HALFWAY HOUSE SHARES.

Dunstan Times, Issue 1974, 29 June 1900, Page 3

HALFWAY HOUSE SHARES.

In Dunedin last week, at the Magistrate's Court, Mr Carew heard the first part of an action by Thomas M'Cracken, sharebrokev, to recover £3l 17s 6d from Charles Mitchell, butcher, of Cromwell, for an alleged breach of contract in the failure to deliver twenty-five fully paid-up shares in the Halfway House Dredging Company sold by defendant to plaintiff on the 21st October, : the amount of the chum being the difference between the contract price and their market value on the 23rd April, when they were bought at defendant's risk. Mr John White appeared for the plaintiff, and Mr W. C. MacGregor for the defendant.—ln opening the "case Mr White said that the plaintiff purchased the shares at 225, and sent a transfer to the defendant for signature. Defendant returned the transfer through the Bank of New Zealand with a draft attached for the amount of the purchase money, but no scrip. The plaintiff made inquiries at the office of the company, and, finding that the shares were unallotted, lie returned the draft and wrote saying that he would complete the purchase whenever the defendant was in a position to produce the scrip. The defendant, in reply, stated that he understood that the sale was made on the footing of an agreement to transfer after allotment; that if the plaintiff would complete on those terms and send the agreement he (defendant) would sign it; if not. lie would withdraw. To that the plaintiff replied that there could be no withdrawal—that he held defendant to his bargain, and would require him to complete an allotment. As the defendant had never completed the transaction, and had failed to reply to letters and telegrams, this action was brought. The defendant was one of the vendors of the claim to the company. The allotment of the vendors' shares had been delayed because the title to the claim had not been completed, but the defendant was aware of this and sold with the full knowledge that no allotment had. taken place The vendors, sold a. mile of the river to the company, and onlv handed over three-quarters of a mile, and until the other quarter was given it; the directors declined to allot the vendors' shares In the meanwhile the vendors hail gone < r the market and sold their shares, knowing that they had never been allotted. The capital of the company was £7.500, and the vendors were to receive 2,000 fully paid-up shares. The contributing shares were allotted, on May 29, 1899, and the directors withheld the paid-up shares, finding that the title to the claim was defective. The vendors then included the remaining portion of the claim in the title, and their paid-up shares were issued, the defendant receiving 150. Evidence was given by the plaintiff and L. G. Reeves. At this stage Mr White said that he had no further evidence to offer.—Mr MacGregor put in the evidence taken at Cromwell, and proceeded to submit that as a, matter of law the plaintiff could not recover because he had not proved his ca.se. The respective duties of buyer and seller were defined in " Liudley on Companies," page 498. and by that and the Companies Act it would be seen that the law cast upon a. purchaser the duty of tendering a deed of transfer before he could sue the vendor for non-delivery. In this case an instrument of transfer was sent to the vendor, who signed it and sent it back, and then the purchaser wrongfully refused to receive it. That what was done by defendant was in accordance with the law 1 was shown by several cases. In Stephens v. Medina (4. Q. 8., 422) Lord Dcnman laid it down as the duty of a purchaser of shares to prepare and tender to the seller the document which he (the purchaser) wished to transfer the shares to him. That was not done in this case. Mitchell did all that he was asked to do, and all that he could do. If M'Cracken wanted more he should have written for it. On that ground the plaintiff could not recover. But, further, he (Mr MacGregor) submitted that the contract was absolutely void. It was admitted now that vendors' shares in the Halfway House Company were not in existence at 'the time the sale was made. -Mr White: M'Cracken says they were. Mr MacGregor: Well, then, one party said one thing and the other party said another, and there was a. mistake as to an essential part of the agreement, and even in such case, accotding to " Pollock on Contracts," ]). 470, the agreement Avas void. The case relied on was Couturier v. Hastie (5 House of Lords, page 673). Both parties contracted on the assumption that there were vendors' shares in existence ; it now turned out that there were no such shares in existence, and the contract was void. In the third place, he (Mr MacGregor) submitted that in any ease, on the plaintiff's own evidence, the defendant had performed his contract so far as it lay upon him to do. The whole of this unfortunate litigation appeared to have arisen from M'Cracken misunderstanding his legal position by assuming that the contract could not be fulfilled unless the scrip was actually handed over, or the transfer was endorsed" "Scrip in office." If the certificates had been in existence Mitchell Mould have been glad to hand them over ; as they were not, he did all he could to make M'Cracken the equitable owner of the shares. The scrip was merely a handy form of evidencing to outsiders a man's title to shares. The essential tiling Mas the share register of the company. Fourthly, even assuming that the plaintiff was entitled to damages for breach of contract, if there was a breach it occurred on the 18th November, and if M'Cracken had then taken out his summons it, would have minimised the loss to both pax-ties. Under all the circumstances, if plaintiff was held entitled to damages, at all,

it would be only nominal damages, as he had not proved the price of the shares on 18th November.—-Mr White replied on the questions of law involved, and remarked that if the shares had gone down instead of up it was plain from the cor-respondence that M'Cracken would have been obliged to take them. All the cases showed that the vendor must make a good title, otherwise he could not compel performance.-—ffis Worship reserved his decision.