Francis Beaufort Palmer.

Company precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) online

. (page 52 of 134)
Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 52 of 134)
Font size
QR-code for this ebook


applicable. Thomas v. Patent Lionite Co., 17 C. D. 250. Re Hopkins, 18 C. Div.
380 ; Re 3Iaggi, 20 C. D. 545 (provisions in regard to secirred creditors apjilicable).

And see supra, Feaudulent Peefeeences.

Dehentiires and Delenture Stock.
See Chap. XXXVIII.

Set-off and Mutual Credit.
Creditors who are also contributories are restricted as regards set-off. See
sect. 101 of 1862. Whether the company be solvent or insolvent, a contributory
of a limited company cannot set ofE a debt due from the company to him against
calls due from him, whether made before or after the commencement of the winding-
up. GrisseWs case, 1 Ch. 528 ; Whitehouse ^ Co., 9 C. D. 595. And sect. 10 of
the Judicature Act, 1875, has not altered this rule, even where the contributory
dies insolvent. GilVs case, 12 C. D. 755. But in an unlimited company a con-
tributory has a limited right of set-off under sect. 101 of the Act. Ex parte Bran-
white, 48 L. J. Ch. 463 ; Brasnett's case, 34 W. R. 206. And when the company's



376 WINDING-UP BY THE COUKT. [ClIAP. XXXVII.

debts are paid, sect. 101 gives a right of set-off, wliether the company be limited or
unlimited.

And there is one case even in a limited company in v^hich set-off will arise
between the company and the contributory, viz., where a contributory becomes
bankrupt in the course of the winding-up proceedings. In such cases it seems
that the mutual credit provisions of the Banki'uptcy Act (see infra) apply, and
the balance only can be proved for on either side. Ec Duckworth, 2 Ch. 578 ; Ex
parte Stang, 5 Ch. 492.

Moreover, a contributory who obtains a winding-up order will be entitled to
his costs free from set-off for calls. General Exchange Bank, 4 Eq. 138 ; 37 L. J.
Ch. 618.

When, after a winding-up has commenced, a creditor who is a shareholder
assigns his debt, the company may set off against the debt any moneys due from
the shareholder for calls or otherwise, even though the calls be made after the
assignment. Ex parte Mackenzie, 7 Eq. 240 ; Ex parte Slang, tibi supra.

And see Taunton, Dehnard ^ Co., (1893) 2 Ch. 175.
, As regards creditors who are not contributories, the winding-up does not, in the

case of a solvent comjiany, interfere with the ordinary right of set-off as between
non- shareholders and the company. Anderson'' s case, 3 Eq. 337.

When, however, the company is insolvent, the bankruptcy rules as to set-off
and mutual dealings are, by virtue of sect. 10 of the Judicature Act, 1875, appli-
cable. Merseg Steel Co. v. Naylor, 9 App. Cas. 434. A-ud it must be borne in
mind that until the contrary is proved it is to be assumed that a company which is
being wound up is insolvent. Milan Tramways, 25 C. Div. 587.

The following is the mutual credit section of the Bankruptcy Act, 1883 (46 & 47
Vict. c. 52) :—

Sect. 38. " Where there have been mutual credits, mutual debts, or other
mutual dealings between a debtor against whom a receiving order shall be made
under this Act, and any other person proving or claiming to prove a debt iinder
such receiving order, an account shall be taken of what is due from the one party
to the other in respect of such mutual dealings, and the sum due from the one
party shall be set off against any sum due from the other party, and the balance
of the account, and no more, shall be claimed or paid on either side respectively ;
but a person shall not be entitled under this section to claim the benefit of any
set-off against the property of a debtor in any case where he had at the time of
giving credit to the debtor notice of an act of bankruptcy committed by the debtor
and available against him." And sect. 39 of the Bankruptcy Act, 1869, was to
the like effect.

