WILLIAMS J. 1896 In re THOMAS EDWARD BRIN MEAD & SONS. the company; another one is the manufacture and sale of pianos. VAUGHAN As a matter of fact, although the company is a young one, a fair number of pianos have been manufactured by it, and that shews that the injunction has not paralysed the business. Regard must be had to the wishes of the shareholders, who, after all, are the best judges of what is for their own interests. Fraud in the promotion of a company is not a ground for winding it up, for the shareholders may waive the fraud: In re Haven Gold Mining Co. (1) And they have waived the fraud, if any, in the present case. Alexander, Q.C., and Rowden, for shareholders opposing the petition. The petition is not a bonâ fide petition of a shareholder, but is really another attempt of John Brinsmead & Sons to strangle a rival company. [They referred to In re Suburban Hotel Co. (2)] W. Higgins, and Wildey Wright, for other opposing share holders. Warmington, Q.C., in reply, referred to In re Anglo-Greek Dec. 3. VAUGHAN WILLIAMS J. This is a shareholder's petition. The petition to wind up is based upon the 5th subsection of s. 79 of the Companies Act, 1862. The main ground upon which it is said that it is "just and equitable that the company should be wound up by the Court is that the substratum of the business which the company was incorporated to carry on has become impossible. But the petition contains, in addition, allegations going to shew that the circumstances of the formation of the company require investigation, partly because, it is suggested, the company, whatever the scope of the memorandum of association, was in fact formed, so far as the intention of the promoters is concerned, for the purpose of fraudulently depriving the owners of the oldestablished business of John Brinsmead & Sons of as much of their business as could be got away through the belief of customers that they were dealing, not with Thomas Edward (2) (1867) L. R. 2 Ch. 737. (1) 20 Ch. D. 151. (3) (1866) L. R. 2 Eq. 1. WILLIAMS 1896 In re THOMAS EDWARD & SONS. VAUGHAN Brinsmead & Co., Limited, but with the old firm of John Brinsmead & Sons, and partly because, it is alleged, the goodwill of the business purchased by the company, being of little or no value, was purchased by the company at a very large price—I think about 76,000l.-the shareholders being led to BRINSMEAD believe that they were purchasing the old-established business of John Brinsmead & Co., and that the price so paid, as to a very large extent-I think 40,000l.-passed into the hands of vendors, who are men without means. And it is sought to say that, even though the substratum of the business of the company, as defined by the memorandum of association, has not become strictly impossible, yet that the fact that there are these matters requiring investigation may itself make it just and equitable that the company should be ordered to be wound up compulsorily; and the more so because the Court of Appeal, affirming the judgment of North J., has restrained the company-i.e., Thomas Edward Brinsmead & Sons, Limitedfrom using the name of Thomas Edward Brinsmead & Sons, Limited, or the name of Brinsmead, in connection with the manufacture or sale or hire of pianos, without adding thereto an express statement that the respondent company are distinct from and have no connection with the old firm of John Brinsmead & Sons. Now, the history of the formation of this company is given very succinctly in the judgment of A. L. Smith L.J., who says: "One has in this case to take a survey of one year and nine months, because nothing has to be counted except from October 24, 1894, to the date of July 28, 1896. What do we find? We find that for years and years, from the year 1834, I think that is for years and years prior to October, 1894-John Brinsmead & Sons, or rather the Brinsmead family, now represented by John Brinsmead & Sons, have been carrying on and building up a trade in the manufacture and sale of pianofortes, which has become I may say universally notorious-I am speaking only from my own knowledge. Brinsmead pianos are as well known, I suppose, to any one who knows anything, as any other article in trade which is well known to anybody. 1 WILLIAMS J. 1896 In re THOMAS EDWARD & SONS. Prior to October, 1894, they had in their employment (that is VAUGHAN the proper word to use for it, no matter what has been stated in the affidavits), a cousin, whose name was Thomas Edward Brinsmead, and who worked for them at the wage of 21. 16s. 6d. per week. I emphasize that because many statements in the affidavits on the Thomas Edward Brinsmead side speak to the BRINSMEAD great capacity he has for making pianos. At any rate, he was a workman for his uncle at 21. 16s. 6d. per week. Thomas Edward had a son named George, who was working for the uncle at 17. 12s. 6d. per week, and Sydney was working at 11. 