evidence that the officers of the company were not aware that either Adams or Dove was an infant; and that the official liquidator did not make the discovery until after the balance order had been made. The Master of the Rolls held that Gooch's liability did not cease until the transfer to Beal was registered, and His Lordship placed Gooch's name on the B list; as reported (1). Gooch's executor appealed. The Solicitor-General (Sir G. Jessel), and Mr. Bagshawe, for the executor:— This case is unlike the case of a mere transfer to an infant. Here the company had an adult shareholder, and accepted him. He has been placed on the list of contributories, and a balance order obtained against him. Beal could not have repudiated, and the company cannot be entitled to two contributories for the same shares. Gooch is either on the A list or on no list at all. If these deeds are all void he has been always on the register. Suppose that it had been Gooch's estate which was insolvent, then the company would have taken Beal. They cannot be allowed to play fast and loose in this way. Lumsden's Case (2) has been overruled. When once the company has an adult shareholder it is all over: Parsons' Case (3). They might have inquired as to the new shareholder. [They also cited Mitchell's Case (4), Symons' Case (5), and In re Bahia and San Francisco Railway Company (6).] Sir R. Baggallay, Q.C., and Mr. Chitty, for the official liquidator: It has never been held that a company is bound to retain a shareholder merely because they have treated him as such. It is the duty of the transferor to see that the transferee is a proper person: Mann's Case (7). The company did not until after the winding-up know the facts. Gooch did not transfer to a person who was competent to hold, and the subsequent transfers go for L. C. and L. JJ. 1872 GOOCH'S CASE. L. C. and L. JJ. 1872 nothing. We must have a shareholder on the list for the period between Gooch's transfer to the infant and the transfer to Beal. Gooch remains a shareholder, for the purposes of sect. 38 of the GOOCH'S CASE. Companies Act, until a competent person is put on the register. The creditors are entitled to his liability for a year, and Gooch must for that time have a transferee capable of taking his liability: Curtis' Case (1); Castello's Case (2). The Solicitor-General, in reply. LORD SELBORNE, L.C. : It appears to us that this appeal ought to succeed. Whatever is material to determine the question in this case had happened before the winding-up. Before the winding-up the share list had on it, so far as relates to the shares in question, a shareholder of full age, in all respects competent, having in him the legal liability for these shares; and his title to those shares the company is estopped from disputing. That title was derived from Dove, a previous shareholder, who was upon the register. After that transfer had been made, the company remained for some time before winding-up, and, in my judgment, they had during that time no right whatever to go back beyond the transfer which had been made to Beal, or to raise any question at all as to the voidability or otherwise of any intermediate transfers between that made by Gooch and that made to Beal. From the time when they had a good shareholder upon their register, with respect to whom they were bound, and who was bound with respect to them, they ceased to have any interest in the voidable character of the intermediate transfers. Then, the question which remains is solely upon the interpretation of the 38th section of the Companies Act, 1862. What has been decided by at all events a considerable preponderance of authority in this Court, and in accordance with the general principles of law, is, that a transfer to an infant is voidable but not void. I will assume that it is voidable at the option of the company as well as at the option of the infant, subject to any difference which particular circumstances might make. That being so, the (2) Law Rep. 8 Eq. 504. (1) Law Rep. 6 Eq. 455. facts are these—as they probably would be in most of such cases: A transfer by deed having de facto taken place from Gooch to the infant Adams, that deed is accepted by the company; Adams is registered in their books in the place of Gooch; and at the proper time they return to the office for the Registration of Joint Stock Companies the particulars required by the Act of Parliament, one of which is the time when any one, having been a shareholder upon the lists previously returned, ceased to be shareholder. They returned Gooch as having ceased to be a shareholder; and all persons dealing with the company upon the faith of the returns made to the Registrar of Joint Stock Companies would from that time forth at all events cease to look to the liability of Gooch as a shareholder. It appears to be clear, and it was admitted in the course of the argument, that if the infant transferee, coming of age before any winding-up, had elected to stand by the transaction and to hold the shares, it could not have then been said that Gooch ceased to be a member at the date of the ratification, as he would have ceased to be a member at the date of the transfer to the infant. Then why should not any other act which substantially puts an end to Gooch's title in a manner binding upon the company and not voidable, be deemed to have relation to the original