(18) TRANSFER OF SHARES.

shares. Dodgson, Ex p.; North of England Joint-Stock Banking Co., in re, 3 De G. & Sm. 85; 14 Jur. 386.

Waiver of Formalities by Consent.]-In deciding whether a party is or is not a contributory within the meaning of the Winding-up Acts, the point to be ascertained is, whether he is liable, in any manner whatsoever, to contribute to the debts, liabilities, and losses of the company; and it is not necessary that he should be a member of the company according to the strict provisions of the deed of settlement. Straffon's Executors' Case; North of England Joint-Stock Banking Co., In re, 1 De G. M. & G. 576; 16 Jur. 435. Affirming 4 De G. & Sm. 256.

If directors, not following the formalities prescribed by the deed of settlement, adopt in respect of a particular transaction, and for the purpose of constituting shareholders, a new rule of proceeding, and a party treats himself and is treated by the directors as a shareholder by virtue of such a transaction, it is not competent either to the party or to the directors subsequently to repudiate the transaction on the ground of non-compliance with the formalities required by the deed of settlement. Ib.

A purchaser of shares in a joint-stock bank took a transfer of them by a deed, which was executed on his behalf by an attorney, not authorised by deed, and the transfer was in other respects wanting in some of the particulars prescribed by the deed of settlement of the company, but the purchaser was treated as a shareholder, and received dividends to the time of his death :-Held, every matter of substance having been complied with, that his executors were properly placed on the list of contributories under the Winding-up Acts. Ib.

J. S. purchased, through a broker, 120 shares in a joint-stock banking company, in respect of ten of which the grandson of the purchaser executed the deed of transfer as his agent. No other deed of transfer was executed. The purchaser received the dividends upon the whole-Held, that he was a contributory in respect of the whole 120 shares, and his executors properly on the list. Ib.

Where a transfer of shares is made by a member to the company, the latter may, as between the parties to the transfer, dispense with the machinery which the legislature has rendered necessary to transfers in general; another

company cannot afterwards, as between itself and the partner with whom it contracted, impeach the transaction. Taylor v. Hughes, 2 Jo. & Lat. 24; 6 Ir. Eq. R. 480, 487.

Custom to disregard Formalities.]—In a joint-stock company fifty shares belonging to the company were transferred and accepted by the transferee, and an entry of the transaction was made in the share ledger of the company. By the deed of settlement certain formalities were to be complied with, without which it was declared that no transfer should have any force either at law or in equity. These formalities had been universally disregarded in the transactions of the company, and were not complied with in this case :-Held, that there must be

(f) Formalities of Transfer.

taken to have been a universal consent to disregard the provisions of the deed in this respect, and that the transferee effectually became a shareholder as between himself and the shareholders generally. Vale of Neath and South Wales Brewery Co., In re; Walter's Case, 3 De G. & Sm. 149. Affirmed 19 L. J. Ch. 501; 14 Jur. 566-L.JJ.

Sufficiency of Waiver.]-A clause of partnership deed, however precise, may be waived by the conduct of all the partners, but a waiver of the stipulations of a company's deed by the directors is not sufficient, unless it is shown that the body at large made the directors their agents for that purpose. Where, therefore, a shareholder bequeathed his shares, and the executor assented to the bequest, and the secretary placed the name of the legatee and her husband opposite the shares in the books of the company, but the provisions of the deed of settlement had not been complied with as to the transfer of the shares, nor was it shown that all the shareholders of the company had concurred in dispensing with such compliance-Held, that the executor was the proper person to be placed on the list of contributories under the Winding-up Acts. Keene's Executors' Case, 3 De G. M. & G. 272.

B.

