 3, and § 181). This applies to most cost-
book mining companies.
Further a company can be formed with limited liability, but
with the liability of its directors or managers unlimited (r).
Having made these preliminary observations, it is proposed
to consider the formation of registered companies and the
evidence b}r which a person can be shown to be a member of
them. For this purpose it is not necessary to distinguish
limited from unlimited companies, but it is necessary to divide
registered companies into
1. Companies formed and registered under the act of 1862.
2. Companies registered under that act, but not formed
under it.
(p) The joint efl'ect of § 179, cl. 1, not intended. See Ennis v. West
and of §§ 180 & 181, seems to be Clare Bail. Co., 3 L. R., Ir. 94.
that railway companies incorporated (q) Princess of Keuss v. Bos, L. R.
by act of Parliament, and having a 5 H. L. 176, affirming General Co. for
capital divided into shares or a Promoting Land Credit, 5 Ch. 363.
transferable stock, may be registered (r) 30 & 31 Vict. c. 131, § 4.
under the act. This was probably
REG! JTB VI [ON 0] I OMPANIES. 117
Bk. I. Chap. 4.
1. Companies formed and registered under tin Companies act, L862. Class >•
Any seven or more persons associated for any lawful pur-
pose may form ;i company under this ad (§ 6). Jt is not even
necessary that gain shall he the object of the company (s).
A company is formed under the act of 1862, by the registra- Memorandum of
lion of a memorandum of association, bearing a deed .stamp, M
and subscribed by seven or more persons, in the presence of,
and attested by one witness at least (see §§ 8 — 11 and 17 and
18, and the forms in sched. 2).
This memorandum must contain, 1, the name of the pro-
posed company; 2, the part of the United Kingdom in which
the registered office of the company is to be ; and 3, the objects
for which the company is to he established (§§ 8—10, and
sched. 2). If the company is to he limited by shares, the
memorandum must also state, -1, that the liability of the
members is limited; and, 5, the amount of proposed capital,
and the shares into which it is to he divided (§ 8 and sched. 2,
form A.). If the company is to he limited by guarantee, the
memorandum must contain, in addition to the three things
first above mentioned, a declaration that each member will, if
necessary, contribute to a specified amount on the winding up
of the company (§ 9, and sched. 2, forms B. and ('.). If the
company, whether limited or unlimited, has a capital divided
into shares, each subscriber to the memorandum must write
opposite his name, the number of shares he takes, and he
must take one at least (§§8 and 14).
A statement of the amount of nominal capital to he raised Stamp.
by shares must he sent to the registrar and be stamped with a
stamp duty of 2-5. per 100/. of capital, see 51 Viet. c. 8, § 11.
The memorandum of association must, in the case of an Articles of
unlimited company, and of a company limited by guarantee, ass
association.
(s) See 30 & 31 Vict. c. 131, § 23. for their object, 7,'. v. Wldtmarsli, 15
No questions, therefore, can arise Q. B. 600 ; Bear v. Bromley, 18 ib.
under the act of 1862, similar to 271 ; Moore v. Rawlins, 6 C. B. X.
those which arose under 7 & 8 Vict. S. 289 ; to companies, the forma-
c. 110. See as to the application of tion of which was commenced before
that act to projected railway com- 1st Nov. 1844, Shaw v. Holland, 15
p.mies, Abbott v. Rogers, 16 C. B. M. & W. 136.
277 ; to companies not having gain
118
THE COMPANIES ACT, 1862.
Table A.
Bk. I. Chap. 4. an(| mav {n the case of a company limited by shares, be accom-
Class 4. - . l / . .
pained, when registered, by articles of association, prescribing
regulations for the company (§ 14, and sched. 2, forms B. and
C). These articles must be printed and be stamped with a
deed stamp, and be signed by the subscribers to the memo-
randum of association, in the presence of, and attested by one
witness at least (§§ 14 and 16). In the case of a company
having a capital divided into shares, and not being limited by
shares, the articles must state the amount of the proposed
capital ; and in the case of a compan}T not having such a capital,
the articles must state the number of members with which the
company proposes to be registered (§ 14).
The first schedule of the act, table A., contains a set of
regulations which may be adopted, wholly or in part, by any
company, and which apply to companies limited b}r shares,
unless the contrary is expressed in their registered articles
(§§ 14 and 15). These regulations closely resemble those con-
tained in table 13., in the repealed act of 1856. They have
been framed with care, and they should be adopted, as far as
possible, in all cases. The Board of Trade has power to alter
them, but not retrospectively (§ 71).
The memorandum of association, and the articles, if any, are
to be delivered to the registrar of joint-stock companies, who
is required to retain and register them (§ 17). Certain fees
are payable upon their registration (§ 17). After their regis-
tration, the registrar is required to certify that the company is
incorporated, and in the case of a limited company, that it is
limited ; and his certificate is conclusive evidence that all the
requisitions of the act, in respect of registration, have been
complied with (§ 18) (0-
The memorandum of association and the articles of asso-
ciation ought to be consistent with each other, and they ought,
if possible, to be construed so as to make them consistent (u).
But if the two conflict, the articles must give way to the
memorandum, for that is the more important document of the
two, and cannot be altered except in certain particulars specified
(t) Ante, p. 111. D. 75 ; South Durham Brewery Co..
(u) See Felgate's case, 2 De G. J. 31 Cli. D. 2(51.
& Sin. 456 ; Andersons case, 7 Ch.
Registration of
memorandum
stud articles.
Certificate of
re ristration.
Construction of
memorandum
aud articles.
MEMBERS. 11 'J
in the statutes (.r). Many cases illustrating this general rule Bk. I. Chap. i.
will be nut with hereafter when considering the powers of
directors and majorities, and the Liabilities of the subscribers
of the memorandum (y). Moreover, articles of association,
w bich arc inconsistent with the Companii s acts, arc invalid (2).
The articles of association may be varied by special resolu- Varying articles
tion (§ 50), and the company cannot, deprive itself of its power
to alter them (a).
The act in substance declares that the subscribers of the Who are mem-
memorandum of association (§§ 18 and 23) (6), and all persons
who have agreed to become members and whose names are
entered in the register of members, shall be deemed members
of the company (§ 23). It is conceived that persons who Subscribers of
,. ., i •, r ■ , ■ ■ -. memorandum.
sign copies ot the memorandum before it is registered are
members under this act, as they were held to be under the act
of 1856 (c).
It is very difficult to see how any person who signs the
memorandum of association can he held not to be a member.
But in Frigate's case (d), a person who had signed the memo-
randum and articles of association was held not to he a contri-
butory, as the articles he had signed had been tampered with
before they were registered. He was held not to be bound by
the articles, and not being bound b}' them he was held not
bound by the memorandum.
With respect to other persons it is to be observed that no Other member?.
particular form of agreement is necessary (e) ; but a question
(x) See § 12 of the Companies act, (k) Signature by an agent is suffi-
18(52, and §§ 8, 9 & 21 of the (.Van- cient, Whitley Partners Limited, 32
panies act, 1867, and § 5 of the Com- Oh. Div. 337.
panics act of 1877, and the Com- (c) New Brunswick Bail. Go. v.
panies act, 1879. Bbore, 3 H. & N. 24!).
(//) See particularly Guinness v. (d) 2 De G. F. & J. 456. This
Land Corporation of Ireland, 22 Ch. case turned on the act of 1836, but
D. 349 ; Aslibury Rail. Carriage Go. there does not appear to be any
v. Iilche, L. R. 7 H. L. 653 ; Dent's difference between that act and the
case, 8 Ch. p. 776. act of 1862, so far as this subject is
(2) Trevor v. Whitworth, 12 App. concerned.
Ca. 409, the case of an article em- (>) This gets rid of New Bruns-
powering a company to buy its own wick Rail. Co. v. Muggeridge, 4 If.
shares. & N. 160 & 580. See Bog Lend
(a) Walker v. London Tramways Mining Co. v. Montague, 10 C. 13. N.
Co., 12 Ch. D. 705. !S. 481.
120
THE COMPANIES ACT, 1862.
Bk. I. Chap. 4,
Class 4.
Several classes
of members.
Certificate of
title.
Register of
members.
Correction of
register, § 35.
may arise on tins act, as on the Companies clauses consolida-
tion act, whether a person may not be a member although his
name is not on the register. In considering this question
regard must be had to the right of companies to put persons
on the register (/), to the i:>rovisions for its rectification^/),
and to the extent to which a person may have acted and been
treated as a member (h).
There is nothing in the statute to prevent the existence of
two or more classes of members (?'), but as will be seen here-
after (in Book III.) the rights of each class must be respected,
and this consideration may prevent the creation of another
class with special privileges.
A certificate under the seal of the company, stating that any
shares or stock are held by a member, is prima facie evidence
of his title to the shares or stock therein specified (§ 31) (A).
Every company registered under the act is bound to keep at
its registered office (§ 82) a register of its members, and a
duplicate of any colonial register which it may keep under the
provisions of the Companies (colonial registries) act, 1883 (/).
The register must contain the names and addresses, occupa-
tions, and the number of the shares, if any, held by the
members, and the amounts paid, or agreed to be considered as
paid, in respect of such shares, and the dates at which the
members were registered, and the dates at which they ceased
to be members (§ 25). Xo notice of any trust is to be entered
on the register (§ 30) (m). The register is prima facie evidence
of all matters directed or authorised to be inserted therein
(§ 37) (n).
The 35th section provides for the rectification of the register,
and is extremely important (o). Its effect is that if the name
(/) Ante, p. 46.
(g) §§ 35 & 98.
(h) Ante, p. 47 et seq.
(i) IV i 'nst ones case, 12 Ch. D. 239,
where there were shareholders ami
assurance members not shareholders.
(A-) The right to demand this cer-
tificate is not given by the act, but
only by Table A, Nos. 2 and 3. See
as to these certificates, ante, p. 64.
(/) 46 & 47 Vict, c 30.
(m) See as to this, Bradford Bank-
ing Co. v. Briggs, 12 App. Ca. 29.
(n) See, as to the register when
fullj- paid-up shares have been re-
placed by share warrants transfer-
able by delivery, 30 & 31 Vict. c.
131, § 31.
(o) See on the correction of
registers generally, ante, pp. 61-63.
CORRECTION OF REGISTER. 121
of any person is without sufficient cause entered in or omitted Bk. I. Chap. 4.
Class 1.
from the register of members, or if default is made or unneces-
sary delay takes place in entering on the register the fact of register under
any person having ceased to he a member of the company, he § 3o"
or any member of the company or the company itself may
obtain an order for the rectification of the register. The order
may be obtained from any division of the High Court; or in
the case of a colonial register from any competent court in the
colony where such register is kept (_/;).
A difference of opinion has been expressed as to the correct
interpretation of this section. Some consider that under it
the register may be rectified whenever it can be shown by any
person who is on or off the register himself that some other
person ought as between themselves to be in his place (7) ;
whilst others consider that the section does not admit of so
wide an interpretation, being confined to the cases specified in
its commencement (r), viz. : —
1. To cases where the name of a person is without sufficient
cause entered in or omitted from the register.
'2. To cases where default is made or unnecessary delay takes
place in entering on the register the fact of any person having
ceased to be a member of the company.
The more restricted interpretation, it will be observed,
renders the section inapplicable except where the company
fails in discharging the duty imposed upon it of keeping a
proper register.
It must be borne in mind that before a company is being
wound up its register is much more readily rectified than after
the winding up has commenced and the rights of creditors
have to be considered. The rectification of the register in
connection with the settlement of the list of contributories
will be considered hereafter ; in the present place those deci-
sions only will be referred to which relate to the rectification of
the register of a going company.
(p) 46 & 47 Vict. c. 30, § 3 (3). cos, , 2 Ch. 431.
(q) See Ex, parte Shaw, 2 Q. B. D. (/•) Ex parte Ward, L. R. 3 Ex.
463 ; Ward and Garfit's case, 4 Eq. 180 ; Shejjherd's case, 2 Cb. 16 ; and
189 ; Musgrave and Hart's case, 5 see Lord Cairns' judgment in Ward
Eq. 193; and the judgment of and Henry's case, 2 Ch. 431 ; Marino's
Turner, L. J., in Ward and Henry's case, 2 Ch. 596.
122 THE COMPANIES ACT, 1862.
Bk. T. Chap. 4. Tlie 35th section not only authorises the correction of mis-
Class 4.
takes but also the determination of important conflicting rights,
going further in this respect than the corresponding section of
the Companies act, 1856 (s). As however trusts are not
noticed (§ 30) the title to be investigated is the legal title or
the right to acquire it (t). If this legal title is clear, and there
is no difficult question of fact to be investigated, the Court
will rectify the register without directing any action to be
brought (») ; but the Court has a discretion as to whether it
will interfere summarily under the act or direct an action, and
will be guided by the nature of the facts in dispute and by the
desirability of having them investigated by a jury (a;). The
circumstance, however, that the company has itself rectified
the register does not preclude the Court from ordering it to be
rectified ; an order of the Court being often of great import-
ance to the applicant^).
Instances of Registers will be rectified at the instance of persons who
have been registered as members without having entered into
any contract to take shares (z) ; so where the contract they
have entered into is void (a) ; so where the contract being
voidable it has been duly avoided by the alleged shareholder.
Thus registers have been rectified where persons have taken
shares on the faith of a prospectus with which the company's
memorandum of association does not correspond (b) ; so where
a person applied for shares on the faith of particular persons
(s) As to which, see British Sugar 669.
Refining Co., 3 K. & J. 408. (;.) Los? case, 6 X. E. 327 ; Higg's
(t) Ex parte Sargent, 17 Eq. 273 ; case, 2 H. & M. 657 ; Martin's case,
Ex parte Parker, 2 Ch. 685. ib. 659, where the name had been
(u) Ex parte Shaw, 2 Q. B. D. removed already ; Baily's ease, 5
463. Eq. 428 ; 3 Ch. 592 ; Somerville's
(.'•) See the last case ; Ashew's case, case, 6 Ch. 266, 271.
9 Ch. 664, where an action was (a) Stace and Worth's case, 4 Ch.
directed to try a question of fraud ; 682. .
Simpson's case, 9 Eq. 91, where a bill (b) Stewards ease, 1 Ch. 574;
was directed to be filed. The dim- Webster's case, 2 Eq. 741 ; Dowries
eulty here mainly turned on the v. Ship, L. R. 3 H. L. 343 ; and
construction of documents, and qu. Ship's case, 2 De G. J. & Sm. 544;
the advantage of directing an action Breckenridge's case, 2 Hem. & M.
in such a case. 642. See ante, p. 19 et seq.
(//) Martin's ruse, 2 Hem. & M.
I 0RRECTI0N OF REGISTER. 123
named in the prospectus being directors, and such persons l;k- ' Chap. 1.
< 'lass 1.
refused to become directors (c) ; so where a person lias been
induced by the fraud of the company to become amember(d) ;
so where the company refuses to register a transferee, to whom
the company cannot object ('•)•
Again, where shares are transferred to an infant the infant
can have the register rectified whilst he is an infant (/), or on
his coming of age, providing lie lias not accepted the shares (g) ;
and the company itself can obtain an order rectifying the
register in such cases (//) if it has not accepted the infant as a
shareholder knowing the facts (7). So where a person has by
misrepresentation or fraud induced the company to register
him as a shareholder, the register will be rectified at the
instance of the company, if it applies promptly (A;), and if third
parties have not dealt with the person registered and have not
acquired rights on the faith of his being a shareholder (/).
So where shares intended to be issued as fully paid up, have
been inadvertently issued as not paid up, the register has been
rectified under this section (in).
The question whether a vendor or a purchaser of shares is
entitled to be registered in respect of them can also be deter-
mined upon an application to rectify the register (ti).
On the other hand, a duly registered member cannot have Application to
his name struck off the register (o) ; and no person is entitled re
(c) Andersons case, 17 Cli. D. 373. noticed ante, p. 54. Compare
(d) Smith's case, 2 Ch. 604, and 4 Askew's case, 9 Ch. 664, where an
H. L. 64 ; Paw!<\< ens,, 4 Ch. 4'.)1 ; action was directed.
McNiell's case, 10 Eq. ."303 ; Forts (m) Darlington Forge Co., 34 Ch.
ease, 5 Eq. 118. D. :>22 ; Ex parte Shaw, 18 Eq.
(e) See Ex parte Parker, 2 Ch. OS."), 16; Ex parte Thomas, ib. 17 note.
and infra, Bk. III., c, 4, § 5, Transfer It seems that in these cases the com-
of shares. P'my may rectify its own mistake ;
(/) See Mann's case, 3 Ch. 459 n. ; Hartley's case, 18 Eq. 542, and 10
Cappers case, ib. 458. Ch. 157 ; Re Etna Ins. Co., Ir. B. 7
(g) See Hart's case, 6 Eq. 512 ; Eq. 264. See as to shares issued at
Wilson's case, 8 Eq. 240. a discount, Bail. Time Tables Pub. r.
(h) See Symon's case, 5 Ch. 298. Co., W. N. 1888, 239.{^o^uJUb ^j^jjp ^u. oT ^T^
(i) Parson's case, 8 Eq. 656. (ri) Ex parte Shan; 2 Q. B. D. ~3t* (°-
(/.•) See Ex parte Kintrea, 5 Ch. 95. 403.
(I) See, as to tins, Pallia and San (o) Ex parte. Ward, L. B. 3 Ex.
Francisco Bail. Co., L. B. 3 Q. B. 180.
584, and other cases of that sort
124
THE COMPANIES ACT, 1862.
Bk. I Chap. 4. to have his name put on the register until lie has complied
Class 4. j. o j.
- with all conditions precedent, e.g., proved his title to his shares
in the manner required by the company's regulations {p) ; and
where a company is required to register a transfer of shares
on which it has a lien, that lien must be first discharged (q).
Neither can a person who was entitled to be on the register
have it rectified in his favour if he has allowed some one else
to be registered in his place, and such person has transferred
his share to a bond fide purchaser (r) ; and as will be seen
hereafter, under the head " Contributories," delay in applying
to the Court is often fatal to the application (s). Nor can a
company which has, when prosperous, persistently refused to
register a person, obtain an order to register him when the
company is in difficulties (t).
If a person has suffered damage by reason of a company
improperly excluding him from or retaining him on its register,
the company will be ordered to pay it (u). But the company
will not be liable to pay any special damage arising from
unusual circumstances of which it had no notice (x).
So long as the company is a going concern, the Court has
apparently no jurisdiction under the 35th section, to order
costs to be paid by airy one except b}r the company (y). But
this observation does not apply to the costs of an appeal {z).
If the application is made after the liquidation has com-
menced, the Court has jurisdiction to order costs to be paid
as it may think fit (a).
The jurisdiction conferred by this section on the Vice-
Warden of the Stannaries to rectify the register of companies
Damages.
Costs.
Stannaries.
(p) East Wheal Martha Mining
Co., 33 Beav. 119.
(a) See London, Birmingham, dr.,
Bank, 34 Beav. 332 ; Stockton Mal-
leable Iron Co., 2 Ch. D. 101.
(r) London and Provincial Tele-
graph Co., 9 Eq. 653.
(s) See Scottish Petroleum Co., 23
Ch. D. 413.
(t) See Sichell's case, 3 Ch. 119 •
NicoVs case and Tufnell and Pon-
sonby's case, 29 Ch. D. 421.
(//) New Quebrada Co., 36 L. J.
Ch. 903.
(./') Sk inner v. City of Loud mi
Marine Ins. Corp., 14 Q. B. D. 882.
(»/) Ex parte Sargent, 17 Eq. 273 ;
Ex parte Kintrea, 5 Ch. 95.
(a) Ex parte Shaw, 2 Q. B. D. 463.
(a) See Ex parte Kintrea, 5 Ch.
95. In Anderson's case, 17 Ch. D.
373, and in Wood's case, 15 Eq. 236,
the company "was ordered to pay
costs as between solicitor and client.
];i Q] - I BE. 125
within tin; district of the Stannaries, does not exclude the Iik- i- Chap. i.
( ! 1 .■ i l
jurisdiction of the High Court for the same purpose (6).
Notice of an order rectifying the register must in most cases
be given to the registrar (<■).
By § 98 of the act of 18G2 it is provided thai when a Correction oi
company is being wound up. the Couri winding it up shall"'-1':1'''""" .
L J ° L e» j winding up of
have power t<> rectify the register of members; and this power company.
is constantly acted upon (//). In determining who are contribu-
tories, the actual state of the register is therefore of much less
importance than the state in which it ought to be.
A company can correct its own register where a Court would
compel it to do so (e).
Every person, whether a member or not, has a right to Inspection of
inspect the company's register, and to have a copy of it, or of Ies's
any part of it, on payment of a small fee (§ 32). Every
member is entitled to inspect the register gratis ; other per-
sons may be required to pa}' one shilling (§ 32). The register
may be temporarily closed (§ 33).
The act does not expressly require the register to be sealed Obsorvatious on
with the company's seal ; and a book kept as required by § 25 regU> e
may, it is conceived, be evidence under § 37, though not
sealed (/).
In addition to the register of members above referred to, Annual list and
every company having a capital divided into shares is bound Sl
under penalties to keep in a separate part of its register of
members, and once a year at least to make out and transmit
to the registrar of joint-stock companies, a list of its members
and late members, and a summary showing the amount of the
company's capital, and the number of shares into which it is
divided, and the number of shares issued and forfeited, and
the amount of calls made, received and unpaid (§§ 26 and 27,
(h) Tlie Pcnhale and Lomax, dc, than that conferred by § 35. See
Co., 2 Ch. 398. SichelVs case, 3 Ch. 119 ; Reese River
(c) § 3G. Co. v. Smith, L. R, 4 H. L. 64.
(d) No special application to (e) Hartley's case, 18 Eq. 542, and
rectify the register is necessary in 10 Ch. 157. See ante, pp. 63, 123.
these cases ; Brechenridge s case, 2 (/) See Cornwall, dc, Mining Co.
Hem. & M. 642. The power con- v. Bennett, 5 H. & N. 423, and see
ferred by § 98 is not more extensive ante, pp. 57-60.
126 THE COMPANIES ACT, 18G2.
Bk. I. Chap. 4. and schecL 2, form E.) (r/). And every company not having a
Class 4. . ' . .
capital divided into shares is bound to keep at its registered
office a register of its directors and managers, and to send a
copy of such register to the registrar of joint-stock companies,
and to notify all changes amongst them to him (§§ 45 and 46).
When share warrants transferable to bearer have been issued
under the Companies act, 1867, the annual return must be
varied as required by that act (h). And when any company
has reduced its capital under the Companies act, 1880, the
annual return must contain the particulars required by sect. 6
of that act (/).
Inspection. ' These documents when registered are open to the inspection
of every one on payment of a small fee (§ 174, cl. 5 ; see also
as to their inspection, § 32).
2. Companies registered under the Companies act, 1862, hut not formed
under it.
Little need be said with respect to the formation of com-
panies which may be registered under the act of 1862, but
which are not formed under its provisions. Such companies,
if created already, must have been formed either under acts
now repealed, or in one of the various methods which have
been considered in preceding pages ; and companies, if created
hereafter, but not under the act, must, as the law at present
stands, be formed in one or other of the same methods, that
is to say, under some special act of Parliament, or under a
royal charter or letters patent, or, if for working mines in
Cornwall or Devonshire, on what is called the cost-book
principle.
It has been ahead}7 seen that registration, under the act, of
companies not formed under it, is in some cases compulsory,
in some impossible, and in others optional (A;). With respect
to existing companies which are required to register, and which
omit so to do, the consequences of non-registration are serious ;
(a) See as to these sections and as and Barton, 10 L. R. Q. B. 329.
to the powers of magistrates under (h) See 30 & 31 Vict. c. 131, § 32.
§ 27, Briton Medical and General (i) 43 Vict. c. 19, § G.
Life Assoc., 39 Ch. D. 61 ; Gibson (k) Ante, p. 114 et sea.
REGISTRATION. 127
for, first, such companies cannot sue (I) ; secondly, no divi- Bk. LChap. 4.
Class 4.
dends can be lawfully paid to their shareholders ; and, thirdly.
each of their directors becomes liable to a penalty of 51. per
day (§ 210) (»).
Companies not formed under the act but capable of being Registration of
registered under it, may, subject to certain restrictions and naaiea with
qualifications (see §§ 179— 188) (h), be registered either with Umited liabii:t-v
or without limited liability (§ 180) ; and such liability, if
limited, may be limited either b}' guarantee or by shares
(§ 180) (o).
Every company when registered becomes incorporated under Effect of
the act (§§ 191 and 192). The incorporation, however, does1Lgls
not deprive the company of its property or acquired rights
(§ 193), nor discharge it from its debts or other liabilities
(§ 194) (;;). But after registration no execution upon a judg-
ment against the company can be issued against its members
(§ 195). The creditors, therefore of an existing company
must, after its registration, proceed to wind up the company,
if they cannot obtain payment of their debts by execution
against the propert}' of the company (q).
Upon compliance with certain requisitions mentioned in the
(/) Accordingly it was held in Vict. c. 110, and registered -with
the case of the Waterloo Tnsur. Co., limited liability under 18 & 19
31 Beav. 5S6, that an insurance Vict. c. 133, was held not to be
company could not petition to be discharged by such registration.
wound up before it was registered. (</) The effect of registration on
(m) A company required to the liabilities of members will be
register under the act by § 209, considered" hereafter. It has been
and registered accordingly, is in held that § 194 does not affect the
the same position as if it had been question who ought to be contri-
registered voluntarily, Ramsay's case, butories on the winding up of the
3 Ch. D. 388. company, Fountain's case, 11 Jur.
(h) § 1S2 is repealed, and a sub- X. S. 553 ; and that § 195 does not
stituted section enacted by the Com- prevent a shareholder in a cost-book
panies act, 1879, 42 & 43 Vict. c. 1V>, mining company, who had retired
§ 6. before the registration, from being
(0) A company registered as 1111- sued in respect of a debt contracted
limited may be afterwards registered whilst he was a shareholder ; Lanyon
as limited under the Companies act, v. Smith, 3 B. & Sm. 938 ; Harvey v.
1879. Clough, 2 N. R. 204. As to what
(p) See Groux's Soap Co. v. Cooper, companies cannot register, see ante,
8 C. B. N. S. 800, where a surety to p. 115.
a company registered under 7 & 8
12S THE COMPANIES ACT, 18G2.
Bk. I. Chap. 4. act, and which need not he here specified (see §§ 109, 179, and
Class 4. ...
183 — 8), the registrar is required to certify that the company
is incorporated under the act, and in the case of a limited
company, that it is limited (§ 191) ; and his certificate is con-
clusive evidence that all requisitions have been complied with,
and that the company is authorised to be registered as a
limited or unlimited company, as the case may be (§ 192) (r).
Change of name. An existing compare cannot, apparently, change its name
on registration, except by adding the word " limited " to its
former name. (Compare § 183, cl. 3, and § 190.) After
registration, however, it has the power of changing its name
as if it were formed under the act. (See §§ 12, 13, 20, and
196) (s).
Membership in The question who is a member in a company registered,
companies, but not formed under the act of 1862, depends upon the consti-
tution of the particular company, and must be determined upon
the principles which have been already considered (see § 196).
With respect, however, to companies governed by the repealed
acts of 7 & 8 Yict. c. 110, 7 & 8 Vict. c. 113, and 19 & 20
Vict. c. 47, it may be useful to add a few observations.
7 & 8 Yict. Companies formed under 7 & 8 Yict. c. 110, were incor-
porated by registration, but before being so incorporated they
passed through a preliminary state, viz., that of provisional
registration, the object of which was to enable the public to
ascertain the nature and objects of the proposed company and
the persons who projected it. Provisional registration did not
incorporate the company or its promoters (t), nor did it affect
their liability for each other's acts (u). A certificate of com-
plete registration was necessary to form and incorporate the
company ; and before this could be obtained a deed of settle-
ment containing certain covenants and particulars specified by
the act was required to be executed by at least one-fourth of
the subscribers to the company. The certificate of complete
registration was conclusive evidence that all the requisitions of
(r) See, as to this certificate, ante, (t) See I?, v. Whitmarsh, 14 Q. B.
pp. Ill, 112. 803.
(s) See as to changing name, ante, (u) See Reynett v. Lewis, and
p. 112 ; and as to becoming limited, Wyld v. Hopkins, 15 M. & TV. 517 ;
see the Companies act, 1879. Walstal v. Spottiswoode, ib. 501.
REGISTRATION OE COMPANIES. 129
the act had been duly complied with (x). The act defined a 1;k- T- ( liaP- 4-
I lass 4.
shareholder to mean any person entitled to a share, and who
had executed the deed of settlement or a deed referring to it;
and it was held that no person was a shareholder who had not
executed such deed (y).
< bartered banking companies were formed under the repealed Chart red bank-
ing companies,
act of 7 & 8 Yict. c. 113, by letters patent and a deed of settle- 7 k 8 Vi,.t
merit set forth in it. This act contained no definition of the c- llj-
word shareholder, but persons whose names were returned as
shareholders to the stamp office pursuant to the aci weveprimd
fad i- liable as shareholders (c).
Companies were formed under the acts of 1856-8, as under J.-'.r.t Btock
the act of 1862, by registration. Under 19 & 20 Yict. c. 47, isse. "
§ 19, every person who had accepted shares in a company
formed under it, and whose name was entered in the company's
register, and no other person (except a subscriber to the
memorandum of association in respect of the shares sub-
scribed for by him) w7as a shareholder ; and § 20 in effect
declared that a transferor of a share should be deemed a
shareholder until the transferee was registered in his place.
These enactments may still be important. Moreover, not-
withstanding the repeal of the act of 1856, the regulations
contained in table B. in the schedule to that act still apply to
those companies which were subject to them when the Com-
panies act, 1862, was passed (see § 206). These regulations,
therefore, must be consulted in order to decide who is or is
not a member of such companies ; and as regards other com-
panies registered under the act of 1856, attention must be paid
to their regulations, deeds of settlement, charters, &c. (a).
(x) Banasen Iron Co. v. Barnett, 8 Butler, ib. 645, and 4 ib. 469 ;
C. B. 406 ; Bird's case, 1 Sim. N. S. Daniell v. Royal Brit. Bank, 1 H.
47 ; Pilbrow v. Pilbrovfs Atraos^jheric & N. 681 ; Henderson v. Royal Brit.
Co., 5 C. B. 440. Bank, 7 E. & B. 356.
(y) See ante, pp. 43 et seq. (a) See New Brunsivick Rail. Co.
(z) Dossett v. Harding, 1 C. B. v. Muggeridge, 4 H. & N. 160 and
N. S. 524 ; Powis v. Harding, ib. 580, and Bog Lead Mining Co. t.
551 ; Thompson v. Harding, ib. 555; Montague, 8 Jur. N. S. 310, noticed
Fry v. Russell, 3 ib. 665 ; Powis v. ante, p. 45, note (e).
L.C.
130 ILLEGAL COMPANIES.
Sect. 1.
CHAPTER V.
OF ILLEGAL COxMPANIES.
SECTION I.— WHAT COMPANIES ARE ILLEGAL.
Bk. I. Chap. 5. It has been said that unincorporated joint-stock companies
with transferable shares are illegal at common law, first, because
the privilege of having transferable shares can only be acquired
by charter from the Crown, or by an act of Parliament ; and,
secondly, because all such companies are dangerous, mis-
chievous, and, in short, public nuisances. But this view can-
not, the writer thinks, be supported. The question has now
only an historical interest, and the following note on the
subject is reprinted for the convenience of those who may
desire information on the subject.
Note on the Babble act.
In order to investigate this subject properly, it is necessary to advert to
the celebrated "Bubble act" of 1719, and the decisions upon it, for
although that act is repealed, the discussions to which it gave rise are
constantly referred to when the illegality at common law of joint-stock
companies is alleged or denied. The Bubble act (a) was levelled more
particularly at —
1. The acting or presuming to act as a corporate body.
2. The raising or pretending to raise transferable stock.
(a) 6 Geo. 1, c. 18, § 18. In the Str. 472, but that case throws no
first two editions this act was printed light on any question of present
at length, but it is omitted now for importance, as it merely relates to
the sake of gaining space. The act the punishment to be inflicted on a
was repealed by 6 Geo. 4, c. 91. The person found guilty of an infringe-
earliest reported decision on the ment of the act. See as to the his-
Bubble act is B. v. Uawood or Cay- tory of this act, Collyer on Partner-
u-ood, 2 Ld. Raymond, 1361, and 1 ship, p. 722, ed. 2.
UNINCORPORATED COMPANIES WITH TRANSFERABLE SHARES. 131
3. The using of charters for purposes not warranted by them. Bk. I. Chap. 5.
4. The formation <>f dangerous ami mischievous companies, tending to _
the grievance of the suhjects of this realm.
1. With respect to acting or presuming to act as a body corporate, it was Assuming to act
held in It. v. Webb (b) that having a committee, general meetings, and ** a corporation,
power to make bye-laws, was not unequivocally assuming to act as a body
corporate ; but in the later case of Josephs v. Pebrer (c) the Court was of a
different opinion. To create transferable shares in a common stock has also
been said to amount t<> assuming to act as a body corporate, although only
such bodies corporate as are specially empowered so to do can lawfully
possess stock, the shares in which are transferable (d).
2. With respect to transferable stock it was held that any company not Transferable
incorporated and specially empowered to possess such stock was illegal, if it s'Kires-
professed to have its stock divisible into shares transferable from one person
to another without restriction (e). But it was held that, if the shares were
not thus transferable, their transfer being restricted to such person as should
be approved by a committee, and as should enter into some special agree-
ment (/), or to persons already members of the company (g), the company
was not necessarily illegal. A scheme for establishing a tontine the shares
in which were to be transferable after a certain time, was held not to be
illegal, the scheme having failed before the time arrived (h). And where a
railway company, the shares in which were to be transferable, was projected;
and the projectors issued scrip, but resolved that nothing further should be
done without the authority of Parliament, it was held that the project was
not illegal (i).
3. To use charters for purposes not authorised b}r them was clearly illegal, E sing charters
not only by the act, but at common law. This ground of illegality does not, imP'°P r '*
however, appear to have been made the subject of any decision on the act
now in question.
4. Lastly, with respect to the general ground of illegality, for being mis- Tendency to
chievous, and tending to the grievance of the subjects of this realm. In mischief-
22. v. Dodd(Jc) it was held that a company with transferable shares based Rex •>« Do<M.
upon a prospectus which declared that no person could be accountable
beyond the amount of the shares for which he should subscribe, was illegal,
(b) 14 East, 406. Bing. 248.
(c) 3 B. & C. 639. Adopting a (e) Buck v. Buck, 1 Campb. 547 ;
name which necessarily denotes a R. v. Stratton, ib. 549, note ; Josephs
corporation is assuming to act as a v. Pebrer, 3 B. & C. 639.
corporation, R, v. Whitmarsh, 14 Q. (/) R. v. Webb, 14 East, 406 ;
B. 803. So is the assumption and Pratt v. Hutchinson, 15 ib. 511.
iise of a common seal, Cooch v. Good- (g) Per Lord Eldon, in Ellison v.
man, 2 Q. B. 580. These cases were Bignold, 2 J. & W. 510.
not decided on the Bubble act, and (/() Nockells v. Crosby, 3 B. & C.
do not show that an unincorporated 814.
society which assumes to act as a (i) Kempson v. Saunders, 4 Bing 5.
corporation is illegal. (k) 9 East, 516, and see Blundell
(d) See Duvergier v. Fellowes, 5 v. Winsor, 8 Sim. 601.
K 2
132
ILLEGAL COMPANIES.
Bk. I. Chap. 5.
Sect. 1.
Rex v. Webb.
Josephs v.
Pebrer.
Opinion of Lord
Eldon.
Duvergier v.
Fellowes.
Blundell v.
Winsor.
on the ground that this was a mischievous delusion, calculated to ensnare
an unwary public. In B. v. Well {I) it was held that a company, the
shares in which were transferable, but not without restriction, was not
necessarily mischievous ; and the jury having found that the company was
in fact rather beneficial than otherwise, the company was held to be legal.
As regards the important question, how far the mere raising transferable
stock was, per se, an offence against the act, the Court inclined to think that
it was not, unless the company had in fact a mischievous tendency (m). In
Josephs v. Pelrer (n), a company, with shares transferable without restriction,
was held to be clearly mischievous, particularly because the shares were sold
at a very considerable premium. Abbott, C. J., thought that this tended to
introduce gaming and rash speculation to a ruinous extent, to the grievance
of numbers of his Majesty's subjects.
Such are the leading decisions on this celebrated act. Juster views of
political economy, and of the limits within which legislative enactments
should be confined, have led to the repeal of the statute in question, which,
though deemed highly beneficial half a century ago, probably gave rise to
much more mischief than it prevented. But the repeal of the act still
leaves room for the contention that companies of the nature described in
the act are illegal at common law. This question is one of present
importance, especially in the colonies, and requires therefore careful
consideration.
Lord Eldon, who certainly had a great aversion to companies, seems to
have been of opinion, in Kinder v. Taylor (o), that companies with large
capitals, arising from numerous small contributions, and with transferable
shares, were injurious to the public, and were illegal, independently of the
Bubble act. The same opinion was expressed by the Court of Common
Pleas, in a case which arose after the repeal of that act ( p), and also by the
Yice-Chancellor Shadwell, on a still later occasion (q). In none of these
cases, however, was it necessary to decide this question. In Duvergier v.
Fellowes (r), the company was formed for an illegal purpose, vie., the work-
ing of a patent which could not be lawfully transferred to more than five
persons, and this was the ground relied on by the Court of Appeal. In
Blundell v. Winsor (s) the Vice-Chancellor thought that there was held out
to the public a false and fraudulent representation calculated to ensnare the
unwary, viz., a representation that any shareholder when he transferred his
(0 14 East, 406. This is the
leading case on the Bubble act,
and is well worthy of attentive
perusal.
(m) See, too, NocJcells v. Crosby, 3
B. & C. 814 ; Pratt v. Hutchinson,
15 East, 511 ; Broivn v. Holt, 4
Taunt. 587.
(w) 3 B. & C. 639.
(o) Coll. on Part. 917, ed. 2.
( p) Duvergier v. Fellowes, 5 Bing.
248 ; affirmed 10 B. & C S26, and 1
CI. & Fin. 39.
(q) Blundell v. Winsor, 8 Sim.
601.
(r) 5 Bing. 248, and 10 B. & C.
826, and 1 CI. & Fin. 39.
(s) 8 Sim. 601. This case can-
not be supported. See Harrison v.
Heathom, 6 Man. & Gr. 81. In
Blundell v. Winsor there was not in
fact any such holding out as sup-
posed by the Vice-Chancellor.
i \ INCORPORATED COMPANIES WITH TRANSFERABLE SHARES. 133
shares ceased to I"- liable to the debl of the company ; and he relied on ttk. I. Chap. 5.
this as a ground of illegality. Although, then fore, in each of these cases -_ ect> •
the Court was of opinion that the company gal, inasmuch as it
trenched upon the prerogative of the Crown by assuming to do that which
(■annul be lawfully done without special authority, there were additional
circumstances, rendering it unnecessary to decide on this ground alone. Tn
IFalburnv. Tngilby(t) Lord Brougham declined to declare an unincorporated Walburnv.
joint-stock company, with transferable hares, illegal ; although the deed of I"odby.
settlement stated that provision was to be made, in all engagements to be
entered into by the directors, that no shareholder should be Liable beyond
the amount of his share, and his lordship thought this clause was nugatory.
In Garrard v.Hardey(u) it was held that an unincorporated joint-stock Garrard v.
company, which had assumed the mime of " The Limerick Marble and. ar ey"
Stone Company," and had a capital of 50,000/., divisible into 500 transfer-
able shares, was not illegal at common law. It was in this case declared
that the raising and transferring of stock in a company could not be held to
be in itself an offence at common law. In Harrison v. Heathom(x), a Harrison v.
similar conclusion was arrived at. In this case the company's deed of Heathorn.
settlement provided, that a person ceasing to lie a shareholder should he
entitled to a certificate declaring him discharged from all liabilities on
account of the shares formerly held by him. This was, in fact, the same
company as was held to he illegal by Vice-Chancellor Shad well in Blundell
v. TFinsor, which, though not overruled on appeal, can scarcely he sup-
ported after the decision in Harrison v. Heathorn.
Attempts have also been made, to induce the Courts to declare scrip Scrip companies,
companies (i.e., unincorporated companies with shares transferable by
delivery) to be illegal at common law (//). But these attempts have
been unsuccessful. The case of Blundell v. Winsor, always relied upon
as an authority by those who contend that such a company is illegal,
has never met with approbation from the bench ; nor has it ever been
followed.
Upon the whole, therefore, it appears that there is no case deciding that Conclusion from
a joint-stock company with transferable shares, and not incorporated by tue cases,
charter or act of Parliament, is illegal at common law ; that opinions have
nevertheless differed upon this question ; that the tendency of the Courts
was formerly to declare such companies illegal ; that this tendency exists
no longer ; and that an unincorporated company with transferable shares
will not be held illegal at common law, unless it can be shown to be of a
dangerous and mischievous character, tending to the grievance of her
Majesty's subjects. The legality at common law of such companies may
therefore be considered as finally established.
(r) 1 M. & K. 61, and Cooper, 177; Ex parte, Aston, 27 Beav. 474,
temp. Brougham, 270. and 4 De G. & J. 320 ; Ex parte
(u) 5 Man. & Gr. 471. Griscwood, 4 De G. & J. 544. As to
(.c) 6 Man. & Gr. 81. See, too, the effect of the act of 1862 on these
Shcppard v. Oxenford, 1 K. & J. 491. companies, see infra, p. 135.
(y) See Ex parte Barclay, 26 Beav.
134 ILLEGAL COMPANIES.
Bk. I. Chap. 5. It is nut easy to arrive at any other conclusion if the question is examined
Sect- !• without reference to the decisions which have been noticed. For
Observations on 1- It is not illegal for persons, however numerous, to enter into an
the illegality of ordinary contract of partnership.
transferable^"11 % Ifc is not nle§al f°r a11 th°Se Persons to a§ree tnat 01le °f tliem sha11
shares. ' retire, and that a person who is not a member of the firm, but who is
willing to become one, shall take his place.
3. It is not illegal for partners, however numerous, to agree once for all
that any partner who is willing to retire shall be at liberty so to do, and to
introduce in his place any person selected by himself.
4. It is not illegal for an out-going partner of a firm established on this
last principle, to retire in favour of an in-coming partner, upon any terms
to which they both agree, provided those terms are not themselves illegal.
5. It is not illegal for an out-going and in- coming partner to agree that
the latter shall pay the former more or less than he himself paid when he
entered the firm.
6. It is not illegal for the members of a partnership to assume a name (z\
and to agree that the management of its affairs, both external and internal,
shall be entrusted to a select few, and that those few shall have the power
to make rules which the others will obey.
If these propositions are assented to, it will, it is conceived, be found
impossible to establish the illegality at common law of unincorporated
joint-stock companies with transferable shares (a).
To say that such a partnership is illegal, because it assumes to act as a
corporation, is untrue ; for none of the above acts are characteristic of
corporations. What distinguishes corporations from other bodies is their
independent personality ; and no society which does not arrogate to itself
this character can be fairly said to assume to act as a corporation. Besides
this, it is by no means clear that it is illegal at common law to assume to
act as a body corporate (b).
To assert that unincorporated companies with transferable shares are mis-
chievous and dangerous, and therefore illegal, is to assert a proposition the
truth of which has not yet been established, and which therefore cannot be
admitted as the basis of a judicial inference. This ground of illegality
would probably not have been relied upon so much had it not been for the
technical rules of pleading which required all the members of a firm, how-
ever numerous, to be made defendants to actions and suits against the firm.
This rule undoubtedly created difficulties in dealing with large bodies of
persons unless they were incorporated ; but if the question is reduced to
this, viz., whether the rule, or a company to which it is inapplicable, most
deserves to be characterised as mischievous, the question must surely be
answered in favour of the company and against the rule. The rule, how-
(z) Ante, p. 133. See the qualifi- that presuming to act as a body cor-
cation in p. 131, note (c). porate was an offence at common
(«) See JValburnv. Ingilby, Cooper, law." As to assuming a corporate
temp. Brougham, 270. name and using a corporate seal, see
(b) See 6 Man. & Gr. 107, where ante, p. 131, note (c).
Tindal, C. J., says, "I am not aware
UNINCORPORATED COMPANIES WITH TRANSFERABLE SHARES. 135
ever, being established as law, the judges felt bound to adhere to it, and Bk. LChap. 5.
then finding it difficult to deal with un incorporate! companies, declared • !
them mischievous and illegal. The difficulty presented by the rule in
question has been to a great extent removed by the Judicature acts and
rules made under them.
Assuming an unincorporated joint-stock company not to be Effect of non-
illegal at common law, it remains to be considered whether it iegls ra lon'
is rendered illegal, by statute, if not registered.
The Companies act, 1862, is extremely important in this Companies act,
respect, for the 4th section says imperatively that no company,
association, or partnership, shall be formed after the 2nd of
November, 1862, except as therein mentioned. From this it
follows that companies, associations, and partnerships required
to register under that section, are illegal if not registered (c).
In this respect the act of 1862 differs from the Companies acts
of 1856 and 1857 (d), and resembles the older acts of 7 & 8
Vict. c. 110, and c. 113 (e).
Companies formed before the 2nd of November, 1862, and
required by the Companies act, 1862, to register under it, are
not illegal, although the consequences of non-registration are
severe (see § 210).
The question whether scrip companies formed since the act Scri.P com-
of 1862 are illegal, has not yet been determined (/) ; but it is
of great practical importance, and before deciding it attention
must be paid not only to the precise language of the act, but
also to the difference between agreements to form companies
(c) See ace. Ex parte Day, 1 Ch. Bradshaw, 5 Ex. 882, as to banks ;
D. 699 ; S. Wales Atlantic Steamship and as to other companies, Butt v.
Co., 2 Ch. D. 763 ; Ex parte Har- Monteaux, 1 K. & J. 98 ; Sheppard
grove, 10 Ch. 542 ; Harris v. Araery, v. Oxenford, ib. 491. The 7 & 8
L. R. 1 C. P. 148 ; Jennings v. Vict. c. 110, did not apply to com-
Hammond, 9 Q. B. D. 225 ; Slmw panies formed before the passing of
v. Benson, 11 Q. B. D. 563; Ex the act, Ex parte Aston, 27 Beav. 474,
parte Poppleton, 14 Q. B. D. 379 ; and 4 De G. & J. 320 ; and see
Smith v. Anderson, 15 Ch. D. 247 ; Womersley v. Merritt, 4 Eq. 695.
overruling Sykes v. Beadon, 11 Ch. (/) The point was discussed in
D. 170 ; Padstow Total Loss Assoc., The Gen. Co. for the promotion of
20 Ch. D. 137 ; In re Siddall, 29 Ch. Land Credit, 5 Ch. 363, and Princess
D. 1, all noticed ante, p. 114-115. of Reuss v. Bos, L. R. 5 H. L. 176.
(d) See 20 & 21 Vict. c. 14, § 3, It is tolerably plain that shares not
and c. 49, § 5. paid up in full cannot be made
(e) As to which see O'Connor v. transferable to bearer.
136
ILLEGAL COMPANIES.
Bk. I. Chap. 5.
Sect. 1.
Bankers.
and partnerships and companies and partnerships which are
actually formed (//). Scrip companies are not, in the writer's
opinion, illegal at common law (/<)•
The only other statutes to which it may he useful to allude
in the present connection are those relating to hankers (i).
By 7 & 8 Vict. c. 32, s. 21 (A), all hankers are required on
the first day of January, in eveiy je&v, to make a return to the
stamp office of their names, residences, and occupations, or in
the case of a company or partnership, of the name, residence,
and occupation of eveiy member of the conipairy or partner-
ship, and in default a penalty of 50?. is inflicted. Upon this
act a question might arise as to the legality of a banking part-
nership, or company, composed in part of members whose
names are not returned.
By two statutes, which have since been considerably modi-
fied, it was made unlawful for banking firms of more than six
members, to issue in London or within sixty-five miles thereof,
notes payable on demand, or within six months after date (7).
(g) See Partn., p. 23, et seq.
(h) Ante, p. 133.
(i) As to marine insurers?, see
Partn. 97.
(k) §§ 8 & 29 of this act, and
parts of §§ 9 & 23 are repealed by
37 & 38 Yict. c. 96.
Issu3 of notes. (0 39 & 40 Geo. 3, c. 28, § 15 ;
7 Geo. 4, c. 46. See Broughton v.
Manchester and Salford Waterworks
Co., 3 B. & A. 1 ; Bank of England
v. Anderson, 3 Bing. N. C. 589;
Bank of England v. Booth, 2 Keen,
466 ; and on appeal, Booth v. Bank
of England, 6 Bing. N. C. 415 ;
and 7 CI. & Fin. 509. By a sub-
sequent act (9 Geo. 4, c. 23) the
right to issue lulls and notes pay-
able on demand was extended to all
bankers (except within London or
three miles thereof), provided they
obtained a licence and gave a secu-
rity, as recpnred by the act. By 3
& 4 Will. 4, c. 83, § 2, it was made
lawful for banking firms of more
than six persons to issue notes pay-
able in London through an agent,
or to draw bills or notes upon any
agent in London, payable on de-
mand, or otherwise, in London, and
for any less amount than 501.
Then the legislature retraced its
stq>s, conferring by the act of 3 & 4
Will. 4, c. 9S, certain privileges on
the Bank of England, and enact-
ing (§ 2) that during the continu-
ance of those privileges no banking
firm of more than six persons
should issue in London, or within
sixty-five miles thereof, bills or
notes payable on demand, with a
proviso, as to firms carrying on
business beyond that limit, in
favour of bills and notes, payable
through an agent in London, and
for not less than bl. Then by the
Bank Charter act of 1844 (7 & 8
Yict. c. 32, §§ 10 & 11), it is en-
acted that no person, other than a
banker,- who on the 6th of May, 1844,
BANKERS.
137
Upon these statutes, it was held, that a banking company m-. \- '
of more than six persons associated for the purpose of issuing
notes payable on demand, or within six months after date, was
not illegal unless it was proved that the company issued such
notes within sixty-five miles of London (m). Upon a similar
statute relating to Ireland (n), it was held, that in order to
establish the illegality of a hanking company upon the ground
that its houses of husiness had been, from the time of the
formation of the company until the commencement of the
suit, and then were, at places in Ireland within fifty miles of
Dublin, it was necessary to prove the existence of a place of
husiness within that limit for the whole time alleged (o). The
statutes in question, moreover, have been held only to affect
was lawfully issuing his own Lank-
notes, shall issue any bank-notes in
any part of the United Kingdom ;
and that it shall not he lawful for
any hanker to issue in England and
Wales bills or notes payable to
bearer on demand ; except that it
shall he lawful for any hanker who
was, on the 6th of May, 1844, carry-
ing on the husiness of a hanker in
England or "Wales, and was then
lawfully issuing in England- or
Wales his own bank-nobs under
the authority of a licence, to con-
tinue to issue such notes to the
extent and under the conditions
mentioned in the act ; and by § 26,
it is made lawful for hanking firms,
though of more than six memhers,
carrying en husiness in London, or
within sixty-five miles thereof, to
draw, accept, or endorse hills not
payable to hearer on demand. Such
is the state of the law on this sub-
ject at the present time. The joint
effect of the above enactments
seems to be that : (1.) The Bank of
England can alone issue, in Lon-
don, or within three miles of it,
notes payable to bearer on demand.
(2.) Beyond that limit such notes
may he issued by hankers who were
lawfully issuing them before May, issue 0f notes.
1844, under a licence ; hut by no
other hankers ; ami not, therefore,
by any banking firm of more than
six persons carrying on the business
of bankers within sixty-five miles
of London. In other words there
an1 three limits : (1.) London and
three miles round, in which the
Bank of England has an exclusive
monopoly. (2.) The district more
than three, hut within sixty-five
milts of London, in which the mo-
nopoly is divided between the Bank
of England and banking firms of less
than six members, lawfully issuing
notes before May, 1844. (3.) The
district more than sixty-five miles
from London in which the mono-
pi ily is divided between the Bank
of England and banking firms of
six or more or less members, law-
fully issuing notes before May,
1844. See further on this subject
the note to the Cos. act, 1862, sched.
3, part 2, in the Appendix ; A.-G. v.
Birkbeck, 12 Q. B. D. 605.
(ru) Eansford v. Copeland, 6 A. &
E. 4S2.
(n) 6 Geo. 4, c. 42, § 10.
(o) Hughes v. Thorpe, 5 M. & "W.
656.
138 ILLEGAL COMPANIES.
Bk. I. Chap. 5. partnerships formed for the purpose of carrying on the busi-
- ness of a hanker, and not to interfere with the issue of notes
by firms not carrying on such business.
By an act which prior to 1857 regulated joint-stock banks
in England (7 & 8 Vict. c. 113, § 1), it was not lawful for any
company of more than six persons to carry on the trade or
business of bankers in England under an}- agreement or cove-
nant of co-partnership made or entered into on or after the
6th of Ma}r, 1844 (p), unless by virtue of letters patent to be
granted b}T her Majesty according to the provisions of that act.
Any banking company therefore formed since May, 1844, and
not under letters patent, was altogether illegal if its members
were more than six in number (q). But the law on this head
has been altered by 20 & 21 Vict. c. 49, and by the Companies
act, 1862. The combined effect of those acts apparently is
that banking companies of ten or more members formed
between May, 1844, and November, 1862, must be registered
unless formed under letters patent, but are not illegal by reason
of non-registration (r), and banking companies of ten or more
members formed since November, 1862, must be registered,
and are illegal if not registered (s).
Chemists. An incorporated company may carry on business as chemists
and druggists if the persons who actually sell and dispense
drugs are duly licensed so to do (t). The principle of the
decision which settled this is applicable to other licensed trades
and businesses.
(p) See Wigan v. Fowler, 1 Stark. § 205, and sched. 3, and the note
459 ; Perring v. Dunston, By. & M. thereto in the Appendix.
426. (s) Companies act, 1862, § 4, and
(q) See O'Connor v. Bradshaw, 5 ante, p. 114.
Ex. 882. Compare this case with (t) Pharmaceutical Soc. v. London
B. v. JVhitmarsh, 15 Q. B. 600. and Provincial Supply Assoc, 5 App.
(r) See 20 & 21 Vict. c. 49, §§ 4, Ca. 857, and 5 Q. B. D. 310 ; re-
5 & 12, and the Companies act, 1862, versing 4 ib. 313.
CONSEQUENCES OF ILLEGALITY. 139
Bk. I. Chap. 5.
Sect. 2.
SECTION II.— CONSEQUENCES OF ILLEGALITY.
If a company, when it is formed, will be illegal, any contract Consequences
of illegality,
to form it, must be illegal also. Upon this ground it was held
in Duvergier v. Fellowes (u), that a bond for the payment of
money upon the formation by the obligee of an illegal company
was invalid.
It does not, however, follow that because an agreement to Effect of ilie
•ii i i i-i • • tmlity on the
form a company is illegal, those who subscribe to its tormation right to recover
cannot recover back their subscriptions. If money is paid by t-'mssu
A. to B'. to be applied by him for some illegal purpose, it is
competent for A. to require B. to hand back the money if he
B. has not already parted with it (.r), and the illegal purpose
has not been carried out (//). Although, therefore, the sub-
scribers to an illegal company have not a right to an account
of the dealings and transactions of that company and of the
profits made thereby (z), the}' have a right to have their sub-
scriptions returned ; and even though the moneys subscribed
have been laid out in the purchase of land and other things for
the purpose of the company, the subscribers are entitled to
have that land and those things reconverted into money, and
to have it applied as far as it will go in payment of the debts
and liabilities of the concern, and then in repayment of the
subscriptions. In such cases, no illegal contract is sought to
be enforced ; on the contrary, the continuance of what is
illegal is sought to be prevented.
In Sheppard v. Oxenford (a), a company was started for Actions for
account.
working mines in Brazil. The members subscribed each a gheppard v.
Oxenford.
(u) 5 Bing. 248 ; 10 B. & C. 826 ; 7 Q. B. D. 548 ; and the cases in the
and 1 CI. & Fin. 39. See, also, last note.
Williams v. Jones, 5 B. & C. 108. (z) See Harvey v. Collet t, 15 Sim.
(x) See Taylor v. Lendy, 9 East, 332. Compare the cases in the next
49 ; Varney v. Hickman, 5 C. B. note.
271 ; Biggie v. Higgs, L. R. 2 Ex. («) Sheppard v. Oxenford, 1 K. &
D. 422; Hampden x. Walsh, 1 Q. J. 491. See, too, Brett v. M onteaux,
B. D. 189 ; Taylor v. Bowers, ib. ib. 98 ; Sharp v. Taylor, 2 Ph. 801 ;
291. Compare Great Berlin Steam- Symes v. Hughes, 9 Ecp 475 ; Taylor
boat Co., 26 Ch. D. 616. v. Bowers, 1 Q. B. D. 291. If in
(y) Compare Herman v. Jtnchner, these cases the companies were
15 Q. B. D. 561 ; Wilson v. StrugncU, really illegal, they must be re-
1-40 ILLEGAL COMPANIES.
Bk. I. Chap. 5. certain sum and received a sort of scrip certificate specifying
Sect. 2. ...
the number of shares to which each was entitled. Mines,
buildings, plant, and shares were bought, and at a meeting of
the subscribers the defendant and another were appointed sole
directors and trustees of the property of the association. Dis-
putes having arisen, a bill was filed against the defendant (his
co-trustee being dead) by one of the shareholders on behalf of
himself and the others for an account of the monies received
and paid by the directors, and of the debts of the association,
and for payment of those debts out of the assets, and for
a division of the profits among the shareholders, and for an
injunction to prevent the defendant from selling the property,
and for a receiver. It was contended that the company was
illegal, and that no relief could be given ; but it was held that
the defendant as trustee could not dispute the trust on which
he had accepted the property ; and a demurrer to the bill was
overruled and a receiver and manager was appointed (b).
Sales of shares If & company is illegal, shares in it cannot be recognised,
and contracts for the sales of such shares are themselves
illegal. Therefore, a broker employed to buy shares in an
illegal company cannot recover the price he may have paid for
them from the person fur whom he bought them (c) ; nor can
the buyer, if he has paid the broker, and the shares have been
bought, recover back any part of the money so paid, although
the broker may have been guilty of a fraudulent overcharge (d).
But if the purchaser of the shares has paid the broker for
them, the broker cannot retain the mone}T against the seller (c).
Again, as a contract for the sale of shares in an illegal
company is itself illegal, it follows that a purchaser of such
shares, who may have paid for them, cannot recover back his
garded as modifying the general infra, p. 141, note {%).
proposition, that a court of equity (c) Josephs v. Pebrer, 3 B. & C.
will not assist a person to get back 639. The illegality in this case was
property which he has transferred apparently treated as obvious.
to another for some illegal purpose. (d) Buck v. Jiucl; 1 Camp. 548.
See Brachenbury v. Brackeribury, 2 (e) Bousfield v. Wilson, 16 M. &
J. & W. 391 ; Groves v. Groves, 3 Y. W. 185. See, also, Nicholson v.
& J. 163. Gooch, 5 E. & B. 999 ; Tenant v.
(b) Compare SyJces v. Beadon, 11 Elliott, 1 Bos. & P. 3, and Partn.
Ch. D. 170 ; and other cases noticed 107,
company.
CONSEQUENCES OF ILLEGALITY. 1 11
money if it should ultimately turn out that the company is no 1!k- I- Ch^P- 5-
apany at all, but a project which has failed (/). . — —
Again, if a company is illegal it cannot maintain any action by companies.
in respect of any transaction tainted with illegality. For
example, an illegal company cannot prove in liquidation pro-
ceedings for a debt clue to it (//), nor can the trustee of an
illegal loan society recover on promissory notes given by the
borrowing members to secure the repayment of the money
advanced to them by the society (Ji).
Again, as no Court will lend its assistance towards carrying
out an illegal transaction, a member of an illegal association
which is regulated by a trust deed cannot maintain an action
to have the trusts administered by the Court nor compel the
trustees to pay damages for any breach of trust (i).
An illegal company cannot be wound up by the Court {k), Winding up.
except perhaps at the instance of a creditor ignorant of its
illegality (I). But if the company is legal, the mere fact that
it may have engaged in some illegal transaction and sustained
loss does not exclude contribution amongst the members in
respect of such loss (m).
Before quitting the subject of the consequences of the ille- indictment,
gality of a company, the risk of criminal prosecution ought to
be mentioned. Persons engaged in an illegal business are
liable, whether incorporated or not, to be punished crimi-
nally (n) ; and even where the object of a company is not
(/) Kempson v. Saunders, 4 the association in question to be
Bing. 5. illegal was disapproved. Had it
(g) Ex parte Bay, 1 Cli. D. 699. been illegal the decision would have
Compare Ex parte Poppleton, 14 been correct.
Q. B. D. 379, where a company (k) Padstow lotal Loss Assoc., 20
after registration sued in respect of Ch. D. 137.
matters which occurred before. (I) See infra, book iv., c. 1, § 2.
(h) Shaiv v. Benson, 11 Q. B. D. (m) Longworth's Ex. case, 1 De G.
563 ; Jennings v. Hammond, 9 Q. F. & J. 17, affirming S. C. Johns.
B. D. 225. 465. See Partn. 103, et seq. and
(i) Ottley v. Browne, 1 Ball & Bea. infra, book iii., c. 2, § 3, and book
360 ; Ex parte Mather, 3 Yes. 373 ; iv., c. 1, § 11.
Sykes v. Beadon, 11 Ch. D. 170. In (n) See the title Conspiracy in
Smith v. Anderson, 15 Ch. D. 247, Russell on Crimes, and Archbold's
this last decision so far as it declared Criminal Law.
142 ILLEGAL COMPANIES.
Bk. I. Clap. 5. illegal, directors and others will do well to Lear in mind, that
if they wilfully violate the provisions of an act of Parliament
they are in strict law guilty of a misdemeanor and liable to be
indicted accordingly (o).
(o) See Lord Campbell's observa- G. F. & J. 31. As to issuing fraudu-
tions in Longivorth's Ex. case, 1 De lent prospectuses, &c, see ante, p. 87.
DOCTRINES OF AGEXCY.
148
BOOK II.
OF THE RIGHTS AND OBLIGATIONS OF COMPANIES AS
REGARDS NON-MEMBERS.
CHAPTER I.
GENERAL PRINCIPLES OF AGENCY AS APPLIED TO COMPANIES IN THE
COURSE OF FORMATION.
SECTION I.— OF THE LIABILITIES OF PROMOTERS AND SUBSCRIBERS
FOR THE ACTS OF EACH OTHER.
It was formerly held that persons engaged in establishing Bk. II. Chap. 1.
companies were partners ; but this doctrine is clearly not law
at the present da}r (a). Associations for forming partnerships,
not being partnerships, it follows that persons who hold them-
selves out as members of such associations do not thereby
hold themselves out as partners, either with each other or with
their co-members. From this it results further that, in order
that a person engaged with others in forming a company may
be liable for their acts, he must have authorised them to do
those acts as his agent, or have ratified such acts. The autho-
rity conferred may be general or special ; but unless it is held
— which it is not (b), — that the jrarsuit of a common object by
persons in concert gives each an authority to act as the agent
of the others in whatever he thinks tends to the attainment of
that object, it must be held that no one is liable for the acts of
(a) Partn. 23, where Holmes v. are explained.
Higyins, 1 B. & C. 74 ; Lucas v. (b) See, in addition to the cases
Beach, 1 Man. & Gr. 417 ; and cited below, Hernial v. Leaf, 5 C. B.
Burnett v. Lambert, 15 M. & "W. 489, 157.
144 DOCTRINES OF AGEXCY.
Bk. II. Chap. l. the others except so far as he has, in some definite manner,
' constituted them his agents or ratified what they have done.
Subscribers not The cases of Bourne v. Freeth (c), Dickinson v. Valpy (d),
liable for acts ancj -pox v. Clifton (e), are distinct authorities for the proposi-
of promoters. J '
tion that the allottees of shares in an unformed company are
not, as such, liable for the acts of its managers. Nor are they
liable for the acts of each other unless authority to do the acts
can be proved (/).
Promoters of The doctrine that the promoters of companies are not, as
eacKher's0t such, each other's agents, and liable for each other's acts,
agents. appears to have been first distinctly laid down by the Court of
Reynell v. Lewis, Exchequer in Reynell v. Lewis and Wijld v. Hopkins (g), which
\\ yid v. Hop- were actions brought by advertising agents and map makers
against members of the provisional committees of two railway
to x
companies. In each of these cases prospectuses and advertise-
ments had been issued by the provisional committee, and the
name of the defendant, as a member of the committee, was
therein announced to the public. In each case the plaintiff
had been directly employed by the solicitor to the committee,
and in neither case had the defendant authorised his credit to
be pledged to any one, except so far as his being a member of
the committee, and knowing what was going on, was to be
regarded as conferring an authority to that effect. In both
cases the jury found verdicts for the plaintiffs. In both, how-
ever, the Court granted new trials, and (in a judgment well
worthy of attentive perusal) it was distinctly laid down, that
the members of provisional committees are not partners ; that
they are not even prima facie each other's agents ; and that, in
order to render any member liable for the acts of the others, it
is incumbent upon those who assert that such liability exists,
to prove, to the satisfaction of a jury, the existence of an
authority emanating from the member in question to the others
to bind him. At the same time it was as distinctly laid down
(c) 9 B. & C. 632. H. L. C. 1G1 ; Bright v. Hutton, ib.
(d) 10 B. & C. 128. 368.
(e) 6Bing. 776; and 9 ib. 115. (g) Both in 15 M. & W. 517.
(/*) Wood v. Argyll, 6 Man. & Gr. Compare Maddick v. Marshall, 16
928 ; Hamilton v. Smith, 5 Jur. C. B..N. S. 387, and 17 ib. 829.
N. S. 32 ; Hutton v. Thompson, 3
LIABILITY OF PROMOTER* FOB ACTS OF EACH OTHER. L45
that ;i general authority, conferred by a defendant on his co- uk. n. Chap. 1.
. . 1. 1.
committee men or any other person, and sumcient to make
their acts his, might be properly inferred from public announce-
ments, and that a special authority for each act was by no
means essential to render him liable for it (//). But no such
general authority is to be assumed from the mere announce-
ment that several persons are acting together, and endeavouring
to get up a company.
The principles laid down above have been since constant! v Members of
provisional or
recognised and acted upon, as will be seen by reference to the managing com-
numerous cases cited below, in many of which the defendant Iu
was a member, not only of a provisional committee, but of a
managing committee also (/). The appointment, by a pro-
visional committee, of a managing committee, does not per se
render the members of the former liable for the acts of the
latter (A).
It follows from the same principle that the acts, statements, Acts of one r.o
and letters of one member of a committee formed for getting the oth
up a company, cannot prejudice any other member, unless the
first can be shown to be the agent of the last by some other
circumstance than their common object ; nor is the receipt of
deposits by one member equivalent to a receipt of them by the
others (I).
(h) See, accordingly, Collingwood 2 McQu. 499 ; Eennie v. Clarke, 5
v. Berkeley, 15 C. B. N. S. 145; Ex.292; Bell v. Francis, 9 C. & P.
Maddick v. Marshall, 16 ib. 387, 66 ; Kerridije v. Hesse, 9 C. & P.
and 17 ib. 829; Burnett v. Lambert, 200 ; Barrett v. Blunt, 2 C. & K.
15 M. & W. 489 ; Higgins v. Hop- 271 ; Barker v. Lyndon, ib. 651 ;
kins, 3 Ex. 163 ; Lake v. Argyll, 6 Giles v. Cornfoot, ib. 653 ; Griffin
Q. B. 477 ; Maitlands' case, 4 De G. v. Beverley, ib. 648; Bremner v.
M. & G. 769. See Newton v. Bel- Chamberlayne, ib. 569.
cher, 12 Q. B. 921, and Newton v. (k) Cooke v. Tonkin, 9 Q. B. 936;
Liddiard, ib. 925, as to mistaken Williams v. Pigott, 2 Ex. 201 ; Daic-
admissions of liability. See as to son v. Morrison, 5 Ra. Ca. 62.
contribution amongst promoters, (1) See Bumside v. Dayrell, 3 Ex.
Le.froy v. Gore, 1 Jo. & Lat. 571. 224 ; Eennie v. Wynn, 4 Ex. 691 ;
(i) Bailey v. Macaulay, 13 Q. B. Watson v. Charlemont, 12 Q. B. 856;
815 ; Barker v. Stead, 3 C. B. 946 ; Drouet v. Taylor, 16 C. B. 671.
Rennie v. Wynn, 4 Ex. 691 ; Ne- Compare Rennie v. Clarke, 5 Ex.
vim v. Henderson, 5 Ra. Ca. 684 ; 292 ; Wontner v, Shairp, 4 C. B.
Wood v. Argyll, 6 Man. & Gr. 404 ; Maddick v. Marshall, 16 C. B.
928 ; Patrick v. Reynolds, 1 C. B. X. S. 387, and 17 ib. 829.
N. S. 727 ; McEwan v. Campbell,
L.c. L
146
DOCTRINES OF AGENCY,
Bk. IT. Chap. 1.
Sect. 2.
Liabilities of
companies for
acts of their
promoters.
Where liability
is imposed by
constitution of
company.
Statutory debts
Tcrson to sue.
SECTIOxN II.— OF THE LIABILITIES OF COMPANIES FOR THE ACTS OF
THEIR PROMOTERS.
With respect to companies, the general principle is that
no member of an unincorporated company is liable to non-
members for acts done before he became a member, unless he
has rendered himself liable for them by some contract between
him and them (m). As regards incorporated companies, it is
obvious that they can do no act nor have any agent before
the}' exist themselves : whence it follows that an incorporated
company is not liable for the acts and engagements of its pro-
moters, unless it is made so by its charter, act of Parliament,
or deed of settlement, or unless it has become so by what it
has done since its formation (»)•
When a company is formed by act of Parliament, the sub-
scribers are usually bound by the terms of the act obtained by
the promoters of the company (o) ; and if that act says that
the company is to be liable for debts and liabilities incurred
before its formation, of course it will be so liable, and the only
question which can arise in such a case is as to the true con-
struction of the act, and the remedy upon it. The Companies
Clauses Consolidation act renders companies governed bjr it
liable for the expenses of obtaining their special act (p).
The statutory obligation thus imposed is a legal obligation
enforceable (before the Judicature acts) by an action of debt (q);
and such action could be sustained, although the plaintiff was
a member of the company (r).
The common form of enactment which imposes the obliga-
tion usually leaves in doubt the proper person to enforce it.
This point, however, was settled by Wyatt v. Metropolitan
Board of Works (s) ; it was there (in effect) decided that only
(m) Partn. 201, et seq.
(n) See infra, c. 2, § 3, as to this.
As to the effect of incorporation in
discharging sureties, see Dance v.
Girdler, 1 N. K. 34. As to pro-
visional contracts for the purchase
of lamls by the promoters of rail-
way companies, see 27 & 28 Vict
c. 121, § 3.
(o) See as to this, ante, p. 23, 24.
(p) 8 & 9 Vict. c. 16, § 65 ; 27 &
28 Vict. e. 121, § 3, et seq.
(q) Tihon v. Warwick Gas Light
Co., 4 B. & C. 962 ; Hitchins v. A'u7-
l-enny Rail. Co., 9 C. B. 536.
(r) Garden v. General Cemetery Co.,
5"Bing. N. C. 253.
(s) 11 C. B.N. S. 744.
i.lAi'.li.l I J 01 C0MPANE 3 FOB A.I [B 01 PR( 11,
those persons can sue the company upon a clause in the usual l; • 1[ ChaP- *■
form who have incurred expense or bestowi 'I time and trouble
in forming the company and in getting its acl passed, and who
have no other paymasters. For example, solicitors or parlia-
mentary agents who have thus acted, and who have no1 been
employed by other people who are liable to them, can sue the
company on such clauses (/) ; but solicitors or parliamentary
agents who have been employed by the promoters of the com-
pany's act, and who are entitled to be paid by them, cannot
sue the company on such clauses (w).
It has also been decided that a person who lias agreed with
the promoters of a company's bill in Parliament to work for
nothing and not to charge the company for his services,
cannot sue the company for those services, although the com-
pany's act contained such a clause as is here referred to (x).
Again, notwithstanding such a clause, claims which are
illegal on grounds of public policy cannot be enforced, e.g., a
claim by a peer for a sum of money agreed to be paid for his
vote (or withdrawal of opposition) in Parliament (y), or a claim
which is inconsistent with representations made to Parliament
and inducing it to pass the bill (z).
Again, a company's articles of association or deed of settle- Adoption by the
ment only affect the members inter se or the parties to the comi':u,-v-
deed, and a clause adopting an agreement made by the pro-
moters does not of itself amount to a contract on which the
company can be sued by a person with whom the company has
not, in fact, entered into an agreement (a) ; and the fact that
(<) Shim's claim, 10 Ch. 177, and Staff. Rail. Co. 1 Eq. 593, noticed
see ante, note (q) ; Re Tilleard, 3 infra, p. 153.
De G. J. & Sm. 519. (z) Spademan v. Lattimore, 3
(u) Kent Tramways Co., 12 Ch. Giff. 16.
D. 312 ; Wyatt v. Metrop. Board of (a) Howard v. Patent Ivory Co.,
Works, 11 C. B. N. S. 744 ; Skegness 38 Ch. D. 15G; Empress Engineer-
Tramway Co., W. N. 1888, 253. ing Co., 16 Ch. D. 125 ; North-
Kensington Station Act, 20 Eq. 197, umberland Avenue Hotel Co., 33 Ch.
is not consistent with these cases. D. 16; Rotherham Alum, dec,
(x) Savin v. Hoijlake Rail. Co., L. Co,, 25 Ch. D. 103 ; Melhado v.
E. 1 Ex. 9. Observe that the terms Porto, Alegre, dec, Rail. Co., L. R. 9
of the agreement were admitted by C. P. 503, where the directors had
the demurrer. an option. And see Boston Deep Sea
(y) Earl of Shrewsbury v. North Fishing Co. v. Ansell, 39 Ch. D. 339.
L 2
148 DOCTRINES OF AGENCY.
Bk. II. Chap. 1. ije is a member of the company makes no difference (b). But
such a clause may create a trust for the plaintiff which he can
enforce (c) ; and if the clause entitles the promoters with whom
the agreement was made to he indemnified against the claim of
the plaintiff he can sue them and they can bring in the com-
pany as third parties (d).
Company taking The circumstance that a company has had the benefit of an
the agreement agreement entered into by its promoters is not of itself suffi-
cient to render the company liable to be sued upon it (e).
There may, however, be cases in which it may be inequitable
to allow a company to hold and enjoy property discharged
from those obligations which were contracted by the promoters
who enabled the company to acquire it (/).
Ordinary rule But in the absence of special circumstances, such as those
m other cases. aDove alluded to, a company is not liable for what may have
been done by its promoters. Thus, it was held that a com-
pany formed under the repealed act, 7 & 8 Yict. c. 110, was not
liable to pay for the services of agents employed by its pro-
moters (before provisional registration) for purposes connected
with the establishment of the company (g) ; and that agree-
ments entered into after provisional but before complete regis-
tration, only bound the company when they were expressly
made binding by the act itself (/?)•
(b) Browne v. La Trinidad, 37 Ch. R, Ir. 180, where promoters sought
D. 1 ; Eley v. Positive Ass. Co., to make the company pay interest on
L. E. 1 Ex. D. 20 & 88, in which money borrowed in order to make
§ 16 of the Companies act, 1S62, is the usual Parliamentary deposit,
considered; and see Wlieal Bulla- (/) See infra, p. 149, and c. 5.
Consols, 38 Ch. D. 42. {(J) Hutchison v. Surrey Gas Co.,
(c) See Touche v. Metropolitan 11 C. B. 689 ; and 3 Car. & Kir.
Rail. Co., 6 Ch. 671 ; Terrell v. 45.
Hutton, 4 H. L. C. 1091 ; Parsons (h) Payne v. N. S. Wales Co.,
v. Spooner, 5 Ha. 102 ; WiOcins v. 10 Ex. 283 ; Gunn v. Lond. and
Roebuck, 4 Drew. 281 ; HopJeinson's Lancashire Fire Insur. Co., 12 C. B.
case, 7 De G. M. & G. 193 ; Gaady N. S. 694. These cases turned on
v. Gandy, 30 Ch. D. 67, per Cot- 7 & 8 Vict. c. 110, §§ 23 & 25, as to
ton, L.J. which, see also, Taylor v. Crouiand
(d) R, S. C. order 16, r. 48. See Gas Co., 10 Ex. 288, note ; Terrell's
the last three notes as to the rights case, 2 Sim. X. S. 126 ; Lloyd's case,
of the plaintiff against the company. 1 ib. 248. Terrell's case was re-
(e) See the cases in note («), and versed on appeal, but the principle
L.misv. West Clare Rail. Co., 15 L. in which it was decided below is
LIABILITY OF COMPANIES FOB L< PS OF PROMOTERS. 149
In cases of this description the promoters themselves are Rk- n- Chap. 1.
■ 2,
liable on the contracts entered into by Hi (i), but not
the company. Moreover, as will be n en hereafter, a company are not bound
cannot ratify a contract made by its promoter^ befon Its own tojf
existence (A-). At the same time, an agreement 1>\ a company
to do what its promoters have undertaken it shall do, may
obviously be entered into, and such an agreement, if entered
into, and if not ultra vires, will be binding on the company.
This appears to have been the true ratio decidendi in Browning Browning v.
v. Great Central Mining Company (I), in which a company » ^-Corn-
registered under the Companies act of 185G was held liable to lany-
pay the wages of a person appointed by the promoters of the
company to be the manager of the company's works. The
company when formed retained the manager in its service, and
there were other circumstances warranting the inference that
the company had appointed him its manager, although there
was no evidence of any formal appointment, as required by the
articles of association. The jury having found a verdict for
the manager, the Court declined to disturb it. The salary
sued for appears to have been calculated from a pi nod anterior
to the registration of the company, but upon this p tint there
is some obscurity.
The difficulty of holding companies bound by the acts of Liability in
their promoters has been felt as much in equity as at law (m) ; '
but where a company has acquired properly or exercised rights
under an agreement entered into with its promoters, there is a
strong tendency to treat such agreement as binding on the
not impeachable. See Terrell v. Ebury, ib. 255 ; Spiller v. Paris
Mutton, 4 H. L. C. 1091. Skating Rink Co., 7 Ch. D. 368,
(i) Kelner v. Baxter, L. R. 2 C. P. is overruled by later decisions re-
174 ; Scott v. Lord Ebury, ib. 255 ; ferred to in note (a).
Lake v. Argyll, 6 Q. B. 477 ; Barton (l) 5 H. & X. 856. See, also,
v. Hutchinson, 2 Car. & K. 712; Pilbrov: v. PUbrovo's Atmospheric
Cullen v. O'Meara, Ir. Rep. 5 Com. Bail Co., 5 C. B. 440 ; and Boston
L. 640. Deep Sea Fishing Co. v. Ansell, 39
(A) See the cases in note (a),supra, Ch. D. 339, where there was a con-
and Wilson v. Tumman, 6 Man. & tract by the company with the
Gr. 236 ; Gunn v. London and plaintiff.
Lancashire Fire Insur. Co., 12 C. (m) See the cases in the next two
B. N. S. 694 ; Kelner v. Baxter, notes ; and as to contracts under
L. B. 2 C. P. 174 ; Scott v. Lord seal, Pickering's claim, 6 Ch. 525,
150
DOCTRINES OF AGENCY.
Bk. II. Chap. 1. company, provided the agreement is one by which the company
Edwards v.
Grand Junction
Railway Com-
pany.
Lord Cotten-
hani's reasoning.
would have been bound if the agreement had been entered
into on its behalf after its formation (/*)• The leading case
on this subject is Edwards v. The Grand Junction Railway
Co. (o), in which an agreement between the trustees of a turn-
pike road and the promoters of a railway company was entered
into, to the effect that the trustees should withdraw their oppo-
sition to the company's bill, and that the company should, if
its bill passed, carry the turnpike road over a bridge of certain
dimensions. The trustees withdrew their opposition, the bill
passed, and the company refused to perform the agreement.
An injunction to restrain the company from violating the
agreement was granted both by Vice-Chancellor Shadwell and
by Lord Cottenham, on appeal. Lord Cottenham, in the
course of his judgment, said : —
" It cannot be denied that tlie act of Moss (the projector who signed the
agreement) was the act of the projectors of the railway ; it is therefore the
agreement of the parties who were seeking an act of incorporation, that,
when incorporated, certain things should be done by them. But the ques-
tion is, not whether there be any binding contract at law, but, whether this Court
will permit the company to use their powers under the act, in direct opposition
to the arrangement made with the trustees prior to the act upon the faith of whirl t
they were permitted to obtain such powers. If the company and the projectors
cannot be identified, still it is clear that the company have succeeded to, and
are now in possession of, all that the projectors had before ; they are entitled
to all their rights, and subject to all their liabilities. If any one had indi-
vidually projected such a scheme, and in prosecution of it had entered
into arrangements, and then had sold and assigned all his interest in it to
another, there would be no legal obligation between those who had dealt
with the original projector and such purchaser ; but iu this Court it would
be otherwise. So here, as the company stand in the place of the projectors
they cannot repudiate arrangements into which such projectors had entered ;
they cannot exercise the powers given by Parliament to such projectors in their
corporate capacity, and at the same time refuse to comply with those terms up>on
the faith of ivhich all opposition to their obtaining such powers was withheld.
(n) This condition is essential.
See Shrewsbury v. North Staffordshire
Rail. Co., 1 Ecp 593, noticed infra,
p. 153.
(o) 1 M. & Cr. 650, affirming
S. C. 7 Sim. 337. See, also, Petre
v. The Eastern Counties Rail. Co.,
1 Ea. Ca. 462, and Stanley v. The
Chester and Birkenhead Rail. Co ,
ib. 58, and 9 Sim. 264, affirmed 3
M. & Cr. 773. Compare Aldred v.
North Midland Rail. Co., 1 Ea. Ca.
404, where the terms of the agree-
ment were held insufficient to pre-
clude the company from doing what
was complained of.
LIABILITY "I COMPANIES FOB ACTS 01 PEOMOTE] , 151
The case of The I ! London Waterworks v. Bailey was cited to prove that, Bk. ir. Chap, i
save in certain excepted cases, the agent of a corporation must, in ord< Sect. 2-
bind the corporation, be authori ed by a power of attorney ; but it does not
therefore follow thai corporations are not to be affected by equities, whether
created by contract or otherwise, affecting those to v. tion they
succeed, and affecting rights and property over which they claim to exe:
control. Whit right bave the company to meddle with tlie road at all 1
Thepowers under tlu act givt them right; but before that right < ' rred,
it had been agreed that the right should only be used in a parti ular ma
Gan the company exercise therighi \h agreement ?
clearly of opinion that they cannot."
The passages in italics contain, as Lord Cottenham himself Theory of this
explained in a subsequent case (p), the true principle on which
Edwards v. Grand Junction Railway Co. was decided, and
maybe supported. In fact, the right of the plaintiff in lit
cases is not based upon the notion that there is any contract
between him and the company, but upon the principle that as
the company obtained the power to interfere with him upon
certain terms, it ought not to be allowed to exercise its powers
to his prejudice in violation of those terms.
The propriety of this decision has, however, been questioned Doubts as to
and denied more than once in the House of Lords on the ise"
ground that persons who take shares on the faith of a com-
pany's act of Parliament cannot be justly subjected to any
liabilities not disclosed therein or contracted by the company
after its formation (q). At the same time, the decision itself
lias not been overruled ; and although Lord Cottenham* s
reasoning would apply to all contracts, whether ultra vires or
intra vires, and is open to objection on that account, yet as
regards contracts of the latter class, the decision in Edwards
v. The Grand Junction Railway Co. may, it is conceived, still
be regarded as unimpeached (/•)• This view is supported by
(■p) Greenhalgh v. Manchester and (554; Shrewsbury v. North Stafford-
Birmingham Rail. Co., 3 M. & Cr. shire Mail. Co., 1 Eq. 593, infra, p.
790, 791. 153.
((/) See Preston v. Liverpool and (r) See Bedford Bail. Co. v. Stanley,
Manchester Bail. Co., 5 H. L. C. 2 J. & H. 746, where it was con-
605 ; Caledonian and Dumbarton- sidered that the company was Lound
shire Bail. Co. v. The Magistrates by the agreement sued upon. See,
of Helensburgh, 2 Macqueen, 391 ; also, Lindsey v. The Gnat Northern
Leominster Canal Co. v. Shrewsbury Bail Co., 10 Ha. 679.
and Hereford Bail. Co., 3 K. & J.
152 DOCTRINES OF AGENCY.
Bk. II. Chap. 1. the judgment of the Lords Justices in Williams v. The St.
- George's Harbour Co. (s). There the promoters of a railway
Gem^Harbour company had entered into an agreement with an owner of land
Comp.iny. through which the proposed railway was to pass, for the pur-
chase of his land on certain terms. The landowner, who up
to that time had opposed the scheme, agreed to withdraw, and
he accordingly did withdraw his opposition. The company
obtained its act, took the land in question, hut declined to
abide by the terms of the contract of sale ; it had, however, so
far recognised that contract, that it had allowed judgment in
an action for its breach to be entered up against itself. This
recognition of the contract was held sufficient to render it
binding on the company, whatever might have been the case
had there been no such recognition.
Cases to which It follows from the principle on which Edwards v. The Grand
GranT Junction Junction Railway Co. was decided, that if the promoters of a
Railway Com- companv enter into an agreement with a person, and the com-
apply. pany, after its formation, does not exercise its powers to his
prejudice, he can no more enforce the agreement against the
company on equitable than on legal grounds. This was all
Preston v. Liver- that was really decided by the House of Lords in Preston v.
way 'Company, Liverpool, Manchester, etc., Railway Co. (t). There the com-
pany did not take the plaintiff's land, and was therefore held
not bound to pay for it, although the promoters had agreed to
pay him a large sum for his land if he withdrew his oppo-
sition to their bill, which he did. The plaintiff had nothing
but the agreement to rely upon, and even according to
Edwards v. The Grand Junction Railway Co., this alone is
not sufficient (u).
Agreements' Asain, if the contract of the promoters is one which would
ultra vires. be ultra vires if entered into by the company after its forma-
tion, such contract, even if attempted to be ratified by the
company when formed, cannot bind the company. For ex-
ample, agreements by the promoters of a company that the
(s) 2 De G. & J. 547, varying the (n) A similar observation applies
S. C. 24 Beav. 339. to Caledonian, dr., Bail. Co., v.
(t) 5 H. L. C. 605, affirming 17 Magistrates of Helensburgh, 2 Mac-
Beav. 114. See the same case on queen,. 391.
demurrer, 1 Sim. N. S. 586.
] i w.m [TT 0] I 0MPANIES I OB l< I S OF PR< I
153
company, when formed, shall apply its funds to purposes for1*- " Chap. l.
: 2.
which they are no! subscribed, clearly do nol bind the company.
Nor can the principle of Edwards v. 'J'ltr Grand Junction Rail-
way Co. be applied to agreements of this description. In The Shrewsbury v.
' ... North Stafford-
!■'. irl of Shrewsbury v. North Staffordshire Railway Co.(x), an shire Baiiway
ngreemenl was entered into first by tin- promoters of a railway '""iM"^
company, and afterwards by the company itself, to pay a peer
20,00(M. for his countenance and support in obtaining the
company's act, and also t<> compensate him for such land as
the company should take or injuriously affect. It was held
that this agreement was ultra vires and could not he enforced
against the company, although under its statutory powers it
took land belonging to that peer (.«/).
(.-■) 1 E<{. 593, where all the cases
were most carefully examined.
(y) This is by no means the only
authority for saying that agree-
ments hy the promoters of a com-
pany to the effect that the com-
pany shall pay a large sum of
money in consideration of the with-
drawal of opposition to its hill in
Parliament are altogether ultra vires.
See Preston v. Liverpool, M"u-
cliester, dec, Rail. Co. 5 H. L. C.
('. >:>. The agreements in Petre v.
Eastern Counties Rail. Co., 1 Pa.
Ca. 642, and Stank)/ v. Chester and
Birkenhead Rail. Co., ib. 58, and
L» Sim. 2G4, and 3 M. & Cr. 773,
were (if such an extravagant nature A-reori^nts for
that they might well 1- held ultra withdrawal of
T ,, n . c Al opposition to hill
wres. In the first of these cases ;,, i>ar]iaIncnt.
120,000/., and in the latter 20,000/.,
were agreed to be paid for tin- with
drawal of opposition to a bill, and
fi r i ompensation for the land which
might lie taken and injuriously
affected. It does not, however,
follow that such i are
in any other respects illegal ; and
it seems that they are not, if the
person withdrawing his opposition
is personally interested in opposing
the bill. See Simpson v. Lord
Howden, 9 CI. & Fin. 61 ; 10 A.
& E. 793 & 807 ; 3 M. & Cr. 97.
154
DOCTRINES OF AGENCY.
CHAPTER II.
GENERAL PRINCIPLES OF AGENCY AS APPLIED TO COMPANIES
AFTER THEIR FORMATION.
Agents of com
panies which
are formed.
r.k. II. Chap. 2. The circumstance that a joint-stock company consists of a
large and fluctuating body of members, is itself sufficient to
prevent the application to companies of the ordinary partner-
ship rule, that each member of a firm is its agent, for the
purpose of carrying on its business. All persons dealing with
companies are supposed to know this, and to know that the
management of their affairs is entrusted to a few individuals
who, and who alone, have power to act for them (a).
B urnes v. Pennell (b), in the House of Lords, is a good illus-
tration of the doctrine that a company is not, like an ordinary
partnership, responsible for the acts of its members. In that
case a shareholder in a company, who was also its solicitor
and law agent, induced a person, by false representations as to
the flourishing state of the company, to buy shares in it. The
purchaser being afterwards sued for calls, relied upon the fraud
as a defence, and he also sought to have the transfer of the
shares to him cancelled. But it was held, that it was no part
of the business of the company's solicitor to make any repre-
sentations on its behalf as to its condition ; and that, although
he was himself a shareholder, his statements were not the
statements of the company, he not being, in his character
of shareholder, an agent of the company for any purpose
whatever.
Company not
bound by the
acts of its
members.
Barnes v.
Pennell.
(a) See Ridley v. The Plymouth
Grinding and Baking Co., and
Kingsbridge Flour Mill v. Same, 2
Ex. 711 ; Smith v. Hull Glass Co.,
11 C. B. 897 ; Ernest v. Nicholls,
6 H. L. C. 418, per Lord Wens-
leydale ; Burnes v. Pennell, 2 H. L.
C. 497.
(b) 2 H. L. C. 497. See, also,
Barnetf, Hoares <£• Co. v. The South
London Tramways Co., 18 Q. B. D.
815.
AGENTS OF COMPANIES. 15/
Whether the company is incorporated or not, whether it is a I;k- Ir- ChaP- -
. , Sect. 1.
chartered company, a registered company, a company merely
empowered to sue and be sued by a public officer, or a com-
pany of some other description, is of no consequence whatever
as regards the question here alluded to ; the same reason
applies to them all (c).
SECTION I.— WHo ARE AGENTS.
1. Directors.
The directors then of a company, and such other persons, if Directors the
any, as may be entrusted with the management of its affairs, company.
are its only agents; and b}r the acts of its directors a company
is bound, provided those acts are within the limits of their real
or apparent authority ; and provided the person dealing with
them has had no notice of the irregularity (if any) of their pro-
ceedings (d). Moreover the power of directors to bind the
company is not affected by any irregularity in their own
appointment if the person dealing with them acted lond fide
and without notice of such irregularity (c) ; although such
irregularity may prevent the company from enforcing what
they have purported to do as agents of the company (/).
But it by no means follows that each director is the agent of Acts done by
the company. Speaking generally, it is clear that if a person proper number
appoints six others to be his agents jointly, he is not bound by of directors-
the acts of any five, four, three, two, or one of them. There-
fore, if the affairs of a company are entrusted to the manage-
ment of not less than a fixed number of directors, it is prima
facie not bound by the acts of a fewer number. It has been
held, for example, that two out of several directors had no
(c) See Lord Campbell's judg- (e) County Life Ass. Co., 5 C'li.
inent in Barnes v. Pennell, 2 H. L. 288.
C. 520, et seq., and Bramah v. (/) Garden Gully Co. v. McLister,
Boh lis, 3 Bing. N. C. 963. 1 App. Ca. 39 ; and cases quoted,
{(l) See infra, as to this. notes (y) and (z) below.
156 DOCTRINES OF AGENCY.
Bk. II. Chap. 2. power to waive a forfeiture (g), or to allot shares (h) ; that four
- out of five had no power to compromise a large debt due to the
company and to indemnify the debtor against certain bills of
exchange (i) ; that six out of eight had no power to bind
the company to pay for services rendered pursuant to their
order (k) ; that four out of five had no power to bind the com-
pany by an agreement for a lease (I) ; that the representations
of one director could not be regarded as those of the com-
pany (m) ; that notice to one director did not affect the com-
pany (n) ; that instructions to sell land given to an auctioneer
by one director and by the solicitor of a company, could not,
without further evidence, be considered as having been given
by the company (o) ; that one liquidator out of four could not
bind the company by a bill (p).
Majority of But it must not be supposed that the majority of a duly
convened and duly constituted board of directors cannot act for
the whole board and bind the company. Business could not
be carried on if such a rule were to prevail. The decisions
referred to above do not apply to such a case.
Delegation of Directors being themselves agents, are 'prima facie unable to
on y. delegate their authority to one or more of their own num-
ber (q) ; but in many companies, and in all which are governed
by Table A. in the schedule to the Companies act, 1862, the
directors are authorised to delegate their powers to a few,
and even to one only (r), of themselves, and such a delegation
may be presumed if one or two directors act for the company in
a matter incidental to its legitimate business (s).
(g) Card v. Can; 1 C. B. N. S. D. 593.
197. (n) Ex parte Credit Fonder and
(h) Howard's case, 1 Cli. 561 ; com- Mdbilier of England, 7 Ch. 161.
pare Ex parte Smith, 39 Ch. D. 546. (o) Moody v. Lond. and Brighton
(i) Kirk v. Bell, 16 Q. B. 290. Bail. Co., 1 B. & Sm. 290.
(k) Brown v. Andreivs, 13 Jur. (p) Ex parte Birmingham Banking
938. Co., 3Ch. 651.
(I) Ridley v. Plymouth Grinding (q) -Cartmell's case, 9 Ch. 691 ;
Co., 2 Ex. 711. Howard's case, 1 Ch. 561 ; Ex parte
(m) Holt's case, 22 Beav. 48 ; Birmingham Banking Co., 3 Ch. 651 ;
Nicol's case, 3 Be G. & J. 387. Cook v. Ward, 2 C. P. B. 255.
But see as to reports made by the (r) Taurine Co., 25 Ch. B. 118.
chairman to a meeting of share- (s) Totterdell v. Fareham Brick
holders, Devala Mining Co., 22 Ch. Co., L. R. ] C. P. 674 ; Lyster's
AGENTS OF COMPANIES. 157
Where the power to act for a company is vested in a given Bk- IX- CbaP- 2-
number of directors, and that number does not exist, and
, . .... , . . ,ti Wliere the pro-
there is no provision in the company s regulations enabling the per number of
directors to act, notwithstanding a vacancy in their board (t), the f^6^-™ d°C3
directors who do exist cannot act for the compan}' (a). At the
same time, if a company does in fact carry on business by
certain persons who are allowed by the shareholders to act as if
they were the duly constituted directors of the company, the com-
pany will be bound by the acts of such persons in all ordinary
matters of business, in favour of all persons bond fide dealing
with them, without notice of their insufficiency in number or
defective appointment (jc). But as to matters out of the
ordinary course of business the company will not be bound.
In Kirk v. Bell (y), where a company's deed of settlement Kirk v- Bell,
contained a clause to the effect that there should not be less
than five directors, and that three should be a quorum for the
transaction of ordinary business, and where there were in fact
only four directors, it was held that a deed executed by these
four on behalf of the company did not bind it, the deed being
of an unusual description, and not a matter of ordinary
business. In like manner, in In re Alma Spinning Company,
Bottomley's case (z), where the articles of association provided Bottomley's case,
that the business of the company should be conducted by not
less than five nor more than seven directors, it was held that
these words were imperative, and not merely directory, and
consequently a call made by the directors, when their number
had been reduced to four, and a resolution passed by them
forfeiting a member's shares for non-compliance with the call
were invalid.
Closely connected with the present subject is the question
case, 4 Eq. 233 ; Ex parte The Con- (x) See Mahony v. East Holy-
trad Corporation, 3 Ch. 105 & 116. ford Mining Co., L. R. 7 H. L.
(t) Scottish Petroleum Co., 23 Ch. 869 ; Thames Haven Dock Co. v.
D. 413 ; and see York Tramways Co. Rose, 4 Man. & Gr. 552, a case re-
v. Willows, 8 Q. B. D. 685. rating to calls where the court was
(a) As to giving notices to hold asked to set aside a judgment,
meetings of shareholders, Harhen v. (y) 16 Q. B. 290.
Phillips, 23 Ch. D. 14 ; of directors, (z) 16 Ch. D. 681; see, also,
Ex parte Smith, 39 Ch. D. 546. Howbeach Coal Co. v. Teague, 5 H.
Compare Brovme v. La Trinidad, 37 & N. 151; London and Southern
Ch. 1). 1. Counties, <£r., Land Co., 31 Ch.U. 223.
158
DOCTRINES OF AGENCY.
Bk. II. Chap. !
Sect. 1.
Acts done by
directors but
not by a Board.
Quorum must
be present.
Commencement
and termination
of directors'
power to bind
the company.
■ whether an act which ought to he done by a Board of directors
is valid when done by the requisite number but not at a board
meeting. There certainly is authority for answering this ques-
tion in the negative (a) ; and as between the company and any
person having notice of the irregularity, that answer is probably
correct. But as between the company and persons having no
notice of the irregularity, the preponderance of authority is in
favour of holding the company bound (6).
Moreover, in order that a majority of persons present at a
meeting may exercise the powers of a meeting, the meeting
itself must not be too small (c), nor summoned at too short
notice (cc).
Prima facie, the power of the directors of a company to bind
it commences at the date of its formation or of their appoint-
ment ; but the commencement of that power may be postponed
to a later period ; and if it is, their previous acts will not bind
the company to a person dealing with them with notice express
or implied of their want of authority (d). Again in conformity
with the general principles of agency, the directors of a joint-
stock company continue to have power to bind it, not only as
long as their appointment lasts, but also as long as its termi-
nation is unknown to those with whom they have been accus-
tomed to deal. But this proposition must be taken in con-
nection with the rule that persons dealing with companies
are deemed to have notice of the contents of companies' acts
of Parliament, charters, and registered deeds of settlement ;
and consequently, if it is sought to make a company liable
for the acts done by its directors after their retirement from
(a) Bosanquet v. Shortridge, 4 Ex.
699 ; D'Arcy v. Tamar, dec, Rail. Co.,
L. E, 2 Ex. 158, and Ex parte Smith,
39 Ch. D. 546.
(b) See Mahony v. East Holy-
ford Mining Co., L. E. 7 H. L.
869 ; Collie's claim, 12 Eq. 246 ;
County Life Ass. Co., 5 Ch. 288.
In Collie's claim it was said, but
surely not correctly, that D'Arcy v.
Tamar, dec, Rail. Co., turned on a
technical rule of pleading. See,
further, the cases aB to irreg
cited infra.
(c) London and Southern Coun-
ties Land Co., 31 Ch. D. 223 ; How-
beach Coal Go. v. Teague, 5 H. & N.
151 ; Ex j)arte Morrison,De Gex, 539 ;
and compare York Tramways Co. v.
Willows, 8 Q. B. D. 685.
{cc) Expte Smith, 39 Ch. D. 546 ;
Browne v. La Trinidad, 37 Ch. D. 1.
| (d) See Peirce v. Jersey Water-
works Co., L. E. 5 Ex. 209. Com-
pare Touche v. Metropolitan Rail.,
d-c, Co., 6 Ch. 671.
AGENTS OF COMPANIES. 159
office, it must be ascertained whether, upon the principle Bk. n. Chap. 2.
n Sect. 1.
alluded to, there was or was not notice of the cessation of —
their authority to act for the company (e).
The extent to which directors are agents of each other and
liable for each others acts will be noticed hereafter (/).
2. Agents who are not directors.
The directors of a company are not necessarily its only Agents who are
agents. It may, and indeed generally must, be competent for m
them to employ other persons to act for the company ; and
where this is the case, those persons will also have power to
bind the company within the limits of their agency but not
further (g). In dealing with the agents of companies there is
great danger of finding their authority altogether repudiated,
on the ground that they have not been duly appointed. Now,
although directors have no implied power to delegate the
authority conferred upon themselves, yet they must necessarily
employ persons not only to do the every-day work of the
company, but also to transact special branches of business
requiring peculiar knowledge. Upon principle, therefore,
where persons are in fact employed by directors to transact
business for a company the authority of those persons to bind
a company within the scope of their employment cannot be
denied by the company, unless — 1, their emplo}-ment was
altogether beyond the power of the directors ; or unless, 2,
the persons employed have been appointed irregularly, and
those who dealt with them had notice of the irregularity (/*).
Where the power to appoint an agent for a given purpose
exists, irregularity in its exercise is immaterial to a person
dealing with the agent bond fide and without notice of the
irregularity in his appointment. The following cases are
important on this point.
In Smith v. The Hall Glass Company (i), it was held that a Smith v. Hull
company registered under 7 & 8 Vict. c. 110, was liable to pay Glass ComPan^
(e) See as to notice, infra, §2. & W. 703, and the cases cited in
(/) Book ii., c. 6, § 1. the next few notes.
(g) See infra, p. 161, note (>•). (i) 8 C. B. 668, and 11 ib. 897.
(/i) See Hawken v. Bourne, 8 M.
160
DOCTRINES OF AGENCY.
Bk. II. Chap. 2.
Sect. 1.
Authority
inferred.
Giles v. Taff
Railway Com-
pany.
Browning v.
Great Central
Mining Com-
pany.
for goods ordered by persons in its employ, and that it was not
necessary for the plaintiff to prove that those persons were
authorised by the directors to order the goods in question.
Maule, J., went further than this, and his judgment is an
authority for the broad proposition that a company is bound
by the acts of persons who take upon themselves, with the
knowledge of the directors, to act for the company, provided
such persons act within the limits of their apparent authority ;
and that strangers dealing bond fide with such persons, have
a right to assume that they have been duly appointed (/«;).
This view is in accordance with later authorities. Thus, a
company has been held bound by a verbal contract with the
chairman of directors, although a sealed contract countersigned
b}r three directors was required by the company's deed of
settlement (Z) ; so by orders for repairs given by a secretary
instead of by the directors (m) ; so by an agreement for the
sale of land made by a company's manager who was allowed
by the directors to make such contracts (n) ; so by cheques
drawn by de facto but improperly appointed directors (o). Again,
in Giles v. The Taff Railway Company (p), it was held that
a railway company was liable for a tort committed by one of
its servants in the course of his employment, although there
was no proof, except that afforded by the fact of employment,
that he was the servant of the company.
Even as between the agent himself and the company, if the
directors appoint him and allow him to act as agent of the
company, and he does so act bond fide and without notice of
any irregularity in his appointment, the company will be liable
to him for his salary although he may not have been appointed
(k) See 11 C. B. 927. The other
judges relied more on the fact that
the directors had sanctioned and
adopted the contracts. But as the
knowledge on the part of the
directors of what was done was
assumed rather than proved, there
was little if any difference in the
views of the different members of
the Court.
(/) Renter v. Electric Telegraph
Co., 6 E. & B. 341.
(w) Allard v. Bourne, 15 C. B. N.
S. 468.
(«) Wilson v. West Hartlepool
Rail. Co., 34 Beav. 187, affd. 2 De
G. J. & Sm. 475. Compare Moody
v. Loudon and Brighton Rail. Co., 1
Best & Sm. 290.
(o) Mahony v. East Hohjford
Mining Co., L. R. 7 H. L. 869.
(p) 2 E. & B. 822 ; Goff v. G. N.
Rail. Co., 3 E. & E. 672. See,
further, infra, c. 3, § 2.
AUTHORITY OF AGENTS. L61
precisely in the manner prescribed by the regulations of the l;; " c'jaP- -•
Sect. 2.
company (q).
These cases must not be confounded with others in which Lim'ts to autho-
companies have been held not bound by acts done by their11
agents when acting beyond the limits set by the nature of their
employment (/•).
SECTION II.— AUTHORITY OF AGENTS OF COMPANIES.
Having seen who are to be considered agents of a company, Limits of the
. . . t • • l-i directors'
it is necessary to examine the limits within which a company authority.
is answerable for their acts. Agents cannot have a more
extensive authority than their principals can legally confer
upon them ; and this principle at once limits the authority of
all agents of incorporated companies. The capacity of such
companies is itself limited, and they cannot be legally bound
by any acts of their directors or officers in which the companies
themselves are legally incompetent to engage. But as regards
other matters, business cannot be carried on unless the directors
of companies may be dealt with, on the assumption that they
have power to bind their companies by all such acts as can
fairly be said to be necessary for the purpose of carrying on
their legitimate businesses in the way in which such businesses
are usually carried on by other people. Such power is con-
sequently implied (s) in favour of all persons dealing bond fide,
(</) Browning v. Great Central Hail. Co., 3 Ex. 268 ; Walker v.
Mining Co., 5 H. & N. 856. In Great Western Rail. Co., L. U. 2 Ex.
this case an appointment under the 228 ; statements made by secretary,
seal of the company was not neces- Barnett, Hoares <£• Co. v. South Loud.
sary. See, also, Totterdell v. Fare- Tramways Co., 18 Q. B. D. 815 ;
ham Brick Co., L. E. 1 C. P. 674. statements by solicitors as to the
(r) See as to Promissory notes, flourishing condition of the com-
Ximpson's claim, 36 Ch. D. 532 ; as pany, Burnes v. Pennell, 2 H. L. C.
to buying shares, Cartmell's case, 9 497 ; sales by a solicitor not in-
C 'h. 691 ; as to policies of insurance structed to sell by the directors,
issued by local agents, Linford v. Moody v. Lond. and Brighton Fail.
Provincial Horse and Cattle Insur- Co., 1 B. & Sm. 290.
ance Co., 34 Beav. 291 ; as to orders (s) See Smith v. Hull Glass Co., 8
by station masters for surgical C. B. 608 ; Taunton v. Royal Insur.
attendance, Cox v. Midland Counties Co., 2 Hem. & M. 135; A.-G. v.
L.C. M
1G2 DOCTBINES OF AGENCY.
Bk. IT. Chap. 2. anc] without notice of its non-existence. Further it is esta-
Sect. 2.
blished that what the directors of a company have power to do,
and do in the name of the company and on its behalf (t), binds
the company, although they may not have acted in the manner
Distinction be- prescribed by the regulations of the company. A distinction is
tween acts ultra x J ° x
vires and acts thus taken between what directors have no power to do at all,
intra vires, but -i-iit -, ■ • t •
irregular. and what they have power to do, provided certain conditions are
complied with; in other words, between acts which, as regards
the company, are altogether ultra vires and those which are
intra vires but irregular; and whilst it is held that companies
are not bound by acts of the former class, it is held that
they may be bound by acts of the latter class in favour of all
persons dealing with their directors bond fide and without
notice of the irregularities of which they may be guilty (u).
1. Of acts which are ultra vires.
Acts altogether With respect to those acts which directors have no power to
do at all, it must be borne in mind that trading and similar
corporations which are created for certain definite purposes
have no greater capacity than is conferred upon them by their
constitution (x). They exist for certain purposes, more or less
well denned in the instrument incorporating them, but the}-
exist for no other purposes ; and a corporation created for one
purpose cannot lawfully do anything which is foreign to the
purpose for which alone it was created. If, therefore, it can
be predicated of any contract entered into by or on behalf of a
body corporate, that such contract is one into which the cor-
poration, even with the assent of all its members, cannot
legally enter, such contract must necessarily be invalid. This
is not the consequence of any doctrine of the law of agency,
but of the nature of corporations, and of the difference between
Great Eastern Rail. (Jo., 5 App. Ca. (./•) See the judgment of Bowen,
473. L. J., in Baroness fVenlock v. River
(t) See Hambro' v. Hull, dr., Dee Co., 36 Ch. D. 684 n., where
Insurance Co., 3 H. & X. 789. the difference between trading
(it) See generally on the subject and other corporations of that kind,
of the ensuing pages a treatise on and municipal corporations is pointed
the doctrine "f ultra vires by Seward out.
lirice.
acts WHICH ARE ULTRA VIRES.
L63
them and ordinary individuals (2/). This principle applies to l;L ','■ ' ^P- -•
joint stock companies. But there is an important difference —
between incorporated and unincorporated companies, forwhilst
it is. competent for all the shareholders of an unincorporated
company to depart from the agreement entered into by each
with the others (:), it is not competent for all the shareholders
of a company incorporated by charter or statute to do anything
contrary thereto (a). Nor can a corporate body be estopped
by deed or otherwise from showing that it had no power to do
tliat which it purports to have done (b).
The constitution of a company as settled by its charter, act Powers of di-
p t> v 1 r ' j.m i i c ^1 rectors limited
01 .Parliament, memorandum oi association, or deed ot settle- 1)V tjic con.,t;.
ment, limits, to a certain extent, the powers of its directors ; t,lt1"" "' llli''
x ' company.
for whatever it may or may not be competent for all the share-
holders to do, it certainly is not competent for the directors of
a company to bind it by entering on its behalf into trans-
actions not warranted by its constitution as settled for the
time being (c). The directors of a company have authorit}' to
do whatever is necessary for the transaction of the company's
legitimate business in the way in which such business is
usually carried on by other people (d), but they have no power
(;/) See upon this subject, Pollock
on Contracts, 110, et seq. ; Att.-Gen.
v. Great Eastern Bail. Go., 5 App.
Ca. 473, and 11 Oh. D. 449 ; L. and
N. W. Bail. Co. v. Price, 11 Q.
B. D. 485 ; London Financial Assoc.
v. Kelk, 26 Ch. D. 107 ; Baroness
Wenlock v. Biver Dee Co., 10 App.
Ca. 354, 36 Ch. D. 675 n., ib. 674,
and 38 Ch. D. 534 ; and the cases
referred to infra, notes (/) and (g).
See, as to dealings with land,
Grand Junction Canal Co. v. Petty,
21 Q. B. D. 273, and cases there cited.
As to the consequences of a corpora-
tion taking securities which it ought
not to take, see Ayers v. S. Austra-
lian Banking Co., L. R. 3 P. C. 548.
(3) Partn. 408 ; Blackburn Benefit
Soc. v. Gunliffe, Brookes & Co., 29
Ch. D. 902.
(a) See Ashbury Railway Carriage
Go. v. Riche, L. R. 7 H. L. 653;
Society of Practical Knowledge v.
Abbott, 2 Beav. 559; Bagshaw v.
Eastern Union Bail. Co., 7 Ha. 114,
and 2 M. & G. 389 ; and Baroness
Wen lock v. Biver Dee Co., ubi supra.
(b) See Baroness Wenlock v. Biver
Dee Co., ubi supra ; Ex parte Watson,
21 Q. B. D. 301 ; Fairtitle v. Gilbert,
2 T. R. 169. Compare Webb v.
Commissioners of Heme Bay, L. R. 5
Q. B. 642, where the company had
power to issue debentures, although
they did not properly exercise the
power.
(c) Ashbury Bailway Carriage Co.
v. Riche, L. R. 7 H. L. 653.
(d) Smith v. Hull Glass Co., 8 C.
B. 668 ; Taunton v. Royal Ins. Co.,
2 Hem. & M. 135.
M 2
164
DOCTRINES OF AGENCY.
Bk. II. Chap. 2. to engage in a class of business for the transaction of which
Sect. 2. n n
r the company was not formed (e).
With respect to the capacities of trading and similar cor-
Capacity of
corporations
Ashbury, &c.
Co. v. Kiche.
porate bodies to bind themselves by contracts, there is an
apparent difference of opinion upon the question whether the
burden of proof is upon those who assert that the power to
enter into any particular contract exists or upon those who
assert the contrary.
It is agreed on all hands that a corporation cannot lawfully
do that which its constitution does not expressly or impliedly
warrant. The difference of opinion, if there really be any, is
not as to that, but simply as to whether the act of incorpora-
tion is to be regarded as conferring unlimited powers except
where the contrary can be shown ; or whether alleged corpo-
rate powers are not rather to be denied unless the}*- can be
shown to have been conferred either expressly or by necessary
implication.
The former is apparently the correct view so far as muni-
cipal and other corporations not created for any clearly limited
purpose are concerned (/) ; but the latter is submitted to be
the correct view with respect to trading and similar corpora-
tions which are created for certain definite purposes only(#).
That such corporations cannot do that which their constitu-
tion does not warrant admits of no doubt, and is conclusively
established by the decision of the House of Lords in Ashbury
Railway Carriage Co. v. lliclie (/*). In that case it was held
that a company formed and registered under the Companies
act, 1862, for contracting to supply materials for making
railways and to carry on the business of general contractors,
was not bound by a contract to make a railway, although such
(e) The cases on this head are
excessively" numerous, and will be
noticed hereafter.
(/) See the authorities cited, L.
R. 9 Ex. 262, et seq.
(g) The leading cases on this sub-
ject are Baroness Wenlock v. River
Dee Co., 10 App. Ca. 354, and 36 Ch.
D. 674, and Ashbury Railway Carriage
Co. v. Riche, L. R. 7 H. L. 653, and
9 Ex. 224. See Lord Justice Bowen's
judgment, 36 Ch. D. 684 n. ; and
Lord Selborne's judgment, L. R.
7 H". L. 693, both of which are in
favour of the view in the text ; but
the judgment of Lord Blackburn, 9
Ex. 262, et seq.. is opposed to it.
(h) L. R. 7 H. L. 653, S. C. L. B.
9 Ex. 224, 249.
ACTS WHICH ARK ULTRA VIRES. 165
contract had been entered into by directors of the company, Bk. II. Chap. 2.
and had been afterwards approved by the shareholders (i).
Such a contract was not authorised by the company's memo-
randum of association and could not bind the company in its
corporate character, even though every shareholder in it might
have assented to it. The rule laid down in this case applies
to all companies created b}r statute for a particular purpose,
and is not confined to companies created by the Companies
act, 18G2 (k). At the same time, whatever may fairly be
regarded as incidental to or consequential upon those things,
which the legislature has authorised, ought not, unless expressly
prohibited, to be held by judicial construction to be ultra
vires (/).
Companies' articles of association and deeds of settlement ' '
usually prescribe certain limits to the powers of their directors. of '
rendering them much less extensive than they would be if1 C0I11F«n:'-
limited merely by the purpose for which the companies are
formed ; and opinions have differed upon the question whether
the public can safely deal with the directors of companies
without ascertaining the real limits set to their authority (;»)•
But it is now settled that persons who deal with a company
whose regulations are registered, and are therefore accessible to
the public, cannot hold the company liable if the directors exceed
their authority as disclosed by those regulations. Accordingly
in Balfour v. Ernest (n), it was held, that an insurance company Balfour v.
" Ernest.
(i) Compare Sheffield Nickel Co. v. Ernest v. XichoUs, 6 H. L. C. 401 ;
Uittriii, 2 Q. B. D. 214, where what Iloyal British Ban]; v. Turquand, 0
was done was within the scope of E. & B. 327 ; Atheneeum Life Ass.
the memorandum of association. Society v. Pooley, 1 Giff. 102, and 3
(k) Att.-Gen. v. Great Eastern Bail. De G. & J. 294. See as to Lord
Co., 5 App. Ca. 473, and 11 Ch. D. Wensleydale's observations in 6 H.
440 ; Baroness JFenlock v. River L. C. 419 ; Agar v. Afhenceum Life
Dee Co., 10 App. Ca. 354, and 36 Ins. Soc., 3 C. B. N. S. 725;
Ch. D. 075 n. London Dock Co. v. Sinnott, 8 E.
(/) Att.-Gen. v. Great Eastern Bail. & B. 347.
Co., ubi supra; L. and N.-JF. Bail. (n) 5 C. B. X. S. 601. See, too,
Co. v. Price, 11 Q. B. D. 485. Irvine v. Union Bank of Australia,
(m) The difference of opinion on 2 App. Ca. 3G6, as to resolutions
this subject will be seen at once by which ought to be registered ;
comparing the judgments in Green- Peirce v. Jersey Waterworks Co.,
wood's case, 2 Sm. & G. 95 (reversed L. R. 5 Ex. 209 ; Ex parte Overend,
on appeal, 3 De G. M. & G. 459) ; Gurney & Co., 4 Ch. 460 ; Ex parti
1GG
DOCTRINES OF AGENCY.
Cliajileo v.
Brunswick
Building
Society.
Bk. II. Chap. 2. was noi bound bv a bill of exchange accepted by its directors
Sect. 2. • to L . J
— on its behalf for a debt incurred by another insurance company,
which had been amalgamated with the first ; for the amalga-
mation was not authorised by the deed of settlement of the
company on whose behalf the bill had been accepted, and the
holder of the bill was aware of the nature of the debt for which
the bill had been given.
Again in Chapleo v. Brunswick Building Society (o), it was
held that persons who have dealings with a building society
must be taken to know that such a society has no power of
borrowing except such as is conferred upon it b}' its rules ; and
if the directors exceed their authority in this respect, those
who trust them and lend them money for the society, cannot
compel the society to repay it.
This doctrine is based upon the necessity of protecting
shareholders against the unauthorised acts of their directors,
and ought not to be extended to cases in which persons who
are really ignorant of the powers of directors, seek to make
them personally responsible for the assumption of powers they
did not really possess. The liability of directors in respect of
contracts entered into by them beyond their powers will be
alluded to hereafter (_p) ; and it will then be seen that although
such contracts do not bind the compan}' for which the directors
may have acted, it by no means follows that they are not
personally liable in respect of them.
Limits of this
doctrine.
Acts intra vires,
but irreinilar.
2. Of acts which ewe intra vires, but irregular.
Notwithstanding, however, that a company is not bound by
those acts of its directors, which as regards the company are
ultra vires, and notwithstanding the doctrine that persons
dealing with companies are affected with notice of their regis-
tered regulations, yet, as already stated, there is no necessity
on the part of such persons to see that tie facto directors arc
Eagle Ins. Co., 4 K. & J. 549;
Athenceum Life Ass. Soc. v. Pooley, 1
Giff. 102, and 3 De G. & J. 294 ;
Sheffield's case, Johns. 451, and
Kearns v. Leaf, 1 Hem. & M. 681.
(o) 6 Q. B. D. 696, at pp. 712 &
713. See, further, as to borrowing
powers, infra, pp. 187, ct seq.
(p) Book ii., c. (!, § 1.
\( ITS I NTH A VIRES BUT IRREGULAR. 167
properly appointed (q), nor to see that directors exercise the Bk. II. Chap. 2.
powers they possess in the precise manner prescribed by the
regulations of the company ; and it may be taken as now settled
that persons dealing with directors bond fide, and without
notice of an irregular or improper exercise of their powers,
are not affected by such irregularity or impropriety.
The leading authority on this head is The Royal British Royal British
" J ' . Bank v. Tur-
Bank v. Turquand (r). In that case, a company's deed, regis- quand.
tered under 7 & 8 Vict. c. 110, empowered the directors to
borrow on the bonds of the company such sums, as by a
general resolution of the company might be authorised to be
borrowed. The directors gave the bankers of the company a
bond for 1000J-., sealed with the seal of the company, and
signed by two directors, as a security for what might he due
from the company to its bankers on its current account. This
was not authorised b}' any resolution of the company, and it
was therefore contended that the bond was invalid. There
was no question here as to the form of the bond, or as to the
authority of those who issued it to act for the company. The
company was prima facie bound by the bond, and no one
looking onl}- at the deed of settlement and the bond, could
come to a different conclusion. The only question was,
whether the bankers were bound to look further and to ascer-
tain whether the issuing of the bond had been authorised by
the resolution of a general meeting. It was held both by the
Court of Queen's Bench and by the Court of Appeal, that
they were not, and that the excess of authority was a matter
which concerned only the shareholders and the directors.
C. J. Jervis, in affirming the decision of the Court below, said,
" We may now take for granted, that the dealings with these companies
are not like dealings with other partnerships, and that the parties dealing
with them are hound to read the statute and the deed of settlement ; but
they are not hound to do more (s). And the party here on reading the deed
of settlement, would find not a prohibition from borrowing, but a per-
(7) County Life Ass. Co., 5 Ch. H. L. 809, where there were none.
288, where there were some duly (?•) 5 E. & B. 248, and 6 ib. 327.
appointed directors ; Mahony v. (s) See ace. as to bye-laws, Royal
East Eolyford Miniwj Co., L. R. 7 Bank of India's case, 4 Ch. 252.
168
D0CT1UNES OF AGENCY.
Bk. II. Chap. 2. mission to do so on certain conditions. Finding that the authority might
>-e be made complete by a resolution, lie would have a right to infer the fact of
a resolution authorising that which on the face of the document appeared to
be legitimately done " (t).
Omnia praesu-
niuntur rite
esse acta.
Clarke v. Im-
perial Gas
Company.
Hill v. Man-
chester Water-
works Company.
Smith r. Hull
Glass Company.
Agar v. Athe-
naeum Assurance
Society.
This was not the first occasion on which the maxim omnia
prasumuntur rite esse acta had been applied to such cases. In
Clarke v. Tlie Imperial Gas Light and Coke Company (u), a
bond given b}r the directors of a company under the seal of the
company for the payment of an annuity to a retired servant,
was presumed tohave been executed after due compliance with
all conditions ; and in Hill v. The Manchester and Salford
Waterworks Company (#)", the same principle was acted upon ;
although that case rather turned on the inadmissibility of the
evidence by which it was sought to show that the requisite
formalities had not been complied with. In Smith v. The Hull
Glass Company (y), Maule, J., whilst recognising the doctrine
that all persons who contract with the directors of a registered
company must be taken to be cognisant of the extent of the
authority conferred upon them, added, " But it by no means
follows that they are to be taken to be cognisant of all the
proceedings of the board of directors ; " and that learned judge
held, that the public were entitled to assume that a person
acting as the agent of a compan}T had been duly appointed by
the directors ; for by the company's deed of settlement, the}-
had power to appoint persons to carry on its business. Again
in Agar v. The Athenaum Life Assurance Society (z), the directors
had power to borrow, but only with the consent of an extra-
ordinary general meeting of shareholders. The}r did borrow
by issuing debentures sealed with the seal of the company, and
signed by two of themselves ; and it was held, that these deben-
tures were binding on the company, although no such authority
to borrow had been conferred by a general meeting as was con-
(t) See as to this Irvine v. Union
Bank of Australia, 2 App. Ca. 366,
where the resolution, if any, would
have been registered. See, also,
La ttdovmerJ Inclosv.rc Co. v. Ashford,
16 Ch. D. 411 ; Romford Canal Go.,
24 Ch. D. 85.
(«) 4 B. & Ad. 315.
(x) 5 B. & Ad. 866.
(y) 11 C. B. 897.
(;.) 3 C. B. N. S. 725. Compare
this with Athenazum Life Ass. Hoc. v.
Pooley, 3 De G. & J. 294, and 1 Gift".
102.
ACTS INTRA VIRES BUT IRREGULAR. 1G9
templated by the company's deed of settlement. In Tlie Bk. u- CIiii'- -•
Prince of Wales Assurance Society v. The Athenceum Insurance
Society (a), the Court of Queen's Bench held, that a policy of Wl],
insurance issued under the seal of an insurance society and ^."ij^q,',' ',,,','
signed hy three of its directors, was binding' upon the society, Society.
although the issue of the policy had not been authorised by a
previous resolution of directors as required by the company's
deed.
The same principles have frequently been approved and Eaglo Co upany's
acted upon in chancery.. In Ex parte The Eagle Company (b)
a claim was made against the Athenasum Assurance Society in
respect, not of a policy under its seal, but of an agreement to
grant such a policy entered into on behalf of the society by its
directors. The Court allowed the claim. The Vice-Chancellor
Wood, in delivering judgment, approved of the observations
made in The Royal British Bank v. Turquand and of the dis-
tinction there drawn, between that which upon the face of it is
manifestly imperfect when tested by the requirements of the
deed of settlement of the company, and that which contains
nothing to indicate that those requirements have not been
complied with.
" Tims, where the deed requires certain instruments to be made under
the common seal of the company, every person contracting with the com-
pany can see at once whether that requisition is complied with, and he is
hound to do so ; hut where, as in the case I have last referred to, the con-
ditions required hy the deed consist of certain internal arrangements of the
company, for instance, resolutions at meetings and the like, if the party
contracting with the directors finds the acts which they undertake to do, to
be within the scope of their power under the deed, he has a right to assume
that all such conditions have been complied with. In the case last sup-
posed, he is not bound to inquire whether the resolutions have been duly
passed or the like, otherwise he would be bound to go further back and to
inquire whether the meetings have been duly summoned and so ascertain a
variety of other matters into which, if it were necessary to make such
inquiry, it would he impossible for the company to carry on the business
for which it is formed."
('() 3 C. B. N. S. 756, note. See, Australian, cOc, Ass. Co. v. British
too, Prince of Wales Assurance Soc. Provident, dr., Society, 3 Giff. 521,
v. Harding, E. B. & E. 183. varied on appeal, 4 De G. F. & J.
(6) 4 K. & J. 549. See, t< »o, A nglo- 341.
1^0 DOCTRINES OF AGENCY.
Bk. IL^Chap. 2. Again iii Ex parte Overend, Gurney dt Co. (c), a company
— - was held bound by bills accepted by its chairman, although he
Ex parte Over- , . ^ ' °
end, aurcey k had only been authorised to accept them on certain conditions
which had not been complied with. The bill holder in this
case had no notice of the conditions, but even if he had had
such notice it would have been no part of his business to see
that they had been complied with ; he would have been entitled
to assume that they had id).
Further illustrations of the same principle are afforded by the
cases already noticed in which companies have been held bound
by the acts of agents irregularly appointed (e).
Peirce v. Jersey In connection with these cases it is necessary to allude to a
i V ti t c r \v o rk s
Company. decision apparently in direct conflict with them, viz., Peirce v.
Jersey Waterworks Company (/). In this case a company was
formed and registered under the Companies' act, 1862, with
articles which provided in substance that when 3,000 shares
had been allotted the members should be associated for the
objects of the company and be all bound by its regulations, as
if all the shares had been allotted. Before 3,000 shares were
allotted the directors appointed the plaintiff to be the engineer
of the company ; and he sued the company for his salary, and
although he had no notice that the 3,000 shares had not been
allotted, he was held not entitled to recover. The Court con-
sidered that until 3,000 shares had been allotted no such com-
pany existed as the plaintiff could contract with. But the
company unquestionably did exist as a corporate body (g) ; and
although the allotment of 3,000 shares may have been a con-
dition precedent to the commencement of the directors' power
to bind the company, the cases already alluded to go far to
show that the plaintiff was entitled to assume that the condi-
tion had been performed. There is, however, a difference
between assuming that an agency has commenced and assuming
that persons whose agency has commenced are pursuing their
authority, and this difference is perhaps sufficient to render the
decision in question consistent with those alluded to above (h).
(c)4Ch. 460. (g) Ante, p. 111.
(d) See per L. J. Giffard, ib. 474. (h) See the end of Mr. Baron
(e) Ante, pp. 158, 160. Bramwell's judgment.
(/) L. E. 5 Ex. 209.
Aris INTRA VIRES BUT tRREGW LR. 171
The principles established by the foregoing cases apply, not 1;1 • " ''li:ii'- -•
only as between companies on the one hand and strangers on
[iTegularil
the other, but also between companies and their members; ami .,. :ili
it has been held over and over again, as will be seen hereafter, St"^!^-
that as between one shareholder and the others the validity of
the acts of their directors depends in any particular case much
more on the power of the directors to do the acts in question,
than on the regularity or irregularity of the manner in which
those acts may have been done (?').
A person who knows or is to be treated as knowing that i:,i !
of impropriety.
directors or agents are acting irregularly and improperly cannot
hold the company bound by their acts (k) ; and instruments
signed by directors on behalf of a company, in a name which
is not that of the company, are improper on the face of them,
and do not bind the company (/).
In connection with the subject of notice, it must not be for- Ti
„ „ _ _ . seem itii a i
gotten that transferees of bonds and other ordinary choses in perlj issued.
action of that kind, not being negotiable instruments, are prima
facie in no better position than their transferors (m). But a
company may be estopped from denying as against a transferee
of a security what it might have denied as against the trans-
feror. For example, in Webb v. Commissioners of Heme Webb v. Com-
Bay (n), a corporation was empowered by statute to issue j'^','
debentures but not to members of its governing body. Deben-
tures however were issued to one of such members, and were
assigned to a bund fide holder for value without notice of the
impropriety in the issue, and it was held that the corporate
body was bound by the debentures, and was estopped from
denying their validity as against the plaintiff'.
Again in the case of the Romford Canal Co. (o), some deben- Romford Canal
, . . . „ Company.
tureswere issued to a contractor without the sanction 01 a meet-
(i) See in book iv. under the head (m) Athenaeum Life Ass. Soc. v.
Contributories. rooky, 1 Giff. 102, and 3 De G. &
(k) See Chapleo v. Brunswick J. 294 ; and other cases noticed
Building Society, 6 Q. B. D. G96 ; infra, p. 180.
Balfour v. Ernest, 5 C. B. N. S. 601 ; (n) L. R. 5 Q. B. 642.
Zulueta's claim, 5 Ch. 444 ; Irvine v. (o) Careufs claim, 24 Ch. D. 85.
Union Bank of Australia, 2 App. Ca. See, also, Ex parte The City Bank, 3
366. Ch. 758 ; Ex parte Colborne and
(I) Hambro' v. Hull, dr., Ins. Co.. Strawbridge, 11 Eq. 478.
3 II. & N. 789.
172 DOCTRINES OF AGEXCY.
Ek. II. Chap. 2. jng at which an insufficient number of shareholders was present
Sect. 3. ° x .
and he knew this. A bond fide transferee for value without
notice of the irregularity was nevertheless held entitled to pay-
ment by the company.
Formalities The observations made above respecting the validity of con-
required by ... .
law. tracts, &c, entered into by directors in contravention of a
company's regulations, have no application to cases in which
contracts are required by law to be in a particular form, and
that form is not observed. The formalities which must be
complied with in order to render contracts binding upon com-
panies will be noticed hereafter ( jj), and it will then be seen
that whether these formalities are required by statute or by the
common law, contracts not in the form prescribed are altogether
invalid, unless they can be upheld on the equitable principles
relating to part performance.
SECTION III.— IMPERATIVE AND DIRECTORY CLAUSES IN COMPANIES'
STATUTES AND REGULATIONS.
A statute may require an act to be done in a particular way
and yet not render the act null and void if not done in the way
prescribed. "Whether invalidity of what is done is a conse-
quence of a departure from the terms of the act or not depends
on its true interpretation, and this again depends on the word-
ing of the statute and on the object sought to be attained by
it. Statutes are said to be imperative when they render null
and void what is done contrary to their provisions ; and to be
directory when the consequence of disregarding them is not
the nullity of what is done but something different. The
following cases illustrate the distinction in question : —
Examples of di- By the 4 Geo. 4, c. 76, § 16, it was enacted that the father, if living, of
rectory statutes, an^ party under twenty-one years of age, should have authority to give
k^ consent to the marriage of such party, and if the father was dead, then that
other persons mentioned in the act should have such authority ; and the act
then went on thus : " And such consent is hereby required for the marriage
( p) Infra, c. 4.
IMPERATIVE A\'I> DIRECTORY CLAUSES. 173
of such party bo underage, unless there shall be no person authorised to Bk. n. Chap. 2.
give such consent." A person who was under twenty-one, and whose lather ' °'
was living, married without hi • con ent. It was held that the marriage was
nevertheless valid ; for the legislature evidentlydid not intend to bastardise
the issue of ma mnised without the consent required (q). Again, Pay™
it has been held thai a covenant by a municipal corporation to repay money Brecon.
borrowed, is valid, although the monej i- uot borrowed for any purpo •
which the borough fund is made applicable by the Municipal corporation
act, and although the deed containing the covenant has nol been approved
by the Lords of the Treasury as required by the same act (/•). So it was i,,. Feuvre v.
held, that a rale made under the Public health act of 1848 was valid, Miller.
although that statute requires all rates made or collected under it, to be
published in the same manner as poor-rates, and the rate in question had
not been published in the manner required (••>•).
Ill each of these cases, the statute in question was said to be
directory only ; and to each of them the maxim Fieri non
debuit sed factum valet, was held applicable. In each case
something was to be done in a particular manner; but what-
ever may have been the consequences of doing it in some
other manner, the invalidity of what was done was not one of
those consequences ; and this appears to be the test whereby
to decide whether a law is directory or imperative as those
terms are customarihy employed (0-
Statutes which are directory only are common enough, but
it is not easy to recognise them with certainty before they have
been judicially interpreted. There is, however, a natural ten-
tency on the part of Courts of justice to uphold au honest
transaction although somewhat irregular, if to do so is con-
sistent with the true interpretation of the statute which has to
be construed. The following illustrations of clauses held to
be directory will serve as guides in other cases.
In Foss v. Harbottlc (u), an act of Parliament incorporating Examples of so-
the Victoria Park Company, declared that it should be in the ciauses.
power of a certain number of shareholders, acting in a certain Foss v.
Harbottlc.
(7) R. v. Birmingham, 8 B. & C. Ingall, 2 Q. B. D. 199 ; Hunt v.
29. Hibbs, 5 H. & N. 123 ; Brumfitt v.
(r) Payne v. Brecon, 3 H. & N. Bremner, 9 C. B. N. S. 1 ; R. v.
572. Rochester, 7 E. & B. 910 ; Lancaster,
(s) Le Feuvre v. Miller, 8 E. & B. Ac, Rail. Co. v. Heaton, 8 E. & B.
321. 952 ; Calcine v. Pixell, 2 C. P. D.
(t) For other instances of direc- 562.
tory statutory enactments, see R. v. (u) 2 Ha. 461.
174 DOCTRINES OF AGENCY.
Bk. II. Chap. 2. manner, and observing certain forms, to require the directors
- to convene extraordinary meetings, and in case of their default,
meetings. to convene such meetings themselves. A question having
arisen how far it was necessary to adhere strictly to the letter
of the enactment, in order to give validity to the acts of a
meeting convened under it, the Vice-Chancellor, Sir James
Wigram, expressed a strong opinion that the acts of a meeting
convened in substantial compliance with the statute would be
valid, although all the prescribed forms had not been observed.
He considered the statute to be in this respect directory only.
Quorum of In The Thames Haven and Dock Railway Company v.
directors. . . ...
Rose (x), a private act ot Parliament directed that the business
of a company should be carried on by twelve directors, of
whom five should be a quorum ; and the Court of Common
Pleas was of opinion that the act was in this respect directory
only, and that calls made by five out of seven directors, there
being no more, were valid (y).
Cases where a Again, it has more than once been held, that when a corn-
been informally pany is incorporated by charter, or act of Parliament, which
directs the observance of certain forms before the corporate
seal is annexed to contracts purporting to bind the body cor-
porate, a contract under the corporate seal, and of a kind
authorised by the charter or statute, is binding on the corpo-
ration, although the seal may have been annexed without the
observance of the prescribed formalities (0).
Signatures of g0j in the case of any ordinary joint-stock company, the
deed of settlement of which declared that all cheques on its
bankers Avere to be signed by three directors, and the directors
drew cheques signed by less than three of them, it was held
that this irregularity did not affect the right of the directors
to be allowed as between themselves and the shareholders the
sums drawn out, such sums having been bond fide applied for
the purposes of the company (a).
(x) 4 Man. & Gr. 552. B. 327, and 5 E. & B. 248 ; Agar v.
(*/) Compare Kirk v. Bell, 16 Q. The Athenceum Life Assurance Society
B. 290, and other cases cited ante, 3 C. B. N. S. 725. Compare D'Arcy
pp. 155,156. v. Tamar, &c, Bail. Co., L. R. 2 Ex.
(.-.-) See Fountaine v. Carmarthen 158.
Bail. Co. 5 Ecp 316; The Boyal (a) Ex parte Big nold, 22 Beav. 143.
British Bank v. Turquand, 6 E. & Compare Ex parte Agra and Master-
cheques.
RATIFICATION BY COMPANIES. 175
9
So, clauses relating to the mode of signing minutes of meet- 1;'; lf- Chap.
. Sect. i.
ings, keeping registers, and making returns, so as to render
them admissible in evidence without preliminary proof, are ',„•",,'.
considered as directory only (h).
As regards borrowing money, statutes limiting the amount Borrowing
money.
which may be borrowed are always regarded as imperative,
as will be seen hereafter (c) ; but a statute authorising money
to be borrowed with the consent of a general meeting was, as
to this, held directory only (d).
Sect. 43 of the Companies act, 18G2, which directs limited Non.-regL.try of
securities.
companies to keep registers of all mortgages and charges has
been held to be directory only ; and an unregistered mortgage,
even to a director of the company, is not invalid (c).
On the other hand, a clause in a company's regulations Proxy paper?.
requiring proxy papers to be attested has been held to be im-
perative, and proxy papers not so attested were rejected (/).
These cases are not to be confounded with those in which Cases of estoppel
to be distin-
shareholders and companies have been held estopped from gaished.
taking advantage of the non-observance of formalities. Such
cases do not turn upon whether the clauses prescribing the
formalities are directory or imperative ; but upon the very
different question, whether, supposing them to be imperative,
the invalidity of what has been done informally can be insisted
on by those who have always treated it as valid, and induced
others to do the same.
SECTION IV. --OF RATIFICATION BY COMPANIES.
When a contract has been entered into on behalf of a com- Ratification by
. r. it " i companies.
pany informally, but has been acted upon and is then disputed
by the company, the question naturally arises whether it has
man's Bank, 6 Ch. 206 ; Ex parte (d) Landowners, <ix., Inclosure Co.
Birmingham Bank Co., 3 Ch. 651. v. Ashford, 16 Ch. D. 411.
(6) See ante, p. 57, 102, 110, as to (e) Wright v. Horton, 12 App. Ca.
registers and returns, and infra, book 37 1 .
iii., c. 1, as to minutes of meetings. (/) Harhen v. Phillips, 23 Ch. D.
(r) Infra, c. 3. 14, a dispute between shareholders.
176 DOCTRINES OF AGENCY.
Bk" Sect8?1*' 2' n0t been rat^ed or otherwise adopted by the company and so
become binding on it. In order to answer this question,
regard must be had first of all to the nature of the contract.
If it is one by which the company would not have been bound,
even if all proper formalities had been observed, ratification
by the directors can be of no avail as against the company ;
nor will ratification or adoption by the shareholders be of any
avail against the company, if the contract in question is one
into which the company has no power to enter (g). But if the
contract would have been binding on the company, if all
proper formalities had been observed, or if all the shareholders
had concurred in it, ratification or adoption by or on behalf of
the company is perfectly possible ; and the only question for
determination then is, whether the contract has been effectually
ratified or adopted or not (h).
Acts done before A contract entered into or an act done before a company is
the formation of .
the company. formed cannot be ratified by it m the proper sense of that ex-
pression. Ratification is a technical word and presupposes
the existence — 1, of a principal; 2, of an agent; and 3, of
some act done by the agent for and on behalf of the principal
but without his authority (/). Where there is no principal
there can be no agent and no act done by him for his prin-
cipal, and consequently there can be no ratification — i.e., ap-
proval by him of something previously done for him. A
company therefore cannot, properly speaking, ratify what
its promoters have done before its formation (k). But a com-
pany may after its formation become bound to do what
others have undertaken it shall do when formed. It ma}'
(y) Ashbury Railway Carriage Co. & S. 29, and 1 Hem. & M. 672.
v. Riche, L. E. 7 H. L. 653, noticed (//.) Irvine v. Union Bank of Aus-
ante, p. 164. See, also, Chapleo v. tralia, 2 App. Ca. at p. 374, noticed
Brunswick Building Society, 6 Q. B. infra.
D. 696, at p. 711 ; Blackburn Benefit (i) Wilson v. Tumman, 6 Man. &
Society v. Cunliffe, Brooks & Co., 29 Gr. 236.
Ch. D. 902; Baroness Wenlock v. (/„•) See ace. Browne v. Lai rinidad,
River Dee Co., 36 Ch. D. 675 n. ; 37 Ch. D. 1 ; Northumberland Avenue
Imp. Bank of China, &c. v. Bank of Hotel Co., 33 Ch. D. 16. Compare
Hindustan, 6 Eq. 91 ; Phoenix Life Howard v. Patent Ivory Manufactur-
Ass. Co., 2 J. & H. 441 ; The Era ing Co., noticed infra.
Co.'s case, 2 J. & H. 408 ; 1 De G. J.
RATIFICATION' BY COMPANIES. 177
become so bound by its charter or act of incorporation, or by r>k- IT- c1i:ip- 2-
a valid contract entered into by itself after its formation.
This subject, so far as regards charters and acts of incorpo-
tion, lias been already examined (I), and as regards contracts
made by the company after its formation, the reader is referred
to § 2 of the present chapter, and to Howard v. Patent Ivory Howarj v.
Manufacturing Co. (m), where a company was held bound by J,aten* ,vol':v
J .1 \ n i j j Manufacturing
debentures issued by it pursuant to arrangements made before Co.
it Avas formed. But the new contract must, of course, be
itself intra vires, or it will be worthless.
Acts done by the agents of a company since its formation Acts don- since
the formation of
can be ratified by it, provided they are not ultra vires the the company,
company (n).
Moreover, although a company's articles cannot be altered
for the future without a special resolution duly passed and con-
firmed, an act done by the directors contrary to the articles as
they stand may be ratified by the shareholders without altering
the articles, and without any such special resolution as their
alteration requires (o).
A ratification, to be imputable to a company, must be made
directly by its shareholders or indirectly through their agents
acting within the limits of their real or apparent authority ;
and in order that ratification by the shareholders or their
agents may be proved, it must be shown —
1. That the parties alleged to have ratified the contract
knew what it was ; or, having their attention drawn to it, did
not choose to inquire into it (p).
2. That they have in some way recognised and adopted it.
If these two essential points are established, there will still
remain for consideration the question whether the recognition
(I) Ante, p. 146. (o) Grant v. United Kingdom
(m) 38 Ch. D. 156. See Ex -.parte Switchback Rail. Co., 40 Ch. D.
Watson, 21 Q. B. D. 301, where the 135. See, also, Irvine v. Union
deposit note was given in discharge Bank of Australia, 2 App. Ca. 366.
of a debt not due from the society. Compare Clay v. Rufford, 5 De G. &
(n) Ante, p. 166, et seq. ; V.-C. S. 760.
Bacon in London Financial Ass. v. (p) See La Banque Jacques Cartier
Kelk, 26 Ch. D. 146 & 151, seems v. La Banque, &c, de Montreal, 13
to go even further if the cpiestion'of App. Ca. 111.
ultra vires is doubtful.
L.C. N
178 DOCTRINES OF AGENCY.
Bk. II. Chap. 2. ancj adoption have been in proper form. Each of these matters
Sect. 4.
requires a few observations.
l. As to know- First, as to knowledge. Where the contract is one which it
is competent for the directors to make, it is also one which it
is competent for them to ratify ; and in such a case knowledge
by them is for the purpose in question equivalent to know-
ledge by the company (//). The case of Smith v. Hall Glass
Co. (r) is a leading authority on this head, and has been
followed by others which have been already referred to (s).
Where, however, the contract is one which it is not competent
for the directors to make, ratification by them is of no avail ;
and knowledge on their part of what is being done under the
contract is not equivalent to knowledge on the part of the
company. In such a case as this, ratification on the part of
the shareholders must be proved, in order to establish rati-
fication by the company (t). But even in this case, it will be
inferred as against the shareholders, from comparatively slight
circumstances, that they were cognisant of what it was the
duty of the directors to bring before them (u).
Knowledge by As in ordinary cases of agency a principal may ratify his-
notdways18 agents' acts without inquiring into them, so shareholders who
essential. hnxe their attention fairly drawn to what the directors have
done may ratify their acts without knowing all the circum-
stances attending them. Ratification on the part of all the
shareholders will be inferred if the acts are such as all can
ratify ; if the attention of them all, or of such of them as
choose to attend, has been fairly called to the acts in ques-
tion (x), and if those acts have been permitted to be done or
acted upon for any length of time without being called in
question. Although cases exist which are extremely difficult
(q) Implied knowledge from the case, 2 J. & H. 441.
books of the company, but which (u) See Lane's case, 1 De G. J. &
they never saw, is not enough. See S. 504.
CartmeWs case, 9 Ch. G91. 0) Of course tin's is essential.
(r) 8 C. B. G68, 11 ib. 897. See- Irvine, v. Union Bank of Aus-
(s) See ante,]). 160, and Grady's tralia, 2 App. Ca. 366; Blackburn,
case, 1 De G. J. & -Sin. 488. d-c, Building Society v. Cunliffe,
(t) Athcnceum Life Assur. Soc. v. Brooks & Co., 29 Ch. D. 902, at p.
Pooley, 1 Giff. 102,. and 3 De<i& J, 910; Grant v. United Kingdom
■1\)[. See, also, Evans v. Smallcomle, Switchback Bail. Co., 40 Oh. D. 135.
L. E. 3 H. L. 249: Burgesand Stock's
RATIFICATION BY COMPANIES. 179
to reconcile with this principle (y), the principle itself will be Bk. II. Chap. 2.
found recognised even in those cases which have been decided
not to fall within it (//). Others have been decided in accord-
ance with it (z). A leading case on this subject is The Phos- Phosphate of
phate of Li me Co. v. Green (a), in which it was held in effect : ,.'"!';,,
1. That a purchase of shares by the directors of a company
out of its funds was beyond the powers of the directors.
2. That the money paid for them might have been recovered
by the company but for the subsequent ratification of the trans-
action. 3. That the company ought to be treated as having
ratified the transaction, as it was fairly brought to the atten-
tion of the shareholders (b), and had been allowed to pass un-
questioned for five years, and had been treated as valid in
other arrangements since made by the company.
A ratification of a past irregular act does not of itself Ratification for
. . past n°t equiva-
authorise a repetition of a similar act ; and it ma}' happen that lent to authority
whilst an ordinary meeting of shareholders may suffice to
ratif}r what has been done, a different kind of meeting is re-
quired to confer an authority to do the like in future. This is
well illustrated by Irvine v. rnion Bank of Australia (c), in Irvine v. Union
• -n • s~, ii- Hank of Aus-
wnicn the directors of a Kice Company were empowered by its tralia.
articles of association to borrow money to an extent not
exceeding one half of its paid-up capital. The directors
borrowed more than this from a bank which had notice of the
restriction, and that the articles had not been altered b}' proper
authority (d). The company was held not liable for. the sum
thus borrowed in excess of the directors' powers, although the
shareholders had ratified a similar transaction two years before.
(y) Spachnan v. Evans, L. R. 3 (c) 2 App. Ca. 36G. Gh-ant v.
H. L. 171 ; Houldsworth v. Evans, United Kingdom Sivitchhack Rail.
ib. 263. Co., 40 Ch. D. 135.
(z) Evans v. Smallcombe, L. R. 3 (d) The notice of the restriction
H. L. 249 ; Brotherhood's casz, 31 was given by the articles of associa-
Beav. 365, and 8 Jur. N. S. 926, on tion ; an alteration of them could
appeal ; and the case next cited. only be made by a registered special
(«) L. R. 7 C. P. 43. See, also, resolution. The bank was therefore
London Financial Ass. v. Kelk, 26 treated as having had notice as
Ch. D. 107, and the next case. stated in the text. The report does
(b) Opinions might reasonably not state that the bank had notice
have differed upon this point, as that the limit was in fact exceeded,
the allusion to the transaction in but the writer assumes that it had.
question was somewhat misleading.
N 2
180
DOCTRINES OF AGENCY.
shareholders.
2. Mode of
recognition,
Bk. II. Chap. 2. A ratification by the directors is not a" ratification by the
- company where the ratification relates to an act clone by the
toeltorfin cL directors in fraud of the shareholders, and the person relying
!af„flT!i!!Lthe on sucn ratification was party to the fraud (e). Therefore, if
directors of a company fraudulently issue debentures under the
seal of the company to a person privy to the fraud, and the
issue of such debentures is entered in the company's books,
and interest upon the debentures is regularly paid, but the
shareholders are kept in ignorance of the entry and payments,
the company is no more bound by ratification than by the
original issue of the debentures. And inasmuch as a deben-
ture is ti chose in action, and onby confers upon its assignee
the title of its assignor, even a bond fide purchaser for value,
without notice of any fraud, is in no better position against the
company than the original payee; and the purchaser's position
against the company is not improved by the recognition of his
title by its directors (/). But, as before observed, a company
may be estopped from denying as against a transferee the
validity of an instrument it might impeach if in the hands of
his transferor (g).
Secondly, with respect to the mode of recognition and adop-
tion. Assuming a contract to be one which the directors of a
company have power to enter into, and that it has been entered
(e) So an entry in the books of a
bank, by its manager, making it
appear that a debt due from him is
due from the bank, does not bind
the bank, La Banque Jacques Carticr
v. La Banque, &c, de Montreal, 13
App. Ca. 111.
(/) Athcna'um Life Ass. Soc. v.
Pooley, 1 GifF. 102, and 3 De G. &
J. 294. This case was followed in
JFood's claim and Brown's claim, 9
W. E. 366, and 10 ib. 662. See, too,
Burges and Stock's case, 2 J. & II.
441. Compare JVoodhams v. Anglo-
Australian Co., 3 Giff. 238 ; The
Magdalena Steam Nav. Co., Johns.
690 ; Hulett's case, 2 J. & H. 306,
where the shareholders were not
kept in ignorance of what had been
done. The Athenaum Life Ass.
Society v. Pooley appears at first
sight to be opposed to Agar v.
Athenceum Life Ass. Society, 3 C.
B. N. S. 725 ; for in the latter case
judgment Avas recovered in an action
at law upon one of a set of deben-
ture?, whilst in the former case
others of the same set were held
invalid. In the action at law,
however, the only plea was non est
factum, and no question of fraud,
even if there was any in that case,
was raised. But in the suit in
ecpuity the dehenture was impeached
for fraud, and was set aside on that
ground.
(g) Ante, p. 171.
RATE [C VI [ON BY COMPAND -. 181
into irregularly, and has been acted upon with their knowledge, r'k- n- C1>ap. 2.
then, upon the principles already explain* d, the company ought - — -
to be deemed to have ratified the contracl in question, and to
be bound by it, unless some particular form of ratification is
required by law, and that form has not hern observed. It has
been already seen that the non-observance of particular for-
malities prescribed by companies' deeds of settlement and
regulations is immaterial as regards persons dealing bond fide
with the directors without notice of the non-observance of the
forms; and several instances have been already referred to in
which informal contracts have been held binding on companies
on the ground that the}- have been acted on with the knowledge
of the directors (/<). A greater difficulty, however, arises where
the formalities in question are required to be observed by law
as distinguished from agreement between the parties. If in-
formal ratifications of contracts informally entered into were
in such cases held valid, the law requiring the observance
of the formalities would be practically repealed. Upon this
ground it is that the old rule of the common law that a body
corporate can only be bound by instruments under its common
seal has been so rigidly adhered to, even where the corporation
has had the benefit of the contract (i). But even here, as will
be seen hereafter, the equitable doctrines of part performance
may come into operation and render the contract binding.
(h) Ante, pp. 166-172. (i) Infra, c. 4.
182 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
CHAPTER III.
OF THE LIABILITIES OF COMPANIES FOR THE ACTS OF THEIR
AGENTS IN PARTICULAR CASES.
Bk. II. Chap. 3. Recapitulating the results arrived at in the foregoing
Recapitulation, pages, it may be taken as settled that, —
1. Companies can only be bound by the acts of their real or
ostensible agents.
2. The agents of a company cannot bind it by any act which
the company as a body has no power to do.
3. The agents of a company can bind it by all acts which
can be shown to be within the limits of the authority really
conferred upon them :
4. And also by acts, which, although not themselves autho-
rised, belong to a class which is ; and which acts, therefore,
may be authorised for anything that can be learned to the
contrary by an examination of the authority conferred.
5. As regards acts of this last description, the neglect of
directors to observe the provisions of their company's deed of
settlement or regulations is a matter which does not concern a
person dealing with them bond fide without notice of the non-
observance of those provisions.
6. The above rules apply as well to ratifications of contracts
previously entered into as to other matters.
7. But a company cannot ratify acts done before it came
into existence ; although it may bind itself by a new contract,
or be bound by its act of incorporation, to perform them.
8. Where particular formalities are required to be observed
by law in order that a contract may be binding, an informal
ratification of an informal contract is of no avail, except in the
limited class of cases to which the equitable doctrines of part
performance are applicable.
CASE NOT [NVOLVING ANT TORT OB l RA1 D.
!). Bui as regards matters which are nol beyond the powi • ■'■■ Chap. 3.
of all the shareholders, they or the company will be held to ^— -
have ratified what they might have disputed, provided th
attention has been fairly called to it, and they have uol cho
to question it.
It is necessarj next to illustrate the application of th
general principles to particular cases.
SECTION I — CASES NOT INVOLVING AXY TORT OK FEAUD.
Admissions. — Admissions made by the servants and officers Admissions,
of a company in the course of their business and relating to
matters which it is their duty to transact are admissible in
evidence against the company (a). But not other admissions.
In The Devala Provident Gobi Mining Company's cas .,, &c.,
speech by the chairman of a meeting to the shareholders of ?
* C8
a company admitting that the prospectus was false, was held
inadmissible against the company in a proceeding to set aside
an allotment of shares applied for on the faith of the pro-
spectus. So an admission by a liquidator was held insufficient
proof of facts relied on for the purpose of setting aside an
amalgamation (c).
See further, infra, Representations.
Amalgamation. — Directors of companies have no power to Amalgamation
amalgamate their respective companies unless such power is °f comparues-
expressly or impliedly conferred upon them.
General powers of management do not include a power to
purchase the business of another company (d), or to sell the
business of one's own company (e). Whether such a power
(a) See Bell v. L. & N. W. Rail. 401. See, too, Gilbert v. Cooper, 10
Co., 15 Beav. 448 ; Meux's Exors. Jur. 580 ; Beman v. Bufford, 1 Sim.
case, 2 De G. M. & G. 522 ; and K S. 550 ; Clay v. Bufford, 5 De G.
Barnett, Hoares &• Co. v. South Lon- & Sm. 768 ; and see the next two
don Tramways Co., 18 Q. B. D. 815. notes.
(b) 22 Ch. D. 593. (e) See Ex parte The Liquidators
(c) Empire Corporation, 17 W. R. of the British Nation, dx., Association,
43L 8 Ch. D. 679.
(d) Ernest -v. Nicholls, 0 H. L.' C.
184 LIABILITY OF COMPANIES FOR ACTS OF THEIR. AGENTS.
Bk. II. Chap. 3. can oe conferred on directors by a meeting of shareholders has
Sect. 1. J &
been much discussed, and is scarcely yet settled. Such a
purchase generally involves the assumption by the purchasing
company of the debts and liabilities of the selling company,
and it is difficult to hold that a transaction of this kind is one
as to which a majority ought to be able to bind a minority (/).
The amalgamation of^isurance companies is now governed
by 33 & 34 Vict. c. 61, and 34 & 35 Vict. c. 58, as amended
by 35 & 36 Vict. c. 41.
See further infra Sales, and Book IV. c. 2, § 4.
Arbitration by Arbitration. — The question whether the directors of a com-
compaaies. .
pany can bind it by agreeing to refer a dispute to arbitration
has not been decided. But the power to bring and defend
actions involves a power to compromise them.
See infra, Compromise.
By the Railway companies arbitration act, 1859 (g), railway
companies are empowered to refer to arbitration any matters
in which they are mutually interested, and which they might
lawfully settle by agreement amongst themselves ; and by the
Companies act, 1862 (h), companies governed by that act are
also empowered to refer disputes with other companies or
persons to arbitration, in accordance with the Railway com-
panies arbitration act, 1859.
Where a company has entered into an agreement which is
ultra vires, any agreement to refer disputes arising out of it to
arbitration is equally ultra vires (i).
(/) Compare upon this subject not enable directors to force their
the judgments in the cases of the own shareholders to take shares in
Era Assurance Soc, 2 J. & H. 400 ; another company. Higg's case, 2
and of the Saxon Life Assurance Hem. & M. 657 ; Ex parte Bagshaw,
Soc, ib. 408, and 1 De G. J. & Sm. 4 Eq. 341, and see, as to the con-
29, and 1 Hem. & M. 672. See, struction of such powers, Stace and
also, Reams v. Leaf, and Aldebert v. Worth's case, 4 Ch. 682; Bank of
Kearns, 1 Hem. & M. 681. In Ex Hindustan v. Alison, L. R. 6 C. P.
parte Bagshaw, 4 Eq. 341 ; Anglo- 54, and 222.
Australian Assurance Co. v. British (g) 22 & 23 Vict. c. 59. See L. C.
Prov. Life, &c, Soc, 3 Giff. 521, and & D. Bail. Co. v. S. E. Rail, Co.,
4 De G. F. & J. 341, the power to 40 Ch. D. 100, as to jurisdiction of
purchase was conferred by the deed the Court,
of settlement, and see Argus Life (h) §§72 and 73.
Ass. Co., 39 Ch. D. 571. But even an (i) Maunsell v. Midland Greed
express power to amalgamate does Western Bail. Co., 1 Hem. & M. 130.
NOT INVOLVING ANY TORT OB l-'l
185
Bills of exchanqe and promissory notes. — Whether directors, bl II. ciiap. 3.
J J 2 . . Ll.
secretaries, or managers of companies have implied power to
ljill
bind the companies to which they belong by bills 01 excnari
and promissory notes, depends partly on the statutes relating
to the privileg< 5 of the Dank of England (k). But where these
statutes do not apply the power depends on the nature of the
company. If its business is such thai i: cannot be carried on
in the ordinary way without the use of bills, &c, its direel
have power to draw, accept, and indorse them in the name and
on behalf of the company (/), in the ordinary course of the
company's business (m). But if its business is not of this
description, there is prima facie no such power (n). This has
been decided in the cases of a salvage company (<>), a mining
company (}>), a gas company (q), a washing company (r), a salt
and alkali company (s), a waterworks company (t), a cemetery
company (u), a railway company (•'')•
"Where the directors of a company have power to bind it
by bills and notes, a bill or note issued by them improperly but
in the name of the company, is binding on it in favour of any
b nil} fide holder for value without notice of the impropriety (y).
(k) As to which see ante, p. 136,
note (/).
(I) See per Parke, B., and Rolfe,
B., in Mayor of Lvdlow v. Charl
6 M. & W. 821, and per Best, J., in
Broughton v. Manchester and Salford
Wai rworks Co., 3 B. & A. 1. See,
also, Murray v. East India Co., 5
ih. 204 ; Peruvian Bail. Co. v.
Thames, dr., Ins. Co., 2 Ch. 617 ;
Ex parte City Bank, 3 Ch. 758.
(m) Simpson's Claim, 36 Ch. D.
532.
(n) The Bills of Exchange act,
1882, does not extend the power.
See § 22 (1).
(o) Thompson v. Universal Salvage
Co., 1 Ex. 694.
(£>) Dickinson v. Valpy, 10 B. &
C. 128 ; Brown v. Byers, 16 M. &
W. 252.
(q) Bramah v. Roberts, 3 Bing.
N. C. 963.
(r) Neale v. Turton, 4 Bing. 149.
(s) Buli \. Mo ll, L2A.&E.745;
see the judgment of ( loleridge, J.
(t) Broughton v. Ma hosier, dr.,
W< i . :; B. & A. 1.
(m) Steele v. Earmer, 14 M. & W.
831, reversed, hut not on this point,
4 Ex. 1.
(.'•) Bateman v. Mid-Wales Rail.
Co., L. E. 1 C. P. 499. Compare
Peruvian Rail. Co. v. Thames, &c,
Ins. Co., 2 Ch. 617, where the
power was held to be conferred
by the general words of the articles
of association.
(y) Ex parte Overend, Gurncy, &
Co., 4 Ch. 460 ; Gordon v. Sea Fire
and Life Assurance Co., 1 H. & X.
599 ; Thompson v. The Wesleyan
Newspaper Association, 8 C. B. 849 ;
Alhii v. Sea Fire and Life Assurance
Co., 9 C. B. 574 ; Forbes v. Marshall,
11 Ex. 166 ; Maclae v. Sutherland, 3
186
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3.
Sect. 1.
Bill in Parlia-
ment.
Bonds.
Borrowing
money.
Before leaving the subject of negotiable instruments it may-
be observed that it is often difficult to say whether they purport
to be the paper of a company or only that of some one or
more of the directors. Unless the paper purports to be the
paper of a company no one whose name is not on the paper is
liable to be sued on it (z). This subject will be adverted to
hereafter (a).
Bill in Parliament. — It will be seen hereafter that it is
not competent for the directors of a company to employ
its funds in endeavouring to obtain an act of Parliament
authorising it to engage in businesses for which it was not
formed (b). And a contract by one railway company with
another, to the effect that the first shall take a lease of the
line of the second and pa}- the expenses of an application to
Parliament for an act extending and improving such line
has been held illegal and void (c). But in a more recent
case, it has been held that a railway company is liable to
pay for surveys, plans, &c, made by order of its directors
for the purpose of an application to Parliament for an exten-
sion of powers (d).
Bonds, see infra, Borrowing money, Debentures, Mortgages.
Borrowing money. — One of the most important questions
respecting the powers of directors, and one which is constantly
E. & B. 1. See, also, the judgment
of Holroyd, J., in 3 B. & A. 10,
and compare Stark v. Highgate
Archway Co., 5 Taunt. 792. In
Aggs v. Nicholson, 1 H. & N. 165 ;
and Lindus v. Melrose, 2 ib. 293,
and 3 ib. 177, the point decided was,
that the defendants were not per-
sonally liahle on the notes there in
question. These cases by no means
decided that the companies would
have been liable without proof of
authority in their directors to issue
notes on their behalf. The mar-
ginal notes of the reporters go too
far, and are apt to mislead. In
Halford v. Cameron's Goalbrooke, dbc.,
Co., 16 Q. B. 442, and Edwards v.
Cameron's Goalbrooke, &c, Co., 6 Ex.
269, the action Avas against the
company, but the authority of the
directors to bind it by bills was not
in issue.
(z) Bills of Exchange act, 1882,
§23.
(a) Infra, c. 4, § 3.
(h) Infra, Bk. HI, c, 2, § 2: c . / / 3 . f,
(c) Eastern Anglian Rail. Co. v.
Eastern Counties Bail. Co., 11 C. B.
775. See, also, McGregor \. Dover
and Deal Rail. Co., 18 Q. B. 618 ;
Maiin sell v. Midland Great Western
Rail. Co., 1 Hem. & M. 130; Taylor
v. Chichester and Midhurst Bail. Co.,
L. Pt. 2 Ex. 356, and 4 H. L. 628.
(cl) Bat', man v. Mayor of Ashton-
under-Lyne, 3 H. & N. 323 ; Bram-
well, B., dissented.
CAS] 3 ■■•! INVOLVING ANY TORT OB FRAUD. 187
arising in practice, is whether they can borrow money for their l;k- JJ- Ch*P- '■'>■
company and render their company liable to repay it.
Whenever this question arises, the first point to determine is ] ;, growing ultra
whether the company is one which cannot lawfully borrow
money at all, for if all borrowing is ultra vires, it follows that
it cannot be liable as debtor (e) to repay what its directors
may have assumed to borrow for it (/).
Supposing that all borrowing is not ultra vires, the next
point to determine is whether there is any statutory or other
limit to the amount which may be borrowed; and whether this
amount has been already raised so as to render an}" further
exercise of the power to borrow, not only irregular and improper
as an excess of authorhy, but wholly ultra vires. If this be
the case, it will again follow that, to the extent to which the
borrowing powers have been exceeded, the company will not be
liable to repay what may in fact have been borrowed in its name
and on its credit (g).
Supposing, thirdly, that borrowing is not ultra vires as re- Borrowing
gards the company, its liability for money borrowed in its name
will depend upon whether the directors had authority, express
or implied, to borrow money for the company ; for if not, the
company will not be liable to repay what its directors may in
fact have borrowed for it, unless the company has ratified the
borrowing (Ji).
Supposing, lastly, that borrowing is intra vires so far as the
company is concerned, and thatthe directors have implied though
no express authority to borrow, and they do borrow money for and
on behalf of the company, then the company will be liable to
repay it, unless there has been some excess of real authority
known to the lender (/).
Cases in which the directors of a company have power
to borrow, and do borrow for and in the name of the
(c) As to liability arising from and 9 App. Ca. 857 ; Baroness Wen-
the application of the money, see lock v. River Dee Co., 36 Ch. D.
infra, c. 5. 675, note, and 10 App. Ca. 354 ; and
(/) Montreal Assurance Co. v. see further on other points, 38 Ch.
McGillivray, 13 Moo. P. C. 87, and D. 534, aft'. 36 ib. 674, and 19 Q. B.
the cases in the next note. D. 155.
(y) Blackburn Building Soc. v. (h) See ante, 166, &c, 175, &c.
Cunliffe, Brooks <b Co., 22 Ch. D. 61, (i) See ibid.
188
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Application of
the money.
Bk. II. Cbap. 3. company, give rise to no difficulty, and need not be further
— — alluded to.
Again cases in which the directors of a company borrow as
principals, and not for or in the name of the company, give
rise to no difficulty, for ex hypothcsi the money borrowed has
not been lent to or borrowed by the company.
"When money is so borrowed for a company as to render the
company liable to repay it as a debt of its own, it is quite
immaterial to the lender what has been done with the money ;
the application of the money in the case supposed is no concern
of his, and in no way affects his rights. But if money is so
borrowed for a company as not to render the company liable
to repay it as a debt of its own, still the lender may not be
wholly without remedy against the company. The application of
the money then becomes important, and may render the compan}r
liable to repay him in whole or in part, as will be more fully
explained hereafter {infra, Book II. c. 5).
Having made these general observations, it is proposed to
notice the leading decisions on the subject.
Whether all borrowing is ultra vires, whether only borrowing
beyond a certain amount is ultra vires, whether there is any
and what authority on the part of directors or others to borrow
(assuming no question of ultra vires to arise), are all questions
which depend on the nature of a company's business, and upon
the terms of its charter, act of Parliament, deed of settlement,
or regulations.
It is very seldom that the nature of a company is such as to
render all borrowing under all circumstances ultra vires, so
that even all its members cannot sanction a loan to it for any
purpose.
But there are numberless companies which have by statute
or charter power to borrow to a limited extent (A;), and there
are numerous cases establishing that loans to such companies
beyond the authorised amount are invalid. The two most
Limited
power to
borrow.
(A-) E.g., railway, canal, and other
companies which obtain special acts
and limited borrowing powers. See,
as to them, S & 9 Vict. c. 16, §§ 38,
et seq.; 16 & 27 Vict, c, 118, §§ 22-
35 ; 29 & 30 Vict. c. 108 ; 32 & 33
Vict. c. 48, § 1 ; and 38 & 39 Vict.
c. 66. As to loan notes, &c, im
properly issued, see 7 & 8 Vict. c.
85, § 19.
CASES NOT INVOLVING ANY TORT OR FRAUD. 189
recent and instructive decisions on this point are Baroness Bk. IJ. Chap. 3.
Sect. 1.
Wenlock v. River Dee Co., and The Blackburn Building Society
v. ('mil [ifc, Brooks <('• < '<>.
In the Baroness Wenlock v. The River Dee Co. (1), & com- Baroness Wen-
panywaa formed to improve the river Dee and lands adjoining, DeeCompanv
and was empowered to borrow 25,000/. on mortgage. The
directors borrowed 85,000/., which was applied in paying off a
previous mortgage of 60,000/. In an action to recover the
85,000/. and interest, it was held that the plaintiff was only
entitled to recover 25,000/., and so much more as had been
applied in payment of debts and liabilities of the company
properly incurred (/»)•
The borrowing powers of benefit building societies are Building
strictly defined by statute (n). Such societies are empowered
to borrow money up to a certain limit if their certified rules
enable them so to do (o). But apart from the acts and the
rules there is no power to borrow (j>). Consequently if money
is borrowed by the managers of the society for it, the society
itself is not liable to repay the amount (q), although the
managers are personally liable to repay it by virtue of an
express enactment to that effect (r). So stringent is the law
limiting the borrowing powers of these societies, that if money
is borrowed beyond the authorised amount, and the amount so
(/) 10 App. Ca. 354, and 30 Ch. money for shares hi advance, Guar-
D. 675, note, and 19 Q. B. D. diem, &c, Building Soc, 23 Ch. D.
155. See also, Landowners, (fee, In- p. 453.
closure Co. v. Ashford, 10 Ch. D. Q<) See, in addition to the cases
411. cited below, Kent Benefit Build. Soc,
(to) See as to this, infra, c. 5. 1 Dr. & Sm. 417 ; Ex parte IVilliam-
(n) 37 & 38 Vict. c. 42, §§ 15, 16 ; son, 5 Ch. 309.
38 Vict. c. 39. (q) Ghapleo v. Brunswick Build.
(o) The rules need not themselves Soc, 6 Q. B. D. 696 ; Blackburn
limit the amount : Murray v. Scott, Build. Soc. v. Cunliffe, Brooks d; Co.,
9 App. Ca. 519, and 23 Ch. D. 440, cited below. See also, Ex parte
sub nom., Guardian Permanent Watson,21 Q. B. D. 301, where the
Build. Soc; Mutual Aid Build. Soc, society acquired borrowing powers
29 Ch. D. 182, and 30 ib. 434 ; and then gave a note for money
Laing v. Reed, 5 Ch. 4. These previously borrowed,
authorities overrule Hill's case, 9 Eq. (r) 37 & 38 Vict. c. 42, § 43 ;
605, and Davis' case, 12 Eq. 516. Ghapleo v. Brunswick Build. Soc, ubi
See as to the difference between supra ; Looker v. Wrigley, 9 Q. B.
borrowing money and receiving D. 397.
190
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3,
Sect. 1.
Blackburn
Building Society
v. Cunlitfe,
Brooks & Co.
Ex parte
Watson.
Implied
power to
borrow.
borrowed is actually repaid out of the funds of the society, such an
application of the funds is ultra vires, and the amount so repaid
can be recovered hack by the society from the lender of the money.
This was decided in The Blackburn, &c, Building Society v.
Cunlife, Brooks & Co. (s). It had been previously decided
that the bankers could not recover the amount of the society's
overdraft nor hold securities given for it except to the extent
to which the moneys advanced had been properly applied in
discharging liabilities of the company (.ss).
It has also been decided that where money was borrowed for
a building society which had no power to borrow, a note given
by it for repayment of the money was invalid, although the
society had acquired power to borrow before it gave the note (/).
There was in this case no compromise and no consideration for
the note to render it intra vires. The note was clearly not
given for money borrowed when there was power to borrow ;
there was no fresh borrowing.
Passing now to cases unaffected by the doctrines of ultra
vires, the directors of ordinary trading companies, whose regu-
lations are silent on the subject of borrowing, have an implied
power to borrow for the purposes of the business of the com-
pany (w), but the directors of other companies have, it is con-
ceived, no such implied power (a?).
A power to borrow is so necessary to a banking company that
its directors can scarcely be deprived of it ; and there are several
cases in the books in which their power was held to have been
exercised so as to bind the company (y). Moreover, although the
directors of a company may have no power to borrow, power so
to do may be conferred upon them by the shareholders ; for
this is a matter as to which a majority can bind a minority (z),
(s) 29 Cli. D. 902.
(ss) Gunliffe, Brooks cfJ Go. v. Black-
burn Build. Soc, 9 App. Ca. 857,
and 22 Ch. D. 61.
(t) Ex parteWatson,21 Q.B.D. 301.
(«) Ex parte Pitman d> Edwards,
12 Ch. D. 707, and the next four
notes.
(x) See the judgment of L. J.
Bowen in 36 Ch. D. 685, note.
(y) Bank of Australasia v. Breil-
lat, 6 Moore, P. C. 152, and 12 Jur.
189 ; Maclae v. Sutherland, 3 E. &
B. 1 ; Royal Brit. Bank v. Turquand,
5 ib. 248, and 6 ib. 327 ; Galloway's
case, 18 Jur. 885.
(a) Bryon v. Metropolitan Saloon
Omnibus Co., 3 De G. & J. 123. As
to unincorporated building societies,
see 29 Ch. D. 902.
CASKS NOT INVOLVING ANY TORT OB FRAUD. 101
unless borrowing is ultravires as regards the company itself." Bk« H- Ch.aP- 3-
°# . Sect. 1.
Further, if the directors have already power to do whatever the —
company itself can do, this includes a power to borrow (a),
if to borrow is intra vires. Moreover, a special power given to
the directors to borrow to a certain extent does not preclude
the company from borrowing to a greater extent with the
sanction of the shareholders (6).
Borrowing imports the creation of the relation of debtor and What is bor-
rowing,
creditor, and whenever money is obtained upon terms which
produce this relation, there is in substance a borrowing; e.g.,
overdrawing a banking account is borrowing (c). But mort-
gages and charges may be created on property, and the remedy
of the lender may be confined to realising his security ; whether
such securities are valid as against any particular companj',
must be decided upon the principles already explained. But
where directors have no power to borrow, they have no power
to raise money on such securities, unless such power can be
shown to exist (d). It is not, however, every transaction by
which money is obtained that can be considered borrowing,
even although the transaction involves the payment of money
by the person who obtains the money, to the person from whom
it is procured ; the transaction ma}' be a sale and rehiring, and
such a transaction, if bona fide and not a borrowing in disguise,
will be valid, although there may be no power to borrow {del).
Further, giving a note for an existing debt not due from the
company, is not a borrowing by the company (<?).
Connected with the subject of borrowing money, is increasing Increasing
capital. The difference between them is illustrated by Bryon „ pi ' ,r ±
->< f Bryon v. Metro -
v. Metropolitan Saloon Omnibus Company (f). In that case poiitan Saloon
the capital of a limited joint-stock company had been expended, pany.
(a) Australian Steam Clipper Co. and Cefn Cilcen Mining Co., 7 Eq.
v. Mounsey, 4 K. & J. 733 ; Gibbs 88, contra, are overruled by the
and West's case, 10 Eq. 312. above.
(b) Irvine v. Union Bank of (d) See Baroness Wenlock v. River
Australia, 2 App. Ca. at p. 374. Dee Co., ubi supra.
(c) Blackburn Building Soc. v. (dd) Yorkshire Bail. Waggon Co.
Cunliffe, Brooks & Co., 9 App. Ca. v. Maclure, 19 Ch. D. 478, and 21
837, and 22 Ch. D. 61 ; Landowners' ib., 309.
<fec, Inclosure Co. v. Ashford, 16 Ch. (e) Ex parte Watson, 21 Q. B. D.
D. 437 ; Looker v. Wrigley, 9 Q. B. D. 301.
397. Waterlow v. Sharp, 8 Eq. 501, (/) 3 De G. & J. 123.
192
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. an(J a majority of shareholders proposed to borrow money on
Sect. 1. . ....
— the credit of the company. A dissentient minority sought to
restrain the majorit}r from so doing, and reliance was placed on
the doctrine that the capital of the company could not be
increased by borrowing money without the consent of all the
shareholders. But it was held competent for the majorit}7 to
borrow money on the credit of the company, and that the
doctrine relied on had no application to the case ; the capital
of the company being one thing, and that which was sought to
be increased b}' borrowing (viz., the cash in hand) being a
different thing.
The difference between borrowing money and procuring
goods or services on credit is not only obvious (<j), but is practi-
cally important, as is shown by the cases in. which members of
cost-book mining companies have been held liable for goods
supplied to the mine (//), but not for money borrowed (i).
An authority to borrow does not warrant the issue of deben-
tures except to secure money lent or to discharge a liability (k) ;
nor does an authority to borrow on the security of the funds
and property of a company justify a mortgage of its uncalled-
up capital (/) ; but future debts may be charged by way of
security (m). Where directors have power to borrow on mort-
gage but not on bills of exchange, a mortgage to secure money
borrowed and for which bills have been given, is not invalid («).
Obtaining goods ]
on credit.
Exercise of
power to borr
(g) Partn. 133.
(h) Tredwen v. Bourne, 6 M. &
W. 461 ; Haicken v. Bourne, 8 ib.
703.
(i) Haidayne v. Bourne, 7 M. &
TV. 595 ; Burmester v. Norris, 6 Ex.
796; Bicketts v. Bennett, 4 C. B.
686 ; Brown v. Byers, 16 M. & W.
252 ; Beldonv. Campbell, 6 Ex. 886.
(It) Inns of Court Hotel Co., 6 Eq,
82 ; West Cornwall Bail. Co. v.
Mowatt, 12 Jur. 407.
(/) English Channel Steam Co. v.
Bolt, 17 Ch. D. 715 ; Ex parte Brad-
sluiw, 15 Ch. D. 467 ; Stanley's case,
4 De G. J. & Sm. 407 ; Bank of S.
Australia v. Abrahams, L. E. 6 P. C.
265 ; and see King v. Marshall, 33
Beav. 565. Calls actually made,
Gibbs and West's case, 10 Eq. 312;
Sanlcey Brook Coal Co., No. 2, ib.
381, and calls actually determined
to be made, although not actually
made, Sankey Brook Coed Co., No.
1, 9 Eq. 721, may be mortgaged.
So may uncalled-up capital if the
power extends to the properties and
rights of the company, Howard v.
Patent Ivory, &c, Co., 38 Ch. D.
156.
(m) Bloomer v. Union, etc., Coal
Co., 16 Eq. 383.
(n) Scott v. Colburn, 26 Beav. 276.
CASES NOT INVOLVING ANY TOUT OR FRAUD. 193
Indeed, where the power to borrow exists and money is bor- I5k- H- C^p- 3-
Sect. 1 .
rowed, a debt is contracted, although the security given for it -
may be informal (o).
Where the directors of a company have power to borrow, Loans i>y
there is nothing now to prevent a loan to the company by one
of themselves ( p).
The validity of securities improperly issued depends on the Validity of
principles above explained. If they are ultra rires they are properly V^^1'-
invalid and worthless even in the hands of bona fide holders for
value, except so far as the money the}' represent can be recovered
by reason of its having been applied for the benefit of the com-
pany (q). But where the doctrines of ultra vires do not apply,
securities which are improperly issued are invalid in the hands
of persons having notice of the impropriety (r), and also in the
hands of their transferees if the securities are mere choses in
action and are not negotiable, and if the company is not
estopped as against such holders from denying the validity of the
securities (s). But if the securities are negotiable (t), or if they
create a legal charge (u), or if, although they are not negotiable
and are mere choses in action, the company is estopped, as
against a bond fide transferee for value without notice of any
impropriety, from disputing their validity (x) such a trans-
feree can enforce them against the company.
Borrowed or loan capital (y) may be properly referred to in Borrowed
• capital.
connection with this subject. The right to raise it depends
on the principles already alluded to. There are, however,
several very important statutory enactments relating to the
(o) See Strand Music Hall Co., 3 Co., 38 Ch. D. 156.
De G. J. & Sm. 147 ; Boss v. Army (s) Athenceum Life Ass. Co. v.
and Navy Hotel Co., 34 Ch. D. 43. Pooley, 1 Giff. 102, and 3 De G. &
(p) Campbell's case, 4 Ch. D. 470. J. 294, ante, p. 180.
It was otherwise under 7 & 8 Vict. (t) Ante, p. 171.
c. 110, as to which see T ever sham («) This is inserted on general
v. Cameron 's Coalbrook Co., 3 De G. principles ; no case actually deciding
& S. 296 ; Bakers case, 1 Dr. & the point has been found.
Sm. 55 ; Murray's Ex. case, 5 De G. (x) As in Romford Canal Co., Ca-
M. & G. 746. rew's claim, 24 Ch. D. 85 ; Webb
(q) See ante, p. 162, etseq. and infra, v. Commissioners of Heme Bay, L.
p. 237, Landowners, dec, Lnclosure R. 5 Q. B. 642.
Co. v. Ashford, 16 Ch. D. 434. (y) As to this use of the word
(r) Howard v. Patent Ivory, <kc, "capital" see bk. hi., c. 3, § 1.
L.C. O
194 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. borrowed or loan capitals of companies incorporated by
— special acts of Parliament and governed by the Companies'
clauses consolidation act, 1845, and these enactments require
attention.
s & 9 Viot c 16. By ^ie act m question, railway and other companies governed
by it are empowered to raise money by mortgage or bond by
the order of a general meeting (z). But this order is not
essential to the validny of the securities issued (a). The
bonds or mortgages rank pari passu as between their respec-
tive holders inter se, without reference to their respective
dates (b). A register of the bonds and mortgages is required
to be kept, and the holders of them are entitled to inspect the
register (c). The bonds or mortgages are transferable b}r
deed (d), and the transfer must be registered in order to com-
plete the title of the transferee as between himself and the
company (e). The interest on the bonds and mortgages is
paj^able in priority to dividends to shareholders (/). As
regards repayment of the principal sum, a day for repayment
ma}' be fixed in the bond or mortgage, or no time for repay-
ment may be fixed. If a day for repaj-inent is fixed the prin-
cipal sum then becomes a debt for which an action majr be
brought (g). If no time be fixed the creditor may call in the
money twelve months after the date of the bond or mortgage
on giving the company six months' notice (/*). The company
may pay it off on giving a like notice (i). The most effectual
remedy for enforcing payment is to obtain a receiver ( j) ; and
if the special act authorises the mortgagees to apply for a
receiver, they can obtain one from two justices of the
peace (k).
(z) 8 & 9 Vict. c. 16, §§ 38, 39, (cj) § 50. Price v. Great Western
40. Rail. Co., 16 M. & W. 244 ; Vertue
(a) Fonntaine v. Carmarthen, <£c, v. East Anglian Bail. Co., 5 Ex.
Bail. Co., 5 Eq. 316 ; Romford Canal 280, shows that a transferee can
Co., 24 Ch. D. 85. sue in his own name. See infra,
(b) §§ 42, 44. See Boioen v. Bre- c. 7.
con, d-c, Bail. Co., 3 Eq. 541. ' (h) § 51.
(c) § 45. (i) § 51.
(d) § 46. (j) Infra, c. 7. A hond creditor
(e) § 47. See Doe v. Jones, 5 Ex. must first recover judgment.
16 ; Lane v. Smith, 14 Beav. 49. (k) §§ 53 & 54.
(/) § 48.
GASES NOT INVOLVING ANY TOBT OB FRAUD. 195
The Railway companies securities act, 18G6 (I), also con- 1;k- Ir ChaP- '■'•■
tains important provisions relating to the registration of
persons authorised to issue securities, to rendering accounts
of loan capital, and to the endorsement on bonds and mort-
gages of certain particulars in order to prevent over-issues.
The Railway companies act, 1867 (in), protects the rolling
stock of railway companies from seizure (//), and declares
that money borrowed on mortgage bond or debenture
stock under any special act shall have priority over other
claims arising after August, 1867, with some few excep-
tions (<>).
This act was passed after the decision of Gardner v. London, Ghudnei ,-.
n •? /-i • London, Chat-
Chatnam d- Dover Railway Co. (j>), which settled that mort- ham, and Dover
gagees of a railway company's " undertaking " are not entitled pany.
to any specific charge upon the company's stock or surplus
lands, but are only entitled, so long as the company is a going
concern, to a receiver of its earnings. The effect of the
priority clause just alluded to does not affect this decision ;
and notwithstanding that clause, a judgment creditor can
obtain a sale of the surplus lands and payment out of their
proceeds in priority to mortgagees of the company's under-
taking (q). The clause in fact only comes into operation when
there is a receiver of the earnings, when there is a scheme of
arrangement, and when the company is being wound up under
the Railway abandonment act (r).
Debenture stock is merely borrowed capital consolidated Debenture
stock.
into one mass for the sake of convenience. Instead of each
lender having a separate bond or mortgage, he has a certificate
entitling him to a certain sum, being a portion of one large
loan. The debenture stock of railway companies and of other
companies created by special act of Parliament and governed
b}* the Companies' clauses consolidation act, 1845, is regulated
(I) 29 & 30 Vict. c. 108. injuriously affected.
(m) 30 & 31 Vict. c. 127. (p) 2 Ch. 201. This is the lead-
(n) § 4, and see infra, c. 7. ing case on these securities.
(o) lb. The exceptions are rent- (q) Hull, Barnsley, dec, Rail. Co.,
charges granted under the Lands 40 Ch. D. 119.
clauses acts, rents payable under (r) lb., and see infra, bk. iv.,
leases, claims for lands taken or c. 3.
o 2
196 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. l,y a variety of statutes of which the principal are the Coin-
Sect, l. J * L x
- panies' clauses act, 1803 (26 & 27 Yict. c. 118), the Railway
companies' securities act, 1866 (29 & 30 Vict. c. 108), and the
Railway companies act, 1867 (30 & 31 Vict. c. 127), to wThich
the reader is referred for further details.
See further, Debentures ; Mortgages.
Cheques. Cheques. — The bankers of a company which has no proper
directors ma}'', nevertheless, safely pay cheques drawn in its
name by those persons who in fact carry on its business, unless
the bankers are aware of their want of authority (s).
Overdrawing is borrowing ; and bankers who allow com-
panies which have no power to borrow to overdraw their
accounts cannot recover the amount overdrawn from the
company (t).
Bankers who allow a company to overdraw its account have
no remedy against the directors personally ; although they
may have signed the cheques or authorised others to sign
them (u). But as regards building societies, the law is other-
wise by virtue of 37 & 38 Vict. c. 42, § 43 (x).
Compromises. Compromises. — A company has, as incident to its existence,
the same power as an individual to compromise claims brought
against it (y).
Debentures. Debentures. — The word debenture, though of frequent occur-
rence in connection with companies, has no definite legal
meaning (z). What is called a debenture may be a mere pro-
mise to pay, a covenant to pay under seal, or a mortgage or
charge under the seal of the company (a). If, as is usually
the case, it purports to give the holder a charge on the under-
(s) Mdhony v. East Holyford Dixon's case, L. R. 5 H. L. 618, per
Mining Co., L. R. 7 H. L. 869. Lord Westbury.
(t) Ante, p. 191 ; see Cunliffe (z) British India Steam Nav. Co.
Brooks dc Co. v. Blackburn Building v. Commissioners of Inland Revenue-,
Soc, 22 Ch. D. 61, and 9 App. Ca. 7 Q. B. D. 165 ; Edmonds v. Blaina
857. Furnaces Co., 36 Cli. D. 215 ; Levy
(?t) BcaMe v. Lord Ebury, L. R. v. Abercorris Slate Co., 37 Ch. D.
7 H. L. 102. 260 ; Topham v. Greenside Fire
(x) See Looker v. Wrigley, 9 Q. B. Brick Co., 37 Ch. D. 2S1.
D. 397 ; Chapleo v. Brunswick Build. (a) See cases in last and succeed-
Soc, 6 Q. B. D. 696. ing notes.
(y) Bath's case, 8 Ch. D. 334;
OB 1 i:ai'1>. 197
taking or 1 1 j « - general property of the company, the charge Bk. II. Chap. 3.
■ l.
given is wliiit has been called "a floating security," thai Is, it
chargee the property of tin- company for the time being, but
not previ nt the company from dealing with its property
in the ordinary course of its busineg Consequently, if
the company, after having issued debentures of this nature,
mortgages m specific pari of it- property in 1 1 1 « - ordinary course
of its business, or to obtain an advance of money n< cessary to
carry on that busin< B8, th< specific m< . whether he had
notice of the previous issue of d< bentures or uot, lias priority
over the debenture-hold* < >n the appointment <>f a
]■■ ceiver by a debenture-holder, or on the commencement of a
winding-up, the floating nature of the security is at an end,
and the charge then becomes effective on the property of the
company existing at that time, hut not as a rule on capital
which has not been called up (d).
The validity of debentures given byway of renewal of former
debentures' or in lieu of bills or bonds of the company pre-
viously issued, depends on the validity of Buch former instru-
ments (c). Where power exists to issue debentures they may
be issued at a discount (/).
What are called LloycCs Bonds are instruments under the Lloyd's bonds.
seal of a company, containing an admission by the company of
its indebtedness to a specified amount to the obligee, and a
covenant to pay him such amount, with interest, on a future
(b) See Panama, d-c, Mail Co., 5 priority of debenture-holders inter
Ch.318 ; Marine Mansions Co., 4 Eq. se, see Cart side v. Silkstone, d-c., Iron
001 ; New Clydach Go., 6 Eq. 514 ; Co., 21 Ch. D. 762 ; Mowatt v.
Gardner v. Lond. Chatham and C ', Co., 34 Ch. D. 58.
Dover Rail., 2 Ch. 201 ; Ex parte (d) Ex parte Bradshaw, 15 Ch. D.
Moor, 10 Ch. D. 530 ; Moor v. 4G5 ; English Channel Steam Co. v.
Anglo-Italian Bank, 10 Ch. D. 681 ; Bolt, 17 Ch. D. 715. Compare
Hodson v. Tea Company, 14 Ch. D. Howard v. Patent Ivory Co., 38 Ch.
859 ; Ex parte Bradshaw, 15 Ch. D. D. 188.
405 ; WUlmott v. London Celluloid (e) See Fountaine v. Carmarthen
Co., 34 Ch. D. 147. Bail. Co., 5 Eq. 316. Compare
(c) Moor v. Anglo-Italian Bank, Irvine v. Union Bank of Australia,
10 Ch. D. 681 ; Ex parte Pitman and 2 App. Ca. 366.
Edwards, 12 Ch. D. 707 ; Wheatley (/) Anglo-Danuhian, dbc, Colliery
v. Silkstone Coal Co., 29 Ch. D. 715, Co., 20 Eq. 339 ; Campbells case, 4
:and compare In re Home and Hel- Ch. D. 470. See, also, Regent's Canal
lard, 29 Ch. D. 736. As to the Ironworks Co., 3 Ch. D. 43.
198
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Issue of deben-
tures.
Registration of
debentures
under Hills of
sale act.
p,k. II. Chap. 3. clay. The validity of these instruments depends on the con-
— siderations for which they are given ; they are primd facie
binding on the company as admissions of indebtedness ; but
when issued by railway companies for money borrowed after
their statutory powers of borrowing have been exhausted, they
are altogether illegal and void (g).
Debentures are issued when they are delivered (h).
Section 17 of the Bills of sale act, 1882, excepts from the
operation of that act any debentures issued by any mort-
gage loan or other incorporated company and secured upon
the capital, stock, or goods, chattels, and effects of such
company (?')•
And as to debenture stock of companies governed by special
acts of Parliament, see 26 & 27 Vict. c. 118, Part 3 ; and 32 &
33 Vict. c. 48.
See further Borrowing Money and Mortgages.
Deeds. — The deeds of unincorporated companies are governed
by the principles applicable to ordinary partnerships (k).
The question, whether an instrument sealed with the seal of
an incorporated company is binding on the company, depends
(1) on the authority by which the seal was affixed to the
instrument, and (2) on the nature of the instrument. An
instrument to which the seal has been affixed by a person who
has no authority to affix it, is invalid, and if there is any
intent to defraud, is a forged instrument (I). On the other
Deeds of com-
panies.
(g) Chambers v. Manchester, dr.,
Rail. Co., 5 B. & Sm. 588 ; White
v. Carmarthen Rail. Co., 1 Hem. &
M. 786 ; Cork and Youghal Rail.
Co., 4 Ch. 748 ; Fountaine v. Car-
marthen Rail, Co., 5 Eq. 316-325.
As to debentures issued for debts
contracted before tbe power to bor-
row commenced, see Re Bagnals-
town and Wexford Rail, Co., Ir. R.
4 Eq. 505, where the previous autho-
rities are reviewed.
(h) Mowatt v. Castle Steel Co., 34
Ch. D. 58.
(i) See on this section, Ross v.
Army and Navy Hotel Co., 34 Ch. D.
43 ; Edmonds v. Blaina Furnaces
Co., 36 Ch. D. 215 ; Levy v. Aber-
corris Slate Co., 37 Ch. D. 260 ; Top-
ham v. Greenside Fire Brick Co., ib.
p. 281 ; Jenkinson v. Brandley Mining
Co., 19 Q. B. D. 568, and as to the
Bills of Sale Act, 1878, see Swift v.
Pannell, 24 Ch. D. 210, and Palmer's
Comp. Prec. 4th ed. pp. 386-388.
(k) As to the inability of one
partner to bind his firm by a deed,
see Partn. 136.
(I) See Bank of Ireland v. Evans'
Charities, 5 H. L. C. 389, and per
Lord Eklon in Mayor of Colchester
v. Louiev, 1 V. & B. 244 ; Mayor of
the Staple of England v. Bank of
England, 21 Q. B. D. 160.
•V TOB I OB FBAUD. I'J'J
hand, an instrument sealed by the propei officers is, primd Bk. n. ci
facie, binding on the bodj corporate; and although the
Bence of the seal does Dot have the effect of binding the corpo-
ration with respect to matters which are ultra vires, ii d
throw upon the corporation the onus of proving the invalidity
of the instrument, and precludes the corporation from ta]
advantage of the non-observance of preliminary formalities, it*
the person dealing with its managers had not aotice of such
non-observance (m .
By §55 of the Companies act, L862, any company under
the act may empower any person to execute <]•>■>]- on its
behalf in any place not situate in the United Kingdom (n).
Extension of business. — It follows from the principles inv< - "-,D of
• bvusu
tigated in the last chapter that although the directors of a
company may develop the business which it was formed to
transact, they have qo pow< r to chan tharacter of such
business, nor to enlarge it by embarking in any business not
necessary to carry on the first in tin- usual way. This sub
has been already alluded to (o), and will be more fully examin< d
hereafter when considering th rs of majorities to bind
minorities, and the cases in which injunctions have been
granted against directors (p). It is sufficient here to state that
in conformity with the principles above alluded to, a company
formed for the purposes of life insurance has been held not
bound by policies against maritime risks, though issued with
the sanction of two general meetings Oj) ; that it has been
doubted whether a copper mining company could sue on a
contract for the supply of iron by itself (r) ; that a canal com-
pany has been held unable to obtain by prescription any right
to water except for the purposes of its canal (s).
(m) Bateman v. The Mayor of act, 1864, 27 & 28 Vict. c. 19.
Ashton, 3 H. & N. 323 ; The Aus- (o) See ante, p. 162 et sea.
tralian, dr., Co. v. Mounsey, 4 K. (p) See book iii. chap. 1, § 3,
& J. 733 ; The Royal British Bank and chap. 9, § 4.
v. Turquaiid, 5 E. & B. 248, and (q) Surges and Stock's case, 2 J. &
6 ib. 327 ; Agar v. The Athenamm H. 441.
Life Assurance Co., 3 C. B. N. S. (r) Copper Miners' Co. v. Fox, 16
725 ; Scott v. Colburn, 26 Beav. 276, Q. B. 229.
and aeea?iie,p. 166 et seq. (s) National Guaranteed Manure
(n) See also the Companies' Seals Co. v. Donald, 4 E & N. 8.
200
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Buying share
in another
business.
Ek- IL Chap- 3. On the other hand, it is now settled that railway companies
are bound by contracts to carry or send goods beyond the
limits of their own lines (t) ; and a railway company can sue
upon a contract between itself and others who undertake to
carry passengers and goods from its terminus across the sea
in steam vessels (u).
See further in connection with this subject ante, Bill in
Parliament, and infra, under the heads Leases and Transfer of
business.
The power of a company formed for lending money, acquiring
property and carrying on any monetary operations, to join
other persons in buying an estate and building upon it and
to form another company in order to carry out the speculation
London Financial was much discussed in London Financial Assurance v. Kelk (x);
KeikCa °n "' an(^ ^ was ne^ ^hat sucn operations were within the power of
the company ; that any irregularities in the way in which the
directors had acted had arisen from mere errors of judgment;
and that what they had done had been approved and sanctioned
by the bulk of the shareholders. In this case, however, the
company's memorandum of association was so wide in its terms
as to warrant almost any kind of business which the directors
might choose to engage in.
Indemnity. — A company is not boimd by an indemnity
given by its directors, unless their power to give it can be
shown Q/) ; but a general power of management is a sufficient
authority, if giving an indemnity is fairly within the scope of
the company's business (z). Nor is a company bound by a
guarantee given for a fraudulent purpose, and which purpose
is known to the person to whom the guarantee is given (a).
Indemnities by
directors.
(t) Willy v. West Cornwall Bail.
Co., 2 H. & X. 703, and the cases
there cited ; Great Western Rail. Co.
v. Blake, 7 H. & N. 987.
{u) South Wales Rail. Co. v. Red-
mond, 10 C. B. N. S. 675. Compare
Col/man v. Eastern Counties Rail. Co.,
10 Beav. 1.
(») 26 Ch. D. 107. Referred to
infra, hook iii., c. 2.
(y) Era Assurance Co., W. N., 1866,
309 ; Ridley v. Plymouth Grinding
Co., 2 Ex. 711 ; Kirk v. Bell, 16 Q.
B. 290 ; and see, as to guaranteeing
profits to other companies, Colman
v. Eastern Counties Rail. Co., 10
Beav. 1.
(z) Ex parte Booker, 14 Ch. D.
317 ; Small v. Smith, 10 App. Ca.
119. •
(a) British and American Tel. Co.
v. Albion Bank, L. R. 7 Ex. 119 ;
Gray v. Lewis, 8 Eq. 526 ; reversed
hut not on this point, 8 Ch. 1049.
CA8EG .'."I INVOLVING ANY TOBT OB FRAUD. 201
Aii agreement by directors, that persons taking Bharea in a B ;1 '
company shall be indemnified by t li . company against 1
does not bind the company(6); nor does an agreement that
the company will indemnify outgoing shareholders againsl their
liabilities (c). But directors who personally give such in-
demnities, are hound by them (d).
Where two companies have power to amalgamate, an agree-
ment by one of them to indemnify the other against it> liabi-
lities is valid, and capable of being enforced S further
as to this subject infra, under tin- head Purchases.
Insurances. — A life insurance company i> nol hound bylnaorai
marine policies issued by its directors with the sanction of a
general meeting of shareholders (/). Nor is a fire insurance
company, which has power to issue marine policies limiting
the liability of the company to its funds, hound by marine
policies issued in a name which is not the name of the
company, and containing no stipulation as t" the limit of
liability (g).
Investments and loans. — Notwithstanding 38 & 30 Vic. c. GO, i
a loan by a friendly society to a person who i~ not a number
of the society on the security of his promissory note is not
illegal but merely unauthorized and the money lent can there-
fore be recovered (//).
Judicial Proceedings. — The powers of directors and others to Ju,lici;i1 1'"-
. . . ceedings.
act for the company in legal proceedings will be noticed here-
after when treating of actions (Bk. II., c. 7, and Bk. III.,
c. 9), and winding up (Bk. IV. c. 1).
Leases. — With respect to leases to and by companies, a Leases,
company may take on lease a larger house and more land than
it wants at the time, and may sublet what it does not actually
(b) See Bunn's case, 2 De G. F. («) Anglo- Australian Ass. Co. v.
& J. 275. British Prov. Society, 3 Giff. 521 ;
(c) See Munt's case, 22 Beav. 55, and on app. 4 De G. F. & J. 341.
and others of that class, which will (/) Phoenix Life Assurance Co.,
he noticed hereafter in hook iii., 2 J. & H. 441.
ch. 5, § 6. (g) Hambrd' v. Hull and London
(d) See Barker v. Allan, 5 H. & Fire Ins. Co., 3 H. & N. 789.
N. 61 ; Haddon v. Ayres, 1 E. & E. (h) In re Coltman, 19 Ch. D.
118. Compare Ellis v. Colman, 25 .64.
Beav. 662.
202 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. require at the time (£). It lias also been held that the directors.
- — — — - of an hotel company might lease part of the hotel for the
purposes of a government office (k) ; but in this case the
circumstances were peculiar ; the hotel was of an immense
size and just finished ; the letting was to be temporary ; and
the whole building could not have been advantageously opened
as an hotel at once. It is settled that in the absence of
express power so to do, one railway company cannot lease its
line to another and exclude itself from using it (I). Where,
however, the articles of association of a company authorised
two-thirds of the shareholders to require the directors to do
any act which the company itself could do, and two-thirds of
the shareholders authorised and required the directors to lease
the company's works for twenty-one years, and such lease was
made accordingly, it was held to be valid and binding on the
company and on dissentient members (m).
It has been decided that a railway company cannot make
a valid lease of any part of its land, so as to prevent the
company from retaking the land if and when possession of
the land becomes necessary for the purposes of the com-
pany (n). But this doctrine is not to be extended to cases in
which it is not clearly proved that the lease is inconsistent
with the attainment by the company of the purposes for which
it was created (o).
Mortgages and Mortgages and Pledges. — With respect to mortgages and
p °c ; pledges by companies little remains to be added to what has
been said above under the head Borrowing money. It has
been held that a trading company can give a valid bill of sale
(t) See Horsey s claim, 5 Eq. 562. 6 H. L. C. 113. See further, as
(fe) Simpson v. Westminster Palace to this much litigated case, 2 Mac.
Hotel Co., 2 De G. F. & J. 141, and & G. 324 ; 3 ib. 70 ; 16 Beav. 441 ;
8 H. L. C. 712. See, also, Forrest 4 De G. M. & G. 115 ; 17 Q. B. 652.
v. Manchester and Sheffield Rail. Co., (m) Featherstonhaugh v. Lee Moor
30 Beav. 40, and 7 Jur. N. S. 887, Porcelain Clay Co., 1 Eq. 318.
as to temporary use of property. (n) Mulliner v. Midland Rail. Co.r
(I) See Winch v. Birkenhead Rail. 11 Ch. D. 611. Qu., if this case did
Co., 5 De G. & Sm. 562 ; London not go too far.
and Brighton Rail. Co. v. London (o) See Grand Junction Canal Co.
and S.-W. Rail. Co., 4 De G. & J. v. Petty, 21 Q. B. D. 273, where part
362 ; Shrewsbury and Birmingham of a towing path was dedicated to-
Rail, Co. v. North-Western Rail. Co., the public as a highway.
I.VIN.i ANY TORT OR FRAUD.
I cure a debt of the company (p) ; that the directors of a
Bteam ship company having general | of management -
cau mortgage its Bhipa for money borrowed (q), and that the
directors of a manufacturing company with similar pov.
can equitably mortgage it- property by depositing its deeds (r);
but tliut a mortgage of the uncalled-up capital of a company is
invalid unless ander special circumstanci -
\ to mortgages by companies governed by the Compani
clauses consolidation act, see ante, under the head Borrowing
money, and al 9 Vict. c. 16, § 88 et seq., and as to deben-
ture stock, 26 & -11 Vict. c. 118, § 22 et seq., 82 & 38 Vict,
c. 48, § 1.
All limited registered companies are required by the Com- &
pames act, 18G2, to keep a register of all mortgages and
charges specifically affecting their property and to allow the
register to be inspected (t); but unregistered mortgages are
not invalid, even although held by a director whose duty it i^
to see that the statute is complied with (m).
By section 19 of the Stannaries art, 1887 (50 & 51 Vict,
c. 43), all companies to which that act applies are required (in
addition to any other registration required by law) to register
;it the office of the registrar of the vice-warden's court within
twenty-eight days of their date, all documents whereby power
is given to any person to take possession of any mining effects
of or in their mine. Unless registered the documents shall
confer no priority over, or title as against, the claims of an}'
(p) Shears v. Jacob, L. B. 1 C. P. (t) 25 & 26 Vict. c. 89, § 43.
513 ; Deffell v. Jlltite, L. R. 2 C. P. (tt) Wright v. Horton, 12 App.
144. A bill of sale given by a com- Ca. 371, which finally settles this
pany is within the Bills of Sale act, much - contested question. The
1882 (45 & 46 Vict. c. 43), unless it earlier authorities are, General South
is a debenture within the meaning American Co., 2 Ch. D. 337; Bo-
ol section 17 of that act. See At- rough of Hackney Newspaper Co.,
tenborough's case, 28 Ch. D. 682, and 3 Ch. D. 669 ; North and South
ante, p. 196. Wales Bank, 10 Eq. 515 ; Dublin
(q) Australian Steam Clipper Co. Drapery Co., 13 L. E. Ir. 174. Com-
v. Mounsey, 4 K. & J. 733. pare Native Iron Ore Co., 2 Ch. D.
(?•) Ex parte National Bank, 14 345 ; Ex parte Valpy and Chaplin,
Eq. 507 ; Patent File Co., 6 Ch. 83. 7 Ch. 289, where the mortgages were-
(s) See ante, p. 192, (I) and p. 197 held invalid.
204
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Mortgage De-
benture Act.
Bk. II. Chap. 3. persons for work done in the mine or for goods supplied to the
Sect. 1. . ...
■ — - — - company by which the mine is carried on.
By the Mortgage debenture act, 1865 (28 & 29 Vict. c. 78,
amended by 33 & 34 Yict. c. 20) (x), facilities are given for the
issue, by certain classes of companies, of transferable mortgage
debentures, upon certain terms and conditions. But the act
only applies to, 1, companies governed by the Companies
act, 1862, and restricted by the memoranda of association to
the objects of advancing money on real securities, and of
borrowing money on transferable mortgage debentures, or on
real securities (y) ; 2, to companies incorporated by act of
Parliament for similarly restricted purposes. Moreover the
paid-up capitals of these companies must not be less than
100,000L, and each share must be of the nominal value of not
less than 50Z., of which not less than one-tenth nor more than
one-half must have been paid up.
Notice. — From the principle that the individual shareholders,
and even the individual directors of a company are not its
agents (z), it follows that notice to one of them is not notice
to the company (a) ; and a company is not deemed to have
notice through a director of a fraud on the company com-
mitted by that director (b) ; nor are two companies having
some directors in common necessarily affected through them
with notice of each other's affairs (c). Thus where two com-
panies, A. and B., had in common two directors and a solicitor,
and company A., in order to buy up its own shares, borrowed
money of company B., and this circumstance was known to
one of the two directors and to the solicitor, it was neverthe-
less held that company B. had no notice of the impropriety of
Notice to com-
panies, &c.
(sc) The act contains a great va-
riety of important provisions, to
which it is unnecessary to allude in
the present place.
(y) There is power to alter the
memorandum so as to restrict it to
these objects where the memorandum
as originally framed includes them,
but extends to others as well. See § 3.
(z) Ante, p. 155 et seq.
(a) See Powles v. Page, 3 C. B.
16 ; Re Carew's Estate Act (No. 2),
31 Beav. 39 ; Peruvian Rail. Co.
v. Thames, &c., Insurance Co., 2 Ch.
617.
(b) Oriental Commercial Bank, 5
Ch. 358 ; Re Car eld's Estate Act,
(No. 2)-, 31 Beav. 39.
(c) Credit Fonder, &c, Co., 1 Ch.
161 ; Ebbw Vale Co.'s claim, 8 Eq.
14.
[OASES NOT INVOLVING ANY TORT OB FRAUD. 205
the transaction (rf). At the same time if, as sometimes Bk- JI- C1
happens, one director lias authority to act for ;i company, his
knowledge of matters within the scope of his authority affects
the company; and it may be said generally that a company is
affected by the knowledge acquired by its agents in the course
of their duty (e), and as to matters to which it is their duty to
attend, bu1 not to other matters (/).
Although every person has notice of what he himself doi
a company is not affected with notice of what is done by its
officers when acting for themselves and not for the com-
pany (ij), nor when acting in fraud of the company or beyond
their powers (//).
Purchases. — Companies are clearly liable for goods supplied Purchases,
to them for the purpose of carrying on their business, if
ordered by their agents. It has been held that the members
of a cost-book mining company are liable for goods supplied
to the mine by the order of its/lirectors or resident manager (?');
and that an ordinary joint-stock company cannot escape
liability for goods bon<i fide supplied to it for the purposes of
its business, and by the order of the superintendent of its
works, simply because he may not have been appointed in
strict conformity with the company's deed of settlement (/.).
(d) Credit Fonda; etc, Co., 7 Ch. Drew. 635 ; Willes v. Greenhill, 29
161. See, also, Gray v. Lewis, 8 Ch. Beav. 376 and 387.
1035, reversing S. C. 8 Eq. 526. (/<) See in addition to the cases
(c) Societe Generate de Paris v. in note (b), Partn. 142, and Banque
Tramways Union Co., 14 Q. B. D. Jacques Cartier v. La Banque, &c,
424, and 11 App. Ca. 20, sub nom. de Montreal, 13 App. Ca. Ill ; IVil-
Societe Gen., dec. v. Walker, where liamson v. Barbour, 9 Ch. D. 535 ;
the knowledge was acquired from Lacey v. Hill, 4 Ch. D. 537, and
casual talk at a funeral. As to ante, p. 178 et seq.
notice through clerks, see the cases (i) Newton v. Daly, 1 Fos. & Fin.
in note (h). 26 ; Tredwen v. Bourne, 6 M. & W.
(/) British and American Tel. Co. 461 ; Hawken v. Bourne, 8 ib. 703.
v. Albion Bank, L. R. 7 Ex. 119. As to Vice v. Anson, 7 B. & C. 409,
See, also, Styles v. Cardiff' Steam- see the above cases, and Owen v. Van
boat Co., 4 N. R. 483, Q. B. ; a case Uster, 10 C. B. 31S.
as to notice of ferocity of a dog. (A-) Smith v. Hull Glass Co., 1 1
(g) See the cases on reputed C. B. 897 ; Allard v. Bourne, 15
ownership, Ex farte Boulton, 1 De C. B. N. S. 46S.
G. & J. 163 ; Browne v. Savage, 4
20G LIABILITY OF COMPANIES FOR ACTS OF THEIK AGENTS.
Ek. II. Chap. 3. s0 a company is liable to pay for goods which it has power to
buy, and which have been ordered in its name b}T its agents,
although not for its use (I). But the mere circumstance that
goods have been supplied to a company in the course of its
trade and have been used by it, is not sufficient to render the
company liable for them if they were supplied by the order of
persons not authorised to obtain them for the company (m).
In such a case ratification by the company must be proved (n).
A company has implied power to purchase a patent which is
useful to it for the purpose of carrying on its business (o).
Whether a company can buy shares in another company
depends on the objects with which it is formed (_p). But a
company has no implied power to buy its own shares, nor is
such a power included in a general power to deal in shares (q).
In fact, such a power is inconsistent with the whole principle
of limited companies, and cannot be conferred on such a
company even by its articles of association, nor is it conceived
even by its memorandum of association (r).
Representations. Representations. — A joint stock company is not bound by
the statements of one of its members, unless he is also the
agent of the company, and his statements relate to matters
within the scope of his agency (s), and are made by him when
acting for the company in some business with a third party (t).
Nor is a company bound b}T statements made by one of its
directors, if he is not singly an agent of the company (u).
But a company is bound by the statements of its directors, if
(l) Ebbw Vale Go's claim, 8 Eq. 14. association would he void — and the
(m) Kingsbridge Flour Mill Co. v. writer is of the same opinion. This
Plymouth Grinding Co., 2 Ex. 718. point, however, did not actually
(n) As to which, see ante, p. 178 arise, and has not been directly
et seq.
decided.
(o) Leif child's case, 1 Eq. 231. (s) Burnes v. Pennell, 2 H. L. C.
(p) Ante, pp. 43, 200. 497, ante, p. 154 ; Burnett Hoares £•
(q) Zulueta's claim, 5 Ch. 444. Co. v. South London Tramways Co.,
(r) See Trevor v. Whitworth, 12 18 Q. B. D. 815.
App. Ca. 409, where the earlier (t) Devala Provident Gold Mining
cases are collected and discussed. Co., 22 Ch. D. 593.
Lord Macnaghten (p. 436) was of («) Holt's case, 22 Beav. 48 ; Gib-
opinion that the power even if son's case, 2 De G. & J. 275 ; Nicols
contained in the memorandum of case, 3 De G. & J. 387.
• l r.\ 0L1 [NQ any TOUT OB PBAUD. 2 7
made \>\ them honesth for the company and in the coursi
the business which it ie their duty to transact
A r< [ards representations respecting the credit of p
these to be actionabL must be in writinj I by the persons,
making them I. c. 1 1. . 6). Signature bj an agent U
not enough, and it has been held thai a banking company
governed b} 7 Geo. !. c. 16, is no! liable to be Bued for a
misrepri sentation of the kind in question mini-- by its mana{
although signed by him
II. >w far companies are liable for the false and frauduL
statements of their directors and other officers will be examined
in a subsequent Bection of the present chapter.
See furthi r on this Bubjecl ante, under the head Admissions.
Suits. \\ itli respect t<> sales by companies, tin- main points Sale* '.
to be borne m mmd are : —
1. Corporate bodii s have by common law lull power t < > sell
their own corporate property (z).
2. Railway and other companies governed bj Bpecial acts
Parliament conferring upon them rights and privileges which
tiny would not otherwise enjoy, cannot delegate or transfer
those rights ami privileges to other persons
3. Although general powers of management necessarily in-
clude power to sell in the ordinary course of business, Buch
powers do not authorise ^ale> of an unusual description, e.g., a
sale of the business of the company (o).
But there is a distinction between selling the business of a
company as a whole and selling the specifie goods and chattels
of the company. This is well illustrated by the case of
Wilson v. Miers (c). There a steamship company, being the Wilson v. Mien?.
(x) See the cases cited in § 3. (a) See Winch v. Birkenhead
Mux's Ex. case, 2 De G. M. & G. Bail. Co., 5 De G. & Sm. 562, and
522. other cases of that class, ante, p. 202,
(?/) Swift x. Jewsbury, L. R. 9 note (I).
Q. B. 301, overruling 8 Q. B. 244. (b) See Ernest v. Nicholls, 6 H.
Compare Bancick v. English Joint L. C. 401 ; Ex parte Liquidators of
Stock Bank, 2 Ex. 259. the British Nation, dec, Ass., 8 Oh. D.
(z) Mayor, <£-c., of Colchester v. 679, and the cases cited ante, p. 184
Lowten, 1 V. & B. 226 ; Evan v. note (/). See, also, Chappie v. Cadell,
Corporation of Avon, 29 Beav. 144. Jac. 537, infra, nott- (e).
See, also, Patent File Co., 6 Ch. 83. (c) 10 C. B. N. S. 348.
208
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. reverse of prosperous, its directors entered into a contract for
Sect. 2. .
— the sale of its whole fleet. The purchaser declined to com-
plete the contract, on the ground that, although the directors
had general powers of management, including power to buy
and sell ships, they could not, in the absence of a resolution to
dissolve the company, sell off all its ships at once. The Court
of Common Pleas, however, held that the contract was one
which the directors could lawfully enter into and carry out
without any special authority from the shareholders.
4. A power to sell the assets of a company as a whole when
it is being wound up is conferred by the Companies act,
1862 (d) ; and independently of that act, where there is power
to wind up, there must necessarily be a power to sell and con-
vert into money (e).
See further ante, Amalgamation.
Transfer of Transfer of business, see ante, Amalgamation, and Sales.
business.
Negligence of
servants.
SECTION 2— TORTS.
Although companies are never created to do what is wrong,
and can seldom be said to have in fact authorised the wrongful
acts of their directors or servants, it is plain that the ordinary
principles of agency apply to such cases; and on these
principles, companies are liable for the negligence of their
servants, and for torts committed by them in the course of their
employment ; and it never has been admitted, as a sufficient
reason for non-liability on the part of the company, that it did
not in fact authorise the very act complained of. All that is
necessary to charge the company is that the act complained of
(d) See § 161, and Higg's case, 2
Hem. & M. 657 ; Clinch v. Financial
Corp., 5 Eq. 450, and 4 Ch. 117 ;
Imperial Bank of China, &c. v.
Bank of Hindustan, 6 Eq. 91 ; City
and County Investment Co., 13 Ch.
D. 475 ; and Union Bank of Kings-
ton-upon-Hull, ib. p. 80S.
(e) See Lord v. Copper Miners'
Co., 2 Ph. 740. Compare Cliapple
v. Cadell, Jac. 537, where it was held
that the majority of the proprietors
of a newspaper could only sell their
own shares.
LIABILITY FOR Ti
209
should be intra vires, and not idtra vires (/), and Bhould be Bk- n- CIiai)- 3-
I 2.
committed by the agent or servant of the company in tin* course -
of the business to which it is his duty to attend, or as it is
Bometimes expressed, in the course and ae pari of his employ-
ment^). Upon this principle it hae been held thai the Bank
of England is liable for a wrongful detention of hank notes by
its servants (h) ; that a banking company is liable for the loss
of securities entrusted to it and carelessly kept(t); that a com-
pany is liable for a wrongful Beizure of goods made by its
servants for aon-paymenl of tolls (ft) ; for wrongful assaults (Q,
and arrests if made by persons authorised to act for tin- com-
pany in removing persons or 'jiving them into custody (m); for
negligence in laving down gas-pipes («) ; for reckless driving (o);
for the infringement of a patent by its servants contrary to the
orders of its directors (/>) ; and for the publication of a libel by
transmitting it by telegraph (g). /Moreover, in such cases as
(/) See cmtef p. 161, d eeq, and
Poulton v. L. it S.-W. Bail Co., L.
R. 2 Q. B. 534.
(g) See, on this subject generally,
Burnsy.Poul8om)h.'R.8C. P. 563, and
the cases cited infra ; with reference
to arrests, Lord Bolingbroke v. Local
Board of Swindon, L. R. 9 C. P. 7"' ,
Mersey Docks Co. v. Gibbs, L. R. 1
H. L. 93 ; Coe v. Wise, ib. 1 Q. B.
711 ; and as to the non-liability of
companies for the acts of directors
and agents when not acting as their
agents, British Mutual Banking Co.
v. Charmoood Forest Rail. Co., 18 Q.
B. D. 714 ; McGowan db Co. v. Dyer,
L. R. 8 Q. B. 141.
(h) Yarborough v. Bank of Eng-
land, 16 East, 6. See, too, Giles v.
Taff Vale Rail Co., 2 E. & B. 822.
(i) Johnston's claim, 6 Ch. 212.
Compare Ciblin v. McMulUn, L. R.
2 P. C. 317.
(k) Ma-undv. Monmouthshire Canal
Co., 4 Man. & Gr. 452 ; Smith v.
Birmingham Gas Co., 1 A. & E. 526.
(I) Butler v. Manchester and Shef-
field Rail. Co., 21 Q. B. D. 207.
L.C.
Co., L. R. 8 Q. B. 'nj v.
"a'1 >7< '. Co.,
L. R. 8 0. P. 148 ; Goff v. G.
Northern I . 3 E. & E. 672.
Compare / v. London and
X.-ll'. Bail. Go., L. R. 5 C. P. 445;
Allen v. London and S.-W. Rail. Co.,
L. R. 6 Q. B. 65 ; Poulton v. London
and S.-W. Rail. Co., L. R. 2 Q. B.
534, and Eastern Counties Rail. Co.
v. Broom, 6 Ex. 314, in all of which
the company was held not liable.
(n) Scott v. Mayor of Manchester,
1 H. & N. 59, and 2 ib. 204.
(o) Green v. London General Om-
nibus Co., 7 C. B. N. S. 290;
Limpus v. Same, 1 Hurlst. & C.
526.
(p) See Betts v. De Vitre, 3 Ch.
441.
( q) Whitfield v. So u th-E astern Rail.
Co., E. B. & E. 115. See, further,
as to libels by companies, Lawless v.
Anglo-Egyptian, &c, Co., L. R. 4 Q.
B. 262, where the libel complained
of was contained in a report made by
the directors to the shareholders
injuries.
210 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. those now in question, it is not necessary, in order to fasten
Sect. 2. * J .
— — liability on the company to prove any formal appointment of
the agent by the company (r).
Malicious Whether an action will lie against a corporate body for a
malicious injury has been much discussed and doubted, and can
scarcely be said to be yet settled (s). The weight of authority is
however in favour of such an action being maintainable, and in
the author's opinion this is most in accordance with principle (t).
It is, however, essential in order that a company ma}' be
liable for the wrongful acts of its servants that those acts should
be such as the company could have authorised, and that they
should have been authorised or ratified by the company, or
have been done by the servants in the course of their employ-
ment, and not when acting in matters to which it is not their
duty to attend (u). Accordingly it was held that a company
was not liable for injuries committed by a dog kept in a yard,
there being no evidence to show that the savage nature of the
dog was known to any one who had charge of it, nor to the com-
pany's manager, nor, in fact, to any one whose knowledge could
be considered as the knowledge of the company, although it was
proved to be known to one or two of its servants (x).
and which was held to be a privi- expressed a decided opinion against
leged communication. such an action. As to maintenance
(r) See Giles v. Tuff Vale Rail. Co., and champerty, see Metropolitan
2 E. & B. 822. Bank v. Pooley, 10 App. Ca. 210.
(s) An action for malicious prose- (t) Pollock on Torts, 51 & 81.
cution was held to lie in Edwards v. (u) See the cases in the last ten
Midland Rail. Co., 6 Q. B. D. 287 ; notes, and the judgment in Bank of
and the possibility of its being New South Wales v. Owston, 4 App.
sustainable was recognised by the Ca. 270. The cases cited in note (m)
Privy Council in Bank of New South show that a company can ratify and
Wales v. Owston, 4 App. Ca. 270. adopt the torts of its agents, if those
See, however, contra, Stevens v. Mid- torts are such as can theoretically
land Counties Rail. Co., 10 Ex. 352, be imputed to the company,
and Abrath v. N.-E. Rail. Co., 11 (x) Styles v. Cardiff Steam Boat Co.,
App. Ca. 247, where Lord Bramwell 4 N. K. 483, Q. B.
LIABILITY FOB PBA1 D8. '^11
Hk. II. C\
BECTIOH III. FEATJD8.
Ii la now proposed to examine the general question — Under ?n
wlint circumstanci -. is a fraud perpetrated by the directors of a
company imputable to the company?
Directors of a company have no Implied authority from the
company t" make false representations on it- behalf; and,
generally speaking, frauds committed bj directors are quit
much frauds tui the companies th< y represent as on othi 1 per-
sons. But consistently with the established principli acy,
it doea aol ("How that, as between an innoc< n1 company on the
one hand, and an innocent individual defrauded by its directors
on the other, the company is no1 reponsible for the fraud com-
mitted by the directors. It has been held that the general
interests of society demand that the representations by the
directors of a company Bhall bind the company, although the
shareholdi rs may be ignorant of the r< pm sentations and of
their falsehood (y). In practice this question never arises in
an abstracl form, but always with reference to Borne remedy
sought either by the company or againsi it ; and if against it,
then with reference to the rescission oi some contract or with
reference to an action for damages. This must always be borne
in mind in reading the reported cases on the subject; for
observations true with reference to one class of remedies may
be inapplicable to another class (z).
First it will be convenient to refer to cases in which com- 1. Rescission
panies have sought redress, and to cases in which relief by way
of rescission of contract has been sought against them.
In The National Exchange Company of Glasgow v. Drew (a), National Ex-
the defendants had been induced, by the false statements con- 0{ (jwowtt,
tained in the reports of the directors to the shareholders of a Drew-
company, and by the false representations of its manager, to
borrow money of the company, and to buy shares in it with
(y) See the cases cited below. ments in this case were reviewed by
(2) See in addition to the cases in Lord Chelmsford in Nicol's case, 3
the text, TFestem Bank of Scotland v. De G. & J. 387, and were not alto-
Addie, L. R, 1 H. L. Sc. App. 145 ; gether approved by him. See, how-
Banger v. The Great Western Bail. ever, the judgment of Lord Justice
Co., 5 H. L. C. 72. Turner in the same case.
(a) 2 McQueen, 103. The judg-
P 2
212 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. the money so borrowed, in order to keep the price of shares up
- in the market. The company sued for a return of the money
lent, and the defendants relied upon fraud as an answer to the
suit. The fraud was clearly proved, and it was held imputable
to the company, and a sufficient ground of defence. The
following passage from the judgment of the Lord Chancellor
shows how the argument, that the fraud committed was not
the fraud of the company, was met.
Judgment of "The company, as an abstract thing, can represent or do nothing. It can
Lord Cranworth. on]y ac^ ^y j^s managers. When, therefore, the directors, in the discharge
of their duty, fraudulently (for I assume this to be so), for the purpose of
misleading others as to the state of the concerns of the company, represent
the company to be in a different state from that which they know it to be,
and the persons to whom the representation is addressed act upon it in the
belief that it is true, I cannot think that society can go on without treating
that as a misrepresentation by the company. Otherwise companies of this
sort would be in this extraordinary predicament — that they might employ,
nay, must employ, agents to carry on their concerns, and that those agents
might make representations, be they ever so false and ever so fraudulent,
and yet that the company might and must benefit by those misrepresenta-
tions, without being at all liable to be told, that is your fraud. It waa
plausibly argued that these reports were not made by the company but to
the company. In form that is so. No doubt they are reports made to the
company. But I assume, for the present, that they were made to the
company under such circumstances that what they so report is known and
intended to be known, not only to the shareholders, but to all persons who
may be minded to become shareholders, just the same as if they were pub-
lished to the world. I repeat that I think the exigencies of society demand
that the reports so made and so circulated should be deemed to be the
Judgment of reports of the company." Lord St. Leonards expressed a similar view upon
Lord St. Leo- ^g question. He said, " If representations are made by a company fraudu-
lently, for the purpose of enhancing the value of their stock, and they
induce a third person to purchase stock, those representations so made by
them for that purpose do bind the company. I consider representations by
the directors of a company as representations by the company, although
they may be representations made to the company ; it is their own repre-
sentation. What is the first act which takes place at any such meeting as
^hat at which the report was read ? The first act which takes place at every
such meeting in Scotland and England is, that if there is not a rejection,
there is an adoption of the report ; then I say the report is the act of the
company, and not simply of the directors. It does not stand as the simple
statement of the directors. It becomes the act of the company by the
adoption of the report, and sending it forth to the world as a true repre-
sentation of their affair?, and if that representation is made use of in
dealing with third persons for the benefit of the company, it subjects them
to the loss which may accrue to the party who deals, trusting to those
misrepresentations."
nards.
LIABILITY FOB PRAUDS. 218
Again in New Brunswick Co. v. Conybeare (b), the facts 1;k- n- r],:iv ■'■'■■
of which will be referred to hereafter in considering the sub-
New Brunswick
ject oJ the rescission of contracts for fraud, Lord Westbuiy, company v.
naif] • Conj
•• 1 1 1 rtainly am not a1 all I to advise your lordships to throw any Judgment of
doubt upon this doctrine, that if report* are made to the .-!. of a L'J1'1 ™«8**miy«
company by the directors, and the reports are adopted by the Bharehol
at one of the appointed meetings of the company, and tb - are
afterwards inilu.-tiiuu.~ly circulated (c), undoubtedly representations con-
tained in those reports must be taken, after their adoption, to be represen-
tations ami statements made with the authority of the company, and th
fore binding the company. Neither do I think it would beat all expedient
to question this conclusion — that if those reports, having been industriously
circulated, shall be clearly shown to have been the proximate and immediate
of shares having been bought from the company by any individual-,
or subscribed for by any individuals, undoubtedly it will be impossible,
consistently with the principles of equity, to permit the company to retain
the benefit of that contract, and to keep the purchase money that has been
bo paid. There may be a very different consideration applied tu the same Difference
transaction in a court of Law and in a court of equity; because when an .^j^.'uit'v*
attempt is made in a court of law to render a party liable in damagi
certain consequences of a misrepresentation, it is necessary to prove that
the individual was aware, at the time, of the falsehood of the representation,
or ought to have been bo aware ; but with regard to a claim for the i
tution of property acquired through : tations made 1
individual acting in the capacity of agent, although the company
no parties to those representations, and did not distinctly authorise them,
it would still appear to be inconsistent with natural justice to permit
property acquired by the company through the medium of those repre-
sentations to be ret lined by them. So far, therefore, as these report-
concerned, they must be taken, I think, to be representations made by
the company " (d).
Lord Cranworth expressed it as his opinion " That if an incorporated Judgment of
company, acting by an agent, induces a person to enter into a contract for Lord Cranworth.
the benefit of the company, that company can no more repudiate the
fraudulent agent than an individual could repudiate him, and that conse-
quently the company are bound by the misrepresentations of their agent : "
and after alluding to the opinion he had expressed in the National Exchange
Company v. Drew, and which is given above, bis lordship added—
" To that opinion I entirely adhere, and I think it would have been
(b) 9 H. L. C. 711. (d) See, in illustration of this
(c) A report by the directors to doctrine, Lovell v. Hicks, 2 Y. & C.
the shareholders is not industriously Ex. 46 and 481 ; Slim v. Croucher, 1
circulated by being sent to absent De G. F. & J. 518 ; Smith v. Reese
shareholders, Ex parte Barrett, 2 Dr. River Co., 2 Eq. 264 ; 2 Ch. 604, and
& Sm. 415. L. R. 4 H. L. 64.
214
LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
13k.
II. Chap.
Sect. 3.
applicable in this case if it had been proved that there had been a fraudu-
lent representation or concealment by the directors, in order to induce
Mr. Conybeare to purchase, not shares in the market (that is a very
different thing), but shares belonging to the company ; namely, forfeited
shares. If the directors, or the secretary acting for them, had fraudulently
represented something to him which was untrue, I then adhere to the
opinion which I expressed in the former cases, that the company would
have been bound by that fraud. But the principle cannot be carried to
the wild length that I have heard suggested, namely, that you can bring
an action against the company upon the ground of deceit, because the
directors have done an act which might render them liable to such an
action. That I take not to be the law of the land, nor do I believe that it
would be the law of the land if the directors were the agents of some
person, not a company. The fraud must be a fraud that is either personal
on the part of the individual making it, or some fraud which another
person has impliedly authorised him to be guilty of."
Principles
applicable to
these cases.
Distinction be-
tween reports
of directors and
reports of share-
holders.
The principles above laid down have indeed been ques-
tioned (c) ; but so long as it is law that a principal may be
bound by the unauthorised act of his agent, so long it will be
impossible to deny that companies may be affected by the false
and fraudulent representations of their directors, although they
have no authority to promulgate falsehoods. The falsehood
may be an excess of authority, but it does not therefore follow
that it is imputable only to those who utter it : and it is now
settled that 'for all purposes of rescission of contract induced by
a false and fraudulent statement made by an agent of a com-
pany, such statement is, in point of law, the statement of the
company, if the statement relates to a matter as to which he is
its agent (/), and if it is made in the course, and as part of
the business which he is appointed to transact for the com-
pany (g). Moreover in such cases there is no difference in prin-
ciple between a fraudulent misstatement and a fraudulent con-
cealment of a material fact (Ji).
A distinction is sometimes drawn between false reports made
by directors to the shareholders, and adopted by them and
(e) See NicoFs case, 3 De G. & J.
387 ; Mixer's case, 4t ib. 575 ; Ex
parte Barrett, 2 Dr. & Sm. 415.
(/) See the cases of rescission of
contracts to take shares, ante, book
L, c. 3, as well as the authorities re-
ferred to in the present section.
(g) As to this qualification, see the
cases infra, p. 216.
(h) See Peek v. Gurney, 13 Eq. 79,
and L. E. 6 H. L. 377 ; Harwich v.
English Jt. Stock Bank, L. R. 2 Ex.
259 ; and Oakes v. Turquand, L. R,
2 H. L. 325.
LIABILITY FOB FRAUDS. 215
then laid before the public, and false statements made by the Ck. II. Chap, .3.
directors alone to persons making enquiries of them with refer-
ence to the affairs of the company. But if such statements as
the last cannot bind the company, it is difficult to see on what
principle untrue reports adopted by shareholders can be
regarded as emanating from those shareholders who do not
expressly adopt them. If the directors are not the agents of
the body of shareholders, for the purpose of stating what is
false, surely some of the shareholders are not the agents of the
rest for the same purpose. To say that a falsehood emanating
from the directors is not imputable to the company, but that a
falsehood emanating from a meeting of the shareholders is im-
putable to the company, cannot be right. The same principles
ought to be applied to both cases ; and the distinction between
representations made by shareholders and similar representa-
tions made by directors is only sound when the representations
relate to matters which the shareholders are competent to deal
with, but the directors are not.
It must not be concluded from the foregoing observations Reports and cir-
. ... , culars when not
that circulars and reports issued by a company are to be imputable to
regarded as representations by the company to any one who comPany-
sees them and is induced, even by an officer of the company,
to act upon them. They will not amount to representations
by the company unless they were issued for the purpose for
which they are afterwards used ; nor unless used by some
person whose business it is to carry out that purpose ; nor
unless used by him when acting on behalf of the company.
This is well illustrated by Bunies v. Pennell (/), which is some- Bumes v.
times, but erroneously, supposed to have decided that false
reports made by the directors to their shareholders, and after-
wards laid before the public, are not to be regarded as repre-
sentations by the compan}\ In this case a company was paying
dividends when it was not warranted in doing so ; its directors
had issued and published false reports as to the flourishing
state of its affairs ; some time after these reports had been
(i) 2 H. L. C. 497. See, too, case, 4 Drew. 529 ; and see Peek v.
Nicol's case, 3 De G. & J. 387 ; Gumey, L. E. 6 H. L. 377, which,
Bigge's case, 5 Jur. N. S. 7 ; Worth's however, was an action for damages.
216 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Bk. II. Chap. 3. published, and when in fact they were old, they were shown by
— the law agent of the company to a person who was desirous of
taking shares in it, and who ultimately did take shares in it on
the faith of the representations made to him by the law agent,
backed by the reports in question. It was held that these cir-
cumstances afforded no answer to an action for calls. It was
no part of the business of the law agent to induce people to
take shares in the company ; no part of his business to make
any representations as to the affairs of the company. The case
is an authority for the proposition that representations made
by an unauthorised person, although an officer of the company,
do not bind the company, and that reports of the company
used by him to substantiate his statements are not to be re-
garded as representations made by the company to the person
to whom he shows them. But the case is no authority for the
proposition that reports of directors are not reports of the com-
pany upon whose affairs it is part of their business to report.
Whether any person who sees them is entitled to make use of
them against the company is quite a different matter. He is
only entitled to do so in one of two cases, viz., 1, if the reports
are published for the purpose of being acted upon by the public,
and he as one of the public deals with the company upon the
faith of them ; or, 2, if, being used for the purposes for which
they were published, they are so used by the agents of the
company when acting within the limits of their real or apparent
authority and on behalf of the company.
Numerous other cases illustrating these principles will be
found in the chapter relating to membership induced by false
statements (Bk. I. c. 3, ante, p. 68, et seq).
2. Actions for Passing now to actions for damages, the question whether a
corporate body can commit a fraud and be liable in damages for
it, at once presents itself for consideration. Some eminent
judges are of opinion that an action of deceit will not lie against
a corporation (k) ; but the contrary has been decided more than
(k) See Lord Bramwell's judgment 166. See the comments on the dicta
in Abrath v. N.-E. Bail. Co., 11 in this case in Mackay v. Commercial
App. Ca. 352; and per Lords Bank, L. R. 5 P. C. 413; and Houlds-
Chelmsford and Cranworth in worth v. City of Glasgow Bank, L. R.
Addie v. Western Bank of Scotland, 5 App. Ca. 317.
L. E. 1 Sc. & Div. App., pp. 158,
LIABILITY FOR FRAUDS. 217
once, both by the Privy Council and by the Exchequer *■ u« CbaP- 8-
Chamber.
In Barwick v. English Joint Stock Bank (I), an incorporated Barwick v.
banking company was held liable in damages for a false and Stock Bank.
fraudulent statement of its manager relating to the state of a
customer's account with the bank.
In Mackay v. Commercial Bank of New Brunswick (m) the Mackay v.
i t> 11 3 , i i • .. . Commercial
above case was followed, and a banking corporation was again Bank of New
held liable in damages for a false and fraudulent statement BnmBwlck-
of its manager, by which the plaintiff had been induced to
accept a bill in which the bank was interested.
In Swire v. Francis (n) these cases were again approved, Swire v. Frai
but this was not an action against a company. Swire v. Francis
is, however, another clear authority to the effect that principals
are liable for the frauds of their agents on precisely the Bame
grounds on which they are liable for other acts which are not
in fact authorised : and this the writer conceives to be the true
doctrine (o).
But assuming this to be the law it will be still true that n
company (like any other principal) is not liable in damages for
a false and fraudulent representation of its agent unless such
representation has been made for and on behalf of the company
and in the course of the business which it is his duty to trans-
act. Bwrnes v. Pennell {p), which has been already noticed, is
an illustration of the application of this principle to reports
made by directors to shareholders and shown to other persons
by agents of the company, but by agents whose employment
did not extend to circulating the reports.
So in British Mutual Bank Co. v. Cham wood Forest Railway British Mutual
Co. (q), a company was held not liable for a false and fraudu- ^,ank Co- ?•
C nam wood
Forest Rail. Co.
(?) L. E. 2 Ex. 259, a case of the Law of Torts, p. 25, et seq. ;
fraudulent concealment. Compare Pollock on Torts, 236, et seq. In
Swift v. Jewsbury, L. B, 9 Q. B. 301, Houldsworth v. City of Glasgow Baal,
which turned on the signature of 5 App. Ca. 317, ante, p. 74, the
the manager not being the signature liability of the company, but for the
of the bank, within 9 Geo. 4, c. 14, winding up, was not denied by the
§ 6. House of Lords.
(m) L. E, 5 P. C. 394. (p) Ante,?. 215. See, also, Peek v.
(») 3 App. Ca. 106. Gumey, L. E. 6 H. L. 377.
(o) See Bigelow's Lead. Ca. on (q) 18 Q. B. JD. _714„ Observe
218 LIABILITY OF COMPANIES FOR ACTS OF THEIR AGENTS.
Ek ? thiV' 3' lent rePresentati°n made by an agent for his own purposes and
- not in fact for or on behalf of the company ; although the re-
presentation related to matters as to which it was his business
to answer inquiries.
Bainett, Hoares Again in Burnett, Hoares & Co. v. South London Tram.
London Tram.1 @0, (r)> a company was held not liable in damages for a
false and fraudulent representation made by its secretary, on
the ground that it was not his duty to make representations
on behalf of the company.
In the two last cases the company derived no benefit from
the misrepresentation. This circumstance was material on the
question whether the agent was or was not acting for and on
behalf of the company ; but if he had been so acting within the
scope of his employment, the fact that the company was not
benefited would, it is apprehended, have been immaterial.
Frauds on Stock In Barry v. Croskey (s), it was attempted to make a com-
ang^' , PanY liable for alleged frauds on the part of the directors in
Barry r. Croskey. .
getting up the company and issuing its shares, and in procur-
ing the recognition of the company by the Stock Exchange
Committee, and the appointment of a settling day for its
shares. The bill charged that the company had adopted and
ratified the acts of the directors, and that by the frauds in
question the shares of the company had commanded in the
market prices considerably higher than would otherwise have
been possible. The bill then stated various dealings and trans-
actions in shares of the company between the plaintiff and the
broker of one of the directors, and that by these dealings and
transactions, which were in fact time bargains, the plaintiff had
lost money in consequence of the frauds of which he com-
plained. The plaintiff by his bill sought to have all the con-
tracts into which he had entered with the directors cancelled,
and to be repaid all the moneys paid by him under those con-
tracts. To this bill the company demurred ; and the demurrer
was allowed on the ground that the frauds complained of were,
according to the plaintiff's own statements, such as could not
that the person deceived did not to this circumstance,
know that the agent was not in fact (r) 18 Q. B. D. 815.
acting for the company, and qu. (s) 2 J. & H. 1.
whether sufficient weight was given
LIABILITY FOR FRAUDS. 21 !>
be attributed to the company, but only tc the individuals who Bk. II. Chap. 3.
were concerned in their perpetration. The company had done —
nothing in order to induce the plaintiff or any one else to
speculate in its shares; the company knew nothing of the
plaintiff nor of his dealings, and had not in any way been
benefited thereby; the damage moreover sustained by the
plaintiff was too remote to be attributed to anything imputable
to the company. The Vice-Chancellor observed that " if this
were the case not of a company and its directors, but of an
individual principal and of his agent, the principal could never
be held responsible in the manner for which the plaintiff
contends."
For reasons which have been already explained (Bk. I. c. 3, § 1),
a company is not liable in damages for false as distinguished
from fraudulent statements of its directors or agents ; nor is a
company responsible in damages for those acts which can only Companies act,
be regarded as fraudulent by reason of § 38 of the Companies 1867' §
act, 18G7 0).
The personal liability of directors and others for frauds com-
mitted by themselves has been already fully examined. See
Bk. I. c. 3, §§ 1 and 2.
(0 Ante, pp. 91, 92.
220
LIABILITY OF CORPORATIONS.
CHAPTER IV.
OF THE PROPER FORM OF CONTRACTS WITH COMPANIES AND OF
THE EFFECT OF FORM ON LIABILITY.
Bk. II. Chap. 4.
Sect. 1.
Contracts of
corporations.
SECTION I.— OF THE RULE REQUIRING CONTRACTS OF CORPORATION
TO BE UNDER SEAL.
It is a rule of the common law that, subject to one or two
exceptions which will be noticed presently, a body corporate
is not bound by any contract which is not under its corporate
seal ; and this rule has always been rigidly adhered to both at
law and in equity (a).
(«■) See generally, on this subject,
Com. Dig. Franchise, F. 13 ; Bac.
Ab. Corporation ; Vin. Ab. Corpo-
ration ; Grant on Corporations ;
Pollock on Contracts, 4th ed., p.
146, et seq.; R. v. Bigg, 3 P. W.
419 ; Broughton v. The Manchester
and Salford Waterworks Co., 3 B.
6 A. 1 ; and on the application
of the rule in equity as well as
at law, see Winne v. Bampton,
3 Atk. 473 ; Taylor v. Dulwich
Hospital, 1 P. W. 655 ; Wilmot v.
Corporation of Coventry, 1 Y. & C.
Ex. 518 ; Carter v. Dean of Ely,
7 Sim. 211 ; Gooday v. The Col-
chester Kail. Co., 17 Beav. 132 ;
Preston v. The Liverpool, &c, Rail.
Co., ib. 114, and 5 H. L. C. 605.
An action will in some cases lie
against a corporation for money had
and received, Hall v. The Mayor of
Swansea, 5 Q. B. 548 ; for money
paid, Jefferys v. Gurr, 2 B. & Ad.
833 ; for use and occupation, Lowe
v. The London and North-West .
Rail. Co., 18 Q. B. 632 ; and see
Eccl. Comrs. v. Merral, L. R. 4 Ex.
162 ; but see Finlay v. The Bristol
Rail. Co.y 7 Ex. 409. As to actions
by corporations on contracts not
under seal, see South of Ireland Coll.
Co. v. Waddle, L. B. 3 C. P. 463,
and 4 ib. 617, overruling East Lon-
don Waterworks Co. v. Bailey, 4 Bing.
283. See, also, McArdle v. Irish
Iodine Co., 15 Ir. Com. Law Rep.
146 ; Copper Miners' Co. v. Fox, 16
Q. B. 229 ; Fishmongers' Co. v. Ro-
bertson, 5 Man. & Gr. 131 ; Mayor of
Stafford v. Till, 4 Bing. 75 ; Doe v.
Taniere, 12 Q. B. 998 ; TJie London
Dock Co. v. Sinnott, 8 E. & B. 347 ;
Doc v.Bold, 11 Q. B. 127. See as to
the engagement of a clerk to a work-
house, Austin v. Guardians ofBethnal
Green, L. R. 9 C. P. 91 ; and as to the
appointment and retainer of a soli-
ON CONTRACTS NOT DNDER SEAL.
22]
At common law any sea! affixed by the proper authority will Bk- "■ ' llli '
suffice (6); but any director or other agent of a limited com
pany under the Companies act, 1802, who uses a seal without
the company's name engraved upon it makes himself liable to
a penalty of 501. (See sects. 41 and 42 of that act.) There is
a similar provision in the Industrial and provident societies
ad, 1870 (39 & 40 Vict. c. 45, § 10, sub-s. 1, and § 18,
Sllb-S. 2).
Even a resolution of the members of the body corporate Lfl
not equivalent to an instrument under its seal (c) ; and a cor-
poration will not be compelled to execute a contract which it
has been resolved shall be entered into by it(<I). A distinction
was at one time supposed to exist between executed and
executory contracts ; but except where the equitable doctrines
of part performance are applicable, a corporation is no more
bound by a contract not under its seal, of which it has had the
benefit, than it is by a similar contract which has not been
acted upon by either party (e).
citor by an incorporated company,
Thames Haven Dock Co. v. Hull,
5 Man. & Gr. 274; Faridl v.
The Eastern Counties Rail. Co., 2
Ex. 344 ; R. v. Cumberland, 5 Ra.
Ca. 332, which show that the solici-
tor on the record will be presumed
to be properly appointed. If a soli-
citor sues a company for payment for
his services, it is doubtful whether
he must not prove a retainer under
seal. See Arnold v. The Mayor of
Poole, 4 Man. & Gr. 860, and com-
pare Haigh v. North Bierley Union,
E. B. & E. 873.
(b) Grant on Corp., 59. See
as to the proper mode of affixing
the seal and as to estoppels by in-
struments under seal improperly
affixed, Mayor, &c, of the Staple of
England v. Governor and Co. of Bank
of England, 21 Q. B. D. 160.
(c) Gibson v. The East India
Company, 5 Bing. N. C. 262 ;
Arnold v. The Mayor of Poole, 4
Man. & Gr. 860 ; Mayor of Ludlow
v. Charlton, 6 M. & W. 815 ; Smart
v. West Ham Union, 10 Ex. 867 ;
R. v. The Mayor of Stamford, 6 Q.
B. 433 ; Cope v. The TJiames Haven
Co., 3 Ex. 841 ; Dunstan v. The
Imperial Gas Co., 3 B. & Ad.
125.
(d) Wilmot v. The Corporation of
Coventry, 1 Y. & C. Ex. 518 ; T
v. Dulwich Hospital, 1 P. W. 655 ;
Carter v. Dean of Ely, 7 Sim. 211.
(e) Mayor of Kidderminster v.
Hardvnck, L. R. 9 Ex. 13 ; Mayor
of Ludlovj v. Charlton, 6 M. & W.
815 ; R. v. Stamford, 6 Q. B. 433 ;
Paine v. The Strand Union, 8 Q. B.
326 ; Lamprell v. Tlie Billericay
Union, 3 Ex. 283; Diggle v. The
London and Blackwall Rail. Co., 5
Ex. 442 ; Homersham v. Tlie Wolver-
hampton Waterworks Co., 6 Ex. 137 ;
Arnold v. The Mayor of Poole, 4 Man.
& Gr. 860; Cope v. The Thames
Haven Co., 3 Ex. 841. Courts of
ecpuity did not interfere in these
cases. See Crampton v. Varna Rail.
222 LIABILITY OF CORPORATIONS.
Bk. II. Chap. 4. gut strict as is the rule in question, it is and always has
been subject to qualification. . There are, it is said, some
the general matters of so trivial a nature that the}7 can be done so as to
rule" bind a corporation in the absence of any instrument under its
seal (/) ; and what is more to the present purpose, it is held
that if a corporation is created for a particular purpose, it will
be bound by unsealed contracts entered into on its behalf in
the ordinary course and bond fide for the purpose for which it
is created (g). Upon this principle the East India Gompany
was held liable to be sued upon bills of exchange accepted on
its behalf, although its seal was not upon them (li). So gas
companies have been held bound by agreements, not under
seal, for the supply of gas (i) and gas meters (k) ; a navigation
company has been held bound by a contract, not under seal,
for the navigation of its ships (I) ; a railway coinpam- has been
held bound to pay for rails, oil, and paint, &c, supplied to it
on the order of its officers (m) ; a colliery company for pump-
ing maehineiy supplied for the purposes of its colliery (n) ; a
poor law union for coals supplied on similar orders (o) ; and a
municipal corporation owning a dock for refusing to admit a
Co., 7 Ch. 562 ; Kirk v. The Bromley 2 Burr. 1216, and Murray v. Tlie
Union, 2 Ph. 640 ; Ambrose v. The East India Co., 5 B. & A. 204.
Dunmow Union, 9 Beav. 508 ; Jack- (i) Church v. The Imperial Gas
son v. Tlie North Wales Rail. Co., 13 Light Co., 6 A. & E. 846.
Jur. 69 ; The Directors of the Mid- (Jc) Beverley v. The Lincoln Gas
land Great West. Rail, of Ireland v. Co., 6 A. & E. 829. The judgment
Johnson, 6 H. L. C. 798. As to the in this case deserves more attention
effect of affixing the company's seal than it has received.
after the contract has been partly (I) Henderson v. The Australian
performed, see Melliss v. Shirley Royal Mail Steam Navigation Co., 5
Local Board, 14 Q. B. D. 911, re- E. & B. 409.
versed on another point, 16 Q. B. D. (m) Ebbw Vale Co.'s claim, 8 Eq.
446. 14 ; Denton v. East Anglian Rail. Co.,
(/) See as to this, South of Ireland 3 Car. & Kir. 16. Compare Copper
Coll. Co. v. Waddle, L. R. 3 C. P. Miners' Co. v. Fox, 16 Q. B. 229,
463, and 4 ib. 617 ; and Eaton v. where the corporation was held not
Basker, 7 Q. B. D. at p. 532. liable for iron rails.
(g) See as to the last condition, (?;) South of Ireland Coll. Co. v.
Ebbw Vale Co.'s claim, 8 Ecp 14, Waddle, L. R. 3 C. P. 463, and 4 ib.
which, properly understood, is not 617.
inconsistent with the text. (o) Nicholson v. Bradfield Union,
(h) Edie v. The East India Co., L. R. 1 Q. B. 620.
ON CONTRACTS NOT UNDER SEAL.
223
ship which they had agreed to admit in its turn (p). On the Bk II. Chap. 4.
other hand it was held in a well-considered case, that a dock Sect h
company was not bound by an unsealed agreement for cleansing
its docks (q) ; and still more recently that poor law guardians
are not bound by an unsealed agreement engaging a clerk (r).
The exception in question, therefore, must still be applied
with caution (s).
Another qualification of the general rule is founded upon Part perform-
the equitable doctrine of part performance. If a corporation an°e*
has entered into an unsealed agreement which has been partly
performed, and if the nature of the agreement and other cir-
cumstances are such as would induce a Court to decree specific
performance of the contract if the parties to it were ordinary
individuals, the Court will hold the corporation bound by the
agreement, and will enforce it accordingly against or in favour
of the corporation as the case may require (t).
A corporation may obviously ratify, under seal, a contract Ratification.
previously entered into but not under seal (//) ; but whether
(p) Wells v. The Mayor of Hull,
L. E. 10 C. P. 402.
(q) London Dock Co. v. Sinnott, 8
E. & B. 347. But see on this case,
South of Ireland Coll. Co. v. Waddle,
ubi sup.
(r) Austin v. Guardians of Bethnal
Green, L. R. 9 C. P. 91. Compare
Scott v. Clifton School Board, 14 Q.
B. D. 500.
(s) These exceptions do not apply
to non-trading corporations, the con-
tracts of which are required by
special statutes to be under seal.
See the following cases under the
Pubbc health act, 1875 (38 & 39
Vict. c. 55, §§ 173 & 174) ; Young
& Co. v. Mayor of Leamington Spa,
8 Q. B. D. 579, 8 App. Ca. 517;
Eaton v. Basher, 6 Q. B. D. 201,
reversed 7 Q. B. D. 529, on the
ground that the act did not require
the contract in question to be under
seal ; Runt v. Wimbledon Local
Board, 3 C. P. D. 208, 4 C. P. D.
48.
(0 See Melbouriu Banking Corpo-
ration v. Brougham, 4 App. Ca. 156
at p. 168 ; Crook v. Seaford, 10 Eq.
678, and 6 Ch. 551 ; London and
Birmingham Rail. Co. v. Winter, Cr.
& Ph. 57 ; Earl of Lindsey v. Great
Northern Bail. Co., 10 Ha. 664 ;
Laird v. Birkenhead Bail. Co.,
Johns. 500 ; Wilson v. West Hartle-
pool Rail. Co., 34 Beav. 187, and 2
De G. J. & Sm. 475 ; Marshall v.
Corporation of Queenborough, 1 Sim.
& Stu. 520; Maxwell v. Dulwich
College, 7 Sim. 222, note ; Stevens'
Hospital v. Dyas, 15 Ir. Ch. 405. In
Crampton v. Varna Rail. Co., 7 Ch.
562, the contract was not one which
could be specifically enforced, and
in Leominster Canal Co. v. Shrewsbury
and Hereford Rail. Co., 3 K. & J.
654, there was nothing amounting
to part performance in the sense
in which that expression is used in
equity.
(u) See ante, book ii., c. 2, § 4.
224
LIABILITY OF CORPORATIONS.
Estoppel by
record.
Effect of a
judgment.
Ek. II. Chap. 4. any other ratification of a contract required to be under seal
Sect. 1. J . . . ?_ . ,
-will bind the corporation is questionable ix). It has, indeed,
been said, that a corporation which sues upon an unsealed
contract thereby irrevocably ratifies it by matter of record ;
and that the invalidity of the contract sued upon cannot avail
as a defence to the action ; and further, that if the corporation
is afterwards sued upon the same contract, it would be es-
topped from denying its validity (?/) . These propositions have,
however, been denied \>y high authority and cannot be relied
upon (z) .
If, however, a corporation is sued upon an unsealed agree-
ment and judgment is obtained against it, the corporation will
not be allowed afterwards to repudiate the agreement, as
against the person who has obtained the judgment, unless the
judgment can be shown to have been obtained by fraud ; or
unless the agreement itself can be impeached for fraud and
the question of fraud was not in issue in the action in which
judgment was obtained (a).
Before leaving the present subject, it may be observed that
although an instrument sealed with the corporate seal is prima
facie valid, yet if the seal is essential to its validity, and if it
be proved that the seal was improperly affixed, e.g., was
affixed by a person having no authority to use it, the instru-
ment is void as a corporate act (b). But those persons who in
practice conduct a company's business, have implied authority
Seal improperly
affixed.
(x) See the observations of Lord
Blackburn, L. R. 9 Ex. 261.
(y) Fishmongers' Co. v. Robertson,
5 Man. & Gr. 192.
(z) Mayor of Kidderminster v.
HardivicJce, L. R. 9 Ex. 13 ; Copper
Miners' Co. v. Fox, 16 Q. B. 229.
(ft) See Williams v. St. George's
Harbour Co., 2 De G. & J. 547 ;
Eulett's case, 2 J. & H. 306. In
The Athenamm Life Assur. Soc. v.
Pooley, 1 Giff. 102, and 3 De G. &
J. 294, debentures were set aside,
although in Agar v. Athenazum, etc.,
Co., 3 C. B. N. S. 725, judgment
had been obtained on another of
like nature. But in the latter case
the only plea was non est factum,
and no question of fraud, even if
there were any in that case, was
raised. As to what fraud will
avoid a deed at law, see Wright v.
Campbell, 2 Fos. & Fin. 393.
(b) See Mayor, efcc, Staple of
England v. Governor and Co. of Bank
of England, 21 Q. B. D. 160 ; Bank
of Ireland, v. Trustees of Evans'
Charities, 5 H. L. C. 389 ;
Colchester v. Lowten, 1 V. & B.
243/ 244 ; D'Arcy v. Tamar, efcc,
Bail. Co., L. R. 2 Ex. 158. Com-
pare Ex parte The Contract Corpo-
ration, 3 Ch. 105.
ON < ON I RAI I - "l UNDER -l LL. 22.1
to use its seal for the purposes of such business (c) : and aBk- n. Chap. 4.
corporation will be estopped from disputing the authority to —
fix tlif seal if negligence imputable to the corporation has
conduced to the misuse of the seal and to the misleading of
the person relying on it (d).
SECTION II.— STATUTORY EXCEPTIONS TO THE FOREGOING RULE.
The general rule, that a corporation is not bound by any Contra
contract not under its common seal, applies to all incorporated
companies, save where it has been abrogated by statute;
whence it follows, that in order that an incorporated company
may be hound by a contract entered into on its behalf, the
contract must fall within one of the exceptions already referred
to, or he under the common seal of the company, or be i ntered
into in the manner and form directed by the statute which em-
powers the company to contract in some other mode(<').
It is important, therefore, to ascertain what statutory enact-
ments there are bearing upon this subject.
The Banking act, 7 Geo. 4, c. 40, and the Letters Patent Statutory
• enactm nts.
act, 7 mil. 4H\ ict. c. 73, leave the common law untouched
as regards the question now under consideration. But com-
panies regulated by these acts are not incorporated by them.
The Joint-stock companies registration act, 7^8 Vict. c.
110, §§ 44-46; the Joint-stock companies banking act, 7 & 8
Vict. c. 113, § 22; and the Joint-stock companies act of 1856,
§ 41, all contained provisions on this subject; but these acts
are now repealed, and it is not necessary further to allude to
them(/).
(c) See Ex parte Contract Corp., 3 Thames Haven Co., 3 Ex. 841 ;
Ch. 105. Copper Miners' Co. v. Fox, 16 Q. B.
{d) See the first two cases in note 229 ; and see Ernest v. Nicholls, 6
(b). H. L. C. 401.
(e) Homersham v. Tlie Wolver- (/) Upon 7 & 8 Vict. c. 110, § 45,
hampton Waterworks Co., 6 Ex. 137 ; relating to bills and notes, see Hal-
Digglev. The London and Blackwall ford v. Cameron's Coalbrook Co., 16
Bail. Co., 5 Ex. 442; Cope v. The Q. B. 442; Edwards v. Cameron's
L.C. Q
226 LIABILITY OF CORPORATIONS
Ek' ScCh2P' 4' ^ By the MetroPolis §as act> 18G0 (9)> tlie contracts of gas
companies regulated by that act and entered into in accord -
(1) Metropolitan . . . ....
gas act. ance with it are binding without any seal, if signed by two or
more directors, or by the company's secretary, or other officer,
by the authority of two or more directors.
(2) 8 & 9 Vict. (2) The Companies clauses consolidation act, 8 & 9 Yict.
c. 16.
c. 1G, renders it lawful for the directors of a company to which
that act applies to appoint committees (§ 95), and enacts (§ 97)
that the power of the committees as well as the power of the
directors to make contracts on behalf of the company may
lawfully be exercised as follows : —
" With respect to any contract, which if made between private persons,
would be by law required to be in writing and under seal, such committee
or tthe directors may make such contract on behalf of the company in
writing and under the common seal of the company, and in the same
manner may vary or discharge the same.
"With respect to any contract, which if made between private persons,
would be by law required to be in writing, and signed by the parties to be
charged therewith, then such committee or the directors may make such
contract on behalf of the company in writing, signed by such committee or
any two of them, or any two of the directors, and in the same manner may
vary or discharge the same.
" With respect to any contract which, if made between private parties,
would by law be valid though made by parol only, and not reduced into
writing, such committee or the directors may make such contract on behalf
of the company by parol only, without writing, and in the same manner
may vary or discharge the same."
Cases on tins This enactment does not render a company liable on a
contract entered into b}r its directors in writing, but not pur-
Coalbrook Co., 6 Ex. 269; Aggs v. with directors, see Stem's case,
Nicholson, 1 H. & N. 165 ; Healey Johns. 480 ; Ernest v. Nicholls, 6
v. Story, 3 Ex. 3 ; Allen v. The Sea, H. L. C. 401 ; Curteis v. Anchor
Fire, and Life Insurance Co., 9 C. B. Insur. Co., 2 H. & X. 537 ; Poole v.
574 ; Gordon v. The Sea, Fire, and National Provincial, &c.} Assurance
Life Insurance Co., 1 H. & N. 599. Society, ib. 6S7 ; Murray's Ex. ca.,
As to § 44, relating to other con- 5 De G. M. & G. 746 ; Teversham v.
tracts, see Ridley v. Tlie Plymouth Cameron's Coalbrooh, d-c, Pail. Co.,
Grinding Co., 2 Ex. 711 ; Ex parte 3 De G. & S. 296 ; Baker's case, 1
Eagle Insur. Co., 4 K. & J. 549 ; Dr. & Sm. 55.
Harribro' v. Hull and London Fire (g) 23 & 24 Vict. c. 125, § 20.
Insur. Co., 3 H. & N. 789 ; British Quaere what the words " entered
Empire Co. v. Browne, 12 C. B. 723. into in accordance with this act"
As to § 29, relating to contracts really mean.
ON CONTRACTS S'OT [JNDEB SEAL. 227
porting to bind the company (h) : nor on a contract required Bk.
Sect. 2.
to be under eal or signed by two directors, bul which is neither
under seal nor bo signed, although the company may have
had the benefit of the contract (i . Moreover, notwithstanding
the general words of the last clause of the enactment, it has
been decided thai where a company has entered intoa contract
in proper form for the execution of certain specified works, it
is uot hound to pay for extra works not done under the con-
tract, although they may have bet o done by the orders and
under the superintendence of the officer appointed by the
directors to 3ee the specified works properly executed (A;). At
the same time, where the company has had the benefit of a
contract which, if entered into between ordinary individuals
would be valid, although not in writing, it will he presumed,
in the absence of evidence to the contrary, that such contract
was duly made by the directors of the company or a committee
of them, or by an agent duly appointed, so as to he binding on
the company. Upon this principle a railway company has
been held liable to pay for the use and occupation of land
occupied by it for the purposes of its business (/) ; and to pay
for sleepers furnished to the company at the requesl of its
engineer (m) ; although there was nothing in either case to
show that any express written or parol contract had been
entered into on behalf of the company by its directors or any
committee of them.
Ordinary individuals can appoint agents verbally, and the The Statute of
frauds and the
Companies
clauses act.
(h) See Serrell v. The Derbyshire, Waterworks Lo., 6 Ex. 13/. See,
d-c., Rail. Co., 9 C. B. 811 ; and further, as to extra works, Ranger v.
McCollin v. Gilpin, 5 Q. B. D. 390 Tlie Great Western Rail. Co., 5 H. L.
affirmed G Q. B. D. 516, the case of C. 72 ; and Nixon v. The Tuff Vale
a company governed by the Com- Rail. Co., 7 Ha. 136 ; KirJc v. Tlie
panies act, 1862. Bromley Union, 2 Ph. 640; Lamprell
(i) Leominster Canal Co. v. Tlie v. The Billericay Union, 3 Ex. 283.
Shrewsbury and Hereford Rail. Co., 3 (I) Lowe v. Tlie London and North-
K. & J. 654. See, too, Higgle v. Western Rail. Co. 18 Q. B. 632. See
London and Blackball Rail. Co., 5 Finlay v. Tlie Bristol and Exeter Rail.
Ex. 442 ; Midland Great Western Co., 7 Ex. 409.
Rail. Co. of Ireland v. Johnson, 6 (m) Pauling v. The London and
H. L. C. 798. But see as to cases North- Western Rail. Co., 8 Ex. 867.
of part performance, ante, p. 223. See further on this subject, ante, p.
(k) Homersham v. Wolverhampton 222.
Q -2
223
LIABILITY OF CORPORATION'S
Bk. II. Chap.
Sect. 2.
The Lands
clauses act.
(3) The Compa-
nies act, 1S56.
The Companies
acts, 1802 and
1867.
4th and 17th sections of the Statute of frauds, which in cer-
tain cases require contracts to be evidenced by some writing
signed by the party to be charged, or his agent, do not render
it necessary that the agent there spoken of should be appointed
in writing (n). Hence a written contract entered into on
behalf of a railway company for the purchase of land, and
signed by its agent, is apparently binding on the company,
although the agent may not have been appointed under seal
or by any writing signed b}T two directors or members of a
committee (o).
It is beyond the scope of the present work to treat of the
method in which companies governed by special acts of Parlia-
ment and the Lands clauses act can obtain land for the pur-
pose of their undertakings ; but it is not altogether irrelevant
to observe that where parties have agreed to refer questions
of disputed compensation under that act to arbitration, the
appointment of an arbitrator on the part of the company may
be made by the secretary (p).
(3) The Companies act of 1856 contained a clause (q) similar
to that which occurs in the Companies clauses consolidation
act (r) ; and although the act of 1856 is repealed, it has been
decided that companies formed and registered under it may
still be bound by unsealed contracts (s). The Companies act,
1862, contained no similar clause : but this defect has been
cured by the Companies act, 1867 (t). Under it a memorandum
signed by a director is sufficient to bind the company so far as
the Statute of frauds is concerned (»).
(ri) Coles v. Trecothick, 9 Ves. 250 ;
Clinan v. Cooke, 1 Sell. & Lef. 31.
Maclean v. Dunn, 4 Bing. 722, shows
that a verbal ratification of a previ-
ously unauthorised agreement signed
by an agent renders the agreement
binding on the principal.
(o) See the cases on the Companies
act, 1867, in note («). See, also,
Wilson v. West Hartlepool Bail. Co.,
34 Beav. 187, and 2 De G. J. & Sm.
475, where, however, this point was
not alluded to.
(p) Collins V. South Staffordshire
Ha il. < 'o.} 7 Ex. 5.
(q) 19 & 20 Vict. c. 47, § 41.
(?•) Ante, p. 226.
(s) Prince v. Prince, 1 Eq. 490.
(0 30 & 31 Vict. c. 131, § 37,
which is similar to 8 & 9 Vict. c. 16,
§ 97, above set out. See, as to the
act of 1862, South of Ireland Coll. Co.
v. Waddle, L. R. 3 C. P. 463, and 4
ib. 617, and Totter dell v. Fareham
Brick Co., L. R. 1 C. P. 674.
( u) Jones v. Victoria Craving Dock,
2 Q. B. D. 314. See, also, Beer v.
London and Paris Hotel Co., 20 Eq.
412.
u.\ CONTRACTS NOT CNDEB SEAL. 229
The act also provides for the appointment by a company l;k- 'J Ch*P- 4-
under its common seal, of agents to execute deeds abroad, and
Deeds executed
renders deeds executed by them as valid ;is if scaled by the ahmad.
company (a;). This provision lias been extended by a sub- Companies seals
r> I \ 1 • • act> 1864.
sequent act of rail lament (//), which authorises companies
governed by the Companies act, 1862, and carrying on busi-
ness in foreign countries, to keep duplicate common seals there,
having engraved upon them the name of the place in which
they are to be used. The act, however, only applies to com-
panies expressly authorised by their articles of association, or
a special resolution to exercise the powers given by the act;
and the persons entrusted with the seals must be specially
empowered to use them by some instrument in writing under
the common seal of the company. Instruments sealed by
such persons in the place to which the seal entrusted to them
applies, are as binding on the company as if such instru-
ments had been sealed in this country with the ordinary
common seal.
(./•) § 55. this act in the appendix, and its
(//) 27 & 28 Vict. c. 19. It has general effect only is attempted to
not been thought necessary to print be given above.
230
LIABILITY OF COMPANIES
Bk. II. Chap. 4.
Sect. 3.
SECTION III.— OF BILLS OF EXCHANGE AND PROMISSORY NOTES.
Bills of
Exchange act,
1882.
Instrument
under seal.
Companies act,
1862.
By the Bills of exchange act, 1882 (c), a bill of exchange
may be made payable to the holder of an office for the time
being. The older cases therefore to the effect that a bill
payable to the secretary or treasurer for the time being of a
company, is invalid (d), are no longer law.
In general the persons liable to be sued on a bill of ex-
change as drawer, indorser, or acceptor, are the persons who
have signed it as such and no others (e) ; but this rule does not
affect the provisions of the Companies act, 1862, nor any act
relating to joint-stock banks or companies, or the Bank of
England or Bank of Ireland (ee).
The power of a corporation to bind itself by drawing,
accepting, or endorsing a bill is left by the act to depend upon
the law for the time being in force relating to corporations (/).
This power, so far as regards companies, has been already
alluded to {(f).
It is doubtful whether an instrument under seal can by the
law merchant be a negotiable instrument {h) ; but now by the
Bills of Exchange act, 1882 (hh), if an incorporated company
has power to draw, accept, or indorse a bill, and it does so
under its corporate seal, the company is liable to be sued on
the bill.
The Companies act, 1862, expressly enacts that promissory
notes and bills of exchange shall be deemed to be made,
accepted, or endorsed on behalf of a company registered under
the act, if made, accepted, or endorsed in the name or by or
(c) 45 & 46 Vict. c. 61, § 7 (2).
and see as to promissory notes,
§ 89 (1).
(d) Yates v. Nash, 8 C. B. N. S.
581 ; Storm v. Sterling, 3 E. & B.
832, and Coicic v. Sterling, 6 E. & B.
333.
(c) 45 & 46 Vict. c. 61, § 23, and
see § 89, as to promissory notes.
(ee) lb., § 97 (3).
(/) lb., § 22.
(g) Bk. i., c. 2, § 2, and ante,
p. 185.
(/() See Grouch v. Credit Fonder
of England, L. R. 8 Q. B., at p. 382.
In Ex parte City Bank, 3 Cli. 758,
the holder of a debenture payable to
bearer, and under the seal of the
company, was held entitled to prove
for its amount, and per Selwyn,
L. J., it was a promissory note.
See, also, Ex parte Colborn and
Strawbridge, 11 Eq. 478.
{hh) See 45 & 46 Vict, c. 61,]§ 91.
ON BILLS hi EXCHANGE AND PROMISSORY NO! 231
"ii behalf or on account of tin- company, by any person acting ''• '■
under its authority (/).
Moreover, if any director, manager, or officer of a limited
company signs on behalf of the company any lull or note
without adding the word " limited,'' he is personally liabli
pay the same, unless it is duly paid by the company(A).
Directors and others constantly make promissory notes, and Liability of
i , i i -ii • i -i • directora.
draw and accept bills in such a manner as to make it very
difficult to say whether they personally, or only the compai
for whom they art, are liable upon the instrument (I). The
question is in every case one of construction ; is the bill or note
the bill or note ofthe company or no1 ? 1 >oes it really purport
so to be? for, although given for the purposes ofthe com-
pany, the bill or note may not ev< n purport to hind it. If on
the true construction ofthe instrument the bill or note is the bill
or note of the company, the company will be liable upon it, and
not the individuals whose names are on it > m), unless the bill or
note is the bill or note of both. On the other hand, if on
the true construction of the bill or note it is not the bill or
note of the company, the persons whose names are upon it will
be liable upon it, whether they intended to be so or not.
The following cases illustrate these principles. A bill
drawn on the directors of a company, and accepted for the
company by its manager and three of its directors, binds the
three directors who accept the bill, but no one else (n). A
fortiori, a bill drawn on the agent of a company, and accepted
by him simply in his own name, binds him and not the com-
pany {<>). On the other hand, a bill drawn on a company and
accepted by its directors, secretary, or other authorised agent
on its behalf or as its agent, binds the company and not those
who accept the bill, except so far as they are members of the
(i) § 47. See Ex parte Overdid, give it will he liable, West London
Gurney cO Co., 4 Ch. 460; Be Barber Commercial Bank v. Kitson, 13 Q.
& Co., 9 Eq. 725. B. D. 360. See, also, as to not adil-
(/;) § 42 ; Penrose v. Martyr, E. B. ing " limited," ante, note (k).
& E. 499. (n) Bult v. Morell, 12 A. & E.
(/) See as regards firms, Partn. 745.
180, et seq. (o) Ducarrey v. Gill, 1 Moo. & M.
(m) This supposes that the bill is 450, and 4 C. & P. 121 ; Thomas v.
not ultra vires, for if it is these who Bishop, 7 Mod. 180.
232 LIABILITY OF COMPANIES
Bk. II. Chap. 4. company (7)). But to this last rule there is an exception, as
—^ already noticed (q).
Examples of the
foregoing rules. Iii Thomas v. Bishop (r), the bill was drawn on John Bishop, cashier of the
Thomas v. York Buildings Company, and was accepted by Bishop in his own name,
Bishop. without reference to the company, and he was held by Lord Hardwicke to
be personally liable on the bill.
Senell v. The In Serrell v. The Derbyshire, Staffordshire, &c, Railway Company (s), a
Der >\ shire, sc., cheque was drawn on the bankers of a companv, and was signed bv three
Railway Cum- ,. .. . . , -, ^ , -,
,1(nv_ ' directors, and countersigned by the secretary, and on the cheque was a date
stamp, with the name of the company in a circle round the date ; but the
companv was held not liable upon the cheque, for it did not purport to
be a cheque of the company. The persons who signed the cheque had not
even signed it as directors.
Butt v. Morell. In Bull v. Morell{t), the bill was drawn on The Directors of the Imperial
Salt and Alkali Company, and was accepted for the Imperial Salt and Alkali
Company, and signed
Richard Parker, Manager,
J. Rainsford, \
James Parker, (. Directors.
Richard <■' irrett, )
The three last named persons only were held liable on the bill.
Nicholls v. In Nicholls v. Diamond (»), the bill was drawn on "Mr. James Diamond,
Diamond. purser, West Downs Mining Company" and was accepted thus, "James
Diamond, accepted per p>roc. West Downs Mining Company." Diamond was
held liable on this bill.
Mare v. Charles. In Mare v. Charles (x),& bill was drawn on Jl'm. Charles for goods supplied
to a mine, and was "accepted for the company, Wm. Charles," and thisaccepl-
ance was held to render Charles solely liable.
Promissory Similar principles are applicable to promissory notes. In
the following cases the makers were held personally liable
upon them : —
Penkivil v. We, the directors of the Royal Bank of Australia, for ourselves and
Connell. other shareholders of this company, jointlj- and severally promise to
pay, &c, value received on account of the company.
T. W. Sutherland, n
J. Connell, I
M. Boyd, Directors (,,).
A. Dcff,
(p) See Edwards v. Barnard, 32 (r) 7 Mod. 180.
Ch. D. 447 ; Edwards v. Cameron's (s) 9'C. B. 811.
Coalbrook Co., 6 Ex. 269 ; Halford (t) 12 A. & E. 745.
v. Cameron's Coalbrook Co., 16 Q. B. (») 9 Ex. 154.
442, and Eastwood v. Bain, 3 H. & (x) 5 E. & B. 978.
N. 738. (y) Penkivil v. Connell, 5 Ex. 381.
(7) See, ante, note (k). See, also, Healey v. Storey, 3 Ex. 3.
0> BILLS "l EXCHANG] \M< PROMISSORY NOT] ■ ->'■'>
,_,,. , . ,,,, . . I'.k. II. Chap. 1.
Midland < ounties Buildii , ;;.
We jointly and severally promise to pay, &c. ,.„,,,.
W. R. UlATII. ) Pi
S.B. Smith, | Director&
W. D. Fisher, Secretar
B
Two month aftei demand in writing we promise to pay Mr. Tin. ma ■ Price r. Taylor,
I' £100, for value n ceived.
W. R. Ill \!M. )
JohnTaylor, iTrU8t(
W. I >. Fisher, Secretary («).
liven ii' the company's seal is affixed and attested the Dutton v.
directors signing the note will be liable if they promise to pay,
as in Dutton v. Marsh(b), where the note ran thus: —
We, the directors of the Isle of Man Slati I ■ .. Limited, do promise
to pay J. I>. £1,600, with interest at •'» per cent till paid, for value
i \ ei 1 .
Signed by four din
The company's seal attested was in one corner.
In Miller v. Thompson (c) the following instrument, drawn Miller u
on a joint-stock bank, by the manager of one of its branches, 011'' n'
was held to be the promissory note of the directors of the
bank, and to be binding on them personally ;
London Trades' Joint Stock Banking Company.
Dorking, Surrey, 24th August, 1839.
Six months after date, pay, without acceptance, to the order of John
Cogan Francis, Esquire, £100, value received.
(Signed) For the Directors,
Thomas Newham, Manager.
(Addressed) The London Trades' Joint Stock Banking
Company, 33, Gracechurch Street, London.
On the other hand, companies have been held bound hy notes Notes of com-
ai £ n • r panies.
m the following forms : —
(z) Bottomlcy v. Fisher, 1 H. & C. 234.
211. (6) L. R. 6 Q. B. 361.
(a) Price v. Taylor, 5 H. & N. 540. (c) 3 Man. & Gr. 576.
Compare Lindus v. Melrose, infra, p.
234 LIABILITY OF COMPANIES
13k. II. Chap. 4. We, two of the directors of the Ark Life Assurance Society by
Secti 3- and on behalf of the Society, do hereby promise to pay, &c, value
Aggs v. received.
J\ic son. (Signed by two directors, and sealed with the seal of the Company) (d).
Maclae v. We, directors of the Eoyal Bank of Australia, for ourselves and
Sutherland. other shareholders of the Company, jointly and severally promise
to pay, &c, for value received, on account of the Company.
J. W. Sutherland, Chairman.
Adam Duff, )
John Mitchell, } directors («).
Entered, Benjamin Wood, Secretary.
Lindas r. We jointly promise to pay, &c, for value received in stock, on
Melrose. account of the London and Birmingham Iron and Hardware Com-
pany, Limited.
James Melrose, \
G. N. Wood, > Directors (/;.
John Harris, )
Edwin Guess, Secretary.
The following instruments have also been held to be pro-
missory notes binding on companies : —
... „ Sea, Fire, and Lijc Assurance Society.
Firr&c.,Com- To the CASHIER,
Pany- , Credit A., or order, with the sum of, &c, on account of this
Corporation.
A. Davis, )
W. Ouilvie, j Directors (Si-
Entered, F. F. A., Accountant.
UNION BANK POST BILL.
Forbes v. At sixty days after sight of this our first bill of exchange (second
Marshall. anci tliircl of same tenor and date not paid), Ave promise to pay,
on account of the proprietors of the Union Bank of Calcutta, &c,
value received.
J. Eennie, )
W. F. Grant, \ Directors (h).
H. W. Abbott, Secretary.
(d) Aejijs v. Nicholson, 1 H. & N. & N. 540, ante, p. 233.
165. (<j) Allen v. The Sea, Fire, and Life
(e) Maclae v. Sutherland, 3 E. & Assurance Co., 9 C. B. 574.
B. 1, held to be binding on the (h)- Forbes v. M arshall, 11 Ex. 166.
members of the company jointly. The above instrument had an accept-
(/) Lindus v. Melrose, 2 H. & N. ance written across it, and might, it
293, and 3 ib., 177, held to bind the seems, have been treated as a bill of
company and not the directors sign- exchange.
ing. Compare Price v. Taylor, 5 H.
FOE CONTRACTS OF WHICH 'llll., HAVE HAD THE BENEFIT. 235
CHAPTER V.
LIABILITY OF COMPANIES IX RESPECT OF CONTRACTS NOT BINDING
ON THEM BUT OF WHICH THEY HAVE HAD THE BENEFIT.
It is obvious that one person may be benefited by a l:!;- Ir- chaP- 3-
contract made by others without being himself in any way
bound by it. A loan to A. cannol be recovered from B.
simply because the money lent has come into his hands (a).
So if the directors of a company enter into a contract which is
not binding on the company, either upon the ground that the
contract is ultra vires or upon any other ground, the company
is not liable on the contract simply because it has had the
benefit thereof (&)•
It lias been already seen that a company is not, under
ordinary circumstances, liable on contracts entered into by its
promoters before its formation, although it may have had the
benefit of such contracts (c). Further, a company which has
benefited by a contract, not binding on it, is not to be deemed
to have thereby ratified that contract ; nor to have incurred an
obligation quasi ex contractu, similar to that which would have
been incurred if the contract had been binding on the company
in the first instance (d).
At the same time, a company is liable to refund monev 'BffanP oit°X
. , J sideration winch
which it has received without consideration, e.g., premiums has failcd-
paid to it in respect of policies which it had no power to
(a) Partn. 189. See Emly v. Lye, 309 ; Cork and Youghal Rail. Co., 4
15 East, 7, and other cases there cited. Ch. 748 ; Hill's case, 9 Eq. 605;
(b) See, in addition to the cases Chambers v. Manchester and Milford
cited below, The Worcester Com Ex. Rail. Co., 5 B. & S. 588. See, also,
Co., 3 D. G. M. & G. 180 ; Fisher v. per Parke, B., in Homersham v.
Taijler, 2 Ha. 218. Wolverhampton Waterworks Co., 0
('') Ante, Bk. ii. c. 1, § 2. Ex. 142, and the cases in the last
(d) Ex parte Williamson, 5 Ch. few notes.
236 LIABILITY OF COMPANIES
Bk. H. Chap. 5. grant (e) ; and money received in respect of shares the contract
to take which afterwards fails or is rescinded (ce).
Exception to There is, however, a very important exception to the general
rule against liability by reason of benefits received. It has been
long settled in equity that although an infant is not liable at
law for money borrowed although expended in necessaries,
nevertheless a person who bond fide advances money to an
infant is entitled, on the administration of the infant's estate,
to rank as a creditor in respect of so much of the money
advanced as has in fact been expended in necessaries (/). A
similar rule has been applied to mone}- lent to married women
and expended in properly maintaining them (g). There is a
further well settled rule that agents and trustees are entitled
to be indemnified by their principals and ccstnis que irustent
against all expenses properly incurred in the exercise of their
authority or the execution of their trust. From these doctrines
there has been developed a rule to the effect that a compan}' is
liable to refund money improperly borrowed \>y its directors
but in fact bond fide applied in discharging debts or liabilities
of the company which could have been enforced against it, or
bond fide applied for any other legitimate purpose for which it
might have come under liability. These last words are added
because with reference to the matter in hand there can, it is
conceived, be no difference between paying a person for goods
already supplied and paying cash for goods which might have
been obtained from him on credit (h).
This doctrine has grown out of the celebrated decision in
the German Mining Company's case (i), which will be hereafter
referred to when considering the rights of directors to in-
demnity (Bk. III., c. 2, § 3). The following cases show the
application of the doctrine to other persons, and the limit of
its application.
(c) PJiaiuix Ass. Co. Burges1 and ea.sos may have gone too far, but the
Stock's case, 2 J. & H. 441. tendency in this direction has been
(ee) Ante, pp. 33 and 72, note (ij). checked by more recent decisions.
(/) Marlow v. Pitfield, 1 P. W. See Ex parte Williamson, 5 Ch. SOD,
558. and the decisions subsequent to it
(g) Jcnner v. Morris, 1 Dr. & Sm. noticed in the text.
218 ; Deare v. Soutten, 9 Eq. 151, (i) Ex parte Chippendale, 4 De G.
(70 This, however, has not yet M. & G. 119.
been actually decided. Some of the
I OB CONTEACTS 01 WHICH THEY HAVE HAD THE BENEFIT. 237
In Re The Cork and Yonghal Railway Company (k), the Bk. II. chap. 5.
holders of Bome invalid Lloyd's bonds (I) were held not Cork v. Youghal
entitled to rank as creditors of the company for the amounts S^™7 Com"
of the bonds, bul were held entitled to be paid so much of
those amounts as they could prove had been properly applied
for the legitimate purposes of the company ; and an inquiry on
this head was directed.
In the Blackburn Building Society v. ( 'unUfe Brooks dt ( 'om- Blackburn
pany (w), a building society was not only held not to be liable ^fiffe !
i" repay money improperly borrowed by its directors bul was
held entitled to recover from the lenders the sums repaid to
them out of the funds of the society. But here again an
exception was made in respect of those sums which could be
proved to have been applied in discharging the debts and
liabilities of the society.
The same principle affords an explanation of certain cases
in which transferees of debentures, issued ultra vires but in the
name of a company, have been held entitled to recover from the
company the value of the consideration received by it for such
debentures.
Thus, in the grossly fraudulent case of the Athenceum Life Athenaum As-
Assurance Society v. Pooley (n), where debentures of a eom-^SS^*1
pany given in exchange for Westminster improvement bonds,
were decided to be invalid in the hands of a bond fide pur-
chaser for value, the purchaser was held entitled to an inquiry
whether the company had received any benefit from the bonds.
Again in the similar and subsequent cases of Wood's Claim Wood's Claim.
and Brown's Claim (o), Westminster bonds were sold to an
insurance company for money debentures and shares. The
transaction was held invalid ; and it appearing that the bonds
were worth more than the company gave for them, and that
the company had had the benefit of the excess, the company
was debited with such excess in an account directed between
the company and the vendor ; and he, on the other hand, was
(k) 4Ch. 748. See, also, National (m) 9 App. Ca. 857, and 22 C'h.
Permanent Benefit Building Soc, 5 D. 61, and 29 ib. 902, noticed ante,
Ch. 309 ; Magdalena Steam Nav. p. 190.
Co., Johns. 690. (n) 3 De G. & J. 294.
(0 As to which see ante, p. 197. (o) 9 W. R. 3(5(5, and 10 ib. 662.
238
LIABILITY OF COMPANIES.
Bk. II. Chap.
Ex parte
Williamson.
Baroness Wen-
lock v. River
Dee Company.
debited with the money paid to him by the company, and with
the sums realised by him by the sale of the debentures and
shares.
The mere fact that the company has had the use of the
money is not enough to create an obligation to repay it ; so to
hold would render nugatory all prohibition against borrowing.
Accordingly where the managers of a building society borrowed
money for the society, but in excess of their powers, and the
money so borrowed was advanced to members on the security of
their shares, it was held that the lenders had no claim against
the society either as creditors at law or by reason of the appli-
cation of the money (_p) .
The following case also shows that the doctrine in question,
cannot be extended so as to defeat a company's special act.
In Baroness Wenlock v. River Bee Company (q) a company
was created by act of Parliament for the purpose of embanking
the river Dee and improving the lands near its mouth.
Limited powers of borrowing and of mortgaging were conferred
by the act. The directors borrowed money largely in excess
of their powers ; but the money to a great extent at least was
bond Jide applied for the legitimate purposes of the company
i.e., in doing the work which the compairy was formed to do,
and in paying off pre-existing mortgages, some of which were
valid and others invalid. The money thus borrowed was held
not recoverable as a debt (r) ; but so much of the money as
had been applied in paying off existing valid mortgages and in
payment of any debts and liabilities properly incurred was
held to be recoverable (s). But the money applied in paying
off one of the invalid mortgages was held to be no charge on
the lands, although the money raised by such invalid mortgage
had been spent in embanking the river and reclaiming the
land adjoining it. The ground of this decision (t) was that to
hold the money so applied to be a charge would be to con-
travene the terms of the company's special act.
Qj) Ex parte Williamson, 5 Ch.
309.
(q) 10 App. Ca. 354 ; 19 Q. B. D.
155 ; and 36 Ch. D. 674 ; 38 ib.
534.
(r) 10 App. Ca. 354, ante, p. 189.
(s) lb., and 36 Ch. D. 675, note.
(0 38 Ch. D. 534, and 36 ib. 674.
The mortgage above referred to as
invalid was the mortgage for ,£6405
to the Lands Improvement Co.
LIABILITY OF DI1
239
CHAPTER VI.
OP Till- LIABILITY OP INDIVIDUAL MEMBERS OP COMPANIES To
CREDITORS.
The liabilities of directors of companies to their members, 1;k- u- c,,aP- G-
the liabilities of members to calls, and their liabilities as con-
tributories in winding-up proceedings will be discussed here-
after in Books III. and IV. In the present chapter it is
proposed to examine the separate liability of members of
companies to creditors and others apari from all questions as
to their liabilities inter se, whether before or after a winding-
up order. For this purpose it is necessary to distinguish
directors from other members; for although what is true of
members is also true of directors as members, it frequently
happens that directors incur liabilities by their own acts in
addition to those to which they art- subject simply in their
characters as members.
SECTION I.— OF THE LIABILITIES OF DIRECTORS.
1. For their own acts.
It has been already seen that the directors of a company are Torts and
frauds.
the agents of the company, but not of each other, unless
clearly so constituted (a). It has also been seen that directors
are responsible for the frauds which they may themselves com-
mit or authorise (/>). On similar principles it is conceived
(«) Ante, c. 2, § 2. (/») Bk. i. c. 3, § 1 (3) and § 2.
240 LIABILITY OF DIRECTORS.
Bk. II. Chap. 6. that they are personally responsible for any torts which they
Sect. 1 .
— may themselves commit or direct others to commit, although
it may be for the benefit of their company (c).
It was held in a case in which a company infringed a patent,
that the directors were personally liable to the costs of a suit
to restrain the infringement (d). But it would be contrary to
principle to hold directors personally responsible for the
negligent or other acts of other servants of the company
unless the directors are themselves personally implicated in
such acts.
Contracts. With respect to contracts directors may bind themselves
personally, although acting for the company, e.g. by putting
their names to bills of exchange or promissory notes so
worded as to be their bills or notes and not those of the com-
pany (e), or by entering into covenants (/), or other contracts
so worded as to bind them individually (//). Such cases turn
on the true interpretation of the documents which may be in
question.
But if a contract is so worded as to bind the company, the
directors who sign it are not liable upon it ; unless indeed the
terms of the contract are such as to bind, both them personally
and the company, which is sometimes the case (/<). This is in
accordance with the ordinary rules applicable to contracts with
agents (?'). The only exception to this rule is, that a director
contracting for a limited company and suppressing the word
"limited," is liable personally on the contract (k).
Position of agent Formerly it was thought that if an agent entered into a con-
who exceeds his tract 011 belialf 0f a principal, and such contract did not bind
authority. * '■
(c) See Mill v. Haviker, L. R. 9 Q. B. D. 516, and 5 ib. 390, where
Ex. 309, and 10 ib. 92. three directors promised to pay
(d) See Betts v. De Vitre, 5 N. R. money advanced to the company on
165, and 3 Ch. 441 : and see an the security of plant, &c. belonging
article in 10 Jur. N. S. (part 2), to it, and see infra, p. 243.
p. 475. (h) Lindus v. Melrose, 2 H. & N.
(e) Ante, c. 4, § 3. 293, and 3 ib. 177 ; Aggs v. Nichol-
(/) See, as to covenants by agents, son, 1 H. & X. 165 ; Russell v. Reece,
Appleton v. BinJcs, 5 East, 148 ; 2 Car. & Kir. 669.
Hancock v. Hodgson, 4 Bing. 269 ; (/) See Partn. 177, &c.
Hall v. Bainbridge, 1 Man. & Gr. (k) 25 & 26 Vict. c. 89, §§ 41
42; Pickering's claim, 6 Ch. 525. and 42 ; Penrose v. Martyr, E. B. &
(g) As in McGollin v. Gilpin, 6 E. 499.
FOB illKll: OWN ACTS. 211
the principal, he not having authorised it, the agent was him- 1;;- "• ( li:ii' ,;-
-'II bound by the contract. According to this doctrine, a con- -
trait ostensibly entered into by A. through 15. was treated as a
contract by II., although it was not the intention of either
party to the contract that 15. should be in any way bound by
it. The propriety of thus making contracts for persons ha-.
however, been very properly questioned and denied ; and it i^
now held that an agent contracting as such without authority,
is not bound by tlte contract at all, hut thai he is liable in
damages lor tin' consequent 9 ensuing from his having
assumed to act with an authority which in fad he did not
possess. It is also held that he is thus Liable although he
acted bond fide and in the belief that In- had the authority he
assumed (I).
This result has been arrived at by the fiction of an implied Warranty of
warranty of authority ; but it really is an exception to the'11
general rule that an action will not lie for a misreprest il-
lation unless fraudulent (in).
The rule in question is as applicable to directors as to other Personal liability
kinds of agents (//). But with respect to directors, it must excee(i their
not be forgotten that in mosi cases the limits of their authority iowers-
can be readily ascertained, and are supposed to be known (o) ;
and a person who deals with directors whom he knows, or is
supposed to know, to be exceeding their authority, cannot
complain of them if he finds that their acts are repudiated.
(I) See on this subject the cases Campbell, 5 App. Ca. p. 952, where
referred to in the next ten notes, the difficulty of drawing the line
and Jcnkiiis v. Hutchinson, 13 Q. B. between warranty, fraud, and es-
744 ; Lewis v. Nicholson, 18 Q. B. toppel is pointed out. See, also,
503 ; llandellx. Trimen, 18 C. B. 786; Pollock on Contracts, Appendix,
Gotten v. Wright, 7 E. & B. 301, and note L. ; Holmes on the Com. Law,
8 ib. 647 ; Simons v. Patchett, 7 ib. 130.
568 ; Eastwood v. Bain, 3 H. & N. (n) Godwin v. Francis, L. R. 5 C.
738, where the plaintiff had not sus- P. 295 ; Ferguson v. Wilson, 2 Ch.
tained damage. As to the measure 77.
of damages, see Ex parte Panmure, (0) See as to this, ante, p. 165.
24 Ch. D. 367 ; Meek v. TVendt & Wilson v. Miers, 10 C. B. N. S. 348,
Co., 21 Q. B. D. 126. was an action against directors for
(on) See ante Bk. I. c. 3, § 1, and exceeding their authority, but the
Firbank's exors. v. Humphreys, 18 Q. Court was of opinion that there was
B. D. 54. See, also, Lord Black- no excess, and decided against the
burn's observations in Brownlie v. plaintiff on that ground.
L.C. R
242 LIABILITY OF DIRECTORS
Bk. II. Chap. 6. He runs the risk of such repudiation. In the absence, there-
Sect, l. l '
- fore, of fraud on their part, such a person will be unable to
obtain airy redress against them. Moreover, they are not
liable for honest mistakes as to the legal extent of their
authority (p).
Thus, where a person advanced money to a coinpan}- on the
security of an invalid Lloyd's bond of the company, the
directors who issued it were held not to be personally liable
to repay the monej' advanced (q). So where a person bought
new preference stock of a railway company which both he and
the directors bond fide believed they had power to issue, but
which in truth they had not, it was held that he had no
remedy against them, for there was nothing more than a
common mistake of law (r).
Liability for But directors, like other agents, impliedly warrant all facts
acts ultra .
vires. necessary to confer the authority which they profess to exer-
cise. And if the company is governed by a private act of
Parliament the contents and effect of that act are regarded as
matters of fact (s). Therefore directors who had accepted
bills on behalf of a company, which had no power under its
private acts of Parliament to accept bills, were held liable to
the holders who had no notice in fact that the company was
not empowered to accept bills (s). So where a company had
power to borrow, but the power had been already exhausted,
and the directors nevertheless raised more money, they were
held personally liable to repay it (t). So where the directors of a
benefit building society had power to borrow if a rule enabling
them to do so had been passed, and they borrowed money for
the society in the absence of any rule enabling them so to do,
it was held that they were personally liable to repay it («). So
where directors of a company authorised the manager to over-
draw the company's account, they were held liable for the
(p) Beattie v. Lord Ebury, L. B. v. Kitson, 12 Q. B. D. 157, and 13
7 Ck. 777, and 7 H. L. 102. Com- Q. B. D. 360.
• pare the cases in the next four notes. (t) Weeks v. Propert, L. B. 8 C.
(q) Rashdall v. Ford, 2 Eq. 750. P/427 ; Chapleo v. Brunswick Build-
See on this ease, 13 Q. B. D. 363. ing Soc, 6 Q. B. D. 696.
(r) Eaglesfield v. Marquis of Lon- (u) Richardson v. Williamson, L.
donderry, 4 Ch. D. 693. B. 6 Q. B. 276, explained by Mel-
(s) West Loudon Commercial Bank lish, L. J., in 7 Ch. 801.
FOB l lll.li; OWN A( I -. 2 18
over-draft, for although the company had no power to borrow 1;k- "■ Chap- •••
without the consent of ;i meeting of shareholders, they had
power to do so with such consent^ . So where a company had
power to issue debenture stock to a Limited extent, and the
directors, niter the power was exhausted, issued more deben-
ture stock, they were held personally Liable to the holdei - of the
unauthorised stock. The damages were held to be the value
which the stock would have had if it had been authorised (>/).
Further, where a person purports to contract as an agent, Contracts with
promoters of
and lie has in truth no principal, so that the contract, unless compan
binding on the party to it, is wholly void, he is treated as
having contracted on his own behalf, and is personally Liable
accordingly. Thus, if a person contracts on hehalf of a com-
pany not yet formed, he is Liable on that contract ; and he is
not relieved from such Liability by the subsequent adoption of
the contract by the company when formed ci ; unless the con-
tract is so worded as to exclude personal liability.
Again, if directors contract as principals, which is quite Express personal
consistent with their acting on behalf of the company (a), they
will be bound personally by tluir contract provided it is not
actually illegal. The fact that the contract is one which would
not bind the company is not p< r se sufficient to render it void
as against the directors personally. Therefore, where the
directors of a company disagreed and divided into two parties,
and one party retired, and the other party covenanted to
indemnify them, this covenant was held binding on the direc-
tors who entered into it, irrespectively of the question how far
the whole transaction was one which the directors had power
to enter into on the part of the company (b). But if the con-
tract is illegal no action can be maintained upon it ; and there-
fore where the directors of a railway company agreed that it
(as) Cherry v. Col. Bank of A us- and the cases on promissory notes,
tralasia, L. R. 3 P. C. 24. ante, p. 232 et sea. See, also, Kay v.
(y) Firbank's exors. v. Humphreys, Johnson, 2 Hem. & M. 118, in which
18 Q. B. D. 54. a decree for the specific performance
(;.) Kelner v. Baxter, L. R. 2 C. P. of an agreement for a lease was made
174 ; Scott v. Lord Ebury, ib. 255. against directors personally.
(a) McCollin v. Gilpin, 5 Q. B. (b) Haddon v. Ayers, 1 E. & E.
D. 390, affirmed 6 Q. B. D. 516, 118; Barker v. Allan, 5 H. & N.
DvMon v. Marsh, L. R, 6 Q. B. 361, 61.
K 2
244 LIABILITY OP SHAREHOLDERS.
Bk. II. Chap. 6. should pa}r the expenses which might be incurred by another
company in attempting to obtain an act of Parliament for the
formation of a line which, when made, was to be handed over
to the first company, it was held that this was an agreement
to the effect that the first company should do that which was
altogether illegal, and that an action against the directors for a
breach of the agreement could not be sustained (c).
2. For the acts of each other.
Directors not the Although the directors of a company are the agents of the
agents of each G I J &
other. company, and although, as a member of the company, each of
the directors is liable for the acts of its agents on the same
ground as other members, still, unless a director has done
something to make his co-directors his agents in some other
sense than this, he is no more liable for their acts than any
other shareholder. In this respect directors are like pro-
moters, each being answerable for his own acts and for the
acts of the others so far as he has made them his agents, but
no further (d). It must however be borne in mind that the
liability here referred to is liability to persons dealing with
directors as representing their company. The duties and
liabilities of directors to shareholders will be referred to here-
after in Book III.
SECTION II.— OF THE LIABILITIES OF SHAREHOLDERS.
Passing now to the consideration of the personal liabilities
of shareholders of companies in respect of transactions which
impose liabilities on the companies of which they are members,
it is necessary to distinguish one company from another, and
especially unincorporated from incorporated companies.
(c) Macgregor v. Dover and Deal case, 4 -De G. M. & G. 411 ; Walker's
Rail. Co., 18 Q. B. 618. case, 8 De G. M. & G. 607. See,
(d) See Brown v. Byers, 16 M. & also, Weir v. Barnett, 3 Ex. D. 32
W; 252 ; Heraud v. Leaf, 5 C. B. and 238 ; Gargill v. Bower, 10 Ch.
157 ; Bra,,) ah v. Roberts, 3 Bing. D. 502.
K. C. 963 ; Lord Londesborough's
/ \u.s r hi i.i \i;ii.u v. 245
Bk. II. Chap. 6.
Sect. 2.
1. As to the > tteni of liability,
(a.) Of liability at Common Law and of attempt I
Hy the common law of this country every member of an
unincorporated partnership, whether it be an ordinary firm or
a joint-stock company with transferable shari 3, is personally
liable for nil tin- debts and engagements of the partnership
contracted whilsl he is a member of it [e). As may be Bup- utemptato
posed, many attempts have been made from time to time
to restrict the application of this rule and to form com-
panies on such terms as to prevent their members from being
ruined in the event of the companies suffering serious loss.
These various attempts have ceased to be of much practical
importance owing to the facilities of forming incorporated
companies by means of registration; hut they have still greal
historical interest and deserve notice on that account : more-
over, there are still insurance companies which issue policies
on the terms that they are to be paid solely out of the funds
of the companies.
The attempts referred to may be ranged under two heads,
according as there has or has not been some special agreement
with the creditors.
So inflexible is the doctrine of unlimited liabilit}', and' so Without special
important is it that no doubts shall be cast upon it, that judges creditors,
have frequently denounced in the strongest terms the conduct
of those who have endeavoured to inveigle the public into
taking shares in companies by asserting that "no one shall be
liable beyond the amount of his subscription." Nothing can
be more delusive or worthless than such statements as applied
to unincorporated bodies, or to bodies not governed by special
acts of Parliament ; for although the subscribers themselves
may stipulate with each other for such a restricted liability,
nothing is more clear than that, as to the rest of the world,
each shareholder is liable for the whole amount of the debts of
(e) Partn., bk. ii. c. 2, and see, as V. & B. 157 ; R. v. Dodd, 9 East,
to companies, Keasley v. Codd, 2 Car. 516 ; Robinson's Executor's case, 6 De
& P. 408, note ; Garlen v. Drury, 1 G. M. & G. 572.
246 EXTENT OF SHAREHOLDERS LIABILITY.
Ck. II. Chap. 6. the company (/). Nor will notice that a stipulation of this
— kind has been entered into between the shareholders prevent a
creditor from holding each of them liable to the full extent of
his demand (//).
By special con- Notwithstanding, however, this general rule, if a person
tors. V'1 l c> ' chooses to deal with a company upon the terms that its funds,
and they only, shall be available to make good his demands,
he cannot afterwards depart from those terms and hold the
members individually liable as if no such restriction had been
agreed to (h).
It is, however, to be borne in mind, that members of unin-
corporated companies, like other partners who contend un-
restricted liability, have the onus probandi on themselves, and
if, owing to any circumstance, they fail in establishing their
contention, the general rule of unlimited liability applies to
them as a matter of course (i).
Limiting liability The ordinary mode of restricting liability, is to contract
to funds of com- ^ ^ ^^ q£ ^ company shaU alone be Hable to the
demands against [it. Upon contracts in this form, it is to be
observed that —
1. A contract by a person to pay out of his own property
without limitation, is in fact an absolute contract to pay ; for
expressio coram qua tacite insunt nihil operatur.
2. Upon the same principle, a contract by a corporation to
pay out of its funds generally is, as regards the corporation,
neither more nor less than a contract to pay absolutely ; for
a corporation as such has nothing except its funds to pay
out of (k) .
3. An express contract to pay out of certain specified
(/) See B. v. Dodd, 9 East, 516, judgment on the bill of exceptions) ;
and the cases in the last note and Durham's case, 4 K. & J. 517.
the next. (t) See Luckombe v. Ashton,
(g) See Greenwood's case, 3 De G. 2 Fos. & Fin. 705, and ante,
M. & G. 459. The State Fire Ins. note (g).
Co., Meredith's case, and Conver's (/.:) Sunderland Marine Insur. Co.
case, 1 N. R. 510, V.-C. W. v. Kearney, 16 Q. B. 925, in which
(h) Alchorne v. Saville, 6 Moo. the liability of the individual mem-
202 ; Halket v. The Merchant bers of the company was not in
Traders' Loan Assoc, 13 Q. B. 960 ; question.
Hallett v. Dowdall, 18 Q. B. 2 (the
VI I 1.M11S TO LIMIT r.IAIHI.ITY.
247
funds, excludes an implied contract to pay in some ■ -t h»-r l;; ■ n Chap. ''■
1 l ■ b. 2.
manner (J).
-1. Bnl ;i person who undertakes to pay out of certain funds,
is absolutely bound to pay it' those funds exist and are avail-
able; so thai it', tin' funds existing and being available, he
docs not choose to pay out of them, he must pay out of liis
own property | m I.
5. On the other hand, a person who undertakes to payout
of certain funds, is under no obligation to pay unless those
funds exist (n), or unless their non-existence is owing to his
own default (o), or unless he has also undertaken that they
shall exist ; in which last case his undertaking to pay amounts
to an absolute undertaking, and the qualification as to the
funds goes for nothing (}>).
En conformity with these principles, it has been held that Success of
the promoters of a company are not Liable to persons i mployed limit liability,
by them upon the terms that such pi rsons shall look for pay-
ment to certain specified funds, and not to the promoters
individually (</) ; that upon a contract to pay out of the funds
of a joint-stock company, all those who in point of law are
bound by the contract, are personally liable to satisfy the
(/) See Alexander v. Wormeen, 6
H. & N. 100 ; Giles v. Smith, 11
Jur. 334, C. P. ; Landman v. En-
twistle, 7 Ex. 632 ; Mathew v. Black-
more, 1 H. & N. 702 ; Taft v.
Harrison, 10 Ha. 489. Compare
Cope's case, 1 Sim. N. S. 54.
(;») Higgins v. Hopkins, 3 Ex.
163 ; Haildt v. Dowdall, 18 Q. B.
2. But if an incorporated company
promises to pay out of its funds
only, anil it lias funds, it does not
follow that the shareholders are
personally liahle, Re the Athenaeum
Society, and Prince of Wales Society,
Johns. 80, affirmed 3 De G. & J.
660.
(») The Statute of Limitations
does not begin to run until they do
exist. See in re Kensington Station
act, 20 Eq. 197.
(o) As in Mclntyre v. Belcher, 14
( '. B. N. S. 65 1. where the defendanl
discontinued the business, out of
the profits of which he was to pay
the plaintiff. See, also, Telegraph
Despatch Go. v. McLean, 8 Ch. 658 ;
Worihington v. Sudlow, 2 B. & Sm.
508. [Compare King v. Accumulative
Ass. Co., 3 C. B. X. S. 151 ; Rhodes
v. Forwood, 1 App. Ca. 256 ; Rail-
v<tij and Electric Appliances Co., 38
Ch. D. 597, noticed infra, p. 249,
note (a).
{p) See Pilhrow v. Pilbrow's At-
mospheric Co., 5 C. B. 440.
(q) Giles v. Smith, 11 Jur. 334,
C. P. ; Landman v. Enticistle, 7 Ex.
632. Compare Cope's case, 1 Sim.
N. S. 54 ; GuUen v. Duke of Queens-
berry, 1 Bro. C. C. 101, and Horslcy
v. Bell, ib. in the note ; S. C. 2 Am.
770 ; Williams v. Hathaway, 6 Ch.
D. 544.
Hancock r.
Hodgson.
248 EXTENT OF SHAREHOLDERS' LIABILITY.
Bk. II. Ciap. 6. demands to which those funds are applicable, if any such funds
— — there be (r) ; but that if there are no such funds, then the
event on which alone payment has to be made not having
arisen, no one is liable to pa}^ (s).
Failure of at- ^he latter proposition, however, supposes that the contract
tempt where .
contract is not is not so framed as (notwithstanding what is said about the
funds of the company) to amount to an undertaking to pay at
all events. The importance of attending to this point appears
from Hancock v. Hodgson (t). In that case, the projectors
of a mining company purchased a copper and tin mine, and
covenanted to pay the purchase money by quarterly instal-
ments out of the funds of the company ; but it was provided
that in case there should not have been received by the
bankers of the company or by the directors for the time being,
the deposits or instalments due from the several shareholders,
so as to enable the directors to pay the purchase money at the
times therein before mentioned, then and in such case the said
directors shall be allowed a further time to pay such balance,
until six months after the time or times when the said quar-
terly instalments became due. Upon this covenant and
proviso it was held, that the covenantors were personally liable
to pay the whole purchase moneys, although the company had
no funds ; for that whatever might have been the case without
the proviso, that clearly showed that after the expiration of the
further period therein mentioned, the payment was to be made
by the covenantors at all events, whether the company had
funds or not.
Having made the above general observations, it is necessary
to examine with greater particularity the effect of contracts by
companies to pay out of particular funds, on
1. The rights of creditors against the funds themselves;
(?•) See Andrews v. Ellison, 6 B. Loan and Insurance Association, 13
Moore, 19!) ; Gurney v. Rawlins, 2 Q. B. 960 ; Hassell v. Ditto, 4 Ex.
M. & W. 87 ; Bauson v. Wrench, 3 523 ; The Worcester Com Exchange
Ex. 359 ; Reid v. Allan, 4 Ex. 32G ; Co., 3 De G. M. & G. 180 ; King v.
llallett v. Dowdall, 18 Q. B. 2, the The Accumulative Assurance Co., 3
judgment on demurrer. C. B. N. S. 151 ; and compare Cope's
(s) See, in addition to the above case, 1 Sm. N. S. 54.
cases, Durham's case, 4 K. & J. 517 ; (0 4 Bing. 269.
Hailed v. The Merchant Traders'
ATTEMPTS TO LIMIT LIABILITY. 2 19
and 2. Their rights againsl the members individually where Bk- IL CbaP- 6-
those funds have been exhausted.
1. With respeel to the rights of creditors against the funds, Right against
it may now be considered as settled, thai a contract by a com-
pany to paya person out of its funds does not give the creditor
any specific charge or lien on those funds, nor any preference
over other creditors (//) ; hut it nevertheless entitles him, even
before the time for payment arrives, to prevent the funds from
being misapplied (x). Where therefore an insurance company
had issued policies and mad.' them payable out of its funds, a
policy holder whose policy had not become payable was laid
entitled to an injunction to restrain the company from amal-
gating with and transferring its funds to another company,
such amalgamation and transfer not being warranted by the
deed of settlement of the first company (y). Jt has, however,
been held o thai a contract to pay a policy out of particular
funds does not amount to a contract to carry on business, nor
to a contract not to hand over the muds to other persons (a) ;
and that a policy holder whose policy is not due cannot sup-
port an action for damages which he fears he will sustain, but
which possibly he will not. The last ground is perhaps the
most satisfactory, and has the advantage of rendering the de-
cision in equity consistent with that at law.
It is, however, by no means uncommon for an unlimited Wliere the com-
,. . . ,. , ... I'.tnv has power
insurance company to limit its liability to policy holders and to transfer its
annuitants to its funds, and to have in its deed of settlement f'""ls'
(u) A Ibcrt Life Ass. Co., 9 Eq. 706 ; 571.
Mclver's claim, 5 Ch. 424, and the (z) King v. Accumulative Life
cases in the next note. Assur. Co., 3 C. B. X. S. 151. See
(.<■) See Kearns v. Leaf, 1 Hem. & also, Lefhhridgex. Adams, 13 Eq. 547.
M. 681 ; State Fire Insur. Co., (a) See, also, llhodes v. Foncood,
ib. 457, and 1 De G. J. & Sm. 634 ; 1 App. Ga. 256, where an agent of a
Athenceum Life Insurance Society, colliery contended in vain that his
Johns. 80 & 633, and 3 De G. & J. employer was bound to carry it on.
660 ; Law v. London Indisputable So in Re Railway and Electric Ap-
Life Policy Co., 1 K. & J. 223. These pliances Co., 38 Ch. D. 597, there was
cases will be adverted to hereafter, no implied covenant to carry on
when the winding up of companies business in order to work a patent,
is being considered. Compare Telegraph Despatch Co. v.
(y) Kearns v. Leaf, 1 Hem. & M. McLean, 8 Ch. 658, and Mclntyre v.
861 ; Aldebert v. Leaf, ib. Compare Belcher, 14 C. B. N. S. 654, noticed
Argus Life Ass. Society, 39 Ch. D. ante, p. 247, note (o).
250
EXTENT OF SHAREHOLDERS LIABILITY.
Extent of mem-
bers' liability.
(a) Where the
company is
incorporated.
Bk. II. chap. 6. or articles of association as originally framed, or as altered in
Sect. 2. . .
- accordance with a power therein contained, power to transfer
its funds and its business to another company. Where this
occurs, a transfer of the funds cannot be prevented ; and upon
a proper transfer being made and in the case of life insurance
companies confirmed bjr the Court, the policy holders and
annuitants cease to have any claims against the transferring
company (b).
2. "With respect to the extent of the liability of the members
of a company upon contracts in which it is specially stipulated
that the funds of the company alone shall be answerable, and
that no member shall be liable beyond the amount of his share,
the limit set by contract is the limit of liability : —
"Where the company is an incorporated compairv, there never
was any difficulty in giving effect even at law to all the terms
of the contract ; and in the case of companies registered under
the act 7 & 8 Vict. c. 110, it was held that the members were
not liable to have execution issued against them upon judg-
ments obtained against the compan}' on a contract of the
description in question ; but that the property of the company
was alone liable to make good the demands of the judgment
creditor ; and this was held at law even in cases where the
subscribed capital had been exhausted but the whole capital
had not been paid up (c) .
The same principle was acted on in equity, except that a
Court of equity compelled the shareholders to pay up rateably so
much of the capital as had not already been subscribed (d).
This can now be done by a properly constituted action.
In all these cases, however, it must be borne in mind that
the liabilities which are limited to the funds of the company,
are those only which are expressly so limited by the contracts
(6)* See infra, § 3, p. 258, &c, and
as to life assurance companies, see
The Life Assurance Companies act,
1870, 33 & 34 Vict. c. 61, § 14.
(r) Hailed v. The Merchant Tra-
ders' Loan and Insurance Assoc, 13
Q. B. 960 ; Hassell v. The Same, 4 Ex.
525 ; Durham's case. 4 K. & J. 517 ;
lie the AtlienoBwm Life Soc, Johns.
80, and 3 De G. & J. 660, on appeal ;
Lethbridge v. Adams, 13 Eq. 547.
(d)' Talbot's case, 5 De G. & Sni.
386 ; Durham's case, 4 K. & J. 517 ;
Evans v. Coventry, 8 De G. M. & G.
835. See clause 7 of the decree.
I.I \l:ll.I'I V LIMITED BY BTA1 ri E. 251
with the creditors: the Liabilities to other persons are un- |;! ■ n- ''1mi'- ,;-
limited (e).
Companies governed by the Companies act, 1802, may, Com]
although unlimited, limit their liability by special contract \J >, a i of L862.
and where they do so the principles above adverted to will be
applicable. But as under the < lompanies act, 1862, judgments
against a company cannot be enforced against its members,
questions as to their individual liability can scarcely arise
except when a company is being wound up.
As regards unincorporated companies, it was extremely dif- (&) Wherethe
i • r • -i i i i • c i -r i- coiniauv is not
iicult, li not impossible, before the passing ot the Judicature incorporated.
Acts, to enforce by action at law a contract limiting their
liability to their funds (y). It was practically necessary to sue
in equity. But now it is apprehended thai an action can be
maintained against the persons having the control of the funds
and the persons liable to contribute to them, to enforce the
liability to contribute, and the due application of the funds
when raised (/<).
(/».) of limit*, 1 liability by Statute.
Passing now to the subject of limited liability by statute, Limited lil,,ili y
. . ' . ' bJ statute,
the first point which lias to be borne in mind is that the
moment a society of any kind is incorporated, its members
cease by common law to be in an}r way liable for the debts and
engagements of the body corporate. Moreover, although by
common law it has always been lawful for the Crown to create
corporations, the Crown has no power by common law to create
a corporation and at the same time to render its members indi-
(e) See the Albert Life Ass. Co., 9 this treatise, but it has not been
Eq. 706 ; Professional Life Ass. Co., thought necessary to reproduce the
3 Eq. 66S, and 3 Ch. 167 ; Lcthbridge former observations on it.
v. Adams, 13 Eq. 547. (h) See Law v. The London In-
(/) See § 38, cl. 6, Accidental disputable Life Policy Co., 1 K. &
Death Ins. Co., 7 Ch. D. 568. J. 223 ; Talbot's case, 5 De G. & Sm.
((/) See Hallett v. DowdaU, 18 Q. 386 ; Durham's case, 4 K. & J. 517 ;
B. 2, and the observations of Mellish, Robson v. McCreight, 25 Beav. 272 ;
L. J., in Crain's case, 1 Ch. D. 322 ; Evans v. Coventry, 8 De G. M. &
Alchorne v. Saville, 6 B. Moore, 202, G. 835. See, as to the effect of a
note. Hallett v. DowdaU was noticed transfer by the company of its busi-
at length in the earlier editions of ness, Hart's case, 1 Ch. D. 307.
252
EXTENT. OF SHAREHOLDERS LIABILITY.
Bk. II. Chap. 6.
Sect. 2.'
Chartered com-
panies.
Companies go-
verned by 8 & 9
Vict. c. 16.
Companies em-
powered to sue
and be sued.
Banking com-
panies governed
by 7 Geo. 4,
c. 46.
Companies act,
1862.
vidually liable for its debts (/), the whole of that branch of
the law which relates to the liability, as distinguished from
the non-liability, of the members of incorporated companies
for the debts and engagements of such companies, is of modern
growth and is based upon statutory enactments. These enact-
ments will be examined hereafter in connection with the
subjects of execution and winding up, but it may be useful to
state generally in the present place that —
1. The liability of the members of a company governed by
the Letters Patent act depends on the terms of its charter or
letters patent, the Crown being empowered by the act in ques-
tion to limit their liability or not. (See 7 Will. 4 and 1 Vict.
c. 73, §§ 4 & 29.)
2. The liability of the members of a company governed by
the Companies clauses consolidation act is limited to the
extent of their unpaid-up shares in the capital of the company
(8 & 9 Vict. c. 1G, § 36).
3. The liability of the members of a company empowered by
a special act of Parliament to sue and be sued by a public
officer depends on the terms of such act, but will almost inva-
riably be found to be unlimited (k).
4. The liability of the members of a banking company
governed by 7 Geo. 4, c. 46, is unlimited. (See 7 Geo. 4,
c. 46, §§ 11, 12, 13.)
5. Subject to the exceptions presently to be noticed, the
extent of the liability of the members of a company formed
and registered under the Companies act, 1862, depends upon
whether the company is registered with limited liability or not.
If the company is registered with limited liability, its members
are not liable beyond the amount for which they have under-
taken to be responsible ; but if the company is not so regis-
tered, its members are liable to the full amount of the com-
(i) This power was conferred upon
the Crown by 6 Geo. 4, c. 91, § 2,
which was followed by 4 & 5 Will.
4, c. 94, and was with it repealed
and replaced by 7 Will. 4 eS: 1 Vict.
c. 73.
(k) See Aldridge v. Cato, L. R. 4
P. C. 313, as to the liability of a
member of a company empowered
to sue and be sued, but not incor-
porated. The Colonial ordinance in
that case was held not to have in-
corporated the company, and the
case may be usefully referred to on
the construction of such documents.
LIABILITY LIMITEP BY MAH 11. 258
pony's debts and engagements, whatever that may be (/>. The l;L n (|"i'- ,;-
liability, however, of each member i-* merely ;i liability t"
contribute with others; and such liability can only be en-
forced by winding up the company. No execution can issue
against a member upon a judgment obtained against the
company.
The exceptions above referred to are ;i^ follows : — tjonal
/i \ -n •/• 1 • • 1 • • i • •!• liabilities.
(1.) hiven it the company is registered with limited liability,
the liability of the directors will be unlimited it' the memo-
randum of association so provides (/«).
(2.) If a company carries on business for six months with
less than seven members, all the members cognisant of the fact
are severally liable for the debts contracted by the company
during that time, and may be sued accordingly (n).
(3.) The act contains stringent provisions to compel limited
companies and their officers to use the word " limited " as part
of the name of the company in matters relating to its busi-
ness (o) ; and persons signing or authorising the signature on
behalf of such a company of any bill of exchange, promissory
note, cheque, or order for money or goods, in which the word
limited is not used as directed, are themselves liable for the
amount, unless the same is duly paid by the company (p).
(4.) The liability of limited banking companies issuing
notes is unlimited in respect of such notes (q).
(5.) Although a company may be registered without limited
liabilit}', the liability of its members may be limited by special
contract (r).
(6.) The liability of the members of companies not formed Companies re-is-
.,,'.. tered but not
under the act but registered under it, is as to all matters formed under
occurring after registration the same as the liability of mem-
bers of companies formed and registered under the act. But
as to other matters the extent of liability is the same as if no
registration had taken place (s). Existing companies with
(0 See 25 & 26 Vict. c. 89, § 38. (3) 42 & 43 Vict. c. 76, § 6.
(m) 30 & 31 Vict. c. 131, §§ 4 (r) 25 & 26 Vict. c. 89, § 38, cl. 6.
and 5. (s) See §§ 179 and 196, cl. 5. The
(n) 25 & 26 Yict. c. 89, § 48. liability under the repealed act of
(0) §§ 41 and 42. 7 & 8 Vict. c. 110, was unlimited ;
(p) § 42. See Penrose v. Martyr, see § 25. So was the liability under
E. B. & E. 499. the repealed act 7 & 8 Vict. c. 113 ;
254
COMMENCEMENT OF SHAREHOLDERS LIABILITY,
Bk. II. Chap. 6. unlimited liability, whether registered as such under the act of
fcGCt, A, u
1862 or not, may be registered as limited companies, and if
so registered, the liabilitiy of their members as to matters
occurring after registration becomes limited also (t). But
banking companies existing at the date of the passing of the
act and registering under it as limited companies, are bound
to give certain notices to their customers before the privilege
of limited liability can be claimed as against them (»).
Commencement
of shareholders'
liability.
2. As to the duration of liability,
(a.) Commencement of liability.
In ordinary partnerships a person who joins a firm does not
become liable to its existing creditors simply by the act of
joining it, although he may have been admitted into partner-
ship upon the terms that as between him and his co-partners
he shall contribute to the existing debts of the firm (x). The
same rule applies to the members of unincorporated companies
when there is no statutory provision to the contrary. There-
fore, where a creditor sued a shareholder in a cost-book mining
company for goods supplied to the company before the de-
fendant became a shareholder, the creditor was held not
entitled to recover (y).
When, however, a person takes shares in a company, he, as
between himself and other shareholders, takes those shares
with all the rights and liabilities attaching to them, so that
his co-shareholders have a perfect right to insist upon his
contributing with them towards the liquidation of debts con-
tracted before he joined the company (z). And even as regards
see § 7. The liability under the acts
of 1856 and 1857 was substantially
the same as that under the Com-
panies act, 1862.
(t) See §§ 179, 180, and 42 & 43
Vict. c. 76, §§ 4 & 5.
(«) See § 188.
(x) Partn., bk. ii., c. 2, § 3, p. 201,
et sec[.
(y) Thomas v. Clarke, 18 C. B.
662. See, too, Thomas v. Holler, 4
De G. F. & J. 199.
(z) Taylor v. Ifill, 1 N. R. 566,
V.-C W. ; Cape's Executor's case, 2
De G. M. & G. 562 ; Mayhew's case,
5 ib. 837. See, too, Horsley v. Bell,
1 Bro. C. C. 101, note. Sanderson's
case, 3 De G. & S. 66, contra, cannot
be regarded as correct on this point.
See Henderson v. Sanderson, 3 H.
L. C. 698.
TERMINATION OF SHAREHOLDERS LIABILITY. -•••'
creditors, the liability of a shareholder to them seldom depends Bk- 'J;'1 '.:''• {'K
npoii the ordinary principles of partnership law ; for most com- -
panics are governed by statutory enactments, which must not
be overlooked. These enactments will be examined hereafter,
but it may be stated generally, that in all companies regulated
by 7 Geo. 4, c. 46, by 8 & 'J Vict. c. 1G, or by the Companies
act, 18G2, an incoming shareholder is, so long as he remains a
shareholder, liable to creditors in respect of debts incurred by
the company before he became a shareholder ("). The Letters
Patent act (7 Will. 4 and 1 Vict. c. 73, § 24) is so worded as
to be capable of receiving a different construction in this
respect; but probably a different construction would not be
put upon it; for it would be highly inconvenient to apply
different principles to different companies if it can be avoided,
and there certainly is no sufficient reason for any distinction
between them with reference to the liability alluded to (l>).
(b.) Termination of liability.
A member of an ordinary partnership may, even during the ]- T?'"^"^."
continuation of the partnership, determine the authority of his liability in re-
• • • / \ mi • • fcPect °f futuie
co-partners to bind him, by giving proper notice (c). lhis is, :i, ..s.
in truth, only an instance of the more general proposition,
that an agent's authority is determinable by his principal at
any time before the authority has been acted on. But as the
directors of an incorporated company are the agents of the
company, and not of the individual members, a notice by one
of them to the effect that he will not be responsible for the
future acts of its directors, would, it is conceived, be simply
inoperative. As regards incorporated companies, the only
mode in which a shareholder can escape liability for future
acts of the directors is by duly severing his connection with
the conrpairy.
"When a shareholder ceases to be such, he obviously deter-
mines the authority conferred by himself upon the company
(«) The same was true of com- tended to be raised in Philipson v.
panies governed by the repealed Egremont, 6 Q. B. 587, but it was
acts, 7 & 8 Vict. cc. 110 and 113, not decided.
and the Joint Stock Companies acts, (c) Partn., bk. ii., c. 2, § 3, p. 210,
1856 and 1857. et seq.
