Francis Beaufort Palmer.

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

. (page 61 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 61 of 134)
Font size
QR-code for this ebook


General
rules.



Bectification.
Calls.

Liahility of
past and
present
members.



Past
members.



Limited lia-
bility on
shares.



Guarantee
compauies.



Insurance
policies.



Competition
with creditors.



Sect. 99 of 1862. — In settling the list of contributories the Court shall distinguish
between persons who are contributories in their own right and persons who are con-
tributories 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.

As to putting on executors in their individual capacity, see Buffos Executors' Case,
32 C. Div. 301.

As to administration proceedings in default of payment, see sect. 105 of 1862, and
Chap. XL.

Sect. 13 of 1890. — General rules may be made for requiring or enabling aU or any
of the powers and duties conferred and imposed on the Court by sects. 91, 98, 99,
102 and 107 of the Companies Act, 1862, to be exercised or performed by the
liquidator as an officer of the Court, and subject to the control of the Court, pro-
vided that the liquidator shall not, without the special leave of the Court, rectify
the register of members, and shall not make any call without either the special
leave of the Coui-t or the sanction of the committee of inspection.

Sect. 38 of 1862. — In the event of a company formed under this Act being wound
up, every jjresent and past member of such company shall be liable to contribute to
the assets of the company to an amount sufficient for payment of the debts and
liabiLities of the company, and the costs, charges, and expenses of the winding-up,
and for the payment of such sums as may be required for the adjustment of the
rights of the contributories amongst themselves, with the qualifications following ;
(that is to say,)

(1.) 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 :
(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 by them in pursuance of this
Act:
(4.) In the case of a company limited by shares, no contribution shaU 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 past member :

[Unless the articles otherwise provide : Hill's case, 20 Eq. 585 ; Fenin-
stilar Co. V. Fleming, 27 L. T. 93 ; McKewan' s case, 6 C. Div. 447.]
(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 :

[Unless the articles otherwise provide : Lion Insurance Assoc, v. Tuchei-,
12 Q. B. Div. 176.]
(C.) Nothing in this Act contained shall invalidate any provision contained in any
policy of insurance or otlier 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 :

\_Lcthbri(lgey. Adams, 13 Eq. 547; Agricultural Cattle Co., 10 Ch. 1;
Accidental Death Co., 7 C. D. 568 ; International Life Soc, 2 C. Div. 476.]
(7.) No sum due to any member of a company, in his character of a member, by
way of dividends, profits, or otherwise, shall be deemed to be a debt of the



CONTRIBUTOKIES.



449



company, payable to sucli member in a case of competition between him-
self and any other creditor not being a member of the company ; but any
such sum may be taken into account for the purposes of the final adjust-
ment of the rights of the contributories amongst tliemselves.

[It has been held that directors' remuneration falls under this clause :
Ex parte Cannon, 30 C. D. 629. But see Bale v. Plant, 43 C. Div. 255.]

The above section draws a distinction between present and past members. The Past and pre-
present members are those who are members at the commencement of the winding- ^^^^ members,
up ; the past members (liable as contributories) are those who, having been
members, ceased to be such within one year before the commencement of the
winding-up. As to date of commencement, see sects. 84, 130 of 1862. The present
members or their representatives are primarily liable to contribute, and are accord-
ingly placed on what is commonly called the A list, and the past members or their
representatives are put on what is connnonly called the B list ; but the B list is
in many cases not settled at all, and it is never settled unless it apjjcars that the con-
tributories on the A list will be imable to satisfy the debts and liabilities, and then
only sxibject to paragraphs (1), (2), and (3) above.

The A list will consist of the following :— A list.

First part : Every person who was a member at the commencement of the
winding-up, and has not since died or become bankrupt.

Second part : The executors or administrators [and, if necessary, the heirs or
devisees] of every member who has died since the commencement, and also of every
person whose estate was, at the commencement of the winding-up, entitled to
shares not personally accepted by his executors, administrators, or trustees ; and
also the trustee in bankruptcy of every member -who has become bankrupt since
the commencement of the winding-up, unless he has disclaimed before any call
made. Ex parte Buddcn ami Roberts, 12 C. D. 288 ; 48 L. J. 764 ; 27 W. R. 906.

The B list will consist of those contributories who cannot be settled on the A list. B list.

As to heirs and devisees, see sects. 76 and 99 of 1862 ; and as to banki'uptcy, see
sect. 77 ; and as to married women, see sect. 78.

Having regard to sect. 23 of the Act, it appears that the "members" of a Who are
company are the subscribers of its memorandum of association, "and every other members,
person who has agreed to become [or is estopped from denying that he is] a
member, and whose name is entered [or ought to be entered] on the register of
members." Though the words within brackets are not in the section, it is well
settled that they are implied. See cases, infra. Tables I., II. and III.

