J. registrar's certificate to be varied by omitting the whole of the KEKEWICH finding as to the amount of uncalled capital said to be due from the shareholders.] Solicitors: Pritchard, Englefield & Co., for J. Leigh, Manchester; Phelps, Sidgwick & Biddle. 1897 MADELEY V. Ross, SLEEMAN & Co. G. I. F. C. In re CONTINENTAL OXYGEN COMPANY. ELIAS v. CONTINENTAL OXYGEN COMPANY. [1896 C. 1045.] Company-Debenture - Floating Security — Foreclosure — Absent Debenture holder. In a debenture-holders' action, where the debentures constitute a charge on the property of a company by way of floating security, foreclosure cannot be ordered in the absence of any one debenture-holder. Sadler v. Worley, [1894] 2 Ch. 170, and Welch v. National Cycle Co., W. N. (1886) 97, Palmer's Company Precedents, 6th ed. Part I. p. 909, considered. FURTHER Consideration of a debenture-holders' action. The defendant company, which was incorporated in 1886 for the purposes of manufacturing and supplying oxygen in different countries in Europe, in May, 1891, borrowed a sum of 15,000l. by the issue of 150 mortgage debentures of 1007. each, by each of which the company charged by way of floating security the patents and all other real and personal property then or at any time thereafter belonging to the company. The plaintiff was the holder of 125 of the debentures for securing 12,5007. in the aggregate. Default having been made in payment of both principal and interest due under the debentures, this action was brought against the company in March, 1896, by the plaintiff, on behalf of himself and all other holders of debentures issued by the company, claiming that the debentures might be enforced by foreclosure or sale. In May, 1896, judgment in default of defence by the defendant company was pronounced, directing the usual inquiries, KEKEWICH 1897 Feb. 4, 18. J. KEKEWICH including inquiries as to the number and the holders of the debentures, and as to what property was included in the debentures. 1897 In re CONTINENTAL OXYGEN COMPANY. ELIAS v. On November 30, 1896, the chief clerk made his certificate, finding that all the debentures were held by six persons, of whom the plaintiff was one, and that debentures to the amount of 2001. were held by Madame la Baronne Jorant, another of OXYGEN such persons, a French subject residing in Paris. The chief clerk also found that the property comprised in the debentures consisted of various oxygen patents, and of shares in other oxygen companies. CONTINENTAL COMPANY. Notice of the judgment was sent to Madame Jorant at her registered address, together with a letter by the plaintiff's solicitor. offering to act for her without charge; but no reply had been received, and she had not attended the proceedings. On February 4, 1897, the action came on to be heard on further consideration, all the debenture-holders except Madame Jorant being represented by the plaintiff's solicitors. There was evidence that the patents belonging to the company were valueless, and that there was no market for any of the shares held by them. P. F. Wheeler, for the plaintiff and the other debentureholders except Madame Jorant. The property comprised in the debentures being worthless, and a sale being therefore futile, the Court is now asked to make an order for foreclosure as in Sadler v. Worley. (1) [KEKEWICH J. In that case I was careful to point out that my decision did not apply to such a case as the present one. What form of order do you ask for?] I ask for an order such as was made in Welch v. National Cycle Co. (2), and set out in Palmer's Company Precedents, 6th ed. Part. I. pp. 908, 909. In Oldrey v. Union Works Co. (3) a foreclosure was ordered in a debenture-holders' action where the security comprised patents and choses in action. [KEKEWICH J. I do not see how I can make a foreclosure (1) [1894] 2 Ch. 170. order in favour of the absent debenture-holder. She may not KEKEWICH care to become the owner of an undivided share in this property which is said to be worthless.] J. 1897 In re OXYGEN COMPANY. She is only entitled to 2001. out of 15,000l., that is to say, CONTINENTAL one seventy-fifth of the whole. In Luke v. South Kensington Hotel Co. (1) it was decided that one of several mortgagees can maintain an action for foreclosure, making the other mortgagees defendants if they are unwilling to be joined as plaintiffs. KEKEWICH J. said that he would take time to consider the case, and intimated that he should be glad to be referred to any other authorities dealing with the question. [A note referring to authorities on the subject was subsequently submitted to his Lordship, and the following cases (in addition to those mentioned in the judgment) were cited: Montgomerie v. Marquis of Bath (2); Cockburn v. Thompson (3) ; Fairfield Shipbuilding and Engineering Co. v. London and East Coast Express Steamship Co. (4)] Feb. 18. KEKEWICH J. On further consideration of a debenture-holders' action, I am asked to make an order of foreclosure. The property comprised in the debentures, and to which the order of foreclosure would apply, is set out in the 2nd schedule to the chief clerk's certificate, and consists of certain foreign patents and certain shares all stated to be fully paid in joint stock companies. The first question is whether an order of