An allottee

a contribu

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 the directors subsequently to repudiate the transaction, on the ground of the non-compliance with the formalities required by the deed of settlement. Ib. A. B. became the owner of shares in a joint stock company by transfer from former holders, and treated himself and was treated by the directors as a shareholder. All the formal ties of the deed of settlement were not however observed in the transaction: it was held, nevertheless, that every matter of substance having been complied with, the executors of A. B. were properly placed on the list of contributories in respect of the shares, on the winding-up of the company. Ib.

Contributories, so far at least as regards allottees of shares and provisional committee-men, are those only who have contracted by themselves or agents with a creditor, or who have agreed to indemnify or repay, in part or in all, those who have contracted with the creditor on their own account. All the questions of contributories resolve themselves into two questions of fact: first, by far the most frequent occurrence, did the alleged contributory make, or authorize to be made, the contract in respect of which he is called on to contribute, on his account, jointly with others? or, secondly, if any one or more entered into the contract, did he agree to indemnify the person or persons contracting in part or in all against the consequences of that contract? Per Parke, B., Bright v. Hutton, 3 H. L. C. 369.

No one is liable to be put on the list of contributories of shares not under the Winding-up Acts merely by reason of his having agreed to take, or, which is the same thing, having become an allottee of shares, whether he has or has not paid a deposit. Carrick's Case, 1 Sim. N. S. 510.

tory.

A. wrote a letter of application for shares in a railway company which was provisionally registered, and received an answer in the usual form, declaring that certain shares had been allotted to him, on which he was required to pay a deposit. A. paid the required deposit, but neither signed the subscribers' agreement nor the parliamentary contract. The scheme having been abandoned: it was held, that A. did not, by his letter of application for shares and by paying the deposits thereon, become a "member" of the company, or a "contributory" within the meaning of the Joint Stock Companies Winding-up Acts, 1848 and 1849. He merely bound himself to take such shares as he had applied for, should the company ever be in fact established. It was held therefore that his name had been rightly ordered to be expunged from the list of contributories. Hutton v. Thompson, 3 H. L. C. 161. A. applied by letter to the committee of a provisionally

registered railway company for fifty shares in the undertaking, and thereby undertook to accept them or any less number that might be allotted to him, and to pay the deposits thereon, and to sign the parliamentary contract and subscribers' agreement when required. The committee allotted him thirty shares, but he did not pay the deposits thereon or do any other act in pursuance of his undertaking. The project proved abortive, and the affairs of the company were ordered to be wound up: it was held, that A. was not liable as a contributory even to the extent of the deposits. Ex parte Capper, 1 Sim. Ñ. S. 178; 15 Jur. 145; 20 Ľ. J. Ch. 148.

An allottee of shares in a company, where the number of subscribers to the scheme proved insufficient to raise the necessary capital and which turned out to be impracticable, is not a contributory. Ex parte Maudslay, 6 Railw. C. 350.

An allottee, who in an action at law has recovered back his deposit, is not liable as a contributory in respect of the shares the subject of such action. Walstab's Case, L. J. 1851, Ch 58. A., an allottee of shares in a projected railway company which failed to obtain an act, paid his deposit but never executed any deed. Accompanying the letter of allotment was a circular from the directors, undertaking to return the deposits if an act should not be obtained. Afterwards A., at the request of the directors, asking for the continuance of the confidence of the shareholders, wrote to the board requesting them to continue the undertaking. On the breaking up of the company the directors returned the balance of the deposits remaining in their hands, and paid to A. on that account 2001. A. recovered in an action against one of the managing directors the remaining 2007.: it was held, that A. was not a contributory. Ex parte Beardshaw, 1 Drew. 226; 16 Jur. 1108.

