DISTRICT COURT, GREYMOUTH.

Inangahua Times, Volume IV, Issue 28, 13 June 1877, Page 2

DISTRICT COURT, GREYMOUTH.

Fbiwk, Jtob 8, 1877. (Before His Honor Judgo Weston.) BESEBVED JUDGMENTS. His Honor delivered the following judgments :— SIB tVtIVS VOOBIi OOLDMININS 00MPA5Y, IN UQUIDATIOK.Y. GUIXINB. Mr Button for the liquidator, Mr Wm. M'Lcan; Mr Guinness for Mr Gullice. The liquidator seeks to make Robert Evans Gulline a contributory in respect of 500 shares assigned to the Company fourteen days subsequent to his retire' ment from the directory thereof. The 31st section of the Act of 1872, under which this transfer professes to have been made, enables a shareholder, as of right, to retire by bestowing his shares upon the Company. Under a proviso thereto a director, before exercising a similar privilege, must give and publish 21 days' notice of his intention to do so. It was contended for the liquidator that Mr Gulline's resignation, admittedly made in contemplation of a transfer, was a subterfuge, hence the transfer became tainted and was necessarily invalid. The section was framed, I think to check transfers to paupers ; to enable shareholders to estimate their liabilities, and to value their risks ; and at tho same time, through the register, to protect those having business relations with a mining company. A transfer by a director after eotice, and by a simple shareholder without it, is unimpeachable, and operates with or without' registration, in other words a shareholder's motives for the transfer cannot be eon* sidered. Except then as a means for conveying an .indirect cautioa to share holders and creditors alike, except as a method for decrying the company's position for sinister or speculative purposes, the proviso is, I think, of no practical utility. Upon what priuciple, then, and with what object should a director be denied the privilege of resigning for the avowed purpose of transferring P Tbat a director can resign at pleasure was not denied, nevertheless bis inability during 21 days subsequent to bis retirement wa* set up. If the proposition bo sustainable, the motive for the retirement, for in that consists the fraud, must be proved either by the transfer of by oral testimony. The former method might be unjust; the issues raised in the latter would be dinV cult, to determine. But I cannot think the seettoa wbea read with the rest of the statute will warrant the reasoning of the learned counsel. The language of the proviso is. plain and unambiguous, it pro* fesses in terms and in spirit also- to deal exclusively with existing directors. Were it capable of a diflere»t interpretation the disadvantages would, is my opinion be great, whilst there could be no cofree* ponding benefit conferred. The great risks involved in the disabilities suggested would deter able and responsible men from assisting m the administration of legitimate enterprises; they would occasion the abandonment of promising adventures ; and in various ways would j injustice he perpetrated to those engaged in a business (mining) preeariotts in its ' nature, and which requires in its conduct promptness if not rashness of action. It must follow then that a director in any company can, in my opinion, retire, and at once transfer when the Rules will per* mifc, rather than risk during the currency of tho notice required by the proviso, | liquidation proceedings and the closing of | the share register consequent thereupon. The liquidators application is dismissed w|th oosts, £10 109, to be paid out of the estate. JAMES CtINTON AND fBE SIB JtTLITTS ' vooßii ooH> xximrct compant, nr lIQUIDATION. Mr Staite and Mr Guinness for Mr Clinton, Mr Button and Mr Pitt for the liquidation. The Court is invited to include Mr Clinton in tho list of eontributories herein. The case comes before it for the second time* permission having been accorded to Clinton to supplement his answer. The Mining Company's Act, 1572, was framed, 09 I conceive, to encourage the formation of large partnerships, or companies, for the development of industries which, by reason of their magnitude, lie beyond the reach of a single individual, and I think it is tho policy of the Act to enable shareholders to transfer their interest at pleasure and retire from a company. Assuming the existenco of such a privilege, the remarks of Lord Justice Turner in CosteUo's case, 3D L. J. Ch., will be instructive, as showing under what circumstances it may and may not be exercised. His Lordship says : — • " I do not see how, whoa the coatract between the parties is

