to the conclusion he did if it had not been for the decisions, but I understand his doubt was as to the identification of the shares subscribed for with those given for the property taken by the company. Mellish, L.J. had no misgivings, and expressly approved the decision of Giffard, L.J. in Pell's case (ubi sup.). In Maynard's case, 1873 (29 L. T. Rep. 630; L. Rep. 9 Ch. App. 60) fully paid-up shares were allotted to a subscriber of the memorandum of association in payment of property sold by him to the company. He was held to have satisfied his liability, the company "being free to accept payment in any honest way:" (see p. 65 of L. Rep. 9 Ch. App.). It was proved to the satisfaction of the court that the shares for which he subscribed were to be paid for in property to be bought by the company at a sum equal to the amount of the shares subscribed for. It was not suggested that the agreement was ultra vires or depended for its validity on the value of the property. All these cases arose before the Companies Act 1867 came into operation, although some of them were decided at a later date. In Fothergill's case, 1873 (28 L. T. Rep. 124; L. Rep. 8 Ch. App. 270), which arose after that Act was in force, the above decisions were again considered, and were held inapplicable to cases to which that Act applied unless a proper agreement were duly registered. In Fothergill's case there was a registered agreement, but it was held not to apply to the shares for which he had subscribed the memorandum of association, and he was held to be a contributory in respect of them. But I can find nothing to throw doubt on the application of the law as settled in Pell's case (ubi sup.), and the others referred to above to similar cases arising since 1867, and in which the shares in question have been issued pursuant to a duly registered agreement as required by the Act. In Anderson's case, 1877 (37 L. T. Rep. 560; 7 Ch. Div. 75) a colliery was sold to a limited company for paid-up shares. A proper agreement was registered. The price of the colliery to the company was 150,000l., to be paid in shares. The vendors had shortly before agreed to buy it for 66,000l. and to pay 42,000l. in shares. They therefore made a huge profit. It was nevertheless held by the Court of Appeal that, so long as the agreement for sale to the company was unimpeached, all the 150,000 shares must be treated as fully paid up. This case is the last to which it is necessary to refer, bearing directly on the question I am examining. I understand the law to be as follows: The liability of a shareholder to pay the company the amount of his shares is a statutory liability and is declared to be a specialty debt (Companies Act 1862, s. 16), and a short form of action is given for its recovery (sect. 70). But specialty debts, like other debts, can be discharged in more ways than one-e.g., by payment, set-off, accord and satisfaction, and release-and, subject to the qualifications introduced by the doctrine of ultra vires, or, in other words, the limited capacity of statutory corporations, any mode of discharging a specialty debt is as available to a shareholder as to any other specialty debtor. It is, however, obviously beyond the power of a limited company to release a shareholder from his obligation without payment in money or money's worth. It cannot give fully paid-up shares for nothing and preclude itself from requiring payment of them in money or

[CT. OF APP.