(b) This point was apparently in-
25G TERMINATION OF SHAREHOLDERS' LIABILITY.
Ek. II. Chap. 6. and its agents to bind him. If lie is a shareholder in a corn-
Sect. 2.
pany which has no register of its members accessible to the
public, he is in the position of a dormant partner, and conse-
quently he cannot be made liable for what occurs after his re-
tirement ; and no notice of retirement is necessary except to
Effect of continu- those who knew him to be a shareholder^?). But a person
mg on register. wj1Q ^g a siiarei10lcier jn a company which has a register of its
members accessible to the public, is prima facie in a different
position ; and reasoning from analog}', a retiring shareholder
ought in such a case to take care to have his name removed
from the register, for so long as it is there he holds himself
Statutes must out as a shareholder (e). But here, as in other cases, the
be looked to. liability of shareholders turns on the statutes applicable to the
companies in which they are shareholders, and reliance
must not be placed upon the general principles applicable to
partnerships.
The Letters Patent act expressly enacts that a person ceas-
ing to be a shareholder in a company to which that act applies,
shall for all purposes of liability be considered as a continuing
shareholder until the fact that he is not so has been regis-
tered (/). But as regards companies governed by other
statutes, it will be found that their liability for future debts
depends not so much on what appears from the company's
register, as on the fact of membership, of which the register is
only prima facie evidence (g).
T ■ 'n tion Again, with respect to the liability of a late shareholder in a
of shareholders' company for those debts and engagements of the company to
liability in re- r. . .
spect of past which he was liable when he was a shareholder, it is necessary
to consult the statute or charter by which the company in
question is governed. Without referring to particular enact-
ments at length, it may be stated generally that the ordinary
(d) See, Ace. Northey v. Johnson, Birch's case, 2 De G. & J. 10 ; Loft-
19 L. T., 104 Q. B. 1852, the case of house's case, ib. 69 ; Powis v. Butler,
a shareholder in a cost-hook mine. 4 C. B. N. S. 469, affirming S. C, 3
(e) This is consistent with the ib. 645. See, also, Partn., p. 40 etseq.
cases which show that a person (/) 7 Will. 4 & 1 Vict. c. 73, §
whose name is put on a register of 21.
shareholders without his authority (//) See the section in the next
does not hold himself out as a share- chapter on Execution against Corn-
holder. See Lyster's case, 4 Ecp 233 ; panies and their Shareholders.
rERMINATION 01 SHAREHOLDERS LIABILITY. 257
principles of partnership and corporation law have not been Bk- ?M31l§p- 6*
materially departed from in 1 1 j * - case of companies, i xc< pi as
regards time (h).
The Joint-stock banking act, 7 Geo. I, c. 16, L 8, contains Summary of
provisions continuing the liability of shareholders in respect of
pasl debts until the lapse of three years after they had c< asecl
to be shareholders
The Letti rs Patenl act, 7 Wm. 1 & 1 Vict. c. 73, § 24, con-
tinues tin- liabilities of late shareholders, but it does nol con-
tain any provisiou limiting the duration of such liabiliti
The Companies clauses consolidation aci contains no pro-
vision continuing the liability of a shareholder, after he has
ceased to be such (8 & !) Vict. c. I<>, § 86).
The liability of shareholders in a company formed under the
Companies act, 1802, is continued, as to debts contracted he-
fore their retirement, for one year alter they have ceased to
hold shares (25 & 26 Vict. c. 89, § 38).
The liahilitv of a retired shareholder to contribute to the Liability to con-
r i i • i i • i- i i- tribute ii
(lehts oi a company must not be confounded witn his liability confounded with
to creditors. For notwithstanding the continuance of his ^itore.
liahilitv to creditors, he may be entitled to a complete in-
demnity from the other shareholders, and may not therefore
be a contributory with them, and this is a common case. On
the other hand, a shareholder may he freed from liahilitv to
creditors, but not he freed from liability to the other share-
holders, to contribute with them to the payment of debts for
which they only are directly liable. This, although not so
common a case as the other, is still a possible case, and affords
a striking illustration of the difference (constantly lost sight
of by non-lawyers) between direct and indirect liability to the
debts of a company (k). This subject will be examined here-
after.
(h) See, as to partners, Part., bk. for debts contracted whilst lie was
ii., c. 2, § 3, pp. 223 et seq. a shareholder. The act of 1856
(i) The repealed acts, 7 & 8 Yict. rendered him liable for debts con-
c. 110, § 66; c. 113, § 10; and 19 traded before he became a share-
& 20 Vict. c. 47, § 62, as to un- holder, and whilst he continued to
limited companies, contained similar be so.
provisions. But the 7 Geo. 4, c. 46, (k) See Ex parte Gouthicaite, 3
and 7 & 8 Vict. c. 110, and c. 113, Mac. & G. 187.
only render a late shareholder liable
L.C. s
258 COMMENCEMENT OF SHAREHOLDERS' LIABILITY
Bk. II. Chap. 6.
Sect. 2.
3. On the commencement and termination of liability in the
case of amalgamating companies.
Commencement The position of a company which amalgamates with another
of liability.
by agreement is analogous to that of a man who enters into
partnership with another. As the two partners do not become
jointly liable to their respective separate creditors, and neither
partner becomes liable to the debts of his co-partner, so the
two companies do not become jointly liable for each other's
engagements, nor do the shareholders in the one company
become debtors to the creditors of the other company. If the
agreement to amalgamate is valid, it will bind the two com-
panies as between themselves ; but such an agreement will not
per se give the creditors of either any locus standi against the
other : and if the agreement to amalgamate is ultra vires and
invalid as between the two companies, securities given by one
company in respect of the debts of the other will be invalid
also (I).
Where companies are amalgamated by statute, special provi-
sion is always made with respect to these matters.
The principle of Edwards v. The Grand Junction Railway
Co. (m) applies to the case of two companies amalgamating.
The amalgamating company will not be allowed to exercise
powers acquired by means of agreements with its component
companies or their projectors, except upon the terms of com-
plying with those agreements, provided they are such as the
amalgamated company would itself have been bound by if it
had entered into them (n).
(I) See Partn. pp. 239 et seq., the two companies contained an express
Era Ass. Co., 2 J. & H. 400, and the provision on the subject.
Saxon Assurance Society, 2 J. & H. (m) Ante, p. 150.
408, and Ernest v. Nicholls, 6 H. L. (■«) See The Earl of Lindsey v.
C. 401. As to the effect of amalga- Great Northern Rail. Co., 10 Ha.
niation in discharging sureties, see 664 ; Preston v. Liverpool and Man-
The Eastern Union Rail. Co. v. Chester Rail. Co., 1 Sim. N. S. 586,
Cochrane, 9 Ex. 197, and The London, on demurrer ; Stanley v. Chester and
Brighton, and South Coast Rail. Co. Birkenhead Rail. Co., 9 Sim. 264,
v. Goodwin, 3 Ex. 320. In these and 3 M. & Cr. 773. See, also,
cases the surety was not discharged ; Port of London Assur. Co.'s case, 5
but the statute amalgamating the De G. M. & G. 465, reversed in 6
IN CASES OF AMALGAMATING COMPANIES. 259
Partners cannot get rid of their Liabilities to creditors by v,k- I!- ChaP- ,;-
; 2.
retiring from the firm (o) ; and it is wholly immaterial whether
all retire, bo as to put an end to the firm altogether, or whether liability.
some only retire; the principle in each case being that a
creditor is not affected by agreements come to between his
debtors.. Precisely the same principle renders it impossible
for the members of a company to get rid of their liabilities as
between themselves and thi ir creditors, by simply agreeing to
dissolve, or by transferring their rights and (so far as they can)
their liabilities to some other company. Although, therefore, Amalgamating
' ...... com;
a company may have transferred all its :i jets and liabilities to
another company, the transferring company will still remain
liable to those of its creditors who have not expressly or im-
pliedly released it from their claims (p). What amounts to an
implied release is often very dillicult to determine; nor are all
the cases on the subject easy to reconcile (q).
In the first place, holders of policies of insurance must not ''" i!;onof
policy-holders,
be confounded with ordinary creditors. The holder of a sub-
sisting policy is not a creditor at all ; and in order that he may
become a creditor of the company which issued the policy, he
must keep up his policy with the company, and the event in-
sured against must happen whilst the policy is so kept up.
Consequently it was held in many cases that if an insurance
office had transferred its business to another company, a
holder of a policy who had notice of the transfer and who paid
his future premium to the new office, ought to be treated as
having agreed to accept the new office in lieu of the old ; and
unless this inference could be rebutted lie was held to have
discharged the old office. The following cases illustrate
this : —
H. L. C. 401, sub nom. Ernest v. was a member of both companies.
Nicholls on the ground that the (q) As pointed out by Lord
amalgamation was altogether in- Hatherley,[in .Ee The Family Endow-
valid. matt Soc, 5 Ch, 118, see p. 133,
(o) Part. 223 et seq. clear proof is recpured to show that
(})) See, in addition to the cases a person having a claim against one
cited below, Hardinge v. Webster, 1 company on a written contract has
Dr. & Sm. 101, in which the ere- abandoned it for a claim against
ditor was a member of the trans- another company which it may be
ferring company, and the defendant difficult to prove.
200 TERMINATION OF SHAREHOLDERS' LIABILITY
Bk. II. Chap. 6. A. Original company held to be discharged.
fecct. z.
(a) The original having had, by its deed of settlement, express
power to transfer its bnsiness, and the policies having been
issued subject to this power.
Hort's case, 1 Ch. D. 307.
Grairfs case, ib.
Harman's case, ib. 326.
Cocker's case, 3 Ch. D. 1.
Dowsers case, ib. 384. A case of an annuity.
(b) The policy-holder having accepted the new office after notice
of the transfer.
National Provincial Life Ass. Soc, 9 Eq. 306.
International, &c, Life Ass. Soc, 9 Eq. 316.
Merchants' and Tradesmen's Ass. Soc, 9 Eq. 694.
Times Life Ass. Soc, 5 Ch. 381.
Anchor Ass. Co., 5 Ch. 632.
Spencer's case, 6 Ch. 362.
Fleming's case, 6 Ch. 393.
Evens' claim, 16 Eq. 354.
Miller's case, 3 Ch. D. 391.
B. Original company held not to be discharged.
(a) The policy-holder having had no sufficient notice of the
transfer.
Manchester and London Life Ass., 9 Eq. 643, and
5 Ch. 640.
Conquest's case, 1 Ch. D. 334.
(I) The policy-holder having refused to accept the new company.
Griffith's case, 6 Ch. 374.
35 & 36 Yict. In order, however, to remove the difficulty of determining in
41, § 7.
these cases whether a policy-holder has or has not released the
old office, it has been enacted by 35 & 36 Vict. c. 41, § 7, as
follows : —
§ 7. Where a company, either before or after the passing of this act, has
transferred its business to or been amalgamated with another company,
no policy-holder in the first-mentioned company, who shall pay to the
other company the premiums accruing due in respect of his policy, shall
by reason of any such payment made after the passing of this act, or by
reason of any other act done after the passiug of this act, be deemed to
have abandoned any claim which he would have had against the first-
mentioned company on due payment of premiums to such company, or to
have accepted in lieu thereof the liability of the other company, unless
such abandonment and acceptance have been signified by some writing
signed by him or by his agent lawfully authorised.
in i •■ m \ i r... i 0MP4 II-. 261
lint even in the case of policy-holders who have apparently I;k- j£ r|'';i'- °-
accepted the new office, in lieu of the old, if it should appear
that the amalgamation was ultra vires so thai the new com-
pany is not Liable to pay the policy, the old office will not be
discharged (1 1.
As regards persons who arc actually creditors of the trans- Actnal cred
ferring company, they arc qo! held to have released their ori-
ginal debtor simply by receiving payments from the new
companj and giving receipts to it(«); there must be some
clear and distinct agreement to accept the new company as
the debtor in lieu of the old ; and where an annuitant who
knew of the amalgamation had done nothing more than for
several years receive his annuity from the new company and
give receipts to it, the Court held that he had not ceased to be
a creditor of the old company (t). But creditors whose claims
are limited to the funds of a company which has power to
transfer those funds and its business, lose their rights against
the company alter it has transferred its funds and business to
another (u).
The amalgamation of Life Insurance Companies is now 33 & 34 Vict.
c 61
regulated by 33 & 3-4 Vict. c. 61, § 14, which prohibits
amalgamation otherwise than by an order of the High Court
to be obtained as there mentioned (r).
(r) See 7.V Saxon Lift . ! partt Gibson, 4 Ch. 662, where there
Society; 27c Anchor's case, 2 J. & H. wa . but a refusal to accept
408, and on appeal, 1 De G. J. <& the new company.
Sm. 29. (/) Family Endowment Society, 5
(s) India and London Life Ass. Ch. 118; Nat. I'rov. Life Ass. Soc,
Co. 7 Ch. 651, a case of an annuitant ; 9 Eq. 306.
Commercial Bank Corp. of India (u) Dowses case, 3 Ch. D. 384.
and the East, 16 W. R. 958, where (v) See Re Argus Life Ins. Co., 39
there was no sufficient notice of the Ch. D. 571.
transfer of the business ; and see Ex
262
ACTIONS BY AND AGAINST COMPANIES.
CHAPTER VII.
Bk. II. Chap. 7.
Sect. 4.
General obser-
vations.
OF ACTIONS BETWEEN COMPANIES AND NON-MEMBERS.
In order to complete the subjects discussed in the preceding
chapters it is necessary to examine the remedies by which the
obligations and liabilities already alluded to can be enforced.
The remedies which alone are of sufficient importance to
require consideration in a treatise like the present are actions,
defences by way of set-off, proceedings to enforce judgments,
and proceedings to wind up companies. The subject of wind-
ing up will be discussed hereafter, and the present chapter will
be confined to actions, set-off, and execution.
Actions by
and against
incorporated
companies.
SECTION I.— ACTIONS BY AND AGAINST COMPANIES.
1. Incorporated companies.
An incorporated company, whether it is incorporated by
charter, special act of Parliament, or registration, must sue
and be sued by its corporate name (a) ; and as a general rule
an incorporated company cannot sue or be sued in respect oi
any contract entered into or act done prior to its incorpora-
tion (b). But to this rule there are statutory exceptions,
and by the Companies act, 1862, a company formed before
(a) See Be Hodges, 8 Cli. 204 ; Fell
v. Burchelt, 7 E. & B. 537, where a
shareholder in a registered company
was unsuccessfully sued. Compare
Barton v. Hutchinson, 2 Car. & K.
712. The company should be sued
in its corporate name simply. Pil-
brow v. Pilbroiv's Atmospheric Bail.
Co., 3 C. B. 730. As to service of
writs, &c, see R. S. C. 1883, Ord. ix.,
r. 8, and Companies act, 1862, § 62.
(b) See ante, p. 146, and the next
note.
I.< ..IM'mRATED compamks.
November, L862, but registered under the act, may apparently 1;k- IT- ( !
sue ami be sued m it- corporate name m respect of such
matters as it mighl have sued it have been sued for if qo
registration had taken place(c).
The law relating to actions by and against companies which Actions by and
i • i -Hi • -i • i ■ n against
are being wound up, will bo examined m that portion oi the panies being
treatise which relates 1>> the winding up of companies; but it W0UIK ap"
may he observed here generally, that when a company regis-
tered under the Companies act, 1862, i- being wound up,
actions, whether by or againsl it, musl be brought in its
registered uame(d), and not us under the Winding-up acts ; — \~
of 18 JS !), in the name of the official manager or liqui-
dator {<■).
A foreign company (/), and also a limited company it th ire Security for costs
.... ... . . ,. . ' when company
is reason to suppose thai its assets will he insufficient to pay .sues.
the defendant's costs, can he compelled to give security for the
costs of actions instituted by it (.</). An affidavit, showing
reasomihle ground for supposing that the company cannot pay
the costs, will, if unanswered, induce the Court to order secu-
(c) This it is conceived is the
general effect of 25 & 26 Vict, c, 89,
§§ L93-195. In Hull Flax Go. v.
Wellesley, 6 H. & N. 38, calls made
before registration were sued for
afterwards in the company's re-
gistered name, and were recovered.
So in Queensbury Industrial >
v. Pickles, L. B. 1 Ex. 1, where a
society registered under 25 & i'<i
Vict. c. 87, recovered in its regis-
tered name a debt owing to it be-
fore registration ; and compare that
case with Dean v. Mellard, 15 C. B.
N. S. 19, and Linton v. Blakeney
Industrial Society, 3 H. & C. 853,
where societies registered under the
same act were held not liable to
be sued in their registered names
in respect of debts contracted before
registration. The only general con-
clusion to be drawn from these cases
is that the exact language of each
act must be closely attended to.
See, farther, Lanyon \. Smith, 3
Sm. 938.
25 & 26 Vict. c. 89, § 95.
(«) 11 & 12 Vict. c. 45, § 50, et
seq. There were, however, some
cases in which he could not sue.
See, as to this, Re Weiss, 15 C. E.
331 ; Russell v. Groysdill, 11 Ex.
123.
(/) Kilkenny, &c, li.il. Go. v.
Fielden, 6 Ex. 81 ; Limerick, dr.,
Bail. Co. v. F enter, 4 Bing. 394.
((/) Western of Canada Oil Go. v.
Walker, 10 Ch. C2s ; 25 & 26 Vict.
c. 89, § 69. City of Moscow Gas Co.
v. International Financial Soc, 7
Ch. 225 ; Washoe Mining Co. v,
Ferguson, 2 Ecp 371. The section,
however, did not apply to pure
cross suits; Accidental and Marine
Insur. Co. v. Mercati, 3 Ecp 200 ;
nor to petitions of appeal, lie
Marine Estates Co., Jan. 18G7,
l. j. j. ^.^ %yU— i* a.«.<3. 2-79
264
ACTIONS PA" AND AGAINST COMPANIES.
Bk. II. Chap. 7. rity to be given (h). And in the absence of any evidence to
— the contrary, the fact that the company is in liquidation affords
a sufficient reason for ordering security (?). The amount and
kind of securit}' are in the discretion of the Court, and depend
on the nature of the case (k). In injunction actions a limited
company's undertaking to abide by such order as the Court may
make as to damages is not sufficient (I).
An unlimited company, although it is insolvent and being
wound up, cannot be ordered to give security for costs of an
action (m).
Actions by the Attorney- General to restrain companies from
exceeding their statutory powers may be brought in cases
where, owing to the absence of any special injury to a par-
ticular individual, an action by a stranger will not lie (n).
"Where companies are amalgamated b}' act of Parliament, it
is generally enacted that actions pending against either com-
pany may be continued against the amalgamated company, and
in such cases it is only necessary to state the amalgamation on
the proceedings (o).
At common law incorporated companies act in legal pro-
ceedings by their agents, appointed under seal ( p).
Actions by the
Attorney-
General.
Actions after
amalgamation.
(h) Southampton Steamboat Co. v.
Rawlins, 9 Jur. N. S. 887, and 2 N.
K. 544, in which Caillaud's, d'C, Co.
v. Caillaud, 26 Beav. 427, contra, was
not followed.
(i) Northampton Coal, dr., Co. v.
Midland Waggon Co., 7 Ch. D. 500 ;
and as to appeals, see Diamond Fuel
Co., 13 Ch. D. 400; Photographic
Artists' Ass., 23 Ch. D. 370.
(k) E. S. C. Ord. lxv. r. 6, as to the
old practice, see Imperial Bank of
Cliina v. Bank of Hindustan, 1 Ch.
437, modifying Australian St am
Ship Co., 4 K. & J. 407.
(/) Anglo-Danubian Co. v. Roger-
son, 3 N. B. 185, and 10 Jur. N. S.
87.
(m) United Ports Co. v. Hill, L.
B, 5 Q. B. 395. This does not apply
to appeals.
(/() See Att.-Gcn, v. Shrewsbury
Bridge Co., 21 Ch. D. 752 ; AU.-Gen.
v. (h-eat Northern Bail. Co., 1 Dr. &
Sm. 154, and Ware v. Regent's Canal
Co., 3 De G. & J. 212. It may be
inferred from the judgment in the
latter case that a definite injury to
the public need not be proved in
order to support such an action.
(o) See 26 & 27 Vict. c. 92, § 43.
(p) See, as to bankruptcy, 46 &
47 Vict. c. 52, § 148. As to regis-
tered companies, see 25 & 26 Vict. c.
89, § 64. See, as to the service of
writs on companies, E. S. C. Ord. ix.
r. 8, Pilbrow v. Pilbrow' s A tmospheric,
&c, Co., 3 C. B. 730 ; and as to com-
panies . registered under the Com-
panies act, 1862, see 25 & 26 Vict.
c. 89, § 62, and Towne v. London
and Limerick Steam Ship Co., 5 C. B.
N. S. 730 ; and as to foreign com-
panies, see Ingate v. Lloyd Austriaco,
COMPANIES EMPOWERED TO 81 I A D BE SI ED. 20;j
As between the parties to an action instituted by an incor- 1;1- Ir- Chap. 7.
porated company, a retainer under -> al of the solicitor acting
for it will, if necessary, be presumed (q) ; but in an action by ^S?^™***
that solicitor againsl the company for his costs, it i-. question- 1'" ' '"'■"1-
able whether ;i proper retainer under seal must aol be
proved (r), if such retainer is essential, which d< pends on the
nature of the company («).
The directors of a company have, it is conceived, power to
institute and defend actions in the name of the company, and
to do for it whatever may be necessary, having regard to the
ordinary course of legal proceedings. It has been held that a
liond given by an incorporated company as a security for costs
in an action to which it is party, and in the ordinary course, is
not ultra vires (t).
Ina case where a company was restrained from infringing a
patent the directors were ordered to pay the costs(w).
In an action by or againsl an incorporated company, any Directors may be
member or officer may he examined on interrogatories (x) ; and "lU'n,,°ateJ-
he need not be made a party to the action tor purposes of
discovery only Q/).
2. Companies empowered to sue and be sue,! by public officers.
Cost-book mining companies are empowered to sue for calls Statutory enact-
i , , • / \ -d i • • -. meats enabling
by their purser (z). .banking companies governed by the companies to 8ue
and be sued.
4 C. B. N. S. 704 ; Newly v. Von (») See Beits v. De Vitro, 5 X. B.
Oppen, L. R. 7 Q. B. 293 ; Lhoneux 165, V.-C. Wood, and 3 Ch. 429 and
Limon & Co. v. Hong Kong Banking 441.
Corp., 33 Ch. D. 446. (,) R. S. C. Ord. xxxi. rr. 1 and 5.
(q) Thames Haven Dock Co. v. As to the person to examine, see
Hall, 5 Man. & Gr. 274. Berkeley v. Standard Discount Co., 9
(r) Compare Arnold v. Mayor of Ch. D. 643 ; 12 Ch. D. 295, and 13
Poole, 4 Man. & Gr. 860, with Haigh Ch. D. 97; Re Alexandra Palace
v. North Bierley Union, E. B. & E. 873. Co. , 1 6 Ch. D. 58.
(s) P. v. Cumberland, 5 Ra. Ca. (ij) Wilson v. Church, 9 Ch. D.
332. See as to companies registered 552.
under the act of 1862, § 37. (z) See 32 & 33 Vict. c. 19, § 13 ;
(t) Young v. Brompton JVaterw. but this enactment only applies to
Co., 1 Best & Sm. 675. See as to calls and to companies subject to
references to arbitration, Faviell v. the jurisdiction of the Stannary
Eastern Counties Bail. Co., 2Ex. 344. Courts.
266 ACTIONS BY AND AGAINST COMPANIES.
Bk. II. Chap. 7. 7 Geo. 4, c. 46 (extended by 27 & 28 Vict. c. 32), and com-
- panies formed under the Letters Patent act, 7 Wm. 4 & 1
Vict. c. 73 (a), are empowered by statute to sue and be sued in
the name of an individual appointed to sue and be sued on
their behalf; and there is a large number of private acts (b)
enabling particular companies to sue and be sued in like
manner. It is customary to designate such companies as
companies empowered to sue and be sued (c), and amongst them
will be found most existing unincorporated companies formed,
for other than mining purposes, before the passing of the
Joint- stock companies registration act of 1844.
Who are repre- A company which, without being incorporated, is empowered
sented by public . _, . „ . ..
officers. to sue and be sued by a public officer, is sufficiently repre-
sented by that officer in all actions between the company as a
body on the one side, and a stranger on the other (d). But, as
will be seen hereafter (e), a public officer does not represent
one set of shareholders as against another set ; for he is only
the representative of the shareholders as a body.
Whether public It does not follow that, because a company is empowered by
sued™ mUSt ^ some Private statute to sue and be sued by a public officer,
therefore a creditor may not sue any one or more of the share-
holders. Creditors are not deprived of their common law
rights by an act of Parliament which is consistent with their
retention of those rights ; and there are several instances of
special statutes under which it has been held, that, although a
creditor might sue the public officer, it was not incumbent on
him to do so (/).
(a) § 1, repealed by 37 & 38 Viet. 1 C. B. N. S. 241.
c. 35. Industrial and Provident (<■) A good account of the pro-
Societies were formerly empowered gress of legislation relating to these
to sue and be sued by a public companies will be found in Van
officer, Burton v. Tannahill, 5 E. Sandau v. Moore, 1 Euss. 441.
& B. 797. By 39 & 40 Vict, c. 45, (d) See Pendlebury v. Walker, 4
§ 11, such societies are incorporated Y. & C. Ex. 424 ; Meux v. Maltbij, 2
by being registered under that act. Swanst. 277.
(6) There are also some colonial (c) See book iii., c. 9, § \i.
statutes to the same effect. The (/) Blewitt v. Gordon, 6 Jur. 825,
validity of one of them was unsuc- per Coleridge, J. ; S. C, 1 Dowl.
cessfully disputed in Bank of Aus- N. S. 815 ; Pentland v. Gibson, 1
tralasia v.Nias, 16 Q. B. 717. See, Ale. & Nap. 310 ; Beech v. Eyre, 5
too, Bank of Australasia v. Harding, Mac. & Gr. 415.
9 C. B. 661 ; and Kelsall v. Marshall,
COMFANI] 3 EMPOWERED TO SUE iND BE BDED. 207
Another ob ervation to be made with respecl to these privati ''■'•• "• ' '"l1- 7-
!- i-
acts is, thai the public officers created by them have do ]><>■
■
except those expressly conferred upon them. Where, there- pUb]
fore, a company was empowered to sue and be Bued in the
name of its secretary, and to institute actions and suits in his
name, it was held that he had no power to petition on behalf
of the company for a commission of bankruptcy against one of
its debtors (g).
Questions sometimes arise as to whether a public officer can On what
t racts public
sue or be sued in respecl of a contract nol expressly entered
into with the company. These questions will all be found to
turn on the Language of the act applicable to the company to
which the questions relate ; hut speaking generally, it may be
said that a public officer may sue or be surd upon contracts
which an- contracts of the company in point of substance,
although not in point of form (h).
A promissory note payable to the order of a person who is Bills and not< .
in fact a trustee for a company empowered to sue by a public
officer ought, if unindorsed, to be sued upon by the payee and
not by the public officer (/).
A public officer may sue for a libel on the company repre- Libels.
sented by him (k).
By far the greater number of decisions to he met with in the Public officers
, . (jt 1 tanking
hooks relating to puhlic officers, have turned upon the Banking companies,
act of 7 Geo. 4, and to these decisions, so far as they relate
to actions between companies governed by the act on the one
hand, and strangers on the other, it is now' proposed to direct
the reader's attention.
(y) Guthrie v. Fish, 3 B. & C. 929 ; Smith v. Goldsworthy, 4 Q. B.
178 ; and see Ex parte Guthrie, 1 430 ; Wills v. Sutherland, 4 Ex.
Gl. & Jam. 245. Some of the older 211, and on appeal, 5 Ex. 715 ;
acts only empower companies to Skinner v. Lambert, 4 Man. & Gr.
sue by tlieir public officers, and are 477. See, also, Cobham y.Holcombe,
altogether silent about their being 8 C. B. N. S. 815.
sued. See the act which was in (i) See M'Dowell v. Doyle, 7 Ir.
question in Meux v. Maliby, 2 Com. Law Rep. 598. See as to bills
Swanst. 277. More modern acts payable to officers for the time being,
are much more comprehensive in 45 & 46 Vict. c. 61, § 7, cl. 2, ante,
their terms. See now Bankruptcy p. 230.
Rules 1886, r. 258. w^6..(.f^9^f5o (k) Williams v. Beaumont, 10
(h) Soulby v. Smith, 3 B. & Ad. Bing. 260.
268
ACTIONS BY AND AGAINST COMPANIES.
Bk. U. Chap. 7. The Banking act of 7 Geo. 4, c. 46 (I), has been decided to
Sect. 1. . .
- require imperatively, that all actions by or against companies
raeo.01?,0^*!. governed by it shall be brought by or against their public
officers, and not otherwise (m). What is to be done if there is
no public officer is not clear (n) ; perhaps now, in such a case,
a creditor could sue the company in its mercantile name ; or
sue some of the members on behalf of the whole company (o).
The fact that the company has stopped pajmient does not
prevent it from suing and being sued by its public officer (p) ;
and if a banking company changes its name, the public officer
of the new company represents the old company (q). \Vhatever
number of public officers a company may have, one only should
sue or be sued (/•). The bankruptcy of a public officer does not
prevent his being sued as such (s).
The change of a public officer pendente lite does not affect
the action (0 . If an action is brought by a public officer, and
he dies or is removed, and no steps are taken by his successor
to prosecute the action, it may, after the lapse of the usual
time, be dismissed with costs for want of prosecution (u).
It is to be observed, that if a person who is not a public
Effect of i hang-
in.; public
officer.
Action by a per-
son who assumes
to be a public
officer.
officer, sues as if he were, the company which he assumes
to represent is not a party to the action, and consequently
(1) Amended by 1 & 2 Vict. c. 96,
3 & 4 Vict. c. 11, and 27 & 28 Vict.
c. 32.
(m) Steward v. G reaves, 10 M. &
W. 711; Chapman v. Milvain, 5
Ex. 61. Compare Robertson v.
Sheward, 1 Man. & Gr. 511. See
as to laying intent to defraud in
indictments for forgery, B. v. ( 'artt r,
1 Car. & K. 741 ; B. v. Beard, 8
Car. & P. 143 ; I!, v. James, 7 Car.
& P. 553 ; and P. v. Bur gist, ib.
490 ; and as to an affidavit to hold
to bail, Spencer v. Newton, 6 A. &
E. 630. The Industrial Provident
Societies act, 17 & 18 Vict. c. 25,
was also imperative, Burton v. Tan-
nahill, 5 E. & B. 797.
(n) See Steward v. Greaves, 10 M.
& TV 711. An indictment will lie
for stealing the property of the com-
pany although there is no public
officer, B. v. Pritchard, 7 Jur. X. S.
557.
(o) See R.S. C. Ord. xvi. rr. 9 and
14.
(p) Davidson v. Cooper, 11 M. &
W. 778 ; Needham v. Law, ib. 400.
(q) Wilson v. Craven, 8 M. & YV
584.
(/•) Holmes v. Binney, 4 Bing. N.
C. 454.
(s) Steward v. Dunn, 11 M. & W.
63.
(i) See Webb v. Taylor, 8 Jur. 39 ;
Todd v. Wright, 11 Jur. 471 ; Barne-
wedl v. Sutherland , 9 C. B. 380, and
Paterson v. Ironside, 14 Jur. 722, note.
(/') Burmester v. Von Stcntz, 23
Beav. 32.
COMPANIES EMPOWERED TO SUE AND BE SUJ D. -ifi'.l
will not bo affected by the judgment in it ; hence the fact. Bk- n- ChaP- "•
Sect. 1.
thai the plaintiff is whal he pretends to be, is material and
traversable (x) ; and declarations and affidavits by public
officers have been held bad for not stating with sufficient
precision tbe character in which the plaintiff on the record
was suing, and tbe existence of the company he assumed to
represent (//).
Although, as has been seen, a public officer may sue on Company must
ll'tVC be STUD
behalf of a company which ha3 stopped payment, there can be business.
no public officer under the 7 Geo. 4, c. 46, of a company which
has not begun to carry on the business of bankers under that
act (z) .
In an action against a public officer as a nominal defendant, Plea that j.ison
lie may deny that he fills the office he is assumed to fill (a). ^yicVt'i:
But this defence will be of no avail, if the only evidence
to support it is that the company has ceased to carry on
business (6). A plea of the bankruptcy of a person sued as a
public officer will not be allowed to stand, if the plaintiff' will
give an undertaking not to issue execution against the person
or property of the defendant himself (c).
Under the 7 Geo. 4, c. 4G, public officers are appointed bv Appointment of
.. . .. . , , public officers
their respective companies ; and returns are required to be under 7 Geo. 4,
made to the Stamp Office, in the form given in the schedule c' 46'
to the act, stating the names and places of abode of the persons
so appointed (d). The most formal evidence of the appoint-
ment of a particular individual to be a public officer of a corn-
er) See Barneicall v. Sutherland, 9 record, and was not in issue.
C. B. 380; Steward v. Dunn, 11 M. («) Roe v. Fuller, 7 Ex. 220;
& W. 63. Steward v. Dunn, 11 M. & W. 63 ;
(y) See Esdaile v. Maclean, 15 Fletcher v. Crosbie, 9 M. & W. 252 ;
M. & W, 277 ; Mclntyre v. Miller, and compare Davidson v. Bower, 4
13 ib. 725 ; Fletcher v. Crosbie, 9 ib. Man. & Gr. 626.
252 ; Christie v. Peart, 7 ib. 491 ; (a) Qu. whether the denial must
Spiller v. Johnson, 6 ib. 570; David- not be supported by affidavit, Wood
son v. Bower, 4 Man. & Gr. 626. v. Marston, 7 Dowl. 835.
See as to affidavits Ex parte Tor- (6) See Needham v. Law, 11 M. &
Hngton, 9 Ch. 298; Ex parte Lowen- W. 400; Davidson v. Cooper, ib. 778.
thai, ib. 324. Compare Robinson v. (c) Steward v. Dunn, 11 M. & W.
Sheward, 1 Man. & Gr. 511, where 63 ; Wood v. Marston, 7 Dowl. 865.
the character in which the plaintiff (d) 7 Geo. 4, c. 46, § 4.
was suing did not appear on tbe
270
ACTIONS BY AND AGAINST COMPANIES.
Bk. II. Chap. 7. pany, is the return made by the company to the Stamp Office
- in pursuance of the statute. But it has been frequently decided
that the appointment may be proved otherwise than b}T such
returns, e.g., by parol testimony, and that an informality in a
return is of no importance, if satisfactory evidence aliunde of
the alleged appointment is forthcoming (<?).
It has been decided that if a public officer brings an action,
he may be interrogated by the defendant (/)'.
The law relating to public officers of companies formed
under the Letters Patent act, 7 Wm. 4 & 1 Yict. c. 73, will
be found in §§ 3, 13, 22, 23, 24 and 25 of that act. There
have been no decisions upon it bearing upon the present
subject, but it seems clear that a company governed by it
must sue and be sued by its public officer, if there is one ;
but if there is not, then any member of the company may be
sued.
Interrogating
public officer.
Public officers
of companies
governed by
7 Wm. 4 &
1 Vict. c. 73.
3. Other unincorporated companies.
Difficulty of Unincorporated companies not empowered by statute to sue
SatureeActe. and be sued b*y a Public officer> must sue aud be sued like
ordinary partnerships (g). This observation applies to unin-
corporated cost-book companies (/*). Consequently, before the
passing of the Judicature acts, it was extremely difficult for
unincorporated and unprivileged companies to sue at law at
all, and various unsuccessful attempts were made to avoid the
necessity of joining all the proper persons as co-plaintiffs (?)•
(e) Edwards v. Buchanan, 3 B. &
Ad. 788 ; R. v. Carter, 1 Car. & K.
741 ; E. v. Beard, 8 C. & P. 143; B.
v. James, 7 C. & P. 553.
(/) M'Kenna v. Bolt, 3 Jur. N. S.
714, Ex.
(g) As to which, see Partn. book
ii., c. 3, pp. 264, et seq.
(h) Such companies can sue for
calls by their purser, ante, p. 265,
but there is no statutory enactment
enabling them to sue and be sued
generally by that officer.
(i) See as to all such attempts,
Badenhurst v. Bates, 3 Bing. 470;
and as to agreements to enable
actions to be brought by the chair-
man for the time being of the direc-
tors of a company, Hall v. Bain-
bridge, 1 Man. & Gr. 42 ; by the
directors for the time being of a
company, Phelps v. Lyle, 10 A. & E.
113 ;*Woobner v. Toby, 4 Ra. Ca.
713 ; by the purser for the time
being of a cost-book company,
Hybart v. Peirker, 4 C. B. N. S. 209 ;
by the managers of a mutual marine
insurance society, Gray v. Pearson,
L. R. 5 C. P. 568 ; Corner v. Max-
u-ell-Iru-in, Ir. R. 10 C. L. 354. Ou
COMPANIES EMPOWERED TO SUE AND BE SUED.
271
Bui even as the law bI 1 before those acts, there was no great J:k- gc;c^h1ap- 7"
difficulty in the way of a creditorwho soughtto obtain payment —
of a debt owing by the company. For although if he did not
sue all the shareholders who in strictness ought to have been
sued, he might have been met by a plea in abatement, yet
Inasmuch as such a plea was of no avail unless it disclosed the
uames of all the persons who ought to have been made defen-
dants, and unless it was verified by affidavit, and unless it
was strictly proved if issue was taken upon it, it was practi-
cally impossible for a member of a large company seriously
to obstruct or embarrass a creditor by having recourse to a plea
in abatement, founded on the non-joinder of the other share-
holders (_/).
The alterations made in the law respecting parties to actions Alterations made
by the Judicature acts and rules, have, however, removed the tore Acts.
difficulty in the way of unincorporated companies suing ; for
an action may now be maintained by or against some of the
shareholders on behalf of themselves and others having a
common interest in the action (/.) ; or, where no change has
occurred amongst the shareholders, an action may be brought
in the name of the company (I).
Actions in this form will have to be adverted to hereafter kctlT^J »°me
on behalt or
when treating of actions between companies and their mem- themselves and
others.
bers ; but it niay be observed here that even before the
Judicature acts, suits in equity by some persons on behalf of
themselves and others having a common interest, were fre-
quently instituted to enforce equitable rights, e.g., to enforce
the rights of the mortgagees of a company's undertaking (m) ;
to rescind a contract for fraud (n) ; to enforce specific per-
the other hand a contract made with observation,
an agent of a company might be sued (k) R. S. C. Ord. xvi. r. 9.
on by the agent, unless the contract (I) lb. it. 14 & 15. See Partn.
was on the face of it made with the book h., c. 3, § 1, p. 265 et seq.
company through its agent. See (m) Tripp v. Chard Bail. Co., 11
C'lmj v. Southern, 7 Ex. 717, and so Ha. 241.
it may now. (n) Small v. Attwood, Younge,
(j) Grellin v. Calvert, and Crellin 457 et seq.; Fenn v. Craig, 3 Y. &
v. Brook, 14 M. & W. 11, may be C. Ex. 213.
referred to as illustrating the above
272 ACTIONS BY AND AGAINST COMPANIES.
Bk. II. Chap. 7. formance of an agreement (o) : to obtain an account ( //), or an
Sect. 1. . . ° w
injunction (q).
Some on behalf So a suit against some of the members of a numerous part-
^edt nership or unincorporated company, might be maintained to
enforce an equitable right if it was a right against the whole
body, and one which all the members thereof had a common
interest in opposing (/•). But suits in this form could not be
maintained to enforce purely legal rights, on the ground that
it was inconvenient to sue at law (s) .
Now actions in this form are maintainable in all the divisions
of the High Court. Such actions, however, are occasionally
attended with inconvenience, for although judgment may be
obtained, it may be found practically useless.
Meux r. Malthy. The case of Meux v. Maliby (t) illustrates this. A suit
was there instituted against the treasurer and the directors of
a company, to obtain the benefit of an agreement made with
the plaintiff by the former owner of property which had
become vested in the company. The agreement was an agree-
ment for a lease, and the Court made a decree in the plaintiff's
favour, but found itself unable to decree the execution of any
lease to him. The defendants had no power to convey the
legal estate in the land, and all the Court could do was to
declare the plaintiff entitled to a lease, and to restrain the
officer from bringing any action to disturb the plaintiff's
possession.
(o) Clay v. Bufford, 8 Ha. 281 ; 216 ; Gullen v. Duke of Queensberry,
and see Douglas v. Horsfall, 2 Sim. 1 Bro. C. C. 101, and 1 Bro. P. C.
& Stu. 184. 396 ; The City of London v. Eich-
(p) Gordon v. Pijm, 3 Ha. 223. mond, 2 Vera. 421.
(</) Lund v. Blanshard, 4 ib. 290. (s) Allison v. Herring, 9 Sim. 583.
(r) See Pare v. Clegg, 29 Beav. (t) 2 Swanst. 277. See, too, Lund
589, where a suit was instituted by v. Blanshard, 4 Ha. 290, where an
the creditor of a benefit society injunction restraining a defendant
against its trustees, and one of each from suing the plaintiffs, was held
class of its members. See, also, not to preclude the defendant from
Adair v. The New River Co., 11 Ves. suing other persons on behalf of
429 ; Meux v. Malthy, 2 Swanst. whom the plaintiffs filed their bill.
277 ; Fenn v. Craig, 3 Y. & C. Ex.
! ol P. -17>'>
J;k. II. Chap. 7.
SECTION II. OF SET-OFF BY AND AGAIN3T COMPANIES. ~\
Tn actions between companies on the one hand and non-
members on the other, there is little to be sai I upon the
subject of set-off, except that the ordinary rules are applicable;
the most important rule being that joint debts cannot be set-
off against separate debts (u), and that the debts of a body
corporate cannot be set-oil' against the separate debts of its
members. Unliquidated damages may be set-off in an action
by the company although it is being wound up (x).
It is onlv when a company sues or is sued by one of its own Set off where a
^ company sues a
members, or by some person claiming under him, or when one member.
member of a company, having obtained judgment against it,
seeks to enforce such judgment against a co-member, or when
a company is being wound up, that questions of set-off present
peculiar difficulties. These are matters, however, which will
be more conveniently discussed hereafter, and the only obser-
vation which requires to be made here is, that in actions
between a company on the one hand and one of its own
members on the other, the member is so far treated as a
stranger to the company, that cross debts existing between
him and the company may be set off against each other (y),
but that cross demands between himself and other members
individually cannot be gone into. As regards incorporated
companies, this follows from the circumstance that they are
distinct from the members composing them ; and as regards
unincorporated companies, it follows from the doctrine that a
debt due from or to several persons jointly, cannot be set off
against a debt due to or from some or one of them only.
Moreover, if a member of an unincorporated joint- stock Set-off where
. . . one member sues
company is a creditor of the conipairv, and is in a position to another tor a
sue the other members or any of them, it is no defence that if the company7
the compairy were wound up, and its accounts taken, the
plaintiff would be found indebted to the company as a share-
holder thereof. In such a case as that now supposed, the
(u) Partn. book ii., c. 3, § 2, p. App. Ca. 434.
290, et seq. (y) Garnet Mining Co. v. Sutton,
(x) Mersey Steel and Iron Co. v. 3 B. & Sin. 321.
Naylor & Co., 9 Q. B. D. 648, and 9
L.C. T
274 ACTIONS EY AND AGAINST COMPANIES.
Bk. II. Chap. 7. plaintiff sues as a non-member ; and if his demand is one
Sect. 2.
- capable of being enforced, lie will not be prevented from
enforcing it, simply because in his character of member, he is
indebted to his co-shareholders. This is well illustrated by
a case before Lord Cottenham, which may be conveniently
noticed here, although it will have to be referred to again in
connection with another subject. In the case in question,
Rbeam v. Smith. Rheam v. Smith [z), the plaintiff and one of the defendants
were members of an unincorporated joint-stock company ; the
defendants were the bankers of the company, and had sued the
plaintiff' for a debt due by the company to the defendants as
bankers. The plaintiff thereupon filed a bill against the
bankers and the company, upon the ground that he ought not,
as between himself and the bankers (one of whom was a share-
holder), to pay more than what, on taking the accounts of the
company, would be found to be due from the plaintiff in
respect of the debt in question. The bill accordingly prayed
that the accounts of the company might be taken, and its
affairs wound up, and that provision might be made for due
payment of the debts of the company, and that in the mean-
time the action, and all proceedings therein, might be stayed.
A demurrer to the bill was overruled by the Vice- Chancellor,
who, it is said, treated tbe case as one in which a partnership
of A. and B. was suing a partnership of A., C, and D., in
which case it would be contrary to equity to allow the debt to
be recovered without first ascertaining for what proportion of
it A. was himself liable (a). But on appeal to the Lord Chan-
cellor, the decision below was reversed, and the demurrer was
allowed : the Lord Chancellor observing, —
" It really seems to me that, if the principle upon which this demurrer is
said to have been overruled by the Vice-Chancellor were admitted, it might
lead to the most frightful consequences ; for it comes to this, that if a
railway company, or any company carrying on great works, and who may
have become indebted to some contractor in half-a-million of money for
work done, upon that contractor applying for payment of his debt, can find
(,-.•) 2 Ph. 726. clear that although one partner
(«) The fact that such an action might under certain circumstances
could not be maintained at law, is sue another at law, A. and B. could
not noticed in the report. But it is not possibly have sued A. and C.
SET OFF. 275
.■lit thai he, or any one connected with him in business, holde share Bk. II. Chap. 7.
in the company, they may jay, No, we cannol payourdebl : you must ectj 2j
lir-i break up the company, and a certain whether Li as ts are sufficient Rheam ,-. Smith,
for paymenl of its debts, for if not, you ot the persons connected with you
will In-- liable to contribute to the very sum which you seek to recover. It
is impossible to Btop Bhorl of that if the principle be once admitted. After
some difficulty a rule has been established at law, enabling creditoi
these greal companii I i enforce their claims against individual share-
holders, leaving them, of ■ urse, to their right to contribution against their
co-partners. The rule, no doubt, leads sometimes to hardship upon the
party sued, hut the balance of convenience is in its favour, and for that
reason it lias been adopted : because it would be a still greater hardship
upon parties dealing with such companies, if the enforcement of their
claims were to he embarrassed by the necessity of treating all the members
of the company as jointly responsible. This suit, however, is an attempt
to induce a court of equity to interfere with that rule, for the plaintiff, by
his hill, asserts in effecl nothing short of this proposition : — If I ran find
out that you, who are suing me at law, have a Bingle share in the company
against whom the claim is made, then there is an end to your legal right;
equity will interfere, and though your money may have contributed to the
establishment of the company, you shall not he permitted to recover a
single farthing against any member of the company until the concern is
altogether wound up."'
It must not, however, be inferred from this case, that if a
member of a company litis a demand against it, and seeks to
enforce that demand against some member of it, he may not
be met by some defence based on the rights of the members
inter se. This subject will be examined in the third book,
when the rights of members inter se are discussed (b).
The general rule that an assignee of a debt is in no better Set-off against
..,,. . . , , holders of
position than his assignor, is undoubted ; and, as a general securities.
rule, where a debt due from a company is assigned, the assign-
ment cannot defeat the right of the company to set off against
the assignee, what may be due from the assignor to the com-
pany before the company has notice of the assignment, and
when payment by the company is demanded (c) ; nor defeat the
(b) See Woodhams v. Anglo- Aus- 102, and 3 De G. & J. 294. See,
tralian Co., 2 De G. J. & Sm. 162. also, WatJcins v. Clark, 12 C. B. N.
(c) Ashworth's case, 10 W. E. 771, S. 277 ; Watson v. Mid Wales Rail
V.-C. W. ; and see Athenceum Life Co., L. R. 2 C. P. 593.
Assurance Society v. Pooley, 1 Giff.
T 2
276
EXECUTION AGAINST COMPANIES AND SHAREHOLDERS.
Bk. II. Chap. 7. company's right to set off what may become due after such
— notice under the same contract as created the debt assigned (d).
At the same time, it is possible for a company to deprive itself
of this right of set-off; and if, being indebted, it gives to
its creditor a document which shows that the debt is to be paid
without reference to the state of other accounts which may
exist between him and the company, the company cannot, when
sued for such debt, set off demands which it may have against
him for other matters. The decisions on this subject will, how-
ever, be more conveniently referred to hereafter when treating
of the proof of debts in winding-up proceedings (c) .
Judgments
against com-
panies.
Modes of exe-
cuting such
judgments
against the
members.
First mode.
SECTION III.— EXECUTION AGAINST COMPANIES AND SHARE-
HOLDERS ON JUDGMENTS AGAINST THEIR COMPANIES.
By the common law, a judgment against an incorporated
company can only be executed excep against the property
of the company ; and a judgment against an individual
cannot by common law be executed against any person or
property, except the person or property of the individual
named in the judgment. In order, however, to give creditors
a more extensive remedy than the}" would have at common
law upon a judgment obtained against companies, either in
their corporate names or in the names of their public officers,
the legislature has rendered such judgments enforceable
against the individual members of the companies. For this
purpose three schemes have been had recourse to.
The first in point of time was applicable to companies
empowered to sue and be sued, and was as follows : — A credi-
tor having obtained judgment against the public officer, was
allowed to proceed upon that judgment by scire facias against
any of the shareholders in the company at the time the judg-
ment was obtained ; and, if necessary, also against such of the
(d) See, as to this, Government of (e) See infra, book iv. c. 1, § 9,
NeiLftntjiillandy.NeivfoundlandRail. and Aslatt v. Farquharson, 10 W.
Co., 1 :i App. ( !a. 1 99 ; and Partn. 364. R. 458.
EXECUTION A.GAIN6T COMPANIES AND SHAREHOLD] 277
late shareholders us were members of the company when the I;k- ir- Chap. 7.
debt was contracted. ■ — ■ — ■ —
The next device was a mere modification of the last, and Second mode.
consisted in the application of it to judgments against com-
panies by their corporate names, which judgments were mail.
enforceable against shareholders and former shareholders in
substantially the same manner as thai above explained: a
qualification, however, was added, to the effect that recourse
should not be had against individual shareholders until efforts
had been made in vain to obtain payment from the company,
and as to some companies, that recourse should not be had
against any shareholder except to the extent of his shai
The third and last device was altogether different, and was Thud mode,
the result of the course adopted by creditors, who, when the}'
could not obtain satisfaction from companies, singled out some
unfortunate shareholder, and compelled him to pay the whole
amount for which judgment had been recovered. This course
was in the highest degree cruel ; and Parliament was induced,
when legislating on joint-stock companies, in 1856, to leave out
all those clauses, found in the preceding acts, enabling creditors
to execute judgments against individual shareholders, and to
provide, instead, that creditors should have the power, upon
non-payment of the debts due to them from the company, to
cause it to be wound up. The same view prevailed when the
acts relating to joint-stock companies were remodelled in 1862.
Consequently, a creditor of a company registered under the
Companies act, 1862, can only execute a judgment obtained
against the company b}r proceeding against the corporate pro-
perty, and, if necessary, by having recourse to a petition for
winding up the company.
Such is a general outline of the manner in which a creditor
of a company has been enabled to obtain satisfaction of a
judgment recovered against it. To fill up this outline so far
as is possible, without alluding to repealed statutes and to the
winding up of companies, is the object of the remainder of the
present section.
278
EXECUTION AGAINST THE COMPANY.
Bk. II. Chap.
Seel. 3.
Execution
against cor-
poration.
Fraudulent
dispositions
of company's
property.
Protected
property.
1. Execution against the company.
A judgment against a corporation is executed against the
corporate property in the same way as a judgment against an
individual is executed against his property ; and a judgment
against a public officer ma}r, it is conceived, be executed
against him and his property as if he were an ordinary indi-
vidual, where the right of the judgment creditor is not in this
respect modified by statute (/).
What is propert^y of a company must be determined by
ordinary principles of the law of property. It must be borne
in mind that unsecured creditors of companies, whether limited
or unlimited, have no lien on their assets (<y) ; and cannot pre-
vent a sale or other disposition thereof (h) ; and it is clearly
competent for all companies to divide profits amongst their
shareholders, and to that extent to convert what was property
of the company into the separate estates of the members.
But any division of the property of a company amongst its
members which is not warranted by the constitution of the
company can be impeached by the company itself (i) ; and
any division of the assets of a coinpairy which would not leave
enough to pay the creditors of the company, would primd
facie be a fraud upon them ; and even if not a fraud upon
them would probably be ultra vires (k).
The rolling stock and plant of railway companies (l) are
protected from seizure by statute (m) ; but a judgment creditor
(/) See Harrison v. Tvmmins, 4
M. & W. 510 ; JFormwell v. Hail-
stone, 6 Bing. 668, where the no-
minal defendant was held not liable
to execution ; and Corpe v. Glyn, 3
B. & Ad. 801, where he was held
not liable to an attachment. See
infra, as to particular companies.
(g) But see, as to cost-book com-
panies, 32 & 33 Vict. c. 19, §§ 24 &
36, and 50 & 51 Vict. c. 43, § 4,
giving miners a lien for their wages.
(h) Mills v. Northern Rail, of
Buenos Ayres Co., 5 Ch. 621.
(£) See Society of Practical Know-
ledge v. Abbott, 2 Beav. 559.
(k) See, as to this, Stringer's case,
4 Ch. 475 ; Cardiff Coal Co. v. Norton,
2 Eq. 558, affirmed by Lord Chelms-
ford, 2 Ch. 405. The decision in this
case was probably right under the
peculiar circumstances affecting the
real plaintiff, but some of the prin-
ciples laid down in the case deserve
serious reconsideration.
(I) The term includes railway and
dock companies, see East and West
India Docks Co., 38 Ch. D. 576; Gt.
North. Rail. Co. v. Tuhourdin, 13 Q.
B. D. 320. Compare Exmoulh Docks
Co., 17 Eq. 181. As to tramway
companies, see Brentford, ii~c, Tram.
Co., 26 Ch. D. 527.
(m) 30 & 31 Vict. c. 127, § 4,
made perpetual by 38 & 39 Vict.
c. 31.
BCUTION \'. WWI I III. < OMPANT. 270
of such a company can obtaii a receiver of the earnings of Bk. II. Chap. 7.
tne company (ro), and ••an issue execution against its unpro-
tected property, and obtain a sale of its surplus Lands
A corporation cannot be attached for contempt or for dis- Attachments,
obedience to an order made upon it (p). Bui if an order is
made upon a corporation, and its directors or officers set the
order at defiance, an attachment against them personally will,
if necessary, be granted (q). By the Rules of the Supreme
Court, L883, Ord. XLII. r. 31, it is provided that :—
'• A.ny judgment or i rder againsl a corporation wilfully disobeyed, may, Executions
by leave of the Courl or a judge, be enforced by sequestration against the against corn-
corporate prbpi rty,or byan attachment against thedu officers paD
thereof, or by writ of sequestration againsl tli.-ir property "(?•)• Attachments.
Ads of Parliament are sometimes met with which empower Under Acts
a company to sue and be sued by a public officer, but which, *ends
instead of giving any remedy against him or the other share- alone liable-
holders individually, render the funds of the company alone
liable to its creditors. In such a case no execution against
the public officer of the company, or against any of its share-
holders, can be issued (s) ; but an action against the public
officer will nevertheless lie, even although there may be no
funds, and the plaintiff may consequently have no means of
enforcing his judgment after he has obtained it (t). If there
are funds they can be got at; but before the Judicature act it
was said that the only mole in which a creditor could get at
them was by mandamus, or by a bill in equity (u).
(») Mancliester and Milford Bail. award.
Co., 14 Ch. D. 645 ; Southern Rail. (q) LacMrme v. Quartz Rock
Co., 5 L. K., Ir. 105. The line must Mining Co., 1 H. & C. 134, and see
have been begun, see Birmingham Salmanv.HamburgCo.,1 Ch.Ca. 204.
and Lichfield Rail. Co., 18 Ch. D. (>■) This rule takes the place of
155. Only one receiver will be § 33 of the C. L. P. act, I860 (23 &
appointed, Mersey Rail. Co., 37 Ch. 24 Vict. c. 126), which was repealed
D. 610, which see as to priorities. by 46 & 47 Vict. c. 49.
(o) Hull, Barnsley, &c, Rail. Co., (s) See Harrison v. Timmins, 4 M.
40 Ch. D. 119. See as to debenture & W. 510 ; Worm-well v. Hailstone,
holders, where one sues on behalf of 6 Bing. 668 ; Gorpe v. Glyn, 3 B. &
himself and others, Hope v. Croydon Ad. 801.
and Norwood Tramways Co., 34 Ch. (t) See Kendall v. King, 17 C. B.
I). 730. 483.
(p) Machenziev.Sligo and Shannon (it) Seethe cases in the last two
Rail. Co., 9 C. B. 250, a case of an notes. Actions have been brought
280 EXEC! TION AGAINST SHAREHOLDERS.
Bk. IT. Chap. 7. Even before the Common law procedure act of 1854, tlie
Sect. 3. ...
- 68th section of which considerably extended the power of
Mandamus in .
suck cases. courts of law to grant a mandamus (x), it had been held that a
creditor of a company, who b}T virtue of its act of Parliament
had no remedy against its shareholders, but only against the
funds of the company, was entitled to a 'mandamus to its
treasurer and directors, after establishing his debt in an ac-
tion (y). If there are no funds, and the company is not under
an obligation to provide any, no mandamus can be granted {z) ;
but if the company is under an obligation to provide funds,
and it will take no measures to raise them, it seems that a
mandamus will go (a). It has, however, been held that a writ
of mandamus will not be granted if the only reason why pay-
ment cannot be obtained by execution in the ordinary way, is,
that there is nothing to seize (b).
The effect of winding up a company upon executions against
it will be examined hereafter in the Fourth Booh.
2. Proceedings against shareholders upon a judgment obtained
against a company or its public officer, generally.
Shareholder can If a company is incorporated, or if it must be sued by a
only be pro- „
ceeded against public omcer, a creditor cannot proceed by action against a
aoain^the1611* snareholder ; but must obtain judgment against the company
company. an(j then proceed upon that judgment (c). It seems to be
doubtful, whether a county court judgment against a company
can be executed against its shareholders ; hence the prudence
of suing companies in one of the superior courts (d).
in such cases, as in Cane v. Chapman, ib. 360.
5 A. & E. 647 ; but see Addison v. (;:) E. v. The Victoria Park Co., 1
The Mayor of Preston, 12 C. B. 108. Q. B. 288.
(x) See Norris v. The Irish Land («) Ib. ; and see R. S. C. Ord. liii.
Co., 8 E. & B. 512, correcting Benson r. 1.
v. Paull, 6 E. & B. 273. The section (b) See R. v. The Victoria Park
was repealed by 46 & 47 Vict. c. 49. Co., 1 Q. B. 288.
The Supreme Court Rules of 1883, (c) Fell v. Burchett, 7 E. & B. 537 ;
Ord. liii. it. 1 to 4, have taken its and see as to public officers, ante, p.
place. 265, et seq.
(y) See Corpe v. Glyn, 3 B. & Ad. (d) See Taylor v. The Crowland
8oi ; R. v. St. Katherine Unci Co., 4 Gas Co., 11 Ex. 1.
EXECUTION AGAINST SHAREHOLDERS. 2Hl
By the common Law, a judgment againsl A. cannot be exe- llk- "• n"i- "•
■ .■'..
cuted againsl B. withoul a scire facias, which, though a judicial
. . . , „ , ' fa. against
writ, is m tne nature of an action, and may be pleaded to Bharehoid<
accordingly. So, before a judgment in the Chancery division Judgment in
against a public officer can be enforced againsl individual Division,
shareholders, an order against them personally musl be ob-
tained (e). The object of the sci.fa. was technically to make
the execution conformable to the judgment ; hut substantially
its object was to give the person againsl whom the judgmenl
was sought to be enforced an opportunity of defending himself;
for, ex hypoth si, he had not had that opportunity before (/).
Proceedings by sci.fa. have not been abolished; but a much OrderXLU.
simpler mode of proceeding lias been introduced by the Rules r- 2'J'
<>f the Supreme Court, 1883, Ord. XLII. r. 23, which pro-
sides that —
" Where a party is entitled to execution against any of the shareholders
of a joint stock company npmi a judgment recorded against such company,
or against a public officer or other person representing such company, the
party alleging himself to be entitled to execution may apply to the Court
or a judge for leave to issue execution accordingly, and Buch < lourt or judge
may, if satisfied that the party so applying is entitled to issue execution,
make an order to thai effect, or may order that any issue or question
necessary to determine the rights of the parties shall he tried in any of the
ways in which any question in an action may lie tried. And in either case
such Court or judge may impose such terms as to costs or otherwise as shall
he just."
This improvement in procedure renders it unnecessary to
refer at length' to the old rules of practice relating to sci.fa.;
hut as they may be still useful in some cases, a short account
of them is given in a note at the end of the present chapter.
A judgment or writ of execution against a company or its Registry of jud£-
public officer may be registered like any other judgment or TOmpanies!'^
writ of execution ; and in those cases in which a judgment
is equivalent to a judgment against all the members of the
company individually, and is enforceable against them, it has
been supposed to affect them as if it had been in form a judgment
(c) Vigers v. Pike, 8 CI. & Fin. Com. Dig. Pleader, 3 L. ; Bac. Ab.
652 ; Healey v. Chichester and, Mid- Sci.fa., and the note to Underhill v.
hurst Rail. Co., 9 Eci. 148. Devereux, 2 Wms. Saund. 71.
(/) See, generally, as to sci. fa.
Lb"J EXECUTION AGAINST SHAREHOLDERS.
Bk. II. Chap. 7. against tliem individually and registered accordingly (g). But
OGCt. o.
as a judgment against a company or its public officer could
not be executed against an individual shareholder of the com-
pany without a sci.fa., it could not be reasonable to make that
judgment a charge on his property before execution against
him could lawfully be sued out (h). A judgment registered
against a company governed by the act of 1862 obviously does
not affect the property of its members.
Discovery of In order to enable a creditor who has obtained judgment
shareholders. . _. .
against a company to discover the persons against whom such
judgment may be executed, provision has been made by the
various statutes relating to companies compelling them to
make periodical returns, or to keep registers, of the names and
residences of their shareholders, and directing such returns or
registers to be open for inspection (i).
Right of creditor A creditor who has obtained judgment against a company,
to proceed against , . , « .. , . .
individual share- ar>d is m a position lawfully to execute such judgment against
holders. ^e individual members of that company, cannot be restrained
from proceeding to execute it against any member or members
he may choose to select, provided he acts bond fide for the
purpose of obtaining payment of what is due to him (k). But,
(g) See Ex parte Ness, 5 C. B. sary ; R. v. The Derbyshire Bail. Co.,
155. 3 E. & B. 784, where a mandamus
(h) See Harris v. The Royal was obtained. As to examining the
British Bank, 2 H. & N. 535. It directors, see Dickson v. Neath and
has been held in Ireland that a Brecon Bail. Co., L. R. 4 Ex. 87.
judgment obtained against a com- See, also, R. S. C. Ord. xlii. r. 32,
pany ought not to be registered et sea., as to discovery in aid of
against a former shareholder. See execution.
Hone v. O'Flahertie, 9 Ir. Ch. 119, (h) See Morisse v. The Royal
where relief against such registra- British Bank, 1 C. B. N. S. 67 ;
tion was given. See, also, Ex parte Green v. Nixon, 23 Beav. 530. See,
Thornton, 2 Ch. 171, as to register- also, Hardinge v. Webster, 1 Dr. &
ing winding-up orders. See now 51 Sm. 101, where it was held that a
6 52 Vict. c. 51. member of a company who had ob-
(i) See 7 Geo. 4, c. 46, § 4, et seq.; tained judgment against it could
7 Wm. 4 & 1 Vict. c. 73, § 6, et not be restrained from enforcing
seq. ; 8 & 9 Vict. c. 16, §§ 9, 10, 36; that judgment against another
and as to the mode of obtaining in- member of the same company,
spection, see Meader v. I. of Wight The company was governed by 7
Ferry Co., 9 W. R. 750, Ex., where & 8 Vict. c. 110, and had become
a mandamus was held not neces- amalgamated with another com-
EXECUTION AGAINST SHAREHOLDERSi 283
as will be seen hereafter, neither a judgment creditor, nor a Bk. [I. Cbap. 7.
purchaser from him, will be allowed to use the judgment for ■
the dishonest purpose of aiding some members of the company
against the others (/).
Upon a proceeding against a shareholder to enforce a judg-
ment already obtained against a company or public officer, the
shareholder is bound by the judgment, and cannot impeach it,
except on the ground that the judgment itself was obtained by
fraud (m). A judgment obtained by default is, in the absence
of fraud, as conclusive against the shareholders as any other
judgment (//).
A judgment obtained by fraud and collusion is however Exception in
always impeachable by innocent parties affected by it; and STp^oT the™
however high the tribunal in which the judgment has been creditor,
pronounced may be, its invalidity on the ground of fraud may
be examined by any inferior court which may happen to be
called upon to give effect to it (o). If, therefore, a shareholder
is proceeded against upon a judgment obtained by fraud on the
part of the creditor, the judgment may be impeached ; and il
seems that the shareholder may at his option either apply to
the Court in which the judgment was obtained to have it set
aside, or rely on the fraud as a defence to a sci. fa., or to an
application for leave to issue execution as the case may be (p).
It is to be observed that the fraud here referred to as Frand by com-
affording a defence to the sci. fa., is fraud on the part of the Eddcr do^ntt
judgment creditor in obtaining the judgment. Fraud on a protj:.ct llim from
shareholder by the directors of the company, and to which
pany in which the defendant was a ston's case, in 2 Sm. L. C, and
shareholder, Imt the plaintiff was the admirable dissertation upon it
not. there.
(/) See Woodhams v. Anglo- Aus- (p) See Dodgson v. Scott, 2 Ex.
tralian Co., 2 De G. J. & Sm. 162. 457 ; Edwards v. The Kilkenny Co.,
(m) See Peddell v. Gwyn, 1 H. & 2 C. B. N. S. 397 ; Philipson v.
N. 590; Bradley v. Eyre, 11 M. & Egremont, 6 Q. B. 587; Bosanquet
W. 432 ; Fowler v. BicJcerby, 2 Man. v. Graham, 6 Q. B. 601, note ; Green
& Gr. 760. v. Nixon, 23 Beav. 530. The hrst
(h) Green v. Nixon, 23 Beav. 530. two of these cases, and Harvey v.
See, also, Ex parte Chorlcy, 11 E<p Scott, 11 Q. B. 92, show that it is
137. not proper to raise the question of
(o) See Shedden v. Patrick, 1 frand upon a motion for leave to
McQu. 535; The Duchess of King- issue a sci. fa.
284
EXECUTION AGAINST SHAREHOLDERS
r.k. ii. Chap. 7. fraud the creditor is not privy, affords no defence to pro-
Sect. 3.
ceedings b}r him against the shareholder. This was decided in
several cases arising out of the failure of the Royal British
Bank, and is a necessaiy consequence of the principles of the
law of partnership (q).
Creditor pro- A shareholder in a company cannot escape from the liability
ceeding against . .... . i i i i
shareholder after to its creditors which is imposed irpon him as a shareholder,
in u.iii- im to excep£ by virtue of some act of theirs : and nothing short of
become such. r j o
fraud on their part, or of some contract or conduct of theirs
precluding them from treating him as their debtor, will afford
him a defence as against them so long as their demand exists
as between them and the company. This is well illustrated
Bill v. Richards, by Bill v. Richards (r), where a shareholder in a railway com-
pany pleaded to a sci.fa. issued against him by a creditor who
had obtained judgment against the company, that he, the share-
holder, had at the request of the plaintiff taken shares in the
compan}r as a trustee for others, and upon the faith of the
plaintiff's statement that by so doing no responsibility in
respect of the shares would be incurred. It was not alleged
that the plaintiff had been guilty of any fraud ; his statement
did not relate to any matter of fact ; it did not amount to a
contract of indemnity, nor to a contract that if he were a
creditor of the company he would not endeavour to obtain pay-
ment from the defendant. It was quite consistent that all that
was meant was, that if the defendant would allow shares to be
taken for others in his name the}7 would indemnify him against
the consequences, and the defence was therefore held insuffi-
cient, although pleaded as a defence on equitable grounds.
No remedy by The effect which a contract by a company to pay out of its
creditor whose ..... .......
right is limited funds, and those only, has in limiting the liability oi the share-
fundsnpany S holders, has been already examined (s). Where such a contract
has been entered into, no execution on the judgment against
(q) Henderson v. Royal British
Bank, 7 E. & B. 356. See, too,
Daniell v. Tlie Royal Brit. Bank, 1
H. & N. 681 ; Poms v. Harding,
1 C. B. N. S. 533. Howard v. Shaw,
9 Ir. Law Kep. 335, shows that a
shareholder sued for a debt of the
company cannot escape payment on
the ground that the company was
concocted in fraud, and that its deed
of settlement was invalid.
(r) 2 H. & N. 311. Compare
Batty v. McCundie, 3 Car. & P. 203 ;
Connop v. Levy, 11 Q. B. 709.
(s) Ante, p. 24(i, et seq.
I\ COMPANIES GOVERNED BY i GEO. 1, C. 46. 285
the company will go against the shareholders at the Buit of ;i 1;;- 'J- ,'l,:ii'- "•
person seeking to enforce that contract (t).
The effect of winding up proceedings on executions against
members of companies will be noticed in the Fourth Book.
Having made these preliminary remarks on the subject ot
executions against shareholders generally, it is proposed to
examine more in detail the law relating to proceedings against
shareholders in companies governed by the Banking act of 9
Geo. 4, the act of 7 Wm. 1 & 1 Vict. c. 73, the Companii a
clauses consolidation act, and other compan
3. Proceedings against members of particular companies.
<() Execution against members of companies governed by 1 Geo. 1, c. 16.
The Banking companies act of Geo. 4 requires the public Execution
officers of a company governed by that act to be members of officer under
the company (it), and enacts that execution upon any judgment
obtained against a public officer may be issued against any
member of the company (x). Prom this it follows that a public
officer of a company governed by the act in question is per-
sonally liable upon every judgment obtained against him; and
that writs can issue against him grounded on such judgment,
and that, so far as he is concerned, no intermediate proceeding
is necessary (y). If, indeed, the public officer named in the
judgment has ceased to be a member of the company, then, by
the act, he is only liable like other former shareholders ; and
upon an affidavit by him, the court will stay execution against
him until after he has been proceeded against by scire facias or
its modern equivalent (z).
The act in question, 7 Geo. 4, c. 46, allows a creditor, who Liability of
. • n-. shareholders
has obtained judgment against the public officer to execute under 7 Geo. 4,
that judgment — c< 40'
1. Against any member for the time being of the company ;
and in case any such execution shall be ineffectual, then
(t) HalJcety. The Merchant Traders' (y) Harwood v. Lau; 7 M. & W.
Ass., 13 Q. B. 960. 203.
(u) 7 Geo. 4, c. 46, § 4. (z) See Harwood v. Lau; 7 M. & W.
(a;) § 13. 203.
286
EXECUTION AGAINST SHAREHOLDERS.
Members for the
time being.
Bk. II. Chap. 7. 2. Against any person who was a member ot the company
Sect. 3. .
— at the time the contract sued upon was entered into ; or
3. Against any person who became a member at any time
after such contract was entered into, but before it was exe-
cuted ; or
4. Against any person who was a member at the time when
the judgment was obtained.
But persons who are not members for the time being, and
so do not fall within the first class, are only liable for three
}Tears after they have ceased to be members (a).
It appears, therefore, that a creditor must go first of all
against the members for the time being, and that until he has
done so he cannot go against late members (b) ; and by members
for the time being are meant, not members at the time judgment
was obtained against the public "officer, but members at the time
a sci.fa. or summons on the judgment is issued (c). Members
for the time being in this sense can be proceeded against at
once, and the statute expressly allows proceedings to be taken
against any one or more of them. Their liability, it will be
observed, is much more extensive than the liability of ordinary
partners ; not being confined to debts incurred after they
become partners.
A sti. fa. (or now a summons under R. !?. C. Ord. XL1I.
r. 23) is the proper mode of proceeding against shareholders
under this act (d) .
The names of the shareholders can be ascertained from the
returns made to the Stamp Office (e).
A creditor is not bound to proceed against all the members
for the time being before having recourse to former members ;
Former mem-
bers.
(a) 7 Geo. 4, c. 46, § 13.
(h) Hence a late member was a
competent witness for the public
officer. Necdham v. Law, 12 M. &
W. 560.
(c) See Dodgson v. Scott, 2 Ex.
457. See, too, Bradley v. Eyre, 11
M. & W. 432, which turned on a
private act in which similar words
occurred.
(d) Ransford v. Bosanquet, 2 Q.
B. 972, and Bosanquet v. Ransford,
11 A. & E. 520, and Cross v. Law,
6 M. & W. 217 ; Wittenbury v. Law,
6 Bing. N. C. 345; Williams v.
Aspinall, 7 Scott, 822, contra, is not
to be relied upon. The rule for a
sci. fa. against present members is
absolute in the first instance, arid
need not be moved for in open
court, Harrison v. Tysan, 1 Bail Ct.
Ca. 111.
(e) See 7 Geo. 4, c. 46, § 4, et seq.,
and see ante, p. 110.
i COMPANIES GOVERNED BY 7 GEO. i, C. l<->. 287
l)ut he must make every reasonable effort to obtain payment 1;k- n- r,,aP- 7.
. ' ;-
from the firsl before he acquires a right to proceed agamst the
last. Acting upon this principle, the Court allowed a sd. fa.
to issue against a late member, although proceedings against a
member for the time being were pending, evidence being given
to Bhow that nothing was to be got from him, and that evi-
dence being uncontradicted (/). So in another case, a late
member was allowed to be proceeded against, although some
only of the members for the time b< ing had been sued ineffec-
tually, uncontradicted evidence being given that inquiry had
been made as to the solvency of the others, and that there was
reason for believing that payment could not he obtained from
any of them (g). So it was unnecessary for the creditor to
issue writs of ca. %a. against the existing shareholders before
proceeding against former members (h). Moreover, a mort-
gagee who has obtained judgment for his debt, and has clone
his best to obtain payment by executing that judgment against
the members for the time being, is, it seems, entitled to
proceed against former members, even without realising his
mortgage (e). On the other hand, the Court will refuse a
creditor leave to proceed against a late member where there is
reason to believe that satisfaction can be got with diligence
from existing members (k) ; and a return of nulla bona to a
writ of fi. fa. issued against the public officer, together with a
loose affidavit as to the insolvency of the members for the time
being, will not of itself be sufficient to satisfy the Court that
payment from them cannot be obtained (I).
With respect to late members, the act, as has been seen, Classes of former
makes three classes of them liable, and renders it lawful for mem ers'
the creditor to proceed agamst any or all of them, not con-
fining him to one class before having recourse to another (m).
(/) Dodgson v. Scott, 2 Ex. 457. 802. See, too, Cross v. Law, 6 M.
(g) Harvey v. Scott, 11 Q. B. 92 ; & "W. 217.
Field v. Mackenzie, 4 C. B. 705. (F) Bank of England v. Johnson, 3
(h) Field v. Mackenzie, 4 C. B. Ex. 598.
'32. (m) A rule for a sci. fa. against a
(i) lb. 4 C. B. 725. The mort- late member must be served per-
gage in that case could not be sonally, or be shown to have reached
realised at once without great loss. him, Esdaile v. Smith, IS L. J. Ex.
(h) Eardley v. Law, 12 A. & E. 120.
288 EXECUTION AGAINST SHAKEHOLDEES
Bk. II. Chap. 7. The liability of late members is, in some respects, mure ex-
— tensive than the liability of retired partners at common law,
inasmuch as these last are not liable to be sued in respect of
debts contracted before they became members. But, on the
other hand, the statute limits the duration of a late member's
liability to creditors to three years after retirement (n). More-
over, there is one class of late members who cannot be pro-
ceeded against by one class of their former creditors at all,
viz., those members who did not become such until after the
creditors' debts had arisen, and who had ceased to be members .
before judgment obtained against the public officer. "Whether
the omission of all members of this class to creditors of
this class was designed or accidental is not known ; but being
omitted, their freedom from liability towards such creditors is
complete (o).
Evidence of A creditor, being entitled to issue execution only against
membership. . . . .
members lor the time being, or, 11 necessary, against certain
classes of late members, must, before he can obtain leave to
proceed against any particular person, adduce some evidence
to show either that such person is a member for the time
being, or that he was a member at the time when the contract
with the creditor was entered into, or before the same was
executed, or at the time judgment was recovered ( p). For this
purpose recourse is usually had to the memorial of share-
holders, directed to be returned to the Stamp Office, which is
held to be sufficient if uncontradicted, even although it may
be in some respects informal (q) or inaccurate as regards the
name of the shareholder proceeded against (r). The memorial
(?i) This limitation applies only to although there was strong evidence
creditors, and does not prevent a late against his having heen a member at
shareholder from being a contribu- the time alleged.
tory, although three years may have (</) See Ex parte Prescott, Mon. &
elapsed since he retired from the Ch. 611 ; Harvey v. Scott, 11 Q. B.
company. Gouthwaite's case, 3 Mc. 92 ; Field v. Mackenzie, 4 C. B. 705
& G-. 187. and 717 ; Bosanquet v. Shortridge,
(o) See Dodgson v. Scott, 2 Ex. 4 Ex. 699. Compare Prescott v.
457, and Harvey v. Scott, 11 Q. B. Buffery, 1 C. B. 41, ante, p. 110.
92. (/•) Clowes v. Brettell, 11 M. & W.
(p) In The Bank of England v. 461, decided on a private act. See
Johnson, 3 Ex. 598, the Court let too, Thompson v. Harding, 1 C. B.
a sci. fa. issue against a person N. S. 555.
(JNDEB THE LETTEBS PATENT kCt. 289
is not. however, conclusive, nor is it the only evidence of Bt- n. CnaP- 7.
Beet. 3.
membership ; and it has been decided that a person whose
name is omitted 1V« >ni the last return may nevertheless In-
proved, aliunde, to have been a shareholder when the return
was made, and that, if there is a dispute as to the fact of mem-
bership, proper steps must be taken in order to have that
question tried («).
As between a creditor and an alleged shareholder, the gues- Effecl ofnon-
r i i • ii-i i -i compliance with
tion 01 membership or no membership depends entirely upon requisite for-
whether the requisites, which, by the company's deed, have ",;i
to be complied with before a person becomes a member, have
been complied with or not ; and it may happen that one and
the same person is not a member for the purpose of being
proceeded against by a sci. fa., although he may be a member
for the purpose of being made a contributory on the winding
up of the company (£).
/») Execution against members of companies governed by tJu Letters Patent act.
The Letters Patent act (7 Win. 4 & 1 Yict. c. 73) does not Execution
n' r ii-i against public
require the public officers ol a company governed by it to be officer under
members of the company ; and even if they arc members their ^ Vi^' c Z3
liabilities are restricted to the extent specified in the letters
patent of their respective companies. These circumstances
alone, it is conceived, render it improper for a creditor to issue
execution against a public officer of a company governed by
the Letters Patent act without an order of a court or judge («)
or a sci. fa. ; for it is clear from the act that he cannot be made
personally liable unless he is or has been a member, and in
neither case is lie liable to the extent to which he would be
liable at common law.
The act in question appears to empower a creditor who has Liability of
obtained judgment against the public officer of a company umier 7 Wm. 4
governed by it, to execute that judgment against all or any of & l ' "
(s) Bank of England v. Johnson, strong, 4 ib. 21 ; Bosanquet v. Short-
3 Ex. 598 ; Prescolt v. Buffery, 1 C. ridge, ib. 699, there cited. See, too,
B. 41. Dodgson v. Bell, 5 Ex. 967.
(t) See ante, p. 54, and Ness v. (u) Under R. S. C. Ord. xlii., r. 23,
Angus, 3 Ex. 805 ; Ness v. Arm- ante, p. 281.
L.C. U
290
EXECUTION AGAINST SHAREHOLDERS
Bk. II. Chap. 7. the shareholders, or late shareholders whom he might have
— sued for payment at common law ; the only qualifications
being : 1, that a shareholder who transfers his shares con-
tinues a shareholder for all purposes of liability until the
transfer has been registered ; and 2, that the extent of a
shareholder's liability is limited or unlimited, according to
the letters patent granted to the company (x). This act has
not received any judicial interpretation throwing light upon
the liabilities imposed by it, and it is by no means clear,
that the liability of an incoming shareholder is not more
extensive than the ordinary liability of an incoming partner.
The names of the shareholders can be ascertained from the
returns made under the act(//).
Under 8 & 9
Vict. c. 16,
creditor must
first go against
the company ;
c) Execution against members of companies governed by 8 & 9 Vict. c. 16.
"With respect to companies governed by the Companies'
clauses consolidation act (8 & 9 Vict. c. 16), there is one im-
portant rule which has no analogy with anything met with in
the law applicable to ordinary partnerships, or in that ap-
plicable to companies governed by the Banking act of 7 Geo. 4,
c. 46, or by the Letters Patent act of 7 Wm. 4 & 1 Vict,
c. 73. The rule referred to is, that the creditors of a company
governed by the Companies' clauses act, are not entitled to
proceed against the shareholders personally, if payment can be
and show that he obtained from the company. In other words, the creditors
payment from it. must have recourse to the assets of the compan}r before they
can have recourse to the shareholders individually. When,
therefore, an application is made for leave to issue a sci.fa. or
execution against a shareholder in a company governed by the
act in question, evidence must be adduced to satisfy the Court
that payment cannot be obtained from the company itself as a
body (z). The creditor need not show that there is no possi-
(x) 7 Wm. 4 & 1 Vict. c. 73, §§ 21
& 24 ; and see upon it Philipson v.
Egremont, 6 Q. B. 587. The writer
supposes that the returns are now
made to the High Court instead of
to the Court of Chancery.
[y) lb- § 6, et seq.
(z) The same rule applied to com-
panies governed by the repealed acts
of 7 & 8 Vict, cc. 110 and 113. It
seems that the sci.fa. need not con-
tain any averment that nothing can
DNDEB J III COMPANIES CLAUSES CONSOLIDATION ACT. 201
bility of the company ever paying him : all that the Court Bk. n. Ch
. _ 3.
requires is to be satisfied that the creditor applymg for leave
to proceed against the shareholder has qo means of obtaining
present payment except from them individually. In order to
satisfy the Court upon this head, the creditor must prove that
he has made reasonable attempts to obtain payment from the
company, and to discover assets presently available for his
satisfaction, and that such attempts have been unsuccessful.
A mere general assertion by a solicitor's clerk that writs of
//. fa. have been issued against the company and returned
nulla bona, is nut sufficient; for it is consistent with such an
assertion that no attempt has been made to ascertain whether
the company has any assets or not (a). But if attempts have
been made to discover assets, and those attempts have been
fruitless, and a writ of fi. fa. has issued against the company
and been returned nuUa bona, that will be sufficient until it
is shown affirmatively that the company has assets (b) ; and
even if the company has assets which have not been taken in
execution, still, if the Court is satisfied that they arc insuffi-
cient to satisfy the plaintiff, the sci. fa. will go, or leave to
issue execution will be given under R. S. C. Ord. XLIL,
r. 23 (c).
By the Companies' clauses consolidation act, a judgment Liability of '
i i-ii t shareholders
recovered against a company to which such act applies, may, under s & 9
if necessary, be executed against any of the shareholders- ^lct- c' 16'
But no shareholder is liable to a greater extent than the
amount unpaid up of his shares in the company (d).
begot from the company, Hitchins Rail. Co., 2 C. B. N. S. 110; Ridg-
v. The Kilkenny Rail. Co., 15 C. B. way v. TJie Security, dr., Ass. Soc,
459 ; but if it does, the averment 18 C. B. 686. The return by the
may be traversed, Mar son v. Lund, sheriff need not be filed when the
16 Q. B. 344. See Nixon v. Brown- sci. fa. is moved for ; Ilfracombe
loiv, 1 H. & X. 405. Rail. Co. v. Devon and Somerset Rail.
(a) See Hitchins v. The Kilkenny Co., L. R. 2 C. P. 15 ; and see infra
Rail. Co., 10 C. B. 160, and 15 ib. notes (e) and (g).
459 ; King v. The Parental Endow- (c) Ilfracombe Rail. Co. v. Lord
ment Co., 11 Ex. 443. Poltimore, L. R. 3 C. P. 288 ; Rigby
(b) Rastrick v. The Derbyshire v. Dublin Trunk Rail. Co., L. R. 2
Rail. Co., 9 Ex. 149 ; Nixon v. The C. P. 586.
Kilkenny Rail. Co., 1 H. & N. 47 ; (d) 8 & 9 Yict. c. 16, § 36. See
Hitchins v. The Kilkenny Rail. Co., Burke v. Dublin Trunk Rail. Co., L. R.
15 C. B. 459 ; Wyall v. TheDarenth 3 Q. B. 47 ; Guest v. Worcester Rail.
v 2
292 EXECUTION AGAINST SHAREHOLDERS.
Bk. II. Chap. 7. The expression, " any of the shareholders," has been decided
Sect. 3. ...
to mean any of the shareholders at the time execution against
shareholders." the company is found to be ineffectual, i.e., in ordinary cases,
at the time of the sheriff's return of nulla bona (e). Conse-
quently, not only all persons who have ceased to be share-
holders before judgment against the company has been
recovered, but also all who have ceased to be so after that
time, but before it has been ascertained that execution against
the company on such judgment will prove ineffectual, are
wholly exempt from liability to the judgment creditor (/).
The act requires that every shareholder intended to be pro-
ceeded against, is to have sufficient notice in writing before
application for leave to issue a sci.fa. against him is made (<j).
Leave to issue a sci. fa. will be refused if the Court is of
opinion that there is a clear defence to it(h). On the other
hand a sci. fa. may be dispensed with if the shareholder does
not desire to contest his liability (i). How far these rules apply
to proceedings under R. S. C. Ord. XLIL, r. 23, has not been
decided.
Evidence of The meaning of the word shareholder in this act of Parlia-
mem ers lp. ment has been already examined (A,) ; and it is only necessary
here to observe that the company's register of shareholders,
which a creditor who has obtained judgment against the
company has a right to inspect (I), is, in the absence of evi-
Co., L. R. 4 C. P. 9. In the last case 9 Eq. 148.
the shares were not in fact paid up. (Ji) See as to the discretion of the
(e) Nixon v. Green, 11 Ex. 550, Court, Shrimpton v. Sidmouth Rail.
and 3 H. & N. 686 ; Nixon v. Co., L. R. 3 C. P. 80 ; Lee v. Bude,
Broivnlow, 3 H. & N. 686. &c, Rail. Co., L. R. 6 C. P. 576 ;
(/) Ibid. Burke v. Dublin Trunk Rail. Co.,
(g) 8 & 9 Vict. c. 16, § 36. See L. R. 3 Q. B. 47. However, in Guest
Hitchins v. Kilkenny Rail. Co., 10 v. Worcester Rail. Co., L. R. 4 C. P.
C. B. 160 ; Devereux v. Kilkenny 9, the Court allowed a sci. fa. to go
Rail. Co., 5 Ex. 834. See Ilfra- although the case was clear.
combe Rail. Co. v. Devon and Somer- (i) Burke v. Dublin Trunk, dr.,
set Rail. Co., L. R. 2 C. P. 15, and Rail. Co., L. R. 3 Q. B. 47.
Edwards v. Kilkenny Rail. Co., 1 (k) Ante, p. 104.
C. B. N. S. 409, as to serving the (I) 8 & 9 Vict. c. 16, § 36. R. v.
notice and rule nisi on the share- The Derbyshire, &c, Rail. Co., 3 E.
holder. See, as to enforcing decrees & B. 784 ; Header v. Isle of Wight
in equity without a sci.fa. Healey v. Ferry Co., 9 W. R. 750, which shows
Chichester and Midhurst Rail. Co., that a mandamus is not necessary.
EXECUTION AGAINST SHAREHOLD] 293
dence to the contrary, sufficienl proof that a person whose Bk- n- chaiJ- 7.
name is on it is a shareholder (ra). 13 ut the register is not
conclusive evidence, and leave to issue a sci. fa. (or, it is
presumed, execution, under I!. S. C. Ord. XLII.r. 23) againsl a
person who is on it will not be given if he can show that lie is not
a shareholder (n). Neither is the register the only evidence thai
a person is a shareholder ; and a person made a member of the
company by its special act, may 1/.- proceeded against accord-
ingly, although no shares have been issued (o), unless he is to
be regarded as having ceased to be a member (;>). In a case
where a creditor was prevented from seeing the register, a sci.
fa. was allowed to issue against a person sworn to be a .-hare-
holder to the belief of the deponent, and which belief was
founded on information from officials connected with the
company (q).
d) Execution "gainst members of other companies.
Companies empowered by special acts to sue and be sued, Liability of
and the shareholders in which are liable for the debts of the in other com-
companies, will generally be found to resemble companies panies-
governed by 7 Geo. 4, c. 46 (>•).
Execution against partners or shareholders under judgments
obtained against them in the name of their tirm or compam-, is
governed by R. S. C. Ord. XLIL, r. 10, as to which see Part.,
Bk. II., c. 3, § 3, p. 298 et seq.
Unregistered cost-book mining companies are partnerships, Cost-book
and shareholders in them may be proceeded against ac-
cordingly (s). But by the Stannaries act, 1887 (50 & 51 Vict.
(m) See 8& 9 Viet, c. 16, §§ Sand & W. 506; Wmgfield v. Barton, 7
29. Jur. 258 ; Wingiield v. Peel, 13 L. J.
(n) Edwards v. Kilkenny Rail. Co., X. S. Q. B. 102 ; and as to friendly
14 C. B. X. S. 526; Mather v. Nat. societies, Myers v. Rawson, 5 II. & X.
Assoc. Investment Soc., ib. 676. 99. The 17 & IS Vict. c. 25, on
(o) Portal v. Emmens, 1 C. P. D. which the last case turned, was re-
201 and 664, ante, p. 104. pealed by 25 & 26 Vict, c. 87 (since
(p) Kipling v. Todd, 3 C. P. D. 350. repealed by 39 & 40 Vict. c. 45, § 4).
(q) Rastrick v. The Derbyshire, d-c., (s) Lanyon v. Smith, 3 Best &
Rail. Co., 9 Ex. 149. See ante, p. Sm. 939 ; Trechecn v. Bourne, 6 M.
104 et seq. & W. 401 ; Newton v. Daly, 1 Fos.
(r) See Clowes v. Brettell, 10 M. & Fin. 26 ; Peel v. Thomas, 15 C.
companies.
294 EXECUTION AGAINST SHAREHOLDERS.
Bk. II. Chap. 7. c. 43) } § 6, in the case of execution against any company to
which the act applies, the sheriff is to levy sufficient to pay all
wages due at the date of the levy in addition to the judgment
debt, and such wages are payable in priority to the judgment
debt.
Companies Shareholders in companies governed by the Companies act,
governed by . . .
act of 1862. 1862, are not liable to execution on judgments against the
company, but must be proceeded against under the winding-up
clauses, which will be examined hereafter (t).
The law respecting execution against members of companies
governed by the repealed acts of 7 & 8 Vict. cc. 110 and 113,
is now obsolete, and is therefore omitted (u).
Note on procedure by Scire facias.
Necessity of ln th°se cases "i which a judgment against a company or a public officer
sci. fa. was sought to be enforced against a shareholder, a scire facias was a neces-
sary preliminary, unless there was some statutory enactment to the
contrary (a;), and a provision that execution should not issue without leave
obtained by motion in open court, was not sufficient to dispense with a
sci. fa. (y).
Sci, fa. under A sci. fa, was necessary in the case of banking companies governed by
7 Geo. 4, c. 46, *j Qeo. 4, c. 46 (a), and of companies governed by the Companies' clauses con-
solidation act ( a) ; and probably also in the case of companies governed by
the Letters Patent act, 7 Win. 4 & 1 Vict. c. 73.
&Tvic't. c. 73. Under the repealed acts 7 & 8 Vict. cc. 110 and 113, leave to issue execu-
Under 7 & 8 tion against a shareholder might be obtained without any suggestion or sci.
Vict. cc. 110 fa. But this did not render a sci. fa. improper; and in point of fact it
was very commonly had recourse to for the purpose of executing judg-
and 8 & 9 Vict.
c. 16
Under 7 Wm. 4
and 113.
B. 714 ; Toll v. Lee, 4 Ex. 230 ; Q. B.
Ellis v. Sclunoeck, 5 Bing. 521, are (y) See the last three cases. A
instances of successful actions against judgment obtained in a colony may
individual shareholders in cost-book be sued upon in this country in an
mining companies. action in the ordinary form : Bank
(0 25 & 26 Vict. c. 89, §§ 180 and of Australia v. Nias, 16 Q. B. 717.
195. (z) Ransford v. Bosanquet, 2 Q. B.
(u) It will be found in the first 972.
edition of the present treatise, vol. i. (a) 8 & 9 Vict. c. 16, § 36 ; Hitchins
pp. 458-462. v. The Kilkenny Bail. Co., 10 C. B.
(x) Bartlett v. Bentland, 1 B. & 160 ; Devereux v. The Kilkenny Bail.
Ad. 704 ; Clowes v. Brettell, 10 M. & Co., 5 Ex. 834. See, as to enforcing
W. 506; Wing Held v. Barton, 2 decrees in equity, Healey v. Chichester
Dowl. N. S. 355, and 7 Jur. 258 ; and Midhurst Bail. Co., 9 Eq. 148.
Wimgfield v. Beel, 12 L. J. N. S. 102,
PROCI.M l:l MY m Il;l. FACIAS.
295
ments obtained ompaniee to which these acts applied (5). A ad. fa., iJk. II. Chap. 7.
however, did not lie against the executors of a deceased shareholder (c). Sect. 3-
A writ of scire facias is a judicial writ, and is the commencemenl of a new Nature of act. fa.
action, founded on a judgment already obtained. The wril states the
recovery of the judgment, and whatever facts are necessary to show that the
person againsl whom the writ is issued is liable to be proceeded against on
that judgment ; and the shareholder againsl whom tin- writ is issued is
commanded to appear to mow why the plaintiff ought not to have execution
against him. Tin- writ is set out in a declaration or statement of claim,
which prays that execution may issue againsl the defendanl (d) ; and which
may be pleaded or demurred to in il rdinary waj 1 1 I ae having b< en
joined, the cause proceeds to trial (/). A judgment obtained against a
defendant in a mi. fa. is executed Like any other judgment. But the Court
will compel the creditor to limit the amount for which execution is sued out
to what may then be really due to him. This is done by putting the creditor
on terms when leave to issue a id. fa. is granted {</).
A sci.fa. issued irregularly, e.g., without leave, where leave is required, Irregular aci fa*
will he set aside ; but a plea to it, alleging merely an irregularity for which
it might be set aside, is bad (A).
A judgment creditor of a company may is9Ue as many concurrent writs Concurrent writs
of sci.fa. against as many shareholders as he thinks proper ; and so long as his °* s"- Ja-
demand is unsatisfied, a defence by any shareholder that the plaintiff is pro-
(/») See as to 7 & 8 Vict. c. 110,
Palmer v. The Justice Assurance So-
ciety, 6 E. & B. 1015 ; Peart v. The
Universal Salvage Co., 6 0. B. 47S ;
Thompson v. The Universal Salvage
Co., 3 Ex. 310 ; Re Weiss, 15 C. B.
331. And as to 7 & 8 Vict. c. 113,
see Bendy v. Harding, 1 C. B. N. S.
551 ; TJtompsonv. Harding, ib. 555 ;
Dossett v. Harding, ib. 524 ; Morisse
v. The Royal British Bank, 1 C. B.
N. S. 67 ; Wilde v. Stunner, 1 H. &
N. 873. See, too, Powis v. Butler, 3
C. B. N. S. 645, and 4 ib. 469 ; Fry
v. Russell, 3 ib. 665.
(c) Powis v. Butler, ubi supra.
(d) See the pleadings in Ricketts
v. Bowhay, 3 C. B. 889, where the
writ and declarations are set out in
full. See, too, Bradley v. Eyre, 11
M. & W. 432 ; Nunn v. Claxton,
3 Ex. 712. In some of the forms
the writ is directed to the sheriff,
but in others it is directed to the
individual shareholder.
(e) See Esdaile v. Trust well, 1
Ex. 371 ; Bank of Scotland v. Fen-
wick, ib. 792 ; Ness v. FenwicJe, 2
Ex. 598 ; Nunn v. Claxton, 3 Ex.
712, in each of which the declara-
tion was demurred to. Several
matters may be pleaded : Phillipson
v. Tempest, 8 Jur. 60. As to the
practice and forms, see 2 Chitty's
Archbold's Practice, and Chitty's
F( urns thereto.
(/) The jury must not be share-
holders, Esdaile v. Lund, 12 M. &
W. 734.
(g) See Harvey v. Scott, 11 Q. B.
92 ; Green v. Nixon, 23 Beav. 530 ;
Addison v. Tate, 11 Ex. 250.
(h) Marson v. Lund, 16 Q. B.
344 ; Bradley v. Warburg, 11 M. &
W. 452 ; Ricketts v. Bowhay, 3 C. B.
889 ; Bank of Scotland v. FenwicJe,
1 Ex. 792 ; Bosanguet v. Graham, 7
Jur. 831, Q. B. See as to suing out
a sci. fa. on a judgment entered up
for costs, Farmer v. Mottram, 6 Man.
& Gr. 684.
296 PROCEDURE BY SCIRE FACIAS.
Bk. II. Chap. 7. ceecling against others is bad (i). Even the circumstance that judgments have
Sect- 3- been already obtained against them on the writs issued against them, affords no
ground of defence ; for such judgments do not extinguish the right conferred
upon the creditor by the prior judgment obtained against the company (k).
Even before pleas in abatement were abolished it was decided that to a sci.
fa. against a shareholder the non-joinder of other persons liable to be pro-
ceeded against, could not be pleaded in abatement ; and if one sci. fa. issued
against several shareholders, a declaration upon it against some of them only
was not bad on demurrer, even if it were irregular (I). Neither is it any
objection to a sci. fa. by a creditor against a shareholder that other creditors
are suing him or are in a position to issue execution against him (m) ;
although when he has paid the full amount to which he is liable, no other
creditor can extract more from him (n).
Applications for A rule for a sci. fa,, or an application for leave to issue execution (in those
rule for sci. fa, cases in which no sci. fa. is necessary) may, it seems, be moved for, or made,
more than once by the same creditor against the same shareholder for the
same debt, if the same rule or application has been allowed to drop for any
satisfactory reason, or has been refused upon some technical ground which
has been removed. At the same time the maxim, nemo debet lis vexari pro
eddern causa, is applicable, unless some good reason to the contrary can be
shown (o).
Sci. fa. after A judgment against a company, the shareholders of which are liable to
elegit. execution on the judgment, may be executed against them, although the
creditor has issued an elegit against the company, and has obtained partial
satisfaction by an extent under the writ (p). The extent does not, in these
cases, satisfy the debt. If the creditor has received nothing from the extent,
he is entitled to execution for his whole demand ; and if he has obtained any
fruits from the extent, he is still entitled to execution for so much as remains
clue (q). If the land extended is of small value compared with what is due
to the creditor, he is entitled to execution against the shareholders without
delay ; but if the land is of such a value that the creditor will in a short
time be able to obtain payment without having recourse to the shareholders,
(i) See Rigby v. Dublin Trunk (o) See upon this, Corder v. The
Rail. Co., L. R. 2 C. P. 586 ; Nixon Universal Gas Light Co., 6 C. B. 190
v. Brownlow, 1 H. & N. 405 ; Nunn and 554 ; Field v. Mackenzie, ib.
v. Lomer, 3 Ex. 471. Compare 384 ; Dodgson v. Scott, 2 Ex. 457.
Esdaile v. TrustweU, 2 Ex. 312, and Edwards v. Cameron's, dec, Rail.
Esdailc v. Lund, 12 M. & W. 607. Co., 15 Jur. 470, Ex., is a strong
(k) Burmester v. Crofton, 3 Ex. authority for not allowing two
397. applications.
(I) Fowler v. Rickerby, 2 Man. & (p) Addison v. Tate, 11 Ex. 250 ;
Gr. 760, decided on 7 Geo. 4, c. 46. R. v. The Derbyshire Rail. Co., 3 E.
See the argument in Esdaile v. & B. 784.
Lund, 12 M. & W. 607. (q) See Addison v. Tate, 11 Ex.
(m) Rigby v. Dublin Trunk Rail. 250, from which it appears that the
Co., L. R. 2 C. P. 586. sci. fa. should state what has been
(n) Burke v. Dublin Trunk Rail, done under the elegit, and the
Co., L Pi. 3 O. B, 47. amount if any obtained by it.
PROCEDURE BY SCIRE FACIAS. 297
the Court will not, as ;i matter of course, lei immediate execution against Bk. IF. Chap. 7.
them be issued (/•). Sect- 3-
Except where judgmenl has been obtained by fraud, the validity of a Validity of jndg-
judgment which has been recovered against a company or its public officer, ment cannot \>e
cannot be impeached by a shareholder who is proceeded against by sci. /a. qu.ev° n
for, excepting in cases of fraud, nothing is admissible as a defence to a scu fa,
w hich might have been relied on as a defence to the action on the judgment
in which the set. fa. issues (s). The judgment i> conclusive, and nothing
ran be set up as a defence to a set. fa. upon it, except some matter which is
consistent with the validity of the judgmenl itself (i).
Upon the same principle it seems that if judgment is obtained against a Bradley v. Eyre.
person sued as a public officer, a shareholder cannot plead as a defence to a
■-ri.fn., that the person against whom the judgment has been obtained was
not the representative (d the company (</). In Buch a case application
should be made to set aside the judgment (.<■).
(r) See Addison v. Tate, 11 Ex. (») See Bradley v. Eyre, 11 M. &
250. W. 432 ; Fowler v. Eickerby, 2 Man.
(«) See per Lord Mansfield in & Gr. 760.
Cook v. Jones, Cowp. 727. (.<•) Ibid., and Bosanquet v. Gra-
(t) See the cases noticed, ante, ham, 7 Jur. 832, and 6 Q. B. 601,
p. 283. note.
298 MANAGEMENT OF COMPANIES.
BOOK III.
OF THE EIGHTS AND OBLIGATIONS OF MEMBERS OF
COMPANIES BETWEEN THEMSELVES.
CHAPTER I.
OF THE EIGHT TO TAKE PART IN THE MANAGEMENT OF THE
AFFAIRS OF A COMPANY.
Bk. III. Chap. 1. One of the peculiarities of companies, as distinguished from
— ' partnerships, is that the management of a company's business
is entrusted to a few chosen individuals, and that the share-
holders are deprived of that right of personal interference
which is enjoyed by the members of ordinary firms (a). The
members of companies form two bodies, whose interests are
or should be the same, but whose powers and functions are
different ; the one body consists of the directors, in whom the
general powers of management are vested ; and the other body
consists of the shareholders, to whom the directors are ac-
countable, and by whom they are generally appointed. Each
of these bodies has its own sphere of action, and its own rights
and duties, as will be seen more particularly hereafter.
SECTION I.— OF DIRECTORS AND THEIR POWERS.
Managing body. Where there is no statutory or other provision regulating
the constitution and powers of the managing body, the majority
of the shareholders of the company must determine how its
(a) See Burnesv. Pennell, 2 H. L. C. 520 and 521.
DIRECTORS. 290
affairs are 1" be conducted, and to whom, and under what Bk. HI. Chap. 1.
restrictions, the management of those affairs shall be en-
trusted^). This is ihr rule which prevails in cost-hook
mining companies <), and it is nol easy to conceive what,
except the will of the majority, can determine a matter of this
description under the circumstances now supposed.
The number of persons composing the managing body of aNumberof
company is generally fixed by the company's special b
charter, deed of settlement, or regulations, and the number
making a quorum is also usually thereby fixed. As a general
rule, a power entrusted to a given number of individuals
cannot be properly exercised by any less number; and there
are several cases in which this rule has been applied to
companies, and in which the acts of directors have been held
invalid on the ground that they were not done by the requisite
number of directors (d). Hut it does not therefore follow that Varying the
the number of directors, as originally fixed, cannot be altered by
the majority iA' a meeting of the shareholders; and where
the number is not fixed by the legislature or the Crown, it
seems that the shareholders may alter it (e). Even where the
number is fixed by an act of Parliament or a charter, the act
or charter may be so worded as to be in this respect director}'
only (/).
It is to be observed that the directors of a company are all Who are
those persons who are constituted directors by a company's
act, charter, or deed of settlement, and not only such of them
as choose to act.
Sometimes provision is made for the transaction of business Persons deemed
by persons who are to be deemed to be directors until directors
are appointed. Such a provision does not necessarily make
such persons directors for all purposes ; and a clause to the
(b) Agreements by directors de- the power of directors to delegate
priving the shareholders of this their authority, see p. 156.
power are invalid, James v. Eve, L. (e) Smith v. Goldsworthy, 4 Q. B.
It. 6 H. L. 335. The powers of 430.
majorities will be examined here- (/) Thames Haven, Dock, <&c, Co.
after. v. Rose, 4 Man. & Gr. 552. See,
(c) See Tapping on the Cost- too, Banjate v. Shortridrje, 5 H. L. C.
Book, p. 64. 297.
((/) See ante, p. 155 ; and as to
ot directors
appointments.
300 •' ' ' MANAGEMENT OF COMPANIES.
Bk. HI. Chap.i. effect that two directors shall be a quorum has been held not
Sect. 1. ,
'— * to apply to persons who were to be deemed to be directors (g).
So a clause as to the qualification of directors has been held
not to apply to similar persons (h).
Qualifications Generally speaking, the members of the managing body are
required to possess certain qualifications, and to be appointed
in some prescribed manner {%). But it by no means follows
that persons who are in fact acting as duly qualified directors
will be prevented from doing so, simply because they have
Irregular been irregularly appointed (k). Still less does it follow that
the irregularity of their appointment will render all their acts
null and void. Persons dealing with them as directors bond
fide, and without notice of the irregularity, are entitled to
treat them as the agents of the company, and to hold the
company bound by their acts, as if they were its duly appointed
directors (/). But, as between themselves and the share-
holders, the irregularity is of greater importance ; and it has
been held that persons tie facto, but not de jure, directors
cannot allot shares, make valid calls or forfeit shares, even
where there is a provision rendering valid what may be done
by persons acting as directors, notwithstanding the subsequent
discovery of a defect in their appointment (to).
(g) London and Soutliern Counties to the proceedings of a board not-
Land Co., 31 Ch. D. 223. withstanding any vacancy among its
(h) Lord Claud Hamilton's case, members or defect in their election,
8 Ch. 548, and others of that class see Newhaven Local Board v. New-
noticed infra, bk. iv., under the haven School Board, 30 Ch. D. 350.
head Contributories. (I) See as to this, ante, pp. 161
(i) As to disqualification by hold- and 166.
ing other offices, see Iron Shi}) (m) See London and Southern, dr.,
Coating Co. v. Blunt, L. R. 3 C. P. Land Co., 31 Ch. D. 223 ; as to
484 ; Bales v. Cumberland Black Co., allotments, Garden Gully, &c, Co. v.
6 H. & N. 481, or by being in- Mc Lister, 1 App. Ca. 39 ; as to calls
terested in contracts, see Beg. v. and forfeiture, Howbeach Coal Co. v.
Gaskarth, 5 Q. B. D. 321. As to Teague, 5 H. & N. "151"; and Miles
the effect of giving votes for dis- v. Bough, 3 Q. B. 845 ; Edinburgh,
qualified persons, see R. v. Tcwkcs- &c, Rail. Co. v. Hebblewhite, 6 M.
bury, L. R. 3 Q. B. 629. & W. 707 ; South-Eastern Rail. Co.,
(k) See Foss v. Harhottle, 2 Ha. v. Hebblewhite, 12 A. & E. 497;
461, and Mozley v. Alston, 1 Ph. Swansea Dock Co. v. Levien, 20 L. J.
790. These cases will be noticed Ex. 447. Compare Murray v. Bush,
hereafter. For a discussion as to L. R. 6 H. L. 37, turning on 7 & 8
the effect of a clause giving validity Vict. c. 110, § 30.
Dini'.c ions. 80J
Directors are supposed to know the regulations of their own 1;k- Hi. Chap< 1-
company (ra) ; and it might be supposed that if a person
i t i.i 11 ii i ii Denying quali-
became a director and acted as such, lie would not be allowed i,,,ui.,n.
to take advantage of the fact that he was not duly qualified to
act in that capacity ; hut as will he seen hereafter the decisions
on this subjecl are not all in accordance with this view. There
are several decisions to the effect that a person may act as a
director and be required to hold a certain number of shares
as a qualification for his office, and still he at liberty to show
that he did not in tact hold such shares, or agree to take
them (<>). Where, however, a company's special act is so
worded as to make a director a shareholder, in respect of the
number of shares necessary to qualify him, he will he a share-
holder in respect of that number of shares whether any
definite shares have been allotted to him or not (p).
A provision that no person shall be eligible as a director
unless he holds a certain number of shares, does not apply to
persons who sign a company's memorandum of association,
and who by that fact alone are the persons to act as directors
until others are appointed (</).
Where a person is required to hold a certain number of Effect of mort-
shares as a qualification for the office of director, those shares qualification!
must not he nominally paid-up shares (r) ; but a director
having the requisite number of shares is not disqualified for
the office simply because he may have mortgaged his shares (s) ;
it is sufficient if he retains the legal title to them. This was
held in a case where the qualification shares were to he held
by the directors in their own right (0.
(«) See per Lord Westbury in C. P. D. 350.
Lane's case, 1 De G. J. & S. 506. (q) Stock's case, 4 De G. J. & Sni.
Compare Marquis of Abercorn's case, 426; and see Cotterell's case, 11 W.
4 De G. F. & J. 78. R. 13 ; and Lord Claud Hamilton's
(o) Wheal Butter Consols, 38 Ch. case, 8 Ch. 548.
D. 42, and other cases of that sort. (>•) Roney's case, 4 De G. J. & Sin.
See infra, bk. iv., c. 1, Contri- 426 ; Curries case, 3 De G. J. & Sm.
butories. 367.
(p) Portal v. Emmens, 1 C. P. D. (s) Cumming v. Prescott, 2 Y. &
664 and 201, and see also Kincaid's C. Ex. 488.
case, 11 Eq. 192 ; Forbes' case, 19 (t) Pulbrook v. Richmond Consoli-
Eq. 353 ; Purcell's case, 29 W. R. dated Mining Co., 9 Ch. D. 610.
170. Compare Kipling v. Todd, 3
302
MANAGEMENT OF COMPANIES.
Bk. III. Ch;
Sect. 1
Vacancies.
Removal of
directors.
*P- !• "Whether a person once a director has or has not ceased to
be so depends (except in the case of his death) upon the
regulations of the company (»). A director who becomes
bankrupt or ceases to attend to his duties does not thereby
necessarily vacate his office (x).
The power to fill up casual vacancies is frequently given to
the remaining directors ; in such a case they can fill up a
vacancy although a general meeting of shareholders has been
held since the vacancy occurred (y). But if the number of
continuing directors is less than the minimum number requisite
for the transaction of any business, they cannot fill up the
vacancy (s). The rules of the company may, however, allow
the continuing directors, however few, to fill up a vacancy,
although not to transact any other business until the vacancy
is filled up (a).
Power to remove directors is often expressly conferred on
the shareholders (b). It has not yet been decided whether
when there is no such express power there is an implied power
in the shareholders of a company to remove a director from
his office by a resolution duly passed at a meeting properly
convened for the purpose, but the better opinion seems to be
that there is (c). If, however, a director is appointed for a
definite period, he cannot be removed before that period has
expired unless there is some special provision to that effect (d).
Where the shareholders have power to remove a director for
" any reasonable cause," the shareholders are themselves the
judges as to what is and what is not a reasonable cause for
removal ; and their decision will not be interfered with if they
act fairly and in good faith (e).
(a) Phelps v. Lyle, 10 A. & E.
113.
(a;) lb., and see Wilson v. Wilson,
6 Scott, 540.
(y) Munster v. Cammell Co., 21
Ch. D. 183.
(s) See Newhaven Local Board v.
Newhaven School Board, 30 Ch. D.
350.
(a) As in York Tramivays Co. v.
Willows, 8 Q. B. D. 685.
(6) There is power to remove
under the Companies' clauses act,
1845. See Isle of Wight Rail. Co. v.
Tahourdin, 25 Ch. D. 320.^^ty.£»£i
(e) See Browne v. La Trinidad, '
37 Ch. D. 1, and the last case.
(d) Imperial Hydropathic Hotel Co.
v. Hampson, 23 Ch. D. 1. Compare
the last note.
(e) InderwicJc v. Snell, 2 Mo. & G.
216. See as to becoming bankrupt,
]'"V. i RS OF SHAREHOLDERS. 308
Directors have no power to vote themselves fees for salaries Bk- m- Chap.l.
t 2
for their services beyond what the constitution of the company-
The powers of directors as agents of the company have been
already examined (Bk. II. c. 2 & 3) : their powers to call
meetings, allot shares, make rails, forfeit shares, will be
noticed hereafter when treating of those subjects.
SECTION II.— OF SHAREHOLDERS AND THEIR TOWERS.
The shareholders of a company cannot usually exercise any
control over the management of its affairs, except at meetings
duly convened ; for the directors of a company are the servants,
not of the individual shareholders, but of the company; and
where the management of the directors is complained of, an
aggrieved shareholder should seek redress through the company,
and induce it to call the directors to accouut(^/). As will,
however, be seen hereafter, if the directors are doing that
which the shareholders cannot sanction, or that which they
have by a proper resolution forbidden, the dissentients may
obtain redress by legal proceedings (/*)•
It may, however, happen that the constitution of a company
is such that the shareholders are deprived of all control over
the managing body in matters not foreign to the objects of the
compan}'. Where this is the case, the managers have it in
their power to disregard the wishes of the shareholders as to
all such matters (i).
Phelps v. Lyle, 10 A. & E. 113; Ch. 489 ; Hayrnan v. Gov. of Rugby
absconding from creditors, Wilson School, 18 Eq. 28.
v. Wilson, 6 Scott, 540. See the (/) See Evans v. Coventry, 8 De
cases as to expelling members of G. Mc. & G. 835, decree, clause 3.
clubs, Dawlcins v. Antrohus, 17 Ch. See infra, ch. 2, § 3.
D. 615 ; Fisher v. Keane, 11 ib. 353; (g) See Orr v. Glasgoiv Rail. Co.,
Ldbouchere v. Wliarncliffe, 13 ib. 3 McQu. 799.
346 ; and as to removing persons (h) See infra, ch. 9, § 2.
from offices, Osgood v. Nelson, L. R. (*) Spurgin v. JVliite, 2 Giffi 473,
5 H. L. 636 ; Dean v. Bennett, 6 is an instance.
304
MANAGEMENT OF COMPANIES.
Bk. III. Chap. l. Individual shareholders, being comparatively powerless, pro-
fio/>+ 9 ...
Sect. 2
Meetings of
shareholders.
vision is generally made for bringing them together at meet-
ings, and it is not a little important that the right to convene
them should to some extent, at all events, be exercisable by the
shareholders themselves. If matters are in such a state that
nothing can be done without a meeting, and there is no express
power to call one, it would seem necessary to imply a power in
any shareholder to convene one. This, however, is a case
which can seldom happen. It more commonly happens that
there is a power to convene a meeting, but that those who have
Interference of the power will not exercise it. In cases of this kind it has
meetings!1 been held that, where those who have the right to call a
meeting of the shareholders refuse to exercise that right, for
the express purpose of preventing the shareholders from duly
assembling, the Court will, if necessary, interfere to protect the
shareholders against an abuse of power on the part of those
entrusted with the management of the affairs of the company (A;).
So where directors give notice that a meeting will be held on a
day when they know that a large number of shareholders will
not be in a position to vote, the Court will interfere and
restrain such an abuse of power (/)• Again, if directors con-
vene a meeting to pass resolutions favourable to themselves on
questions in which the interests of the directors are opposed to
those of the shareholders, by a circular which is misleading,
and which contains statements calculated to obtain proxies in
their favour without giving the shareholders the information
necessary to enable them to form a just judgment as to who are
the proper persons to whom to entrust their votes, the Court
will grant an injunction to restrain the holding of the meeting
or to restrain the directors from laying such resolutions before
the meeting (m).
The Court, however, is very reluctant to interfere with the
holding of meetings of shareholders, especially when they are
called for the purpose of investigating and controlling the con-
duct of the managing body ; and the Court will not interfere to
restrain such a meeting simply because the notice convening it
(k) Foss v. Harbottle, 2 Ha. 461 ;
Isle of Wight Rail. Co. v. Tahourdin,
25 Cli. D. 320.
(1) Cannon v. Trash, 20 Eq. 669.
(m) Jackson v. Munster Bank, 13
L. K. Ir. 118.
MEETINGS OF SHAREHOLDERS.
is badly framed, and invites the meeting inter alia to pass Bk- HL Chap. l.
resolutions which would be invalid if passed (n) ; for the —
meeting might take souk; other legal course, e.g., pass some
amended resolution which would be valid.
In order that a resolution come to at any meeting, whether Resolutions d
of directors or of shareholders, ma}' have any legal effect, it is
necessary that the meeting shall be duly convened : that a
proper number of persons shall be present (o), and there must
always be two at least (j)) ; that the resolution should relate to
a matter upon which the meeting is competent to pass a reso-
lution ; and that the resolution should be duly passed.
In order that a meeting may be duly convened, it is necessary
that it be convened (1) by those who have a right to convene it,
(2) at a proper time, (3) at a proper place, and (4) by a proper
notice.
The persons entitled to convene a meeting have been Persons to
conveiio,
alluded to already ; and it is only necessaiy to add that a
meeting convened by the proper persons will not be incom-
petent to transact business simply because they may themselves
have been irregularly convened to consider whether a meeting
shall be called or not (<[).
As regards time : where there is no express provision, a Time,
reasonable time must be given (r) ; and perhaps if the time
were unreasonably short and were made so purposely, the
Court might restrain the holding of the meeting. But if a
meeting is held, and no objection is taken to the shortness of
the notice convening it, the Court will not interfere (s). Where
the time for holding a meeting is prescribed, such time must be
observed ; and there are instances in which resolutions of
meetings have been held invalid on the ground that the
meetings were not held at the proper times (t).
In calculating the time for holding a meeting, where an
(n) Isle of JFight Bail. Co. v. Ta- (r) Browne v. La Trinidad, 37 Cb.
hourdin, 25 Ch. D. 320. D. 1. As to a meeting of directors,
(o) See Howbeach Coal Co. v. see Ex parte Smith, 39 Ch. D. 546.
Teague, 5 H. & N. 151, and other (s) Browne v. La Trinidad, 37
cases, ante, pp. 157, 158. Ch. D. 1.
{p) Sharp v. Dawes, 2 Q. B. D. 26. (t) Baihvay Sleepers Supply Co.,
(q) Browne v. La Trinidad, 37 Ch. 29 Ch. D. 204. Compare Miller's
D. 1. Dale, &c., Lime Co., 31 Ch. D. 211.
L.C. X
306
MANAGEMENT OF COMPANIES.
Place.
Notice of object
of meeting.
Bk. III. Chap. 1. interval of not less than a certain number of days is required
Sect. 2. . .
to elapse between one meeting and another, the rule is that
the prescribed number of days must be clear days, i.e., ex-
clusive of the days of the meetings (?/).
As regards place : where no place is prescribed, it is con-
ceived that any reasonably convenient place of meeting may be
fixed. But the Court would probably interfere if a place were
purposely fixed at which it was known shareholders could not
attend.
A meeting is not duly convened unless every person entitled
to attend has notice not only of the time and place at which,
but also of the purposes for which it is to be held, so that he
may exercise his own judgment whether he will attend or
not ; and there are numerous cases in which resolutions have
been held invalid on the ground that insufficient notice was
given of an intention to submit the matters to which they
relate to the meeting at which they were passed (x). But a
notice may be good in part and bad in part, and is not wholly
invalid because it extends to something which cannot be
done (y).
A person who attends a meeting cannot dispute the validity
of what is done on the ground that he had not due notice of
the time and place at which the meeting was about to be held ;
and if all entitled to notice have it in fact, but not in the
precise form in which it ought to have been given them, the
proceedings of the meeting will not necessarily be invalid (s).
But still it is absolutely requisite for the j^otection of those
heard must have w]10 are to be affected by the resolutions of others, that such
an opportunity . . ..
of being heard, resolutions shall have no effect unless aff entitled to a voice m
making them had an opportunity of expressing their views. In
a case where directors were empowered to meet once a week at
their office, without notice or summons, but on such day and
at such hour as they should from time to time agree upon, it
was held that a resolution come to by a quorum assembled
Every one
entitled to be
(m) lb.
(x) A leading case on tins head
is Bridport Old Brewery Co., 2 Ch.
191. See also Garden Gully Co. v.
McLister, 1 App. Ca. 39.
(y) Clevex. Financial Corporation,
16 Eq. 363 ; Isle of Wight Rail. Co.
v. Tahourdin, 25 Ch. D. 320.
(z) See British Sugar Refining Co.,
3 K. & J. 408.
MEETINGS OF SHABEHOLDER8. 307
without notice was invalid, inasmuch as no day or hour for the Bk. III. Chap. 1.
Sect. 2.
meeting oi the directors bad ever been fixed (a).
The mode in which notice is to 1"' given varies with almost Mode of giving
every company. Such statutory enactments as exist upon the mee<
subject will be notic< d hereafter. The only general rule which
can be laid down is, that notice must be given in the manner
prescribed by each companj^s act, charter, deed of settlement,
or regulations. It seems that it is not necessary to give notice
of the holding of an adjourned meeting to the persons entitled
to attend it; it is apparently sufficient if they had notice of
the holding of the original meeting (6). But nothing can,
without notice, he transacted at an adjourned meeting except
the unfinished business of the first meeting (c).
There are two lands of meetings, viz., ordinary and extra- Ordinary and
ordinary, or, as they are sometimes called, general and special, meetings.
Ordinary or general meetings are usually held at stated times,
and for the transaction of husiness generally. Extraordinary Nature of busi-
. ■, . . ill • n i nesa should be
or special meetings are held as occasion may require, for the
transaction of some particular husiness, which ought to be
specified in the notice convening the meeting. A resolution
passed at an extraordinary meeting, upon a matter for the
consideration of which it was not avowedly called, or which
was not specified in the notice convening the meeting, is alto-
gether inoperative (d) ; and although such resolution may have
been confirmed at a subsequent ordinary meeting, it will still
be invalid unless it might have been properly passed in the
first instance at an ordinary meeting, without previous notice
of any intention to enter upon the matter to which the reso-
lution relates (e) : and if a meeting is convened to confirm
resolutions previously passed, the notice ought to state those
resolutions or their effect (/).
(a) Moore v. Hammond, 6 B. & C. Bank of Hindustan, 6 Eq. 91 ; Anglo-
456. Californian Gold Alining Co. v. Lea-is,
(b) See Wills v. Murray, 4 Ex. 6 H. & N. 174 ; Stearic Acid Co., 9
843, 862 ; Scudding v. Lorant, 3 H. Jur. N. S. 1066, V.-O. K.
L. C. 418. (e) Lawes' case, 1 De G. M. & G.
(c) li. v. Grimshaw, 10 Q. B. 747. 421.
(d) Bridport Did Brewery Co., 2 (/) Dean v. Ik mutt, 6 Ch. 489,
Ch. 191 ; Imp. Bank of China v. and 9 Eq. <52i>.
x 2
308
MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1.
Sent. 2.
Bye-laws.
One and the same meeting may be both ordinaiy and ex-
traordinary ; ordinaiy for the purpose of transacting the usual
he both ordinary business of the compaii}T, and extraordinary for the transaction
and extraordi- 0f some particular business of which special notice may have
been given (g). If an ordinaiy meeting is held and adjourned
the adjourned meeting continues to be an ordinaiy meeting,
although special notice is given that it is about to be held for
special business (/?).
The power of making bye-laws for the regulation of the
affairs of a company is not unfrequently reposed in its share-
holders : and it is not uncommonly required that all bye-laws
shall be sealed with the seal of the company. In such a case
nothing which is not so sealed can be regarded as a bye-
law (i) ; nor is an unsealed resolution passed at a meeting of
the shareholders of an incorporated companjr, equivalent to a
contract under the seal of such compairy (j). At the same
time it is clear that, as a general rule, the resolutions of meet-
ings of members of a body corporate do not require to be
sealed in order to be binding on its members, as between
themselves, and as members. Acts relating to the internal
affairs of a corporation, affecting members only, and affecting
them merely as members, do not in general require the com-
mon seal to render them valid (k).
Bye-laws not warranted by the authority which empowers
them to be made, are altogether illegal (I).
Where there is no special provision to the contrary, the
resolution come to by the majority of those present at a meet-
ing is the resolution of that meeting (???) ; and the chairman is
the person to decide what the result is and all incidental ques-
tions requiring instant decision ; but his decision is not neces-
Resolution of a
majority is a
resolution of a
meeting.
(g) See Cutbill v. Kingdom, 1 Ex.
494 ; Graham v. Van Diemen's Land
Co., 1 H. & N. 541.
(h) Wills v. Murray, 4 Ex. 843.
(i) Dunston v. Imperial Gas Co.,
3 B. & Ad. 125.
(J) Ibid., and see ante, p. 221.
(k) Grant on Corp. 65.
(I) See Colder, <tc, Nav. Co. v.
Pilling, 14 M. & W. 7G ; Adley v.
Whitstable Co., 17 Ves. 315, 19 ib.
304, and 1 Mer. 107.
(m) Horbury Bridge Coal, &-c, Co.,
11 Ch. D. 109, deciding that the
regular method of voting is by show
of hands, and that an article giving
every member one vote for every
share only applies to cases where a
poll is demanded.
■ii i. DINGS 0] SHAREHOLDERS. 309
sarily final («). It is not illegal to transfer or procure shares Bk.HI. Chap. 1.
, e . . . Sect. 2.
before a meeting so as to multiply votes at it ; nor can votes
so obtained be disregarded (o).
A meeting at which there is not present a sufficient number
of persons to transact business, cannot pass any valid resolu-
tion (}>).
It is conceived that an agreement to vote in a particular Interest*
way, in consideration of some personal benefit, is illegal; for
a vote ought to be an impartial and honest exercise of judg-
ment (7). But as a matter of law as distinguished from con-
science a person may vote on a question in which he happens
to have a personal interest opposed to that of the company;
and where the question was whether proceedings should be
taken by the company to impeach the title of some of the
shareholders in it, those shareholders were held entitled to
vote in respect of the very shares the title to which was dis-
puted (/•). So a director may vote as a shareholder on the
question whether a contract between the company and himself
shall be entered into or be confirmed (-s-).
Absent members are not entitled to vote by proxy unless Proxies
they are specially empowered so to do (t). The right of an
absent member to vote by proxy depends on the terms of
(n) Indian Zoedone Co., 26 Ch. D. tween two .subscribers to a charity
70. to vote for each other's nominees,
(0) Pender v. Lushington,6 Ch. D. was held not to be illegal.
70; Stranton Iron and Steel Co., 16 (/■) East Pant Du Mining Co. v.
Eq. 559 ; Cannon v. Trasl; 20 Eq. Merry weather, 2 Hem. & M. 254.
669; Moffatt v. Farquhar, .7 Ch. D. See, also, Menier v. Hooper's Tele-
591, and see North-West Transpoiia- graph Works, 9 Ch. 350. Compare
tion Co. v. Beattij, 12 App. Ca. 589, Atwool v. Merryweather, 5 Eq. 464,
noticed infra. note, and see 8 & 9 Vict. c. 16, §§ 85
(})) Howbeach Coal Co. v. Teague, and 86, and the Companies act, 1862,
5 II. & N. 151 ; Sharp v. Dawes, 2 Table A, No. 57, as to votes by
Q. B. D. 26. directors on matters in which they
(q) See Elliott v. Billiard son, L. are interested.
B. 5 C. P. 744, where the agreement (s) North-West Transportation Co.
was held illegal as opposed to the v. Beattij, 12 App. Ca. 589, where
Companies act, 1862. See, further, the director had bought up shares to
Moffatt v. Farquharson, 2 Bro. C. C. secure a majority.
338 ; Card v. Hope, 2 B. & Cr. 661. (t) See Grant on Corporations,
Compare Bolton v. Madden, L. B. 9 256, note (q) ; Com. Dig. Franchise,
Q. B. 55, where an agreement be- F. 11,
310 MANAGEMENT OF COMPANIES.
Bk. III. Chap. l. the company's regulations, and these must be strictly complied
- with (»)• A corporation entitled to hold shares in another
company has the same right to vote by proxy as any other
member (x). A member who signs a form of proxy in blank,
and hands it over to another to be used in the ordinary way,
impliedly authorises that other to fill up the blank with his
own name («/). It would seem that a person who has himself
a right to attend a meeting cannot be considered to represent
another, for whom he holds a proxy, unless he shows some
intention to act for his principal as well as for himself (#).
Where voting by proxy is allowed, the appointment of the
proxy to vote at any one meeting must bear a penny stamp (a) ;
and the appointment must specify the day upon which the
meeting at which it is intended to be used is to be held ; and
the proxy is available only at the meeting so specified, or an
adjournment thereof (ft). If the appointment authorises the
proxy to vote at more than one meeting, the proxy paper will
require a ten shilling instead of a penny stamp (c). The ex-
pense of stamping proxy papers ought to be borne by those
who want them and not by the company, unless there is some
provision to that effect (d). Every person who makes or
executes, or votes or attempts to vote by means of a voting
paper not duly stamped incurs a penalty of 50/., and his vote
is absolutely void (e).
Husband and The right of a married woman or of her husband to vote in
wife voting. respect of shares held by her has not been judicially con-
sidered. Speaking generally, however, and without reference
(u) Harben v. Phillips, 23 Ch. D. 5 Ch. D. 911.
14 ; Indian Zoedone Co., 26 Ch. D. (c) 33 & 34 Vict. c. 97, § 3, and
70. Schedule. As to stamps on proxies
(x) Indian Zoedone Co., 26 Ch. I). under the older stamp laws, see Jf?.
70. v. Kelk, 12 A. &E. 559 ; Monmouth-
(y) Ex parte Duce, 13 Ch. D. 429; shire Canal Co. v. Kendall, 4 B. &
Ex parte Lancaster, 5 Ch. D. 911. Al. 453 ; Trinity House of Hull v.
(z) Ex parte Evans, 13 Ch. D. 424. Beadle, 13 Q. B. 175.
(a) 33 & 34 Vict. c. 97, § 3, and (</) Studdert v. Grosvenor, 33 Ch.
Schedule ; 34 Vict. c. 4. D. 528.
(b) 33 & 34 Vict. c. 97, § 102, («) 33 & 34 Vict. c. 97, § 10?,
pi. 1. See, as to filling up a paper pi. 3.
signed in blank, Ex parte Lancaster,
MEETINGS OF SHAREHOLDERS. .'ill
to the regulations of any particular company, it would seem Bk. III. Chap. l.
. . * Sect. -.
1 1 lilt if the shares belong to her as pad of her separate estate,
her husband lias no right to vote in respect of them, and her
vote is valid notwithstanding his disapproval thereof. But if
the shares do not form part of her separate estate, she alone
cannot in point of law lie a member in respect of them, and
cannot therefore vote (/) ; nor is her husband entitled to vote
in respect of such shares until he has hecome a member of
the company in respect of them. Nor docs it follow from the
fact that he is subject to liabilities in respect of his wife's
shares, that he is entitled to the privilege of voting in respect
of them.
The right of a shareholder to demand a poll has not been PolL
decided ; but the right would probably be held to exist unless
the contrary could be shown (g). A person holding a proxy
has no right to demand a poll on behalf of his principal (h).
The demand should be made immediately after the declaration
of the show of hands (i), and the poll may be taken at once
without adjourning the meeting (/.).
Absentees cannot effectually urge their ignorance of what A! sentees.
took place at meetings which they might have attended had
they thought proper so to do : and they are bound by the
resolutions come to at a duly convened meeting, provided such
resolutions relate to matters upon which the meeting was
competent to decide (/). Moreover, shareholders who receive
reports of what takes place at meetings, and who do not object
to what is being done, will be considered as acquiescing therein
(/) See R. v. Harrald, L. R. 7 Q. p. 157.
B. 361. (0 R. v. TJiomas, 11 Q. B. D. 282.
(g) See Grant on Corp. 203 ; (A-) Chillington Iron Co., 29 Ch.
R. v. Wimbledon Local Board, 8 Q. D. 159 ; R. v. D'Oyly, 12 Ad. & E.
B. D. 459 ; Campbell v. Maund, 5 139. Some dicta to the contrary in
A. & E. 865. If no poll is taken Horbury Bridge Coal, dbc, Co., 11
when rightfully demanded the elec- Ch. D. 109, must be considered as
tion is void ; R. v. Cooper, L. R. 5 overruled. See also British Flax
Q. B. 457. As to demanding a poll Producers Co., W. N. 1889, 7.
on a question of adjournment, see (I) Phosphate of Lime Co. v. Green,
Macdougall v. Gardiner, 1 Ch. D. 13. L. R. 7 C. P. 43 ; Evans v. Small-
(h) R. v. Government Stock Invest- combe, L. R. 3 H. L. 249 ; Tur-
ment Co., 3 Q. B. D. 442 ; Haven quand v. Marshall, 4 Ch. 376 ; Kor-
Gold Mining Co., 20 Ch. D. 151, at wich Yarn Co., 22 Beav. 1C5.
312 MANAGEMENT OF COMPANIES.
Bk. III. Chap. l. if what is done might have been validly sanctioned by them if
Sect. 2.
- present ; but not if what is done is altogether illegal, and
beyond the power of even all the shareholders (■?;?).
The limits of the power of a majority will be examined
hereafter.
Minutes of Minutes of meetings, and the contents of books kept by the
officers of a company, are not, as against third persons, evi-
dence for the company, unless expressly made so by act of
Parliament (n). Partnership books are, as a rule, evidence
against every partner, because every partner is entitled not
only to see them, but, in conjunction with his co-partners, to
determine what shall be inserted and what not ; but this is not
the case with shareholders of companies, and consequently
unless there is some statutory enactment or agreement to the
contrary, the books of a company are no more evidence against
ordinary members of the company than they are as against
strangers (n). The inconvenience resulting from this prin-
ciple is obviated in modern acts of Parliament by making
certain things, e.g., the registers of shareholders, and signed
minutes of meetings, prima facie evidence as well against
shareholders as against strangers.
Shareholders are not, as between themselves and their
directors, supposed to know all that is in the company's
books (o).
Signing minutes. With respect to minutes of meetings, it is usual for acts ot
Parliament to require that the minutes of every meeting shall
be entered in a book, and be signed by the chairman of the
meeting, and to declare that the minutes so entered and signed
shall be admissible in evidence in courts of justice. In prac-
tice, the minutes of a meeting are commonly made up and
entered by the secretary after the meeting is over, and the
(m) See Phoenix Life Assur. Co.'s Co., 5 B. & Ad. 866. Compare
case, 2 J. & H. 441 ; Irvine v. Union Alder son v. Clay, 1 Stark. 405, and
Bank of Australia, 2 App. Ca. 366. The Thetford case, 12 Vin. Ab. 90,
Compare Evans v. Smallcombe, L. K. pi. 16 ; Maguire's case, 3 De G. & S.
3 H. L. 249 ; Spademan v. Evans, 31. See, also, the next note.
il>. 171 ; Hoiddsworth v. Evans, il>. (o) See Longworth's case, 1 De G.
263; Phosphate of Lime Co. v. Green, F. & J. pp. 27 and 32. See, too,
L. E. 7 C. P. 43. per Turner, L. J., in Stewart's case, 1
(n) Hill v. Manchester Waterworks Ch. 587.
MEETINGS "i -ii \l:i HOLD] B8. 313
chairman signs such minutes at a subsequent period (generally 1;L '"■ ChaP- 1«
2.
the i h x t. meeting). It 1ms been frequently urged thai a r<
lution made .-it a meeting, the minutes of which were entered
and signed after the meeting was over, could not, by such
minutes, be proved to have been made. But this objection
lias always been overruled, even where the minutes of each
meeting ought in strictness to have been signed at such meet-
ing( p). But where a company brought an action for call-, ami
the evidence of the making of the calls consisted of minut< 3
which were signed after the commencement of the action, it
was held that such minutes were not admissible (q).
The maxim omnia prasumuntur /••'/>• esse <i<t<i is applicable Omuia prsesum-
to the proceedings at meetings; ami if minutes of such pro- acta,
ceedings are not produced it will be presumed against the
company, and in favour id' all persons dealing bond fide with
its directors, not only that every resolution proved to lure
been made was duly passed, hut also that all such resolutions
and steps were made and taken as were necessary to authorise
subsequent acts proved to have been done (r). But this pre-
sumption will not be made in favour of directors and against
the shareholders ; and a transaction with directors which is
invalid if not assented to by the shareholders must, if relied
on by the directors, be proved by them to have been brought
to the attention of the shareholders, and to have received their
sanction (s).
A resolution of a meeting is not an agreement, and does not Stamp.
require an agreement stamp (<).
One of the most important rights of shareholders is to Inspection of
inspect the books and accounts of the company, and to have shareholders. *
(p) Miles v. Bouyh, 3 Q. B. 845 ; And compare Tothill's case, 1 Ch. 85.
Southampton Dock Co. v. Richards, (q) Cornwall Great Consolidated
1 Man. & Gr. 448; West London Mining Co. v. Bennett, 5 H. &N. 423.
Rail. Co. v. Bernard, 3 Q. B. 873 ; (r) See Lanes case, 1 De G. J. &
London and Brighton Rail. Co. v. Sni. 504 ; Grady's case, ib. 488 ;
Fairclouyh, 2 Man. & Gr. 675 ; Stanhope's case, 1 Ch. 161 ; Knight's
Inglis v. Great Northern Rail. Co., case, 2 Ch. 321.
1 McQueen, 112. See, also, Roneg's (s) See British Provident Assur.
ase, 4 De G. J. & Sm. 426, which Soc. v. Norton, 3 N. R. 147, V.-C. K.
shows that those who sign minutes (/) Mills v. Britisli Provident As-
are treated as admitting their truth. swrance Society, 1 Fos. & Fin. 607.1 J
314 MANAGEMENT OF COMPANIES.
Bk. III. Chap. l. them examined and reported upon by competent persons.
Sect. 3.
- This subject will be alluded to more in detail hereafter (u).
It may, however, be observed generally, that a right to in-
spect includes a right to copy if the first is practically useless
without the second (x) ; and a shareholder who has a right to
inspect need assign no reason for exercising such right, and
cannot be refused inspection on the ground that he desires it
in order to oppose the directors or other shareholders (*/). At
the same time, the Court will not assist a shareholder in
obtaining inspection for an improper purpose ; and the right
must be exercised at reasonable times and in a reasonable
manner (z) .
ultra vires.
SECTION III.— OF THE POWERS OF MAJORITIES.
Disputes between In the event of a difference arising between shareholders, it
s are o c ers. becomes necessary to consider whether there is an}r method of
determining which of them is to give way to the other. It is
not uncommonly supposed by the public, that the minority of
the shareholders, if they are unequally divided, must submit
to the majority. But this is by no means the case ; for, as
will be seen presently, the majority cannot oblige the minority
except within certain limits.
Acts which are As regards incorporated companies, one limit is set by the
doctrines of ultra vires which have been already explained (a).
That which the company cannot do, even with the consent of
all the shareholders, it obviously cannot do at the bidding of
any majority, however large ; and any shareholder can obtain
the aid of the Court to prevent an act which is ultra vires,
even although resolved upon by all the other shareholders (b).
Every company incorporated by act of Parliament, by
charter, or by letters patent, or by registration, is governed
by a law denning its objects and limiting its powers, and such
(u) Infra, c. 3, § 4. son, 37 Ch. D. GG9.
(x) Mutter v. East. <£ Midlani (z) See the cases last cited.
Rail. Co., 38 Ch. D. 92. (a) Ante, p. 162.
(i/) lb., and see Holland v. Dick- (b) See infra, p. 319 et sea.
POWERS "i ma. mini ii . 315
law cannot be abrogated by any agreement between the mem- Bk.ni. Chap 1.
bers of the company however unanimous they may be(c). A
registered company cannot alter the nature of its business as
denned in its memorandum of association (d) \ nor can even
all the members of a chartered company do what they like
with its property, e.g., divide it amongst themselves without
accounting for its value to the company (e) ; nor can even all
the members of a railway company apply the funds of a com-
pany to a purpose which is not authorised by the act of
Parliament by which the company is governed I
On the other hand, it is to he observed, that a corporation '
acts by a majority : the will of the majority is the will of the
corporation; and whatever it is competent for the corporation
to do can be done by a majority of its members againsl the
will of the minority, unless there is some express provision to
the contrary (//). It follows from this, that the power of ;i
majority of the shareholders of a company incorporated by
charter or act of Parliament, is limited only by that charter or
act, unless the powers of the majority are specially restricted
in some other way (//).
But the doctrines of ultra vires have no application to acts Unanimous
resolved upon by all the members of an unincorporated and
unprivileged company. Such a company, although formed for
one purpose, may, if all the members consent, depart from
that purpose to any extent they all may please (i). There
may be great difficulty in obtaining the assent of all ; and in
practice it is often impossible to do so. It is seldom, if ever,
practically possible to apply to companies the recognised rule
applicable to partnerships, viz., the rule that partners who
(c) See Ashbury Rail. Co. v. Eiche, Clipper Co. v. Mounsey, 4 K. & J.
L. R. 7 H. L. 653 ; Att.-Gen. v. 733 ; Exeter Rail. Co. v. Buller, 5
Great East. Rail. Co., 5 App. Ca. Ra. Ca. 211. See also the statute
473. 33 Hen. 8, c. 27.
(<i) Ibid, and see infra. (Ji) Even a special agreement re-
(e) Society of Practical Knouiedye striding powers expressly conferred
v. Abbott, 2 Beav. 559. by statute may be invalid, see
(/) See Att.-Gen. v. Great East. Walker v. London Tramways Co., 12
Rail. Co., ubi supra ; and the cases Ch. D. 705.
cited infra, p. 317 et seq. (i) See Keene's Executor's case, 3
(a) See Grant on Corporations, De G. M. & G. 272.
p. 68 et seq. j Australian Aux. St.
316
MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1. deliberately do not adhere to their partnership articles, are to
— be treated as having agreed to vary the articles in those
respects in which the partners have not observed them (k).
At the same time, if any members of a company, be they
shareholders or directors, choose to ignore the company's
regulations, and not to observe the provisions contained in
them, those individuals cannot afterwards object to the validity
of a course of conduct adopted or acquiesced in by them on
the ground that it is not warranted by the regulations ; but
their adoption or acquiescence in no way affects the rights
and obligations of the other shareholders, either inter se or as
between them and the acquiescing parties. On this ground,
the non-observance of prescribed formalities has over and over
again been held to be of no consequence as between acquiescing
shareholders, and }ret to be fatal as between them and other
non-assenting shareholders (I).
Passing now to the consideration of what is to be done where
questions arise as to which all the shareholders are not agreed,
the first point to determine is, whether the act, charter, or
deed of settlement, or regulations by which the company is
governed, do or do not contain any express provision appli-
cable to the matter in question ; for if they do, such provision
ought to be obe}Ted (m). If they do not, then the nature of the
question at issue must be examined ; for there is an important
distinction between differences which relate to matters inci-
dental to carrying on the legitimate business of a company,
and differences which relate to matters with which it was never
intended that the company should concern itself,
l. Disputes on With respect to the first class of differences, regard must be
in ordinary bad to the state of things actually existing; for, as a rule, if
course ot ^ie shareholders are equally divided, those who forbid a
business. -1 J
How disputes
urn t be settled.
(k) Partn., p. 408, and as to the
difficulty of applying this rule to
companies, see Ex parte Sargent, 17
Eq. 273 ; Keene's Executors' case, 3
De G. M. & G. 272.
(I) Compare, for example, Keene's
Executors' case, 3 De G. M. & G.
272, and Straffon's Executors' case,
1 De G. M. & G. 576. See also
Bush's case, 6 Ch. 246, and L. E. 6
H. L. 37.
(hi) The general obligation to
observe the provisions of companies'
deeds of settlement will be found
well put in Ex parte Brown, 19
Beav. 97, and Lawes's case, 1 De G.
M. cSc G. 421.
POWERS OF MAJORITIES. 317
change must have their way : in re communi potior est conditio J;:-- in. Chap.].
. . . . Sect. 3.
prohibentU (it), if, however, in a case of this description,
Power of
unprovided for by previous agreement, the shareholders are majority in
unequally divided, the minority must give way to the majo- s'
rity (o). This doctrine has been held to apply where the
majority wished to make a division of profits, without first
paying an outstanding debi I p) ; where the majority wished to
borrow money (q) ; where the majority resolved to assign all
the joint property to trustees, upon trust for sale and distri-
bution amongsl the joint creditors (r) ; where the majority
resolved on leasing part of the property of the company for a
temporary purpose (s) ; where the majority of the subscribers
to an abortive company resolved that the subscriptions should
be returned (t) ; and where the majority approved and adopted
accounts fairly laid before them (n).
Moreover, the legitimate business of a company includes Matters in-
cluded in ordi-
whatever is fairly incidental to those things which it is formed i, ,. » conn
to do, and whatever may be necessary for carrying on its busi-
ness in the way in which it is ordinarily carried on by other
people (.r). Hence, where the directors of a fire insurance
company, the policies of which did not cover losses occasioned
by explosions of gunpowder, resolved to pay claims made in
consequence of losses so occasioned, and it was proved that
other companies generally did the same thing, although not
(?<) But see as to tlie employment (/•) Lord v. Governor and Co. of
of a ship, Abbott on Shipping, p. Copper Miners, 2 Ph. 7-10.
58, ed, 12; and as to completing con- (s) Simpson v. Westminster Palace
tracts already entered into, Butchart Hotel Co., 2 De G. F. & J. 141.
v. Dresser, 4 De G. M. & G. 545. See, also, Forrest v. Manchester and
(o) See ante, p. 315, and Gregory Sheffield Bail. Co., 30 Beav. 40, and
v. Patchett, 33 Beav. 595 ; Const v. on appeal, 4 De G. F. & J. 126.
Harris, T. & R. 518 ; Robinson v. (t) Kent v. Jackson, 14 Beav. 367,
Thompson, 1 Vera. 465. and 2 De G. M. & G. 49.
(p) Stevens v. The South Devon (u) Kent v. Jackson, 2 De G. M. &
Rail. Co., 9 Ha. 326, and see Gregory G. 49, and 14 Beav. 367 ; Stupart v.
v. Patchett, 33 Beav. 595. Arroivsmith, 3 Sm. & G. 176. See
(q) See Bryon v. The Metropolitan as to opening accounts already
Saloon Omnibus Co., 3 De G. & J. settled, Morgan's case, 1 Mac. & G.
123, affirming S. C. 4 Jur. N. S. 235.
680; Australian Auxiliary Steam (x) Att.-Gen. v. Great East. Rail.
Clipper Co. v. Mounsey, 4 K. & J. Co., 5 App. Ca. 473, and the cases in
733. the next notes.
318
MANAGEMENT OF COMPANIES.
Changes in
wishes.
All members
entitled to be
heard.
Bk. III. Chap. l. bound to do so, it was held that such payments could not be
Sect. 3.
restrained (y). So a railway and ferry company may use its
ferryboats for excursion trips when not wanted for the ferry (z).
So directors of a trading company are justified in giving gra-
tuities to their servants when there had been a very good
year (a). So banking companies may grant pensions to the
families of deceased officers (aa).
In questions of the class now under consideration, the views
of the majority may vary from time to time, and effect must, it
is conceived, be given to them as they change (b).
A very important rule respecting the powers and votes of
majorities is, that a majorit}', to have any weight, must act
and be constituted with perfect good faith ; for every member
has a right to be consulted, to express his own views, and to
have those views considered by the other members. In the
language of Lord Eld on, " that is the act of all which is the
act of the majority, provided all are consulted, and the
majority are acting bond fide, meeting not for the purpose of
negativing what any one ma}r have to offer, but for the purpose
of negativing what, when they are met together, they may after
due consideration think proper to negative. For a majority
of partners to say, We do not care what one partner may
say; we, being the majority, will do what we please, is, I
apprehend, what a court of equity will not allow" (c).
Moreover, where powers are conferred on a majority present
at a meeting of not less than a certain number of persons,
unless such meeting be duly convened and the requisite
Majorities at
meetings.
(y) Taunton v. Royal Insur. Co., 2
Hem. & M. 135. See on this case,
and those cited in note (s), Joint
Stock Discount Company v. Brown,
3 Ecp 139.
(z) Forrest v. Manchester and
Sheffield Bail. Co., 30 Beav. 40, and
4 De G. F. & J. 126 ; and see Att.-
Gen. Great Fast. Bail. Co., 5 App.
Ca. 473, as to supplying rolling
stock.
(a) Hampson v. Price's Patent
Candle Co., 24 W. B. 754. This
right ceases when the company has
ceased to carry on business, Hutton
v. West Cork Bail. Co., 23 Ch. D. 654.
(era) Henderson v. Bank of Austral-
asia, ±0 Ch. D. 170.
(b) See Exeter Bail. Co. v. Buller,
5 Ka. Ca. 211, and Att.-Gen, v.
Gould, 28 Beav. 485.
(c) Const v. Harris, Turn. & B.
525, and see ib. 518, and Blisset v.
Daniel, 10 Ha. 493 ; Great Western
Bail. Co. v. Bushout, 5 De G. & Sm.
310, and further as to agreements
precluding impartial voting, ante, p.
309.
POWERS OF MAJORITIES. 319
number be present at the meeting the powers in question can- Bk. III. Chap. 1 ,
DCCbt o *
not be exercised ; and although it may be true that the -
required number of persons was summoned, and that the
absentees could not have turned the scale, this will not render
valid the acts of the majority of those actually present, for that
is not such a majority as was originally contemplated ('/).
Passing now to the second class of differences, viz., those2- Disputes on
matters mvolv-
which relate to matters with which the company was never ing a change in
intended to concern itself, it is to be observed that what is tjlc business.
ultra vires an incorporated company musl be ultra vires the
majority of the members of an unincorporated company formed
for similar purposes and with similar powers, and it has been
decided over and over again that no majority, however large,
can lawfully engage the company in such matters against the
will of even one dissentient shareholder. Each member is 0ne 'll^"tli-"-lt
can turbid a
entitled to say to the others, " I became a member in a con- change,
cern formed for a definite purpose, and upon terms which were
agreed upon by all of us, and you have no right, without my
consent, to engage me in any other concern, or to hold me to
any other terms, or to get rid of me, if I decline to assent to a
variation in the agreement by which you are bound to me and
I to you." Nor is it at all material that the new business is
extremely profitable (e). This principle is applicable to all1" 'J!,'";',/
partnerships and companies, whether great or small, and is partnerships,
evidently one which requires only to be stated to be at once
assented to as being just. No cases upon this subject can be
referred to with greater advantage than Natusch, v. Irving and
Const v. Harris, both of which were decided b}^ Lord Eldon (/).
In Natusch v. Irving (a), a company was formed in the early ^ire aml L'fe
J >«7/' Insurance Com-
part of the year 1824 for granting fire and life assurances, pany turning
(d) See London and Southern mile, 1 Taunt. 241 ; Glassington v.
Counties Freehold Land Co., 31 Ch. Thivaites, 1 Sim. & Stu. 131.
D. 223 ; Hotvbeach Coal Co. v. Teague, (g) Gow on Partnership, A]3p.
5 H. & N. 151 ; Ex parte Morrison, 398, ed. 3. The case is referred to
De G. 539. See, too, the cases at length in Partn. 316. See, also
cited ante, p. 305, et seq. The Phoenix Life Insur. Co., 2 J. &
(e) Att.-Gen. v. Great Northern H. 441. Compare Bath's case, 8 Ch.
Rail. Co., 1 Dr. & Sm. 154. D. 334, where the original deed of
(/) See, too, Davies v. Haivkins, settlement authorised the addition
3 M. & S. 488; Fcnnings v. Gren- of other businesses.
3-20
MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1
Sect. 3.
into a Marine
Insurance
Company.
Natusch r.
Irving.
Const r. Harris.
Altering prin-
ciple on which
profits should
be dealt with.
Modern cases
illustrative of
these principles.
• The plaintiff was one of the original subscribers. In the
summer of 1824, the act of 6 Geo. 1, prohibiting companies
from carrying on the business of marine insurance, was
repealed, and shortly afterwards advertisements appeared in
the newspapers, stating that the company would commence
the business of marine insurance. The plaintiff objected to
this extension of the business of the company and he instituted
a suit to restrain it and obtained an injunction.
In Const v. Harris (h), the proprietors of Covent Garden
Theatre agreed that the profits should be exclusively appro-
priated to certain definite purposes. Afterwards, the pro-
prietors of seven out of eight shares, entered into an agreement
to apply the profits in a different manner, but they had not
consulted the owner of the other eighth share, and he disap-
proved of the alteration. It was held by Lord Eldon, that the
majority had no power to depart from the terms of the original
agreement ; and upon a bill filed by the one dissentient
member for a specific performance of that agreement, a receiver
of the profits was appointed. In a long and elaborate judg-
ment, Lord Eldon distinctly recognised the principle, that
articles which had been agreed on to regulate the rights of the
members of a company, cannot be altered without the consent
of all the members (i).
In modern cases the same principle has been constants-
recognised and followed (A). Indeed it may be said never now
to be disputed ; the contest always turning on the question,
whether the acts of the majority do or do not belong to the
class under consideration, rather than to the question whether,
if they do, the minority is or is not bound by them. With
reference to the former question, it has been held not com-
petent for a majority of shareholders in a company formed
for the purpose of making a railway between two places, to
make a railway between two other places (I) ; nor for the
ill) Turn. & R. 496.
{%) See Turn. & R. 517, 523. The
judgments in this and the preceding
cases are well worthy of attentive
perusal.
(/:) See K 'x 'parte Morgan, 1 Mac.
& G. 225; Davidson's case, 4 K. & J.
688 ; Smith v. Goldsworthy, 4 Q. B.
430 ; Dairies v. Haivkins, 3 M. & S.
488 ; Aula" v. Glasgow Working Mens
Building Soc, 12 App. Ca. 197.
(I) Bagshaw v. The Eastern Union
TOWERS OF MAJORIIII.-.
321
majority of the members of a fire and life insurance company Ek- HL Chap. l.
to convert the company into a marine insurance company (m) ;
nor for a majority of the members of a railway company to
engage it in the business of coal sellers (») ; nor for a
majority of the members of any company to employ the pro-
perty or funds of the company otherwise than as contemplated
by themselves and the other members; e.g., by dividing the
capital amongst themselves (o), or even amongst all the share-
holders whether they approve or not (j>) ; by making presents
to the directors (q) ; by paying the costs of actions, &c., insti-
tuted by or against the directors as individuals, and not as
trustees or agents of the company (r) ; b}' paying dividends or
interest on shares or share warrants out of capital (s) ; by
applying the funds of the company in defraying the expenses
of an application to Parliament to alter the constitution or
objects of the company (0 ; or in the purchase of shares of
Rail. Co., 7 Ha. 114, and 2 Mac. &
G. 389 ; Simpson v. Denison, 10 Ha.
51.
(m) Natusch v. Irving, ante, p.
319 ; Phoenix Life Insur. Co., 2 J.
& H. 441. In Rogers v. Oxford, dr.,
Rail. Co., 2 De G. & J. 662, the
railway company had express power
to become a canal company also.
(to) Att.-Gen. v. Great Northern
Rail. Co., 1 Dr. & Sm. 154. Com-
pare Att.-Gen. v. Great Eastern Rail.
Co., 5 App. Ca. 473.
(<>) Menier v. Hooper's Telegraph
Co., 9 Ch. 350 ; Griffith v. Paget, 5
Ch. D. 894.
(p) Holmes v. Newcastle, <Lx\,
Abattoir Co., 1 Ch. D. 682.
(q) York and North Mid. Rail. v.
Hudson, 16 Beav. 485. See, too,
Rossmore v. Mowatt, 15 Jnr. 238,
V.-C. K. B.
(?•) See Studdeii v. Grosvenor, 33
Ch. D. 528 ; Smith v. Duke of Man-
chester, 24 Ch. D. 611 ; Pickering v.
Stephenson, 14 Eq. 322 ; Kemaghan
v. Williams, 6 Eq. 228.
(s) Leeds Estate, etc., Co. v. Shepherd,
L.C.
36 Ch. D. 787 ; Oxford Benefit Build-
ing Society, 35 Ch. D. 502 ; Denham
& Co., 25 Ch. D. 752 ; FHtcroft?s
case, 21 Ch. D. 5i:» ; National Funds
Assurance Co., 10 Ch. D. 118;
aessv. Land Corporation of Ire-
land\ 22 Ch. D. 349 ; MacDoughallv.
Jersey Hotel Co., 2 Hem. & M. 528. If
directors have received from a share-
holder any part of the money due
upon his shares beyond the amount
actually called up, and have agreed
to pay interest on the money so
advanced, interest must be paid out
of capital if there are no profits out
of which to pay it. This is not a
reduction of capital but spending
capital in payment of a lawful debt.
Dale v. Martin, 11 L. B. Ir. 371 ;
affirming 9 L. B. Ir. 498.
(t) Lyde v. Eastern Bengal Rail.
Co., 36 Beav. 10; Munt v. Tlie
Shrewsbury and Chester Rail. Co., 13
Beav. 1 ; Simpson v. Denison, 10 Ha.
51 ; Vance v. The East Lancas. Rail.
Co., 3 K. & J. 50, and the cases there
cited.
322
MANAGEMENT OF COMPANIES.
Invalid bye-
laws.
Bk. III. Chap. l. retiring shareholders (») ; or in subscribing to a public insti-
. — — - tution as the Imperial Institute (v) ; or in stamping, and
paying for, the return of proxy papers of any kind, or in print-
ing and sending out proxy papers in a form calculated to
influence the votes of the shareholders (x).
Upon the same principle bye-laws which are not warranted
by the terms of the instrument which confers the power of
making them, are altogether invalid (y) ; and a majority
cannot, unless empowered so to do by the company's act,
charter, deed of settlement, or regulations, or by some statute,
forfeit shares (z) or reduce the capital of the company (a), or
issue preference shares (b).
A company incorporated by charter or special act of Parlia-
ment cannot delegate its powers, and cannot therefore transfer
its business even for a time to another company (c) ; nor can the
majority of the shareholders of any company bind the minority
by an agreement to transfer its property and business, unless
such power is authorised by the original constitution of the
company (//), or by statute (c). Nor is it competent for the
Transfer of
business.
(u) Trevor v. Whitivorth, 12 App.
Ca. 409 ; Hope v. International Fi-
nancial Soc, 4 Ch. D. 327 ; Hodgkin-
son v. National Live Stock Insur. Co.,
26 Beav. 473, and 4 De G. & J.
422 ; Gregory v. Patchett, 33 Beav.
595.
(v) Tomkinson v. South East. Hail.
Co., 35 Ch. D. 675.
(x-) Studdert v. Grosvenor, 33 Ch.
D. 528.
(y) Colder, &c, Nav. Co. v. Pilling,
14 M. & W. 76 ; Adley v. Whit-
staple Co., 17 Ves. 315 ; 19 ib. 304 ;
1 Mer. 107.
(z) Barton's case, 4 Drew. 535, and
4 De G. & J. 46.
(a) Smith v. Goldsivorthy, 4 Q. B.
430 ; Hope v. International Financial
Soc, 4 Ch. D. 327.
(b) Hutton v. Scarborough Cliff Co.,
2 Dr. & Sm. 514 and 521 ; and on
appeal, 6 N. R. 10 ; Ashbury v.
Watson, 30 Ch. D. 376 ; and dis-
tinguish Harrison v. Mexican Rail.
Co., 19 Eq. 358 ; and South Durham
Brewery Co., 31 Ch. D. 261, where
an increase of capital by an issue of
preference shares was authorised by-
articles drawn up at the same time
as the memorandum of association.
Although these were limited com-
panies, the principles on which they
were decided appear to apply to all
companies.
(c) Hattersle)/ v. Shelburne, 10 W.
R. 881, and 31 L. J. Ch. 873 ; Charl-
ton v. Newcastle and Carlisle Rail.
Co., 5 Jur. N. S. 1096 ; Winch v.
Birkenhead, etc., Rail. Co., 5 De G. &
S. 562 ; Beman v. Rufford, 1 Sim. N,
S. 550 ; Salomons v. Laing, 12 Beav.
377. Compare Clay v. Rufford, 5
De G. & S. 768.
(d) See Ernest v. Nicholls, 6 H.
L. C. 401 ; Era Assur. Co., 2 J.
(e) See note (e) next page.
POWERS OF MAJORITIES. 323
majority of one company to purchase the assets and liabilities l;L HI. Chap. 1.
ol another without similar powers (/). Whence it follows
Amalgamation.
that two compames cannot amalgamate with each other, unless
such a transaction is authorised by the constitutions of both
companies, or unless all the shareholders in both consent to
the amalgamation (</). And where there is power to amalga-
mate, that power must be strictly pursued, or at least there
must be no substantial departure from it (/<).
The right of a majority of shareholders to apply to the Eight of ma-
Legislature or the Crown for an act of Parliament or charter for power tV
for the purpose of changing the constitution of the company, "^ natare
has occasioned much discussion and no little difference of
opinion. The right of every person to apply to Parliament or to
the crown on any subject he pleases is founded upon principles
of constitutional law, which are paramount to all others ; and Ward r. Society
although there is an instance in which a minority of a chartered
society obtained an injunction, restraining the majority from
surrendering the existing charter with a view to procure a new
one materially differing from it (/), the authority of this case is
questionable. The Court will, however, even at the instance Sach applica-
of one dissentient shareholder, grant an injunction restraining ^* Tut not
the application of the funds of an incorporated company in at tl10 exi,ense
x ^ ot the couipuuy.
defraying the expenses of obtaining an act of Parliament
altering the constitution of that company (k) ; but upon con-
stitutional principles the Court declines to go further, and will
not restrain shareholders in a company from applying at their
own expense for an act which, if passed, will affect the whole
& H. 400, and 1 H. & M. 672. See act have power to amalgamate with
ante, pp. 250, 258, and, further, as to companies working adjoining mines,
amalgamating, Ex parte Bagslmw, 4 (/) See last note but one.
Eq. 341 ; Stace and Worth's case, (g) See notes (c) and (d).
4 Ch. 682 ; Gilbert v. Cooper, 10 (h) Clay v. Rufford, 5 De G. & Sm.
Jur. 580, V.-C. E., and Shrewsbury 768.
and Birmingham Rail. Co. v. Stour (i) Ward v. Society of Attornies, 1
Valley Rail. Co., 2 Be G. M. & G. Coll. 370.
866 ; European Society Arbitration (k) Munt v. Tlie Shrewsbury and
Acts, 8 Ch. D. 679. Chester Rail. Co., 13 Beav. 1 ; Simp-
(e) By § 27 of the Stannaries act, son v. Denison, 10 Ha. 51 ; Vance
1887 (50 & 51 Vict. c. 43), cost-book v. East Lane. Rail. Co., 3 K. & J.
mining companies governed by that 50 ; and the cases there cited.
Y 2
324 MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1. company and change its constitution ; those shareholders who
object to the application must oppose it in Parliament (7).
Recapitulation. Recapitulating the results now arrived at, it appears —
1. That within the limits set by the original constitution of
a company, the voice of a majority must prevail.
2. That it is not competent for any number of shareholders,
less than all, to pass beyond those limits.
3. That it is competent for all to do so, unless the}' are
bound together not only by agreement amongst themselves,
but by some charter, letters patent, or act of Parliament,
which is inconsistent with what they all desire to do.
SECTION IV.— OF THE CONSTITUTION AND MANAGEMENT OF PAR-
TICULAR COMPANIES.
Statutory enact- Having made these general observations on directors and
the constitution shareholders, it is proposed to examine the various statutory
of companies. provisions now in force relating to their powers and duties in
particular companies.
There are no statutory provisions which affect the consti-
tution of the managing bodies, or the powers of the share-
holders of companies governed by the Banking act of 7 Geo. 4,
c. 46 ; or by the Letters Patent act of 7 Win. 4 & 1 Yict. c. 73.
But the enactments affecting the management of the affairs of
cost-book mining companies, of companies governed by the
Companies' clauses consolidation act, 8 & 9 Vict. c. 16, and of
companies governed by the Companies act, 18G2, are numerous
and important, and require special notice.
(/) See the last cited cases, and Western Rail. Co., 2 K. & J. 293 ;
Ware v. Tlic Grand Junction Water- Heathcote v. Tlie North Staffordshire
works Co., 2E.& M. 470 ; and as to Rail. Co., 2 Mac. & G. 100. See,
injunctions restraining applications also, Bill v. Sierra Nevada, d-c., Co.,
to Parliament, Steele v. The North 1 De. G. F. & J. 177, in which an
Metropolitan Rail. Co., 2 Ch. 237 ; injunction to restrain an application
Telford v. Metropolitan Board of to a foreign government was also
Works, 13 Eq. 574 ; The Lancashire refused.
and Carlisle Rail. Co. v. The North-
COST-BOOK MINING COMPANIES. 325
Ilk. III. Chap. 1.
1. Cost-book mining companies governed by the Stannaries !_ —
acts, 1869 and 1887 (m).
The a Dai is of a cost-book mining company are conducted by Duties of
an agent called a purser, and by the acts above mentioned the
following duties are imposed upon him : —
1. To enter proper accounts in the cost-book of the company
every four months (w).
2. To call a meeting of the shareholders every sixteen weeks
for the transaction of ordinary business, and to submit to the
meeting his accounts (o).
3. To make out and send to the registration office at Truro
the periodical returns required to be sent by him (p).
A copy of the company's rub s and regulations is to be filed Company's rules
at the office of the registrar of the vice-warden's court, and to an regu 10m
be open to the inspection of all applicants at reasonable
times (q). These rules and regulations may within certain
limits be altered or added to by the company by special resolu-
tions passed in accordance with the terms of the act. The
company has no power to make rules or regulations incon-
sistent with the act, nor to abrogate any special rules or
regulations for the management of the company existing at the
time when the act was passed (24 June, 1861)) ; nor to make
any special rule enabling a company then existing to borrow
money (r).
(m) The act of 1869, 32 & 33 Yict. the two sections, and notice that by
c. 19, does not extend to companies the latter act a penalty is imposed
registered under the Companies acts for any omission or false entry, §§
unless such companies are expressly 23 & 24. See, as to mine club funds,
mentioned or necessarily implied, § § 13.
3, while the act of 1887, 50 & 51 (o) 50 & 51 Vict, c. 43, § 25. A
Vict. c. 43, does apply to such com- penalty is imposed for any breach of
panies (§ 2, interpretation of the duty. The accounts are to he printed
word "company"). Moreover, while and a copy sent to each shareholder,
the act of 1869 applies to all mines ib., § 26.
in the Stannaries, § 3, the act of (p) lb. § 32.
1887 applies only to metalliferous (q) 32 & 33 Vict. c. 19, § 9, and
mines and tin streaming works in 18 & 19 Vict. c. 32, § 22. West
that district, § 3. Devon Great Consols Mine, 27 Ch.
(») 32 & 33 Vict. c. 19, § 9, and D. 106.
50 & 51 Vict. c. 43, § 23. Compare (r) 32 & 33 Vict. c. 19, § 7.
326
MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1,
Sect. 4.
Meetings and
votes.
Shares.
Forfeiture of
shares.
Kelinquishnient
of shares.
Transfer of
shares.
Sale and amal-
gamation.
There must be an ordinary meeting of the company once
every sixteen weeks (s). Resolutions at a meeting are
passed by the votes of a majority in value of the share-
holders present in person or represented by proxy (t). A
meeting with special notice has power to make calls and audit
the accounts («)•
The company has power by a resolution passed at a meeting
with special notice (x), to forfeit (y) shares for the non-payment
of calls, after notice requiring payment has been given bj' the
company (z). Shares when forfeited become the property of
the company and may be disposed of as it thinks fit.
Shareholders ma}' relinquish their shares by notice in
writing delivered to the purser, and the shares thereupon
become the property of the company (a). But by the Stannaries
act, 1887 (b), the relinquishment to be valid must be made at
lenst six weeks before a resolution is passed, or an order made,
for winding up the company.
Forfeited and relinquished shares may be sold by the com-
pany, and may be bought by the shareholders (c). A statutory
declaration by the purser, that the requirements of the act,
necessary to constitute a valid forfeiture or relinquishment,
have been complied with, and his receipt for the purchase
money, confer a good title on the purchaser (d),
The company need not recognize the transfer of a share
until all calls are paid (e). Nor need it recognize a fraudulent
transfer (/), nor the transfer (g) nor relinquishment (/<) of a
fractional part of a share.
The company has also power to sell its machinery with or
(s) 50 & 51 Vict. c. 43, § 25.
(f) 32 & 33 Vict. c. 19, § 4 ; for
meaning of special resolution, see
ib. § G.
(«) Ib. § 10.
(as) For what constitutes such a
meeting, see ib. § 5.
(y) Ib. §§ 16 & 17, and see Rule
v. Jewell, 18 Ch. D. 660.
(s) For the service of notices by
the company, see ib. § 8.
(a) lb. §§ 21 & 22.
(b) 50 & 51 Vict. c. 43, § 22. For
the basis on which relinquished
shares are now to be valued, see ib.,
§ 21, and see also Prosper United
Mining Co., 7 Ch. 236, and Frank
Mills Mining Co., 23 Ch. D. 52.
(c) 32 & 33 Vict. c. 19, §§ 18
&21.
(d) Ib. §§ 19 & 23.
(«) lb. § 14.
(/) Ib. § 35, and see Cliynoweth's
case, 15 Ch. D. 13.
(</) lb. § 15.
(h) Ib. § 22.
DNDEB THE COMPANIES CLAUSES CoN'SOLIDATION ACT. 327
mt its interest in the leases of its mines (/), and t
gamate with a company working an adjoining mine (k).
without its interest in the leases of its mines (/), and to amal- 1;k- HI. Chap, l
Sect. 4.
2. Companies governed by 8 & 9 Vict. c. 16.
First, as to the managing body.
The Companies' clauses consolidation act contains several 1. Directors
important provisions relating to the appointment, rotation, goveraed'by
powers, and proceedings of directors of the companies to8iL9^lct'
which the act applies (I). The special act of such a company
is supposed to fix the number of its directors, and this number
cannot be varied except within such limits as may be thereby
allowed (m). A certain number of the directors are required
to retire from office in rotation every year, so that all the
directors may be changed every three years ; the persons to
retire are to be determined by the directors by ballot if they
do not otherwise agree ; but the persons to take their place
are to be elected by the shareholders (//). The directors may
be removed by the shareholders at a general meeting (o).
Occasional vacancies are to be supplied by the directors them-
selves (}>)• In order that a person may be eligible as a
director he must be a shareholder, and hold as many shares as
may be required by the company's special act (q). Moreover,
it is expressly declared that no person holding an office or
place of trust or profit under the company, or interested in
any contract with the company, is capable of being a director (/•) ;
and that if any director accepts or holds any other office or
place of trust or profit under the company, or is directly or
indirectly concerned in any contract with the company, or
(i) lb. § 24. and cases there cited.
(k) 50 & 51 Vict. c. 43, § 27. f» 8 & 9 Vict. c. 16, §§ 88, 83, 84.
Notice that the majority necessary (o) § 91. Isle of Wight Rail. Co.
to pass the special resolution in these v. Tahourdin, 25 Ch. D. 320.
two cases is different. ( p) lb. § 89.
(/) See 8 & 9 Vict. c. 16, §§ 81 to (q) lb. § 85. See Portal v.
100. Emmens, 1 C. P. D. 221 and 664 ;
(m) lb. §§ 81 & 82. See on the Kincaid's case, 11 Eq. 192 ; Forbes 's
construction of such acts, Portal v. case, 19 Eq. 353.
Emmens, 1 C. P. D. 201 and 664, (r) lb. § 85.
328
MANAGEMENT OF COMPANIES.
Bk. III. Cbap. l. participates in the profits of any work to be done for it, or
— — ceases to be the holder of the prescribed number of shares,
then his office shall become vacant, and he shall cease from
voting or acting as a director (s). But an exception is made
as regards a director whose only interest in a contract with
the company arises from his having shares in another company
with which such contract is made (<).
These provisions do not, like the similar clauses of the re-
pealed act of 7 & 8 Vict. c. 110 (?/), render void a contract
made between a director and the company, unless such con-
tract is confirmed by the shareholders ; and it was held in
Foster v. Oxford Foster v. The Oxford Railway Company (x), that under the
act 8 & 9 Vict. c. 16, such a contract was not void. But it
must not be forgotten that, although the act does not ex-
pressly invalidate contracts of this description, there is a well-
established equitable principle which precludes any person
whose duty it is to take care of others, from binding them by
any bargain entered into on their behalf with himself, unless
all the circumstances relating to such bargain are fully and
clearly explained to them (y).
With respect to the nature of the contracts which disqualify
a person interested in them from being a director, it has been
held, that they must be contracts made with the company in
the prosecution of its undertaking ; and that there is nothing
to prevent a banker of a company from being one of its
directors (z) .
Contracts be-
tween directors
and company.
Railway Com-
pany
Nature of
disqualifying
contract.
(s) 8 & 9 Vict. c. 16, § 86.
(0 lb. § ST.
(«) See 7 & 8 Vict. c. 110, § 29.
The following decisions upon that
section may be usefully referred to.
Ernest v. Nicholls, 6 H. L. C. 401 ;
Curteis v. Anchor Insur. Co., 2 H.
& N. 537 ; Poole v. National, dbc,
Assur. Society, ib. 687 ; Ex 'parte
Stcars, Johns. 480 ; Stears v. South
Essex Gas Co., 9 C. B. N. S. 180.
See as to the purchase of shares by
directors, HodgJcinson v. Nat. Lin-
stock Insur. Co., 26 Beav. 473, and
4 De G. & J. 422 ; Lanes case, 1
De G. J. & S, 504 ; and as to loans,
T&oersJiam v. Cameron's, <L-c, Bail.
Co., 3 Ue G. & S. 296; Murray's
Executors' case, 5 De G. M. & G.
746 ; Baker's case, 1 Dr. & Sm. 55 ;
Bluck v. Mallalue, 27 Beav. 398 ;
British Prov. Ass. Society v. Norton,
3 N. R. 147 ; Paul and Beresford's
case, 33 Beav. 204.
(a) 13 C. B. 200. But query this
case, see Aberdeen Bail. Co. v. Blaikie,
1 McQu. 461 ; Flanagan v. G. W.
Bail. Co., 7 Eq_. 116, in which such
contracts were held invalid.
(y) See infra, Ch. 2, § 2, duties of
directors.
(-.) Sheffield and Manchester Bail.
UNDER THE COMPANIES CLAUSES CONSOLIDATION A< 1 . 329
To return to the act. The directors have the management Bk- HI. ChaP- l-
b Sect. 4.
of the affairs of the compairy, with the exception of such as
Fowcr of
are required to be transacted by a general meeting («). directors.
They are subject to the control of a general meeting specially
convened for the purpose, but no resolution of any such
meeting renders invalid what may have been done before the
resolution passed (6). The directors are required to hold
meetings at such times as they shall appoint, and they are
empowered to adjourn such meetings as they may think
proper (<■). Any two directors ma}- require a meeting of direc-
tors to be called (c). One-third of the whole number of
directors constitutes a quorum, unless some other quorum is
prescribed by the company's special act (c). All questions
at any meeting are determined by a majority of votes of the
directors present, and, in case of an equality of votes, the
chairman has a casting vote (c). A chairman is required to be
elected, and the elected chairman continues in office for a
year (d). A deputy-chairman may be elected, if the directors
think fit, and vacancies in the otiice of chairman and deputy-
chairman are to be filled up (e). In case of the absence at any
meeting of the chairman and deputy-chairman, the directors
present are to choose one of their number to be a chairman
for that meeting (/).
The directors are authorised to delegate their powers to one Delegation of
or more committees (g). Members of committees must act in
concert and not delegate their powers to one of their number (h).
The mode in which contracts are to be made on behalf of Contracts by
the company has been already explained (i).
The directors are required to cause to be entered in proper Duty to keep
books, notes or minutes of all appointments and contracts made
by them, and of the orders and proceedings of all meetings of
Co. v. Woodcock, 7 M. & W. 574. (d) lb. § 93.
The cases referred to above, in note (e) Ibid.
(tt), may be usefully consulted on (/) lb. § 94.
this head. See also Lewis v. Carr, (g) lb. §§ 95 & 96. See D'Arcy
1 Ex. D. 484. v. Tamar Rail. Co., L. R, 2 Ex. 158,
(a) 8 & 9 Vict. c. 16, § 90. Sec, where a bond -was sealed without
as to this, § 91, and infra, p. 332. authority.
(b) lb. § 90. (/<) Cook v. Ward, 2 C. P. D. 255.
\e) lb. § 92. See infra, note (g). (i) lb. § 97 ; see ante, p. 226.
330
MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1
Sect. 4.
Acts of tie facto
directors valid.
Indemnity of
directors.
Duty to take
security from
subordinate
officers.
the company, and of the directors and their committees (j).
All entries are to be signed by the chairman of the meeting at
which they are made, and entries so signed are receivable in
evidence without any preliminary proof (k).
The proceedings of de facto directors are not invalid, although
it may afterwards be discovered that there was some defect in
their appointment, or that they were disqualified (I).
The directors are not personally liable for what they may
lawfully do on behalf of the company, and they are entitled to
be indemnified by the company against all costs, charges, and
expenses properly incurred by them in the exercise of the
powers entrusted to them (m).
The directors are required to take security from every
person entrusted with the custody or control of the monies of
the company (n) ; and they are empowered to demand from
every "officer employed by the company an account of all
monies received by him on behalf of the company and the
delivery up of all receipts and vouchers, and payment of the
balance which may appear to be owing from him on such
account (o). A summary remedy is provided in case such a
demand is not complied with (p), and also against any officer
believed to be about to abscond without accounting (q).
2. Shareholders
in companies
governed by
8 & 9 Vict,
c. 16.
Secondly, as to the shareholders.
Ordinary general meetings of the shareholders are to be held
twice a year, viz., in February and August, unless the company's
act otherwise directs (r). Extraordinary general meetings may
at any time be convened by the directors (s) ; but provision is
also made for convening such meetings at the instance of the
(j) 8 & 9 Vict. c. 16, § 98.
(/.:) lb. See as to this, Miles v.
Bough, 3 Q. B. 845, and other cases
noticed ante, p. 312.
(I) lb. § 99. For a discussion as
to the effect of such a clause, see
Newhaven Local Board v. Newhaven
School Board, 30 Ch. D. 350.
(to) lb. § 100.
(n) lb. § 109. See Evans v.
Coventry, 8 De G. M. & G. 835.
Decree on appeal, clause 6, as to
the effect of not observing such
clauses.
(o) lb. § 110.
(p) lb. §§ 111 & 112.
(q) lb. § 113.
(r) lb. § 66.
(s) lb. § 68.
UNDER THE COMPANIES CLAUSES CONSOLIDATION ACT. 331
shareholders (t). In order to constitute ;i meeting, there must 1)k- III. Chap. 1.
b. 4.
be present, either personally or by proxy, the quorum prescribed
by the special act; and where no quorum is prescribed, then
shareholders, holding in the aggregate not less than one-
twentieth of the capital of the company, and being in number
not less than one for every BOOL of such required proportion
of capital, unless such number would be more than twenty, in
which case twenty shareholders, holding not less than one-
twentieth of the capital of the company, shall be the quorum (u).
Every meeting is to be presided over by a chairman, viz., by
the chairman of directors, or in his absence, by the deputy-
chairman, or in the absence of both, by a director chosen by
the meeting, or in the absence of all the directors, by a share-
holder similarly chosen [x).
Fourteen days' public notice, at least, of all meetings are to Notices of
l'li- / \ i • meetings,
be given by advertisement (jj) ; and every notice ol an extra-
ordinary meeting is to specify the purpose for which the
meeting is called (s) ; and if any matters, except such as are
authorised by the legislature to be done at an ordinary meeting,
are to be transacted at such a meeting, the notice convening
that meeting must state what those matters are (a). The
shareholders present at any meeting are to proceed with the
business to transact which the meeting shall have been con-
vened, and with no other business ; and no business is to be
transacted at an adjourned meeting except that left unfinished
at the first meeting (6).
No shareholder is entitled to vote, unless all the calls upon Votes of share-
bis shares have been paid (c) ; but with this qualification, and
except where the company's special act otherwise provides,
every shareholder is entitled to one vote for eveiy share he
holds up to ten, and to one additional vote for every additional
five shares up to one hundred, and to an additional vote for
every ten shares beyond the first hundred id). Voting by
(0 8 & 9 Vict. c. 16, § TO. (g) Ibid.
(u) lb. § 72. For some purposes («) lb. §§ 67, 71, 138.
a less quorum is sufficient, see the (b) lb. § 74, and see §§ 67 & 69.
§ 72. (c) lb. § 75.
(x) lb. § 73. (d) Ibid.
(y) lb. § 71, and see § 138.
332 MANAGEMENT OF COMPANIES.
Bk. III. Chap. l. proxy is allowed, subject to certain regulations, easily com-
— plied with (e) ; and every proposition is determined by a
majority of votes, tbe chairman having the casting vote in
case of an equality (/). Where a share is registered in the
names of more persons than one, he whose name stands first
on the register is to be treated as the shareholder for all
purposes of voting (//). Lunatic shareholders are entitled to
vote by their committees, and infant shareholders by their
guardians (//). In case of a dispute as to whether any reso-
lution has been passed by the required majority, a poll may be
demanded ; but if no poll is demanded the decision of the
chairman is final (i).
Election of The shareholders elect the directors (k) ; but occasional
officers. . . .
vacancies occurring among them may be filled up by the con-
tinuing directors (/). The shareholders also appoint the audi-
tors, and determine the remuneration of the directors, auditors,
treasurer, and secretary, the amount of money to be borrowed
on mortgage, and the extent to which the company's capital
may be augmented (/»)• Dividends, moreover, can only be de-
Other powers of clared at a general meeting of the shareholders (n). The share-
shareholders. .
holders can also, at a meeting specially convened lor the pur-
pose, make regulations for the conduct of the directors (o) ; or
remove them (p). The power of making bye-laws may be
exercised by the directors, subject to the control of the share-
holders (q).
Sealing register. The company's register of shareholders is to be authenticated
(e) 8 & 9 Vict. c. 16, §§ 76 & 77, his services, although his rernune-
and 51 & 52 Vict. c. 48. See ante, ration may not have been fixed at
p. 309. a general meeting, Bill v. Darenth,
(/) 8 & 9 Vict. c. 16, § 76. &c, Bail. Co., 1 H. & N. 305.
\g) lb. § 78. 00 8 & 9 Vict. c. 16, § 91.
(h) lb. *§ 79. (o) lb. § 90.
(0 lb. § 80. (p) § 91. Isle of Wight Bail. Co.
(k) lb. §§ 83 & 91. As to removal, v. Tahourdin, 25 Ch. D. 320.
see ante, p. 327, (q) lb. §§ 90 & 124. The bye-
(l) lb. § 89. laws must be under seal. A justice
(to) lb. § 91. See, too, as to of the peace who is a shareholder
auditors, §§ 101 & 104, and as to cannot convict for a breach of a
borrowing money, § 38, et seq. A bye-law, R. v. Hammond, 3 N. E.
company must pay its secretary for 140.
UNDEB THE COMPANIES ACT, 1802. 333
by (he seal of the company at the ordinary general meetings of Bk- Iir- ChaP- 1-
Sect. 4.
shareholders (/•).
Shares cannot be forfeited for non-payment of calls without Forfeiture of
slltiTCS
tin- sanction of a general meeting of shareholders (s).
The shareholders have a right to inspect and take copies Ri8ht t0 inspect
books, &c.
of (/)—
1. The shareholders' address-book (u).
2. The register of mortgages and bonds t c).
3. The register of consolidated stock (y).
4. The register of debenture stock (z).
5. The company's books of account (a).
6. The company's special act (b).
They have also a right to have copies of, or of any part of
the shareholders' address-book, and the company's books of
account, and special act (c).
Copies of the company's special act may always be seen by
any person interested (<l).
3. Companies governed by the Companies act, 1862.
The constitution of a company formed under the act of Constitution of
18G2 is determined by its memorandum of association and its unjer a"ct-°r
articles, to copies of which the members are entitled (e). Both
the memorandum and the articles bind the members as if they
had signed and sealed them, and had covenanted to observe
their conditions, subject to the provisions of the act (/). The
memorandum of association defines the nature and objects of
the company, and cannot be altered in these respects, although
(r) 8 & 9 Vict. c. 16, § 9. (a) 26 & 27 Vict. c. 118, § 28.
(s) lb. §§ 31 & 32. See infra, Mutter v. Eastern Midlands Bail. Co.,
book iii. c. 6, as to forfeiture of 3S Cb. D. 92.
sbares. (o) 8 & 9 Vict. c. 16, §§ 117 &
(t) See as to tbis, Matter v. Eastern 1 19.
Midlands Rail. Co., 38 Cb. D. 92, (6) lb. § 161.
noticed ante, p. 314. (c) lb. §§ 10, 119, 161.
(it) lb. § 10. ((/) lb. § 161. Printed copies can
(x) lb. § 45. be bought of the Queen's printers.
0/) lb. § 63. Holland v. Dickson. (e) 25 & 26 Vict. c. 89, § 19.
37 Ch. D. 669. (/) lb. §§ 11 & 16.
334
MANAGEMENT OF COMPANIES.
Bk. Ill Chap. l. ^ may in some others (</). The articles contain regulations
beet. 4. w °
- for the management of the company's affairs, and may he
altered from time to time hy a special resolution of the mem-
bers (A), notwithstanding any article to the contrary (i). But
neither the articles themselves nor the power of altering them
authorises any alteration of the constitution of the company, as
defined by the memorandum of association (k) ; e.g., the issue
of preference shares (I), the payment of dividends out of
capital (in) ; the purchase of its own shares (n) ; the issue of
shares at a discount (o) ; or the reduction of capital otherwise
than as allowed hy the Companies acts, 1867, 1877, and 1880,
which will be referred to hereafter (p).
Constitution of The constitution of an existing company, registered but not
existing com-
panies registered formed under the act of 1862, is determined by the act of Par-
un ei le ac . lament, letters patent, deed of settlement, or other instrument
creating or regulating the company. This constitution, so far
as it is fixed by act of Parliament or letters patent, is only alter-
able by the legislature or the Crown, as the case may be (q) ;
(g) lb. § 12. See, also, as to the
liability of the directors, 30 & 31
Vict. c. 131, § 8 ; as to reducing
capital, ib. § 9, et seq., amended by
40 & 41 Vict. c. 26; as to sub-
dividing shares, ib. § 21 ; as to
declaring that a portion of the
capital shall not be called up
except in the event of a winding-
up, 42 & 43 Vict. c. 76, § 5 ; as to
returning profits in reduction of
paid-up capital, 43 Vict. c. 19, §§
3-6. See, also, 28 & 29 Vict, c. 78,
§ 3, amended by 33 & 34 Vict. c. 20,
■which enables certain companies to
restrict their objects in order to
avail themselves of the privileges
of issuing transferable mortgage
debentures under that act.
(h) § 50. Sheffield Nickel Co. v.
Unwin, 2 Q. B. t>. 214.
(i) Walker v. London Tramways
Co., 12 Ch. D. 705.
(/.;) Ashbury Bail. Carriage Co. v.
Riche, L. R. 7 H. L. 653 ; Ashbury
v. Watson, 30 Ch. D. 376, 28 CK. D.
56, and ante, p. 164.
(I) Hutton v. Scarborough Hotel
Co., 2 Dr. & Sm. 521 ; Ashbury v.
Watson, 30 Ch. D. 376 ; and dis-
tinguish Harrison v. Mexican Rail.
Co., 19 Eq. 358 ; South Durham
Brewery Co., 31 Ch. D. 261, ante,
p. 322, note (b). See infra, c. 3, § 1.
(m) Guinness v. Land Corporation
of Ireland, 23 Ch. D. 349.
(n) Trevor v. Whitworth, 12 App.
Ca. 409, disapproving of the reason-
ing of the Court of Appeal in
Dronfield Silkstone Coal Co., 17 Ch.
D. 76 ; Taylor v. Pilsen, &c, Light
Co., 27 Ch. D. 270, must be con-
sidered as overruled on this point.
(o) Almada v. Tirito Co., 38 Ch.
D. 415 ; New Civile Gold Mining Co.,
ib. 475 ; Addlestone Linoleum Co, 37
Ch. D. 191. Plaskynaston Tube Co.,
23 Ch.' D. 543, and Ince Hall Rolling
Mills Co., ib. 545 note, are overruled.
(p) Hope v. International Finan-
cial Soc, 4 Ch. D. 327.
(q) 25 & 26 Vict, c. 89, § 196, cl.
UNDER THE COMPANIES ACT, 18G2. 335
nor can the members change the constitution of the company Bk. in. Chap. 1.
in any of those matters which, had it been formed under the
ad of 18G2, would have been unalterable by its members (r).
]5ut those regulations which are not contained in any act of
Parliament or letters patent, and which, if the company had
been formed under the act of 18G2, might have been altered by
its members, may be altered by a special resolution of the
members of an existing company, after its registration under
the act (s).
A company registered under the act as an unlimited com- Power to change
, , , . , ,. ., -, i ii from unlimited
pany can now be converted into a limited company under the to limited.
provisions of the Companies act, 1879 (t).
Very little is to be found in the act relating to the powers of Management
directors, or to the internal management of a company's affairs. aa^^
These matters are for the most part left to be provided for by
each company as it may deem proper, and are accordingly dealt
with in Table A.
The act of 1862, however, requires that a general meeting Provisions of
of members shall be held once a year at least (it), and the
amendment act requires that every conipan}- formed under the
act of 1862, after the 1st of September, 1867, shall hold a
general meeting within four months after its memorandum of
association is registered (r). Moreover, the act of 1862 enables
the members, by a special resolution, the meaning of which is
defined (a-), 1. to alter the constitution and regulations of the
company to the extent already pointed out ; 2. to appoint
inspectors to examine into the affairs of the company (y) ;
and 3. to have the company wound up (z). The act, further,
renders the keeping of proper minutes compulsory, and enacts
that, until the contrary is proved, meetings and proceedings,
of which minutes shall be properly made, shall be considered
3 & 4. See, also, 30 & 31 Vict. c. Gibson v. Barton, L. E. 10 Q. B.
131, § 47. 329.
(r) § 196, cl. 6. («) 30 & 31 Vict. c. 131, § 39.
(s) § 196, and see § 176, as to (x) 25 & 26 Vict. c. 89, § 51.
companies governed by Table B. of (y) § 60.
the act of 1856. (z) §§ 79 & 129. The members
(t) 42 & 43 Vict. c. 76, §§ 4 & 5. of unregistered companies have not
(h) 25 & 26 Vict. c. 89, § 49. this power, see § 199.
336
MANAGEMENT OF COMPANIES.
Bk. in. Chap. 1. as duly convened and transacted, and that all appointments of
— - directors, managers or liquidators, shall be deemed valid, and
that all their acts shall he valid, notwithstanding any defect
that may afterwards be discovered in their appointments or
qualifications (a).
Examination of For the greater protection of the members of companies the
b7inspect0ars.aUS act contains some very important provisions, enabling not
only the members (b), but also, on their application, the Board
of Trade to appoint inspectors to examine into and report
upon the affairs of all companies registered under the act (c).
A copy of the report of the inspectors, sealed with the seal of
the company, is also made admissible in any legal proceeding
as evidence of their opinion on any matter contained in their
report (d).
Provisions of Passing now to the regulations in Table A., the following
rules will be found respecting the managing bodies and the
members of companies to which that Table applies.
First, as regards the managing body.
Directors. The business of the company is to be managed by the
Table A. directors, and, in case of any vacancy in their body, by those
who continue in office (Table A., Nos. 55 and 56). The
powers of the directors are, however, subject not only to the
provisions of the act, but also to the company's regula-
tions (ib.), which, as before observed, may be altered b}r
special resolution. What is done by de facto directors is valid,
notwithstanding the subsequent discovery of a defect in their
appointment or of their disqualification (No. 71, and § 67 of
the act) (c).
The directors are the proper persons to make calls (No. 4),
forfeit shares (Nos. 17 and 22), and appoint the first auditors
(a) 25 & 26 Vict. c. 89, § 67. See
ante, p. 312.
(b) § 60.
(c) §§ 56-59.
(d) § 61.
(e) See ante, p. 300. Newhaven
Local Board v. Newhaven School
Board, 30 Ch. D. 350 ; and Howbeach
Coal Go. v. Teague, 5 H. & N. 151,
where the defect in the appointment
of directors was held not to be cured
by a clause of this nature. Compare
Murray v. Bush, L. R. 6 H. L. 37,
which turned on a similar clause in
7 & 8 Vict. c. 110, § 30.
UNDEH TIIU COMPANIES ACT, 1862. 337
(No. 84). But the directors cannot, without the sanction of Bk- In- Cfl»P' l-
the members, convert shares into stock (Xo. 23), increase the
capital by issuing new shares (No. 26), or declare dividends
(No. 72).
Until directors are appointed the subscribers of the memo- Appointment
randum of association are the directors (Table A., Xo. 53),°
and arc the persons to determine the number and names of
the first directors (No. 52). This number may afterwards be
varied by the members (No. G3). At the first ordinary meet-
ing of the members, after the registration of the company,
the whole, and in every subsequent year one-third, of the
directors, must retire (No. 58). In case of any dispute as to
who shall retire in the first two years after the first, the per-
sons to retire must be determined b}r ballot (No. 59) ; but
afterwards those who have been longest in office must retire
(No. 59). A retiring director may be re-elected (No. GO).
Vacancies occurring by retirement under these provisions must
be filled up by the members at the meeting at which the
directors retire (No. 61) ; otherwise the meeting stands ad-
journed for a week (No. G2) ; and if the vacancies are not
filled up at such adjourned meeting, those directors whose
places are not filled up continue in office for another year
(No. 62). Casual vacancies may be filled up b}r the other
directors (No. 64) (/).
A director vacates his office — 1. if he holds any other office Disqualifications,
or place of profit under the company (g) ; 2. if he becomes
bankrupt or insolvent; 3. if he (otherwise than as a member
of some other company) is concerned in or participates in the
profits of any contract with the company (No. 57) (/?)•
Irrespectively of these provisions, any director may be re- Removal of
moved b}r a special resolution of the members (No. 65).
The members fix the remuneration of the directors (No. 54). Their pay.
The directors may regulate their own meetings as they Meetings of
directors.
(/) York Tramways Co. Y. Willows, director, Eales v. Cumberland Black
8 Q. B. D. 685 ; Minister v. Cammell, Lead Co., 6 H. & N. 481. Compare
21 Ch. D. 183. Iron Ship Coating Co. v. Blunt, L. E.
(g) The directors may appoint one 3 C. P. 484.
of themselves to be a manager at a (h) See as to this, ante, pp. 327
salary, but the person so appointed and 328.
ceases by the appointment to be a
L.C Z
338
MANAGEMENT OF COMPANIES
Delegation of
powers.
Duties of
directors.
Bk. III. Chap. l. think fit (No. 66), but they are bound to keep minutes of their
proceedings (see § 67 of the act). The directors may deter-
mine what number is to be a quorum (Table A., No. 66), and
may elect a chairman and determine the period for which he
shall hold office (No. 67). If no chairman is present when a
meeting assembles, the directors present must choose one of
themselves to be chairman pro tern. (No. 67).
Questions arising at any meeting of directors are to be
determined by a majority of votes, the chairman having a
second or casting vote in case of equality (No. 66).
Any director may at any time summon a meeting of directors
(No. 66).
The directors may delegate any of their powers to com-
mittees of themselves (Nos. 68—70) (i).
The directors may at any time convene an extraordinary
general meeting of the members (No. 32).
The directors are bound to keep accounts of the company's
stock in trade, receipts and expenditure, assets and liabilities ;
and the members are entitled to inspect these accounts, subject
to such restrictions as the members may themselves impose
(No. 78). The directors are further bound, once a year at
least, to lay before the members a statement of the company's
income and expenditure for the past year (Nos. 79 and 80),
and also a balance sheet containing a summary of the assets
and liabilities of the company in the form given at the end of
Table A. (No. 81). A printed copy of this balance sheet is
moreover to be sent to each member seven days before the
meeting (No. 82).
In addition to these provisions the directors are bound by
the act itself, and mostly under penalties, to do various things
which it may be useful here to recapitulate, viz. : —
1. To keep a proper register of members (A), and to allow
it to be inspected {I).
2. To make out and send to the registrar of joint-stock
companies the annual lists required to be sent to him (m).
(i) See Totterdell v.Fareham Brick
Co., L. P». 1 C. P. 674, and ante, p.
156.
(h) 25 & 26 Vict. c. 89, § 25.
(/) § 32.
(m) §§ 26, 27, 45, 46.
UNDER THE COMPANIES ACT, 1862. 339
3. To notify to the registrar all increases or re-distributions l:k in. Chap. l.
. . Sect. 4.
of capita] and conversions of capital into stock (n), and all
increases of members where there is no share capital (o).
4. To keep, if there be no share capital, a register of
directors, and send a copy of it to the registrar, and notify
to him all changes amongst the directors (p).
5. To take care, in the case of limited companies, that the
word "limited" appears, and is used as prescribed by the
statute (7).
G. To keep, in the case of a limited company, a register of
all mortgages or charges affecting its property, and allow such
register to be inspected (r).
7. To keep, in the office of a limited banking company, an
insurance company and deposit provident or benefit society,
the statement required by the act, and to permit such state-
ment to be inspected (s).
8. To take care that the company does not carry on business
with less than seven members (/).
9. To send copies of all special resolutions to the registrar,
and to the members if required (it).
10. To submit to examination by the inspectors appointed
by the Board of Trade (>), or by a special resolution of the
members (//).
The powers of directors, as regards calls, dividends, and the
forfeiture of shares, and their duties and liabilities on the
winding up of a company, will be pointed out hereafter.
Secondly, as regards the members.
The question who are members has been already exa- Members.
mined (z). The original number of members may be in-
creased (a).
(n) §§ 28-34. 21, 23, 27, 31-33, and 33 & 34 Vict.
(0) § 34. c. 20, §§ 3, et seep
( p) §§ 45 & 46. (s) § 44.
(?) §§ 41 & 42. See ante, p. 240, (t) § 48.
note (&). (u) §§ 53 & 54.
(r) § 43. See, also, as to the re- (») § 58.
gistration, &c, of debentures issued (y) § 60.
under the Mortgage debenture act, (,~) Ante, p. 119, et seq.
1865, 28 & 29 Vict. c. 78, §§ 6-1 1. («) $§ 12 '& 34.
C40 MANAGEMENT OF COMPANIES
Bk. III. Chap. l. The act requires a general meeting of the members to be
Sect. 4. .
— held once a year at least (b) ; and all companies formed after
members. 1^ September, 1867, must hold a meeting within four months
after its memorandum of association is registered (c).
Table A. By the regulations contained in Table A., the first ordinary
general meeting is to be held at such time within six months
after registration of the company, and at such place as the
directors may determine (Nos. 29 and 31). Subsequent ordi-
nary general meetings are to be held, at such time and place
as the members may determine ; and if they do not fix a time
and place, a general meeting shall be held on the first Monday
in February in every year, at such place as the directors ma}r
determine (Nos. 30 and 31).
Extraordinary An extraordinary general meeting may be convened by the
directors whenever they think proper (Nos. -31 and 32) ; and
the directors are bound to call such a meeting whenever re-
quired so to do in writing by one-fifth of the members (Nos.
32 — 34). If the directors fail to comply with such requisition,
the requisitioners, or any other members, being one-fifth of
the whole, may themselves convene an extraordinary general
meeting (No. 34) {d).
Notice convening Seven days' notice at least, specifying the day, place, and
hour of meeting is to be given to the members, by post or
personal service (Nos. 95 — 97, and § 52 of the act), or in such
other way as the members in general meeting may direct
(No. 35), but the non-receipt of such notice by any member
does not invalidate the proceedings of the meeting (No. 35).
Whenever an extraordinary meeting is called, or whenever it is
intended at an ordinary meeting to do more than sanction a
dividend, or consider the accounts, balance-sheets, and ordinary
reports of the directors, the notice convening the meeting must
state the general nature of the business to be transacted
(Nos. 35 and 36) (e).
Resolutions. ]^0 business, except the declaration of a dividend, can be
(b) § 49. Gibson v. Barton, L. R. members may summon meetings,
10 Q. B. 329. see § 52 of the act.
(c) 30 & 31 Vict, c 131, § 39. (e) See ante, p. 307, and the cases
(d) Where there are no regula- there cited in note (d).
tions upon this subject, any five
UNDER THE COMPANIES ACT, 1862. :;j|
transacted at any general meeting, unless a quorum of members Bk. III. Chap. i.
Si rl |
is present when the meeting proceeds to business (No. 87).
The quorum is ascertained as follows: — [fthe members of the
company do nol exceed 10, the quorum is 5; if they exceed 10,
one must be added for every 5 additional members up to 50;
and one for every 10 additional members after 50, until the
quorum amounts to 20, which is in all cases asufliei. nt number
(Table A., No. 87) (/).
If within an hour from the time appointed for the meeting, Table A.
a quorum is not present, the meeting, if convened upon the Dissolution of
requisition of the members, shall be dissolved; in any other
case it shall stand adjourned to the same day in the next
week, at the same time and place ; and if at such adjourned
meeting a quorum is not present, it shall be adjourned sine die
(Table A., Xo. 38).
The chairman (if any) of tin1 board of directors, shall pre- chairman,
side as chairman at every general meeting of the members
(Xo. 39) (g). If there be no such chairman, or if at any meet-
ing he is not present within a quarter of an hour after the time
appointed for holding the meeting, the members present shall
choose one of their number to be chairman (Xo. 40) (A).
The chairman may, with the consent of the meeting, adjourn Adjourned
it from time to time, and from place to place, but no business
can be transacted at any adjourned meeting, except the busi-
ness left unfinished at the meeting from which the adjourn-
ment took place (No. 41) (i).
At any general meeting a poll ma}- be demanded by five or Votes,
more members ; but if no poll is so demanded, a declaration by
the chairman that a resolution has been carried, and an entry
to that effect in the book of the proceedings of the company is
sufficient evidence of the fact, without proof of the number or
proportion of votes recorded for or against the resolution
(Nos. 42 and 43).
(/) See, as to the quorums, ante, tions to the contrary, the members
p. 155. may always elect their own chair-
(g) For the power and duties of a man, see § 52 of the act.
chairman, see Indian Zoedone Co., (i) As to adjourned meetings, see
26 Ch. D. 70. ante, p. 307.
(h) Where there are no regula-
3-12 MANAGEMENT OF COMPANIES
Bk. III. Chap. l. Where the regulations do not otherwise prescribe, each
Sect. 4.
— member is entitled to one vote (k), but by the regulations in
Table A., eveiy member is entitled to one vote for every share
up to ten, and to one additional vote for every 5 additional
shares up to 100, and to an additional vote for every 10 shares
beyond the first 100 (No. 44). A lunatic may vote by his
committee (No. 45). If several persons are jointly entitled to
a share or shares, the person whose name stands first on the
register in respect of those shares, and no other person, is
entitled to vote in respect of them (Table A., No. 46).
Table A. No member can vote unless he has paid all his calls (No. 47) ;
and except for the first three months after the registration of
the company, no member can vote in respect of any share
acquired by transfer, unless he has held it for three months
(No. 47).
Proxies. Votes may be given personally or bj1- proxy (No. 48) (I).
The proxy must be a member of the compan}', appointed in
writing, signed, and attested by one witness at least (No. 49).
An instrument appointing a proxy is only good for a year
(No. 50), and it must be left at the company's office not less
than 72 hours before it can be acted upon (No. 50). A form
of proxy is given in Table A. (No. 51) ; it must be duly
stamped (/»)•
Minutes. Minutes of all resolutions and proceedings of general meet-
ings are required to be kept by the act, which moreover makes
the minutes of any meeting admissible in evidence, if purport-
ing to be signed by the chairman of that or of the next suc-
ceeding meeting (n).
Powers of i1^ members have, as has been already mentioned, power
members.
to elect (No. 52) and to increase or reduce the number of the
directors (No. 63), and to fix their remuneration (No. 54), and
by special resolution to remove them (No. 65).
The members are also entitled to see the accounts of the
company (No. 78), and to appoint all auditors, except the first
(No. 84).
(k) 25 & 26 Vict c. 89, § 52. See (m) Ante, p. 310.
as to voting, ante, p. 309. (n) 25 & 26 Vict. c. 89, § 67.
(1) See ante, p. 309.
iM.i.K THE COMPANIES A.CT, 1862. 343
The members, moreover, are entitled by the act, 1;k- llL ch*P- l-
Beet. 4.
1. To have copies of the company's memorandum of associa-
tion and articles (<>).
2. To inspect and have copies of the register of members ( p).
3. To inspect the register of mortgages required to be kept
by limited companies (q).
4. To have copies of all special resolutions (r).
5. To apply to the Board of Trade to appoint inspectors to
examine the affairs of the company («), and by special resolu-
tion to appoint such inspectors themselves (/)•
6. To insist on the company being wound up (u).
7. In addition to these powers, the members are empowered Special resolu-
• tions.
by a special resolution, i.e., a resolution passed by three-
fourths, and afterwards confirmed by a majority of members,
present in person or by proxy, and entitled to vote (./•), — to
alter the regulations of the company (y). But, except by
increasing (z) or reducing (a) the original capital, or by sub-
dividing the shares (&), or in certain cases by limiting the
objects of the company so as to avail itself of the Mortgage
debenture act, 18G5 (c), or by changing the name of the com-
pany (d), no departure can be made from the memorandum , of
association (c), nor can the regulations of the company be so
altered as to change the respective status of the members, and
to give one class a preference over others (/), except as
authorised by § 24 of the Companies act, 1807.
(o) §li). Vict. c. 76, § 5. The same section
(p) § 32. gives a company the power of de-
(?) § 43 ; Credit Co., 11 Ch. D. daring that a portion of its capital
256. shall not be called up except in the
(r) §§ 54 & 19. event of a winding up.
(s) § 56. (a) 30 & 31 Vict. c. 131, § 9,
(t) § 60. ct seq., and 40 & 41 Vict. c. 26, § 3,
(h) §§ 79 & 129. See, also, 30 & ct seq.
31 Vicl c. 131, § 40. (6) 30 & 31 Vict, c. 131, § 21,
(x) 25 & 26 Vict. c. 89, § 51. The which only applies to limited corn-
resolution must be registered, § 53. panies.
(y) § 50. (c) 28 & 29 Vict. c. 78, § 3,
(z) § 12. As to sax unlimited amended by 33 & 34 Vict. c. 20.
company increasing the nominal (d) 25 & 26 Vict. c. 89, § 13.
amount of its capital when regis- (c) § 12, ante, p. 334.
tering itself as limited under the (/) See Hutton v. Scarbro' Hotel
Companies act, 1879, see 42 & 43 Co., 2 Dr. & Sm. 521. See ib. 514,
344
MANAGEMENT OF COMPANIES.
Bk. III. Chap. 1.
Sect. 4.
Alteration of
articles anil
acting on them
as altered.
Questions sometimes arise respecting the power at one and
the same meeting both to alter the articles and to pass resolu-
tions which are only valid after the articles have been altered.
Unless care be taken this cannot be done. The articles must
be altered first, and then a resolution must be passed to do
that which they authorise as altered (g). But if proper notices
are given, there is no reason why a special resolution should
not be passed altering the articles, and another resolution (not
special) be passed immediately afterwards at the same meet-
in a (h). But two special resolutions cannot be passed in this
way, if the second depends for its validity on the passing of
the first (i).
and the judgment of Lord West-
bury in 11 Jur. N. S. 551. Ashbury
v. Watson, 30 Ch. D. 37G, and dis-
tinguish Harrison v. Mexican Rail.
Co., 19 Eq. 358 ; South Durham
Bn wery Co., 31 Ch. D. 261, where
an increase of capital by the issue
of preference shares was authorised
by contemporaneous articles.
(g) Patent Invert Sugar Co., 31
Ch. D. 166; Imperial Hydropathic
Hotel Co. v. Hampson, 23 Ch. D. 1 ;
West India Steam Ship Co., 9 Ch.
11 note.
(/;) Campbell's case, 9 Ch. 1 ;
Taylor v. Pilsen Light Co., 27 Ch.
D. 268.
(i) Compare the cases in the two
last notes.
DI'TV TO oI'.SKKVi: (iOOD FAITH. 34.J
CHAPTER II.
OF THE FIDUCIARY RELATION OP PBOMOTERS AND DIRECTORS TO
THEIR RESPECTIVE COMPANIES.
SOME of the rights and duties of promoters and directors Bk. III. Chap. 2.
Sect. 1.
have been already examined, viz., their duties and liabilities
with respect to contracts to take shares (a), with respect to
prospectuses (b), and their rights and powers to bind their
respective companies by contracts and other acts (c). The
powers of directors as regards general management have
also been alluded to (d) ; and their powers with reference
to raising capital (e), making calls (/), transfers of shares (//),
and the forfeiture of shares (h) will be uoticed in succeed-
ing chapters. But in addition to these matters it is
necessary to investigate the extent to which promoters and
directors are regarded as trustees for their respective com-
panies and the consequences of being so regarded. The
present chapter is devoted to this difficult subject.
SECTION I.— OF PROMOTERS.
The duties of partners to observe good faith to each other, Duty to observe
not to overreach each other, and not to make separate profits
or obtain secret advantages at the expense of their firm has
been long recognised and enforced by the Courts of this
country (i) ; and this duty commences as soon as the nego-
(«) Book i. c. 1. (/) lb.
(b) lb. cc. 1 & 3. (g) Book iii. c. 4, § 5.
(c) Book ii. c. 1. (h) lb. c. 6.
(d) Book iii. c, 1. (i) Partn. book iii. c. 2.
(c) Book iii. c. 3.
346 DUTY TO OBSERVE GOOD FAITH.
Bk. III. Chap. 2. tiations for a partnership commence (Jc). The general prin-
Sect. 1.
- ciples applicable to partners and to persons about to become
partners are applicable to promoters of companies in their
dealings with the companies which they practically create, and
with the persons whom the}' induce to join such companies.
Projectors of Nothing is more common than for persons to acquire pro-
rprofit^utrfifc8 Per*v m or(ier to re-sell it, to form a company on purpose to
buy it, to make arrangements by which the company do
buy it, and to conceal their own true position from the com-
pany they so form, and induce to buy. Such a transaction
can never stand. There is nothing to prevent a person from
buying property for himself at one price, and afterwards selling
the same property to a company or any one else at a higher
price ; nor in a case of this simple description is the vendor
bound 1o disclose the fact that he is selling at a profit (I).
Moreover, there may be a valid sale to a company by a person
engaged in getting it up (in), and there often is great difficulty
in determining the true nature of any given transaction (n) ;
but once let it be shown that the alleged vendor was engaged
in obtaining property for a company which he was engaged in
forming, or that he formed a company to buy property of his
own, and it immediately follows that he cannot, without full
disclosure on his part, hold the company to its bargain, or in
the first case at all events (o) charge the company more than
he actually gave.
Meaning of the There has been considerable discussion with reference to
the meaning of the word promoter, and also with reference to
his relation to the company he is endeavouring to form. The
word itself has never been defined ; but it is used in common
parlance and also in § 38 of the Companies act, 1867, to
denote those persons who bring the company into existence,
by taking an active part in forming it and in procuring persons
(k) See Hichcnsv.Congreve, 4 Buss. observations of V.-C. YVigram, in
562, and 1 B. & M. 150 ; Faivcett v. Foss v. Harbottle, 2 Ha. 489.
Whitehouse, 1 R. & M. 132. (n) As in Beck v. Kantoroicic;., 3
(?) See Governs case, 1 Ch. D. 182, K. & J. 323, noticed infra, p. 352.
and per James, L. J., in 5 Ch. D. (o) See, as to this, the Cape Breton
118. Mining Co., 29 Ch. D. 795, noticed
(m) As in Paul and Bercsford's infra,
case, 33 Beav. 204. See, too, the
term promoter.
PKOHOTE11S. 347
to join it as soon as it is technically formed (it). 'J'his i;k- T[I- <"iiap. 2.
. . ' . . Sect. 1.
description is sufficiently accurate for practical purposes,
although as a definition it is too wide, for it includes persons,
e.g. mere printers and advertising agents, who are employed by
the promoters, but who have nothing to do with the company
or its formation in such a sense as to create any relation
between it and them.
The relation of a promoter to a company which he has taken Relation to the
«... ,*. i-i i- company.
part in forming, lias been compared to that which subsists
between an agent and his principal, and to that which sub-
sists between a trustee and his cestui '/>"' trust. Of these
analogies the last is the closest, although neither is perfect,
'i he relation of principal and agent cannot exist between a
company not yet created and those engaged in forming it (q) ;
and what is done by them before the company is formed cannot
be ratified by the company after its formation, unless the word
ratified is used in a loose and inaccurate sense (r). On the
other hand trusts for unborn persons are familiar in English
law, and such trusts can be enforced by their objects when
they come into existence.
The real relation of promoters to companies is difficult to A fiduciary
define ; the relation is in truth sui generis, and is the result of
dealings and transactions of a kind not known until recent
times. The term by which accurately to define such relation
has not yet been discovered. Familiarity with trusts and the
language employed in connection with them has led to the
description of the relation as a fiduciary relation (-s) ; and
although this is not a very happy expression, it is not eas}' to
suggest a better. What is meant is that although there is no
actual relation of trustee and cestui que trust between a promoter
and an unformed company, yet that when he has succeeded in
forming it, he is liable to it in respect of frauds practised by
(p) Ante, book i. c. 3, § 2 ; Emma Phosphate Co., 3 App. Ca. 1218;
Silver M ining Co. v. Lewis, 4 C. P. D. Bagnall v. Carlton, 6 Ch. D. 371;
:i.)6 ; Jllialey Bridge Co. v. Green, 5 Emma Silver Mining Co. v. Lewis,
Q. B. D. 109 ; Cover's case, 1 Ch. D. 4 0. P. D. 396 ; Lydney, dr., Co. v.
182. Bird, 33 Ch. D. 8.3 ; Whalcy Bridge
(7) Ante, book ii. c 1, § 2. Printing Co. v. Green, 5 Q. B. D.
(/•) Ante, book ii. c. 2, § 3. 109.
(s) Erlanger v. New Sombrero
348
DUTY TO OBSERVE GOOD FAITH.
Bk. III. Chap. 2. him upon it, planned by means of agreements entered into
- before its formation, and the real nature of which is carefully
concealed from every one except those who profit by them.
The frauds thus perpetrated are obvious when discovered ;
and the doctrine of fiduciary relation has been invented or
extended in order to defeat them.
The following extract from the judgment of Lord Cairns in
Erlanger v. New Sombrero Phosphate Co. (t) explains the posi-
tion of a promoter very clearly : —
Lord Cairns in
Erlanger v.
New Sombrero
Company.
" It is now necessary that I should state to your Lordships in what
position I understand the promoters to be placed with reference to the
company which they proposed to form. They stand, in my opinion, un-
doubtedly in a fiduciary position. They have in their hands the creation
and moulding of the company ; they have the power of defining how, and
when, and in what shape, and under what supervision, it shall start into
existence, and begin to act as a trading corporation. If they are doing all
this in order that the company may, as soon as it starts into life, become,
through its managing directors, the purchaser of the property of themselves,
the promoters, it is, in my opinion, incumbent upon the promoters to take
care that in forming the company they provide it with an executive, that
is to say, with a board of directors, who shall both be aware that the pro-
perty which they are asked to buy is the property of the promoters, and
who shall be competent and impartial judges as to whether the purchase
ought or ought not to be made. I do not say that the owner of property
may not promote and form a joint stock company, and then sell his pro-
perty to it, but I do say that if he does he is bound to take care that he
sells it to the company through the medium of a board of directors who
can and do exercise an independent and intelligent judgment on the trans-
action, and who are not left under the belief that the property belongs, not
to the promoter, but to some other person."
Commencement
of the fiduciary
relation.
One of the greatest difficulties in connection with this sub-
ject is to determine when a promoter of a projected company
begins to be in such a position as to be unable to make a
secret profit by a sale to it, or to persons acting on its behalf.
On the one hand, it is quite plain that the so called fiduciary
relation between a promoter and a company may exist long
before the actual formation of a company by registration or
otherwise (u). On the other hand, it is obvious that something
must be done beyond a purchase and resale to constitute such
(f) 3 App. Ca. 1236. but one, and Bank of London v.
(?t) See the cases in the last note Tyrrell, 10 H. L. Ca. 26.
PHOMOTERS. '619
a relation: something must be done by the promoter to impose Bk. in. Chap. 2.
• • • • '■ '■
upon him the duty ot protecting the interests of those who
ultimately compose the company. He assumes this duty if he
assumes to act for them, or if he induces them to trust him, or
to trust persons who are under his control, and who are prac-
tically himself in disguise ; he also assumes such duty if he
calls the company into existence in order that it may buy what
he has to sell; hut he does not assume such dutv by nego-
tiating with persons who have themselves assumed that duty
and who are in no way under his influence (x). A fraud by
him on them will of course vitiate any agreement based on the
fraud, whether there is any fiduciary relation between him and
them or not ; hut the principles now being investigated pre-
suppose the existence of that relation, and a breach of the
obligations incidental to it, and no fraud other than that
involved in their breach.
In dealing with any particular case care must be taken not General caution,
to be misled by words. Owing to the ambiguity in the meaning
of the word promoter, and the difficulty of defining his exact
relation to the company he procures to be formed, it is unsafe
to say that any particular person was a promoter of a particular
company, and to infer from thence, that he is liable to account
to it as if he had been its trustee. The question in each case
must be, what has the so-called promoter done to make him-
self liable to the demand made against him ? What fraud or
breach of trust has he committed or been party or privy to (y) ?
If none, he is under no liability : if any, he is liable accordingly
by whatever name he may be called or by whatever terms his
relation to the company may be expressed. His liability,
moreover, in such cases, is incurred by " fraud or breach of
trust " within the meaning of the Bankruptcy act, and is
not therefore terminated by his bankruptcy and subsequent
discharge (z).
The position of a promoter to the company he promotes
(/) Compare Albion Steel Wire Green, 5 Q. B. D. 109.
Co. v. Martin, 1 Ch. D. 580, with (a) Emma Silver Mining Co. v.
the other cases noticed in the text. Grant, 17 Ch. D. 122 ; Ramskill v.
(y) See Lydney, dbc, Co. v. Bird, Edwards, 31 ib. 100.
33 Ch. D. p. 93 ; IVhaley Bridge Co. v.
350 DUTY TO OBSERVE GOOD FAITH.
Bk. III. Chap. 2. wiH be best understood if the following propositions are borne
Sect. 1.
m mind : —
1. A seller of property is under no obligation to inform the
buyer how or when, or from whom, or at what price, or
under what circumstances he, the seller himself, acquired it.
2. An agent to buy cannot charge his principal a greater
price than the agent pays, and if he does so his principal can
either repudiate the purchase and compel the agent to repay
him the price he, the principal, has paid ; or the principal can
keep the property and recover from the agent the profit he has
made by the transaction.
3. An agent to buy cannot sell his own property to his prin-
cipal without informing him of the fact, and if he does so, the
principal can repudiate the transaction. "Whether, in this
case, the principal can keep the property and recover from
the agent the profit he has made by the transaction cannot be
regarded as settled (a).
4. An agent cannot in any other way obtain secret benefits
for himself at the expense of his principal in any transaction
within the scope of the agency.
5. A person engaged in forming a company is treated as
under the same disabilities in these respects as if he were its
agent.
The cases illustrating these propositions, and their applica-
tion to promoters of companies, are numerous and important ;
but their details are complicated and infinitely various. They
group themselves into four classes, viz. : —
1. Cases in which promoters have been acquiring property
and forming a company to take it at an enhanced price.
2. Cases in which persons have sold their own property to a
company formed by them to buy it.
3. Cases in which the promoters of a company have in other
ways obtained secret benefits at its expense.
4. Cases in which the position of promoter has not been
proved to exist, and in which, therefore, the doctrines applic-
able to promoters have not come into operation.
(«) See Cape Breton Co., 29 Ch. I). 795, noticed infra.
PROMOTERS. 351
15k. III. Chap. 2.
1. Cases in which promoters have been acquiring 'property and _ 1-
forming <i company in take it at an enhanced price.
In this class of cases a company is formed in order to buy
property for a given price. The price really consists of two
portions ; one is what the property is fairly worth ; the other
is what is called promotion money, and is enough to cover the
legitimate expenses of forming the company, and to put large
sums of mone}' into the pockets of the promoters. The owner
of the property may or may not be himself a promoter; but he
gets no money until the company is formed and money is
raised b}' the issue of shares or debentures. The fact that the
company is being made to pay far more than an equivalent for
what it gets is of course concealed, and the first directors are
promoters or persons procured by them, and the shares they
take are in fact paid for out of the promotion money. The
contrivances to which recourse is had in order to rob com-
panies in this wa}r without being found out, are innumerable.
The following are the leading cases of this class, and they are
important enough to be noticed separately.
In Hichens v. Congreve (//), a company was formed to work Company en-
a mine, and was principally got up by three of the defendants ; reserved l >y" '
it was proposed that a lease of the mine should be purchased directors-
by the company, and a lease to the company was executed by Congreve.
the owner of the property for 25,0007. This sum was accord-
ingly charged to the company, but it afterwards turned out
that 10,000/. only had been in fact paid to the owner for the
lease, and that the remaining 15,000/. had been distributed
amongst the directors. The three principal promoters of the
company alleged that the property had been sold to them, on
their private account, before the company had come into
existence, that 25,000?. was a fair price for the company to
pay for the lease, and that the 15,000/. was only a fair profit
on a re-sale, the original purchase being entirely at the per-
sonal risk of the three. They said that the lease was taken
directly to the company, and that the amount of the considera-
te 4 Russ. 562, and 1 R. & M. house, 1 R. & M. 132, a somewhat
150. Sec, also, Fawcett v. White- similar ease.
352
DU'IY TO OBSERVE GOOD FAITH.
Alleged open
sale by pro-
jectors to
company.
Beck v. Kan-
torowicz.
Bk. III. Chap. 2. tion money was stated to be 25,000/., with the knowledge of
- the lessor, and merely for the purpose of simplifying the title.
But it was admitted that only 10,000/. reached the lessor's
hands, and that the 15,000/. had been divided amongst the
defendants. A motion was made that the three principal
defendants might be ordered to pay into Court such sums,
part of the 15,000/., as appeared by their answers to be then
in their hands, and an order to that effect was made.
Another and very instructive case is Beck v. Kantorowicz (c),
in which one projector sought to obtain a benefit at the ex-
pense of the others, and they all sought to make a profit
out of the company. In this case five persons proposed to
purchase a mine, and to get up a company to work it. One
of them, Kantorowicz, negotiated on behalf of himself and
co-adventurers with the owners of the mine, and agreed with
the owners for a purchase from them, at a sum of 85,000/.,
and he represented to his co-adventurers that this sum was
the least which the owners would take for the mine. In
point of fact, however, there was an agreement between
Kantorowicz and the owners, that if the mine was purchased
at that price he was to have 20,000/. for his trouble ; but this
was unknown to the other adventurers and to the company
which was afterwards formed. Upon the supposition that
85,000/. was the price of the mine, a contract for the sale of it
at that price was entered into between the owners of the one
part, and Kantorowicz and his four co- adventurers of the other.
Part of the purchase money was to be paid in shares in the
company proposed to be formed. Shortly afterwards a pro-
spectus was issued, with a view to the formation of the com-
pany ; and in the prospectus it was stated that a contract
had been entered into for the purchase by the company of
the entire property for 125,000/., including all preliminary
expenses, and a premium to the parties who had incurred the
risk and the responsibility of the original purchase. The
company was formed. The agreement between Kantorowicz
and the owners was afterwards discovered, and a bill was filed
by three of the committee of management of the company, on
(c) 3 K. & J. 230. See, too, Ex parte Perrier, 7 Ir. Ch. Rep. 256.
wlo.moti.k-. 353
behalf of themselves and other shareholders, for the purpose Bk. in. Chap. 2.
of compelling Kantorowicz to account to the company for the
20,000/. premium which he had received in shares from the torowicz.
vendors of the mine. On the part of Kantorowicz it was
insisted, first, that he had an interest in the mine, and was a
selling party, and that, therefore, he practised do fraud on the
four original adventurers ; and secondly, that even if the
transaction could not he upheld as between him and them, the
company could not complain, as he and the other promoters
avowedly sold the property to the compai:ry for 125,000/., and
the company had got all they ever expected, or had contracted
to have. But it was held upon the evidence, that Kantorowicz
had no interest in the mine, and that, as hetween him and the
other promoters, the transaction could not for one moment
stand. With respect to the more difficult question which arose
hetween Kantorowicz on the one side, and the company on the
other, it appeared in the first place, that two of the original
j3romoters were members of the committee of management.
In this latter capacity they became, as it were, agents for the
company, and were, as such, hound to buy for the company at
as reasonable a price as possible, although in their character
of grantees they were entitled to sell at any price they liked.
It also appeared that the 125,000/, at which the company was
to buy was fixed by the committee of management, upon the
assumption that 85,000/. was, in fact, to be paid to the vendors
of the mine, and that the difference between 85,000/. and
125,000/. would cover the preliminary expenses, and what was
considered to be a fair premium for the promoters. This
premium was alluded to in the prospectus, and was a premium
of 30,000/., to be paid out of the difference between the 85,000/.
and the 125,000/. Another premium, payable out of the
85,000/. to one of the promoters alone, was never contemplated
in drawing up the prospectus. Upon these grounds it was
held not to be competent to Kantorowicz to get a bonus of
20,000/., in addition to his share of the 30,000/., and that
having kept back the transaction as to the 20,000/., he ought
to be considered as having joined the other four promoters in
stipulating for payment by the company of a premium of
30,000/., and no more. He in fact allowed them, in the exer-
L.C. A A
354
DUTY TO OBSERVE GOOD FAITH.
Bk' "ect01?.11' 2' cise °f theil" iud8'menfc as to what was a right premium to
demand of the company, to contract with the company for the
30,000/., and that was the contract which the Court held
ought to be performed as between the company and the
promoters (d).
New Sombrero, Again, in The New Sombrero Phosphate Co. v. Erlanqer (e)
&c, Co. r. -i r , ,
Erianger. a lease ot some property was sold to an agent for a syndicate,
i.e., a group of speculators. One of these speculators, on
behalf of himself and the others, got up a company to buy the
property from them. An agent of theirs entered into a pro-
visional contract with a nominee of their own for the sale of
the property to him, as trustee for the intended company, at
the advanced price, to be paid for in cash and shares. The
company's memorandum and articles of association were pre-
pared under the direction of the chief promoter. There were
five directors. Of these two were abroad, and the others were
all in fact nominees, and more or less under the control of the
chief promoter; one of them was the person who originally
purchased as agent for him and the other speculators. The
agreement between this agent and the trustee for the company
was alluded to in the articles of association, and also in a
prospectus published by the directors. This prospectus was
in fact prepared under the instructions of the chief promoter.
The solicitor of the company was the solicitor of the pro-
moters. The prospectus stated that the provisional contract
with the trustee for the company had been approved by the
directors, and in fact the directors in this country had adopted
it ; but they had in truth no discretion in the matter ; they
had no independent advice, and one of them was the trustee
for the promoters. Their approval was therefore a mere sham.
Upon the true facts becoming known, the company repudiated
the contract, and filed a bill to set it aside. The V.-C. Malins
dismissed the bill, being of opinion that the promoters of the
(</) The result, it is apprehended, and themselves. As it was, they
would not have been different if abandoned any interest they might
the four promoters had insisted on have in the 20,000/. to the company,
keeping the company to the bargain (e) 5 Ch. D. 73, and 3 App. Ca.
for 125,000/., and had claimed to 1218. See the extract from Lord
have the 20,000/. stipulated for by Cairns' judgment in this case, ante
Kantoiwicz divided between him p. 348.
PROMOTEBS. 355
company were not in such m fiduciary position towards it as Bk. m. Chap. 2.
Beet. 1.
td render it obligatory upon them to disclose that they were
themselves selling their own property to the company. Bui
on appeal, this decision was reversed upon the ground that the
promoters stood in a fiduciary relation to the company, which
was their creature ; and were hound to disclose the fact that
they were selling their own property to the company.
In The Phosphate Sewage Co. v. Hartmont (/),the promoters Phosphate
oC W2UT6 ( *0 V
had no title to the property they sold. The trustees of the Hartmont.
company to whom they sold it were their own financial agents,
and were paid a Large commission by them out of the purchase
money obtained from the company. The solicitors to the
company were the solicitors to the promoters, and neglected
their duty. The contract was set aside ; the so-called trustees
had to repay the commission they received ; and all the de-
fendants, including the solicitors, were ordered to pay the costs
of the suit.
B agnail v. Carlton (g), a company was formed to buy some Bagnall v.
property at a given price, which was much larger than the price
paid to the owner. The difference went into the pockets of
persons employed by him to get up the company, which was
formed for the purpose of buying the property. This differ-
ence, however, less just allowances for expenses properly
incurred in forming the company, was recovered by the com-
pany in an action brought against those who had divided the
plunder (h). In this case the company brought an action to
rescind the contract of purchase, which having regard to the
fraud perpetrated on the company, would clearly have been set
aside if that action had not been compromised. Such com-
promise, however, did not affect the company's right to recover
from the promoters the secret profit which they had made at
the expense of the company. One of the promoters was dead,
but his estate was held liable for what he had received.
Emma Silver Mining Co. v. Grant (i), was another case in Emma Silver
Mining Company
v. Grant.
(/) 5 Ch. D. 395. promotion money, see 6 Ch. D. 410.
(g) 6 Ch. D. 371. (0 11 Ch. D. 918. See further as
(h) The 1,500/. paid to the solid- to the effect of bankruptcy, S. C.
tors, and sought to be recovered 17 Oh. D. 122, ante, p. 349, note (z).
from them, was not paid out of "the
a a 2
356 DUTY TO OBSERVE GOOD FAITH.
Bk. III. Chap. 2. which part of the purchase money paid by the company for a
mine was divided amongst the persons who took part in its
formation, but who concealed from the company the fact that
they were to have part of the purchase money. In substance
they created the company and blinded it, and took advantage
of its blindness to enrich themselves at its expense. In this
case, as in others of the same sort, the promoters urged in
vain that they were sellers ; they were also creating the buyers,
and came under obligations to them which had been disregarded.
The promoters were compelled to repay to the company the
sums they had obtained by their secret arrangements, but they
were allowed all expenses fairly and properly incurred in
forming the company. In this case the company did not seek
any rescission of contract.
Lydney, &c., Lydney & Wigpool Iron Ore Co. v. Bird (A), is another case
Company v. /»,-, , „,
Bird, oi the same class, lhe company was formed to buy a business.
One of the defendants took an active part in forming the
company, and was one of its first directors. The purchase
money was fixed by him, and it included a large sum which he
was to retain for his own benefit. This fact was concealed
from the company, but was afterwards discovered. He was
compelled to refund it, but was allowed all expenses fairly
incurred by him in forming the company. No rescission of the
contract of purchase was sought by the company. The other
defendant was a partner of the first, but took no part in the
formation of the company, except that he guaranteed the taking
of a certain number of shares, and was paid for this guarantee.
He was paid in fact out of money got from the company, but
he did not know this, and he was held not liable to refund the
payment.
The Whaley Bridge Printing Co. v. Green (l), noticed infra
(class 3), is based on the same principles as the foregoing, and
belongs to the same class of cases.
Allowances made The allowances made to promoters in cases of this descrip-
in these oases. ,• i , ■., ., , . , „
tion do not cover all the expenses they have in fact incurred :
the allowances are confined to legitimate expenses ; and do not
(k) 33 Ch. D. 85, reversing S. C, 31 Ch. D. 328.
(/) 5 Q. B. D. 109.
PROMOTERS. 357
extend to bribes or commissions paid to people who procure Bk- IIJ- CnaP- 2-
Sect 1.
shares to l>e taken (m). Nothing can be allowed which would
involve n misapplication of the company's funds (w).
Such being the principles which the Court enforces, it >>'" specific per-
need hardly be addeH, that contracts of the kind alluded to in tracts tainted
the foregoing pages will not be decreed to be performed by the "'^'j *''',",] "'
company, even although the company's articles of association
provide that they shall (o). An}' concealed agreement, more-
over, between a vendor to a company and its directors, to the
effect that they shall profit by the purchase by the company
will entitle the company to repudiate its agreement with the
vendor ( //).
The right of the company in these cases is to rescind the Option of com-
• iwnv '" suc''
contract, or at its option to hold the property it has purchased, cases.
and to pay no more for it than its agent or trustee himself
paid (q). l>ut the right to rescission cannot be exercised if
the property bought cannot be restored ; nor can the property
be retained unless the company is prepared to pay, or has paid
what the promoters paid the owner for it (/•).
2. Cases in which persons have sold their own property to a
company formed by them to buy it.
This class of cases is very similar to the last, but is distin-
guished from it by the fact that the promoters of the company
buy and pay for the property which they afterwards form a
company to buy, and which they ultimately sell to it.
The fact that the company is buying from its promoters is
not disclosed to the company or to such of its directors as do
(m) Lydney Co. v. Bird, 33 Ch. D. v. Gt. Western Rail. Co., 7 Eq. 116,
85, see p. 95. The commission a case of an agreement with a
allowed in Bagnall v. Carlton, 6 Ch. director.
D. 371, would not have been allowed (p) Ex parte Williams, 2 Eq. 216.
if the company had not offered to (q) See Tyrrell v. Bank of London,
allow it. 10 H. L. C. 26.
(n) lb. (r) See Great Luxembourg Bail.
(o) Maxwell v. Port Tennant, efcc, Co. v. Magnay, 25 Beav. 586, and
Co., 24 Beav. 495. See, too, Ellis the cases in the next class.
v. Colvian, 25 Beav. 662 ; Flanagan
858
]>l TV TO OBSERVE GOOD FAITH.
Company v
Brookes.
Bk. in. chap. 2. not profit by the transaction, and on this ground the company
'■ can rescind the contract of purchase ; but if the decisions about
to be referred to are correct, the company has no other remedy.
Consequently, if it cannot rescind, it is without redress. The
leading cases on this subject are the following : —
Laclywel] Miuing Ladywell Mining Co. v. Brookes (s). In this case the defen-
dants bought a leasehold mine in order to resell it at a profit
to a company which was to be formed in order to buy the mine.
At the time of the purchase nothing had been done to form a
company. After the defendants had bought the mine and paid
for it, they agreed to sell it at a profit to a trustee for the in-
tended company, and a company was formed to buy the pro-
perty at the enhanced price, and four of the original buyers
became directors. The company bought the mine and paid the
enhanced price out of capital raised by shares placed by the
original buyers, who in fact found the money paid in respect of
the shares. The company was ejected from the mine by the
lessor, and it then sought to recover the profit made by those who
had bought the mine and resold it to the company. The Court,
however, decided that the company were not entitled to this
relief, because those who sold to the company were under no
fiduciary relation to the company when they themselves bought
it. The Court held that the only relief which the company
could have been entitled to would have been to rescind the
contract for purchase, and that as this was impossible, the com-
pany could obtain no redress. The company was not in a
position to say, " when you bought this mine you were acting
for us; this purchase, although made by you, is one which must
be considered as having been made by you for the company,
which was afterwards formed at your invitation " (t).
This case was decided in conformity with a previous decision
of the Court of Appeal in the case of the Cape Breton Co.
Cape Breton Co. (u). In this case certain persons bought a
coal mine. A company was afterwards formed to purchase it
from them at an enhanced price. One of the original pur-
chasers was a director of the company. The company was
Cape Breton
Company.
(.s) 35 Ch. D. 400. affirmed on appeal under the name
(0 35 Ch. D. 413. of Cavendish Bentinck v. Font, 12
(u) 26 Ch. D. 221 ; 29 ib. 795, App. Ca. 652.
PBOM0TERS. 359
wound up ; the facts became known ; and at a meeting of share- ,,,k- In- Chap. 2.
holders specially convened in order to determine what should
be done, the}' resolved not to repudiate the purchase, but to
keep the mine and to resell it, which they did at a heavy loss.
After this, a contributory of the company endeavoured to make
the director who -was one of the original purchasers liable for
the loss sustained b}r the company, and it was decided thai he
was under no such liability. The House of Lords decided the
case upon the ground that there was no proof that the director's
interest in the property was not disclosed, and no proof that it-
had been sold to the company for more than it was worth. But
Pearson, J., and the Court of Appeal (r), decided the case upon
the ground that although the company might have rescinded
the contract, yet, that having adopted it, the director could not
be made liable for any loss sustained by the company; because
when the mine was originally bought, the purchasers bought for
themselves and not for any company then in course of formation,
and because it was impossible to ascertain the sum for which
the director could be properly held responsible. The Court
distinguished the case from B agnail v. Carlton and others of
that class, on the ground that in each of them the property
sold to the company had been acquired by persons acting for a
company then in process of formation, so that the company
ultimately formed could say that the property was in truth
bought on its behalf. The distinction here drawn between a
company contemplated by the buyers but not yet in process of
formation, and a company, the formation of which has just
commenced, is very fine (y), the more so, as it was conceded
that the company ultimately formed may have been very
different from that wdiich the promoters were endeavouring to
form when they became purchasers themselves. It is much
to be regretted that the House of Lords did not express an
opinion on the broad point on which the members of the Court
(x) i.e. Lords Justices Cotton and otherwise ; apparently not, see the
Fry ; Boweri, L. J., dissented. The judgment of Cotton, L. J., in Ex
majority thought the value of the parte Taylor and Ex parte Moss, 14
property could not be ascertained, Ch. D. 398.
and qu. if the decision would have (y) See, however, 3 App. Ca. 1235,
been the same if they had thought per Cairns, L. C.
360 DUTY TO OBSERVE GOOD FAITH.
Bk. ill. Chap. 2. 0f Appeal differed. The decision as it stands is difficult to
- reconcile with others in the books (z), and seriously limits the
redress that can be obtained against fraudulent promoters.
Observations on Notwithstanding the present state of the authorities, the
these ciscs
writer ventures to submit that it is the breach of duty on the
part of the seller to the company, and the resulting application
of the company's money which gives rise to the right to relief
in these cases ; and he submits that when a promoter (a) sells
his own property to a company at a profit, without disclosing
the fact that what he is selling is his property, the company
can at its option either rescind the sale or keep the property,
paying only its fair value, and such further allowances, if any,
as may be just, and recovering back from the promoter the
difference between such value and allowances, if any, and the
sum he has managed to extract from the company. But of
course the company must pay him the fair value of his pro-
perty, and all just allowances ; and if it is impossible to ascertain
this value, the transaction can only be rescinded in toto, and
if it is also impossible to rescind then the company will bo
without redress (b). In this view there is no difference in the
result between this class of cases and the last.
3. Cases in which the promoters of a company have in other
ways obtained secret benefits at its expense.
Promoters of companies are exceedingly ingenious in the
devices to which they have recourse in order to obtain money
without being found out, from the companies they call into
existence. The principles, however, before expounded, are
generally sufficient to defeat them.
(z) Kimber V. Barber, 8 Cli. 56 ; closing the fact.
Bentley v. Craven, 18 Beav. 75 ; (b) Ex parte Taylor, 14 Ch. D.
Great Luxembourg Rail. Co. v. Mag- 390. See Great Luxembourg Rai'.
nay, 25 Beav. 586, see pp. 595, 6. Co. v. Magnay, 25 Beav. 586, and
See the next class of cases. observe that the hill was frame I
(a) The principle contended for upon the assumption that the whole
is submitted to apply to all cases in thing was to be set aside, see p.
which an agent sells his own pro- 594.
perty to his principal without dis-
PROMOTERS. 861
In Emma Silver Mining Co. v. Lewis (c), a promoter who I!k- In- ChaP- :>-
Sect. 1 .
procured himself to he appointed metal broker to the companv ,,
A Emma Silver
on certain terms which were disclosed, also managed to obtain Mining Co. v.
a large sum in addition out of the promotion money, which (as
is usual), was added to and hidden in the price paid by the
company for the property it bought. But he was compelled to
refund what he so surreptitiously obtained.
Whaley Bridge Printing Co. v. Green (d) goes a step further. Whaley Bridge
In that case the company agreed to buy property for 20,000/., r;u\"v '" Vrcen.
of which (by an agreement concealed from the company) 3,000/.
was to be paid by the vendor to its promoter. The company had
paid the 20,000/., but the vendor had not paid over the 3,000/.
The company recovered it from the vendor upon the ground
that the company was entitled to the benefit of the agreement
made by the promoter. There was no rescission of contract
here, nor was it considered necessary.
The principles illustrated by the foregoing decisions apply, Solicitors to
if possible, more strongly to the solicitors of projected com- ££ed c°m"
paniesthanto other persons. The relation of solicitor and client
in cases of this sort is considered as commencing from the
time when the solicitor first acts in any matter relating to the
company ; and if he afterwards acquires property for himself
and sells it at a profit to the company, without the fullest dis-
closure, the company can retain the property and compel him
to refund the profit (e). Moreover, if the solicitor to the
company is, as he frequently is, the solicitor to the promoters,
and he neglects his duty to the company when he knows that
the promoters are acting improperly towards it, he runs the
serious risk of being held liable to the costs of proceedings
against them (/) : but lie ought not to be made a party if
(c) 4 C. P. D. 396, an action for House of Lords held that the corn-
damages, pany had nothing to do with the
(el) 5 Q. B. D. 109. profit made by reselling the rest of
(e) Tyrrell v. Bank of London, the property. Compare Bagnall v.
10 H. L. C. 26, affirming mainly, Carlton, 6 Ch. 1). 371.
but in some respect:; varying the (J ') Phosphate Sewage Go. v. Hart-
decree below, in 27 Beav. 273. The mont, 5 Ch. D. 394. See generally,
company bought only part of what re Blundell, 40 Ch. D. 370.
its solicitor had purchased, and the
and Wire Co
v. Martin.
362 DUTY TO OBSERVE GOOD FAITH.
Bk. III. Chap. ± the only relief sought against him is the payment of
Sect. 1.
— — ■ costs (g).
4. Cases in which the position of promoter has not been
proved to exist.
Themost instructive case of this kind is the Albion Steel and
Wire Co. v. Martin ; and its value consists in the contrast it
affords with those already noticed.
Albion Steel In the Albion Steel and Wire Co. v. Martin (k), two persons
carried on a business which was afterwards sold to a company
formed in order to buy it. The defendant had long supplied
the vendors with goods for their business, and at their request
he agreed to become a director of the company. After he had
so agreed, and before the company was formed, he contracted
to supply goods to the vendors, and these contracts were not
completed when the company took over the business. The
business was taken over with all contracts pending at the time
of its transfer, and the defendant completed the contracts into
which he had entered, and was paid by the company of which
he had become a director. An attempt was made by the com-
pany to compel him to account for the profit made by him, at
the expense of the company, from these contracts. But it was
held that he was not bound to do so. There was no fraud
whatever in the transaction ; the defendant had dealt with the
vendors ; they had dealt with the company ; the company bad
trusted them, and he was not concerned directly or indirectly in
the purchase by the company of their business, and was not
directly or indirectly in the double position of buyer and seller;
and in his own contracts with the vendors they were the
guardians of the interests of the company. In this same case,
however, the defendant had, after he had become a director,
entered into similar contracts with the company itself, but he
did not attempt to retain the profits on them, and it is plain
that he could not have done so.
The liability of promoters and others who issue prospectuses
(<j) Bagnall v. Carlton, uhi supra ; v. Bcyfus, 26 Cli. D. 35.
Barnes v. Addy, 9 Ch. 244 ; Burstall (h) 1 Ch. D. 580.
DIRECTORS. 868
;iik1 fail to comply with the provisions of § 88 of the Companies 1;k- IH. Chap. 2.
act, 1867, has been already noticed; see Bk. I., c. 3, § 3.
Before leaving this subject it will be useful to refer to the Payment for
services
rights of promoters to payment for their services. What will
be allowed them on setting aside transactions with them has
been seen already (i). But in addition to this it is to be ob-
served that promoters of companies are not entitled to charge
each other for their services, unless there is some agreement to
that effect (k); nor have they any claim fur their services
against the company they have formed in the absence of some
clause to that effect contained in the company's special act or
charter (I), or (in other cases) in the absence of some agree-
ment entered into by the company and binding the company to
pay them (in). Moreover, even an express agreement for their
remuneration may be ultra vires, and not binding on the com-
pany on that ground (n).
SECTION II.— OF DIRECTORS AND THEIR POSITION AS TRUSTEES.
As soon as a company is formed, the difficulties peculiar to
promoters disappear.
The same obligation to good faith which exists on the part Good faitn
f t n / amongst share -
of every member of an ordinary farm (a), exists also on the part holders.
of every member of a company; but, in this latter case, the
obligation of each member towards the others is qualified by
the comparatively small right of personal intervention in the
affairs of the company which each member enjoys (_/>). It is
part of the contract into which the members of a company
enter, that the management of its concern shall be confided to
(i) Ante, p. 356 et seq. (m) Ante, Bk. ii. C 1, § 2.
(k) Holmes v. Higgins, 1 B. & C. (») See as to this, Bk. ii. c. 2, § 2.
74 ; Goddart v. Hodges, 1 Or. & M. (o) As to which, see Partn. bk.
33 ; Wilson v. Curzon, 15 M. & W. iii., c. 2, pp. 303 et seq.
532 ; Parkin v. Fry, 2 C. & P. 311. (p) As to voting on questions on
(-') As in Garden v. The Gen. which interests are conflicting, see
( \ metery Co., 5 Bing. N. C. 253. ante, p. 309.
364 DUTY TO OBSERVE GOOD FAITH.
Bk. III. Chap. 2. a few chosen individuals. But whilst this contract limits the
Sect. 2.
— right of each member of the company to interfere in the con-
duct of its affairs, and limits his obligation to exert himself for
the benefit of the company, it, if possible, increases the obli-
gation of the directors to observe good faith towards the great
bod}' of shareholders, to attend diligently to their interests, and
to act within the limits of the authority conferred by them.
Directors Directors are not only agents, but to a certain extent trustees(j>7').
trustees.
Their position, however, is very different from that of ordinary
trustees, whose primary duty it is to preserve the trust property,
and not to risk it. Directors have to cany on business, and
this necessarily involves risk (7). The duty of directors to
shareholders is so to conduct the business of the company, as
to obtain for the benefit of the shareholders the greatest advan-
tages that can be obtained consistently with the trust reposed
in them by the shareholders and with honesty to other people.
Directors should remember that they are not the masters but
the servants of the shareholders ; and although it is true that
the directors have more power, both for good and for evil, than
is possessed by the shareholders individually, still that power
is limited, and accompanied by a trust, and is to be exercised
bond fide for the purposes for which it was given, and in the
manner contemplated by those who gave it. The property of
the company may not be legally vested in the directors, but it
is practically under their control ; and they are bound to
employ it for the purposes for which it is entrusted to them.
So the powers which the directors have, e.g., of calling meetings,
electing members of their own board, allotting, transferring
and forfeiting shares, making calls, &c, &c, are reposed in
them in order that such powers rnay be bond fide exercised for
the benefit of the company as a whole ; and any exercise of
such powers for other purposes is a breach of trust, and will be
treated accordingly (r).
(PP) See per Kay, J., in Faure Eh c- directors, Faure Electric Accumulator
trie Accumulator Co., 40 Ch. D. p. 151. Co., 40 Ch. D. 141, York and North
(q) Seeder Bacon, V.-C, in Lon- Midland Bail. Co. v. Hudson,l6 Beav.
don Financial Assoc, v. Kclk, 26 Ch. 485 ; Great Luxembourg Bail. Co. v.
D. 143. Magnay, 25 Beav. 586. As to how
(r) See generally as to tlie duties of far they can he treated as trustees
DIRECTORS. 8G5
Tt follows as u necessary consequence that directors of a Bk.'m. Chap. 2.
company are hound to account to the company for sill profits -
,. 0 , Directors must
made by themselves, by the employment of the assets <>1 the account for profit
company, and for all profits made by them at the expense of ™^f Jy employ-
the company, unless they can show that the company, with a company's assets.
full knowledge of all the facts, have agreed to allow them to
retain such profits for their own benefit.
The duties of directors begin from the moment they become Commencement
directors ; but persons who are directors may have come under t]ire(.t,,,
obligations to the company long before they became directors
of it. Whether they have done so or not depends upon the
principles investigated in the last section (s). In the ensuing
pages it is proposed to examine the duties of directors after
they have become such. All the authorities referred to in the
last section are relevant to the present inquiry, and may be
referred to in support of their liability to account for profits
secretly made by them. In addition to those authorities the
following may be also usefully alluded to.
In the celebrated case of The York and North Midland Profits made by
. . employment of
Railway Company v. Hudson (t), a quantity of shares in a assets of com -
railway company were placed at the disposal of its directors, pany'
. . Directors selling
amongst whom the defendant was the most influential. The shares for their
defendant disposed of these shares bv issuing some 5000 of
/ _ . . York and North
them to nominees of his own, causing them to be sold for his Midland Rail.
benefit and putting the proceeds of the sale into his own
pocket, accounting, however, to the company for the money
due on them in respect of deposits and calls. The defendant
contended that the shares in question were in fact a present to
himself, in consideration of his great services to the company;
but the Court thought otherwise, and having come to the
conclusion that the shares were to be at the disposal of the
directors as trustees for the company, compelled the defendant
for persons dealing with the com- Hichens v. Congreve, 1 E. & M. 150 ;
pany, see Wilson v. Lord Bury, 5 Fawcett v. Whitehousc, ib. 132 ; but
Q. B. D. 518 ; Poole, Jackson, and not in Albion Steel Wire Co. v.
Whyte's case, 9 Ch. D., at p. 328. Martin, 1 Ch. D. 580.
As to the rule against not interfering (t) 16 Beav. 485. The judgment
in matters of internal management, in this case is particularly valuable
see infra, book iii. c 9, § 2. with reference to the position of
(s) They had, for example, in directors.
366 DUTY TO OBSERVE GOOD FAITH.
Bk. TIL Chap. 2. to account for the monies derived by him from their sale.
. Sect. 2.
The Court also held, that the defendant was not entitled to be
allowed any part of such monies by wa}r of remuneration for
his services, or on account of money disbursed by him for the
company in a manner which he either could not or would not
explain (u).
Profits made on In Parker v. McKenna (x) , a banking company resolved to
p , issue 20,000 new shares, and those not taken up by the old
McKenna. shareholders were to be disposed of by the directors at a certain
price. The old shareholders only took up about one half of
the shares ; and the directors made an arrangement with one
Stock that he should take all the rest at the price fixed, and pay
for them as he found purchasers for them. He was unable to
pay for them all, and he applied to the directors to take a large
part of them off his hands. Some of them agreed to do so ;
and each of the defendants took a certain number, sold what he
took at a price considerably higher than that at which the
directors had been authorised to sell them, but only accounted
to the company for that price. "When, however, the share-
holders discovered what had been clone, they claimed to be en-
titled to share all the profits thus made b}7 the defendants, and
their claim was upheld by the Court. It was conceded in this
case, that if the directors had actually sold the shares to Stock,
and he had bond fide paid for them and completed his title to
them, the directors (or any one else) might have bought them
from him and resold them at a profit ; but the arrangement with
him was such that the shares had never become his ; the duty
of the directors to the shareholders with respect to the disposal
of the shares had not been performed when they were taken off
his hands, and the shares were in effect under the control of
the directors as unissued shares when the defendants themselves
sold them at a profit.
(h) Iii Dunston v. Imperial Gas West Cork Hail. Co., 23 Ch. D. 654,
Co., 3 B. & Ad. 125, it was held in which case the company had
that directors are not impliedly en- ceased \,o carry on business. As to
titled to any pay for their services ; their unpaid fees, see Ex parte Can-
and see, as to making presents to non, 30 Ch. D. 629.
directors, Eossmore v. Mowatt, 15 (.<) 10 Ch. 96.
Jnr. 238, V.-C. K. B. ; Hutton v.
DIRECTORS. 361
Again, the directors of a company arc no1 entitled to retain Bk. III. Chap. 2.
for their own benefit any advantages they may receive by way
of bonus, commission, or otherwise on the sale of the company's on >;i|,,/ ,^,._ '
business, or on the amalgamation of the company with some
other (y), unless there is an agreement to the contrary between
the company and the directors (z). In Gaskell v. Chambers (a), Gaskell <■.
„ i-i 1 T-i ii Chambers.
the directors of a company, winch amalgamated with another
company, received from the latter a considerable sum, the
particulars of which they kept secret. In a suit instituted on
behalf of the shareholders in the first company, this money was
held prima facie to belong to them, and it was ordered to be
paid into Court (a).
So, if on the formation of a company, its directors receive
bonuses or other advantages from the promoters on a sale to
the compairy, or on the adoption or ratification of a contract
by the compan}-, they can be compelled to account for what
they so receive (b).
Again, directors are not entitled to retain any shares or other Persons receiving
shares, &c, from
benefit which may have been given them by the promoters of a promoters as
company in order to induce them to become directors or to forbe^m^"
qualify them for that office. In Nant-y-Glo v. Grave (c), Grave directors,
consented to become a director of the plaintiff company, on Grave,
receiving from one of the promoters five hundred fully paid up
shares, and subsequently acted in that capacity. Some years
after he had ceased to be a director, an action was instituted
against him by the company to recover these shares or their
value. The shares being at that time very much diminished in
value, Grave was ordered to pay to the company a sum equivalent
(y) Boston Deep Sea Fishing Co. v. Eq. 442, and the next two notes, and
A7isell, 39 Ch. D. 339; General Ex- the cases ante.
change Bank v. Horner, 9 Eq. 480. (c) 12 Ch. D. 738. See, also,
(z) Southall v. British Mutual MacKay's case, 2 Ch. D. 1 ; De
Society, 6 Ch. 614, where it was Ruvigne's case, 5 Ch. D. 306 ; Pear-
agreed that a part of the purchase son's case, ib. p. 336 ; EnglefieM
money should, he paid to the directors Colliery Co., 8 Ch. D. 388 ; Weston s
by way of bonus. See, also, Imperial case, 10 Ch. D. 579 ; Mitcalfe's case,
Mercantile Credit Association v. Cole- 13 Ch. D. 169 ; Carriage Co-operative
man, L. R. 6 H. L. 189, noticed infra. Supply Association, 27 Ch. D. 322,
(a) 26 Beav. 360. cases of a similar nature under
(I,) Sec Madrid Bank v. Pelty,1 § 165 of the Companies act, L862.
368
DUTY TO OBSEEVE GOOD FAITH.
Lk. III. Chap. 2.
Sect. 2.
Directors quali-
fied out of assets
of a company.
Contracts be-
tween directors
and their
companies.
Profits made by
transacting
business.
to the highest value they had reached since they had heen trans-
ferred to him together with interest from that time at four per
cent.
Another illustration of the same general principle is afforded
by those cases in which a director has had shares allotted to
him as a qualification, and has had them paid up out of money
belonging to the company, and been compelled to refund the
money so paid (J).
Indeed, it is not going too far to say that every director of a
company is bound, when his personal interest conflicts with his
duty to the shareholders, to perform his duty towards them at
the sacrifice of his own interest ; and a transaction in which a
director, on behalf of the company, has, in fact, been dealing
with himself as an individual, cannot stand. This was
solemnly decided in the House of Lords, where it was unani-
mously held, that a contract entered into between a firm of
ironfounders for the supply of railway chairs to a company,
one of the directors of which was a member of the firm, clearly
could not be enforced against the company (e). This decision
did not turn upon any act of Parliament, but was based upon
the general principles applied by courts of equity to trustees
and agents in their dealings with those whose interests are
committed to their charge. The same principles unfortunately
were not formerly recognised at law to the same extent as in
equity ; and it was therefore to be regretted that the Companies
act, 1862, contained no provisions similar to those in the re-
pealed act 7 & 8 Vict. c. 110, making void contracts between
companies and their own directors unless sanctioned by the
shareholders (/). But since the Judicature act this has
probably ceased to be of any consequence.
Whether, however, this be so or not it is clearly settled that
the directors of a company cannot, without its consent, make a
profit at its expense in the course of business transactions with
it or for it. This is shown by Albion Steam and Iron Works Co.
(d) Hay's case, 10 Ch. 593. See, Great Western Rail. Co., 7 Eq. 116 ;
also, Carting's case, 1 Ch. D. 115.
These cases will be noticed hereafter
under the head Contributories.
(e) Aberdeen Rail. Co. v. Blaikie,
MacQ. 461. See, also, Flanagan v.
Murphy 'v. O'Shea, 2 Jo. & Lat. 422.
See Foster v. The Oxford Rail. Co.,
13 C. B. 200, ante, p. 328.
(/) See ante, p. 328.
DIRECTORS. 3G9
ided to, and by Imperial Mercantile
Credit Association v. Coleman (//). In that case a director of a
v. Martin (g), already alluded to, and by Imperial Mercantile Bk. in. cbap. 2
Imperial Mer-
bnanciai company was authorised t<> do Borne business for it at cantiie Credit
a certain commission to be paid to the company. lie in fact Cofeman °"
got a larger commission, and it was held that the company was
entitled to it, although he had told the other directors that he
had an interest in the transaction. lie never, however, told
them what his interest was ; and it was held that in order to
entitle himself to the commission he was bound to make a full
disclosure of his interest {i).
But directors may Issue debentures of a companv at a dis- Taking shares
and debentures
count if they cannot issue them at par ; and it has been held at a discount,
that if a director takes some of them himself at the same
price as they are issued to other people, he cannot be com-
pelled to pay their full value (/»■)• The same rule will apply to
taking shares at a discount in those cases in which an issue of
shares at a discount is allowed b}r law (/).
The position of promoters and others selling their own pro- Sales by direc-
,. P ■, ■, • • tors to tne
perty without disclosing the fact has been already investi- company.
gated (in). The company can always repudiate such a transac-
tion unless it is too late so to do ; but it is doubtful if the
company can retain the property sold and compel the vendors
to account for the profit the}' have made by the transaction (n).
If rescission is not sought and no profit is shown to have been
made there will be nothing to account for(o). An instructive
illustration of this principle is furnished by In re Ambrose Lake Ambrose Lake
Tin Copper Mining Co., Ex parte Tat/lor and Ex parte Moss (p). &c-» ComPan>''
There a cost book mining company was converted into a regis-
tered company. The mine was bought by the new company
from the old company for more than it was worth, but was paid
for in shares of the new company all of which were allotted to
the members of the old company. In effect what was paid by
(g) 1 Ch. D. 580, ante, p. 362. § 1.
(h) L. R. 6 H. L. 189, reversing (m) Ante, p. 357 et seep
S. C. 6 Ch. 558. (ft) lb.
(i) See, also, Dunne v. English, (0) Cavendish Bentinch v. Fenn, 12
18 Eq. 524. App. Ca. 652, ante, p. 358, was
(Jc) Campbell's case, 4 Ch. D. 470. decided on this principle.
(I) As to which, see infra, c. 3, (p) 14 Ch. D. 390.
L.C. B B
370
DUTY TO OBSERVE GOOD FAITH.
T.k. III. Chap. 2.
Sect. 2.
Case where all
the members
agree to divide
shares between
them to the
detriment of
the company.
Society of Prac-
tical Knowledge
v. Abbott.
the new company was Avhat it got from the old company, but
divided in a different manner amongst its members. The
directors of the new company were members of the old com-
pany, and two of them sold their shares in the new company
and made a profit by the transaction. The new company was
wound up and the liquidator endeavoured to recover for the
company the profit made by those two directors ; but the
money obtained by selling the shares was in no sense the
money of the company, and the Court held that the company
was not entitled to the profit made by their sale (q). If shares
in the new company had been allotted to persons who were not
vendors, i.e., if strangers had come in and the mine had been
bought with their money, the case would have assumed a
different aspect. But as it was the only remedy was for each
purchaser of shares in the new company to sue his vendor for
any misrepresentation he might have made(r).
This case may be usefully contrasted with another in which
all the persons interested in a company committed that which
was a fraud on those only who subsequently joined it. In The
Society of Practical Knowledge v. Abbott (s), a corporation was
created by charter with a capital of 20,000/. in four hundred
50/. shares which ought to have been paid for in cash. At the
time of the granting of the charter, four persons only held
shares, and they appropriated the whole of the shares equally
amongst themselves, and debited themselves in the books of the
company with the 20,000/. This sum they did not pay, but
after spending, as they alleged, 16,000/. in taking and fitting
up the Adelaide Gallery, they paid 4,000/. into a bank to the
credit of the company. They then sold shares ; each for his
own benefit, and for what he could get. It wras afterwards
alleged that 8,000/. only, and not 16,000/., had been expended
for the purposes mentioned, and that in point of fact, the four
(a) British Seamless Paper Box
Co., 17 Ch. D. 467, was a similar
case, only new shareholders after-
wards came in.
(r) See 14 Ch. D. 399, per Cotton,
L. J. The object of the whole
the new company, and then sell
them for more than they were
wurtb. '
(s) 2 Beav. 559. See, also, the
observations of Jessel, M. E., in 5
Ch. D. 113, as to duties to future
transaction was to obtain shares in shareholders.
DIRECTORS LIABLE FOE NEGLIGENCE.
371
original members of the society had benefited themselves at Bk- 1^]- <h/i' ■ -•
the expense of the society to the extent of 8,000/. A bill was
filed by the company against them for an account, in order to
compel them to pay this amount ; and a demurrer to the bill
was overruled, although it was strongly urged on behalf of the
defendants, that they were the company at the time when the
acts complained of were done, and that they therefore had a
right to do as they liked with the shares (0-
The duties of directors as trustees are by no means confined
to an obligation to account to the company in respect of gains
made by themselves at its expense.
Directors are responsible for the loss of the company's Liability for
assets if that loss is attributable to the employment of the a*scts lost"
assets in a manner and for purposes not warranted by the
constitution of the company (»)• Thus, in the Land Credit Land Credit Co.
Co. of Ireland v. Lord Fermoy (x), the directors of a company '
who had improperly employed its funds in buying up its own
shares were held liable to replace the funds so spent. So in
Grimes v. Harrison (y) the directors of a building society were Grimes v.
held liable to make good money of the society improperly
expended in the purchase of land. So if directors are parties
to a fraudulent transaction by which their company suffers loss,
they can be compelled to indemnify it against such loss (,?).
So if the directors improperly pay dividends out of capital (a).
So directors will be held liable to repay money paid b}r them
(0 See also Flitcroffs case, 21 Ch. (y) 26 Beav. 435.
D. 519. (z) See Parker v. Lewis, 8 Ch.
(a) But see Pickering v. Stephen- 1035, where the court held there
son, 14 Eq. 342, and Studdert v. was no loss caused by the fraudulent
Grosvenor, 33 Ch. D. 528, as to their transaction.
non-liability where they act howl (a) National Funds Assurance Co.,
fide and with the sanction of a ma- 10 Ch. D. 118 ; FlitcrojVs case, 21
jority of shareholders. Ch. D. 519 ; Deriham <£• Co., 25
(x) 8 Eq. 7, and 5 Ch. 7G3. See, Ch. D. 752 ; Oxford Benefit Building
also, Joint Stock Discount Go. v. Soc, 35 Ch. D. 502 ; Leeds Estate,
Brown, 8 Eq. 381. Compare Tur- &c, Go. v. Shepherd, 36 Ch. D. 787 ;
quand v. Marshall, 4 Ch. 376. /tuner's case, 6 Ch. 104.
372
CULPABLE NEGLIGENCE AND WILFUL DEFAULT.
Bk. III. Chap. 2.
Sect. 2.
Actions to
recover property
of a company.
Culpable negli-
gence and wilful
default.
Negligence in
taking security.
Evans v.
Coventry.
as a bonus to a promoter (b), or for commission improperly
paid for placing the company's shares (bb).
The property of a company is so far regarded as in the
nature of trust property that it can be recovered by the com-
pany from any person who has obtained it from the directors
with notice that they were acting beyond their powers (c).
Although, generally speaking, directors have a wide dis-
cretion, and in the absence of proof of mala fides, it may be
difficult to establish a case of culpable negligence or wilful
default, yet if such a case be proved, and loss by the company
attributable thereto be also proved, the directors will be liable
to make good such loss (d). Thus, in Evans v. Coventry, it
was sought to make the directors of a company responsible for
monies of the company embezzled by its secretary, on the
ground that the directors had neglected to obtain security for
his good conduct, as they were required to do by the com-
pany's deed of settlement. The deed only required the
directors to take such security as they thought proper, and no
collusion or dishonesty was imputed to them, and under these
circumstances the V.-C. Kindersley held that they were not
liable to make good the monies in question (e). But on appeal,
an inquiry on the subject was directed, with a view to make the
directors responsible, if the result of the inquiry should prove
(6) Ex parte Pelly, 21 Ch. D. 492.
See, also, Englefield Colliery Co., 8
Cb. D. 388.
(bb) Faure Electric Accumulator
Co., 40 Ch. D. 141 ; compare infra,
note (o).
(c) Ex parti Pelly, 21 Ch. D. 492 ;
Bryson v. Warwick and Birmingham
Rail. Co., 4 De G. M. & G. 711, and
Ernest v. Croysdill, 2 De G. F. & J.
175, which require to be studied
together. See the cases as to Build-
ing Societies repaying money bor-
rowed, ante, p. 189. See, also,
Hardy v. Metropolitan Land, &c.
Co., 7 Ch. 427, reversing 12 Eq. 386.
Gray v. Lewis, 8 Eq. 526, was de-
cided on this principle, and, although
reversed, 8 Ch. 1035 may be usefully
referred to as illustrating the prin-
ciple. The monej' there sought to
be recovered never, in fact, belonged
to the company. Its title was based
on a sham and fraudulent transac-
tion. In Grimes v. Harrison, 26
Beav. 435, the purchaser of the com-
pany's property was held to have
had no notice of the directors' want
of authority to sell it. As to order-
ing defendants in such cases not to
part with the property pending liti-
gation, see Bank of Turkey v. Otto-
man Co., 2 Eq. 366 ; Hagell v. Currie,
2 Ch. 449.
(d) See Charitable Corp. v. Sutton,
2 Atk. 400, and Overend, Gurney, &
Co. v. Gibb, L. R 5 H. L. 480.
(c) Evans v. Coventry, 2 Jur. N. S.
557.
ERRORS OF JUDGMENT. 373
adverse to them (/). Although the directors had a discretion Bk ill. Chap. 2.
as to what security they should require, they were culpably
negligent in taking none at all.
Again, in Western Bank of Scotland v. Bairds(g), directors Not stopping
were held liable for losses sustained by reason of their neglect, in Western Bank of
not causing the business of the company to be stopped, pursuant *cotland v-
. * 1 lairds.
to a provision to that effect in its articles ; and, although in a
subsequent English case of a similar nature the decision was
different, that case was decided on the ground that the share-
holders had sanctioned the continuance of the business (//).
It is clearly established that directors who keep within the X,J ,il,,ility for
... . . A errors of
limits of their authority, and act bona fide to the best of their judgment.
judgment (i), are not liable to make good to the company the
losses which may result from their acts. Honest mistakes and
errors of judgment made by directors when acting within their
powers do not render them liable for losses thereby occasioned
to the company. This was the real ratio decidendi in the great
case of London Financial Association v. Kelk (k), in which all ^ndonFinancia]
Assoc latu in v.
the previous authorities on this subject will be found collected. Kelk.
In that case a company sought to make its directors responsible
for large sums of money spent and lost in building the
Alexandra Palace, and in obtaining shares in companies formed
for carrying it on and for building on land about it. Such
transactions were within the scope of the plaintiff company's
memorandum of association ; they were known to and approved
by its shareholders; and the directors had acted honestly in
the exercise of their powers ; and although the consequences
were disastrous they were held not responsible to make good the
losses occasioned by them.
So it has been held, that directors acting bond fide and
within their powers, are not liable for a loss arising from a loan
(/) S. C, 8 De G. M. & G. 835. Lethbridgev. Adams, 13 Eq. 547.
See clause 6 of the decree on appeal. (i) See as to what amounts to
Compare Overend, Gumey, <£ Co. v. acting bond fide, Nat. Funds Ass.
Gurney, 4 Ch. 701, and Oi-erend, Co., 10 Ch. D. 118; Oxford Benefit
Gumey, tfc Co. v. Gibb, L. B, 5 H. L. Build. Soc., 35 Ch. D. 502 ; Faure
480, where there was no obligation Electric Accumulator Co., 40 Ch. D.
to take any security. 141.
(g) Cited in 4 Ch. 381. (jfc) 26 Ch. D. 107, see p. 144,
(/<■) Turquand v. Marshall, 4 Ch. noticed ante, p. 200.
376, reversing 6 Eq. 112. See, also,
374
ERRORS OF JUDGMENT,
In compromising
claims.
Bk. III. Chap. 2. to a co-director who had died insolvent (?) ; nor for losses
Sect 2
— occasioned by purchasing a business which they knew to be in-
solvent at the time of purchase (m) ; nor for omitting to take
mortgage securities to cover the amount of insolvency (n). Nor
are directors acting bond fide and within their powers liable to
refund to the company sums paid by way of commission and
promotion money, to persons other than themselves, although
such payments may have been made for very inadequate
considerations (o).
Moreover, if judgment has been obtained against a com-
pany for a large sum of money, and the directors, instead of
appealing, bond fide compromise the matter by paying less than
the sum recovered, they cannot be compelled to refund to the
company what they so pay, although the judgment against the
company may have been erroneous (p).
At the same time directors must attend to then' duties and
not place undue reliance on the other servants of the company.
Leeds Estate Co. Thus in Leeds Estate Co. v. Shepherd (q), directors who had
paid dividends out of capital, relying on the balance-sheets
prepared by the manager and certified by the auditor, were
held liable to make good the money so paid away.
The liability of a director for the misapplication by him of
the money of the company closely resembles the liability of a
trustee for a breach of trust, and is indeed often designated as
such. The liability is not barred by the statute of limitations (r) ;
it is not terminated by death (s) ; nor by bankruptcy (/).
Trusting to
others.
v. Shexmerd.
Liability as for
breach of trust.
(/) Turquand v. Marshall, 4 Ch.
370, see p. 386.
(m) Overend, Gurney, & Go. v. Gibb,
L. E. 5 H. L. 480, affirming Overend,
Gurney, & Co. v. Gurney, 4 Ch. 701.
(n) lb. Compare Evans v. Co-
n ntry, 8 De G. M. & G. 835, cl. 6 of
the decree on appeal.
(o) General Exchange Bank v.
Horner, 9 Eq. 480. Compare ante,
notes (b), (bb).
(p) See Parker v. Lewis, 8 Ch.
1035, and the remarks of Jessel,
M, R. in Forest of Dean Coal Mining
Co., 10 Ch. D. 450 ; and Bath's case,
8 Ch. D. 334.
(q) 36 Ch. D. 787. It should be
noticed that the balance-sheet in
this case was not prepared in accord-
ance with the articles of association.
The case is also valuable as showing
the duties of an auditor. Compare
Benham & Co., 25 Ch. D. 752.
('') Oxford Benefit Building Hoc., 35
Ch. D. 502 ; Flit croft's case, 21 ib.
519, see p. 537 ; Metropolitan Bank
v. Heiron, 5 Ex. D. 319. See now
51 & 52 Vict. c. 59, § 8.
(•s) Ramskill v. Edwards, 31 Ch.
D. 100.
(t) lb., and see Emma Silver
Mining Co. v. Grant, 17 Ch. D. 122.
LIABILITY OF CO-DIRECTOE . 375
Iii Evans v. Coventry (u), directors were charged with in- Bk. HI. Chap. 2.
'j
fcerest at 41. percent, on the money of'the company improperly
v j i -l • ,, , , . [nteresl charged
applied by them m paying themselves salaries, m paying against directors.
dividends out of capital, and in buying up shares: and in Evans v.
other cases when they have been charged with assets of the Cove,ltry-
company which they have misapplied, or with profits made by
themselves, to which the company is entitled, they have usually
been charged with interest at 4 per cent. (x).
Liabilities of co-directors.
A difficult question which arises with reference to the Liability of
liability of directors is the extent to which each is liable for the acts' of Tach"
acts of the other. The following appear to be the principles otlle^•
applicable to this subject : —
1. All those directors who are actually implicated in mis-
applying the company's money (even although they only sign
cheques prepared by others), are jointly and severally liable for
the losses arising therefrom (y) : e.g., where they have im-
properly paid money to promoters (z), preliminary expenses (a),
dividends out of capital (&). So where they have paid up shares
of their own out of the monies of the company (c) ; and where
they have allotted to each other, as fully paid up, shares which
are not paid up (d).
2. Directors who really know of and sanction such misappli-
cation are implicated in it within the meaning of this rule,
although they do not actively take part in it (<?).
(u) 8 De G. M. & G. 835. Brown, 8 Eq. 381 ; Land Credit Co.
(x) See Joint Stock Discount Co. v. Lord Fermoy, 8 Eq. 7, 5 Ch. 763.
v. Broivn, 8 Eq. 407; Parker v. (s) Ex parte Pelly, 21 Ch. D. 492.
McKenna, 10 Ch. 123; National And see Faure, dc. Co., 40 Ch.D. 141.
Funds Assurance Co., 10 Ch. D. 118 ; (a) Englefield Colliery Co., 8 Ch.
Flitcroft's case, 21 Ch. D. 519 ; Ox- D. 388.
ford Benefit Build. Soc, 35 Ch. D. (b) Leeds, dc. Co. v. Shepherd, 36
502 ; Leeds Estate, dc. Co. v. Shep- Ch. D. 787 ; Oxford Ben. Build. Soc,
herd, 36 Ch. D. 787; Faure, dc.,Co., 35 ib. 502 ; Flitcroft's case, 21 ib.
40 Ch. D. 141. Even 5 p. c. has '519; Nat. Funds Ass.. Co., 10 ib. 118.
been allowed, Alexandra Palace (c) Joint Stock Discount Co. v.
Co., 21 Ch. D. 149 ; Denham d Co., Brown, 8 Eq. 381.
25 Ch. D. 752 ; Oxford Benefit Build. (d) Carriage Co-operative Supply
Soc, ubi supra. Assoc, 27 Ch. D. 322.
(y) Joint Stock Discount Co. v. (e) Land Credit Go. v. Lord Fer-
376 LIABILITY OF CO-DIRECTOKS.
Bk. III. Chap. 2. 3. So are directors who know of the misapplication, but
Sect. 2. ...
take no steps to prevent it beyond writing a letter of dis-
approval (/).
4. Where their liability is to account for mone}^s of the
company improperly received by them, the}7, are only severally
liable for their own receipts, and are not jointly and severally
liable for each other's receipts (g). But even in this case their
liability is joint and several if there has been a joint receipt by
them all, and then a division amongst themselves of what they
have all received ; or if they have all been implicated in some
joint breach of trust resulting in profit to them all (h).
5. It has been decided that a director who is not cognisant
of a breach of trust committed b}^ his co-directors, and who
takes no part in it, is not liable for it (?')• This point, how-
ever, involves the question, whether a director is not bound
to make himself acquainted with what his co-directors are
doing, and to take such steps as may be in his power to pre-
vent them from doing wrong. On this question opinions differ,
and it can scarcely be considered as settled (k). Mere con-
structive notice, however, is not enough to impose liability (I).
Moreover, if (as often happens) the constitution of the com-
pany is such as to justify a director in leaving certain matters
to his co-directors, or some of them, he is justified in trusting
them with such matters, and is not responsible for breaches of
trust committed by them and concealed from him (m). But in
other cases his irresponsibility is by no means so clear (n).
6. Nor is a director liable for breaches of trust committed
moy, 8 Eq. 7, and 5 Ch. 763, where Mason, 20 Eq. 225.
tlie sub-committee were the persons (k) Compare the judgment of the
more immediately to blame. M. E. in the Land Credit Co. v.
(/) Joint Stock Discount Co. v. Lord Fermoy, 8 Eq. 7, with the last
Brown, 8 Eq. 381, and see Ramskill cases, and see Turquandv. Marshall,
v. Edwards, 31 Ch. D. 100. 4 Ch. 385.
(g) Parker v. McKenna, 10 Ch. (/) Hallmark's case, 9 Ch. D. 329,
96 ; General Exchange Bank v. Hor- and see the next note.
ner, 9 Eq. 480. (m) Dcnham <£■ Co., 25 Ch. D. 752 ;
(h) Oxford Benefit Build. Soc, 35 Land Credit Co. v. Lord Fermoy, 5
Ch. D. 502 ; Carriage Co -operative Ch. 763, reversing on this point,
Supply Assoc, 27 Ch. D. 322. S. C. 8 Eq. 7.
(i) Joint Stock Discount Co. v. (n) See Leeds Estate, &c. Co. v.
Brown, 8 Eq. 381 ; Ashurst v. Shepherd, 36 Ch. D. 787.
DIRECTORS POWERS TREATED AS TRUSTS. 377
by his co-directors before lie became a director (o). In this Bk. in. Chap. 2.
case the new director's liability, if any, can only be for the loss ^—
sustained by the company by reason of his omission to make
known what he has discovered, and to compel the real delin-
quents to make good their breach of trust ; and it has been
decided that an incoming director is not liable for such omis-
sions (0).
That powers reposed in directors are regarded as being in Powers of direc-
the nature of trusts, is clearly shown by Gilbert's case (p), trusts.**
in which it was held that a director could not exercise his Gilbert's case.
power of making calls for his own benefit and without regard
to the interests of the company : in that case a call was
postponed in order to enable a director to transfer his shares,
and a transfer by him in the interval was held invalid. There
are other cases which show that directors have no right to
favour one set of shareholders more than another (7) ; and
that powers of accepting surrenders of shares and of forfeiting
shares (>•), as also powers of approving transfers of shares (s),
and of paying preliminary expenses (t), must be exercised bond
fide for the purposes for which they are conferred.
Before leaving the subject of the liability of directors to Effect of acqui-
make good assets of the company improperly lost or parted esccnce-
with, or to account for profits made by them at the expense
of the company, it is material to consider whether the share-
holders have acquiesced in what has been done or not (w).
Cases indeed may occur where their acquiescence is imma-
(0) Forest of Dean Coal Mining C. C. C. 507 ; Harris v. Tlie North
Co., 10 Ch. D. 450. See Ashurst v. Devon Rail. Co., 20 Beav. 384.
Mason, 20 Eq. 225 ; Turquand v. (/•) Infra, cc. 5 & 6.
Marshall, 4 Ch. 385 ; Evans v. Co- (s) Bennett's case, 5 D. M. & G.
ventry, 8 De G. M. & G. 835, decree 284, p. 297 ; Gresham Life Assurance
cl. 2 ; but observe the Scotch cases Society, 8 Ch. 446 ; Moffatt v. Farqu-
contra there cited. And see Jackson har, 7 Ch. D. 591 ; Faure, dr., Co.,
v. Minister Bank, 15 Ir. L. E. 35G. 40 Ch. D. 141.
(p) 5 Ch. 559. See, also, Syhes' (t) Englefield Colliery Co., 8 Ch.
case, 13 Eq. 255, as to paying calls D. 388.
in advance, and then taking them (u) See De Bussche v. Alt, 8 Ch.
back for fees. And compare Poole D. 286, at p. 312 et seq., as to what
Jackson and Whyteh case, 9 Ch. D. amounts to acquiescence as between
322. principal and agent.
(7) Richardson v. Larpent, 2 Y. &
378
LIABILITY OF DIRECTORS AS TRUSTEES.
Sanction by
other directors.
Bk- ***• ck;ir- 2. terial, but this is only where the company is incorporated and
its funds have been applied in a manner which is ultra vires (x).
In other cases the acquiescence of the shareholders affords a
complete defence to the directors as against the shareholders
or the company : e.g., where it is attempted to make them
refund dividends improperly paid to the shareholders (y) ; or
to make good losses sustained by the company after its busi-
ness ought by the articles to have been stopped, but which the
shareholders, knowing the facts, allowed to be continued (z).
Again, where a director has made a profit at the expense of
the company, and this circumstance is known to the other
directors, and they, acting bond fide, sanction it, having power
so to do, the shareholders and the company will be bound by
their sanction (a). But as will be seen hereafter, when treating
of winding up, a liquidator may impeach transactions on behalf
of creditors which neither the company nor the shareholders
can impeach themselves (b).
The right of directors as trustees to be indemnified by the
compairy against expenses and liabilities incurred by them in
the exercise of their powers, will be alluded to in the next
section. But it may be properly observed here that directors
may be entitled to contribution and indemnity amongst them-
selves in respect of a demand against them on the part of the
company. Thus, where shares in a company were purchased
and transferred into the name of a director as trustee for the
company, pursuant to a resolution of the board which was not
binding on the company, it was held that he was entitled to
be indemnified by the other members of the board who had
concurred in the transaction against the claims made on him
Ramskill v. bv the company (c). Again, in Ramskill v. Edwards (d), a
Edwards.
Indemnity.
Contribution
inter se.
(x) See ante, p. 175 et seq.
(tj) Turquand v. Marshall, 4 Ch.
376.
(.-.) Ibid. See, also, ante, p. 373.
(«) Imperial Mercantile -Credit
Assoc, v. Coleman, 6 Ch. 558, re-
versed, L. R. 6 H. L. 189, but only
on the ground that the other di-
rectors were not sufficiently in-
formed of the facts.
(b) National Funds Ass. Co., 10
Ch. D. 118.
(c) See Ashwst v. Mason, 20 Eq.
225, and Ashurst v. Fowler, ib. A
director who was only present when
the transfer was formally approved
was held not liable. And compare
the next case.
(d) 31 Ch. D. 100.
iM'.im 0] DIRECTORS TO INDEMNITY. 379
director wlio had been compelled to make good money of a Bk- In- ChaP- 2.
company which had been advanced on an improper security — -1— '- —
sued his co-directors for contribution; he was held entitled to
relief againsl those directors who had joined in the mis-appli-
cation and against the estates of such of them as were dead ;
but not as against one of them who had merely confirmed what
had previously been done (e). The maxim thai there is no
contribution amongst wrongdoers is seldom applicable to this
class of case ; but if all parties have been guilty of actual fraud
or of a wilful breach of the law, no relief will be obtainable by
some against the others in respect of their fraudulent or illegal
transactions (/).
SECTION III.— OP THE EIGHT OF DIRECTORS AND OTHERS TO
INDEMNITY.
The right of partners to contribution in respect of their
liabilities and losses will be found investigated in the volume
on Partnership (g). Wherever there is community of profit
and loss there must be a right to contribution in respect of
those transactions the profits or losses of which have to be
shared. Consequently, if a member of a company is compelled
to pay more than his share of a debt of the company, he is
entitled to contribution from the other members. In some
cases this right is expressly conferred by statute ; in others it
rests on express agreement ; but the right exists independently
of express enactment or agreement, although it of course may
be modified or even be excluded in particular cases by special
enactment or agreement.
The right of a public officer of a banking company to be Right of share-
indemnified by the members of the company against judgments ^SiS*
obtained against himself is recognised by statute (h) ; and the against judg-
right of each individual shareholder, against whom execution
may have issued for a debt of the company, to indemnity from
the company, or to contribution from his co-shareholders, is
(e) See the last note but one. (g) Partn., 367 et seq.
(/) See Partn., 377 et seq. (/,.) 7 Geo. 4, c. 46, § 14.
380 CONTRIBUTION AND INDEMNITY.
Bk. III. Chap. 2. also placed beyond a doubt by legislative enactment (i), except
-^ in tbe case of companies governed by tbe Letters Patent act,
7 Wm. 4 & 1 Vict. c. 73, which is silent upon this point.
This act provides for limited liability, but does not enact that
if one member of a company governed by it pays more than
his share of a debt of the company, he is to be reimbursed by
the company or the other shareholders ; but his right to such
indemnity or contribution is nowhere taken away, and may
therefore be assumed to exist by virtue of general principles
not touched by the statute.
In registered companies this particular question caunot
arise, as execution cannot issue against individual shareholders
on judgments obtained against such companies.
The rights of members of companies to contribution seldom
arise until the companies are being wound up : and for further
information on this head the reader is referred to Book IV.
The rights of directors, however, require special notice, and
may be conveniently examined in the present chapter.
Right of direc- Directors of a company are both members and also agents
tioTaTin-ribU' and trustees. As members, they are entitled to contribution
demnity. ^ reSpect 0f such debts and liabilities of the company as they
may be compellable or have been compelled to pay in that
character ; and as agents and trustees they are entitled to be
indemnified by the company against all losses and expenses
bond fide sustained and incurred by them in the exercise of the
trust reposed in them. But if directors exceed their authority,
and thereby incur loss, such loss must be borne by them and
not by the company, unless the company ratifies what they
have done. But even in this case one director may be entitled to
contribution from his co-directors as has been already seen (A).
Directors acting The cases illustrating these general statements will be ex-
E^thefc* amined presently, but before proceeding to notice them it is
authority. requisite to allude to certain decisions which tend to show that
where directors of a company acting bond fide and to the best
of their judgment, advance money in order to carry on the
business of the company, and spend the money for that pur-
(*) 7 Geo. 4, c. 46, § 14 ; 8 & 9 and 7 & 8 Vict. c. 113, § 14.
Vict, c. 16, § 37. See, also, the re- (/,) See ante, pp. 378, 379.
pealed acts, 7 & 8 Vict. c. 110, § 67,
GERMAN' MINING COMPANY'S CASE. 381
pose, they arc entitled to be reimbursed by the company ; Bl£. ni. Chap. 2.
Sect. 3.
although they had no authority to borrow money, and could -
not have rendered the company liable to third persons for
money lent on the credit of the company.
Upon this subject the case of the German Mining Coin- German Mining
pany (I) is the leading authority. It was there decided that omPany s case-
directors who had no power to borrow money on the credit of
the company, but who nevertheless did borrow money, and
themselves advance money, and bond Ode apply the whole for
the benefit of the company, were entitled, having themselves
repaid the money borrowed, to be reimbursed by the share-
holders the whole amount borrowed and advanced. The
circumstances of this case were somewhat peculiar. The part-
nership was a mining partnership ; it was absolutely necessaiy
to work the mines in order to preserve them from rapid de-
terioration and destruction ; the directors had ostensible power
not only to carry on the mines, but also to carry them on on
credit; the money borrowed and advanced was wholly applied
in paying miners' wages, and other expenses necessarily in-
curred in carrying on the works, and so preserving the mines ;
and the shareholders were kept informed of what was being
done. The monej" borrowed and advanced was in fact applied
in discharging debts for which the company was or would have
been legally responsible ; and although it by no means neces-
sarily followed that those debts wrere not incurred improperly
as between the directors and the shareholders, yet the full
information which the shareholders had of what was being
done, precluded them from saying that the debts were impro-
perly incurred. Although, therefore, the company was not
liable at law to repay the money borrowed, the mode in which
that money was applied, coupled with the acquiescence of the
shareholders in the course pursued by the directors, entitled
them to be reimbursed the money they had advanced.
This case paved the way for others which have gone far
beyond it.
In The Norwich Yam Company's case (m), the company's Ex parte Big-
deed of settlement was prepared with an anxious view to limit
(I) Ex parte Chippendale, 4 De G. (m) 22 Beav. 143, Ex parte Big-
M. & G. 19. nold.
382 CONTRIBUTION AND INDEMNITY.
Bk. III. Chap. 2. the liability of the shareholders, as between themselves, to the
Sect. 3. J '
amount of their shares in the capital of the company ; and
there were certain provisions for increasing that capital, and
for borrowing money on mortgage of the company's landed pro-
perty. The capital being all expended, the directors, instead
of raising money by increasing the capital, or by mortgage,
from time to time borrowed money of a bank, and applied the
money in carrying on the business of the company. It was
held that they were entitled to charge this money against the
company, although the consequence was to render each share-
holder liable to a considerable extent beyond the amount of
his share (n).
Baker's case. In Baker's case (o), the V.-C. Kindersley held that a director
of a company governed by 7 & 8 Vict. c. 110, was not entitled
to stand as a creditor against the company by virtue of a
debenture issued to him by the company, for the loan had
not been confirmed as required by that statute (p). But His
Honour said : —
" But although, for want of confirmation, the contract is not binding
upon the company as a contract, still Mr. Baker may be entitled to recover
the money, if he can show that it was duly applied in carrying on the
business of the company. For, if a director, finding that it is necessary for
the carrying on of the business of the company that goods should be pur-
chased, or that workmen should be employed and wages paid, or that other
disbursements should be made, and that there are no available funds of the
company at their bankers, should, out of his own pocket, advance the
money necessary to carry on the business, and it was applied accordingly,
he would have a right to recover that money ; and, in my opinion, such
a transaction would not be a contract within the meaning of the 29th
section.
" Upon the whole, I am of opinion that the claim of Mr. Baker, by virtue
(n) Is is very difficult to reconcile G. M. & G. 180, and Selwyn v. llar-
the company's deed in Tlie Norwich rison, 2 J. & H. 334, noticed infra,
Yam Company 's case with the no- pp. 384, 387.
tion that the directors had, as be- (o) 1 Dr. & Sm. 55. See, also,
tween themselves and the share- British Prov. Society v. Norton, 3
holders, power to borrow in any N. R. 147, and 9 Jur. N. S. 130S.
other way than that pointed out in (p) The 29th section of 7 & 8
the deed ; and yet if this were not Vict. c. 110, rendered contracts with
so, the decision ought to have been directors invalid, unless confirmed
against the directors, as in the case of by the company. There were some
Tlie Worcester Com Exchange, 3 De exceptions.
ADVANCES BY DIRECTORS. 383
I' the contract, must be disallowed ; l>ut he must be at liberty to establish Bk.IH.Chap. 2.
cl lira for ao much of the sum in question a
properly applied for the purposes ol th mpany.'5
in for so much of the sum in question a he can mow to have been
This case was followed by Troup's case(q)} and Hon re's Troup's case.
case (r), in both of which the shareholders of a company were Hoare's case,
held liable to reimburse the directors a sum of money borrowed
by them without authority, but applied in the construction of
the works of the company.
In Lowndes v. The Garneti and Moseley Minimi Company (s), Lowndes «. Gar-
advances were made by a director, and were applied in paying Company,
debts of the company ; the shareholders were held liable to
repay the advances, although they had not been sanctioned in
the manner required by the regulations of the company re-
specting the borrowing of money.
These decisions are apparently based upon the ground that Observations on
i /. the foregoing
directors do not exceed the limits of their trust by borrowing cases,
and advancing money bona Jul- for the purposes of the com-
pany, although the borrowing may have been an excess of
authority. But it is difficult to see how that which, as between
the directors and the shareholders, is a clear excess of authoritv,
can as between the same persons be deemed warranted b}' any
trust. Nor is it easy to assent to the doctrine that where
shareholders have anxiously limited the powers of directors
with respect to raising capital and borrowing money, there is no
breach of trust on the part of directors who persist in carrying
on the business of the company on credit, when the capital of
the company has been expended, and its borrowing powers
have been exhausted.
It ma}' be urged, that as, if gain had resulted from the out-
lays made by the directors, the shareholders would have had
the benefit of it, so it is only fair that if loss has unfortunately
ensued they should sustain that loss. But in answer to this,
the shareholders are entitled to say, " As you chose to act
without authority, it rests with us to adopt or repudiate what
you have done ; and we are not to be deprived of our right of
repudiation, on the ground that if we elect not to repudiate
your acts, we shall be bound to indemnify you." Neither has
(q) 29 Beav. 353. (r) 30 Beav. 225. (s) 3 N. R. 601.
384
CONTRIBUTION AND INDEMNITY.
Sect. 3
Observation on
judgment in
Baker's case.
Ek" IjShC^P- 2- ^ie maxnr1' Q11* sentit commodum sentire debet et onus, an}'
application ; unless the shareholders had some opportunity,
either of objecting to the outlays before they were made, or of
rejecting the benefit and the burden at some subsequent period.
If the shareholders, having had an opportunity of objecting to
the proposed outlay, did not object ; or if, having had an oppor-
tunity of rejecting the benefit derived from the outlay, they
have declined to do so, then, indeed, the maxim may apply;
but in the absence of any such opportunity it is impossible to
hold them liable to indemnify the directors on the ground of
having had the benefit of the expenditure. No liability can be
established on this ground, unless it is to be held that a benefit
is to be paid for, because it cannot be got rid of.
With reference to the extract from the judgment in Baker's
case, given above, the writer ventures to observe, that although
the doctrine there laid down is apparently warranted by what
fell from the Court in the case oiThe German Mining Company,
3ret, as already pointed out, the actual decision in that case by
no means involves the necessity of holding that as between
directors and shareholders the liability of the latter is to be
determined by the benefits they have received rather than by
the powers which they have conferred. "When directors who
have no power to borrow inoney find that the business of the
company cannot go on without borrowing, they ought to dis-
close the truth to the shareholders. It cannot be successfully
maintained that directors may, if they honestly believe it to be
for the benefit of the company, advance and borrow money to
an unlimited extent, and expend it in attempting to keep the
company on foot, and then, having failed, make the share-
holders, at least in unlimited companies, pay for the experi-
ment.
Comparison of The decisions noticed above must be contrasted with other
the foregoing
cases with cases.
°* ers* In the Worcester Corn Exchange Company's case (t), a corn-
Corn Exchange pany was formed for the purpose of building a corn exchange,
ompanj. rpjie ^ee(j 0f settlement of the company limited the amount of
each shareholder's subscription, and authorised the directors to
(0 3 De G. M. & G. 180.
ADVANCES HY DIRECTORS. 385
create new shares and to raise money by borrowing, under Kk- HI. cliaP- 2-
Sect. 3.
certain restrictions. The capital of the company being ex-
pended, and more money being required, the directors advanced
money themselves, and expended it in payment of debts of the
company. They also, but in excess of their powers, borrowed
money of a bank which had notice of the company's deed, and
that money was similarly expended. It was held that the
directors were not entitled to charge the shareholders, either
in respect of the advances or in respect of the bank debt,
beyond the amount of the capital which each shareholder had
agreed to subscribe.
Again, in Ex parte Cropper (u), a committee of directors Bx parte
charged with the winding-up of a company, was held not entitled
to be repaid by the company, expenses incurred in endeavouring
to obtain the passing of a public bill pending in Parliament, for
facilitating the winding-up of the affairs of insolvent companies
generally ; for to support bills in Parliament was not within
the scope of the committee's authority.
These decisions are strictly in conformity with the sensible
rule that agents are not entitled to any indemnity from their
principals in respect of unauthorised expenditure ; and in the
first edition of this work the writer ventured to express a hope,
that this rule, so essential to the protection of shareholders
against directors, would not be frittered away ; and that the
principle of The German Mi nitty Company's case would not
be extended. That hope has been partially realised, for all
attempts to extend that principle have failed, and its practical
application is now confined to cases where the money has been
applied in discharging debts for which the company was liable,
or for carrying on the legitimate business of the company (x).
Even when thus restricted, however, it must be borne in mind
that debts for which a company is liable may as between the
directors and the shareholders have been improperly contracted
by the directors ; and in such a case the directors ought to
(u) 1 De G. M. & G. 147. Ch. 748 ; Hill's case, 9 Eq. 605 ;
(sc) See the cases in the next note, Davis' case, 12 Eq. 516 ; TJie Catholic
and Ex parte IVilliamson, 5 Ch. Publishing Co., 10 Jur. N. S. 193 ;
309 ; Cork and Youglval Rail. Co., 4 and ante, p. 235 et sea.
L.C. C C
386 . CONTRIBUTION AND INDEMNITY.
i
Bk. TIL Chap. 2. indemnify the shareholders, and not the shareholders the
beet. 3.
directors.
Limits of the Notwithstanding the length to which the courts have gone
principle above D
discussed. in the cases observed upon above, directors who borrow money
1. Where money without authority, and apply it to purposes not falling within
iinauthorised the scope of the company's business, are not entitled to be
DUrDOSG
Kent Benefit reimbursed by the shareholders. This is well shown by the
Building Society, case of The Kent Benefit Bu^ dg Society (y). There the
managing committee of a benefit building society exceeded
their powers by purchasing land, and by borrowing the money
to pa}' for it. The repayment of the money was secured by a
mortgage of the land purchased. The society was ordered to
.» be wound up. The mortgage securities were realised for less
than the amount due upon them, and the members of the
committee liad to make good the difference. They sought to
prove the amount paid by them as a debt against the society ;
but it was held that the society was not liable. The fact of
the borrowing appears to have been brought to the notice of
the society at a general meeting ; but there was nothing to
show that the acts of the committee had been sanctioned by
all the members of the society ; and to buy land was not within
the scope of the objects of the society, ard was altogether
vltra vires.
2. Where the Again, the right of directors to indemnity, if expressly con-
right to indein- _ . .. ...
nity is expressly nned and limited, cannot be extended beyond the limit thus
expressly set. The two following cases illustrate this.
In Gillan v. Morrison (s), a company was formed for pur-
chasing land in Segovia, and establishing a colony there. It
was agreed at a meeting of the directors and proposed share-
holders, that an expedition should proceed to Segovia, to
examine and report upon the land which it was proposed
the company should purchase ; that the expense of the
expedition should not exceed 12001. ; that the expense to that
((/) 1 Dr. & Sm. 417. See also River Dee Co., 19 Q. B. D. 155 ; 36
Cunliffe, Brooks & Co. v. Blackburn Ch. D. '674 ; affirmed 10 App. C'a.
Building Soc, 9 App. Ca. 857, affirm- 354 ; all noticed ante, pp. 186 et seq.,
ing 22 Ch. D. 61 ; Blackburn Build- and 235 et seq.
ing Soc. v. Cunliffe, Brooks <L- Co., 29 (^) 1 De G. & S. 421.
Ch. D. 902 ; Baroness JFenlock v.
Gillan v.
Morrison.
ADVANCES BY DIRECTORS. 387
amount should be defrayed out of the shareholders' deposits, 1;k- In rllli' '-•
Sect. '■'>.
and that if the expense should exceed 1200?., the difference -
should be raised by a new issue of shares. Certain persons
were appointed trustees to direct the fitting out of the expedi-
tion, to nominate the persons who were to conduct it, and to
manage the fund supplied for defraying the expenses. The
persons composing the expedition proceeded to Segovia, and
arrived at the place where the lands in question were situate ;
and were then arrested and imprisoned. The object of the
expedition was thus frustrated ; the expenses incurred by its
members greatly exceeded the fixed sum of 1200L ; and an
attempt was made on behalf of the trustees to compel the
shareholders to make good the excess. But it was held that,
as between the trustees and the shareholders, the liability of
the latter was limited to 1200L, and that they were not bound
to contribute more.
Again, in the case of Seliciin v. Harrison (a), the creditors of Selwyn v.
b ' * . Harrison,
a firm executed a deed by which the business of the firm was
placed in the hands of inspectors, and the creditors severally
covenanted to indemnify the inspectors to a limited extent
against the liabilities which they might incur in carrying on
the business. It was held that the creditors were not bound,
otherwise than by their covenants, to contribute to the pay-
ment of debts contracted by the inspectors in carrying on the
business. The express covenant to indemnify the trustees to
a definite amount, excluded any more extensive obligation to
indemnify them which might otherwise have arisen.
The reader, however, will not fail to observe that both in The
German Mining Company's case and in The Norwich Yarn
Company's case, the shareholders had taken care to stipulate
that their liability should not be unlimited.
It is scarcely necessary to remark that the shareholders in
a limited liability company cannot be compelled to contribute
more than the amount of their shares, either for the purpose of
indemnifying directors or for any other purpose.
With respect to advances by directors, it has been held that Loans by
•*• •/ ' directors.
if a loan is bond fide made by them to the company and the
(a) 2 J. & H. 334.
388
CONTRIBUTION AND INDEMNITY,
Bk' "ect01?1'' 2" money advanced has been bond fide applied to the legitimate
purposes of the company, the company must repay it (b). But
the 'attention of the shareholders should be specially called to
the fact of a loan being made by the directors. The duties of
directors and the interest of creditors may very possibly con-
flict with each other ; and it is always suspicious when a
director claims to be a creditor of the company entrusted to his
care, in respect of a matter of which the shareholders know-
nothing (c).
tW^orT8 10 Directors of companies are generally allowed compensation
for then trouble by express agreement (d) ; but where there is
no such agreement they cannot, without the sanction of the
shareholders, charge the company anything for their services (e),
nor are they entitled to extra remuneration for extra work. In
MidkSSwa The ¥°rk and North Mi<Uand Railway Company v. Hudson (/),
Company v. the defendant contended that he was entitled to certain shares
of the company by way of remuneration for the great advan-
tages he had conferred upon it, and for which, as he alleged,
the shares in question would be a meagre and inadequate
return. But the Court held this contention to be wholly
inadmissible, observing that,
" When Mr. Hudson accepted the office of chairman, he knew that the
salary was not more than \l. per week, and yet he was content to give his
services on that footing. He might possibly have considered that the
Hudson.
Co) See ante, p. 380. See, also, failure, Ex parte Johnson, 27 L. J.
Mwratfs Executors' case, 5 De G. Ch. 803. See infra, notes (h) and (i).
M. & G. 750 ; Ex parte Sedgwick, 2 (e) Dunston v. Imperial Gas Co., 3
Jur. X. S. 949. B. & Ad. 125, where there was a
(c) As to loans by directors of' resolution to pay them,
companies governed by 7 & 8 Yict. (/) 16Beav. 485. See, too, Evans
c. 110, see Baker's case, 1 Dr. & Sm. v. Coventry, 8 De G. M. & G. 835,
55; Murray's Executors' case, 5 De Oxford Benefit Build. Soc, 35 Ch.
G. M. & G. 750 ; Teversham v. The D. 502, and Leeds Estate Co. v. Shep-
Cameron's Ooalbrook, d-c. Co., 3 De G. herd, 36 Ch. D. 7S7, where directors
& S. 296, and Black v. Mallalue, 27 were made to refund, with interest,
Beav. 398, in which last case there the difference between what they
was an express authority to borrow were entitled to by the company's
from the directors. deed, and what they had voted
(</) Where there is such an agree- themselves, and retained for their
ment they are entitled to their fees, remuneration,
although the company proves a
ALLOWANCES TO DIRECTORS. 389
station and influence acquired in the position of chairman of the York and Bk. III. Chap. 2.
North Midland Railway was a remuneration for the time and labour Sect- 3-
bestowed by him, even if his services were not paid by any salary at all ; "
hii! whether this were so or not, it is the duty of every man who accepts
any situation, to perform the duties of it thoroughly and entirely. If they
require his whole time and attention, it is his duty to give that whole time
and attention to the due discharge of them. This Court can never coun-
tenance a person who is placed in a fiduciary situation in retaining for his
own benefit sums of money which have come to his hands, or have been
acquired by him in that character, although the acquisition of those sums
is due to his own exertions, on the suggestion that his services were worth
more than what was paid for them, and that he was himself entitled to
ascertain and determine the just measure of their value. If this principle
were allowed, I know not what there would be to prevent any clerk from
retaining the property of his master, on the plea that his master had not
adequately rewarded his great and meritorious services " (g).
When a company is being wound up, it cannot make presents
to its directors for past services at the expense of its creditors
or otherwise than at the expense of those who make the
presents (/<). Moreover if a company is being wound up, fees
due to its directors cannot be paid until the debts of the com-
pany have been satisfied (i).
If losses not properly chargeable to the company or the Ratification by
shareholders, without their consent, are charged to them in the sharehokkl *
accounts and reports in such an open and fair way as to enable
them to see and understand what is done, and these accounts
and reports are not objected to, but are, on the contrary,
approved and adopted by the shareholders, it will be too late for
them afterwards to dispute the propriety of what they may thus
have sanctioned (k). Moreover, those shareholders who do not
choose to attend meetings of which they have notice, cannot
complain of their ignorance of what the}' might have known
had they attended (I).
Where directors have misapplied moneys of a company by Refunding l.j
shareholders,
(g) See, also, Imperial Merc. G. M. & G. 19, might perhaps have
Credit Assoc, v. Coleman, L. E. 6 H. been properly decided on this ground
L. 189. alone.
(h) See Hutton v. West Cork Rail. (I) See ante, -p. 311, and Turquand
Co., 23 Ch. D. 654. v. Marshall, 4 Ch. 376 ; Lane's case,
(i) Ex parte Cannon, 30 Ch. D. 1 De G. J. & Sm. 504. See, also,
629. Ex parte Bignold, 22 Beav. p. 165.
(k) Ex parte Chippendale, 4 De
390
CONTRIBUTION AND INDEMNITY.
Bk' SectC13aP" 2' imProPerly distributing them among the shareholders, and have
- been afterwards compelled to repay such moneys, the question
arises whether the directors can compel the shareholders to
refund the amounts they have respectively received. The cir-
cumstance that the directors made a mistake in point of law,
would not entitle them to relief, but perhaps a mistake of fact
might. This question has not yet been settled by judicial
decision (m).
(m) See National Funds Assurance Valley Rail Co. v. Hawes, 16 Ch. D.
Co., 10 Ch. D. 118, where the di- 489, where the Court refused to add
rectors' rights, if any, against the the shareholders as third parties to
shareholders were reserved ; Wye an action against the directors.
CAPITAL OF COMPANIES. 3<J1
CHAPTER III.
OF THE CAPITA! OF COMPANIES ; OF CALLS ; OF DIVIDENDS ; AND
OF ACCOUNTS.
SECTION I.— GENERAL OBSERVATIONS ON THE CAPITAL OF
COMPANIES.
The word capital is used in many senses: we speak of Bk. III. Chap. 3.
borrowed or loan capital; of share capital; of nominal capital ; Beet" L
of paid-up capital ; of unpaid-up capital ; of issued and un- Capital
issued capital ; of fixed capital ; of floating capital. Again,
capital is used by way of distinction from income, interest,
dividends, and profits ; and accounts are divided into capital
accounts and income accounts. The idea underlying the
various meanings of the word capital in connection with a
company is that of money obtained or to be obtained for the
purpose of commencing or extending a company's business as
distinguished from money earned in carrying on its business.
Money earned in carrying on the business may be treated as
capital, or, in other words, may be capitalised, i.e., it may be
applied in paying off capital previously borrowed, or in re-
placing capital which has been lost or exhausted, or in some
extension of business instead of being applied in defraying
current expenses, or in being divided as profit.
In speaking of capital, it is of the first importance not to
confound borrowed capital with share capital.
1. Of borroived or loan capital.
A company's so-called borrowed capital or loan capital is Borrowed
neither more nor less than a debt ; it is money borrowed by a °ai>1 '
392
CAPITAL OF COMPANIES.
Bk. III. Chap. 3. company on certain terms, and is repayable by the company
- according to the terms on which the money has been lent.
The loan may be secured or unsecured — i.e., the persons to
whom the money is due may be entitled to a mortgage or
charge on the company's property, or some definite part of it,
or they may simply be entitled to be paid b}T the company out
of its assets, without having any specific mortgage or charge
upon them or any part of them (a).
The power of companies to borrow money has already been
alluded to (Bk. II., c. 3) (b), and the observations there made
are equally applicable to money borrowed as capital and to
money borrowed for other purposes. The powers of com-
panies to issue debentures, and the rights of debenture-holders
have also been already noticed (c).
Capital of
companies.
Varying tlie
amount of
capital.
2. Of share capital.
The capital of a company — i.e., the money intended to be
raised for carrying out its objects — is one of the matters deter-
mined upon as soon as its formation is seriously undertaken.
The sum fixed upon ought to be so large as to be sufficient to
enable the compairy to carry on its business with success ; but
it ought not to be larger than is necessary for this purpose ;
for the greater the capital sunk in any undertaking, the less
will be each subscriber's share of profit, unless, indeed, the
profits increase with the capital sunk, a result not so often ob-
tained as anticipated. The probable success of an}' company
depends very much upon the capital intended to be embarked
in its projected business ; if that capital is inadequate, it will
probably be wholly lost ; whilst if it is more than is required,
the profits per share will be unnecessarily diminished. Hence
the amount of a company's capital is one of those things which,
when fixed, cannot be varied without the consent of all who
join the company, unless there is some special provision to the
contrary in the statute by which a company is governed, or in
its charter or deed of settlement (d). This is well illustrated
(«) See Debentures, ante, p. 196.
(b) Ante, p. 186 et seq.
(c) Ante, p. 196.
(d) See the observations of Lord
SHARE CAPITAL. 393
by Smith v. Goldsworthy (e), where it was held that notwith- Bk- in. chaP- 3.
oect. 1.
standing the very large powers which by a company s deed — ; —
were conferred upon a general meeting of shareholders, such a Goldsworthy.
meeting was not authorised in so far altering the constitution
of the company as to convert its capital from 2,000,000Z.
divided into 20,000 shares of 100L each, into a capital of
1,000,000/. divided into 20,000 shares of 50/. each. Upon
the same principle a person who agrees to take shares in a
company with a given capital, is primd fade not bound to take
shares in a company with a different capital (/) ; but persons
not unfrequently agree to take shares in companies the capital
of which is not defined ; and in such cases they are bound by
their agreement, although the capital ultimately fixed upon
may differ materially from that originally proposed (g).
The capital of a company is usually divided into a definite Division of
number of equal parts or shares; and the value and amount of shares.
such parts are by no means matters of small importance to the
subscribers or shareholders ; for not only is a small share
more marketable than a large one, but the extent to which a
subscriber or shareholder is liable to contribute to the capital
or debts of a company depends on the number and amount of
his shares. When, therefore, the number and amount of the Varying the
shares into which the capital of a company is to be considered g^res.
as divided are once fixed, no change in these respects ought to
be valid unless made under some statutory or other special
power, or unless assented to by all the shareholders ; and there
are cases to this effect (h). However, in the Ambergate, dec, Ambergate Rail-
.,-,.,„ ... , „ ... . , -, way Company v.
Railway Company v. Mitchell (?), a company was incorporated Mitchell.
by a special act, which enacted that the capital was to be
Bramwell in Bouch v. Sproule, 12 Nixon v. Brownlow, 2 H & N. 455,
App. Ca. 405, as to leaving money and 3 il>. 686.
in the business. (h) See ace. Felling's case and
(e) 4 Q. B. 430. Compare Am- others In re the Financial Corpora-
bcrgate, &c, Bail. Go. v. Mitchell, 4 Hon, 2 Ch. 714 ; Sewell's case, 3 ib.
Ex. 540, noticed infra. 131 ; Smith v. Goldsworthy, 4 Q. B.
(/) See Bourne v. Freeth, 9 B. & 430 ; and In re European Society
C. 632 ; Fox v. Clifton, 6 Bing. 776 ; Arbitration Acts, 8 Ch. D. 679, at
Pitchford v. Davis, 5 M. & W. 2. p. 705.
(g) See, for example, Norman v. (i) 4 Ex. 540.
Mitchell, 5 De G. M. & G. 648 ;
894
CAPITAL OF COMPANIES.
Unissued
shares.
Bk. III. Chap. 3. divided into shares, and that for the purpose of voting, each
Sect. 1.
sum of 251. of the capital should he considered as representing
one share. The shares were at first 25?. shares, hut the com-
pany (i.e., apparently the directors) afterwards reduced them
to 20L shares, and it was contended in an action for calls on
a 20Z. share, that the alteration in the number and value of
the shares Avas invalid, and that the call was not recoverable.
But it was held that there was nothing in the company's
special act which prevented the directors from making shares
of less than 25L each ; that they were not bound to fix the
amount of the shares once for all ; and that, as to the voting,
the alteration could not deprive any one of his rights, inas-
much as the only effect of it was, to give every holder of a
25L share, one share and a quarter, instead of one share as
before.
Unissued shares in a company belong to the company, and
although they may be placed at the disposal of the directors,
the directors must account to the company for whatever they
may receive in respect of such shares (k). On the other hand,
the shares held by a director are his separate property, and he
is in no sense a trustee of them for the company (I).
Persons who conspire to issue, as good, more shares than
the authorised number, may be criminally prosecuted (to).
It is not usual for the whole of the sum fixed upon as the
capital of a company, to be paid up at once by the subscribers
or shareholders. The capital, and the number and amount of
the shares into which it is to be divided, having been deter-
mined upon, and such shares having been subscribed for, an
instalment only of the money they represent is paid, and the
rest of that mone}r is left to be paid as occasion may require.
Hence the distinction between paid-up and nominal capital.
The former is the money which the company actually has or
has had ; the latter consists of the sum to which it is entitled
by virtue of the contract entered into by its subscribers and
Issuing too
many shares.
Nominal and
paid-up capital.
(k) York and Midland Rail. Go. v.
Hudson, 16 Beav. 485. So all un-
paid calls, see Webb v. Whiffin, L.
R 5 H. L. 711 ; Morris' case, 7
Ch. 200 ; and 8 Ch. 800.
(/) Gilbert's case, 5 Ch. 559.
(m) See R. v. Mott, 2 Car. & P.
521.
PAID-UP SHARES. 395
shareholders, including the nominal value of any unissued Bk. III. Chap. 3.
. , . Sect. 1.
snares (//).
A share, the whole nominal amount of which has been paid Paid-up shares.
to the company is called a paid-up share. Whether a share
can be effectually paid up otherwise than in mone}- has been
much discussed. The result of the decisions seems to be,
that unless the contrary can be shown b}^ reference to some
statutory enactment, payment in money's worth, e.g., in services
rendered or goods supplied to the company, is equivalent to
payment in money (o) : whence it follows that paid-up shares
can be issued in consideration of such services, &c. The
abuse, however, of this rule led to the insertion in the Com-
panies act, 1867, of a provision to the effect that shares in
companies registered under the Companies act, 1862, must be
paid up in cash unless some agreement in writing for payment
otherwise is entered into and registered at or before the issue
of the shares (p). The articles of association are not such
an agreement (q) .
The issue of paid-up shares otherwise than for value (r) is a
breach of trust on the part of the directors ; and the company
and its creditors are entitled to have such shares treated as not
paid up (s) ; unless they are in the hands of bond fide holders
for value without notice of the facts (t).
(h) See English Channel Steamship 200, the Court granted an order for
Co. v. Bolt, 17 Ch. D. 715 ; and Re registering a contract for 3,000 fully
Ihonfield Coal Co., ib. p. 86, per paid-up shares more than six years
Jessel, M.R. after the original issue of the shares,
(o) See Clime's case, 3 De G. J. on being satisfied that the creditors
& Sm. 367; Pell's case, 5 Ch. 11 ; would not be prejudiced. See further
Schroder's case, 11 Eq. 131. But see in book iv. c. 1, § 10, A (5).
the observations of V.-C. Stuart in (q) PritcharcVs case, 8 Ch. 956.
Leeke's case, 11 Eq. 100. (r) As to inquiring into the value,
(p) See 30 & 31 Vict, c 131, § 25. see Pell's case, 5 Ch. 11, and the
As to compelling the Registrar to others cited above,
register such agreements by manda- (s) See infra, book iv. c. 1, § 10,
mus, see R. v. Registrar of Joint- A. (5), Holders of paid-up shares.
Stock Companies, 21 Q. B. D. 131. (t) See Guest v. Worcester Rail.
In that case the Registrar had re- Co., L. R. 4 C. P. 9 ; Waterhouse v.
fused to register a certain agreement Jamieson, L. R. 2 Sc. App. 29 ;
on the ground that it was insuffi- British Farmers, <L-c, Cake Co., 7 Ch.
ciently stamped. In Dublin and D. 533 ; affd. sub nom. Burkinshaw
Wicklow Manure Co., 13 Ir. L. B. v. Nirolls, 3 App. Ca. 1004 ; Bar-
396
CAPITAL OF COMPANIES.
Bk. III. Chap. 3
Sect. 1.
Issue at a
discount.
Preference
shares.
Kind of pre-
ference.
Where the liability of the members of a company is limited
by charter, statute, or registration, it is, to say the least,
questionable whether it can lawfully issue paid-up shares at a
discount, and exonerate the taker from liability to pa}^ the
difference between the price at which he takes them and their
nominal value (u). Shares in companies governed by the
Companies' clauses consolidation act can be issued at a
discount, with certain restrictions (x) ; but shares in com-
panies formed and registered under the Companies act, 1862,
cannot be so issued (//).
Unless the contrary is declared by statute, charter, or ex-
press contract, all shareholders are entitled to equal rights ;
and no class is entitled to any preference or priority over any
other. Nor can a majority of shareholders deprive a minority
of this right of equality (z).
Shares conferring on their holders preferential or additional
rights not enjoyed by the holders of other shares are called
preference shares. They can only be created when the
authorit}T to create them is given by statute or charter, or by
agreement between all parties interested. If, however, autho-
rity to issue them is given b}r a company's memorandum of
association, or by its articles of association, as originally
framed, preference shares may be issued (a) .
Preference shareholders are members, not creditors, of the
company issuing the shares. The nature of the preferential
rights which the holder of a preference share enjoys depends
on the terms on which it is issued ; for example, he may be
row's case, 14 Ch. D. 432 ; A. W.
Hall &■ Co., Limited, 37 Ch. D. 712.
See further in book iv. c. 1, § 10,
A (5).
(n) See Hoole v. Gt. Western Bail.
Co., 3 Ch. 262 ; West Cornwall Rail.
Co. v. Mowatt, 12 Jur. 407 ; and as
to cost-hook companies, 32 & 33
Vict. c. 19, § 12.
(x) 26 & 27 Vict. c. 118, § 21 ; 30
& 31 Vict. c. 127, § 27 ; 32 & 33
Vict. c. 48, §§ 5—7.
(;/) 30 & 31 Vict. c. 131, § 25 ;
Almeida and Tirito Co., 38 Ch. D.415;
Addlestone Linoleum Co., 37 Ch. D.
191, overruling Lnce Hall Rolling
Mills Co., 23 Ch. D. 545, n., and
Plashjnaston Tube Co., 23 Ch. D.542.
(z) Hutton v. Scarborough Hotel Co.,
2 Dr. & Sm. 514 and 521 ; and 9 Jur.
N. S. 551 ; Ashbury v. Watson, 30
Ch. P. 376. See also Guinness v.
Land Corp. of Ireland, 22 ih. 349.
Compare the cases in the next note.
(a) Bridgwater Nav. Co., 39 Ch.
D. 1 ; South Durham Brewery Co., 31
Ch. D. 261 ; Harrison v. Mexican
Bail. Co., 19 Eq. 358.
PEE] ERENCE SHA1 897
entitled to some advantage in voting, or to be paid a dividend I!k- EI. ('hap. 3.
in priority to other shareholders, or to be paid liis capital in
priority to them in the event of a winding-up. It by no
means follows that a right to priority to payment of dividend
whilst a company carries on business involves a right to
priority to payment of capital when business has ceased, and
the assets of the company are being distributed amongst the
shareholders. This subject will be adverted to hereafter. See
as to dividends, infra, Companies governed by the Companies'
clauses consolidation act, and section 3, and as to distribu-
tion of assets, Bk. IV., c. 1, § 13.
Preference shareholders cannot be deprived of their rights
by the other shareholders ; but if their rights are created
subject to modification or revocation they may be modified or
revoked according^ (b).
In the absence of special provision to the contrary, after the Effect of exhaust-
capital originally agreed upon has been raised and expended, ing capital-
any shareholder in an unlimited company has a right to say, I
will subscribe no more, and if the company cannot now be
carried on to a profit, I insist upon its being dissolved (c).
This right is the only security which a shareholder, whose
liability is not limited, has against being made responsible for
an unlimited amount of debts. It certainly sometimes happens
that calls are made after the original capital has been paid up
and expended ; but in order that the shareholders may be
liable to pay such calls, they must either have agreed to
submit to them, or must have allowed their directors to go on
and contract debts which at last have to be met by a general
contribution.
A company has no power to increase its capital, unless such increasing
power is expressly conferred upon it, or unless all the share- capital-
holders agree to subscribe or raise more than the sum originally
determined upon (d) ; and if the capital of a company is fixed
by its charter, letters patent, or special act, and no power is
given to increase it, such capital cannot be increased, even by
(Jj) Bannatyne v. Direct Spanish Ireland, 22 Beav. 471 ; Jennings v.
Tel. Co., 34 Ch. D. 287 ; Direct Baddeley, 3 K. & J. 78.
Spanish Tel. Co., ib. 307. (d) See the cases in the last note,
(c) See Electric Telegraph Co. of and Fisher v. Tai/ler, 2 Ha. 218.
398
CAPITAL OF COMPANIES.
Bk. III. Chap.
Sect. 1.
Increasing
capital of cost-
book mining
companies.
Statutory enact
ments relating
to capital, &c.
3- the consent of all the members of the company. The dis-
- tinction, however, between borrowing money and increasing
capital, which was adverted to on a former occasion, must not
be overlooked; for it does not follow that because a majority
of the shareholders of a company cannot increase the capital
of the company, they cannot lawfully, and against the will of
the minority, borrow money on the credit of the company (e).
To the rule that, in the absence of special powers, the
capital of a company cannot be increased against the will of a
single dissentient shareholder, there is, apparently, an excep-
tion in the case of cost-book mining companies. It is stated
by Mr. Tapping, in his useful essay on the cost-book, that the
capital of a cost-book mining company may be increased in
pursuance of a resolution of a special general meeting (/). No
authority is cited for this statement, but it certainly is the
constant practice of cost-book companies, which have spent all
their capital, to make further calls on their shareholders, and
to proceed against them in the Stannary court in case of non-
payment. But it must not be overlooked that the capital of a
true cost-book company is seldom if ever fixed beforehand (g),
and that shareholders in cost-book mining companies have the
power of relinquishing their shares if all calls upon them have
been paid up ; and that if they do not choose to avail them-
selves of this power, they may with propriety be treated as
agreeing to go on, and to furnish more capital, should it be
found necessary, for the purposes of the mine.
Passing now to the various statutory enactments bearing
upon the capital of companies, it may be observed, that there
is no statutory provision relating to the capital of banking
companies governed by 7 Geo. 4, c. 46, nor to that of com-
panies governed by the Letters Patent act of 7 Wm. 4 & 1
Vict. c. 73.
(e) See Bryan v. Metropolitan
Saloon Omnibus Co., 3 De G. & J.
123 ; and A ustralian Auxiliary Steam
Clipper Co. v. Mounsey, 4 K.& J. 733,
noticed ante, p. 191 et seq.
(/) Tapping on the Cost-Book,
p. 22. -
(</) See ante, p. 93 et seq.
GOVERNED BY 8 A\I> 9 VICT. 0. 16. 399
Bk. III. Chap. 3.
' ' on a '. '
The capita] of companies incorporated by special act of Capital of com-
panies governed
Parliamenl is determined by Buch act, and is divided into by 8 & 9 Vict.
c 16
snares of the number and amount thereby prescribed (It).
And by the Companies' clauses consolidation acl it is enacted,
that the subscribers shall pay the sums subscribed by them
respectively, or such portions thereof as shall from time to
time be called for by the company (i) ; and the company is
empowered to make calls on the shareholders (k), and to
enforce payment by action (Z), and to forfeit the shares of
defaulters (m). Subject to certain restrictions, new shares
in these companies may be issued at a discount («)• The act
in question does not itself confer any power to borrow, but it
contains important provisions relating to the borrowing of
money by companies empowered to borrow by their special
acts {<>), and enacts that money authorised to be borrowed may,
unless it be otherwise provided by the special act, be raised by
the creation of new shares (p), which, with reference to the
payment of calls, are to be on the same footing as original
shares (q), and are to be o fife red to the existing shareholders if
the old shares are at a premium (/•)• It is also declared, that
it shall be lawful for the company to convert or consolidate
shares wholly paid up into capital stock, to be divided
amongst the shareholders according to their respective in-
terests therein (s) ; and provision is made for registering the
owners for the time being of such stock and for the transfer
thereof, and for securing to the holders such rights as they
would have enjoyed if their shares had not been converted
(h) See Ambergate, &c, Rail. Co. (o) 8 & 9 Vict. c. 16, § 38 et seq.
v. Mitchell, 4 Ex. 540, noticed ante, (|>) lb. § 56.
p. 393. (q) lb. § 57.