On the other hand, it is well settled that the mere fact that a person's name is on
the register is not evidence that he is a member. See infra. Table I.

Sect. 25 of the Act of 1862 provides for the keeping of the register of members.
A mere list of members is not to be regarded as the register. Arnofs case, 36 C. D.
702; Ex parte CammcU, (1894) 2 Ch. 392.

R. 83 of 1890. — The liquidator shall with all convenient speed after his appoint- Liquidator to
ment settle a list of the contributories of the company, and shall ai^poiut a day for settle list.
that pui'pose. The list of contributories shall contain a statement of the address of,
and the number of shares or extent of interest to be attributed to, each contributory,
and'shall distinguish the several classes of contributories. As regards representative
contributories, the liquidator shall observe the requirements of sect. 99 of the Com-
panies Act, 1862.

"Liquidator" here includes the official receiver when acting as provisional
liquidator after a winding-up order. English Bank of the River Plate, (1892) 1 Ch.
391.

R. 84 of 1890. ^The liquidator shall give notice in writing of the time and place Notice of

appointed for the settlement of the list of contributories to every person whom he appointraent

to settle list.
P. G G



450



WINDING-UP BY THE COURT. [ChAP. XXXIX.



Settling list.



Notice to
contributory.



Time for
objection.



Varj-ing list.



Duties of
Court dele-
gated to
liquidator.



Companies
under
Part YU.
of 1862.



Contributory
of unregiH-
tered com-
pany.



proposes to include in the list, and shall state in the notice to each person in what
character and for what number of shares or interest he proposes to include such
person in the list.

E. 85 of 1890. — On the day appointed for settlement of the list of contributories,
the liquidator shall hear any person who objects to being settled as a contributory,
and after such hearing shall finally settle the list, which when so settled shall be
the list of contributories of the company.

E. 86 of 1890. — The liquidator shall forthwith give notice to every person whom
he has finally placed on the list of contributories, stating in what character and
for what number of shares or interest he has been placed on the list, and in the
notice inform such person that any application for the removal of his name from
the list or for a variation of the list must be made to the Court by summons
within twenty- one days from the date of the service on the contributory or alleged
contributory of notice of the fact that his name is settled in the list of con-
tributories.

E. 87 of 1890. — Subject to the power of the Court to extend the time or to allow
an application to be made notwithstanding the expiration of the time limited for
that purpose, no application to the Court by any person who objects to the list of
contributories as finally settled by the liquidator shall be entertained after the
expiration of twenty- one days from the date of the service on such person of notice
of the settlement of the list.

E. 88 of 1890. — The liquidator may from time to time vary or add to the list of
contributories, but any such variation or addition shall be made in the same
manner in all respects as the settlement of the original list.

E. 89 of 1890. — The duties imposed on the Court by sect. 93 of the Companies
Act, 1862, with regard to the collection of the assets of the company and the
application of the assets in discharge of the company's liabilities shall be dis-
charged by the liquidator as an officer of the Court, subject to the control of the
Court.

As regards companies registered under Part "VTI. of the Companies Act, 1862,
including those registered under the Act of 1879, it is provided : —

Sect. 196 '5) of 1862. — 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 con-
tribute to the payment of any debt or liability of the company contracted prior to
registration, or to pay or contribute to the pajTnent 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 comjiany, so far as relates to such debts or liabilities as afore-
said, 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 ; and in the event of the death, bankruptcy, or insol-
vency of any such contributory as last aforesaid, or marriage of any such con-
tributory being a female, the provisions hereinbefore 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.

Unregistered Companies.

Sect. 200 of 1882. — In the event of an unregistered company being wound np,

every prison shall be dtciiied to be a contributory who is liable, nt law or in equity,

t/j pay or contribute to tlic payment of any debt or liability of the comp;iny, or

to pay or contribute to the payment of any sum for the adjustment of the rights



CONTEIBUTOKIES.



451



of the members amongst themselves, or to pay or contribute to the pajTnent of the
costs, charges, and expenses of wiudiug-np the company, and every such contribu-
tory 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 con-
tributory, and to the assignees of a bankrupt or insolvent contributory, and to the
husband of married contributories, shall apply.

The following tabular statement contains particulars of the leading oases on the
law relating to contributories : —

Table I.



A person on the register of members may
escape being settled on the list of contribu-
tories on the ground that—



But his escape may be prevented where it can
be shown that —



He never api^lied for shares ; registration
without his knowledge or consent.

