DUNEDIN DISTRICT COURT.

Otago Witness, Issue 1240, 4 September 1875, Page 5

DUNEDIN DISTRICT COURT.

Mondat, 30th August. J (Before His Honour Judge Bathgate.) Wm. Gregg and Others v. The Shotover Terrace Gold Mining Company (Limited).— His Worship delivered judgment in this case as follows : — The first point for consideration in this case is whether the District Court of Dunedin is the, proper forum wherein the plaint made can be adjudicated. The registered office of the Company, where the register t>f shareholders Ls kept, beinsr in Dunedin, and the subject of plaint beinjr tho rectification of the register under section 35 of the Mining Companies Act, 1872, I have come to the conclusion, although not without hesitation, that this being the district within which the operations of the Company, in so far as concerns the register and its ordinary administration, are carried on, it is therefore the proper /arum for the receiving and considering an application to strike names off the register as being improperly entered therein. This preliminary plea bein;,' disposed of, it lemiins to consider the applicants' claims to have their names expunged from the register as shareholders. The appli ution is bused on the 54th section, which enacts that •' Any share upon which a eisll due thereon diall. at the expiration of 21 days after the day upon which it shall bo due be unpaid, shall thereupon be üb-olutely forfeited ;" and by the 55th section I power of sale of such forfeited shares is siven. It has been contended on behalf of the Compunv that tin,does not confer any power on the defaulting shareholder to render void his own obligations; that while the Company has power to sell forfeited shares to pay calls due, yet for the shareholder to avoid his responsibilities, by default would be to allow a man to benefit by his own wrong. On a careful consideration of the provisions iv the Act refenedto.it is quite clear that their intention and purpose are to enable directors to re.iuse the shares promptly when the shareholder is in arrear of calls. The shares may be sold at once without any notice of forfeiture, and the pioceeds applied m pajmentof the calls and expenses, in order that the Diieetora niav be in funds to provide for carrying on the business of the Company. There is no provision for the ease where the shares are unsaleable, or where a sale does not produc : snmcient to satisfy tho calls nor is there nuy provision dHinetlv allowing a shareholder to dhest him-elf of all responsibility by the mere fact of being in default. The npplicants maintain that the legitimate consequence of the shares being iv terms of the st-ituto, "absolutely forfeited," is. that by the forfeiture he at once ceases to be a shareholder and hW name n>u-.t be struck vtt the register. " But the decisions go to maintain a contrary interpretation, fouudedon rhe just pinciplo that a man cannot benefit by his own wronir. Tho phraseoloay of the section is not intended to benefit the defaulter, but to reinoce the technical objections hgainst forfeiture, which wera usual where certain formalities formed a condition precedent to forfeiture. Suppose that on tho faith of there being a number of shareholders on the register a Companyhad purchased an expensiveconcern orentere'l into large 1 cmtraets, would it be fair or equitable to allow shareholder* who, by being partners, had incurred their share of the responsibility, to slide out of all riik and responsibility whatever merely by aliowing thenvelvei to be in default for a single call ? Ihh would bi unjust to their co-shareholdirs who had paid their calls, and still more unjust to creditor* who, having inspected tha renter as authorised by section 34, had, in the belief the Company was in a position to discharge all its obligations, entered into important contracts with the Directors. Although the T»int is not free from doubt, yet, looking at the disi'-trouß consequences which would follow to innocent creditors if the interpretation urged by the applicants were maintained, and also con-idering that to allow a man to p/oflt by his own default is inconsis. tent with the first principles of justice, I have come to tho conclusion, in the absence of any express provi-ion to tho contrary, that a defaulting shareholder cannot tike advantage of the 54th section to c cape his liability. It may be observed that the secretary U not enjoined to take the name of a defaulting shareholiter off the register. . The cases which establish that where a contract is to be void in a certain contingency is only voidable at the election of the party not in the wrong, support the view I have adopted. An argument against the applicant* may also be founded on the word " forfeited.'' What U forfeiture ? It is the mode by which the relationship between two parties can be dissolved. It confers apower on one pirty to take *way a right enjoyed by another, If he think fit ; but it cannot from its very uiture destroy any right existing in the party not guilty of wrong. The active right of forfeiture can only exist in one' party ; the other being merely passive. The holder of tha active right \» not bound to exeroi3e it unless it be to his advantage. He may waive or decline to exercise his right. The law always presumes against forfeitures, and allows the dominant party to waive his right at his pleasure. lam strengthened in the opinion I have formed by the 35th section, under which the application is brought. It does not contemplate or specially authorise an application oy a defaulting shareholder to get his name expunged from the register. An application for the rectification of the register may be at the instance (1) of any member of the Company, (2) or of the Company, (3) or any person claiming to be interested as transFerror. (4) or transforree; but there is no power conferred on aper.-on who says he has no interest In the Company to make an application wholly to obliterate shares— and in particular there is no power given to a, defaulting shareholder to make such application. The intention of the 35th section is to ensure that the proper owner of each shaie is duly registered; that the title of each shareholder on the register shall bo good and valid, and not to destroy the existence of a share after it has been allotted and taken up. There is a general power conferred on the Court at the end of the section to decide any question necessary for the rectification of the Register; but as I am of opinion the 54th section does not absolve a shareholder from his obligations, unless so desired by the Directors for the advantage of the Company, I do not see how I can give any remedy unr'er the 35th section. Of consent of parties, I direct that the names of A. T. Dunning and Kclward M'Glashan be struck out, there being no transfer, and that the shares in their names remain in the names of the original shareholders ; also that 100 shares transferred by Alexander to Gregg be altered from Gregg to Alexander, there being no acceptance of the transfer. Iv the cases of Dunning, M'Glashan, and Gregg, I find costs due by the Company to the applicants.

