Francis Beaufort Palmer.

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

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331, 345.

Table III.


A person not on the register may be fixed as a
contributory where it can be sliown that —

But he may escape on the RTound that —

He is a member, and ought to bo on the
register. Winstone's case, 15 C. D.

Ho agreed to become a member, and
ought to have been registered. Be
Ucrcynia Copper Co., (189-1) 2 Ch. 403.

His shares were coUusively forfeited.
Spackmanv. Evans, L. R. 3 H. L. 171 ;
Esparto Trading Co., 12 C. D. 201.

His shares were surrendered illegally or
not bond fde. Addison''s case, 5 Ch.
294 ; Morgan^ s case, 1 DeGr. & Sm. 750.

Transfer by him invalid, e. g., to an in-
fant. Sijinoii's case, 5 Ch. 298 ; South
London Fish Market Co., 39 C. D.
324. Or made after winding-up order
without consent of Court. Sect. 153
of 1862. Onivard Building Society,
(1891) 2 Q. B. 463.

He acceiDted office as a director, failed
to qualify witliin the time specified,
and therefore by the articles was "to be
deemed " to agree to take the shares
from the coy. But in absence of such
a provision, accepting office, and even
acting-, only amount to offer to
take. Hutchinson^ s case, (1895) 1 Ch.
226 ; Isaac's case, (1892) 2 Ch. 158 ;
He Hercynia Co., (1894) 2 Ch. 403.
See Part I., p. 347.

He executed a transfer without know-
ledge or consent of transferee. Cart-
meWs case, 9 Ch. 091 ; Hennessey'' s case,
3 De G. & Sm. 191 ; 2 M. & G. 281 ;
Heritage'' s case, 9 Eq. 5.

He executed a transfer to a fictitious
transferee. CorJiehVs case, W. N. (1873)

He subscribed the memorandum of asso-
ciation for shares. Evan'' s case, 2 Ch.
427 : London Coal Co., 5 C. D. 525.

He was not in fact registered, and has a
good defence to specific p)ei'formance.
Barangah Co., 36 C. Div. 702 ; Black's
case, 8 Ch. 359 ; West London Com.
Bank, Gl L. T. 807 ; Trevor v. Wh'it-
xvorth, 12 App. Cas. 409.

Agreed only to take fully paid shares.
Macdonald, Sons % Co., (1894) 1 Ch. 89.

Acquiescence with knowledge by every
shareholder. BrotherhoocVs case, 31
Beav. 305 ; Phosphate of Lime Co.,
L. R. 7 C. P. 843. [Mere lapse of
time no defence. S. C]

Surrender not in fact illegal {Wright's
case, 7 Ch. 55; Re Dron field Co., 17 C.
Div. 76) ; or acquiescence, as above.

Ti'ansferee after attaining majority ac-
quiesced. MitchclVs case, 9 Eq. 363 ;
Luinsden's case, 4 Ch. 31. Shares
transferred by infant to person sui
Juris. Gooch's case, 8 Ch. 266. Com-
pany after knowledge of infancy guilty
of laches. Farson's case, 8 Eq. 656.

He ceased to be a director before end
of time allowed for qualifying. Salis-
bury-Jones' ease, (1894) 3 Ch. 356. His
appointment void, because the posses-
sion of the qualification shares was, by
the regulations, a condition precedent
to the election. Brown's case, 9 Ch. 102 ;
Joiner's case, 7 C. Div. 132.

Transferee subsequently acquiesced, and
became bound before winding-up.
Mitchell's ease, 9 Eq. 363 ; Luuisdoi's
case, 4 Ch. 31.

All the shares allotted to other persons.
Macklcy's case, 1 C. D. 247. He
applied for other shares, which were
to include those for which he signed
memorandxmi. Gilinan's case, 31 C.
D. 420.

Shares allotted to fh-m of which he was
a member. Funster's case, (1894) 3
Ch. 473.


Shares pay-
able in cash
unless con-
tract filed.