money's worth (Re Eddystone Marine Insurance Company, 69 L. T. Rep. 363; (1893) 3 Ch. 9); nor can a company deprive itself of its right to future payment in cash by agreeing to accept future payments in some other way. It cannot substitute an action for the breach of a special agreement for its statutory action for nonpayment of calls (see Pellatt's case, 16 L. T. Rep. 442; L. Rep. 2 Ch. App. 527). From this it follows that shares in limited companies cannot be issued at a discount. By our law the payment by a debtor to his creditor of a less sum than is due does not discharge the debt; and this technical doctrine has also been invoked in aid of the law which prevents the shares of a limited company from being issued at a discount. But this technical doctrine, though often sufficient to decide a particular case, will not suffice as a basis for the wider rule or principle that a company cannot effectually release a shareholder from his statutory obligation to pay in money or money's worth the amount of his shares. That shares cannot be issued at a discount was finally settled in the case of The Ooregum Gold Mining Company v. Roper (66 L. T. Rep. 427; (1892) A. Č. 125), the judgments in which are strongly relied upon by the appellant in this case. It has, however, never yet been decided that a limited company cannot buy property or pay for services at any price it thinks proper, and pay for them in fully paid-up shares. Provided a limited company does so honestly and not colourably, and provided that it has not been so imposed upon as to be entitled to be relieved from its bargain, it appears to be settled by Pell's case (ubi sup.), and the others to which I have referred, and of which Anderson's case (ubi sup.) is the most striking, that agreements by limited companies to pay for property or services in paid-up shares are valid and binding on the company and their creditors. The Legislature in 1867 appears to me to have distinctly recognised such to be the law, but to have required, in order to make such agreements binding, that they shall be registered before the shares are issued. There is certainly no decision yet which is opposed to the above statement of the law. The observations in Re Addlestone Linoleum Company (58 L. T. Rep. 428; 37 Ch. Div. 191); Re Almada and Tirito Company (59 L. T. Rep. 159; 38 Ch. Div. 415); Lee v. Neuchatel Asphalte Company (61 L. T. Rep. 11; 41 Ch. Div. 1); and The Ooregum Gold Mining Company v. Roper (66 L. T. Rep. 427; (1892) A. C. 125), relied upon by the appellant in this case, fall far short of deciding that the value of the property or services paid for in shares can be inquired into or is material in any case in which the sale is not impeached. These and other cases decided upon the Act of 1867 show (1) that since that Act, as before, shares must be paid for in money or money's worth; (2) that since that Act, as before, they may be paid for in money's worth; (3) that since the Act payment in money's worth can only be effectually made pursuant to a properly registered contract; (4) that, even if there is such a contract, shares cannot be issued at a discount; (5) that if a company owes a person 1007., the company cannot by paying him 2001. in shares of that nominal amount discharge him, even by a registered contract, from his obligation as a shareholder to pay up the other 1001. in respect of those shares. That would be issuing shares at a dis

count. The difference between such a transaction and paying for property or services in shares at a price put upon them by a vendor and agreed to by the company may not always be very apparent in practice. But the two transactions are essentially different, and whilst the one is ultra vires the other is intra vires. It is not law that persons cannot sell property to a limited company for fully paid-up shares and make a profit by such transaction. We must not allow ourselves to be misled by talking of value. The value paid to the company is measured by the price at which the company agrees to buy what it thinks it worth its while to acquire. Whilst the transaction is impeached this is the only value to be considered. This appears to me to be in complete accordance with the passages quoted from the judgments of Cotton, L.J., in Re Almada and Tirito Company (59 L. T. Rep. 159; 38 Ch. Div. 415, at p. 423) and Lords Watson and Macnaghten in The Ooregum Gold Mining Company's case 166 L. T. Rep. 427; (1892) A. C. 125, at pp. 136-7, 147-8). Lord Herschell's judgment, as I understand it, is distinctly favourable to the respondents. In my judgment the law is settled, and cannot be declared wrongly settled by this court at any rate. If it is to be altered, the decisions which have settled it must be declared wrong by the House of Lords, or the law must be altered by Act of Parliament. Williams, J. has had to consider this matter on more than one occasion-viz., in Chapman's case (72 L. T. Rep. 461; (1895) 1 Ch. 771), and again in the present case-and on both occasions the principle on which he based his decision is, in my judgment, correct. The summons which has raised the question of Martin and Wragg's liability is of an unusual kind, being a misfeasance summons and an alternative application to enforce payment up of the shares. It was dismissed with costs, and no question was raised on appeal except the important question of principle which I have considered. The appeal must be dismissed with costs.

SMITH, L.J.-This is an application by the official receiver, who is liquidator in the windingup of a company, called E. J. Wragg Limited, for a declaration that certain shares of that company standing in the name of Mr. Wragg and Mr. Martin as fully paid up are not so, and for an order that Wragg and Martin should forthwith pay the amounts unpaid thereon. Williams, J. refused the application, and the liquidator appeals. For many years prior to the year 1894 Messrs. Wragg and Martin carried on an extensive business in partnership as coach proprietors, liverystable keepers, and jobmasters, in Whitechapel and various other parts of London. In that year they converted their business into a company, limited by shares, which was brought out and registered under the name of E. J. Wragg Limited, with a capital of 20,000l. divided into 2000 shares of 101. each. To this company Messrs. Wragg and Martin sold their freehold and leasehold premises as also their business as a going concern, together with the goodwill thereof, at the agreed price of 46,300l. to be paid in cash debentures and fully paid up shares. The Solicitor-General, who appeared for the liquidator, did not seek upon any ground to impeach the sale by Messrs. Wragg and Martin to E. J. Wragg Limited; but he asserted that he could