The characteristic of mutuality is still necessary in order that a set-off may be
claimed. Where the company's moneys are paid for a specific purpose, and after
sati.'ifaction of it a balance remains, the payee cannot after winding-uj) set off a
debt owing to him unless he can show that the balance was retained with the
company's consent. Mid-Kent Fruit Factory, (1896) 1 Ch. 567.

The line is to be drawn at the commencement of the winding-up. Milan Tram-
ways Co., uhi supra.

" In cases of this kind the question must be considered in the same manner as if
it had arisen at the time of the bankru^itcy [commencement of winding-up], and
cannot bo varied by any change of status of one of the parties." Ter Lord Kenyon,
Dickson v. Evans, 6 T. R. 57, approved by Lord Selborne, L. C, in the above case.

" It is impoMsiblo that a person, who at the time of the bankruptcy [winding-up]
owes a debt to the bankrupt [company], and has no right of set-off, can acquire
such a right by taking an assignment of another debt due to another creditor of the
bankrupt." Fer Lord Selborne, L. C, Milan Tramways, ubi supra.



CREDITORS. 377

And where the liquidator or a creditor claims to set oif an assigned debt, the onus
lies on the claimant to show that the assignment was made before the commence-
ment of the winding-up. Dickson v. Evans, 6 T. R. 57.

In order to constitute a mutual credit, it is not necessary to show that the credit
was reciprocally given in relation to one and the same transaction. Thus, if at the
commencement of the winding-up the company is indebted to A. for goods sold and
delivered, and A. is the indorsee for value of a bill drawn by B. upon, and accepted
by, the company, mutual credit has been given within the meaning of the section,
for the company gave credit when it sold the goods to B., and B. gave the company
credit when he became indorsee for the value of the bill, liankcy v. Smith, 3 T. R.
507. And it is immaterial that tlie credit was given at different times. Almffer v.
Cur He, 12 M. & AV. 751.

On the same principle, it would seem that whenever an assignment of a debt is
taken, the assignee is to be deemed to give credit to the debtor ; and accordingly, if
the company is the debtor, and at the commencement of the winding-up the debt
is still due to the assignee, the amount will be set off against any debt due from
him to the company, and so vice versa.

By virtue of the section, unliquidated damages for breach of a contract may be
set off against a claim for money due under the contract {Peat v. Jones, 8 Q. B. D.
147) ; "because a contract of sale and purchase is in its nature mutual, imposing
reciprocal obligations on the vendor and purchaser." Pt/- Jessel, M. R., S. C, p. 149.
See also Mersey Steel Co. v. Naylor, 9 App. Gas. 434. Moreover, unliquidated
damages for misrepresentation in regard to property sold may be set off against
the price. Jack v. Kipping, 9 Q. B. D. 113.

Mutual dealings must be such as result in a money liabihty. See EberWs Hotel
Co. v. Jones, 18 Q. B. Div. 46o ; Re Winter, 8 C. Div. 225.

It has been held that a claim on a current policy cannot, in an action by the
company (though in liquidation), be set off against a loan on such policy. Ex parte
Trice, 10 Ch. 648. But qiKcre, whether this can be supported.

A claim on a policy that has matured before the winding-up can be set off.
Sovereign Life v. Lodd, (1892) 2 Q. B. 573 ; and see Asphallic TFood, ^-c. Co., 30 C.
Div. 216.

Notice of a floating security on all the company's property at the time when the
debt due to the creditor was contracted will not prevent the set-off from binding
the debenture-holders. Biggerstaffv. Eowatt^s Wharf, (1896) 2 Ch. 93.

Where by set-off the debt on one side is satisfied, the security held for that debt
is freed. Re Barnett, 9 Ch. 293.

Debts to be capable of set-off must be due in the same right. Middleton v.
Bollock, 20 Eq. 29 ; Re Willes, 12 C. Div. 491 ; West v. Brice, 2 Bing. 455 ; Bishop
V. Church, 3 Atk. 691. But the equitable interests may be regarded. Bailey v.
Finch, L. R. 7 Q. B. 34.