Table III. — continued.

He applied in fictitious name, or of
infant. Pufih and Sharman''s case, 13
Eq. 566. Procured infant or other
incapacitated person to apply for his

He transferred to some nominee not out
and out. Hyani's case, 1 De Gr. F.
& J. 75 ; Kintrea''s case, 5 Ch. 95.

Directors' approval requisite, and was
obtained by misrepresentation in the
transfer or otherwise. Williams'' case,
9 Eq. 22.5 ; Rogers' case, 25 L. T. 406 ;
W. W. Williams'' case, 1 C. D. 576 ;
Heritage's case, 9 Eq. 223.

See cases whei'e transfer to infant.

Great lapse of time, Munfs case, 32
Beav. 387.

Sect. 25 of 1867. — 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.

1. Parlies to Contract.

Cases on sect. The company, or some person purporting to act on its behalf, should be a party.

25 of 1867. But it has been held that a contract made with a trustee or agent for the company
before its incorporation may, if duly filed and acted on, be a sufficient contract
within the section. Eartley's case, 10 Ch. 159, explained by P. C. in Smith v. Broicn,
(1896) A. C. 61-4.

The document filed must be, in point of law, a contract, and it must determine
that the shares are to be paid up for a valid consideration other than cash. The
contract should be signed or sealed by both parties, and the filing of a mere offer
signed by the company is insufficient. New Eberhardt Co., 43 C. Div. 118.

2. Statement of Aggregate Numler of Shares.

It is not settled whether the contract must show how many shares are to be
allotted, but it would seem that it must, either in the original or in a supplemental

3. Denoting Numbers of Shares.

It has been suggested that the contract ought to state the distinguishing numbers
of the shares; ]'ritchard''s case, 8 Ch. 956 ; but .Tessel, M. R., in Re Buenos Aijres Co.,
W. N. (1875) 59, was of opinion that this was unnecessary ; and so decided by
Pearson, J., Delta Syndicate, 30 C. D. 153 ; and see Re Common Petroleum Engine Co.,
(1895) 2 Ch. 759.

4. Issuing to Nominees.

Where by a contract duly filed provision is made for the issue of paid-up shares
to A. or his nominees, such shares may bo allotted to A. or to his nominees, and
the allottees will bo protected. Carting's case, 1 C. Div. 124 ; Kirl/y's case, 46
L. T. 682 ; Re Common Petroleum Engine Co., ubi supra.


5. Consideration.

The contract must show for what consideration the shares are to be issued, i.e.,
in what manner they are to be paid up. Crickmcr^s case, 10 Ch. 614.

If shares credited as paid up are issued under a valid agreement, for property-
sold or services rendered, the Court will not go into the value. TclPs case, 5 Ch. 11 ;
Baglan Hall Co., 5 Ch. 346; He Theatrical Trust, (1895) 1 Ch. 771; E. J. Wragg,
Limited, (1897) 1 Ch. 796, unless consideration not treated as equivalent to par
value. See Cotton, L. J., in Almado and Tirito Co., 38 C. D. 423, explained by him
in Lcc V. Neuchatel, 41 C. D. 1.

Shares cannot be issued at a discount even if the contract is filed. Addlestone Co.,
37 C. Div. 191; Almado and Tirito Co., 38 C. Div. 423; Oorcgum Co. v. Roper,
(1892) A. C. 125 ; Welton v. Saffcry, 45 W. R. 508 ; (1897) A. C.

The failure of the consideration in respect of which the paid-up shares are issued
will not render the holders liable to calls. Meg e and Angier^s case, W. N. (1875)
208; Tanner's case, 27 S. J. 584.

6. Ultra vires Contract.

Where paid-up shares are issued under a contract, fraudulent and ultra vires, by
the directors, but duly filed, it has been held that such shares cannot be treated
by the company or liquidator as unpaid. De liuvigne's case, 5 C. Div. 306. And
see Anderson's case, 7 C. D. 102. But query whether these cases can be relied on.
See Eddgstone Marine, (1893) 3 Ch. 9.