(*) 8 & 9 Vict. c. 16, § 21. (r) 8 & 9 Vict. c. 16, § 58. See
(k) lb. § 22. See infra, § 2. Pearson v. London and Croydon Rail.
(1) lb. § 25. Co., 14 Sim. 541 ; and Campbell v.
(m) lb. § 29. See infra, c. 6. London and Brighton Rail. Co., 5 Ha.
(n) See 26 & 27 Vict. c. 118, § 21, 519, as to the time within which a
as amended by 30 & 31 Vict. c. 127, shareholder must accept the offer.
§ 27, and by 32 & 33 Vict. c. 48, (s) 8 & 9 Vict. c. 16, § 61.
§§5-7..
400
CAPITAL OF COMPANIES.
Bk' "ecf iaP' 3' int° caPital stock of the company (t). The act authorises the
directors to receive payment from airy shareholder of the
whole amount of his shares, and to pay him interest on the
difference between such amount and the amount of calls
actually made in respect of the same shares (u).
The company's monies are to be applied first in payment of
the costs and expenses incurred in obtaining the special act,
and secondly in carrying out the objects of the company (x).
26 & 27 Vict. The Companies' clauses act, 1863 (ii), contains some further
c. 118.
important provisions relative to additional capital and deben-
ture stock of companies governed by special acts of Parliament.
The act in question does not confer any power to increase
capital, or to issue preference shares, or to create debentures,
but only regulates the mode of exercising such powers where
^nvehdder-s ^ie*v aie con^erre^ D.Y ^ie company's special act. There is
one provision, however, relating to the rights of preference
shareholders which requires special notice. The provision in
question (§ 14) is to the effect that preference shares or stock
shall be entitled to the preferential dividend or interest
assigned thereto out of the profits of each year in priority to
the ordinary shares and stock of the company ; but if in any
year there are not profits available for the payment of the full
amount of preferential dividend or interest for that year, no
part of the deficiency shall be made good out of the profits
of any subsequent year, or out of any other funds of the com-
pany. Prior to the passing of this act, it had been held that
preference shareholders were entitled to have any deficiency
of profit in one year made good out of the profits of a subse-
quent year, even although nothing might be left for the
ordinary shareholders (z). The enactment altering this rule
only extends, it is conceived, to preference shares issued
under some special act passed after July, 1863.
(0 lb. §§ 62-64. Stock will pass Vict. c. 121, §§ 3 et seq., ante,
under a bequest of shares. See book ii., c. 1, § 2.
Morrice v. Aylmcr, 10 Ch. 148; (#)' 26 & 27 Vict. c. 118 ; amended
Dillon v. Arkins, 17 L. E. Ir. 636. by 30 & 31 Vict. c. 127, and 32 & 33
But not debentures. See last case. Vict. c. 48.
(u) lb. § 24. (;.) See as to preference shares,
(x) lb. § 65. See, also, 27 & 28 Webb v. Earle, 20 Eq. 556 ; Bangor
GOVEBNED HY THE COMPANIES ACT, 18 12. 401
BL III. Chap. 3.
Companies governed by the < 'ompanies act, 1862. —
The capital of a company formed under the act of 1862, and Capital of coin-
limited by shares, must be specified in the memorandum of^l^e
association (§ 8), and the capital of other companies formed Vict> c> 89<
under the act, and having a capital divided into shares, must
be specified in the registered articles (§ 14).
By the Customs and Inland Revenue act, 1888 (a), the Stump.
nominal capital of any company to be registered with limited
liability is to be liable to an ad vaLon m stamp duty of two
shillings per cent., and a statement of the amount of nominal
capital and of any increase of capital must be sent to the
Registrar of joint stock companies.
The number and amount of the shares into which the
capital is divided must also appear in the memorandum or
articles, as the case may be (§§ 8 and 14); and the shares
must be numbered (§ 22); but the omission to number them
will not prevent their holder from being a contributory in
respect of them (b).
Shares in limited companies formed under this act cannot Issue at a
be issued at a discount (c). discount-
The original capital may be increased by the issue of new Increase of
shares (§§ 12 and 50) (d) ; but notice of the increase must be capitaL
given to the registrar of the joint-stock companies (§ 34).
and Port Modoc Slate Co., ib. 59 ; (a) 51 Vict. c. 8, § 11.
Henry v. Great Northern Bail. Co., 1 (6) See Ind's case, 7 Ch. 4S5. See
De G. & J. 606, and 4 K. & J. 1 ; ante, p. 50, as to numbering shares.
Sturge v. Eastern Union Rail. Co., 7 (c) Almeida and Tirito Co., 38 Ch.
De G. M. & G. 158 ; Crawford v. D. 415 ; New Chile Gold Mining Co.,
North- Eastern Kail. Co., 3 K. & J. 38 Ch. D. 475 ; Addlestone Linoleum
723 ; Stevens v. South Devon Bail. Co., 37 Ch. D. 191 ; overruling lace
Co., 9 Ha. 313 ; Matthews v. Great Hall Rolling Mills Co., 23 Ch. D.
Northern Rail. Co., 5 Jur. N. S. 284 ; 545 n. ; and PlasJcynastm Tube Co.,
Coates v. Nottingham W. W. Co., 30 23 Ch. D. 542. And see 30 & 31
Beav. 86 ; Carry v. Londonderry and Vict. c. 131, § 35. Debentures may
E,,nisl-U!ni Rail. Co., 29 Bea v. 263; be issued at a discount, Regent's
Smith v. Cork and Bandon Rail. Co., Canal Ironworks Co., 3 Ch. D.' 43 ;
Ir. L. R. 3 Eq. 356, and 5 ib. 65, Anglo-Danubian Steam, d-c, Co., 20
where the preference shareholders Eq. 339 ; Campbell's case, 4 Ch. D. 470.
established their right to many years' (d) See Campbell's case, 9 Ch. 1 , as
rrears' to the necessary meetings.
L.C. D D
402
CAPITAL OF COMPANIES.
Bk- q11;^1'' 3' An unlimited company when registering as a limited com-
pany may increase its capital by increasing the nominal
amount of its shares (e).
Reduction of The capital of a company not limited by shares, may
apparently be reduced (see §§14 and 50) (e) ; but to reduce
the capital of a company limited by shares was impossible as
the act originally stood (/). This, however, may now be
done under the provisions of the Companies acts, 1867 and
1877 (g), and with the sanction of the Court (h) ; but not
otherwise, e.g., by buying up and cancelling shares (i). But,
as will be seen hereafter, inability to reduce capital does not
prevent shares from being forfeited or surrendered in the
usual way (k).
These acts and the orders of Court relating to the reduc-
tion of capital will be found in the appendix to the present
treatise. By reference to them and to the decisions referred
to below it will be seen that —
1. The reduction of capital must be authorised by the com-
pany's regulations as originally framed or as altered by special
resolution. Where the articles require alteration they must
be first altered by special resolution and then another reso-
lution must be passed reducing the capital (7).
2. Where there are several classes of shareholders with
different rights, e.g. holders of preference shares and holders
of ordinary shares, the reduction must be so made as not to
infringe the rights of either class (m) ; but it is not necessary
(e) See the Companies act, 1879 (t) Hope v. International Financial
(42 & 43 Vict, c. 76). Soc, 4 Ch. D. 327 ; Trevor v. Whit-
(/) See § 12, and the cases of worth, 12 App. Ca. 409 ; disapproving
Felling and others, 2 Ch. 714; SewelVs Dronfield Silkstone Coal Co., 17 Ch.
case, 3 Ch. 131. Even a company D. 76 ; Taylor v. Pilsen, d-c, Light
which had power to reduce its Co., 27 Ch. D. 268, must also he
capital lost it by being registered as considered as overruled on this
a limited company, Droitxoich Patent point. See Re Balgooley Distill* ry
Salt Co. v. Curzon, L. R. 3 Ex. 35. Co., 17 Ir. L. R. 239.
(y) 30 & 31 Vict. c. 131, § 9 ct (k) Teasdales case, 9 Ch. 54. Com-
seq.; 40 & 41 Vict. c. 26. pare the cases in the last note.
(h) § 11. Eor the practice of the (/) Patent Invert Sugar Co., 31 Ch.
Court in these matters, see the cases D. 166. Compare Taylor v. Pilst n,
cited in the following notes, and dr., light Co., 27 ib. 268. And see
The General Mining Co., Ir. L. R, 6 ante, book iii., c. 1, § 4.
■£<!• 213. (m) Bannatyne v. Direct Spanish
REDUCTION OF CAPITAL. .|0:{
that the reduction should be made equally or ratably on all the Bk [n. Chap. 3;
shares (mm). The rights of the different classes of shareholders —
will depend on pre-existing arrangements.
3. Mi, m s never taken up or agreed to be taken up by any
person may be cancelled by a specia] resolution of the share-
holders, and without any application to the Court (n).
4. In all other cases an order of the Court having jurisdic-
tion to wind up the company (i.e., in England the Chancery
Division of the High Court of Justice) is necessary in order to
effect a reduction of capital (6).
5. With such sanction and the approval of a special resolu-
tion of the shareholders, the capital may be reduced whether
fully paid up or not, and whether lost or not (j)). But the
Court will not sanction a reduction to correct an issue of shares
at a discount (q).
6. Where the reduction of the capital involves either the
diminution of a shareholder's liability or the payment to any
shareholder of any paid-up capital (>•), notice of an intended
application to the Court must as a rule be given to the cre-
ditors (s) ; and security must be given to those creditors who
will not assent (t).
7. The words " and reduced" must be temporarily added to
the name of the company in all cases where the sanction of the
Court to a reduction of capital is required, unless the Court
dispenses with such addition (it) ; and the Court has only
power to dispense with it where the reduction does not involve
Tel. Co., 34 Ch. D. 287, an instate- (q) New Cliile Gold. Mining Co.,
tive case, but too special to be use- 38 Cb. D. 475.
fully abridged. (,•) See 40 & 41 Vict. c. 26, § 4.
(mm) Barrow Haematite Steel Co., 39 (s) 30 & 31 Vict. c. 131, §§ 11
Ch. D. 582"; Quebradd, dr., Copper and 17. General Order March, 1868,
Co., 40 Ch. D. 363. r. 5. The advertisements directed in
(n) 40 & 41 Vict. c. 26, § 5. this rule may be dispensed with by
(o) 30 & 31 Vict. c. 131, § 11. As the Judge if he is satisfied that the
to the discretion of the Court, see interests of creditors will not be
per Cotton, L.J., in Bannatyne v. affected, Tambracherry Estates Co.,
Direct Spanish Tel. Co., 34 Ch. D. 303. 29 Ch. D. 683.
(p) lb. § 9, and 40 & 41 Vict. (t) lb. §§ 11, 13, and 14.
c 26, § 3. Prior to this act the law (u) Tb. § 10. The Court usually
was otherwise. See Ebbw Vale Steel, directs this addition to be used for
&C, Co., 4 Ch. D. 827 ; Kirhtall three months, Sharp v. Stewart and
Brewery Co., 5 ib. 535, and compare Co., 5 Eq. 155 ; but in Telegraph
Cridit Fonder of England ,llEq. 356. Construction Co., 10 Eq. 384; Credit
D D 2
404
CAPITAL OF COMPANIES.
Bk. III. Chap. 3. either the diminution of any liability in respect of unpaid capital
or the payment to any shareholder of any paid-up capital (x).
8. The special resolution confirmed by the order must be
registered (*/).
All copies of the memorandum of association issued after
the reduction must be in accordance with it (z).
Where the liability to calls is to be diminished or a division
of paid-up capital is to be made (a), a time is fixed for credi-
tors to come in and object, and if they do not come in within
the time fixed for the purpose, they cannot afterwards effec-
tually dissent (b). But unless a consent on their behalf is
produced the Court will order a sum equal in amount to the
money owing to the non-consenting creditors to be paid into
Court (c). Creditors who receive no notice of the intended
reduction are entitled to be paid their debts not only by the
company, but, if necessary, by compelling the then members
of it to contribute to their payment (d).
Reduction of By the Companies act, 1880, power is given to a company
to reduce its paid-up capital by a return of accumulated
profits to the shareholders, or to such of them as are willing to
accept such a return. In exercising this power the following
matters must be attended to : —
1. The profits in question must be capable of being dis-
tributed amongst the shareholders, with their consent, in the
shape of a dividend or bonus (e) ;
2. A special resolution for the return of these profits or a
part of them must be passed (/) ;
3. A memorandum containing the necessary particulars
must be produced to and registered by the Registrar-General
before the resolution can take effect (g) ;
Fonder of England, 11 Eq. 356, and (a) 40 & 41 Vict. c. 26, § 4.
Patent Ventilating Granary Co., 12 (b) Credit Fonder of England, 11
Cli. D. 254, fourteen days were fixed. Eq. 356, foot-note.
See also cases in note (mm) and (c) Patent Ventilating Granary Co.,
Buckley, 5th ed., p. 516. 12 Ch. P. 254.
(./■) See 40 & 41 Vict. c. 26, § 4. (d) 30 & 31 Vict. c. 131, § 17.
(y) 30 & 31 Vict. c. 131, §§ 15, 16, See the section,
and see 40 & 41 Vict. c. 26, § 4. As (e) 43 Vict. c. 19, § 3.
to the form of the minute to be regis- (/) lb.
tered, see W. N. 1888, pp. 54, 103. (g) lb. § 4.
(«) 30 & 31 Vict. c. 131, § 18.
GOVERNED BY THE COMPANIES ACT, 18G2. 405
4. Since shareholders are at liberty to require the company Bk. III. chap. 8.
to retain the moneys paid upon their shares (//) the company
must specify (i)
1) in the annual lists of members returnable under § 2G
of the Companies act, 18G2, the amounts so retained
by them ;
2) in the statements of account laid before any general
meeting the amount of undivided profits which have
been returned.
Provision is also made by the Companies act, 18G7, for sub- Subdivision of
dividing a company's shares. This may be done by special E '""'
resolution, without the sanction of any court (A) ; but the
proportion between the amount paid and unpaid on the exist-
ing shares must be preserved (/) ; and all copies of the memo-
randum of association issued after the subdivision must be in
accordance with it (m).
Notwithstanding the large powers given by the Companies Preference
act, 18G2, to shareholders, enabling them to modify their'
articles of association by special resolution (n), it has been held
not competent for them to issue preference shares unless the
articles as originally framed authorise such issue (<>). But it is
otherwise if they do, although the memorandum of association
is silent on the subject (p). By the act of 1867, special reso-
lutions may be passed authorising arrangements on the issue
of shares for a difference between their holders in the amount
of calls to be paid, and the time of payment of such calls (q).
The capital of companies governed by the Companies act, Conversion
1862, may be consolidated and divided into shares of larger
amount, and may be converted into stock (§§ 12 and 50) ; but
notice of any such change must be given to the registrar
(§ 28).
(h) lb. § 5. Co., 2 Dr. & Sm. 514 and 521, and 9
(i) lb. § 6. Jut. N. S. 551 ; Ashbury v. Watson,
(k) 30 & 31 Vict. c. 131, § 21. 30 Ch. D. 376. See as to the con-
(l) lb. struction of articles on this point,
(?;i) § 22. As to the illegality of Melhado v. Hamilton, 21 W. R. 874.
subdividing otherwise than under (jj) Harrison v. Mexican Bail. Co.,
the act, see the cases of Feiliwj and 19 Eq. 358 ; South Durham Brewery
others, 2 Ch. 714. Co., 31 Ch. D. 261 ; Bridge-water
(n) 25 & 26 Vict. c. 89, § 50. Nav. Co., 39 Ch. D. 1.
(o) Hutton v. Scarboro' Cliff Hotel (?) 30 & 31 Vict. c. 131, § 24.
406
CAPITAL 01' COMPANIES.
Bk. III. Chap. 3.
Sect. I.
Return, slowing
capital, &c.
Companies act,
1862.
Table A.
Pi-ovisions as to
capital.
Capital of exist-
ing companies.
The amount of a company's capital or stock, the shares into
which the former is divided, and in which the latter is held, the
persons to whom the shares or stock belong, the dates of trans-
fers, and the amounts of calls paid and unpaid, must appear
with other matters in the returns required to be made annually
to the registrar (§§26 and 29).
By the regulations in Table A., the directors may, with the
sanction of a special resolution of the members, increase the
capital of the company by issuing new shares (No. 26). The
amount of the increase and the amounts of the shares into
which the increased capital is to be divided, rest with the mem-
bers ; but if they give no directions upon the subject, then with
the directors (*&.). Unless the meeting, authorising the increase,
gives directions to the contrary, all new shares are to be offered
to the members in proportion to the existing shares held by
them (No. 27). Shares not accepted by the members, may be
disposed of by the directors as they think most beneficial to
the company ('&•)• Any capital raised by the creation of new
shares is to be considered as part of the original capital, and
is subject to the same provisions as regards calls and forfeiture
of shares (No. 28) (r).
By the same regulations, the directors may, with the sanction
of the members, convert any paid-up shares into stock (No. 23,
§§ 12, 28, and 34 of the act). The transfer of stock is, as far
as practicable, subject to the same regulations as the transfer
of shares (No. 24), and the rights of stock-holders are assimi-
lated, as nearly as circumstances will permit, to the rights of
shareholders (Nos. 24 and 25 ; and see § 29 of the act).
With respect to existing companies registered under the act
but not formed under it, the amount of their capital and the
number of their shares, and the persons to whom they belong,
and the amounts paid on them, must all be stated in the docu-
ments sent to the Registrar (§ 183) ; and if the capital has
(r) Clauses similar to these were
contained in Table B. to the act of
1856. They were discussed with
reference to borrowing money, in
Bryon v. Metropolitan Saloon Om-
Go., 4 Jur. N. S. 680, and 3 De
G. & J. 123 ; Australian Auxiliary
Steam Gl vpper Co. v. Mounsey, 4K.& J '.
733. As to the issue of preference
shares, see Bannatyne v. Direct
Spanish Telegraph Co., 34 Ch. D.
287, and ante, p. 405.
CALLS. 4(J7
been converted into stock, the amount of such stock, and the Lik- m- Chap. 3.
persons entitled to it, must be similarly stated (§ 185). Shares Sect %
in these companies need not be numbered if they were not
numbered before registration (§ 196, cl. 2). Subject, however,
to the provisions of any special act of Parliament, or letters
patent, the foregoing remarks concerning the capital and shares
of new companies appear to be applicable to existing companies
after their registration (see § 196 ; and as to companies
registered under the acts of 1856—1858, see §§ 176—178).
SECTION II.— OF CALLS.
Capitals of companies are usually raised by instalments or Different kinds
calls. of calls-
"A call," is an expression used to denote both a demand
for money, and also the sum demanded ; and in this last sense
it signifies either the whole sum required to be raised at one
time from the members of a company by a contribution amongst
themselves, or that proportion of this entire sum which is pay-
able in respect of each share.
There are two kinds of calls. First, there are those calls
which are nothing more than the unpaid-up portions of the
nominal capital of a company (s) ; and, secondly, there are
those calls which are contributions required after that capital
has been raised and exhausted. Calls of the first kind are
payable by virtue of the agreement entered into by the sub-
scribers and shareholders to contribute the sums fixed upon as
the capital ; but calls of the last kind are payable in conse-
quence of the liability of shareholders to discharge their
debts (*). If this liability is unlimited, the amount of calls (of
the second kind) which a shareholder may be compelled to pay,
(s) Payments on allotment are IVelhsley, 6 H. & N. 38, in which it
not calls. See Croskey v. Bank of was held that calls made by liqui-
JVales, 4 Gitf. 314. dators might be recovered, although
(0 The difference here alluded to the notices required for other calls
is illustrated by Hull Flax Go. v. had not been given.
408
CALLS.
Bk- "g;^1'- 3* depends entirely on the amount of the debts to be liquidated,
- and upon the number of the solvent co-shareholders. But no
shareholder can be required to pay calls of the first kind beyond
his unpaid proportion of the capital of the company. In the
ensuing pages it is proposed to examine the law respecting calls
of the first kind, so far as it relates to the persons empowered
to make them, the purposes for, and the manner in which they
may be made, the persons liable to pay them, and the law
relating to actions for their recovery. The right to forfeit
shares for the non-payment of calls will be noticed in a sub-
sequent part of the work (infra, ch. 6).
By whom calls
may be made.
In companies
governed by
7 Geo. 4, c. 46,
7 Wm. 4 & 1
Vict. c. 73.
In companies
governed by
8 & 9 Vict,
c. 16.
Companies go-
verned by the
Companies act,
1862.
1. Of the persons by whom calls may be made.
The terms of the instrument which regulates the internal
affairs of each company must be ascertained before the persons
empowered to make calls on its shareholders can be known.
Generally speaking, this power is naturally vested in the
directors of the company. There is no statutable provision
upon this subject applicable to banking companies governed
by 7 Geo. 4, c. 46 ; nor to companies governed by the Letters
Patent act of 7 Wm. 4 & 1 Vict. c. 73. In ordinary cost-book
companies calls are made by the shareholders (u).
By the Companies clauses consolidation act the power to
make calls is given to the company where its special act is
silent on the subject (,r) ; and it has been held, that this power
is one winch may be exercised by the directors, and that con-
sequently a general meeting of the shareholders need not be
held for the purpose of making a call (y).
By the schedule to the Companies act, 1862, the power of
making calls is exerciseable by the directors (z) ; and this rule
applies to all companies limited by shares and formed under
that act, and having no articles of association of their own.
The act itself, however, is silent upon the subject, and leaves
the authority to make calls to be settled by the regulations of
each company.
00 See 32 & 33 Vict. c. 19, § 10. dr., Rail. Co. v. Mitchell, 4 Ex.
(x) 8 & 9 Vict. c. 16, § 22. 540.
(ij) lb. § 90. See Ambergate, (z) Table A., No. 4.
BEFORE WHOLE CAPITAL SUBSCRIBED. 409
Where the power to make calls resides in the directors, a call Bk. III. Chap. ?,.
made by those directors who are so de jure is valid, although Sect' 2'
an attempt may have been made to remove them, and otoSi!^^
directors may have been (improperly) elected to take their
place (a).
It need hardly be observed, that a call made by persons who Calls made by
have not the right to make it, is altogether invalid (b). 2T* ***'
Where the power to make a call is exerciseable by a certain Calls ,,„,,. be
number of persons collectively, a valid call cannot be made at m*d.e by ihe, re"
. i • i i quisite number
a meeting at which less than the requisite number is present. of persons.
The authorities on this point are numerous and conclusive (c).
However, in The Southampton Dock Company v. Richards (d), Southampton
power to make calls was given by a special act of Parliament SbuST*
to the directors of a company, and it was held that a call made
by a court of directors (i.e., by three of them) was valid, inas-
much as in the act the expressions "the directors" and "a
court of directors " were used indiscriminatelv.
2. The purposes for which calls until he made.
First, as to starting tin company.
It has been seen already that a person who agrees to take Calls made to
shares in a company formed for a given purpose, and with a start a C01"P:U1^
given capital, is not bound to accept shares in a company
formed for another purpose, or with a different capital; and it
follows from this that a variation in the original scheme if
unassented to by a subscriber to it, affords an answer to any
application for calls which maybe made upon him (e). And Calk on allottees
of scrip, &c.
(a) Sivansea Dock Co. v. Levein, 497
20 tn I' ^ U]' n 11 n «r W See Bott™>Ws «•* ™ Ch. D.
(6) See Garden Gully Co. v. Mc- 681 . Kirk v> mi) 16 Q B 2QQ
Lister 1 App. Ca. 39 ; Howbeach and similar cases cited ant '
Goal Co. v. Teague, 5 H & N. 151, and p. 299, and e ^J
and the remarks on this case in Harm Dock Co. v. Rose, 4 Man. &
York Tramways Co. v. Willows, 8 Gr. 552.
Q. B D. 685, and London & South- (,/) 1 Man< & Qr 44a Smth_
em Counties Land Co., 31 Ch. D. ampton Dock Co. v. Amett ib
223. _ The general issue raised the (c) See Galvanized Iron Co. v.
question of validity. South-Eastern Westoby, 8 Ex. 17.
Rail. Co. v. Hebbleichite, 12 A. & E.
410
CALLS.
Bk' "ecf1? P" 3' ^ n° conclu(^ed agreement has been entered into, binding an
allottee of shares to accept them, and to become a shareholder,
he cannot be liable to calls (/). But if a subscriber to a com-
pany binds himself to take shares in a company which may
differ, more or less, from that originally proposed to be formed,
he cannot set up a variation in the original scheme as an
answer to a demand for payment of the capital he has under-
Beforethe whole taken to contribute (g). Again, although the whole of a com-
capital has been . °
subscribed. pany's intended capital has not been subscribed, it does not
follow that those who have subscribed are not bouud to furnish
funds to enable it to commence operations. If by a company's
special act or charter the subscription of the whole, or a de-
finite part of the proposed capital, is made a condition prece-
dent to the right to require payment of anything from those
who have subscribed, effect must be given to such a condi-
tion (Ji) ; but there is nothing in any general act now in force
having any such effect (?) ; and consequently, where there is no
special act or charter affecting the question, the liability of a
subscriber to a company to contribute to its capital before the
whole has been subscribed for depends entirely upon the con-
tract into which he may have entered ; and there are several
instances in which persons have been held bound so to contri-
bute, although the whole capital of the company which they
had joined had not been subscribed for (k). Prima facie,
however, they are not so bound (/) ; and in all the cases in
which they were held bound, the defendants had entered into
a contract which precluded them from maintaining that the
(/) Duke v. Andrews, 2 Ex. 290. (i) There was a clause to the effect
(g) Ante, p. 22 et seq., and p. in question in the repealed act re-
106 ; Midland, &c, Bail. Co. v. lating to banking companies formed
Gordon, 16 M. & W. 804 ; Corlc and after May, 1844. See 7 & 8 Vict. c.
Youghal Eail. Co. v. Paterson, 18 C. 113, § 5.
B. 414 : Norman v. Mitchell, 5 De (4) MacDougall v. Jersey Imperial
G. M. & G. 648, and 19 Beav. 278. Hotel Co., 2 H. & M. 528 ; Lyon's
See, too, Kidwelly Canal Co. v. Baby, case, 35 Beav. 646. See Scottish
2 Price, 93. Petroleum Co., 23 Ch. D. p. 422.
(h) Norwich and Lowestoft Nov. (I) See Fox v. Clifton, 6 Bing. 776 ;
Co. v. Theobald, 1 Moo. & M. 151. Pitchford v. Davis, 5 M. & W. 2 ;
And see North Stafford Steel Co. v. North Stafford Steel Co. v. Ward, L.
Ward, L. R. 3 Ex. 172 ; Peirce v. R. 3 Ex. 172.
Jersey Waterworks Co., 5 ib. 209.
FOR CARRYING ON BUSINESS OF COMPANY. -Ill
subscription of the whole of the originally proposed capital lik- HI. Chap. 3.
was an express or implied condition to their becoming share — — '■
holders (//<).
With respect to companies formed under the Companies
act, 18G2, and having no special articles of their own, it is con-
ceived that the directors have power to commence business, and
make calls before the whole capital is subscribed for («).
Secondly, as to carrying on the business of the company.
The unpaid-up instalments of a capital, agreed to be sub- Calls made to
scribed for a given purpose, cannot be lawfully required to be company's110
paid up for any purpose other than that to which the capital business-
itself is by agreement properly applicable. In other words, a
call cannot be lawfully made upon the shareholders of a com-
pany for any purpose not warranted by the constitution of
that company (o). If it is made by the proper authority, in
the proper form, and for a purpose which is not improper,
then although some of the shareholders may disapprove of
it, the call will be valid, and a court will not take upon itself
to decide whether it ought or ought not to be made, but will
leave that question to the decision of the shareholders them-
selves (p). But if a call is made for a purpose not warranted
by the constitution of the company, such call will be invalid,
and a court will interfere, even at the instance of one single
(m) See Hutt v. Giles, 12 M. & W. turned on the articles.
492 ; Watefford, Wexford, &c. Bail. (o) In an action for calls this
Co. v. Dalbiac, 6 Ex. 443 ; London defence was open on a plea of never
and Continental Ass. Co. v. Bed- indebted. South-East. Bail. Co. v.
grave, 4 C: B. N. S. 524 ; Norman Hebjblewhite, 12 A. & E. 497.
v. Mitchell, 5 De G. M. & G. 648, (p) Yeits v. Norfolk Bail. Co., 3
and 19 Bear. 278. De G. & S. 293 ; Cooper v. Shrop-
(//) Ornamental Pyrographic Co. shire Union Bail, and Can. Co., 6
v. Brown, 2 H. & C. 63, and Mac- Bail. Ca. 136, and 13 Jur. 443.
Doughally. Jersey Hotel Co., 2 Hem. See, also, Orr v. Glasgow Bail. Co.,
& M. 528 ; Lyon's case, 35 Beav. 3 McQu. 799, where the money
646. Howbeach Coal Co. v. Teague, already obtained was applied to a
5 H. & N. 151, however, contains purpose which was improper, im-
dicta to the contrary; and see less sanctioned by a majority of
North Stafford Steel Co. v. Ward, shareholders.
L. R. 3 Ex. 172, which, however
412
CALLS.
Improper calls.
Bk- gg;tCh2ap" 3* dissentient shareholder, to prevent the making of such a call.
The authorities bearing upon this subject will be adverted to
hereafter, when the principles which guide the Court in
interfering in matters connected with the internal affairs of
companies come to be discussed (Bk. III. c. 9, § 2). There
appears to be no objection in principle to making calls to
meet prospective and estimated expenses ; but it seems that
in ordinary cost-book companies such calls were formerly con-
sidered improper (q).
The power of making a call must be exercised as a trust (/•),
so as not to oppress or favour one shareholder, or set of share-
holders, more than another ; and if a call, which ought to be
made on all the shareholders ratably, is made on some of
them exclusively of the others, redress may be had (s). So,
if a call is made on one shareholder only, with a view to
enable him to make default and have his shares forfeited, and
thus get out of the company, the call, and all the proceedings
founded upon it, will be nugatory as against the other share-
holders (t).
A creditor who has obtained judgment against a company
and cannot obtain satisfaction by execution in the ordinary
way, has been held not entitled to a mandamus to compel the
Action to compel company to pay him by means of a call (»). But as before the
the making of a T
call. Judicature acts a court of equity would, so now it is submitted
any Division of the High Court will, if necessary, assist a
person entitled to payment out of the funds of a company by
making a call on the shareholders, and compelling them to
furnish so much of the unpaid-up capital as may be required
to liquidate the demand upon them (./). Whether they can be
Mandamus to
make a call.
(«) Such calls can, however, now
be made for the estimated expenses
of three months. See 32 & 33 Yict.
c.19, §11.
(>•) See Gilbt rt's case, 5 Ch. 559.
(.s) Preston v. Grand Coll. Dock
Co., 11 Sim. 327. Compare Mangles
v. Grand Coll. Dock Co., 10 ib. 519 ;
Bailey v. Birkenhead, d-c. Rail. Co., 12
Beav. 433 ; Yetts v. Norfolk Rail. Co.,
3 De G. & S. 293. These cases will
be considered hereafter.
(t) Richmond's case and Painter a
case, 4 K. & J. 305.
0) R. v. Victoria Park Co., 1 Q.
B. 288. See, also, The York Build-
ings Co., 2 Atk. 56.
(x) Lain v. London Indisputable
Pol. Co., 1 K. & J. 223 ; Ex parte
Durham, 4 K. & J. 517 ; Talbot's case,
5 De G. & S. 386. The 7 & 8 Vict,
c 113, § 31, provided for making
calls for the indemnity of a share-
holder who had been compelled to
FOR CARRYING OX BUSINESS OF COMPANY. 413
compelled to furnish mure than their respective unpaid up Bk. III. chap. 3.
instalments depends in each case upon the constitution of the ^—
company, i.e., upon whether the liability of the shareholders
is limited or unlimited.
The amount of each call (meaning thereby an instalment of Amount of call
capital) (y), is generally fixed by those to whom the power of t0 be matle'
making calls is entrusted. Where there is no special provision
in a company's act, charter, or regulations, limiting the amount
of each call, that amount must be considered discretionary,
subject only to the limits which are set, first, by the rule that
no call can be made upon the shareholders of any company for
any purpose not warranted by the constitution of that com-
pany ; and secondly, by the rule that the shareholders are not
bound to contribute more than the capital which may have
been agreed upon.
Statements are sometimes made in prospectuses that it is Intention not to
not intended to call up more than part of the capital ; but make a eaU'
such statements afford no defence to a call for more than the
amount stated. A statement of a present intention does not
preclude a subsequent change. Power, however, is given by
the Companies act, 1879, to an unlimited company, when
registering under that act as limited, and to a limited com-
pany, by special resolution, to declare that any portion of the
capital not already called up shall not be capable of being
called up except in the event and for the purposes of the com-
pany being wound up. It is also provided that, when an
unlimited company on registering itself as limited increases
the nominal amount of its capital by increasing the nominal
amount of each of its shares, no part of such increased capital
shall be capable of being called up except for the purposes of
the company being wound up (z).
Whether a call can be made on persons who have once paid Ca'la to compel
up their shares in full but to whom part of the paid-up capital rSSlpital
has been returned, is a question which turns on the true con- or aceumulated
profits.
pay a debt of the company. No a petition to wind-up would depend
act now in force contains any such on circumstances.
provision ; but his right to indem- (y) Ante, $. 407.
nity in such a case is clear. Whether (z) 42 & 43 Vict. c. 76, § 5.
his remedy would be by action or by
414 CALLS.
Bk. III. Chap. 3. struction of the act, charter, or other instrument, conferring
foGCt. 2,
— the power to make calls. But unless there are words showing
the contrary, the power to make calls in such a case would he
considered as exhausted. It would not, however, follow that
the returned capital could not he recovered back (a). When
the accumulated profits of any company are returned to the
shareholders in reduction of its paid-up capital under the
Companies act, 1880, the directors' powers of making calls are
expressly extended to the amount of unpaid capital as aug-
mented by this reduction (/>).
Interest on Calls not paid on the day fixed bear interest at rates vary-
unpaid calls. ...
mg m dmerent companies ; m the cases ot companies governed
by 8 & 9 Vict. c. 16, the rate is 4 per cent., see §§23 and
25 (c) ; and in companies governed by 25 & 26 Vict. c. 89,' and
Table A, the rate is 5 per cent., see Table A, No. 6. Calls
made by cost-book companies may be made to bear interest at
5 per cent. (d). Interest on calls made in winding-up pro-
ceedings will be alluded to hereafter.
3. Of the manner of making calls.
Mode of making jn order that a call may impose anv obligation on those on
calls. _ ,
whom it is made, it must be made not only by the proper
authority, but in the proper manner (e). AVhat is the proper
manner varies in different companies, but there are a few rules
applicable generally to making calls to which it will be con-
venient at once to advert.
(a) See the Companies' clauses 448.
cons, act, 1845, § 121, and as to (d) 32 & 33 Vict. c. 19, § 12.
registered companies, compare The This section also provides that dis-
Cardiff Coal Co., 11 W. R. 1007, with count not exceeding 5 per cent, may
Cardiff Coal Co. v. Norton, 2 Eq. be allowed for punctual payment.
558 and 2 Ch. 405 ; Stringer's case, (e) In an action for calls, never
4 Ch 475 ; Ranee's case, 6 ib. 104. indebted put in issue the propriety
(li) 43 Vict. c. 19, § 3. of the manner in which they were
(c) The act says lawful interest. made. South-Eastem Rail. Co. v.
The interest should not be added to Hebbleichite, 12 A. & E. 497 ; Shrop-
the principal and be claimed with it shire Union Rail. Co. v. Anderson,
as part of the call. See Southampton 3 Ex.401; Wetland Rail. Co. v.
Dock Co. v. Richards, 1 Man. & Gr. Blake, 6 H. & N. 410.
MANNER OF MAKING THEM. /) 1 5
Except so far as irregularities may have been waived (/), it Bk. III. Chap. 3.
seems thai an irregularity in making a call renders it invalid ;
and an irregularity in giving notice of it precludes the com- ^akln^theni m
pany from enforcing its payment against a person who has not
received a proper notice (g). But after judgment has been
recovered in an action for a call, .such judgment will not be
set aside on the ground that the call was improperly made ;
although the defendant may only have become acquainted
with its invalidity since the judgment was obtained against
him (//).
The irregularities which are generally relied upon as ex-
onerating a shareholder from the payment of a call may be
reduced to two kinds, viz. (1,) those which affect the resolution
for the call, and (2,) those which affect the notice requiring
payment of a call which has been made. It may be useful to
refer to each of these in turn.
1. As to the resolution making the call. It has been already Irregular reso-
'seen that the resolution to be valid must be made by those Caii.°n ma 1Dg
persons with whom the power to make the call lies, and also
by a competent number of such persons (i). It has also been
seen, in an earlier part of the treatise, that what takes place
at a meeting improperly convened is not legally valid, and is
not binding upon those who have not, by their own acts, pre-
cluded themselves from objecting thereto (k). If, therefore, a
call can only be made at an extraordinary meeting, specially
summoned for the purpose, a call made at a meeting not
duly summoned for that purpose will be invalid. But if a call
can be made at an ordinary meeting not specially convened,
it may also be made at an adjourned ordinary meeting,
although such meeting may have been convened specially by a
notice not stating the purposes for which it was to be held, and
although the notice was not sent to everybody entitled to be
present (7).
(/) British Sugar Refining Co., 3 same Co. v. Rose, 4 ib. 552.
K. & J. 408. (*) Ante, p. 409.
(g) See Miles v. Bough, 3 Q. B. (&) Ante, p. 305 et seq. ; and see
845, where the defendant had ac- Garden Gully Go. v. McLister, 1 App.
tually promised to pay the call. Ca. 39.
(h) Thames Haven Dock Co. v. (I) See Wills v. Murray, 4 Ex.
Hall, 5 Man. & Gr. 274 ; and The 843 ; see ib. p. 862.
call
416 CALLS.
Bk. III. Chap. 3. Although the persons making a call may also be required to
— - determine when, where, and to whom the call is to be paid, it
not state when, is not necessary that they should do this by the resolution
where, or to making the call. It is sufficient if these particulars are stated
whom a call is o x
to be paid. in the notices issued in pursuance of such resolution (in).
Prospective calls. A call may be made prospectively, i.e., it maybe resolved
to-day that a call be made a month hence, and be payable a
month after that {n). So, a call may be made payable by
instalments (o). But (unless it is necessary to raise the whole
capital at once) a power to make calls, as from time to time
may be thought necessary, does not authorise those entrusted
with the power, in calling up the whole capital at once, and
make the same payable by instalments, so as to save them-
selves the trouble of determining at future periods whether any
call shall be made or not (_p).
Intervals he- It is frequently provided that no call shall be made at less
tween successive , , . . , 1 r ,. • ,-, -, • « ., 1 ,
than a certain interval ot time since the making ot the last
call ; and considerable difficulty has been felt in determining
the exact time at which a call can be said to be made. After
some hesitation, the courts have determined that a call must
be considered as made when a resolution that it be made is
duly passed (q) : and this view has been adopted by the legis-
lature so far as regards companies registered under the Com-
panies act, 1862, and having no special regulations of their
own (r). Where, therefore, a certain time is required to elapse
between the making of two successive calls, that time must be
(m) Newry, dec, Rail. Co. v. Ed- covery of instalments before all are
munds, 2 Ex. 118; Sheffield, dbc, due, see the last three cases.
Rail. Co. v. Woodcock, 7 M. & W. (p) Stratford and Moreton Rail.
574 ; Great Northern Rail. Go. v. Go. v. Stratton, 2 B. & Ad. 518.
Biddulph, lb. 243. (</) See R. v. Londonderry Rail.
(n) See Sheffield, dec, Bail. Co. v. Co., 13 Q. B. 998, and 6 Rail. Ca. 1,
JJroodcock, 7 M. & W. 574. sub nomine Ex parte Toohe ; Shaw
(6) Amhergate, dbc, Rail. Co. v. v. Rowley, 16 M. & W. 810 ; Great
Norcliffe, 6 Ex. G29 ; Lawrence v. North of England Rail. Co. v. Bid-
Wynn, 5 M. & W. 355 ; North- dulph, 7 M. & W. 243. See, as to
fVestern Rail. Co. v. McMichael, 6 calls made prospectively, Sheffield,
Ex. 273 ; Birkenhead, dec, Rail. Co. dbc, Rail. Co. v. Woodcock, 7 M. & W.
v. Webster, ib. 277 ; Amberyate, dbc, 574.
Rail. Co. v. Coulthard, 5 Ex. 459. (r) 25 & 26 Vict, c. 89, Table A.
As to an action of debt for the re- No. 5.
MANNER OF MAKING THEM. 117
reckoned from the day on which the resolution for the first call Bk. III. Chap. 3.
J . Sect. 2.
is passed, lip to the day on which the resolution for the second
call is passed (s) ; and if this period is too short, the call will
be invalid (t) ; and if the time required to elapse between the
calls is so many days at least, neither of the days on which the
calls are made ought to be included in the reckoning (u).
If a call is made too soon, and is then abandoned, in order
to be replaced by another duly made, the irregular call should
be declared void before the second is made (x).
A call will not be held invalid simply because the minutes Minutes of meet-
- ,, . , . . . , - . . ing making calls,
ot the meeting making it were signed atter the meeting was
over (y). In Cornwall Great Consolidated Mining Company v. Cornwall, &c,
. Mining Go. V.
Bennett (z), the question whether a call could be made by a reso- Bennett,
lution not reduced to writing and signed was raised, but not
decided. The judges differed upon that point, but they agreed
that there must be some better evidence of the making of a
call than a minute neither signed nor confirmed until after the
action was commenced.
2. As to the notice of the making of a call. — Inasmuch as a 2- Irregular
n-i • i i ii • notice of call.
call is to be considered as made when a resolution that it be
made is duly passed, and inasmuch as it would be unjust to
any person liable to pa}7 a call to treat him as in default unless
he has had notice of the making of a call, it is held that such
notice must be given to him before he can be dealt with as
a defaulter ; and this rule applies not only where notice is
expressly required to be given by the company's act, charter,
or deed of settlement, but also where there is no express pro-
vision upon the subject, and the shareholder has entered into
an absolute covenant to pay such calls as may be made (a).
Indeed, in one case it was said, that the notice made the
(s) See generally as to the compu- (ij) Miles v. Bough, 3 Q. B. 845,
tation of time, Railway Sleepers and see ante, p. 313.
Supply Co., 29 Ch. D. 204. (z) 5 H. & N. 423.
(t) See the cases in note (q), and (a) Miles v. Bough, 3 Q. B. 845.
Stratford and Moreton Bail. Co. v. See, too, Edinburgh, &c, Rail. Co.
Stratton, 2 B. & Ad. 518. v. Eebblewhite, 6 M. & W. 707 ;
(w) See Watson y. Eales, 23 Beav. Painter v. Liverpool Gas Co., 3 A. &
294. E. 433 ; and as to co.st-book coni-
(x) Wetland Rail. Co. v. Berrie, 6 panies, 32 & 33 Vict. c. 19, § 10.
H. & N. 41G.
L.C. E R
418
CALLS.
Bk. III. Chap.
Sect. 2.
Form of notice.
Evidence of
notice having
been triven.
Mode of giving
notice.
In companies
governed by
8 & 9 Vict,
c. 16.
call (b) ; but this is not in conformity with the rule now esta-
blished (c).
The notice to be valid must be in such form, if an}', as may
be required by the regulations of the company ; and where a
notice is required to be signed by the directors, it will not be
sufficient if their signatures are affixed by a clerk (d).
A notice requiring payment to the account of a person at
a particular bank, is equivalent to a notice to pay to that
person (e).
A list of persons prepared by a deceased clerk whose busi-
ness it was to send the notices, and ticked or marked by him
so as to show that notices were sent to the persons on the list,
is admissible in evidence to prove that a notice was sent to
them (/).
The notice must be given in the manner required by the act
or regulations applicable to each particular company (g).
By the Companies clauses consolidation act it is provided (/<),
1, that twenty-one days' notice at the least shall be given of
each call ; 2, that no call shall exceed the amount, if any, pre-
scribed by the company's special act ; 3, that successive calls
shall not be made at less than the interval, if any, prescribed
by the same act (i) ; 4, that the aggregate amount of calls made
in any one year shall not exceed the amount, if any, prescribed
by the same act ; and 5, that all calls shall be paid to the
persons, and at the times and places, from time to time ap-
pointed by the company. Under this act, therefore, there
must first of all be a call made, and then at least twenty-one
days' notice of it must be given (k), and the notice must state
the person to whom, and the place and time at which, the call
is to be paid. The twenty-one days are reckoned from and
exclusively of the day on which the notice is given (I). If the
(6) Shaw v. Rowley, 16 M. & W.
810.
(c) Ante, p. 416, note (q).
(d) See Miles v. Bough, 3 Q. B.
845.
(e) Ibid. But see Tlie Leeds Bank-
ing Co., 1 Ch. 150.
(/) Eastern Union Hail. Co. v.
Symonds, 5 Ex. 237.
(g) See Watson v. Eales, 23 Beav.
294.
(h) 8 & 9 Vict. c. 16, § 22.
(i) See Ambergate Rail. Co. v.
Mitchell, 4 Ex. 540.
(/:) § 136 provides for giving
notices by post.
(/) Re Jennings, 1 Tr. Ch. 654, re-
versing on this point, ib. 2.36 ; and
PERSONS LIABLE TO PAY CALLS. H9
notice states to whom, and when and where, the call is to he Bk.III. Chap. 3.
Sect. 2.
paid, it is immaterial whether the resolution for the call does
the same or not (m).
By the Companies act, 1862, it is provided (in Table A.) in companies
. . governed bv the
that the directors may, from time to time, make such' calls act of 1862,
upon the members, in respect of all monies unpaid on their
shares, as they think fit (No. 4) ; but twenty-one days' notice,
at least, must be given of each call (No. 4) (n). The notice
may be sent by post (No. 95). A call is made at the time
when the resolution of the directors authorising it is passed
(No. 5).
The act makes calls specialty debts (§ 16), and gives a short
form of pleading in an action for their recovery (§ 70).
By the Stannaries act, 1869 (o), it is provided that calls I" companies
governed by the
may be made at any meeting of the company with special stannaries act,
notice (§ 10) (})), which may be either given personally or sent
by post (§ 8).
The act does not make calls specialty debts (§ 13), but gives
a short form of pleading for their recovery.
4. Of the person* liable to pay adls.
In order that a person may be liable to pay a call, meaning Persons to pay
thereby a portion of the unpaid-up capital of a company, he ca
must either have agreed to subscribe to such capital, or he must
have become a shareholder in the company, or, thirdly, his
liability must have devolved upon him as the representative
of a subscriber or a shareholder. It will be convenient to
allude — 1, to subscribers ; 2, to shareholders ; 3, to the repre-
sentatives of subscribers and shareholders.
see generally on the computation of has changed its name since the call
time, Railway Sleepers Supply Co., was made, may be given in the new
29 Ch. D. 204. name, Shackleford, Ford & Co. v.
(m) Newry, &c, Rail. Co. v. Ed- Dangerfield, L. R. 3 C. P. 407.
munds, 2 Ex. 118 ; Sheffield, &c, (o) 32 & 33 Vict, c. 19.
Rail. Co. v. Woodcock, 7 M. & W. (p) § 5 provides that 7 clear days'
574; Great Northern Rail. Co. v. notice must be given of such
Biddulph, ib. 243. meetings.
(n) A notice by a company, which
E E 2
420
CALLS.
Bk. III. Chap. 3.
Sect. 2.
1. Calls on
subscribers.
Subscribers to
companies go-
verned by
8 & 9 Vict.
c. 16.
Subscribers to
companies go-
verned by the
act of 1862.
2. Calls on
shareholders.
1. As to subscribers. — There is no principle of common law
which prevents a subscriber to an undertaking from being
liable to calls before he has become an actual shareholder in the
company he has agreed to join. His liability at common law
depends entirely on the contract into which he has entered. But
by several of the statutes relating to companies, a particular
mode of proceeding for the recovery of calls is pointed out ; and
if that mode of proceeding applies, as it frequently does, to
shareholders only (or their representatives), a person who is a
mere subscriber as distinguished from a shareholder, cannot
be made to pay a call by that particular mode of proceeding (q),
whatever obligation he may have incurred by agreeing to take
shares and to contribute his quota of capital (r).
By the Companies clauses consolidation act, it is expressly
declared that calls may be made on the subscribers as well as
on the shareholders (s) ; and as was seen in an earlier part of
the work, subscribers may be registered as shareholders with-
out any express consent on their part, and when registered
they may be sued as shareholders for calls (t). But an allottee
of shares who is not a subscriber, i.e., who has not executed
any instrument binding himself to contribute towards the
capital of the company (u), cannot be sued for calls under the
act in question (r).
Under the Companies act, 1862, Table A., calls are only
authorised to be made on the members (w).
2. As to shareholders. — AVho are shareholders, the effect of
being on or off the register of shareholders, the effect of acting
as a shareholder without being one, — are matters which were
(g) See Galvanized Iron Co. V.
Westoby, 8 Ex. 17; Thames Tunnel
Co. v. Sheldon, 6 B. & C. 341.
(r) For instances of successful
actions against allottees on the con-
tracts entered into by them, see
Duke v. Forbes, 1 Ex. 356 ; Duke v.
Dive, ib. 36 ; Aldham v. Brown, 7
E. & B. 164, affirmed on appeal, 6
Jur. N. S. 41.
(s) 8 & 9 Vict. c. 16, §§ 21, 22.
if) See, accordingly, Mid. Rail.
Co. v. Gordon, 16 M. & W. 804 :
Cork and Youghal Rail. Co. v. Pater-
son, 18 C. B. 414, ante, p. 46.
(u) Thames Tunnel Co. v. Sheldon,
6 B. & C. 341.
(r) Carmarthen Railway Co. v.
Wright, 1 Fos. & Fin. 282 j Water-
ford, Wexford, dtc., Rail. Co. v.
Pidcock, 8 Ex. 279.
(w) 25 & 26 Vict, c 89, Table A.,
No. 4 ; and as to who are mem-
bers, see § 23 of the act, and ante,
p. 119.
PEliSONS LIABLE TO PAY CALLS. -I'll
discussed in Book I. Chap. 2. In the present place, therefore, Bk. III. Chap. 3.
. . Sect. 2.
it is proposed merely to recapitulate, as shortly as possible, the
results formerly arrived at, so far as they relate to the parti-
cular question of liability for calls.
A person who has never become a shareholder in the proper Person must be
sense of the word, and who is not estopped by his own conduct
from denying that he is a shareholder, is not liable to calls as a
shareholder, although he may have been registered as one (./•).
Where a trustee is the person registered and recognised as a
shareholder, his cestui que trust is not liable to the company
for calls (y) ; and as a general principle, there must be some
special ground for holding that a person who has no right as
against a company to share profits, is compellable by the com-
pany to pay calls (z).
At the same time, whether a person is actually a shareholder or ^ estopped
in a company or not, if he is estopped by his own conduct that he is one.
from denying that he is a shareholder, he cannot escape from
the payment of calls properly made : and upon the ground of
estoppel by conduct, subscribers to companies have frequently
been held liable to calls as shareholders, although they had not
complied with all the formalities necessary to render them
shareholders in the strict sense of the word (a).
(/:) Galvanized Iron Co. v. Westoby, Woodcock, 7 M. & W. 574 ; Chelten-
8 Ex. 17 ; Watetford, Wexford, tfcc, ham, &c, Rail. Go. v. Daniel, 2 Q.
Bail. Go. v. Pidcock, 8 Ex. 279 ; B. 281 ; London Grand Junction
Carmarthen Rail. Co. v. Wright, 1 Rail. Co. v. Graham, 1 ib. 271 ;
Fos. & Fin. 282 ; Neio Brunswick, Birmingham, Bristol, &x., Rail. Co.
dr., Rail. Co. v. Muggeridge, 4 H. v. Locke, ib. 256, in all of which
& N. 160, and 580. See, also, the calls were recovered. Compare
Bloxam v. Metropolitan Cab Co., 4 these with Irish Peat Co. v. Phillips,
N. R. 51, where an injunction was 1 B. & Sm. 598, in which they
granted. were not, and Wolverhampton New
((/) N ot even in equity, see Newry Waterworks Co. v. Hawksford, 6 C.
Rail. Co. v. Moss, 14 Beav. 64. B. N. S. 336 ; 7 ib. 795 ; and 11
(z) Shropshire Union Rail. Co. v. ib. 456, where an action for calls was
Anderson, 3 Ex. 401. partly successful and partly not.
(a) Hull Flax Co. v. Wellesley, The defendant was held liable for
6 H. & N. 38, where the shares calls made on shares properly issued
were issued irregularly ; Cromford, and held by him, although there
rfcc, Rail. Co. v. Lacey, 3 Y. & J. was no properly sealed register of
80 ; Burnes v. Pennell, 2 H. L. C. shareholders ; but he was held not
497 ; Sheffield, dc, Rail. Co. v. liable for calls on shares not mini-
422 CALLS.
13k. in. chap. 3. A person who is a shareholder within the meaning of an act
Sect. 2. r &
of Parliament which authorises calls to he made on share-
shareholders'^6 holders, is liable to calls made in pursuance of the act, although
liable to calls, jf jjjg liability had not depended on statutory provisions, he
might have been able to resist payment. Upon this ground it
is that infant shareholders in railway companies are liable to
calls (b), if they do not repudiate their shares (c). So, a
person who is a shareholder, and is as such under a statutory
liability to pay calls, cannot escape from such liability on the
ground that he was induced to become a shareholder by the
fraud of the company ; he must go further and show a repudia-
tion of his shares, and that he is not in truth a shareholder (d) ;
fraud and timely repudiation, however, afford a defence (e).
Again, in the case of a registered joint-stock company, the
company being actually created by registration, and having
when created all the powers conferred upon properly con-
stituted companies, a call upon its shareholders will be valid,
although the company ought not to have been registered ;
and a shareholder in such a company cannot escape from
his liability to pay the call, upon the ground that things
required to be done before registration have never been done
at all(/). So, in the case of a company incorporated by a
special act, it is no answer to a call that the act was obtained
by fraud (g).
Duration of A person who, by being a shareholder, has once become
shareholder's . . .
liability to calls, liable to pay calls, continues to be so liable until he has ceased
bered or distinguished from each Bail. Co. v. Black, 8 Ex. 181.
other, and in respect of which there (d) Deposit Life Assur. Co. v.
was in truth no register at all. See Ayscough, 6 E. & B. 761. As to
ante, p. 105; and quaere whether this giving particulars of the fraud, see
case can be relied upon after Portal McCreight v. Stevens, 1 H. & C. 454.
v. Emmcns, 1 C. P. D. 201 and 664. (e) Bwlch-y Plwm Lead Mining Co.
(h) Cork and Bandon Bail. Co. v. v. Baynes, L. R. 2 Ex. 324. See
Cazenove, 10 Q. B. 935 ; Leeds and bk. i., c. 3, as to rescinding contracts
Thirsk Bail. Co. v. Fearnley, 4 Ex. for fraud.
26 ; North-Western Bail. Co. v. (/) Barmen Iron Co. v. Barnett,
McMichael, 5 Ex. 114. Compare 8 C. B. 406. See, too, Agricultural
Birkenhead, &c, Bail. Co. v. Bilcher, Cattle Insur. Co. v. Fitzgerald, 16
5 Ex. 121. Q. B. 432.
(c) Xi.irrij,dr.,Bail.Co.v.Coomhc, (g) See Waterford, &c., Bin!. d>.
3 Ex. 565 ; Dublin and WvMow v. Logan, 14 Q. B. 672.
PERSONS LIABLE TO PAY CALLS. 423
to be a shareholder, or until some valid agreement has been Bk. III. Cbap. 3.
made between him and the company by virtue of which the
company is precluded from treating him any longer as liable
to pay calls (h). If any such agreement has been made, it will
afford a defence (i), although all the formalities required to be
observed by out-going shareholders may not have been rigo-
rously complied with (k).
In most companies, shares are not transferable, so long as When shares
the owner is indebted to the company for calls (I). Where bave bcen sold-
this is the case, a person who has sold his shares, must pay
all the calls made whilst the shares are registered in his name,
before he or the purchaser can require the company to accept
the latter as a shareholder in respect of the shares he has
purchased (mi) ; and so long as the purchaser is not a share-
holder, the vendor continues to be one, and to be liable to
calls (w).
Shares are not unfrequently sold after a call has been made Effect of sale
and before it has become payable ; and if in such a case the made, but before
purchaser is accepted as a shareholder by the company, it may lt l" Pa7able-
possibly find itself unable to sue either the vendor or the pur-
chaser for the call after the time for its payment has elapsed.
In The Aylesbury Railway Company v. Mount (o), which was a Aylesbury Rail.
case of this sort, turning on the provisions of a special act of C0, y" Mouut-
Parliament, the Court of Common Pleas held, that the call
could not be recovered from the transferor, and the Court of
Queen's Bench held that it could not be recovered from the
transferee (p) ; for the transferor was not a shareholder when
the call became payable, and the transferee was not a share-
(h) See the cases of Bosanquet v. shares wall be alluded to hereafter.
Shortridge, 4 Ex. 699 ; Shortridge v. (m) R. v. Londonderry, <&c, Rail.
Bosanquet, 16 Beav. 84 ; Bargate v. Co., 13 Q. B. 998 ; R. v. Wing, 17
Shortridge, 5 H. L. C. 297 ; Taylor ib. 645.
v. Hughes, 2 Jo. & Lat. 24, noticed (n) See London and Brighton Rail,
ante, pp. 55, 56. Co. v. Fairclough, 2 Man. & Gr.
(i) Plate Glass Co. v. Sunleij, 8 674 ; Humble v. Langston, 7 M. &
E. & B. 47. The validity of the W. 517.
defendant's retirement in this case (o) 4 Man. & Gr. 651 ; reversed,
was admitted by the demurrer. but on purely technical grounds, 7
(k) See Bargate v. Shortridge, and Man. & Gr. 898.
Taylor v. Hughes, ante, pp. 55, 56. (p) Aylesbury Rail. Co. v. Thomp-
(l) The subject of the transfer of son, 2 Ra. Ca. 668.
424
CALLS.
r»k. III. Chap. 3. holder when it was made ; and the act in question was so
Sect. 2. ' , 1
worded as to render those only liable to be sued for calls who
were shareholders at both those times. The Courts will, not,
however, so construe an act as to deprive the company of all
remedy for the recovery of a call, if they can possibly avoid it ;
and as the obligation to pay is created by the making of a call,
the person who wTas the shareholder when a call was made, is
prima facie the person to pay it, whatever he may since have
done with his shares.
North American In The North American Colonial Association of Ireland v.
Colonial Assoc. »-,,/» . . • i
v. Bentley. Bentley {q), a company was incorporated by a special act, which
provided for making calls on shareholders, and enacted that if
at the time appointed for payment of a call, the holder failed to
pay it, the company might sue such shareholder, and that it
should be sufficient in an action for calls, to prove that the de-
fendant was a shareholder at the time the call was made. The
act also declared that shareholders who had sold their shares
should remain liable for all future calls until transfers had been
delivered to the secretary, and that no shareholder should be
entitled to transfer his share until he should have paid all calls
due upon it. Upon these somewhat conflicting enactments, it
was held, that a shareholder who had transferred his shares after
a call had been made, but before it had become payable, was
liable to be sued for the call ; and it wTas considered clear
that the transferee could not be sued for it, although the
transfer had been delivered to the secretary of the company as
contemplated b}T the act.
Watson v. Eales. Again, in Watson v. Eales {r), which was the case of a cost-
Cost-book book mining company, one of the rules was, that no share
company.
should be transferred until all calls upon it were paid : and it
was held that a transferee of shares in respect of which calls
were in arrear, was not liable for such calls to the company,
and that the company having recognised the transfer, could
not forfeit the shares for non-payment of the calls.
Result of the In the present state of the law, it cannot be said that there
is any general rule determining whether the transferor or the
transferee of a share is liable to the compan}' for calls made,
(</) 15 Jur. 187, Q. B. (r) 23 Beav. 294.
PERSONS LIABLE TO PAY CALLS.
425
but not paid before the transfer; for admitting the tendency Bk- I(JI-Ch0ap- 3-
to be in favour of holding the transferor liable, the statutory
provisions generally applicable to the subject, are by no means
uniform.
Under the Companies clauses act (s), and the Stannaries act Statutory enact-
...... 1.- r merits on this
1869 (t) the person liable is the shareholder at the time oi subject.
making the call.
This also appears to be the case with respect to companies
governed by the Companies act, 1862, Table A. (a).
The right to forfeit shares for non-payment of calls, or for Forfeiture of
shares for non-
other reasons, will be examined hereafter (infra, c. 6), but payment of
it may be observed here, that both the Companies clauses con- c
solidation act and the Companies act, 1862, Table A., provide
that an action for calls may be maintained, although the shares
in respect of which they became due, have been forfeited for
their non-payment (.r). Where this double remedy is not
expressly given, it will not be presumed ; and in such a case
forfeiture will be an answer to an action (y), provided the for-
feiture was in all respects legal, but not otherwise (z).
3. As to tlir representatives of subscribers and shareholders. — 3. Calls on the
representatives
In adverting to the liability of the executors of a deceased 0f subscribers
,, ., . t ,• • i ii j and shareholders.
person to pay calls, it is necessary to distmguish calls made
before, from those made after the testator's death. Calls made
before his death are payable out of his estate (a) ; and as to
companies governed by the Companies clauses consolidation
act, or the Companies act, 1862, rank like ordinary specialty
debts (b). Calls made after his death, are also payable out of
(s) 8 & 9 Yict. c. 16, §§ 26, 27. See cade, pp. 119, 128.
Belfast, dc, Rail. Co. v. Strange, 1 (a;) 8 & 9 Vict. c. 16, § 29 ; 25 &
Ex. 739 ; Birkenhead, dc, Rail. Co. 26 Vict. c. 89, Table A., No. 21.
v. Brownrigg, 4 Ex. 426 ; Wilson v. See Great Northern Rail. Co. v.
Birkenhead, d-c, Rail. Co., 6 Ex. Kennedy, 4 Ex. 417 ; Inglis v. Great
626 : R. v. Londonderry, dc, Rail. Northern Rail. Co. , 1 Macqueen, 112.
Co., 13 Q. B. 998 ; R. v. Wing, 17 (?/) See Giles v. Hutt, 3 Ex. 18.
ib. 645. As to who is a shareholder, (z) See Edinburgh, dec, Rail. Co.
see ante, p. 104. v. Hebblewhite, 6 M. & W. 707.
(0 32 & 33 Vict. c. 19, § 13. (a) Fyler v. Fyler, 2 Ra. Ca. 813.
(u) See 25 & 26 Vict. c. 89, § 70, (6) As to 8 & 9 Vict, c, 16, see
and Table A., No. 4 ; but see, also, Cork and Bandon Rail. Co. v. Goode,
No. 6, which throws some doubt on 13 C. B. 826 ; and as to 25 & 26
the point as to who is a member. Vict. c. 89, see § 16. As to com-
42G
CALLS.
Bk. III. Chap. 3.
Sect. 2.
Calls not payable
by executors
personally.
Unless they arc
themselves
shareholders.
Trustees in
bankruptcy.
his estate, if they are made whilst the shares are left in his name,
and if he entered into any contract whereby he undertook to pay
such calls as might be made upon his shares (c). In order that
this liability may attach to the estate of a deceased shareholder,
it is not necessary that his executors should become share-
holders in respect of his shares, or that they should have been
named in the contract sought to be enforced against them (d).
By the Companies clauses consolidation act it is expressly
declared, that the executors of subscribers and shareholders
shall pay the calls payable in respect of their testators'
shares (e) ; but this only means that the executors are to pay
out of their testators' assets ; and unless they have actually be-
come shareholders themselves, they must be sued as executors,
and not as shareholders, for such calls as may be sought to be
recovered from them(/). As a general rule it may be taken,
that executors are never liable otherwise than in their repre-
sentative capacity, unless they actually become shareholders^).
But if they do. become shareholders they become subject to the
same obligations as other shareholders, and as between them-
selves and the company they are personally liable to calls, what-
ever the state of their testators' assets may be (h).
If a shareholder becomes bankrupt, calls made before his
bankruptcy are provable against his estate ; and under the
Bankruptcy act, 1883 (/), his liability to future calls is also
provable. Therefore, his order of discharge is a bar to all calls;
even although the trustee in bankruptcy may neither sell the
shares nor disclaim them (k).
panies governed by the Stannaries
act, 1869, see § 13 of that act ; and
as to other companies, see Robinson's
case, 6 De G. M. & G. 572. Spe-
cialty debts now rank with simple
contract debts, 32 & 33 Vict. c. 46.
(c) Heward v. JVheatley, 3 De G.
M. & G. 628 ; Fyler v. Fyler, 2 Ra.
Ca. 813 ; Wills v. Murray, 4 Ex.
843 ; Blount v. Hipkins, 7 Sim. 51.
(d) Ibid., and see Baird's case,
5 Ch. 725.
(e) 8 & 9 Vict. c. 16, § 21.
(/) Birkenhead, &c. Rail. Co. v.
Cotesworth, 5 Ex. 226.
((/) Buchan's case, 4 App. Ca. 549,
583 ; Weald of Kent Canal Co. v.
Robinson, 5 Taunt. 800.
(/() See Armstrong v. Burnet, 20
Beav. p. 435 ; Spence's case, 17 Beav.
203 ; Buff's Executors' case, 32 Ch.
D. 301 '; Buchan's case, 4 App. Ca.
549 and 583.
(i) 46 & 47 Vict. c. 52, § 37.
(k) § 55, infra, c. 8.
\< noNS fob i u.j. - . 127
Bk. IH. Chap. 3.
5. Actions for calls. Sect. 2.
An action for calls must be brought in the name of the Actions for
company, if it is incorporated; and in the name of the public
officer if the company is empowered to sue its shareholders in
that manner (m). In cost-book companies the purser now can
sue (//).
Several of the modern acts of Parliament relating to com- Statutory
panies contain provisions having for their object the simpli-
fication of the pleading and proofs in actions for calls (o).
Their general effect is to render it necessary for a statement of
claim in an action for calls to state merely that the defendant,
as a shareholder, is indebted to the company in so much
money for calls, omitting all statements respecting the making
of the calls in question (p). As regards proof, the general
effect of the provisions referred to is to render it necessary to
show merely three things; viz., first, that the calls sued for
were made in point of fact ; secondly, that the defendant was a
shareholder when the call was made (q) ; and, thirdly, that he
has had proper notice of the making of the call.
Calls made payable by statute (r), or by deed, are specialty Time for bring-
debts ; and an action for their recovery is not, therefore, barred
by the lapse of less than twenty years (s) .
(m) Chapman v. Mil rain, 5 Ex. verhampton, &c, Waterworks Co. v.
61 ; Wills v. Sutherland, 4 Ex. Hcmksford, 6 C. B. N. S. 336 ;
211, affirmed in error, 5 Ex. 715 ; 7 ib. 795, and 11 ib. 546 ; Dundalk,
Skinner v. Lambert, 4 Man. & Gr. dr., Rail. Co. v. Tapster, 1 Q. B.
477 ; Lavrrence v. Wynn, 5 M. & 667 ; Newport, &c, Rail. Co. v.
W. 355 ; Smith v. Goldsworthy, 4 Hawes, 3 Ex. 476 ; Wilson v. Bir-
Q. B. 430. See a declaration in an kenhead, &c, Rail. Co., 6 Ex. 626,
action for calls, by a company in- and as to actions against executors,
corporated by tbe Canadian legis- Birkenhead, dr., Rail. Co. v. Cotes-
lature, Wetland Rail. Co. v. Blake, 6 worth, 5 Ex. 226.
H. & N. 410. (q) See, as to this, ante, p. 57,
(«) 32 & 33 Vict. c. 19, § 13. &c. ; and p. 419 et seq.
(o) See 8 & 9 Vict. c. 16, §§ 26- (r) Calls made under a colonial
28, 25 & 26 Vict. c. 89, § 70 ; and act are simple contract debts only.
bo cost-book mining companies, See Wetland Rail. Co. v. Blake, 6
:^2 & 33 Vet. c. 19, § 13. See the H. & N. 415.
form of statement of claim in R. S. (s) Cork and Bandon Rail. Co. v.
C, Appx. C, § 4, No. 9. Goode, 13 C. B. 826. Compare
{p) See, as to the necessity of Robinson's case, 6 De G. M. & G.
- doptiug the statutory forms, Wol- 572.
428
CALLS.
Bk. III. Chap. 3.
Sect. 2.
Defences.
Evidence.
The usual grounds of defence to an action for calls have all
been considered. They may be reduced to : —
1. A denial that the defendant is a person liable to pay the
call (t). The cestui que trust or principal of a shareholder is
not liable to such an action (u). But a married woman may
be sued for calls on shares standing in her own name (x).
2. A denial of the making of the call in point of fact.
3. A denial that the call, admitted to have been made in
point of fact, was authorised (y), was made by competent
persons (~), or in the proper manner (a), or for proper
purposes (6).
4. A denial of any notice of the call.
5. A denial of such notice as the defendant was entitled to
receive (c).
6. Set off (rf).
7. Infancy (e).
8. Fraud (/).
It must be borne in mind, that if a shareholder does not
avail himself of such defence as he may have at the proper
time, he will be precluded from afterwards disputing either the
validity of the call, or his liability to pay it (g),
Evidence of the making of a call is usually given by proving
the resolution by which it was made ; and this may be done
either by the testimony of the company's secretary, or some
other person having actual knowledge of the fact, or by the
company's minute books, which, as was seen in a former
(t) See ante, p. 419 et scq., and as
to estoppel by conduct, ante, p. 421.
(?<) United Kingdom Mutual Ass.
Assoc, v. Nevill, 19 Q. B. D. 110.
(x) See 45 & 46 Vict, c, 75, §§1,
6, 9, and ante, pp. 41, 42.
(y) Ante, p. 414.
(z) Ante, p. 408.
(a) Ante, p. 414.
(b) Ante,?. 409.
(c) Ante, p. 417. In an action
for calls against a contributory of a
limited company being wound up
voluntarily, it is no defence that the
defendant had no notice that his
name was placed upon the list of
contributories, see Brighton Arcade
Co. v. Bowling, L. R. 3 C. P. 175.
((/) Ante, p. 273, and infra, under
Winding-up. As to setting off calls
not yet due where a shareholder
sues a company, Eyland v. Pelisle,
L. R. 3 P. C. 17. Compare Kent's
case, 39 Ch. D. 259.
(e) Ante, pp. 39, 422.
(/) Ante, p. 422, and Smith v.
Reese River Co., 2 Eq. 264.
(g) See Thames Haven, &c, Co.
v. Hall, 5 Man. & Gr. 274 ; Thames
Haven, &c, Co. v. Rose, 4 ib. 552.
DIVIDENDS. 429
chapter, are in many cases made admissible as evidence of the Bk. III. Chap. 3.
facts stated in them (//).
Evidence that the defendant was a shareholder is usually Evidence,
given by the production of the company's register, the effect of
which has been considered already (i).
Evidence that the defendant received due notice of the
making of the call must be given by showing that the requisite
advertisements (if any) were published, and that such notice
as he was entitled to receive either actually reached him, or
was so sent to him as to have probably reached him. This
will be sufficient, in default of evidence that what was so sent
him did not reach him (j).
SECTION III.— OF DIVIDENDS.
By a dividend is ordinarily meant that share of a company's
profits which is payable to its members in respect of their
shares. The proper fund for the payment of dividends is the
excess of a company's earnings over the expenses incurred in
obtaining them. But it is obvious that opinions may differ as
to the items which ought to be taken into consideration in
settling the two sides of the account, the balance of which may
be properly divided as profit.
The power of settling questions of this kind is generally en-
trusted to the directors, with or without the sanction of the
shareholders ; and (subject to any special provision to the
contrary, and to the limits placed on all powers of directors
and shareholders by the doctrines of ultra vires) if there be a
difference of opinion the voice of the majority must prevail.
The majority can decide whether a dividend shall be paid
before some particular debt is discharged (k) ; or before certain
(h) See ante, p. 312. (h) Stevens v. South Devon Rail.
(i) See ante, p. 57. Co., 9 Ha. 326 ; Comj v. London-
(j) Eastern Union Rail. Co. v. derry, dr., Co., 29 Beav. 263.
Symonds, 5 Ex. 237.
430 DIVIDENDS.
Bk. III. cbap. 3. works are finished (I) ; and what losses and expenses ought to
Sect. 8.
be treated as ordinary and payable out of current receipts, and
what as extraordinary and payable out of capital or money
borrowed (wi). But the power of deciding such questions can-
not be lawfully exercised for the dishonest purpose of making
it appear that profits have been made, when in truth the
current receipts have been less than the current expenses, and,
in fact, there has been a loss (n).
Cases where Under ordinary circumstances, and in the absence of airy
dividends have ■
been held not agreement to the contrary, monies earned ought to be treated
impropu. ag profits of the year in which they are paid, and not as profits
of the year in which they are earned (o) ; and in ascertaining
the profits of a company for the purpose of making a dividend,
debts incurred in the ordinary course of business ought to be
deducted, but not debts incurred b}r exercising special powers
of borrowing (p). Assets, moreover, may be estimated at a
value which they may never realise (q). It has also been held
that dividends may be paid by a company before its works are
finished (/•), and although its debts may be unpaid. The
creditors of a company may be willing to allow their principal
monies to continue unpaid, provided they are punctually paid
the interest upon them ; and if a company, after defraying all
current expenses and the interest of its debts, has a surplus
arising from its current receipts, there is no principle either of
law or morality which requires that such surplus shall be
accumulated, or forbids its division as profit amongst the
shareholders. Whether dividends shall be paid whilst debts
remain unpaid, or whether the whole or any part of the surplus
of receipts over expenditure shall be accumulated or divided,
are questions which it is competent for the majority of share-
holders to decide (s).
(I) Browne v. Monmouthshire, <i-c., (p) Corry v. Londonderry Co., 29
Co., 13 Beav. 32. Beav. 263.
(m) See Gregory v. Patchett, 33 (q) Stringer"1 s case, 4 Ch. 475 ;
Beav. 595. Ranee's case, 6 Ch. 104.
(n) Bloxa/m v. Met. Rail. Co., 3 (r)~ Browne v. Monmouthshire, &c.,
Ch. 337. Rail. Co., 13 Beav. 32.
(o) See per Turner, L. J., in (s) Stevens v. South Devon Rail.
Maclaren v. Stainton, 3 De G. F. & Co., 9 Ha. 313 ; Corry v. London-
J. 214. Compare Browne v. Collins, derry Co., 29 Beav. 263.
12 Eq. 586.
DIVIDENDS OUT OF CAPITAL. 431
Expenses incidental to the formation of a company are Ek- Iri- ChaP- 3-
Sect. 3.
frequently paid off by instalments spread over a number of -
years, dividends being paid in the meanwhile (t) ; and if this
is done openly, there seems to be nothing illegal in it. And it
has been decided that if the articles allow it, dividends may be
paid even by a limited company, if its income exceeds its
expenditure, although its whole capital may have been sunk
in obtaining wasting property, e.g., a leasehold mine, and
although no provision has been made for replacing the capital
which is wasting away year by year (u).
Expenses properly ehargeable to capital, but paid out of Payment of
income, may afterwards be charged to capital so as to increase capital.
a dividend. In other words, the income account may in such
a case be recouped by the capital account, and the two accounts
be set right by paying a dividend out of capital (x).
But except in a case of this sort payments out of capital Dividends paid
cannot be profit ; and to pay what are called profits or dividends
out of capital is, under whatever disguise, tantamount to re-
turning so much capital to the shareholders to whom such
payments are made. In ordinary partnerships there is nothing
to prevent the partners from withdrawing and diminishing their
capitals wholly or in part if the}' all think proper to do so ;
nor is there any legal reason why partners should not, if they
please, borrow mone}T on the credit of the firm, and divide it
wholly or in part among themselves. But neither course
could be pursued without the consent of all the partners.
With respect to companies, however, there are reasons why
capital and money borrowed should not be applied in making
payments to shareholders, even although they ma}r all consent.
In the first place, such an application of the money is calcu-
lated to deceive the public, and can hardly be made for any
(t) See per Martin, B., in Bale v. its expenses ; the excess may be
Cleland, 4 Fos. & Fin. 144. See, divided as profit, although the
also, Bardwell v. Sheffield Waterworks realisable assets, including the good-
Co., 14 Eq. 517. will, may not sell for 10,000^. See ~
(u) Lee v. Neufchatel Asphalte Co., Buckley, 486 et seq., 5th ed. ■^u.^AiuUJ^ ^ijJ-^LU. \o
W. N. 1889, 31. Another case may (x) Mills v. North Rail. of^Bu^s^r^^ V f-&£. S3. /
be suggested. A newspaper may Ayres Co., 5 Ch. 621. Compare
cost 100,000^. to start, that sum Hoole v. Great Western Rail. Co., 3
being spent its receipts may exceed Ch. 262.
432 DIVIDENDS.
Bk. III. Chap. 3. honest purpose ; and in the next place, capital raised, or
— money borrowed, in order to carry on the business of the com-
pany, cannot be properly applied for such a wholly different
purpose as that of paying dividends to the shareholders (y).
Even if all the shareholders can render such a course legal, a
majority cannot; and the more difficult theoretical question
whether all can is of little practical consequence (z). With
respect, indeed, to companies governed by the Companies
clauses consolidation act (a), or by the Table A. to the Com-
panies act, 1862 (b), payment of dividends otherwise than out
of profits is expressly prohibited, and will be restrained by
injunction (c). Nay, more, articles of association providing for
the payment of dividends out of capital are invalid, and the
directors will be restrained from acting under them (d). Such
a payment could not, it is conceived, be authorised, even by
the memorandum of association (e).
Personal liability Independently of any statute, if a company pledges its funds
of directors. „ 1 . .. . . .
for the payment of debts, and the directors misapply tnose
funds by knowingly paying dividends out of capital, (or out of
estimated profits which are never realised) they are com-
pellable to replace not only the amount of dividends which
they themselves have actually received in respect of their own
shares, but also the whole amount of the dividends which they
have caused to be paid to the other shareholders, and also
interest thereon (/). But neither directors nor shareholders
(y) See ante, p. 321. payment of dividends before capital
(z) See Flitcr o] Vs case, 21 Ch. D. is productive.
519 ; Macdougall v. Jersey Imperial (d) Guinness v. Land Corporation
Hotel Co., 2 Hem. & M. 528 ; Fawcett of Ireland, 22 Ch. D. 349. Compare
v. Laurie, 1 Dr. & Sm. 192 ; James Dent v. London Tramways Co., 16
v. Eve, L. R. 6 H. L. 335. Ch. D. 344, and see Buckley, p. 490,
(«) 8 & 9 Vict. c. 16, § 121. 5th ed.
(b) Table A., art. 73. (<>) See Trevor v. Whitworth, 12
(c) See ante, note (z), and Dent v. App. Ca. 409.
London Tramways Co., 16 Ch. D. (/) Oxford Benefit Building Soc.,
344 ; Davison v. Gillies, ib. 347 n. ; 35 Ch. D. 502 ; Leeds Estate Build-
Bloxam v. Metropolitan Bail. Co., 3 ing Soc v. Sheptherd, 36 Ch. D. 787 ;
Ch. 337 ; Hoole v. Great Western Alexandra Palace Co., 21 Ch. D.
Bail. Co., ib. 262 ; Holmes v. New- 149 ; Flitcroff s case, ib. 519 ; Evans
castle, dr., Abattoir Co., 1 Ch. D. v. Coventry, 8 De G. M. & G. 835.
682. Compare Bar dwell v. Sheffield See the decree, clause 4. The decree
Watervwrks Co., 14 Eq. 517, as to was made without prejudice to the
EXCLUSION FROM SHARE OF PROFITS. 433
are liable to refund dividends declared and paid on a bond fide Bk- l}1- Chap. 3.
Sect. 3.
valuation of assets, although such assets may ultimately prove
valueless (g).
Moreover, directors who for fraudulent purposes and in
order to induce shareholders and the public to believe that the
affairs of a company are in a favourable position, declare
dividends out of profits when there are no profits wherewith to
pay them, and pay the dividends declared, either out of the
capital of the company or out of money borrowed for the pur-
pose, are guilty of a criminal offence, punishable both at
common law (h) and by statute (i), and are liable to an action
for damages at the instance of persons induced to take shares
on the faith of such misrepresentation (k).
A resolution by the directors or shareholders of a company, Exclusion of
to exclude a shareholder from his share of the profits, can only share of profits.
be defended where the right to make such a resolution has been
clearly conferred by the act, charter, or deed of settlement by
which it is governed. A resolution to exclude a shareholder
from his share of profits is very like a resolution to forfeit his
share, and is illegal unless specially authorised (l).
In Adley v. The Whitstable Company (???), an incorporated Adley v.
Whitstable
company of oyster fishers and dredgers made a bye-law to the Company,
effect, that if any member should sell oysters, except those
taken from the company's grounds, he should forfeit 10/., and
be excluded from all share in the profits which the company
might make after the penalty was incurred and before it was
paid. A member infringed the bye-law and refused to pay
the penalty, and was thereupon excluded from all share of the
profits of the company. But on a bill filed by him against
right of the directors to recover the Burnes v. Pennell, 2 H. L. C. 497 ;
dividends back from those who had R. v. Esdaile, 1 Fos. & Fin. 213.
received them. Compare Turquand (i) See infra, p. 446, on fraudulent
v. Marshall, 4 Ch. 376. accounts.
(g) See Stringer s case, 4 Ch. 475 ; (k) Bale v. Cleland, 4 Fos. & Fin.
Ranee's case, 6 ib. 104 ; and compare 117, and other cases, ante, p. 88.
Oxford Benefit Building Soc, 35 Ch. (I) See infra, c. 6 ; and Griffith
D. 502, at p. 512 ; and Leeds Estate v. Paget, 5 Ch. D. 894.
Building Soc. v. Shepherd, 36 Ch. D. (m) 17 Ves. 315 ; 19 ib. 304 ; and
787. 1 Mer. 107.
{h) See per Lord Campbell, in
L.C. F F
434
DIVIDENDS.
Bk. III. Chap. 3,
Sect. 3.
Dividends pay-
able rateably
according to
the number
of shares.
Maughan r.
Leamington
Gas Company.
the company, it was held that the bye-law was invalid (n) ;
that the company had no right to exclude any of its members
from their share of profits on any such ground as that in
question ; and that it was no defence that the profits of which
the plaintiff sought a share were actually gone, having been
divided amongst the other members. An objection that the
parties, if any, accountable to the plaintiff, were the officers of
the company, who paid those profits, and not the company
itself, was also overruled, and a decree was made in the
plaintiff's favour.
Where all shares are on the same footing, the shareholders
will prima facie be entitled to have dividends declared and paid
to them in proportion to the number of shares they respectively
hold, although the amounts paid up in respect of them may be
unequal (o). The same rule holds even where there are two
issues of shares, if, by the regulations of the company, dividends
are to be paid to all shareholders in proportion to their
shares (})). But the application of this or any other general
rule, may be excluded as regards any particular company by
its act, charter or regulations.
In Maughan v. Leamington Gas Company (q), certain share-
holders in a gas company were entitled to dividends up to 10
per cent., and certain other shareholders were only entitled to
dividends up to 7 per cent. The surplus profits, if any, were
to be applied first, in making up the dividends of past years to
these amounts, and secondly, in reducing the charges for gas.
The profits not being sufficient to pay a dividend of 10 per
cent, on the one set of shares, and also a dividend of 7 per cent,
on the other set. it was resolved to pay a dividend of 8 per
cent, on the first, and 7 per cent, on the second. It was con-
tended that this resolution was illegal, and that the dividend
ought to be declared in the proportion of 10 to 7 ; and a suit
was instituted to enforce this view. But the Court declined to
interfere ; considering that, according to the true construction
On) An action was directed to be
brought to try this question.
(o) Oahbank Oil Co. v. Crura, 8
App. Ca. 65. Of course, unpaid
calls can be set off against dividends.
See, also, 8 & 9 Vict. c. 16, § 120 ;
25 & 26 Vict. c. 89, Tahle A., art. 72.
(])) Ibid. ; and see Bridgewater
Nav. Co., 39 Ch. D. 1.
(q) 15 W. R. 333.
ON PREFERENCE SHARES.
435
of the statutes relating to the company, the above proportions Bk. ni^cl^P- 3-
might be departed from when the profits were insufficient to -
pay both classes of shareholders their maximum amounts of
dividend.
It is bv no means unusual for companies who have expended Preference
J L . shares,
their original capital, to raise (under some power specially
conferred upon them for the purpose) further capital by the
issue of "preference shares," i.e., of shares the holders of
which are to be entitled to share profits, up to a given amount,
in preference to the other shareholders. The right to do this
has been already examined (r).
Where preference shares have been issued by competent
authority, the terms upon which they have been issued must,
of course, be adhered to (s) ; and it has been decided in several
cases, that unless there is some agreement or enactment to
the contrary, preference shareholders are entitled to be paid
out of the profits of the company their dividends to the
amount guaranteed, before the other shareholders receive any-
thing : so that if the profits divisible at a given time are not
sufficient to pay the guaranteed dividends in full, the deficiency
must be made good out of the next divisible profits ; the
ordinary shareholders taking no profits until all arrears of
guaranteed dividends have been paid to the preference share-
holders (f). This rule, however, has been altered by statute,
so far as concerns companies governed by the Companies'
clauses consolidation act(«).
No resolution of a company can vary the rights of the Rights of
A ^ ^ " t preference
holders of different classes of duly created shares (x). No shareholders.
resolution can deprive preference shareholders of their right to
be paid the sums guaranteed out of the company's profits as
soon as there are any. So long as there are no profits, the
preference shareholders get nothing, for they are not creditors
i
(r) Ante, p. 396. was held to extend to capital also.
(s) Bannatyne v. Direct Spanish (u) 26 & 27 Vict. c. 118, § 14,
Telegraph Co., 34 Cli. D. 287. noticed ante, p. 400.
(0 See Webb v. Earle, 20 Eq. 556, (x) Ashbury v. Watson, 28 Ch. D.
and other cases cited ante, p. 400, 56 ; and 30 ib. 376 ; and compare
note (as). In Bangor v. Port Madoc Bannatyne v. Direct Spanish Tele-
Slate Co., 20 Eq. 59, the preference graph Co., 34 Ch. D. 287.
436
DIVIDENDS.
iruaranteed
dividends.
Bk. III. Chap. 3. of the company (y) ; but as soon as there are any profits to
— divide, they must be applied in payment of whatever is
required to make up to the preference shareholders the sums
guaranteed to them, including all arrears, if that is the bargain
with them (z). Where the payment of a dividend of a certain
amount is guaranteed, it becomes a question whether the monies
payable under the guarantee form part of the general assets of
the company, so as to be liable to the company's debts, or
whether they belong to the shareholders individually. This
question depends in each case upon the true construction of
the contract and the bona fides of the transaction (a).
Dividends must be paid in money ; not in shares unless all
the shareholders so agree (b).
Bonuses or extra dividends may be declared out of accumu-
lated profits or unexpected gains ; but questions as to these
seldom arise, except where shares are bequeathed or are held
for life only, and they will be found considered in another part
of the work(c).
Married women. Shares standing in the name of a married woman being now
prima facie her separate property, dividends payable in respect
of them are prima facie payable to her (d).
The law relating to the payment of dividends where charging
orders have been made, where shares have been transferred,
where transfers have been forged, and where a shareholder has
died or become bankrupt, will be found in those parts of the
work which treat of those subjects respectively.
lionuses.
Effect of
charging order,
etc.
(y) Preference shareholders are
not necessarily entitled on a wind-
ing np to any preference in the divi-
sion of assets. See, as to this, infra,
book iv. c. 1, § 13.
(z) See notes (t) and (y), and
Dent v. London Tramways Co., 16
Ch. D. 344.
(a) Compare Be Stuart's Trusts, 4
Ch. D. 213 ; Bouch v. Sevenoaks Rail.
Co., 4 Ex. D. 133, where the credi-
tors established their claim, and Ex
parte Jegon, 12 Ch. D. 503 ; Water-
ford, Dungarvan and Lidmore Rail.
Co., 5 L. R., Ir. 103 & 584, where
the shareholders were held entitled.
As to the power of the company to
release such a guarantee, see Sheffield
Nickel Co. v. Unwin, 2 Q. B. D.
214.
(b) See Hoole v. Great Western
Rail. Co., 3 Ch. 262.
(c) See book iii. c. 7, § 3.
(d) See ante, p. 41 et seq. ; 45 &
46 Vict. c. 75, §§ 6-8. Formerly an
action for them had to be brought
by her and her husband ; see Dalton
v. Midland Rail. Co., 13 C. B. 474,
ACTIONS FOR DIVIDENDS. 437
Dividends which are actually declared and payable by an Bk- H1- ch^P- 3-
incorporated company, are recoverable by action brought by
, Actions for
the person having the legal title to receive them, against the dividends,
company. The plaintiff must prove that the dividend sought
to be recovered has been declared, and has become payable,
and that lie has the legal title to the dividend payable in
respect of the shares by virtue of which he claims it. The
circumstance that he is not a registered shareholder will not
prejudice him if he has been wrongfully removed by the com-
pany from the register (e). A married woman may sue for
dividends on shares standing in her own name (/).
The non-payment of calls is, in most companies, an answer
to an action for dividends ; and even where it is not so, calls
and dividends may be set off against each other (//).
Except where an action would lie by one partner against Dividends of
another for money in the hands of the latter payable to the companfe"™ ^
former, an action for a dividend due to a member of an unin-
corporated company would not lie before the passing of the
Judicature acts(#).
Having made these general observations on the payment of Dividends of
dividends, it is proposed to notice shortly the legislative enact- panies! ^
ments bearing upon the same subject.
No shareholder in a company governed by the Letters Patent 7 Wm. 4 & l
Vict, c 73
act, is entitled to any share of the profits of the company
unless he is registered as a shareholder (h).
The Companies' clauses consolidation act declares, that a 8 & 9 Vict.
company governed by it shall not be bound to see to the
execution of any trust, and that the receipt of the person, or
of any one of the persons in whose name a share ma}r be
registered, shall be a discharge to the company for all monies
paid in respect of such share, notwithstanding any trusts to
where a married woman sued alone and ante, p. 41 et seq.
for dividends and recovered, the (//) Ante, p. 434, note (o), infra,
non-joinder of her husband not p. 438.
having been pleaded in abate- (g) See Lyon v. Haynes, 5 Man. &
ment. Gr. 504. See Partn. 560 et seq.
(e) Dalton v. Midland Rail. Co., (h) 7 Wm. 4 & 1 Vict. c. 73,
12 C. B. 458, and 13 ib. 474. § 20.
(/) 45 & 46 Vict. c. 75, §§ 1, 6-9,
438
DIVIDENDS.
Bk. III. Chap. 3. which it may be subject (i). Interest upon all mortgage and
— bond debts must be paid in preference to any dividends (j),
which are to be declared only at general meetings of the share-
holders (&). It is the business of the directors, previously to
every meeting at which it is proposed to declare a dividend,
to prepare a scheme showing the profits which have accrued
since the last meeting at which a dividend was declared, and
apportioning such profit, or so much of it as they may consider
applicable to the purposes of dividend, among the share-
holders (I). No dividend is to be paid out of capital {11). The
directors are authorised to set apart out of the profits such
sum as they may think proper to meet contingencies, or for
repairs and improvements (m). No shareholder is entitled to
be paid any dividends unless he is registered, and has paid all
calls due from him to the company (n).
The Companies act, 1862, is silent upon the subject of
dividends. By Table A., however, it is provided that the
directors may, with the sanction of the members, declare a
dividend to be paid to them in proportion to their shares
(No. 72). But no dividend is payable except out of profits
(No. 73) ; and before recommending any dividend, the directors
may set aside out of the profits such a sum as they think
proper as a reserve fund to meet contingencies, or for equalising
dividends, or for repairing or maintaining the works con-
nected with the business of the company (No. 74). Moneys
due from any member, for calls or otherwise, may be deducted
from the dividends payable to him (No. 75). Dividends
unclaimed for three years may be forfeited for the benefit of
the company (No. 76). No dividend bears interest (No. 77).
If several persons are registered as joint holders of any share,
the receipt of any one of them for the dividends payable in
respect of such share is to be effectual (No. 1).
The Companies act, 1867, gives a company power, if autho-
rised by its regulations as originally framed, or as altered by
Companies act,
1862.
Table A.
Companies act,
1S67.
(i) 8 & 9 Vict. c. 16, § 20.
(j) lb. § 48.
(jfc) lb. § 91.
(?) lb. § 120. As to withholding
dividends from preference share-
holders, see ante, p. 435, notes (t)
and (u).
(II) lb. § 121.
(m) lb. § 122.
(n) lb. §'§ 8 & 123.
accoun j s. 489
special resolution, to pay dividends in proportion to the amount Bk. III. Chap. 3.
paid up on each share, in cases where a larger amount is paid
up on some shares than on others (o).
The Companies act, 1880, gives a company power, by special Companies act,
. . 1880.
resolution, to return accumulated profits, which might be dis- Rejucti0I1 0f
tributed as a dividend or a bonus to the shareholders in reduc- paid-up capital.
tion of the paid up capital of the company, the unpaid capital
being thereb}r increased by a similar amount. Any shareholder
may decline to receive the return of his money, and require the
company to retain it, but his share in regard to the payment of
dividends is to be deemed to be paid up to the same extent
only as the shares on which the repayment has been accepted.
The company are to invest the amount retained on proper
securities and pay the interest to the shareholder, applying
the capital from time to time in paying the future calls, which
may be made to replace the capital so reduced on those
shares (})).
SECTION IV.— OF THE ACCOUNTS OF COMPANIES.
1. Of the duty to keep and the right to inspect them.
The duty of keeping the accounts of companies necessarily Accounts of
companies.
devolves upon the managers and directors, or persons super-
intended by them. The right of the shareholders to inspect
such accounts is also necessarily limited ; for if every share-
holder were at liberty to examine the accounts whenever he
desired to do so, it would be impracticable for the accounts
ever to be kept or made up in a proper manner. The right of Shareholders
shareholders to inspect accounts is usually qualified by express them,
agreement ; but it requires no express agreement to confer the
right, for that is a consequence of their right to share profits :
and where there is no agreement to the contraiy, the writer
apprehends that the shareholders of a company are entitled to
have its accounts produced at their meetings and to appoint
persons to inspect and examine them. Moreover, a right to
(o) 30 & 31 Vict. c. 131, § 24 (3). Qj)I43 Vict. c. 19, §§ 3-5.
440 ACCOUNTS
Bk. III. Chap. 3. inspect includes a right to take a copy, if inspection is useless
Sect. 4.
without a copy (q).
If a company's regulations provide for the inspection of its
accounts by the shareholders at certain times and subject to
certain restrictions, then, it seems, the shareholders are not
entitled to inspect the accounts, otherwise than subject to the
restrictions mentioned (r). Nor does a right to inspect the
books of a company necessarily extend to the minutes of the
meetings of the directors (s).
Mandamus to It has been decided that a shareholder who, by the terms of
tion. a company's special act, is entitled at all seasonable times to
inspect the books of the company, and who has applied for an
inspection and has been refused, is not entitled to a mandamus
against the company to allow inspection, unless, before inspec-
tion was refused him, he stated for what purpose he desired to
see the books, and unless such purpose was, in the opinion of
the Court, a reasonable purpose, and unless the refusal pro-
ceeded from the managing body (t).
Inspection in an When a person obtains from a court of justice an order to
inspect for some purpose connected with a pending litigation,
he is bound to conduct himself in a peaceable, decorous, and
gentlemanly manner, and not to make public, or communicate
to strangers to the litigation the contents of the documents he
may have had produced to him (w).
(</) See Mutter v. Eastern and 337. See, too, R. v. Clear, 4 B. & C.
Midland Rail. Co., 38 Ch. D. 92. 899 ; and generally as to the right of
(r) See Baldwin v. Laivrence, 2 a member of a corporation to inspect
Sim. & Stu. 18. In Hall v. Connell, the corporation's books, &c, see Rex
3 Y. & C. Ex. 707, the Court (lis- v. The Fraternity of Hostmen in
regarded the restrictive clauses ; Newcastle-upon-Tyne, 2 Str. 1223,
but see Morgan's case, 28 Ch. D. and notes to that case ; Holland v.
620 ; Turney v. Bayley, 4 De G. J. Dickson, 37 Ch. D. 669 ; Mutter v.
& S. 332 ; Williams v. The Prince of Eastern and Midland Rail. Co., 38
Wales' Life Co., 23 Beav. 338 ; and Ch. D. 92. In an action for calls
as to the application of special rules the Court will not order the com-
after a winding-up order, see York- pany to produce its books in order
shire Fibre Co., 9 Eq. 650. to enable the shareholders to fish
(s) R. v. Mariquita Mining Co., out a defence, Birm., Bristol, &c, Go.
1 E. & E. 289. v. White, 1 Q. B. 282.
(t) R. v. The Wilts and Berks (u) Williams v. Prince of Wales'
Canal Co., 3 A. & E. 477 ; R. v. Life Ass. Co., 23 Beav. 338.
Tiie Grand Canal Co., 1 Ir. Law Rep.
action.
OF COMPANIES GOVERNED BY 8 & 9 VICT. C. 16. 441
The directors of a company have no power, by any resolu- Bk. III. Chap. 3.
tion of their own, to exclude one or more of their number from
access to the company's books. This has been decided in suits doctor to see
against directors who, in answers to interrogatories as to the accounts> &c-
contents of the books, have sworn ignorance of those contents,
and inability to ascertain them, in consequence of orders given
by the other directors to the officers having charge of the
books not to allow them to be seen. This answer is insuffi-
cient, for the directors interrogated must, if necessary, enforce
their right to examine the books, and time will be afforded
them for that purpose (x).
Some acts of Parliament relating to companies, contain ex- Statutory enact-
press enactments upon the subject of accounts, and especially tympanies'8
as to their audit and the right of the shareholders to examine accounts-
them. These enactments, so far as they are contained in
public general statutes now in force, are confined to companies
governed by the Companies' clauses consolidation act, 8 & 9
Vict. c. 16, the Companies acts, 1862 and 1879, the Life
Assurance Companies act, 1870, and the Stannaries act, 1887.
As to companies governed by the Companies' clauses consolidation act.
The 8 & 9 Vict. c. 16, contains several provisions relating Accounts of
to the appointment and duties of auditors, and to the keeping govemedby
and inspection of accounts, the general effect of which is as 8 & 9 Vict-
c. lb'.
follows (y). Two auditors (or such other number, if any, as
the company's special act may require) are to be elected by the
shareholders, and one auditor is to go out of office every year,
but may be re-elected. The directors are to deliver to the
auditors, accounts and balance sheets before every ordinary
meeting of shareholders, and the auditors are to examine the
same, and either report upon them or simply confirm them,
(x) See Taylor v. Rundell, 1 Y. & as to taking security from officers
C. C. C. 128, and 1 Ph. 222. See, entrusted with money belonging to
too, Stuart v. Lord Bute, 12 Sim. the company, and to the summary
460 ; Turquand v. Marshall, 6 Eq. method of making them account,
112, which, however, was reversed, see §§ 109-114. See, also, 30 & 31
4 Ch. 376. Vict. c. 127, § 30.
(//) §§ 101-108, and 116-119, and
412 ACCOUNTS
Bk. III. Chap. 3. aiK| the auditors' report or confirmation is to be read at the
Sect 4
- meeting (z). The auditors, or any one of them, may appoint
an accountant to assist in the audit (a). The directors are
required to have proper accounts kept of all monies received or
expended on account of the company, and to appoint a book-
keeper to keep the accounts. The books of the company are
to be balanced at the periods prescribed in the company's
special act ; and if no period is prescribed, fourteen days at
least before each ordinary meeting. On the books being so
balanced, a balance sheet is to be made up and signed by the
chairman or deputy chairman of the directors, and such balance
sheet is to exhibit a true statement of the capital, stock,
credits, and property of every description belonging to the
company, and the debts due by the company, and a distinct
view of the profits or loss which may have arisen on the trans-
actions of the company in the course of the preceding half-
year. The books so balanced, and the balance sheet, are
required to be open for the inspection of the shareholders at
the principal office or place of business of the company for
fourteen days before, and one month after every ordinary
meeting, if no other periods are prescribed by the company's
special act, and during those periods the shareholders have a
right to see the books, and to take copies and extracts there-
from ; but they are not entitled to demand inspection of such
books at any other time, unless in virtue of an order signed by
three directors (b).
As regards companies governed by the Companies act, 1862.
Accounts of com- The Companies act, 1862, contains, as will be seen here-
tythe lcteorrd after, some enactments relating to the production of books and
1862- accounts to inspectors specially appointed; but, with some
exceptions, to be noticed presently, the act leaves each com-
pany to make what regulations it pleases respecting the keep-
ing, inspection, and auditing of accounts on ordinary occasions.
(z) The audit does not bind the 12 Q. B.D. 68.
shareholders, Bloxom v. Metropolitan (b) See, also, as to loan capital
Bail. Co., 3 Ch. 337. accounts of railway companies, 29
(a) § 108. Steele v. Sutton Gas Co., & 30 Vict. c. 108.
OF COMPANIES GOVERNED BY THE COMPANIES ACT, 1862. 443
By the regulations, however, in Table A., appended to the Bk- m- cliaP- 3-
Sect. 4.
act (c), the directors are to cause true accounts to be kept of
Table A
the stock in trade, receipts, expenditure, credits, and liabilities
of the company. These books are to be kept at the registered
office of the company, and are to be open to the inspection of
the shareholders during the hours of business, subject to any
reasonable restrictions, as to the time and manner of inspec-
tion, that may be imposed b}r the company in general meet-
ing (d). The directors are required to lay before the share-
holders, once a year at least, a statement of the income and
expenditure of the company (e), and also a balance sheet con-
taining a summary of the property and liabilities of the com-
pany, and a printed copy of such balance sheet is to be sent to
every shareholder (/).
The accounts of the company and the balance sheets are to Audit.
be examined by one or more auditors, the first of whom are
to be appointed by the directors, but the others by the com-
pany at a general meeting (g). If no election is made, the
Board of Trade is empowered, upon the application of one-
fifth in number of the shareholders, to appoint an auditor, to
be paid by the company (h). The auditors are at all reason-
able times to have access to the books and accounts of the
company, and are empowered to employ accountants at the
expense of the company to assist in the investigation of the
accounts ; they are also empowered to examine the directors
and other officers of the company, with reference to its ac-
counts (i). The auditors are required to report upon the
accounts and balance sheets, and their reports are to be read
to the shareholders at the general meetings (k). And it is
their duty to enquire into the substantial, and not merely the
arithmetical, accuracy of the balance sheet, and to ascertain
that it contains the particulars, if any, required by the articles
(c) By 25 & 26 Vict. c. 89, § 15, No. 78.
the regulations in Table A. apply (e) lb. Nos. 79 and 80.
to all companies limited by sbares, (/) lb. Nos. 81 and 82.
and formed under that act, with the (g) lb. Nos. 83 and 84.
exception of such of those com- (/<) lb. No. 91.
panies as have other regulations (i) lb. No. 93.
inconsistent with them. (£) lb. No. 94.
(d) 25 & 26 Vict. c. 89, Table A.,
444
ACCOUNTS
Bk. III. Chap. 3.
Sect. 4.
Inspection by
Board of Trade ;
or by inspectors
specially ap-
pointed by the
company.
Statements to
be made by
banking, in-
surance and
other com-
panies
Accounts of
banking
companies.
of association, and correctly represents the state of the com-
pany's affairs (Z). No director, and no person interested other-
wise than as a member of the company in any of its transac-
tions, can be an auditor (m).
In addition to these regulations, the Companies act, 1862,
enacts (n) that, upon the application of a certain number of the
shareholders of any company registered under it, the Board of
Trade may appoint inspectors to examine and report on the
affairs of the company ; and such inspectors are empowered to
call for and examine all the company's documents and books,
and to examine the officers and agents of the company upon
oath. The expenses of the inspectors are to be defrayed by
the shareholders upon whose application they were appointed.
Instead of applying to the Board of Trade, the shareholders
themselves may, by special resolution, appoint inspectors for
the purpose of examining into the affairs of the company, with
the same powers as are conferred upon inspectors appointed
by the Board of Trade (o). A copy of the report of the
inspectors, authenticated by the seal of the company, is ad-
missible in evidence in any legal proceeding (p).
Every limited banking company, and every insurance com-
pany, and ever}T deposit, provident, and benefit society governed
by the Companies act, 1862, is bound, before it begins business,
and twice a year whilst it carries on business, to make a state-
ment in a prescribed form, showing the state of its assets and
liabilities ; and a copy of such statement is to be kept in some
conspicuous place in the registered office of the company, and
in every branch office where its business is carried on, and
every member and creditor of the company is entitled to a cop}r
of such statement on payment of sixpence (q).
The accounts of every banking company registered as limited
after the passing of the Companies act, 1879 (r), are to be
examined once at least in every 3rear by an auditor or auditors
who are to be elected annually by the company at a general
(/) Leeds Estate Co. v. Shepherd, 36
Ch. D. 787.
(m) 25 & 26 Vict. c. 89, Table A.
No. 86.
(n) lb. §§ 56-59.
(o) lb. § 60.
(P) lb. §61.
(q) lb. § 44, and Schedule 1,
Form D.
(r) 42 & 43 Vict. c. 76, §§ 7 and 8.
OF OTHER COMPANIES.
445
meeting. No officer of the company can be elected as auditor, Bk. III. Chap. 3.
. ., TP i Sect. 4.
but an auditor on quitting office is re-eligible. If any casual —
vacancy occurs in the office of auditor, the surviving auditor
may continue to act, but if there is no surviving auditor, the
directors are to call an extraordinary general meeting to fill the
vacancy. The auditors are to be supplied with a list of all the
books kept by the company, and to have access to all the books
and accounts of the company in England, with power to
examine the directors or other officers of the company in rela-
tion to them. It is their duty to make a report to the members
on the accounts examined by them, and on every balance sheet
laid before the company in general meeting, stating whether
the balance sheet referred to in the report is full and fair, and
properly drawn up, so as to exhibit a correct view of the state
of the company's affairs as shown by the books of the company.
The report is to be read to the company in general meeting.
The balance sheets are to be signed by the auditors, the
secretary or manager, and by at least three of the directors.
The remuneration of the auditors is to be fixed by the general
meeting at which they are appointed.
As regards companies governed by the Life Assurance Companies Act, 1870.
By 33 & 34 Vict. c. 61 (s), all life assurance companies, other Life assurance
than those registered under the acts relating to friendly comp D
societies, are required to make out annually statements of their
revenue accounts and balance sheets, and to lay the same
before the Board of Trade, and to furnish printed copies to
their shareholders and policy-holders.
As regards companies governed by the Stannaries act, \8S'i
mining com-
The purser of every cost-book mine is bound once at least Cost-book
• ii mining
in every sixteen weeks to enter in the cost-book accounts panies.
showing the actual financial position of the company at the end
either of the financial month last preceding the entry, or of the
last preceding calendar month, and to convene an ordinary
(s) Amended by 34 & 35 Vict. c. 58 ; 35 & 36 Vict. c. 41.
UG
FRAUDULENT ACCOUNTS.
Bk. III. Chap. 3. meeting of the shareholders, and to lay the accounts before the
— meeting, and to submit them to the full inspection of all share-
holders present. For any neglect of these duties he is liable
to a penalty. The accounts, after they have been laid before
the meeting of shareholders, are to be printed, and a copy sent
to every shareholder, and to the lessors of the mine (t).
Fraudulent
accounts.
24 & 25 Vict,
c. 96.
Directors keep-
ing fraudulent
accounts.
Directors, &c,
destroying
books, &c.
Publishing
fraudulent
statements.
2. Of false and fraudulent accounts.
Before quitting the subject of accounts it is necessary to
draw attention to certain important statutory enactments re-
lating to false and fraudulent accounts. The act 24 & 25 Vict.
c. 96, consolidating the statutes relating to larceny and other
similar offences, declares amongst other things that —
§ 82. Whosoever, being a director, public officer, or manager of any body
corporate or public company, shall as such receive or possess himself of any
of the property of such body corporate or public company otherwise than in
payment of a just debt or demand, and shall with intent to defraud, omit
to make, or to cause or direct to be made, a full and true entry thereof in
the books and accounts of such body corporate or public company, shall be
guilty of a misdemeanor, and being convicted thereof shall be liable, at the
discretion of the court, to any of the punishments which the court may
award as hereinbefore last mentioned (»).
§ S3. Whosoever, being a director, manager, public officer, or member of
any body corporate or public company, shall, with intent to defraud, destroy,
alter, mutilate, or falsify any book, paper, writing, or valuable security
belonging to the body corporate or public company, or make or concur in
the making of any false entry, or omit or concur in omitting any material
particular, in any book of account or other document, shall be guilty of a
misdemeanor, and being convicted thereof shall be liable, at the discretion
of the court, to any of the punishments which the court may award, as
hereinbefore last mentioned.
§ 84. Whosoever, being a director, manager, or public officer of any body
corporate or public company shall make, circulate, or publish, or concur in
making, circulating, or publishing, any written statement or account which
he shall know to be false in any material particular, with intent to deceive
or defraud any member, shareholder, or creditor of such body corporate or
(t) 50 & 51 Vict, c. 43, §§ 23, 25,
and 26, and compare §§9 and 10 of
the Stannaries act, 1869 (32 & 33
Vict. c. 19).
(u) i.e., by § 75, penal servitude
for not more than seven nor less
than three (now five) years ; or im-
prisonment for not more than two
years, with or without hard labour,
and with or without solitary confine-
ment.
FRAUDULENT ACCOUNTS. 447
public company, or with intent to induce any person to become a share- Bk. III. Chap. 3.
holder or partner therein, or to intrust or advance any property to such body ' 4"
corporate or public company, or to enter into any security for the benefit
thereof, shall be guilty of a misdemeanor, and being convicted thereof shall
be liable, at the discretion of the court, to any of the punishments which
the court may award, as hereinbefore last mentioned.
§ 85. Nothing in any of the last ten preceding sections of this act con- Discovery in
tained shall enable or entitle any person to refuse to make a full and com- such cases,
plete discovery by answer to any bill in equity, or to answer any question
or interrogatory in any civil proceeding in any court, or upon the hearing
of any matter in bankruptcy or insolvency ; and no person shall be liable
to be convicted of any of the misdemeanors in any of the said sections
mentioned by any evidence whatever in respect of any act done by him, if
he shall, at any time previously to his being charged with such offence,
have first disclosed such act on oath, in consequence of any compulsory
process of any court of law or equity, in any action, suit, or proceeding
which shall have been bond fide instituted by any party aggrieved, or if he
shall have first disclosed the same in any compulsory examination or
deposition before any court upon the hearing of any matter in bankruptcy
or insolvency.
The Companies act, 18G2, also declares, " that if any Companies act,
director, officer, or contributory of any compan}' wound up
under this act, destroys, mutilates, alters, or falsifies any
books, papers, writings or securities, or makes or is privy to
the making of any false or fraudulent entry in any register
book of account or other document belonging to the company,
with intent to defraud or deceive any person, every person so
offending shall be deemed to be guilty of a misdemeanor, and
upon being convicted shall he liable to imprisonment for any
term not exceeding two years, with or without hard labour " (x).
The same act also contains provisions by wdiich directors and
others may be ordered to be criminally prosecuted for offences
relating to a company being wound up (y).
The Stannaries act, 1887, enacts that if any false statement Stannaries act,
... 1S87.
or entry be made, or any material particular he omitted in the
accounts of the cost-hook mine with the knowledge of the
purser, the purser shall be liable in respect of every such false
statement, entry or omission, to a penalty not exceeding 501.,
to be recovered in a summary way before any two or more
justices of the peace, who have power to award any portion of
the penalty not exceeding one half to the prosecutor, provided
(a?) 25 & ■!('> Vict. c. 89, § 166. («/) lb. §§ 167, 8.
448
FRAUDULENT ACCOUNTS.
Bk. III. Chap. 3. ]ie 1S a shareholder in the company or a person having a legal
Sect. 4.
right to inspect the accounts ; and the manager ot the mine is
also liable to a similar penalty if any false statement or entry
be made, or material particular be omitted to his knowledge (z).
Independently of all statutory enactments, moreover, per-
sons who conspire to defraud others by false representations as
to the solvency of companies are indictable (a).
It has already been seen that an action for damages will lie
against directors and others who issue false reports, and
thereby induce persons to take shares in a company (c) ; and
that an action may be maintained to rescind contracts entered
into with a company on the faith of such reports (d).
Indictment for
conspiracy.
Action for mis-
representation.
(z) 50 & 51 Vict. c. 43, § 24.
(a) Ante, p. 87.
(c) See ante, p. 88.
(d) Ante, p. 72 et seq., and see
infra, c. 9, § 4.
SHARES. 449
CHAPTER IV.
OF SHARES IN COMPANIES ; THEIR TRANSFER AND SALE. Bk. III. Chap. 4.
In the present chapter it is proposed to examine the follow- Subject of pre-
sent chapter,
ing subjects : —
§ 1. The nature of a share in a company.
§ 2. The amount of a share.
§ 3. The lien which the company has on its members'
shares.
§ 4. Of charging orders on shares.
§ 5. The transfer of shares.
§ G. The sales of shares and questions arising thereon.
SECTION I.— OF THE NATURE OF A SHARE AND OF THE DOCTRINE
THAT SHARES ARE PERSONAL ESTATE.
Speaking generally, a share in a company signifies a definite Nature of a
n • • i -i vi i share in a
portion of its capital. A share in a company, like a snare in company.
a partnership, is a definite proportion of the joint estate, after
it has been turned into money and applied as far as may be
necessary in payment of the joint debts (a). But it includes a
right to receive dividends, and, ordinarily, it confers a right to
vote.
What are called preferential or guaranteed shares, are Preference
nothing more than shares the owners of which are entitled to
certain rights or privileges in addition to those enjoyed by
other shareholders (b).
(a) See Watson v. Spratley, 10 226.
Ex. 222 ; Sparling v. Parker, 9 Beav. (b) See ante> p. 435,
450 ; Hunt v. Gunn, 13 C. B. N. S.
l.c. a a
450
SHARES.
Bk. III. Chap. 4.
Sect. 1.
Investing in
shares.
Shares not
securities.
Shares in companies are unfortunately too often regarded
by the public in the light of securities. To " invest money in
shares" is a common expression not a little calculated to per-
petuate this error. But it ought never to be overlooked that a
shareholder is a partner in and not a creditor of the company
to which he belongs ; that if the company becomes insolvent,
he cannot recover any part of his money invested until the
company's debts are paid in full ; that whether he is personally
liable for the payment of those debts, and whether the extent
of his liability is unlimited or limited, depends upon the
nature of the company.
Shares, in short, are property (c), but they are not securi-
ties ; they have been held not to pass under a bequest of
bonds, moneys, and securities (d) ; and no lawyer need be told
that trustees who invest trust moneys in shares do that which
is extremely improper, unless such an investment is clearly
authorised by the trust or by statute (e). Directors who invest
the money of their company in shares of other companies are
prima facie guilty of a breach of trust (/).
A power to invest upon the security of the funds of any
company incorporated by act of Parliament, does not authorise
an investment in preference railway shares (g).
A power to invest in the stocks, shares, or securities of an
incorporated company paying a dividend, authorises an invest-
ment in the stock or shares of an incorporated company paying
a fixed rate of interest to its stock or shareholders. But such
a power does not justify a purchase or even the retention of
stock or shares in the name of one trustee only, even although
the regulations of the company do not allow shares to be held
in the names of more than one person (Ji).
(c) e.g., for purposes of succession
duty, A. G. v. Montefiore, 21 Q. B. D.
461.
(d) Ogle v. Knvpe, 8 Eq. 434 ;
Collins v. Collins, 12 Eq. 455 ;
Hudleston v. Gouldsbury, 10 Beav.
547.
(e) See 23 & 24 Vict. c. 38, § 10,
and R. S. C, Orel, xxii., r. 17. As
to investing in shares on which the
company has a lien, see New London
Brazilian Bank^ v. BrocJclebank, 21
Ch. D. 302.
(/) Hope v. International Finan-
cial Soc, 4 Ch. D. 327 ; Joint Stock
Discount Co. v. Brown, 3 Eq. 139.
(g) Harris v. Harris, 29 Beav.
107. .
(7i) Consterdine v. Consterdine, 31
Beav. 330. See, also, Butler v.
Withers, 1 J. & H. 332, where the
Court ordered shares to be sold
THE NATURE OF A SHARE. 451
Although shares are not securities on which trustees can ^k- HI. chap. 1.
Sect. 1.
invest without an express power so to do, shares in incorpo- —
Shares are stock
rated companies are stock within the meaning of the Trustee within the mean-
act, 1850, and orders for their transfer under that act niay^^ctSi
accordingly be made (i).
Shares in companies are expressly declared by statute to be Shares in com.
, , . . ,, „ ,, . panies usually
personal estate in the following cases : — personal estate.
1. Shares in companies governed by the Companies' clauses
consolidation act (8 & 9 Vict. c. 16, § 7).
2. Shares in companies governed by the Companies act,
1862 (25 & 26 Vict. c. 89, § 22).
Shares in other companies are also, as a rule, personal and
not real estate (k). But it cannot be affirmed that shares in
companies are universally personal estate, inasmuch as there
are undoubtedly exceptional cases which render it necessary to
examine the constitution of every company before the character
of its shares can be determined. The point to ascertain is
whether the shareholders have individually any interest in
land as land, or whether their interest is represented by mere
money (I).
In conformity, however, with the general rule, it has been
rather than leave them in the name not an interest in land, Mitchell v.
of one trustee. Moberly, 6 Ch. D. 655 ; Holdsworth
(i) See 13 & 14 Vict, c. 60, § 2 ; v. Davenport, 3 Ch. D. 185 ; Chanel-
Be Awjelo, 5 De G. & Sin. 278. lev v. Howell, 4 Ch. D. 651; and
See, also, Be Ives, 9 Jur. X. S. 611, Ashton v. Lord Langdale, 4 De G. &
as to orders under the Lunacy regu- Sm. 402 ; Ali md r v. Bearne, 30
lation act. Beav. 153 ; and other cases to the
(/:) See Partn., pp. 343 i ' contrary must be considered as over-
(l) See Morris v. Glynn, 27 Beav. ruled. See Attree v. Hawe,9 Ch. D.
218, where shares in an unincorpo- 337. Nor is debenture stock created
rated iron company, working iron under the Companies' clauses act,
got from its own estates, and having 1863, Attree v. Hawe, ubi sup. See
estates for other purposes than those as to mortgages of rates, Jervis v.
of iron manufacture, were held to Latcrence, 22 Ch. D. 202 ; Tlwrnton v.
be within the Mortmain act, al- Kempson, Kay, 592 ; Re Harris, 15
though by the deed of settlement of Ch. D. 561 ; as to bonds of Harbour
the company the shares were de- Commissioners, Martin v. Lacon, 33
clared to be personal estate. This Ch. D. 332 ; Stock of the Metro-
case was, however, disapproved in politan Board of Works has been
Entwistle v. Davis, 4 Eq. 272. By decided to be so, Cluffv. Cluff, 2 Ch.
act of Parliament New River shares D. 222. See now 51 & 52 Vict. c.
are real estate. See Townsend v. 42, §§4 and 10.
Ash, 3 Atk. 336. Debentures are
a G 2
452 SHARES.
Bk. III. Chap. 4. held that shares in a waterworks company will pass under an
^— - unattested will if made before the present Wills act (m) ; that
shares in dock, canal, mining, or railway companies are not
interests in land within the meaning of the Mortmain act ; nor
within the fourth section of the Statute of Frauds ; and do not
give a right to vote for members of Parliament (n). And after
some conflict of opinion, it seems at last settled that this is so,
although the shares are not expressly declared to be personalty
in the act, charter, or deed of settlement constituting the
company. The cases establishing these propositions are here
collected for reference : —
Mortmain act, 1. Shares not interests in land within the old Mortmain acts.
51 & 52 Vict.
c- 42- Laud companies, Entwistle v. Davis, 4 Eq. 272*
Dock companies, Hilton v. Giraud, 1 De G. & Sm. 183 ;* Sparling v.
Parker, 9 Beav. 450 ;* Walker v. Milne, 11 Beav. 507.*
Railway companies, Ashton v. Lord Langdale, 4 De G. & Sm. 402,*
(shares and scrip) ; Linley v. Taylor, 1 Giff. 67, and 2 De G. F. &
J. 84.
Canal companies, Ashton v. Lord Langdale, nbi sup. ;* Edwards v.
Hall, 6 De G. M. & G. 74; Walker v. Milne, 11 Beav. 507;*
Langham's Trusts, 10 Hare 446 (o).
Gas companies, Sparling v. Parker, 9 Beav. 450.*
"Waterwork companies, Ashton v. Lord Langdale, ubi sup.*
Banking companies, Ashton v. Lord Langdale, ubi sup. ; (p) Myers v.
Perigall, 11 C. B. 90, and 2 De G. M. & G. 599*
Cost-book Mining companies, Hayter v. Tucker, 4 K. & J. 243.
Foreign Mining companies, Baker v. Sutton, .1 Keen, 234.
Insurance companies, see March v. A.-G., 5 Beav. 433, where the
question arose on the bequest of a policy payable out of the funds
of the company.
* In all the cases thus marked, act, or deed of settlement. In the
the shares were declared to be per- other cases nothing was declared as
sonal estate by the company's charter, to this point.
(m) Bligh v. Brent, 2 Y. & C. Ex. and Freeman v. Gaiusford, 18 il>.
268, and Weekley v. Wcekley, ib. 185.
281, note. (o) Tomlinson v. Tomlinson, 9
(n) Watson v. Black, 16 Q. B. D. Beav. 459, contra, cannot be relied
270 ; Bulmer v. Norris, 9 C. B. N. upon.
S. 19; Aclanxl v. Lewis, ib. 32; ( p ) Ware v. Cumberledge, 20 Beav.
Teppcr v. Nichols, 18 ib. 121. See, 503, contra, was overruled in Ed-
also, Bennett v. Blain, 15 ib. 518, wards v. Hall, 6 De G. M. & G. 74.
THE NATURE OF A SHARE.
453
2. Shares not interests in land within the meaning of the 4th Bk- Ig^tch1ap' 4'
section of the Statute of Frauds. statute of
Waicrwork companies, Bligh v. Brent, 2 Y. & (J. Ex. 268 ; JVeeMeij v. frauds' *
Weekley, ib. 281, note.
Cost-book Mining companies, Powell v. Jessopp, 18 C. B. 336 ; Walker
v. Bartlett, 18 C. B. 845 ; Watson v. Spratley, 10 Ex. 222 (g).
Banking companies, Humble v. Mitchell, 11 A. & E. 205.
Eailway companies, Duncuft v. Albrecht, 12 Sim. 189; Srodfet/ v.
Holdsworth, 3 M. & W. 422*
Although, however, shares in companies holding land are Shares, how far
° ' goods and chat-
not interests in land, it does not therefore follow that they tela,
have all the attributes of goods and chattels. They are not
goods, wares, or merchandise within the exception in the
Stamp acts, exempting agreements relating to the sale of
goods, shares, and merchandise from stamp duty(r). Nor are
they goods and chattels within the meaning of the Factors
acts (s) ; nor within the seventeenth section of the Statute of
Frauds, which requires an agreement for the sale of goods and
chattels for the price of 10/. and upwards, to be in writing (0 ;
but their price may be recovered in an action for " goods and
chattels " sold and delivered (u) ; they were bona notabilia in
the diocese where the chief office of the company was
(7) Vice v. Anson, 7 B. & C. 409, difficult to arrive at the conclusion
in which it was held that a share in that the shareholders had more than
a mine was real estate, and could a money interest,
not be transferred except by deed (r) Knight v. Barber, 16 M. & W.
is scarcely consistent with the mo- 66.
dern decisions. In Boijce v. Green, (s) Freeman v. Appleyard, 32 L. J.
Batty, 608, cited in Sugd. V. & P. Ex. 175, and see 38 Ch. D. 408.
p. 101, ed. 13, a share in a mining (t) See Humble v. Mitchell, 11 A.
company was held to be an interest & E. 205, as to banking companies ;
in land within the meaning of the Tempest v. Kilner, 3 C. B. 249, as
4th section of the Statute of Frauds, to projected railway companies;
the share having been regarded as Watson v. Spratley, 10 Ex. 222, as
a share of the land as land, rather to cost-book mining companies ;
than as a share of a money capital. Boiclby v. Bell, 3 C. B. 284, and
If this really had been so, the case Duncuft v. Albrecht, 12 Sim. 189,
would have been rightly decided as to railway companies. See, too,
(see Watson v. Spratley, 10 Ex. Colt v. Nettervill, 2 P. W. 304 ;
222; Hayter v. Tucker, 4 K. & J. Pickering v. Appleby, Com. 354.
243) ; but having regard to the (u) Lawton v. Hickman, 9 Q. B.
terms of the Company's act, it is 563, railway shares.
454 SHARES.
Bk. III. Chap. 4. situate (r) ; and they have heen decided to .he property in
Sect. 1.
respect of which hail may justify {xj. Whether shares in a
cost-hook mine are goods and effects attachable in the Lord
Mayor's court has been discussed, but not decided (y).
chose in action. In Colonial Bank v. Whinney (z) the question whether
Colonial Bank shares are choses in action was much discussed, and it was
v. Whinney.
ultimately held by the House of Lords that shares in a com-
pany incorporated by a special act are things in action within
the meaning of the proviso to the reputed ownership clause in
the Bankruptcy act, 1883 (a).
Shares in companies governed by modern statutes differ,
however, in some important respects from ordinary choses in
action ; the legal, as well as the equitable, interest in them is
capable of transfer ; and where the legal ownership in them,
or even only the legal right to be registered, is acquired by a
bond fide purchaser for value without notice of a prior equit-
able interest, the title of such purchaser cannot be im-
peached (b).
If a share in a company governed by the Companies act,
1862, or the Companies' clauses consolidation act, or by any
statute containing a provision similar to § 30 of the Companies
act, 1862, is equitably assigned or mortgaged more than once,
the priority of the assignees or mortgagees will be determined
ceteris paribus, by the priority of the [assignments or mort-
gages, and not by the priority of the notices thereof, given to
the company (c).
Slander of title. An action may, it is apprehended, be sustained by a share-
holder whose title is slandered, and who can prove special
damage (d).
(v) See A.-G. v. Higgins, 2 H. & reputed ownership clause. See infra,
N. 339, railway shares. Ch. VIII.
(x) Pierpoint v. Brewer, 15 M. & (b) See infra, pp. 471 et seq, under
W. 201, 10 Jur. 79. transfers in blank, and the next note.
(y) Tredinnick v. Oliver, 5 H. & N. (c) Societe Generate de Paris v.
780. Walker, 14 0. B. D. 424 ; 11 App.
(z) 11 App. Ca. 426, reversing Ca. 20; overruling Martin v.
S. C. 30 Ch. D. 261, where all the Sedgwick, 9 Beav. 332 and the cases
earlier authorities will he found. there cited, and Gumming v. Prescott,
(a) 46 & 47 Vict. c. 52, § 44. The 2 Y. & C. Ex. 488.
effect is that shares do not now pass (d) See Malachy v. Soper, 3 Bing.
to trustees in bankruptcy under the N. C. 371.
AMOUNT OF A SHARK. 455
Bk. III. Chap. 4.
SECTION II.— THE AMOUNT OF A SHARE. Sect- 2-
Shares in companies, like shares in partnerships, must be
taken to be equal, unless the contrary is proved. In point of
fact, shares in a company always are equal, except when there
have been successive issues of shares arising from successive
increases of capital. But it sometimes happens that a capital Shares in com-
n , • j_ t • i t • , . ■ , ,. , panies sometimes
ot a certain amount divided into a certain number of equal unequal,
shares, is raised ; and that then a further capital is raised by
the issue of a certain number of new shares, equal to each
other, but not equal to the old shares. Moreover, it some-
times also happens, that whilst the old shareholders have paid
up their shares in full, the new shareholders have paid in respect
of theirs, less than the amount per share paid up by the old
shareholders. In such a case there is not only inequality of
shares, but inequality of money paid in respect of them ; and
questions then arise as to the relative rights of the holders of
the different kinds of shares, and especially with respect to the
payment of dividends, and in case of dissolution, the apportion-
ment of surplus assets. These questions are investigated else-
where in connection with those subjects (del). Their solution
depends on the true construction of the company's act, charter,
or deed of settlement ; but where they are silent on the point, the
rights of the shareholders to surplus assets will, it is conceived,
be proportionate to the money paid to the company in respect of
their respective shares, and not to the nominal value of such
shares. If one shareholder has paid 1001. , and another only
50?., it is clear that unless some reason to the contrary can be
shown, the first ought to receive for surplus assets, twice as
much as the last (e). The same rule does not, however, neces-
sarily apply to dividends (/).
(dd) As to dividends see ante, p. Ch. D. 1.
434. As to distribution of surplus (/) See Oakbank Oil Co.v. Crum,
assets, see infra, b. iv., c. 1, § 13. 8 App. Ca. 65, where the dividends
(e) See Somes v. Currie, 1 K. & J. were payable in proportion to the
605 ; Exchange Drapery Co., 38 Ch. shares held.
D. 171 ; Bridge/water Nav. Co., 39
456 SHARES.
Bk. III. Chap. 4.
Sect. 3.
SECTION III.— OF THE LIEN WHICH A COMPANY HAS ON THE
SHARES OF THEIR MEMBERS.
Lien of company Each member of an ordinary partnership has a lien on the
member. shares of his co-partners for what is clue from them as partners
to the firm (g) ; and by analogy to this rule every company
should have a lien on the shares of its members for what may
be due from them to the company in respect of such shares.
The writer is not aware of any case expressly establishing such
a lien in favour of companies generally ; but he conceives that
its existence cannot be successfully disputed, except where it is
inconsistent with an express right of transfer ; and he has not
met with an}r decision or dictum opposed to this view.
Lien of one It must, however, be observed that the lien which each
shareholder
as against partner has on the assets of the partnership, and on the shares
of his co-partners, cannot be held to reside in every member
of an incorporated company, without considerable modification ;
for its existence is to a great extent inconsistent with the
principle that a company is distinct from the individuals com-
posing it, and would destroy many of the advantages resulting
from that principle. Upon these grounds Lord Cottenham, in
Rheam r. Smith. Rhcam v. Smitli (/<), declined to restrain a creditor of a company
from proceeding at law against one of its members ; although
the creditor was himself a member of the compan}', and it was
insisted that each member had a right to have the accounts
of the company taken, and to have its assets applied in pay-
ment of its debts.
Lien of company Again, the ordinary partnership lien is inconsistent with an
for debts due .
to it. unrestricted right of transfer. Hence it was held, in Pinkett
v. Wright (i), that an Irish banking company had no lien on
the shares of one of its shareholders for advances made to him
by the bank. The Court was of opinion that with respect to
the advances, the shareholder was in the position of an ordi-
nary customer to whom the bank had advanced money, and
(g) See Partn. 351 ct seq. See also Dunlop v. Dunlop, 21 Ch.
(h) 2 Ph. 726. See, too, Hardinge D. 583, infra. Compare Hague v.
v. Webster, 1 Dr. & Sm. 101. Dandeson, 2 Ex. 741 ; Ex parte
(i) 2 Ha. 120, and 12 CI. & Fin. Plant, 4 Deac. & Ch. 160, where
764, sub nomine Murray v. Pinkett. there was an agreement for lien.
Pinkett
Wright.
LIEN ON SHARES. 457
that what was clue from liiin as a customer did not give any Bk« in. chap. 4.
Sect. 3.
right of lien upon his shares. The question arose between
the bank and a transferee of the shares of the customer ; and
to have allowed the lien would have gone far to destroy the
transferability of the shares. The inconsistency of the lien
contended for with the general objects of the company is
well put by the Vice-Chancellor Wigram in the case in
question.
Again, in Dunlop v. Dunlop (k), a banking company had, by Dunlop v.
its deed of settlement, power to forfeit shares if the holder did
not on demand pay all monies due from him to the company ;
and shareholders indebted to the company could not transfer
their shares. But it was held that these provisions gave the
company no lien in the sense of an equitable charge on the
shares of a person indebted to it enforceable by an action for
their sale.
It need scarcely be observed, that if it is expressly enacted Agreements
for lien,
or agreed by the members ot a company that the company
shall have a lien on their shares for all monies which may be due
from them to the company on any account whatever, a lien will
be created in cases where it would not otherwise have existed ;
and the lien so created is not a mere passive right of retainer,
but is an equitable charge actively enforceable (I). In the case
of companies which are exempted from the duty of taking notice
of trusts, the lien is available against a shareholder who is
merely a trustee for others for debts due from him personally ;
and it is conceived that this is so even if the purchase of the
shares was a breach of trust (m). On the other hand, the
company has no lien on shares held by a trustee for the debts
of the cestui que trust, and has no right to transfer the shares
from the trustee to the cestui que trust in order to assert such
a lien (n). So far as the lien gives a right to prevent a transfer,
it is available against all persons claiming under a member
(7c) 21 Ch. D. 583. The question the mortgage debt,
arose "between the devisee of land (I) Be Lewis, 6 Ch. 818.
mortgaged to the company and a (m) Neio London and Brazilian
legatee of the shares. The latter Bank v. Brocldcbank, 21 Ch. D. 302.
was held not bound to contribute (n) Ystalyfera Gas Co., W. N. 1887,
with the former to the payment of p. 30.
458
SHARES.
Extent of lien.
Lien of com-
jxinies governed
by particular
statutes.
Bk. III. Chap. 4. indebted to the company (o). "Whether it prevents a transfer
if the member lias given the company a billi for the amount
due, and such bill is still running, depends upon the true con-
struction of the enactment or agreement. The currency of
the bill will usually be found to suspend the lien (p) ; but a
case may arise where it does not produce this effect (q).
Prima facie a clause conferring a hen on shares will extend
not only to the shares, but to dividends and other mone}Ts
pa}-able in respect of them (r).
As regards banking companies governed by 7 Geo. 4, c. 46,
it is expressly enacted that no claim which any member may
have in respect of his share shall be set off either at law or in
equity against airy demand which the company may have
against such member, on account of any other matter or thing
whatsoever (s).
Unpaid-up shares in a company governed by the Companies'
clauses consolidation act, are not transferable so long as any-
thing is due to the company from their holder for calls either
upon them or upon any other shares (t).
Cost-book mining companies are not bound to recognise
transfers, unless all calls on the shares transferred, with
interest and expenses, have been paid (u).
The Companies act, 1862, contains nothing on this subject,
neither does the Letters Patent act, 7 Win. 4 & 1 Vict. c. 73.
But by Table A. to the Companies act, 1862, it is provided
that the company may decline to register any transfer of shares
made by a member who is indebted to it (x). This article
applies to all debts owing by a member to the company how-
Co) Ex f arte Plant, 4 D. & C. 163.
(p) Stockton Malleable Iron Co., 2
Ch. D. 101, which, see as to the words
" due " and " indebted."
(q) Lond. Birm. and S. Staff. Bank,
34 Beav. 332 ; but see the case in
the preceding note.
()•) Re Lewis, 6 Ch. 818 ; Hague
v. Dandeson, 2 Ex. 741.
(s) 1 & 2 Vict. c. 9G, § 4. See
Ex parte Davidson, 1 Mon. M. D. &
De G. 648 ; Ex -parte Caldecott, 2 ib.
368.
(t) 8 & 9 Vict. c. 16, § 16 ; Hub-
bersty v. Manchester, Sheffield, tbc,
Bail. Co., L. R. 2 Q. B. 59 and
471.
(u) 32 & 33 Vict. c. 19, § 14.
(.<•) 25 & 26 Vict. c. 89, Table A.,
cl. 10. This hardly confers a right
to have the shares sold for payment
of the debt. As to the right to de-
duct debts from dividends, see cl.
LIEN ON SHARES. 459
ever contracted (y), and whether the debt is owing by him Bfc in. Chap. 4.
solely or jointly with others (z). —
Assuming a company to have a lien on the shares of a Priority of lien
member for all money which he may owe it, let us suppose chargT^'0
that he pledges his shares. The pledger must be treated as
having notice of the lien ; and as regards moneys then due to
the company the lien will prevail. With respect to moneys
not then due to the company, there is more difficulty. It
would be obviously unjust to the company to enable the
member to deprive the company of its lien for money which
afterwards becomes due from him by virtue of his contract of
membership, and it is apprehended that for such a debt the
lien takes priority over the pledge (a). But as regards debts
which a company allows a member to contract with it in
respect of dealings and transactions which the company need
not engage in unless it chooses, the case is different. Hence,
if a shareholder pledges his shares and the pledger gives notice
of the pledge to the company, such pledge is entitled to priority
over any lien of the company for such a debt subsequently
contracted by the shareholder (b). This was recently decided
by the House of Lords in the Bradford Banking Co. v. Briggs Bradford Bank-
et Co. (c). Briggs & Co. was a colliery company governed by B%a°?Com!'
the Companies act, 1862. One of its articles of association Pany°
entitled it to a "first and permanent lien and charge available
at law and in equity upon every share for all debts due from
the holder thereof." A shareholder deposited his share certi-
ficates with his bankers as a security for the balance due and
to become due on his current account with them. Notice of
this pledge was given to Briggs <& Co. Afterwards, the share-
(ll) Ex parte Stringer, 9 Q. B. D. S. C. 29 Ch. D. 149. Miles v. New
1:3(J- Zealand, die., Co., 32 Ch. D. 266, is
(.-.) See per Hall, V.-C, in Bentliam overruled by this decision.
Mills Spinning Co., 11 Ch. D. 900. (c) See the last note. The case
(a) An assignee of a share in a was decided in conformity with
partnership takes only what the Bolt v. Hopkinson, 9 H. L. C.
partner is entitled to when paid out. 514, the principle of which was also
See Partn., p. 364. followed in the Scotch case of
{h) Bradford Banking Co. v. Briggs Union Bank of Scotland v. National
d; Co., 12 App. Ca. 29, reversing Bank of Scotland, 12 App. Ca. 53.
S. C. 31 Ch. D. 19, and affirming
460 SHAKES.
Ek. in. chap. 4; holder became indebted to Brians & Co. for coals sold to him
Sect. 4.
— and became bankrupt. Briggs & Co. claimed a lien on the
shares for the price of the coal in priority to the amount due
to the bankers. The House of Lords decided that the bankers
had priority over the company, notwithstanding § 30 of the
Companies act, 1862, which enacts that no notice of any trust
shall be entered on the register. This section was held not to
apply to such transactions.
SECTION IV.— OP CHARGING ORDERS ON SHARES.
Execution for Shares in public companies are rendered available for the
shareholder. payment of the separate debts of their holders by a very
different method from that to which recourse must be had in
the case of partnerships (d). There is no interference with the
company or its property by the sheriff; but the judgment
Charging order, creditor applies to one of the judges of the High Court for an
order charging the shares of the judgment debtor with pay-
ment of the debt for which judgment has been recovered.
Such an order has the effect of a charge made by the debtor
himself in favour of the creditor (e), subject, however, to this
qualification, that no proceedings can be taken to have the
benefit of the charge created by the order until the expiration
of six calendar months from its date (/).
Where shares are charged by a judge's order under 1 & 2
Vict. c. 110, the dividends must nevertheless be paid to the
judgment debtor ; for he is the person entitled to them at
law (g), and his receipt discharges the company even in
equit}' (//). The payment of dividends to a particular share-
holder may, however, be restrained under 5 Vict. c. 5, § 4, or
under R. S. C, Order XL VI. (/), and an interim order for this
(d) See Partn., 356 et seq. (g) See Fowler v. Churchill, 11
(c) See Onslow 's Trusts, 20 Eq. M. & W. 57 ; Churchill v. Bank of
677. England, ib. 323.
(/) See as to this, Bristed v. (/<) See Bridal v. Wilhins, 3 Ha.
Wilkins, 3 Ha. 235 ; Recce v. Taylor, 235.
5 De G. & S. 480. (t) See infra.
CHARGING ORDER ON SHARES. 4G1
purpose can be obtained, although the six months above men- Bk. III. Chap. 4.
tioned have not expired (k).
As a charging order only affects the interest of the judgment
debtor in the shares charged, if he is a trustee of those shares
the order is useless to the judgment creditor (I). The interest
of a cestui que trust of shares may, however, be charged by an
order in the proper form (m) ; but not, it seems, if his only
interest in them is in the produce of their sale (/;)•
An order nisi may be obtained ex parte, and without notice Order nisi.
to the debtor ; and it restrains the company from permitting a
transfer of the shares held by the debtor, or by any person in
trust for him, until the order is made absolute or discharged ;
and if the company permits a transfer of the debtor's shares
during the continuance of the order, the company becomes
liable to the creditor to the extent of the value of the shares
transferred (o).
An order nisi is to the effect that unless cause be shown to the
contrary by the judgment debtor within a given time, the shares
in the company, standing in the name of , shall be,
and shall in the meantime stand, charged with the payment of
the amount for which judgment has been recovered (p). The
order nisi prevents the shares from being transferred or dealt
with, and when made absolute the order takes effect from the
date of the order nisi (q). The order is not " an execution
against the goods of a debtor " within § 45 of the Bankruptcy
act, 1883 (r). For the purpose of obtaining the full benefit of
(k) See Watts v. Jeffryes, 3 Mc. & (p) For the form see E. S. C.
G. 372 ; Brereton v. Edwards, 21 App. K. No. 27 ; and see Fowler v.
Q. B. D. 488. Churchill, 11 M. & W. 57 ; Robinson
(1) Gill v. Continental Union Gas v. Burbidge, 9 C. B. 289.
Co., L. R. 7 Ex. 332 ; compare Cragg (q) Brereton v. Edwards, 21 Q. B.
v. Taylor, L. R. 1 Ex. 148. D. 488 ; Haly v. Barry, 3 Oh. 452,
(m) See Cragg v. Taylor (No. 2), explaining Warburton v. Hill, Kay,
L. R. 2 Ex. 131; South-Western 470; Scott v. Lord Hastings, 4 K.
Loan Co. v. Robertson, 8 Q. B. D. & J. 633 ; Watts v. Porter, 3 E. &
17. B. 743. See those cases as to the
(n) Dixon v. Wrench, L. R. 4 Ex. priorities of creditors. See, also,
154. ante, notes (I), (m), (w).
(o) 1 & 2 Vict. c. 110, §§ 14 and (r) Re Hutchinson, 16 Q. B. D.
15 ; 3 & 4 Vict. c. 82, § 1. R. S. C. 515.
Ord. xlvi. r. 1.
462
SHARES.
Bk. III. Chap. 4
Sect. 4.
Effect of arrest-
ing debtor.
What are public
companies.
Macintyre r.
Connell.
What shares may
be charged under
1 & 2 Vict,
c. 110.
■ the order, application must be made to the court in separate
- proceedings for a foreclosure or sale (s).
If the creditor causes the debtor to be arrested before the
shares have been applied in satisfaction of the debt, the benefit
of the charging order is lost (t).
The statute which enables shares to be charged in the manner
above explained, applies only to "public companies ;" (a)
but there is no statutoiy or other authoritative definition of
this phrase ; and questions of considerable difficulty may con-
sequently arise with reference to many companies, as to whether
they are "public " or not.
In Macintyre v. Connell (v), the Court came to the conclu-
sion, 1, that transferability of shares was not the test of
publicity ; 2, that the attribute of publicity could not be
denied in the case of a company empowered to sue and be
sued by a public officer, and required to keep a register of its
shareholders and to make official returns of their names and
addresses.
Taking this decision as a guide, and having regard to the
law relating to companies at the time of the passing of the
1 & 2 Vict. c. 110, the following companies must be considered
as public companies within the meaning of that act : —
1. Joint-stock banking companies governed by the 7 Geo. 4,
c. 46 (a?).
2. Joint-stock companies governed by the Letters Patent
act, 7 Wm. 4 & 1 Vict. c. 73 (y).
3. Incorporated joint-stock companies generally. Incor-
poration itself 'makes a company a public company; for its
existence is authorised by public authority, viz., the Crown
(s) See Leggott v. Western, 12 Q.
B. D. 287; Bristcd v. Wilkins, 3
Ha. 235, and Macintyre v. Connell,
1 Sim. N. S. 225, 252.
(0 1 & 2 Viet. c. 110, § 1G. But
arrest for debt is now only possible
in cases excepted by 32 & 34 Vict,
c. 62, § 4.
! (u) See too R. S. C, Ord. xlvi.,
r. 3.
(r) 1 Sim. N. S. 225. See also
Garr v. Griffith, 12 Ch- D. 655.
(./■) Macintyre v. Connell, 1 Sim.
N. S. 225, related to a joint-stock
banking company governed by 7
Geo. 4, c. 46, and 7 & 8 Vict. c. 113,
and removes the doubts formerly
entertained respecting suck com-
panies. See Graham v. Connell, 19
L. J. Ex. 361.
(y) See Macintyre v. Connell, 1
Sim. N. S. 225.
CHARGING ORDER ON SHARES. 463
or the legislature, and is required by the same authority to be r,k- gLtC1f p" 4'
publicly recognised.
Unincorporated companies, not being banking companies,
governed by the 7 Geo. 4, c. 46, or companies governed by
the Letters Patent act, are primd facie not public com-
panies (z).
This last conclusion, if correct, is of great importance to As to cost-book
. . . , companies.
mining companies formed on the cost-book principle ; for if
these companies are not public companies within the meaning
of 1 & 2 Vict. c. 110, it follows that their mines and plant may
be seized under writs issued against individual shareholders
for their separate debts. And this appears to be the case ; for
although the writer is not aware that the propriety of such a
seizure has been actually decided («), he is enabled to state of
his own knowledge that if judgment is recovered against a
shareholder in a Cornish cost-book mining company for a
private debt owing by him, and a fi.fa. upon such judgment
is delivered for execution to the sheriff of Cornwall, he treats
the company as a mere partnership, and seizes its property
and sells the share and interest of the judgment debtor therein
in the ordinary way. This is not so well known as it deserves
to be (b).
Whether shares can be attached in the Lord Mayor's court Attachment of
appears doubtful (c).
In connection with this subject it should be observed that Restraining
any party interested in any stock or shares can, by filing a
proper affidavit and notice, and serving it, restrain any public
company from permitting the transfer of any stock or shares
standing in the name of any person in the books of such com-
pany, or from paying any dividend thereon (d). The mode of
(») See the judgment of Macintyre having himself (as trustee) issued
v. Connell, 1 Sim. N. S. 225. execution against a person who was
(a) In Nicholls v. Rosewame, 6 C. a shareholder in several Cornish
B. N. S. 480, the question whether cost-book mines. Qu. if the acts
shares in cost-hook mines can be 1869 and 1887 have rendered unin-
charged under 1 & 2 Vict. c. 110, corporated cost-book companies pub-
was mooted but not decided. lie companies ?
(b) The writer is enabled to make (c) See TredinnicJc v. Oliver, 5 H.
the above statement as to the prac- & N. 780.
tice of the sheriff of Cornwall, by (d) 5 Vict. c. 5; § 4.
464
TRANSFER OF SHARES.
Bk. in Chap. 4. procedure is now regulated by K. S. C, Ord. XLVI., to which
the reader is referred (e). The restraint is temporary only
until the Court itself makes an order.
Right to
transfer.
Consent to
transfer.
No consent
requisite.
SECTION V.- OF THE TRANSFER OF SHARES.
1. Of ordinary transfers.
One of the most important distinctions between partnerships
and companies is the comparatively unlimited right of members
of the latter to transfer their shares (/). In what are called
scrip companies this right is wholly unlimited ; the right to
the shares passing by the delivery of the scrip certificate (//).
In other companies, also, the right to transfer is frequently
unfettered.
Whether a share in a company is transferable at the will of
its owner for the time being, or whether its transfer requires
the consent of the other shareholders, or of the directors of
the company, depends upon the constitution of each company.
Speaking generally, if shares are transferable, and no restric-
tion on the right to transfer them is imposed by the regulations
of the company, or by the statute or charter by which it is
governed, the right to transfer is absolute, and the directors
cannot lawfully prevent a transfer, even if they are bond fide
of opinion that it is for the interest of the company that they
should do so (h). It follows from this, that where no restriction
on the right to transfer exists, a transfer to a pauper, in order
to escape from liability, is valid, and cannot be prevented (/).
This is certainly going very far; and in cost-book mining com-
panies the legislature has thought fit to interfere, by declaring
(e) The old procedure by dis-
tringas is abolished.
(/) See Partn., p. 5.
(g) See Barclay's case, 26 Beav.
177 ; Grisewood's case, and De Pass's
case, 4 De G. & J. 544.
(h) Moffatt v. Farquhar, 7 Ch. D.
591 ; Stranton Iron, dx., Co., 16 Eq.
559 ; Weston's case, 4 Ch. 20, re-
versing 6 Eq. 238. Compare Ex
parte Parlcer, 2 Ch. 685.
(i) lb.,- and see Jefferys v. Smith,
3 Russ. 158, and infra, book iv.,
under the head Contributories.
Compare South London Fish Market
Co., 39 Ch. D. 324. LJ- tlx, &>^J~ ~)Jl
CONSENT TO TRANSFER. 465
such transfers fraudulent and void (/.•). But the company may Bk. III. Chap. 4.
be precluded from disputing the validity of a transfer by its
dealings with the transferee (I).
But notwithstanding the length to which the courts have Fraudulent
transfers.
gone in holding the right to transfer to be free from all implied
restriction, a transfer which is fraudulent in the sense of not
being a real transfer out and out, or a transfer made for a
fraudulent purpose, can be lawfully objected to by the direc-
tors (m). But a transfer to avoid future liability or to multiply
votes is held not to be fraudulent (n).
Where, by the constitution of a company, certain definite Consent
.... ,. i • i i j (>-i requisite.
restrictions are placed on the right to transfer its shares, the
directors have no implied authority to impose airy other
restrictions on the exercise of that right (o), e.g., if the only
restriction is that no calls shall be in arrear, the directors can-
not refuse to permit a transfer, if all calls made have been
paid. So, again, a right to object to a transferee does not
entitle them to object to a transfer to an unobjectionable person,
although made for a purpose the directors may disapprove,
e.g. t to multiply votes (p). Moreover, where, as frequently
happens, the restriction is that the directors shall consent to
the transfer, their consent is regarded so much as a mere
matter of form, that the necessity for it does not practically
affect the marketable value of the shares. Nor can directors
withhold their consent to a transfer without good reason ; for
the power of assenting or dissenting to a transfer is reposed
in them as trustees, and they must exercise that power
accordingly, and not capriciously (<?). At the same time, if their
(k) 32 & 33 Vict, c. 19, § 35. (?) In Ex parte Penney, 8 Ch. 446,
(I) Ghynoweth's case, 15 Ch. D. 13. it was held that they need give no
(m) This is admitted in Weston's reasons for their refusal ; but that
case, 4 Ch. 20. See further under whether they give reasons or not,
the head Contributories in book iv. the Court will interfere if it is
(?i) See the last five notes, and proved that they are not acting
infra. honestly in the discharge of their
(o) This follows from Weston's duty. See ib. and Poole v. Middle-
case, ubi supra. See also, ClmppelVs ton, 29 Beav. 646 ; Robinson v.
case, 6 Ch. 902 ; Gilbert's case, 5 Ch. Chartered Bank, 1 Eq. 32 ; Pinkett
559, and the next note. v. JFright, 2 Ha. 120. See also Faure
(p) Moffatt v. Farquhar, 7 Ch. D. Electric Accumulator Co., 40 Ch. D.
591 ; Pender v. Lushington, 6 Ch. D. 141.
70 ; Stranton Iron Co., 16 Eq. 559.
L.C. H H
466 TRANSFER OF SHARES.
Bk. III. Chap. 4. consent to a transfer is necessary, and in giving (qq) or refusing
Sect. 5.
their consent to a transfer, they act iono- ,/wie, with a view to
the protection of the interests of the company, the exercise of
their discretion will not be interfered with (r) ; and, in such
a case, it is competent for them, if the company is in embar-
rassed circumstances, to resolve not to allow any transfers
at all (s). A director may consent to a transfer of his own
shares (t). As to consenting to transfers to executors, &c,
see below.
Informal con- a consent to a transfer given and acted upon is not invalid
sent.
on the ground that it has been given informally (u) ; but a
consent fraudulently obtained can be treated by the company
as invalid (a) .
Payment of jn most companies payment of calls is a condition precedent
to the exercise of a right of transferring shares (b). A call
must be actually made before its non-payment can justify a
refusal to permit a transfer (c). If calls are due on some only
of the shares held by a shareholder he cannot be prevented
from transferring other shares on which no arrears are due,
unless the statutory or other regulations of the company clearly
go to that extent (d), as is the case with respect to companies
governed by the Companies' clauses consolidation act, 1845,
and companies governed by Table A. to the Companies act,
1862. Such, however, is not the case in companies governed
by the Stannaries act, 1869 (e). The right, however, to pre-
vent a transfer of shares on which calls are due may be waived,
(qq) Faure Electric Accumulator (u) Bargate v. Shortridge, 5 H. L.
Co., 40 Ch. D. 141. C. 297 ; Taxjlor v. Hughes, 2 Jo. &
(r) Taft v. Harrison, 10 Ha. 489 ; Lat. 24. See ante, pp. 55, 56.
R. v. Liverpool and Manchester Rail. (a) See Payne's case, 9 Eq. 223 ;
Co., 21 L. J. Q. B. 284; and see Ex parte Kintrca, 5 Ch. 95, and others
Bermingham v. Sheridan, 33 Beav. of that class.
660. But compare Stranton Iron (h) See ante, p. 423.
Co., 16 Eq. 559, ante, note (p). (c) R. v. Inns of Court Hotel Co.,
(s) Nelson Mitchell v. City of Glas- 2 N. R. 397, and 32 L. J. Q. B. 369.
gow Bank Liquidators, 4 App. Ca. Compare Gilbert's case, 5 Ch. 559.
624 ; and see Mitchell's and Ruther- (d) 8 & 9 Vict. c. 16, § 16. Hub-
ford's cases, ib. 548 ; Shepherd's case, bersty v. Manchester Rail. Co., L. R.
2 Eq. 564, and 2 Ch. 16. 2 Q. B. 59 and 471. See also Table
(t) Bush's case, 6 Ch. 246, and L. A., Art. 10, and Ex parte Stringer, 9
R. 6 H. L. 37 ; and see Gilbert's case, Q. B. D. 436.
5 Ch. 559. (e) 32 & 33 Vict. c. 19, § 14.
MODE OF TRANSFEK.
4G7
e.g., by registering the transfer (/) ; and if waived, a transfer Bk- ™^JP- 4"
of them cannot be afterwards impeached {(f).
Whether upon the sale of shares it is the business of the Procuring con-
■"■ . sent to transfer,
buyer or of the seller to procure the consent of the directors
to a transfer will be examined hereafter (h).
Shares in companies are not all legally transferable in the Mode of trans-
x " . . ferring shares.
same way : some are transferable by deed only, some by writing
not under seal, some apparently by parol. The mode in
which the shares of a given company are transferable, depends
on the constitution of the company, and on the statute, if
any, by which it is governed (i). Acceptance by the transferee
is essential (j) ; but it will be presumed in the absence of
evidence to the contrary (k).
Shares in companies governed by the Companies' clauses In companies
governed by
consolidation act, are transferable by deed, which must be 8 & 9 Vict.
delivered to the secretary properly executed by the transferor c'
and the transferee, and be properly stamped (I). A form of
transfer is given by the act (m) .
The Companies act, 1862, declares that shares in companies In companies
r governed by the
formed and registered under that act shall be capable ot being act 0f 1862.
transferred in manner provided by the regulations of the
company (§ 22) (w). Table A. contains a form of transfer,
and requires it to be executed both by the transferor and
the transferee (see Nos. 8 and 9). Whether executed means
sealed and delivered is, however, left in obscurity (o). Shares
(/) Ex parte Littledale, 9 Cli. 257, (/) Nanney v. Morgan, 37 Ch. D.
and the case in the next note. 346, and compare West v. West, 9
(g) Ibid., and Orpen's case, 9 Jur. L. R. Ir. 121.
N. S. 615. (to) 8 & 9 Vict. c. 16, § 14. Rail-
(h) See London Founders' Associa- way stock belonging to a lunatic
tion v. Clarke, 20 Q. B. D. 576 ; Stray may be transferred without a deed,
v. Russell, 1 E. & E. 888 ; and com- under an order obtained in lunacy,
pare Wilkinson v. Lloyd, 7 Q. B. 27, See 16 & 17 Vict. c. 70, §§ 141, 142,
infra, pp. 469, 470, and 491. and Re Ives, 9 Jur. N. S. 611.
{%) In Ex parte Sargent, 17 Eq. (n) The repealed acts 7 & 8 Vict.
273, a deed was held not necessary, c. 110, § 54, and c. 113, § 23, botli
although the practice was to have required transfers to be by deed,
one. The articles only required an See as to scrip, &c, transferable to
instrument in writing. bearer, infra, p. 474.
(j) See Cartmell's case, 9 Ch. 691. (o) Ex parte Sargent, 17 Eq. 273,
(k) Standing v. Bowring, 31 Ch. tends to show that a deed is not
D. 282. necessary.
H II 2
468
TRANSFER OF SHARES.
Transmission to
executors. &c.
Bk. in. Chap. 4. in these companies cannot, however, be made transferable by
Sect. 5. . . . . , _,
mere delivery (p), except under the provisions ot the Com-
panies act, 1867, which only applies to fully paid-up shares in
limited companies (q).
The Companies' clauses consolidation act, 1845, requires
executors to be registered (see § 18). Executors or admini-
strators of members of companies governed by the Companies
act, 1862, and Table A. may, at their option, either register
themselves as members (Table A., No. 13), or transfer the
shares which have devolved upon them, without becoming
members themselves (Nos. 14 to 16, and see § 24 of the act).
The same observation applies to trustees of bankrupt mem-
bers, and to persons marrying female members (see Table A.,
Nos. 13 — 16). It is to be observed that the power given to
directors of declining to register a transfer of shares does not
entitle them to decline to register shares in the name of a
person claiming them by transmission (r) ; but if the person
so claiming endeavours to combine his title by transmission
with some other person's title by transfer, in order to deprive
the company of its right of lien, the directors may refuse to
register the shares in his name (s).
The transfer of shares in other companies is not regulated
by any general act of Parliament now in force (<). Shares
in cost-book mining companies, although usually transferred
by some written document, appear to be transferable by parol
only (u). Shares in what are called scrip companies are appa-
rently transferable by the delivery of the scrip certificate (x).
Companies formed under the repealed acts of 1856 — 8, may
cause their shares to be transferred in manner in use before
November, 1862, or in such other manner as such companies
may direct {y).
In other com-
panies.
(p) See General Co. for the Promo~
Hon of Land Credit, 5 Ch. 363 ;
Eeuss v. Bos, L. R. 5 H. L. 176.
(5) See 30 & 31 Vict. c. 131, § 27
et sea.
(r) Bentham Mills Spinning Co.,
11 Ch. D. 900.
(s) Ex parte Harrison, 28 Ch. D.
363.
(t) As to agreements for the
transfer of shares in banking com-
panies, see 30 Vict. c. 29, noticed
infra, p. 489.
(n) Walker v. Bartldt, 18 C. B.
845.
(x) Barclay's case, 26 Beav. 177 ;
Griseivood's case, 4 De G. & J. 544 ;
De Pass's case, ib.
(y) 25 & 26 Vict. c. 89, § 178.
STAMP ON TRANSFERS. 4G9
The forms of transfer given bv the various acts are short, Dk- IIL CflaP- 4-
Sect. 5.
and arc framed with a view to convenient registration ; and
. Forms of
although shares may he transferred by instruments in other transfer.
forms, still, if they are complicated, and differ substantially
from those prescribed, the company need not register
them(z).
Shares standing in the names of trustees or lunatics may be Shares of
transferred in proper cases under an order of the Chancery lunatics.3
Division, or an order in lunacy as the case may be (a).
Shares are not held to be goods, wares, or merchandise Stamp,
within the clause in the Stamp act, exempting contracts for
the sale of goods from stamp duty (b) ; and written agreements
for their sale must therefore be stamped (<■). Shares, more-
over, are property within the meaning of the Stamp acts ; and
instruments of transfer must therefore have the true considera-
tion for the transfer expressed upon them, and be stamped
accordingly (d). Several shareholders, however, may join in
one transfer, and if the stamp covers the total consideration
money it is sufficient (e). Where shares are themselves the
consideration for a purchase, the stamp is regulated by their
market value at the time of sale (/).
A transferee of a share does not become a shareholder, nor When transfer
does a transferor of a share cease to be a shareholder, until
those forms and ceremonies which by the constitution of each
company are necessary to be observed, have been either duly
complied with or waived by competent authority. The deci-
sions on this subject having been already examined need not
be again adverted to (g). It is the duty of the transferee to
(z) Copeland v. North-Eastern (d) See 33 & 34 Vict. c. 97, under
Rail. Co., 6 E. & B. 277 ; R. v. the head Conveyance, and as to
General Cemetery Co., ib. 415. foreign shares, &c, 51 Vict. c. 8, §§
(a) See Re Angelo, 5 De G. & Sm. 12 and 13, and mortgages of shares,
278 ; Re Ices, 9 Jur. N. S. 611 ; ante, ib. § 14.
p. 467, note (to). (e) Wills v. Bridge, 4 Ex. 193.
(6) Knight v. Barber, 16 M. & W. (/) See 33 & 34 Vict. c. 97, tit.
66. Conveyance ; and 51 Vict. c. 8,
(c) Ib, See also 51 Vict. c. 8, §§ 12 & 13 ; and Ulverstone Rail.
§§ 16 and 17, imposing a duty of 6d. Co. v. The Commissioners of Inland
on contract notes for the sale of Revenue, 2 H. & C. 855.
shares of the value of £100 or up- (g) Ante, bk. i., c. 2, § 2, and see
wards. infra, bk. iv., c. 1, § 10, Contribu-
470
TRANSFER OF SHARES.
Companies act,
1867, § 26.
Bk. III. Chap. 4. obtain recognition of himself as shareholder (//)• The trans-
Sect. 5.
— — '■ feror must ascertain by inquiry whether his transfer has been
accepted by the company or not ; it is not the duty of the
company to give him this information if he does not ask
for it (i).
The Companies act, 1867, § 26, obliges companies regis-
tered under the Companies act, 1862, to register a transfer on
the application of the transferor in the same manner and sub-
ject to the same conditions as on the application of the
transferee.
A transferee has a right to be registered subject always to
the conditions of the Company's act, charter, or regulations ;
and this right can be enforced by action of mandamus (A-) ; or
in companies governed by the Companies act, 1862, by an
application under § 35 to rectify the register (I). But the
company is entitled to a reasonable time to ascertain that all
is right before it registers a transfer (m) ; and in practice
notice is usually sent to the transferor that a transfer of his
shares has been lodged for registration (n).
The transferee of a share in a company acquires, as a rule,
no greater rights than the transferor (o) ; and this doctrine has
been carried so far that it has been held that a transferee is
precluded from objecting to conduct which has been sanctioned
or acquiesced in by his transferor (jj) ; but this may well be
doubted (q). The extent to which a transferee of shares takes
upon himself the liabilities of the transferor, is examined in
other parts of the treatise (r) ; it ma}r, however, be observed
generally, that the transferee, as between himself and his
transferor, takes the place of the latter, not only as regards
Rights of the
transferee.
tories. See also, Nanney v. Monjan,
37 Ch. D. 34G.
(/() See Skinner v. City of London
Murine Corporation, 14 Q. B. D. 882 ;
Ward and Henry's case, 2 Ch. 431,
438.
(i) See Custard's case, 8 Eq. 438.
(k) See infra, c. 9, § 4.
(/) See ante, bk. L, c. 2, § 3.
(m) See per Lord Blackburn, in
Societe Generate dc Paris v. Walker,
11 App. Ca. 41.
(n) lb., pp. 34 et seep
(o) See further on this point,
infra, pp. 475.
(p) Ffooks v. South-Western Rail.
Co., 1 Sm. & G. 168. See, also,
Peek v. Gurney, 13 Eq. 79, and L. B.
6 H. L. 377.
(</) See -per Fry, L.J., in Ashbury
v. Watson, 30 Ch. D. 379 & 386.
(/•) See as to creditors, ante, bk. ii.,
c. 7, § 3 ; as to calls, ante, bk. iii., c. 3,
§ 2, and post, bk. iv., c. 1, §§ 10& 11.
TRANSFERS IN BLANK. 471
what is past, but also as regards what is to come (s). "With Bk- In- chaP- 4-
respect, however, to the title of a transferee, it will be seen —
presently that a bond fide purchaser of shares for value without
notice of any invalidity in the title of his transferor, acquires
a title which cannot be impeached by persons claiming a prior
equitable interest (t) ; moreover, if the company has actually
registered such a purchaser, in ignorance of material facts, the
company cannot lawfully afterwards remove his name from the
register (u).
Where any company is being wound up by the Court, or Transfers when
subject to the supervision of the Court,*all transfers of shares wound up.
in it subsequent to the presentation of the petition, and prior
to the winding-up order, are invalid unless otherwise ordered
by the Court (x). Transfers after the winding-up order are
not expressly prohibited, but such a transfer does not dis-
charge the transferor from liability to be put on the list of
contributories as a present member (//). After a resolution to
wind up voluntarily transfers of shares, unless to, or with the
sanction of, the liquidators, are also invalid (z). The effect of
these provisions upon the question whether a buyer or seller
ought to be put on the list of contributories will be examined
hereafter (a).
Having made the above observations on ordinary transfers,
it is necessary to consider the important and difficult ques-
tions which arise when transfers are executed in blank, and
when transfers are forged. The title acquired to shares by
estoppel will be examined in the course of this inquiry.
2. Of transfers in blank.
Whatever may be the legal method of transferring shares, Transfers in
and whether a formal deed is or is not requisite, it is a
common practice for a seller of shares to sign a deed or in-
strument of transfer with the name of the transferee in blank.
(s) See Mayhew's case, 5 De. G. pany.
M. & G. 837. (x) 25 & 26 Vict. c. 89, § 153.
(t) See the next heading. (y) See ib. §§ 38, 74, & 84.
(u) Ward v. South-Eastern Rail. (,-j) lb., § 131.
Co., 2 E. & E. 812, Avhere a fraud («) See infra, bk. iv., c. 1, §§ 6 &
had been committed on the com- 10.
472
TRANSFER OF SHARES.
Blank deeds of
transfer.
Bk' sIct°h5aP' *' The buyer tlien inserts llis own name, or without doing so re-
— — sells, and hands the blank transfer to the new purchaser, who
again either inserts his own name as the transferee, or resells
and delivers the transfer, still in blank, to the purchaser from
him, and so on. The effect of executing transfers in blank,
and handing them from one person to another, is very different
with respect to different classes of shares.
In the first place there are shares (e.g., shares in scrip and
cost-book mining companies) which are transferable without
the intervention of any formal document ; and a letter signed
by a shareholder, and transferring his shares to , amounts,
if delivered to a purchaser, to a transfer to him, and authorises
him to fill up the blank with any name he likes (b).
But let us suppose a deed to be required. A deed executed
by A., and purporting to transfer property to , i.e., to
nobody, is altogether inoperative as a deed; and consequently,
if a shareholder in a company, the shares in which are trans-
ferable by deed only, executes a transfer of his shares in
blank, he still remains legal owner of the shares, and the
holder of the deed acquires no other title to the shares than a
right to have them properly transferred, or to have the trans-
feror declared a trustee of them (c). But although a blank
deed is invalid as a deed, it by no means follows that all
transfers in blank are worthless.
In the first place, circumstances may be proved which
justify the inference that the instrument has been re-executed
since the blanks were filled up (d). This inference may be
drawn if the transferor has recognised the transfer since he
knew that it was filled up, but not otherwise (<?).
Effect in equity In the next place, the equitable ownership in shares agreed
of transfers in °
blank. to be sold depends on the contract of sale and not on the form
(b) See Waller v. Eartlett, 18 C.
B. 345 ; Rumball v. Metropolitan
Bank, 2 Q. B. D. 194.
(c) Societe Generale de Paris v.
Walker, 11 App. Ca. 20; 14 Q. B.
D. 424 ; Nanney v. Morgan, 37 Ch.
D. 346 ; Hibblewhite v. McMorine, 6
M. & "VV. 200 ; Humble v. Lanrjston,
7 M. & W. 517 ; Sayles v. Blane, 14
Q. B. 205, and 6 Ra. Ca. 79. See,
too, Consols Insur. Assoc, v. Newall,
3 Fos. & Fin. 130, and Swan's case,
7 C. B. N. S. 400, and Swan v. North
British Australian Co., 7 H. & X. 603,
noticed infra, p. 486.
(d) HeeHudsonv.Bcvctt,oBm^.368.
(c) Societe Generale de Paris v.
Walker, libi supra.
TRANSFERS IN BLANK. 478
of transfer ; and as there is no law requiring a contract for Bk. III. Chap. 4.
the sale of shares to be by deed or even in writing, there is ^-^~
nothing to prevent a purchaser of shares from being held to
his bargain, nor from being ordered to accept the shares he
has agreed to buy, and with them all the liabilities incident
thereto. Consequently, where there is a binding agreement
for the sale and transfer of shares, it is comparatively imma-
terial as between the buyer and the seller whether a transfer
in blank has been executed or not. The purchaser can be
compelled at the instance of the seller to take his place as
from the time of the making of the contract ; in other words,
the purchaser will be compelled to accept a proper transfer of
the shares, to procure himself to be registered as a shareholder
in respect of them, and to indemnify the seller from all liabili-
ties accruing in respect of the same shares since the time when
they were agreed to be sold (/). So the purchaser can compel
the seller to execute a proper transfer and to account for all
dividends received by him since he ceased to be the equitable
owner of the shares.
Similar observations apply to transfers in blank by way of
pledge.
Where, however, there is no valid contract, a transfer in
blank of shares not passing by delivery is as invalid in equity
as at law, unless the transferor has so acted as to estop himself
from disputing its validity.
This is well illustrated by the case of Tayler v. Great Tayier v. Great
Indian Peninsula Railway Company (a). In that case the Indian Railway
i • j.-nc i • ■, -,' Company.
plamtin, who was entitled to some 20Z. and some 21 shares in
a company, directed his broker to sell the latter. The broker
obtained forms of transfer, stamped sufficiently to pass the
20/. shares ; and the plaintiff executed these forms, leaving
the blanks to be filled in by the broker. The broker inserted
(/) Morris v. Canaan, 4 De G. F. Cocker, 4 Beav. 59, a purchaser of
& J. 581. See Cheale v. Kenward, 3 scrip was held to be under no such
De G. & J. 27 ; Wynne v. Price, 3 obligations ; but see Beckitt v. Bil-
De G. & S. 310 ; Shaw v. Fisher, 5 brough, 8 Ha. 188.
De G. M. & G. 596, affirming S. 0. (g) 4 De G. & J. 559. See
1 Jur. N. S. 971, and 2 De G. & further as to forged transfers, infra,
Sin. 1 1 . See, also, Contract Cor- p. 483 et seq.
porati&n, ■'> Cli. 105. In Jackson v.
474
TRANSFEE OF SHAKES.
Transfers in
blank not
negotiable.
Bk. in. chap. 4. the description of the 201. shares, but left the names of the
Sect. 5. l
transferees still in blank. The shares were then sold, and the
names of the purchasers were ultimately filled in, the}7 know-
ing that the transfers had been previously executed in blank.
The plaintiff having discovered that the wrong shares had
been sold, filed a bill to set aside the sale, and to have the
transfers delivered up, and to restrain their registration. A
decree was made in his favour by the V.-C Wood, and an
appeal from this decision was dismissed.
A transfer in blank is in practice generally accompanied by
the certificate of the transferor's ownership of the shares to
which the transfer relates. Attempts have frequently been
made to induce the Courts to hold that a transfer executed by
a transferor in blank as regards the transferee and accompanied
by the transferor's share certificates are negotiable instruments
transferable by delivery, and conferring a good title to the
shares mentioned in the transfer to any bond fide holder of the
documents without notice of any defect in the title of the
person from whom he receives them. These attempts, how-
ever, have as yet invariably failed (h). Whether in the present
state of the law such documents can become negotiable on
proof of a general mercantile usage to that effect is doubtful (i).
The fact that such documents are negotiable abroad, e.g., in
America, does not render them negotiable in this country (k).
It has, however, been decided that scrip certificates may be
shown to be transferable to bearer b}r general usage where
there is no enactment or agreement to the contrary ; and where
this is shown the title of a bona fide purchaser for value of the
scrip without notice of any infirnrity in the title of the seller,
will be unimpeachable, even although the seller himself may
have had no title (/). There is as yet no decision to this
Scrip, &c,
transferable
to bearer by
usage.
(/(.) Williams v. Colonial Bank,
38 Ch. D. 388 ; France v. Clark, 26
Ch. D. 257 ; London and County
Bank v. London and River Plate
Bank, 20 Q. B. D. 232, and 21 ib.
535 ; Colonial Bank v. Hepworth, 36
Ch. D. 36.
((') Compare the cases in the last
note with Goodwin v. Robarts, 1 App.
Ca. 476, and L. R. 10 Ex. 377, and
Rumbatt v. Metropolitan Bank, 2 Q.
B. D. 194 • Crouch v. Credit Fonder
of England, L. R, 8 Q. B. 374.
(k) See JVilliarnsv. Colonial Bank,
ubi supra.
(I) Rumball v. Metropolitan Bank,
2 Q. B. D. 194, a ease of a limited
company.
TRANSFERS IN BLANK. 175
effect with respect to shares; and in the presenl state of the Bk. in. chap. i
authorities it is doubtful whether proof of a similar usage as
to them would make them negotiable (m). I fader existing acts
of Parliament, shares transferable to bearer can hardly exist;
for they are qo1 consistent with the statutory enactments relat-
ing to registers. But regulations might be made to the effiecl
that share certificates should be transferable to bearer; and that
the bearer should be entitled to be registered; but thai
the persons on the register should alone be members of the
company. Such certificates might then become negotiable by
usage.
A person, who signs a transfer in blank and gives it with the Effect of trans-
certificate of shares to another person, does in fact enable that Iv^'umV*
person to insert his own name in the transfer as transferee partie8,
ami to take the transfer so filled up with the certificate to the
company and procure himself to be register* d as owner. Nay
more, the person, to whom the transfer is handed, may, without
filling it up with his own name, pass it and the certificate on to
a third person, and he may do the like, and ultimately some
ladder of the transfer may fill in his own name and procure
himself to be registered. Such transactions are of daily occur-
rence, and give rise to no difficulty where each step in the trans-
action is honest and in accordance with the real intention of
the parties to it (n). But where this is not the case, questions
of great difficulty arise. The principles to be borne in mind
for the purpose of solving them may be gathered from the
following considerations and authorities.
Except where a shareholder is estopped from denying the Title acquired
title of some particular transferee, the general rule of English und^bknk"
law is that a purchaser of a share acquires no better title than transfers> &c-
his vendor himself has (o) ; shares being in this respect like
other goods and chattels (p). As regards ordinary goods there
are three exceptions, viz., 1, where they are bought in market
overt ; 2, where they are bought from agents entrusted with
(m) See the cases in the last two rised what the transferee did.
110tes- (o) Williams v. Colonial Bank, 38
(h) See the cases cited below and Ch. 388, and other cases cited below.
Boffe v. Eoscoe, referred to in 26 Ch. (p) As to which see Cole v. North-
D. 26."), where the transferor autho- Western Ban!:, L. R, 10 C. P. 354.
476
TRANSFER OP SHARES.
Factors acts.
Market overt.
Purchasers for
value without
notice.
Bk. III. Chap. 4. them and who by the Factors acts can make a good title by sale
— or pledge ; 3, where the equitable title is in one person and the
legal title is in another and is acquired by a purchaser bond
fide, and without notice of the equitable title.
The Factors acts do not it seems apply to shares (q).
A sale in market overt (if proved) followed by delivery
would, it is presumed, protect a buyer ; but no decision upon
the point is known to the author. The exception in question
does not apply to pledges (r).
The equitable doctrines applicable to purchasers for value
without notice apply to shares as well as to other property ;
shares not being for this purpose regarded as mere choses in
action (s). In applying those doctrines the following points
must be borne in mind, viz., —
1. The purchaser must have acquired the legal title to the
shares, or at all events, the legal right to be registered in
respect of them (f).
2. This legal title or right must have been acquired without
notice of the equitable title affecting the shares ; and without
notice of such circumstances as rendered it reasonable to
inquire into the title of the transferor (u). If the legal title or
right is acquired with notice of a prior equitable title the latter
will of course prevail (x) .
3. A person who knowingly accepts the share certificates of
a transferor from the holder of a blank transfer, has notice that
As to notice.
(q) See 38 Ch. D. 408.
(r) lb. 405. Qusery, if there is a
market overt for shares.
(s) See the cases infra, and Tay-
lor v. Blakelock, 32 Ch. D. 560, a
case of stock ; London and County
Banking Co. v. London and, River
Plate Bank, 20 Q. B. D. 232, and 21
ib. 535.
(t) Boots v. Williamson, 38 Ch.
D. 485 ; Societe Generate de Paris v.
Walker, 14 Q. B. D. 424, and 11
App. Ca. 20 ; Donaldson v. Gillot,
3 Eq. 274. Observe that in this
case the transferor (Govett) executed
two transfers. The second under
which the defendant claimed was
invalid ; the first under which the
plaintiff claimed was valid.
(u) See far Lord Bramwell, 13
App. Ca. 345-6.
(<•) Nanney v. Morgan, 37 Ch. D.
346, where the person acquiring the
legal title had made a voluntary
settlement of the shares whilst he
was their equitable owner. Dodds
v. Hills, 2 Hem. & M. 424, where
the purchaser had notice before he
was registered.
TBANSFERS IN BLAXK. 477
the holder is not tin- owner of the shares, and that the Bk- In- ChaP- *■
Sect. 5.
transferors legal title is still in him (3/).
4. Again, where registration is necessary to complete the title
of a transferee, a person who accepts a transfer (whatever its
form) docs not acquire the legal title until he is registered as
owner ( :).
5. [f the transfer is duly executed and the transferee has the
transferor's share certificates, the transferee has a legal right to
complete his title ; hut he has no such right if the transfer is
not in proper form, or if the transferee has not got the certifi-
cates, and the company has not waived their production (a).
6. A person who has property stolen from him and gets it
back is in the same position as a bondjide purchaser of it, even
although he is not aware of the theft or restitution. Whether
he has the legal title or notice of titles created between the date
of the theft and restitution, depends on the nature of the
property and the facts of each case (b).
The effect of giving or not giving notice to a company regis- Companies act,
to tt , ° . 1862, § 30.
tered under the Companies act, lSii-2, was much discussed in ^-otloes t0
the Society Gtnerale de Paris v. Walker (c), which will he companies,
noticed presently. The Court of Appeal decided, and Lords
Selborne and Blackburn (d) agreed with them, that no priority
was gained by an equitable mortgagee of shares giving the
company notice of his equitable claim, and that no priority was
lost by omission to give such notice ; and that having regard
to § 30 of the Companies act, 1862, companies governed by
that act cannot be affected by notices of trusts or of equitable
titles. This has always been and is the author's opinion (e),
and the same observation applies to companies governed b}'
(y) See France v. Clark, infra, p. securities were negotiable and were
479. not the same as those stolen.
(») Nanney v. Morgan, 37 Ch. D. (c) 11 App. Ca. 20, and 14 Q. B.
346 ; Societe Generate de Paris v. D. 424. See infra, p. 479.
Walker, 11 App. Ca. 20, and 14 (d) See 11 App. Ca. pp. 30 & 41.
Q. B. D. 424 ; Boots v. Williamson, In The Bradford Banking Co. v.
38 Ch. D. 485. Briggs & Co., 12 App. Ca. 29, some
(a) Ibid. members of the House of Lords
(b) London and County Banking Co. seemed indisposed to accept this
v. River Plate Co., 21 Q. B. D. 535, view of the acts.
and 20 ib. 232, where some of the (e) See 14 Q. B. D. 424.
478 TRANSFER OF SHARES.
Ek. in. Chap. 4. 8 & 9 Vict. c. 16 (see § 20). But as already seen, companies
— cannot take advantage of this doctrine to acquire priority in
their own favour over equitable rights against the company of
which their directors or agents have actual knowledge (/).
Let us now attempt to apply the principles above mentioned
to sales and pledges, and to other cases where shareholders
have left their transfers and certificates with persons who
have improperly used them.
Sales. 1. In the first place the shareholder signing the transfer in
blank may give it with the certificate to a buyer. In such
case the buyer is impliedly authorised by the seller to deal with
the documents as his own. He can consequently insert his
own name and procure himself to be registered as owner ; or
he can pass the documents on to some one else to deal with
in a similar wa}\ In the case supposed, the original share-
holder has transferred his right to the documents, and although
he remains the legal owner of the shares, he is a trustee of
them for the buyer or for the persons claiming under him as
the case may be (g).
Pledges. 2. Secondly, the shareholder signing the transfer in blank
may deposit it and his share certificates as a security for
money. The real authority given to the pledgee may simply
be to hold the documents as a security. But if he fills in his
own name as transferee and procures himself to be registered
as owner, his title as owner is apparently perfect ; and
although so long as he holds the shares they are subject to
redemption, yet if he then transfers them to a bond fide
purchaser for value without notice of his real title, his mort-
gagor will, it is conceived, be without redress against such a
purchaser (/?). If, however, the mortgagee disposes of the
transfer and certificate whilst the}^ are in the state in which he
received them from his mortgagor, the documents themselves
show that the mortgagee is disposing of what is not his own,
and the purchaser from him acquires no better title than the
mortgagee himself had.
(/) Bradford Banking Co. v. ment, although none are directly
Briggs & Co., 12 App. Ca. 29, ante, in point,
p. 459. (h) See the judgments in the cases
(g) The cases cited below are next cited,
really authorities for this state-
TRANSFERS EN BLANK. 479
This was decided in France v. < 'huh (i). In thai case France l:k- HI. Chap. i.
. t. 5.
was the registered owner of some shares in a company regis-
tered under the ( Companies act, 1862. He signed a transfer of
them with the name of the transferee and the date, and the con-
sideration all in blank ; and he gave this document and his
share certificates to Clark as a security for t'150. Clark
deposited the same documents unaltered with Quihampton asa
security for ,£250. Clark died insolvent. Quihampton then
ins. ited his own name in the transfer, filled in the date, and
sent it to the company for registration. The company sent
France the usual notice that the transfer had been received,
and he stopped the registration of the transfer (A). France
demanded the shares from Quihampton on payment of the
£150 and interest. Quihampton required £250 and interest,
and insisted that he was a bond fide purchaser for value of the
shares without notice of France's title. It was, however,
decided that although this might have been true if Clark
had procured himself to be registered as owner before pledging
the shares, yet that the blank transfer and certificate showed
that France wras the owner and not Clark, and consequently
Quihampton's title was no better than Clark's, and that on
paying £150 and interest, France was entitled to the shares.
Lord Selborne in giving the judgment of the Court of Appeal Notice sj™1 1)>
til*.! OlaUKS.
said, " The defence of purchaser for value without notice, by
anyone who takes from another without inquiry an instrument
signed in blank by a third party, and then himself fills up the
blanks, appears to us altogether untenable." This decision
has been followed by others which afford further illustration
of the important principle above enunciated.
In The Societe Generate de Paris v. Walker (I), A. was the re- Blank transfer
without certi-
gistered owner of 100 shares in a company registered under the ficate.
Companies act, 1862. The shares were transferable by deed.
A. executed a transfer of them in blank and deposited the
transfer and his share certificates with B. as a security for a
(i) 26 Ch. D. 257, and 22 ib. 830. seems to have been effected in fact,
Ex parte Sargent, 17 Eq. 273, if see 26 Ch. D. 261.
opposed to this cannot be relied (l) 1 1 App. Ca. 20, affirming S. C,
upon. 14 Q. B. D. 424. See, also, Roots v.
(k) The registration, however, Williamson, 38 Ch. D. 485.
TRANSFER OF SHARES.
Bk. III. Chap. 4. debt. A. then executed another transfer in blank as regards
Sect. 5.
— the name of the transferee and the numbers of the shares, and
dbParis v. ° deposited it with his bankers, giving them a memorandum as
Walker. ^Q tjie siiares and an excuse for not handing over his share
certificates ; afterwards the name of an officer of the bank and
the numbers of the shares were inserted in this last transfer,
and it was sent to the company for registration. Before, how-
ever, it was registered B.'s executors gave the company notice
of their title, and thereupon the company declined to register
the bank's nominee. The bankers then sued the company
and B.'s executors, and claimed a declaration that they were
entitled to the shares and for delivery of the certificates to
them. But it was decided that the bankers had not acquired
either the legal title to the shares nor the equitable title to
them. Not the legal title, because the transfer was void as a
deed ; not the equitable title, because that title was subsequent
in point of time to B.'s equitable title which there was nothing
to displace. The House of Lords held that as the bankers
never had the share certificates they would not have been in a
position to compel the company to register them as owners of
the shares, even if the transfer itself had been by deed duly
executed, for the company was entitled to reasonable time
for inquiry and to an indemnity even before they received
notice from B.'s executors not to register the transfer to the
bank (m).
other improper 3. A registered owner of shares may send a blank transfer
dealings with w^j1 j^ s]mre certificates to a broker for sale or mortgage, and
share transters, ° °
&c. the broker may exceed his authority, or may sell or mortgage
pursuant to it, and misapply the money he receives. Accord-
ing to France v. Clark the person dealing with the broker and
taking the blank transfer from him obtains no better title to
the shares than the broker is authorised to confer. If he has
no authority to sell without further orders he can confer no
good title ; if he has authority to sell he can sell but not
pledge ; if he has authority to pledge on behalf of his prin-
cipal he cannot pledge for his own debt.
(?)i) See, per Lord Seaborne, 11 App. Ca. 29, and per Lord Bkcklmrn,
ib. p. 41.
Transfers in blank, 481
In The Earl of Sheffield v. The London Joint Stock Bk. ill. Chap. 4.
Bank(n), the plaintiff gave Easton authority to borrow
£'26,000 for him on the security of certain stocks and shares, ,'.' London Joint
and gave him (Easton) transfers executed in blank and share Stock Bank-
certificates. Easton raised £26,000 on them by depositing
them with Mozley, a money dealer. Mozley deposited them
with other securities belonging to other customers with various
banks as security for loans to himself to a large amount. The
transfers were tilled in with the names of officials of the hanks,
and were registered in their names. Mozley failed, and the
banks claimed to retain the shares, &c, as security for what
was due to them respectively from Mozley. The plaintiff
sought to redeem his shares on payment of the £26,000
which Mozley had advanced upon them, with interest on that
sum. The Court of Appeal decided in favour of the banks on
the ground that they were purchasers for value without notice ;
but the House of Lords reversed this decision on the ground
that tin1 banks had notice that Mozley was pledging shares, &c,
which were not his own; and that there was no proof of any
authority, hy custom or otherwise, enabling Mozley to pledge
his customers' shares for more than he himself advanced upon
them.
It is said that if a shareholder in an American company Shares in foreign
•iii i- -ii-i -n companies.
signs transfers in blank, and gives them with his share certifi-
cates to another, the transferor impliedly authorises that other
to deal with them as he chooses (<>). But whether this is so
or not by the law of America, the title of a person who acquires
such documents in this country is governed by the law of this
country, and he can acquire no better title than his transferor
himself has, unless indeed the owner of the shares has so con-
ducted himself as to be estopped by the lawT of this country
from denying the title of the transferee.
The leading case on this head is Williams v. Colonial Banh(f). Williams v.
Colonial Dank,
(n) 13 App. Ca. 333, reversing was in accordance with previous
Easton v. London Jt. St. Bank, 34 decisions on negotiable instru-
Ch. D. 95. Some of the docu- nients ?
ments deposited were negotiable (o) See the next two cases,
securities ; but the House of Lords (p) 38 Ch. D. 388 ; reversing S. C,
made no distinction between them 36 Ch. D. 659.
and the others. Qu. whether this
L.C. I I
482 TRANSFEB OF SHAKES.
Bk. III. Chap. 4. There Williams was the registered holder of shares in an
Sect. 5.
— American company. He died, and his executors signed a trans-
fer of the shares in blank, and sent them with share certificates
made out in Williams' name to Thomas dt Co. (sharebrokers) for
transmission to America ; so that the shares, if sold, might be
registered in the names of the purchasers, and if not sold,
might be registered in the names of the executors themselves.
Thomas dt Co. deposited the documents with their bankers in
London as security for advances, and then became bankrupt.
Williams' executors claimed the certificates from the bankers,
and were held entitled to recover them. The Court decided
that the documents were not negotiable instruments ; that the
bankers had no better title to the documents than Thomas dt
Co. had ; that the Factors' acts did not apply ; and that the
executors were not estopped by what they had done, nor by
having left the documents with Thomas & Co. for a considerable
time, from denying the title of the bankers. This last point
was the most difficult ; but the transfers were signed by the
executors, and the share certificates were in the name of the
deceased ; and the evidence showed that in this state the
documents were not "in order," i.e., that business men would
not take them without inquiry (q).
Colonial Bank The Colonial Bank v. Hepworth (r), was another case arising
from Thomas dt Co.'s misconduct. There Hepworth employed
Thomas Jt Co. to buy shares in American companies for him.
They did so, and received from the sellers transfers executed
by them in blank and their share certificates. Thomas dt Co.
retained these documents for Hepworth in order to procure
registration in his name. Instead, however, of doing so,
Thomas & Co. pledged them with their bankers for an advance.
Thomas & Co. afterwards got the documents back from the
bankers b}r a false representation, and sent the documents with
Hepworth's name filled in to the company's agents for registra-
tion, in Hepworth's name, and they were so registered (s).
The bankers then claimed the shares from Hepworth, but it
(q) This removed all difficulty. and France v. GlarJc, ante, p. 479, and
But qu. whether the result would the case next cited,
not have been the same in any case ? (/•) 36 Ch. D. 30.
See the judgment of Cotton, L. J., (.■?) See 36 Ch. D. 39.
V. Hepworth.
FORGED TRANSFERS. 483
amis decided that lie was entitled to retain them. He had Bk- H1-' Chap. 4.
Sect. b.
obtained the legal title bond fide for value, and without notice
of the equitable title of the bankers (t).
3. Of forged tra/nsfers.
A forged transfer is no transfer, and is simply a void docu- Forged trans-
ment, in no way affecting the title of the person whose name is
forged.
If the officer of a company, acting upon the faith of a forged
transfer or power of attorney, wrongfully but innocently trans-
fers the shares of one of its shareholders, the company is
liable to make good the loss (u) ; and an action will lie
against the company to compel it to replace the shares,
and to pay to the plaintiff the dividends declared since
the transfer (v). The transferee need not be a party to
such an action, but he may be added as a third party under
Ord. XVI., r. 48 (w). As regards the Statute of limitations,
time begins to run in favour of the company from the moment
when it refuses to treat the plaintiff as the owner of the
shares (x). The above statements apply to cases where shares
are standing in the joint names of several persons, one of whom
forges the names of the others (y), and to shares standing in
the name of a corporation whose clerk improperly puts its seal
to a transfer (z).
(t) See, also, London and County 1 J. & H. 243 ; Marsh v. Keating,
Bank v. River Plate Bank, 20 Q. B. D. 2 CI. & Fin. 250, which shows that
232, and on appeal 21 Q. B. D. 535, the forgery is no bar to civil pro-
ante p. 477. ceedings for damage* sustained by
(u) See the cases in the next notes, the transfer,
and Ashby v. Blackwell, 2 Eden, 299, (w) Barton v. Lond. and N.-1V.
and 1 Amb. 503. Hildyard v. The Bail. Co., 38 Ch. D. 144 ; Carshore
South Sea Co., 2 P. W. 76, cannot be v. North-Eastern Rail. Co., 29 Ch. D.
relied upon ; see the case last cited, 344. See, as to interpleader, Dalton
and Bank of Ireland v. Evans's v. Midland Rail. Co., 12 C. B. 458,
Cliarity Trustees, 5 H. L. C. 389 ; and 13 ib. 474.
Orr v. Union Bank of Scotland, 1 (a;) Barton v. North Staffordshire
McQueen, 513. Rail. Co., 38 Ch. D. 458.
(v) See the cases in the next notes, (y) Ib. where the registered holders
and Burnett, Hoares & Co. v. South were executors.
London Tramway Co., 18 Q. B. D. (z) Mayor, <£r., of the Staple of
815 ; Johnston v. Renton, 9 Eq. 181 ; England v. Governor and Co. of Bank
Cottam v. Eastern Counties Rail. Co., of England, -l\ Q. B. D. 160.
i i I
484
TRANSFER OF SHARES.
Bk. III. Chap. 4.
Sect. 5.
Shaw V. Port
Philip Gold
Mining Com-
pany.
Sinvm v. Anglo-
American Tele-
graph Com-
pany.
Again, a company is liable to an action for damages at the
instance of a person who has bought shares or advanced money
on the faith of a certificate of title issued by a company, and
who has been damnified thereby (a), although the company
may have been induced to issue the certificate by fraud or
forgery (&).
In Shaw v. Port Philip Gold Mining Co. (c) it was the duty
of the secretary of the company to issue certificates under the
seal of the company to persons entitled to them ; but by the
regulations of the directors the certificates required the signa-
tures of a director, the secretary, and the accountant. The
secretary improperly affixed the seal of the company to a
certificate in favour of a purchaser from himself, and forged
the signature of one of the directors to such certificate.
The purchaser acted in good faith and transferred the
shares to the plaintiff for value. The company was held
bound by the certificate, and liable to the plaintiff for
damages.
But the mere fact that a company has registered a forged
transfer or issued a certificate which is untrue, will not render
the company liable in damages to the person wrongly registered
as a shareholder or to whom the certificate was issued, unless
he has acted on the faith of the validity of the registration, or
of the truth of the certificate, and has thereby suffered damage.
This is well illustrated by the case of Simm v. Anglo-American
Telegraph Co. (d). In that case Burge bought some stock in
the defendant company, and received a transfer which purported
to be signed by one Coates, who held stock in the company.
(a) Simm v. Anglo-American Tel.
Co., 5 Q. B. D. 188, where the plain-
tiff had advanced money on the
shares, but had been paid oft".
(b) Bahia and San Francisco Rail.
Co., L. R. 3 Q. B. 584 ; Hart v.
Frontino, d-c, Co., L. R. 5 Ex. 111.
Compare Shropshire Union Rail. Co.
v. The Queen, L. R. 7 H. L. 496,
reversing S. C, L. R. 8 Q, B. 420,
which turned on the fact that the
certificate was true, but only pur-
ported to show the legal title.
(c) 13 Q. B. D. 103, see ante,
p. 64. Compare Mayor, etc., of
the Staple of England v. Governor
of Bank of England, 21 Q. B. D.
160, and British Mutual Banking Co.
v. Charnwood Forest Rail. Co., 18 Q.
B. D. 714.
(d) 5 Q. B. D. 188. The judg-
ment of the Court of appeal in this
case is particularly instructive.
FORGED 1 RANS] ! 485
Burge sent tliis transfer to the company, who registered it alter r;k- ni. chap. 4.
... . " Sect. 5.
making the usual enquiries. Bv/rge then transferred the stock
to Si in in. The company registered this transfer, and issued a
certificate to Simm, stating that lie was the holder of the stock.
Si nun, who was secretary to the National Bank, held the stock
as trustee for Burge, subject to any lien the hank might have on
it for advances to Bv/rge. The bank made advances to Burge
on the stock, but these advances had been repaid before the
action was brought. The company having discovered that
Coates's signature was a forgeiy, refused to acknowledge Simm
as a stockholder, or to pay him any dividends. Under these
circumstances, Simm and Burge brought an action against the
company for the recovery of the purchase-money of the stock,
and the dividends thereon. It was contended on their behalf,
first, that the National lunik having advanced money to Burge
on the faith of the transfer to Simm, and of the certificate
issued to him, Simm as trustee for the bank had as against the
company acquired a title to the stock by estoppel, and that this
title could not be defeated by any fluctuations of the account
between the bank and Burge ; and secondly, that it was the
duty of a company to keep a correct register, and that the
defendant company having entered Simm on the register, could
not afterwards refuse to acknowledge his right to the stock.
These views prevailed in the Court of first instance, but the
Court of Appeal reversed this decision and gave judgment for
the company, on the ground as regards Simm, that although he
as trustee for the National Bank would have had a right to re-
cover damages against the company, if the bank had suffered
loss from having advanced money to Burge on the faith of the
certificate issued to Simm, yet that these advances had been
repaid, and no loss had been incurred ; and as regards Burge,
that the loss sustained by him had arisen from his having
accepted as genuine a forged transfer, and not from any repre-
sentation made to him by the compan}\
In connection with this subject, it, should be remembered that
a company cannot be estopped from denying that it has done
something which it had no power to do ; so that if a person
has bought shares or advanced his mone}r on the faith of a
certificate, which the company had no power to issue, he can-
486
TRANSFER OF SHARES.
Bk. ill. chap. 4. not recover damages from the company for the loss he has
Sect. 5. ' l J
sustained (<?).
Carelessness
when an
estoppel.
Swan's case.
Estoppel by carelessness.
The most difficult cases which arise in practice are those in
which the shareholder, whose shares have heen improperly
transferred from his name into the name of someone else, has
heen guilty of some carelessness which has facilitated the
improper dealing with his shares. The mere fact that he has
signed transfers in blank, and entrusted them with his share
certificates to a broker or banker, does not without more
estop the transferor from claiming his shares as against a
purchaser who knew that the transfer was in blank (/). Again,
carelessness in leaving share certificates or transfers about,
although it facilitates fraud and even forgery, does not cause it,
and does not of itself estop the owner of the shares from
recovering them (g). So, carelessness on the part of a corpora-
tion as to the custody of its common seal, does not prevent the
corporation from recovering shares transferred from its name
by an unauthorised and fraudulent use of its seal (1i).
The leading case on the kind of carelessness which will
prevent the person guilty of it from recovering shares wrong-
fully transferred from his name, is Sloan's case. The facts
there were somewhat like those in Taylcr v. Great Indian
Peninsula Railway Co. (noticed ante, p. 473). But in Swan's
ease the transfers had been actually registered, and the vendor
sought to have the registration cancelled. The case came first
before the Common Pleas (i), and then before the Exchequer (/r),
and lastly before the Exchequer Chamber (I). All the judges
(e) See ante, l>ouk ii. e. 2, § 2, ami
British Mutual Banking Co. v. Charn-
w >od Forest Bail. Co., 18 Q. B. D. 714.
(/ ) See the cases ante p. 476, et seq.
and Taijler v. Great Indian Peninsula
Rail. Co., 4 De G. & J. 559 ; Swan
v, North British Australian Co., 2 H.
& C. 175, noticed infra.
(;/) Johnston v. Benton, 9 Eq. 181.
(/)) Bank of Ireland v. Evans's
Charity Trustees, 5 H. L. C. 389;
Mayor, dr., of the Staple of England
v. Governor and Co. of Bank of Eng-
land, 21 Q. B. D. 160.
(i) Ex parte Sunn, 7 C. B. N. S.
400.
(k) Swan v. North British Austra-
lia „ Co., 7 H. & N. 603.
(/) 2 H. & C. 175.
SALES OP SHARES. 487
agreed that the transfers were wholly void, and conferred no Bk. III. Chap. 4.
title on the transferee, although he was a bond fide purchaser; -
and it was also held by the Exchequer Chamber that the vendor
was not estopped, by his own negligence in signing the blank
transfers, from asserting his title to the shares. On this point
the judges in the courts below had been equally divided (in).
In order that carelessness may estop one person from
denying his title as against another, it is necessary that the
carelessness shall be in the transaction in which that other has
been engaged, and shall be the proximate cause of his being
misled, and must be the neglect of some duty owing to him or
to the public, of whom he is one. But the neglect of what is
prudent, having regard to one's own interests or neglect of duty
to third persons through whom the person relying on the
estoppel does not claim, is not sufficient for the purpose (n).
Similar observations apply to acts done, not by carelessness,
but under the influence of fraud or misrepresentation, or of
misplaced confidence (o).
SECTION VI. -OF SALES OF SHARES AND QUESTIONS ARISING
THEREON.
There is nothing illegal at common law in the sale of shares or niegal sales,
scrip (_p). At the same time, if a company or projected company
is itself illegal, the sale of its shares or scrip is illegal also(q).
(m) See some observations on this complaining of a forgery, is corn-
case in 11 Eq. 319. mented on in the above cases.
(n) See Lord Blackburn's cele- (o) Johnston v. Benton, 9 Eq. 181,
brated judgment in Sivan v. North and see Donaldson v. Gillot, 3 Eq.
British Australasian Co., 2 H. & C. 274.
175 ; Mayor, die, of Staple of Eng- (p) See Barclay's case, 26 Beav.
land v. Governor and Co. of Bank of 177 ; Asian's case, 4 De G. & J. 320,
England, 21 Q. B. D. 160 ; Garr v. and 27 Beav. 474 ; Grisewood's case,
Bond, and N.-W. Bail. Co., L. R. 10 4 De G. & J. 544 ; Ex parte Bagge,
C. P. 307. See, on estoppel gene- 13 Beav. 162.
rally, Cababe on Estoppel, 1888; (q) Josephs v. Bebrer, 3 B. & C.
Bams v. Bant of England, 2 Bing. 639 ; Buck v. Buck, 1 Camp. 547.
393, where the careless drawing of a The statute of 7 & 8 Vict, c. 110,
cheque estopped tin- drawer from prohibited the sale of shares in a
488
SALES OF SHARES.
Bk. III. Chap. 4.
Sect. 6.
Gaming and
wagering in
shares.
Conspiracy.
Settling clay.
There is nothing illegal in the sale of shares in companies
which are heing wound up (r).
A bond fide contract by a person to deliver shares which
he has not got, is legal (s). But a contract for their purchase
and sale, where neither party intends to acceptor deliver them,
and they only intend to pay " differences," according to the
rise or fall of the market, is void as a gaming or wagering con-
tract within 8 & 9 Vict. c. 109, § 18(f). But such contracts
can seldom be proved ; for in the ordinary course of business
there is a valid contract to buy and another to sell (u) ; and it
is now settled that a broker who pays differences for his
principal can recover them from him (r).
A conspiracy to obtain a settling day by fraudulent means
in order to defraud buyers of shares, or a conspiracy by fraudu-
lent means to raise or lower the price of shares with intent to
defraud buyers or sellers, is an indictable offence (x).
By the rules of the London Stock Exchange, bargains in the
shares of a new company are contingent on the appointment of
company governed by it, until after
the company had obtained a certifi-
cate of complete registration, and
even then by any subscriber not
registered as a shareholder, § 26 ;
Ex parte Neilson, 3 De G. M. & G.
556 ; Morris v. Cannan, 4 De G. F.
& J. 581. But the statute is now-
repealed ; and the prohibitions in
question never extended to com-
panies, the formation of which wras
commenced before the 1st Nov.
1844 (as to which see Baker v.
Plaslitt, 5 C. B. 262 ; Aston's case,
27 Beav. 474, and 4 De G. & J. 320),
nor to railway or other companies
requiring the authority of Parlia-
ment : Young v. Smith, 15 M. & W.
121 ; Bousfield v. Wilson, 16 ib.
185 ; Lawton v. Hickman, 9 Q. B.
563.
(?•) See Rudge v. Bowman, L. R. 3
Q. B. 689, and infra, p. 494.
(s) Hibblewhite v. McMoriuc, 5
M. & W. 462 ; Barry v. Groskey, 2
J,$ H. 1 ; Ex parte 'Phillips, and
/.'. parte Mamliam, 2 De G. F. & J.
634.
(t) Grisewood v. Blane, 11 C. B.
539 ; Bees v. Femie, 4 N. R. 539,
and the cases in the last note. The
old Stock-jobbing act (Sir John
Barnard's act), 7 Geo. 2, c. 8, was
repealed by 23 & 24 Vict. c. 28.
It did not apply to shares in com-
panies. See Hewitt v. Price, 4 Man.
& Gr. 355 ; Williams v. Trye, IS
Beav. 366. See, too, Ex pari*
Turner, 3 De G. & J. 46, and the
cases there cited.
(it) See Thacker v. Hardy, 4 Q. B.
D. 685, the leading case on this sub-
ject, and infra, pp. 500 et seq.
(v) Bosewarne v. Billing, 15 C. B.
N. S. 316 ;- Thacker v. Hardy, 4 Q.
B. D. 685 ; Ex parte Rogers, 15 C'li.
D. 207. See, also, Read v. Anderson,
13 Q. B. D. 779.
(.') See R. v. Aspinall, 1 Q. B. D.
730, and 2 ib. 48 ; R. v. De Bt rt nger,
3 M. & S. 67 ; R. v. Esdaile, 1 Fos.
& Fin. 213.
BANKING COMPANIES.
489
a settling day ; but the validity of contracts in relation to Buch 1;k- I^tCh6ap> 4-
shares is no1 affected by reason of the appointment having been —
obtained by a fraud to which the contracting persons were no
parties (;i).
By 30 Vict. c. 29, § 1. it is enacted thai all contracts mad.' Banking
0 Companies.
after the 1st of July, 1867, for the sale or transfer ol anyshai
stock, or interest in any -Joint-stork Banking Company in
England or Ireland, constituted under or regulated by any ad
of Parliament, royal charter, or letters patent, issuing shares or
stock transferable by any written instrument, shall be void
unless such contract sets forth in writing the distinguishing
numbers of such shares, stock, or interest on the registi r, or if
there is no register, the person in whose name such shares,
stock, or interest shall at the time of making such contract
stand in the books of the company. The object of this enact-
ment is to prevent runs on banks which may be occasioned by
a fall in the price of their shares resulting from gambling
transactions (z). It is the custom on the Stock Exchanges of
London and Bristol to disregard the provisions of this act:
but such custom is illegal. Contracts in violation of the
statute are, however, simply void, not illegal. Consequently,
a stockbroker employed to sell shares in a joint stock bank, is
liable in damages to his employer if the sale goes off owing to
his having disregarded the provisions of the act (a). Again, a
stockbroker employed to purchase such shares has no claim
against his principal who refuses to take them, although the
broker may have been himself obliged by the rules to pay for
the shares (b). But it is otherwise if the principal knew of the
custom, and authorised the contract (c) ; and a person who has,
by accepting a transfer in pursuance of the contract, become
owner of the shares, may be compelled to indemnify the vendor
against all liability in respect of them (d).
(y) Ex parte Ward, 20 Ch. D. 546.
356. (b) Perry v. Barnett, 15 Q. B. D.
(v) See, as to numbering shares, 388, and 14 ib. 467.
ante, p. 50 ; and see on this act in (c) Seymour v. Bridge, 14 Q. B. D.
addition to the cases below, Mitchell 460. See, also, Read v. Anderson,
v. City of Glasgow Bank, 4 App. Ca. 13 ib. 779, and 10 ib. 100.
624. (d) Loring v. Davis, 32 Ch. D.
(ft) Neilson v. James, 9 Q. B. D. 625.
490 SALES OF SHARES.
Bk. in. Chap. 4. Neither scrip nor shares are goods or chattels or interests in
Sect. 6. L &
land within the Statute of Frauds ; and (subject to the qualm-
sale of shares, cation introduced by the act just noticed) a contract for the
sale of them is therefore valid, although not reduced into
writing and signed by either buyer or seller, or by any agent of
either of them (c). At the same time, if a contract for the sale
of shares is reduced into writing, that writing is the proper
evidence of the contract, and must therefore be produced
Stamp. properly stamped (/). Moreover, by the Customs and Inland
Revenue act, 1888 (51 Vict. c. 8), any person who effects any
sale or purchase of any stock or marketable security as broker
or agent, is bound under penalty to make and execute a con-
tract note (§ 17), and such note must be properly stamped with
a duty of Gd. if the shares are of the value of 100/. or upwards
(§16, and 33 & 34 Vict. c. 97, § 69 et seq).
Dividends on Under a contract for the sale of shares which is silent as to
dividends, the price covers all future dividends, and the pur-
chaser becomes entitled to all dividends declared after the con-
tract is made, though they may be declared in respect of a
period antecedent to the contract, and before the time fixed by
the contract for completion has arrived (g).
Delivery of the As regards delivery, it is to be observed that shares and
certificates are different things ; and an agreement to deliver
shares is performed by the execution and delivery of a proper
transfer. Actual delivery of the share certificates is not
essential to the performance of such a contract (h). The
transferee can generally procure himself to be registered, or
to be otherwise recognised by the company as a shareholder
without them, although he cannot do so without trouble and
delay (i). In practice the vendor's share certificates are usually
handed to the purchaser with the transfer ; and if the vendor
does not send his certificates to the purchaser within a reason-
able time, the purchaser may decline to accept the shares (A;)-
(c) Ante, p. 453. (h) Hunt v. Gunn, 13 C. B. N. S.
(/) Knight v. Barber, 16 M. & W. 226, and 3 Fos. & Fin. 223.
66, and ante, pp. 453 and 469 ; 33 & (t) See Societe GinSrale cle Pai is v.
34 Vict. c. 97, § 69 et seq.; 51 Vict. Walker, 11 App. Ca. 34, antt p. 479,
c. 8. as to the effect of not getting the
(g) Black v. Homersham, 4 Ex. D. certificates.
24. (A) De Waal v. Adler, 12 App.
SALES NOT ON STOCJ EXCH INGJ . 491
Bk. III. Chap. 4.
1 , < 1 . t T • 7 ~ t. 6.
1. /V//V.S- //r;/ on Stock Exchange.
A contracl for the sale of shares, although usually madi Sales of shares
. not on the Stock
through members of the Stock Exchange, may be made with- Exchange.
mil their intervention.
A simple contracl for the sale of shares imposes on the Vendor's
vendor the obligation of delivering to tin- purchaser on the day
fixed, or if no time be fixed within a reasonable time after the
date of tin' contract (I), the number of shares agreed to he sold.
But, except in cases to which 80 Vict. <■. 29 is applicable (///),
or unless there be some special stipulation to that effect, the
vendor is not bound to deliver any particular shares; uor is it
importanl whether when he agreed to -ell he actually had any
shares or not (n) ; it is sufficient if he procures them in time.
Neither is it necessary that the shares should he actually
vested in him, or that lie should be the actual transferor; it
being immaterial to the purchaser by whom the transfer to
him is made, provided only the transferor's title Ls g 1 (o).
It lias been said that it is the vendor's duty to procure the Duty to procure
t rcinsf or.
registration of the shares in the name of the purchaser (p).
But this is going too far: and it appears more correct to say
that in the absence of express agreement (q), the purchaser
takes the risk of any objection being made by the company to
himself as the transferee ; and also the risk of all other objec-
tions not based on the right of the transferor to transfer his
shares (r). The vendor, however, must do whatever is neces-
Ca. 141. The constitution of the 33 Beav. 660.
company doe? not appear, and (7) See per Lord Campbell in
shares and certificates were ap- Stray v. Russell, 1 E. & E. 900.
parently treated as the same (r) See London Founders' Associa-
things. tion v. Clarke, 20 Q. B. D. 576;
(I) De Waal v. Adler, 12 App. Ca. Skinner v. City of London Marine
141. Insurance Corporation, 14 Q. B. D.
(to) Ante, p. 4S9. 882 ; Stray v. Russell, 1 E. & E. 888,
(») Ante, p. 488, note (s). and Lord Blackburn's judgment in
(0) See the judgment of Lord Maxted v. Paine, No. 2, L. R. 6 Ex.
Blackburn in Maxted v. Paine, No. 132 ; and the cases Evans v. Wood,
2, L. R. 6 Ex. 132. 5 Eq. 9 ; Hodgkinson v. Kelly, 6 Eq.
(p) Wilkinson v. Lloyd, 7 Q. B. 496; Sheppard v. Murphy, Ir. R. 2
27 ; Lloyd v. Crispe, 5 Taunt, 249. Eq. 544, which, however, are all
See, also, Bermingham v. Sheridan, Stock Exchange cases.
492
SALES NOT ON STOCK EXCHANGE.
Bk* "e^fr' 4* Saiy t0 perfect llis riSht t0 transfer, e.g., pay all calls which
- become due before the purchaser becomes in equity the owner
of the shares (s).
Vendor's title. With respect to the title which a vendor of shares can be
required to show, the distinction between incorporated and
unincorporated companies is of great importance. A vendor of
a share in an incorporated company has only to show a title
to the shares he proposes to transfer; and he cannot be re-
quired to show any title in the company to its landed property
or other assets (t). Bat the title of a vendor of a share in an
unincorporated company is not so clearly separable from the
title of the company ; and a vendor who sells a share in such
a company without special conditions runs the serious risk of
finding himself embarrassed by requisitions respecting the title
of the company to its landed property (u).
The cases referred to below are quite sufficient to render it
prudent for a vendor of shares in an unincorporated company
to stipulate that he shall not be required to adduce any evi-
dence of the title of the company to any property whatever ;
and for a vendor of shares in any company to stipulate that
he shall not be required to adduce any evidence of his own
title, except the registry of himself as a shareholder in respect
of the shares offered for sale (x).
oblSSs! The obligation of tlie Purchaser is to pay the price agreed
upon, and to accept a transfer of the shares, and to indemnify
the vendor from all liability in respect of them accruing after
the purchaser has become their equitable owner (y). It has
long been established that a contract for the sale and purchase
of shares is one of which specific performance will be en-
forced 0/) ; whence it follows that from the time when his
(s) As to his right to procure Y. & C. Ex. 139.
registration, see 30 & 31 Vict. c. 131, (x) See Hare v. Waring, 3 M. &
§ 26, ante, p. 470. VV. 362, as to evidence of title by
(t) See Shaw v. Fisher, 2 De G. & entries in a company's books.
Sm. 11, and 5 De G. M. & G. 596, as (,,) Cheale v. Kenward, 3 De G. &
to the title which can be required J. 27 ; Duncuft v. Albrecht, 12 Sim.
in these cases. 189 ; Shaw v. Fisher, 2 De G. & S.
(m) See Curling v. FligM, (i Ha. 11, and 5 De G. M. & G. 596. Fry
41, and 2 Ph. 613; Stevens v. Gwppy, on Sp. Per., pp. 26 & 620 et seq.,
3 Russ. 171 ; Morris v. Kearsley, 2 2nd ed.
PUR< HASER'S 0BLIGA1 EONS. 493
contract ought to have been performed, the purchaser becomes Bk.lir.Chap. i.
in equity the owner of the shares; and all the rights and obli
gations incidental to such ownership attach to him (z). More-
over, this gelation of trustee and cestui que trust may be
created, no1 only by a direct contract between the parties, but
in other ways — e.g., if there is a series of assignments by
equitable owners, the ultimate assignee will be the cestui que
trust of the legal owner, and be bound to indemnify him
accordingly. Numerous authorities illustrate these principles ;
but as they relate to purchases and sales through brokers, they
will be noticed hereafter (a ►.
The obligation of a purchaser to pay the price, accept the
shares, and indemnify the vendor against Liability in respect of
them, was recognised at law even before the Judicature acts;
and for ;i breach of such an obligation an action will lie (6).
Moreover, this obligation exists and will be enforced, notwith-
standing the shares may have become valueL ss since the date
of the contract by reason of the stoppage of the company or
otherwise (c), and notwithstanding they cannot be registered
in the name of the purchaser (<?). The risk is <>n the pur-
chaser, and as he benefits by a rise in the value of the shares,
so he suffers it' they become worthless or worse. But the
terms of the agreement may throw the risk on the vendor'
(•.) Loring v. Daris, 32 Ch. L>. ring v. Shepherd, L B. 6 Q. B. 309 ;
625. As to dividends declared and in equity, inter alia, Paine v.
before this time, see Black v. Hutchinson, 3 Eq. 257, and 3 Ch.
Homersharrbj 4 Ex. D. 24, ante, p. 490. 388; Evans v. Wood, 5 Eq. 9;
(«) See inter alia, Shepherd v. HodgMnson v. Kelly, 6 Eq. 49(5;
Gill spie, 3 Ch. 764, and 5 Eq. 293 ; Hawkins v. Malfby, 6 Eq. 505, and
Evans v. Wood, 5 Eq. 9 ; Paine v. 4 Ch. 200 ; Loring v. Davis, 32 Ch.
Hutchinson, 3 Eq. 257, affirmed 3 D. 625, which, however, were all
Ch. 388, where forms of decree are cases in which the defendant had
given. accepted the transfers. Compare
(b) See KellocJc v. Enthoven, L. Bermingham v. Slieridan, 33 Beav.
R. 9 Q. B. 241 ; affirming S. C. 660, which, however, cannot now he
8 Q. B. 458, where the vendor relied on, as was admitted by the
was made a contributory as a past M. R. in Fenwick v. Wood, 6 June,
member ; Walker v. Bartlett, 18 C. 1870, and see 3 Ch. 393.
B. 845, and Humble v. Langston, 7 (d) See per Lord Campbell in
M. & W. 517. Stray v. Russell, 1 E. & E. p. 900 ;
(c) See, at law, inter alia, Chapman and Wilkinson v. Lloyd, 7 Q. B. 27.
v. Shepherd, L. R. 2 C. P. 228 ; Bow- Fry, Sp. Per., p. 632, 2nd ed.
494
SALES NOT OX STOCK EXCHANGE.
Bk. III. Chap. 4.
Sect. 6.
Sales of shares
in companies
being wound up.
Position of par-
ties where the
shares bought
and sold are not
identical.
Kempson v.
Saunders.
Ex parte Pan-
mure.
Further, a contract for the sale of shares in a company being
wound up under the act of 1862 is perfectly valid, although
made during the liquidation of the company. The provisions
of the Companies act, 1862, §§ 131 — 153, declaring certain
transfers made after the commencement of the winding up to
be void, operate only to prevent the register of shareholders
or the list of contributories from being altered by reason of
such transfer (e) ; and such a contract is binding upon a pur-
chaser, although he can show that he was ignorant of the fact
of the company having gone into liquidation (/).
On the other hand, a contract for the sale and purchase of
shares does not bind the purchaser to accept what does not
answer the description of the shares which he agreed to buy.
If, therefore, such shares do not exist, he is not compellable
to pay the price agreed upon ; and if he has paid it in igno-
rance of the facts, he can recover it back as money paid for a
consideration which has failed (g).
In Kempson v. Saunders (h) it was held that a purchaser of
shares in a projected company which was never formed, was
entitled to recover back his money from the vendor, although
the vendor was not an original subscriber, and had himself
purchased the shares from other persons.
Again, an authority to obtain shares from company A. is
not pursued by obtaining shares from company B., and if they
are obtained by mistake or otherwise the principal is not bound
to take them, and can repudiate them if they are registered in
his name (i). In such a case the agent is liable to company B.
for the damages that company may have sustained by losing
the allottee as a shareholder (k).
Again, where shares are apparently bought, and the certi-
(e) Biederman v. Stone, L. R. 2 C.
P. 504 ; Budge v. Bowman, L. R. 3
Q. B. 689. See ante, p. 471.
(/) Budge v. Bowman, L. R. 3
Q. B. 6S9, 697. See, as to en-
forcing such a contract in equity,
Emmerson's case, 1 Cli. 433, ex-
plained by Wood, L. J., in I'liin,
v. Hutchinson, 3 Cli. 388, 391. Fry,
Sp. Per., 634.
(y) WatJcins v. Huntley, 2 Car. &
P. 410, note ; JFestrop}) v. Solomon,
8 C. B. 345.
(h) 4 Bing. 5. Compare Stent v.
Bailis, 2 P. W. 217 ; Mitchell v.
.V, whall, 15 M. & W. 308.
(i) Ex parte Panmure, 24 Ch. D.
367.
(/,) lb., where the damages were
tin- whole amount of the shares.
l'Ul.l Al;Al ION "I rEANS] IK. 195
ficates for them prove to be forged, the purchaser can recover Bk. in. Chap. 4.
their price from the vendor (I).
Strictly speaking, i1 is the purchaser's duty to prepare the Preparation of
transfer, and to tender it to the transferor for execution (m) ;
but the form of transfer is so simple that in practice the
vendor fills it up and sends it to the purchaser to execute.
The effect of a transfer in blank (to), and al>>> the question
whose duty it is to procure it to be registered (o) have been
already considered.
An importanl question connected with the transfer is, win ther Transfer to
li-ii r • purci
tne vendor is bound to transfer to any person nominated by nomine
the purchaser, or can insist on transferring to the purchaser
himself. As will be seen hereafter, a purchaser of shares sold
on the Stock Exchange is entitled to require a transfer to
himself or his nominee (jj). Lord Blackburn has stated his
opinion to be that any other purchaser has the 9ame right (q).
But it musl be borne in mind thai a transfer does not always
relieve a transferor from all liability (r), and thai it is often a
matter of greal importance t<> a transferor that his transferee
shall be a person of substance. Whatever, therefore, the rule
may he in cases where the transferor is under no liability, or
where by his transfer he trees himself from all liability, it is
very questionable whether a vendor of shares who lias not
agreed expressly or impliedly (by selling on the Stock Ex-
change) to transfer to the nominee of the person with whom
he has contracted, is under any obligation to transfer to such
nominee (s). A vendor of a leasehold estate who has him-
self entered into onerous covenants, is surely not under
any obligation to assign to a pauper at the request of the
purchaser, unless indeed the purchaser enters into a covenant
(I) Royal Exchange Assur. Co. v. 6 Ex. 132.
Moore, 2 N. R. 63, Q. B., a case of (q) See his judgment in the case
forged debentures. last cited.
(m) Humble v. Langston, 7 M. & (■?•) E.g., in companies formed and
W. 517, and per Lord Blackburn, in registered under the Companies
Maxted v. Paine, No. 2, L. R. 6 Ex. act, 1S62, from liability as a past
132. member.
(h) Ante, p. 471 et seep (s) Coles v. Bristowe, 4 Ch. 3, is
(o) Ante, p. 491. an authority to the effect that he
(p) Maxted v. Paine, No. 2, L. R, is not.
496 SALES NOT OX STOCK EXCHANGE.
Bk. III. Chap. 4. for indemnity which would obviously remove the vendor's
Sect. 6.
objections.
Lien of vendor It is conceived that an unpaid vendor of a share in a com-
chrase°roney.Ur Pan^ has the same ri§nt of stoPPmS tne delivery to an in-
solvent purchaser that a seller of ordinary goods has in similar
cases.
Fraudulent sale. A person who fraudulently sells shares in a company which
he knows has no existence, is criminally responsible (t). But
the rule caveat emptor renders it lawful for a person holding
shares in an insolvent company to sell them to an}1- one willing
to buy them ; and in the absence of misrepresentation by
the seller, the buyer is apparently without remedy against
him (w).
Fraud by the A person who has been induced to purchase shares by fraud
on the part of the seller, can, at his option, either keep the
shares and sue for the damage he has sustained by the fraud,
or repudiate the contract, and recover the money paid under
it. But he cannot adopt the latter alternative unless he can,
when the action is brought, restore the shares in the same
state in which he took them, and place the seller in the same
position in which he stood before the sale (x). The purchaser
can also maintain an action to rescind the contract, and to
compel the vendor to indemnify him. And the fact that the
plaintiff sold some of the shares before he knew of the fraud,
will not disentitle him to relief, if the contract is severable,
and this it has been held to be, where all the shares bought
are shares in the same company (y). Nor will the forfeiture
of the shares after the commencement of the action affect
his rights (z). Unless, however, the company is implicated
in the fraud, the purchaser, if he has become a share-
(/) See Maccallum v. Turton, 2 Y. taking shares on the faith of frau-
& J. 183. dulent statements, see Clarke v.
(n) See Remfry v. Butler, E. B. & Dickson, 6 C. B. N. S. 453 ; Bedford
E. 887 ; Stray v. Russell, 1 E. & E. v. Bagshaw, 4 H. & Is. 538 ; David-
888, and ante, p. 493. son v. Tulloch, 3 Macqueen, 783 ;
(x) Clarke v. Did; son, E. B. & E. Twycross v. Grant, 2 C. P. D. 469.
148; and see Maturin v. Tredinnick, (//) Maturin v. Tredinnick, 2 X.
cited in the next note. As to R. 514, and 4 il>. 15.
actions for damages sustained by (.-.) Ibid.
SALES BY AUCTION. 497
holder, cannot, it is conceived, prevent calls being made Bk- ^ cll}i'- 4-
upon him (a).
If a person is induced to sell shares by the fraud of the Fraud on seller.
purchaser, the vendor has similar rights to those which a pur-
chaser has in the converse case already considered. But Effect of fraU(1
^ on title of pur-
where the purchaser is innocent of the fraud, and a person's chaser.
shares have been fraudulently sold and transferred by others,
his rights against the purchaser will depend upon whether the
latter has acquired the legal ownership or the right to call for
the legal ownership, hand fide, for value, and without notice of
the fraud. If he has, his title cannot be impeached (b) ; but
if he has not, the shares may be recovered from him, unless
the claimant has lost his right to relief b}' his own negligence,
lapse of time, or some other special circumstance (c).
Shares are not unfrequently sold by auction. If an auc- Sales of shares
....... by auction.
tioneer sells shares, without disclosing the persons on whose
behalf he sells, he will be personally responsible for the due
completion of the sale, and will be liable to the purchaser in
damages for the non-transfer of the shares to him (d). More-
over, if in such a case the auctioneer, when called upon to
transfer the shares refers the purchaser to the owners, it
becomes unnecessary for the purchaser to tender a deed of
transfer to the auctioneer before suing him, for b}r such a
reference the auctioneer discharges the purchaser from ten-
dering any deed of transfer to him(e). If shares are sold
subject to a condition that if they are not paid for by a certain
time, the seller shall be at liberty to resell them, and shall be
entitled to recover from the purchaser any loss sustained by
the resale, and the shares are sold and resold under this con-
dition, the first purchaser can be sued on the special contract
entered into by him (/).
(a) See ante, book i. c. 3, and infra, (c) See Tayler v. Great Indian
book iv. c. 1, § 10, under the head Bail. Co., 4 De G. & J. 559, ante,
Contributories. Bloxam v. Metropo- p. 473, and other cases of forged
litan Gab Go., 4 N. E. 51, V.-C. W., transfers cited ante, p. 483 et seq.
where an injunction was granted is, (d) FranMijn v. Lamond, 4 C. B, .
it is conceived, not opposed to this, 637.
as the plaintiff was not a share- (e) lb.
holder. (/) Lamond v. Davall, 9 Q. B.'
(h) See ante, pp. 476 et seq. 1030.
L.C. K K
498
SALES NOT ON STOCK EXCHANGE.
Bk. III. Chap. 4.
Sect. 6.
Actions by pur-
chaser against
seller.
Actions by seller
against pur-
chaser.
Transfers in
blank.
Damages re-
coverable when
contract for sale
is broken.
In an action by a purchaser of shares against a seller, for
not transferring the shares bought, the purchaser must prove
— 1, that he was ready and willing to pay for the shares ((/),
and 2, that he tendered to the seller for his execution a
proper instrument of transfer (h) . The necessity for such
tender, however, only exists upon the supposition that some
formal document is required to render the transfer of the shares
complete, and upon the further supposition that the seller has
not discharged the purchaser from making the tender (i).
Again, a seller suing a purchaser for not accepting shares
must prove readiness and willingness on his, the seller's part,
to transfer those shares to the purchaser (A;). The circum-
stances that a call is due upon shares agreed to be sold, and
that they are not transferable so long as the call remains
unpaid, do not disprove readiness and willingness on the part
of the seller to transfer, if he was in fact ready and able to pay
the call in question (I).
The effect of transfers in blank has been already con-
sidered (m). The decisions at law on this subject must now
be taken with the qualifications rendered necessary by the
decisions in equity.
In an action by the seller of shares against the purchaser
for not accepting them, the damages are measured by the
difference between the contract price and the market price at
the time of the purchaser's breach of contract (n) ; and it is
for the jury to determine when this time was (o). So, in an
action by the purchaser of shares against the seller for not
delivering them, the damages are measured by the difference
(g) Laiorence v. Knowles, 5 Bing.
N. C. 399. In Tempest v. Kilner, 2
C. B. 300, the averment of readiness
and willingness was traversed too
largely.
(h) Stephens v. De Medina, 4 Q.
B. 422; Bowlby v. Bell, 3 C. B.
284 ; Green v. Murray, G Jur. 728,
Q.B.
(i) Frankly it v. Lomond, 4 C. B.
037.
(/.•) Hannuic v. Goldner, 11 M. &
W. 849. As to the duty to procure
a transfer, see mite, p. 491, and infra,
p. 506.
(/) Shaw v. Rowley, 16 M. & W.
810.
(m) Ante, p. 471 et seq.
(/() Shaw v. Holland, 15 M. & W.
136 ; Stewart v. Cauty, 8 M. & W.
160 ; Pott v. Flather, 5 Ea. Ca. 85.
(o) Ibid., and see Earned v.
Hamilton, 2 Ra. Ca. 624.
SPECIFIC PERFORMANCE. 499
between the contract price and the market price at the time Bk- HI. Chap. 4.
Sect. 6.
when they ought to have been delivered (/>). Where, however,
an action is brought for not re-delivering shares lent and
agreed to be returned on a given da}-, the damages are mea-
sured by the market price of the shares at the time of the
trial (</) ; and the same rule is adopted in estimating damages
in actions against companies for not delivering shares at the
time they ought (/•).
An action will lie for specific performance of a contract Specific perform -
for the purchase and sale of shares (s) if it is capable of being 0f sale.
performed (t) : and the purchaser will be compelled to pay the
price, although it may have been expressed to be paid in the
deed of transfer, if, in fact, it was not thus paid (//) ; and will
be compelled to accept a transfer of the shares he has bought,
and to indemnify the seller from all liabilities accruing subse-
quently to the sale (x) ; and the seller will be compelled to
account for any monies he may have received from an improper
subsequent sale to another person (y). The Court has, how-
ever, refused to compel a purchaser of scrip to accept shares,
and indemnify the seller from calls upon them (z) ; and to
compel an allottee of shares to accept them, and to execute
the company's deed in respect of them (a) ; and to compel the
(p) Tempest v. Kilner, 3 C. B. 121, and 4 De G. & J. 588. The case
253. seems, at first sight, to have been a
(q) Owen v. Routh, 14 C. B. 327. hard one upon the defendant ; hut
If the shares have been returned, the deed stated that he had paid the
the damages must be limited to the money, and this he knew was not
loss caused by their detention. the fact. He could not, therefore,
Williams v. Archer, 5 C. B. 318. be treated as having been misled by
(r) Cocker ell x. Van Diemen's Land the plaintiff or by the contents of
Co., 18 C. B. 454, and 1 C. B. N. S. the deed.
732. (.'•) Wynne v. Price, 3 De G. & S.
(s) Ante, p. 493. 310, and other cases cited, ante,
(t) See, as to this, Bermingham v. pp. 492,493. As to the right of a
Sheridan, 33 Beav. 660, and com- mortgagee of shares to an indemnity
pare Poole v. Middleton, 29 Beav. from his mortgagor, see Phene x.
646 ; and see ante, p. 493, from Gillan, 5 Ha. 1.
which it appears, that although re- (?/) Beckitt v. Bilbrough, 8 Ha.
gistration in the purchaser's name 188.
may be impossible, he can be com- (a) Jackson v. Cocker, 4 Beav. 59.
pelled in equity to indemnify the Compare this with the last case.
vendor. (a) Sheffield, dr., Gas Co. v. II" r-
(") Wilson v. Keating, 27 Beav. rison, 17 Beav. 294.
500
SALES ON STOCK EXCHANGE.
Bk. III. Chap. 4,
Sect. 6.
Relief where
directors refuse
to allow a
transfer.
Jurisdiction
under § 35 of
the Companies
act, 1862.
promoters of a company to deliver shares to a subscriber to
the compairy (&). Neither will the Court interfere to compel
the completion of a gratuitous and intended transfer (c).
In Poole v. Middleton (d), a purchaser of shares obtained a
decree against the seller for the specific performance of the
contract of sale, although the directors refused to allow the
defendant to transfer his shares. The contract was valid
without their consent ; and they could not prevent the defen-
dant from completing it, nor object to that mode of transfer
which they were in the habit of allowing in other cases.
How far disputes between the vendor and purchaser of shares
may be determined by means of the summary jurisdiction con-
ferred by § 35 of the Companies act, 1862, has been often dis-
cussed, but is not yet satisfactorily settled. The jurisdiction
apparently exists, but it is discretionary only, and the decisions
seem to show that the Court will be slow to exercise the juris-
diction except where the legal title of the applicant is clear (e) .
Rales of shares
on the Stock
Exchange.
2. Sales on the Stock Exchange.
Having now alluded to contracts for the sale of shares other-
wise than on the Stock Exchange, it is proposed to notice the
effect of entering into such contracts through members of that
body. In practice scrip and shares are usually bought and
sold through jobbers and brokers (/) ; and a person employing
Brokers and
jobbers.
(6) Columbine v. Chichester, 2 Ph.
27. In this case, however, the pro-
moters did not appear to have any
shares which they could allot.
(c) See Milroy v. Lord, 4 De G.
F. & J. 264.
(d) 29 Beav. 646.
(e) See Ward and Henry's case, 2
Ch. 431 ; Musgrave and Hart's case,
5 Eq. 193 ; Ex parte Sargent, 17 Eq.
273 ; Ex parte Shaiv, 2 Q. B. D. 463,
and see Fry, Sp. Per., p. 488,
2nd ed.
(/) Brokers buy and sell for prin-
cipals, jobhers for themselves ; but
as between all members of the Stock
Exchange brokers are always re-
garded as principals ; and for the
purposes of the text there is no ma-
terial distinction between brokers
and jobbers. That their liabilities
on these contracts are alike, see
Lord Blackburn's judgment in
Maxied v. Paine, No. 2, L. R. 6 Ex.
132. See, as to brokers, Partn., p.
97, and Baring v. Corrie, 2 B. &
A. 137. In this case it is said
brokers have no business to con-
tract as principals ; but this has no
application to sharebrokers, as is
evident from the cases alluded to in
the text.
SALES ON STOCK EXCHANGE. 501
a broker to buy or sell is, in the absence of evidence to the Bk- m- Chap. 4.
Sect 6
contrary, presumed to authorise him to buy or sell according
to the rules and usages prevailing in the market where the
commodity is to be bought or sold (g) ; and persons employing
members of the Stock Exchange as their brokers are bound by
the rules and usages which govern that body (h) ; provided they
are not unreasonable, or on some other ground illegal, e.g.,
contrary to 30 Vict. c. 29 (?). What these rules and usages are
is a question of fact to be proved by the person who relies on
them : and in considering the cases it is important to bear in
mind that the decisions are made only with reference to the
custom as proved or admitted in the particular case under con-
sideration, and do not conclude the question as to what the
custom really is.
Besides the printed rules of the Stock Exchange there are
certain established practices observed by its members, and
which are as binding upon them as the printed rules them-
selves. Both the rules and unwritten practices are altered
from time to time, but a contract must be interpreted according
to the custom as it existed at the date of the contract (/<;).
The rules and practices of the Stock Exchange respecting Course of a
the sale and purchase of shares will be found stated in Maxted Exchange.' St°°k
v. Paine (I), Bowring v. Shepherd (m), Grissell v. Bristowe {n),
Coles v. Bristowe (o), Rennie v. Morris {p), Merry v. Nickalls (q),
and Thacker v. Hardy (/•) ; and from those cases it appears that
in the ordinary course of events a sale of shares on the Stock
Exchange is essentially a transaction of the following descrip-
tion : —
(g) See Fleet v. Murton, L. R. 7 (k) Per Lord Blackburn, Maxted
Q. B. 126 ; Robinson v. Mollett, L. R. v. Paine, 2nd action, L. R. 6 Ex.
7 H. L. 802, reversing L. R. 5 C. P. 132, 160.
646, and L. R, 7 0. P. 84, and the (/) L. R. 4 Ex. 203, and 6 Ex. 132.
cases there referred to. (m) L. R. 6 Q. B. 309.
(h) Stray v. Russell, 1 E. & E. (n) L. R. 4 C. P. 36, and 3 C. P.
888 ; Biederman v. Stone, L. R. 2 112.
C. P. 504 ; Grissell v. Bristowe, L. (o) 4 Ch. 3, and 6 Eq. 149.
R. 4 C. P. 36 ; Coles v. Bristowe, 4 (p) 13 Eq. 203, overruled by
Ch. 3 ; Bowring v. Shepherd, L. R. 6 Merry v. Nickalls.
Q. B. 309 ; Duncan v. Hill, L. R. 6 (q) 7 Ch. 733, and L. R. 7 H. L.
Ex. 255, reversed in part, L. R. 8 530. See, also, Ex parte Grant, 13
E*- 242. Ch. U. 667.
(*) Ante, p. 489. (r) 4 Q. B. D. 685.
502
SALES ON STOCK EXCHANGE.
Bk'sL°16aP'4' L There is a contract between the selling and buying
broker or jobber, to the effect that on a given day, called the
account da}-, the shares shall be deliverable and the price
payable.
2. That on the day before the account day (called the name
day) the buying broker or jobber gives or passes to the selling
broker a ticket containing the name of the person to whom the
shares are to be transferred, and the price which that person
has agreed to pay for them.
3. That the name so passed can be objected to within a
limited time (10 days) ; and if objected to on reasonable
grounds, must be replaced by another name ; the committee
of the Stock Exchange deciding, in case of dispute, whether
another name is to be given or not.
4. That the above-mentioned ticket is prepared by the
broker of the ultimate purchaser, and is passed (between 12
and 2 o'clock on the name day) by such broker to his imme-
diate vendor, and by him to his vendor, and so on, until it
reaches the broker of the original seller. The ticket is in-
dorsed by each member of the Stock Exchange, with his own
name, as it passes through his hands.
5. That the original seller executes a transfer (prepared by
his broker) to the ultimate purchaser ; the consideration for
such transfer being usually stated to be the price agreed to be
paid by such purchaser (.§).
6. That the selling broker looks for payment of the price at
which he sold to the broker or jobber who bought of him ; but
usually takes from the broker of the ultimate purchaser the
money he has agreed to pay, and then settles for the difference,
if any, with the broker or jobber with whom he, the selling
broker, originally contracted.
From this statement it is apparent that important and diffi-
cult questions of law are likely to arise, and, in order to solve
them, it is proposed to consider the position —
(s) The confusion introduced by 188, which, however, was put right
this circumstance led to a variance in the 2nd suit, 6 Eq. 505, and 4
between the pleadings and the evi- Ch. 200.
dence in Hawkins v. Malthj, 3 Ch.
VENDOR AND PURCHASING BROKER. 503
1. Of the vendor and of the broker or jobber who agrees to 1>,k- m.Chap. 4.
Sect. fi.
buy from him.
2. Of the vendor and the ultimate purchaser.
3. Of the vendor and the undisclosed and intermediate
purchasers.
4. Of the vendor and purchaser as regards their respective
brokers.
1. As to tlie position of the vendor and of the broker or jobber who agrees to bwj
from him.
There is a clear contract between these parties which each Contract between
r • -i i mi • i t vendor and pur-
can enforce against the other. Ihis has never been doubted; chasing broker
but the real nature of the contract has given rise to muchorJO er'
controversy. From the most recent decisions, however, it
seems that the true contract is to the effect that the vendor
will transfer to the buyer or to his nominee, and that the
broker or jobber will either accept the shares and pay for
them and indemnify the seller against all liability in respect
of them, or find some other person to do so ; and that person
must be a person sui juris who has himself agreed to take
the shares, and to whom no reasonable objection can be
taken (t).
Accordingly where the name of an infant was passed, and Instances of
. „ jobber's liability.
the transfer was made to him, the purchasing jobber was held
liable to the vendor, although being ignorant of the infancy
he had made no objection to the transferee within the time
fixed by the rules of the Stock Exchange (u). So, where a
jobber passed the name of a person whose broker had exceeded
his authority, by extending the time for completing the sale,
and that person declined to accept a transfer, it was held that
the jobber had not relieved himself from liability in respect of
his contract (x). So, also, where the name passed was that of
a foreigner resident at Smyrna, it was held, in substance, that
(t) See Maxted v. Paine, No. 2, L. 530, and 7 Cli. 733 ; overruling
L. R. 6 Ex. 132, and the cases cited E( nnie v. Morris, 13 Eq. 203.
in the next few notes. (.<-) Maxted v. Paine, 1st action, L.
. (u) Merry v. Nickalls, L. R. 7 H. R. 4 Ex. 81.
504
SALES ON STOCK EXCHANGE.
Waiver of
objection to
nominee.
Grisf^ell v.
Bristowe.
Coles v.
Bristowe.
Bk. III. chap. 4. the vendor might reasonably object to it ; and having done so,
oGCL. 0.
that the jobber remained liable (y).
But if the person whose name is given is sui juris, and is
one to whom the vendor ma}- reasonably object, and he allows
the time for objecting to pass, and executes a transfer to that
person, the purchasing broker or jobber is discharged from all
further liability, unless, as sometimes happens, he has ex-
piessly undertaken some further obligation, e.g., to guarantee
registration of the transfer.
In Grisscll v. Bristowe {£), and Coles v. Bristowe (a), the
seller had executed a transfer to the person whose name was
given as the ultimate purchaser, and he paid for the shares
and kept the transfers, but did not execute them, and did not
procure them to be registered in his name. The seller conse-
quently remained liable to the company for calls, and he
sought to compel the jobber who first bought the shares to
indemnify him. But it was held both by the Court of Ex-
chequer Chamber and by the Court of Appeal in Chancery
that the jobber had duly discharged his obligations, and had
ceased to be liable. In these cases it did not appear that the
transferee could have been reasonably objected to; but the
decisions showed the true position of purchasing jobbers, and
paved the way to those which follow.
In Maxted v. Paine, No. 2 (b), the name passed was one
which could have been reasonably objected to, and was the
name of a nominee of the true purchaser, who was paid by
him for accepting the transfer. It was, nevertheless, held,
that there being no fraud on the part of the defendant (the
first purchasing jobber), he had discharged his obligation, by
procuring the acceptance of a transfer by a person who could
not himself repudiate it, and to whom the vendor had not
objected in due time. This case shows conclusively that as
between the vendor and purchasing jobber, and where they
Maxted v. Paine,
No. 2.
(y) Allen v. Graves, L. E. 5 Q. B.
478.
(v) L. R. 4 C. P. 36, reversing S.
C. 3C. P. 112.
(a) 4 Ch. 3, reversing S. C. 6 Ei|.
149; Loring v. Davis, 32 Ch. D.
625.
(b) L. E. 6 Ex. 132, and 4 Ex.
203. See as to the judgment of
Lord Blackburn, in this case, Merry
v. Nickalls, 7 Ch. 733.
VENDOR AND ULTIMATE PURCHASER.
505
both act bona fide, it is the duty of the vendor to make inquiry Bk. ^C1JP- 4-
respecting his proposed transferee.
If, as sometimes happens, the purchasing broker or jobber Registration
has expressly guaranteed the registration of the shares, he is gl
liable to indemnify the seller against the consequences of their
non-registration in the name of the transferee (c) ; but he is
not liable for the solvency of the transferee.
2. As to the position of the vendor and the ultimate purchaser.
When the ticket containing the name of the ultimate pur- Contract between
chaser issued by his brokers is delivered to the vendor, and ^rferee.
he has executed a transfer of his shares, and that transfer has
been accepted by the purchaser, and he has paid the price, it
is plain that the vendor has become a trustee for the pur-
chaser, and that the purchaser is bound to indemnify the
vendor against all liability in respect of the shares (d). This
has been decided even where the purchaser has not executed
the transfer (d) ; and where the registration of the transfer can-
not take place by reason of the stoppage of the company (e).
The most recent decision on this point is Loring v. Davis (/), ^01v1inss v'
where the original contract was void under Leeman's act, 30
Vict. c. 29, and the transfer had not been executed by the
purchaser ; but he had authorised his agents to accept the
shares, and they had done so.
Even before the Judicature acts, where the vendor and ulti-
mate purchaser had been thus brought into direct communica-
tion with each other, the vendor could sue the purchaser at
(c) Cruse v. Paine, 6 Eq. 641, and Hodglcinson v. Kelly, 6 Eq. 496 ;
4- Ch. 441. Holmes v. Symons, 13 Eq. 66. Com-
(d) Paine v. Hutchinson, 3 Eq. pare Bermingham v. Sheridan, 33
257, and 3 Ch. 388 ; Hodgkinson Beav. 660, which, cannot now be
v. Kelly, 6 Eq. 496 ; Hawkins v. relied upon. See, on it, 3 Ch.
Maltby, 6 Eq. 505, and 4 Ch. 200 ; 393.
Shepherd v. Gillespie, 5 Eq. 293, and (/) 32 Ch. D. 625. The autho-
3 Ch. 764 ; Shqrpard v. Murphy, Ir. rity to accept the shares was revoked
Rep. 2 Eq. 544, and 16 W. R,. 948 ; by one letter but conferred by an-
Wynne v. Price, 3 De G. & Sm. 310. other sent with it.
(e) Evans v. Wood, 5 Eq. 9 ;
506 SALES ON STOCK EXCHANGE.
P»k. III. Chap. 4. }aw for SU(.]1 indemnity (r/) : for then, at all events, there was
clearly a contract between them (h).
Privity of rr;he precise moment when the contract in these cases is
contract.
first created, has given rise to some difference of opinion,
hut the better opinion seems to be that a contract between
the vendor and the ultimate purchaser exists, as soon as the
ticket containing the purchaser's name has been handed, by
his authority, to the vendor, and he has accepted the name,
and indicated that acceptance to the purchaser (i). This
opinion is based upon the ground that the ticket is drawn up
and issued by the agent of the purchaser, who is authorised to
use the machinery of the Stock Exchange, and to transmit the
ticket to any person to whom the operation of that machinery
may bring it. When that person is ascertained, and the ticket
is handed to him, an offer is made by the purchaser to buy
of the vendor, upon the terms specified on the ticket : and
if the vendor accepts that offer, and informs the purchaser that
he has done so, it is difficult to see that anything further is
required to make a contract between the parties. This point,
however, has ceased to be of the same importance as before
the Judicature acts : for now, if the relation of trustee and
cestui que trust is shown to exist, it becomes unnecessary to
consider whether there was a contract between the plaintiff
and the defendant or not.
Duty to procure It was settled in Stray v. Ihtsscll (k), that in sales on the
Stra v Russell Stock Exchange, it is not the duty of the seller of shares to
(g) Kellock v. Enthovcn, L. R. 9 200.
Q. B. 241 ; Boivring v. Shepherd, L. (i) See ace. per Christian, L. J.,
R. 6 Q. B. 309 ; Davis v. Haycock, Sheppard v. Murphy, 16 W. R. 948,
L. R. 4 Ex. 373 ; Walker v. Bartlett, 956 ; per Brett, J., in Bowring v.
18 C. B. 845, reversing S. C. ib. Shepherd, L. R. 6 Q. B. 309, 328 ;
446 ; Humble v. Langston, 7 M. & per Kelly, C. B., in Davis v. Hay-
W. 517. The action should he for cock, L. R. 4 Ex. 373, 384-386. See,
not indemnifying the seller. See also, per Lord Blackburn, in Maxted
Sayles v. Blanc, 14 Q. B. 205, and v. Paine. 2nd action, L. R. 6 Ex.
6 Ra. Ca. 79, and the cases above. 132, 166. See, contra, Mr. Justice
(/i.) See, as to this, Hawkins v. Lush's judgment in the same case.
Maltby, 3 Ch. 188, where the con- See, also, Fry, Sp. Per., 628, 2nd ed.
tract was held to be misstated. (k) 1 E. & E. 888. As to sales
This, however, was put right in not on the Stock Exchange, see p.
the 2nd suit, 6 Eq. 505, and 4 Ch. 491 et seq.
VENDOR AND ULTIMATE PURCHASER. 507
procure their transfer to the purchaser ; and that a person p,k- IH- chaP- 4-
Sect. o.
who buys shares through a broker may be compelled to pay
for them, although the company may decline to accept him as
a shareholder ; and he has endeavoured to repudiate the
shares. The facts of this case were as follows : — Some shares
in the Royal British Bank were sold by the defendant to the
plaintiff through brokers, who were members of the Stock
Exchange. Soon after the sale the bank stopped payment,
and the directors refused to allow any transfers of shares.
The plaintiff, the purchaser, repudiated the purchase, and
directed his broker not to pay the purchase-money. The
broker, however, did pay it, as he was bound to do by the
rules of the Stock Exchange. By the same rules it was in-
cumbent on the purchaser, and not on the seller, to obtain the
consent of the directors to the transfer. The plaintiff' took
no steps to procure such consent, and refused to repay his
broker the money he had paid for the shares. This, how-
ever, the plaintiff was ultimately compelled to do by an action
at law (0, and he then brought an action to recover their price
from the seller. It was held that the action could not be sus-
tained : 1. Because there had not been a total failure of con-
sideration, inasmuch as the plaintiff had got the transfers and
the certificates ; 2. Because, by the rules of the Stock Ex-
change, it was not the duty of the seller to procure the con-
sent of the directors to the transfers ; and 3. Because the
plaintiff was not himself ready and willing to perform the
contract on his part.
It follows that if the buyer has paid the seller or his broker London Founders'
. Association v.
on the receipt of a proper transfer (which is the usual prac- Clarke.
lice), and the company declines to accept the buyer, he cannot
recover from the seller the amount paid for the shares, the
vendor himself being in no default (»?)■
A reasonable time for the transfer of shares bought and sold Time for com-
, . pleting transfers.
is implied m the contract tor sale ; and where the sale is made
through brokers, the rules of the Stock Exchange fixing the
time within which shares sold are to be delivered are admis-
(l) See Taylor v. Stray, 2 C. 13. N. (m) London Founders' Association
S. 175, 197.. v. Clarke, 20 Q. B. D. 57(5.
508
SALES ON STOCK EXCHANGE.
Same broker
acting for both
parties.
Bk. III. Chap. 4. sible in evidence upon the question what is reasonable time,
Sect. 6. x
although the buying and selling brokers are not proved to be
members of the Exchange (w). As to the delivery of certi-
ficates, see ante, p. 490.
A curious and instructive case arose in Ireland in which the
same broker acted for both buyer and seller without their
knowing it. He was instructed to sell shares in a company by
some of his customers, and he was instructed to buy shares in
the same company for others of his customers. He sent
bought and sold notes to them respectively, and in his books
he debited the buyers with the price and credited the sellers
with the same amount. Some of the buyers sent him cheques
for the money they had to pay. Others of the buyers had
money in his hands. No mone}* reached the sellers, and they
knew nothing of what was being done about the payment of
the purchase-money. The broker became bankrupt. The
buyers sued the sellers for the shares : a decree was made
in their favour, by the Court of first instance, but this was
reversed on appeal, on the ground that the parties did not
know that the same broker was acting for them, and that
the vendors had not been paid, and that until they were, the
purchasers were not entitled to the shares (o).
Undisclosed
principals.
Intermediate
purchasers.
3. As to the position of the vendor and the undisclosed and intermediate
]_m.r chasers.
If the first purchaser is a broker buying for a principal, the
liabilities of such principal are the same as the liabilities of a
purchasing broker or jobber {p). These have been already
examined.
But in the course of a sale on the Stock Exchange, the only
persons who are brought into contact with the vendor are the
first and ultimate purchasers. "With the intermediate pur-
(n) Stewart v. Cauty, 8 M. & W.
160. See, also, Field v. Lelean, 6
H. & N. 617, where evidence of a
custom among mining sharebrokers
to pay on delivery was held admis-
sible upon the question of reason-
able time. In this case both the
plaintiff and the defendant were
mining sharebrokers.
(o) M'Devitt v. Connolly, 15 L. R.,
Ir. 500, reversing S. C, 13 ib. 207.
(p) See Lord Blackburn's judg-
ment in Maxted v. Paine, No. 2, L.
R. 6 Ex. 132.
VENDOR AND INTERMEDIATE PURCHASERS. 509
chasers lie has ordinarily nothing to do, and unless under ex- ' Se^t gap"
ceptional circumstances, he has no rights against them (q). ~
A vendor, for example, has ordinarily no remedy against an
intermediate purchaser who passes the name of some one else
as the ultimate purchaser and transferee (r).
But an intermediate jobber may enter into a contract with
the vendor through his broker, and in such a case the inter-
mediate jobber will be liable to the vendor for any breach of
such contract (s).
Moreover, if the ultimate purchaser is a mere nominee of Cestui quo trust
of triiiLisforcc
and trustee for an intermediate purchaser, or for any one else,
and the transfer to the ultimate purchaser is never registered,
but tlic vendor continues the legal owner of the shares, and
incurs liability in consequence, he is entitled to be indemnified
against that loss by the person in whom the beneficial interest
of the shares is really vested (t). This liability arises not out
of any contract between the legal and beneficial owners ; but
from the relation of trustee and cestui <iac trust which exists
between them ; and from the principle that the interposition
of intermediate trustees does not affect the rights of the legal
and true equitable owner. Upon this principle it was held in
Brown v. Black (u), that a vendor of shares who had trans- Brown v. Black.
ferred them to an infant, but whom he did not know to be
such, was entitled to be indemnified by the real purchasers
who had used the infant's name, although the infant had been
registered in respect of the shares for two years. His infancy
was discovered on the winding-up of the company ; and, the
transfer to him being invalid, the transferor became a contri-
butory in his place, and then successfully claimed indemnity
from the real owners of the shares (x).
(q) See, however, Lord Black- mediate jobber,
burn's judgment in Maxted v. (t) Castellan v. Hobson, 10 Eq. 47 ;
Paine, L. E. 6 Ex. 167-8. and see ante, p. 506.
(?•) Torrington v. Lowe, L. E. 4 («) 8 Ch. 939, and 15 Eq. 363.
C. P. 26. Compare Castellan v. (a;) Compare Maynard v. Eaton,
Hobson, 10 Eq. 47. 9 Ch. 414, a similar case, but where
(s) As in Allen v. Graves, L. E. 5 a compromise effected between the
Q. B. 478, where there was a special plaintiff and the infant was held
arrangement between the plaintiff's fatal to the plaintiffs claim. See,
broker and the defendant, an inter- also, Heritage v. Paine, 2 Ch. D. 594.
510 SALES OX STOCK EXCHANGE.
lik. in. chap. 4. For convenience of reference, the following analysis of the
Sect. 6. ...... „ .
principal decisions, referred to in the preceding pages upon the
rights of vendors, is appended : —
I. Vendor against jobber.
1 . Successful actions and suits.
(a) Actions at law.
Maxted v. Paine, No. 1, L. R. 4 Ex. 81.
Allen v. Graves, L. R. 5 Q. B. 478.
In both of these the transferee was objected to.
(b) Suits in equity.
Merry v. Nickalls, L. R. 7 H. L. 530 ; 7 Ch. 733.
Heritage v. Paine, 2 Ch. D. 594.
Transferee an infant.
Cruse v. Paine, 6 Eq. 641, and 4 Ch. 441.
Registration guaranteed.
2. Unsuccessful actions and suits.
(«) Actions at law.
Grissell v. Bristowe, L. R. 4 C. P. 36, reversing L. R. 3
C. P. 112.
Maxted v. Paine, No. 2, L. R. 6 Ex. 132, and L. R. 4
Ex. 203.
In both of these the transferee had accepted the
transfer.
(b) Suits in equity.
Coles v. Bristowe, 4 Ch. 3, reversing 6 Eq. 149.
Transferee had accepted the transfer.
B. nnie v. Morris, 13 Eq. 203.
Transferee an infant ; overruled by Merry v.
Nickalls, 7 Ch. 733 ; and L. R, 7 H. L. 530.
II. Vendor against ultimate purchaser.
1. Successful actions and suits.
(a) Actions at law.
Pouring v. Shepherd, L. R. 6 Q. B. 309.
Davis v. Haycock, L. R. 4 Ex. 373.
Walker v. Bartlett, 18 C. B. 845.
Humble v. Langston, 7 M. & W. 517.
Kellock v. Enthovcn, L. R. 8 Q. B. 458, and 9 Q. B. 241.
Where the purchaser had himself transferred the
shares.
(b) Suits in equity.
Wynne v. Price, 3 De G. & Sm. 310.
Paine v. Hutchinson, 3 Eq. 257, and 3 Ch. 388.
Shepherd v. Gillespie, 5 Eq. 293, and 3 Ch. 764.
Sheppard v. Murphy, Ir. Rep. 2 Eq. 544, and 16 W. R.
948.
Hawkins v. Maltby, 6 Eq. 505, and 4 Ch. 200.
Holmr* v. Symons, 13 Eq. 66.
VENDOR AND PURCHASER AND THEIR BROKERS.
511
Loring v. Davis, 32 Ch. D. 625. Bk. III. Chap. 4.
In none of these cases was the transfer executed ec ' '
by the transferee.
Evans v. Won, I, 5 Eq. 9.
Hodgkinson v. Kelly, 6 Eq. 496.
In both of which the company had stopped.
2. Unsuccessful suits.
Hawkins v. Maltby, 3 Ch. 188, reversing S. C. 4 Eq. 572.
The case on appeal turned on the pleadings.
Bermingltam v. Sheridan, 33 Beav. 660.
Not now to be relied upon. See ante, p. 505,
note (e).
III. Vendor against cestui que trust of transferee.
(a) Successful suits.
Castellan v. Hobson, 10 Eq. 47.
Brown v. £Zac&, 15 Eq. 363, and 8 ( !h. 939.
Transfer to an infant.
(b) Unsuccessful suit.
Maynanl v. Eaton, 9 Ch. 414.
Compromise with transferee held to be a defence.
IV. Purchaser against vendor.
MDevitt v. Connolly, 15 L. K., Ir. 500, ante, p. 508.
4. As to the position of the real vendor and purchaser as regards their
respective brokers.
The duty of a broker emploj'ed to sell is to sell according to Duty of sellin£
broker.
his instructions if he can do so, and if he cannot, not to sell at
all. His duty is performed when he has entered into a binding
contract for sale, and has given the name of the buyer to his
employer (2/). If the selling broker receives the price, it is
his duty to hand it over to his principal ; but it is no part of a
selling broker's legal duty to his employer to procure pa}anent
of the price, nor to procure the execution by the purchaser of
the transfer, nor to procure the registration thereof (z). Nor
has it yet been decided that it is part of his duty to inquire
into the solvency of the transferee (a). As between the vendor
and his own broker, the sale is effected by the contract to sell,
although the vendor may refuse to carry it out (b).
(y) A broker who by disregarding (g) See Clark's Law of Joint Stock
the requirements of 30 Vict. c. 29, Companies (Scotch), 145.
fails to effect a binding contract, is (a) See, on this subject, Lord
liable to his employer for negligence, Blackburn's judgment in Mended v.
see Neilson v. James, 9 Q. B. D. Paine, No. 2, L. R. 6 Ex. 132.
546, ante, p. 489. (b) Boss v. Moses, 1 C B. 227.
;i2
SALES ON STOCK EXCHANGE.
Bk. III. Chap. 4.
Sect. 6.
Duty of buying
broker.
Broker buyiDg
what he was not
directed to buy.
Revocation of
broker's autho-
rity.
Right of broker
to indemnity.
Again, the duty of a broker employed to buy is to buy
according to his instructions if he can ; and if he cannot, not
to buy at all. He has no implied authority to enlarge the
time for completing the purchase when that time has once been
fixed ; in other words, he has no implied authority to continue
the account (c). If he exceeds his authority he exposes him-
self to liability to persons who rely on his having authority to
buy, and are damnified by its absence ((?).
A broker instructed to buy shares of a particular kind, fulfils
his instructions if he buys what are commonly bought and sold
as such shares in the share market. Thus, where a broker
was instructed to buy " Kentish Coast Railway Scrip," and he
bought what was known as such, and was paid for it, it was
held, that he was not liable to [ refund the money he had re-
ceived, although it turned out that what he had bought was
scrip issued without due authority, and was in fact utterly
worthless (e). Upon the same principle, if a broker is told to
buy shares and he buys scrip ; if nothing but scrip has found
its way into the market, and if such scrip has been usually
bought and sold as shares, and if there is nothing to show that
the broker was to wait until shares were issued, he will be held
to have pursued his authority (/).
Until the broker has acted upon his authority to buy, it may
be revoked ; and if any money has been given him in order to
enable him to pay for them, it may be demanded hackly). But
this cannot be done after he has entered into a contract for
purchase, and become personally responsible for the due per-
formance of that contract (/<•)•
On the other hand, a person who employs a broker to buy or
sell is bound to indemnify him against any losses which he may
incur by reason of his having contracted in his own behalf,
and of being afterwards, without any default of his own, unable
(c) See Maxted v. Paine, No. 1,
L. R. 4 Ex. 81.
(d) Ex parte Panmure, 24 Ch. D.
367. See ante, p. 494.
(e) Lamert v. Heath, 15 M. & W.
48(5.
(/) Mitchell v. Newhall, 15 M. &
W. 308. Compare Kempson v.
Saunders, 4 Bhig. 5.
(g) Fletcher v. Marshall, 15 M. &
W. 755.
(/«) McEwen v. Woods, 11 Q. B.
13. See, also, Read v. Anderson, 13
Q. B. D. 779, affirming 10 Q. B. D.
100.
VENDOR AND PURCHASER AND TI1EIR BROKERS. 513
duly to complete his contract (i). The following cases will Bk. III. Chap. 4.
o6Cw O.
serve to illustrate this doctrine.
1. Where a broker is employed to sell.
In Sutton v. Tatham(k), a person ordered a broker to sell Sales through
■*• t brokers.
for him 250 shares. The broker entered into a contract for Sutton Vm
their sale, and was afterwards informed that a mistake had Tatham.
been made, and that fifty only were intended to be sold. The
broker not being enabled to deliver the shares which he had
agreed to sell, was compelled to make good to the purchaser
the difference between the price agreed upon and the price at
which the purchaser had procured shares elsewhere. It was
held, that the broker was entitled to recover this difference
from his employer.
In Bayliffe v. Butterworth (I), the defendant instructed the Bayliffe v.
plaintiff, a broker, to sell shares for him, which the plaintiff
accordingly did. When the time came for the delivery of the
shares to the purchaser, the defendant made default, and did
not furnish them. The plaintiff having been compelled by the
rules of the Stock Exchange to pay the difference between the
price agreed to be paid by the purchaser and that actually
paid by him for other shares, was held entitled to recover such
difference from the defendant.
2. Where a broker is employed to buy.
In Bayley v. WUkins (m), the defendant requested the plain- Purchases
tiff, a broker, to buv shares for him, which the plaintiff accord-
. . . Bay]ey r-
ingly did. At the time of their purchase, a call had been made, Wilkins.
but such call had not become payable. The plaintiff paid the
amount of the call to the selling broker in pursuance of the
rules of the Stock Exchange, and was held entitled to recover
the money so paid from the defendant.
In Taylor v. Stray (ri), the defendant instructed the plaintiff, Taylor v. Stray.
(i) See, in addition to the cases (k) 10 A. & E. 27.
cited, infra, Young v. Cole, 3 Bing. (I) 1 Ex. 425. Compare this with
N. C. 724 ; Child v. Morley, 8 T. R. Bowlby v. Bell, 3 C. B. 284.
610 ; Bowlhy v. Bell, 3 C. B. 284 ; (m) 7 C. B. 886. See, as to the
Simpson'v. Rand, 1 Ex. 688. As to evidence to be adduced by a broker
indemnifying one's broker against who seeks to recover a call paid by
the costs of an action brought him, McEwen v. Woods, 2 Car. &
against him, see Brown v. Hall, 7 K. 330, and 11 Q. B. 13.
C. B. N. S. 503. (n) 2 C. B. N. S. 175. See, toe,
J,.C. • L L
514
SALES ON STOCK EXCHANGE.
Bk. III. Chap. 4,
Sect. 6.
Pollock v.
Stables.
Lacey v. Hill.
Broker not
entitled to
indemnity for
his own default.
Duncan v. Hill.
a broker, to buy some Royal British Bank shares for him.
The defendant accordingly bought the shares, which were to
be paid for on a future day. Before that day arrived, the bank
stopped payment, and the defendant refused to take or pay for
the shares. The plaintiff thereupon paid for them in com-
pliance with the rules of the Stock Exchange; and he was held
entitled to recover the money so paid from the defendant.
In Pollock v. Stables (o), the plaintiff, in pursuance of the
defendant's instructions, bought shares for him which the
defendant neglected to take up. The broker who sold them,
consequently re-sold them, and thereby a loss was sustained.
The plaintiff, who was also a broker, made good this loss, as
he was compellable to do by the rules of the Stock Exchange,
and he was held entitled to recover the amount he had paid
from the defendant.
In Lacey Y.Hilli})), brokers bought stock for a customer,
who suddenly died insolvent ; they having paid for the stock
were held entitled to re-sell it and to prove against his estate
for the loss they sustained.
But a broker is not entitled to indemnity from his employer
in respect of loss arising from his own default. Thus in
Duncan v. Hill (q), the plaintiffs, who were brokers on the
Stock Exchange, were instructed by the defendant to buy
shares for a certain account, and afterwards to continue it.
This was done ; but before the final settling-day arrived the
brokers were declared defaulters, and according to the rules
of the Stock Exchange all their transactions were peremptorily
closed. The brokers were held entitled to be repaid moneys
paid by them in order to keep open the account at the de-
fendant's request, but not those further sums which had
become payable by reason of their own insolvency (/•).
Stray v. Russell, 1 E. & E. 888 ;
Chapman v. Shepherd, L. R. 2 C. P.
228 ; Biederman v. Stone, ib. 504.
The last two cases show that the
broker's right is not affected by
§ 153 of the Companies act, 1862.
See, further, as to the right of pur-
chasing brokers to indemnity from
their employers, Mollett v. Robinson,
L. R. 7 H. L. 802 ; 7 C. P. 84, and
5 C. P. 646. "
(o) 12 Q. B. 765.
(p) Lacey v. Hill, Scrimgeour's
claim, 8 Ch. 921. See ib., Crowley's
claim, 18 Eq. 182.
(q) L. R. 8 Ex. 242, reversing S.
C. 6 Ex. 255.
(r) Compare Hartas v. Ribbons, 22
VENDOR AND PURCHASER AND THEIR BROKERS. 515
Again, a broker who contracts to buy unnumbered shares in Bk. III. Chap. 4.
& ' -7 Sect. 6.
a joint-stock bank, contrary to 39 Vict. c. 29, has no claim -
against his employer if he refuses to accept the shares, unless
indeed he authorised a purchase contrary to the act (s).
The cases above referred to establish as a general doctrine Rules of stock
that what a broker, employed in buying and selling shares for tinguished from
another person, is compelled by the rules of the Stock Ex- usase of brokers-
change to pay, in consequence of the non-performance by his
employer of the contract entered into on his behalf, is recover-
able from him by the broker. The principle of the decisions
in question does not however extend further than this, viz.,
that brokers are impliedly authorised by those who employ
them, to do what is usual and customary amongst brokers in
matters such as those they are employed about. The cases
which have been noticed do not show that persons who employ
members of the Stock Exchange are affected by the rules of
the Exchange without reference to the question of what is cus-
tomary amongst its members ; and in truth, to non-members,
such rules are only important so far as they evidence usage.
This is shown by the case of Westropp v. Solomon (t). There, After-made
the defendant employed the plaintiff, a broker, to sell ten scrip
certificates, which the plaintiff did. It afterwards appeared Solomon.
that these certificates were forgeries, although neither the
plaintiff nor the defendant had any suspicion that such was the
case. The committee of the Stock Exchange made a rule to
the effect that the purchasers of the spurious scrip should have
a right to demand from the sellers not only repayment of the
purchase-money, but also payment of an additional fixed sum.
In compliance with this rule, the plaintiff repaid to the pur-
chaser the money received from him, and also the additional
sum fixed by the rule ; but it was held, that the plaintiff was
only entitled to recover from the defendant the money which
the purchaser himself could have recovered at law ; namely
the amount paid by him with interest ; and it was held, that
Q. B. D. 254, where the principal Ex parte Panmure, 24 Ch. D. 367.
ratified the closing of the account ; («) Ante, p. 489.
and Lacey v.Hill, Crowley's claim, 18 (t) 8 C. B. 345. See, also, Sweet-
's,^. 182, where the brokers became mg v. Pearce, 7 C. B. N. S. 449, and
defaulters solely by reason of the pre- 9 ib. 534.
vioua default of their principal ; see
L I- 2
516 SALES ON STOCK EXCHANGE.
Bk. III. Chap. 4. the rule, having been made after the sale, formed no part of
Sect. 6. .
that usage of brokers by which the defendant was bound.
Brokers' charges. Accounts sent in by sharebrokers to their employers may be
shown not to have included charges which ought to have been
included ; and this is true even where the persons to whom
such accounts are sent have dealt with other people upon the
faith of the accounts being full and correct (n).
Illegal purchases A broker employed to buy or sell shares in an illegal com-
brokeis^ * PanJ> or m a company which by law is not in a position to
issue shares, cannot recover from his employer either an}r
commission on the purchase or sale, or any money expended
for him on account of such shares (x).
(h) Bails v. Lloyd, 12 Q. B. 531. 1 Camp. 547 ; and Bousfield v. Wil-
(x) Josephs v. Pebrer, 3 B.*& C. son, 16 M. & W. 185, both of which
639 ; Ex parte Neilson, 3 De G. M. have been noticed already. See
& G. 556. See, further, as to illegal ante, p. 140.
sales through brokers, Bud v. Buck,
SURRENDER OF SHARES. 517
CHAPTER V.
OF THE SURRENDER OF SHARES.
1. General Observations.
The right of a shareholder to retire from a company of which Bk. III. Chap. 5.
he is a member, by surrendering his shares to the company, Retirement by
depends upon the acts of Parliament, charter, or regulations or
customs which govern the company in question. Where there
is nothing enabling a shareholder to retire by surrendering his
shares, the ordinary partnership rule applies, and no surrender
can be made except with the consent of all the shareholders (a).
If such a method of withdrawing from the company is autho-
rised by its constitution, a surrender by a shareholder of his
shares will of course be valid, if all the formalities which may
be necessary are duly complied with ; and where the power to
surrender exists, the due observance of all necessary formalities
will be presumed in favour of a shareholder who has in fact
bond fide retired from the company, and whose shares have
been cancelled or otherwise disposed of by the company (b).
The right of a shareholder to retire by surrendering his Rower of ma-
shares, is not one of those matters as to which a majority of minority with
members binds a minority, or as to which directors have any reifnqu^hment5
implied authority to represent the conrpan}'. Both principle of sliares-
and authority are clearly opposed to any such doctrine (c).
(a) See volume on Partnership, (c) The Plate Glass, &c, Co. v.
pp. 573 et seq. Retirement by trans- Bunley, 8 E. & B. 47, is not incon-
fer is quite another matter, and has sistent with this nor with the cases
been already referred to. referred to in the text ; in that case
(b) See Lane's case, 1 De G. J. & the demurrer admitted that the com-
Sm. 504 ; Kipling v. Todd, and pany had accepted the surrender of
Kipling v. Allan, 3 C. P. D. 350. the shares then in question. See as
The retirement must be complete, to special resolutions under the
see Barry v. Navan and King's Companies act, 1862, infra, p. 526.
County Rail. Co., 4 L. R. Ir. 68.
513 SURKENDEE OF SHAKES.
Bk. ill. Chap. 5. Nor if directors have power to accept a surrender of shares
_ can they delegate this power to a manager (d). At the same
time if shares have heen surrendered with the knowledge of
all the shareholders under circumstances fully disclosed to them
all, and such surrender has not been questioned for a consider-
able period, the company will be precluded from afterwards
disputing the validity of the surrender (e). The following are
leading authorities upon this subject : —
Morgan's case. Morgan's case(f). The company's deed authorised the
directors to buy up, out of certain specified funds of the com-
pany, any shares which might be offered for sale. An extra-
ordinary general meeting resolved that if any shareholder should
be desirous of withdrawing from the company, the directors
should be at liberty to purchase his shares upon certain speci-
fied terms. A shareholder acted upon this resolution, com-
plied with the terms, and sold his shares to the company. But
it was held that the resolution was not binding on the company ;
and that the shareholder in question was properly made a
contributory, although nearly five years had elapsed since his
withdrawal.
Stanhope's case. Stanhope' s case (g). The directors had power generally to
act as might appear to them best for the interest of the com-
pany. A dispute arose amongst them, and one of them re-
tired, and his shares were surrendered and cancelled. It was
held that his retirement was unauthorised, and he was put on
(,/) GartmdVs case, 9 Ch. 691. case, 1 De G. M. & G. 421, were
(e) As in Brotherhood's case, 31 similar decisions with respect to
Beav. 365, and. 4 De G. F. & J. other shareholders in the same com-
566; noticed infra, pp. 519 and pany. Compare Kent v. Jackson,
522, and Hunt's case, 32 Beav. 14 Beav. 367, and 2 De G. M. & G.
387. Implied notice to the 49.
directors of the company through (g) 3 De G. & S. 198. See, too,
the books of the company is*not Esparto Trading Co., 12 Ch. D. 191 ;
enough; Hull mini's case, 9 Ch. D. Daniell's case, 22 Beav. 43, affirmed
329 ; Denham & Co., 25 Ch. D. 752 ; 3 Jur. K S. 803 ; Walter's case, 3
Cartmell's case, 9 Ch. 691, where the De G. & S. 244 ; Holt's case, 1 Sim.
directors had power to accept sur- X. S. 389 ; and compare Cockbum's
renders. See, as to estoppel by con- case, 4 De G. & S. 177, and Busk's
duct, ante, p. 47 ei a 7. case, 3 ib. 267 ; and observe the
(/) 1 De G. & S. 750, and 1 Mac. larger powers of the directors in
& G. 225. Richmond's Executors' the first, and the adoption of their
case, 3 De G. & Sm. 96. and Laves' acts in the last, of these two cases.
SURRENDER OF SHARES. 519
the list of contributories ten years after his shares had been Bk. HI. Chap. 5.
cancelled.
Muni's case (Ji). The directors of a cornpan}-, disagreeing as Munt's case,
to the mode of managing its affairs, and being divided into two
parties, it was resolved that one of the two parties should
retire, and that the other should take the management of the
company and relieve the first from their liabilities. The
directors composing one of the two parties did accordingly
retire, and relinquish their shares in favour of the company ;
but it was held that their retirement was altogether unautho-
rised and invalid, and that the}' were contributories on the
winding up of the company.
The principles laid down in these cases were very much con- Agriculturist
A ^ Cattle Insurance
sidered in the course of winding up the Agriculturist Cattle Company.
Insurance Company. The company was formed in 1845. In
1848 it had got into difficulties, and several shareholders
wished to retire. This the}' could not do consistently with the
company's deed of settlement. An arrangement, however,
was made in November, 1848, under resolutions passed at a
meeting of shareholders specially convened for the purpose, to
the effect that a call of 41. per share should be made, and that
those shareholders who wished to retire should, on a particular
day, pay part only of the call, and that their shares should be
forfeited for non-payment of the rest. Under this arrangement
many persons retired at once ; many, however, remained, and
of those some retired afterwards under various arrangements
made between themselves and the directors. In 1861 the
company was ordered to be wound up, and in the course of
such winding up it was held — 1. That having regard to the Brotherhood's
publicity and bona fides of the arrangement come to in gmaiicombe's
November, 1848, and to the time which had since elapsed, the case-
validity of the retirement of those shareholders who withdrew
in pursuance of that arrangement could not be disputed, and
that those persons therefore were not liable to be placed on the
list of contributories (i). 2. That those persons who retired sPackman s
v ' x case.
(h) 22 Beav. 55. See, too, Ben- (i) Evans v. Smallcombe, L. R. 3
nett's case, 18 Beav. 339, and 5 De H. L. 249 ; Brotherhood's case, 31
G. M. & G. 284 ; Richmond's case, Beav. 365, affirmed 4 De G. F. & J.
and Painter's case, 4 K. & J. 30"). 566.
520 SURRENDER OF SHARES.
Bk. in. Chap. 5. afterwards by arrangement with the directors, but without the
Houidsworth's knowledge of the other shareholders, were to be treated as
shareholders still, and were liable to be placed on the list,
although twelve years had elapsed since their retirement and
the winding-up order (k).
Moreover, where persons have only agreed to take shares,
and have not become actual shareholders, the directors have no
implied power to release them from their agreement (/). Never-
theless, an express power to accept a surrender of shares, or to
rescind and abandon contracts, has been held to apply to con-
tracts to take shares and to authorise a release of a person from
his agreement to become a member (m).
Directors have Xhe foregoing decisions sufficiently establish the doctrine
no power to buy . ,
out shareholders, that in the absence of a special authority enabling them so to
do, directors have no power to bind the company by buying
each other out ; nor by buying out shareholders ; nor by
accepting the surrender or relinquishment of shares to the
company (n). Moreover, if the directors of a company mis-
apply its funds by buying up shares in the company, they are
compellable to make good to the company the inone}' so
expended, with interest (o).
Retirement of It is necessary, however, to distinguish the retirement of a
shareholders iir r -\ r iii-i-
compared with shareholder from the refusal of a person to be a shareholder m
refusal to accept
shares.
(k) Spackman v. Evans, L. R. 3 and Provincial Coal Co., 5 Ch. D.
H. L. 171; Houldsworth v. Evans, 525; Phosphate of Lime Co. v. Green,
ib. 263 ; Stanhope's case, 1 Ch. 161 ; L. R. 7 C. P. 43 ; Harris v. North
Stewart's case, ib. 511. See, on these Devon Rail. Co., 20 Beav. 384;
cases, the note infra, pp. 522 and Walker's case, 2 Jur. N. S. 1216,
523. L. J. ; Playfair v. Birmingham,
(I) Hall's case, 5 Ch. 707 ; Adams' Bristol, dec, Co., 1 Ra. Ca. 640 ;
case, 13 Eq. 474. Hodgkinson v. National Live Stock
(m) SnelVscase,5 Ch. 22 ; Thomas' Insur. Co., 26 Beav. 473, and 4 De
case, 13 Eq. 437 ; and compare Kip- G. & J. 422 ; Burt v. British Nation
ling v. Todd, 3 C. P. D. 350, infra, Life Assur. Assoc., 4 De G. & J.
525, where the Court presumed a 158 ; Paul and Beresford's case, 10
surrender of shares which directors Jur. N. S. 692, M. R.
had under a special act. (o) Evans v. Coventry, 8 De G.
(n) See, further, Trevor v. Whit- M. & G. 835. See decree, par. 4,
worth, 12 App. Ca. 409, and the varying pars. 5 and 6 of the decree
criticisms therein on Dronfield Silk- in the court below. See ante, p.
stone Coal Co., 17 Ch. D. 76 ; London 371.
.SURRENDER OF SHARES. 521
a concern which he never agreed to join (_p) ; and it has very Bk. III. Chap. 5.
properly heeii held that the principle of the above decisions
does not apply to the case of a person who, having taken shares
in a company formed for given objects, relinquishes such shares
and retires from the company, upon a change being made in
those objects without his consent (7). So, if it is doubtful Compromise
•' w/ with doubtful
whether a person ever was a shareholder or not, an agreement shareholder,
releasing him from all liability, if any, may be validly made, so
as to bind the company (r) ; and an allotment of shares made
pursuant to an invalid resolution may be properly cancelled at
all events before the shares are registered in the name of the
allottee (s). But a general power to compromise does not
authorise an agreement to allow a shareholder to retire when
there is no dispute as to his membership, and where there is
no power to buy or accept a surrender of shares (t).
It is further necessary to distinguish the retirement of a Surrender of
t r shares to com -
shareholder by relinquishing his shares to the company, from pany compared
his retirement by transferring his shares to some or one of the ^them to^the1"
directors of the company upon their own individual account, directors.
For whilst, in the absence of special authority, it is not com-
petent for directors to accept on behalf of a company the
surrender of shares held in the compau}-, it is as competent for
the directors of a company, as for anybody else, to accept shares
in the company from such shareholders as may be willing to
transfer them in the ordinary way. Consequently, an agree-
ment between the directors and some of the shareholders of a
company to the effect that the latter shall relinquish their
shares and transfer them to the directors, is not ultra vires, or
(p) See Pirn's case, 3 De G. & S. (s) Burnett's cuse, 18 Eq. 507.
11, and 1 Mac. & G. 291 ; Henessy's (t) See L. R. 3 H. L. 188, 231 ;
case, 2 Mac. & G. 201, and 3 De G. Adams' case, 13 Eq. 474 ; Phosphate
& S. 191, as to placing shares in a of Lime Co. v. Green, L. R. 7 C. P.
person's name without authority. 43 ; Dixon's case, 5 Ch. 79, was
See ante, p. 19 et sea. decided on the principle that there
(q) Meyer's case, 16 Beav. 383. can be no compromise where there
(r) Bath's case, 8 Ch. D. 334 ; is no dispute ; and although the
Lord Belhaven's case, 3 DeG. J. &Sm. House of Lords reversed the de-
41 ; Dixon's case, L. R. 5 H. L. 606, cision, see L. R. 5 H. L. 606, the
reversing 5 Ch. 79. See Wright's principle is unquestionable. Comp.
case, 7 Ch. 55, reversing S. C. 12 Wright's case, 7 Ch. 55.
Eq. 331 ; Fox's case, 5 Eq. 118.
522 SURRENDER OF SHARES.
Bk. hi. chap. 5. ni any way illegal, if the agreement is with the directors as in-
dividuals, and not with them as representing the company (w).
Upon the same principle, if a shareholder transfers his shares
to a director or to an ordinary individual, without notice
that the director is acting on behalf of the company, the trans-
feror does effectually retire from the company ; although had
he known that he was in fact surrendering his shares to the
company, the surrender would have been invalid (x).
Moreover, directors who individually agree to accept a sur-
render of shares and to indemnify the surrenderor against calls,
are personally bound by their agreement, whether it is, as
regards the company, ultra vires or not (y).
NOTE ON SMALLCOMBE'S CASE, SPACEMAN'S CASE, AND HOULDS-
WORTH'S CASE, REFERRED TO ABOVE, P. 519.
Smallcombe retired in strict accordance with the arrangement come to
in 1848.
Houldsworth retired pursuant to the same arrangement, with this excep-
tion, that he did not retire within the time fixed therehy, but shortly
afterwards ; the time having been extended by the directors.
SpacJcman retired pursuant to another agreement altogether, come to
between him and the directors for compromising litigation between him
and the company.
The House of Lords held, —
1. That the arrangement of 1848 was one by which a majority of share-
holders could not bind a minority.
2. That, nevertheless, the minority might be precluded from disputing it.
3. That all the shareholders must be treated as having had notice of it,
and that as they had allowed it to be carried out, and had not disputed its
validity for many years, they were all precluded from disjjuting it.
4. That consequently Smallcombe was not a contributory (z).
5. That the agreement with Houldsworth differed in an essential parti-
cular from the arrangement of 1848, and was one which the directors had
no power to enter into.
6. That all the shareholders could not be treated as having had sufficient
notice of the agreement with him to preclude them from disputing it, even
after the lapse of many years.
(u) Haddon v. Ayers, 1 E. & E. S. 777 ; Ex parte Bagge, 13 Beav.
. 118. See, too, Jessopp's case, 2 De 162 ; Nicols' case, 3 De G. & J. 387.
G. & J. 638. In Cartmell's case, 9 (y) Barker v. Allan, 5 H. & N. 61.
Ch. 691, the directors never assented (s) Brotherhood's case, 31 Beav.
to the transfer made to them. 365, affirmed 4 De G. F. & J. 566,
(a;) See Hollwey's case, 1 De G. & was like Smallcombc's.
IN PARTICULAE COMPANIES. 523
7. That consequently Houldsworth or, he being dead, his executors were Bk. III. Chap. 5.
contributories.
8. That the agreement with Spademan was one which the directors had
no power tu make
9. That all the shareholders could not be treated as having had sufficient
notice of it to preclude them from disputing it, even after the lapse of
many years.
10. That he therefore was also a contributory («).
The Lords were by no means unanimous in their decision, and Lord St.
Leonards, in a judgment which the writer ventures to think ought to have
prevailed with the House, gave his opinion, that in all three cases the com-
pany ought to be held precluded from disjniting transactions so long passed
as those in question, and all of which were perfectly bond fide. The same
view was taken by Lord Romilly when the cases were before him (see 1
Ch. 163). As the decisions stand, however, they are extremely difficult to
reconcile on satisfactory grounds ; for the notice which the shareholders
had in Houldsworth's and Spademan's cases was little if at all less full than
the notice they had in Sinallcombe's case. Some general principles of value,
however, can be extracted from these three cases. They show —
1. That a company will be precluded from disputing the validity of
transactions sanctioned by a general meeting, but not binding on absentees,
if such transactions are bond fide, and such as all the shareholders, if sui
juris, could sanction, and if it can be inferred that all the shareholders
were informed of them, and if no steps have been taken for a considerable
time to impeach them.
2. That information on the part of all the shareholders, sufficient for the
purpose in cpuestion, must be inferred from notices sent to them all, in the
usual way, telling them what has been done ; but not from reports, &c,
not distinctly giving them this information.
3. That powers of compromise and powers of forfeiture must be bond fide
exercised for the purposes for which they are conferred, and that attempts
to make them available for other purposes will not succeed.
This view of their joint effect is supported by Phosphate of Lime Co. v.
Green, L. R. 7 C. P. 43, where the Court of Common Pleas held that a
company had ratified a purchase of shares which the directors had no
power to make.
2. Surrender in particular companies.
It is necessary now to advert to the right to retire by
surrender of shares in the various classes of companies which
exist in this country.
The rules of building societies invariably provide for the Building
withdrawal of their unadvanced members, and the terms on societies-
(</) Stanhope's case, 1 Ch. 161, was like Spademan's.
524
SURRENDER OF SHARES.
Auld v. Glasgow his consent
Build. Soc.
Cost-book com
panies.
Bk. in. Chap. 5. which they can retire depend entirely on the rules (b) ; these
rules cannot be altered to the prejudice of any member without
Thus, where the rules enabled unadvanced
members to withdraw the sum at their credit in the society's
books, it was held that so long as the society was not in liqui-
dation, any unadvanced member was entitled to withdraw the
amount at his credit in the books, although the assets of the
company had become depreciated, and a majority of the
members had passed a resolution to the effect that 7s. 6d. per
pound should be deducted from the amounts at the credit of
the members, and be carried to a suspense account (c).
The right of a shareholder in a cost-book mining compairy
to retire from the company upon the relinquishment of his
shares, and payment of what may be due from him to the
company, is established by custom, and is therefore imported
into the contract by which the members of such companies are
mutually bound (d) ; and where it was proved to be the practice
of a cost-book company to allow shareholders to retire upon
any terms agreed upon at general meetings, it was held that a
shareholder who had been allowed at a general meeting to
surrender his shares without paying the arrears of calls upon
them, had ceased to be a shareholder (e). The surrender must
be by notice in writing to the purser (/), and must be delivered
at least six weeks before a resolution is passed or an order
made to wind up the company (g).
The usual terms on which a member is entitled to retire
from a cost-book company are, that if the company is insolvent,
the retiring member pays his share of the deficiency, as if the
company were being wound up, but if the company is solvent he
is entitled to receive his share of the surplus left, on deducting
the liabilities from the value of the assets. In ascertaining
Usual terms of
retirement.
(b) See Tosh v. North British
Build. Soc, 11 App. Ca. 489 ; Walton
v. Edge, 10 ib. 33 ; Brownlie v. Rus-
sell, 8 ib. 235 ; Sheffield and S. York.
Perm. Build. Soc, 22 Q. B. D. 470.
(c) Auld v. Glasgow, &c, Build.
Soc, 12 App. Ca. 197.
(d) See, as to this, infra, and Ex
parte Palmer, 7 Ch. 286 ; Fenn's case,
4 De G. M. & G. 285, and 1 Sm. & G.
26 ; Bodmin United Mines, 23 Beav.
370 ; Birch's case, 2 De G. & J. 10 ;
Lofthouse's case, ib. 69 ; Northey v.
Johnson, 19 L. T. 104.
(e) Bodmin United Mines, 23 Beav.
370.
(/) 32 & 33 Vict. c. 19, §§ 21-23.
(rj) 50 & 51 Vict. c. 43, § 22.
IN PARTICULAR COMPANIES. 525
these amounts, the solvency or insolvency of the remaining Bk. HI. Chap. 5.
shareholders had formerly to he taken into account, and the
assets valued on the footing of the company being a going
concern (//.). Now, the valuation of the assets is to be made
upon the basis that the continuing shareholders had also
relinquished their shares (/). The terms of retirement may be
varied by agreement, which may be implied from the course of
practice in the company, but such an agreement is not nearly
so readily implied in the case of large companies as in the case
of ordinary partnerships (k).
The Companies clauses consolidation act, 1845, contains no Companies
provision authorising the surrender of shares. But by the
Companies clauses act, 1863 (I) (which applies to all com-
panies which have a special act of Parliament incorporating
that act), it is enacted (§ 9) that " the company may from time
to time accept, on such terms as they think fit, surrenders of
any shares which have not been fully paid up;" and (§ 10)
that " the company shall not pay or refund to any shareholder
any sum of money for or in respect of the cancellation or sur-
render of any share."
In Kipling v. Todd and Kipling v. Allan (m), Todd and Kipling v. Todd.
Allan were nominated in a company's special act as directors,
and their qualification was the possession of 50 shares each.
Todd resigned his directorship, and never acted as director,
Allan did for a short time, and then resigned. Neither of
them ever had any shares allotted to them, nor ever had any
registered in his name. Moreover, all the company's shares
were allotted to other people. Under these circumstances, a
surrender by Todd and Allan of their shares, and an issue of
them by the company to other persons were presumed ; and
Todd and Allan were held not liable to creditors of the com-
pany whose debts had accrued after their resignations.
Neither the Companies act, 1862, nor the regulations in Companies act,
Table A. to that act, authorise the retirement of a member by
(h) Frank Mills Mining Co., 23 Ch. D. 52.
Ch. D. 52, and cases in note (d). (I) 26 & 27 Vict. c. 118.
(•) 50 & 51 Vict. c. 43, § 21. See (m) 3 C. P. D. 350. Compare
the section. Portal v. Emmens, 1 C. P. D. 201 &
(k) Frank Mills Mining Co., 23 GG4.
526 SURRENDER OF SHARES.
Bk. III. Chap. 5. surrendering his shares to the company ; and the effect of a
surrender of shares, unless it be in exchange for others, is to
diminish the capital of the company. Nevertheless, it has
been held that the holder of unpaid-up shares in a company
registered with limited liability, can surrender his shares with-
out first paying them up in full if the articles as originally
framed or as altered b}T special resolution (n) authorise such a
surrender (o). The power to surrender has been regarded as
open to no more objection on the ground that it reduces the
capital than a power to forfeit ( })), the legality of which is un-
questioned. (See Table A. and the next chapter.) A power to
forfeit, however, is only operative where a shareholder cannot
or will not pay up his calls, and is far less open to abuse in
order to reduce capital than a power to surrender.
The right of a member of these companies to retire by sur-
rendering his shares, has been recently very much discussed,
and some doubt on the subject has been expressed (q) ; but
the decisions above referred to have not been overruled, and
the power when properly conferred and exercised, may there-
fore be treated as intra vires.
It is, however, now settled that a company governed by the
Company buying Companies act, 1862, cannot lawfully apply its funds in buying
its own shares. ., , .*. -, ■■ -, • . . . ,
up its own shares, even n empowered so to do by its original
Whitworth. articles (r), or by special resolution (s), or even by its memoran-
dum of association. This last point hasnot been actually decided,
but is practically determined by the decision of the House of
Lords in Trevor v. Whitworth, and the judgment of Lord
(n) Teasdaleh case, 9 Ch. 54, where, disapproved, and practically over-
however, the effect of all the resolu- ruled by the House of Lords in
tions taken together was to increase Trevor v. Whitworth, infra.
the unpaid-up capital. See as to (q) See the next two notes,
this case, Trevor v. Wlritworth, and (r) Trevor v. Whitworth, 12 App.
Hope v. International Financial Soc, Ca. 409. Dronfield Silkstone Coal
cited infra. Co., 17 Ch. D. 76, contra, must be
(o) Ibid. ; Marshall v. Glamorgan considered as overruled.
Iron Co., 7 Eq. 129 ; and see (s) Hope v. International Finan-
Wright's case, 12 Eq. 336, note ; cud Society, 4 Ch. D. 327, which
SnelVs case, 5 Ch. 22. compare with Teasdale's case, ante,
(p) Dronfield Silkstone Coal Co., note (n).
17 Ch. D. 76, which, however, was
IN PARTICULAR COMPANIES. 527
Macnaghten is clear upon the point (t). The consequences of Bk. III. Chap. 5.
this are very serious to persons selling their shares in such
companies to the companies themselves, or surrendering their
shares to the companies for value paid by the companies. The
transaction being ultra vires, it will follow that any money paid
by the compairy for the shares can be recovered back ; that
the directors paying it and the shareholders receiving it, will be
liable for it, and that the surrender itself will be invalid unless
indeed the transaction can be upheld in part, and set aside in
part, which may be possible in some cases, but practically in
very few.
(t) See Trevor v. Whitworth, 12 App. Ca. 409, pp. 432 et seq.
528 FORFEITURE OF SHARES.
CHAPTER VI.
OF THE FORFEITURE OF SHARES.
Companies have no power to forfeit the shares of their
Dan^t? forfeit mem^ers» or °f subscribers who have not yet become members,
shares. unless such power is specially conferred upon them (a). A
clause in a company's articles enabling the directors to forfeit
the shares of any member who shall take any legal proceedings
against the company is invalid (It).
The right to forfeit shares is frequently arrogated in cases
where a shareholder will not pay to the company what is due
to it from him in respect of his shares : and it is not uncom-
monly assumed that a right to forfeit in such a case is pos-
sessed as a matter of course by directors. But this opinion is
erroneous ; for, as already stated, a right to forfeit exists only
when specially conferred ; and even a majority of shareholders
cannot confer it unless empowered so to do by the company's
act, charter, deed of settlement, or regulations (c). But if
there is power to forfeit for non-payment of calls, that power
may be extended to non-payment of additional capital which
may be authorised to be raised (d).
(a) Hart v. Clarke, 6 De G. M. v. Keane, 11 Ch. D. 353 ; Labouchere
& G. 232, and 6 H. L. C. 633 ; Nor- v. Earl of Whamcliffe, 13 Ch. D.
man v. Mitchell, 5 De G. M. & G. 346 ; Dawkins v. Antrobus, 17 Ch.
648 ; Barton's case, 4 Drew. 535, D. 615 ; and from a trade associa-
and 4 De G. & J. 46. As to com- tion, Strickv. Swansea Tin Plate Co.,
panies partly English and partly 36 Ch. D. 558 ; Rigby v. Connol, 14
foreign, see Sudloiv v. Dutch Rhenish Ch. D. 482.
Rail. Co., 21 Beav. 43. As to the (b) Hope v. International Finan-
right of corporations to disenfran- cial Society, 4 Ch. D. 327.
chise and expel members for reason- (c) Barton's case, 4 Drew. 535,
able cause, see Osgood v. Nelson, L. affirmed on appeal, 4 De G. & J. 46.
R. 5 H. L. 636 ; Grant on Cor- As to the Companies act, 1862, see
porations, 262-269. As to expul- infra.
sion from a club, see Hopkinson v. (d) See Relics case, 9 Eq. 107.
Marquis of Exeter, 5 Eq. 63 ; Fisher
IN COMPANIES GOVERNED BY 8 & 9 VICT. C. 16. 529
By the Stannaries act, 1869, shares in cost-book mining Ek. III. Chap. 6.
companies can be forfeited for non-payment of calls (a). Forfeiture of
. . shares in cost-
The only other general legislative enactment now in force {b), book companies.
which expressly confers on companies the power of forfeiting Statutes autho-
rising forfeiture
the shares of their members, is the Companies' clauses con- 0f shares.
solidation act. The Companies act of 1862 does not itself
contain any provisions on this subject, but the Table A. to
that act does, as will be seen presently (c).
As to companies governed by the Companies' clauses consolida- Forfeiture of
. . shares in com-
tion act, it is provided by 8 & 9 Vict. c. 16, §§ 29-35, that if panies governed
any shareholder fail to pay any call payable by him, the directors, J lg
at any time after the expiration of two months from the day
appointed for the payment of a call, may declare the share in
respect of which such call was payable forfeited, whether the
call has been sued for or not. But before declaring any share
forfeited, the directors must give notice of their intention to
do so, twenty-one days at least before making a declaration of
forfeiture. After a share has been declared forfeited, it may
be sold for payment of the calls in arrear ; but before it is so
sold, the declaration of its forfeiture must be confirmed, and
its sale must be ordered at a general meeting held not sooner
than two months after the day on which notice of intention to
forfeit was given. If the money arising from the sale of a
forfeited share is more than sufficient to pay the arrears of
calls with interest, and the expenses of sale, the surplus is
to be paid to the defaulting shareholder ; and if before a share
is sold he pays what is due upon it and also the expenses, if
any, incurred for the purpose of selling it, then he is entitled
(«) 32 & 33 Vict. c. 19, § 16. See, was valid ; Stewart v. Anglo-Cali-
bei'ore this act, Hart v. Clarke, 5 De fornian Co., 18 Q. B. 736 ; Beres-
G. M. & G. 232, and 6 H. L. C. ford's case, 2 Mac. & G. 197, and 3
633. De G. & S. 175 ; Baihjs case, 15
(6) The 7 & 8 Vict. c. 113, § 37, Jur. 29 ; but if there was no such
provided for forfeiture, but the 7 & clause, no forfeiture could be
8 Vict. c. 110, did not. Companies effected ; Barton's case, 4 Drew. 535,
governed by this last act usually and on appeal, 4 De G. & J. 46.
possessed the right of forfeiting (c) The acts of 1856-58 also left
shares under their deed of settle- the subject of forfeiture to be dealt
ment. A clause in the deed that with by the regulations of each
the shares of subscribers who would company,
not execute it might be forfeited,
B.C. M m
530 FORFEITURE OF SHARES.
Bk. III. Chap. 6. to have the share restored to him. The act in question
Forfeiting and expressly declares that shares may be forfeited for non-pay-
suing for calls.
ment 01 calls, whether those calls have been sued lor or not.
The right to forfeit and the right to sue may consequently
both be exercised together : the remedies are cumulative, not
alternative (d).
Cancellation of if the company has a special act also incorporating the
forfeited shares. . .
Companies clauses act, 1863, the shares when forfeited may
be cancelled if they cannot be sold (c). But this can only be
done by a general meeting, held at least two months after
notice of the forfeiture (/), and the shares may be redeemed
by payment of what is due in respect of them before they have
been cancelled (g). Even such cancellation, however, does
not release the shareholder from his liability to pay what may
be due from him at the time of cancellation (h) ; although if he
is afterwards sued in respect of what is so due, he must be
credited with the value of his shares at that time (i). How-
ever, by the consent in writing of the shareholder and the
sanction of a general meeting, shares which have been for-
feited or on which money is due may be cancelled, so as to
release the holder from all liabilities (k) ; but no money must
be paid by the company for the cancellation of any share (I).
New shares may be issued in lieu of cancelled shares (m).
Companies As to companies governed hy the Companies act, 1862, it is
act of 1862. provided by Table A., that shares may be forfeited for non-
payment of calls (No. 17) ; and even if power to forfeit is not
given by the original articles, it may be given by special reso-
lution under § 50 of the act (n). But a power to forfeit the
shares of a person if he sues the company or the directors is
brutiun fulmen (o). In order legally to forfeit a share, under
(d) Great Northern Rail. Co. v. (g) lb. § 7.
Kennedy, 4 Ex. 417 ; Inglis v. Great (h) lb. § 6.
Northern Rail. Co., I Macq. 112. (i) lb. § 7.
In Edinburgh, Leith, <hc, Rail. Co. (k) lb. § 8.
v. Hehblewhite, 6 M. & W. 707 ; (?) lb. § 10.
Giles v. Hutt, 3 Ex. 18 ; London and (m) lb. § 11.
Brighton Rail. Co. v. Favrchugh, 2 (n) See Teasdale?s case, 9 Ch. 54,
Man. & Gr. 674, tbere was only an and Relic's case, and Pahlen's case, 9
option to sue or to forfeit. Eq 107.
(c) 26 & 27 Vict, c. 118, § 4. (o) See Hope v. International Fi-
(/) Ibid. nancial Society, 4 Ch. D. 327.
PROVISIONS OF TABLE A. 531
the regulations of this table, it is necessary, first to serve the Bk. III. Chap. 6.
defaulting member, personally or by post (see Nos. 95 — 97),
with a notice (Xo. 17) ; and secondly, to pass a resolution of
the directors forfeiting his shares (Xo. 19).
The notice must
1. Require the defaulting member to pay the call in arrear,
with interest and any expenses that may have accrued by
reason of its non-payment (No. 17) (p) ;
2. Name a further day on or before which the unpaid calls
with the interest and expenses are to be paid (No. 18) ;
3. State the place where the payment is to be made, such
place being either the company's registered office or some
other place at which the calls are usually made payable, e.g.,
at the company's bankers (No. 18) ;
4. State that, in the event of non-payment at or before the
time and at the place appointed, the shares in respect of which
the call was made will be liable to be forfeited (No. 18).
If the requisitions of this notice are not complied with, the
shares in respect of which it was given, may be forfeited, by a
resolution of the directors, at any time before payment of what
is due in respect of such shares (No. 19).
Any member whose shares have been forfeited is liable to
pay all calls due upon them at the time of their forfeiture
(No. 21).
Forfeited shares are the propert}- of the company, and may Forfeited shares.
be disposed of as the members at a general meeting think fit
(No. 20).
In order to enable such shares to be reissued, and to protect
a purchaser from the risk of having his title defeated by some
irregularity in the forfeiture, it is provided that a statutory
declaration in writing that the call in respect of a share was
made and notice thereof given, and that default in payment of
the call was made, and that the forfeiture of the share was
made by a resolution of the directors to that effect, shall be
sufficient evidence of the facts therein stated as against all
persons entitled to such share ; and such declaration, and the
(p) Interest can only be claimed call, Johnson v. Lyttles Iron Agency,
from the time when the call ought 5 Ch. D. 687.
to he paid not from the date of the
M m 2
532
FORFEITURE OF SHARES.
Exercise of the
ritrbt to forfeit.
Bk. III. Chap. 6. receipt of the company for the price of such share, shall con-
stitute a good title thereto (No. 22).
A right to forfeit shares must, in order to he effectually
exercised, be pursued with the greatest exactness (q) ; it must
be exercised by the proper parties, i.e., by directors properly
appointed (r), and by the requisite number of them (s), and in
the proper manner and for proper cause. The right must be
exercised bond fide for the purpose for which it was conferred.
The power to forfeit is a trust, the execution of which will be
narrowly scanned by the court (t). It cannot, for example,
be exercised surreptitiously, for the purpose of expelling a
shareholder (t) ; nor by connivance, for the purpose of assisting
him in getting rid of shares and retiring from the company, in
fraud of the other shareholders. A court will not sanction or
recognise as valid a forfeiture made mala fide for any such
purpose.
The invalidity of a forfeiture made for the purpose of
enabling a shareholder to retire when he is not entitled so to
do, is well shown by the decision in Richmond's case, and
Painter's case (u). There a director of a company proposed
that he and his co-directors should take a number of shares
as trustees for the company, and he signed the deed for 2000
shares, and he was registered as the owner thereof. None of
the other directors, however, followed his example. About
Forfeiture to
enable a share-
holder to retire
(7) See, as to the insufficiency of
notices, &c, Johnson v. Lyttle's Iron
Agency, 5 Ch. D. 687 ; Watson v.
Eales, 23 Beav. 294 ; Van Diemen's
Land Co. v. Cockerell, 1 C. B. N. S.
732, affirming Cockerell v. Van Die-
men's Land Co., 18 C. B. 454 ; Edin-
burgh, Leith, &c, Rail. Co. v. Hebble-
white, 6 M. & W. 707 ; London and
Brighton Rail. Co. v. Fair dough, 2
Man. & Gr. 674. Compare Graham v.
Van Diemen's Land Co., 1 H. & N. 541.
(r) Garden Gully, &c.,Co.v. M' Lister,
1 App. Ca. 39, where the appoint-
ment of the directors was invalid.
(s) Bottom-ley's case, 16 Ch. D. 681,
where the number of directors was
insufficient. Compare Lystcrs case,
4 Eq. 233, infra, note (a).
(/) Blisset v. Daniel, 10 Ha. 483 ;
Harris v. North Devon Rail. Co., 20
Beav. 384 ; Stubbs v. Lister, 1 Y. &
C. C. C. 81. See, also, Stewart's
case, 1 Ch. 511 ; and Sw'eny v. Smith,
7 Eq. 324, where the plaintiff had
sent a cheque for his calls.
(u) 4 K. & J. 305. See, also,
Esparto Trading Co., 12 Ch. D. 191 ;
Hall's case, 5 Ch. 707 ; Gower's case,
6 Eq. 77 ; Spachnan v. Evans, L. B.
3 H. L. 171 ; Stanhope's case, 1 Ch.
161 ; Phosphate of Lime Co. v. Green,
L. B. 7 C. B. 43 ; Harris v. North
Devon Rail. Co., 20 Beav. 384 ;
Preston v. Grand Collier Dock Co., 11
Sim. 327.
WHAT AMOUNTS TO A FORFEITUEE.
533
two years afterwards he ceased to be a director ; and a year Bk. III. Chap. 6.
after that, finding the company to be the reverse of prosperous,
he desired to have his 2000 shares cancelled. To enable the
directors to cancel them, he suggested that a call should be
made on his shares, and that they should be forfeited under
the powers contained in the company's deed. This suggestion
was acted on ; a call was made, and his shares were forfeited
for non-payment thereof. But it was held, that the directors
had no power to release a shareholder from his obligations by
enabling him to retire at the expense of the company ; that the
shares had not been bond fide forfeited for the benefit of the
company, and that the forfeiture was therefore invalid.
Clauses in deeds of settlement, &c, which declare that on What amounts
to a forfeiture.
non-payment of calls, &c, shares shall become absolutely for-
feited, do not enable shareholders to get rid of their shares
by refusing to pay their calls. Such clauses are inserted for
the benefit of the company, and there is no forfeiture until a
forfeiture is declared (r).
Moreover, a declared intention to forfeit not carried into
effect (y), or not duly confirmed, is no forfeiture at all (z).
Still, if there is power to forfeit, and a declared intention to
forfeit, and the shares intended to be forfeited are treated by
the company and the shareholder as forfeited, the company
will be precluded from afterwards insisting that no forfeiture
ever took place (a). This doctrine, however, cannot apply
where the forfeiture is altogether ultra vires ; and there are
cases in which, after the lapse of many years, persons whose
shares had been forfeited in order to enable them to retire,
were nevertheless held to be contributories (b).
The effect of the forfeiture of a share depends entirely upon Effect of for-
tc • • v ^ ±t feiture.
whether the forfeiture is valid or not. If it is valid, the share-
(x) See Moore v. Rawlins, 6 C. B. («) Ex parte Woollaston, 4 De G.
N. S. 289. & J- 437 ; Knight's case, 2 Cli. 321,
(y) Bigg's case, 1 E<[. 309. where a resolution to forfeit was
(z) See Birmingham, Bristol, Ac, presumed ; Lyster's case, 4 Eq. 233,
Bail. Co. v. Locke, 1 Q. B. 256 ; where the forfeiture was by two
Edinburgh, Leith, tfec, Rail. Co. v. directors out of six. See, under the
Hebblewhite, 6 M. & W. 707 ; London head Contributories, in bk. iv., c. 1,
and Brighton Rail. Co. v. Fairclough, § 10, B. (3).
2 Man. & Gr. G74. (b) See ante, p. 519.
Cll^'S.
534 FORFEITURE OF SHARES.
Bk. in. Chap. 6. holder ceases, by the forfeiture of his shares, to he a member
of the company ; and although he may be liable to be sued
for the calls (c) for the non-payment of which his shares have
been forfeited, he is not liable to subsequent calls nor to be
made a contributory as a present member on the winding-up
of the company (d). But if a forfeiture is invalid, and if the
company is not estopped from showing the invalidity (e), then
the shareholder does not cease to be a member of the com-
pany, and he still remains liable to calls (/), and to be made
a contributory on the winding-up of the company (g). Whether
the invalidity of a declaration of forfeiture affords a defence to
an action by the injured shareholder against the company for
damages occasioned by its wrongful act, is a question on which
decisions conflict (h). But if a member has been in fact
wrongfully expelled, and been damnified, it is not easy to see
Relief in such why an action should not lie. Be this, however, as it may,
the invalidity of a forfeiture affords no reason why the court
should not interfere to protect or restore a shareholder to that
position from which he is in fact excluded. In Hart v.
Clarke (i), a shareholder in a cost-book mining company, whose
shares had been improperly forfeited, was, after the lapse of a
considerable length of time, restored to his rights as a share-
holder ; in Norman v. Mitchell (k), and in Watson v. Eales (I),
(c) Interest on such calls was held (h) See Catchpolc v. Ambcnjatc
not recoverable in Stocken's case, 5 Bail. Co., 1 E. & B. Ill, and com-
Eq. 6, and 3 Ch. 412. pare the cases in the next note. If
(d) See infra, under the head a company Las no power to forfeit,
Contributories, in book iv., c. 1, § 10. a forfeiture cannot be imputed to it,
He may be a contributory as a past and the action for damages ought to
member, Bridgets case, 4 Ch. 266 ; be against its directors, if it can be
CreyJce's case, 5 Ch. 63. sustained at all.
(c) See ante, p. 48 et seq. (i) 6 De G. M. & G. 232, and 6
(/) See Birmingham, Bristol, cvc., H. L. C. 633. See, also, Sweny v.
Bail. Co. v. Locke, 1 Q. B. 256 ; Smith, 7 Eq. 324,' where the share-
Edinburgh, Leith, Ac, Bail. Go. v. holder had tendered his call ; Garden
Hebblewhite, 6 M. & W. "707 ; London Gully, &c, Co. v. MLister, 1 App.
and Brighton Rail. Co. v. Fair dough, Ca. 39; where the defence failed,
2 Man. & Gr. 674. and Wood v. Wood, L. R. 9 Ex. 190,
((/) Barton's case, 4 Drew. 535, where it succeeded. The former
and 4 De G. & J. 46 ; Richmond's case does not appear to have been
case, and Bainter's case, 4 K. & J. noticed.
305, and the cases cited, ante, p. 532, (k) 5 De G. M. & G. 648.
note (u). (I) 23 Beav. 294.
RELIEI AGAINST FORFEITURE. 535
an injunction was granted to restrain the carrying into effect Bk- Iri- ChaP- Cj-
of declarations of forfeiture recently made ; and in Stubbs v. Stubbs v.
Lister.
Lister (m), a forfeiture of shares was set aside on the ground
that the directors who were bound to credit the shareholder
with the utmost value of the shares, had credited him with a
value set upon them by themselves, and which value was less
than the current market price of shares in the company at the
time the forfeiture was declared. In this case the shares were
a security for money owing by their owner to the company, and
wore forfeited for non-payment of that money.
It may further be observed, that although a court will not
relieve a person whose shares have been duly forfeited (n), it
will interfere to prevent a forfeiture pending a dispute between
a company and a shareholder upon payment by him into court
of what may be due from him in respect of the shares intended
to be forfeited (o), and will take care that the shareholder has
credit for whatever the shares may or, if properly sold, might
have fetched (_p).
The effect of acquiescence in a forfeiture, and of delay in
seeking relief, will be examined hereafter. See Chap. IX.,
§ 3 (q).
(m) 1 Y. & C. C. C. 81. (i>) See Stubbs v. Lister, 1 Y. &
(n) Sparks v. Liverpool Water- C. C. C. 81.
v:orks Co., 13 Ves. 428. (7) The most recent decision on
(0) See Naijlor v. South Devon this point is Rule v. Jewell, 18 Ch.
Rail. Co., 1 Pe G. & S. 32. D. 660.
536
THE EFFECT OF THE DEATH OF A SHAREHOLDER
CHAPTER VII.
Bk. III. Chap. 7.
Sect. 1.
OF THE EFFECT OF THE DEATH OF A SHAEEHOLDER.
The consequences of the death of a member of a company
will be most conveniently pointed out in the course of an
examination of the position of the company, and of the exe-
cutors of the deceased member —
1. As between themselves ;
2. As regards the creditors of the company ; and
3. As regards the separate creditors and legatees of the
deceased.
Executors of
shareholders.
Liability to
calls, &c.
SECTION I.— CONSEQUENCES AS REGARDS THE COMPANY AND
THE EXECUTORS OF THE DECEASED.
The position of the executors or administrators of a deceased
shareholder relatively to the company is as follows : —
1. They are entitled, as against the company, to the shares of
the deceased, and to be paid by the company whatever is
payable by it in respect of such shares at the time of his death ;
and also whatever becomes payable in respect of those shares
whilst they form part of his estate.
2. The assets of the deceased are liable to make good what-
ever is at the time of his decease payable by him to the
company ; and also whatever afterwards becomes payable by his
representatives by virtue of the contract into which he entered.
Consequently, if a person becomes a shareholder in a company
and then dies, and afterwards, and whilst his shares are part of
his estate, a call is made by the company on its shareholders,
AS BETWEEN THE COMPANY AND THE SHAREHOLDER'S EXECUTORS. 537
his assets will be liable to the payment of such call (a). More- Bk- ***■ Chap- 7-
over a call, made by a company in pursuance of its act,
charter, or deed of settlement, constitutes a specialty debt (jb) ;
and all calls made under the winding-up provisions of the
Companies act, 1862, are also specialty debts (c). But
specialty debts are no longer entitled to priority of payment
over simple contract debts (d) ; and even before the law was
altered in this respect, executors who paid the simple contract
debts of their testator before a call was made, were allowed
those payments as against the company seeking to make them
liable for a devastavit (e) ; and no part of the testator's assets
could, as against his simple contract creditors, be set apart for
the payment of calls which had not been made (/).
3. It follows from the foregoing observations that, when a Liability to be
made contnlra-
company is being wound up, the executors of a deceased share- tones,
holder are liable to be made contributoiics as executors in
respect of his shares so long as the}' remain untransferred.
From this again it follows, that the executors of a deceased
shareholder are entitled to petition for an order to wind up the
company, although they may not be themselves shareholders
therein. This subject will be alluded to hereafter (g).
4. In most companies, executors have, as between them- Necessity for
selves and the company in which their testator was a share- become share-
holder, a right to become shareholders in his stead (h). But if holclers-
(a) See, in equity, Fyler v. Fyler, under a Colonial act are simple con-
2 Ka. Ca. 813 ; Blakeley's case, 13 tract debts only, see Welland Rail.
Bear. 133, and 3 Mac. & G. 726 ; Co. v. Blake, 6 H. & X. 415.
Heward v. JWieatley, 3 De CI. M. & (c) The Companies act, 1862, § 16.
G. 628, and at law, Wills v. Murray, It was not so under the older
4 Ex. 843. Compare Weald of Kent winding - up acts, see Robinson's
Canal Co. v. Robinson, 5 Taunt. Executors' case, 6 De G. M. & G.
801. 572.
(6) Cork <i ml Bandon Rail. Co. v. (rf) 32 & 33 Vict. c. 46.
Goode, 13 C. B. 826. In Morris v. (e) Henderson v. Gilchrist. 17 Jur.
S.nllier, Ir. L. R. 6 Eq. 580, a 570.
covenant by a deceased shareholder (/) Wmtworth v. Chevett, 3 Jur.
with an officer of the company to N. S. 805. As to the legatees and
pay what should be demanded of next of kin, see infra, p. 540 et seq.
him, was held not to create a (y) See infra, bk. iv. c. 1, § 3.
specialty debt in respect of moneys (/<) A clause in the articles of
due from his estate, but not de- association giving the company
manded in his lifetime. Calls made power to decline to register a trans-
538 THE EFFECT OF THE DEATH OF A SHAREHOLDER
Bk. III. Chap. 7. an executor does become a shareholder, his liability, as well to
- the company as to its creditors, is a personal liability ; and such
liability is in no way qualified or limited by the circumstance
that as between himself and those who are beneficially entitled
to the testator's assets, the executor is not the owner of the
shares standing in his name (i). Executors, therefore, should
not become shareholders if they can avoid doing so ; and
generally it will be found that they can transfer their tes-
tator's shares without first becoming shareholders themselves ;
and where this is the case, an assent by them to become share-
holders will not be presumed, even if their names have been
put on the company's register (/»•). AVhether, however, executors
can or cannot dispose of their testator's shares without them-
selves becoming shareholders, and the manner in which it is to
be done, depend, in each case, upon the constitution of the
company in which the shares are held.
By the Companies act, 1862, provision is expressly made for
transfers by executors, although they may not themselves be
members (I).
The transfer by executors of shares in companies, governed
by the Companies' clauses consolidation act, is also specially
provided for (m) ; but by this act the executors must apparently
be themselves registered as shareholders before they can
transfer (n).
Shares held by When a share in a company is held by several persons jointly
joLetliy!PerS°nS and one of them dies, the legal title to that share devolves on
the survivors, whatever may be the case as to the equitable
title (o). If the holders are partners, and the share is partner-
fer does not apply as between a on the register,
testator and his executor. See (I) 25 & 26 Vict. c. 89, § 24, and
Benthcm Mills Spinning Co., 11 see Table A., Nos. 12—16. The
Ch. D. 900 ; compare Ex parte Har- Table B. to the Companies act,
rison, 26 Ch. D. 522, and 28 Ch. D. 1856, contained similar provisions.
363. (m) 8 & 9 Vict. c. 16, §§ 18, 19,
(i) See Duff's Executor's case, 32 20.
Ch. D. 301 ; Spence's case, 17 Beav. (n) Compare §§ 3, 14, 18.
203 ; Fenwick's case, 1 De G. & S. (o) See ace. HilFs case, 20 Eq.
557 ; Armstrong v. Burnet, 20 Beav. 595, where the survivor alone was
424. put on the list of contributories.
(k) See Buchan's case, 4 App. Ca. Qu. whether the executors can be
549, 583, where the executors were put on as past members.
AS KEGARDS THE CREDITORS OF I HI'. COMPANY.
530
ship property, the equitable interest of the deceased will not Bk- I^5tC1£p'
survive ; but if the holders are not partners, the question of -
survivorship or non-survivorship will depend upon those prin-
ciples which would be applicable under similar circumstances
to other property ; and the fact that the regulations of the
company contain a clause to the effect that no benefit of sur-
vivorship shall take place amongst the shareholders will be of
little, if any, consequence. For example: shares purchased
by A., in the names of himself and B., prima facie belong in
equity to A. ; but if A. dies before B., the legal interest in them
devolves on B. ; and if the evidence rebuts the presumption
which 'prima facie exists in A.'s favour, B. will be entitled to
the shares both at law and in equity, although the company's
deed may contain such a clause as that just mentioned (jp).
If, however, B. is only a trustee for A., and A. dies, and then
B. dies, and the company is wound up, B.'s executor will be
liable to be put upon the list of contributories, and he will be
entitled to indemnity out of A.'s estate, and to sue for such
indemnity before being actually settled on the list (q).
SECTION II.— CONSEQUENCES OF DEATH AS REGARDS THE CREDITORS
OF THE COMPANY.
With respect to the right of a creditor of a company to Liability of
proceed against the executors of a deceased shareholder, a ceased° hare-
distinction must be taken between unincorporated and incor- holder.
porated companies ; for whilst the assets of a deceased share-
holder in an unincorporated company are prima facie liable in
equity (although not at law) to the debts of the company con-
tracted before his decease (r), the assets of a deceased member
of a body corporate are, prima facie, not liable to the payment
of the debts thereof either at law or in equity. But as regards
both classes of companies, the position of executors in fact
(p) Garrickx. Taylor, 4 De G. F. (q) Hobbs v. Wayd, 36 Ch. D.
& J. 159, affirming S. C. 29 Beav. 256.
79, (r) See Partn., 594 et seq.
540
THE EFFECT OF THE DEATH OF A SHAREHOLDER
Bk. III. Chap.
Sect. 3.
depends less on general principles than on particular statutes,
the provisions of which must therefore not be overlooked.
Thus, although banking companies governed by 7 Geo. 4, c. 46,
are not corporate bodies, and although creditors of such com-
panies are, it seems, entitled to obtain payment of their debts
out of the assets of a deceased shareholder, still the creditors'
rights are so far modified by the acts in question, that, whether
they are creditors by specialty or by simple contract, the lapse
of three years after the death of a shareholder bars their
claims against his executors (s) ; and even within that period
the executors are only liable to pay such debts as the surviving
shareholders are unable to discharge (t). Several cases are
also to be found in which executors, not being themselves
shareholders, have been held not liable to creditors (u). Similar
observations apply to actions for calls.
The liability of executors to be proceeded against by sci.fa.
or its modern substitute has been already noticed (Book II.,
c. 7, § 3) : their liabilities as contributories will be referred to
hereafter in Book IV., c. 1, § 10.
Legacies of
shares in com-
panies.
SECTION III.— AS REGARDS THE SEPARATE CREDITORS AND LEGATEES
OF THE DECEASED.
Shares in companies are property for all purposes of ad-
ministration. They are assets for the payment of debts ; they
can be disposed of by will ; and if not disposed of they must
be dealt with like other personal estate, and be distributed
amongst the statutory next-of-kin of their deceased owner.
(s) See Barker v. Buttress, 7 Bear.
134.
(t) Heward v. Wheatley, Ex parte
Wilson, 5 De G. & S. 552. Com-
pare Be Walton's Estate, 23 Beav.
480.
(«) Ness v. Armstrong, 4 Ex. 21,
where the executors had received
dividends ; Powia v. Butler, 3 C. B.
N. S. 645, and 4 ib. 469, where
the deceased's name was kept on
the register of shareholders ; Poole
v. Knott, 7 W. R. 527, where the
deceased had died before the creditor
had obtained judgment against the
company. The doubt expressed in
Bicketts v. Boichay, 3 C. B. 889,
is removed by the decision in Xess
v. Armstrong, 4 Ex. 21 ; and the
case of Ness v. Bertram, 4 Ex. 191,
AS REGARDS HIS SEPARATE CREDITORS AND LEGATEES. 541
They are legal and not equitable assets (r) ; they pass under a Bk- ™* J31^ "-
bequest of personal estate (y) ; and if the certificates are kept —
;it a bank the shares will pass under a bequest of property at
that bank (z).
Shares, however, will not ordinarily pass under a bequest of
moneys, bonds, or securities (a). But under special circum-
stances they will pass even under a bequest of money, as in
Knight v. Knight(b), where share certificates were in an en-
velope indorsed "to be considered as money and given to A.B."
A bequest of shares will ordinarily pass stock (c), but not
debentures (d).
Where a person entitled to various kinds of shares in a com-
pany bequeaths some of them without saying which in par-
ticular, the legatee can select which he pleases (e).
A legacy of shares in a company is not necessarily adeemed Ademption.
by the conversion of such shares into stock (/), or into
annuities (g) ; nor by the amalgamation of that company with
another (//). But a bequest of shares in an unincorporated
banking company governed b}' 7 Geo. 4, c. 46, was held to fail
by reason of the subsequent registration of the company
with limited liability, and with an altered capital differently
divided (i).
A legatee of shares may, of course, decline to accept them,
and he may do so although he accepts other property under the
same will (A) ; unless there is only one gift, in which case he
must accept or decline the whole (I).
turned entirely on a point of plead- (/) Oakes v. Oakes, 9 Ha. 666.
ing. See on this case the cases in note
(./) Cook v. Gregson, 3 Drew. 547. (c) ; and compare Re Gibson, 2 Eq.
(</) Cadman v. Cadman, 13 Eq. 669 ; Re Lane, 14 Ch. D. 856, a case
470, canal shares. of debentures.
(;:) Desinge v. Beare, 37 Ch. D. (g) Bronsdon v. Winter, 1 Amh.
481. 57 ; Partridge v. Partridge, 9 Mod.
(a) Hudleston v. Gouldsbury, 10 269 ; Cas. t. Tal. 226.
Eeav. 547 ; Ogle v. Knife, 8 Eq. (/t) See Phillips v. Turner, 17
434 ; Collins v. Collins, 12 Eq. 455. Beav. 194.