A debt due to A. and B. jointly cannot be set off against a debt due from A. to
the company. Ex parte Rose, Buck, 125 ; Netv Quebrada Co. v. Carr, L. R. 4 C. P.
651 ; Ex parte Morier, 12 C. D. 491.

As to set-off by a landlord, see Kidsgrove Steel Co., W. N. (1894) 25; and as to
setting off directors' fees, see Washington Diamond Co., (1893) 3 Ch. 95.

Sureties.

When the company is surety for payment of A.'s debt to B., B. can prove in the
liquidation of the company ; but if the debt is secured B. must value his security,
and prove for the balance, supra, p. 363. If the debt is not payable when the proof
is made, B. can only prove as for a contingent liability ; for non constat that A. will



378 WINDING-T^P BY THE COURT. [ChAP. XXXVII.

not pay in due course. Ilerepath v. Belmar, 38 W. R. 752 ; Re Farrott, 63 L. T.
777.

So, also, if A. at the request of the company guarantees to B. the payment of a
debt owing by the company to B., here, if company goes into liquidation, A. can
prove against the company. See supra, "Indemnity."

A surety who pays in full is entitled to all securities held by the creditor. Mer-
cantile Law Amendment Act, 1856 (19 & 20 Vict. c. 97), s. 5 ; Duncan, Fox and Co.
v. North and South Wales Bank, 6 Ap. Gas. 1.

Where a surety who is liable for part of a debt has paid the whole of what he is
liable for, he is entitled to stand in the place of the creditor to that extent against
the estate of the bankrupt debtor. Thornton v. M'^Kewan, 1 H. & M. 525 ; Be Gray
V. Seckham, 7 Ch. 680 ; Ellis v. Emmanuel, 1 Ex. D. 157.

Where the surety is surety for the whole debt, but with a limit as to the amount
of his liability, and there is a proviso that the surety is to be liable for the ultimate
balance, and that dividends received from the debtor are not to go in discharge of
the surety, the payment by the surety to the creditor does not give the surety a right
to prove and reduce the proof of the creditor. Fn re Fees, 17 C. D. 98 ; Midland Co.
V. Chambers, 4 Ch. 398.

See as to proof for whole amount when claim against surety is limited in amount
and he has paid it. Ex parte National, ^-c. Bank, (1896) 2 Q. B. 12.

It is now settled that the creditor is not entitled to the benefit of counter bonds
or securities given by the principal creditor to the surety. Sheffield Bank v. Clayton,
(1891) 1 Ch. 621.

As to proof by surety against a co-surety, see Ex parte Snoicdon, 17 C. D. 44.

As to double proof, see supra.

Taxes.
See stipra, " Rates " and " Ceown Debts."

Trustee.
A trustee for a company may prove in respect of liabilities incurred as such
trustee, e.g., a person who holds leaseholds or shares in trust for the company.
National Financial Co., 3 Ch. 791 ; Hunt's Claim, W. N. (1872) 53.

Unliquidated Damages.
Having regard to paragraph (1) of sect. 37 of the Bankruptcy Act, 1883, un-
liquidated damages for a mere tort are not provable, but there are cases in which a
person wronged may waive the tort and claim on some other footing, e.g., implied
contract. Watson v. Hollidaij, 20 C. D. 780. He must, however, elect which
remedy to pursue. Ex parte Baum, 9 Ch. 673. And damages for misrepresenta-
tion inducing a contract may be proved (see Jack v. Kippling, 9 Q. B. D. 113),
unless, indeed, it be a contract to take shares in the company.

Vouchers.
As to mentioning vouchers in proof, and as to production thereof, see R. 99 of
1890.

Wages.
See the Act of 1888, infra, p. 397. In bankruptcy payment of workmen's wages
entitled to priority has been ordered, although the payment left the trustee without
the funds necessary to iuvostigato tho affairs of the debtor. Fe Bowen, 13 Eq. 130 ;
43 L. J. Bk. 24.