Where a number of shares are offered to parties and they accept only part of them, and sign the subscription deed and parliamentary contract in respect of such limited number, their liability will extend only to the shares in respect of which they have so signed. A. B. and C. D. were members of the managing committee of a provisionally registered railway company, and as such had allotted to them and accepted 100 shares in the company. At a meeting of the managing committee an instruction was given for the allotment of shares according to a scheme by which 500 shares were reserved to each member of the managing committee. A report was made by the secretary of the company at a subsequent meeting, at which A. B. and C. D. were both present, that shares had been allotted according to the scheme, but no further evidence appeared of allotment of shares to, or acceptance of shares by, the members of the committee. A. B. and C. D. subsequently executed the parliamentary contracts in respect of 100 shares only: it was held, on the winding-up

G

Who are liable as contributories generally.

of the company, that the liability of A. B. and C. D. as contributories was limited to the 100 shares, and was not affected by the proposed reservation of the 500 shares. Sharp and James's Case, 1 De G., M. & G. 565; 16 Jur. 579; 21 L. J., Ch. 767.

It was decided not to be sufficient ground for excluding an allottee from the list of contributories to a provisonally registered railway company, that the prospectus of the company contained incorrect and fraudulent statements, in reliance on which he applied for shares; or that the project was never carried into effect, unless it appear that the only other persons interested in the company were the parties who made the fraudulent statements. Ex parte Parbury, 2 De G. & S. 43; 13 Jur. 725; see Ex parte Sharpus, 3 De G. & S. 49; 13 Jur. 723; Morgan's Case, 1 De G. & S. 774; I Hall & T. 320; see Brockwell's Case, 4 Drew. 214; Nichol's Case, 5 Jur. N. S. 207.

The proper test to apply in considering whether a party should be retained on the list of contributories is not, whether he would be liable to the creditors of the bank if sued by them, but whether, having regard to the rights of the shareholders inter se, he ought to be on the list. A party may be liable at law to the creditors of the company, and yet should not be placed on the list of contributories; and, vice versâ, a party may not be liable at law to the creditors of the company, and yet ought to be placed on the list. Although a director is not the agent of the shareholders to commit a fraud, if the shareholders adopt and seek to enforce a contract entered into by him as their authorized agent, they cannot repudiate a fraud committed by him which led to the contract and was immediately connected with it; Ex parte Ginger, Re Tipperary Joint Stock Bank, 5 Ir. Eq. R., N. S. 174.

In 1835 a company was formed for working mines in South America. There was no deed of settlement, and the shares were transferable by delivery. On the 24th November, 1857, an order was made to wind-up the company. On the 18th A. purchased eighty shares in the company, and on the 23rd he purchased 325 other shares. The certificates for 300 of these shares were handed to A. before the date of the order for winding-up the company, and the certificates for the remaining 105 shares were handed to A. afterwards: it was held, that as A. was, at the date of the winding-up order, legal and equitable owner of 300, and equitable owner of the remaining 105 shares, his legal title to which shares was afterwards completed, he was liable as a contributory in respect of the whole 405 shares. Re Mexican and South American Company, Ex parte Grisewood, 5 Jur. N. S. 1191; 28 L. J., Ch. 769; 7 W. R. 681.

A purchaser of shares in such a company must, in the absence of express contract to the contrary, be taken to have

bought them subject to the debts of the company existing at the date of the purchase. Ib.

Where shares in a scrip company passed by mere delivery: Principals it was held, that London bankers who had in their hands at and agents. the date of the winding-up order shares belonging to foreign correspondents, on which they had received the dividends, were not contributories. Ex parte Finlay, Re Mexican and South American Mining Company, 26 Beav. 182; 4 Jur. N. S. 1030; 27 L. J., Ch. 664.

The single circumstance that a party attended the board meetings of the directors of a company, and seconded a resolution as to the qualification of directors, is insufficient to constitute him a shareholder. In order to fix him as a contributory, it must be shown that he has accepted shares or done something equivalent to an acceptance. Re Little Down and Ebber Rocks Mineral and Mining Company, 3 L. T., N. S. 483, Holroyd, Com.