Recognition of Transferee by Company.]— A company was registered under the 7 & 8 Vict. c. 110. Čertain clauses in its deed of settlement required that a holder of shares desirous of transferring them must give notice to the officer of the company; that the directors at a board meeting must certify their approval of the proposed transferee; that the transferor must execute a deed of transfer; and that every transferee approved of by the directors must within one calendar month execute at the office of the company, or at such other place as the board should reasonably require, a deed of covenant to abide by the rules and regulations of the company," whereupon such person shall become a shareholder of the company." held shares in the company, and was a director. He desired to transfer his shares, but he gave no notice and no certificate of approval was given before the transfer (it was alleged that such certificate was given after the transfer). A deed of transfer was executed, but no deed of covenant as required by the articles of the association was ever executed :-Held, that the transfer thus made, though irregularly, was not invalidly made, and the persons then known as directors having at a meeting of shareholders recognised the transferees as shareholders, and having then and there declared them to be elected as directors, and the shareholders at such meeting having accepted them as creditors, the validity of the transfer to them and their title to office could not afterwards be impeached. Murray v. Bush, 42 L. J. Ch. 586; L. R. 6 H. L. 37; 29 L. T. 217.

Held, also, that the transfer made under these circumstances was sufficient to relieve the transferor from liability to become a contributory. Ib.

The directors had no power to dispense with the execution, by the transferee, of the deed of covenant-the only discretion they possessed as

(18) TRANSFER OF SHARES.

to such deed related to the place of its execution. Ib.

Cost-book Mine-No Notice to Purser.]— The rules of a mining company, carried on upon the cost-book principle, provided that no shareholder should dispose of his shares without giving notice in writing to the purser of the intended transfer, and that every transfer should be according to a particular form provided for that purpose. The form was printed, and contained a notice that no transfer was valid or complete unless entered in the cost-book and acknowledged by the purser. A shareholder agreed to transfer his shares, and the proposed transferee stipulated that the transferor should pay the calls then due. They went together to the office of the company, and deposited with the purser a transfer of the shares executed by them both in the required form, and the transferor paid the calls, but no notice in writing was given of the transfer, nor was there any formal acknowledgment on the part of the purser :Held, that the transferee was properly placed upon the list of contributories. Mayhew's Case, 5 De G. M. & G. 837; 24 L. J. Ch. 353; 1 Jur. (N.s.) 566; 3 W. R. 95.

Held, also, that he was liable to the debts of the company incurred before the transfer. Ib.

Transfer by Delivery of Certificates.] -Upon the winding-up of a company carried on upon the cost-book principle, it appeared by its deed, that shares in the company would pass by the delivery of the certificates; but no shareholder was entitled to a dividend unless his name was entered in the share register book. A shareholder who had transferred his shares, but whose transferee had not been registered-Held, to be liable as a contributory of the company. Humby, Ex p.; Wrysgan Slate Co., in re, 28 L. J. Ch. 875; 5 Jur. (N.S.) 215; 7 W. R. 335.

It

Test-Specific Performance.]-In 1851 a company had called up and expended all the capital contemplated by the deed, viz., £10 per share. The company had been established in 1849, professedly on the cost-book principle, with monthly meetings, three directors, one to retire annually, and no new member to be admitted until approved by a board of directors. After 1851 no new directors were appointed. In March, 1852 the company being indebted to S., one of the shareholders, in £1,000, a meeting was called and held some time in the spring or summer of that year, at which all the adventurers attended. was then resolved that the whole authority of the board of directors should be handed over to the secretary, to be exercised under the supervision of S. alone, who was to furnish all moneys necessary to work the mine, to try and redeem what had been already lost. Previously to this meeting, viz., in 1851, P., one of the shareholders, being indebted to De C., placed in deposit with him ten shares as a security. After the meeting, P., without informing De C. of the change of circumstances in the company, offered to relinquish the ten shares to De C. in part payment. In

(f) Formalities of Transfer.