[CT. OF APP.

show by evidence that the shares in E. J. Wragg Limited, which were taken by Wragg and Martin as fully paid up in part payment of the agreed price of 46,300l., were not so; in other words, that he could show that there was a deficiency in the value of the property sold by Messrs. Wragg and Martin to the company for the agreed price of 46,3001., and that as regards that deficiency, which he alleged to be 11,6477., the shares held by them were not fully paid up. It is admitted that the present proceeding of the liquidator is without precedent, and apart from the authorities, some of which I will deal with hereafter, I will first ascertain the facts upon which the liquidator relies in proof of his case, assuming that he is entitled to go into them. The sale by Messrs. Wragg and Martin to E. J. Wragg Limited was carried out upon the 10th Jan. 1894 by an agreement in writing of that date, which was duly registered pursuant to sect. 25 of the Companies Act 1867 upon the 24th Jan. 1894. By it it was agreed that Wragg and Martin should sell, and the com pany should purchase of them-first, the goodwill of their business; secondly, their freeholds; thirdly, their leaseholds; fourthly, their coaches, omnibuses, and horses; fifthly, their harness, saddlery, and all other stock; sixthly, all contracts relating to the business; and, lastly, all other properties the vendors might be entitled to. It was agreed (clause 2) that the company should pay to the vendors for the above-mentioned property and rights the sum of 46,300l. in the following way: viz., by 70007. in cash; as to 93001., 30001. in first debentures of the company, and 6300l. in. second debentures of the company; as to 10,0001. by the transfer to the company of two mortgages making together 10,000l. secured upon the property conveyed; and as to 20,000l., the balance of the said 46,300l., 19,930l. in 1993 fully paid-up shares of 101. each. By clause 3 of the agreement the component parts of this 46,300l. were allocated to the different matters sold by the vendors to the company thus: To the value of the goodwill, 60007.; to the value of the freeholds, 12,000l. (this includes the mortgages for 10,000l.); to the value of the leaseholds, 500l.; to the value of stock, coaches, horses, plant, &c., 27,300l.; to contract rights, 2501.; to all other property, 2501.-making a total of 46,300l. It is argued for the liquidatorthat here he proves that the "stock" sold to the company was valued at 27,3001. I agree that upon the face of this clause it is so; but, before

I

say that it is proved that 27,300l. was the valueof the stock, I must consider for what purpose this apportionment of the 46,3001. into its different. component parts was made and inserted in the agreement. The Solicitor-General was unable to make any suggestion as to this. He simply said there, it is stated upon the face of the clause that the value of the stock was 27,300l., and that establishes the fact. Primâ facie, this would be so; but, except upon one hypothesis, the clause is obviously useless, and there is no possible reason for its insertion. I do not think what would otherwise be its prima facie meaning, is necessarily its real meaning. The hypothesis is this, that the distribution of the items in this clause was made solely to arrive at the stamp duty payable upon the instrument of agreement, for otherwise it is inconceivable why it should have been inserted, and that this is the only reason for its existence I have no doubt. It was said that the

