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The plaintiffs then moved to stay the proceedings in the suit until the company should have been wound up under the order for that purpose. The court refused the motion, because the bill sought relief which could not be obtained under the winding-up order and on account of the delay which had occurred in applying to stay the proceedings in the suit. Deeks v. Stanhope, 20 L. J., Ch. 485; see Parbury v. Chadwick, Jones v. Lord Charlemont, 16 Sim. 271.

If the tests which are directed by the acts to be applied to try the solvency of a company, strictly and literally apply to a particular company, but the presumption arising therefrom is rebutted by the evidence offered in opposition to the petition, so that there is no reason to believe that the company is insolvent, the court will refuse to interfere. A dispute having arisen between a mining company and one of the shareholders respecting his liability to pay calls, the company procured one of their creditors to bring an action against him. He served notice of the action on the company, but they took no steps to stay the action or to indemnify the shareholders. There were no circumstances to satisfy the court that the company was not in a solvent condition: it was held, that, although the case came within the letter of the 5th article of the 5th section of the act 11 & 12 Vict. c. 45, yet as the action arose out of the dispute between the shareholder and the company and not from their inability to pay, he was not entitled, under the circumstances, to an order for winding up the concern. the Wheal Lovell Mining Company, Ex parte Wyld, 1 H. & Tw. 125; 1 Mac. & G. 1.

Re

A company, established in 1858, had carried on its business at a loss in every year, amounting in the whole to 6,5071. There were irregularities in the management; the directors had not paid for shares subscribed for by them, interest had been paid out of capital, and the balance at the bankers had been reduced to 300l. On the other hand, the calls on the shares had hitherto been one-fifth only: it was held, that there was no case for winding it up. Re National Live Stock Company, 26 Beav. 153.

One object of the Winding-up Act, 1848, and of the former act, 7 & 8 Vict. c. 111, was to afford some test by which it should be ascertained whether the company did or did not fall within the description of a company unable to meet their pecuniary engagements, in short a sort of act of bankruptcy of the company. The former act, 7 & 8 Vict. c. 111, dealt with it as an act of bankruptcy, called it an act of bankruptcy and provided certain tests. The same identical tests that are applied to traders as evidence of their insolvency are applied as tests to the companies: and in the event of the test being applied and the company not being able to remove that test, the act considers that as an act of bankruptcy in effect, and therefore subjects the company to the operation of the pro

But all those tests are

visions for winding up the concern.
simply for the purpose of coming to a safer conclusion as to
whether they do or do not fall within the description of com-
panies whose affairs require winding-up, and as to which,
therefore, the policy of the act was intended to apply. Now
among others, the test is proposed, of a creditor of the com-
pany having a judgment against the company demanding
payment against the company and the company not paying it
after a certain length of time (11 & 12 Vict. c. 45, s. 3), giving
the company the opportunity of paying the judgment debt if
they please, but if they do not pay that debt so ascertained to
be a lawful debt by the judgment, it is assumed they cannot.
That is assumed as a very fair test under the circumstances
to which the act was intended to apply. But following that,
another provision is necessarily and properly introduced. If
a creditor thinks proper to sue an individual shareholder and
recover a judgment, or shall be in the course of recovering
his judgment against that individual shareholder, the share-
holder being so called upon to pay, or liable to pay more than
he ought to pay, is then authorized to apply to the company
to relieve him from this liability; and if the company do not
within a certain time relieve him from the liability, that is
also considered as a test of the condition of the company and
of its being in a condition to require the winding up of their
affairs (11 & 12 Vict. c. 45 s. 5), namely, that they are not in a
position to meet their pecuniary engagements.

If however these circumstances occur where the tests do not at all prove the point under investigation, if these facts occur, but afford no proof of the insolvency of the company or their being unable to meet their pecuniary engagements, why the act loses the test which was intended to be applied; and then the question is, whether the court exercising a discretion, for so ample a discretion is given to the court when all these facts occur, would be right in exercising its discretion and putting the act in operation upon such a test, the circumstances not coming up to that which is required to be proved before the company ought to be subjected to the operation of the act. Re Wheal Lovell Mining Company, Ex parte Wylde, 1 H. & Tw. 136, 137; 1 Mac. & G. 22; see sect. 79, post, n.

