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by a resolution seconded by this director, his shares were declared to be forfeited, and shares bearing the same numbers were issued to other persons: it was held, that the director was still liable as a contributory in respect of those shares. At a meeting of directors a sum of money was voted to this director for introducing a new manager, and in consideration of an equal sum this director was declared free from all liability as to the forfeited shares; it was held, that he was still liable as a contributory in respect of those shares. Re London and County Insurance Company, 4 Jur. N. S. 448, Ch.
A deed of settlement of a company provided, that if a shareholder should fail to pay a call for two months, the secretary shall send him a notice requiring payment within twenty-one days, and if the sum should not be paid within that time, the directors might declare the shares to be forfeited. A. and others having failed to pay for more than two months, the directors passed a resolution that notices should be sent to them requiring immediate payment, and that unless the calls were paid within twenty-one days, the shares should be immediately forfeited. A notice was accordingly sent to A., that if he did not pay his calls within twentyone days his shares should be immediately forfeited. He did not pay. The company went on for three years, during which he was not treated as a shareholder, and did not claim to be one, though his name remained on the register. The company being wound-up: it was held, that the declaration of forfeiture, though not strictly regular, complied substantially with the requisitions of the deed of settlement, and that A. was not a contributory. Re Home Counties and General Life &c. Assurance Company, Wollaston's Case, 4 De G. & J. 437.
One of the directors and promoters of a company took 500 shares, in order to enable the company to be registered; calls were made on those shares, and at a meeting of the directors by a resolution seconded by a director, his shares were declared to be forfeited, and shares bearing the same numbers were issued to other persons: it was held, that the director remained liable as contributory in respect of such shares. At a meeting of directors a sum of money was voted to that director for introducing a new manager, and in consideration of an equal sum the director was declared free from all liability as to the forfeited shares, but notwithstanding he was held to be liable as a contributory. Re London and County Insurance Company, Jones's Case, 4 Jur. N. S. 448; 27 L. J., Ch. 666.
Certain shares were, as fully paid-up shares, issued and allotted to the vendor of the works and premises wherein the company was to carry on its business. The vendor accepted and treated the shares as paid up, and subsequently transferred to each of the appellants in the suit, who were di
rectors of the company, 100 of such shares. It was decided, that as the shares had been allotted to a stranger as paid-up shares, they could not be considered as otherwise by the court, and neither the stranger nor his alienees would be liable as contributories in respect of them. If the shares had
been originally issued fraudulently, it would have been competent to the court to have set aside the transaction, as it cannot alter the terms of the agreement, nor treat as shares not paid up shares which had been expressly issued as such. It was also decided, that the directors could not be made contributories with respect to shares declared to be paid up taken by them in lieu of attendance fees. Ex parte Currie, Re Great Northern and Midland Coal Company (Limited), 7 L. T., N. S. 486.
Shareholders in a joint stock company who have subscribed the memorandum of association and assumed to act as directors throughout, no other directors having been chosen by the company, by holding themselves out to the world as directors, paying themselves their attendance fees out of the company's funds, &c., and who have also signed the articles of association, whereby the qualification of a director is fixed at 100 shares, but who had not taken or accepted such shares as such qualification, cannot be regarded as contributories as the holders by implication of 100 shares necessary to constitute a qualification. Holders of free or paid-up" shares must be placed upon the list of contributories in respect of those shares, without reference to the question whether or not they will ever be subject to a call. Directors allotting fees to themselves for attendance as directors, and employing such fees in the purchase of "paid-up" shares in the company, there being no power in the articles to that effcect, are contributories in respect of those shares. Ex parte the Official Liquidator, Re the Great Northern and Midland Coal Company (Limited), 6 L. T., N. S. 662.
The proprietors of an intended company issued a prospectus headed "The Amazon Life Assurance and Loan Company and Sick Benefit Society," and stating that the intention of the projectors was, to form a loan and assurance company with a branch sick benefit society. The company was registered as "The Amazon Life Assurance and Loan Company." After this registration, an application headed in the same way as the prospectus was made for shares, and an answer was returned headed with the registered title, and stating that shares in the company so registered had been allotted to the applicant. The applicant paid the deposits on the shares and received certificates headed with the registered title, but did not acknowledge the receipt of them or interfere any further. On the company being wound-up, it was held, that the allottee was not entitled to have his name removed from the list of contributories on the ground that he had applied for
shares in a different company, or on the ground that he had been informed that he would only incur a limited liability. Re Amazon Life Assurance and Loan Company, Blackburn's Case, 8 De G., M. & G. 177; see ante, p. 128.
The deed of settlement of a joint stock company provided for the division of the persons concerned in it into three classes: (1). Those interested in the mutual investment or depositors' fund; (2). Those interested in the mutual assurance fund; (3). Those interested in the general fund. The deed also provided, that the depositors or holders of the investment stock (1), were to have such interest not exceeding 51. per cent., as should be determined by the directors of the association; and it gave the depositors any surplus profits on that stock. The depositors or holders of that mutual investment stock (1) paid their money over the counter of the company, and received in return certificates of acknowledgment referring to the deed of settlement, and stating, that the interest was payable half-yearly on the deposits so made. The prospectuses of the association and an almanac issued by the directors also referred to the rate of interest payable to the depositors, and spoke of the profits to be realized by them on their deposits. On appeal, the Lords Justices held, reversing the order of the Master of the Rolls, that the prospectuses contained nothing to show that the "investment" contemplated was anything more than an ordinary deposit with the bank, and could not give the depositors any claim to a share of the profits, and that their names must be removed from the list of contributories; and further, that the fact that the prospectus mentioned the special act of parliament of the company, which act referred to the deed of settlement, was not notice of the contents of the deed. Also, that consent to become a director was not a consent to accept the necessary qualification for that office under the deed; that a person who had no actual notice of the deed could not, under any circumstances, be taken to have had constructive notice thereof; and that consent to become a director did not impose the obligation of accepting any stock; and generally, that the mere fact of filling the office of a director did not make such director a contributory. Re National Assurance and Investment Association (The Bank of Deposit), Ex parte Davis and Ex parte the Marquis of Abercorn, 31 L. J., Ch. 828.
