HASTINGS CORPORATION v. LETTON. 1907. L. R. (1908) 1 K. B. 378.15 APPEAL from the county court of Sussex holden at Hastings, which gave judgment for the plaintiffs. DARLING, J.-This case raises a difficult point which, apparently for the first time, it is necessary to decide. The corporation of the borough of Hastings granted a lease to a certain company, who covenanted in the lease to pay the rent thereby reserved for the term of seven years. The appellants entered into similar covenants as sureties. The company assigned the lease to another company, the Southern Produce Company, Limited, the appellants remaining sureties on the same terms for the new company, and the old company ultimately dissolved. The new company, the assignees of the lease, also dissolved, namely, in August, 1906, without having assigned over the lease; and the question is whether, the new company having become dissolved, the appellants are nevertheless still liable to pay the rent to the lessors. They undertook to pay the rent in these terms: "These lessees do, and each of the sureties doth for himself covenant that the lessees and sureties, or some one of them, will during the said term pay the said rent on the dates and in the manner hereinbefore mentioned." The question is whether the term came to an end by the dissolution of the new company or whether it still exists, and, if it does still exist, whether the sureties are still bound to pay the rent although the lessees and their assignees are gone out of existence. The county court judge has held that the sureties are still bound to pay the rent, on the ground that the dissolution of a company is analogous to the death of a human being; he argues that if single human being were a lessee for a term of years and the payment of his rent were guaranteed by sureties, the sureties would continue liable for the rent during the term notwithstanding that the lessee himself had during the term, died a bastard without issue and intestate. In such a case, the county court judge says with truth, the term would not be at an end, but would still subsist and vest in the Crown, and, the sureties having undertaken to pay the rent during the term, as long as the term subsisted the sureties would be liable for the rent. In my opinion this analogy, though specious, is false. The death of a limited company is in truth but a figurative expression; it is not the expression used in the Companies Act, 1862; the word used in that Act is not death, but dissolution. In the case of a company, dissolution does not come upon it, as death does upon a human being, with all its contracts liabilities and property still on its hands: the dissolution of a company is regulated by ss. 142 and 143 of the Companies Act, 1862, by which it is provided that before a company dissolves it shall have nothing; it must first be divested of everything, and is not permitted 15 Statement abridged. Concurring opinion of Phillimore, J., omitted.-Eds. to dissolve until it is divested of everything. The analogy on which the county court judge has based his judgment takes no notice of these facts. A truer analogy, though not an exact one in all particulars, would be the case of a single human being lessee for life. On the death of such a lessee the land reverts to the lessor. The passage from Blackstone's Commentaries cited by counsel for the appellants is still good law. Part of it was cited by Wright, J., in In re Higginson and Dean (1899), 1 Q. B. 325, as a perfectly accurate statement of the law in modern times. That passage is as follows: "But the body politic may also itself be dissolved in several ways; which dissolution is the civil death of the corporation; and in this case their lands and tenements shall revert to the person or his heirs, who granted them to the corporation: for the law doth annex a condition to every such grant, that if the corporation be dissolved, the grantor shall have the lands again, because the cause of the grant faileth. The grant is indeed only during the life of the corporation, which may endure forever; but when that life is determined by the dissolution of the body politic, the grantor takes it back by reversion, as in the case of every other grant for life." I Bl. Com. 484. The law there laid down seems to apply to the present case. I cannot see that when this company was dissolved there were any bona vacantia to vest in the Crown. The term determined and the land reverted to the grantor of the lease; the lease merged in his reversion, and he has his whole estate again. If further authority is wanted it will be found in In re Higginson and Dean (1899), 1 Q. B. 325, at p. 332, where Wright, J., after quoting the opinion of Story, J., in the cases of Wood v. Dummer (1824), 3 Mason 308, and