TEST CASE.

Auckland Star, Volume LXIX, Issue 285, 2 December 1938, Page 10

TEST CASE.

COMPANY'S AFFAIRS.

ACTION BY LIQUIDATOR.

QUESTION OF MEMBERSHIP.

Described as a test case, a civil action was begun in the Supreme Court to-dav before Mr. Justice Fair. The plaintiif was tlio Public Mutual Insurance Company of New Zealand, acting by its liquidators, and Joyce William Hvlaiul public accountant, Auckland (Messrs. Rich mond and Hayne*), and the defendant avhs Walter Harold Hunter, taxi proprietor, Auckland (Messrs. Johnstone and Goldstine).

In opening. Mr. Richmond said Ilitaction had been commenced by th>; liquidation of the company against the defendant. The real matter at issue was whether or not defendant was a member, or at any time was a member, of the plaintiff company. The question had arisen bv reason of the fact, allegedly argued by defendant, that lie was never on the register of members, and was not entered on any register, and that he was not, and never was, a member. Result of Ruling. That affected all other persons alleged to be members of the company, except persons who signed the memorandum of association, and might still be members. If the defendant was not a member, and had never been a member of the company, the result would be that at the meeting of members or those who purported to be members, which ]>assed a resolution to go into liquidation, there would not have l>een a quorum, and the company would not be in liquidation. The matter was of very great importance because it affected whether the company is in liquidation, and the question of the right of the company, which was a mutual insurance company, to sue 011 a levy made before it went into liquidation; also the right to make any of those claimed to be members contribute. Large Ai»ount Involved. Proceeding, Mr. Richmond said that a large amount was involved. The liability of members, if they were proved to be members, was unlimited. There was a debenture of £23.700; there were claims against the company arising under policies, and other creditors. A levy, made prior to going into liquidation, made under the terms of the articles of the association, had been sufficient to produce £90,000, that was assuming all members were capable of paying. The actual amount of the company's liability was approximately £40,000. Some action* were being instituted against the company of various kinds, but they were standing over in the meantime. The whole thing was mo<st chaotic. A File of Names. Douglas Arthur Young said that at the beginning of August of this year he was appointed general manager, pro tern., of the company, and before that he had been inspector for the companv and stationed at Hamilton. A Mr. McCullough was previously secretary and general manager. He had left New Zealand some time ago, and had not returned. Witney* had not found any book labelled or titled "register of member*." There was an entry in the proposal book in regard to Hunter. He had signed a document, and on a card index file were the names of all persons claimed to be members. Cross-examined by Mr. Johnstone, witness said that he had been associated with insurance work since 1923. and had been in three offices. The P.M.I, was doing business from August 8 to September 23 under his management. There was always a time when a number of the proposals would be loose. At no time could members of the company be found out by examination of the renewal register/ A refund and rebate register had the list of policies that had lapsed. If he had been asked to show who were the members he would have produced the various renewals and the other registers and cards from the office insurance index system. Two Euentials.

Mr. Richmond said that he -would not call further evidence.

■Mr. Johnstone said that his submission would be that defendant was not liable for the sum claimed from him. It was contended that he had never been a member of the company. There were two essentials, agreement and entry of the name in the register of members. There might be evidence that defendant intended to become a member, and had paid a premium, but the second condition of membership was hot fulfilled, as his name was never entered on the register.

(Proceeding.)