(1) AMALGAMATION. (c) Repayment of Money on Failure of.]-A. was the holder of twenty-five shares in the I. bank, which in 1864, entered into an agreement for amalgamation with the H. bank, under which it was agreed that shares in that bank should be allotted at £6 premium to such shareholders of the I. bank as elected to accept them. A. did so elect, and had allotted to him twenty-five shares in the H. Bank, in respect of which he was credited with £125 for his old shares, and he paid £150 in cash. Subsequently the amalgamation was attempted to be set aside as ultra vires, and the suit was compromised, but previously to that his shares had been duly forfeited for nonpayment of calls. Both banks were wound up and the liquidators of the H. bank brought an action against A. to recover payment of the calls, which resulted in a decision in A.'s favour. On a summons taken out by A. against the liquidators of the H. bank to enforce repayment to him of the above two sums, with interest :-Held, that the judg. ment in the action was conclusive, and that A. was entitled to be repaid the £150, with interest at £5 per cent. from the date of the summons, but that his claim to the £125 could not be sustained. Bank of Hindustan, China and Japan, In re; Alison's Case, 43 L. J. Ch. 1; L. R. 9 Ch. 24; 29 L. T. 524; 22 W. R. 113.

Transfer of Shares-Bona fides-Lapse of Time.]-Upon an amalgamation, in 1858, between company A. and company B., it was agreed that A. should pay for the purchase of B.'s business £16,000 in cash, and £20,000 in 53,334 £1 shares (on which 7s. 6d. should be considered to have been paid) to the directors of B. or their allottees. H., the solicitor to company A., and a holder of 1,000 shares, disapproved of the amalgamation, and, without opposition by the directors, transferred his shares, as part of the 53,334 shares, to members of company B. Calls were subsequently made upon the shares, the notice of such calls being sent to the transferees of H., who were treated as the holders of the shares. In 1861 company A. was wound up-Held, in the absence of any evidence to impeach the amalgamation as being a device by company A. for ridding itself of valueless shares, that the transfer by H. was bonâ fide, and that he was not liable as a contributory in respect of the transferred shares, especially after the length of time during which the transaction had remained unquestioned. Horn, Ex p.; State Fire Insurance Co., in re, 12 W. R. 904.

Condition as to Executing Deed.]-The B. company amalgamated with the A. company, and agreed to indemnify the A. company against the debts of the A. company, and the Lord Chancellor decided that such indemnity did not apply to the individual shareholders, but to the company only. It was a condition of the deed of amalgamation that no shareholder of the A. company who did not execute the deed of settlement of the B. company within a fixed peiod should participate in the benefits of such amalgamation. W. did not execute the deed of settlement, but it was sought by the official manager, notwithstand

Effect of, upon Members.

ing, to put him on the list of contributories in the winding-up of the B. company :Application was dismissed with costs, without prejudice to any application of the official manager or creditors' representative as to costs. Webster, Ex p.; British Provident Life and Fire Assurance Society, In re, 10 L. T. 288; 12 W. R. 677.

Indemnity.]-In 1858, by an indenture to which the seals of the companies were affixed, and executed by two directors of each company, incorporated under 7 & 8 Vict. c. 110, all the business, property, effects and liabilities of the plaintiffs' company were assigned to the defendants' company, and the shareholders in the plaintiffs' company agreed to become shareholders in the defendants' company, and to execute the deed of settlement of the latter. It was also agreed that the shareholders in the plaintiffs' company should, out of the funds of the defendants' company, be held harmless and indemnified against any and all liabilities in respect of the plaintiffs' company. Actions were afterwards brought against the plaintiffs' company, and a bill was filed for a specific performance of the agreement for indemnity contained in the deed of amalgamation-Held, that those shareholders only who had executed the deed of settlement of the defendants' company were entitled to the benefit of the indemnity. Anglo-Australian Insurance Co. v. British Provident Insurance Society, 4 De G. F. & J. 341; 8 Jur. (N.S.) 628; 6 L. T. 517; 10 W. R. 588.