"It is not the mere fact of the name
appearing upon the register which
makes a person liable as a member of
the company." Per Lord Chelms-
ford, L. C, Oahcs V. Turquand, L. E,.
2 H. L. 350 ; Chapman and Barker'' n
case, 3 Eq. 365; SomerviUe' s case, 6 Ch.
371. "An act done behind a man's
back cannot throw any burden on
him ; some authority to put his name
on the register must be shown." Per
Fiy, L. J., Scottish Fetroleum Co., 23
C.'Div. 424.



He was registered for his qualification as
a director, although he resigned before
he became bound to take. SaUshury
Jones' case, (1894) 3 Ch. 356.



The person who applied professedly as
an agent had no authority. Ornierod's
case, (1894) 2 Ch. 475 ; Consort Beep
Level, (1897) 1 Ch. 575.



He withdrew his application before
notice of allotment. Hebb's case, 4
Eq. 9 ; Ritso's case, 4 C. Div. 774 ;
Natal Investment Co., 20 L. T. 962
(orally) ; Truman's case, (1894) 3 Ch.
272 ; Northern Electric, 63 L. T. 369.



He assented to his name being on the
register, e.g., he kept the certificate, or
received dividend, or executed a trans-
fer, or voted or otherwise acted as a
member. Challis's case, 6 Ch. 266 ;
Craiclcy's case, 4 Ch. 322; Eindley^scase,
(1896) 2 Ch. 121. And see what was
said in Alabaster's case, 7 Eq. 284 ;
Railway Time Tables Co., 42 C. Div. 104.

He became a director, and not having
obtained his qualification within a
reasonable time he. was registered in
respect thereof. Brown's cat^c, 9 Ch.
102; E.V parte Lord Inchiquin, (1891) 3
Ch. 28; Hutchinson's case, (1895) 1 Ch.
226; Isaacs' case, (1892) 2 Ch. 158;
Eercynia Co., (1894) 2 Ch. 403. As to
what is a sufficient register, see Arnot's
case, 36 C. D. 702 ; CammeU' s case, (1894)
2 Ch. 392.



He assented, aa above.



He assented, as above ; or the agent had
an ostensible authority. Bcntley's case,
69 L. T. 204.



Notice of allotment posted before notice

of withdi-awal given. Household Fire

Co. V. Grant, 4 Ex. Div. 216.
Had a right to the allotment, and his

application in eft'ect an acceptance.

Adam's case, 13 Eq. 474 ; AddinelVs

case, 1 Eq. 225.
The application was by an agent whose

authority was irrevocable. Carm ichael's

case, (1896) 2 Ch. 643.

G G 2



452



WINDING-UP BY THE COURT. [ChAP. XXXIX.

Table I. — continued.



He received no notice of allotment.
Pellati' s case, 2 Ch. 527 ; Gunii's case,
3 Ch. 40 ; land Shipping Co., 18 L. T.
786.



Notice of allotment not given within a
reasonable time after application.
Bamsgate Hotel Co. v. Montefiore, L. K.
1 Ex. 109 ; Baihfs case, 3 Ch. 592.



The allotment irregular, e.g., directors
not duly qualified or no quorum.
Howard'' s case, 1 Ch. 561 ; Harris^ case,
7 Ch. 587; London and Southern Co., 31
C. D. 225 ; British Empire, 59 L. T.
291 ; Fortuguese, ^-c. Mines, 42 C. Div.
160.



Application for specific number of shares
with no undertaking to accept less.
Hobart's case, 1 Drew. 204 ; lie Barber,
15 Jur. 51.



Registered as transferee, but never exe-
cuted or agreed to accept transfer, or
transfer irregular. Heritage's case, 9
Eq. 5; CartmeWs case, 9 Ch. 691.



No contract, for the shares were allotted
subject to now term. AddinelVs case,
1 Eq. 225 ; Beck's case, 9 Ch. 392.

Application subject to condition pre-
cedent which not complied with.
Howard's case, 1 Ch. 50 1 ; ShacJdeford's
case, 1 Ch. 507 ; 35 L. J. 818 ; J'e/latt's
case, 2 Ch. 627. As to underwriting
letters, see Ormerod's case, (1894) 2 Ch.
474, and Part I., pp. 107—125.



Shares allotted subject to a condition
which ullottco never performed. Fcn-
telow's case, 4 Ch. 178.



Notice of allotment posted. Harris's
case, 7 Ch. 587.

Allottee's conduct shows notice of allot-
ment given, e.g., where he executes
transfer, pays calls, votes, or other-
wise acts as a member. Crawley's case,
4 Ch. 322; Ward's case, 10 Eq. 659;
Sanger's case, 37 L. J. Ch. 292.