Shareholders in a company who have either sold or forfeited their shares may apply for a winding-up order against the company when it has ceased to carry on business, and is winding up its affairs privately, if they claim to be contributories and have been sued and made liable as such. Re the Times Fire Assurance Company, 31 L. J., Ch. 478.

(b) See 19 & 20 Vict. c. 47, s. 65; 20 & 21 Vict. c. 78,

s. 15.

(c) The word "contributory" was a new term in legal Definition of phraseology, and adopted in the first instance in the joint stock contributory.

Liability of present share

holders in respect of debts.

Liability of former share

holders in a company

limited

winding-up acts. The attempt to give that word a precise and definite meaning has been hitherto unsuccessful, as will appear by the numerous decisions which have occurred upon the question as to who is or who is not to be deemed a contributory.

The definition of contributory in the winding-up acts, 1848, 1849, 11 & 12 Vict. c. 45, s. 3, and 12 & 13 Vict. c. 108, s. 9, was: I. Every member of a company; II. Every other person liable to contribute to the payment of any of the debts, losses or liabilities thereof. 1. As heir, devisee, executor or administrator of a deceased member. 2. As a former member. 3. As heir, &c. of a former member deceased. 4. Otherwise howsoever. By 20 & 21 Vict. c. 78, s. 15, it was declared, that the words, shareholder, member, contributory and alleged contributory, should be nominally taken to include all contributories or alleged contributories within the meaning of the Joint Stock Companies Winding-up Acts, 1848, 1849, and also all persons who might apprehend or desire to be discharged from responsibility in respect of the debts, liabilities and obligations of the company. As to contributories under Joint Stock Companies Acts, 1848, 1849, 1856, 1857, see sect. 99, post, n.

The provisions of 19 & 20 Vict. c. 47, relating to the winding-up of companies, shall apply to all companies registered under that act, and to all companies registered under the act 7 & 8 Vict. c. 110, from and after the date at which they have obtained registration under the act 19 & 20 Vict. c. 47, in manner thereinafter mentioned, but not any other companies.

In the event of any company being wound up by the court or voluntarily, the existing shareholders shall be liable to contribute to the assets of the company to an amount sufficient to pay the debts of the company, and the costs, charges and expenses of winding-up the same, with this qualification, that if the company is limited no contribution shall be required from any shareholder exceeding the amount, if any, unpaid on the shares held by him. 19 & 20 Vict. c. 47, s. 61.

In the event of any company other than a limited company being wound up by the court or voluntarily, any person who has ceased to be a shareholder within the period of three years prior to the commencement of the winding-up shall be other than a deemed, for the purposes of contribution towards payment of the debts of the company, and the costs, charges and expenses of winding-up the same, to be an existing shareholder, and shall have in all respects the same rights, and be subject to the same liabilities to creditors, as if had not so ceased to be a shareholder, with this exception, that he shall not be liable in respect of any debt of the company contracted after the time at which he ceased to be a shareholder. Ib. s. 62.

company

with respect to debts.

Liability of former share

holders in a

In the event of any limited company being wound up by the court or voluntarily, any person who has ceased to be a holder of any share or shares within the period of one year

to debts.

prior to the commencement of the winding-up shall be deemed, limited for the purposes of contribution towards payment of the debts company of the company, and the costs, charges and expenses of wind- with respect ing-up the same, to be an existing holder of such share or shares, and shall have in all respects the same rights, and be subject to the same liabilities to creditors, as if he had not so ceased to be a shareholder. Ib. s. 63.

of company

The winding-up shall, if the company is wound up by the Commencecourt, be deemed to commence at the time of the presentation ment of of such petition as thereinafter required to be presented to winding-up the court, and if the company is wound up voluntarily, be defined. deemed to commence at the time of the passing the resolution authorizing such winding-up. Ib. s. 64.

"contribu

Any existing or former shareholder upon whom calls are Definition of authorized to be made by the third part of that act is thereinafter called a "contributory," and the representatives of any legal chatory," and deceased contributory shall be liable in a due course of ad- racter of his ministration to the same extent as such contributory would be liability. liable under the third part of that act, if alive. Ib. s. 65.