Dissentient Shareholder not entitled to Winding-up Order.]-Two companies, A. and B., were carrying on business. A. had power by its articles of association to buy up other companies. An arrangement was effected for amalgamating the two companies :-Held, that even if the arrangement was not binding on a dissentient shareholder of B., he was not entitled to a winding-up order, on the ground that since the amalgamation B. had ceased to carry on business. His remedy was by bill. National Financial Corporation, In re, 14 L T. 749; 14 W. R. 907.

Scheme of Amalgamation Dissentient Member-Locus Standi-Claim to Examine Witnesses.]-A dissentient member of a company, whose liquidator has elected under s. 161 of the Companies Act, 1862, to purchase his interest, and is willing to submit the value to arbitration, has no right to examine wit nesses under s. 115 of that Act for the purpose of increasing the value of his shares. British Building Stone Co., In re, 77 L. J. Ch. 752; [1908] 2 Ch. 450; 99 L. T. 608; 15 Manson, 349.

Majority of Shareholders not Assenting.]— Two companies amalgamated, and a shareholder in the original company agreed to take shares in the amalgamated one, in lieu of those which he had held in the other. There was no evidence of the assent of the majority of the shareholders in the original company to the exchange of the shares; and when it was subsequently ordered to be wound up, he was placed on the list of contributories to it :Held, that he was a contributory, and must

changed for certificates of shares in company B., and inclosing for him to fill up a printed letter addressed to the liquidators, requesting them to obtain for him certificates of B. shares in exchange for his. This form A. filled up, signed and returned, with his share certificates inclosed, to the liquidators. He afterwards received a form of notice of an intended shareholders' meeting of company B., which he did not attend. He never received any letter of allotment of B. shares, and though the directors of company B. declared a dividend, he never received a dividend warrant. In July, 1866, company B. was ordered to be wound up; and shortly after A. was informed that his name had been settled on the list of contributories, and then for the first time learned that his name had been, on September 9, 1865, placed on the share register. He also found that a form of certificate of shares had been issued by company B. in exchange for those received from company C., which bore on its face these words, For account of the" (C. company) in liquidation, subject to covenants of May 17, 1865." These certificates were forwarded by the B. directors to the liquidators of company C., who retained them, so that A.'s certificate of shares in company B. never reached him personally. In February, 1868, by a decree of the court, in a suit instituted on November 10, 1865, it was declared that the arrangement of March, 1865, was beyond the powers of the directors of company C., and was not binding on any of the shareholders of company C.-Held, that A., though his application was not commenced till January, 1867, was entitled to have his name removed from the list of contributories of company B. Alabaster, Ex p.; Oriental Commercial Bank, in re, 38 L. J. Ch. 32; L. R. 7 Eq. 273; 17 W. R. 134.

44

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Delay-Void Amalgamation.]-W., holder of fully paid-up shares and director of a limited company A. which was being amalgamated with an unlimited company B., applied for 100 fully paid-up shares in company B., in accordance with the terms of the agreement for amalgamation." Two days afterwards (July 29, 1869) he sent a letter requesting that his application might be kept back until the compulsory winding-up of the A. company which had been instituted, was changed into a voluntary winding-up, and all impediments in the way of the amalgamation of the two companies removed. The compulsory winding-up was stayed on July 30. On August 7 a letter was sent to W., saying that 100 shares had been allotted to him, and his name placed on the register for them, and that he would be credited in respect of them with the proportionate amount of the net assets of company A." He was absent from London, and did not receive this until August 31. Early in October, on his return to London, he repudiated the shares and was informed by the officers of the company, that his name was not on the register. On November 6 an order was made to wind up the B. company, and his name was on the register for 100 shares. A separate engrossment of the deed of amalgamation was executed by each company, and that executed by one company

materially differed from that executed by the other-Held, first, that there never was an amalgamation; and, secondly, that W.'s name must be removed from the list of contributories of company B. Wynne's Case, United Ports Insurance Co., In re, L. R. 8 Ch. 1002; 29 L. T. 381; 21 W. R. 895.