CREDITORS. '379

This -will be found in Form lo7. It maybe cited as Form 60, and -was sub- Form 405.
stitutvd by R. 36 of April, 1892, for Form 66 of 1890. ^

The affidavit of proof may be delivered or sent by post to the official receiver, or Qgneral form'
if a liquidator has been appointed, to the liquidator. See R. 97 of 1890, supra.

As to lodging the proof in time to vote at first meeting of creditors, see R. 108 of
1890, supra.

As to proving debts, and admitting or rejecting proof, at the first meeting, see
Sched. I. to Act of 1890, Rr. 21 and 11, Chap. XVII.

A debenture dated the day of , and under tlie common Form 406.

seal of the above-named coy, the sd coy, for the consideration therein Debt due on

expressed, promised to pay me on the day of , the sum of debenture

100/., and thereby promised to pay me interest on the sd sum in the ° ^ "^^ •
meantime at the rate of 10/. p.c. p. a. by equal half-yearly payments

on the day of and day of in each year. The sd

debenture is now produced and shown to me, and is marked A.

1. The sd coy was, at the date, &c., and still is, justly and truly Form 407.
indebted to me in the sum of 194/. 7*. 4f/., being the remuneration Dii-ector's
payable to me under and by virtue of the articles of association of the fees,
sd coy for services rendered by me as a director of the sd coy between
the day of and the of .

1 . The above-named coy was, at the date, &c., and still is, justly and Form 408.
truly indebted to mo and to my partner H. in the sum of 105/. for law Debt due to
charges and payments made on behalf of the sd coy in the matter of solicitor,
the conveyance and mortgage of certain land at and for pro-
fessional ad\'ice and work done for the sd coy, as appears by the account

now produced and shown to me marked with the letter N.

2. The charges in the sd account are reasonable and such as are
usual between solors and clients, as I know, &c.

The old practice was for the chief clerk to sign a request to the taxing master to
tax the solicitor's bill. After the bill was taxed the parties came again before the
chief clerk and the claim was supported by the taxing master's original certificate,
"which was not filed. But under the present practice the bill is taxed by the
registrar.

1. The above-named coy was, &:c., that is to say : — Form 409.

1884, July 31st, amount due ujion a judgment



Jud lament
recovered by N. against the sd B. Coy in the debt.

Queen's Bench Division of this Ct on bill of

exchange, and signed 31st July, 1884.

For debt £657 10 £ s. d.

For taxed costs 11118

769 8



August 5th, 1884, interest thereon at 5 p.c. p. a.. , 8 6

The paper writing marked A now produced and shown to me is



380



WINDING-UP BY THE COURT. [GhAP. XXXVII.



Form 410.

Liquidator of

another

companj'.



the judgment paper upon which the above-named judgment for 769^.
"was signed, and the sd judgment still remains in full force and virtue.



I, J. C, of , accountant, the liqr of the M. Coy, Limtd, make

oath and say as follows : —

1. By an order of Mr. Justice , dated, &c., the M. Coy was

ordered to be wound up under the provisions of the Cos Acts, 1862 to
1890.

2. By an order dated, &c., I was appointed liqr of the sd M. Coy.

3. It appears from the books and papers of the sd M. Coy which
came to my hands as liqr thof, that the sd C. Coy was, at the date,
&c., and still is, justly and truly indebted to the M. Coy in the sum of
1., for, &c., for which sum or any part thereof, &c., the said M.



Coy, &c. \_as in Form 157].



Form 411.

Proof of debt
of workmen.
Form 67 of
1890.



I {Jill in full name, address, and occupation of deponent), of {on behalf
of the u'orkmen and others e7nploj/ed by the ahove-named coy), make oath
and say :

1. That the above-named coy was, on the day of , 189 — ,

and still is, justly and truly indebted to the several persons whose
names, addresses, and descriptions appear in the schedule endorsed
hereon in sums severally set against their names in the sixth column
of such schedule for wages due to them resply as workmen, or others
in the employ of the coy, in respect of services rendered by them
resply to the coy during such periods as are set out against their
respective names in the fifth column of such schedule, for which sd
sums, or any part thof, I say that they have not, nor hath any of them,
had or received any manner of satisfaction or security whatsoever.