December, 1852, De C., having put inquiries to the secretary, which were satisfactorily answered, agreed in writing to take these shares on the same terms as P. held them. In April, 1853, De C. endeavoured to sell the shares to other parties, and with that view applied to be admitted on the register as a transferee. This was at first refused, but ultimately assented to, but no such registration ever took place. The next meeting did not take place till 1854, when it appeared that the loss for which the company was liable to S. amounted to nearly £5,000. In 1856 S. alone presented his petition to have the company wound up, on which an order was made accordingly-Held, that De C. was not liable to be placed on the list of contributories. De Castro's Case; Court Grange Silver Lead Co., In re, 2 Jur. (N.s.) 1203.

The test applied was not whether De C. could have insisted, as against P., on having the shares, but whether P. could have insisted on a specific performance of the agreement of December, 1852; and :-Held, that P. could not have done so. Ib.

Under the above circumstances :-Held, that the company in 1852, at the time of the contract, was no longer carrying on business under its deed; that P. knew that fact, and that De C. did not know it; and therefore that the contract could not be sustained. Ib.

Winding-up-Irregularity as Affecting Contributories. Where transfers of shares in a company are invalid by reason of an act of the company, the transferees cannot, on the ground of that invalidity, be allowed to say, that they are not properly placed on the list of contributories; but it is open to the official liquidator, in the interest of the creditors, to put either transferor or transferee on the list. Holmes, Ex p.; Financial Corporation, in re, 15 W. R. 188.

Irregularity of transfer of shares held unavailable as a bar to liability as contributory, the transferee having accepted dividends. Hoare, Ex p.; Phoenix Life Assurance Co., in re, 2 J. & H. 229; 31 L. J. Ch. 504; 8 Jur. (N.S.) 713; 10 W. R. 381.

G., a shareholder in a completely registered company, being in prison, two of the directors being desirous to procure his discharge, entered into an agreement with B., one of his creditors, by which B. agreed to accept 1,500 shares in part payment of his debt, and to consent to G.'s discharge, and the two directors stated that they were authorised by G. and the company to transfer the shares, declared the shares to be transferable by delivery, and agreed that if it should appear that the shares could not be legally vested in B. without his executing the deed of settlement they would pay him £1,500. They handed over to him scrip certificates for 1,500 shares, which described the company as only provisionally registered, and purported to be transferable by delivery. The directors placed B. on the register of shareholders without his knowledge, and in the register of transfers they entered the shares as transferred to him by G., but it was not shown that any deed of transfer had ever been executed, and he never executed the deed of settlement, or any deed

(18) TRANSFER OF SHARES. of accession to it. An order was afterwards made for winding up the company :-Held, that inasmuch as the shares in the company were not transferable by delivery, and could not be vested in B. without his executing the deed of settlement, B. in the absence of conduct estopping him from disputing his being a shareholder was not liable to be placed on the list of contributories. Bunn, Ex p.; Electric Telegraph Co. of Ireland, in re, 2 De G. F. & J. 275.

Informal Transfer Registered Before.] -A transfer had been informally made, but had been registered some time before the winding-up :-Held, that the official liquidator was not entitled to have the transferor's name substituted for the transferee. Hughes's Case 16 L. T. 526; 15 W. R. 476.

Contract Specifically Enforceable.]— W. was a shareholder in a company which could refuse to register transfers. W. contracted to assign his shares to S., and H. applied to S. for a sub-assignment of the shares, and filed a bill against S. for specific performance :-Held, that though W. was registered owner, H. must be entered upon the list of contributories. Henry, Ex p.; London, Hamburgh and Continental Exchange Bank, in re, 14 L. T. 457; 14 W. R. 785.

Certification by Secretary-Statement by Managing Director-Estoppel.]-A company is not bound by the representations of its secretary, who is only a servant with powers limited to his instructions; and the certification by the secretary of the transfer of shares by a person who had no power of dealing with such shares cannot operate as an estoppel against the company from denying the title of the alleged transferee, or make it liable in damages for refusing to register such transferee as a shareholder. Nor can the recognition by a managing director of such certification, or even the representation by him that the certification would be acted upon by the company and entitle the transferee to be placed on the register, create such estoppelas a representation, to be effective for such a purpose, must be one of an existing fact, and not constitute a mere promise of future action. Whitechurch (George), Lim. v. Cavanagh, 71 L. J. K. B. 400; [1902] A. C. 117; 85 L. T. 349; 50 W. R. 218; 9 Manson, 351; 17 T. L. R. 746-H. L. (E.)