7. Filing Sub-Cotitract.

Parties sometimes rely on filing a so-called sub-contract, but the sub-contract
may be ineffective if it is made without consideration or does not disclose the con-
sideration. See, however, Jie Kharasl-ltoma Syndicate, "W. N. (1897) 58, where a
sub -contract was held effective although the consideration was merely identified.

8. Articles not a Contract.

Asa general rule, a clause in the articles of association j^roviding for the issue of
paid-up shares is not a contract within the meaning of the section. Eirmstonc'scase,
20 Eq. 524 ; Crickmer's case, 10 Ch. 614 ; Eritchard's case, 8 Ch. 960. But there
may possibly be cases in which the articles constitute such a contract. Appletree-
wick Lead Co., 18 Eq. 95.

9. Meaning o/ " Cash:'

Payment in cash may be eflfected without any coin passing. It is sufficient if
there is a debt presently and unconditionally due on either side, and the parties
agree to set it off, and the transaction is completed in the book. Spargo's case, 8 Ch.
407; White's case, 12 C. Div. 517; Bentley's case, 12 C. Div. 851; Barrow-in-
Furness Co., 14 C. Div. 400 ; Eerrao's ease, 9 Ch. 355 ; Jones, Lloyd if- Co., 41 C. D.
159 ; but see Kent's case, 39 C. Div. 191, where the transaction was not completed
in the books, and [Joliannesherg Co., (1891) 1 Ch. 129), and Oorcgum v. Eoper, (1892)
A. C. 125, in which Lord Halsbury, L. C, disapproved of the above cases. Spargo's
case was, however, approved by P. C. in Larocque v. Bcauchcmin, 76 L. T. 473 ;
1897, A. C.

Where a company agrees to issue paid-up shares in consideration for property
sold or services rendered, it is impossible to treat the transaction as a cash payment,
for the company never owed and never intended to owe any cash. Andress's case, 8
C. Div. 126 ; Fagin and Gill's case, 6 C. Div. 681. And the fact that the transac-
tion is entered in the books as a cash payment does not affect the matter. Andress's
ease, ubi supra ; White's case, 12 C. D. 511 ; Neuport Co., 42 L. T. 785 ; W. N.
(1880) 80.



And where tlie sale is for cash ■with merely an option to satisfy in shares, if the
option is exercised the shares cannot be regarded as paid in cash. Barrow'' s case, 14
C. Div. 433. So, too, a surrender of a debenture not due cannot be treated as a
payment in cash. AppleyarcV s case, 18 C. D. 587.

In order that a transaction may be treated as a payment in cash, there must be

10. Meaning of Issue.

The issue is something different from the allotment or the issue of the certificates.
A share is issued when the holder has acquired an absolute right thereto. Biisli's case,
9 Ch. 554 ; Bli/th's case, 4 C. Div. 140. Allotment followed by entry on the register
is certainly issuing. Clarke'' s case, 8 C. Div. 642. Notwithstanding Tunnel Mining
Co. (35 C. D. 579) and Anglo- Colonial Syn. (65 L. T. 847), it is not wise to allot
before the filing of the contract.

11. Suhscribt7iff Memorandum of Associatio7i.

Notwithstanding what was said in FothergiW s case, 8 Ch. 282 ; Anderson's case,
7 C. Div. 75, it appears that a share subscribed for in the memorandum of associa-
tion must be paid up in cash, and cannot be paid up in any other way. See Ballon,
^•c. Co. V. Ballon, 66 L. T. 704, Ct. of App.

12. Result of not filing Contract.

In case of default in filing, the UabUity of the shareholder is to pay in cash.
Calls may be made {Burkinshaw v. Nicholls, 3 App. Cas. 1016), and the liability
attaches to transferees, unless an estoppel can be made out. Blytli's case, 4 C. D.
140 ; Rowland's case, 42 L. T. 785 ; London Cellulo'id Co., 39 C. D. 190 ; A. W. Hall
i- Co., 37 C. D. 712.