court could not come to such a conclusion without having the defendants' evidence thereon. But, with evidence or no evidence, for what other purpose was the clause inserted? To this there has been no answer. In my judgment, this supposed valuation of the stock at 27,300l. is not a real valuation of such stock at all. The liquidator goes into evidence, and produces a certificate signed by Wragg and Martin, directors of the company, and countersigned by Brown, as secretary, which showed that on the stock-taking of the 1st Jan. 1894 there was 15,3751. of stock and no more, and I accept this as the truth. The liquidator then puts in evidence a book of the company. containing entries headed "Purchase of business." Upon the debit side of that is entered : The 1st Jan. 1894 to vendors 36,2301., i.e., without the mortgages, and on the credit side as follows; 2nd Jan. 1894.-By stock, 15,3751.; goodwill, 60001.; ditto, 500l.; premises, leasehold, 5007.; fixtures and plant, 2081.; freeholds, 20001. (i.e., without mortgages, 10,000l.); balance to goodwill account, 11,6471.-making a total of 36.2301. What is the meaning of this last entry "balance to goodwill account"? Does it mean profit upon the sale of Messrs. Wragg and Martin's business to the company over and above the estimated items therein appearing; or, if not, what does it mean? The liquidator suggests that it was put in as representing nothing. The accountant he called to give evidence as to this, gave no intelligible account of why he made this entry as he did. He said that he found that there was a sum of 11,6477. to be accounted for, and so he entered it in this way. The liquidator ignores the fact of a possible profit being made upon the sale of the business to the company, and says that he has proved that the sum of 11,6477. represents nothing. I do not think that he has. It was vigorously insisted upon that, as the defendants had not been called, the court was bound not to infer that the component parts of the 46,300l. were allocated as they were in clause 3 for stamp purposes, for that would be to infer that it was done for the purpose of defrauding the Revenue, which no court could without evidence infer. Assuming for a moment the probability that the agreed price of 46,300l. for the business as a going concern embraced a profit to Mr. Wragg and Mr. Martin upon the sale thereof to the company over and above the estimated items, the whole thing is at once explained. Whether the Revenue can complain is another matter, and indeed it would seem that the 11,6477. should have been distributed over the different items sold and not placed exclusively upon the stock, and if this were the fact I should decide against Messrs. Wragg and Martin.

In

my judgment, however, the liquidator fails to establish that the 11,6477. is a fictitious entry and represents nothing, and indeed the true inference from the facts adduced by the liquidator is that it represents the agreed profit passing to the vendors upon the sale of their business to the company. The liquidator has failed to prove that the 27,3001. was the real price of the stock, and thereby, as he contends, the 11,6477. represents nothing. But, even if this were otherwise, another point arises. If there were in fact the shortage, as it has been called, of the 11,6471., what right has the liquidator to say that this shortage was the consideration for the shares so that by that amount they were not fully paid up? There was ample property

[CT. OF APP.

conveyed by the vendors to the company to satisfy 1993 fully paid-up shares of 101. each, i.e., 19,930., for, leaving out the 10,000l. of mortgages transferred to the company, the agreed price was 36,3001. Deduct 11,6477., the alleged shortage, it leaves 24,6531. as consideration for 19,9301. of shares. Why is the liquidator to allocate the shares against what he alleges to be shortage, even if it existed, and not against the whole consideration of 24,6531. Mr. Buckley ingeniously argued that, if he did not do this, the result would follow that the consideration for the 70001. cash and for the 93001. of first and second debentures would be short; that is, assuming there was no agreed profit upon the transaction. He got at it thus: 36,300l. agreed contract price (leaving out the two mortgages for 10,000l.), 11,6471. shortage : leaves 24,6531.; shares, 19,9301.; leaving 47231. as consideration for the 70001. cash and the 93001. in first and second debentures. And therefore he said the shares, and not the cash and debentures, must be taken to have had insufficient consideration given for them-a purely speculative conclusion, and which also omits the consideration of profit. So much for the facts, and upon these alone, apart from the cases, I agree with my brother Williams that the liquidator has failed in his case. But when I come to the authorities the same result follows. It is now well settled law, that for a shareholder in a company limited by shares to have fully paid up shares, and therefore not to be liable for calls in a winding-up of the company, he must show that he has fully paid up to the face value of the shares either in cash or in value received by the company in some form, or partly in cash and partly in value received by the company in some form, and if the payment other than in cash be relied on, this can only be so if there be a "contract duly made in writing, and filed with the Registrar of Joint Stock Companies, at or before the issue of such shares" pursuant to sect. 25 of the Companies Act 1867. The House of Lords has definitely settled this point in the case of The Ooregum Gold Mining Company v. Roper (66 L. T. Rep. 427; (1892) A. C. 125). Partial payment is not sufficient, but shares may be lawfully issued as fully paid up for considerations which the company have agreed to accept as representing in money's worth the nominal value of the shares: (per Lord Watson, at p. 136 of (1892) A. C. in the Ooregum case). It is not suggested that the contract of the 10th Jan. 1894 is not an honest bargain, or that its consideration is colourable or illusory. Now, is a liquidator entitled to go into the adequacy of the consideration, and to show if he can that the consideration for the contract was made inadequate unless it appears so upon the transaction itself, or if not if he desires to do so, must he not impeach the contract itself? If there be no consideration at all for the shares, and it be shown, as in the case of Re The Eddystone Marine Insurance Company (69 L. T. Rep. 363; (1893) 3 Ch. 9), that the words inserted in the registered contract "in consideration of services" were placed there as a mere blind, that will suffice. Again, if in a registered contract a money value be placed upon the consideration which the company had agreed to accept as representing in money's worth the nominal value of the share less than the face value of the share, that share

