ALLOCATION OF SHARES.

New Zealand Herald, Volume LVI, Issue 17275, 26 September 1919, Page 5

ALLOCATION OF SHARES.

WAIHI SXTENDED'S MANAGES }| CONDITION OF APPOINTMENT. ACTION IX SUPREME COURT. A civil action to secure specific perform ance of an agreement tor the allotment of shares was commenced at the Supreme Court yesterday. before Mr. Justice Cooper, against the Waihi Extended Gold Mining Company, Limited (Mr. Pranderga.st). The plaintiff was John McCombie (Mr. A. E. Skelton, instructed by Nicholson and Gribben!. mine manager, of Auckland. The action was originally commenced in the Magistrate"? Court, and was removed to the Supreme Co-art on the application of the defendant company. The statement of claim set out that on March 30, 1917, the secretary to the company wrote to the plaintiff stating that the directors had agreed to the plaintiff's appointment as mine manager at a salary of £5 a week, with the right to use the company's house, together with a bonus in shares, fixed at 1000 contributing shares, to be allotted whenever the plaintiff desired. The 1000 shares were a part of the forfeited shares held by the company. The plaintiff commenced his duties on April 16, 1917. but the company had not allotted the shares and had refused to do so, although a request to this effect had been made by him. The plaintiff, therefore, asked for a decree for specific peiformance of the agreement to allot the 1000 shares, or hi th-?. alternative, £300 damages, representing the plaintiff's estimate of the value of -.he shares.

Statement oi Defence. The company admitted in its statement of defence that the plaintiff was employed as mine manager from April 16, 1917," to May 18, 1918, but denied that the agree ment was in the form alleged by the plaintiff. The company admitted that the | 1000 shares had not been allotted to the j plaintiff, and asserted that a request of this nature had not been made by him. As an alternative defence, the companv stated that if trie Court held that the plaintiff had the right to an allotment of the shares, such right was conditional upon the plaintiff applying for the shares while in the employ of the company. This condition, it is contended, was set forth I in a letter forming part of the contract \ between the plaintiff and the companv. j The letter, dated April 3, 1917, stated that the right to apply for the shares would hold good only while the defendant was in the company's employment. Should he sever his connection with the companv, the right to apply for the shares would lapse. Prior to the plaintiff ceasing his ' employment with the company he was verbally requested by the chairman of directors to apply for the shares, but he declined to do so. Question of Conditions. I Mr. Skelton said the letter written on | April 3, 1917, by the secretary to the J company, stating that the plaintiff's right I to apply for the shares would hold good J only while the plaintiff remained in the j company's service, had nothing to do j with the actual contract between the par- : ties. 'The letter was written after the i plaintiff had unconditionally accepted in I writing the conditions of employment set j out in the letter from the secretary on . March 30. 1917. The plaintiffs anrtointI ment was terminated by the defendant • company, in consequence of the mine being ] closed down. j The plaintiff stated that he did not j apply for the shares earlier than he . actually did do so. because the shares 1 carried a liability which he did not wish to undertake. The company's property was sold to the Waihi Grand Junction Gold Mining Company, and he estimated the value of the shares when the sale took ■ place at about 4s a share. The company had not paid a dividend during the 20 years it had been in existence. When the. : company's property was sold there were I comparatively few shares on the register. I There were a large number of forfeited shares, and these were oi practically no value. His interpretation of the letter of ■ April 3 was that if he took the initiative Jin terminating his appointment, in that ; case onlv would he forfeit the right to be ! allotted'the 1000 shares.

Defence Advances Nonsuit Points. In opening the case for the defence Mr Prendergast moved the following non-suit points : —(1) That the letter of April 3, 1917, formed part of the contract; (2) that the plaintiffs right to the shares ceased when his employment terminated; (3) that the plaintiff abandoned any right to the shares by his delay in not applying earlier for them; and (4) that owing to the company holding forfeited shares .with varying amounts paid up on them, the agreement to grant the 1000 shares was uncertain in its operation and was not enforceable.

Judgment on the non-suit points was reserved.

John W. Nichol, secretary to the company, stated that when plaintiff was appointed mine manager the company's capital consisted of 150.000 £1 shares, "of which 149,967 had been issued. At this time the company was in possession of 95,337 forfeited shares. The most that bad been called up on any share was 7s B*d on one class of fchare and 8s on another class. Varying amounts had been paid on the forfeited shares.

Evidence of Chairman of Directors. John Dawson, chairman of directors of the company, said there were several contributing causes why the company ceased operations, but one of the chief was the difficulty in properly ventilating the mine. He admitted it was extremely probable that he suggested to the plaintiff that he should jtfpply for the shares. Questioned as to the shares which the directors would have allotted to the plaintiff had he applied for them during the term of his engagement, witness said that shares on. which there was a small liability would have been transferred to him. Any shares transferred must have been subject to some liability. Witness said that if the Court held the shares should now be allotted the directors would, as far as he personally had anything to do with the matter, transfer 1000 forfeited shares on which a dividend of lid a share was pavable, or a total of £45 16s Bd. These would bs shares forfeited just prior to the plaintiff'* appointment as -mine manager. Even if the plaintiff secured the most favourable allotment—shares en which there was the least amount of liability—the dividend would be -2s on each share, or a total of £100 According to the Mining Act all forfeited shares must he offered to existing shareholders before being taken up by new shareholders. Mr. i'rendergast submitted that the letter of April 3. 1917, formed part of the contract between the parties. The reason the company had offered the plaintiff a bonus in the form of shares was to induce him to do the best he could for the company. If the plaintiff had left. the. company's employ of his own volition, or had been discharged, it would have been manifestly unfair if the plaintiff had waited, say, until the company's operations proved successful and then applied to take up the shares. In accepting emphn'ment after receiving the letter of April 3 the plaintiff had acquiesced in the conditions contained in the letter. If he had dissented from the conditions in the letter the company could have taken steps to protect itself. Judgment was reserved.