Mumma v. Potomac Co. (1834), 8 Peters 281, said: "This statement of the law may not perhaps be entirely applicable in this country, but it requires consideration. It might be reasonable to enact"-I pause there to observe that the learned judge says "to enact," not "to hold”-“that, in analogy to the immemorial law of executors and administrators, and the statute of 31 Edw. 3, st. 1, c. 11, on the dissolution of a corporation aggregate all its rights, including its rights of action on executed contracts, such as those evidenced by bank notes or bonds, or on claims in debt, devolve upon the Crown, subject to payment of the corporation's own debts. It would, however, I think, in the present state of the authorities, be judicial legislation to declare the Crown entitled to maintain actions in such cases except where it can allege a trust." In the present case I think it would be judicial legislation to hold that the law as laid down by Sir W. Blackstone does not apply, and that when a company, being lessees or assignees for a term of years, ceases to exist, the term does not revert to the grantor. For these reasons I think this appeal should be allowed.16 16 The intended appeal was not pursued. See note, 8 Col. Law Rev. 410.Eds. right of corporation to make, for benefit of creditors, 261. ATTACHMENT, of shares of stock, as against unrecorded transferees, 720, 725. ATTORNEY, POWER OF, See TRANSFER OF STOCK. right of innocent holder of certificate of shares delivered under blank, certificate therewith, stolen, 731. when new certificates issued, 737, 739. rights of owner of certificate, how effected by forgery of, authorizing rights and liabilities of holder of certificate issued on forged, 739, 746. B BANKRUPTCY, treatment of doctrine of corporate entity in, 113 BONUS, of stock with bond issue, 827, 831. BORROW, power of corporation to, 259. BY-LAWS. See STOCKHOLDERS. power of corporation to make, 261, 520, 522. power to amend, 408n. validity of, 518, 582. BY-LAWS-Continued. [References are to Pages.] who can make, 513, 515. restraining transfer of shares, 693, 702. function of, 514, 517, 521, 579. effect of, on third parties, 515, 518. creation of lien on stock by, 522, 697. C CAPITAL STOCK, See SHARES OF STOCK; PREFERRED STOCK; WATERED STOCK. nature of, 488, 605, 844. distinguished from property of corporation, 534. distinguished from shares of stock, 488. right to increase amount of, 536, 560, 561. right to reduce amount of, 238. power of directors to increase or reduce, 375, 381. taxation of, 488. subscription to, and payment of, as conditions precedent to corporate payment for increased, 180. subscription of entire as condition precedent to subscriber's liability, 198, 199, 203. overissue of, 592, 595. CERTIFICATES OF STOCK, distinguished from capital stock, 177. necessity of tender of, before payment for stock due, 179. when delivery of, unnecessary, 702. effect of loss of, 731. as approximating negotiable securities, 724, 725, 730. CHARTER, acceptance of, 116. See STATE CONTROL. acceptance without the state invalid, 117. acceptance, time of, 117. acceptance, place of, 117. acceptance, method of, 117. revocability of offer of, 117, 893. effect of expiration of, 909. as a contract, 108, 110, 581. constitutionality of general laws, 118. obtaining, in two or more states, 139, 140, 142, 150. effect of amendment of, on stock subscription, 212, 215, 220. CITIZEN, corporation as, for purpose of Federal jurisdiction, 98, 101. CITIZEN-Continued. [References are to Pages.] corporation as, under 14th Amendment of Federal Constitution, 101. presumption of citizenship of shareholders, 100, 129. effect of incorporation in two or more states, 144. CONSOLIDATION, effects of, 140. CONTEMPT, corporate liability for, 23. CONTRACT, See ULTRA VIRES CONTRACTS; PROMOTERS; DIRECTORS. distinction between joint-stock company and, 73, 74, 75. classification of, 109. effect of legislative declaration that company is not, 73. as an entity distinct from stockholders, 3, 7, 37, 43, 49, 51, 113, 688. as trustee for stockholders, 590. individual liability consistent with concept of, 70, 82, 83. power of, to subscribe for stock, 198. power of, to release subscriber, 203n. must act through agents, 410, 491, 943. CORPORATION TAX, application of Federal, 86. CREATION, necessity of legislative authority for, 121. by letters-patent, 116. by prescription, 116. by parliament, 116. by special act, 116, 899. under general laws, 121, 125. delegation of right of, 116, 118. invalidity of, by agreement alone, 121. authorized objects, 124. typical method of, 130. conditions precedent, 129, 133. directory and mandatory provisions, 135, 137. under laws of two or more states, 137, 142, 148. memorandum and articles of association distinguished, 266, 572. |