Sworn at , in the county of , \

this day of , 189 — . > Deponent's signature •

Before )

Schedule referred to on the other side.



1.

No.


2.

Full name of
Workman.


3.

Address.


4.

Description.


5.

Period over ■which.
Wages due.


6.
Amount due.












£


s.


d.



See E. 106 of 1890, supra, p. 361,



Signature of deponent



CREDITOKS. ^^l

(Address, date, and title.) Form 412.

lam desired by tlie off recr to acknowledge tlie receipt of your claim. Notice to

for 1, in respect of , and to inform you in reply that before creditor to

such claim can be admitted against the estate, a proof of debt must be
made for the amount, for which purpose a form of affidavit is enclosed.

I am, your obedient Servant,
To

I am desired by the off recr of the above coy to return you herewith Form 412a.
the form of proof of debt herein, and to request you will be good Notice~to
enough to complete it by being sivorn thereto, and affixing the Cos complete
(Winding-up) Stamp, value one shilling, required by Table A. of the ^^""
scale of fees. The completed proof should be returned to the off recr
of cos at the above address, without delay.

I am, your obedient Servant,

There are also official forms of notices to forward stamp for proof, to forward
bills of exchange, &c.

An indenture dated, &c., now produced and shown to me and marked Form 413.
A., and made between the above-named coy of the one part and myself Description
of the other part, whereby the sd coy granted certain freehold heredits, aud valuation
situate, &c., unto and to the use of me, my heirs and assigns : subject ^j^g proof
to a proviso therein contained for the redemption of the sd premises
upon payment by the sd coy unto me of the sum of 1,000^., with interest

for the same at the rate of 5 p.c. p. a. on the day of . And

■whereby the sd coy covenanted to pay me the sd ppal sum of 1,000/.

and interest on the sd day of , and in case the sd ppal sum

should not be pd on that day, then to pay me interest on the same sum

after the rate afsd by equal half-yearly payments on the day of

■ and of in every year.

I estimate the value of my sd security at the sum of 600/., and I
claim to be entitled to prove in the winding-up of the sd coy for the

sum of /., being the balance of the sd sum of 1,000/. and the

interest thereon after deducting the sd sum of 600/.

As to valuing security, see supra; and Moor v. Anglo-Italian Bank, 10 C. D. 681 ;
Western District Bank, 23 S. J. 880; Kit Hill Tunnel, 16 C. D. 590; Williams v.
Hopkins, 18 C. Div. 370. Rejection of secured creditor's proof remits him to his
rights as mortgagee ; S. C, 31 W. R. 495 ; 48 L. T. 513.

{Title). Form 414.

Take notice that, as off recr and liqr of the above-named coy, I Notice of
have this day rejected your claim against the coy \_If proof wholly rejection of

rejected strike out tcords ivithin brackets^ (to the extent of /.) on ^Ts^d^^on

the following grounds : Form 68 of

[e. ff., " That you agreed to accept payment for 20 p.c. of your con-



382 WINDING-UP BY THE COUKT. [CilAP. XXX VII.

tract price iu f ully pd up shares," or "That the costs in respect of
which the claim arises were not incurred by the coy, and that the
coy had not undertaken or become liable to undertake a lease of the
premises numbered , , street."]

And further take notice that, subject to the power of the Ct to ex-
tend the time, no application to reverse or vary my decision in rejecting
your proof will be entertained after the expiration of \jiuenty-one days
or seven days as the case may be (Ri\ 111 and 112)] days from this date.

Dated this ^ day of , 189—.

Signature .

Addi-ess . , Off Eecr.

E. 110 of 1890. — The liquidator shall examine every proof and the grounds of the
debt, and in writing admit or reject it, in whole or in part, or require further
evidence in support of it. If he rejects a proof he shall state iu writing to the
creditor the grounds of the rejection.

The admission is notified in writing on the proof itself, but it is not the practice,
at any rate in the London official receiver's office, to give the creditor notice of the
admission of his proof.