an

would I should think not be fully paid up. For instance, as was put in argument, a contract to supply to a limited company 100 tons of coal, valued at 108. per ton, as a consideration for 100 11. shares in the company-i.e., a valued 50l. worth of coal for 100 11. shares-these shares would not be, I think, fully paid up. There would be no necessity in such a case for impeaching the agreement for that the shares were not fully paid up in money or money's worth would be apparent upon its face. Cotton, L.J., in Re The Almada and Tirito Company (59 L. T. Rep. 159; 38 Ch. Div. 415, at p. 421), points to such a case as this, though he did not decide it. If, however, the consideration which the company has agreed to accept as representing in money's worth the nominal value of the shares be a consideration not clearly colourable nor illusory, then, in my judgment, the adequacy of the consideration cannot be impeached by a liquidator unless the contract can also be impeached. And I take it to be the law that it is not open to a liquidator, unless he is able to impeach the agreement, to go into the adequacy of the consideration to show that the company have agreed to give an excessive value for what they have purchased. I will content myself with citing three of the earlier cases which will be found in 5 Ch. App., and I will begin with Pell's case, 1869 (21 L. T. Rep. 412; L. Rep. 5 Ch. App. 11). Pell in this case had agreed to sell to a company the goodwill and stock-in-trade of his business in consideration of 1500 201. shares of the company fully paid up. The company was wound-up, and no payment for these shares could be found in the books of the company. Lord Romilly, M.R. directed inquiry as to the value handed over by Pell to the company under his agreement with them, and declared that Pell was entitled to be allowed only the amount of, that value. This decision was reversed upon appeal, Giffard, L.J. holding that, as the agreement was not impeached, the court had no ground for going behind the agreement. In the next year (1870) in Forbes's case (21 L. T. Rep. 632; L. Rep. 5 Ch. App. 270, at p. 273) Hatherley, L.C. deals with Pell's case (ubi sup.), and expressly states that if the consideration is to be impeached the contract must also be impeached; he says: "The only difference between Giffard, L.J. and the Master of the Rolls in that case was this: The Master of the Rolls thought that Pell, being bound to pay the full amount of 201. per share, was not to be taken to have paid it in full unless the property he handed over was worth that amount. That result, however, could only be arrived at by rescinding the contract to buy Pell's business; and Giffard, L.J. thought that the contract not being impeached must be treated as a good contract, and one that ought to be acted upon, so that no question could be raised as to the actual value of the business made over." The Lord Chancellor clearly approves, and in no way disapproves, of the decision of Giffard, L.Š. in Pell's case (ubi sup.). In Re The Baglan Hall Colliery Company (23 L. T. Rep. 60; L. Rep. 5 Ch. App. 346, at p. 537) Giffard, L.J. again lays down what he had stated in Pell's case (ubi sup.). It is true that in Leeke's case, 1871 L. Rep. 11 Eq. 100, at p. 107), Stuart, V.C. did not like the decisions in Pell's and Forbes's cases, by Lord Hatherley and Giffard, L.J. But many