Bonâ fide purchase of Business.]By an agreement between two companies, one company was to buy the business of the other company, the consideration to be paid in shares of the buying company, to be issued to the selling company and divided amongst its shareholders. Resolutions approving of this agreement, and also authorising the creation of the requisite new shares (all the shares authorised by the articles of association having been already issued), were passed at one extraordinary general meeting of the buying company, and were confirmed at a second meeting. A large majority of the shareholders of the selling company assented to the agreement, and applied for, and received, what purported to be new shares of the buying com. pany. Certain dissentient shareholders, however, filed a bill in Chancery, and obtained a decision from Giffard, V.-C., that the agreement was void. These shareholders were afterwards, by way of compromise, paid a sum of money by the official liquidator of the buying company, then in liquidation, and the suit in Chancery was stayed. Certain former shareholders of the selling company, holders of what purported to be new shares in the buying company, then applied to be repaid the money which they had paid to the buying company for premiums and on calls upon their shares :Held, that as the buying company did really acquire the property of the selling company, and as the shares were issued bonâ fide, the holders of the new shares could not now repudiate them. Campbell's Case; Hippisley's Case; Bank of Hindustan, China and Japan, In re, 43 L. J. Ch. 1; L. R. 9 Ch. 1; 29 L. T. 519; 22 W. R. 113.

The buying company had brought against one of the holders of new shares an action to recover calls, in which action judgment had been given for the defendant :-Held, that the judgment was conclusive; and that this holder of shares must be repaid what he had paid for premium and calls on the shares. Ib.

Invalidity of Amalgamation Acquiescence.]-Although an amalgamation and purchase of the business and liabilities of one company by another established for similar purposes may be ultra vires, as a transaction not within the general scope and purpose of the business of such a company; and unauthorised by the deed of settlement; there may have been such an amount of subsequent acquiescence as to render the attempted amalgamation, though invalid in its inception, binding as between the companies. Williams, Ex p.; Anchor Co., ex p.; Era Assurance Co., In re, 11 W. R. 204.

extra

also given by an extraordinary meeting of the company to amalgamate with any other company. An agreement was made for the amalgamation of this company with another company, on the terms that the second-named company should sell its assets to the firstnamed company; that the directors of the amalgamated board should consist of the present five directors of the purchasing company, and of seven of the directors of the selling company. This agreement was acted upon, but it was never confirmed by an ordinary meeting of the purchasing company-Held, that this agreement was void, and that two of the directors of the selling company, who had been allotted shares in the purchasing company in exchange for shares in the selling company, and had acted as directors of the amalgamated company, were not liable to be put on the list of contributories to the purchasing company. Stace and Worth's Case; London and Northern Insurance Corporation, In re, L. R. 4 Ch. 682; 21 L. T. 182; 17 W. R. 751.

Agreement incapable of Specific Performance.]-By an agreement, in June, 1864, between two banking companies, it was agreed that company L. should be dissolved, and that its goodwill should be taken over by company M.; that M. should increase its capital, and that 10,000 of the new shares, credited with £10 each, should be, allotted at par to the directors of L. for distribution amongst their shareholders, the L. directors paying £100,000 consideration for the new shares to be issued to them. Of the 10,000 shares only 9,740 were applied for and allotted to L. shareholders. In 1865 the L. directors issued a circular to their shareholders dissuading them from taking M. shares. In 1866 the M. bank made a call, which was badly met, and many shares were forfeited in consequence, including some held by the liquidators of the L. bank. In March, 1867, a mutual release was executed between the companies. It recited that the £100,000 had been paid, and (inconsistently with the fact) that the M. bank had duly allotted to such persons as the liquidators of the L. bank directed the 10,000 shares mentioned in the agreement. In November, 1867, a right to a large number of unissued M. shares was asserted by the secretary of the L. liquidators in a letter, but no step was taken. In September, 1868, a formal demand was made by the solicitors of the L. liquidators for the remaining shares. In February, 1869, the M. bank was wound up, and the M. liquidators made a return of £5 10s. per share to their shareholders, calls having been made upon them and paid for moneys which were found not to be required. Upon the L. liquidators claiming to be entitled, on behalf of the L. shareholders, to participate in the return to the extent of 260 £10 shares :-Held, that the agreement was incapable of specific performance. London Bank of Scotland, Ex p.; Mercantile and Exchange Bank, in re, L. R. 12 Eq. 268.