10s. 4d. per week. That delineates accurately the position. of the three Brinsmeads when they parted company with the uncle in October, 1894. I know there is a conflict in the affidavits as to why they parted company with the uncle. It is sufficient to say that they no longer continued to work for him. What do we then find? We at once find Mr. Thomas Edward Brinsmead with his two boys, in conjunction with a man called Willcox, who was also a workman who had left the old firm, setting up business in the manufacture of pianofortes under the name of T. Brinsmead & Sons. Now, I ask myself whether that was honest business to start with. Why did they take the name of T. Brinsmead & Sons? It was not true. As to the elder Brinsmead, his name was Thomas Edward Brinsmead. The Sons' is true, but the firm which started making the pianos in a small pettifogging way at that time was not T. Brinsmead & Sons, but Thomas Edward Brinsmead, his two sons, and a man named Willcox. But for some reason or other—and, for myself, I have no difficulty in surmising the purpose this Brinsmead starts in rivalry with his uncle, or the old firm, under the name of T. Brinsmead & Sons. Well, I say he started in fraud. He took that name, I have not the slightest doubt in the world, for the purpose of filching from his uncle as much of the old trade as he could get by using that name, the name T. Brinsmead & Sons being as near to the old name, J. Brinsmead & Sons, as he could well go. I am not now going to pursue it, but the result of that was litigation by the uncle to restrain him. The uncle was successful. He got, first of all, an injunction from my brother Romer, VAUGHAN which has been read by my brother Lindley. That injunc WILLIAMS 1896 In re THOMAS EDWARD & SONS. J. tion, at any rate in part, was evaded. There was a motion to commit. There were proceedings upon that, and we have heard what was the result of those proceedings. Then, after those proceedings had been taken, Mr. Thomas Edward BrinsBRINSMEAD mead turns himself into a limited company with his sons, and that goes on for a little while. Then the company is voluntarily wound up, and at last (mind, I am only taking one year and nine months) Mr. Thomas Edward Brinsmead and the two sons (Willcox appears to have dropped out) blossom out into a company issued to the public by the prospectus and the picture which we have seen enclosed in the prospectus, and no less a sum than 76,000l. is sought to be obtained from the public. For what? Using the name of Thomas Edward Brinsmead & Sons, Limited. These are the facts occurring in this one year and nine months. What is the 76,0001. got from the public for? What is to induce the public to subscribe 76,000l.? To use the new firm's name? Were they to pay 76,000l. for the business of the father and the two sons and Mr. Willcox, whose business was being dealt with, or were they to pay 76,000l. for the slice they could get out of the old business of John Brinsmead & Sons? Well, the question has only to be put to be answered in one way. Now, then, John Brinsmead & Sons bring this action against the company, limited, this new company, the 76,000l. company, Thomas Edward Brinsmead & Sons, Limited, to restrain them from using the name on the ground that the name Thomas Edward Brinsmead & Sons, Limited, is likely to deceive the public (I am not talking of shareholders; I have nothing to do with. them; that will come out hereafter, I dare say) and is likely to induce the public to buy the new firm's pianos, thinking they are buying the pianos of the old firm of John Brinsmead & Sons." The Lord Justice then goes on, dealing with the question whether the use of the name Thomas Edward Brinsmead & Sons, Limited, is likely to deceive the public into thinking that they are really buying the old firm's pianos, and points out that, although there is no evidence of any customer being deceived, WILLIAMS 1896 In re THOMAS EDWARD & SONS. there is yet evidence that when the company was advertised VAUGHAN as Thomas Edward Brinsmead & Sons, Limited, people em- J. barked their money in a company which they saw advertised in the name of Thomas Edward Brinsmead & Sons, Limited, believing it was the old well-known company which had been known for years and years as John Brinsmead & Sons; and the BRINSMEAD Lord Justice says that there is cogent evidence that Thomas Edward Brinsmead, Thomas Edward Brinsmead & Sons, and Thomas Edward Brinsmead & Sons, Limited, have all been using this name with the intention of thereby getting as much of the old firm's trade into their own hands as they possibly could. The Lord Justice concludes by reading the injunction of North J., which I have set out, and saying that the order for the injunction was perfectly right. The only fact which I have to add is that it appeared upon the affidavits before me that the company was doing a considerable business, and, as I understand, has done that business since the granting of the injunction of North J., and, I suppose, consistently with it--at least there is no evidence before me to the contrary-and I thought it better when the petition was before me to order a meeting of the shareholders to ascertain what their views were. The view of the majority of the shareholders present at the meeting was that they would wish the business continued, and that the company should not be compulsorily wound up; but it is to be observed that a good many shareholders have brought actions to recover the sums paid by them for shares, on the ground that they were induced to take them by fraud, and more shareholders might be disposed to bring actions if no winding-up order is made; and shareholders thus placed might well hesitate to attend the meeting of shareholders and vote, lest they should prejudice their right of recovery. Moreover, those shareholders who could not bring actions by reason of the winding-up order having been made might well desire a winding-up order on the ground that proceedings immediately taken by the liquidator might lead to the recovery of some of the purchase-money paid to the vendors. Having regard to the history of this company, one's inclination |