[CT. OF APP.

cases have been decided since then all in accord with Pell's case (ubi sup.), which Lindley, L.J. has referred to, and I do not repeat them, and not a single case has been cited to the contrary. It appears to me that in the House of Lords in the Doregum case (ubi sup.) the principle of Pell's case (ubi sup.) and Forbes's case (ubi sup.) was distinctly approved. Lord Watson, at p. 136 of (1892) A. C., says: "It has been decided that, under the Act of 1862, shares may be lawfully issued as fully paid up, for considerations which the company has agreed to accept as representing in money's worth the nominal value of the shares.

do not think any other decision could have been given in the case of a genuine transaction of that nature where the consideration was the substantial equivalent of full payment of the shares in cash. The possible objection to such an arrangement is, that the company may overestimate the value of the consideration, and, therefore. receive less than nominal value for its shares. The court would doubtless refuse effect to a colourable transaction, entered into for the purpose or with the obvious result of enabling the company to issue its shares at a discount; but it has been ruled that, so long as the company honestly regards the consideration given as fairly representing the nominal value of the shares in cash, its estimate ought not to be critically, examined. That state of the law is certainly calculated to induce companies who are in want of money, and whose shares are unsaleable except at a discount, to pay extravagant prices for goods or work to persons who are willing to take payment in shares. The rule is capable of being abused, and I have little doubt that it has been liberally construed in practice." Lord Herschell, at p. 140, is very distinct upon this point-he says: "But the contrary has been determined. And not only may a share be allotted as fully paid up in respect of property, goods, or services received by the company, but the courts will not inquire into the adequacy of the consideration. and certainly have not required it to be proved that the consideration given was equivalent in cash value to the nominal amount of the share.” And Lord Macnaghten, at p. 148, says: "It seems to me that all that has been determined so far is, that the court will decline to rip up a transaction not impeached as dishonest, and not proved to be such, merely because the company may have paid an extravagant price for the property." In my judgment, whether the facts of this case are looked to, or whether the law applicable thereto is looked at, the liquidator is in the wrong, and that my brother Williams's judgment was quite right in dismissing his application.

RIGBY, L.J.-In this case the respondents Wragg and Martin were two of the first three directors of the company now in course of being wound-up; the third, Harrison, has been also made a respondent to the summons, though not interested in the appeal. Wragg and Martin had for a considerable time before the incorporation of the company carried on the business of omnibus and cab proprietors at Whitechapel and elsewhere in London. What their respective interests as between themselves were in the assets of the business we cannot infer from the evidence, nor is it necessary that we should know. Wragg and Martin were minded to turn their business, as the

phrase goes, into a private limited company; that is to say, a limited company in which the vendors were to take, at any rate in the first instance, all the shares in the company which were to be allotted to the vendors as part of the consideration for the purchase of the goodwill and assets of the partnership, and as such allotted to the vendors or their nominees, including, as I understand, the subscribers of the memorandum of association. The property to be sold to the new company consisted of freehold estate of sufficient value to have been accepted as security for a first mortgage debt of 80007., with interest at 6 per cent, and a second mortgage debt of 2000l. with interest at 5 per cent. These mortgages were apparently treated by the mortgagees as fair security. There were leaseholds of small value, a considerable stock-in-trade, consisting, among other things, of omnibuses, cabs, and horses, worth at any rate not less, according to the evidence, than 15,000l. The business was, therefore, a very substantial one. The assets (notably the goodwill of the business) could not from the nature of them be said to have any market value; and what they would be worth to a company incorporated to carry on the business would depend upon considerations as to which there would be room for considerable honest difference of opinion. The vendors were of course able to settle the constitution of the company according to their own wishes, and they determined that it should be brought out with a capital of 20,000l. in 2000 shares of 101. each, and that there should be an issue of first debentures for 10,000l. Neither the amount of capital, nor the amount proposed to be raised on first debentures, can be said to have been on the face of the matter extravagantly large, regard being had to the nature of the business to be transferred. The only effect, beyond the appearance of greater importance to be given to the company, of putting down 20,000l., instead of say 10,000l., as the capital of the company would be to make the value of each share proportionately smaller. The vendors or their nominees might be able to dispose of their shares on better terms if the capital were larger; but it is only fair to observe that the vendors in fact retained by far the largest part of the share capital until the winding-up of the company. The vendors determined to fix the price for the property to be sold at 46,300l. How this sum was arrived at we do not know. No doubt it included a large amount of what would be profit to the vendors if they disposed of their shares favourably; but so long as they continued to hold them this would be nominal profit only. The vendors did not require to be paid a large amount in cash, and arranged that the 46,300%. should be paid as follows: 10,0001. by the company taking over the existing mortgages on the freeholds, 7000l. in cash, which was expected to be raised by means of first debentures for that amount; 3000l., the residue of the first debentures, 20,000l. in shares to be treated as fully paid up. This left 63007. to be raised somehow or other, and I think Mr. Eve's suggestion a probable one, that the balance so remaining determines the amount 63001. of the second debentures. This arrangement was carried out by an agreement, dated the 10th Jan. 1894 (the company having been incorporated just before). The memorandum of association provided for the execution of this agreement. The agreement was executed by the