(b) 2 Giff. 616. (0 Dresser v. Gray, 36 Ch. D. 205.
(c) Morrice v. Ayhner, 10 Ch. 148, N.B. The head-note misdescribes
and L. R. 7 H. L. 717 ; Trinder v. the company.
Trinder, 1 Eq. 695. (k) Long v. Kent, 6 N. R. 354.
(d) Dillon v. Arkins, 17 L. R. Ir. (I) See Guthrie v. Walrond, 22
636. Ch. D. 573, and the cases there
(e) Millard v. Bailey, 1 Eq. 378. cited.
542 THE EFFECT OF THE DEATH OF A SHAREHOLDER
Bk. III. Chap. 7. Where a share in a compairy is bequeathed to a person ah-
solutely, the executors should transfer it to the legatee as soon
Absolute
legacies. as possible, m order that the liability of the testator's estate in
respect of it may be put an end to (m). If the legatee is not
sill juris, and the share cannot be transferred into his name,
the position of the executors becomes embarrassing. If, how-
ever, they do nothing with the share, but simply take the
dividends as executors, they will not render themselves per-
sonally liable to creditors (n) ; nor will they be liable to be
made contributories, otherwise than in their representative
capacity (o). But it may happen that, unless the executors
transfer the shares into the names of themselves or some other
persons, the shares will become forfeitable ; and in that case
(the legatee of the share being still supposed to be not sui juris)
the executors should, for their own protection, apply for the
direction of the Court.
Legacies for "Where shares are bequeathed to one person for life with
life.
remainder to another, they ought nevertheless to be sold
unless it is clearly the testator's intention that they shall be
retained in specie {p). If the}T are intended to be enjoyed in
specie, the position of the executors again becomes embarrass-
ing : for if they transfer the shares into the name of the tenant
for life, there is nothing to prevent him from selling them for
his own use ; and in case of a sale of the shares by him, the
remainderman would naturally seek to make the executors
responsible for their loss. If, on the other hand, the executors
procure the shares to be transferred into their own names as
trustees for the legatees, a personal liabilit}' in respect of the
shares will be incurred by the executors, and that liability will
not be limited by the amount of the assets of the testator.
Unless, therefore, the executors can retain the shares without
transferring them, they should, for their own safety, apply for
the direction of the Court.
(m) See Keene's Executors'1 case, 3 (p) See Blann v. Bell, 2 De G.
De G. M. & G. 272. M. & G. 775 ; Thornton v. Ellis,
(n) Ness v. Armstrong, 4 Ex. 21. 15 Beav. 193 ; Crowe v. Crisford,
(o) This subject will be adverted 17 ib. 507 ; JFightwick v. Lord, (i
to hereafter when treating of Con- H. L. C. 217.
tributaries, bk. iv., e. 1, § 10.
AS REGARDS HIS SEPAEATE CREDITORS AND LEGATEES. 543
Where shares are bequeathed to one person for life, with Bk- M. ChaP« 7.
remainder to another, and are transferred into the name of the
. . . Probate duty.
tenant for life, they will, on his death, be transferable into the
name of the remainderman without further payment of probate
duty (q). Such shares, in fact, form no part of the tenant for
life's estate, and are covered by the duty payable in respect of
the estate of the original testator.
Where shares are bequeathed, not specifically, to one person Income before
for life, and after his death to another, the money yielded by s
them before sale will not necessarily belong to the tenant for
life ; for, according to the case of Dimes v. Scott (r), the tenant Dimes v. Scott.
for life is only entitled to the income which would have been
obtained if the shares had been sold and the produce invested
in consols, at the end of a year from the testator's death : the
income thus ascertained being, however, paid from the date of
the death. This rule applies where the testator's residuary
estate consists of shares when he dies. But it has been held
that the rule does not apply where the executors themselves
make an unauthorised investment ; and that in such a case the
tenant for life is entitled to the income actually yielded by the
investment, and the remainderman is not entitled to more than
a restoration of the original capital (s).
When the legacy is specific, the rule in Dimes v. Scott does
not apply, the legatee taking whatever the shares may yield(t).
So where the shares, although not specifically bequeathed, are
directed by the will not to be sold for a certain time, what
they yield during that time will belong to the tenant for
life (it).
It appears to be now settled, that when shares are specifi- Payment of
cally bequeathed, and the will contains no special directions to ca s*
the contrary, all calls made upon the shares in the testator's
lifetime must be borne by his general personal estate ; whilst
all those made after his death must be borne by the legatee
(q) Hennell v. Strong, 25 L. J. Ch. (t) Infra.
407. . (u) See Green v. Britten, 1 De G.
(r) 4 Russ. 195, and see Fearns v. J. & Sm. 649. Where the sale is
Young, 9 Ves. 549. postponed by the Court for the
(s) See Stroud v. G'u-yer, 28 Beav. benefit of infants, see Lambert v.
130. K. mile, 3 N. E, 247.
544
THE EFFECT OF THE DEATH OF A SHAREHOLDER
Indemnity fund
to meet calls.
Bk. ill. Chap. 7. taking the shares (x). There are, indeed, cases which show that
Sect. 3. - „ , .
- calls made after the testator s death are payable out ot Ins
general estate, and not by the specific legatee (y) ; but these
cases are not to be relied upon, except where the payment of
the calls would have been a condition precedent to the comple-
tion of the testator's own title to the shares if he himself had
lived (z), and the calls are made before the specific legatee is,
by the terms of the will, to have the shares (a).
Where shares are specifically bequeathed, and calls upon
them are payable out of a testator's residuary estate, a fund
ought to be set apart for the indemnity of the specific lega-
tee (b) ; but, where the assets of the deceased are insufficient
for the payment of his debts, no fund to meet future calls
ought to be set apart to the prejudice of even simple contract
creditors (c).
A legatee of shares on which the company has a general lien,
is not liable to contribute with the devisee of land mortgaged
to the company by the testator towards the payment off of the
mortgage debt (d).
A specific legatee of a share in a company is entitled to all
ordinary dividends declared after the testator's death (e) ; un-
less although declared after his death they were earned and
ought to have been declared before (/). But dividends de-
Rights to
profits, &c.
(.;■) See Ee Box, 1 Hem. & M.
552, and Day v. Day, 1 Dr. & Sm.
261, where all the previous cases
are reviewed. See also, Bevan v.
Waterhouse, 3 Ch. D. 752, as to a
direction to pay calls out of income
and not out of capital.
(ij) Blount v. Hiphins, 7 Sim. 51 ;
Clive v. Clive, Kay, 600 ; Jacques v.
Chambers, 4 Ea. Ca. 499, correcting
S. C, 2 Coll. 435 ; Wright v. War-
ren, 4 De G. & S. 367.
(.-;) As to this qualification, see
Armstrong v. Burnet, 20 Beav. 424 ;
Addams v. Ferick, 26 ib. 384 : and
Day v. Day, ubi supra.
(a) Ee Box, 1 Hem. & M. 522,
where the testator's residuary estate,
including the shares, was bequeathed
to A. for life, and after his death
the shares were specifically be-
queathed to B., and the calls were
made in A.'s lifetime.
(6) Jacques v. Chambers, 4 Ra. Ca.
499.
(c) Wentworth v. Chevell, 3 Jur.
N. S. 805. See, too, Eead v. Blunt,
5 Sim. 567, and compare Atkinson
v. Grey, 1 Sm. & G. 577. See ante,
p. 537.
(d) See Dunlop v. Dunlop, 21 Ch.
D. 583, noticed ante, p. 457.
(e) Jacques v. Chambers, 2 Coll.
435 : Wright v. Warren, 4 De G. &
S. 367 ; Browne v. Collins, 12 Eq.
586 ; Ibbotson v. Elam, 1 Eq. 188.
(/) Browne v. Collins, 12 Eq.
586. But see Ibbotson v. Elam, 1
Eq. 188.
AS REGARDS HIS SEPARATE CREDITORS AND LEGATEES. 5-45
clared before a testator's death (g), or declared afterwards when Bk- ™;tch3ap- 7'
they were earned and ought to have been declared before (h),
prima facie form part of his general estate, and do not pass to
the specific legatee of the share : and the same rule applies to
dividends declared before his death, but the actual payment of
which is postponed until afterwards (i). Losses must not be
thrown on capital so as to benefit a tenant for life at the
expense of the remainderman (k).
Few questions have given rise to more difficulty and diversity Bonuses, &c.
of opinion than the proper mode of treating bonuses and other
extraordinary payments made in respect of shares held for life.
At one time it was considered that all payments in respect of
accumulations of profits were to be treated as between tenant
for life and remaindermen as capital and not as income ; and
it was not by any means clear that the mode in which the com-
pany treated them afforded the true solution of the difficulty (/).
This subject, however, has been at last thoroughly discussed
in the House of Lords in Bouch v. Sproulc(m), where all the Bouch v. Sproule
previous authorities were reviewed. The principles there laid
down are as follows, viz. : —
1. If a company has no power to increase its capital, but
accumulates profits, uses them as capital, and afterwards
divides them amongst the shareholders, the amount payable
in respect of shares held for life must be treated as capital (n).
(g) See the next two notes. v. Wilson, 6 Ch. 503 ; Barton's
(h) Browne, v. Collins, 12 Eq. 586. trust, 5 Eq. 238 ; Ward v. Combe,
(i) De Gendre v. Kent, 4 Eq. 283 ; 7 Sim. 634 ; Witts v. Steere, 13 Ves.
Lock v. Venables, 27 Beav. 598 ; 363 ; Paris v. Paris, 10 Ves. 185 ;
Wright v. Tuckett, 1 J. & H. 266. and Brander v. Brander, 4 Ves. 800,
Compare Clive v. Clive, Kay, 600, in which the payments were held to
which turned on the special word- he capital. See, also, Cuming v.
ing of the company's deed of settle- Boswell, 2 Jur. N. S. 1005, where
ment. the House of Lords held, that upon
(k) See Upton v. Brown, 26 Ch. the true construction of a Scotch
D. 588 ; Gow v. Forster, ib. 672. deed, bonuses belonged to an infant's
(I) Compare I. Hopkins' trust, 18 estate, and not to the person who,
Eq. 696 ; Plumbe v. Neild, 6 Jur. N. on his death under 21, became en-
S. 529 ; Price v. Anderson, 15 Sim. titled to the stocks which yielded
473 ; Preston v. Melville, 16 ib. 163 ; them.
and Barclay v. Wainivright, 14 Ves. (m) 12 App. Ca. 385, reversing
66, in which the payments were S. C. 29 Ch. D. 635.
held to be income, with TI. Straker (?() Irving v. Houstoun, 4 Paton
L.C. N N
546
THE EFFECT OF THE DEATH OF A SHAREHOLDER.
Bk. III. Chap. 7
Sect. 3.
Maclaren V,
Stainton.
Loss of income
by tenant for
life.
Apportionment
of interest and
dividends.
2. If a company can lawfully increase its capital, and it does
so by capitalising and distributing its accumulated profits, then
what is distributed in respect of shares held for life must be
treated as capital, whether what is distributed is cash or new
shares (o).
3. If a company having power to treat accumulated profits
as an increase of capital, or otherwise, divides accumulated
profits amongst its shareholders as profits (or without capital-
ising them or treating them as capital) what is distributed
in respect of shares held for life will belong to the tenant for
life as income {})).
It had been previously decided that if a company having
power to increase its capital chooses not to divide its
profits as income, but to capitalise them, the sum payable
to a legatee of shares for life must be treated by him as
capital (q).
On the other hand, if, as in Maclaren v. Stainton (r) a bonus
arising from mone}r paid to a company under a compromise
with one of its own shareholders is divided as income, the sum
payable will belong to a specific legatee of shares and not to
the residuary legatee, and to a legatee of shares for life and
not to the remainderman.
Where part of the profits accruing during the life of the
tenant for life are capitalised by the company, he has no right
to have the loss of income, which he thereby sustains, made
good by the remainderman (s).
Interest on a debt accrues de die in diem, and is apportion-
able at common law ; and profits and dividends, including
bonuses (t), are now apportionable under the act 33 & 34 Vict,
c. 35, which applies to all cases arising between a tenant for
life and remainderman after the act came into operation,
Sc. App. 521, a former decision of
the House of Lords, and one which
has often been felt to create a diffi-
culty".
(o) This was the point decided in
Bouch v. Sproule.
(p) This point did not arise in
Bouch v. Sproide, but is warranted
by it.
(q) Barton's trust, 5 Eq. 238. See,
also, Stroke? v. Wilson, 6 Ch. 503.
(/■) 3 De G. F. & J. 202, reversing
27 Beav. 460.
(s) See Stroud v. Gwyer, 28 Beav.
130.
(0 Can v. Griffiths, 12 Ch. D.
655.
AS REGARDS HIS SEPARATE CREDITORS AND LEGATEES. 547
although the will under which the parties claim came into Bk- ™. CbaP- 7.
operation before that time (u). If, therefore, a testator be- -
queaths debentures to one person Tor life, and afterwards to
another, and dies shortly before the current interest on the
debentures is payable, so much only of that interest as accrued
after the death of the testator will belong to the tenant for
life (x). And it is apprehended that now if there is a specific-
bequest of shares in a company, and the testator dies a few
days before a dividend upon them is declared, there will be a
similar apportionment of the dividend (?/).
Other circumstances being the same, the price of shares in
dividend-paying companies naturally rises as a dividend day
approaches ; in fact, the price includes a proportionate part of
the accruing dividend ; nevertheless, as between a tenant for
life and a remainderman the price realised by a sale of shares
is all treated as corpus, without reference to the time when a
sale is made (z) ; and it is conceived that the statute 33 & 34
Vict. c. 35, has not altered the law in this respect.
Where shares are bequeathed to executors upon trust for Liability of
executors for
sale as soon as conveniently may be after the testator's death, not selling
they should sell them within a year after his death : and in a s '
case where they were kept unsold for many years and the
company was ultimately wound up, the estate of a deceased
executor who survived the testator only thirteen months was
held liable for the loss sustained by not having sold them
within the year (a). Where, however, the executors honestly
(u) Lawrence v. Lawrence, 26 Ch. Kay, 600 ; Hartley v. Allen, 4 Jur.
D. 795. N. S. 500.
(x) See Roger* Trusts, 1 Dr. & Sm. (z) Scholejield v. Redfern, 2 Dr.
338. & Sin. 182. See, also, Freman v.
(y) Can v. Griffiths, uhi sup. ; Pol- Wliitbread, 1 Eq. 266.
lock v. Pollock, 18 Eq. 329, correcting (a) Graybum v. Clarkson, 3 Ch.
Whitehead v. Whitehead, 16 Eq. 528. 605 ; Sculthorpe v. Tipper, 13 Eq.
In Jones v. Ogle, 14 Eq. 419, affirmed 232. See, also, The Heirs Hiddingh
on appeal, 8 Ch. 192, there was no v. Be Villiers Denyssen, 12 App. Ca.
apportionment, hut there not only 624, an appeal from the Cape, where
the shares but the dividends on executors who had delayed the con-
them were specifically bequeathed, version of shares were held liable
Compare Re Clarke, 18 Ch. D. 160. for their value ascertained at a rea-
See, before the act, Maxwell's Trusts, sonable time after the death of the
1 Hem. & M. 610; Bates v. Mac- testator, which in that case was fixed
kinley, 31 Beav. 280 ; Glive v. Clice, at six months.
N N 2
548 THE EFFECT OF THE DEATH OF A SHAREHOLDER
Bk. III. Chap. 7. in the exercise of their own judgment postpone the sale for a
— '- short time longer than a year, they will not be compelled to
make good loss arising from the postponement (b) ; and if a
testator gives his executors an absolute discretion to postpone
the sale and conversion they will not, in the absence of mala
fides, be held liable for any loss sustained by non-conversion,
even of shares in an unlimited company (c).
(b) Marsden v. Kent, 5 Ch. D. 598. (c) Re Norrington, 13 Ch. D. 654.
BANKRUPTCY OF A SHAREHOLDER. 549
CHAPTER VIII.
OF THE EFFECT OF THE BANKRUPTCY OF A SHAREHOLDER.
The law of bankruptcy so far as it relates to partners will Bk. III. Chap. 8.
be found in the volume on partnership. So much of it as
relates to shareholders and is peculiar to them is alone referred
to in the present treatise.
Eveiy shareholder who is sui juris, whether a trader or not, Married
is liable to become bankrupt (a). A married woman holding
shares for her separate use can however only become bankrupt
if she carries on a trade separately from her husband, and she
is only subject to the bankrupt laws in respect of her separate
estate (b). Whether holding shares in a trading company is
carrying on trade within the meaning of the Married Woman's
Property act, 1882 (c), has not yet been decided. But merely
holding shares in an incorporated company can hardly be
carrying on a trade (d). Whether holding shares in an unin-
corporated company can amount to " carrying on trade sepa-
rately from her husband " is more doubtful ; but unless a
married woman not only holds shares in a company, but also
takes an active part in carrying on its business separately from
her husband, she cannot, it is conceived, be made bankrupt
under the clause in question. The older authorities, to the
effect that persons holding shares in trading companies were
themselves traders within the meaning of the old Bankruptcy
acts (e), have little bearing on this question.
Any company empowered to sue and be sued by a public
(a) See as to infants and lunatics, ried on by the corporation not by
Partn., p. 624, note (h). the members of it.
(h) 45 & 46 Vict. c. 75, § 1, cl. 5. (e) Smith v. Cannan, 2 E. & B.
Ex parte Coulson, 20 Q. B. D. 249. 35, and the cases there referred to.
(c) lb. See as to mining companies, Ex
(d) In this case the trade is car- parte Sclwmbery, 10 Ch. 172.
550 BANKRUPTCY OF A SHAREHOLDER.
Bk. III. Chap. 8. officer (/ ) or a corporation (g), e.g. a registered company (h),
may be the petitioning creditor ; and a company being wound
up under the Companies act, 1862, can obtain an adjudication
against one of its own shareholders in respect of calls (i).
An incorporated company can act in bankruptcy by any of
its officers authorised so to do under its corporate seal (k) ;
and an unincorporated company having no public officer can
act by any of its members authorised so to act (I).
It is presumed that a company empowered to sue and be
sued by a public officer can act by him although there is no
general enactment or rule expressly to this effect (in).
The petitioning creditor's debt must amount to 501., pay-
able immediately or at some certain future time (n). A call
made under the winding-up provisions of the Companies act,
1862, is expressly declared to be a debt accruing when the
call is made (o).
The doctrine that on the bankruptcy of one member of a
firm the whole firm is dissolved is not applicable to companies
with transferable shares (p).
Shares vest in Upon the bankruptcy of a shareholder all his property,
including his shares, vests first in the official receiver, and
afterwards when a trustee is appointed in the trustee (q) ; but
subject to disclaimer, as will be seen presently. Shares held
by the bankrupt as trustee do not pass to his trustee in bank-
(/) Bank, rules, 1886, r. 258. As (m) See § 148 and rule 258; Re
to the mode of describing him, see Galdecott, 2 M. D. & D. 368, affirra-
Ex parte Torhington, 9 Ch. 298. ing Ex parte Davidson, 1 M. D. & D.
(g) 46 & 47 Vict. c. 52, § 168, 648.
" Person." Ex parte Collins, De Gex, (n) 46 & 47 Vict. c. 52, § 6.
381 ; Ex parte Sneyds, 1 Moll. 261. (o) See Comp. Act, 1862, § 75 ;
(h) lie Galthrop, 3 Ch. 252. Ex parte Canwell, 4 De G. J.
(i) See 25 & 26 Vict. c. 89, §§ 75, & S. 539. See as to calls made
95; Ex. parte Winterbottom, 18 Q. under the Winding-up acts, 1848-49,
B. 1). 446 ; Ex parte Hall, Mon. & William* v. Harding, L. K. 1 H.
Ch. 365 ; Ex parte Galthrop, 3 Ch. L. 9.
252. Under the former acts the official (p) See Ex parte Broadbent, 1
manager could not he a petitioner ; Mont. & A. 638 ; Bentley v. Bates,
Williams'w Harding, L. E. 1 H. L. 9. 4 Y. & C. Ex. 190, as to mining
(/,-) lb., § 148. partnerships.
(I) See ib. and Bank, rules, 1886, (q) 46 & 47 Vict. c. 52, §§ 43, 44,
r. 258. The section uses the word 54. See as to the old law and the
firm, and the statement in the text vesting of onerous property, Cope-
is supposed to be the meaning. land v. Stephens, 1 B. & A. 593.
trustee.
EFFECT OF BANKRUPTCY. ."551
ruptcy (/•) ; and shares which are in the order and disposition Bk. III. Chap. 8.
of the bankrupt, but in which other persons have an interest
by way of mortgage or otherwise do not now pass to his trustee
under the reputed ownership clause (s) ; the trustee, in short,
is only entitled to the interest of the bankrupt in the shares,
and if they are subject to a lien either in favour of the com-
pany (i), or of any third party (//), the trustee's right to the
shares is subject to the same lien.
It must not, however, be supposed that the effect of vesting Trustee not a
, . . . shareholder.
a bankrupt s property, including his shares, in his trustee, is
to make the trustee a shareholder, i.e. a member of the company
in which the shares are held (x). In order to become a share-
holder the trustee must do whatever may be necessary by the
regulations of the company to render himself a member thereof.
The vesting of the bankrupt's property in the trustee entitles
the trustee, but does not oblige him, to become a member.
His right to become a member can be exercised even after
the lapse of a considerable time, if nothing has been done
either b}r him or the company depriving him of such right (y).
Speaking generally a trustee of a bankrupt shareholder may
take one or other of the following courses, viz. : —
1. He may cause the shares to be transferred into his own Registration in
name (or do whatever else is necessary) and thereby become name ° trustee#
himself a member of the compamr in respect of them. The re-
gulations of the company may possibly not entitle him to take
this course ; but this is rarely if ever the case. A clause
empowering directors to decline to register a transfer to a
(r) III., s. 44 (1), and see Pinkett account. See, too, Meliorucchi v.
v. Wright, 2 Ha. 120 ; Joy v. Camp- Royal Ex. Co., 1 Eq. Ca. Ab. 9.
bell, 1 Sc. & Lef. 328. (u) See Ex parte Dohson, 2 M. D.
(s) lb., § 44 (3) ; Colonial Bank v. & D. GS5 ; Ex park Moss, 3 De G.
Whinney, 11 App. Ca. 426, revers- & S. 599.
ingS. C, 30 Ch. D. 261. The older (x) See South Staffordshire Bail.
authorities collected in former edi- Co. v. Burnside, 5 Ex. 129, and the
tions are omitted as no longer useful. next note.
(t) See Child v. Hudson's Bay Co., (y) Graham v. Van Diemen's Land
2 P. W. 207 ; Ex parte Cooper, 2 Co., 11 Ex. 101, where five years
M. T). & D. 1. See, too, Pinkett v. had elapsed. Compare Lon. and
Wright, 2 Ha. 120, where, however, Provincial Tel. Co., 9 Eq. 653; Law-
it was held that a banking company rence v. Knowles, 5 Bing. N. C. 399,
had no lien on the shares of a where the right was lost. As to
customer who had overdrawn his disclaimer, see infra.
552
BANKRUPTCY OF A SHAREHOLDER.
Bk. III. Chap. 8. person disapproved by them or indebted to the company does
not apply to a trustee claiming the shares under the Bank-
ruptcy act (z). But the trustee has no right to be registered
as owner if the bankrupt has executed a transfer to another
person who has such right (a) ; and even the consent of such
person will not entitle the trustee to be registered so long as
the transfer already executed remains in force {b).
If the trustee elects to take the shares and to be registered
in respect of them he becomes himself a shareholder to all
intents and purposes; and it is very seldom therefore that he
takes this course.
2. The trustee may, without himself becoming a shareholder,
sell or dispose of the bankrupt's shares. A provision to this
effect is usually iuserted in a company's regulations (c) ; but
whether there is or is not such a clause in them, the Bank-
ruptcy act, 1883, authorises the trustee to take this course (d).
So long as the shares are retained in the bankrupt's name
unsold the trustee incurs no personal liability to the company
in respect of them. On the other hand, not being himself a
shareholder, notices of meetings, of calls, and of forfeiture of
shares, will not be sent to him but to the bankrupt. Conse-
quently, if a call is made and not paid, and the company has
power to forfeit shares for the non-payment of calls, the
trustee's title may be defeated by a forfeiture of which he has
not received notice (e). So he may lose his right to them by a
transfer to a bond Jide purchaser for value without notice.
This was decided in a case where the assignee did nothing for
five years. In the meantime the bankrupt died ; his widow
and executrix became registered in respect of his shares, and
she afterwards sold them and the purchaser was registered.
The assignee then claimed them, but the V.-C. James held
that the purchaser had acquired a good legal title to them (/).
Sale by the
trustee.
Shares left by
name of bank'
rupt.
(,-.) Bentham Mills Spinning Co.,
11 Ch. D. 900.
(a) Ex parte Harrison, 28 Ch. Div.
363.
(6) Ibid.
(c) The Companies act, 1862, Table
A., contains such a provision ; see
art. 14.
(d) 46 & 47 Vict. c. 52, § 50 (cl. 3).
(e) Graham v. Van Diemen's Land
Co., 1 H. & N. 541.
(/) See London and Provincial
Tel. Co., 9 Eq. 653. The purchaser
had at any rate the better title in
equity to be registered, and being
registered, the assignee could not
DISCLAIMER BY TRUSTEE. 553
3. The trustee may disclaim the shares. The provision in Bk. III. Chap. 8.
the Bankruptcy act, 1883, relating to the disclaimer of onerous Disclaimer,
property differs in many important respects from those con- ^^- act> 1883'
tained in former acts of bankruptcy, and decisions on them
must not be relied upon as applicable to the law as it now
stands (g).
The following is the substance of the present enactment
relating to the disclaimer of shares : —
1. The trustee may disclaim them by writing signed by him
at any time within three months after the first appointment of
a trustee ; or within two months after he first became aware of
their existence (It) ;
2. He may disclaim them, although he may have tried to sell
them, or has taken possession of them, or exercised any act of
ownership in relation to them (/) ;
3. The disclaimer determines as from its date the rights,
interests, and liabilities of the bankrupt and of his property in
respect of the shares (A) ;
4. It also discharges the trustee from all personal liability
in respect of them as from the date when they vested in
him (I) ;
5. But except so far as necessary for the purpose of re-
leasing the bankrupt and the trustee, the disclaimer does not
affect the rights or liabilities of any other person (/») :
6. The trustee cannot disclaim if an application in writing
has been made to him by any person interested in the shares
requiring him to decide whether he will disclaim or not, and
he has for twenty-eight days (or such extended time as may be
allowed by the court) declined or neglected to give notice
whether he disclaims or not (n) ;
7. The court may make an order vesting the shares in any
disturb him by having the register Hill v. E. cfc TV. In. Docks Co., 9
rectified, which was what lie sought. App. Ca. 448.
(g) See for the present law 46 & (h) § 55, cl. 1. See TVilson v.
47 Vict. c. 52, § 55. The section TVallani, 5 Ex. D. 155, as to signa-
was much discussed with reference ture by an agent,
to cases in Ex parte the Clothworlcers' (i) Ibid.
Co., 21 Q. B. D. 475. The older (/„•) § 55, cl. 2.
cases are Ex parte Budden, 12 Ch. (I) lb.
D. 288 ; Ex parte Walton, 17 ib. (m) lb.
74H ; Levi v. Ayers, 3 App. Ca 842 ; (n) lb., cl. 4.
BANKRUPTCY OF A SHAREHOLDER.
Bk. in. chap. 8. person or trustee for anjr person entitled to them or to com-
pensation for any liability in respect of the shares not dis-
charged by the act (o) ;
8. Any person injured b3T the disclaimer is deemed to be a
creditor of the bankrupt to the extent of the injury, and may
prove the same accordingly against the bankrupt estate (_2>).
The short effect of a disclaimer of shares appears, therefore,
to be as follows : — 1, the bankrupt and the trustee are dis-
charged from all future liability in respect of them ; 2, they
have no further right or interest in them ; 3, the company can
apparently apply for an order vesting the shares in itself or
some trustee for itself (q) ; 4, the company can prove against
the bankrupt's estate for any damage it may sustain by the
disclaimer. If the shares are subject to any mortgage or equi-
table charge the bankrupt and his trustee will be released from
all liability in respect of the shares ; but the mortgage or
charge will not be affected ; and the person entitled thereto
will apparently be entitled to an order vesting the shares in
himself free from redemption. Whether the company can
compel him to take the shares or allow the company to have
them, and in the latter case to take them free from the mort-
gage or charge, are questions not yet settled by decision (/•).
Proof of debts. Under the Bankruptcy act, 1883, § 37, every conceivable
debt or money demand, liquidated or unliquidated, present or
future, vested or contingent, can be proved with two excep-
tions, viz., (1) demands for unliquidated damages arising other-
wise than bj' reason of a contract, promise, or breach of trust ;
and (2) demands which in the opinion of the court are incapable
of being fairly estimated (s).
A transferor of shares to a bankrupt can now prove in re-
spect of his right of indemnity (t) by his transferee, although
the transfer may not have been perfected.
An ordinary partnership cannot prove against the separate
Proof by unin-
corporated com
panies.
(o) § 55, cl. 6, much abridged.
(p) lb., cl. 7. See Ex parte Davis,
3 Ch. D. 4G3.
(q) This will not be clear until it
is decided. See Ex parte The Cloth-
workers Co., 21 Q. B. D. 47."..
(r) See the case last referred to,
and observe that § 55 contains special
provisions applicable to leases but
not to shares.
(.s) See as to these, Hardy v.
Fothergill, 13 App. Ca. 351.
(t) Holmes v. Symons, 13 E<p 66,
shows that this formerlv was not so.
PROOF FOR CALLS. 555
estate of one of its members, except under special circum- Bk, Til. Chap. 8.
stances ; for to allow such a proof would be inconsistent with
the general principle that a person cannot prove against his
own estate in competition with his own creditors (u). The
application of this principle to unincorporated companies seek-
ing to prove against a bankrupt shareholder in competition
with his other creditors has given rise to some difficult}*. The
question, however, now seldom arises. It is now settled that
the rule does not apply to proofs by banking companies em-
powered to sue by public officers by the act 7 Geo. 4, c. 46 (x) ;
nor to proofs by liquidators of unincorporated companies being
wound up (y). The difficulty cannot arise in the case of
incorporated companies; but it may arise where the proving
company is merely a large partnership not empowered to sue
by a public officer, and not being wound up. No case has
been met with in which proof by a cost-book mining company
has been discussed ; but the purser can sue a member for
calls, and as to them would probably be considered a public
officer (z).
Calls on shares made before adjudication are, and always Proof for calls,
have been, provable like other debts ; and it is immaterial
whether such calls are made by directors whilst a company is
carrying on business, or by liquidators when a company is being
wound up (a). But with respect to calls made after adjudica- Old law.
tion, the authorities were not a little embarrassing. Calls
made by directors after adjudication were not provable under
the Bankruptcy act of 1849, it being wholly uncertain at the
time of adjudication whether they would ever be made or not;
they were consequently neither debts payable presently or at a
future time, nor were they debts payable on a contingency
within the meaning of that act (b). Neither did the Bankruptcy
act of 1861 make such calls provable (c). The same reasons
(c) See Partn. 737 et seq. (b) South Staffordshire Rail. Co. v.
(x) Re Caldecott, 2 M. D. & D. Burnside, 5 Ex. 129 ; TVylam's Steam
368, affirming Ex parte Davidson, 1 Fuel Co. v. Street, 10 ib. 849 : Re
il». 648. J. H., It. Rep. 3 Eq. 245. See, also,
(;/) Ex parte Ball, 10 Ch. 48. General Discount Co. v. Stokes, 17 C.
(;;) As to the purser, see ante, B. N. S. 765.
pp. 265, 427. (c) See 24 & 25 Vict. c. 134, §§
(a) As in Ex parte Brov:n, 3 De G. 150 et seq.
& Sm.590.
556
BANKRUPTCY OF A SHAREHOLDER.
Companies act,
1862, § 75.
Bk. in. Chap. 8. were as applicable to calls made under the Winding-up acts as
to other calls ; but the decisions respecting such calls were not
uniform (d).
The difficulties arising from the conflict of these decisions
were intended to be removed by § 75 of the Companies act,
1862. But this section itself gave rise to further difficulties ;
and it was ultimately decided, 1, that the liability of a contri-
butory to calls made in a winding-up under that act commenced
when he became a member (e) ; 2, that if the winding-up pre-
ceded his bankruptcy, all future calls might be proved against
his estate (/); 3, but where he was adjudicated bankrupt
before the winding-up, calls made in the winding-up could not
be proved at all (<r/) ; and consequently in this case the bank-
rupt remained liable for all calls made while he continued a
shareholder.
The Bankruptcy act, 1868, abolished these unnecessary
distinctions (h) ; and the present Bankruptcy act, 1883, is
similar to it. Under this act, when a shareholder becomes
bankrupt, all calls in arrear are provable as debts, and his
liability to future calls may be estimated and proved as well
when the company is being wound up as when it is not (i). If
the shares are neither disclaimed nor sold by the trustee, but
are allowed to remain in the name of the bankrupt, and he
obtains his discharge, it seems that he will nevertheless be
freed from calls in respect of them, as his liability to them was
capable of proof (A:).
Present law.
(d) See, on the one hand, General
Discount Co. v. Stokes, 17 C. B. N.
S. 765, and on the other, Parbury's
case, 3 De G. F. & J. 80, and Ex
parte Nicholas, 2 De G. M. & G.
271. See, also, Chappie's case, 5 De
G. & Sm. 400 ; GreenshieloVs case,
ib. 599.
(e) Ex parte Canwcll, 4 De G. J. &
S. 539. See, also, Williams v. Hard-
ing, L. R. 1 H. L. 9.
(/) Ex parte Pickering, 4 Ch. 58 ;
Mitchell's case, 5 Ch. 400 ; M'Ewen's
case, 6 Ch. 582 ; where the bank-
rupt was a past member ; Ex parte
Marshall, 7 Ch. 324 ; Financial Cor-
poration v. Lawrence, L. R. 4 C. P.
731, and the cases in the next note.
Holmes v. Symons, 13 Eq. 66, is not
opposed to these.
(</) Martins Patent Anchor Co. v.
Morton, L. R, 3 Q. B. 306 ; Hastie's
case, 7 Eq. 3, and 4 Ch. 274 ; Ex
parte King, 3 Ch. 10. It was left
doubtful whether in this case they
could be proved if made before the
bankrupt's estate was distributed, or
if the assignee took the shares. See
L. J. Giffard's judgment, 4 Ch. 278.
(h) See §§ 23, 24, 31.
(i) See §§ 37, 55.
(k) Mercantile Mutual Marine Ins.
SET-OFF.
557
A company entitled to a lien on a bankrupt's shares for Bk. m. Chap. 8.
calls is a secured creditor, and cannot therefore prove without
giving up its lien (I).
The ordinary rules as to set-off and mutual credit apply to Set-off.
bankrupt shareholders. As regards companies which are being
wound up, the Companies act, 1862, provides in effect that
debts due to a contributory from a limited company which is
being wound up cannot be set off by him against calls made
upon him (m). But it has nevertheless been decided that if
the liquidator proves for a call against the estate of a bankrupt
contributory to whom the company is indebted, the mutual
credit clause applies, and a set-off must be allowed (w).
The combined effect of the sections of the Bankruptcy act, Summary.
1883, relating to the vesting and disposition of property (§§ 43,
44, 50, 54), disclaimer (§ 55), and the proof of debts (§ 37),
seems to be as follows : —
1. That the legal right to a bankrupt's shares vests in his
trustee ;
2. That the shares do not vest in the trustee so as to make
him a shareholder in place of the bankrupt ;
3. That the trustee can, without the concurrence of the
bankrupt, sell and transfer or otherwise dispose of his shares
for the benefit of his estate ;
4. That this right can only be exercised by the trustee, sub-
ject to the same conditions as regards consents, payment of
calls in arrear, and the like, as the bankrupt himself would
have had to comply with if he had been the transferor ;
5. That if the shares cannot be disposed of beneficially for
the estate, they may be disclaimed by the trustee, and so be
got rid of altogether ;
6. That inasmuch as under § 37 all calls due and to become
due can be proved, the bankrupt when discharged will be free
from liability in respect of the shares, whatever the trustee
may do with them ;
Ass., 25 Ch. D. 415. Compare Fur- (m) 25 & 26 Vict. c. 89, §§ 101
doonjee's case, 3 Ch. D. 264, which & 38, cl. 7. See infra, bk. iv., c.
arose under an Indian insolvency 1, § 11(5).
act. (n) He Duckworth, 2 Ch. 578 ;
(I) See Be Jennings, 1 Ir. Ch. Caralli and Haggard's claim, 4 Ch.
236 & 654. 174 ; Ex parte Strcmg, 5 Ch. 492.
558 BANKRUPTCY OF A SHAREHOLDER.
Bk. III. Chap. 8. 7. That practically even calls in arrear will not be proved if
the company has a lien on the shares, and they are worth more
than the amount due in respect of them : for the company will
then retain the shares and realise them if not redeemed ;
8. That practically calls not in arrear will not be proved if
the shares are transferred by the trustee ; for the company will
look to the transferee for all future calls (0) ;
9. That future calls will be proved if the trustee disclaims
or does nothing ; the amount of injury sustained by the dis-
claimer being estimated under § 55 at the amount of the debt
which but for the disclaimer would be provable under § 37 (p).
The liability of trustees in bankruptcy to be made contri-
butories will be considered hereafter (see Book IV. c. 1, § 10).
(0) But it is apprehended that not intended,
future calls can be proved in this (p) The calls can be proved if the
case. If they cannot the bankrupt trustee does nothing. See Ex parte
may still be liable in some cases as Davis, 3 Ch. D. 463.
a past member, which evidently is
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS. 559
CHAPTER IX.
OF ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS, AND
BETWEEN THE MEMBERS THEMSELVES.
General Observations.
The mutual rights and obligations of shareholders and Bk. III. Chap. 9.
directors having been examined, it is proposed in the next
place to consider the means by which those rights and obli-
gations can be enforced.
In the volume on Partnership, it was pointed out that an
unincorporated firm or company could not at common law sue
one of its members, nor could he sue it (a), and that this in-
convenience could not be avoided by an agreement amongst the
members that some officer, e.g., the secretary or treasurer of the
company, should sue and be sued on its behalf (b). The con-
sequences of these doctrines were very serious to unincorporated
companies of many members. Companies which were neither Putting a cmli-
incorporated nor empowered to sue their own shareholders by holder,
public officers, frequently found it extremely difficult to compel
the payment of money due to them from such shareholders by
any direct proceeding against them. This difficulty often led
to the crooked expedient of "putting a creditor on a share-
holder;" that is to say, of compelling a shareholder to pay
what he owed to the company by inducing some creditor of the
company to single him out and sue him for the company's debt
(a) Partn. 456 et seq. the case of a cost-book mining com-
(b) See Evans v. Hooper, 1 Q. B. pany. By 32 & 33 Vict. c. 19, § 13,
D. 45 ; Corner v. Maxwell- Irwin, Ir. calls may now be sued for by the
Rep. 10 C. L. 354 ; Gray v. Pearson, purser. As to bills payable to the
L. R. 5 C. P. 568, the case of a holder of an office for the time being,
mutual marine insurance society; see 45 & 46 Vict. c. 61, § 7, cl. 2.
Hybart v. Parker, 4 C!. B. N. S. 209,
a case.
560 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. at the costs of the company. This expedient was usually found
to answer the purpose, inasmuch as the shareholder could only
resist the creditor's action by pleading the non-joinder of the
other shareholders in abatement ; and this it was almost always
impossible to do with effect. Rather therefore than allow the
creditor to obtain judgment, the unfortunate shareholder made
terms with the directors. It is obvious that the grossest
oppression might be exercised in this manner, and whatever
might be said in defence of putting a creditor on an obstinate
shareholder who would not pay, and could not be otherwise
made to pay, what he justly owed to the company, nothing
Interference COuld possibly be said in its favour in any other case. Fortu-
of a court cr L J J
equity in such nately, courts of equity would always interfere in such cases,
and both restrain proceedings by the creditor and compel those
who "put him on," to deal fairly with the person sued. "What-
ever the rights of the creditor might have been, if he had been
suing bond fide (c), he was not regarded in cases of the present
description as having any greater rights than those whose tool
he was (d). If the shareholder sued was entitled to have the
accounts of the company taken, and to have its assets applied
in payment of its debts, the court would make a decree ac-
cordingly (e), if the necessary parties were before the court (/).
But a court of equity would only interfere to protect the share-
holder on the terms of his doing what was just towards the
company ; and would, if there was reason to believe that he
ought to pay what the company sought to make him pay,
require him to pay that sum into court (g).
The mere fact, moreover, that a shareholder in a company is
being sued by a creditor at the instance of the company, is not
(c) If lie was so suing, the court 162.
would not interfere, Green v. Nixon, (e) Femihough v. Leader, 4 Ra. Ca.
23 Beav. 530 ; Beck v. Dean, 3 Jur. 373, and Lewis v. Billing, ib. 414.
N. S. 14. (/) See Sibley v. Minton, 27 L. J.
(d) See Taylor v. Hughes, 2 Jo. Ch. 53.
& Lat. 24 ; Shortridge v. Bosanquet, (g) See Gutts v. Riddell, 1 De G. &
1 6 Beav. 84, and Bargate v. Short- S. 226 ; Sibley v. Minton, 27 L. J.
ridge, 5 H. L. C. 297 ; Horn v. Ch. 53. This last was the case of a
Kilkenny, dr., Rail. Go., 1 K. & J. cost-book mining company, a share-
399. See, also, Woodhamsx. Anglo- holder in which would not pay his
Australian Go., 2 De G. J. & Sm. calls.
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS. 561
sufficient to induce a court to make an order for winding up Bk- In- CIiaP- &
the company (h).
The inconveniences arising from the state of the law above Effect of incor-
alluded to, were effectually removed by incorporating the com- Poratlon-
pany ; for a member of a body corporate might always sue or
be sued by it just as if he were not a member ; and whether
the body corporate was a company having gain for its object or
not, is and always was immaterial with reference to its capacity
of suing and being sued.
The institution of a public officer to sue and be sued on Effect of ena-
i i ij. » .1 -i .. . , . bling company
behalf ot the members of an unincorporated company, is not t0 sue and be
necessarily so efficacious for the purposes now under discus- pXlic officer
sion as the incorporation of the company. For the public
officer may be so constituted as to represent the members as
individuals, and only to represent them all, and not all less
some or one of them. If in such a case he sues one of the
members of the company which he represents, he in fact either
represents the member sued as well as all the other members,
or nobody at all, and in either case his action will be im-
proper (i). In most modern acts of Parliament, however, care
has been taken to avoid this objection, and to render the
public officer the representative of the company as distinct
from the individuals composing it ; and where this is done,
legal proceedings between the public officer and those individuals
or any of them, are theoretically as unobjectionable as are legal
proceedings between incorporated companies and their share-
holders. The tendency in modern times, moreover, is to regard
companies empowered to sue and be sued more in the light of
corporate bodies than formerly, and to treat public officers as
the representatives of collective wholes rather than as the
representatives of members individually (k).
The general effect of the Judicature acts, so far as they Effect of the
Judic A
acts.
relate to legal proceedings by companies, has been already in-
(h) See infra, Look iv. ch. 1, § 4, 473 . Eugkes v. Thorpe, 5 M. & W.
and Ex parte Wyld, 1 Mac. & G. 1 ; G56 . SeddoH y Connell, 10 Sim. 58.
Ex parte Lawton, 1 K. & J. 204 ; See, too, per Lord Eldon in Van
Ex parte Watson, 3 De G. & S. 253 ; Sandau v. Moore, 1 Rnss. 460 and
Ex parte Wise, 1 Drew. 465. 4-3
(i) See Hichensv. Congreve, 4 Russ. (/.) See ^y,,^ p> 5G4_
•jf;2 ; MacMahon w Upton, 2 Sim.
L.C. O O
562
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. vestigated (Bk. 11., c. 7) ; and it was then seen that an unin-
Sect. 1. ...
— corporated company can now sue and be sued in its mercantile
name ; and that where parties are numerous and have a
common interest, some of them may sue and be sued on behalf
of all in respect thereof. Further, there is now the same facility
in arranging parties to actions in all divisions of the High Court
as there was formerly in arranging parties to suits in equity ;
and the fact that an account has to be taken in order to ascertain
what is due from one party to another is no longer any reason
why an action by one against another should fail ; at most, such
a circumstance may render it expedient to transfer the action
from one division of the High Court to the other at some stage
of the action.
It has not yet been decided whether an action in the name
of an unincorporated company can be maintained by or against
one of its own members ; but the writer sees no difficulty in
principle in supporting such an action ; the company being
regarded for the purposes of the action as one collective
whole (I). This, however, is comparatively an unimportant
matter ; for if an action in that form cannot be maintained, it
is plain that one or more members can sue the others whenever
there are legal or equitable rights to be enforced or adjusted.
With respect to actions by or against some members of com-
panies on behalf of themselves and others, it must be borne in
mind that suits in this form have long been familiar in courts
of equity, and certain rules respecting them have been settled
which are not interfered with by the Judicature acts. The
rules will be fully investigated presently.
Actions by and
against the
company.
Actions by or
against some
on behalf of
others.
SECTION I.— OF THE PARTIES TO SUE AND BE SUED.
1. Actiojis by and against incorporated companies.
incorporated 6en An incorporated company can only sue and be sued in its
companies and corporate name ; and this rule applies as much to actions by
their members. # . .
and against its own members as to actions by and against
(/) Such actions are common in Scotland.
ACTIONS BY AND AGAINST INCORPORATED COMPANIES. 5G3
other persons. Accordingly it has been held that a registered Bk- in. Chap. 9.
-1 ^ ■ . beet. 1.
joint-stock company can support an action against one of its —
own shareholders for damages for a libel on the company pub-
lished by him {in). A shareholder of an incorporated company
may be a creditor of or debtor to the company, just as if he
were not a member of it. It follows from this, that he may
not only sue it, but having obtained judgment against it, he
may execute that judgment against his co-shareholders, if they
are liable to be proceeded against in that way by ordinary
creditors. Moreover, a court will not interfere at the instance
of the shareholders proceeded against, and stay execution
against them, either on the ground that the plaintiff is himself
a member of the company, and bound therefore to contribute
to his own payment, or upon the ground that the rights of the
parties cannot be ascertained without taking the accounts of
the company. In the case supposed the plaintiff is a creditor
of the company, and not the less so for being a shareholder in
it ; and to deprive him of his rights as a creditor would be to
defeat one of the objects for which the company, as such, has
any existence (n). But one shareholder will not be allowed to
buy up and put in force against a co-shareholder a debt of the
company, if the object of the execution creditor is to obtain by
means of that debt payment of other monies to which he is
not justly entitled (o).
An action to recover property of a company, or to make its
directors answerable for the misapplication of its funds, ought
to be brought in the name of the company ( y), and the directors
cannot require all the persons liable to indemnify them to be
made parties (q).
The cases in which some of the members of an incorporated
company can sue or be sued on behalf of themselves and others
will be considered presently (pp. 570 and 572).
(m) Metropolitan Saloon Omnibus (p) Gray v. Lewis, 8 Ch. 1035 ;
Co. v. Haickins, 4 H. & N. 87. Duckett v. Govcr, 6 Ch. D. 82 ;
(a) See Rheam v. Smith, 2 Ph. Russell v. Wake-field Waterworks Co.,
726 ; Hardinge v. Webster, 1 Dr. & 20 Eq. 474.
Sm. 101. (q) Wye Valley Rail. Co. v. Hawes,
(o) Woodhwms v. Anglo-Austra- 1G Ch. D. 489.
lian, d-c., Co., 2 De G. J. & Sm. 162.
o o 2
5G4
ACTION'S BETWEEN COMPANIES AND THEIR MEMBERS.
Ek. III. Chap. 9.
Sect. 1.
2. Of actions by and against public officers.
Representation
of parties by
public officers.
Upon the ground that the public officer of a company only
represents all the shareholders, and not any one or more of
them as against the others (r), it was twice held by Lord Eldon,
that a suit for the dissolution of a company empowered to sue
and be sued by its secretary, was defective for want of parties,
although the suit was instituted by one shareholder on behalf
of himself and others, against the secretary and the directors
of the company (s). In tracing the history of joint-stock com-
panies in the celebrated case of Van Sandau v. Moore, Lord
Eldon prominently alluded to the inability of a public officer to
represent the company in suits between its members (t), and
this doctrine was carried out to its full extent by the late Vice-
Chancellor Shadwell (u), who held (x), that neither the act of 7
Geo. 4, c. 46, nor the subsequent act of 1 & 2 Vict. c. 96,
empowered the public officer to represent all the members of
the company except one, in a suit between him and them as
members. But notwithstanding these authorities an action
may be instituted by the public officer of a company against
some of its members, if the question in dispute is one between
the company as a collective whole, on the one side, and those
individual members on the other ; and it has accordingly been
held that, under the Joint-stock banking act, 7 Geo. 4, c. 46,
it is competent for a public officer of a company governed by
that act, to sue the directors of the company for the purpose of
making them account for breaches of trust and mismanage-
ment ; and in such an action none of the shareholders need be
parties, although the company has ceased to carry on business,
Action for calls, except for the purpose of winding up its affairs (y). The public
officer is the proper person to sue a shareholder for calls made
payable to him by the company (z).
(?) See ante, pp. 266 and 5G1.
(s) Davis v. Fisk, cited in You.
425 ; and Van Sandau v. Moore, 1
Russ. 441.
(0 See 1 Russ. 460 and 472, and
Hichens v. Congreve, 4 Russ. 562.
(«) In MacMahon v. Upton, 2
Sim. 47:J ; Seddon v. Connell, lOSim.
58 ; Abraham v. Hannay, 13 Sim.
581.
(<) In Seddon v. Connell, 10 Sim.
58.
(y) Harrison v. Brown, 5 De G. &
Sm. 728.
(z) See as to banking companies
governed by 7 Geo. 4, c. 46 ; Chap-
ACTIONS BY ONE MEMBER ON BEHALF 01 HIMSELF AND OTHERS. 565
The Stannaries act, 1869, expressly authorises the purser of Bk- ™;tch1aiJ' 9-
a cost-book mining company to sue a shareholder for calls, TT^T
although the act does not authorise such a company to sue and purser.
be sued generally by its purser (a).
3. Of actions by one member on behalf of himself and others.
Actions by one member of a class of persons on behalf of
himself and all others of that class, have long been familiar in
courts of equity (6). Actions in this form are permissible when
their object is to obtain relief to which the whole class is
entitled, and when the members of the class are so numerous
that they cannot all be made parties by name (c).
Thus, for the purpose of rescinding an agreement illegally Actions to
restrain dircc~
entered into by the directors of an incorporated company, or tors from im-
for the purpose of restraining them from doing that which is proper
illegal, an action may be instituted by one shareholder on
behalf of himself and all the others, except the defendants,
against those directors (d).
Again in Apperley v. Page (c), it was held that a suit could Apperleyr.
be sustained by some shareholders of a provisionally registered
railway company on behalf of themselves and all the other
shareholders except the defendants, against the directors, for
man v. Milvain, 5 Ex. 61, removing 2 Ha. 530. But see Fripp v. Chard
the doubt expressed in Hughes v. Rail. Co., 11 Ha. 258. See now
Thorpe, 5 M. & W. 656. See, too, Ord. xvi., r. 9.
Ex parte Hall, 3 Deac. 405. As to (d) Gray v. Chaplin, 2 Sim. & Stu.
other companies, see Lawrence v. 267, reversed on appeal, on the
Wynn, 5 M. & W. 355 ; Skinner v. ground of delay and acquiescence,
Lambert, 4 Man. & Gr. 477 ; Wills 2 Russ. 126.
v. Sutherland, 4 Ex. 211, affirmed (e) 1 Ph. 779. See, also, Butt v.
in error, 5 Ex. 715, in each of which Monteaux, 1 K. & J. 98 ;. Sheppard
an action for calls by a public officer v. Oxenford, ib. 491; Cramer v.
was successful. See, too, Smith v. Bird, 6 Eq. 143 ; Wilson v. Stanhope,
Goldsworthy, 4 Q. B. 430 ; Reddish v. 2 Coll. 629 ; Harvey v. Collett, 15
Pinnock, 10 Ex. 213. Sim. 332 ; Cooper v. Webb. ib. 454 ;
(a) 32 & 33 Vict. c. 19, § 13. Clements v. Bowes, 17 Sim. 167, and
(6) See Walworth v. Holt, 4 M. & 1 Drew. 684 ; Richardson v. Hastings,
Cr. 619. 7 Beav. 323 ; Sibson v. Edyeworth,
(c) Twenty used to be the mini- 2 De G. & S. 73. Compare Wil-
mum. See Harrison v. Stewardson, Hams v. Salmond, 2 K. & J. 463.
shareholder on
his own behalf,
566 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. in. Chap. 9. the purpose of having the assets of the company realised and
— — '- applied in payment of its debts, and for the distribution of the
surplus amongst the shareholders.
This form of action, moreover, is constantly adopted where
numerous partners seek to make their managers account for
secret benefits and advantages obtained by them in breach of
the good faith owing to those whose affairs they conduct (/ ) ;
or to rescind contracts into which the partnership has been
induced to enter by false and fraudulent representations (g).
So in the case of mutual insurance societies and friendly
societies one member may sue the trustees or committee and
one of each class of members as representing all the other
members, where the object of the action is to obtain payment
of what is due to the plaintiff (/&).
Actions by one Moreover where it is permissible, on the principles above
explained, for one person to sue on behalf of himself and
others, he ought so to sue or his action will be defective for
want of parties. But there are exceptions to this ; for it seems
settled that any one shareholder can maintain an action
against a company to restrain the company from doing an act
that is illegal or ultra vires (i) ; and if a plaintiff sues alone
when he ought to sue on behalf of himself and others, an
amendment would probably be allowed.
Where the plaintiff does not seek redress in respect of any
injury or injustice to himself and others, i.e. where he seeks
redress in respect of some injury or injustice to himself, he not
only can sue in his own name alone but he ought so to sue.
For example a shareholder may sue on his own behalf only to
restrain the improper rejection of his vote (k), his wrongful
(/) Ohancey v. May, Prec. in Ch. M. 429.
592 ; Hichens v. Congreve, 4 Bliss. (i) See Hoole v. Great Western
562 ; Taylor v. Salmon, 4 M. & Cr. Bail. Co., 3 Ch. 262. Russell v.
134 ; Beck v. Kantorowicz, 3 K. & J. Wakefield Waterworks Co., 20 Eq.
237. 474 at p. 481. Simpson v. West-
(g) See Small v. Attwood, You. minster Palace Hotel Co., 8 H. L. C.
407, and infra, p. 568. 712.
(It) See Pare v. Glegg, 29 Beav. (/,) Pender v. Lushington, 6 Ch.
589 ; Bromley v. Williams, 32 ib. D. 70 ; Moffatt v. Farquhar, 7 Ch.
177 ; Harvey v. Beckvnth, 2 Hem. & D. 591.
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS. 507
exclusion from acting as director (I), or a refusal to allow him Bk.III. Chap. 9.
to inspect the company's register (m).
In order that an action may be sustainable by one or more identity of
persons on behalf of themselves and others, it is essential that mterests-
the interests of the plaintiffs on the record, and of those
others whom they assume to represent, should be, in a judicial
point of view, identical, and be proved to be so by the
plaintiffs (n). Consequently a shareholder in a company who
has sold his shares, and has no longer any interest in the
company, cannot sustain an action on behalf of himself and
the other shareholders for an account of the dealings and
transactions of the company or of its directors, and to have its
assets applied in discharge of its liabilities. For, whether he
is or is not still under liabilities from which he is entitled to
be freed, he has no right, having sold all his interest in the
company, to assume to represent those with whom he has no
longer anything to do (o). Upon the same principle it has
been said that a shareholder who is a mere trustee, having no
beneficial interest in the compaivy, is not a proper person to
sue on behalf of himself and other shareholders (j>).
Neither can an action by one shareholder on behalf of him- Plaintiff a
self and others be maintained by a person who does not riTaUompany.
honestly represent the interests of his co-shareholder, but
who is the nominee of a rival company (q). A bill by such a
(/) PulbrooJc v. Richmond Consoli- Thomas v. Hobler, 4 De G. F. & J.
dated Alining Co., 9 Ch. D. 610 ; 199 ; -which shows that if the plain-
Munster v. Gammell Co., 21 Ch. tiff makes an alternative case, neither
D. 183 ; and see Harben v. Phillips, alternative must be opposed to the
23 Ch. D. 14 ; Browne v. La interests of those whom he assumes
Trinidad, 37 Ch. D. 1. to represent.
(m) Mutter v. Eastern and Mid- (o) Doyle v. Muntz, 5 Ha. 509.
lands Bail. Co., 38 Ch. D. 92 ; (p) Ibid, sed quaere.
Holland v. Dickson, 37 Ch. D. 669. (q) Forrest v. Manchester, &c, Bail.
(n) See the cases as to calls, infra, Co., 4 De G. F. & J. 126. See.
p. 573, and fFrtrdv. Sittingboume and also, Hare v. London and North
Sheerness Bail. Co., 9 Ch. 488 ; Clay Western Bail. Co., 1 J. & H. 252,
v. Bufford, 8 Ha. 281 ; Williams v. and Thomas v. Hobler, 4 De G. F. &
Salmond, 2 K. & J. 463 ; Sibson v. J. 199. The rule does not apply to
Edgworth, 2 De G. & S. 73 ; in a nominee of a rival company, who
which case the defendant pleaded does not assume to represent others,
that the interests of the plaintiff Mutter v. Eastern and Midland Bail.
and those he assumed to represent, Co., 38 Ch. D. 92.
were not identical. Sec, also,
568
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect. 1.
Joint right of
action.
Actions for
recovery of
subscriptions
in cases of
fraud.
Further observa^
tions on actions
by some on
behalf.
plaintiff has even been taken off the file (r). But the mere
circumstance that the plaintiff has bought a share recently
to enable himself to bring an action, does not warrant the
Court in dismissing it (s).
It was at one time considered that a suit by one person on
behalf of himself and others was not sustainable unless the
injury of which he complained was such as to give him and
them a right to sue jointly ; and that where persons having no
previous connection with each other had been induced to sub-
scribe to a loan or for shares in a company by fraud, a suit by
one of them on behalf of himself and others to obtain a return
of their subscriptions could not be sustained (t). But later
cases have gone further and allowed such actions on the
ground that the subscribers to a company have such a com-
munity of interest in the funds subscribed as to entitle them
all to sue for their return (u). Practically this point is not
now of much importance, owing to the modern rule as to mis-
joinder of plaintiffs (x).
An action by one or more persons on behalf of themselves
and others, may be instituted without the consent of such
others (y) ; and even against their consent if the object of the
action is to prevent or obtain redress in respect of an illegal
act (z). But an action by one or more on behalf, &c, is the
action of those who are named on the record as plaintiffs, and
whatever is a defence as against them is a defence to the
action, whatever might have been the case if other persons had
been plaintiffs on the record (a).
(/•) Robson v. Dodds, 8 Eq. 301.
(s) Bloxam v. Metropolitan Rail.
Co., 3 Cli. 337 ; Beaton v. Grant, 2
Ch. 459. See further, on this
suhject, Orr v. Glasgow, dr., Rail.
Co., 3 McQu. 799 ; Rogers v. Oxford,
dc,, Rail. Co., 2 De G. & J. 662.
(t) Jones v. Garcia del Rio, Turn.
& Russ. 297 ; Croskey v. Bank of
Wales, 4 Giff. 314. See, also,
Hallows v. Fernie, 3 Ch. 467.
(it) See Beeching v. Lloyd, 3 Drew.
227, which, although prior to Croskey
v. Bank if Wales, was not cited in
it. See, also, Moseley v. Cresscys Co.,
1 Eq. 405, a suit for the return of
deposits.
(x) See infra, next page.
(i/) Burt v. British Nation Assrtr.
Co., 5 Jur. N. S. 555, affirmed on
appeal, 4 De G. & J. 158 ; Williams
v. Salmond, 2 K. & J. 463.
(a) White v. Carmarthen Rail. Co. ,
1 Hem. & M. 786. See, also,
Bloxam v. Metropolitan Rail. Co.,
3 Ch. 337. Compare Lund v. Blan-
shard, 4 Ha. 299.
(a) Burt v. British Nation Insur.
ACTIONS BY ONE MEMBER OX BEHALF OE HIMSELF AND OTHERS. 5G9
Formerly, if a bill was filed by some on behalf of themselves Bk- HI. ('hli'- !)-
Sect. 1.
and others, and it turned out that any of the persons thus in- -
eluded as plaintiffs had no right to sue, or had interests con- plaintiffs.
flicting with that of the plaintiffs on the record, the bill was
dismissed (b) ; but now the Court has power to grant relief and
to modify its decree according to the special circumstance of
the case, and for that purpose to direct amendments, and to
treat any one or more of the plaintiffs as if he or they was or
were a defendant or defendants to the action, and the remain-
ing plaintiff or plaintiffs was or were the only plaintiff or
plaintiffs on the record (c). Accordingly, if an action is
brought by one shareholder on behalf of himself and others,
and it appears that the interest of some of the persons thus
represented is different from that of the plaintiff, the action
may nevertheless be sustained (<1).
When an action is brought by some shareholders on behalf Frame of action
. j. by some on
of themselves and others, it should appear m the statement of behalf, &c.
claim (1), that the plaintiffs are shareholders (e); and (2), that
they are suing on behalf of themselves and others. If this
last does not appear, the action will be treated as that of the
ostensible plaintiffs alone (/).
Where an action is instituted by one member of a company Costs.
on behalf of himself and others for the protection of the funds
of the company and the action is successful, the plaintiff's are
only entitled to their costs as between party and party,
although in one sense the funds out of which those costs are
to be paid belong to the plaintiffs themselves (r/).
Co., ubi supra, where the plaintiff Hallows v. Fernie, 3 Ch. 467 ; Jones
was held barred by his own ac- v. Rose, 4 Ha. 52. See, too, Clements
quiescence in the matters com- v. Bowes, 1 Drew. 684 ; Sturge v.
plained of. See, too, Scarth V. The Eastern Union Bail. Co., 7 De
Chadwick, 14 Jur. 300, where the G. M. & G. 180, 181.
defendants got rid of the suit by (e) Banks v. Parka; 16 Sim. 176 ;
paying the plaintiff all that he was Walburn v. Ingilby, 1 M. & K. 61.
entitled to. (/) Baldwin v. Lawrence, 2 Sim. &
(l>) In Spittal v. Smith, Taml. 45 ; Stu. 18 ; Cooper v. Powis, 3 De G. &
the bill was dismissed as to some of S. 688.
the plaintiffs only. (cj) Morgan v. Great Eastern Rail.
(c) See Ord. xvi. r. 11. Co., 1 Hem. & M. 560.
{<!) Watson v. Cave, 17 Ch. D. 10 ;
570 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. Accounts taken in an action by one shareholder on behalf
— of himself and others bind all of them (h).
Appeal. No member of a class which purports to be represented by
the plaintiff can appeal against an order made in the plaintiff's
favour ; his proper course if dissatisfied with the order is to
make an application to the Court below to be added as a
defendant to the action and then to apply to get rid of the
order or to obtain the conduct of the action (i). If the deci-
sion of the Court of first instance is against the plaintiff, it
would seem that airy member of the class represented by
him may obtain leave to appeal on an ex parte application to
the Court of Appeal (k).
Where company Where a company is incorporated, and its directors or some
.s mcorpor, . siiareii0]_c{ers have done or are doing that which other share-
holders desire to bring an action to redress or prevent, the
following rules are to be observed : —
1. If the matter complained of is one which gives a right of
action to the company as a collective whole, the company ought
to sue in its corporate name, and an action by one member on
behalf of himself and others is improper (I) : but leave may be
given to add the company as a co-plaintiff (m).
2. Again, if the complaint relates to some matter of internal
management as to which a majority is competent to decide,
the action should be brought by the majority in the name of
the company (w).
3. But if those who have the management of the affairs of
the company will not bring an action in its name when the
shareholders require it, having a right so to do, or if directors
or shareholders have done or are about to do that which is
wrong, even if sanctioned by a majority, then an action by
some of the members on behalf of themselves and others, or in
the latter case by a member suing alone (o), may be sustained,
(h) See Singletonv. Selvvjn,9 Jur. Russell v. Wakefield Waterworks Co.,
X. S. 1149. 20 Eq. 474.
(i) Watson v. Gave (No. 1), 17 Ch. (m) Duckett v. Cover, 6 Ch. D. 82.
D. 19, and see Wilson v. Church, 9 (n) MacDougallv. Gardiner, 1 Ch.
Ch. D. 552. D. 13 ; Modeu v. Alston, 1 Ph. 790 ;
(k) Markham v. Markham, 16 Ch. Foss v. Harbottle, 2 Ha. 461.
D. 1. (o) Simpson v. Westminster Palace
(1) Gray v. Lewis, 8 Ch. 1035 ; Hotel Co., 8 H. L. C. 712 ; Russell v.
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS.
571
for otherwise the dissentients would be without redress (p). Bk. III. Chap. 9.
Sect. 1.
And a clause in the articles of association imposing any penalty -
on a shareholder for bringing such an action against the com-
pany is void (q). In suits thus constituted, courts of equity
have compelled directors to account for monies improperly
applied (r) ; have declared resolutions fraudulent and void (s) ;
have restrained the carrying out of agreements under the seal
of" the company (t); restrained the application of the funds
of a company to unauthorised purposes (u), e.g., defraying
the expense of applications to Parliament (x) ; restrained a
company from purchasing its own shares (y) ; restrained the
construction of part of a railway instead of the whole of it (z) ;
restrained the improper declaration of dividends (a) ; set aside
an improper forfeiture of shares (b) ; restrained the transfer of
the business of one company to another company (c) ; set aside
agreements for such transfer (d) ; set aside fraudulent pur-
Wakefield Waterworks Co., 20 Eq.
474 at p. 481 ; Hoole v. Great 11 r< stt rn
Railway Co., 3 Ch. 2(r2.
(])) See the last three notes, Mason
v. Harris, 11 Ch. D. 97, and the
cases infra.
{(j) Hope v. International Financial
Society, 4 Ch. D. 327.
(V) Brysonv. Warwick ('mini Co.,
4 De G. M. & G. 711.
(s) Preston v. Grand Collier Dock
Co., 11 Sim. 327.
(t) Maunsell v. Midland Great
Western (Ireland) Rail. Co., 1 Hem.
& M. 130.
(m) Guinness v. Land Corporation
of Ireland, 22 Ch. D. 349 ; Smith v.
Duke of Manchester, 24 Ch. D. 611 ;
Tomkinsonv. South Eastern Rail. Co.,
35 Ch. D. 675 ; Studdert v. Grosvenor,
33 Ch. D. 528 ; Colman v. Eastern
Counties Rail. Co., 10 Beav. 1 ;
Salomons v. Laing, 12 Beav. 339 and
377 ; Munt v. Shrewsbury and Chester
Bail. Co., 13 Beav. 1 ; Bagshaw v.
Eastern Union Rail. Co., 7 Ha. 114,
and 2 Mac. & G. 389 ; Simpson v.
Denison, 10 Ha. 51 ; Vance v. East
Lancas. Rail. Co., 3 K. & J. 50.
(r) Seethe last two cases, and Lydc
v. East. I'» ngal Rail. Co., 36 Beav. 10.
(y) Hope v. International Financial
Society, 4 Ch. 1). 327.
(a) Cohen v. Wilkinson, 12 Beav.
125, and 1 Mac. & G. 481 ; Hodgson
v. Powis, 12 Beav. 392 and 529, and
1 De G. M. & G. 6.
(a) Bloxain v. Metropolitan Rail.
Co., 3 Ch. 337 ; Hoole v. Great
Western Rail. Co., ib. 262 ; Dumvile
v. Birkenhead, <£c, Rail. Co., 12
Beav. 444; Carlisle v. South-Eastern
Rail. Co., 1 Mac. & G. 689; Henry
v. Great Northern Rail. Co., 4 K. &
J. 1, and 1 De G. & J. 606. As to
actions to restrain the payment of
dividends actually declared, see
infra, p. 574.
(b) Siceny v. Smith, 7 Eq. 324.
(c) Beman v. Rufford, 1 Sim. N.
S. 550 ; Charlton v. Newcastle and
Carlisle Rail. Co., 5 Jur. N. S. 1096 ;
Hare v. London and N.-W. Rail.
Co., 1 J. & H. 252, which shows that
the company which has agreed to
take the business ought to be a party.
(d) Clinch v. Financial Corp., 5
Eq. 450, and 4 Ch. 117.
572 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. chases (e), restrained loans to directors (/) ; restrained a divi-
— sion of assets amongst a majority of members to the exclusion
of the rest (g).
An action by one member on behalf of himself and others
may even be maintainable, where an action with like objects
would fail if instituted by the company in its corporate capa-
city ; e.g., where the complaint is of fraud imputable to the
company as a body, but not imputable to the members indi-
vidually (//).
Company and In such cases as the foregoing, the company, as such, is a
putomvaoh* ProPer Party> because it is the company, as such, which is
cases. sought to be affected by the judgment of the Court (?) ; and the
directors individually are proper parties, because they are the
persons to be affected in the first instance, and some judgment
against them personally is also usually necessary. If, however,
a judgment against the company is all that is required, there is
no necessity to make the directors parties individually (A').
Actions by some The cases above referred to show that it is competent for
trol a majority.11' one shareholder to institute an action on behalf of himself and
co-shareholders, for the purpose of obtaining relief in respect
of illegal acts done or contemplated by directors ; moreover,
an action in this form is sustainable to prevent or set aside a
transaction which is a fraud by a majority on a minority (I) ;
but courts will not interfere in actions so constituted, if the
relief sought is in respect of acts the legality or illegality of
which depends on the voice of a majority of the shareholders,
who are not themselves chargeable with fraud (m). If such
last-mentioned acts are sanctioned by the majority, the Court
(e) Atwool v. Merryweather, 5 Eq. action to restrain a company from in
464, note. effect transferring its business.
(/) Bluek v. Mallalue, 27 Beav. (/) Atwool v. Memjioeather, 5 Eq.
398. 464 note ; Menier v. Hooper's Tele-
(fi) Menier v. Hooper's Telegraph graph Co.,9 Ch. 350 : Masonv. Harris,
Co.] 9 Ch. 350. Ch. D. 97.
(h) See the observations of Lord (ra) See the next section, and
Cottenham in Vigers v. Pike, 8 CI. & Russell v. Wakefield Waterworks Co.,
Fin. 647,648. 20 Eq. 474; Browne v. The Mon-
ti) See Bagshaw v. The Eastern moutlishire Bail, and Canal Co., 13
Union Rail. Co., 7 Ha. 114. Beav. 32 ; Stevens v. The South Devon
(k) Winch v. Birkenhead, d-c., Rail. Co., 9 Ha. 313.
Rail. Co., 5 De G. & Sm. 562, an
ACTIONS BY ONE MEMBER ON BEHALF OF HIMSELF AND OTHERS. 573
cannot interfere at all, and if thev are not so sanctioned, the Bk- m- cl':ii' '■'•
7 J m Sect. 1.
majority should themselves apply to the Court, and institute -
proceedings in the name of the company (n). If it is thought ^nfan\ame of
necessary to bring an action before the views of the majority
are known, or if the majority are too indifferent to take any
proceedings to enforce obedience to their own resolutions, the
proper course to be taken by those who determine to appeal to
the Court is to take upon themselves the responsibility of
bringing an action in the name of the company. Such an
action will not be stayed unless it appears that the majority
disapprove it (o) ; if, however, the majority disapprove the
action they should apply to the Court to strike out the name
of the company as plaintiffs (jj).
Moreover, if there are conflicting interests, care must be Conflicting
interests.
taken to have each separate interest substantially represented
by some person who is a party to the action (q). Therefore, Actions to
ni-i liii restrain calls.
where there is a dispute about a call which some shareholders
have paid and others have not, those who have not paid cannot
sustain an action on behalf of themselves and those who have
paid, against the directors, trustees, and secretary of the com-
pany, for a general account of the partnership debts and
assets, and to have the property of the concern applied in
discharge of its liabilities. To an action with such objects,
some at least of the class of shareholders who have paid the
call ought to be made parties (;■)• Again, with respect to
(n) MacDouyallx. Gardiner, 1 Ch. to amend an<l make the company
D. 13 ; Mozley v. Alston, 1 Pb. 790. defendants.
(o) The Exeter and Crediton Bail, (q) Cramer v. Bird, 6 Eq. 143;
Co. v. Buller, 5 Ka. Ca. 211, where Hoole v. Great Western Bail. Co.,
the bill was filed in the name of the 2 Ch. 262 ; Fraser v. Cooper, Hall £■
company, although the defendants Co., 21 Ch. D. 718 (an action by a
had possession of the seal. See, also, bondholder on behalf of himself and
East Pant Du, d-c. Mining Co. v. other bondholders).
Merryweatlier, 2 Hem. & M. 254 ; (/) See Bichardson v. Larpent, 2
Atwool v. Merryweatlier, 5 Eq. 464 Y. & C. C. C. 507 ; Lovell v. Andrew,
note ; Pender v. Lushinyton, 6 Ch. 15 Sm. 581 ; Sharpe v. Day, 1 Ph.
D. 70 ; Harbin v. Phillips, 23 ib. 14 ; 771 ; Lund v. Blanshard, 4 Ha. 9.
Imperial Hydropathic Hotel Co. v. If the plaintiff does not know who
Hampson, ib. 1. they are, see Hodyhinsou v. National
(])) Silber Light Co. v. Silber, 12 Live Stock Insurance Co., 26 Beav.
Ch. 1). 717, where leave was given 473, and De Gr. & J. 422.
574
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Actions to
restrain pay-
ment of divi-
dends.
Bk. III. Chap. 9. actions to restrain the improper payment of a dividend, it is
Sect 2
to be remembered that the declaration of a dividend confers on
each shareholder a legal title to his share of it ; and, conse-
quently, even although the dividend may have been improperly
declared, payment of it will not be restrained in an action
by one shareholder against the company and its directors
only. On these grounds, in Carlisle v. South-Eastern Railway
Company, an injunction to restrain the payment of a dividend
already declared was refused, although an injunction to restrain
the future declaration of dividends, except out of profits, was
granted (s).
Internal ma-
nagement of
companies,
SECTION II.— OF THE RULE THAT THE COURT WILL NOT INTERFERE
IN MATTERS OF INTERNAL REGULATION.
Where an application is made to a Court to assist one or
more shareholders against others or against the managing
body, the first matter to be considered is, whether the rights
which the complainants seek to enforce do or do not depend
on the views which may be taken b}T the majority of the share-
holders (t). The Court will interfere to prevent the violation
of rights which do not depend on the views of other share-
holders («) ; but, as a general rule, the Court will not interfere
between members of companies for the purpose of enforcing
alleged rights arising out of matters which are properly the
subject of internal regulation. It will not interfere to control
a majority, unless it sees that the majority has been or is
doing, or is about to do, that which it is illegal even for a
majority to do ; and it follows from this, that the Court will
not interfere in matters properly the subject of internal
management until all reasonable attempts have been made to
take the sense of the general body of members on the matters
(s) Carlisle v. Soutlb Eastern Rail.
Co., 1 Mac. & G. 689. See, also,
Fawcett v. Laurie, 1 Dr. & Sm. 1 92.
Compare Hoole v. Great Western
Bail. Co., 3 Ch. 262, where one of
the defendants was held sufficiently
to represent others in the same
interest.
(t) As to the powers of majorities,
see ante, bk. iii. ch. 1, § 4.
(u) See infra, p. 579, &c, and the
instances on p. 571.
MATTERS OF INTERNAL REGULATION'. 575
in question ; nor even then unless it is called upon to interfere Bk.m. Chap. 9.
to give effect to the will of the majority against a factious — —
minority.
The leading decisions on this subject are Carlen v. Drury,
Foss v. Ha/rbottle, and Mozley v. Alston, which will serve to
illustrate the application of the principle in question, as well
to unincorporated as to incorporated companies.
In Carlen v. Drury (x), a large number of persons were Complaints
_ against remov-
partners in a concern called The Bankside Brewery, and six of able directors,
them on behalf of themselves and co-partners, filed a bill Carlen v.
Drury.
against the managers and others, alleging circumstances of
gross mismanagement and neglect on the part of the managers,
and praying for an account, a dissolution, and a receiver. It
appeared that by the company's deed of settlement, the
managers might be removed at any general meeting ; that
general meetings were to be held at Lady-da}- and Michaelmas,
or within a month after, at such place as the managers should
appoint ; that a committee of twelve persons should be annually
elected for auditing accounts, and advising the managers ; that
if the managers should misbehave themselves, this committee,
or any seven of them, should have the power of calling a
special general meeting of shareholders to report thereon ; and
that no dissolution should be made without the consent of a
majority of three -fourths of the shareholders at a general
meeting. A motion for an injunction and a receiver was
refused with costs, the Court not being satisfied that the
means of redress provided by the parties themselves in the
articles were not effectual, and being of opinion that the plain-
tiffs had a remedy in their own hands to which they had not
resorted. From the judgment of Lord Eldon, it appears that
the Court would, if necessary, have compelled the managers to
call meetings ; that in a case of delinquency clearly made out
the Court would have acted without hesitation ; but that there
must have been a positive necessity for the interference of the
Court arising from the refusal or neglect of the committee to
act ; and that the Court would not interfere before the parties
{x) 1 V. & B. 154. See, also, mont v. Meredith, 3 V. & B. 180 ;
Waters v. Taylor, 15 Ves. 10 ; Ellison Miles v. Thomas, 9 Sim. (306.
v. Bignold, 2 Jac. & W. 503 ; Beavr
576 ACTIONS BETWEEN COMPANIES AND THEIK MEMBERS.
Bk. in. Chap. 9. haci tiled that jurisdiction which the articles had themselves
Sect. 2. . J
— — provided.
Alleged fraud jn p'ogg v# Harbottle (y), two members of an incorporated
and misconduct. ,. . . ...
Fossn Hai- company, called The Victoria Park Company, hied a bill
bottle. against the directors and others., charging them with a variety
of fraudulent and illegal acts, whereby the property of the
company was misapplied, aliened, and wasted, and praying that
the defendants might make good to the company the losses
sustained by the acts complained of, and that a receiver might
be appointed to apply the property of the company in dis-
charge of its liabilities, and to secure the surplus. The
general result of the act incorporating the company was (in
the opinion of the Court) to make the directors the governing
body, subject to the superior control of the proprietors, who,
when assembled in general meeting, had power to originate
proceedings for any purpose within the scope of the company's
powers, as well as to control the directors in any acts which
they might have originated. The Court was of opinion that
the acts of the defendants complained of were of such a nature
as to be capable of confirmation by a majority of the members
of the company ; that it did not appear that any attempt had
been made to bring those acts before a general meeting of the
shareholders ; and that under those circumstances, the Court
could not interfere at the suit of a minority, whatever it might
have been induced to do if proper means had been resorted to
and found ineffectual to set the general body of shareholders
in motion.
Directors impro- In Mozley v. Alston (z), a bill was filed by two shareholders
per y appointee . ^ ^ railway company against the company and its directors,
Mozlcv v
Alston. alleging that the latter had been illegally appointed ; that they
had possession of the seal of the corporation ; and that they
were about to use it for various improper purposes. The bill
prayed that the directors who were defendants might be
restrained from acting as directors, and be ordered to place
(;/) 2 Ha. 461. Compare Atwool (z) 1 Ph. 790. Compare Atwool v.
v. Merry weather, 5 Eq. 464 n., which Merryweatlicr, 5 Eq. 464, note, where
was also a case of fraud, hut a ma- the votes of the defendant turned
iority of the shareholders excluding the scale, and the suit succeeded,
the defendants supported the hill.
MATTERS OF INTERNAL REGULATION. 577
the seal, and the books and documents of the company, under Bk. HI. Chap. 9.
the control of its lawful directors. It appeared from the
statements of the bill that a majority of the shareholders
agreed with the plaintiffs in their view of the illegality of the
defendants' appointment, and the Court held that, if that were
so, there was nothing to prevent the company from filing a
bill in its corporate character to remedy the alleged evils ; and
that as the plaintiffs showed no reason to justify them alone in
applying to the Court for redress, they were not entitled to its
assistance.
These cases have been followed by a variety of others (a). Bailey*. Birken-
. . . head, &c, Rail-
One of the most characteristic of this class is perhaps Bailey way Company.
v. The Birkenhead, Lancashire, and Cheshire Junction Railway
Company (h), where a bill was filed by one of a set of share-
holders in an amalgamated company, alleging that an unfair
and unnecessary call had been made upon that set, and seeking
to restrain proceedings to enforce payment of the call. Lord
Langdale thought that the case could only be considered as an
attempt to induce the Court to interfere in the internal manage-
ment of the affairs of a company, and to take upon itself to
determine a question which might and ought to be determined
by the shareholders themselves at general meetings.
So, in the Scotch case of Orr v. Glasgow, dec, Railway Orr v. Glasgow
~ , . .... .. Railway Com-
Company(c), a suit was instituted against a railway company pany.
and its directors, seeking redress on the ground that the
directors were also directors of a rival company, and were
acting in the interests of that company to the prejudice of the
shareholders in the first company. The specific relief sought
was, that certain calls might be set aside, and that monies
already paid, for calls previously made, might be returned ;
(a) See, in addition to those Fisher v. Keane, 11 Ch. D. 353 ;
mentioned in the text, Edwards v. Labouchere v. Wliamcliffc, 13 ib. 346 ;
The Shrewsbury and Birmingham Dawkins v. Antrobus, 17 ib. 615.
Bail. Co., 2 De G. & Sm. 537 ; (6) 12 Beav. 433.
Yettsv. The Norfolk Bail. Co., 3 ib. (c) 3 MacQu. 799. Compare
293 ; Kent v. Jackson, 14 Beav. 367, Hodgkinson v. National Live Stock
and 2 De G. M. & G. 49 ; Inder- Insurance Co., 26 Beav. 473, and 4
wick v. Snell, 2 Mac. & G. 216 ; and De G. & J. 422, where, however,
the cases dealing with disputes be- relief was sought in respect of other
tween members of a club. See matters than the call.
L.C. P P
578
ACTIONS BETWEEN COMPANIES AND THELR MEMBERS.
MacDougall v.
Gardiner.
Bk. in. Chap. 9. but the suit was dismissed, on the ground that although the
SeCt" 2' acts of the directors were beyond their powers, it was com-
petent to the shareholders to ratify and adopt those acts, and
the suit was not instituted for the protection of the majority
of shareholders.
Again, in MacDougall v. Gardiner (d), the Court was asked
to restrain directors from carrying out certain arrangements
without submitting them to the shareholders and to compel
the directors to call a meeting. The shareholders had them-
selves power to call a meeting, and it did not appear that a
majority of the shareholders could not control the directors
without the assistance of the Court, which was therefore
refused.
Other instances will be referred to hereafter when treating
of injunctions.
In such cases as these, those who complain of the managing
body should, before appealing to the Court, endeavour to bring
their grievances before their fellow shareholders, and ascertain
what the views of the majority are (e). The Court will not
prevent the holding of a meeting simply because the notice
convening it may invite it to exceed its powers (/). If the
majority disapprove the conduct complained of, they can sue
in the name of the company, and so obtain redress (g) ; or if
the defendants prevent that course by turning the scale of votes,
an action by one shareholder on behalf of himself and others
may be supported (h). If, however, the majority, acting bond
fide, agree with and sanction the course adopted or proposed
Course to be
taken by
minority.
(d) 10 Ch. 606, and 1 Ch. D. 13.
The decision of V.-C. Malms, in 20
Eq. 383, was reversed, and the pre-
vious decisions of the same judge in
Feather stone v. Cooke, 16 Eq. 298, and
Trade Auxiliary Co. v. Vickers, ib.,
can hardly be relied upon.
(e) See the foregoing cases.
(/) Isle of Wight Rail. Co. v. Ta-
hourdin, 25 Ch. D. 320. Compare
Jackson v. Minister Bank, 13 L. R. Ir.
118.
(</) See the observations in Foss
v. Harbottle, and Mozley v. Alston,
and MacDougall v. Gardiner, 1 Ch. D.
13, above referred to. As to using
the name of the company at tbe risk
of a stay of proceedings, see ante,
p. 573.
(h) See Atwool v. Merryweather, 5
Eq. 464, where a bill by one share-
holder on behalf of himself and
others, was ultimately successful ;
although a bill by the company had
been taken off the file.
MATTERS OF INTERNAL REGULATION. 579
to be adopted by the managing body, and if that course is not Bk- m- Chap. 9.
illegal if approved by the majority, the Court clearly cannot -
interfere. But if that course will be a fraud on the minority,
or illegal, although sanctioned by the majority of shareholders,
then, even if it is approved by all of them except one, the
Court wdll interfere at the suit of that single dissentient share-
holder, and protect him and his interests : and in such a case
it is not essential that he should appeal to the other share-
holders before applying to the Court (?').
As an illustration of the proposition that the majority cannot Majority not
be interfered with if they are not doing what it is illegal for if they are not
them to do, reference may be made to the case of Lord v. The j5Hwhatls
Governor and Company of Copper Miners in England (k), where Lord v. Copper
a shareholder in an incorporated mining company filed a bill p*^18 Com"
to restrain the governing body from vesting the property of
the company in trustees for the benefit of its creditors. Lord
Cottenham (reversing the decision of Y.-C. Knight Bruce)
allowed a demurrer to the bill, on the ground that it was
competent for a majority of shareholders to sanction such a
proceeding, and that it appeared that in fact they had sanc-
tioned it.
The important principle that one out of any number of otherwise if it
is doing what
shareholders is entitled to the protection of the court against is illegal,
the illegal acts of the others (I), although he stands alone, was
emphatically declared and strictly carried out by Lord Eldon in
Natusch v. Irving (m) and Const v. Harris (n), which were cases
of unincorporated companies; but precisely the same principle
applies to all companies, whether incorporated by act of Parlia-
ment, charter, letters patent, or registration.
(i) See Gregory v. Patchett, 33 Jackson, 14 Beav. 367, and 2 De G.
Beav. 595 ; Atwool v. Merryweather, M. & G. 49 ; The Exeter and Cre-
5 Eq. 464 ; Mason v. Harris, 11 Ch. diton Bail. Co. v. Buller, 5 Rail. Ca.
D. 97 ; Tomkinson v. South Eastern 219 ; Inderivick v. Snell, 2 Mac. &
Rail Co., 35 Ch. D. 675. The con- G. 216, where directors complained
trary receives some countenance that they had been wrongfully re-
from, but is not really warranted by, moved.
Edwards v. Shreivsbury, &c, Rail. (I) i. e., illegal, although sane-
Co., 2 De G. & S. 537. tioned by a majority.
(k) 2 Ph. 740. See, too, Gregory (m) Gow. on Partn. App. 398.
v. Patchett, 33 Beav. 595 ; Kent v. (n) T. and R. 518, 519.
p p 2
580
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Ek. III. Chap. 9.
Sect. 2.
Adley v. The
Whitstable
Company.
Preston v. Grand
Collier Dock
Company.
Beman v.
Rufford.
Action by
Attorney-
General.
Thus, in Adley v. The Whitstable Company (o), Lord Eldon
restored a member of a company incorporated by act of Parlia-
ment, to rights from which he had been unlawfully excluded
under colour of a bye-law of the company.
In Preston v. The Grand Collier Dock Company (p), the Vice-
Chancellor of England overruled a demurrer to a bill, the
object of which was to set aside an arrangement on the ground
of fraud, and to compel certain shareholders to pay calls,
although it had been in effect unanimously resolved at a special
general meeting of the company that no calls should be made
upon them. So in Beman v. Rufford (q), the Court, at the suit
of a small minority of shareholders in a railway company,
restrained what in effect would have been a transfer of the busi-
ness of that company to another company, although the great
majority of shareholders in the former were desirous that such
transfer should be made. So the Court has interfered to prevent
an improper payment of dividends (r) ; and to prevent a pay-
ment of dividends in shares (s) ; and to protect the preference
shareholders in a company against the directors and other
shareholders, who intended to make an illegal apportionment
of dividends (t). Upon the same principle, the Court has over
and over again interfered, at the instance of a minority of
shareholders, to prevent an application of the funds of com-
panies to purposes foreign to those to attain which alone such
companies were formed (»).
If a company incorporated for a special purpose is exceeding
its powers to the detriment of the public, an action by the
Attorney- General will lie ; as an illustration of this, reference
may be made to Attorney-General v. Great Northern Railway
(o) 17 Ves. 315, and 19 ib. 304,
and 1 Mer. 107, where a decree for
an account of profits was made-.
(p) 11 Sim. 327.
(q) 1 Sim. N. S. 550. See, too,
Winch v. The Birkenhead, dbe., Rail.
Co., 5 De G. & Sm. 562 ; Salomons
v. Laing, 12 Beav. 377 ; Clinch v.
Financial Corporation, 5 Etj_. 450,
and 4 Oh. 117.
(r) Bloxam v. Metropolitan Rail.
Co., 3 Ch. 337.
(s) Hoole v. Great Western Rail.
Co., 3 Ch. 262.
(t) Henry v. Great Northern Rail.
Co., 4 K. & J. 1, and 1 De G. & J.
606. See, too, Carlisle v. The South-
Eastern Rail. Co., 1 Mac. & G. 689,
and on the rights of preference
.shareholders, ante, p. 435.
(it) See infra, under the head In-
junction, where the cases will be
found collected ; andante, p. 571.
MATTERS OF INTERNAL REGULATION. 581
Company (x), where a railway company was restrained from Bk- HL ch_aP- 9-
carrying on extensive dealings in coals. '
Where a fraud on a company is complained of by a minority Frauds sane-
only of its shareholders, considerable difficulty arises ; for a majority
transaction which is a fraud on the company may be repudiated
or adopted by it at its option. Hence, if a majority of the
shareholders not implicated in the fraud, bond fide, elect to
ratify the transaction which they might, if they chose, repudiate,
it seems that the Court will not interfere at the instance of the
minority (y) ; but if the fraud is a fraud by the majority upon
the minority the Court will protect such minority (z).
After the foregoing remarks, it scarcely requires to be men- Factious
. minority.
tioned that the Court will interfere to control a factious minority
which impedes the execution of the lawful resolutions of the
majority (a). Nor can Mozley v. Alston (b) be considered as Mozley t>.
inconsistent with this proposition ; for, although in that case
the Court certainly did refuse to interfere, it was not called
upon to do so in a suit properly framed ; and it is tolerably
clear from the judgment, that if the majority had chosen to
institute a suit in the name of the corporation, the Court would
have acted very differently (c).
(x) 1 Dr. & Sin. 154. See, also, See, too, Eraser v. JVhallcy, 2 Hem.
A tt.- Gen. v. Ely, Haddenham and & M. 10.
Sutton Bail. Co., 4 Ch. 194 ; Att- (6) 1 Ph. 790, and ante, p. 576.
Gen. v. Great Eastern Rail. Co., 11 (c) See, also, MacDougall v. Gar-
Ch. D. 449, and 5 App. Ca. 473 ; diner, 1 Ch. D. 13. In Miles v.
Att.-Gen. v. Shrewsbury (Kingsland) Thomas, 9 Sim. 606, V.-C. Shadwell
Bridge Co., 21 Ch. D. 752. declined to restrain the sailing of a
(y) See Foss v. Harbottle and ship, although it would seem that
Mozley v. Alston, ubi supra, and per the majority of the shareholders of
Wood, V.-C, in Clinch v. Financial the company to which the ship be-
Corp., 5 Eq. 482. longed, were opposed to her sailing
(z) See Atwool v. Memjweaiher, 5 on the voyage on which she was
Eq. 464 n. ; and the cases of ille- about to be sent. The report of
gality referred to above. this case is, however, obscure, not
(a) See The Exeter and Crediton only as to the facts, but also as to
Bail. Co. v. Butter, 5 Rail. Ca. 211, the reasons for the judgment.
in which the Court did so interfere.
582 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect- 3- SECTION III.— OF THE RULE THAT THE COURT WILL NOT INTERFERE
AT THE INSTANCE OF PERSONS WHO HAVE BEEN GUILTY OF
LACHES.
Laches a bar to A plaintiff who seeks equitable, as distinguished from legal
relief, will fail to obtain redress if lie has delayed his appli-
cation so long as to render it unjust to interfere on his behalf.
His delay naturally induces others to suppose that he is con-
tent, and to act on that supposition ; and if he has allowed
them to engage in transactions and expose themselves to risks,
in the belief that they will alone be the losers in the event of
disaster, he will not be able to obtain any share of their gains
in the event of success.
The application of these principles to shareholders, is well
illustrated by those cases in which partners and share-
holders, whose shares have been forfeited, have been refused
relief on the ground of delay (d). The following cases further
illustrate the application of the principles under other circum-
stances.
Setting aside In Gray v. Chaplin (e), the directors of a canal company
made an agreement for letting tolls for ninety-nine years, which
agreement was both ultra vires and detrimental to the interests
of the public. After the agreement had been acted upon for
forty-seven years without any complaint being made, a bill was
filed by two shareholders on behalf of themselves and the other
shareholders to set aside the agreement and for an account. A
great majority of the shareholders disavowed the suit, but the
Vice-Chancellor held that this was immaterial (/), and he
made an order for a receiver. Upon appeal, however, from
this order, Lord Eldon held, that the plaintiffs could not avail
themselves of the interest which the public might have in the
matters complained of; and that, whatever relief might be
obtained by the Attorney-General on behalf of the public (g),
the plaintiffs were precluded by their own laches and acqui-
(d) See Partn. 468—475, where Hall, 1 De G. & J. 173, where it was
the cases are collected. Compare not. Ante, pp. 534 and 535.
Glegg v. Edmondson, 8 D. G. M. 7S7 ; (e) 2 Russ. 126.
Rule v. Jewell, 18 Ch. D. 660, where (/) See 2 Sim. & Stu. 267, and 2
laches was a bar, with Hart v. Clarke, Russ. 132, note.
6 Ho. Lo. Ca. 633 ; and Clements v. (g) See ante, p. 580.
agreements.
Gray v. Chaplin
EFFECT OF LACHES. 583
escence from disturbing the possession of the lessee of the tolls, Bk,I|^tc^p'9,
at all events before the hearing of the cause and in the absence
of the Attorney- General to represent the public. The order
for the receiver was accordingly discharged. What became of
the suit afterwards does not appear, but Lord Eldon's judg-
ment left the plaintiffs small hopes of obtaining a decree.
In Graham v. The Birkenhead, <&c, Railway Company (h), a compelling
suit was instituted by a shareholder in a company to restrain Jv°0^se 10
the completion of part only of the company's works. There Graham v. Bir-
had been several suits for the same purpose instituted by other (jompauy.
shareholders, but for reasons to which it is not material to
advert, those suits were never effectually prosecuted. It had
been known for a considerable time that it was not intended
by the directors to complete the company's works as originally
contemplated, and that in fact there were not sufficient funds
for that purpose. It was also well known that the directors
had for some time been completing part of the works. It was
held that those who disapproved of the application of the com-
pany's funds to that limited extent, ought to have taken pro-
ceedings to stop it at once ; and that having regard to the
laches of the plaintiff he was not entitled to relief.
In Stupa/rt v. Arrowsmith{i), a suit was instituted by a Making good
shareholder in a company against its directors and others for trast
the purpose of compelling them to restore funds of the com- stupart v.
pany alleged to have been illegally applied in buying up
shares (k), and for a general account. It appeared, however,
that the alleged illegal purchase of shares had not taken place,
that the directors had laid accounts before the shareholders
showing the amount of the company's receipts and expendi-
ture, and the balance to be divided ; that these accounts had
been adopted at a general meeting, and that payments had
been made to some of the shareholders upon the footing of
these accounts. The suit was not instituted until three years
after the adoption of the accounts, at the meeting referred to,
(h) 2 Mac. & G. 146, and 12 Beav. Patchett, 33 Beav. 595 ; Scott v. Izon,
460. 34 Beav. 434.
(i) 3 Sm. & G. 176. See, too, (k) See, as to this, Evans v.
Kent v. Jackson, 14 Beav. 367, and Coventry, 8 De G. M. & G. 835, and
2 De G. M. & G. 49 ; Gregory v. other cases, ante, p. 371 et seq.
584
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect. 3.
Burt v. British
Nation.
Application of
foregoing prin-
ciples in windin
up companies.
Brotherhood's
case.
Smallcombe's
case.
and it was held that, under these circumstances, and no fraud
having been proved, the plaintiff was not entitled to the inter-
ference of the Court.
In Burt v. Brit i. sit Nation Assurance Association (I) a suit by
a director complaining of various improper acts done before he
became a director, was dismissed on the ground that for two
years he had had the means of knowing what had been done,
and had sanctioned what he afterwards sought to impeach.
It has even been held that a person who acquires a share
from a former shareholder is precluded from complaining of
what his predecessor could not complain of himself (m). But
this is very questionable (w).
Again, a person who seeks to rescind an agreement for fraud
must bring his action within a reasonable time after he has
discovered the [fraud (o) ; and this rule applies to actions by
companies to rescind contracts into which they have entered (p).
With respect to companies, by far the most important de-
, cisions upon the subject of laches and acquiescence are those
in which the foregoing principles were held to be applicable to
questions arising in winding up companies ; for it is now settled
that if a person has retired from a company pursuant to an in-
valid agreement, which all the shareholders must be considered
as having known, and which they have long suffered to remain
unimpeached, such person cannot afterwards be placed on the
list of contributories (q).
(J) 4 De G. & J. 158. See, also,
Peek v. Gurney, 13 Eq. 79 ; Hunter
v. Stewart, 4 De G. F. & J. 168.
(m) Ffooks v. South-Western Rail.
Co., 1 Sm. & G. 142 ; Peek v. Gurney,
13 Eq. 79.
(n) See per Fry, L. J., in Ashhury
v. Watson, 30 Ch. D. at pp. 379 and
386.
(o) Clough v. Lou. and N.-W.
Rail. Co., L. R. 7 Ex. 26 ; Sharpley
v. Louth and East Coast Rail. Co., 2
Cli. D. 663. See ante, pp. 73, 85.
(p) Erlanger v. New Sombrero
Phosphate Co., 3 App. Ca. 1218, ante,
354, where a delay of 10 months was
held not fatal. Compare the judg-
ments of Lords Cairns and Blackburn
on this point.
(q) Brotherhood's case, 31 Beav.
365, affirmed on appeal, 4 De G. F.
& J. 566, and confirmed by Evans
v. Smallcombe, L. R. 3 H. L. 249.
See, as to these cases, ante, p. 519
et seq. See, also, Hunt's case, 32
Beav. 387 ; Gregory v. Patchett, 33
ib. 595.
SPECIFIC PERFORMANCE.
585
P.k. III. Chap. 9.
Sect 4
SECTION IV.— OF PARTICULAR ACTIONS.
1. Actions for specific performance.
Shareholders and companies seldom sue each other for
specific performance, except to enforce contracts to take shares
and to obtain indemnity against liabilities.
An agreement to form a company is one the specific per- Specific perform-
° * ance of agree-
formance of which can hardly ever be decreed. Such an agree- ments to form
ment may be perfectly valid and binding, but this is not company"
sufficient to entitle one of the parties to it to a decree for spe-
cific performance by the other ; for this purpose the agreement
must not only be valid, but must also be one which a Court
can compel performance of in all essential points ; if this is
practically impossible, an action for damages, and not for
specific performance, is the proper remedy. In Stocker v. ^*eer^";rn
Wedderburn (r), the plaintiff had obtained a patent, and it was
agreed between him and the defendants that a company should
be formed by them for the purpose of working the patent ; that
the plaintiff should assign the patent to the company, give
his whole services to it for two years, do his best to improve
his invention, and give the company the full benefit of all
improvements. Owing to a doubt respecting the validity
of the patent, the defendant refused to abide by the agree-
ment, and thereupon the plaintiff filed a bill for specific per-
formance, praying, amongst other things, that the defendants
might be decreed to take such steps as might be necessary for
the registration and incorporation of the company. To this
bill the defendants demurred, and the demurrer was allowed
with costs, on the ground that the agreement was one and
entire, and that if a decree were made in the plaintiff's favour,
the Court could neither compel him to perform his part nor
restore the defendants to their original position in case he did
not.
Where two companies, having power to amalgamate, have Specific perfom-
. „ ,, ance of agree-
entered into a binding agreement so to do, specific pertomiance ment t0 amai-
of the agreement will be decreed, if its terms are such that a eamate-
(r) 3 K. & J. 393. See, too, Max- 495, where, however, there was
well v. Port Tennant Co., 24 Beav. fraud.
586 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9. decree for specific performance can practically be enforced.
- In the Anglo-Australian Assurance Company v. British Provi-
dent Insurance Society (s), an agreement by the defendant
company to take the assets and liabilities of the plaintiff com-
pany, and to indemnify it against its liabilities, was specifically
enforced.
Specific perform- The question whether a court will decree the specific per-
ments°to take formance of an agreement to allot and accept shares in a corn-
shares, pany, has given rise to some difference of opinion. An
ordinary contract for the sale of shares is one which the Court
will decree to be specifically performed (t) ; and it is immaterial
whether the vendor has or has not other shares which he does
not sell, or, in other words, whether he and the purchaser will
or will not become co-shareholders. But a contract for the
sale of shares by one individual to another, is distinguishable
in many respects from a contract for the allotment and accept-
ance of shares in a company, and Lord Romilly refused to
decree specific performance of a contract of this kind, on the
ground that the decree would be ineffectual, as the shares might
be transferred immediately after the contract was performed (u).
On principle, however, this view cannot be supported, and more
recent decisions show that specific performance of such agree-
ments will be enforced (x). It is true that the applicant for
shares might sell and transfer his shares as soon as the decree
was made, but the decree would nevertheless not be inoperative.
If the applicant were the plaintiff, he could not be got rid of ;
whilst if he were the defendant, he could only retire from the
company by transferring his shares to somebody else. The
reason therefore Avhich induces the Court to decline to decree
specific performance of an agreement for an ordinary partnership
at will, is scarcely applicable to such an agreement as that now
under consideration. Moreover, nothing is more common than
(s) 3 Giff. 521, and on appeal, 4 case there were circumstances to
De G. F. & J. 341. show that specific performance was
(t) Ante, p. 499. impossible.
(u) Sheffield Gas, &c, Go. v. Har- (x) Odessa Tramways Co. v. Men-
rison, 17 Beav. 294 ; Bluck v. Mai- del, 8 Ch. D. 235. See, also, the
lalne, 27 Beav. 398 ; Columbine v. cases below, where specific perform-
Cliichester, 2 Ph. 27. In this last ance was refused on other grounds.
SPECIFIC PERFORMANCE. 587
for the promoters of a company to agree to sell property to the Bk. HL< Ohap. 9.
company in consideration of a certain number of paid-up shares, -
and it is certainly difficult to see why such a contract, if valid and
binding on both parties, should not be enforced ; indeed, there
is authority for specific performance in such a case (y). Again,
persons who have agreed to take shares in a company, are every
day made contributories for the purpose of winding up ; and
they are so upon the ground that, although they are not actually
shareholders, they have entered into an agreement to take
shares which is binding upon them. Many of these cases are
only intelligible upon the assumption that a contract for the
allotment and acceptance of shares is one which a court ought
to enforce.
In order, however, that specific performance of an agreement Defences to
, ,. . . , , j ., • suits for specific
to take or deliver shares m a company may be decreed, it is performance
necessary that the agreement should be concluded and bind- °* JgJJJJjJg.
ing (z), and be untainted by fraud (a), or unfairness (b), and be
capable of being performed by the defendant (c), and not
involve any breach of trust (d), or performance by either party
of obligations the performance of which a court cannot practi-
cally enforce (<?).
On this head, reference may be made to the instructive case
of the Odessa Tramways Co. v. Mendel (f), where specific Odessa Tram-
ways Co. v.
performance of an agreement to take shares was decreed, Mendel.
although the defendant alleged that the agreement was part of
a scheme between himself and the directors to do that which
was really ultra vires or a fraud on the shareholders. The
scheme alleged was held to be separable, and the defendant
(y) See Fyfe v. Swabeg, 16 Jur. 49, (c) Ferguson v. Wilson, 2 Ch. 77 ;
M. R. Columbine v. Chichester, 2 Ph. 27.
(z) Which it was not in Oriental As to the impossibility of obtaining
Steam Nav. Co. v. Briggs, 4 De G. F. registration of transfers, ante, pp.
& J. 101. 500, 507.
(a) Which was not the case in (d) Fry on Spec. Perf. p. 177, eel.
New Brunsioick and Canada Rail. 2, and see Flanagan v. Great Western
Co. v. Muggeridge, 4 Drew. 686, and Bail. Co., 7 Eq. 116.
1 Drew. & Sm. 363 ; or in Maxwell (e) Flanagan v. Great Western
v. Port Tennant Co., 24 Beav. 495. Bail. Co., 7 Eq. 116; Stocker v.
(h) As to agreements between co- Wedderburn, 3 K. & J. 393, ante,
directors, see Flanagan v. Great p. 585.
Western Bail. Co., 7 Eq. 116. (/) 8 Ch. D. 235.
588
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect. 4.
Agreements
with promoters
and directors.
Incomplete
gratuitous
transfers.
Contracts for
indemnity.
was not allowed to avail himself of his own fraud as a reason
for not taking the shares he had agreed to take and pay for.
As regards impossibility of performance, it is to be observed
that an agreement by A. that B. shall do something, can only
be decreed to be specifically performed if the agreement,
although in form by A., is in truth an agreement by B. him-
self, or if B. is bound to do that which it has been agreed he
shall do. If B. is not bound, by the agreement or otherwise,
to do what A. has agreed he B. shall do, no decree for specific
performance can be made against either A. or B. (g). These
observations apply to agreements made by promoters and
others, to be performed by a compare ; if the company is not
bound by the agreement, a decree cannot be made either against
the company or against the individuals who entered into the
agreement (h). If directors agree to allot shares, and the
ageement is in point of law the agreement of the company, the
directors individually can neither be compelled to perform it
nor to compensate the plaintiff for its non-performance (/).
Although a court will decree specific performance of an
agreement to sell shares, it will not interfere to compel the
completion of a gratuitous and intended, but unperfected
transaction. Thus, if a person voluntarily settles shares on
others, but does not transfer them, or actually constitute him-
self a trustee of them, the persons intended to be benefited by
the settlement do not acquire any equitable title to the shares
enforceable against the settlor or his representatives (k).
The right of sellers of shares to be indemnified against calls
and other liabilities has already been considered (Book III.,
c. 4, § 6), as has also the right of directors and others to be
indemnified against liabilities incurred by them in conducting
the affairs of their companies (Book III., c. 2, §3). Those
rights are enforced by action, which may or may not assume
the form of an action for specific performance. It is unne-
cessary, however, further to allude to this subject (0-
(</) Damages can be obtained, see
Foster v. Wheeler, 38 Ch. D. 130.
(h) Ellis v. Colman, 25 Beav. 662.
(i) Ferguson v. Wilson, 2 Ch. 77.
(jfc) Milroy v. Lord, 8 Jur. N. S.
806, L. J.; and 4 De G. F. & J. 264.
See, also, Nanney v. Morgan, 37 Ch.
D. 346.
(/) See, as to specific performance
of contracts to indemnify, Eanelagh
RESCISSION FOR FRAUD. 589
As a general rule, only those persons who are, by themselves Bk- ni- GliaP- 9-
. , , Sect. 4.
or their agents, parties to an agreement (or who represent
them), can enforce it. An agreement between A. and B. cannot agreement can
be enforced by C, although it may be for his benefit (ra). But eu£orce lt
if the agreement creates a trust for C, he can enforce the trust,
and so obtain the benefit of the agreement («)• The applica-
tion of these principles to cases in which attempts have been
made to enforce against companies contracts entered into before
their formation, has been already alluded to (Bk. II., c. 1, § 2,
and c. 2, § 3). Another illustration is afforded by Bell v. Bell v.
Mexborough (o) , where an unsuccessful attempt was made by a '
subscriber to an abortive railway company to compel two
members of the provisional committee to perforin an agreement
to take shares and pay for them. The plaintiff was no party
to this agreement, and he could not enforce it. His remedy, if
any, was for misrepresentation, inducing him to take shares.
2. Rescission of contract and return of deposits.
The circumstances under which agreements to take shares
can be rescinded and deposits paid on them be recovered, have
been already examined (see Bk. I., c. 1, § 3, and c. 3).
With reference to actions to rescind contracts to take shares
on the ground of misrepresentation, it is necessary to distin-
guish companies which, are being wound up from companies
which are not in that position.
After the winding-up of a company has commenced, it is too 1. Companies
late for a shareholder to repudiate his shares on the ground of em° ^
fraud ; even although that fraud may in point of law be impu-
table to the compan}r, and may have been discovered since the
winding-up commenced. This was decided in Oakes v. Tur-
v. Hayes, 1 Vernon, 190 ; Lloyd v. Ch. D. 125.
Dimmack, 7 Ch. D. 398 ; Hughes- (n) As in Page v. Cox, 10 Ha. 163 ;
Hallett v. Indian Mammoth Gold Murray v. Flavell, 25 Ch. D. 89.
Mining Co., 22 Ch. D. 561 ; Hobbs See, too, (h-egory v. Williams, 3
v. Wayet, 36 Ch. D. 256. Fry Spec. Mer. 582 ; Bale v. Hamilton, 2 Ph.
Perf., Part VI., Chap. 10. 266.
(m) Colyear v. Mulgrave, 2 Keen, (o) 5 Ra. Ca. 149, and 10 Jur.
81 ; Empress Engineering Co., 16 893, and 12 ib. 64, on appeal.
590
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
2. Companies
not being wound
up.
Fraud must be
clearly proved.
Bk. III. Chap. 9. quand (p), and is settled law, and is based upon the ground
— - - that such fraud affords no answer to the claims of the creditors
of the company.
But where the company is not being wound up, the right of
a person who has been induced by the fraud or misrepre-
sentation of the company to take shares in it, to repudiate those
shares and to be relieved from them is indisputable ; provided,
1, the fraud or misrepresentation of which he complains is
proved, and is sufficiently material ; and 2, he has not deprived
himself of his right of repudiation by his own laches, or by
conduct inconsistent with such right {q).
The difficulty in practice is to prove the facts necessary to
obtain relief. If there has been no positive misrepresentation
and no concealment, making what is stated untrue (r), the cir-
cumstance that the plaintiff was in fact misled by what he was
told and by documents furnished to him will not entitle him to
be relieved from bis contract. This is well illustrated by
Conybeare v. New Brunswick and Canada Railway Com-
pany (s). The material facts of this difficult case were shortly
as follows: — The company was formed for the purpose of
purchasing and carrying on a railway belonging to the St.
Andrew's and Quebec Kailway Company, and of purchasing all
the lands and property of that company, and all the rights of
the holders of a certain class of shares (called A. shares) in it.
The plaintiff applied for shares in the new company, and was
informed by its secretary that the A. shares were entitled to a
preferential dividend of 61. per cent., and that the holder of
every A. share was entitled to four acres of land. The secre-
tary also stated that the new company had acquired some
thousands of acres of land from the Colonial Government, and
that all claims against the company were regularly liquidated
Conybeare v.
New Brunswick,
&c, Company.
(p) L. R. 2 H. L. 325 ; Kent v.
Freehold Land Co., 3 Ch. 493, re-
versing S. C. 4 Eq. 588.
(q) Ante, pp. 73 and 85.
(r) Ante, p. 70.
(s) 9 H. L. C. 711, reversing
S. C, 1 De G. F. & J. 578, and
affirming the decision of V.-C.
Stuart in 6 Jur. N. S. 164. See,
also, as to the necessity of clearly-
proving the fraud relied upon, Rob-
son v. Earl of Devon, ante, p. 78 ;
Kennedy v. Panama, cfcc, Mail Co.,
L. R. 2 Q. B. 580 ; Smith v. Chad-
wick, 9 App. Ca. 187, and 20 Ch. D.
70, which, however, was not an
action for rescission ; and as to
giving particulars of fraud, McCreight
v. Stevens, 1 Hurls. & Colt. 454.
RESCISSION FOR FRAUD.
591
every six weeks ; and he gave the plaintiff reports from the Dk- ™;J^f " 9'
directors, in which these and other matters, tending to show -
the prosperity of the company, were stated. The plaintiff was
shown, and he examined the statutes of the Colonial Legis-
lature, by which the lands were granted ; and he took copies of
all those statutes, except one, away with him. That one sta-
tute which had been produced to the plaintiff, but which was
not amongst those he took away, showed that the title of the
company to the lands depended on the completion of the rail-
way by a certain time. The effect of the statute was correctly
stated in the company's articles of association. The plaintiff
took shares in the company on the faith of those documents
and statements ; but having afterwards discovered that the
company was greatly in debt, that its affairs were far from
prosperous, and its title to the lands was not absolute but
liable to forfeiture, insisted on rescinding his contract.
The Vice-Chancellor Stuart and the House of Lords were
of opinion that no positive misrepresentation had been made,
that no wilful concealment had been practised with reference to
the title to the land, and that the plaintiff had not been
induced to take the shares upon the faith of that title being
indefeasible, and his bill was dismissed by the Lords with
costs (t).
Upon the subject of the right to rescind a severable con- Rescission of
. severable con-
tract in part where it cannot be rescinded m toto the case ol tracts.
Maturin v. Tredinnick (u) is very important. Maturin v.
Tredinnick.
There the plaintiff had been induced by the fraud of the
defendant to purchase from him several shares in several
mining companies. Before the plaintiff had discovered the
fraud he sold some of the shares in one of the companies.
(t) The Lords Justices held that purchase,
the plaintiff was entitled to relief (u) 2 New Rep. 514, and 4 ib. 15.
upon the grounds that the title of In this case the V.-C. is reported to
the company to the land had been have said that a sale of some shares
represented to him as indefeasible, in one of the companies would have
that he had been put off inquiry afforded a defence to the suit as to
by the statements so made to him, the shares in the other companies,
and that even if the acquisition of But quaere how this is consistent
land was not the main inducement with the relief actually given. See,
of the plaintiff in taking shares, it further, Curtis'' s case, 6 Eq. 455.
formed a material ingredient in the
592
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. in. Chap. 0. He afterwards filed a bill to rescind the contract as to all the
^— remaining shares. Pending the suit one of the companies in
which some of these shares were held, was ordered to be
wound up ; and the shares in one of the other companies were
forfeited for non-payment of calls, but the defendant had full
notice of the intended forfeiture. The Vice-Chancellor Wood
held, (1,) that the sale of some of the shares before the bill
was filed did not disentitle the plaintiff to rescind the con-
tract as to the other shares ; and, (2,) that neither the sub-
sequent order to wind up one of the companies, nor the
subsequent forfeiture of shares, afforded any defence to the
suit.
If a director of a company is applied to for unallotted shares,
and he transfers to the applicant shares already allotted to
himself, the transferee can repudiate the transfer, and recover
back what he may have paid for the shares (x).
When a person has been induced by the fraud of some par-
ticular shareholder to purchase shares of him, the right of
the person defrauded is to rescind the contract of sale, and
to throw the shares back on the person from whom he took
them, and to be indemnified by him against all losses sus-
tained in consequence of having taken the shares (y). This
is apparently the limit of the right of the person defrauded
in such a case (z). If the shares have been actually trans-
ferred to him, he is not entitled to have the transfer treated as
null and void as between himself and the company ; nor to
restrain the company from making calls upon him whilst
he is a shareholder (a). He maybe entitled to compel his
vendor to accept a re-transfer of the shares, but even this right
must, it is conceived, depend upon whether the company is
Director selling
his own shares
as unallotted
shares.
Fraud by seller
of shares.
(x) Blake v. Mowatt, 21 Beav. 603.
(y) See Stainbank v. Fern-ley, 9
Sim. 556, and Seddon v. Council, 10
Sim. 58 & 79, and Maturin v. Tredin-
nick, 2 New Rep. 514, and 4 ib. 15
ante, p. 591.
(s) An action for damages will lie,
see ante, p. 588, note (g), but this is
not so complete a remedy.
(a) Bloxam v. Metropolitan Cab
Co., 4 New Rep. 51, is not op-
posed to this. For although the
company was restrained from suing
the plaintiff for calls, the plaintiff
had not acquired any title to the
shares, they having been transferred
to him by a person who had himself
no title. The transfer was therefore
wholly void.
RESCISSION FOR FEATJD.
;os
being wound up or not, and upon the power of the directors to Uk- I*I,.Ch*p" °-
refuse to register transfers.
Actions for rescission of contract and for the return of
deposits, can also be maintained under other circumstances
besides fraud and misrepresentation as has been already pointed
out(Bk. I., c. 1, §§ 2, 3).
Actions for the rescission of contracts with promoters have
also been considered (Bk. III., c. 2, § 1).
The persons to be made parties to actions for rescission of Parties to
. . actions for
contract must include the parties to the contract, but since the rescission, &c.
Judicature acts, other persons against whom the plaintiff may
be entitled to relief may be joined.
A person who has been induced by the fraud of the defen- Shares purchased
on the faith of
dant to purchase shares from him, is entitled to bring an action false statements.
for a return of the purchase-money, and for an indemnity, and
the only necessary party to such an action is the person who
sold the shares (b).
Where persons have been induced by fraud to subscribe to a Bubble com-
... panics.
bubble company, each one may institute an action on his own
behalf against those who have fraudulently obtained his money,
for a return thereof; and in such a case, it is not necessary
that the other persons defrauded should be parties to the action,
or be represented therein (c). An action by one of such persons
on behalf of himself and others can, however, also be main-
tained in these cases (d). A member of a chartered company
cannot, so long as the charter is not revoked, maintain an
action to rescind his agreement to take shares on the ground
that the charter was obtained by fraud and that the company
was formed by fraud (V).
(I) See Stambank v. Femleij, 9 454; Wilson v. Stanhope, 2 Coll.
Sim. 556 ; Mare v. Malachy, 1 M. & 629 ; Apperley v. Page, 1 Ph. 779 ;
Cr. 559 ; Turner v. Bill, Turner v. Clements v. Bowes, 17 Sim. 167, and
Tyacke, Turner v. Borlase, 11 Sim. 1 Drew. 684, where demurrers to
1 16 17. such bills were overruled. See, too,
(c) Colt v. Woollaston, 2 P. W. Sheppard v. Oxenford, 1 K. & J. 491,
154 ; Green v. Barrett, 1 Sim. 45 ; and Butt v. Monteaux, 1 K. & J.
Blainv.Agar,2 Sim. 289 : Cridland 98. Compare Hallows v. Fernie, 3
v. De Mauley, 1 De G. & S. 459. Ch. 467, and 3 Eq. 520.
(d) Crosskey v. Bank of Wales, 4 (e) Macbride v. Lindsay, 9 Ha.
Giff. 314 ; Cooper v. Webb, 15 Sim. 574.
l.c. Q Q
594
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
15k. III. Chap. 9.
Sect. 4.
Opening
accounts.
Discovery.
3. Of account and discovery.
The subject of account and discovery so far as it relates to
partnerships and unincorporated companies will be found fully
discussed in the author's work on Partnership (/).
Actions for an account may be maintained in order to have
the assets of abortive companies properly applied (g) ; and in
order to compel promoters and directors to make good moneys
which on principles before explained are moneys of the com-
pany (//). But after a company is ordered to be wound up
those questions which were formerly settled in a suit for a dis-
solution and account are now disposed of under the winding-up
order, as will be seen hereafter in Book IV.
As regards opening settled accounts it has been decided
that when accounts have been laid before shareholders at a
proper meeting, and have been accepted and adopted by them
as correct, those accounts cannot be afterwards impeached,
except on the ground of fraud or mistake, which must be
proved by those who allege it (i). Moreover, an account may
be a settled account although it may not have been audited as
required by the rules of the company (k). In connection with
this subject the power of a majority of shareholders to bind a
minority must be borne in mind ; for a minority cannot impeach
an account which relates to matters as to which the majority
can bind the minority (I), and which the majority have assented
to with adequate knowledge of the facts.
With respect to discovery the only points to which attention
need be called in a treatise like the present are these, viz. :
1. The Court may order interrogatories to be delivered to
any member or officer of any company, whether incorporated
or not (»?). An ordinary member however will not be required
(/) Partn., 492 et seq.
(g) Wullworth v. Holt, 4 M. & Cr.
619 ; Sheppard v. Oxenford, 1 K. &
J. 491, and ante, § 1 (3).
(h) Ante, Bk. III., c. 2.
(i) See Holgate v. Shutt, 27 Ch.
T). Ill, and 28 ib. Ill ; Holmes' case,
2 D. G.M. &G. 113; Kent v. Jackson,
ib. 49 ; Ex parte Bignold, 22 Beav.
143 ; Stupart v. Arrowsmith, 3 Sni.
& G. 176. Compare Portsmouth
Banking Co., 2 Eq. 167, as to re-
ports without accounts.
(k) Holgate v. Shutt, 28 Ch. D.
111.
(0 Ante, Bk. III., c 1, § 3.
(in) 11. S. 0., Ord. XXXI. r. 5.
ACCOUNT AND DISCOVERY. 595
to answer interrogatories under this rule unless they relate to ^k- IIL P^p. 9.
° * Suet. 4.
matters which he knows more about than the officers of the -
company (n).
2. Officers of the company cannot avoid discovery simply by
saying they do not know. They must inquire of those officers
or servants of the company who do know (o) ; and must either
consult the books and documents of the company which con-
tain the information sought or produce them for inspection by
the person seeking discovery (p), unless such books, &c, are
privileged from production. Directors cannot defeat the
Court by forbidding their officer to examine the books (q).
3. An order for an affidavit of documents may be made Affidavit of
under E. S. C, Ord. XXXI., r. 12, against an officer of a
company (?■)•
Books and papers which are in the possession of a com- Directors deny-
pany are, for purposes of discovery, in the possession or power 1Dg pos
of the directors, and they cannot avoid giving a list of the
documents of the company by saying that they, the directors,
have none (s).
When an order is made against a company for the inspec- inspection of
• tit -li n i books of cor-
tion oi its books, and the directors will not allow them to be p0rations.
produced, an order for their production will be made against
the directors personally (t).
The right of the members of a company to inspect and take
copies of its accounts and other books and documents, apart
from legal proceedings, has been already alluded to, see
Bk.IIL, c. 3, § 4(w).
(n) Berkeley v. Standard Discount 128, and 1 Ph. 222.
Co., 13 Cli. D. 97. (/•) Cooke v. Oceanic Steam Co.,
(o) Taylor v. Bundcll, 11 Sim. W. N. (1875) 220.
391, and Cr. & Ph. 10-4 ; Southwark (s) Clinch v. Financial Corporation,
Water Co. v. Quick, 3 Q. B. P. 321,per 2 Eq. 27 1.
Cotton, L.J. ; Bolckow, Vaughand: (t) Lacharmev. Quartz Rock Mining
Co. v. Fisher, 10 ib. 161. Com- Co., 1 Hurls. & Colt. 134. As to
pare Basbotham v. Shropshire Union the form of an order for production
Canal Co., 24 Ch. D. 110. by a corporation, see Banger v. Great
(■p) See Drake v. Symes, Johns. Western Bail Co., 4 De G. & J. 74.
647. (u) See also infra, under the heads
(q) Seddon v. Council, 1 Y. & C. C. (4) Injunction, and (G) Mandamus.
Q Q 2
596
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect. 4.
Injunctions
against com-
panies and
their directors.
4. Of injunctions.
With respect to injunctions against companies and their
directors, little remains to be added to what was said when
considering the principles by which Courts are guided in
interfering in matters of internal management (x), and in
controlling majorities (y). In order, however, to facilitate
reference, it will be convenient to collect those cases in which
an injunction has been granted or refused, although they may
have been noticed in previous pages.
In relying upon the authorities here collected, it is to be
borne in mind that the circumstances under which the Court
will grant an injunction have been somewhat extended by the
Judicature act, 1873, § 25 (8), but not much (z). It must also
be recollected that before the trial of a cause, the Court will not
restrain the exercise of a clear legal right, unless the Court is
satisfied that it will be compelled to do so at the trial (a) ; nor
will it interfere, if it is not in the possession of all the material
facts, and convinced that an immediate injunction is impera-
tively required (b).
Injunctions
granted.
I. — An injunction has been granted to restrain —
1. The improper insertion or continuance of a person's name on a com-
pany's prospectus (c) or on the register of shareholders {d) ;
2. The registry of an improper transfer of shares (e) ;
3. The making of calls for illegal purposes (/) ;
(x) Ante, p. 574 et seq.
(ll) Ante, p. 314 et seq.
(z) See North London Rail. Co. v.
Great Northern Rail. Co., 11 Q. B. D.
30.
(a) Playfair v. Birmingham, tic,
Rail. Co., 1 Ea. Ca. 640.
(?)) Fielden v. Lancashire, dr.,
Rail. Co., 2 De G. & S. 531.
(c) Routh v. Webster, lOBeav. 561.
((/) Taylor v. Hughes, 2 Jo. & Lat.
24 ; Shortridge v. Bosanquet, 16
Beav. 84. Compare Bullock v. Chap-
man, 2 De G. & S. 211. This is
now usually done by an application
to rectify the register, as to -which
see aide, p. 57 et seq. and 121 et seq.
(,) Fyfe v. Swaby, 16 Jur. 49.
(/) See as to this, Preston v.
Grand Collier Dock Co., 11 Sim. 327,
and Hodgkinson v. National Live
Stock Insur. Co., 26 Beav. 473, and
4 De G. & J. 422, both of which,
however, wire decided on demurrer.
See further on this subject, Orr v.
Glasgow Rail. Co., 3 MacQu. 799,
and the other cases cited infra, under
the next head, Xos. 2 to 6.
INJUNCTIONS.
597
4. The making of calls on a shareholder induced to become such by Bk. III. Chap. 9.
fraud (g) ; Sect- 4.
5. The illegal issue of shares (7i) ; e.g , preference shares issued pursuant iniai,cti0na
to a special resolution (7) ; granted.
6. The illegal forfeiture of shares (k) ;
7. The unfair use by a company of a creditor's name in an action against
a shareholder (/) ;
8. The illegal suspension of a shareholder from his rights (m) ; e.g., the
improper rejection of his vote(«) ;
9. The illegal payment of dividends not actually declared (o), e.g., pay-
ment of dividends out of capital or borrowed money (p) ;
10. The payment of dividends in shares (q) ;
11. The making of loans to directors (>•) ;
12. The departure by a company from the objects to attain which it was
formed ; viz., to restrain
A fire and life insurance company from engaging in marine insu-
rances (s) ;
A railway company from dealing extensively in the purchase ami sale
of coals (t) ;
A railway company from guaranteeing the payment of dividends by a
steam packet company («) ;
From taking an unauthorised number of shares in another railway
company (.c) ;
(;/) Smitli v. Reese River Co., 2 Eq.
264, and L. R. 4 H. L. 64 ; Bloxam
v.Metrop. Cab Co., 4 N. R. 51.
(A.) Fraser v. Whalley, 2 Hem. &
M. 10. See infra, under second
head, No. 8.
(i) Hutton v. Scarboro' Cliff Co.,
2 Dr. & Sm. 514 and 521.
(/.•) Johnson v. LyMe's Iron Agency,
5 Ch. D. 687 ; Watson v. Eales, 23
Beav. 294 ; Norman v. Mitchell, 5
De G. M. & G. 648 ; Naylorv. South
Devon Rail. Co., 1 De G. & Sm. 32.
(I) Taylor v. Hughes, 2 Jo. &
Lat. 24, and other cases cited ante,
p. 560.
(m) Adley v. Whitstable Co., 17
Ves. 315 ; 19 ib, 304 ; 1 Mer. 107.
(n) Fender v. Lushington, 6 Ch.
D. 70, and see Moffalt v. Farquhar,
7 Ch. D. 591.
(o) Fawcett v. Laurie, 1 Dr. &
Sm. 192 ; Carlisle v. South Eastern
Hail. Co., 1 Mac. & G. 68.) ; Henry
v. Great Northern Rail. Co., 4 K &
J. 1, and 1 De G. & J. 606, and other
cases cited ante, p. 429 et seq.
(j)) Dent x. London Tramways Co.,
16 Ch. D. 344 ; Dacison v. Gillies,
ib. 347 n. ; Guinness v. Land Corpora-
tion of Inland, 22 Ch. D. 349. Com-
pare under 2nd head, No. 14 ;
Bloxam v. Metrop. Rail. Co., 3 Ch.
337 ; McDougall v. Jersey Hotel Co.,
2 Hem. & M. 528.
((/) Hoolc v. Great Western Rail.
Co., 3 Ch. 282.
(r) BlucJc v. Mallalur, 27 Beav.
39S.
(s) Natusch v. Irving, Part. 316 et
seq., and Gow on Partnership, App.
398, ed. 3.
(t) A.-G. v. Great Northern Rail.
Co., 1 Dr. & Sm. 154.
(u) Colman v. Eastern Counties
Rail. Co., 10 Beav. 1.
(») Salomons v. Laing, 12 Beav.
377.
•98
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect. I.
Injunctions
granted,
From making a different railway from that which it was incorporated
to make (y) ;
Or part only of such railway (:.) ;
Or one only out of several railways which it had heen formed to
make (a) ;
13. The transfer, by one company, of its business to another company (6),
otherwise than under § 161 of the Companies Act, 1862 (c) ;
14. The amalgamation of two companies having similar objects (<7) ;
15. A company ami its directors from applying to Parliament at the
expense of the company, for power to do what it was not formed to
do 0) ;
16. A chartered company from surrendering its charter (/) ;
17. The publication of the contents of books and documents inspected
under an order (g) ;
18. The payment out of the fmids of a company of money borrowed by
its promoters, to enable them to comply with the standing orders of the
House of Lords (h) ;
19. Proceeding to arbitration under an ultra vires agreement (i) ;
20. Prosecuting a suit instituted by a stranger, but alleged to be for the
benefit of the company (k) ;
21. Prosecuting proceedings for a libel on the directors (I) ;
(?') Bagshaw v. Eastern Union
Bail. Co., 7 Ha. 114. and 2 Mac. &
G. 389 ; Simpson v. Venison, 10 Ha.
51.
(.-;) Cohen v. Wilkinson, 12 Beav.
125, and 1 Mac. & G 481 ; Logan
v. Courtown, 13 Beav. 22.
(a) Hodgson v. Powis, 12 Beav.
392 and 529, and 1 De G. M. &
G. 6.
(b) Charlton v. Neircastle and
Carlisle Rail. Co., 5 Jur. N. S. 1096 ;
Beman v. Ruff or d, 1 Sim. X. S.
550; Winch v. Birkenhead, &c,
Rail Co., 5 De G. & S. 562. See,
too, Salomons v. Laing, 12 Beav.
377; Hattersley v. Shelburne, 10
W. R. 801, where it was intended
to obtain an act to legalise the
transfer.
(c) See, as to this, Southall v.
British Mutual Life Ass. Soc., 11 Eq.
65, and 6 Ch. 614.
(d) Kearns v. Leaf, 1 Hem. & M.
681 ; Gilbert v. Cooper, 10 Jur. 580.
See, also, the last note but one.
(e) Lyde v. East Bengal Rail. Co.
36 Beav. 10 ; Munt v. Shrewsbury
and Chester Rail. Co., 13 Beav. 1 ;
Simpson v. Dcnison, 10 Ha. 51 ;
Great Western Rail Co. v. Rushout,
5 De G. & Sm. 290 ; Vance v. Bast
Lane. Rail. Co., 3 K. & J. 50. See,
also, A.-G. v. Norwich, 16 Sim. 225,
and compare Bateman v. Mayor of
Ashton-under-Lyne, 3 H. & N. 323.
(/) Ward v. Society of Attornies,
1 Coll. 370, as to which, see ante,
p. 323.
(g) See Williams v. Prince oj
Wales Co., 23 Beav. 338.
i]i) Spademan v. Lattimore, 3 Giff.
16.
(i) MaunseU v. Midland Great
Western Bail Co., 1 Hem. & M. 130,
and compare North London Rail. Co.
v. Great Northern Rail. Co., 11 Q. B.
D. 30. See also 31 Ch. D., p. 368.
(k) Kernaghan v. Williams, 6 Eq.
228.
(1) Pickering v. Stephenson, 14 Eq.
322, and compare Studdert v.
Grosvenor, 33 Ch. D. 528.
INJUNCTIONS. 599
22. The purchase by a company of its own shares (m) ; Bk. III. Chap. 0.
23. Improper application of company's funds, viz. : — ^ect- 4-
Subscription to the Imperial Institute (») ; Injunctions
Stamping proxy forms and paying return postage stamp on them (o) ; tinted.
Printing proxy forms in a way calculated to influence the votes of
shareholders (o) ;
Paying costs of a winding-up petition presented by the directors, but
opposed by a number of shareholders and a minority of directors (p) ;
Giving gratuities to servants and remunerating directors for past ser-
vices when company has ceased to carry on business (7) ;
24. Illegally preventing a person from acting as a director (s) ;
25. To prevent directors from laying resolutions favourable to themseh
on a question in which their interests are in conflict with those of the
shareholders before a meeting which has been convened by them by a mis-
leading circular, and one which contains statements calculated to obtain
proxies in their favour without giving the shareholders sufficient informa-
tion to enable them to form a proper opinion as to the proper persons to
whom to entrust their votes (t) ;
26. Illegally preventing a debenture or stock holder from inspecting the
company's books (it).
II. — An injunction Juts been refused to restrain — jnjnn .; ,
refused.
1. A company from commencing business on a smaller scale than con-
templated by the prospectus, or before its nominal capital had been sub-
scribed (.'•) ;
2. The making of calls by a company commencing business with less
capital than that originally contemplated (y) ;
3. The making of necessary calls by directors who had been guilty of
improper conduct (s) ;
(m) Hope v. International Finan- dated Mining Co., 9 Ch. D. 610;
cial Soc, 4 Ch. D. 327. See also Minister v. Cammell Co., 21 Ch. D.
Trevor v. Whitworth, 12 App. Ca. 183. And see Harben v. Phillips, 23
409. Ch. D. 14, and Bainbridge v. Smith,
(n) Tomkinson v. South Eastern TV. N. 1889, p. 72.
Rail. Co., 35 Ch. D. 675. (J) Jackson v. Munster Bank, 13
(0) Studdcrt v. Grosvenor, 33 Ch. L. E. Ir. 118. Compare Isle of
D. 528. Wight Bail. Co. v. Tahourdin, 25 Ch.
(p) Smith v. Duke of Manchester, D. 320.
24 Ch. D. 611. (h) Holland v. Dickson, 37 Ch. D.
(7) Hutton v. West Cork Rail. Co., 669 ; Mutter v. Eastern and Mid-
23 Ch. D. 654, and compare Hamp- lands Rail. Co., 38 Ch. D. 92.
son v. Price's Patent Candle Co., 24 (.?;) McDougall v. Jersey Hotel Co.,
YV. R. 754 ; Taunton v. Royal Insur- 2 Hem. & M. 528.
ance Co., 2 H. & M. 135. Henderson (y) Norman v. Mitchell, 19 Beav.
v. Bank of Australasia, 40 Ch. D. 170. 278, and 5 De G. M. & G. 648.
(.5) Pulhrook x. Richmond Con soli- (2) Logan v. Courtown, 13 Beav. 22.
coo
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect. 4.
Injunctions
refused.
4. The making of calls on some only of the members of an amalgamated
society («) ;
5. The making of calls on all the members of two amalgamated com-
panies, to pay the debts of one of such companies (h) ;
6. Actions for calls on improperly relinquished or forfeited shares (c) ;
7. The borrowing of money by a limited company (</) ;
8. The issuing of preference shares (e) ;
9. The application of the money raised by the issue of preference shares
to a purpose different from that for which it was raised (/) :
10. The return of deposits to subscribers^/) ;
11. The payment of dividends actually declared (It) ;
12. The payment of dividends before payment of debts (i) ;
13. The payment of dividends before the completion of the company's
works (/,■) ;
13a. The payment of dividends without making good lost capital (/) ;
14. The continuance in office of directors appointe I in the place of others
removed for alleged misconduct (to) ;
15. The management of a company's affairs by directors whose conduct
■was complained of; no sufficient attempt having been made to control them
before applying to the Court (n) ;
16. Directors improperly appointed, from acting (o) ;
17. Directors from putting their own names on negotiable instruments
relating to the affairs of the company (j)) ;
(a) Bailey v. Birkenhead, dr., Rail.
Co., 12 Beav. 433. Compare Preston
v. Grand Collier Doelc Co., 11 Sim.
327, and see No. 15, infra.
(b) Cooper v. Shropshire Union
Bail. Co., 6 Ra. Ca. 136 ; S. C, 13
Jur. 443.
(c) Harris v. North Devon Rail. Co.,
20 Beav. 384 ; Play/air v. Birming-
ham, dr., Rail. Co., 1 Ra. Ca. 640.
(d) Bryon v. Metropolitan Saloon
Omnibus Co., 4 Jur. N. S. 680, and
on appeal, 3 De G. & J. 123. See
No. 15.
(e) Edwards v. Shrewsbury, dr.,
Rail. Co., 2 De G. & Sm. 537. See
under first head, No. 5.
(/) Yetts v. Norfolk Rail. Co., 3
De G. & Sm. 293. See No. 15,
infra.
(<j) Kent v. Jackson, 14 Beav. 367,
and 2 De G. M. & G. 49.
(h) Fawcett v. Laurie, 1 Dr. & Sm.
192 ; the suit, however, was de-
fective for want of parties. See
ante, p. 574 note (s).
(i) Stevens v. South Devon Rail.
Co., 9 Ha. 326. See No. 15.
(k) Browne v. Monmouthshire, dbc,
Rail. Co., 13 Beav. 32. See No. 15.
(/) Lee v. Neufchatel, dr., Co.,
W. N. (1889)31. Compare supra,
under first head, No. 9.
(m) Lnderioick v. Snell, 2 Mac. &
G. 216.
(u) McDougall v. Gardmer, 1 Ch.
D, 13, and 10 Ch. 606 ; Carlen v.
Drury, 1 V. & B. 154; Waters v.
Taylor, 15 Yes. 10; Foss v. Harbottlc,
2 Ha. 461 ; Mozley v. Alston, 1 Ph.
790. And see Harben v. Phillips,
23 Ch. D. 14. This principle was
acted on in the cases cited under
Xos. 4,5, 7, 8,9, 12,13.
(o) Hattersley v. Shelburne, 10 W.
R. 881. And see Imperial Hydro-
pathic Hotel Co. v. Hampson, 23 Ch.
D. 1.
(p) Black v. Mallalue, 27 Beav.
398.
INJUNCTIONS.
601
18. The sailing of a ship on a voyage disapproved of (?) ; Bk- I|I,tC^ap- 9*
19. The assignment of a company's property to trustees, upon trust to !2_LJ
sell and pay the company's debts (/) ; . Injunctions
20. The total abandonment by a railway company of its works, it not refused,
having funds to complete them (s) ;
21. The application to Parliament, otherwise than at the expense of the
company, for power to enable the company to do what it was never in-
tended it should do (t), though the application is in the name and under
the seal of the company (u) ;
22. The sealing of an agreement to make such an application (x) ;
23. A company from applying to a foreign legislature for increased
powers (y) ;
24. An application to Parliament to legalise an agreement for the transfer
of the business of one company to another (::) ;
25. A railway company empowered to purchase a canal, from exercising
the powers of a canal company (a) ;
26. A railway company having steam ferry-boats from using them for
other than ferry purposes when not wanted for those purposes (6) ;
27. A railway company from carrying out a traffic agreement entered
into with another company (r) ;
28. An hotel company from temporarily letting part of its hotel for other
than hotel purposes (d) ;
29. A fire insurance company from paying for losses usually paid lor but
not covered by its policies (e) ;
30. The discharge of a servant whose engagement was provided for in the
company's articles of association (/) ;
3L. The non-registry of a transfer of shares (<j) ;
32. The voluntary winding up of a company with a view to a transfer of
its business under § 161 of the Companies act, L862 (/<) ;
(q) Miles v. Thomas, 9 Sim. 606.
(?•) Lord v. Governor and Co. of
Copper Miners, 2 Ph. 740.
(s) Logan v. Court own, 13 Beav. 22.
(t) Ware v. Grand June. Water-
works Co., 2 11. & M. 470.
(w) Ex parte Hartridge, 5 Ch.
671 ; Great Western Rail. Co. v.
Bushout, 5 De G. & Sm. 290.
Compare Maunsell v. Midland Great
West. Kail. Co., 1 Hem. & M. 130.
(./•) Winch v '. Birkenhead Real. Co.,
5 De G. & Sm. 580.
(y) Bill v. Sierra Nevada Mining
Co., 1 De G. P. & J. 177.
(z) Hattersley v. Earl of Shelbur ne,
10W. R. 881.
(a) Rogers v. Oxford, dr., Rail. Co.,
2 De G. & J. 662.
(7>) Furred v. Manchester, dr.,
Rail. Co., 3(1 Beav. 40, affirmed on
appeal, 4 De G. F. & J. 126, but on
a different ground.
(c) Hare v. Loudon and North-
western Rail. Co., 2 J. & H. 80.
(d) Simpson v. Westminster Palace
Hotel Co., 2 De G. P. & J. 141, and
8 H. L. C. 712.
(e) Taunton v. Royal Insur. Co., 2
Hem. & M. 135.
(/) Mair v. Himalaya. Tea Co.,
1 E(p 411.
(g) Taft v. Harrison, 10 Ha. 489.
(h) Souihall v. British Mutual
Life Ass. Soc., 11 Eq. 65, and 6 Ch.
614.
602 ACTIONS BETWEEN COMPANIES AND THEIR .MEMBERS.
Bk. III. Chap. 9. 33. The reduction of capital (i) ;
^ect- 4- 34 \ general meeting called by shareholders under § 70 of the Com-
Injunctions panies clauses act, 1845 ( j) ;
refused. 35- Givjng effect to resolutions of a meeting convened by an irregular
meeting of directors (I:) ;
36. At the instance of a simple contract creditor to restrain the company
from dealing with its assets as it pleases (/).
37. From paying a pension to the family of a deceased officer of the
company (m).
5. Re reivers.
Receivers. The object of obtaining a receiver is to protect property
and to insure its due application in accordance with the rights
of the persons interested in it. A receiver is not the same as
a manager appointed to cany on a business ; but when neces-
sary the same person will be appointed receiver and manager.
The Judicature act, 1873, § 25 (8), authorises the appoint-
ment of a receiver whenever the Court is of opinion that it is
just or convenient to appoint one (n) ; but this general enact-
ment is construed somewhat restrictively and with reference
to the principles on which the Court of Chancery acted before
the Judicature acts came into operation (0).
Receivers of a company's property are seldom appointed
unless there are conflicting claims to be adjusted, e.g., dis-
putes between secured and unsecured creditors, between de-
benture holders and judgment creditors, between various classes
of shareholders, &c. When a company is being wound up the
liquidator is a receiver of its assets for the benefit of its
shareholders and creditors ; but this does not prevent persons
having claims upon the assets in priority to the liquidator
(i) Bannatyne v. Direct Spanish (m) Henderson v. Bank of Austral-
Telegraph Co., 34 Ch. D. 287. An asia, 40 Ch. D. 170. Compare cases
injunction would have been granted cited ante, p. 599, note(^).
in this case had the proposed reduc- (») Just or convenient is con-
tion of capital interfered with the strued just and convenient. See
rights of preference shareholders. North London Rail. Co. v. Great
Compare Taylor v. Pilsen Light Co., Northern Bail. Co., 11 Q. B. D. 30.
27 Ch. D. 268. (0) Ibid. For the effect of the
(j) Isle of Wight Bail. Co. v. appointment of a receiver on the
Tahourdin, 25 Ch. D. 320. nature of a debenture holder's secu-
(7c) Brovme v. La Trinidad, 37 Ch. rity, see ante, p. 197. For receivers
D. 1. appointed at the instance of judgment
(/) Mills v. Northern Railway of creditors of a railway company, see
Buenos Ayres Co., 5 Ch. 621. ante, pp. 278, 279.
RECEIVERS. MANDAMUS.
003
from' obtaining a receiver of them so as to protect their pre- Bk- DL Chap. 9.
D _ Sect. 4.
ferential rights. The liquidator, however, is usually appointed
the receiver in such cases ( p).
A receiver is an officer of the Court, and any interference
with him or with the property under his protection is punish-
able as a contempt of Court. A person who desires to obtain
such property must apply to the Court for an order for its
deliver^' to him or for permission to take it (q).
A manager of a business is never appointed by the Court
unless temporarily and with a view to a sale or winding up of
the business (r).
6. Of mandamus,.
The Common law procedure act, 1854 (s), authorises the Actions for
/» J.T. r id mandamus.
issuing of a mandamus in an action to enforce the iuihiment
iA' any duty in the fulfilment of which the person applying for
the writ is personally interested ; and the Judicature act, 1873,
§ 25 (8), has still further enlarged the power of the Court to
grant a mandamus (t). An action for mandamus can be
brought in the Chancery Division of the High Court (u). It
has been held that the writ ought not to issue for the purpose
of compelling the specific performance of an ordinary agree-
ment (.r), but it has been allowed to go to compel a chartered
company to register as a shareholder, a person entitled to be
so registered by the provisions of the company's deed of
settlement (y) : and in a recent action for mandamus a clerk
has been ordered to deliver up papers (~).
It has been recently decided that where an action for Prerogative
mandamus will lie, the prerogative writ will not be allowed to
issue {a). It will, therefore, be seldom necessary or proper to
apply for a prerogative writ to settle disputes between com-
panies and their members.
(p) See Perry v. Oriental Hotel (h) Paris Skating Rink Go., 6 Oh.
Co., 5 Ch. 420. D. 731.
(q) Russell v. East Anglian Hail. (.<•) Benson v. Paull, 6 E. & B. 273.
Co., 3 Mc. & G. 104. (?/) Norris v. Irish Land Co., 8 E.
(?■) Partn. 545 et seq. ; Roberts v. & B. 512.
Eberhardt, Kay, 148. (.".) Newington Local Board v.
(s) 17 & IS Vict. c. 125, § 68, Eldridge, 12 Ch. D. 349.
repealed by 40 & 47 Vict. c. 49. (a) R. v. Lambowm Valley Rail.
It) See R. S. C. Ord. LITT. Co., 22 Q. B. D. 463.
604 ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. in. Chap. o. A prerogative writ has, however, been allowed to compel —
The production of a company's register to a creditor (b) ;
The entry on the register of the probate of the will of a
deceased shareholder (c) ;
The registry or transfer of shares (<1) ;
The production to a shareholder, for a proper purpose and
at a proper time, of such books as he has a right to inspect (e) ;
The admission of persons to offices to which they have been
elected (/) ;
The election of directors and officers required to be ap-
pointed {[)) ;
The appointment of a public officer by a company empowered
to sue and be sued by one (h) ;
The payment by such a company of a debt for which judg-
ment has been obtained against its officer (i) ;
The making of a call for the payment of a creditor having
no other remedy (j).
On the other hand, a mandamus has been refused to compel
a company to pay a shareholder dividends wrongfully withheld
from him (/,) ; to compel a companj' to register a transfer of its
stock (/); to compel it to produce its books to the share-
(//) /.'. v. Derbyshire, dr., Rail, v. Russia ('<>., ib. 7*3 ; Com. Dig.
Co., 3 E. & B. 784. Maud. B. 2.
(c) R. v. Worcester Omul Co., 1 (;/) Seeder Tindal, C.J.,mThames
M. & R. 529. Haven Dock Co. v. Rose, 4 Man. &
(»/) See JR. v. Londonderry, dr., Gr. 559.
Rail. Co., 13 <v>. B. 998; 7.'. v. {h) See per Parte, B., in Steward
Wing, 17 ib. (545 ; R. v. General v. Greaves, 10 M. it W. 721.
Cemetery Co., 6 E. & B. 415, and see (i) Corpe v. Glyn, 3 B. & Ad.
ante, p. 61, and infra, note /. 801 ; R. v. St. Katkerine Bock Co., 4
0) 11. v. Saddlers' Co., 1" W. 1!. B.&Ad. 360.
87. See, also, 1!. v. Wilts, cf-c, (j) See R. v. Victoria Park Co., 1
Canal Co., 3 A. & E. 477, and R. v. Q. B. 288, where the mandamus was
Mariquita, dbc, Minim/ Co., 1 E. & refused, the creditor being in a posi-
E. 289. In the two last cases, how- tion to issue execution against the
ever, the writ was refused. See as company, though not to get satis-
to inspection and taking copies, faction by so doing.
MuiU r v. EasU rn "ml Midlands Rail. (k) R. v. Whitstable Co., 7 East, 353.
Co., 33 Ch. D. 92, and the cases (/) U. v. Bank of England, 2
there cited. Holland v. Dickson, 37 Doug. 524 ; R. v. London Ass. Co.,
ib. 669, shows that an injunction will 5 B. & A. 899. R. v. Lamboum
be granted, and that a mandamus is Valley Rail. Co., 22 Q. B. D. 403 ;
not necessary. R. v. ShropsIiirc,d'c. Canal Co., L. li.
(/) Anon., 2 Str. 69G ; Da Costa 8 Q. B. 420, anU , note d.
MANDAMUS. 605
holders for the purpose of enabling them to consider whether Bk. III. Chap. 9.
a dividend shall or shall not be declared and paid (m) ; to '
compel it to make calls for the payment of a debt (/?).
The Queen's Bench Division alone has power to grant the Discretion of
the court.
prerogative writ (o) ; and the Court has a wide discretion in
granting or refusing it. No prerogative writ of mandamus is
allowed to go except to enforce some public dut}r (p) ; nor
unless the applicant has been denied the right he seeks to
enforce (q) ; nor unless he applies for the writ within a reason-
able time after such denial (r) ; nor unless the Court is satisfied
that its interference is sought for a proper purpose (s) ; nor
unless the applicant having a legal right has no other adequate
legal remedy (0-
It has been held that, although a corporation may be com-
pelled by mandamus to affix its seal to a document (»), it Mandamus to
cannot be thus compelled to remove its seal from a docu-
ment (x). But it is submitted that the difference between
doing and undoing, is, in such a case as that alluded to, a
difference in words rather than in substance. Registers of
shareholders may be rectified both b}^ inserting names wrong-
fully omitted and by striking out names wrongfully inserted,
as has been seen already (?/).
7. Other Miscellaneous Actions.
Promoters of companies cannot maintain actions against
each other for remuneration for their services unless there is
(m) R. v. Bank of England, 2 B. & Commissioners, 1 B. & Ad. 378.
A. 620. (••>') R. v. Wilts, &c, Canal Co., 3 A.
(n) R. v. Victoria Park Co., 1 Q. & E. 477 ; R. v. Liverpool, Manches-
B. 288. ter, dec, Hail. Co., 21 L. J. Q. B. 284.
(o) See Glossop v. Keston Lor,,/ (t) See R. v. Chester, I T. R. 396;
Board, 12 Ch. D. p. 115, and R. R. v. Stafford, 3 ib. 646; R. v.
v. Lambowrn Valley Rail. Co., 22 Victoria Park Co., 1 Q. B. 288 ; R.
Q. B. D. p. 469. As to the mode of v. Registrar of Joint Stock Companies,
application for such awrit, see Crown 21 Q. B. D. 131. R. v. Lambourn
Office Rules, 1886, rr. 60 et seq. Valley Rail. Co., 22 (,). 1'.. 1). 463.
( ji) Sec tin- cases in notes k h> ii. (n) R. v. Windham, Cowp. :!77 ;
and Shortt on Mandamus. B. v. Cambridge, 3 Burr. 1647; B.
($) B. v. Wilts, <!•<■., Canal Co.,3 v. York, 4 T. K. (>:>u.
A. & ]•:. 177. (■>) Exparte Nash, l'> Q. B. 92.
(/•) B. v. Cockermouth Tnclosure (y) Ante, p. 61.
GOG
ACTIONS BETWEEN COMPANIES AND THEIR MEMBERS.
Bk. III. Chap. 9.
Sect. 4.
Company re-
quired to pay
expenses of
formation.
Contribution
between them.
Actions for
deposits agreed
to be paid.
some express contract for their payment (z). But a person
who is retained by the promoters to assist them, is entitled to
he paid by them for his services, although he may afterwards
himself subscribe for shares in the company (a).
Where a company is required by act of Parliament to apply
its first funds in defraying the expenses of its formation, an
action lies against it by those who have expended their money,
time, and trouble, in forming the company, and who have no
other paymasters. But a clause in a company's deed of settle-
ment or articles of association to the like effect, does not
necessarily have the same operation (b) .
Although the promoters of companies are not impliedly
liable to each other for services rendered, nor for money ex-
pended by any of them in the prosecution of their common
design ; still, if they render themselves jointly liable to a third
party, and, by virtue of that liability, some only of them are
compelled to pay what ought, as between themselves and the
others, to be paid by all, an action of contribution lies, at the
suit of those who have been so compelled to pay, against the
others ; and even before the Judicature acts it was no objec-
tion to such an action that there were unsettled accounts
which required to be taken, before what was due from each to
the other could be properly ascertained (c).
If a person has agreed to take shares in a proposed com-
pany, and to pay a deposit in respect of such shares, an action
will lie for the recovery of the deposit he has agreed to pay (d).
The persons to bring such action are those with whom the
(z) See Holmes v. Higgins, 1 B. &
C. 74 ; Wilson v. Curzon, 15 M. &
W. 532 ; Milium v. Codd, 7 B. & C.
419.
(a) Luras v. Beach, 1 Man. & Gr.
417. See, too, Caldicott v. Grijitlis, 8
Ex. 898 ; and Burnett v. Lambert,
15 M. & \V. 489. Compare Gorgier
v. Morris, 7 C. B. N. S. 588, where
the company was never formed, and
the agreement was to pay the
plaintiff in shares.
(b) See ante, pp. 146, et seq.
(c) Boidter v. Peplow, 9 C. B. 493 ;
Batard v. Halves, 2 E. & B. 287 ;
Edger v. Knapp, 7 Jut. 583, C. P.
It may be observed here, that where
the promoters of a company retain
a solicitor, they are all liable to be
sued by him for payment of his bill,
and that a delivery by him of his
bill, duly signed, to any one of those
liable, is a sufficient delivery to all,
Mant v. Smith, 4 H. & N. 324 ; and
that any one of them is entitled to
tax his bill, Re Stephen, 2 Ph. 562.
(d) See, for instance, Duke v. Dive,
1 Ex. 36 : Duke v. Forbes, ib. 356.
MISCELLANEOUS ACTIONS. 607
agreement sued upon was made. If, therefore, tire agreement Bk- HI. Chap. 9.
was with the members of the provisional committee, those -
members, and not the managing section of them, are the
proper parties to sue (<■).
Actions by subscribers for the return of their deposits have
been already considered (/).
With respect to ordinary actions between companies and Actions between
their shareholders, it is unnecessary to add to what has been Smlmb^ '.
said in previous chapters. The following subjects have, in
fact, been already considered, viz.: —
1. Actions between the promoters of companies and by and
against persons who have subscribed for shares (g).
2. Applications by shareholders to have a company's register
rectified (//).
3. Actions by shareholders whose shares have been illegally
forfeited (i).
4. Actions between the buyers and sellers of shares, and
between them and the brokers employed by them (A).
5. Actions for contribution and indemnity {I).
6. Actions for calls (in).
7. Actions for dividends (n).
(c) Woolmer v. Toby, 10 Q. B. (I) Ante, p. 534.
691. (k) Ante, p. 4S7 et seq.
(f) Ante, p. 29 d seq., and § 1 (3) (/) Ante, p. 378 et seq.
of the present chapter. (m) Ante, p. 427.
(g) Ante, p. 29. (n) Ante, p. 437.
(h) Ante, p. 61, 121.
COS < THE WINDING-UP OF COMPANIES.
BOOK IV.
OF THE DISSOLUTION AND WINDING-UP OF COMPANIES.
Introductory.
Bk. IV.
Introductory.
The reasons for which an ordinary partnership is held to be
~ dissolved by the death, lunacy, or bankruptcy of any one of its
members, or by a transfer of his interest, or by his determina-
tion to retire, have no application to companies the shares in
which are transferable, and the management of the concerns of
which is entrusted by all the shareholders to directors. Nor
is there any authority to the effect that companies with trans-
ferable shares are or can be dissolved by, or on the happening
of, those events which are sufficient to dissolve, or induce
the Court to dissolve, an ordinary partnership. The death,
bankruptcy, or retirement of a shareholder dissolves his con-
nection with the company (a), but does not dissolve the bond
by which the remaining shareholders are held to each
other (b).
Some of the reasons which are sufficient to induce the Court
to dissolve a partnership are, however, quite as applicable to
companies as to ordinary firms, e.g., the impossibility of going
on as contemplated (c).
Effect of transfer But notwithstanding the often repeated assertion, that at
of shares when . . ., . •,!, riii
company is not common law unincorporated companies with transferable shares
incorporated. are meve partnerships, it ought not to be inferred that what is
sufficient to dissolve a partnership will also dissolve such a
company. The personal relations between the members of a
company are very different from those which exist between
(o) See Jefferys v. Smith, 3 Ku- . marginal note is scarcely warranted
158; Greenshield's case, •"> De G. & by the judgment.
S. 599. ('') Electric Telegraph Co. of Ire-
(!,) See Thomas v. Wells, 16 0 land, 22 Beav. 471.
T N. S. 508, where, however, the
THE WINDING-UP OF COMPANIES. 609
partners, and the power to dissolve depends on those relations. jJ^JJ^.
But to apply the doctrines relating to the dissolution of part-
nerships to companies would be to destroy and not to uphold
the agreement into which the members have entered. At the
same time it was formerly very generally assumed that an
unincorporated company with transferable shares might, like
an ordinary partnership, be dissolved at the will of any mem-
ber, if no time was fixed for its duration ; and, although the
point does not appear to have been ever actually decided,
Lord Eldon, in Van Sandau v. Moore (d), and the late Vice-
Chancellor Shadwell in Wheeler v. Van Wart (e), evidently
thought that, under ordinary circumstances, unincorporated
joint-stock companies might be dissolved by any shareholder
on his giving notice to all the other shareholders. Until,
however, this view shall have been judicially acted upon, it
may be considered as open to question, and, for the reasons
given above, the writer ventures to submit that, on principle,
it cannot be sustained.
"Whatever doubt there may be as to unincorporated com- Effect where the
company is
panies, there can be none with respect to companies mcorpo- incorporated.
rated by the Crown or by special act of Parliament or by
registration. A corporation cannot, by common law, be dis-
solved by the will of all its members ; for a charter cannot be
got rid of without the assent of the Crown, nor can an act of
Parliament be got rid of without the assent of the Legislature.
What cannot be done by all the members of a body corporate
is, a fortiori, incapable of being done by less than all, and it
consequently follows that, as regards the power of an indi-
vidual member to insist on a dissolution, there is no analogy
at common law between partnerships and incorporated com-
panies. Moreover, as a corporation is distinct from the
persons composing it, events which affect those persons indi-
vidually, e.g., lunacy, death, or bankruptcy, do not affect the
existence of the body corporate ; and here again, therefore,
there is no analogy at common law between partnerships and
cpmpanies which are incorporated (/).
(d) 1 Russ. 463. (/) As to the dissolution of cor-
(e) 2 Jur. 292, and '.) Sim. 193. porations, mm- Grant on Corpora-
See, too, Miles v. Thomas, 9 Sim. (JOG. tions, p. 2U'j, < l 8t </•
L.C. R ^
610
THE WINDING-UP OF COMPANIES.
Bk. IV.
Introductory.
Unincorporated
companies.
Adverting, therefore, solely to the general principles appli-
cable to partnerships and corporations, it is submitted : —
1. That a company which is not incorporated, but the
shares in which are transferable, is not dissolved by the death
or bankruptcy of a shareholder (except as to him), and ought
not to be dissolved by the Court, simply because a shareholder
desires a dissolution.
2. That such a company may be dissolved, not only in the
manner and under the circumstances provided for in its deed
of settlement (g), but also (by the Court) whenever it can be
shown that the business of the company cannot be carried on
as intended.
3. That a company which is incorporated by charter may
be dissolved by a formal surrender or cancellation of its
charter, and in such other way, if any, as is pointed out
therein.
4. That a company which is incorporated by act of Parlia-
ment can be dissolved only as therein provided, or by another
act of Parliament.
But as will be seen presently, several acts of Parliament,
commonly called the winding-up acts, have been passed ex-
pressly for the purpose of providing for the dissolution and
winding up of companies, whether unincorporated or incorpo-
rated, and whether incorporated by charter, special act of
Parliament, or registration. These acts do not prevent the
Court from dissolving unincorporated companies in the exer-
cise of its general jurisdiction (h) ; but they greatly extend its
power, especially as regards incorporated companies ; and,
practically, the law relating to the dissolution and winding up
of companies may be said to depend almost entirely on the
acts in question.
With respect to bankruptcy, it would seem that unincorpo-
rated companies may be adjudicated bankrupt, as they are not
excepted by the Bankruptcy act, 1883 (i). But it is not pro-
bable that recourse will ever be had to proceedings in bank-
ruptcy against them, as they can be much more readily and
(g) See Lyon v. Haynes, 5 Man.
& Gr. 405.
(h) Jones v. Charlemont, 16 Sim.
271 ; Clements v. Bowes, 17 ib. 167.
(i) 46 & 47 Vict, c. 52, § 123.
THE WINDING-UP ACTS. 611
completely wound up under the Companies act, 1862, as will Bk- IV-
Introductory.
be seen hereafter. Incorporated companies cannot now be
adjudicated bankrupt (k).
Winding-tip acts.
The first of the winding-up acts was 7 & 8 Vict. c. Ill, 7 &8 Vict.
which had three principal objects ; viz., 1. to give courts of
bankruptcy jurisdiction over incorporated, trading or com-
mercial companies, and to enable those courts to apply the
assets of such companies in payment of their debts ; 2. to
enable the affairs of a company adjudicated bankrupt to be
wound up in Chancery, so that if its assets were not sufficient
to pay its creditors in full, the members might be compelled
to raise what might be necessary for that purpose by a contri-
bution amongst themselves, and so that the rights of the
members, inter se, might also be finally adjusted ; and 3. to
facilitate the discovery of any abuses which might have
attended the formation or management of the company, and
the causes of its failure, and to authorise prosecutions against
its delinquent directors or officers. This statute, after being
considerably modified by 11 & 12 "Vict. c. 45, and 20 & 21
Vict. c. 78, was finally repealed by the Companies act, 1862
(see §§ 205—207).
The next statute passed for winding up companies was 11 & Winding-up
. &ii actsof 1848
12 Vict. c. 45, which was shortly afterwards amended by 12 & and 1849.
13 Vict. c. 108. These acts were also repealed by the Com-
panies act, 1862 ; but they have formed the basis of the law of
winding up, and a few observations upon them will not be out
of place.
The main object of the Winding-up acts of 1848 and 1849, Object of the
was to enable companies to be dissolved, and wound up more acts of 1848
expeditiously than was possible by means of an ordinary suit 1849,
in Chancery, and more completely than was possible under
the act of 7 & 8 Vict. c. 111. This latter act was passed prin-
cipally for the purpose of enabling creditors to obtain payment
of their debts from insolvent companies. The acts of 1848
(Jc) Ibid. As to remitting winding- the Companies act, 1862, § 8 ,
up proceedings to bankruptcy, see infra, c. 1, § 1.
R B 2
612
THE WINDING-UP OF COMPANIES.
Bk. IV.
Introductory.
Defects of these
acts.
1. Creditor's
right to sue
at law.
21 & 22 Vict.
c. 78.
2. Creditors
not entitled
to obtain a
winding-up
order.
and 1849, on the other hand, were passed principally for the
purpose of supplying shareholders with a means by which they
might relieve themselves from their liabilities to creditors, by
having the assets of the compan}7 properly got in, and applied
in payment of its debts, and by having any deficiency made
good by contribution amongst themselves. Under these acts
an order for the winding up of a company was obtained by
petition to the Court of Chancery, and was carried into effect
by an officer called the official manager, acting under the
direction of one of the equity judges (or of a master in Chan-
cery) whose duty it was to determine what debts were payable
by the company, who were the persons to pay them, what
calls, if any, were to be made on such persons for their pay-
ment, how the conflicting claims of such persons inter se were
to be adjusted, how the costs of the winding up were to be
provided for, and lastly, how the surplus assets, if any, were
to be divided.
These acts had several great defects. The first defect was
that the creditors were not restrained from pursuing their legal
remedies against the shareholders individually ; so that, not-
withstanding a winding-up order, any shareholder might be,
and frequently was, singled out and utterly ruined by a credi-
tor of the company, although if the creditor could have been
compelled to wait, he would have received his principal and
interest in full from funds provided by a proper contribution
from all the members of the company. This defect was in a
great measure removed by 21 & 22 Vict. c. 78, under which
the creditors could be required to choose a representative (the
creditors' representative) , and be compelled to wait for payment
out of the funds raised by contribution.
A second defect was that the creditors of a company were
not entitled to obtain an order for winding it up. They con-
sequently either sued the shareholders individually, or pro-
ceeded against the company in bankruptcy, under 7 & 8 Vict.
c. 111. By suing the shareholders individually, the latter
were liable to be, and frequently were, utterly ruined ; when,
under a better machinery, such a result might have been
avoided without detriment to the creditors. By proceeding
against the company in bankruptcy under 7 & 8 Vict. c. Ill,
THE WINDING-UP ACTS. 613
when the same company was being or might be wound up in j t^ ^
Chancery under the acts of 1848 and 1849, the Courts of
Chancery and of Bankruptcy were brought into collision, and
questions of great difficulty as to the rights of their respective
officers arose (I).
A third defect was that no provision was made by which a 3. No voluntary
i i i winding up.
company s affairs could be wound up by the shareholders
themselves without the intervention of the Court of Chancery.
A fourth defect, which was rendered worse rather than 4. Expense,
better by the institution of a creditors' representative, was the
excessive cost of winding-up proceedings.
All these defects, except the last, were removed by the Acts of 1856
Joint-stock companies acts 1856, 1857, and 1858. Under '
these acts companies might be wound up at the instance of c 47.
creditors as well as of contributories : the creditors could not 20&21 "Slct-
7 C. 14.
sue the shareholders individually, and could only obtain pay- 21 & 22 Vict,
ment from them by means of a contribution ; and the share- c> 60*
holders themselves were enabled, when not pressed by their
creditors, to wind up their affairs without having recourse to
the expensive machinery of the Court of Chancery. Under
these acts companies with limited liability could only be
ordered to be wound up in bankruptcy ; other companies in
Chancery (/»)•
The last-mentioned acts were themselves repealed by the CWpames act,
Companies act, 1862 (25 & 26 Vict. c. 89), which with the
acts amending it will be found in the appendix.
The Companies act, 1862, provides three modes of winding Modes of
winding up.
up, viz. —
1, compulsorily, or as it is termed by the Court ;
2, voluntarily, without the intervention of any court ; and,
3, voluntarily, but subject to the supervision of the Court
(see §§ 79, 129, and 147).
Companies registered under the act of 1862, or under the
(I) See on this subject, Aitchison conflict may possibly still arise in
v. Lee, 3 Drew. 637, and on appeal, the case of unincorporated com-
3 Jur. N. S. 95 ; London and panies. See ante, p. 610.
Eastern Banking Corporation, 2 De (m) See, as to this, Plv/mstead
G. & J. 484 ; Mitre Assurance Asso- Water Co., 2 De G. F. & J. 20 ;
ciation, 29 Beav. 1 ; Ex parte Col- Welsh Potosi Mining Co., 27 L. J.
lingridge, 14 Jur. 1129. Such a Ch. 311.
G14
THE WINDING-UP OF COMPANIES.
Bk. IV.
Introductory.
Malicious
petitions.
former acts of 1856 — 1858 (n), may be wound up in any of
these three ways. Unregistered companies can only be wound
up in the first of them (o) (see § 199, cl. 2). Each of the
above methods requires to be studied separately ; but there is
so much common to them all, that in order to avoid repetition
it will be convenient to consider the subject of winding up
generally under the first head, and then to draw attention
shortly to the differences between winding up by the Court
and the other modes of winding up. The dissolution of rail-
way companies will be alluded to in a separate chapter.
A company is necessarily seriously injured in its credit by
having proceedings taken against it in order to have it wound
up ; and an action lies against a person who maliciously and
without reasonable cause presents a petition for the winding
up of a company, and in order to sustain such an action it is
not necessary for the company to prove special pecuniary
damage (_p).
(n) Torquay Bath Co., 32 Beav.
581.
(o) To this there are the follow-
ing exceptions. By 25 & 26 Vict. c.
87, § 17 (now repealed by 39 & 40
Vict. c. 45, § 4), industrial and pro-
vident societies registered under that
act can he wound up voluntarily
under the Companies act, 1862, and
by 39 & 40 Vict. c. 45, § 17, societies
registered under that act may he
wound up in the same manner.
This is also the case with building
societies governed by the Building
Societies act, 1874 (37 & 38 Vict. c.
42, § 32), and see Re Sunderland,
&c, Building Society, 21 Q. B. D.
349.
(p) Quart:: Hill Gold Mining Co.
v. Eyre, 11 Q. B. D. 674.
WINDING UP BY THE COURT. 615
CHAPTER I.
WINDING DP BY THE COURT.
SECTION I.— THE COURT HAVING JURISDICTION OVER THE
WINDING UP OF A COMPANY.
The Court, i.e., the Court having jurisdiction to wind up a Bk. IV. Chap. 1.
company under the Companies act, 1862, is —
1. In the case of companies which are or have been engaged
in (a) working mines within and subject to the jurisdiction of
the Stannaries, or have been formed for that object, and are
not actually engaged in, nor bound by contract to engage in,
any works beyond the limits of the Stannaries (b) — the court
of the Vice-Warden of the Stannaries (§ 81) (c).
2. In the case of registered building societies, and industrial
and provident societies — the county court within the jurisdic-
tion of which their office is situate (d).
3. In the case of other companies registered in England, or,
it' unregistered, having a principal place of business there —
the Chancery Division of the High Court of Justice (§§81
and 199, cl. 1, and Judicature act, 1873, § 34).
4. In the case of companies registered in Ireland, or, if un-
registered, having a principal place of business there — the
Chancery Division of the High Court of Justice in Ireland (ib.) :
5. In the case of companies registered in Scotland, or, if
(a) Silver Valley Mines, 18 Ch. D. (b) 50 & 51 Vict. c. 43, § 28.
472, overruling East Botallack Min- But tins section only applies to
ing Co., 34 Beav. 82, which decided metalliferous mines and tin stream-
that it was not necessary that the ing works, see § 3.
luine should have been worked. As (c) See 32 cSt 33 Vict. c. 1!»,
to the concurrent jurisdiction of the amended by 50 & 51 Vict. c. 43.
Court of Chancery where the com- (d) See as to building societies,
pany is not formed solely for the 37 & 38 Vict. c. 42, §§ 4 & 32 ;
above purpose, see Penhale and and as to industrial and provident
Lomax, <&c, Co., 2 Ch. 398. societies, 39 & 40 Vict. c. 45, § 17.
616
WINDING UP BY THE COURT.
Bk. IV. Chap. I,
Sect. 2.
Mines in
Stannaries.
Proceedings in
bankruptcy.
County court.
Duchy of
Lancaster.
unregistered, having a principal place of business there — the
Court of Session in either division thereof (ib.) (e).
If, however, the Vice-Warden of the Stannaries certifies
that, in his opinion, a company engaged in working a mine
within his jurisdiction would he more advantageously wound
up in the Chancery Division of the High Court, then the
Court is such Chancery Division (§ 81).
The Chancery Divisions of the High Courts in England,
and Ireland respectively, after making an order for winding
up a company, may direct all subsequent proceedings for
winding up the same to be had in the Court of Bankruptcy
having jurisdiction in the place in which the registered
office of the company is situate (§ 81) (/), or, if the company
is unregistered, in the place where it has a principal place of
business (§ 199, cl. 1). The Court of Bankruptcy in England
is now the High Court or a county court (/).
Further, by the Companies act, 1867, the Chancery Division
of the High Court in England has power, where it makes an
order for winding up a company, to remit the subsequent pro-
ceedings to a county court (§ 41 et seq.).
When these powers are exercised, the Court in Bankruptcy,
or the County Court, as the case may be, becomes the court
for the purposes of winding up the company, and has all the
powers of the Chancery Division of the High Court (g).
The Court of Chancery of the Palatine Duchy of Lancaster
has power to wind up companies whose registered offices are
within the limits of its jurisdiction (h). But the jurisdiction
of the Palatine Court is not exclusive (i).
SECTION II.— COMPANIES WHICH CAN BE WOUND UP BY THE COURT,
OR SUBJECT TO ITS SUPERVISION.
Under the older winding-up acts, questions of considerable
difficulty arose with respect to what companies were within
(e) See, also, Companies act,
1886, 49 Vict. c. 23, § 5.
(/) See 46 & 47 Vict. c. 52, § 92.
(g) See the statutes, and Ex parte
Hirtzel, 2 De G. F. & J. 653,
17 & IS ib. c. 82, the Court of
Chancery of Lancaster acts, 1850
and 1854, and the general orders of
that Court.
(i) Lancashire Co-operative Build-
(h) See 13 & 14 Vict, c. 43, aal mj Go., W. N. 1867, p. 246.
COMPANIES TO WHICH THE ACT APPLIES. 617
their provisions. Thus the 7 & 8 Vict. c. Ill, applied only to Bk. ^pbap 1.
commercial and trading companies (k) ; and whether the Wind
ing-up act of 1848 applied to companies not falling within the
same description, was hy no means free from doubt (I). The
Winding-up act of 1849 greatly extended the operation of the
act of 1848. But, notwithstanding the very general word
association, used in these acts, and although they extended to
associations which were neither partnerships nor quasi-part-
nerships, (e.g., to friendly societies, and to associations having
for their object the formation of companies,) still associations
not having gain for their object, and in which there were
no shares and no liability to contribute, were not within
them (m).
Under the Companies act, 1862, the following companies Companies
. capable of
may be wound up by the Court, or subject to its supervi- being wound
up under the
S1011 : — act of 1862.
1. All companies registered under the act, whether formed
under it or not (§§ 79, 180, and 196).
2. All companies registered under the acts of 1856 — 1858
(see §§ 176 and 177).
3. All other partnerships, associations, or companies, except
railway companies incorporated by act of Parliament, consist-
ing of more than seven members (see § 199) (n).
What companies can be registered under the act and what
not, has been pointed out in a former page (o) ; and it is only
necessary to observe that any company or association of per-
sons which is capable of being registered at all may be
registered for the purpose only of being wound up (p).
(k) See, as to these words, Ex London, &c., Ins. Assoc, 6 Cb.
parte Surge, 1 De G. & S. 588 ; Ex 421.
parte, Spademan, ib. 599. (o) Ante, p. 114, et seq.
(I) See Ex parte Burge, 1 De G. & (p) 25 & 26 Vict. c. 89, § 180.
S. 588 ; Ex parte Spackman, ib. 599, See Northumberland and Durham
and 1 Mac. & G. 170. Banking Co., 2 De G. & J. 357, and
(m) See St. James's Club, 2 De G. Liverpool Borough Bank v. Mellor,
M. & G. 383. 3 H. & N. 551, as to registering
(n) An unregistered insurance banking companies governed by 7
company formed between the pass- Geo. 4, c. 46, in order that they may
ing of the Joint Stock Companies be wound up. Both of these cases
acts, 1856 and 1857, may be wound turned on the acts of 1856-8.
up under this section. Bank of
Gl*
WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 2.
Companies
specially in-
corporated.
Railway com-
panies.
Cost-book
mining com-
panies.
The circumstance that a company is incorporated by a
special act of Parliament, or by a grant from the Crown,
does not prevent such company from being wound up under
the Companies act, 1862 (q) ; even although the property of
such company cannot be sold without a special act of Par-
liament (r) ; and even though part of its property may be a
railway (s).
Whether a railway company incorporated by special act of
Parliament can be registered under the Companies act, 1862,
and then wound up under it, is doubtful (t) ; unregistered rail-
way companies (u) are expressly excepted from the act (see §
199), and can only be wound up under it where they are duly
authorised to abandon their railways under the provisions of
other acts of Parliament (x) .
Companies formed on the cost-book principle for working
mines within the jurisdiction of the Stannaries may be wound
up under the Companies act, 1862. The law as to winding up
these companies was formerly in a very unsatisfactory state (y).
(q) See § 199, and Wey v. Aran
Junction Canal Co., 4 Eq. 197 ;
Free Fishermen of Faversham, 36 Ch.
D. 329, where, however, the Court
refused to make a winding-up order ;
&ovih London Fish/market Co., 39
Ch. D. 324. See, also, under the
older acts, Isle of Wight Ferry Co.,
2 Hem. & M. 597 ; Electric Tele-
graph of Ireland, 22 Beav. 471, and
Ex parte Croysdill, 7 De G. M. & G.
199.
(?•) Bradford Navigation Co., 10
Eq. 331. This case was appealed,
but the appellant was not entitled
to be heard, see 5 Ch. 600.
(s) Exmouth Docks Co., 17 Eq.
181.
(t) See ante, p. 116, note (p), and
§§ 79, 180 and 196 ; and Ennis and
West Clare Rail. Co., 3 L. R, Ir. 94,
where such a railway company was
wound up. The Court, after a long
examination of the various statutes
and authorities, expressed a strong
opinion that such a company might
be registered and wound up, but
decided the case on the ground that
§ 192 of the Companies act, 1862,
precluded them from going behind
the registrar's certificate.
(h) As to what is a railway com-
pany, see Exmouth Docks Co., 17 Eq.
181. A dock company having a
railway was there held not to be a
railway company, and was ordered
to be wound up ; but compare Great
Northern Rail. Co. v. Tahourdin,
13 Q. B. D. 320 ; East and West
India Dock Co., 38 Ch. D. 576. In
Brentford and Isleworth Tramways
Co., 26 Ch. D. 527, a tramway com-
pany was held not to be a railway
company, and was ordered to be
wound up, though incorporated by
a special act and not registered.
(.-«-) See 32 & 33 Vict. c. 114, § 4 ;
30 & 31 Vict. c. 127, § 31, et seq. ;
13 & 14 Vict. c. 83. See infra,
c. 4.
(?/) They were, if formed for
working mines in Cornwall, wholly
COMPANIES TO WHICH THE ACT APPLTES.
019
Friendly societies, building societies, and industrial and Bk. IV^i Chap. 1.
provident societies, whether registered under 25 & 26 Vict.
Friendly
c. 87, 37 & 38 Vict. c. 42, or 39 & 40 Vict. c. 45, or not, may Societies, &c.
be wound up under the provisions of the Companies act,
1862 (z), but as regards registered building and industrial
societies the court having jurisdiction is the County
Court (a).
Scrip companies have been ordered to be wound up under Scrip companies,
the older acts {b) ; and it is apprehended that they can also
be wound up under the act of 1862 ; for although shares trans-
ferable to bearer, and not paid up in full, cannot be validly
created under the Companies act, 1862 ; yet it by no means
follows that a company with such shares cannot be wound
up {<■).
A company which has been dissolved, but the members Dissolved
of which are still under liabilities incurred before the dissolu-
tion may be wound up ; and orders have been frequently made
for winding up companies which have amalgamated with, or
excepted from the act of 1848, as
it originally stood, see 11 & 12 Vict,
c. 45, § 2 ; Ex parte Wyld, 1 Mac.
& G. 1. Provision was, however,
afterwards made for winding them
up in Chancery in certain specified
cases, 12 & 13 Vict. c. 108, § 1 ; 20
& 21 Vict. c. 78, § 12. See, on this
subject, Bosworthon Mining Co., 26
L. J. Ch. 612 ; Wheal Anne Mining
Co., 10 W. R. 330 ; and as to the
right of creditors to oppose, see
Trefoil and Messer Mining Co., 2 J.
& H. 421. Cost-book companies
formed for working mines in De-
vonshire might be wound up in
Chancery even under the act of
1848, see South Lady Bertha Mining
Co., 2 J. & H. 376. Companies
formed on the cost-book principle,
but not for working mines within
the jurisdiction of the Stannaries,
were clearly within the Winding-up
acts of 1848 and 1849. See, now,
32 & 33 Vict. c. 19, and 50 & 51
Vict. c. 43, § 28, and ante, p. 615.
(z) See Queen's Benefit Building
Soc, 6 Ch. 815 ; Professional, &c,
Building Soc, ib. 856 ; Sunderland
Building Soc., 21 Q. B. D. 349.
See, also, infra, app. No. 2, on
industrial and provident societies.
Such societies were within the pro-
visions of the Winding-up acts,
1848-9. See St. George's Building
Society, 4 Drew. 154 ; and as to
loan societies, Ex parte Smith, 1
Sim. N. S. 165. See Crown and
Cushion Loan Fund Soc, 14 Jur.
874. See 39 & 40 Vict. c. 45,
§17-
(a) See ante, p. 615.
(b) Barclay's case, 26 Beav. 177 ;
Ex parte Grisewood, 4 De G. & J.
544.
(r) See General Co. for Promotion
of Land Credit, 5 Ch. 363, and
Princess Beuss v. Boss, L. R. 5
H. L. 176. See, infra, as to illegal
companies.
620
WINDING UP BY THE COURT.
Bk. IV. Chap. l. ]iave transferred their assets and liabilities to, other corn-
Sect. 2.
panies (d).
Companies not The 199th section of the Companies act, 1862, is expressed
in terms sufficiently large to include all unregistered societies
and corporations of whatever kind consisting of more than
seven members at the date of the petition (e), with the single
exception of railway companies incorporated by act of Parlia-
ment. But the general scope of the Winding-up acts, shows
that there are corporations aggregate to which the winding-
up provisions of the Companies act, 1862, have no application :
e.g., municipal corporations, ecclesiastical corporations aggre-
gate, and societies such as the Royal Society, incorporated by
royal charter for the advancement of science (/). The pro-
perty of all such corporations is liable to their debts, but their
members are not personally liable to pay or to contribute to
the payment of such debts ; nor have the members any rights
inter se analogous to those which are capable of being adjusted
in the course of winding up.
Clubs. Moreover there are some unregistered and unincorporated
societies incapable of being wound up under the act. An
ordinary club is an example (</). Such an association has no
resemblance to a partnership, quasi-partnership, or inchoate
partnership ; it is not formed for the division of profit amongst
its members ; they have no shares, in the sense in which that
word is used with reference to partnerships, companies, or
associations more or less like them ; and even if the members
(d) For examples, see Family wound up, the directors en-
Endowm,ent Society, 5 Ch. 118 ; deavoured to get rid of their
and under the older acts, Ex shares and reduce the number of
parte Phillips, 3 De G. & S. 3 ; shareholders below seven. Mem-
Ex parte Dee, ib. 112 ; Warwick bers in this section does not neces-
and Worcestershire Rail. Co., 13 sarily mean shareholders. Bolton
Jur. 651. A dissolved company, Benefit Loan Soc, 12 Ch.'D. 679.
which had been adjudicated bank- (/) See Free Fishermen of Faver-
rupt under 7 & 8 Vict. c. Ill, sham, 36 Ch. D. 329.
might, nevertheless, be wound up (g) St. James's Club, 2 De G. M. &
under the acts of 1848-9, see ante, G. 383, reversing S. C, 20 L. J. Ch.
p. 613, note (m). 630. But it seems that a club might
(e) South London Fishmarket Co., be registered under the act, see § 6
39 Ch. D. 324, where, in order to and 30 & 31 Vict. c. 131, § 23.
prevent the company from being
COMPANIES TO WHICH THE ACT APPLIES. 621
of a club, are, as amongst themselves, bound otherwise Bk. IV. Chap. 1.
than in honour to contribute to its debts, there is nothing Sect 2-
to prevent any member who has paid his subscription from
sending in his resignation, and so getting rid of any such obli-
gation (h).
For similar reasons, it is doubtful whether an unregistered Mutual Marine
mutual marine insurance society can be wound up where the sStieiT
members are not in arrear in their contributions. Such a
society is not a partnership (i) ; and although mutual marine
societies have been ordered to be wound up (k), the power of
the court to wind them up does not appear to have been con-
tested until too late, and is very doubtful (Z). The difficulty,
however, of winding up such a society otherwise than under
the act is very great.
The court has power to order a mutual life insurance Mutual Life
society to be wound up, if the society be proved to be in- g^^eT
solvent, though instead of so doing it may, if it thinks fit,
reduce the amounts of the contracts of the society (m).
Illegal companies (n) cannot be wound up by the court at uiegal com-
the instance of themselves or of their own members (o) ; nor Pames-
at the instance of creditors who had notice of the illegality
when their debts were contracted (p). It is doubtful whether
other creditors can obtain an order to wind up such a com-
(h) See the last note, and as to 22. Great Britain Mutual Life As-
suits for winding up clubs, Richard- surance Soc, 16 Ch. D. 246 ; 19
son v. Hastings, 7 Beav. 301, 323, Ch. D. 39; 20 Ch. J). 351. And
and 11 ib. 17. see Endow v. Great Britain Mutual
(i) Partn. 51. Life Ass. Soc, 17 Ch. D. 600.
(k) E. g., Arthur Average Associa- (n) As to which, see ante, p. 130,
Hon. See 3 Ch. D. 522, and 10 Ch. et seq.
542 ; Shields Marine Lis. Assoc, 5 (o) See Barclay's case, 26 Beav.
Eq. 368; London Marine Ins. Assoc, 177 ; Fenn's case, 4 De G. M. & G.
8 Eq. 176 ; Ex parte Phillips, 3 De 295 ; Ex parte Longworth's Executors,
G. & S. 3. See the special report Johns. 465, affirmed on appeal, 1 De
made by the Master in this case, 14 G. F. & J. 17. See, also, the next
Jur. 929. two notes.
(1) See Ex parte Hargrove., 10 Ch. (p) See, as to this, Padstow Total
542 ; Arthur Average Association, 3 Loss Association, 20 Ch. D. 137 ;
Ch. D. 522; London Marine Ins. South Wales Atlantic Steam Ship Co.,
Assoc, 8 Eq. 176. 2 Ch. D. 763, and the cases in the
(m) 33 & 34 Vict. c. 61, §§ 21 & next note.
622 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. pany (q) • but there is nothing to prevent an illegal company
- being wound up by its own members without any judicial
assistance. Moreover, it must be remembered that if a com-
pany is illegal simply because it is not registered, the im-
pediment to being wound up can be removed by registration.
Foreign A company formed and registered under the act can be
wound up under it, although the subscribers of the company's
memorandum of association may be all foreigners resident
abroad, and although the objects of the company may be
mainly the transaction of business abroad (/•). It has
been doubted whether the Court can wind up a company
registered under the act, but shown by its own memorandum
and articles to be formed exclusively of foreigners resident
abroad for the transaction of business abroad (s) ; but admit-
ting that such a company ought never to have been registered,
its continued existence as a registered company cannot appa-
rently be stopped except through the machineiy of a winding-
up order.
A company formed and registered abroad, and having a
branch office (t) in this country, but not registered here, may
be ordered to be wound up under the Companies act, 1862 (u) ;
and the fact that steps are being taken to wind up the com-
(q) Compare the last case, and Ex Compare the cases in the next
parte Hargrove, 10 Ch. 542, with the note.
ohservations of Jessel, M. E., and (u) Commercial Bank of India, 6
Brett, L. J., in Padstow Total Loss Eq. 517 ; Commercial Bank of South
Association, 20 Ch. D. 137, at pp. Australia, 33 Ch. D. 174 ; Matheson
143 & 146. It should be borne in Brothers, Limited, 27 Ch. D. 225.
mind that winding up is the modern And see the following cases under
substitute for an action and sci. fa., the older acts : a Spanish Eail. Co.,
as to which, see ante, p. 277. Ex parte Turner and James, 3 De G.
(r) General Co. for promotion of & S. 127, and 2 Mac. & G. 169 ; a
Land Credit, 5 Ch. 363, and Princess German Mining Co., Ex parte Chip-
ofRcuss v. Bos, L. E. 5 H. L. 176. pendale, 4 De G. M. & G. 19 ; a
(s) Princess of Beuss v. Bos, L. E. Mexican Mining Co., Barclay's case,
5 H. L. 176. 26 Beav. 177 ; a Calcutta Bank, see
(t) In Lloyd Ginerale Italiano, 29 Ex parte Watson, 3 De G. & S.
Ch. D. 219, Pearson, J., refused to 253, where, however, no order was
make an order for winding up a made ; an Indian Eail. Co., Ex
foreign company which had no parte Wolesey, 3 De G. & S. 101 ; a
branch office in England, but Belgian Eail. Co., Ex parte Moss, 14
carried on business here by agents. Jur. 754.
COMPANIES TO WHICH THE ACT APPLIES. 623
pany in the country in which the company is registered does Bk- IV CIiaP- 1«
not affect the jurisdiction of the English court (x). But the
writer apprehends that it is not competent for any court in
this country to dissolve a corporate body created by a compe-
tent foreign authority; and a foreign corporation, therefore,
cannot be wholly wound up and dissolved in this country.
At the same time, if a foreign incorporated company were
registered, the corporate body created by registration might
be wound up and dissolved without any undue exercise of
jurisdiction.
If a company which ought not to be ordered to be wound
up is nevertheless ordered so to be, the validity of the winding
up order can only be questioned (at least by the company or a
contributory) by an appeal (y).
Other cases on the older acts.
The following note of other decisions on the acts of 1848-9 is appended
for reference : —
The general words partnerships, associations, and companies, were held to
include projected, hut ahortive, railway and other companies, provisionally
registered under 7 & 8 Vict. c. 110 (z). But as the subscribers to ahortive
companies are neither partners nor cpmsi-partners, it followed, that, unless
they had done something whereby they had, as between themselves, in-
curred a liability to contribute to the demands to which they were respec-
tively subject, an order to wind up a company, never in fact formed,
was useless ; for, except in the case supposed, there could be no con-
tributories (a).
Irish companies were specially provided for by 4 & 5 Vict. c. 45, § 17 (b).
Scotch companies were not subject to the acts at all(c).
(.«) Matheson Brothers, Limited, 27 Ex parte Turner and James, 3 De G.
Ch. D. 225 ; Commercial Bank of & S. 127, and 2 Mac. & G. 169 ;
South Australia, 33 Ch. D. 174. Ex parte Besley, 2 Mac. & G. 176 ;
(y) See the Arthur Average Asso- Ex parte Holinsworth, 3 De G. &
elation, 3 Ch. D. 522 ; 10 Ch. 542 ; S. 7.
and Padstovj Total Loss Association, (a) See Ex parte James, 1 Sim. N.
20 Ch. D. 137. S. 140 ; Ex parte Besley, 3 Mac. &
(a) Bright v. Hutton, 3 H. L. C. G. 287.
341 ; Ex parte James, 1 Sim. N. S. (7j) Ex parte Fisher, 3 De G. & S.
140; Ex parte Woolmer, 5 De G. & 116.
S. 117, and 2 De G. M. & G. 665 ; (c) 11 & 12 Vict. c. 45, § 1 27, and
Ex parte Barber, 1 Mac. & G. 176 ; 12 & 13 Vict, c. 108, § 40.
G24 WINDING UP BY THE COURT.
Bk. IV. Cbap. 1.
Sect. 3.
SECTION III.— PERSONS AT WHOSE INSTANCE A WINDING-UP ORDER
WILL BE MADE.
Under the Companies act, 1862, an order for winding up a
company, may be applied for by all or any of the following
persons, viz. : —
1. The company ;
2. One or more of its creditors ;
3. One or more of its contributories ;
and every order made on any petition operates in favour of all
the creditors and all the contributories of the company in the
same manner as if it had been made upon the joint petition of
a creditor and a contributory (§ 82).
A company required to be registered is not entitled, whilst
unregistered, to apply for an order to be wound up(e).
Creditors. Any creditor (/) of a company is entitled to petition for a
winding-up order, and it is not necessary that his debt should
be of any particular amount ; but, as will be pointed out in the
next section, the evidence which he must adduce in support of
his petition depends on the amount of his debt.
A landowner who has a claim against a company for purchase-
money and compensation in respect of lands taken by the
company under the Lands Clauses act, is not a creditor of the
company until a conveyance has been executed (g). An
assignee of a debt is entitled to petition (h), and an executor of
a creditor may present a petition before he has obtained probate
of the will (i). A secured creditor may also present a petition
without giving up his security or losing any of his rights (k).
(e) See § 210, and Waterloo As- Pen-y-van Colliery Co., 6 Ch. D.
surance Co., 31 Beav. 586. In this 477 ; Gold Hill Mines, 23 Ch. D.
last case the company was ordered 210.
to be wound up on a contributories' (g) Milford Docks Co., 23 Ch. D.
petition ; but the company was not 292.
illegal : it had been formed and re- (h) London and Birmingham
gistered under 7 & 8 Vict. c. 110. Alkali Co., 1 De G. F. & J. 257.
(f) See, as to disputed debts, infra, (i) Masonic and General Life As-
p. 637, a person claiming unliqui- surance Co., 32 Ch. D. 373.
dated damages, and whose claim (k) Moor v. Anglo Italian Bank,
is disputed, cannot obtain an order, 10 Ch. D. 6S1.
PERSONS ENTITLED TO PETITION. 625
Whether a debenture holder is entitled to present a petition Bk- IV- ' Ch„aP- 1-
sect. o.
depends upon whether he is entitled to enforce payment of the
Debenture
debenture by an ordinary action for a debt due and payable by holders.
the company. Thus in Exmouth Docks Co. (I), and Heme Bay
Waterworks Co. (m), it was held that the rights of the debenture
holders were by the statute, under which the debentures were
issued, limited to obtaining the appointment of a receiver, and
that they were therefore not entitled to a winding-up order ;
so in Uruguay Central & Hygueritas Rail. Co. of Monte
Video (n), the holder of an instrument described as a mortgage
bond was held not entitled to a winding-up order, on the ground
that he was not a creditor of the company, the covenant to pay
being entered into by the company with the trustees of a
covering deed, and not with the bond-holders themselves. On
the other hand, in Olathe Silver Mining Co.(o), where there
was an agreement by the company with the bearer of the
debentures to pay him, a debenture holder was held entitled to
present a winding-up petition.
Under the Life assurance companies act, 1870, the holder Policy holders
of a policy granted by a life assurance company may petition
for the winding-up of the company if it is insolvent, although
the policy is not yet due (}>).
The meaning of the word contributory will be examined Contrilmtories.
hereafter ; for the present purpose the term includes an alleged tri ^orf™'
contributory (see § 74). But the legislature has not said what
sort of allegation is to be regarded as sufficient ; an admis-
sion by the petitioner that he is a contributory in respect of at
least one share, seems, however, to be necessary (q). It may,
however, be remarked, that several of the older cases in which
orders were made under the Winding-up act of 1848 on the
petition of the subscribers to abortive companies could not be
supported at the present day, upon the ground that the peti-
{l) 17 Eq. 181. see § 2. See, also, 35 & 36 Vict. c.
(in) 10 Ch. D. 42. 41. § 4, as to subsidiary companies.
(/<) 11 Ch. D. 372, explained in (7) Ship's case, 2 De G. J. & Km.
Olathe Silver Mining Co., 27 Ch. D. 544 ; Times Fire Ass. Co., 30 Beav.
278. 596 ; Continental Bank, W. N. (1867)
(0) 27 Ch. I). 278. 114 and 178 ; 15 W. R. 548, and 16
( p) 33 & 34 Vict. c. 61, § 21. A L. T. 1 1 2.
policy-holder includes an annuitant,
L.c. S S
026
WINDING Ur BY THE COURT.
Dk. IV. Chap. 1. tioners in them were contributories ; if those cases arc to be
Sect. ."3.
supported at all, it must bo upon the ground that the peti-
tioners claimed to be contributories, without being so in
reality (/•).
30 ct 31 Vict. In order, however, to put a stop to the improper practice of
c 131, § 40. . . . • , . , .
buying snares in a company, simply with a view to obtain a
right to petition to wind up the company, it is in substance
enacted that no contributory shall be capable of presenting a
winding-up petition, unless the members are reduced below
seven ; or unless the petitioner is an original allottee of the
shares in respect of which he petitions ; or unless he or his
wife, or a trustee for him or her has held and been registered
in respect of such shares for six months during the eighteen
months next before the presentation of the petition; or unless
he has acquired them by the death of their former owner (s).
Registration for six months is enough (t), and if the company
has been ordered to register the petitioner, he need not be
registered in fact (»).
Member in A winding-up order may be made at the instance of a con-
arrear of calls.
tnbutory who has not paid his calls (x).
Solders of fully A holder of fully paid-up shares in a limited company is nol
paid-up shares . . . L
in limit,, l entitled to petition for a winding-up order; unless he can show
that the company is in such a state of solvency that there is a
reasonable probability of sufficient assets being left for the
shareholders to give him a tangible interest in having the
company wound up (y).
(/•) That the petitioners in Ex 400, explaining Steam Stoker Co., 1!)
parte Capper, 3 De G. & S. 1 ; Ex Eq. 410 ; European Life Ass. Soc,
parte Cooke, ib. L48, and Ex parte 10 Eq. 403. Compare the older
Holinsworth, ib. 7, would not at the cases referred to infra, note (/).
present time he held to be contri- (,,) Diamond Fuel Co., 13 Ch. D.
butories, see Bright v. Hutton, 3 II. 400 ; Rica Gold Washing Co., 11 Ch.
k- C. 341. D. 36, modifying the earlier eases ;
(.s) 30 & 31 Vict. c. 131, § 40. Tvmacacori Mining Co., 17 Eq. 534 ;
The petition need not state the fact, National Savings Bank, 1 Ch. 547 •
( 'ity and I 'ounty Bank, 10 Ch. 470. London Armour!/ Co., 10 Jur. X. S.
(0 Wala Wynaad Indian Gold 962 ; Lancashire Brick and Tile Co.,
Mining ( <o., 21 Ch. IX 849. 34 Beav. 330 ; Patent Artificial Stone
(u) Patent Steam Engine Co., 8 Co., ib. 185 ; Cheshire Patent Salt Co ,
Ch. D. 464. 1 N. R< 533.
(.'•) Diamond Fuel Co., 13 Ch. D.
companies.
PERSONS ENTITLED TO PETITION. 627
A person who lias been declared by the Court to be entitled Bk- Iv- ChaP- 1-
Sect. 3.
to be a shareholder, but who, owing to the negligence of the -
company, has not been registered, is entitled to petition for
a winding-up (z).
A scrip-holder is not entitled to petition for a winding-up Scrip-holders.
order unless he is, or admits himself to be, a contributory (a) ;
or unless there are surplus assets which he has a right to have
distributed.
Under the Building societies act, 1874, any member autho- Building
i i societies.
nsed by three-iourths of the members present at a general
meeting of the society specially called for the purpose, and any
judgment creditor for not less than fifty pounds, may petition
to have the society wound up, either voluntarily under the su-
pervision of the Court, or by the Court ; but no other person
may do so (b) .
The following persons were held entitled to petition under the Winding-
up acts of 1848 and 1849 ; and the decisions in their cases may be usefully
referred to on questions arising under the act of 1862 : —
A scrip-holder of a provisionally registered railway company, who
had not signed either the subscribers' agreement or the parliamentary
contract (c) ;
An original subscriber for shares in an abortive company, and a member
of its provisional committee (rf) ;
A member of the managing committee of an abortive company, who had
been compelled to pay the charges of the company's solicitor, but who had
not taken any shares (e) ;
A member of a company who had not paid his calls (/) ;
A manager of a cost-book company, who was a creditor of the company
for advances made by himself (g) ;
A contributory resident abroad (h) ;
(z) Patent Steam Engine Co., 8 Ch. & S. 7.
T). 4G4. (e) Ex parte Cooke, 3 De G. & S.
(a) Littlehampton Steam, Ship Co., 148.
34 Beav. 256, and 2 De G. J. & S. (/) Ex parte Lawton, 1 K. & J.
521, Turner, L. J., dissenting. See 204; Ex parte Hodsell, 19 L. J. Ch.
under the older acts, Ex parte Cap- 234. See, too, Sherwood Loan Co.,
per, 3 De G. & Sm. 1. 1 Sim. N. S. 165. Compare these
(6) 37 & 38 Vict. c. 42, § 32, subs. with the cases cited supra, note («).
4, and sec Sunderland Building Soc., (g) Ex parte Sedgvnck, 2 Jur. N.
2] Q. B. D. 349. S. 949.
(c) Ex parte Capper, 3 De C. & (h) Ex parte Latta,3 De G. & S.
5. 1. Seenote(a). 186. But he may be compelled to
((/) Ex parte Holms/worth, 3 De G. give security for costs, ibid.
s s 2
628
WINDING UP BY THE COURT,
Bk. IV. Chap 1
Sect. 4.
The executors of a deceased member, though not members themselves (i) ;
Past members (/.-) ;
Where a petition was presented by a shareholder who had entered into
an arrangement with his creditors under the Bankrupt act, an order
was refused, the trustees of the deed of arrangement not having been
served (I).
Circumstances
under which
a company may
be wound up.
a) When
registered.
b) When
unregistered.
SECTION IV.— THE CIRCUMSTANCES UNDER WHICH A COMPULSORY
WINDING-UP ORDER WILL BE MADE.
A company registered under the act may be wound up by
the Court, i.e., compulsorily under the following circumstances
(§ 79) :—
1. Whenever the company has passed a special resolution,
requiring the company to be wound up by the Court ;
2. Whenever the company does not commence its business
here or abroad (if its object be to carry on business abroad)
within a year from its incorporation, or suspends its business
for the space of a whole year (m) ;
3. Whenever the members are reduced in number to less
than seven ;
4. Whenever the company is unable to pay its debts ;
5. Whenever the Court is of opinion that it is just and
equitable that the company should be wound up.
An unregistered company (except a railway company) may
be wound up if it has not less than seven members (n) (§ 199,
cl. 3)—
1. Whenever the company is dissolved, or has ceased to
(i) Re Norwich Yarn Co., 12
Beav. 366.
(7„) Times Fire Assurance Co., 30
Beav. 596.
(1) Ex parte Walter, 3 De G. &
S. 2.
(m) See Capital Fire Insurance
Association, 21 Ch. D. 209 ; Tuma-
cacori Mining Co., 17 E<p 534;
Metropolitan Railway Warehoust
Co., 15 W. B. 1121, L. J. Aban-
doning part of the business is not
enough, Norwegian Titanic Iron Co.,
35 Beav. 223. Nor is' a temporary
suspension of business with the con-
sent of a large majority of share-
holders, Middlesborough Assembly
Rooms Co., 14 Ch. D. 104.
(«) Bolton Benefit Loan Society, 12
Ch. D. 679 ; South London Fish
Market Co., 39 Ch. U. 324.
GROUNDS FOR WINDING UP. 629
carry on business, or is canning on business only for the Bk. IV. Chap. l.
purpose of winding up its affairs (o) ;
2. Whenever the company is unable to pay its debts ;
3. Whenever the Court is of opinion that it is just and
equitable that the company should be wound up.
Further, by the Companies act, 1880 (43 Vict. c. 19, § G),
the registrar of joint stock companies is empowered, after the
necessary notices have been given, to strike off the register the
name of any company which he has reasonable cause to think
has ceased to carry on business, and on notice of this being
published in the Gazette, such company is dissolved.
The act declares the circumstances under which a company Inability to
is to be deemed unable to pay its debts, both where the pay <lebts'
company is registered (§ 80), and where it is not (§ 199, cl. 4).
The circumstances mentioned are, in the case of registered «) In case of
companies, in substance as follows (§ 80) : companies.
1. Whenever a creditor for more than 501. has served on
the company a demand, under his hand, requiring the company
to pay the sum due, and the company has for three weeks
afterwards neglected to pay, or secure, or compound for the
same to the creditor's satisfaction ;
2. Whenever execution, issued by a judgment creditor
against the company, is returned unsatisfied ;
3. Whenever it is proved, to the satisfaction of the Court,
that the company is unable to pay its debts (p).
In the case of unregistered companies, two other circum- b) In case of
stances are added (q) (§ 199, cl. 4), viz. : co^Sfef
1. Whenever a member is sued for a debt of the company,
and notice of the proceeding is served on the company, and the
company has not within ten days paid, secured, or compounded
for the debt, or procured the proceeding to be stayed, or
indemnified the defendant to his satisfaction against the same,
and the costs thereof;
2. Whenever, in the case of a company working a mine
(o) See Family Endowment Soc, Co. of Utah, 20 Eq. 268 ; Globe New
5 Ch. 118, which had transferred its Patent Iron, &c, Co., ib. 337.
business to another company. (r/) The substance only of the sec-
(p) This lets in any evidence of tion is attempted to be here given,
insolvency, Flagstaff Silver Mining
G30
WINDING UP BY THE COURT.
Railway
company
Discretion of
Court.
Bk. IV. Chap. 1. within the jurisdiction of the Stannaries, a customary decree
Sect. 4. J .
- or order absolute for the sale of the effects of the mine has
been made, in a creditor's suit, in the Vice- Warden's Court.
Further, in the case of an unregistered railway company
there must be a warrant for the abandonment of the
railway (r).
In connection with the above enactments, it is necessary to
advert to section 86, which empowers the Court, upon hearing
a petition for a winding-up order, to dismiss the same with
or without costs, adjourn the hearing conditionally or un-
conditionally, or make aii}T interim or other order that it
deems just.
Moreover, by sections 91 and 149, the Court is empowered
to have regard to the wishes both of the contributories and of
the creditors, and to have meetings called in order to ascertain
such wishes (s). It is obvious, from the foregoing provisions,
that in all cases the Court has a very wide discretion as to
what it will do when applied to for an order to wind up. But
wide as the discretion is, there are certain principles by which
the Court is guided, and which reduce the practice on this
subject to reasonable certainty. These principles will be best
expounded by considering first the circumstances under which
the act declares that a winding-up order can be made, and
secondly the circumstances by which the Court is usually
influenced in exercising its discretion as to the course it will
pursue.
1. Circumstances under which a winding-up order ran be made.
No company can be wound up by the Court except in the
cases specified above (t), and of these the only two which have
given rise to difficulty are thus expressed : 1. " Whenever it is
proved to the satisfaction of the Court that the company is un-
able to pay its debts.''' 2. " Whenever the Court is of
opinion that it is just and equitable that the company should
be wound up."
(r) 32 & 33 Vict. c. 114, §4.
(.s) This power can be exercised
on the hearing of a winding-up
petition, Western of Canada Oil,
&c, Co., 17 Er[. 1.
(t) Langham Skating Rink Go., 5
CI). D. (i(J9 ; Cork Skipping and
Mercantilt Co,, 7 L U. \r. I \8
GROUNDS FOR WINDING UP.
631
The difficulty as to insolvency has been to determine Bk- Iv- cliaP- 1-
whether prospective debts ought to be taken into account.
„ . . . 1. Inability to
llns point was discussed in the case of the European Lije pay debts.
Assurance Society (u), and it was there decided that by European Life
Assurance
inability to pay debts was meant inability to pay debts Society.
actually due and payable ; and that liabilities under sub-
sisting policies were not to be reckoned : and this construc-
tion of the clause in question may be taken to be correct,
although it has been since enacted that in considering the
solvency of life insurance companies, the Court is to take
into account the contingent or prospective liabilities under
policies and annuities, and other existing contracts (x).
In considering the question of insolvency, uncalled-up capital Position of
must be estimated as an asset ; and unless there is evidence to c piia
show that it cannot be recovered it will be estimated at its full
nominal value (y). On the. other hand, the paid-up capital of a
company is not a debt within the meaning of the statute (z) ;
it is not a debt of the company in any legal sense.
Assuming a company not to be insolvent, circumstances may 2. Just and
nevertheless exist to render it just and equitable to wind it up. wind np.
It is obvious, from the context of the act, that the words,
" whenever the Court is of opinion that it is just and equitable
that the company should be wound up," were intended to
apply to cases other than those previously enumerated ; and it
has been decided that, wide as the words are, they only apply
to cases resembling some one or other of those before described.
Unless, therefore, a company can be brought within one or more
of the previous specific provisions, or unless there are questions
to be settled and rights to be adjusted which can only be
settled and adjusted by converting into money the assets of
the compan}r, whether actual or raiseable by calls, and by dis-
charging the company's liabilities, distributing the surplus
assets and finally dissolving the company, the Court will not
order it to be wound up (a).
(it) 9 Eq. 122. (:.) See § 80, and § 199, cl. 4.
(x) 33 & 34 Vict. c. 61, § 21. (a) The Agriculturist Gattlt Ins.
(y) European Life Ass. Soc, 9 Eq. Co., 1 Mac. & G. 170. .See, also,
L22. See, as to insurance companies, the judgments in Ex part Wyld,\
infra, p. 634, Mac. & (J. 1; Ex parte Wise. I
632
WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 4.
Misconduct on
part of direc-
tors.
Companies
■which ought to
be stopped.
Fraudulent
companies.
London and
County Coal
Company.
Abortive
companies.
In conformity with these principles it has been held, as well
under the older acts as under the Companies act, 1862, that
where the object of the petitioner is to make directors or
others account to the company for the misapplication of its
assets, or to make good losses for which they are liable to the
company (b), or to prevent the directors from exceeding their
powers, e.g., by amalgamating with another company (c), the
Court will leave the petitioner to such other remedies, if any,
as he may have, and will not make a winding-up order unless
the liabilities of the company are such as to render it neces-
sary or expedient to have recourse to a general winding-up.
At the same time if it can be shown to the satisfaction of
the Court that a company, although not insolvent, ought to be
annihilated, the Court will order it to be wound up. Proof of
inability to commence business after the lapse of a year (d),
continuing fraud (e), improper registration (/), will induce the
Court to put an end even to a solvent company.
In a case in which a company had been fraudulently got up,
and was kept on foot by fraudulent practices, the V.-C. Wood
ordered the company to be wound up at the instance of a con-
tributory, although the company had only existed three or four
months, and although it consisted of only eleven members, and
although the majority of them desired to go on, and although
it was not proved that the company was unable to pay its
debts (g). The evidence showed that it would be unjust and
inequitable to allow the company to go on.
Again if it be proved to be impossible for a company to
carry on the business for which it was formed, the Court will
order the company to be wound up even though it has been in
existence less than a year and is solvent ; and the fact that
the majority of the shareholders are opposed to the petition,
Drew. 465 ; Suburban Hotel Co., 2
Ch. 737 ; Diamond Fuel Co., 13 Ch.
D. 400. See, also, the other cases
referred to in the summary of cases
at the end of this section, under the
head " Petition dismissed, Company
not Insolvent."
(b) Anglo-Greek Steam Co., 2 Eq.
I ; Ex parte Wise, 1 Prew. 465.
(r) See Irrigation Co. of France, 6
Ch. 176.
((/) Tumacacori Mining Co., 17
Eq. 534.
(e) See infra, note (g).
(/) Ante, p. 622, note (r).
(g) London and County Coal Co., 3
Eq. 355.
GROUNDS FOR WINDING UP. 633
does not affect the question, for a majority however large has Bk. IV. Chap. l.
no power to force a minority to embark in a business into -
which it has never undertaken to enter (/<).
The greatest difficulty, however, is felt in cases where there Company not
are no such circumstances as those just alluded to ; but where ProsPerous-
a company is not prospering.
Where a company's assets are sufficient to meet not merely
its actual debts, but also its existing liabilities, the Court
will not speculate on the possible consequences of continuing
the business of the company, and will decline to wind it
up (/). The fact of there having been fraudulent represen-
tations in the prospectus is not sufficient, as the shareholders
may waive the fraud and decide to go on (k). The circum-
stance that a company which is solvent will, if not wound up,
probably contract further liabilities, which it will be unable to
pay, is not of itself sufficient to induce the Court to make a
winding-up order (/). But if a company's assets, including its
uncalled-up capital, are not sufficient to discharge its existing
liabilities ; then, although the company might be able to pay
its existing debts, the Court will deem it just and equitable to
order the company to be wound up (m).
As regards impossibility of going on at a profit, a difference Difference be-
exists between a limited and an unlimited company. If a InTun/hnUed
company is unlimited, and its capital is all paid up and spent, comPauies-
and the company is making no profit, and is getting worse and
worse, a shareholder is entitled to decline to run further risk,
and to have the company wound up (n). But this reasoning
does not apply to a limited company, and consequently the
(h) Haven Gold Mining Co., 20 441.
Ch. D. 151 ; German Date Coffee Co., (k) Haven Gold Mining Co., 20 Ch.
lb., p. 169 ; Suburban Hotel Co., 2 D. 154.
Ch. 737. See, also, Diamond Fuel (I) See cases in note (i).
Co., 13 Ch. D. 400. (m) See the judgment in the
(i) Langham Skating Rink Co., 5 European Life Ass. Soc., 9 Eq. 122.
Ch. D. 669, noticed infra ; Suburban (n) Partn. p. 576, and Norwich
Hotel Co., 2 Ch. 737 ; Joint Stock Yam Co., 12 Beav. 366 ; Electric
Coal Co., 8 Eq. 146 ; European Life Tel. of Ireland, 22 Beav. 471. Com-
Ass. Soc, 9 Eq. 122 ; Professional, pare Professional, &c, Building Soc,
dr., Building Soc, 6 Ch. 856 ; 6 Ch. 856, where the petitioners
Planet Benefit Building Soc, 14 Eq. were under no liability.
634 WINDING UP BY THE COURT.
Bk. IV. Chap. l. Court has on several occasions declined to wind up a limited
— company under circumstances which would have induced it to
wind up the company had it been unlimited (o). Thus in the
Langham Lancjliam Skating Rink Company (p) the Court refused to order
Skatmg Rink a company to ke wounci Up? although the shares were not paid
up in full and there was considerable evidence to show that
profit was not to be expected. The company was not prosper-
ing and had abandoned most of the objects for which it had
been formed; but it was not insolvent, and a majority of
members opposed the petition.
Life insurance With respect to Life Assurance companies, it has been
companies. specially enacted as follows (q) : —
33 & 34 Vict. c. « The Court may order the winding-up of any company, in accordance
61, §§ 21, 22. witli tlie compailjeg act; 1862, on the application of one or more policy-
holders or shareholders, upon its being proved to the satisfaction of the
Court that the company is insolvent, and in determining whether or not
the company is insolvent, the Court shall take into account its contingent
or prospective liability under policies and annuity and other existing con-
tracts ; but the Court shall not give a hearing to the petition until security
for costs for such amount as the judge shall think reasonable shall be given,
and until a prima facie case shall also be established to the satisfaction of
the judge (r) ; and in case of a proprietary company having an uncalled
capital of an amount sufficient, with the future premiums receivable by the
company to make up the actual invested assets equal to the amount of the
estimated liabilities, the Court shall suspend further proceedings on the
petition for a reasonable time (in the discretion of the Court), to enable the
uncalled capital, or a sufficient part thereof, to be called up ; and if, at the
end of the original or any extended time for which the proceedings shall
have been suspended, such an amount shall not have been realised by
means of calls as, with the already invested assets, to be ecpial to the
liabilities, an order shall be made on the petition as if the company had
been proved insolvent."
" The Court, in the case of a company which has been proved to be
(o) See, in addition to the case in This act includes Mutual Life As-
the text, London Suburban Bank, 6 surance companies, see Great Britain
Ch. 641 ; Suburban Hotel Co., 2 Ch. Mutual Life Assurance Society, 16
737 ; Joint Stock Goal Co., 8 Eq. 146. Ch. D. 246. For the basis on which
In each of these cases, the company annuities and policies are to be
was not prospering, but the majority valued, see Life Assurance Com-
, if members desired to go on. panies act, 1872, 35 & 36 Vict. c. 41 ,
(p) 5 Ch. D. 669. The petition § 5, and infra.
•was a contributory'e petition. See (?') This is not necessary where
the last note, and compare Diamond the company has passed a. resolution
Co., 13 Ch. D. 400. to wind up voluntarily, British
o) 33 & 34 Vict, c 61. $ 21. A lliance Ass, Corp., 9 Ch D. 635
GROUNDS FOR WINDING UP. 635
insolvent, may, if it thinks lit, reduce the amount of the contracts of the Bk. IV. Chap. 1.
company upon such terms and subject to such conditions as the Court thinks °ect- 4'
just, in place of making a winding-up order "(.-j.
If the Court proceeds under this latter section the contracts
to be included in the scheme for reduction are, in the absence
of special circumstances, those in existence at the date of the
presentation of the petition for winding up ; and if there are
two classes of policies, participating and non-participating,
they must be reduced pari passu. The claims of policy-holders
and annuitants, which have matured into debts before the date
of the presentation of the petition, and all outside debts, must
be paid in full by the company ; and the company is entitled
to receive in full payment of all monies then due to it, whether
in respect of arrears of premium or otherwise (0-
2. Circumstances inflvA ncing the discretion of the Court .
Assuming that circumstances are proved to exist under
which a company may be ordered to be wound up, it by no
means follows that it will be ordered so to be (u). The Court,
as already observed, has in all cases a wide discretion as to the
course it will take ; but in the exercise of this discretion a
marked difference exists between cases in which a winding-up
order is sought by creditors and those in which it is sought by
contributories.
ft) Creditors' petitions.
When a petition is presented by a creditor for an order to «) Creditors'
wind up a company, and his debt is not disputed, or has been P6
established by legal proceedings, and there is evidence that the
company is unable to pay its debts within the meaning of the
statute, it is almost a matter of course to make the order (./;) ;
(s) 33 & 34 Vict. c. 61, § 22 ; 20 Ch. D. 352.
Great Britain Mutual Life Assurance («) See this very clearly laid down
Society, 10 Ch. D. 246. If a wind- in Metropolitan Saloon Omnibus Co.,
ing-up order has been made, it must 5 Jur. N. S. 922.
be discharged Wore the Court pro- (.,•) See Westi rn of < 'anada Oil Co.,
ds under this section. 17 Eq. 1, and the cases cited infra,
(t) Crmt Britain Mutual Lif, As- notes (c) and (h).
Durance Society, 19 Ch. I). 39. a lid..
636
WINDING UP BY THE COURT.
Bk. IV. Chap. l. but if other creditors oppose the petition and it appears that
Sect. 4. , .... . • t
- the petitioning creditor will gam nothing by a winding-up
order, the petition may he dismissed at once (y), or ordered to
stand over (z). The opposition of the company, or the wishes
of the contrihutories, go for little in such a case (a) : nor does
the fact that the contrihutories desire to wind up voluntarily (b)
usually induce the Court to abstain from making a compulsory
order (c). The smaller, moreover, the assets of the company,
the less reason is there to attend to the wishes of the contrihu-
tories ; for where a company is clearly insolvent, its assets may
be regarded as belonging rather to its creditors than to its
members (d). But if the assets are very small and the com-
pany is being wound up voluntarily, the Court may make a
supervision order instead of a compulsory order, unless the
creditor shows that he would be prejudiced thereby (e).
The fact that the company is substantially a foreign com-
pany, and that there will be great difficulty in winding it up, is
not sufficient to justify a refusal to make a winding-up order (/) ;
and a winding-up order may be made even though winding-up
proceedings are pending abroad (g).
If, however, the Court is satisfied by proper evidence that
the majority of the creditors of a company are of opinion that a
compulsory order to wind up is not desirable, the Court will
give effect to their wishes (h) ; although where there had been
Creditors
divided in
opinion.
(?/) Uruguay Central, &c, Rail. Co.
of Monte Video, 11 Ch. D. 372 ;
Chapel House Colliery Co., 24 Ch. D.
259 ; The Free Fishermen of Faver-
sham, 36 Ch. D. 329.
(;;) Great Western Coal Consumers'
Co., 21 Ch. D. 769 ; Olathe Silver
Mining Co., 27 Ch. D. 278.
(a) See the next four notes.
(h) General Rolling Stock Co., 34
Beav. 314.
(c) However, in the Brighton Hotel
Co., 6 Eq. 339, the Court gave the
company time to make some arrange-
ment for paying its creditors. So,
also, in Western of Canada Oil Co.,
17 Eq. 1 ; St. Thomas' Dock Co., 2
Cb. D. 116. This indulgence was,
however, refused in Home Ass. Ass.,
12 Eq. 114.
(d) Isle of Wight Ferry Co., 2 Hem.
& M. 597.
(e) New York Exchange, Limited,
39 Ch. D. 415.
(/) Gen. Co. for Promoting Land
Credit, 5 Ch. 363, and Princess of
Reuss v. Bos, L. R. 5 H. L. 176.
(g) Commercial Bank of South
Australia, 33 Ch. D. 174 ; Matheson
Brothers, Limited, 27 Ch. D. 225.
(h) Olathe Silver Mining Co., 27
Ch. D. 278 ; Chapel House Colliery
Co., 24 Ch. D. 259 ; Great Western
Coal Consumers' Co., 21 Ch. D. 769 ;
Uruguay Central and Hygueritas
Rail. Co. of Monte Video, 11 Ch, D.
GROUNDS FOR WINDING UP.
G37
ample time to consult them, and they had not been called Bk. IV. Chap. 1.
together, and had not expressed their wishes in such a way as -
to satisfy the Court, the opposition of a considerable number
of them did not induce the Court either to refuse the order, or
even to direct the petition to stand over until the creditors
could be called together (i) .
Again, if the petitioning creditor has assigned or incumbered Assignment of
his debt, so as to have little, if any, interest in it, the Court creditor's debt.
will be reluctant to make an order at his instance (k) : and if
he has assigned his debt after the petition has been presented
the Court will refuse the order (I).
Further, if a company has been specially incorporated for Company for
public purposes the Court will not order it to be wound up at pubhc pur"
1 poses.
the instance of a creditor unless the Court is satisfied that he
cannot otherwise obtain payment (m).
Moreover, it was never intended that a petition to wind up a Disputed debt,
company should be had recourse to for the purpose of trying a
disputed debt (n) : and if the petitioner's debt is bond fide dis-
puted the Court will either dismiss the petition at once (o), or
at least not make a winding-up order, until the debt has been
372 ; West Hartlepool Iron Works
Co., 10 Ch. 618 ; Western of Canada
Oil Co., 17 Eq. 1 ; St. Thomas' Dock
Co., 2 Ch. D. 116 ; Langley Mill
Steel, dr., Co., 12 Eq. 26, and the
next note.
(i) See Oriental Commercial Bank,
W. N. 1866, 283. The Imperial
Mercantile Credit Ass., ib. 257, was
decided on a contributory 's petition ;
and Gen. Boiling Stock Co., 34 Beav.
314.
(k) European Banking Co., 2 Eq.
521, where the petition was dis-
missed.
(1) Baris Skating Rink Co., 5 Ch.
D. 959.
(m) Exmouth Docks Co., 17 Eq.
181, where the petitioning creditor
was an unpaid debenture-holder,
and no application had been made
for a receiver. And see per Fry, L. J.,
36 Ch. D. 347.
(n) In Cercle Restaurant Castiglione
Co. v. Lavery, 18 Ch. D. 555 ; Niger
Merchants Co. v. Capper, ib. 557 note,
and Cadiz Waterworks Co. v. Barnett,
19 Eq. 182, injunctions were granted
to restrain the presentation of a
petition, and in Gold Hill Mines, 23
Ch. D. 210, the petition was dis-
missed on motion, and all proceed-
ings under it stayed. As to malici-
ous petitions, see ante, p. 614.
(o) Gold Hill Mines, 23 Ch. D.
210 ; London and Baris Banking
Corporation, 19 Eq. 444 ; London
Wharfing and Warehousing Co., 35
Beav. 37, where twenty-one days
after demand had elapsed ; Catholic
Publishing Co., 2 Be G. J. & Sm.
116, where they had not. See, also,
Ben-y-van Colliery Co., 6 Ch. D. 477,
ante, p. 624, note (/).
638
WINDING UP BY THE COURT.
Judgment
creditor.
Bk" sI'ctC4aP" h estaolished (P)- But the Court will itself judge whether the
debt is disputed simply to get rid of the petition, or bond fide
because it is not due (q), and unless the company adduce such
evidence as will show that there is a question to be tried a
winding-up order ought to be made (r).
Even if the petitioner has obtained judgment against the
company, still if there is evidence to show that the judgment
was obtained by fraud, and the petitioner declines an inquiry
on the subject, his petition will be dismissed (s). At all events,
a winding-up order ought not to be made in such a case with-
out giving the company an opportunity of impeaching the
judgment.
Where the petitioning creditor was himself a member of the
company, and the debt due to him was due by the rules of the
company, and the company was solvent, and the object of the
petitioner was to force the company to pay him in preference
to other members in the same position as himself, the Court
refused to make a winding-up order (t).
Except in the case of building societies (a), it is not necessary
that the petitioning creditor's debt should amount to 50/. ; but if
it is of less amount he must show that the company is unable
to pay its debts by some other evidence than non-payment of
himself within three weeks after demand. A judgment debt of
less than 501. followed by an unsatisfied execution has been
decided to be sufficient (x). If non-payment within three
weeks after demand is relied upon, that period must have
expired before the presentation of the petition {y).
Inability to pay debts is, in a creditor's petition, the ground
generally relied upon for obtaining a winding-up order ; but
Creditor a
member seeking
an unfair
advantage.
Amount of
debt.
Ground of
petition.
{p) Bhydydefed Colliery Co., 3 De
G. & J. 80 ; Inventors' Association, 2
Dr. & Sm. 553. See, also, Brighton
Club and Norfolk Hotel Co., 35 Beav.
204.
(q) King's Cross Industrial Dwel-
lings Co., 11 Eq. 149.
(r) Great Britain Mutual Life As-
surance Society, 16 Ch. D. 246.
(s) Hope Mutual Life Assuranct
Co., 1 N. It. 542, L. J., and Bowes
v. Same Co., 11 H. L. C. 389.
(t) Planet Benefit Building Soc, 14
Eq. 441.
(u) See 37 & 38 Vict, c. 42, § 32,
el. 4.
(x) London and Birmingham Al-
kali Co., 1 De G. F. & J. 257.
(y) Catholic Publishing Co., 2 De
G. J. & Sm. 110. See, also, ante, p.
629, note (v).
GROUNDS FOR WINDING UP. G39
a creditor's petition may be supported on any of the other Bk. IV. Chap. 1.
grounds mentioned in the statute (ante, p. 028).
h) Contrib utories' petitions.
When a petition to wind up a company compulsorily is 0) Contributo-
presented by a contributory, the Court will take into considera- ries' Petlt,ons-
,. 1-1 ,■ i ,, ,, . , a) Under older
tion not only the question whether the company is brought acts.
within one or more of the statutory provisions under which it
may be wound up, but also whether an order to wind up is
necessary or expedient having regard to the interests of the
shareholders generally. This was clearly settled when the
Winding-up acts of 1848 — 9 were in force (z) ; and not only
did the Court decline to make a winding-up order under those
acts at the instance of a contributory, where the company was
not shown to be insolvent (a) ; but even where a company was
under heavy liabilities, and had ceased to carry on its business,
the Court would not order it to be wound up if measures were
being taken to wind up its affairs out of court, and there was
good reason to suppose that its liabilities would be discharged
and its assets divided as satisfactorily without the interference
of the Court as with it (b).
The discretion entrusted to the Court by the Companies act, ^ Under the
1862, is certainly not more restricted than that which it Companies act,
lob-.
possessed under the older acts (c) ; and in exercising that
discretion, when a winding-up order is sought by a contributory,
the Court is not only guided by the state of the company, but
also by the utility of the order, if made (d), and by the wishes
(z) See Ex parte Wyld, 1 Mac. & Ex parte Watson, 3 De G. & S. 253 ;
G. 1, where the company, although Ex parte Guest, 5 ib. 458 ; Be Mon-
not prosperous, was solvent; Ex mouthshire and Glamorganshire Barik-
parte Wise, 1 Drew. 465 ; Metro- ing Co., 15 Eeav. 74. See, too Ex
politan Saloon Omnibus Co., 5 Jur. parte Phillvpps, 1 Sim. N. S. 605
N. S. 922. In Ex parte Goldsmith, where a suit was pending.
14 Jur. 734, V.-C. Wigram seems to (c) See §§ 86, 91, 149, of the act of
have thought that the act of 1848 1862 ; Suburban Hotel Co., 2 Ch.
was more imperative than it really 737 ; Professional, dec, Building Soc.
was. 6 Ch. 856 ; Planet Benefit Building
(a) See the last note. Soc, 14 E<p 441.
[b) Ex parte Wise, 1 Drew. 465 ; (d) Middlesborough Assembly Rooms
610 WINDING UP BY THE COURT.
Bk. iv. Chap. l. of the majority of the shareholders. Even where it is agreed
Sect. 4. J " &
on all hands that the company must he wound up, the Court
will, as a rule, refuse to order it to he wound up compulsorily
at the instance of a contributory, if the majority of other share-
holders prefer to wind up voluntarily, or subject to the super-
vision of the Court, and bond fide intend so to do (<?). If a
resolution to wind up voluntarily has been duly passed and con-
firmed the Court will not order the company to be wound up com-
pulsorily upon a contributory's petition ; unless it be proved that
the resolution has been improperly obtained, as for instance where
it has been procured by directors or shareholders, whose
conduct is complained of and whose object is to prevent inquiry,
or unless the petition is supported by creditors (/). Nor will
the Court grant a supervision order in such a case, unless special
circumstances are proved (g). If, however, the contributory's
petition was presented before the resolution for a voluntary
winding-up was confirmed the case may be different (It).
Very small Although one of the circumstances under which a registered
companies. company may be wound up by the Court is when the members
are less than seven in number, the Court will not, at the
instance of a contributory, order a company with very few
members to be wound up compulsorily if a voluntary winding-
up is desired, and there are no circumstances showing that
the company will not be fairly wound up voluntarily (i). But
if the question is whether the compai:ry shall be wound up or
Co., 14 Ch. D. 104 ; and New Gas ib. 339 ; West Surrey Tanning Co.,
Generator Co., 4 Ch. D. 874, where 2 Eq. 737 ; Fire Annihilator Co., 32
there were no debts or assets worth Beav. 561; and Littlehampton, dc.,
mentioning, and no members except Steam Ship Co., 2 D. J. & S. 521,
the subscribers to the memorandum are examined. See, also, London and
of association. Compare Tumacacori Mercantile Discount Co., I Eq. 277.
Mining Co., 17 Eq. 534, where there The question turns on the true con-
was property and fraud alleged. struction of §§ 79, 129 and 145 of
(e) See City and County Ban!;, 10 the Companies act, 1862.
Ch. 470 ; London Mercantile Dis- (g) Gold Company, 11 Ch. D. 701,
count Co., 1 Eq. 277 ; General Inter- 718.
national Agency Co., 36 Beav. 1. (/<) Gold Company, 11 Ch. D. 701,
(/) Gold ''"., 11 Ch. D. 701, 717; West Surrey Tunning Co., 2
where the earlier cases of Bank of Eq. 737.
Gibraltar and Malta, 1 Ch. 69; (i) Natal Co., 1 Hem. & M. 639,
Imperial Bank of China and Japan, where there were nine shareholders.
GROUNDS FOR WINDING UP. 641
go on, and the Court thinks it ought to be stopped, the small Bk. IV. Chap. 1.
number of the members is no reason why a compulsory order
should not be made (k).
Where, in the case of a limited company, a contributory Majority of
ie •-!• t -ii • f i members de-
seeks for a winding-up order, and the majority ol the members siring to go on.
are of opinion that there is a reasonable prospect of making
arrangements for paying their debts (I), or of carrying on the
business of the company with success, and they oppose the
application on this ground, the Court will give effect to their
wishes and decline to make a winding-up order (m) ; unless
the company is a fraudulent company which ought to be
stopped (n), or the object for which the company was formed
is clearly unattainable (o). In the case of an unlimited com-
pany, however, the case is different, as has been already
pointed out (p).
Although the act declares that a compairy shall be wound up Companies
amalgamated
if it does not commence business within a year from its incor- with others,
poration, or if it suspends its business for the space of a year,
yet, a company which has transferred its business to another
company, and has ceased to carry on business itself only by
reason of such transfer, will not be ordered to be wound up
unless there are other grounds for the order in addition to
suspension of business (q). If, however, the company which
has transferred its business is unable to pay its debts, and the
company which has taken its business does not discharge them,
an order to wind up the first company will be made (/•)•
(k) Sanderson'' s Patents Assoc, 12 ib. p. 169; Suburban Hotel Co., 2 Ch.
Eq. 188, where there were only seven 737, and see ante, p. 632.
shareholders ; London and County (jj) See ante, p. 633.
Coal Co., 3 Eq. 355. But see New (</) British Provident Assur. So-
Gas Generator Co., 4 Ch. D. 874. ciety, 1 Dr. & Sm. 113; Anglo-Aus-
(l) City and County Bank, 10 Ch. tralian Assurance Co., 1 Dr. & Sm.
470. 113, where the petitioner had con-
(//() Ante, p. 633. See, also, -Fad- curred in the amalgamation; Ex
aye Parisien Co., 10 Jur. X. S. 121, parte Cookson, 15 Jur. 615.
L. J. ; Metropolitan Saloon Omnibus (r) Ex parte Lavton, 1 K. & J.
Co., 5 Jur. X. S. 922, L. J. 204, where the petitioner was being
(?() London ami County Coal Co., sued by the creditors. See, also,
3 Eq. 355. Pennant and Craigwen Mining Co.,
(o) Haven Cold Mining Co., 20 15 Jur. 1192 ; Ex parte Lee, 3 De
Ch. D. 151 ; German Date Coffee Co., G. & Sm. 112 ; Ex parte Phillips, 3
L.C. T T
inquiries
612 WINDING UP BY THE COURT.
Bk. IV. Chap, l it may here be observed, that if a company has passed a
- resolution to wind up voluntarily, and has transferred its
under §§161 business to another company, under §§ 1G1 and 162 of the
Companies act, 1862, and a contributory is desirous of im-
peaching the validity of such transfer, he can only do so by an
action. If he petitions for leave to bring an action and for a
compulsory winding-up order, the petition will not be dis-
missed, but will be ordered to stand over with leave to bring
an action if the Court is satisfied by the evidence before it
that there are reasonable grounds for impeaching the trans-
actions complained of (s).
Preliminary Under the Winding-up act of 1848, § 12, the Court was
expressly empowered to direct preliminary inquiries before
finally disposing of a petition to wind up. This power is also
exercisable under the Companies act, 1862, and in several
cases petitions have been directed to stand over, in order that
meetings might be held and the wishes of the creditors and
contributories ascertained (t). At the same time it was de-
cided under the older acts, and the same rule applies now, that
no preliminary inquiries ought to be directed unless the Court
feels unable to come to a satisfactory conclusion as to the
proper course to take ; nor unless it is also satisfied that
further inquiry will enable it to form a more correct or
decisive opinion (u).
Where there has been ample opportunity to ascertain the
vfie'ws of creditors or contributories, the Court will not allow
De G. & Sm. 3 ; Family Endowment -shire and Glamorganshire Banking
Hoc, 5 Ch. 118, where, however, the Co., 15 Beav. 74 ; Ex -parte Trout-
petitioner was a creditor. See infra, bed; 13 Jur. 157. In Re Tlie Great
as to insurance companies. Eastern anil Western Rail. Co., 3 De
(s) See Imperial Bank of China, G. & Sm. 218, the petition was un-
India, and Japan, 1 Ch. 339. See, opposed ; but it was intimated that
also, Irrigation Co. of France, 6 Ch. it would be well if no winding-up
176, where a compulsory winding- order were to be made on an unop-
up order was refused. posed petition, without a preliminary
(t) See infra. Cases in which inquiry, as it had been found that
petitions stand over for such a pur- such orders would very often not
pose are not usually reported. have been made if the Court had
(u) See Sherwood Lean Co., 1 been more fully informed of the
Sim. N. S. 165 ; Ex parte Pocock, facts. This, however, is not the
1 De G. & S. 731; Re Monmouth- usual practice.
GROUNDS FOR WINDING UP. G43
further time for the purpose, unless there is some special Bk- Iv- cliaP- *■
reason for so doing (x) ; and where the contributories have -
already had a meeting and expressed their wishes, a further
meeting will not be directed simply because the first may not
have been altogether regular (//). Nor will a meeting be
directed if no grounds for winding up are established (z).
With respect to Life Insurance companies, which have amal- Amalgamated
gamated with another which is being wound up, it is provided companies.
as follows by 35 & 36 Vict. c. 41, § 4 :
" Where the business or any part of the business of a life assurance 35 & 36 Vict,
company has, either before or after the passing of this act, been transferred c- 41» § 4-
to another company under an arrangement in pursuance of which such
first-mentioned company (in this act called the subsidiary company), or the
creditors thereof, has or have claims against the company to which such
transfer was made (in this act called the principal company), then if such
principal company is being wound up by or under the supervision of the
Court, either at or after the passing of this act, the Court shall (subject as
hereinafter mentioned) order the subsidiary company to be wound up in
conjunction with the principal company, and may, by the same or any
subsequent order, appoint the same person to be liquidator for the two
companies, and make provision for such other matters as may seem to the
Court necessary, with a view to such companies being wound up as if they
were one company ; and the commencement of the winding up of the
principal company shall, save as otherwise ordered by the Court, be the
commencement of the winding up of the subsidiary company ; the Court,
nevertheless, shall have regard, in adjusting the rights and liabilities of the
members of the several companies between themselves, to the constitution
of such companies, and to the arrangements entered into between the said
companies in the same manner as the Court has regard to the lights and
liabilities of different classes of contributories in the case of the winding up
of a single company, or as near thereto as circumstances admit.
" When any subsidiary company, or company alleged to be subsidiary,
is not in process of being wound up at the same time as the principal com-
pany to which it is subsidiary, the Court shall not direct such subsidiary
company to be wound up, unless, after hearing all objections (if any) that
may be urged by or on behalf of such company against its being wound up,
the Court is of opinion that such company is subsidiary to the principal
company, and that the winding up of such company in conjunction with
the principal company is just and equitable.
" Where any subsidiary company and principal company are being
wound up by different branches of the Court, the Court to which appeals
(.<;) Oriental Commercial Bank, W. (z) Langham Mating Rink Co., 5
N. 1866,283. Ch. D. C69 ; Joint Stock Coal Co., 8
(ij) Imperial Mercantile Credit As- Eq. 146.
sociatim, ib. 257.
t t U
644 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. from such branches lie shall make an order directing in which branch the
°ectj 4j winding up of such companies is to be carried on, and the necessary pro-
ceedings shall be taken for carrying such order into effect.
" An application may be made in relation to the winding up of any sub-
sidiary company, in conjunction with a principal company, by any creditor
of, or person interested in, such principal or subsidiary company.
" Where a company stands in relation of a principal company to one com-
pany, and in the relation of a subsidiary company to some other company
or where there are general companies standing in the relation of subsidiary
companies to one principal company, the Court may deal with any number
of such companies together or in separate, groups, as it thinks most
expedient, upon the principles laid down in this section."
3. Summary of cases.
Analysis of the The decisions bearing on the subject above considered are
decisions on this „ '. . ... .
subject. very numerous, but alter the foregoing observations it will be
sufficient to notice the most important of them very shortly,
and this may best be done by collecting them into three
groups, as follows :
1. Cases in which a compulsory winding-up order has been
made.
2. Cases in which a compulsory winding-up order has been
refused.
3. Cases in which a compulsory winding-up order has been
deferred.
Analysis of The cases in which an order to wind up subject to super-
C1S6S
vision has been made in preference to a compulsory order will
be noticed hereafter {infra, c. 2).
1. Order made. 1. ORDER MADE.
A. Creditors'1 petitions.
Orders made on creditors' petitions are seldom reported. It is when no
order is made that a report is needed.
Commercial Bunk of South Australia, 33 Ch. D. 174.
Bank incorporated, and carried on business, in Australia ; not
registered here, but had a branch office in London. Winding up
proceedings were pending in Australia. North, J., made an order,
but expressed an opinion that the proceedings here should be
ancillary to those in Australia, and that the liquidator should
only deal with assets in this country. Compare Matheson Brother;
Limited, 27 Ch. D. 225, when no order was made.
r; HOUNDS FOR WINDING UP. 645
General Rolling Stock Co., 34 Beav. 314. Bk. IV. Chap. 1.
Company unable to pay its debts. Members desired to wind ect'
up voluntarily, and some creditors supported them. Analysis of
Isle of Wight Ferry Co., 2 Hem. & M. 597. cases-
Company incorporated by act of Parliament, and petitioning for 1- Order made,
further powers, but utterly insolvent, and alleged to have no
saleable assets at all.
Family Endoivment Soc., 5 Ch. 118. )
National Provincial Life Ass. Co., 9 Eq. 306. J
Company amalgamated with another company which was itself
being wound up.
General Co. for Promotion of Land Credit, 5 Ch. 363, and Princess of
Beuss v. Bos, L. R. 5 H. L. 176.
Company formed and registered under the act ; but consisting
entirely of foreigners, and with no assets in this country.
King's Cross Industrial Dwellings Co., 11 Eq. 149.
Petitioner's debt disputed, but on grounds considered un-
substantial.
Compare cases under head No. 3, p. 652.
Home Assurance Association (No. 2), 12 Eq. 114.
Company insolvent (?), but desiring time to pay.
Flagstaff Silver Mining Co., 20 Eq. 268 ; Globe New Patent Iron Co., 20
Eq. 337.
Company proved to be unable to pay its debts, though no
execution had issued and no statutory demand had been made.
B. Contributories' petitions.
Haven Gold Mining Co., 20 Ch. D. 151.
German Date Coffee Co., 20 Ch. D. 169.
In both these cases it was impossible for the company to carry
on the business for which it was formed. The petitions were
opposed by the majority of the shareholders, and in the latter case
a year had not elapsed since the formation of the company.
Diamond Fuel Co., 13 Ch. D. 400.
Company's business had been carried on at loss, its capital had
been expended and its property, except some patents which had
nearly expired, had been sold at a great sacrifice, and the business
could not be resuscitated. The petitioner was a fully paid-up
shareholder, but it was shown that the company had claims for
large sums against the directors, which if recovered would leave a
considerable surplus to be divided among the shareholders.
Tumacacori Mining Co., 17 Eq. 534.
Company doing nothing after four years ; assets to divide ; debts
to pay ; majority desirous of settling out of Court.
Quaere, if an order ought in this ease to have been made ? see
4 Ch. D. 876.
West Surrey Tanning Co., 2 Eq. 737.
Company doing no business— circumstances to be investigated —
616 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. voluntary winding up proposed, but one director able to carry
Sect- 4- everything as lie liked.
Analysis of Fire AnnihUator Co., 32 Beav. 561.
cases- Voluntary winding up going on for five years, and not ended.
1. Order made. See obs. (ante, p. 640), note (/).
Contributory 's London and County Coal Co., 3 Eq. 355.
Pe 1 lon" Company only three or four months old ; formed dishonestly ;
the directors themselves not paying anything on their shares, and
defraying the expenses out of money obtained from an unwary
secretary, who had taken and paid for shares in order to secure his
appointment.
Sanderson's Patents Assoc., 12 Eq. 188.
Only seven shareholders, and no business. Compare New Gas
Generator Co., 4 Ch. D. 874.
Metropolitan Railway Warehouse Co., W. N. 1867, 94.
Company unable to commence business within a year.
Ex parte Latta, 3 De G. & Sm. 186.
Pennant and Oraigwen Mining Co., 15 Jur. 1192.
Ex parte Sedgwick, 2 Jur. N. S. 949.
South Lady Bertha Mining Co., 2 J. & H. 376.
Tretoil and Messer Mining Co., 2 J. & H. 421.
Times Fire Assurance Co., 30 Beav. 596. )
In all these cases the petitioner was being or had been sued by
a creditor of the company, whom the company either could not or
would not pay. See, also, the Bosworthon Mining Co., 26 L. J. Ch.
612, M. R., where, however, an inquiry was first directed, in order
to ascertain whether the petitioner had paid more than he owed
the company.
Ex parte Holinsu-orth, 3 De G. & S. 7.
Ex parte Term r and James, ib. 127, and 2 Mac. & G. 109.
Ex parte Cooke, 3 De G. & S. 148.
Ex parte Barber, 1 Mac. & G. 170.
Ex parte Woohner, 5 De G. & S. 117, and 2 De G. M. & G. 665.
Ex parte Goldsmith, 14 Jur. 734.
Larue, Belfast, dr., Rail. Co., ib. 996.
In all these cases the companies had proved abortive and unable
to commence business, but there were liabilities to be provided
against or assets to be shared. In the last of them the directors
would not produce any accounts.
Bastenne Bitumen Company, 3 De G. & Sm. 265.
A suit for a dissolution was pending. The circumstances which
induced the Court to make a winding-up order are not stated. It
could not have done so as a matter of course. See Ex parte
PhiUipps, 1 Sim. N. S. 605, infra, p. 652.
Ex parte Walker and Ex parte Troutbeck, 1 De G. & Sm. 585 ; affirmed
1 H. & T. 100, and 13 Jur. 157.
The company had no outstanding debts, but it had stopped
business ; a suit for its dissolution was pending, and some of its
members had been compelled to pay much more than their proper
.-hare of debts.
GROUNDS FOR WINDING UP. 647
Sherwood Loan Co., 1 Sim. X. S. 1G5. ) Bk. IV. Chap. 1.
St. George's Building Society, -1 Drew. 154. f Sect 4"
Friendly societies which could not go on, and the rights of Analysis of
w hose members could not be adjusted without a winding up. cases.
Electric Telegraph Go. of Ireland, 22 Beav. 471. 1- Order made.
The company had spent all its capital, and could not go on Contributory a
... petition,
without more.
Norwich Yarn Company, 12 Beav. 366.
The company was insolvent, and daily getting worse, but better
times were hoped for.
Wey and Aran Junction < 'anal Co., 4 E<p 197.
Canal company incorporated by special act of Parliament, and
ruined by railway competition.
Bradford Navigation Co., 10 E(p 331.
Is another instance of the same sort, but the company itself
petitioned.
Company amalgamated with another.
Ex parte Phillips, 3 De G. & S. 3.
Ex parte Dee, ib. 112.
Pennant and Craigwen, die, Mining Co., 15 Jar. 111)2.
In each of these cases a company had ceased to carry on
business, and had been amalgamated with another company. In
Ex parte Phillips the company's assets exceeded its liabilities, aad
there was a surplus to divide ; in Ex parte Dee it was objected that
in consequence of outstanding policies, the company's liabilities
could not be settled for many years ; in the Pennant and Craigwen
Co. creditors were suing the shareholders.
Ex parte Lawton, 1 K. & J. 204.
The company had failed ; its liabilities were outstanding ; but
a new company had been formed by all the shareholders of the
first, save the petitioner and another. It was sworn that the
affairs of the old company would speedily be wound up if no
order were made. The petitioner alone desired the Court to
interfere, and he, not having paid his calls, was sued by a creditor
at the instance of the company. The order in this case was made
on the ground that the company in question existed only for the
purpose of winding up its affairs, that its assets were outstanding,
and its liabilities undischarged.
N.B. — For other cases of amalgamated companies, see ante, p. 645, and
infra, pp. 650, 652, 653.
2. Petition dismissed.
A. Creditors' petitions.
Padsiow Total Luss Association, 20 Ch. D. 137.
Association illegal under § 4 of the Companies act, 1862, and the
petitioning creditor had notice of the illegality.
648
WINDING UP BY THE COUET.
Bk. IV. Chap. 1
Sect. 4.
Analysis of
cases.
2. Petition
dismissed.
Creditor's
petition.
Heme Bay Waterworks Co., 10 Cb. D. 42. \
Uruguay Central and Hygueritas Rail. Co. of Montr Video, 11 Ch. D. 372. ]
Petitioner a debenture bolder (see ante, p. 625, and compare
Ohifhe Silver Mining Co., 27 Cb. D. 278).
Great Britain Mutual Life Association Society, 16 Cb. D. 247.
Order made on tbe petition of the second petitioning creditor,
the debt of the first being disputed. On appeal at tbe desire of a
committee of policy-holders, this order was discharged, and a
scheme for the reduction of the companies' contracts entered into.
See same case, 19 Ch. D. 39, and 20 Ch. D. 351.
The Fishermen of Faversham, 36 Ch. D. 329. \
Chapel House Colliery Co., 24 Cb. D. 259. I
Uruguay Central and Hygueritas Rail. Co. of Monte Video, 1 1 Ch. D. 372. )
In tbese cases the petition was opposed by the majority o'
creditors, and it did not appear that the petitioner would gain
anything by an order.
Bolton Benefit Loan Society, 12 Cb. D. 679.
Company unregistered consisting at the date of tbe petition of
less than seven members. Compare South London Fishmarket
Company, 39 Ch. D. 324.
Pen-y-van Colliery Co., 6 Ch. D. 477.
Petitioner's claim for unliquidated damages and disputed.
Paris Slating Rink Co., 5 Ch. D. 959.
Petitioner's debt assigned since petition was presented.
Catholic Publishing Co., 2 De G. J. & Sm. 116.
Petitioner's debt disputed — twenty-one days after demand had
not expired when petition was presented.
London and Paris Banking Co., 19 Eq. 444. )
London Wharfing and Warehousing Co., 35 Beav. 37. }
Petitioner's debt disputed — twenty-one days after demand bad
elapsed before petition was presented.
Hope Mutual Life Assurance Co., 1 N. E. 542, and 11 H. L. C. 389.
Petitioner's debt, a judgment debt, disputed on the ground of
fraud, and he declined to try its validity.
Gold Hill Mines, 23 Ch. D. 210.
Petitioner's debt was small and disputed, and no evidence of the
company's insolvency was adduced. Petition was dismissed on
motion.
European Banking Co., 2 Eq. 521.
Petitioner's debt small, and attached by judgment creditor of
his own.
Langley Mill Steam, dx., Co., 12 Eq. 26.
Petitioner's debt not disputed, but majority of creditors pre-
ferring a voluntary winding up.
Playlet Benefit Building Soc, 14 Eq. 441.
Petitioner, a withdrawing member, seeking to obtain an unfair
advantage over others. Company not insolvent.
GROUNDS FOR WINDING UP. 649
t, ,Y ., . , . . Bk. IV. Chap. 1.
15. tontnoutories petitions. Sect. 4.
\ n j. ■ 7 Aualysis of
a) Company not insolvent. cases
Rica Gold Washing Co., 11 Ch. D. 36. -; Petition
Petitioner was the holder of fully paid up shares for small „ ""^V .
1 t- j. £ -1 j i i 1 i , , ■, , Contributory s
value, but tailed to show that there would be a substantial amount petition.
of assets to be divided amongst the shareholders.
The charges of fraud were too vague.
Capital Fire Insurance Association, 21 Ch. D. 209.
Reason alleged was that company had not commenced business
within a year. The company was formed to carry on business
here or abroad. It had commenced business in France, and
intended doing so in England.
Middlesborough Assembly Rooms, 14 Ch. D. 104.
Under the circumstances the suspension of business for more
than a year (the reason alleged in the petition for the winding up)
was reasonable. The majority of shareholders opposed the
petition.
Langham Skating Rink Co., 5 Ch. D. 669.
Company the reverse of prosperous, but not insolvent.
New Gas Generator Co., 4 Ch. D. 474.
Only seven members, and nothing to be gained by making an
order. Compare Sanderson's Patents Assoc, 12 Eq. 188.
Ex parte Wyld, 1 Mac. & G. 1.
Company solvent, and carrying on business ; petitioner would
not pay his calls, and was sued by a creditor at the instigation of
the directors.
Ex parte Spademan, 1 Mac. & G. 170.
Company solvent, and carrying on business. Petitioner was
dissatisfied with an arrangement by which several shareholders
had retired. This arrangement was subsequently held to be ultra
vires (a).
National Live Stock Insurance Co., 26 Beav. 153.
The company was carrying on its business. It was alleged to
be insolvent, and would have been so, if it could not have re-
covered monies due to it from its own directors and others for
calls. But it was in a position to recover such monies, and was
solvent when credited with them.
European Life Ass. Soc, 9 Eq. 122, and 10 Eq. 403.
Company not proved to be unable to pay all its existing debts
and liabilities, but was not flourishing, and would probably
be unable to discharge liabilities it would incur if it continued
business.
Ex parte James, 1 Sim. N. S. 140.
A member of the managing committee of an abortive company
petitioned to have it wound up. There were no bond fide debts
outstanding ; the real object of the petitioner was to obtain pay-
(n) See ante, p. 522.
650
WINDING UP BY THE COUET.
Ek. IV. Chap. 1.
Sect. 4.
.Analysis of
cases.
2. Petition
dismissed.
Con tributary's
petition.
ment of his brother's bill of costs, which was disputed, and for
which an action had been brought and discontinued.
Anglo-Greek Steam Co., 2 Eq. 1, ante, p. 632.
Misconduct on part of managers and directors alleged, but no
insolvency, and no reason why business should not be profitable
with better management.
Hop and Malt Exchange Co., W. N. 1866, 222.
Company not a year old, and not in debt ; members about
equally divided as to whether they should go on or not, and
articles providing that four-fifths must concur in order to pass a
resolution to dissolve.
Suburban Hotel Co., 2 Ch. 737.
London and Suburban Bank, 6 Ch. 641.
Joint Stock Coal Co., 8 Eq. 146.
Factage Parisien Co., 10 Jur. N. S. 121.
Metropolitan Saloon Omnibus Co., 5 Jur. N. S. 922.
Company not prospering, but not insolvent, and majority
desirous of going on. Company limited, and capital not all
paid up.
Professional Building Society, 6 Ch. 856.
Similar circumstances, but no limit to liability. Petitioner
under no liability.
Spence's Patent, tic, Cement Co., 9 Eq. 9.
No allegation of insolvency in the petition ; but evidence of
insolvency, and allegation and proof of continued loss. Petition
supported by creditor.
Ex parte Fisher, 3 De G. & Sin. 116.
A subscriber for shares in a proposed railway company, peti-
tioned to wind up a company formed for making and working
portion only of the line originally contemplated. The projectors
were authorised to apply for an act to enable the company to make
a less line than that first intended.
Planet Benefit Building Soc, 14 Eq. 441, ante, p. 648.
b) Company amalgamated with another.
Anglo-Australian Assurance Co., 1 Dr. & Sm. 113.
The company's business had been transferred to another com-
pany, and the petitioner had become a shareholder in it, and was
bound by the transfer. The amalgamation, however, was disputed,
and the selling company was being sued for its debts.
Ex parte Godkson, 15 Jur. 615.
A projected company had been amalgamated with another com-
pany, which had undertaken to buy up the scheme of the first.
There were no debts of the former company outstanding or
unsettled, but the money agreed to be paid was still unpaid.
The sole object of the petition was to have this money got in and
divided. See, also, the previous heads and next head.
GROUNDS FOR WINDING UP. 651
Bk. IV. Chap. 1.
c) Company being wound up voluntarily. Sect. 4.
Irrigation Go. of France, 6 Ch. 170. j
Imperial Bank of China and Japan, 1 Ch. 339. \
Company being wound up voluntarily in order to be amalga- dismissed011
mated with another. Contributory'*
London and Mercantile Discount Co., 1 Eq. 277. petition.
Directors charged with breaches of trust, and commanding a
majority of votes.
Bank of Gibraltar and Malta, 1 Ch. 69. i
Gold Company, 11 Ch. D. 701. f
Company being wound up voluntarily, petitioner showed no
fraud in the passing of the resolution for that purpose, though
fraud in other matters was alleged. See ante, pp. 639, 640.
General International Agency Co., 36 Beav. 1.
Majority in favour of voluntary winding up.
Ex parte Watson, 3 De G. & Sm. 253.
The company had carried on business as bankers in India and
in this country, and was being wound up extra-judicially. The
petition was presented by a shareholder, who, declining to pay the
amount required of him, was sued by a creditor.
Ex parte Guest, 5 De G. & Sm. 458.
The company was being wound up in a way approved by a
majority of the shareholders. There was a large judgment debt
to provide for, but the creditor was not pressing for payment.
Ex parte Wise, 1 Drew. 465.
This was a somewhat similar case to the last, and the real object
of the petitioner was to make the directors account to the company
for a misapplication of its assets.
d) Company small, and Letter wound up out of Court than in.
Natal, dr., Co., 1 Hem. & M. 639. \
Sea, Purer, and Marine Insurance Co., W. N. 1866, 253. j
Companies having only nine and seven members respectively,
no debts, and no reason why they should not be wound up
voluntarily. In both cases the company desired to wind up
voluntarily.
e) Winding-up order useless if made.
New Gas Generator Co., 4 Ch. D. 874.
Compare Tumacacori Mining Co., 17 Eq. 534.
Ex parte Inderwick, 3 De G. & Sm. 231.
The petitioner was a subscriber to an abortive company. There
were no outstanding liabilities, and no assets except what might
be recovered from the promoters in respect of matters which
occurred five years before, and which had been already made the
subject of two compromises.
652
WINDING T'P BY THE COURT.
Bk. IV. Chap. 1.
Sect. 4.
Analysis of
cases.
2. Petition
dismissed.
Contributory's
petition.
Ex parte Murrell, 3 De G. & Sm. 4.
The petitioner was a subscriber to an abortive company, but it
appeared that there were no outstanding liabilities, and no assets
except what could be got by opening accounts which had been long
acquiesced in and acted upon. The petitioner had received back
the greater part of his subscriptions. Compare Ex parte Pocock, 1
De G. & S. 731 ; Ex parte Williams, 1 Sim. N. S. 57.
Ex parte Phillipps, 1 Sim. N. S. 605.
Suit for dissolution pending, in which everything could be done.
Compare Bastenne Bitumen Co., 3 De G. & S. 265, ante, p. 646.
/) Foreign company.
Lloyd Generate Italiano, 29 Ch. D. 219.
Petition presented by the company. Order refused on the
ground that the Court has no jurisdiction to wind up an un-
registered foreign company which has merely carried on business
in England by agents without having any office in this country.
See ante, p. 622.
3 Petition
ordered to
stand over.
3. Petition ordered to stand over.
A. Creditors' petitions.
Western Canada Oil Co., 17 Eq. 1. \
St. Thomas Dock Co., 2 Ch. D. 116. (
Exmouth Docks Co., 17 Eq. 181. C
Brighton Hotel Co., 6 Eq. 339. J
In all these the, petition stood over to see if means could be
found for paying dissentient creditors.
Olafhe Silver Mining Co., 27 Ch. D. 278.
Petitioner was a debenture holder, and the petition was ordered
to stand over for inquiry whether the company had any assets
other than those comprised in the debentures. See ante, p. 625.
Great Western Coed Consumers'' Co., 21 Ch. D. 769.
Petition was opposed by the majority of creditors, and it was
ordered to stand over for six months on terms, this being considered
more beneficial to the other creditors than dismissing it.
Rhydydefed Colliery Co., 3 De G. & J. 80.
Petitioner's debt disjxtted.
Inventor's Association, 2 Dr. & Sm. 553.
Petitioner's debt disputed — voluntary winding up proceeding —
action against company commenced by petitioner, but obstructed
by liquidator.
Imperial Guardian Life Ass. Soc, 9 Eq. 447.
Company amalgamated with another and in course of voluntary
liquidation. Petitioner's debt disputed, and security offered.
N.B. — Compare King'* Cross Industrial Dwellings Co., 11 Eq. 149.
GROUNDS FOR WINDING UP. 653
B. Contributories' petitions. ' Se*ct_ £p"
City and County Bank, 10 Ch. 470. Analysis of
Company desired to wind up voluntarily and to carry out an cases-
arrangement with its creditors, to which they agreed. 3- Petltlon
Imperii! Bank of China, 1 Ch. 339. stanTover.
Resolution to wind up voluntarily, in order to amalgamate with
another company. Petition impeached whole proceeding, and was
ordered to stand over, with liberty to file a bill.
British Provident Assurance Society, 1 Dr. & Sm. 113.
The company had transferred its business to another company,
. which was not shown to be unable or unwilling to fulfil its
engagements.
Wheal Anne Mining Co., 30 Beav. 601.
The petition was ordered to stand over with a view to an
arrangement being made. Creditors were suing in the Stannary
Courts.
North West-em Trunk Co., 3 De G. & Sm. 266.
The company had proved abortive, but it was not clear that
anything capable of being wound up had really ever existed.
Ex 'parte Williams, 1 Sim. 2s1. S. 57.
The company was abortive, and had, in fact, had its affairs
wound up, but, as the petitioners alleged, in an improper manner.
Compare Ex parte Pocock, 1 De G. & S. 731 ; Ex parte Murrett,
3 ib. 4; Lame, Belfast, dr., Rail. Co., 14 Jur. 996.
Monmouthshire and Glamorganshire Banking Co., 15 Beav. 74.
The petition was ordered to stand over, to enable the company,
if possible, to wind up its own affairs, which it had begun to do.
Ex pcu-te Collins, 8 W. R. 170.
The petition was ordered to stand over with liberty to apply ;
the solvency of the company depending on its right to enforce
a disputed contract for the sale of its business to another
company.
Ex parte Pocock, 1 De G. & Sm. 731.
The company proved abortive. The great majority of the sub-
scribers had been repaid part of the money they had paid for
deposits and had released the directors. A dissatisfied sub-
scriber, who had not executed the release, presented a petition
for winding up the company, alleging a refusal by the directors
to produce the accounts, and a misapplication of assets by them.
The Court declined to order the company to be wound up ; it
also declined to direct any inquiry as to the expediency of wind-
ing it up ; at the same time it would not dismiss the petition
but ordered it to stand over, so that the petitioner might have an
opportunity of seeing the accounts which had been withheld from
him. What ultimately became of the petition does not appear.
See, too, Ex parte Capper, 3 De G. & S. 1 ; and compare Ex parte
Murrell, ib. 4. In The Lame, Belfast, etc., Rail. Co., 14 Jur. 996,
the directors refused to produce the accounts, and a winding-up
order was therefore made.
654 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. Bosu-orthon Mining Co., 26 L. J. Ch. 612, M. R.
^ Sect. 5. Inquiries were directed by consent, in order to see whether the
petitioner, who was being sued by a creditor, had paid more than
he owed to the company. A winding-up order was ultimately
made.
/.'< parte Moss, 14 Jur. 754.
An inquiry was directed to ascertain the position of the
company abroad, it being half a foreign and half an English
company.
petition
SECTION V.— PROCEEDINGS To OBTAIN A WINDING-UP ORDER AND
TO DISCHARGE IT, AND TO STAY PROCEEDINGS UNDER IT (6).
Petition for The proper mode of applying to the Court for a winding-up
order.110 order, whether by the Court or subject to the supervision of
Form of the Court, is by petition (c).
No form of petition is given, but it must be entitled in the
matter of the Companies acts, 1862 and 1867, and of the com-
pany sought to be wound up (d). The petition should show
the nature of the company, the title of the petitioner to pre-
sent the petition, and the circumstances on which he relies for
obtaining the order ; the petition should state such circum-
stances in sufficient detail to enable the Court to see from the
petition itself that a winding-up order ought to be made, if the
statements in the petition are not denied or satisfactorily
explained by those who oppose it(e). If fraud be alleged the
facts constituting the fraud must be stated (/). A petition
presented by a contributory should show that the provisions of
(b) This section relates only to the ((/) See Order of 1868, Rule 1.
procedure in the Chancery Division (e) Wear Engine Works Co., 10
of the High Court. As to the Stan- Ch. 188. See, &lso,LangJiam Slating
naries, see 32 & 33 Vict. c. 19, and Rink Co., 5 Ch. D. 669. For a form
50 & 51 Vict. c. 43. The procedure of petition, see Palmer's Company
in the County Court is the same as Precedents (4th ed.), 649, 2 Smith's
that in the Chancery Division. See Chan. Prac. 319, ed. 7, and for a
30 & 31 Vict. c. 131, §§ 41-43, and form under the older acts, see Be
County Court Eules, 1886, Ord North of England Banking Co., 1 De
xlii. * G. & S. 545.
(c) 25 & 26 Vict, c." 89, §§82 and (/) Rica Gold Washing Co., 11
148. Ch. D. 36.
THE PETITION AND PRACTICE EESPECTIXG IT. 655
30 & 31 Vict. c. 181, § 40, have been complied with ; but an Bk- IV- Ch.aP- 1.
omission to state this is not fatal to the petition (g). One -^—
petition to wind up two companies is wrong (ft). A petition
may be amended by leave of the Court (/).
Every contributory or creditor is entitled to have a copy of
the petition, on payment of 4d. per folio (Rule 5).
The petition must be advertised seven clear days before the Advertisements.
hearing, once in the London Gazette, and once at least in two
London daily morning newspapers, or local newspapers, accord-
ing to the situation of the company's office (Rule 2).
The advertisement must state the day on which the petition
was presented, and the name and address of the petitioner, and
of his solicitor and London agent (Rule 2). Forms of adver-
tisement are given in the schedule to the rules (k).
Care should be taken to make no mistake in advertising.
An advertisement that a petition will be heard on Saturday
the 20th of December, when the 20th fell on a Thursday, has
been held insufficient (Z) ; and a mistake, although trifling, in
the name of the company may prove fatal (m) ; but the Court
may give leave to amend the petition either with (n) or with-
out (o) ordering it to be re-advertised.
In a case where a petition comes on to be heard too soon,
the Court can in its discretion dispense with fresh advertise-
ments ( p) ; or order the petition to stand over in order that
fresh advertisements may be issued (q). The petition may be
(</) City and Count)/ Bank, 10 Ch. (n) Army and Navy Hotel, 31 Cli.
470. As to holder of fully paid-Tip D. 644; Newcastle Machinists? Co.,
shares, see ante, p. 626. W. N. 1888, 146, and note W. n!
(/i) Shields Marine Ins. Co., W. X. 18S9, 1.
1867, 265 and 296. (o) Cork Constitution Ld., 9 L. R.,
(i) Queen's Benefit Building Soc, Ir. 163.
6 Ch. 815. (p) City and County Bank, 10 Ch.
(A-) For the form of advertisement, 470.
see rule 2 and form 1 in the 3rd (q) London and Westminster Wine
schedule to the rules. As to dis- Co., 1 Hem. & M. 581. Under the
pensing with fresh advertisements older acts, it was held that the ad-
on a rehearing, Patent Floor Cloth vertisement of the petition in the
Co., 8 E p. 664. London Gazette need not be seven
(/) Re The Joint Stock Companies days before the hearing of the pe-
Windmg-up Act, 13 Beav. 434. tition, although the advertisement
(m) City and County Bank, 10 Ch. in the other papers must, English
4'0* and Irish Church and University
656
WINDING UP BY THE COURT.
Bk. IV. Chnp. 1. presented and the advertisements issued on the same day :
beet. 5. ^
- and where an advertisement stated that a petition had that
day been presented, and the petition was presented on that
da}T, but not until after the advertisement had been published,
the Court held the advertisement sufficient (r).
It is improper to publish in a newspaper the contents of a
petition before it is heard (s).
Service of The petition, unless presented by the company itself, must
be served at its registered office (t) ; and if there is no such
office, then at the company's principal or last known principal
place of business, if an}' can be found ; and the service must
be upon some member, officer, or servant (u) of the company
there ; or if no such person can be found there, then by being
left at the registered office or principal place of business of the
company (,r). If it is found impracticable to comply with these
directions, application must be made to the Court for leave
to serve the petition upon some member of the company (y).
These rules, however, are directory only ; and if the solicitor
of the company accepts service for it, service at the registered
office may be dispensed with (z).
Where a company is being wound up voluntarily, a petition
to have it wound up subject to the supervision of the Court
must be served on the liquidators (a) ; but, owing probably
to an oversight, the rules do not require that the liquidator
Assurance Society, 10 W. R. 33. This order is meant where no other
It is, however, different now. is referred to.
(?•) Cork and Youghal Rail. Co., (y) lb. Service on some member
W. N. 1866, 279. seems necessary. Under 11 & 12
(s) Cheltenham and Swansea Rail- Vict. c. 45, § 10, service might be
icay Carriage, d-c, Co., 8 Eq. 580. dispensed with altogether. As to
(t) As to which see the Com- whether service can be dispensed
panies act, 1862, §§ 39, 40, and with by consent, see Re Brighton,
rule 3. Lewes, &c, Rail. Co., 1 De G. & S.
(») These words occurred in 11 & 604 ; Ex parte Wolesey, 3 ib. 101 ;
12 Vict. c. 45, § 10, and it was held Re Tring, Reading, <lr., Rail. Co., ib.
that service on a member of the 10 ; Regent United Service Stores, 8
provisional committee was insutli- Ch. D. 75, and Panonia Leather
cient, Re London and Dublin, tfcc, Cloth Co., 13 W. R. 1015.
Railway Company, 3 De G. & S. (.-„■) Regent United Service Stores, 8
208 ; so service on the company's Ch. D. 75.
solicitor, Ex parte Dale, ib. 11. (a) Rule 3.
(.c) Rule 3 of the order of 1862.
THE PETITION AND PRACTICE RESPECTING IT. 657
should be served with a petition to have the company wound Bk- IV- CnaP- *■
up compulsorily. This, however, ought, it is conceived, to be
done.
Where a company's registered office was shut up, the Court
directed the petition to be dropped into the letter-box of the
office, and to be served on the company's solicitor, and on one
of the directors (b). In another case, where the company was
being wound up voluntarily, service was directed on all the
directors and two or three of the principal shareholders (c).
Service without leave of the Court on a workman at the last
registered office of a company, which had long ceased to carry
on business there and had amalgamated with another company,
is not sufficient (d) ; but service on two directors at the actual
office of the company has been held sufficient (e).
The petition must be verified by the affidavit of the peti- Evidence in
■ P , support of
tioner, or one oi the petitioners ; or, it the company is the petition,
petitioner, by some director, secretary, or principal officer (/).
An affidavit by the petitioner himself will, however, be dis-
pensed with under special circumstances (g). If one company
petitions for an order to wind up another, an affidavit by the
secretary or one of the acting directors of the petitioning
company would probably be sufficient. The affidavit must be
entitled like the petition (h), sworn and filed within four days
after the petition is presented (?) ; but the time will be en-
larged by the Court if any reasonable grounds for so doing are
shown (k). The affidavit is sufficient prima facie evidence of
the statements in the petition (I).
(b) London and Westminster Wine abroad.
Co., 1 Hem. & M. 561. (h) See note (/), ante.
(c) Inventors' Assoc, 6 N. R. 349. (i) Rule 4 ; not before, see
(d) Manchester and London Life Western Benefit Building Soc., 33
Ass. and Loan Assoc, 9 Eq. 643. Beav. 368.
(e) Fortune Copper Mining Co., 10 (k) See rule 73 ; Patent Screwed
Eq. 390. Boot Co., 32 Beav. 142 ; Kentish
(/) Rule 4. A form of affidavit Royal Hotel Co., 5 N. R. 423.
i> given, see form 2 in the 3rd (/) Rule 4. Strictly speaking the
schedule to the rules of 1862, but affidavit is seldom proof of anything,
as to the heading, see order of 1868, being hearsay as to most matters
rule 1. sworn to : Gold Hill Mines, 23 Ch.
{()) Fortune Copper Mining Co., D. at p. 214. The rule, however,
10 Eq. 390, where the petitiomT was is a cluck on reckless assertionc:.
L.C U U
058
WINDING UP BY THE COURT.
Bk ^ct^' L ^ tiie Pet^^on is opposed on grounds not disclosed in it, or
in the affidavits filed in support of it, the additional facts
Evidence in
opposition.
Appearance in
support and
opposition.
Costs.
necessary to be proved, must be verified by affidavit.
The persons making affidavits can be cross-examined ; the
Court will, if necessary, order the books of the company to be
produced on such cross-examination (m).
All persons served with the petition, and also all contribu-
tories and creditors (n), but apparently no other persons (n),
are entitled to appear on the petition, and to support or
oppose it. But as regards costs the following rules are usually
followed :
1. The costs of a petition on which a winding-up order is
made are borne by the company (p) ; these costs include the
costs of the petitioner and of the company, and the costs of all
other persons, if any, properly served with the petition (q).
2. The costs of a petition which is dismissed are borne by
the petitioner ; unless the Court is of opinion that the petition
was justifiable, in which case the dismissal will be without
costs. If dismissed with costs, such costs include those of
the company, and of all persons, if any, served with the
petition (r).
3. With respect to persons who appear to support or oppose
a petition, although not served with it, the usual practice is :
1, to allow one set of costs to those contributories, and one
set to those creditors, who upon reasonable grounds (without
being served) appear on the petition and support the view
which ultimately prevails — i.e., support a successful, or oppose
an unsuccessful, petition ; 2, to give no costs to those who
(not being served) support an unsuccessful, or oppose a suc-
It has been suggested that this part
of rule 4 is ultra vires, see Buckley
on the Companies act, 5th ed., p.
615, but in practice no other evi-
dence is adduced in the majority
of cases, at least in the first instance.
(m) Emma Silver Mining Co., 10
Ch. 194. As to inspection of com-
pany's books, see Credit Co., 11 Ch.
D. 256, and West Devon Great
Consols Mine, 27 Ch. D. 106.
(n) See Marlborough Club Co., 1
Eq. 216, and the next note.
(o) See Bradford Navigation Co.,
9 Eq. 80, and 5 Ch. 600. See, also,
S. C, 10 Eq. 337.
(p) The order is usually silent as
to the costs. It was so under the
older acts, see the form in 1 De G.
& Sm. 547.
(q) Humber Iron Works Co., 2 Eq.
15.
(r) Humber Iron Works Co., 2 Eq.
15.
THE PETITION AND PRACTICE RESPECTING IT. C59
cessful, petition ; but, 3, to make a petitioner pay the costs of Bk- IJ'.Ch*p- 7
persons who appear to answer and succeed in refuting un- -
founded charges made against them (s).
A provisional liquidator is only in the nature of a receiver,
and will not be allowed his costs of appearing on a winding-up
petition (t).
Where a petition was presented by a shareholder in a cost- Costs of preli-
. , . . ii-i, ii ,., i minary inquiries.
book mining company, who had been sued by a creditor, and
the petition was opposed on the ground that the petitioner was
indebted to the company and had net been compelled to pay
more than he owed to the company, and an inquiry upon that
point was directed by consent, and the result showed that the
petitioner had paid more than he owed the company, and a
winding-up order was then made, the costs of the preliminary
inquiries were thrown on those whose opposition caused them
to be directed (u).
A petition may be withdrawn by the petitioner (x), and ought Withdrawal of
i'ii • / petition.
to be withdrawn as soon as his claim is satisfied (y) ; but as a
general rule, he can only withdraw it on payment of the proper
costs of those who appear on it, whether to support or oppose
it (z), though under special circumstances the Court will allow
the petition to be withdrawn without payment of costs (a).
Separate sets or only one set of costs may be given to the
shareholders and creditors appearing on the petition (b).
(s) See Hull and County Bank, 10 L. J. Ch. 612.
Ch. D. 130 ; New Gas Co., 5 Ch. D. (x) Hereford and South Wales
703; Anglo-Egyptian Nav. Co., 8 Waggon, &c, Co., 17 Eq. 423;
Eq. 660 ; European Banking Co., Times Life Ass., &c, Co., 9 Eq.
2 Eq. 521 ; Anglo-Greek Steam Co., 383; Home Ass. Association, 1:4
ib. 1 ; Humber Iron Works Co., ib. Eq. 59.
15. Lord Hatherley, when V.-C, (y) Times Life Ass., &c, Co., 9
refused costs to persons not served. Eq. 383.
See Oriental Commercial Bank, W. (z) Nacupai Gold Mining Co., 28
N. 1866, 283; Hop and Malt Ex- Ch. D. 65; Patent Cocoa Fibre Co.,
change Co., ib. 222 ; Imperial Merc. 1 Ch. D. 617 ; Hereford and South
Credit Ass., ib. 256. Wales Waggon, &c, Co., 17 Eq. 423 ;
(0 General International Agency Marlborough Club Co., 1 Eq. 216 ;
Co., 36 Beav. 1. He was, however, Home Ass. Association, 12 Eq. 59.
allowed some costs in Times Life (a) District Bank of London, 35
Ass., d-c, Soc, 9 Eq. 382, and in Ch. D. 576 ; United Stock Exchange,
European Banking Co., 2 Eq. 521. Limited, 28 Ch. D. 183.
(u) Re Bosworthon Mining Co., 26 (b) Paper Bottle Co., 40 Ch. D. 52 ;
u u 2
tions
660 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. The petitioner, on the hearing of his petition, may elect to
take a supervision order instead of a compulsory order, and in
this case the costs of creditors who appear to support the
petition for a compulsory order will be allowed, though the}7
may have opposed the supervision order (c).
Several peti- There is nothing to prevent the presentation of several
petitions by several persons ; and as no person can prevent the
withdrawal of a petition presented by another person, and as
petitions are frequently presented in order that they may be
withdrawn or pressed on as may be afterwards found con-
venient, it has become common for several persons to present
several petitions to wind up the same company. This practice,
however, is discouraged as much as possible by the courts ;
and if the petitions are presented to different branches of the
Court, those subsequent to the first will be transferred to that
branch of the Court to which the first has been presented (d).
Persons who present petitions in ignorance that a petition
has already been presented, are generally allowed the costs
incurred by them before they had notice of the previous
petition (e) ; but persons who, without some special justification,
present petitions, or proceed with petitions the}7 have already
presented, after they know of the presentation of a petition
earlier than their own, run great risk of having to pajr the
costs incurred by themselves, if not also the costs of the
persons they have served (/). Where, however, the first
petition is presented by persons in the interest of the com-
pany and is of a suspicious character, a second petition is
considered justifiable (g) ; and where there are several justifiable
petitions and a winding-up order is made, one order is usually
made on all the petitions, and the costs of them all are paid by
Slu2 'u-'&^z^889, P' 46' ~^~"
'{c) Chepstow Bobm/n Mills Co., 36
North Brazilian Sugar Factories, 56 (e) General Financial Bank, 20
L. T. (X. S.) 229; Criterion Gold Ch. D. 276 ; G. F. Brooked: Co., W.
N. 1888, 213.
(/) See, on this subject, Ex parte
Ch. D. 563. Turner, 3 De G. & S. 127 ; Times
(d) West Hartlepool Iron Works Fire Ass. Co., 30 Beav. 596 ; and
Co., 10 Ch. 629. In United Ports the cases in the next note.
and General Ins. Co., 39 L. J. Ch. (g) General Financial Ban!:, 20
146, V.-C. K., the priority of several Ch. D. 276; Humber Iron Works
petitions was determined by the Co., 2 Eq. 15 ; Commercial Discount
dates of their advertisements. Co., 1 N. E. 416.
APPEALS AND STAYING PKOCEEDINGS. 661
the company (h) ; one set of costs being allowed to the unserved Bk- IV. Chap. 1.
creditors and one to the unserved contributories appearing and ■ — -
supporting the petitions (i). Each, however, of several petitions
must be dealt with on its own merits (k).
If a petition is presented by a limited company (l), or by a Security for
person resident out of the jurisdiction, or in the case of a life co
insurance company by a policy-holder or a contributory (in), or
if the petitioner before the hearing has filed a petition in bank-
ruptcy (n), the petitioner can be compelled to give security for
costs before his petition is heard ; and such security can be
applied for, either when the petition comes on for hearing (o)
or before ( p) ; and the respondent does not lose his right to
security by filing affidavits in opposition to the petition (q).
Persons opposing the petition cannot be ordered to give
security for costs (r) .
If a petitioner dies between the presentation and hearing of Death of
the petition, his personal representatives may obtain leave to
continue and carry on the petition (s).
Appeals from and staying 'proceedings under winding-up
orders.
A winding-up order made by a court having no jurisdiction improper
to make it, is wholly invalid, and must be so treated although orders-
not appealed against (t) ; but an order made by a court having
jurisdiction must be treated as valid until reversed on
(h) See the cases in the last two (p) Atkins v. Cooke, 3 Drew. 694.
notes, and Ex parte Walker, 1 De G. (q) See last note but one, and
& Sm. 585. Mariano v. Mann, 14 Ch. D. 419 ;
(i) Ante, pp. 658, 659. Lydney and Wigpool Co. v. Bird, 23
(k) European Bank Co., 2 Eq. 521. Ch. D. 358, and R. S. C. Ord. Ixv. r.
As to the carriage of the order in 6, which leaves the amount of the
such cases, see infra, p. 686. security to be given in the discre-
(1) See the Companies act, 1862, tion of the judge.
§ 69. (/•) Percy and Kelly Nickel, &c,
(m) 33 & 34 Vict. c. 61, § 21. Co., 2 Ch. D. 531.
(n) Carta Para Mining Co., 19 (s) Dynevor Duffryn Collieries Co.,
Ch. D. 457, hut compare Rhodes v. W. N. 1878, 199, and see Atkins'
Dawson, 16 Q. B. D. 548. Estate, 1 Ch. D. 82 ; Commercial Bank
(o) Home Ass. Assoc. (No. 2), 12 of London, W. N. 1888, 213 and 234.
Eq. 112 ; Ex parte Seidler, 12 Sim. (t) Plumstead Water Co. v. Davis,
106. 28 Beav. 545, and 2 De G. F.& J. 20.
(>62 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. appeal (u). Under the older winding-up acts, if an order were
— ■ made upon the petition of a person not entitled to petition,
the order was not void ; but it, and all proceedings under it,
were allowed to stand, and its further prosecution was, upon
a proper application to the court, entrusted to a qualified
person (cc). There is no express provision to this effect in
the Companies act, 1862, but the old winding-up practice is
so continued that probably the above rule would still be
observed (y).
Appeal from After an order for the winding up of a company has been
oraer. made, such order may be appealed from in the ordinary way (z),
by a person entitled to appear and be heard on the petition (a)
in 21 days (h). The appointment of a liquidator does not
prevent the directors of the company authorising an appeal (c),
but when a limited company appeals without joining anyone
personally responsible for costs, it will as a rule be ordered to
give security for the costs of the appeal (d). It does not follow
that because the order is appealed against, proceeding's under
it will be stayed until the appeal is disposed of (e).
Discharge of Before the Judicature acts, a winding-up order might have
order
(u) Padstow Total Loss Assoc, 20 which, see New Callao, 22 Ch. 1).
Ch. D. 137 ; Arthur Average Assoc, 484 ; Manchester Economic Building
3 Ch. D. 522; Ex parte Hargrove, 10 Society, 24 Ch. D. 488; Madras
Ch. 542; London Marine Ins. Assoc, Irrigation and Canal Co., 23 Ch. D.
8 Eq. 189 and 193 ; Ex parte Oakes 248. Before the Judicature acts,
and Peek, W. N. 1867, 101, and the limit of twenty-one days did
L. R. 2 H. L. 369. not apply to appeals from winding-
(x) 11 & 12 Vict. c. 45, § 9. up orders. See Be Universal Bank,
(y) See the Companies act, 1862, 1 Ch. 428 ; Anglo-Californian Min-
§§ 82, 170 ; the latter section was ing Co., 1 Dr. & Sm. 628 ; Plumsteack
repealed by 44 & 45 Vict, c. 59, but Water Co., 2 De G. F. & J. 20. The
see § 4 of that act. fact that calls had been made and
(,~) 25 & 26 Vict. c. 89, § 124. A other proceedings taken did not
company successfully appealing was prevent an appeal. See- National
allowed its costs out of its own estate Permanent Benefit Building Soc, 5
in National Savings Bank Association, Ch. 309.
1 Ch. 554. (c) Diamond Fuel Co., 13 Ch. 1).
(a) See Bradford Navigation Co., 400.
5 Ch. 600. (d) Diamond Fuel Co., 13 Ch. D.
(b) See R. S. C, Ord. lviii. rr. !) 400 ; Photographic Artists Associa-
and 15 ; National Funds Ass. Co., 4 tion, 23 Ch. D. 370.
Ch. D. 305. The time may be ex- (e) See R. S. C, Ord. lviii. r. 16V
tended by the Court of Appeal, as to and Ex parte Barber, 1 Mac. & G. 183.
APPEALS AND STAYING PROCEEDINGS. 6G3
been discharged on motion or petition by the judge who made Iik- IV- GhaP- L
oGCt. 0.
it ; but now no judge can rehear an order, whether made by
himself or another judge, the power to rehear being part of the
appellate jurisdiction which was transferred to the Court of
Appeal (/).
Cases may occur in which a winding-up order has been rightly Staying pro-
, , . , . , . . i • i i ' ceedings under
made, but in which its further prosecution is not desirable, as order.
for instance when the Court wishes to reduce the contracts of
a life insurance society instead of making an order to wind the
society up (g). In such a case, application should be made to
the Court which made the order, to stay the proceedings under
it. This the Court has power to do on the application of any
creditor or contributory (h) ; and the Court will accede to the
application if it is satisfied that it is not for the advantage of
the company, or of any of the persons interested in its winding
up, that further proceedings should be taken (/). Thus in the
case of The Worcester, Tenbury, and Ludlow Raihvay Com- Worcester,
Tenbury, &c,
pany (k), a winding-up order had been made, an official Railway
manager had been appointed, all the company's debts had been ompanj'
paid, and a surplus remained. It had been found impossible
to make out a complete list of contributories, as the allottees
of a considerable number of shares could not be discovered,
but the known allottees held the great bulk of the shares
which had been issued. Upon their petition the Court
ordered the fund in Court to be paid to them, they under-
taking to deal with it as the Court should direct, and to pay
the costs incurred in the winding up. So proceedings will be
stayed in order to enable a company to resume business if cir-
cumstances justify such an order (/).
But a winding-up order is in the nature of a judgment for Winding-up
the benefit as well of creditors as of contributories (m) ; and nature of a
judgment.
(/) St Nazaire Co., 12 Ch. D. 88 ; ante, p. 625.
Manchester Economic Building Soc, (i) In Ex farte Barber, 1 Mac. &
±\ Ch. D. 488. G. 176, proceedings pending an ap-
(g) Great Britain Mutual Life peal were not stayed.
Assurance Soc, 16 Ch. D. 247. (k) 3 De G. & S. 189.
(h) See § 89 of the Companies (I) South Barrule Slate Quarry Co.,
act, 1862. A person applying as an 8 Eq. 688.
alleged contributory must admit (m) See § 82 of the Companies
himself to be a contributory. Sue act, 1862.
664 WINDING UP BY THE COURT.
Bk. IV. Cbap. 1. proceedings under it cannot be stayed without giving those who
!_J have acquired rights consequent upon it an opportunity of op-
posing the application to stay proceedings (n). Consequently,
an order to stay proceedings will not be made, unless the con-
tributories, and the creditors who have proved their debts, have
had proper notice of the intention to apply for the order ; and
such an order will not, therefore, be made upon notice of a
motion to discharge a call (o), or to be struck off the list of
contributories (p).
Costs to be Again, where an order has been obtained and acted on and
on staying costs have been incurred under it, these costs must be pro-
proceedings, vided for by those who seek to have further proceedings
stayed (q).
SECTION VI.— EFFECT OF WINDING UP AS REGARDS DEALINGS
WITH PROPERTY.
1. Commencement of zvinding up.
1. Compulsorily. When a petition is presented to wind up a company by the
Court, the commencement of the winding up dates from the
presentation of the petition (r). Hence the importance, when
there are several petitions, of making a winding-up order, if
possible, on that first presented. But if the petition is dis-
missed, the winding up commenced on its presentation will
obviously be at an end.
2. Voluntarily. When a resolution has been passed to wind up a company
voluntarily, the voluntary winding up dates from the passing
of the resolution (-s). But if the company is afterwards ordered
(n) See Careiv's case, 5 De G. Mac. (q) Clarke's case, 1 K. & J. 22 ; Ex
& G. 94 ; Underwood's case, ib. 677 ; parte TVoolmer, 5 De G. & S. 117,
Clifton's case, ib. 743. As to serving and 2 De G. M. & G. 665.
the provisional liquidator, see Ex (r) § 84. Taurine Co., 25 Ch. D.
parte Coleman, 3 De G. & S. 139. 118.
(o) Carew's case, 5 De G. M. & G. (s) § 130, i.e., the confirmation of
94, reversing S. C, 2 Sm. & G. 1. the resolution when the resolution
{f) Underwood's case, 5 De G. M. is special. See Emperor Life Assur-
& G. 677 ; Sharpus's case, 3 De G. & ance Society, 31 Ch. D. 78 ; Dawes
S. 49. case, 6 Eq. 232, and infra, c. 2.
COMMENCEMENT OF WINDING UP. 665
to be wound up compulsorilv, the commencement of the Bk- IV- ChaP- *«
Sect. 6.
winding up will date from the time of the presentation of the
petition on which the order is made (t) : but not so as to
invalidate what has been done or to let in a distress (it). The
consequence of altering the date of the commencement of a
winding up is sometimes a good reason for not making a
compulsory order when a company has been for some time
winding up voluntarily.
An order to wind up a company subject to the supervision 3. Subject to
of the Court pre-supposes a prior resolution to wind up volun-
tarily, and in fact continues the voluntary winding up. The
commencement, therefore, of a winding up subject to super-
vision dates from the passing of the resolution to wind up
voluntarily, and not from the time of the presentation of the
petition on which the order is made (x) ; and this is the case
although a provisional liquidator has been appointed, and a
compulsory order made before the resolution for a voluntary
winding up was passed, if the compulsoiy order is subsequently
changed into a supervision order (y) ; and the Court has no
jurisdiction to alter this date (z).
It seems that if a compulsory order is made after an order
to wind up under supervision, the date of the commencement
of the winding up is not altered by the second order (a).
As regards life insurance companies which have transferred Life insurance
their business to others, the enactment contained in 35 & 36
Yict. c. 41, § 4 (b), must not be forgotten ; it in effect makes
(t) § 84. Taurine Co., 25 Ch. D. 31 Cli. U. 78 ; Dry Docks Corpora-
118. tion of London, 39 Ch. D. 306.
(u) Thomas v. Patent Lionite Co., (») West Cumberland Iron and
17 Ch. D. 250. Steel Co., 40 Ch. D. 361.
(x) Emperor Life Assurance Society, (a) See United Service Co., 7 Eq.
31 Ch. D. 78 ; TVeston's case, 4 Ch. 76, where a company was being
20, and 6 Eq. 238 ; Ex parte Col- wound up voluntarily, and an order
borne and Straicbridge, 11 Eq. 478, was made on one petition to con-
§§ 148, 151, and 164. Compare Ex tinue such winding up, subject to
parte Bradshaiv, 15 Ch. D. 472, where supervision, and a compulsory order
for the purpose of fixing the date of was made on another petition, and
a debenture-holder's charge, the date, was dated the day after tbe first
at which a provisional liquidator order,
was appointed, was taken. (/;) Ante, p. 643.
(y) Emperor Life Assurance Society,
6G6
WINDING UP BY THE COURT.
Importance of
the commence-
ment of wind-
ing up.
P.k. IV. Chap. 1. the commencement of the winding up of the purchasing corn-
Sect. 6.
— pany the commencement of the winding up of the selling
company, unless the Court otherwise orders ; but the enact-
ment does not apply to a purely voluntary winding up.
The exact time of the commencement of the winding up of
a company is important, inasmuch as after that time great
restrictions are put on all dealings with the property of the
company, on all alterations in the status of its members, and
on all proceedings by creditors to enforce payment of their
debts. The leading principle pervading the winding-up provi-
sions of the Companies act, 1862, is that nothing shall be done
after the commencement of the winding up of a compan}'
except with a view to realise its assets and distribute them
ratably first among its creditors, and then, if there is a
surplus, amongst its members (c).
Lis pendens.
Retrospective
effect of order
to wind up.
2. Effect of winding up on dealings with property.
A petition to wind up a company coinpulsorily is not a lis
pendens (d).
When an order has been made to wind up a compamy coin-
pulsorily, or subject to the supervision of the Court, all dis-
positions of the property, effects, and things in action of the
company made subsequently to the commencement of the
winding up of the company are void unless confirmed by the
Court (c).
The winding-up order has thus a retrospective effect ; and
the section in question apparently even renders void all dispo-
sitions of property made previously to the order by voluntary
liquidators unless the Court expressly sanctions them (/).
After a winding-up order has been made, no disposition of
the company's property is valid unless made by the liquidatora
or the Court (g).
(c) This will be seen by examin-
ing the following sections, 85, 87,
95, 98, 102, 107, 109, 133, 153, 158,
163, 164, and 196 to 204. And see
Ashbury's case, 5 Eq. 223, and Ex
parte Grissell, 1 Ch. 528.
(d) 30 & 31 Vict. c. 47. See,
before this act, Ex parte Thornton,
2 Ch. 171.
0) § 153.
(/) See, also, § 151. But quaere
if this is the true construction.
(g) See §§ 92 and 95.
EFFECT ON DEALINGS WITH PROPERTY. fi()"
After a resolution to wind up voluntarily, no disposition of I!k- ^^jf* L
a company's property can, it is apprehended, be made, except
by the liquidators (h).
It will be observed that what are avoided are dispositions
by the company of its property, not transfers or payments to it,
e.g., not a transfer of shares to the company (i), nor payment
of a debt to it (/.").
Payments by the company after the commencement of the
winding up are however avoided unless sanctioned by the
court ; and this rule applies even to the payment of a petition-
ing creditor's debt if an order is made on his petition or on
any petition presented previously to it (I).
In a recent case it was held that a customer of the Oriental
Bank Corporation, who had paid money in at a branch office
of the bank in the Mauritius in exchange for drafts on the
head office in London, after the presentation of a petition in
London to wind up the bank, and the appointment of a pro-
visional liquidator, but before any notice of these facts had, or
could have, reached the Mauritius, had no right to have his
money refunded, but was only entitled to prove in the winding-
up for the amount of the drafts pari passu with other cre-
ditors (m).
The Court will, however, confirm bond fide sales (n), mort- Bona fi.ie salesr
P , > &e., upheld.
gages (o), or other dispositions of the company s property
made in the interval which elapses between the presentation of
the petition and the winding-up order. Further, if the pro-
pert}- in goods sold in that interval has passed to the pur-
chaser, the Court will order the liquidator to deliver such
goods to him (p) ; but if the property has not passed, the pur-
chaser cannot obtain the goods ; he can only prove against
the company in respect of damages (q).
(h) See §§ 131 and 133. {m) Ex parte Guillemin, 28 Ch. D.
(i) Ex parte Contract Corporation, 634.
3 Ch. 105. 00 Pearson's case, 3 Ch. 443.
(it) Mersey Steel and Iron Co. v. (o) Gibbs and West's case, 10 Eq.
Xaylor, Benzon & Co., 9 App. Ca. 312.
434, and 9 Q. B. D. 648. {p) Pearson's case, 3 Ch. 44:;.
(I) Ex parte Greenviood, 9 Ch. 511 ; (q) lb.
Daly & Co., 19 L. R. Ir. 83.
668
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 6.
Liens.
Wiltshire Iron
Company v.
Great Western
Railway Com-
pany.
Fraudulent
preference.
Liens acquired on a company's property before the com-
mencement of the winding-up are not avoided (r), and if a
debt due to a company has been equitably assigned before a
petition to wind it up is presented the assignee's title is not
affected^, by a subsequent winding-up order (s). But a lien
cannot be acquired after the winding up has commenced, e.g.,
a solicitor cannot retain documents of the company come to
his hands since that date (t).
In connection with this subject, an important decision of
the Court of Queen's Bench and Exchequer Chamber requires
notice. A company had agreed that a carrier should have a
general lien on all goods carried for it ; the company was
ordered to be wound up, and the liquidator continued to
employ the carrier without coming to any fresh agreement
with him. The carrier sought to detain goods sent by the
liquidator until he should pa}^ the debt due from the com-
pany ; but it was held that the carrier was not entitled to do
so (u). The Court seems to have thought that the winding-up
order put an end to the previous agreement for a lien, and that
the goods sent by the liquidator were not the goods of the
company. But it is submitted that neither of these views was
correct. As, however, there was no plea on equitable grounds,
the Court was not in a position to give due weight to the
difference between an equitable security and a common law
lien.
"Where a company is being wound up, whether by the Court
or subject to its supervision, or voluntarily, the doctrines of
fraudulent preference are applicable to it ; and with reference
to these doctrines, the presentation of the petition in the first
two cases, and the resolution to wind up in the last case, is
equivalent to an act cf bankruptcy (v).
It has been decided that a disposition of property, which is
invalid on grounds of fraudulent preference, can be set aside
(r) See the next two notes, and
the authorities there cited.
(s) Gorringe v. Invell India Rubber,
t&c., Works, 34 Ch. D. 128.
(t) Capital Fire Ins. Assoc, 24 Ch.
D. 408.
(u) Wiltshire Iron Go. v. Great
Western Bail. Co., L. B. 6 Q. B. 101
& 776, not followed in Llangennoch
Coal Co., W. N. 1887, p. 22.
(v) § 164 ; Bankruptcy act, 1883,
§ 48 ; Kent's case, 39 Ch. D. 259 ;
EFFECT ON ACTIONS, &C. 669
in an action instituted by the company itself (x) ; but no dis- Bk- lJ- Chap. i.
Sect. 6.
position of a company's property can be impeached on the
ground of fraudulent preference, except for the benefit of the
general body of creditors (y) ; and the disposition must have
been made in contemplation of a winding up, and without
pressure (z). Pressure, however, by a director of an insolvent
company to obtain security for a debt owing to himself by
that company has been held not to be enough (<t).
The doctrines of reputed ownership have no application to Reputed owner-
ship.
companies which are being wound up (b).
All conveyances or assignments by a company formed under Creditor's deeds,
the act of 1862 to trustees for the benefit of all its creditors,
are wholly void (c) .
The effect of the commencement of the winding up of a Transfers of
shires &C
company on transfers of shares and the status of members and
agreements with them will be examined hereafter, ^ y> .** 7 ' ^ /» &?>X -
3. Effect of winding upon legal proceedings against the company
and its members.
No part of the law relating to the winding up of companies a) Old law.
has been more altered or improved than that which relates to
the rights of creditors to enforce payment of their debts by
ordinary legal proceedings (d). Under the Winding-up acts of Acts of 1848
, , -■ , , and 1849.
1848 and 1849 it was held (e)—
Inns of Court Hotel Co., 6 Eq. 82 ; disposition of property which would
Syke's case, 13 Eq. 255. Compare be an act of bankruptcy, that is void
Poole Jackson and JVhyte's case, 9 under § 164. See the last case. See
Ch. D. 322. Partn. 628, for the principles appli-
(x) Gas Light Improvement Co. v. cable to this subject.
Terrell, 10 Eq. 168. («) Gas Light Improvement Co. v.
(i/) Willmott v. London Celluloid Terrell, 10 Eq. 168, and observe that
Co., 34 Ch. D. 147, affirming 31 Ch. the security there included all the
D. 425, where it was held that company's property. Compare Ha-
debenture-holders could not take bershon's case, 5 Eq. 287, and see
advantage of this doctrine to re- Syke's case, 13 Eq. 255.
cover money exclusively for their (b) Gorrmge v, Irwell India Rubber
own benefit ; and see Ex parte Works, 34 Ch. D. 128 ; Crumlin
Cooper, 10 Ch. 510. Viaduct Works Co., 11 Ch, I). 755.
(z) Inns of Court Hotel Co., 6 Eq. (c) § 164.
82 ; Ex parte Birmingham Banking (d) See ante, p. 611 et seq.
Co., 6 Ch. 83. N.B. It is not every (e) The statements in the text
=670 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. 1, That a winding-up order per se did not prevent a ere-
Sect. 6. ... ...
ditor of the company from obtaining and executing judgments
against it or its members (/) .
2. That a winding-up order, and the appointment of an
interim manager, did not preclude a creditor from obtaining
judgment against the company or its members, or from en-
forcing a judgment against the latter ; but merely precluded
the judgment creditor from intermeddling with the property of
the company protected by the interim manager (g).
3. That after a winding-up order, and the appointment of
an official manager, proceedings by a creditor of the company
against the company or its members would be stayed until the
creditor had, so far as he was able, proved his debt in the
winding up (h).
4. That this last rule did not apply to persons in a position
to sue one or more individuals by virtue of some contract
binding on them, otherwise than as members of the company,
e.g., upon some separate undertaking or promissory note, on
which they were personally liable (i).
5. That a creditor of the company who had, so far as he was
able (k), proved his debt in the winding up, was at liberty to
proceed to enforce his demand against the company or its
apply to the creditors suing in the (</) Brettell v. Dawes, 7 Ex. 307.
ordinary courts of law. Creditors (h) Hutchinson v. Harding, 11 Ex.
suing in the Stannary Courts were 561 ; Thompson v. Universal Salvage
in a much worse position, for their Co., 3 Ex. 310; Macgregor v. K
proceedings were stayed by the 4 Ex. 801 ; Prescott v. Hadow, 5 Ex.
mere presentation to the Court of 726; Marson v. Lund, 13 Q. B. 664.
Chancery of a petition for winding But non-proof in the winding up
up, and notice thereof to the Vice- was no defence to an action, Mac-
Warden. See 12 & 13 Vict. c. 10S, kemie v. Sligo, dec, Rail. Co., 18
§ 1, and 20 & 21 Viet. c. 78, §§ 12 Q. B. 862.
and 13. It was, however, decided (0 Re Sudloiu and Kingdom, 12
that a creditor was not entitled to Beav. 527 ; Penkivil v. Ccnnell, 5
appear and oppose the petition, Ex. 381 ; Beardsluno ' v. Londes-
Tretoil and Messer Mining Co., 2 borough, 11 C. B. 49S. See, too,
J & H. 421. Macgregor v. Keiley, 4 Ex. 801 ;
(/) Re India and Australia Steam Dover and Deal Rail. Co., 17 Sim.
Packet Co., 17 Sim. 15 ; Hill v. 18.
London and County Assurance (k) An unsatisfactory affidavit of
Co. 1 H. & X. 398; Re Phillips, debt is not sufficient proof, Hutchin-
18 Beav. 629. son v- Harding, 11 Ex. 561.
EFFECT ON ACTIONS, &C. 671
members without further hindrance or delay, save that he Bk- IV- C1,:ii • ]-
J ' Sect. 6.
eould not seize the property of the company vested in the
official manager. Therefore the Court of Chancery would not
restrain such creditor from issuing execution against a con-
tributory (i) ; nor would a court of law withhold from a judg-
ment creditor of the company permission to enforce payment
of his debt from the individuals liable to pay it (m) ; nor was
there anything to prevent such a creditor from suing the
official manager for the purpose of obtaining a judgment,
decree, or order against him (n), or from afterwards enforcing
such judgment, decree, or order against the individuals repre-
sented by him (o).
By 20 & 21 Vict. c. 78, however, these rights of the creditors Alterations ma.ie
- , ■ , ' . 1,1 by 20 &21 Vict.
of a company which was being wound up under the acts of c. 78.
18-48 and 1849, were materially altered. For in the first place,
the Master or Judge acting in the winding up was empowered
to call upon the creditors, by advertisement, to meet and
choose one or more persons, other than the official manager,
to represent them in the winding up ; and after they had been
thus called upon by advertisement, the creditors became parties
to the winding up (p).
In the next place, as soon as the creditors had chosen, or When le.ive
had been required to choose, representatives, no action or suit require .i*
could be either commenced or prosecuted by any creditor
against the official manager or the company, or any other
person representing the same, or any person as a contributory
thereof, except by leave of .the Master or Judge acting in the
(?) Re Dover and Deal Rail. Co., 17 272 ; Thompson v. Norris, 5 De G.
Sim. 18 ; Re Phillips, 18 Beav. 629 ; & S. 6S6.
Prichard's case, 5 De G. M. & G. (o) But a judgment against the
484. official manager of a so-called com-
(m) Morisse v. Royal Brit. Bank, pany which has no capacity to sue
1 C. B. N. S. 67 ; Palmer v. Justice or be sued, either by a corporate
Assurance Society, 6 E. & B. 1015 ; name or by a public officer, cannot
Hilly. London and County Assurance be enforced against the individuals
Co., 1 H. & N. 338 ; Carroll v. composing such company, Re Weiss,
Kennedy, 6 Ir. Com. Law Rep. 11 ; 15 C. B. 331.
Mackenzie v. Sligo, <£c, Rail. Co., 4 {p) 20 & 21 Vict. c. 78, § 1. See
E. & B. 119. Mexican and South American Mining
(n) Robson v. MCreight, 25 Beav. Co., 26 Beav. 172.
672
WINDING UP BY THE COURT.
b) Under the
companies act,
1862.
Bk. IV. Chap, 1. winding up (q). It was not, however, incumbent on the Master
'— - or Judge to require the creditors to choose a representative ;
and until they were required to do so, their right to sue was
not affected (r).
The Companies act, 1862, proceeds upon an entirely different
principle ; the leading idea being that when the winding up of
a company has once commenced, its creditors ought to be paid
2>ari passu (s). In order to give effect to this principle the act
enables the Court, when a company is being wound up either
compulsorily or voluntarily (t), to stay actions and executions,
not only against companies which are being wound up, but also
against their members in those cases in which such proceedings
against them individually can still by law be taken.
It has been already pointed out that the members of a com-
pany formed and registered under the Companies act, 1862, or
under the former acts of 1856-8, are not liable to be proceeded
against personally by action in respect of the debts of the com-
pany (u) ; but it may be otherwise as regards companies not
formed under these acts ; and it therefore becomes material
for the present purpose to distinguish companies of the first
class from those of the second.
1. Where com-
pany is being
wound up l>y
the Court.
Restraining
actions, &c.
a) As regards companies formed and registered under the act.
"With respect to companies formed and registered under the
Companies act, 1862, or under the repealed acts of 1856-8 (.z),
it is enacted that at any time after the presentation of the
petition, and before any winding-up order is made upon it, the
Court may, upon the application of the company, or any
creditor or contributory of the company, restrain further pro-
(q) lb. § 7. Such leave was ob-
tained in Chambers, Royal British
Bank, 3 Jur. N. S. 1114 ; if not ob-
tained, the court in which the action
was brought would stay proceedings,
Thomas v. Wells, 16 C. B. N. S. 508.
See, as to judgment creditors, Barnes
v. Thrwpp, 3 Jur. N. S. 1242.
(r) Robson v. IBG'reight, 25 Beav.
272. See, also, Ex parte Tohin, 7
W. B. 4.
(s) See ante, p. 666, note (c), and
Ex parte Grissell, 1 Ch. 528 ; Ash-
bwry's case, 5 Eq. 223; Wiltshire
Iron Go. v. Great Western Rail. Co.,
L. B. 6 Q. B. 101 & 776.
(0 See §§ 85, 87, 138, 163.
(it) See ante, p. 276 et seq.
(x) See §§ 176 and 177 of the
Companies act, 1862.
STAYING ACTIONS, EXECUTIONS, &C. 673
ceedings in any action, suit, or proceeding against the com- Kk- IV- cliaP- 1-
. . . Sect. 6.
pany (//) ; and further, that after a winding-up order is made,
no action, suit, or other proceeding shall be proceeded with or
commenced against the company, except with the leave of the
Court, and subject to such terms as the court may impose (z).
Moreover, where a company is being wound up by the Court,
or subject to the supervision of the Court, any attachment,
sequestration, distress or execution, put in force against the
estate or effects of the company after the commencement of
the winding up, is declared to be void to all intents (a).
There are no similar provisions expressly applicable to Where company
. . , mi *s being wound
companies winch are being wound up voluntarily ; but upon Up voluntarily.
the application of the liquidators or any of the contributories
of such companies, the Court is empowered to restrain cre-
ditors from proceeding with actions, executions, &c, in like
manner as it can where a company is being wound up by the
Court (b) ; and this power has been exercised on several occa-
sions (c). Neither a creditor nor the company, however, is
apparently entitled to apply to the Court to interfere in these
cases (d).
Where a company is being wound up under the supervision Where company
of the Court, the Court has the same jurisdiction over suits Up under super-
and actions as it has when the company is being wound up vlsl0n-
compulsorily (e).
These enactments do not apply to proceedings by the
Crown (/).
(y) Companies act, 1862, § 85. 643 ; Walker v. Banagher Distillery
\z) lb. § 87. Co., 1 Q. B. D. 129 ; Rose & Co. v.
(a) lb. §163 ; Ex parte Four -drinier, Gardden Lodge Goal Go., 3 Q. B. D.
21 Ch. D. 510. In Harford v. Ami- 235. Execution stayed, Poole Fire
cable, &c, Asso. Co., Ir. L. R. 5 Com. Brick and Blue Clay Co., 17 Eq. 268 ;
Law, 368, the Court set aside a Sabloniere Hotel Co., 3 Eq. 74 ;
judgment entered up against a com- Peninsular Banking Co., 35 Beav.
pany after it had been ordered to be 280.
wound up. See infra. (d) See § 138 ; Thomas v. Patent
(b) § 138. Lionite Co., 17 Ch. D. at p. 257.
(c) Actions stayed, Keynsham Co., (e) §§ 148 to 151.
33 Beav. 123 ; Life Assurance Co. of (/) Oriental Bank Corporation, Ex
England, 10 Jur. N. S. 762 ; Thames parte The Crown, 28 Ch. D. 643 ;
Plate Glass Co. v. Land and Sea Tele- Henley & Co., 9 Ch. D. 469.
graph Co., 11 Eq. 248 ; and 6 Ch.
L.C. X X
674 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. Notwithstanding the clear words of § 163 they have been
Sect. 6.
construed as controlled by § 87, and the Court has declared
itself competent to allow attachments, &c, to proceed, if to
stop them will deprive the person putting them in force of all
remedy against the company (g). But an attachment, &c,
which is void under § 163 is void altogether — i.e., as against
secured creditors, and not only as against the company (/*).
It is necessaiy to notice in greater detail the numerous
decisions on the foregoing enactments with respect to actions,
executions, and distresses.
Staying actions. As regards actions. — When the Court is asked to stay an
action, the only material question to be considered is, whether
there are any circumstances which render it necessary that the
action should be continued, or whether the claim of the plain-
tiff is not one which can be as easily dealt with in the winding
up as in any other way. If the claim sought to be enforced is
capable of being satisfactorily dealt with in the winding up,
other proceeding's to enforce it will be sta^yed (?) ; but the
costs already incurred by the creditor will be added to his
debt (J). Even where a company is being wound up volun-
tarily, actions against it will be stayed upon these terms (k).
If the Court is of opinion that the action ought not to be
stopped, e.g., where an action is instituted against directors or
other individuals as well as against the company, the Court
will allow the proceedings to go on (I), but will require the
(g) Exhall Coal Mining Co., 4 De Life Assurance of England, 10 Jur.
G. J. & S. 377 ; Ex parte Carnelleij, N. S. 762 ; Rose <£• Co. v. Gardd\ n
35 Ch. D. 656. Lodge Coal Co., 3 Q. B. D. 235,
(h) Ex parte Fourdrinier, 21 Ch. where the plaintiff's costs of appear-
D. 510. ing on the application to stay pro-
(i) Hermann Loog, Limited, 36 Ch. ceedings were not allowed.
D. 502, action in Scotland ; Inter- (k) See Rose & Co. v. Garddi n.
national Pulp and Paper Co., 3 Ch. Lodge Coal Co., 3 Q. B. D. 235 ;
D. 594, action in Ireland ; Australian Poole Fire Brick, &c, Co., 17 E<p
Direct Steam Nav. Co., 20 Eq. 325, a 268, and other cases, ante, p. 673,
suit to enforce a maritime lien, and note (c).
compare Rio Grande do Sul Steamship (/) As in JVyley v. Exhall Coal
Co., 5 Ch. D. 282; Re Briton Medical Co., 33 Beav. 538; Hall v. Old
Assur. Assoc, 32 Ch. D. 503, sum- Talargoch, dr., Co., 3 Ch. D. 749,
monses to recover penalties. See, and Rio Grande do Sul Steamship Co.,
also, the next note. 5 Ch. D. 282.
(j) Keynsham Co., 33 Beav. 123 ;
STAYING ACTIONS. 675
plaintiff to undertake not to issue execution against the Bk- lJ- Chap. 1.
company without the leave of the Court (w). So the Court ^-^
has allowed a suit to go on until the defendants have answered,
but no further (n). A mortgagee will not be restrained from
enforcing his rights against the mortgaged property (o).
Applications for leave to continue proceedings against a
company which has been ordered to be wound up should be
made to the judge who made the order (p) ; and should be
made by summons at chambers (q) : and if he gives leave to
proceed, the appeal court will not interfere (?•)•
The liquidator ought to be the receiver in actions in which
receivers are necessary (s).
By Order XLIX. r. 5, of the Rules of the Supreme Court, R. s.c.
1883, "when an order has been made by any judge of the XLVL 2' 5-
Chancery Division for the winding up of any company, the
judge in whose court such winding up shall be pending shall
have power, without any further consent, to order the transfer
to such judge of any cause or matter pending in any other
court or division brought or continued by or against such
company " (t).
The Court has no power to order the costs of an action Costs,
which has been dismissed by consent in consequence of the
company being wound up, to be paid out of the assets of the
(m) Mr.Eiven r. London and Bom- (p) Wilson v. Natal Investment
bay and Mediterranean Bank, W. N. Co., W. N. 1867, 68.
1866, 407 ; Hagell v. Currie, ib. 1867, (a) Hagell v. Owrrie, W. K 1867,
75. 75.
(n) Thames Plate Glass Co. v. Land (r) Thames Plate Glass Co. v. Land
and Sea Telegraph Co., 11 Eq. 248, and Sea Telegraph Co., 6 Ch. 643.
and 6 Ch. 643. (s) Perry v. Oriental Hotels Co., 5
(o) Lloyd v. Lloyd, 6 Ch. D. 339 ; Ch. 420. See, also, Campbell v.
Longdendale Cotton Spinning Co., 8 Compagnie Generate de Bellegarde, 2
Ch. D. 150, where the company was Ch. D. 181. See, in a voluntary
being wound up in the County winding up, Boyle v. Bettws Llant-
Palatine Court of Lancashire ; wit Coll. Co., ib. 726.
Morr v. Anglo-Italian Bank, 10 (t) Compare Ord. li. r. 2a, of the
Ch. D. 681, where the property Rules of 1875, and Madras Irriga-
subject to the mortgage was in Hon Co., 16 Ch. D. 702, correcting
Italy, and proceedings were being Bandore Siemens Steel Co., 10 Ch. D.
taken in that country ; and Hodson 489.
v. Tea Co., 14 Ch. D. 859.
x x 2
676
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 6.
Practice.
Staying execu-
tions.
Executions
levied before
a winding-up
order.
company, although the action was brought by shareholders for
the benefit of the company (w).
Proceedings before a magistrate to recover penalties from a
company may be restrained (x).
An application to stay an action in the High Court should
be made by summons in the action, and not to the judge in
whose Court the company is being wound up (y). To stay
other actions application must be made to him.
When a winding-up petition has been presented and has not
been heard, the usual practice is to apply ex parte to have
actions stayed until the petition is heard or disposed of ; and
an order to this effect is generally granted, on the usual under-
taking being given as to damages. This practice was adopted,
after consideration, by V.-C. Wickens in London and Suburban
Bank (z), and has been followed since the Judicature acts by
all the divisions of the High Court.
As regards executions. — The Court is much more reluctant
to stay executions than other proceedings. To interfere with
a creditor whose legal right is established, and who is about to
reap the fruit of a successful litigation, is a strong measure
scarcely to be justified by considerations of hardship to the
debtor, but possibly justifiable on the principle that equality
is equity, and that it is unjust to other creditors that one shall
obtain payment in full whilst little or nothing is left for them.
Even as between creditors, however, some preference is fairly
the reward of extra diligence ; and where a creditor has
actually issued execution against a company before a petition
to wind it up has been presented, and the sheriff is in posses-
sion when it is presented, the Court will not interfere and
deprive the creditor of the fruits of his diligence (a), unless
(u) Hull Central Drapery Co., 15
Ch. D. 326.
(x) Briton Medical, dec., Assoc, 32
Ch. D. 503.
(y) Jud. act, 1873, § 24, el. 5 ;
Artistic Colour Printing Co., 14 Ch.
D. 502 ; Walker v. Banagher Dis-
tillery Co., 1 Q. B. D. 129 ; People's
Garden Co., 1 Ch. D. 44 ; Needham
v. Pdvers Protection Co., ib. 253 ;
Perkins Beach Lead Mining Co., 7
Ch. D. 371, and King church v.
People's Garden Co., 1 C. P. D. 45,
contra.
(z) 19 W. R. 950.
(a) JVithernsea Brickworks, 16 Ch.
D. 337 ; Parry's case, 4 De G. J. &
Sm. 63. See, also, London Cotton Co.,
2 Eq. 53, where the sheriff was kept
out of possession ; Bastow, &c, Co.,
4 Eq. 681.
STAYING EXECUTIONS. 077
under very special circumstances, e.g., of oppression or Bk. IV. Chap. l.
Sect. 6.
fraud (6). But, as a rule, if the sheriff does not seize before
the commencement of the winding up, the execution will be
stayed (c) ; and receivers appointed in the same interval will
be restrained from acting (<;?). In one case, indeed, of this
description the creditor was allowed to proceed, but was put
under terms as to what property he should seize (e) ; and in
two other cases creditors, who had obtained judgment before the
commencement of the winding up, but had at the request of
the company refrained from issuing execution, were allowed
in one case to issue execution after the commencement of the
winding up, and in the other case to have the same advantages
as if the sheriff had seized before the winding up had com-
menced (/). It has, however, been doubted in a later case
whether the fact of the creditor having given time to the com-
pany is sufficient to entitle him to such an indulgence (g) ; but
if the company has behaved in such a way as to make it unfair
for it to restrain a creditor from proceeding on his judgment,
the Court will allow execution to issue (It). On other
occasions, where the execution preceded the petition to wind
up, the Court, whilst staying the execution, has directed the
liquidator to sell for the benefit of the execution creditor (i),
thus substantially securing to him the fruits of his diligence.
A fortiori will the Court not interfere with an execution
(b) See Perkins Beach Lead Min- (e) Bastow, dec, Co., 4 Eq. 681.
ing Co., 7 Ch. D. 371 ; Hill Pottery See the cases in note (c).
Co., 1 Eq. 649, where the sheriff (/) Richards & Co., 11 Ch. D.
had seized hefore the petition was 676 ; Ex parte Railway Steel an I
presented. Plant Co., In re Taylor, 8 Ch. D.
(c) See Ex parte Railway Steel and 183.
Plant Co., In re Williams, 8 Ch. D. (g) Vron Colliery Co., 20 Ch. D.
192 ; London and Devon Biscuit Co., 442.
12 Eq. 190, where the writ was (h) Rudow v. Great Britain Mutual
lodged before the petition was pre- Life Ass. Soc, 17 Ch. D. 600.
sented. (i) Hill Pottery Co., 1 Eq. 649 ;
(d) Campbell y . Compagnie Ginerale Plas yn Mhowys Coal Co., 4 Eq.
de Bellegarde, 2 Ch. D. 181 ; Perry 689 ; Ex parte Railway Steel and
v. Oriental Hotels Co., 5 Ch. 420. Plant Co., In re Taylor, 8 Ch. D.
But see, where the winding up is 183. See, also, Dublin Exhibition
voluntary, Boyle v. Bettws Llantivit Co., Tr. Rep. 2 Eq. 158.
Coll. Co.', 2 Ch. D. 726.
678
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 6.
Executions
levied after
a winding-up
order.
Garnishee
orders.
Judicature act,
1875, § 10.
Staying
distresses.
creditor who has actually got his money before the winding-
up order is made (k).
Executions issued after a petition for a winding-up order
has been been presented, stand in a different position, and are
stopped (I) ; even although the property seized may be in a
foreign country (m). But the Court will not interfere with
creditors who have obtained judgments against the company in
actions brought by or against it by its liquidators (w). Indeed,
it is very doubtful whether the statutory provisions in question
have any application to such a case.
In the case of an execution by a writ of ji. fa., the important
date is that on which the sheriff seizes ; in the case of an
attachment of a debt by means of a garnishee order, the date
to be considered is the date on which the order nisi is served ;
in other respects the rules applicable to the stay of these two
forms of proceedings are the same (o).
It has been decided that section 10 of the Judicature act,
1875, did not introduce into the winding-up of companies,
section 87 of the Bankruptcy act, 1869, which deprived execu-
tion creditors of the fruits of their execution, where the sheriff
had notice of the bankruptcy within fourteen days after
sale (f>) ; and the same reasoning excludes the application of
sections 45 and 46 of the Bankruptcy act, 1883.
As regards distresses. — The 10th section of the Judicature
act, 1875, does not place a landlord in the position of a secured
creditor by reason of his power of distress, nor give him the
priority for a year's rent, which is conferred upon landlords by
the bankruptcy acts (q). As regards re-entry, the Court will
(k) Ex parte Hawkins, 3 Ch. 787.
(I) Ex parte Railway Steel and
Plant Co., In re Williams, 8 Ch. D.
192 ; Waterloo Life Ins. Co., 31 Beav.
589 ; Peninsular Banking Co., 35
Beav. 280. See, also, Universal
Disinfector Co., 20 Eq. 162 ; Dim-
son's Estate Fire Clay Co., 19 Eq.
202, where leave to issue execution
was refused.
(m) Ex parte Scinde Rail. Co., 9
Ch. 557.
(?r) See Re Mackrill Smith, 3 Ch.
125 ; Re Levick, 5 Eq. 69.
(o) Stanhope Silkstone Collieries Co.,
11 Ch. D. 160. See Hamer v. Giles,
ib. 942.
{p) Ex parte Railway Steel and
Plant Co., In re Taylor, 8 Ch. D.
183 ; Withernsea Brickworks, 16 Ch.
D. 337 ; Richards & Co., 11 Ch. D.
676. Printing and Numerical Regis-
tering Co., 8 Ch. D. 535, is overruled,
and see infra, p. 685, note h.
(q) Thomas v. Patent Lionite Co.,
17 Ch. D. 250 ; Bridgeicater Engin-
STAYING DISTRESSES FOR RENT.
679
not prevent a landlord from exercising bis power of re-entry, f,k- g^01^' L
if his right to enter under the terms of the lease is clear (r).
Further, the sections of the Companies act, 1862, under Where landlord
. cannot prove
consideration only apply to a landlord who seeks to distrain Ior the vent.
upon goods of a company, which is his legal tenant. There-
fore in New City Constitutional Club Co. (s), the Court decided New City Con-
. . stitutional Club
that it could not prevent a landlord trom distraining upon company.
goods'which, although originally the property of the company,
had ceased to be so by being charged for more than their full
value in favour of debenture holders. Again when the land-
lord has no right of proof against the company, e.g., where
the company is not the legal tenant (t) of the landlord but is the
undertenant 0) or the cestui que trust (x) of his lessee, the
Court will not restrain the landlord from levying a distress on
the company's goods, even although the company may offer to
allow him to prove for his rent in the winding up (y). In one
case of this sort the Court allowed a distress although the
landlord held the company's promissory note for the rent, and
could therefore prove for it(z). But this case has been
questioned and not without reason (a).
In cases of this class, i.e., where the company is not tenant
to the person distraining, it is immaterial whether the rent, for
which the landlord seeks to distrain, accrued due before, or
after, the commencement of the winding up, for the landlord
not being a creditor of the company in respect of his rent, has
no right to prove for it in the winding up (b).
eering Co., 12 Ch. D. 181 ; Coal Con- of circumstances at the commence-
sumers1 Co., 4 Ch. D. 625. Stockton ment of the winding up.
Iron Furnace Co., 10 Ch. D. 335, can (t) Lundy Granite Co., 6 Ch. 462.
no longer be relied upon as an autho- (u) Carriage Co-operative Supply
rity to the contrary. Association, 23 Ch. D. 154 ; Regent
(?•) General Share Co. v. Wetlcy United Service Stores, 8 Ch. D. 616.