Difference between a certificate and certification explained. Ib.

Grant v. Norway (20 L. J. C. P. 93; 10 C. B. 665) approved, Lord Robertson doubting its application, but concurring on other grounds. Ib.

Estoppel-Share Certificates-Return to Transferor-Subsequent Fraudulent Transfer.]-On April 19, 1904, B. became the registered owner of shares in the defendant company, and certificates of his ownership were made out, but were not sent to him. On the same day a transfer by B. to H. and M. of 1,500 shares was presented to the secretary of the company, and the secretary indorsed upon it a certification certifying that the certificates

(g) Compulsory Transfer.

had been forwarded to the company's office, and the transfer so certified was returned to H. and M., and they then executed it, and had since become the registered owners of the shares. On April 22 the secretary, having occasion to send B. certificates for other shares in the company, by mistake inclosed the certificates for the 1,500 shares which had been transferred to H. and M. Subequently the plaintiffs made advances to B. on a deposit of the certificates for the 1,500 shares, with transfers of the shares. The loans not being repaid, the plaintiffs sent in the transfers to the company for registration. Finding that they were unable to obtain registration, they brought the action for registration of the transfers and delivery of the certificates, and damages. They based their claim on estoppel arising from the negligence of the secretary in returning the certificates to B. after the certification -Held, that admitting that there was negligence for which the company might have been liable to those who were entitled to rely on the certification, the plaintiffs were not persons who could rely on it, and they failed to show that there was any duty on the part of the company to retain the certificates, either to them personally or to the public, or to any section of the public, or to persons desirous of becoming members of the company; under s. 31 of the Companies Act, 1862, a certificate was only primâ facie evidence of title to shares, and the plaintiffs were not entitled to assume as against the company, without inquiry, that there had been no dealing with the shares since the issue of the certificates to B., from the mere fact of finding them in his possession; further, the negligence was not the real or proximate cause of the plaintiffs' loss, but the improper use of the certificates made by B. after they were returned to him; and mere negligence would not raise estoppel. The circumstances, therefore, were not sufficient to raise a case of estoppel against the company. Longman v. Bath Electric Tramways, 74 L. J. Ch. 424; [1905] 1 Ch. 646; 92 L. T. 743; 53 W. R. 480; 12 Manson, 147; 21 T. L. R. 373-C. A.

Statements of the law in Swan v. North British Australasian Co. (32 L. J. Ex. 273, 277, 280; 2 H. & C. 175, 182, 192) and Bishop v. Balkis Consolidated Co. (59 L. J. Q. B. 565, 571; 25 Q. B. D. 512, 519) adopted and applied. Ib.

The secretary of the company, on receipt from the plaintiffs of the transfers to them, gave an acknowledgment of the receipt of them for registration in favour of the transferees

subject to the approval of the directors, with a note appended that the receipt must be returned to the company's office in exchange for the relative share certificates, which would be ready on a day named :-Held, that the receipts were not a recognition on behalf of the company of the plaintiffs' title, and did not bind the company to issue certificates on the day named. Ib.

g. Compulsory Transfer. Bankruptcy - Articles of Association Repugnancy-Fraud on Bankruptcy Law.]A provision in the articles of association of a

Name of Transferee Blank.]-When the owner of shares borrows money and deposits with the lender certificates of his shares, and also transfers signed by him, but with the date and name of the transferee left blank, the lender has implied power to fill up the blanks, and the transfers will pass the legal interest if the articles of association do not require a deed; otherwise only an equitable interest. Tahiti Cotton Co., In re; Sargent, ex p., 43 L. J. Ch. 425; L. R. 17 Eq. 273; 22 W. R. 815. See col. 1135.