[CT. OF APP.

authority of the board of directors, consisting of Wragg and Martin and one Harrison, and its execution by the company was attested by Wragg and Harrison. A supplementary agreement was executed the same day, whereby the solicitor of the company undertook to raise 70001. by first debentures, of which 4600l. was to be paid to Martin, 1000l. to the credit of the company, and out of the residue Wragg and Martin covenanted to pay the debts of the partnership. The last terms of this agreement were plainly insisted upon for the satisfaction of debenture-holders, and were very fair. So far nothing could be more straightforward or more reasonable, subject always to the question whether the intended ultimate profit to be realised was not fixed too high. As, however, it is not suggested that there is ground for setting aside the contract, I do not see, subject to the point which I reserve as to the appropriation of the purchase money, how, consistently-at any rate with Anderson's case (37L. T. Rep. 560; 7 Ch. Div. 75)—the shares could possibly be treated as not fully paid up. In the present, as in Anderson's case, the shares allotted were allotted to vendors, or persons representing vendors, and in Anderson's case the 150,000l. worth of shares allotted consisted, to an extent of far more than 50 per cent. of profit reserved to the members of the syndicate selling. That case is undoubtedly binding upon us. It was cited and relied upon in the Ooregum case (66 L. T. Rep. 427; (1892) A. C. 125), and was not, I think, in any way disapproved of. Certainly there is nothing in the opinions of the noble and learned Lords to shake the authority of the case. By saying that Anderson's case (ubi sup.) is an authority binding on us, I do not mean to intimate an opinion that there are not other authorities to the same effect. I think that the series of authorities cited by Lindley, L.J., beginning with Pell's case (21 L. T. Rep. 412; L. Rep. 8 Eq. 222; L. Rep. 5 Ch. App. 11), have made it impossible in such a case as above indicated to inquire effectually into the value of the property taken in exchange for shares where the contract itself is not impeached. If these authorities are to be overruled, that must be done by the House of Lords. But it is said that a clause in the main agreement of the 10th Jan. 1894, viz., clause 3, makes the present case an exception to the general rule. Before examining that clause I will consider what the actual agreement between the parties was, independently of that clause. Clearly, it was a purchase of the whole freehold property dealt with at an entire price. Neither the vendors nor the purchasers would have sold or bought any one of the items independently of the others. It is not in accordance with the facts that there were number of independent purchases of separate items, and no one could say that, independently of the clause, it would have been possible to make any appropriation of portions of the purchase money. As the vendors would have the full control over the consideration given, and could divide it in accordance with their rights inter se, there could be no object connected with any difference in those rights in making any appropriation. In addition to this it is manifest that the figures in the clause are not founded on any exact estimate of the rights of the different partners, the figures being throughout round numbers which could hardly by possibility conform to pre-existing rights. It is obvious that it could not in any way