transfer, which was voidable but which was never avoided, and which, so far as the company is concerned, could not now be avoided? It appears to me that a transfer having before the winding-up been made to an adult, who was to all intents and purposes a good shareholder, it was not possible before the winding-up order, and it is not possible under the winding-up order, for the company to go back and now to avoid, not the transfer by which the existing shareholder was constituted such, but transfers which are functa officio, which have been spent by intermediate transactions, and through which the title of the existing shareholder is derived. I wish to say further, that, if I found in the 38th section words supporting the argument which has been offered, that there always must be some person against whom the liability for a year as a past shareholder can be enforced, of course I should think it necessary to give full effect to those words; but I do not find any such words. I find a clause which, in its affirmative part, says generally that all past members are to be liable to contribute; but that general enact L. C. and L. JJ. 1872 GOOCH'S CASE. L. C. and L. JJ. ment is subject to qualifications in their favour, the first being that no past member shall be liable to contribute to the assets if he has ceased to be a member for a period of one year or upwards prior to GOOCH'S CASE the commencement of the winding-up. 1872 It appears to me that the Respondents are in this dilemma, that if Gooch did not cease to be a member when he made the transfer, he could not cease to be a member by the act of an infant, who, upon that supposition, derived no title from him; and if so, it is difficult to see why he, or his executor in his name, should not be a member still. The Act says that he is not to be liable to contribute if he ceased to be a member for more than a year; and in my judgment he must be regarded as having ceased to be a member for more than a year. SIR W. M. JAMES, L.J.: I entirely concur in the opinion of the Lord Chancellor. SIR G. MELLISH, L.J.: I am of the same opinion. Solicitors for the Official Liquidator: Messrs. Linklater & Co. L. C. and L. JJ. 1873 Jan. 16, 17, 24. In re PEN 'ALLT SILVER LEAD MINING COMPANY. FOTHERGILL'S CASE. Company-Subscriber to Memorandum-Paid-up Shares-Payment in Cash- F. and two other persons, by an agreement which was registered along with the memorandum and articles of association of a company formed in 1869, agreed to sell a mine to the company for £20,000, half of which was to be paid at once by 5000 fully paid-up shares of £2 each in the company, £6000 at the end of a month, and £4000 when the profits reached a certain rate. F. subscribed the memorandum of association for 1000 shares. company took possession of the mine, and 5000 fully paid-up shares were allotted to the vendors or their nominees; 1600 of them being allotted to F., who never had any other shares allotted to him. The company was The ordered to be wound up, at which time F. remained on the register for 275 shares, having sold the rest :— Held (affirming the decision of the Master of the Rolls), that F. was liable to be placed on the list of contributories for the 1000 shares for which he had subscribed the memorandum, as shares on which nothing had been paid; for that, on the face of the registered documents, there was no connection between the 1000 shares for which F. subscribed and the 5000 paid-up shares, and that if there was any subsequent agreement for F.'s giving up, in satisfaction of his liability to pay for the 1000 shares, paid-up shares to which he would otherwise have been entitled, such agreement was invalidated by the Companies Act, 1867, s. 25. Under the Companies Act, 1867, s. 25, the holder of shares (unless such agreement, as provided by that section, has been registered) cannot defend himself against an action for calls by anything which would only support a plea of accord and satisfaction, and would not support a plea of payment. THIS The company was registered on the 8th of October, 1869, with a capital of £40,000, divided into 20,000 shares of £2 each. The memorandum of association stated one of the objects of the company to be, "to purchase and work a certain silver lead mine situate in the parish of Llandwwg, in the county of Carnarvon, known as the Pen 'Allt Mine, and to carry on and continue the operations hitherto carried on at the said mine." The memorandum was subscribed by seven persons for shares amounting in all to 3350. Fothergill subscribed it for 1000 shares; Craig, whose name will occur again, for 1000; and Pennington for 100. The 3rd of the articles of association was: "The directors of the company are hereby authorized to carry out the agreement set forth in the appendix to these articles." Fothergill, Craig, and Hewitt were appointed by the articles the first directors. The agreement in the appendix was an agreement dated the 30th of September, 1869, between Fothergill, Craig, and Pennington of the one part, and Hewitt, as a trustee for the company, of the other part, by which Fothergill, Craig, and Pennington agreed to sell and assign their leasehold interest in the mine to the company, when formed, at the price of £20,000, to be paid as follows:-£10,000 in fully paid-up shares of the company on the L. C. and L. JJ. 1873 FOTHERGILL'S CASE. |