As to the person to be deemed a contributory in the event of an unregistered company being wound up, see post, sect. 200.

contribu

75. The liability of any person to contribute to Nature of the assets of a company under this act in the event liability of of the same being wound up, shall be deemed to tory (a). create a debt (in England and Ireland of the nature of a specialty (b)) accruing due from such person at the time when his liability commenced, but payable at the time or respective times when calls are made as hereinafter mentioned for enforcing such liability (c); and it shall be lawful in the case of the bankruptcy (d) of any contributory to prove against his estate the estimated value of his liability to future calls, as well as calls already made.

(a) See 20 & 21 Vict. c. 14, s. 13.

debts.

(b) It was decided that a call, under the winding-up acts, Calls under 11 & 12 Vict. c. 45, and 12 & 13 Vict. c. 108, was not a spe- acts specialty cialty debt, although the shareholder had executed the deed of settlement. Re Royal Bank of Australia, 3 Sm. & G. 272; 2 Jur. N. S. 11; Ex parte Robinson's Executors, 6 De G., M. & G. 572; 3 Jur. N. S. 1173; 26 L. J., Ch. 95. But by stat. 20 & 21 Vict. c. 14, s. 13, all calls which were authorized by part 3 of the act 19 & 20 Vict. c. 47, to be made on a contributory in the event of the company being wound up by the court or voluntarily shall be deemed, in England and Ire

land, to be specialty debts due from such contributory to the company.

A creditor whose debt is secured by an instrument under hand and seal, as by a bond or other deed, or by an instrument under hand and seal only, and which is not a deed, because it is not delivered as a deed, Co. Litt. 35 b; Browne v. Vawser, 4 East, 584; Shep. Touch. 57, 60; Cecil v. Butcher, 2 Jac. & W. 571, is a creditor by special contract, and the money so secured is therefore a specialty debt. 2 Bl. Com. 465; Plumer v. Marchart, 3 Burr. 1380; Gifford v. Manley, Cas. T. Talb. 109.

Specialty debts are to be paid by an executor or administrator out of legal personal assets before simple contract debts. Pinchon's Case, 9 Co. 88 b; 7 B. & C. 452; 3 Salk. 83. See Wms. Exors. pt. 3, bk. 2, s. 3.

A call made in pursuance of an act, charter or deed of settlement, before payment of the simple contract debts of a testator, will have priority over them; but an executor or administrator who pays simple contract debts before a call has been made will not be liable for a devastavit, as the contingent liability to pay calls which have not been made is not sufficient to render the payment of simple contract debts actually due improper. Henderson v. Gilchrist, 17 Jur. 570. Where a testator held shares in a company, the calls on which shares constituted a specialty debt, it was decided, that as against simple contract creditors, no part of the estate could be reserved to provide for future calls. Wentworth v. Chevell,

3 Jur. N. S. 805; 26 L. J., Ch. 760. See 22 & 23 Vict. c. 35, ss. 27, 29; and Moffett v. Bates, 26 L. J., Ch. 465, as to the fund out of which calls were to be paid. The executors of a deceased shareholder are liable to be made contributories in respect of shares until they have been transferred. Blakesley's Case, 13 Beav. 133; 3 Mac. & G. 726; Keene's Executors, 3 De G., M. & G. 272. An executor who becomes a shareholder incurs a personal liability not limited by the circumstance that as between himself and the persons beneficially interested the executor is not the owner of the shares standing in his name. Spence's Case, 17 Beav. 203; Fenwick's Case, 1 De G. & S. 557; Armstrong v. Burnett, 20 Beav. 424.

The time within which actions of debt upon specialties may be maintained is prescribed by stat. 3 & 4 Will. 4, c. 42, ss. 3-7; in Ireland, 16 & 17 Vict. c. 113, ss. 20, 21, 23. See Shelford's Real Property Statutes, pp. 269-275 (6th ed.) The limitation of time is twenty years in an action by a railway company against one of its members for calls under the Companies Clauses Consolidation Act, 1845, 8 & 9 Vict. c. 16, and the special act, the claim being founded upon a statutory liability. Cork and Bandon Railway Company v. Goode, 13 C. B. 827; Sheppard v. Hills, 11 Exch. 55.

An order to wind-up a joint stock company under the acts

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