Agreement to divide Shares of Dissentients.] -A shareholder in a company entered into an agreement with the majority of the share

VOL. IV.

holders to amalgamate the company with another company, and it was provided, that the shares of any shareholder who refused to enter into this agreement should be divided amongst the majority-Held, that this agreement was not binding on any shareholder who was not a party to it, and that the allottees were trustees in respect of their shares. Smith v. Bank of Victoria, or Harrison, 41 L. J. P. C. 34; 27 L. T. 188; 20 W. R. 594.

Dealing with Shares after Transfer of Business.]-A company entered into an agreement with a corporation that all its business should be transferred to the corporation, and that its shareholders should be entitled to shares in the corporation in exchange for their shares in the company. But the company was not formally dissolved or wound up. Afterwards the corporation, not being successful, was wound up voluntarily. A few days before the commencement of the winding-up the former directors of the company, in the name of the company, entered into an agreement with the corporation for a retransfer of the principal part of the businesses of the company, and notice was given to the shareholders that the company had resumed business. A board meeting of the former directors was held in the same month, in which they sanctioned a transfer by the solicitor of the company of 2,145 shares for a nominal consideration. By the articles of the company the directors had no power to reject a transfer unless they found a substituted transferee. The company was afterwards wound up, and his name was settled by the Master of the Rolls on the list of contributories in respect of those shares-Held, by James, L.J., that although the transfer was out and out, and therefore would have been valid if the company had been a going concern, yet the transfer of the business to the corporation having been completed, the shares were no longer capable of being dealt with, and that the transfer was invalid; but, by Mellish, L.J., that the company not having been formally dissolved or wound up, the shares might still be dealt with, and that the transfer was good, and the decision of the Master of the Rolls was affirmed. Chappell's Case, Accidental Death Insurance Co., In re, L. R. 6 Ch. 902; 25 L. T. 438; 20 W. R. 9.

Transferor guaranteeing payment of Calls by Transferee - Amalgamation void.]-The plaintiffs contracted to purchase shares in a company, and shortly afterwards the directors (with the plaintiffs' knowledge) agreed to amal. gamate with another company. Resolutions (the validity of which was disputed on the ground of insufficient notice) for amalgamation were passed and confirmed at two successive meetings, and that "for enabling the agreement and the amalgamation thereby agreed on to be carried into effect," the company should be wound up voluntarily. Immediately before the confirmation meeting one of the plaintiffs agreed to sell his shares, and the other plaintiff having purchased as agent merely, transfers from the two plaintiffs, one to his principal, the other to his purchaser, were executed; but upon the transfers being presented for registration, the liquidators refused to register, except

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on the terms of the plaintiffs executing deeds poll, whereby they should agree to guarantee to the liquidators payment by their transferees of all calls. The plaintiffs accordingly executed the deeds. Afterwards the company was ordered to be wound up compulsorily; and by a decree of the court the agreement for amalgamation and consequent resolutions were held to be ultra vires, and not binding on any dissentient member of the company. Actions having been commenced by the official liquidators against the plaintiffs upon the deeds, bills were filed alleging that the liquidation was invalid, and that the deeds were obtained without consideration, and by misrepresentation and concealment, and were null and void and ought to be cancelled :-Held, that the liquidation resolution was valid, and that the charges of want of consideration, misrepresentation and concealment failed. Cleve v. Financial Corporation, 43 L. J. Ch. 54; L. R. 16 Eq. 363; 29 L. T. 89; 21 W. R. 839.