Pottery Co., 20 Ch. D. 260. § 163 (aj) Exhall Coal Mining Co., 4 De
of the Companies act, 1862, does not G. J. & S. 377.
apply to such a case. (y) Regent United Service Stores, 8
(s) 34 Ch. D. 646. The debenture- Ch. D. 616. See, also, Lundy Gra n ite
holders after the hearing of the action Co., 6 Ch. 462.
in the Court of first instance, offered (z) Exparte Clemence, 23 Ch. D. 154.
to give up their charge on the chat- (a) New City Constitutional Club
tels in favour of the liquidator. The Co., 34 Ch. D. 646.
court of appeal held this could not (b) See the cases in the last five
affect the landlord's right, which notes, and the next note,
must be ascertained from the state
680 WINDING UP BY THE COURT.
Bk. IV. Chap. l. if the landlord is the legal creditor of the company in
Sect. 6.
respect of the rent, which he wishes to recover hy a distress
Where landlord . . , . ,
can prove for up on the company s goods, he must, m order to obtain leave
the rent. tQ cjjstrain under section 87, show either that it is inequitable
for the company to insist on section 163, or that the rent
ought to be paid in full as one of the expenses of the winding
up (c). In applying these principles to any given case it is
important to ascertain whether the rent for which the landlord
seeks to distrain accrued due before, or after, the commence-
ment of the winding up. If the rent accrued due before the
commencement of the winding up, the landlord will not be
allowed to distrain (d), even though the liquidator may have
retained possession of, and carried on the company's works
upon the land (e) ; the landlord must prove for his debt like
any other creditor (e). If the rent accrued since the com-
mencement of the winding up, the landlord will be allowed to
distrain for it, or receive payment in full, if the liquidator has
retained possession of the property for the purposes of the
winding up, or for carrying on the company's business, or in
order to sell it or do the best he can with it ; for under these
circumstances the rent is considered as one of the expenses of
the winding up, and should be paid in full, like any other
debt properly incurred by the liquidator (/). But if the
(c) Oak Pits Colliery Co., 21 Ch.D. compulsory winding up, which
330; Lancashire Cotton Spinning Go. superseded the voluntary winding
35 Ch. D. 656. A mortgagee who up, had been made.
has a power of distress under an (e) North Yorkshire Iron Co., 7
attornment clause, is in a less favour- Ch. D. 661 ; Brown, Bayley, and
able position for obtaining leave to Dixon, 18 Ch. D. 649 (case of a
distrain than an ordinary landlord. mortgagee with power of distress) ;
lb. South Kensington Co-operative Stores,
(d) Traders' North Staffordshire 17 Ch. D. 161 ; Oak Pits Colliery Co.,
Carrying Co., 19 Eq. 60, where the 21 Ch. D. 322.
distress was for tolls in arrear ; (/) Dundy Granite Co.,.6 Ch. 462 ;
Coal Consumers' Association, 4 Ch. North Yorkshire Iron Co., 7 Ch. D.
D. 625, where the liquidator retained 661; Silkstone and Dodivorth Iron
possession, but not for any purpose Co., 17 Ch. D. 158 ; South Kensing-
of liquidation ; Thomas v. Patent ton Co-operative Stores, 17 Ch. D.
Lionite Co., 17 Ch. D. 250, where 161 ; Brown, Bayley, and Dixon, 18
distress was levied after a resolution Ch. D. 649 ; Oak Pits Colliery Co.,
for a voluntary winding up had been 21 Ch. D. 322.
passed, but before the order for a
STAYING DISTRESSES FOR RATES.
G81
liquidator has retained possession by arrangement with the Bk- Iv- chaP- L
landlord for his benefit as well as for that of the company, or
has clone nothing, but has merely abstained from trying to get
rid of the property, and has not agreed to pay rent, the land-
lord will not be allowed to distrain, but must prove for the
rent in the winding up (y). If the rent has accrued due partly
before and partly after the commencement of the winding up,
and the landlord establishes his right to distrain, or be paid in
full, for the latter portion of the rent, the rent will be appor-
tioned and the distress will be allowed for so much as accrued
after the winding up commenced (It).
Questions of a similar nature have arisen in respect to rates. Rates before
It was settled that the local authorities had no right (under "
§ 10 of the Judicature act, 1875) to be paid in full rates due at
the commencement of a winding up in priority to other debts (i) .
As these rates were debts provable in the winding up, the
overseers were not allowed to distrain for them after the
winding up had commenced (k), and inasmuch as rates,
unlike rent, cannot be apportioned, if a rate had been
assessed before the commencement of a winding up for a
period which extended beyond that date, the local authorities
were not entitled to receive any portion in full, but had to
prove for the whole (I). Now, however, by the Preferential
Payments in Bankruptcy act, 1888 (m), all parochial or other
local rates due from a company at the commencement of the
winding up and which have become due within twelve months
next before that time, have been given a priority and are to b^
(g) Progress Assurance Co., 9 Eq. Dry Docks Corporation of London, 39
370 ; Bridgewater Engineering Co., Ch. D. 306.
12 Ch. D. 181 ; Oak Pits Colliery Co. , (I) Rates are not "within the Ap-
21 Ch. D. 322. portionment act, 33 & 34 Vict. c. 35,
(h) South Kensington Co-operative and as the occupation by the com-
Stores, 17 Ch. D. 161. pany before the winding up is the
(*) Albion Steel and Wire Co., 7 Ch. same occupation as that by the licpii-
D. 547 ; Art Engraving Co., W. N., dator afterwards, there is no change
1889, 38. Bankruptcy act, 1883, § 40. of occupation, so as to allow the rate
(ifc) The Court would have allowed to be apportioned under the Public
a distress to be levied before the Health act, 1875, 38 & 39 Vict. c. 55,
commencement of a winding up, § 211, sub-s. (3). TVearmouth Crown
although a provisional liquidator Glass Co., 19 Ch. D. 640.
might have been appointed. See (m) 51 & 52 Vict. c. 62.
682 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. paid, pari passu with certain other preferential debts, if
Sect. 6.
possible in full, and at once.
Rates after The rights of the local authorities with respect to rates
winding up. assessed after the commencement of the winding up, have
given rise to some difference of opinion. In the two earliest
cases on this subject (n), payment in full was refused on the
ground that the liquidator's occupation of the property had
not been beneficial, in that he had made no profit by it. The
Court of Appeal, however, in the other two cases which have
arisen (o), did not approve of this test, but in both cases
ordered the rates to be paid in full, though the liquidator had
made no profit out of his occupation, on the ground that the
occupation of the property was continued with a view to the
more advantageous realisation of the company's assets. In
the latter of these two cases Lord Justice Bowen expressed an
opinion, in which Lord Justice Fry concurred, that the true
test is whether the liquidator's occupation has been beneficial
within the ordinary meaning of that expression in cases of
rating. The Court will not, except in a very extreme case,
take into consideration complaints by the liquidator as to the
unreasonable amount of the rates ; if the assessment is wrong,
he should appeal against it in the ordinary way (p).
b) As regards companies not formed under the act.
The winding-up provisions of the Companies act, 1862,
apply, as has been seen, not only to companies formed and
registered under it, but also to other companies (q). As re-
gards actions, executions, &c, against companies themselves,
it is not material to distinguish those formed under the act
from other companies (r). But in the case of a company not
(n) West Hartlepool Iron Co., 34 (q) Ante, p. 617.
L. T. N. S. 570 ; Watson, Kipling & (/•) See Rudoio v. Great Britain
Co., 23 Ch. D. 500. Mutual Life Assurance Society, 17
(o) International Marine Hydro- Ch. D. 600, and §§ 196 to 198, and
pathic Co., 28 Ch. D. 470 ; National 199, 201, 202, and 204. An action
Arms Co., ib. 474. against official liquidators in whom
(p) National Arms Co., 28 Ch. D. the company's property is vested
474 ; and see Watson, Kipling & Co., under § 203 in their official capacity
23 Ch. D. 500. can be stayed as an action against
STAYING PROCEEDINGS. 683
formed under the act of 1862, or under the prior acts of Bk. ^Chap. l.
1856—1858, creditors of the company may be entitled to
proceed against members individually; and accordingly the
act of 18G2 contains provisions enabling the Court, before any
winding-up order is made, to stay such proceedings upon the
application of any creditor both when the company has been
registered (s) and when it has not (t) : only a creditor, how-
ever, is entitled to apply for a stay of such proceedings («).
But after a winding-up order has been made, no action, suit,
or other legal proceeding can be commenced or proceeded with
against any contributory in respect of any debt of the com-
pany except with the leave of the Court, and subject to such
terms as the Court may impose (x). The reasons already
noticed for making a distinction between actions on the one
hand, and executions on the other, and the decisions referred
to in connection with that distinction ought to be borne in
mind when considering these enactments (y).
Where a debt has been contracted by an unincorporated Debts contracted
before registra-
company, and the company is afterwards registered, those tion.
persons only who are members of the company at the time of
registration become members of the incorporated company.
Consequently, even although such company may be afterwards
wound up, the common law liabilities of persons who had
ceased to be shareholders before the registration of the com-
pany remain wholly unaffected, and may be enforced as if the
company had never been registered or ordered to be wound up.
Thus in Lanyon v. Smith (z), a cost-book mining company Lanyon v.
, Smith.
was formed, and whilst the defendant was a member oi it the
debt to the plaintiff was contracted ; the defendant sold and
transferred his shares and ceased to be a shareholder ; after-
wards the company was registered and ordered to be wound up.
The defendant's name was placed on the list of contributories
the company, Graham v. Edge, 20 a voluntary winding up, § 138. As
Q. B. D. 538 ; on appeal the action to the Court to apply to, see ante,
was decided to be against the liqui- p. 676.
dators personally, see ib. 683. {y) Ante, p. 676.
(s) § 197. (z) 3 B. & Sin. 938. Harvey v.
(t) § 201. Clough, 2 New K. 204, Ex., was a
(u) See the sections 197 and 201. precisely similar case. See, also,
(x) §§ 198 and 202, and see as to Fountain's case, 11 Jur. N. S 553.
684 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. as a past member, but the plaintiff nevertheless sued him at
Sect 7
— law ; and the Court of Queen's Bench held that the action
ought not to be stayed, inasmuch as the defendant never was
a member of the company being wound up, and his name
ought not to have been placed on the list of contributories of
that company.
order.
SECTION VII. —PROCEEDINGS UNDER COMPULSORY WINDING-UP
ORDERS.
1. Generally.
Form of order. A compulsory winding-up order is in the following form,
" This Court doth order that the company be wound up
by this Court under the provisions of the Companies acts,
1862 and 1867 " (a). Under the Winding-up acts of 1848 and
1849, the order dissolved the company (b) ; but, under the act
of 1862, the company is not dissolved until the winding up is
completed («?).
Notice of the When a winding-up order is made, notice is to be given to
the registrar of joint-stock companies (c/) ; and the order must
be advertised, within twelve days after the date thereof, by the
petitioner in the London Gazette, and be served upon such
persons (if any) and in such manner as the Court may direct (e).
(a) See the orders, schedule 3, dissolved, see Croohhaven Mining
form 3. For a form of order giving Co., 3 Ecp 69 ; Pinto Silver Mining
the liquidator power to act without Co., 8 Ch. D. 273, and London and
the previous sanction or interference Caledonian Insurance Co., 11 Ch. D.
of the Court, see Rochdale Property 140.
and General Finance Co., 12 Ch. D. (d) § 88.
775. (e) Rule 6. As to dispensing
(b) See 11 & 12 Vict. c. 45, § 16, with the advertisement under the
and form 2 in the schedule ; Ex old practice, see 12 & 13 Vict. c.
parte Barber, 1 Mac. & G. 183; Re 108, § 16; and Re Worcester Corn
North of England Banking Co., 1 De Exchange, 15 Jur. 960, where the
G. & S. 545 ; and Re Newcastle, <£c, advertisement of an order of refer-
Banh, 17 Beav. 470. ence as to the expediency of wind-
(c) 25 & 26 Vict. c. 89, §§ 111 ing up a company was dispensed
and 143. As to the jurisdiction of with,
the Court over a company actually
PROCEEDINGS UNDER THE ORDER. 085
A form of advertisement is given in the third schedule to the Bk- J V. Chap. l.
Sect. 7.
rules promulgated under the act (/).
These rules apply as well to orders for winding up com-
pulsorily as to orders for winding up subject to the supervision
of the Court (g) ; but the remaining proceedings under such
orders are so different that it is necessary to distinguish the
one class of orders from the other. In the present place the
proceedings under a compulsory order will be alone adverted
to; those under an order to wind up subject to the supervision
of the Court will be noticed in a subsequent section.
The general practice of the Chancery Division of the High General practice.
Court (Ji), including the practice in winding up companies
under the older winding-up acts, applies to the winding up of
companies under the Companies act, 18G2, so far as such
practice is not inconsistent with that act, and the rules which
have been issued under its authority (i). Those matters only
which have special reference to the winding up of companies
will be found in the present work, and for detailed informa-
tion on minor points of practice the reader is referred to the
Companies act, 1862, and to the rules which, with a full index
to them, will be found in the appendix.
(/) See form No. 5. assets are insufficient to pay its
(g) See as to the advertisements, debts and liabilities, and the costs
rule 6 ; and as to the notice to the of winding up, which has been
registrar, see §§88 and 151. ordered to be wound up since 2nd
(h) Not the practice in bank- Nov. 1875, Joseph Suche & Co., 1
rnptcy as distinguished from that Ch. D. 48. See as to the effect of
in chancery. See Smith, Fleming & this act, infra, p. 719 et seq.
Go's case, 1 Ch. 543, per Turner, (i) See § 170, now repealed by 44
L. J., as to set off ; Kellock's case, & 45 Vict. c. 59, see § 4 and rule 74 ;
3 Ch. 769, as to secured creditors ; Luard's case, 1 De G. F. & J. 533 ;
Ebb w Vale Co., 5 Ch. 112, as to Ex parte Kintrea, 5 Ch. 95, as to
interest ; Merchants' Co., 4 Eq. 453, costs. Although rules have been
as to examinations ; Chapman's case, made under § 170, it is apprehended
1 Eq. 346, as to servant's wages. that in cases not provided for the
But by the Judicature act, 1875, old winding-up practice would be
§ 10, the rules which in bankruptcy followed ; but see the section. A.s to
regulate the rights of secured and serving notices in the winding up
unsecured creditors, the debts and on persons out of the jurisdiction of
liabilities provable, and the valua- the Court, see Anglo-African Steam-
tion of annuities, of future and con- ship Co., 32 Ch. D. 348 ; Natlian,
tingent liabilities, are to be observed Newman & Co., 35 Ch. D. 1.
in winding up any company whose
686
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 7.
Proceedings in
chambers.
Carriage of the
order.
Proceedings
after the order.
The present practice is for the judge who makes the winding-
up order to refer the prosecution of it to his own chambers ;
the winding up is then proceeded with there by his chief clerk,
and under his own immediate superintendence (k). The deci-
sion of the judge himself can always be required as a matter
of right ; no one being bound to abide by the decision of the
chief clerk (I). The judge, moreover, is empowered to do in
chambers everything which the Court is authorised to do by
the Companies act, 1862 (m).
If more than one petition has been presented the carriage of
the order is usually given to the first petitioner (»). As a
general rule the priority of the petitions is determined by the
date of advertisement (o) ; but where two petitions were both
advertised in the same gazette the carriage of the order was
given to the petitioner whose petition was first presented (p).
As soon as practicable after a compulsory winding-up order
is made, it is the duty of the Court to settle the list of contri-
butories, and to cause the assets of the company to be collected
and applied in discharge of its liabilities (q). To work out the
order, a copy of it must be left by the petitioner at the cham-
bers of the judge within ten days after the order has been
passed and entered (r) ; and in default any other person inte-
rested in the winding up may leave the same, and the judge
may, if he thinks fit, give the carriage and prosecution of the
order to such person (s). Upon the copy of the order being
left, a summons to proceed upon it must be taken out and
served upon the parties who appeared upon the hearing of the
(k) See Wheal Virtue Mining Co.,
3 Jur. 659 ; Re Newcastle, &c., Bank,
17 Beav. 470.
(?) Agriculturist Cattle Insurance
Co., 3 De G. F. & J. 194.
(m) See § 83 and rule 73.
(?i) Storforth Lane Colliery Co., 10
Ch. D. 487 ; General Financial Bank,
20 Ch. D. 276 ; Dublin Gh-ains Co.,
17 L. R., Tr. 512.
(o) Trades Bank Co., W. N. 1877,
268.
(p) Storforth Lane Colliery Co., 10
Ch. D. 487.
(?) § 98.
(r) Rule 7.
(s) lb. Ex parte Baker, 3 De G.
& Sm. 243. It is presumed that a
similar rule would apply where the
petitioner delayed to draw up the
order. The carriage of the order
will not, however, be given to a
person who could not himself ob-
tain a compulsory order, if his
object is to force on proceedings
which others are desirous of stay-
ing, Brighton Club and Norfolk Hotel
Co., 35 Beav. 204.
PROCEEDINGS UNDER THE ORDER. 687
petition (t). Upon the return of the summons the judge ma)' Bk- *£■ p^P- L
fix a time for the appointment of an official liquidator, and for -
the proof of debts, and for the list of contributories to be
brought in, and directions may be given as to the advertise-
ments to be issued for such purposes, and generally as to the
proceedings and the parties to attend (u). The proceedings
under the order are to be continued by adjournment, and when
necessary by further summons, and any directions may be
given, added to, or varied, at any subsequent time as may be
found necessary (x).
With respect to the attendance of parties, every contributory Attendance of
on the list, and every creditor of the company whose debt or
claim is allowed, is entitled, at his own expense, to attend the
proceedings before the judge, and to have notice thereof (y).
Every person desirous of attending must leave the name and
address of himself and of his solicitor at the judge's cham-
bers (z). The judge, moreover, may appoint any one or more
of the contributories or creditors to represent before him, at
the expense of the company, all or any class of the contribu-
tories or creditors, upon any question as to a compromise
with any of the contributories or creditors, or in and about
any other proceedings before him relating to the winding up
of the company, and may remove the person or persons so
appointed (a).
Service of notices, &c, upon contributories and creditors Service of
may be effected (when personal service is not required) by
letter sent through the post ; and such service is to be con-
sidered as made at the time the letter ought to be delivered in
the due course of delivery by the post-office (b). The Court
has no jurisdiction to serve notices of orders or of other pro-
(f) Rule 7. (b) Rules 63 and 64, and see §§
(u) lb. 62 & 63 of the act. Service of a
(a-) lb. debtor summons by leaving it at
(y) lb. 60. As to the right of a the registered address of a member
creditor to attend the examination will not be good if it is not his true
of persons under § 115, see infra. or last known address. See Ex
(z) lb. 62. Varte Chatteris, 10 Ch. 227. As
(a) lb. 61. As to discharging the to the service of notices under the
petitioner from further attendance, Stannaries acts, see 32 & 33 Vict.
see Barber's case, 1 De G. & S. 726. c. 19, § 8.
688
"WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 7.
Wishes of credi-
tors and contri-
butories to be
consulted.
Inspection of
books, &c.
ceedings in a winding up upon persons residing out of the
jurisdiction of the Court, if the notices are in substance the
commencement of proceedings against the persons on whom
they are served (c) ; but notices which are not of this character
may be served abroad (d).
In all matters relating to the winding up of companies, the
Court may have regard to the wishes of the creditors or con-
tributories (e), and may direct meetings to be held in order to
ascertain their wishes, and may appoint a person to act as
chairman (/). When the judge directs a meeting to be held
under this section (g), the official liquidator is to give notice in
writing, seven days before the clay appointed for the meeting,
to every creditor or contributory, of the time and place ap-
pointed for the meeting, and of the matter upon which the
judge desires to ascertain the washes of the creditors or con-
tributories (h). The notice may, however, be given by adver-
tisement, if the judge so directs (i). Votes may be given at
such meetings either personally or by proxy (k), but no credi-
tor can vote by proxy unless his debt has been allowed, and
no contributory can so vote unless he is settled on the
list (Z). The form in which the chairman of the meeting is
to report its result is given in the 3rd Schedule to the Kules,
No. 48.
The right of creditors and contributories to inspect the
books of a company being wound up, will be alluded to here-
after when noticing the duties of the liquidators.
(c) Anglo- African Steamship Co.,
32 Ch. D. 348.
(d) Nathan, Newman & Co., 35
Ch. D. 1 ; and Baron Liebig's Cocoa
Works, Limited, W. N. 1888, 120.
(e) § 91. Including alleged con-
tributories, see § 74.
(/) See, as to submitting pro-
posals with reference to matters
arising in the winding up, Skitter's
Executors, 5 De G. & S. 34, and 1 De
G. M. & G. 64.
g) § 91. The direction is to be
testified by a memorandum signed
by the chief clerk. See rule 47, and
the form in schedule 3, No. 47.
(h) Rule 45, and, for the form of
notice, see the 3rd schedule, No. 45.
(i) Rule 45.
(k) Rule 46, and, for the form of
proxy, see schedule 3, No. 46.
(I) Rule 46. This, it is presumed,
is what is meant by the expression
" contributory of the company " afr
the end of rule 46.
PROCEEDINGS UNDER THE ORDER. 689
Bk. IV. Chap. 1.
Sect. 7.
2. Extraordinary powers of the Court. —
In order to enable the Court more effectually to exercise its
winding-up jurisdiction, certain extraordinary powers are con-
ferred upon it which it will be convenient here to notice (in).
The Court which will be referred to in the following pages will,
however, be only the Chancery Division of the High Court of
Justice in England, the reader being referred to the act itself
for information as to other courts (n). Substantially, however,
their powers will be found to be much alike.
In order to enable the Court to ascertain the real state of p0wer to sum-
its affairs, the Court is empowered, after making a winding-up mon ?nci
' x o o i examine,
order, to summon before it any officer of the company or any §§ 115, 117.
person known or suspected to have in his possession any of
the estate or effects of the company, or supposed to be in-
debted to it, or any person whom the Court may deem capable
of giving information concerning the trade, dealings, estate or
effects of the company ; and the Court may require him to
produce any books or documents in his power relating to the
company (o), and may examine him upon oath concerning its
affairs (p). An order may be made under this section on the Upon the appli-
application of the liquidator, or of a contributory or alleged liquidator or
contributory ; in the former case the order is made ex parte, contnbutory-
and the liquidator is not required to make any affidavit ; it is
sufficient if he makes a written statement showing a case of
suspicion (q) ; in the latter case, the contributory is generally
required to file an affidavit in support of his application, and
he must serve the liquidator with notice of motion, but he need
not serve the persons for whose examination the order is
wanted (r).
It is entirely in the discretion of the Court whether it will in
(m) These extraordinary powers (o) § 115.
are in addition to and not restrictive (p) § 117. For the summons,
of the ordinary powers of the Court, see form 54 in the 3rd schedule to
§ 119. the rules.
(n) As to the jurisdiction of the (q) Gold Co., 12 Ch. D. 77 ; Im-
Stannary Courts, see §§ 68, 83, 108, ferial Continental Water Corporation,
116, 120, and 172 of the Companies 33 Ch. D. 314.
act, 1862 ; 32 & 33 Vict. c. 19, and (r) See cases in last note.
50 & 51 Vict. c. 43.
L.c. Y Y
690
WINDING UP BY THE COURT.
Commissioners
for taking evi-
dence.
Bk Isr't°h'-ap' 1" an^ Par^cu^ar case exercise the powers conferred upon it. The
- Court of Appeal will not interfere with the Court of first
instance in the exercise of this discretion, except in a very
extreme case (s) ; but an appeal will be allowed, even by a
person ordered to attend for examination, if the Court of first
instance has decided on a wrong principle, or if it had no juris-
diction to order the appellant to attend (<).
The judges of the county courts sitting at places more than
tweiny miles from London, and the commissioners of bankrupts,
and the assistant barristers and recorders in Ireland, and the
sheriffs of counties in Scotland, are made commissioners for
taking evidence under the act, and examining any witnesses
whom the Court may direct to be examined by them (u). Pro-
vision, moreover, is made for the examination of persons in
Scotland (x).
The proper mode of obtaining the attendance of a person
for examination under §§115 and 117 is by summons, not by
subpoena (y).
A person is not bound to attend unless his expenses are
tendered him (z). A witness who does not answer to the satis-
faction of the judge acting in the winding up, or who refuses
to produce documents which he ought to produce, is liable
to commitment (a) ; and a person is not justified in refusing
to be sworn on the ground that it is necessary for him to
have counsel's assistance during his examination (b) ; but it
has been decided that he is entitled to the assistance of a
solicitor and counsel, and to be re-examined by them, and to
have notes taken of his own examination (c). A person sum-
Attendance for
examination.
(s) lb., and Heironh case, 15 Ch.
D. 139.
(t) JVhitioorth's case, 19 Cli. D.
118 ; Heiron's case, 15 Ch. D. 139
Compare the dicta of Jessel, M. R,
and Baggallay. L. J., in Gold Com-
pany, 12 Ch. D. 77.
(u) § 126.
(*) § 127.
(y) English Joint-Stock Bank, 3
Eq. 203 ; Gold Company, 12 Ch. D.
77.
(z) See § 115, and Mercer's case 5
De G. M. & G. 26, and 2 Sm. & G.
87.
(a) Stone's case, 3 De G. & S. 120.
(b) Ex parte Bunn, 3 Jur. N. S.
1013.
(c) Cambrian Mining Co., 20 Ch.
D. 376 ; Breech-Loading Armoury
Co., 4 Eq. 453 ; Merchants' Co., ib.
Compare Ex parte Bunn, 3 Jur.
N. S. 1013.
PROCEEDINGS UNDER THE ORDER. 691
moned ex parte, under § 115, must attend before a special Bk- IV. (Jhap. l.
examiner {<!). The examination is as a general rule entrusted
to the liquidator, but if necessary, the Court may entrust either
the whole, or some part of it, to a creditor or contributory ; it
will then as a rule point out the extent and limits of the exa-
mination (e). It may be added, that neither the public (/) nor
creditors, who are entitled to attend proceedings at their own
expense, whether under rule 60 of the orders of 1862 (g), or
under an order of court (h), have any right to be present at an
examination under this section, and the examiner, if requested
to do so, is bound to exclude them ; the Court, however may,
in its discretion allow their attendance (i).
Under this section it has been held that bankers (k), Persons liable
to be examined.
brokers (/), relatives (m), and other persons (w), acquainted with
the affairs of defaulting contributories, or of persons sought to
be put on the list of contributories, may be examined concern-
ing such contributories or persons, and transfers of shares by
or to them. Moreover, a person is liable to examination under
§ 115, although there may be a pending litigation between him
and the company, and his examination may relate to the subj ect-
matter of such litigation (o). But it seems that a mere creditor
of a company is not as such liable to examination under this
section (p), although he can of course be cross-examined on
his own claim.
This power of summoning persons for examination is con-
(d) Re Contract Corporation, 13 (I) Clement's case, 13 Eq. 179 n.
Eq. 27. See Smith, Knight & Co., (m) Swan's case, 10 Eq. 675 ;
8 Eq. 23, as to objecting to the Fricker's case, 13 Eq. 178.
examiner. (n) Trower and Laioson's case, 14
(e) Whitworth's case, 19 Ch. D. Eq. 8 ; Bloxam's case, 36 L. J. Ch.
118. 687; Massey v. Allen, 9 Ch. D.
(/) Western of Canada Oils Co., 6 164.
Ch. D. 109. (o) Lisbon Steam Tramioays Co., 2
(g) Grey's Brewery Co., 25 Ch. D. Ch. D. 575 ; and see English Joint-
400. Stock Bank, 3 Eq. 203 ; Re Cathcart,
(h) Norwich Equitable Fire Insur- 5 Ch. 703 ; V enables v. Schweitzer, 16
ance Co., 27 Ch. D. 515. Eq. 76. Compare Heir on' s case, 15
(i) Grey's Brewery Co., 25 Ch. D. Ch. D. 139 ; Imperial Continental
400. Water Corporation, 33 Ch. D. 314.
(/.) Druitt's case, 14 Eq. 6 ; Smith, (p) Accidental and Marine Ins.
Knight & Co., 4 Ch. 421. Corp., 5 Eq. 22.
Y Y 2
692
WINDING UP BY THE COURT.
Compelling
production of
documents.
Bk. IV. Chap. l. f erred upon the Court for the purposes of the winding up, and
— for the benefit of all the persons interested in it ; and the
Court will not allow the power to be used in a vexatious manner
or for an improper object (q). It may, however, be exercised
for the purpose of tracing monies of the company, and in-
vestigating any of its transactions (r). Monies due to a com-
pany are part of its estate and effects within the meaning of
§ 115 (s) ; and a person's ability to pay what he owes may be
inquired into (t).
The power of compelling the production of documents only
extends to such documents as may be required to be produced
consistently with established rules (u). But the solicitors of a
company being wound up are compellable to produce the
accounts, deeds, and documents of the company in their pos-
session, but without prejudice to any lien they may have against
the company for their costs (x).
Liquidators may be examined by contributories, or alleged
contributories, or by creditors, and be compelled to produce
the company's books for inspection (//).
In order to prevent persons liable to contribute to the pay-
ment of the debts of the company from escaping from justice
and avoiding examination, the Court may, either before or
after making a winding-up order, cause any contributory or
alleged contributory (z) to be arrested, and his books, money,
and effects to be seized, if proof is given that there is probable
Power to arrest.
(q) Heiron's case, 15 Ch. D. 139 ;
Imperial Continental Water Corpora-
tion, 33 Ch. D. 314.
(r) See Smith, Knight & Co., 4
Ch. 421 ; Contract Corp., 6 Ch.
145.
(s) See Clements case, ubi supra,
and Devon and Somerset Bail. Co.,
6 Eq. 610.
(t) See Bloxam's case, ubi supra,
and others of that sort.
(«) An order will not be made ex
parte. Commercial, dr., Wine Co.,
35 Beav. 35.
(.'-) Capital Fire Insurance Associa-
tion, 24 Ch. D. 408 ; Ex parte Paine
and Layton, 4 Ch. 215 ; Cameron's
Coalbrook Rail. Co., 25 Beav. 1 ;
Potter's case, 1 De G. & S. 728,
contra, was under the older acts.
(y) Mutual Society, 22 Ch. D.
714 ; Barned's Banking Co., 2 Ch.
350 ; Gooch's case, 7 Ch. 207. See
Gooch's case as to the affidavit the
liquidator must make. See, also,
Emma Silver Mining- Co., 10 Ch.
194. As to the right of plaintiffs in
an action to compel the liquidator
of a company, which has been wound
up and dissolved, to produce the
books of such company, see London
and Yorkshire Bank v. Cooper, 15
Q. B. D. 473.
00 § 74.
PROCEEDINGS UNDER THE ORDER. 693
cause for believing that he is about to abscond, or to remove or Bk. IV. chap. l.
. . Sect. 7.
conceal any of his goods or chattels for the purpose of evading
the payment of calls, or examination (a).
In order to facilitate the collection of the company's assets, Summary order
~ , .. to hand over
the Court may order any contributory settled on the list, and m0ney, &c,
any trustee, receiver, banker, or agent, or officer of the com- ^s '
pany, to hand over any books, monies, or effects in his hands,
and to which the company may be prima facie entitled (b).
The Court may also order any contributory settled on the list
to pay any monies due from him or from the estate of the
person he represents to the company, exclusively of any calls
made in the winding up (c) . If the company is limited, pay-
ment under this section must be made irrespectively of any
set-off; but if the company is unlimited, set-off may be allowed
in respect of monies due from the company otherwise than on
account of dividends or profits (d). The payment of calls is
also enforced by a summary order (<?).
All monies ordered to be paid under these sections are to be
paid into the Bank of England, unless specially directed to be
paid to the liquidator (/).
These summary powers of obtaining money belonging to the
company were introduced in the Winding-up act of 1848 (g) ;
and it was at one time held that these powers ought not to be
exercised where there was a serious question as to the right of
the company to what was withheld from it (li) ; but recent de-
(a) § 118. See Ulster Land Co., bankrupt shareholders, Mitchell's
Limited, 17 L. R., Ir. 591, where a case, 5 Ch. 400.
form of order will be found ; Im- (/) §§ 103 and 104, and rule 38.
ferial Mercantile Credit Co., 5 Eq See, as to enforcing payment into
264, which shows that an order to the bank, Leeds Banking Co., 1 Ch.
seize property may be made, though 150.
the Court will not on the evidence (<j) 11 & 12 Vict. c. 45, §§ 66 and
order an arrest. 67. See Ex parte Chadivick, 15 Jur.
(b) § 100, and see also § 165. In 597.
British Imperial Corporation, 5 Ch. (h) See Royal Hotel Co. of Great
D. 749, leave was given to serve a Yarmouth, 4 Eq. 244 ; Bank of (re-
summons for this purpose out of the raltar and Malta, 1 Ch. 69, and
jurisdiction. Carpenter's and JVeiss's case, 5 De G.
(c) § 101, and see § 165. & S. 402 ; Ex parte Johnson, 1 Jur.
(d) § 101. As to set-off, see N. S. 913 ; Ex parte Chadwick, 15
infra, § 9. Jul. 597.
(e) §§ 102 and 103. See, as to
694
WINDING UP BY THE COURT.
Not exercisable
over strangers.
Bk. IV. Chap.l. cisions show that the Court will exercise these summary powers
wherever it can do so without injustice (i).
The summary powers conferred by § 100 cannot be exer-
cised against a person who is not a contributory, trustee, re-
ceiver, banker, agent or officer of the company (k). Therefore
no order can be made under these sections on the trustee of
a bankrupt solicitor to a company (I) ; nor on the executors of
a deceased contributory or director (m) ; nor on a fully paid-up
shareholder who objects to be on the list of contributories (n) ;
nor on a creditor who has obtained payment after the com-
mencement of the winding up (o) ; nor on a banker of the
company who cannot be proved to have in his hands money of
the company (p).
Where a company had borrowed money beyond its powers,
and had deposited deeds as a security for it, the Court refused
to order the deeds to be given up, although the debt was not
enforceable against the company (q).
The Court is expressly empowered to examine into the
conduct of any director (r), manager, liquidator, or other officer
if it appears that he has misapplied, or retained in his own
hands, or become liable or accountable for, any monies of the
company, or been guilty of any misfeasance or breach of trust
in relation to the company ; and the Court is empowered to
Exercisable
over directors,
§ 165.
(i) Pearson's case, 5 Cli. D. 336,
and 4 ib. 222 ; McKay's case, 2 Ch.
D. 1 ; Stringer's case, 4 Ch. 475 ;
Bance's case, 6 ib. 104. See, also,
under the acts of 1856-8, Cardiff
Coal Co. v. Norton, 2 Eq. 558,
affirmed 2 Ch. 405.
(k) Ex parte Hawkins, 3 Ch. 787.
(1) Hollinsu-orttis case, 3 De G. &
S. 102. See, also, Cox's case, ib.
180 ; and Northfield Iron and Steel
Co., W. N. 1866, 253, where the
Court refused to order a railway
company to deliver up goods on
which it claimed a lien.
(m) British Guardian Life Assur-
ance Co., 14 Ch. D. 335; and Fettom's
Executors' case, 1 Eq. 219, decided
on § 165.
(n) Marlbro' Club Co., 5 Eq. 365.
(o) Ex parte Hawkins, 3 Ch. 787.
( p) Be National Bank, 10 Eq. 298,
where the Court held that it could
not either under § 100, or under
§ 165, compel the bankers of a
company being wound up to re-
fund money improperly paid to
the bank, but not proved to be
the money of the company in
question.
(5) Wilson's case, 12 Eq. 516.
This case did not, however, turn
on any particular section of the
act.
(?•) A director de facto is within
the section, Coventry and Dixon's
case, 14 Ch. D. 660.
PROCEEDINGS UNDER THE ORDER.
695
compel him to repay such monies, with interest, or to make Bk- JV. Chap. l.
such compensation to the company as the Court may deem
just (s). This clause applies where a company is being wound
up voluntarily (t). The application may be made by the liqui- Upon the appli-
dator (it) or any creditor (/•), or any contributory of the com- $J™ creditor
pany (y). It does not seem necessary, in order to entitle the or contnb«ton-.
liquidator to a summons under this section, that the claim he
seeks to assert should be one which the company itself might
have asserted were it not being wound up ; but if any objection
be taken on this ground, the Court will order the summons to
be amended by joining a creditor with the liquidator (z). The
clause does not create any new liability, but only provides a
summary mode of enforcing rights, which must otherwise have
been enforced under the ordinary procedure of the Court (a) ;
and proceedings can only be taken under this section when
there has been some breach of duty towards the company (b),
which has resulted in a loss to the company's funds (c).
Under the clause in question a director has been compelled
(s) § 165, and see upon it, Ranee's
case, 6 Ch. 104 ; Stringer's case, 4 Ch.
47") ; McKay's case, 2 Ch. D. 1 ;
Madrid Bank v. Bayley, L. R. 2
Q. B. 37.
(t) Ranee's case, 6 Ch. 104.
(it) As to the liquidator's affidavit,
see Mutual Society, 22 Ch. D. 714 ;
he will not, except under special
circumstances, be ordered to make
an affidavit of documents, ib.
(x) Including a policy-holder,
British Guardian Life Assurance Co.,
14 Ch. D. 335.
(y) A bankrupt contributory has
no right to make the application,
Cape Breton Co., 19 Ch. D. 77. And
a contributory who is the holder of
fully paid-up shares must show that
there is some probability if his
application is successful, of there
being assets to be divided amongst
the shareholders, Cavendish Bentinck
v. Fenn, 12 App. Ca. 652.
(::) National Finals Ass. Co., 10
Ch. D. 118; but see Coventry and
Dixon's case, 14 Ch. D. 660. In
British Guardian Life Assurance Co.,
ib. 335, the summons was taken out
in the first instance by the liquidator
and a creditor.
(a) Cavendish Bent i nek v. Fenn, 12
App. Ca. 652 ; Flitcroft's case, 21 Ch.
D. 519 ; Coventry and Dixon's case,
14 Ch. D. 660, and the concluding
remarks in Forest of Dean Coal Min-
ing Co., 10 Ch. D. 450.
(b) See words " in relation to the
company " and Ambrose Lake Tin
Mining Co., 14 Ch. D. 390 ; British
Seamless Paper Box Co., 17 Ch. D.
467.
(c) Cavendish Bent inch v. Fenn, 12
App. Ca. 652 ; Coventry and Dixon's
case, 14 Ch. D. 660, where it was
decided that for a director to act
without holding the necessary share
qualification is not a misfeasance
lunler this section.
696 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. to refund dividends and bonuses improperly declared and
— received by him (d), or improperly paid out of capital (e), or
§165. out of monies borrowed for the purpose (/); to refund sums
improperly paid out of the company's monies to a promoter for
preliminary expenses (g), to a stockbroker for placing the com
pany's shares (li), or to himself for remuneration for his services,
or for commissions on purchases and sales (?) ; to make good
losses occasioned by the non-investment of funds which ought
by the company's regulations to have been invested (k) ; to pay
calls made on shares improperly procured by him to be allotted
to his infant children (I) ; to pay the full value of paid-up shares
given him as a qualification or as bribe (m) ; or if he paid any-
thing for them, to pay the difference between the price which
he did pay and their full value (n) ; and a secretary has be^n
ordered to pay the full value of paid-up shares given to him by
a vendor of property to the company (o).
The section, however, has been held not to apply where it is
sought to charge the estate of a deceased director (p) ; neither
is a banker (q) nor a solicitor (r), as such within it.
The Court cannot commit a director to prison for non-pay-
ment of money which he has been ordered to pa}T under this
section unless the case can be brought within § 4 of the Debtors
act, 1869 (32 & 33 Vict. c. 62) («).
(d) Ranee's case, 6 Ch. 104. insolvent.
(e) Oxford Benefit Building Soc, (i) Oxford Benefit Building Soc,
35 Ch. D. 502 ; Lknham <b Co., 25 35 Ch. 1). 502.
Ch. D. 752 ; Flitcroft's case, 21 Ch. (k) British Guardian Life Assur-
D. 519 ; Alexandra Palace Co., ib. ance Co., 14 Ch. D. 335.
149 ; National Funds Assurance Co., (I) Ex parte Wilson, 8 Ch. 45.
10 Ch. D. 118. (m) Carriage Co-operative Supply
(/) Alexandra Palace Co., 21 Ch. Assoc, 27 Ch. D. 322 ; Mitcalfe's
D. 149. Compare Stringer's case, 4 case, 13 Ch. D. 169 ; Pearson's case,
Ch. 475. 5 Ch. D. 33(1, and 4 ib. 222.
(g) Englefield Colliery Co., 8 Ch. (n) Weston's case, 10 Ch. D. 579.
D. 388 ; Ex parte Pelly, 21 Ch. D. (o) McKay's case, 2 Ch. D. 1 ; De
492. Ruvigne's case, 5 Ch. D. 306.
(h) Faure Electric Accumulator Co., (p) Feltom's Executors' case, 1 Eq.
40 Ch. D. 141. This case also 219 ; British Guardian Life Assur-
decided that in the absence of dis- ance Co., 14 Ch. D. 335.
honesty a director could not be (q) Re National Bank, 10 Eq. 298 ;
made liable under this section for ante p. 694, note (p).
sanctioning a transfer to a person (r) Carter's case, 31 Ch. D. 496.
•who subsecpiently tinned out to be (s) Mitcalfe's case, 13 Ch. D. 815.
PROCEEDINGS UNDER THE ORDER. 697
A director cannot set-off a debt due to him from the company Bk- lJ- Ch5>- 1.
Sect. 7.
against a claim made by the liquidator under this section (t).
Lastly, the Court may order any past or present director, Power to order
manager, officer, or member of a company ordered to be wound
up by the Court, or subject to its supervision, or being wound
up voluntarily, to be criminally prosecuted, at the expense of
the company, if it shall appear that he has been guilty of any
offence in relation to the company for which he is criminally
responsible (u).
3. Mode of enforcing orders and appeals from them.
By the Companies act, 1862, provision is made for enforcing
the orders of the English, Irish, and Scotch courts in those
parts of the United Kingdom which are out of their respective
jurisdictions (x).
Orders made by the Chancery Division of the High Court
are enforced in the same way as orders made in an action in
that division are enforced (y). Orders to pay money may be
enforced by the ordinary writs of fieri facias, levari facias,
elegit, and, if necessary, by sequestration (z) ; also by charging
orders (a) ; and by attachment of debts (&). Where it is
desired to issue &fi.fa., an order should be obtained for pay-
ment to the liquidator himself, and not for payment into the
Bank to his account (c).
Orders and decisions of the Court may be appealed from in Appeals.
(t) Carriage Co-operative Supply formal order. See Hercules Ins. Co.,
Assoc, 27 Ch. D. 322 ; Ex parte Ir. Rep. 6 Eq. 207.
Pelly, 21 Ch. D. 492 ; Pearse's case, (y) § 120.
ib. 498, n. ; Flitcroft's case, ib. 519; (z) See as to persons abroad, Re
and see Ex parte Theijs, 25 Ch. D. William Hall, 2 Dr. & Sm. 284.
587. (a) As to which see ante, p. 460.
(«) §§ 167, 168, and see rule 51. (b) R. S. C. Orel. xlv. r. 1, which
(x) §§ 122 and 123. See Holly- renders Re Frankland, L. R. 8 Q. B.
ford Copper Mining Co., 5 Ch. 93, as 18 ; Best v. Pembroke, ib. 363 ; and
to orders made by an Irish Court of Cremetti v. Crom, 4 Q. B. D. 225, no
Bankruptcy. To enforce in Ireland longer applicable.
an English order to pay calls, it is (c) Leeds Banking Co., 1 Ch. 150.
not necessary that it should be made See, also, Waterloo Life Assurance
an order of the Chancery Division Co., 4 N. R. 207.
of the High Court in Ireland by
098 WINDING UP BY THE COURT.
]}k. IV. Chap. 1. the ordinary way ; but notice of appeal must be given within
— three weeks after the making of the order complained of (d),
and the time is calculated in the case of an appeal from an
order in chambers from the time when the order was pro-
nounced, or when the appellant first had notice thereof, and
in all other cases from the time when the judgment or order is
signed, entered, or otherwise perfected, or, in the case of a
refusal of an application, from the date of such a refusal (e).
The court of appeal, however, has power to extend the
time (/).
Rehearing. A judge of the High Court cannot now rehear an order
made by himself or any other judge (g). But an order ob-
tained ex parte or one which is in truth a nullity, may perhaps
even now be discharged by the Court which made it, although
three weeks have elapsed (//).
The application for leave to appeal after the three weeks
have expired ought not to be made ex parte (i). The Court
refuses leave unless some good reason for the delay is
given (k) ; even where an order has been made on the authority
of a recent decision which has been reversed, leave to appeal
against such order will not necessarily be granted (/).
(d) § 124. See R. S. C. Ord. lviii. son's case, 3 De G. & S. 66 ; Ex parte
rules 9 and 15 ; National Funds Ass. Besley, 3 Mac. & G. 287.
Co., 4 Ch. D. 305. (i) Lama Italian Coal Co., W. N.
(e) R. S. C. Ord. lviii. r. 15. 1867, 119 ; but see Hull Forge Co ,
(/) § 124. New Callao, 22 Ch. 15 W. R. 388.
D. 484; Manchester Economic Build- (A) See, as to extending time for
ing Society, 24 Ch. D. 488 ; Madras a cross-appeal, Ex parte Kiveton Coed
Irrigation and Canal Co., 23 Ch. D. Go., 7 Ch. 730. In contributory cases
248 ; Banner v. Johnston, L. R. 5 leave to appeal, after three weeks
H. L. 157. Under the older acts had expired, was given in Ex parte
the time could not be extended; Holroyd, 1 5 J ur. 696, and in Ex parte
Ex parte Sanderson, 1 Mac. & G. Day, 3 Jut. N. S. 1016, in both of
306 ; Re Gi-een, 1 Jur. N. S. 33 ; which cases the appellant had paid
but see Ex parte Besley, 3 Mac. & G. calls. In Ex parte Holroijd, the
287. appellant was put under terms not
(g) St. Nazaire Co., 12 Ch. D. 88. to disturb the payment he had made.
As to rehearing an order made in In Ex parte Day, the Court refused
chambers, see Ex parte Charlestuorth, to impose any such terms.
36 Ch. D. 299. (I) Compare Ebbiv Vale Co.'scase,
(h) Ex parte Tumley and Oliver, 5 Ch. 112, with Esdailev. Payne, 40
8 Eq. 227. See, also, Hopkins' Ex. Ch. D. 526.
case, 4 De G. J. & Sm. 342 ; Sander-
LIQUIDATORS. 699
Fresh evidence may be used on an appeal, even from a final Bk- *J. Chap. 1.
beet. 8.
order, by special leave, which, however, is only given where
the Court sees that no injustice will be done by admitting
it (m).
An order made in chambers cannot be appealed from unless
the judge certifies that the matter was fully argued before
him (n). Nor is there any appeal from an order made by a
judge whom the parties have treated as an arbitrator (o) ;
nor will an appeal be entertained on a mere matter of judicial
discretion (}>).
Winding-up orders themselves cannot be appealed from, Appeals from
° . winding-up
without special leave, after three weeks from their date (q). orders.
The Judicature act, 1873, has vested the appellate iurisdic- Appeals from
' . the Stannaries.
tion of the Lord-Warden of the Stannaries in the Court of
Appeal (/•) .
SECTION VIII.— THE LIQUIDATORS OF THE COMPANY.
The actual management of the winding up of a company is Liquidators.
entrusted to persons called liquidators, whose powrers and
duties are extremely important.
Liquidators are of twro different kinds : the one called pro-
visional liquidators, who are merely temporary officers in the
nature of receivers and are appointed in order to protect the
assets of the company until other liquidators are appointed (s) ;
whilst the other kind of liquidators, called official liquidators,
(m) See Weston's cos,; 10 Ch. D. (/•) 36 & 37 Vict. c. 66, § 18 (3).
579 ; Ex parte Pearson, 3 Ch. 443. The deposit of 201. required by the
See, also, R. S. C. Ord. lviii. r. 4. Stannaries act, 1869, 32 & 33 Yict.
(?i) Warrant Finance C'o.'s case, 5 c. 19, § 32, must still be paid, West
Ch. 88. Devon Great Consols Mine, 38 Ch. D.
(o) See Jud. act, 1873, § 49. Ex 51.
parte Wilson, 7 Ch. 45. (.s) Dry Docks Corporation of
(p) Thames Plate Glass Co. v. London, 39 Ch. D. 306. See Brettell
Land and Sea Telegraph, Co., 6 Ch. v. Dawes, 7 Ex. 307, as to the dis-
643 ; and see the cases on the ap- tinction between an interim and an
pointment of liquidator, and ante, official manager under the Wlnding-
p. 690. up acts of 1848-49.
(q) Ante, p. 662.
700 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. or simply liquidators (according as the company is being wound
Sect" 8' up compulsorily or otherwise), are the persons who have the
actual management of the winding up.
1. Provisional liquidators.
Appointment of A provisional liquidator may be appointed by the Court as
provisional liqui- goon ag a petition for winding up has been presented (t) . The
Mtitors. (
application for his appointment is made by summons, without
advertisement or notice to any person, unless the judge shall
otherwise direct (u). A provisional liquidator may be ap-
pointed without security (a>) ; but the other rules relating to
official liquidators apply to those provisionally appointed, so
far as such rules are applicable and subject to any directions
which may be given in any case by the judge (y). A form
of order appointing a provisional liquidator is given in the
rules (z).
It is not usual to appoint a provisional liquidator before the
hearing of the petition, unless the company is the petitioner,
or the petition is unopposed (a) ; and where a creditor who
had presented a petition to wind up a company had obtained
ex parte an order appointing a provisional liquidator, the
order was afterwards discharged on the application of the
company (b).
A provisional liquidator will not be appointed on a petition
to wind up an insurance company until it is shown to be within
33 & 34 Yict. c. 61 (c).
The appointment of a provisional liquidator is not necessary
in order to invalidate dealings with the company's property
since the commencement of the winding up (a1) ; nor to stay
actions, &c, by creditors (e).
(t) § 85, and see §§ 106, 199, 204. observation in Emmerson's case, 2 Eq.
(it) Rule 15. 236, and Hammersmith Town Hall
(x) lb. See Langham Skating Co., 6 Ch. D. 112.
Rink Co., 6 Ch. D. 102 ; Hammer- (b) Railway Finance Co., W. N.
smith Town Hall Co., ib. 112. 1866, 196.
(y) Rule 59. (e) London and Manchester Indus-
(z) Schedule 3, No. 9. trial Association, 1 Ch. D. 466.
(a) Cilfoden Benefit Building Soc, (d) Ante, p. 666.
3 Ch. 462, and see Lord Romilly's (e) Ante, p. 669, et seq.
OFFICIAL LIQUIDATORS. 701
Neither the act nor the rules specify with any particularity Bk- Iv- ChaP- 1-
, . Sect. 8.
what the duties of a provisional liquidator are. But the order
appointing him usually removes all ambiguity on this point, provisional
by stating explicitly what he is to do(/). Speaking generally, hciuldators-
his duty is to act as a receiver and to protect the assets of the
company.
A provisional liquidator ought to be served with notice of
any application to discharge or stay proceedings under a
winding-up order (g).
2. Official liquidators.
For the purpose of conducting the proceedings in winding Appointment
up a company, and assisting the Court therein, the Companies liquidator,
act, 1862, empowers the Court to appoint one or more official
liquidators (h), and to remove them for due cause (£).
For the position, powers, and duties of the registrar of the
Court of the Vice-Warden of the Stannaries when a company
is being wound up in that court, and no official liquidator has
been appointed, see 32 & 33 Vict. c. 19, § 33.
The appointment of the official liquidators lies with the
judge, and is to be made by a distinct order (k) ; and the
practice is to make the order in chambers, and not on the
hearing of the petition (I). The appointment may be made
without previous advertisement or notice to any one (m) ; but
the judge may, by advertisement, fix a time and place for the
appointment. He is not, however, bound to appoint the
person who may be nominated by those who attend pursuant
to the advertisement (»).
The appointment of any particular person as liquidator is so
(/) See the form, schedule 3, (I) General Financial Bank, 20
No. 9. Oh. D. 276. The liquidator was
(g) Ex parte Coleman, 3 De G. & appointed on the hearing of the
S. 139. As to his costs, see ante, p. petition in Commercial Discount Co.,
659. 32 Beav. 198, and London, Bombay
(h) § 92. and Mediterranean Bank, 1 Ch. 525.
(i) § 93, and in voluntary winding (m) Rule 8.
up, §§ 141 and 150. (n) See rules 8 and 9, and schedule
(k) Rules 8, 11, and schedule 3, 3, Nos. 6-8.
No. 8.
702
WINDING UP BY THE COURT.
Bk. IV. Chap. l. entirely a matter for the discretion of the judge, that the court
of appeal will not review his decision (o) ; except under very
special circumstances, or unless it can be shown that the judge
has acted upon a wrong principle (p). But the same rule
does not apply to appointments by the judge's chief clerk ; the
parties interested are entitled to have the appointment con-
sidered and determined by the judge himself; and if he de-
clines to reconsider an appointment by his chief clerk, an
appeal lies (q).
In order to put a stop to contests for the appointment of
liquidator, the person nominated by the petitioner is usually
preferred, unless some good reason can be adduced for not ap-
pointing him (?•) ; and where several amalgamated companies
are being wound up, the same person is preferred as liquidator
in them all (s).
The official liquidators are required to give security, by
entering into a recognizance, with two or more sureties, in
such sum as the judge may approve (t). When the proper
security has been given, a certificate to that effect is to be
made by the chief clerk (■«)• Fresh securities may from time
to time be required (#).
As soon as an official liquidator has been appointed, and has
given security, his appointment is to be advertised (?/).
In the case of the death, removal, or resignation of an
official liquidator, another is to be appointed in his room in
Security.
Advertisement
of appointment.
Vacancies.
(o) London Quays, &c, Co., 3 Ch.
394 ; Northern Assam Tea Co., 5 Ch.
644 ; Albert Average Ass. Ass., 5 Ch.
597 ; International Contract Co., 1
Ch. 523 ; London, Bombay, and
Mediterranean Bank, ib. 525. See,
afso, Merchant Traders' Ship Loan
and Association Co., 15 Jur. 981,
and compare this with the case
cited infra in note (q).
(p) Albert Average Ass. Ass., 5
Ch. 597.
(q) Agriculturist Cattle Insurance
Co., 3 De G. F. & J. 194. See the
observations in this case as to the
employment of accountants.
(;•) See Albert Average Ass. Ass , 5
Ch. 597 ; Northern Assam Tea Co.,
ib. 644.
(s) Western Life Ass. Soc, 5 ( 'h.
396. See, also, 35 & 36 Vict. c. 41,
§4.
(t) See § 92 and rule 10, and the
forms 10 and 11 in schedule 3. 1 he
appointment is operative before, the
security is given, Ex parte Charles-
worth, 36 Ch. D. 303.
(«) Rule 12.
(x) Rule 13.
(y) Rule 14, and see schedule 3,
No. 15.
OFFICIAL LIQUIDATORS.
703
the same manner as in the case of a first appointment, and the «k- ^^J*' L
proceedings for the purpose may be taken by such person
interested as may be authorised by the judge to take the
same (z).
The power to remove a liquidator is exercisable not only if Removal of
. liquidator.
the liquidator is personally unfit to act, but also whenever it
is shown that it is for the general advantage of those interested
in the assets that he should be removed (a), e.g., where the
principal creditors of an insolvent company offered to pay the
other creditors in full if the winding up was entrusted to their
own nominee (&) ; so where the great bulk of the unsecured
creditors were not satisfied with the liquidator originally
appointed (c). Personal unfitness includes favouritism to
persons whose interests are opposed to those of others (d).
The same principles apply to the removal of liquidators where
the winding up is voluntary (e), or subject to the supervision
of the Court (/). The wishes of the persons interested are
always considered in these cases, although they cannot always
be complied with.
A liquidator can appeal from an order removing him (7/).
The remuneration of the official liquidator is fixed by the Remuneration,
judge [h) : and is payable out of the assets of the company
next after the costs of the winding up, including therein the
costs of his own solicitor (i).
The official liquidator may, with the sanction of the judge, Solicitor,
appoint a solicitor to assist him in his duties (A"). The soli-
citor's duty is to conduct all such proceedings as are ordina-
(z) "Rule 16. (g) Ex parte Charlesivorth, 36 Cli.
(a) Ex parte Charlesivorth, 36 Ch. D. 299.
D. 299, explaining Sir John Moore (h) See § 93 and rule 18, and the
Gold Mining Co., 12 Ch. D. 325. order of May, 1868, in 7 Eq. 105,
(b) Ex parte Charlesivorth, ubi note, and 3 Ch. lxiv., and Cannan's
supra. claim, 7 Eq. 102 ; North of England
(c) Association of Land Financiers, Banking Co., 3 Mae. & G. 362, note,
10 Ch. D. 269. and Mysore Reefs Gold Mining Co.,
(d) Sir John Moore Gold Mining 34 Ch. D. 14.
Co., ubi supra. (i) Dronfield Silkstone Coal Co.
(e) British Nation Life Ass. Assoc, (No. 2), 23 Ch. D. 511; Be Masscy,
14 Eq. 492. 9 Eq. 367.
(/) Marseilles, <i-c, Land Co., 4 (k) §97. See Bass's case, 1 De G.
Eq. 692. & S. 722.
704
WINDING UP BY THE COURT.
Bk. IV. Chap. l. rjly conducted by solicitors of the court (I). If necessary,
— - — - separate solicitors may be appointed to attend to conflicting
interests (m). The solicitor is entitled to payment of his
costs (n) out of the assets of the compairy, in priority to payment
of the liquidator's remuneration (o), but not in priority to the
payment of expenses, which the liquidator has properly in-
curred (p). The solicitor has no lien on the file of proceed-
ings in the winding up, nor on the documents relating
thereto (q) ; nor has he any right to payment by the liquidator
personally (r).
Passing accounts. Official liquidators are required to pass their accounts like
receivers (s), and to pay all monies which they may receive
into the Bank of England (t) ; and to deposit all bills, notes,
and other securities payable to the company in the bank, for the
purpose of being presented by it for acceptance and payment (u).
It is the duty of the official liquidator to take possession of
all the company's books and accounts (r), and to make up and
rectify the books of the company, and to keep books showing
its debts and credits, and also a ledger, containing the separate
accounts of the contributories (x).
The right of the creditors and contributories of the com-
pany to inspect its books and papers depends upon the order
which the Court may think fit to make upon the subject (y).
The general rules direct all documents relating to the winding
up of a company to be filed and entitle every contributory and
creditor whose debt has been proved to inspect and have
copies of such documents (z). This rule, however, does not
Books of the
company.
Inspection.
(?) Eule 68.
(m) See Western Life Ass. Society,
5 Ch. 396.
(n) See as to a soficitor deruan ding
more than the scale fee, United
Kingdom, dr. Building Association,
40 Ch. D. 471.
(o) Be Massey, 9 Eq. 367.
(p) Dominion of Canada Plumbago
Co., 27 Ch. D. 33.
(q) Ex parte Pulbrool, 4 Ch. 627.
(r) Ex parte Watkin, 1 Ch. D.
130 ; Be Trueman's Estate, 14 Eq. 278.
(«) Rule 19.
(0 Rules 11 and 36. They have
no business to lend money in their
hands even for short periods and on
good security. See Lord Eomilly's
observations in W. N. 1866, 327.
(u) Rules 37 & 41.
(r) See §§94 and 100. See,
under the old acts, Pell's case, 3 De
G. & Sm. 170.
(x) Rule 17. See Wrights case,
5 Ch. 437.
(y) § 156. Ex parte Walker, 15
Jur. 853.
(z) Rule 58.
OFFICIAL LIQUIDATORS.
705
in terms apply to the books of the company. If an inspection Bk- ™;ctch8ap- *■
of them is desired, an application must be made to the judge -
under § 156 of the act (a). An order for inspection will be
made if the Court is satisfied that the inspection is wanted for
a proper purpose (b) ; and liberty will be given to an account-
ant to attend if there are complicated accounts to be investi-
gated (c). Inspection will only be allowed for the purposes of
the winding up (d) ; and the liberty to inspect must not be
abused ; and the Court will interfere to prevent an improper
disclosure of the contents of the books (e). The rules of the
company as to inspection do not apply to a winding up (/).
As between contributories and alleged contributories, the Official liqui-
t ( , dators' books
books, accounts, and documents ot the company and ot tne evidence against
liquidators are prima facie evidence of the truth of all matters contributories.
purporting to be therein recorded {g). This is a very im-
portant provision, and one of which unfair use might be made
if there were no means of compelling liquidators to expunge
from their books matters improperly inserted in them. But
a liquidator is not entitled to charge a person with money
without notice, and then require him to show that he does
not owe it ; and if any attempt to do so is made, the Court
will order the entry to be removed, and throw upon the
liquidator the onus of showing that such entry ought to be
restored (It).
Under the Winding-up acts of 18-48 and 1849, the property Extent to which
,, the liquidator
of the company vested in the official manager (?) ; and all represented the
actions and suits by or against the company had to be brought ^^J^6*
by or against him as its representative (Jc). He, however, only and 1849.
(a) As to summoning the liqui- naries act, West Devon Great Consols
dator as a witness, see BameoVs Mine, 27 Ch. D. 106.
Banking Co., 2 Ch. 350. (e) See cases in note (b).
(b) As to the extent of production, (/) Yorkshire Fibre Co., 9 Eq.
and the affidavit which a liquidator 650.
can be required to make, see GoocKs (g) § 154, and see Arnofs case, 36
case, 7 Ch. 207, and Mutual Society, Ch. I). 702.
22 Ch. D. 714, and the cases in the (h) Ex parte Chadwick, 15 Jur.
next notes. 597.
(c) lb. (i) 11 & 12 Vict. c. 45, §§ 29 and -
(d) North Brazilian Sugar Factories, 30.
37 Ch. D. 83, and see Morgan's case, (k) lb. §§ 50 and 51. See, on
28 Ch. D. 620 ; and under the Stan- this subject, Grand Trunk Bail. v.
L.C. z z
706 WINPIXG UP BY THE COURT.
Bk. IV. Chap. 1. represented the company which was being wound up ; and
Sect. 8.
consequently, actions in which it was sought to charge, not the
company, but one or more of its contributories, individually,
had to be brought against him or them, and not against
the official manager (I). Moreover, where the company being
wound up could not have been sued at law, either as a com-
pany or by a public officer, there an action against the official
manager as the representative of the company could not be
sustained. The acts in question did not confer on companies
any capacity of suing and being sued, but simply declared that
companies having that capacity were to sue and be sued by
their official manager (m). Consequently, a company, not
registered or in any way incorporated, but being a mere asso-
ciation of individuals, could not sue or be sued by its official
manager (n).
Under the Act Jn the foregoing respects the Companies act, 1862, is very
different from the older winding-up acts. It is the duty of
the official liquidator to take into his custody the property and
effects of the company (o) : and if no liquidator is appointed,
or during any vacancy in his appointment, the property of the
company is in the custody of the Court {p) ; but the property
of a company registered under the act does not vest in the
Brodie, 3 De G. M. & G. 146 ; Rid- Weiss, 15 G B. 331 ; Ernest v.
dick v. Deposit, &c, Association Co., Weiss, 2 Dr. & Sin. 561.
9 Ir. Com. Law Eep. 84 ; McDowell (n) lb., and see Russell v. Croys-
v. Davis, 8 ib. 42. As to the mode dill, 11 Ex. 123, and Ernest v.
of describing him, see Re Heritage, Croysdill, 2 De G. F. & J. 175,
Kay, App. 29. The official manager where the plaintiff represented one
only represented the company if his provisionally registered company,
appointment was valid. See Official and the defendant another.
Manager of Plumstead Water Co. v. (o) § 94. The doctrines of re-
Davis, 28 Beav. 545, and 2 De G. pnted ownership are not applicable
F. & J. 20, where the winding-up to companies which are being wound
order and all the proceedings under up, Crumlin Viaduct Works Co., 1 1
it were invalid, the order having Ch. D. 755 ; Gorringe v. Irwell India
been made by the wrong Court. Rubber Works, 34 Ch. D. 128.
(1) Beardshaw v. Lord Londes- (p) § 92. The liquidator is him-
borough, 11 C. B. 498 ; McDowell self in the nature of a receiver,
v. Doyle, 7 Ir. Com. Law, 598 ; and a receiver will not therefore be.
Armstrong v. Normandy, 7 Ex. appointed of assets in his hands.
409. Perry v. Oriental Hotel Co., 5 Ch.
(m) Pritchard v. London and 420. Compare Boyle v. Bettws
Birmingham, <tc, Rail. Co., Re Llantioit Co., 2 Ch. D. 726.
OFFICIAL LIQUIDATORS. T07
liquidator, and all actions are taken and continued by and Bk- TJ- cl'aP- *•
Sect. 8.
against the company in its corporate name (q). In the case,
however, of an unregistered company, the Court has power to
make an order vesting its property in the liquidator; and, if
such an order is made, he may sue and be sued in his official
name, or in such other name as the Court may direct, as the
representative of the company (r).
As regards unregistered companies, therefore, the decisions
on the acts of 1848 and 1849 may still be usefully referred
to (s) ; but it must not be overlooked that the language of the
203rd section of the Companies act, 1862, differs materially
from that of the acts on which those decisions turned ; and it
was held that the sanction of the Court to sue, warranted a
suit in equity, in the name of the official liquidator, without
any vesting order (t).
The official liquidators are to be described by their style of Duties of
office, and not by their individual names (u) ; and they are to iquu
perform such duties in reference to the winding up of the
company as may be imposed by the Court (x).
Their duties, so far as they relate to the investigation of
claims against the company, to settling the list of contribu-
tories, to making calls and distributing the assets of the com-
pany, will be noticed in the subsequent sections of this chapter.
In the present section it is proposed to notice those general
powers and duties which do not relate to these matters.
Where more official liquidators than one are appointed, it is p0wev of liqui-
for the Court to declare whether any act authorised or required t^eT^moie
by the statute to be done by the official liquidator is to be done than one-
by all or any one or more of the persons so appointed (y).
(q) See §§94 and 95, and 195, vested in them under this section,
196. A bill of sale given by the Graham v. Edge, 20 Q. B. D. 683.
company, and not within the Bills (s) They are collected, ante, notes
of sale act, 1882, is valid as against (i) to (n).
the liquidator, although not regis- (t) See Turquand v. Kirbij, 4 Eq.
tered, Marine Mansions Co., 4 Eq. 123 ; Turquand v. Marshall, 6 Eq.
601. 112, reversed, but not on this point,
(?•) See § 203. Hercules Ins. Co., 4 Ch. 376. Quaere these decisions.
11 Eq. 321, where the company was (u) § 94. See, also, § 203.
registered after the petition was pre- (x) § 94.
sented. Liquidators are not person- (y) § 92, and see the rules, sche-
ally liable to pay charges on property dule 3, No. 8. As to the validity
z z 2
708
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 8.
Towers of
liquidator.
The official liquidator has power to do the following things
with the sanction of the Court, or without it, if previously
authorised by the Court to act without consulting it (z).
1. To institute or defend legal proceedings in the name and
on behalf of the company (a).
2. To carry on the business of the company so far as may
be necessary for the beneficial winding up of the same (b).
3. To sell the property and claims of the company by
auction or otherwise (c).
4. To do all acts, and to execute in the name and on behalf
of the company all deeds, receipts, and other documents, and
for that purpose to use the company's seal (d).
5. To prove as a separate creditor against the estate of a
bankrupt contributory for money due from him to the com-
pany (e).
6. To draw, make, accept, and indorse bills of exchange
of the acts of one out of several
liquidators, see Ex parte Agra and
Masterman's Bank, 6 Ch. 206, and
cases there cited. See, under the
older acts, Bass's case, 1 De G. & Sm.
722.
(z) § 96. For form of order, see
Rochdale Property, &c, Co., 12 Ch.
D. 775.
(«) § 95. See, as to unregistered
companies, ante(t). A liquidator may
serve a bankruptcy notice on a judg-
ment debtor of the company, Ex
parte Winterhottom, 18 Q. B. D. 446.
The Court has no power to allow
the solicitor of a creditor to institute
proceedings in the name of the com-
pany to get in assets in order to pay
his own costs, Cape Breton Co. v.
Fenn, 17 Ch. D. 198. As to examin-
ing directors in actions against them,
see Madrid Bank v. Bayley, L. R. 2
Q. B. 37.
(b) § 95. British Waggon Co. v.
Lea & Co., 5 Q. B. D. 149, and Ex
parte Emmanuel, 17 Ch. D. 35, a
decision under the Bankruptcy act,
1869. The onus of proving that a
particular contract is not beneficial
for the winding up of the company
lies on the person making the asser-
tion, Hire Purchase Co., Limited v.
Richens, 20 Q. B. D. 387.
(c) § 95. Park Gate Waggon Co.,
17 Ch. D. 234, claims against direc-
tors for misfeasance under § 165.
See, as to sales, rule 32, and as
to transferring the business of the
company, infra, p. 711. As to open-
ing biddings, see Northumberland and
Durham Banking Co., 9 W. R. 584 ;
and as to getting in the legal estate,
Sheerness Waterworks Co. v. Poison,
3 De G. F. & J. 36, and 29 Beav.
70 ; as to selling, subject to alleged
incumbrances, Radley v. Bramall,
12 Eq. 472 ; as to purchases by old
directors, and irregular proceedings,
at the sale, see A lexandra Hall Co.,
W. N. 1867, 67.
(d) § 95.
(e) § 95. As to his j:>ower to peti-
tion for an adjudication of bank-
ruptcy against a contributory, see
Williams v. Harding, L. R. 1
H. L. 9.
OFFICIAL LIQUIDATORS. 709
and promissory notes in the name and on behalf of the com- Bk- lv- Chap. 1
pany, and to raise money upon the security of its assets (/).
7. To take out, if necessary, in his official name, letters of
administration to any deceased contributory, and to do in his
official name any other act that may be necessary for obtaining
payment of any monies due from a contributory or his estate,
and which cannot be conveniently done in the name of the
company (g).
8. To do and execute all such other things as may be neces-
sary for winding up the affairs of the company and distributing
its assets (h).
When the company being wound up is a cost-book mining Cost-book
company governed by the Stannaries act, 1887, it is the duty C0D1imny-
of the purser or other person having possession of the club
funds of the mine to account for them to the liquidator, who is
empowered to recover them and whose duty it is to apply them
in accordance with the rules of the club (see 50 & 51 Vict,
c. 43, § 13(2)).
The official liquidator is further empowered, with the sane- Compromh
tion of the Court, to make arrangements with creditors and
contributories, and to compromise all claims whether by or
against the company (i). A proposed compromise will not be
sanctioned by the Court in the absence of sufficient informa-
tion as to the grounds on which the compromise is to be
entered into (k). Nor will the Court compel a liquidator to
enter into a compromise which he, on behalf of the company,
opposes (I). A compromise entered into by an official liqui-
(/) § 95. The Court will not (g) § 95.
allow a liquidator to give accept- (h) lb. But as to reconstruet-
ances which are valueless, Contract iug the company, see Wreck Recovery
Corporation, Ebbiv Vale Company's Salvage Co., 15 Ch. D. 353.
claim, 8 Eq. 14. The liability of (i) §§159 and 160, and see rule
the company upon such bills or notes 6 1 .
is the same as if the company had (k) Ex parte Totty, 1 Dr. & Sm.
issued them in the course of its 273, and on appeal, 6 Jur. N. S.
business : see the section. As to 849.
negotiating bills in order to avoid a (I) Pearson's case, 7 Ch. 309. But
Bet-off, see Smith, Fleming <k Co.'s this assumes that the liquidator is
case, and Gledstanes & Co.'s case, not himself opposing the wishes of
1 Ch. 538, noticed in the next those whom he represents,
section.
710 WINDING UP BY THE COURT.
Bk. IV. Chap. l. cktor, and approved by a chief clerk, does not require the
Sect. 8.
personal sanction of a judge to make it binding. But airy
person aggrieved by it is entitled to have it considered by the
judge in whose chambers the winding up proceeds (m).
A compromise with the sanction of the Court is biuding on
all parties, including creditors (n), unless appealed against in
due time (o).
But notwithstanding a compromise with a contributory, who
is a transferee of shares, he remains liable to indemnify his
transferor from all calls which may be made on him as a past
member (p).
If it can be shown that the sanction of the Court was
obtained by the misrepresentation or improper concealment
of material facts, the compromise will be set aside by the
Court which sanctioned it, although the time for appeal has
passed (q).
Limit of power The power of the Court to sanction compromises under the
to compromise. , ... n j x i • i • x ai
above section is confined to claims by or against the company,
and does not extend to claims by individual shareholders
against the directors personally (r).
Opinions differed respecting the power of the Court to bind
dissentient creditors or contributories by sanctioning arrange-
ments approved by majorities of them (s).
33 & 34 Vict. The power of the Court in this respect has, however, been
c 104.
(m) Ex parte Garstin, 10 W. R. 629; Kellock v. Enthoven, L. R. 9 Q.
457. B. 241, and 8 ib. 458.
(») See Cleave v. Harwar, 6 H. & (q) Central Darjeeling Tea Co., W.
N. 22, where proceedings by sci. fa. N. 1866, 361 ; Clarke's case, ib. 254 ;
against a shareholder were stayed, a Garstin's case, 10 W. R. 457.
compromise having been entered (r) Ex parte Ha/nkey, W. N. 1869,
into between him and the official 226.
manager under 20 & 21 "Vict. c. 78, (s) See Albert Life Ass. Co., 6 Oh.
and see as to enforcing a com- 381 ; and compare Risca Coal and
promise, Gaudet Freres Steamship Co., Iron Co., 30 Beav. 528 (an appeal
12 Ch. D. 882. was dismissed, on the ground that
(o) Lucy's case, 4 De G. M. & G. it was made too late. See 8 Jur. N.
356 ; Underwood's case, 5 ib. 677 ; S. 900). Commercial Bank Corpora-
Garstin's case, 10 W. R. 457. See, tion of India and the East, 8 Eq. 241.
also, Hughes's case, 1 De G. & Sm. See, also, Bank of Hindustan, dec. v.
606, and 13 Jur. 530. Eastern Financial Assoc, L. R. 2 P.
(p) Roberts v. Crowe, L. R. 7 C. P. C. 489.
OFFICIAL LIQUIDATORS. 711
enlarged by the Joint Stock Companies arrangement act, 1870 Bk- Iv- chaP- J-
(33 & 34 Vict. c. 104), which (§ 2) enacts that,
" Where any compromise or arrangement shall be proposed between Where compro-
a company, which is, at the time of the passing of this act or afterwards, in m'se ProP ,s"l
the course of being wound up, either voluntarily or by or under the super- *J our m^-
° ' ' j j r order a meeting
vision of the Court, under the Companies acts, 1862 and 1867, or either of 0f creditors,
them, and the creditors of such company, or any class of such creditors, it &c-> to decide
shall be lawful for the Court, in addition to any other of its powers, on the comT,romja
application in a summary way of any creditor or the liquidator, to order
that a meeting of such creditors or class of creditors shall be summoned in
such manner as the Court shall direct, and if a majority in number repre-
senting three- fourths in value of such creditors or class of creditors present
either in person or by proxy at such meeting shall agree to any arrangement
or compromise, such arrangement or compromise shall, if sanctioned by an
order of the Court, be binding on all such creditors or class of creditors, as
the case may be, and also on the liquidator and contributories of the said
company."
The order in which the sanctions required are obtained is
immaterial (t). The sanction of three-fourths of those present
is sufficient («■). Unanimity is not required, and the opposi-
tion of some creditors is not fatal (x). But schemes for
arrangement under this act have failed because of the impossi-
bility of ascertaining and valuing the claims of the creditors (y);
and because those who voted for it had voted in respect of
debentures payable to bearer and not produced, and had not
voted bond fide in the interest of the company (z). So where
a company induced a judgment creditor not to issue execution
against it, and petitions by a creditor and the company were
then presented for winding up the company, and a scheme of
arrangement was proposed and assented to by all the creditors
except the judgment creditor who opposed it, the Court
declined to sanction the scheme (a).
The assets of the company may be sold and realised in the Transfer of
ordinary way by auction or private contract as may be thought
(t) Dynevor, Ac. Collieries Co., 11 (y) Albert Life Ass. Co., 6 Ch.
Ch. D. 605. 381.
{u) Bessemer Steel and Ordnance (s) Wedgwood, Coal and Iron Co., 6
Co., 1 Ch. D. 251. Ch. D. 627.
(x) Tunis Rail. Co., 10 Ch. D. (a) Richards A Co., 11 Ch. D.
270, note ; aff. on appeal,W. N. 1874, 676.
p. L65.
712
WINDING UP BY THE COURT.
Bk.[IV. Chap. 1. best
sect. 8.
Albert Life
Assurance Com-
pany's case.
Acts done with-
out sanction of
Court.
Doubts have been expressed as to the power of the
Court in a compulsory winding up to sanction a sale of a com-
pany's assets en masse to a new company formed to cany on its
business (b). It is, however, to be remembered that the Court
can stay the winding-up proceedings altogether on such terms
as it thinks proper (c) ; and this power, coupled with that of
selling the assets of the company (d), and of compromising
with the creditors and contributories (e) is, it is conceived,
sufficient to give the Court jurisdiction to sanction such a sale
as that under consideration upon any terms the Court may
judicially approve (/).
But in the case of the Albert Life Assurance Company (g),
which had absorbed several other companies, the Lord Justice
James considered that a majority of creditors could not bind
a minority to accept a composition ; and he refused to sanction
a scheme for reconstructing the Albert Company, and for pay-
ing its creditors and the creditors of the absorbed companies a
composition, by calls, and for transferring to another company
the assets of the Albert, and the monies proposed to be raised
by calls.
Liquidators who act without the sanction of the Court in
matters requiring such sanction, expose themselves to serious
risks ; for if loss ensues to the company the liquidators may
be compelled to make it good, and if they sue or defend an
action unsuccessfully, they may have to pay the costs per-
sonally (]i). But an order made in an action and directing a
liquidator to pay the costs personally does not necessarily pre-
clude him from afterwards obtaining such costs out of the
assets of the company (?'). The consequences of not obtaining
(b) See §§ 89, 91, 95, 159, and
160. The doubt has arisen by
reason of § 161 being in terms only
applicable to a voluntary winding
up. The act 31 & 32 Vict. c. 68,
only applies to companies being
wound up when it passed.
(c) § 89, ante, p. 663.
(d) § 95.
(e) Ante, p. 709.
( /) See, as to winding up, subject
to supervision, Ex parte Poole's Exe-
cutors, 8 Ch 7<>2 ; Imp. Merc. Credit
Ass., 12 Ecp 504 ; Af/ra and Master-
man's Bank, 12 Ecp 509, note.
(y) 6 Ch. 381, and see General
Exchange Bank, W. N. 1867, 63.
(h) Grand Trunk, dr., Hail. Co. v.
Brodie, 9 Ha. 823, and 3 De G. M. &
G. 146 ; Caldwell v. Ernest, 27 Beav.
39 and 42.
(i) II). See, on this subject,
PROOF AND PAYMENT OF DEBTS. 713
the sanction of the Court where such sanction is required, Bk- Iv- chaP- L
Sect. 9.
may, moreover, in some cases invalidate the liquidator's pro-
ceedings ; but it is apprehended that if he sues without leave
the want of leave affords no defence to the action (k).
SECTION IX.— PROOF AND PAYMENT OF DEBTS.
1. General observations.
The Court is empowered to fix a time within which creditors Time for proof,
are to prove their debts, or be excluded from the benefit of
any distribution made before such debts are proved (I). For
the purpose of ascertaining the debts of the company, and of
requiring creditors to come in and prove their debts, an adver-
tisement is to be issued at such time as the judge may direct (m).
The advertisement fixes a time for the creditors to send the
particulars of their demands, and the names and addresses of
themselves and their solicitors (if any) to the official liquidator,
and appoints a day for adjudicating thereon (n).
The creditors need not attend the adjudication, nor formally Mode of proof.
prove their debts, unless required so to do by notice from the
official liquidator : but, upon such notice being given, they are
to come in and prove their debts within the time specified in
the notice (o). It is the duty of the official liquidator to inves-
tigate the claims sent in, and, so far as he is able, to separate
Consols Insurance Co. v. Wood, its termination it may be proved,
2 Dr. & Sm. 353, and infra, though the time fixed has passed,
§ 12. Macfarlane's claim, 17 Ch. D. 337.
(k) See the analogous cases in (m) Rule 20.
bankruptcy, Lee v. Sangster, 2 C. B. (n) lb., and see the form in sche-
N. S. 1 ; Piercy v. Roberts, 1 M. & dule 3, No. 16.
K. 4 ; Ex parte Magmis, 3 M. D. & (o) Rule 21. As to what is put-
D. 693 ; Jones v. Yates, 3 Y. & J. ting in a claim, see Forwood's claim,
373. 5 Ch. 18. Probate in this country
(I) § 107. Kit Hill Tunnel, 16 cannot be dispensed with where a
Ch. D. 590. If a liability con- claim is made by the legal personal
tingent at the commencement of a representatives of a deceased credi-
winding up ripens into a debt before tor, Fernandes1 Exs. case, 5 Ch. 314.
714
WINDING UP BY THE COURT.
Bk. IV. Chap. l. those which ought to be allowed without further proof from
Sect. 9. °
- those which ought not, and to set forth the former in an
affidavit, giving the reasons why, in his opinion, they ought to
be at once allowed (_/>). In adjudicating upon the debts the
judge may either allow them upon the official liquidator's
affidavit, or require them to be further proved (q). Notice of
allowance or disallowance, as the case may be, is to be given
to the creditors by the official liquidator (/•) ; and those
creditors whose claims have not been allowed are to have
notice to come in and prove b}r a day named in the notice
(being not less than four days after the notice), and to attend
at a time to be therein mentioned, being the time for adjudi-
cation (s).
Under the acts of 1848 and 1849, it was held that the master
or judge acting in the winding up must examine into every
claim brought in before him, and either allow it or disallow it,
or allow it as a claim only ; and must do this after hearing
such evidence as the claimant might be able to adduce ; and
must not allow a claim as a claim only, in order to avoid the
consideration of the more difficult question, whether the claim
ought to be allowed as a debt of the company (t). These
rules are as applicable under the act of 1862 as under those of
1848 and 1849. If the claimant refuses to produce what
evidence he has relating to his claim, it may be disallowed («).
Interrogatories may be administered to him (x).
Creditors coming in and proving their debts, pursuant to
notice from the official liquidator, are entitled to their costs of
proof Oy).
Creditors' claim:
to be investi-
gated.
Costs of proof.
( p) Rule 22, and see the form of
affidavit in schedule 3, No. 17.
(q) Rule 23.
(V) Rules 23 and 24.
(s) Rule 24, and see the forms in
schedule 3, Nos. 20 and 21.
(t) See Prichard's case, 5 De G. M.
& G. 495 ; and Terrell v. Hutton, 4
H. L. C. 1091. As to bringing
actions to try a disputed debt,
see East of England Banking Com-
pany's case, 5 De G. M. & G. 505,
and 13 Beav. 426; Ex parte Gkvyn,
1 Jui'. N. S. 300; Ex parte Higgins,
2 ib. 178. As to enabling a creditor
to prosecute his claim in forma, pau-
peris, see Ex parte Fry, 1 Dr. & Sm.
318.
(u) Constantinople and Alexandra
Hotel Co., 35 Beav. 349.
(x) Alexandra Palace Co., 16 C'h.
D. 58.
(y) Rule 27.
PROOF AND PAYMENT OF DEBTS. 715
The result of the adjudication upon debts and claims is to I;k- I^ctch9ap- L
be stated in certificates to be made by the chief clerk. The
, Certificate of
certificates are to state whether the debts or claims are allowed (lebfc9.
or disallowed, and whether allowed as against any particular
assets, or in any other qualified or special manner (2).
A creditor whose debt is allowed is informed by notice when Notice of
pavment.
and where he will be paid (a). The sum payable to him by
the company is a debt due to him and can it seems be attached
in the hands of the liquidator under a garnishee order (b) .
If the iudge acting in the winding up disallows a claim Appeal by
•> ° ° creditor.
brought in before him, the creditor may appeal from the
decision (c) ; he can also, where necessary, apply for leave to
take such proceedings as he may be advised, for the purpose
of establishing his case by action (d) ; but it is now seldom if
ever necessary to do this.
On the other hand, if the official liquidator or the contribu- Appeal by
official liqui-
tories, or, it is presumed, the other creditors where the}- are dator.
prejudiced, are dissatisfied with the allowance of a debt, they
can appeal (e) ; but if the official liquidator appeals, the con-
tributories or other creditors are not usually heard with
him (/).
The time for appeal is the same in this as in other cases (</).
Debts contracted by the liquidators in winding up the com- Debts contracted
by the liqui-
pany must not be confounded with debts contracted by the cfator.
company, and provable against it (It). Debts properly con-
tracted by the liquidator are part of the expenses of the
winding up, and are payable in full out of the assets of the
company in priority to the other unsecured debts of the com-
pany (i).
(2) Rule 28. (e) In Ex parte G-wyn, 1 Jur. N. S.
(a) See the rules, schedule 3, No. 300, a contributory appealed.
23. (/) Re Nonvich Yarn Co., 13
(b) Prichard's claim, 2 De G. F. & Beav. 428, note, where, however,
J. 354. Compare Cowan's estate, 14 the contributories were heard. See,
Ch. D. 638 ; Re Hunter, L. R. 8 C. too, Bodmin United Mines, 23 Beav.
P. 24 ; Dawson v. Malley, Ir. Rep. 1 385.
Com. L. 207. (g) Ante, pp. 697, 698.
(c) Ernest v. Nicholls, 6 H. L. C. (h) See Ex parte Clark, 7 E<p 550 ; ■
401. Ex parte Synith, 3 Ch. 125, both of
(d) As in Armstrong's case, 3 De which were cases of set-off.
G. & S. 140. (i) See-, as to distresses for rent and
716
WINDING UP BY THE COURT.
Bk. IV. Chap, 1.
. — 2. Debts provable.
Debts provable. The Companies act, 1862, has for one of its primary objects
the ratable payment pan passu of all creditors and others
Contingent debts having claims against the company (k) ; and not only all debts
And -claims to
damages. actually payable, but all debts of the company payable on a
contingency, and all claims against it, present or future, certain
or contingent, ascertained or sounding only in damages, are
admissible to proof against it (I). The value of those debts or
claims which are subject to any contingency, or sound only in
damages, or which, for some other reason, do not bear a
certain value, is to be estimated as justly as possible (w),
according to the value thereof at the date of the winding-up
order (n). But this last rule does not apply to cases of con-
tinuing damage (o), and has not been always regarded even in
other cases, the date of the making of the claim having been
preferred ( p). A claim which is contingent at the commence-
ment of the winding up may be proved for in the ordinary way
if it ripens into a debt during the continuance of the winding
up, whether the time limited for sending in claims has expired
or not (q).
The Companies act, 1862, authorises liquidators to pay any
creditors in full under certain special circumstances mentioned
in the act (r), but contains no provision to the effect that one
class of creditors is to be in any better position than any
others. The general scheme of the act is that all shall be
paid out of the assets of the company pari passu (s). Thus a
landlord has no priority for arrears of rent unless he is in a
Priorities of
debts.
rates, ante, p. 678 et siq, and as to
secured debts, Ex parte Grissell, 3
Ch. D. 411, and infra, § 12, under the
liead C( >sts.
(7c) Ante, p. 66(3, note (c).
(1) § 158 ; see, too, §§ 159, 160.
See, as to remoteness of damage,
Johnston's claim, 6 Ch. 212.
(m) § 158. The valuation of
annuities and future and contingent
liabilities is in the case of insolvent
companies now governed by the
rules in bankruptcy, Jud. act, 1875,
§ 10, infra, p. 719.
(n) Rule 25.
(o) Cambrian Steam Packet Co., 4
Ch. 112, and 6 Eq. 396.
( p) See Kellock's case, 3 Ch. 769 ;
Craig's Executor's case, 9 Eq. 706.
(q) Macfarlane's claim, 17 Ch. D.
337.
(r) § 159.
(s) Ante, p. 666, note (c).
PROOF AND PAYMENT OF DEBTS. 717
position to distrain (0, nor have persons paying money into a Lk- ^ Ch9ap- L
bank which stops immediately afterwards (u), or into the -
branch office of a bank in ignorance that the head office
has already stopped (r) ; nor are policy holders whose policies
are actually payable (y) in any better position as regards
priority than other creditors.
This general rule, however, is subject to the right of the
Crown to be paid in priority to other persons (z) ; and is also
subject to the following statutory exceptions.
By the Preferential Payments in Bankruptcy act, 1888 (a), Preferential
which applies only to windings up commenced after the Bankruptcy
31st December, 1888, priority is given to, Act> 1888-
(a) All parochial or other local rates due from the company at the com-
mencement of the winding up, and having become due and payable within
twelve months next before that time (6), and all assessed taxes, land tax,
property or income tax assessed on the company up to the fifth day of April
next before the commencement of the winding up, and not exceeding in the
whole one year's assessment ;
(6) All wages or salary of any clerk or servant in respect of services
rendered to the company during four months (c) before the commencement
of the winding up, not exceeding fifty pounds (d) ; and
(c) All wages of any labourer or workman not exceeding twenty-five
pounds, whether payable for time or for piece-work, in respect of services
rendered to the company during two months before the commencement of
(t) Thomas v. Patent Lionite Co., Ch. D. 364. A surety to the Crown
17 Ch. D. 250 ; Bridgwater En- who has paid his principal's debt, is
gineering Co., 12 Ch. D. 181 ; Coal entitled to the Crown's priority,
Consumers' Association, 4 Ch. D. 625, Manisty v. Churchill, 39 Ch. D.
and ante, p. 678 et seq. as to distress. 174.
(u) Ex parte Waring, W. N. 1866, (a) 51 & 52 Vict. c. 62. This act
399. repealed the Companies act, 1883,
(») Ex parte Quillemin, 28 Ch. D. by which servants, clerks, and others
634. were given a priority for salary and
(y) Mclver's claim, 5 Ch. 424. wages, except as to Ireland, to which
And where a company's contracts country this act does not applv
are reduced under a scheme in (§ 4).
accordance with § 22 of the Life (b) As to rates before this act, see
Assurance Companies act, 1870, see ante, p. 681.
Great Britain Mutual Life Ass. Soc, (c) I.e., four months next before,
20 Ch. D. 351. see Ex parte Fox, 17 Q. B. D. 4.
(z) Henley d; Co., 9 Ch. D. 469 ; (d) As to the old law, see Chap-
Oriental Bunk Corporation, Ex p>arte man's case, 1 Eq. 346 ; and Associa-
te Crown, 2b Ch. D. 643 ; and tion of Land Financiers, 16 Ch. D.
West London Commercial Bank, 38 373.
718 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. the winding up : Provided that where any labourer in husbandry has
Sect. 9. entered into a contract for the payment of a portion of his wages in a lump
sum at the end of a year in hiring, he shall have priority in respect of the
whole of such sum, or a part thereof as the Court may decide to be due
under the contract proportionate to the time of service up to the date of
the commencement of the winding up.
The foregoing debts rank equally between themselves and
are payable in full, unless the assets of the company are in-
sufficient to meet them, in which case they must abate in equal
proportions between themselves (e). Moreover, subject to the
retention of such sums as may be necessary for the costs of
administration or otherwise, the foregoing debts are payable
at once, so far as the assets of the company are sufficient to
meet them (/).
In the event of a distress on the company's goods within
three months next before the date of the winding-up order,
the above-mentioned debts are a first charge on the goods
distrained on, or the proceeds of sale thereof (g) ; but the
person distraining has the same right of priority in respect
of any money paid under any such charge, as the person to
whom such payment is made (h).
Stannaries Again by the Stannaries act, 1887 (i), (which is not affected
Act, 1887. by the last mentioned act (A:)), miners are given a first
charge for three months' wages upon the mining effects, and
the money and other assets of the company in connection with
the mine, having priority, subject to the provisions of the tenth
section of the act, over all claims by the lessors of the mine
or by mortgagees or judgment execution or other creditors (V) ;
and on the company being wound up these wages are to be paid
by the liquidator forthwith in priority to all other costs, except
the costs properly incurred of making the winding-up order,
and, subject to the tenth section of the act, to all claims by
any person whatsoever ; and the court has power to charge
the whole or any part of the assets of the company with a sum
(f) 51 & 52 Vict, c. 62, § 2. (i) 50 & 51 Vict. c. 43, § 14.
(/) lb., § 3. (k) 51 & 52 Vict. c. 62, § 2 (2).
( ii) lb. § 4. W See § 4 ; for other advantages
(/i,) As to distresses after the com- conferred on miners for their wages
mencement of the winding up, see before the company is being wound
ante, p. 678 et seq. up, see §§ 5-8.
PROOF AND PAYMENT OF DEBTS. 719
sufficient to pay these wages with interest at 5 per cent, per Bk- IV- ChaP- *•
Sect. 9.
annum in favour of any person willing to advance the
requisite amount or any part thereof (m). By section 10, the
right conferred upon clerks and servants by the Companies
act, 1883, to be paid in the winding up of a company in
priority to other creditors pari passu with labourers and
workmen out of such assets only as are distributable by
the liquidator is preserved, except that such priority is
limited to three months' wages, and does not extend to the
principal agent or manager, purser or secretary (n).
By the 10th section of the Judicature act, 1875, it is enacted Judicature act,
/• / 7- x +V + 1875, §10
{inter aha) that —
"In the winding up of any company under the Companies acts, 1862
and 1867 (o), whose assets may prove insufficient for the payment of its
debts and liabilities and the costs of winding up (p), the same rules shall
prevail and be observed as to the respective rights of secured and unsecured
creditors, and as to debts and liabilities provable, and as to the valuation
of annuities and future and contingent liabilities respectively as may be in
force for the time being under the law of bankruptcy " (y).
This enactment has given rise to much discussion and to
some conflict of judicial opinion, but it appears now to be
settled that the bankruptcy rules which it has introduced into
the winding up of insolvent companies, are confined to those
relating to (1) the respective rights of secured and unsecured
creditors, (2) to the debts and liabilities provable, and (3) to
the valuation of annuities and future and contingent liabi-
lities (/')• The section does not affect priorities (s), nor
the funds out of which debts are to be paid. The bank-
ruptcy rules which under certain circumstances deprive execu-
tion creditors of the fruits of their executions (t), allow the
(m) See § 9. Mersey Steel and Iron Co. v. Nay-
(n) 46 & 47 Vict. c. 28, § 4. lor, Benzon & Co., 9 App. Ca. 434.
(o) The enactment does not apply (r) As to what future and contin-
to any winding up commenced before gent liabilities may be valued see
it came into operation, Joseph Suche Hardy v. Fothergill, 13 App. Ca.
cfc Co., 1 Ch. D. 48. 351.
(p) This must be assumed to be (s) See infra, and p. 685, note (h).
the case until the contrary is proved, (t) Withemsea Brickivorks, 16 Ch.
Ex parte Theys, 25 Ch. D. 587. D. 340 ; Richards & Co., 11 Ch. D.
(q) Notice the words are " as may 676; Railway Steel and Plant Co.,
be in force for the time being," 8 Ch. D. 183. Printing and Nu-
720 WINDING UP BY THE COURT.
Bk. IV. Chap. i. trustee in bankruptcy to disclaim onerous property («), and
Sect 9.
— — -the doctrines relating to reputed ownership (.r), and fraudulent
preferences (?/) (except so far as introduced by the Companies-
act, 1862, § 164), are not introduced into the winding up of
companies.
Effect on secured With regard to the respective rights of secured and un-
creditors. secured creditors (z), it must be remembered that previously
to the Judicature act, 1875, by the rules in Chancery a secured
creditor was allowed to prove in the winding up of an in-
solvent company, for the full amount of his debt and to
realize his security afterwards (a).. The abolition of this rule
was one of the chief objects of the section, and by it the rights
of secured and unsecured creditors in the winding up of in-
solvent companies, are in this respect made the same as then
rights in bankruptcy (&). But the rule in bankruptcy which
prevents a fully secured creditor, who retains his security, from
presenting a petition in bankruptcy, does not prevent a secured
creditor from presenting a petition for a winding-up order (c).
As to debts With respect to the bankruptcy rules relating to " debts and
provable. liabilities provable," it has been decided that the rules intended
to be introduced by this clause, are the rules which determine
what debts or liabilities may be proved in bankruptcy and
these rules only (d). Thus it has been held that the rule in
merical Registering Co., 8 Ch. D. D. 250 ; Coal Consumers' Association,
535, is overruled, ante, p. 678. 4 Ch. D. C25. See also Printing
(u) Westbourne Grove Drapery Co., and Numerical Co., 8 Ch. D. 535,
5 Ch. D. 248. and Buckley on the Companies Acts,
(») Gorringe v. Irwell Rubber 5th ed., p. 346.
Works, 34 Ch. D. 128 ; Crumlin (a) Mason v. Bogg, 2 My. & Cr.
Viaduct Works Co., 11 Ch. D. 755. 443 ; KellocVs case, 3 Ch. 769.
(?/) See Withemsea Brickworks, 16 (b) Winehouse v. Winehouse, 20
Ch. D. 340 ; Winehouse v. Wine- Ch. D. 545 ; Williams v. Hopkins,
house, 20 Ch. D. 515. 18 Ch. D. 370 ; Withemsea Brick-
ie) The class of secured creditors works, 16 Ch. D. 337 ; Kit Hill
must he determined by the creditor's Tunnel, ih. 590; Lee v. Nuttall, 12
position at the commencement of Ch. D. 61 ; Coal Consumers' Associa-
tive winding up, and by the defini- Hon, 4 Ch. D. 625 ; Joseph Suche tfc
tion of " secured creditors," con- Co., 1 Ch. D. 48.
tained in the Bankruptcy act. See (r) Moor v. Anglo-Italian Bank,
§ 168 of the Bankruptcy act, 1883, 10 Ch. D. 681.
Thomas v. Patent Lionite Co., 17 Ch. (d) West of England Bank, Ex
PROOF AND PAYMENT OF DEBTS. 721
bankruptcy which allows any liability contingent at the date of Bk- IV- ChaP- *■
Sect. 9.
adjudication to be proved if it ripens into a debt during the
bankruptcy, is introduced mutatis mutandis into the winding up
of insolvent companies (e) ; and that the bankruptcy rules as
to interest (/), and as to set-off between the company and non-
contributories, are also introduced (g).
A creditor who has priority over others apart from the bank- Effect on
ruptcy laws, is not deprived of such priority by the enactment pnon '
in question ; nor does the enactment confer any priority upon
a creditor who, apart from the bankruptcy law, has no
priority (//). For example, the Crown is not deprived of
its right to issue process for the recovery of a debt due to
it (i) ; nor is a creditor, who is a shareholder and has paid all
calls made upon him, deprived of his right to prove for his
debt pari passu with any other creditor (j). Nor is a savings
bank deprived of the priority to which it is entitled under the
Savings Bank act, 1863, in respect of monies due to it from
any of its officers in their official capacity (A). On the other
hand, a landlord is not entitled to any priority in respect of
a year's arrear of rent (I).
Passing now to the general question, what debts are provable What debts, &c.
are provable.
parte Brovm, 12 Ch. D. 823 ; Albion v- Morgan, 5 C. P. D. 337. See
Steel Wire Co., 7 Ch. D. 547. also as to an executor's right of
(e) Macfarlane's claim, 17 Ch. D. retainer, Lee v. Nuttall, 12 Ch. D.
336. This is irrespective of the 61.
question whether such a debt is oris (*) Ante, p. 717, note (z).
not provable under § 158 of the U) West of England Bank, Ex
Companies act, 1862 ; and see Hill parte Brown, 12 Ch. D. 823. The
v. Bridges, 17 Ch. D. 342, an ad- debt must not be a debt due to him
ministration case. in his character of member, see § 38,
(/) Boswell v. Gurney, 13 Ch. D. sub-s. 7 of the Companies act, 1862.
136, and see infra, pp. 724 et seq. (&) 26 & 27 Vict. c. 87, § 14.
(g) See infra, p. 738, as to set-off. Bankruptcy act, 1883, § 40, Jones
{h) The decision of V.-C. Malins, v. Williams, 36 Ch. D. 573.
as to servants' wages in the Associa- (I) Thomas v. Patent Lionite Co.,
tion of Land Financiers, 16 Ch. D. 17 Ch. D. 250 ; Bridgewater En-
373, is not consistent with the text. gineering Co., 12 Ch. D. 181 ; Coal
But that case is not consistent with Consumers' Assoc, 4 Ch. D. 625.
more recent decisions. See as to Stockton Iron Furnaces Co., 10 Ch.
judgment creditors and the assets D. 335, so far as it is an authority
of deceased persons, Winehov.se v. to the contrary, must be considered
Winehouse, 20 Ch. D. 545 ; Smith as overruled.
L.C. 3 A
722 WINDING UP BY THE COURT.
Bk. IV. Chap. 1 . an(j what not, the guiding principle is that those claims only
- are provable on the winding up of a company which are or will
become enforceable against the company which is being wound
up. So long as an order exists for winding up a company the
Court cannot hold that there is no company against which
debts can be proved (m). Demands against the promoters or
directors, or other persons, but not against the company itself,
cannot be proved against it either as a debt (n) or a claim (o).
On the other hand, debts of the company can be proved against
it although some of the shareholders may be entitled to an
indemnity in respect of them from other shareholders (p).
What is, and what is not, a debt of the company, must be
determined upon the principles discussed in an earlier portion
of the present treatise (q) ; and in this place it is proposed
merely to notice some general points of practical importance,
and continually arising in the winding up of companies.
A debt may be proved in the winding up, although an action
has been previously brought against the company to recover it,
and such action has been dismissed for want of prosecution (r).
Equitable debts. Equitable debts are clearly provable (s) ; but a debt con-
tracted under seal by a trustee for the company is not provable
against the company (0 ; nor are claims founded on agree-
ments fraudulently concealed from the members, even though
payment is stipulated for in the articles of association (u). Nor
can moneys subject to a fraudulent trust be treated as trust
moneys and be paid as such (x).
Debts contracted Nor are claims, founded on contracts which are ultra vires,
ultra vires.
(ra) Arthur Average Assoc, 3 Ch. (q) See book ii.
D. 522 ; Ex parte Hargrove, 10 Ch. (r) Orrell Colliery and Fire Brick
542. Co., 12 Ch. D. 681.
(n) London Marine Ins. Assoc, 8 (s) See Terrell v. Hutton, 4 H. L.
Eq. 176 ; Ex parte Lloyd, 1 Sim. N. C. 1091.
S. 248, as explained in 2 De G. M. (t) Pickering's claim, 6 Ch. 525.
& G. 640. («) Ex parte Williams, 2 Eq. 216.
(o) See Wrijghte's case, 2 De G. where the articles of association
M. & G. 636, and Prichard's case, 4 were vitiated by a concealed agree-
De G. & S. 328, and 5 De G. M. ment. See, also, Hereford and South
& G. 484. See, too, Ex parte Briggs, Wales Waggon Co., 2 Ch. D. 621.
8 W. R. 110. (x) Great Berlin Steamboat Co., 26
[p) Share's claim, 10 Ch. 177. Ch. D. 616.
PROOF AND PAYMENT OF DEBTS.
723
provable against the company [y). Moreover, solicitors who, Bk- ^^J*" L
on behalf of the company conduct legal proceedings arising
out of transactions which are ultra vires, and are known by
them to be so, are not entitled to be paid for their services by
the company (z). Nor can brokers claim in respect of pur-
chases of shares in the company being wound up unless the
company has power to buy its own shares (a). But money
borrowed ultra vires, but proved to have been expended in
paying debts for which the company was liable, or for other
legitimate purposes of the company, is provable as a debt
against it (&). In connection with this subject, it should be
remembered that creditors may be able to dispute claims which
would be binding on the company by the law of estoppel (c).
A debt of the company bought up for less than its full £f^bfi* "p
amount can be proved for the full amount even by a mem- their amount.
her (d) ; but a director who knows that a debt has been im-
properly contracted on behalf of the company, cannot buy it
up cheap and make a profit, by proving for its full amount
against the company (e).
Debts barred by the Statutes of Limitations at the date of Sgjjj" of Limi-
the winding-up order cannot be proved (/). But debts not
then barred are provable, although no claim may be made in
respect of them until after the expiration of the time which
but for the winding-up order would have barred them (g). A
creditor, however, who neglects to cany in his claim for an Laches in carry-
unreasonable time will not be allowed to disturb dividends
already paid (h) ; and he will entirely lose his right to prove if
all the assets have been distributed and the affairs of the com-
pany practically wound up before he has brought in his claim.
(y) Ante, p. 162. (e) Ex parte Larking, 4 Ch. D.
{%) Howard and Dollman's case, 566.
1 Hera. & M. 433. (/) Mitchell's claim, 6 Ch. 822.
(a) ZuluehCs claim, 5 Ch. 444, re- (g) Joint Stock Discount Co.'s claim,
versing S. C, 9 Eq. 270. See ante, 7 Ch. 646 ; Wryghte's case, 5 De
p. 206. G. & Sm. 244 ; and see Ex parte
(6) Ante, p. 237 et seq., Cork and Higgins, 2 Jur. N. S. 178 ; Warwick
Yoiujhal Rail. Co., 4 Ch. 748. and Worcester Rail. Co., 27 L. J. Ch.
(c) Mowatt v. Castle Steel and Iron 735 ; Gloucester, Aberystwith, dx.,
Works Co., 34 Ch. D. 58. Rail. Co., 2 Gift". 47.
(d) Hurnber Iron WorJcs Co., 8 Ecp (/() See the last note, and Kit Hill
] 22. Tunnel, 16 Ch. D. 590.
3 a 2
724
WINDING UP BY THE COURT.
Ex parte
Forest.
13k. IV. CLap. l. Thus where a solicitor's bill has been taxed, and ordered to
Sect.J>. ^ pai(j out Qf tjie first funds of the company which should
come to the hands of the official liquidator, and the solicitor
took no steps to obtain payment for more than six years, and
in the meantime the affairs of the company were settled by
compromise, it was held that the solicitor was not entitled to
have a call made for his payment (i). Again, in Ex parte
Forest (k), a debt was due from a company ordered to be wound
up. No claim was made by the creditor until more than nine
years had elapsed since the debt became due and the
winding-up order was made ; nor until all the other debts of
the company had been paid and the surplus assets had been
distributed amongst the shareholders. The debt was held to be
barred by the laches of the creditor, and by the Statute of
Limitations. As regards the statute, the decision cannot now
be relied upon ; but as regards the effect of laches, coupled
with an alteration in the position of others which would render
a proof unjust to them, the case may, it is conceived, be still
considered sound (I).
A claim by a solicitor for costs is subject to taxation (m) ; but
if at the date of the winding up the company could not have
taxed the bill, it is not taxable at the instance of the liqui-
dators (n) ; but if it is then taxable, the liquidator can have it
taxed even after the lapse of twelve months from the delivery
of the bill (o). The bill, however, may be allowed as a debt
subject to taxation (p).
By the rules and orders issued under the act of 1862,
interest on debts allowed is to be computed, as to such of them
as carry interest, after the rate they respectively carry. Accord-
ing to the rule, creditors whose debts do not carry interest are
entitled to interest, after the rate of 41. per centum per annum,
from the date of the winding-up order ; but only out of any
Solicitor's bills.
Interest.
(i) Ex parte A'Beckett, 2 Jur. N.
S. 684. Compare Gloucester, Aber-
ystwith, &c, Bail. Co., 2 Giff. 47.
(k) 2 Gift 42.
(I) See Joint Stock Discount Go.'s
claim, 7 Ch. 646, where no injustice
was clone to any one in admitting
the claim.
(m) Ex parte Quilter, 4 De G. & S.
183.
(«) Ex parte Quilter, 4 De G. & S.
183.
(o) Ex parte Evans, 11 Eq. 151.
(p) Terrell v. Hutton, 4 H. L. C.
1091.
PROOF AND PAYMENT OF DEBTS. 725
assets which may remain after satisfying the costs of the winding Bk- IV- c,iaP- 1-
. , , , . - Sect. 9.
up, the debts and claims established, and the interest of such
debts and claims as by law carry interest (q). But the validity
of this part of the rule is very questionable (r) ; and notwith-
standing the rule, interest on a debt not bearing interest
cannot be allowed at all (s), unless the debt is one in respect of
which interest in the shape of damages would be given by a
jury under 3 & 4 Win. 4, c. 42 (t). Even if a debt bears interest,
the interest stops at the commencement of the winding up if
the company is insolvent (u). And if a creditor, whose debt
carries interest at a higher rate than 4 per cent., obtains a
judgment for his principal and interest, he will only be allowed
to prove for his judgment debt and interest on it at the rate of
4 per cent., for the original debt will have merged in the judg-
ment (x). If the debt is payable by two companies, the
creditor can prove against each for the principal and interest
up to the date of its winding up, and can receive dividends
from each until each has paid twenty shillings in the pound on
the debt proved against it, or until both companies together
have paid the whole principal and interest up to the date of
payment (y). A dividend paid in respect of principal and
interest is first to be attributed to the interest and then to the
principal (z).
(q) Rule 26. The act is silent on 18(52. Compare Sargood's claim, 15
the subject of interest. See 3 & 4 Eq. 43, where a surety, who paid
Wm. 4, c. 42, §§ 28, 29 ; 1 & 2 Vict. off a debt bearing interest at 4 per
c. 110, §§ 17, 18 ; Dornford v. cent., was allowed to prove for the
Dornford, 12 Ves. 129 ; Mildmay v. principal and interest at 5 per cent.
Methuen, 3 Drew. 91. (u) See Jud. act, 1875, § 10, ante,
(r) In truth it seems ultra vires, p. 719 et seq. Warrant Finance Co.,
see the next note. 4 Ch. 643 ; Ebbw Vale Co.'s case, 5 Ch.
(s) Ex parte Greenwood, 9 Jur. N. 112 ; Ex parte Colborne and Strav:-
S. 997. East Holy ford Mining Co., bridge, 11 Eq. 478 ; Hughes' claim,
It. Rep. 9 Eq. 327 ; East of England 13 Eq. 623, the case of a surety.
Banking Co., 4 Ch. 14 ; and Here- [x) Ex parte Oriental Financial
fordshire Banking Co., 4 Eq. 250. Corporation, 4 Ch. D. 33 ; Ex parte
(t) State Fire Insurance Co., Hughes, ib. 34 n. ; Ex parte Fewings,
Times Assurance Go's case, 2 Hem. 25 Ch. D. 338.
& M. 722. In this case the com- (//) Warrant Finance Co., 5 Ch.
pany was being wound up under 86.
the act of 1848, but the reasoning (2) Warrant Finance Co. (No. 2),
applies to companies which are 10 Eq. 11.
being wound up under the act of
726
WINDING UP BY THE COURT.
Bk. IV. Chap. l. Secured creditors cannot prove for their debts without giving
Sect. 9.
up their securities on the property of the company («■). But
Position of ' . . . /JN
secured ere- they need not give up other securities {o).
tlltors- Although interest accruing after the commencement of the
winding up is not provable against an insolvent company (c),
yet a creditor who holds a security for principal and interest
can only be redeemed on being paid principal and interest in
full up to the time of payment and his costs (rf). A creditor
who holds two securities of the same company for one debt
can only prove for that debt ; he cannot prove in respect of
each security (e). The holder of a debenture containing a
covenant for the repayment of the principal sum on a certain
day and charging property of the company is entitled to
enforce his security — i.e., to be paid out of the assets charged,
although the day for payment has not arrived and no interest
is in arrear (/).
Whether a mortgage is binding on the company, and the
extent of the assets covered by it, depends not only on its terms
but also on the nature of the company and on the powers of its
directors (#). A security of a limited company not registered as
required by § 43 of the Companies act, 1862, is nevertheless
provable as against other creditors, even although given to the
directors or solicitors of the company (/<■). A bank, with which
a company had deposited its deeds as a security for bills under
discount, was held entitled to apply the proceeds of the sale
of its security, not only to meet bills under discount, but all
other moneys due to it from the company (i).
Vendor's lien for The ordinary lien which a vendor of land has for his unpaid
unpaid purchase . . . ... -in i
money. purchase-money (k), the right ot an unpaid vendor ol goods to
(a) Jud. Act, 1875, § 10. See
ante, p. 719 et seq.
(b) See Partn. p.,714 etseq., where
the rules in bankruptcy are referred
to.
(c) Ante, pp. 724, 725.
(d) Warrant Finance Co. (No. 2),
10 Eq. 11.
(e) In Metropolitan and Provincial
Bank, W. N. 1869, 148, the creditor
had a bill and a bond ; and see
Ex parte European Bank, 7 Ch. 99.
(/) Hodson v. Tea, Company, 14
Ch. D. 859. As to debentures
charging the undertaking, see ante,.
p. 197.
(g) See ante, pp. 186 et seq.
(h) Wright v. Horton, 12 App.
Ca. 371. See ante, p. 203 n. (u).
{%) Ex parte National Bank, 14.
Eq. 507. See, also, Agra Bank's
claim, 8 Ch. 41.
(k) See, as to the lien of a vendo r
who sells for cash and shares, and
PROOF AND PAYME? T W DEBTS. 727
stop them in transitu in the event of the insolvency of the Bk- Iv- ChaP- 1-
... . . Sect. 9.
buyer, and maritime liens (I) are all available against com-
panies which are being wound up (m).
The rule in Ex parte Waring (n), by which, if both the Rule in Ex
drawer and acceptor of a bill of exchange become bankrupt, the parte anng'
holder of the bill is entitled to have any securities held by the
acceptor for the bill applied in taking it up, applies where the
drawer and acceptor are companies in liquidation, at all events
if they are insolvent ; but, it has been said, not otherwise (o).
The rule, however, has no application unless there is a double
forced liquidation (p). Whilst the drawer and acceptor are
solvent they can deal with the securities as they please, and
release them altogether (q) ; and the transferee of the bill
acquires no right to have securities pledged to meet it applied
in taking it up, unless that right has been conferred upon him
by some special contract with himself or its equivalent (r) ;
and where the security consists of a guarantee, the bill-
holder acquires no rights as against the guarantor or his
estate, even although all parties are insolvent (s).
A person who holds shares as a trustee for a company being Trustees for the
company.
wound up is entitled to prove against it, not only for calls
already made on him, but also in respect of his liability to
the company becomes wholly abor- (o) Hickie & Co.'s case, 4 Eq. 226,
tive, Brentwood Brick and Goal Co., sed quaere, see Poivles v. Hargreaves,
4 Ch. D. 562. The vendor not 3 De G. M. & G. 430 ; Ex parte
being a creditor at law until a con- Alliance Bank, 4 Ch. 423 ; Bank of
veyance has been executed, never Ireland v. Perry, L. R. 7 Ex. 14.
was entitled in equity to prove for (p) The rule does not apply when
the whole purchase-money, and to one of the parties, though insolvent,
retain his security. See Rome v. remains master of his own property,
Young, 3 Y. & C. Ex. 199, and 4 ib. Ex parte General South American Co.,
204. 10 Ch. 635.
(1) Australian Steam Nav. Co., 20 (q) Ex parte Lambton, 10 Ch. 405.
Eq. 325 ; Bio Grande do Sul Steam (;•) Compare Inman v. Clare,
Ship Co., 5 Ch. D. 282. Johns. 769, and Agra and Master-
(m) See, as to the lien of a vendor man's Bank, 2 Ch. 391, where he
of a patent, Gore and Durant's case, had acquired the right, with Ex
2 Eq. 349. parte Stephens, 3 Ch. 753, and Ban-
in) 19 Vesey, 345. For a fuller ner v. Johnston, L. R. 5 H. L. 157,
account of this rule, see Partn. where he had not.
p. 712, and Eddis on Ex parte (*) Ex parte Stephens, 3 Ch. 753.
Waring.
723
WINDING UP BY THE COURT.
Bk. iv. Chap. ] . fature calls (t) ; and his proof is not to be rejected simply
because he may be indebted to the company on another
account («).
Indemnity. So other claims against the company for indemnity by it can
be proved against it, e.g., a claim by a surety for the com-
pany (x), or a claim arising from an undertaking by the com-
pany to pay a bill accepted by the claimant, and not due at
the commencement of the winding up (y). But as in bank-
ruptc}r so in winding up companies, the same debt cannot be
proved twice over ; and if in the last case the holder of the
bill has proved, the acceptor cannot prove also without giving
credit for the dividend received by the holder.
Winding up Although future claims, and claims for unliquidated damages
no breach of .
contract. are provable against the company, a company neither rescinds
its contracts, nor is necessarily guilty of a breach of contract,
by being wound up. Hence current engagements to accept
bills, supply goods, &c, are not broken by a winding-up
order ; and no claim for damages can be allowed, on the
theory that the winding up was per se a breach of contract, if
the liquidators are ready to perform the contract. But if they
are not the case will be otherwise. The point to determine
is whether what has taken place renders performance by the
company of its contract impossible, or amounts to a refusal
by the company to perform it.
Mersey Steel The principles applicable to this subject were much dis-
and Iron Com-
pany v. Naylor cussed in The Mersey Steel and Iron Co. v. Naylor, Benzon &
Co. (z). There a company had agreed to sell 5000 tons of
steel and to deliver them by instalments of 1000 tons per
month. The company delivered some of the steel, and a
petition to wind it up was then presented. The bu}Ter refused
to pay for the steel delivered without the sanction of the
Court (a), and the compan}' treated his refusal to pay as a
(t) Ex parte Oriental Commercial Gray v. Seckham, 7 Ch. 680.
Bank, 3 Ch. 791. (s) 9 App. Ca. 434, and 9 Q. B. D.
(it) lb. 648.
(x) See, as to sureties, Hughes' (a) This was held not to be an
claim, 13 Eq. 623. absolute refusal to perform the con-
(y) Oriental Commercial Bank, 7 tract so as to entitle the company
Ch. 99, reversing 12 Eq. 501. See, to treat it as rescinded,
further as to the rights of sureties,
PROOF AND PAYMENT OF DEBTS.
729
breach of his contract and as exonerating the company from Bk- IJ'ctcl^p" L
further deliveries. A winding-up order was then made, and
the company brought an action for the price of the steel
delivered, and the buyer counterclaimed for damages for non-
delivery of the rest of the steel. It was held (1) that the
company was entitled to be paid for the steel delivered ;
(2) that the buyer was entitled to damages for non-delivery of
the rest of the steel ; (3) that these damages could be set off
against the price. The breach of contract which rendered
the company liable in this case was the refusal to make further
deliveries of steel, not the winding-up of the compairy.
So an order to wind up a company under supervision was
held to afford no defence to an action by the company for the
breach of an agreement which the liquidators had performed
and were ready to continue to perform (b). So where a bank
had agreed to accept bills against bills of lading, and the bank
was ordered to be wound up, and the liquidators were ready
to carry out the agreement, a claim for damages for its breach
was disallowed (c) ; and sureties for the bank were held not
discharged (d).
On the other hand, as the winding up of a company renders
it impossible to place shares in it, a person who has agreed with
the company to place them is entitled to damages for the loss
which the winding up has caused him (e).
Similar principles were applied by V.-C. Wood to the dis- Dismissal ot
missal of servants in Ex parte Hardinq ( /'). There a clerk to '
1 * w ' Ex parte
a company was engaged on the terms that he should not be Harding,
dismissed without three months' notice. The company was
ordered to be wound up ; but its business was continued by
the liquidator for a time, and the clerk was not dismissed,
but he continued in his employment. He was then
discharged by the liquidator without notice. The Court
(b) British Waggon Co v. Lea & Coffee Co., 17 C. B. N. S. 733.
Co., 5 Q. B. D. 149, the liquidators (/) 3 Eq. 341. Compare the
had assigned the contract, and the next three notes ; and as to the
assignees carried it out. effect of a transfer of the company's
(c) Ex parte Tondeur, 5 Eq. 160. business, see Stirling v. Maitland,
(d) Barber & Co., 9 Eq. 725. 5 B. & Sin. 840.
(e) Inchbaldv. Western Neilgherry
730 WINDING UP BY THE COURT.
Bk. IV. Chap. l. decided that the winding-up order did not operate as a dis-
charge of the clerk, and that he was entitled to his salary up to
the time of his dismissal and the damages in lieu of notice (g).
servants by But on grounds of convenience it has heen held in other
wuiding-xip cases that a compulsory winding-up order operates as a dis-
charge of the company's servants, and entitles them to
damages as for wrongful dismissal on that day, even if they
are not in fact dismissed hut assist the liquidator in winding
up the company.
The general doctrine that a compulsory winding-up order
operated as a discharge of the company's servants was laid
down by Lord Romilly in Chapman's case (h) ; and in Shirreff's
case (i) the same judge held that a resolution to wind up
voluntarily had the same eifect on a manager who was
appointed liquidator. In Mac Dowall's case (k) the liquidator
issued a circular (in effect) treating the winding-up order as a
discharge of the company's clerks, but saying that he should
require the services of some of them, and should reduce the
staff as little as possible. A clerk who was entitled by his
agreement with the company to three months' notice continued
to be employed by the liquidator for more than three months,
and afterwards received notice to leave at the end of the then
current month (/), which he did. He was paid for his services
up to that time. He claimed three months' salary in lieu of
notice, after giving credit for what he received after the notice
to leave ; but it was held that he was not entitled to this. He
was treated as having been discharged by the winding-up
order, and on this footing he had sustained no damage, having
been paid more than three months' wages (m).
The last case on this subject is Reid v. Explosives Co. (w),
where it was held by the Court of Appeal that a winding-up
(g) Observe that if the order had (k) 32 (Jli. D. 366.
dismissed him he would have been (I) The notice was given on the
entitled to damages, but they would 19th August,
have been reduced by the sub- (m) See the next case,
sequent payments to him. See (ri) 19 Q. B. D. 264. A receiver
Reid v. Explosives Co., infra. and manager had been appointed,
(/(.) 1 Eq. 346. See, also, Forster and this was held to have discharged
<C- Co., 19 L. E. Ir. 241. the plaintiff. Sed qucere.
(i) 14 Eq. 417.
PROOF AND PAYMENT OF DEBTS.
73 1
order operated as a wrongful dismissal of the plaintiff, but that Bk- ^J3^" L
he suffered no damage, as he had been employed and paid by
the liquidator for the period of the notice to which he was
entitled.
It must therefore be treated as practically settled that the
principle acted on in Ex parte Harding is not applicable to
clerks and servants unless the company's business is continued
without break as it was there.
A servant engaged for an unexpired term and discharged Damages in
00 these cases.
before its expiration, is entitled to prove for the present value
of all the future payments which would accrue to him if he
continued to serve the whole time, and to add to that the
pecuniary value of any other benefits to which he would have
been entitled under his contract ; and then to deduct a proper
sum for the chance of death and bad health, and for his
liberty to obtain fresh employment (o) ; or if he has obtained
fresh employment what he has been paid for it(p). If the
contract mentions the sum to be paid in case of dismissal,
no deduction from it will be made (q). On the other hand,
nothing is provable in respect of loss of commission on
business which might or might not have been transacted (r).
As to the priority of wages, see ante, p. 717.
Where the company is lessee for an unexpired term of years Future rent,
the lessor is entitled to have a claim entered for the full
amount of the rent which will become due under the lease ;
and he is further entitled to prevent the company from being
dissolved without notice to him. But where the lease has
been assigned, the lessor is not entitled to receive more from
the company than it may ultimately become liable to pay
under the covenants contained in the lease (s). And the lessor
is not entitled to a dividend on his claim until something be-
comes payable to him ; nor is he entitled as against the other
creditors to stay a dividend, nor to have any sum impounded
(0) Yelland's case, 4 Eq. 350 ; Ex but see the last note.
parte Clark, 7 Eq. 550. (r) Ex parte Maclure, 5 Ch. 737.
(p) Reid v. Explosives Co., 19 Q. (s) See Haytor Granite Co., 1 Ch.
B. D. 264; Shirrefs case, 14 Eq. 77, reversing 1 Eq. 11, and see the
417. next two notes.
(5) Ex parte Logan, !) Eq. 149 ;
732
WINDING UP BY THE COURT.
Subsisting
policies and
annuities.
Bk. IV. Chap. 1. t0 meet future possible demands (t). He must trust to his
power of distress and entry, and to his rights against the
assignee if the lease is assigned. But where a company seeks
to reduce its capital, it must make provision for meeting the
lessor's future demands (u) ; and the shareholders are not
entitled to divide the assets amongst themselves without
making similar provision (%). The same rule applies to the
voluntary winding up of a solvent company (y).
Annuitants, and policy-holders whose policies are not yet
due, are entitled to prove for the values of their respective
annuities and policies {z) : and the amount to be proved for is
to be ascertained as at the date when the claim is made (a) ;
but if a claim contingent at the commencement of the winding
up ripens into a debt during its continuance the whole may be
proved for, whether the day fixed for sending in claims has,
or has not, passed (b). Moreover, it is not necessary in order
to prove in respect of a policy to keep it up after the com-
mencement of the winding up (c) ; and as between policy-
holders, those whose policies have dropped are not entitled to
payment in priority to the others (d).
The proper method of valuing subsisting policies gave rise
to considerable difference of opinion ; the Court of Chancery
holding that the amount to be proved in respect of such a
policy is the sum which would be required by a solvent office
to effect a new policy of the same amount on the same condi-
tions and at the same premium as the policy in respect of
How annuities
and policies are
±o be valued.
(7) JVestbourne Grove, Drapery Co.,
5 Ch. D. 248 ; Honey's claim, 5 Eq.
561 ; Ex parte Lord Elphinstone, 10
Eq. 412. As to the proof and dis-
charge of such claims in bankruptcy,
see Hardy v. Fothergill, 13 App. Ca.
351.
(a) Telegraph Construction Co., 10
Eq. 384.
(ic) Oppenheimer v. British and
Foreign Exchange, &c, Bank, 6 Ch.
D. 744.
(y) Lord Elphinstone v. Monkland
Iron Co., 11 App. Ca. 332 ; Gooch v.
London Banking Assoc, 32 Ch. D.
41.
(z) Hunt's case, 1 Hem. & M. 79 ;
Teete's case, 4 N. R. 48, and see infra.
(a) Craig's Executors' case, 9 Eq.
706.
(b) Macfarlane's claim, 17 Ch. D.
337 ; and Hill v. Bridges, ib. 342,
an administration action. Dividend s
already paid are of course not dis-
turbed.
(c) Cook's policy, 9 Eq. 703, where
the days of grace had not then
expired.
(d) Mc Tver's claim, 5 Ch. 424.
PROOF AND PAYMENT OF DEBTS. 7^3
which the proof is made (e) ; and this principle has the advan- Bk- IV- Cll:,i>- '
Sect. 9.
tage of doing justice to all parties so far as circumstances -
admit. But the practical difficulty of applying the rule in-
duced Lord Cairns as arbitrator in the winding up of the
Albert Life Assurance Company, to adopt a different rule, and
to hold that the sum to be proved for was the difference be-
tween the present value of the sum insured and the present
value of the premiums which the insured would have to pay in
order to keep the policy on foot (/). The legislature has, in
substance, adopted Lord Cairns' rule, for by 35 & 36 Vict,
c. 41, it is enacted as follows : —
" § 5. Where a life assurance company is being wound up by tlie Court, 35 & 36 Vict,
or subject to the supervision of the Court, or voluntarily, the value of every c* **•
life annuity and life policy requiring to be valued in such winding up
shall be estimated in manner provided by the first schedule to this Act ;
but this section shall not apply to any company the winding up of which
has commenced before the passing of this Act, unless the Court having
cognizance of the winding up so order, which order that Court is hereby
empowered to make if it think expedient so to do, on the application of
any person interested in the winding up of such company."
FIRST SCHEDULE.
Rule for valuing an annuity.
An annuity shall be valued according to the tables used by the company
which granted such annuity at the time of granting the same, and where
such tables cannot be ascertained or adopted to the satisfaction of the Court,
then according to the table known as the Government Annuities Experi-
ence Table, interest being reckoned at the rate of four per centum per
annum.
Rule for valuing a policy.
The value of the policy is to be the difference between the present value
of the reversion in the sum assured on the decease of the life, including
any bonus or addition thereto made before the commencement of the wind-
ing up, and the present value of the future annual premiums.
In calculating such present values, the rate of interest is to be assumed
as being four per centum per annum, and the rate of mortality as that of
the tables known as the Seventeen Offices' Experience Tables.
(e) Holdich's case, 14 Eq. 72; (/) See Lancaster's case, 14 Eq.
Bell's case, Kerr's and Stubb's case, 72, note, and Lord Romilly's obser-
Bleackley's case, Craig's Executors' vations on it in Holdich's case, ib.
case, and Wilson's case, 9 Eq. 706.
734 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. The premium to be calculated is to be such premium as according to
Sect. 9. the g^ rate 0f interest and rate of mortality is sufficient to provide for the
risk incurred by the office in issuing the policy, exclusive of any addition
thereto for office expenses and other charges.
SECOND SCHEDULE.
Where an assurance company is being wound up by the Court or subject
to the supervision of the Court, the official liquidator in the case of all
persons appearing by the books of the company to be entitled to or inte-
rested in policies granted by such company, for life assurance, endowment,
annuity, or other payment, is to ascertain the value of such policies, and
give notice of such value to such persons, and any person to whom notice
is so given shall be bound by the value so ascertained unless he gives
notice of his intention to dispute such value in manner and within a time
to be prescribed by a rule or order of the Court.
Debts of amai- Where one company has transferred its assets and liabilities
gamated com- to anotiier company, and both or either of such companies are
afterwards wound up, questions of some perplexity arise with
reference to the debts to which they are respectively liable.
In the first place it is necessary to ascertain whether the amal-
gamation itself was intra vires and binding on both companies,
or ultra vires and binding on neither (g). Assuming the amal-
gamation to have been intra vires, then it will follow from the
principles investigated in an earlier part of the treatise (h) —
l Where the ^' That a creditor of the company which has sold its busi-
amaigamation is ness can pr0ve against that company unless he has in some
intra vires.
way released it, or unless his debt is barred by the Statute of
Limitations (i).
2. That such creditor can prove against the purchasing
company, if, but only if, that company has become liable to
him by reason of some agreement, express or tacit, between
it and him (A).
(g) See, on this subject, ante, pp. M. 79. Compare Carr's- case, 33
183, 322. Beav. 542, which turned on the
(h) Ante, pp. 258 et seq. terms of the policy and the com-
(i) Family Endoivment Soc., 5 Ch. pany's deed of settlement.
118 ; Manchester and London Life (k) Commercial Bank Corporation
Ass., &c, Assoc.., 9 Eq. 643, and 5 of India and East, 16 W. R. 958,
Ch. 640 ; Griffith's case, 6 Ch. 374 ; and W. N. 1868, 166 ; .Ex parte
National Provincial Life Ass. Soc, Gibson, 4 Ch. 662 ; National Provin-
9 Eq. 306 ; Hunt's case, 1 Hem. & cial Life Ass. Soc, 9 Eq. 306 ; Ex
PROOF AND PAYMENT OF DEBTS. 735
3. That if there has been a complete novation of his con- Bk- JV. Chap. 1.
Sect. 9.
tract, the creditor lias discharged the selling company, and can -
only prove against the purchasing company (I).
4. That the selling company is entitled to be indemnified by
the purchasing company against all the liabilities of the former
agreed to be taken over and discharged by the latter (m) ; but
is not entitled to a lien as for unpaid purchase-money, nor to
the benefit of securities effected by the purchasing company to
cover the debts it had taken over (n).
"Where, however, the amalgamation is ultra vires, and invalid, 2. Where amai-
i i"ii i i .i/., gamation is
the company which has assumed to take upon itself the ultra vires.
liabilities of the other, cannot be made to discharge those
liabilities, either by the other company or by its creditors (o)
and the company which has assumed to transfer its debts,
remains liable to pay them, even though its creditors may
have taken securities from the other company (p). In order to
replace both companies in their former position, it would be
necessar}' to restore to the transferring company all its assets,
and to the company taking the liabilities of the other, all
moneys paid in discharge of those liabilities. But it does not
necessarily follow, from the mere fact that the companies have
acted beyond their powers, that they are entitled to be restored
to the position in which they would have been, had they never
amalgamated ; and it was held that a company which had
taken the assets and liabilities of another, was not entitled to
rank as a creditor against that other, in respect of the excess
of its liabilities which had been discharged, over its assets
which had been taken (q).
parte Blood, 9 Eq. 316 ; Teete's case, 164.
and Rumney's case, 4 N. E. 48, (o) See The Era Assurance Soc,
V.-C. K. Williams's case, and Anchor s case,
(I) Merchants and Tradesmen's 2 J. & H. 400.
Ass. Soc, 9 Eq. 694 ; Times Life (p) See The Saxon Assurance
Ass., &c, Co., 5 Ch. 381 ; Anchor Society, Anchor's case, 2 J. & IT.
Ass. Co., 5 Ch. 632 ; Spencer's case, 408. See, too, Hardincje v. Webster,
6 Ch. 362 ; Fleming's case, 6 Ch. 1 Dr. & Sm. 101.
393, and see the last two notes. (q) See The Saxon Life Assur-
(m) British Provident and, Anglo- ance Society, Era case, 2 J. & H.
Australian Assurance Cos., 4 N. R. 408, and 1 De G. J. & Sm. 29. Com-
48. pure. Wood's claim, and Brown's
(n) Western Life Ass. Soc, 11 E(j. claim, 9 W. R. 366, and 10 ib. 662.
736
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect, 9.
Debts due to
members.
Cost-book mine.
Insurance
societies.
A debt due from a company to one of its own members in
his character of member by way of dividends, profits, directors'
fees (r), or otherwise, cannot be proved against the company
in competition with creditors who are not members ; but such
a debt must be taken into account in adjusting the rights of
the members inter se (s).
But debts due to members not as such, but in respect of
matters in which they have acted as strangers, may be proved
against the company in competition with other debts (t).
A person who has taken shares in a company and has
effectually repudiated them before the winding up has com-
menced, or who has been decided not to be a shareholder, may
prove as a creditor for what he has paid to the company in
respect of them (u) ; but a person induced by the fraud of th&
company to take shares in it, and who is a shareholder when
the winding up of the company commences, cannot prove for
the damages he has sustained ; for such a claim is inconsistent
with his position as a member of the company (x).
A shareholder in a cost-book company who has relinquished
his shares and paid his share of the expenses up to the date
of his retirement can prove for the value of his share, even in
competition with the other creditors (y).
Insurance societies (not limited) almost invariably issue
their policies and grant their annuities on terms which render
their funds alone liable to pay the policies and annuities. The
efficacy of such stipulations in limiting the liability of the
(?■) Ex farte Cannon, 30 Ch. D.
G29.
(s) See 25 & 26 Vict. c. 89, <j 38,
cl. 7, and § 101. See also, Addle-
done Linoleum Co., 37 Ch. D. 191,
and Exchange Drapery Co., 38 Ch.
D. 171, Avhere some shares had been
paid up in advance.
(t) Grissell's case, 1 Ch. 528 ; Ex
parte Brown, 12 Ch. D. 823, infra,
p. 742, and ante, p. 727.
(u) See Alison's case, 9 Ch. 1, and
15 Eq. 394, and compare Campbell's
case and Hippisley's case, 9 Ch. 1,
and 16 Eq. 417.
(x) Houldsworth v. City of Glasgovj
Bank, 5 App. Ca. 317 ; Addlestone
Linoleum Co., 37 Ch. D. 191, in
which Mudford's claim, 14 Ch. D.
634, and Ex parte Appleyard, 18 Ch.
D. 587, are doubted. And compare
Gibson & Co., 5 L. E. Ir. 139, where
the action was brought before the
winding up, but quaire if this is con-
sistent with Houldsworth v. City of
Glasgow Bank, ubi supra.
(y) Ex parte Palmer, 7 Ch. 286,
and see ante, p. 524.
PROOF AND PAYMENT OF DEBTS. 737
shareholders has been already seen (z) ; but such societies Bk. IV. Chap. l.
Sect. 9.
often have other creditors, and their policies and annuities —
are frequently held by their own members. The conflicting
rights of these various persons have all to be adjusted when
such societies are wound up; and after considerable dif-
ference of opinion, the following rules appear now to be
settled : —
A. In the case of an incorporated company with a share Incorporated
camtal • proprietary
( apilcU . companies.
1. The policy-holders and annuitants, whether members of
the company or not, are entitled to be paid pari passu with
the other creditors out of the funds of the company, including
therein all uncalled-up capital (a).
2. The policy-holders and annuitants are not entitled to be
paid out of these funds in priority to the other creditors ; nor
to throw those creditors on what may be raised by calls beyond
the nominal capital (&).
3. The policy-holders and annuitants can only obtain pay-
ment out of such funds ; but the other creditors, whether
members or not, are entitled to be paid, not only out of those
funds, but also by calls beyond the amount of the nominal
capital (c).
4. The costs of winding up are also payable out of the
funds of the company, and so far as they may be insufficient
by calls beyond the share capital (d).
B. In the case of an incorporated company without any Incorporated
capital agreed to be subscribed by the members, the same p^s. C°m
principles would, it is conceived, be applicable : subject, of
(z) Ante, p. 246. two classes of shareholders.
(a) English and Irish Church and (jb) International Life Ass. Soc, 2
University Assurance Society, 1 Hem. Ch. D. 476 ; State Fire Insurance Co.,
& M. 79 ; State Fire Insurance Co., 1 and Professional Life Ass. Co., ubi
Hem. & M. 457, and 1 De G. J. & supra.
Sm. 634 ; Professional Life Assurance (c) See the cases in the last two
Co., 3 Eq. 668, and 3 Ch. 167. See, notes, which remove the doubts ex-
further, Winstone's case, 12 Ch. D. pressed on this point in Athenazum
239; Albion Life Ass. Soc, 15 Ch. Life Assurance Society, Johns. 633.
D. 79, & 16 ib. 83 ; and Sander's case, (d) Agriculturist Cattle Ins. Co., 10
20 ib. 403, as to the position of Ch. 1 ; Professional Life Ass. Co., 3
policy-holders who are members in Ch. 167, and 3 Eq. 668.
a registered unlimited company with
L.C. 3 B
738
WINDING UP BY THE COURT.
Unincorporated
companies.
Bk. IV. Chap. 1. course, to this modification— that the members could not he
. Sect- 9- compelled to contribute anything in respect of uncalled-up
capital.
C. In the case of an unincorporated company, whether pro-
prietary (i.e., with a share capital) or mutual (i.e., where the
insured look only to their own premiums), the rights of the
various claimants against the funds of the company (i.e., what-
ever can be got at without making a call) will be the 'same as
before ; but the members of the company cannot compete with
their own creditors against the funds raisable by calls (e).
But the holders of policies hi such companies are not liable to
contribute to the debts of the company (/).
A provision that policies shall be paid only out of the funds
of a company does not entitle the holder of a policy which has
become payable to any priority over the holders of policies
which are still subsisting (g). The only difference between
the two cases is in the amount provable against the company.
Set-off between
non-members
and the com-
pany.
3. Set-off.
a.) As between the company and strangers.
As between a company being wound up on the one hand,
and non-contributories on the other, when the company is
insolvent the rules applicable in bankruptcy to cases of mutual
credit are introduced by the Judicature act, 1875 (h). Before
that act was passed the ordinary rules of set-off were ap-
plicable (i), nor was it essential that both debts should have
been actually due before the winding-up order was made (j).
Since the Judicature act a debtor to the company can set off
a claim for unliquidated damages for a breach of contract by
(e) See, on this subject, The Law
of Mutual Life Assurance, by Thomas
Brett.
(/) Great Britain Mutual Life
Ass. Soc, 16 Ch. D. 246. For the
rights of policy-holders when the
company's contracts are reduced, see
Great Britain Mutual Life Ass, Soc,
19 Ch. D. 39, & 20 Ch. D. 351.
(g) Mclver's claim, 5 Ch. 424.
(h) 3¥=&73l5yict. c!Jk$, § 10, ante
p. 719, and Partn. 654 et seq.
(i) Anderson's case, 3 Eq. 337 ;
and see Mersey Steel and Lron Go. v.
Naylor & Co., 9 Q. B. D. at p. 667.
(j) lb., and see Ex parte James, 8
Eq. 225.
SET-OFF.
739
the company (k). But a creditor of the company cannot set Bk. IV. Chap. 1.
off a debt due to him from the company against a claim made
by the liquidator in respect of a distinct contract entered into
with him (I). There can be no set-off when the claims on each
side do not result in pecuniary liabilities, e.g., a debt cannot
be set-off against a claim for the return of goods (m). It has
moreover been decided that a person who has accepted bills in
favour of the company is not entitled to restrain the liquidator
from negotiating them before they are due, although the result
of such negotiation may be to deprive the acceptor of his right
to set-off against those bills a debt owing to him by the com-
pany (n).
It is a common practice for the debtors of a company which Buying up debts
is being wound up to buy up bills of the company in order to them off#
set such bills off against what the purchasers themselves owe
to the company. The legality of this practice has been
questioned, and has not yet been settled by decision. The
general scope of the Companies act, 1862, is hardly consistent
with any device by which one creditor obtains a preference
over others after the winding up has commenced ; but it is
doubtful whether the language of the act is sufficiently clear
to defeat the practice in question (o). The effect of the 10th
section of the Judicature act, 1875, on this point has not been
determined (p).
The principles by which rights of set-off are regulated have
been already noticed (q).
As regards debts which have been assigned it is settled Set-off against
assignees.
that a debtor cannot set off against the assignee of a debt due
from him, any claim against the assignor which has arisen
(k) Mersey Steel and Iron Go. v. (h) Smith, Fleming, and Go's case
Naylor & Go. , 9 App. Ca. 434, and Gledstane's Co.'s case, 1 Ch. 538.
affirming 9 Q. B. D. 648, ante, p. (o) See the case in the last note.
728 ; and see Lee and Chapman's \ \{p) As to the rule in bankruptcy,
case, 30 Ch. D. 216. see In re Gillespie, 14 Q. B. D. 963 ;
(I) Ince Hall Mills Go. v. Douglas Dickson v. Evans, 6 T. R. 57, which
Forge Co., 8 Q. B. D. 179 ; and show that rights of set-off depend
Sankey Brook Coal Co. v. Marsh, on the state of things at the date of
L. R. 6 Ex. 185, explained in 9 the bankruptcy ; see, also, Ex parte
Q. B. D. at p. 669. Theys, 25 Ch. D. 587.
(to) Eberle's Hotels, &c, Go. v. E. (q) Ante, p. 273 ; and Partn. p.
Jonas & Bros., 18 Q. B. D. 459. 290 et sea.
3 e 2
740
WINDING UP BY THE COURT.
Set-off against
holders of
debentures, &c.
Bk. IV. Chap. 1. since the assignment was completed unless such claim arises out
Sect. 9. . .
of the same contract from which the debt assigned arose, and is
intimately connected with it (r) ; and this rule applies to debts
proved against a company and afterwards assigned, and pre-
vents the liquidator from setting-off against the assignee a
claim against the assignor founded on a breach of trust (s) ;
but not from setting off calls in respect of the assignor's
shares (t). Again, a debtor may by contract or otherwise
preclude himself from disputing a given debt when the debt
is assigned, and from bringing it into account with cross
demands which he may have against Ins creditor ; and where-
ever this has been done (u) the assignee of the debt so
isolated can sue the debtor for it and obtain payment notwith-
standing any cross demands which he may have against the
original creditor. Advantage of this principle is constantly
taken by companies who issue under seal promises to pay the
assign, or holder, or bearer of the instrument. A promise by
a company to pay A. B. or order, or bearer, if properly
stamped has been held to be a promissory note, although
under the seal of the company (x) ; and the bond fide holder
for value of such an instrument can, if it is not altogether
ultra vires, prove against the company in his own name, and
he will not be affected by any equities or rights of set-off
which may exist between the company and the original
payee (y). And even where the instrument cannot be treated
as a promissory note, yet if its form and the circumstances
under which it was issued are such as to show that the com-
pany intended that the payee should be able to raise money on
(r) Government of Newfoundland
v. Newfoundland Rail. Co., 13 App.
Ca. 199 and cases there cited.
(«) Ex parte Theys, 25 Ch. D. 587,
and 22 ib. 122. Compare Ex parte
Mackenzie, 7 Eq. 240.
(t) Ex parte Mackenzie, 7 Eq. 240,
but see the last case.
(u) As a rule, assignees of debts
are in no better position than their
assignors, unless, by reason of special
circumstances, Athenozum, Life Ass.
Soc. v. Pooley, 3 De G. & J. 294 ;
Financial Corporation's claim, 3 Ch.
355 ; Ex parte Mackenzie, 7 Eq. 240,
and Judicature Act, 1873, § 25 (6).
Compare Brunton's claim, 19 Eq. 302.
(a;) Ex parte City Bank, 3 Ch. 758 ;
Ex parte Colborne and Strawbridge, 11
Eq. 478. Bills of Exchange act, 1882,
§ 91, cl. 2. See as to Negotiability
by usage, Goodwin v. Bobarts, L. R.
10 Ex. 337 & 1 App. Ca. 476, and
ante, p. 474.
(y) it.
SET-OFF. 741
it, and that the transferee should take it without reference to Bk. IV. Chap. 1.
' . Sect. 9.
the state of accounts subsisting between the payee and the
company, the transferee is entitled to prove on the instrument
in his own name, and his proof will not be subject to any
set-off by reason of claims which the company may have
against the transferor. A leading case on this subject arose
on a debenture of the Blakely Ordnance Company (z). There Biakely Ord-
the debenture was payable to bearer, and the bearer was case.
authorised to give a receipt for the money ; the debenture was
issued to a promoter of the company, pursuant to a prior
agreement with him, and the agreement was confirmed by the
company's articles of association. It was held that the bearer
could prove in his own name without being subject to any
equities between the company and the promoter, to whom the
debenture had been given. A fortiori will the company be
precluded from availing itself as against the transferee of any
rights of set-off which the company may have against the
transferor, if the company has induced the transferee to act on
the assumption that he would become the company's cre-
ditor (a), or has recognised and treated him as such (6).
b.) As between the company and contributories
The right of a member of a company which is being wound Set-oit between
members and
up to set-off what is owing to him by the company against the company,
what is owing by him in respect of calls, or otherwise, does
(z) Ex parte New Zealand Bank- Co., L. R. 4 Q. B. 44, debenture
ing Corporation, 3 Ch. 154. Com- issued on purpose to enable the
pare Financial Corporation's claim, taker to raise money on it.
ib. 355, where the debenture was (h) Brunton's claim, 19 Eq. 302 ;
payable to A., his executors, admini- Higgs v. Northern Assam Tea Co.,
strators, or transferees, and the person L. R. 4 Ex. 387 ; Ex parte Uni-
presenting it was empowered to give versal Life Ass. Co., 10 Eq. 458.
receipts ; but there was no agree- In botb of these the claimant had
ment to give them in this form, and been registered as proprietor. See,
the. consideration for the debentures also, IVoodhams v. Anglo- Australian
had failed. The case was not one of Ass. Co., 3 Giff. 238, where he
set-off at all ; and see Romford Canal was told all was right. Ex parte
Co., 24 Ch. 1). 85. Chorley, 11 Eq. 157, where the com-
(a) Ex parte Asiatic Banking Cor- pany had allowed the transferee to
poration, 2 Cb. 391, a case of a letter obtain judgment. See, also, HuleWs
of credit shown to the claimant. case, 2 J. & H. 306.
Dickson v. Swansea Vale Railway
742 WINDING UP BY THE COURT.
Bk. IV. Chap. l. not depend simply on the general principles applicable to set-
off, but also on the special enactments contained in § 38,
cl. 7, and § 101 of the Companies act, 1862. These are not
affected by § 10 of the Judicature act, 1875 (c). By reference
to these sections, it will be seen —
1. That whether a company is limited or unlimited, money
due to a contributory in his character of member, is not to be
treated as a debt of the company payable to him in competition
with creditors who are not members (d).
2. That where a company is limited no set-off whatever
against an order for payment is allowed in favour of a con-
tributory indebted to the company, except when the rights of
the contributories inter se come to be adjusted (e).
3. That where a company is unlimited, mone}' due to a con-
tributory, not as a member, but on some independent dealing
or contract, may be set off as if such money were owing to a
person unconnected with the company (/).
4. That in adjusting the rights of contributories inter se,
monies due to contributories from the company on any account
may be set off against money due from them to the company
in respect of calls or otherwise ; and that in such cases there
is no difference between limited and unlimited companies (//).
Grisseil's case. The whole subject now under consideration was carefully
considered in Grissell's case (//), in which it was held — 1. That
(c) See Gill's case, 12 Ch. D. 755 ; (/) § 101. See Ex parte Brown,
Ex parte Brown, ib. 823 ; Re White- 12 Ch. D. 823; Professional Life
house <£• Co., 9 ib. 595. Ass. Co., 3 Ch. 167 ; Gibbs and
(d) § 38, cl. 7 ; Ex parte Cannon, West's case, 10 Eq. 312 ; a case of
30 Ch. D. 629, and see Addlestone an insurance company, with the
Linoleum Co., 37 Ch. D. 191 ; and § usual restriction as to liability
101. Observe that the word member being confined to the funds of the
is used in § 38, and contributory in company.
§ 101. (g) § 38, cl. 7, and § 101.
(e) § 101. See Gill's case, 12 Ch. (h) 1 Ch. 528, and see Black &
D. 755 ; Be Wliitehouse tfc Co., 9 ib. Co.'s case, 8 Ch. 254 ; Barnett's case,
595. This differs from the rule 19 Eq. 449 ; Calisher's case, 5 Eq.
which prevailed under the acts 214, as to calls made before the
of 1856-58. See 21 & 22 Vict. c. winding up, and Ex parte Mackenzie,
60, § 17, and Garnet and Moseley 7 Eq. 240. The Judicature act has
Gold Mining Co. v. Sutton, 3 B. & not altered the law as laid down in
Sm. 321 ; Barretts case, 4 De G. J. this case, see ante, note (c).
& Sm. 416 and 756.
SET-OFF.
743
a creditor of a limited company, who was also a contributory Bk. IV. Chap. 1.
in it, was not bound to pay the full amount remaining unpaid
on his shares before receiving any dividend on his debt ;
2. That he was not entitled to deduct the calls made or to be
made upon him from his debt and to receive a dividend on the
balance ; 3. That he was entitled to prove his whole debt, and
to receive a dividend on it pari passu with other creditors, and
was liable, on the other hand, to pay all calls upon him in full
as they might be made.
It might be inferred from this decision that the only right
to set off in such cases is to deduct sums actually due and pay-
able by the contributory in respect of calls from the amount
of dividend actually payable to him in respect of his proof.
But it has since been held that where a debt is proved by a
contributory, the company is entitled to set off all calls due
from him and actually in arrear at the time of proof (i), just
as it could set off any other debt due by the contributory to the
company against a debt due by the company to him.
The provisions of the act and the above decisions do not, Exceptions to
this rule.
however, apply to debts or costs which have become due to
contributories from the company acting by its liquidators in
the course of the winding up (k) ; nor where the contributory
is bankrupt, or his estate is being administered under the
bankruptcy acts ; for then, whether the liquidator proves
against the bankrupt's estate (I), or whether the trustee in
bankruptcy proves against the company (ra), the balance due
from the one estate to the other, after setting off all mutual
debts and credits, is all that can be proved. Moreover, if two
debts have been actually set off before the winding up com-
menced, the liquidator cannot disturb the set-off so made (n) ;
but agreements as to set-off made when the company is in diffi-
culties, are regarded very suspiciously, and may be altogether
(i) See ante, p. 557. See, also, (I) Re Duckworth, 2 Ch. 578 ; Ex
Ex parte Mackenzie, 7 Eq. 240, where parte Strang, 5 Ch. 492.
the proof was by the assignee of a (m) Garralli and Haggard's claim,
debenture. 4 Ch. 174, and the last note.
(k) See Ex parte Clark, 7 Eq. 550 ; (n) Habershon's case, 5 Eq. 286,
see, also, Ex parte Smith, 3 Ch. and see Spargo's case, 8 Ch. 407, and
125 ; General Exchange Bank, 4 Eq. others of that class.
138.
744
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 9.
Observations
on§ 101.
Proceedings
under § 169 of
the Companies
act, 1862.
Companies act,
1867.
void as against creditors on the ground of fraudulent prefer-
ence ; and in a case where the agreement was with a director
and related to a debt secured by a debenture not then payable,
the agreement was held invalid (o).
Indeed, the better opinion seems to be, that agreements for
paying calls by setting off debts, which may afterwards become
due from the company, are not binding on the company, at
least when it is being wound up (p).
It is worthy of remark, that § 101, which prevents set-off in
favour of the contributories of limited companies, applies in
terms only to cases in which a summary order is made upon a
contributory for payment of money due by him to the com-
pany ; and in one case it was held that where a company was
being wound up voluntarily, and the liquidator brought an
action for calls made in the winding up, a plea of set-off
afforded a good defence to the action (q). But this decision
has been justly criticised, and cannot be relied upon (r). The
mode of winding up is immaterial with respect to the right of
set-off ; and in no case can a contributory defeat an action by
a limited company in liquidation by a set-off, unless he can
show that all the creditors are paid, and that as between
himself and the other contributories, the set-off ought to be
allowed.
A director has no right to set off a debt due to him from
the company against a claim made by the liquidator under
§ 169 (•).
The right of a contributory to set off a debt due to him
from the company against calls made on him is very materially
affected by the Companies act, 1867 (t) ; and if, in a case to
(o) Habershon's case, 5 Eq. 286.
(p) See Pellatt's case, 2 Ch. 527 ;
Calisher's case, 5 Eq. 214 ; Barge's
case, ib. 420 ; 30 & 31 Vict. c. 131,
§25.
(q) Brighton Arcade Co. v. Dow-
ling, L. R. 3 C. P. 175.
(r) JVhitehouse & Co., 9 Ch. D.
595 ; Black & Co.'s case, 8 Ch. 254 ;
Sankey Brook Coal Co. v. Marsh,
L. R. 6 Ex. 185 ; and see 10 Eq.
330, per V.-C. Malins in Gibbs and
West's case.
(s) Carriage Co-operative Supply
Association, 27 Ch. D. 322 ; Ex
parte Petty, 21 Ch. D. 492 ; Pearseh
case, ib. 498, n. ; Flitcroft's case, ib.
519. And see Ex parte Theys, 25
Ch. D. 587, where the director had
assigned the debt due to him before
an order was made against him.
(t) § 25.
CONTRIBUTORIES. 745
which that act applies, a holder of nominally paid-up shares Bk- g^,"tcj2P' L
has a call made on him in respect of them, he cannot avail
himself of a set-off, agreed upon when the shares were issued,
unless the agreement has heen duly registered (u). But it is
conceived that the act in question does not preclude a set-off
against a call in any other case in which such set-off is admis-
sible under the Companies act, 1862.
SECTION X.— CONTRIBUTORIES.
1. The list of contributories.
The persons who, on the winding up of a company, are com- List of contri-
pellable to pay its debts by contribution amongst themselves,
are termed contributories (x) ; and one of the first duties of the
Court, after making a winding-up order, is to settle the list of
contributories (y). Who are the persons to be put on the list
will be examined presently. With respect to settling the list,
it is to be observed— 1. That the Court has power to rectify
the company's register of members (z) ; 2. That persons who
are contributories in their own right are to be distinguished
from persons who are contributories as the representatives or
as being liable to the debts of others ; and 3. That where the
personal representative of a deceased contributory is placed
on the list, it is not necessary to add his heirs or devisees,
although they may be added if the Court thinks fit (a).
It is the duty of the official liquidator to prepare the list of Settling the list.
contributories, and to leave it with the judge at chambers {b).
The list is to be verified by affidavit, but it may, from time to
time, be varied or added to by the official liquidator by leave
of the judge (c). Upon the list being left with the judge, the
{%) Cleland's case, 14 Eq. 387 ; § 98.
Pagin and Gill's case, 6 Ch. D. (a) § 98 and § 35.
681. (a) §99.
(x) This word was introduced by (b) Rule 29.
11 & 12 Vict. c. 45, § 3. (c) lb., and see the forms in the
(y) See the Companies act, 1862, schedule to the Rules, Nos. 24 to 32
746
WINDING UP BY THE COURT.
Bk. IV. Chap. l. official liquidator obtains an appointment to settle the same;
- and it is bis duty to give notice in writing of the appointment
to every person included in the list, whether resident within
the jurisdiction of the Court or not (d), stating in what cha-
racter and for what number of shares or interest he is
included (e). Similar notices are to be given when any varia-
tion or addition is made to the list (/). The notices must be
served four clear days before the day appointed for settling (g).
The result of the settlement of the list is certified by the chief
clerk ; and certificates may be made from time to time for the
purpose of stating the result of the settlement down to any
particular time, or as to any particular person or variation (/?).
A person may be summoned to be sworn and examined in
chambers, in order to determine whether he ought to be a
contributory or not, although the list may have been already
settled (t).
Forms of lists of contributories are given in the schedule to
the rules issued under the Companies act, 1862 (k).
Every contributory on the list, and every creditor whose
debt or claim is allowed, is entitled to attend the winding-up
proceedings at his own expense (I) ; and therefore to attend on
the settlement of the list of contributories. The judge, more-
over, can appoint persons to represent contributories and
Forms of lists
Attendance on
settling list.
(d) See Nathan, Newman & Co.,
35 Ch. D. 1, as to service abroad.
(e) Rule 30.
(/) lb.
(g) lb. See the forms of notice
and affidavit of service in schedule
3, Xos. 26 and 27. As to notices
under the older acts, see 12 & 13
Vict. c. 108, §§ 26 and 32, which
altered the law as to notices laid
down in Glaholme's case, 1 De G. &
S. 583, and Hutchinson's case, ib.
.->63.
(h) Rule 31.
(i) See Re Tiu Esgair Mwyn Min-
ing Co., 8 W. R. 660, and ante, p.
689 et sea.
(k) See Forms Nos. 24, 29, 31.
For the form under the older
winding-up acts, see 1 De G. &
S. 548.
(I) Rule 60. This rule does not
give a creditor the right to be heard
in argument, nor to his costs if his
attendance is unnecessary, Lord R.
Montagu's case and Grey's case, W. N.
1888, 137, nor to attend proceedings
under § 115, see ante, p. 691. As
to his right of cross-examination, see
Brampton v. Longtown Rail. Co., 11
Eq. 428. See, also, Bugg's case, 2 Dr.
& Sm. 452, where some of the con-
tributories sought to put on the list
a person omitted by the liquidator,
and see infra, note (z).
THE LIST OF CONTRIBUTORIES. 747
creditors to attend the settlement of the list of contributories Bk- IV- ChaP- l-
n xi • • • -,- Sect- 10-
as well as other matters arising on the winding up (m).
With respect to the power of the liquidator to vary the list Resettling the
after it has been once settled, it is to be observed — 1. That
this can only be done by leave of the judge ; and 2. That no
time is limited after which it may not be varied with such
leave (n). It therefore seems that even after a person has
been settled on or off the list, and the time for applying to
vary the certificate has expired, the judge has still power to
vary the list if, in his judgment, it ought to be varied. But
it need hardly be said that this power is exercised with great
caution ; and only under special circumstances, and when
there are good reasons for not having made the application
sooner.
As instances in which the power to vary and re-settle the Alexander's
list was exercised on the discovery of material facts, reference
may be made to Alexander's case and Shcic ell's case. In Alex-
ander's case (o), shares had been transferred, mala fide, by A.
to B. ; before the facts were known B. was put on the list,
and actually attached for non-payment of calls upon him ; but
that was held not sufficient to prevent A. from being placed
on the list after the invalidity of the transfer had been dis-
covered.
In ShewelVs case (p) the shares of the company were trans- Shewell's case,
ferable to bearer, and a broker had purchased shares for his
own solicitor, and was improperly put on the list, and calls
were made on him. He referred the matter to the solicitor,
who paid the calls out of his own money, and the broker heard
no more about them. The solicitor died, and further calls
were made on the broker, and he then applied to have his
name removed from the list of contributories, and his name
was removed accordingly.
(m) Eule61. See M elver's claim, (?i) Rule 29.
5 Ch. 424, and Ex parte Oakes and (o) 9 W. E. 410.
Peek, 3 Eq. p. 634. The creditor's {p) 2 Ch. 387. For other in-
representative appointed under 20 & stances, see Hopkin's case, 4 De G. J.
21 Vict. c. 78, had a right to attend & Sm. 342 ; Ex parte Curzon, 3 Drew.
at the settling of the list, Mexican 508 ; CrosfiekVs case, 4 De G. & S.
and South American Mininy Co., 26 338, and 2 De G. Mc. & G. 128 ; Ex
Beav. 172, and see infra, note (c). parte Best, 1 Sim. N. S. 193; Ex
748
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Laches.
Power to rectify
the register of
members.
Appeals, &c.
This case is valuable as showing that mere laches on the
part of a contributor}'- in allowing his name to remain on the
list does not necessarily preclude him from having it removed
if the company has not been damnified by his delay.
As a rule, however, where a person has been settled on the
list in chambers, he must apply to the judge within three
weeks if he desires to question the decision (q). Moreover, a
judge of the High Court cannot now rehear his own decision;
if not acquiesced in it must be appealed against in proper
time (r). But where there are several cases of the same kind,
all determined alike, and one of them is selected as a test
case and is successfully appealed, the decisions in the others
may, it is conceived, be rectified by the Court below without
separate appeals (s).
In order to settle the list of contributories properly the
Court has power to rectify the company's register of mem-
bers (t) : and where a company is being wound up by the
Court, the Court, when settling the list of contributories, will
rectify the register without any special application for that
particular purpose (u) ; but the power to rectify the register
cannot, it is conceived, be exercised by the liquidators of a
company which is being wound up voluntarily or subject to
the supervision of the Court ; and where in such cases recti-
fication is necessary the Court must be applied to (x).
The practice with respect to certificates settling the list of
contributories, and to applications to vary them, and to appeals
from orders settling persons on or off the list of contributories,
parte Kelly's Executors, 9 W. R. 329,
and Re The Esgair Mwyn Mining
Co., 8 ib. 660.
(q) Dickson's case, 12 Ch. D. 298.
(r) St. Nazaire Co.. 1 2 Ch. D. 88,
see ante, p. 698.
(s) See Ex parte Munday, 31 Beav.
206. But see the last note. Where
no test case has been selected, see
Esdaile v. Payne, 40 Ch. D. 520.
(t) See §§98 and 35, and ante, p.
120, and infra, p. 755.
(u) See § 98, Breckenridge's case,
2 Hem. & M. 642 ; Whittet's case,
2 De G. & J. 577 ; Birch's case, ib.
10.
(x) Power to rectify the register
may at first sight be supposed to be
given hy § 133, cl. 8, taken in con-
nection with § 98. But a closer
examination of the words of those
sections, and of § 35, will, it is con-
ceived, show that this is not so.
See Gilbert's case, 5 Ch. 559 ; but see
Brighton Arcade Co. v. Dowling, L. R.
3 C. P. p. 187.
THE LIST OF CONTRIBUTORIES. 749
is the same as in other cases (y). An appeal from the decision Bk- IJ- Cb*P- 1-
of the judge acting in the winding up, may be made not only
by a person who contends that he is wrongly put on, or
excluded from the list, and by the official liquidator on behalf
of the company, but also by any other contributory (z), or (it
is presumed) by any creditor who, under the same act, is a
party to the winding up. The question on the appeal being
simply whether a given individual ought or ought not to be on
the list, it is not requisite to bring before the Court another
person who will have to be put on the list, if the individual in
question is struck off (a). And an appeal cannot be objected
to on the ground that there is no means of settling the person,
who is liable for the shares if the appeal is successful, on the
list of contributories (b). The usual parties to the appeal are
the alleged contributory and the official liquidator (c).
No person ought to be settled on the list of contributories No person to be
until his liability to contribute to some debt, liability, or his liability to
loss of the company being wound up has been ascertained : ^biis^eY8
he ought not, for example, to be put on the list " in re-
spect of an}r expenditure which he may be proved to have
authorised " (d).
Under the acts of 1848 — 49, it was ultimately held that if As regards per-
there were two classes of persons liable to creditors, but one liable.
of those classes was bound to indemnify the other against
all demands, the persons composing the class secondarily
(y) See § 124 and rule 56, Dickson's Ir. Eep. 7 Eq. 362.
case, 12 Ch. D. 298, and ante, p. (a) See Curtis' case, 6 Eq. 455 ;
697 et seq. Sanderson's case, 3 De G. & S. 66 ;
(z) See Bush's case, 6 Ch. 246 ; Hall's case, ib. 80.
Ship's case, 2 De G. J. & S. 544, and (6) Duchess of Westminster Silver
Downes v. Ship, L. R. 3 H. L. 343, Lead Ore Co., 10 Ch. D. 307.
where a contributory obtained leave (c) The creditor's representative
to intervene. See, also, Blackburn's appeared in Nicol's case, 3 De G. &
case, 3 Drew. 409, and 8 De G. M. & J. 387, but was not allowed to be
G. 177. Inre Bodmin United Mines, heard. In Ex parte Finlay &• Co.,
23 Beav. 385, the official manager 27 L. J. Ch. 658, his costs were
contended that a person ought to be allowed, and see ante, note (m). As
on the list ; some contributories ap- to the costs of the liquidator, see
plied to be heard on the same side, Musgrave and Hart's case, 5 Eq.
but the Court declined to hear them. 193.
See Re Norwich Yarn Co., 13 Beav. (d) Ex parte Riddell, 1 Sim. N. S.
428, note ; and see Re Etna Ins. Co., 402.
750
WINDING UP BY THE COURT.
Bk. IV. Chap. l. liable ought not to be on the list until it became necessary
Sect. 10. & . . ■ . t. . . , . ,
to put them there, m order that justice might be done as
between themselves (e).
Past members. So, under the Companies act, 1862, past members are only-
liable to contribute in the event of the present members being
unable to discharge their liabilities; and until there is evidence
to show that recourse must be had to the past members, they
are not put on the list at all (/).
1. Under acts
of 1848-49.
2. Who are contributories.
General observations.
Under the Winding-up acts of 1848 — 49 (g), the contributories
were —
1. Persons entitled to shares of the assets or accruing profits
of the company at the time of the presentation of the petition
for winding it up ; and,
2. Other persons liable to contribute to the payment of any
of the debts, liabilities, or losses of the company.
But with respect to both classes, it was held that the obli-
gation to contribute with others was the real test of liability
to be put on the list of contributories. There might, there-
fore, be shareholders who were not contributories ; e.g., share-
holders entitled to be indemnified by the company against all
losses : and there might be contributories who were not share-
holders, e.g., persons who had simply agreed to take shares
from the company. Direct liability to creditors was not, how-
ever, the test whereby to determine whether a person was
or was not a contributory under the acts of 1848 — 1849 : for
a person may be liable to creditors, and yet not be liable
to contribute with other persons to the payment of those
creditors ; and a person may not be liable to the creditors
at all, and yet may, as between himself and others who are
liable to them, be bound to contribute with those others to
the discharge of the creditors' demands (h).
(e) See infra, class B.
(/) See infra, class B. This
practice is warranted by § 38, cl. 3,
and § 74.
(g) 11 & 12 Vict. c. 45, § 3.
(h) The dictum to the contrary in
1 Mac. & G. 315, is opposed to later
views. See 1 De G. & S. 560, 563 ;
WHO ARE CONTRIBUTORIES. 751
The Companies act, 1862, draws a distinction between, Bk"sV't°ioP' *"
1. Companies formed and registered under the act, or
2. Under the
under the repealed acts of 1856 — 1858 (i). Companies act,
2. Companies registered under the act, or the acts of
1856 — 1858, but not formed under it or them (A;).
3. Unregistered companies (I).
1. With reference to companies of the first class, the act l.) Companies
formed under
declares that the term contributory shall mean every person act.
liable to contribute to the assets of a company under the act
in the event of the same being wound up(ra). In order to
ascertain what persons are thus liable, recourse must be had
not only to § 74 but also to sections 38 and 76 — 78, the effect
of which is apparently to make the following persons, and
those only, contributories in the companies now under con-
sideration, viz.,
1. Existing members (n), i.e., members at the time of the
commencement of the winding up (o).
2. Past members, i.e., persons who were members and who
have not ceased to be members for one year prior to the time
above mentioned (^>).
3. The legal personal representatives of such members and
past members (q).
4. Their heirs and devisees (r).
5. Their assignees in bankruptcy (s).
6. Their husbands (t).
The third, fourth, and fifth classes are only liable to be put
on the list in their representative capacities, unless they them-
selves fall within one of the two first classes. The position of
husbands has been greatly modified by the Married women's
property act, 1882, as will be seen hereafter.
Former members who have ceased to be members for a year
or more before the presentation of the winding-up petition are
not contributories at all. Former members who have ceased
3 ib. 223, 265 ; 3 Mac. & G. 187 ; 1 (n) § 38.
De G. M. & G. 576, and 3 De G. & (o) See §§ 84 and 153.
J. 421. (p) §§ 38 and 84.
(i) See §§74 and 176. (ry) § 76.
(k) See §§ 177 and 196. (r) lb.
(Z) § 200. (s) § 77.
(m) § 74. (t) § 78.
752
WINDING UP BY THE COURT.
Observation on
word "mem-
bers."
r,k. IV. Chap. l. to be members within that time are liable to be made contri-
- butories in the event of the existing members being unable to
satisfy their contributions (u) ; but even then past members are
only liable in respect of debts and liabilities of the company
contracted before they ceased to be members (x).
From the above remarks it will be seen that in order to
understand the exact signification of the term " contributory "
as used in § 74, it is indispensable to understand accurately
the meaning of the word "member" as used in § 38. To do
this, however, will be found extremely difficult; for not only is
the description of a member given in § 23 open to the remarks
made upon it in an earlier part of this treatise (see p. 119),
but the register, which that description assumes to be correct,
is liable to be rectified when the question of contributory or no
contributory has to be determined (y).
2. As regards companies registered under the act of 1862,
or under the acts of 1856 — 1858, but not formed under it or
them, it seems, 1, that all persons are contributories who come
within the meaning of that word as applied to companies
formed and registered under the act of 1862 ; 2, that all
other persons are contributories in respect of the debts and
liabilities of the company contracted prior to registration,
who are liable at law or in equity to pay or contribute to the
payment of any of such debts or liabilities, or to pay or con-
tribute to the payment of any sum for the adjustment of the
rights of the members amongst themselves in respect thereof,
or to pay or contribute to the payment of the costs of winding
up, so far as relates to such debts or liabilities (0). The
provisions already noticed respecting representatives, heirs,
devisees, assignees, and husbands, also apply to this last class
of contributories (a).
3. With respect to unregistered companies, the act declares
2.) Companies
registered but
not formed
under the act.
3.) Unregistered
companies.
(u) § 38, cl. 3.
(z) lb. cl. 2.
(y) §§ 98 an(i 45- Ante, P- 60 et
seq., 120 et seq. And see Arnot's
case, 36 Ch. D. 702 ; TVinstone's case,
12 Ch. D. 239, and compare Sanders
case, 20 Ch. D. 403, and Great Britain
Mutual Life Assurance Society, 16
Ch. D. 246.
(z) § 196, cl. 5. See, as to the
application of the older authorities
to this class of cases, LuaraVs case, 1
De G. F. & J. 533 ; Ex parte Dixon's
Executors, 1 Dr. & Sm. 225.
(a) lb., and §§ 74-78.
CONTRIBUTORIES. 753
that every person shall be a contributory who is liable at law Bk- IV- ChaP- 1-
. J Sect. 10.
or in equity to pay or contribute to the payment of any debt or
liability of the company, or of any sum for the adjustment of
the rights of the members amongst themselves, or of the costs
of winding up (b). The representatives, heirs, devisees, as-
signees, and husbands of such persons are also contributories
as above (c).
Notwithstanding the words "liable at law or in equity to Liability to
pay," &c, which occur in §§ 196 and 200, a transferor of pay'
shares who may be a debtor to the company in respect of calls
due before the transfer, is not a contributory as a present
member. Such a person ought not to be on the register
of members ; he is a mere debtor to the company (d).
Although the above are the main provisions of the Com- Distinctions
panies act, 1862, bearing directly on the question who are Acts of 1848-49
contributories and who not, that question by no means depends jgLthe Act of
solely on the sections referred to.
In the first place, it must be borne in mind that creditors of Effect of rights
companies registered under the act of 1862, have no remedy °
against the members individually, except under the winding-up
provisions of that act. This circumstance at once goes far to
destroy the analogy between contributories under the act of
1862, and contributories under the acts of 1848 — 1849 ; for
although it might be very proper, under the last-mentioned
acts, to hold that liability to creditors was no test of liability
to be put on the list of contributories, the same doctrine cannot
be applied under the act of 1862 without placing the creditors
in a much worse position than the act itself contemplates.
This has been decided by the House of Lords in Overend Oakes v-
and Gtirneys Company, Limited (e), where it was held that
persons, assumed to have been induced by fraud imputable to
the company to take shares in it, and having therefore on this
assumption, and as between themselves and the company,
rights of rescission and indemnity, but who had not exercised
(h) § 200. See the last note but L. 325, affirming 3 Eq. 576. See,
one. also, Tennent v. City of Glasgow
(c) §§ 200 and 74-78. Bank, 4 App. Ca. 615 ; Stone v.
(d) Ex parte Littledale, 9 Ch. 257. City ami County Bank, 3 C. P. D.
(e) Oalces v. Turquand, L. It. 2 H. 282.
L.C. 3 c
-4-
754
WINDING UP BY THE COURT.
Houldswortli v.
City of Glasgow
Bank.
Liability of
members after
winding up.
Bk. rv. Chap. 1. those rights before the winding up commenced, ought to be on
Sect. 10. . . _. „ ,
the list of contnbutories, in order that the creditors ot the
company might be paid. To this extent, therefore, the credi-
tors of a company being wound up have greater rights against
the contributories than the company itself has before it is
wound up (/).
Again, in Houldsworth v. City of Glasgow Bank (g), a share-
holder induced to become such by the fraud of the company,
and who on the authority of the last case was settled on the
list of contributories, was held not entitled to prove for the
damages he had sustained by reason of the fraud. It was
assumed that he might have maintained an action for damages
against the company if it had not been wound up.
It has, indeed, been said by very high authority, that even
after a winding-up order the creditors of a company formed
and registered under the act of 1862, are creditors of the com-
pany only, and not of the contributories individually, and that
the creditors can only reach the contributories through the
company (h). But this view, if logically carried out, involves
as a consequence that the creditors can have no greater rights
against the contributories than the company in its corporate
capacity itself has. This consequence is not consistent with
the decisions above referred to, nor with other cases in which
persons entitled to indemnity from the company may never-
theless be contributories for the payment of its debts (i).
Whether, however, the true view is, that after a winding-up
order the creditors have against the individual members rights
which cannot be enforced before the winding-up order ; or
whether the true view is, that after a winding-up order the
company, as a trustee for its creditors, has greater rights
against its contributories than it had before, is not perhaps
(/) See, further, on this point,
Wiltshire Iron Go. v. Great Western
Rail. Co., L. E. 6 Q. B. 101 and 776 ;
and as to set-off, ante, p. 741 et seq., and
fraudulent preferences, ante, p. 668,
and under § 165, ante, p. 693 et seq.
(g) 5 App. Ca. 317. See, also,
Addlestone Linoleum Co., 37 Ch. D.
191.
(h) See Ship's case, 2 De G. J. &
Sm. 544 ; Be Duckworth, 2 Ch. 578 ;
Webb v. Whiffin, L. E. 5 H. L. p.
734, per Lord Cairns.
(i) See Lord Selborne's observa-
tions in Black db Co.'s case, 8 Ch. 254
(at pp. 261, 262), and Chapman and
Barker's case, 3 Etp 361.
CONTRIBUTORIES. 755
very material. But one or other of these views must, it is Bk- IV- chaP- *
i ■,, i , , . Sect. 10.
submitted, be correct ; any other appears inconsistent with
the decisions before referred to, with the course of legislation
on the subject of Joint Stock Companies, and with those pro-
visions of the act of 1862, which are introduced expressly for
the benefit of creditors, e.g., those provisions which relate to
the register of shareholders, the rights of creditors to obtain
winding-up orders, the effect of such orders, the rights of
creditors under them, fraudulent preference and set-off.
Nay, more, the position of shareholders in companies, Bi
whether solvent or insolvent, is very different after an order to
wind up from what it was before the order. This was pointed
out by Jessel, M. R., in an admirable judgment in Burgess's
case (k), and must never be lost sight of.
Another circumstance which renders it important to be Effect of power
careful before relying on the older decisions on the question register.
of contributories, as authorities under the act of 1862, is the
power given to the Court to rectify the company's register of
members (I). Tins power renders the actual state of the
company's register of little or no consequence if it is shown to
be wrong.
A third point which it is necessary to bear in mind when Alterations in
. . .. . . status after
applying the older decisions to modern cases, is the power of commencement
the Court to sanction the registration of transfers after the of winding up"
commencement of the winding up. This subject will be con-
sidered hereafter, when treating of the position of persons who
have ceased to hold shares in the company, and it will then be
seen that under the older acts, sellers of shares were held to be
contributories under circumstances which, if they were now to
occur, would render the buyers contributories in their stead.
(k) Burgess's case, 15 Ch. D. 507, (I) See §§98 and 35, and ante,
where shares had been taken on p. 120. This power was first con-
the faith of a fraudulent prospectus, ferred by 19 & 20 Vict. c. 47, § 25.
and their holders were held to be See as to mandamus, &c, ante, pp.
contributories, although the assets 61 and 603.
exceeded the debts and costs.
3 c 2
'5G
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Present mem-
bers.
Past members.
A. list.
B. list.
Classification of contributories.
Contributories are primarily divisible into three classes,
viz. : 1, contributories as present members ; 2, contributories
as past members ; 3, their respective representatives.
Persons who are contributories as present members are divi-
sible into four classes, viz. : — •
1. Duly constituted shareholders.
2. Persons who are estopped from denying that they are
shareholders.
3. Persons who are hound by agreement to become share-
holders.
4. The representatives of persons belonging to one or other
of these classes.
Persons who are contributories as past members are those
who would have been contributories as present members if they
or those whom they represent had not ceased to hold shares
before the commencement of the winding up.
In practice, the contributories as present members are settled
on what is called the A. list ; whilst the contributories as past
members are settled on what is called the B. list.
As regards present members there does not appear to be any
substantial difference between companies formed and registered
under the Companies act, 1862, and other companies (m) ; but
as regards past members there is a very material difference, as
will be seen hereafter.
It is proposed first to investigate the general principles
applicable to the first three classes and then to notice their
application to special cases of difficulty. The 4th class, and
lastly Past members, will follow and complete the subject.
A. Contributories as present members.
1. Duly constituted shareholders. (See Bk. I., cc. 2 and 4.)
Subject to one or two exceptions all persons who, at the
time of the commencement of the winding up of a company (n),
are duly constituted shareholders therein, are contributories in
(m) See Ex parte Littledale, 9 Ch. 257.
(n) Ante, p. 664.
CONTRIBUTORIES. ESTOPPEL.
757
it. It is immaterial whether the persons in question were the Bk- ^V'C1hQP'
original founders of the company, or whether they have become
shareholders by a direct allotment of shares to themselves, or
whether they have become shareholders by a transfer of shares
previously held by some one else. These general propositions
require no comment. They apply to persons who are made
shareholders by special acts of Parliament (o) ; to all classes of
members and shareholders where there are several in the same
company (p). The particular cases in this class will be found
under the heads 5 to 11, and under head B.
The exceptions are persons under disability and persons like
ambassadors (q), and holders of fully paid-up shares, who are
not liable to any call or contribution and who therefore cannot
be settled on the list against their will although they are entitled
to be on the list to obtain their share of any ultimate surplus
there may be.
2. Persons who are estopped from denying that they are
shareholders.
It has been already seen that persons who have not com- Persons estopped
/» t • i i £. irom denying
plied with all prescribed formalities may be estopped irom that they are
denying that they are shareholders (r). shareholders.
Even before there was any power given to the Court to
rectify a company's register of shareholders, it was settled that
all persons who, when a petition for winding up a company
was presented, were estopped from denying that they were
shareholders in that company, were also contributories in it,
unless they could show good reason to the contrary. It is
wholly immaterial whether such persons are or are not
properly described in the company's register of share-
holders (s), or whether they are or are not shareholders in
(o) Kincaid's case, 11 Eq. 192 ; (q) See Magdalena Steam Co. v.
Forbes' case, 19 ib. 353 ; O'Brien's Martin, 2 E. & E. 94 ; of course,
case, Ir. Rep. 11 Eq. 422. they can receive nothing without
(p) South London Fish Ma/rket Co., being charged in account with
39 Ch. D. 324 ; Winstone's case, 12 calls.
Ch. D. 239. Compare Great Britain (r) See, on this subject, ante, pp.
Mutual Life Assurance Society, 16 ib. 48 et seq.
246. (s) Yelland's case, 5 De G. & S.
758
WINDING UP BY THE COURT.
Bk. IV. Chap. 1,
Sect. 10.
Straffon's Execu-
tors" case.
Persons who
have acted and
been treated as
shareholders,
although they
have not com-
plied with
formalities.
the strict sense of the term, and, as such, liable, in the case
of an unregistered company, to be sued by creditors of the
company.
Strajfon's Executors' case (t) is a leading authority on this
head. There the provisions of a company's deed of settlement
required that all transfers of shares should be made in a
particular manner, with the consent of the directors testified in
a particular manner, and that the transferee should execute the
company's deed of settlement. It was also expressly declared
that no transferee should be entitled to any of the privileges
of a shareholder until he had executed the deed of settlement.
A Mr. Straffon bought various shares which were, in fact,
transferred to him, and in respect of which certificates and
dividends were, in fact, given and paid to him. The shares
had never been transferred to him in the manner prescribed
by the company's deed of settlement ; nor had he ever executed
that deed. He had, however, executed a sufficient deed in
respect of some of the shares, but not in respect of the others ;
and his executors had been returned to the stamp office as
shareholders in respect of all his shares. On the winding up
of the company after his death, his executors were made con-
tributories in respect of all his shares ; it being perfectly
clear that, although the prescribed formalities had not been
rigorously complied with, enough had been done to estop both
the company and Mr. Straffon from denying that he was
virtually a shareholder in the company in respect of them all.
So an irregularity in a transfer of shares will not preclude
the transferee from being a contributory if the transfer has been
registered (u). Indeed, it is now clearly settled, as a general
395, and others of that class noticed
under the next head (3).
(t) 1 De G. M. & G. 576, and
4 De G. & S. 256. See, also, Ex
parte Dixon's Executors, 1 Dr. & Sm.
225 ; Maguire's case, 3 De G. & S.
31 ; Sanderson's case, ib. 66, and 3
H. L. 698 ; Gordon's case, 3 De G.
& Sm. 249 ; and the following cases
arising in the liquidation of the City
of Glasgow Bank, Bell and Lang's
case, 4 App. Ca. 547 ; Ker's case, ib.
549 and 598, and Guninghame v.
City of Glasgow Bank, ib. 607.
(u) Weikersheim's case, 8 Ch. 831,
where the registration was some-
what irregular. See, also, Bush's
case, 6 Ch. 246, and Murray v. Bush,
L. K. 6 H. L. 37, where a person
who had irregularly transferred his
shares was held not to be a con-
tributory, and compare that case with
Keene's Executors' case, 3 De G. M. &
G. 272 ; Brown's case, 19 Beav. 97 ;
CONTRIBUTORIES. ESTOPPEL. 759
rule, that where a person has acted, and been treated as a Bk- JV« cJ»ap. 1.
1 , Sect. 10.
shareholder, he will be a contributory, notwithstanding the non-
observance of those formalities which, according to the strict
letter of the company's deed or articles of association, ought
to be complied with before a person is entitled to share profits,
or enjoy the other rights or privileges of a shareholder (x).
In applying this principle, however, care must be taken to Qualifications
rr J n x L of these prin-
ascertain whether the conduct relied upon is referable to an ciples.
agreement to take shares or not : for whilst on the one hand if
there be an agreement binding or entitling a person to take
shares, his conduct will effectually preclude him from taking
advantage of any informalities or ii regularities, and even from
repudiating the agreement if it be voidable at his option ; yet
if he has neither become nor agreed to become a shareholder,
the circumstance that he has acted as a shareholder will not
necessarily render him a contributory. Thus it was decided,
under the old winding-up acts, that a person who had never
become a shareholder, and had never agreed to take shares,
did not become a contributory in respect of shares improperly
allotted to him, although he had executed the company's deed
of settlement («/) ; or had attended meetings of shareholders (z) ;
and even under the Companies act, 1862, a person registered
as the holder of shares illegally issued pursuant to a void
scheme for amalgamation has been held not to be a con-
tributory, although he has acted as a shareholder and a
director (a).
The application of these principles to directors who have
acted as such without being properly qualified, will be
examined hereafter under head (6).
Henderson's case, ib. 107, where were really taken, but dividends
persons who had transferred their were paid upon them ; Bernard's
shares irregularly were held con- case, 5 De G. & S. 283.
tributories. (y) As in Coleman's case, 1 De G.
(x) See, in addition to the cases J. & Sin. 495, noticed infra, under
cited in the last two notes, Ex parte head 4 d).
Contract Corporation, 3 Ch. 105 ; (z) As in Bunn's case, 2 De G. F.
Challis case, 6 Ch. 266; Leishman & J. 275, infra, under head 4 d).
v. Cochrane, 1 Moore, P. C. N. S. (a) As in Stace and Worth's case,
315 ; Robinson's Executors' case, 15 4 Ch. 682, infra, under head 4 b).
Jur. 438, and on appeal, 2 De G. See, also, Smith's case, 4 Ch. 611.
Mac. & G. 517, where no shares
760 WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
shares.
3. Persons who are bound by agreement to become shareholders.
What constitutes a valid agreement with a company to take
shares, and what not, has been examined already, see Book L,
c. 1.
Speaking generally, a person who has agreed to become a
member of a company being wound up is a contributory
whether he is actually a member or not ; and, on the other
hand, a person who is not a member, and has not agreed to
become one, is not a contributory. This will be seen here-
after (b).
The position of persons who have agreed to take shares not
from the company but from persons who are already share-
holders will be examined under the head of Past Members.
It has already been seen that transferees of shares who have
been accepted by the company as shareholders, are contribu-
tories, although they may not have complied with all those
formalities which ought to have been observed in the trans-
fer (c) : and it will be seen hereafter that transferees of shares
who have not been accepted by the company as shareholders
were not contributories under the older winding-up acts, and
are not contributories under the Companies act, 1862, except
in those cases in which there is power to rectify the company's
register (d).
Allottees of With respect to persons who have agreed to take shares
directly from the company, it will be convenient to distinguish
unconditional from conditional agreements. The latter will
be separately considered hereafter (e).
Further, in dealing with cases resting on agreement, it is
important to distinguish a concluded agreement, whether
simple or conditional, from that which is in truth no agree-
ment, in consequence of there not being a final assent by both
parties to the same terms (/).
(b) Infra, under the head 4 a). pare Penteloios case, 4 Ch. 178, with
(c) Ante, p. 758. Peek's case, ib. 532. And see the
(d) See infra, under head B. judgment of L. J. Cotton in Arnot's
(e) Infra, under head 4 d). case, 36 Ch. D. 702.
(/) See ante, p. 13 et sea. Com-
CONTEIBUTOMES. — ALLOTTEES OF SHARES. 761
Bk. IV. Chap. 1.
a) Allottees of shares in formed companies. Sect. 10.
The following are the leading older authorities for the pro-
position that a person who agrees to take shares from a com-
pany is a contributory : —
Yelland's case, 5 De 6. & S. 395, affirmed on appeal, 16 Jur. 509, where
the allottee had not executed the company's deed.
Sharpus' case, 3 De G. & S. 49.
Mansfield's case, 3 De G. & S. 58, and on appeal, 2 M. & G. 57.
In these the allotment was made before the company was com-
pletely registered. The allottees did not execute the deed, and
the proposed capital was never raised. See, also, Lyon's case,
35 Beav. 646.
Cookney's case, 26 Beav. 6, and 3 De G. & J. 170.
Barton's case, 4 Drew. 535, and on appeal, 4 De G. & J. 46.
In these the applications for shares were verbal only, and they
were allotted ; but nothing more was clone.
Hawkins' case, 2 K, & J. 253 (a cost-book company).
Bird's case, 1 Sim. N. S. 47.
Also illustrate the same principles.
More modern authorities to the same effect abound in the
books. One of the most recent is The Licensed Victuallers'
Mutual Trading Association (g), where a promoter of a company
who had agreed to underwrite 10,000 shares for a commission
of 15 per cent, was held a contributory in respect of 8,500 shares
which he had not been able to induce other persons to take.
Although an agreement to take shares need not (in general) Agreement to
. . . . . . „ take shares
be m writing, tnere are exceptions to this rule, 13 y the statute need not be in
30 Vict. c. 23, relating to marine insurances, all agreements wrltinS-
for such insurances were required to be in writing, and to be
stamped ; and consequently the members of a mutual marine
insurance company, which did not issue stamped policies, were
not contributories (It).
Moreover, if a person has agreed to take shares, he will be No allotment.
a contributory, even although there may have been no allot-
ment (i) ; or he may have no notice of it (A;). Allotment and
(g) The LicensedVictuallers' Mutual penalty. See 39 Vict. c. 6, § 2,
Trading Assoc, W. N. (1889) 71. but a written policy is still neces-
(h) Smith's case, 4 Ch. 611. Com- sary.
pare Blyth <£• (Jo.'s case, 13 Eq. 529 ; (i) Bird's case, 4 De G. J. & Sm.
Martin's claim, 14 Eq. 148. Marine 200.
policies can now be stamped after (k) Adam's case, 13 Eq. 474 ;
their execution on payment of a Harward's case, 13 Eq. 30 ; Sidney's
762
WINDING UP BY THE COURT.
Bk. IV. Chap. 1,
Sect. 10.
Agreement to
take fully paid-
up shares.
Agreement to
take shares at a
future time.
Barrett's case.
Option to pay
in cash or
shares.
notice are in truth only material where there is no agreement
without them. In the ordinary case of an application for
shares, there is no agreement in the absence of allotment and
notice of it ; but there may well be a binding agreement
without either of them (I).
An allotment following an application for shares will, unless
otherwise expressed at the time, be treated as an allotment of
such shares as are applied for. Consequently, if after the
application, and before the allotment, the nominal value of
the shares has been altered, and the allottee has no notice
of the alteration, he will be a contributory in respect of
such shares as he applied for, but not in respect of them as
altered (m).
A person who has only agreed to take fully paid-up shares
cannot be treated as a contributory in respect of shares not
paid up («).
An agreement to take shares at a future time will not render
a person a contributory, if the winding up of the company has
commenced before that time arrives (o) ; but if shares are
agreed to be taken at once, the person agreeing to take them
will be a contributory, although they are not to be paid for
until a future day, and the certificates for them are not to be
delivered until payment (p).
Again, where a person has agreed to take cash or shares at
the option of the company in payment of his claims against
the company, and he has not received either cash or shares, he
cannot be compelled to take shares after the company has
been ordered to be wound up ; and he is entitled to rank as a
creditor in respect of what the company may owe him (q).
case, ib. 228 ; Folder's case, 14 ib.
316. See, also, Richards v. Home
Assur. Assoc, L. R. 6 C. P. 591,
where an agent applied for shares,
and was registered as their holder.
(/) See, as to this, ante, p. 13 et
seq.
(m) GustaroVs case, 8 Eq. 438,
where the allottee was held to be a
contributory for them. Compare
this with the cases noticed ante,
p. 19 et seq.
(n) Arnot's case, 36 Ch. D. 702.
See infra, as to paid-up shares.
(o) Barrett's case, 2 Dr. & Sm..
415, and 3 De G. J. & Sm. 30.
(p) Ib. The case turned on the
true construction of the correspon-
dence.
(2) Sharon's claim, W. N., 1866.
231.
CONTRIBUTORIES. ALLOTTEES OF SHARES. 763
So also in winding up companies in which there are share- Bk- IV> cliaP- 1-
Sect. 10.
holders and scripholders, and in which the scripholders are
entitled to become shareholders, but are not bound so to do,
so long as they remain scripholders, as distinguished from
shareholders, they are not contributories (r).
An agreement to take shares which has not been acted upon Agreements not
for so long that neither party can enforce it against the other
will not render the person who agreed to take them a contri-
butory. This follows from the ordinary doctrines applicable
to the specific performance of agreements ; and where a person
in this position sought to be put on the list in order to obtain
a share of surplus assets, he was held not entitled to be on
it (s). So it is apprehended he could not have been made a
contributory against his will if there had been a deficiency (t).
An agreement to take shares which has been duly rescinded Agreements
I'GSClll AC I
before the commencement of the winding up, will not render
the party to it a contributory unless it be as a past member.
But, 'prima fac'u, directors have no more power to rescind an
agreement to take shares than they have to accept a surrender
of them when taken ; and there are numerous authorities to
show that persons who have agreed to take shares are contri-
butories as present members, although the directors have sub-
sequently agreed to relieve them from their obligation (u).
These cases, however, will be more conveniently noticed when
treating of persons who have ceased to be members (x).
An agreement which is void cannot per sc render a person a Voidable and
contributory ; but an agreement which is voidable at his option vou
may do so. This subject will be alluded to hereafter (#).
b) Allottees of shares in contemplated companies.
An abortive company, i.e., an unregistered association of Allottees of
individuals engaged in the formation of a company, and not LTbortvVeconf-
panies.
(r) See scripholders, infra, head 8. five years.
(«) Ex parte London Bank of Scot- (u) See, for example, Adams' case,
land, 12 Eq. 268. 13 Eq. 474. And compare Nicol's
(t) Nicol's case, 29 Ch. D. 421. case, Tufnell and Ponsonby's case, 29
Compare Sidney's case, 13 E([. 228, Ch. D. 421.
where a person who signed a com- (x) See infra, class B.
pany's memorandum of association (•//) See under head 4.
was put on the list after a delay of
764
MINDING I'P i:Y THE COURT.
Liability of
subscribers to
contribute.
Bk.'IV. Chap. l. succeeding in their attempts to form it, might be wound up
- under the acts of 1848 and 1849 (z). But persons engaged in
the formation of a company are neither partners nor quasi-
partners, nor is each the agent of the others for doing that
which may be necessary to start the company (a). It follows
from this, that if an abortive unregistered company is being
wound up, a person who has done nothing more than act as
;i promoter, without rendering himself liable with the other
promoters, to third parties, or to those others in respect of
liabilities incurred by them, is not a contributory.
It was at one time thought that there was an equitable, as
distinguished from a legal obligation on the part of every
promoter of a company towards the other promoters, to con-
tribute with them towards the discharge of debts incurred
by them in the prosecution of their common design ; but it
has long been settled that a promoter, or subscriber, to an
abortive company is not liable to contribute to the liquidation
of debts or expenses which have been incurred without his
authority, or which he has not agreed to share. Unless,
therefore, a person has agreed to share, or has rendered him-
self directly liable with others to pay, the debts incurred in
the attempt to form an abortive company, he will not be a
contributory on the winding up of that company (b).
The non-liability of a mere promoter of a company to be
made a contributory, unless he has done something besides
act with others in getting up a company, was established com-
paratively early ; but it was nevertheless decided by the House
of Lords, in UpjilVs case (c), that if a promoter of a company
agreed to accept shares in the company when formed, he ought
to contribute to the expenses incurred in attempting to form it.
The impossibility, however, of upholding this decision was
felt as soon as attention was drawn to it ; and although it was
followed for a time, it was repudiated by the House of Lords
Upfill"-
(z) Ante, p. 623.
(a) See Partn. p. 23.
(6) See Norris v. Cottle, 2 H. L.
C. 647, affirming Ex parte Cottle, 2
Mac. & G. 185 ; Bright v. Hutton,
3 H. L. C. 341 ; Hutton v. Thomp-
son, and Norris v. Cooper, ib. 161.
See, too, Hamilton v. Smith, 7 W.
R. 173.
(c) Hutton v. Upfill, 2 H. L. C.
674.
CONTRIBUTORIES. ALLOTTEES OF SHARES. 765
itself in Bright v. Hutton (d), which has ever since been the Bk- IV- ChaP- *■
. Sect. 10.
leading authority upon the present subject.
Many cases had been decided on the authority of UpfiWs
case, and they, of course, fall with it. With reference, there-
fore, to the subject now under discussion, it is necessary to
separate the cases decided before, from those decided after the
reversal of UpfilVs case. But it is to be observed, that cases
decided before such reversal, and in which promoters or sub-
scribers were held not to be contributories, are still entitled to
weight. It is only those which decided such persons to be
contributories that must now be disregarded.
The following cases must be considered as overruled Gases falling
(directly or indirectly) by Bright v. Hutton, 3 H. L. C. 341: — case.
UpfiWs case, 2 H. L. C. 674.
Besley, Ex parte, 2 Mac. & G. 176. This case occurs three times in
the hooks. It was first decided by Vice-Chancellor Knight Bruce
(Besley's case, 3 De G. & S. 224), who held that Besley was not a
contributory. This decision was appealed against, and was re-
versed by Lord Cottenham (2 Mac. & G. 176). But the appeal was
reheard by Lord Truro, who affirmed the decision of the Vice-
Chancellor (3 Mac. & G. 287). The case, as reported in 3 De G. &
S. 224, and 3 Mac. & G. 287, is still law.
Bright's case, 1 Sim. N. S. 602. This was reversed on appeal (3 H. L.
C. 341).
Brittain, Ex parte, 1 Sim. N. S. 281, decided reluctantly on the autho-
rity of UpfiWs case.
Hole's case, 3 De G. & S. 241, decided on the authority of Ex parte
Besley, 2 Mac. & G. 176.
Markivell's case, 5 De G. & S. 528, decided on the authority of UpfilVs
case, but after the decision of Bright v. Hutton. It cannot, however,
be considered law. See Ex parte Capper, 1 Sim. N. S. 178, and
Carriers case, 1 Sim. N. S. 505.
Morrison, Ex parte, 15 Jur. 346, and 20 L. J. Ch. 296, decided on the
authority of UpfilVs case, and in effect overruled by Sharp and
James's case, 1 De G. M. & G. 565.
Nicholay's case, 15 Jur. 420, decided on the authority of UpfilVs case.
Sichell, Ex parte, 1 Sim. N. S. 187, decided reluctantly on the authority
of UpfilVs case.
Studley, Ex parte, 14 Jur. 539. This case is very shortly reported, but
it seems inconsistent with such cases as Hall's (3 De G. & S. 214),
Stock's (22 L. J. Ch. 218) and Curricle's (1 Sim. N. S. 505).
Upon the principles which are now settled to be applicable Result of
authorities.
(d) 3 II. L. 0. 341.
7fi6
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Subscribers to
abortive com-
panies not con-
tributories.
Provisional
committee men
not contribu-
tories.
A fortiori,
subscribers
who have not
to the case of an abortive unregistered company, it may be
taken :
1. That a mere subscriber to or allottee of scrip in an
abortive company is not, by virtue of his subscription, or
acceptance of scrip, a contributory on the winding up of the
company, whether he has paid his deposit (e) or not (/).
2. That such a person does not become a contributory by
being one of the committee from which the scheme emanates,
and by which it is encouraged ; or, in other words, by being
what is commonly called a promoter of the company (//).
This holds, even although he may have subscribed something
towards the expenses, if he did so under the erroneous sup-
position that he was liable for them (h), or merely for the
sake of peace (i) ; so, although he may have concurred in
the appointment of persons, and have incurred liability by so
doing, if all liability on that score is at an end (k) ; so, although
he may have been party to the appointment of a managing
committee, by which debts still unpaid have been incurred (I) ;
so, although his name may have been put on that com-
mittee, if he never assented to join it, and he never acted
on it (m).
3. That, a fortiori, subscribers to and promoters of an
abortive company are not, as such, liable to be made con-
(e) As in Maudslay and Field's
case, 17 Sim. 157 ; Ex parte Beard-
shaw, 1 Drew. 226. See, too, Ex
parte Walstab, 20 L. J. Ch. 58,
where the deposit had been paid
and recovered back.
(/) As in Hutton v. Thompson,
and Norris v. Cooper, 3 H. L. C. 161 ;
Ex parte Capper, 1 Sim. N. S. 178 ;
Carrick's case, ib. 505 ; Ex parte
Hirschel, 15 Jur. 942. See, too, the
cases in the next seven notes.
(g) Bright v. Hutton, 3 H. L. C.
341, reversing Bright' s case, 1 Sim.
N. S. 602 ; Norris v. Cottle, 2 H. L.
C. 647, affirming Ex parte Cottle, 2
Mac. & G. 185. See, too, Mart-
land' s case, 3 Giff. 28 ; Ex parte
Roberts, 2 Mac. & G. 192, and 14
Jur. 539 ; Ex parte Clarice, 20 L. J.
Ch. 14.
(/i) Ex parte Besley, 3 Mac. & G.
287, affirming Besley' s case, 3 De G.
& S. 224 ; Hall's case, 3 De G. & S .
214.
(i) Ex parte Stocks, 22 L. J. Ch.
218 ; Hall's case, 3 De G. & S. 214 ;
Carrick's case, 1 Sim. N. S. 505 ;
Ex parte Roberts, 1 Drew. 204 ;
Tanner's case, 5 De G. & S. 182.
(k) Carrick's case, 1 Sim. N. S.
505 ; Ex parte Hight, 1 Drew. 485.
(I) Tanner's case, 5 De G. & S. 182.
(m) Ex parte Roberts, 1 Drew. 204.
See, too, Ex parte Osborne, 15 Jur.
72. Compare Spottiswoode's case, 6
De G. M. & G. 345.
CONTRIBUTORIES. REPUDIATION. 767
tributaries on its winding up, if they never have, in fact, Bk- JJJJ^ **
entered into a binding agreement to take shares. Even -
.. agreed to take
before UpfiU's case was reversed, this proposition was well shares.
established (n).
4. That if persons are actively engaged in forming a com-
pany, if they act as a body, and as a body incur debts for
which they are all liable, if not directly, at all events as be-
tween each other, then they form a company or association
which may be wound up, and on its winding up they will be
contributories, whether they have actually subscribed for shares
or not (o) .
5. That persons who, without being actively engaged in
forming a company, agree not only to take shares in it, but
also to share the expenses incurred in forming the company,
are, on its winding up, liable to be made contributories (p).
The writer is not aware of any case having arisen under the Application of
. i-Ti 11 these rules to
Companies act, 1862, and in which the above rules have been modem com-
adverted to. The reason of this is that there is no recent Pames-
instance of an order to wind up an unregistered association of
promoters of a company. At the same time, such an associa-
tion, at least if consisting of less that twenty persons, might
be legally formed and be wound up (q) ; and if such an event
should occur, the principles and rules followed under the older
acts would apply ; subject, however, to this qualification, that
liability to creditors is now a ground for being put on the list,
which was not the case under the older acts (r).
4. On the repudiation of shares after the commencement of
the winding up.
A person who is sought to be made a contributory in respect
of shares which he has agreed to take or which may be regis-
(n) See Matliew's case, 3 De G. & S. case, 6 De G. M. & G. 345. See,
234 ; CarmichaeVs case, 17 Sim. 163 ; also, Bowen and Martin's case, 20 L.
and Onions' 's case, 1 Sim. N. S. 394. J. Ch. 856, and Ex parte Apps, 18 L.
(o) Norbury's case, 5 De G. & J. Ch. 409.
Sm. 423 ; Sharp and James' case, (p) See the last note.
1 De G. M. & G. 565 ; Pearson's (q) See Companies act, 1862, §§ 4
Executors' case, 3 De G. M. & G. and 199.
241 ; Spottiswoode and Amsinck's (r) lb., § 200.
768 "WINDING UP BY THE COURT.
Bk. IV. Chap. l. tered in his name, may be entitled to repudiate them on various
- grounds. But it by no means follows, that because he might
have repudiated them before the winding up commenced, he
can repudiate them afterwards. The leading principles
applicable to this subject appear to be as follows :
1. Shares placed in a person's name pursuant to an alleged
agreement, which is in truth no agreement, may be repudiated
by him after the winding up has commenced, unless he has
chosen to accept them on the terms on which they have been
placed in his name (s).
2. Shares which the company has no power to issue, can be
repudiated after the winding up has commenced (t).
3. Shares placed in his name under an agreement which is
voidable, e.g., on the ground of fraud (u), or the non-perform-
ance of a condition (v), cannot be repudiated after the winding
up has commenced.
4. Shares which a person has agreed to take, but which have
not been placed in his name, and in respect of which he is not
a shareholder at the commencement of the winding up, may be
repudiated by him if he can show that for any reason the agree-
ment is not binding on him(w).
a) Repudiation on the ground of no agreement.
Cases in which By way of contrast with the decisions noticed under the
a person has . , ....
neither become last head, those cases will now . be adverted to, m which it
self bvUa<n-ee-m' *ias been ne^> that a person is not a contributory, he not
ment to become having become a shareholder or agreed to become one, and
a shareholder. , ■ .
there being no other grounds on which to hold him a con-
tributory.
Sureties, &c. Persons who are merely sureties to a conipairy for the pay-
ment of calls by shareholders are not contributories (x). It
will be seen hereafter that cestuis que trustent are not con-
Admissions, tributories (y). A person who has never agreed to take shares
and has never acted or been treated as a shareholder, but who
(s) See infra, under head a). (w) See infra, under head d).
(t) See infra, under head b). (x) Harrison's case, 6 Ch. 286 ;
(u) See infra, under head c). Lee and Moor's case, 5 Eq. 368.
(v) See infra, under head d). (i/) See infra, head 9.
C0NTRIBUT0RIES. — NO AGREEMENT. 769
bv mistake has admitted, even under seal, that he is a share- Bk. IV. Chap. 1.
, . , . .. , _ Sect. 10.
holder is not a contributory (z).
A person who agrees to place shares does not agree to take
them himself and he is not a contributory (a).
A person who is entered on the register of shareholders Effect of being
without due authority is not a contributory, unless he has pre-
cluded himself from denying the propriety of the entry (b).
This he may do by express ratification or b}r acting as a share-
holder (c). Even where an applicant for shares authorised
them to be registered in his name, and executed a blank
transfer of them before allotment, the subsequent entry of his
name in the register was held not to affect him, as he had no
notice of such entry or of the allotment (d) .
With respect to applicants for shares, the following pro- Applicants for
SI13X6S
positions follow, from the principles explained in Bk. I. c. 1,
§ 1, where the requisites of an agreement to take shares were
examined (e).
1. If shares have been applied for and the deposit on them *■ No allot~
. ■ i * • ■ ment.
has been paid, and a receipt has been given for the money,
but the shares have never been allotted, the applicant will
not be a contributory, although the application may have been,
in form, an agreement by him to accept the shares applied
for or any less number which might be allotted (/). If indeed
there is some other evidence clearly showing that the applica-
tion had been accepted, the fact that there was no formal
allotment will be immaterial (r/).
2. If an application for shares is followed by allotment and 2- No notice of
,t • , , , ,, . allotment.
entry on the register, but the allottee is not informed of these
facts, he will not, without more, be a contributory (h). But
(z) Empson's case, 9 Eq. 597. 592 ; Ward's case, 10 Eq. 659.
See, also, Davies's case, 4 De G. F. & (c) See the cases on the effect of
J- 78. varying from the prospectus, infra,
(a) Gorrissen's case, 8 Ch. 507. p. 771.
Otherwise if he underwrites so many (d) Ward's case, 10 Eq. 659.
shares, ante, p. 761. (e) Ante, p. 13 et seq.
(6) See Hallmark's case, 9 Ch. (/) Best's case, 2 De G. J. & Sm.
D. 329 ; Somerville's case, 6 Ch. 266 ; 650.
Gorrissen's case, 8 Ch. 507 ; Wynne's (g) See Adam's case, 13 Eq. 474 ;
case, ib. 1002 ; Beck's case, 9 Ch. Bird's case, 4 De G. J. & Sm. 200.
392 ; Pellatt's case, 2 Ch. 527 ; (h) Gunn's case, 3 Ch. 40 ; Ward's
Binlij's case, 5 Eq. 428, and 3 Ch. case, 10 Eq. 659, and others cited
L.C. 3 D
770
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
3. Application
for shares
revoked.
4. Allotment
too late.
5. Applicant and
allottee different
persons.
..Mallorie's case.
6. Terms of
offer not as-
sented to.
7. No accept-
ance by proper
authority.
direct formal notice is not necessary ; and notice may be
inferred from conduct, and may even be wholly dispensed
with (i).
3. If an application for shares has been revoked before it
has been accepted, the applicant will not be a contributory,
although shares may afterwards be allotted to him (k). But re-
vocation after notice of allotment has been posted is too late (/).
4. If an application for shares is not accepted within a
reasonable time, a subsequent acceptance will not render
the applicant a contributory unless he has assented to
it (?n) ; and this applies as well to directors and to persons
who take an active part in getting up the company as to
others (n).
5. If a person applies for shares himself and they are
allotted to some one else, there is no concluded agreement,
and he is not a contributory. Thus, where reserved shares
were offered to old shareholders and their executors, and a
person who was a relative of a deceased shareholder and acted
for his executors applied for some reserved shares, and they
were allotted to the executors, there being no power to allot
them to the applicant himself, it was held that he was not a
contributory (o).
6. If shares are applied for, or offered, on terms which are
never assented to by both parties to the negotiation, the person
applying for them, or to whom they are offered, will not be it
contributory in respect to them (p).
7. Moreover, the conditions must be accepted by those pei-
ante, p. 14 ; Bloxam's case, 4 De G.
J. & Sm. 447, contra, turned on its
own special circumstances. See
ante, p. 15.
(i) See Adam's case, 13 Eq. 474,
and the cases collected ante, p. 14,
to which add Richards v. Home Ass.
Assoc, L. R. 6 C. P. 591. See, also,
the cases relating to directors, infra,
head 6, p. 790.
(k) Ritsos case, 4 Ch. D. 774, the
case of a director ; GledhilVs case, 3
De G. F. & J. 713, and others of
that class noticed ante, pp. 13, 14.
(1) Harris s case, 7 Ch. 587 ;
WalVs case, 15 Eq. 18, ante, p. 14.
(m) Mathew's case, 3 De G. & Sm.
234, and others of that class noticed
ante, p. 15.
(n) Ritso's case, 4 Ch. D. 774 ,
Carmichael's case, 17 Sim. 163.
(o) Mallorie's case, 2.Ch. 181.
(p) See Jackson v. Turquand, L.
R. 4 H. L. 305, and the other cases
collected ante, p. 16. See, also,
Daviei case, 4 De G. F. & J. 78,
which was a case of fraud as well as
of no contract ; Empson's case, 9 Eq.
597 ; compare Gustard's case, 8 Eq.
438.
CONTRIBUTORIES. NO AGREEMENT. 771
sons who are competent to bind the company by assenting to Bk. IV. Chap, i.
them, or the allottee will not be a contributory (q). The ■ —
application of this principle to cases in which shares have been
issued on terms which are ultra vires will be noticed hereafter
(see sub-heads b and d, pp. 774 and 778).
A difficult class of cases arises where an application for Variations
between the
shares is followed by an allotment, but there has been in the objects of the
interval some change in the nature or objects of the compan}\ fo^gj'and as
If this change is material the allotment is no acceptance of projected,
the application, and the allottee can, at his option, accept or
repudiate the shares (r). If, knowing the facts, he does not
repudiate them before the commencement of the winding up,
the inference will be that he has in fact accepted them, and he
will be a contributory. If, on the other hand, he repudiates
them in time, he is not a contributory (s). His option to
accept or repudiate does not, however, necessarily continue
until he knows the facts ; it must be exercised, if at all, as
soon as, with reasonable diligence, he might have known
them (t). From this it follows that, as regards companies
formed and registered under the Companies act, 1862, inas-
much as every person can obtain a copy of a company's
memorandum of association, an applicant for shares in a pro-
jected company who neglects to inform himself in reasonable
time after its formation of its nature and objects as formed,
and who keeps shares which have been allotted to him until
the compan}r is wound up, will not escape from being a con-
tributory by proving that the company as formed is materially
different from that which he agreed to join.
The following are instances (under the older Winding-up
acts) of persons who were held not to be contributories by
reason of a change in the nature and objects of the company.
(q) Howard's case, 1 Ch. 561, and 58, and 2 M. & Q. 57.
ante, p. 17. (s) Smith's case, 2 Ch. 604, and
(r) See on this subject generally L. R. 4 H. L. 64, where the repu-
ante, p. 19 et seq. The non issue of diation was before the winding up.
the whole number of shares promised (t) See PeeVs case, 2 Ch. 674 ;
to be issued is not sufficient. Lyon's Laicrence's case, 2 Ch. 412 ; Wilkin-
case, 35 Beav. 646 ; Sharpus' case, 3 son's case, 2 Ch. 536.
De G. & S. 49 ; Mansfield's case, ib.
3 D 2
772
WINDING UP BY THE COUKT.
Bk. IV. Chap. 1,
Sect. 10.
Cox's case and
Naylor's case.
Qoldsmid':
Meyer's case.
Other cases.
Cox's case and Naylor's case (u) ; persons who had taken shares in a com-
pany, the liability of the members of which was limited, were held not to
be contributories in a company, the liability of the members of which was-
unlimited. The constitution of the company had been fraudulently altered,
and they had not acquiesced in the alteration.
Goldsmid's case (a). Goldsmid took, and paid for shares in a projected
steam-packet company. The directors afterwards determined to abandon
the scheme, and to join a company already existing ; and at a general
meeting of the shareholders of the projected company, it was resolved
unanimously that the new scheme should be substituted for the old one,
and that the capital originally contemplated should be doubled. At this-
meeting Goldsmid was present. He did not approve of the proposed
departure from the original scheme, but he did not actively oppose it : he,
in fact, remained passive, and never did anything more ; and two years
after the meeting referred to, his shares were cancelled. He was held not
to be a contributory.
Meyer's case (y) was the case of another allottee of shares in the same
projected company. He originally had ten shares : he did not accede to
the change in the scheme ; but ultimately he took one share in the new
company, and nine out of the ten shares which he originally agreed to
take were cancelled. He was held not a contributory in respect of these
nine shares.
Bye's case (z), Blackburn's case, as decided by V.-C. Kindersley (a), Ship's
case (6), Stewart's case (c), Webster's case (d), Nichol's case (e), and Baily's
case (/), all of which have been already referred to, further illustrate the
same principle, although in applying them to winding-up cases it is
necessary to bear in mind that all of them related to companies which
were not in course of liquidation.
Delay in n pu-
diation.
Upon the subject of delay in repudiation, it is important to
distinguish those cases in which there has been repudiation
before any winding up has commenced, from those in which
there has been no repudiation until after that time. Where a
person having a right to repudiate shares has duly repudiated
them before the commencement of the winding up, he will not
(»/) 4 K. & J. 308 and 314, cited
in Richmond's case. Compare Shef-
field's case, Johns. 451.
(») 16 Beav. 262.
(y) 16 Beav. 383.
(;;) 3 Jut. N. S. 460, ante, p. 20.
(a) 3 Drew. 409, reversed on ad-
ditional evidence, 8 De G. M. & G.
177. See ant", p. 25.
(6) 2 De G. J. & Sm. 544, affirmed
L. R. 3 H. L. 343, under the name
of Dovmes v. Ship. See ante, p. 20.
N.B. — In this case, Ship applied
for shares in one company, and was
allotted shares in another company,
there having been two memoranda
of association.
(c) 1 Ch. 574, ante, p. 26.
(d) 2 Eq. 741, ante, p. 26.
(«) W. N. 1867, 77, and ante,
p. 26.
(/) 3 Ch. 592, and ante, p. 27.
OONTRIBUTORIES. NO AGREEMENT. 773
be a contributory (a) ; but where he has not he will (h), unless, Bk. IV. Chap. l.
Sect 10.
indeed, a reasonable time has not elapsed within which he — ■ — - — - —
might have ascertained the facts and repudiated the shares.
That he may do so in this case follows from the hypothesis,
viz., that there is no agreement between him and the company.
The decisions bearing on the right of repudiation before the
winding up commenced have been noticed already (i).
A leading authority on the effect of repudiation after the Peel's case.
winding up has commenced, is Peel's case (k), which may be
usefully contrasted with them. There a person applied for
shares on the day the company was registered ; the applica-
tion was made on the faith of a prospectus previously issued,
and from which the memorandum of association materially
departed ; shares were allotted ; the allottee paid the allot-
ment money and a call pursuant to the prospectus ; he was
registered as a shareholder, and received a dividend ; after the
company had been ordered to be wound up he repudiated his
shares, deposing that he had never seen the memorandum of
association, and did not know of its departure from the pro-
spectus. It was held, however, that as he had had ample time
to ascertain the real facts, he was too late, and was a con-
tributory.
By reason of the stringency of § 18 of the Companies act* Alteration of the
1862, a subscriber of the memorandum of association is a con- auj articles of
tributory, although the memorandum as registered may have assomtlon-
been somewhat altered since he signed it (I). An alteration in
the articles of association, not affecting the objects of the com-
pany, will not enable the allottee to escape from being a con-
tributory, although such alteration be made after an applica-
tion for shares, and before allotment (in).
(<j) See Smith's case, 2 Ch. 604, Hare's case, 4 Ch. 503, where the
and L. R. 4 H. L. 64. Compare contributory remained on the re-
Hare's case, 4 CI i. 503. gister. See Persse's case, Ir. Rep.
(h) See below. <i Eq. 298, where there had been
(i) Ante, p. 25 et seq. See, also, gross fraud, and an action for calls
Wynne's case, 8 Ch. 1002 ; Beck's before the licpiidation had failed,
■case, 9 Ch. 392, where there was but the shareholder was retained on
very little delay. the list. Qmere this case.
(k) 2 Ch. 674. See, alflO, Perrett's (I) See infra, under head 7, p.
case, 15 Eq. 250 ; Wilkinson's case, 797.
2 Ch. 536 ; Peel's case, 2 Ch. (>74 ; (m) See Lyon's case, 35 Beav. 646.
774
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Repudiation of
illegally issued
shares.
Illegal sub-
division of
shares.
Staee and
Worth's case.
Amalgamation
of companies.
b) Repudiation of illegally issued shares.
With respect to the right to repudiate shares issued impro-
perly, a distinction must be made between shares which the
company has no power to issue, and shares which the company
has power to issue, although not in the manner in which, or
upon the terms upon which, they have been issued. The
holders of shares which the company have no power to issue,
in truth, hold nothing at all, and are not contributories. The
only possible ground for holding them to be contributories
wTould be by applying to them the doctrines by which a person
who holds himself out as a partner incurs liabilities as if he
were a partner (n). These doctrines might suffice to render
an ostensible member of an unincorporated insolvent company
liable as a contributory in it ; but they have little, if any,
bearing on the statutory liability of persons to be made con-
tributories in incorporated companies in respect of shares
which do not exist in point of law (o).
Thus where shares had been illegally subdivided, the holders
of them were held not to be contributories in respect of the
reduced parts (p) : although where such parts could be
identified with the original shares which they represented,
the holders of those parts were held to be contributories in
respect of the original shares which the parts made up (q).
A much more difficult case is Stace and Worth's case (?•)►
There company A. amalgamated with company B., under
circumstances which rendered the amalgamation wholly void-
(n) See Partn. 40 et seq., and
ante, p. 43 et seq.
(o) See, as to the non-application
in such a case of the doctrine of
estoppel hy conduct, Bank of Hin-
dustan, d'c. v. Alison, L. E. 6 C. P.
54, and 222, ante, p. 53 ; Royal Bank
of India's case, 4 Ch. 252 ; Stace and
Worth's case, 4 Ch. 682 (infra) ;
Smith's case, 4 Ch. 611.
(p) See Holmes's, Pritchard's, and
Adam's cases, 2 Ch. 714.
(q) Feiling and Rimington's case,
2 Ch. 714 ; Sewcll's case, 3 Ch. 131.
(r) 4 Ch. 682. See, also, Dougan's
case, 8 Ch. 540 ; Alison's case, 9
Ch. 1 ; Alabaster's case, 7 Eq. 273,
which were decided on the same
principle. Wynne's case, 8 Clu
1002, and Beck's case, 9 Ch. 392,
were somewhat similar cases, hut
were decided on the ground that
there was no binding agreement to
take shares, and nothing to prevent
their repudiation.
CONTRIBUTORIES. — ILLEGAL SHARES. 775
Pursuant, however, to the scheme for amalgamation, a member Bk IV- ohaP- l-
. . Sect. 10.
in company A. exchanged his shares in it for fully paid-up
shares in company B., which, however, that company had no
power to issue : he was put on the register of compairv B.
in respect of the shares taken by him, and he became a director
of company B., and acted as such. The shares, if they had
been legally issued, could not have been treated as fully paid
up by reason of 30 & 31 Vict. c. 131, § 25. It was, neverthe-
less, held that he was not a contributory in company B., the
issue of the shares to him being void, and all his acts being
referable to these shares, and to the arrangement between the
two companies and nothing else (s).
But the mere circumstance that a person has become a
shareholder pursuant to a scheme which is ultra vires will
not relieve him from liability as a contributory if the shares
which he has taken can be considered as legally existing.
Thus in Challis's case (t) and Hare's case (u), which were in Challis's case,
many respects similar to Stace and Worth's case, the member 'fare's case,
who had exchanged his shares was held to be a contributory
in the purchasing company ; he having in effect entered into a
distinct agreement with that company to take shares in it, and
that agreement being valid, although resulting from an invalid
agreement for an amalgamation (,r). In Hare's case there was
a distinct and separate application for shares which was duly
accepted ; and in Challis's case, certificates of shares in the
purchasing company had been sent to and accepted by the
contributory, and he had attended meetings of the share-
holders. The Court of Appeal held the agreement with
him was not void but was capable of ratification.
The holder of shares existing in point of law, but held upon
(s) See the importance of this, Hippisley's case, 9 Ch. 1, which were
8 Ch. 546. very similar to the two last, and in
(0 6 Ch. 266. And see Miller's which the holders of shares de-
Dale Lime Co., 31 Ch. D. 211, where clared by a court of law in another
there was an irregularity in the issue case to have been illegally created
of the shares. were held contributories.
(u) 4 Ch. 503. In this case Hare (x) This distinguishes these cases
had repudiated his shares, but not in from those cited ante, note (o). See
time. See, also, Campbell's case, and 8 Ch. 546.
776
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. terms not binding on the company, may be a contributory in
Sect. 10.
respect of them, as will be seen presently (y).
Repudiation
on the ground
if fraud.
Oakes' case and
Peek's case.
■\
c) Repudiation on the ground of fraud.
It has been already seen that fraud cannot be relied upon as
a defence to a proceeding by a creditor, whether by action or
by scire facias (z) ; and it follows that such fraud does not
enable a shareholder in an insolvent company registered under
the Companies act, 1862, to escape from being put on the list
of contributories, there being no other method by which the
creditors can have recourse to him. This is now completely
settled by the cases which arose in winding up Overend,
Gurney, and Company. It was there held, that where the
prospectus of a company formed and registered under the
Companies act, 1862, had been issued, and such prospectus
was expressed in terms calculated to deceive those who read it
with respect to the true position of the company, the issuing
of the prospectus was in point of law a fraud on the part of the
company, and that such fraud entitled persons taking shares
directly from the company on the faith of such prospectus to
repudiate their shares ; but that they were, nevertheless, liable
to be placed on the list of contributories of the company, it
being proved that the creditors of the company would other-
wise remain unpaid (a).
This important decision has been followed in other cases, to
which it is unnecessary to refer in detail (b). Moreover it has
been extended to cases of solvent companies on the ground
that a winding-up order entirely alters the position of the
shareholders (c).
(y) Infra, head d), p. 778, and the
table on p. 796. Ex parte Daniell,
1 De G. & J. 372, and Robinson's
Executors' case, 2 De G. M. & G. 517,
illustrate the position of directors
who improperly appropriate shares
which the company can repudiate.
(z) Ante, p. 283.
(a) Ex parte Oakes and Peek, 3 E<p
576, affirmed L. R. 2 H. L. 325,
under the name of Oakes v. Tur-
quand. Oakes took his shares
directly from the company. Peek
bought his from a previous share-
holder. Both were put on the list.
(b) See Ashley's case ; Kent v. Free-
hold Land, dec, Co., both cited below ;
Stone v. City and County Bank, 3 C.
P. D. 282 ; Tennent v. City of Glasgow
Bank, 4 App. Ca. 615.
(c) Burgess's case, 15 Ch. D. 507,
see ante, p. 755.
CONTRIBUTORIES. — FRAUD. 777
Where, however, a person entitled to repudiate his shares on Bk. IJ^JjP- L
the ground of fraud has repudiated them before the commence- udiation
ment of the winding up, and has procured himself to be re- before winding
moved from the register of members, he will not be a con- up'
tributary (d), even as a past member (e). And even if he has
not procured himself to be so removed, still if he has insti-
tuted legal proceedings to have his name removed, that will be
sufficient (/). So, where he has repudiated his shares, and
has been guilty of no laches in obtaining the removal of his
name (g). But laches on his part will be fatal to him (h).
Even where only two months elapsed between the repudiation
of the shares and the commencement of the winding up, the
shareholder was held a contributory (i).
The principles on which Oakes v. Turquand and Burgess's Other voidable
con. t r<i c is .
case proceed are by no means confined to contracts which are
voidable on the ground of fraud. They extend to all void-
able contracts entered into by persons who are sui juris : but
they do not extend to infants nor to contracts which are void
as distinguished from voidable (j). Their application to con-
ditional contracts and to shares which have been accepted will
be noticed hereafter (k).
Further, the same principles apply to all companies wound ^gfjJd^*
up under the Companies act, 1862, whether formed or regis- the Act of 1862.
tared under it or not : for the winding up machinery of that
act cannot be applied consistently with any other principles (I).
(d) This follows from the cases failed. Sed quaere.
cited in the next two notes. (h) Ashley's case, 9 Eq. 263 ;
(e) Wright's case, 7 Ch. 55, re- Scholey v. Central Rail Co. of Vene-
versing 12 Eq. 331, but quaere zuela, ib. 266, note. See, also, The
whether the V.-C. Wickens was not Scottish Petroleum Co., 23 Ch. D. 413.
rjcrht. (*) Kent v- Freehold Land and
(/) Reese River Co. v. Smith, L. Brickmaking Co., 3 Ch. 493, re-
R. 4 H. L. 64, affirming Smith's case, versing S. C. 4 Eq. 588. It is very
2 Ch. 604, where the proceedings difficult to reconcile this case with
were stayed by the winding up. those cited in the last note but one.
(y) McNiell's case, 10 Eq. 503 ; It was not apparently referred to in
Pawle's case, 4 Ch. 497 ; Fox's case, 5 them, and quazre whether Smith's
Eq. 118. See next note but one. case can be properly extended.
But in Persse's case, Ir. Rep. 6 Eq. (j) See the last head b), p. 774.
298, the name was retained on the (k) See pp. 778 and 781.
list, although an action brought (I) See the judgment in Burgess's
before the winding up for calls had case, 1 5 Ch. D. 507.
778
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. The older authorities on this subject will be found collected
— SeCt" 1Q" on pp. 79 et seq., but they cannot be relied upon with reference
to the question of contributory or non-contributory.
d) Repudiation on the ground of non-performance of conditions.
Repudiation on The position of a person who has agreed to take shares upon
noLpTformance special conditions is generally one of considerable difficulty. If
of conditions. the conaitions have not been assented to by both parties to the
agreement (w), or if the conditions, having been assented to in
point of fact, are ultra vires, so that the company could not
assent to them in point of law (n), there is in truth no con-
cluded contract. This class of cases has been already
examined. For the present, it will be assumed that there is a
concluded agreement, but an agreement upon special conditions.
Under such circumstances, the points to determine are —
1, whether the condition is a condition precedent to the
person's becoming a shareholder, or a condition subsequent ;
and 2, whether, assuming the condition to be precedent, it has
been performed or waived.
If the condition is precedent, and has not been performed,
and its performance has not been waived, the applicant will not
be a contributory (o).
Thus in Rogers' case {p), a person applied in the usual form
for shares, and his application was sent to the directors with a
letter stating that the application was made on condition that
the applicant should be appointed agent to the company ; he
never obtained the agency, and had done nothing which
amounted to an acceptance of the shares without it ; he was
held not a contributory, although the shares had been allotted
to him.
The following case was one of greater difficulty, but decided
on the same principle. In Wood's case (q), Wood agreed to take
Conditions
precedent.
Rogers' case.
Wood's case.
(m) Ante, p. 17.
(n) See Pellatt's case, 2 Ch. 527.
(o) See, in addition to the case
referred to in the text, Mainwaring's
case, 2 De G. M. & G. 66 ; Robert's
case, 3 De G. & S. 205, and 2 Mac.
& G. 192 ; Austin's case, 2 Eq 435.
(p) Rogers' case, 3 Ch. 633. See,
also, Simpson's case, 4 Ch. 184 ;
Wood's case, 15 Eq. 236. Compare
Thomson's case, 4 De G. J. & Siu.
749.
(q) 3 De G. & J. 85. See, too,
Shackleford's case, 1 Ch. 567, ante,
CONTRIBUTORIES. NON-PERFORMANCE OF CONDITIONS.
779
shares upon condition that he should obtain a contract for the Bk- JJ^f" L
supply of certain goods. The shares were allotted, and Wood
was informed thereof, and he was registered as a shareholder.
Nothing more was done, and Wood never obtained the contract.
The Court held that Wood was not a contributory, first,
because the conditions on which alone he agreed to take shares
had not been assented to by the company with sufficient dis-
tinctness, and secondly, because, even if they had, they were
conditions precedent, which had not been performed or waived.
Where, however, the condition is not precedent to a person's Conditions sub-
, sequent, &c.
becoming a shareholder ; or where if precedent he has waived
its performance, either wholly or for a time subsequent to that
at which he is to become a shareholder ; or if the so-called
condition is not in truth a condition at all, but only an agree-
ment giving rise, in the event of its breach, to a right of action ;
in all such cases as these, the person who has agreed to become
a shareholder will be a contributory, whatever his rights may
be by reason of the breach by the company of the condition or
agreement.
The following are leading authorities on this head (r) : —
In Fisher's case{s), an application for 700 shares was made Fisher's case,
on a specified condition. 700 shares were allotted to the appli-
cant and were registered in his name with the word conditional
against it. He did not know of this, but he afterwards sold and
transferred 400 of the shares. He was held a contributory for
the remaining 300 shares on the ground that the condition if
precedent had been waived ; and that if the condition was a
condition subsequent to his becoming a shareholder, its non-
performance did not entitle him to reject the shares after the
winding up of the company had commenced.
In Ex parte Burton (t), a person was persuaded to apply to Ex parte
an insurance society for an appointment as agent, and also for
shares to qualify him for the appointment. His application
was apparently acceded to, but before he paid for his shares, or
p. 17, and Pellatt's case, 2 Ch. 527, case, 31 Ch. D. 120.
infra, p. 781. (t) 16 Jur. 967 ; and see Har-
(r) See, also, infra, p. 781), as to rison's case, 3 Ch. 633 ; Thomson's
conditions which are ultra vires. case, 4 De G. J. & Sm. 749.
(a) Fisher's case, and Sherrington's
780 WINDING UP BY THE COURT.
Bk. iv. Chap. l. executed the company's deed, he relinquished the appointment,
: and expressed a desire to relinquish the shares. This, however,
he was not permitted to do, and he was held a contributory.
Payment in So where a person agreed to supply the company with goods
shares. to ^ vaiue 0f 3000/., and to take shares in the company to
Elkmgton's case. ^^ that amount in part payment, and to take cash for the
residue, and he applied for the shares in the ordinary form, and
paid the deposit on them, and they were allotted to him, and
he received the certificates and paid the sum required upon the
allotment ; it was held that he was a contributory in respect of
the shares, although no goods were ever ordered or supplied ;
and although it was contended that the agreement to take
shares was conditional upon goods being required (u). A for-
tiori is a person a contributory who actually sells goods to a
company and receives shares in part payment, and is registered
in respect of them (x). The circumstance that the goods have
not been wholly paid for is immaterial (y).
Conditions Similar principles apply to agreements to take shares in a
Idtm vires company upon terms or conditions which are not binding on
the company. If the person who has agreed to take shares on
such terms has not, in fact, accepted them and become a share-
holder in respect of them he will not be a contributory. If on the
other hand he has accepted the shares and become a share-
holder in respect of them he cannot repudiate them after the
winding up, and will be a contributory in respect of them.
Both of these propositions require illustration.
The following cases arising under the older Winding-up acts
and in which persons were held not to be contributories, may be
usefully referred to on the first point : —
WoodfalVs case, 3 De G. & Sm. 631 (z).
A creditor of the company paid in scrip, which he sold. It was
agreed that he should not execute the company's deed, and he did
not ; but his name was returned as a shareholder.
Bunn's case, 2 De G. F. & J. 275 (a).
(u) Elkington's case, 2 Ch. 511. (2) See, too, Mowatt and Elliott's
Compare Pellatt's case, ib. 527, infra. case, 3 De G. M. & G. 254. Com-
(x) Gore and Durant's case, 2 Eq. pare Davidson's case, 3 De G. & S.
349. 21.
(y\ lb. («) See, too, Saunders's case, 2 De
CONTRIBUTORIES. — NON-PERFORMANCE OF CONDITIONS. 781
The company agreed that Bunn should have paid-up shares Bk. IV. Chap. 1.
transferable by delivery, but that he should incur no liability
and not be required to execute the company's deed. He never
did, but he attended meetings.
Coleman's case, 1 De G. J. & Sm. 495.
Coleman had executed the company's deed, but other conditions
of membership had not been complied with, and his agreement to
take shares contained terms not binding on the company.
Lord Westbury also held that even if Mr. Coleman had become
a shareholder, the proper inference from the facts would have
been that his shares had been forfeited pursuant to the promise of
the managing director. The directors had power to forfeit.
Pellatfs case, 2 Ch. 527- (b).
Pellatt agreed to take shares on condition that goods to a certain
amount should be taken of him, and that he should pay a
small sum per share in cash, and that the goods should be taken
in payment of the rest. He paid a deposit on his application for
shares, and they were allotted to him, and he was put on the
register ; but he did not know of the allotment or registration.
Before anything further was done, and before any goods were
ordered, he withdrew from his engagement ; three years afterwards
the company was wound up.
Howard's case, 1 Ch. 561.
Keserved shares were accepted by Howard on conditions which
were assented to by persons who had no authority to assent to
them.
Upon precisely similar principles if a person agrees to take
fully paid-up shares he is not a contributory in respect of shares
not paid up if he has not accepted such shares and become a
shareholder in respect of them (c).
These cases, however, must not be confounded with others Cases where the
shares have been
which do not rest merely on agreement. If persons have accepted.
become shareholders upon terms which are not binding on the
company, such persons will be contributories in respect of the
shares they have in fact accepted ; and although they need not
have taken them they cannot repudiate them after the winding-
up has commenced. The following are the leading cases on
this point. The reader will observe the difference between
this class of cases and those discussed above (p. 774, head 4 b)
G. J. & Sm. 101. Bunn was held (b) Compare Elkington's case, 2
not to have accepted the shares. Ch. 511, ante, p. 780.
This circumstance distinguishes his (c) Arnotfs case, 36 Ch. D. 702 ;
case from DanielVs and others of Carting's case, 1 Ch. D. 115, and
that class noticed below. infra, head 5, p. 783, &c.
782 WINDING UP BY THE COURT.
Bk. IV. Chap. l. where the shares were themselves illegally issued and could not
Sect. 10. . ,
be legally recognised.
Addison's case, 5 Ch. 294.
Addison paid for and accepted shares upon the terms that they
should be cancelled and all money paid for them returned on his
giving a certain notice. He gave the notice, received his money
back, and transferred his shares to a nominee of the company.
He was nevertheless held to be a contributory : the directors
having had no power to bind the company by the terms mentioned
nor to cancel the shares.
Bridgets case, 5 Ch. 304, and 9 Eq. 74 (d).
An agent of the company agreed to take shares upon the terms
that he should pay for them out of his commission on shares
which he might dispose of. He applied for and received an
allotment of shares and certificates, and he was registered as a
shareholder and acted as such, and was held to be a contributory
notwithstanding the collateral agreement as to the mode of paying
for them.
Ex parte Daniell, 1 De G. & J. 372, and 23 Beav. 568 (e).
The directors of a company allotted fully paid-up shares to
themselves. Daniell was a shareholder and a director, and he
took some shares under this resolution, and he obtained a certifi-
cate that they were fully paid. He was held a contributory and
liable to calls as if the shares were not paid up. The importance
of this case is due to the fact that the court held that although
Daniell could not repudiate his shares the company was not bound
by the terms on which alone he had accepted them. The shares
allotted by the directors to themselves were treated as assets of
the company misapplied by the directors (/). Lord Justice Knight
Bruce dissented. See on this case Catling's case, 1 Ch. D. 1.
NickoWs case, 24 Beav. 639.
Is another case in which a promoter was fixed with shares
which had been issued to him as fully paid up in payment of
services. He had accepted the shares, and the company was not
bound by the agreement that they should be treated as fully paid
up.
There are numerous other cases illustrating the same prin-
ciple, but they mostly relate to paid-up shares, and will be found
under the next head (see p. 787, 9).
(d) See, also, Davidson's case, 3 contributory, although he had en-
De G. & Sm. 21 ; Chapman and deavoured to get rid of his shares.
Barker's case, 3 Eq. 361. The later report relates to calls.
(e) See, also DanielVs case, 22 (/) See, also, Robinson's Execu-
Beav. 43, where he was held to be a tors' case, 2 De G. M. & G. 517.
CONTRIBUTORIES. — PAID-UP SHARES. 783
Bk. IV. Chap. 1.
Sect. 10.
5. Holders of paid-up shares.
With respect to holders of fully paid-up shares in a limited Holders of fully
n /?\ ai paid-up shares,
company, as they are not as a rule liable to calls (k), tney can-
not be placed on the list of contributories against their own
consent ; they are entitled to be on in order to share the surplus
assets, if any ; but if they disclaim all interest in this respect,
they ought not to be put on the list (I).
In order to prevent the frauds which were committed by 30 & 31 Viet.
c 131 § 25.
treating shares as paid up in full when they had only been paid
for in land, goods, or services of very questionable value, it is
enacted by 80 & 31 Vict. c. 131, § 25, that shares in companies Payment up of
shares in cash.
registered under the Companies act, 1862, are to be taken to
be issued and held subject to the payment of the whole amount
thereof in cash, unless there is a contract in writing to the
contrary filed with the registrar of joint-stock companies at or
before (m) the issue of such shares. This enactment applies
whether a company is being wound up or not (n).
This section applies to subscribers of the memorandum of
association (o), and even a subscriber of the memorandum is
protected by a duly registered agreement (p).
Shares are issued within the meaning of this section when
they have been registered in some person's name (q), or when
a certificate of their ownership has been given (r). Probably
an allotment would be held to be an issue (s).
(k) There are exceptions. See, as (m) Pool's case, 35 Ch. D. 579.
to banking companies issuing notes, (n) For general object of the
§ 6 of the Companies act, 1879 ; section, see Almeida and Tirito Co ,
and as to companies limited by 38 Ch. D. 415. As to companies
shares, but the articles of which not being wound up, see Burkinshaw
specially bind the holders of paid- v. Nicolls, 3 App. Ga. 1004 ; Gibson
up shares to pay certain specified <£ Co., 5 L. R., Ir. 139.
debts. See McKewaris case, 6 Ch. (o) See Coates' case, 17 Eq. 169 ;
D. 447 ; Maxwell's case, 20 Eq. Fothergill's case, 8 Ch. 270, infra,
585. bead 7.
(I) Marlbro' Club Co., 5 Eq. 365 ; (p) Anderson's case, 7 Ch. D. 75.
Baglan Hall Collierxj Co., 5 Ch. (q) Blijth's case, 4 Ch. D. 140 ;
346 ; Anglesea Coll. Co., 1 Ch. 555, Gibson cfc Co., 5 L. E., Ir. 139.
and 2 Eq. 379 ; Leifchild's case, 1 (?•) Bush's case, 9 Ch. 554.
Eq. 231 ; Hollyford Mining Co., Ir. (s) But see Clarke's case, 8 Ch. 1).
Rep. 1 Eq. 39. 635, where the allotment was made
784
WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 10.
Non-registration
by inadvertence.
Clarke's case.
Pajmient in
cash .
The contract in writing required to be filed must be some
contract distinct from the company's articles of association (0 ;
and must refer distinctly to the shares in question (u), but need
not mention their numbers (w).
The duty of registering the contract seems to be on the
person seeking to enforce it (x), and where a company owed a
person money, and he agreed to accept payment in fully paid-
up shares, but none were in fact allotted to him or accepted by
him, he was held not liable to be placed on the list of con-
tributories in respect of unpaid-up shares (y). Further, where
shares have been allotted as paid up in full pursuant to a con-
tract to that effect, but which contract has inadvertently not
been registered, the Court has ordered it to be registered on
being satisfied that no creditor would be prejudiced (s). In
Clarke's case (a), the contract was inadvertently not registered
until after a resolution to allot the shares had been passed, nor
until after some of the allottees had agreed to sell them ; but
the mistake was discovered, and the contract was registered
before any certificates were issued, and before any entries were
made in the register, and it was held that the statute had been
complied with in time.
In construing the expression payment in cash, the Courts
have upheld honest transactions in which no cash has passed;
they have treated payment in cash as equivalent to payment
within the meaning of a plea of payment at common law, and
have held payment in cash to mean payment as distinguished
from set-off or accord and satisfaction (b). Accordingly, pay-
by mistake. As to the issue of
debentures, see Mowatt v. Castle
Steel, dc, Co., 34 Ch. D. 58.
(t) Crickmer's case, 10 Ch. 614 ;
PritcharoVs case, 8 Ch. 956 ; Gibson
& Co., 5 L. R., Ir. 139. Apple-
treewick Lead Mining Co., 18 Eq.
95, contra, must be treated as over-
ruled.
(u) Coates' case, 17 Eq. 169.
(w) Ex parte Forcle, 30 Ch. D. 153.
Quaere, in the case of a Banking
( Y.mpany, see 30 & 31 Vict. c. 29,
§ 1, ante, p. 489.
(a;) See next note. As to com-
pelling the Registrar to register, see
ante, p. 395, note (p).
(y) Arnot's case, 36 Ch. I). 702.
(a) Dublin v. Wicklow Manure
Co., 13 L. R,, Ir. 200, ante, p. 395,
note (p).
(a) 8 Ch. D. 635.
(b) See Spargo's, 8 Ch. 407 ;
Fothergill's case, ib. 270 ; Pagin and
Gill's case, 6 Ch. D. 681 ; Andress's
case, 8 Ch. D. 126 ; Gibson & Co., 5 L.
R,, Ir. 139. Cldandh case, 14 Eq. 387,
was decided before this construction
CONTRIBUTORIES. — PAID-UP SHARES.
785
ment of a balance of an account stated, and in which the Bk- ^tcJjP- L
nominal amount of the shares is entered, is sufficient (c) ; and
even the settlement of an account treating the amount of the
shares as paid by the sums on the other side of the account is
sufficient if those sums are bond fide due from the company to
the shareholder (d) . On the other hand, if the original contract
is that property or services shall be paid for in fully paid-up
shares (e), or may be so paid for at the option of either party (J ),
the person who accepts the fully paid-up shares, will not be
considered to have paid for them in cash. And neither giving
nominally paid-up shares in satisfaction of the liability to calls
on unpaid-up shares (g), nor an agreement to apply a debt
payable by the company in futuro in paying up shares in
advance is a payment in cash (h).
Previouslv to the above enactment it had been decided, and Payment other-
J wise than in
where the statute in question does not apply, it may be taken cash.
as settled, that shares may be fully paid up, not only in money,
but in money's worth ; and shares which are bond fide given as
paid up, in payment of property transferred to the company, or
of services rendered to it, or of other claims against it, must,
on the winding up of a company be treated as paid-up
shares (i) ; and in the absence of fraud the Court will not
inquire into the value of that which is taken by the company
in payment instead of money (k) ; for example, where payment
was settled, and cannot be relied White's case, 12 Ch. D. 511 ; Burkin-
upon. It was there held that a shaw v. Nicolls, 3 App. Ca. 1004.
creditor of a company who accepted Ex parte Bentley, 12 Ch. D. 850, does
fully paid-up shares in satisfaction not seem to be in accordance with
of his debt was a contributory, and the other authorities,
liable to calls in respect of them. (/) Barrow's case, 14 Ch. D. 432.
(c) Spargo's case, 8 Ch. 407 ; (g) FothergilVs case, 8 Ch. 270.
Barrow-in-Furness Investment Co., (h) Kent's case, 39 Ch. D. 259,
14 Ch. D. 400. affirming 37 Ch. D. 508. The trans-
(d) Goates' case, 17 Eq. 169, was action in this case was also invalid
decided on this principle, but quaere on the ground of fraudulent pre- , .
whether there was there a sufficient ference. &<ju<J*& -W* T&yL Ko' r&T*-Ji- M / <*A. J /j>Q ******
settlement of the account. See, also, (i) See ante, p. 395 ; Gurrie's case, *%**!"* ». ^' ^°^
Maynard's case, 9 Ch. 60 ; Ferrao's 3 De G. J. & Sm. 367 ; AngUsea y^f j, * A^^
case, ib. 355, which, however, did Colliery Co., 2 Eq. 379, and 1 Ch. *-*«^/ «f «^ *—-//»-
not turn on this section. 555; and the cases in the next ^ f *y ^^ ***** ^°
(e) Pagin and Gill's case, 6 Ch. D. notes. **wM— AUj ajlzJ^^ -
681 ; Andress's case, 8 Ch. D. 126 ; (k) Pell's case, 5 Ch. 11, and 8 Eq.
L.C. 3 E
786 WINDING UP BY THE COURT.
Bk. IV. Chap. l. was made in paper, which turned out to be worthless, it was
Sect. 10. V I >
nevertheless treated as duly made (I). But a fictitious pay-
ment, by taking money from the company and returning it, is no
payment at all : e.g., where a promoter in this way paid up the
shares of a director (m) ; or where a director prepays his shares
and takes back the money in payment of fees (n). Such pay-
ments can only be valid where the honesty of the transaction
and the solvency of the company are unquestionable. Where a
director pays up his shares out of money paid to him, but
which can be recovered from him by the company, the shares
may be treated as not paid up unless they have been issued
pursuant to a duly registered agreement (o).
Moreover, if a shareholder pays money to the company upon
the terms that the money shall be treated as a loan, or as pay-
ment in respect of shares, according as the company continues
business or is wound up, the money so paid cannot on the
winding up of the company, be treated as having been paid
on account of the shares, and in anticipation of calls on
them(_p).
Payments in In order that money may be treated as paid in respect of
ehares. shares, it must be paid to the company on account of the
shares in question (q). When one company amalgamates with
another, and the shareholders in the old companjr exchange
their shares for shares in the new company, payments to the
new company in respect of the new shares cannot be treated as
payments to the old company, in respect of the old shares (r).
222. See the observations of V.-C. case turned on the fact, that the
Stuart on this and other cases in agreement was made after a petition
Leeke's case, 11 Eq. 100, affirmed 6 to wind up had been presented ;
Ch. 469. but the judgment goes far to support
(t) Schroder's case, 11 Eq. 131. the statement in the text.
(m) Englcfield Colliery Co., 8 Ch. (q) See case in next note, and
D. 388; Leeke's case, 11 Eq. 100, and Carriage Co-operative Supply Assoc,
6 Ch. 469 ; Disderi & Co., 11 Eq. 27 Ch. D. 322. And see Duchess of
242, where a cheque of the company Westminster Silver Lead Ore Co., 10
was given, and given back. Ch. D. 307, where a payment gene-
(n) Syke's case, 13 Eq. 255. rally in respect of a number of shares
(o) Hay's case, 10 Ch. 593. If was apportioned equally between
there has been such an agreement them.
the shares must, it seems, be treated (r) See Ex parte Jeaffreson, 11 Eq-
as paid up. See infra, pp. 790, 796. 109.
( p) Barge's case, 5 Eq. 420. The
CONTRIBUTORIES. PAID-UP SHARES. 787
A payment by a director in advance of the amount of shares Bk- }V- Chap. 1.
Sect. 10.
held by him will discharge him, although the payment may
have been made to enable the company to pay off a debt for
which the director was liable as guarantor (s).
If a holder of paid-up shares has had part of the capital of Return of
the company returned to him, e.g., by receiving a bonus or
dividend paid out of capital, and not out of profits, he could
perhaps be treated as the holder of shares not paid up, and be
put on the list accordingly (t).
Even a registered contract will not bind the company to treat Shares issued at
a share issued at a discount as a fully paid-up share. To the
extent of the discount, nothing has been paid for it. The
statute assumes that every share is paid for in money or money's
worth, and, to the extent to which there is neither, a registered
contract affords no protection. Consequently the holders
of such shares will be contributories (u), unless they are pur-
chasers for value without notice.
A company may be estopped from proving that shares issued Purchasers for
. . . T-.1--I- value without
by it as paid-up, are in truth not paid-up. but this doctrine notice.
will not avail persons who know the truth (x) ; it only applies
in favour of a bond fide purchaser for value without notice of
the real facts. But it does apply to him, and protects him
from being put on the list as a contributory (y), but not a pur-
chaser from him with notice (z).
Few questions present more difficulty than those which arise Repudiation of
ii i un paid-up
when a person, who has agreed to take paid-up shares, is sought shares.
(s) Poole, Jackson, and Whyte's 542 ; Ince Hall Rolling Mills Co., ib.
case, 9 Ch. D. 322. 545, are overruled.
(t) See Stringer's case, 4 Ch. 475, (a;) See below, and Simm v. Anglo-
and Ranee's case, 6 ib. 104 ; and American Tel. Co., 5 Q. B. D. 188.
compare Re Cardiff Coal and Coke (y) Burkinshaw v. Nicolls, 3 App.
Co., 11 W. K. 1007, and Cardiff, dec, Ca. 1004 ; A. W. Hall & Co., 37
Co. v. Norton, 2 Eq. 558, and 2 Ch. Ch. D. 712 ; Waterhouse v. Jamieson,
405. See, also, McKay's case, 2 Ch. L. R. 2 H. L. 29, and see Guest
D. 1. v. Worcester Rail. Co., L. R. 4 C. P.
{u) London Celluloid Co., 39 Ch. 9. Blyth's case, 4 Ch. D. 140, contra,
D. 190 ; Alrnada Tirito Co., 38 Ch. cannot be relied upon.
D. 415 ; Addlestone Linoleum Co., 37 (z) London Celluloid Co., 39 Ch. D.
ib. 191 ; Sandy's case, infra, p. 789 ; 190, correcting in this respect
Plaskynaston Tube Co., 23 Ch. D. Barrow's case, 14 Ch. D. 432.
3 e 2
788 WINDING UP BY THE COURT.
Bk. IV. Chap. l. to be put on the list in respect of shares which are not paid
Sect. 10.
up. He naturally desires to repudiate them, but it is seldom
that he can do so.
Effect of Com- The leading cases on this subject will be found collected
' below. In companies to which the Companies act, 1867,
applies the question whether a person is to be treated as a
member in respect of paid-up or unpaid-up shares, resolves
itself into two others, viz., (1) is he, or ought he to be treated (a)
as a member in respect of any shares ? and (2) can they, con-
sistently with the act, be treated as paid-up ? If a person is
not a member and cannot properly be treated as a member in
respect of any shares, he will escape (b), but otherwise he will
be fixed unless the shares have been paid for in cash, or
are to be treated as paid-up, pursuant to a duly registered
contract (c), or unless he is a purchaser for value without
notice (d). In companies not governed by the act in question,
similar principles will apply, but the proof that the company is
bound to treat the shares as paid-up, may be easier.
It must be borne in mind, that shares in companies governed
by the Companies act, 1862, and issued at a discount, are not
paid-up, and cannot be treated as paid-up even, if a contract
that they shall has been registered (e).
In the following cases, persons who had agreed to take or
had taken paid-up shares, were held not contributories :
Amot's case, 36 Ch. D. 702.
Arnot had agreed to take paid-up shares in payment of services,
the agreement was not registered, but no shares were allotted to
him or registered in his name. He was held not bound to take
unpaid-up shares.
Brown's case, 9 Ch. 102,
was a similar case, but there was no registered contract. On
the other hand, there was no agreement to take any shares unless
they were paid-up.
Cartings case, 1 Ch. D. 115, reversing 20 Eq. 580.
Hespeler's case, ib.
Walsh's case, ib.
(a) I.e., having regard to the (c) As in Catling's case, infra.
power to put his name on the (d) As to which, see ante, p. 787.
register, if not on already. (e) Ante, p. 787.
(b) As in Amot's case below.
CONTRIBUTOPJES. PAID-UP SHARES. 789
De Ruvigne's case, 5 Ch. D. 306. Bk- 17'^- L
In all these cases directors had paid-up shares transferred to eij :
them by a promoter : the shares were registered in their names.
They were issued as paid-up pursuant to a duly registered contract.
It was held not right, therefore, to put them on the list for unpaid-
up shares. Their liability in respect of their corrupt bargain with
the promoter was another matter. As to this, see infra, p. 790.
Gurrie's case, 3 De G. J. & Sm. 367 (/).
Directors had agreed to take paid-up shares, but no others. The
state of the register does not appear.
Miller's case, 5 Gh. D. 70, and 3 ib. 661.
Miller was a director, but had retired. 25 fully paid-up shares
were registered in his name as his qualification shares, but they
were treated as forfeited when he retired.
In the following cases, persons who had agreed to take paid-
up shares, were held contributories :
Gurrie's case, 3 De G. J. & Sm. 367.
Directors had agreed to qualify themselves ; 100 shares quali-
fied ; they endeavoured to discharge their obligation by means of
fully paid-up shares partly obtained from promoters and partly
voted to themselves.
Ex parte Daniel, 1 De G. & J. 372. i . -g^
Nickolls' case, 24 Beav. 639. J
Leeke's case, 6 Ch. D. 469, and 11 Eq. 100. \ See infra, under the
Disderi & Co., 11 Eq. 242. J next head.
Barrow's case, 14 Ch. D. 432.
A director was registered as the holder of 300 paid-up shares,
but they were neither paid-up nor protected by a registered
contract.
Other shares were treated as paid-up, he being regarded as a
purchaser for value without notice ; but see as to this, London
Celluloid Co., 39 Ch. D. 190.
Cleland's case, 14 Eq. 387,
Pagin and Gill's case, 6 Ch. D. 681,
Andress's case, 8 Ch. D. 126,
were all cases in which paid-up shares had been given in pay-
ment of goods or services, and registered in the name of the
creditor ; but there was no registered contract (g).
London Celluloid Co., 39 Ch. D. 190.
Addlestone Linoleum Co., 37 Ch. D. 191.
Sandy's case, In re Railway Time Tables,
(he, Co., W. N. 1889, p. 77.
Holders of shares at a discount.
(/) The shares here referred to (g) See, as to this class of cases,
are those indicated as (a) and (6) in ante, p. 785.
he report.
790 WINDING UP BY THE COURT.
Bk. IV. Chap. l. When shares are issued to promoters or their nominees as
- — '- — fully paid up pursuant to a duly registered contract, but under
circumstances which render the transaction a breach of trust
as against the company, the holders of the shares will not be
contributories in respect of them (h) ; although the holders
may be compelled to pay the value of the shares by other pro-
ceedings, e.g., by proceedings under § 165 of the Companies
act, 1862 (i).
6. Directors in respect of their qualification shares.
Directors' quali- The cases in which directors and other officers of a company
ought to have had a certain number of shares as a qualifica-
tion for their office, and they have acted more or less without
qualifying themselves, have given rise to considerable difference
of opinion.
No qualification In the first place, mistakes sometimes arise from supposing
that a certain number of shares are required to qualify all
directors, when in truth the qualification is only necessary
with respect to some of them, e.g., for elected directors, as
distinguished from those originally named (j), for town as dis-
tinguished from country directors (A;). Cases such as these
turn on the true construction of the company's deed of settle-
ment or articles of association, and not upon any rule relating
particularly to contributories.
Again, a resolution of the board of directors to the effect
that all the members of the board shall hold a certain number
of shares as a qualification does not necessarily impose any
obligation to qualify, and a director who acts without obeying
the resolution will not necessarily be a contributory (/).
Special acts of Parliament are sometimes so worded as to
make first directors shareholders to the extent of the shares
necessary.
(h) De Ruvigne's case, 5 Ch. D. (j) As in Forbes' case, 8 Ch. 768
306 ; Garling, Hespeler, and Walsh's Lord Claud Hamilton's case, ib. 548
case, 1 Ch. D. 115. Stock's case, 4 De G. J. & Sm. 426.'
(i) See Carriage Co-operative Svppl n Tothill's case, 1 Ch. 85.
Assoc.,27Ch.D. 322, where the agree- (k) As in Cotterell's case, 11 W. R.
ment was not registered ; Pearson's 13.
case, 5 ib. 336 ; McKay's case, 2 ib. 1, {I) De Ruvigne's case, 5 Ch. D.
and ante, p. 694. 306.
CONTRIBUTORIES. — QUALIFICATION SHARES. 791
necessary to qualify them, and where this is the case such Bk. 17. _Chap. l.
directors will without more he contrihutories in respect of-
such shares (in).
Where no qualification is necessary, the circumstance that a Repudiation
person has agreed to become a director, and has acted as such, snares.
will not make him a contributory in respect of shares allotted
to him and pined in his name without his authority or know-
ledge ; and if, in truth, he did not know that shares were in
his name, knowledge of the fact will not be imputed to him on
the ground that he might have seen the entries in the books if
he had looked into them (n). But if the regulations of the
company do require a director to hold a certain number of
shares, and they are allotted to him and are registered in his
name, he will be a contributory in respect of them (o), although
he may not have applied for them or known of their allotment
to him (p), provided he has no other shares sufficient to
qualify him (q).
Still less can a director who accepts the shares necessary to
qualify him take advantage of any want of formality, and repu-
diate them on the ground that he never was, properly speaking,
a shareholder in respect of them (/■).
But, generally speaking (s), a director is not bound by Qualification
may be obtained
accepting office to obtain his qualification shares direct from by transfer.
the company ; he may obtain them by purchase from other
people, and if he obtains them within a reasonable time after
he becomes a director he cannot be made a contributory in
(m) Kincaid's case, 11 Eq. 192, 2nd table infra, p. 796.
where shares had been allotted to (q) See infra, as to this.
the directors ; Forbes' case, 19 Eq. (r) Walter's case, 3 De G. & Sm.
353 ; Knox's and Nugent's case, Ir. 149, affirmed on appeal, 19 L.J. Ch.
R. 11 Eq. 294 ; O'Brien's case, ib. 501 ; Honey's case, 4 De G. J. & S.
422, where no shares had been 426 ; Gurrie's case, 3 De G. J. & S.
allotted. See, also, Portal v. 367. And see Bird's case, 4 De G.
Emmens, 1 C. P. D. 201 & 664, J. & S. 200, where the director ap-
and South London Fish Market Co., plied for shares as agent.
39 Ch. D. 324. (s) The regulations of the coin-
(n) Hallmark's case, 9 Ch. D. 329. pany might be exceptional. So if
(o) Saunders' case, 2 De G. J. & no shares could be obtained except
Sm. 101, is not opposed to this. It from the company, see Hamley's case,
arose under older acts. 5 Ch. D. p. 707.
(p) See the cases collected in the
792 WINDING UP BY THE COURT.
Bk, IV. Chap. 1. respect of any additional shares on the ground that he did not
Sect. 10.
■ qualify himself soon enough, and ought to be treated as
holding shares as soon as he accepted office or acted as a
director {t).
General Assuming that qualification shares are necessary, then (in
prmcip es. ^e absence of any special statutory enactment applicable to
the case) the questions to be determined in each case are —
1. Has the director expressly or impliedly agreed with the
company to take the necessary shares from it ? 2. Has he so
acted as to be estopped from denying that he has so agreed ?
If either of these questions is decided against him he will be a
contributory, but not otherwise. The state of the register is
very important ; for if he has been registered as a member in
respect of his qualification shares his assent to take them will
be readily inferred, and he will be a contributory unless he
can prove that his name ought to be removed from the register
even after the winding up has commenced (u). On the other
hand, if he has not been registered as a member, the evidence
against him must establish that he ought to be on the register
in respect of the qualification shares.
The application of these principles depends on facts and
inferences of fact, and, as might be expected, the cases on the
subject are by no means all consistent. An attempt has been
made below to classify the most important of them for conve-
nience of reference, but the principles underlying them all will
be found to be those stated above.
The cases apparently warrant the following inferences : —
Observations on 1. Notwithstanding § 16 of the Companies act, 1862, ren-
the cases. n . , . n , . n . .
denng a company s articles binding on its members, a person
who is a member (by subscribing the memorandum of associa-
tion or by having shares), and who becomes a director, is not
necessarily a contributory in respect of the shares necessary to
qualify him for the office (x).
(t) Broum's case, 9 Ch. 102 ; Wheal Butter Consols, 38 Ch. D. 42 ;
Karuth's case, 20 Eq. 506 ; Marquis and see Heivitt's case and Brett's case,
of Abercorn's case, 4 De G. F. & 25 Ch. D. 283 ; and Browne v. La
J. 78. Trinidad, 37 Ch. D. pp. 13, 14.
(u) This was done in Austin's Compare Bilton Hotel Co., 9 L. K.,
case, 2 Eq. 435. Ir. 338.
(x) Karuth's case, 20 Eq. 506 ;
CONTRIBUTORIES. — QUALIFICATION SHARES. 793
2. The Courts have often declined to infer an agreement by Bk- IV- ChaP- 1-
Sect. 10.
a director with the company to accept qualification shares from
it, although he has accepted the office of director and acted as
such without being qualified. The cases on this point, how-
ever, are by no means uniform ; nor can they be expected to
be so, as thej^ all turn on inferences of fact (y).
3. If a company is wound up before the lapse of a reason-
able time for the acquisition of qualification shares, directors
who have not acquired them will not be contributories in
respect of them (z).
4. So, if a person has agreed to become a director, but has
changed his mind or has retired almost immediately, and has
not accepted qualification shares, and has not agreed to take
them otherwise than inferentially by being a director, he will
not be a contributory (a). So if he retires on the ground
that conditions on which he accepted office have not been
fulfilled (6).
5. If the holding of qualification shares is a condition pre-
cedent to election as a director, and an unqualified person is
elected and acts for a short time, and then retires before he
obtains his qualifying shares, he will not be a contributory (c).
His election will have been void. Nor in such a case will he
be made a contributory if qualification shares are allotted to
him after his retirement (d).
6. A director may treat any shares he holds as qualification
shares unless he has agreed to take them in addition to
others (e).
(y) Compare the cases in the two Green's case, 18 Eq. 428. Compare
tables below, and see the Irish case, Sidney's case, 13 Eq. 228.
Re Hilton Hotel Co., 9 L. R., Ir. 338, (c) Hamley's case, 5 Ch. D. 705 ;
where the director was held liable. Barber's case, ib. 963 ; Jenner's case,
(z) Hewitt's case and Brett's case, 25 7 ib. 132.
Ch. D. 283 ; Wheal Butter Consols, {d) Barber's case, 5 Ch. D. 963.
■38 Ch. D. 42. See, as to estoppel, per James, L. J.,
(a) Marquis of Abercorn's case, 4 at p. 968.
De G. F. & J. 78, explained and (e) As he had in Fowler's case, 14
approved in Brown's case,9 Ch. 102 ; Eq. 316, but not in Duke's case, 1
Karuth's case, 20 Eq. 506 ; Barber's Ch. D. 620, where Fowler's case is
case, 5 Ch. D. 963. See, also, the doubted ; Brown's case, 9 Ch. 102,
next note. and Miller's case, 3 Ch. D. 661, are
(b) Austin's case, 2 Eq. 435 ; the leading cases on this point.
794 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. 7. Apart from any special circumstances, if a director is the
Sect. 10. r . . ....
- registered holder of the requisite number of shares, he will be
qualified, although the articles require him to hold them in his
own right, and he may have mortgaged them or even have no
beneficial interest in them (/).
8. As regards paid-up shares, nothing need be added to
what has been stated already when dealing with that sub-
ject (g). It has been said that shares which are nominally
fully paid up cannot satisfy the requirements of the qualifica-
tion clause (h) ; but if the company is bound to treat the
shares as paid up, whether by reason of a duly registered
contract or otherwise, that must be sufficient.
§ 165. Acting as a director without a qualification does not amount
to a misfeasance within § 165 of the Companies act, 1862 (i).
TABLE I.
In the following cases directors were held not to be contri-
butories in respect of their qualification shares : the Court
coming to the conclusion that no agreement to take shares
was established, and that the directors were not estopped from
denying their due qualification :
Abercom's case, 4 De G. F. & J. 78.
Director accepted office and was advertised, but he never acted,
and did not know qualification was necessary.
See, also, Mather v. National Ass. Assoc, 14 C. B. X. S. 676.
Karuth's case, 20 Eq. 506 (k).
Director subscribed memorandum and articles of association r
and was advertised ; but he withdrew from the company and
never acted.
Brorvn's case, 9 Ch. 102.
Director had fully paid-up shares registered in his name, and no
agreement to take others was proved.
(/) Pulbrook v. Richmond Cons. (h) Clime's case, 3 De G. J. & S.
Mining Co., 9 Ch. D. 610 ; Gumming 367.
v. Prescott, 2 Y. & C. Ex. 488. Sed (i) Coventry and Dixon's case, 14
qumre, if he is only a trustee of Ch. D. 660.
them, see Bainbridge v. Smith, (k) In all these cases the directors
W. N. 1889, 72. were put on the list for the shares-
(g) Ante, p. 783 et seq., and see the for which they signed the memor-
tables below. andum of association.
CONTRIBUTORIES. — QUALIFICATION SHARES.
795
Millers case, 5 Ch. D. 70, and 3 ib. 661. Bk- ™- °hap. lm
Director had fully paid-up shares to qualify him, and they were *^ — L_
forfeited when he retired.
Hamley's case, 5 Ch. D. 705.
Barber s case, ib. 963.
J earner's case, 7 Ch. D. 132.
In all of these the qualification was a condition precedent to
election, and the directors were not duly elected, and they had
retired before obtaining any shares.
Hewitt's case and, Brett's case, 25 Ch. D. 283. )
Wheal Butter Consols, 38 Ch. D. 42. J
Directors signed the memorandum and articles of association,
but had not had a reasonable time to qualify before winding up
commenced. In Wheal Buller Consols directors had three months
to qualify, and the winding up commenced directly afterwards.
Tothill's case, 1 Ch. 85.
Director signed memorandum and applied for qualification
shares, but never got them. His name was in a list for the shares,
but he did not know it. N.B.— The articles did not require
directors named in them to qualify.
Compare Roney's case, 4 De G. J. & Sm. 426.
Stock's case, 4 De G. J. & Sm. 426.
Forbes' case, 8 Ch. 768.
Lord Claud Hamilton's case, 8 Ch. 548.
The last observation applies to these also.
Chapman's case, 2 Eq. 567.
Director signed memorandum and articles of association, and
was named in them as a director. He applied for qualification
shares, but never got them. He resigned.
Currie's case, 3 De G. J. & Sm. 367 (I), \
Curling's case, 1 Ch. D. 115, j ante, pp. 788, 789.
Arnolds case, 36 Ch. D. 702, )
are all cases in which directors were entitled to say that they
were only liable, if at all, in respect of fully paid-up shares.
Arnot's case was not a case of qualification shares.
Saunders' case, 2 De G. J. & Sm. 101.
Saunders was registered, but he was not liable to creditors as a
member, and he was entitled to be indemnified by the company
under the older winding-up acts, therefore he was not a contributory.
Hallmark's case, 9 Ch. D. 329.
Shares were registered in a director's name without his know-
ledge. No qualification shares were necessary.
Austin's case, 2 Eq. 435.
The director was on the register for the qualification shares, but
he did not know it. He had retired on the ground that the con-
ditions on which he became a director had not been performed.
N.B. — None of the above were registered in respect of unpaid-
up shares, except Austin, Saunders, and Hallmark.
(I) As to the shares a, see ante, p. 789, note (/).
796 WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect 10, TABLE II.
In the following cases directors were held to be contribu-
tories in respect of their qualification shares, the Court coming
to the conclusion that an agreement to take them was
established, or that the directors were estopped from deirying
their qualification :
Leeke's case, 6 Ch. 469, and 11 Eq. 100.
Director had qualification shares allotted to him ; they were
registered in his name as paid up, which, however, they were not.
He knew he had the shares, and acted as a director.
Harivard's case, 13 Eq. 30.
Director acted, and had qualification shares allotted to him, but
he did not know it.
Levita's case, 3 Ch. 36,
Bird's case, 4 De G. J. & Sm. 200,
were both cases of express application for shares by a director,
and registration in his name.
See, also, Barrow's case, ante, p. 789 ; and Roney's case below.
Disderi & Go., 11 Eq. 242.
11 directors had qualification shares allotted to them and
registered in their names as fully paid-up, which, however, they
were not.
Walter's case, 3 De G. & S. 149, affirmed 19 L. J. Ch. 501.
Qualification shares were placed in director's name with his
consent ; but the formalities necessary to make him a shareholder
were not duly complied with.
Duke's case, 1 Ch. D. 620.
Fowler's case, 14 Eq. 316.
The question in these cases was how many shares over and
above the qualification number the director was liable for. Each
was decided according to his real agreement.
Curries case, 3 De G. J. & Sm. 367 (m).
The directors had signed the articles which required them to
hold 100 shares. They had voted themselves paid-up shares.
They were treated as holders of 100 unpaid-up shares. Shares for
which they had signed the memorandum were reckoned as part of
their 100 qualification shares. Currie acted as a director ; see
20 Eq. 510.
Esparto Trading Co., 12 Ch. D. 191.
Goddard had accepted the office of director, and had acted as
such : he was registered in respect of his qualification shares ;
they had been marked in the books as cancelled, but they had not
been duly forfeited.
(m) The shares here referred to are those indicated as b and c in the
report. See ante, p. 789.
CONTRIBUTORIES. SUBSCRIBERS OF MEMORANDUM. 797
Eoney's case, 4 De G. J. & Sm. 426. Bk- IV- ChaP- L
Roney acted as a director and agreed to take 100 shares ; but '
there was no allotment of them, nor were they registered in his
name.
Hay's case, 10 Ch. 593.
Hay had signed the memorandum of association for the shares
for which he was held liable. The only question was, whether he
had paid lor them.
7. Subscribers of the memorandum of association.
In companies formed under the act of 1862, the sub- Subscribers of
scribers (n) of the memorandum of association are members, dum 0f assoda-
and liable to be put on the list of contributories, although tlon-
the memorandum may have been somewhat altered since they
signed it (o) ; and although no shares may have been allotted
to them, and they may never have been registered as share-
holders (p) ; and although the directors may have cancelled
the shares at the request of the subscribers (q). If, however,
all the shares in the company have been duly allotted to other
persons, so that none are left which a subscriber of the memo-
randum can hold, he will not be a contributory, but must be
treated as having transferred his shares (r).
In Felgate's case (s) it was held that a person who signed Felgate's case.
the memorandum and articles of association was not a con-
tributory, the articles having been altered after he signed them,
but before they were registered. But it is very difficult to
reconcile this decision with the provisions of the act (t).
Shares allotted to the subscribers of a company's memo-
randum of association are prima facie allotted in respect of, or
(n) Signature by an agent is five notes,
equivalent to signature by oneself, (q) Esparto Trading Co., 12 Ch.
Whitley Partners, Limited, 32 Ch. D. 191. Compare NicoVs case, 29
D. 337. Ch. D. 421.
(o) Peel's case, 2 Ch. 674 ; Oakes (r) Mackley's case, 1 Ch. D. 247 ;
v. Turquand, L. R. 2 H. L. 325. Drummond's case, 4 Ch, 772. See 4
Compare Felgate's case, 2 De G. J. & Ch. 776. See, also, Kipling v. Todd,
Sm. 456. 3 C. P. D. 350.
( p) London and Provincial Con- (s) 2 De G. J. & Sm. 456, decided
solidated Coal Co., 5 Ch. D. 525 ; on 19 & 20 Vict. c. 47.
Sidney's case, 13 Eq. 228 ; Evans' (t) See §§ 11, 18, and the cases in
case, 2 Ch. 427 ; Hall's case, 5 Ch. note (o), ante.
707. See, also, the cases in the next
798 WINDING UP BY THE COURT.
Bk. IV. Chap. l. include, the shares subscribed for ; consequently, unless there
- — : — are circumstances to rebut this inference, a subscriber's lia-
bility is not for the number of shares subscribed for, plus
the number allotted, but only for one of such numbers, or
the larger of them if they are unequal (u).
Duke's case. In Duke's case (x) there were two classes of shares, A.
shares and B. shares. Both classes were of the same nominal
amount, but the B. shares were preference shares. A person
subscribed the memorandum for 50 B. shares ; but he applied
for and had allotted to him 25 A. shares and 25 B. shares
instead of 50 B. shares. It was sought to place him on the
list in respect of 25 A. shares and 50 B. shares, but it was
held that this being contrary to the intention of all parties,
and the act only requiring the memorandum to state the
number of shares applied for, he was only liable to be a con-
tributory in respect of 25 A. shares and 25 B. shares.
Shares sub- The shares which a subscriber to the memorandum agrees
scribed for when ^0 ^ake are primd facie shares not paid up (y) : and the acqui-
to be treated as . .
paid up. sition by him of fully paid-up shares to which some one else
was entitled will not relieve him from his liability to be a con-
tributory in respect of the shares for which he subscribed the
memorandum of association (z). Before the passing of the
Companies act, 1867 (30 & 31 Vict. c. 131, § 25, already
noticed), it had been decided that if the memorandum or
articles of association showed that the shares subscribed for
were shares fully paid up, and the subscriber had given value
to the company for them, he would not be a contributory in
respect of an}r other shares (a) ; and that, if the articles of
association stated that paid-up shares were to be issued to a
subscriber of the memorandum, the shares for which he sub-
scribed were primd facie the same as those which he was
(u) Gilman's case, 31 Ch. D. 420 ; cases in the next four notes.
Elliott's case, W. N. 1866, p. 342. (2) See Migotti's case, 4 Eq. 238 ;
(a-) 1 Ch. D. 620. See, also, Forbes and Judd's case, 5 Ch. 270 ;
Maynard's case, 9 Ch. 60. Dent's case, 15 Eq. 407, and 8 Ch.
(y) Maynard's case, 9 Ch. 60 ; 768.
Ha y's case, 10 Ch. 593, where the shares (a) Baglan Hall Colliery Co., 5
were paid for out of the company's Ch. 346 ; Baron de Beville's case, 7
money. See, also, the cases collected Eq. 11. See note (c), infra.
in Table II., ante, p. 796, and the
CONTRIBUTORIES. HOLDERS OF SCRIP. 799
■eceive under the articles of association ; or in
other words, shares paid in full (6). However, notwith-
entitled to receive under the articles of association ; or in Bk- Jv- ChaP- L
Sect. 10.
Dent's case.
standing these decisions, it was held in Dents case (c), that a
person who subscribed the memorandum of association was a
contributory and liable to calls, although the articles of asso-
ciation declared that all the shares subscribed for were to be
allotted as fully paid up, and although the company was bound
by agreement and by its articles to allot fully paid-up shares
to a third person, or his nominees, of whom the subscriber
was one. It is extremely difficult to reconcile this decision
with the case of the Baglan Hall Colliery Co. and others
of that class ; and it may be safely assumed that they
will not be extended even if they should be ever followed
again.
With respect to companies formed since 1867, it has been Anderson's case,
held by the Court of Appeal, in Anderson's case (d), that
shares for which a person signs the memorandum of associa-
tion must be treated as paid up if there is a bond fide con-
sideration for them, and if an agreement that they are to be
treated as paid up is duly registered pursuant to 30 & 31
Vict. c. 131, § 25, at the same time as the memorandum
itself. Such an agreement was held not to be invalid on the
ground that it altered or was inconsistent with the memo-
randum of association, which was the view adopted in the
court below.
8. Holders of scrip.
With respect to scrip companies, i.e., companies the shares Shares in scrip
companies,
in which pass by the delivery of the scrip certificate, he who
when the company is ordered to be wound up, is the bond fide
holder of a certificate, and is bond fide entitled to a share as
such holder, is a contributory in respect of such share (e).
(b) Jones' case, 6 Ch. 48 ; Pell's up ; but this alone would not be
case, 5 ib. 11 ; Drurnmond's case, 4 sufficient, see ante, 784, note (t).
Ch. 772. See the next note. (e) See Grisewood and Smith's case,
(c) Dent's case, 15 Eq. 407, and De Pass's case, 4 De G. & J. 544 ;
8 Ch. 768; Fothergill's case, 8 Ch. Finlay Hodgson's case, 26 Beav. 182;
270. Barclay's case, ib. 177 ; Shewell's case,
(d) 7 Ch. D. 75. The articles 2 Ch. 387, and the cases in notes ( j)
also stated that the shares were paid and (k) infra.
800 WINDING UP BY THE COURT.
Bk. IV. Chap. l. But as will be seen hereafter, mala fide transfers of the certi-
: — ficates to persons who hold them for the transferors, will not
enable the latter to escape from being made contributories (/).
If, as sometimes happens, the scripholders are a distinct class
from the shareholders, not enjoying the same rights, and not
subject to the same liabilities, difficult questions arise as to
the liability of the scripholders to be put on the list of con-
tributories. A company of this sort has been ordered to be
wound up on the petition of a transferee of scrip, but only on
his admitting himself to be a contributory. The very fact,
however, that this admission was required, shows that the
Court was not satisfied that he would have been a contributory
without it (g) ; and in other cases arising on the winding up
of the same company it was held that even an allottee of scrip
was not a shareholder (h).
As has been seen above (i), an agreement to take shares which,
owing to the non-performance of conditions precedent or other-
wise, cannot be specifically enforced, does not render the per-
son who has agreed to take them a contributory. Allottees of
scrip are frequently in this position ; and when they are, they
are not contributories. Thus, where scrip transferable to
bearer is issued, and it is provided in substance that on regis-
tration of the scrip, shares will be exchanged for it, an allottee
of scrip who transfers it without registering it ( j), or whose
scrip is forfeited for non-registration {k) (power to forfeit in
such case being reserved), will not be a contributory, and it is
very questionable whether he will if he holds the scrip and it
remains unforfeited ; unless, indeed, he is registered as a
shareholder, and he allows himself so to continue.
Under the Companies act, 1862, shares transferable to
(/) Lund's case, 27 Beav. 465 ; a member, and was held to be a
Hyam's case, 1 De G. F. & J. 75 ; contributory. See, also, - Weston's
Gostello's case, 2 ib. 302. Compare case, 5 Ch. 614, where the son had
De Pass's case, 4 De G. & J. 544. caused the shares to be registered,
These will be noticed hereafter. and the father was put on the list.
(g) Littlehampton Steam Ship Co., (i) Ante, p. 778 et seq.
2 De G. J. & Sm. 521. (j) Eustace v. Dublin Trunk Rail.
(h) Ormerod's case, 5 Eq. 110. Co., 6 Eq. 182.
Compare Gregg's case, 15 "W. R. 82, Qc) Ex parte Collum, 9 Eq. 236 ;
where the allottee was registered as Kelk's case, ib. 107.
CONTRIBUTORIES. TRUSTEES, ETC. 801
bearer, and not paid up in full, are illegal (I) ; the question who Bk- IV- ChaP- *•
oCCt. I U,
ought to be a contributory in respect of such a share in a com-
pan}' formed and registered under the act, is by no means free
from difficulty, and has not been decided. In such a case the
only contributories appear to be the subscribers to the memo-
randum of association (m), and other duly constituted share-
holders, if any, although they may have parted with their
scrip (n).
9. Trustees and Cestuis que trustent.
A trustee who is a shareholder is, like any other share- Trustees con-
holder, liable to be made a contributor}', and he must look for
his indemnity to his cestui que trust. The trustee, as between
himself and the other shareholders, is bound to contribute
with them to the payment of the company's debts ; and he
therefore, is in ordinary cases the person to be on the list.
There are numerous cases to this effect in the books. The
matter was considered and settled by the House of Lords in
several cases of great hardship arising on the failure of the
City of Glasgow Bank ; there some of the persons held liable cityof Glasgow
were described as trustees in the register of shareholders, but BankCa3e3>
this circumstance was of no avail (o). Even if the trustee has
not complied with all the formalities which ought to have been
complied with according to the company's articles of associa-
tion or deed of settlement, yet if the shares have been assigned
(I) This has never been actually 547 ; Cuninghame v. City of Glasgow
decided ; but see General Co. for Bank, ib. 607 ; Cree v. Somervail, ib.
Promotion of Land Credit, 5 Ch. 648 ; Lumsden v. Buchanan, 4 Macqu.
363, and see 30 & 31 Vict. c. 131, 950. Their liability is joint and
§ 27, et seq. several, Gillespie v. City of Glasgow
(m) But see the cases in note (e), Bank, 4 App. Ca. 632. See, also,
ante. Davidson's case, 3 De G. & Sin. 21 ;
(?t) McEuen v. West Lon. Wharves Ex parte Jones, 27 L. J. Ch. 666,
Co., 6 Ch. 655. and Barrett's case, 4 De G. J. & Sm.
(o) Muir v. City of Glasgow Bank, 416.
4 App. Ca. 337, and other cases, ib.
L.G. 3 P
802
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Cestui que trust
not a contribu-
tory.
Bugg's case.
Transfers into
persons' names
without their
authority.
Dishonest
trusts.
Cox's case.
to him and he has accepted them he will be a contributory in
respect of them (y).
The cestui que trust on the other hand is not liable to be put
on the list. The leading case on this head is Bugg's case (z) ;
there a person bond fide bought shares in the name of his
brother, in order that it might not be known that he was him-
self connected with the company : there was evidence to show
that the trustee was unable to meet the calls upon him, but
the cestui que trust was held not a contributory. Moreover,
subject to the observations which will be made hereafter on
maid fide transfers (a), it is immaterial whether the trustees
acquire the shares by allotment, as in Bugg's case, or by
transfer (b) ; and the fact that the object of the cestui
que trust was to avoid liability will not make him a con-
tributory (c).
But although the general rule is that the trustee and not
the cestui que trust is a contributory, still, a person in whose
name shares have been placed without his knowledge or con-
sent, and who has not himself accepted them or ratified what
has deen done (d), cannot be made a contributory in respect of
them (e).
Again, the rule that the trustee, and not the cestui qui trust,
is a contributory, will not be adhered to where a departure
from it is required in order to defeat fraud. In a case where
a promoter of a company took a number of shares, and placed
them in the names of various persons in order to swell the
(y) Hoare's case, 2 J. & H. 229 ; Ex
parte Drummond, 2 Giff. 189. Com-
pare Ex parte Scully, 6 Ir. Ch. 72 ;
and Ex parte Hall, 1 Mac. & G. 307,
reversing 3 De G. & Sm. 80. Observe
that in this case non-liability to
creditors was relied on.
0) 2 Dr. & Sm. 452. See, also,
Fentvick's case, 1 De G. & S. 557 ;
Newry and Enniskillen Co. v. Moss,
14 Beav. 64 ; Wilson v. Keating, 27
Beav. 121, and 4 De G. & J. 588.
(«) See infra, class B.
(6) King's case, 6 Ch. 196 ; Mit-
chell's case, 9 Eq. 363.
(c) Williams' case, 1 Ch. D. 576 ;
and the cases in the last note.
(d) A ratification of a transfer
previously made without authority
is sufficient. Ker's case, 4 App. Ca.
549, 598. Compare Bell's case, 4
App. Ca. 547 (Janet Hill's case).
(«) Pirn's case, 3 De G. & S. 11,
and 1 Mac. & G. 291 ; Henessey's
Ex. case, 3 De G. & S. 191, and 2
Mac. & G. 201, in both of which the
evidence of acceptance was insuffi-
cient.
CONTRIBUTORIES. — TRUSTEES. 803
apparent number of shareholders, and so to deceive the public, Ek- ^v- ChaP- !•
Sect. 10.
he was put on the list in respect of all such shares ; he was -
in fact, treated as holding the shares in various names which
he had chosen to assume for purposes of his own (/). Whether
his nominees were also liable to be put on the list was not
decided, but was expressly left open for determination (g). So
where a father bought shares from a company in the name of
a son, who was under age, the father was placed on the list,
the son's name being treated as his (h).
So where a person procured a married woman to apply for Name of trustee
shares for him, and she did so, and shares were allotted to 0f cestui que
her, it was held that he was a contributory : her name being """**■
treated as his own disguised (i).
Upon the same principle, viz., in order to defeat fraud, if a Mala fide
person transfers his shares to a nominee of his own, in order trans ers"
to put the nominee forward in case of reverse, but at the same
time to retain for himself whatever advantages may accrue
from the shares, the real owner will be treated as himself hold-
ing the shares, and will be placed on the list accordingly (k).
In all these cases the dishonest purpose of the trust
prevents its recognition for the purpose for which it was
created.
But, as already seen, a purchase of shares in the name of Name used to
avoid liability.
a person to avoid liability does not entitle the company to put
the purchaser on the list, if the transaction is a real trans-
action (I).
Further, in companies, the shares of which are transferable Holders of
by delivery of certificates, the person who xaay happen to hold t,y delivery. °
the certificates for another when the company is ordered to be
(/) Cox's case, 4 De G. J. & Sm. (i) Pugh and Sharman's case, 13
53, on appeal from the Stannaries. Eq. 566. Compare London, Bombay
Compare King's case, 6 Ch. 196. and Mediterranean Bank, 18 Ch. D.
(g) See, as to this, Barrett's case, 581, where there was no fraud.
4 De G. J. & Sm. 416, and David- (k) Chinnock's case, Johns. 714,
son's case, 3 De G. & Sm. 21. and others of that class noticed
(It) Weston's case, 5 Ch. 614 ; infra, under class B., p. 826. Com-
Richardson's case, 19 Etp 588. pare Williams' case, 1 Ch. D. 576.
Compare Ex parte Scully, 6 Ir. Ch. (I) Ante, p. 802.
72.
3 ? 2
804 WINDING UP BY THE COURT.
Bk. IV. Chap. l. wound up, is not necessarily the proper person to be on the
Sect. 10.
list of contributories. "Whether he is, or is not, depends upon
whether he held them as a principal and legal owner, or
simply as the agent of the person to whom they belonged.
Finlay's case. This is shown by Finlay's case (m), which arose in winding up
a Scrip company. In this case Messrs. Finlay & Co., who
were merchants and bankers, were the allottees and holders of
1455 shares. Of these sixty were their own, and the rest
belonged to their customers. Messrs. Finlay & Co., however,
received all dividends and paid all calls on all the shares, and
they did so in their own names, without making any distinc-
tion between the shares which belonged to themselves and
those which did not. One at least of the directors of the
company knew that Messrs. Finlay & Co. held shares as agents
merely. It was decided that Messrs. Finlay & Co. were con-
tributories only in respect of the sixty shares which were their
own. The shares in this case were transferable by delivery,
there was no rule of the company to the effect tbat trusts
should be ignored, and there was, therefore, no reason why the
cestui que trustent should not be treated as the holders of the
shares. It may however be doubted, whether it therefore
followed that the agents could not have been treated as the
holders ; for their principals were undisclosed.
Trustees for A person who holds shares in a company as a trustee for
company. ....
that company, is obviously entitled to be indemnified by" the
company against all losses (n), unless the transaction in respect
of which he holds the shares is ultra vires, or fraudulent, and
not binding on the shareholders (o). It follows from this, that
where the transaction is valid, the trustee ought not to be on
(to) Finlay, Hodgson's case, 26 tain payments would be) entitled to
Beav. 182, and 27 L. J. Ch. 664. a certain number of shares in the
See, also, SheweWs case, 2 Ch. 387. company. The certificates passed
The company had no deed of settle- by delivery, and the holder was
ment, and was not incorporated. treated as the owner. See ante, p.
It had a prospectus, which set out 799 et seq., as to scrip.
the constitution and regulations of (n) Janus v. May, L. It. 6 H. L.
the company, so far as it had any. 328 ; Ex parte Oriental Commercial
The scrip certificates declared that Bank, 3 Ch. 791.
the holder was (or on making cer- (o) In a case of fraud the trustee
CONTRIBUTORIES. TRUSTEES. 805
the list of contributories except in respect of his liability to Bk- £v- ChaP- *■
oGC* . J. v.',
creditors ; and under the older winding-up acts he would not —
have been a contributory at all (p). But as regards companies
registered under the Companies act, 1862, members are con-
tributories although they may be trustees for the company ;
their right to indemnity can only be taken into account when
the creditors have been paid, and the rights of the contribu-
tories inter se come to be adjusted. This point was decided
by the V.-C. Wood, in Chapman and Barker's case (q), where Chapman and
a shareholder in a company borrowed money of it, and trans-
ferred his shares to a trustee for the company as a security for
the loan. The trustee was put on the list.
A trustee of shares is entitled to be indemnified by his cestui Trustee's right
n ii -i i i -i i n of indemnity.
que trust against all calls paid and to be paid, and all expenses
properly incurred by the trustee in the execution of his trust (r),
and he may obtain a declaration of his right to an indemnity
before any call upon him has been made (s). It not unfre-
quently happens that the trustee is insolvent, while the cestui
que trust is not. Even under these circumstances the cestui
que trust cannot be put on the list of contributories (t).
Whether in such a case the company can compel the trustee
could be fixed with the shares, gone into liquidation. See Oree
whilst his right to indemnity might v. Somervail, ubi sup. Qucere if it
be repudiated. See Ex parte Daniell, will do so before. See Beat tie v.
1 De G. & J. 372, and 23 Beav. Lord Ebury, L. R. 7 H. L. 102.
568 ; Nicltoll's case, 24 Beav. 639 ; In Gray's case, 1 Ch. D. 664, where
Davidson's case, 3 De G. & Sm. 21. the trustee was never registered as
Compare Saunders' case, 2 De G. J. a holder, and it was agreed that he
& Sm. 101. should not be, he was held not a
(p) Saunders' case, 2 De G. J. & contributory.
Sm. 101. Observe that there the (?•) See Cruse v. Paine, 6 Eq. 641,
creditors could not have succeeded and 4 Ch. 441 ; Butler v. Cumpston
at law against Saunders. 7 Eq. 16 ; James v. May, L. R. 6 EL
(q) 3 Eq. 361. See, also, Cree v. L. 328, and see Huyhes-Hallett v.
Somervail, 4 App. Ca. 648, and Indian Mammoth Gold Mines Co.,
Munster Bank, Limited, 17 L. R., 22 Ch. D. 561.
Ir. 341 ; Ennis and West Clare (s) Hobbs v. Wayet, 36 Ch. D. 256,
Railway Co., 3 L. R., Ir. 187. and compare last case.
The Court will not rectify the (£) Buyy's case, ante, p. 803 ;
register and treat the trustee as not Williams' case, 1 Ch. D. 576.
a member after the company has
806
WINDING UP BY THE COURT.
Bk. IV. Chap. 1. to enforce his right of indemnity, and so reach the cestui que
Sect. 10. • t t
trust, has not been decided (u).
Resignation of A trustee who is a shareholder does not terminate his
liability to the company by a mere resignation of his office,
in order to do this he must transfer his shares or in some
other way cease to be a shareholder (r).
Mortgagees.
Price and
Brown's case.
10. Mortgagees.
The principle on which a trustee is made a contributor}'
applies to mortgagees. Price and Brown's case (x) shows that
a person who holds shares only as a security for a debt, and is
known to do so by the directors of the company, is as much a
contributory as if he were the absolute owner of such shares.
But an equitable mortgagee of shares is in the same position
as a cestui que trust, and not a contributory (jj). If a com-
pany borrows money on the security of its own shares, winch
are transferred to the mortgagee, it has been held that the
mortgagee will not be a contributory and that the Court will
rectify the register so as to give effect to the real intention of
the parties (z). But this requires reconsideration, and seems
inconsistent with the cases that show that persons registered
as holders of shares are contributori.es, although they hold
them hi trust for the company (a).
(u) See Hemming v. Maddick, 9
Eq 175, affirmed 7 Ch. 395; Massey
v. Allen, 9 Ch. D. 164, and British
Nation Life Ass. Assoc, 8 Ch. D. at
p. 708. If the trustee were made
bankrupt, his trustee in bankruptcy
could, it is conceived, enforce the
right to indemnity ; and what was
recovered would be distributable
like the rest of the bankrupt's
estate.
(v) Alexander Mitchell's case, 4
App. Ca. 548 & 567 ; RutherfuuVs
case, ib. 548 & 581 ; Buchan's case,
ib. 549 & 583 ; Ker's case, ib. 549 &
598.
(a;) 3 De G. & Sm. 146 ; Weiker-
sheim's case, 8 Ch. 831 ; Royal Bank
of India's case, 7 Etp 91, and 4 Ch.
252 ; Addison's case, 5 Ch. 294. As
to the mortgagee's right to indem-
nity from his mortgagor, see Phene
v. Gillan, 5 Ha. 1.
((/) Sichell's case, 3 Ch. 119, where,
however, the company had refused
to register the mortgagee. .See, also,
Gray's case, 1 Ch. D. 664.
(z) South-Eastern Rail. Co.'s claim,
14 Eq. 10 ; Beattie v. Lord Ebury,
L. E. 7 H. L. 102.
(a) Chapman and Barker's case, 3
Eq. 361, ante, p. 805.
C0NTRIBUT0RIES.— MARRIED WOMEN. 807
Bk. IV. Chap 1.
11. Persons under disability. ■ — ■ —
a) Companies holding shares in other companies.
A company holding shares in another company is a contri- Companies
butory in respect of such shares, unless to hold shares is *
beyond the power of the shareholding company (6). It is not
necessary that the transfer to the holding company should be
executed by it under its corporate seal (c). Partners who hold
shares in the name of their firm are contributories in respect
of them (d).
b) Married women and their husbands (e).
Before the Married women's property act, 1882, it was Married women
decided that if a company chose to deal with a married woman S are ° ers'
as a principal, and not as the agent of her husband, and she
being known to the company to be a married woman, was
allowed to become a shareholder in her own right; and if
further, by the rules of the company, her husband was not a
shareholder in respect of her shares, and she had no separate
estate, then, on the winding up of the company, neither she
nor her husband was a contributory. Not the wife, because
she was not capable of binding herself by contract ; not the
husband, because, ex hypothesi, he had nothing to do with the
shares or the company, and the latter had not dealt with his
wife as his agent (/). In Angas's case (g), a lady known to a Angas'scase
company to be married, bought shares, and was accepted as a
shareholder in respect of them, without any participation on
the part of her husband. He received the dividends, but
always as her agent ; he attended meetings, and once held a
proxy for another shareholder ; his name had been placed on
the list of shareholders, but this had been done without the
knowledge either of himself or his wife, He was held not to
(h) As in Ex parte British Nation (d) TVeikersheim's case, 8 Ch. 831.
Life Ass. Assoc, 8 Ch. D. 679, and (e) See ante, p. 41.
see Ex parte Contract Corporation, 3 (/) Ex parte Rhodes, 7 W. R. 510.
Ch. lOo ; Royal Bank of India's case, (g) 1 De G. & S. 560. Compare
4 ib. 252, and 7 Eq. 91. Luard's case, 1 De G. F. & J. 533.
(c) lb.
808
WINDING UP BY THE COURT.
London,
Bombay, and
Mediterranean
Bank.
Bk. IV. Chap. 1. be a contributory; for, by the rules of the company, he was
Sect. 10.
not a shareholder in respect of her shares.
Again, in the London, Bombay, and Mediterranean Bank (i),
a merchant applied for shares in a limited company in the
name of his wife : and shares were allotted to her accordingly.
The husband subscribed the memorandum and articles of
association for his wife, and paid the deposit money and all
calls made on the shares for her, and subsequently transferred
some of the shares, executing the transfers in her name or on
her behalf. The wife had no knowledge of any of these
transactions. The wife's name as " M., the wife of S." was
on the register. She had no separate estate, and the liqui-
dator sought to put the executors of the husband, who was
then dead, on the list of contributories, on the ground that
the husband was the true owner of the shares, and that the
wife's name had only been used to enable him to escape lia-
bility. V.-C. Hall, however, held that the liquidator was not
entitled to do this, as the company had accepted the wife as a
shareholder without any misrepresentation or concealment on
the part of the husband.
The case of a woman holding shares and marrying is specially
provided for by the Companies act, 1862. In such a case her
husband is liable during the continuance of the marriage to
contribute what she would have been liable to contribute if she
had not married (k). She also is liable in respect of her
separate estate, if any, under § 13 of the Married women's
property act, 1882 (I). Further, in the event of her surviving
her husband, she will be liable in respect of such shares (m).
Both she and her husband ought therefore to be on the list.
His liability does not appear to be limited in this case to the
amount of the property he acquired from his wife (n) ; but as
Female share-
holder marrying.
(i) 18 Ch. D. 581, and compare
Pugh & Slmrman's case, 13 Eq. 566.
(A) Compare §§ 78, and 38 & 74,
and see Ex parte Hatcher, 12 Ch. D.
284, decided on this act and the
Married women's property act,
1874; Bell's case, 4 App. Ca. 550.
(1) 45 & 46 Vict. c. 75, § 13.
(m) Ibid., and see under the old
law Burlinson's case, 3 De G. & S.
18 ; Sadler's case, ib. 36 ; White's
case, ib. 157 ; Kluht's case, 3 De G.
& S. 210. See, also, Luard's case, 1
De G. F. & J. 533.
(») See note (k), and 45 & 46
Vict. c. 75, § 14.
CONTRIBUTORIES. — INFANTS. 809
between him and her he is entitled to be indemnified out of her Bk- Iv- ChaP- !•
Sect. 10.
separate estate (o).
By the Married women's property act, 1882, shares stand- Effect of Mar-
ried women's
ing m the sole name of a married woman are deemed to belong property act,
to her for her separate use unless the contrary can be proved (p),
and her husband ought not now to be put on the list (q) in respect
of them unless his wife held the shares before her marriage (r).
She will be liable to be on the list in respect of her separate
estate (s), but not further : so that if she has no separate estate
except the shares in question and the company is not solvent
no one will be liable to contribute in respect of her shares.
If shares belonging to a married woman having separate
estate are held by trustees for her, they will be the contribu-
tories, and will be entitled to indemnity out of her separate
estate (t).
If the married woman is herself a trustee she and her
husband ought apparently to be both on the list (u).
c) Infants.
The writer is not aware of any case in which an infant has infant shan
been put on the list of contributories. Upon principle, how- ho1ders-
ever, there does not appear to be any reason why he should
not, if it be for his benefit ; and this, if there are surplus
assets, may be the case (x). Except, however, where it is for
an infant's benefit to accept shares, and with them the burdens
attaching to them, it is not easy to see how an infant can be held
to be a contributory. In the ordinary case of an insolvent com-
(o) See note (I). trustees.
(p) 45 & 46 Vict. c. 75, §§ 6 & 7, (u) See BeWs case, 4 App. Ca.
ante, p. 42. 547, the order made as to Janet Hill,
(q) See ib. §§6 and 13. See, as p. 562.
to the old law, Luard's case, 1 De G. (a;) See ante, p. 39. The 39th
F. & J. 533. section of the act of 1848 (11 & 12
(r) See Ex parte Hatcher, 12 Ch. Vict. c. 45, § 39), which enacted
D. 284, noticed above. that if any contributory were a
(s) So under the old law, see minor, he might attend the pro-
Matthewman's case, 3 Ecp 781 ; ceedings in the winding up by his
Luard's case, 1 De O. F. & J. 533. father or guardian, evidently con-
(t) Butler v. Cumpston, 7 Eq. 16, tern plated the possibility of an in-
and see ante, p. 801 et sea., as to fant's being a contributory.
810 WINDING UP BY THE COURT.
Bk. IV. Chap. l. paily, the infant's shares would be repudiated (y). The principle
— '■ — : acted on in Oakesx. Turquand {&), has never been applied to in-
fants. If an infant fraudulently represented himself as of age,
he might perhaps be fixed (a) ; but nothing short of this can,
it is conceived, deprive him of his right of repudiation. Even
if he signs the memorandum of association, he will, it is sub-
mitted, not be bound (6).
If an infant shareholder does not repudiate his shares either
whilst he is an infant or within a reasonable time after he
attains twenty-one, he will be a contributory (c) ; a fortiori will
he be so if, after attaining twenty-one, he does anything incon-
sistent with his right of repudiation, e.g., acts as a shareholder,
receives a dividend, or pays a call (d). But if he is an infant
when the winding up commences, or if he is not then pre-
cluded from repudiating his shares, he does not lose that right
Shrapnell's by mere delay. Thus in ShrapnelVs case (e), an infant who
case- had applied and paid for shares, and had paid calls, and
received dividends, attained his majority one week before the
company stopped payment ; three months afterwards he was
settled on the list of contributories after due notice, but he paid
no attention to the notice, and allowed the time for varying the
chief clerk's certificate to expire. A call was afterwards made
upon him as a contributory, and he then took out a summons
for leave to apply to vary the chief clerk's certificate putting
him on the list. This leave was granted on payment by the
infant of the costs of the application. He then applied to vary
the certificate, and to be removed from the list of contributories,
and he was struck off. He had done nothing after attaining
twenty-one which could be regarded as an election to take the
shares, and his repudiation was held not to be too late (/). It
(y) See Reid's case, 24 Beav. 318. trustee marrying after she attained
(») Ante, pp. 753 and 776. 21, BelVs case, 4 App. Ca. 547 ;
(a) See Wright v. Snoive, 2 De G. Janet Hill's case, p. 562.
& s. 321. (d) Lv.msden's case, 4 Ch. 31 ;
(b) See §§ 11 & 18 of the Com- Mitchell's case, 9 Eq. 363.
panies act, 1862. § 18 renders the (e) ShrapnelVs case, Re Barned's
infant a member, but does not ex- Banking Co., before Lord Eomilly,
elude his right to repudiate. at Chambers, 24 April, 1867.
(c) Ebbett's case, 5 Ch. 302. See (/) See, also, Mann's case, 3 Ch.
ante, p. 39, and the next note. See 459, note ; Capias case, ib. 458 ;
the curious case of a female infant Hart's case, 6 Eq. 512 ; Curtis's case,
CONTRIBUTORIES. LUNATICS. 811
has been decided in other cases that a person who was an Bk- IV- chaP- *•
Sect. 10.
infant when the winding up commenced cannot on his attain-
ing twent}T-one elect to hold shares transferred to him, and
thereby defeat the right of the company to reject him, and to
have his transferor put on the list in his place {g).
The right of a company to reject an infant transferee, and Right of the
company to
to put his transferor on the list, is clearly established (h) ; but reject an infant.
this right may be lost by the company's own laches prior to the
winding up (?) ; and if an infant transferee has himself trans-
ferred his shares, and his transferee has been accepted as a
shareholder, the transfer to the infant cannot be treated as a
nullity (k).
Where shares are taken direct from the company in the
names of infants, the persons who really take them, and not
the infants, will be contributories (I) ; unless the infant and the
company are precluded from repudiating them. Even in the
case of a transfer to an infant, if his name is a mere alias for
that of some other person, such person may be put on the list,
and the company although entitled to fall back on the trans-
feror is not bound to do so (m).
cl) Lunatics.
The writer is not aware of any decision on lunatic contribu-
tories. The principles applicable to them have been already
alluded to (see ante, p. 40).
ib. 458 ; Weston's case, 5 Cb. 614 ; (A:) Gooch's case, 8 Ch. 266, rever-
Baker's case, 7 Ch. 115, where there sing S. C. 14 Eq. 454.
was some evidence of adoption. (I) See Weston's case, 5 Ch. 614 ;
(g) Symonrf case, 5 Ch. 298 ; Cas- and compare London, Bombay, and
tello's case, 8 Eq. 504. Mediterranean Bank, 18'Ch. D. 581 ;
(h) See the last two notes. Pugh and Sharman's case, 13 Eq. 566,
(i) Parson's case, 8 Eq. 656 ; Max- and cases ante, p. 803.
well's case, 24 Beav. 321. (m) Richardson's case, 19 Eq. 588.
812
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Executors of
deceased share-
holders.
12. Representatives.
a) Executors, heirs, and devisees.
If shares are registered in the names of more persons than
one, and one dies, the survivors and not his executors are con-
tributories in respect of them (n) .
Although the executors of a deceased shareholder may not
be themselves shareholders, they will nevertheless be liable to
be placed as executors on the list of contributories in respect of
the shares held by their testator (o). Moreover, an executor is
liable to be made a contributory as executor, if his testator was
virtually, although, owing to the non-compliance with certain
forms, not perhaps strictly, a shareholder (p). So, although
the shares were such as the directors had no right to create (q),
or, although more than three years have elapsed since the tes-
tator's death, and the company is one in which shareholders
are not liable to creditors for more than three years after their
retirement (r) ; or, although the debts of the company have
been incurred since the testator's decease (s) ; or, although the
executor swears he has no assets, and has wound up the
estate (t). Even if a share has been bequeathed and the exe-
cutor has assented to the bequest, he will still be a contribu-
tory in his character of executor, if the legatee has not been
accepted by the company as a shareholder in respect of the
share in question (w). If the executor is himself legatee, he
(«) Hill's case, 20 Ecp 585. The
executors might be put on as repre-
senting a past member.
(o) 25 & 26 Vict. c. 89, §§ 76, 99,
105. Baird's case, 5 Ch. 725 ; Thomas's
case, 1 De G. & S. 579.
(p) Straff oris Executors' case, 1 De
G. M. & G. 576 ; Ex parte Dixon's
Executors, 1 Dr. & Sin. 225.
(q) Robinson''* Exmitur* case, 2 De
G. M. & G. 517, and 13 Jur. 438,
where a deceased director had taken
shares which the company might
have repudiated. Compare ante,
774.
(r) Gouthwaite's case, 3 Mac. & G.
187. See, also, Pouris v. Butler, 3
C. B. N. S. 645, and 4 ib., 469.
(s) Baird's case, 5 Ch. 725 ; Ex
parte Blakeley's Executors, 3 Mac. &
G. 726, and 13 Beav. 133 ; Harrier's
Devisees' case, 2 De G. M. & G. 366.
(t) Thomas's case, 1 De G. & S.
579 ; Crosfield's case, 2 De G. M. &
G. 128. See Henderson v. Gilchrist,
17 Jur. 570, ante, p. 537.
(m) Keene's Executors' case, 3 De
G. M. & G. 272 ; Crosfield's case,
2 ib. 128, and 4 De G. & S. 338 ;
Hamer's Devisees' case, 2 De G.
M. & G. 366, and 3 De G. & S.
279.
C0NTRIBUT0RIES. — EXECUTORS, ETC. 813
will be a contributory as executor only until he has himself Bk- J^0^' L
been accepted as a shareholder (v).
But if a share is bequeathed and the executor has assented When executor
to, and the legatee has accepted the bequest, and the company
has accepted the legatee as a shareholder in respect of such
share, then, on the subsequent winding up of the company,
the legatee and not the executor is the person to be made con-
tributory (x) : and if an executor applies to the directors to Eflfect of wind-
. . . ing up estate
know what shares his testator had in the company, and is told 0f deceased on
none or a certain number only, and the executor acts upon the statement3 made
faith of this statement and winds up the estate of the deceased, b? the comPany-
transferring those shares, if any, which, according to the state-
ment of the directors, belonged to him, and the company is
afterwards wound up, the executor cannot be made a contribu-
tor}' ; although his testator may in fact have had shares in the
company other than those mentioned by the directors (y).
The official liquidator is entitled to bring an action for the Rights against
administration of the estate of a deceased shareholder, and to
prove against the estate for all calls made and to be made, and
he is entitled to have a fund set apart to meet such claim (z).
If a deceased shareholder's personal estate is insufficient to Heirs and
(3GV1S663 01
pay his debts, his heir or the devisees of his real estate may be realty
made contributories (a). They may be added to the list when
it becomes necessary to have recourse to them (b).
After the shares of a deceased shareholder have been duly Effect of transfer
by executor.
(v) Bulmer's case, 33 Beav. 435. Turquand v. Kirby, 4 Eq. 123.
(x) See the cases cited in the last Executors of deceased shareholders
two notes, and post, under the head in going companies cannot safely-
Retired shareholders. Crosfield'scase, pay legacies without providing for
2 De G. M. & G. 128, and 4 De G. & future calls, see Taylor v. Taylor, 10
S. 338, may he referred to with re- Eq. 477.
ference to the acceptance of one of {a) 25 & 26 Vict. c. 89, §§ 76, 99,
several executors as a shareholder. 105. Harrier's Devisees1 case, 2 De
See, too, Pirn's case, 3 De G. & S. G. M. & G. 366, reversing S. C,
11. 3 De G. & S. 279. See Broughton
(y) Meux's Executors' case, 4 De v. Hutt, 3 De G. & J. 501, as to
G. & S. 331, and 2 De G. M. & G. setting aside deeds executed hy heirs
522. or devisees on the assumption that
(z) 25 & 26 Vict. C 89, §§ 76 and the shares were real estate.
95, cl. 7, Re Mugyeridge, 10 Eq. (6) 25 & 26 Vict. c. 89, § 99.
443 ; Buck v. Robson, 10 Eq. 629 ;
814
WINDING UP BY THE COURT.
Executors be-
coming share-
holders.
Bk. IV. Chap. 1. transferred by his executors, they cease to be liable to be made
Sect. 10. ...
- contributories in respect thereof. This will be seen hereafter,
when the position of persons who have ceased to have any con-
nection with the company is being considered. It may how-
ever here be observed that, unless the constitution of a company
warrants the surrender of shares, executors who surrender the
shares of their testator do not thereby get rid of their liability
to be made contributories (c).
If executors themselves become shareholders, they will be
contributories, without reference to the character in which they
became entitled to the shares taken by them. Thus, where the
directors of a company offered reserved shares to the share-
holders and the executors of deceased shareholders in propor-
tion to the amount of their original shares, and the executors of a
late shareholder accepted some of such reserved shares, but
accepted them only in their representative character, they were
nevertheless put on the list of contributories in respect of these
shares without any qualification (d).
Executors, however, do not render themselves personally
liable as shareholders by keeping a testator's shares and
receiving the dividends until the shares are sold (e) ; and even
if the shares of the deceased are registered by the company in
the names of the executors they will not be personally liable
unless they authorised or ratified the registration (/).
(c) Ex jj <arte Richmond's Executors,
13 .Tur. 727.
(d) Fearnside and Dean's case, and
Dobson's case, 1 Ch. 231. See, also,
Duff's Executors' case, 32 Ch. D. 301 ;
Jackson v. Turquand, L. R. 4 H. L.
305 ; Spence's case, 17 Beav. 203,
where the executors had purchased
shares. Compare Pirn's case, 3 De
G. & S. 11, where the acceptance
by the executor was held not to
bind him. In Mallorie's case, 2 Ch.
181, the applicant was not executor,
but acted for him.
(e) See Buhner's case, 33 Beav.
435, where the executor was legatee
of the shares. See, also, Armstrong's
case, 1 De G. & S. 565 ; Gouthioaite's
case, 3 Mac. & G. 187, and 3 De G.
& S. 258 ; Doyle's case, 2 Hall & T.
221 ; Harness Devisees' case, 2 De G.
M. & G. 366 ; Crosfield's case, ib. 128,
and 4 De G. & S. 338. In Pirn's
case, 3 De G. & S. 11, the shares
exchanged by the executor- were in
no sense his testator's. See the
analogous case of trustee's in bank-
ruptcy, noticed infra, note {n).
(/) Buchan's case, 4 App. Ca. 549,
at p. 589.
CONTRIBUTORIES. TRUSTEES IN BANKRUPTCY. 815
Bk. IV. Chap. 1.
Sect. 10.
b) Trustees in bankruptcy.
A bankrupt member of a company being wound up under Position of the
the Companies act, 1862, who has obtained his order of dis-
charge under the Bankruptcy act, 1869, or under the Bank-
ruptcy act, 1883, is not a contributory either as a present (g)
or as a past member (h) ; nor was he under the older acts,
unless he retained his shares and remained a member after his
order of discharge, and the company was ordered to be wound
up at some subsequent period, in which case his order of dis-
charge did not protect him (i).
By the Companies act, 1862, the trustee of a bankrupt con- position of the
tributory represents him, and is " deemed to be " a contribu- r™&tceye m
tory accordingly, and can be required to admit to proof against
the bankrupt's estate what is due from him in respect of his
liability to contribute (k) ; and not only calls already made, but
the estimated value of those to be made, may be so proved (I).
The expression " deemed to be " leaves it uncertain whether
the trustee ought to be settled on the list of contributories or
not ; but it is clear that he cannot be made a contributory in
any other than his representative character, unless he does
something to render himself a shareholder {in). The payment
of calls to preserve the shares from forfeiture, and the receipt
of dividends paid in respect of the shares, does not render a
trustee in bankruptcy liable to be made a contributory per-
sonally (w).
If the company being wound up is insolvent and the bank- Disclaimer by
trustee.
(ry) 25 & 26 Vict. c. 89, §§75 and Ir. Rep. 6 Eq. 272, and ante, p.
77. See Ex 'parte Marshall, 7 Ch. 556.
324 ; Ex parte Budden & Roberts, 12 (k) 25 & 26 Vict. c. 89, § 77.
Ch. D. 288 ; Mercantile Mutual (I) lb., § 75, and 46 & 47 Vict. c.
Marine Ins. Assoc, 25 Ch. D. 415. 52, § 37 ; Mercantile Mutual Marine
A bankrupt contributory is a Ins. Assoc, 25 Ch. D. 415.
stranger to the company, Cape (m) Stone's case, 3 De G. & S. 220.
Breton Co., 19 Ch. D. 77. (n) See, as to paying calls, Stone's
(h) McEwen's case, 6 Ch. 582. case, 3 De G. & S. 220, and as to re-
(i) See Hastie's case, 4 Ch. 274, ceiving dividends, Armstrong's case,
and 7 Eq. 3 ; Martin's Patent Anchor 1 De G. & S. 565. See, too, South
Co. v. Morton, L. R. 3 Q. B. 306 ; Staffordshire Rail. Co. v. Bumside, 5
Financial Corporation v. Lawrence, Ex. 129. See the analogous case of
L. R. 4 C. P. 731 ; Ex 'parte Malone, executors, ante, note (r).
816
WINDING UP BY THE COURT.
Bk- gV- C^p- L rupt's shares are not fully paid up his trustee can disclaim
them ; and in that case the company can prove for damages
against his estate (o).
Where a call is provable, an order under the Companies,
act, 1862, for its payment ought not to be made, even although
the shares may be standing in the name of the bankrupt (p).
B. — CONTRIBUTORIES AS PAST MEMBERS.
General observations on past members.
Late share- The liability of shareholders, and of persons who are bound
to take shares, at the time of the commencement of the
winding up having been now examined, it is necessary to
advert to the position of persons who would have been contri-
butories if they had not ceased to hold their shares before the
time in question.
The liability of a retired member of a company to be placed
on its list of contributories depends primarily on the effect of
the retirement as between himself and the other members, and
secondarily on its effect as between himself and the creditors
of the company.
The extent to which a member of a company who leaves it
gets rid, as between himself and the other members, of his
obligations to contribute with them to the discharge of the
debts and liabilities of the company depends theoretically on
the constitution of each particular company. Practically, how-
ever, it will be found that, as a general rule (q), a member of a
company, whose shares have been duly transferred, surrendered,
or forfeited, is discharged, as between himself and the other
members, from all liability as well in respect of past as of
future transactions : the acceptance by the company of the
transfer or surrender, or the declaration by the company of the
(o) 46 & 47 Vict. c. 52, § 55. See Eelbifs case, 2 Eq. 167, and others of
ante, p. 553. See under the act of that class, noticed infra. By the
1869, Ex parti Budden & Roberts, 12 Stannaries act, 1887, 50 & 51 Vict.
Ch. D. 288 ; Hardy v. Fothergill, 13 c. 43, § 22, the relinquishment of a
App. Ca. 351. share in a mine subject to that act
(p) Mitchell's case, 5 Ch. 400. has no effect if the company goes
(q) There are exceptions, as in into liquidation within six weeks.
CONTRIBUTORIES PAST MEMBERS. 817
forfeiture, being, generally speaking, equivalent to a release by Bk- JV. Chap. 1 .
Sect. 10.
the company of the member whose shares are thus dealt with, -
from all liability in respect of them. Where this is the case,
he is not liable, on the subsequent winding up of the company,
to be put on the list of contributories with the present mem-
bers ; and his liability to be put on the list at all can only arise
from some necessity of having recourse to past members in
order to pay the debts of the company or to adjust the rights
of such members inter se.
Under the Winding-up acts of 1848 and 1849, the liability Under the Acts
of a late shareholder to be made a contributory depended upon 1849.
the simple question whether he had, as between himself and
the company, got rid of the obligations which, by supposition,
he was once under. If he had, he was not a contributory with
the existing members, whatever his liability to creditors might
have been ; whilst if he had not, he was a contributory,
although he might have been under no liability to the creditors
at law (r). But there might be, and, in fact, there usually
were, a considerable number of retired members who, although
not liable to contribute with the existing shareholders, were,
as between themselves, liable to contribute to the payment of
those debts which were enforceable against them at law, and
which the existing shareholders were unable to discharge.
The question then arose whether these transferors ought not
to be contributories, seeing that they might be ultimately
called upon to defray debts of the company, although they
were entitled to be indemnified against such debts by the
existing shareholders. This question was formerly answered
in the affirmative (s) ; but the later practice was not to make
such persons contributories until it actually became necessary
to do so, in order to prevent one or more of them from bearing
more than his or their share of loss. In other words, retired
shareholders were not placed on the list of contributories
(r) See Ex parte Gouthwaite, 3 571, and on appeal, 1 Mac. & G. 49.
Mac. & G. 187 ; Stirling's case, 6 Ir. The transfer took place within, and
Ch. 180, and the cases in the next not (as stated in the marginal note
two notes. in 1 De G. & S. 571) more than
(s) Ex parte Morgan, 1 Mac. & G. three years before the winding up of
225 ; Hawthorn's case, 1 De G. & S. the company.
L.C. 3 G
818 WINDING UP BY THE COURT.
Bk. IV. Cbap. 1. simply because they might possibly be called upon to make
good losses which, as between themselves and the existing
shareholders, ought to be borne by the latter (t). Before the
retired shareholders could be made contributories, it had to be
shown that there was some necessity for putting them on the
list for the purpose of equitably adjusting these claims against
each other (u).
Under the Com- This practice is also followed in winding up companies
' under the Companies act, 1862 (x) : and a person improperly
put on the list as a present member will be struck off the list
altogether, although he may possibly be put on again as a past
member. Nor is it necessary when striking him off the list
(i.e., the list of present members), expressly to reserve, or to
add without prejudice to, his liability to be put on the list as a
past member. The removal from the list of a person sought
to be put on as a present member is understood in practice to
leave open for future decision the question whether he ought
to be on the list as a past member (y).
In winding up companies under the Companies act, 1862,
and in considering the liability of a person who was a share-
holder before, but not at the time of the commencement of the
winding up, to be put on the list of contributories, it is neces-
sary to distinguish, —
1. Unregistered companies ;
2. Companies registered but not formed under the act ;
3. Companies formed as well as registered under the act.
l. Unregistered 1. The liability of a past member of an unregistered com-
pany depends on § 200, which contains no statutoiw limit as
to the time after which a past member ceases to be liable. His
(t) Carexds case, 7 De G. M. & G. (x) See § 170, now repealed by 44
43 ; Sutton's case, 3 De G. & S. 262 ; & 45 Vict. c. 59. See, as to Part's
Holme's case, 4 ib. 312, and 2 De G. case, 10 Eq. 622, infra,' note (z).
M. & G. 113 ; Ex parte Stirling, 6 (y) See Wright's case, 12 Eq. 331.
Jr. Ch. Rep. 180. See pp. 345-6, per L. J. Selwyn.
(«) Compare the eases in the last Where, however, the register of
two notes, and observe that in members, as distinguished from the
Hawthorn's case, the transferor was list of contributories, is rectified, it
made a contributory at the instance may be necessary to add, without
of a person in the same position as prejudice, &c., see Marshall v. Gla-
himself. morgan Iron, etc., Co., 7 Eq. 129.
C0NTRIBUT0RIES — PAST MEMBERS. 819
position, therefore, depends on his liability to existing creditors, Bk- IV- chaP- L
Sect. 10.
and on the constitution of the company of which he was a
member. It very rarely, however, happens that a past member
can be put on the list by reason of any rights which the
present members have as against him : and speaking generally
no past member of an unregistered company is liable to be on
the list at all, unless there are debts to which he was liable
before he retired, and unless the present members are unable
to pay such debts (z).
With respect to cost-book mining companies the Stannaries Cost-book
act, 1869, renders past members not liable to be put on the list
if they have ceased to be shareholders for two years or upwards
before the mine has ceased to be worked, or before the date of
the winding-up order (a).
2. The liabilitv of a past member of a company registered, 2- Companies
registered under
but not formed under the Companies act, 1862, depends on the Act of 1862,
§ 196, which renders § 38 applicable to the company from the imder it
time of its registration (b). But this is subject to the im-
portant qualification that the liabilities of members at the
time of registration to their existing creditors are preserved
(see §§ 195, 196, cl. 5, and § 197). Consequently, in dealing
with companies of this description it is necessary to subdivide
the past members into three classes, viz. : —
(a.) Those who ceased to be members before registration.
(b.) Those who ceased to be members afterwards, but
more than a year before the commencement of the
winding up.
(c.) Those who ceased to be members after registration,
and less than a year before such commencement.
(a.) As regards the first of these classes it seems that they Class (a).
are not liable to be put on the list of contributories of the
registered company, never having been members of it (c). But
(z) See Part's case, 10 Eq. 622. (a) 32 & 33 Vict. c. 19, § 25. See
If, in this case, there were present Cliynowettis case, 15 Ch. D. 13, and
members capable of paying the see ante, p. 816, note (q).
debts in respect of which Part (b) Ramsaifs case, 3 Ch. D. 388.
was held liable, the decision was (c) See Lanyon v. Smith, 3 B. &
not conformable with the usual Sm. 938 ; and Kelk's case, 9 Eq.
practice. 107.
3 g 2
820
WINDING UP BY THE COURT.
Bk's\t°ioP' 1" ^ ^S tecnnical difficulty is got rid of, by an order winding up
the unregistered company, as well as the registered company,
the liability of the past members now under consideration
will be the same as that of past members in unregistered
companies.
Class (b). (b.) As regards the second of the above classes, § 38 frees
them from all liability in respect of debts contracted by the
company after its registration ; but §§ 195 to 197 leave those
persons who were members before registration exposed to
liability in respect of such debts as existed at the time of
registration, and at the commencement of the winding up, and
as the present members are unable to pay. In respect, there-
fore, of such debts, if any, such past members of this class may
be liable to be put on the list.
Class W- (c.) The third of the above classes may include persons who
became members before the registration of the company, as
well as those who became members since. The position of
those who became members since the registration of the com-
pany depends entirely on § 38, and is the same as that of
past members in companies formed and registered under the
act (see § 196) (d). The position of those who became members
before the registration of the company is more complicated :
for first they are by § 38, under the same liability as those last
spoken of; and, secondly, they are by §§ 195, 196, and 197,
liable to be made contributories in respect of debts existing
before registration, and still unpaid; and whilst their liability
under § 38 may be limited, their liability under § 196 may be
unlimited.
3. Companies 3. The position of retired members of companies formed
formed and . .
registered under and registered under the Companies act, 1862, is denned by
§ 38. Persons who have ceased to be members twelve months
before the commencement of the winding up are not liable to
be put on the list at all (e) ; whilst persons who have ceased
to be members less than twelve months before that time are
liable to be put on the list, but only as past members ; and no
person is under any liability as a past member unless two
things can be proved, viz. : —
1. It must be shown that there is some undischarged debt
(d) Ramsay's case, 3 Ch. D. 388. (e) See Gooch's case, W. N. 1872, p. 227.
CONTRIBUTORIES PAST MEMBERS. 821
or liability of the company contracted before the person in Bk- IV- chaP- *■
Sect. 10.
question retired (/).
2. The Court must be satisfied that the existing members
are unable to satisfy their contributions (g).
Hence, as under the older winding-up acts, it is not the Contributories as
practice to put any person on the list of contributories as a pa&
past member until the inability of the present members to dis-
charge their liabilities is apparent (/i). But it is not necessary
to obtain from them all that they can pa}T before settling a
past member on the list (i).
It is now settled that the liability of past members is only
to pay those debts contracted before they ceased to be mem-
bers, which the present shareholders are unable to pay. The
past members get the benefit of all dividends paid b}r calls on
present members ; and their liability is confined to calls in
respect of what remains of the debts in question. It follows
from this that if these debts are paid or released, no calls can
be made on past members, and they ought not to be put on the
list of contributories (k).
Settling a person on the list of contributories as a past
member does not of itself decide or prejudice any question as
to his liability to any particular call (I).