bat each man may transfer hte shares*. my on* partner can have* right to eotn>lain of another for making that transfer it a time when the company may happen 10 be in dificmltftfj" tad again,«ld» tot doubt, therefore, the rif*t to tatke a baa ftfe transfer of the* Jhfcte, fa* I think that ia at! eases the fiiMiftf Mint tetibona 4fe transfer, ttsrag *» «ords b^^ m the sense that H filet to be i mere colorable and unsubstantial transtction, bit that it it to be • real and tub* itantial transaction* The principle Urot laid down hie Wen acted upon by the English Coortt of Chancery eiaoe *De Pan's ease in 18S8. ft v taw thai in at parte Smith tad Weston, 9L J.C&., the Master of the Roll* held that director* of in etntarrejeed company could refuse to register a trantfer mtim to one unable in their opinion to diecharge calls, yet that judgment wat overruled, and the principles previously , established became thereby re-amrmeol Now when testing a transfer the.stvefai ciroamstances surrounding the taunt*, tion mast bo, for obvious reason*, re* garded collectively rather than separately; In that way only, I apprehend, can the Court deceide whether there was or" fta* not a sale within the definition already given, and also within that supplied by Wood V.C., in Button's case, 31 L.Ji Ch. ; whether, upon the merits, the seller could cast the burthen of the eonttt* butions upon his assignee. Such being the principle deducible from the ea*e», cited* by the several learned counsel, I will deal with the facts disclosed by CUn^ ton at both inquiries. It appeared then*,. tbat in the capacity of a director, h*> became aware of the indebtedness and embarrassments of the company, of, the cessation of operations- at the ttne r and of the unsaleableness of the cot&V pany's shares. Kelly, an entire strangle ', in the district, a miner in search of employment, without baggagt, and with £1 as his capital, #aY introduced to Clinton by a Mend, at a person willing to take the interest*. At * the interview between the alleged plirV , chaser and seller, no aegotiaiioat w«» ■ade, no bargain was struck, but Kelly simply "yreti to tcketke share*;? lhe> # ; consideration was incorrectly stated in the transfer, its attestation was trregalar, it» registration was effected by the seller; the transferee waß unacquainted with the mine, was ignorant of the company*!* position, it» shareholders, and prospects, and it is clear that Clinton was tbeftrst to announce to him the liquidation pfo» ceedtiigs. The denial of the agency and iutcrference imputed to the iriend is important, inasmuch as on the one hand Kelly's indebtedness when leaving the hotel is suggestive of a consideration by Clinton thvong'a the agent for the use of his name to the transfer j on the other baad, an inaccuracy upon the most material point, "the making of tfaecontracV' eoosidered with the several pees* tiariricft revealed, might warrant fte aspersions past ipoa the transaction and the partita to it; The transferee it is •tame admitted he " took the shares abso* fotrly," that he -intended to pay the call* if he eonlcs," but that evidence would be consistent even witk> the existence of am indemnity, about which, nowever, it may be noticed the transferee was not interrogated. The f*et» ami eirewwUnees tn» the* entirety fcHto establish teeMjkVfe disposition, a dealing Between vendor and: porehaeer; they point rather to aeiaten* ttototnattosjgsjoept net vatoefo**' property, bat the which would revolt from fts possession ; in short to •&• arrtßgeßstit vhersjfcy a paopef jrigfitv through a *bai» lisyftr, be p* forward to bear the lkkilkie* of a solvent ~maiK Hie present is, I think, distkafftishaWe from De Fats* case, 28, L. X Ch. Therethe object was it is true to escape liability -•the sale was, nevertheless, openly and) regularly made to a person apparently ia solvent circßOMtances, in regflar employment, and whose place of abode was. fixed and ascertainable. CKnton most rank as a contributory, and the liquidator can amend the register if necessary. Costa are reserved. KOUIB DATIES ASP TBM 8» TO WW VOGK. aoiry unnva eomfurt, ut bqvii>*> tion. Mr Button and Mr Pitt for the liquidators) ,- Mr Staite and Mr Guinness for Mr Davies. Mr Davies is sought to be included i» the list of contributories in this liquidation upon the following feets :— Davit*>aa> , original shareholder, and" th« manger of the company when- in difficulties* tranev ferred bis shares to Bobertsoo, who i» turn at the instance of Mr Davie* as» signed to Cooney. It is, said that these iransfers were fraudulent, and void Mr Davies at the outset by affidavit denied his liability and pleaded "an<mt and out tale" Robertson, however, also by affi» davit, whilst denying the purchase ad« mitted the acceptance of a transfer for Mr Davies' convenience. At the hearing Davies was unable to confute Bobtrtson'ft statement, indeed bis learned counsel (Mr Guinness) in argument abandoned* and rightly so, the position he at first assumed and conceded a trust. In my opinion, however, nothing so sacred) existed. If, nevertheless a trust had been declared, it was, to quote Lord Justice Turner in Hyam't case, "created for a fraudulent purpose, for the purpose of covering tho real , ownership.** lhat the transfer was void, I eater* tain ao doubt. Now how dost tfcd

or*l tettimony of M* Daw», taken to\ hi» benefit (ai hia affidavit made n< j, illusion to Coon»j'B assignment) suppor *be transfer nominally from Bobertsor Ofteosibly front Davies fco Cooties f No* Cooney was in poverty, ho was already the holder of 501 shares upon which calls were doe and tnipaid j lifco Mr Daviei lie waa eopmitut of the company'; position* »n# that liquidation proceeding! weri intfirfnont ; he Accepted the shares jit the express invitation of Mr Davtea, h< iodiffWent to* the custody of the transfer Mp fe^itraMon was completed by Mi Davies at his own cost, and abo.re all ai tike examiaatiotf Cconef was unUbla tc point to fhe true hofder of the shares Axe th'o aeycral circofflstancas of this cast then from its inception when weighed together wit'i an out and ont-r a bona fide, transfer ? not an assignment in name, a lecret and fraudulent one cartying with it either an express or ar implied indemnity, but one by virtue o which the transferee became the abaolut^ and unqualified owner of the property^ prepared and compelled as between sellei and purchaser to heav, its obligations. Applying to them the principles propounded by . the eminent judges referred to ia Clinton's case, I am bound to answer the qaestion in the negative. X think the transfer was executed sot to complete a sale, but for the pur* pose of casting Mr Dairies* liabilities upon the shoulders of a man overwhelmed with debt, and who wa3 yet prepared to beta, if not able to discharge considerably more. Mr Davies is liable as a contributory, and the register can be amended to give effect to the ruling. Costs aro re» flerred.