DIRECTOR'S CLAIM UPHELD

Press, Volume LXIX, Issue 20961, 15 September 1933, Page 7

DIRECTOR'S CLAIM UPHELD

: .1200 VOTED BY ANNUAL \ MEETING ' SUPREME COURT DECISION if-ltrss ABSOCIATIO.t HLJUJUM.) AUCKLAND, September 14. The sum of £2OOO voted at a shareholders' annual meeting to the directors for their services and the subsequent discovery that instead of a profit of £SOOO the company had made a loss of £3200 led to an unusual action in the Supreme Court to-day. Charles John MacCulloch, company manager, who was one of the live di- j rectors, claimed £2OO from the Putaruru Pine and Pulp Co. (N.Z.). Ltd.,: as his share of the £IOOO which had] never been paid. In a counter-claim the company asked the court to rescind the resolution voting the directors £IOOO, on the ground that the balance-sheet showing a profit of £SOOO was incorrect. After legal argument his Honour Mr Justice Ilerdman asked, "Can you have a more definite direction than that given by (he shareholders to the directors to do a certain thing? It was a definite order to pay, and if the directors did not pay sureiy they could be sued." , In reply to his question it was stated that the company was carrying on and doing reasonably well. Counsel for the company said it wcJUld be a curious position if the company had to pay the sum voted to the directors when it was voted as a result of a balance-sheet that contained a false statement. The mover and seconder of the shareholders' resolution gave evidence that they would not have moved and seconded it had they known there was a loss, and not a profit. The present secretary to the company said the dividend declared at the first meeting had not been paid. The company's losses since its inception totalled £11,827. He believed that the shareholders did not know till recently that the £IOOO had not been paid to the directors, and that they were now moving to have the resolution cancelled. The mistake made by the directors was in showing i as assets 90 per cent, of the amount : represented by the sale of bonds, al- ] lowing only 10 per cent, for forfeit- : ures. i Counsel for both parties made it ( clear that there was no suggestion of 1 fraud against the directors. , < His Honour gave judgment for plain- • tiff with costs. ;