foreclosure can properly be made with reference to such property, bearing in mind that it is only charged by the debentures, and has never been in any way vested in the debenture-holders, or in any persons in trust for them. Although property of this particular kind did not exist, so far as I remember, in Sadler v. Worley (5), I embraced it in my consideration of that case, and the language of my judgment was intended to extend to it. I have been unable to ascertain how (1) (1879) 11 Ch. D. 121. (2) (1797) 3 Ves. 560. (3) (1809) 16 Ves. 324, note (43). ELIAS V. CONTINENTAL OXYGEN COMPANY. (5) [1894] 2 Ch. 170. J. 1897 In re KEKEWICH far the conclusions at which I arrived on that point in Sadler v. Worley (1) have been criticised or approved by other judges or by the profession. Under these circumstances I am not CONTINENTAL disposed to reconsider my conclusions, and if this were the only OXYGEN point for decision I should hold the plaintiff entitled to the relief asked. The foreclosure would in that event have to be worked by proper directions for vesting the charged property in the debenture-holders free from redemption. COMPANY. ELIAS v. CONTINENTAL But there is a greater difficulty in the plaintiff's way, which also was before me in Sadler v. Worley. (1) It is noticed in the opening sentence of my judgment, and being then immaterial was dismissed in a few words, but it was nevertheless then much considered. I have considered it again with special reference to the circumstances of this case, and it now calls for further treatment. I shall not endeavour to decide what may hereafter happen in other cases, where the facts are not substantially the same as they are here. It will suffice to deal with the actual case in hand. The plaintiff is not the owner of all the debentures. There are five others whose names with their respective holdings are set out in the 1st schedule to the chief clerk's certificate. Four of them combine with the plaintiff, whose counsel was instructed to appear for them on the hearing on further consideration; but the fifth, Madame la Baronne Jorant, who holds debentures for 2007., is not a party to the action. According to the established practice in chambers, notice of the judgment was sent to her in Paris through the post; but this of course did not make her a party, and she has never appeared. This has neatly raised the question whether I can properly make an order of foreclosure in favour of her as well as the other debenture-holders in her absence. When considering whether a particular order can be made or not—in other words, whether there is jurisdiction to hear and grant any particular application-it is useful to reduce the proposed order into form, and to test the question by the language of that form. I therefore inquired of counsel what precise order he asked, and his reply was that he asked such an order as was made by Chitty J. in Welch v. National Cycle Co. (2), which is (1) [1894] 2 Ch. 170. (2) W. N. (1886) 97. J. 1897 In re CONTINENTAL COMPANY. ELIAS v. CONTINENTAL set out in the last edition of Mr. Palmer's volume of Company KEKEWICH Precedents, page 909. In that case the debenture-holders consisted of the plaintiff and two defendants, and the order provided for redemption on payment to the three, and for conveyance in default to them. I omit all reference to a third class debenture-holder as not touching the present question. On principle it seems right that an order of foreclosure in the primitive sense that is, an order which merely discharges the equity of redemption remaining in a mortgagor who has conveyed the legal estate to the mortgagee-should be made on the application of one of two mortgagees as against the other, because this release of the equity of redemption really adds nothing to the mortgagee's original estate, and is the inevitable result of the mortgage contract; but it does not follow that an order of foreclosure ought to be made as against one of two mortgagees where it has to provide for the conveyance to him of property which it is possible he has no wish or intention to take as his own, although he accepted a charge on it. This point is not touched by the order to which I have just referred, for though it declares a charge, and directs a conveyance operating as foreclosure, the debenture-holders other than the plaintiff were not only parties as defendants, but consented to the order, so that it was made with the concurrence of all. There still therefore remains open the question whether such an order can be made where the consent of one of the debentureholders has not been obtained. Mr. Wheeler has been good enough to furnish me with a list of authorities bearing on this point which his industry has discovered, including Drage v. Hartopp (1), Davenport v. James (2), Lowe v. Morgan (3), and Palmer v. Earl of Carlisle. (4) None of these cases can be cited as an authority for the proposition that foreclosure can be granted in the absence of one of two or more mortgagees. The only suggestion to the contrary is to be found in Drage v. Hartopp (1); but it illustrates the maxim that the exception. proves the rule. There the mortgage was vested in two executors, one of whom had absconded and could not be made (1) (1885) 28 Ch. D. 414. (3) (1784) 1 Bro. C. C. 368. |