Where a person buys shares bonafde in reliance on a certificate of the company,
which represents them to be fully paid iip, the company is estopped from showing
that in fact they are not paid up. Burkinshaw v. Nicholls, 3 App. Cas. 1016 ;
Barrow's case, 14 C. Div. 445 ; Re Vulcan Iron Works, W. N. (1885) 120 ; Parbury''s
case, (1896) 1 Ch. 100 ; qu. was the certificate acted on, BloementhaV s case, (1896)
2 Ch. 525, reversed in Lords, (1897) App. Cas. 156.

The allottee or purchaser cannot generally rely on a certificate issued to himself
as an estoppel (Simin v. Anglo-American Co., 5 Q. B. Div. 188), unless he can show
that he has acted on it. Hari v. Front'mo Co., L. R. 5 Ex. Ill ; Bishop v. Balkis
Co., 25 Q. B. Div. 512.

13. Remedy before Winding-up.

"Where shares have been issued as paid up under a contract which ought to havo
been, but was not, filed, the Court will in some cases rectify the register, and so
give an opportunity to fUo the contract. New Zealand Kapango Co., 18 Eq. 17;
Benton Colliery Co., 18 Eq. 16; Barl'ington Forge Co., 34 C. D. 522; Broad Street
Co., W. N. (1887) 149 ; Nottingham Breivcry Co., 4 T. L. R. 429 ; Rushworth's case,
66 L. T. 48 ; Re Preservation Syndicate, (1895) 2 Ch. 768. And where there has
been a slip the directors may rectify it without going to the Court {Hartley's case,
10 Ch. 157) ; but tliis cannot bo acted on prudently, except under very exceptional
circumstances. See Trevor v. Whitworth, 12 App. Cas. 409.

Sco also Bath's case, 8 C. Div. 334 ; WrighCs case, 7 Ch. 55 ; 12 Eq. 335, n.



14. Party bound to Jile Contract.

Unless othorwisG arranged, the obligation to file is on the company which has
agreed to issue shares otherwise than for cash. Barangah Oil Co., 3G C. Div. 702.
And see Addlestone Linoleum Co., 37 0. D. 191.

15, Relief in JVinding-up.

The allottee may escape liability where his name has not been placed on the
register, and he has done nothing showing assent to the appropriation to himself of
the particular shares, or his recognition of them as his property. Barangah Oil Co.,
36 CD. 702. But if his name was with his consent on the register at the com-
mencement of the winding-up, he cannot repudiate {Oakes v. Turquand, L. R. 2
H. L. 352) : and in such case ho must pay calls, and cannot prove for damages.
Addlestone Co., 37 C. Div. 191 ; Railivaij Time Tables, 42 C. Div. 98 ; IVelton v.
Saffcnj, 45 W. R. 508 ; A. C. 1897.

Machinery fob, Fixing and Enforcing Contributories' Liability.

As to the necessity for using this method of procedure, see E. J. Wragg, Limited,
"W. N. (1896) 166, referred to supra.

i^'^^^-) Form 498.

The following is a list of the contributories of the above-named coy, 77~~.

made out by me from the books and papers of the sd coy, together tributories to

with their respective addresses and the number of shares [or extent of J^® ™.^'^*r ^^^

-11.11 ij Til 1 "7 uquidator.

interest] to be attributed to each, so far as I have been able to make Form 45 of
out or ascertain the same. 1^^^-

In the first part of the list, the persons who are contributories in
their own right are distinguished.

In the second part of the sd list, the persons who are contributories
as being representatives of, or being liable to the debts of others, are

Dated this day of , 189 — .

A. B., [Of Beer atid] Liqr.

\_A second sheet is as folloivs, and this is folloived by as many similar
sheets as are necessary to include contributories iii their oion riyht.~\

In the Matter of the Coy, Limtd.