Transfer of Shares to Trustee for Company -Indemnity.]-By the deed of settlement of the A. insurance company power was given to the directors to call an extraordinary meeting of the company for the purpose of making new laws and regulations. By laws and regulations made accordingly several years afterwards, power was given to the directors to make a junction with any other company. By a private Act, shareholders who had executed transfers were to continue liable until their transfers were enrolled in chancery, but were to be reimbursed out of the funds of the company for all losses sustained in consequence thereof; nor were they to be liable for any debt for which they would not have been liable as partners, nor could anything be recovered from them which could not have been recovered if the Act had not been passed. With a view to an amalgamation with the B. insurance company, the greater number of shareholders in the A. company agreed to transfer their shares to trustees for the B. company. In the case of one of these shareholders, he assigned his shares to a trustee for the B. company, but the transfer was not enrolled in chancery. The A. company then ceased to carry on business. Thirteen years afterwards that company was ordered to be wound up. There were claims by policy-holders whose policies were granted before the alteration in the laws and regulations -Held, that though the transfer was not enrolled, it would be useless to make the shareholder a contributory, as he would, under the Act, receive back from the company all that he paid to it; also, that as his transfer was valid according to the constitution of the company, the Act prevented him from being liable to pay the debts of the company. Doman's Case, 45 L. J. Ch. 801; 3 Ch. D. 21; 34 L. T. 929.

Held, also, that as the deed of settlement to which the policy-holders were subject provided for making new laws and regulations, they were bound by these new laws and regulations when made; and therefore, semble, that the amalgamation between the companies was not ultra vires. Ib.

Transfer to Trustee for Company-Non

inrolment.]-With a view to the transfer of the business of the A. insurance company to the B. insurance company, the greater number of the shareholders in the A. company agreed to assign their shares to trustees for the B. company. In the case of one of these shareholders, he assigned his shares to a trustee for the B. company, receiving the consideration, money out of the assets of the A. company, though there was no evidence that this was known to him. By a private Act transfers of shares in the A. company were to be inrolled in chancery ; but the transfer of these shares was not inrolled until four years after the transfer, when the A. company ceased to carry on business. Eight years afterwards an order was made for winding up the A. company, which had large liabilities but no assets, except such as could be obtained by calling up the shares, and it was held in the winding-up that the claims of the policy-holders in the A. company continued in force against that company :-Held, that the case of this shareholder was to be considered by itself, and without reference to the effect which the decision might have upon the general winding-up. British Commercial Insurance Co., In re; Rivington's Case, 45 L. J. Ch. 804; 3 Ch. D. 10; 34 L. T. 926.

Held, that there was nothing unlawful, and no breach of trust in the arrangement between the two companies so as to make the transfer of the shares invalid. Ib.

Held, that the subsequent inrolment of the transfer was sufficient. Ib.

Held, that this shareholder was not a contributory in the winding-up of the A. company. Ib.

Repayment of moneys paid on New Shares under ultra vires Amalgamation.]-Two banking companies, A. and B., agree to amalgamate, A. to be wound up, and B. to continue and issue new shares at £6 premium, giving credit to the A. shareholders of £5 per share, representing the capital of A. handed over to B. A shareholder in A. was allotted twentyfive new shares in B., and paid £150, and was credited with £125. The amalgamation having been declared ultra vires and void :-Held, that the shareholder was entitled to the return of £150 paid by him (but not to the £125 representing his interest in the capital of A. company), with interest at £5 per cent. from the date of the summons which claimed that interest. Alison, Ex p.; Bank of Hindustan, China and Japan, in re, L. R. 15 Eq. 394; 28 L. T. 263; 21 W. R. 399.

Specific Performance-Railway Companies.] -By an agreement between three incorporated railway companies A., B., and C., it was agreed that A. should purchase the other two railways when completed, and that in the meantime their capitals should be amalgamated for the purpose of such completion, A. undertaking to supply any deficiency; and it was provided, that all the three companies should concur in applications to Parliament for the necessary powers to carry the agreement into effect. At the time the agreement was entered into, B. had power, with the consent of threefifths of its shareholders, to sell its railway to A., but C. had no such power, and neither B.