Notice of allotment given to allottee's
agent. Levita's case, 5 Ch. 489.

Allottee dispensed with notice of allot-
ment. Bloxham's case, 33 Beav. 529.
Or acted as a member. Railway Time
Tables Co., 42 C. Div. 104; Hindley's
case, (1896) 2 Ch. 121.

He accepted the shares expressly or
impliedly, e.g., by acting as a member.
Crawley's case, ttbi supra.

He did not repudiate at once. Boyle's
case, 33 W. R. 450.

Allottee registered, and company es-
topped from questioning his title.
Campbell's case, 9 Ch. 1 ; 43 L. J. 1 ;
Mahoney y. East Holy ford Co., L. R. 7
H. L. 869.

Or the ii-regular allotment afterwards
ratified by the directors. Portuguese
Copper, 4.5 C. Div. 16. Allottee had
notice of irregularity. Staffordshire
Gas Co., 66 L. T. 413.

Accepted smaller number expressly or
impliedly. Crawley's case, 4 Ch. 322.



Has been treated or acted as a member,
Straffon's Executors, 1 De G. M. & G.
576; 4 De G. & Sm. 256; Contract Cor-
poration, In re Barned's Co. (No. 2), 3
Ch. 105 ; Chains' s case, 6 Ch. 266.

Subsequent acquiescence or delay. Craw-
ley's case, 4 Ch. 322.



Not really a condition precedent, but
merely a collateral agreement. Elking-
ton's case, 2 Ch. 511; Bridger^s case, 5
Ch. 305.

He waived condition, e.g., by acting as
holder of the shares with knowledge
that condition not complied with before
allotment. Rankin v. Hop and Malt
Exchange, 20 L. T. 207; Jackson and
Shaw's case, W. N. (1867) 226.

Condition waived by company.



CONTEIBUTORIES.



453



Table I. — continued.



Applied subject to condition ultra vires
directors. Bunn's case, 2 D. F. & J.
275 ; PellaWscasc, 2 Ch. 527 ; 36 L. J.
613.



Shares illegally created. Stace and
WortJi's case, 4 Ch. 682 ; 21 L. T. 182;
17 W. R. 751 ; Scivcirs case, 3 Ch. 138.



Induced to take shares by misrepresen-
tation or non- disclosure of material
facts. Oakes v. Titrquand, L. R. 2
H. L. 325. Even although the misre-
presentation was contained in prospec-
tus issued by promoters before com-
pany incorporated. Karberg^s case,
(1892) 3 Ch. 1; Canadian Direct Heat
Co., TampUn's case, W. N. (1892) 146.



Ceased to be a member more than a year
before the commencement of the wind-
ing-up. (See sect. 38.) Re Taurine
Co., 25 C. Div. 118.

Only trustee, or mortgagee, or executor,
or administrator, and never applied
for registration. Bnchan''s case, 4 App.
Cas. 549.

Was an infant at date of registration.
Capper^s case, 3 Ch. 458 ; Fugh v. Shar-
man's case, 13 Eq. 566.



Became bankrupt more than a year before
winding-up, and shares disclaimed by
trustee. Mercantile Mutual Marine As-
sociation, 25 C. D. 415 ; and see E.v
parte Biidden and Moberts, 12 C. D. 288.

Is a holder only of paid-up shares, and
desires not to be placed on list. An-
derson'' s case, 7 Ch. 75 ; or company is
estopped from saying that the shares
are not fully paid-up, whether the
shareholder is a transferee, Burkin-
shaw V. Nicholls, 3 App. Cas. 1004;
or an original allottee. Farhuri/s case,
(1896) 1 Ch. 100 ; Bloomcnthal'v. Ford,



He knew condition ultra vires, but did
not repudiate after allotment, and
therefore estopped. Oakes v. Turquand,
L. R. 2 H. L. 325. He did not know
condition ultra vires, the directors and
company estopped. CampbclVs case, 9
Ch. 1 ; Mahoney v. Fast Uoh/ford Co., 7
H. L. 869 ; Railway Time 'Tables, 42 C.
Div. 104.

Company estopped from disputing lega-
lity. CampbeWs case, ubi supra. Rights
of creditors have intervened. Miller's
Bale, %c. Co., 31 C. D. 211.

Had not effectually repudiated shares
before commencement of winding-up.
Oakes V. Turqnand, L. R. 2 H. L. 325 ;
Scottish Petroleum, 23 C. Div. 413;
Ex parte Stoncy, 62 L. T. 791.