As to the liquidator administering oaths, &c., see R. 114 of 1890.

R. 29 of April, 1892. — Subject to the power of the Court to extend the time, the
official receiver as liquidator, not later than fourteen days from the latest date spe-
cified in the notice of his intention to declare a dividend as the time within which
such proofs must be lodged, shall in writing either admit or reject wholly or in part
every proof lodged with him, or require ftirther evidence in support of it.

K. 119 of 1890 (annulled by R. 34 of 1892) contained, instead of the word
"later" as above, the word " less," and (unless the word is to be regarded as an
obvious mistake) still applies in every winding-up commenced between the 31st
December, 1890, and the 6th May, 1892, and retained by Chitty, North, StirKng,
and Kekewich.

E. 120 of 1890. — Subject to the power of the Court to extend the time, the liqui-
dator, other than the official receiver, within twenty-eight days after receiving a
proof, which has not previously been dealt with, shall in writing either admit or
reject it wholly or in part, or require further evidence in support of it. Provided
that where the liquidator has given notice of his intention to declare a dividend, he
shall within fourteen days after the date mentioned in the notice as the latest date
up to which proofs must be lodged examine and in writing admit or reject every
proof which has not been already dealt with, and give notice of his decision rejecting
a proof wholly or in part to the creditors affected thereby.



Form 415. {Tide.)

Notice rcquir- Take notice that, pursuant to the terms of R. 119 of the Cos
Ivklfme'in (Winding-up) Eules, 1890 [now E. 29 of the Cos (Winding-up) Eules,
Hui)[iort of 1892], you are required to furnish the off recr with further evidence
I""^" • in support of your proof against llio above-named coy. The further

evidence required is as follows \_siate evidence^.

And furtlior take notice, that as a dividend is about to be declared

it is necessary that all cluima should bo dealt with forthwith, and that



383



CREDITORS.

unless the above evidence be produced to the off recr on or before
day, the day of , 189 — , your said proof will be rejected.

Dated this day of , 189—.

C. J. S.,

Off Recr and Liqr.

To . [_Addresi>.^

See notes to Form 414.

{Title.) Form 415a.



Sib,— The [bill of exchange or other mhshuj semrit;/'], full particulars of -whicli are Letter of

set out in the anuexed afiBdavit, representing the sum of /., issued to by indemnity _

the above-named , in respect of which I did on the day of lodge a "•"'^ affidavit.

proof of debt in the above matter, having been lost or mislaid, I (or we) hereby
undertake, in consideration of your admitting my (or our) said proof to rank for

dividend for the total sum of /. (subject to its being otherwise in order) without

production of the said , to indemnify you against all claims which may be made

by any other person or persons in respect of the said [bill, ^-c, as above'], and from
all loss, damage, and expense which the assets of the above-mentioned company,
you,' or your executors, administrators, or assigns may sustain by reason of your

makiug any payment to me (or us) in respect of the said total sum of 1., and if

it should hereafter appear that any other person or persons is entitled to the amount
represented by the said [as aborel so lost or mislaid as aforesaid, or auy part thereof,
I (or we) hereby engage to repa}^ to you all sums of money which such other person
or persons is, are, or may become entitled to in respect of such [as above'], together
with interest thereon at the rate of 51. per cent, per annum from the date of pay-
ment of such sum or sums [date and signature].

To the Official Receiver in Companies Liquidation [address].

That I have made a careful search for the [bill of exchange, promissory note, deposit Affidavit.
note, i'C.], the particulars whereof are under-written, in respect of which I have
lodged a proof of debt in the above matter, but that I have not been able to find
the same, and that I verily believe that the same h — been lost or mislaid ; and I
further say that I have not nor hath any person by my order, to my knowledge or

belief, for my use, in any manner parted with the said , or assigned my legal

or beneficial interest therein or any part thereof ; and that I am the person now
legally and beneficially interested in the same, and entitled to receive for my use all



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 52 of 134)