Where it was stated in an agreement made between a company and C., that in consideration of 3,100% advanced by C. to the company as the amount of monies unpaid upon 3,100 shares, and exclusively held by C., beyond the sums actually called for in respect of such shares, the company undertook to pay interest at eight per cent. upon the amount, with a proviso that such interest should cease upon so much of the sum as should from time to time become payable in respect of calls, from the time of such calls becoming payable; and that in case the company was dissolved or wound-up, so much of the 3,1001. as should not have been called up should be a debt due from the company and repaid to C. or his assigns of the shares it was held, that there was sufficient prima facie evidence to show an acceptance of shares by C. to fix him as a contributory. Ib.

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A party who has bought shares on the Stock Exchange, received dividends and paid calls, is precluded on the winding-up of the company from raising a question as to the illegality of the issue of shares. Re Mexican and South American Company, Ex parte Barclay, 4 Jur. N. S. 1042; 27 L. J., Ch. 660.

Individual members of an insurance company (registered under the 7 & 8 Vict. c. 110), which by its policies has provided that the capital stock and other the property of the company remaining at the time of any claim undisposed of and inapplicable to prior claims, shall alone be liable to make good all claims thereunder, and that no shareholder shall be individually liable to any such claim beyond the amount unpaid of his shares in the capital stock, are not liable under the Winding-up Acts to calls in respect of the amount for which judgment has been recovered upon any policy, beyond the amount unpaid of their shares, notwithstanding the company had assets when the claim was made under the policy.

Calls on appeal.

Extent of liability of contributories.

Degrees of liability amongst contributories.

Re Athenæum Society and Prince of Wales Life Assurance Society, 1 Johns. 80; 5 Jur. N. S. 383; affirmed on appeal, 5 Jur. N. S. 558; 28 L. J., Ch. 335, L. J.

It seems that an order for a call made in chambers is, for the purpose of appeal to the court, under the 11 & 12 Vict. c. 45, s. 99, to be treated as an order of the master. Ex parte Longworth's Executors, 1 Johns. 461; 29 L. J., Ch. 55; 7 W. R. 628.

A person who buys shares in a trading company is to be taken to have bought them subject to their existing liabilities, and on the winding-up of the company is liable to contribute as well towards debts incurred before as those incurred after the purchase. Grisewood and Smith's Cases, 4 De G. & J. 544.

Two persons bought shares in a company whose shares passed by delivery of the certificates. Some of the certificates were not delivered until after an order for winding-up the company had been made: it was held that such persons were contributories in respect of these shares as well as in respect of those the certificates of which had been delivered before the winding-up order. Ib.

When the list of contributories has been settled distribution is to be made of the proportions in which the contributories are liable amongst themselves. If a company has incurred great loss and expense by improper management or by the directors assuming powers which they never possessed, such members as have not sanctioned those proceedings are not liable to the losses occasioned by the directors, and the contribution is to be settled according to the degrees of liability properly ascertained. Ex parte Earl of Mansfield, 1 Hall & T. 596; 2 M. & G. 67. The liability of a trustee as a contributory will not be limited to the extent of the trust estate. A transferee of shares having taken upon himself the character of owner cannot rely upon any irregularities in the transfer to escape liability, whether the shares belong to him beneficially or as a trustee; Re the Phoenix Life Assurance Company, Hoare's Case, 31 L. J., Ch. 504.

An order under a petition to wind-up a company made by arrangement between the official liquidators and the petitioners does not bind the other contributories. Re Anglo Californian Gold Mining Company, 10 W. R. 127, V.-C. K. Contributories of a company, although no parties to a windingup order, in the sense that they are neither petitioners nor respondents, are parties in the sense that they are bound by it. Ib.

The prospectus of a cost-book mining company stated the proposed capital at 30,000l. Upon application shares were allotted to a party, and the certificate mentioned rules and regulations under which the shares were to be held. One of the rules was that the company should be associated when