Past members are not sureties ; and a compromise by the Past members
. , . . i-i n°t sureties.
liquidator with present members, even when made without
notice to a past member, does not discharge him from his
liability to be a contributory, at least if such liability is
reserved, as in practice it always is (m). The right, however,
of a past member to be indemnified by his own transferee is not
affected by a compromise between him and the liquidator (»)•
(/) Weston's case, 6 Eq. 17; they can be shown to be wrong.
Brett's case, 6 Ch. 800, and 8 Ch. (k) See Brett's case, 8 Ch. 800, a
800 ; Webb v. Whiffin, L. R. 5 H. L. rehearing of S. C, 6 Ch. 800.
711. (0 See Andrew's case, 3 Ch. 161.
(g) See § 38, cl. 2 and 3. (m) Hudson's case, 12 Eq. 1 ;
(h) See Needham's case, 4 Eq. 135, Nevill's case, 6 Ch. 43 ; Helbert v.
and ante, pp. 749, 750. Banner, L. R. 5 H. L. 28.
(i) Andrew's case, 3 Ch. 161. See (») Roberts v. Crowe, L. R. 7 C. P.
Helbert v. Banner, L. R. 5 H. L. 28, 629. See, also, Kellock v. Enthoven,
which shows that the Court will act L. R. 8 Q. B. 458, and 9 ib. 241 ;
on the liquidator's estimates, unless Heritage v. Paine, 2 Ch. D. 594.
822
WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 10.
Irregular
retirement.
Effect of lapse
of time.
Having made these preliminary remarks on the liability of
persons who have retired from a company before the com-
mencement of its winding up, to be put on the list of con-
tributories as past members, it is proposed to examine the
position of such persons more in detail, and to point out when
the)r are liable to be put on the list as present members, and
when as past members only.
It has already been seen that, where a person has, in fact,
become a shareholder, he is a contributory, although all pre-
scribed formalities may not have been observed (o). On similar
principles, where a person has, in fact, retired from a company,
he will not be a contributory (at least as a present member),
although his retirement may have been somewhat irregular in
point of form (p). But this proposition assumes that the
shareholder had the right to retire ; and that his retirement
would have been unimpeachable if all proper formalities had
been duly observed. Where this is not the case, the retired
member will, in point of law, be a shareholder still ; and will
be liable to be made a contributory accordingly, as a present
member, subject only to the question whether there is any
statutory or other limit of time, after the lapse of which the
retirement cannot be called in question. Statutory limit there
appears to be none, unless it be twenty years (q) ; but there is
the highest authority for the proposition that where a person
has retired bond fide and openly, so that all the shareholders
ought to be treated as aware of the fact, the equitable doctrines
of laches and acquiescence ought to be applied against a
company, and preclude it from disputing the validity of the
retirement (?•).
(o) Ante, A (2), p. 757.
(p) See Taurine Co., 25 Ch. D.
118 ; Bush's case, 6 Ch. 246, affirmed
Murray v. Bush, L. R. 6 H. L. 37.
Upon the application to such cases
of the maxim, omnia yyroeswmuntur
rite esse acta, the following cases are
particularly instructive : Lane's case,
1 De G. J. & Sm. 504 ; Knight's case,
2 Ch. 321 ; Woollaston's case, 4 De
G. & J. 437.
(q) See § 16 of the Companies act,
1862 ; Hetty's case, Stoke 's case, and
Horsey' s case, all in 2 Eq. 167.
(r) See ante, p. 522 ; Murray v.
Bush, L. R. 6 H. L. 37 ; Evans
v. Smallcombe, L. R. 3 H. L. 249,
affirming Smallcombe' 's case, 3 Eq.
769 ; Brotherhood's case, 31 Beav.
365, and 4 De G. F. & J. 566. See
ante, pp. 517 — 523. See, also, Hunt's
case, 32 Beav. 387.
CONTRIBUTORIES TRANSFERORS. 828
Bearing these observations in mind, it is proposed to con- Bk. iv. Chap. 1.
sider the liability, to be put on the list of contributories, of—
1. Persons who have transferred their shares to others.
2. Persons who have surrendered their shares to the com-
pany.
3. Persons whose shares have been forfeited.
1. As regards persons who have transferred their shares
to others.
In considering the position of a person who has parted with
his shares to another, two classes of cases must be distin-
guished from each other: viz., 1, cases in which the transferee
has actually been substituted by the company for the transferor
before the commencement of the winding up ; and 2, cases in
which there has been no such substitution.
a) Where the transferee has been accepted by the company in the place of the
transferor.
If a person has transferred his shares to another, if the Transferors of
transferee has accepted the transfer, and if he has been accepted contributories!0
by the company as a shareholder in respect of those shares,
then, on the subsequent winding up of the compairy, the
transferee, and not the transferor, is the person to be made
a contributory as a present member in respect of the shares
transferred.
A leading case on this head is Cape's Executors' case (s), Cape's Execu-
in which it was held that the purchaser of shares in a banking tors case*
company governed by 7 Geo. 4, c. 46, was liable as a contri-
butory, as well in respect of debts contracted before as in
respect of those contracted after he became a shareholder. It
was considered that, in the absence of any special provisions
in the company's deed to the contrary, the purchaser took the
shares as they stood, subject to the state of the concern at
the date of his purchase. This may safely be taken to be
(«) 2 De G. M. & G. 562, affirming case, 2 De G. M. & G. 1 13 ; Mayhew's
the decision of the Master of the case, 5 ib. 837, a case of a cost-book
Rolls, 16 Jur. 787. See, too, Holme's mine.
824 WINDING UP BY THE COURT.
Bk. IV. Chap. l. the general rule ; and it follows from it that, as between
Sect. 10. & , ,, „ ,. .. ,
the company, the buyer, and the seller, the seller, when he
transfers his shares, transfers his liability to be made a
contributory.
The proposition that in such cases the transferor is not a
contributory, is established indirectly by the cases just cited,
Harrison's case, and more directly by others; e.g., Harrison's case (t), where
the directors assented to a transfer on the terms that the
transferor should guarantee payment of future calls by the
transferee ; and it was held that the transferor was not a con-
tributory, although the transferee was insolvent.
Even where the transfer is in some respects irregular, still
if it is intra vires, and the transferee has accepted the transfer,
and has been accepted by the company, the transferee (w), and
not the transferor (x), will be the contributory as a present
member. The same rule holds good in the case of a bond fide
transfer without value (y). But a transfer which is wholly
invalid cannot be treated as good, simply by being acted
upon (s). Even in this case, however, the transferee and not
the transferor will be a contributory, if there was in effect an
agreement between them both and the company, that the
transferee should take the shares instead of the transferor (a).
(t) 6 Ch. 286. For other illustra- director ; Ex parte Littledale, 9 Ch.
tions of the same principle, see 257, where the transferor had not
Croxton's case, 1 De G. M. & G. paid his calls ; Bivington's case, 3
600; Nicol's case, 3 De G. & J. Ch. D. 10; Doman's case, ib. 21,
387 ; Orpen's case, 9 Jur. N. S. where the transfer had not been en-
615. rolled as required by act of parlia-
(u) Meux's Executors'1 case, 2 De ment. See, also, the cases in the
G. M. & G. 522 ; Straff on' s Exe- last note.
cutors' case, 1 De G. M. & G. 576 ; (y) Maguire's case, 3 De G. & S.
Sanderson's case, 3 De G. & S. 66, 31 ; FenwicFs case, 1 De G. & S.
and 3 H. L. C. 698 ; Gordon's case, 557.
3 De G. & S. 249 ; Walters' case, 3 (2) See Chappell's case, 6 Ch. 902 ;
De G. & S. 149. Compare the cases and the cases of scrip, McEuen v.
cited infra, p. 830 et seq., where the West London Wharves Co., 6 Ch.
transferee had not been accepted by 655 ; East Gloucester Rail. Co. v.
the company in the place of the Bartholomew, L. R. 3 Ex. 15, which,
transferor. although not contributory cases, are
(x) Murray v. Bash, L. R. 6 H. L. applicable to them. Compare Taurine
37, affirming Bush's case, 6 Ch. 246? Co., 25 Ch. D. 118.
where the transferor was an outgoing (a) See Morton's case, 16 Eq. 104.
CONTKIBUTORIES — TRANSFERORS. 825
Moreover, the fact that the transfer has been made to a man Bk. IV. Chap. 1.
Sect. 10.
of straw simply to avoid liability makes no difference (b).
In Hymn's case(c), Lord Campbell threw some doubt upon Transfer made to
this doctrine ; but, notwithstanding his Lordship's remarks, it
seems to be settled that, where the transfer is a real trans-
action, it will stand, although the transferor's sole object in
making it may be to get rid of liability (d) ; except, perhaps,
in the case of a director transferring his qualification
shares (e).
By the Stannaries act, 1869, 32 & 33 Vict. c. 19, § 35, a
transfer of shares made for the purpose of getting rid of
liability for a nominal consideration, or to a person who is
insolvent, or in the domestic service of the transferor, is pre-
sumed to be fraudulent and need not be recognised either by
the Court or the compairy. Still, if the company, knowing
the facts, has recognised the transfer, it cannot afterwards set
it aside (/).
But, independently of an}' statutory enactment, such Mala fide
transfers are naturally viewed with great suspicion, and if
there is any doubt as to whether the transferor has bond fide
parted with all his interest in the shares, or if the directors
having power to reject the transferee have been imposed upon
in accepting him, the transfers will be treated as invalid. The
following are the leading cases on this head : —
First, where there is no real transfer.
In Lund's case (g) a holder of 100 shares, of 101. each, in an insolvent 1. No real
company, sold them all to one of his servants for half-a-crown. The shares transfer-
passed by delivery, and it was not necessary that the purchaser should he Lunci's case-
accepted as a shareholder by the company. The sale was held to have
been made maid fide, and the seller was held to be a contributory.
(b) Be Pass's case, 4 De G. & J. 391 ; Costello's case, 2 De G. F. & J.
544, and cases below. 302 ; Garstin's case, 10 W. R. 457 ;
(c) 1 De G. F. & J. 75. Hatton's case, 8 Jur. N. S. 380.
(d) Taurine Co., 25 Ch. D. 118; (e) South London Fish Market Co.,
Master's case, 7 Ch. 292; Hakim's 39 Ch. D. 324, at p. 331, and Gilberts
case, ib. 296, note ; Bishop's case, ib. ; case, 5 Ch. 559.
Harrison's case, 6 Ch. 286 ; Weston's (/) Chynoiceth's case, 15 Ch. D. 13.
case, 4 Ch. 20 ; Slater's case, 35 Beav. (y) 27 Beav. 465.
826
WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 10.
Hyam's case.
Costello's case.
Alexander's case.
Hyam's case (h) was a similar case, the transferor in effect giving the
transferee the money expressed to be paid for the shares. The Court
treated the whole transaction as a mere fable which the parties were acting
and held upon the evidence that they never intended the transfer to have
any effect as between themselves. In this case also the shares passed by
delivery.
Chinnock's case. In Chinnock's case (i), there was a formal transfer, and the company's deed
contained a clause that trusts should not be recognised ; but the transferor
was nevertheless put on the list, as it was clear that the transferee had no
real interest in the shares, and the trust was merely created to screen the
transferor from liability.
In Costello's case (j), a son transferred his shares to his father, who was old
and was supported by his family. The sale was expressed to be made for a
trifling consideration, after the company had been ordered to be wound up,
and was clearly not a bond fide transaction, but a mere device to substitute
the father for the son. The son was put on the list.
Alexander's case(k). There a shareholder, who was a broker, transferred
his shares to a clerk for an alleged consideration of 97/. 10s., which was
never paid. The transfer was registered, but the transferor kept the certifi-
cates, and his clerk sent all notices to him. The clerk was settled on the
list, and was ultimately attached and imprisoned for not paying the calls
made upon him. He then took the benefit of the Insolvent act. The
transferor was afterwards examined, and the result was that the transfer
was held invalid, and he was put on the list in the place of the clerk.
This case is the more instructive as it is plain that the clerk was himself
estopped from denying that he was a shareholder.
Budd's case (/). There a solicitor transferred shares to his servant without
consideration, and solely for the purpose of escaping from liability. The
solicitor was held to be a contributory. It was considered that the servant
might have repudiated the transaction, and that the company was entitled
to show that the transfer was invalid, although the transferee did not him-
self impeach it.
Hatton's case (??t). There the transfer was made after notice of a call, and
in order to avoid payment of it. The directors had refused to register the
transfer. The transaction was plainly a mere device to avoid liability.
De Pass's case (n) was the first case of this class in which the transferor-
was held not a contributory. There a shareholder knowing that the com-
pany was in difficulties transferred his shares to a clerk for a nominal con-
sideration. The shares were transferable by delivery, and the Court of
Appeal came to the conclusion that the transfer was a real transfer out and
out. This case is extremely difficult to reconcile with the others noticed
above, and is generally admitted to be unsatisfactory (o).
Budd's case.
Hatton's case.
De Pass's "cas<\
(h) 1 De G. F. & J. 75.
(i) Johns. 714. See, also, Scully's
case, 6 Ir. Ch. 72.
(j) 2 De G. F. & J. 302.
(/c) 9 W. R. 410. See ante, \>.
747.
( 3i) Beav. 143, affirmed on
appeal, 3 De G. F. & J. 297.
(m) 8 Jur. N. S. 380. Compare
Orpen's case, 9 ib. 615.
(n) 4 De G. & J. 544. For other
cases to the same effect, see ante,
note (y).
(o) The Master of the Pvolls put
CONTRIBUTORIES — TRANSFERORS. 827
Whether De Pass's case was rightly decided or not, both Bk- IV. Chap. 1.
Sect. 10.
that and the other decisions above referred to establish, that - — —
notwithstanding a transfer in form, the transferor will be held
a contributory if the evidence shows not only that the transfer
was made to get rid of liability, but that the transfer was not
a real transaction, and was not intended to divest the interest
of the transferor, and to render the transferee the bond fide
owner of the shares, but that the transferee held them subject
to the orders of the transferor : and although it cannot, per-
haps, be denied that, in the cases in question, the relation of
trustee and cestui que trust was created, it is obvious that
the sole object of the trust was to screen the transferor from
liability. The cases show that such devices will not have the
effect desired by the persons who practise them ( p).
Secondly, where the company has been imposed upon.
The power of directors to reject a transferee depends on the 2. Company
company's regulations (q) ; if there is no power to reject him a lulP0Sed uP°n-
misdescription is immaterial, and if he is sui juris and becomes
a shareholder, the transferor escapes (r). But if the directors
have power to object to a transferee, and shares are transferred
to a pauper or a man of straw, who is misdescribed, so that
the directors are imposed upon and induced to make no in-
quiry about him, the company can, on ascertaining the facts,
repudiate the transfer and place the transferor on the list of
contributories. This has been done where the transferee was
a clerk, and was paid to accept a transfer, and he was de-
scribed as a gentleman paying for the transfer (s). So where
the transferee was a ship's steward, paying nothing for the
transfer, but was described as of a certain place, where he did
not live, and as paying the market price for the shares (t).
De Pass on the list. The Lord.s et seq., A (9), trustees and cestuis que
Justices reversed the decision. An trustent.
appeal to the House of Lords was (q) Weston's case, 4 Ch. 20. See
prevented by a compromise. ante, p. 464.
(p) See ace. Kings case, 6 Ch. 196, (r) lb.
where the difference between trans- (,s) Payne's case, 9 Eq. 223.
fere and allotments is alluded to. (t) Ex parte Kintrea, 5 Ch. 95.
Williams' case, 1 Ch. D. 576, was a He was not described as a gentleman
case of allotment. See ante, p. 801 or anything.
828 WINDING UP BY THE COURT.
Bk. IV. Chap. l. Moreover in cases of this description, proof that the directors
Sect. 10. . ,,.,„...*
— were not m the habit oi inquiring about transferees is not
material ; it is their duty to inquire where their suspicions are
aroused, and the mis-statements are of course made to lull
suspicion (u).
However, the mere fact that the transferee is described as a
" gentleman," when he is not entitled to be so called, is not
sufficient to invalidate an otherwise valid transfer (%).
If the directors have accepted the transferee with knowledge
of the facts, the transferor cannot be made a contributory (y).
Transfers to Transfers to infants are voidable not only by the infant
infants. J J
whilst under age, or within a reasonable time after coming of
age {z), but also by the company (a) ; unless it has accepted
him, knowing him to be an infant (b), or has allowed him to
transfer and has accepted his transferee (c). Hence, except
under special circumstances, transferors to persons who are
infants at the commencement of the winding up (d), or who, if
then of age, can repudiate their shares (c), or can be repudiated
by the company (/), are contributories, and not the infant
transferees. Moreover, the fact that the infant transferee has
got rid of some of the shares transferred to him, does not
prevent the transferor from being settled on the list in respect
of the rest (g). The only cases yet reported in which trans-
(h) See Williams s case, 9 Eq. 225, case, 6 Eq. 455 ; Weston's case, 5
note. Ch. 614 ; Castello's case, 8 Eq. 504 ;
(x) Masters's case, 7 Ch. 292 ; Symons' case, 5 Ch. 298. See, also,
Bishop's case, ib. 296, note ; and, Reicl's case, 24 Beav. 318 ; Beaveley's
see, as to an allottee, Williams' case, case, 1 De G. & S. 550, where the
1 Ch. D. 576. transferee was untruly stated to be
(y) Chynoiveth's case, 15 Ch. D. 13, of age ; Litchfield's case, 3 ib. 141,
a case in a company governed by the where he was described as Master.
Stannaries act, 1869, as to which, see (e) As in Shrapnell's case, ante, p.
ante, p. 825. 810.
(2) Ante, pp. 39 et seq., and p. 809, (/) This follows from Symons'
All (c). case, 5 Ch. 298, and Castello's case, 8
(a) Symons' case, 5 Ch. 298 ; Gas- Eq. 504, where the transferee tried
tello's case, 8 Eq. 504. to screen his transferor by keeping
(6) Parson's case, 8 Eq. 656. the shares. See, also, Mann's case,
(c) As in Gooch's case, 8 Ch. 266, 3 Ch. 459, note.
reversing S. C. 14 Eq. 454. (g) Mann's case, 3 Ch. 459, note ;
(d) As in Hart's case, 6 Eq. 512 ; Gurtis's case, 6 Eq. 455.
Capper's case, 3 Ch. 458 ; Gurtis's
CONTRIBUTORIES TRANSFERORS. 829
ferors to infants have escaped being put on the list are : 1, Bk- IV- cliaP- l-
• Sect- 10-
cases (h) where the company was precluded by its own conduct -
before the winding up commenced, from repudiating the
transfer ; and 2, cases where the infant attained 21 before the
commencement of the winding up, and was precluded from
repudiating the shares (?'). A transferor to an infant more
than one year before the commencement of the winding up of
a company formed and registered under the Companies act,
1862, is not liable to be put on the list either as a past or as a
present member, if the shares have been since transferred by
the infant to a person on the register (k).
Again, if a shareholder transfers shares into the name of a Transfers to
person without his authority, and the transferee never accepts consulted0*
the shares, the transferor will be the contributor (I).
If the directors of a company make a mistake, and uninten- Mistake of
tionally pass a transfer, and it is registered, but the mistake company"
is discovered and corrected before anything more is done, the
transferor will be a contributory if the transferee does not
object (m).
Again, where a transfer is part of an illegal scheme for Other cases
amalgamating the company with another (n), the transferor transfers.
will be a contributory. So where a director transfers his
shares under circumstances entitling the company to impeach
the transfer, as where he postpones a call to enable him to get
rid of his shares, he will be a contributory (o).
Where a company has transferred its assets to another, and Transfer after
company has
has ceased to carry on business, a member of it who after- discontinued
wards transfers his shares is "nevertheless a contributory ( p) ; business<
(h) Parson's case, 8 Eq. 656; Max- 3 De G. & Sm. 191, and 2 Mac. &
well's case, 24 Beav. 321. G. 201 ; Pirn's case, 3 De G. & Sm.
(i) Ebbett's case, 5 Ch. 302 ; 11, and 1 Mac. & G. 291, noticed
Mitchell's case, 9 Eq. 363 ; Lums- ante, p. 802.
den's case, 4 Ch. 31 ; and the next (m) Anderson's case, 8 Eq. 509.
note. (n) As in Clack's case, 11 W. R.
(k) Gooch's case, 8 Ch. 266, revers- 986.
ing S. C, 14 Eq. 454. (o) Gilbert's case, 5 Ch. 559 ; and
(I) Cartmell's case, 9 Ch. 691 ; see South London Fish Market Co.,
where the transfer was to two direc- 39 Ch. D. at p. 331.
tors at the request of the manager, ( p) Chap-pell's case, 6 Ch. 902 ;
and was registered. Heritage's case, 9 Lankester's case, ib. 905, note ; Allin's
Eq. 5 ; Henessey's Executors' case, case, 16 Eq. 449. Lord Justice Mel-
830
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Transfers to
directors.
Cases where
the transferor
remains liable
to losses not-
withstanding
the transfer.
Holme's case.
Helby's, Stokes',
and Horsey' s
cases.
for, the company having virtually ceased to exist, practically
there are no shares to transfer, and a transfer of them is
inconsistent with the general scheme for putting an end to the
comj^any.
A bond fide transfer to a director as an individual, and not
as a trustee for the company, has the same effect as any other
transfer (q). So has a bond fide transfer to a director or other
person who is a nominee for the company ; provided the trans-
feror acted throughout in the belief that he was dealing with
an ordinary individual, and had no notice of any trust for the
company (r). But, as will be seen in the next section, a sur-
render of shares to the company does not release a share-
holder from liability to be made a contributory, unless the
surrender is warranted by the constitution of the company.
Before leaving this branch of the subject, it is necessary to
allude to those difficult and exceptional cases which occasion-
ally arise on winding up old companies, the deeds of settle-
ment of which contain clauses to the effect that a transfer of
shares shall not release the transferor from liability in respect
of antecedent losses. In Holme's case (s), where there was such
a clause, and where it was proved that there were debts in-
curred before the shares in question had been transferred, and
which debts were still unpaid, it was nevertheless held that
the transferor was not a contributory ; for both before and
after he sold his shares, accounts not showing any losses had
been laid before the shareholders, and by those accounts the
company was held bound.
In Helby's case, Stokes' case and Horsey' s case (t), however,
which arose under the Companies act, 1862, on winding up
an old banking company, the deed of settlement of which con-
tained a similar clause, the V.-C. Kindersle}r held (1), that a
lish dissented, but see Lord Selborne's
observations in 16 Eq. 455.
(q) Jessopp's case, 2 De G. & J.
638, and the cases cited in the next
note.
(r) See Grady's case, 1 De G. J.
& S. 488, and others of that class,
noticed infra, p. 841.
(s) 2 De G. M. & G. 113, and 4
De G. & S. 312.
(0 2 Eq. 167. See, also, Sander-
son's case, 3 De G. & Sm. 66, which
was afterwards observed upon in
Dodgson's case, ib. 85, and was ap-
pealed to the Lords, 3 H. L. C. 698,
when the order of the Court below
was varied by consent.
CONTRIBUTORIES — TRANSFERORS. 831
person who had transferred his shares more than twenty years Bk- IV. Chap. 1.
*■ Sect. 10.
before the commencement of the winding up ought not to be
put on the list at all ; but (2) that persons who had transferred
their shares within that time were liable to be put on the list,
but that their liability was to be confined to their proportions
of the losses, if any, which had accrued whilst they held their
shares. There was evidence to show the existence of such
losses.
b) Where the transferee has not been accepted by the company in the place of
the transferor.
In all cases of this class, something remains to be done
before the transferor ceases to be a shareholder, and he there-
fore prima facie remains a contributory. There is generally a
clause to this effect in a company's articles or deed of settle-
ment, but even where there is no such clause, the moment it is
established that where shares are held in trust, the trustee and
not the cestui que trust is the contributory (u), it follows that
a seller of shares, who, as between himself and the company,
remains the holder of them when the winding up commences,
must be the contributory in respect of them (x).
For similar reasons the executors of a deceased shareholder Transfers by
remain liable to be made contributories after they have sold
the shares of their testator, until the purchaser has been
accepted by the company as a shareholder in respect of
them (y).
The principle of these cases is particularly applicable to Transfers to or
transfers by or to directors ; for it is more especially the duty y c
of directors to observe all requisite formalities. If therefore
they transfer their own shares informally, it is their own
fault (z) ; and if shares are transferred to them informally,
although it may not be the fault of the transferor, it will
(u) Ante, p. 801. cases of Ex parte Scully, 6 Ir. Cli.
(x) Humby's case, 5 Jur. N. S. Rep. 72, and Ex parte Kennedy, ib.
215 ; Chartres' case, 1 De G. & S. 121.
581 ; De Castro's case, 2 Jur. N. S. (y) Keene's Executors' case, 3 De
1203 ; Ex parte Walton & Hue, 3 G. M. & G. 272.
ib. 853. Compare Mayhem's case, (z) Ex parte Brown, 19 Beav. 97.
5 De G. M. 837. See, also, the Irish See, too, Eyre's case, 31 Beav. 177.
832 WINDING UP BY THE COURT.
Bk. IV. Chap. l. strongly corroborate other evidence tending to show that the
-transfer was not made bond fide (a). Such evidence may, of
course, be rebutted, and then the informality will be of less
consequence (b).
The general rule, illustrated by the foregoing decisions, is
as applicable at the present day as formerly (c), subject to the
qualification introduced by the Companies act, 1862, and
which it is proposed now to examine.
Companies act. By § 153 of the Companies act, 1862, it is enacted, that
1862, § 153. ^ere a company is being wound up by the Court, or subject
to its supervision, every transfer of shares or alteration of the
status of the members of the company made between the com-
mencement of the winding up (d) and the order for winding up
shall be void, unless the Court otherwise orders ; and by § 131,
it is enacted, that where a company is being wound up volun-
tarily, all transfers of shares, except transfers made to or with
the sanction of the liquidators, or alteration in the status of
the members of the company, taking place after the commence-
ment of the winding up, shall be void. Transfers made after
a winding-up order are a fortiori void if not sanctioned by the
Altering register Court or the liquidators (e). The effect of these enactments
appears to be that after the commencement of the winding up
of a company its register of members cannot be lawfully
altered, except by the order of the Court (/), or, perhaps, in a
case of voluntary winding up, by the sanction of the liqui-
dators {g). But the act does not invalidate contracts for the
sale of shares made but not completed before the commence-
ment of the winding up (h). The act, it will be observed,
applies not only to cases where shares have been transferred
(a) Ex parte Henderson, 19 Beav. (/) A consent order removing a
107. person's name from the register is
(b) Murray v. Bush, L. R. 6 H. L. not invalidated by the fact, that on
37, affirming Bush's case, 6 Ch. 246 ; the same day a petition to wind up
Ex parte Bagge, 13 Beav. 162. is presented on which a winding up
(c) See infra, p. 833 et seq. order is afterwards made. London
(d) As to date at which a winding Suburban Bank, 15 Eq. 274. Com-
up commences, see ante, p. 664, and pare Barge's case, 5 Eq. 420.
Taurine Co., 25 Ch. D. 118. (g) See, as to this, ante, p. 748.
(e) See §§ 38 and 74, and compare (h) Chapman v. Shepherd, and
11 & 12 Vict, c. 45, § 76 ; Glanville's Whitehead v. Izod, L. R. 2 C. P.
case, 10 Eq. 479. 228.
C0NTRIBUT0RIES — TRANSFERORS. 833
after the commencement of the winding up, but also to cases Bk- IV- cliaP- 1-
Sect. 10.
where they have been transferred previously, but the transfers
have not been registered. The words " alteration of the status
of the members " plainly include the last-mentioned cases.
But it is by no means clear from the language of the act,
whether the Court can, under § 153, alter the register in cases
to which § 35 does not apply ; or whether § 35 restricts the
general power to sanction transfers which is conferred on the
Court by § 153. The tendency of the more modern decisions
is in favour of the latter view (i).
Again, whether the Court can exercise the discretion, which
is generally reposed in the directors, of permitting or refusing
transfers is another very important matter on which there is
also a conflict of judicial opinion. This question, it will be
observed, does not depend on the power of the Court to rectify
the register, but on its power to substitute its own judgment
for that of the persons in whom the discretion of accepting or
rejecting transferees has been reposed by the members of the
company. The better opinion is that this cannot be done (k) ;
although the absence of approval is not material where there
were no grounds for disapproval, and where the approval was
not a condition precedent to the transferee's becoming a share-
holder (I).
The following observations it is hoped will be found to be
in accordance with the most recent decisions (m) : —
a) JVliere the sale has taken place before the commencement of the winding up.
1. If a person has sold his shares, and has unnecessarily Delay on the
delayed compelling the purchaser to complete the transfer, parties to the
and the seller remains the registered holder at the commence- transfer-
ment of the winding up, he, and not the purchaser, will be
placed on the list (n) ; although, as between the seller and the
(i) See, as to the construction of Giffard in Marshall v. Glamorgan
§ 35, ante, p. 120, et seq. Iron and Goal Co., 7 Eq. at p. 137.
(k) Infra, pp. 834—837. See, (n) Ward and Henry's case, 2 Ch.
also, Shepherd's case, 2 Ch. 16. 431, reversing Ward's case, 2 Eq.
(1) Ward and Garfit's case, 4 Eq. 226 ; Walker's case, 6 Eq. 30 ; Head's
189, and infra, p. 834. case, 3 Eq. 84 ; White's case, ib. The
(m) See the summary of V.-C. observations of the Master of the
L.C. 3 H
834
WINDING UP BY THE COURT.
Bk. IV. Chap.
Sect. 10.
No delay, and
transfer com-
plete although
not registered.
Discretion of
directors exer-
cised by the
Court.
l- purchaser, the former may be entitled to an indemnity from
— the latter (o), and although each of them may be as solvent as
the other (p).
2. Where before the commencement of the winding up
shares are bond fide sold, and the transfer has been executed
by both transferor and transferee, and has been left for regis-
tration at the company's office, and there has been no un-
necessary delay on either side in completing the transfer, and
nothing remains to be done except to register it, and the
compan}', having had an ojjportunity of registering, have
neglected, but not declined to do so (q) : under these circum-
stances, the Court will allow, and indeed order, the trans-
feree's name to be substituted for that of the transferor, unless
there is some good reason why the transfer should not be
completed (?'). Even if the transferee has not executed the
transfer, still if he has accepted the shares, and has been
accepted by the directors as a shareholder, the transferee will
be treated as the owner (s).
3. Where, as is generally the case, the directors have power
to decline to register a transfer if the transferee is not approved
by them, and a transfer has been left for registration in suffi-
cient time to be approved before the commencement of the
winding up, but has not been approved ; still, if no delay is
imputable to the parties to the transfer, and there are no
grounds on which the directors could have properly declined
to accept the transferee, the Court will accept him, and order
his name to be registered (t). But if the directors did object
Rolls in Ward's case, 2 Eq. 226, were
commented upon and explained by
him in these two last cases.
(o) Head's case and White's case, 3
Eq. 84.
(p) Ibid. In Head's case, the
liquidator was indifferent as to
which of the two was put on the
list.
(q) See infra, 3, 4, and 6, as to
this. And compare Lord B.
Montagu's case, W. N. 1888, 136,
where the transferor had neglected to
see that the transfer was registered,
and there was no default on the part
of the company.
(r) Fyfe's case, 4 Ch. 768 ; Hill's
case, ib. 769, note ; Lowe's case, 9 Eq.
589 ; Ward and Garfit's case, 4 Eq.
189 ; Nation's case, 3 Eq. 77 ; and
see Ward's case, 2 Eq. 226.
(s) General Floating Dock Co., W.
N. 1867, 27, where the transferee
was registered.
(t) Weston's case, 4 Ch. 20, where
the transferee was a man of straw,
but the directors had no right to
object to him. See, also, Ward and
CONTRIBUTORIES — TRANSFERORS.
835
on proper grounds, the Court clearly cannot interfere ; and it Bk- JJ^Jjf- 1-
has been held competent for directors, seeing that the com- -
pany is in extremis, to resolve that no more transfers shall be
registered without their express sanction ; and where this is
done, the Court will decline to complete a transfer left for
registration just before the passing of the resolution («),
although the Court will complete a transfer which was left for
registration, and ought to have been registered before the
resolution was passed (x).
4. It is always material, in these cases, to ascertain whether Delay in regis-
•> . tering transfer.
the directors have received a proper transfer in sufficient time
before the commencement of the winding up to enable them
to pass or reject the transfer in the ordinary course of business.
Where there has been no board meeting in the interval between
the leaving of the transfer and the commencement of the
winding up, the Court has never yet completed the transfer,
and it is very doubtful whether the Court has any power to do
so (y). But where there has been such a meeting, although
only one, delay is imputable to the company in not passing
and registering the transfer, and the Court can and will order
it to be completed if the parties to the transfer have not
themselves been guilty of delay (z).
5. But this assumes that the transfer left for registration is Improper
transfers.
one which the directors were bound to accept : if it be not, no
delay is imputable to the company, and the transferor will be
the contributory.
This has been decided where no transfer has been left for
registration (a) ; where the transfer left was not executed by
the transferee, as was required by the practice of the com-
Garfit's case, 4 Eq. 189 ; Nation's (y) See Ward and Henry's case, 2
case, 3 Eq. 77 ; and compare Wes- Ch. 431 ; Shepherd's case, ib. 16.
ton's case, with Ex parte Parker, 2 (z) See Nation's case, 3 Eq 77 ;
Ch. 685. Hill's case, 4 Ch. 769, note ; Lowe's
(u) Alexander Mitchell's case, 4 case, 9 Eq. 589, where petitions for
App. Ca. 548 & 567 ; Rutherfurd's winding up, which were afterwards
case, ib. 548 & 581 ; Mitchell v. City withdrawn, were pending. Qu. this
of Glasgow Bank, ib. 624 ; Shepherd's case.
case, 2 Ch. 16, and 2 Eq. 564. (a) Musgrave and Hart's case, 5
(x) Nation's case, 3 Eq. 77 ; and Eq. 193.
see Lowe's case, 9 Eq. 589.
3 h 2
836 WINDING UP BY THE COURT.
Bk. IV. Chap. l. pany (b) ; where the transferee was a person to whom the com-
pany might have objected (c) ; where the transferor not having
paid his calls was not entitled to transfer (d). But a transfer
executed in blank and filled up afterwards, but before being
sent in for registration, has been held sufficient (e).
The directors of a mutual insurance society are entitled to
evidence of the assignment of a policy, and if reasonable time
for inquiry has not elapsed before the winding up, the Court
will not register the transferee (/).
6. It must be borne in mind in these cases that if the com-
pany has refused to register the transferee before the company
was in difficulties, the company cannot insist on having his
name put on the list of contributories instead of that of the
transferor (g) ; and the creditors of the company are in this
respect in no better position than the company (h).
P) Where the sale has taken place since the commencement of the winding up.
If, in order to rectify a company's register and to substitute
the name of a transferee for that of the transferor, it is essential
that the transfer shall be left for registration before the func-
tions of the directors cease, it will follow that a person who
sells his shares after that time must, under all circumstances,
be a contributory. But if this is not essential, there will be
the same power of making the substitution where sales are
made after, as where they are made before, a petition to wind
up (i). It is obvious, however, that to allow shareholders to
get rid of their liabilities by selling their shares after the
commencement of the winding up of the company would lead
to the greatest fraud ; and it is difficult to conceive any cir-
cumstances which can entitle such a seller to have the pur-
chaser substituted for him, if the liquidators or the creditors
(b) Marino's case, 2 Ch. 596 ; (/) See Sanders case, 20 Ch. D.
Walker's case, 2 Eq. 554, and see 403.
last note. (g) Sichell's case, 3 Ch. 119.
(c) Shipman's case, 5 Eq. 219. (h) lb.
(d) Holden's case, 8 Eq. 444. (i) See ace. Emmerson's case, 1
(e) Contract Corporation, 3 Ch. Ch. 433.
105.
CONTRIBUTORIES — TRANSFERORS.
837
oppose the substitution (&). Nor is there yet any reported Bk- ^^JP- L
case in which the substitution has been made, even where
there has been no opposition on their part. In Emmersons Emmerson's
case (I), indeed, the Master of the Rolls made the substitution ;
but the decision was reversed on appeal (m). This case, more-
over, was decided before it was held, as it now is, that the
question who ought to be on the list of contributories, is
materially different from the question whether the seller is
entitled to indemnity from the purchaser. In Walker's case (n), Walker's case.
the Court declined to make the substitution, on the ground
that the Court could not itself exercise the discretion of ap-
proving or rejecting transferees, and which discretion was
vested by the articles of the company in the directors. In
each of the above cases the liquidator was indifferent as to
which person was on the list.
In connection with this subject it is to be remembered that
sales of shares after the commencement of a winding up are
not void under § 153 of the Companies act, 1862 ; and trans-
fers after that date may be approved by liquidators (o).
2. As regards persons who have surrendered their shares to the
company.
The right of shareholders to retire from a company has been Surrenderors
• j. u i. °f shares.
discussed in an earlier chapter (p), and it was there seen that
in the absence of an express agreement, except in the case of
cost-book mining companies, the only mode in which a share-
holder can retire from a company is by transferring his shares
to some other person. If, therefore, a shareholder has sur-
rendered his shares, and even if they have been cancelled by
the directors, he will, nevertheless, be a contributory, as a
(k) Under the acts of 1848 and wind up, and that under those
1849 the transferor has been decided circumstances a decree for specific
to be the contributory. Glanville's performance could not have been
case 10 Eq. 479. made against the purchaser.
(1) 2 Eq. 231. (n) 2 Eq. 554.
(m) 1 Ch. 433. It was reversed (o) See Kudge v. Bowman, L. R. 3
upon the ground that neither buyer Q. B. 689.
nor seller knew of the petition to (p) Ante,?. 517.
838 WINDING UP BY THE COURT.
Bk. IV. Chap. l. present member, unless he can show that the company is bound
— — - by what has taken place. Prima facie, directors have no right
to accept a surrender of shares.
Morgan's case. Morgan's case (q), Stanhope's case (r), and Muni's case (s),
Stanhope's case. an(j the cases which arose on winding up the Agriculturist
Cattle Insurance Company (t), the facts of which have been
before stated (u), are leading authorities upon the subject now
in question, and it appears from them, and other cases which
will be found in the notes below, that, unless the constitution
of a company is such as to warrant directors in accepting a
surrender of shares, or unless an unauthorised surrender has
been so acquiesced in by the company as to become binding
upon it (x), a person whose shares have been surrendered will,
nevertheless, remain liable to be a contributory, as a present
member. This has been held where the directors would have
had power to buy shares of the company out of certain accu-
mulated funds if they had existed, but which, in fact did not
exist, and the shares were nevertheleless purchased by the
directors for the company in pursuance of a resolution passed
at one general meeting of the shareholders (y), and ratified at
another similar meeting (z). So, where the shares had been
surrendered and cancelled considerably more than six years
before the company was ordered to be wound up (a) ; where the
cancelled shares had been allotted without authority (b) ; where
it was part of the bargain when they were issued that they
should be cancelled (c) ; where they had been transferred to
(q) 1 De G. & S. 750, and 1 Mac. 225, and 1 De G. & S. 750, ante, p.
& G. 225, ante, p. 518. 518.
(?•) 3 De G. & S. 198, ante, p. 518. (z) Lawes's case, 1 De G. M. & G.
(s) 22 Beav. 55, ante, p. 519. 421. See, also, the cases in note (t).
(t) Stanhope's case, 1 Ch. 161; Such a power in the case of a limited
Stewart's case, ib. 511; Spackman jompany would now be invalid,
Evans, L. R. 3 H. L. 171 ; Houlds- Trevor v. Wliitworth, 12 App. Ca.
worth v. Evans, ib. 263. 409.
(u) Ante, p. 522. (a) See the cases in note (t), and
(>;) As to which, see Evans v. Addison's case, 5 Ch. 294. See, also,
Smallcombe, L. R. 3 H. L. 249, and Stanhope's case, 3 De G. & S. 198,
other cases noticed, ante, pp. 517 and Richmond's Executors' case, ib.
to 523 ; and Hunt's case, 32 Beav. 96.
387. (b) Holt's case, 1 Sim. N. S. 389.
(y) Ex parte Morgan, 1 Mac. & G. (c) Addison's case, 5 Ch. 294.
CONTRIBUTORIES SURRENDERORS. 839
the surrenderor in an informal manner (d) ; where they were Bk- *v- cll*P- 1-
those of dissatisfied shareholders, whose retirement was one
of the terms of a compromise effected with them (e) ; where
the shares were those of dissatisfied directors wishing to have
nothing more to do with the company (/) ; where the shares
were those of a person who had released all his claims upon
the other shareholders, for such a release is not a release by
them of their claims on him (g) ; where the shares were can-
celled on non-payment of a call made for the purpose of
enabling the shareholder to get rid of his shares (h) ; where
the shares were cancelled at the request of the holders (i) ;
where the shares were held by a trustee, and were cancelled
pursuant to a compromise between the cestui que trust and the
company (k) ; where the shares were cancelled and exchanged
for other shares, pursuant to a scheme for amalgamating the
company with another (I).
Upon precisely the same principles it has been held that
persons who have agreed to become shareholders are contri-
butories as present members, although the directors may have
since agreed to cancel their shares (m):
Moreover, where there is a power to accept a surrender, and
a surrender is made colourably, but not bond fide in exercise
of it, the surrenderor will be a contributory (n).
Compare Miller's case, 3 Ch. D. 661. ante, pp. 517 to 523.
and 5 ib. 70. (g) Ex parte Apps, 18 L. J. Ch.
(d) Walter's 2nd case, 3 De G. & 409.
S. 244. (h) Richmond's case, 4 K. & J.
(e) Bennett's case, 5 De G. M. & 305.
G. 284, and 18 Beav. 339. London (i) Esparto Trading Co., 12 Ch.
and Provincial Consolidated Coal Co., D. 191.
5 Ch. D. 515, where the persons re- (/:) Barrett's case, 4 De G. J. &
tiring had subscribed the memo- Sm. 416. See, infra, p. 842 as to
randum of association and no shares compromises.
had been allotted. See, also, the (I) Austin's case, W. N. 1867, 138.
cases ante in note (t), noticed ante, (m) See Adams's case, 13 Eq. 474;
p. 522. Sidney's case, 13 Eq. 228 ; Ball's
(/) Hunt's case, 22 Beav. 55 ; case, 5 Ch. 707 ; London and Pro-
Daniell's case, ib. 43, and on appeal, 3 vincial, dr., Coal Co., 5 Ch. D. 525.
Jur. N. S. 803 ; Stanhope's case, 3 De (n) Hall's case, 5 Ch. 707, and see,
G. & S. 198. See Walker's case, 8 De infra, p. 842, under the head For-
G. M. & G. 607 ; Ex parte Brown, feiture.
19 Beav. 97, and the cases noticed,
840
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 10.
Persons who
have duly sur-
rendered their
shares not con-
tributories.
Distinction
between sur-
rendering shares
and transferring
them.
Where, however, the shareholders have power to relinquish
their shares, and do relinquish them in the exercise of that
power, then, as between themselves and the company, their
liability is at an end, and on the winding up of the company
they are not liable to be made contributories, unless it be as
past members (o). There are many decisions under the older
acts to the effect that, under the circumstances now supposed,
persons who had surrendered their shares were not contribu-
tories (p), even although the surrender was somewhat irre-
gular (q). The same principles are applicable to surrenderors
of shares in companies formed and registered under the Com-
panies act, 1862 (r). The writer conceives the same to be
true of unregistered companies wound up under that act,
although, if there are no present as distinguished from past
members, surrenderors will be liable to be contributories if
there are debts for which but for the act they could be sued at
law (s).
Before quitting this subject it is necessary to advert to the
distinction between a transfer of shares and a surrender of
them. A surrender which is carried out by a transfer to a
nominee of the company is treated as a surrender and not as a
transfer (t) ; but if what is called a surrender of shares is in
fact a bond Jide transfer of them, the transferor will, as between
(o) As to companies governed by
the Stannaries act, 1887, see 50 &
51 Vict. c. 43, § 22.
(p) See Fenn's case, 4 De G. M.
& G. 285, and 1 Sm. & G. 26 ;
Birch's case, 2 De G. & J. 10 ; Loft-
house's case, ib. 69 ; Bodmin United
Mines, 23 Beav. 370, all cases of
cost-book mines.
(q) Lane's case, 1 De G. J. & S. 504 ;
Grady's case, ib. 488 ; Busk's case, 3
De G. & S. 267, affirmed on appeal,
see 16 Jur. 343 ; Cockburn's case, 4
De G. & S. 177 ; Ex parte Bagrje,
13 Beav. 162 ; Hawthorn's case, 10
W. R. 572.
(r) Teesdale's case, 9 Ch. 54, where
the power was given by special reso-
lution altering the articles. But see
the observations on this case in
Hoye v. International Financial
Soc, 4 Ch. D. 327 ; Thomas's case,
13 Eq. 437 ; Snell's case, 5 Ch. 22,
where the surrenderor had sub-
scribed the memorandum of associa-
tion . Compare Hall's case, ib. 707,
where the transaction was held not
to amount to a surrender.
(s) Part's case, 10 Eq. 622. See
ante, p. 819, note (z).
(t) See Addison's case, 5 Ch. 294 ;
LankesteiJs case, 6 Ch. 905, note, as
explained by L.-J. Mellish, at p.
910 ; Eyre's case, 31 Beav. 177 ;
Benham's case, 13 W. R. 483 ;
Clack's case, W. N. 1866, p. 275,
where dissentient shareholders re-
tired. Compare next two notes.
CONTRIBUTORIES SURRENDERORS. 841
himself and the company, be released from liability, and will Bk- Iv- ChaP- *■
, . Sect. 10.
not be a contributory, although the main object of the transfer —
may have been to enable him to get quit of the company (u).
Moreover, even if the transfer is made to a person in trust for
the company, but the transferor is ignorant of this fact, and
throughout acts in the bond fide belief that he is transferring
his shares to the transferee as an individual, the transfer will
be valid, and the transferor will not be a contributory (x).
A transfer to an individual director, moreover, will not
relieve the transferor from his liability if the transfer is not
made with perfect bona fides, and so as to constitute the
transferee a shareholder in respect of the shares transferred.
In Ex parte Brown (y), a transfer by a director to a director was Ex parte Brown.
held invalid as between the transferor and the company, on
the ground that the transfer was made irregularly, and the
transferee had already as many shares as he was entitled to
hold in his own right ; and in Ex parte Henderson (z), a transfer Ex parte
by an auditor to a director was held invalid as against the
company, because, in addition to the grounds relied upon in
the last case, the transferor had made no attempt to transfer
his shares in the proper manner, and had acted throughout
with want of good faith.
A person who has not bound himself to take shares, can Difference
DGfcWGGU SUI"~
waive any right to take them which he may have acquired ; rendering shares
and an arrangement by which he abandons some and retains to takTthenf
the rest, does not entitle the company to hold him a con-
tributory in respect of more shares than he ultimately agrees
to take (a). So if shares are allotted pursuant to an invalid
resolution which is afterwards rescinded, and the shares are
cancelled, the allottee will not be a contributory (b). So shares
(u) Jessopp's case, 2 De G. & J. Bush, L. R. 6 H. L. 37, affirming
638. See, also, the next note. Bush's case, 6 Ch. 246, where there
(x) Grady's case, 1 De G. J. & Sm. was irregularity, hut no malafid.es.
488; Reeve's case, 10 W. R. 817 ; (a) See Sahlgreen and Carrall's
Hollwey's case, 1 De G. & S. 777 ; case, 3 Ch. 323 ; Meyer's case, 16
Nicol's case, 3 De G. & J. 387 ; Beav. 383 ; Coleman's case, 1 De G.
Hughes' case, 15 W. R. 476. Com- J. & Sm. 495 ; Hebb's case, 4 Eq. 9.
pare these with the last two notes. See, also, Nicol's case, 29 Ch. D.
(y) 19 Beav. 97. 421.
(z) lb. 107. Compare Murray v. (b) Barnetl's case, 18 Eq. 507.
842
WINDING UP BY THE COURT.
Compromise
of doubtful
liability.
Bk. IV. Chap. l. allotted by mistake as paid up may be withdrawn, and re-issued
— - — : — when the mistake has been rectified (c). Such cases as these
do not turn on a shareholder's right to retire from a company,
but on a person's right to withdraw from an unconcluded
agreement, and to have mistakes corrected.
Moreover, if there is a bond fide question whether a person
is or is not a shareholder or bound to take shares, and such
question is settled by a compromise, and he gives up all his
rights (if any) against the company, and the company relin-
quish all claims upon him, he will not be a contributory as a
present member ; although he might have been had there been
no compromise, and although shareholders in the company
may have had no right to surrender their shares id).
Moreover, this principle applies although the parties may
not have got so far as to dispute the question capable of
being disputed between them (e). But in the absence of a
bond fide dispute, or of a question capable of being bond fide
made a matter of dispute, there can be no compromise, and
no room therefore for the application of the principle in
question (/).
A shareholder who in the course of winding up surrenders
his shares under § 161 of the Companies act, 1862, does not
cease to be a contributory (</).
Surrender under
§161.
Position of
persons whose
shares have
been forfeited.
3. As regards persons whose shares have been forfeited.
It was seen in a previous chapter, that the right to forfeit
shares does not exist except where it is expressly conferred (h).
Consequently, persons whose shares have been declared for-
feited, do not cease to be shareholders, and are not relieved
from their liability to be made contributories as present
(c) Hartley's case, ib. 542, and 10
Ch. 157.
(d) Lord Belhaven's case, 3 De G.
J. & Sm. 41 ; Fox's case, 5 Eq. 118 ;
Blake's case, 34 Beav. 639. See,
also, Bath's case, 8 Ch. D. 334 ;
Hesketh's case, 13 Ch. D. 693.
(«) Dixon v. Evans, L. R. 5 H. L.
606, reversing Dixon's case, 5 Ch.
79.
(/) Adams's case, 13 Eq. 474 ;
Dixon's case, 5 Ch. 79, was decided
on this principle, but was reversed
on appeal. See the last note.
( g) Vining's case, 6 Ch. 96.
(h) Ante, p. 528.
CONTRIBUTORIES — FORFEITED SHARES. 843
members, unless the forfeiture is warranted by the constitu- Bk. IV. Chap. l.
J Sect. 10.
tion of the company.
On the other hand, where there is power to forfeit shares, Persons whose
and shares are bona fide forfeited in pursuance of the power, been duly
the shareholder who is thereby deprived of all interest in the gJnSbutories
company, is not liable to be made a contributory, as a present
member, on its winding up (i), unless, notwithstanding the
forfeiture, he continues, as between himself and the company,
liable for its debts, which, although not an impossible, is a
very improbable case.
A power to forfeit is, however, one which must be exercised Irregular
... -1111- forfeitures.
with great attention to the formalities prescribed by the instru-
ment conferring it (k), and a person whose shares have been
improperly forfeited will be a contributory as a present member
under ordinary circumstances (I).
Nevertheless, if everything required to be done is substan-
tially done by the company, and if the shares have been treated
both by the company and by the shareholder as forfeited, the
shareholder will not be a contributor}'. This is well exempli-
fied in Knight's case (m), where there was power to forfeit for Knight's case.
(i) See, in addition to the cases (k) Ante, p. 532.
cited in the next three notes, Dawes's (I) Esparto Trading Co., 12 Ch. D.
case, 6 Eq. 232, where the forfeiture 191, where there was no intention
was in the interval between a reso- to forfeit the shares, but merely to
lution to, wind up voluntarily, and a cancel them; Bottomley's case, 16
resolution confirming it ; Kelk's case Ch. D. 681, where the forfeiture was
and Pahleri's case, 9 Eq. 107, and invalid owing to the number of
Ex parte Collum, ib. 236, where the directors being insufficient ; Garden
forfeiture was for not bringing in Gully Mining Co. v. McLister, 1 App.
certificates for registration. See, Ca. 39, where the forfeiture was
also, Beresford's case, 3 De G. & S. invalid on the ground that it was
175, and 2 Mac. & G. 197 ; Ex parte made by persons not properly elected
Bailey, 15 Jur. 29. These cases directors.
show that if a company's deed con- (in) 2 Ch. 321. See, also, IVool-
fers a power of forfeiture, that power laston's case, 4 De G. & J. 437, re-
may be exercised against a person versing, on this point, JVoollaston's
who ought to execute, but has not, case, 5 Jur. N. S. 617 ; Luster's case,
in fact, executed that deed. And 4 Eq. 233, where the forfeiture was
.-ee Strick v. Swansea Tin Plate Co., by two out of six directors ; King's
36 Ch. D. 558, where members case, 2 Ch. 731 and 735, where the
expelled from a trade association shares forfeited were illegally sub-
were held to have no claim to share divided shares ; and see Webster's
in the division of surplus assets. case, 32 L. J. Ch. 135 ; Grady's case,
844
WINDING UP BY THE COURT.
Bk. iv. Chap. l. non-payment of calls, on giving certain notices, and by a reso-
Sect. 10. * _
lution to that effect : a shareholder from whom calls were due,
received notice in proper form that if his calls were not paid
on a certain day his shares would be forfeited. He made
default, and the secretary thereupon made an entry in the
compan}r's books to the effect that the shares were forfeited,
and had been transferred to the company. By the regulations
of the company the shareholder ought to have had notice of
this ; but no notice was sent to him ; and no resolution to
forfeit appeared in the company's books : indeed, it was
tolerably plain that there had been no such resolution. The
shareholder in question, however, had never acted or been
treated as a shareholder after the forfeiture ; and it was held,
that a resolution to forfeit ought to be presumed, and the
shareholder was accordingly held not to be a contributory.
In the above case, it will be observed that there was power
to forfeit, an intention to forfeit, and notice of that intention :
and the intention was actually carried into effect, although not
with due regularity. But, as has been seen on a former occa-
sion, an intention to forfeit not carried into effect is no forfei-
ture at all (//) ; therefore, where a shareholder received notice
that if he did not pay his calls in arrear by a certain day his
shares would be forfeited without further notice ; and he paid
his calls on some of his shares but not on others, stating that
he should submit to their forfeiture, but the directors after all
did not forfeit them, but kept his name on the books as it had
been before the notice ; he was held, on the subsequent wind-
ing up of the company, to be a contributory in respect of all
his shares (o).
Even when there is a power to forfeit, that power can only
be exercised bond fide for the benefit of the company. If,
therefore, a shareholder procures his shares to be forfeited in
order that they may be cancelled and got rid of, or as part of
Intention to
forfeit not
carried out.
Improper exei ■
cise of power
to forfeit.
1 De G. J. & S. 488, and Coleman's
case, ib. 495, as to presuming for-
feiture. See, also, Miller's case, 3
Ch. D. 661, and 5 ib. 70, infra
note (o).
(n) Ante, p. 533.
(o) Bigg's case, 1 Eq. 309. In
Miller's case, 3 Ch. D. 661, and 5 ib.
70, there was no notice or declara-
tion of forfeiture, but it was a con-
sequence of ceasing to be a director
C0NTRIBUT0RIES — FORFEITED SHARES. 845
a scheme by which he may be enabled to surrender his shares Bk- IV. Chap. 1.
J J ... Sect. 10.
and retire from the company, he will remain a contributory
notwithstanding the forfeiture (p). On the same principle a
surrender of shares which is ultra vires cannot be treated as
valid by being referred to a power of forfeiture, which was
never really exercised (q).
A forfeiture of shares taken or agreed to be taken, must be Distinction
between for-
distmguished from the withdrawal of shares allotted to a per- felting shares
son, but which he has not bound himself to take, and has ™a Xare^not
expressly or impliedly declined to accept. Whether any power agreed to be
to forfeit shares exists or not, such a person is not a con-
tributory (r).
The forfeiture of a share within a year before the commence- Liability as past
. members.
ment of the winding up of a company formed and registered
under the Companies act of 1862, does not relieve the former
holder from his liability to be put on the list of contributories
as a past member (s), even although he may have transferred
them before the forfeiture (i) ; and even although the com-
pany's regulations are to the effect that forfeited shares are to
be treated as extinguished (u).
(p) Richmond's and Painter's case, Coleman's case, 1 De G. J. & S. 495 ;
4 K. & J. 305, ante, p. 532. See Belhaven's case, 3 ib. 41. See, also,
also, Spackman v. Evans, L. R. 3 Dixon v. Evans, L. R. 5 H. L. 606,
H. L. 171 ; Houldsworth v. Evans, reversing Dixon's case, 5 Ch. 79.
ib. 263 ; Stanhope's case, 1 Ch. 161 ; ante, p. 842.
Stewart's case, ib. 511 ; noticed ante, (s) Bridgets case, and Neill's case,
pp. 518 to 523 ; Gower's case, 6 Eq. 4 Ch. 266 ; Bath's case, 8 Ch. D.
77, where the member's name was 334. Compare Hesketh's case, 13 Ch.
still on the register. D. 693.
(q) Hall's case, 5 Ch. 707 ; Esparto (t) Bridger's case, and Neill's case,
Trading Co., 12 Ch. D. 191. 4 Ch. 266.
(/) Goldsmid's case, 16 Beav. 262 ; (u) Creyke's case, 5 Ch. 63.
846 WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 11.
SECTION XL— CALLS FOR DEBTS, ETC.
1. Generally.
Calls on con- Having settled the list of contributories so far as he is able,
the next thing which the judge acting in the winding up
usually finds it necessary to do, is to make calls on the con-
tributories for the payment of the debts, losses, and liabilities
of the company (x).
Turposes for Calls may be made :
be made! S "^ 1- For the payment of the company's debts and liabilities ;
2. For the payment of the costs of winding up ; and
3. For the adjustment of the rights of the contributories
amongst themselves (y).
Moreover, in making calls, the probability that some of the
contributories will fail to pay the full amount due from them
may be taken into consideration (z).
Time and With respect to the time for making calls, and the amount
'can°?n ° to De raised, the Companies act, 1862, gives the judge a wide
discretion (a) ; and he is, to a great extent, guided by the
liquidator's view of what is required (b). Moreover, the court
of appeal is very reluctant to interfere with the discretion of
the judge upon such a question, as to whether the time has
arrived for making a call, or as to the amount for which it
should be made(c). A call can only be made upon persons
who are settled on the list of contributories (d) ; but it is not
necessary to wait until the list is completed (e) ; nor until
the assets of the company have been realised or have been
(x) The power of making calls on H. L. 28 ; The Contract Corporation,
the contributories is given by § 102 2 Ch. 95.
of the Companies act, 1862. These (c) Ibid,
calls must not be confounded with (d) See the act § 102. -
calls made under a company's articles (e) Ibid., and see, as to past mem-
of association or deed of settlement. bers, Creykes case, 5 Ch. 66 ; and see
See ante, p. 407. Helbert v. Banner, L. R. 5 H. L. 28.
(y) § 102. See, also, §§ 38, 196, See Underwood's case, 5 De G. M.
cl. 5, and § 200. & G. 677, where the list was in such
(z) § 102. a state that it was held no call could
(a) lb. he made.
(b) See Helbert v. Banner, L. R. 5
CALLS.
847
ascertained to be insufficient to discharge its liabilities (/); lik- l^Chap. l.
nor until the claims against the company have been estab-
lished (g).
Applications to the judge to make a call are made by sum- ^t"* as t0
mons, stating the proposed amount of the call(/t). The
summons must be served four clear days at least before the
day appointed for making the call on every contributory pro-
posed to be included in it (i). Notice of the intended call
may, however, be given by advertisement if the judge so
directs (k). The application for a call must be supported
by affidavit, which in ordinary cases is made by the official
liquidator (I).
When an order for a call is made, a copy of it must be Order for a call,
served upon each of the contributories included in it, together
with a notice specifying the balance due from him in respect
of such call (m). If this notice states that interest will be
charged in case of non-payment on the day named, such inte-
rest will be payable (w). But provisions in a company's
articles of association for the payment of interest on calls do
not apply to calls made in winding up (o). The order need
not be advertised unless the judge so directs (p). If default is Balance order.
made by any contributory in payment of the sum which he
has thus been required to pay, another and special order,
called a balance order, is made, requiring him to pay what is
due from him within four days after service (q). Upon non-
(/) § 102. Helbert v. Banner, Ex parte D' Urban, 18 Jur. 781, notice
L. R. 5 H. L. 28 ; Gay's case, 1 JDe sent by post to a person abroad was
G. M. & G. 347 ; Greenwood's case, held good, though it reached him
3 ib. 459. after the day appointed for payment.
(g) Contract Corporation, 2 Ch. 95, As to the affidavits of service, see
noticed infra, p. 850. Natle Slate Co., 7 W. R. 319 ; Re
(h) See rule 33. Job, 27 Beav. 32.
(i) lb. («) Barrow's case, 3 Ch. 784 ; Ex
(k) Ib. See the forms in the parte Lintott, 4 Eq. 184.
Rules, schedule 3, Nos. 34-37. (o) Welsh Flannel and Tweed Co.,
(I) See ib. No. 33. 20 Eq. 360, a case of voluntary
(m) See rule 34, and the forms in winding up.
the schedule, Nos. 36 and 37. As (p) Rule 34.
to the mode of service, see § 63 ; (q) Rule 35, and see the forms in
as to substituted service, see Ellis's the schedule, Nos. 38 and 39. This
ease, 3 De G & S. 172. As to ser- order ought not to be issued against
vice abroad, see ante, pp. 687, 688. In a bankrupt contributory, against
848 WINDING UP BY THE COURT.
Bk. IV. Chap. 1. compliance with this order it may be enforced in the way in
which orders in the Chancery Division of the High Court are
SgblLce usually enforced (r), i.e., by Ji. fa., &c, or by sequestration (s).
order- A writ of ne exeat regno to prevent a contributory from ab-
sconding without paying a call made upon him will be granted
on motion ex parte (t).
Calls made in the winding up of a company are specialty
debts, binding heirs {u) ; and provision is made for obtaining
payment out of the real as well as out of the personal estates of
deceased contributories (x) ; and the liability to a call is con-
sidered as commencing at the time when the shares in respect
of which they are made were taken (y) ; and executors as such
are liable to calls in respect of debts contracted by the com-
pany since their testator's death (z). Calls may be proved
against the estate of bankrupt contributories (a).
An order for payment of a call might formerly have been
registered (6) ; and it may be made the foundation of a charging
order, under 1 & 2 Vict. c. 110 (c). But a balance order cannot
be sued upon (d) ; nor made the foundation of a bankruptcy
notice (e) ; nor if made against an executor does it prevent him
from retaining his own debt out of the testator's assets (/).
whose estate the call can be proved. Ex parte Mackenzie, 7 Eq. 240 ;
Mitchell's case, 5 Ch. 400. Hastie's case, ib. 3, and 4 Ch. 274 ;
(r) See the act, § 120. As to en- Martin's Patent Anchor Co. v. Mor-
forcing orders in Scotland, see § ton, L. R. 3 Q. B. 306 ; Ex parte
12i. Camvell, 4 De G. J. & Sm. 539, and
(s) Ante p. 697. the cases cited in note (u). Com-
(t) Mawer's case, 4 De G. & S. pare Williams v. Harding, L. R. 1
349. See Jackson v. Petrie, 10 Ves. H. L. 9.
Ig4 (z) Baird's case, 5 Ch. 725 ; Blake-
(u) See the act, § 75. Re Mug- ley's case, 13 Beav. 133. and 3 Mac.
qeridge, 10 Eq. 443 ; Buck v. Robson, & G. 726.
ib. 629. It was otherwise under the (a) See, as to this, ante, pp. 555
older acts. See Robinson's Exors. et seq.
case, 6 De G. M. & G. 572. (b) Ex parte Thomas, 9 C. B. 740.
(x) lb., §§ 105 and 106, and see (c) Re Connell, 25 L. J. Ch. 649.
§ 76, and ante, p. 813. As to en- See B. S. C. Ord. xlvi., r. 1.
forcing payment of a call out of the (d) Chalk, Webb & Co. v. Tennent,
assets of a deceased Scotch share- W. N. 1867, p. 159.
holder, see Wryghte v. Lindsay, 3 (e) Ex parte Grimwade, 17 Q. B. D.
McQueen, 772. " 357 ; Ex parte Whinney, 13 ib. 476.
(>j) Ib. § 75. See on this section, (/) International Marine, dr., Co.
Ex parte Hatcher. 12 Ch. D. 284 ; v. Hawes, 29 Ch. D. 934.
CALLS FOR DEBTS. 849
The proceeds of a call made to pay a creditor of the company Bk- IV- chaP- l-
o6Cu J I.
may be attached under the Common law procedure act, by his —
judgment creditors (g).
An order for a call may be appealed from by any contribu- Appeal from
tory on whom it is made (/<), and he may on the appeal show,
if he can, that although his name is on the list of contributories
it ought not, in truth, to be there (?')• But he will not be
allowed to go into this matter if any considerable time has
elapsed since his name was settled on the list, or if he has
acquiesced in being made a contributory (k) ; nor will he be
allowed to dispute the validity of the winding-up order (I).
Where a person is settled on the list, and a call is made upon
him, and he resists payment on the ground that he is not a
contributory, he should apply to have his name removed from
the list, and to have the proceedings to enforce payment of the
call stayed ; he must, however, be prepared to pay the call into
Court (m).
The power of liquidators to effect compromises with contri-
butories has already been alluded to (»).
2. Calls for debts.
The proper mode of providing funds for the payment of a
debt clue from a company which is being wound up is by
making a call on its contributories, and not by ordering them
to pay the debt (o).
Under the acts of 1848 and 1849, a creditor of a company Right of creditor
was not entitled, as creditor, to require a call to be made for t0 be made.
(g) See Prichard's claim, Ex parte (k) Underwood's case, 5 De G. M.
Turner and Smith, 2 De G. F. & J. & G. 677.
354. See R. S. C. Ord. xlv. ; Rapier (I) Arthur Average Association, 3
v. Wright, 14 Ch. D. 638. Cli. D. 522 ; London Marine Insur-
(h) See ante, p. 697. Low/worth's cmce Association, 8 Eq. 176.
Executors' case, Johns. 461. (m) See OaJces' case, and Peek's
(i) Londesborough's case, 4 De G. case, W. N. 1866, 361 ; London
M. & G. 411. As to obtaining Bank of Scotland, 2 ib. 114; Jopp's
back money already paid for calls, case, ib. 192.
see Ex parte Holroyd, 15 Jur. 696 ; (/t) Ante, p. 709.
Ex parte I)a\j, 3 Jur. N. S. 1016 ; (o) See lie Cameron Coalbrook, &c,
Alison's case, 9 Ch. 2. Co., 30 Beav. 216.
L.C. 3 I
850 WINDING UP BY THE COURT.
Bk. IV. Chap. l. his payment. His remedy, if lie had a judgment already, was
— - — : — to enforce it against those individuals who were liable to it,
and, if he had no judgment, then to obtain one against the
official manager, and enforce it as before (p). The persons
proceeded against could require a call to be made for their
own indemnity, but it was only in this manner that a creditor,
as such, could obtain payment under the acts of 1848 and
1849, if driven to his strict rights (q). If, however, the creditor
was himself a contributory, he was, even under the acts of 1848
and 1849, entitled to require a call to be made for his own
payment (r) ; and when creditors become parties to the winding
up under the act of 20 & 21 Vict. c. 78, and were thereby dis-
abled from proceeding at law, they were entitled as creditors
to require a call to be made for payment of their allowed
demands. Under the Companies act, 1862, a creditor who
has established his debt against the company is entitled to
have a call made for his payment on those contributories who
are liable to calls.
For what debts The only debts for the payment of which calls can be made,
calls may be ftre ^g ^e^s proved against the company being wound up (s) ;
whether the debt is equitable or legal is unimportant (t) ; but
no call can be made for providing a fund which may or may
not be wanted (u). Nevertheless it was decided in the case of
Contract Cor- the Contract Corporation (x), that it is not necessary that dis-
poratiou. puted debts shall be finally established against the company
before calls in respect of them are made.
Under the Winding-up acts of 1848-49 it was held, that
before a call could be made on any particular contributory
settled on the list, his liability to contribute (y) to the debt to
(p) See ante, p. 612. and see ante, p. 731, as to providing
(q) See Thompson v. Norris, 5 De funds to answer possible claims by
G. & S. 686 ; and Prichard's case, 5 landlords.
De G. M. & G. 484. (x) 2 Ch. 95. See, also, Helbert v.
(r) Gleadotv v. Hull Glass Co., 15 Banner, L. R. 5 H. L. 28, which
Beav. 200. shows that the Court will act on the
(s) See Wryghte's case, 2 De G. estimates of the liquidator.
M. & G. 636 ; and see Marylebone (y) Direct liability to creditors
Bank, 18 Jur. 281. was not the test of liability to calls
(t) Terrell v. Hutton, 4 H. L. C. under the Winding-up acts of 1848-
1091. 49. Hopkinsorfs and Underwood's.
(u) Marylebone Bank, 18 Jur. 281, case, 7 De G. M. & G. 193.
CALLS FOR DEBTS. 851
pay which the call was made, must have been established (z) ; Bk- Iv- chaP- 1-
. K ' Sect. 11.
for it by no means follows that every person settled on the list -
is liable to all the calls which it may be necessary to make in
the course of winding up the company (a). Thus, if debts
had been incurred by the directors, and such debts were
provable against the company, but ought, as between the
directors and the shareholders, to be borne by the former, the
call for the payment of those debts must have been first made
on the directors exclusively. This was held where the directors
had expressly guaranteed the shareholders against all loss (b) ;
where the debts in question had been incurred by the directors
in excess of the authority reposed in them (c) ; and where they
had been contracted by the directors, who had fraudulently
obtained a covenant for their own indemnity (d).
In applying these decisions, however, to companies which are
wound up under the Companies act, 1862, it is necessary to bear
in mind not only the difference between the position of creditors
under that act and the older acts, but also the rule that calls on
past members form part of the general assets of the company,
and are not specifically applicable to any particular debt (e).
The proper mode of dealing with such cases as the above
under the act of 1862, is, if necessary (/), to make a call on all
the contributories, liable as present members, and to pay the
creditors, and afterwards adjust the rights of the contributories
inter se (g).
Calls for costs. — See infra, § 12.
(z) Upfill's case, 1 Sim. N. S. 395 ; parte Chippendale, 4 ib. 19, and
Hunter's case, ib. 435 ; Marylebone Ex parte Bignold, 22 Beav. 143.
Bank, 18 Jur. 281. (d) Carew's case, 7 De G. M. &
(a) See Ex parte Mansfield, 2 Mac. G. 43 ; and see Walker's case, 8 ib.
& G. 67, per Lord Cottenham. 607.
(6) Mowatt and Elliott's case, 3 (e) Webb v. Whiffin, L. R. 5 H.
De G. M. & G. 254, reversing Ex L. 711.
parte Mowatt, 1 Drew. 247 ; Londes- (/) See under the next head.
borough's case, 4 De G. M. & G. 411. (g) See the judgments in the Con-
ic) Ex parte Cropper, 1 De G. tract Corporation, 2 Ch. 95, and
M. & G. 147 ; Worcester Corn Ex- Helbert v. Banner, L. R.5EL 28.
change Co., 3 ib. 180. Compare Ex
3 i 2
852
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 11.
Calls for adjust-
ment of rights
of the contribu-
tories inter se.
Paid-up and
unpaid-up
shares.
3. Calls for the adjustment of the rights of the contributories.
It is the duty of the judge acting in the winding up, to
adjust and finally settle all cross claims between the contribu-
tories (h) ; but this does not preclude him from making a call
on them all alike, and from afterwards adjusting such in-
equalities of payments as on taking the whole of the accounts
between them may be found to exist. If, for example, several
of the contributories have already paid to the company more
than others, who ought to have paid as much as they, a call
may nevertheless be made on all alike if it is necessary to
raise a fund at once for defraying some loss or expense to
which they are all liable ; the temporary injustice produced by
such a call may be set right afterwards (i). At the same time,
such temporary injustice ought, if possible, to be avoided ; and
a call ought not to be made on the general body of contribu-
tories if it appears that any of them are indebted to the com-
pany in sums which can readily be recovered, and which, if
recovered, would render the call unnecessary (k).
If in an unlimited company there are two classes of share-
holders, viz., holders of shares paid up, and holders of shares
not paid up, the latter ought to be called upon to pay up their
shares before any call is made on the former (I). Again, in
limited companies where some of the shares are paid up in full
but others are not, calls ought to be made on the holders of
the unpaid-up shares in favour of the holders of the paid-up
shares, in order to put all the shareholders on an equality (m) ;
(h) I.e., qua contributories, Alex-
andra Palace Co., 23 Ch. D. 297.
See § 109 of the Companies act,
1862, and Mari/lebone Joint Stock
Bank Co., 25 L. J. Ch. 650 ; Ex parte
Perrier, 7 Ir„ Ch. Bep. 256 ; Ex
parte Dat/rell, and Ex parte Lowndes,
1 Jur. N. S. 1129.
(i) See Gay's case, 5 De G. & S.
122, and 1 De G. M. & G. 347 ;
Preece and Evans' case, 2 De G. M.
& G. 374.
(k) Gay's case. 1 De G. M. & G.
347 ; Underwood's case, 5 ib. 677.
See, too, The Marylebone Bank, 18
Jur. 271 ; and see above, notes (c),
(d), (g).
(I) See last note, and as to paid-
up shares, ante, p. 783.
(m) Anglesea Colliery Co., 2 Eq.
379, and 1 Ch. 555 ; Crookhaven
Mining Co., 3 Eq. 69 ; Scinde, Pun-
jaub, and Delhi Corp., 6 Ch. 53,
note ; Ex parte Maude, ib. 51 ; Gib-
son & Co., 5 L. E. Ir. 139 ; N< w-
townards Gas Co. 15 L. E. Ir. 51.
LIABILITY TO CALLS.
853
unless the regulations of the company exclude the right to Bk. iv^Chap. 1.
such a call (n).
Again, in some insurance societies calls ought not to be
made on policy-holders who are members until calls have been
made on the shareholders (o).
In settling the cross claims of contributories, a call cannot Calls on a
contributory
it seems be made on a contributory otherwise than in respect otherwise than
of the shares standing against his name in the list of contribu-r ^/^ares.0
tories (p). But, as already seen, orders can be made for pay-
ment of money owing to the company by its officers (q) ; and
in one case it was held that where directors were liable to
make good losses incurred by their own fraudulent conduct,
the shareholders have a right to have a call for the whole
amount made on those, or that one of the directors who was
able to pay (r).
4. Limit of liability to calls,
a) Present members.
The extent to which contributories are liable to calls de- Extent of lia-
bility to calls.
pends, in the first place, on the nature of the company.
If the companv is one, the liability of whose members is not 1. Where com-
1 J . pany is not
limited by the Legislature or the Crown, or by registration as limited.
a limited company, the amount of the calls which may be
made upon the contributories is limited only by the debts and
engagements of the company, and the costs of winding up, and
the sums, if any, which may be required for the adjustment of
the rights of the contributories amongst themselves (s).
(n) As in Eclipse Gold Mining Co., had to pay the whole value of no-
17 Eq. 490 ; Doncaster Permanent minally paid-up shares which had
Building Society, 4 Eq. 579, and been fraudulently obtained by him
Holyford Mining Co., Ir. L. R., 3 from the company, and had been
Eq. 208. afterwards given by him to the di-
(o) Albion Life Ass. Soc. 16 Ch. rectors who enabled him to commit
D. 83. the fraud.
(p) See Addison's case, 20 Eq. 620, (s) See, as to mutual marine in-
where a call to enforce a contract of surance societies, Andrews and Alex-
indemnity was refused. But see the ander's case, 8 Eq. 176; Lion In-
next note but one. surance Association v. Tucker, 12
(q) Ante, p. 851. Q. B. D. 176 ; Arthur Average Asso-
(r) See Ex parte Perrier, 7 Ir. Ch. ciation, 3 Ch. D. 522.
Rep. 256, where one contributory
854
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 11.
■2. Where com-
pany is limited.
By shares.
By guarantee.
In those cases in which, by the constitution of the company,
the liability of its shareholders as between themselves is
limited to the amount of their respective shares, a call may be
made upon them to the full amount of those shares not already
paid up (t) ; and even beyond that amount, if, notwithstanding
the constitution of the company, the liability of the share-
holders to the creditors is unlimited (u). But if the liability
of the shareholders is, as between them and the creditors of
the company, limited to the amount unpaid up of their re-
spective shares, then no calls for the payment of the debts
of the company can be made beyond the same amount (x) ;
although even then the liability for calls in respect of costs
will be unlimited {y).
If, on the other hand, the company is one, the liability of
whose members is limited by the Legislature, or the Crown, or
by registration as a limited company, the amount of calls which
may be made upon the contributories cannot exceed the limit
imposed by the Legislature or the Crown, or by the Companies
act, 1862, as the case may be.
With respect to companies formed and registered under the
last-mentioned act with limited liability, the act declares,
1. That in the case of a company limited by shares, no con-
tribution shall be required from any member exceeding the
amount, if any, unpaid on the shares, in respect of which he is
liable as a present or a past member (z) ; and
2. That in the case of a company limited by guarantee, no
contribution shall be required from any member exceeding the
amount of the undertaking entered into on his behalf by the
memorandum of association (a). With respect, however, to
(t) Talbot's case, 5 De G. & S.
386.
(u) Greenwood's case, 3 De G. M.
& ( J. 459, reversing S. C, 2 Sin. &
G. 95. See Marylebone Joint Stock
Banking Co., 25 L. J. Ch. 650.
(x) Prince of Wales Life Assur.
Society, Johns. 80, affirmed 3 De
G. & J. 660. See, also, the Com-
panies act, 1862, § 38, cl. 6 ; and
ante, pp. 246 et seq.
(y) Lethbridge v. Adams, 13 Eq.
547.
(a) § 38, cl. 4. As to calls on the
holders of fully paid-up shares who
have received back part of the
capital or assets of the company,
compare Cardiff Coal Co., 2 N. R.
562, and 11 W. R. 1007, with Car-
diff, dec, Coal Co. Y.Norton, 2 Eq. 558,
and 2 Ch. 405 ; and see Stringer's
case, 4 Ch. 475 ; Ranee's case, 6 ib.
104.
(a) § 38, cl. 5.
LIABILITY TO CALLS. 855
companies limited by guarantee, and having capitals divided Bk- JV. Chap. 1
Sect. 11.
into shares, it is also declared that any share of capital that
may not have been called up shall be deemed assets of the
company, and be a debt due to the company from each mem-
ber, to the extent of any sums unpaid on any shares held by
him, and shall be payable at such time as the Court may
appoint (b).
It must also be borne in mind that, even if a company is
limited, still, its articles may contain clauses obliging holders
of paid-up shares to contribute to some particular debt (c) ;
and if the company is a banking company issuing notes, the Limited banking
,. , .,., j, . ., . . P . companies.
liability ol its contributones m respect of those notes is not
limited (d).
It has already been seen that a company formed before 3. Company
November, 1862, as an unlimited company, may be registered limited but
under the Companies act, 1862, as a limited company (e), and ^tld S
that a company originally registered as an unlimited company
may be re-registered as limited (/). But such registration
does not affect the obligation of the company or its share-
holders to discharge in full the debts and liabilities of the
company contracted whilst the company was unlimited {g) ;
and in a case of this description, it has been decided that calls
may be made on the shareholders in the unlimited company,
beyond the amount unpaid up on their shares in the limited
company (h).
b) Past members.
1. As regards companies formed and registered under the l. Companies
Companies act, 1862, the extent of a contributory' s liability to re^tere<T
calls depends further on whether at the time of the presenta- nnt]erJlie Act
of 1862.
{b) § 90. (e) Ante, pp. 116, 253.
(c) As in Maxwell's case, 20 Eq. (/) Companies act, 1879, § 4, and
585, and McKewan's case, 6 Ch. D. ante, p. 335.
447. And in a mutual marine in- (</) lb. The remedy of the credi-
surance society limited by guarantee, tors is affected, but not their right to
see Lion Insurance Association v. payment. See ante, pp. 121 ,276 et seq.
Tucker, 12 Q. B. D. 176. (h) Garnet and Moseley Gold
(d) See the Companies act, 1879, Mining Go. v. button, 3 Best & Sm.
§ (i. This act repealed § 182 of the 321 ; Ex parte Stevenson, 32 L. J.
Companies act, 1862. Ch. 97. Compare Fountain's case,
856 WINDING UP BY THE COURT.
Bk. IV. Chap. l. tion of the winding-up petition he was or was not a member of
the company. With respect to retired members the act in
substance declares,
1. That no past member shall be liable to contribute if he
has ceased to be a member for a year or more before the com-
mencement of the winding up (i).
2. That no past member shall be liable to contribute in
respect of any debt or liability of the company contracted after
he ceased to be a member (k).
3. That no past member shall be liable to contribute unless
the existing members are unable to pay their contributions (I).
In giving effect to these provisions, considerable difficulties
arise. Such of them as affect the liability of past members to
be settled on the list of contiibutories have been already
alluded to (m) ; but assuming a past member to be properly on
the list, the question still remains what calls can be made upon
him ? He is not liable to any call in respect of any debt or
liabilit}T contracted after he ceased to be a member (n) ; but he
is liable in respect of all debts contracted before that time and
subsisting at the date of the winding-up order, even although
they were contracted before he became a member (o) ; and if
the assets of the company, including the contributions of the
present members, are not sufficient to discharge the whole of
the liabilities of the company, the past members become liable
to have a call made upon them in respect of those debts. But
the amount of the call cannot exceed the unpaid residue of the
debts in respect of which the past members are liable to be put
on the list : all payments made by the liquidator out of the
assets of the company in respect of those debts enure for the
benefit of the past members and diminish their liability (p).
11 Jur. N. S. 553, L. C, which (m) Ante, pp. 816 et seq.
turned on the Industrial and Pro- (») § 38, cl. 2, and see § 133 ;
vident Societies act. Andrew's case, 4 Eq. 458, and 3 Ch.
(i) § 38, cl. 1, and § 84. 161.
(k) § 38, cl. 2. (o) Helbert's case, 6 Eq. 509, and
(I) § 38, cl. 3. See as to past and L. R. 5 H. L. 28, sub nom. Helbert v.
present members of insurance com- Banner ; Webb v. IVhifjin, L. R. 5
panies, Hesketh's case, 13 Ch. D. 693 ; H. L. 71 1.
Bath's case, 8 Ch. D. 334. Bath's (p) Brett's case and Morris's case,
case, 11 Ch. D. 386, is overruled. on the rehearing, 8 Ch. 800 ; and
SET-OFF AGAINST CALLS.
857
In limited companies the liability of each past member is Bk- g^0^ L
further limited by the amount unpaid up of his shares.
Again, the money raised by calls made on past members No marshalling
becomes part of the general assets of the company, applicable
to the payment of all its debts and liabilities, without reference
to the time when they were contracted (q), and also to the costs
of winding up (r). There is no marshalling either of debts or
of assets for the benefit either of creditors or of members (s).
The consequences of this as regards costs will be seen here-
after (t) .
2. As regards companies not formed under the Companies 2. other
,.,.,. „ , n i i companies.
act, 1862, the liability of past members to calls depends on
sections 196 and 200 (u), which do not exonerate members who
have retired more than a year before the commencement of the
winding up from liability. Consequently, if there are debts to
which past members are still liable, and which present mem-
bers cannot pay (x), calls must be made on the past members.
The amount of call must, it is apprehended, be decided on the
principles explained when considering the liability of these
persons to be on the list of contributories (y).
As has been already pointed out, past members are not in
the position of sureties, and are not discharged by compro-
mises made with present members before the past members
are settled on the list {z) ; nor by the forfeiture of their
shares (a).
5. Set-off against calls.
If the company is indebted to a contributory on whom a call Set-off against
is made, his right to set off the amount due to him from the
call upon him has to be considered. With reference to this
see the same cases on the first hear- case, 8 Ch. 800, on the rehearing,
ing, 7 Ch. 200, and 6 Ch. 800. (t) See infra, § 12.
(q) Webb v. Whiffin, L. E. 5 (u) See, as to registered com-
H. L. 711, affirming Briton, &c, Life panies, § 196, cl. 5, and as to un-
Ass., 5 Ch. 428. registered companies, § 200.
(r) lb. (x) See, as to this, ante, 749 and
(s) See Webb v. Whiffin, L. R. 5 817.
H. L. 711, correcting Brett's case, (y) Ante, p. 818.
{} Ch. 800, and Morris's case, 7 ib. (z) Ante, p. 821.
500, and Brett's case and Morris's (a) Ante, p. 845.
858
WINDING UP BY THE COURT.
In limited
companies.
Bk. IV. Chap. 1. subject, it is important to determine whether his claim against
Sect. 11. . .
- the company arises simply irom his being a member of the
company ; or whether it arises from some transaction with the
company which would give him a claim against it even if he
were not a member. If his claim is of the first description,
e.g., if it is a claim to dividends or profits, no set-off is allowed,
to the prejudice of the creditors of the company ; but the
claim must be taken into account in finally adjusting the rights
of the contributories amongst themselves ; and this rule applies
as well to unlimited as to limited companies (b). If, on the
other hand, his claim is of the second description, then the
ordinary doctrines of set-off apply in his favour if the company
is unlimited, but not if it is limited (c). In other words,
where the compan}'- is limited, no set-off is allowed, as against
the company, except to the extent of setting off a call made
and payable by a contributory against a dividend payable to
him in respect of his debt : whilst if the company is unlimited,
any debt owing by it to a contributory, otherwise than in
respect of his shares, may be set off against calls made upon
him (d).
In this respect the law as to unlimited companies is the
same as it was under the Winding-up acts of 1848-49. Under
them it was held that where the company was indebted to a
contributory otherwise than in respect to his shares (e), he
might set off the amount of that debt from calls made upon
him (/) ; and, if necessaiy, calls for Ins reimbursement were
made on the other contributories (g) ; and unless their liability,
as between him and them, was clearly limited to the amount
of their respective shares, it was no answer to a call on them
for his indemnity, that they had already paid up their shares
in full (h).
In unlimited
companies.
(b) See § 38, cl. 7, and § 101.
(c) lb. Black & Go.'s case, 8 Ch.
254. § 10 of the Judicature act,
1875, has not changed the law, Gill's
case, 12 Ch. D. 755.
(d) See, on this subject, ante, pp.
741 et sea.
(e) See 11 & 12 Vict. c. 45, § 61.
(/) Ex parte Chippendale, 4 De G.
M. & G. 19.
(g) Marylebone Joint Stock Bank-
ing Co., 25 L. J. Ch. 650, V.-C. K.
See, too, Ex parte Bayrell, and Ex
parte Lowndes, 1 Jur. N. S. 1129 ;
Ex parte Sedgwick, 2 Jur. N. S. 949.
(h) Marylebone Joint Stock Bank-
ing Co., 25 L. J. Ch. 650.
COSTS.
859
Where an order is made to wind up a limited company, and Bk*g^C^p" 1"
the costs are ordered to be paid by the company to the peti- - — -
Set-off against
tioner, he is entitled to receive these costs, although he may costs,
be a debtor to the company before they are paid (i).
SECTION XII.— COSTS.
The costs of winding up a company are usually so large, Costs of winding
that the rules relating to their payment are of great practical UI
importance. In fact, it is by no means an uncommon circum-
stance for contributories to have heavier calls made upon them
for the payment of costs than for all other purposes put
together (/). In considering the question of costs, the first
point to determine is, what costs are payable by the company,
and the next is, how and by whom such costs are to be paid.
First, as to the costs payable by the company.
The costs of the petition for winding up a company have
been already alluded to (ante, p. 658).
The costs of the proceedings subsequent to the winding- Costs of
up (k) order may be divided into two classes, according as they
are or are not incurred in litigation. The non-litigious ex- ^^
penses are borne by the company, unless otherwise directed by subsequent to
. 7 -r. ... i* the winding-
the judge acting m the winding up (I). But provision is made Up order.
against burdening the company with the costs of persons who,
for their own better protection, desire to attend the winding-
up proceedings ; they can only do so at their own expense,
(i) See The General Exchange winding up and subsequently dis-
Bank, 4 Eq. 138 ; and see ante, p. missed by consent to be paid out of
715, as to costs and debts becoming the company's assets : Hull Central
due from the company whilst in Drapery Co., 15 Ch. D. 326.
liquidation. (/) In Ex parte Hardinge, 1 N.
(j) The power of the taxing- R. 40, it was held that the official
master to disallow costs has been manager of a Company was not en-
much increased by the order of May, titled to costs incurred under an
1889, LX V., r. 27 (38a). order made by a court having no
(k) The Court cannot order the jurisdiction. Compare Arthur Aver-
costs of an action brought for the age Association, 3 Ch. 1). 522.
benefit of the company before the
860 WINDING UP BY THE COURT.
Bk. IV. Chap. l. and if their attendance causes extra expense to the company,
such expense may be thrown upon them (m).
If the Court orders delinquent directors to be prosecuted, it
may order the costs to be borne by the company (n).
General rules. The litigious expenses (or costs in the usual sense of the
word) are in the discretion of the Judge (o). This discretion,
however, is not to be exercised arbitrarily ; and where there
are no reasons to the contrary, the costs incurred by any
particular litigation must be borne by the unsuccessful party.
Ex parte SichelL This rule was expressly laid down in Ex parte Sichell (p), and
it has been held to apply to appeals (q). The rule, moreover,
applies as well in favour of as against the conipamT, and not
only in cases of litigation between the company and its con-
tributories, but also in those between it and non-contributories,
or between different classes of contributories disagreeing
amongst themselves. For example, if a contributory applies
unsuccessfully to be removed from the list (/■), or unsuccessfully
resists being put on it (s), or applies unsuccessfully to have
another person put on (t), or appeals unsuccessfully against an
order making, or refusing to make, a call (u), or if he moves
unsuccessfully to discharge the winding-up order (v), or to
disturb a compromise made with other contributories (x), or if
a person claiming to be a creditor appeals against a disallow-
ance of his debt, and he fails on the appeal (y) ; in all these
(m) See Kule 60. G. M. & G. 421 ; Straffon's Exe-
(n) See § 167. cutors' case, ib. 576 ; Gibson's case, 2
(o) See, as to costs in the Stannary De G. & J. 275.
Courts, Ex parte Palmer, 7 Ch. 286. (s) Ex parte Bamfs representatives,
(p) 1 Sim. N. S. 187. See, also, 2 Dr. & Sm. 321; Goner's case, 6 Eq.
Ex parte Barry's representatives, 2 Dr. 77.
&Sm. 321 ; Exparte Oakes and Peek, (t) Pugg's case, 2 Dr. & Sm. 452.
3 Eq. 633, 634. O) Ex parte Cropper, 1 De G. M.
(q) Ex parte Hall, 1 De G. M. & & G. 147 ; Ex parte Chippendale. 4
G. 1. But seeSichell's rase, 3 Ch. 119. ib. 19 ; LondesborougK 's casefib. 411 :
(r) Examples of this are very Ex parte Woolmer, 2 ib. 665.
numerous. See, amongst others, (v) Ex parte Woolmer, 5 De G. &
Ex parte Oakes and Peek, 3 Eq. S. 117, and 2 De G. M. & G. 665 ;
633, 634 ; Sichell' s case, 1 Sim. Clarke's case, 1 K. & J. 22.
N. S. 187 ; Beaveky's case, 1 De G. (x) Lucy's case, 4De G. M.&G.356.
& S. 550 ; Bernard's case, 5 ib. 283 ; (y) Ex parte Lloyd, 1 Sim. N. S.
and as to appeals, Exparte Mansfield, 248 ; Wryghte's case, 2 De G. M. & G.
2 Mac. & G. 57 ; Lawes's case, 1 De 636.
COSTS.
861
and similar cases the motion or the appeal will, as a rule, be Bk- Jv- ctaP- 1-
11 ' Sect. 12.
dismissed with costs.
So where the official liquidator, on the part of the company,
unsuccessfully appeals against an order excluding a person
from the list of contributories (z), or unsuccessfully resists an
appeal by a person put on the list, and seeking to have his
name removed from it (a), or an appeal against an order for a
call (b), or an appeal against the disallowance of a creditor's
demand (c), or an appeal against an order excluding a contri-
butory from attendance before the Judge acting in the winding
up (d), or an appeal against an order for the delivery up of
documents {e) ; in these and similar cases the official liqui-
dator, as a rule, is either ordered to pay the costs, reimbursing
himself from the assets of the company (/) ; or to pay the
costs out of the assets (g).
However, where the case of one individual is selected to ^Representative
represent that of a class, the general rule is not to make him
pay the costs even if he fails ; and sometimes the company
is ordered to pay them (h), but not as between solicitor and
client (/).
(z) As in Maudslay & Field's case,
17 Sim. 157 ; Capper's case, 1 Sim. N.
S. 178 ; Conway's case, 5 De G. & S.
150 ; Holme's case, 4 ib. 312 ; and 2
De G. M. & G. 113 ; Ex parte Beard-
shaw, 1 Drew. 226 ; Ex parte Roberts,
ib. 204 ; Brockwell's case, 4 ib. 205 ;
NicoVs case, 3 De G. & J. 387.
(a) As in Roberts' case, 3 De G. &
S. 205, and 2 Mac. & G. 192 ;
Matlmu's case, 3 De G. & S. 234 ;
Mainwarincj 's case, 2 De G. M. & G.
66.
(b) As in Upfill's case, 1 Sim. N.
S. 395 ; Hunter's case, ib. 435 ;
Mowatt and Elliott's case, 3 De G.
M. & G. 254.
(c) Croxton's case, 5 De G. & S.
432.
(d) Ex parte Stutter's executors, 5
De G. & S. 34.
(e) Pell's case, 3 De G. & S. 170.
( / ) Dominion of Canada Plumbago
Co., 27 Ch. D. 33 ; Campbell's case, 4
Ch. D. p. 475 ; Ferrao's case, 9 Ch.
355 ; Sichell's case, 3 Ch. p. 124 ;
and compare in bankruptcy, Ex
parte Angerstein, 9 Ch. 479 ; Pitts
v. La Fontaine, 6 App. Ca. 482.
(g) Smallpage's case, 30 Ch. D. p.
604 ; Dronfield Silkstone Coal Co.,
23 Ch. D. 511 ; Home Investment
Soc., 14 Ch. D. 167 ; Ex parte
Bartley, 12 Ch. D. p. 857 ; and
compare in bankruptcy, Ex parte
Leicestershire Banking Co., 14 Q. B.
D. 48 ; Ex parte Stapleton, 10 Ch. D.
586.
(It) See Walton v. Edge, 10 App.
Ca. p. 44 ; Tosh v. North British
Building Soc, 11 App. Ca. p. 508;
Ex parte Jeaffrcson, 11 Eq. 116 ;
Walker's case, 2 Eq. 554. But see
contra, Ex parte Walton, and Ex
parte Hue, 3 Jur. N. S. 853.
(i) Grimwade v. Mutual Society,
862
WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 12.
No order as to
costs.
But although the general rule is as above stated, its appli-
- cation is far from being universal. It frequently happens, that
no order whatever is made as to costs, except that those of the
official liquidator are to be borne by the company. It is very
difficult to lay down any general rules which can be relied upon
as guides, in cases where so much is left to the discretion of
the Judge ; all that can be said is that there are cases in which
a person has not been made to pay costs, where he has unsuc-
cessfully resisted being made a contributory under circum-
stances of considerable hardship (A;) ; where he has been
induced to take shares by misrepresentation or fraud (I) ;
where the law applicable to his case has been doubtful (?n) ;
where he has been made a contributory on the authority of a
recent decision, followed with reluctance (n) ; where the Judge
acting in the winding up has at different times taken different
views of a contributory's liability (o), or has decided in favour
of the contributory (p) ; where a director has succeeded in
Setting himself struck off the list on which he would not have
been put, had it not been for his own ambiguous conduct (q) ;
in other hard or doubtful cases, and where one side has been
as much in fault as the other (r).
Payment of All costs properly incurred by the official liquidator, are
liquidator. defrayed out of the assets of the company, and if necessary by
18 Ch. D. 530 ; but see contra,
Part's case, 10 Eq. p. 629. See
generally as to this, Andrews v.
Barnes, 39 Ch. D. 133.
(k) As in CrosfiekVs case, 4 De G.
& S. 338, and 2 De G. M. & G.
128 ; Chartre's case, 1 De G. & S.
581 ; Richmond's Executors' case, 3
ib. 96 ; but see Ex parte Oakes and
reek, 3 Eq. 633, 634.
(I) Dodgson's case, 3 De G. & S.
85 ; Parbury's case, ib. 43. But see
Hitchcock's case, ib. 92, and Gibson's
case, 2 De G. & J. 275 ; and Ex
parte Oakes and Peek, 3 Eq. 633,
634.
(m) As in Angas's case, 1 De G. &
S. 560 ; Kluht's case, 3 ib. 210.
(n) As in Hole's case, 3 De G. &
S. 241 ; Ex parte Brittain, 1 Sim.
N. S. 281. But see Ex parte Sichell,
ib. 187, and Markwell's case, 5 De
G. & S. 528.
(o) As in Stanhope's case, 3 De G.
& S. 198.
(p) As in Bird's case, 1 Sim. N.
S. 47 ; Holt's case, ib. 389 ; Keene's
Executors' case, 3 De G. M. & G.
272 ; Woollaston's case, 5 Jur. N. S.
617, and 4 De G. & J. 437. -
(q) As in Cockburn's case, 4 De G.
& S. 177 ; Sharp and James's case, 1
De G. M. & G. 565.
(r) See Worcester Corn Exchange
Co., 3 De G. M. & G. 180 ; Talbot's
case, 5 De G. & S. 386 ; Preece and
Evans's case, 2 De G. M. & G. 374.
costs. 863
calls on its contributories (s). Even where the official liqui- Bk- IV- chaP- 1-
w x Sect. 12.
dator is a party to some proceeding, the costs of which he is
ordered to pay personally, his right to be indemnified by the
company is not necessarily taken away by such order (t). But
there can be no doubt of the power of the Court to order an
official liquidator to pay out of his own pocket, and without
recourse to the company, any costs, charges, or expenses, im-
properly incurred by him in winding up the company (u) ; and
•on more than one occasion, the official liquidator has been
made to bear his own costs (x). It has, however, been said
that the official liquidator cannot be ordered personally to pay
the costs incurred by his having improperly summoned a per-
son as a contributory (?/). In those cases in which no costs are
given, or in which the costs of the official liquidator are not
otherwise provided for, his costs are borne by the company,
unless the contrary is ordered.
As regards appeals, an appeal will lie against an order Costs of appeals.
refusing to give the liquidator his costs out of the assets of the
company (z). If a liquidator unsuccessfully supports an order
appealed from, he gets his costs out of the assets of the com-
pany, but if he unsuccessfully appeals and is ordered to pay
costs, the Court of Appeal usually leaves it to the Judge having
the conduct of the winding up to determine how those costs
are to be borne (a). It is not necessary for the liquidator to
obtain leave to appeal, but unless he does so, he incurs con-
siderable risk of losing his costs if he is unsuccessful (b).
(s) As to calls for remuneration (y) Ex parte Marsh, 1 Mac. & G.
for work to be done, see the Mary- 302.
lebone Bank, 18 Jur. 281. As to (g) Silver Valley Mines, 21 Ch. D.
taxation of liquidator's costs, see Re 381.
East Holyford Mining Co., Ir. Kep. (a) See Silver Valley Mines, 21
10 Eq. 361. Ch. D. 381 ; Robinson's case, 4 Ch.
(t) Grand Trunk Rail. Go. v. 335 ; Stringer's case, ib. 493. See
Brodie, 3 De G. M. & G. 146. See National Savings Bank Association,
ante, note (/). 1 Ch. 554. See, also, Westcomb's
(u) See Ex parte Roberts, 1 Drew. case, 9 Ch. 553, where the liquidator
204. was a respondent and was left to
(x) Silver Valley Mines, 21 Ch. D. apply to the judge for his costs.
381 ; Clifton's case, 5 De G. M. & G. (6) Silver Valley Mines, 21 Ch. 1).
743 ; Ex parte A' Beckett, 2 Jur. N. S. 381. He will be allowed the costs of
684, where the 0. M. had not kept an application for leave to appeal
proper books. unless the application is frivolous,
864
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 12.
Costs of credi-
tors' represen-
tatives.
Calls for costs.
Costs paid in
full not proved.
A creditors' representative appointed under the Winding-up
- amendment act of 1857, was entitled to his costs out of the
assets of the company (c).
The office of creditors' representative is abolished, but the
Court has power to appoint persons to represent either
creditors or contributories (d), and the costs of such persons
are usually paid by the company even when there is no
adverse interest between them and the official liquidator (e).
But other individuals who choose to appear upon ques-
tions not directly concerning them, must do so at their own
expense (/).
Secondly, as to the payment of the costs payable by the
company.
The costs which have to be borne by the company, or are
payable out of its estate, are discharged by the official liqui-
dator out of the assets of the company in his hands, if he has
sufficient for the purpose, and if not, then by calls on the con-
tributories (g).
In the event of the assets being insufficient to satisfy the
liabilities, the Court may make an order as to the payment out
of the estate of the company of the costs, charges, and expenses
incurred in winding it up, in such order of priority as the
Court thinks just (h).
Costs ordered to be paid by the company in the course of
the winding up are not like debts on which a dividend only
ib. See, also, City and County In-
vestment Co., 13 Ch. D. 475.
(c) See Budd's case, 3 De G. F. &
J. 297 ; Hatton's case, 10 W. R. 313 ;
Ex parte Finlay & Co., 27 L. J. Ch.
658 ; and see Mclver's claim, 5 Ch.
427. As to his costs when he sup-
ported the official manager, see per
V.-C. Wood, in Hatton's case, 10
W. R. 313 ; Hoare's case, ib. 381 ;
and Re Saxon Life Assurance
Society, 2 J. & H. 408 ; Surges and
Stock's case, 2 J. & H. 441. As to
his costs of attending the settlement
of the list of contributories, Mexican
and South American Mining Co., 26
Beav. 172 ; Alabaster's case, 7 Eq.
285.
(d) Rule 61.
(c) See Ex parte Oahcs and Peek,
3 Eq. 634.
(/) lb.
(g) See, as to calls for costs, The
Companies act, 1862, §§ 38, 102.
(h) Ib. § 110. And see Dominion
of Canada Plumbago Co., 23 Ch. D.
511.
costs. 865
can be paid if there is a deficiency in assets, but are payable Bk- IV. Chap. 1.
Sect. 12.
in full out of the assets if there are any (i) ; but the ordinary
costs of proving a debt in chambers are usually added to
it (k).
Where the assets are deficient, even for the payment of costs, Assets deficient,
the costs of the petition to wind up are entitled to priority
over the other costs, and even over those of the liquidator (I) :
next come the costs of any successful litigant which the liqui-
dator has been ordered to pay (m) ; next comes the liquidator's
own costs (n) ; and then the other costs without priority inter
se (o). But this order of payment is only applicable to assets
not specifically charged ; assets which are mortgaged are not
liable as against the mortgagee to any costs not incurred for
his benefit (p) : his principal and interest must be paid out of
the mortgaged property in priority even to costs incurred by
the liquidator in cariying on the company's business with a
view to increase its assets, and thereby to benefit its creditors
generally (q) ; but the costs of realising the security are a first
charge on the fund produced by it (r).
A call for costs may, if necessary, be made before all the
assets are got in (s), and before the exact amount of the costs
payable has been ascertained by taxation (t) ; and a call for
(i) Madrid Bank v. Pelly, 7 Eq. Massey, 9 Eq. 367.
442; Bailey and Leetham's case, 8 (o) Ex parte Percival, 6 Eq. 519.
Eq. 94. See, also, Ex parte Clark, 7 (p) See Oriental Hotels Co., 12 Eq.
Eq. 550 ; Ex parte Smith, 3 Ch. 125 ; 126.
National Building Land Co., 15 L. (q) Ex parte Grissell, 3 Ch. D. 411,
R., Ir. 47. and compare Marine Mansions Co.,
(k) Ex parte Wright and Gamble, 4 Eq. p. 611. Where part of the
8 Eq. 123. assets have been severed from the
(/) Audley Hall Cotton Spinning rest to meet a particular claim, see
Co., 6 Eq. 245. Cook's claim (2), 18 Eq. 655.
(ra) This is so whether the liqui- (r) See the cases in the last two
dator was ordered to pay the costs notes, and compare Batten v. Wedge-
owl of the company's assets, Home wood Coal Co., 28 Ch. D. 317.
Investment Society, 14 Ch. D. 167, or («) Gay's case, 1 De G. M. & G.
to pay them himself with liberty to 347, and 5 De G. & S. 122. See
recoup himself out of the assets, ante, p. 850.
Dominion of Canada Plumbago Co., (t) Dale's case, 1 De G. M. & G.
27 Ch. D. 33, overruling Dronfield 513 ; Ex parte Woolmer, 2 ib. 665.
Silksto-ae Coal Co., 23 Ch. D. 511. Compare Marylebone Bank, 18 Jur.
(n) Not his remuneration, Re 281.
L.C. 3 K
866
WINDING UP BY THE COURT.
Bk. IV. Chap. 1
Sect. 12.
On whom call
to be made.
Costs not pay-
able out of
funds of com-
pany to pre-
judice of
creditors.
Past members.
costs is prima facie payable, by those liable to it, in proportion
to the number of shares held by them respectively (n).
The right to have a call made for payment of costs may be
lost by laches (x).
But a call for costs, like a call for debts, is only to be made
on those liable to pay it(y). Therefore, where in winding up
an abortive company, costs had been incurred, for which a call
was made on all the contributories, before their liabilities to
the debts of the company had been ascertained, it was held
that this call was wrongly made (z). It is, therefore, the duty
of the judge in the winding up, to ascertain to what costs each
contributory or set of contributories is liable, and to make the
call for their liquidation accordingly. It is, however, to be
observed, that where costs have been incurred in proceedings,
taken for the benefit of all the contributories as a body, they
are all ratably chargeable with the costs of those proceedings,
although they may have been taken unsuccessfully, and
although some of the contributories may have already paid
more than others towards the discharge of the company's
debts (a). Any temporary injustice resulting from this last
circumstance must be set right afterwards (b).
In winding up Insurance companies, the policies of which
are payable out of the funds of the company, the costs of
realising those funds are not deducted from them, but are
treated like all the other costs of winding up ; i.e., they must
be defrayed by calls on the contributories (c).
The liability of past members for calls in respect of costs,
turns, as regards companies formed and registered under the
Companies act, 1862, on the true construction of the early
part of § 38, taken in connection with the second and third
(u) Ex parte Woolmer, 2 De G.
M. & G. 665.
(x) See Ex parte A' Beckett, 2 Jur.
N. S. 684.
(y) Hunter's case, 1 Sim. N. S.
435.
(z) Ib. See, too, Gay's case, 5 De
G. & S. 122 ; Marylebone Bank, 18
Jur. 281.
(a) Preece and Evans' case, 2 De
G. M. & G. 374 ; Ex parte Woolmer,
ib. 665 ; Gay's case, 5 De G. & S.
122, and 1 De G. M. & G. 347.
(h) Ib.
(c) Professional Life Ass. Co., 3
Ch. 167 ; Agriculturist Cattle Ins.
Co., 10 Cb. 1. See, further, Acci-
dental Death Ins. Co., 7 Cb. I).
568.
DISTRIBUTION OF SURPLUS ASSETS. 867
clauses of the same section (d). The early part of § 38 ren- Bk' |Jct Cj Jp* -1*
ders past members liable for costs ; and the second and third -
clauses apparently do not exempt them therefrom. As regards
companies registered, but not formed under the act (e), and as
regards unregistered companies (/), the provisions of the act
are very imperfect, and at present there are no decisions on
them.
As regards companies formed and registered under the Brett's case.
Companies act, 1862, it was settled in Brett's case (g), that if
there are no debts in respect of which a past member can be
made a contributory no calls can be made upon him for any
costs. But if there are any such debts a call for some costs
may be made on him ; but only apparently for costs incurred
in settling the list of past members and of adjusting such
equities in ter se as may require adjustment (h). At the same
time whatever sum is raised by a call on a past member is
applicable to pay all debts and costs for which the company
liable.
SECTION XIII.— DISTRIBUTION OP SURPLUS ASSETS, AND FINAL
DISSOLUTION OF THE COMPANY.
After the debts, liabilities, and losses of the company have Distribution of
i. t i t i i ••ii_ surplus.
been paid, discharged, and made good, and provision has been
made to meet future contingent claims (i), and the cross claims
between the contributories have been settled, and the costs of
winding up have been paid or provided for, there remains but
to distribute the surplus assets of the company, if any there
be (k). The cases in which any surplus is left are rare, but
(d) See, also, §§ 75, 110, 196, cl. (i) Gooch v. London Banking As-
5, 200, and as to voluntary winding sociation, 32 Ch. D. 41 ; Lord Elphin-
up, § 144. stone v. Monkland Iron Co., 11 App.
(<?) See § 196, cl. 5. Ca. 332.
(/) See § 200. (k) Companies act, 1862, § 109.
(g) 8 Ch. 800, and 6 ib. 800. See See as to a voluntary society not
ante, p. 856. governed by the Companies acts,
(h) See 8 Ch. 808 et seq., and Broivn v. Dale, 9 Ch. D. 78.
Marsh's case, 13 Eq. 388.
3 k 2
868
WINDING UP BY THE COURT.
Surplus may not
be profit.
Bk. IV. Chap. 1. the possibility of there being a surplus, shows that a person
■ — - — may be prejudiced by being excluded from the list of contribu-
tories, although, in point of fact, those who are so excluded
seldom have reason to complain. A person, however, upon
whom calls can be made, will not be allowed to remain on the
list so long as he thinks it will be for his benefit to continue
there, and then insist on his name being removed when he
begins to apprehend that it will be to his prejudice (I).
Although there may be surplus assets to be divided, it by no
means follows that the company has made any profit. If the
surplus is not sufficient to return to the shareholders the
amount of capital paid up by them, there has been a loss ; and
the question to be decided in distributing the surplus is then
how that loss is to be borne. If on the other hand the surplus
is more than sufficient to return to each shareholder the capital
paid up by him, there is a profit and the question then is how
the profits are to be shared.
If there has been a loss the holders of shares entitled to a
preference in respect of dividends payable out of profits are
not entitled to any preference in respect of the surplus
assets (m). If there has been a profit the question is more
difficult, and depends upon whether (according to the com-
pany's act, charter, deed, or articles) the excess of the assets
over the capital paid up, though profit in one sense, constitutes
a fund divisible as profits amongst the holders of the preference
shares.
Thus in the Bridgeivater Navigation Co., the articles of
association provided for the issue of preference shares, and
contained a clause that no dividends should be paid except out
of the profits of the company arising from the business of the
company as shown upon the balance sheet, which should from
time to time have been examined and passed by the auditors.
Shares were afterwards issued entitling the holders to a divi-
dend of 5 per cent, taking precedence of all dividends and
claims of the holders of ordinary shares. The company sub-
sequently sold its business for a sum greatly in excess of what
Preference
shareholders.
Bridgewater
Navigation
Company.
(1) See Undenvood's case, 5 De G.
M. & G. 700, per Turner, L. J.
(m) London India Rubber Com-
pany, 5 Eq. 519 ; Griffiths v. Paget,
6 Ch. D. 511.
DISTRIBUTION OF SURPLUS ASSETS.
869
was needed to return the paid-up capital ; the preference share- Bk. N^JjJP- *•
holders claimed to receive out of this excess a preferential —
dividend of 5 per cent, and to share the balance with the
ordinary shareholders, while the ordinary shareholders con-
tended that the preference shareholders were not entitled to
receive anything out of this excess beyond a dividend of 5 per
cent. It was held that under the articles of association the
holders of preference shares were only entitled to a dividend
of 5 per cent, and all other profits belonged to the ordinary
shareholders, but that the profit arising from the compulsory
sale was not profit in respect of which dividends might have
been declared, and that the clauses relating to dividends were
in no way applicable to the fund to be divided (n). The con-
stitution of the company may however be such as to confer on
some shareholders a preference as to capital, and not only as
to dividends, and where this is the case the surplus assets must
be applied accordingly (o).
Questions also arise as to the mode in which assets are to Paid-up share-
c , . holders.
be divided when some shareholders have paid up more on their
shares than others. If there is a loss, the loss in the absence
of express agreement (p) is to be borne by all shareholders
equally, and the shareholders who have paid up less than others
will not be allowed to share in the surplus until those, who
have paid up more than they, have been put on an equality
with them. This may be done either by returning to share-
holders, who have paid up more than the others, the excess so
paid by them (q) or by making a call on the shareholders, who
have paid less than the others (r).
If there is a profit, and the dividends of the company whilst
it has been carrying on business have been paid upon the
(n) Bridgeioater Navigation Co., 39 Mining Co., Ir. L. R. 3 Eq. 208.
Ch. D. 1. See, too, the remarks of (7) As in Ex parte Maude, 6 Ch.
North J., pp. 12 & 13, as to the 51 ; Scinde, Punjaub, and Delhi Cor-
possibility of some funds coming to poration, 6 Ch. 53, note. See, also,
the liquidator's hands being divisible Newtownards Gas Co., 15 L. R., Ir.
as profits. 51.
(0) Bangor v. Port Madoc Slate (r) As in Anglesea Colliery Co., 1
and Slab Co., 20 Eq. 59. Ch. 555, and 2 Eq. 379 ; Crookhaven
(p) As in Eclipse Gold Mining Co., Mining Co., 3 Eq. 69.
17 Eq. 490. See, also, Holyfnrd
870
WINDING UP BY THE COURT.
Termination of
winding up.
Bk. IV. Chap. l. amount of capital paid up, the surplus will in the absence of
Sect. 13. ,-...,., , >
any provision to the contra^ be divided in the same manner (s).
If the company has treated the amount paid up by some share-
holders in excess of others, as an advance to it, upon which it
has been paying interest, these shareholders will be entitled to
a return of this advance with interest up to the date of repay-
ment before the other shareholders receive anything and
then the surplus will be divided between the two classes
equally (t).
Upon the termination of the proceedings in chambers for
the winding up of a company, the official liquidator is required
to bring in a balance sheet and pass his final account (u).
Upon payment, as he may be directed, of the balance, if any,
in his hands, the recognisance of himself and his sureties may
be vacated (x), and a certificate that the affairs of the company
have been completely wound up is to be made by the chief
clerk (y).
When the affairs of the compan}' have been completely
wound up, the Court is required to make an order (s) dissolving
the company as from the date of the order (a) ; and notice of
this order is forthwith to be given by the official liquidator to
the registrar of joint-stock companies, who is required to make
a minute in his books of the compan}''s dissolution (b).
The order dissolves the company (c).
The books of the company are to be disposed of as the
Court ma}- direct (d). The documents relating to the winding
Order dissolving
company.
Books of com-
pany.
(s) Bridgewater Navigation Co., 39
Ch. D. 1 ; Sheppard v. Scinde, Pun-
jaub, and Delhi Rail. Co., 36 W. R.
1, since affirmed by the House of
Lords ; Somes v. Currie, 1 K. & J.
605.
(t) Exchange Drapery Co., 38 Ch.
D. 171. They could not claim in-
terest after the winding up against
creditors.
(w) Rule 65.
(a;) Rule 65.
(y) Rule 66, and see the form in
schedule 3, No. 55.
(») See the form in the 3rd sche-
dule to the rules, No. 56.
(a) § 111, and see rule 66.
(6) §§ 112 and 113.
(c) § 111. As to the jurisdiction
of the Court over dissolved com-
panies, see Crookhaven Mining Co.,
3 Eq. 69 ; Pinto Silver Mining Co.,
8 Ch. D. 273 ; London and Cale-
donian Marine Insurance Co., 11 Ch.
D. 140.
(d) § 155. As to the liability of
a liquidator to produce the books in
an action to which he is a party, see
London and Yorkshire Bank v. Cooper,
15 Q. B. D. 473.
SURPLUS ASSETS OF BUILDING SOCIETIES. 871
up, and the book containing the official liquidator's account, Bk- Iv- Chap. l.
are to be deposited in the Record and Writ Clerk's Office (e). : — ' —
In addition to the usual method of dissolving a company on Defunct com-
the winding up by an order of court, power has been given to Pames-
the registrar of joint-stock companies, after giving certain
prescribed notices, to strike the names of defunct companies
off the register (/), and by so doing to dissolve them. But
any company or member thereof who feels aggrieved by the
name being struck off may apply to the Court ; and the Court
if satisfied that the company was at the time of the striking off
carrying on business, or that it is just so to do, may order the
name of the company to be restored to the register (g), and
thereupon the company shall be deemed to have continued in
existence as if the name thereof had not been struck off.
Note on building societies. (See infra, p. 918.)
In the distribution of the surplus assets of benefit building and mutual Benefit Building
loan societies, the peculiar nature and constitution of the societies give rise Societies,
to questions of a different character from those already examined. The
members of these societies are divided into two classes : unadvanced members
who, by continuing in the society for a certain period of time and paying
regularly what becomes due from them according to the rules of the society,
are at the end of that period of time entitled to receive all they have paid
with a share of any profits the society may have made ; and advanced members,
who receive at the beginning the sum which the unadvanced members
receive at the end, and execute a mortgage to the society to secure the
repayment of this sum with interest by fixed instalments, with a right of
redemption, when the amount of the instalments they have paid together
with any profits with which they may have been credited, is ecpial to the
principal sum advanced with the interest agreed upon. Further, the rules
of these societies usually allow members to withdraw either the whole or
part of the sums standing to their credit in the books of the society on
giving a notice of their desire so to do. When the surplus assets of such a
society are not sufficient to pay to the unadvanced members the whole sum
to which they are entitled, difficulties have arisen as to the terms on which
advanced members are entitled to redeem their mortgages, and as to the
manner in which the assets are to be divided between those members who
have given a notice of withdrawal, which has expired before the commence-
ment of the winding up, and members who have given no such notice.
The rights of the members are to be determined in each case by the con-
tract into which they have entered, and not by presumptions or inferences
(e) Rule 07. (</) See Outlay Assurance Society,
(/) 43 Vict. c. 19, § 7. 34 Ch. D. 479.
872
WINDING UP BY THE COURT.
Bk. IV. Chap. 1.
Sect. 13.
Position of
advanced and
unadvanced
members.
Withdrawing
members.
Preference shares
in building
societies.
from the law relating to companies of a different kind or to common law
partnerships (h). In these societies there is no presumption that all the
members are liable to contribute equally to the losses of the society so that
in the absence of anything in the rules as to the way in which such losses
are to be borne, advanced members are entitled, on the company going into
liquidation, to redeem their mortgages on payment of what remains due
from them after credit has been given for all instalments already paid and
for any profits which may have been allocated to them, and the society has
no right to make any deductions either from these instalments or from these
profits in order to throw the losses of the society equally upon the advanced
and unadvanced members (i).
Members who have given notice which has expired before the commence-
ment of the winding up, of their desire to withdraw the monies standing
to their credit, either out of the general funds of the society or out of a
special fund, as the case may be, are entitled to receive payment of these
monies before the other members who have claims against the same funds,
but who have given no such notice, receive anything, provided that on
the true construction of the rules the effect of the notice is to confer on the
members who have given it, an unconditional right to receive these monies,
though the society may not be bound to pay them immediately (k) ; but if
the notice merely confers upon the members who give it a right to be paid
if there be a particular fund in existence and there is no such fund,
the members who have given notice have no priority over the other
members {I).
There is nothing in the acts relating to building societies or in the nature
of the societies themselves to prevent the issue of preference shares, and if
such shares are issued the preferences created by them must be observed.
Thus, in a case where the society had power to issue fully paid up or deposit
shares, which entitled the holders, called depositors, to withdraw their
deposits on giving the prescribed notice, in preference to other shares,
it was held that the depositors, whether they had or had not given notice of
withdrawal before the commencement of the winding up, were entitled to
be paid the amount of their deposits before the members who held other
shares received any portion of the surplus assets (to).
(/i) See the cases in the next
note, and infra, p. 918.
(i) Brownlie v. Russell, 8 App. Ca.
235 ; l^osh v. North British Building
Society, 11 App. Ca. 489; Auld v.
Glasgoiv Working Men's Building
Soc, 12 App. Ca. 197 ; and see
Doncaster Permanent Building Soc,
3 Eq. 158. The society cannot by
any subsequent resolution alter the
terms on which a member has a
right to redeem. Smith's case, 1 Ch.
D. 481.
(k) Walton v. Edge, 10 App. Ca.
33, and 24 Ch. D. 421, sub now...
Blackburn Benefit Building Society;
Mutual Aid Building Society, 29 Ch.
D. 182, affirmed 30 Ch. D. 434;
Alliance Society, 28 Ch. D. 559.
(I) Mutual Society, 24 Ch. D. 425,
note, explained in the cases cited
in the last note. It is not competent
for the majority of the society to
alter the terms on which a member
is allowed to withdraw. Auld v.
Glasgow Working Men's Building
Society, 12 App. Ca. 197.
(to) Guardian Building Soc, 23
SURPLUS ASSETS OF BUILDING SOCIETIES.
873
If, after the payment of all the shareholders who are entitled to priority, Bk. IV. Chap. 1.
there remains a surplus to be divided amongst the ordinary unadvanced Sect. *3.
shareholders, and if these shareholders have joined the society at different
times, the surplus is divided amongst them in proportion to the time they
have been members of the society (?i).
Ch. D. 440 & 453, affirmed 9 App.
Ca. 519, sub nom. Murray v.
Scott. The question here decided
was not whether the depositors who
had given notice of withdrawal be-
fore the commencement of the wind-
ing up were entitled to priority over
depositors who had given no notice,
but whether the depositors as a class
were entitled to priority over the
holders of other shares. For the
decision of this question it was im-
material whether notice had or had
not been given, for the winding up
is equivalent to the compulsory
withdrawal of all members. See
8 App. Ca. p. 254.
(») Boncaster Permanent Building
Society, 4 Eq. 579. In this case
there was a rule to this effect, but it
is evident from the nature of the
society that the method of distribu-
tion is the fair one.
874 WINDING UP VOLUNTARILY AND SUBJECT TO SUPERVISION.
CHAPTER II.
OF WINDING UP VOLUNTARILY, AND SUBJECT TO THE SUPERVISION
OF THE COURT.
SECTION I.— DIFFERENCES BETWEEN THE VARIOUS METHODS OF
WINDING- UP.
Bk. IV. Chap. 2. When a company is wound up by the Court, everything is
^— - — done under the immediate superintendence of the chief clerk
of compulsory8 °f the juc^ge to whose court the winding up is attached. This
winding up. necessarily involves issuing summonses and obtaining appoint-
ments, and consequent delay and expense, even in matters of
routine. In addition to this, the power of adjourning every
question before the judge is frequently exercised for the mere
purpose of gaining time ; and every such adjournment,
whether reasonable or not, increases the delay and expense of
winding up.
Winding up To avoid these inconveniences as far as practicable, the
subject to7super- Companies act, 1862 (following in this respect the acts of
vision. -Lg56 — 58) pr0vides for two other methods of winding up, viz.,
1st, purely voluntarily, that is, without the intervention of the
Court at all, and 2dly, voluntarily, but at the same time under
an order and subject to the supervision of the Court.
Differences The practical differences between these two methods on the
and compulsory one hand, and winding up by the Court on the other, are, that
winding up. when a company is wound up voluntarily, or subject to the
supervision of the Court, all the business is done by the liqui-
dator, without consulting the judge or his chief clerk, who are
only appealed to on matters of difficulty or for the purpose of
exercising powers which the liquidator does not possess (a).
(a) See the judgment of V.-C. Wood, in the Inns of Court Hotel Co.>
W. N. 1866, 348.
WINDING UP VOLUNTARILY.
875
This at once saves much delay and expense. On the other Bk- l^- chaP- 2
hand, the liquidator being able to act without the direction of
the judge or his chief clerk, is more likely to take steps which
have afterwards to be rectified, perhaps by litigation (b). More-
over, notwithstanding the power of invoking the aid of the
Court, creditors and contributories complain that, practically,
they have not the same facilities for ascertaining what is being
done by the liquidator under a voluntary winding up, or winding
up subject to supervision, as they have when a company is
wound up compulsorily.
The theoretical difference between winding up voluntarily Diflerence be-
and winding up subject to supervision appears to be that the ^voluntarily
first is supposed to be carried on without any aid from the and subJ.ect t0
11 J supervision.
Court, except when that aid is invoked for some special and
limited purpose ; whilst when a company is wound up subject
to supervision, the extent to which the winding up shall be
carried on without consulting the judge or his chief clerk
depends upon the order which has been made (c). It is not
usual, however, to impose any restrictions, unless some necessity
for so doing is shown to exist (d) ; and consequently the
practical difference between the two methods of winding up
consists mainly, if not entirely, in the comparative facilities for
obtaining the assistance of the Court, and in the comparative
ease with which the liquidator can be controlled, and exe-
cutions against the company be prevented.
SECTION II.— OF WINDING UP VOLUNTARILY.
All companies registered under the Companies act, 1862, Com]^m0efs
and also all companies which, though not so registered, have being wound
. up voluntarily.
been registered under the acts ol 1856 — 1858 (e), and also all
industrial and provident societies registered under 25 & 26
(b) See the observations of L. J. (d) See the form of order in sche-
Turner, as to the expense of vo- dule 3 to the rules, No. 4.
luntary liquidations in National (e) Torquay Bath Co., 32 Beav.
Savings Bank Association, 1 Ch., 581 ; London India Rubber (Jo., 1
p. 553. Ch. 329.
(c) See § 147.
876
WINDING UP VOLUNTARILY.
Bk. IV. Chap. 2. yict
Sect. 2.
Circumstances
under which a
company may
be wound up
voluntarily.
c. 87, or under 39 & 40 Vict. c. 45, and building societies
under 37 & 38 Vict. c. 42 (/), maybe wound up voluntarily (g).
But no other company can (ft). But although unregistered
companies cannot be wound up voluntarily under the act, there
is, thoretically, nothing to prevent the members of such com-
panies, if unincorporated, from dissolving the partnership which
subsists between them, and from applying their joint assets in
discharging their joint liabilities, and dividing the surplus
amongst themselves. It is seldom, however, that this can be
done (i) ; for the successful carrying out of such a scheme is
liable to be defeated not only by disagreement amongst the
shareholders, but also by the importunity of creditors. Practi-
cally, therefore, and excepting a few rare cases, unregistered
companies must be wound up by the Court.
A company capable of being wound up voluntarily under the
act may be so wound up, —
1. When the time, if any, fixed by the articles for the
duration or dissolution of the company has expired or arrived,
and the members have passed a resolution requiring the
company to be wound up voluntarily (A) .
2. When the members have passed a special resolution
requiring the company to be so wound up (I).
3. When the members have passed an extraordinary resolu-
tion to the effect that it has been proved to their satisfaction
that the company cannot, by reason of its liabilities, continue
its business, and that it is advisable to wind it up (m).
The resolution in this last case must be passed in the manner
required for a special resolution, but no confirmation of it is
necessary (n).
The resolution must, in the second and third of the above
cases, be advertised in the Gazette (o).
(/) § 32, sub-s. (4), and Sunder-
land, dec, Building Socy., 21 Q. B.
D. 349.
(</) See §§ 129, 176, 177, and 196
of the Companies act, 1862 ; and, as
to Industrial and Provident societies,
Appendix.
(h) § 200, cl. 2.
(i) See as to Friendly societies,
38 & 39 Vict. c. 60, § 25. As to the
registration of such societies under
the Companies acts, see ib. § 24.
(k) §§129 and 130.
(I) § 129.
(m) Ib.
(«) Ib. and § 51.
(o) § 132.
RESOLUTION TO WIND UP. 877
With respect to extraordinary resolutions, the following case Bk- TJ- Ch5-P- 2-
06CL. "-.
is important : — In the case of the Bridport Old Brewery Com-
. ' Extraordinary
pany (p) notice was given that an extraordinary meeting would resolution,
be held to consider, and, if so determined, to pass a resolution Bridport Old
Brewery Com-
to wind up the company voluntarily. The meeting passed a pany.
resolution that it had been proved that the company could not,
by reason of its liabilities, continue its business, and that it
was advisable to wind up the company. This resolution was
never confirmed, and could not, therefore, be supported as
a special resolution. It was held that it could not be sup-
ported as an extraordinaiy resolution, inasmuch as the notice
was so framed as to lead to the supposition that a special
resolution, requiring confirmation, was to be proposed, and did
not sufficiently disclose an intention to proceed by way of extra-
ordinary resolution.
A notice, however, may be good in part and bad in part ;
and if it is good so far as it relates to the passing of a re-
solution to wind up, a resolution to that effect may be valid,
although the rest of the notice may relate to some proposed
resolution which is ultra vires, and such resolution may also be
passed (q).
The effect of a valid resolution to wind up voluntarily, when Effect of resolu-
a compulsory winding-up order is sought to be obtained, has
been considered already (r). It is only necessary here to add
that, although a company may be in course of winding up
voluntarily, any creditor who can satisfy the Court that his
rights are prejudiced, is entitled to have the company wound
up by the Court (s) ; but the Court may adopt all or any
of the proceedings taken in the course of the voluntary
winding up (t).
The time at which the winding up is deemed to commence Commencement
of winding up.
(p) 2 Ch. 191. See, also, Silk- (r) Ante, pp. 636, 640. In the
stone Fall Colliery Co., 1 Ch. D. 38 ; case of the Bridport Old Breivery Co.,
National Savings Bank Assoc, 1 Ch. supra, the Court made a compulsory
p. 553 ; Inns of Court Co., W. N. order on the petition of a creditor.
1866, 348. See, further, infra, p. 886.
(q) Cleve v. Financial Corporation, (s) § 145. As to the right of con-
16 Eq. 363 ; Stone v. City and tributories in this respect, see Gold
County Bank, 3 C. P. D. 282, at Co., 11 Ch. D. 701, and ante, p. 640.
pp. 307 and 313. (0 § 146.
878 WINDING UP VOLUNTARILY.
Bk. IV. Chap. 2. is the time at which the resolution to wind up is passed («) ;
— and this, when the resolution is special, means when the second
resolution confirming the first is passed (a;). After the com-
mencement of the winding up the company must cease to
carry on business, except for the purpose of winding up its
affairs (y). The onus of proving that a contract entered into
by a company, which is being wound up voluntarily, is not
required for the purposes of the winding up, lies on the party
disputing the validity of the contract (z).
The company retains its corporate character until its affairs
are wound up, and it has been actually dissolved, as mentioned
below (a). After the passing of the resolution to wind up, no
shares can be lawfully transferred, except to or with the
sanction of the liquidators (b) ; nor can the property of the
company be dealt with without their sanction (c) .
Liquidators. The first thing to be done after a resolution to wind up is
passed is to appoint one or more liquidators, for the purpose
of carrying the resolution into effect (d). The appointment
lies with the members (e) ; but they are empowered to delegate
the appointment to the creditors of the company, or to a com-
mittee of them (/). If there is no liquidator, the Court may
appoint one or more, on the application of a contributory (g).
The Court, moreover, may, on due cause shown, remove any
liquidator and appoint another (h) : and it is not essential to
(u) § 130. For the effect of a 666.
subsequent order for a compulsory (d) § 133, cl. 2, 4, 6. A liqui-
winding up, see Taurine Co., 25 Ch. dator cannot be appointed except
D. 118 ; Thomas v. Patent Lionite when there is a valid resolution to
Co. 17 Ch. D. 250. See ante, p. wind up. Indian Zoedone Co., 26
664. Ch. D. 70.
(x) Emperor Life Assurance Co., (e) § 133, cl. 3, and § 140.
31 Ch. D. 78, and ante, p. 664 ; (/) § 135.
Dawes' case, 6 Eq. 232 ; Ex parte (g) § 141.
Colborne and Strawbridge, 11 Eq (h) lb. Sir John Moore Gold
478 ; Weston's case, 4 Ch. 20. Mining Co., 12 Ch. D. 325 ; British
(y) § 131. Nation Life Ass. Assoc, 14 Eq. 492 ;
(z) Hire Purchase Co. v. Richens, Marseilles Extension, dec, Co., 4 Eq.
20 Q. B. D. 387. 692. And see Ex parte Charlesworth,
(a) lb. and § 143. 36 Ch. D. 299 ; and ante, p. 703.
(b) § 131. See ante, pp. 832 et seq. Ex parte Pulbrook, 2 De G. J. & S.
(c) See §§ 131, 133, and ante, p. 349.
LIQUIDATORS. 879
prove misconduct or unfitness on the part of a liquidator, in Bk- Iv- ChaP- 2>
order to induce the Court to remove him (i).
Liquidators may, it seems, be appointed at a meeting con- Resolutions
vened for the purpose of passing a resolution to wind up liquidator!
voluntarily, although no notice has been given that their
appointment will be proposed at such meeting (k) ; but if the
resolution to wind up is a special resolution requiring confirma-
tion the resolution b}7 which the liquidator was appointed must
also be confirmed (I). Whether acts done by liquidators im-
properly appointed are null and void, or whether they are valid
notwithstanding the defect in their appointment, is not so clear
as might be desired. It seems, however, that when their ap-
pointment is proved to have been invalid, acts done by them
are void (m). But it is conceived that it is by no means every
irregularity in the appointment which will vitiate it; in
many cases the maxim fieri non debuit, sed factum valet, may
apply (n).
Upon the appointment of liquidators, the powers of the
directors cease, except so far as their continuance may be
sanctioned by the members in general meeting, or by the
liquidators (o).
The duties of the liquidators are — Duties of
1. To apply the property of the company in satisfaction 0f iiquidatoi-s.
its liabilities, pari passu (p).
2. To pay the debts of the company, and adjust the rights
of the contributories amongst themselves (q).
(i) Marseilles Extension, &c, Co., 70.
4 Eq. 692 ; British Nation Life Ass. (m) See note (Jc), and § 67 of
Assoc, 14 Eq. 492 ; and cases in last the act. In the case of the Brid-
note. port Old Brewery Co., 2 Ch. 191,
(k) Welsh Flannel Co., 20 Eq. 360, the effect of that section was dis-
and see Lord Chelmsford's observa- cussed,
tions in L. R. 2 H. L. 355. But see, (n) See ante, p. 173.
contra, Stearic Acid Co., 9 Jur. N. S. (o) § 133, cl. 5. James v. Maij,
1066 ; Anglo - Californian Co. v. L. R 6 H. L. 328. See infra, p.
Lewis, 6 H. & N. 174. In that 881, note (I).
case the invalidity of the appoint- (p) § \ZZ, cl. 1.
ment of the liquidators enabled a (q) § 133, cl. 10. Though the
shareholder to defeat an action for words in this section differ from
calls made by them. those in § 109, which applies to
(I) Indian Zoedone Co., 26 Ch. D. a winding up by the Court, their
880 WINDING UP VOLUNTARILY.
Bk. iv. Chap. 2. 3. To pay the costs of winding up (r).
— 4. As soon as the affairs of the company are fully wound up,
to make up an account showing the manner in which such
winding up has been conducted (s).
5. To call a meeting of the company (t) for the purpose of
having this account laid before them, and hearing any ex-
planation that may be given by the liquidators (u).
6. To make a return to the registrar of joint-stock com-
panies of such meeting having been held (x).
If the winding up continues more than a year, the liqui-
dators must, at the end of the first and each succeeding year,
summon a general meeting of the company (y), and lay before
such meeting an account showing their acts and dealings, and
the manner in which the winding up has been conducted
during the preceding year (z).
In order to enable the liquidators to perform their duties,
they are authorised —
1. To exercise all powers given by the act to the official
liquidator (a).
2. To exercise the powers given to the Court of settling the
list of contributories (b) ;
3. To make calls upon all or any of the contributories
settled on the list to the extent of their liability (c) ;
4. To apply to the Court to determine any question arising
in the winding up, or to exercise any of the powers which the
meaning is the same : Bridgewater of those things which the official
Navigation Co., 39 Ch. D. pp. 21 liquidator can do under § 95, with
and 26. the sanction of the Court.
(r) lb. cl. 9, and § 144. (6) § 133, cl. 8. See ante, pp.
(s) § 142. 745—750.
(t) Qu. members or the contribu- (c) § 133, cl. 9. See ante, p. 846.
tories ? A liquidator can also, by giving
(«) § 142. notice, enforce calls made by the
(aj) § 143. directors before the commencement
(y) Qu. members or the contribu- of the winding up, although no
tones ? notice of the call had been given
(z) § 139. by them : Stone v. City and County
(a) § 133, cl. 7. See ante, p. Bank, 3 C. P. D. 282. As to orders
708. It is apprehended that the for the payment of calls, see ante,
voluntary liquidators can, without p. 847.
the sanction of the Court, do any
LIQUIDATORS. 881
Court might exercise if the company were being wound up Bk- ^- cllap- 2>
bjit(d).
5. To summon general meetings of the company (e).
The liquidators are also empowered, with the sanction of
an extraordinary resolution of the company, to make arrange-
ments with creditors and contributories, and to compromise
all claims by or against the company (/); and with the sanction
of a special resolution to sell the business of the company, in
consideration of shares, policies or other like interests, for the
purpose of distribution amongst the members (//).
Lastly, the liquidators are empowered, with the sanction of
the Court, to prosecute delinquent directors, managers, officers,
or members of the company (/<).
Where there are more liquidators than one, the powers given Where there are
x ° more than one.
to them by the act may be exercised by such one or more of
them as may be determined at the time of their appointment,
or, in default of such determination, by any number not less
than two (i). There is no necessity, however, to appoint more
than one (k). Where, however, there are more than one, and
one is not empowered by the company to act for all, the
liquidators cannot themselves delegate their powers to one of
their own body ; and if they do, his acts will not bind the
company (I). Moreover, if several liquidators are appointed
the survivor cannot act alone (m).
The exercise by the liquidators of the foregoing powers is „emtersand
subject to be controlled by the company and its creditors ; for creditors over
,, . ' , . liquidators.
the company is empowered by an extraordinary resolution to
(d) § 138, and rule 51. This en- (h) § 168. To obtain this sanc-
ables the Court to do in a voluntary tion a petition must be presented,
winding up whatever it can do in See rule 51.
a compulsory winding up. See (i) § 133, cl. 6.
Ranees case, 6 Ch. 104 ; Union (k) § 133, cl. 4.
Bank of Kingston upon Hull, 13 (I) See the next note and Ex parte
Ch. D. 808 ; Heiron's case, 15 Ch. D. Birmingham Bank, 3 Ch. 651 ; Bo-
139 ; Gold Co., 12 Ch. D. 77. lognesi's case, 5 ib. 567 ; Ex parte
(c) § 139. Agra and Masterman's Bank, 6 ib.
(/) §§ 159 and 160. See ante, p. 206, where bills were accepted by
709, as to compromises, and Wedg- one out of four.
wood Coal and Iron Co., 6 Ch. D. 627. (m) Metropolitan Bank v. Jones, 2
(g) § 161. See infra, as to this. Ch. D. 366.
l.c. 3 L
882
WINDING UP VOLUNTARILY.
Bk. IV. Chap. 2. enter into anv arrangement, with three-fourths in number and
Sect. 2.
Sale of assets.
Transfer of busi
ness to auother
company.
value of its creditors, with respect to the powers to be exercised
by the liquidators, and the manner in which they are to be
exercised (n). Moreover, any arrangement so made is binding
as well on the contributories as on the creditors, if not appealed
against within three weeks from the date of its completion (o) .
Moreover, any contributory may apply to the Court to deter-
mine any question arising in the winding up (p), or to stay the
winding up and all proceedings therein (q) ; and any creditor
can apply for a compulsory order to wind up under § 145, at
any time before the company is dissolved (r).
With respect to the sale of the assets of the company, the
liquidators apparently have power to sell them for money as
best they can ; at the same time, if any particular sale is
opposed by any of the creditors or contributories, it may be
prudent to apply to the Court to sanction it (s).
One of the most important powers of the liquidators under a
voluntary winding up is that of selling the business and good-
will of the company being wound up to another company, in
consideration of shares, policies, or other like interests in the
purchasing company. This power is conferred by §§ 161
and 162 of the Companies act, 1862(0, from which it will
be seen —
1. That the power can only be exercised under the authority
of a special resolution of the company («) being wound up ;
(re) §§ 135 and 136.
(o) § 137. The appeal may be by
petition or motion. See rule 51.
(p) § 138, by motion or petition,
see rule 51. See, for examples,
Anglesea Colliery Co., 2 Eq. 3SO ;
Crookhaven Mining Co., 3 Eq. 69.
(q) Schanschirff Electric Battery
Syndicate, W. N. 1888, 165 ; and
see South Barrule Slate Quarry Co.,
8 Eq. 688.
(r) See § 143. London and Cale-
donian Marine Insurance Co., 11 Ch.
D. 140 ; Pinto Silver Mining Co.,
8 Ch. D. 273.
(s) This was done in the Scinde,
&c, Bank Corporation, W. N. 1867,
41, and the agreement for sale was
confirmed. As to compelling the
liquidators to accept the best of two
offers, see The Colonial and Gen. Gas
Co., ib. 42, where, however, the
company was being wound, up sub-
ject to supervision.
{t) See also 31 & 32 Vict. c. 68,
which, however, only applies to
companies being wound up when
the act passed.
(u) Qu. members or contribu-
tories ?
LIQUIDATORS. 883
2. That if so sanctioned, the transfer can be made notwith- Bk- IV. Chap. 2.
standing the opposition of the minority (r) ;
3. That any dissentient can require the liquidators, at their
option, to abstain from carrying the resolution into effect, or
to purchase the interest of the dissentient (y) ;
4. That this requisition must be made by leaving a notice in
writing, addressed to the liquidators, and left at the registered
office of the company not later than seven days after the
passing of the resolution (z) ;
5. That in the event of the liquidators electing to purchase
the interest of a dissentient, the price, if not agreed upon, must
be ascertained by arbitration, as provided by 8 & 9 Vict. c. 16,
S§ 128— 134(a).
The decisions on these sections and the mode of winding up
and reconstructing companies under them will be noticed in
the next Chapter {infra, p. 891).
A purely voluntary winding up does not, per se, prevent a Staying actions
creditor of the company from suing it, or issuing execution &°'
against it; it is not, therefore, in any case necessary for
him to apply for leave so to do (b). But as already stated,
he may be restrained as well from issuing execution as from
suing (o).
A resolution to wind up voluntarily may disable a company Winding up a
from performing its contracts ; and if this is the case, the tra?t°.
company may be sued for a breach of them (a7). But, generally
speaking, a winding-up order is not equivalent to a breach of
contract (e).
(x) Imp. Merc. Credit Ass., 12 Eq. As to costs, see Imp. Merc. Credit
504 ; Tunis Raihvays Co., 10 Ch. D. Assoc, 12 Eq. 504.
270, note ; affd. W. N. 1874, 165. (6) See §§ 85, 87, and 163, which
(y) Ex parte Fox, 6 Ch. 176, only apply to winding up by the
where a resolution depriving a Court, or subject to its supervision,
shareholder of this right was held (c) § 138. See ante, p. 678, and
VtJid- as to appointing a receiver in a
(a) Union Bank of Kinqston-upon- creditor's action, Boyle v. Bettws
Hall, 13 Ch. D. 808. Llantwit Coll. Co., 2 Ch. D. 726.
(a) The judge can appoint an (d) Inchbald v. Western Neikjhemj
umpire, if the arbitrators do not Coffee Co., 17 C. B. N. S. 733. See
agree. See Re Lord, 24 L. J. Ch. also, as to a voluntary winding up
145. So can a judge of the Queen's being equivalent to a dismissal of a
Bench Division. Re Anglo-Italian servant, ante, pp. 729, 730.
Bunk and De Rosaz, L. R. 2Q. 13. 452. (e) Ante, p. 728.
3i,2
884
WINDING LT VOLUNTARILY.
Bk. IV. Chap. 2.
Sect. 2.
Payment of
debts.
The list of con-
tributories.
Calls.
The debts to be paid out of the assets of the company are
the same as those which would have to be paid under a com-
pulsory winding up (/). But in order to exclude creditors
who do not prove within a given time, such time must appar-
ently be fixed by the Court ; the fixing of such time not being
one of those things which liquidators alone can do (g). The
rules as to set- oft* are the same as in a compulsory winding
up Qi).
The contributories in a voluntary winding up are those
persons who would be contributories on a compulsory winding
up having the same date for its commencement. The liqui-
dators settle the list, and they have all the powers of the
Court for this purpose (?'). But whether under these words
the liquidators have power to rectify the register of members
ma}r well be doubted (k). The liquidators, however, have
power to sanction transfers of shares and alterations in the
status of members made after the commencement of the wind-
ing up (/). In exercising this power regard ought to be had
to the principles acted upon by the Court in like cases (m).
The liquidators are also empowered to make calls on the
contributories (n) ; and they have the same discretion both as
to when to make a call, and as to its amount, as the Court has
under a compulsory winding up (o). The liquidators, how-
ever, have no power to enforce payment without judicial assist-
ance. The methods of enforcing payment are either by an
action in the name of the company ( j)) ', or, if the contributory
is already settled on the list, by an application to the Chan-
cery Division of the High Court to order payment under the
(/) See ante, pp. 713 et seq.
(g) See § 107.
(h) See §§38 and 101, and infra,
note (?•).
(i) § 133, cl. 8. As to giving
notice of settling the list, see the
London Bank of Scotland, W. N.
1867, 114; Brighton Arcade Go. v.
Voiding, L. R. 3 C. P. pp. 175,
184.
(k) Compare § 133, cl. 8, with §§
38, 95, and 98 ; and see Gilbert's case,
5 Ch. 559 ; Brighton Arcade Co. v.
Voiding, ubi sup.
(I) See § 131.
(m) See ante, pp. 831 — 837.
(«) § 133, cl. 7.
(o) Compare § 133, cl. 7, with §
202. See ante, p. 849.
(p) See, for instance, Brighton
Arcade Co. v. Dowling, L. R. 3 C. P.
175, which shows that no notice of
being on the list of contributories is
necessary ; General Discount Co. v.
Stokes, 17 C. B. N. S. 7G5 ; Hull
Flax Co. v. Wellesley, 6 H. & N. 38 ;
DISSOLUTION OF COMPANY. 885
powers conferred upon it by the Companies act, 1862 (q). In Bk- lJ- Chap. 2.
the event of death or bankruptcy payment can be obtained - —
wholly or in part, as the case may be, by administering the
estate of the deceased, or by proof against the bankrupt's
estate. The same rules as to set-off against calls apply when
a company is being wound up voluntarily as when it is being
wTound up compulsorily (r).
The costs of winding up are payable out of the assets of the Costs.
company in priority to all other claims (s) ; and the costs of
the liquidators incurred in prosecuting delinquent directors,
&c, are entitled to like priority (t).
In distributing the surplus assets care must be taken to put Surplus assets.
the contributories as far as practicable on an equality, regard
being had to the amounts paid up on their respective
shares (u).
A company which has been wound up voluntarily is dis- Dissolutiou of
company.
solved at the end of three months from the date of the regis-
tration of the return which the liquidators are required to
make as before mentioned (v). After the liquidator has made
his return the Court has sufficient jurisdiction to make calls
on the contributories for the payment of the debts of the
company or the adjustment of the rights of the contributories,
inter se, if an application be made before the three months
have expired (x) . After the expiration of the three months
the Court has no jurisdiction to make any order unless the
dissolution of the company was obtained by fraud (y). A
company, moreover, will be restrained from dissolving without
Gcernett and Moseley Gold Mining Co. Ch. D. 171 ; Ex parte Maude, 6 Ch.
v. Sutton, 3 B. & Sm. 321. 51, and ante, pp. 852 and 869.
(q) See § 138. Ranee's case, 6 Ch. (c) § 143.
104. (x) See Crookhaven Mining Co., 3
(r) Brighton Arcade Co. v. Dow- Eq. 69.
ling, L. R. 3 C. P. 175, is opposed to (y) Pinto Silver Alining Co., 8 Ch.
this ; but this case is now overruled D. 273 ; London and Caledonian
by Black & Co.'s case, 8 Ch. 254; Marine Ins. Co., 11 Ch. D. 140,
and see also, ante, p. 744. where the Court refused to make an
[s) § 144. See ante, pp. 859 et order for the compulsory winding
sen up of the company. See, also,
(t) § 168. See ante, pp. 867 et IVestbourne Grove Drapery Co., W.
seq. N. 1878, 195.
(u) See Exchange Drapery Co., 38
886
WINDING UP SUBJECT TO SUPERVISION.
Bk. iv. Chap. 2. notice to those persons to whom it may in future become
Sect. 3.
liable (z).
Winding up sub-
ject to super-
vision of Court.
Winding up
subject to
supervision
preferred to
compulsory
winding up.
SECTION III.— OF WINDING UP SUBJECT TO THE SUPERVISION
OF THE COURT.
After a resolution has been passed for winding up a com-
pany voluntarily, the Court may make an order directing that
the voluntary winding up shall continue, but subject to such
supervision of the Court and with such liberty for creditors,
contributories, or others to apply to the Court, and generally
upon such terms and subject to such conditions as the Court
thinks just (a).
The application for such an order is made by a petition (b),
which must be advertised, verified, and served as required in
the case of a petition for winding up by the Court (c). It
must also be served on the liquidators if there are any (d).
In determining what ought to be done upon such a petition,
the Court may consult the wishes of the creditors and con-
tributories, and may summon meetings for the purpose of
ascertaining their wishes (e).
The circumstances which influence the Court in determining
what order to make on petitions to wind up have been already
noticed (/) ; and in addition to what has there been stated it
is only necessary to observe that the Court is reluctant to
interfere with a voluntary winding up, and will not at the
instance of a contributory convert a voluntary winding up into
(.-.} See Hrnjtor Granite Co., 1 Ch.
77, a claim for rent, where the com-
pany being lessee had assigned ; and
see Gooch v. London Banking Asso-
eiation, 32 Ch. D. 41 ; Lord Elphin-
stone v. Morikland Iron Co., 11 App.
Ca. 332. As to the jurisdiction of
the Court to restrain the dissolution
of a company being wound up volun-
tarily under the acts of 1856-8, see
Lowndes v. Garnett & Moseley Gold
Mining Co., 2 J. & H. 282.
(«) § 147. See the form of the
order No. 4, in schedule 3 to the
rules, and as to who may petition,
Pen-y-Van Colliery Co., 6 Ch. D.
477, ante, p. 624.
(6) § 148. See infra, p. 888, note
(P)-
(c) Rules 1-5, ante, p. 654.
(f/) Rule 3. See ante, p. 656.
(e) § 149, and see rules 45 & 46.
(/) Ante, pp. 624, et seq.
WINDING UP SUBJECT TO SUPERVISION. 887
a compulsory winding up unless the resolution to wind up Bk- !▼• Chap. 2.
voluntarily is impeachable or unless creditors support the peti- -
tion {g) ; and will not convert a voluntary winding up into a
winding up subject to supervision unless there is misconduct
on the part of the liquidators or some other good reason for so
doing (/*). Where there is no proper resolution to wind up
voluntarily, the Court cannot make an order to wind up subject
to supervision ; for such an order presupposes, and, in fact,
continues a pre-existing voluntary winding up. Where, there-
fore, there is no such winding up, all that the Court can do is
to make a compulsory order (/), or to dismiss the petition, or
to allow it to stand over in order to give the shareholders an
opportunity of passing a resolution to wind up voluntarily (k).
Where, however, the Court is satisfied that a proper resolution
to wind up has been passed, it will make an order to continue
the winding up subject to supervision in preference to a com-
pulsory order, unless a compulsory order is desired by a
majority of creditors or there is some other good reason for
making it.
A strong illustration of this is afforded by the case of the London and
London and Mediterranean Bank (I). That bank had been Banti
amalgamated with the London and Bombay Bank. A reso-
lution to wind up the London and Mediterranean Bank volun-
tarily was passed, and liquidators were appointed ; a petition
for an order to continue this winding up under the supervision
of the Court, and to continue the voluntary liquidators, was
afterwards presented by a contributory, and was supported by
the company : but was opposed by another contributory, on
the ground that a petition to wind up the London and Bombay
(g) Gold Co., 11 Ch. D. 701. The ante, p. 877, and The National
Court will not make a compulsory Savings Bank Association, 1 Ch. 547.
order against the consent of the See, also, Patent Floor Cloth Co., 8
petitioner even if his petition asks Eq. 664, where an order for winding
for it, Chepstow Bobbin Mills Co., 36 up subject to supervision was dis-
Ch. D. 563. charged, and a compulsory order
(h) See Imperial Bank of China, made. As to building societies,
rfr., 1 Ch. 339 ; Beaujolais Wine Co., see 37 & 38 Vict. c. 42, § 32 (4).
3 Ch. 15. As to applications by (k) See the cases collected, ante,
creditors, see infra, notes (1) to(p). pp. 644 et seq.
(i) As in the case of the Bridport (I) W. N. 1866, 207 and 317.
Old Brewery Co. 2 Ch. 191, noticed
888
WINDING UP SUBJECT TO SUPERVISION.
Bk. IV. Chap. 2. Bank was pending ; and that petition disclosed facts tending
Conflicting
winding-up
orders.
Effect of order
to wind up
subject to
supervision.
to show that the continuance of the voluntary winding by the
voluntary liquidators was not for the interests of the contribu-
tories. The Court, nevertheless, made the order for continuing
the voluntary winding up, subject to supervision (?»). On a subse-
quent occasion another petition was presented by two creditors
and a contributory in the London and Mediterranean Bank,
praying for a compulsory winding-up order, on the ground that
the voluntary winding up was not being conducted properly.
The petition was supported by other creditors ; but the Court,
nevertheless, dismissed the petition (»), on the ground that a
compulsory winding-up order would not be more advantageous
to the creditors, or contributories, than the order which already
existed; and that if sufficient grounds were shown, the
liquidators could be removed as easily under one order as the
other.
In this case it was objected that a compulsory order could
not be made until the former order for winding up, subject to
supervision, had been discharged on a rehearing or on appeal :
but this objection was overruled (o). Instances have also
occurred in which proceedings, under a compulsory winding-up
order, have been stayed, and an order to wind up, subject to
supervision, has been substituted for it(p). Where this is
done, care ought to be taken not to disturb the date of the
commencement of the winding up (q).
The general effect of an order to wind up, subject to super-
vision, is to continue the voluntary winding up with such
restrictions, if any, as the Court may impose (r). The pre-
sentation of the petition gives the Court the same jurisdiction
over actions as a petition for winding up compulsorily (s), and
has the same effect as such a petition on fraudulent convey-
(m) W. N. 1866, 207.
(n) W. N. 1866, 317.
(o) W. N. 1866, 317.
(p) This was done by Lord Ro-
milly, M. R., in the case of the
General Exchange Bank, May, 1867.
The application was made by sum-
mons, not by petition. See ante, p.
886, note (b).
(q) See, as to this, ante, p. 664.
(r) § 147, and see the form of the
order No. 4, in the 3rd schedule to
the rules. London Quays, &c, Co., 3
Ch. 394.
(a) See §§ 148 and 85, ante, p.
672.
WINDING UP SUBJECT TO SUPERVISION. 889
ances by the company of its assets (0- Moreover, speaking Bk- ^-^J*" 2*
generally, an order to wind up, subject to supervision, appears -
to be equivalent to an order to wind up coinpulsorily, except
that the liquidators can, unless restricted by the Court,
exercise, without its sanction, all the powers of liquidators
acting in a winding up which is purely voluntary (u). The
liquidators should, however, apply to the Court for its sanction
before doing anything of unusual importance, or which is
opposed on grounds not obviously unreasonable. They have
power to sell the assets of the company under § 161, if such
sale is authorised by a special resolution (x).
When a company is ordered to be wound up, subject to Commencement
1 J of the winding
supervision, the commencement of the winding up dates from up.
the passing of the resolution on which it is founded (y) ; i.e.,
where there is a special resolution, from the passing of the con-
firming resolution (z). This is so even where, as frequently
happens, the petiton on which the order is made precedes the
resolution (a) : so where a provisional liquidator has been
appointed upon an earlier petition for a compulsory order (b).
If an order is made for winding up, subject to the super- Liquidators.
vision of the Court, the Court may appoint one or more liqui-
dators, in addition to or in the absence of any previously
appointed (c). The additional liquidators have the same
powers, are subject to the same obligations, and stand in the
same position as if they had been appointed by the com-
pany^/). This power of appointing additional liquidators is
sometimes exercised for the protection of creditors (e). An
appointment of an additional liquidator chosen by the creditors,
practically secures to them the same protection as the appoint-
(0 § 164. See ante, p. 667. 832.
(u) § 151. Wright's case, 5 Ch. (a) JVeston's case, 4 Ch. 20, see
437. further, ante, p. 664.
(x) Imp. Merc. Credit Assoc, 12 (b) Emperor Life Ass. Society, ubi
Eq. 504, and see ante, p. 882, and supra,
infra, p. 849. (c) § 150. See London Quays Co.,
(y) See § 130. 3 Ch. 394.
(z) Emperor Life Ass. Society, 31 (d) § 150.
Ch. D. 78 ; Ex parte Colborne and (e) See an instance under the acts
Strawbridge, 11 Eq. 478 ; Weston's of 1856-58. Llanfymach Silver
case, 4 Ch. 20 ; Dawes' case, 6 Eq. Lead Mining Co., 9 W. R. 500.
890 WINDING UP SUBJECT TO SUPERVISION.
Bk. IV. Chap. 2. ment of an official liquidator under an order to wind up
- compulsorily ; and by appointing such additional liquidator
the necessity of making a compulsory winding-up order is fre-
quently obviated. Not only can the Court appoint additional
liquidators to act with those appointed by the contributories,
but it can also remove any liquidator whom they have
appointed (/). This power, however, can only be exercised
on due cause shown ; but to induce the Court to exercise
it, misconduct on the part of the liquidators need not be
proved (g).
If an order for winding up, subject to the supervision of the
Court, is superseded by an order for winding up by the Court,
the old liquidators, or any of them, may be appointed official
liquidators, either with or without other persons, and either
provisionally or permanently (h).
An order for winding up, subject to supervision, may be
stayed in a proper case to enable the company to resume
business (i).
(/) §§ 141 and 150, and next (h) § 152.
note. (i) South Barrule Slate Co., 8 Eq.
(g) Ex parte Charlesworth, 36 Ch. 688, where one contributory dis-
D. 299 ; Marseilles Extension, dr., senting was put to his election to
Co., 4 Eq. 692, and British Nation retire on payment of the value of
Life Ass. Ass., 14 Eq. 492, ante, p. his share.
878.
AMALGAMATION AND RECONSTRUCTION. 891
CHAPTER III.
AMALGAMATION AND RECONSTRUCTION OF COMPANIES (a).
Although the word amalgamation is frequently used in Bk. IV. Chap. 3
connection with companies it does not seem to have acquired Meaning of the
any technical or well defined meaning (6). It is perhaps ^°rt<?Qamalga"
generally understood to express or imply a transfer by one or
more companies of their assets and liabilities either to a new-
company formed to take them, or to an already existing com-
pany, in consideration of shares in such company, which
are given or are at least offered to the members of the trans-
ferring companies.
A power to amalgamate would probably be held to authorise
a purchase of the assets and liabilities of another company (c) ;
or a transfer of assets and liabilities in consideration of shares
in a company to which such assets are transferred (d). But it
does not enable directors to compel their shareholders to
become members in a new company with wider objects, whereby
their liability may be increased, and probably not in any new
company (e).
How far, apart from statute, companies have or have not Power to amal-
powers enabling them to amalgamate depends upon the terms dmtty ofstatute.
of their charters, articles, or deeds of settlement (/). Unless
these contain distinct provisions for the purpose such powers
do not exist (g). A company incorporated by charter or
(a) Parts of this chapter will be G. J. & Sm. 29 ; Pulbrook v. New
found in other portions of the work ; Civil Service Co-operation, 26 W. R.
but it lias been thought convenient 11.
to bring the whole subject together (d) Dougan's case, 8 Ch. 545.
even at the expense of some repeti- (e) See cases in note (b) above,
tion. and Clinch v. Financial Corporation,
(b) Higg's case, 2 H. & M. 666 ; 5 Eq. 450 ; Imperial Bank of China
Ex parte Bagshaw, 4 Eq_. 347. See, v. Bank of Hindustan, 6 Eq. 91.
as to the meaning in the Railway (/) See ante, pp. 183 and 207.
Clauses act, 26 & 27 Vict. c. 92, § 37. (g) Ernest v. Nicholls, 6 H. L. C.
(c) Era Assurance Soc, 1 De 401, and cases below, note (k).
892 AMALGAMATION AND RECONSTRUCTION.
Bk. IV. Chap. 3. special act of Parliament cannot delegate its powers (h), and
cannot therefore transfer its business, even for a time, to
another company (?) ; nor can the majority of the shareholders
of any company bind the minority by an agreement to transfer
its property and business (k), or to purchase the assets and
liabilities of another company (I). Whence it follows that
two companies cannot amalgamate with each other, unless
such a transaction is authorised by the constitutions of both
companies (m).
Where there is power to amalgamate the terms of the
power must be observed (n). Thus a power to amalgamate
with another cornpairy having the same objects will not autho-
rise an amalgamation with a company with wider or different
objects (o) ; and a power to amalgamate with the sanction
of an extraordinary meeting will not enable an amalgamation
to be effected without such sanction, although the amalgama-
tion may have been acted on (p). A power to sell and dis-
pose of a business will not authorise a sale in consideration of
shares in another company (q) ; nor will general powers of
management be sufficient for the purpose (r). But such
powers need not necessarily be conferred by the original con-
stitution of the company ; if there is power to alter and amend
(h) Great Northern Rail. Co. v. Sm. 768 ; Ernest v. Nicholls, 6 H.
Eastern Counties Rail. Co., 9 Ha. L. C. 401. As to the construction
30(5. of such powers, see Stace & Worth's
(i) Rattersley v. Skelbume, 10 W. case, 4 Ch. 682 ; Bank of Hindustan
E, 881 ; 31 L. J. Ch. 873 ; Charlton v. Alison, L. R. 6 C. P. 54, and
v. Newcastle and Carlisle Rail. Co., 5 9 Ch. 1.
Jur. N. S. 1096 ; Winch v. Birken- (o) Clinch v. Financial Corpora-
head, &c, Rail. Co., 5 De G. & S. tion, 5 Eq. 450.
562 ; Beman v. Rufford, 1 Sim. N. (p) Stace and Worth's case, 4 Ch.
S. 550 ; Salomons v. Laing, 12 Beav. 682.
377. Compare Clay v. Rufford, 5 De (q) Dougan's case, 8 Ch. 545.
G. & S. 768. (r) Ernest v. Nicholls, 6 H. L. C.
(k) Ernest v. Nicholls, 6 H. L. C. 401 ; Era Assurance Soc, 2 J. &
401; Era Assurance Soc, 2 J. & H. 400; Saxon Life Assur. Soc,
H. 400 ; 1 H. & M. 672 ; Kearns v. ib. 408, and 1 De G. J. & Sin. 29 ;
Leaf, 1 H. & M. 681. Gilbert v. Cooper, 10 Jur. 580 ;
(I) Ib. Beman v. Rufford, 1 Sim. N. S.
(m) Ib. ; and see European Soc, 550 ; Clay v. Rufford, 5 De G. & S.
8 Ch. D. 679. 768.
(n) Clay v. Rufford, 5 De G. &
AMALGAMATION AND RECONSTRUCTION. 893
the constitution of the company they may be subsequently Bk. IV. Chap. 3.
acquired (a).
Whether, where no powers of amalgamation are given by Power of
the regulations of a company and no means of acquiring them majon y>
are provided by such regulations, they can be conferred by
a meeting of shareholders, has been much discussed. Amal-
gamation with another company must involve a complete
change in, if not a destruction of, one at least of the companies
intending to amalgamate ; and even if such a transaction is
one which could be effected by a unanimous agreement upon
the part of the members, it is difficult to hold that it is
one as to which the majority ought to be able to bind the
minority (t).
But even a unanimous agreement of the members of a
company to amalgamate with another company, unless per-
mitted by the terms of its regulations, would be ineffectual
except in the case of those companies which are in fact mere
partnerships. Such bodies may alter or vary the agreements
into which they have entered («). But with respect to com-
panies which are created by a special act of Parliament, by
charter, by letters patent, or by registration, the case is very
different : for every company so established is governed by a
law defining its objects and limiting its powers, and such law
cannot be abrogated by any agreement between the members of
the company, however unanimous they may be (x).
Practically, however, amalgamation under a company's regu- Amalgamation
lations is rarely attempted, recourse being usually had to one u^veJr statutory
or other of the following statutory methods : —
1. Application may be made to Parliament for a special act
to enable companies to amalgamate (y). This, however, is
not often done now except in cases of companies formed by
special acts.
2. An amalgamation may often be in effect carried out by
(s) Argus Life Assur. Soc, 39 Ch. (u) Keene's Executors' case, 3 De
D. 571 ; Doman's case, 3 Ch. D. 21. G. M. & G. 272.
(t) Beman v. Buff or A, 1 Sim. N. (a:) See, as to this, ante, pp. 314 d
S. 550 ; and see further as to the sea.
powers of majorities ante, pp. 314 et (y) See ante, pp. 186, 323, as to
seq. the right to apply to Parliament.
894
AMALGAMATION AND RECONSTRUCTION.
Bk. IV. Chap. 3. an arrangement or compromise under the provisions of the
Joint Stock Companies arrangement act, 1870 (a).
3. But by far the most usual method of proceeding is under
sections 161 and 162 of the Companies act, 1862 (a). These
sections apply to all companies which can register under the
act. A company not already registered may register for the
express purpose of winding up and selling its business under
these sections (b) ; and provided the proposed sale is within
the section no objection to it can be raised on the ground
that it is not authorised by the companies regulations (c).
Mode of proceed- A company proposing to make use of the powers conferred
mg under §§ 161, .
162 of the Com- by these sections passes special resolutions to wind up volun-
" tarily, appoints liquidators, and gives them either a general or
special authority to sell or transfer the whole or a part of its
business to another company in consideration of shares,
policies, or like interests in such company (d). The notices
summoning the meeting at which the proposed transaction is
to be submitted to the shareholders, should give distinct inti-
mation that it is intended to proceed under these sections (e).
The sale must be<to a company (/) ; and not to a person who,
though undertaking to form a company, is free to make any
bargain he pleases for the sale of the assets to it (g). An
agreement entered into with a person as the agent or trustee
for an unformed company is good (h). A sale to a foreign
(z) See infra, p. 1027, and ante, (e) Imperial Bank of China v.
p. 711. Bank of Hindustan, 6 Eq. 91 ; Fox's
(«) Ante, p. 882. case, 6 Ch. 176.
{!>) Southall v. British Mutual Life (/) § 161. A sale may be to a
Assur. Soc., 11 Eq. 65, and 6 Ch. company formed for the jmrpose of
614, which was the case of a mutual taking over the business and assets
insurance society. of the selling company : Imperial
(c) lb., and Clinch v. Financial Merc. Credit Co., 12 Eq. 501 ; Agra
Corporation, 4 Ch. 117, and 5 Eq. & Masterman's Bank, ib. 509, nt.te ;
450. Ex parte Poole's executors, 8 Ch. 702,
(d) § 161. The resolution to where the sale was to another coin-
wind up voluntarily may be valid pany being wound up.
although its object may have been (g) Bird v. Bird's Patent Sewage
to carry out an objectionable scheme : Co., 9 Ch. 358.
Ex parte Fox, 6 Ch. 176. See, also, (h) Hester & Co., Limited, 44 L. J.
Cleve v. Financial Corporation, 16 N. S. Ch. 757.
Eq. 363.
AMALGAMATION AND RECONSTRUCTION. 895
company may be valid, at least where the company selling Bk. IV. Chap. 3.
carries on business abroad (i).
The sale may be upon any terms which a majority of the Terms and
members approve ; and which they are competent in point of conditions-
law to approve on behalf of the company (k). Thus a sale may
be made in consideration of shares in the purchasing company
which are not fully paid up (I) ; and the agreement for the sale
may provide that such shares shall be distributed directly
among the shareholders of the selling company, and not given
to the liquidator as part of the assets in the winding up (in).
Again, it is no objection to a sale that it provides that the
purchasing company shall take a portion only of the assets and
liabilities of the selling company, leaving the rest of the debts
to be paid for by the liquidator of the selling company («).
But no transfer or sale under those sections can be valid as Dissentients.
against dissentient shareholders if the terms of the transfer or
sale are such as to expose them to increased liability (o) ; e.g.,
where they are made to guarantee that their assets will yield a
certain sum, or to pay by calls for shares in the new company.
Nor again can the terms of the sale or transfer deal with the Distribution of
distribution of what may be agreed upon as the consideration mone^ChaSe
for the sale, whether it be shares or money ; it must be dis-
tributed, after payment of the debts and liabilities of the selling
company, amongst the members according to their rights and
interests in the company (p). But it has been held that a
proper compensation may be made to the directors of the
selling company out of the purchase-money (q).
A sale duly carried out under these sections binds both Remedies for
creditors and dissentient members. If a creditor thinks him- dissentients!
self injured by the transaction he must apply within a year to
have the company wound up either by the Court or subject to
(i) Ex parte Fox, 6 Ch. 183. where the sale was set aside after it
(k) See cases in note (/) above. had been carried out. See, also,
(I) City and County Investment Imperial Bank of China, <bc. v. Bank
Co., 13 Ch. D. 475. of Hindustan, 6 Eq. 91.
(m) Ib- (p) Griffith v. Paget, 5 Ch. D. 894,
(n) City and County Investment and 6 Ch. D. 511. See further, as to
Co., 13 Ch. D. 475. allowances to directors, ante, p. 388.
(o) Clinch v. Financial Corpora- (q) Southall v. British Mutual
tion, 4 Ch. 117, and 5 Eq. 450, Life Assur. Co., 6 Ch. 614.
896
AMALGAMATION AND RECONSTRUCTION.
Bk. IV. Chap. 3. its supervision (r). This will avoid the transaction unless
sanctioned by the Court (s). The remedy for a dissentient
member is to express his dissent in writing addressed to the
liquidators and left at the registered office of the company not
later than seven days after the passing of the special resolu-
tion ; and he must further require the liquidators at their
option either to abstain from carrying the resolution into effect
or to purchase his interest (t).
If the liquidators elect to purchase the interest. of a dissen-
tient member, they should give him every facility for ascer-
taining its value (u) ; but he has no right to inspect the books
of the selling company after they have been handed over to
the purchasing company in order to see whether it would be
better to accept the valuation of the liquidators or to go to
arbitration (x). If the price cannot be agreed upon it must be
settled by arbitration (y). As soon as the price has been fixed an
action may be brought against the company for the amount (z).
With respect to those who do not give the proper notice in
due time, it has been decided that although they cannot im-
peach the transfer, they cannot be compelled to become share-
holders in the purchasing company ; and if they are registered
as shareholders therein against their consent, they are entitled
to have their names removed from the register (a). Moreover,
in the absence of a proper and timely notice a dissentient
loses his right to have his interest purchased, and it is said
that he also loses all right to any share of the surplus assets of
Omission to
give notice of
dissent in time
(?•) City and County Investment
Society, 13 Ch. D. 475.
(s) lb., and § 161, i.e., sanctioned
by an order made in the compulsory
winding up, or in the winding up
subject to supervision : Callao Bis
Co., W. N. 1889, 97.
(t) The notice of dissent must
contain a notice requiring the liqui-
dators either to abstain from carry-
ing the resolution into effect or to
purchase the dissentient's share :
Union Bank of Kingston-iipon-Hull,
13 Ch. 808.
(u) Imperial Mercantile Credit
Assoc, 12 Eq. p. 515.
(») Morgan's case, 28 Ch. D. 620.
(y) A judge can appoint an
umpire if the arbitrators do not
agree : ante, p. 883, note (a). As to
costs, see Imperial Mercantile Credit
Assoc, 12 Eq. 504.
(z) De Rosaz v. Anylo-Italian Bank
L. R. 4 Q. B. 462.
(a) Higg's case, 2 Hem. & M. 657 ;
Martin's case, ib. 669 ; Ex parte Los,
11 Jur N. S.]661. See, also, Ex parte
Fox, 6 ^Ch. 176, and Ex patre Bag-
shatv, 4 Eq. 341 ; Imperial Mer-
cantile Credit Assoc. 12 Eq. 504.
AMALGAMATION AND RECONSTRUCTION. 897
the company being wound up (b). This share, if he were Bk- Iv- chaP- 3-
entitled to it, would be practically represented by the shares
in the purchasing company, which he might have taken if he
had chosen, and which he might require the liquidators to sell
for his benefit if he had any right to them at all. The general
opinion, however, seems to be adverse to his having any such
right ; his choice being to assent ; or to dissent and require
his interest to be purchased ; Or to dissent and abandon all
his interest in the company (c) .
In a case where the business of a bank had been transferred
under these sections, and dissentient shareholders presented a
petition for a compulsory winding up, and impeached the
validity of the resolution to wind up, and of all the subsequent
transactions, the Court gave them leave to take such proceed-
ings as they might be advised in the name of the company in
order to set aside the transactions complained of; but the
Court declined to order the bank to be wound up compulsorily,
or subject to the supervision of the Court, and also declined to
decide on the petition what the rights of the dissentients
were (d).
But a shareholder whose interest has been purchased by the Liability of
liquidators under section 161 does not cease to be liable to the toTreditors.8
creditors of the company ; the section not contemplating any
alteration of liability as between the dissentient shareholder
and the creditors whose debts are to be contributed to by all
the shareholders (e).
(b) See Higcjs case, 2 Hem. & M. 702.
657. The marginal note, however, (e) Fining's case, 6 Ch. 96, where
is scarcely warranted by the judg- the liquidators had taken a transfer
ment. of the shares, which was not in fact
(c) See Buckley on § 161, p. 367, authorised by the agreement they
ed. 5. had to carry out ; it seems, however,
((t) Imperial Bank of China, &c, that under § 131 the liquidators may
1 Ch. 339. Compare Ex 'parte Fox, take a transfer of shares ; the effect
6 Ch. 176. As a rule, however, of which would be to relieve the
the Court will have regard to the shareholder from any future lia-
wishes of the majority of share- bility, not only with respect to the
holders and creditors as against costs of the winding up, but any
a dissentient minority unless they costs of any liabilities incurred by
will be exposed to liability, Im- reason of the transaction in ques-
perial Credit Assoc, 12 Eq. 504; tion. See Ex parte Poole's executors,
Ex parte Poole's executors, 8 Ch. 8 Ch. p. 710.
L.C. 3 M
898 AMALGAMATION AND RECONSTRUCTION.
Ek. IV. Chap. 3. Where a company is already being wound up by the Court,
Companies these sections are not applicable, as they are expressly limited
being wound up .
by the Court. to a voluntary winding up (/). But the Court has as wide, it
not wider, powers under § 95 of the act, and in any case where
it might seem desirable the Court could, it is conceived,
effect an amalgamation by a sale under such last-mentioned
section (g).
Life Insurance The amalgamation and transfer of the business of life insur-
Companies. #
ance companies is expressly provided for by the Life insurance
companies act, 1870 (Ji), §§ 14, 15. These sections are as
follows : —
33 fr 34 Vict. 14. Where it is intended to amalgamate two or more companies, or to
c ol, 4,9 14, Id. transfer the life assurance business of one company to another, the directors
of any one or more of such companies may apply to the Court, by petition,
to sanction the proposed arrangement, notice of such application being pub-
lished in the Gazette, and the Court, after hearing the directors and other
persons whom it considers entitled to be heard upon the petition, may con-
firm the same if it is satisfied that no sufficient objection to the arrangement
has been established.
Before any such application is made to the Court (i), a statement of the
nature of the amalgamation or transfer, as the case may be, together with
an abstract containing the material facts embodied in the agreement or
deed under which such amalgamation or transfer is proposed to be effected,
and copies of the actuarial or other reports upon which such agreement or
deed is founded, shall be forwarded to each policy holder of both companies
in case of amalgamation, or to each policy holder of the transferred com-
pany in case of transfer by the same being transmitted in manner provided
by section one hundred and thirty-six of the Companies clauses consolida-
tion act, 1845, for the transmission to shareholders of notices not requiring
to be served personally ; and the agreement or deed under which such
amalgamation or transfer is effected shall be open for the inspection of the
policy holders and shareholders at the office or offices of the company or
companies for a period of fifteen days after the issuing of the abstract herein
provided.
The Court shall not sanction any amalgamation or transfer in any case
in which it appears to the Court that policy holders representing one-tenth
or more of the total amount assured in any company which it is proposed
to amalgamate, or in any company the business of which it is proposed to
transfer, dissent from such amalgamation or transfer.
(/) It has, however, been held (g) See Agra and Master ma it's
that they extend to a winding up Bank, 12 Eq. 509, note ; and ante,
under supervision. See Imperial book iv., c. 1, § 8, p. 712.
Mercantile Credit Assoc, 12 Eq. (h) 33 & 34 Vict. c. 61.
504. See, as to this, Buckley, ed. 5, (i) See Briton Life Assoc, W. X
p. 368. 1887, p. 122.
AMALGAMATION AND RECONSTRUCTION. 899
No company shall amalgamate with another, or transfer its business to Bk. IV. Chap. 3.
another, unless such amalgamation or transfer is confirmed by the Court in -
accordance with this section.
Provided always, that this section shall not apply in any case in which
the business of any company which is sought to be amalgamated or trans-
ferred does not comprise the business of life assurance (k).
15. When an amalgamation takes place between any companies, or
Avhen the business of one company is transferred to another company, the
combined company or the purchasing company, as the case may be, shall,
within ten days from the date of the completion of the amalgamation or
transfer, deposit with the Board of Trade certified copies of statements of
the assets and liabilities of the companies concerned in such amalgamation
or transfer, together with a statement of the nature and terms of the amal-
gamation or transfer and a certified copy of the agreement or deed under
which such amalgamation or transfer is effected, and certified copies of the
actuarial or other reports upon which such agreement or deed is founded ;
and the statement and agreement or deed of amalgamation or transfer shall
be accompanied by a declaration under the hand of the chairman of each
company and the principal managing officer of each company, that to the
best of their belief every payment made or to be made to any person what-
soever on account of the said amalgamation or transfer is therein fully set
forth, and that no other payments beyond those set forth have been made
or are to be made either in money, policies, bonds, valuable securities, or
other property by or with the knowledge of any parties to the said amalga-
mation or transfer.
The effect of the amalgamation of life insurance companies
on their policy holders has been already pointed out (I).
The amalgamation of companies working mines within the Cost-book
Stannaries is dealt with by 50 & 51 Vict. c. 43, § 27, which compauies'
enacts —
When the limits of any mine join those of any other mine the 50 & 51 Vict,
companies respectively working the said mines may, with the consent in c- 43> § 27-
writing of the respective lessors thereof in all cases where such consent is
by law or custom necessary, amalgamate and become one company, pro-
vided that no such amalgamation shall take place unless each of the said
companies shall authorise the same by a special resolution, to which two-
thirds in value of the shareholders in the said company shall consent in
writing ; such resolution shall be registered in the Court, and the amalga-
mation shall not take effect until such registration, and shall be advertised
in such manner as the Court directs.
(k) See Argus Life Assur. Co., 39 (I) See ante, pp. 259 et seq. and
Ch. D., which was the case of a p. 737.
petition under this section.
3 m 2
900 AMALGAMATION AND RECONSTRUCTION.
Bk. IV. Chap. 3. The act, however, contains no definition of amalgamation ;
nor are there any provisions dealing with the rights of dissen-
tients ; and although the resolution authorising the amalga-
mation requires to be registered in the Court, it does not
appear that the Court has an}r discretion as to withholding the
registration if it is duly sanctioned.
The effect of amalgamation on the debts of the amalgama-
ting companies has been already discussed (m).
Reconstruction. Where a company wishes to alter the nature of its business
or effect anything which is ultra vires, and which cannot be
authorised by an alteration of its constitution under powers
conferred upon it, recourse is commonly had to reconstruction.
Reconstruction differs from amalgamation in that, as a rule,
there is only one transferring company, and the company to
which the property in question is transferred is practically
the same company with some alterations in its constitution.
In point of law, the two companies are, however, distinct
persons.
The method of proceeding to a reconstruction is similar to
that described above in cases of amalgamation. The most
usual way of proceeding is under §§ 161 and 162 of the Com-
panies act, 1862, a new company being formed to take over the
assets and liabilities of the old company.
(m) See ante, pp. 258 et seq. Rail. Co. v. Cochrane, 9 Ex. 197,
and 734 et seq. As a rule, a per- and L. B. & S. C. Rail. Co. v. Good-
son who becomes surety to a corpo- win, 3 Ex. 320, where the surety
ration for the conduct of one of its was not discharged ; but the statute
servants is discharged by the amal- amalgamating the two contained an
gamation of that corporation with express provision on the subject.
another. See The Eastern Union
ABANDONMENT OF RAILWAYS. 901
CHAPTER IV.
ON THE ABANDONMENT OF RAILWAYS, AND THE WINDING UP AND
DISSOLUTION OF RAILWAY COMPANIES.
The last winding-up acts to which it is necessary to advert, Bk. IV. Cbaii. 4.
are, " The Abandonment of Railways Act, 1850 " (a), " The
Railway Companies Act, 1867," {b), and " The Abandonment
of Railways Act, 1869 "(c).
1. Abandonment of Railways.
The first of these acts was passed in 1850, and only applied
to railway companies incorporated by Act of Parliament, and
empowered to make a railway by an act passed before the 14th
of August, 1850 (<?).
Other railways, incorporated by act of Parliament could,
until the passing of the Railwaj^s Companies act, 1867 (e), only
be wound up (if at all) under 7 & 8 Vict. c. Ill (/). The
Railway Companies act, 1867, amended the act of 1850, and
extended the operation of it to all companies authorised to
(«) 13 & 14 Vict, c. 83. Mackenzie v. Sligo, dr., Rail. Co., 18
(6) 30 & 31 Vict. c. 127. Q. B. 862.
(c) 32 & 33 Vict. c. 114. Lord (e) 30 & 31 Vict. c. 127.
Dalhousie's act (9 & 10 Vict. c. 28), (/) Whether railway companies
which applied only to unincorpo- incorporated by special act, were
rated railway companies projected within 7 & 8 Vict, c 111, was doubt-
before July, 1846, has ceased to be ful. See Bright v. Hutton, 3 H. L.
of any practical importance. See, C. 366 ; Ex parte Surge, 1 De G. &
upon it, Jones v. Charlemont, 16 S. 588 ; Ex parte Spackman, ib. 599.
Sim. 271 ; Coupland v. Ghallis, 2 Such companies were expressly ex-
Ex. 682 ; Owen v. Challis, 6 C. B. cepted from the Winding-up acts,
115 ; and Ex parte Clarice, 12 Jur. 1848-9. See as to the Companies
471 ; and Ex parte Green, ib. 534, act, 1862, Ennis and West Clare
and 13 ib. 775, as to proof of debts. Rail. Co., 3 L. R. Ir. 94, and ante,
(d) 13 & 14 Vict. c. 83, § 1. As p. 618.
to its retrospective operation, see
902 ABANDONMENT OF RAILWAYS.
Bk, IV. Chap. 4. niake railways by anj act passed before the session 30 & 31
Vict. These acts were amended by the Abandonment of
Railways act, 1869 (g).
The joint effect of the three acts with respect to the abandon-
ment of railways is in substance as follows : —
If any company authorised to make a railway by act of Par-
liament passed before the session 30 & 31 Vict, (h) desires to
abandon the railway in whole or in part, the company may, by
the authority and with the consent of the holders of three-
fifths of its shares or stock apply to the Board of Trade (i) for
liberty to abandon the same (k). If less than three-fifths of
the share capital of the company has been subscribed, the
Board of Trade may, if it think fit, without the preliminary
consent of a meeting of the shareholders, proceed under the
act of 1850, on the application of any person named in the
special act as a member or director, or of any person named in
a warrant or order directing paj'ment of any deposit, or who
has lent the deposit or any part thereof, or who has entered
into any bond conditioned for the completion of the railway,
or for payment of any money in default thereof (/), or in the
case of a company, no part of whose railway is open for traffic,
on the application of a judgment creditor (m).
If the Board of Trade entertains the application, the fact of
its having been made must be publicly notified bjr the company
in the manner directed by the act, so that persons desirous of
opposing the application may have an opportunity of doing
so (n). After due notice has been given and the time thereb}r
fixed for opposing the application has expired, the Board of
Trade may by warrant under seal, and signed by two or more
of the members of the board, authorise the abandonment of the
railwa)7, or the portion of it described in the warrant, as the
board may think fit (o). The warrant is required to be adver-
tised (p) ; and after it has been duly advertised (of which a
(</) 32 & 33 Vict. c. 114. (h) 13 & 14 Vict. c. 83, § 1.
(h) 30 & 31 Vict. c. 127, § 31. (/) 30 & 31 Vict. c. 127, § 32.
(i) These powers were originally (m) 32 & 33 Vict. c. 114, § 8.
vested in the commissioners of rail- (n) 13 & 14 Vict. c. 83, § 13.
ways, but were transferred to the (o) 13 & 14 Vict. c. 83, § 15.
Board of Trade by/v14 8f=tt Vict. c. (p) Ibid. § 17, as amended by
83, $ 1. 32 & 33 Vict. c. 114, § 9.
ABANDONMENT OF RAILWAYS.
903
certificate of the Board of Trade is sufficient evidence (q) ), the Bk- IV- ChaP- 4-
company is released from the obligation of making the aban-
doned railway (r). The acts contain various provisions for
regulating the manner in which the sense of the shareholders
is to be taken (s) ; for prohibiting the directors from proceed-
ing with the undertaking after a resolution has been passed to
apply to the Board of Trade (t) ; for enabling the Board to
ascertain the true state of the company's affairs (u) ; for pro-
tecting and compensating persons who have acquired rights
against the company (%) ; for reducing the capital of the
company if the Board of Trade think it expedient so to do (y) ;
and for dealing with the money deposited for the purpose of
securing the completion of the railway (2).
The exercise of the powers of the Board of Trade is dis-
cretionary (a).
Upon the granting of a warrant for the abandonment of a
railway, the powers of the company cease ; and the company
exists only for the purpose of winding up its affairs (b).
When a warrant has been granted for the abandonment of
the whole of a railway, a petition may be presented under the
Companies acts of 1862 and 1867, either by the company or
by any person who, under the Companies acts, is authorised to
present a petition to wind up a company (see ante, p. 624),
or by any person upon whose application the Board of Trade
may proceed in pursuance of 30 & 31 Vict. c. 127, § 32 (c) ;
and for the purpose of the winding up the company shall be
deemed an unregistered company, which may be wound up
under the Companies acts {d).
(q) 13 & 14 Vict. c. 83, § 18. Rail. Co., Ir. Rep. 4 Eq. 538, as to
(r) § 19. the rights of the depositors.
(.5) §§ 2-11. («) 30 & 31 Vict. c. 127, § 31,
(0 §§ 4 and 12. cl. 3.
(it) 13 & 14 Vict. c. 83, § 14. (6) 13 & 14 Vict. c. 83, § 29,
(«) lb. §§ 16, 19-28, 35 and 36. amended by 32 & 33 Vict. c. 114,
§ 35 is amended by 30 & 31 Vict. § 10, now repealed 46 & 47 Vict.
c. 127, § 31, by substituting 21st c. 39.
May, 1867, for 11th Feb. 1850. (c) The substance of which is
(y) Ibid. § 28. given ante, p. 902.
(2) Ibid. § 31, cl. 3, 32 & 33 Vict. (d) 32 & 33 Vict. c. 114, § 4.
114, § 5. See Water ford, d-c,
904 SCHEMES OF ARRANGEMENT.
Bk. IV. Chap. 4. Under the joint operation of these acts and special acts, the
Application of deposit money may usually be applied in compensating land-
owners for loss occasioned by the abandonment of the under-
taking 0) ; and in paying creditors if the money to pay them
cannot be raised by calls (/) ; but the deposit is not applicable
to pay promoters, parliamentary agents, and people employed
in the promotion of the company (g).
2. Arrangements between railway companies and their
creditors.
In addition to the provisions relating to the abandonment of
railway undertakings noticed above, the Railway Companies
act, 1867 (h), contains provisions relating to railway companies
unable to meet their engagements with their creditors. Until
this act was passed, railway companies which had exhausted
their capital and powers of borrowing, and were desirous of
raising further capital to meet their engagements, were com-
pelled to apply to Parliament for a special act conferring
further powers of raising money. Parliament in dealing with
these applications was in the. habit of considering how far the
arrangements proposed as to the new capital were assented to
or dissented from by the proprietors of the existing capital of
the company. The object of the Railway Companies act,
1867, is to dispense with special applications to parliament,
and to give a parliamentary sanction to a scheme approved by
the Chancery Division of the High Court, and assented to by
certain majorities of the various classes of persons interested
in the undertaking (i). The act provides that where a rail-
(e) Ruthin and Cerrig-y-Dnridion 484; Barry Rail. Co., 4 Ch. D. 315 ;
Rail. Act, 32 Ch. D. 438 ; Potteries, Brampton and Longtoum Rail. Go.,
Shrewsbury and North Wales Rail. 10 Eq. 613. A solicitor and parlia-
Co., 25 Ch. D. 251. mentary agent was paid in Kensing-
(/) Bradford 'Tramways Co., 4 Ch. ton Station Act, 20 Eq. 197; but
D. 18, and the next note. query this case, see ante, 147, note
(g) See as to promoters, &c, Birm- (u), and the cases just cited.
ingham and Lichfield Junction Rail. (h) 30 & 31 Vict. c. 127.
Co., 28 Ch. D. 652 ; Lowestoft and (i) See Cambrian Rail. Co., 3 Ch.
Yarmouth Tramways Co., 6 Ch. D. 278, 294.
SCHEMES OF ARRANGEMENT.
905
way company (k) is unable to meet its engagements, the direc- Bk. IV. Chap. 4.
tors may prepare a scheme of arrangement between the
company and its creditors, and may file such scheme in
Court (I). After the filing of the scheme, and until its enrol-
ment as directed in a subsequent section of the act, the Court
may, on the application of the company, restrain any proceed-
ing against the company (m), whether by persons bound by the
scheme, or by those not so bound (n). The Court, however,
in the exercise of its discretion, will not suspend the proceed-
ings of any outside creditor, unless the scheme proposed will,
if it reaches maturity, afford a reasonable prospect of providing
for the payment of the claims of creditors, and thus compensate
them for a temporary suspension of their remedies (o), nor will
it compel creditors to accept securities instead of money in
payment of their debts, except with their consent (p).
Notice of the scheme is directed to be published in the
" Gazette " (#), and after such publication no process against
the company is available without leave of the Court (r). After
the filing of the scheme, or within such extended time as the
Court has allowed, the directors may apply to the Court to
confirm the scheme. Notice of that application must, how-
ever, be published in the " Gazette " (s).
The scheme is to be taken to be assented to by the holders
of mortgages or bonds or debenture stock (t), by holders of
(/;) For definition of the word Bail. Co., Ir. Kep. 4 Eq. 538, the
" Company," see § 3. A tramway Court declined to sanction a scheme
company is not a railway, Brent- which made no provision for paying
ford and Isleworth Tramways Co., 26 the creditors of the company.
Ch. D. 527 ; but a dock company (p) West Cork Railway, Ir. Rep.
maybe also a railway company. See 7 Eq. 96; and cases in note
East and West India Docks Co., 38 (0).
Ch. D. 596. These were not, how- (g) § 8.
ever, decisions on the act in ques- (r) § 9. A sci. fa., against a
tion. shareholder under the Companies
(/) § 6. See, too, Potteries, die, clauses act, 1845, § 36, may be re-
EaU. Co., 5 Ch. 67. strained under this section. Devon
(m) § 7. "'"' Somerset Rail. Co., 6 Eq. 610.
(n) Cambrian Rail. Co. Scheme, 3 (*) § 16.
Ch. 278. (0 § 10- A debenture holder
(0) See per V. -C. Gifl'ard, in who lias obtained judgment is, for
Bristol and North Somerset Rail. the purposes of this sect., precisely
Co., 6 Eq. 448, 453. In Letterkenny in tlie same position as those who
906 SCHEMES OF ARRANGEMENT.
p.k. IV. Chap. 4. rent-charges (it), and by preference shareholders (x) respec-
tively, when it is assented to in writing by three-fourths in
value of the class in question ; and by the ordinary share-
holders of the company, when it is assented to at an extraor-
dinary general meeting of the company specially called for that
purpose (y). If the company is a lessee of a railway, the
scheme is to be taken to be assented to by the lessors, if
three-fourths in value of the holders of mortgages, bonds, and
debenture stock, and of each class of preference shareholders
in the leasing company have given their assent in writing to
the scheme, and if the ordinary shareholders of the leasing
company have, at an extraordinary general meeting", called for
that purpose, assented to it (s).
The Court may then confirm the scheme, upon being satis-
fied that it has been duly assented to by all the classes of
interests mentioned above (a).
Railway Com- r^ scheme when confirmed must be enrolled in the
pames acts,
1867-9. Chancery Division of the High Court, and then becomes as
effectual as an act of Parliament (b) : and in the absence of
fraud (c) the scheme, when enrolled, binds the company, and all
the persons whose assents were necessary to it ; but it does not
bind any outside creditor unless he has actually assented to
it (d). After the enrolment no appeal can be made against the
order confirming the scheme (e) ; but in order to prevent an
appeal from being defeated, the Court will suspend the en-
rolment (e). Upon the enrolment the summary powers given
have not. Potteries, &c, Rail. Co. (d) Cambrian Rail. Co. Scheme,
V. Minar, 6 Cb. 621. 3 Ch. 278 ; Bristol and North
(u) § 11. Somerset Rail. Co., 6 Eq. 448 ; East
(x) § 12. "'"' West Junction Rail. Co., 8 Eq.
(y) § 13. 87,91 ; Stevens v.MidHants Rail. Co.,
(z) § 14. 8 Ch. 1069 ; and compare Navan
(a) § 17. There is no clause ex- and Kingscourt Rail. Co., 17 L. R,
pressly requiring all these assents, Ir. 410. See, also, Re Stevens, Ir.
but § 17 implies that they are neces- Rep. 6 Eq. 604, where a judgment
sary. See The Cambrian Rail. Co.'s creditor and statutory mortgagee of
Scheme, 3 Ch. 278, 284, V.-C. Wood's the company was held not bound by
judgment. its scheme, though duly confirmed
(6) § 18. *>y the Court.
(c) East and West Junction Rail. (e) Devon and Somerset Rail. Co.
Co., 8 Eq. 87. 6 Eq. 615, 618.
SCHEMES OF ARRANGEMENT. 907
to the Court by §§ 7 and 9 cease ; and afterwards no injunc- Bk. IV. Chap. 4.
tion can be obtained by the company to restrain proceedings
against it except upon bill filed (/).
The confirmation and enrolment of the scheme must be
published in the " Gazette " ([/).
The practice of the Court under this act is regulated by the
General Order and Rules, dated 24th January, 1868 (h),
which, however, it has not been considered necessary to print
in the present treatise.
(/) Potteries, <kc, Rail. Go., 5 Ch. (h) These rules are issued under
67. the authority given by § 22.
(</) § 19-
909
APPENDIX.
No. I.
FOREIGN COMPANIES.
It is an established rule of private international law that a corporation Appendix I.
•duly created according to the laws of one state may sue and be sued in its -j, '.
•corporate name in the courts of other states (a). This rule was recognised J^-IT* C°m'
by our own courts in the case of The Dutch West India Company v. p • •, f
Moses (b), and since that decision there have been several instances of f0reicn°com-
actions and suits instituted both by and against foreign incorporated panies.
companies (c).
The individual members of a foreign incorporated company cannot be
sued for the debts of the company contracted in another country where
it carries on business (d). This was decided in the case of a company
incorporated in Victoria and carrying on business in "Western Australia
but not registered there : nor was it material that by the laws of that
state the members of a native company which had never been registered
were liable to be sued individually for the company's debts (d).
But a corporation created by a government, not recognised by her
Majesty, cannot be recognised as a corporation by the courts of this
country (e).
A foreign corporation may sue here by the name it has acquired
by reputation (/).
As regards procedure (</), and parties to actions, the law of the country
(a) See Story, Conflict of Laws, § 565 ; H. & N. 410.
2 Kent's Com. p. 284, e<l. 6. (d) Bateman v. Service, 6 App. Ca.
(b) 1 Str. 611. 386, and see infra, p. 913.
(c) See, for example, Westman v. (e) The City of Berne v. Bank of
Aktiebolaget, die., Fabrik, 1 Ex. D. England, 9 Yes. 347.
237 ; The National Bank of St. Charles (/) Dutch West India Co. v. Moses,
v. Bamales, 1 Car. & P. 569 ; South 1 Str. 611.
Carolina Bank v. Case, 8 B. & Cr. 427 ; (g) See, as to service of writs on
Lewis v. Baldwin, 11 Beav. 153 ; Sud- agent, &c, here, Mackereth v. Glasgow
Imov. Dutch Rhenish RaU. Co., 21 Beav. and S.-W. Bail. Co., L. R. 8 Ex. 149 •
43; Maclaren v. Stainton, 16 Beav. 279; Llumeux Limon <Ss Co. v. Hong Komj
Mackenzie v. Sliqo and Sfuinnon Bail. Banking Corp., 33 Ch. D. 446 ■ Baillie
Co., 8 Q. B. 862. As to actions for v. Qoodwin & Co., ib. 604.
calls, see Wclland Bail. Co. v. Blake, C
910
ArPENDIX NO. I.
Contracts with
foreign corpo-
rations in
En 2 land.
Appendix I. in which the action is brought prevails ; and consequently a company
— empowered by a foreign or colonial government to sue and be sued by a
public officer, cannot so sue or be sued here (h).
It lias been decided that where a company formed in a colony is
empowered by an act of the Colonial legislature to sue and be sued
by a public officer, and an action is brought against that officer in the
colony, and judgment is recovered against him there, such judgment
may be enforced in this country against a member of the company
resident here, although he was not in fact party to the proceedings in the
colony (i).
Notwithstanding some Canadian decisions to the contrary (k), it is con-
ceived that a foreign corporation can sue in this country on all contracts
entered into with it in this country, provided such contracts are warranted
by the constitution of the corporation and are not illegal by English law (I).
The Canadian decisions are based on the theory, that as no state can
validly authorise a body corporate to transact business out of its own
territory, no corporation can sue in a foreign country on a contract entered
into there. But the true question is, not whether one state can legally
grant powers of contracting, &c, in another state, but to what extent
does one state recognise the acts of another ? The right of a foreign
corporation to sue in this country is conferred by English law, and not
by the law of the state creating the corporation. The right of a corporation
to sue in a foreign country, as well as its right to contract in a foreign
country, are both based, not on the law of the state creating the body
corporate, but on the extent to which the foreign country chooses to
recognise that law. It is curious, however, that this point should never
have been discussed or decided in this country.
Calls made under a Colonial act are simple contract debts (m) ; and
under the old practice never indebted might have been pleaded in an
action for such calls (n).
Residence of The residence and domicil of an incorporated company are determined
companies. by the situation of its principal place of business. This is not only the
opinion of the most recent writers on private International law (o), but is
(h) See Aliron v. Furnixal, 1 Cr. M.
& R. 277, where two out of three Syndics
sued successfully, although it was ob-
jected that the other ought to have
joined. A company empowered by a
colonial statute to sue and be sued is not
a corporation ; Aldridge v. Cato, L. R.
4 P. C. 313, which see as to the con-
struction of such a statute. See also
Bulloch v. Caird, L. R. 10 Q. B. 276,
where one member of a Scotch firm was
sued here on a contract made in Scotland
with the firm.
(i) Bank of Australasia v. Harding,
9 C. B. 661 ; Bank of Australasia v.
Nias, 16 Q. B. 717; Kelsall v. Mar-
shall, 1 C. B. N. S. 241.
(k) Bank of Montreal r. Bathune, 4
Up. Can. Q. B. 341 ; Genesee Mutual
Ins. Co. v. Westman, 8 ib. 487 ; Union
Rubber Co. v. Hibbard, 6 Up. Can. C.
P. 77. If carefully examined, these
cases only decide what is uncpiestionably
true, viz., that a corporation formed to
carry on a particular business in one
country exceeds its powers if it carries
on a similar business out of that country.
At the same time the judges who decided
those cases based their judgments on
supposed grounds of international law.
(I) See ace. Bank of Augusta v. Earle,
13 Peters, 519.
(m) Welland Bail. Co. v. Blake, 6 H.
& N. 415.
(n) Ib.
(o) See 4 Phill. Int. Law, pp. 138,
128, 129 ; and Westlake, Priv. Int. Law
§§ 55 et seq.
FOREIGN COMPANIES. 911
supported by the decisions of our own courts (})). By the principal place Appendix I.
of business is meant the place where the administrative business of the ~~
company is conducted ; this may not be where its manufacturing or other
business operations are carried on (q).
A company registered under the Companies act, 1862, is for all the Residence of
purposes of that act, resident in that part of the United Kingdom in which registered
the company's registered office is situate (see §§ 8 — 10) ; and for the comPailie8-
purpose of determining the Court in which an unregistered company is to
be wound up under that act, the company is to be treated as registered in
that part of the United Kingdom in which its principal place of business
is situate (see § 199) (?•).
As regards payment of income tax, it has been decided that income Residence for
tax is payable by an English registered company carrying on business purposes of
abroad on the whole of its profits wherever earned, and not only on so income-tax.
much of them as are received in England (s) ; but that foreign companies
carrying on business here are only assessable in respect of their profits
earned here (t), or remitted here for division amongst the shareholders (u).
These cases turn on the language of the income tax acts, and illustrate the
meaning of. reside and carry on business as applied to companies and their
agents. b<& ^dsLA-^^jiH zxhxsLRA^jB^* ty-lv^t-vi.
But although a foreign company may have its principal place of busi- Jurisdiction
ness abroad, and be therefore domiciled abroad, it may be sued in the over foreign
courts of this country if it is in fact amenable to the process of our courts. comPanies.
There is no difference in this respect between a foreign individual and a
foreign corporation, except that the individual may be amenable to process
both hi his person and in his property, whilst a corporation domiciled
abroad can, it is conceived, only be amenable to process through its
property and its agents. In neither case, however, does the simple fact
of a foreign domicil exclude the jurisdiction (x).
Service of writs out of the jurisdiction is now governed by E. S. C. Service of
1883, Ord. XL, to which the reader is referred. A Scotch Lnsurauce W|"its out of
the jurisdic-
tion.
(p) In Taylor v. Crowland Gas Co., H. & C. 729.
11 Ex. 1 ; Adams v. The Great Western (a) See the cases in the last note, and
Rail. Co., 6 H. & N. 404 ; and Shields in the next two notes.
v. The Great Northern Rail. Co., 7 Jur. (?■) Jones v. Scottish Accident Ass.
N. S. 631, it was held that a company Co., 17 Q. B. D. 421, noticed infra, and
dwells (in the sense in which the word is see the next note.
used in the County Court acts) at its (s) Cesena Sidphur Co. v. Nicholson,
principal place of business, e.g., in the and Calcutta Jute Mills Co. v. Nicholson,
case of the Great Western Rail. Co. at 1 Ex. D. 428 ; Alexander Water Co. v.
Paddington. Again, in Minor v. The Musgrave, 11 Q. B. D. 174.
London and North-Western Rail. Co., (t) Att.-Gcn. v. Alexander, L. R. 10
1 C. B. N. S. 325, and Corbett v. The Ex. 20 ; Werle & Co. v. Colquhoun, 20
General Steam Navigation Co., 4 H. & Q. B. D. 753.
N. 482, it was held that a company, («) Gilbertson v. Fergusson, 7 Q. B.
whose principal place of business was in D. 562. See also, as to this, Colquhoun
London, but which had an office in a v. Brooks, 21 Q. B. D. 52, and 19 ib.
country town, did not cany on business 174, as to profits remitted from a firm
there within the meaning of the same abroad to a partner here.
acts. See also, Le Taillcur v. South- (x) See Maclaren v. Stain ton, 16
Eastern Rati. Co., '■'> C. P. 1). 18 ; Keyn- Beav. 279, and the judgment of Lord
sham Blue Lias Lime Co. v. Barker, 2 St. Leonards, 5 H. L. C. 450.
912
APPENDIX NO. I.
Appendix I.
Jurisdiction
over foreign
companies.
Interference
with foreign
companies.
office registered in Scotland, but having an agency and a chief office in
England, and issuing policies here, was held not to be domiciled or
ordinarily resident in England so as to authorize the service of a writ on
it in Scotland under this rule (y).
The jurisdiction of English coui'ts over foreign companies was discussed
in Norris v. Chambres, 29 Beav. 246, aff. on appeal, 7 Jur. N. S. 689, in
which it was held that a mere lien on property situate abroad cannot be
enforced here, unless such lien is founded on some contract or transaction
creating a personal obligation on the part of the defendant in favour of the
plaintiff.
The question whether a foreign company having its principal place of
business abroad, but having an agent and an office for the sale of its goods
here, was within the jurisdiction of the English courts, was much dis-
cussed in The Garron Company v. Maclaren (z) ; and although in that case
there was a difference of opinion as to the propriety of making a decree
against the company, there appears to have been no difference of opinion
as to the mere question of jurisdiction.
Companies formed in this country, for the purpose of carrying on busi-
ness abroad, but having their principal place of business here, are clearly
subject to the jurisdiction of English courts (a) ; and may be wound up
in this country (6).
The jurisdiction of the courts of one country over companies domiciled
in another country, appears therefore to depend upon whether those com-
panies are, through their property or their agents, amenable to the process
of the courts in which the companies are sued. Assuming a foreign
company to be amenable to the process of our courts, there is nothing to
prevent its being sued or even adjudicated bankrupt here, if it could be
so adjudicated were it an English company (c).
A foreign company cannot be registered as an existing company
under the Companies act, 1862 (d) ; nor can it be wound up under that
act unless it has a branch office (not merely agents) in England, and assets
which an English court can reach (d). Practically it would be impossible
to wind it up completely ; and if it were a corporation there would be no
jurisdiction to dissolve it.
A foreign company which is amenable to the jurisdiction of the courts
of this country may be restrained from suing its own members in the courts
of the country where its principal place of business is situate (e). But
if disputes between the members, or between the company and strangers,
(y) Jones v. Scottish Accident Ass.
Co., 17 Q. B. D. 421.
(z) 5 H. L. C. 416 ; Maclaren v.
Stainton, 16 Beav. 279. See also as to
income tax the cases in note (s).
(a) See Buenos Ayres Rail. Co. v.
North Rail. Co. of Buenos Ayres, 2
Q. B. D. 210, where an action was held
to lie for rent of land abroad ; Madrid
and Valencia Rail. Co., 3 De G. & S.
127, and 2 Mac. & G. 169 ; Butt v.
Monteaux, IK. k 3. 98.
(6) Princess Reuss v. Bos, L. R. 5 H.
L. 176.
(c) See, as to bankruptcy, Royal Bank
of Scotland v. Cuthbert, 1 Rose, 462 ;
and Forth Marine Ins. Co., 9 Beav.
469.
(d) See Bidkeley v. Schutz, L. R. 3
P. C. 764 ; Lloyd Generate Italiano,
29 Ch. D. 219, and compare Matheson
Brothers, Limited, 27 Ch. D. 225 ; Com-
mercial Bank of South Australia, 33
Ch. D. 174, and 36 ib. 522, and ante,
p. 622. See also Bateman v. Service,
6 App. Ca. 386.
(e) Carron Co. v. Maclaren, 5 H. L.
C. 416.
FOREIGN COMPANIES. 913
have arisen and been the subject of Litigation and been adjudicated upon Appendix I.
by a foreign court of competent jurisdiction, its decision will not be re- _
viewed here at the instance of a member resident here and not a party to
the proceedings abroad (/).
It has also been decided that an application by a company to a foreign
government for further powers ought not to be restrained by the courts of
this country ((/).
Again, although a corporation duly created in one State, is recognised Laws applic-
as a corporation by other States, the transactions of that corporation are able to the
governed, not by the law of the State creating it, but by the law of the transactions
place where those transactions occur, and by the constitution of the cor- „„mn„J00
A m r j companies.
poration (Ji). This last is important ; for the capacity of a corporation to
acquire rights and incur obligations is limited by the objects to attain
which it is created, and these limits must be regarded whenever and
wherever the extent of the corporate powers has to be judicially decided (i).
But it by no means follows that what a corporation can lawfully do in
the State where it was created, it can also lawfully do in every other State
-which recognises its existence. This must always be borne in mind when,
as frequently occurs, a company is formed here for the purpose of transact-
ing business in the colonies or in foreign countries. Suppose, for example,
that a registered company is formed in England for the purpose of working
mines or cultivating estates in a colony. If, by the laws of that colony, a
corporation cannot hold lands, the company will not be able to attain its
object without obtaining special authority from the proper quarter to hold
lands in the colony.
The proper mode of transferring shares in a foreign incorporated com- Dealings in
pany depends on the laws by which the company is incorporated. But shares,
foreign laws of estoppel do not govern transactions in this country ; nor
are documents which are treated abroad as negotiable instruments neces-
sarily so treated here (k).
One of the most important questions which arise with reference to Liabilities of
foreign companies, relates to the personal liabilities of their members. If a the^ members
company is incorporated by a foreign government, so that by the constitu-
tion of the company the members are rendered wholly irresponsible, 01
only to a limited extent responsible, for the debts and engagements of the
company, the liability of the members, as such, will be the same in this
(/) See Sudlow v. Dutch Rhenish valid by the law of France, was held
Rail. Co., 21 Beav. 43 ; Bank of Aus- valid, whatever might have been the
tralasia v. Harding, 9 C. B. 661, and case if the contract had been made in
v. Nias, 16 Q. B. 717 ; Kelsallv. Mar- England. See, also, Maunder v. Lloyd,
shall, 1 C. B. N. S. 241. As to suits 2 J. & H. 718. It will be assumed in
here and abroad concurrently, see Rent the absence of proof to the contrary,
v. Young, 9 Sim. 180, and Transatlantic that general principles of commercial and
Co. v. Pietroni, Johns. 604 ; and as to mercantile law are the same abroad as
the two suits being for the same matter, here. Pickering v. Stephenson, 14 Eq.
see Hunter v. Stewart, 10 W. li. 176, 322.
L. J. (i) See the Canadian cases, noticed
(g) Bill v. Sierra Nevada, dr., Co., ante, p. 910, note (k).
1 Be Gr. F. & J. 177. (k) Williams v. Colonial Bank, 38
(h) In Branley v. South-Eastern Hail. Ch. D. 388, and other cases noticed
Co., 12 C. B. N. S. 63, a contract made ante, pp. 481-3.
by an English company in Boulogne, and
L.C. 3 N
of foreign
companies.
914
APPENDIX NO. I.
Appendix I.
Enforcing
foreign
judgments.
Convention
with France,
and other
countries.
country as in the country which created the corporation (I). But with
respect to unincorporated companies, the measure of liability in respect of
any given transactions, seems, upon principle, to depend upon the law of
the place where the transactions in question occurred (lex loci contractus).
The law of agency, as administered in that place, woidd, it is conceived,
have to be applied ; and the law of the place where the company might be
considered as domiciled would only be material for the purpose of deter-
mining the authority given by the members to the agents by whom the
transactions in question were conducted. See, upon this difficult subject,
Story's Conflict of Laws, § 320 a, and JVestlalce's Private Intern. Law, § 222
et seq. ; Maunder v. Lloijd, 2 J. & H. 718.
If a judgment has been obtained abroad against a company (m), or a
member of a company (n), such judgment may be enforced here, although,
by reason of service having been substituted or dispensed with, the judg-
ment may have been obtained without actual notice to the defendant (o).
The following convention upon the subject to which this note relates
has been concluded between England and France : —
" Art. I. The high contracting parties declare that they mutually grant
to all companies and other associations, commercial, industrial, or financial,
constituted and authorised in conformity with the laws in force in either
of the two countries, the power of exercising all their rights, and of appear-
ing before the tribunals whether for the purpose of bringing an action, or
for defending the same, throughout the dominions and possessions of the
other power, subject to the sole condition of conforming to the laws of
such dominions and possessions.
" Art. II. It is agreed that the stipulations of the j^receding article shall
apply as well to companies and associations, constituted and authorised
previously to the signature of the present convention, as to those which
may subsequently be so constituted and authorised.
" Art, III. The present convention is concluded without limit as to
duration. Either of the high powers shall, however, be at liberty to
terminate it by giving to the other a year's previous notice. The two
high powers, moreover, reserve to themselves the power to introduce into
the convention, by common consent, any modifications which experience
may show to be desirable."
Similar conventions have been made with Belgium (see Pari. Papers
for 1862, vol. xxii. p. 1), with Italy (see Pari. Papers for 1867 — 8, vol.
lxxiii. p. 533), with Germany (see Pari. Papers for 1874, vol. lxxvi.
p. 139), with Spain (see Pari. Papers for 1883, vol. lxxxii. p. 659), and
with Greece (see Pari. Papers for 1888, C. 5556).
(I) General Steam Nav. Co.v. Guillan, Ex. D. 17, affirming L. R. 9 Ex. 345,
11 M. & W. 877. And see Bateman v.
Service, 6 App. Ca. 386.
(m) Sheehy v. Professional Life Ass.
Co., 3 C. B. N. S. 579.
in) See Vallee v. Dumergue, 4 Ex.
290. See, also, Copin v. Adamson, 1
where a French company had obtained
judgment in France against an English
member.
(o) lb. ; compare Mceus v. Thelusson,
8 Ex. 638 ; and Schibsby v. Westenholz.
L. R. 6 Q. B. 155.
INDUSTRIAL AND PROVIDENT SOCIETIES. 915
No. II.
INDUSTRIAL AND PROVIDENT SOCIETIES.
Industrial and Provident Societies, as governed by the Industrial and Appendix II.
provident societies act, 1876 (39 & 40 Vict. c. 45) (a), are a peculiar
kind of limited joint-stock company. They are societies formed for the
purpose of carrying on any labour, trade, or handicraft, whether wholesale
or retail, including the buying and selling of land and banking, but subject
to certain restrictions ; but no member other than a registered Industrial
and Provident Society can have a greater interest in the funds of the
society than 2001. (§ 6). There must be seven members at least (§ 7) ;
and infants over sixteen may be members (§ 11, cl. 9). Such a society is
formed by being registered by the registrar of friendly societies (§§ 7 and 8) ;
and, when registered, it becomes a body corporate by its registered name,
having a perpetual succession and a common seal, with power to hold
lands and buildings, and with limited liability (§ 11). It can bind itself
by promissory notes and contracts in the same way as companies registered
under the Companies act, 1862 (§11, cl. 10 and 12).
The registrar's certificate vests in the society all property that may at
the time be vested in any person in trust for it (§ 11) (b).
The society, being incorporated, must sue and be sued by its corporate
name ; and its members are individually liable for its debts and engage-
ments only so far as the statute declares. As in the case of companies
registered under the Companies act, 1862, so in the case of societies regis-
tered under the act now in question, the members are not liable to have
executions issued against them in respect of judgments obtained against
the society. The members can only be reached individually by the
process of winding up (c). For the protection of creditors, however, the
society is bound to have a registered office (§ 10), and to use the word
limited as is required in the case of companies registered, with limited
liability, under the Companies act, 1862 (§ 7), and to make certain
annual returns to the registrar (§ 10) ; and to have its accounts audited
(ib.). A register of members is required to be kept, and is frimA facie
evidence that the persons named in it are members (§ 11, cl. 11).
(a) Amended by 43 Vict. c. 14, § 8, (c) See, under the older acts, Dean v.
as to income tax ; 46 & 47 Vict. c. 47, Mcllard, 15 C. B. N. S. 19 ; Linton v.
§ 3, which extends the power of nomina- Blakeney Industrial School, 3 H. & C.
tion given by § 11, cl. 5 & 6 ; 47 & 48 853, and Gray v. Raper, L. R. 1 C. P.
Vict. c. 43, § 4, which repeals § 19, 694, as to debts contracted before regis-
cl. 6, and part of cl. 6. tration ; and see the last case as to stay-
(6) See Queensbury Industrial Society ing actions when the society is being
v. Pickles, L. U. 1 Ex. 1. wound up.
3 N 2
916
APPENDIX NO. II.
Appendix II.
Rules, &c.
Winding up.
Contributories
and their
liabilities.
The Industrial and provident societies act, 1876, contains little respect-
" ing the management of the affairs of a society registered under it or the
rights of its members. Provision, however, is made for the settlement of
disputes by arbitration (§ 14) (d) ; for the official inspection of the affairs
of the company upon the application of a certain proportion of the mem-
bers (§ 15) ; for the inspection by the members of the books of the com-
pany (§ 10) ; and for the nomination by members not entitled to more
than 501., of persons to succeed to their shares on their death (§ 11, cl. 5).
Subject, however, to these enactments, the rights of the members inter se,
and the management of the society's affairs, are left to be provided for by
the rules of the society. The rules bind the members as if they had
entered into a covenant to observe them (§ 11, cl. 2). They may be
altered from time to time, and must be registered by the registrar, and a
copy of them must be delivered by the society to any person on demand,
on payment of a sum not exceeding one shilling (§ 9).
The act in question does not contain any form of rules ; but the
schedule to the act contains a list of the matters to be provided for by
the rules of societies established under it.
A society registered under the act is empowered to amalgamate with
a similar society (§ 16, cl. 3) ; and to register itself as a company under
the Companies act, 1862 (§ 16, cl. 4) ; but a special resolution is necessary
for these purposes (ib.).
Societies registered under the act in question may be wound up either
by the court or voluntarily : but the court having jurisdiction over the
winding up, is the county court of the district in which the society's
registered office is situate (§ 17). Societies not registered under the act,
but capable of being registered under it, may apparently be wound up
either in the Chancery division of the High Court or in the county
court (e).
With respect to contributories and their liabilities, there is no sub-
stantial difference between societies registered under this act, and com-
panies registered under the Companies act, 1862 (see 39 & 40 Vict.
c. 45, § 17) (/).
Arbitration. (d) Upon the corresponding provisions
in the older acts, the leading cases are
Fleming v. Self, Kay, 518, and 3 De G.
M. & G. 997 ; Farmer v. Giles, 5 H.
& N. 753 ; Morrison v. Glover, 4 Ex.
430 ; Cutbill v. Kingdom, 1 Ex. 494 ;
R. v. Traford, 4 E. & B. 122 ; Kelsall
v. Tyler, 11 Ex. 543 ; Smith v. Lloyd,
26 Beav. 507, in which it was held that
the provisions as to arbitration did not
apply ; and Crisp v. Bunbury, 8 Bing.
394 ; Reeves v. White, 17 Q. B. 995 ;
R. v. Mildenhall Savings Bank, 6 A.
& E. 952 ; Timms v. Williams, 3 Q. B.
413 ; Thompson v. Planet Building So-
ciety, 15 Eq. 333 ; Wright v. Monarch
Investment Building Society, 5 Ch. D.
726 ; Hueklc v. Wilson, 2 C. P. D. 410 ;
where it was held that they did. See,
also, Armitage v. Walker, 2 K. & J.
211 ; Wright v. Desley, 4 H. & C. 209 ;
Edwards v. Aberayron Soc, 1 Q. B. D.
563. As to Friendly Societies, Royal
Liver Friendly Society, 35 Ch. D. 332.
As to Building Societies, see infra,
p. 921, notes (c) and (rf). ( £,.t (uloU^Aja. j,.L->
(e) See Midland Counties Benefit
Building Soc, 4 De G. J. & Sm. 468,
reversing S. C, 10 Jur. N. S. 505 ;
Chatham Industrial Co-operative Soc,
10 Jur. N. S. 933; Rotherhithe, cfcc,
Soc, 32 Beav. 57 ; Fountain's case, 11
Jur. N. S. 553.
(/) See Fountain's case, 11 Jur.
N. S. 553, L. C. as to liability in
respect of debts contracted before regis-
tration.
INDUSTRIAL AND PROVIDENT SOCIETIES.
917
A society under the act is, however, dissolved by the order or the Appendix II.
resolution to wind it up as the case may be, or by an instrument of Dissoiution.
dissolution signed by three-fourths of the members. (§ 17). The notice of
dissolution must be advertised in the Gazette, and, unless steps are taken
within three months in the county court to set aside the dissolution, the
society is to be treated as dissolved from the date of the advertisement
(ib. cl. 3 e). But this must mean dissolved so far as is consistent with the
proper winding up of its affairs (g).
Trade union societies, being in restraint of trade, were illegal before Trades Union
34 & 35 Vict. c. 31 (h). Now, however, such societies may be registered
under the act last cited ; but neither the Friendly societies acts nor the
Industrial and provident societies act, nor the Companies acts, apply to
them (i).
(g) See ante, p. 870. As to paying but compare R. v. Stainer, L. R. 1 Cr.
the -whole assets to the last surviving Ca. Res. 230, as to protection against
member, see Spiller v. Maude, 10 Jur. embezzlement.
N. S. 1089. (*) 34 & 35 Vict. c. 31, § 5. See B.
(h) See Hornby v. Close, L. R, 2 Q. v. Registrar of Friendly Societies, L. R.
B. 153 ; Farrer v. Close, h. R. 4 Q. B. 7 Q. B. 741.
602 ; Hilton v. Eckersley, 6 E. & B. 47 ;
918
APPENDIX NO. in.
No. III.
BENEFIT BUILDING SOCIETIES.
Appendix III.
Benefit Build-
ing Societies.
Acts now in
force.
Objects of such
societies.
Formation of
societies.
Benefit Building Societies are associations of a special kind, formed
and regulated under particular acts of Parliament for particular purposes ;
and are distinct as well from joint-stock companies and common law
partnerships (a), as from friendly industrial and provident societies (b). ^
The acts now in force are the principal act of 1874, 37 & 38 Vict.
c. 42, together with the amending acts, 38 Vict. c. 9, 40 & 41 Vict,
c. 63, and 47 & 48 Vict. c. 41 (c).
The object of these societies is defined by the principal act (37 & 38
Vict. c. 42) to be the raising by subscriptions of the members a stock or
fund for making advances to members out of the funds of the society
upon mortgage security (§ 13), and they may be either terminating or
permanent (§§ 1, 3, 5). There is no limit to the number of members
(§ 13) (d) ; and infants may be members, but cannot vote or hold office
while under age (§ 37).
The society is formed by receiving a certificate (e) of incorporation from
the registrar of friendly societies (/), and when registered it becomes a
body corporate by its registered name, having perpetual succession and a
common seal (§ 9), with power to hold land with right of foreclosure
(§ 13) and to purchase or lease buildings for its business purposes (§37).
The liability of the members is limited (§ 14) (g). Societies existing at
the date of the principal act and certified and enrolled under the act of
Will. 4, are upon the enrolled transcript or a certified copy of the rules
(a) See per Lord Selborne in Brownlie
v. Russell, 8 App. Ca. p. 248 ; Auld v.
Glasgow Working Men's Building Soc,
12 App. Ca. p. 201.
(b) The acts governing such societies
seem applicable only to societies whose
object is combination for labour and
trade. See Midland Counties B. B.
Soc, 4 De G. J. & S. 468, per Turner,
L. J.
(c) The earlier act, 6 & 7 Will. 4, c.
32, is now repealed ; see 37 & 38 Vict,
c. 41 (§ 7) ; but the repeal is not to
affect any subsisting society certified
under the act until such society shall
have obtained a certificate of incorpora-
tion under the new act. See, also, 38
Vict. c. 9.
(d) But it seems that there must be at
least four ; see § 17, which requires before
registration a copy of the rules to be
signed by three intending members and
the secretary.
(e) As to the form of the certificate,
see schedule to 40 & 41 Vict. c.-63.
(/) The Court cannot declare the
certificate of incorporation void on the
ground that it has been obtained irregu-
larly, Glover v. Giles, 18 Ch. D. 173.
See, with respect to the registrar, 38 &
39 Vict. c. 60 (§ 10).
(g) Brownlie v. Russell, 8 App. Ca.
235 ; Doncaster Permanent B. Soc, 3
Eq. 158.
BENEFIT BUILDING SOCIETIES. 919
of such society being delivered to and registered by the registrar entitled Appendix III.
to a certificate of registration ; provided the application to the registrar is
made by authority of a general meeting of the society (§§ 10, 11, 12).
Persons intending to establish a society after the date of the act
(Nov. 2, 1874) are entitled to a certificate of registration on transmitting
to the registrar two copies of the rules agreed on signed by three such
persons ; provided such rules contain all the provisions set out in § 16 of
the act and conform to the act, and the proposed name is not identical or
similar to that of a subsisting society (§ 17).
On the incorporation of the society all rights of action and other rights
and interests in real and personal estate belonging to or held in trust for
the society vest in it (h).
Any society registered under the principal act is empowered to amalga- Amalgamation
mate with a similar society upon such terms as may be agreed upon (§ 33) : of societies,
but creditors are not to be prejudiced. Notice of such amalgamation is
to be sent to the registrar and registered by him, and such registration is
to operate as an effectual conveyance of the funds and property of the
uniting society to the united society (i).
The matters required by § 16 to be set forth in the rules of such
societies, and the provisions of the act relating to such matters are —
1. The name of the society and chief office or place of meeting for the Name of
business of the society. society.
§ 22 of the principal act enables a society to change its name : and
40 & 41 Vict. c. 63, § 2, enables a change to be made in the chief offices.
Notice of the change is in each case to be given to the registrar, who is to
register the change, and give a certificate of registration : see the form
given in the schedxde to the last mentioned act
2. The manner in which the stock or funds of the society are to be Funds of the
raised, the terms upon which paid-up shares (if any) are to be issued and society,
repaid, and whether preferential shares (k) are to be issued, and if so
within what limits, if any ; and whether the society intends to avail
itself of the borrowing powers contained in the act, and if so within what
limits, not exceeding the limits presented by the act.
The power to borrow is given by § 15 of the act (Z), sub-sect. 5 of Bon-owing
which requires §§14 and 15 of the act to be printed or written on all powers,
securities given for any deposit or loan by a society (m). If a society
boiTOWs without power, or exceeds its borrowing powTer, the society is
not bound (n) ; but by § 43 the directors or committee of management of
the society are to be personally liable for the amount so received in
excess (o).
(/() 37 & 38 Vict. c. 42, §§ 27 & 28, (m) This is, however, merely direc-
and 40 & 41 Vict. c. 63, §§ 3 & 4. tory, and the security will be valid,
(i) 40 & 41 Vict. c. 63, § 5. Haivkins1 case, 23 Ch. D. 452.
(k) See, as to preference shares, {a) Ex parte Watson, 21 Q. B. D.
Murray v. Scott, 9 App. Ca. 519. 301 ; Blackburn Benefit Building Soc.
(I) See, as to the power of borrowing v. Cunliffe Brooks, ubi supra ; Chapleo
apart from the act, Exparte Williamson, v. Brunswick Soc, 6 Q. B. D. 696, and
5 Ch. 309 ; Blackburn Benefit Building ante, p. 189. See, as to the right to
Soc. v. Cunliffe Brooks, 22 Ch. D. 61, recover from the society any money spent
9 App. Ca. 859. 29 Ch. D. 902 ; Murray in paying tbe societies' debts, ante, pp.
v. Scott, 9 App- Ca. 519 ; Hill's case, 9 189 ct scq., and 236 et seq.
Eq. 605 ; Davis' case, 12 Eq. 516 ; (o) See, as to this section, Looker v.
Laing v. Reed, 5 Ch. 4, ante, p. 189. IVrigley, 9 Q. B. D. 397. As to the
920
APPENDIX NO. III.
Appendix III.
Application
and investment
of funds.
Withdrawal of
shares.
Mortgages
of such
societies.
Alteration of
rules.
3. The purposes to which the funds of the society are to be applied,
and the manner in which they are to be invested (p).
§§25 and 26 of the principal act deal with the manner of investing
the surplus funds of a society and the transference of such investments.
4. The terms upon which shares may be withdrawn and upon which
mortgages may be redeemed (q).
a. As to withdrawal of shares. — The right of a member to withdraw
and the terms upon which he may do so depend upon the contract to be
found in the rules (r). The right of withdrawal in the case of members
who have given mortgages to the society, is intimately connected with
their right to redeem their mortgages, which depends in each case on the
terms of the mortgage and on the rules (s).
b. As to the mortgages of a society. — Mortgages are excepted from the
general exemption from stamp duty in respect of instruments required or
authorised by the act or rules of the society given by § 41 of the principal
act it). § 42 enacts that a receipt endorsed on any mortgage shall be a
sufficient discharge without reconveyance (u), but the act allows a recon-
veyance to be made (x).
As to the terms on which a mortgage can be redeemed see the cases
collected in note (s).
5. The manner of altering and rescinding the rules of the society, and
of making additional rules.
§ 18 provides for the way in which the rules may be altered (y). All
rides must be registered by the registrar and a copy of them must be
supplied by the society to any person on demand on payment of a sum
liability of directors apart from the act,
see Richardson v. Williamson, L. R. 6
Q. B. 276, and Chapleo v. Brunsivick
Soc., 6 Q. B. D. 696, and ante, p. 189.
(p) See, as to the power to invest in
land under the earlier acts, Mallock v.
Jenkins, 14 Beav. 633 ; Guiness v.
Harrison, 26 Beav. 435 ; Re Kent B.
B. Soc, 1 Dr. & Sm. 417.
(q) See, on this subject, Fleming v.
Self, 3 De G. M. & G. 997, Kay, 518 ;
Smith v. Pilkington, 1 De G. F. & J.
120 ; Archer v. Harrison, 7 De G. M. k
G. 404 ; Matterson v. Elderfield, 4 Ch.
207.
(»•) See ante, pp. 523, 872 ; A uld v.
Glasgow Working Men's Building Soc,
12 App. Ca. 197 ; BrownZiey. Russell, 8
Aj>p. Ca. 235 ; Walton v. Edge, 10 App.
Ca. 33 ; Tosh v. North British Building
Soc, 11 App. Ca. 489; Walker v.
Genera/ Mutual Building Soc, 36 Ch.
D. 780.
(s) The leading cases on this subject
are Fleming v. Self, 3 De G. M. & G.
997 ; Archer v. Harrison, 7 ib. 404 ;
Smith v. Pilkington, 1 De G. F. & J.
120 ; Matterson v. Elderfield, 4 Ch.
207 ; Farmer v. Smith, 4 H. & N. 196 ;
Handley v. Farmer, 29 Beav. 362 ;
Sparrow v. Farmer, 26 ib. 511.
(t) See, under the earlier acts,
Williams v. Hayward, 22 Beav. 220 ;
Thorn v. Croft, 3 Eq. 193, which
decided tbat mortgages did not require
a stamp. This is now altered by 33 &
34 Vict. c. 97, § 112.
(u) As to the effect of a statutory
receipt, see Pease v. Jackson, 3 Ch.
576 ; Fourth City Mutual Benefit Build-
ing Society v. Williams, 14 Ch. D. 140 ;
Robinson v. Trevor, 12 Q. B. D. 423 ;
Sangster v. Cochrane, 28 Ch. D. 298 ;
Carlisle Banking Co. v. Thompson, ib.
399. For the form of the receipt, see
the schedule to the act of 1874.
(x) As to the effect of a reconveyance
as distinguished from a receipt, see
Carlisle Banking Co. v. Thompson, 28
Ch. D. 399.
(y) As to the form of a certificate of
alteration, see 40 & 41 Vict. c. 63,
schedule.
BENEFIT BUILDING SOCIETIES. 921
not exceeding Is. (§17). By § 21 the rules are made to bind all Appendix HI.
members and officers of the society, and all persons claiming on account _
of a member or under the rides (z). A certified copy is prirnd facie
evidence, § 20.
6. The manner of appointing, remunerating and removing the board of Appointment,
directors or committee of management, auditors, and other officers. f^'' ° lrec"
See generally as to this, ante, p. 298 et seq.
7. The manner of calling general and special meetings of the members. Calling of
See generally as to this, ante, p. 303 et seq. meetings.
8. Provision for an annual or more frequent audit of the accounts and Audit of
inspection by the auditors of the mortgages and other securities belonging accounts,
to the society.
§ 40 provides for an annual audit and statement of the funds, and a
copy of such accounts and statement is to be sent to each member (a) and
also to the registrar.
9. Whether disputes between the society and any of its members or Provisions as
any persons claiming through any member or under the rules, shall be to arbitration,
settled by reference to the Court (6), or to the registrar, or by arbitration.
What sort of disputes must be referred and what may be the subject
of an action, has given rise to much controversy. By 47 & 48 Vict,
c. 41, § 2, disputes which must be referred are confined to those which
arise between the society and a member in his capacity of member (c),
and do not include disputes arising out of any mortgage he may have
given unless the rules so provide (d).
The rules having settled to which tribunal disputes are to be referred,
§§ 34-36 provide for the regulation of such tribunal and enable its
determination to be enforced. Such determination is to be final : but
any one of the tribunals may state a case for the opinion of the Supreme
Court on any question of law.
10. Provision for the device, custody, and use of the seal of the society, Seal of com-
which shall in all cases bear the registered name thereof. V™y.
11. Provision for the custody of the mortgage deeds and other securities Custody of
belonging to the society. deeds.
12. The powers and duties of the board of directors or committee of Liabilities and
management, and other officers. duties of direc-
§ 23 requires all officers of a society who have charge of money to
give security (e), and by § 24, such officers are bound to account for and
(2) As to tbe liability of members to (d) See, as to this, Western Suburban
new rules, see Re Norwich and Norfolk- Building Soc. v. Martin, 17 Q. B. D.
Permanent B. B. Soc., 1 Ch. D. 481. 609. The enactment in the text has
(a) As to how far audited accounts altered the law laid down in some pre-
bind the members, see Holgate v. Shutt, vious cases relating to mortgages, viz.,
28 Ch. D. 111. Municipal Permanent, d-c, Soc. v. Kent.
(6) This means the County Court, see 9 App. Ca. 260 ; Hack v. London Build.
37 & 38 Vict. c. 42. Soc, 23 Ch. D. 103 ; Wright v. Monarch,
(c) See, as to this, Municipal Build- Ac, Soc, 5 Ch. D. 726, and restores the
tag Soc. v. Richards, 39 Ch. D. 372 ; law as it stood under older enactments,
Walker v. General Mutual Building Mulkern v. Lord, 4 App. Ca. 182 ;.
Soc, 36 ib. 777 ; Thompson v. Planet Fleming v. Self, 3 De G. M. & G. 997.
Building Soc, 15 Eq. 332. See, also, (e) For the form of the security to be
the cases on other acts collected, ante, given, see the schedule to the act of
p. 916, note (d). 1874.
922
APPENDIX NO. III.
Appendix III. pay over all moneys in their hands. §§ 29 & 30 contain provisions
Fines and
forfeitures.
Dissolution.
enabling the directors to deal with the share of a member dying intestate.
But any person withholding or misapplying money or making false returns
is liable to a penalty (§§ 31, 43) (/).
13. As to the fines and forfeitures to be imposed on members of the
society (g).
14. The manner in which the society, whether terminating or per-
manent, shall be terminated or dissolved.
§ 32 provides that any society under the act may be terminated or be
dissolved —
(1.) Upon the happening of any event declared by its rules to be the
determination of the society.
(2.) By dissolution in manner prescribed by its rules.
(3.) By dissolution with the consent of three-fourths of the members
holding not less than two-thirds of the number of shares in the society.
(4.) By winding up either voluntarily or under the supervision of the
Court : if the Court shall so order on the petition of any member
authorised by three-fourths of the members present at a general meeting
of the society or on the petition of any judgment creditor for not less than
£50, but not otherwise, and notice of the commencement and termination
of every dissolution and winding up must be sent to the registrar, and
registered by him.
No reference is made to the Companies acts, but the winding up must
be under those acts (h).
The principal difficulties which arise on winding up have been noticed
already, see as to
Proof of debts, ante, bk. iv. c. 1 , § 9.
Contributories, ante, ib. § 10.
Distribution of assets amongst advanced and unadvanced members, ante,
p. 871.
(/ ) As to the general rights and lia-
bilities of directors and others, see ante, p.
298 ctseq. ; and Small v. Smith. lOApp.
Ca. 119, where it was held the directors
had no power to give a guarantee.
(g) As to the construction of rules im-
posing fines, see Re Tierney, 9 Ir. K.
Eq. 1. As to forfeiture of shares, see
Card v. Carr, 1 C. B. N. S. 197 ; Moore
v. Rawlins, 6 C. B. N. S. 289; and ante,
p. 528, &c.
(h) Midland Counties B. B. Soc, 4
De G. J. & S. 468 ; Andrew or Jones v.
Swansea Cambrian B. B. Soc, 50 L. J.
Q. B. 428 ; Be Queens B. B. Soc, 6
Ch. 815 : Be Professional, dec, B. B.
Soc, ib. 856 ; Sunderland Universal
Build. Soc, 21 Q. B. D. 349, a volun-
tary winding up.
LIST OF STATUTES. 923
No. IV.
CHRONOLOGICAL LIST OF STATUTES RELATING TO
COMPANIES.
The following is a chronological list of (it is believed) all the general Appendix IV.
statutes which have from time to time been passed, governing English ~
joint-stock and other companies, and having any direct bearing on the law statutes.
of partnership as applied to them (a) : —
1541. 33 Hen. 8, c. 27. This act renders void rules tending to restrict
the power of majorities of certain corporate bodies to make
grants or to elect governors, &c.
1719. 6 Geo. 1, c. 18. — This is the celebrated " Bubble act," (See ante,
p. 130).
Section 4 was repealed as to the recovery of double damages
by 8 Geo. 1, c. 15, § 25 ; section 12, prohibiting marine
insurance by partners, was repealed by 5 Geo. 4, c. 114 ;
and sections 18 & 19, prohibiting joint-stock companies with
transferable shares, were repealed by 6 Geo. 4, c. 91, and
sections 2, 3, 12, 18 — 28, were repealed by the Statute law
revision act, 1867, 30 & 31 Vict. c. 59.
1721. 8 Geo. 1, c. 15. — Section 25 repealed so much of section 4 of 6
Geo. 1, c. 18, as gave a right to recover double damages.
Repealed (except § 25) by the Statute law revision act,
1867, 30 & 31 Vict, c, 59.
1766. 7 Geo. 3, c. 48. — The object of this act was to prevent the multi-
plication of votes by splitting stock and distributing shares,
and to prevent the declaration of dividends except half yearly.
The act only applies to certain companies formed before the
act came into operation. The manufacture of votes in the
way forbidden by this act is not illegal where the act itself
does not apply. See ante, pp. 309 and 465.
1788. 28 Geo. 3, c. 53. — Section 2 (repealed by 6 & 7 Wm. 4, c. 109)
prohibited partnerships of coal merchants.
Repealed by the Statute law revision act, 1861, 24 & 25
Vict. c. 101.
1800. 39 & 40 Geo. 3, c. 28. — Section 15 prohibited banking partner-
ships of more than six persons ; but the act was, in this
respect, repealed by 7 Geo. 4, c. 46.
Sections 1 — 12, and part of § 13, were repealed by the
(a) See ante, p. 2, for a sketch of the are not collected in this list, although one
history of companies. The acts relating or two of them are noticed,
to Friendly Societies and Building Societies
924
APPENDIX NO. IV.
Appendix IV.
List of statutes.
Statute law revision act, 1871, 34 & 35 Vict. c. 116, and
section 17 was repealed by the Statute law revision act,
1887, 50 & 51 Vict. c. 59.
1824. 5 Geo. 4, c. 114. — This act repealed 6 Geo. 1, c. 18, § 2.
Repealed by the Statute law revision act, 1873, 36 & 37
Vict. c. 91.
1825. 6 Geo. 4, c. 91.— This repealed 6 Geo. 1, c. 18, §§ 18 & 19.
Section 2 (repealed by 7 Win. 4 & 1 Vict. c. 73) em-
powered the Crown, in charters of incorporation, to provide
that the members of the incorporated body should be indi-
vidually liable for its debts.
Repealed by the Statute law revision act, 1873, 36 & 37
Vict. c. 91.
1826. 7 Geo. 4, c. 46. — Repealed 39 & 40 Geo. 3, c. 28, § 15.
Provided for the establishment of joint-stock banking com-
panies with public officers, by whom they could sue and be
sued.
Amended by 1 & 2 Vict. c. 96, and 3 & 4 Vict. c. Ill ;
and as to the issue of notes, &c, by bankers, by 3 & 4 Wm, 4,
c. 83 ; ib. c. 98 ; 4 & 5 Vict." c. 50 ; 7 & 8 Vict. c. 32 ;
8 & 9 Vict. c. 76.
Repealed, as to companies formed since May, 1844, by 7 &
8 Vict. c. 113 ; and as to companies formed before that time,
but registered under the acts of 1856 and 1857, by 20 & 21
Vict. c. 49.
Still in force as to companies formed before May, 1844,
and not registered under the acts of 1856 — 8 or 1862.
1833. 3 & 4 Wm. 4, c. 83. — An act to compel banks issuing promissory
notes, payable to bearer on demand, to make returns of their
notes in circulation, and to authorise banks to issue notes
payable in London for less than 50/.
See too 3 & 4 Wm. 4, c. 98 ; 4 & 5 Vict. c. 50 ; 7 & 8
Vict. c. 32 ; 8 & 9 Vict. c. 76.
Repealed as to §§ 1 and 3 by 37 & 38 Vict. c. 35.
1833. 3 & 4 Wm. 4, c. 98. — Relates to the issue of notes, &c, by
bankers. See the note on the last act.
Repealed as to §§ 5, 9, to 13, and 15 by 37 & 38 Vict. c. 35.
Section 7 repealed by the Statute law revision act, 1861,
24 & 25 Vict, c. 101.
1834. 4 & 5 Wm. 4, c. 94. — Authorised the Crown, by letters patent,
to empower companies to sue and be sued by their principal
officers.
Repealed by 7 Wm. 4 & 1 Vict. c. 73.
1836. 6 & 7 Wm. 4, c. 109.— Repealed 28 Geo. 3, c. 53.
Repealed by the Statute law revision act, 1874, 37 & 38
Vict. c. 35.
1837. 7 Wm. 4 & 1 Vict, c. 73. —The Companies letters patent act.
Repealed 6 Geo. 4, c. 91, § 2, and 4 & 5 Wm. 4, c. 94.
Empowers the Crown to grant companies the privilege of
suing and being sued in the name of an officer of the com-
pany, and to limit the liability of the shareholders to creditors.
Section 1 repealed by the Statute law revision act, 1874,
37 & 38 Vict. c. 35.
Construction of § 29 declared by 47 & 48 Vict. c. 56.
LIST OF STATUTES. 925
1838. 1 & 2 Vict. c. 10. — This act resembled the 4 & 5 Vict. c. 14, but Appendix IV.
applied only to companies formed before the then Session of t/ t of statutes
Parliament.
Repealed by the Statute law revision act, 1861, 24 & 25
Vict. c. 101.
1838. 1 & 2 Vict. c. 96. — Amended 7 Geo. 4, c. 46.
Continued by 2 & 3 Vict. c. 68 : and 3 & 4 Vict. c. 111.
Made perpetual by 5 & 6 Vict. c. 85.
1838. 1 & 2 Vict. c. 110. — Sections 14 and 15 rendered shares of
debtors, held in public companies, available for the payment
of judgment creditors, by means of charging orders.
Amended by 3 & 4 Vict. c. 82.
Though various parts of 7 & 8 Vict. c. 110 have been
repealed, §§14 and 15 are still in force. See rules of the
Supreme Court, 1883, O. XLVI.
1839. 2 & 3 Vict. c. 68. — Continued 1 & 2 Vict. c. 96 ; as to which
see above. Repealed by the Statute law revision act, 1874
(No. 2), 37 & 38 Vict. c. 96.
1840. 3 & 4 Vict. c. 82. — Amended 1 & 2 Vict. c. 110, §§ 14 & 15.
1840. 3 & 4 Vict. c. 111. — Continued 1 & 2 Vict. c. 96 ; and further
amended 7 Geo. 4, c. 46.
Section 1 is repealed, and section 2 is partly repealed by
the Statute law revision act, 1874 (No. 2), 37 & 38 Vict.
c. 96.
1841. 4 & 5 Vict. c. 14. — Authorises spiritual persons to hold shares in
companies.
Sections 2 & 3 repealed by 37 & 38 Vict. c. 96.
1841. 4 & 5 Vict. c. 50. — Relates to the issue of notes by bankers. See
observations on 3 & 4 Wm. 4, c. 83.
Repealed by 37 & 38 Vict. c. 96.
1841. 5 Vict. c. 5, § 4. — Authorises the restraining of transfers of
shares.
1842. 5 & 6 Vict. c. 85. — Perpetuated 1 & 2 Vict. c. 96.
Repealed by 37 & 38 Vict. c. 96.
1844. 7 & 8 Vict. c. 110. — Commonly called the Joint-stock companies
registration act of 1844.
The first act which provided for incorporation by mere
registration.
Amended by 10 & 11 Vict. c. 78 ; 18 & 19 Vict. c. 133.
Repealed by the acts of 1856-8, and by the Companies
act, 1862.
1844. 7 & 8 Vict. c. 111. — Provided for the winding up of companies
in bankruptcy.
Amended by 11 & 12 Vict. c. 45, and 20 & 21 Vict.
c. 78.
Repealed by the Companies act, 1862.
1844. 7 & 8 Vict. c. 113. — An act to regulate Joint-stock banks in
England.
Repealed 7 Geo. 4, c. 46, as regards companies formed
since May, 1884.
Extended to Scotland and Ireland by 9 & 10 Vict. c. 75.
Amended by 19 & 20 Vict. c. 100.
Repealed by 20 & 21 Vict. c. 49, and by the Companies
act, 1862.
List of statutes.
926 APPENDIX NO. IV.
Aitekdix IV. 1845. 8 & 9 Vict. c. 16. — An act for consolidating in one act certain
provisions usually inserted in acts, with respect to the con-
stitution of companies incorporated for carrying on under-
takings of a public nature.
The Companies clauses consolidation act.
Amended by 26 & 27 Vict. c. 118 ; 30 & 31 Vict. c. 127 ;
32 & 33 Vict. c. 48 ; and 51 & 52 Vict. c. 48.
Sections 152 and 164 are partially, and section 165 is
wholly, repealed by the Statute law revision act, 1875 (38
& 39 Vict. c. 66).
Sections 147, 155, and 159 are partially, and sections 148,
149, 153, and 157, and Schedule G. are wholly, repealed by
47 & 48 Vict. c. 43.
The Lands clauses consolidation act (8 & 9 Vict. c. 18),
and the Railways clauses consolidation act (8 &9 Vict. c. 20),
do not form part of the law of partnership.
1846. 9 & 10 Vict. c. 28. — An act to facilitate the dissolution of certain
railway companies.
This act (Lord Dalhousie's) only applied to railway com-
panies projected before July, 1846, and never incorporated by
act of parliament.
Repealed by the Companies act, 1862.
1846. 9 & 10 Vict. c. 75. — Extended 7 & 8 Vict. c. 113, to Scotland
and Ireland.
Repealed by the Companies act, 1862.
1847. 10 & 11 Vict. c. 78. — Amended 7 & 8 Vict. c. 110.
Repealed by the Companies act, 1862.
1848. 11 & 12 Vict. c. 45. — Amended 7 & 8 Vict. c. 111.
Amended by 12 & 13 Vict. c. 108 ; and by 20 & 21 Vict,
c. 78.
Repealed by the Companies act, 1862.
This act and the next are usually called the Winding-up
acts of 1848-9.
1849. 12 & 13 Vict. c. 108. — Amended the last act.
Repealed by the Companies act, 1862.
1850. 13 & 14 Vict. c. 83. — Facilitates the abandonment of railways,
and the dissolution of railway companies, empowered to make
railways by acts passed before August, 1850.
Amended and extended by 30 & 31 Vict, C 127 ; and 32
& 33 Vict. c. 114.
Section 34 is partially, and section 40 is wholly, repealed
by the Statute law revision act, 1875, 38 & 39 Vict. c. 66.
1852. 15 & 16 Vict. c. 31. — Industrial and provident societies act, 1852.
Repealed by 25 & 26 Vict. c. 87.
1855. 18 & 19 Vict. c. 133. — The first limited liability act.
Repealed by 19 & 20 Vict. c. 47.
1856. 19 & 20 Vict. c. 47. — The Joint-stock companies act, 1856.
Repealed, as to all companies registered under it, 7 & 8
Vict. cc. 110 and 111 ; 11 & 12 Vict. c. 45 ; 12 & 13 Vict.
c. 108 ; 18 & 19 Vict. c. 133.
Explained, as to insurance companies, by 20 & 21 Vict
c. 80.
Extended to banking companies by 20 & 21 Vict. c. 49.
LIST OF STATUTES. 927
Amended by 20 & 21 Vict. c. 14 ; and 21 & 22 Vict. c. 60. Appendix IV.
Repealed by the Companies act, 1862. ,
1856. 19 & 20 Vict. c. 100.— Amended 7 & 8 Vict. c. 113, now repealed. ° 3 a u es-
1857. 20 & 21 Vict. c. 14. — Amended 19 & 20 Vict. c. 47, as to which
see above.
Repealed by the Companies act, 1862.
1857. 20 & 21 Vict. c. 49. — The Joint-stock banking companies act,
1857.
Extended 19 & 20 Vict. c. 47, to banking companies.
Repealed as to companies registered under it, 7 Geo. 4,
c. 46 ; 7 & 8 Vict. cc. Ill, 113 ; 11 & 12 Vict. c. 45 ; 12
& 13 Vict. c. 108.
Amended by 21 & 22 Vict. cc. 60, 91.
Repealed by the Companies act, 1862.
1857. 20&21 Vict. c. 54. — An act to make better provision for the
punishment of frauds committed by trustees, bankers, and
other persons entrusted with property.
Applied to frauds by directors of companies.
Repealed by 24 & 25 Vict. c. 95.
1857. 20 & 21 Vict. c. 78. — Amended the act 7 & 8 Vict. c. Ill,
and also the " Joint-stock companies winding-up acts, 1848
and 1849."
Repealed by the Companies act, 1862.
1857. 20 & 21 Vict. c. 80. — Explained 19 & 20 Vict. c. 47, as regards
insurance companies.
Repealed by Companies act, 1862.
1858. 21 & 22 Vict. c. 60. — Amended the Joint-stock companies acts,
1856 and 1857, and the Joint-stock banking companies act,
1857.
Repealed by the Companies act, 1862.
1858. 21 & 22 Vict. c. 91. — Enabled Joint-stock banking companies to
be formed on the principle of limited liability.
Amended 20 & 21 Vict. c. 49.
Repealed by the Companies act, 1862.
1861. 24& 25 Vict. c. 96. The Larceny act, applies to frauds by
directors, &c.
Sections 105 and 112 are wholly, and sections 107, 110,
and 111, are partially repealed by 47 & 48 Vict. c. 43, but
§§ 81 — 86 which relate to fraudulent directors are unaltered.
1862. 25 & 26 Vict. c. 87. — The Industrial and provident societies act,
1862.
Amended by 30 & 31 Vict. c. 117 ; and 34 & 35 Vict,
c. 80.
Repealed by 39 & 40 Vict. c. 45.
1862. 25 & 26 Vict. c. 89. — The Companies act, 1862.
Amended by 30 & 31 Vict. cc. 47 and 131 ; 32 & 33
Vict. c. 19, § 38 ; 33 & 34 Vict. c. 104 ; 40 & 41 Vict.
c. 26 ; 42 & 43 Vict. c. 76 ; 43 Vict. c. 19 ; 46 & 47 Vict.
c. 28, which, however, has been repealed except as to Ireland
by 51 & 52 Vict. c. 62 : and as to Scotch liquidations, by 49
& 50 Vict. c. 23.
Repealed as to §§ 35 (in part) and 170, by 44 & 45 Vict.
c. 59 ; as to §§126 (in part), 206 (4), 207, 211 and 212,
by the Statute law revision act, 1875, 38 & 39 Vict. c. 66.
928
APPENDIX NO. IV.
Appendix IV. 1863
List of statutes.
26 & 27 Vict. c. 118. — Amended 8 & 9 Vict. c. 16.
Amended by 30 & 31 Vict. c. 127 ; and 32 & 33 Vict.
c. 48.
Sections 21 and 22 are repealed in part by the Statute law
revision act, 1875, 38&39 Vict, c. 66.
1864. 27 & 28 Vict.- c. 19. — The Companies seals act.
1865. 28&29 Vict. c. 78. — Mortgage debenture act, 1865.
Amended by 33 & 34 Vict. c. 20.
1865. 28 & 29 Vict. c. .86. — Law of partnership amendment act.
1867. 30 & 31 Vict. c. 29. — Makes contracts for the sale of shares in
Joint-stock banking companies void unless the numbers of
the shares are specified (Leeman's act).
30 & 31 Vict. c. 47. — Repealed § 114 of the Companies act,
1862.
30 & 31 Vict. c. 117. — Amended the Industrial and provident
societies acts.
Amended by 34 & 35 Vict. c. 80.
Repealed by 39 & 40 Vict. c. 45.
30 & 31 Vict. c. 127. — Relates to railway companies. Restricts
executions against their rolling stock and plant. Enables
binding schemes of arrangement to be made.
Amends 13 & 14 Vict. c. 83, as to the abandonment of
railways, &c.
Amended by 32 & 33 Vict. c. 114.
Section 37 repealed by the Statute law revision act, 1875 ;
38 & 39 Vict. c. 66.
The temporary protection given to rolling stock and plant
by this act was made perpetual by 38 & 39 Vict. c. 31.
30 & 31 Vict. c. 131. — The Companies act, 1867, amends the
Companies act, 1862.
Amended by 40 & 41 Vict. c. 26, and 46 & 47 Vict. c. 28.
Section 20 is repealed in part by the Statute law revision
and civil procedure act, 1881 ; 44 & 45 Vict. c. 59.
1868. 31&32 Vict. c. 68. — An act to facilitate liquidation in certain
cases of bankruptcy, arrangement, and winding up.
This act applies only to liquidations, &c, pending when
it passed.
1869. 32&33 Vict, c. 19. — The Stannaries act, 1869.
Amended by the Stannaries act, 1887 ; 50 & 51 Vict. c. 43.
Section 39 is repealed in part by the Statute law revision
act, 1883 ; 46 & 47 Vict. c. 39.
32 & 33 Vict. c. 48. — Amended the Companies clauses act, 1863.
32 & 33 Vict. c. 114. — Relates to the abandonment of railways.
Amends 13 & 14 Vict. c. 83 ; and 30 & 31 Vict. c. 127.
Section 10 is repealed by the Statute law revision act,
1883; 46 & 47 Vict. c. 39/
1870. 33 & 34 Vict. c. 20. — Mortgage debenture (amendment) act,
1870.
Amends 28 & 29 Vict. c. 78.
33 & 34 Vict. c. 61. — The Life assurance companies act, 1870.
Amended by 34 & 35 Vict. c. 58 ; 35 & 36 Vict. c. 41 ;
and 38 & 39 Vict. c. 60, §§ 4, 28, and 30.
Section 8 is repealed in part by the Statute law revision
act, 1883 ; 46 & 47 Vict. c. 39.
LIST OF STATUTES. 92.9
33 & 34 Vict. c. 104. — Amends the Companies act, 1862, so far Appendix IV.
as regards compromises and arrangements between creditors ■, ■ , {
and shareholders of Joint-stock and other companies in liqui-
dation.
1871. 34 & 35 Vict. c. 58. — Amends the Life assurance ' companies act,
1870.
Amended by 35 & 36 Vict, c. 41.
34 & 35 Vict. c. 80. — The Industrial and provident societies act,
1871.
Amends 25 & 26 Vict. c. 87 ; and 30 & 31 Vict. c. 117.
Kepealed by 39 & 40 Vict, c. 45.
1872. 35&36 Vict. c. 41. — Amends the Life assurance companies acts,
1870-1871.
1874. 37&38 Vict. c. 42, — Building societies act, 1874.
Section 32, clause 4, provides for the winding up of a
society governed by that act voluntarily, under the super-
vision of the Court or by the Court.
Amended by 38 & 39 Vict, c. 9 ; 38 & 39 Vict. c. 60,
§ 10 ; 40 & 41 Vict. c. 63 ; and 47 & 48 Vict. c. 41.
Sections 27 and 44 and the schedule are repealed in part
by the Statute law revision act, 1883 ; 46 & 47 Vict. c. 39.
1875. 38&39 Vict, c, 60. — Friendly societies act, 1875.
Amends 33 & 34 Vict. c. 61; and 37 & 38 Vict. c.
42, § 3.
38 & 39 Vict. c. 31 made § 4 of 30 & 31 Vict. c. 127 perpetual.
1876. 39 & 40 Vict. c. 45. — The Industrial and provident societies act,
1876.
Repeals 25 & 26 Vict, c 87 ; 30 & 31 Vict. c. 117 ; 34
& 35 Vict. c. 80.
Amended by 43 Vict, c 14, § 8 ; and 46 & 47 Vict. c. 47.
Section 4 and schedule 1 repealed by Statute law revision
act, 1883 ; 46 & 47 Vict. c. 39 ; and section 19 repealed in
part as to England by 47 & 48 Vict. c. 43, § 4.
1877. 40 & 41 Vict. c. 26.— The Companies act, 1877.
Amends the Companies acts, 1862 and 1867.
Is amended by 42 & 43 Vict, c. 76 ; and 43 Vict. c. 19.
1879. 42 & 43 Vict, c. 76. — The Companies act, 1879.
Repeals § 182 of 25 & 26 Vict. c. 89.
Amends 40 & 41 Vict, c. 26.
1880. 43 Vict. c. 19. — The Companies act, 1880.
Amends 25 & 26 Vict. c. 89 ; and 40 & 41 Vict. c. 26.
1883. 46&47 Vict. c. 28. — Companies act, 1883.
Amends 25 & 26 Vict. c. 89.
Repealed, except as to Ireland, by 51 & 52 Vict. c. 62.
46 & 47 Vict. c. 30. — The Companies (colonial registers) act,
46 & 47 Vict. c. 47. — Amends 39 & 40 Vict. c. 45.
1884. 47 & 48 Vict. c. 41. — Building societies.
Amends 37 & 38 Vict. c. 42.
47 & 48 Vict. c. 56. — Chartered companies act, 1884.
Declares construction of § 29 of 7 Will. 4 & 1 Vict,
/ & 26> A9 fee. Zf-^J-^^^f^^A <uU- i& &L -
1887. 50 & 51 Vict. c. 43! — Stannaries act; 1887.
Amends 32 & 33 Vict. c. 19.
L.C. 3 o
930
Appendix IV.
List of statutes.
Note on
these acts.
APPENDIX NO. IV.
50 & 51 Vict. c. 47. — Trustee savings bank act, 1887.
Section 3 declares that a trustee savings bank is an un-
registered association which may be wound up under the pro-
visions of the Companies acts.
51 Vict. c. 8. — Customs and inland revenue act, 1888.
Sections 11 — 17 relate to the stamp duties payable on the
capital of limited companies, and on various dealings with
bonds and share certificates.
51 & 52 Vict. c. 48. — Companies clauses consolidation act, 1888,
relating to votes by proxy.
51 & 52 Vict. c. 62. — Preferential payments in Bankruptcy actr
1888.
Repeals the Companies act, 1883 (46 & 47 Vict. c. 28)r
except as to Ireland.
An examination of the above list will show that in addition to the Com-
panies clauses consolidation act (8 & 9 Vict, c. 16, and the acts amending,
it), there were, prior to the passing of the Companies act, 1862, no less-
than seven classes of acts regulating Joint-stock companies. These acts
were as follows : —
1. 7 Geo. 4, c, 46, and acts amending it ; as to banking companies
established before May, 1844, and not registered under 20 & 21 Vict,
c. 49.
2. 7 Win. 4 & 1 Vict. c. 73, as to companies established by letters patent
from the Crown.
3. 7 & 8 Vict. c. 110, and acts amending it : as to insurance companies,
and such other companies, if any, as were registered under it, and not
under 19 & 20 A'ict. c. 47.
4. The Winding-up acts, 7 & 8 Vict, c. Ill ; 11 & 12 Vict. c. 45 ; 12
& 13 Vict. c. 108 ; 20 & 21 Vict. c. 78 ; as to companies not registered
under 19 & 20 Vict. c. 47, and not a railway company incorporated by
act of Parliament.
5. The Winding-up act, 13 & 14 Vict. c. 83 : as to railway companies
incorporated by act of Parliament, and empowered to make a railway by
an act passed before August, 1850.
6. The Joint-stock companies acts of 1856 and 1857 ; as to all joint-
stock companies registered under them.
7. The Joint-stock banking companies acts of 1857 and 1858 ; as to
banking companies formed since May, 1844, or formed previously thereto
and registered under these acts.
Of these the 3d, 4th, 6th, and 7th are all repealed by the Companies
act, 1862.
The following tabular view of the acts now in force is appended
for facility of reference : —
TABLE OF STATUTES NOW IN FORCE.
931
PRINCIPAL ACTS NOW IN FORCE.
7 Geo. 4, c. 46
7 Wm. 4 & 1 Vict,
c. 73
1 & 2 Vict. c. 110
4 & 5 Vict. c. 14
5 Vict. c. 5
3 & 9 Vict. c. 1 6
13 & 14 Vict. c. 83
24 & 25 Vict. c. 96
Banking Companies (6)
Amended
generally by
as to issue of
notes, &c., by
Companies empowered by
letters patent to sue and
be sued
Charging shares by Judge's
order ....
Spiritual persons
Restraining transfers, &c.
The Companies clauses con-
solidation act
Winding-up act for railway
companies incorporated
by a special act of Parlia-
ment ....
Fraudulent directors, &c.
See SS 81 to 86.
AMENDING ACTS.
3 & 4 Wm. 4, c.
98.
1 & 2 Vict. c. 96 (c).
3 & 4 Vict. c. 111.
25 & 26 Vict. c. 89.
7 & 8 Vict. c. 32.
8 & 9 Vict. c. 76.
19 & 20 Vict. c. 20.
37 & 38 Vict. c. 96.
Section 29 is construed by 47 & 48
Vict. c. 56.
Amended by 3 & 4 Vict. c. 82 ; and
see R. S. C, 1883, Orel. XL VI.
§§ 2 & 3 repealed by 37 & 38 Vict. c. 96.
/ Amended by 26 & 27 Vict. c. 118 ;
J 32 & 33 Vict. c. 48 ; 38 & 39
) Vict. c. 66 ; 47 & 48 Vict. c. 43 ;
( and 51 & 52 Vict. 48.
I
Amended by 30 & 31 Vict. c. 127,
32 & 33 Vict. c. 114 ; and 38 &
39 Vict. c. 66.
25 & 26 Vict. c. 89 The Companies act, 1862 . (
28 & 29 Vict. c. 78
30 Vict. c. 29
The Mortgage debenture
act, 1865
An act to prevent the making
of contracts for the sale of
shares in joint-stock bank-
ing companies unless the
shares sold are numbered.
/Amended by 30 & 31 Vict. cc. 47
and 131 ; 32 & 33 Vict. c. 19, §
38 ; 33 & 34 Vict. c. 104 ; 38 &
39 Vict. cc. 66 and 77, § 10 ; 40
& 41 Vict. c. 26 ; 42 & 43 Vict,
c. 76 ; 43 Vict. c. 19 ; 44 & 45
Vict. c. 59 ; 51 & 52 Vict. c. 62 ;
as to Ireland, by 46 & 47 Vict,
c. 28 (see 51 & 52 Vict. c. 62) •
and as to Scotch liquidations, by
V 49 & 50 Vict. c. 23.
| Amended by 33 & 34 Vict, c. 20.
(b) The 7 Geo. 4, c. 46, is still in
force. But having regard to the subse-
quent acts, 7 & 8 Vict. c. 113, 20 & 21
Vict. c. 49, and 25 & 26 Vict. c. 89, those
provisions of 7 Geo. 4, c. 46, which relate
to the constitution of companies and
their powers of suing and being sued by
public officers, appear to apply only to
companies formed before May, 1844, and
not registered under 20 & 21 Vict. c. 49,
or 25 & 26 Vict. c. 89.
(c) The 1 & 2 Vict. c. 96, was con-
tinued by 2 & 3 Vict. c. 68, and 3 & 4
Vict. c. Ill, and was made perpetual by
5 & 6 Vict. c. 85, and by 37 & 38 Vict,
c. 96, which repealed 5 & 6 Vict. c. 85,
and those clauses in 1 & 2 Vict. c. 96,
which limited its duration.
3 o2
932 APPENDIX NO. IV.
PRINCIPAL ACTS NOW IN FORCE. AMENDING ACTS.
30&31 Vict. c. 127 Schemes of arrangement \ Amended by 32 & 33 Vict, c. 114 ;
between railway com- ( § 4 made perpetual by 38 & 39
panies and their creditors, C Vict. c. 31 ; § 37 repealed by 38
&c. ) & 39 Vict. c. 66.
32 & 33 Vict. c. 19 An act to amend the law"\
relating to mining part- ' Amended by 46 & 47 Vict. c. 39,
nerships, within the Stan- ( and 50 & 51 Vict. c. 43.
naries . . . ■ J
r Amended by 34 & 35 Vict. c. 58 ;
33 & 34 Vict. c. 61 The Life assurance com-) 35 & 36 Vict. c. 41 : 38 & 39
panies act, 1870 . . ') Vict. c. 60 ; and 46 & 47 Vict.
(. c. 39.
m , . . , n „ .-, . I Amended by 43 Vict. c. 14, § 8;
39 & 40 Vict. c. 45 The Industrial and Provident I 46 & 4? yict ^ g9 & 4? and
societies act, 1876 . • ( 47 & 48 yict c 43.
46 & 47 Vict. c. 30 The Companies (Colonial
Register) act.
25 & 26 vict. c. 89. — preliminary. 933
No. V.
THE COMPANIES ACTS, 1862—1886.
THE COMPANIES ACT, 1862.
25 & 26 Vict. Cap. 89.*
An act for the incorporation, regulation, and winding wp of trading com~
panies and other associations. [7th August, 1862.]
Whereas it is expedient that the laws relating to the incorporation, Appendix V.
regulation, and -winding up of trading companies and other associations ~~
should be consolidated and amended : be it therefore enacted by the
Queen's most excellent Majesty, by and with the advice and consent of
the lords spiritual and temporal, and commons, in this present parliament
assembled, and by the authority of the same, as follows :
Preliminary.
1. This act may be cited for all purposes, as "The Companies act, Short title.
1862."
2. This act, with the exception of such temporary enactment as is Commencement
hereinafter declared to come into operation immediately («), shall not °* act-
come into operation until the second clay of November, one thousand eight
hundred and sixty-two ; and the time at which it so comes into operation
is hereinafter referred to as the commencement of this act.
3. For the purposes of this act, a company that carries on the business Definition of
of insurance in common with any other business or Imsinesses shall be insurance corn-
deemed to be an insurance company (b). pany.
4. No company, association, or partnership consisting of more than ten Prohibition of
persons shall be formed, after the commencement of this act, for the pMS^rt^"
purpose of carrying on the business of banking (c), unless it is registered num]ie°#
as a company under this act, or is formed in pursuance of some other act r20 yict c< ^
of Parliament or of letters patent ; and no company, association, or partner- § 4; and 21 Vict,
ship consisting of more than twenty persons shall be formed, after the c. 14, § 3, and
commencement of this act, for the purpose of carrying on any other c- *9> § 13.]
business that has for its object the acquisition of gain (d) by the company,
* The references in the margins of the sections are to the corresponding sections
of the repealed Acts. The sections referred to have seldom been incorporated without
some alteration of more or less importance.
(a) See § 209. W. R. 138. See ante, pp. 114, 135.
(b) See ante, p. 114. {d) See 10 Cb. 546, 7. See ante,
(c) See District Savings Bank, 10 p. 114.
934 THE COMPANIES ACT, 1862.
Appendix V. association, or partnership, or by the individual members thereof, unless
it is registered as a company under this act, or is formed in pursuance of
some other act of Parliament, or of letters patent, or is a company engaged
in working mines within and subject to the jurisdiction of the Stan-
naries («).
Division of act. 5- Tni* act is divided into nine parts, relating to the following subject
matters :
The first part. — To the constitution and incorporation of companies
and associations under this act :
The second part. — To the distribution of the capital and liability of
members of companies and associations under this act :
The third part. — To the management and administration of com-
panies and associations under this act :
The fourth part, — To the winding up of companies and associations
under this act :
The fifth part. — To the registration office :
The sixth part. — To application of this act to companies registered
under the Joint-stock companies acts ;
The seventh part. — To companies authorised to register under this
act :
The eighth part. — To application of this act to unregistered com-
panies :
The ninth part. To repeal of acts and temporary provisions.
PART I.
Constitution and incorporation of companies and associations
under this act.
Memorandum of association (/).
Mode of forming 6. Any seven or more persons associated for any lawful purpose may,
company. Dy subscribing their names to a memorandum of association, and other-
[25 Vict. c. 47, -n-ige complying with the requisitions of this act in respect of registration,
§ 3'1 form an incorporated company, with or without limited liability (g).
Mode of limiting 7. The liability of the members of a company formed under this act
liability of may, according to the memorandum of association, be limited either to the
members. amount, if any, unpaid on the shares respectively held by them, or to such
amount as the members may respectively undertake by the memorandum
of association to contribute to the assets of the company in the event of
its being wound up.
Memorandum of 8. Where a company is formed on the principle of having the liability
association of a 0f its members limited to the amount unpaid on their shares, hereinafter
company limited referre(j to as a company limited by shares, the memorandum of associa-
y " .. " tion shall contain the following things ; (that is to say,) (h).
[20 \ict. c. ii, ^ ^ The name of tlxe pr0p0se<j company, with the addition of the
word " Limited" as the last word in such name (/) :
(e) See p. 114. ante, p. 117.
(/) For Forms, see Sched. 2. See (k) See § 179, cl. 1.
ante, p. 117. (i) See ante, p. 116.
(&•) See Form A. in Sched. 2. See
25 & 26 VICT. CAP. 89.— PART I. CONSTITUTION, ETC. 935
(2.) The part of the United Kingdom, whether England, Scotland, Appendix V.
or Ireland, in which the registered office of the company is
proposed to be situate :
(3.) The objects for which the proposed company is to be estab-
lished :
(4.) A declaration that the liability of the members is limited :
(5.) The amount of capital with which the company proposes to be
registered divided into shares of a certain fixed amount :
Subject to the following regulations :
(1.) That no subscriber shall take less than one share :
(2.) That each subscriber of the memorandum of association shall
write opposite to his name the number of shares he takes.
9. Where a company is formed on the principle of having the liability Memorandum of
<of its members limited to such amount as the members respectively under- association of a
take to contribute to the assets of the company in the event of the same ^"gXanteT
being wound up, hereinafter referred to as a company limited by guarantee,
the memorandum of association shall contain the following things (k) ; (that
is to say,)
(1.) The name of the proposed company, with the addition of the
word " Limited" as the last word in such name {1} :
(2.) The part of the United Kingdom, whether England, Scotland,
or Ireland, in which the registered office of the company is
proposed to be situate :
(3.) The objects for which the proposed company is to be established :
(4.) A declaration that each member undertakes to contribute to the
assets of the company in the event of the same being wound up,
during the time that he is a member, or within one year after-
wards, for payment of the debts and liabilities of the company
contracted before the time at which he ceases to be a member,
and of the costs, charges, and expenses of winding up the com-
pany, and for the adjustment of the rights of the contributories
amongst themselves, such amount as may be required, not
exceeding a specified amount.
10. Where a company is formed on the principle of having no limit Memorandum of
placed on the liability of its members, hereinafter referred to as an un- JXlite™ ora^
limited company, the memorandum of association shall contain the pany
.following things (m) ; (that is to say,) ^ yict c> 47>
(1.) The name of the proposed company : s 10.]
(2.) The part of the United Kingdom, whether England, Scotland,
or Ireland, in which the registered office of the company is
proposed to be situate :
(3.) The objects for which the proposed company is to be established. Stamp, signa-
11. The memorandum of association shall bear the same stamp as if it j^^^^i
were a deed, and shall be signed by each subscriber (ri) in the presence of of association.
and be attested by, one witness at the least, and that attestation shall be 2Q Vict c ^
a sufficient attestation in Scotland as well as in England and Ireland : it §§ 7 ami ii.]
shall, when registered, bind the company and the members thereof to the
(k) See Forms 1). and C. Sehed. 2 ; (»t) Form D. in Sched. 2 ; and see, as
.and as to the capital, see § 14. to capital, § 14.
{I) See, as to associations not having («) Signature by an agent is sufficient,
gain for their object, 30 & 31 Vict. Whitley Partners, Limited, 32 Oh. D.
c. 131, § 23 ; and ante, p. 114. 337.
936 THE COMPANIES ACT, 1862.
Appendix V. same extent as if each, member had subscribed his name and affixed
~~ his seal thereto, and there were in the memorandum contained, on the
part of himself, his heirs, executors, and administrators, a covenant to
observe all the conditions of such memorandum, subject to the provisions
of this act (see § 16).
Power of certain 12. Any company limited by shares may so far modify the conditions
companies to contained in its memorandum of association, if authorised to do so by its
alter menioran- regulations as originally framed, or as altered by special resolution in
duni of associa- manner hereinafter mentioned (o), as to increase its capital, by the issue
of new shares of such amount as it thinks expedient, or to consolidate and
§3 13and°37.]' divide its capital into shares of larger amount than its existing shares, or
to convert its paid-up shares into stock ; but, save as aforesaid, and save as
is hereinafter provided in the case of a change of name (p), no alteration
shall be made by adiy company in the conditions contained in its memo-
randum of association (q).
Power of com- 13- Any company under this act, with the sanction of a special resolu-
pauies to change tion of the company passed in manner hereinafter mentioned (r), and with
name. the approval of the Board of Trade, testified in writing under the hand
of one of its secretaries or assistant secretaries, may change its name (s) ;
and upon such change being made the registrar shall enter the new name
on the register in the place of the former name, and shall issue a certifi-
cate of incorporation altered to meet the circumstances of the case ; but
no such alteration of name shall affect any rights or obligations of the
company, or render defective any legal proceedings instituted or to be
instituted by or against the company ; and any legal proceedings may
be continued or commenced against the company by its new name that
might have been continued or commenced against the company by its
former name.
Articles of association.
Regulations to 14. The memorandum of association may, in the case of a company
be prescribed by limited by shares, and shall, in the case of a company limited by guarantee
articles of asso- or unlimited, be accompanied, when registered, by articles of association (t)
ciation. signed by the subscribers to the memorandum of association, and prescrib-
[20 \ ict. c. 47, ing gUch regidations for the company as the subscribers to the memorandum
^ "■' of association deem expedient ; the articles shall be expressed in separate
paragraphs numbered arithmetically : they may adopt all or any of the
provisions contained in the Table marked A. in the first schedule hereto :
they shall, in the case of a company, Avhether limited by guarantee or
unlimited, that has a capital divided into shares, state the amount of
capital with which the company proposes to be registered (u)} and in the
(o) See §§ 50 and 51. and ante, p. 405. See as to altering the
O) See §§ 13 and 20. regulations of the company, §§ 50, 176,
(q) The memorandum of association and 196 ; and see ante, pp. 334, 343.
may be altered in some other respects, (?•) See § 51.
see ante, pp. 334 and 343 ; and 28 & 29 (s) See, further, as to changing name,
Vict. c. 78, § 3, as to mortgage debeu- § 20, and ante, p. 112.
tures; 30 & 31 Vict. c. 131, § 9 et {t) See Forms B. and C. in Sched. 2.
seq., and 40 & 41 Vict. c. 26, 43 Vict. See ante, p. 118.
c. 19, and ante, p. 402, as to reduction (u) The capital of companies limited
of capital, and 30 & 31 Vict. c. 131, by shares appears in the memorandum of
§§ 21 and 22 as to subdivision of shares, association. See § 8.
25 & 26 vict. cap. 89. — part i. constitution, etc. 937
case of a company, -whether limited by guarantee or unlimited, that has Appendix V.
not a capital divided into shares, state the number of members with which
the company proposes to be registered, for the purpose of enabling the
registrar to determine the fees payable on registration : in a company
limited by guarantee or unlimited, and having a capital divided into
shares, each subscriber shall take one share at the least, and shall write
opposite to his name in the memorandum of association the number of
shares he takes.
1 5. In the case of a company limited by shares, if the memorandum of Application of
association is not accompanied by articles of association, or in so far as Table A.
the articles do not exclude or modify the regulations contained in the [20 Vict. c. 47,
Table marked A. in the first schedule hereto, the last-mentioned regula- § 9. ]
tions shall, so far as the same are applicable, be deemed to be the regula-
tions of the company in the same manner and to the same extent as if
they had been inserted in articles of association, and the articles had been
duly registered.
16. The articles of association shall be printed ; they shall bear the same Stamp, signa-
stamp as if they were contained in a deed, and shall be signed by each ture, and effect
subscriber in the presence of, and be attested by, one witness at the least, ° _ . *!. es ot
and such attestation shall be a sufficient attestation in Scotland as well as
in England and Ireland; when registered, they shall bind the company L ^q ^^q i'
and the members thereof to the same extent as if each member had sub-
scribed his name and affixed his seal thereto, and there were in such
articles contained a covenant on the part of himself, his heirs, executors,
and administrators to conform to all the regulations contained in such
articles, subject to the provisions of this act (as) ; and all moneys payable
by any member to the company, in pursuance of the conditions and regu-
lations of the company, or any of such conditions or regulations, shall be
deemed to be a debt due from such member to the company, and in
England and Ireland to be in the nature of a specialty debt (y).
General provisions.
1 7. The memorandum of association (z) and the articles of association, if Registration of
any, shall be delivered to the registrar of ioint-stock companies hereinafter lliemor|in(™ °
• iiiii • i • i i i n i • i i. association and
mentioned, who shall retain and register the same : there shall be paid to ai-ticles of asso-
the registrar by a company having a capital divided into shares, in respect ciation, with
of the several matters mentioned in the Table marked B. in the first fees as in
schedule hereto, the several fees therein specified, or such smaller fees as „a..e • or
the Board of Trade may from time to time direct ; and by a company not '
having a capital divided into shares, in respect of the several matters men- k , ~ i° ' C" '
tioned in the Table marked C. in the first schedule hereto the several fees
therein specified, or such smaller fees as the Board of Trade may from
time to time direct : all fees paid to the said registrar in pursuance of this
act shall be paid into the receipt of her Majesty's exchequer, and be
carried to the account of the consolidated fund of the United Kingdom of
Great Britain and Ireland.
(x) See as to the nature of the contract 39 Ch. D. 339 ; ante, pp. 147, 8.
entered into by becoming a member, [y) See § 75.
Eley v. Positive, etc., Ass. Co. 1 Ex. D. (z) 51 Vict. c. 8, § 11, requires a
88; Browne \.La Trinidad, 37 Ch. D. 1 ; statement of the nominal capital to be
Wheal Buller Consols, 38 Ch. D. 42 ; sent to the registrar, and imposes an ad
Boston Deep Sea Fulling Co. v. Ansell, valorem stamp duty of 2s. per £100.
938
THE COMPANIES ACT, 1862.
Appendix V.
Effect of regis-
tration.
[20 Vict. c. 47,
§ 13, and 21
Vict. c. 14, § 4.]
•Copies of memo-
randum and
articles to be
given to mem-
bers.
[20 Vict. c. 47,
S 27, and 21
Vict. c. 14,
§ 10.]
Prohibition
against identity
of names in
companies.
[20 Vict. c. 47,
§6.]
Prohibition
against certain
companies hold
ing land.
{20 Vict. c. 47,
§38.]
1 8. Upon the registration of the memorandum of association, and of the
articles of association in cases where articles of association are required
by this act or by the desire of the parties to be registered, the registrar
shall certify under his hand that the company is incorporated, and in the
case of a limited company that the company is limited : the subscribers
of the memorandum of association, together with such other persons as
may from time to time become members of the company, shall thereupon
be a body corporate by the name contained in the memorandum of asso-
ciation, capable forthwith of exercising all the functions of an incorpo-
rated company, and having perpetual succession and a common seal with
power to hold lands (a), but with such liability on the part of the members
to contribute to the assets of the company in the event of the same being
wound up as is hereinafter mentioned : a certificate of the incorporation
of any company given by the registrar shall be conclusive evidence that
all the requisitions of this act in respect of registration have been complied
with (b).
19. A copy of the memorandum of association, having annexed thereto
the articles of association, if any, shall be forwarded to every member, at
his request, on payment of the sum of one shilling or such less sum as
may be prescribed by the company for each copy ; and if any company
makes default in forwarding a copy of the memorandum of association
and articles of association, if any, to a member, in pursuance of this sec-
tion, the company so making default shall for each offence incur a penalty
not exceeding one pound.
20. No company shall be registered under a name identical with that by
which a subsisting company is already registered, or so nearly resembling
the same as to be calculated to deceive, except in a case where such sub-
sisting company is in the course of being dissolved and testifies its consent
in such manner as the registrar requires ; and if any company, through
inadvertence or otherwise, is, without such consent as aforesaid, registered
by a name identical with that by which a subsisting company is registered,
or so nearly resembling the same as to be calculated to deceive, such first-
mentioned company may, with the sanction of the registrar, change its
name ; and upon such change being made the registrar shall enter the new
name on the register in the place of the former name, and shall issue a
certificate of incorporation altered to meet the circumstances of the case ;
but no such alteration of name shall affect any rights or obligations of
the company, or render defective any legal proceedings instituted or to
be instituted by or against the company ; and any legal proceedings may
lie continued or commenced against the company by its new name that
might have been continued or commenced against the company by its
former name (c).
21. No company formed for the purpose of promoting art, science,
religion, charity, or any other like object, not involving the acquisition of
gain by the company or by the individual members thereof, shall, without
the sanction of the Board of Trade, hold more than two acres of land ;
but the Board of Trade may, by licence (d), under the hand of one of their
(«) As to companies not having gain
for their object, see § 21, and ante, p. 114.
(b) See, as to this, p. Ill ; see, also,
§192.
(c) See, further, as to changing name,
§ 13 j and see ante, pp. 112, 113, and
R. v. Registrar of Friendly Societies,
L. R. 7 Q. B. 741.
(d) See Form F. in Sched. 2.
25 & 26 vict. cap. 89. — part ii. distribution, etc. 939
principal secretaries, or assistant secretaries, empower any such company Appendix V.
to hold lands in such quantity and subject to such conditions as they
think fit.
PART II.
Distribution of capital and liability of members of companies
and associations under this act.
Distribution of capital.
22. The shares or other interest of any member in a company under Nature of inte-
this act shall be personal estate (e), capable of being transferred in rest in company,
manner provided by the regulations of the company (/), and shall not be [20 Vict. c. 47,
of the nature of real estate ; and each share shall, in the case of a company § 15.]
having a capital divided into shares, be distinguished by its appropriate
number (g).
23. The subscribers of the memorandum of association of any company Definition of
under this act shall be deemed to have agreed to become members of the "member."
company whose memorandum they have subscribed, and upon the regis- [20 Vict. c. 47,
tration of the company shall be entered as members on the register of §§ 8 and 19.]
members hereinafter mentioned ; and every other person who has agreed
to become a member of the company under this act, and whose name is
entered on the register of members, shall be deemed to be a member of
the company (h).
24. Any transfer of the share or other interest of a deceased member Transfer by
of a company under this act, made by his personal representative, shall, personal repre-
notwithstanding such personal representative may not himself be a member, sentative.
be of the same validity as if he had been a member at the time of the
execution of the instrument of transfer (i).
25. Every company under this act shall cause to be kept in one or more Register of
books a register of its members (k) ; and there shall be entered therein the members,
following particulars : — [20 Vict. c. 47,
(1.) The names and addresses, and the occupations, if any, of the §^ 16 an" 18^
members of the company, with the addition, in the case of a
company having a capital divided into shares, of a statement of
the shares held by each member, distinguishing each share by
its number, and of the amount paid or agreed to be considered
as paid on the shares of each member :
(2.) The date at which the name of any person was entered in the
register as a member :
(3.) The date at which any person ceased to be a member :
And any company acting in contravention of this section shall incur a
(c) See pp. 449 et seq. (k) As to inspection of the register,
(/) See Table A. Nos. 8-16, and 30 sec § 32 ; and as to its rectification, see
& 31 Vict. c. 131, § 26 et seq., and as to §§ 35 and 98. When shares have been
transfers of shares, ante, p. 464 et seq. converted into stock, see § 29. When
(rj) See ante, p. 50. . sliare warrants have been issued, see 30
(h) See § 18, and ante, pp. 43, 119. & 31 Vict. c. 131, § 31.
(i) See Table A. Nos. 12-16. and ante, As to registers generally, see ante,
pp. 468, 538. pp. 57 et seq.
940
THE COMPANIES ACT, 1862.
Appendix V.
Annual list of
members.
[20 Vict. c.
§17.]
47,
(2.)
(3.)
(4.)
penalty not exceeding live pounds for every day during which its default
in complying with the provisions of this section continues ; and every
director or manager of the company who shall knowingly and wilfully
authorise or permit such contravention shall incur the like penalty.
26. Every company under this act, and having a capital divided into
shares (/), shall make, once at least in every year, a list (m) of all persons
who, on the fourteenth day succeeding the day on which the ordinary
general meeting, or if there is more than one ordinary meeting in each
year, the first of such ordinary general meetings is held, are members of
the company ; and such list shall state the names, addresses, and occupa-
tions of all the members therein mentioned, and the number of shares
held by each of them, and shall contain a summary specifying the following
particulars (ri) :
(1.) The amount of the capital of the company, and the number of
shares into which it is divided :
The number of shares taken from the commencement of the
company up to the date of the summary :
The amount of calls made on each share :
The total amount of calls received :
(5.) The total amount of calls unpaid :
(6.) The total amount of shares forfeited :
(7.) The names, addresses, and occupations of the persons who have
ceased to be members since the last list was made, and the
number of shares held by each of them.
The above list and summary shall be contained in a separate part of the
register, and shall be completed within seven days after such fourteenth
day as is mentioned in this section, and a copy shall forthwith, be for-
warded to the registrar of joint stock companies (o).
27. If any company under this act, and having a capital divided into
shares, makes default in complying with the provisions of this act with
respect to forwarding such list of members or summary as is hereinbefore
mentioned to the registrar, such company shall incur a penalty not
exceeding five pounds for every day during which such default continues ;
and every director and manager (p) of the company who shall knowingly
and wilfully authorise or permit such default shall incur the like penalty.
Company to give 28. Every company under this act, having a capital divided into shares,
notice of consoh- fct fc h consoiijatecn anci divided its capital into shares of larger amount
elation, oi- of con- . . . . , L . „. .. , . ° , , , .
version of capital than its existing shares, or converted any portion ol its capital into stock (q),
shall give notice to the registrar of joint-stock companies of such consolida-
tion, division, or conversion, specifying the shares so consolidated, divided,
or converted (r).
29. Where any company under this act, and having a capital divided
into shares, has converted any portion of its capital into stock, and given
Penalty on com-
pany, &c, not
forwarding list of
members, &c,
to registrar.
[20 Vict. c. 47,
§18.]
into stock,
[21 Vict. c. 14,
§6.]
Effect of conver
sion of shares
into stock.
(I) As to other companies, see §§ 45
and 46.
(m) See the Form E. in Sched. 2.
(n) See, further, when shares have
been converted into stock, § 29 ; when
share warrants have been issued, 30 &
31 Vict. c. 131, § 32 ; when capital has
been reduced by a return of paid-up
capital, see 43 Vict. c. 19, § 6.
(o) As to their inspection, see §§ 32
and 174 (5).
(p) I.e., manager de facto. See Gib-
son v. Barton, L. K. 10 Q. B. 329, and
Briton Medical and General Life Assoc. ,
39 Ch. D. 61.
(?) Under § 12.
(»■) See § 34.
25 & 26 vict. cap. 89. — part ii. distribution, etc. 941
notice of such conversion to the registrar, all the provisions of this act Appendix V.
which are applicable to shares only shall cease as to so much of the capital f91 ,r. . .
as is converted into stock (s) ; and the register of members hereby required §§ 5-7.1
to be kept by the company, and the list of members to be forwarded to
the registrar, shall show the amount of stock held by each member in the
list instead of the amount of shares and the particulars relating to shares
hereinbefore required.
30. No notice of any trust, expressed, implied, or constructive, shall be No entry of trusf s
entered on the register, or be receivable by the registrar, in the case of on register,
companies under this act and registered in England or Ireland (t). [20 Vict. c. 47,
31. A certificate under the common seal of the company, specifying any $ X"-J
share or shares or stock held by any member of a company, shall be prima Certificate of
facie evidence of the title of the member to the share or shares or stock s aies 01 s oc '
therein specified («). fll^' °' 4"'
32. The register of members, commencing from the date of the registra-
tion of the company, shall be kept at the registered office of the company » ^ ^10n °
hereinafter mentioned : except when closed as hereinafter mentioned, it r2Q y. . ,-
shall during business hours, but subject to such reasonable restrictions as « 23.]
the company in general meeting may impose, so that not less than two hours
in each day be appointed for inspection, be open to the inspection of any
member gratis, and to the inspection of any other person on the payment
of one shilling, or such less sum as the company may prescribe, for each
inspection ; and every such member or other person may require a copy
of such register, or of any part thereof, or of such list or summary of
members as is hereinbefore mentioned, on payment of sixpence for every
hundred words required to be copied : if such inspection or copy is
refused, the company shall incur for each refusal a penalty not exceeding
two pounds, and a further penalty not exceeding two pounds for every
day during which such refusal continues ; and every director and manager
of the company who shall knowingly authorise or permit such refusal
shall incur the like penalty ; and in addition to the above penalty, as
respects companies registered in England or Ireland, any judge sitting in
chambers, or the vice-warden of the Stannaries, in the case of companies
subject to his jurisdiction, may by order compel an immediate inspection
of the register (as).
33. Any company under this act may, upon giving notice by advertise- Power to close
ment in some newspaper circulating in the district in which the registered register.
office of the company is situated, close the register of members for any [20 Vict. c. 47,
time or times not exceeding in the whole thirty days in each year. § 2^-J
34. Where a company has a capital divided into shares, whether such Notice of in-
shares may or may not have been converted into stock, notice of any crease of capital
increase in such capital beyond the registered capital, and where a com- anc* °^ members
pany has not a capital divided into shares, notice of any increase in the ° r,-e ,glven
number of members beyond the registered number, shall be given to the r.™ y t c 47
registrar in the case of an increase of capital, within fifteen daj-s from the §37.]
date of the passing of the resolution by which such increase lias been
(s) See Table A. Nos. 23-25. tion with transfers in blank, ante,
(t) See Bradford Banking Co. v. pp. 471 et seq. ; and forged certificates,
JBriggs, 12 App. Ca. 29, ante, pp. 459 ante, p. 484.
and 477. (as) As to mandamus, see ante, p. 440 ;
(u) As to the right to require this, see and the right to take copies, ante,
Table A. Nos. 2 and 3. See as to these p. 314.
certificates, ante, p. 64 ; and in connec-
942
THE COMPANIES ACT, 1862.
Appendix V.
Remedy for im-
proper entry or
omission of entry
in register.
[20 Vict. c. 47,
§ 25, and
21 Vict. c. 14,
§§ 8-9.]
Notice to regis-
trar of rectifica-
tion of register.
Register to be
evidence.
[20 Vict. c. 47,
§26.]
authorised, and in the case of an increase of members, within fifteen days
from the time at which such increase of members has been resolved on or
has taken place ; and the registrar shall forthwith record the amount of
such increase of capital or members ; if such notice is not given within
the period aforesaid, the company in default shall incur a penalty not
exceeding five pounds for every day during which such neglect to give
notice continues ; and every director and manager of the company who
shall knowingly and wilfully authorise or permit such default shall incur
the like penalty.
35. If the name of any person is, without sufficient cause, entered in or
omitted from the register of members of any company under this act, or if
default is made" or unnecessary delay takes place in entering on the register
the fact of any person having ceased to be a member of the company,
the person or member aggrieved, or any member of the company, or the
company itself, may, as respects companies registered in England or
Ireland, by motion in any of her Majesty's superior courts of law or
equity, or by application to a judge sitting in chambers, or to the vice-
warden of the Stannaries in the case of companies subject to his juris-
diction, and as respects companies registered in Scotland by summary
petition to the Court of Session, or in such other manner as the said
courts may direct, apply for an order of the Court that the register may
be rectified ; and the Court may either refuse such application, with or
without costs to be paid by the applicant, or it may, if satisfied of the
justice of the case, make an order for the rectification of the register, and
may direct the company to pay all the costs of such motion, application, or
petition, and any damages the party aggrieved may have sustained : The
Court may, in any proceeding under this section, decide on any question
relating to the title of any person who is a party to such proceeding to
have his name entered in or omitted from the register, whether such
question arises between two or more members or alleged members, or
between any members or alleged members and the company ; and generally
the Court may in any such proceeding decide any question that it may be
necessary or expedient to decide for the rectification of the register ; pro-
vided that the Court [if a court of common law] may direct an issue to be
tried, in which any question of law may be raised, [and a writ of error or
appeal, in the manner directed by " The common law procedure act, 1854,"
shall lie] (y).
36. Whenever any order has been made rectifying the register, in the
case of a company hereby required to send a list of its members to the
registrar, the Court shall, by its order, direct that due notice of such recti-
fication be given to the registrar.
37. The register of members shall be prima facie evidence of any matters
by this act directed or authorised to be inserted therein.
Liabiliti/ of members (z).
Liability of pre- 38. In the event of a company formed under this act being wound up,
sent and past every present and past member of such company shall be liable to con-
(y) See, also, infra, § 98 ; and as to
rectifying registers generally, ante, p.
61 ; and as to this section more particu-
larly, pp. 120 et seq., and pp. 747, 748,
755. The words in brackets are re-
pealed by 44 & 45 Vict. c. 59.
(z) See, further, as to the liability of
members, §§ 42, 48, 180, 182, 195 and
25 & 26 vict. cap. 89. — part ii. distribution, etc. 949
tribute to the assets of the company to an amount sufficient for payment Appendix V.
of the debts and liabilities of the company, and the costs, charges, and —
expenses of the winding up, and for the payment of such sums as may be mem erS °
required for the adjustment of the rights of the contributories amongst r2n y- + ' <-
themselves, with the qualifications following; (that is to say,) ss 61-63 I
(1.) No past member shall be liable to contribute to the assets of the
company if he has ceased to be a member for a period of one
year or upwards prior to the commencement of the winding
up (a) :
(2.) No past member shall be liable to contribute in respect of any
debt or liability of the company contracted after the time at
which he ceased to be a member :
(3.) No past member shall be liable to contribute to the assets of the
company unless it appears to the Court that the existing members
are unable to satisfy the contributions required to be made bv
them in pursuance of this act :
(4.) In the case of a company limited by shares, no contribution shall
be required from any member exceeding the amount, if any, un-
paid on the shares in respect of which he is liable as a present or
past member :
(5.) In the case of a company limited by guarantee, no contribution
shall be required from any member exceeding the amount of the
undertaking entered into on his behalf by the memorandum of
association (6) :
(6.) Nothing in this act contained shall invalidate any provision con-
tained in any policy of insurance or other contract whereby the
liability of individual members upon any such policy or contract
is restricted, or whereby the funds of the company are alone
made liable in respect of such policy or contract (c) :
(7.) No sum due to any member of a company, in his character of a r22 Vict c 60,
member, byway of dividends, profits, .or otherwise, shall be §"l7.]
deemed to be a debt of the company, payable to such member
in a case of competition between himself and any other creditor
not being a member of the company (d) ; but any such sum
may be taken into account for the purposes of the final adjust-
ment of the rights of the contributories amongst themselves («)•
196, cl. 5, and § 200 ; and see § 102 (b) See §§ 90 and 134, and Lion
respecting calls in winding up. As to Mutual Ins. Assoc, v. Tucker, 12 Q. B.
directors, where their liability is un- D. 176.
limited, see 30 & 31 Vict. c. 131, § 5. (c) See ante, p. 246 et seij.
See ante, pp. 252, 253. {d) This applies to guaranteed divi-
(a) See §§84 and 130, and as to past dends. Stuart's trust, 4 Ch. D. 213
members generally, ante, p. 750 and and ante, p. 436.
816 etseq., and 855. See, also, Taurine (e) See § 101, and ante, pp. 741 et
Co., 25 Ch. D. 118. Seq., and 857.
944
THE COMPANIES ACT, 1862.
Appendix V.
PART III.
Registered office
-of company.
f20 Yict. c. 47,
.§ 28.]
Notice of situa-
tion of registered
office.
[20 Vict. c. 47,
§29.]
Publication of
name by a
limited com-
pany.
[20 Vict. c. 47,
§30.]
Penalties on
non-publication
of name.
[20 Vict. c. 47,
§31-]
Register of
mortgages (h).
Management and administration of companies and associations
under this act.
Provisions for protection of creditors.
39. Every company under this act shall have a registered office to which
all communications and notices may be addressed ; if any company under
this act carries on business without having such an office, it shall incur a
penalty not exceeding five pounds for every day during which business is
so carried on.
40. Notice of the situation of such registered office, and of any change
therein, shall be given to the registrar, and recorded by him : until such
notice is given the company .shall not be deemed to have complied with the
provisions of this act with respect to having a registered office.
41. Every limited company under this act. whether limited by shares
or by guarantee, shall paint or affix, and shall keep painted or affixed its
name on the outside of every office or place in which the business of the
company is carried on, in a conspicuous position, in letters easily legible,
and shall have its name engraven in legible characters on its seal, and
shall have its name mentioned in legible characters in all notices, adver-
tisements, and other official publications of such company, and in all bills
of exchange, promissory notes, endorsements, cheques, and orders for
money or goods purporting to be signed by or on behalf of such conrpany,
and in all bills of parcels, invoices, receipts, and letters of credit of the
company (/).
42. If any limited company under this act does not paint or affix, and
keep painted or affixed, its name in manner directed by this act, it shall
In- liable to a penalty not exceeding five pounds for not so painting or
affixing its name, and for every day during which such name is not so
kept painted or affixed ; and every director or manager of the company
who shall knowingly and wilfully authorise or permit such default shall
be liable to the like penalty ; and if any director, manager, or officer of
such company, or any person on its behalf, uses or authorises the use of
any seal purporting to be a seal of the company whereon its name is not
so engraven as aforesaid, or issues or authorises the issue of any notice,
advertisement, or other official publication of such company, or signs or
authorises to be signed on behalf of such company, any bill of exchange,
promissory note, endorsement, cheque, order for money or goods, or issues
or authorises to be issued any bill of parcels, invoice, receipt, or letter
of credit of the company, wherein its name is not mentioned in manner
aforesaid, he shall be liable to a penalty of fifty pounds, and shall further
be personally liable to the holder of any such bill of exchange, promissory
note, cheque, or order for money or goods, for the amount thereof, unless
the same is duly paid by the company (g).
43. Every limited company under this act shall keep a register of all
mortgages and charges specifically affecting property of the company, and
shall enter in such register in respect of each mortgage or charge a short
(/) Neither this nor the next section,
apply to companies licensed to omit the
word limited under 30 & 31 Vict. c. 131,
§23.
(g) See ante, p. 253.
(/*) See ante, pp. 175, 203.
25 & 26 vict. cap. 89. — part hi. management, etc. 945
description of the property mortgaged or charged, the amount of charge Appendix V.
created, and the names of the mortgagees or persons entitled to such —
charge (i) : if any property of the company is mortgaged or charged with-
out such entry as aforesaid being made, every director, manager, or other
officer of the company who knowingly and wilfully authorises or permits
the omission of such entry shall incur a penalty not exceeding fifty
pounds : the register of mortgages required by this section shall be open [Inspection of
to inspection by any creditor or member of the company at all reasonable register.]
times; and if such inspection is refused, any officer of the company
refusing the same, and every director and manager of the company autho-
rising or knowingly and wilfully permitting such refusal, shall incur a
penalty not exceeding five pounds, and a further penalty not exceeding two
pounds for every day during which such refusal continues ; and in addition
to the above penalty, as respects companies registered in England and
Ireland, any judge sitting in chambers, or the vice-warden of the Stannaries
in the case of companies subject to his jurisdiction, may by order compel
an immediate inspection of the register.
44. Every limited banking company and every insurance company, and Certain corn-
deposit, provident, or benefit society under this act shall, before it com- Panies to le-
niences business, and also on the first Monday in February and the first !„ f0?,jf d^"*
Monday in August in every year during which it carries on business, schedule. '
make a statement in the Form marked D. in the 1st Schedule hereto, or r22 Vict. c. 11
as near thereto as circumstances will admit ; and a copy of such statement § 4.]
shall be put up in a conspicuous place in the registered office of the com-
pany, and in every branch office or place where the business of the com-
pany is carried on ; and if default is made in compliance with the provisions
of this section the company shall be liable to a penalty not exceeding five
pounds for every day during which such default continues, and every
director and manager of the company who shall knowingly and wilfully
authorise or permit such default shall incur the like penalty.
Every member and every creditor of any company mentioned in this
section shall be entitled to a copy of the above-mentioned statement on
payment of a sum not exceeding sixpence.
45. Every company under this act, and not having a capital divided List of directors
into shares (k), shall keep at its registered office a register containing the to be keiJt .and
names and addresses and the occupations of its directors or managers, and °'
shall send to the registrar of joint-stock companies a copy of such register,
and shall from time to time notify to the registrar any change that takes
place in such directors or managers.
46. If any company under this act, and not having a capital divided Penalty on coni-
into shares, makes default in keeping a register of its directors or managers, Pany n<|* keeping
or in sending a copy of such register to the registrar in compliance with °r sei? ( !"s 'egu,"
. ° *■ J -. ,° * ter ot directors,
the loregoing rules, or m notifying to the registrar any change that takes &c.
place in such directors or managers, such delinquent company shall incur
a penalty not exceeding five pounds for every day during which such
default continues ; and every director and manager of the company who
shall knowingly and wilfully authorise or permit such default shall incur
the like penalty.
(i) In the case of debentures passing other cases, Dublin Drapery Co., 13
by delivery registration in the names of L. It. Ir. 174.
the original holders is sufficient, and (k) As to other companies, see § 26.
there is no necessity to register the As to the inspection of this register,
transfers, scmblc this rule applies to see §§ 32 and 174 (5)i
L.C. 3 1>
946
THE COMPANIES ACT, 18G2.
Appendix V.
Promissory
notes and bills
of exchange.
[20 Yict. c. 47,
§43.]
Prohibition
against carrying
on business witl
less than seven
members.
[20 Yict. c. 47,
§39.]
47. A promissory riotfe or 1 >i 11 of exchange shall be deemed to have been
made, accepted, or endorsed on behalf of any company under this act, if
made, accepted, or indorsed in the name of the company by any person
acting under the authority of the company, or if made, accepted, or indorsed
by or on behalf or on account of the company, by any person acting under
the authority of the company (/).
48. If any company under this act carries on business when the number
of its members is less than seven for a period of six months after the
number has been so reduced, every person who is a member of such
company during the time that it so carries on business after such period of
six months, and is cognizant of the fact that it is so carrying on business
with fewer than seven members, shall be severally liable for the payment
of the whole debts of the company contracted during such time, and may
be sued for the same, without the joinder in the action or suit of any other
member (>»).
General meeting
of company.
[20 Vict. c. 47,
§ 32.]
Power to alter
regulations by
special i-esolu-
tion.
[20 Vict. c. 47,
§33.]
Definition of
special resolu-
tion.
[20 Vict. c. 45
§34.]
Provisions for protection of memh rs,
49. A general meeting of every company under this act shall be held
once at the least in every year («).
50. Subject to the provisions of this act, and to the conditions contained
in the memorandum of association, any company formed under this act may
in general meeting from time to time, by passing a special resolution in
manner hereinafter mentioned, alter all or any of the regulations of the com-
pany contained in the articles of association or in the Table marked A. in
the first schedule, where such table is applicable to the company, or make
new regulations to the exclusion of or in addition to all or any of the regu-
lations of the company (0) ; and any regulations so made by special resolu-
tion shall be deemed to be regulations of the company of the same validity
as if they had been originally contained in the articles of association, and
shall be subject in like manner to be altered or modified by any subsequent
special resolution.
51. A resolution passed by a company under this act shall be deemed
to be special whenever a resolution has been passed by a majority of not
less than three-fourths of such members of the company for the time being
entitled according to the regulations of the company to vote as may be
present, in person or by proxy (in cases where by the regulations of the
company proxies are allowed), at any general meeting of which notice
specifying the intention to propose such resolution has been duly given,
and such resolution has been confirmed by a majority of such members for
the time being entitled, according to the regulations of the company, to
vote, as may be present, in person or by proxy, at a subsequent general
meeting, of which notice, has been duly given, and held at an interval of
(I) See ante, pp. 230 et seq.
(»n) See § 79.
(n) See 30 k 31 Vict. c. 131, § 39.
The year begins on the 1st Jan. See
Gibson v. Barton, L. R. 10 Q. B. 329.
(0) As to altering the conditions in
the memorandum of association, see § 12 ;
and as to companies existing before the
passing of this act, see §§ 176 and 196 ;
cl. 3, 4 and 6.
See, further, as to what can be done
by special resolution, §§ 60, 79, 129, and
Table A., Nos. 25, 26, Andante, pp. 333
and 343 et seq. The company cannot
deprive itself of the power to alter its
articles, Trevor v. Whitworth, 12 App.
Ca. 409.
25 & 26 vict. cap. 89. — part hi. management, etc. 947
not less than fourteen days (/>), nor more than one month, from the date of Appendix V.
the meeting at which such resolution was first passed : At any meeting
mentioned in this section, unless a poll is demanded by at least five
members, a declaration of the chairman that the resolution has been
carried shall be deemed conclusive evidence of the fact, without proof of
the number or proportion of the votes recorded in favour of or against the
same : Notice of any meeting shall, for the purposes of this section, be
deemed to be duly given and the meeting to be duly held, whenever such
notice is given and meeting held in manner prescribed by the regulations
of the company : In computing the majority under this section, when a
poll is demanded, reference shall be had to the number of votes to which
each member is entitled by the regulations of the company.
52. In default of any regulations (q) as to voting every member shall Provision where
have one (?•) vote ; and in default of any regulations as to summoning general no regulations
meetings a meeting shall be held to be duly summoned of which seven as to meetlDSs-
days' notice in writing has been served on every member in manner
in which notices are required to be served by the Table marked A. in the
first schedule hereto (s) ; and in default of any regulations as to the
persons to summon meetings, five members shall be competent to summon
the same (t) ; and in default of any regulations as to who is to be chairman
of such meeting, it shall be competent for any person elected by the
members present to preside («).
53. A copy of any special resolution that is passed by any company Registration of
under this act shall be printed and forwarded to the registrar of joint- special reso-
stock companies, and be recorded by him : If such copy is not so forwarded lutlons-
within fifteen days from the date of the confirmation of the resolution, the ^LX10*' c' i7'
company shall incur a penalty not exceeding two pounds for every day
after the expiration of such fifteen days during which such copy is
omitted to be forwarded ; and every director and manager of the company
who shall knowingly and wilfully authorise or permit such default shall
incur the like penalty.
54. Where articles of association have been registered, a copy of every Copies of special
special resolution for the time being in force shall be annexed to or em- resolutions,
bodied in every copy of the articles of association that may be issued after t20 Yict- c- 4^
the passing of such resolution : "Where no articles of association have § 36'-'
been registered, a copy of any special resolution shall be forwarded in
print to any member requesting the same on payment of one shilling, or
such less sum as the company may direct : And if any company makes
default in complying with the provisions of this section, it shall incur a
penalty not exceeding one pound for each copy in respect of wliich such
default is made ; and every director and" manager of the company who
shall knowingly and wilfully authorise or permit such default shall incur
the like penalty.
55. Any company under this act may, by instrument in writing under Execution of
its common seal, empower any person, either generally or in respect of deeds abroad.
any specified matters, as its attorney, to execute deeds on its behalf in t20 Vict> c- 4'»
any place not situate in the United Kingdom ; and every deed signed by ^ •*
(p) As to computation, of time, .see (/•) See Table A., No. 44.
ante, pp. 305 and 306. (s) See Table A., Nos. 35 and 95-7.
(q) See as to the meaning of these {1) Sec Table A., No. 34.
words, Brick and Stone Co., W. N. (w) Sec Table A., Nos. 39, 40.
1878, p. 140.
3 l' 2
948
THE COMPANIES ACT, 18G2.
Appendix V.
Examination of
affairs of com-
pany by inspec-
tors.
[20 Vict c. 47,
§48.]
Application for
inspection to be
supported by
evidence.
Inspection of
books and ex-
amination of
officers.
[20 Vict. c. 47,
§49.]
Report of result
of examination,
&c.
[20 Vict. c. 47,
§50.]
Power of com-
pany to appoint
inspectors.
[20 Vict. c. 47,
§51.]
such attorney, on behalf of the company, and under his seal, shall he
binding on the company, and have the same effect as if it were under the
common seal of the company (r).
56. The Board of Trade may appoint one or more competent inspectors
to examine into the affairs of any company under this act, and to report
thereon, in such manner as the Board may direct, upon the applications
following ; (that is to say,)
(1.) In the case of a hanking company that has a capital divided
into shares, upon the application of members holding not less
than one-third part of the whole shares of the company for the
time being issued :
(2.) In the case of any other company that has a capital divided into
shares, upon the application of members holding not less than
one-fifth part of the whole shares of the company for the time
being issued :
(3.) In the case of any company not having a capital divided into
shares, upon the application of members being in number not
less than one-fifth of the whole number of persons for the time
being entered on the register of the company as members.
57. The application shall be supported by such evidence as the Board
of Trade may require for the purpose of showing that the applicants have
good reason for requiring such investigation to be made, and that they
are not actuated by malicious motives in instituting the same : The
Board of Trade may also require the applicants to give security for
payment of the costs of the inquiry before appointing any inspector or
inspectors.
58. It shall be the duty of all officers and agents of the company to
produce for the examination of the inspectors all books and documents in
their custody or power : Any inspector may examine upon oath the
officers and agents of the company in relation to its business, and may
administer such oath accordingly : If any officer or agent refuses to
produce any book or document hereby directed to be produced, or to
answer any question relating to the affairs of the company, he shall incur
a penalty not exceeding five pounds in respect of each offence.
59. Upon the conclusion of the examination, the inspectors shall report
their opinion to the Board of Trade : Such report shall be written or
printed, as the Board of Trade directs : A copy shall be forwarded by
the Board of Trade to the registered office of the company, and a further
copy shall, at the request of the members upon whose application the
inspection was made, be delivered to them or to any one or more of them :
All expenses of and incidental to any such examination as aforesaid shall
be defrayed by the members upon whose application the inspectors were
appointed, unless the Board of Trade shall direct the same to be paid out
of the assets of the company, which it is hereby authorised to do.
GO. Any company under this act may, by special resolution (s), appoint
inspectors for the purpose of examining into the affairs of the company.
The inspectors so appointed shall have the same powers and perform the
same duties as inspectors appointed by the Board of Trade, with this
exception, that, instead of making their report to the Board of Trade,
they shall make the same in such manner and to such persons as the
(»•) See also 27 & 28 Vict. c. 19, and
30 & 31 Vict. c. 131, § 37.
(*) See §51.
25 & '2(j VICT. OAL>, 89. — PART III. MANAGEMENT, ETC. 9 ii)
company in general meeting directs ; and the officers and agents of the Appendix V.
company shall incur the same penalties in case of any refusal to produce
any book or document hereby required to be produced to such inspectors,
or to answer any question, as they would have incurred if such inspector
had been appointed by the Board of Trade.
61. A copy of the report of any inspectors appointed under this act, Report of in-
authenticated by the seal of the company into whose affairs they have ^j^rcseto be
made inspection, shall be admissible in any legal proceeding, as evidence '
of the opinion of the inspectors in relation to any matter contained in j; 52 -jic '
such report.
Notices.
62. Any summons, notice, order, or other document required to be Service of notices,
served upon the company may be served by leaving the same, or sending c_> on company
it through the post in a prepaid letter addressed to the company at their L gg ^1C ■ c
registered office (t).
63. Any document to be served by post on the company shall be Services of no-
posted in such time as to admit of its being delivered in the due course of JJJ &c-' ^
delivery within the period (if any) prescribed for the service thereof ; Q "^ ^ ^
and, in proving service of such document, it shall be sufficient to prove § 54 j
that such document was properly directed, and that it was put as a pre-
paid letter into the post office (»).
64. Any summons, notice, order, or proceeding requiring authentica- Authentication
tion by the company, may be signed by any director, secretary, or other JJJJjJjjJ? J^
authorised officer of the company, and need not be under the common Q ^J ^ '^
seal of the company; and the same may be in writing or in print, or § 55 j
partly in writing and partly in print (x).
Legal Proceedings.
65. All offences under this act made punishable by any penalty may Recovery of
be prosecuted summarily before two or more justices, as to England, in penalties.
manner directed by an act passed in the session holden in the eleventh ^6Vlct- c- il>
and twelfth years of the reign of Her Majesty Queen Victoria, chapter ^ ^ ^ ^
forty-three, intituled " An act to facilitate the performance of the duties c 4g>
of justices of the peace out of sessions within England and Wales with
respect to summary convictions and orders," or any act amending the
same; and as to Scotland, before two or more justices or the sheriff of
the county, in manner directed by the act passed in the session of Parlia-
ment holden in the seventeenth and eighteenth years of the reign of her 17 & 18 Vict,
Majesty Queen Victoria, chapter one hundred and four, intituled " An c- •
act to amend and consolidate the acts relating to Merchant shipping ; "
or any act amending the same, as regards offences in Scotland against that
act, not being offences by that act described as felonies or misdemeanors ;
and as to Ireland, in manner directed by the act passed in the session
holden in the fourteenth and fifteenth years of the reign of her Majesty 14 & 15 Vict.
Queen Victoria, chapter ninety-three, intituled " An act to consolidate °. ;i:;-
and amend the acts regulating the proceedings of petty sessions and the
(t) See Rules 63 and 64, and R. S. C. ruptcy, The Bankruptcy act, 1883,
Order ix. r. 8. § 148, which seems to require tho seal of
(u) See Rules 63 and 64. the company.
(x) See, as to proceedings in bank-
950
THE COMPANIES ACT, 1862,
Appendix V.
Application of
penalties.
[20 Vict. c. 47,
§57.]
Evidence of
proceedings at
meetings, &c.
[20 Vict. c. 47
§40.]
Jurisdiction of
Court of vice-
warden of Staii'
naries.
duties of justices of the peace out of quarter sessions in Ireland," or any
act amending the same.
66. The justices or sheriff imposing any penalty under this act may
direct the whole or any part thereof to be applied in or towards payment
of the costs of the proceedings, or in or towards the rewarding the person
upon whose information or at whose suit such penalty has been recovered ;
and, subject to such direction, all penalties shall be paid into the receipt
of her Majesty's exchequer in such manner as the Treasury may direct,
and shall be carried to and form part of the Consolidated Fund of the
United Kingdom.
67. Every company under this act shall cause minutes of all resolutions
and proceedings of general meetings of the company, and of the directors
or managers of the company in cases where there are directors or managers,
to be duly entered in books to be from time to time provided for the pur-
pose ; and. any such minute as aforesaid, if purporting to be signed by the
chairman of the meeting at which such resolutions were passed or pro-
ceedings had, or by the chairman of the next succeeding meeting, shall
be received as evidence in all legal proceedings ; and until the contrary is
proved, every general meeting of the company or meeting of directors or
managers in respect of the proceedings of which minutes have been so
made shall be deemed to have been duly held and convened, and all
resolutions passed thereat, or proceedings had, to have been duly passed
and had ; and all appointments of directors, managers, or liquidators shall
be deemed to be valid, and all acts done by such directors, managers, or
liquidators shall be valid, notwithstanding any defect that may afterwards
be discovered in their appointments or qualifications (//).
68. In the case of companies under this act, and engaged in working
mines within and subject to the jurisdiction of the Stannaries, the court
of the vice-warden of the Stannaries shall have and exercise the like
jurisdiction and powers, as well on the common law as on the equity side
thereof, which it now possesses by custom, usage, or statute in the case of
unincorporated companies, but only so far as such jurisdiction or powers
are consistent with the provisions of this act and with the constitution of
companies as prescribed or required by this act ; and for the purpose of
giving fuller effect to such jurisdiction in all actions, suits, or legal pro-
ceedings instituted in the said Court, in causes or matters whereof the
Court has cognizance, all process issuing out of the same, and all orders,
rules, demands, notices, warrants, and summonses required or authorised
by the practice of the Court to be served on any company, whether regis-
tered or not registered, or any member or contributory thereof, or any
officer, agent, director, manager, or servant thereof, may be served in any
part of England without any special order of the vice-warden for that
purpose, or by such special order may be served in any part of the United
Kingdom of Great Britain and Ireland, or in the adjacent islands, parcel
of the dominions of the Crown, on such terms and conditions as the Court
shall think fit; and all decrees, orders and judgments of the said Court
made or pronounced in such causes or matters may be enforced in the same
manner in which decrees, orders, and judgments of the Court may now by
law be enforced, whether within or beyond the local limits of the Stan-
(ij) See, as to meetings and the minutes
of their proceedings, ante, pp. 304 et scq.,
and Table A., Nos 29-43, and as to the
last part of this section, ante, pp. 300
and 879.
25 ^ 26 vict. cap. 89. — part hi. management, etc. 951
naries ; and the seal of the said Court, and the signature of the registrar Appendix V.
thereof, shall be judicially noticed by all other courts and judges in —
England, and shall require no other proof than the production thereof :
the registrar of the said Court, or the assistant-registrar, in making sales
under any decree or order of the Court shall be entitled to the same
privilege of selling by auction or competition without a licence, and with-
out being liable to duty, as a judge of the Court of Chancery is entitled to
in pursuance of the acts in that behalf.
69. Where a limited company is plaintiff or pursuer in any action, Power to order
suit, or other legal proceeding, any judge having jurisdiction in the matter, security for
may, if it appears by any credible testimony that there is reason to believe m-ou.rht t,v
that if the defendant be successful in his defence, the assets of the com- limited com-
pany will be insufficient to pay his costs, require sufficient security to be panies.
given for such' costs, and may stay all proceedings until such security is [21 Vict. c. 14,
given (z). § 2"*-J
70. In any action or suit brought by the company against any member Allegations in
to recover any call or other monies due from such member in his anions against
character of member, it shall not be necessary to set forth the special
matter, but it shall be sufficient to allege that the defendant is a member
of the company, and is indebted to the company in respect of a call made
or other monies due whereby an action or suit hath accrued to the
company (a).
Alteration of forms.
71. The forms set forth in the second schedule hereto, or forms as near Forms in second
thereto as circumstances admit, shall be used in all matters to which such schedule to be
forms refer ; the Board of Trade may from time to time make such used-
alterations in the tables and forms contained in the first schedule hereto, Board of Trade
so that it does not increase the amount of fees payable to the registrar in in'Ychedule°rmS
the said schedule mentioned, and in the forms in the second schedule, or ,9Q ,7. 4~
make such additions to the last-mentioned forms, as it deems requisite : g 53 an(j 21
any such table or form, when altered, shall be published in the " London Vict. c. 14,
Gazette," and upon such publication being made, such table or form shall § 22-]
have the same force as if it were included in the schedule to this act ; but
no alteration made by the Board of Trade in the table marked A. con-
tained in the first schedule, shall affect any company registered prior to
the date of such alteration, or repeal, as respects such company, any
portion of such table.
Arbitrations.
72. Any company under this act may from time to time, by writing Power for com-
muter its common seal, agree to refer and may refer to arbitration, in panies to refer
accordance with " The Railway companies arbitration act, 1859 " (b), any ™.^ti^S j° ^. l"
existing or future difference, question, or other matter whatsoever in dis- cordance with
pute between itself and any other company or person ; and the companies 22 & 23 Vict,
parties to the arbitration may delegate to the person or persons to whom c 59.
the reference is made power to settle any terms or to determine any
matter capable of being lawfully settled or determined by the companies
themselves, or by the directors or other managing body of such companies.
(2) See ante, pp. 263 and 661. (6) 22 k 23 Vict. c. 59.
(</,) Sec ante, \>. 427.
952
THE COMPANIES ACT, 1862.
Appendix V.
Provisions of
22 & 23 Vict,
c. 59, to apply.
73. All the provisions of " The Railway companies arbitration act,
1859," shall be deemed to apply to arbitrations between companies and
persons in pursuance of this act : and in the construction of such provi-
sions " the companies " shall be deemed to include companies authorised
by this act to refer disputes to arbitration.
Meaning of con-
tributory.
[20 Vict, c,
§65.]
■17.
Nature of lia-
bility of contri-
butory.
[21 Vict. c. 14.
§13-]
Contributories in
case of death.
[20 Vict. c. 47,
§65.]
Contributories in
case of bank-
ruptcy.
PART IV.
Winding up of companies and associations under this act (c).
Preliminary.
74. The term " contributory " shall mean every person liable to con-
tribute to the assets of a company under this act, in the event of the same
being wound up (d) : it shall also, in all proceedings for determining the
persons who are to be deemed contributories, and in all proceedings pri< >r
to the final determination of such persons, include any person alleged to
be a contributory (e).
75. The liability of any person to contribute to the assets of a company
under this act in the event of the same being wound up, shall be deemed
to create a debt (in England and Ireland of the nature of a specialty)
accruing due from such person at the time when his liability commenced,
but payable at the time or respective times when calls are made as herein-
after mentioned for enforcing such liability ; and it shall be lawful in
the case of the bankruptcy of any contributory to prove against his estate
the estimated value of his liability to future calls, as well as calls already
made ( f ) .
76. If any contributory dies either before or after he has been placed
on the list of contributories hereinafter mentioned, his personal representa-
tives, heirs, and devisees shall be liable in a due course of administration
to contribute to the assets of the company in discharge of the liability of
such deceased contributory ; and such personal representatives, heirs, and
devisees shall be deemed to be contributories accordingly (</).
77. If any contributory becomes bankrupt, either before or after he has
been placed on the list of contributories, his assignees shall be deemed to
represent such bankrupt for all the purposes of the winding-up, and shall
be deemed to be contributories accordingly, and may be called upon to
admit to proof against the estate of such bankrupt, or otherwise to allow
to be paid out of his assets in due course of law, any monies due from
such bankrupt in respect of his liability to contribute to the assets of the
company being wound up (h) ; and for the purposes of this section any
person who may have taken the benefit of any act for the relief of insol-
(c) See,' as to companies registered
under the acts of 1S56-8, infra, §§ 176,
177 ; and as to companies registered
under this act, but not formed under it
or the last mentioned acts, infra, §§ 196
-198 ; and as to companies not regis-
tered at all, infra, §§ 199-204.
(c/) See §§ 38 and 76-78, and ante,
pp. 750, 751 et seq.
(e) See Rules 58 and 60 to 62, and
ante, p. 625.
(/) See ante, p. 556.
(g) See, also, § 105 ; and as to putting
them on the list, see § 99, and ante,
p. 812.
(h) See § 75 and ante, p. 556, and as
to putting bankrupts, &c, on the list,
P. 815.
25 & 26 vict. cap. 89. — pakt iv. winding up. 958
vent debtors (*) before the eleventh day of October one thousand eight Appendix V.
hundred and sixty-one shall be deemed to have become bankrupt.
78. If any female contributory marries, either before or after she has Contributories in
been placed on the list of contributories, her husband shall during the case of marriage,
continuance of the marriage be liable to contribute to the assets of the
company the same sum as she would have been liable to contribute if she
had not married ; and he shall be deemed to be a contributory accord-
ingly (k).
Will/lint/ up by court.
79. A company under this act (£) may be wound up by the Court as Circumstances
hereinafter defined, under the following circumstances ; (that is to say,) under which
(1.) Whenever the company has passed a special resolution requiring comP^ny n™>
the company to be wound up by the Court : court.
(2.) Whenever the company does not commence its business within rgo Vict. c. 47,
a year from its incorporation, or suspends its business for the § 67.]
space of a whole year :
(3.) Whenever the members are reduced in number to less than
seven (m) :
(4.) Whenever the company is unable to pay its debts :
(5.) Whenever the Court is of opinion that it is just and equitable
that the company should be wound up (n).