If directors of a company, by a resolution duly entered in a minute book, agree to pay themselves certain fees for attendance, and to accept shares of the company as paid-up shares in lieu of cash, as they are considered paid-up shares, no call can be enforced in respect of such shares in the event of the company being wound-up, notwithstanding that the articles of association are silent on both points, and no general meeting of the company have assented thereto. Ex parte Carne, Re Great Northern and Midland Coal Company
(Limited), 1 N. R. 71, L. J.; Maxwell v. Port Tenant Patent Steam Fuel and Coal Company, 24 Beav. 495.
In the deed of settlement of a company being wound-up it was provided that no person should be or continue to be a director, unless he was the holder of a certain amount of stock. The general board of management was at the chief office in London, and at the branch offices in different towns in the kingdom there were local agents or deputies, with limited powers, who were called provincial directors: it was held, that the clause requiring the qualification did not apply to these. One of such provincial directors at Bath, who had never been the holder of any stock whatever, was held not to be liable to be placed on the list of contributories. On an appeal by the official manager, seeking to place on the list of contributories the name of an illegal contributory, the creditors' personal representative is not as of right entitled to be heard. Ex parte Cottrell, Re National Assurance and Investment Association (The Bank of Deposit), 7 L. T., N. S. 341.
When an order has been made under the Joint Stock Com- Compromise. panies Amendment Act, 1858, for the compulsory winding-up of a company, the court, notwithstanding the discretionary power which it has, will not sanction a compromise between certain of the contributories, unless upon sufficient evidence being furnished as to the basis on which the compromise is to be supported. Re the Northumberland and Durham District Banking Company, 6 Jur. N. S. 849; see sect. 160, post.
A person who had been a provisional committee-man in a company, which was an inchoate railway company, had in that capacity attended one meeting and no more, and in the then state of the decisions as to the liability of provisional committee-men as between them and the other shareholders, it was understood to be the law that no liability attached upon a contributory existed, unless the party was legally liable to some creditor of the company. And it had been accordingly letermined by the master in 1852, that the committee-man was only liable as contributory in respect of the acts of the committee on the day on which he attended it, and he was placed on the list of contributories as a contributory limited to that day. But it appeared by the notes of the master's judgment, that he had expressly reserved liberty to the official manager to open the question further if he should see grounds for claiming to extend the liability. From that time nothing had been done in respect of C.'s liability. In the meantime other persons as liable as the first who had not been put upon the list as general contributories were, it was alleged, freed at law under the Statute of Limitations from any legal liability they might have incurred to creditors. In this state of things an application had been made to the master on the authority of Spottiswoode's Case in particular, and on the tender of further evidence, for leave to review the decision of 1852 upon
Enforcing order for
calls upon contributories.
Proof of debts.
recent and upon such further evidence. It appeared that the evidence had not been looked at by the master, but he decided upon the citation and argument of the cases and the allegation of further evidence, that there was enough to justify an order to review. On appeal the court confirmed this decision. Ex parte Viscount Curzon, 3 Drew. 598.
The court refused to make an order under sect. 66 of the 11 & 12 Vict. c. 45, enforcing payment against the contributories of a company in course of winding-up of a debt found due to a creditor, there being no assets sufficient to pay it in the hands of the official manager, upon the ground that a call was the only medium through which the court ordered debts so found due to be paid. Re Cameron Coalbrook Steam Coal and Swansea and Lougher Railway Company, 9 W. R. 684—R.
An order ex parte was made under 21 & 22 Vict. c. 60, ss. 12, 13, for the inrolment of an order of the Court of Session in Scotland, directing payment by contributories of a sum of money, or in default, attachment. Re Western Bank of Scotland, 1 De G., F. & J. 1.
A contributory to the liabilities of a company in course of being wound-up was ascertained by the official assignee to be the owner of shares standing in her name in the books of another company: it was ordered that such shares should stand charged with the amount due from her in respect of a call made upon her as such contributory, but without prejudice to a claim of lien upon such shares in respect of a debt claimed by the company in whose books the shares were standing from the company in course of being wound-up. Re Connell, 25 L. J., Chanc. 649.
After a winding-up order has been lodged in the judge's chambers the chief clerk will, within ten days afterwards, insert in the London Gazette an advertisement requiring the creditors to come in before him and to prove their debts and demands, or be precluded from the benefit of any distribution which may be made before new debts are proved; see 11 & 12 Vict. c. 45, s. 72; 19 & 20 Vict. c. 47, s. 84.
Debts are proved by creditors before the chief clerk by affidavit or declaration in the same manner as in bankruptcy, but power is given to the judge to allow or direct debts to be proved by the official liquidator, which power is exercised with the view of saving expense, 11 & 12 Vict. c. 45, s. 74. It is declared by the act 11 & 12 Vict. c. 45, s. 3, that the word "creditor" shall for the purposes of that act include every person having any debt or demand enforceable against the company in any court of law or equity, or for non-payment or non-satisfaction of which damages could be recovered." Provision must therefore be made for equitable debts; Terrell v. Hutton, 4 H. L. C. 1091; and trustees of the company having claims against it are entitled to be paid like other creditors. Croxton's Case, 5 De G. & S. 432.