First Part — Contributories in their own Eight.


Number in





In what

Number of Shares

{or extent of




[/n practice, separate sheets of representative contrihtitories are annexed

asjbllotvs : — ]

In the Matter of the Coy, Limtd.

Second Paet — Contributories as being Eepresentatives of or


[^Add Tabular Form as in First Part.~\



of list.

The usual entry in the fifth column of the first part is now " In own right,"
and in the fifth column of the second part, " As the executor of A. B., deceased,"
or "As the administrator of A. B., deceased," or "As the trustee in bankruptcy
of C, a member."

Take care that the serial number once assigned to a contributory is always
assigned to him throughout the proceedings.

The names, addresses, and descriptions contained in the company's register of
members should be accurately transcribed. " Care of" is a sufficient address, if so
entered in the register.

In preparing the list of contributories the liquidator should carefully search the
register of members (see stipra) and other books and papers, and should frame the
list with due regard to the rules laid down supra, pp. 446 — 451 et seq. Frimd facie, all
persons on the register of members shotild be entered in the list, but the liqiudator
should look into each case, and if he is satisfied that a name is improperly on the
register he should omit it from the list. See cases in Table I. above. On the
other hand, he should ascertain whether there are cases in which names not on
the register should be entered in the list (see Table III. above) ; and whether shares
entered as paid up are really paid up, and in particular whether sect. 25 of the Act
of 1867 touches the matter, see p. 456, supra.

Form 499.

Notice to
of appoint-
ment to settle
list of con-
Form 46 of


Take notice that I, A. B. [A. B., senior off recr and] the liqr of the

ahove-named coy, have appointed the day of , 1894, at of

the clock in the noon, at \_inscrt place of appointment^ , in the

county of , to settle the list of the contributories of the above-
named coy, made out by me, pursuant to the Cos Acts, 1862 to 1890,
and the rules thereunder, and that 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 con-
trary at the time and place afsd, the list -will be settled, including you

Dated this day of , 189 — .

[A. B. C, Off Recr and'] Liqr,
.33, Carey Street, Lincoln's Inn, London, AV.C.

To IMr. A. 15. [and to Mr. C. 1)., his Solor].

[y/f/f/ taliuhir form as in Form 498, inscrtiiig name, ^'c. of Mr. A, B.~\


The above form is Form 46, varied to suit the case of the official receiver.

See Rules 84 and 85 of 1890, supra, p. 408.

Where the official receiver is liquidator he usually gives seven clear days' notice.

At the time and place appointed to settle the list of contributories, the following
will or may be required : —

(1) The list, Form 498; (2) Copy memorandum and articles; (3) Register of Documents
members and transfers ; (4) Applications for shares ; (5) Record of notices of allot- required as
ment given ; (6) Share ledgers ; (7) Minute books, and any other books relating to °

the members.

It is not now the practice on settling the list for the liquidator (at any rate, when Books,
the official receiver fills that office) to produce an affidavit identifying the company's
books, as in Form 100.

As regards opposed cases, the evidence to fix the alleged contributory is produced, Evidence,
and then the alleged contributory produces his evidence in opposition.

The evidence is usually by affidavit, and when the liquidator has gone into it he Liquidator's
gives liis decision. The liquidator in deciding should have due regard to the evi- duty,
dence and the law. In a proper case the name should be struck off. Where it is
clear that the alleged contributory is liable he should of course be settled on the
list. Where it is doubtful whether he is liable he should, as a general rule, be Doubtful
settled on the list, and left to take steps under Rule 86 of 1890 to have the list cases,
varied. Sometimes, however, when the liability of a class is in question, it is con-
venient to issue a summons asking for a declaration of liability, but even then it
is wrong to add a claim for payment of the amount. Payment should be obtained
in the manner pointed out below. E. J. Wragg, Limited, W. N. (1896) 166.
If the contributory thinks fit he can wait until the certificate has been filed, and
within twenty -one days after notice that he has been placed on the list finally, take
out a summons to vary the list. R. 85 of 1890. As to discovery, infra.