80. A company under this act (o) shall be deemed to be unable to pay Company when to
its debts be deemed unable
(1.) Whenever a creditor by assignment or otherwise, to whom the °Payisie
company is indebted, at law or in ecpiity, in a sum exceeding [20 Vict. c. 4/,
fifty pounds then due, has served on the company, by leaving § -I
the same at their registered office, a demand under his hand
requiring the company to pay the sum so due, and the company
has for the space of three weeks succeeding the service of such
demand neglected to pay such sum, or to secure or compound
for the same to the reasonable satisfaction of the creditor :
(2.) Whenever, in England and Ireland, execution or other process
issued on a judgment, decree, or order obtained in any court in
favour of any creditor, at law or in equity, in any proceeding
instituted by such creditor against the company, is returned
unsatisfied in whole or in part :
(3.) Whenever, in Scotland, the inducioe of a charge for payment on
an extract decree, or an extract registered bond, or an extract
registered protest, have expired without payment being made :
(4.) Whenever it is proved to the satisfaction of the Court that the
company is unable to pay its debts (p) :
81. The expression "the Court," as used in this part of this act, shall Definition of
mean the following authorities ; (that is to say,) (q) "the court."
(?) Viz., 1 & 2 Vict. c. 110 ; 5 k 6 wound up, pp. 628 et seq., and as to
Vict. c. 116 ; 7 k 8 Vict. c. 96, all re- just and equitable, p. 631.
pealed by 24 & 25 Vict. c. 134. (o) See, as to unregistered companies,
(A) Ante, p. 42. § 199 (4).
(!) Ante, p. 617. Sec § 199 (3), as {p) Sec ante, pp. 631 and 634.
to unregistered companies. (q) See ante, p. 615, and as to In-
(m) See § 48. dustrial and Provident Societies and
(n) See as to the circumstances under Benefit Building Societies, see App.
which a company will be ordered to be II., p. 916, and III., p. 922.
954
THE COMPANIES ACT, 1862.
Appendix V.
[20 Vict. c. 47,
§§ 60 and 74,
and 20 & 21
Vict. c. 78,
§12.]
Application for
winding up to
be made by
petition.
[20 Vict. c.
§69.]
47,
Power of court.
In the case of a company engaged in (r) working any mine Avithin and
subject to tlic jurisdiction of the Stannaries, — the court of the vice-
warden of the Stannaries, unless the vice-warden certifies that in his
opinion the company would lie more advantageously wound up in
tliL' High Court of Chancery, in which case "the court" shall mean
the High Court of Chancery :
In the case of a company registered in England that is not engaged in
working any such mine as aforesaid,— the High Court of Chancery :
In the case of a company registered in Ireland, the Court of Chancery
in Ireland :
In all cases of companies registered in Scotland, the Court of Session in
either division thereof : (?r)
Provided that where the Court of Chancery in England or Ireland makes
an order for winding up a company under this act, it may, if it thinks
fit, direct all subsequent proceedings for winding up the same to be had
in the Court of Bankruptcy having jurisdiction in the place in which
the registered office of the company is situate ; and thereupon such last-
mentioned Court of Bankruptcy shall, for the purposes of winding up the
company, be deemed to be "the court'"' within the meaning of the act, and
shall have for the purposes of such winding up all the powers of the High
Court of Chancery, or the Court of Chancery in Ireland, as the case may
require (s).
82. Any application to the Court for the winding up of a company
under this act shall be by petition (r) ; it may be presented by the com-
pany, or by any one or more creditor or creditors, contributory or con-
trihutories of the company, or by all or any of the above parties, together
or separately («) ; and every order which may be made on any such peti-
tion shall operate in favour of all the creditors and all the contributories
of the company in the same mariner as if it had been made upon the joint
petition of a creditor and a contributory (a;).
83. Any judge of the High Court of Chancery may do in chambers any
act which the Court is hereby authorised to do ; and the vice-warden of
the Stannaries may direct that a petition for winding up a company be
heard by him at such time and at such place within the jurisdiction of
the Stannaries, or within or near to the place where the registered office
of the company is situated, as he may deem to be convenient to the parties
concerned, or (with the consent of the parties concerned) at any place in
England ; and all orders made thereupon shall have the same force and
effect as if they had been made by the vice-warden sitting at Truro or
elsewhere within the jurisdiction of the Court, and all parties and persons
summoned to attend at the hearing of any such petition shall be compel-
lable to give their attendance before the vice-warden by like process and in
like manner as at the hearing of any cause or matter at the usual sitting of
the said Court ; and the registrar of the Court may, subject to exception,
(?•) See Stiver VaUey Mines, 18 Ch.
D. 472, and 50 & 51 Viet, c. 53, § 28
(The Stannaries act, 1887).
(rr) See further as to Scotch windings
up, 49 Vict. c. 23.
(s) As to remitting to the County
Court, see 30 & 31 Vict. c. 131, § 41 et seq.
(t) As to the petition, see mite, p.
654, and Rules 1 to 5, and Forms 1 and
2, in the 3rd Schedule thereto. As to
the order to wind up, see Rules 6 and 7,
and Forms 3 — 5, in the 3rd Schedule
thereto.
(k) See ante, p. 624, and 30 & 31
Vict. c. 131, §40.
(x) Ante, pp. 663 and 664.
25 & 26 VICT. CAP. 89.— PART IV. WINDING UP. 955
or appeal to the vice-warden as heretofore used, Jo and exercise such and Appendix V.
the like acts and powers in the matter of winding up as he is now used to
do and exercise in a suit on the equity side of the said Court (xx).
84. A winding up of a company by the Court shall be deemed to com- Commencement
mence at the time of the presentation of the petition for the winding up (y). J*™^* Up
85. The Court may, at any time after the presentation of a petition for ^.^ ^ ^
winding up a company under this act, and before making an order for g g4 -j
winding up the company, upon the application of the company, or of any ^^ may gmnt
creditor or contributory of the company, restrain further proceedings in injunction. °
any action, suit, or proceeding (z) against the company, upon such terms as po Vict. c. 47,
the Court thinks fit (a) ; the Court may also at any time after the presen- § 84.]
tation of such petition, and before the first appointment of liquidators,
appoint provisionally an official liquidator of the estate and effects of the
company (b).
86. Upon hearing the petition the Court may dismiss the same witli or Hearing petition,
without costs, may adjourn the hearing conditionally or unconditionally, [20 Vict, c 47,
and may make any interim order, or any other order that it deems just (c). §§ 70—72.]
87. AVhen an order has been made for winding up a company under Actions ami [suits
this act, no suit, action, or other proceeding shall be proceeded with or *o be staye .
commenced against the company except with the leave of the Court, and i - lc • c
subject to such terms as the Court may impose (d). . ' of ^^ fcQ
88. When an order has been made for winding up a company under be^rwarded to
this act, a copy of such order shall forthwith be forwarded by the com- registrar,
pany to the registrar of joint-stock companies, who shall make a minute [20 Vict, c. 47,
thereof in his books relating to the company. § 73.]
89. The Court may at any time after an order has been made for p0wer of court
Avinding up a company, upon the application by motion of any creditor or to stay proceed-
contributory of the company, and upon proof to the satisfaction of the "J®8' ?
Court that" all proceedings in relation to such winding up ought to be j? 1C ■ c
stayed, make an order staying the same, either altogether or for a limited
time, on such terms and subject to such conditions as it deems fit (c).
90. When an order has been made for winding up a company limited Effect of order on
-, , • ■, -■• -t t • , r i v t share capital ot
by guarantee and having a capital divided into shares, any share capital company : limited
that may not have been called up shall be deemed to be assets of the by guarantee.
company, and to be a debt (in England and Ireland of the nature of a
specialty) due to the company from each member to the extent of any
sums that may be unpaid on any shares held by him and payable at such
time as may be appointed by the Court (/>.
91. The" Court may, as to all matters relating to the winding up, have Court may hare
regard to the wishes of the creditors or contributories, as proved to it by ^gai'd *» ™ ies
O .p.,.,. T'lT* ,. 01 CTcUltUla Ul
any sufficient evidence, and may, if it thinks it expedient, direct meetings cont,.irjUtories.
of the creditors or contributories to be summoned, held, and conducted in
such manner as the Court directs, for the purpose of ascertaining their
. . | Amended as to the Stannarie by (b) See, as to provisional liquidators,
32 & 33 Vict. c. 19, § 38. ante, p. 700, and Rules 15 and 59.
(y) Sec ante, p. 664, §§ 114, 153, (c) See § 91, and ante, pp. 630 et seq. ,
163, 164. and as to costs, p. 658.
(z) E.g., for penalties, Briton Medical (d) Ante, pp. 672 ct seq. See, also,
Ass. Ass., 32 Ch. D. 50:;. §§ 163, 198 ; and as to unregistered
(a) See ante, pp. 672 et seq., and companies, § 202.
§ 197 ; and as to unregistered com]'-1 . (c) Sec ante, p. 663.
66 201 and 204. (f) See, also, § 134.
956
THE COMPANIES ACT, 1862.
Appendix V. wishes, and may appoint a person to act as chairman of any such meeting,
~" and to report the result of such meeting to the Court : in the case of
creditors, regard is to be had to the value of the debts due to each creditor,
and in the case of contributories to the number of votes conferred on each
contributory by the regulations of the company (y).
Official liquidators (/;.).
Appointment of 92. For the purpose of conducting the proceedings in winding up a
official liquida- company, and assisting the Court therein, there may be appointed a person
tor. or persons to be called an official liquidator or official liquidators ; and the
[20 Vict. c. 47, Court having jurisdiction may appoint such person or persons, either pro-
§ 88-] visionally or otherwise, as it thinks fit, to the office of official liquidator or
official liquidators ; in all cases, if more persons than one are appointed to
the office of official liquidator, the Court shall declare whether any act
hereby required or authorised to be done by the official liquidator is to be
done by all or any one or more of such persons. The Court may also
determine whether any and what security is to be given by any official
liquidator on his appointment ; if no official liquidator is appointed, or
during any vacancy in such appointment, all the property of the company
shall be deemed to be in the custody of the Court (i).
Resignations, re- 93. Any official liquidator may resign or be removed by the Court on
movals, filling up (jue cause shown : and any vacancy in the office of an official liquidator
ld appointed by the Court shall be filled by the Court (k) : there shall be paid
to the official liquidator such salary or remuneration, by way of percentage
or otherwise, as the Court may direct (I) ; and if more liquidators than one
are appointed such remuneration shall be distributed amongst them in
such proportions as the Court directs.
94. The official liquidator or liquidators shall be described by the style
of the official liquidator or official liquidators of the particular company in
respect of which he is or they are appointed, and not by his or their in-
dividual name or names (m) : he or they shall take into his or their
custody, or under his or their control, all the property, effects, and things
in actions to which the company is or appears to be entitled, and shall
perform such duties in reference to the winding up of the company as
may be imposed by the Court (n).
Powers of official 95. The official liquidator shall have power, with the sanction of the
liquidator. Court (o), to do the following things (p
of vacancies
compensation.
[20 Vict. c. 47,
§ 92.]
Style and duties
of official liqui-
dator.
[20 Vict. c. 47,
§89.]
[20 Vict.
§90.]
c. 4/,
n.) To bring or defend any action, suit, or prosecution, or other
legal proceeding, civil or criminal, in the name and on behalf
of the company (q) :
(2.) To carry on the business of the company, so far as may be
necessary for the beneficial winding up of the same :
(3.) To sell the real and personal and heritable and movable
property, effects, and things in action (r) of the company by
(g) See, also, § 149 and Rules 45—47.
(h) See ante, pp. 701 ct scq.
(i) See, also, Rules 8—19.
(k) See Rule 16.
(I) See Rule 18.
(to) See ante, pp. 706 ct scq.
(n) See § 203 as to unregistered com-
panies.
(o) See Rules 48—50.
[p) See ante, pp. 707 ct scq.
(q) See ante, p. 707 and § 203 as to
unregistered companies.
(r) Including claims against the direc-
tors for misfeasance, Park Gate Waggon
Co., 17 Ch. D. 234.
25 & 26 vict. cap. 89. — part iv. winding up. 957
public auction or private contract, with power to transfer the Appendix V.
whole thereof to any person or company, or to sell the same in
parcels (s) :
(4.) To do all acts and to execute, in the name and on behalf of the
company, all deeds, receipts, and other documents, and for that
purpose to use, when necessary, the company's seal :
(5.) To prove, rank, claim, and draw a dividend, in the matter of
the bankruptcy or insolvency or secpiestration of any contribu-
tory, for any balance against the estate of such contributory,
and to take and receive dividends in respect of such balance, in
the matter of bankruptcy or insolvency, or secpiestration, as a
separate debt due from such bankrupt or insolvent, and rateably
with the other separate creditors :
((5.) To draw, accept, make, and endorse any bill of exchange or [12 & 13 Vict,
promissory note in the name and on behalf of the company, c. 108, § 8.]
also to raise upon the security of the assets of the company
from time to time any recpiisite sum or sums of money ; and
the drawing, accepting, making, or endorsing of every such bill
of exchange or promissory note as aforesaid on behalf of the
company shall have the same effect with respect to the liability
of such company as if such bill or note had been drawn,
accepted, made, or endorsed by or on behalf of such company
in the course of carrying on the business thereof :
(7.) To take out, if necessary in his official name, letters of adminis-
tration to any deceased contributory, and to do in his official
name any other act that may be necessary for obtaining pay-
ment of any monies due from a contributory or from his estate
and which act cannot be conveniently done in the name of the
company ; and in all cases where he takes out letters of ad-
ministration, or otherwise uses his official name for obtaining
payment of any monies due from a contributory, such monies
shall, for the purpose of enabling him to take out such letters
or recover such monies, be deemed to be due to the official
liquidator himself :
(8.) To do and execute all such other things as may be necessary
for winding up the affairs of the company and distributing its
assets (t).
96. The Court may provide by any order that the official liquidator Discretion of
may exercise any of the above powers without the sanction or interven- official liqui-
tion of the Court, and where an official liquidator is provisionallv an- dator-
TOO ~V" 4- £\f\
pointed may limit and restrict his powers by the order appointing him. k ^ , ' c< '
97. The official liquidator may, with the sanction of the Court, appoint
a solicitor or law agent to assist him in the performance of his duties («). g^^" to^ffi0'- 1
liquidator.
, [20 Vict. c. 47,
Onhiinri/ power* of Court (r\, § 91 j
98. As soon as may be after making an order for winding up the com- Collection and
panv, the Court shall settle a list of contributories (y), with power to application of
1 - ' w/' l assets.
[20 Vict. c. 47
(s) See, as to sales, Rule 32, and ante, (x) See ante, pp. 684 et seq. § 75.1
pp. 711, 712. (y) See Rules 29—31, and the Forms
(0 See, further, §§ 159—162. 24 to 32 in the 3rd Sched. to the rules;
in) See Rule 68, ante, ]>. 703. and see ante, pp. 745 et seq.
958
THE COMPANIES ACT, 1862.
Appendix V rectify the register of members in all cases where such rectification is
~ required in pursuance of this act (»), and shall cause the assets of the
company to be collected and applied in discharge of its liabilities.
99. in settling the list of contributories the Court shall distinguish be-
representetive tween persons who are contributories in their own right and persons who
contributories. are contributories as being representatives of or being liable to the debts
of others ; it shall not be necessary, where the personal representative of
any deceased contributory is placed on the list, to add the heirs or devisees
of such contributory ; nevertheless such heirs or devisees may be added as
and when the Court thinks fit («■).
Power of court to 100. The Court may, at any time after making an order for winding
require delivery Up a company, require any contributory for the time being settled on the
of property ijst 0f contributories, trustee, receiver, banker, or agent, or officer of the
to official company, to pay, deliver, convey, surrender, or transfer forthwith, or
liquidator witnin such time as the Court directs, to or into the hands of the official
c 45 §"66 1° ' liquidator (b), any sum or balance, books, papers, estate or effects which
happen to be in his hands for the time being, and to which the company
is prima facie entitled (c).
Power of court 101. The Court may, at any time after making an order for winding
to order payment up the company, make an order on any contributory for the time being
of debts by con- settled on the list of contributories, directing payment to be made, in
tributary. manner in the said order mentioned, of any monies due from him or from
[11 & 12 Vict. tlie estate 0f the person whom he represents to the company, exclusive of
& S'vi't3 c 60 any monies wmca ne or the estate of the Person wnom he rePresents may
§17.1 ^ ' ' be liable to contribute by virtue of any call made or to be made by the
Court in pursuance of this part of this act (</) ; and it may, in making
such order, when the company is not limited, allow to such contributory
by way of set-off any monies due to him or the estate which he represents
from the company on any independent dealing or contract with the com-
pany, but not any monies clue to him as a member of the company in
respect of any dividend or profit (e) :
Provided that when all the creditors of any company, whether limited
or unlimited, are paid in full, any monies due on any account whatever
to any contributory from the company may be allowed to him by way of
set-off against any subsequent call or calls (/).
Power of court 102. The Court may, at anytime after making an order for winding
to make calls. up a company, and either before or after it has ascertained the sufficiency
[20 Vict. c. 47, of the assets of the company, make calls on and order payment thereof by
§82.] ' ' all or any of the contributories for the time being settled on the list of
contributories, to the extent of their liability, for payment of all or any
sums it deems necessary to satisfy the debts and liabdities of the com-
pany, and the costs, charges, and expenses of winding it up, and for the
adjustment of the rights of the contributories amongst themselves ; and it
may, in making a call, take into consideration the probability that some
(z) See § 35, and ante, p. 121 el scq. {d) See, also, § 165, and Rule 35, and
(a) See § 76, and rules 29—31 ; and Form 39 in the 3rd. Sched. to the rules.
see ante p. 813. (e) See as to directors with unlimited
(&) See § 103 and §§ 115, 165. liability, 30 & 31 Vict. c. 131, § 6.
(c) See Form 13 in the 3rd Sched. to (/) See, further, as to set-off, § 38,
the rules. See, also, § 165, and ante, cl. 7, and 30 & 31 Vict. c. 181, § 0, and
pp. 693 et stq. ante, pp. 7-11 et scq.
25 & 20 Vict. cap. 89. — part iv. winking up. 959
of the eontributories upon whom the same is made may partly or wholly Appendix V.
fail to pay their respective portions of the same (</).
1 03. The Court may order any contributory, purchaser, or other person Power of court
from whom money is due to the company to pay the same into the Bank *° order payment
of England or any branch thereof to the account of the official liquidator lnto bank-
instead of to the official liquidator ; and such order maybe enforced in the \r® V0*" c' '
same manner as if it had directed payment to the official liquidator (h).
104. All monies, bills, notes, and other securities paid and delivered Regulation of
into the Bank of England or any branch thereof in the event of a company account with
being wound up by the Court, shall be subject to such order and regula- cour*'
tion for the keeping of the account of such monies and other effects, and
for the payment and delivery in or investment and payment and delivery
out of the same, as the Court may direct (i).
105. If any person made a contributory as personal representative of a Proceedings in
deceased contributory makes default in paying any sum ordered to be paid case of represen-
1 iv him, proceedings may be taken for administering the personal and real tativc con-
estates of such deceased contributorv, or either of such estates, and of com- tnbut017 not
... , A, P ,, . -. ... paying monies
pellmg payment thereout oi the monies due (k). ordered
106. Any order made by the Court in pursuance of this act upon any Order conclusive
contributory shall, subject to the provisions herein contained for appealing evidence,
against such order (§ 124), be conclusive evidence that the monies, if [11 & 12 Vict,
any, thereby appearing to be due or ordered to be paid are due ; and all c- 45, § 89.]
other pertinent matters stated in such order are to be taken to be truly
stated as against all persons, and in all proceedings whatsoever, with the
exception of proceedings taken against the real estate of any deceased
contributory, in which case such order shall only be primd facie evidence
for the purpose of charging his real estate, unless his heirs or devisees were
on the list of eontributories at the time of the order being made.
107. The Court may fix a certain day or certain days on or within Court may fix
which creditors of the company are to prove their debts or claims, or to a time for credi-
be excluded from the benefit of any distribution made before such debts tors to Prove.
are proved (I). [20 Vict. c. 47,
108. If in the course of proving the debts and claims of creditors in the ^ *
Court of the vice-warden of the Stannaries any debt or claim is disputed Proceedings in
by the official liquidator or bv any creditor or contributorv, or appears to -e cour ° s
• r, . -in i n i u vice-warden of
the Court to be open to question, the Court shall have power, subject to the Stannaries
appeal as hereinafter provided, to adjudicate upon it ; and for that purpose on proof of
the said Court shall have and exercise all needful powers of inquiry ^e^ts-
touching the same by affidavit or by oral examination of witnesses or of
parties, whether voluntarily offering themselves for examination or sum-
moned to attend by compulsory process of the Court, or to produce docu-
ments before the Court ; and the Court shall also have power, incidentally,
to decide on the validity and extent of any lien or charge claimed by any
creditor on any property of the company in respect of such debt, and to
make declarations of right, binding on all persons interested ; and for the
more satisfactory determination of any question of fact, or mixed question
of law and fact arising on such inquiry, the vice-warden shall have power,
if he thinks fit, to direct and settle any action or issue to lie tried either on
((/) See, further, as to calls, Rules 33, (t) See Rules 11, 32, and 36—44.
35, and ante, pp. 846 ct seq. (&) See § 76.
(//) See Rules 11, 32, and 36—41, {I) See Rules 20—28, and ante, pp.
and ante, p. 693. 713 ct seq.
960
THE COMPANIES ACT, 1862.
Appknpix V.
Court to adjust
rights of contri-
butories.
[20 Vict. c. 47,
§ 86.]
Court to order
costs.
[20 Vict. c. 47,
§87.]
Dissolution of
company.
[20 Vict. c. 47,
§93.]
Registrar to
make minute of
dissolution of
company.
[20 Vict. c. 47,
§94.]
Penalty on not
reporting dissolu
tion of company
[21 Vict. c. 14,
§20.]
Petition to be
Us pendens.
[11 & 12 Vict,
c. 45, § 125.]
Power of court
to summon be-
fore it persons
suspected of
having property
of company, &c.
[20 Vict. c. 47,
§77.]
the common law side of his Court, or by a common or special jury, before
the justices of assize in and for the counties of Cornwall or Devon, or at
any sitting of one of the superior courts in London or Middlesex, which
action or issue shall accordingly be tried in due course of law, and without
other or further consent of parties ; and the finding of the jury in such
art inn or issues shall be conclusive of the facts found, unless the judge
who tried it makes known to the vice-warden that he was not satisfied
with the finding, or unless it appears to the vice-warden that, in conse-
quence of miscarriage, accident, or the subsequent discovery of fresh
material evidence, such finding ought not to be conclusive.
109. The Court shall adjust the rights of the contributories amongst
themselves, and distribute any surplus that may remain amongst the parties
entitled thereto (m).
110. The Court may, in the event of the assets being insufficient to
satisfy the liabilities, make an order as to the payment out of the estate of
the company of the costs, charges, and expenses incurred in winding up
anv company in such order of priority as the Court thinks just (n).
111. When the affairs of the company have been completely wound up,
the Court shall make an order that the company be dissolved from the
date of such order, and the company shall be dissolved accordingly (o).
112. Any order so made shall be reported by the official liquidator to
the registrar, who shall make a minute accordingly in Ms books of the
dissolution of such company.
113. If the official liquidator makes default hi reporting to the registrar,
in the case of a company being wound up by the Court, the order that the
company be dissolved, he shall be liable to a penalty not exceeding five
pounds for every day during which he is so in default.
[114. Any petition for winding up a company by the Court under this
act shall constitute a lis pendens within the terms of the act passed in the
session holden in the second and third years of the reign of her present
Majesty, chapter eleven, and intituled, " An act for the better protection
of purchasers against judgments, crown debts, lis pendens, and fiats in
bankruptcy," provided the same is duly registered in manner required by
such act concerning suits in equity (p).]
Extraordinary powers of Court (q).
115. The Court may, after it has made an order for winding up the
company, summon (r) before it any officer of the company or person known
or suspected to have in his possession any of the estate or effects of the
company, or supposed to be indebted to the company, or any person whom
the Court may deem capable of giving information concerning the trade,
dealings, estate, or effects of the company ; and the Court may require
(//!) See, also, § 165, and ante, pp.
852, 867. Compare § 133 (10), though
the words are different the meaning is the
same. See Bridgewater Navigation Co.,
39 Ch. D, p. 21.
(n) See, as to costs of winding up,
ante, pp. 859 et seq.
(o) See Rules 65—67, and ante, p.
870.
( p) This section is repealed by 30 &
31 Vict. c. 47.
(q) See, also, §§ 117, 127, 165—168,
and ante, pp. 6S9 et seq.
(r) See Form 54 in the 3rd Schedule
to the rules. See also § 165, and ante,
pp. 689 et seq.
25 & 26 vict. cap. 89. — part iv. winding up. 901
iny such officer or person to produce any books, papers, deeds, writings, Appendix V.
or other documents in his custody or power relating to the company ; and ~~
if any person so summoned, after being tendered a reasonable sum for his
expenses, refuses to come before the Court at the time appointed, having
no lawful impediment (made known to the Court at the time of its sitting,
and allowed by it), the Court may cause such person to be apprehended,
and brought before the Court for examination ; nevertheless in cases
where any person claims any lien on papers, deeds, or writings or docu-
ments produced by him, such production shall be without prejudice to
such lien, and the Court shall have jurisdiction in the winding up to
determine all questions relating to such lien.
116. If, after an order for winding up in the Court of the vice- warden Special provi-
of the Stannaries, it appears that any person claims property in, or any si°ns as to court
lien, legal or equitable, upon any of the machinery, materials, ores, or °* vice-warclen
effects on the mine or on premises occupied by the company in connection
with the mine, or to which the company was, at the time of the order,
prima facie entitled, it shall be lawful for the vice-warden or the registrar
to adjudicate upon such claim on interpleader in the manner provided by
section eleven of the act passed in the eighteenth year of the reign of her [18 & 19 Vict,
present Majesty, chapter thirty-two ; and any action or issue directed upon c. 32, § 11.]
such interpleader may, if the vice-warden think fit, be tried in his court,
or at the assizes or the sittings in London or Middlesex, before a judge
of one of the superior courts, in the manner and on the terms and con-
ditions hereinbefore provided in the case of disputed debts and claims of
creditors.
117. The Court may examine upon oath, either by word of mouth or Examination of
upon written interrogatories, any person appearing or brought before them parties by court,
in manner aforesaid concerning the affairs, dealings, estate, or effects of the L*20 Vict. c. 4/,
company, and may reduce into writing the answers of every such person, 8 -J
and require him to subscribe the same (s).
118. The Court may, at any time before or after it has made an order Power to arrest
for winding up a company, upon proof being given that there is probable contributory
cause for believing that any contributory (t) to such company is about to a.°,u oa !,cont. '
quit the United Kingdom, or otherwise abscond, or to remove or conceal COnceal any of
any of his goods or chattels, for the purpose of evading payment of calls, his property.
or for avoiding examination in respect of the affairs of the company, [21 Vict, c 14
cause such contributory to be arrested, and his books, papers, monies, §11-]
securities for monies, goods, and chattels to be seized, and him and them
to be safely kept until such time as the Court may order (it).
119. Any powers by this act conferred on the Court shall be deemed to Powers of court
be in addition to and not in restriction of any other powers subsisting cumulative,
cither at law or in equity, of instituting proceedings against any contri-
butory, or the estate of any contributory, or against any debtor of the
company for the recovery of any call or other sums due from such con-
tributory, or debtor, or his estate ; and such proceedings may be instituted
accordingly.
Enforcement of and appeal from orders.
(
120. All orders made by the Court of Chancery in England or Ireland r°wer toenforco
under this act may be enforced in the same manner in which orders of orcc,b-
J [20 Vict. c. 47,
§60.]
(s) See ante, pp. 689 et seq. (u) See ante, p. G92.
(t) Or alleged contributory. See § 74.
L.C. 3 Q
962
THE COMPANIES ACT, 18G2.
Appendix V.
Power to order
contributories in
Scotland to pay
calls.
[22 Vict. c. 60,
§5.]
Order made in
England to be
enforced in Scot-
land and Ire-
land (y).
[22 Vict. c. 60,
§12.]
Mode of dealing
with orders to
be enforced by
other courts.
[22 Vict. c.
§13.]
60,
such Court of Chancery made in any suit pending therein may be enforced ;
and for the purposes of this part of this act the Court of the vice-
warden of the Stannaries shall, in addition to its ordinary powers, have
the same power of enforcing any orders made by it as the Court of
Chancery in England has in relation to matters within the jurisdiction of
such Court ; and for the last-mentioned purposes the jurisdiction of the
vice-warden of the Stannaries shall be deemed to be co-extensive in local
limits with the jurisdiction of the Court of Chancery in England (x).
121. Where an order, interlocutor, or decree has been made in Scot-
land for winding uj) a company by the Court, it shall be competent to the
Court in Scotland during session, and to the lord ordinary on the bills
during vacation, on production by the liquidators of a list certified by
them of the names of the contributories liable in payment of any calls
which they may wish to enforce, and of the amount due by each con-
tributory respectively and of the date when the same became due, to
pronounce forthwith a decree against such contributories for payment of
the sums so certified to be due by each of them respectively, with interest
from the said date till payment, at the rate of five pounds per centum per
annum, in the same way and to the same effect as if they had severally
consented to registration for execution, on a charge of six days, of a legal
obligation to pay such calls and interest ; and such decree may be extracted
immediately, and no suspension thereof shall be competent, except on
caution or consignation, unless with special leave of the Court or lord
ordinary.
122. Any order made by the Court in England for or in the course of
the winding up of a company under this act shall be enforced in Scotland
and Ireland in the Courts that would respectively have had jurisdiction in
respect of such company if the registered office of the company had been
situate in Scotland or Ireland, and in the same manner in all resj>ects as
if such order had been made by the Courts that are hereby required to
enforce the same ; and in like manner orders, interlocutors, and decrees,
made by the Court in Scotland (z) for or in the course of the winding up
of a company, shall be enforced in England and Ireland, and orders made
by the Court in Ireland for or in the course of winding up a company
shall be enforced in England and Scotland by the Courts which would
respectively have had jurisdiction in the matter of such company if the
registered office of the company were situate in the division of the United
Kingdom where the order is required to be enforced, and in the same
manner in all respects as if such order had been made by the Court
required to enforce the same in the case of a company within its own
jurisdiction.
123. Where any order, interlocutor, or decree made by one Court is re-
quired to be enforced by another Court, as hereinbefore provided, an office
copy of the order, interlocutor, or decree so made shall be produced to the
proper officer of the Court required to enforce the same, and the production
of such office copy shall be sufficient evidence of such order, interlocutor,
or decree having been made ; and thereupon such last-mentioned Court
shall take such steps in the matter as may be requisite for enforcing such
order, interlocutor, or decree in the same manner as if it were the order,
interlocutor, or decree of the Court enforcing the same.
(x) See ante, p. 697.
(;/) See International Pulp and Paper
Co., 3 Ch. D. 594.
(z) See City of Glasgow Bank, 14 Ch.
D. 628.
25 & 26 VICT. CAP. 89.— PART IV. WINDING UP. 963
124. Rehearings of (a) and appeals from any order or decision made or Appendix V.
given in the matter of the winding up of a company by any Court having ~ ~
jurisdiction under this act, may be had in the same manner and subject 0ISgrs
to the same conditions in and subject to which appeals may be had from
any order or decision of the same Court in cases within its ordinary juris- c 4^ ™ ioi—
diction ; subject to this restriction, that no such rehearing or appeal shall 102, 12 & 13
be heard unless notice of the same is given within three weeks after any Vict. c. 108,
order complained of has been made in manner in wbich notices of appeal § ^3.]
are ordinarily given according to the practice of the Court appealed from,
unless such time is extended by the Court of Appeal (b) : provided that it
shall be lawful for the lord warden of the Stannaries, by a special or
general order, to remit at once any appeal allowed and regularly lodged
with him against any order or decision of the vice-warden made in the
matter of a winding up to the Court of Appeal in Chancery ; which Court
shall thereupon hear and determine such appeal, and have power to re-
quire all such certificates of the vice-warden, records of proceedings below,
documents, and papers as the lord warden would or might have required
upon the hearing of such appeal, and to exercise all other the jurisdiction
and powers of the lord warden specified in the act of Parliament passed in
the eighteenth year of the reign of her present Majesty, chapter thirty-two ; [18 & 19 Vict,
and any order so made by the Court of Appeal in Chancery shall be final, c. 32.]
without any further appeal.
125. In all proceedings under this part of this act, all Courts, judges, Judicial notice
and persons judicially acting, and all other officers, judicial or ministerial, *? be taken ot
of any Court, or employed in enforcing the process of any Court, shall 0j£cers &c
take judicial notice of the signature of any officer of the Courts of Chancery r,-i & 12 Vict
or Bankruptcy in England or in Ireland, or of the Court of Session in c< 45 § ill.]
Scotland, or of the registrar of the Court of the vice-warden of the Stan-
naries, and also of the official seal or stamp of the several offices of the
Courts of Chancery or Bankruptcy in England or Ireland, or of the Court
of Session in Scotland, or of the Court of the vice-warden of the Stan-
naries, when such seal or stamp is appended to or impressed on any docu-
ment made, issued, or signed under the provisions of this part of the act,
or any official copy thereof.
126. [The commissioners of the Court of Bankruptcy (c) and] the judges Special commis-
of the county courts in England who sit at places more than twenty miles S10°ers for takm«
from the General Post Office, and the commissioners of bankrupt and the
assistant barristers and recorders in Ireland, and the sheriffs of counties L 101l-i '
in Scotland, shall be commissioners for the purpose of taking evidence
under this act in cases where any company is wound up in any part of the
United Kingdom ; and it shall be lawful for the Court to refer the whole
or any part of the examination of any witnesses under this act to any
person hereby appointed commissioner, although such commissioner is out
of the jurisdiction of the Court that made the order or decree for winding
up the company ; and every such commissioner shall, in addition to any
power of summoning and examining witnesses, and requiring the produc-
tion or delivery of documents, and certifying or punishing defaults by
witnesses, which he might lawfully exercise as a [commissioner of the
Court of Bankruptcy] (c), judge of a county court, commissioner of bank-
«
(a) As to rehearings, see aide, j>. 71.r), and 748.
699. (c) These words repealed by 38 & 39
(f>) See ante, pp. 662, 697 ~et scj., Vict. c. 66.
3 Q 2
964
THE COMPANIES ACT, 1862.
Appendix V
Court may order
the examination
of persons in
Scotland.
[12 & 13 Vict.
c. 108, §21.]
Affidavits
may be sworn,
&c, before
any competent
court or person.
[12 & 13 Vict.
c. 108, § 24.]
rapt, assistant barrister, or recorder, or as a sheriff of a county, have in the
matter so referred to him all the same powers of summoning and examin-
ing witnesses, and requiring the production or delivery of documents, and
punishing defaults by witnesses, and allowing costs and charges and ex-
penses to witnesses, as the Court which made the order for winding up
the company has ; and the examination so taken shall be returned or
reported to such last-mentioned Court in such manner as it directs.
127. The Court may direct the examination in Scotland of any person
for the time being in Scotland, whether a contributory of the company or
not, in regard to the estate, dealings, or affairs of any company in the
course of being wound up, or in regard to the estate, dealings, or affairs of
any person being a contributory of the company, so far as the company
may be interested therein by reason of his being such contributory ; and
the order or commission to take such examination shall be directed to the
sheriff of the county in which the person to be examined is residing or
happens to be for the time ; and the sheriff shall summon such person to
appear before him at a time and place to be specified in the summons for
examination upon oath as a witness or as a haver, and to produce any
books, papers, deeds, or documents called for which may be in his posses-
sion or power ; and the sheriff may take such examination either orally or
upon written interrogatories and shall report the same in writing in the
usual form to the Court and shall transmit with such report the books,
papers, deeds, or documents produced, if the originals thereof are required
and specified by the order, or otherwise such copies thereof or extracts
therefrom, authenticated by the sheriff, as may be necessary ; and in case
any person so summoned fails to appear at the time and place specified, or
appearing refuses to be examined, or to make the production required, the
sheriff shall proceed against such person as a witness or haver duly cited,
and failing to appear or refusing to give evidence or make production may
be proceeded against by the law of Scotland : and the sheriff shall be
entitled to such and the like fees, and the witness shall be entitled to such
and the like allowances as sheriffs when acting as commissioners under
appointment from the Court of Session, and as witnesses and havers are
entitled to in the like cases according to the law and practice of Scotland ;
if any objection is stated to the sheriff by the witness, either on the ground
of his incompetency as a witness, or as to the production required to be
made, or on any other ground whatever, the sheriff may, if he thinks fit,
report such objection to the Court, and suspend the examination of such
witness until such objection has been disposed of by the Court.
128. Any affidavit, affirmation, or declaration required to be sworn or
made, under the provisions or for the purposes of this part of this act, may
be lawfully sworn or made in Great Britain or Ireland, or in any colony,
island, plantation, or place under the dominion of her Majesty in foreign
parts, before any court, judge, or person lawfully authorised to take and
receive affidavits, affirmations, or declarations, or before any of her
Majesty's consuls or vice-consuls, in any foreign parts out of her Majesty's
dominions ; and all courts, judges, justices, commissioners, and persons
acting judicially shall take judicial notice of the seal or stamp or signature
(as the case may be) of any such court, judge, person, consul, or vice-consul
attached, appended, or subscribed to any such affidavit, affirmation, or
declaration, or to any other document to be used for the purposes of this
part of this act.
25 & 26 vict. cap. 89. — part iv. winding up. 965
Voluntary winding up of company (d). DIX '
129. A company under this act may be wound up voluntarily, Circumstances
(1.) AVhenever the period, if any, fixed for the duration of the com- under which
pany bv the articles of association expires, or whenever the event, comPaQy may >Je
.... wound up
if any occurs, upon the occurrence of which it is provided by voluntarily
the articles of association that the company is to be dissolved, ran y t --
and the company in general meeting has passed a resolution § 102.]
requiring the company to be wound up voluntarily :
(2.) Whenever the company has passed a special resolution requiring
the company to be wound up voluntarily (e) :
(3.) Whenever the company has passed an extraordinary resolution to
the effect that it has been proved to their satisfaction that the
company cannot, by reason of its liabilities, continue its busi-
ness, and that it is advisable to wind up the same ( / ) :
For the purposes of this act, any resolution shall be deemed to be extra-
ordinary which is passed in such manner as would, if it had been confirmed
by a subsequent meeting, have constituted a special resolution, as herein-
before defined ((/).
1 30. A voluntary winding up shall be deemed to commence at the time Commencement
of the passing of the resolution authorising such winding up (h). of. voluntary
131. Whenever a company is wound up voluntarily, the company shall, ^? J?*! UP' .7
from the date of the commencement of such winding up, cease to carry on k g4 -,1C " c" '
its business, except in so far as may be required for the beneficial winding
up thereof, and all transfers of shares, except transfers made to or with tary wjn(jjI1g up
the sanction of the liquidators, or alteration in the status of the members on status of
of the company taking place after the commencement of such winding up, company,
shall be void (i), but its corporate state and all its corporate powers shall, [20 Vict. c. 47,
notwithstanding it is otherwise provided by its regulations, continue until § 1°4.]
the affairs of the company are wound up (A:).
132. Notice of any special resolution or extraordinary resolution passed Notice of resolu-
for winding up a company voluntarily shall be given by advertisement as t1011 fc° ^jnd up
respects companies registered in England in the " London Gazette," as ' '
respects companies registered in Scotland in the " Edinburgh Gazette," and k"jo3 "l '
as respects companies registered in Ireland in the " Dublin Gazette."
133. The following consequences shall ensue upon the voluntary winding Consequences of
up of a company : voluntary wind-
(1.) The property of the company shall be applied in satisfaction of mg u*
its liabilities pari 'passu (1), and, subject thereto, shall, unless it £2.?0Y1?t c* 47'
be otherwise provided by the regulations of the company, be b
distributed amongst the members, according to their rights and
interests in the company :
(2.) Liquidators shall be appointed for the purpose of winding up the
affairs of the company and distributing the property :
(3.) The company in general meeting shall appoint such persons or
person as it thinks tit to be liquidators or a liquidator, and may
fix the remuneration to be paid to them or him (m) :
(d) See ante, pp. 874 et seq. (i) See § 153, and ante, pp. 667,
(e) See §§ 51, 53, and 132. 673.
(/) See ante, p. 877, and as to (/•) See §§ 142, 143, and ante, p. 885.
advertisement of the resolution, § 132. (I) See § 159, and ante, p. 884.
{g) See §51. [m) See §§ 135 and 140, 141, and
(h) See ante, pp. 664, 877. ante, pp. 878, et seq.
I
966 THE COMPANIES ACT, 1862.
Appendix V (4-) ^ 01ie Person on^J is appointed, all the provisions herein con-
tained in reference to several liquidators shall apply to him :
(5.) Upon the appointment of liquidators, all the power of the
directors shall cease, except in so far as the company in general
meeting or the liquidators may sanction the continuance of such
powers :
(6.) When several liquidators are appointed, every power hereby
given may be exercised by such one or more of them, as may be
determined at the time of their appointment, or in default of
such determination by any number not less than two :
(7.) The liquidators may, without the sanction of the Court, exercise
all powers by this act given to the official liquidator (?<) :
(8.) The liquidators may exercise the powers hereinbefore given to
the Court of settling the list of contributories of the company ;
and any list so settled shall be prima facie evidence of the
liability of the persons named therein to be contributories (o) :
(9.) The liquidators may at any time after the passing of the resolu-
tion for winding up the company, and before they have ascer-
tained the sufficiency of the assets of the company, call on all
or any of the contributories for the time being settled on the
list of contributories to the extent of their liability to pay all or
any sums they deem necessary to satisfy the debts and liabilities
of the company, and the costs, charges, and expenses of winding
it up, and for the adjustment of the rights of the contributories
amongst themselves ; and the liquidators may in making a call
take into consideration the probability that some of the contri-
butories upon whom the same is made may partly or wholly
fail to pay their respective portions of the same ( p) :
(10.) The liquidators shall pay the debts of the company, and adjust
the right of the contributories amongst themselves (q).
Effect of winding 134. Where a company limited by guarantee, and having a capital
up on share divided into shares, is being wound up voluntarily, any share capital that
capital of com- may not have been called up shall be deemed to be assets of the com-
by guarantee Panv> anc^ '° ^e a specialty debt due from each member to the company
to the extent of any sums that may be unpaid on any shares held by him,
and payable at such time as may be appointed by the liquidators (r).
Power of com- 135. A company about to be wound up voluntarily, or in the course
pany to delegate of being wound up voluntarily, may, by an extraordinary resolution (s),
authority to delegate to its creditors, or to any committee of its creditors, the power of
dators k^' appointing liquidators or any of them, and supplying any vacancies in
the appointment of liquidators, or may by a like resolution enter into any
arrangement with respect to the powers to be exercised by the liquidators,
and the manner in which they are to be exercised ; and any act done by
the creditors in pursuance of such delegated powers shall have the same
effect as if it had been done by the company.
Arrangement 136. Any arrangement entered into between a company about to be
when binding wound up voluntarily, or in the course of being wound up voluntarily,
company and
on creditors.
(n) See §§ 95, 138, 139, 159, 160, are different but the meaning the same,
and ante, pp. 708 et seq. See Bridgewater Navigation Co., 39 Ch.
(o) See §§ 98, 99, and ante, p. 745. D. p. 21.
(jo) See, also, § 102, and ante, p. 884. (r) See, also, § 90.
(q) Compare § 109, where the words (s) § 129.
25 & 26 vict. cap. 89. — part iv. winding up. 967
and its creditors, shall be binding on the company if sanctioned by an Appendix V.
extraordinary resolution (s), and on the creditors if acceded to by three-
fourths in number and value of the creditors, subject to such right of
appeal as is hereinafter mentioned.
137. Any creditor or contributory of a company that has in manner Power of creditor
aforesaid entered into any arrangement with its creditors may, within or contributory
three weeks from the date of the completion of such arrangement, appeal to appeal.
to the Court against such arrangement, and the Court may thereupon, as
it thinks just, amend, vary, or confirm the same (t).
138. Where a company is being wound up voluntarily, the liquidators p0Wer for liqui-
or any contributory of the company may apply to the Court («) in Eng- dators or contri-
land, Ireland, or Scotland, or to the Lord Ordinary on the bills in Scotland butories in vo-
in time of vacation, to drtt-nuine any question arising in the matter of such un ,ary ^inf in8
- , j. t, • up to apply to
winding up, or to exercise, as respects the enforcing ot calls, or m respect court.
of any other matter, all or any of the powers which the Court might exer- ^ vict> c> g(l
cise if the company were being wound up by the Court; and the Court § 14.]
or Lord Ordinary in the case aforesaid, if satisfied that the determina-
tion of such question, or the required exercise of power, will be just and
beneficial (x) may accede, wholly or partially, to such application, on such
terms and subject to such conditions as the Court thinks fit, or it may
make such other order, interlocutor, or decree on such application as the
Court thinks just.
139. Where a company is being wound up voluntarily the liquidators Power of liqui-
may, from time to time, during the continuance of such winding up, dators to call
summon general meetings of the company for the purpose of obtaining general meetings,
the sanction of the company by special resolution or extraordinary resolu- t-| Aicfc' c" 14'
tion, or for any other purposes they think fit ; and in the event of the s
winding up continuing for more than one year, the liquidators shall
summon a general meeting of the company at the end of the first year,
and of each succeeding year from the commencement of the winding up, or
as soon thereafter as may be convenient, and shall lay before such meeting
an account showing their acts and dealings, and the manner in which the
winding up has been conducted during the preceding year.
140. If any vacancy occurs in the office of liquidators appointed by the Power to till
company, by death, resignation, or otherwise, the company in general up vacancy in
meeting may, subject to any arrangement they may have entered into liquidators.
with their creditors, fill up such vacancy ; and a general meeting for the [22 Vict. c. 6<i,
purpose of filling up such vacancy may be convened by the continuing § 15-J
liquidators, if any, or by any contributory of the company, and shall be
deemed to have been duly held if held in manner prescribed by the regu-
lations of the company, or in such other manner as may, on application
by the continuing liquidator, if any, or by any contributory of the com-
pany, be determined by the Court.
141. If from any cause whatever there is no liquidator acting in the Power of court
case of a voluntary winding up, the Court may, on the application of a to appoint
contributory, appoint a liquidator or liquidators ; the Court may also, on iqui a ors'
due cause shown, remove any liquidator, and appoint another liquidator
to act in the matter of a voluntary winding up (y).
(s) § 129. (a?) See Gold Co., 12 Ch. D. 77, and
(<) See Rule 51. JMron's case, 15 Ch. D. 139.
{u) See Rule 51. See ante, p. 615, (y) See Rule 51. and § 150, and ante,
and as to staying actions, &c. , pp. 673 pp. 703, 878.
et seq., and p. 883.
968
THE COMPANIES ACT, 1862.
Appendix V.
Liquidators on
conclusion of
winding up to
make an ac-
count and lay it
before general
meeting.
[20 Vict. c. 47,
§ 104.]
Liquidators to
report meeting
to registrar.
[20 Vict. c. 47,
§104.]
Costs of volun-
tary liquidation.
[20 Vict. c. 47,
* 104.]
Creditor may
insist on winding
up by Court.
[20 Vict. c. 47,
§105.]
Power of court
to adopt proceed-
ings of voluntary
winding up.
[21 Vict. c. 14,
§19.]
142. As soon as the affairs of the company are fully wound up, the
liquidators shall make up an account showing the manner in which such
winding up has been conducted, and the property of the company disposed
of ; and thereupon they shall call a general meeting of the company for
the purpose of having the account laid before them and hearing any
explanation that may be given by the liquidators ; the meeting shall be
called by advertisement, specifying the time, place, and object of such
meeting ; and such advertisement shall be published one month at least
previously to the meeting, as respects companies registered in England in
the " London Gazette," and as respects companies registered in Scotland
in the " Edinburgh Gazette," and as respects companies registered in
Ireland in the " Dublin Gazette."
143. The liquidators shall make a return to the registrar of such
meeting having been held, and of the date at which the same was held ;
and on the expiration of three months from the date of the registration of
such return the company shall be deemed to be dissolved : if the liquida-
tors make default in making such return to the registrar they shall incur
a penalty not exceeding five pounds for every day during which such
default continues.
144. All costs, charges, and expenses properly incurred in the voluntary
winding up of a company, including the remuneration of the liquidators,
shall be payable out of the assets of the company in priority to all other
claims.
145. The voluntary winding up of a company shall not be a bar to the
right of any creditor of such company to have the same wound up by the
Court, if the Court is of opinion that the rights of such creditor will be
prejudiced by a voluntary winding up (z).
146. Where a company is in course of being wound up voluntarily,
and proceedings are taken for the purpose of having the same wound up
by the Court, the Court may, if it thinks fit, notwithstanding that it
makes an order directing the company to be wound up by the Court, pro-
vide in such order or in any other order for the adojntion of all or any of
the proceedings taken in the course of the voluntary winding up (a).
Power of court
to direct volun-
tary winding up
to continue sub-
ject to super-
vision of Court.
[21 Vict. c. 14,
§19.]
Effect of petition
for continuance
of winding up
subject to
supervision.
[22 Vict. c. 60,
§2.]
Winding up subject to the supervision of the Court (b).
147. When a resolution has been passed by a company to wind up
voluntarily, the Court may make an order directing that the voluntary
winding up should continue, but subject to such supervision of the Court,
and with such liberty for creditors, contributories, or others, to apply to
the Court, and generally upon such terms and subject to such conditions
as the Court thinks just (c).
148. A petition, praying wholly or in part that a voluntary winding up
should continue, but subject to the supervision of the Court, and which
winding up is hereinafter referred to as a winding up subject to the super-
vision of the Court, shall, for the purpose of giving jurisdiction to the
(z) Ante, p. 636. As to how far a
compulsory order supersedes a voluntary
winding up, see Thomas v. Patent Lionite
Co., 17 Ch. D. 250.
(a) See Taurine Co., 25 Ch. D. 118,
p. 139.
(&) See ante, p. 886.
(c) For form of order, see form No. 4,
in the 3rd Sched. to the Rules. As to
who may petition, and as to "or others''
see Pen y Van Colliery Co., 6 Ch. D.
477.
25 & 26 vict. cap. 89. — rART iv. winding up. 969
Court over suits and actions, be deemed to be a petition for •winding up Appendix V.
the company by the Court (d).
149. The Court may, in determining whether a company is to be Court may have
wound up altogether by the Court, or subject to the supervision of the regard to wishes
Court in the appointment of liquidator or liquidators, and in all other °^ crechtors.
matters relating to the winding up subject to supervision, have regard to [22 Viet. e. 60,
the wishes of the creditors or contributories as proved to it by any ss 2 &3-J
sufficient evidence, and may direct meetings of the creditors or contribu-
tories to be summoned, held, and regulated in such manner as the Court
directs for the purpose of ascertaining their wishes, and may appoint a
person to act as chairman of any such meeting, and to report the result of
such meeting to the Court : in the case of creditors regard shall be had to
the value of the debts due to each creditor, and in the case of contribu-
tories to the number of votes conferred on each contributory by the regu-
lations of the company (e).
150. Where any order is made by the Court for a winding up subject Power to court
to the supervision of the Court, the Court may, in such order or in any t0 appoint addi-
subsequent order, appoint any additional liquidator or liquidators; and .lon^ ^Lul(lat<)rs
in winum^ up
any liquidators so appointed by the Court shall have the same powers, be subject to super-
subject to the same obligations, and in all respects stand in the same vision,
position as if they had been appointed by the company ; the Court may [22 Vict. c. 60,
from time to time remove any liquidators so appointed by the Court, § 3.]
and fill up any vacancy occasioned by such removal, or by death or
resignation (/).
151. Where an order is made for winding up, subject to the supervision Effect of order
of the Court, the liquidators appointed to conduct such winding up may, °* court for
subject to any restrictions imposed by the Court, exercise all their powers, win.t,1°g UP
without the sanction or intervention of the Court, in the same manner as supervision.
if the company were being wound up altogether voluntarily ; but, save as r.>2 y- t c qq
aforesaid, any order made by the Court for a winding up, subject to the § 4.]
supervision of the Court, shall for all purposes, including the staying of
actions, suits, and other proceedings, be deemed to be an order of the
Court for winding up the company by the Court, and shall confer full
authority on the Court to make calls, or to enforce calls made by the
liquidators, and to exercise all other powers which it might have exercised
if an order had been made for winding up the company altogether by the
Court ; and in the construction of the provisions whereby the Court is em-
powered to direct any act or thing to be done to or in favour of the official
liquidators, the expression official liquidators shall be deemed to mean the
liquidators conducting the winding up subject to the supervision of the
Court (g).
152. Where an order has been made for the winding up of a company Appointment in
subject to the supervision of the Court, and such order is afterwards super- certam cases of
seded (h) by an order directing the company to be wound up compulsorily, ciators to be'1
official liqui-
(d) See § 85 ; and as to the petition, Lag actions, &c., p. 674 ; as to dealings ' „.
see Rules 1 — 5, and see ante, pp. 654 with property, p. 666 ; as to transfers «~3 1
et seq., and p. 673. of shares, pp. 831 et seq. ; as to com-
(e) See, also, § 91, and Rules 45—47. promises, &c., §§ 159 and 160.
(/) See, also, § 141. (h) As to how far a compulsory order
(g) See, as to this section, ante, p. supersedes a voluntary winding up, see
888 ; as to the commencement of the Thomas v. Patent Lionite Co., 17 Oh.
winding up, pp. 664 and 889 ; as to stay- D. 250.
970
THE COMPANIES ACT, 1862.
Appendix V. the Court may in such last mentioned order, or in any subsequent order,
appoint the voluntary liquidators or any of them, either provisionally or
permanently, and either 'with or without the addition of any other
persons, to be official liquidators.
Dispositions of
property, &c,
after the com-
mencement of the
winding up to be
void.
[20 Vict. c. 47,
§ 73.]
The books of the
company to be
evidence.
[20 Vict. c. 47.
§81.]
Disposal of
books, accounts,
and documents
of the company.
Inspection of
books.
L22 Vict. c. 60.
§7.]
Power of assignee
to sue and be
sued.
Debts and claims
of all descriptions
to be proved.
Supplemental provisions.
153. Where any company is being wound up by the Court or subject
to tbe 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
commencement of the winding up (/) and the order for winding up, shall,
unless the Court otherwise orders, be void (k).
154. Where any company is being wound up, all books, accounts, and
documents of the company and of the liquidators shall, as between the
contributories of the company (I), be prima facie evidence of the truth of
all matters purporting to be therein recorded (m).
155. Where any company has been wound up under this act and is
about to be dissolved, the books, accounts, and documents of the company
and of the liquidators may be disposed of in the following way ; that is
to say, where the company has been wound up by or subject to the super-
vision of the Court, in such way as the Court directs, and where the com-
pany has been wound up voluntarily, in such way as the company by an
extraordinary resolution directs ; but after the lapse of five years from the
date of such dissolution, no responsibility shall rest on the company, or
the liquidators, or any one to whom tbe custody of such books, accounts,
and documents has been committed, by reason that tbe same, or any of
them, cannot be made forthcoming to any party or parties claiming to be
interested therein (n).
156. Where an order has been made for winding up a company by the
Court, or subject to the supervision of the Court, the Court may make
such order for the inspection by the creditors and contributories of the
company of its books and papers as the Court thinks just ; and any books
and papers in the possession of the company may be inspected by creditors
or contributories, in conformity with the order of the Court, but not
further or otherwise (o).
157. Any person to whom any thing in action belonging to the com-
pany is assigned, in pursuance of this act, may bring or defend any action
or suit relating to such thing in action in his own name.
1 ~> 8. In the event of any company being wound up under this act, all
debts payable on a contingency, and all claims against the company,
present or future, certain or contingent, ascertained or sounding only
in damages, shall be admissible to proof against the company, a jtrst
estimate being made, so far as is possible, of the value of all such debts
or claims, as may be subject to any contingency or sound only in
damages, or for some other reason do not bear a certain value (p).
(0 See § 84.
(k) See, also, §§ 131, 163, 164, and
ante, pp. C66 et ,?"/.
(I) And alleged contributories, see
74.
(to) See ante, p. 705.
(n) As to right of litigants to compel
the production of these books by the
liquidator, see London and Yorkshire
Bank v. Cooper, 15 Q. B. D. 473.
(o) See Rule 58, and ante, p. 704.
(p) See Rules 20—28, and ante, pp.
25 & 26 vict. cap. 89. — part iv. winding up. 971
159. The liquidators may, with the sanction of the Court (q), where Appendix V.
the company is being wound up by the Court or subject to the supervision p . ma^e
of the Court, and with the sanction of an extraordinary resolution (r) of COmpromises,&c,
the company, where the company is being wound up altogether volun- with creditors,
tarily, pay any classes of creditors in full, or make such compromise or [9-2 yict. c. 60,
other arrangement as the liquidators may deem expedient with creditors § 10.]
or persons claiming to be creditors, or persons having or alleging them-
selves to have any claim, present or future, certain or contingent,
ascertained or sounding only in damages against the company, or whereby
the company may be rendered liable (s).
160. The liquidators may, with the sanction of the Court (t) where the Power to make
company is being wound up by the Court or subject to the supervision compromises
of the Court, and with the sanction of an extraordinary resolution (u) of ^ debtors
the company where the company is being wound up altogether voluntarily, fi0
compromise all calls and liabilities to calls, debts, and liabilities capable | ^g -i
of resulting in debts, and all claims, whether present or future, certain or
contingent, ascertained or sounding only in damages, subsisting or sup-
posed to subsist between the company and any contributory or alleged
contributory, or other debtor or person apprehending liability to the com-
pany, and all questions in any way relating to or affecting the assets of
the company or the winding up of the company, upon the receipt of such
sums, payable at such times, and generally upon such terms as may be
agreed upon, with power for the liquidators to take any security for the
discharge of such debts or liabilities, and to give complete discharges in
respect of all or any such calls, debts, or liabilities (x).
161. "Where any company is proposed to be or is in the course of being Power for liqui-
wound up altogether voluntarily, and the whole or a portion of its business dators to accept
or property is proposed to be transferred or sold to another companv, s arf!' f.-' as, a
, ,. ., ,, , „ . t -ii • p consideration for
the liquidators of the first-mentioned company may, with the sanction of saje 0j pr0perty
a special resolution (y) of the company by whom they were appointed, to another
conferring either a general authority on the liquidators, or an authority company,
in respect of any particular arrangement, receive in compensation or part [21 Vict. c. 14,
compensation for such transfer or sale, shares, policies, or other like in- si' -J
t crests in such other company, for the purpose of distribution amongst the
members of the company being wound up, or may enter into any other
arrangement whereby the members of the company being wound up may,
in lieu of receiving cash, shares, policies, or other like interests, or in
addition thereto, participate in the profits of or receive any other benefit
from the purchasing company ; and any sale made or arrangement entered
into by the liquidators in pursuance of this section shall be binding on
the members of the company being wound up ; subject to this proviso, that
if any member of the company being wound up, who has not voted in
favour of the special resolution passed by the company of which he is
a member at either of the meetings held for passing the same, expresses his
dissent from any such special resolution in writing addressed to the liqui-
dators or one of them, and left at the registered office of the company not
716 et seq. ; and as to annuities and (t) See Rules 50, 60 — 62.
policies, 35 & 36 Vict. c. 41, ante, p. (it) See § 129.
732. («) See §§ 136, 137 ; 33 & 31 Vict.
(q) See rules 49, 60—62. c. 104, § 2, ante, pp. 709 ct seq.
(r) See § 129. (y) See § 51.
(s) See ante, pp. 709, 711.
972
THE COMPANIES ACT, 1862.
Appendix V.
Mode of deter-
mining price.
Certain attach-
ments, &c, to
be void.
[20 Vict. c. 47,
§80.]
Fraudulent pre-
ference.
[20 Vict. c. 47,
§76.1
Power of court
to adjudicate
later than seven days after the date of the meeting at which such special
resolution was passed (as), such dissentient member may require the liqui-
dators to do one of the following things as the liquidators may prefer; that
is to say, either to abstain from carrying such resolution into effect, or to
purchase the interest held by such dissentient member at a price to be
determined in manner hereinafter mentioned, such purchase-money to be
paid before the company is dissolved, and to be raised by the liquidators
in such manner as may be determined by special resolution ; no special
resolution shall be deemed invalid for the purposes of this section by reason
that it is passed antecedently to or concurrently with any resolution for
winding up the company, or for appointing liquidators ; but if an order be
made within a year for winding up the company by or subject to the super-
vision of the Court, such resolution shall not be of any validity unless it
is sanctioned by the Court («).
162. The price to be paid for the purchase of the interest of any dis-
sentient member may be determined by agreement ; but if the parties
dispute about the same, such dispute shall be settled by arbitration, and
for the purposes of such arbitration the provisions of " The companies
clauses consolidation act, 1845," with respect to the settlement of disputes
by arbitration (b), shall be incorporated with this act ; and in the con-
struction of such provisions this act shall be deemed to be the special act,
and the " company " shall mean the company that is being wound up, and
any appointment by the said incorporated provisions directed to be made
under the hand of the secretary, or any two of the directors, may be made
under the hand of the liquidator, if only one, or any two or more of the
liquidators if more than one.
163. Where any company is being wound up by the Court or subject
to the supervision of the Court, any attachment, sequestration, distress, or
execution put in force against the estate or effects of the company after the
commencement of the winding up shall be void to all intents (c).
1 64. Any such conveyance, mortgage, delivery of goods, payment, execu-
tion, or other act relating to property as would, if made or done by or
against any individual trader, be deemed in the event of his bankruptcy to
have been made or done by way of undue or fraudulent preference of the
creditors of such trader, shall, if made or done by or against any company,
be deemed, in the event of such company being wound up under this
act, to have been made or clone by way of undue or fraudulent preference
of the creditors of such company, and shall be invalid accordingly (d) ; and
for the purposes of this section the presentation of a petition for winding
up a company shall in the case of a company being wound up by the Court
or subject to the supervision of the Court, and a resolution for winding up
the company shall in the case of a voluntary winding up, be deemed to
correspond with the act of bankruptcy in the case of an individual trader :
and any conveyance or assignment made by any company formed under
this act of all its estate and effects to trustees for the benefit of all its
creditors shall be void to all intents.
165. Where, in the course of the winding up of any company under
(z) Union Bank of Kingston-upon-
Hull, 13 Ch. D. 808.
(a) See, as to transfers of business
under §§ 161 and 162, ante, pp. 711,
882, and 894.
(b> 8 & 9 Vict. c. 16, §§ 128—134.
(c) See, also, §§ 84, 85, 87, 197, 198,
201, 202, and see ante, pp. 671 et seq.
(d) See ante, p. 668.
25 & 26 vict. cap. 89. — part iv. winding up. 973
this act, it appears that any past or present director, manager, official, or Appendix V.
other liquidator, or any officer of such company, has misapplied or re- acninst delin-
tained in his own hands or become liable or accountable for any monies quent directors
of the company, or been guilty of any misfeasance or breach of trust in and officers,
relation to the company, the Court may, on the application of any liqui-
dator, or of any creditor or contributory of the company, notwithstanding
that the offence is one for which the offender is criminally responsible,
examine into the conduct of such director, manager, or other officer, and
compel him to repay any monies so misapplied or retained, or for which
he has become liable or accountable, together with interest after such rate
as the Court thinks just, or to contribute such sums of money to the
assets of the company by way of compensation in respect of such misap-
plication, retainer, misfeasance, or breach of trust, as the Court thinks
just (e).
1G6. If any director, officer, or contributory of any company wound up Penalty on
under this act destroys, mutilates, alters, or falsifies any books, papers, talsmcation or
writings, or securities, or makes or is privy to the making of any false or
fraudulent entry in any register, book of account, or other document be- k *g -,1C ' c" '
longing to the company with intent to defraud or deceive any person,
every person so offending shall be deemed to be guilty of a misdemeanor,
and upon being convicted shall be liable to imprisonment for any term not
exceeding two years, with or without hard labour (/ ).
167. Where any order is made for winding up a company by the Court Prosecution of
or subject to the supervision of the Court, if it appear in the course of delinquent di-
. rectors etc m
such winding up that any past or present director, manager, officer, or ^ cas'e of '^;n(i.
member of such company has been guilty of any offence in relation to the ino Up by court.
company for which he is criminally responsible (g), the Court may, on the r.22 Vict. c. 60,
application of any person interested in such winding up (/i), or of its own § 20.]
motion, direct the official liquidators, or the liquidators (as the case may
be), to institute and conduct a prosecution or prosecutions for such offence,
and may order the costs and expenses to be paid out of the assets of the
company.
168. Where a company is being wound up altogether voluntarily, if it Prosecution of
appear to the liquidators conducting such winding up that any past or pre- delinquent di-
sent director, manager, officer, or member of such company has been guilty iec 0f Voluntary
of any offence in relation to the company for which he is criminally windin°- up.
responsible, it shall be lawful for the liquidators, with the previous sanction ^ yjc^ c qq
of the Court (z), to prosecute such offender; and all expenses properly § 2 1.]
incurred by them in such prosecution shall be payable out of the assets of
the company in priority to all other liabilities.
169. If any person, upon any examination upon oath or affirmation Penalty on
authorised under this act, or in any affidavit, deposition, or solemn PerJul7-
affirmation in or about the winding up of any company under this act, or [H & 12 Vict,
otherwise in or about any matter arising under this act, wilfully and c' ' ° '■■
corruptly give false evidence, he shall, upon conviction, be liable to the
penalties of wilful perjury.
(e) See ante, pp. 693 et seq, seq., ante, pp. 446, 697.
(/ ) See, also, 24 & 25 Vict. c. 96, (h) See Rule 51.
§ 83, ante, pp. 446 et seq. (i) See Rule 51, and ante, p. 831.
(g) See 24 & 25 Vict. c. 96, §§ 82, et
974
THE COMPANIES ACT, 1862.
Appendix V.
Power of Lord
Chancellor of
Great Britain to
make rules.
[20 Vict. c. 47,
§ 95, and 22
Vict. c. 60,
§11.]
Power of Court
of Session in
Scotland to
make rules.
[20 Vict.
§97.]
c. 47,
Power to make
rules in Stan-
naries Court.
[20 Vict. c. 47,
§98.]
Power of Lord
Chancellor of
Ireland to make
rules.
[20 Vict. c. 47,
§96.]
Power of courts to make rules.
[170 authorised the Lord Chancellor to make rules concerning the
mode of proceeding to be had for winding up a company in the Court of
Chancery, and enacted that until such rules were made the general practice
of the Court of Chancery, including the practice hitherto in use in
winding up companies, should, so far as the same was applicable and not
inconsistent with this act, apply to all proceedings for winding up a
company (A-).]
171. In Scotland, the Court of Session may mate such rules concern-
ing the mode of winding up as may be necessary by act of sederunt ; but,
until such rules are made, the general practice of the Court of Session in
suits pending in such Court shall, so far as the same is applicable and not
inconsistent with this act, apply to all proceedings for winding up a
company, and official liquidators shall in all respects be considered as
possessing the same powers as any trustee on a bankrupt estate.
172. The vice- warden of the Stannaries may, from time to time, with the
consent provided for by section twenty-three of the act of eighteenth of
Victoria, chapter thirty-two, make rules for carrying into effect the powers
conferred by this act upon the Court of the vice-warden ; but, subject to
such rules, the general practice of the said Court, and of the registrar's
office in the said Court, including the present practice of the said Court in
winding up companies, may be applied to all proceedings under this act.
The said vice-warden may likewise, with the same consent, make from time
to time rules for specifying the fees to be taken in his said Court in pro-
ceedings under this act ; and any rules so made shall be of the same force
as if they had been enacted in the body of this act ; and the fees paid in
respect of proceedings taken under this act, including fees taken under
" The joint stock companies act, 1856," in the matter of winding up com-
panies, shall be applied exclusively towards payment of such additional
officers, or such increase of the salaries of existing officers, or pensions to
retired officers, or such other needful expenses of the Court, as the lord
warden of the Stannaries shall, from time to time, on the application of the
vice-warden or otherwise-, think fit to direct, sanction, or assign, and mean-
while shall be kept as a separate fund, apart from the ordinary fees of the
Court arising from other business, to await such direction and order of the
lord warden herein, and to accumulate by investment in government
securities until the whole shall have been so appropriated (I).
173. In Ireland the Lord Chancellor of Ireland may, as respects the
winding up of companies in Ireland, with the advice and consent of the
Master of the Rolls in Ireland, exercise the same power of making rules as
is by this act hereinbefore given to the Lord Chancellor of Great Britain ;
but, until such rules are made, the general practice of the Court of Chan-
cery in Ireland, including the practice hitherto in use in Ireland in
(k) See 30 & 31 Vict. c. 131, § 20,
and ante, p. 685. Under the above
section rules have been promulgated.
See infra, Appendix No. vi. ; and as to
the general practice of the Court of
Chancery, see Rules 74 and 75. The
section has been repealed by 44 & 45
Vict. c. 59 ; but the rules in the Ap-
pendix are still in force.
(I) Rules have been issued under this
section, but they are not printed in the
present work. They are published by
Stevens and Sons. And s^e 30 & 31
Viet, c. 131, § 20.
25 & 26 vict. cap. 89. — part v. registration, etc. 975
winding up companies, shall, so far as the same is applicable and not Appendix V.
inconsistent with this act, apply to all proceedings for winding up a
company.
PART V.
REGISTRATION OFFICE.
174. The registration of companies under this act shall be conducted as Constitution of
follows (that is to say) : — registration
(1.) The Board of Trade may, from time to time, appoint such regis- ° ce"
trars, assistant registrars, clerks, and servants as they may think i-^ ^ ict. c. 47,
necessary for the registration of companies under this act, and '*
remove them at pleasure :
(2.) The Board of Trade may make such regulations as they think fit
with respect to the duties to be performed by any such registrars,
assistant registrars, clerks, and servants as aforesaid :
(3.) The Board of Trade may, from time to time, determine the
places at which offices for the registration of companies are to be
established, so that there be at all times maintained in each of
the three parts of the United Kingdom at least one such
office (m), and that no company shall be registered except at an
office within that part of the United Kingdom in which, by the
memorandum of association, the registered office of the company
is declared to be established, and the board may require that the
registrar's office of the court of the vice-warden of the Stannaries
shall be one of the offices for the registration of companies
formed for working mines within the jurisdiction of the Court :
(4.; The Board of Trade may, from time to time, direct a seal or
seals to be prepared for the authentication of any documents
required for or connected with the registration of companies :
(5.) Every person may inspect the documents kept by the registrar of
joint stock companies ; and there shall be paid for such inspec-
tion such fees as may be appointed by the Board of Trade, not
exceeding one shilling for each inspection ; and any person may
require a certificate of the incorporation of any company, or a
copy or extract of any other document or any part of any other
document, to be certified by the registrar : and there shall be
paid for such certificate of incorporation, certified copy, or extract
such fees as the Board of Trade may appoint, not exceeding five
shillings for the certificate of incorporation, and not exceeding
sixpence for each folio of such copy or extract, or, in Scotland,
for each sheet of two hundred words :
(6.) The existing registrar, assistant registrars, clerks, and other
officers and servants in the office for the registration of joint
stock companies shall, during the pleasure of the Board of Trade,
hold the offices and receive the salaries hitherto held and received
(m) The Board of Trade has, by an Stannaries to be registered in the Court
order dated the 14th Feb, 1863, directed of the vice- warden,
companies for working mines within the
976 THE COMPANIES ACT, 1862.
Appendix V. by them, but they shall in the execution of their duties conform
to any regulations that may be issued by the Board of Trade :
(7.) There shall be paid to any registrar, assistant registrar, clerk, or
servant that may hereafter be employed in the registration of
joint-stock companies, such salary as the Board of Trade may,
with the sanction of the commissioners of the Treasury, direct :
(8.) Whenever any act is herein directed to be done to or by the
registrar of joint-stock companies, such act shall, until the
Board of Trade otherwise directs, be clone in England to or by
the existing registrar of joint-stock companies, or in his absence
to or by such person as the Board of Trade may for the time
being authorise, in Scotland to or by the existing registrar of
joint-stock companies in Scotland, and in Ireland to or by the
existing assistant registrar of joint-stock companies for Ireland,
or by such person as the Board of Trade may for the time being
authorise in Scotland or Ireland in the absence of the registrar ;
but in the event of the Board of Trade altering the constitution
of the existing registry office, such act shall be done to or by
such officer or officers and at such place or places with reference
to the local situation of the registered offices of the companies to
be registered as the Board of Trade may appoint.
PART VI.
APPLICATION OP ACT TO COMPANIES REGISTERED UNDER THE JOINT-STOCK
COMPANIES ACT.
Definition of 175- Tne expression "Joint-stock companies acts" as used in this act
Joint stock com- shall mean " The joint-stock companies act, 1856," "The joint-stock com-
panies acts. panies act, 1856, 1857," "The joint-stock banking companies act, 1857,"
and " The act to enable joint-stock banking companies to be formed on the
principle of limited liability," or any one or more of such acts, as the case
may require ; but shall not include the act passed in the eighth year of the
reign of Her present Majesty, chapter one hundred and ten, and intituled
"An act for the registration, incorporation, and regulation of joint-stock
companies."
. ,. .. , 176. Subject as hereinafter mentioned, this act, with the exception of
Aiiiilication of J ,,,,-,-, , . r i ^
actio companies table A. in the first schedule, shall apply to companies formed and regis-
formed under terecl under the said Joint-stock companies acts, or any of them, in the
joint-stock com- same manner in the case of a limited company as if such company had
panies acts. ^n formed and registered under this act as a company limited by shares,
and in the case of a company other than a limited company as if such
company had been furmed and registered as an unlimited company under
this act, with this qualification, that wherever reference is made expressly
or impliedly to the date of registration, such date shall be deemed to refer
to the date at which such companies were respectively registered under the
said Joint-stock companies acts, or any of them, and the power of altering
regulations by special resolution given by this act (n) shall, in the case
of any company formed and registered under the said Joint-stock com-
panies acts, or any of them, extend to altering any provisions contained in
(n) See §§ 50 and 196, ante, p. 119.
25 & 26 vict. cap. 89. — part vii. registration, etc. 977
the table marked B. annexed to "The Joint-stock companies act, 1856," Appendix V.
and shall also in the case of an unlimited company formed and registered
as last aforesaid extend to altering any regulations relating to the amount
of capital or its distribution into shares, notwithstanding such regulations
are contained in the memorandum of association (o).
177. This act shall apply to companies registered but not formed under Application of
the said Joint-stock companies acts or any of them in the same manner as act to companies
it is hereinafter declared (p) to apply to companies registered but not registered under
formed under this act, with this qualification, that wherever reference is panies acts
made expressly or impliedly to the date of registration, such date shall be
deemed to refer to the date at which such companies were respectively
registered under the said Joint-stock companies acts, or any of them (g).
178. Any company registered under the said Joint-stock companies acts, Mode of trans-
or any of them, may cause its shares to be transferred in manner hitherto ferring shares,
in use, or in such other manner as the company may direct.
PART VII.
COMPANIES AUTHORISED TO REGISTER UNDER THIS ACT.
179. The following regulations shall be observed with respect to the Regulations as
registration of companies under this part of this act ; (that is to say,) to registration
(1.) No company having the liability of its members limited by act existing
OOTTl D3.1116S
of Parliament or letters patent, and not being a joint-stock com-
pany as hereinafter defined (r), shall register under this act in
pursuance of this part thereof :
(2.) No company having the liability of its members limited by act
of Parliament, or by letters patent, shall register under this act
in pursuance of this part thereof as an unlimited company, or as
a company limited by guarantee :
(3.) No company that is not a joint-stock company, as hereinafter
defined (r), shall in pursuance of this part of this act register
under this act as a company limited by shares :
(4.) No company shall register under this act in pursuance of this
part thereof, unless an assent to its so registering is given by a
majority of such of its members as may be present, personally
or by proxy, in cases where proxies are allowed by the regula-
tions of the company, at some general meeting summoned for
the purpose :
(5.) Where a company not having the liability of its members limited
by act of Parliament or letters patent, is about to register as a
limited company, the majority required to assent as aforesaid
shall consist of not less than three-fourths of the members
present, personally or by proxy, at such last-mentioned general
meeting :
(6.) Where a company is about to register as a company limited
by guarantee, the assent to its being so registered shall be accom-
panied by a resolution declaring that each member undertakes
to contribute to the assets of the company, in the event of the
(o) See ante, p. 115. {q) See ante, p. 115.
(p) See Part VII. (?•) § 181. Sec ante, pp. 115, 116.
L,C. 3 II
978
THE COMPANIES ACT, 1862.
Appendix V.
Companies capa^
ble of being
registered.
[21 Vict. c. 14,
§29.]
Definition of
joint-stock
company.
Proviso as to
banking com-
pany.
[22 Vict. c. 91,
§1.]
Requisitions for
registration by
companies.
same being wound up, during the time that he is a member or
within one year afterwards, for payment of the debts and liabili-
ties of the company contracted before the time at which he ceased
to be a member, and of the costs, charges, and expenses of
winding up the company, and for the adjustment of the rights
of the contributories amongst themselves, such amount as may
be required, not exceeding a specified amount :
In computing any majority under this section, when a poll is demanded,
regard shall be had to the number of votes to which each member is
entitled according to the regulations of the company of which he is a
member.
180. With the above exceptions, and subject to the foregoing regula-
tions (s), every company existing at the time of the commencement of
this act, including any company registered under the said Joint-stock
companies acts (t), consisting of seven or more members, and any company
hereafter formed in pursuance of any act of Parliament other than this
act, or of letters patent, or being a company engaged in working mines
within and subject to the jurisdiction of the Stannaries, or being otherwise
duly constituted by law, and consisting of seven or more members, may at
any time hereafter register itself under this act as an unlimited company,
or a company limited by shares, or a company limited by guarantee ; and
no such registration shall be invalid by reason that it has taken place with
a view to the company being wound up.
181. For the purposes of this part of this act, so far as the same relates
to the description of companies empowered to register as companies
limited by shares, a joint-stock company shall be deemed to be a company
having a permanent paid-up or nominal capital of fixed amount, divided
into shares, also of fixed amount, or held and transferable as stock, or
divided and held partly in one way and partly in the other, and formed
on the principle of having for its members the holders of shares in such
capital, or the holders of such stock, and no other persons ; and such
company when registered with limited liability under this act shall be
deemed to be a company limited by shares («).
[182. No banking company claiming to issue notes in the United
Kingdom shall be entitled to limited liability in respect of such issue, but
shall continue subject to unlimited liability in respect thereof ; and, if neces-
sary, the assets shall be marshalled for the benefit of the general creditors, and
the members shall be liable for the whole amount of the issue, in addition to
the sum for which they would be liable as members of a limited company (x).]
183. Previously to the registration, in pursuance of this part of this
act of any joint-stock company (y), there shall be delivered to the registrar
the following documents (that is to say,) : —
(1.) A list showing the names, addresses, and occupations of all per-
sons who on a day named in such list, and not being more
than six clear days before the day of registration, were members
of such company, with the addition of the shares held by such
(5) See, also, §§ 182—184, and 188.
(t) The act applies to thera, even
though they do not register. See §§
176, 177, and ante, pp. 113, 116, and
617.
(u) See ante, p. 116.
(x) This section was repealed by 42 &
43 Vict. c. 76, § 6. See, also, § 188,
and for the corresponding section now in
force, 42 & 43 Vict. c. 76, § 6.
(y) §181.
25 & 26 vict. cap. 89. — part vii. registration, etc. 979
peTSon3 respectively, distinguishing, in cases where such shares Appendix V.
are numbered, each share by its number :
(2.) A copy of any act of Parliament, royal charter, letters patent,
deed of settlement, contract of co-partnery, cost-book regula-
tions, or other instrument constituting or regulating the com-
pany (as) :
(3.) If any such joint-stock company is intended to be registered as
a limited company, the above list and copy shall be accompanied
by a statement specifying the following particulars ; that is to
say,
The nominal capital of the company and the number of shares
into which it is divided ;
The number of shares taken and the amount paid on each
• share ;
The name of the company, with the addition of the word
" limited" as the last word thereof (a) ;
With the addition, in the case of a company intended to be
registered as a company limited by guarantee, of the reso-
lution declaring the amount of the guarantee.
184. Previously to the registration in pursuance of this part of this act Requisitions for
of any company not being a joint-stock company (b), there shall be reflstration by
i t i „ . ,. , . ,i -it i existing company
delivered to the registrar a list showing the names, addresses, and not kein„ a
occupations of the directors or other managers (if any) of the company, joint-stock
also a copy of any act of Parliament, letters patent, deed of settlement, company,
contract of co-partnery, cost-book regulations, or other instrument consti-
tuting or regulating the company, with the addition, in the case of a com-
pany intended to be registered as a company limited by guarantee, of the
resolution declaring the amount of guarantee.
185. Where a joint-stock company (c) authorised to register under this Power for
act, has had the whole or any portion of its capital converted into stock, company to
such company shall, as to the capital so converted, instead of delivering to T<:°™ e^m?und
the registrar a statement of shares, deliver to the registrar a statement of 0f shares.
the amount of stock belonging to the company, and the names of the per- i-gj yjct c -^
sons who were holders of such stock, on some day to be named in the § 30.]
statement, not more than six clear days before the day of registration.
186. The lists of members and directors, and any other particulars Authentication
relating to the company hereby required to be delivered to the registrar, °* statements,
shall be verified by a declaration of the directors of the company delivering
the same, or any two of them, or of any two other principal officers of the [20 Vict. c. 47,
company, made in pursuance of the act passed in the sixth year of the § 112.]
reign of his late Majesty King William the Fourth chapter sixty-two.
187. The registrar may require such evidence as he thinks necessary Registrar may
- ., "» j. «. i_- t£ i_ .-i • ■• • . require evidence
for the purpose of satisfying himself whether an existing company is or not ag^to nature of
a joint-stock company as hereinbefore defined (d). company.
188. Every banking company existing at the date of the passing of On registration
this act which registers itself as a limited company shall, at least thirty of banking
days previous to obtaining a certificate of registration with limited liability, company with
give notice that it is intended so to register the same to every person llin)tecl liability,
0 n * r notice to be
(2) See § 209, as to insurance com- (b) § 181.
panies already registered under 7 & 8 (c) § 181.
Vict. c. 110. (d) § 181.
(«) See § 190.
3 a 2
980
THE COMPANIES ACT, 1862.
Appendix V.
given to cus-
tomers.
[22 Vict.
§3.]
c. 91,
Exemption of
certain com-
panies from pay
ment of fees.
[21 Vict. c. 14,
§32.]
Power to com-
pany to change
name.
[20 Vict. c. 47,
and partnership firm who have a banking account with the company ;
and such notice shall be given either by delivering the same to such
person or firm, or leaving the same or putting the same into the post
addressed to him or them at such address as shall have been last com-
municated or otherwise become known as his or their address to or
by the company : and, in case the company omits to give any such
notice as is hereinbefore required to be given, then as between the com-
pany and the person or persons only who are for the time being in-
terested in the account in respect of which such notice ought to have
been given, and so far as respects such account and all variations thereof
down to the time at which such notice shall be given, but not further
or otherwise, the certificate of registration with limited liability shall
have no operation (e).
189. No fees shall be charged in respect of the registration in pur-
suance of this part of this act of any company in cases where such com-
pany is not registered as a limited company, or where previously to its
being registered as a limiteJ company the liability of the shareholders was
limited by some other act of Parliament or by letters patent.
190. Any company authorised by this part of this act to register with
limited liability shall, for the purpose of obtaining registration with limited
liability, change its name, by adding thereto the word "limited."
191. Upon compliance with the requisitions in this part of this act
contained with respect to registration, and upon payment of such fees, if
§114.]
Certificate of re- any, as are payable under the tables marked B. and C. in the first sche-
gistration and fiuie hereto, the registrar shall certify under his hand that the company
so applying for registration is incorporated as a company under this act,
and, in the case of a limited company, that it is limited ; and thereupon
such company shall be incorporated, and shall have perpetual succession
and a common seal, with power to hold lands ; and any banking company
in Scotland so incorporated shall be deemed and taken to be a bank incor-
porated, constituted, or established by or under act of Parliament (/).
192. A certificate of incorporation given at anytime to any company
registered in pursuance of this part of this act shall be conclusive evidence
that all the requisitions herein contained in respect of registration under
this act have, been complied with, and that the company is authorised to
be registered under this act as a limited or unlimited company (g), as the
case may be ; and the date of incorporation mentioned in such certificate
shall be deemed to be the date at which the company is incorporated
under this act (h).
193. All such property, real and personal, including all interests and
rights in, to, and out of property, real and personal, and including obliga-
tions, and things in action, as may belong to or be vested in the company
at the date of its registration under this act, shall on registration pass to
and vest in the company as incorporated under this act for all the estate
and interest of the company therein (i).
194. The registration in pursuance of this part of this act of any com-
pany shall not affect or prejudice the liability of such company to have
companies.
[20 Vict. c. 47,
§113.]
Certificate to be
evidence of com
pliance with
act.
[20 Vict. c. 47,
§ 115.]
Vesting of pro-
perty in com-
pany.
Registration
not to affect ob-
ligations incurred
previously
thereto.
[20 Vict. c. 47,
§ 116, and 21
Vict. c. 49,
§8.]
enforced against it, or its right to enforce, any debt or obligation incurred
See, also, 42 & 43 Vict, c
(e) § 182
76, § 6.
(/) See§ 18, ante, p. 111.
(g) These words are not in § 18. See
Ennisv. West Clare Rail. Co., 3 L. R.
Ir. 94, and ante, p. 112, note (I).
(h) Compare § 188 ; and see as to the
certificate, ante, p. 111.
(i) See ante, p. 263, note (V).
25 & 26 vict. cap. 89. — part vii. registration, etc. 981
or any contract entered into, by, to, with, or on behalf of such company Appendtx V.
previously to such registration (k).
195. All such actions, suits, and other legal proceedings as may at the Continuation of
time of the registration of any company registered in pursuance of this existing actions
part of this act have been commenced by or against such company, or the an SU1 S-
public officer or any member thereof, may be continued in the same ^-.Y106, ?'2j7'
manner as if such registration had not taken place ; nevertheless execu- yict 'e ^
tion shall not issue against the effects of any individual member of such § iq.]
company upon any judgment, decree, or order obtained in any action,
suit, or proceeding so commenced as aforesaid ; but in the event of the
property and effects of the company being insufficient to satisfy such
judgment, decree, or order, an order may be obtained for winding up the
company (I).
196. When a company is registered under this act in pursuance of this Effect of regis-
part thereof, all provisions contained in any act of Parliament, deed 0ftratl0n-
settlement, contract of co-partnery, cost-book regulations, letters patent, [21 Vict. c. 14,
or other instrument constituting or regulating the company, including, *> 3lJ
in the case of a company registered as a company limited by guarantee,
the resolution declaring the amount of the guarantee, shall be deemed to
be conditions and regulations of the company, in the same manner and
with the same incidents as if they were contained in a registered memo-
randum of association and articles of association ; and all the provisions
of this act shall apply to such company and the members, contributories,
and creditors thereof, in the same manner in all respects as if it had been
formed under this act, subject to the provisions following; (that is to
say),
(1.) That table A. in the first schedule to this act shall not, unless
adopted by special resolution, apply to any company registered
under this act in pursuance of this part thereof :
(2.) That the provisions of this act relating to the numbering of
shares (m) shall not apply to any joint-stock company whose
shares are not numbered :
(3.) That no company shall have power to alter any provision con-
tained in any act of Parliament relating to the company :
(4.) That no company shall have power, without the sanction of the
Board of Trade, to alter any provision contained in any letter's
patent relating to the company :
(5.) That in the event of the company being wound up, every person
shall be a contributory, in respect of the debts and liabilities of
the company contracted prior to registration, who is liable, at
law or in equity, to pay or contribute to the payment of any
debt or liability of the company contracted prior to registration,
or to pay or contribute to the payment of any sum, for the
adjustment of the rights of the members amongst themselves in
respect of any such debt or liability ; or to pay or contribute to
the payment of the costs, charges, and expenses of winding up
the company, so far as relates to such debts or liabilities as.
aforesaid ; and every such contributory shall be liable to con-
tribute to the assets of the company, in the course of the winding
up, all sums due from him in respect of any such liability as
aforesaid ; and in the event of the death, bankruptcy, or insol-
(&) See ante, p. 127. (m) § 22.
(I) See ante, pp. 262, 2G3.
982
THE COMPANIES ACT, 1862.
Appendix V.
Power of court
to restrain fur-
ther proceedings,
[20 Vict. c. 47,
§84.]
Order for wind-
ing up company.
[20 Vict. c. 47,
§73.]
vency of any such contributory as last aforesaid, or marriage of
any such contributory being a female, the provisions herein-
before contained with respect to the representatives, heirs, and
devisees of deceased contributories, and with reference to the
assignees of bankrupt or insolvent contributories, and to the
husbands of married contributories, shall apply (n) :
(6.) That nothing herein contained shall authorise any company to
alter any such provisions contained in any deed of settlement,
contract of co-partnery, cost-book regulations, letters patent, or
other instrument constituting or regulating the company, as
would, if such company had been originally formed under this
act, have been contained in the memorandum of association, and
are not authorised to be altered by this act :
But nothing herein contained shall derogate from any power of altering its
constitution or regulations which may be vested in any company register-
ing under this act in pursuance of this part thereof by virtue of any act of
Parliament, deed of settlement, contract of co-partnery, letters patent, or
other instrument constituting or regulating the company (o).
197. The Court may, at any time after the presentation of a petition
for winding up a company registered in pursuance of this part of this act,
and before making an order for winding up the company, upon the appli-
cation by motion of any creditor of the company, restrain further proceed-
ings in any action, suit, or legal proceeding against any contributory of
the company as well as against the company as hereinbefore provided,
upon such terms as the Court thinks fit (^>).
198. Where an order has been made for winding up a company regis-
tered in pursuance of this part of the act, in addition to the provisions
hereinbefore contained (q) ; it is hereby further provided that no suit,
action, or other legal proceeding shall be commenced or proceeded with
against any contributory of the company in respect of any debt of the
company except with the leave of the Court, and subject to such terms as
the Court may impose (r).
PART VIII.
Winding up of
unregistered
companies.
11 & 12 Vict.
c. 45, §§1—3.]
APPLICATION OF ACT TO UNREGISTERED COMPANIES.
199. Subject as hereinafter mentioned, any partnership, association, or
company, except railway companies incorporated by act of Parliament (s),
consisting of more than seven members, and not registered under this act,
and hereinafter included under the term unregistered company (t), may be
(») See §§ 74—78, 105, 106, 200, and
ante, pp. 751 et seq. ; pp. 846 et seq.,
and 859 ; and as to Industrial and Pro-
vident Societies, ante, p. 916.
(o) As to the power of a company re-
gistered under this act to alter its memo-
randum of association, see § 12 ; and as
to its power to alter its articles of associ-
ation, see §§50 and 176.
(i>) See §§ 85, 195, 196, and also
§ 201, ante, pp. 672 et seq., and 819.
(q) See §§ 87 and 196.
(r) See §§ 195 and 202 ; and see ante,
pp. 682, 683.
(s) See ante, p. 617.
(t) This definition includes companies
25 & 26 vict. cap. 89. — part viii. unregistered companies. 983
wound up under this act ; and all the provisions of this act with respect to Appendix V.
winding up shall apply to such company, with the following exceptions
and additions (it).
(1.) An unregistered company shall, for the purpose of determining
the Court having jurisdiction in the matter of the winding-up,
be deemed to be registered in that part of the United Kingdom
where its principal place of business is situate ; or, if it has a
principal place of business situate in more than one part of tin-
United Kingdom, then in each part of the United Kingdom
where it has a principal place of business ; moreover the prin-
cipal place of business of an unregistered company, or (where it
has a principal place of business situate in more than one part
of the United Kingdom) such one of its principal places of
business as is situate in that part of the United Kingdom in
which proceedings are being instituted, shall for all the purposes
of the winding up of such company be deemed to be the regis-
tered office of the company :
(2.) No unregistered company shall be wound up under this act
voluntarily or subject to the supervision of the Court (a;) :
(3.) The circumstances under which an unregistered company may
be wound up are as follows (y) : (that is to say,)
(d.) Whenever the company is dissolved, or has ceased to
carry on business, or is carrying on business only for the
purpose of winding up its affairs ;
(b.) Whenever the company is unable to pay its debts ;
(c.) Whenever the Court is of opinion that it is just and
equitable that the company should be wound up :
(4.) An unregistered company shall, for the purposes of this act, be ^J^^^g
deemed to be unable to pay its debts (?;), ^ ^.
(a.) Whenever a creditor to whom the company is indebted, g 5 -j
at law or in equity, by assignment or otherwise, in a '
sum exceeding fifty pounds then due, has served on the
company, by leaving the same at the principal place of
business of the company, or by delivering to the secre-
tary or some director or principal officer of the company,
or by otherwise serving the same in such maimer as the
Court may approve or direct, a demand under his hand
requiring the company to pay the sum so due, and the
company has for the space of three weeks succeeding the
service of such demand neglected to pay such sum, or to
secure or compound for the same to the satisfaction of
the creditor :
(b.) Whenever any action, suit, or other proceeding has been
instituted against any member of the company for any
debt or demand due, or claimed to be due, from the
company, or from him in his character of member of
the company, and notice in writing of the institution of
registered under the acts of 1856—1858 ; Societies, ante, pp. 916 et seq.
but see as to such companies, supra, §§ (y) See ante, pp. 628 et seq.
176, 177, and ante, p. 617. (z) See, as to registered companies, §§
(u) See ante, p. 617. 70, 80, and ante, p. 628.
(x) See, as to Industrial and Provident
984 THE COMPANIES ACT, 1862.
Appekdix V. such action, suit, or other legal proceeding having been
served upon the company by leaving the same at the
principal place of business of the company, or by de-
livering it to the secretary, or some director, manager,
or principal officer of the company, or by otherwise
serving the same in such manner as the Court may
approve or direct, the company has not within ten days
after service of such notice paid, secured, or compounded
for such debt or demand, or procured such action, suit,
or other legal proceeding to be stayed, or indemnified
the defendant to his reasonable satisfaction against such
action, suit, or other legal proceeding, and against all
costs, damages, and expenses to be incurred by him by
reason of the same :
(r.) Whenever, in England or Ireland, execution or other pro-
cess issued on a judgment, decree, or order obtained in
any court in favour of any creditor in any proceeding at
law or in equity, instituted by such creditor against the
company, or any member thereof as such, or against any
person authorised to be sued as nominal defendant on
behalf of the company, is returned unsatisfied :
(d.) Whenever, in the case of an unregistered company engaged
in working mines within and subject to the jurisdiction
of the Stannaries, a customary decree or order absolute
for the sale of the machinery, materials, and effects of
such mine lias been made in a creditor's suit in the court
of the vice-warden :
(e.) Whenever, in Scotland, the inductee of a charge for pay-
ment on an extract decree, or an extract registered bond
or an extract registered protest, have expired without
payment being made :
(/.) Whenever it is otherwise proved to the satisfaction of
the Court that the company is unable to pay its debts.
AVho to be 200. In the event of an unregistered company being wound up every
deemed con- person shall be deemed to be a contributory who is liable, at law or in
tributaries in the ef|Ujtv t0 pay or contribute to the payment of any debt or liabilitv of the
event of company * ' , .. M A L ' • „ - ", ,
bein<* wound up company, or to pay or contribute to the payment ot any sum tor the ad-
rn jt 12 V t justment of the rights of the members amongst themselves, or to pay or
c. 45 § 3.1 contribute to the payment of the costs, charges, and expenses of winding
up the company ; and every such contributory shall be liable to contribute
to the assets of the company in the course of the winding up all sums due
from him in respect of any such liability as aforesaid ; but in the event
of the death, bankruptcy, or insolvency of any contributory, or marriage
of any female contributory, the provisions hereinbefore contained with
respect to the personal representatives, heirs, and devisees of a deceased
contributory, and to the assignees of a bankrupt or insolvent contributory,
and to the husband of married contributories, shall apply (a).
Power of court 201. The Court may, at any time after the presentation of a petition
to restrain for winding up an unregistered company, and before making an order for
winding up the company, upon the application of any creditor of the com-
(o) See §§ 74—78, and 105, 106, 857 ; and as to Industrial and Provident
§ 196, cl. 5, and ante, pp. 752, 819, Societies, ante, p. 916.
25 & 26 vict. cap. 89. — part viii. unregistered companies. 985
pany, restrain further proceedings in any action, suit, or proceeding against Appendix V.
any contributory of the company, or against the company as hereinbefore further pro.
provided (b), upon such terms as the Court thinks fit. ceedings.
202. Where an order has been made for winding up an unregistered j-20 yict c 47;
company, in addition to the provisions hereinbefore contained in the case § 84.]
of companies formed under this act (c), it is hereby further provided that Effect of 01.jer
no suit, action, or other legal proceeding shall be commenced or proceeded for winding up
with against any contributory of the company in respect of any debt of company,
the company, except with the leave of the Court, and subject to such [20oVict- c- 47,
terms as the Court may impose. 8 ' -J
203. If any unregistered company has no power to sue and be sued in Property may be
a common name, or if for any reason it appears expedient, the Court may vested in official
by the order made for winding up such company, or by arjy subsequent h(lul a ors' 'c-
order, direct that all such property, real, and personal, including all ^ ^
interest, claims, and rights into and out of property, real and personal, J; ^ g 29 j '
and including things in action, as may belong to or be vested in the com-
pany, or to or in any person or persons on trust for or on behalf of the
company, or any part of such property, is to vest in the official liquidator
or official liquidators (d) by his or their official name or names ; and there-
upon the same or such part thereof as may be specified in the order shall
vest accordingly ; and the official liquidator or official liquidators may, in
his or their official name or names, or in such name or names and after
giving such indemnity as the Court directs, bring or defend any actions,
suits, or other legal proceeding relating to any property vested in him or
them, or any actions, suits, or other legal proceedings necessary to be
brought or defended for the purpose, of effectually winding up the company
and recovering the property thereof (e).
204. The provisions made by this part of the act with respect to un- Provisions in
registered companies shall be deemed to be made in addition to and not in this part of act
restriction of any provisions hereinbefore contained with respect to winding cumulative.
up companies by the Court ; and the Court or official liquidator may, in
addition to anything contained in this part of the act, exercise any powers
or do any act in the case of unregistered companies which might be exer-
cised or done by it or him in winding up companies formed under this
act ; but an unregistered company shall not, except in the event of its
being wound up, be deemed to be a company under this act, and then
only to the extent provided by this part of this act (/).
(b) See, also, §§ 85, 197, 199, 204 ; Q. B. D. 683.
and ante, p. 6S2. (e) See ante, pp. 705 et seq., &c.
(c) See §§ 87, 199, 204 ; and ante, p. (/) As to the scope of this section,
682. see Rudow v. Great Britain Mutual
(d) This does not render the liquidators Life Ass. Society, 17 Gh. D. 600.
personally liable, (jraham v. Edge, 20
986
THE COMPANIES ACT, 1862.
Appendix V.
PART IX.
Repeal of acts.
Saving clause as
to repeal.
Saving of exist-
ing proceedings
for winding up.
Saving of convey
ances, &c.
Compulsory re-
gistration of
certain com-
panies.
REPEAL OF ACTS, AND TEMPORARY PROVISIONS.
205. After the commencement of this act there shall be repealed the
several acts specified in the first part of the third schedule hereto, with this
qualification, that so much of the said acts as is set forth in the second
part of the said third schedule shall be hereby re-enacted and continue in
force as 'if unrepealed (g).
206. No repeal hereby enacted shall affect (h),
(1.) Anything duly done under any acts hereby repealed :
(2.) The incorporation of any company registered under any act
hereby repealed :
(3.) Any right or privilege acquired or liability incurred under any
act hereby repealed :
[(4.) Any penalty, forfeiture, or other punishment incurred in respect
of any offence against any act hereby repealed : (t)]
(5.) Table B. in the schedule annexed to the Joint-stock companies
act, 1856, or any part thereof, so far as the same applies to any
company existing at the time of the commencement of this
act (k).
[207. Related to the winding up of companies under an order made or
a resolution passed before the act came into operation (£).]
208. Where previously to the commen cement of this act any convey-
ance, mortgage, or other deed has been made in pursuance of any act
hereby repealed, such deed shall be of the same force as if this act had not
passed, and for the purposes of such deed such repealed act shall be deemed
to remain in full force.
209. Every insurance company completely (m) registered under the act
passed in the eighth year of the reign of her present Majesty, chapter one
hundred and ten, intituled " An act for the registration, incorporation,
and regulation of joint-stock companies," shall on or before the second day
of November, one thousand eight hundred and sixty-two, and every other
company required by any act hereby repealed to register under the said
joint-stock companies acts, or one of such acts, and which has not so
registered, shall, on or before the expiration of the thirty-first day from
the commencement of this act, register itself as a company under this
act, in manner and subject to the regulations hereinbefore contained (n),
with this exception, that no company completely registered under the said
act of the eighth year of the reign of her present Majesty shall be required
to deliver to the registrar a copy of its deed of settlement ; and for the
(ff) See §§ 170-173.
(h) See ante, p. 129.
(i) Sub-section 4 is repealed by 38 &
39 Vict. c. 66.
(&) See § 176.
(I) See West Silver Bank Mining Co.,
32 Beav. 226 ; Fire Annihilator Co.f ib.
563. This section is repealed by 38 & 39
Vict. c. 66.
{m) I.e., under § 7, etseq. ; not pro-
visionally registered under § 4, nor
simply registered under § 58. See ante,
p. 114.
(n) See § 203. § 180 enables these
companies to register with limited lia-
bility. See ante, pp. 114, 127. § 38
applies to companies registered under
this section ; Ramsay's case, 3 Ch. D.
388.
25 & 26 vict. cap. 89. — part ix. repeal op acts, etc. 987
purpose of enabling such insurance companies as are mentioned in this Appendix V.
section to register under this act, this act shall be deemed to come into
operation immediately on the passing thereof ; nevertheless the registration
of such companies shall not have any effect until the time of the commence-
ment of this act. No fees shall be charged in respect of the registration
of any company required to register by this section.
210. If any company required by the last section to register under this Penalty on corn-
act makes default in complying with the provisions thereof, then, from Pany not regis-
and after the day upon which such company is required to register under tennS-
this act, until the day on which such company is registered under this act [?} ^ct* c- 1_i>
(which it is empowered to do at any time), the following consequences b ' '*
shall ensue ; (that is to say,)
(1.) The company shall be incapable of suing either at law or in
equity, but shall not be incapable of being made a defendant to
a suit either at law or in equity (o) :
(2.) No dividend shall be payable to any shareholder in such
company :
(3.) Each director or manager of the company shall, for each day
during which the company so being in default carries on busi-
ness incur a penalty not exceeding five pounds, and such penalty
may be recovered by any person, whether a shareholder or not
in the company, and be applied by him to his own use :
Nevertheless, such default shall not render the company so being in default
illegal, nor subject it to any penalty or disability, other than as specified
in this section ; and registration under this act shall cancel any penalty
or forfeiture, and put an end to any disability which any company may
have incurred under any act hereby repealed by reason of its not Laving
registered under the Joint-stock companies acts, 1856, 1857, or one of
them.
[211 and 212. Conferred power on the Board of Trade to change the Temporary power
registered office of any company from any one part of the United Kingdom ?x comPan1^ °
° _ . . 1 J . r, J ,J r 1 , . . change registered
ol Great Britam and Ireland, to any other part thereoi, upon application office.
made within one year from the passing of the act (j)).~\
(o) See ante, p. 127.
(p) §§ 211 and 212 are repealed by 38 & 39 Vict. c. 66.
988 THE COMPANIES ACT, 1862.
Appendix V.
FIRST SCHEDULE.
TABLE A. (see §§14, 15) (q).
Regulations for management of a company limited by shares (r).
Shares (s).
First Schedule. (1.) If several persons are registered as joint holders of any share,
Table A. any one °f such persons may give effectual receipts for any
dividend payable in respect of such share.
(2.) Every member shall, on payment of one shilling, or such less
sum as the company in general meeting may prescribe, be
entitled to a certificate, under the common seal of the company,
specifying the share or shares held by him, and the amount paid
up thereon (t).
(3.) If such certificate is worn out or lost, it may be renewed, on
payment of one shilling, or such less sum as the company in
general meeting may prescribe.
Calls on Shares (u).
(4.) The directors may from time to time make such calls upon the
members in respect of all monies unpaid on their shares as they
think fit, provided that twenty-one days' notice at least is given
of each call (x) ; and each member shall be liable to pay the
amount of calls so made to the persons and at the times and
places appointed by the directors (y).
(5.) A call shall be deemed to have been made at the time when the
resolution of the directors authorising such call was passed.
(6.) If the call payable in respect of any share is not paid before or
on the day appointed for payment thereof, the holder for the
time being of such share shall be liable to pay interest for the
same at the rate of five pounds per cent, per annum from the
day appointed for the payment thereof to the time of the actual
payment.
(q) This table corresponds to table B. them by a special resolution. See § 50.
in the act of 1856. The two are sub- (r) As to the construction of com-
stantially alike in most respects. The panies' regulations, see ante, pp. 172 et
regulations in the above table apply to seq.
companies formed under this act, and (s) Shares are personal estate, and'
limited by shares, unless specially ex- must be numbered. See § 22 of the act.
eluded. (See §15.) But they do not, See ante, p. 451.
unless specially adopted, apply to com- (t) See § 31 of the act.
panies existing before the passing of the (u) See, on this subject, ante, pp. 407,.
act, and registered under it : § 196 : see et seq.
also § 176. (x) See, as to giving notices, Nos. 95
The Board of Trade has power to alter — 97 ; and see ante, pp. 407, et seq.
these regulations (see § 71) ; and every (y) § 16 makes calls specialty debts,
company to which they apply can alter
25 & 26 vict. cap. 89. — schedule i.
989
<(7.) The directors may, if they think fit, receive from any member
willing to advance the same all or any part of the monies due
upon the shares held by him beyond the sums actually called
for ; and upon the monies so paid in advance, or so much
thereof as from time to time exceeds the amount of the calls
then made upon the shares in respect of which such advance
has been made, the company may pay interest at such rate as
the member paying such sum in advance and the directors agree
upon (z).
Appendix V.
Table A.
Transfers of shares (a).
(8.) The instrument of transfer of any share in the company shall be
executed both by the transferor and transferee ; and the transferor
shall be deemed to remain a holder of such share until the
name of the transferee is entered in the register book in respect
thereof.
(9.) Shares in the company shall be transferred in the following
form : — 1 A. B. of , in consideration of the sum of
pounds paid to me by C. D. of , do hereby
transfer to the said C. D. the share [or shares], numbered ,
standing in my name in the books of the company, to
hold unto the said C. D., his executors, administrators, and
assigns, subject to the several conditions on which I held the
same at the time of the execution hereof ; and I, the said C. D.,
do hereby agree to take the said share [or shares] subject to
the same conditions. As witness our hands, the day
of
(10.) The company may decline to register any transfer of shares
made by a member who is indebted to them (b).
(11.) The transfer books shall be closed during the fourteen days
immediately preceding the ordinary general meeting in each
year.
Transmission of shares.
(12.) The executors or administrators of a deceased member shall be
the only persons recognised by the company as having any title
to his share.
(13.) Any person becoming entitled to a share in consequence of the
death, bankruptcy, or insolvency of any member, or in conse-
quence of the marriage of any female member, may be regis-
tered as a member upon such evidence being produced as may
from time to time be required by the company.
(14.) Any person who has become entitled to a share in consequence
of the death, bankruptcy, or insolvency of any member, or in con-
sequence of the marriage of any female member, may, instead of
(z) Interest is payable though no profits
have been earned, Dale r. Martin, 11
L. R., Ir. 371, affirming 9 Lb. 498.
(a) See § 22. As to the transfer of
shares, see ante, pp. 464 et seq., and as
to sales, see pp. 487 et seq.
{!>) See ante, pp. 465, 468, 470 and
pp. 833 el seq.
990 THE COMPANIES ACT, 1862.
Appendix V. being registered himself, elect to have some person to be named
T , , 7 by him registered as a transferee of such share (c).
(15.) The person so becoming entitled shall testify such election by
executing to his nominee an instrument of transfer of such
share.
(16.) The instrument of transfer shall be presented to the company,
accompanied with such evidence as the directors may recmire to
prove the title of the transferor ; and thereupon the company
shall register the transferee as a member.
Forfeiture of shares (d).
(17.) If any member fails to pay any call on the day appointed for
payment thereof, the directors may, at any time thereafter,
during such time as the call remains unpaid, serve a notice on
him (e), requiring him to pay such call, together with interest
and any expenses that may have accrued by reason of such non-
payment.
(18.) The notice shall name a further day, on or before which such
call, and all interest and expenses that have accrued by reason
of such non-payment, are to be paid. It shall also name the
place where payment is to be made (the place so named being
either the registered office of the company or some other place
at which calls of the company are usually made payable). The
notice shall also state that, in the event of non-payment at or
before the time and at the place appointed, the shares in respect
of which such call was made will be liable to be forfeited.
(19.) If the requisitions of any such notice as aforesaid are not
complied with, any share in respect of which such notice has
been given may, at any time thereafter, before payment of all
calls, interest, and expenses due in respect thereof has been
made, be forfeited by a resolution of the directors to that effect.
(20.) Any share so forfeited shall be deemed to be the property of
the company, and may be disposed of in such manner as the
company in general meeting thinks fit (/).
(21.) Any member whose shares have been forfeited shall notwith-
standing be liable to pay to the company all calls owing upon
such shares at the time of the forfeiture (g).
(22.) A statutory declaration in writing, that the call in respect of a
share was made and notice thereof given, and that default in
payment of the call was made, and that the forfeiture of the
share was made by a resolution of the directors to that effect,
shall be sufficient evidence of the facts therein stated, as against
all persons entitled to such share ; and such declaration and the
receipt of the company for tbe price of such share shall constitute
a good title to such share ; and a certificate of proprietorship
(c) See, also, as to executors and ad- (e) The service may be personal, or by
ministrators, § 24 of the act, ante, pp. post. See Nos. 95 — 97.
536 et seq., and as to trustees in bank- (/) The disposal of forfeited shares is
ruptcy, pp. 551 et seq. special business. See Nos. 35, 36.
(d) See on this subject, ante, pp. 530 ((/) See ante, p. 425.
et »eq., and pp. 842 et seq.
25 & 26 vict. cap. 89. — schedule i. 991
shall be delivered to a purchaser, and thereupon he shall be Appendix V.
deemed the holder of such share discharged from all calls due f^ie a
prior to such purchase ; and he shall not be bound to see to the
application of the purchase money, nor shall his title to such
share be affected by any irregularity in the proceedings in
reference to such sale.
Conversion of shares into stock.
(23.) The directors may, with the sanction of the company previously
given in general meeting, convert any paid-up shares into
stock (h).
(24.) When any shares have been converted into stock, the several
holders of such stock may thenceforth transfer their respective
interests therein, or any part of such interests, in the same manner
and subject to the same regulations as and subject to which any
shares in the capital of the company may be transferred, or as
near thereto as circumstances admit (t).
(25.) The several holders of stock shall be entitled to participate in
the dividends and profits of the company according to the
amount of their respective interests in such stock ; and such
interest shall, in proportion to the amount thereof, confer on the
holders thereof respectively the same privileges and advantages
for the purpose of voting at meetings of the company, and for
other purposes, as would have been conferred by shares of equal
amount in the capital of the company ; but so that none of such
privileges or advantages, except the participation in the divi-
dends and profits of the company, shall be conferred by any such
aliquot part of consolidated stock as would not, if existing in
shares, have conferred such privileges or advantages (k).
Increase in capital (I).
(26.) The directors may, with the sanction of a special resolution of
the company previously given in general meeting, increase its
capital by the issue of new shares ; such aggregate increase to be
of such amount, and to be divided into shares of such respective
amounts, as the company in general meeting directs, or, if no
direction is given, as the directors think expedient.
(27.) Subject to any direction to the contrary that may be given by
the meeting that sanctions the increase of capital, all new shares
shall be offered to the members in proportion to the existing
shares held by them ; and such offer shall be made by notice
specifying the number of shares to which the member is entitled,
and limiting a time within which the offer, if not accepted, will
be deemed to be declined ; and after the expiration of such time,
or on the receipt of an intimation from the member to whom such
notice is given that he declines to accept the shares offered, the
(h) See the act, §§ 12, 28, 34, and 405.
ante, p. 405. (I) See § 12 of the act, and ante, pp.
(») See the act, § 29. 397 k, 401.
(k) See § 29 of the act, and ante, p.
992 THE COMPANIES ACT, 1862.
Appendix V . directors may dispose of the same in such manner as they think
T w a most beneficial to the company.
(28.) Any capital raised by the creation of new shares shall be con-
sidered as part of the original capital, and shall be subject to the
same provisions with reference to the payment of calls, and the
forfeiture of shares on non-payment of calls, or otherwise, as if it
had been part of the original capital.
General meetings {in).
(29.) The first general meeting shall be held at such time, not being
more than six months after the registration of the company, and
at such place, as the directors may determine (n).
(30.) Subsequent general meetings shall be held at such time and
place as may be prescribed by the company in general meeting ;
and if no other time or place is prescribed, a general meeting
shall be held on the first Monday in February in every year, at
such place as may be determined by the directors.
(31.) The above-mentioned general meetings shall be called ordinary
meetings : all other general meetings shall be called extra-
ordinary (o).
(32.) The directors may, whenever they think fit, and they shall upon
a requisition made in writing by not less than one-fifth in number
of the members of the company, convene an extraordinary general
meeting.
(33.) Any requisition made by the members shall express the object
of the meeting proposed to be called, and shall be left at the
registered office of the company.
(34.) Upon the receipt of such requisition the directors shall forthwith
proceed to convene an extraordinary general meeting. If they
do not proceed to convene the same within twenty-one days from
the date of the requisition, the requisitionists, or any other
members amounting to the required number, may themselves
convene an extraordinary general meeting (p).
Proceedings at general meetings (q).
(35.) Seven days' notice at the least (r), specifying the place, the day,
and the hour of meeting, and in case of special business (s) the
general nature of such business, shall be given to the members in
manner hereinafter mentioned (t), or in such other manner, if
any, as may be prescribed by the company in general meeting ;
but the non-receipt of such notice by any member shall not invali-
date the proceedings at any general meeting (u).
(36.) All business shall be deemed special that is transacted at an
extraordinary meeting, and all that is transacted at an. ordinary
meeting, with the exception of sanctioning a dividend and the
(m) See § 49 of the act, and as to (q) See ante, pp. 304 et seq., 340.
meetings and the proceedings at them, (r) See § 52 of the act, and ante, pp.
ante, pp. 304 et seq., 340. 305, 306.
(») See The Companies act, 1867, § 39. (s) See No. 36.
(o) See ante, p. 307. (t) See Nos. 95, 97.
(p) See § 52 of the act. (u) See ante, p. 304.
25 & 26 vict. cap. 89. — schedule i. 993
consideration of the accounts, balance-sheets, and the ordinary Appendix V.
report of the directors. Table A
(37.) No business shall be transacted at any general meeting, except
the declaration of a dividend, unless a quorum of members is
present at the time when the meeting proceeds to business, and
such quorum shall be ascertained as follows ; that is to say, if
the persons who have taken shares in the company (x) at the
time of the meeting do not exceed ten in number, the quorum
shall be five ; if they exceed ten there shall be added to the
above quorum one for every five additional members up to fifty,
and one for every ten additional members after fifty, with this
limitation, that no quorum shall in any case exceed twenty (y).
(38.) If within one hour from the time appointed for the meeting a
quorum is not present, the meeting, if convened upon the requi-
sition of members, shall be dissolved : in any other case, it shall
stand adjourned to the same day in the next week, at the same
time and place ; and if at such adjourned meeting a quorum is
not present, it shall be adjourned sine die.
(39.) The chairman (if any) of the board of directors shall preside as
chairman at every general meeting of the company (z).
(40.) If there is no such chairman, or if at any meeting he is not
present within fifteen minutes after the time appointed for
holding the meeting, the members present shall choose some one
of their number to be chairman (a).
(41.) The chairman may, with the consent of the meeting, adjourn
any meeting from time to time and from place to place, but no
business shall be transacted at any adjourned meeting other than
the business left unfinished at the meeting from which the
adjournment took place (6).
(42.) At any general meeting, unless a poll is demanded by at least
five members, a declaration by the chairman that a resolution
has been carried, and an entry to that effect in the book of pro-
ceedings of the company (c), shall be sufficient evidence of the
fact, without proof of the number or proportion of the votes
recorded in favour of or against such resolution.
(43.) If a poll is demanded by five or more members it shall be taken
in such manner as the chairman directs, and the result of such
poll shall be deemed to be the resolution of the company in
general meeting. In the case of an equality of votes at any
general meeting the chairman shall be entitled to a second or
casting vote.
Votes of members (d).
(44.) Every member shall have one vote for every share up to ten :
he shall have an additional vote for every five shares beyond the
first ten shares up to one hundred, and an additional vote for
every ten shares beyond the first hundred shares (e).
(x) This expression should apparently (a) See § 52 of the act.
be, " if the members of the company." (b) See ante, p. 341.
(y) See, as to quorums, ante, pp. 155, (c) See, as to this, § 67 of the act.
299. (d) See ante, pp. 309 et seq.
(z) See § 52 of the act. (e) See § 52 of the act.
L.C
3 s
994 THE COMPANIES ACT, 1862.
Table A.
Appendix V. (45.) If any member is a lunatic or idiot, he may vote by his com-
mittee, curator bonis, or other legal curator.
(46.) If one or more persons are jointly entitled to a share or shares,
the member whose name stands first on the register of members
as one of the holders of such share or shares, and no other, shall
be entitled to vote in respect of the same.
(47.) No member shall be entitled to vote at any general meeting
unless all calls due from him have been paid, and no member
shall be entitled to vote in respect of any share that he has
acquired by transfer at any meeting held after the expiration of
three months from the registration of the company, unless he has
been possessed of the share in respect of which he claims to vote
for at least three months previously to the time of holding the
meeting at which he proposes to vote.
(48.) Votes may be given either personally or by proxy (/).
(49.) The instrument appointing a proxy shall be in writing, under
the hand of the appointor, or if such appointor is a corporation,
under their common seal, and shall be attested by one or more
witness or witnesses : no person shall be appointed a proxy who
is not a member of the company.
(50.) The instrument appointing a proxy shall be deposited at the
registered office of the company not less than seventy-two hours
before the time for holding the meeting at which the person named
in such instrument proposes to vote ; but no instrument ap-
pointing a proxy shall be valid after the expiration of twelve
months from the date of its execution.
(51.) Any instrument appointing a proxy shall be in the following
form (g) : —
Company limited.
I of in the county of being a member of
the Company limited, and entitled to vote or
votes, hereby appoint of as my
proxy, to vote for me and on my behalf at the [ordinary or
extraordinary, as the case may be] general meeting of the com-
pany to be held on the day of , and at any
adjournment thereof [or at any meeting of the company that
may be held in the year ].
As witness my hand, this day of
Signed by the said in the presence of
Directors (h).
(52.) The number of the directors, and the names of the first directors,
shall be determined by the subscribers of the memorandum of
association.
(53.) Until directors are appointed, the subscribers of the memoran-
dum of association shall be deemed to be directors (i).
(54.) The future remuneration of the directors, and their remunera-
tion for services performed previously to the first general meet-
ing, shall be determined by the company in general meeting.
(/) See ante, p. 309. (k) See ante, pp. 298, 336.
(g) This must be stamped. See ante, (i) See ante, p. 336.
p. 310.
25 & 26 vict. cap. 89. — schedule i. 995
Powers of directors (k).
(55.) The business of the company shall he managed by the
directors, who may pay all expenses incurred in getting up
and registering the company, and may exercise all such powers
of the company as are not by the foregoing act, or by these
articles, required to be exercised by the company in general
meeting, subject nevertheless to any regulations of these
articles, to the provisions of the foregoing act, and to such
regulations, being not inconsistent with the aforesaid regula-
tions or provisions, as may be prescribed by the company
in general meeting ; but no regulation made by the company
in general meeting shall invalidate any prior act of the directors
which would have been valid if such regidation had not been
made (I).
(56.) The continuing directors may act notwithstanding any vacancy
in their body.
Disqualification of directors (m).
(57.) The office of director shall be vacated —
If he holds any other office or place of profit under the
company ;
If he becomes bankrupt or insolvent ;
If he is concerned in or participates in the profits of any
contract with the company ;
But the above rules shall be subject to the following excep-
tions : That no director shall vacate his office by reason of his
being a member of any company which has entered into con-
tracts with or done any work for the company of which he
is director ; nevertheless he shall not vote in respect of such
contract or work ; and if he does so vote his vote shall not be
counted.
Rotation of directors (ante, p. 337).
(58.) At the first ordinary meeting after the registration of the com-
pany the whole of the directors shall retire from office ; and at
the first ordinary meeting in every subsequent year one-third of
the directors for the time being, or if their number is not a
multiple of three, then the number nearest to one -third, shall
retire from office.
(59.) The one-third or other nearest number to retire during the
first and second years ensuing the first ordinary meeting of the
company shall, unless the directors agree among themselves, be
determined by ballot : in every subsequent year the one-third
or other nearest number who have been longest in office shall
retire.
(60.) A retiring director shall be re-eligible.
(61.) The company at the general meeting at which any directors
retire in manner aforesaid shall fill up the vacated offices by
electing a like number of persons.
(k) See ante, pp. 155 et seq., 298 et (I) See infra, No. 71.
seq., pp. 377 et seq., and p. 596, &c. (m) See ante, pp. 300, 337.
3 s 2
Appendix|V.
Table A.
996 THE COMPANIES ACT, 1862.
Appendix V. (62.) If at any meeting at which an election of directors ought to
„ , , 7 take place the places of the vacating directors are not filled up,
the meeting shall stand adjourned till the same day in the next
week, at the same time and place ; and if at such adjourned
meeting the places of the vacating directors are not filled up,
the vacating directors, or such of them as have not had their
places filled up, shall continue in office until the ordinary meet-
ing in the next year, and so on from time to time until their
places are filled up.
(63.) The company may from time to time, in general meeting, in-
crease or reduce the number of directors, and may also deter-
mine in what rotation such increased or reduced number is to
go out of office.
(64.) Any casual vacancy (n) occurring in the board of directors may
be filled up by the directors, but any person so chosen shall
retain his office so long only as the vacating director would
have retained the same if no vacancy had occurred.
(65.) The company, in general meeting, may, by a special resolu-
tion (o), remove any director before the expiration of his period
of office, and may by an ordinary resolution appoint another
person in his stead ; the person so appointed shall hold office
during such time only as the director in whose place he is
appointed would have held the same if he had not been re-
moved (p).
Proceedings of directors (q).
(66.) The directors may meet together for the despatch of business,
adjourn, and otherwise regulate their meetings as they think fit,
and determine the quorum necessary for the transaction of busi-
ness : cpiestions arising at any meeting shall be decided by a
majority of votes : in case of equality of votes the chairman
shall have a second or casting vote : a director may at any time
summon a meeting of the directors.
(67.) The directors may elect a chairman at their meetings, and
determine the period for which he is to hold office ; but if no
such chairman is elected, or if at any meeting the chairman is
not present at the time appointed for holding the same, the
directors present shall choose some one of their number to be
chairman of such meeting.
(68.) The directors may delegate any of their powers to committees
consisting of such member or members of their body as they
think fit : any committee so formed shall, in the exercise of the
powers so delegated, conform to any regulations that may be
imposed on them by the directors (?•).
(69.) A committee may elect a chairman of their meetings : if no
such chairman is elected, or if he is not present at the time
(«) As to the meaning of the word (q) See ante, pp. 298 et seq., and as
"casual," see York Tramways Co. v. to boards and quorums, ante, pp. 155,
Willows, 8 Q. B. D. p. 694 ; Munster 299, 828-9.
v. Cammell Co., 21 Ch. D. p. 187. (r) See ante, p. 338, and the refer-
(o) See the act, § 51. ences in the last note.
(p) Ante, pp. 302, 337.
25 & 26 viot. cap. 89. — schedule i. 997
appointed for holding the same, the members present shall Appendix V.
choose one of their number to be chairman of such meeting. Table A.
(70.) A committee may meet and adjourn as they think proper :
questions arising at any meeting shall be determined by a
majority of votes of the members present ; and in case of an
equality of votes the chairman shall have a second or casting
vote.
(71.) All acts done by any meeting of the directors or of a committee
of directors, or by any person acting as a director, shall, not-
withstanding that it be afterwards discovered that there was
some defect in the appointment of any such directors or persons
acting as aforesaid, or that they or any of them were disqualified,
be as valid as if every such person had been duly appointed and
was qualified to be a director (s).
Dividends (t).
(72.) The directors may, with the sanction of the company in
general meeting, declare a dividend to be paid to the members
in proportion to their shares.
(73.) No dividend shall be payable except out of the profits arising
from the business of the company.
(74.) The directors may, before recommending any dividend, set
aside out of the profits of the company such sum as they think
proper as a reserved fund to meet contingencies, or for equalis-
ing dividends, or for repairing or maintaining the works con-
nected with the business of the company, or any part thereof ;
and the directors may invest the sum so set apart as a reserved
fund upon such securities as they may select.
(75.) The directors may deduct from the dividends payable to any
member all such sums of money as may be due from him to the
company on account of calls or otherwise.
(76.) Notice of any dividend that may have been declared shall be
given to each member in manner hereinafter mentioned (u) ; and
all dividends unclaimed for three years after having been
declared may be forfeited by the directors for the benefit of
the company.
(77.) No dividend shall bear interest as against the company.
Accounts (x).
(78.) The directors shall cause true accounts to be kept, —
Of the stock in trade of the company ;
Of the sums of money received and expended by the company,
and the matter in respect of which such receipt and expen-
diture takes place ; and
Of the credits and liabilities of the company :
The books of account shall be kept at the registered office of
(s) See § 67 of the act, and ante, p. (x) See ante, pp. 439 et seq., and as
300. to accounts of banking companies, see
(t) See ante, pp. 429 et seq. 42 & 43 Vict. c. 70, § 7.
(«) See Nos. 95—97.
998 THE COMPANIES ACT, 1862.
Appendix V. the company, and, subject to any reasonable restrictions as to
m u 7 the time and manner of inspecting the same that may be im-
posed by the company in general meeting, shall be open to the
inspection of the members during the hours of business (y).
(79.) Once at the least in every year the directors shall lay before
the company in general meeting a statement of the income and
expenditure for the past year, made up to a date not more than
three months before such meeting.
(80.) The statement so made shall show, arranged under the most
convenient heads, the amount of gross income, distinguishing
the several sources from which it has been derived, and the
amount of gross expenditure, distinguishing the expense of the
establishment, salaries, and other like matters ; every item of
expenditure fairly chargeable against the year's income shall be
brought into account, so that a just balance of profit and loss
may be laid before the meeting ; and in cases where any item of
expenditure which may in fairness be distributed over several
years has been incurred in any one year, the whole amount of
such item shall be stated, with the addition of the reasons why
only a portion of such expenditure is charged against the income
of the year.
(81.) A balance-sheet shall be made out in every year, and laid
before the company in general meeting ; and such balance-
sheet shall contain a summary of the property and liabilities
of the company arranged under the heads appearing in the
form annexed to this table, or as near thereto as circumstances
admit (z).
(82.) A printed copy of such balance-sheet shall, seven days
previously to such meeting, be served on every member in
the manner in which notices are hereinafter directed to be
served (a).
Audit (b).
(83.) Once at the least in every year the accounts of the company
shall be examined, and the correctness of the balance-sheet
ascertained, by one or more auditor or auditors.
(84.) The first auditors shall be appointed by the directors : subse-
quent auditors shall be appointed by the company in general
meeting.
(85.) If one auditor only is appointed, all the provisions herein con-
tained relating to auditors shall apply to him.
(86.) The auditors may be members of the company ; but no person
is eligible as an auditor who is interested otherwise than as a
member in any transaction of the company ; and no director or
other officer of the company is eligible during his continuance
in office.
(87.) The election of auditors shall be made by the company at their
ordinary meeting in each year.
(y) See ante, pp. 439 et seq. (a) See No. 95.
(z) See form at end of this table, (b) See ante, pp. 443, 4.
nfra, p. 1000.
25 & 26 VICT. CAP. 89. — SCHEDULE I. 999
(88.) The remuneration of the first auditors shall be fixed by the Appendix V.
directors ; that of subsequent auditors shall be fixed by the _ ,. T
company in general meeting.
(89.) Any auditor shall be re-eligible on his quitting office.
(90.) If any casual vacancy occurs in the office of any auditor ap-
pointed by the company, the directors shall forthwith call an
extraordinary general meeting for the purpose of supplying the
same.
(91.) If no election of auditors is made in manner aforesaid, the Board
of Trade may, on the application of not less than five members
of the company, appoint an auditor for the current year, and
fix the remuneration to be paid to him by the company for his
services.
(92.) Every auditor shall be supplied with a copy of the balance-
sheet, and it shall be his duty to examine the same, with the
accounts and vouchers relating thereto.
(93.) Every auditor shall have a list delivered to him of all books
kept by the company, and shall at all reasonable times have
access to the books and accounts of the company : he may, at
the expense of the company, employ accountants or other persons
to assist him in investigating such accounts, and he may in rela-
tion to such accounts examine the directors or any other officer
of the company.
(94.) The auditors shall make a report to the members upon the
balance-sheet and accounts ; and in every such report they shall
state whether, in their opinion, the balance-sheet is a full and
fair balance-sheet, containing the particulars required by these
regulations, and properly drawn up so as to exhibit a true and
correct view of the state of the company's affairs, and, in case they
have called for explanations or information from the directors,
whether such explanations or information have been given by
the directors, and whether they have been satisfactory ; and
such report shall be read, together with the report of the
directors, at the ordinary meeting.
Notices (c).
(95.) A notice may be served by the company upon any member
either personally, or by sending it through the post in a pre-
paid letter addressed to such member at his registered place of
abode.
(96.) All notices directed to be given to the members shall, with
respect to any share to which persons are jointly entitled, be
given to whichever of such persons is named first in the register
of members ; and notice so given shall be sufficient notice to all
the holders of such share.
(97.) Any notice, if served by post, shall be deemed to have been
served at the time when the letter containing the same would
be delivered in the ordinary course of the post ; and in proving
such service it shall be sufficient to prove that the letter con-
taining the notices was properly addressed and put into the
post-office.
(c) These clauses only apply to notices business, sec London and Staffordshire
in the ordinary course of a company's Fire Inn. Co., 24 Ch. D. 149.
1000
THE COMPANIES ACT, 1862.
o
0)
q
_
ai
o
—
c
e>
i— |
$
~r.
-
0
a I
o
2 "°
-2 £rs
o o o
on -p
.S3 rt
.2 «s
S5 T3 -5 t£ =3
rQ o 'u r3
•CSS 3£mS S^^ «
i *
•• b a
so-3 "*
.Sg ^
I § §
2 « ft
52 a, a.
-^> o
gt/2'
be o
■ — 1-3 tr m
2 ^ cs
.o^S
-^ m n w
£ £ o Js
P P
p^ §>
2> o ft
S0°
.a « « _3 ■
^
-O
£ P.
W CD
«3
led
s to
^ "S
2 g
O — " cr"
•■3 o .s
ft<o^ g
a: I2; <; >> £ cl!
© o eS <3 o
-° ft <+h -c
o „o
P '
.5 I §
J o 4S
o a a
-a J3 f
a: ^ —
o
« p
l-s 1 .a
■9"f IJ-M
rO .£; Eh s
=J0 00 53 ;/>
C -*i o +5 ,
~p p
ft-w
3 °> a
e3 C _3 P fl
^ H~J <°
« a <" £ -fi
2=25 a a
03 ?5 ° 'rt os
a o
o o
pp
O a
.. <V o>
^"*2
or s
bo
a
CC -5
o o
l||
00 .5
-a
Eh
to rt o —
3
P <| o
25 & 26 vict. cap. 89. — schedule i.
1001
TABLE B. (See§ 17.)
Table of pees to be paid to the registrar of joint-stock com-
panies BY A COMPANY HAVING A CAPITAL DIVIDED INTO SHARES.
£ S. d.
For registration of a company whose nominal capital does not
exceed 2,000?., a fee of 2 0 0
For registration of a company whose nominal capital exceeds
2,000/., the above fee of 21., with the following additional
fees, regulated according to the amount of nominal capital ;
(that is to say,) £ s. d.
For every 1,000/. of nominal capital, or part
of 1,000/., after the first 2,000/., up to
5,000/ 10 0
For every 1,000/. of nominal capital, or part
of 1,000/., after the first 5,000/., up to
100,000/ 0 5 0
For every 1,000/. of nominal capital, or part
of 1,000/., after the first 100,000/. .'.010
For registration of any increase of capital made after the first
registration of the company, the same fees per 1,000/., or part
of 1,000/., as would have been payable if such increased
capital had formed part of the original capital at the time of
registration.
Provided that no company shall be liable to pay in respect of
nominal capital on registration, or afterwards, any greater
amount of fees than 50/., taking into account in the case of
fees payable on an increase of capital after registration the
fees paid on registration.
For registration of any existing company, except such companies
as are by this act exempted from payment of fees in respect
of registration under this act (e), the same fee as is charged
for registering a new company.
For registering any document hereby required or authorised to
be registered, other than the memorandum of association .050
For making a record of any fact hereby authorised or required
to be recorded by the registrar of companies, a fee of . . 0 5 0
Appendix V.
Table B.
TABLE C. (See § 17.)
Table of fees to be paid to the registrar of joint-stock com-
panies BY A COMPANY NOT HAVING A CAPITAL DIVIDED INTO SHARES.
£ s. d.
For registration of a company whose number of members as
stated in the articles of association does not exceed 20 .200
For registration of a company whose number of members, as
stated in the articles of association, exceeds 20, but does not
exceed 100 500
(c) See §§ 189 and 209. 51 Vict. c. 8,
§ 11, requires a statement of the amount
of nominal capital to be sent to the regis-
trar, and imposes a stamp duty of 2s.
per 100/. of capital.
Table C
1002 THE COMPANIES ACT, 1862.
Appendix V. For registration of a company whose number of members, as £ s. d.
_, , . ~ stated in the articles of association, exceeds 100, but is not
stated to be unlimited, the above fee of 51., with an addi-
tional 5s. for every 50 members or less number than 50
members after the first 100.
For registration of a company in which the number of members
is stated in the articles of association to be unlimited, a fee
of 20 0 0
For registration of any increase on the number of members
made after the registration of the company in respect of
every 50 members, or less than 50 members, of such in-
crease . . . . . . . . . .050
Provided that no one company shall be liable to pay on the
whole a greater fee than 201. in respect of its number of
members, taking into account the fee paid on the first regis-
tration of the company.
For registration of any existing company, except such com-
panies as are by this act exempted from payment of fees in
respect of registration under this act (/), the same fee as is
charged for registering a new company.
For registering any document hereby recmired or authorised to
be registered, other than the memorandum of association .050
For making a record of any fact hereby authorised or required
to be recorded by the registrar of companies, a fee of . . 0 5 0
FORM D.
Form D. FORM OF STATEMENT REFERRED TO IN PART III. OF THE ACT.
(See § 44.)
* The capital of the company is , divided into shares
of each.
The number of shares issued is
Calls to the amount of pounds per share have been made, under
which the sum of pounds has been received.
The liabilities of the company on the first day of January (or July)
were, —
Debts owing to sundry persons by the company :
On judgment, £
On specialty, £
On notes or bills, £
On simple contracts, £
On estimated liabilities, £
The assets of the company on that day were, —
Government securities [stating them], £
Bills of exchange and promissory notes, £
Cash at the bankers, £
Other securities, £
(/) See §189.
* If the company has no capital divided into shares, the portion of the statement
relating to capital and shares must be omitted.
25 & 26 vict. cap. 89. — schedule ii.
1003
SECOND SCHEDULE (g).
FORM A. (See § 8.)
Memorandum of association of a company limited by shares.
1st. The name of the company is " The Eastern Steam Packet Com-
pany, Limited."
2nd. The registered office of the company will be situate in England.
3rd. The objects for which the company is established are, " the con-
veyance of passengers and goods in ships or boats between such places as
the company may from time to time determine, and the doing all such
other tilings as are incidental or conducive to the attainment of the above
object."
4th. The liability of the members is Limited.
5th. The capital of the company is two hundred thousand pounds,
divided into one thousand shares of two hundred pounds each.
We, the several persons whose names and addresses are subscribed, are
desirous of being formed into a company, in pursuance of this memo-
randum of association ; and we respectively agree to take the number
of shares in the capital of the company set opposite our respective
names.
Appendix V.
Form A.
Names, Addresses, and Descriptions of Subscribers.
Number
of Shares
taken by
each Sub-
scriber.
" 1. John Jones of
" 2. John Smith of
" 3. Thomas Green of
" 4. John Thompson of
" 5. Caleb White of
" 6. Andrew Brown of
" 7. Ccesar White of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
Total shares taken .
Merchant
200
25
30
40
15
5
10
325
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
FORM B. (See§§ 9, 14.)
Memorandum and articles of association of a company limited
by guarantee, and not having a capital divided into shares.
Memorandum of association.
1st. The name of the company is " The Mutual London Marine Asso-
ciation, Limited."
(</) The forms in this schedule are cases to which they apply will be fouinl
given as examples, to be followed as in the sections referred to at the head of
closely as possible. (See § 71.) The each form.
Form B.
1004 THE COMPANIES ACT, 1862.
Appendix V. 2nd. The registered office of the company will be situate in England.
Z Z 3rd. The objects for which the company is established are, "the mutual
insurance of ships belonging to members of the company, and the doing
all such other things as are incidental or conducive to the attainment of
the above objects."
4th. Every member of the company undertakes to contribute to the
assets of the company, in the event of the same being wound up during
the time that he is a member, or within one year afterwards, for payment
of the debts and liabilities of the company contracted before the time at
which he ceases to be a member, and the costs, charges, and expenses of
winding up the same, and for the adjustment of the rights of the contri-
butories amongst themselves, such amount as may be required not exceed-
ing ten pounds.
We, the several persons whose names and addresses are subscribed, are
desirous of being formed into a company, in pursuance of this memo-
randum of association.
Names, Addresses, and Descriptions of Subscribers.
"1. John Jones of in the county of Merchant.
" 2. John Smith of in the count}7 of
"3. Thomas Green of in the county of
" 4. John Thompson of in the county of
"5. Caleb White of in the comity of
" 6. Andrew Brown of in the county of
" 7. Csesar White of in the county of
Dated the 22nd day of November 1861,
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
Articles op association to accompany preceding memorandum of
association. (See § 14.)
(1.) The company, for the purpose of registration, is declared to
consist of five hundred members.
(2.) The directors hereinafter mentioned may, whenever the busi-
ness of the association requires it, register an increase of
members.
Definition of members.
(3.) Every person shall be deemed to have agreed to become a
member of the company who insures any ship or share in a
ship in pursuance of the regulations hereinafter contained.
General meetings.
(4.) The first general meeting shall be held at such time, not being
more than three months after the incorporation of the company,
and at such place, as the directors may determine.
(5.) Subsequent general meetings shall be held at such time and
place as may be prescribed by the company in general meeting ;
and if no other time or place is prescribed, a general meeting
25 & 26 vict. cap. 89. — schedule ii. 1005
shall be held on the first Monday in February in every year, at Appendix V.
such place as may be determined by the directors. Z Z
(6.) The above-mentioned general meetings shall be called ordinary
meetings ; all other general meetings shall be called extra-
ordinary.
(7.) The directors may, whenever they think fit, and they shall, upon
a recpiisition made in writing by any five or more members,
convene an extraordinary general meeting.
(8.) Any requisition made by the members shall express the object
of the meeting proposed to be called, and shall be left at the
registered office of the company.
(9.) Upon the receipt of such requisition the directors shall forth-
with proceed to convene a general meeting ; if they do not
proceed to convene the same within twenty-one days from the
date of the requisition, the requisitionists, or any other five
members, may themselves convene a meeting.
Proceedings at general meetings.
(10.) Seven days' notice at the least, specifying the place, the day,
and the hour of meeting, and in case of special business the
general nature of such business, shall be given to the members
in manner hereinafter mentioned, or in such other manner, if
any, as may be prescribed by the company in general meeting ;
but the non-receipt of such notice by any member shall not
invalidate the proceedings at any general meeting.
(11.) All business shall be deemed special that is transacted at an
extraordinary meeting, and all that is transacted at an ordinary
meeting, with the excej)tion of the consideration of the
accounts, balance-sheets, and the ordinary report of the
directors.
(12.) No business shall be transacted at any meeting except the
declaration of a dividend, unless a quorum of members is pre-
sent at the commencement of such business ; and such quorum
shall be ascertained as follows ; that is to say, if the members
of the company at the time of the meeting do not exceed ten in
number, the quorum shall be five ; if they exceed ten, there
shall be added to the above quorum one for every five additional
members up to fifty, and one for every ten additional members
after fifty, with this limitation, that no quorum shall in any
case exceed thirty.
(13.) If within one hour from the time appointed for the meeting a
quorum of members is not present, the meeting, if convened
upon the requisition of the members, shall be dissolved : in any
other case it shall stand adjourned to the same day in the fol-
lowing week at the same time and place ; and if at such
adjourned meeting a quorum of members is not present, it
shall be adjourned sine die.
(14.) The chairman (if any) of the directors shall preside as chair-
man at every general meeting of the company.
(15.) If there is no such chairman, or if at any meeting he is not
present at the time of holding the same, the members present
shall choose some one of their number to be chairman of such
meeting.
1006 THE COMPANIES ACT, 1862.
Appendix V. (16.) The chairman may, with the consent of the meeting, adjourn
■porm j> any meeting from time to time and from place to place ; but no
business shall be transacted at any adjourned meeting other
than the business left unfinished at the meeting from which the
adjournment took place.
(17.) At any general meeting, unless a poll is demanded by at least
five members, a declaration by the chairman that a resolution
has been carried, and an entry to that effect in the book of pro-
ceedings of the company, shall be sufficient evidence of the fact,
without proof of the number or proportion of the votes recorded
in favour of or against such resolution.
(18.) If a poll is demanded in manner aforesaid, the same shall be
taken in such manner as the chairman directs, and the result of
such poll shall be deemed to be the resolution of the company
in general meeting.
Votes of members.
(19.) Every member shall have one vote and no more.
(20.) If any member is a lunatic or idiot, he may vote by his com-
mittee, curator bonis, or other legal curator.
(21.) No member shall be entitled to vote at any meeting unless all
monies due from him to the company have been paid.
(22.) Votes may be given either personally or by proxies : a proxy
shall be appointed in writing under the hand of the appointor,
or, if such appointor is a corporation, under its common seal.
(23.) No person shall be appointed a proxy who is not a member ;
and the instrument appointing him shall be deposited at the
registered office of the company not less than forty-eight hours
before the time of holding the meeting at which he proposes to
vote.
(24.) Any instrument appointing a proxy shall be in the following
form : —
Company Limited.
I of in the county of being a member of
the company limited, hereby appoint of
as my proxy, to vote for me and on my behalf at the [ordinary
or extraordinary, as the case may 6e] general meeting of the
company to be held on the day of , and at any
adjournment thereof to be held on the day of
next [or, at any meeting of the comjDany that may be held in
the year ].
As witness my hand, this day of
Signed by the said in the presence of
Directors.
(25 ) The number of the directors, and the names of the first
directors, shall be determined by the subscribers of the memo-
randum of association.
(26.) Until directors are appointed, the subscribers of the memo-
randum of association shall for all the purposes of this act be
deemed to be directors.
25 & 26 VICT. CAP. 89.— SCHEDULE II. 1007
Pmvers of directors. Appendix V.
(27.) The business of the company shall be managed by the directors, Form B.
who may exercise all such powers of the company as are not
hereby required to be exercised by the company in general
meeting ; but no regulation made by the company in general
meeting shall invalidate any prior act of the directors which
would have been valid if such regulation had not been made.
Election of directors.
(28.) The directors shall be elected annually by the company in
general meeting.
Business of company.
[Here insert rules as to mode in ivhich business of insurance is to be
conducted.]
Accounts.
(29.) The accounts of the company shall be audited by a committee
of five members, to be called the audit committee.
(30.) The first audit committee shall be nominated by the directors
out of the body of members.
(31.) Subsequent audit committees shall be nominated by the mem-
bers at the ordinary general meeting in each year.
(32.) The audit committee shall be supplied with a copy of the
balance-sheet, and it shall be their duty to examine the same
with the accounts and vouchers relating thereto.
(33.) The audit committee shall have a list delivered to them of all
books kept by the company, and they shall at all reasonable
times have access to the books and accounts of the company :
they may, at the expense of the company, employ accountants
or other persons to assist them in investigating such accounts,
and they may in relation to such accounts examine the directors
or any other officer of the company.
(34.) The audit committee shall make a report to the members xvpon
the balance-sheet and accounts ; and in every such report they
shall state whether in their opinion the balance-sheet is a full
and fair balance-sheet, containing the particulars required by
these regulations of the company, and properly drawn np so
as to exhibit a true and correct view of the state of the com-
pany's affairs, and, in case they have called for explanation or
information from the directors, whether such explanations or
information have been given by the directors, and whether they
have been satisfactory ; and such report shall be read, together
with the report of the directors, at the ordinary meeting.
Notices.
(35.) A notice may be served by the company upon any member
either personally, or by sending it through the post in a pre-
paid letter addressed to such member at his registered place of
abode.
(36). Any notice, if served by post, shall be deemed to have been
1008 THE COMPANIES ACT, 1862.
FormB.
Appendix V. served at the time when the letter containing the same would
be delivered in the ordinary course of the post ; and in proving
such service it shall be sufficient to prove that the letter con-
taining the notice was properly addressed, and put into the
post office.
Winding up.
(37). The company shall be wound up voluntarily whenever an
extraordinary resolution, as defined by the Companies act,
1862, is passed, requiring the company to be wound up volun-
tarily.
Names, Addresses, and Descriptions of Subscribers.
"1. John Jones of in the county of Merchant.
" 2. John Smith of in the county of
"3. Thomas Green of in the county of
" 4. John Thompson of in the county of
" 5. Caleb White of in the county of
" 6. Andrew Brown of in the county of
"7. Caesar White of in the county of
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
FORM C. (See§§ 9 & 14.)
Form C. MEMORANDUM AND ARTICLES OF ASSOCIATION OP A COMPANY LIMITED
BY GUARANTEE, AND HAVING A CAPITAL DIVIDED INTO SHARES.
Memorandwm of association.
1st. The name of the company is, "The Highland Hotel Company,
Limited."
2nd. The registered office of the company will be situate in Scotland.
3rd. The objects for which the company is established are "the facili-
tating travelling in the Highlands of Scotland, by providing hotels and
conveyances by sea and by land for the accommodation of travellers, and
the doing all such other things as are incidental or conducive to the attain-
ment of the above object."
4th. Every member of the company undertakes to contribute to the
assets of the company in the event of the same being wound up during
the time that he is a member, or within one year afterwards, for pay-
ment of the debts and liabilities of the company contracted before the time
at which he ceases to be a member, and the costs, charges, and expenses of
winding up the same, and for the adjustment of the rights of the contri-
butories amongst themselves, such amount as may be required not ex-
ceeding twenty pounds.
We, the several persons whose names and addresses are subscribed, are
desirous of being formed into a company, in pursuance of this memo-
randum of association.
25 Sc 26 vict. cap. 89. — schedule ii.
1009
Names, Addresses, and Descriptions of Subscribers.
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
1. John Jones of Merchant.
" 2. John Smith of
" 3. Thomas Green of
" 4. John Thompson of
" 5. Caleb White of
" 6. Andrew Brown of
"7. Csesar White of
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
Appendix V.
FormC.
Articles of association to accompany preceding memorandum of association.
(See §14.)
1. The capital of the company shall consist of five hundred thousand
pounds, divided into five thousand shares of one hundred pounds each.
2. The directors may, with the sanction of the company in general
meeting, reduce the amount of shares.
3. The directors may, with the sanction of the company in general
meeting, cancel any shares belonging to the company.
4. All the articles of Table A. shall be deemed to be incorporated with
these articles, and to apply to the company.
We, the several persons whose names and addresses are subscribed, agree
to take the number of shares in the capital of the company set opposite
our respective names.
Names, Addresses, and Descriptions of Subscribers.
1. John Jones of
2. John Smith of
3. Thomas Green of
4. John Thompson of
5. Caleb White of
6. Andrew Brown of
7. Csesar White of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
Total shares taken
Merchant
Number
of Shares
taken by
each Sub-
scriber.
200
25
30
40
15
5
10
325
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 13, Hute Street, Clerkenwell, Middlesex.
FORM D. (See §§ 10, 14.)
Memorandum and articles op association of an unlimited com-
pany, HAVING A CAPITAL DIVIDED INTO SHARES.
Memorandum of association.
1st. The name of the company is " The Patent Stereotype Company."
2nd. The registered office of the company will be situate in England.
L.C 3 T
Form D.
1010
THE COMPANIES ACT, 18G2.
Appendix V.
Form D.
3rd. The objects for which the company is established are " the working
of a patent method of founding and casting stereotype plates, of which
method John Smith, of London, is the sole patentee."
We, the several persons whose names are subscribed, are desirous of being
formed into a company, in pursuance of this memorandum of asso-
ciation.
Names, Addresses, and Descriptions of Subscribers.
John Jones of
John Smith of
Thomas Green of
John Thompson of
Caleb White of
Andrew Brown of
Abel Brown of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
Dated 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 20, Bond Street, Middlesex.
Merchant.
Articles of association to accompany the preceding memorandum of
association. (See § 14.)
Capital of the company.
The capital of the company is two thousand pounds, divided into twenty
shares of one hundred pounds each.
Application of Table A.
All the articles of Table A. shall be deemed to be incorporated with
these articles, and to apply to the company.
We, the several persons whose names and addresses are subscribed, agree
to take the number of shares in the capital of the company set
opposite our respective names.
Names, Addresses, and Descriptions of Subscribers.
1. John Jones of
2. John Smith of
3. Thomas Green of
4. John Thompson of
5. Caleb White of
6. Andrew Brown of
7. Abel Brown of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
in the county of
Merchant
Total shares taken
Number
of Shares
taken by
Sub-
scribers.
18
Dated the 22nd day of November 1861.
Witness to the above signatures,
A. B., No. 20, Bond Street, Middlesex.
25 & 26 vict. cap. 89. — schedule ii.
1011
CO
<
o
m
0
cr1
O
P
W
«!
a
GO
P
«!
E-"
t— 4
Ah
<!
o
J
O)
CO
£
^^3
V
-1
^
— 1
43
d
>
cS
5
03
O
3
rd
y
*£
d
.9
m
d
-4-2
CM
bo
g
o
^
o
d
-7
^
a)
o
I
.> J^d'+s
^ o §^
rs ~ < — i i — i
^
5 rf rH O O
£*CO ai s s
<~' O 03 O O
2 «-d cs S
O S ,T3 o O
-t3
02
03
os S
O .£
s >?
03
.3
~w
03
03
03
M
-
(11
-d
c3
f-
OQ
—
T-l
r/?
f&
SI,
d
». .
c
o
T)
H
-M
ri
:
!>-
d
rd
5
03
d
o
cS
?3
o
o
<1
■j.
a
d
3
o
r^
1
■° s
2 g ^
2 3 a3
^ rJ= >H
so a
Is -S 2
s "S ft
5 ^ a
o5
a
* js
s s>>
1 *
o £2
03 i-D
-d 2
■S ,|
O 'ft
^ <N
3 T 2
1012
THE COMPANIES ACT, 1862.
Appendix V.
Form F.
Acts repealed.
FORM F. (See § 21.)
Licence to hold lands.
The lords of the committee of privy council appointed for the considera-
tion of matters relating to trade and foreign plantations hereby license
the Association, Limited, to hold the lands hereunder
described [insert description of lands]. The conditions of this licence are
[insert conditions, if any].
THIRD SCHEDULE. (See
FIEST PART.
205.)
Date and
Chapter of Act.
21 & 22 Geo. 3, c. 46 .
(Parliament of Ireland)
7 & 8 Vict. c. 110
7&8 Vict, c. Ill
7 & 8 Vict. c. 113
8 & 9 Vict. c. 98
9 & 10 Vict. c. 28
9 & 10 Vict. c. 75
10 & 11 Vict, c. 78
11 & 12 Vict. c. 45
12 & 13 Vict. c. 108
19 & 20 Vict. c. 47
20 & 21 Vict. c. 14
20 & 21 Vict. c. 49
20 & 21 Vict. c. 78
20 & 21 Vict. c. 80
21 & 22 Vict. c. 60
21 & 22 Vict. c. 91
Title of Act.
An Act to promote Trade and Manufactures by
regulating and encouraging partnerships.
An Act for the Registration, Incorporation, and
Regulation of Joint-Stock Companies.
An Act for facilitating the winding up the Affairs
of Joint-Stock Companies unable to meet their
pecuniary Engagements.
An Act to Regulate Joint-Stock Banks in England.
An Act for facilitating the winding up the Affairs
of Joint-Stock Companies in Ireland unable to
meet their pecuniary Engagements.
An Act to facilitate the Dissolution of certain
Railway Companies.
An Act to Regulate Joint-Stock Banks in Scotland
and Ireland.
An Act to amend an Act for the Registration,
Incorporation, and Regulation of Joint-Stock
Companies.
An Act to amend the Acts for facilitating the
winding up the Affairs of Joint Stock Com-
panies unable to meet their pecuniary Engage-
ments, and also to facilitate the Dissolution
and winding up of Joint-Stock Companies and
other Partnerships.
An Act to amend the Joint-Stock Companies
Winding-up Act, 1848.
An Act for the Incorporation and Regulation of
Joint-Stock Companies and other Associations.
An Act to amend the Joint-Stock Companies
Act, 1856.
An Act to amend the Law relating to Banking
Companies.
An Act to amend the Act Seven and Eight Vic-
toria, Chapter One hundred and eleven, for
facilitating the winding up the affairs of Joint-
Stock Companies unable to meet their pecuniary
Engagements, and also the Joint-Stock Com-
panies Winding-up Acts, 1848 and 1849.
An Act to amend the Joint -Stock Companies Act,
1856.
An Act to amend the Joint Stock Companies Acts,
1856 and 1857, and the Joint-Stock Banking
Companies Act, 1857.
An Act to enable Joint-Stock Banking Companies
to be formed on the Principle of Limited
Liability.
25 & 26 vict. cap. 89. — schedule hi.
1018
SECOND PART (i).
7 & 8 Vict. c. 113, s. 47.
Appendix V.
Every company of more than six persons established on the sixth day Existing com-
of j May one thousand eight hundred and forty-four, for the purpose of panies to have
carrying on the trade or business of bankers within the distance of sixty- th? l)0wers °f
five miles from London, and not within the provisions of the act passed ^ed. ^ ^
(i) The explanation of the Second
Part of the Third Schedule to the fore-
going statute, is as follows : —
The 39 & 40 Geo. 3, c. 28, rendered
all banking companies of more than six
persons illegal, the Bank of England
alone being excepted.
The 7 Geo. 4, c. 46, rendered banking
companies of more than six persons
legal, provided they did not carry on
business within 65 miles of London.
The same act also empowered the bank-
ing companies thus legalised to sue and
be sued by public officers, upon certain
conditions.
The 3 & 4 Will. 4, c. 98, enabled
banking companies of more than six
persons to carry on business within 65
miles of London, subject to certain re-
strictions ; but neither this act nor any
other, prior to the 7 & 8 Vict., extended
to these companies the privilege of suing
and being sued by public officers, and
which privilege was enjoyed under 7
Geo. 4, c. 46, by banking companies
carrying on business more than 65 miles
from London.
The 7 & 8 Vict. c. 113, § 47, which is
above preserved from repeal, conferred
the privilege in question upon banking
companies of more than six members
carrying on business within 65 miles of
London, and established before the 6th
of May, 1844.
The same act (7 & 8 Vict. c. 113)
prohibited the formation after the 6th of
May, 1844, of banking companies of
more than six persons, save under its
provisions (§1). This act also authorised
banking companies of more than six
persons formed before the 6th of May,
1844, to obtain charters of incorpora-
tion, and so bring themselves within the
provisions of the act (§ 45). Once
within its provisions by incorporation, Note on banking
the privilege of suing and being sued by companies,
public officers would, of course, be un- [See also ante,
necessary ; and this accounts for the PP- 136 — 138.]
occurrence in the 47th section of 7 &
8 Vict. c. 113, of the words "and not
within the provisions of this Act."
With respect to the 20 & 21 Vict,
c. 49, it must be borne in mind that
when it passed, there were three kinds of
banking partnerships and companies in
existence, viz. :— 1. Ordinary banking
firms of not more than six members ; 2.
Banking companies of more than six
members formed before the 6 th of May,
1844, but not incorporated ; and 3. Bank-
ing companies of more than six members,
which, whether formed before or after the
6th of May, 1844, were incorporated under
the provisions of 7 & 8 Vict. c. 113. It
must also be borne in mind that prior to
the passing of the 20 & 21 Vict. c. 49,
the privileges of banking partnerships
and companies to issue notes, &c, de-
pended partly upon whether they con-
sisted of more than six members or not,
and partly upon the distance from London
at which they carried on their business.
(See ante, p. 136 n.) Such was the state
of the law when the Joint-stock banking
companies act, 1857, passed. That act
(20 & 21 Vict. c. 49) did four things,
viz. : — 1. It imperatively required all
banking companies formed under 7 &
8 Vict. c. 113, to register (§ 4). 2. It
repealed that act, not only with respect to
banking companies formed after the 17th
of August, 1857, but also with respect to
all companies formed before that time
under 7 & 8 Vict. c. 113, as soon as they
should have registered as required. (See
§ 12.) 3. It prohibited the formation
of banking companies of more than ten
members, save under its own provisions
1014
THE COMPANIES ACT, 1862.
Appendix V. in the session holden in the seventh and eighth years of the reign of Her
present Majesty, chapter one hundred and thirteen, shall have the same
powers and privileges of suing and being sued in the name of any one of
the public officers of such copartnership as the nominal plaintiff, peti-
tioner, or defendant on behalf of such co-partnership, and all judgments,
decrees, and orders made and obtained in any such suit may be enforced,
in like manner as is provided with respect to such companies carrying on
Note on banking (§ 13)- 4. It conferred upon banking
companies. companies of not more than ten members
the privileges previously enjoyed by
banking firms of not more than six
members (§ 12). This last enactment it
is which is preserved from repeal by the
act of 1862.
The above observations will, it is hoped,
enable the reader to understand without
difficulty the object of saving from repeal
the clauses in the second part of the 3rd
schedule to the Companies act, 1862.
A few additional remarks, however,
are necessary to explain the varieties of
banking companies which may be met
with after that act has come into opera-
tion.
Until 1857 banking companies could
not be formed by registration, and until
the following year they could not be
formed with limited liability, except by
virtue of some special act of Paiiiament
or royal charter. In 1857, however,
an act was passed, authorising banking
companies of more than six members to
register (20 & 21 Vict. c. 49) ; and in
1858 another act was passed, authorising
them to register w-ith limited liability
(21 & 22 Vict. c. 91). Companies actually
registered under these acts are made sub-
ject to the provisions of the act of 1862
(see §§ 176, 177), which also authorises
the formation of new banking companies
of more than six members, with limited
or unlimited liability (§ 6). Adding
registered banking companies therefore
to those which existed before 1857, the
result will be as follows : —
1. There may be ordinary banking
partnerships of not more than ten
members.
2. There may be companies of more
than six members formed before the
6th May, 1844, and empowered to sue
and be sued by public officers, but not
registered.
3. There may be registered companies
of more than six members. Companies
of this class may be limited or not, and
may have been originally formed before
or after May, 1844, and if after, then
either under 7 & 8 Vict. c. 113, or
under the Joint-stock companies acts of
1857 — 1858, or under the new act of
1862. As to the power of a bank regis-
tered as unlimited to re-register as limi-
ted, see 42 & 43 Vict. c. 76.
4. There may. perhaps, be yet another
class, viz., companies formed before the
6th of May, 1844, and subsequently in-
corporated by royal charter under 7 & 8
Vict. c. 113, § 46, but not registered
under any of the later acts. Such a
company might possibly be considered as
not having been formed under 7 & 8
Vict. c. 113, within the meaning of 20
& 21 Vict. c. 49, § 4 ; and, if so, regis-
tration under this last act would not be
compulsory, and if not compulsory under
that act, it is not compulsory under the
act of 1862. (See § 209.) If, however,
the incorporation of the company by char-
ter be considered as the formation of the
company within the meaning of 20 & 21
Vict. c. 49, § 4, then the registration of
the company is imperative, and the class
under consideration cannot legally exist.
The latter view the writer conceives to be
correct.
In addition to the above four classes
there, of course, may be banking com-
panies formed under special - acts or
charters of their own.
With reference to Irish banks, and as
to how far the Irish act, 33 Geo. 2, c. 14,
is repealed by the imperial act, 6 Geo. 4,
c. 42, see O' Flaherty v. McDowell, 6
H. L. C. 142, and Copland v. Davis,
L. R. 5 H. L. 358.
27 vict. cap. 19. 1015
the said trade or business at any place in England exceeding the distance Appendix V.
of sixty-five miles from London, under the provisions of an act passed in
the seventh year of the reign of King George the fourth, chapter forty-
six, intituled, " An act for the better regulating copartnerships of certain
bankers in England, and for amending so much of an act of the thirty-
ninth and fortieth years of the reign of His late Majesty King George the
third, intituled ' An act for establishing an agreement with the governor
and company of the Bank of England for advancing the sum of three
millions towards the supply for the service of the year one thousand
eight hundred/ as relates to the same " ; provided, that such first-men-
tioned company shall make out and deliver from time to time to the
commissioners of stamps and taxes the several accounts or returns required
by the last-mentioned act ; and all the provisions of the last-recited act as
to such accounts or returns shall be taken to apply to the accounts or
returns so made out and delivered by such first-mentioned companies
as if they had been originally included in the provisions of the last-recited
act.
20 & 21 Vict, c 49, part of section 12.
Notwithstanding anything contained in any act passed in the session Power to form
holden in the seventh and eighth years of the reign of Her present baking part-
Majesty, chapter one hundred and thirteen, and intituled "An act to "^ongS °
regulate Joint-Stock Banks in England," or in any other act, it shall be
lawful for any number of persons, not exceeding ten, to carry on in partner-
ship the business of banking, in the same manner and upon the same
conditions in all respects as any company of not more than sLx persons
could before the passing of this act have carried on such business.
THE COMPANIES SEALS ACT, 1864.
27 Vict. Cap. 19.
An act to enable joint stock companies carrying on business in foreign
countries to have official seals to be used in such countries (k).
[13th May, 1864.]
Whereas there have been and may be established in the United
Kingdom companies whose business is to be earned on in countries not
situate in the United Kingdom, and it is convenient and desirable that
investments may be made, and mortgages, conveyances, and leases taken,
and contracts and engagements entered into, on behalf of the Company, in
such countries, in the name of the company : be it therefore enacted by
the Queen's most excellent Majesty, by and with the advice and consent of
the lords spiritual and temporal, and commons, in this present Parliament
assembled, and by the authority of the same, as follows :
1. This act may be cited for all purposes as " the Companies seals Short Title,
act, 1864."
(k) See ante, p. 229.
1016
THE COMPANIES SEALS ACT, 18G4.
Appendix V.
Power to
companies to
have an
official seal.
affix seals.
2. Any company, under "The Companies act, 1862," whose objects
require or comprise the transaction of business, as hereinbefore mentioned,
in foreign countries, may cause to be prepared an official seal for and to
be used, in any place, district, or territory situate out of the United
Kingdom in which the business of the company shall be carried on, and
every such official seal may and shall be a fac-simile of or as nearly as
practicable a fac-simile of the common seal of the company, with the
exception that on the face thereof shall be inscribed the name of each
and every place, district, or territory in and for which it is to be used :
provided that it shall be lawful for any such company as aforesaid from
time to time to break up and renew any official seal or seals, and to vary
the limits within which it is intended to be used.
Power to com- 3. Every company having or using any such official seal as is authorised
paniesto appoint by this act may from time to time, by any instrument or instruments in
agents abroad to -writing under the common seal of the company, empower any agent or
agents specially appointed for the purpose, or any local agent, board,
committee, manager, or commissioner appointed under the provisions of
the articles of association of such company, in any place, district, or
territory situate out of the United Kingdom where the business of the
company shall for the time being be carried on, to affix such official seal
to any deed, contract, or other instrument to which the company is or
shall be made a party in such place, district, or territory, and no other
order of the company or the board of directors thereof shall be necessary
to authorize any such seal to be affixed to any deed, contract, or other
instrument.
4. Every power granted under the last preceding section shall, as
between the company, their successors and assigns, on the one hand, and
the person or persons dealing with the agent or agents, board, committee,
manager, or commissioner named in the instrument conferring the power,
and all parties claiming through or under such person or persons, on the
other hand, continue in force during the period, if any, mentioned in the
instrument conferring the power, or if no power be there mentioned then
until notice of the revocation or determination of the power shall have
been given to such person or persons as aforesaid.
5. Whenever any such official seal as aforesaid shall be affixed to any
seal to document document, the person affixing the same shall, by writing under his hand
date when so anc^ written on the document to which the seal may have been affixed,
affixed. certify the date when and the place where the same was affixed ; and any
document to which any such seal shall have been duly affixed within the
district or territory or place the name whereof is inscribed on such seal
shall bind the company in the same way and to the same extent and have
the same force and effect as if it had been duly sealed with the common
seal of the company.
6. The powers given by this act shall be exercised by such companies
only as are or shall be expressly authorised to exercise the same by their
articles of association, or a special resolution passed according to the
provisions of "The Companies act, 1862," and shall be exercised by such
companies subject to any directions or restrictions in their articles of
association or the special resolutions contained.
7. Nothing in this act contained shall operate to repeal the provisions
of the fifty-fifth section of " The Companies act, 1862," but such section
shall continue in force, and all acts done or to be done thereunder shall
be as valid and effectual as if this act had not been passed.
As to the
duration of
powers granted
under sect. 3 of
this act.
Person affixing
Companies not
to exercise
powers of act
unless autho-
rized.
Section 55 of
25 & 26 Vict.
c. 89, not
repealed.
30 & 31 vict. cap. 131. 1017
Appendix V.
"THE COMPANIES ACT, 1867."
30 & 31 Vict. Cap. 131.
An Act to amend " The Companies act, 1862."
[20th August, 1867.]
BE it enacted by the Queen's most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons, in
this present Parliament assembled, and by the authority of the same, as
follows :
Preliminary.
1. This act may be cited for all purposes as " The Companies act, Short title.
1867."
2. The Companies act, 1862, is hereinafter referred to as "the prin- Act to be con-
cipal act ; " and the principal act and this act are hereinafter distinguished strued as one
as and may be cited for all purposes as "The Companies Acts, 1862 and ^*^ \ ™
1867 ;" and this act shall, so far as is consistent with the tenor thereof,
be construed as one with the principal act ; and the expression " this act "
in the principal act, and any expression referring to the principal act
which occurs in any act or other document, shall be construed to mean
the principal act as amended by this act.
3. This act shall come into force on the first day of September one Commencement
thousand eight hundred and sixty-seven, which date is hereinafter referred of act.
to as the commencement of this act.
Unlimited liability of directors.
4. Where after the commencement of this act a company is formed as a Company may
limited company under the principal act, the liability of the directors or have directors
managers of such company, or the managing director, may, if so provided with unlimited
by the memorandum of association, be unlimited. y'
5. The following modifications shall be made in the thirty-eighth sec- Liability of
tion of the principal act with respect to the contributions to be required directors, past
in the event of the winding up of a limited company under the principal arK* present,
act, from any director or manager whose liability is, in pursuance of this )vieie. .. V ^
act, unlimited :
(1.) Subject to the provisions hereinafter contained, any such director
or manager, whether past or present, shall, in addition to his
liability (if any) to contribute as an ordinary member, be liable
to contribute as if lie were at the date of the commencement of
such winding up a member of an unlimited company :
(2.) No contribution required from any past director or manager who
has ceased to hold such office for a period of one year or up-
wards prior to the commencement of the winding up shall
exceed the amount (if any) which he is liable to contribute as
an ordinary member of the company :
(3.) No contribution required from any past director or manager in
respect of any debt or liability of the company contracted after
the time at which he ceased to hold such office shall exceed the
1018
THE COMPANIES ACT, 1867.
Appendix V.
Director with
unlimited lia-
bility may have
set-off as under
sect. 101, of
25 & 26 Vict,
c. 89.
Notice to be
given to director
on his election
that his liability
will be unlimited.
Penalty for
neglect to give
notice.
Liability not
affected by
neglect.
Existing limited
companies may,
by special resolu-
tions, make
liability of
directors
unlimited.
amount (if any) which he is liable to contribute as an ordinary
member of the company :
(4.) Subject to the provisions contained in the regulations of the
company, no contribution required from any director or manager
shall exceed the amount (if any) which he is liable to contribute
as an ordinary member, unless the Court deems it necessary to
require such contribution in order to satisfy the debts and lia-
bilities of the company, and the costs, charges, and expenses of
the winding up.
6. In the event of the winding up of any limited company, the Court,
if it think fit, may make to any director or manager of such company
whose liability is unlimited the same allowance by way of set-off as under
the one hundred and first section of the principal act it may make to a
contributory where the company is not limited.
7. In any limited company in which, in pursuance of this act, the
liability of a director or manager is unlimited, the directors or managers
of the company (if any), and the member who proposes any person for
election or appointment to such office, shall add to such proposal a state-
ment that the liability of the person holding such office will be unlimited ;
and the promoters, directors, managers, and secretary (if any) of such
company, or one of them, shall, before such person accepts such office or
acts therein, give him notice in writing that his liability will be un-
limited.
If any director, manager, or proposer make default in adding such state-
ment, or if any promoter, director, manager, or secretary make default in
giving such notice, he shall be liable to a penalty not exceeding one
hundred pounds, and shall also be liable for any damage which the person
so elected or appointed may sustain from such default ; but the liability of
the person elected or appointed shall not be affected by such default.
8. Any limited company under the principal act, whether formed
before or after the commencement of this act, may, by a special resolu-
tion, if authorised so to do by its regvdations, as originally framed or as
altered by special resolution, from time to time modify the conditions con-
tained in its memorandum of association so far as to lender unlimited the
liability of its directors or managers, or of the managing director ; and
such special resolution shall be of the same validity as if it had been
originally contained in the memorandum of association, and a copy thereof
shall be embodied in or annexed to every copy of the memorandum of
association which is issued after the passing of the resolution ; and any
default in this respect shall be deemed to be a default in complying with
the provisions of the fifty-fourth section of the principal act, and shall be
punished accordingly (I).
Power to
company to
reduce capital,
by special reso-
lution and order
of Court
registered by
registrar.
Reduction of capital and shares (m).
9. Any company limited by shares may, by special resolution, so far
modify the conditions contained in its memorandum of association, if
authorised so to do by its regulations, as originally framed or as altered by
special resolution, as to reduce its capital ; but no such resolution for
(?) See, as to special resolutions, act
of 1862, § 51, and as to altering the
memorandum, ib. § 12.
(m) See Ord. of 1868, rules 2 et seq. ;
and 40 & 41 Vict. c. 26, §§ 2 to 5, infra ;
and 43 Vict. c. 19 ; and ante, p. 402.
30 & 31 vict. cap. 131. 1019
reducing the capital of any company shall come into operation until an Appendix V.
order of the Court is registered by the registrar of joint-stock companies,
as is hereinafter mentioned.
10. The company shall after the date of the passing of any special Company to
resolution for reducing its capital add to its name, until such date as the add "and re-
Court may fix, the words "and reduced," as the last words in its name ; ducecl to ,ts
and those words shall, until such date, be deemed to be part of the name iimited period
of the company within the meaning of the principal act.
11. A company which has passed a special resolution for reducing its Company to
capital may apply to the Court by petition for an order confirming the apply to the
reduction ; and on the hearing of the petition the Court, if satisfied that jlrt toifiau .
with respect to every creditor of the company who under the provisions of retiucti0n which
this act is entitled to object to the reduction, either his consent to the may be made as
reduction has been obtained, or his debt or claim has been discharged or herein provided,
has determined, or has been secured as hereinafter provided, may make an
order confirming the reduction on such terms and subject to such condi-
tions as it deems fit.
12. The expression "the Court" shall in this act mean the Court Dennrtion of the
which has jurisdiction to make an order for winding up the petitioning Court,
company ; and the eighty-first and eighty-third sections of the principal act
shall be construed as if the term "winding up " in those sections included
proceedings under this act ; and the Court may in any proceedings under rcosts i
this act make such order as to costs as it deems fit.
13. Where a company proposes to reduce its capital, every creditor of Creditors en-
the company who at the date fixed by the Court is entitled to any debt or titled to prove
claim which, if that date were the commencement of the winding up of in winding up
the company, would be admissible in proof against the company, shall be may °kject to
entitled to object to the proposed reduction, and to be entered in the list rec uc lon'
of creditors who are so entitled to object.
The Court shall settle a list of such creditors, and for that purpose shall List of objecting
ascertain as far as possible without requiring an application from any creditors to be
creditor the names of such creditors and the nature and amount of their ^t^1 bv tne
debts or claims, and may publish notices fixing a certain day or days our
within which creditors of the company who are not entered on the list
are to claim to be so entered or to be excluded from the right of objecting
to the proposed reduction.
14. Where a creditor whose name is entered on the list of creditors, and Court may dis-
whose debt or claim is not discharged or determined, does not consent to Pense witn con-
the proposed reduction, the Court may (if it think fit) dispense with such sent of c.l"edlto.r
11 .i n/n-, on security being
consent on the company securing the payment ot the debt or claim of o-iven for bis
such creditor by setting apart and appropriating, in such manner as the debt.
Court may direct, a sum of such amount as is hereinafter mentioned ;
(that is to say,)
(1.) If the full amount of the debt or claim of the creditor is admitted
by the company, or, though not admitted, is such as the company
are willing to set apart and appropriate, then the full amount of
the debt or claim shall be set apart and appropriated.
(2.) If the full amount of the debt or claim of the creditor is not
admitted by the company, and is not such as the company are
willing to set apart and appropriate, or if the amount is con-
tingent or not ascertained, then the Court may, if it think lit,
inquire into and adjudicate upon the validity of such debt or
claim, and the amount for which the company may be liable in
respect thereof, in the same manner as if the company were
1020
THE COMPANIES ACT, 1867.
Appendix V.
Order confirm-
ing reduction
and minute
showing certain
particulars as to
capital as altered
to be registered.
being wound up by the Court, and the amount fixed by the
Court on such inquiry and adjudication shall be set apart and
appropriated.
1 5. The registrar of joint stock companies, upon the production to him of
an order of the Court confirming the reduction of the capital of a com-
pany, and the delivery to him of a copy of the order, and of a minute
(approved by the Court), showing with respect to the capital of the com-
pany, as altered by the order, the amount of such capital, the number of
shares in which it is to be divided, and the amount of each share, shall
register the order and minute, and on the registration the special resolution
confirmed by the order so registered shall take effect.
Notice of such registration shall be published in such manner as the
Court may direct.
The registrar shall certify under his hand the registration of the order
and minute, and his certificate shall be conclusive evidence that all the
requisitions of this act with respect to the reduction of capital have been
complied with, and that the capital of the company is such as is stated in
the minute.
Minute to form \q The minute when registered shall be deemed to be substituted for
part of memo- ^ correSp0n(iing part of the memorandum of association of the company,
ciationand mem- and shall be of the same validity and subject to the same alterations as if
bers to be liable it had been originally contained in the memorandum of association ; and,
only for dif- subject as in this act mentioned, no member of the company, whether past
ference between Qr presentj shaU be liable in respect of any share to any call or contribu-
shares and" ° tion exceeding in amount the difference (if any) between the amount which
amounts of shares has been paid on such share and the amount of the share as fixed by the
as fixed by minute.
minute. ^ jf any creditor who is entitled in respect of any debt or claim to
Saving of rights 0ijject to the reduction of the capital of a company under this act, is in
consequence of his ignorance of the proceedings taken with a view to such
reduction, or of their nature and effect with respect to his claim, not
entered on the list of creditors, and after such reduction the company is
unable, within the meaning of the eightieth section of the principal act, to
pay to the creditor the amount of such debt or claim, every person who
was a member of the company at the date of the registration of the order
and minute relating to the reduction of the capital of the company shall
™M^°Ltw °f he liable to contribute for the payment of such debt or claim an amount
not exceeding the amount which he would have been liable to contribute
if the company had commenced to be wound up on the day prior to such
registration ; and on the company being wound up, the Court, on the appli-
cation of such creditor, and on proof that he was ignorant of the proceed-
ings taken with a view to the reduction, or of their nature and effect with
respect to Ms claim, may, if it think fit, settle a list of such contributories
accordingly, and make and enforce calls and orders on the contributories
settled on such list in the same manner in all respects as if they were
ordinary- contributories in a winding up ; but the provisions of this section
shall not affect the rights of the contributories of the company among
themselves.
1 8. A minute when registered shall be embodied in every copy of the
memorandum of association issued after its registration ; and if any com-
•an- pany makes default in complying with the provisions of this section it
dum of associa- shall incur a penalty not exceeding one pound for each copy in respect of
tion subsequently wbich such default is made, and every director and manager of the company
issued.
of creditors who
are ignorant of
proceedings.
Liability of
members to con-
tribute for pay-
such creditors.
Copy of regis-
tered minute to
be embodied in
30 & 31 vict. cap. 131. 1021
who shall knowingly and wilfully authorise or permit such default shall Appendix V.
incur the like penalty.
19. If any director, manager, or officer of the company wilfully conceals Penalty for con-
the name of any creditor of the company who is entitled to object to the cealmentof name
proposed reduction, or wilfully misrepresents the nature or amount of the °f creditor or
debt or claim of any creditor of the company, or if any director or manager ™lsrePie?enta"
of the company aids or abets in or is privy to any such concealment or mis- &c.
representation as aforesaid, every such director, manager, or officer shall be
guilty of a misdemeanor.
20. The powers of making rules concerning winding up conferred by the Power to make
one hundred and seventieth, one hundred and seventy-first, one hundred rules extended
and seventy-second, and one hundred and seventy-third sections of the making rules
principal act shall respectively extend to making rules concerning matters matters in which
in which jurisdiction is by this act given to the Court which has the power jurisdiction is
of making an order to wind up a company, and until such rules are made given by this act.
the practice of the Court in matters of the same nature shall, so far as the
same is applicable, be followed.
Subdivision of shares (o).
21. Any company limited by shares may by special resolution so far Shares may be
modify the conditions contained in its memorandum of association, if divided into
authorised so to do by its regulations as originally framed or as altered by snares of smaller
special resolution, as by subdivision of its existing sbares, or any of them, amount-
to divide its capital, or any part thereof, into shares of smaller amount
than is fixed by its memorandum of association.
Provided, that in the subdivision of the existing shares the proportion Proportion
between the amount which is paid and the amount (if any) which is unpaid between amounts
on each share of reduced amount shall be the same as it was in the case of P . a unpaul
the existing share or shares from which the share of reduced amount is preServed
derived.
22. The statement of the number and amount of the shares into which Statement of
the capital of the company is divided contained in every copy of the memo- number and
randum of association issued after the passing of any such special reso- amount °f shares
t ,. i n v • i -4.1 i i . • -i as altered to be
lution, snail be in accordance with such resolution ; and any company eraboclied. in
which makes default in complying with the provisions of this section shall every memo-
incur a penalty not exceeding one pound for each copy in respect of which randum of
such default is made ; and every director and manager of the company who associatjon sub-
knowingly or wilfully authorises or permits such default shall incur the 1 su
like penalty.
Associations not for profit.
23. Where any association is about to be formed under the principal act Special pro-
as a limited company, if it proves to the Board of Trade that it is formed visions as to
for the purpose of promoting commerce, art, science, religion, charity, or associations
any other useful object, and that it is the intention of such association to ,°ime . °r t
apply the profits, it any, or other income ol the association in promoting 0f gain.
its objects, and to prohibit the payment of any dividend to the members of
the association, the Board of Trade may by licence, under the hand of one
of the secretaries or assistant secretaries, direct such association to be regis-
tered with limited liability, without the addition of the word limited to its
(o) Ante, p. 405.
1022
THE COMPANIES ACT, 1867.
Appendix V. name ; and such association may be registered accordingly, and upon regis-
~ tration shall enjoy all the privileges and be subject to the obligations
by this act imposed on limited companies, with the exceptions that none
of the provisions of this act that require a limited company to use the word
limited as any part of its name, or to publish its name, or to send a list of
its members, directors, or managers to the registrar, shall apply to an
association so registered.
The licence by the Board of Trade may be granted upon such conditions
and subject to such regulations as the board think fit to impose ; and such
conditions and regulations shall be binding on the association, and may, at
the option of the said board, be inserted in the memorandum and articles
of association, or in both or one of such documents.
Company may
have some
shares fully paid
and others not.
Shares to he
issued and held
subject to pay-
ment of the
whole amount in
cash, unless it
be otherwise
determined by a
contract regis-
tered at or before
the issue.
Transfer may be
registered at
request of
transferor.
Galls upon shares.
24. Nothing contained in the principal act ( p) shall be deemed to prevent
any company under that act, if authorised by its regulations as originally
framed or as altered by special resolution, from doing any one or more of
the following things ; namely, —
(1.) Making arrangements on the issue of shares for a difference
between the holders of such shares in the amount of calls to be
paid, and in the time of payment of such calls :
(2.) Accepting from any member of the company who assents thereto
the whole or a part of the amount remaining unpaid on any share
or shares held by him, either in discharge of the amount of a
call payable in respect of any other share or shares held by him
or without any call having been made :
(3.) Paying dividend in proportion to the amount paid up on each
share in cases where a larger amount is paid up on some shares
than on others (q).
25. Every share in any company shall be deemed and taken to have
been issued and to be held subject to the payment of the whole amount
thereof in cash, unless the same shall have been otherwise determined by a
contract duly made in writing, and filed with the registrar of joint-stock
companies at or before the issue of such shares (r).
Transfer of shares.
26. A company shall on the application of the transferor of any share or
interest in the company enter in its register of members the name of the
transferee of such share or interest, in the same manner and subject to the
same conditions as if the application for such entry were made by the
transferee (s).
(p) See ante, pp. 343 and 455.
(q) Oakbank Oil Co. v. Crum, 8 App,
Ca. 65, and ante, p. 455.
(»■) See ante, pp. 395 and 783, and
further as to the meaning of issue, 1 Ex.
D. 242 ; 9 Ch. 554. See, also, British
Farmers, &c., Co., 7 Ch. D. 533, as to
companies being estopped by their certifi-
cates from denying that shares are paid up.
(5) See act of 1862, §§ 22 and 35, and
as to the person to procure the registra-
tion of the transfer, see ante, p. 491,
and for remedy if registrar refuses to
register a transfer on the ground that it
is improperly stamped, see Queen v.
Registrar of Joint- Stock Cos., 21 Q. 1).
D. 131.
30 & 31 vict. cap. 181. 1023
Appendix V.
Share warrants to bearer.
27. In the case of a company limited by shares the company, if autho- \yarrants for
rised so to do by its regulations as originally framed or as altered by fully paid up
special resolution, and subject to the provisions of such regulations, may, shares or stock
with respect to any share which is fully paid up, or with respect to stock, may issuec in
issue under their common seal a warrant stating that the bearer of the
warrant is entitled to the share or shares or stock therein specified, and
may provide, by coupons or otherwise, for the payment of the future
dividends on the share or shares or stock included in such warrant, herein-
after referred to as a share warrant.
28. A share warrant shall entitle the bearer of such warrant to the shares Effect of share
or stock specified in it, and such shares or stock may be transferred by the warrants,
delivery of the share warrant. Transfer of
29. The bearer of a share warrant shall, subject to the regulations of the sna.res "?
company, be entitled, on surrendering such warrant for cancellation, to
have his name entered as a member in the register of members, and the , ^warrant
company shall be responsible for any loss incurred by any person by reason may be entered
of the company entering in its register of members the name of any bearer in the register of
of a share warrant in respect of the shares or stock specified therein without members on
the share warrant*being surrendered and cancelled. (e lvennS UP ie
30. The bearer of a share warrant may, it the regulations of the company cancellation,
so provide, be deemed to be a member of the company within the meaning Regulations
of the principal act, either to the full extent or for such purposes as may of the company
be prescribed by the regulations : may make the
Provided, that the bearer of a share warrant shall not be cpaalified in ,earei ,
respect of the shares or stock specified in such warrant for being a director member, but not
or manager of the company in cases where such a qualification is prescribed so as to qualify
by the regulations of the company. him as a director
31. On the issue of a share warrant in respect of any share or stock the in resPect ot
company shall strike out of its register of members the name of the member '
then entered therein as holding such share or stock as if he had ceased to n nes *n re~
be a member, and shall enter in the register the following particulars : share warrant
(1.) The fact of the issue of the warrant : issued.
(2.) A statement of the shares or stock included in the warrant, dis-
tinguishing each share by its number :
(3.) The date of the issue of the warrant :
And until the warrant is surrendered the above particulars shall be deemed
to be the particulars which are required by the twenty-fifth section of the
principal act to be entered in the register of members of a company ; and
on the surrender of a warrant the date of such surrender shall be entered
as if it were the date at which a person ceased to be a member.
32. After the issue by the company of a share warrant the annual Particulars as to
summary required by the twenty-sixth section of the principal act shall share warrants
contain the following particulars, — the total amount of shares or stock for *° be contained m
which share warrants are outstanding at the date of the summary, and the
total amount of share warrants which have been issued and surrendered
respectively since the last summary was made, and the number of shares or
amount of stock comprised in each warrant.
33. There shall be charged on every share warranta stamp duty of an Stamps on share
amount equal to three times the amount of the ad valorem stamp duty warrants,
which would be chargeable on a deed transferring the share or shares or
1024
THE COMPANIES ACT, 1867.
Appendix V.
Penalties on
persons
committing
forgery in re-
lation to share
warrants or
coupons, or
attempting to
defraud by
means of forged
warrants, &c.
Penalties on
persons falsely
personating
owners of shares
or share
warrants.
Penalties on
persons engrav-
ing plates, &c.
stock specified in the warrant, if the consideration for the transfer were
the nominal value of such share or shares or stock (t).
34. Whosoever forges or alters, or offers, utters, disposes of, or puts off,
knowing the same to be forged or altered, any share warrant or coupon, or
any document purporting to be a share warrant or coupon, issued in pur-
suance of this act, or demands or endeavours to obtain or receive any share
or interest of or in any company under the principal act, or to receive any
dividend or money payable in respect thereof, by virtue of any such forged
or altered share warrant, coupon, or document, purporting as aforesaid,
knowing the same to be forged or altered, with intent in any of the cases
aforesaid to defraud, shall be guilty of felony, and being convicted thereof
shall be liable, at the discretion of the Court, to be kept in penal servitude
for life or for any term not less than five years, or to be imprisoned for any
term not exceeding two years, with or without hard labour, and with or
without solitary confinement.
35. Whosoever falsely and deceitfully personates any owner of any share
or interest of or in any company, or of any share warrant or coupon issued
in pursuance of this act, and thereby obtains or endeavours to obtain any
such share or interest, or share warrant or coupon, or receives or endeavours
to receive any money due to any such owner, as if such offender were the
true and lawful owner, shall be guilty of felony, and being convicted
thereof shall be liable, at the discretion of the Court, to be kept in penal
servitude for life or for any term not less than five years, or to be im-
prisoned for any term not exceeding two years, with or without hard
labour, and with or without solitary confinement.
36. Whosoever, without lawful authority or excuse, the proof whereof
shall be on the party accused, engraves or makes upon any plate, wood,
stone, or other material any share warrant or coupon purporting to be a
share warrant or coupon issued or made by any particular company under
and in pursuance of this act, or to be a blank share warrant or coupon issued
or made as aforesaid, or to be a part of such a share warrant or coupon, or
uses any such plate, wood, stone, or other material for the making or print-
ing any such share warrant or coupon, or any such blank share warrant or
coupon, or any part thereof respectively, or knowingly has in his custody
or possession any such plate, wood, stone, or other material, shall be guilty
of felony, and being convicted thereof shall be liable, at the discretion of
the Court, to be kept in penal servitude for any term not exceeding fourteen
years and not less than five years, or to be imprisoned for any term not
exceeding two years, with or without hard labour, and with or without
solitary confinement.
Contracts on
behalf of com-
panies, how to
be made.
Contracts (u).
37. Contracts on behalf of any company under the principal act may be
made as follows ; (that is to say,)
(1.) Any contract which if made between private persons would be by
law required to be in writing, and if made according to English
law to be under seal, may be made on behalf of the company in
writing under the common seal of the company, and such contract
may be in the same manner varied or discharged :
(t) A penalty of 501. is imposed upon
the company, and its managing director)
secretary or principal officer, if this sec-
tion is not observed by 33 & 34 Vict. c.
97, § 127.
(u) Ante, pp. 220—229.
30 & 31 vict. cap. 131. 1025
(2.) Any contract which if made between private persons would he Appendix V.
by law required to he in writing, and signed by the parties to
he charged therewith, may be made on behalf of the company
in writing signed by any person acting under the express or
implied authority of the company, and such contract may in
the same manner be varied or discharged :
(3.) Any contract which if made between private persons would by
law be valid although made by parol only, and not reduced into
writing, may be made by parol on behalf of the company by any
person acting under the express or implied authority of the com-
pany, and such contract may in the same way be varied or dis-
charged :
And all contracts made according to the provisions herein contained shall
be effectual in law, and shall be binding upon the company and their
successors, and all other parties thereto, their heirs, executors, or adminis-
trators, as the case may be.
38. Every prospectus of a company, and every notice inviting persons Prospectus, &c.
to subscribe for shares in any joint stock company, shall specify the dates t0 specify dates
,-, „, . , i • • . t_ . i_ and names ot
and the names of the part les to any contract entered into by the company, artieg to any
or the promoters, directors, or trustees thereof, before the issue of such contract made
prospectus or notice, whether subject to adoption by the directors or the prior to issue of
company, or otherwise ; and any prospectus or notice not specifying the such P™SP^«>
same shall be deemed fraudulent on the part of the promoters, directors, ^ fco be
and officers of the company knowingly issuing the same, as regards any deemed fraud u-
person taking shares in the company on the faith of such prospectus, unless lent on part of
he shall have had notice of such contract (v). Person.s issuin°
as against
persons taking
shares on faith
Meetings. thereof.
39. Every company formed under the principal act after the commence- Company to hold
J ,.,,,, , • ■ , ■ <• xi ci. •<-- meeting within
ment of this act shall hold a general meeting within four months alter its fom. m„nths
memorandum of association is registered ; and if such meeting is not held atter registra-
the company shall be liable to a penalty not exceeding five pounds a day tion.
for every day after the expiration of such four months until the meeting is
held ; and every director or manager of the company, and every subscriber
of the memorandum of association, who knowingly authorises or permits
such default, shall be liable to the same penalty.
Winding up.
40. No contributory of a company under the principal act (x) shall lie Jj^Jj*™7
capable of presenting a petition for winding up such company unless the qualified to
members of the company are reduced in number to less than seven, or present winding
unless the shares in respect of which he is a contributory, or some of them, up petition,
either were originally allotted to him or have been held (y) by him, and
registered in his name, for a period of at least six months during the
eighteen months previously to the commencement of the winding up, or
have devolved upon him through the death of a former holder :
Provided that where a share has during the whole or any part of the
six months been held by or registered in the name of the wife of a contii-
(r) See ante, pp. 91, 92. (y) See Wala Wynaad, die, Co , 21
(x) See act of 1862, § 82. Ch. D. 849.
L.C. 3 U
1026 THE COMPANIES ACT, 1867.
Appendix V. butory either before or after her marriage, or by or in the name of any
"~ trustee or trustees for such wife or for the contributory, such share shall
for the purposes of this section be deemed to have been held by and regis-
tered in the name of the contributory.
Winding up in 41. Where the High Court of Chancery in England makes an order
England may for wimling up a company under the principal act, it may, if it thinks fit,
be referred to direct all subsequent proceedings to be had in a county court held under
coun y com . ^ ^ ^ ^ session of the ninth and tenth years of the reign of her
present Majesty, chapter ninety-five, and the acts amending the same (s) ;
and thereupon such county court shall, fur the purpose of winding up the
company, be deemed to be " the Court " within the meaning of the prin-
cipal act, and shall have, for the purposes of such winding up, all the
jurisdiction and powers of the High Court of Chancery (a).
Transfer of 42, if during the progress of a winding up it is made to appear to the
winding up from Hi , Courfc of Chancery that the same could be more conveniently pro-
one county court . , . ,, . . -. t_ n i li^, +i.„ T-T;.,n
to another. secuted in any other county court, it shall be competent tor the High.
Court, of Chancery to transfer the same to such other county court, and
thereupon the winding up shall proceed in such other county court.
Parties aggrieved 43. If any party in a winding up under this act is dissatisfied with the
by decisions of determination or direction of a judge of a county court on any matter in
jXeinwinding such Ending UP> sucn VaTtY lna>' appeal from the same to the Vice-
up may appeal. & Chancellor named for that purpose by the Lord Chancellor by general
order : Provided that such party shall, within thirty days after such deter-
mination or direction, give notice of such appeal to the other party or
his attorney, and also deposit with the registrar of the county court the
sum of ten pounds as security for the costs of the appeal ; and the said
Court of Appeal may make such final or other decree or order as it thinks
fit, and may also make such order with respect to the costs of the said
appeal as such Court may think proper, and such orders shall be final (6).
Powers to frame 44i T/be county court judges appointed or to be appointed by the Lord
under^sect01^'13 Chancellor from time to time to frame rules and orders for regulating the
of 19 & 20 Vict, practice of the courts, and forms and proceedings therein, under the thirty-
c. 108. second section of an act passed in the nineteenth and twentieth years of
the reign of her present Majesty, chapter one hundred and eight, shall
frame the rules and orders for regulating the practice of the comity courts
under this act, and forms of proceedings therein, and from time to time
may amend such rules, orders, and forms ; and such rules, orders, and
forms, or amended rules, orders, and forms, certified under the hands of
such judges or of any three or more of them, shall be submitted to the
Lord Chancellor, who may allow or disallow or alter the same, and so
from time to time ; and the rules, orders, and forms, or amended rules,
orders, and forms, so allowed or altered, shall from a day to be named by
the Lord Chancellor be in force in every county court (c).
Scale of costs to 45_ T/l,e county court judges mentioned in the last section shall be
tta^dees empowered to frame a scale of costs and charges to lie paid to counsel and
attorneys with respect to all proceedings in a winding up under this art,
(2) The act now in force is 51 & 52 c. 43, §§ 120-132.
Vict. c. 43; the County Courts act, 1888. (cj Under this section an order has
(a) See act of 1862, § 81. been made, adopting the orders and forms
(b) The appeal is now to the Divisional of the Chancery Division so far as the
Court, see Judicature act, 1873, 36 & 37 same are applicable. See County Court
Viet. c. 66, § 45 ; see also 51 & 52 Vict. Rules, 1886, Order XLII.
THE JOINT STOCK COMPANIES ARRANGEMENT ACT, 1870. 1027
and from time to time to amend such scale ; and such, scale or amended Appendix V.
scale, certified under the hands of such judges or any three or more of ~~
them, shall be submitted to the Lord Chancellor, who from time to time
may allow or disallow or alter the same ; and the scale or amended scale so
allowed or altered shall, from a day to be named by the Lord Chancellor,
be in force in every county court.
46. The registrars and high bailiffs of the county courts shall he remu- Remuneration of
iterated for the duties to he performed by them under this act, by receiving registrars and
for their own use such fees as may be from time to time authorised to be '"S1.1 bailiffs for
taken by any orders to be made by the commissioners of the Treasury, ^lll.ties "n,fler,
■ii ii ' p ,, T . . „ ' ,. , , . . „ ■ ' this act, Ijv fees,
with the consent ot the Lord Chancellor; and the commissioners of the 0r by allowances.
Treasury are hereby authorised and empowered, with such consent as
aforesaid, from time to time to make such on his ; Provided, that it shall
be lawful for the said commissioners, with the like consent as aforesaid,
by an order to direct that after the date named in the order any registrar
or high bailiff shall, in lieu of receiving such fees, be paid such fixed or
fluctuating allowance as may in each case be thought just ; and after such
date the said fees shall be accounted for and paid over by such registrar
or high bailiff in such manner as may be directed in the order.
Saving.
47. Nothing in this act contained shall exempt any company from the Companies not
second or third (d) provisions of the one hundred and ninety-sixth section exempted from
of the principal act restraining the alteration of any provision in any act S^y-r- °1c,t 1 g«
of Parliament or charter. & 26 Vict. c. 89,
sect. 190.
THE JOINT STOCK COMPANIES ARRANGEMENT ACT, 1870.
33 & 34 Yict. Cap. 104.
An Act to facilitate compromises and arrangements between creditors and
shareholders of joint stock and other companies in liquidation (e).
[10th Any ust, 1870.]
Whereas it is expedient to amend the law relating to the liquidation
of joint stock and other companies :
Be it enacted by the Queen's most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons,
in this present Parliament assembled, and by the authority of the same,
as follows :
1. This act may lie cited as "The Joint Stock Companies Arrangement Short title.
Act, 1870."
2. Where any compromise or arrangement shall be proposed between a Where compro-
company which is, at the time of the passing of this act or afterwards, in mise proposed
, Pn . -, . . , .-, , , n Court of Chancery
the course ot being wound up, either voluntarily or by or under the super- )u;iV or<jer a
vision of the Court, under the Companies acts, 18G2 and 1807, or either meeting of
of them, and the creditors of such company, or any class of such creditors, creditors, &c. to
decide as to such
compromise.
(d) Qucere, third and fourth, see Buck- (e) See ante, pp. 710, 711.
ley, ed. 5, p. 549.
3 u 2
1028
THE COMPANIES ACT, 1877
Appendix V.
Interpretation.
Act and Com-
panies act to be
read together.
it shall be lawful for the Court, in addition to any other of its powers, on
the application in a summary way of any creditor or the liquidator, to
order that a meeting of such creditors or class of creditors shall be sum-
moned in such manner as the Court shall direct, and if a majority in
number representing three-fourths in value of such creditors or class of
creditors present either in person or by proxy at such meeting shall agree
to any arrangement or compromise, such arrangement or compromise shall,
if sanctioned by an order of the Court, be binding on all such creditors or
class of creditors, as the case may be, and also on the liquidator and con-
tributories of the said company.
3. The word " company " in this act shall mean any company liable to
be wound up under "The Companies act, 1862."
4. This act shall be read and construed as part of " The Companies
act, 1862."
"THE COMPANIES ACT, 1877."
40 & 41 Xict. Cap. 26.
[30 & 31 Vict,
c. 131.]
Short title.
Construction
of act.
[25 & 26 Vict,
c. 89, and 30
and 31 Vict,
c. 131.]
Construction of
" capital " and
powers to reduce
capital con-
tained in 30
& 31 Vict.
c. 131.
Application of
provisions of
30 & 31 Vict,
c. 131.
An Art io amend the Companies acts of 1862 and 1867.
[23rd July, 1ST 7.]
Whereas doubts have been entertained whether the power given by the
Companies act, 1867, to a company of reducing its capital extends to
paid-up capital, and it is expedient to remove such doubts :
Be it enacted, &c. :
1. This act may be cited for all purposes as the Companies act, 1877.
2. This act shall, so lav as is consistent with the tenor thereof, be con-
strued as one with the Companies acts, 1862 and 1867, and the said acts
and this act maybe referred to as " The Companies acts, 1862, 1867,
and 1877."
3. The word "capital" as used in the Companies act, 1867, shall
include paid-up capital : and the power to reduce capital conferred by
that act shall include a power to cancel any lost capital, or any capital
unrepresented by available assets, or to pay off any capital which may be
in excess of the wants of the company ; and paid-up capital may be
reduced either with or without extinguishing or reducing the liability (if
any) remaining on the shares of the company, and to the extent to which
such liability is not extinguished or reduced it shall be deemed to be
preserved, notwithstanding anything contained in the Companies act,
1867 (/).
4. The provisions of the Companies act, 1867, as amended by this act,
shall apply to any company reducing its capital in pursuance of this act
and of the Companies act, 1867, as amended by this act :
Provided, that where the reduction of the capital of a company does not
involve either the diminution of any liability in respect of unpaid capital
or the payment to any shareholder of any paid-up capital, —
(1.) The creditors of the company shall not, unless the court other-
(/) See «»/", pp. 402 et seq., and 43 Vict. c. IP,
40 & 41 vici. cap. 26. 1020
wise direct, be entitled to object or required to consent to the Appendix V.
reduction ; and
(2.) It shall not be necessary before the presentation of the petition
for confirming the reduction to add, and the Court may, if it
thinks it expedient so to do, dispense altogether with the addi-
tion of the words " and reduced," as mentioned in the Companies [3G & 31 Vict.
Act, 1867. c. 131.]
In any case that the Court thinks fit so to do, it may require the com-
pany to publish in such manner as it thinks fit the reasons for the reduc-
tion of its capital or such other information in regard to the reduction of
its capital as the Court may think expedient with a view to give proper
information to the public in relation to the reduction of its capital by a
company, and, if the Court thinks fit, th'e causes which led to such
reduction.
The minute required to be registered in the case of reduction of capital
shall show, in addition to the other particulars required by law, the amount
(if any) at the date of the registration of the minute proposed to be deemed
to have been paid up on each share (g).
5. Any company limited by shares may so far modify the conditions Power to reduce
contained in its memorandum of association if authorised so to do by its capital by the
regulations as originally framed or as altered by special resolution, as to ^^ce nation of
reduce its capital by cancelling any shares which, at the date of the passing
of such resolution, have not been taken or agreed to be taken by any
person: and the provisions of "The Companies act, 1867," shall not
apply to any reduction of capital made in pursuance of this section.
6. And whereas it is expedient to make provision for the reception as Reception of
legal evidence of certificates of incorporation other than the original certifi- certified copies
cates, and of certified copies of or extracts from any documents filed and °^ (^°cuments
registered under the Companies acts, 1862 to 1877 : Be it enacted, that ^^] ^^
any certificate of the incorporation of any company given by the registrar r9_ '„ ,..
or by any assistant registrar for the time being shall be received in c~° go,' 30 ^31
evidence as if it were the original certificate ; and any copy or extract from Vict. 131, and
any of the documents or part of the documents kept and registered at any 40 k 41 Vict,
of the offices for the registration of joint-stock companies in England, c" ^®'1
Scotland, or Ireland, if duly certified to be a true copy under the hand
of the registrar or one of the assistant registrars for the time being, and
whom it shall not be necessary to prove to be the registrar or assistant
registrar, shall, in all legal proceedings, civil or criminal, and in all cases
whatsoever, be received in evidence as of equal validity with the original
document.
(g) For the form of the minute, see p. 54, and Britannia Mills Co., ib. p.
West Cumberland, d:c, Co., W. N. 1888, 103.
1030 THE COMPANIES ACT, 1879.
ArrENDix V.
Short title
Act not to
to Bank of
THE COMPANIES ACT, 1879.
42 & 43 Vict. Cap. 76.
An act to amend the law with respect to the liability of members of banking
and other joint stock companies: and for other purposes.
\lbth August, 1879.]
Be it enacted by the Queen's most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons in
this present Parliament assembled, and by the authority of the same, as
follows :
1. This act may be cited as the Companies act, 1879.
toBanl rfaP1'ly 2- This act sha11 110t aPP!y t0 the Bank of EnSland-
England. 3- This act shall, so far as is consistent with the tenor thereof, be con-
Act to be con- strued as one with the Companies acts, 1862, 1867, and 1877, and those
strued with 25 & acts together with this act may be referred to as the Companies acts, 1862
26 Vict, c. 89, to 1879.
SO & 31 Vict. 4 Subject as in this act mentioned, any company registered before or
40 & 41 Vict after the passing of this act as an unlimited company may register under
c. 26. the Companies acts, 1862 to 1879, as a limited company, or any company
Registration already registered as a limited company may re-register under the
anew of company, provisions of this act.
25 & 26 Vict. The registration of an unlimited company as a limited company in pursu-
c. 89. ance of this act shall not affect or prejudice any debts, liabilities, obliga-
30 & 31 ^ ict. lions, or contracts incurred or entered into by, to, with, or on behalf of
c 131 • ....
40 *k 41 Vict such company prior In registration, and such debts, liabilities, contracts,
c. 26. and obligations may lie enforced in manner provided by Part VII. of the
42 & 43 Vict. Companies act, 1862, in the case of a company registering in pursuance
c- 7,;- of that part.
25 & 26 Vict. 5. An unlimited company may, by the resolution passed by the
c' Lt" members when assenting to registration as a limited company under the
Reserve capital Companies acts, 1862 to lb 7 9, and for the purpose of such registration
provided * or °therwise, increase the nominal amount of its capital by increasing the
2" <k 26 V nominal amount of each of its shares.
c g9_ Provided always, that no part of such increased capital shall be capable
30 & 31 Vict. of being called up, except in the event of and for the purposes of the
c- 131. ^ company being wound up.
26 And, in cases where no such increase of nominal capital may be
42 &43 Vict resolved upon, an unlimited company may, by such resolution as aforesaid,
c 76. provide that a portion of its uncalled capital shall not be capable of being-
called up, except in the event of and for the purposes of the company
1 icing wound up.
A limited company may by a special resolution declare that any portion
of its capital which has not been already called up shall not be capable of
1 icing called up, except in the event of and for the purpose of the company
being wound up ; and thereupon such portion of capital shall not be
capable of being called up, except in the event of and for the purposes of
the company being wound up (h).
(/<) See ante, p. 413,
42 & 48 vict. cap. 76. 1031
6. Section one hundred and eighty-two of the Companies act, 1862, is Appendix V.
hereby repealed, and in place thereof it is enacted as follows : — A bank of 2 - ^ 2g y.^
issue registered as a limited company, either before or after the passing of c gp, s_ i go,
this act, shall not be entitled to limited liability in respect of its notes ; repealed, and
and the members thereof shall continue liable in respect of its notes in the liability of
same manner as if it had been registered as an unlimited company; but a ?. ?. \ .
° l unlimited in
in case the general assets of the company are, m the event of the company reSpect of notes,
being wound up, insufficient to satisfy the claims of both the note-holders
and the general creditors, then the members, after satisfying the remaining
demands of the note-holders, shall be liable to contribute towards payment
of the debts of the general creditors a sum equal to the amount received
by the note-holders out of the general assets of the company.
For the purposes of this section the expression " the general assets of
the company" means the funds available for payment of the general
creditor as well as the note-holder.
It shall be lawful for any bank of issue registered as a limited company
to make a statement on its notes to the effect that the limited liability
does not extend to its notes, and that the members of the company
continue liable in respect of its notes in the same manner as if it had been
registered as an unlimited company.
7. (1.) Once at the least in every year the accounts of every banking Audit of accounts
company registered after the passing of this act as a limited company shall ° ban"JnS
COlllDcilllGS
be examined by an auditor or auditors, who shall be elected annually by
the company in general meeting.
(2.) A director or officer of the company shall not be capable of being
elected auditor of such company.
(3.) An auditor on quitting office shall be re-eligible.
(4.) If any casual vacancy occurs in the office of any auditor the surviv-
ing auditor or auditors (if any) may act, but if there is no surviving auditor,
the directors shall forthwith call an extraordinary general meeting for the
purpose of supplying the vacancy or vacancies in the auditorship.
(5.) Every auditor shall have a list delivered to him of all books kept
by the company, and shall at all reasonable times have access to the books
and accounts of the company ; and any auditor may, in relation to such
books and accounts, examine the directors or any other officer of the
company : Provided that if a banking company has branch banks beyond
the limits of Europe, it shall be sufficient if the auditor is allowed access
to such copies of and extracts from the books and accounts of any such
branch as may have been transmitted to the head office of the banking
company in the United Kingdom.
(6.) The auditor or auditors shall make a report to the members on the
accounts examined by him or them, and on every balance sheet laid before
the company in general meeting during his or their tenure of office ; and
in every such report shall state whether, in his or their opinion, the balance
sheet referred to in the report is a full and fair balance sheet properly
drawn up, so as to exhibit a true and correct view of the state of the com-
pany's affairs, as shown by the books of the company ; and such report
shall be read before the company in general meeting.
(7.) The remuneration of the auditor or auditors shall be fixed by the
general meeting appointing such auditor or auditors, and shall be paid by
the company.
8. Every balance sheet submitted to the annual or other meeting of the Signature of
members of every banking company registered after the passing of tliis 'jalancc sheet.
act as a limited company shall be signed by the auditor or auditors, and
1032
THE COMPANIES ACT, 1880.
Appendix V.
Application of
25 & 26 Vict,
c. 89,
30 & 31 Vict,
c. 131, and
40 & 41 Vict.
c. 26.
25 & 26 Vict.
c. 89,
30 & 31 Vict.
c. 131,
40 &41 Vict.
c. 26, and
42 & 43 Vict.
c. 76.
Privileges of
Act available
notwithstanding
constitution
of company.
by the secretary or manager (if any), and by the directors of the company,
or three of such directors at the least.
9. On the registration, in pursuance of this act, of a company which
has been already registered, the registrar shall make provision for closing
the former registration of the company, and may dispense with the delivery
to him of copies of any documents with copies of which he was furnished
on the occasion of the original registration of the company ; but, save as
aforesaid, the registration of such a company shall take place in the
same manner and have the same effect as if it were the first registration of
that company under the Companies acts, 1862 to 1879, and as if the
provisions of the acts under which the company was previously registered
and regulated had been contained in different acts of Parliament from those
under which the company is registered as a limited company.
10. A company authorised to register under this act may register there-
under and avail itself of the privileges conferred by this act, notwith-
standing any provisions contained in any act of Parliament, royal charter,
deed of settlement, contract of copartnery, cost book, regulations, letters
patent, or other instrument constituting or regulating the company.
THE COMPANIES ACT, 1880.
43 Vict. Cap. 19.
Short title.
Construction
of acts.
25 & 26 Vict,
c. 89.
30 & 31 Vict.
c. 131.
40 & 41 Vict.
c. 26.
42 & 43 Vict.
c. 76.
Accumulated
profits may be
returned to
shareholders in
reduction of
paid-up capital.
An act to amend tfa Companies acts <</ 1862, 1867, 1877 and 1879.
[■2±th March, 1880.]
BE it enacted by the Queen's most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons, in
this present Parliament assembled, and by the authority of the same, as
follows :
1. This act may be cited for all purposes as the Companies act, 1880.
2. This act shall, so far as is consistent with the tenor thereof, be con-
strued as one with the Companies acts, 1862, 1867, 1877, and 1879,
and the said acts and this act may be referred to as the Companies acts,
1862 to 1880:
3. When any company has accumulated a sum of undivided profits,
which with the consent of the shareholders may be distributed among the
shareholders in the form of a dividend or bonus, it shall be lawful for the
company, by special resolution, to return the same, or any part thereof, to
the shareholders in reduction of the paid-up capital of the company, the
unpaid capital being thereby increased by a similar amount. The powers
vested in the directors of making calls upon the shareholders in respect of
moneys unpaid upon their shares shall extend to the amount of the unpaid
capital as augmented by such reduction (/).
(i) See ante, p. 404. It is not neces-
sary for the articles to provide for a
reduction of capital. Compare 30 k 31
Vict. c. 131, §§ 9 and 21, and 40 &
Vict. c. 26, § 3.
41
43 vict. cap. 19. 1033
4. No such special resolution as aforesaid shall take effect until a Appendix V.
memorandum, showing the particulars required by law in the case of a jt0 e iu+ion t0
reduction of capital by order of the Court, shall have been produced to t;1ke eg-ect tju
and registered by the Registrar of Joint Stock Companies. particulars have
5. Upon any reduction of paid-up capital made in pursuance of this heen registered,
act, it shall be lawful f< ir any shareholder, or for any one or more of Power to any
several joint shareholders, within one month after the passing of the shareholder
special resolution for such reduction, to require the company to retain, Wltnin one
and the company shall retain accordingly, the whole of the moneys passjng 0f reso.
actually paid upon the shares held by such person, either alone or jointly lution to require
with any other person or persons, and which, in consequence of such company to
reduction, would otherwise be returned to him or them, and thereupon retain monevs
the shares in respect of which the said moneys shall be so retained shall, g^gs held by
in regard to the payment of dividends thereon, be deemed to be paid up such person.
to the same extent only as the shares on which payment as aforesaid has
been accepted by the shareholders in reduction of their paid-up capital,
and the company shall invest and keep invested the monevs so retained in
such securities authorised for investment by trustees as the company shall
determine, and upon the money so invested, or upon so much thereof as
from time to time exceeds the amount of calls subsequently made upon
the shares in respect of which such moneys shall have been retained, the
company shall pay such interest as shall be received by them from time
to time on such securities, and the amount so retained and invested shall
be held to represent the future calls which may be made to replace the
capital so reduced on those shares, whether the amount obtained on sale
of the whole or such proportion thereof as represents the amount of any
call when made, produces more or less than the amount of such call.
6. From and after such reduction of capital the company shall specify Company to
in the annual lists of members, to be made by them in pursuance of the specify amounts
twenty-sixth section of the Companies act, 1862, the amounts which any wlllcn shaie-
of the shareholders of the company shall have required the company to required them
retain, and the company shall have retained accordingly, in pursuance of to retain under
the fifth section of this act, and the company shall also specify in the s- 5 ; also to
statements of account laid before any general meeting of the company the specify amounts
amount of the undivided profits of the company which shall have been returned to
returned to the shareholders in reduction of the paid-up capital of the shareholders.
company under this act. 25 & 26 Vict.
7. — (1.) Where the Registrar of Joint Stock Companies has reasonable c< "•
cause to believe that a company, whether registered before or after the P°wer of regis-
passing of this act, is not carrying on business or in operation, he shall rai ° s/\ f
■ , , 1 • •• tit names of defunct
send to the company by post a letter inquiring whether the company is companies off
carrying on business or in operation. register.
(2.) If the registrar does not within one month of sending the letter
receive any answer thereto, he shall within fourteen days after the expira-
tion of the month send to the company by post a registered letter referring
to the first letter, and stating that no answer thereto has been received by
the registrar, and that if an answer is not received to the second letter
within one month from the date thereof, a notice will be published in
the Gazette with a view to striking the name of the company off the
register.
(3.) If the registrar either receives an answer from the company to the
effect that it is not carrying on business or in operation, or does not with-
in one month after sending the second letter receive any answer thereto,
1034 THE COMPANIES ACT, 1880.
Appendix V. the registrar may publish in the Gazette and send to the company a notice
~~ that at the expiration of three months from the date of that notice the
name of the company mentioned therein will, unless cause is shown to the
contrary, be struck off the register and the company will he dissolved.
(4.) At the expiration of the time mentioned in the notice the registrar
may, unless cause to the contrary is previously shown by such company,
strike the name of such company off the register, and shall publish notice
thereof in the Gazette and on the publication in the Gazette of such last-
mentioned notice the company whose name is so struck off shall be dis-
solved : Provided that the liability (if any) of every director, managing
officer, and member of the company shall continue and may be enforced
as if the company had not been dissolved.
(5.) If any company or member thereof feels aggrieved by the name of
such company having been struck off the register in pursuance of this
section, the company or member may apply to the superior court in which
the company is liable to be wound up ; and such court, if satisfied that
the company was at the time of the striking off carrying on business or in
operation (A) and that it is just so to do, may order the name of the com-
pany to be restored to the register, and thereupon the company shall be
deemed to have continued in existence as if the name thereof had never
been struck off ; and the Court may by the order give such directions and
make such provisions as seem just for placing the company and all other
persons in the same position as nearly as may be as if the name of the
company had never been struck off.
(6.) A letter or notice authorised or required for the purposes of this
section to be sent to a company may be sent by post addressed to the
company at its registered office, or, if no office has been registered,
addressed to the care of some director or officer of the company, or if
there be no director or officer of the company whose name and address are
known to the registrar, the letter or notice (in identical form) may be
sent to each of the persons who subscribed the memorandum of associa-
tion, addressed to him at the address mentioned in that memorandum.
(7.) In the execution of his duties under this section the registrar shall
conform to any regulations which may be from time to time made by the.
Board of Trade.
(8.) In this section the Gazette means, as respects companies whose
registered office is in England, the "London Gazette;" as respects com-
panies whose registered office is in Scotland, the " Edinburgh Gazette ; "
and as respects companies whose registered office is in Ireland, the
" Dublin Gazette."
(k) A company which is carrying on words, Outlay Ass. Soc, 3i Ch. D.
business merely for the purpose of a 479.
voluntary winding up is within these
THE COMPANIES ACT, 1883. 1035
Appendix V.
THE COMPANIES ACT, 1883.
46 & 47 Vict. Cap. 28(0.
An act to amend the Companies acts, 1862 and 1867.
[20th August, 1883.]
Be it enacted by the Queen's most excellent Majesty, by and with the
advice and consent of the Lords spiritual and temporal, and Commons, in
tins present Parliament assembled, and by the authority of the same, as
follows :
1. This act may be cited for all purposes as the Companies act, 1883. Short title.
2. This act shall, so far as is consistent with the terms thereof, be Construction
construed as one with the Companies acts, 1862 and 1867. of act.
3. This act shall come into force on the first day of September, one Commencement
thousand eight hundred and eighty-three. ot act-
4. In the distribution of the assets of any company being wound up Wages and
under the Companies acts, 1862 and 1867, there shall be paid in priority salary to be
to other debts,— preferential
(a.) All wages or salary of any clerk or servant in respect of service c aim' '-
rendered to the company during four months before the com-
mencement of the winding up not exceeding fifty pounds ; and
(b.) All wages of any labourer or workman in respect of services
rendered to the company during two months before the com-
mencement of the winding up.
5. The foregoing debts shall rank equally among themselves, and shall Such claims to
be paid in full, unless the assets of the company are insufficient to meet rank equally,
them, in which case they shall abate in equal proportions between them-
selves.
6. Subject to the retention of such sums as may be necessary for the Liquidator to
costs of administration or otherwise, the liquidator or liquidators or official discharge same
liquidator shall discharge the foregoing debts forthwith, so far as the assets upon receipt of
of the company are and will be sufficient to meet them, as and when such su cien asSC &*
assets come into the hands of such liquidator or liquidators or official
liquidator.
THE COMPANIES (COLONIAL KEGISTEKS) ACT, 1883.
46 & 47 Vict. Cap. 30.
An act to authorise companies registered under the Companies act, 1862, to
keep local registers «j their members in British Colonies.
[Wth August, 1883.]
Whereas many companies registered under the Companies act, 1862,
carry on business in British colonies, and dealings in their shares are
frequent in such colonies, hut delay, inconvenience, anil expense are
(I) This act is repealed except as to Bankruptcy act, 18S8, 51 & 52 Vict. c.
Ireland by the Preferential Payments in 26, sec ante, p. 717.
1036
THE COMPANIES (COLONIAL REGISTERS) ACT, 1883.
Appendix Y
Short title and
construction.
Definitions.
Power for com-
panies to keep
colonial
registers.
25 k 26 Vict.
c. 89.
occasioned by reason of the absence of any legal provision for keeping
local registers of members, and it is expedient that such provisions as this
act contains be made in that behalf :
Be it therefore enacted by the Queen's most excellent Majesty, by and
with the advice and consent of the Lords spiritual and temporal, and
Commons, in this present Parliament assembled, and by the authority of
the same, as follows :
1. This act may be cited for all purposes as the Companies (Colonial
Registers) act, 1883 ; and this act shall, so far as is consistent with the
tenor thereof, be construed as one with the Companies acts, 1862 to 1880,
and the said acts and this act may be referred to as the Companies acts,
1862 to 1883.
2. In this act the term " company " means a company registered under
the Companies act, 1862, and having a capital divided into shares; the
term " snares " includes stock ; the term " colony " does not include any
place within the United Kingdom, the Isle of Man, or the Channel
Islands, but includes such territories as may fur the time being be vested
in her Majesty by virtue of an act of Parliament for the government of
India, and any plantation, territory, or settlement situate elsewhere within
her Majesty's dominions.
3. (1.) Any company whose objects comprise the transaction of busi-
ness in a colony may, if authorised so to do by its regulations, as originally
framed or as altered by special resolution, cause to be kept in any colony
in which it transacts business a branch register or registers of members
resident in such colony.
(2.) The company shall give to the registrar of joint stock companies
notice of the situation of the office where any such branch register (in
this act called a colonial register) is kept, and of any change therein, and
of the discontinuance of any such office in the event of the same 1 icing
discontinued.
(3.) A colonial register shall, as regards the particulars entered therein,
be deemed to be a part of the company's register of members, and
shall be priimi facie evidence of all jmrticulars entered therein. Any
such register shall be kept in the manner provided by the Companies aits,
1862 to 1880, with this qualification, that the advertisement mentioned
in section thirty-three of the Companies act, 1862, shall be inserted in
some newspaper circulating in the district wherein the register to be closed
is kept, and that any competent court in the colony where such register is
kept shall be entitled to exercise the same jurisdiction of rectifying the
same as is by section thirty-five of the Companies act, 1862, vested, as
respects a register, in England and Ireland in her Majesty's superior courts
of law or equity, and that all offences under section thirty-two of the Com-
panies act, 1862, may, as regards a colonial register, be prosecuted
summarily before any tribunal in the colony where such register is kept
having summary criminal jurisdiction.
(4.) The company shall transmit to its registered office a copy of every
entry in its colonial register or registers as soon as may lie after such
entry is made, and the company shall cause to be kept at its registered
office, duly entered up from time to time, a duplicate or duplicates of its
colonial register or registers. The provisions of section thirty-two of the
Companies act, 1862, shall apply to every such duplicate, and every such
duplicate shall, for all the purposes of the Companies acts, 1862 to 1880,
be deemed to be part of the register of members of the company.
49 vict. cap. 23. 1037
(5.) Subject to the provisions of this act with respect to the duplicate Appendix V.
register, the shares registered in a colonial register shall be distinguished
from the shares registei-ed in the principal register, and no transaction
with respect to any shares registered in a colonial register shall, during the
continuance of the registration of such shares in such colonial register, be
registered in any other register.
(6.) The company may discontinue to keep any colonial register, and
thereupon all entries in that register shall be transferred to some other
colonial register kept by the company in the same colony, or to the register
of members kept at the registered office of the company.
(7.) In relation to stamp duties the following provisions shall have
effect : —
(a.) An instrument of transfer of a share registered in a colonial
register under this act shall be deemed to be a transfer of
property situated out of the United Kingdom, and unless
executed in any part of the United Kingdom shall be exempt
from British stamp duty.
(b.) Upon the death of a member registered in a colonial register
uuder this act, the share or other interest of the deceased
member shall for the purposes of this act so far as relates to
British duties be deemed to be part of his estate and effects
situated in the United Kingdom for or in respect of which
probate or letters of administration is or are to be granted, or
whereof an inventory is to be exhibited and recorded in like
manner as if he were registered in the register of members kept
at the registered office of the company.
(8.) Subject to the provisions of this act, any company may, by its
regulations as originally framed, or as altered by special resolution, make
such provisions as it may think fit respecting the keeping of colonial
registers.
THE COMPANIES ACT, 1886.
49 Vict. Cap. 23.
An Act to amend the Companies Acts of 1862, 1867, 1870, 1877, 1879,
1880, and 1883. [4th June, 1886.]
Whereas it has become expedient to amend the provisions of the
Companies act, 1862, and of the other acts amending the same here- 25 & 26 Vict.
inafter recited, in so far as the said provisions relate to the liquidation of c- 89-
companies in Scotland :
Be it therefore enacted by the Queen's most Excellent Majesty, by and
with the advice and consent of the Lords Spiritual and Temporal, and
Commons, in tins present Parliament assembled, and by the authority of
the same, as follows :
1. Tins act may be cited for all purposes as the Companies act, 1886. Short title.
2. This act shall, so far as consistent with the tenor thereof, be con- Construction
strued as one with the Companies acts, 1862, 1867, 1877, 1879, 1880 of acts.
and 1883, and the Joint stock companies arrangement act 1870 nn,i 25 & 26 Vict.
' c. 89.
1038
THE COMPANIES ACT, 1886.
Appendix V.
30 & 31 Vict.
c. 131.
40 & 41 Vict,
c. 26.
42 & 43 Vict,
c. 70.
43 Vict. c. 19.
46 & 47 Vict,
c. 23.
33 & 34 Vict,
c. 104.
Effect of
diligence within
(JO days of
winding up by
or subject to
supervision of
court.
19 .1- 20 Vict.
c. 79.
the said acts and this act may be referred to as the Companies acts, 1862
to 1880.
3. In the winding up, by or subject to the supervision of the Court,
of any company under the Companies acts, 1862 to 1886, whose regis-
tered office is in Scotland, where the winding up shall commence after
the passing of this act, the following provisions shall have effect :
(1.) Such winding up shall, in the case of a winding up by the
Court as at the commencement thereof, and in the case of a
winding up subject to the supervision of the Court as at the
date id the presentation of the petition, on which a supervision
order is afterwards pronounced, be equivalent to an arrestment
in execution and decree of forthcoming, and to an executed or
completed poinding ; and no arrestment or poinding of the
funds or effects of the company, executed on or after the
sixtieth day prior to the commencement of the winding up by
the Court, or to the presentation of the petition on which a
supervision order is made, as the case may be, shall be effectual ;
and such funds or effects, or the proceeds of such effects, if sold,
shall be made forthcoming to the liquidator : Provided that any
arrester or poinder, before the date of such winding up, or of
such petition, as the case may be, who shall be thus deprived of
the benefit of his diligence, shall have preference out of such
funds or effects for the expense bond fide incurred by him in
such diligence.
(2.) Such winding up shall, as at the respective dates aforesaid, be
equivalent to a decree of adjudication of the heritable estates
of the company for payment of the wdiole debts of the com-
pany, principal and interest, accumulated at the said dates
respectively, subject always to such preferable heritable rights
and securities as existed at the said dates and are valid and
unchallengeable, and the right to poind the ground hereinafter
provided.
(3.) The provisions of sections one hundred and twelve to one
hundred and seventeen inclusive, and also of section one
hundred and twenty, of the Bankruptcy (Scotland) act, 1856,
shall, so far as consistent with the tenor of the recited acts,
apply to the realization of heritable estates affected by such
heritable rights and securities as aforesaid ; and -for the pur-
poses of this act the words " sequestration " and "trustee"
occurring in said sections of the Bankruptcy (Scotland) act,
1856, shall mean respectively " liquidation " and " liquidator " ;
and the expression " the lord ordinary or the Court " shall
mean " the Court " as defined by this act.
(4.) No poinding of the ground which has not been carried into
execution by sale of the eifects sixty days before the respective
dates aforesaid shall, except to the extent hereinafter provided, be
available in any question with the liquidator : Provided that no
creditor who holds a security over the heritable estate preferable
to the right of the liquidator shall be prevented from executing
a poinding of the ground after the respective dates aforesaid,
but such poinding shall in competition with the liquidator be
available only for the interest on the debt for the current half
yearly term, and for the arrears of interest for one year imme-
diately before the commencement of such term.
49 vict. cap. 23. 1039
4. In the winding up of any company under the Companies acts, Appendix V.
1862 to 188G, whose registered office is in Scotland, and where the llanking of
winding up shall commence after the passing of this act, the general and ciaims.
special rules in regard, to voting and ranking for payment of dividends,
provided by the Bankruptcy (Scotland) act, 1856, sections forty-nine to
sixty-six inclusive, ox any other rules in regard thereto which may be
in force for the time being in the sequestration of the estates of bankrupts
in Scotland, shall, so far as consistent with the tenor of the said recited
acts, apply to creditors of such companies voting in matters relating to the
winding up, and ranking for payment of dividends; and for this purpose
sequestration shall he taken to mean liquidation, trustee to mean liquidator,
and sheriff to mean the Court.
5. Wherever the expression "the court of session" occurs in the said Jurisdiction of
recited acts, or the expression " the Court " occurring therein or in this *tLt° t^
act refers to the Court of Session in Scotland, it shall mean and include bills in yaeati0n.
either division thereof, or, in the event of a remit to a permanent
lord ordinary, as hereinafter provided, such lord ordinary, during
session, and in time of vacation the lord ordinary on the bills ; and
in regard to orders or judgments pronounced by the said lord ordinary
on the bills in vacation, the following provisions shall have effect : —
(1.) No order or judgment pronounced by the said lord ordinary
in vacation, under or by virtue, in whole or in part, of the fol-
lowing sections of the said recited acts, shall be subject to
review, reduction, suspension, or stay of execution, videlicet, of
the Companies act, 1862, sections ninety-one, one hundred and 25 & 26 Vict,
seven, one hundred and fifteen, one hundred and seventeen, and c- °- •
one hundred and twenty-seven, and section one hundred and
forty-nine so far as it authorises the Court to direct meetings of
creditors or contributories to be held, and that portion of section
two of the Joint stock companies arrangement act, 1870, 33 &34 'Wet.
which authorises the Court to order that a meeting of creditors C-
or class of creditors shall be summoned ; and also sections one
hundred and twenty-two and one hundred and twenty-three of
the Companies act, 1862, so far as they may affect the sections
above enumerated.
(2.) All other orders or judgments pronounced by the said lord
ordinary in vacation (except as after mentioned) shall be subject
to review only by reclaiming note, in common form, presented
(notwithstanding the terms of section one hundred and twenty-
four of the Companies act, 1862,) within fourteen days from
the date of such order or judgment : Provided always, that
such orders or judgments pronounced by the said lord ordinary
in vacation, under or by virtue, in whole or in part, of the
following sections of the Companies act, 1862, shall, from the
dates of such orders or judgments, and notwithstanding any
reclaiming note against the same, be carried out and receive
effect till such reclaiming note be disposed of by the Court,
videlicet, sections eighty-five, eighty-seven, eighty-nine, ninety-
three (except in regard to the removal or remuneration of
liquidators), ninety-five, ninety-six ('except in regard to the
power to .-'-111, one hundred, one hundred ami eighteen, first
part of one hundred and forty-one, one hundred and forty-seven,
one hundred and fifty (except in regard to the removal of
liquidators and the tilling up of vacancies caused by such
nary.
1040 THE COMPANIES ACT, 188G.
Appendix V. removal), one hundred and ninety-seven, one hundred and
ninety-eight, and two hundred and one ; and also sections one
hundred and twenty-two and one hundred and twenty-three of
the Companies act, 1862, so far as they may affect the sections
above enumerated.
Provided that nothing in this section contained shall in any way affect
the provisions of section one hundred and twenty-one of the Companies
act, 18G2, in reference to decrees for payment of calls in the winding up
companies, whether voluntarily or by or subject to the supervision of
the Court.
Windin<> up 6. When the Court makes a winding up or a supervision order or at
may be remitted any time thereafter, it shall be lawful for the Court, in either division
tolordordi- thereof, if it thinks fit, to direct all subsequent proceedings in the winding
up to be taken before one of the permanent lords ordinary, and to remit
the winding up to him accordingly ; and thereupon such lord ordinary
shall, for the purposes of the winding up, be deemed to be " the Court,"
within the meaning of the recited acts and this act, and shall have, for
the purposes of such winding up, all the jurisdiction and powers of the
Court of Session : Provided always, that all orders or judgments pro-
nounced by such lord ordinary shall be subject to review only by reclaim-
ing note in common form, presented (notwithstanding the terms of section
one hundred and twenty-four of the Companies act, 1862,) within fourteen
days from the date of such order or judgment. But, should a reclaiming
note not be presented and moved during session, the provisions of section
five of this act shall apply to such orders or judgments : Provided also,
that the said lord ordinary may report to the division of the Court any
matter which may arise in the course of the winding up. This section
and the immediately preceding section shall come into force from the
passing of this act, and shall include companies then in the course of being
wound up.
RULES OF 1862. 1041
No. VI.
ORDERS AND RULES (a).
GENERAL ORDER AND RULES OF THE HIGH COURT OF CHANCERY
TO REGULATE THE MODE OF PROCEEDING UNDER THE COMPANIES
ACT, 1862, ISSUED BY THE LORD HIGH CHANCELLOR, TUESDAY,
11th DAY OF NOVEMBER, 1862.
The right honourable Richard, Baron Westbury, Lord High Chancellor Appendix VI.
of Great Britain, with the advice and consent of the right honourable Sir
John Romilly. Master of the Rolls, the honourable the Vice-Chancellor,
Sir Richard Torin Kindersley, the honourable the Vice-Chancellor, Sir
John Stuart, and the honourable the Vice-Chancellor, Sir William Page
"Wood, doth hereby, in pursuance and execution of the powers given by
the statute 25th and 26th Victoria, chapter 89 (b), and of all other
powers and authorities enabling him in that behalf, order and direct in
manner following : —
Petition to wind up company (c).
1. Every petition for the winding up of any company by the Court, or
subject to the supervision of the Court, shall be intituled in the matter of
" The Companies act, 1862," and of the company to which such petition
shall relate, describing the company by its most usual style or firm (d).
2. Every such petition shall be advertised seven clear days before the
hearing as follows : —
(1.) In the case of a company whose registered office, or if there shall
be no such office, then whose principal, or last known principal
place of business is or was situate within ten miles from
Lincoln's Inn Hall, once in the " London Gazette," and once at
least in two London daily morning newspapers.
(2.) In the case of any other company, once in the "London Gazette,"
and once at least in two local newspapers circulating in the
district where such registered office or principal or last known
principal place of business, as the case may be, of such company
is or was situate.
The advertisement shall state the day on which the petition was pre-
sented, and the name and address of the petitioner, and of his solicitor
and London agent (if any) (e).
(a) These rules apply to the winding (b) See § 170, now repealed,
up of companies in county courts, the (c) See the act, §§ 82 and 148, aud
registrar being substituted for the chief ante, pp. 654 et seq.
clerk. Any bank may, however, be sub- (d) See order of 1868, rule 1.
stituted for the Bank of England by the (e) See ante, p. 655, and the form
order of the county court judge. See of advertisement, infra, in Schedule 3,
County Court Rules of 1886, Ord. XLII. No. 1.
l.c. a x
1042 rules of 1862.
Appendix VI. 3. Every such petition shall, unless presented by the company, be
~~ served at the registered office, if any, of the company, and if no registered
office, then at the principal or last known principal place of business of
the company, if any such can be found, upon any member, officer, or
servant of the company there, or in case no such member, officer, or
servant can be found there, then by being left at such registered office or
principal place of business, or by being served on such member or mem-
bers of the company as the Court may direct ; and every petition for the
winding up of a company subject to the supervision of the Court, shall
also be served upon the liquidator (if any) appointed for the purpose of
winding up the affairs of the company (/).
4. Every petition for the winding up of any company by the Court, or
subject to the supervision of the Court, shall be verified by an affidavit
referring thereto, in the form or to the effect set forth in Form No. 2, in
the third Schedule hereto ; such affidavit shall be made by the petitioner,
or by one of the petitioners, if more than one, or in case the petition is
presented by the company, by some director, secretary, or other principal
officer thereof, and shall be sworn after and filed within four days after
the petition is presented, and such affidavit shall be sufficient prima facie
evidence of the statements in the petition (g).
5. Every contributory or creditor of the company shall be entitled to
be furnished by the solicitor to the petitioner with a copy of the petition,
within twenty-four hours after requiring the same, on paying at the rate
of fourpence per folio of seventy- two words for such copy.
Order to wind up company (h).
6. Every order for the winding up of a company by the Court, or
subject to its supervision (i), shall, within twelve days after the date
thereof, be advertised by the petitioner once in the " London Gazette,"
and shall be served upon such persons (if any) and in such manner as the
Court may direct (J).
7. A copy of every order for winding up a company, certified to be a
true copy thereof as passed and entered, shall be left by the petitioner at
the chambers of the judge within ten days after the same shall have been
passed and entered, and in default thereof any other person interested in
the winding up may leave the same, and the judge may, if he thinks fit,
give the carriage and prosecution of the order to such person. Upon such
copy being left, a summons shall be taken out to proceed with the winding
up of the company, and be served upon all parties who may have appeared
upon the hearing of the petition. Upon the return of such summons, a
time shall, if the judge thinks fit, be fixed for the appointment of an
official liquidator, and for the proof of debts, and for the list of con-
tributories to be brought in, and directions may be given as to the
advertisements to be issued for all or any of such purposes, and generally
as to the proceedings and the parties to attend thereon. The proceedings
under the order shall be continued by adjournment, and, when necessary,
by further summons, and any such direction as aforesaid may be given,
(/) Ante, p. 65Q. (i) See the form of order, infra,
(g) Ante, p. 657. Scheduie 3, Nos. 3 and 4.
(h) See the act, §§ 82, 85, 86, 147, (j) See the form of advertisement in
and ante, pp. 684 et seq. ib. No. 5.
rules of 1862. 1043
added to, or varied, at any subsequent time, as may be found neces- Appendix VI.
sary (k).
Official liquidator (I).
8. The judge may appoint a person to the office of official liquidator
without previous advertisement, or notice to any party, or fix a time and
place for the appointment of an official liquidator, and may appoint or
reject any person nominated at such time and place, and appoint any
person not so nominated.
9. When a time and place are fixed for the appointment of an official
liquidator, such time and place shall be advertised in such manner as the
judge shall direct, so that the first or only advertisement shall be pub-
lished within fourteen days and not less than seven days before the day so
fixed (m).
10. Every official liquidator shall give security by entering into a re-
cognisance with two or more sufficient sureties in such sum as the judge
may approve ; and the judge may, if he shall think fit, accept the security
of any guarantee society established by charter or act of Parliament in
England, in lieu of the security of such sureties as aforesaid, or of any of
them (n).
11. The official liquidator shall be appointed by order (o), and unless
he shall have given security, a time shall be fixed by such order within
which he is to do so ; and the order shall fix the times or periods at
which the official liquidator is to leave his accounts of his receipts and
payments at the judge's chambers (p), and shall direct that all moneys to
be received shall be paid into the Bank of England, immediately after the
receipt thereof, to the account of the official liquidator of the company,
and an account shall be opened there accordingly ; and an office copy of
the order shall be lodged at the Bank of England (q).
12. When an official liquidator has given security pursuant to the
directions in the order appointing him, the same shall be certified by the
chief clerk, as in the case of a receiver appointed in a cause subject to
giving security.
13. The official liquidator shall, on each occasion of passing his ac-
count (r), and also whensoever the judge may so require, satisfy the judge
that his sureties are living, and resident in Great Britain, and have not
been adjudged bankrupt or become insolvent, and in default thereof he
may be required to enter into fresh security within such time as shall be
directed.
14. Every appointment of an official liquidator shall be advertised in
such manner as the judge shall direct, immediately after he has been
appointed, and has given security (s).
(k) Ante, pp. 686, 687. and 9.
(7) See the act, §§ 85, 92, 93, 103, (p) See rule 19.
104, and ante, pp. 701 tt seq. (q) See, further, as to accounts in the
(m) See the form of advertisement, Bank of England, rules 36 — 44 ; and for
infra, Schedule 3, No. 6, and the form the form of direction to open an account
of proposal for the appointment of the there, see Schedule 3, No. 14.
official liquidator, ib. No. 7. (r) See rule 19.
(n) See the form of recognisance and (s) See the form of advertisement in
affidavit of sureties, ib. Nos. 9 and 10. Schedule 3, No. 15.
(o) See the form of order, t'6. Nos. 8
3x2
1044 rules of 1862.
Appendix VI. 15. Where it is desired to appoint provisionally an official liquidator (t)
~ an application for that purpose may, at any time after the presentation of
the petition for winding up the company, be made by summons, without
advertisement or notice to any person, unless the judge shall otherwise
direct ; and such provisional official liquidator may, if the judge shall
think fit, be appointed without security.
16. In case of the death, removal or resignation of an official liquidator,
another shall be appointed in his room, in the same manner as directed in
the case of a first appointment, and the proceedings for that purpose may
be taken by such party interested as may be authorised by the judge to
take the same.
17. The official liquidator shall, with all convenient speed after he is
appointed, proceed to make up, continue, complete, and rectify the books
of account of the company ; and shall provide and keep such books of
account as shall be necessary, or as the judge may direct, for the purposes
aforesaid, and for showing the debts and credits of the company, including
a ledger, which shall contain the separate accounts of the contributories,
and in which every contributory shall be debited from time to time with
the amount payable by him in respect of any call to be made as provided
by the said act and these rules.
18. The official liquidator shall be allowed in his accounts, or otherwise
paid, such salary or remuneration as the judge may from time to time
direct, including any necessary employment of assistants or clerks by the
official liquidator, to which regard shall be had ; and such salary or remu-
neration may either be fixed at the time of his appointment, or at any
time thereafter, as the judge may think fit. Every allowance of such
salary or remuneration, unless made at the time of his appointment, or
upon passing an account, shall be made upon application for that purpose
by the official liquidator, on notice to such persons (if any), and supported
by such evidence as the judge shall require ; nevertheless the judge may
from time to time allow any sum he may think fit to the official liquidator,
on account of the salary or remuneration to be thereafter allowed.
19. The accounts of the official liquidator shall be left at the judge's
chambers at the times directed by the order appointing him, and at such
other times as may from time to time be required by the judge, and such
accounts shall, upon notice to such parties (if any), as the judge shall
direct, be passed and verified in the same manner as receiver's accounts.
Proof of debts (u).
20. For the purpose of ascertaining the debts and claims due from the
company, and of requiring the creditors to come in and prove their debts
or claims, an advertisement shall be issued at such time as the judge shall
direct : and such advertisement shall fix a time for the creditors to send
their names and addresses, and the particulars of their debts or claims,
and the names and addresses of their solicitors (if any), to the official
liquidator, and appoint a day for adjudicating thereon (x).
(t) See the form of order appointing a (u) See the act, §§ 107, 158, and ante,
provisional official liquidator in Schedule pp. 713 et seq.
3, No. 9 ; and see further, as to him, (a:) See the form of advertisement,
§§ 85 and 92 of the act, and infra, infra, Schedule 3, No. 16.
rule 59.
rules of 1862. 1045
21. The creditors need not attend upon the adjudication, nor prove Appendix VI.
their debts or claims, unless they are required to do so by notice from the
official liquidator ; but upon such notice being given, they are to come in
and prove their debts or claims within a time to be therein specified.
22. The official liquidator shall investigate the debts and claims sent in
to him, and ascertain, as far as he is able, which of such debts and claims
are justly due from the company ; and he shall make out and leave at the
chambers of the judge, a list of all the debts and claims sent in to him,
distinguishing which of the debts and claims, or parts of debts and claims
are so claimed, are, in his opinion, justly due and proper to be allowed
without further evidence, and which of them, in his opinion, ought to be
proved by the creditors ; and he shall make and file, prior to the time
appointed for adjudication, an affidavit, setting forth which of the debts and
claims in his opinion are justly due and proper to be allowed without
further evidence, and stating his belief that such debts and claims are
justly due and proper to be allowed, and the reasons for such belief (y).
23. At the time appointed for adjudication upon the debts and claims,
or at any adjournment thereof, the judge may either allow the debts and
claims upon the affidavit of the official liquidator, or may require the
same, or any of them, to be proved by the claimants, and adjourn the
adjudication thereon to a time to be then fixed ; and the official liquidator
shall give notice to the creditors whose debts or claims have been so
allowed, of such allowance (s).
24. The official liquidator shall give notice to the creditors whose debts
or claims have not been allowed upon his affidavit, that they are required
to come in and prove the same by a day to be therein named, being not
less than four days after such notice, and to attend at a time to be therein
named, being the time appointed by the advertisement, or by adjournment
(as the case may be), for adjudication upon such debts and claims (a).
25. The value of such debts and claims as are made admissible to proof
by the 158th section of the said act, shall, so far as is possible, be esti-
mated according to the value thereof at the date of the order to wind up
the company.
26. Interest on such debts and claims as shall be allowed shall be com-
puted, as to such of them as carry interest, after the rate they respectively
carry ; any creditor whose debt or claim so allowed does not carry interest,
shall be entitled to interest, after the rate of 41, per centum per annum,
from the date of the order to wind up the company, out of any assets
which may remain after satisfying the costs of the winding up, the debts
and claims established, and the interest of such debts and claims as by law
carry interest (6).
27. Such creditors as come in and prove their debts or claims pursuant
to notice from the official liquidator, shall be allowed their costs of proof
in the same manner as in the case of debts proved in a cause.
28. The result of the adjudication upon debts and claims shall be stated
in a certificate to be made by the chief clerk, and certificates as to any of
such debts and claims may be made from time to time. All such certifi-
(y) See tbe form of affidavit, ib. Nos. («) See the form of notice, ib. No. 20
17 and 18. and tbe form of affidavit to be made by
(z) See the form of notice, ib. No. 19 ; creditor who has received such notice,
and the form of notice to attend and be No. 21.
paid, ib. No. 23. {>>) Bee ante, i>. 724.
1046 rules of 1862.
Appendix VI. cates shall state whether the debts or claims are allowed or disallowed,
— and whether allowed as against any particular assets, or in any other
qualified or special manner (c).
List of contributories (d).
29. The official liquidator shall, with all convenient speed after his
appointment, or at such time as the judge shall direct, make out and leave
at the chambers of the judge a list of the contributories of the company ;
and such list shall be verified by the affidavit of the official liquidator, and
shall, so far as is practicable, state the respective addresses of, and the
number of shares or extent of Interest to be attributed to each such con-
tributory, and distinguish the several classes of contributories. And such
list may from time to time, by leave of the judge, be varied or added to,
by the official liquidator (e).
30. Upon the list of contributories being left at the chambers of the
judge, the official liquidator shall obtain an appointment for the judge to
settle the same, and shall give notice in writing of such appointment to
every person included in such list, and stating in what character, and for
what number of shares or interest such person is included in the list ; and
in case any variation or addition to such list shall at any time be made by
the official liquidator, a similar notice in writing shall be given to every
person to whom such variation or addition applies. All such notices shall
be served four clear days before the day ajqjointed to settle such list, or
such variation or addition ( / ).
31. The result of the settlement of the list of contributories shall be
stated in a certificate by the chief clerk ; and certificates may be made
from time to time for the purpose of stating the result of such settlement
down to any particular time, or as to any particular person, or stating any
variation of the list (y) .
Sales of property (h).
32. Any real or personal property belonging to the company may be
sold, with the approbation of the judge, in the same manner as in the case
of a sale under a decree or order of the Court in a suit, or, if the judge
shall so direct, by the official liquidator ; and upon any such sale by the
official liquidator, the conditions or contracts of sale shall be settled and
approved of by the judge, unless he shall otherwise direct ; and the judge
may, if he thinks fit, direct such conditions and contracts, and the abstract
of the title to the property, to be submitted to one of the conveyancing
counsel of the Court, under the second of the consolidated general orders (hh),
and may, on any sale by public auction, fix a reserved bidding ; and,
unless on account of the small amount of the purchase-moneys, or. other
(c) See the form of certificate, ib. No. varying the list, ib. No. 32.
22 ; and the form of notice to a creditor (/) See the form of notice, ib. No.
to attend and be paid, ib. No. 23. 26 ; and of the affidavit of service, No. 27.
(d) See the act, §§ 98 and 99, and ( y) See the form of certificate, ib. No.
ante, pp. 745 et seq. 31.
(e) See the forms of the list, infra, (h) See the act, §§ 94, 95, 103, and
Schedule 3, Nos. 25, 29, and 30 ; and ante, p. 708.
the form of the affidavit in support, ib. (hh) See now K. S. C. Order LI.
Nos. 24 and 29 ; and the form of order rr. 7 — 13.
rules of 1862. 1047
cause, it shall, having regard to the amount of the security given by the Appendix VI.
official liquidator, be thought proper that the purchase-moneys shall be
paid to him, all conditions and contracts of sale shall provide that the
purchase-moneys shall be paid by the respective purchasers into the Bank
of England, to the account of the official liquidator of the company.
Galls (i).
33. Every application to the judge to make any call on the contribu-
tories, or any of them, for any purpose authorised by the said act, shall be
made by summons, stating the proposed amount of such call ; and such
summons shall be served four clear days at the least before the day
appointed for making the call on every contributory pnmosed to be in-
cluded in such call ; or, if the judge shall so direct, notice of such intended
call may be given by advertisement (k).
34. When any order for a call has been made, a copy thereof shall be
forthwith served upon each of the contributories included in such call,
together with a notice from the official liquidator specifying the amount
or balance due from such contributory (having regard to the provisions of
the said act) in respect of such call ; but such order need not be advertised
unless, for any special reason, the judge shall so direct (I).
35. At the time of making an order for a call, the further proceedings
relating thereto shall be adjourned to a time subsequent to the day ap-
pointed for the payment thereof, and afterwards from time to time so long
as may be necessary ; and at the time appointed by any such adjourn-
ment, or upon a summons to enforce payment of the call, duly served, and
upon proof of the service of the order and notice of the amount due, and
non-payment, an order (m) may be made for such of the contributories who
have made default, or of such of them against whom it shall be thought
proper to make such order, to pay the sum which by such former order
and notice they were respectively required to pay, or any less sum which
may appear to be due from them respectively.
Payment in of moneys and deposit of securities (?i).
36. If any official liquidator shall not pay all the moneys received by
him into the Bank of England (o), to the account of the official liquidator
of the company, within seven days next after the receipt thereof, unless
the judge shall have otherwise directed, such official liquidator shall be
charged in his account with ten shillings for every 1001., and a propor-
tionate sum for any larger amount, retained in his hands beyond such
period, for every seven days during which the same shall have been so
retained, and the judge may, for any such retention, disallow the salary or
remuneration of such official liquidator.
((') See the act, §§ 102 and 120, and of the affidavit on which to obtain it, ib.
ante, pp. 816 et seq. Nos. 38 and 39 ; and see the form of
(k) See the forms of the summons, the affidavit of service of this order, ib. No.
affidavit in support of it, and the adver- 42.
tisement, infra, Schedule 3, Nos. 33 — (n) See the act, S§ 103, 104, and
35. ante, p. 704.
(I) See the forms of the order and the (o) See form of direction to open ac-
notice, ib. Nos. 36—37. count, infra, Schedule 3, No. 14.
(m) See the forms of this order and
1048 rules of 1862.
Appkndix VI. 37. All bills, notes, and other securities payable to the company or to
the official liquidator thereof shall, as soon as they shall come to the hands
of such official liquidator, be deposited by him in the Bank of England for
the purpose of being presented by the bank for acceptance and payment, or
for payment only, as the case may be.
38. All orders for payment of calls, balances, or other moneys due from
any contributory or other person, shall direct the same to be paid into the
Bank of England, to the account of the official liquidator of the company,
unless, on account of the smallness of the amount or other cause, it shall,
having regard to the amount of the security given by the official liquidator,
be thought proper to direct payment thereof to the official liquidator.
Provided that where any such order has been made directing payment
of a specific sum into the Bank of England, in case it shall be thought
proper for the purpose of enabling the official liquidator to issue execution
or take other proceedings to enforce the payment thereof, or for any other
reason, an order may, either before service of such former order, or after
the time thereby fixed for payment, be made, without notice, for payment
of the same sum to the official liquidator.
39. At the time of the service of any order for payment into the Bank
of England, the official liquidator shall give to the party served a notice,
to the purport or effect set forth in form No. 40 in the third schedule
hereto, for the purpose of informing him how the payment is to be made ;
and before the time fixed for such payment the official liquidator shall
furnish the cashier of the Bank of England with a certificate, to the pur-
port or effect set forth in form No. 41 in the third schedide hereto, to be
signed by such cashier, and delivered to the party paying in the money
therein mentioned.
40. For the purpose of enforcing any order for payment of money into
the Bank of England an affidavit of the official liquidator, to the purport
or effect set forth in form No. 43, in the third schedule hereto, shall be
sufficient evidence of the non-payment thereof.
41. All moneys, bills, notes, and other securities paid and delivered
into the Bank of England, shall be placed to the credit of the account of
the official liquidator of the company ; and orders for any such payment
and delivery shall direct the same accordingly.
Delivery out of securities, and payment out and investment of moneys (p).
42. All bills, notes, and other securities delivered into the Bank of
England, shall be delivered out upon a request signed by the official liqui-
dator, and countersigned by the chief clerk of the judge ; and moneys
placed to the account of the official liquidator shall be paid out upon
cheques or orders, signed by the official liquidator, and countersigned by
the chief clerk of the judge.
43. All or any part of the money for the time being standing to the
credit of the account of the official liquidator at the Bank of England, and
not immediately required for the purposes of the winding up, may be
invested in the purchase of Bank 31. per cent. Annuities, Reduced 31. per
cent. Annuities, New 3/. per cent. Annuities, or New 21. 10s. per cent.
Annuities, in the name of the official liquidator, or in the purchase of
exchequer bills. All such investments shall be made by the Bank of
( p) See the act, §§ 103, 104. As to county courts, see the note ante, p. 1041.
rules of 1862. 1049
England, upon a request signed by the official liquidator, and counter- Appendix VI.
signed by the chief clerk of the judge, and which request shall be a suffi- ~
cient authority for debiting the account with the purchase money ; and
such exchequer bills, and in case of an exchange thereof any new ex-
chequer bills, shall be retained by or deposited with the Bank of England,
in the name and on behalf of the official liquidator : and such annuities or
exchequer bills shall not afterwards be sold or transferred or otherwise
dealt with except upon a direction for that purpose, signed by the official
liquidator, and countersigned by the chief clerk of the judge, or under an
order to be made by the judge (q).
44. All dividends and interest to accrue due upon any such annuities,
shall from time to time be received by the Bank of England, under a power
of attorney to be executed by the official liquidator, and placed to the
credit of the account of such official liquidator ; and such of the exchequer
bills as shall from time to time be in course of payment, shall be delivered
by the Bank of England to one of their cashiers, who is to receive the
interest due thereon, and exchange the same for new bills, in case such new
bills are issued, or otherwise to receive the principal and interest due on
such of the said bills, so in course of payment, as cannot be exchanged,
and pay the said interest, or principal and interest, as the case may be,
into the Bank of England to the credit of the account of the official
liquidator of the company.
Meetings of creditors or contributories (r).
45. When the judge shall direct a meeting of the creditors or contri-
butories of the company to be summoned under the 91st or 149th section
of the said act, the official liquidator shall give notice in writing, seven
clear days before the day appointed for such meeting, to every creditor or
contributory, of the time and place appointed for such meeting, and of the
matter upon which the judge desires to ascertain the wishes of the creditors
or contributories ; or, if the judge shall so direct, such notice shall be given
by advertisement, in which case the object of the meeting need not be
stated, and it shall not be necessary to insert such advertisement in the
" London Gazette " (s).
46. The votes of the creditors or contributories of the company at any
meeting summoned by the direction of the judge, may be given either
personally or by proxy ; but no creditor shall appoint a proxy who is not
a creditor of the company whose debt or claim has been allowed, and
no contributory shall appoint a proxy who is not a contributory of the
company (t).
47. The direction of the judge for any meeting of creditors or contri-
butories under the 91st or 149th section of the said act, and the appoint-
ment of a person to act as chairman of any such meeting, shall be testified
by a memorandum signed by the chief clerk of the judge (u).
(q) See the form of request to invest, proxy, ib. No. 46. As to the stamp, see
infra, Schedule 3, No. 54. ante, p. 310.
(r) See the act, §§ 91 and 149, ante, (u) See the form of this memorandum,
pp. 687, 688. Schedule 3, No. 47 ; and for the form
(s) See the form of notice or adver- of tho chairman's report of the result of
tisement, infra, Schedule 3, No. 45. the meeting, see ib. No. 48.
(t) See the form of appointment of
1050 RULES OF 1862.
Appendix VI.
Direction or sanction of the judge (x).
48. The sanction of the judge to the drawing, accepting, making, and
indorsing of any bill of exchange or promissory note by any official Liqui-
dator, shall be testified by a memorandum on such bill of exchange or
promissory note, signed by the chief clerk of the judge (y).
49. Every application for the sanction of the judge to a compromise
with any contributory or other person indebted to the company, shall be
supported by the affidavit of the official liquidator that he has investigated
the affairs of such contributory or person, and stating his belief that
the proposed compromise will be beneficial to the company, and his
reasons for such belief ; and the sanction of the judge thereto shall be
testified by a memorandum signed by the chief clerk of the judge, on the
agreement of compromise, unless any party shall desire to appeal from the
decision of the judge, in which case an order shall be drawn up for that
purpose (2).
50. The direction or sanction of the judge for any other proceeding or
act to be taken or done by the official liquidator, shall be obtained upon
summons, and an order shall be drawn up thereon, unless the judge shall
otherwise direct (ft).
Applications to the court or judge under §§ 137, 138, 141, 167, and 168
of the act.
51. Every application under the 137th, 138th, or 141st section of the
said act shall be made by petition or motion, or, if the judge shall so direct,
by summons at chambers : and every application under the 167th or 168th
section of the said act shall be made by petition (b).
Orders.
52. All orders made in chambers shall be drawn up in chambers, unless
specially directed to be drawn up by the registrar, and shall be entered
in the same manner, and in the same office, as other orders made in
chambers (c).
Advertisements.
53. When an advertisement is required for any purpose, except where
otherwise directed by these rules, the advertisement shall be inserted once
in the " London Gazette," and in such other newspaper or newspapers,
and for such number of times as may be directed. The judge may, in such
cases as he shall think fit, dispense with any advertisement required by
these rules (d).
(x) See the act, §§ 95, 159, 160, and arrangements with creditors : § 138 re-
infra, rule 74. lates to applications by liquidators in a
(y) See the form of memorandum, voluntary winding up : § 141 relates to
infra, Schedule 3, No. 49. the appointment of liquidators in a
(2) Sec the forms of an agreement to voluntary winding up : and §§ 167 and
compromise ; and of the memorandum 168 relate to the prosecution of delin-
sanctioning it, ib. Nos. 50 and 51. quent directors, he.
(a) See the form of order, ib. No. 52. (c) See infra, rule 74.
(6) § 137 relates to appeals against (d) See infra, rules 73 and 74.
RULES OF 1862. 1051
Appendix VI.
Admission of documents.
54. Any party to any proceeding in court or chambers relating to the
winding up of a company may, by notice in writing in the Form No. 6, in
schedule N. to the Consolidated general orders (dd), or to the like effect, call
on any other party thereto competent to admit the same, to admit any
document, saving all just exceptions ; and in case of refusal or neglect so
to admit, the costs of proving such document shall be paid by the party so
refusing or neglecting, unless the judge shall be of opinion that the refusal
to admit was reasonable ; and no costs of proving any document shall be
allowed unless such notice shall have been given, except in cases where the
omission to give such notice has been, in the opinion of the taxing master,
a saving of expense.
Affidavits (e).
55. Where an order shall have been made for the winding up of any
company, any person intending to use any affidavit in any proceeding
under such order, shall file the same in the Record and Writ Clerks' office (ee),
and give notice thereof to the official liquidator. The person, other than
the official liquidator, filing the affidavit, shall not be required to take
an office copy thereof, but an office copy thereof shall be taken by the
official liquidator, and he shall produce the same at the hearing of any
application or proceeding upon which it is intended to be used, unless the
judge shall otherwise direct.
Certificate of chief clerk ( / ).
56. The 48th, 49th, 50th, 51st, 52nd, and 55th rules of the 35th of the
Consolidated general orders, shall apply to all certificates of the chief clerk
in the matter of the winding up of any company ; nevertheless certificates
on passing the official liquidator's accounts may be approved and signed by
the judge without delay, and upon being so signed, shall be filed and forth-
with acted upon (</).
Register and file of -proceedings.
57. A register shall be kept of all proceedings in the judge's chambers,
in each matter, in the same manner as required by the 57th rule of the
35th of the Consolidated general orders (gy), and no documents or pro-
ceedings are to be filed in the judge's chambers, unless the judge shall
otherwise direct.
(dd) See now R. S. C. Ord. XXXII. a certificate not signed by him is four
r 3. clear days after its signature by the chief
(e) See infra, rule 74. clerk ; and the time for applying by
(ee) Now the Central Office, 42 k 43 summons or motion to discharge or vary
Vict. c. 78. * certificate signed and adopted by the
(/) See infra, rule 74. judge, is eight clear days after the filing
(g) These rules relate to the practice of the certificate. But the judge has
respecting certificates, and the time for power to enlarge these times ; see infra,
obtaining a review of a certificate, as rule 73. See for the rules now in force,
well before as after it has been signed by It. S. C. Ord. LV. rr. 65—71.
the judge. The time for obtaining a sum- iffy) See now It. S. G. Ord. LV. r. 73.
rnons to take the opinion of the judge on
1052 rules of 1862.
Appendix VI. 58. All orders, exhibits, admissions, memorandums, and office copies of
affidavits, examinations, depositions and certificates, and all other docu-
ments relating to the winding up of any company, shall be filed by the
official liquidator, as far as may be, in one continuous file, and such file
shall be kept by him, or otherwise, as the judge may from time to time
direct. Every contributory of the company, and every creditor thereof
whose debt or claim has been allowed, shall be entitled, at all reasonable
times to inspect such file free of charge, and, at his own expense, to
take copies or extracts from any of the documents comprised therein, or
to be furnished with such copies or extracts at a rate not exceeding
three-halfpence per folio of seventy-two words ; and such file shall be
produced in court, or before the judge, and otherwise, as occasion may
require (h).
Provisional official liquidators.
59. All the above rules relating to official liquidators shall, so far as the
same are applicable, and subject to the directions of the judge in each case,
apply to provisional official liquidators {%).
Attendance and appearance of parties (Jc).
60. Every person, for the time being, on the list of contributories of the
company, left at the chambers of the judge by the official liquidator, and
every person having a debt or claim against the company, allowed by the
judge, shall be at liberty, at his own expense, to attend the proceedings
before the judge, and shall be entitled, upon payment of the costs occa-
sioned thereby, to have notice of all such proceedings as he shall by written
request desire to have notice of ; but if the judge shall be of opinion that
the attendance of any such person upon any proceeding has occasioned any
additional costs which ought not to be borne by the funds of the company,
he may direct such costs, or a gross sum in lieu thereof, to be paid by such
person : and such person shall not be entitled to attend any further pro-
ceedings until he has paid the same.
61. The judge may from time to time appoint any one or more of the
contributories, or creditors, as he thinks fit, to represent before him, at
the expense of the company, all or any class of the contributories or
creditors, upon any question as to a compromise with any of the con-
tributories or creditors, or in and about any other proceedings before
him relating to the winding up of the company, and may remove the
person or persons so appointed. In case more than one person shall be
so appointed, they shall unite in employing the same solicitor to represent
them.
62. No contributory or creditor shall be entitled to attend any pro-
ceedings at the chambers of the judge, miless and until he has entered in
a book to be kept there for that purpose his name and address, and the
name and address of his solicitor (if any), and upon any change of his
address or of his solicitor, his new address, and the name and address of
his new solicitor (I).
(A) fee the act, § 156, and ante, p. infra, rule 74, arte, p. 687.
704. (I) See the form of tLi3 book, Schedule
(t) See ante, rule 15. 3, No. 53, ante, p. 687.
(k) See the act, §g 74, 159, 160, and
rules of 1862. 1053
Appendix VI.
Services of summonses, notices, dec. (m)
63. Services upon contributories and creditors snail be effected (except
when personal service is required) by sending tbe notice, or a copy of the
summons or order or other proceeding, through the post in a pre-paid
letter, addressed to the solicitor of the party to be served (if any) or
otherwise to the party himself at the address entered or last entered
pursuant to the preceding ride ; or if no such entry has been made, then,
if a contributory, to his last known address or place of abode ; and if a
creditor, to the address given by him, pursuant to the foregoing rule 20 ;
and such notice, or copy summons, order, or other proceeding, shall be
considered as served at the time the same ought to be delivered in the due
course of delivery by the post-office, and notwithstanding the same may be
returned by the post-office.
64. No service under these rules shall be deemed invalid by reason that
the Christian name, or any of the Christian names of the person on whom
service is sought to be made has been omitted, or designated by initial
letters, in the list of contributories, or in the summons, order, notice, or
other document wherein the name of such contributory or creditor is con-
tained, provided the judge is satisfied that such service is in other respects
sufficient.
Termination of winding up (n).
65. Upon the termination of the proceedings in chambers for the
■winding up of any company, a balance-sheet shall be brought in by the
official liquidator of his receipts and payments, and verified by his
affidavit ; and the official liquidator shall pass his final account, and
the balance (if any) due thereon shall be certified. And upon payment
of such balance, in such manner as the Court or judge shall direct, the
recognisance entered into by the official liquidator and his sureties may be
vacated.
66. When the official liquidator has passed his final account, and the
balance (if any) certified to be due thereon has been paid in such manner
as the judge shall direct, a certificate shall be made by the chief clerk that
the affairs of the company have been completely wound up (o) ; and, in
case the company has not been already dissolved, the official liquidator
shall, immediately after such certificate has become binding, apply to the
judge for an order that the company be dissolved from the date of such
order (j>).
67. When the proceedings for winding up any company have been com-
pleted, the file of proceedings and the book containing the official liqui-
dator's account shall be deposited in the Kecord and Writ Clerk's office ( pp).
Ditties of solicitor of official liquidator (q).
68. The solicitor of the official liquidator shall conduct all such pro-
ceedings as are ordinarily conducted by solicitors of the Court ; and
(to) Sec the act, §§ 62 and 63, and (p) Sec the form of order, ib. No. 56.
infra, rule 74, ante, p. 687. (pp) Now the Central Office, see 42 &
(n)' See the act, §§ 111—113. 43 Vict. c. 78.
(o) See the form of certificate, Sche- (<j) See the act, § 97, and infra,
dule 3 No. 55. Schedule 3, Form No. 12.
1054 rules of 1862.
Appendix VI. where the attendance of his solicitor is required on any proceeding in
~~ court or chambers, the official liquidator need not attend in person, except
in cases where his presence is necessary in addition to that of his solicitor,
or the judge shall direct him to attend.
Forms.
69. The forms set forth or referred to in the third schedule to these
orders, with such variations as the circumstances of each case may require,
may be used for the respective purposes mentioned in such schedule.
Fees.
70. Solicitors shall be entitled to charge, and be allowed, the fees set
forth and referred to in the first schedule hereto, unless the Court or judge
shall otherwise specially direct.
71. The fees of Court set forth and referred to in the second schedule
hereto shall be paid in relation to proceedings in the Court of Chancery
under the Companies act, 1862, and shall be collected by means of
stamps, in the manner prescribed by the 39th of the Consolidated
General Orders.
Taxation of costs.
72. Where an order is made in court or chambers for payment of any
costs, the order shall direct the taxation thereof by the taxing master ;
except in cases where a gross sum in lieu of taxed costs is fixed by the
order, in accordance with the 37th rule of the 40th of the Consolidated
General Orders (qq).
Power of judge (r).
73. The power of the Court, and of the judge sitting in chambers, to
enlarge or abridge the time for doing any act, or taking any proceeding,
to adjourn or review any proceeding, and to give any direction as to the
course of proceeding, is unaffected by these rules.
General directions (s).
74. The general practice of the Court, including the course of pro-
ceeding and practice at the judge's chambers, as provided by the statute
15th and 16th Victoria, chapter 80, and the general orders of the Court
relative thereto, shall, in cases not provided for by the Companies act,
1862, or these rules, and so far as the same are applicable and not incon-
sistent with the said act or these rules, apply to all proceedings for
winding up a company.
Application of rules.
75. These rules apply only to proceedings under the Companies act,
1862.
(qq) See now It. S. C. Ord. LXV. , and as to the power of enlarging time,
r. 27 ; and regulation 38 a. R. S. C, Ord. LXIV., r. 7.
(r) See the act, §§ 83, 119, and 204, (s) See the act, § 170, and ante, p. 685.
rules of 1862. 1055
Appendix VI.
Commencement of rules.
76. These rules shall take effect and come into operation on and after
the 25th day of November, 1862.
Interpretation.
77. The 1st rule of the 23rd of the Consolidated General Orders, and
the general interpretation clause therein, shall be deemed to extend and
apply to the rules of this order ; and such rules shall have the effect of
and be deemed to be General Orders of the Court.
Westbury, C.
John Romilly, M.R.
RlCHD. T. KlNDERSLEY, V.-C
John Stuart, V.-C.
W. P. Wood, V.-C.
THE FIRST SCHEDULE.
FEES AND CHARGES TO BE ALLOWED TO SOLICITORS.
£ s. d.
For preparing and drawing up every order made at chambers,
and attending for same, and at the registrar's office to get
same entered . . . . . . . .0134
For engrossing every order, in addition to the above fee, per
folio 004
For other duties performed, such of the fees on the higher
scale authorised by the 2nd rule of the 38th of the Con-
solidated General Orders, and the regulations as to solicitor's
fees subjoined thereto, as are applicable ; except that the
special fee allowed on creditor's claims is not to apply.
Where, under such regulations, a fee of 3 guineas may be
allowed for attending any summons or other appointment
at the judge's chambers, the same may be increased to any
sum not exceeding 5 guineas.
The fee of 2s. 6d. allowed by such regulations for notices and
services shall be reduced to Is. 6d., where the service may
be effected as provided by the above rule 63.
The usual charges relating to printing shall be allowed in lieu
of copies for service, where the fee for copies would exceed
the charges for printing and amount to more than £3.
£
s.
d.
0
3
0
0
5
0
1
0
0
0
5
0
1
0
0
0
5
0
0
5
0
1056 rules of 1862.
Appendix VI. THE SEC0ND SCHEDULE.
FEES TO BE COLLECTED BY MEANS OF STAMPS.
In the judge's chambers.
For every summons ........
For every order drawn up l>y the chief clerk . . . .
For every advertisement .......
For every certificate ........
For every oath, affirmation, declaration, or attestation upon
honour .........
In the registrar's office.
For every order made in court . . . . . .
For every order made in chambers .....
For every office copy of an order . . . . .
In the examiner's office.
The same fees as those directed to be paid and collected in such
office by the 2nd rule of the 39th of the Consolidated General
Orders (ss), and the regulations subjoined thereto.
In the record and writ clerk's office, and report office.
Such of the fees directed to be paid and collected in such office
by the 2nd rule of the 39th of the Consolidated General
Orders, and the regulations subjoined thereto, as are
applicable.
In the taxing master's office.
The same fees as those directed to be paid and collected by the
2nd rule of the 39th of the Consolidated General Orders,
and the regulations subjoined thereto.
In the office of the Lord Chancellor's principal secretary.
For every petition . . . . . . .10 0
In the office of the Secretary of the rolls.
For every petition . . . . . . • .10 0
THE THIRD SCHEDULE.
FORMS.
No. 1. Advertisement of petition. [Rule 2.]
In the matter of the Companies act, 1862 (t) ; and of
the company.
Notice is hereby given, that a petition for the winding up of the above-
named company by the Court [or, subject to the supervision of the court]
of Chancery was, on the day of , 186 , presented to
(ss) See for present rules as to fees, {t) Add now and 1867. See General
Order as to Supreme Court Fees, 1884. Order, March, 1868, r.l, infra, p. 1084.
RULES OF 1862.
1057
the Lord Chancellor [or, the Master of the Rolls] by the said company [or,
by A. B., of , a creditor [or, contributory] of the said company]
[or, as the case may be]. And that the said petition is directed to be
heard before the Vice-Chancellor [or, Master of the Rolls] on the
day of , 186 ; and any creditor or contributory of the
said company desirous to oppose the making of an order for the winding
up of the said company under the above act [acts], should appear at the time
of hearing by himself or his counsel for that purpose, and a copy of the
petition will be furnished to any creditor or contributory of the said com-
pany requiring the same, by the undersigned, on payment of the regidated
charge for the same.
C. and D., of &c. [Agents for E. and F., of &c]
Solicitors for the petitioner.
Appendix VI.
Forms.
No. 2. Affidavit verifying petition. [Rule 4.]
In Chancery.
In the matter, &c.
I, A. B., of &c, make oath and say, that such of the statements in the
petition now produced and shown to me, and marked with the letter A.,
as relate to my own acts and deeds are true, and such of the said state-
ments as relate to the acts and deeds of any other person or persons, I
believe to be true.
Sworn, &c.
No. 3. Order for winding up by the Court. [25 & 26 Vict. c. 89,
ss. 81, 82.]
The Master of the Rolls ) day, the day of 186 .
[or Vice-Chancellor > In the matter, &c.
]• )
Upon the petition of the above-named company [or, A. B., of &c, a
creditor [or contributory] of the above-named company] on the
day of 186 , preferred unto the Right Honourable the Lord
High Chancellor of Great Britain [or, Master of the Rolls], and upon hear-
ing counsel for the petitioner, and for , and upon reading the said
petition, an affidavit of (the said petitioner), filed, &c, verifying the said
petition, an affidavit of L. M., filed the day of 186 , the
" London Gazette " of the day of , the " Times " news-
paper of the day of [enter any other papers] each con-
taining an advertisement of the said petition [enter any other evidence],
his Honour [or, this Court] doth order that the said company be
wound up by this Court, under the provisions of the Companies act,
1862.
No. 4. Order for winding up, subject to supervision
ss. 147, 148.]
The Master of the Rolls \ day, the
[25 & 26 Vict. c. 89,
of 186 .
[or, Vice-Chancellor > In the matter, &c.
]• J
Upon the petition, &c, his Honour [or, this Court] dotii order, that the
voluntary winding up of the said company be continued, but
Bubject to the supervision of this Court; and any of the proceedings under
the said voluntary winding up may be adopted as the judge shall think
L.C. 3 Y
1058
RULES OF 1862.
Appendix VI. fit. And the creditors, contributories, and liquidators of the said com-
pany, and all other persons interested, are to be at liberty to apply to the
judge at chambers as there may be occasion.
Forms.
No. 5. Advertisement of order to wind up.
In the matter, &c.
[Rule 6.]
By an order made by the Master of the Rolls [or, the Vice-Chancellor
] in the above matter, dated the day of 186,
on the petition of the above-named company [or, A. B., of ], it
was ordered that, &c. [as in order].
C. & D., of &c,
Solicitors for the said petitioner.
No. 6. Advertisement of time and place fixed for the appointment of official
liquidator. [Rule 9.]
In the matter, &c.
Notice is hereby given, that the Master of the Rolls [or, the Vice-Chan-
cellor ] has fixed the day of 186 , at
o'clock in the noon, at his chambers in the Rolls Yard, Chancery
Lane [or, at No. Lincoln's Inn], in the county of Middlesex, as the
time and place for the appointment of an official liquidator of the above-
named company. G. H.,
Chief Clerk.
No. 7. Proposal for appointment of official liquidator (and sureties) where
form No. 6 has been issued.
In the matter, &c.
We, the undersigned contributories of the above-named company for
the number of shares placed opposite our respective names, hereby pro-
pose Mr. W. T., of &c, public accountant, to be the official liquidator
of the said company [and H. N., of &c, and J. P., of &c, to be his
sureties].
Name.
Address.
Number of
Shares held.
No. 8. Order appointing an official liquidator. [Rules 10, 11.]
Master of the Rolls [or}
Vice-Chancellor ( , the day of , 186 .
3(
at chambers. ) In the matter, &c.
Upon the application, &c, and upon reading, &c, the judge doth
hereby appoint R. P. H., of &c, official liquidator of the above-named
company [if security has not been given, add, And it is ordered that the
said R. P. H. do, on or before the day of next, give
security to be approved of by the judge]. And it is ordered that the
said R. P. H. do, on the day of , and day of
186 , and the same days in each succeeding year, leave his accounts at
rules of 1862. 1059
the chambers of the said judge. And it is ordered that all moneys to be Appendix VI.
received by the said R. P. H. be paid by him into the Bank of England, Forms
to the credit of the account of the official liquidator of the said com-
pany, within seven days after the receipt thereof. [In case two or
more official liquidators are appointed, add, And the said judge doth
declare that the following acts, required or authorised by the above
statute to be done by the official liquidator, may be done by either [or,
any one, or two] of the official liquidators hereby appointed, that is to
say [describe the acts] ; and that all other acts so required or authorised
to be done be done by both [or, all] the official liquidators hereby
appointed. ]
No. 9. Order appointing a provisional official liquidator. [Rules 10, 11,
15, 59].
Master of the Rolls [or \
Vice-Chancellor (^ , the day of , 186 .
]('
at chambers. / In the matter, &c.
Upon the application, &c, and upon reading, &c, the judge doth
hereby appoint R. P. H., of &c, provisionally, official liquidator of the
above-named company [if security dispensed with, add, without security ;
or, if security is to be given, add directions as to security, accounts, and
payment into the bank, as in form No. 8]. And the said judge doth
hereby limit and restrict the powers of the said R. P. H. as such
provisional official liquidator, to the following acts, that is to say [describe
the acts which the provisional official liquidator is to be authorised to do].
No. 10. Recognizance of the official liquidator and sureties. [Rule 10.]
•g R. P. H., of &c, W. B., of &c, and T. P., of &c, before our
"g sovereign lady the Queen in her High Court of Chancery
personally appearing, do acknowledge themselves, and every
a of them doth acknowledge himself, to owe to the Right
w <* Honourable Sir John Romilly, Knight, the Master of the
5 Rolls, and the Honourable Sir Richard Torin Kindersley,
t3 Knight, the senior Vice-Chancellor of the said Court, the
§ respective sums of lawful money of Great Britain set oppo-
site to their respective names in the schedule hereto, to be
■& g jJ" paid to the said Sir John Romilly and Sir Richard Torin
'£% c Kindersley, or one of them, or the executors or administra-
"I % tors of them, or one of them : and in default of payment of
^o 6 the said sums, the said R. P. H., W. B., and T. P., are
"5 8 a willing and do agree, and every of them is willing and doth
^ ^.'1 agree for himself, his heirs, executors, and administrators,
^ o by these presents that the said sums shall be levied, re-
-2 2 covered, and received of and from them and every of them,
and of and from all and singular the manors, messuages,
lands, tenements, and hereditaments, goods and chattels, of
them, and every of them, wheresoever the same shall be
found. Witness our sovereign lady Victoria, by the grace of
God, of the United Kingdom of Great Britain and Ireland,
Queen, Defender of the Faith, and so forth, at Westminster,
the day of , 186 .
3 y 2
O 02
a>
*-'
43 Tl
-^
o
>
o
0
=j
CD
a
'P. %
ts
1060
RULES OF 1862.
Appendix VI.
Forms.
Whereas, in the matter, of, &c. [take title from order to wind up] the
Master of the Rolls [or Vice-Chancellor ] has, by an order dated
the day of , 186 , appointed the said R. P. H. official
liquidator of the said company, and has thereby directed him to give
security, to be approved of by the said judge [or, in case the security pre-
cedes the order appointing, has approved of the said R. P. H. as a proper
person to be appointed official liquidator of the said company, upon his
giving security]. And whereas the said judge has approved of the said
W. B. aud T. P. to be sureties for the said R. P. H. in the amounts set
opposite to their respective names in the schedide hereto, and has also
approved of the above-written recognizance, with the under-written con-
dition, as a proper security to be entered into by the said R. P. H., W. B.,
and T. P., pursuant to the said order and [or, pursuant to] the general
order of the said Court in that behalf ; and in testimony of such approba-
tion the chief clerk of the said judge hath signed an allowance in the
margin hereof. Now the condition of the above-written recognizance is
such, that if the said R. P. H., his executors, or administrators, or any of
them, do and shall duly account for what the said R. P. H. shall receive,
or become liable to pay, as official liquidator of the said company at such
periods and in such manner as the said judge shall appoint, and pay the
same as the said judge hath [by the said order] directed, or shall hereafter
direct, then the above recognizance to be void, otherwise to remain in full
force and virtue.
THE SCHEDULE ABOVE REFERRED TO.
R. P. H.
W. B.
T. P.
Thousand pounds.
Thousand pounds.
Thousand pounds.
Taken and acknowledged by the above-named R. P. H., &c, &c.
No. 11. Affidavit of sureties. [Rule 10.]
In Chancery.
In the matter, &c.
We, W. B., of &c, and T. P., of &c, severally make oath and say as
follows : —
1. I, The said W. B., for myself, say that I am worth the sum of
<£ of lawful money of Great Britain, over and above what is
sufficient for the payment of all my just debts and liabilities.
2. And I, the said T. P., for myself, say that I am worth the sum of
£ , of (fee. [as above].
Sworn, &c.
No. 12. Sanction of appointment of solicitor to official liquidator, and
appointment. [25 & 26 Vict. c. 89, s. 97.]
In the matter, &c.
The Master of the Rolls [or, Vice-Chancellor ] sanctions the
official liquidator appointing a solicitor to assist him in the performance of
his duties.
G. H.,
Chief Clerk.
RULES OF 1862. 1061
Forms.
I hereby appoint Messrs. C. and D., of &c, to be my solicitors in this Appendix VI.
matter.
Dated this day of , 186 .
R. P. H., Official Liquidator.
No. 13. Order for payment of money or delivery of books, (fee, to official
liquidator. [25 & 26 Vict. c. 89, ss. 100, 101.]
The Master of the Rolls \
[or, Vice-Chancellor f day, the day of , 186 .
](
at chambers. / In the matter, &c.
Upon the application of, &c, and on reading, &c, it is ordered that
A. B., of &c, do, within four days after service hereof, pay to [or deliver,
convey, surrender, or transfer to or into the hands of] R. P. H. the official
liquidator of the said company, at the office of the said R. P. H., situate at
&c, tbe sum of £ , being the amount of debt appearing to be due
from the said A. B. on his account with the said company [or, any sum or
balance, books, papers, estate, or effects], [or, specifically describe the
property] now being in the hands of the said A. B. , and to which the said
company is prima facie, entitled [or, otherwise, as the case may be].
No. 14. Direction to open account at the Bank of England.
[Rides 11, 32, 36—44.]
The Master of the Rolls ^
[or, Vice-Chancellor ( day of 186 .
H
at chambers. / In the matter, &c.
To the governor and company of the Bank of England.
Gentlemen,
An order, dated the day of , 186 , having been made
in the above matter by the Master of the Rolls [or, the Vice-Chancellor
] for winding up the above-named company by the Court of
Chancery, under the provisions of the said act, and R. P. H., of ,
having by order dated the day of , 186 , been appointed
the official liquidator of the said conqxmy, you are requested to open an
account, to be entitled " The Account of the Official Liquidator of the
Company," in your books, pursuant to the said act.
All cheques drawn upon such account must be signed by the official
liquidator, whose signature is attached hereto, and countersigned by one
of the chief clerks of the said judge, whose signatures are also attached
hereto.
I am, Gentlemen,
Your most obedient Servant,
G. H.,
Chief Clerk.
Signal ures.
R. P. H., Official Liquidator.
w T Chief Clerks of the Master of the
n U \ Rolls [or, Vice-Chancellor
u. ii. | 3
1062 rules op 1862.
ArrEKPix VI. -j^Q 15 Advertisement of appointment of official liquidator.
Forms. [Rule 14-]
In the matter, &c.
The Master of the Rolls [or, the Vice-Chancellor ] has, by an
order dated the day of , 186 , appointed R. R H., of
, to be official liquidator of the above-named company.
Dated this day of , 186 .
G. H.,
Chief Clerk.
No. 16. Advertisement for creditors. [Rule 20.]
In the matter, &c.
The creditors of the above-named company are required, on or before
the day of , 1 86 , to send their names and addresses,
and the particulars of their debts or claims, and the names and addresses
of their solicitors, if any, to R. P. H., of , the official liquidator
of the said company, and if so required by notice in writing from the said
official liquidator, are by their solicitors to come in and prove their said
debts or claims, at the Chambers of the Master of the Rolls [or, the Vice-
Chancellor ], in the Rolls Yard, Chancery Lane [or, at No. ,
Lincoln's Inn], in the county of Middlesex, at such time as shall be
specified in such notice, or in defaidt thereof they will be excluded from
the benefit of any distribution made before such debts are proved.
day, the day of , 186 , at
o'clock in the noon, at the said chambers, is appointed
for hearing and adjudicating upon the debts and claims.
Dated this day of , 186 .
G. H., Chief Clerk.
No. 17. Affidavit of official liquidator as to debts and claims.
[Rule 22.]
In Chancery.
In the matter, &c.
I, R. P. H., of &c, the official liquidator of the above-named company,
make oath, and say as follows : —
1. I have in the paper writing now produced and shown to me, and
marked with the letter A., set forth a list of all the debts and claims the
particulars of which have been sent in to me by persons making claims
upon, or claiming to be creditors of the said company, pursuant to the
advertisement issued in that behalf, dated the day of ,
186 ; and the names and addresses of the persons by whom such claims
are made.
2. I have investigated the said debts and claims, and examined the
same with the books and documents of the said company, in order to
ascertain, so far as I am able, which of such debts and claims are justly
due from the said company : and I have, in the first part of the said list,
set forth such of the said debts and claims, or parts thereof, as, in my
opinion, are justly due from the said company, and proper to be allowed
without further evidence ; and I have, in the sixth column of the said
first part of the said list, set forth the amounts proper to be allowed in
respect of such debts and claims ; and I believe that such amounts respec-
tively are justly due and proper to be allowed ; and I bave, in the seventh
RULES OF 1862.
10G3
Forms
column of the said first part of the said list stated my reasons for such Appendix VI.
belief.
3. I have, in the second part of the said list, set forth such of the said
debts and claims as in my opinion ought to be proved by the respective
creditors.
Sworn, &c.
No. 18. Exhibit referred to in affidavit No. 17.
A.
In the matter, &c.
List of debts and claims of which the particulars have been sent in to
the official liquidator.
This paper writing, marked A., was produced and
shown to R. P. H., and is the same as is referred to
in bis affidavit sworn before me this day of
, 186 .
W. B., &c.
First part. — Debts and claims proper to be allowed without further
evidence.
Serial
No.
Names of
Creditors.
Addresses
and
Descriptions.
Particulars
of Debt
or Claim.
Amount
Claimed.
Amount
proper
to be
allowed.
Keasons for
belief that
amounts are
proper to be
allowed.
£, s. d.
£ s. d.
Second part. — Debts and claims which ought to be proved by the creditors.
Serial
No.
Names of Creditors.
Addresses and
Descriptions.
Particulars of
Debt or Claim.
Amount
Claimed.
£ s. d.
Sir,
No. 19. Notice to creditor of allowance of debt. [Rule 23.]
In the matter, &c. [Place and date.]
The debt claimed by you in this matter has been allowed by the
judge at the sum of £ . [If part only allowed, add, If you claim
to have a larger sum allowed, you are hereby required to come in and
prove the further amount claimed, <&&, as in next form.']
I am, &c,
To Mr. PR R. P. H., Official Liquidator.
1064 rules of 1862.
Appendix VI. No. 20. Notice to creditors to come in and prove their debts.
— i^~~ [Rule 24-l
In the matter, &c.
You are hereby required to come in and prove the debt claimed by yon
against the above-named company, by filing your affidavit, and giving
notice thereof to me, on or before the day of next ; and
you are to attend by your solicitor at the chambers of the Master of the
Rolls, in the Rolls Yard, Chancery Lane [or, of the Vice-Chancellor
, at No. , Lincoln's Inn], in the county of Middlesex, on
the day of ,186, at o'clock in the noon,
being the time appointed for hearing and adjudicating upon the claim.
Dated this day of , 186 .
R. P. H., Official Liquidator.
To Mr. S. T.
No. 21. Affidavit of creditor in proof of debt. [Rule 24.]
In Chancery.
In the matter, &c.
I, S. T., of &c, make oath, and say as follows : —
1. The above-named company was, on the day of ,
186 , the date of the order for winding up the same, and still is justly and
truly indebted to me in the sum of £ for, &c. [Describe shortly the
nature of the debt, and exhibit any security for it ; and in the case of a trade
debt exhibit a bill of parcels, and verify the reasonableness of the charges, as
in proving a debt in a suit.]
2. I have not, nor hath nor have any person or persons by my order, or
to my knowledge or belief, for my use received the said sum of £
or any part thereof, or any security or satisfaction for the same or any
part thereof [if any security, add], except the said [describe the security]
hereinbefore mentioned or referred to.
Sworn, &c.
No. 22. Certificate of chief clerk as to debts and claims.
[Rule 28.]
In the matter, &c.
In pursuance of the directions given to me by the Master of the Rolls
[or, Vice-Chan cellor ], I hereby certify that the result of the
adjudication upon debts and claims against the above-named company,
brought in pursuance to the advertisement issued in that behalf, dated the
day of , 186 , so far as such adjudication has up to
the date of this certificate been proceeded with, is as follows : —
The debts and claims which have been allowed are set forth in the first
schedule hereto, and, with the interest thereon and costs mentioned in the
said schedule, are due to the persons therein named, and amount altogether
to£
I have in the first part of the said schedule set forth such of the said
debts and claims as carry interest, and the interest thereon has been
computed after the rate they respectively carry down to the date of this
certificate.
I have in the second part of the said schedule set forth such of the said
debts and claims as do not carry interest, and the interest thereon has been
computed at the rate of 41. per cent, per annum, from the day of
RULES OF 1862.
1065
,186 , being the date of the said order to wind up the company, Appendix VI.
down to the date of this certificate. ~ '
The claims set forth in the second schedule hereto have been brought in
by the persons therein named, and have been disallowed.
The evidence produced, &c.
THE FIRST SCHEDULE ABOVE REFERRED TO.
First part. — Debts and claims which carry interest.
No.
Names of
Creditors.
Addresses and
Descriptions.
Particulars of
Debt.
Total
due.
1.
J. L.
29, Street,
London, Stationer.
Principal
Interest at £ per
cent, per annum (less Pro-
perty Tax), from
186 to
the date of this Certifi-
cate ....
Costs of Proof
On Bill of Ex-
change, dated, &c.
£
£
£
£ s. d.
Total first Part... £
Second part. — Debts and elaims which do not carry interest.
No.
Names of
Creditors.
Addresses and
Descriptions.
Particulars
of Debt.
Interest
on Prin-
cipal (less
Property
Taxi.
Total due.
40.
W. P.
15, Street,
London.
Coal Merchant.
Principal
Costs of Proof
Goods sold
£50 0 0
2 0 0
£, s. d.
2 0 0
I
£ s. d.
54 0 0
Total £
Add Total fir
it Part. . .£
Total
first and secon<
1 Parts. . .£
1066
Appendix VI.
Forms.
RULES OF 1862.
THE SECOND SCHEDULE ABOVE REFERRED TO.
No.
Names of Creditors.
Addresses and
Descriptions.
Particulars of
Claim.
Amount
Claimed.
£ s. d.
Dated this
Approved the
day of 186
day of
186
G. H., Chief Clerk.
No. 23. Notice to creditor to attend to receive debt. [Rule 28.]
In the matter, &c.
Sir,
Upon application at my office, No. Street, Middlesex,
on and after the instant, between the hours of ten and four o'clock,
you may receive a cheque for the amount of your debt, allowed in this
matter as under : —
Principal . . . . ■ £
Interest .....£
Costs of proof .... £
Total £
If you cannot attend personally, the cheque will be delivered to your
order upon your filling up and signing the subjoined form.
The bills or securities (if any) held by you must be produced at the
time of such application.
Dated this day of 186 .
I am &c,
R. P. H., Official Liquidator.
To Mr. S. T.
Sir,
[Form of order.]
Please to deliver to W. R, the cheque for £
to in the above letter as payable to me.
To Mr. R. P. H., Official Liquidator j
of the company. )
referred
S. T., Creditor.
No. 24. Affidavit in support, of list of contributories.
[Rule 29.]
In Chancery.
In the matter, &c.
I, R. P. H., of &c, the official liquidator of the above-named company,
make oath and say, as follows : —
RULES OF 1862.
1067
1. The paper writing now produced and shown to me, and marked with Appendix VI.
the letter A, contains a list of the contributories of the said company,
made out by me from the books and papers of the said company, together
with their respective addresses, and the number of shares [or, extent of
interest] to be attributed to each ; and such list is, to the best of my
knowledge, information, and belief, a true and accurate list of the con-
tributories of the said company, so far as I have been able to make out
and ascertain the same.
2 . I have, in the first part of the said list marked A, distinguished the
persons who are contributories in their own right.
3. I have, in the second part of the said list marked A, distinguished
the persons who are contributories as being representatives of, or being
liable to the debts of, others.
Sworn, &c.
No. 25. List of contributories referred to in Form No. 24.
A.
In the matter, &c.
This list of contributories marked A, was produced and shown to
R. P. H., and is the same list of contributories as is referred to in his
affidavit, sworn before me this day of 186 .
W. B., &c.
First part. — Contributories in their own right.
Serial
No.
Name.
Address.
Description.
In what
character
included.
Number of
shares [or,
extent of
interest. ]
Second part. — Contributories as being representatives of, or liable to the
debts of others.
Serial
No.
Name.
Address.
Description.
In what
character
included.
Number of
shares [or,
extent of
interest].
Forms.
No. 26. Notice to contributories of appointment to settle list of contributories.
[Rule 30.]
In the matter, &c.
The Master of the Rolls [or, Vice-Chancellor ] has appointed
tin' day of 186 , at of the clock in the
1068
RULES OF 1862.
Appendix VI.
Forms.
noon at his chambers, in the Rolls Yard, Chancery Lane [or, at No.
Lincoln's Inn], in the county of Middlesex, to settle the list
of the contributories of the above-named company, made out and left at
the chambers of the said judge by the official liquidator of the said com-
pany, and you are included in such list in the character, and for the
number of shares [or, extent of interest] stated below ; and if no sufficient
cause is shown by you to the contrary at the time and place aforesaid, the
list will be settled by the said judge, including you therein.
Dated this day of 186 .
R. H. P., Official Liquidator.
To Mr. A. B. [and to
Mr. C. D., his solicitor].
No.
on
List.
1
Name. Address.
Description.
In what
character
included.
Number of
shares [or,
extent of
interest].
No. 27. Affidavit of service of notice. [Rule 30.]
In Chancery.
In the matter, &c.
I, W. S., of, &c, clerk to Messrs. C. and D., of. &c. the solicitors of
the official liquidator of the above-named company, make oath, and say as
follows : —
1. The first six columns of the schedule now produced and shown to
me and marked with the letter A, contain a true copy of the list of
contributories of the said company, made out and left at the chambers of
the Master of the Rolls [or, Vice-Chancellor ], by the said official
liquidator, on the day of 186 , and now on the file of
proceedings of the said company, as I know from having, on the
day of 186 , examined and compared the said schedule with
the said list ; and I have, in the seventh column of the said schedule
marked A, set forth the names and addresses of the solicitors who have
entered appearances for any of the contributories named in the said list.
2. I did, on the day of 186 , in the manner herein-
after mentioned, serve a true copy of the notice now produced and shown
to me, and marked B, upon each of the respective persons whose names,
addresses, and descriptions appear in the second, third, and fourth columns
of the said schedule marked A, except that in the tabular form at the foot
of such copies respectively I inserted the number on list, name, address,
description, in what character included, and number of shares [or, extent
of interest] of the person on whom such copy of the said notice was served,
in the same words and figures as the same particulars are set forth in the
said schedule marked A.
3. I served the said respective copies of the said notice, by putting such
copies respectively, duly addressed to such persons respectively or their
RULES OF 1862.
106D
solicitors, according to their respective names and addresses appearing in
the said schedule marked A, and with the proper postage-stamps affixed
thereto as prepaid letters, into the post-office receiving-house, No.
in street, in the county of , between the hours of
and of the clock in the noon of the said day
of
Sworn, &c.
Appendix VI.
Forms.
No. 28. The schedule referred to in Form No. 27.
A.
In the matter, &c.
This schedule marked A was produced and shown to W. S., and is the
same schedule as is referred to in his affidavit, sworn before me, this
day of 186 .
W. B., &c.
1.
2.
3.
4.
5.
6.
7.
Names and addresses
of solicitors who have
<D
entered appearances,
a _•
and been served with
0
<3 a>
«HOg
a copy of the notice
o
O 3
° "S fe
referred to in the
02
ft
1 2
3 .-.2
affidavit of W. S., to
s
3
55
2
ci
55
<
o
na
o
is
a s
3 ' '
55
which this schedule
is an exhibit.
Xo. 29. Supplemental list of contributories, and affidavit in siqjport.
[Ride 29.]
In Chancery.
In the matter, &c.
I, K P. H., of &c, the official liquidator of the above-named company,
make oath, and say as follows : —
1. Since leaving at the chambers of the judge the list of the contribu-
tories in this matter, on the day of 186 , it has come
to my knowledge that the several persons whose names are set forth in
the supplemental list of contributories now produced and shown to me,
and marked with the letter B, are, or have been, holders of shares in
[or, members of] the said company, and to the best of my judgment,
information, and belief, such persons are contributories of the said
company.
2. The said supplemental list marked B, contains the names of such
persons, together with their respective addresses, and the number of
Forms.
1070 RULES OF 1862.
Appendix VI. shares [or, extent of interest] to be attributed to each ; and such list
is to the best of my knowledge, information, and belief, true and
3. I have, in the first part of the said list marked B, distinguished such
of the said persons as are contributories in their own right.
4. I have, in the second part of the said list marked B, distinguished
such of the said persons as are contributories as being representatives of, or
being liable to the debts of others.
Sworn, &c.
No. 30. Supplemental list of contributories referred to m Form No. 29.
B.
In the matter, &c.
This supplemental list of contributories marked B, was produced and
shown to R. P. H., and is the same supplemental list of contributories as
referred to in his affidavit, sworn before me this day of
186 .
W. B., &c.
jSfote. — The supplemental list is to be made out in the same form as the
original list, Form No. 25.
No. 31. Certificate of chief clerk of settlement of the list of contributories.
[Ride 31.]
In the matter, &c.
In pursuance of the directions given to me by the Master of the Rolls
[or, Vice-Chancellor ], I hereby certify that the result of the
settlement of the list of contributories of the above-named company, made
out and left at the chambers of the said judge by the official liquidator
of the said company on the day of 186 , pursuant to
the above statute and the general order of this Court in that behalf, so
far as the said list has been settled up to the date of this certificate, is as
follows : —
1. The several persons whose names are set forth in the second column
of the first schedule hereto, have been included in the said list of contri-
butories as contributories of the said company in respect of the number of
shares [or, extent of interest] set opposite the names of such contributories
respectively in the said schedule.
I have, in the first part of the said schedule, distinguished such of the
said several persons included in the said list, as are contributories hi their
own right.
I have, in the second part of the said schedule, distinguished such of
the said several persons included in the said list as are contributories, as
being representatives of, or being liable to the debts of others.
2. The several persons whose names are set forth in the second column
of the second schedule hereto have been excluded from the said list of
contributories.
3. I have, in the seventh column of the said first and second schedules,
set forth opposite the name of each of the said several persons respectively,
the date when such person was included in or excluded from the said list
of contributories.
The evidence produced, &c.
RULES OF 1862.
THE FIRST SCHEDULE ABOVE REFERRED TO.
First -part — Contributories in their own right.
1071
Appendix VI.
Forms.
Serial
No. in
list.
Name.
Address.
Descrip-
tion.
In what
character
included.
Number of
shares [or,
extent of
interest].
Date when
included in
the list.
Second part. — Contributories as being representatives of, or liable to the
debts of others.
Serial
No. in
list.
Name.
Address.
Descrip-
tion.
In what
character
included.
Number of
shares [or,
extent of
interest].
Date when
included in
the list.
THE SECOND SCHEDULE ABOVE REFERRED TO.
Serial
No. in
list.
Name.
Address.
Descrip-
tion.
In what
character
proposed to
be included.
Number of
shares [or,
extent of
interest].
Date when
excluded
from the
list.
Dated tbis
Approved the
day of
day of
186
186
G. H., Chief Clerk,
1072
RULES OF 1862.
Appendix VI.
Forms.
No. 32. Order on application to vary list. [Rule 29.]
Master of the Rolls [or, j
Vice-Chancellor ] > day the day of 186 .
at chambers. ) In the matter, &c.
Upon the application of W. N. to review the list of contributories of
the said company, in respect of the inclusion of the said W. N. therein,
and that his name may be excluded therefrom, and upon hearing counsel,
&c, and upon reading, &c, It is ordered, That the name of the said W. N.
be excluded from the said list of contributories [or, the judge doth not
think fit to make any order on the said application, except that the said
W. N. do pay to R. P. H., the official liquidator of the said company,
his costs of this application, to be taxed by the taxing master in case the
parties differ].
No. 33. Affidavit of official liquidator in support of proposal for call.
[Rule 33.]
In Chancery.
In the matter, &c.
I, R. P. H., of &c, the official liquidator of the above-named company,
make oath, and say as follows : —
1. I have, in the schedule now produced and shown to me, and marked
with the letter A, set forth a statement, showing the amount due in
respect of the debts allowed against the said company, and the estimated
amount of the costs, charges, and expenses of and incidental to the winding
up of the affairs thereof, and which several amounts form in the aggregate
the sum of £ or thereabouts.
2. I have also in the said schedule set forth a statement of the assets
in hand belonging to the said company, amounting to the sum of £
and no more. There are no other assets belonging to the said company,
except the amounts due from certain of the contributories of the said
company, and, to the best of my information and belief, it will be impos-
sible to realise in respect of the said amounts more than the sum of
£ or thereabouts.
3. It appears by the chief clerk's certificate, dated the day of
186 , that persons have been settled on the list of con-
tributories of the said company, in respect of the total number of
shares.
4. For the purpose of satisfying the several debts and liabilities of the
said company, and of paying the costs, charges, and expenses of and
incidental to the winding up the affairs thereof, I believe the sum of
£ will be required, in addition to the amount of the assets of the
said company mentioned in the said schedule A, and the said .sum of
£
5. In order to provide the said sum of £ , it is necessary to
make a call upon the several persons who have been settled on the list of
contributories as before mentioned, and having regard to the probability
that some of such contributories will partly or wholly fail to pay the
amount of such call, I believe that for the purpose of realising the amount
required as before mentioned, it is necessary that a call of £ per
share should be made.
Sworn, &c.
RULES OF 1862.
1073
No. 34. Summons for intended call. [Rule 33.]
In the matter, &c.
Let all parties concerned attend at my chambers in the Rolls Yard,
Chancery Lane [or, at No. , Lincoln's Inn], in the county of
Middlesex, on day, the day of 186 , at
of the clock in the noon, on the hearing of an application on the
part of the official liquidator of the above-named company, that a call to
the amount of £ per share may be made on all the contributories
[or, if upon any particular class specify the same] of the said company.
John Romilly, Master of the Rolls.
or
X. Y., Vice-Chancellor.
This summons was taken out by A. & B. of , in the county of
, solicitors for the said official liquidator.
To Mr. A. B., of &c, a contributory of the said 7
company proposed to be included in the said call, j
Appendix VI.
Forms.
No. 35. Advertisement of intended call. [Rule 33.]
In the matter, &c.
By direction of the Master of the Rolls [or, Vice-Chancellor ],
notice is hereby given that the said judge has appointed the
day of , 186 , at o'clock in the noon, at his
chambers in the Rolls Yard, &c, to make a call on all the contributories
of the said company [or, as the case may be], and that the official liquidator
of the said company proposes that such call shall be for £ per
share. All persons interested are entitled to attend at such day, hour, and
place, to offer objections to such call.
Dated this day of 186 .
G. H.,
Chief Clerk.
No. 36. General order for a call. [Rule 34.]
Master of the Rolls [or, ^ the day of
Vice-Chancellor ] > 186 .
at Chambers. ) In the matter, &c.
Upon the application of the official liquidator of the above-named com-
pany, and upon reading two orders, dated the day of 186 ,
and the day of 186 , the chief clerk's certificate, dated
the day of 186 , an affidavit of the said official liquidator,
filed 186 , and the exhibit marked A, therein referred to, and an
affidavit of filed 186 , It is ordered, That a call of
pounds per share be made on all the contributories of the said company
[or, as the case may be]. And it is ordered that each such contributory
do on or before the day of 186 , pay into the Bank of
England to the account of the official liquidator of the company,
the amount which will be due from him or her in respect of such call.
L.C. 3 z
1074
EULES OF 1862.
Appendix VI.
Forms.
No. 37. Notice to be served with the general order for a call.
[Rule 34.]
In the matter, &c.
The amount due from you, A. B., in respect of the call made by the
above [or within] order, is the sum of £ , which sum is to be paid
by you into the Bank of England, to the account mentioned in the said
order. You can pay the same in person, or through a banker or other
agent ; but this notice and copy order must be produced at the bank upon
such payment, and the cashier of the bank will, upon receiving the same,
deliver to you a certificate of the payment in, numbered , signed
by the said cashier. In order to prevent proceedings being taken against
you for non-payment, you must, immediately upon such payment in,
cause written notice of the payment, and of the date thereof to be given
to me as the official licpiidator of the said company, at my office,
No. Street, in the county of Middlesex.
Dated this day of
R. P. EL, Official Liquidator.
To Mr. A. B.
No. 38. Affidavit in support of application for order -for payment of call
due from contributories. [Rule 35.]
In Chancery.
In the matter, &c.
I, R. P. H., of &c, the official liquidator of the above-named company,
make oath and say as follows : —
1. None of the contributories of the said company whose names are set
forth in the schedule hereunto annexed, marked A, have paid, or caused to
be paid, the respective sums set opposite their respective names in the said
schedule, and which sums are the respective amounts now due from them
respectively in respect of the call of £ per share in pursuance of
the order of the judge in that behalf, dated the day of
186 .
2. The respective amounts or sums set opposite the names of such con-
tributories respectively in such schedule, are the true amounts due and
owing by such contributories respectively in respect of the said call.
Sworn, &c.
THE SCHEDULE ABOVE REFERRED TO.
No. on
List.
Name.
Address.
Description.
In what
character
included.
Amount
due.
£ s. d.
Note, — In addition to the above affidavit, an affidavit of the service of the
order and notice (Nos. 36 and 37) will be required.
RULES OF 1862.
1075
No. 39. Order for payment of call due from a contributory.
[Rule 35.]
The Master of the Rolls, [or, ) day, the day of
Vice- Chancellor V 186 .
] at Chambers. J In the matter, &c.
Upon the application of the official liquidator of the above-named
company, and upon reading the order, dated the day of ,
186 , an affidavit of filed the day of 186 , and
an affidavit of the said official liquidator, filed the day of
186 , It is ordered that C. D., of, &c, [or, E. F. of, &c, the legal personal
representative of L. M., late of &c, deceased] one of the contributories of
the said company [or if against several contributories, the several persons
named in the second column of the schedule to this order being respectively
contributories of the said company] do on or before the day of
186 , or within four days after service of this order, pay into
the Bank of England, to the account of the official liquidator of the
company [or to A. B., the official liquidator of the said company,
at his office, No. Street, in the county of Middlesex], the sum of
£ [if against a legal personal representative add, out of the assets
of the said L. M., deceased, in his hands as such legal personal representa-
tive as aforesaid, to be administered in a due course of administration if
the said E. F. has in his hands so much to be administered : or if against
several contributories, the several sums of money set opposite to their
respective names in the sixth column of the said schedide hereto], such
sum [or sums] being the amount for amounts] due from the said C. D. for
L. M.] for, the said several persons respectively] in respect of the call of
£ per share made by the said order dated the day of
186 .
THE SCHEDULE REFERRED TO IN THE FOREGOING ORDER.
Appendix VI.
Forms.
No. on
List.
Name.
Address.
Description.
In what
character
included.
Amount
due
& s. d.
Note. Tlie copy for service of the above order must be endorsed as required
by the 23rd Consol. Order, rule 10 (t).
No. 40. Notice to be endorsed on, or served loith, every order directing
payment of money into the Bank of England. [Rule 39.]
You can make the payment directed by the within for, above] order at
the Bank of England in person, &c. fas in the Form No. 37.]
R. P. H., Official Liquidator.
To Mr.
(t) The endorsement is to the effect
that if the order is not obeyed, the per-
son in default will be liable to be arrested
and have his estate sequestered,
now R. S. C, Order XLL, r. 5.
3 z 2
See
1076
RULES OF 1862.
Appendix VI.
Forms.
No. 41. Certificate of payment of money into the Bank of England.
[Rule 39.]
In the matter, &c.
No.
day of 186 .
I hereby certify that C. D., of &c., has this day paid into the Bank of
England the sum of , to be placed to the credit of the official
liquidator of the company, pursuant to an order dated the
day of , 186 .
For the governor and company of the Bank of England.
H. M.,
Cashier.
No. 42. Affidavit of service of order for -payment of call.
[Rule 3 5. J
In Chancery.
In the matter, &c.
I, J. B., of &c, make oath, and say as follows : —
1. I did, on the day of , 186 , personally serve
G. F., of , in the county of , &c, with an order made
in this matter by his Honour the Master of the Rolls [or, Vice-Chancellor
], dated the day of , 186 , whereby it was
ordered [set out the order in the past tense] by delivering to and leaving
with the said G. F. at , in the county of , a true copy
of the said order, and at the same time producing and showing unto him,
the said G. F., the said original order duly entered.
2. There was endorsed on the said copy, when so served, the following
words, that is to say, " If you, the within-named G. F., neglect to obey
this order by the time therein limited, you will be liable to be arrested
under a writ of attachment issued out of the High Court of Chancery, or
by the serjeant-at-arms attending the same court, and also be liable to
have your estate sequestered for the purpose of compelling you to obey the
same order."
Sworn, &c.
No. 43. Affidavit of non-payment of money by order directed to be paid into
the Bank of England. [Rule 40.]
In Chancery.
In the matter, &c.
I, R. P. H., of &c, the official liquidator of the above-named company,
make oath and say as follows : —
1. G. F., the person named in an order made in this matter by his
Honour the Master of the Rolls [or, Vice-Chancellor ], dated the
day of 186 , has not paid into the Bank of England,
to the account of the official liquidator of the company, the
whole or any part of the sum of £ as by the said order
directed.
[Or, in case of several p>arties.~\
1. None of the several persons whose names and addresses are set
forth in the schedide hereunder written, and who have respectively been
RULES OF 1862.
1077
duly served with orders made in this matter by his Honour the Master of Appendix VI.
the Rolls [or, Vice-Chancellor ], of the respective dates set oppo- p
site to their respective names in the said schedule, have paid into the Bank
of England to the account of the official liquidator of the com-
pany, the whole or any part of the several sums of money set opposite to
their respective names in the said schedule hereunder written, as by the
said orders respectively directed.
2. I am enabled to depose to such non-payment, by reason of my
having this day ascertained by inquiry at the said bank, that such pay-
ment [or, payments] has [or, have] not been made, and seen the certificate
of payment in, numbered [or, several certificates of payments in,
the numbers whereof respectively are set forth in the sixth column of the
said schedule, opposite the names of the said respective persons, being
certificates] furnished by me to the cashier of the said bank for delivery
to the said G. F. [or, several persons respectively] upon such payment [or,
payments] being made, still in the hands of the cashier of the said bank.
No notice [or, notices] of such payment [or, payments] having been made
has [or, have] been given to me by the said G. F. [or, several persons
respectively].
Sworn, &c.
THE SCHEDULE ABOVE REFERRED TO.
Name.
Address.
Descrip-
tion.
Amount.
Date of balance
order.
Number of
certificate.
£ s. d.
No. 44. Request to invest cash in Government stock or Exchequer bills.
[Rule 43.]
In the matter, &c.
To the Governor and Company of the Bank of England.
Gentlemen,
It appearing that the sum of £ cash is standing to the credit
of the account of the official liquidator of the above-named company,
you are hereby requested to invest the sum of £ , part thereof,
in the purchase of Bank £3 per cent, annuities [or, Reduced <£3 per cent, an-
nuities, or, New £3 per cent, annuities, or, New £2 10s. percent, annuities]
in the name of R. P. H., of &c, the official liquidator of the said com-
pany [or, in the purchase of Exchequer bills, and to deposit such Exchequer
bills in the Bank of England, in the name and on behalf of the said
official liquidator]. The said annuities [or, Exchequer bills] are not to
be sold, transferred, or otherwise dealt with, except upon a direction for
that purpose signed by the official liquidator of the said company, and
1078 rules of 1862.
Appendix Vf. countersigned by the chief clerk of the Master of the Rolls [or, Vice-
Z Chancellor ], or under an order to be made by the said judge.
°rmS" Dated this day of , 186 .
I am, gentlemen,
Your most obedient servant,
R. P. H., Official Liquidator.
Countersigned,
G. H., Chief Clerk of the Master of the Rolls
[or, Vice-Chancellor ].
No. 45. Notice or advertisement of meeting of creditors or contributories.
[Rules 45, 46.]
In the matter, &c.
Notice is hereby given that the Master of the Rolls [or; Vice-Chancellor
] has directed a meeting of the creditors [or, contributories]
of the above-named company to be summoned pursuant to the above
statute, for the purpose of ascertaining their wishes as to [state the object for
which meeting called, unless notice is by advertisement, in which case say,
certain matters relating to the winding up of the said company], and that
such meeting wiU be held on day, the day of ,
186 , at o'clock in the noon, at in the county
of , at which time and place all the creditors [or, contributories]
of the said company are requested to attend. [The said judge has
appointed H. T., of &c, to act as chairman of such meeting.]
Dated this day of 186 .
R, P. H., Official Liquidator.
No. 46. Appointment of proxy to vote at meeting of creditors or
contributories. [Rule 46.]
In the matter, &c.
I, W. S., of in the county of , being a creditor [or,
contributory] of the above-named company, hereby appoint of
as my proxy to vote for me, and on my behalf, at the meeting
of the creditors [or, contributories] of the said company, summoned by
direction of the Master of the Rolls [or, Vice-Chancellor ], to be
held on the day of and at any adjoimnnent thereof.
As witness my hand, this day of 186 .
W. S.
Signed by the said W. S.,
in the presence of
J. M., of, &c.
No. 47 . Memorandum of appointment of a person to act as chairman at
meeting of creditors or contributories. [Rule 47.]
In the matter, &c.
The Master of the Rolls [or, Vice-Chancellor ] has appointed
Mr. H. T., of &c, one of the creditors [or, contributories] of the above-
named company, to act as chairman of a meeting of the creditors [oi; con-
tributories] of the said company, summoned by direction of the said judge
RULES OF 1862.
1079
day, the
o'clock in the
, and to report the result of
pursuant to the above statute, to be held on
day of , 186 , at
noon, at , in the county of
such meeting to the said judge.
The said meeting is summoned for the purpose of ascertaining the
wishes of the creditors [or, contributories] of the said company as to
[state the object for ivhich meeting called] ; and at such meeting the votes
of the creditors [or, contributories] may be given either personally or by
proxy.
Dated this day of , 186 .
G. H., Chief Clerk.
Appendix VI.
Forms.
No. 48. Chairman's report of result of meeting of creditors or contributories.
[Rules 45, 46, 47.]
In the matter, &c.
I, H. T., the person appointed by the Master of the Rolls [or, Vice-
Chancellor ] to act as chairman of a meeting of the creditors [or,
contributories] of the above-named company, summoned by advertisement
[or, notice] dated the day of , 186 , and held on the
day of 186 , at in the county of , do
hereby report to the said judge the result of such meeting as follows : —
The said meeting was attended either personally or by proxy, by
creditors to whom debts against the said company have been allowed,
amounting in the whole to the value of £ [or, by con-
tributories, holding in the whole shares in the said company, and
entitled respectively, by the regulations of the company, to the number of
votes hereinafter mentioned].
The question submitted to the meeting was, whether the creditors [or,
contributories] of the said company approved of the proposal of the official
liquidator of the said company, that, &c. [as the case may be], and wished
that such proposal should be adopted and carried into effect.
The said meeting was unanimously of opinion that the said proposal
should [or, should not] be adopted and carried into effect [or, The result of
the voting upon such question was as follows : — ]
The undermentioned creditors [or, contributories] voted in favour of the
said proposal being adopted and carried into effect : —
Name of creditor [or,
contributory].
Address.
Value of debt
[or, number
of shares].
Number of
votes con-
ferred on each
contributory
by the regu-
lations of the
company.
1080
RULES OF 1862.
Appendix VI.
Forms.
The undermentioned creditors [or, contributories] voted against the said
proposal being adopted and carried into effect: —
Name of creditor [or,
contributory].
Address.
Value of debt
[or, number
of shares].
Number of
votes con-
ferred on each
contributory
by the regu-
lations of the
company.
Dated this
day of 186
(Signed)
H. T., Chairman.
No. 49. Memorandum of sanction of judge to accepting bill of exchange.
[Rule 48.]
In the matter, &c.
The Master of the Rolls [or, Vice-Chancellor ] has sanctioned
the acceptance of this bill of exchange by the official liquidator, on behalf
of the said company.
G. H., Chief Clerk.
No. 50. Memorandum of agreement of compromise with a contributwy.
[Rule 49.]
In the matter, &c.
Memorandum of agreement entered into this day of
186 , between R. P. H., of &c, the official liquidator of the above-named
company of the one part, and S. B., of &c, one of the contributories of the
said company, of the other part.
Whereas the said S. B. has been settled on the list of contributories of
the said company as a contributory in respect of shares in the said
company. And whereas by an order made by the Master of the Rolls [or,
Vice-Chancellor ], dated the day of 186 , a
call of £ per share was made on all the contributories of the said
company, and there is now due from the said S. B. to the said company the
sum of £ in respect of the said call. And whereas the said S. B.
has proposed to pay to the said official liquidator the sum of £
by way of compromise, and in satisfaction and discharge of thesaid sum
of £ , and of all liability whatsoever as a contributory of the said
company. And whereas the said official liquidator having investigated
the affairs of the said S. B., and believing that such compromise will be
beneficial to the said company, hath, in exercise of the power for that
purpose given to him by the above statute, agreed to accept the same,
RULES OF 1862.
1081
subject to the sanction of the said judge, and to the conditions and agree-
ments hereinafter contained. Now it is hereby agreed by and between
the said parties hereto :
1st. That the said official liquidator shall, before the day of
next, apply to the said judge at chambers to sanction this agree-
ment of compromise.
2nd. That upon this agreement being sanctioned by the said judge, the
said S. B. shall within days next after such sanction, pay to the
said official liquidator the said sum of £ , and when thereto
required, shall do and execute all such acts and deeds as may be neces-
sary for transferring, or surrendering and releasing, to the said official
liquidator on behalf of the said company, or in such manner as the said
judge may direct, the said shares held by the said S. B. in the said com-
pany, and all claim and demand whatsoever which the said S. B. has,
or may have, against the said company in respect of the said shares,
or the distribution of the assets of the said company, or otherwise how-
soever.
3rd. That the said sum of £ , and the transfer or surrender and
release of the said shares and interest of the said S. B., as aforesaid, shall
be accepted by the said official liquidator as, and be deemed and taken to
give to the said S. B. a full and complete discharge from all calls and liabili-
ties, claims and demands whatsoever, which the said company, or the official
liquidator thereof, now has or may hereafter have, or be entitled to, against
the said S. B., in respect of his being or having been the holder of the said
shares or otherwise, as a contributory of the said company.
4th. That in case this agreement shall not be sanctioned by the said
judge it shall cease and determine, and the said official liquidator and the
said S. B. shall be remitted to their original rights with respect to each
other, as if this agreement had not been entered into.
5th. That in case this agreement shall be sanctioned by the said judge,
and the said S. B. shall not in all respects perform the same on his part,
the official liquidator shall be at liberty, with the sanction of the said
judge, and without notice to the said S. B., to enforce the performance
thereof, or, with the like sanction, to give notice to the said S. B., that he
abandons this agreement, whereupon the same shall cease and determine,
and the said official liquidator shall be entitled to proceed against the
said S. B. to enforce payment of the said sum of £ , or so much
thereof as shall then remain due and unpaid, as if this agreement had not
been entered into.
R. P. H., Official Liquidator.
S. B.
Witness to the signatures j
of the said R. P. H. and S. B., '
C. D., of &c. J
Afpendix VI.
Forms.
No. 51. Memorandum of sanction of judge to agreement of compromise.
[Rule 49.]
In the matter, &c.
The Master of the Rolls [or, Vice- Chancellor
this agreement of compromise.
] has sanctioned
G. H.,
Chief Clerk.
1082
RULES OF 1862.
Appendix VI.
Forms.
No. 52. Order or memorandum of the sanction of the judge for certain acts to
be done by the official liquidator. [Rule 50.]
The Master of the Rolls [or, \
Vice-Chancellor
clay of
In the matter, &c.
186
at chambers. J
The Master of the Rolls [or, Vice-Chancellor ] doth hereby
sanction [or, has sanctioned] the following proceedings being taken [or, acts
being done] by the official liquidator of the above-named company, namely
[state the proceedings to be taken or acts to be done cos,] the bringing [or, insti-
tuting] and prosecuting an action at law [or, suit in equity], in the name
and on behalf of the said company, against [or, defending an action at law
[or, suit in equity] brought [or, instituted] against the said company by]
K. M., of &c, to recover a debt or sivm of <£ alleged to be due
from [or, to] the said K. M. to [or, from] the said company, &c.
G. H.,
Chief Clerk.
No. 53. Appearance book. [Rule 62.]
In the matter, &c.
Appearance book.
Date
when ap-
pearance
entered.
Party's
Name.
Whether
creditor
or con-
tributory.
If he appears If he appears
in person, his by a solicitor,
address for , his solicitor's
service. name.
Solici-
tor's
address.
Amount of
debt [or,
number of
shares].
No. 54. Summons for persons to attend at chambers to be examined.
[25 & 26 Vic. c. 89, s. 115.]
In Chancery.
In the matter, &c.
A. B., &c., and E. F., are hereby severally summoned to attend at the
chambers of the Master of the Rolls [or, Vice-Chancellor ], in the
Rolls Yard, Chancery Lane [or, No. , Lincoln's Inn], in the
county of Middlesex, on day of 186 , at of
the clock in the noon, to be examined on the part of the official
liquidator [or, of W. D., of &c], for the purpose of proceedings directed by
the Master of the Rolls [or, the said Vice-Chancellor] to be taken before
me in the above matter. [And the said A. B. is hereby required to bring
with him and produce, at the time and place aforesaid, a certain inden-
RULES OF 1862. 1083
ture [describe documents] and all other books, papers, deeds, writings, and Appendix VL
other documents in his custody or power in anywise relating to the above- Forms,
named company.]
Dated this day of 186 .
G. H.
Chief Clerk.
This summons was taken out by Messrs. C. & D., of in the
county of , solicitors for the official liquidator [or, for the said
W. D.]
No. 55. Certificate of the company being completely wound up, and of the
official liquidator having passed his final account.
[Rule 66.]
In the matter, &c.
In pursuance of the directions given to me by the Master of the Rolls
[or, Vice-Chancellor ], I hereby certify that R. P. EL, the official
liquidator of the above-named company, has passed his final account as
such official liquidator, and that the balance of £ thereby certified
to be due to [or, from] the said official liquidator has been paid in the
manner directed by the order dated the day of 186 .
And that the affairs of the said company have been completely wound up.
The evidence produced, &c.
Dated this day of 186 .
G. H.,
Chief Clerk.
Approved the )
day of 186 . /
No. 56. Order to dissolve the company. [Rule 66.]
The Master of the Rolls [or, \ , the
Vice-Chancellor ] V day of 186 .
at chambers. I In the matter, &c.
Upon the application of the official liquidator of the above-named com-
pany, and upon reading an order dated the clay of , and
the chief clerk's certificate, dated the day of , whereby it
appears that the affairs of the said company have been completely wound
up, and that the balance of £ , due from [or, to] the official
liquidator has been paid in manner directed by the said order, it is ordered
that the said company be dissolved, as from this day
of 186 , and that the recognizance dated the day of
186 , entered into by the said official liquidator, together with
W. B. and T. P., his sureties, be vacated.
Westbury, C.
John Romilly, M. R.
RlCHD. T. KlNDERSLEY, V.-C.
John Stuart, V.-C.
W. P. Wood, V.-C.
1084 rules of 1868.
Appendix VI.
ORDER AND RULES IN CHANCERY ISSUED PURSUANT TO
"THE COMPANIES ACT, 1867."
ORDER OF COURT.
Saturday, the 21 st day of March, 1868, as amended by order of 2nd
March, 1869 (it).
The ri^ht honorable Hugh MacCalmont Baron Cairns, Lord High Chan-
cellor of Great Britain, with the advice and consent of the right honorable
John Lord Romilly, Master of the Rolls, the honorable the Vice-Chan-
cellor Sir John Stuart, and the honorable the Vice-Chancellor Sir Richard
Malins, doth hereby, in pursuance and execution of the powers given to
him by "The Companies Act, 1867," and of all other powers and
authorities enabling him in that behalf, order and direct in manner
following : —
Petition for winding up (v).
1 . Every petition which shall, after this order comes into operation, be
presented for the winding up of any company by the Court, or subject to
the supervision of the Court, and all notices, affidavits, and other pro-
ceedings under such petition, shaU be intituled in the matter of "The
Companies Acts, 1862 and 1867," and. of the company to which such
petition shall relate.
