P.M. INSURANCE COY.

Grey River Argus, 6 December 1938, Page 5

P.M. INSURANCE COY.

Levy Test Case AUCKLAND, December 3. What was described by counsel as a test case in which many people were interested was brought before his Honour, Mr, Justice Blair, in the Supreme Court, when the Public Mutual Insurance Company of New Zealand, through its liquidator, Joyce William Hyland, claimed £26 5s and costs from Walter Harold Hunter, a taxi proprietor, of Auckland. The statement of claim said tnat every person desirous of becoming a member of the company had to sign an application to that effect, or for a policy of insurance. The granting of a policy was sufficient proof of membership. The defendant had on June 7, 1937, satisfied both those requirements. The policy was granted to him, and subsequently renewed for a period expiring on June 7, 1939. On August 11, 1938, the directors made a levy upon all members of two and a half times their current annual premiums, to be paid on September 16 last. Hunter’s levy was not paid. The statement of defence denied all knowledge of the decision on September 23, 1938, to wind up the company, or that the defendant lodged an application for membership. It was admitted that he took' out an insurance- cover with the company last ( year, and renewed it for a further period, but he denied that he was entered as a member of the company or that he had knowledge of the decision to make a levy upon members. T - xtrno thnt T-TIIYI tor* W3C InW-

fully liable for the levy or £26 5s made upon him. Mr. Richmond, for the plaintiff, said that the action had been taken as a test case. The real matter at issue was whether the defendant' was a member or had been a member of the plaintiff company. The action had arisen because the defendant argued that there never was in effect any register of members, and that he never was entered upon any register of the company. ‘‘That matter, of course, affects all other persons who are alleged to be

members of the company, excepting those persons who signed the memorandum of association, and those who may still be members. If the defendant is not and never has been a. member of the company, the result would be that at the meeting on September 23, 1938, at which members, or those who purported to be members, passed a resolution to go into liquidation, there would not be a

quorum. If that is the position, the company is not in liquidation,' and the gentleman who purports to be liquidator would not be the liquidator.” There was a very large amount involved, counsel said. The liability of all persons who were proved to be members was, of course, unlimited. There was a debenture of £23,700. The levy made by the directors before the company went into liquidation was sufficient to produce £90J)00, assuming that all the members paid or were capable of paying. The net amount required from members was £40,000.

MANAGER’S EVIDENCE. Douglas Arthur Young said that at the beginning of August, 1938, he was appointed general manager of the company. He had n6t been able to find any book labelled or titled “register of members.” The defendant, he said, signed a proposal form, and an entry was made in the proposal book. The form was bound with others, and a card was included in a system of indices which gave particulars about insured persons who claimed to be members. Cross-examined by Mr. A. H. Johnstone, K.C., for the defendant, witness admitted that at no time would the renewals register show a full list of members of the company. There was no book to show membership, when members became members, or when they ceased to be members of the company. That concluded the evidence of the plaintiff. Mr. Johnstone, opening for the defence, said that it was submitted that the defendant was not liable for the sum claimed because he was not and never had been a member of the company according to Section 38 of the Companies Act, 1933. It was laid down that a member was one who had

agreed to membership, and whose name was entered on the company’s register of members. The second condition of membership was never fulfilled in Hunter’s case, because it was admitted that there was. never a register. The hearing was adjourned until Monday.