If an alleged contributory is dissatisfied with the liquidator's decision lie may Application
take out a summons at once to strike his name off the list, and if necessary, the sum- to vary List.
mons is adjourned into Court. See Forms 506, 509.

The liquidator appears to have no power to make any order as to costs, either in Costs,
favour" of or against a contributory ; but there seems to be no reason why an alleged
contributory who has successfully disputed his liability should not apply in the
winding-up for payment of his costs.

{Title.) Form 500.

I, A. B., a clerk in the department of the off recr in cos liquidation ^^davit of
[or as the case may he'], make oath and say as foUows : — postage of

1. That I did on the day of , 189—, send to each con- ^"pSment

tributory mentd in the list of contributories made out by the off recr to settle list
and liqr [or by C. D., the liqr of the above-named coy] on the -

day of , 189 — , and now on the file of proceedings of the above-
named coy, at the address appearing in such list, a notice of the time
and the place of the appointment to settle a list of contributories in the
form hereunto annexed, marked "A," except that in the tabular form
at the foot of such copies resply I inserted the number, name, address,
description, in what character included and number of shares [or
extent of interest] of the person on whom such copy of the sd notice
was served.

2. That I sent the sd notices by putting the same prepaid into the

of contribu-



post office at

befoi'e the hour of

o'clock in the

the sd day [_or tvhere tJie off recr is liqr, that I sent the sd notices by
putting the same into the official letter bag provided by the Postmaster-
General for the department of the off recr in cos liquidation, before
the hour of 5.30 o'clock in the afternoon of the sd day].

in the county of
day of ,

Sworn at

Middlesex, this

Before me, X. Y., a Commissioner to Administer Oaths in the
Supreme Court of Judicature in England.

The above is the form used when the official receiver is liquidator, and is based
on Form 27 of 1862. The exhibit A. is, under the present practice, a copy of the
notice sent to the particular contributory.

Form 501.

Certificate of
liquidator of
final settle-
ment of the
list of con-
Form 47 of
1890. See
Rule 85 of


Pursuant to the Cos Acts, 1862 to 1890, and to the Eules made
thereunder, I, the undersigned, being the liqr of the above-named
coy, hby certify that the result of the settlement of the list of con-
tributories of the above-named coy, so far as the sd 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 sd list of
contributories as eontributories of the sd coy in respect of the number
of shares [or extent of interest] set opposite the names of such con-
tributories resply in the sd schedule. I have, in the first part of the
sd schedule, distinguished such of the sd several persons included in
the sd list as are contributories in their own right. I have, in the
second part of the sd schedule, distinguished such of the sd several
persons included in the sd list as are contributories as being representa-
tives of or being liable to the debts of others.

2. The several persons whoso names are set forth in the second
column of the Second Schedule hereto have been excluded from the sd
list of contributories.

3. I have, in the seventh column of the sd First and Second Schedules,
set forth opposite the name of each of the several jiersons resply the
date when such person was included in or excluded from the sd list of

4 . Before settling tho sd list, I was satisfied by the afft of ,

clerk to , duly filed with the proceedings herein, that notice was

duly sent Ity post to each of tho persons mentd in the sd list, informing
lum that ho was included in each list in the character and for the



number of shares [or extent of interest] stated therein, and of tlie day-
appointed for finally settling the sd list.

[To this, in practice, are annexed three separate sheets, as follows :'\

In the matter of the Coy, Limtd.

The First Schedule above referred to.
FiusT Part — Contributories in their own Eight.


Number in





In what

Number of

Shares [or extent

of Interest).

Date ■when

included in

the List.

In the matter of the Coy, Limtd.

The First Schedule above referred to.

Second Part — Contributories as being Eepresentatives of or

Liable to the Debts of Others.

[Here follow seven columns, headed as above. ~\

Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 62 of 134)