Petition to reduce capital (x).
2. Every petition for an order confirming a special resolution for
reducing the capital of a company, and all notices, affidavits, and other
proceedings under such petition, shall be intituled in the matter of " The
Companies Act, 1867," and of the company in question.
3. No such petition as mentioned in the 2nd rule of this order shall be
placed in the list of petitions by the secretary of the Lord Chancellor or
of the Master of the Rolls, as the case may be, until after the expiration
of eight clear days from the filing of such certificate as is mentioned in the
1 4th rule of this order.
4. When any such petition as last aforesaid has been presented, appli-
cation may be made, ex parte by summons in chambers, to the judge to
whose Court the petition is attached, for directions as to the proceedings
to be taken for settling the list of creditors entitled to object to the pro-
posed reduction, and the judge may thereupon fix the date with reference
to which the list of such creditors is to be made out, pursuant to the 1 3th
section of the Companies Act, 1867 ; and may, either at the same time or
(u) The order of March, 1868, has (v) Ante. p. 654. Orel, of 1862,
been amended by an order of 2nd March, rule I.
1869. (See W. N. of that date.) The (x) See act of 1867, § 11 et seq., ante,
amendments affect rules 8 and 14, which pp. 402 et seq. See, also, the act of
Are here printed as amended. 1877, ante, p. 1028.
rules of 1868. 1085
afterwards, as he shall think fit, give such directions as are mentioned in Appendix VL
the 5th and 6th rules of this order. The order upon such summons may
be in the form No. 1 in the schedule hereto, with such variations as the
circumstances of the case may require.
5. Notice of the presentation of the petition shall be published at such
times, and in such newspapers as the judge shall direct, so that the first
insertion of such notice be made not less than one calendar month before
the day of the date fixed as mentioned in the 4th rule of this order.
Such notice may be in the form No. 2 in the schedule hereto, with such
variations as the circumstances of the case may require.
6. The company shall, within such time as the judge shall direct, file
in the office of the clerks of records and writs (y), an affidavit made by some
officer or officers of the company competent to make the same, verifying a
list containing the names and addresses of the creditors of the company at
the date fixed as mentioned in the 4th rule of this order, and the amounts
due to them respectively, and leave the said list and an office copy of such
affidavit, at the chambers of the judge.
7. The person making such affidavit shall state therein his belief that
such list is correct, and that there was not at the date so fixed as aforesaid
any debt or claim, which, if that date were the commencement of the
winding up of the company, would be admissible in proof against the
company, except the debts set forth in such list, and shall state his means
of knowledge of the matters deposed to in such affidavit. Such affidavit
may be in the form No. 3 in the schedule hereto, with such variations as
the circumstances of the case may require.
8. Copies of such list containing the names and addresses of the
creditors and the total amount due to them, but omitting the amounts due
to them respectively, or (as the judge shall think fit) complete copies of such
list shall be kept at the registered office of the company, and at the offices
of their solicitors and London agents (if any), and any person desirous of
inspecting the same may at any time, during the ordinary hours of
business, inspect and take extracts from the same on payment of the
sum of one shilling (z).
9. The company shall, within seven days after the filing of such
affidavit, or such further time as the judge may allow, send to each
creditor whose name is entered in the said list, a notice stating the amount
of the proposed reduction of capital, and the amount of the debt for which
such creditor is entered in the said list, and the time (such time to be
fixed by the judge) within which, if he claims to be a creditor for a larger
amount, he must send in his name and address, and the particulars of his
debt or claim, and the name and address of his solicitor (if any) to the
solicitor of the company ; and such notice shall be sent through the post
in a prepaid letter addressed to each creditor at his last known address or
place of abode, and may be in the form or to the effect of the form No. 4,
set forth in the schedule hereto, with such variations as the circumstances
of the case may require.
10. Notice of the list of creditors shall, after the filing of the affidavit
mentioned in the 6th of these rules, be published at such times, and in
such newspapers, as the judge shall direct. Every such notice shall state
the amount of the proposed reduction of capital, and the places where the
aforesaid list of creditors may be inspected, and the time within which
(y) Now the Central Office, see 42 & (z) Ante, p. 1084, note (u).
43 Vict. c. 78.
1086 rules op 1868.
Appendix VI. creditors of the company who are not entered on the said list, and are
desirous of being entered therein, must send in their names and addresses,
and the particulars of their debts or claims, and the names and addresses
of their solicitors (if any) to the solicitor of the company ; and such notice
may be in the form No. 5, set forth in the said schedide hereto, with such
variations as the circumstances of the case may require.
11. The company shall, within such time as the judge shall direct, file
in the office of the clerks of records and writs (zz) an affidavit made by the
person to whom the particulars of debts or claims are by such notices as
are mentioned in the 9th and 10th rules of this order, required to be sent
in, stating the result of such notices respectively, and verifying a list con-
taining the names and addresses of the persons (if any), who shall have
sent in the particulars of their debts or claims in pursuance of such notices
respectively, and the amounts of such debts or claims, and some competent
officer or officers of the company shall join in such affidavit, and shall in
such list distinguish which (if any) of such debts and claims are wholly, or
as to any and what part thereof, admitted by the company, and which (if
any) of such debts and claims are wholly, or as to any and what part
thereof, disputed by the company. Such affidavit may be in the form
No. 6 in the schedule hereto, with such variations as the circumstances of
the case may require ; and such list, and an office copy of such affidavit,
shall, within such time as the judge shall direct, be left at the chambers
of the judge.
12. If any debt or claim, the particulars of which are so sent in, shall
not be admitted by the company at its full amount, then, and in every
such case, unless the company are willing to set apart and appropriate in
such manner as the judge shall direct the full amount of such debt or
claim, the company shall, if the judge think fit so to direct, send to the
creditor a notice that he is required to come in and prove such debt or
claim, or such part thereof as is not admitted by the conqoany, by a clay
to be therein named, being not less than four clear days after such notice,
and being the time appointed by the judge for adjudicating upon such
debts and claims, and such notice shall be sent in the manner mentioned
in the 9 th rule of this order, and may be in the form No. 7, in the
schedule hereto, with such variations as the circumstances of the case may
require.
13. Such creditors as come in to prove their debts or claims in pursu-
ance of any such notice as is mentioned in the 12th of these rules, shall
be allowed their costs of proof against the company, and be answerable for
costs, in the same manner as in the case of persons coming in to prove
debts under a decree in a cause.
14. The result of the settlement of the list of creditors shall be stated
in a certificate by the chief clerk, and such certificate shall state what
debts or claims (if any) have been disallowed, and shall distinguish the
debts or claims the full amount of which the company are willing to set
apart and appropriate, and the debts or claims (if any) the amount of
which has been fixed by inquiry and adjudication in manner provided by
section 14 of the said act, and the debts or claims (if any) the full amount
of which is not admitted by the company, nor such as the company are
willing to set apart and appropriate, and the amount of which has not
been fixed by inquiry and adjudication as last aforesaid ; and shall show
which of the creditors have consented in writing to the proposed reduction,
and the total amount of the debts due to them, and the total amount of
(zz) Now the Central Office, see ante, p. 1085, note (y).
eules of 1868. 1087
the debts or claims the payment of which has been secured in manner pro- Appendix VI.
vided by the said 14th section, and the persons to or by whom the same
are due or claimed ; but it shall not be necessary to show in such certi-
ficate the several amounts of the debts or claims of any persons who have
consented in writing to the proposed reduction or the payment of whose
debts or claims has been secured as aforesaid (a).
15. After the expiration of eight clear days from the filing of such last
mentioned certificate, the petition may be placed in the list of petitions
upon a note from the chief clerk to the secretary of the Lord Chancellor
or of the Master of the Rolls, as the case may be, stating that the certifi-
cate has been filed and become binding.
16. Before the hearing of the petition, notices stating the day on which
the same is appointed to be heard shall be published at such times and in
such newspapers as the judge shall direct. Such notices may be in the
form No. 8, in the schedule hereto, with such variations as the circum-
stances of the case may require.
17. Any creditor settled on the said list whose debt or claim has not,
before the hearing of the petition, been discharged or determined, or been
secured in manner provided by the 14th section of the said act, and who
has not, before the hearing, signed a consent to the proposed reduction of
capital, may, if he think fit, upon giving two clear days' notice to the
solicitor of the company of his intention so to do, appear at the hearing of
the petition and oppose the application.
18. Where a creditor who appears at the hearing under the last pre-
ceding ride, is a creditor the full amount of whose debt or claim is not
admitted lay the company, and the validity of such debt or claim has not
been inquired into and adjudicated upon under section 14 of the said act,
the costs of and occasioned by his appearance shall be dealt with as to the
Court shall seem just, but in all other cases a creditor appearing under the
last preceding rule shall be entitled to the costs of such appearance, unless
the Court shall be of opinion that in the circiunstances of the particular
case his costs ought not to be allowed.
1 9. When the petition comes on to be heard, the Court may, if it shall
so think fit, give such directions as may seem proper with reference to the
securing in manner mentioned in section 14 of the said act the payment of
the debts or claims of any creditors who do not consent to the proposed
reduction ; and the further hearing of the petition may, if the Court shall
think fit, be adjourned for the purpose of allowing any steps to be taken
with reference to the securing in manner aforesaid the payment of such
debts or claims.
20. Where the Court makes an order confirming a reduction, such order
shall give directions in what manner, and in what newspapers, and at
what times, notice of the registration of the order and of such minute as
mentioned in the 15th section of " The Companies Act, 1867," is to be
published ; and shall fix the date until which the words " and reduced "
are to be deemed part of the name of the company as mentioned in the
10th section of the same act.
Fees.
21. Solicitors shall be entitled to charge and be allowed for duties per-
formed under "The Companies Act, 1867," the same fees as they shall
(a) See ante, p. 1084, note (u).
1038 rules of 1868.
Appendix VI. for the time being be entitled to charge and be allowed for the like duties
performed under " The Companies Act, 1862," unless the Court or judge
shall otherwise specially direct.
22. The same fees of Court shall be paid in relation to proceedings in
Chancery under " The, Companies Act, 1867," as shall for the time being be
payable in relation to like proceedings in Chancery under " The Companies
Act, 1862," and shall be collected by stamps in manner provided by the
general orders of the Court.
General directions.
23. The general orders and practice of the Court, including the course of
proceeding and practice in the judges' chambers, shall, in cases not provided
for by "The Companies Act, 1867," or these rules, so far as such orders
and practice are applicable and not inconsistent with the said act or with
these rules, apply to all proceedings in the Court of Chancery under the
said act.
24. The power of the Court and of the judge sitting in chambers to
enlarge or abridge the time for doing any act or taking any proceeding, to
adjourn or review any proceeding, and to give any direction as to the
course of proceeding, shall be the same in proceedings under " The Com-
panies Act, 1867," as in proceedings under the ordinary jurisdiction of the
Court (aa).
Commencement of order.
25. This order shall take effect and come into operation on the 15th day
of April, 1868, and shall apply to all proceedings in Chancery under the
said act, whether commenced before or after that day, but every proceeding
taken under the said act before that day shall have the same validity as it
would have had if this order had not been made.
Interpretation.
26. The general interpretation clause of the consolidated general orders
shall be deemed to extend and apply to the rules of this order, and this
order shall be deemed a general order of this Court.
Cairns, C.
Romilly, M.R.
John Stuart, V.C.
Richard Malins, V.C.
(aa) See now R. S. C, Order LXIV., p. 7.
rules of 1868. 1089
Appendix VI.
Forms.
THE SCHEDULE.
No. 1. Form of order. [Rule 4.]
/ In the matter of The
The Master of the Rolls [or J Company, Limited and
Vice-Chancellor] Sir at "j Reduced ; and in the matter of "The
Chambers. ( Companies Act, 1867."
Upon the application of the petitioners by summons, dated
and upon hearing the solicitor for the petitioners, and on reading the
petition on the day of , preferred unto the Right
Honourable the Lord High Chancellor of Great Britain [or Master of the
Rolls], it is ordered that an inquiry be made what are the debts, claims,
and liabilities of or affecting the said company on the day of
,186 , and that notice of the presentation of the said petition
be inserted in [the newspapers] on the day of and
[other times of insertion], and that a list of the persons who are creditors
of the company on the said day of , and an office copy
of the affidavit verifying the same, be left at the chambers of the judge on
or before the day of
No. 2. [See Ride 5.]
In the matter of The Company,
Limited and Reduced ; and in the matter of " The
Companies Act, 1867."
Notice is hereby given, that a petition for confirming a resolution
reducing the capital of the above company from £ to £
was on the day presented to [the Lord Chancellor, or
Master of the Rolls], and is now pending ; and that the list of creditors of
the company is to be made out as for the day of , 186
C. and D. of [Agents for A. and B., of ].
Solicitors to the company.
No. 3. Affidavit verifying list of Creditors. [Rule 7.]
In Chancery.
In the matter of The Company,
Limited and Reduced ; and in the matter of " The
Companies Act, 1867."
I, A. B., of, &c, make oath and say as follows : —
1. The paper writing now produced ami shown to me, and marked with
the letter A., contains a list of the creditors of and persons having claims
upon the said company on the day of ,186 (the date
fixed by the order in tins matter, dated ), together with then-
respective addresses, and the nature and amount of their respective debt.,
or claims, and such list is, to the best of my knowledge, information, and
L.C. 4 A
1090
RULES OF 1868.
Appendix VI.
Forms.
belief, a true and accurate list of such creditors and persons having claims
on the day aforesaid.
2. To the best of my knowledge and belief there "was not, at the date
aforesaid, any debt or claim which, if such date were the commencement of
the winding up of the said company, would be admissible in proof against
the said company other than and except the debts set forth in the said
list. I am enabled to make this statement from facts within my knowledge
as the of the said company, and from information derived upon
investigation of the affairs and the books, documents, and papers of the said
company.
Sworn, &c.
List of Creditors referred to in the last Form.
In the matter, &c.
This list of creditors marked A. was produced and shown to A. B., and
is the same list of creditors as is referred to in his affidavit sworn before me
this day of , 186 .
X. Y., &c.
Names, Addresses, and
Description
of the Creditors.
Nature of Debt or Claim.
Amount of Debt
or Claim.
No. 4. [See Ride 9.]
In the matter of The Company,
Limited and Reduced ; and in the matter of " The
Companies Act, 1867."
To Mr.
You are requested to take notice that a petition has been presented
to the Court of Chancery to confirm a special resolution of the above com-
pany, for reducing its capital to £ , and that in the list of persons
admitted by the company, to have been on the day of , creditors
of the company, your name is entered as a creditor [here state the amount
of the debt or nature of the claim],
If you claim to have been on the last-mentioned day a creditor to a
larger amount than is stated above, you must, on or before the
day of , send in the particulars of your claim, and the name and
address of your solicitor (if any), to the undersigned, at . In
default of your so doing, the above entry in the list of creditors will in
RULES OF 1868.
101)1
all the proceedings under the above application to reduce the capital of the Appendix VI.
company be treated as correct. Forms.
Dated this day of , 18
A. B.,
Solicitor for the said company.
No. 5. [See Rule 10.]
In the matter of the Company ,
Limited and Reduced ; and in the matter of " The
Companies Act, 1867."
Notice is hereby given, that a petition has been presented to the Court
of Chancery for confirming a resolution of the above company, for reducing
its capital from £ to £ .A list of the persons admitted
to have been creditors of the company on the day of ,
186 , may be inspected at the offices of the company at
, or at the office of , at any time during usual business
hours, on payment of the charge of one shilling.
Any person who claims to have been on the last-mentioned day and still
to be a creditor of the company, and who is not entered on the said list
and claims to be so entered, must on or before the day of
send in his name and address, and the particulars of his claim, and the
name and address of his solicitor (if any), to the undersigned, at ,
or in default thereof he will be precluded from objecting to the proposed
reduction of capital.
Dated this day of , 18 .
A. B.,
Solicitor for the said company.
No. 6. [Ride 11.]
In Chancery.
In the matter of The Company,
Limited and Reduced ; and in the matter of " The
Companies Act, 1867."
We, C. D., of, &c. [the secretary of the said company], E. F., of, &c.
[the solicitor of the said company], and A. B., of, &c. [the managing
director of the said company], severally make oath and say as follows : —
I, the said C. D. for myself, say as follows : —
1. I did, on the day of , 186 , in the manner here-
inafter mentioned, serve a true copy of the notice now produced and
shown to me, and marked B., upon each of the respective persons whose
names, addresses, and descriptions appear in the first column of the list of
creditors marked A., referred to in the affidavit of , filed on the
day of , 186 .
2. I served the said respective copies of the said notice by putting such
copies respectively duly addressed to such persons respectively, according
to their respective names and addresses appearing in the said list (being
the last known addresses or places of abode of such persons respectively),
and with the proper postage stamps affixed thereto as prepaid letters, into
4 a 2
[Rule 9.]
1092
RULES OF 1868.
Forms.
If notice issued
under rule 10.
[Rule 11.]
If notice issued
under rule 10.
Appendix VI. the post-office receiving house, No. , in Street, in the county
~~ of , between the hours of and of the clock in
the noon of the said clay of
And I, the said E. F., for myself, say as follows : —
3. A true copy of the notice now produced and shown to me, and
marked C, has appeared in the of the day of ,
186 , the of the day of , 186 , &c.
4. I have, in the paper writing now produced and shown to me, and
marked D., set forth a list of all claims, the particulars of which have been
sent hi to me pursuant to the said Notice B. now produced and shown to
me by persons claiming to be creditors of the said company for larger
amounts than are stated in the list of creditors marked A., referred to in
the affidavit of , filed on the day of , 186 .
5. I have, in the paper writing now produced and shown to me, marked
E., set forth a list of all claims, the particulars of which have been sent in
to me pursuant to the notice referred to in the third paragraph of this
affidavit by persons claiming to be creditors of the said company on the
day of , 186 , not appearing on the said list of creditors,
marked A., and who claimed to be entered thereon.
And we, C D. and A. B., for ourselves, say as follows : —
6. We have in the first part of the said paper writing, marked D. (now
produced and shown to us), and also in the first part of the said paper
writing, marked E. (also produced and shown to us), respectively set forth
such of the said debts and claims as are admitted by the said company to
be due wholly or in part, and how much is admitted to be due in respect
of such of the same debts and claims respectively as are not wholly
admitted.
7. We have, in the second part of each of the said paper writings,
marked D. and E., set forth such of the said debts and claims as are wholly
disputed by the said company.
8. In the said Exhibits D. and E. are distinguished such of the debts,
the full amounts whereof are proposed to be set apart and appropriated in
such manner as the judge shall direct.
Sworn, &c.
[Rule 11.]
[Rule 11.]
Exhibit D., referred to in the last-mentioned affidavit.
D.
In the matter, &c.
List of debts and claims of which the particulars have been sent in to
by persons claiming to be creditors of the said company for
larger amounts than are stated in the list of creditors made out by the
company.
This paper writing, marked D., was produced and shown to
C. D., E. F., and A. B., respectively, and is the same as
is referred to in their affidavit sworn before me this
day of , 186 .
x. y., &c.
RULES OF 1868.
1093
First Part.
Debts and claims wholly or partly admitted by the company.
Appendix VI.
Forms.
Names,
Addresses, and
Descriptions of
Creditors.
Particulars
of Debt
or Claim.
Amount
claimed.
Amount
admitted by
the Company
to be owing to
Creditor.
Debts proposed
to be set apart and
appropriated in
full although
disputed.
Second Part.
Debts and claims wholly disputed by the company.
Names, Addresses,
and Descriptions
of Claimants.
Particulars of
Claim.
Amount
claimed.
Debts proposed to be
set apart and
appropriated in full
although disputed.
Exhibit E., referred to in the last affidavit.
E.
In the matter, &c.
Lists of debts and claims of which the particulars have been sent in
to Mr. by persons claiming to be creditors of the company, and
to be entered on the list of creditors made out by the company.
This paper writing, marked E., was produced and shown to
C. D., E. F., and A. B., respectively, and is the same
as is referred to in their affidavit, sworn before me,
tbis dav of , 186 .
X. Y., &c.
1094 rules of 1868.
APPMMX VI. FlRgT pART_
[Same as in Exhibit D.]
Second Part.
[Same as in Exhibit D.]
Note. — The names are to be inserted alphabetically.
No. 7. [See Rule 12.]
In the matter of The Company,
Limited and Reduced ; and in the matter of " The
Companies Act, 1867."
To Mr.
You are hereby required to come in and prove the debt claimed by
you against the above company, by filing your affidavit and giving notice
thereof to Mr. , the solicitor of the company, on or before the
day of next ; and you are to attend by your solicitor
at the chambers of [the Master of the Rolls, in the Rolls Yard, Chancery
Lane, or the Vice-Chancellor at No. Lincoln's Inn], in
the county of Middlesex, on the day of , 18 , at
o'clock in the noon, being the time appointed for hearing and adju-
dicating upon the claim, and produce any securities or documents relating
to your claim.
In default of your complying with the above directions you will [be
precluded from objecting to the proposed reduction of the capital of the
company] or [in all proceedings relative to the proposed reduction of the
capital of the company, be treated as a creditor for such amount only as
is set against your name in the list of creditors].
Dated this day of , 18 .
A. B.,
Solicitor for the said company.
No. 8. [See Rule 16.]
In the matter of The Company,
Limited and Reduced ; and in the matter of " The
Companies Act, 1867."
Notice is hereby given that a petition presented to the [Lord Chancellor]
or [the Master of the Rolls], on the day of , for con-
firming a resolution reducing the capital of the above company from
£ to <£ , is directed to be heard before [the Vice-
Chancellor ] or [the Master of the Rolls], on the day
of , 186 .
C. and D. of [Agents for E. and F. of J.
Solicitors for the company.
Cairns, C.
Romilly, M.R.
John Stuart, V.C.
Richard Malins, V.C.
JJFE ASSURANCE COMPANIES ACT, 1870. 1095
No. VII.
THE LIFE ASSURANCE COMPANIES ACTS.
THE LIFE ASSURANCE COMPANIES ACT, 1870.
33 & 34 Vict. c. 61.
An act to amend the lav: relating to Life Assurance Companies.
[9th August, 1870.]
Be it enacted by the Queen's most excellent Majesty, by and with the
advice and consent of the lords spiritual and temporal, and commons, in
this present Parliament assembled, and by the authority of the same, as
follows :
1. This act may be cited as " The Life Assurance ( 'ompanies Act, 1870." Short title.
2. In this act— Interpretation
The term "company ' means any person or persons, corporate or 0f terms.
unincorporate, not being registered under the acts relating to
friendly societies, who issue or are liable under policies of assurance
upon human life within the United Kingdom, or who grant
annuities upon human life within the United Kingdom : (a)
The term " chairman " means the person for the time being presiding
over the court or board of directors of the company :
The term "policy holder" means the person who for the time being
is the legal holder of the policy for securing the life assurance
endowment, annuity, or other contract with the company :
The term "financial year" means each period of twelve months at
the end of which the balance of the accounts of the company is
struck, or if no such balance is struck, then each period of twelve
months ending with the thirty-first clay of December :
The term " Court " means, in the case of a company registered or
having its head office in England, the High Court of Chancery ;
in the case of a company registered or having its head office in
Ireland, the Court of Chancery in Ireland ; in all cases of com-
panies registered or having its head office in Scotland, the Court
of Session, in either division thereof :
The term " registrar " means the registrar of joint stock companies in
England and Scotland, and the assistant-registrar of joint stock
companies in Ireland.
3. Every company established after the passing of this act within the Deposit.
United Kingdom, and every company established or to be established out
of the United Kingdom which shall after the passing of this act commence
to cany on the business of life assurance within the United Kingdom,
shall be required to deposit the sum of twenty thousand pounds with the
(a) See, as to Industrial Assurance act, 1865, 38 & 39 Vict. c. 60, §§ 4,
Societies under the Friendly Societies 28 & 30.
1096
LIFE ASSURANCE COMPANIES ACT, 1870.
Appendix VII.
Life funds
separate.
Statements to
be made by
companies.
Statements by
company doing
other than life
business.
Actuarial report
and abstract.
Statement of
life and annuity
business.
Accountant General of the Court of Chancery (b), to he invested by him
in one of the securities usually accepted by the Court for the investment
of funds placed from time to time under its administration, the company
electing the particular security and receiving the income therefrom, and
the registrar shall not issue a certificate of incorporation unless such deposit
shall have been made, and the Accountant General shall return such
deposit to the company so soon as its life assurance fund accumulated out
of the premiums shall have amounted to forty thousand pounds (c).
4. In the case of a company established after the passing of this act
transacting other business besides that of life assurance, a separate account
shall be kept of all receipts in respect of the life assurance and annuity
contracts of the company, and the said receipts shall be carried to and form
a separate fund to be called the life assurance fund of the company, and
such fund shall be as absolutely the security of the life policy and annuity
holders as though it belonged to a company carrying on no other business
than that of life assurance, and shall not be liable for any contracts of the
company for which it would not have been liable had the business of the
company been only that of life assurance ; and in respect to all existing
companies, the exemption of the life assurance fund from liability for
other obligations than to its life policy-holders shall have reference only
to the contracts entered into after the passing of this act, unless by the
constitution of the company such exemption already exists : Provided
always, that this section shall not apply to any contracts made by any
existing company by the terms of whose deed of settlement the whole of
the profits of all the business are paid exclusively to the life policy-holders,
and on the face of which contracts the liability of the assured distinctly
appears (d).
5. From and after the passing of this act every company shall, at the
expiration of each financial year of such company, prepare a statement of
its revenue account for such year, and of its balance-sheet at the close of
such year, in the forms respectively contained in the first and second
schedules to this act.
6. Every company which, concurrently with the granting of policies of
assurance or annuities on human life, transacts any other kind of assurance
or other business shall, at the expiration of each such financial year as
aforesaid, prepare statements of its revenue account for such year, and of
its balance sheet at the close of such year, in the forms respectively con-
tained in the third and fourth schedules of this act.
7. Every company shall, once in every five years if established after the
passing of this act, and once every ten years if established before the
passing of this act, or at such shorter intervals as may be prescribed by
the instrument constituting the company, or by its regulations or byelaws,
cause an investigation to be made into its financial condition by an actuary,
and shall cause an abstract of the report of such actuary to be made in the
form prescribed in the fifth schedule to this act.
8. Every company shall [on or before the thirty-first day of December
(6) By 34 & 35 Vict. c. 58, § 1, this
money was to be paid into the Court of
Chancery and to be dealt with in the
same way as other moneys paid into that
Court were dealt with ; but that section
was repealed by the Statute Law Revision
act, 1883 (46 & 47 Vict. c. 39). It will
now be paid into the Chancery Division
of the High Court of Justice : see Dan.
Ch. Practice, 6th ed., p. 2255.
(c) See, also, 35 & 36 Vict. c. 41, § 1,
infra.
(d) See, also, 35 & 36 Vict, c. 41, § 2,
infra.
33 & 34 vict. cap. 61. 1097
one thousand eight hundred and seventy-two, and thereafter] within nine Appendix VII.
months after the date of each such investigation as aforesaid into its
financial condition, prepare a statement of its life assurance and annuity
business in the form contained in the sixth schedule to this act, each of
such statements to he made up as at the date of the last investigation,
[whether such investigation he made previously or subsequently to the
passing of this act :] Provided as follows :
[(1.) If the next financial investigation after the passing of this act
of any company fall during the year one thousand eight hundred
and seventy-three, the said statement of such company shall be
prepared within nine months after the date of such investigation,
instead of on or before the thirty-first day of December one
thousand eight hundred and seventy-two :] (e)
(2.) If such investigation be made annually by any company, such
company may prepare such statement at any time, so that it be
made at least once in every three years.
The expression date of each such investigation in this section shall mean
the date to which the accounts of each company are made up for the
purposes of each such investigation.
9. The Board of Trade, upon the applications of or with the consent of Forms may
a company, may alter the forms contained in the schedules to this act, for be altered,
the purpose of adapting them to the circumstances of such company, or of
better carrying into effect the objects of this act.
10. Every statement or abstract hereinbefore required to be made shall Statements, Ac-
he signed by the chairman and two directors of the company and by the to ^e s'gne(1
principal officer managing the life assurance business, and, if the company anc] j™*^! i
has a managing director, by such managing director, and shall be printed ; 'wjth Board
and the original, so signed as aforesaid, together with three printed copies of Trade,
thereof, shall be deposited at the Board of Trade within nine months of
the dates respectively hereinbefore prescribed as the dates at which the
same are to be prepared. And every annual statement so deposited after
the next investigation (/) shall be accompanied by a printed copy of the
abstract required to be made by section seven.
11. A printed copy of the last deposited statement, abstract, or other Copies of
document by this act required to be printed shall be forwarded by the statements
company, by post or otherwise, on application, to every shareholder and *? be PTf1 to
policy-holder of the company. »
12. Every company which is not registered under " the Companies Act. T • ,, ,-
1862," and which has not incorporated in its deed of settlement section .shareholders,
ten of "the Companies Clauses Consolidation Act, 1845," shall keep a
" Shareholders' address-book," in accordance with the provisions of that
section, and shall furnish, on application, to every shareholder and policy-
holder of the company a copy of such book, on payment of a sum not
exceeding sixpence for every hundred words required to be copied for such
purpose.
13. Every company which is not registered under "the Companies Act, Deed of settle -
1862," shall cause a sufficient number of copies of its deed of settlement m<rnt to 1)C
to be printed, and shall furnish, on application, to every shareholder and Prmted-
policy-holder of the company a copy of such deed of settlement on pay-
ment of a sum not exceeding two shillings and sixpence.
(e) The words in brackets were re- (/) " Next investigation " means the
pealed by the Statute Law Revision act, first investigation after the passing of the
1883, 46. & 47 Vict. c. 39. act of 1872, see § 3 of that act, infra.
1098
LIFE ASSURANCE COMPANIES ACT, 1870.
Appknmx
VII.
Documents
may be trans-
ferred from
Hoard of Trade
to registry of
Joint Stock
Companies.
Documents to
be received
in evidence.
Penalty for
non-compliance
with act.
Penalty for
falsifying
statements. &c.
Penalties
bow to be
recovered
and applied.
Notices under
this act to
policy-holders.
Statements,
&c, to be laid
before Par-
liament.
Exceptions.
[§§ 14 and 15 are printed ante, pp. 898, 899.]
16. The Board of Trade may direct any printed or other documents
required by this act, or certified copies thereof, to he kept by the registrar
of joint stock companies or other officer of the Board of Trade ; and any
person may, on payment of such fees as the Board of Trade may direct,
inspect the same at his office, and procure copies thereof.
17. Every statement, abstract, or other document deposited with the
Board of Trade or with the registrar of joint stock companies under this
act shall be receivable in evidence ; and every document purporting to be
certified by one of the secretaries or assistant secretaries of the Board oi
Trade, or by the said registrar, to be such deposited document, and every
document purporting to be similarly certified to be a copy of such depo-
sited document, shall, if produced out of the custody of the Board of Trade
or of the said registrar, be deemed to be such deposited document as afore-
said, or a copy thereof, and shall be received in evidence as if it were the
original document, unless some variation between it and the original docu-
ment shall be proved.
1 8. Every company which makes default in complying with the re-
quirements of this act shall be liable to a penalty not exceeding fifty
pounds for every day during which the default continues ; and if default
continue for a period of three months after notice of default by the Board
of Trade, which notice shall be published in one or more newspapers as
the Board of Trade may direct, and after such publication the Court may
order the winding up of the company, in accordance with the Companies
Act, 1862, upon the application of one or more policy-holders or share-
holders.
1 9. If any statement, abstract, or other document required by this act
is false in any particular to the knowledge of any person who signs the
same, such person shall be liable on conviction thereof on indictment to
fine and imprisonment, or on summary conviction thereof to a penalty not
exceeding fifty pounds.
20. Every penalty imposed by this act shall be recovered and applied
in the same manner as penalties imposed by the Companies Act, 1862, are
recoverable and applicable (h).
[§§ 21 and 22 are printed ante, p. 634 (i).]
23. Any notice which is by this act required to be sent to any policy-
holder may be addressed and sent to the person to whom notices respecting
such policy are usually sent, and any notice so addressed and sent shall
be deemed and taken to be notice to the holder of such policy.
24. The Board of Trade shall lay annually before Parliament the state-
ments and abstracts of reports deposited with them under this act during
the preceding year.
25. This act shall not affect the Commissioners for the Seduction of tin-
National Debt, nor the postmaster general, acting under the authorities
vested in them respectively by the acts tenth George the Fourth, chapter
twenty-four,* third and fourth William the Fourth, chapter fourteen,
sixteenth and seventeenth Victoria, chapter forty-five, and twenty-seventh
■[Altered from
forty-one, pur-
7',vfr.°58.] " * and twenty-eighth Victoria, chapter forty-three.
(h) See §§ 65 & 66 of that act, ante,
p. 949.
(i) See
s to the contracts to be in-
cluded in a reduction, Great Britain
Mutual Life Ass. Soc, 19 Ch. D. 39,
affirmed 20 Ch. D. 351.
33 & 34 vict. cap. 61.
10W
Appendix VII.
bo
S
•
tc
T?
m
2
•d
'o
03
+3
(1
c;
<u
,£j
-o
a;
o
r—
O
*J
£
*J
0>
*j
43
00
§
,d
a
5
g
O
o
o
—
to
-73
a
^
" — '
03
,4
§
r/j
3
fl
d
1
—
t*H
c3
cu
«2 S
r1 M •r"1
~o
CO
a
o
o
o
Q
W
o
m
•H
CO
P5
l-H
-&4
tf
o cu rt
d
IC
d
-d
rt
rd
,o
J*
^
-d
o
TJ
*4J
s
p5
4-3
d
rS
03
a
to
d
3M
o
O
PI
(—1
§ d
«8 d
tf o
a 9'
££
1100
Appendix VII.
LIFE ASSURANCE COMPANIES ACT, 1870.
P
Q
W
a
o
O
o
w
co
-
<4
V*
p
^
s s
*j
o ^o
0!
.
P
CO
cC t£
s n
CO .
>> .
rr£
Sh
s
i> w>
c
c5
o
t:
,
C
09
OS
<1
<D CO
'S'S
CO CO
,g'o
'%■ °
cc
CO
o
p.
CO
.<B
Vs
o
CO
CC
CO
CO
CO
=
CO
s
p
B
CO
o
O
"3
p
-
3
CO
CO
4J
Pi
CO
CU
tH .
CO
? •
o
5
CO
o
p .
CO
"3
3
CO
s
'o
I)
—
co
CO
o
CO
=
-1-3
3
o
CO • r*
* g
O
. c,
S3
-4-3
• P
^5"
CO
cp
'co
CO
-*-
p
S-l
'o
—
CO
"o
CO >.
P "d -'
o
QQ
CO
p.
—
s
o
CO
>
O
t3
cS co
~
• p
go
o
CO
o
o
DO *"o?
i
ci
P
oa
'3,5.3
™ si
_• g CO
on perso
alances
ing pren
inter
-^ p
•a a
Ph §
o
•f.
43
o
o
CO
p
c3
O
CO >Vi
1o p
- p—
>
■ —
o'S tt
Loans up
Agents' b
Outstand
Do.
CO S
•• a: a
CC
03
O
a:
CC
CO
CO
o
t'
OS
=3
=4*
CO
o
^
^
■
o
o
o
^^
*
•
ka
>a
«
, .
P
ei
CO
CO
c3
CC
S4-1
cpj
W
w-
"o
■^
*
s
3
Ph
CO
CO
CO
CO
c?2
3
Ph
4^
C
o
CO
<J
'3
-w
o
t-3
Ph
p
o
CO
Pi
-4->
>.
c3
£
^3
£C
°Ph
«+H
a
CO
P
c3
o
t3
Ph
CO
"i£
„
3
r^
to
-*3
o
CO
Fh
co
,P
CO
CO
Pi
P
4^
—
CO
s
cH
CC
CQ
9
CO
CO
S3
9
o3
,p
F-4
S3
CO
3
CO
13
4-»
o
s
'5
F4
U
CO
Pi
CO
02
-^
<
o
Eh
O
5
33 & 34 vict. cap. 61.
1101
n
*"d ^
-°T3
6- o
C n-i
a ~
o
w
w
o
p
PS
I— I
tt
in
< o
:|
*s
o
a
a
a
u
-
—
=
W
<!OHO<l
fe
p^
fl
Fh
f ,
fl
O
n
77
l>
05
a
PW o
-2 *
m ^ fl)
~
o 0 o
o
a
be
hed
an
o w «
rt
.-3 cK
3
a
2 P^
O «C S
* o o
>} » '3
o 5 B
5 Qi 9
6 x 3
j a q
c^
•5 ^
e —
^t z &
&4 PT3 00 p-3 ^ a
P, "^ H
1-
05
a
o
o
03
o
_^
HhIO
—
_ o
a ^
£ o r=
tt-4
a
■ —
o
-
o
0
DQ
o
p
aj
=C
o
a
i— i
W
PkO
1102
LIFE ASSURANCE COMPANIES ACT, 1870.
-t"
<^
s
J .3 • •
p .9
3
0>
"s^
^
h .a °.a
o. Ph
o . a
f-'-rS o
5^'
•° ►»
£ o .«
C
o v — >>i3
• en -g g
a 5 an
9 - B S
2 +=
a j'
P
W
o
W
c
•IP*
n h r o> o
rH 0> ^ ^ £h
iS § a
a> u
ftp ^
o 5. a
a
^e^ps
KO * « 9
,-£ «*
p "P.
^
=■*
^
efl
Ph
p a
2 -a « £• S
a ^3
,P <u
CS s
■ rH |_j >H
^ g Ph
^=
►>
J—
O
• rH
,AJ
HJ
O
tj
CP
>>
a
tn
0
<u
to
a
a
«a
CD
'C
>
ED
ew
"
ea
ctf.
c
<t>
a
c£h
a
tn
*
'P.
'CD
p
d
o
02
o
-u
DO
a
tH
d
-t->
at
p
<D
a
o
o
rP
«3
J>>
-
,p
O
o
o
o
3 S
.2 n
«s a
3 -5 «
•— i rt a>
33 & 34 vict. cap. 61. 110H
Appendix VII.
FIFTH SCHEDULE.
Statement respecting the valuation of the liabilities under life
policies and annuities of the , to be made by
the actuary.
(The answers should be numbered to accord with the numbers of
the corresponding questions.)
1. The date up to which the valuation is made.
2. The principles upon which the valuation and distribution of profits
among the policy-holders are made, and whether these principles were
determined by the instrument constituting the company, or by its
regulations or byelaws, or otherwise.
3. The table or tables of mortality used in the valuation.
4. The rate or rates of interest assumed in the calculations.
5. The proportion of the annual premium income, if any, reserved as a
provision for future expenses and profits. (If none, state how this provi-
sion is made.)
6. The consolidated revenue account since the last valuation, or, in case
of a company which has made no valuation, since the commencement of
the business. (This return should be made in the form annexed.)
7. The liabilities of the company under life policies and annuities at
the date of the valuation, showing the number of policies, the amount
assured, and the amount of premiums payable annually under each class
of policies, both with and without participation in profits ; and also the
net liabilities and assets of the company, with the amount of surplus or
deficiency. (These returns should be made in the forms annexed.)
8. The time during which a policy must be in force in order to entitle
it to share in the profits.
9. The results of the valuation, showing —
(1.) The total amount of profit made by the company.
(2.) The amount of profit divided among the policy-holders, and the
number and amount of the policies which participated.
(3.) Specimens of bonuses allotted to policies for 1001. effected at
the respective ages of 20, 30, 40, and 50, and having been
respectively in force for five years, ten years, and upwards, at
intervals cf five years respectively, together with the amounts
apportioned under the various modes in which the bonus might
be received.
1104
Appendix VII.
LIFE ASSURANCE COMPANIES ACT, 1870.
• i-H
CD
c
.3
o
Q
0)
be
a
u
rt
a>
«
W
=
o
03
B
o
*+)
;
^3
s
cp
>>
.Jp
^
c5
~
t4H
^^
89
o
O
7
00
O
P
-
F-
rt
^
o
o
X
O
«:
^j
c
aj
G
V.
O)
o
ri
fe
to
S
o
o
(U
cfi
o
CD
GO
CO
o
EC
•3 S
S3 &
>>
CO
<v
{3
rd
P
(3
13
Ph o
33 & 34 vict. cap. 61.
1105
»
CO
fa
o
d 2
o
PL,
'? - '" ~'
<u 3 o *?
a <s -a
|Z3
« 2.
p.
-5 .2
213.2
ju ^_, g
* <HrO A
fe c w
w o tc
-2 T3 3
H«
tS >>
T
5 c
w
in d
C3 <**
M
° «r
&
*s -*=■
^
o s
S5
2 a
-3
8 -e
o ^
^<1
d °<
5 S
.- o
3 «
2.S
3 £<
2-1
a>-B
.3 5
5W
^-a
o 2
- 2
- m <0
= » B
_ so
a a c
t/5 13
FH
H.C W
II
►5 o
4 B
L.C.
HOG
LIFE ASSURANCE COMPANIES ACT, 1872.
(Form referred to under heading No. 7 in Fifth Schedule.)
as at
Valuation Balance Sheet of
IS
Dr. £
To net liability under Assurance
and Annuity transactions (as
]>er summary statement pro-
vided in Schedule 5) . . .
To surplus, if any
Cr. £
By life assurance and annuity
funds (as per balance sheet
under Schedule 2 or 4) . .
By deficiency, if any .
SIXTH SCHEDULE.
Statement of the life assurance and annuity business of
the on the 18 .
(Th" answers should be numbered to accord with the numbers of the
corresponding cpiestions. Statements of re-assurance corresponding
to the statements in respect of assurances, under headings 2, 3, 4, 5,
and 6, are to be given.)
1. The published table or tables of premiums for assurances for the.
■whole term of life which are in use at the date above mentioned.
2. The total amount assured on lives for the whole term of life, which
are in existence at the date above mentioned, distinguishing the portions
assured with and without profits, stating separately the total reversionary
bonuses and specifying the sums assured for each year of life from the
youngest to the oldest ages.
3. The amount of premiums receivable annually for each year of life,
after deducting the abatements made by the application of bonuses, in
respect of the respective assurances mentioned under heading No. 2,
distinguishing ordinary from extra premiums.
4. The total amount assured under classes of assurance business, other
than for the whole term of life, distinguishing the sums assured under
each class, and stating separately the amount assured with and -without
profits, and the total amount of reversionary bonuses.
5. The amount of premiums receivable annually in respect of each such
special class of assurances mentioned under heading No. 4, distinguishing
ordinary from extra premiums.
6. The total amount of premiums which has been received from the
commencement upon all policies under each special class mentioned under
heading 4 which are in force at the date above mentioned.
7. The total amount of immediate annuities on lives, distinguishing the
amounts for each year of life.
8. The amount of all annuities other than those specified under heading
35 & 36 vict. cap. 41. 1107
No. 7, distinguishing the amount of annuities payable under each class, Appendix VII.
the amount of premiums annually receivable, and the amount of considera-
fcioi] i ni: \ received in respect of each such class, and the total amount
of premiums received from the commencement upon all deferred
annuities.
9. The average rate of interest at which the life assurance fund of the
company was invesl -' al the close of each year during the period since tl
investigation.
10. A table of minimum values, if any, allowed for the surrender of
policies for the whole term of life and for endowments and endowment
assurances, or a statement of the method pursued in calculating such
surrender values, with instances of its application to policies of different
standing and taken out at various interval ages from the youngest to the
oldest.
Separate statements to be furnished for business at other than European
rates, together with a statement of the manner in which policies on
unhealthv lives are dealt with.
THE LIFE ASSURANCE COMPANIES ACT, 1872.
35 & 36 Vict. cap. 41.
An Act to am m ' the Life Assurance Companies Ads, 1870 and 1871.
[6th August, 1872.]
Be it enacted by the Queen's most excellent Majesty, by and with the
advice and consent of the lords spiritual and temporal, and commons, in
this present Parliament assembled, and by the authority of the same, as
follows :
1. Whereas by the provisions of the " Life assurance companies acts, Deposit by
1870 and 1871 " (k), a life assurance company is required to pay a sum company in
of money into the Court of Chancery by way of deposit, and the certifi- chancery,
cate of incorporation of such company is not to be issued unless such
deposit has been made, and such deposit is to be returned to the company
as soon as its life assurance fund amounts to the sum therein mentioned ;
and doubts have arisen as to the construction of the said provisions,
and it is expedient to remove such doubts ; be it therefore enacted as
follows :
The said deposit may be made by the subscribers of the memorandum
of association of the company, or any of them, in the name of the pro-
posed company, and such deposit upon the incorporation of the company
shall be deemed to have been made by and to be part of the assets of the
company.
The said deposit shall, until returned to the company, be deemed to
form part of the life assurance fund of the company, and shall be subjeel
(/<•) The Life Assurance Companies 1870 in the manner mentioned in the
act, 1871, has not been printed. It notes to those sections.
amended §§ 3 and 25 of the act of
4 B 2
1108
LIFE ASSURANCE COMPANIES ACT, 1872.
Appendix VII.
Separation of
life funds.
Deposit of
statement
and abstract
required by
33 & 34 Vict,
c. 61, s. 10.
Rules in First
and Second
Schedules to be
rules of court.
to the provisions of section four of the Life assurance companies act,
1870, accordingly. The Board of Trade may from time to time make,
and when made revoke, alter, or add to, rules with respect to the payment
and repayment of the said deposit, the investment of or dealing with the
same, the deposit of stocks or securities in lieu of money, and the pay-
ment of the interest or dividends from time to time accruing due on any
such investment, stocks, or securities in respect of such deposit. Any
rules made in pursuance of this section shall have effect as if they were
enacted in this act, and shall he laid before Parliament within three weeks
after they are made, if Parliament be then sitting, or if not, within three
weeks after the beginning of the then next session of Parliament.
2. Whereas, by section four of the Life assurance companies act,
1870, it is enacted that, " In the case of a company established after the
passing of this act, transacting other business besides that of life assurance,
a separate account shall be kept of all receipts in respect of the life
assurance and annuity contracts of the company, and the said receipts
shall be carried to and form a separate fund, to be called the life assur-
ance fund of the company, and such fund shall be as absolutely the
security of the life policy and annuity holders as though it belonged to
a company carrying on no other business than that of life assurance, and
shall not be liable for any contracts of the company for which it would
not have been liable had the business of the company been only that of
life assurance ; " and further provisions were made by the same section,
with respect to the application of the above-recited part of the said section
to existing companies, and doubts have arisen with respect to the con-
struction of the said provisions, and it is expedient to remove such doubts ;
be it therefore enacted,
That the portion of section four of the Life assurance companies act, 1870,
above recited shall apply to every company established before the passing
of that act, provided that the Life assurance companies act, 1870, and
this act shall not diminish the liability of the life assurance fund for any
contracts of the company entered into before the passing of the Life
assurance companies act, 1870.
3. Whereas by section ten of the Life assurance companies act, 1870,
it is provided that, " Every annual statement so deposited after the next
investigation shall be accompanied by a printed copy of the abstract
required to be made by section seven," be it therefore enacted that the
words " next investigation " shall be construed to mean the first investiga-
tion after the passing of the said act.
The Board of Trade shall lay before Parliament any statement or
abstract of report which is deposited with them by any company, and
purports to be in pursuance of the Life assurance companies act, 1870,
although the Board are of opinion that it is not such a statement or
abstract as is required to be prepared by that act.
[i. Printed ante, p. 643.]
[5. Printed ante, p. 733.]
6. The rules in the first and second schedules to this act shall be of
the same force as if they were rules made in pursuance of the one
hundred and seventieth, one hundred and seventy-first, and one hundred
and seventy- third sections of the "Companies act, 1872," as the case may
be, and may be altered in manner provided by the said sections, and rules
may be made under the said sections for the purpose of carrying into
effect the provisions of this act with respect to the winding up of
companies.
35 & 3(3 vict. cap. 41. 1109
| 7. Printed ante, p. 260 (I).] Appendix VII.
8. This act shall be construed as one with the Life assurance com- Z ~
panies acts, L 8 70 and 1871 ; and those acts and this act may be cited an(j gj^j tjtje-
together as "The Life assurance companies acts, 1870 to 1872;" and
this act may be cited as " The Lil'e assurance companies act, 1872."
[FIRST SCHEDULE, printed ante, p. 733.]
[SECOND SCHEDULE, printed ante, p. 734.]
Note. — Rules have been issued by the Board of Trade under the fore- Board of Trade
going Life assurance companies acts. The rules are dated the 28th Rules of August,
August, 1872. They relate to obtaining warrants from the Board of Trade 1872.
for the deposit in Court of £20,000 as required by the acts, and to the
payment out (under an order of the Court) of the deposit fund as soon as
it is proved to the satisfaction of the Court that the life assurance fund
accumulated out of premiums paid to the company amounts to £-40,000.
(I) See ante, pp. 258—261.
INDEX NO. I.
INDEX TO THE COMPANIES ACTS, 1862—1886, AND TO THE CLAUSES
OF TABLE A., AND TO THE RULES PROMULGATED UNDER TDK
AUTHORITY OF THE ACTS OF 1862 AND 1867, AND TO THE LIFE
ASSURANCE COMPANIES ACTS, 1870, 1872.
N.B.— In this Index the numl ded by the letter "s." refer to the sections of the
Companies Acts 1862 and 1 ^ > > T ; those preceded by the letter "A." refer to the cl a i ol
Table A. in the first Schedule to the Acts ; and those precedi d by the letter " r." i fei 1 1 the
rules promulgated under the authority of the Acts. The references in ordinary type an to
the Act and rules of 1862 ; those in black type refer to the Act of 1867, and the rules of 1868.
The other Companies Acts are distinguished by the addition of the date ; thi I *' rs "L. A."
refer to the Life Assurance Companii a A its.
ABATEMENT OF ACTIONS.
where company changes name, s. 13, 20
where company registers, s. 195
ABSCONDING,
contributory power to arrest, s. 118
ACCOUNTANT,
auditors may appoint, A. 93
ACCOUNTS
of company, A. 78 — S2
to show amount of accumulated profits returned on reduction of
capital, act of 1880, s. 6
to be kept, A. 78
audit of, A. 83—94
falsifying, s. 166
of banking company, act of 1879, s. 7
inspection of, A. 78
pending winding up, s. 156, and r. 58
production of, to auditors, A. 93, 94
inspectors, s. 58
of official liquidators
passing, r. 11, 19, and 65
what they are to keep, r. 17, 22
with the Bank of England, r. 11, and SG —44
inspection of, s. 156 and r. 58
See, also, Books and Production
ACCUMULATED PROFITS,
return of, in reduction of paid-up capital, act of 1880, s. 3
ACTIONS
for calls, s. 70
against company which has changed its name, s. 13, 20
[N.B.— In tliis lii<!< \ "s.'' n < • scH on, ''A." means Table A., and "r,1 means rule. The
references in black ty] e refer to the Act of 1867, and the rul< sof L868. |
1112 INDEX NO. I. TO ACTS AND RULES.
ACTIONS— continued.
against companies registering, s. 195
staying, in winding up before winding-up order, s. 85, 197, 201
after ditto, s. 87, 198, 202
by limited companies, security for costs may be ordered to be given, s. 69
by assignee of debt in his own name, s. 157
by official liquidators, s. 94, 95, and r. 48 — 50
ADJOURNMENT
of general meetings, A. 38, 41
of proceedings in winding up, r. 7
ADMINISTRATION,
power of liquidators to take out letters of, s. 95
of estates of deceased contributorie-, s. 105, 106
ADMINISTRATOR,
See Executor
ADMISSION,
of documents in winding-up proceeding5, r. 54
ADVERTISEMENT,
of resolution to wind up, s. 132
of meeting to consider liquidator's report, s. 142
of intention to cbange registered office, s. 212
that register will be closed, s. 33
in winding-up proceedings
general rule as to, r. 53
of petition to wind up, r. 2
of order to wind up, r. 6
of appointment of official liquidator, r. S, 9, 14
for creditors to come in, r. 20
of making of calls, r. 33, 34
for meetings of creditors and contributories, r. 45
of petition to reduce capital, r. 5, 16
of list of creditors on reduction of capital, r. 10
forms of. See Forms
See, also, Notice
AFFIDAVITS,
before whom to be sworn, s. 128
perjury in, s. 169
general rule as to, in winding up, r. 55
in proceedings to reduce capital, r. 6, 7, 11
forms of. See Forms
ALLEGED CONTRIBUTORY, s. 74
ALTERATION
of forms and Table A. by Board of Trade, s. 71
of constitution of companies formed under the act, s. 12, 50, and A. 26 —
28, not formed under act, s. 176, 196
of list of contributories, r. 29 —31
of name of company, s. 12, 13, 20, 190
of register of members, s. 35, 98
of registered office, s. 211, 212
amongst members to be returned to registrar, s. 26, 34, 45
of capital. See Capital
AMALGAMATION
of life assurance companies, L. A. 1870, s. 14
effect of on policy holders, L. A. 1872, s. 7
statements to be made on, L. A. 1870, s. 15
[N.B.— In this Index " s." means section, " A." means Table A., an.] "r." means rule. The
references in black type refer to the Act of 1S07, ami the rules of 1S0S.]
INDEX NO. I. TO ACTS AND RULES. 1H3
ANNUAL . DO
list andsummaTy to be sent to registrar, s. 26, 27, 32
meeting of members, 8. 49, and A. 30
meetings to be called by liquidators, s. 139
statement of accounts to be laid before members, A. 79
APPEAL
from orders in winding up, s. 124
time for, s. 124, and r. 5, 6
from arrangemeut with creditors in voluntary winding up, s. 137
from county court, s. 43
APPLICATIONS
to judge, r. 45 — 51
APPOINTMENT
ol auditors, A. 84
of banking company, act of 187-9, s. 7 (1)
of chairman of directors, A. Q'i
of members in general meeting, A. 39, 40
of meetings of creditors, &c, in winding up, s. 91, 14^, and r. 45 ^
of directors, A. 52 54, 58, 59
of inspectors, s. 56, 57, 60
of liquidators
by court, s. 92, 141, 150, 152, aud r. 8—16
by members, s. 133
delegation of, to creditors, s. 135
of solicitor by liquidators, s. 97
irregular, of directors, &c, not to affect validity of their acts, s. 6/, and
A. 71
ARBITRATION,
power to refer to, s. 72
ARRANGEMENTS
with creditors, power of liquidators to make, s. lo9, and act ot 18/0, s. L
with creditors in voluntary winding up, s. 135—137, and act of 1870, s. 2
by liquidators, for sale of company's business, &c, s. 161, 162
ARREST,
power to arrest absconding contributory, s. 118
power to arrest persons refusing to attend to bo examined, s. 115
ARTICLES OF ASSOCIATION,
when necessary, s. 14
table A., when it applies, s. 15
execution of, s. 16
form and effect of, s. 14 — 16
registration of, s. 17
members entitled to copy of, s. 19
power to alter, s. 50
forms of, sched. 2 (of act), forms A. — J).
ASSIGNEE
of debt, action by, in his own name, s. lo7
ASSIGNEES IN BANKRUPTCY,
transfer of shares by, A. 13—16
liability of, to be made contributories, s. 77
ASSOCIATIONS NOT FOR PROFIT, s. 23
ATTENDANCE
in winding-up proceedings, r. 60
for examination, s. 115
TN B In this Index "s." menus section, " A." mems Tablr A., ami " r." means rule. The
references in black type refer to the Act of 1807, and the rules of 1S6S.J
1114 INDEX NO. I. TO ACTS AND RULES.
ATTESTATION
of memorandum of association, s. 11
of articles of association, s. 1 6
AUDIT
of company's accounts, A. 83 — 94
of banking companies account, act of 1879, s. 7
AUDITORS,
appointment, powers, and duties of, A. 83—94
in banking companies, act of 1879, s. 7
BALANCE SHEET
to be laid before general m g, A. 81
copy to be sent to members, A. 82
form of, sched. 1, at the end of table A.
to be prepared by official liquidator on termination of winding up. r. 65
signature of, of banking companies, act of 1879, s. 8
BA.NK OF ENGLAND,
order to pay money into, s. 103, and r. 11, 38
accounts with, s. 104, and r. 36—44
excepted from act of 1879. S i ,2
BANKING COMPANY,
when to be registered under act of 1862, s. 4
notices to be given prior to registration of existing, s. 188
issuing notes, liability in respect of, act of 1879, s. 6
statement to be kept in office of limited, s. 44, and sched. 1 (of act),
form D.
proviso as to repeal of acts relating to, s. 205, and sched. 3, part 2
(of act)
audit of accounts of, a t 79, s. 7
BANKRUPTCY,
winding up in, s. 81
commissioners of, taking evidence before, s. 126
power of liquidators to prove in, s. Pf>
transfer of shares on, A. 13 — 16
liability of assignees to be made contributories, s. 77
BEARER,
share warrants to, s. 27, 36
BENEFIT SOCIETY,
statement to be kept in office of, s. 4 4, and sched. 1 (of act), form D.
BILLS OF EXCHANGE,
of company, form of, s. 47
power of liquidators to accept, &c, s. 95, and r. 48
BOARD OF DIRECTORS,
See Directors
BOARD OF TRADE,
power of, over registration office and fees. s. 17, 174
power of, to appoint inspectors, s. 56, 57
may authorise company to change its name, s. 13
may authorise company to change its registered office, s. 211, 212
may license company to hold land, s. 21
to drop limited, s. 23
may alter forms and table A., s. 71
[N.B. — Tn this Index " s." means section, "A. eans Table A., and " r." moans rule. The
refejences in hi; efer to the Act of 1867, and the rules of 1868.]
INDEX NO. I. TO ACTS AND RULES. 1115
BOOKS AND ACCOUNTS,
falsification of, s. 166
production of, by person examined respecting company, s. 1 Lo
production of, before special examiners, s. 126
of company,
evidence in winding up, s. 154
disposal of, after winding up, s. 1 55
inspection of, by members, A. 78
pending winding ap, s. 156, andr. 58
production of, to auditors, A. 93, 94
of banking company, act of 1S7'.>, s. 7 (5)
to inspectors, s. 58
to be kepi 1 y official liquidators, r. 17
BREACH OF TRUST,
by directors and others, s. 165
BUSINESS OF COMPANY,
power of liquid 11, s. 161,
CALLS ON SHARKS.
arrangements as to, s. 24
payment of in cash, s. 25
generally, A. 4 — 7
(in new shares, A. 28
are specialty debts, s. 16
forfeiture for non-payment of, A. 17
liability to, when shares are forfeited, A. 21, 22
actions for, s. 70
in arrear may be deducted from dividends, A. 7">
if in arrear member not entitled to vote, A. 47
annual summary as to, s. 26
CALLS IN WINDING UP,
power to make, s. 102
mode of making, r. 33 — 35
specialty debts, s. 75
liability to, s. 38
in respect of unpaid-up capital of company limited by guarantee,
s. 90, 134
of directors whose liability is unlimited, s. 5
enforcing order for, s. 120, and r. 34 ; 35, 40
in winding up voluntarily, s. 133 (9)
CANCELLATION OF SHARES,
act of 1877, s. 5
CAPITAL,
to be stated in memorandum, s. 8
annual return of, s. 26
increasing, s. 12, and A. 26 — 8
on unlimited company registering as limited, act of 1879, s. 5
reducing, s. 9—20, and act of 1877, s. 3—5
by return of accumulated profits, act of 1880, s. 3
converting into stock, s. 12
dividing anew, s. 12
subdividing, s. 21
changes in, to be notified to registrar, s. 28, 34
of company limited by guarantee, ..ailing up of, s. 90, 131
of limited company, calling up of, act of 1879, s. 5
CASH,
snares to be paid up in, s. 25
[N b —In this Index " s." weans section, "A." menus Table A., and " r." means rule. The
references in black type refer to the Act of 1867, and the rules of 1808.]
1116 INDEX NO. I. TO ACTS AND RULES.
CASTING VOTE
at general meetings, A. 43
CERTIFICATE
of registration,
of newly formed company, s. 18
of existing company, s. 191, 192
under new name, when there lias been a change, s. 13, 20
right to demand, s. 174 (5)
of title to shares or stock, s. 31, and A. 2, 3
of Board of Trade, authorising change in registered office, s. 211, 212
of chief clerk, r. 56
of list of creditors on reduction of capital, r. 14
duplicate certificates, act of 1877, s. 6
See Forms in Winding up
CHAIRMAN
of directors, A. 67
at general meetings, A. 39, 40
casting vote of. A. 43
of meetings of creditors and contributories, summoned when company is
being wound up, s. 91, 149, and r. 45 — 47
CHAMBERS,
proceedings in, s. 83, and r. 43 — 51
CHANCERY,
See Court
CHANGE
of registered office, s. 211, 212
of company's name, s. 12, 13, 20, 190
of constitution of company formed under the act, s. 12, 50
not formed under the act, s. 176, 196
of forms and table A. by Board of Trade, s. 71
amongst members to be returned to registrar, s. 26, 34, 45
in capital, &c. See Capital
CHARITY,
companies formed for, land to be held by, s. 21
CHOSE IN ACTION,
power of assignee of, to sue in his own name, s. 157
CLAIMS
against company being wound up, proof, &c, of, r. 20 — 28
COLONIAL REGISTERS,
power of companies to keep, act of 1883, s. 3
notice to be given to registrar of office where kept, lb., s. 3 (2)
manner of keeping, and rectification of, ib., s. 3 (3)
copies of entries in, to be transmitted to registered office, ib., s. 3 (4)
discontinuance of, ib., s. 3 (6)
stamp duties on shares registered in, ib., s. 3 (7)
COMMENCEMENT
of winding up by the court, s. S4
voluntarily, s. 130
of act, s. 2, 209
of rules, r. 76
COMMITTEE,
delegation of powers of directors to, A. 68 — 70
[N.B.— In this Index "s." means section, "A." means Table A., and "±\" meaiu rule. The
references in black type refer to the Act of 1S07, and the rules of 1808.]
INDEX NO. I. TO ACTS AND RULES. 1117
COMPANIES ACT, 1862
short title of, s. 1
commencement of, s. 2, 209
repeal of acts by, s. 205
rules issued under authority of, s. 170 et seq.
COMPANIES ARRANGEMENT ACT, p. 1027
See Arrangement, Compromise
COMPANIES SEALS ACT, p. 1015
See Sea.] s
COMPANIES,
banking. See BANKING COMPANY
insurance. See Insurance Company; Life Assurance Companies.
joint-stock, definition of, s. 181
registration and incorporation of
new companies,
when necessary, s. 1
when optional, s. 6
mode of, s. 6 — 18
effect of, s. 18
existing companies,
when necessary, s. 20 9
when optional, s. ISO
when impossible, s. 179
mode of, s. 179—192
effect of, s. 191-196
power to change name on, s. 190
for purpose of being wound up, s. 180
unlimited companies as limited, act of 1879, s. 4
application of act to
companies registered under the previous acts of 1S56 — 58, s. 175 —
178
unregistered companies, s. 199 — 204
registered companies,
limited by shares, s. 8
by guarantee, s. 9
See, also, Limited Companies
unlimited, s. 10
See also, Unlimited Companies
memorandum of association of, s. 6 — 12
articles of, s. 14 — 16
application of table A. to, s. 15
altering constitution of, s. 12, 50. See Constitution
name of, s. 12, 13, 20, 190
management of affairs of. See Directors and Members
members in, s. 23
liability of, s. 38
See, also, Members
not to carry on business with less than seven members, s. 4S
authentication of notices, &c, by, s. 64
dissolution of, s. Ill, 143, and r. 65 —67
winding up of. See Winding up
defunct, striking names of, off register, act of 1880, s. 7
COMPROMISE,
power of liquidators to, s. 159, 160, and see r. 49, and forms 50 and 51
with creditors, act of 1870, s. 2. See, also, Arrangement
CONSTITUTION OF COMPANY,
power to alter,
in the case of companies formed under the act, s. 12, 13, 50
in the case of other companies, s. 176, 196
[N.B. — In this Index "s." means section, " A." means Table A., and " r." means rule. The
references in black type refer to the Act of ISO", and the rules of 1868.]
1118 INDEX NO. I. TO ACTS AND RULES.
CONTRACTS,
by companies, s. 37
dates, kc, to be mentioned in prospectus, s. 38
for issue of paid-up shares, registration of, s. 25
of life assurance companies, reduction of, L. A., 1870, s. 22
CONTRIBUTION,
liability to, s. 38
CONTRIBUTORIES,
1. Who are,
in registered company, s. 74, 196 (5)
alleged contributor}', s. 74
executors and administrators, s. 76
heirs, s. 76
devisees, s. 76
assignees, s. 77
husbands and wives, s. 78
past members, s. 38
m voluntary winding up, s. 133
in unregistered companies, s. 200
settling list of, s. 98, 99, and r. 29—31
2. Liabilities of,
generally, s. 38
in companv limited by guarantee, but whose capital is not paid up, s. 90,
134
3. Miscellaneous provisions concerning,
ma)' petition to wind up, s. 82
may apply for injunction to stay actions, &c, s. 85
may apply to stay winding up proceedings, s. 89
order upon, to deliver up property, s. 100
order upon, to pay money, s. 101
power to examine and arrest, s. 118
staying actions against, where company is being wound up, s. 197, 198,
201, 202
consulting as to winding up, s. 91, 149, and r. 45 — 47
attendance of, in winding up proceedings, r. 60 — 62
power of liquidators to make compromises with, s. 160
rights amongst, to be adjusted, s. 109
claims of, against company, how to be dealt with, s. 38 (7), 101
calls on. See Calls
in voluntary winding up,
power of, to apply to court, s. 138
power of, to make arrangements with creditors, s. 135 — 137, and
act of 1870, s. 2
meetings of, power to summon, s. 139
CONVERSION,
of shares into stock, s. 12, 28, 29, and A. 23—25
COPY,
of balance-sheet to be sent to members, A. 82
of documents at registration office, right to have, s. 174 (5)
of inspectors' reports, members entitled to, s. 59
of petition to wind up right to, r. 5
of register, &c, right to, s. 32
of register of directors to be sent to registrar, s. 46
of special resolution, member entitled to, s. 54
of statement in office, right to have, s. 44
of entries in colonial register to be transmitted to registered office, act of
1883, s. 3 (4)
CORRECTION,
of register, s. 35, 36
on settling list of contributories, s. 93
of list of contributories, r. 29, 30
[N.B. — In this Index " s." means section, !i A." means Table A., and " r." means rule. The
references in black type refer to the Act of 1867, and the rules of 1S6S.]
INDEX NO. I. TO ACTS AND RULES. 1110
< • 3TS
of application to correct register, s. 35
of criminal prosecutions, s. 167, 163
of examination of company's affairs by inspectors, s. 57, 53
security for, in actions by limited company, s. 69
of winding up, s. 110
of parties attending, r. 60
taxation of, r. 72
of voluntary winding up, s. 144
of proving debts in winding up, r. 27
on reduction of capital, r. 13
of appearing on petition to reduce capital, r. 18
COUNTY COURT
examination of witnesses in, s. 126
remitting winding up to, 8. 41—46
COURT,
definition of, s. 81 ,
for winding up where company is registered, s. Sj.
where company is unregistered, s. 199
power of,
to correct register of members, s. 35, 36, 93
to order inspection of register, s. 32
to authorise reduction of capital, s. 11 & 12
power of, in winding up proceedings,
in dealing with winding up petition, s. 86
to settle list of contributories, s. 98
to make calls, s. 102
to appoint liquidators, s. 92, 141, 150, 152
provisionally, s. 85, 92
to remove liquidators, s. 93, 141, 150, 152
to consult creditors, &c, s. 91, 149_
to fix time for proof of debts, s. 107
to stay actions, &c.
before order to wind up, s. 85, 197, 201
after order to wind up, s. 87, 198, 202
to stay proceedings in winding up, s. S9
to summon witnesses, &c. , s. 115
to order them to attend before special commissioners, s. 126
to arrest absconding contributory, s. 118
to order delivery up of company's property, s. 100
to vest company's property in official liquidator, s. 2
to order payment of money by contributory, s. 101
to order directors to pay damages, refund, &c, s. 165
to make rules for winding up, s. 170 — 173
to direct prosecutions, s. 167, 168
powers conferred by act cumulative, s. 119, 204, and see r. 73
enforcing orders of, out of jurisdiction, s. 122, 123
sanction of, how to be obtained, r. 48—51
See, further, Scotland, Stannaries
CREDITORS,
conveyance of company s property, in trust tor, s. lb 4
bow affected by company's registering, s. 195
may petition to wind up, s. 82
may apply for injunction to stay actions, &c, s. 85
attendance of, in winding-up proceedings, r. 60—62
consulting, in winding up, s. 91, 149, and r. 45, 46, and 60—S2
power of liquidators to make arrangements with, s^ 159
arrangements with, on voluntary winding up, s. 135—137
proofof debts by, s. 158, and r. 20—28
fixing time for, s. 107, and r. 20
in Stannary Court, s. 108
rN.B.-In this Index "8." moans section, "A." means Table A., and «r." moans rale. The
, ,f ir slices in black type refer to the Act of 1867, and the rules of ISoS.]
1120 INDEX NO. I. TO ACTS AND RULES.
CREDITORS— continued.
staying actions by, where company is being wound up, s. 85 — 87, 197,
198, 201, 202
compromise with, act of 1870, s. 2, and see Compromise
may apply to stay winding-up proceedings, s. 89
in proceedings to reduce capital,
list of, r. 4, &c.
notice to, r. 17
opposing, s. 13, and r. 19
ignorant of proceedings, s. 17, and r. 19
CRIMINAL PROSECUTION,
of delinquent directors, &c, s. 167,168, and r. 51
CUSTOMER,
of banking company, to have notice of intended registration with limited
liability, s. 188
DAMAGES,
power of court to assess, against directors and others, s. 165
assessment of claim for, on winding up company, s. 158, and r. 25
DATE,
of registration of companies formed under the acts of 1856 — 1S5S, s. 176
of commencement of winding up by court, s. 81
voluntarily, s. 130
of dissolution of company, s. Ill, 113, and r. 66
See, also, COMMENCEMENT
DEATH,
transfer of shares on, s. 24, and A. 12 — 16
stamp duties on, where shares registered in colonial registrv, act of 1883,
3(7 6)
DEBTS,
proof of, in winding up, s. 158, and r. 20—28
fixing time for, s. 107, and r. 20
mode of proof, r. 21 — 24
valuing, r. 25
allowing interest, r. 26
costs of proof, r. 27
owing by members under company's articles are specialty, s. 16
owing to members, payment of, s. 38 (7), 101
test of inability to pay, in case of registered company, s. 80
in case of unregistered company, s. 199 (4)
DECEASED CONTRIBUTORY,
liability of estate of, s, 76
administering estate of, s. 105, 106
transfer of shares of, s. 24, and A. 12 — 16
DECLARATION,
in action by company against member, s. 70
DEEDS,
execution of, by agents abroad, s. 55
DEFINITION,
of company,
life assurance. See Life AssniAKCE Companies
insurance, s. 3
joint stock, s. 1S1
limited by guarantee, s. 9
by shares, s. 8
unregistered, s. 199
[N.B.— In this Index " s." means section, " A. ' means Tahle A., and " r." means rule. The
references in black tj;pe refer to the Act of 1867, and the rules of 1S68.]
INDEX NO. I. TO ACTS AND RULB3. 1121
]) E FIN ITION— eon ! in ucd.
of contributory, s. 74, 196 (5), 200
of court, s. 81
of inability to pay debts, s. 80, 199 (4)
of Joint-stock companies acts, s. 175
of members, s. 23
of ordinary and extraordinary meetings, A. 31
of resolution,
extraordinary, s. 129
special, s. 51
of special business, A. 36
DEFUNCT COMPANIES,
power of registrar to strike names of, off register, act of 1830, s. 7
to replace name on register, act of 1SS0, s. 7 (5)
DELEGATION,
of powers of directors to committees, A. 63 — 70
of appointment of liquidators to creditors, s. 135
DELINQUENT DIRECTORS, &c,
ordering to pay, s. 165
prosecution of, s. 167, 168, and r. 51
DEPOSIT
to be made by life assurance societies, L. A. 1870, s. 3 ; L. A. 1872, s. 1
DEPOSIT SOCIETY,
statement to be kept in office of, s. 44
DEVISEES,
liability of, to be made contributories, s. 76
proceedings against, for call in winding up, &c, s. 105, 106
DIRECTION
of court in winding up, how to be obtained, r. 48 —51
DIRECTORS,
register of, to be kept by certain companies, s. 45, 46
appointment of, A. 52 — 54, 58, 59
prosecution of, s. 167, 16S, and r. 51
removal of, A. 65
remuneration of, A. 54
disqualification of, A. 57
for office of auditor in Banking company act of 1879, s. 7 (2)
rotation of, A. 58 — 65
supplying vacancies amongst, A. 62, 64
meetings and proceedings of, A. 66 — 71
chairman of, A. 67
validity of acts of, s. 67, and A. 71
duty of, as regards accounts, &c, A. 78 — 82
penalties to which they are liable. See Penalties
powers of,
generally, A. 55, 56
delegation of, A. 6S
to make calls, A. 4
to close register, s. 33
to refuse to register transfer, A. 10
to forfeit shares, A. 17
to convert shares into stock, A. 23
to increase capital, A. 26
to summon meetings, A. 32
to fill up vacancies amongst themselves, A. 64
to declare dividends, A. 72
to set apart a reserved fund, A. 74
fN.B.— In this Index "s." means section, " A." means Table A., and "r." means rule. The
references in black type refer to the Art of Jsr»7, and the rules of 1808.]
L.C.
4 c
1122 INDEX NO. I. TO ACTS AND RULES.
DIRECTORS— amtin ued.
powers of — continued.
to appoint the first auditors. A. 84
cessation of, on winding up, s. 133 (5)
unlimited liability of, s. 4 to 8
DISQUALIFICATION
of directors, A. 57
for office of auditor in banking company. See act of 1879, s. 7 (2)
See, also, Appointment
DISSOLUTION
of company wound up voluntarily, s. 143
of company ordered to be wound up by court, s. Ill, and r. 66
DISTRESS
against company being wound up, s. 163
DISTRIBUTION
of surplus assets on winding up, s. 109. and r. 65, 66
DIVIDENDS, A. 72—77
set-off of, against debt due to company by a member, s. 33 (7), ICQ
arrangements as to, s. 24
DOCUMENTS,
to be sent to registrar on registration of existing companies, s. 183—187
proof of, in winding up, r. 54
See Accounts, Books, Inspection, Production
DOMICIL
of registered company, s. 8 — 10
of unregistered company, s. 199 (1)
ENGLAND
enforcing English orders in Scotland or Ireland, s. 122, 123
enforcing Scotch or Irish orders in, s. 122, 123
See Court
EVIDENCE,
to be given by company registering, that act has been complied with, s. 187
affidavits before M'hom to be sworn, s. 128
books of company, &c, evidence in winding up, s. 154
registrar's certificate of registration, s. 18, 192, and act of 1877, s. 6
certificate of shares, &c, s. 31
inspector's report, s. 61
proceedings at meetings, s. 67
of order to be enforced, s. 123
of order for payment of calls, s. 106
register of members, s. 37
signatures, &c, to be judicially noticed, s. 125, 128
special commissioners for taking, s. 126
in winding-up proceedings, r. 40, 54, 55
See Examination
EXAMINATION
of witnesses before special commissioners, s. 126
of witnesses in Scotland, s. 127
of company's affairs by inspectors, s. 56—61
of witnesses by inspectors, s. 58
of contributory, s. 118
of persons, respecting company's affairs, s. 115—117
[N.B.— In this Index "s." means section, "A." means Talile A., and "p." means rale. Ehe
references in black type refer to the Act of 1867. and the rules oi"1868.
INDEX NO. I. TO ACTS AND RULES. 1123
EXECUTION,
against company being wound up, s. Iti3
against members of existing company which has register* d, s. 195
See Staying Actions, &c.
EXECUTORS,
transfer of shares by, s. 24, A. 12— 16
liability of, to be made contributories, s. 76
proceedings against, for calls in winding up, &c, s. 105, 106
KXTRAORDINARY RESOLUTION,
what is, s. 129
FALSIFICATION,
of book-, &c, s. 166
FEES, . _
payable to registrar, see sched. 1 (of act), tables B. and 0.
payable in winding-up proceedings, r. 70, 71
for registration of memorandum or articles of association, s. i7
for inspecting documents at registration office, s. 174 ,">)
for registration, when none payable, s. 1S9
regulation of, by Board of Trade, s. 17, 174
application of, s. 17
in proceedings to reduce capital, r. 21
FEME COVERT,
liability of, to be made contributory, s. 78
FORFEITED SHARES,
disposal of, A. 20, 22
FORFEITURE
of shares, A. 1 7 — 22
of new shares, A. 28
FORGERY
of share warrants, s. 84, 38
FORMATION
of companies under the Act of 1 :»32, s. 0
See Companies
e ati oi J.OC6 una me »uin/uuwa uu^louv
rnual summary to be sent to registrar, ate, sched. 2, form E.
ilance sheet to be laid before meeting, act, sched. 1, end of table A.
FORMS,
1. In the act of 1862 and the schedules thereto
of annu
of bal
of licence to hold lands, act, sched. 2, form F.
of memorandum of association and articles,
1 . For company limited by shares, act, sched. 2, form A.
2. For company limited by guarantee, and not having capita]
divided into shares, act, sched. 2, form B.
3. For company limited by guarantee, and having capital divided
into shares, act, sched. 2, form C.
4. For unlimited company having capital divided into shares, act,
sched. 2, form D.
of proxy paper, A. 51
of statement to be kept in offices of limited banking and other companies,
act, sched. 1, form D.
of transfer of shares, A. 9
power of Board of Trade to alter forms in schedule to act, s. 71
[N B — In this Index " s." means section, " A." means Table A., and "r." means ml.'. The
references in black 1 efer to the Aet of 1867, and the rules of 1808.]
4 c 2
1124 INDEX NO. I. TO ACTS AND RULES.
FORMS — continued,
2. Of winding-up proceedings given in the third schedule to the rules,
advertisements,
of petition to wind up, No. 1
of order to wind up, No. 5
of time and place for appointment of official liquidator, No. 6
of appointment of official liquidator, No. 15
for creditors, No. 16
of intended call, No. 35
of meeting of creditors or contributories, No. 45
affidavits,
verifying petition, No. 2
of sureties of official liquidator, No. 11
of official liquidator as to debts and claims, No. 17
of creditor in proof of debt, No. 21
in support of list of contributories, No. 24
in support of supplemental list, No. 29
of service of notice on contributories of their being on the list,
No. 27
in support of proposal for call, No. 33
in support of application for balance order against contributories,
No. 38
of service of balance order, No. 42
of non-payment of money ordered to be paid, No. 43
appearance book, No. 53
appointment of proxy, No. 46
certificate,
as to debts and claims, No. 22
of settlement of list of contributories, No. 31
of company being completely wound up, No. 55
of payment of money into the Bank of England, No. 41
chairman's report of result of meeting of creditors or contributories,
No. 48
direction to open account at Bank of England, No. 14
list of contributories, No. 25, 29, 30
memorandum,
of appointment of person to act as chairman, No. 47
of compromise, No. 50
of sanction of judge,
generally, No. 52
to compromise, No. 51
to acceptance of bills, &c, No. 49
to appointment of solicitor to official liquidator, No. 12
notices,
to creditors to come in and prove, No. 20
of allowance of debt, No. 19
to attend and be paid, No. 53
to contributories of appointment to settle list, No. 26
to be served with general order for call, No. 37
to be endorsed on or served with order to pay money into the Bank
of England, No. 40
of meeting of creditors or contributories, No. 45
orders,
for winding up, No. 3, 4
appointing official liquidators, No. 8, 9
for payment of money, delivery of books, &c, to the official liqui-
dator, No. 13
on application to vary list of contributories, No. 32
for calls, No. 36
for payment of balance due from contributory, No. 39
to dissolve company, No. 56
proposal to appoint official liquidator, No. 7
recognisance of official liquidator and sureties, No. 10
request to invest cash, No. 44
[N.B.— In this Index "s." means section, " A." means Table A., and "r." means rule. The
references in black type refer to the Act of 1867, and the rules of 1868. J
INDEX NO. I. TO ACTS AND RULES. 1125
FORMS— continued.
sanction of judge. Sec Memorandum, supra
summons,
for intended calls, No. 34
for persons to attend to be examined, No. 5 1
supplemental List of contributories, No. '29, 30
3. Of proceedings for reduction of capital given in the schedule to the
order of 1868
advei tisements,
of presentation of petition, No. 2
nl Lis1 of creditors, No. 5
of hearing of petition, No. 8
See, infra, Notices
affidavits,
verifying list of creditors, No. 3
nl service of notices, debts, &c, under r. 11, No. 6
list of creditors, No. 3, 6
notr
to creditors as to amount of their debts, No. 4
to creditors to come in and prove their debts, No. 7
See above, Advertisements
order,
for inquiry as to debts, &c, No. 1
4. Of annual statements to be made by life assurance companies L. A.
act, 1870, schedules.
FRAUDULENT CONVEYANCE,
of property of company, s. 164, and see s. 153
FUNDS OF COMPANY,
limiting liability to, s. 38 (6)
GENERAL MEETINGS,
See Meetings
GUARANTEE,
companies limited by,
formation of, s. 9
articles of, s. 14
liability of members of,
generally, s. 38
to pay up unpaid capital on winding up, s. 90, 131
See, further, Limited Companies
HEIRS,
liability of, to be made contributories, s. 76
of deceased contributories, proceedings against, s. 105, 106
HUSBAND,
transfer of shares by, A. 13 — 16
liability of, to be made contributory, s. 78
IDENTITY OF NAME,
prohibited, s. 20
ILLEGALITY,
of unregistered company, s. 4, 210
INABILITY TO FAY DEBTS,
test of, in case of registered company, s. 80
unregistered company, s. 199 (4)
INCORPORATION
of companies under act of 1862, s. 18
uf existing companies registering under act, s. 191
[N.B.— In this Index " s." means section, " A." means Table A., and " r." means rale. The
references in black type refer to the Act of 1867, and the rules of L88S. I
1126 INDEX NO. I. TO ACTS AND RULES.
INCORPORATION— continued.
certificate of, s. 18, 191, 192
where name has been changed, s. 13, 20
right to demand, s. 174 (5)
INCREASE OF CAPITAL AND MEMBERS,
power to increase them, s. 12, and A. 26 — 28
notice of increase to he given to registrar, s. 34
on registration of unlimited company os limited, act of 1879, s. 5
INJUNCTION,
to stay actions, &c, after petition to wind up, s. 85, 197, 201
after order to wind up, s. 87, 198, 202
INSPECTION,
of documents at registration office, s. 174 (5)
of company's accounts, A. 78
pending winding up, s. 150, and r. 58
by inspectors, s. 58
of register of members, s. 32
of register of mortgages, s. 43
of statement to he kept in office, s. 44
of documents relating to winding-up proceedings, s. 158, and r. 58
INSPECTORS,
power of Board to appoint, s. 56, 57
power of members to appoint, s. CO
powers of, s. 58, CO
report of, s. 59, CO
to be evidence, s. CI
expenses of, s. 59
INSURANCE COMPANY,
definition of, in act of 18C2, s. 3
registration of, s. 209
.statement to be kept in office of, s. 44
See Life Assurancr Compami:-.
INTEREST.
on debts, proved in winding up, r. 26
on unpaid calls, A. C
dividends not to bear, A. 77
INVESTMENTS,
by official liquidators, r. 43
IRELAND,
enforcing Irish orders in England or Scotland, s. 122, 123
enforcing English or Scotch order,-; in, s. 122, 123
See Cour.T
JOINT HOLDERS OF SHARES,
first on list may give receipts, A. 1
entitled to vote, A. 46
to receive notices, &c, A. 96
JOINT STOCK COMPANY,
definition of, in act, s. 181
JUDGE,
general powers of, s. 83, and r. 73, 74
See Court
JUDICIAL NOTICE,
of signatures, &c, s. 125, 12S
[N.B. -In lliis Index "s." means section, "A. "humus Table A., and "jr." means rule. The
refi renc - i bl ick type refer to the Act of 1867, and the rales of 1 568. j
INDEX NO. I. TO ACTS LND RULES. 1127
JURISDICTION,
enforcing orders out of, s. 122, 12 I
See Court, Okders, Stann w i,. i
[CES OF PEACE,
re overy of penalties before, ... . ,
LAND,
power of companies to hold, s. 18, 21, 191
form of licence to hold, sched, 2 m F.
sale of, in winding up, r. 32
LEAVE TO PROSECUTE ACTION'S, &c,
when necessary, s. 87
how to he obtained, r. 48—51
LIABILITIES,
of existing companies, ai affe ted by registration,
s. 193—195
of members of companies formed an ler the act, -
of members of limited banking . in respect of its notes, act of
1879, s. C
of members of company limited by guarantee to pay up capital, s. 90, 1 34
where business is carried on with le3s than 3even members, s. 48
where the word " limited i night to be, s. 42
of directors, when unlimited, s. 4—8
See, further, Penalty
LIABILITY,
companies with limited or unlln
See Companies, Limited Cow \ i
LICENCE
to hold lands,
power of Board of Trade to grant, s. 21
form of, sched. 2 (of act), form F.
LIEN,
on books, &c., the production oi i !, -. 115
decision of questions as to, in Stannaries, s. 116
LIFE ASSURANCE COMPANIES,
amalgamation of L. A., 1870, s. 14
effect of, on policy holders, L. A., 1872, s. 7
statements to be made on, L. A., 1379, s. 15
deed of settlement of, to be printed, L. A., 1870,. s. 13
definition of, L. A., 1870, s. 2
deposit to be made by, L. A., 187C, s. 0 ; L A., 1872, s. 1
notices to policy-holders how sent, L. A., 1870, s. 23
penalties for non-compliance with act, L. A., 1870, s. 18
for falsifying statements, ib., s. 19
how recovered, ib., s. 20
reduction of contracts of, L. A., 1870, s. 22
shareholders in, list to be kept of, ib., s. 12
statements to be made by, L. A., 1870, s. 5 — 3
copies of, to be given to shareholders, ib., s. 11
evidence of, ib., s. 17
i is of, L. A., 1870, schedules
alteration of, L. A., 1870, s. 9
to be signed and printed and deposited with Board of Trade, ib.,
s. 10, and L. A., 1872, s. 3
to be laid before Parliament, L. A., 1370, s. 24, and L. A., 1872,
s. 3
may be transferred to registry of joint-stock companies, L. A., 1870,
s. 16
[N.B. —In this Index <;.s." means section, "A." means Table A., ami "r " means rule. The
references in black type refer to the Act of 1807, and the rules of 1863.]
1128 INDEX NO. I. TO ACTS AND RULES.
LIFE ASSURANCE COMPANIES— continued.
transacting other business to keep life funds separate, L. A.. 1870 s 4
and L. A., 1872, s. 2
transfer of business of. See Amalgamation
valuation of annuilies and policies of, L. A., 1872, s. 5, and schedule 1
winding up of, L. A., 1S70, s. 21
of subsidiary company, L. A., 1872, s. 4
LIMITED COMPANIES,
formation of, when limited by shares, s. 8
by guarantee, s. 9
power of companies to register as, s. 179, 180
unlimited companies to register as, act of 1879, s. 4
publication and use of name of, s. 41, 42
exception, s. 23
to keep register of mortgages, s". 43
ai ticks of association of, s. 14, 15
liability of members of, generally, s. IS
to pay up capital where company is limited by guarantee, s. 90, 134
security for costs by, s. 69
LIMITED BANKING COMPANY,
liability of members of, with respect to notes, s. 182
notices to be given before registration of, s. 188
statement to be kept in office of, s. 44
form of, sched. 1 (of act), form D.
LIQUIDATORS,
1. Official, in winding up by the court,
appointment of, by court, s. 92, and r. 8 — 16
security to be given by, s. 92, and r. 10
provisional, s. 85, 92, and r. 15, 59
removal of, s. 93
remuneration of, s. 93, and r. 18
description of, s. 94, 203
duty of,
generally, s. 94, and r. 11
to pass accounts, r. ] 9, 69
to keep books of account, r. 17
to investigate claims, r. 22
to make out list of contributories, r. 29, 30
to pay monies, &c, into Bank of England, r. £6, 37
to keep tile of proceedings, r. 58
on termination of winding up, r. 65 — 67
to give registrar notice of order to dissolve, s. 112 113
powers of,
generally, s. 95
where there are more than one, s. 92
to act without the sanction of the court, s. 96
to appoint solicitor, s. 97, and r. 68
to effect compromises, s. 159, 160
of unregistered companies, s. 203—204
order for delivery of property to, s. 100
2. In voluntary winding up,
appointment of, s. 133
by the court, s. 141
delegation of, to creditors, s. 135
effect of irregular appointment, s. 67
removal of, s. 141
filling up vacancies in, s. 140
remuneration of, s. 133 (3)
to give account of their proceedings, s. 142
to convene meeting to consider their account, s. 142
to report meeting to registrar, s. 143
[N'.B.-In this Index " s." means section, " A." means Tatle A., and "r." meai s rule The
references m black tyre refer to the .V t el is.;;, and the rules uf lbk]
INDEX NO. I. TO ACTS AND RULES. lliJD
LIQUIDATORS continued.
2. In voluntary winding-up —continued.
powers of, generally, s. 133, 135
to sell business of company, s. 161, 162
to apply to court, s. 138
to summon meetings, s. I:;1.'
3. In winding up subject to supervision,
appointment of, s. 150, 152, and r. 8 — 17
powers of, s. 151
LIS PENDENS,
registering petition to wind up as a, s. 114
LIST OF CONTRIBUTOR IKS,
settling and varying, s. 98, 99, and r. 29 — 31
in voluntary winding up, s. 133
form of, see the rules, sched. 3, No. 25, 29, 30
LIST OF CREDITORS,
in proceedings to reduce capital, s. 13, r. 4 — 8
LIST OF MEMBERS,
duty to keep, s. 25
to send annually to registrar, s. 26, 27
inspection of, s. 32
See Register
LUNATIC MEMBER,
committee may vote for. A. 45
MANAGEMENT,
of affairs of company. See Directors, Meetings, Members
MANAGER,
See Directors
MARRIAGE,
transfer of shares on, A. 13—16
MARE I ED WOMAN,
liability of, to be made contributory, s. 78
MEETINGS
of con tributaries,
power of liquidators to call, s. 139
of creditors and contributories when company is being wound up,
s. 91, 149, andr. 44—47
to consider report of liquidator, s. 142
of directors, A. 66—71. See Directors
of members,
first general, s. 39
ordinary and extraordinary, A. 31
holding of, A. 29—34
to be held once a year, s. 49
notice of, s. 52, and A. 35, 36
power to call, s. 52, and A. 32—34
quorum, A. 37
adjournment of, A. 38, 41
dissolution of, A. 38
chairman at, A. 39, 40
casting vote of, A. 43
business to be transacted at, A. 35 — 37
accounts to be laid before, A. 79 — 81
auditor's report to be laid before, A. 94
(N.B.— In this index " s." means section, " A." means Table A., and "r."means rule. Tlie
references in black type refer to the Act of 1S07, and the rules of 1868.]
1130 INDEX NO. I. TO ACTS AND RULES.
MEETINGS— continued.
of members — continued.
proceedings at, A. 35—43
minutes of, s. C7
validity of, s. G7
resolutions of, A. 42
extraordinary, s. 129
special,
what is, s. 51
to be notified to registrar, s. 53
member entitled to copy of, s. 54
special business at, A. 36
votes at, s. 52, and A. 44—51
poll, A. 42, 43
proxy, A. 48 — 51
casting, A. 43
powers of members in general meeting,
to alter constitution of company, s. 12,50, A. 20—28
to alter name of company, s. 13
to appoint inspectors, .s. 60
to have company wound up, s. 79, 129
to appoint liquidators, s. 133 (?.), 135
to register existing compi • "9,18 .190
to dispose of forfeited shan
to convert shares into sto:1:. A .:
to appoint directors, A. 59
to fix their remuneration, A. 54
to increase or reduce their inn . A
to remove them, A. 65
to declare dividends, A. 72
to appoint auditors, A. 8 1
MEMBERS,
who are, s. 23
bearer of share warrant may become, 3. 30
annual list of, s. 26, 27
register of, s. 25
correction of, s. 35, 36
on settling list of con I
increase of,
power to increase, s. 12, and A. 26 — 28
notice of increase of, to be given to registra 3 i
reduction of, to seven, s. 48
rights of, to call meetings, .s. 52, and A. 32 — 34
in general meetings. See Meetings
rights of,
to apply to Board of Trade to appoint inspectors, s. 56, 57
to appoint inspectors, s. 60
to have copies of reports of in si e t >rs, s. 59
to inspect and have copies of register, s. 32
to copy of articles and memorandum of association, s, 19
liability of, s. 38. See Liabilitie
purchase of interest of, on sale in winding up, s. 161, 162
service of notice on, A. 95- — 97
MEMORANDUM OF ASSOCIATION, s 6-14
what to be stated in, s. 8 — 10
effect of, s. 11
alteration of, s. 12
as to liability of directors, s. 8
as to reduction of capital, s, 10 — 16
as to subdividing shares, s. 22
execution of, s. 11
registration of, s. 13, 17
I X.B.- In this Index " s." means section, "A." s \.. and "j The
es in black type refer to the Act of 1SG7, ami the rules of 1868.]
INDEX NO. I. TO ACTS AND RULES. 1131
MEMORANDUM OF ASSOCIATION—' United.
member entitled to copy of, s. 19
forms of, sched. 2 (of act), forms A..— D.
MINK,
lien on, decision on questions of, iu Stannary I >urt, ». 115
.MINING COMPANY,
when to be registered und< r ai t of 1862, s. 4
S ' ' VI'M
M i N ! :TES,
of meetings, s. 67
of orders reducing capital, s. 15—18
MORTGAGES,
register of, I '•
M'iRIWAI
[ \ er of companies to hold land, s. 18, 21, 191
of licence to hold land, sched. 2 (of act), foi 0
m n ION,
what applications are to be madi by, i _ r. 18—51
NAME OF COMPANY,
to be stated in memorandum of association, s. 8
changing, s. 12, 13, 20
limited when to be part of, s. 11. 42, s. 23
two companies not to have same name, s. 20
power to change, on registration of existing Les, s. 19)
and reduced, when to be added to, s. 10
of association not for profit, s. 23
\ \ ES OF MEMBERS,
to be in the register, s. 25
and in annual list sent to the registrar, A. 26
correction of, in register, s. 35, 98
NEW SHAKES,
power to issue, s. 12, and A. 26
regulations as to, A. 27, 28
NOTES,
issued 1 y limited banking company, liability in respect of, act of 18
promissory,
form of company's, s. 47
power of liquidator to make, s. 9? (6).
NOTICE,
of call, A. 4
of forfeiture of shares, A. 17 — 19
of meetings, s. 52, and A. 35
service of on company, s. 62
on member, A. 95 — 97
in winding-up proceedings, i. 63, (it
to be given by banking company ini Ling to register with limited
liability, s. 188
to be given to registrar,
of special resolution, f 5 !
of increase of capital, s. 34
of order to dissolve, s. 112
of final winding up, s. 140
: i5.— in this Index "s." means section, ",AJ means Table A., and "r." means rule. The
refer to the Act oi 1867 and les of 1868.]
1132 INDEX NO. I. TO ACTS AND RULES.
NOTICE— continued.
in winding-up proceedings,
of petition, r. 2, 3
of order to wind up, r. 6
of appointment of liquidator, r. 8, 9, 14
to creditors to come in, r. 20, 24
to settle list of contributories, r. 30
of calls, r. 33—35
to person ordered to pay money, r. 39
of meetings of creditors and contributories, r. 45
of proceedings generally, r. 60 — 62
service of, r. 63, 64
in proceedings to reduce capital,
of intention to oppose petition, r. 17
of hearing petition, rr. 5 and 16
to be sent to creditors, rr. 9 and 10
under Life assurance companies act, 1870, h&w sent, L. A., 1870, s. 23
See Advertisements
NUMBER, , ,
greatest legal number of persons in unregistered companies, s. 4
least legal number in registered companies, s. 48
shares to be numbered, s. 22
not necessary where company is not formed under the act, s. lib (-)
OFFICE
of registrar of joint-stock companies, s. 1/4
of company,
to be registered, s. 39, 40
power to cbange, s. 211, 212
register of members to be kept at, s. 32
register of mortgages to be kept at, s. 43
register of directors to be kept at, s. 45
service of notices, &c, on company at, s. 62
statement to be kept in, by certain companies, s. 44
OFFICIAL LIQUIDATORS,
See Liquidators
ORDERS IN WINDING UP,
to wind up, rules as to proceedings under, r. 6, <
appointing official liquidator, r. 11
for call, r. 34
balance order to pay call, r. 35
for payment of money, r. 38
drawing up of, r. 52
to dissolve company, s. Ill, and r. 66
how enforced, s. 120, and r. 40
appeal from, s. 124
made in one country may be enforced out of it, s. 122, 123
See Court, Forms, and Winding yv
ORDERS ON REDUCING CAPITAL— s. 11 & 15—18 and r. 20
PAID UP CAPITAL,
reduction of, by return of accumulated profits, act of 18S0, s. o
PAID-UP SHARES -s. 25
PASSING ACCOUNTS,
of official liquidators, r. 11, 19, 65
[N B -In tins Index "s." means section, " A." means Table A and " r." means rule. The
references in black type refer to the Act of 1807, and the rules of 1868.]
INDEX NO. I. TO ACTS AND RULES. 1133
PAST MEMBERS,
liability of, s. 38
PENALTIES,
recovery of, 8. 65
application, s. 6t>
under Life assurance companies act, L. A., 1870, s. 18 — 20
PENALTY,
for nut registering company, s. 210
for not registering office, s. 39
for carrying on business with less than seven members, s. 48
for not holding meeting within four months after registration of company,
s.39
for falsifying l»ooks, &c., s. 166
for not giving member copy of memorandum of association and articles,
s. 19
for not embodying minute of order reducing capital, s. 18
lor not giving member copy of special resolution, s. ~>l
for not keeping proper register of members, s. 25
for refusing to allow register, &c, to be inspected, s. 32
for not keeping register of mortgages, s. 43
tor not allowing same to be inspected, s. 13
for not keeping register of directors, s. 46
for not keeping statement in office, s. 44
for refusing to be examined by inspectors, s. 58
for not producing books, &c, to inspectors, s. 58, 60
for not using the word " limited," s. 42
for not sending annual list, &c, to registrar, s. 27
for not giving registrar notice of increase of capital or members, s. 34
for not notifying special resolution to registrar, s. 53
for not giving registrar notice of final winding up, s. 143
for not giving registrar notice of order to dissolve, s. 113
on liquidator for not paying 111011(7 into the Bank of England, r. 36
for personating others, s. 35
for engraving plates, &c., s. 36
for concealing name of creditor entitled to object to reduction of capital,
s. 19
TEPJUEY, s. 169
PERSONAL ESTATE,
shares are, s. 22
of deceased contributory, proceeding against, s. 105, 106
PETITION,
what applications in winding up are to be made by, r. 48 — 51
for winding up,
by the court, s. S2, and r. 1—5
who may present, s. 82
as to contributories, s. 40
commences winding up, s. 84
staying actions after, s. 85, 197, 201
subject to supervision of court, s. 148, and r. 1 — 5
registering as a Us pendens, s. 114
beading of, r. 1
advertising, r. 2
service of, r. 3
verification of, r. 4
right to copies of, r. 5
for reduction of capital, s 11 and r. 2, &C.
notice of, r. 5 and 16
hearing of, r. 15
TN B -In this Index "s." means section, " A." means Table A., and "t." means rale The
references in black type refer to the Act of 1867, and the rules of 18(58.]
1134 INDEX NO. I. TO ACTS AND RULES.
POLL,
at general meetings, A. 42, 43
POST,
service of notices, &c, by,
on company, s. 62, 63
on members, A. 95 — 97
in winding-up proceedings, r. 63, 64
POWEES,
of Board of Trade. See Board of Trade
of court. See Court
of directors. See Directors
of liquidators. See Liquidat >r.s
of members. See Meetings and Members
PRACTICE IN WINDING UP,
preservation of old, s. 170—173, and sec r. 74
as to petitions to wind up, r. 1 — 5
orders to wind up, r. 6, 7
the appointment of liquidators, r. 8 — 16
proof of debts, r. 20—28
settling the list of contributories, r. 29 — 31
calls, r. 33—35
sales, r. 32
payments into and out of Bank of England, r. 36—44
consulting creditors and contributories, r. 45—47
mode of applying to judge, r. 48 — 51, 74
drawing up orders, r. 52
advertisements, r. 53
admission of documents, r. 54
affidavits, r. 55
certificate of chief clerk, r. 56
attendance of parties, r. 60. 62
service of summonses, &c, r. 63, G4
PRACTICE IN REDUCING CAPITAL, s. 9, &C, and r. 2, &C.
PRICE,
of share of member who disapproves sale of company s business in winding
up, s. 162
PEOCEEDINGS,
of directors. See Directors
of liquidators. See Liquidators
of members at meetings. See Meetings
right to attend in winding up, r. 60, 62
file of, in winding up, r. 57, 58
PRODUCTION,
of books by persons examined as to affairs of company, s. 115
of books before special examiners, s. 126
to auditors, A. 93, 94
of banking company, act of 1879, s. 7 (5)
to inspectors, s. 58, 60
PROFITS,
division of, A. 72 — 77
setting apart a reserve fund out of, A. 74
return of accumulated by way of reduction of paid-up capital, act of 1880,
s. 3
PROMISSORY NOTES,
of company, form of, s. 47
power of liquidators to make, &c, s. 95, atd r. 4S
|N B —In tl is Index " s." means section, "A." means Talle A., and " c. ' i tans rule. The
references in Hack type refer to the Act of 1807, and the ruTes oi 1868.]
INDEX NO. I. TO ACTS AND RULES. 1135
PROOF,
See Evident e
PROOF OF DEBTS,
in winding up generally, s. 158, and r. 20—23
fixing time for, s. 107, and r. 20
mode of proof, r. 21 — 24
costs of, v. 27
by contributories, s. 38 (7), 101
in Stannaries, s. 108
in proceedings to reduce capital, r. 12, 13
in bankruptcy, by liquidators, s. 95
in suits against estate of d< • as< I ontributory, l>y liquidators, s. 106
PROPERTY,
of absconding contributory, seizure of, s. 118
of deceased contributory, proceedings against, s. 105, 10(3
of company not affected by registration, s. 193
fraudulent conveyance of, s. 104
onveyance of, in trust for creditors, s. 164
in custody of court, s. 92
of unregistered company, power to vest in official liquidator, s. 203
person having, liable to be examined as to, s. 115
summary order for delivery up of, s. 100
distress and execution upon, after commencement of winding up, s. 163
dealings with, after commencement of winding up, s. 153
power of liquidator over, s. 94, 95, 103, 161, 162
sale of, by liquidators, s. 94, 95, 103, and r. 32
sale cii masse, s. 161, 162
PROSECUTION,
of delinquent directors, &c, s. 167, 168, and r. 51
of winding-up order, r. 7
PROSPECTUS,
what to be stated in, s. 38
PROVIDENT SOCIETY,
statement to be kept in orli ■ !. ;;
PROVISIONAL LIQUIDATOR,
power of court to appoint, s. 55, 92 ; also r. 15, 59
power of, s. 96
PROXY,
voting by, at company's meetings, A. 48, 51
form of proxy paper, A. 51
voting by, at meetings summoned in course of winding up, r. 40
PURCHASE,
of forfeited shares, A. 22
of member's interest on sale of business, &c, in winding up, s. 101, 102
QUALIFICATIONS,
of directors, &c, A. 57
defects in, s. 67, and A. 57
QUORUM,
at general meetings, A. 37
of directors, A. 66
RAILWAY COMPANIES,
Arbitration act, 1859, s. 72, 73
[N B -In this Index " b." m< ans section, " A." means Table. A., and "r." means rale. The
references :n blacl? type refer to the A<-t ol I8C7, and the rules of 1808.]
1136 INDEX NO. I. TO ACTS AND RULES.
RECTIFICATION,
of register, s. 35, 36
on settling list of contributories, s. 98
of colonial register, act of 1883, s. 3 (3)
of list of contributories, r. 29—31
REDUCED,
■when to be added to name of Co., s. 10
REDUCTION OF CAPITAL— s. 9-20 and r. 2 et seq. ; and act of 1877,
s. 3—5
by return of accumulated profits, act of 1880, s. 3
REDUCTION OF CONTRACTS,
of Life assurance companies, L. A., 1870, s. 22
REGISTER,
of directors to be kept by certain companies, s. 45, 4<!
of members,
duty of keeping, s. 25
what it must contain, s. 25, 26
where shares are converted into stock, s. 28
where share warrants exist, s. 29 and 31
trusts not to be on, s. 30
correction of, s. 35, 36
on settling contributories, s. 98
evidence, s. 37
inspection of, s. 32
closing, s. 33
of mortgages, to be kept by limited companies, s, 43
colonial. See Colonial Registers
REGISTERED OFFICE,
duty to have, s. 39
power to change, s. 211, 212
notice of change of, to be given to registrar, s. 10
REGISTRAR OF JOINT STOCK COMPANIES, s. 171
may require evidence that act has been complied with, s. 1S7
may strike defunct companies off register, act of 1S80, s. 7
See Registration, Certificate, Fees
REGISTRATION,
of articles of association, s. 14, 17
of memorandum of association, s. 11, 17
of company's office, s. 39, 40
of new name in case of change, s. 13, 20
of mortgages, s. 43
of list of directors, s. 45
of annual returns, s. 26
of changes in capital, s. 28, 34
of special resolution, s. 53
of corrections in the register of members, s. 36
of order reducing capital, s. 15
of winding-up order, s. 88
of order to dissolve, s. 112
of companies formed under new act,
■when necessary, s. 4
certificate of, s. 18
of unlimited company as limited, act of 1879, s. 4
of existing companies,
power to register, s. 179 — 181
with a view to wind up. s. 180
[N.B.— In this Index " s." means section, " A." means Table A., and " r." means rule. The
references in black type refer to the Act of 1S67, and the rules of 186S.]
INDEX NO. I. TO ACTS AND RULES. 1137
REGISTRATION— continued.
of existing companies — continu d.
when compulsory, s, 2 I
Diode of, s. ISi — 187
assents, &c, necessary for, s. 179
notices to be given by banking companies registering with limited
liability, s. 183
:ertificate of, s. 191
when inop ratii , -. 188
effecl of, s. 191—196
for, b. 189
REGISTRATION OFFIl E, ,. 17 1
REGULATIONS OF COMPANY, s. 14— ]>}
registration of, s. 17
power to alter,
members entitl . <>!', s. 19
form it, forms A. — D.
REHEAH1M;
of orders in winding up, s. 124
REMOVAL
"l directors, A. 6.1
of Liquid il i s, s. 93, 1 il
REMUNERATION
of auditors, A. 88, and act of 1879, s. 7 (7)
of directors, A. .1 J
"I' liquidators, s. 93, 133 (3), and r. 18
of registrar and his assistants, &c, s. 174 (7)
REPEALED STATUTES,
See sched. 3 of act
REPEALING SECTIONS, s. 205 -203
REPORT
of auditors, A. Hi, and act of 1879, s. 7 (6)
of directors, A. 79—82
of inspectors, s. f>9 — 61
<>f liquidators in voluntary winding up, s. 142
REPRESENTATION
of classes of creditors and contributories in winding-up proceeding;, r. >;i
RESERVE CAPITAL
of company, how provided, act of 1879, s. 5
RESERVED FUND,
power to form, A. 71
RESIDENCE
of registered company, s. 8 — 10
of unregistered company, s. 199 (1)
RESOLUTIONS,
at general meetings, A. 42
extraordinary, s. 129
special, what is, s. 51
to be notified to registrar, s. 53
to register under act of 1862, s. 179
to wind up, s. 79, 131, 132
of meetings summoned in winding up, r. 45 — 47
See Meetings
|N. B.— In this Index "s." means section, " A." means Table A., and "r."ineans rale The
references in black type refer to the Act of 1S07, and the rules of lSUS.J
L.C. 4 n
1138 INDEX NO. I. TO ACTS AND RULES.
RESTRAINING
proceedings bv creditors of company being wound up, s. 85 — 87, 197, 198,
201, 202
RETIRED MEMBERS,
liability of, s. 38
ROTATION
of directors, A. 58 — 65
RULES,
for winding up, power of courts to make, s. 170 — 173
county court, s. 20
SALARY
of clerk, priority of in winding up, see act of 1883, s. 4
See Remuneration
SALE,
power of liquidators to sell, s. 95
how to be exercised, r. 32
of company's business in winding up, s. 161, 162
SCHEME,
for winding up, s. 159
power to make arrangements with creditors, s. 135 — 137, 159
for disposal of company's business, s. 161, 162
SCOTLAND,
enforcing Scotch orders in England or Ireland, s. 122, 123
enforcing English or Irish orders in, s, 122, 123
examination of witnesses in, s. 127
order for payment of calls, how enforced in, s. 121
winding up of companies registered in Scotland, act of 1886
SEAL OF COMPANY,
of limited company, s. 41, 42
bills and notes need not have, s. 47
deeds executed abroad need not have, s. 55
notices, &c, need not be authenticated by, s. 64
certificate of title to shares, &c, evidence, if under company's seal, s. 31
inspector's report evidence, if under company's seal, s. 61
for use in foreign countries, act of 1864, s. 2
foreign agents may affix, act of 1864, s. 3
effect of, act of 1864, s. 3
SECURITY,
for costs by limited company, s. 69
to be given by liquidators, s. 92, and r. 10 — 13
SERVICE
of summons, notice, &c, on company, s. 62, 63
of notices on members, A. 95 — 97
of petition to wind up, r. 3
of summonses, notices, &c, in winding-up proceedings, r. 63
SET-OFF,
of money due from company to contributory, s. 38 (7), 101
where liability of directors is unlimited, s. 6
SHARES,
when to be numbered, s. 22, 196 (2)
are personal estate, s. 22
number and amount of, when to be stated iu
memorandum of association, s. 8, 14
articles of association, s. 14
ry b —In this Index " s." means section, " A." means Table A., and " i." means ru'e. Tli
references in black type refer to the Act of 1867, and the rules of 1SCS.]
INDEX NO. I. TO ACTS AND RUL1 1139
SHARES continued.
annual summary as to, 8. 20
increasing number of, e. 12, and A. 20 — 28
varying- amounts of, s. 12, and A. 26 — 28
subdivision of, s. 21, 22
conversion of, into stock, -. 12, and A. 23—25
increas ■ consolidation of, to be notified to registrar, s. 28
(■alls on. Se< Cali
i ancellation of unissued, ai I of 1877, s. 5
cash to be paid for, s. 25
certificate of title to, right to demand, A. 2—3
evidence, a. 3 I
Forfeiture of, A. 17— 22
joint holders of
notices to, A. 96
rea ipts by, A. i
votes of, A. 46
new regulations as to, A. 27, 28
transfer of,
generally, s. 22, and A. ^—11
form of, A. 'j
on death, s. 21, and A. 12—16
on bankruptcy or marriage, A. 12 — 16
after commencement of winding up, s. ItVJ
in companies registered under the acts of 1856 -1868, s. 17
votes conferred by, s. 62, ami A. 44
SHAREHOLDERS,
See Members and Contributories
SHARE WARRANTS, s. 27—36
SIGNATURES, &c
to be judicially noticed, s. 125, 123
SOLICITOR,
to liquidators, s. 97, and r. 68
fees of, on petitions to reduce capital, r. 21
SPECIAL BUSINESS, A. 36
SPECIAL RESOLUTION,
what is, s. 51
altering articles by, s. 50
to be notified to registrar, s. 53
member entitled to copy of, s. 54
to change name, s. 13
to reduce capital, s. 9
to subdivide shares, s. 22
as to unlimited liability of directors, s. 8
SPECIALTY DEBTS,
monies due from members under company's articles are, s. 16
un paid-up capital of company limited by guarantee, s. 90
calls in winding up are, s. 75
STAMP,
on articles of association, s. 1 6
on memorandum of association, s. 11
on share warrants, s. 33
on shares registered in colonial registry, act of 1883, s. 3 (7)
rN.B.— In tin's Index "s." means section, '"A." means Table'A., ami "r " means rule Th*
references in black type refer to the Act of 1S67, ami the rules of IS68. |
4 r> 2
1140 INDEX NO. I. TO ACTS AND RULES.
STANNARIES,
registration of companies working mines in, s. 4
enlargement of jurisdiction of, s. 6S
power of court of, to correct register of members, s. 35
to compel inspection of register of mortgages, s. 43
decision of questions of lien in, s. 115
orders of, how enforced, s. 120
appeal from order of, s. 124
winding up in court of, s. 81, 83
power to make rules for winding up, s. 172
proof of debts in, s. 108
STATEMENT,
annual, to be ma le to registrar, s. 2G
to be laid before general Hirelings,
by directors, A. 79—82
by liquidators, s. 142
to be kept in offices of certain companies, s. 44
required to be made by the Life Assurance companies act, L. A., 1870,
ss. 5—8
See, also, Lift. Assurance Companies
STATUTES REPEALED, s. 205, and sched. 3 of act
STAYING,
actions and suits when company is being wound up,
before winding up order, s. 85, 197, 201
after ditto, s. 87, 198, 202
by limited company until security is given for costs, s. 69
winding-up proceedings, s. 89
STOCK,
conversion of shares into, s. 12, 28, 29, and A. 23 — 25
certificate of title to, s. 31
rights of holders of, A. 24, 25
SUBDIVISION OF SHARES, s. 21, 22
SUBSCRIBERS
to memorandum of association,
form company, s. 6
shares to be t iken by, s. 6, 14
the first directors, A. 52, 53
SUMMARY,
annual, to be sent to registrar, s. 26, 27
SUMMARY PROCEEDINGS,
for recover}' of penalties, s. 65
for inspection of' register, s. 32
against contributories,
to examine them, s. 118
to arrest them, if about to abscond, s. 118
to compel them to pay money, s. 101
for enforcing delivery up of company's property, s. 100
SUMMONS.
service of, on company, s. 62
in winding-up proceedings, r. 63
applications to be made by, in winding-up proceedings,
to proceed with winding up, r. 7
to appoint provisional liquidator, r. 15
to make calls, r. 33
other cases, r. 50 — 74
I N.3.— In this Index " 8." means section, "A." means Table A. , and " r. " means rule. The
references in black type refer to the Act of 1807, and the rules of 1S6S.]
INDEX NO. I. TO ACTS AND RULES. 1141
SUPERVISION OF COURT,
winding up, subject to, s. 147 — 152
Sec WINDING! UP
SURPLUS ASSETS,
distribution of, s. 109
TABLE A.,
to what companies it applies, s. 15
power of companies to adopt, s. 1 4
n<>t to apply to companies no1 formed under act, s. 176, 196
power of Board of Trade to alter, s. 71
TABLE B.;
not 3 to companies to which it applies, s. 206
power to alter, s. 176
TAXATION OF COSTS in winding np, r. 72
TT.KMINATION of winding up, r. 65-67
TIME
for appealing, s. 124, and r. 56
for holding meetings, A. 29 — 34
for proving debts in winding np, s. 107
from which winding np dates, s. 84, 130
at which act comes into operation, s. 2, 209
at which companies 1 u 1 und< r Bets i f 1856—58 are to be considered as
registered, s. 176
of dissolution of company, s. Ill, 143
power of court to enlarge, &c, r. 24
TRADE,
See Board of Tb \
TRANSFER BOOKS,
close of, A. 11
TRANSFER OF BUSINESS
of life assurance companies. See Amalgamation
TRANSFER OF SHARES,
generally, s. 22. and A. 8 — 16
form of, A. 9
on death, s. 24, and A. 12—16
on bankruptcy or marriage, A. 12 — 16
after commencement of winding up, s. 153
in companies governed by acts of 1856 — 1858, s. 178
register of, at request of transferor, s. 26
stamp duties on, when registered in colonial registry, act of 1883, s. 3
(7), (a)
TRANSFER OF STOCK, A. 24
TRUST DEEDS
for benefit of company's creditors, void, s. 164
TRUSTS
not to appear on register of members, s. 30
UNLIMITED COMPANIES,
registration of as limited, act of 1879, s. 4
effect of, act of 1879, s. 4
UNREGISTERED COMPANIES,
winding up of, s. 199—204
[N.B.— In this [ndex " s." means section, " A." means Table A., and" r." means rule. The
,, |, ,, .,,, es in i lack type refei to the Act of 1867, and the rules oi L8t58. i
1142 INDEX NO. I. TO ACTS AND RULES.
VACANCIES
amongst directors, A. 62, 64
official liquidators, r. 16
VALIDITY
of proceedings at meetings, s. 67, and A. 71
of irregular acts, s. 67, and A. 71
VALUATION
of claims against company being wound up, s. 158, and r. 25
of annuities and policies of life assurance companies, L. A., 1872, s. 5,
and schedule 1
VESTING ORDER,
power to make, s. 203
VICE-AVARDEN,
See Stannakiks
VOLUNTARY
winding up, s. 132 — 146
See Winding up
VOTES,
how to he given at company's meetings, s. 52, and A. 43—51
chairman's casting vote, A. 43
how to be given at meetings summoned in winding up, r. 45 — 47
WAGES,
priority of in winding up, act of 1SS3, s. 4
WINDING UP,
generally,
of companies formed under the act, s. 74 — 173
of companies registered, but not formed under the act, s. 196 — 198
of unregistered companies, s. 199 — 204
of companies being wound up on 2nd Nov. 1862, s. 2i>7
of companies registered in Scotland, act of 1886
of life assurance companies, L. A., 1S70, s. 21
of companies subsidiary thereto, L. A., 1872, s. 4
registration of company for purpose of being wound up, s. 180
by the court, s. 79 — 128
See Practice and Forms
voluntarily, s. 129 — 146
subject to supervision of court, .-. 147 — 152
books of company,
evidence in, s. 154
disposal of, s. 155
inspection of, s. 156
business of company, power to sell, s. 161, 162
calls in. See Calls
commencement of winding up
by court, s. 84
voluntarily, s. 130
contributories in. See Contributories
costs of, s. 110, 144, and r. 70—72
court for, and its powers. See Court
in County Court, s. 41 and 44
creditors,
compromises with, s. 159, 160, and act, 1S70, s. 2
consulting wishes of, s. 91, 149, and r. 45 — 47
proof of debts by, s. 158, and r. 20—28
time for, s. 107
See, also, Creditors
[N.B.— Inthis Index "s." means section, "A." means Table A., and "r. means rule. The
references in black type refer to the Act of 1S07, and the rules of 1S0S.J
INDEX NO. J. rO \ CT3 AND RULES. 1143
\\ [NDING UP continued.
directors,
ordering proseention of, 3. 167, 168, and r. .".1
llsO, DIRECTORS
dissolution of company after, s. Ill, 143, and r. 65—67
effect <>(',
win iv winding up is voluntary, s. 131
where winding up is subject to supervision of court, s. 1 51
oil dealings with shores in or property of company, s. 153
"ii actions, &c . s. 85—87, 197, 198, 201, 202
mi executions, & .. -. 163
examination of persons concerning affairs of company, s. 115—118
liquidators in. See Liquidators
order for
by tli<- court,
when to be made, s. 79, S6, 199
effect wl, on creditoi -. s. 87, 198, 202
registration of,
sub;'''-! to supervision,
when [n be made, s. 1 17
effect of, s. 151
orders in,
enforcing, s. 120 —123
appeal from, s. 121
Sec Co CRT
petition for. See PETITION
practice in, see 1 . 7 1
temporary preservation of old, s. 17" — 173
power of court to make rules tor, s. 170 — 170
S< e Practice
proceedings in voluntary, adoption of, s. 146, 117
property of company,
delivery up of, s. 100
dealings with, s. 153, 163
sale of, r. 32
resolution for voluntary, s. 129
effect of, s. 131
advertisement of, s. 132
rules for, power of court to make, s. 170—173
scheme for, s. 159
staying actions, &c, pending, s. 85—87, 197, 198, 201, 202
staying proceedings in, s. 89
surplus distribution of, s. 109, and r. 65, SQ
WITNESSES, EXAMINATION OF,
by inspectors, s. 58
in winding up, s. 115 — 118. See Forms
before special commissioners, s. 126
in Scotland, s. 127
WOMAN,
liability of married, to be made contributory, s. 78
[N.B.— In this Index " s." me ins section, " A." moans Table A., ami " r." means rule. The
references in black type refer to the Act of 1S>J7, and the rules of 1S6S.]
GENERAL INDEX.
ABANDONMENT
ol railways, 618, 001 i
ABATEMENT OF ACTIONS See Index No. I.
ABORTIVE COMPANIES,
calls on i to, 32
expenses of forming, 30
recovery bach of deposits b i iers, 29—35, 539
winding up of, 632
who are contributories on the winding-up of, 763
See CONTKIBtTTORIES
ABSENTEES onn OQa
from meetings., how far bound by what takes place at, 311, 6$\)
ACCEPTANCE
of application for shares, 13 et seq., 769 ct seq.
must be by proper authority, 14, 770
must be in a reasonable time, 15, 770
must be before revocation, 13, 770
must he in accordance with the offer, 16, 770
of bills. See Bills OF Ex< HANGE
of shares, 13 ct seq. See Allotment Shares
on conditions, 778 ct seq.
of transfer by company, effect of in winding up, 82 I t * ■/.
want of, 831
ACCORD AND SATISFACTION
not payment in cash, 784
ACCOUNT AND NAME DAY
ou Stock Exchange, 502
ACCO UNT,
actions for
against directors for money improperly applied, 5/1
for contribution between promoters of companies, 606
in illegal companies, 139
in ordinary companies, 594
where company abortive, 594
approved bv majority, 317
audit of, 443
duty to keep, and the right to inspect, 439
under Companies clauses consolidation act, 441
under Companies act, 1S62, 442
under Life assurance co. act, 445
under Stannaries act, 1887, 445
false and fraudulent, 44 6
inspection of
by Board of Trade, 444
in an action, 440
mandamus to permit, 440
under Companies act, 1862, 442
under Companies clauses consolidation act, 441
1146 GENERAL INDEX.
ACCOUNT— continued.
injunction to restrain publication of, 59S
liquidators' accounts, 704
opening settled accounts, 594
statements as to, required from various companies, 144
taken in an action by some on behalf of others bind all, 570
ACQUIESCENCE
as between principal and agent, 377, note (u)
in surrender of shares, 518 et seq.
notice of irregularity implied from company's books, not sufficient, 518,
note (e)
of company, effect on liability of directors for assets lost, 377
of subscriber to a company in change of scheme, 25. See Change of
Scheme
ACT OF PARLIAMENT
company required by statute to pay expenses of, 146, 400, 606
expenses of obtaining, when not payable out of funds of company, 321, 322
See Statute
ACTIONS. See Index No. I.
1. by and against companies
generally, 262, 559
after amalgamation, 264
by Attorney-General, 264, 580
by and against official liquidators, 705 et scq.
public officers, 265, 564. See Public Officers?
of companies governed by 7 Geo. IV.,! c. 46, 265
7 Will. IV. & 1 Vict,
c. 73, 270
by one member alone, 566
by some on behalf of themselves and others, 565 et seq.
instances of, 571
companies empowered to sue and be sued, 265, 564. See Public Officer
other unincorporated companies, 270, 559
being wound up, 263, 669 et seq.
ontrolling majority, 572, 578
minority, 581
foreign companies, 263, 911
fraud and misconduct, 576
general doctrines as to interference between members of companies, 574
et seq.
incorporated companies, 562
on contracts answerable out of funds of company, 246 et scq.
on instruments not under seal, 220 et seq. See Contracts
restraining, against companies being wound up compulsorily, 672
voluntarily, 883
security for costs, 263
2. between companies and their members
generally, 559 et seq.
incorporated companies and their members, 559
unincorporated companies and their members, 559
public officers and shareholders, 561
pursers of cost-book companies and members of company, 559
note (b)
creditors (at instigation of a company) and shareholders, 559, 560
particularly for
calls, 427, 564
evidence on, 428, 440, note (t)
dividends, 437
rectification of register, 63
wrongfully forfeiting shares, 534, note (Ji)
right to use the company's name, 573
GENERAL INDEX.
1147
ACTIONS— continued.
3. miscellaneous
between promoters of companies, 605. See Promoters
costs of, by or against directors, when payable by company; 321
for account, 51»4
contribution, 606
damages for fraud, 88et seq. See Fraud
discovery, 594
expenses of formation of company, 146
injunction, 596 - ' seq.
mandamus, 603 ■ t s< q.
receivers, 602
recovery back of deposits. 29—35, 589, 607
evidence in, 30, note {>/), 34
• rescission for fraud, 74 et seq., 589. See Fraud
specific pesformance, 585 ct seq.
in connection with forged transfers, 483
to enforce indemnity, 588
to restrain calls, 572
payment of dividends, 571, .">7 4
against shareholders I by creditors] sci. fa,, 276, 2S0. See Execution
!>y brokers against their employers, 512
malicious petition to wind up, 614
on sales of shares. See Sale of Sharks
by purchaser against seller, 498
seller against purchaser, 498
in companies being wound up, 672
under Companies act, 1S62, 672
staying in such cases, >\72 et seq.
old acts, 669 et seq.
ADEMPTION
of legacies of shares, 541
ADJOURNED MEETINGS. See Meetings
notice of, 307
power of, 307, 308, 341
poll on question of adjournment, 311, note (</)
ADJUSTMENT
of rights of contributories amongst themselves, 8o2, 8b/ el seq.
ADMINISTRATION
of estate of deceased shareholder by liquidator, i UJ
See Death, Executor
ADMINISTRATOR
of convicts, 38
See Executor
ADMISSION
of membership, 64
not necessarily conclusive, 65, 768
of one promoter, when evidence against another, 145
mistaken, of liability, 145, note (A)
when binding on company, 1S3
ADVANCES
by directors for benefit of comrany, 193, 380 et teq.
See Loans
ADVERTISEMENT
of petition to wind up company, 6o5
of winding up order, 684
of appointment of liquidator, 702.
Sec Notice. And Indkx No. I.
1148 GENERAL INDEX.
AFFIDAVIT
by public officers, form of, 269
verifying petition to wind up, 657
And see Index No. I.
AGENCY,
doctrines of, as applied to
companies in process of formation, 143 ct seq.
when formed, 154 ct scq.
directors, 155 et seq.
employes, 159, 160
promoters, 143 et scq.
servants, 159, 160
subscribers, 144 ct seq.
See also Agent ; Authority : Implied Powees ; Liability
AGENT,
acting beyond limits of their employment, company not bound, 161,
note (/•), 210, 38C
notice to, 205
representations by, 207
carrying on business by, when registration necessary, 114
covenants by, 240, note (/)
excess of authority, liability for, 240
frauds of, liability of company for, 211 et seq.
liability of, to company for agreeing to purchase shares without authority,
494
may be a contributory, 762, note
of companies,
directors, 155. See Direi TORS
members not, 154
promoters, 146. See Promoters
not directors, 159
irregularly appointed, acts done by, 159
limits of authority of, 161 ct seq.
to act injudicial proceedings, how appointed, 2<34 — 265
right of, to indemnity, 380
selling his own property to his principal, 357 < > ■ 7.
signature of memorandum by, 119, note (b) ; 797, note (*i)
torts of, liability of company for, 208 ct scq.
warranty of authority, 241
See also Agency ; Authority; Implied -Powers ; Liability
AGREEMENTS,
to place shares, 769
to take shares, 13 et seq. ; 760 et seq.
action for breach of, 498 ct seq.
completed by allotment and notice, 14, 769 ct i /.
conditional, 17, 778 ct ■
repudiation on ground of non -performance of conditions, 778 J s </.
directors have no implied power to release person from, 520
effect of, 18
enough to make a person a contributory, 7G0 ct q.
party to, when not a contributory, 769 ct scq.
specific performance of, 586
uuconcluded, 16
void and voidable, when persons are cor.tril utories in respect of, 777
writing, when necessary, 761
to underwrite shares, 761
as to issue of fully paid-up shares. See Paid-up Shares
See also Contracts; Rescission of Contract; Specific Per-
formance
ALIENS, 36
ALLOTMENT OF SHARES, 13 et scq.
applicant for, when a contributory. 760 et srq.
when not a contributory, 7 GO, 769 et seq.
GENERAL INDEX. H^9
ALLOTMENT OF SHARES -continued.
cancellation of improper, 521
invalid, when 17, 13
letter of, what, 1 1
requires a penny stamp, 14 .
production of, in actions for deposits, 30, noti
must be by proper authority, 14, 300
notice of, must be given, 14, 769
what sufficient, 14
applicant may dispense with, 15
revoking application for shares before, 13, 11, //0
time for, 15
when not acceptance of applic ition, 770
with notice of change of scheme, 25
See, also, Scrip ; Shares
ALLOTTEES,
acting as share! >lde] , effect of, 14, note (/)
of scrip and sli
in formed companies, when contributories, ?bl
in abortive companies, when contributories, 763 _
when contributory though without notice ,.1 allotment, t 69
payment by, when a condition precedent to becoming a shareholder, 11,
"^ALLOTMENT J CALLS J CONTRIBUTOHTES ; SCRIP J SHARE-
HOLDERS ; Shares
ALLOWANCES
to promoters on rescission, : 5 .'
to directors, 388
A M ALGAMATED COMPANY,
actions against, 264
liability of, 258 et seq. ., , . ,-«. 1fl-
on bills given for the debts of the constituent companies, 165, 16b
life assurance companies, how wound up, 643 .
proof of debts against, on winding up where amalgamation is intra vires,
734
proof of debts against, on winding up where amalgamation is rlim vires,
- 735
winding up of, 641, 643, 734
AM \LGAMATION OF COMPANIES, 891 et seq.
effect of, on contributories when ultra vires, 1 1 i
on sureties, 253, note (I)
on securities, 258
liabilities, 258 et seq.
on policy holders, 259
injunction to restrain, 598
meaning of, 891
modes of effecting, 893 _
under Companies act, lbo^ ..b>*4
of Life Insurance Companies, 898
Cost-Book Companies, 326, 899
power of, 183, 323, 891 .
general power of managing does not give, lbi
rights of creditors, 896, 897
dissentient members, 895
specific performance of agreements for, 585
AMBASSADOR,
cannot be sued for calls, &c, oQ
not contributories, 757
AMENDMENT
of petition to wind up, 6o5
1150
GENERAL INDEX.
ANNUAL
lists under Companies act, 1862. ..125. See Returns, Official
after a return of paid-up capital, 405
And see Index No. I.
ANNUITANT,
in insurance companies. See Policy Holders
rights of, on transfer of business, 250, note (b)
rights of, in winding up, 737
ANNUITIES,
valuation of, in winding up, 732
APPEALS,
against order in settling list of contributories, 748
by creditor whose claim in winding-up is disallowed, 715
from order on winding-up petition, 6*51, 699
orders in winding up, 697, 698
orders for calls, 849
in actions by some on behalf of themselves and others, 570
And see Index No. I.
APPEARANCE,
persons entitled to appear on winding-up petition, 658
APPLICATION FOR SHARES, 13 ct scq.
after company has been formed, 28
effect of alteration in articles of association, 29, note (/)
before formation of company,
prospectus not adhered to, 19 ct scq.
change of scheme authorised by form of application, 23
conditional, 17
form of, common, 16 note («)
revocation of, 13, 14, 770
See Allotment ; Contributory ; Shares
APPLICATION OF MONEY
improperly borrowed, 188, 235 ct aq.; 3S1 ct scq.
APPOINTMENT,
of liquidators, 699. See Liquidators
of officers, mandamus to compel, 604
taking shares on faith of obtaining, 83
APPORTIONMENT
of interest and dividends, 546
of rent due in windiug up, 681
of rates, none, 6Sl
ARBITRATION,
under statutory enactments
in benefit building societies, 921
in industrial and provident societies, 916
valuation of share of dissentient shareholder on sale of companies
assets, 896
when binding on company, 184
ARBITRATOR,
appointment of, under Lands clauses act, 228
ARRANGEMENTS,
between company and its creditors, 711
between railway companies and their creditors, 904
See Compromise and Index No. I.
ARREST,
liability of company for, 209
of debtor, effect on charging order, 462
power of court to order, in winding up, C92, 696
See Index No. I.
GENERAL INDEX. 1151
ARTICLES OF ASSOCIATION,
adoption of a contract in, 147, 148
alteration of,
after application foi shares, 29 note (I)
effect of, on subscriber to memorandum, 119
ratification without, 177
contents of, 117, 118
construction of, 118
how far a contract, 117, 792
invalid when, 119
power to alter, 119, ."534
liow to be exercised, 343, 344
registration of, 118
stamp on, 118
Table A., 118
when necessary, 117, 118
See Deed of Settlement; Memorandum of Association. See
Index No. I.
ASSAULT,
liability of company for, 209
ASSENT
to transfer of shares after winding up, 833 et scq.
before winding up, 464 et scq.
See Transfer of .Shakes
ASSETS,
distribution of surplus in winding up, 867 et scq., 835
liability of directors for, if lost, 371
sale of, of company on voluntary winding up, 582, 883
unpaid capital to be estimated as, 631
ASSIGNEE
of debt, set off against, 275
ASSIGNMENT
of debt by creditor petitioning for winding up, effect of, 637
as regards set-off, 275, 739 et scq.
of shares in companies. See Shakes ; Transfer of Shares
ASSOCIATION,
articles of, under act of 1862... 11 7. See Aktici.es of Association
memorandum of, under act of 1862. ..117. See Memorandum of Associ \-
tion. And see Index No. I.
what is not an, within the meaning of the Winding-up acts, 617
what must be registered. 114
ASSUMING
to act as a corporation, if illegal, 130 ct scq.
ATTACHMENT
against corporations, 279
directors of corporations, 279
of shares in the Mayor's court, 463
after winding up, 674
of debts after winding up, 678
ATTENDANCE
in proceedings after winding-up order, 687
on settling list of contributories, 746
ATTORNEY-GENERAL,
actions by, against compxnies, 264, 580
AUCTION,
sale of shares by, 497
1152 GENERAL INDEX.
AUDIT
of accounts
under Companies clauses consolidation act, 4-11, 112
under Companies act, 1862. ..443
other companies, 445
AUDITORS,
duties of, 374, and note (//)
under Companies clauses consolidation act, 411, 412
under Companies act, 1862, 443
And see Index No. I.
AUTHORITY. See Agent ; Directors; Implied Powers
agents exceeding, 240
in matters of fraud, 211
of tort, 209
of agents of companies, 161 ct seq.
of directors, 155 ct scq.
delegation of, 156
in particular cases, 183 ct srq.
of members to bind company, 154
of promoters to act for each other, 1 13 ct scq.
to hind subscribers, 1 14
revocation of broker's, to buy shares, 512
warranty of, by agents, 88, 241
BALANCE ORDERS, S47
BANK CHARTER ACT. 136 note, 1013 note
BANK NOTES,
issue of, 136 note, 1013 note
unlimited liability of limited banking company in respect of, 855
■wrongful detention of, 209
BANK OF ENGLAND,
privileges of, 136 note, 1013 note
liable for wrongful detention of notes, 209
BANKERS,
issue of notes by, 136 note, 1013 note
of contributories liable to be examined when, 691
overdrawn accounts with, 196
partnerships, when to he registered, 114
paying cbecpies drawn by de facto directors, 196
returns to be made by, 136
statutes relating to, 136—138, 1013 note
securities, loss of, 209
BANKING ACCOUNT,
directors having no power to borrow may not overdraw, 196
BANKING COMPANIES,
actions by and against public officers of, 265 ct scq.
chartered under 7 & 8 Vict. c. 113... 129
shareholders in, 129
classes of. 1013 note
execution against members of, 285. See Execution
issue of notes by, 136 note (I), 1013 note
liable for securities carelessly lost, 209
note on, 1013
power of directors of, to borrow money, 190
registration of, under Companies act, 1862. ..114, 138, 1013 note
shares in,
sale of, 489
not within the Statute of Frauds, 453
nor within the Mortmain acts, 452
GENERAL INDEX. 1153
BANKING COMPANIES— continued.
statements of accounl ade by, 444
stopping payment,
effect of, on authority of public officer, 268
unlimited liability of limited, in respect of notes, 855
See Companies Governed by 7 Geo. 1. c. 16, p. 109: Piblic
Officers ; Indey No. I.
BANKRUPTCY,
I II' -ct of,
on director's liability, 374
promoter's liability, 349
in disqualifying a director, 302 note (e), 337
of companies, 610
of pi Mi ;t of, 268
of shareholders, 549 -
company, how far dissolved by, 550
petition '■■ Lns1 shareholder, 540, 550
proof by official liquidator, 708
transferor to a bankrupt transferee in respo;t of his right to
indemnity, 554
unincorporated companies, 551
for calls, 426, 555 et seq.
against contributory, 556, 708
debts, 554
set-off in, 557, 743
shares are not i i s reputed own rship, 551
vest in trustee, 550
subject to right of disclaimer, 553 et seq,
when liable to he made bankrupt. 549
who a contributory in case of, 815
rules of, applicable in winding up companies, 6S5 note (k), 710
winding up in, 616
And see Index No. I.
BENEFIT,
effect of having had, of contracts, 235 ct $
of borrowed money, 381 et s /.
BENEFIT BUILDING SOCIETIES. See Building Soon
BEQUEST. See Legacy
BILL IN PARLIAMENT,
agreement for withdrawal of opposition I >, 153
powers of company in regard to, 1S6
See also Act of Parliament ; Statute
BILLS OF EXCHANGE, 185, 230 ct seq. See also Promissory Notes
actions on, by public officers, 267
buying up, in order to set off against company in winding up, 730
directors accepting, in excess of power, liability of, 242
effect of having given, on company's lien, 458
form of, under Companies act, 1860
effect of, on liability, 231 ct seq.
how to be accepted by companies
governed by 7 & 8 Vict. c. 110... 225 note (/)
8& 9 Vict. c. 16... 226
Companies act, 1862.. .228
liability of companies on, 230 ct seq.
directors on, 231 ct seq.
where ultra vires, 231 note (m)
power of company to draw, 185
official liquidator to draw, 708, 700
BILLS OF SALE,
debentures of company, registration of, 198
given by a company, 203 note (/>)
validity of, against liquidator, 707 note (q)
L.C. 4 ,.
1154
GENEKAL INDEX.
BLANK TRANSFERS, 471 et seq.
deeds in blank, 472
effect in equity, 472
as regards third parties, 475
not negotiable, 474
notice given by, 479
pledges, 478
purchasers for value without notice, 476
sales, 478
shares in foreign companies, 481
title acquired by purchasers under, 475
without certificates, 479
BOARD OF DIRECTORS,
acts not done by, how far binding on company, 157, 158. See DIRECTORS
vacancies in, how filled, 302
BOARD OF TRADE,
applications to, by railway companies to abandon railway, 902 et st q.
inspection of accounts by, 444
jurisdiction to alter articles in Table A., 118
change of company's name, 112
Life Assurance Companies, 445
register of companies, 111
may appoint inspectors to examine company's affairs, 336
rules of, as to Life Assurance Companies, 1110
See Index No. I.
BONDS,
given for security for costs, 265
Lloyd's, 197
money raised on, under 8 & 9 Vict. c. 16. ..194, 195
nature of, issued under that act, 194, 195
of company, validity of, though irregularly issued, 254
See, also, Borrowing Money ; Debentures
BONUS,
as between tenant for life of shares and remainderman, 545
executors and legatee, 544 et seq.
distinguished from dividends, 545 et st q.
when company may pay, 436
BOOKS,
of company being wound up, 689
how dealt with after dissolution, 870
right of official liquidator to, 7(H
directors withholding, 595
inspection of, 595, 688
when directors have implied notice of contents of, 518, note (
See Accounts ; Inspection. See Index No. I.
BORROWED CAPITAL,
generally, 391
right to raise under 8 & 9 Vict. c. 16... 193— 195
BORROWING MONEY. See Debentures, Lloyd's Bonds, Mortgage
by Lloyd's bonds, 197
effect of having had benefit of, 235 et seq., 381 et seq.
liability of directors for exceeding powers in, 242, 243, 3S6
power of companies generally, 187 et seq.
banking companies, implied power, 190
building societies, 166, 189, 919
consequences of the possession of the power, 192
effect of exceeding powers, 1 89
application of money borrowed in excess, 235 et seq., 3S1
exercise of power, 192
implied power, 190
statutory limits must not be exceeded, 175, 188, 1S9
trading companies, implied power, 190
GENERAL INDEX. Hi
BORROWING MONEY continued.
power of directors, 1*7 et
may be given by a majority if company has power, 100
ratification of past, is not an authority for future, 179
what is, 191
overdrawing banking account, 190
what is i
increasing capital, 19]
obtaining goods on credit, 192
receiving money for snares in advance, ISO note {<>)
sale and rehiring, 191
BOVILL'S ACT, 7
BREACH OF CONTRACT,
winding up how far, 728 et ft /., 883
BREACH OF TRUST,
delay when a bar to relief, 583
directors liable as for, when, 371, 374
investing in -hares, when, 450
Trustee
BROKEBS,
acting for buyer and seller, 508
buying, liability of, 503
charges of, 516
difference between, and jobbers, 500 note ( / )
duty of, to their principals when employed to sell, 511
to buy, 5 1 2
where acting for both parties, 50S
to procure transfer, 506
illegal companies, employed in sale of shares in, 140, 516
of contributories liable to be examined, when, 691
revocation of authority of, 512
right of to indemnity,' 512
not for his own default, 514
to charge company for buying its shares for it, 723
selling, liability of, 511
usage of, as distinguished from rules of Stock Exchange, 515
BROKERS' TICKETS,
custom as to, 502
See Sale of Shares
BUBBLE ACT, THE, 3, 130 d scq.
BUBBLE COMPANIES. See Abortive Companies
BUILDING SOCIETIES,
advanced and unadvanced members, 872, 920
borrowing powers, 166, 189, 919
buying land, liability of directors, 371
can be wound up voluntarily, 614 note (o)
court having power to wind up, 615, 616, 619, 922
distribution of assets of, on winding up, 871
dissolution of, 922
formation of, 918
mortgages of, 920
overdrawing banking account, 196
directors, liability of, for, 196
rules of, 919
withdrawal of members from, 517, 518, 872, 920
winding up of, who may petition for, 627
BUSINESS OF COMPANY,
disputes in cases involving change of, 319
extending, 199,. 200
4 e 2
11 50 GENERAL INDEX.
BUSINESS OF COMPANY— continued.
implied contract to carry on, 249
liability of registered company with less than seven members carrying
on, 253
ordinary course of,
matters included in, 317
purchase of, 291, 295, 322, 891 ct seq.
right to transact, 298
sale of, 207, 208
transfer of, effect on creditors, 249, 250
in compulsory winding up, 711, 898
in voluntary winding up, 882, 891 ct seq.
when possible, 322
BYE LAWS,
invalid when, 322
notice of, 167 note (s)
power of making, 308
under Companies clauses act, 332
See Companies
CALLS. See Index No. I, and Calls on Conteibutoeies
generally, 407
actions for, 427 ct seq.
after shares have been forfeited for non-payment of, 425
by public officers, 564
purser of cost-book company, 95 note (;'), 427, 559 note (6)
companies' books may not be ordered to be produced, 440 note (0
defences to, 428
evidence in, 428
where minutes signed after commencement of action, 313
pleadings in, 427
statutory enactments, 427
to compel the making of, 412
restrain the making of, 573
amount of, to be made, 413
arrears of, petition by person owing, 626
are specialty debts, 427, 537, 848
before capital has been subscribed, 410
by whom to be made, 408
in companies governed by 7 Geo. 4, c. 46.. .408
7 Wm. 4& 1 Vict. c. 73... 408
8 & 9 Vict. c. 16. ..408, 418
Companies act, 1862.. .408, 419
by directors, de jure, 409
by improper persons, 300
by insufficient number of persons, 409
compelling shareholder to pay, by causing him to be sued by i
creditor, 559
demand for, not notice of allotment, 15 note (£•)
different kinds of, 407
does not prevent transfer of shares until made, 406
effect of loss of capital on liability to pay, 397
increasing capital, 397
forfeiture of shares for non-payment of, 425. See Forfeiture
for what they may be made, 409
for carrying on business of company, 111
for costs in winding up, 865
for improper purposes, 412
for the indemnity of a shareholder, 412 note («)
for prospective expenses not improper, 412, 416
otherwise in cost-book companies, 412
for repayment of capital returned, when, 413
for starting company, 409
GENERAL INDEX. 1157
CALLS— contintu '.
injunction to restrain making of,
granted if c ill illegal 596
refused if call no1 illegal, 599, 600
interest on, when payable after forfeiture, 531 note (p), 534 note (c)
paid in advance, 321 note (s)
provisions in articles as to, do not apply after winding up, 847
unpaid, 414, 531 nob
intention not to make, 413
intervals betwei u . 1 1 6
lien on shares for, 456
making, mode of, 11 1
in cost-book i I0S
irregulai ities in making, 415
iking, 415
must be made fairly, 112
when considei sd i . ide, 1 16, 417
i.'ii.i; ti make, 11 2
marshalling of, | ryi I I i by pasl member, none, 357
minutes of meeting making calls, 417
mort^a-'' of, 192 note / , 203
notice of calls, 417
evidence, 41 S
form, 418
irregular, 417
under < lompanies a< t, I 862... 1 1 -
order of discharge bars all, 426
payment of, a condition precedent to a transfer of shares, 423, 466
in advance and taking back for fees, 377 note (p)
persons liable to pay, 419, 425
by statute, 425
cestui qui trust not Liable, 16
executors, 425, 427 not" (p), 536. 848
infants, 422
legatees of shares, 543
persons induced to take shares by fraud, 422, 496
who have sold their shares, 423
who are shareholders in substance, 46
by estoppel, 49 et scq.
retired shareholders, 422
scrip holders, 409, 410
shareholders, 420
duration of liability, 122
subscribers, 420
under Companies act, 1862... 420
in companies formed under 8 & 9 Viet. e. 16... 420
to abortive companies, 32
trustees in bankruptcy, 426
proof in bankruptcy for, 426, 555 et seq.
prospective, 416
sale of shares between the making and payment of, 423
lor non-payment of, in cost-book mines, 94
set-off for, 743
uot yet due, 428 note (d)
sureties for payment of, not contributories, 768
transfer of shares to avoid payment of, 826
CALLS ON CONTRIBUTORIES, 84G et scq. See Index No. I.
advertisement of, 847
appeal from order for, 849
balance order, 847
calls on a contributory otherwise than in respect of his shares, 853
who had no notice of being on the list, 428 note (c)
directors who have been guilty of fraud, 851
holders of paid-up shares, 852
officers indebted to the company, 853
1158 GENERAL INDEX.
CALLS ON CONTRIBUTORIES— continued.
calls on past members, 855
shareholders entitled to indemnity from others, 851
for costs, 864
for returned capital, 787
in voluntary winding up, 884
liability of contributory must be established before a call is made on him,
850
limit of liability in respect of, 853
mode of making, S47
obtaining payment of, in cases of death, bankruptcy, &c, 848
after forfeiture, 500
order for payment of, 847, 848
practice as to, 847
provisions of articles as to interest on calls do not apply after winding up,
817
purposes for which may be made, 846
for adjustment of rights of contributories, 852 et seq.
for costs, 864
for debts, 849 et seq.
right of creditors to require, 849
set off against calls, 742, S57
costs, 858
time for making, 846
where contributories have already made unequal payments, 852
See CoNTBIBTJTOBIES.
CANAL COMPANIES,
shares in, not within the Mortmain acts, 452
See Companies governed by 8 & 9 Yict. c. 16
CANCELLATION
effect of agreement that shares taken might be cancelled, 5-37 et
of improper allotment, 521
of registration, 111
of shares
after forfeiture, 530
effect on liability as contributory, 837 et seq.
validity of, 402, 521, 841, 842
See Rescission of Contracts ; Sebrenbeb or Shabes
CAPACITY
of persons to be shareholders
aliens, 36
companies, 43
corporations, 13
felons, 38
infants, 39
lunatics, 40
married women, 41
CAPIAS. See Execution
CAPITAL
o! companies. See Ixdex No, I.
generally, 391
annual return as to, 406
borrowed capital, 193, 391
change in amount of, person not bound to take shares, 393
conversion of, into stock, 405
dividing, 405
division of, into shares, 391
effect of exhausting, 397
varying the amount of, as stated in the prospectus, 393
increasing, 191, 192, 397, 401
by preference shares, 400, 405
loss of, a cause for winding-up, 633. See Winding-up
loan capital, 391
GENERAL INDEX.
1159
CAPITAL— continued.
of companies cont nth d.
misrepresi ntation as to amount subscribed, 71, 75
must be paid up in cash when, 783
nominal and paid up, 394
of companies governed by 8 & 9 Vict. c. 1(5. ..399
I ompanies act, I 562... 101 —407
26 & 27 Vict. c. 118... 399, 400
of cost-book mining companies, 94
paying dividends out of, 321, 431, 432
position of shareholder who has received a return of, 413. Ill,
power to increase, not Bame as power to borrow, 191, 391 et
powers of majority over application of, 321
reducing, 322, 334, 102 et seq.
share capital, '■'>'■'-
subscription of, when necessary before calls are made, 409, 410
before commencing business, 21, 409,
410
uncalled, may be mortgaged, 192 and note (/)
unpaid up, an asset, 631
varying the amount of, 392
what may not be paid out of, 321 et seq.
CARRIAGE
of winding-up order, 686
('ASH
payment of shares in, 395, 783, 785 et seq.
what is, 395, 785 et seq.
CERTIFICATE. See Index No. I.
of chief clerk in winding up, 748
of debts in winding up, 715
of registrar that a person is shareholder, 45 note
of building societies, 918
of registration under Companies act, 1862. ..Ill
copies of when evidence, 112
of title to shares, 64
blank transfers without, 476, 479
company cannot dispute truth of, 64
delivery of, not necessary to complete transfer, 490
duty to grant, 64
in companies governed by S k 9 Vict. c. 16. ..103
by Companies act, 1862... 120
liability of company for issuing false, 484
shows only the legal title to shares, 64, 104, 484 note (b)
scrip, 65
may become transferable by delivery by usage, 66, 474
CESTUIS QUE TRUSTEXT,
business carried on for, 114
company has no lien on shares held by trustees, for debts of, 4o/
interest in shares can be charged by a charging order, 461
liability of,
to indemnify trustee, 509
pay calls, 46
not contributories, 802
exceptions, 802, 803
not shareholders, 46
CHAIRMAN
of directors
under Companies clauses act, 329
under Companies act, 1862. ..338
of meetings of shareholders
under Companies clauses act, 331, 332
under Companies act, 1862. ..341
See Directors, Meetings, and Index Xo. I.
11(30 GENERAL INDEX.
CHAMBERS, .
proceedings in, under winding-up order, b8b, b&/
CHANGE IN CONSTITUTION. See Majority
one dissentient can forbid, 319
CH VNGE OF NAME OF COMPANY, 112, 128
effect on authority of public officer, 268. Sec Index No. I.
sureties, 258 note (?)
11ANGE OF SCHEME,
allotment with notice of, 25
authorised
by act of Parliament, 24
by form of application, 23
by special agreement, 22
by subsequent assent, 24
between company as projected and as formed, 19—29
by changing amount of capital, 393^
effect on liability as contributory, 771
right to rectify register, 122, 123
See Prospectus
CHARGING ORDERS ON SHARES, 460 et seq.
effect of, on right to receive dividends, 436
on shares held in trust, 461
in cost-book companies, 463
only in public companies, 462
CHARTERS, 3
acceptance of, 97
applications to Crown for new, 323
injunction to restrain, 98 note (d), 323
departing from, 98, 131
enrolment of surrender, 99
grant of, 97
how obtaine I, 99
illegal use of, 131
obtained by fraud, 593
scire facias to repeal, 98
surrender of, 98, 99
restrained, 323
validity of, 98
CHARTERED COMPANIES, 3, 7
banking under 7 & 8 Yict. c. 113... 129
members of, 129
registration of, under Companies act, 1862. ..114
returns to Stamp Office, by, 129
formation of, 97 — 99
liability of shareholders of, 252
members of, not partners, 98
See Charters ; Companies ; Corporation
CHEMISTS,
companies carrying on business o!, 160
CHEQUES,
bankers may pay, if drawn by de facto directors, 196
directors not liable on, if account overdrawn, 196
forgery made possible by careless drawing of, 4S7 note (w)
irregularly signed, 171
power to draw, 196
CHOSES IN ACTION,
debentures are, Ex parte Rensburg, 4 Cb. D. 68o
shares how far, 454
transferees of, position of, 171, 180, 193
set off against, 275
GENERAL INDEX. 1 101
l ll." ULARS,
fraudulent statements contained in, SO. Bee Fraud; Misrepresenta-
i [OS ; PrOSPEi J PS ; REPORTS
i :ued by directors, when imputable to company, 215
CLAIMS
of creditors against companies being wound up, in. and allow-
anci of, 713 et seq.
See Winding up
I i BS,
can not be wound up, 620
disputes between members of, 577 uo1
i (pulsion from, 303 note (e), 52s note
CO-D1REI TORS,
ion1 libution I (v. •. n, 378,
indemnity, 37 3
liability of, generally, 241, 375 !
for fraud, 88
< >L< >N1ES. S ■ Foreign Co ipai u
actions by companies in, 101 note (d) 909
companies empowered to sue by public ofii cr, 1"] nob
judgm snts obt tine 1 in, maj be sued on here, 294 note (y , 91 !
regisl r may b • kepi in, 120, 121
rectification of, 121 See Appendix No. ).
COMMENCEMENT. See also Date
of liability of shareholders, 2.31
ol powers of din stors, 1 5 -'
>' winding up compulsorily, 664
subject to supervision, GG5
voluntarily, 664, 877
of life assurance companies, 665
COMMISSIONERS
for taking evidence in winding up, 090
COMMISSIONS,
directors' liability to account for, to company, 367 ct seq.
wrongfully paid, directors liable for, 37 -l
COMMITTEE OF LUNATIC, 40
vote by, under Companies clauses act. 332
COMMITTEE OF MANAGEMENT,
members of, not each other's agents, 145
provisional, not contributories, 766
COMMON LAW,
legality of companies at, 130
COMMON SEAL, 220 et seq. See Seal
COMPANIES. And see Index No. I.
1. Companies generally,
classification of, 7 ct seq.
distinguished from partnerships and corporations, 1, 11
historical sketch of, 2
list of statutes relating to, 923
table of classes of, 9
table of statutes relating to, 931
abortive. See Abortive Company
actions by and against, 262 ct seq., 559 et seq. See Actions
adoption of contracts by, 147
agency, doctrines of, 243. See Agent
amalgamate, power to, 183, 323
amalgamation of, 891 ctscq. See Amalgamation
banking. See infra, Nos. 2, 5, 7, and 8
11G2 GENERAL INDEX.
COMPANIES— continued.
1. Companies generally — continued.
bankruptcy of, 610
borrowing by, 187 ct scq. See Borrowing Money
business of, extending. 199, 200. See Business of Company
buying its own shares, 206
calls on shareholders of. See Calls
capacity of, 161 ct scq.
capable of being wound up, 617. See Winding- up
capital of, 391. And see Capital
in companies governed by 8 & 9 Vict. c. 16... 399
acts of 1862-7. ..401
division of, into shares, 393
increasing, 397, 398
loss of, effect of, 397
nominal and paid up, 394
reducing, 397, 404
varying amount of, 393
chartered. See Charter ; and infra, No. 3
commencing business before capital is subscribed, 21
constitution of, departing from, 323
contracts of proper form of, 220. See Contracts
ratification of, 175, 223
cost-book. See Cost-book Mining Company
debts of, what are, 716
different sorts of, 71, 93
directors of. See Director
dissolution of,
causes of, 608 ct scq.
effect of, as regards creditors, 885
See Winding vp
execution against, 276 ct scq. See Execution ; Public Officer
empowered to sue and be sued, 101
by colonial legislature. 101 note (<l)
foreign, by what law governed, 913. Appendix No. I.
formation of, 11 ct scq.
under special acts of Parliament, 4
fraud upon, by all existing members, 370
fraudulent, winding up of, 632
funds of, application of, 321 ct scq. See Majority ; Injunction
future shareholders, duty of towards, 370
gain, for, 114, 115
not for, 10, 117 note (s)
holding shares, when contributories, 807
illegal. See Illegal Companies
incorporated
by charter, 97
See Charter ; Corporation ; and infra, Nos. 3 and 5
by Act of Parliament, 101
See Corporation ; and infra, No. 6
by registration, 111. See infra, Nos. 4 and 7
insolvency of, tests of, 629, 631
insurance' See Insurance Companies
internal management, court will not interfere in, 574 ct scq.
Irish anonymous, 8 n.
joint-stock. See infra, Nos. 2, 3, 4, 5, and 7
liability of. See Liability.
attempts to limit, 244 ct scq.
for acting on forged transfers, 483
for acts of agents irregularly appointed, 159
in particular cases, 182 ct scq.
directors, 155. See Directors
when irregular, 155 — 158
members, 154
promoters, 146. See Promoters
for contracts of which they have had the benefit, 235
for fraud, in damages, 74. See Fraud
for fraudulent reports, 81
GENERAL INDI X. 1163
COMPANIES- continued.
1. Companies generally — continued.
liability of — continued.
for goods supplied bo, on credit, 205
for money borrowed, 187 etseq. See Borrowing Money
for statements of directors, 74 et seq. S wi> Misrepre-
sentation
fur use and occupation, 227
on bills of exchange, i-.\ 230 et seq. See Bills of Exchange
on instruments sealed by agents abroad, 229
on promissory notes, 185, 230 etseq., 233
on unsealed instruments, 220 etseq.
to be made contributory for shares held by it, 807
under Companies act, i 362 . 156
liability of shareholders in. See l.i ability ; Shareholders
lien on shares of members, 156. See I,n \
limited. See Limii ed Liability
majority of, po 114 et seq. See Ma roRH v
management of, 298 - (
members of,
power of, 342
name of, 112. Sec Name of Company
use of in actions, 573
nature of, 1
notice to, what is, 204. See Notk e
powers of, 161 et seq. Sec Imii led Powers
privileged by Letters Patent. See infra, Xo. 3
promoters of,
are not partners, 18, 21, 102
bound to act with good faith in dealings with compani ;s, 345 et seq.
liability of companies for acts of, 146
See Promoters
property of,
effi ct of winding up on dealings with, 666
fraudulent dispositions of, 278
prospectus of, nature and effect of, 12, 19. See Prospe tus
public, what are, 9, 462
public officers of, 265 et seq. See Public Officer
quasi incorporated, 7
railway. See infra, Xo. 6, and Railway Company
ratification by, 17.". ct seq. See Ratification
reconstruction of, 900
regarded as nuisances, 3
registers of. See Register
registered. See infra, Nos. 4 and 7
regulations of,
directors bound to observe, 364
directory and imperative, 172 et seq.
public affected with notice of, 165
residence of, 37, 910
scrip, 6'.-, 131, 135, 136. See Scrip Companies
service of writs on, 264, note (p)
set-off in actions by, 273 et seq. See Set-off
shares in. See Shares.
buying, in another company, 200, 206
buying its own, 206
shareholders, may be, 43
sale of shares, 487 et seq. See Sale, Transfer of Shares
spoliation of, by members, 370
starting too soon, 21
subscriptions to, returning, 29 — 35
suing and being sued in name of public officer, 4, 265 et seq. See Public
Officer
usage of, effect of, 98 note (/")
winding up of, 608. See Winding up
very small, may be wound up, when, 640, 651
votes, 341. See Votes
1]G4 GENERAL INDEX.
COMPANIES— continued. .
2. Companies governed by 7 Geo. 4, c. 46 (banking,, 109 et ;eq.
actions by and against, 265 et seq. See Actions
are public companies, 9, 462
calls on shareholders in, 408
for reimbursement of shareholders proceeded against by creditors,
413
discovery of shareholders in, by creditors, 282
execution against shareholders in, 285
for separate debt, 462, 463
formation of, 109
former members, 286
liability of shareholders in, to creditors, 252, 2S5 et seq.
See Execution, Liability
lien of, 458
management of affairs of, 298, 299
members for the time being, 285
public officers of. See Public Officer
returns to the Stamp Office to be made by, and effect of, 109, 110
transfer of shares in, 110
who are shareholders in, 109, 288
3. Companies governed by 7 Wm. 4 & 1 Vict. c. 73 (the Letters Patent act)
actions by and against, 205 et seq.
calls on shareholders of,
by whom to be made, 408
calls for reimbursement of shareholders of, 412, note i
discovery of shareholders in, by creditors. 282
execution against, 289
bow shareholders in, are to lie proceeded against by creditors, 260, 2»y
liability of shareholders in, to creditors, 252, £89
management of affairs of, 298, 299
nature and formation of, 99 — 101
arc not corporations, 100
are public companies, 10, 462
who arc members of, 101
payment of dividends by, 437
transfer of shares in, 101. See Transfer of Shares
4. Companies governed by 7 & 8 Vict, c 110 (the Joint-stock companies
registration act)
are public companies, 10, 462
contracts on behalf of, bow to be made, 22{
when made with the directors, 328, 3G8
liability of shareholders of, to creditors. 280. See Sci. Fa.
provisional registration of, 128
registration of, under Companies act, 1862. ..114
who are shareholders in, 44, 128
when formalities have not been observed, 45 _
5. Companies governed by 7 & 8 Vict. c. 113 (Banking companies act)
liability of shareholders of, to creditors. 280. See Set. Fa.
members of, 129
nature and formation of, 129
registration of, 114 , .
6. Companies governed by 8 & 9 Vict. c. 16 (Companies clauses act)
arc public companies, 10, 402
accounts of, 441
right to inspect, 441
borrowed capital, 193 — 195
capital of, 399
calls on subscribers to, 408
by whom to be made, 418
for reimbursement of shareholders, 412, note (x)
certificates of shares in, 103, 104
contracts of, proper form of, 227 .„ ,fia
when between company and its directors, <328, -Job
delegation of powers of directors, 329
GENERAL rNDEX. 11G5
COMPANIES I.
6. Companies governed by 8 & 9 Vict. c. 16 (Companies clauses act)— n,,,/ I.
I
indemnity, right to, 330
dividends I, payment of, 437
tin inatioii of, 102 et
inspection, shareholder's rights to, 333, ill
liabilil .
of company on ,227
of shareholders I i
how to be lagai . 294. See S< i. Fa
lien of, i
management of, 327 •
power t . borrow on m bond, 104. 195
regi tei >i lemben under, 103— 109
company not estopped by, 108
corn n of, 108
• of improper insertion, 107
not concl i
proper form <>f, 105
right of company to put | 106
rough shan' hook, 105
unsealed, 105, 106
right to retire from, 525
shareholders in. who are, 104
■very of, by creditors, i _
meetings of, 331. See Meetis
powers of, 330 •
register of, 104—109
votes, 331. S< ■ V
shares,
conversion of into stock, 399
forf( iture of, 333, 529
po . r of issuing, &c,
surrender of, 525
transfer of, 103, 467
Statute of Frauds and, 227
winding up of, 901 • !
7. Companies governed by the acts cf 185S— 1853
formation of, 129
liability of, on contracts not under seal, 25
members of, 129
registration of, 114
transfer of shares in, 468
transferor of shares in, 129
who were contributories, 749. See No. 8, and Contbibutories
8 Companies governed by Companies acts, 1862—1886. See Index Xo. I.
articles, 117. See Articles of Association
table A., 118, 336 et seq.
calls, 407 et seq. See Calls on Shabeholdebs ; Calls ox Contbibd".
TORIES
persons to make, 408
liable to pay, 425
when shares have been sold, 423
capital of, 401. See Capital
change of name by, 112
constitution of, 333
contracts, proper form of, 228. See Contbacts
directors of, 336 ct seq. See Di hectors
appointment, 337
delegation of powers, 338
disqualification, 337
duties of, 338
pay, 337
removal, 337
dissolution of, 870, 685. And see Index No. I.
1166 GENERAL INDEX.
COMPANIES— couth tied.
8. Companies goverced by Companies acts, 1862 — 1886 — continued,
dividends under, 438
examination of affairs of by inspectors, 336
forfeiture of shares in, 530. See Forfeiture of Shares
formation of companies under, 117, 333
inspection of accounts of, 442
liability of, on contract not under seal, 228
of members of, to creditors, 753. See Liability
lien of, 458. See Lien
liquidators, on winding up of, 699 ct scq., 878 ct scq. See Liquidators
management of companies' affairs, 335 et seq.
meetings of, 340 ct scq. See Meetings
chairman of, 341
minutes of, 342
notice convening, 340
proxies, 342
resolutions, 310, 343
votes, 341. See Votes
members of. See Contrikutories, Past Members, Shareholders.
who are, 19, 751
where company not formed under nets, 128
annual list and summary of, to be made, 125
liability of, extent of, 252
powers of, 339, 342
register of, 120. See Registration of Members
correction of, 120, 121
on winding up, 125, 755
inspection of, 125
need not be sealed, 125
right of to retire, 526
memorandum of association of, 117. See Memorandum of Association
power to change from limited to unlimited, 113, 335
purchase by, of its own shares, 206
reconstruction of, 894 ct scq., 900
registration under, 111 ct scq. See, also, Registration
certificate of, 111, 118
effect of, 111, 118
of companies not formed under, 126, 134
sale of assets in voluntary winding up, 882, 894 ct seq
sale of shares in, after winding up order, effect of, 836. See Sale of
Shares
Statute of Frauds, 227
surrender of shares in, 525. See Surrender
transfer of shares in, 467. See Transfer of Shares
winding up of. See Winding up
who are contributories in, 751. See Contributories
what companies may be wound up under acts, 617
9. Companies registered under act of 1862, but not formed under i;
change of name, 128
constitution of, 334
contributories, who are, 752
extent of liability of members, 253, 819
how wound up, 617
members, who are, 128
in companies formed originally under 7 & 8 Vict. c. 110. ..123
under 7 & 8 Vict. c. 113.. 129
under acts of 1856— 58. ..129
registration when necessary. See Registration
effect of, 127
mode of, 127
10. Companies governed by the Stannaries acts. See Cost-book Mining
Companies
11. Companies empowered to sue and be sued
actions by and against, 265 ct scq. See Public Officer
extent of members' liability, 252
GENERAL INDEX. 1107
COMPANIES CLAUSES ACT. See Companies Governed by 8 & 9 Vict
c. 16
COMPENSATION
to directors, 388
COMPKOMISE
by official liquidator, 709
o irt may order a meeting of creditors to deride as to, 710, 711
enforcing a, 710, note (n)
in winding up, 709
voluntarily, 881
under Joint stock companies arrangement art, 711
liability of directors for, 37 1
limit of power of court to sanction in winding up, 710. See also Arrange-
ments
of doubtful liability to take shares, by cancellation, 842
power to, 196
with doubtful shareholders, 521
with present, effect of on past members, ~>-2). 857
COMPULSORY WINDING UP. See Winding up
proceedings under, 684 et scq.
when ordered, 628 et seq., 6 1 1
refused, 647
deferred, 652
CONCEALMENT,
misrepresentation by, 70, 90
fraudulent, under § 38 of Companies net, 1867. ..91, 92
CONDITIONAL
offer to take shares, 17
CONDITIONS,
acceptance of shares on, 17, 778
as to cancellation of shares, effect of, 778, 837, 838
if ultra vires, no concluded contract, 778
payment by allottee when a condition precedent, 44 note (ij)
repudiation of shares for non-performance of, 778 et seq.
conditions precedent, 778
conditions subsecpaent, 779
CONDUCT. See Estoppel
of directors and others investigated in winding up, 6S9 cl s<-q.
CONSENT
to transfer of shares when necessary, 464, 465
by whom to be obtained, 467
power of court to give, in winding up, 834
to transmission of shares not necessary, 468
CONSIDERATION,
failure of, in agreement to take shares, 29 et scq., 236
in purchase of shares which do not exist, 494
of the recovery back of subscriptions to companies, 29
subscribers to a scheme not at liberty to retire from it, unless it has
failed, 29
subscribers to abortive companies not liable for expenses incurred in
attempting to form them, 30
subscription returnable though deed signed, 33
policies issued ultra vires, recovery of premiums, 235, 236
CONSOLIDATION. See Amalgamation
of shares into stock, 399
CONSPIRACY,
indictment for, 87
for fraudulently raising or lowering the price of shares, 488
lor obtaining settling day by fraud, 87, 488
1168 GENERAL INDEX.
CONSTITUTION OF COMPANY. And see Index No. I.
applications to Parliament for powers to alter, 321, "323
under Companies act, 1862... 333, 343
of companies registered but not formed under, 334
limits the authority of its directors, 162
power to vary, 319 ct seq.\
CONTINGENT CLAIMS,
proof of, in winding up, 716
setting aside fund to meet, 731, 732, 867, S85, 886
CONTRACTS
between directors and their companies, 328, 363
binding on company when
entered into after winding up, 708, note (L)
not if a '< a vii . 151, 1"'2. 161
promoters, 146
when entered into by persons without authority, 160
irregularly, 166
when not under seal, 222 ct seq.
disclosure of, under sect. 38 of Companies act, 1867.. .91
foreign, 913
liability on, when limited to funds of the company, 246 et seq.
of directors on, 240
" limited " effect of omission of word on, 231, 240
of which companies have had the benefit, 226, 235 et seq.
on deeds executed abroad, 229
part performance of, 223
promissory notes and bills of exchange, 230 et
proper form of, 220
under statutory enactments, 225
8& 9 Vict. c. 16. ..226
Metropolis gas act, I860... 226
Companies act, 1862. ..226
Companies seals act, 1864. ..229
ratification of, 175 et seq., 223
by directors, 180
reduction of, of Life assurance companies, 635
to cany on business when implied, 249
to take shares. See Agreements; Allotment; Application fob
Shares
under sect. 25 of the Companies act, 1867. ..395, 7>:3 et seq.
understanding, not a contract, 91, note («)
when public officers are to sue and be sued on, 266. See Public
Officers
winding up, no breach, 728, 883
CONTRIBUTION,
directors, right to,
generally, 379 et seq.
in respect of personal services, 388
advances to company, 387
where they have exceeded their powers, 380
inter se, 378 et seq.
liability of retired shareholders to, 257
promoter's right to, 145, note (7i), 606
public officer's right to, in respect of judgment, 379/vS0
shareholder's right to, in respect of judgment, 379, 3S0
illegal transactions, for loss occasioned by, 141
in 'winding up companies, 852
CONTRIBUTORIES. See Index No. I.
under the act of 1848 and 1849. ..750, 817
Companies act, 1862,
companies formed under, 751, 818
companies registered but not formed under, 752, 819
definition of, 752
unregistered companies, 752
GENERAL INDEX. 1169
CONTRI BUTORIES— continued.
list of, 745 et seq. See List of Contributories ; Winding up
position of members after winding up, 753
who are
generally, 750 et seq.
in voluntary winding up, 884
persons secondarily liable, 749
classification of, 756
agents, 761 note (k)
allottees of shares
in completely formed companies, 761
in contemplated companies, 763
amalgamated companies, holders of shares in, 774
ambassadors, 757
applicants for shares, 769 et seq.
bankrupts, 815
cestui que trust, 801
companies, 807
conditional agreements to take shares, in cases of, 778
devisees, 813
directors,
in respect of qualification shares, 790 et seq.
of shares transferred to or by them, 830, 831
executors and administrators, 812
forfeited shares, in cases of, 842 et seq.
fraud, in cases of, 776 et seq.
heirs, 813
infants, 809
legatees, 812
lunatics, 811
managing committee-men, 766
married women and their husbands. 807
mortgagees, 806
equitable, 806
paid-up shares, holders of, 757, 783 et seq.
partners, 807
past members, 749, 816 ct seq.
cost-book companies, 819
registered companies, 819
unregistered companies, 818
persons who have
acted as shareholders, 758
agreed to become shareholders, 760
in formed companies, 761
in contemplated companies, 763
on conditions which have not been complied with, 778
agreed to place shares, not, 769
to take fully paid-up shares, 781
retired from the company irregularly, 822
been paid in shares, 780, 784 et seq.
promoters of companies, 764
provisional committee-men, 766
repudiation of shares when possible, 767 et seq.
on ground of no agreement, 768
fraud, 776
illegality of issue of shares, 774
non-performance of conditions, 778
shares not being paid up, 787
retirement, in cases of irregular, 822
sale of shares, in cases of,
after commencement of winding up, 83 6;
before commencement of winding up, 833
scripholders, 763, 799
shareholders generally, 756
by estoppel, 757 et seq.
in companies not observing their prospectus, 771
L.C. 4 P
1170 GENERAL INDEX.
CONTRIBUTORIES— continued.
who are,
shares issued at a discount, 787, 788
illegally issued, 774
passing by delivery, 803
subscribers to memorandum of association, 797
though altered after signature, 773
sureties for payment of calls, not, 768
surrender of shares, in cases of, 837 et seq.
transfer of shares, in cases of, 823 — 837
after company has discontinued business, 829
avoid liability, to, 825
directors, to, 830, 831
incomplete, 831
infants, to, 828
invalid, 829
sham, 825
where transferee has been accepted by company, 823 et seq.
has not been accepted, 831
trusts for dishonest purposes, in cases of, 802
trustees, 801
in bankruptcy, 815
for company, 804
underwriter of shares, 761
adjustment of claims between, 852
appeals by, 748. See Appeals
calls on for adjustment of rights of contributories, 852
for costs, 859
for debts, 849. See Calls on Contributories
compromise between company and contributory, by liquidator, 709, 842
past member not discharged by, 857
division of surplus assets among, 867. See Winding up
effect of allotment, 769
being on the register, 769
delay in repudiation, 768 et seq.
power to rectify register of members, 755, 832
entitled to a copy of petition for winding up, 655
appear on petition, 658
attend winding up proceedings, 687, 746
petition to wind up company, 625
under old acts, 639
Companies act 1862. ..639
in mutual marine assurance societies who are, 761
limit of liability of, 853
liquidator's books evidence against, 705
persons who have agreed to receive payment in cash or shares not com-
pellable to take shares after winding up, 762
right of, to inspect books of company, 688, 704
set off by, against calls when allowed, 857
wishes of consulted in winding up, 630, 688
CONTROL
of directors by shareholders, 303
CONVENTION
with Belgium as to companies, 914
France as to companies, 914
Germany, 914
Greece, '914
Italy, 914
Spain, 914
CONVERSION
of paid-up shares into stock, 405
CONVEYANCE
by liquidator, may be made, 708
upon trust for creditors, resolved upon by a majority of shareholders, 601
injunction to restrain, 579
GENERAL INDEX. 1171
CONVICTS, 38
administrator of, 38
cannot be members of a company, 38
COPIES,
right to have, of books, &c, 314
under Companies clauses act, 333
of petition to wind up, 655
CORPORATE SEAL
where necessary, 220 et seq.
See Seal of Company
CORPORATIONS
generally, 1, 8
actions by and against, 262 et seq.
contracts by, to pay out of their funds, effect of, 246 et sej. See Funds of
Companies
dissolution of, 608 et seq.
effect of taking security not authorised by its constitution, 163 note [</)
execution against, 278 et seq.
exist only for the purposes for which they are created, 162
expulsion of members from, 528 note (a)
foreign, 909 et seq. See also Foreign Companies
liability of, on contracts not under seal, 220 et seq.
by statutory enactments
Companies act 1856. ..228
Companies act 1862. ..228
Companies clauses act, 226
Companies' seals act 1864. ..229
Lauds clauses act, 228
Metropolitan gas act, 226
Public health act, 223 note (*)
may be a shareholder, 43
members of cannot change its constitution, 319
not estopped from showing act to be ultra vires, 163
power of majority of members of. 317
to apply for change of nature of, 323
presuming to act as, 131, 134 note (6)
provisionally registered companies have no right to act as, 128
public bound to notice regulations of, 165
ratification of contracts by, 175
CORRECTION. See Index No. I.
of mistakes in accounts. See Accounts
of register of shareholders, 61, 603, 755. See Register
COST-BOOK MINING COMPANIES,
accounts of, 445, 447
amalgamation of, 323 note (e), 326, 898. See Amalgamation
actions by and against purser of, 265, 270 note (h), 559 note (b)
by purser against shareholders of, 95 note (i), 265, 559 note (b),
427
calls in how made, 408
interest upon unpaid, 414
ought not to be made for prospective expenses, 412
purser may sue for, 95 note (*), 265, 270 note (h)
capital of, increasing, 398
cost-book, what, 94
customs relating to must be proved, 95
executiou against members of, 593
company for debts of members, 463
formation of, 93, 94
liability of shareholders in, to creditors, 94
for debts contracted before they joiued the company, 254
for goods supplied to the mine, 192, 205
on credit, 192
for money borrowed, 192
of past shareholder, how limited, 95, 819
4 v 2
1172 GENEKAL INDEX.
COST- BOOK MINING COMPANIES— continued.
management of, 325
may sue by purser, 265
nature of, 2 note (b), 7, 93
past member not a contributory when, 816 note (q), 819
power of majority in, to appoint directors, 298, 299
proof of membership in, 95
purser of, 94, 395
register of shareholders, 95
rectification of, 124
registration of, 95
of rules, 94 note (c), 325
right to retire from, 524, 816.note(?)
shares in,
forfeiture of, 326, 529
relief against, 534
not within the Mortmain acts, 452
the Statute of Frauds, 453
relinquishment of, 94, 326, 524, 816 note (q)
sale of, by company for non-payment of calls, 94
title to be shown by vendor of, 491, 492
transfer of, 96, 326, 468
invalid if made to escape liability, 464, 465, 825
liability to be made a contributory in cases of, 840 note (o) and (p)
signing and stamping the cost-book, 95, 97
shareholder in, need have no interest in the mine as land, 96
wages, miner's lien for, 278 note (g)
priority for, in winding up, 718
whether public companies, 463
winding up of. 610
club funds to be handed over to liquidator, 709
court having jurisdiction in, 615, 616
liquidator's duties, 709
priority of debts of, 718
proof by member who has relinquished his share, 736
COSTS. See Index No. I.
of actions by or against directors when payable by company, 321
by some on behalf of others, 569
stayed in winding up, 675
correction of register under § 35 of Companies act, 1862. ..124
when company is being wound up, 124
infringement of patent, directors ordered to pay, 240, 265
in winding up,
calls for, 865
on whom to be made, 866
liability of past members for, 866
payable by company, 859
by liquidator, 862
priority of, where assets deficient, 865
solicitor demanding more than scale fee, 704 note (n)
in winding up voluntarily, 885
under act of 1862. ..858
in winding up insurance societies, 737, 866
of attendance on settling list of contributories, 746 note (I)
of creditor's representative, 749 note (c), 846
of petitions to wind up company, 658
on staying proceedings under, 664
of proof in winding up, 714
of liquidator, of appeals, 863
not entitled 1o, out of mortgagee's security, 865
payment of by, 862, 863
taxation of, 863 note (s)
security for,
bond given for not invalid, 265
by foreign company suing, 263
GENEKAL INDEX. 1173
COSTS — continued.
security for, by limited company suing, 263
by unlimited company suing, 264
on presentation of winding-up petition, 661
COUNTY COURT,
jurisdiction to wind up companies, 615, 616
building societies, 921
provident societies, 916
judgment of, against company, execution of, 280
procedure in, 654 note (0)
COURT,
interference of, in internal management, 304, 574 etseq.
having jurisdiction in winding up, 615 et seq. See also Winding vv
liability of liquidator acting without, 712
sanction of, when required by liquidator, 708
summary powers of, in winding up, 689 et seq.
over directors, 694
to arrest, 692
to examine persons, 689
to order delivery up of property, 693
paymeut of money, 693
See, also, Index No. I.
COVENANT,
actions by and against public officers on, 267
by agents, 240 note (b)
to pay out of funds, effect of, 245 et seq.
CREDIT,
misrepresentations as to, 207, 217
CREDITORS,
rights of,
against promoters of companies, 87, 143
See Promoters
against companies, 245 et seq., 276 et seq. See Execution
arrangement with, in winding up, 710
by railway companies, 904
for the acts of their directors, 155
for the acts of their promoters, 146, 235
injunction to restrain conveyance in trust for, 601
not liable to be examined in winding up, 691
petitions by, for winding up, 624 et seq., 635 ft seq., 886
position after winding up, 753
proof of debts by, in winding up, 713 et seq.
where they are also members, 736
staying proceedings by, in winding up
under old acts, 669
Companies act, 672
when limited to funds of company, 246, 279, 280, 284
where companies amalgamate, 258 et seq. , 734, 895
See, also, Companies ; Directors ; Winding up
against shareholders, 280 et seq. See Execution ; Sci. Fa.
at the instigation of the company, 56, 559, 560
in companies governed by 7 Geo. 4, c. 46, 285
7 Wm. 4& 1 Vict. c. 73. ..289
8& 9 Vict. c. 16.. .290
Companies act, 1862. ..294, 751
registered but not formed under Com-
panies act, 1862... 127
in other companies, 293
in companies being wound up, 754 ; and see Winding up
See, too, Companies ; Execution ; Liability
who have not complied with necessary formalities, 54 et seq., 289
where liability is limited to funds of companies, 250, 251, 284
cost-book companies, effect of registration of on, 127 note (q)
1174 GENERAL INDEX.
CREDITORS— continued.
rights of — continued.
have no lien on company's property, 278
injunction against, when suing shareholder at instigation of directors,
560, 597
See, also, Injunction
inspection of list of shareholders in. See Inspection ; Index No. I.
liability of executors to, 539
not protected by § 38 of Companies act, 1867. ..91 note (s)
reduction of capital in cases of, 403
rights of, on amalgamation of company, 895, 897
right to attend settling list of contributories, 746
right to have a call made, 412
mandamus for, 412, 604
secured position of, in winding up company, 726
wishes of, as to winding up, 636, 688
CREDITOR'S DEEDS
by company are void, 669
CREDITOR'S REPRESENT ATI VE,
costs of, 749 note (c), 846
CRIMINAL LIABILITY,
for conspiring to obtain settling day by fraud, 87
fraudulent accounts, 446
issuing too many shares, 394
publishing false reports, 87
paying dividends out of capital, 433
selling shares in a company which has no existence, 496
of illegal companies, 141
CROWN,
not bound by Companies act, 673
po\ er to grant charters, 97 — 99
priority of debts of, in winding up, 717
CUSTOMS,
negotiability of blank transfers by, 47 4
of brokers, 515
cost-book companies, 94
not judicially noticed, 95
stock exchange, 501, 502
scrip may be transferable by delivery by, 66, 474
DAMAGES,
action for, in cases of fraudulent statements, 73, 88 — 90. See Fraud
company liable to, in other cases, when, 209
for exclusion from register, 124
for fraud, contributories' right to when company is winding up, 753
for wrongful dismissal by winding up, 731
measure of,
for breach of contract to sell or buy shares, 498
for excess of authority, 241 note (I)
in actions for recovery of shares improperly obtained by a director,
367
in cases of invalid issue of debenture stock, 243
in contract to take shares induced by fraud, 90
in rectification of register, 124
recoverable by company against an agent for agreeing to take shares
without authority, 494 note (k)
proof for, on winding up of company, 716
GENERAL INDEX. 1175
DATE
of commencement of compulsory winding up, 664
voluntary winding up, 664, 877
winding up subject to supervision, 665, 889
in case of life insurance companies, 665, 660
importance of, 666
See Commencement
DEATH
of petitioner to wind up company, 661
of shareholder,
effect of, 536 et seq. See Executors
liability of executors to calls, 536
as contributories, 812
to creditors, 539
right of liquidator to administer estate on, 709
DEBENTURE HOLDER,
right to petition for winding up of company, 625
receiver appointed by, 279 note (t)
set-off against, 740
DEBENTURE STOCK
of railway company, 295
DEBENTURES
are choscs in action, 180
as to implied powers of directors to issue, 192, 196
as to validity of, when given in renewal of others, 197
do not pass under a bequest of shares, 400 note (<), 541
floating security, 197
for debts contracted before power to borrow commenced, 198 note (g)
improperly issued, liability of company on, 167 et seq., 196, 237
liability of directors for, 243
issued by company pursuant to arrangement before its formation, 177
issued when delivered, 198
may be issued at a discount, 197, 401 note (c)
to directors, when, 369
nature of, 196
not within the Mortmain acts, 451 note (I)
priorities of, 197 and note (c)
receiver appointed at instance of holder of, 272 note
registration of. under Bills of Sale act, 198
rights of assignees of, 171, 180, 740
DEBTS,
assignment of, effect of, on creditor's right to present winding-up petition,
637
assignee of, may petition to wind up, 624
set-off against, 275, 738
calls for payment of, on contributories, 846
when debt disputed, 850
company unable to pay, when, 631
disputed, when ground for winding up, 637
future, may be mortgaged, 192
liability of shareholders for. See Companies ; Liability ; Share-
holders
of company, what are, 716 et seq.
priority of, in winding up, 716 et seq.
proof and payment of, in winding up, 713 et seq. See Proof of Debts ;
Winding up
in voluntary winding up, 884
when bought up at less than nominal value, 723, 739
set off of, 273, 738. See Set-off
statutory, 146
when sufficient to support winding-up petition, 638
1176 GENERAL INDEX.
DECEASED SHAREHOLDER,
liability of estate of,
to calls, 425, 536
to creditors of company, 539
on winding up of company, 539, 812
power of official liquidator to administer estate, 709
position of executors of, 536, 539
See Executors ; Death
DECLARATION
in action for calls, 427 note (m)
DECREE,
enforcing without a sci. fa., 294 note (a)
winding-up order is a, 663, 664
DEEDS,
blanks in, 471 et seq.
execution of, when it estops, 53
method of, by companies, 220
governed by 7 & 8 Vict. c. 110... 225
7 & 8 Vict. c. 113... 225
8 &9 Vict. c. 16. ..226
19 & 20 Vict. c. 47... 228
23 & 24 Vict. c. 125... 226
Companies act, 1862... 228
38 & 39 Vict. c. 55... 229
abroad, 229
transfers of shares must be made by, when, 467 notes (i), {m), (a)
when binding on company, 198
DEEDS OF SETTLEMENT (Companies')
directory and imperative clauses in, 172 et seq.
effect of tampering with, on shareholder's liability to be made a contribu-
tory, 85
mis-statement as to, on such liability, 85
not executing, 49 e.t seq.
as between company and shareholder, 45, 49 et seq., 757
execution of, by member, 44
public bound to notice, 165
See Companies
DEEDS OF TRANSFER,
blank, 472
when necessary, 467
DEFENCE,
illegality, where a, 139
of actions by official liquidators, 708
to actions for calls, 428
for dividends, 437
for specific performance of agreement to take shares, 587
DEFUNCT COMPANIES, 113, 871
DELAY
effect of, on an irregular retirement from company, 822
in sending in transfers for registration, 833, 835
in application to rectify register, 124
in carrying in claims in winding up, 723
in repudiation of shares, 25 et seq., 73, 85, 771
when a bar to relief, 582 et seq.
DELEGATION OF AUTHORITY
by directors, 156, 329, 338
of power to accept surrender, 518
of powers by company, 322
GENERAL INDEX. 1177
DEPOSIT, PARLIAMENTARY,
application of
in payment of debts, 102 note (/), 904
necessity for, 102
DEPOSITS ON SHARES,
actions to compel payment of, 606
to recover back, 29, 35, 589
evidence in, 30 note (y), 34
effect of paying when shares applied for, 15
when company abortive, 22
injunction to restrain return of, 600
lien for, none, 32
when applicable to pay preliminary expenses, 32
when not so applicable, 30
when returnable, 29 et seq.
returnable though deed lias been signed, 33
where fraud, 75, 593
misrepresentations, 74 et .seq.
when not returnable, 32
DESTRUCTION OF ACCOUNTS,
penalties against fraudulent, 446
DEVISEES,
when contributories, 813
DIRECTORS,
1. Generally,
accounts of company, right to see, 441
liability for fraudulent, 440
• acquiescence of shareholders, effect of, on liability, 377
actions against
for misrepresentation, 87 et seq.
on bills of exchange, 231 et seq.
on promissory notes, 231 et seq.
who ought to be parties to, 565
advances by, to company, 193, 380 et seq.
agents of company not of each other, 82, 83, 244
agreements with, specific performance of, 588
allowances to, for trouble, &c, 388
appointment of, 337
irregular, 300
consequences of, 155, 166, 167
authority of, 155 et seq., 298 et seq. See, also, Implied Powers
commencement of, 158
delegation of, 156, 329, 338
of power to accept surrender, 518
duration of, 158
excess of, 240 et seq.
liability for, 240
notice of, 241
for particular purposes. See Implied Powers
as regards each other, 82, 83, 155, 244
actions, to bring and defend, 265
declaration of dividends, 429. See Dividends
fill vacancies in their own number, 302
forfeit shares, 528 et seq., 842 et seq.
make calls, 408. See Calls
ratification, 177 et seq. See Ratification
surrender of shares, 517 et seq., 837 et seq. See Surrender
transfer of shares, 464 et seq., 834
irregular exercise of, effect, 300
limits of, 161, 163
majority, 156, 158
mistakes as to, not liable for honest, 242
1178 GENERAL INDEX.
DIRECTORS— continued.
1, Generally — continued.
authority of— continued.
quorum, 156, 174, 299
less than, 155—157, 174, 300 note (&), 302
bankruptcy of,
effect on liability, 374
how far a disqualification, 302, 337
board of, validity of acts not done at, 157, 158
meetings ofj 304 et scq. See Meetings
bonuses on sales, &c, must account for, 367
cannot buy shares out of funds of the company, 179, 520, 526
commissions on sales, &c, must account for, 367
contracting as principals, 243
contracts with, must be referred to in prospectus, 91
between them and their company, validity of, 328, 368
contribution, inter se, 378
control of by shareholders, 303
by court, 575
of corporations liable to attachment, 279
criminal liability of,
for carrying on illegal business, 141
for fraudulent accounts, 440
payment of dividends out of capital, 433
prospectus, &c, 87
de facto, 330, 336
is within § 165 of Companies act, 1862... 694 note (r)
discovery against, 265, 595
discretion as to approving transfers whether exercisable by the Court after
a winding up, 834 et seq.
disqualification of, by
bankruptcy, 302, 337
holding other offices, 300 note (■*'), 327, 337
interest in contracts, 300 note (i), 327, 337
duties of, to observe good faith, 363 et seq.
commencement of duties, 365
as to surrenders of shares, 517 et seq.
as to transfers of shares, 464 et seq.t 834, 835
as to transmission of shares, 468
as trustees, 363 ct seq.
of their powers, 364, 377
to account for
benefits received from promoters, 367
bonuses or commissions on sales, 367
profits made by employment of companies' assets, 365
by issuing shares, 365, 366
secret profits, 345 et seq., 365, 367
share qualifications improperly received, 367
election of, 298 et seq.
examination of, 282 note (?'), 694 et seq.
fees of, not payable until after debts, 389
fiduciary position of, 363 et seq.
forfeiture of shares, powers as to, are trusts, 532
frauds of. See Fraud
liability for, 88 et seq.
when imputable to company, 211 et seq.
indemnities by, to company, 201
to, from shareholders, 380 et seq.
iiiter se, 378
injunctions against. See Injunctions
interest charged against, for misapplication of funds, 375
interference by court, with, 575
liability of, 239 et seq., 363 et seq. See, also, Liability of Directors
effect of acquiescence on, 377, 378
of bankruptcy, 374
of death, 374
for accounts, fraudulent, 446
GENERAL INDEX.
1179
DIRECTORS— continued.
1. Generally — continued.
liability of— continued.
for acts of each other, 88, 244, 374, 375
acts done bond fide, 373 note (i)
acts of other agents, 240
assets lost or misapplied, 371 et seq.
bills and notes, 231 et seq.
bonuses and commissions, 367
breach of trust, 374
buying out shareholders with company s money, 520, 527
compromising claims, none if bond fide, 374
contracts, 240
errors of judgment, 373
excess of authority, 241 et seq.
frauds, 88—92, 239. See, also, Fka.uds
of co-directors, 88
guarantees, 200
indemnities, 200
misfeasance under § 165 of Companies act, 1862... 694
misrepresentations in prospectus, 88 et seq.
negligence and wilful default, 372
by relying on others, 374
not stopping unsuccessful company, 373
overdrawing banking account, 196, 242, 243
paying dividends out of capital, 432
profits improperly made, 364 et seq.
promotion money improperly paid, 372, 374
qualification shares obtained from promoters, 367
sales to company, 369
torts, 239 et seq.
may be unlimited though company^is limited, 116, 253
rate of interest charged against, 375
Statute of Limitations, its application to, 374
loans to, 373, 374
by, to company, 193, 388
majority of board may act, 156, 158
may issue shares and debentures to themselves at a discount, when, 369
meetings must be duly summoned, 157 note (u), 158, 304 et seq.
misconduct of, no ground for winding up, 632
notice to, when it affects company, 156, 204
through the books of the company, 518 note (e)
number of, 299
vacancies in, 302
varying, 299
of illegal companies, liability of, 131
paying dividends out of capital, 432
powers of, treated as trusts, 377
cease on voluntary winding up, 879
presents to, 321, 366 note (w), 389
qualifications of, 300
acting without, 794
liability as contributories in respect of share qualifications, JW
et seq.
may not receive from promoters, 367
transfer of, to avoid liability, 825
quorum of, 155-157, 174, 299, 302
recovery of monies by, improperly distributed amongst shareholders, 389,
390
removal of, 302, 327, 332
remuneration of,
may not vote themselves, 303
no implied right to, 366 note {u)
sales by, to the company, 357 et seq., 369
selling shares for their own benefit, 365
selling his own shares as unallotted, 592
statements of, when binding on the company, 206 211 et seq.
1180 GENERAL INDEX.
D IRECTORS— continued.
1. Generally — continued.
transfer of shares, 464 et seq. See Transfer
consent of, when required, 464 et seq.
how to be exercised, 465, 466, 696 note (h)
power of court to consent, 833 et seq.
to transfer of his own shares, 467
to, distinguished from a surrender of shares, 830
to and by, contributories in cases of, 830, 831
transmission of shares, consent of, to, not necessary, 468
unregistered securities held by, are valid, 203
vacancies in number of, 302
when not necessary parties to actions against companies, 572
who are, 299
persons deemed to be, 299
2. of companies governed by Cos. CI. Cons, act, 8 & 9 Vict. c. 16. ..327 et seq.
contracts between them and their companies, 328
indemnity of. 330
powers of, 329
3. of companies governed by Companies act, 1862
appointment, 337
conduct of, may be investigated on winding up, 694
delegation of powers by, 156, 338
disqualifications of, 337
duties of, 338
liability of, in limited company may be unlimited, 116, 253
meeting of, 337
not using word limited, 231, 253
pay of, 337
removal of, 337
See Companies
DIRECTORY CLAUSES, 172—175
as to number of directors, 299
DISCHARGE
from liability. See Liability
of winding-up order, 662
DISCLAIMER
of shares by trustee in bankruptcy, 553
DISCLOSURE
of contracts on prospectus, 91
DISCOUNT,
debentures may be issued at, 197, 401 note (c)
holder of shares issued at, a contributory, 787
shares cannot be issued at, under Companies act, 1862... 334, 396, 401
when shares may be issued at, 396, 399
when directors may take shares and debentures issued at, 369
DISCOVERY,
affidavit of documents by directors, 595
against companies, 594, 595
interrogatories,
officers of company may be examined by, 265, 594
public officers may be examined by, 270
of shareholders, provisions for, 282
DISCRETION
of court
as to granting mandamus, 605
interfering between shareholders, 574 et seq.
making a winding-up order, 630
calls, 846
of directors,
as to allowing transfers, 364, 465, 834
exercise of, by court, 834. See, also Injunction ; Specific
Performance
GENEKAL INDEX. 1181
DISMISSAL
of company's servants by winding up, 729
DISPUTES
between shareholders, how settled, 314 et seq.
in ordinary course of business, 316 et seq.
involving change of business, 319 et seq.
See, also, Majority
DISQUALIFICATION
of directors, 300 note (i), 302, 327, 337
shareholders. See Shareholders
DISSOLUTION
by bankruptcy, 610
by bankruptcy of one shareholder, 610
causes of, 608
effect of, on rights of creditors, 885
in winding up. See Winding up
jurisdiction of court after, 684 note (c)
of building societies, 917
of companies. 871, 885
of foreign companies, 623, 912
of industrial societies, 922
of railway companies, 901 et seq.
order for, 870
winding up a company already dissolved, 619
DISSOLVED COMPANY,
may be wound up, 619
jurisdiction over, 885
DISTRESS,
effect of winding-up order on right, 678
for rent, 678
rates, 681
priority for, 718
DISTRIBUTION
of surplus assets on compulsory winding up, 867 et seq.
on voluntary winding up, 885
DIVIDENDS,
actions for, 437, 438
apportionment of, 546
bonuses and, distinction between, 545
guarantee fund to provide, belongs to company when, 436
injunction to restrain payment of, 571, 574
mandamus to compel payment of, 605
must be paid in money, 436, 580
payment of, 429 et seq.
actions to restrain, 571, 574, 605
by insolvent company, effect of, as regards contributories, 84
in particular companies, 437, 438. See Companies
on shares of unequal amount, 434
out of capital, 321, 334, 430
provisions of Companies act, 1862, as to, 438
to married women, 436
to preference shareholders, 435
when creditors are unpaid, 430
where share is subject to a charging order, 436, 460
transfer of share has been forged, 483
payable ratably according to number of shares, 434
right of legatee of shares to, 544
purchaser of shares to, 490
shareholders not liable to refund, although based on erroneous valuation,
433
1182 GENERAL INDEX.
DOCK COMPANIES.
See Companies governed by 8 & 9 Vict. c. 16
shares in, not within the Mortmain acts, 452
DOCUMENTS,
inspection and production of in winding up, 658, b92
lien on of company being wound up, 692
DOMICIL
of companies, 37, 38, 910, 911
DRUGGISTS,
companies carrying on business of, 1<J»
DUE, , ,
meaning of the word, 458 note (p)
DURATION
of companies. See Dissolution ; Winding up
of liability of shareholders. See Liability
commencement of, 254
termination of, 255
as regards future acts, 255
past acts, 256
in cases of amalgamation, 258 et seq.
DUTIES n _, TTT
of directors generally. See Analysis of Contents, Bk. 111.
See, also, Directors
ELECTION
of directors. See Directors
ELEGIT. See Execution
scire facias after, 296
ENROLMENT
of surrender of charter, 99
EQUITABLE DEBTS,
proof of, in winding up, 722
EQUITABLE MORTGAGEE,
when a contributory, 806
ESTOPPEL __
as to shares issued as fully paid up, 787
by carelessness giving rise to a fraud, 486
contributories by, 757 et seq.
effect of, as between company and shareholder, 49
as between creditor and shareholder, 54
calls upon, 421
ignorance of material facts on, 53
foreign laws of, 913
in actions for calls, 421
in cases which are ultra vires, none, 163
of company by its register, 60, 108
certificate of shares, 64, 484, 4 85
seal, effect of company's, 199, 221 note (6), 225
shareholder, by, 48 et seq.
by being on register, 60, 106
execution of companies' deed, 53
where shares illegal, 52
irregularly issued, 52
transfers in blank. 481
See Formalities ; Register ; Shareholders
GENERAL INDEX. 1183
EVIDENCE. Sec Index No. I.
acts of one member of committee, none against another, 145
books of companies being wound up, how far, 705
of official liquidator, 705
in actions for calls, 428
recovery of deposits, 30 note (y), 34
minutes of meetings, 312, 335
of custom of Stock Exchange, 501, 515
of brokers, 508 note (»), 515
of incorporation, 111
in criminal cases, 112 note (n)
on petition to wind up company, 657, 689
in opposition to, 658
returns to stamp office by banking company, 110
that a company is registered, 111 et seq.
apersonis a shareholder, 15 et seq., 44, Book I. cap. II. See Register
by admission, 64
certificates of title, 64
official returns, 45 note (a), 57 et seq.
registers generally, 57 et seq.
rough share-book, 59
in a cost-book mining company, 96
companies governed by 7 Geo. 4, c. 46 ..109, 288
8 & 9 Vict. c. 16... 103, 292
the Companies act, 1862.. 119
in proceedings by sci. fa., 288, 292
to be produced by a broker seeking to recover a call paid by him, 513
note (m)
to correct register, 61
See also Companies ; Liability ; Proof of Debts ; Notice ; Stamp
EXAMINATION
of affairs of company under Companies act, 1862, by inspectors, 335
directors, 282 note (i), 694 et seq.
persons in winding up, 689, 690 et seq.
EXCLUSION
of shareholders from register, damages for, how far recoverable, 124
EXECUTED
and executory contracts of corporations, 221
EXECUTIONS, 276 et seq.
against company or person named in the judgment, 278
corporations, 278
executors of a deceased shareholder, 539
past shareholder, 286
protected property, 278
public officers under 7 Geo. 4, c. 46.. 278, 285
7 Wm. 4 & 1 Vict. c. 73... 289
rolling-stock of railway companies, 278
shareholders in companies governed by
7 Geo. 4, c. 46. ..285
the Letters patent act, 289
8 & 9 Vict. c. 16... 290
other companies, 293
upon a judgment obtained against a company or its
public officer, 280 et seq.
attaching shares, 463
charging shares, 460
discovery of shareholders on, 282
for separate debt of shareholder, 9 note (d), 460 et seq.
in cases of fraud by creditor, 283
injunction to restrain, 282 note (k)
leave to issue, 281 et seq.
registry of judgments against companies, 281
right of creditor to proceed against individual shareholders, 282
1184 GENERAL INDEX.
EXECUTION'S— continued.
scire facias against shareholders, 281, 294. See Sci. fa.
shareholder can only be proceeded against after judgment against com-
pany, 280
when funds only are liable, 279
mandamus in such case, 279, 280
where company is being wound up, 676 et seq., 682
EXECUTOES
of deceased shareholder
actions against, for calls, 425, 427 note (p)
liabilities of
after transfer of shares, 831
for fraud of their testator, 88
for not selling shares, 547
to be made contributories, 537, 812
to calls, 426, 848
to creditors of the company, 539
to separate creditors and legatees of deceased, 540 et seq.
sci. fa. did not lie against, 295
when they allow shares to be transferred into their own name,
538
rights of,
to indemnity against calls, 536
to petition to wind up company, 537, 628
transfer of shares by, 537, 538
transmission of shares to, 468, 537, 538
See Death
EXISTING COMPANIES,
registration of, under act of 1862. See Registration
EXPENSES
of forming company
under 8 & 9 Vict. c. 16... 400
liability of company for, 606
promoters for, 605, 606
subscribers for, 30
See also Contribution
EXPULSION
from clubs, 303 note (e), 528 note (a)
from corporations, 528 note (a)
from trade associations, 528 note (a)
See Forfeiture
EXTENSION OF BUSINESS, 199
EXTRAORDINARY MEETING, 307. See Meeting
EXTRAORDINARY RESOLUTION, 877
FACTORS ACTS
do not apply to shares, 476
FALSE PRETENCES,
indictment for obtaining money under, 87 note (6)
FALSE STATEMENTS,
actions for damages for, 73
for rescission of contract for, 71, 589 et seq.
by directors, liability of company for, 211 et seq.
effect of, on contributories, 79 et seq.
ensnaring public by, 131, 132
See also Fraud ; Misrepresentation
FEES
of directors cannot be paid until debts are satisfied, 389
GENERAL IXDEX. 1185
FELONS, 38
FEME COVERT. See Married Women
FICTITIOUS NAME,
shareholder assuming, 59
FIDUCIARY RELATION
of directors to company, 363 ct seq.
of promoters to company, 347 ct seq.
FIRE INSURANCE COMPANY. See Insurance Companies
majority cannot change to marine insurance company, 321
FLOATING SECURITY,
effect of winding-up order upon, 197, 665 note (x)
nature of, given by a debenture, 197
FOREIGN COMPANY, 909 ct seq.
contracts of, 910
conventions as to, 914
dissolution of, 623
forfeiture of shares in, 528 note («)
how wound up, 622, 912
jurisdiction over, of English courts, 622, 911 ct seq.
law applicable to transactions of, 913
liability of members of, 913
may be registered, 116
unless incorporated, 115
public officers of, 910
residence of, 910
security for costs required from, 263
service of writ on, 264 note (/>), 911
transfer of shares in, 481
when Court will refuse to wind up, 622
FOREIGN GOVERNMENT,
conventions with, as regards foreign companies, 914
injunction to restrain application to, refused, 324 note (I)
FOREIGNERS
may register company to carry on business abroad, 116
FORFEITURE OF SHARES, 528 ct seq., 842 ct seq.
action for, 63
by directors improperly appointed, 300
cancellation of forfeited shares, 530
clause in articles authorising if shareholder sued company, illegal, 5 28
effect of, 533, 534
for non-payment of calls, 425, 552
in cost-book mining companies, 326, 529
in companies governed by 8 & 9 Vict. c. 16... 333, 529
Companies act, 1862. ..530
in the case of illegally subdivided shares, 843 note (m)
injunction to restrain, 534, 535, 597
of bankrupt shareholders, 552
power to forfeit must be exercised bona fide, 532
relief from, 534, 571
right to forfeit shares, 322, 528
where subscriber has not executed company's deed, 529 note (/>)
shareholder may be a contributory notwithstanding, 842 ct seq.
where forfeiture irregular, 843
statutes authorising, 529
surrender if ultra vires not valid as, 845
to enable shareholder to retire, 532
what amounts to, 533
when right to forfeit co-exists with right to sue for calls, 425, 530
for interest on calls, 531 note (p), 534 note (c)
L.C. 4 G
1186 GENERAL INDEX.
FORGED
instrument, what is, 198
transfers, 483 et scq.
FORGERY
no bar to civil proceeding for damages occasioned by, 483 note (v)
of scrip, 65 note (b)
FORM OF CONTRACT,
effect of, on liability of companies, 220 ct scq.
FORMALITIES. See also Irregularities
imperative and directory clauses, 172 et seq.
to be observed before becoming a shareholder
complied with by the company, 46
effect of not observing,
as between company and alleged shareholder, 49
as between creditor and alleged shareholder, 54, 2891
as regards contributories, 758
necessity of observing, 44 ct scq.
waiver of observance of, 47, 49
writing, when agreement to take shares must be in, 761
to be observed by directors and companies in exercising powers,
effect of not observing, 166 et scq., 316
presumption in favour of regularity, 168
FORMATION OF COMPANIES, 11 ct scq. See Contents, Bk. I., Cap. I.
agreements for, specific performance of, 585
of chartered companies, 97
of companies governed by Letters patent act, 99
by special act of Parliament, 102
expenses of formation
liability of companies for, 146, 147
subscribers to abortive company, 30
payment out of deposits, 32
recovery of, 146
when completed, 18
FORMER MEMBERS. See Past Members ; Retired Shareholders
in winding up, 816 ct seq.
FRANCE,
convention with, 914
FRAUD. See Misrepresentation
general rules as to fraudulent statements, 68 ct scq., 590
must be made to induce person to act on it, 70, 90
be of fact, 68
intention may be a fact, 69
be untrue, 69
have been acted upon, 71, 77 et seq., 84
ambiguous statements, 71
concealment of material facts, 70, 90
where fraudulent, 90
exaggerated opinions, &c, 69
intention, 69
opportunity of ascertaining truth by person deceived not material, 72
statements true when made but subsequently untrue, 21, 69
authority of agents in matters of, 211
by company no defence on sci.fa., 283
by person not a party to the contract, 84
by promoters, 352 et seq.
contributories in cases of, 776
dispositions of company's property in fraud of creditors, 278
GENERAL INDEX.
1187
FRAUD— continued.
civil remedies for
recovery of damages, 73, 216, 219
from company, 74, 216 ct seq.
when winding up, for fraud inducing membership, 74, 217
note (o), 754
from person guilty of fraud, 88 et scq. See Directors
under section 38 of Companies act, 1867... 91
from executors of person guilty of, 88
lapse of time, effect of, on, 90
measure of damages,
contract to take shares', 90
rescission of contract induced by 72. 74 et scq., 211—216, 589 et scq.
of contract to take shares, 74 ct seq.
effect of persons taking shares on faith of others being share-
holders, 86
fraud imputable to the company, 79 — 81
of the company not cause of contract, 84
repudiation too late, 85. See Repudiation
fraud not imputable to the company, 81—84
by person not a party to the contract, 84
prospectus fraudulent under Companies act, 1867, s. 38...
91, 92
when company is being wound up, 589, 753, 776
when company is not being wound up, 590
of eontract with promoters, 352 et seq.
delay may bar right to, 584
criminal responsibility of directors and others
fraudulent accounts, 446
fraudulently raising or lowering the price of shares, 488
issue of invalid shares, 394
obtaining settling day on Stock Exchange, 87, 488
payment of dividends out of capital, 433
publishing fraudulent reports, 87
judgment obtained by, shareholder's right to impeach, 283
in sale of shares, 496, 592
liability of directors for, 87 et seq., 239. See Directors ; Liability
liability of company for frauds of its agents, 211 — 219
on Stock Exchange, 218
rectification of register in cases of, 123
return of deposit, effect of, on right to, 34
sanctioned by a majority, interference of court, 581
when a ground for winding up, 632
FRAUDS, STATUTE OF
and Companies act,1862...282
and Companies clauses act, 227, 228
shares, how far within, 452, 453, 490
FRAUDULENT
accounts, 446
penalties for, 446
companies, winding up of, 632
preference, 668
sales of shai'es, 496
statements, 68 et seq., 590. See Fraud ; Misrepresentation
transfers, 464, 465
contributories in case of, 825 ct scq.
FREEHOLD LAND SOCIETIES
are not associations for gain, 115
FRIENDLY SOCIETIES,
loans by, 201
winding up of, 619
FULLY PAID-UP SHARES. See Paid up ; Shares fully paid up
4 a 2
1188 GENERAL INDEX.
FUNDS OF COMPANIES,
injunctions to restrain misapplication of, 321 et seq.
liability limited to, 246 et seq.
creditor has no rights against shareholders, 284
distribution in winding up, 736
mandamus to pay out of, 280
rights against funds, 249, 279, 280
powers of majority over application of, 321
what cannot be paid out of, 321 et seq.
GAIN,
carrying on business for, what is, 114, 115
companies not for, 10, 117 note (s)
GAMING
in lniying and selling shares, 488
GARNISHEE ORDER,
staying proceedings under, after a winding up, 678
GAS COMPANIES,
bills of exchange, no implied power to draw, 185
contracts not under seal, 226
GAZETTE. See Advertisements
GERMANY,
convention with, 914
GOODS AND CHATTELS,
shares, how far, 453
GOOD FAITH
required from directors, 363
from promoters, 345 et seq.
GRATUITIES,
power of companies to give to servants, 318
GREECE,
convention with, 914
GUARANTEE,
companies limited by. See Companies governed by Companies Act,
1862
articles of association necessary, 117, 118
memorandum of association of, 117
of profits to other companies, 200 note (y)
when companies bound by, 200, 201
GUARANTEED DIVIDENDS, 435, 436
GUARDIAN
of infant shareholder, right to vote under Companies clauses act, 332
contributory, right of, 809 note (x)
HEIRS OF DECEASED SHAREHOLDERS,
liability of, in winding up, 813
HISTORY
of law of companies, 2 et seq.
of winding-up acts, 611 et seq.
HOLDING OUT,
effect of name inducing others to take shares,
in cost-book mining companies, 96 note (m)
none by being on register, 60
unless formerly a member, 256
GENEKAL INDEX. 1189
HUSBAND
of .shareholder, liability of, 42
in banking company under 7 Geo. IV. c. 46... 109
transmission of shares to, 468
voting, 310, 311
when a contributory, 807
ILLEGAL COMPANIES,
what companies are, 130 ct scq. ; Bk. I, c. 5, § 1
assuming to act as a corporation, 131, 134 note (/>)
bankers, 136—138
cheiiiists, 138
druggists, 138
licensed trades, 138
non-registration, by reason of, 136
scrip companies,
at common law, 133
since Companies act, 1862... 135
consequences of illegality, 139 — 142
actions by and against, 140, 141
actions for account, 139
administration of trusts, 141
contract to form is illegal, 139
contribution for loss by illegal transaction, 141
indictment of, 141
proof in bankruptcy for debt due to, 141
recovery of subscriptions, 139
recovery of debts, 141
sales of shares in, 140, 487, 516
winding up of, 141, 621
ILLEGAL ISSUE OF SHARES,
when holders are liable for, 52, 774
ILLEGAL SALE OF SHARES, 140, 487, 516
IMPERATIVE AND DIRECTORY CLAUSES, 172—17.' £a»
IMPLIED CONTRACT
to carry on business, 249
IMPLIED POWERS. Bk. II. c. 3, s. 1
arising from business of company, 317 ct seq.
of directors,
generally, 155, 161 et seq.
as regards
actions, 265
admissions, 183
amalgamation, 183, 891
arbitration, 184
bills and notes, 185 ct scq.
bills in Parliament, 186
bonds, 186
borrowing money, 187
cheques, 196
compromise, 196
debentures, 196
deeds, 198
extension of business, 199
gratuities, 318
insurances, 201
investments, 201
judicial proceedings, 201
leases, 201
loans, 201
mortgages, 202
1190 GENERAL INDEX.
IMPLIED POWERS— cmvbinued.
notices, 204
pensions, 318
pledges of chattels, 202
purchases, 205
purchase of shares of company out of company's funds, 179
ratification, 177 et seq.
representations and admissions, 206
sales, 207
transfer of business, 208
of promoters of companies, 143 et seq.
INCHOATE COMPANIES. See Abortive Companies
INCOME TAX,
payment of, by companies, 911
INCORPORATED COMPANIES,
actions by and against, 262 et seq.
are public companies, 462
causes of dissolution of, 609
formation of
chartered companies, 97. See Chartered Companies
companies incorporated by special act of Parliament, 102
registered companies, 111
liability of members, when company's liability is limited to its funds, 250
See Companies ; Corporation
INCORPORATION. See Index No. I.
by registration, 111
proof of, 112
in criminal cases, 112 note (n)
effect of, on sureties, 127 note (p). 146 note (n)
INCREASE OF CAPITAL. See Capital
generally, 397
difference between and borrowing, 191, 192
of cost-book mining companies, 398
under Companies clauses consolidation act, 399
under Companies acts, 401
INDEBTED,
meaning of the word, 458 note (p)
INDEMNITY,
generally, 379 et seq.
agreement with shareholders for, no answer to action against company
Shaw's claim, 10 Ch. 177
amalgamation of companies on, 201
eontracts for, enforcement of, 588
broker's right to, 512
not for their own default, 514
directors' right to,
generally, 378 et seq.
when right is restricted, 386
under Companies clauses act, 330
when dividends have been improperly paid, 432 note (/)
public officers right to, 379
shareholders' right to, against judgments, 379
from directors, 385, 386
for having paid company's debt, 412 note (re)
specific legatee's right to, out of assets of deceased, 544
trustee of company, right to, in winding up, 727, 805
trustees' right to, against being made a contributory, 539, 805
transferor of shares to a bankrupt transferee may prove in respect of his
right to, 554
persons entitled to, may prove against company, 728
right to, in winding up, 727, 728
GENERAL INDEX. 1191
INDEMNITY— continued.
rights to, on sale of shares, 493
to outgoing shareholders against liabilities, 201
to shareholders against loss, 201
when company bound by, 200, 201
See also CONTRIBUTION
INDICTMENT,
for conspiracy to obtain settling day, 87
fraudulent accounts, 146
fraudulently paying dividends out of capital, 433
inducing persons to take shares, 448
obtaining money nnder false pretences, 448 note (/<)
issuing too many shares, 394
stealing property of company, 268 note (n)
illegal companies, 141
INDUSTRIAL AND PROVIDENT SOCIETIES,
generally, 915 et scq.
can be wound up voluntarily, 614 note (")
court having jurisdiction to wind up, 615
formerly sued and were sued by public officer, 266 note (a)
INFANTS,
companies' right to object to, 811
liability of jobber who passes name of, 503
purchaser who passes name of, 509
necessaries, liability for money borrowed and expended in, 236
rectification of register by, 123
repudiation of shares by, 39, 810
shareholders, 39
liability of, to calls, 422
to be contributories, 809
signature of memorandum of association by, 39
transfers to, 828
transferors to, when contributories, 811, 828
vote by guardian under Companies clauses act, 332
INJUNCTION,
generally, 596 et scq.
against companies and directors, 596 et scq.
instances when granted, 596 — 599
refused, 599—602
limited company, undertaking as to damages, 264
for correction of register, 61, 108
to restrain actions against companies being wound up, 669 et scq.
against shareholders at instigation of directors, 560
advertising plaintiff as promoter of a company, 596
carrying on business under similar name, 113
dissolution of company, 885, 886
executions against one shareholder at the suit of another,
282
companies being wound up, 676 ct seq.
holding improper meetings, 304
illegal acts, 596 ct scq.
improper application of company's funds, 321 ct seq., 599
application to Parliament, 323
to foreign government, 324, note (I)
forfeiture of shares, 535
keeping plaintiff's name on register of shareholders, 61,
596
majority, 579
minority, 581
making or enforcing a call, 577, 599, 600
payment of dividend in shares, 597
presentation of winding-up petition, 637 note (w)
proceedings for a libel upon the directors, 598
1192 GENERAL INDEX.
INJ UTXCTIOTS—corvtinued.
generally — continued.
to restrain purchase by company of its own shares, 599
obtaining a charter, 98 note (I)
registering one company in same name as another, 112
note (o), 113
submitting improper resolutions to a meeting, 304, 599
surrendering a charter, 323
INSOLVENCY,
tests of, in winding up, 631
INSPECTION,
of accounts, 439 et seq.
under Companies clauses act, 441
Companies act, 1862... 442
Life insurance companies act, 445
Stannaries act, 445
by Board of Trade, 444
of books in hands of liquidator, 704
of company's books, 313, 3H, 595
of register of shareholders, 103, 125
by creditors, 282
of registered documents, 126
right to, includes right to copy, 314
shareholders, rights of,
under Companies clauses act, 333
Companies act, 1862... 343
Stannaries acts, 325
mandamus to permit, 440
in winding up, 658, 692
See Books ; and Index No. I.
INSPECTORS. See Index No. I.
examination of company's affairs by, 335
INSTALMENTS,
calls payable by, 416
INSURANCE COMPANIES,
amalgamation of. See Amalgamation
effect of on creditors, 258
on policy holders, 259
distribution of funds where liability is limited to them, 733, 736
Life. See Life Assubance Companies
majority cannot change nature of, 321
mutual. See Mutual Insurance Companies
petition to be wound up presented by, before registration, 127 note (I)
policies of, binding on, though issued irregularly, 169
power to transfer assets although policies payable out of them, 249
provisional liquidator, when appointed, 659
registration of, 114
shares in, not within Mortmain acts, 452
unregistered, may be wound up under Companies act, 1862, when, 617
note (h)
valuation of policies and annuities in winding up, 732
INSURANCES,
when binding on company, 201
INTENTION,
untrue statement of, 69
INTEREST,
on calls paid in advance, 321 note (.s), 870
not paid at proper time, 414, 531 note (p), 534 note (c), 847
on debts in winding up, 724
on share warrants not payable out of capital, 321
rate of, charged against directors, 375
GENERAL INDEX. 1193
INTERNAL MANAGEMENT,
interference of court with, 304
INTERPLEADER
in cases of forged transfer, 483 note (")
INTERROGATORIES,
to whom delivered, in actions against companies, 265, 594
examination of public officers by, 270
INTRA VIRES. See U lt i i A VIBES.
distinction between acts, and acts ultra vires, 1 »> 1 et seq.
IN VEST IXC
in shares, 450
IRELAND,
actions in, against company ;n liquidation,
stayed when, 674 note (?)
court for winding up companies in, 615
old companies in, how wound up, 623
IRREGULARITIES,
effect ot non-observance of formalities, 43 et seq.
effect ot, on validity of acts of directors, 155 et seq., 166 et seq.
irregular acts distinguished from unauthorised acts, 161 i
liability of company for, 155 ct seq., 166 et seq.
in appointment of directors, 166, 167, 300
in making calls, 409, 412, 415
waiver of, 47, 49
as between company and shareholder, 19
as between creditor and shareholder, S I
as regards contributories, 758
See, also, Formalities
ISSUE OF SHARES,
illegal, effect of, 52
criminal liability for, 394
what amounts to, 783
ITALY,
convention with, as to companies, 914
JOBBER, 500. See Broker, and Sale of Shares
JOINT OWNEES OF SHARES,
survivorship between, 538
survivor contributory, 812
JOINT STOCK COMPANY. See Companies
history of law relating to, 2 et seq.
JUDGE,
interested in company as to which he adjudicates. Re Hopkins, I
E., B. & E., 100
JUDGMENT,
against companies,
execution of, against company, 276. See Execution
against shareholder, 280 et seq.
obtained by fraud can be impeached by shareholder, 283
registry of, 281
validity of, cannot be questioned on set. fa., 283, 297
except for fraud, 283, 297
may be disputed on petition to wind up, 638
colonial, may be sued upon here, 294 note (>j)
foreign, 914
1194 GENERAL INDEX.
JUDGMENT— continued.
in action for call, not set aside for irregularity of call, 41 o
of county court against compauy, execution of, 280
shareholder's right to indemnity against, 379
winding-up order is a, 663
mode of enforcing, 697. See Order
JUDICATURE ACTS, .
effect of, on actions between companies and their members, 271, obi, Doz
section 10, effect of, 678, 719 et seq.
JURISDICTION , T AT .
of court under act of 1862. See Winding up, and Index No. I.
of judge in chambers in winding up, 686
of Stannaries. See Stannaries ; Cost Book Mining Companies
over foreign companies, 911 et seq.
dissolved companies, 885
service of notices in winding up out of, 685 note (i), 687
"JUST AND EQUITABLE"
to wind up company, when, 631
LACHES,
when a bar to relief, 582 et seq.
in barring right to an account, 583
in making claim in winding up, 723
in not applying to be removed from list of contributories, 748
in repudiating shares, 79 et seq., 772
in setting aside agreements, 582, 584
LANCASTER,
winding up companies by Palatine Court of, 616
LAND,
shares not an interest in, 451 — 453
LANDS CLAUSES CONSOLIDATION ACT. See Companies governed by
8 & 9 Vict. c. 16
appointment of arbitrator under, 228
LAND COMPANIES,
where shares of, within the Mortmain acts, 452
LANDLORD,
right of, to distrain in winding up, 678
to future rent, 731, 886 note (a)
LAPSE OF TIME. See Delay, Time, Laches
LEASES,
to and by companies, 201, 202
specific performance decreed against directors, 243 note (o)
LEAVE OF COURT
in matters connected with winding up, 703, 712
LEDGER,
when a sufficient register, 59
LEGACY,
of shares, 540 et seq.
absolute legacies, 542
ademption of, 541
apportionment of interest and dividends, 546
income of, before sale, as between tenant for life and remainderman,
543
legacies for life, 542, 545
legatee may decline to accept, 541
i.KNKRAIi INDEX.
1195
LEGACY — continued.
of shares — continued.
liability of executors for not selling when bequeathed upon trust for
sale, 547, 548
probate duty, 543
] Kisses stock, 400 note (/)
not debentures, 100 note (/)
specific legatee, rights of, 542 ct scq.
to profits and bonuses. 544, 545
liability of, to calls, 543, 544
as contributory, 812
what will pass shares, 5 II
LEGALITY. See Illegality
LEGATEE,
when a contributory, 812
See Legacy
LBMAN'S ACT, 489
LETTERS OF ALLOTMENT, 14. See Allotju m
LETTERS PATENT ACT, 99
See Companies govebned by 7 Wm. 4 & l Vict. c. 73
LIABILITY,
of agents on warranty of authority, 241. See also AGENTS
of companies,
attempts to limit, 244 et scq.
summary of law as to, 182
by estoppel, 225. See KsmiTia
part performance, 223
ratification, 175, 223
for the acts of their agents not directors, 159
directors, 155 el scq.
when irregularly appointed, 160
frauds of, 74, 79 et seq., 211 et scq.
in particular cases, 183 ct scq. See Implied
Powers
intra vires, but irregular, 166
ultra vires, 152, 162
members, 154
promoters, 146 et scq.
acts ultra vires of the company, 151
by adoption, 147
by constitution of company, 146
by taking benefit of the agreement, 148
in equity, 149 — 152
for goods supplied, 205
for negligence of servants, 208
for representations, 206
for torts and frauds, 74, 208 et scq.
on amalgamation, 259, 734
on bills of exchange, 230 ct scq.
on contracts of which company has had the benefit, 235 ct seq.
not under seal, 220 ct seq. See Seal of Company
under particular statutes, 226 et seq.
when judgment was obtained on, 224
on promissory notes, 230 et scq.
to indemnify directors, 378 et seq.
See Contract ; Companies
of corporations oil unsealed contracts, 220 et scq. See Corporations
of directors, 239 et seq., 363 et scq. See also Directors ; Implied Powers
for accounts, fraudulent, 446
acts of each other, 88, 244, 374, 375
acts done bond fide, 373, note (0
1196 GENERAL INDEX.
LIABILITY— continued.
of directors — continued.
for acts of other agents, 240
assets lost or misapplied, 371 ct seq.
acquiescence of company, effect of, 377, 378
bonuses and commissions, 367
breach of trust, 374
buying shares in their own company with company's funds, 520
compromising claims, none if bond fide, 374
contribution and indemnity, 378, 379 ct scq.
costs, in action for infringement of patent, 240, 265
errors of judgment none, 373
excess of authority, 241 ct seq.
accepting bdls, 242
borrowing money, 242
honest mistakes as to authority. 242
issuing debentures, 242
warranty of authority, 241, 243
fraud, 88—92, 239. See also Fraud
of co-directors, 88
under § 38 of Companies act, 1867. ..91, 92
guarantees, 200
indemnities, 200
misfeasance under § 165 of Companies act, 1862. ..694
negligence and wilful default, 372
by relying on others, 374
not barred by Statute of Limitations, 374
death, 374
bankruptcy. 374
not stopping unsuccessful company, 373
omitting word limited, 231, 240, 253
overdrawing banking account, 196, 242, 243
paying dividends out of capital, 432
profits improperly obtained from company, 364 et seq.
promotion money improperly paid, 372, 374
qualification shares obtained from promoters, 367
to be contributories in respect of, 790 et seq
sales to company, 369
torts, 239 ct scq.
criminal,
carrying on illegal business, 141
conspiring to obtain settling day, 87
fraudulent accounts, 446
issuing false reports, &c, 87
paying dividends out of capital, 433
of corporations to attachment, 279
on bills of exchange, 231, 242
on contracts, 240
when contracting as principals, 243
on promissory notes, 231
may be unlimited though company is limited, 116, 253
rate of interest, charged against, 375
executors
for fraud of deceased, 88
for not selling shares, 547
to calls, 536
to be made contributories, 537, 812 et seq.
to creditors of company, 539
to creditors and legatees of deceased shareholder, 5 40
when they allow shares to be transferred to their own name, 538
of managing committee, 145
to be contributories, 766
of promoters. See Promoters
for acts of each other, 143 et seq.
for contracts entered into on behalf of an unformed company, 248-
for profits made from company, 345 et seq.
GENERAL INDEX. 1197
LIABILITY— continued.
of promoters — continued.
to company, how affected by bankruptcy, 349
of provisional committee, 145
of purser of cost-book mines for false accounts, 447
of shareholders, 244 et scq.
after surrender of shares, 517 et scq., 837 et seq.
winding up, 753
to be made contributories, 750 et seq. See CONTBIW0TORIE8
to calls, 419, 853. See Calls
to creditors
duration of, 254 et seq.
commencement of, 254
termination of, 255
in amalgamation, 258
extent of, 244 et seq.
attempts to limit liability, 245 et seq.
by a special contract, 245
to funds of the company, 246 et scq., 284, 854
without a special contract, 245
limited by Btatute, '251 ct seq.
in companies governed by
7 Geo. 4, c. 46... 252
7 Win. 4 & 1 Vict. c. 73... 252, 289
8 & 9 Vict. c. 16... 252, 290_
by Companies act, 1862. ..253
of past members of, 256, 257, 816 et seq.
in companies empowered to sue and be sued, 252
in cost-book mines, 94. See Cost-Book Mining Companies
in foreign companies, 913
on amalgamation, 897
to contribute not to be confounded with liability to creditors, 2y/
to refund money improperly divided amongst them, 389, 390
transfer of shares to avoid, 465, 825 ct seq.
where company is not incorporated, 251
shareholders have been deceived by directors, 283. See * RA.tjd
shareholder has been induced to become such by creditor suing
him, 284
of subscribers for acts of promoters, 144
LIBEL,
action by public officer for, 26 •
liability of company for, 209
on company by member, action lies for, 563
on directors, proceedings by company for, restrained, 598
reports of directors to shareholders when privileged, 209 note (?)
LICENCES, § . .
companies carrying on business requiring, l<5»
LIEN
by amalgamating companies, 735
eifect of winding up on, 668, 726
for deposit, none, 32
miner's, for wages in cost-book company, 2/8_note [g)
creditors have none on company's property, 278
on documents of company being wound up, 692
on shares, 456 et seq.
agreements for, 457
discharge of, before transfer registered, 124
extent of, 458
of company for debts due to it, 456
of companies governed by particular statutes, 458
of one shareholder as against another, 456
priority of, over equitable charges, 459
vendors, for unpaid purchase money, 496
1198 GENERAL INDEX.
LIFE ASSURANCE COMPANIES,
accounts to be laid before the Board of Trade, 445
amalgamated, bow wound up, 643
commencement of winding up of, 665, 666
amalgamation of, 898
not bound by a marine insurance, 201
reduction of contracts of, 635
when insolvent may be wound up, 634
See Index No. I.
LIMITATIONS, STATUTE OF,
calls when barred by, 427
effect of winding-up order on, 723
effect of, on liability to be put on list of contributories, 822
on liability of directors, 374
in actions for deceit, 90
in cases of forged transfers, 483
payment of debts barred by, in winding up, 723
LIMITED COMPANIES. See Index No. I.
change of unlimited company to, 113, 335
effect of omitting the word "limited," 231, 240, 253
exceptional liabilities of members of, 253
"limited" to be added to name of, 113
sorts of, 7, 8, 251
security for costs by, 263
set-off in cases of winding up, 738
with liability of directors unlimited, 116, 253
See Companies, and Winding up
LIMITED LIABILITY
by statute, 251 et seq.
introduction of, 5
unknown at common law, 245 et seq.
alluring statements as to, 245, 246
attempts to introduce, 245
by stipulating that funds only shall be liable, 246, 736, 737
right against funds, 249
members, 250
exceptional liability, 253
of contributories, 853
registering existing companies with, 113 et seq., 127
what companies cannot be registered with, 116
LIQUIDATORS. See, also, in Index No. I.
in compulsory winding up, 699 et seq.
in voluntary winding up, 878 — 881
appointment and removal of, 8781
control of members and creditors over, 881
duties and powers of, 879
where several, 881
in winding up under supervision of court, 889
1. provisional
appointment of, 700
of insurance company, 700
duties of, 701
2. official liquidator
advertisement of appointment, 702
allowed costs when, 861
out of mortgagee's security, 865
appointment of, 701
as to investigating debts, 714 et seq.
books to be kept by, 704
compromises by, 709
court will act on estimates of, 846
GENERAL INDEX. 1199
LIQU I DATORS— contin ued.
2. official liquidator — continued.
debts contracted by, 715
description <>f, 757
discretion as to calls, 846
evidence by books of, 705
final accounts of, how passed, 870
how far represents the company,
under old acts, 705
underact of 1862 ..706
inspection of books in custody of, 704
liability of for property invested in them, 707 note (r)
loans by, not allowed, 704 note (t)
may consent to transfers after winding up, 837
ought to be receiver when, 675
passing accounts by, 704
payment of costs by, 862
powers of, 707
when more than one, 707
of a survivor, 881
what conferred by statute, 708
removal of, 703
remuneration of, 703
Sanction of court when necessary, 708
consequences of acting without, 7 1 2
security to be given, 702
settling list of contributories, 745 et seq.
solicitor to, 703
demanding more than scale fee, 704 note(»)
taxation of costs of, 863 note (s)
transfer of business of company by, 711
vacancies, how supplied, 702
LIS PENDENS,
petition to wind up not, 666
LIST OF CONTRIBUTORIES, 745
form of, 746
in voluntary winding up, 884
persons secondarily liable, 816 et seq.
resettling, 747
settling, 745
See Contributoiues. See, also, in Index No. I.
LIST OF SHAREHOLDERS. See Register
LLOYD'S BONDS
issued ultra vires, effect of application of money raised by, 237
nature of, 197
power of company to raise money by, 198
LOANS
by companies to directors, 328, 368
by directors to company, 193, 387, 388
by friendly societies, 201
by liquidators, not allowed, 704 note (t)
See Advances
LOAN CAPITAL, 391
LOAN NOTES
improperly issued, 188 note (it)
LOSS OF CAPITAL
reduction of capital on, 403
And see Capital ; Index No. I.
1200 GENERAL INDEX.
LUNATICS, 40
committee of, may vote under Companies clauses act, 332
transfer of shares held by, by order of court, 469
when a contributory, 811
MAJORITY,
at meetings, 318
resolution of, is resolution of meeting, 308
of contributories, wishes of, as to winding up, 641
of creditors, wishes of, as to winding up, 636
of directors, 156, 158
of shareholders,
control of, by court, 572, 574 et seq.
control of minority by court at instance of, 581
powers of, 314 et seq.
amalgamation, as regards, 323
in winding up, 893
application of company's funds, 321 et seq.
application for power to alter nature of company, 323
borrowing money, 190, 192, 317
directors,
appointment of, 298, 299
varying number of, 299
dividends, as regards payment of, 429, 430
forfeiture of shares, 528. See Forfeiture
fraudulent transactions, ratification of, by, 581
in incorporated companies, 314
in unincorporated companies, 315
in matters
arising in ordinary course of a company's business, 316 et seq.
involving a change of the company's business, 319 et seq.,
322, 323
leases authorised by, 202
preference shares. See Preference Shakes
alteration of rights of holders of, 435
issue of, 396
share of profits, no power to exclude shareholder from, 433
surrender of shares, 517
transfer of business, 322
MALICE,
whether imputable to company. 210
MALICIOUS INJURY,
liability of company for, 210
MALICIOUS PETITION
to wind up a company, 614
MANAGEMENT
of companies
generally, 298 et seq.
vested in directors, 298 et seq.
of shareholders in meeting, 303 et seq.
interference of court with, 304
cost-book mining companies, 325 — 327
governed by 8 & 9 Vict. c. 163. ..27 et seq.
directors, 327 et seq.
shareholders, 330 et seq.
governed by the Companies act, 1862... 333 et seq.
directors, 336 et seq. See Directors
shareholders, 339 et seq.
when court will not interfere with, 578
will interfere with, 579, 581
See, also, Companies ; Directors ; Injunction ; Majority ;
Meetings ; Shareholders
GENERAL INDEX. 1201
MANAGER
of business of company, when appointed by court, 603
contract with, when binding on company, 160
MANAGING COMMITTEE. See, also, Di hectors ; Promoters
liability of members of, for each others' acts, 144 et seq.
to be made contributories, 766
petition by, to wind up company under the Winding-up acts, 627
MANAGING DIRECTOR. See Director
dismissal of, Boston Deep Sea Fishing Co. v. Ansell, 39 Ch. D. 339
MANDAMUS
generally in regard to companies, 603 — 606
to appoint a public officer, 604
to correct register, 61, 108
to elect directors and other officers, 604
to make a call, 412, 604
to pay creditors out of companies' funds, 280
to pay a debt for which judgment has been obtained against public officer,
604
to produce register of shareholders, 282 note (i), 604
to register contracts under § 25 of the Companies act, 1867. ..395 note (p)
to register a person as a shareholder, 603
to permit inspection of accounts, &c, 440, 604
to seal a document, 605
to undo, 605
to Registrar of companies, 111
MARINE INSURANCE
agreements for must be in writing, 761
holders of unstamped policies, whether contributories, 761
MARKET OVERT
sale of shares in, 476
MARRIAGE,
effect of on female shareholder, 42
MARRIED WOMAN,
may be a shareholder, 41
entitled to paid-up shares, may compel registration, 42
shares standing in name of, deemed separate property, 42
.Married woman's property act, 42
money borrowed, liability for, 236
voting, 310, 311
dividends payable to, 436
when contributories, 807
MARSHALLING
none, of debts or assets in winding up, 857
MAXIMS,
Caveat emptor, 496
Exprcssio eorum quae tacite insunt nihil operator, 246
Fieri non debuit sed factum valet, 173, 879
In re communi potior est conditio prohibentis, 317
Omnia prcesumuntur rite esse acta, 168, 313, 822 note (p)
Qui sentit commodum sentire debet et onus, 39
.M EETINGS, 304 et seq. See Index No. I.
under Companies act, 1862,
of directors, 337, 338
of shareholders, 340 et seq.
adjourned meeting, 341
chairman of, 341
dissolution of, 341
extraordinary, 340
first general, when to be held, 335
L.C. 4 H
1202 GENERAL INDEX.
MEETI XGS— continued.
under Companies Act — continued.
notice convening, 340
poll demanded, 341
resolution at, 340
votes at, 341
under Companies clauses consolidation act,
of directors, 329
of shareholders, 331 ct seq.
under Stannaries act, 325
generally,
absentees from, 311, 389
adjourned, 307, 308
convening of, 305 ct seq.
general and special, 307, 335
interference of court with, 304
irregularly convened may be valid, 174
majorities at, 308, 318. See Majority
minutes of, 312. See Minutes
notices of, 157 note (w), 158, 305 ct seq.
of object of, 306, S77
mode of giving, 307
ordinary and extraordinary, 307, 308
persons to convene, 305
place of, 306
resolutions
of majority are, of meeting, 308
stamp on, 313
validity of, 305, 309
time for, 305
voting at, 309 ct seq. See Votes
poll, 311
proxy, 309. See Proxy
in winding up,
to consider compromises, 710 ct seq.
of creditors and contributories may be called by court, 630, 688
MEMBERS. See Index No. I. ; Contributories ; Shareholders
classes of in registered companies, 120
definition of, under Companies act, 1862. ..119, 752
"for time being," 286
list of. See Register of Shareholders
not agents of the company, 154
of chartered companies, 101
past, when contributories, 816
calls on, 855
position of, after winding up, 753
proof of debts due to, in winding up, 736
for damages for fraud in winding up, 754
set off between company and, in winding up, 741 ct seq.
type of, 46
who can be, 36 ct seq.
MEMBERSHIP,
evidence of, in proceedings uuder sci.fa., 288, 292
in equity though not in law, 47
what constitutes, 43 et seq.
MEMORANDUM OF ASSOCIATION,
agent may sign, 119 note (b), 797 note (n)
allottee of shares should ascertain contents of, 25
alteration of,
effect of, on liability of subscriber to be a contributory, 773
how far allowed, 334 note (g), 343
to comply with Mortgage debenture act, 204 note (y), 343
when capital has been reduced, 404
construction of, 118
GENERAL INDEX. 1203
MEMORANDUM OF ASSOCIATION— continued.
contents of, 117
governs articles if inconsistent with it, 118
infant, effect of signature by, 39
limits power of company, 164, 165, 333
necessary, when, 117
registration of, 117, 118
stamp on, 117
subscribers to, are members, 119
when contributories, 773, 797
MERGER
of debt in judgment, effect of on right to interest, 725
MINER,
lien for wages in cost-book company, 278 note (g)
priority of wages due to, under Stannaries act, 718
MINING COMPANY
not bound by bills of its directors, 185
shares in, not within Mortmain acts, 452
not within Statute of Frauds, 452
See Cost-Book Mining Company
MINING CUSTOMS
not judicially noticed, 95
See Cost- Book Mining Company
MINORITY. See Majority
actions by, in name of company, 578
bound by majority, when, 314 et seq.
control of, by court, 581
course to be adopted by, in cases of dispute, 578 et seq.
frauds sanctioned by majority, 581
right to be heard, 318
MINUTES
of meetings, 312
under Companies act, 1862... 335, 342
under Companies clauses act, 329
of calls, 417
right to inspect books does not extend to directors' minutes, 440
signature of, 312, 313
irregular, 175
MISAPPLICATION OF MONEY,
injunctions to restrain, 580, 596. See Injunctions
liability of directors for, 371 et seq., 694
MISCHIEF,
illegality of companies on ground of, 131
MISDESCRIPTION
of transferee of shares, effect of on liability of transferor, 827
MISFEASANCE
under § 165 of the Companies act, 1862. ..694 et seq.
MISJOINDER. See Parties to Actions
of plaintiffs, 569
MISREPRESENTATION. See Fraud
general rules as to, 68 et seq.
must be of fact, 68
untrue, 69
made to induce person to act on it, 70
of a material fact, 70
have been acted on, 71, 77 et seq.
4 H 2
1204 GENERAL INDEX.
MISREPRESENTATION— continued.
general rules as to— continued.
ambiguous statements, 71
concealment of material facts, 70
exaggerated opinions do not amount to, 69
intention may be a fact, 69
opportunity of ascertaining truth not material, 72
sole inducement, need not be, 71
statements true when made, subsequently untrue, 21, 69
by paying dividends out of capital, 433
of effect of companies deed, 84
recovery of damages on ground of, 73
from company, 74
when winding up, shares taken in reliance on, 74, 754
from person making misrepresentation, 88-90
repudiation of shares, after commencement of winding up, 776
rescission of contract induced by, 72, 74 etscq., 589 et seg., 776
MISSTATEMENTS. See Misrepresentation ; Fraud
in prospectus, 68
MONEY,
action for money had and received, against a corporation, 220 note (a)
effect of having had the benefit of, improperly borrowed, 188, 235 et seq
723
misapplication of company's, 580, 596
power of company to borrow, 187 et seq.
See Borrowing Money
MORTGAGE. See also Borrowing Money ; Debentures
effect of application of money raised by invalid, 235 et seq.
of calls made, 192 note (Z)
determined upon but not made, 192 note (I)
of companies' undertaking or general property,
priority of in
railway companies under 30 & 31 Yict. c. 127... 195
other companies, 197 and note (c)
of future debts, 192
of shares,
effect on director's qualification, 301, 794
by transfers in blank, 473
stamp upon, 469 note (c)
of uncalled capital, 192 and note (I)
power of companies to, 202
railway and other companies under S & 9 Vict. c. 16. ..194
under Building societies acts, 920
proof for, in winding up, 726
registers of,
under Companies act, 1862... 203
unregistered, not invalid, 175, 203
Stannaries act, 1887. ..203
rights of holders of, in winding up, 726
MORTGAGE DEBENTURE ACT, 204
alteration of memorandum of association to comply with, 204 note (;/), 343
MOUTGAGEE
allowed to foreclose against company being wound up, 675
distress by, against company being wound up, 680 note (c)
of shares, when a contributoiy, 856
of company governed by 7 Geo. 4, c. 46, right of, against shareholders,
287
.MORTMAIN ACT,
shares, how far within, 451, 452
debentures and bonds, 451 note {I)
GENERAL INDEX. 1205
MUTUAL INSURANCE COMPANIES
are associations for gain, 115
conrributories in, 761
policies of marine, must be in writing, 761
rights of creditors, &c. , in winding up, 737
what are capable of being wound up, 621
MUTUAL LOAN SOCIETIES
are associations for gain, 115
distribution of surplus assets in, 871 et seq.
rights of withdrawing members, 872
NAME,
fictitious effect of, 59
use of another person's, to avoid liability, 803
NAME OF COMPANY,
change of name,
effect of change, 1 1 3
power to change, 112, 128
"limited" to be added to, when, 113
removal of, from registry when company is defunct, 118, 871
restoration of, when improperly removed, 871
same name, two companies may not have, 112
similar names, 113
NE EXEAT REGNO
against contributory, 848
NEGLIGENCE,
estoppel by, 486
liability for, in making statements, 88, 89
liability of company for, 209
liability of directors for, 371
of servants, liability of company for, 208, 209
NEGOTIABLE INSTRUMENTS. See also Bills of Exchange ; Promissory
Notes
blank transfers are not, 474
scrip certificates are not, 66
may be so by custom, 66, 474
under seal, 230
NEW RIVER SHARES
are real estate, 451 note (I)
NEWSPAPERS. See Advertisement
contents of winding-up petition must not be published in, before hearing,
656
NOMINAL CAPITAL
of companies, 394. See Capital
NOMINEE
of purchaser of shares,
right to object to, 502, 503
transfer to, 495
waiver of objection to, 504
of rival company, actions by, 567
of shareholder, when a contributory, 803 et seq.
NOTES,
issue of, by bankers, 136, 1013 note
loan, improperly issued, 188 note (k)
promissory, 230 et seq. See Bills of Exchange; Promissory Notes
unlimited liability of limited banking companies on, 253, 855
1206 GENERAL INDEX.
NOTICE m Hn
by blank transfers, 4/6, 479
casual conversation, none from, 205 note (e)
implied from books of company, 178 note (q), 312, 518 note (e)
of allotment, 14 . .
of assignment of shares no priority gamed by, 4o4
of calls, 417
form of, 418
of change in scheme of company, 19 et seq.
of director's authority, 242
of forfeiture of shares under Table A. ,531
of irregularities of directors in exercising powers, 16/, 171
of meetings, 157 note (it), 158, 305 et seq. See Meetings
for voluntary winding up, 876
under Companies clauses act, 331
of pledge of shares, effect of, upon lien, 459
of regulations, &c., of company, 158, 165
of revocation of offer by post, 14
of winding-up order, 684
purchaser without, of shares purporting to be fully paid up, /8/
to one of several directors does not bind company, 156, 204
to companies, 204 .
two companies having several directors in common, Mi
NOTICES . .
of proceedings m winding up, service ol, obb
NUISANCES,
companies regarded as, 3, 130
NULLA BONA, ,..
return of, to writ against company, where not sufficient to enable creditoi
to proceed against shareholder, 291
NUMBER „. „ . . ,„ , ono
of directors, invalidity of acts of insufficient, 155 d s^., 299
See Directors
NUMBERS
of shares to be on registers, 58
in companies governed by 8 & 9 Vict. c. 16. ..103
of shares in banking company, to be stated in contracts for sale, 489
OFFICIAL LIQUIDATORS. See Liquidators, and Index No. I.
appointment of, 700
compromises with, 709
powers and duties of, 708 et seq.
OFFICIAL MANAGER
under acts of 1848-49... 705, 706
See Liquidators
OFFICIAL RETURNS,
evidence of membership, 45 note (a), 58
OPPOSITION
to bill in Parliament, agreements to withdraw, 153 note (y)
OPTION
of company to rescind or recover damages from promoter, 35/
none if promoter has sold his own property to the company,.
358
to take cash or shares does not make a person a contributory, 762
OPTIONAL CLAUSES
distinguished from imperative, 172 et seq.
GENERAL INDEX. 1207
OKI )KK AND DISPOSITION,
shares in, do not pass to trustee of bankrupt shareholder, 551
ORDER OF DISCHARGE
bars all calls, 426, 557
ORDERS,
balance, 847
charging, 460 ctscq. Sec Charging Orders
for winding up, 661. See Winding up
conflicting, 888
how enforced, 697 et seq.
proceedings under, 684
summary, to pay money in winding up, 693
ORDINARY AND EXTRAORDINARY MEETINGS, 307, 877. See Meetings
OUTLAYS AND ADVANCES,
allowances for, 379 et seq. See also Advances ; Allowances; CONTRI-
BUTION
lien for, 456 et seq.
loans by directors for, 387, 388
OVERDRAWN BANKING ACCOUNT, 196, 242
PAID V,V
capital of companies, 394. See CAPITA!
conversion of, into stock, 405
shares. See also Shakes fully paid up
wliat are, 395, 783 et seq.
can be paid up otherwise than in cash when, 395, 784 et seq.
companies may agree to pay their debts in, 778 et seq., 783 et seq.
contracts for, to be registered under Companies act, 1867. ..395, 783.
non-registration of, by inadvertence, 784
holders of, when contributories, 757, 783, 787
may petition to wind up, 626
issue of, when a breach of trust, 395
married woman holding, entitled to registration, 41, 42
purchaser of shares purporting to be, 787
rights of holders of, to surplus in winding up, 869
shares improperly issued as, may be reissued, 842
subscribed for in memorandum, when to be treated as, 783, 798
what is payment in cash, 784 et seq.
when agreement to take, makes a person a contributory for unpaid
shares, 762, 787
when unpaid, issued for paid, register corrected, 123
PALATINE COURT OF LANCASTER
jurisdiction in cases of winding up company, 616
PARLIAMENT
application to, for extended powers, 186
to alter constitution of company, 320
costs of, 186, 321, 323
contents of private act are facts, 242
injunctions to restrain applications to, 323, 571, 598
opposition to bill in, 150 et seq.
standing orders of, 102 note (/)
voting for members of, in respect of shares, 452
PARLIAMENTARY AGENT
actions by, for expenses in forming company, 146, 147
PARLIAMENTARY CONTRACT, 102
effect of undertaking to sign, 32
1208 GENERAL INDEX.
PARLIAMENTARY DEPOSIT
application of, 102 note (/)
when necessary, 102
PARTIES TO ACTIONS. See Actions
between directors and shareholders, 565 ct seq.
any shareholder may sue to restrain an illegal act, 572
to rescind contracts tainted with fraud, 589 ct seq.
to restrain directors. &c, from improper acts, 565
between public officers and shareholders, 564
by and against incorporated companies, 562 el seq., 570
unincorporated companies, 562
by some on behalf of themselves and others, 565 ct seq., 572
company to be defendant in, when, 563, 572
frame of actions by, 569
identity of interest requisite in, 567, 573
instances of, 571
misjoinder of plaintiff's in, 569
to control majorities or factious minorities, 572
for an injunction. See Injunction
to restrain payment of dividends, 574
calls, 573
for expenses of forming company, 146
for recovery of company's funds, 563
for recovery of money paid on fraudulent sales of shares, 593
subscriptions to abortive company fraudulently obtained, 568, 593
for specific performance, 589
plaintiff nominee of rival company, 567
right of shareholder to use company's name, 572, 573
where plaintiff has bought share on purpose to bring an action, 568
PARTNERS
promoters not, 18, 21, 102
shares held by, no survivorship, 539
subscribers not, 18, 21
PARTNERSHIPS
companies compared with, 1, 7
PART PERFORMANCE
of contracts not under seal, 223
PAST MEMBERS. See Retired Shareholder
calls on, part of general assets, 851
effect of registration of company on, 127 note (q)
execution against, 286
liability of, to creditors, 255, 816 et seq., 855
in cost-book companies, 95
on winding-up of cost-book mine, 95, 819
to be put on list of contributories, 816
to calls in winding up, 855
to what extent, 816, 820, 855, 866
to costs of winding up, 866
may petition to wind up, when, 624, 750
no marshalling of calls payable by past member, 857
not sureties, 821, 857
persons whose shares have been forfeited liable as, 534 note (r/), 845, 857
PATENTS
companies' power to purchase, 206
infringement of, liability of company for, 209
liability of directors for costs of, 240, 265
PAUPER,
transfer to, when valid, 464, 825
GENERAL INDEX. 1209
PAYMENT,
by or to companies, offecl of winding up on, 667
in shares, effect of on liability as contributory, 780
option to pay in cash or shares, 762
mandamus to compel, 604
of calls by contributory, 848
of debts in winding up, 713 et seq. See PROOF OF Debts
of dividends, 429 et seq. See Dividends
of shares in cash, 783 ct seq.
to petitioning creditor when invalid, 666, 667
when right to, is limited to particular funds, 246 et seq.
PENALTIES. See Index No. 1.
staying proceedings for, 676
PENSIONS,
power to grant, 318
PERSONAL ESTATE,
shares are usually, 451 d seq.
PERSONS
capable of being shareholders, 36 ct seq. See Capacity
number of, who may carry on banking business without registration, 136
who may carry on other business for gain, 114
PETITION. See Index No. I.
for adjudication of bankruptcy by company against shareholder, 5 19, 550
for arrangement between railway companies and their creditors, 904
to reduce capital, 102 ct seq.
to wind up company, 654 et seq. See Winding up
advertisement of, 655
amendment of, 655
appeal from order on, 661
compulsory order on,
when made, 644
deterred, 652
refused, 647
costs of, 658, 859 et seq.
security for, 061
death of petitioner, effect of, 061
discretion as to order to be made on, 630
evidence on, 657
form of, 654
grounds for, 628 et seq.
malicious presentation of, 614
not a lis pendens', 666
one, to wind up two companies wrong, 655
persons entitled to present, 624 et seq.
appear on, 658
priority of, 660
proceedings under, 654
orders on, 684 ct seq.
service of, 656
several, 660
staying proceedings under, 663
withdrawal of, 659
to wind up railway company on abandonment, 903
PETITIONING CREDITOR,
in bankruptcy,
company may be, 550
public officer may be, 549
in winding up, 635 et seq.
effect of assignment of debt by, 637
death of, 661
payment to wdien invalid, 666 ct seq.
1210 GENERAL INDEX.
PLACING SHARES,
agreements for, do not make person a contributory, / 69
directors' liability for commissions paid for,^372
not the same as underwriting shares, 761, 769 note («)
PLEADINGS. See Actioks ; Parties
in actions for calls, 427
PLEDGES. See Mortgages
by companies, 202
of shares by transfers iu blank, 473, 478
POLICIES OF INSURANCE
issued ultra vires, recovery of premiums on, 235, 236
irregularly, company when bound by, 168, 169
payable out of funds of company, 246 d seq.
proof of, in winding up, 736
in mutual societies, 736, 737
reduction of, under Life assurance companies act, 1870... 635
stamp on marine, 761
valuation of in winding up, 732
where company lias power to transfer its funds, 249, 250
See also Marine Insurance
POLICY HOLDER,
not a creditor, 259
right of to bring an action for damages before policy is due, 249
to present petition to wind up, 625
to prove in winding up, 737
rights of, against companies on transfer of business, 250
in cases of amalgamation, 259 el seq., 734
where original company discharged, 260
not discharged, 260
POLL,
right to, 311
under Companies act, 1862. ..341
POST,
notice by,
of allotment, 14
revocation of offer by, when in time, 14
POWERS. See Implied Powers
of attorney to transfer shares, effect of forgery of, 483
directors, 155. See Directors
majorities, 314 ct seq. See Majorities
official liquidators, 708. See Liquidators
PRACTICE,
in winding up generally, 685. See Winding up
as to calls in winding up, 847 et seq.
PREFERENCE SHARES,
dividends on, 435
in companies governed by 8 & 9 Vict. c. 16... 400
Companies act, 1862... 405
injunction for protection of holders of, 580
to restrain issue of, 597
liability of holders of, to be made contributories, S3
nature of, 396, 435, 449
rights of holders of, 435
entitled to priority in payment of capital when, 435 note (<)
on distribution of surplus assets after winding up, 868
when companies can issue, 322, 334, 396
GENERAL INDEX. 1211
PREFERENCE SHAREHOLDERS,
in companies governed by Companies clauses act, 400
position of, 396
rights of, 435
on reduction of capital, 402
in winding up, 868
PREFERENTIAL PAYMENTS
in winding up, 716 — 718
PRELIMINARY EXPENSES
of forming companies, 30 d ieq.
liability of companies for, 146. See LIABILITY
subscribers for, 30, 32
return of deposits paid for, 32
where company abortive, 30
PREMIUMS,
obtained by directors at the expense of companies, 365 el seq.
recovery of, on policies issued ultra vires, 235, 236
PREROGATIVE,
of Crown. See CboWN
writ of mandamus, 603 i
PRESENTS,
to directors, 321, 389
PRESUMPTIONS
as to membership if name is in official return. 110
in favour of regularity, 168, 822 note (;>)'
that contract was made in proper form, 226
PRIORITY,
of charges on shares, 454
of costs in winding up, 865
of debenture holders, 197
inter se, 197 note (c)
of debts in winding up, 716 ct seq., 721
of lien over equitable charges of shares, 459
of mortgages, bonds, or debenture stock issued under S & 9 Vict. c. 16...
195
of winding up petitions, 660
in cases of blank transfers, 476 ct seq.
PRIVITY OF CONTRACT
between the vendor and purchaser of shares on Stock Exchange, 506
PROBATE
of will of contributory by official liquidator, 709
of deceased creditor, when necessary, 713 note (o)
PROBATE DUTY
where shares bequeathed to a person for life, 543
PROCEEDINGS
under petition to wind up, 654 et seq.
staying, 663
PRODUCTION. See Books ; Inspection '
by directors denying possession of books, &c, 595
mandamus to compel, 440, 604
of books by liquidators, 705
in constant use. See Mertens v. Haigh, John. 735
of corporations, 440 note (t), 595 note (t)
of documents in winding up, 692
1212 GENERAL INDEX.
PROFITS,
alteration of principle on which profits are dealt with, 320
division of, 429 et seq. See Dividends _
as between tenant for life and remainderman, 544 et seq.
liability of promoters to account for, 357
directors to account for, 366 et seq.
PROMISSORY NOTES. See Bills of Exchange
industrial and provident societies can bind themselves by, 915
liability of companies on, 230 et seq.
directors on, 231 et seq.
powers of companies to make, 185
official liquidators to make, 708, 709
public officers, actions by, on, 267
ultra vires, liability on, 231 note (m)
PROMOTERS,
acts of one no evidence against others, 145
actions against, for recovery of deposits, 32 et seq.
agreements with, specific performance of, 588
allowances made to, in cases of rescission, 356
bankruptcy of, effect <>n liability to companies, 349
contracts with, must be mentioned in prospectus, 91, 92
contribution between. 145 note (h), 606
duty to observe good faith towards company, 345 et seq.
fiduciary relation of, towards company, 347 et seq.
commencement of, 348
general rules governing, 350
generally, 345
liability of,
for each other's acts, 143 et seq.
how affected by bankruptcy, 349
on contracts entered into for companies not formed, 243
to be made contributories on winding up of company, 764
to creditors, &c, who are to be paid out of specified fund, 247, 248
to solicitors retained, 607 note (a)
liability of companies for acts of, 146 et s< q.
acts ultra vires the company, 152
by adoption, 147
by constitution of the company, 146
in equity, 149 — 152
liability of subscribers for acts of, 144
not each other's agents, 143 et seq.
not partners, 18, 21, 102, 143
payment for services, 363
persons not liable as, 362
petition to wind up may be presented by, 627
proof for promotion money in winding up, 722
sales by, to company,
of property acquired whilst forming the company, 351 et seq.
of their own property, 357 et seq.
secret benefits obtained by, 360 et seq.
specific performance of agreement between them and companies not
decreed if tainted with want of good faith, 357
when contributories, 764
who are, 346, 349", 362
within § 38 of the Companies act, 1867... 91, 92
PROMOTION MONEY,
liability of directors for paying improperly, 372, 374
PROOF. See Evident i
GENERAL INDEX.
J 213
PROOF OF DEBTS,
in bankruptcy of shareholder, , .
by transferor to a bankrupt transferee m respect of his right, to
indemnity, 554
by unincorporated companies, 554
for calls, 555 ct scq.
for debts, 554
in winding up of companies, 713 ct scq.
amalgamated companies, 734
annuitants, 732
appeals as to, 715
bankruptcy rules as to, 720
barred debts, 723
certificate of, 715
costs of, 714
damages for breach of contract, 728
dismissal of servants. 729
debts bought up, 72:;, 739
contracted by liquidator, 715
due to members, 736
provable, 716 ct scq., 721
Ultra rirt's, 722
equitable debts, 722
Ex parte Waring, 727
future rent, 731
interest, 724
investigation of, 714
ladies, effect of, 723
liens, 726
mode of, 713
notice of payment, 715
policy holders, 732 — 736
priorities of, 716 ct a 7
secured debts, 720, 726
set-off, 738. See SET-OFF
solicitor's bills, 724
sureties, &c, 728
time for, 713
trustee for company, 727
where funds of company alone are liable, 73b
See Bankruptcy ; winding up
PROPERTY. See Index No. I.
of company,
does not vest ill liquidators, 706, 70/
effect of winding up on dispositions of, 666
fund to guarantee dividends is, 436
summary orders to hand over, in winding up, 693
PROSECUTION
power to order in winding up, 69/
PROSPECTIVE
calls, 416
PROSPECTUS
of companies : nature, object, and eflect ot, 12, iy, «"
basis of agreement to take shares, 12, 19 ct scq.
effect of changing scheme as set out in, 19 et scq., 68 et scq. See
Change of Scheme
departure from, where not sanctioned, 19
where sanctioned,
by act of Parliament, 24
form of application, 23
special agreement, 22
subsequent assent, 24
notice of, 25, 771
1214 GENERAL INDEX.
PROSPECTUS— continued.
misstatements in, 68 et seq., 771. See Fraud ; Misrepresentation
effect of, on liability of shareholders to be made contributories, 771
776
liability of company for, 221 et seq.
of promoters to company for, 352 ct seq.
right to recover damages for,
against company, 74 et seq. , 323, 754
persons who made, 87 et seq
to rescind, 72, 589
to prosecute criminally, 87
what contracts must be noticed in, 91, 92
PROVIDENT SOCIETIES, 915 et seq.
how sued, 266 note (a)
See Industrial and Provident Societies
PROVISIONAL COMMITTEE MEN. See Promoters
liability of, for eacb other's acts, 144 et seq.
for acts done before they become such, 143 et seq.
to be made contributories, 766. See Contributories
may petition to wind up company, 627
PEOVISIONAL LIQUIDATORS, 700. See Liquidators
PROVISIONAL REGISTRATION,
effect of, 128
PROXY,
expenses of sending out, when payable by company, 322
holder of cannot demand a poll, 311
non-attestation of proxy paper, 175
stamp on, 310
voting by, 309, 310
an act of membership, 49
under Companies clauses act, 332
under Companies act, 1862... 342
PUBLIC
bound to take notice of powers of directors, 165
memorandum and articles, 771
See Notice
PUBLIC COMPANIES,
what are, 9, 462
PUBLIC HEALTH ACT,
contracts to be under seal, 223 note (s)
PUBLIC INSTITUTION,
subscription to by company restrained, 322
PUBLIC OFFICERS, 265 et seq.
actions by and against, 265 ct seq., 561, 564
by person assuming to be, 268
effect on
of bankruptcy of, 268
of change of company's name, 268
of change of, 268
of death of, 268
for calls, 564
for dissolution, 564
for libel, 267
on bills and notes, 267
plea that person is not, 268
when empowered to sue and be sued by colonial legislature, 101
note (d), 266 note (b)
more than one, 268
they must sue and be sued, 265 et seq.
who are represented by them, 266, 561, 564
GENERAL INDEX. 1215
PUBLIC OFFICERS— continued.
affidavits by, form of, 269
appointment of
under 7 Geo. 4, c. 46... 269
7 Will. 4& 1 Vict. c. 73... 270
companies suing and being sued in name of, 265 ct scq.
entitled to indemnity from shareholders, 379
execution against, 278, 279
under 7 Geo. 4, c. 46... 285
7 Will. 4 & 1 Vict. c. 73. ..289
mandamus to compel appointment of, 604
may be interrogated, 270
of banking companies,
actions by and against, 268 ct scq., 564
powers of, 267
returns to be made by, 110, 269
of foreign companies, 910
of industrial and provident societies, 266 note (a)
petition in bankruptcy by, 267, 549, 550
proof in bankruptcy by, 555
where none, company may be sued by its name, 268
PURCHASES
by companies, 205
PURCHASER. See Sale
of business of companies, 207. See Amalgamation
of debentures irregularly issued, 171. See Debentures
of shares in companies,
action by, against seller, 498
seller against, 498
damages recoverable against, 498
effect of fraud on, 79 ct scq., 496
in company being wound up, 488, 836
liability of, to be made a contributory, 79 ct seq., 471, 823 ct scq. See
CONTRIBUTORIES
must indemnify seller, 493, 505 ct scq.
position of, when transfer is in blank, 476 ct scq.
purporting to be fully paid up, 395, 787
questions between, and vendor, as to right to be registered, 123
rectification of register against, 124
rights of, against company, 470
against seller, 506, 507
through broker, bound to indemnify him, 512
when a shareholder, 45
when transfer is complete, 469
when transfer is forged, 483 ct seq.
PURSER. See Cost-Book Mining Companies
actions by and against, 265
document transferring shares is addressed to, 96
liability of, for false accounts, 447
may sue for calls, 95 note (i), 265, 270 note (h), 565
of cost-book mining companies, duties of, 94, 325
QUALIFICATION,
directors acting without, 300
not a " misfeasance " under § 165 of the act, 1862. ..794
may not receive, from promoters, 367
liability for, in winding up, 790 ct seq.
QUORUM
of directors, acts done by less than, 155—158, 174, 299, 302
what is, under Companies clauses act, 329
under Table A., 338
1216 GENERAL INDEX.
Q UORUM— continued.
of shareholders,
what is under Companies clauses act, 331
under Table A., 341
QUO WARRANTO
to cancel registration of company, 111 note (k)
RAILWAYS,
abandonment of, 901
injunction to restrain making part of, 59S
making unauthorised, 320, 598
RAILWAY COMPANIES,
what are, 278 note (I), 618 note (u), 905 note (/.:
abandonment of railway by, 901 et seq.
arrangement with creditors, 904 et seq.
deposit, application of parliamentary, 904
execution against, 278, 279
injunctions against, 320, 321, 598
leases by, 202
liability of,
for acts of promoters, 146, 147
for use and occupation, 227
mortgage of undertaking, nature of, 195
power to borrow on mortgage, 194, 195
registration of, under Companies act, 116 note (p), 618
rolling stock of, protected from execution, 195, 278
shares in, not within Mortmain acts, 452
not within Statute of Frauds, 452, 453
surplus lands, creditors' right to sell, 279
warrant of abandonment, 630
winding up of, 618, 903
KATES
after winding up,
distress for stayed, 681
payment of, 681
priority of, in winding up, 717
RATIFICATION,
by companies,
of acts of promoters before formation, 176 et seq.
directors, &c. , since formation, 177 et seq.
of contract not under seal, 223
form of, 181
mode of, 180
parol, by, 228 note (n)
of past, not equivalent to authority for future, 179
without alteration of articles, 177
by directors,
when a ratification of the company, 177 178
when not, 180
by infant, 39, 40, 810
by majority in cases of fraud, interference of court, 581
by shareholders, of improper charges, 389
fraud in cases of, 180
knowledge essential to, 178
• if change of scheme of company, 23 et seq.
READY AND WILLING
to transfer shares sold, 498
REAL ESTATE,1!
shares how far, 451 et seq.
GENERAL INDEX. 1217
RECEIVER,
generally, 602, 603
liquidator when appointed, 675
is in the nature of, 706 note (p)
not appointed of assets in hands of liquidator, 706 note (p)
obtained by holder of bonds, &c, issued under 8 & 9 Vict. c. 16. ..194, 195
of company's undertaking, effect of, 195
by debenture-holder, 279 note
by judgment creditor of railway company, 279
RECONSTRUCTION
of companies, 900
RECTIFICATION OF REGISTER, 61, 748, 755, 832, 834. See Register of
Shareholders.
REDUCTION OF CAPITAL,
annual return must state particulars of. 126
not allowed, to rectify an issue of shares at a discount, 403
under the Companies acts, 1862 and 1877... 402 et seq.
REGISTER OF SHAREHOLDERS. See Index No. I.
general remarks on, 57 et seq.
in several volumes, 105
rough share-book is not, 105
share ledger is, 59
action for improper exclusion from, or insertion in, 63
colonial register, 120, 121
correction of, 61
in case of cost-book companies, 124, 125
on winding up of company, 748, 755, 818 note (y), 832, 834
damages for exclusion from, 124
effect of sealing, 106
effect of having name in
estoppel by, 60
as evidence of membership, 57 et seq.
as regards liability to creditors, 60, 256
injunction against continuing names in, 61
mandamus to compel company to
correct, 61, 108, 605
produce, 282 note (i), 604
remove seal from, 61
right of company
to put person on, 46, 49, 64
to alter, 63
right of married woman to be on, 42
of companies governed by 8 & 9 Vict. c. 16... 103 — 109
correcting, 108
does not estop company, 108
effect of, 104, 108
improper entries in, 107
irregularities in, 105
mistakes in, 106
not conclusive, 106
of companies governed by Companies act, 1862
correction of, 120 et seq.
without an order, 123 note (m), 125
damages for exclusion from, 124
effect of being on in winding up, 769
form of, 120
inspection of, 125, 282
power to rectify, on winding up company, 125, 748, 755, 818 note (y),
832, 834
of cost-book mines, 95
L.C. 4 I
1218 GENERAL INDEX.
REGISTERED COMPANIES. See Companies governed by the Companies
Act, 1862.
change of name of, 112. See Name of Company.
formation of, 111
REGISTERS,
inspection of, 103, 125, 126. See Inspection.
of mortgages and securities,
under Companies act, 1862... 203
unregistered not invalid, 175, 203, 726
under Stannaries act,~ 1887. ..203
of shares. See Register, of Shareholders.
general rules as to, 57 et seq.
if used as evidence must be properly kept, 58
inaccuracies in, what unimportant, 58
omission of numbers of shares from, effect of, 105
rough share-book not, 105
share ledger is, 59
of transfer of shares. See Transfer of Shares.
required to be kept under Companies act, 1862... 125, 126
REGISTRAR
of joint-stock companies, 111
annual return to, 125
certificate of
registration of company, 111, 112
that a person has been returned as a member, 45 note (a)
mandamus to, to enforce duties, 111
removal of name of defunct company by, 113, 871
REGISTRATION. See Index No. I.
of benefit building societies, 915
of companies generally, 111 et seq.
cancellation of, 111
certificate of, 111, 112, 118
effect of, 111
under same names, 112
under 7 & 8 Vict. c. 110. ..128
under 19 & 20 Vict. c. 47... 129
under Companies act, 1862... Ill et seq.
when necessary with reference to number of members, 114
when cornpulsoiy, 114
impossible, 115
optional, 115, 116
with limited liability, 116
company may be registered although members are foreigners
and the business abroad, 116
for purposes of winding up, 616 et seq.
improper, a cause for winding up the company, 632
non-registration, consequences of, 126, 127, 135
of companies formed under the act, 117 et seq.
of companies not formed under act, 126 et seq.
of existing companies as limited, 128
of memorandum and articles of association, 117, 118
of contracts under § 25 of the Companies act. 1867 ... 395 note (p),
783 et seq.
of cost-book companies, 97
of rules of, 94 note (c)
of existing companies, effect of, 127
of industrial and provident societies, 915
of judgment against companies, 281
of mortgages by companies, 175, 203, 726
of shares, 57 et seq. See Register of Shareholders.
provisional registration, effect of, 128
guaranteed, effect of, on jobbers' and brokers' liability, 505. See Sale
of Shares.
GENERAL INDEX. 1219
REGULATIONS OF COMPANY,
departure from, extent to which creditors are affected by, 54
distinction between imperative and directory, 172
effect of not complying with, 144 et seq.
public bound to notice, 158, 165
waiver of compliance with, 47, 54 et seq.
See Formalities ; Irregularities.
REHEARING
orders in winding up, 698
RELATION BACK
of order to Mind up, 664 et seq.
RELATIVES
of contributories, when liable to be examined, 691
RELINQUISHMENT
of shares, generally, 450, 517 et seq., 783 et seq. See Surrender ov
Shakes.
in cost-book mines, 94, 326, 816 note (q)
proof in winding up for value of, 736
REMOVAL
of directors, 302
under Companies clauses act, 327, 332
under Companies act, 1862. ..337
of liquidators, 703, 878
of persons from offices, 302 note (c)
of seal, no mandamus to compel, 605
REMUNERATION
of directors,
directors may not vote themselves extra, 303, 388 uote (/)
for past services not allowed after winding up, 389
under Companies clauses act, 332
of liquidators, 703
of promoters, 356
RENT,
proof for, in winding up, 680
future rent, 731, 886 note (z)
staying distress for, in winding up, 678
REPORTS,
by chairman to meeting, effect of, on liability of company, 156 note (/*)
false,
laid before meeting, 79 et seq., 82, 211 — 215
criminal responsibility of directors and others for, 87
when not imputable to company, 81, 82, 215
libellous, 209 note (q)
of directors, distinction between, and of shareholders, 214
to shareholders, liability of company for, 211 — 215
REPRESENTATIONS. See Misrepresentations ; Fraud.
by chairman of meeting, 156 note (to)
by creditor to shareholder that he would incur no responsibility, effect of
284 J
by directors, 68 et seq., 214 et seq.
by members of company, 154, 206
by one of several directors, 156, 206
by solicitor of company, 154
when binding on company, 206
respecting the credit of persons, 207
REPRESENTATIVES,
calls upon, 425
when contributories, 812. See Executors.
4 i 2
1220 GENERAL INDEX.
REPUDIATION,
by infant, 39, 810
of shares,
before winding up,
when in time, 26
when too late, 16 note (?), 25 et scq., 28, 73, 85, 589, 772, 777
when taken on faith of fraudulent misstatements, 73
where there is no concluded agreement, 768
where scheme has been changed, 25 et seq.
after winding up, 767 et seq.
on ground of no agreement, 768
fraud, 776
illegality of issue, 774
non-performance of condition, 778
of stares not fully paid up, 787
REPUTED OWNERSHIP,
shares not within, 551
doctrines of, do not apply to winding up of companies, 669, 706 note (o)
RESCISSION OF CONTRACT. See Fraud; Misrepresentation ; Repudia-
tion.
between promoters and company, 352 et seq.
when the only remedy, 358
effect of delay upon right to rescind, 582, 584
for failure of consideration, 29 et seq.
for fraud of company, 211 et seq.
of contracts for the sale of shares, 496, 592
where director sells his own shares as unallotted, 592
of severable contracts, 591, 592
proof of fraud in actions for, 590
to take shares, induced by fraud, 72 et seq., 589 et seq.
for fraud under § 38 of Companies act, 1867, none, 92
in companies being wound up, 589, 767 et seq.
companies not being wound up, 590
RESIDENCE
of companies, 37, 910
RESOLUTION
extraordinary, what is, under Companies act, 1862 ..876
for calls, 415
no stamp on, 313
of company not equivalent to an instrument under seal, 221, 308
of meetings when valid, 305
special, under Companies act, 1862... 343
to wind up voluntarily, 876
unanimous, when ultra vires, 314
RESTRAINING ORDER
under 5 Vict. c. 5, § 4... 463, 464
RETAINER
under seal when presumed, 221 note (a), 265
RETIRED SHAREHOLDER. See Past Members.
caUs on, 422, 423
duration of liability of, to creditors, 256
in cost-book companies, 94, 95, 326, 819
when retirement is informal, 55
duration of liability to contribute to debts, 255 et seq.
execution against, 286
right to retire,
in cost-book mines, 524
under the Companies clauses act, 525
act of 1862... 525
GENERAL INDEX. 1221
RETIRED SHAREHOLDER— continued.
when liable as a contributory, 816 et seq.
although his shares have been forfeited, 533, 534, 842 et seq.
surrendered, 518 et seq., 837 et
seq.
in cost-book companies, 95, 816 note (</), 819
under old acts, 817
under act of 1862. ..818
where retirement irregular, 822
See Forfeiture ; Past Members ; Surrender of Shak, s •
Transfer of Shares.
RETIREMENT
by surrender, 517 et seq., 837 et seq.
compared with refusal to accept shares, 520, 841
irregular, effect of, on liability to be made a contributory, 822 et scq.
RETURN
of subscription to company, 29 et seq., 589
RETURNS, OFFICIAL,
of names of shareholders considered as evidence, 45 note (a)
to be made
after reduction of capital, 405
as to capital, 406
by bankers, 136
by banking companies governed by 7 Geo. 4, c. 46. ..109, 110, 269
7 & 8 Vict. c. 113... 129
by companies governed by act of 1862... 125
by industrial and provident societies, 915
under the Letters patent act, 100, 290 note (x)
under the Life assurance companies act, 1870... 445
REVOCATION
after acceptance posted, too late, 14
by post when in time, 14
of application for shares, 13, 14, 770
of broker's authority to buy shares, 512
RIVAL COMPANIES,
plaintiff a nominee of, when a bar to relief, 567
use of same name by, 113
ROLLING STOCK
of railway companies protected from seizure, 195, 278
ROUGH SHARE-BOOK,
no evidence of membership, 105
ROYAL SOCIETY,
registration of under act of 1862, impossible, 115
SALARY,
director's right to, for extra work, 388
priority of, in winding up, 717
SALE
by companies generally, 207
effect of winding up on, 667
by directors to company, 369 et seq.
by promoters to company, 357 et seq.
of business of company. 207, 208. See also Amalgamation.
in winding up, 711, 712, 882, 883, 894 et seq.
of shares in companies, 487 et seq.
in banking companies, 489
in cost-book companies, by company, 94
in illegal companies, 1 40, 487
1222 GENEEAL INDEX.
SALE — continued. .
of shares in companies — continued.
agreements for, 490
stamp on, 469 note (c), 490
writing when necessary, 489, 490
delivery of, 490
director selling his own as unallotted commits a fraud, 592
dividends in cases of, 490
effect of, on liability to pay calls, 423. See Calls.
liability to be made a contributory
sale before commencement of winding up, 833
sale after commencement of winding up, 836
gambling sales, 488
illegal sales, 140, 487, 516
in liquidation not illegal, 494
stamp on, 469 note (c), 490
trustees in bankruptcy, by, 552
not on Stock Exchange, 491 — 500
action by purchaser, 498
action by vendor, 498
auction, by, 497
blank transfers, 478, 498
damages for breach of contract, 498
difference between shares bought and sold, effect of, 494
fraud
by seller, 496
on seller, 497
fraudulent, 496, 593
lien of vendor for unpaid purchase-money, 496
obligations
of purchaser, 492 et seq.
to prepare transfer, 495
of vendor, 491
procure transfer, 491
title to be shown by, 492
whether to transfer to purchaser's nominee, 495
relief where directors will not sanction transfer, 500
rescission of, 592 et acq.
right to indemnity, 499
specific performance of contract, 499
on Stock Exchange, 500 et seq.
broker or jobber,
liability of purchasing, 503 et seq., 512
departing from his authority, 512
not objecting to infant, 503
not objecting to person sui juris, 504
where transferee does not get registered, 504
where registration is guaranteed, 505
liability of selling, 511 et seq.
right to
charges, 516
indemnity, 512
not if, in default, 513
customs and rules of Stock Exchange regulate, 500 et seq.
difference between, and usage of brokers, 515
duty to procure transfer, 506
illegal purchases and sales by broker, 516
liability of beneficial owner to vendor, 509
nature of contract between
vendor and purchasing broker or jobber, 503 et seq., 510
vendor and his own broker, 511
vendor and ultimate purchaser, 505 et seq.
priority between when it arises, 506
vendor and undisclosed and intermediate purchaser, 508 ct seq.
revocation of broker's authority, 512
time for completion, 507
See also Broker ; Contributor ies ; Purchaser ; Trans-
fer of Shares.
GENERAL INLtEX. 1223
SALT AND ALKALI COMPANY
not bound by bills, fee, of its directors, 185
SALVAGE COMPANY
not bouixl by bills, &c., of its directors, 185
SAVINGS BANK,
priority of, in respect of money due from its officers, 721
SCALE FEE,
solicitor demanding more than in winding up, 704 note (»)
SCHEME
of arrangement between railway companies and their directors 905 ,> „a
scheme oi company, change of, 19 et seq.
SCIRE FACIAS,
after elegit, 296
against shareholders, when necessary, 281 et seq.
against shareholders in companies governed by
7 Geo. 4, c. 46, 285, 294
7 Wm. 4 & 1 Vict. c. 73, 289, 294
7 & 8 Vict. c. 110, 294
7 & 8 Vict. c. 113, 294
8 & 9 Vict. c. 16, 290 et seq.
Companies act, 1862, 294
in other companies, 293
against shareholders who have not complied with formalities 54 289
applications for rule for, 296
by creditor whose right is limited to company's funds, 284, 285
concurrent against several shareholders, 295
fraud by creditor a defence to, 284
directors no defence to, 283
irregular, 295
judgment on which it is founded, cannot be impeached, 283 297
except for fraud, 283, 297
nature of, 281, 294
note on procedure by, 294 et seq.
proceedings substituted for, 281
to repeal charter, 98, 99
where recourse must be had to the company before issuing execution
against shareholder, 290
SCOTCH COMPANY
court to wind up, 615.
not subject to old winding-up acts, 623
And see Companies act, 1886... 1037 et seq.
SCRIP,
nature of, 65
calling in of, 66
calls on allottees of, 409
certificate, 65, 66
what is, 65
stamp on, 65
may become transferable by delivery by usage, 66 474
purchaser of not bound to accept shares. 473 note If) '499
transfer of, 66, 468 J
to bearer by usage, 474
SCRIP COMPANIES, 66
contributories in, 799
legality of, 131
transfer of shares in, 468
under Companies act, 1862... 135, 136
within winding-up acts, 619
1224 GENERAL INDEX.
SCRIPHOLDERS,
calls upon, 409, 420
converted into shareholders, 66
registration of as shareholders, 107
return of deposit to, 29 note (u)
right to petition for winding up, 627
when contributories, 763, 799
SEAL OF COMPANY. See Index No. I.
bills of exchange drawn, &c, under, 230
byedaws under, when necessary, 308
contract under, binds company, though entered into irregularly, 174,
199 et seq.
effect of as estoppel, 199, 221 note (i), 225
improperly affixed, 167, 174, 198,224
mandamus to remove, 61, 605
to affix, 605
nature of seal required, 221
necessity of, to contracts by companies, 220 et seq.
persons conducting company's business, have authority to use, 224, 225
promissory notes made under, 230
retainer of solicitor under, 221 note (a), 265
to register, 106
when not necessary to bind company,
at common law, 222 et srq.
by statute, 225 et seq.
Metropolitan gas act, 226
8 & 9 Vict. c. 16, 226
Companies act. 1862, 228
■/ . // ySee Comi'Amfs' Seals ACTi 1864. . / ■£-- II "i
contract with, when binding, 160
for time being, actions by, 267, 559
payment of under Companies clauses act, 332
when liable to account for shares given to him, 696
See Companies ; Notice.
SECRET BENEFITS,
directors must account for, 363 et seq. See Director.
promoters must account for, 345 et seq. See Promoters
SECURED CREDITORS,
position of in winding up, 720, 726
SECURITIES,
amalgamation, effect of, on, 258
corporation taking improper, 163 note (y)
liability of company for loss of, 209
non-registration of, 175, 203
shares are not, 450
validity of improperly issued, 193
SECURITY
directors' liability for not taking, 372
required from officers under Companies clauses act, 330, 441 note (y
to be given by liquidator, 700, 702
SECURITY FOR COSTS, 263. See Costs.
SELLER OF SHARES,
actions against, by purchaser, 498
actions by, against purchaser, 498
fraud by, 496, 592
fraud upon, 497
liability of
to purchaser, 496
to calls, 423. See Calls.
to be made contributories, 833 et seq. See Retired Shareholder.
GENERAL INDEX. 1225
SELLER OF SHARES— continued.
lien for unpaid purchase money, 496
rights of, against purchaser, 492, 493
title to be shown by, 492
when entitled to indemnity, 499, 833, 834
See, too, Contributories ; Sale of Shares ; Transfer of Shares.
SEPARATE ESTATE,
investment of in shares, 41
liability of, for shares, 41
in winding up, 807 et seq. See Married Women.
shares in name of married women are primd facie, 42
SEQUESTRATION,
writ of against corporate property, 279
SERVANTS,
dismissal of by winding up, 729
liability of company for negligence of, 208
priority for wages in winding up, 717
sale of shares in cost-book mine to, fraudulent, 825
SERVICE,
of petition to wind up, 656
of notices, &c, in winding up, 687
out of jurisdiction, 685 note (*), 687, 911
of writs on companies, 264 note (p)
SERVICES,
right of directors to compensation for, 388
SET-OFF
against holders of securities, 275
between companies and non-members, 273 et seq.
between members of unincorporated companies, 273
in actions for calls, 428
in bankruptcy of shareholder, 557, 743
in winding up, 738 et seq.
against assignees of debts and debentures, 739
against calls, 857
against costs, 859
as between company and stranger, 738
as between companies and contributories, 741
buying up debts in order to set them off, 739
in summary proceedings, 744
when money is ordered to be paid in winding up, 693
SETTLED ACCOUNT,
opening, 594
SETTLING
list of contributories, 745 et seq. See List of Contributories ; Con-
tributories.
SETTLING DAY,
obtaining by fraud, indictable, 87
SHARE CAPITAL, 392 et seq. See Capital.
SHAREHOLDER. See, also, Contributories.
who is a
generally, 36
aliens, 36, 37
cestui que trust, 46
convicts, 38
corporation or company, 43, 200
estoppel, persons by, 48
formalities not observed, 44 et seq.
waived, 47 et seq. See Formalities.
1226 GENERAL INDEX.
SHAREHOLDER— continued.
who is a — continued.
generally — contin ued.
in equity though not at law, 47
infants, 39
lunatics, 40
married women, 41, 42
in companies governed by
7 Geo. 4, c. 46... 109
7 Wm. 4 and 1 Vict. c. 73... 101
7&8 Vict. c. 110. ..44, 123
7&8 Vict. c. 113... 129
8 & 9 Vict, c. 16... 104
acts of 1856— 1858... 129
cost-book principle, 96
Companies act, 1862
formed and registered under the act, 119
registered not formed under the act, 128
action against by creditor " put on," 559 et seq. See, also. Action's.
address book, 103
allottees acting as, effect of, 14 note (k)
bankruptcy of, 549 et seq. See, also, Bankruptcy.
consequence of, 550
petition for adjudication against, by company, 549, 550
proof by company
for calls, 555 et seq.
for debts, 554
trustee, in, position and rights of, 550 et seq.
calls on, 420 el seq. See Calls.
death of, 536 et seq. See, also, Executors.
discovery of, by creditors, 282
disputes between, 314 et seq.
exclusion of, from share of profits, 433
execution against by creditor. See, also, Execution ; Scire Facias.
of company, 276, 280 et seq.
of shareholder, 460
future, company's duty towards, 370
good faith required amongst, 363
indemnity to, against loss, 201
to outgoing, against liabilities, 201
liability, 244 et seq. See Liability.
at common law, 245 et seq.
amalgamation, in cases of, 258 et seq. See, also, Amalgamation.
calls, to, 420 et seq. See Calls.
commencement of, 254
continuing on register, by, 256
contributories, to be made, 745 et seq. See Contributors.
duration of, 254
limited by statute, 251
to funds of company, 246
termination of. See, also, Past Members.
in respect of future acts, 255
in respect of past acts, 256
to indemnify directors, 378 et seq.
lien of, on each others' shares, 456
company against, 456 et seq. See Lien.
majorities of, 314 et seq. See Majorities.
management of companies by, 303 et seq.
under Companies act, 339 et seq.
under Companies clauses act, 330 et seq.
meetings of, 304 et seq. See Meetings.
paid up, 783 et seq. See, also, Paid up ; Shares fully paid up.
powers of, 303 et seq.
preference, 322, 334, 405, 449, 868. See, also, Preference Shares.
registers of, 57. See Register of Shareholders.
reimbursement of, by calls, 412 note (x)
GENERAL INDEX. 1227
SHAREHOLDERS— continued.
rights of, to
certificates of title, 64. See Certificates.
control directors. See Direct<ii:s.
be registered, 60, 61
inspect accounts, 439
See Company's Accounts ; Accounts ; Inspection.
scripholders,
converted into, 66. See Scrip ; SCRIPHOLDERS.
difference between and, 66
set-oil', in actions by and against, 273. See SET-OFF.
SHAREHOLDERS' ADDRESS BOOK, 103
right to inspect, 333
SHARE LEDGER
a register, 59
SHARE REGISTER. See Register.
SHARES IN COMPANIES. See Index No. I.
general nature of, 392, 449
acceptance of,
on conditions not warranted by constitution of the company, 17
on other conditions, 17, 778 ct seq.
agreement to take, 13 et seq., 769 et seq.
makes a person a contributory, 760 el seq.
need not be in writing, 761
specific performance of, 586
agreement for sale of, 490
allotment of, on application for, 13—29. See Allotment.
must be by authorised persons, 14, 300
revocation of application before allotment, 13, 770
when not necessary to complete the contract, 15
allotted to directors, 365
ought not to be sold as unallotted, 592
applicant for, may dispense with notice of allotment, 15
applications for, 13, 769. See Allotment ; Application for Shares.
acceptance must correspond with application, 16, 17
assent to, by persons not authorised, 17
revocation of, 13, 770
attachment of, 463
blank transfers of, 471. See Blank Transfers.
calls on, 407 et seq. See Calls.
cancellation of, 517 et seq., 528 ct seq., 837 et seq., 842 et seq. See For-
feiture ; Surrender.
certificates of, 64. See Certificates.
charging orders, 460 et seq.
choses in action, how far they are, 454
company taking, in another company, 43, 200, 206
limited, may not purchase its own, 206, 322
conversion of, into stock,
under Companies act, 405
under Companies clauses act, 399
criminal liability for issuing too many, 394
delivery of, 490
deposits on, paying not conclusive of acceptance, 15
recovery back of, 29 — 35
disclaimer of, by trustee in bankruptcy, 552 et seq.
dividends payable ratably upon, 434
doctrines of reputed ownership not applicable to, 454, 551
forfeiture of,
generally, 321, 528 et seq., 842 et seq. See Forfeiture.
for non-payment of calls, 425
in cost-book miniug companies, 326
under Companies clauses act, 333
gaming in, 488
1228 GENERAL INDEX.
SHARES IN COMPANIES— wntinued.
goods and chattels, how far they are, 453
investing in, 450
issue of
bad for good, punishable, 394
conditions, on, 17, 778
discount, at a, 396. See Shakes issued at a Discount.
illegal,
where persons are members in respect of, 52, 774
no estoppel, 53
what is, 783
joint owners of, 538
legacies of, 540 ct scq. See Legacy.
passes stock, 400 note (/), 541
not debentures, 400 note (t), 541
lien on, 456 et seq. See Lien.
not paid up, cannot be transferable to bearer, 135 note (/), 801
not securities, 450
option to pay in shares or cash, effect of, on liability as contributory, 762
paid up, 395, 783 et seq. See Paid-up Shares ; Shares fully paid up.
holders of, when contributories, 783 et scq.
rights of, in distribution of assets, 867 ct seq.
passing by delivery, contributories in case of, 803
must be paid up, 135 note (/), 801
payment in respect of, what is, 395, 783 ct scq.
must be in cash when, 395, 783 et scq.
payment for goods, &c. in, effect of on liability as contributory, 780
placing, power to pay persons for, 372
agreements for do not make person a contributory, 769
personal estate, 451
Mortmain acts, 451 — 453
Statute of Frauds, 452—453
pledge of, by blank transfers, 478
preference, 322, 334, 405, 449. See Preference Shares.
rights of holder of, in distribution of assets, 868
purchase of, not within powers of directors, 179
own, by limited company, illegal, 206, 322
qualification shares,
director's liability for as contributory, 790
director may not receive, from promoter, 367
relinquishment of, 460, 517 et seq., 837 etseq. See Surrender of Sharks.
in cost-book mining companies, 94, 326, 816 note (q)
proof in winding up for value of, 736
repudiation of, after winding up, 753, 767 et seq.
reputed ownership, not within, 454, 551
restraining orders, 463
revocation of application for, 13, 770
sales of, 487 ct seq. See Sale.
in illegal companies, 140
scrip companies, in, transferable by delivery, 468
securities, are not, 450
slander of title to, 454
stock within the Trustee acts, 451
subdivision of, 405
effect of improper, 774
succession duty payable upon, 450 note (c)
surrender of, 517 et seq., 837 et scq. See Surrender of Shares.
survivorship in, 538, 539
transfer of, 464 et seq. See Transfer.
before calls are paid, 466
in winding up, 823 et seq.
transferable by delivery
legality of at common law, 131 ct seq.
in scrip companies, 468
since Companies act, 135, 136
must be paid up, 135 note (/), 801
usage by, 474
GENERAL INDEX. 1229
SHARES IN COMPANIES— continued.
trustee in bankruptcy, position of, as to, 550 et seq.
do not vest in, so as to make him a shareholder, 550, 551
power of to disclaim, 553 et seq.
to sell, 552
trustee of entitled to be indemnified against calls, 539, 805
Trustee acts, are stock within, 451
underwriting, agreement for, makes person a contributory, 761
unissued belong to the company, 394
value and amount of, 455
varying the, 405
votes for Parliament confer no, 452
SHARES ISSUED AT A DISCOUNT,
allowed under Companies clauses act, 396, 399
not under Companies act, 1862. ..334, 396, 401
cannot be corrected by reducing capital, 403
holder of a contributory, 787
rectification of register in respect of, 123 note (in")
when directors may take, 369
SHARES FULLY PAID UP. See also Paid up.
contracts to be registered under Companies act, 1867. ..39
holders of,
petition by, 626
rights in distribution of assets, 869
when contributories, 783 et seq.
how to be paid up, 395, 783 et seq.
purchaser of shares purporting to be, 395, 787
rectification of register in respect of, 123
what are, 395
SHARE WARRANTS,
annual return of, 126
interest on, not payable out of capital, 321
SHIP,
may be registered in name of a company, 36 note (b
SHOW OF HANDS,
ordinary mode of voting, 308 note (m)
SIGNING,
irregularity in,
cheques, 174
minutes, 175
minutes of meetings, 312
register or returns of shareholders, 58
SLANDER OF TITLE
to shares, 454
SOCIETIES,
benefit building, 918 et seq. See Benefit Building Societies.
Industrial and Provident, 915 et seq. See Industrial and Provident
Societies.
what may be registered under Companies act, 114 et seq.
what may be wound up under, 619 et seq.
SOLICITOR,
actions by, for payment for formation of company, 146 — 147
conducting proceedings ultra vires not entitled to be paid, 723
demanding more than scale fee for costs in winding up, 704 note (n)
lien on documents required in winding up, 692
proof of bill in winding up, 724
representations by, of company, 154
retainer of, by company, whether it need be under seal, 221 note (a)
when presumed, 265
1230 GENERAL INDEX.
SOLICITOR— continued.
to liquidator, 703
to projected companies,
liability of, 361
money paid to by promoters, 355
liability of promoters to pay, 607 note (a)
SOME ON BEHALF
of themselves and others, actions by, 565 ct scq.
SPECIAL ACT,
companies incorporated by, 102. See Companies, 6
contents of are facts, 242
right to have copies of, 333
position of persons made members by, 104, 107 note (b), 790, 791
SPECIAL RESOLUTIONS,
under Companies act, 1862... 343
SPECIALTY DEBTS,
calls are, 427, 848
SPECIFIC PERFORMANCE,
actions for, 585 ct scq.
as a means of being indemnified, 588
decreed against directors personally, 243 note (a)
defences to actions for, 587
of agreements to amalgamate companies, 585
form a company, 585
take shares, 586
with promoters, 357, 588
of contracts for the sale of shares, 499, 586
not under corporate seal, 223
of voluntary agreements, 588
STAMP
on amount of nominal capital, 117, 401
articles of association, 118
authority to purser to insert name in cost-book, 97
contracts for sale of shares, 469 note (c), 490
cost-book, 97 note (r)
letters of allotment, 14
memorandum of association, 117
mortgages of shares, 469 note (c)
policies of marine insurance, 761
proxy paper, 310
resolution of meeting unnecessary, 313
scrip certificates, 65
transfer of shares, 469
in cost-book companies, 97
foreigi shares, 469 note (c
STAMP OFFICE,
returns to, by banking companies under 7 Geo. 4, c. 46... 109, 110, 269
under 7 & 8 Vict. c. 11 3... 129
STANDING ORDERS OF PARLIAMENT, 102 note ( f )
STANNARIES. See Cost-Book Mining Companies.
appeal from Court of, 699
Court for winding up companies in, 615, 616
liquidator in, 701, 709
priority of debts under act, 718
procedure in, in winding up, 654 note (b)
rectification of register by vice- warden, 124
registrar of the court of, acting as liquidator, 701
staying proceedings in, 669 note (e)
GENERAL INDEX. 1231
STATUTE OF FRAUDS,
and Companies act, 1862. ..227
and Companies clauses act, 227
does not apply to agreements for the sale of shares, 490
shares, how far within, 452, 453
STATUTE OF LIMITATIONS. See Limitations.
STATUTES,
imperative and directory, 172 — 175
relating to companies,
chronological list of, 923 et seq.
historical sketch of, 2 et seq.
table of those now in force, 931
STAYING PROCEEDINGS,
after winding up,
actions against companies, 673 et seq., 883
practice as to, 676
actions against members, 683
distresses for rent, 679
rates, 681
executions, 676
under winding up order, 663, 890
STOCK,
conversion of shares into,
under Companies acts, 405
under Companies clauses act, 399
gaming in, 488
passes under a legacy of shares, 400 note (<), 541
STOCKBROKER. See Broker.
STOCK EXCHANGE,
frauds on, by directors, liability of company for, 218
illegal customs of, 489
rules of, 501
difference between, and usage of brokers, 515
sale of shares on, 500—516. See Sales of Shakes on Stock Exchange.
settling day,
conspiracy to obtain by fraud, 87, 488
STOPPAGE IN TRANSITU,
against company being wound up, 726, 727
SUBDIVISION OF SHARES,
effect of improper, 774
power of, 343, 405
SUBSCRIBERS,
agreement, what was, 102
to abortive companies,
actions by, for the recovery of their subscriptions, 29—35
calls on, 32
liability of, to be made contributories, 764
majority may resolve to return subscriptions, 317
not liable for preliminary expenses, 30
right of, to have back their money, 29 — 35
where company is illegal, 139
to companies, who are, 19 note (I)
actions for return of subscriptions by some on behalf 568
calls on, 409, 420
entitled to petition to wind it up, 627
liability of, for acts of each other, 144 et seq.
not liable for acts of promoters, 144
return of subscriptions to, when not lawful, 29
1232 GENERAL INDEX.
SUBSCRIBERS— continued.
to companies under 8 & 9 Vict. c. 16, when shareholders, 107
to inchoate companies not partners, 18. 21
to memorandum of association. See Memorandum of Association.
when contributories, 797
to scheme, not at liberty to retire, 29
SUBSCRIBERS' AGREEMENT,
effect of undertaking to sign, 90
what is, 102
SUBSCRIPTIONS,
majority of subscribers may resolve to return, 317
to companies, recovery of, 29 — 35
SUCCESSION DUTY,
payable on shares, 450 note (c)
SUMMARY
orders to pay, &c, in winding up, 693 et seq.
proceedings in winding up, set-off in, 744
SUMMONS
for examination in winding up, 690
SUPERVISION, WINDING UP UNDER, 886—890. See Winding up.
commencement of, 665, 889
liquidators, 889
staying actions, &c, in, 673
SUPPLIES,
to mine, shareholders liable for, 192, 205
SURETIES,
effect of registration of a company on, 127 note (p), 146 note (n)
amalgamation of a company on, 258 note (I)
for payment of calls, not contributories, 768
past members not, 821
SURPLUS ASSETS,
distribution of, in winding up compulsorily, 867 et seq.
voluntarily, 885
in cases of building societies, 871
SURRENDER OF CHARTERS, 99, 323
SURRENDER OF SHARES,
as part of compromise, 842
directors cannot delegate a power to accept, 518
have no power to buy out shareholders, 520
who agree to accept a, are bound by such agreement, 522
power must be properly exercised, 839
retirement of shareholder compared with refusal to accept shares, 520
right to relinquish shares in company, 517 et seq., 837 et seq.
regulated by Companies clauses act, 1863... 525
Companies act, 1862. ..525
in building societies, 523, 871, 920
in cost-book company, 94, 524, 816 note (p)
shareholder a contributory notwithstanding, 518 et seq., 837 et seq.
surrender of shares to company compared with a transfer of them to the
directors, 521, 840
under § 161 of Companies act, 1862, effect of, 842
SURVIVORSHIP,
between joint holders of shares, 538
partners holding shares, 539
SUSPENSION,
of proceedings. See Staying Proceedings.
GENERAL INDEX. J 233
TABLE,
of statutes relating to companies,
chronological, 923 et seq.
now in force, 931
TABLE A,
to Companies act, 1862.. 118
provisions of, 336 et seq.
See Index No. I.
TABLE B,
to Joint-stock companies act, 1856... 129
TAXATION,
of liquidators' costs, 863 note (s)
of solicitor's bill in winding up, 724
TENANT FOR LIFE,
of shares, 542
right to bonuses, &c, 545, 546
TENDER,
of transfer, on sale of shares, 495
TERMINATION OF LIABILITY,
in companies, 255. See, also, Liability.
TICKET,
to calls in winding up 855 et seq. See Past Members
on sales on Stock Exchange, 502
TIME. See Index No. I.
calculation of, 305, 306, 416, 417
for appeals against orders in winding up 698
making calls, 416, 846. See Calls.'
making allotment of shares, 15. See Allotment
meetings, 305
proof in winding up, 713
repudiating shares, 26 et seq., 767 et sen
not accepting offers within reasonable, 15, 770
lapse of, when an answer to an action, 582 et seq
effect on liability to be put on list of contributories, 822
bee Laches ; Limitation, Statute of.
TITLE,
to be shown by vendor of shares, 492
to shares, proof of by certificates, 64. See Certificates
TORTS,
liability of company for, 208 et seq.
directors for, 240
TRADE ASSOCIATIONS,
expulsion from, 528 note (a)
TRADE UNIONS
are now legal, 917
registration of, under Companies act impossible, 115
TRANSFER OF BUSINESS. See Amalgamation ; Business
effect of on creditors, 249, 250 iAfci>h-
on sureties, 258 note(^)
power of company to, 207
power of majority to sanction, 322
when possible, 322
winding up, in, 882, 891 et seq.
TRANSFER OF SCRIP, 66
L.C.
1234 GENERAL INDEX.
TRANSFER OF SHARES
generally, 464 ct seq.
before calls are paid, 466
legality of, 464
of member indebted to company, 457, 458
on forged power of attorney, 483
in particular companies,
companies governed by
7 Geo. 4, c. 46... 110
7 Wm. 4& 1 Vict. c. 73. ..101
8 &9 Vict. c. 16...1 08, 467
Companies act, 1862. ..467
cost-book mining companies, 96, i64, 468
foreign companies, 913
scrip companies, 468
blank transfers, 471 ct seq. See Blank Transfers.
"not in order," 482
not negotiable, 474
complete, when, 469
consent to,
by court in winding up, 833, 834
by director of his own shares, 466
duty to procure. 467, 491, 506
giving and withholding, 465
necessity of, 464
relief when directors refuse, 500, 834
delay in registering, effect of, 833 et seq.
effect of, as regards
dissolution of company, 608 et seq.
liability to calls, 423. See Calls.
liability to creditors, 255 et seq.
liability to be made contributories, 823 et seq.
after company has discontinued business. 829
fraudulent, 803 ct seq.
to avoid liability, 825
to directors, 830, 840
to persons not consulted, 802, 829
transferee accepted by company,^ 823
company imposed upon, 827 et seq.
by mistake, 827 et seq.
transferee not accepted by company, 831
escape liability, in order to, not fraudulent, 464, 825
forged, 483 et seq.
forms of, 469
fraudulent, 464, 465, 803
infants, to, 39, 809 et seq., 828
informal, 835
lien, effect of upon, 457, 458
maid fide, 803 et seq.
mandamus to register a, 604
modes of transfer, 467
multiply votes, in order to, not illegal, 309
cannot be objected to, 465
negotiable, blank transfers not, 474
nominee of purchaser, to, effect of, 495
" not in order," 482
pauper, to, when valid, 464, 825, 827
preparation of, 495
priorities of equitable, 454
register of, 57 et seq.
directors neglecting to, 833 et seq. See Registration of Shares.
restraining under 5 Vict. c. 5, 463
specific performance of, gratuitous and intended, 500. See Specific
Performance.
stamp on, 469
time for completing, 507
transfer to directors not same as surrender to company, 521, 840
GENERAL INDEX. 1235
TRANSFER OF SHAKES— continued.
transferee, rights and duties of, 470
to, without authority, 802, 829
Trustee acts, under, 451
winding up, after commencement of, 471, 832 et'si'q.
TRANSFERABLE SHARKS,
legality of companies with, 130 et seq.
when shares are, 464
TRANSFEREE OF SHARES. See Calls ; Contributories ; Sale of Shakes ;
Transfer of Sharks.
rights of, 470
in winding up, 823 et seq.
TRANSFEROR OF SHARES,
position of, 469, 470.
in winding up, 823 et seq.
See Calls; Contributories ; Liability; Sale of Shares; Trans-
fer of Shares.
TRANSMISSION OF SHARES
no power for directors to refuse consent to, 468
on bankruptcy, 550
on death of shareholder, &c, 468, 536
TREATIES
relating to foreign companies, 914
TROUBLE,
right of directors to compensation for, 388
TRUST
not noticed on register, 122
dishonest, contributories in case of, 802
TRUSTEES,
business carried on by, 114
charging order, cannot affect shares of, 461
contributories, 801, 804
directors, how far, 364 et seq.
for company, proof by in winding up, 727
lien of company in respect of shares held by, 457
resignation of, does not terminate liability to company, 806
right to indemnity against being made a contributory, 539, 805
transfer of shares held by, by order of court, 469
TRUSTEE ACT,'
shares within, 451
TRUSTEE IN BANKRUPTCY,
calls on, 426
contributory, when, 815
disclaimer of shares by, 553
not a shareholder, 551
position of, 550 et seq.
sale of shares by, 552
shares do not pass to, under reputed ownership clause, 454 note (a), 551
transmission of shares to, 468
TRA VIRES
acts which are, 162 et seq., 314 et seq.
cannot be rendered valid by majority of votes, 31 I
acts of promoters, company not liable for, 152
amalgamation of companies,
effect of on liabilities to creditors, 735
on contributories, 774
application to unincorporated company, 315
bills of exchange, liability on, 231 note (m)
1236 GENERAL INDEX.
ULTRA VIRES— continued.
conditions of allotment, 17
court will interfere to prevent acts which are, 577
debentures issued, effect of having had benefit of, 237
debts contracted, not provable in winding up, 722
liability of company for acts which are, 162 et seq.
money borrowed, 187 et seq.
limited company purchasing its own shares, 526
policies, premiums on to be refunded, 235, 236
shares issued, effect of on contributories, 774
UNANIMITY,
acts of corporations may be ultra vires notwithstanding, 162, 163, 314
of unincorporated companies, 315
UNCONCLUDED AGREEMENT
to take shares, 15, 768
UNDERTAKING,
mortgages of a company's, 195
UNDERWRITER
of shares, a contributory, 761
difference between, and person agreeing to place shares, 769
UNINCORPORATED COMPANIES,
actions by and against, 265 et seq., 270, 562
causes of dissolution of, 608 et seq.
where they may be made bankrupt, 610
with transferable shares, legality of, 130 et seq.
under the Bubble act, 130
at common law, 130
result of cases, 133
See Companies.
UNLIMITED COMPANIES,
change of to limited, 113, 335
UNLIMITED LIABILITY
at common law, 2 et seq.
liability of directors of a limited company, may be, 116
of banking companies in respect of notes, 855
UNPAID PURCHASE MONEY,
lien for,
available against company, 726
on shares, 496
when it gives right to petition for winding up, 624
UNREGISTERED COMPANIES,
number of persons who may be partners in, 114
contributories of, on winding up, 752, 753
UNSEALED CONTRACTS,
liability of corporations on, 220 et seq.
USAGE,
of brokers, not same as rules and customs of stock exchange, 51a
of company, effect of, 98 note (/)
mining usages must be proved, 95
negotiability of transfers by, 474
See Customs.
USE AND OCCUPATION,
actions against corporations for, 220 note (a)
VALUATION
of shares of shareholder dissenting to sale of company's assets, 896
GENERAL INDEX. 1237
VARIATION
in object of company, 19 ctseq., 771. See Change of Scheme.
of memorandum of association. See Memorandum OP Association-.
VENDOR
lien of, in winding up, 726
on sale of shares, 496
of shares, position of in winding up, 833 et seq.
question between, and purchaser as' to right to be registered,
title to be shown by, 492
See also Sale.
VICE-WARDEN OF STANNARIES
power to wind up companies, 615
rectification of register by, 124
See also STANNARIES.
VOID AND VOIDABLE AGREEMENTS,
contributories by reason of, 777
See Fraud ; Misrepresentation ; Rescission of Contracts.
VOLUNTARY WINDING UP,
advantages of, 847 ct seq.
amalgamation and reconstruction of companies in, 894 et sc>/
calls in, 884
circumstances under which a company may be so wound up 876
commencement of, 664, 877 '
companies capable of being so wound up, 875
costs, 885
dissolution of company, 885
jurisdiction of court after, 885
injunction to prevent, 885, 886
effect of on creditors, 877
liquidators. See Liquidators.
how appointed, 879
duties and powers of, 879
how controlled, 881
list of contributories, 884
payment of debts, 884
resolution for, 876
staying actions, 673, 674, 883
transfer of business upon, 882, 894 et seq.
rights of dissenting members, 895
transfer of shares after, 832
when an answer to contributories' petition for a compulsory order, 640
to creditors' petition for a compulsory order, 636
VOTES
at meetings, rides as to, 309
_ of creditors and contributories in winding up, 688
chairman has casting vote, 329, 338
creation of, by transfer of shares, 309
cannot be objected to, 465
husband, 310
illegal agreements as to, 309
interested, 309
lunatic by committee, 342
married women, 310
poll, right to, 311, 341
proxy, 309, 332, 342
show of hands, 308 note (m)
under Companies act, 1862. ..341, 342
under Companies clauses consolidation act, 329, 331
See Meetings ; Poll ; Proxy ; and Index No. I
1238 GENERAL INDEX.
WAGERING IN SHARES, 488
WAGES,
miners' lien for in cost-book company, 278 note {g)
priority for, in winding up, 717, 718
WAIVER
of compliance with § 38 of Companies act, 1867... 92
of formalities necessary to constitute membership, 47 et seq.
effect of, as between company and alleged shareholder, 49
creditor and alleged shareholder, 54
of notice of allotment, 15
of right to rescind for fraud, 73
See Formalities ; Irregularities.
WAR,
effect of, on contracts, 37
WARING, EX PARTE,
rule in, 727
WARRANT,
share. See Shares.
WARRANTY
of authority, 88, 241, 242
WATERWORK COMPANIES,
shares in,
not within Mortmain act, 452
Statute of Frauds, 453
See Companies governed by 8 & 9 Vict. c. 16.
WINDING UP,
under Railway abandonment act, 618
under old Winding-up acts, 611, 753
under the Companies act, 1862
See Analysis of Contents, Bk. IV., c. 1. And, also, Index No. I.
various modes of, compared, 874
compulsoriiy, 616 et seq.
subject to supervision, 886. See Winding up subject to
Supervision.
voluntarily, 875. See Voluntary Winding up.
bankruptcy rules, how far applicable, 719
books of company, ultimate disposition of, 870
breach of contract, how far, 728, 883
calls in, 846 et seq. See Calls on Contributories.
enforcing payment of, 847, 848
for adjusting rights of contributories, 852
costs, 859
debts, 849
limits of, 853
as regards past members, 853
present members. 855
set-off against, 857
commencement of
in voluntary winding up, 664, 877
in winding up compulsoriiy, 664
in winding up subject to supervision, 665, 889
companies to which act applies, 616 et seq.
amalgamated companies, 641
foreign companies, 622, 912
industrial companies, 614 note (o), 916
very small companies, 640
compromises in, 709
GENERAL INDEX. 1239
WINDING UP— continued.
contributories. See Contributories.
who are, 750 ct seq.
list of,
form of, 746
how settled, 745
how resettled, 7 47
in voluntary winding up, 884
past members, position of, 750
primary and secondary liability of contributories, 749
petitions by, 639, 645
correction of register on, 120, 121, 755
costs of petitions for, 658. See Costs.
costs in, 859 et seq.
court having jurisdiction over, 615 ct seq.
powers of,
to arrest, 692
compel production of documents, 692
investigate conduct of directors, 694
make summary order, 693 et seq.
order prosecution, 697
stay actions and other proceedings, 669 et seq.
proceedings under order, 663
summon and examine, 689
creditors,
arrangements with. See AMALGAMATION.
consulting, 688
petitions by, 635, 644
proof of debts by, 713 et seq.
staying actions and suits by, 669 et seq.
debts contracted in, 715
interest on, 724
priorities of, 721
proof and payment of, in, 713 et seq. See Proof of Debts.
set-off, 738
discretion of court, as to, 630
distribution of surplus assets, 867 et seq., 885
dissolution (final), 870
in voluntary winding up, 885
injunction to prevent, 885, 886
effect of,
on actions, &c, 669 ct seq.
when stayed, 672
actions for damages for fraud inducing membership, 74, 753
dispositions of property, 666 et seq.
distresses for rent, 678
rates, 681
executions, 676
payment made by company, 667
position of members, 753
right to repudiate shares, 767 et seq.
rescission of contract to take shares, 73, 76, 753, 767 et seq.
enforcing orders made in, 697
grounds for, 628 et seq.
contributories' petitions, 639
creditors' petitions, 635
inability to pay debts, 630
just and equitable, 631
summary of cases, 644 et seq.
history of, 611 et seq.
injunction to restrain petition when made, 637 note (n)
inspection of books, &c, in, 658 note (m)
liquidators, 699 et seq. See Liquidators.
appointment of, 700, 701, 879
in voluntary winding up, 878
official, 701 ct seq.
powers and duties of, 707 et seq.
1240 GENERAL INDEX.
WINDING UP— continued.
liquidators — contimied.
provisional, 700
removal of, 703, 890
list of contributories. See Conteibutoeies ; List of Conteibutoeies.
modes of, 613
not equivalent to a breach of contract, when, 728, 883
orders for,
a judgment, 663
appeals from, 661, 662
carriage of, 686
cannot be questioned except on appeal, 623
compulsory, when made, 628 et seq.
conflicting, 888
form of, 684
notice of, 684
proceedings under, 684, 686
staying proceedings under, 663
summary of cases, 644 et seq.
winding up subject to supervision, 886
orders in appealing from, 697
petitions for. See Petition.
costs of, 658
malicious, 614
practice on, 654
who may present, 624
preliminary inquiries, court may make, 642
proof of debts in, 713 et seq. See Peoof of Debts.
property of company, how affected by, 666 et seq.
prosecutions directed in, 697
repudiation of shares, after, 753, 767 et seq.
servants, effect on, as to dismissal, 729
set-off in, 738
against calls, 857
staying actions and executions pending, 669 et seq.
proceedings in winding up, 663
summary powers of court, 689 et seq.
summoning witnesses, &c, in, 689
transfers of shares, how affected by, 832. See Teansfee of Shares.
transfer of company's business in. See Amalgamation.
in compulsory winding up, 711
in voluntary, 882
WINDING UP SUBJECT TO SUPERVISION, 886 et seq.
commencement of, 665, 889
effect of, 889
liquidators in, 889
when preferred to compulsory, 886
WITHDRAWAL
of winding-up petition, 659
WITHDRAWING MEMBERS
of building societies, 872, 920
WRIT,
service of, on companies, 264 note (p). See Seevice.
WRITING,
contracts in, when necessary, 220 et seq. See Contbacts
when agreement to take shares must be in, 761
THE END.
BRADBURY, AGNEW, & CO., PRINTERS, WHITEFR1ARS.
o
CO
ex
SWEET AND MAXWELL, LIMITED— LAW BOOKS.
Examination. — A Guide to the Inter-
mediate Examination. By J. Carter Har-
rison. Price 105. 6d. 1888.
A Modern Final Examination Digest in the form
of Questions and Answers. ByT. B. Napier,
ll.d., Barrister-at-Law. Demy 8vo. Price
I85. cloth. 1887.
A Final Examination Digest of the Subjects of
Probate, Divorce, Bankruptcy, Admiralty,
Ecclesiastical and Criminal Law. Done into
Questions and Answers. By T. B. Napier,
ll.d., and R. M. Stephenson, ll.b., Barris-
ters-at-Law. Demy 8vo. 12s. cloth. 1888.
Executors. — Williams' (Sir E. V.)
Treatise on the Law of Executors and Ad-
ministrators. 9th Edit. In the Press.
Forms.— Chitty's (T.) Forms of Practi-
cal Proceedings in Queen's Bench Division ;
with Notes, Rules and Cases. 12th Edit. By
T. W. Chitty. 1/. 18s. 1883.
Handbooks of the Law.— By C. F.
Morrell, Barrister-at-Law. 2s. 6d. each,
sewed.
No. 1. Wills —Handbook for Testators.
,, 2. Probate — Executors and Administrators.
,, 3. Insurance — Fire, Life, Accident, and
Marine.
Horses, Oliphant's Law of, including the
Law of Innkeepers, Veterinary Surgeons, &c,
and of Hunting, Racing, Wagers and Gam-
ing. 4th Edit. By Clement Elphinstone
Lloyd, is. a. Oxon." Demy 8vo. 21s. 1882.
Husband and Wife.— Maoqueen's (J.
F. ) Treatise on the Law of Husband and
Wife. 3rd Edit. By J. C. and R. B. Rus-
sell. 1 vol. Roy. 8vo. Price 25s. 1885.
A Digest of the Law of Husband and Wife.
■ By R. Thicknesse, b.a., Barrister-at-Law.
With Forms and Precedence 8voS<Price
20s. cloth. - is-;.
Injunctions. — A Treatise on the Law
and Practice of Injunctions. By William
Williamson Kerr, a.m., Barrister-at-Law.
3rd Edit. Royal Svo. 1/. 15s. cloth. 1888.
Insurance. — Arnotjld's (J.) Marine In-
surance and Average. 2 vols. Svo. 6th
Edit. 60s. 1887.
International Law.— Westlake, J.,
Q.C., on Private International Law, with
Principal Reference to its Practice in Eng-
land ; being in lieu of a Second Edition of
the work published in 1858. Royal 8vo.
15s. cloth. 1880.
Manning's Law of Nations. 2nd Edit. By
Sheldon Amos. Barrister-at-Law. Svo.
16s. cloth. 1875.
Interpleader. —Cababe (M.) on Inter-
pleader in the High Court of Justice. With
Forms. 2nd Ed. Crown 8vo. 6s. cloth. 1888.
Justice of the Peace. — Stone's Prac-
tice for Justices of the Peace at Petty and
Special Sessions. 9th Edit. By W. H.
Macnamara. Svo. Price 25s. " 1882.
Landlord and Tenant. — Woodfall's
Law of Landlord and Tenant. A Practical
Treatise on the Law of Landlord and Tenant ;
with afull Collection of Precedents and Forms
of Procedure. 14th Edition. By J. M. Lely,
Barrister-at-Law. Roy.8vo. 38s. cloth. 1889.
Smith's (J. W.), Law of Landlord and Tenant,
a Course of Lectures delivered in the Law
Institution. 3rd Ed. By T. Thompson, m. a.,
Barrister-at-Law. 18s. cloth. 1882.
Law LictiOiiary.— Containing Defini
tions of Terms in modern use, and the Rub
of Law affecting the principal Subjects
By C. Sweet, ll.r. Imp. 8vo. In ha
morocco, !.0s. 188:
Leading Cases. — Smith's Leadin
Cases. A Selection of Leading Cases i
various Branches of the Law, with Note
9th Edit. By R. Henn Collins, q.c, an
R. G. Aebuthnot, Esips., Barristers-at-Lau
2 vols. Royal Svo. 75s. cloth. 188
White and Tudor's Leading Cases in Equity
A Selection of Leading Cases in Equity, wit
Notes. By F. T. White and 0. D. f ldoi
Esqrs., Barristers-at-Law. 6th Edit,
vols. Royal Svo. 84s. cloth. 18S<
Licensing". — Licensing Acts, 1823-
1874, containing the Laws of the Sale
Liquors by Retail and the Management
Licensed Houses, Statutes and Cases to Aiu
1887, and the Law of Licensing Theatres an
Music Halls. 3rd Edit. By J. M. Lely ai
W. D. I. Foulkes. 10s. 6d. cloth. 188;
Master and Servant.— Smith's (C. M
Law of Master and Servant, iucludin
Masters and Workmen ; with Statutes. 8v
4th Edit. 28s. cloth. 188;
Maxims. — Broom's (Dr.) Selection
Legal Maxims, Classified and Illustratec
6th Edit. By Herbert Francis Manist
of the Inner Temple, Esq. , Barrister-at-Lav
Svo. Price 11. lis. U. cloth. 188'
Mayor's Court, London.— Practit
and Pleading, with Forms and Precedent
By E. H. RAiLTONandR. Gill. 8s. 188:
Mercantile and Maritime Law.
Smith's (J. W.) Compendium of Mercanti
Law. Tenth Edition. In the Pi
Tudor's (O. D.) Selection of Leading Cases c
Mercantile and Maritime Law ; with Note
Royal Svo. Third Edition. Trice 42s. 188
Merchant Shipping-.— A Treatise
I the Law of Merchant Shipping. By Dav
V'Maclaciilan, m.a., Barrister - at - La\
Royal Svo. Price 2/. cloth. 188
.Maude (F. P.) and Pollock's (C. E.) Treati
on the Law of Merchant Shipping. 4th Edi
By the Hon. Baron Pollock and Gain
ford Bruce, Recorder of Bradford. 2 vo
Royal Svo. Price 3/. 10s. 188
Metropolitan Building" Acts.
Woolrych's. With Notes, &c. 3rd Ed
"By N. H. Patekson. Price 8s. 6d. 18S
Mines, Minerals. — A Treatise on tl
Law of Mines, Quarries, and Minerals. 1
R. F. MacSavinney, m. a., Barrister- at-La
Royal 8vo. Price 35s. cloth. 188
Mortg'ag'e. — Coote's(R. H.) Treatise <
the Law of Mortgage. 5th Edit. By A
Wvllys Mackeson, Esq., Q.C., and 1
Arthur Smith, Barrister-at-Law. 2 vo
Royal Svo. Price U. cloth. IS
Municipal Corporations.— The Mu
cipal Corporations Act, 1882, and the Ger
ral Pules made in pursuance thereof. By
Geary, Barrister-at-Law. 8th Edit. Wi
Supplement containing the Municipal El
tions {Corrupt add Illegal Practices) A
1884. Svo. Price 11. 18s. cloth. 188
Nisi Prius^RoscoE's (H.) Digest oft]
Law of Nisi§fifts Evidence. 15th Editio
By M. PowellT Barrister-at-Law. 2 vo
8vo. Price 21 ~&tQ
UNIVERSITY OF CALIFORNIA
LOS ANGijj.' s
V>
V»l MVIimi ' ISA
fir* 4T <
^OF-CAUF0«fo
• uOJITYD'J
^OFCAIIFO^ ^MEUNIV
University ot California
cnUTHERN REGIONAL LIBRA"1 13g8
305SD°UNeve Drive, »$g£&W«ee
Returnjh|sm^^ f
IVERS//.
I a^ P
'OkWM
^JIMNV-SOV^
f-SOV
^UIBRARY-0/
!JUI7t
#!
§ 5 /v»IX ^
mer%
£1 §(
5? 5
juifiti
&i l(3£
^~i§
^
^lUBRARYtf/. W
^ftn-imn-JCY
JU
AA 000 820 107
UC SOUTHERN REGIONAL LIBRARY FACILITY
i*
^imsOl^
^M-UBRARY-Or
^ 1 irr I
/ Q 0.
^WFUNIVERS/^.
g\
"^ilWNV-SOV^
I?
'J lljltt JV.H
i3i
^OJITWJO^ ^/OJIIVOJO^
^OFCAUF0% ^OFCAIIFO%
.StfMJNIVfRSfci
es " ' n ft i
*~0 ISfcl
.:\\UtJNIVER%
1^
"Sssmajm-jw^
^TOSOV^ %H3AIN(1-3WV
NlLlBRAKY(
1 f f"
^tOSANGFlfr.> ^.OF'CAUFO/fo
>&A»viian-# A
^WHJNIVERJ^
^lOSANCFlfj>
^UIBRARYfl/ ^HIBRARYQr
Via i/nirinj//^ *j<iuj «mHicjy -vy\VLiDn«n rojr ^\t imn«n ic^r . .\\u uwviiw/^.
Live Music Archive
Librivox Free Audio
Metropolitan Museum
Cleveland Museum of Art
Internet Arcade
Console Living Room
Books to Borrow
Open Library
TV News
Understanding 9/11