THE APPEAL COURT.

Otago Daily Times, Issue 13641, 10 July 1906, Page 5

THE APPEAL COURT.

(Pek United Press Association.) WELLINGTON, July 9, The ease of Cowllshaw and others v. the Christchurch Press Company was resumed to-day before the Court of Appeal.

Mr Bell, for the plaintiffs, quoted authorises in support of his contention that the profits raado by the defendants from 1692 to 1893 ehouitl have been expended 'in paying dividends to ordinary shareholders instead of being put into t.lio business and converted into capital. Learned counsel quoted from tin balance sheets to show tha-t. between IC3I and 1904 the .ifsets of the company Iv.ul considerably increased, and. the increase had been built up out of the annual profits after paying dividends at 8 per cent, to nrefcrciico shareholders. The plaintiffs wanted an account of the profits taken and a declaration of the court that the profits which should have been raid to ordinary shareholders, but which had been used to build un the business of tlw company, belonged to the ordinary shareholders. .

Continuing his argument in the Court, of Appeal in (lie case of Cowlishaw and Olivers v. the Cliriskhureh Press Company (Ltd.) and. another. Mr 'Stringer gave a resume of the history of the, company. The original company had been formed as far back as 1869, but- had lost a great part of its capital, and bad not lieen able to pay dividends to its shareholders. The company was leconslnicfed in 1890, lira old shareholders siting amongst them 1329 fully paid-np £25 shares, which wore declared lo be deferred siiar;-?, and Iho new shareholders getting 630 shares at £15 per share, which were declared lo be preference shares. The hoi,lew of the preference shares became onlitled ro draw a cumulative dividend of f) per rent, per annum on the amount paid up' on the shares. If there were not .mflicient. profits in any one year to pay 8 tier cent, on these shares, then the amount not paid in that year was to bo made up out of the profits of the next; year. After the preference shareholders had received a. dividend of 8 per cent, then ihe deferred shareholders were to receive a dividend on their shares up to 8 p-i- cent, if the profits allowed of it, and if there were anv"further profit to be distributed. after these dividends had l/'on paid this profit was lo be distributed after these dividends to the two classes of shareholders. In Ihe first year of the operations of the reconstruct! 'company the balance sheet showed a. k-ss. but from 1592 to the present year there had hern an increasing profit made annually, til! in 1904, accordinn- to the balance shcl. il amounted to £9940. From 189?, In 1093 dividends of 3 ]'.or cent, had been paid lo the preference shareholders, but. no dividends had been paid during Ihat period of time, to the ordinary shareholders, and . the money available for dividends to the ordinary shareholders had been loft in tte business of the company, and the company's as=ets bad been considerably swelled out. of dividends that, belonged to the ordinary shareholders. It was from that sum that the plaintiffs wanted the court to declare that they were entitled to receive a dividend of P, per cent. Mr Stringer cited authorities In .show that the actions of tin plaintiffs in agreeing year by yel'r to the balance sheets of the eompanv did not amount, to acriuieseence in the diversion of the profits to permanent assets. Mr Iloskinir then addressed the ronrl on behalf of tlm defendant company. Tie ron-tendr-d (1) that on the proper construction of t.lio articles of association of ■ tho company the ordinary shareholders had 1 no rifrht of action against Ihe comnauy for dividends that had not been declared bv the directors, and no exclusive proprietary right in respect of any part of the profits of tho eompanv: 121 that, if the arlic>s dealing with the declaration of dividends were ambiguous, and the .directors, with ihe assent of tlw shareholders, bona, fide placed one consistent construction upon the articles, the courts would uphold that construction; (3) that the profits not declared as dividends had now been converted into capital of the comnanv. and could not now lie distributed as dividends. Mr Woskine had not concluded hid arenment when the court adioumed at 4-.15 this aftornoon till 10.30 to-morrow morning.