Acted as a member after discovery, and
thereby affirmed contract. Kent v.
Freehold Land Co., 3 Ch. 493 ; White-
house's case, 3Eq. 794; Scholey\. Central
Co., 9 Eq. 266.

Delayed proceedings after right to repu-
diate denied. Taite's case, 3 Eq. 795 ;
Scottish Petroleum, 23 C. Div. 413. Or
until after rights of innocent persons
had intervened. Tennent v. City of
Glasgow Bank, 4 App. Cas. 615.

Guilty of laches in not seeing that his
name was removed. Walker's case, 6
Eq. 30; Montagu's case, "W. N. (1888)
137.

Had notice and acquiesced in registra-
tion. S. C.



After attaining majority, acquiesced in
registration. Lumsden's case, 4 Ch. 31 ;
Ebbett's case, 5 Ch. 302 ; Yeoland Consols ,
58 L. T. 922.

Subsequently acted as a member. Sastie's
case, 4 Ch. 274.



Shares not really paid up, e.g., paid up
out of company's money, or paid iip
otherwise than in cash, and no proper
contract filed. Fothergiirs case, 8 Ch.
270 ; Dent's case, 8 Ch. 768.

Shares issued at a discount. Ooregum Co.
V. Roper, (1892) A. C. 125; Fx parte
Weltou, (1895) 1 Ch. 255, affd. by H. L.
See Wclton v. Saffery, W. N. (1897) 42,



454



WINDING-UP BY THE COURT. [ChAP. XXXIX.
Table I. — continued.



(1897)App.Cas. 156. See also i/cA'ay's
case, (1896) 2 Ch. 757, where estoppel
by certification, and Macdonald, Sons ^■
Co., (1894) 1 Ch. 80.



Shareholder's agent knew shares not
really paid up. Halifax Sugar, S;c. Co.,
W. N. (1891) 25.

Shares really a bonus. Edchjstone, ^-c. Go. ,
(1893) 3 Ch. 9; W. N. (1894) 33.

Consideration illusory. Chapmari's case,

(1895) 1 Ch. 771 ; Ames's case, W. N.

(1896) 79.

Subscribed the memorandum for such
shares, and never paid up in cash.
Balton V. Balton, 66 L. T. 704 (C. A.).



Table II.



A person on the register may escape from the
A List on to the B List (if any) -where —



But his escape may he prevented ■where —



Before winding-up he sent in transfer,
which ought to have been registered.
Fi/fe's case, 4 Ch. 768 ; Loice's case, 9
Eq. 589 ; National Bank of Wales, 13
T. L. E. 179.



His shares duly forfeited within a year
before winding-up. I)axve''s case, 6
Eq. 232 ; Bridger's case, 4 Ch. 266 ;
Bath's case, 8 C. Div. 334.



His shares surrendered within a year
before windiijg-up. Wr>ght''s case, 7
Ch. 55; I'msdule' s case, 9 Ch. 54 ; J)ron-
field Coal Co., Ex parte Ward, 17 C.
Div. 76.

Became bankrupt within a year before
winding-up, and shares disclaimed.



Transfer not regular. Musgrove and
Hart's case, 5 Eq. 193. Transferee
open to objection, and by regulations
dii-ectors had discretion. Ex parte
Kintrea, 5 Ch. 95 ; Roger's case, 25
L. T. 406 ; 19 W. R. 1057 ; SUpman's
case, 5 Eq. 219 ; Gustard's case, 8 Eq.
438.

Transfer sent more than a short time
before winding-up, and transferor
therefore gviilty of laches in not seeing
that transfer registered. Walker's case,
6 Eq. 30 ; Montagu's case, W. N. (1888)
137.

No power to forfeit. Barton's case, 4 D. &
J. 46. Forfeitiu-e not completed. Bigg's
case, 1 Eq. 309. Want of bona fides.
Spackman v. Evans, L. E. 3 H. L. 171 ;
Ex parte Littledale, 9 Ch. 257. [But
liquidator cannot rely on irregularity,
e.g., no sufiicient notice before for-
feiture {Austin's case, 24 L. T. 932) ;
though contributory can if he desire
to get on list. Bottomleg's case, 16 Ch.
D. 681.]

No power in regulations. Power not
duly exercised. Illegal scheme for
reducing capital. Hope v. Interna-
tional Society, 4 C. Div. 327 ; Trevor
V. Whitworth, 12 App. Cas. 409.

Subsequently acted as a member. Hastie's
case, 4 Ch. 274.



Where a contributory's niimo is excluded from the A list, it is not necessary or
usual to declare tliat tlie order is to be without prejudice to his being placed on the
B List, for it is well settled tliat the matter remains open. Wright's case, 12 Eq.



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 61 of 134)