M'Landress, Hepburn,, and Co. v. Henry Driver, Charles Stewart, and Hugh John M'Lean.— This suit was brought to recover LIG6 10s due to the plaintiffs on the following grounds: -In August, 1874, George Hyde Campbell bonded in the Otago Bond six cases of lampware, for which he received five several bond warrants from the defendants, who were then proprietors of the bond. These warrants were endorsed by the said George Hyde Campbell to the plaintiffs, and the defendants refused to deliver the said cases. — Mr Haggitt appeared for the plaintiffs, and Mr Barton for the defendants, who pleaded not indebted.— ln opening, the case, Mr Haggitt said that the plaintiffs had obtained from Messrs Calvert and Campbell the warrants which represented the six cases of lampware, and which always had been understood by mercantile men in Dunedin to represent the goods which they acknowledged as received. Mr Campbell requested an advance for these goods, and the plaintiffs, relying upon what had been invariably the case here, advanced to Messrs Calvert and Campbell the probable amount the goods would fetch. It was the practice here to transfer these goods into the names of the holders of the warrants until the goods were about to be dealt with. The custom was to make the warrants transferable by endorsement.— Mr 'Barton contended that there was no mercantile custom in Dunedin, the place being too young. It was decided twelve years ago that there was no custom in Melbourne. John Arnot, Custom House Agent, deposed that it was ■customary here for endorsees to hold warrants until they required the goods. George Turnbull, merchant and proprietor of a Bond said he kept such warrants by him till he wanted the goods, unless he had soma reason to believe that the original vendor was insolvent." George F. Tait, late manager of the Otago Bond de-

pond thai when h« signed the warrants, he in* tended to transfer the goods to the holders— the plaintiffs. The goods were delivered on th« 13th August, without the receipt and the warrants, to Calvert and Campbell. The practice was to cancel the warrant at the time of delivery. Unless in special cases, goods were never delivered after warrants had been issued, un]c3S the warrants are cancelled and produced. John Davie, of the firm of M'Landress, Hepburn, and Co., deposed that he gave value for the warrants produced, and corroborated the evidence of previous witnesses. When he suspected that Campbell was getting into trouble he sent down all the warrants the firm had of Campbell, to have the goods transferred into the plaintiffs' name. Witness found that the goods had been delivered. He could not tell exactly what advances had been made on these goods, and what the amount was. James bcoular, merchant and bonded warehousekeeper, deposed that his warrants were similar to those of the Otago Bond, being "transferable by endorsement only." The foods «re delivered to tho holder of the waiWmt —MiBarton moved for a non-suit. He said that Mr Dayie was quite unable to tell the date on which he received the warrants from Campbell (who took them after the goods had been aold to someone else, and when the warrants were of no value whatever), to Mr Davie for the purpose of raising money and keeping hia -rrtfaira secret, according to the practice here. Ihe Court had no evidence of what the plaintiffs advanced to Campbell. There was nothing to show that the property of the ijoods haS passed. He denied that the warrants were negotiable documents. Mr Davie received the warrants with the writing on the back for goods which were delivered nine or ten months before. The clerk of the Otapro Bond cancelled his name on the front of the warrant and wrote the word "Delivered," and it was an oversight that he did not cancel the endorsement on the back. The real quesfon was this .-—What is the effect on strangers of the words " Transferable by endorsement only. " The plaintiffs must be non-suited on this point, because they treated this tranaotion as a contract between them and the defendants. A stranger was not a contrantoi unless he had the goods transferred to his own name. The learned counsel then commented at considerable length on Chief Justice Ariiey's judgment in the~case, Teschemaker v. M'Lean, showing its bearing on the present suit. The defendants were not liable in trover or in contract for the goods which they had not in possession when the wairants were given to the plaintiffs. He cited Langton v. Sifigins, 28, L.J., and Stoheld v. Hwjhea, 14, East. 308, and other cases. He contended that there waa no contract between the plaintiffs and defendants.— Mr Hagptt, in replying, snid there was nothing in the law to prevent a man doing an act in advance. Ihe words "Transferable by endorsement only ' meant that the goods should be delivered to the holder of the warraut. His contention was that the documents were presented for a certain purpose, and beyond that purpose the manager of the Otago Bond had no right whatever to interfere with them. This was simply a question of attornment, and the attornmenfc cannot be retracted or repented of when it is once made. The Legislature of this Colony had recognised these warrants as negotiable instruments. Advances to Agents Act, 1881. sections 8 and G. He had shown by evidence what was the custom here.— His Honour said the case had been very ably argued, and he must reserve judgment, Shortly before 5 o'clook tho Court adjourned till this morningr,