When the articles of association of a company permit a transfer of shares to be made by instrument in writing" it is not necessary that the transfer should be by deed, even although the uniform practice of the company may have been to require one. Ib.

Rights of Holder. ]-F., the registered holder of shares in a company, deposited the certificates with C. as security for £150, and gave him a transfer signed by F., with the consideration, the date, and the name of the transferee left in blank. C. deposited the certificates and the blank transfer with Q. as security for £250. C. died insolvent, after which Q. filled in his own name as transferee, and sent in the transfer for registration. The shares were accordingly registered in Q.'s name, but whether this was done before notice given by F. to the company and to Q. that F. denied the validity of the transfer was doubtful on the evidence :-Held, that Q. had no title against F. except to the extent of what was due from F. to C. France v. Clark, 53 L. J. Ch. 585; 26 Ch. D. 257; 50 L. T. 1; 32 W. R. 466-C. A.

A person who without inquiry takes from another an instrument signed in blank by a third party, and fills up the blanks, cannot, even in the case of a negotiable instrument, claim the benefit of being a purchaser for value without notice, so as to acquire a greater right than the person from whom he himself received the instrument. If a debtor delivers to his creditor a blank transfer by way of security,

(i) Blank Transfers.

that does not enable the creditor to delegate to another person authority to fill it up for purposes foreign to the original contract. Sargent, Ex p. (L. R. 17 Eq. 273), observed upon. Ib.

Authority of Broker-Priorities-Inchoate Title Right to Registration.]—The plaintiff, the registered owner of shares in a limited company, instructed a broker to sell the same, and for that purpose delivered to him the share certificate and a blank transfer signed by the plaintiff. The articles of the company did not require a deed. The broker improperly deposited the blank transfer and certificate with the defendant as security for his own debt. The defendant afterwards filled up the blank transfer with the date, consideration, and name of transferee, and sent it for registration to the office of the company, where it lay for more than a fortnight without being registered. The company had then no notice of any invalidity in the transfer, and had no power under the articles to refuse to register the transfer. The plaintiff on discovering the facts brought this action to restrain registration and establish his title to the shares :--Held, following France v. Clark (26 Ch. D. 257), that the defendant had acquired no title to the shares as against the plaintiff; and that, therefore, the defendant had no inchoate title which was capable of being treated as com pleted by registration according to the doctrine that an unconditional right to have a transfer registered may be equivalent to actual registration. Fox v. Martin, 64 L. J. Ch. 473.

A., the owner of shares, deposited with B. the certificates of his shares and a transfer thereof signed by him, but with the name of the transferee left blank, to secure a previously. existing debt. The articles of association of the company permitted a transfer of shares to be made by instrument in writing. The debt remaining unpaid, B. filled in his own name as transferee, and (the company declining to register) applied under the Companies Act, 1862, s. 35, to have the register rectified :Held, that B. was entitled to have his name on the register; that the court had jurisdiction to decide the question of title between B. and A. (who had been served), and also to order costs of the application to be paid by A. Tees Bottle Co., In re, Davies' Case, 33 L. T. 834.

Mortgage-Estoppel-Notice to Company not to Register.]-A person who executes a transfer of shares thereby comes under an implied obligation not to hinder the transferee from obtaining registration, and this applies to a case where the transfer is originally made in blank by the transferor and subsequently filled in by a bonâ fide holder for value, in whose favour it is binding by estoppel against the transferor. Dictum of Lord Esher, M.R., in London Founders' Association v. Clarke (57 L. J. Q. B. 291, 293; 20 Q. B. D. 576, 582) followed and applied. Hooper v. Herts, 75 L. J. Ch. 253; [1906] 1 Ch. 549; 94 L. T. 324; 54 W. R. 350; 13 Manson, 85-C. A.

Measure of Damages for Delay.] - The measure of damages for the breach of such obligation is the difference between the value of the shares at the time when in the ordinary