Liability of Shareholders.

Evening Star, Issue 6863, 29 March 1886, Page 4

Liability of Shareholders.

A New Zealand case of some importance was decided before Lord Justices Cotton, Bowen, and Fry in the Supreme Court of Judicature on February 12. It was that of Miles v. the Alford Estate Company—an appeal from a decision by Mr Justice North. A Mr Grant was the holder of 12,5 shares in the Company, by the articles of which the Company were to have a first and paramount lien on each member's shares for his liabilities to the Company. In October, 1882, the plaintiff took a charge on Mr Grant's shares, of which notice was duly given to the Company. In 18S3 the Company threatened proceedings against Grant, who was one of the promoters and the chairman of the Company, in respect of certain misrepresentations aa to the value of the property sold to the Company, and in March, 1883, he guaranteed a dividend to the shareholders. Grant, however, became bankrupt in ISB4, and the present action was brought by the plaintiff, claiming priority for his charge on the shares over the charge claimed by the Company under the articles in respect of (Jrant's liability under the guarantee.—Mr Justice North decided the case in favor of the plaintiff, on the authority of a case of Bradford Banking Company v. Briggs; but he expressed an opinion that the guarantee was good, as the consideration for it was the compromise of the threatened proceedings against Grant. Since the decision of Mr Justice North the decision in Bradford Banking Company v. Briggs has been reversed by the Court of Appeal, and as the decision on appeal is binding on the Court of Appeal, the plaintiff now contended that there was no liability by Grant to the Company and no compromise, and that, therefore, the guarantee was without consideration and of no value.—Mr Barber, Q.C., and Mr Blake Odgors appeared for the Company; and the Solicitor-General (Mr Davey, Q.C.) and Mr Stirling for the plaintiff.—Lord justices Cotton and Fry now

delivered judgments in favor of the plaintill'.—Lord Justice Bowen differed from the other members of the Court on the point whether the guarantee waa good, being of opinion that it was; but the majority of the Judges being in favor of the plaintiff, the appeal was dismissed with costs.