AN IMPORTANT MINING CASE.

Otago Witness, Issue 2429, 3 October 1900, Page 20

AN IMPORTANT MINING CASE.

His Honor M±- Justice Martin, sitting in banco, delivered judgment in the Supreme

Court, Christchurch, on September 26, in the case heard recently, m 'which R. O. Duncan and J. H. Hopkins, liquidators of the Bell Hill Gold Mining and Sluicing Company, moved for a 3um.ra.ons calling on James Knight to show cause why he should not be ordered to pay the amount of a call made upon him in respect of 450 shares.

lhis being a test case, and of interest to mining speculators, we reprint the judgment in full as reported in the Lyttelton Times.

His Honor said that Mr Knight was a director of the company, and the company being m want of funds, he agreed to make an advance, provided he received certain security, and in addition 150 fully paid-up shares.- Suhsequently, the amount he had advanced becoming due, and the company not being in a position to repay it, and not being able to raise it elsewhere, Mr Knight agreed to renew his loan and make a further advance, receiving, in addition to such security as the company could offer, 300 full paid-up shares. Neither of these sets of shares v/as to form part of his security, but they were to be his property. It was clear from the evidence that the -shares were to be fully paid-up, shares in respect of which Knight could be under no liability as to calls. Knight advanced his money and received share certificates for these shares. These certificates, dated respectively December 11, 1896, and May 22, 1897, 'he did not examine, but placed them in his deed-box with -his solicitors. It was admitted that Knight had throughout acted in perfect gpod faith"; neither Knight nor the directors of the "company were aware that the company could not issue paid-up shares unless, as a m,atter of fact, they were fully paid-up, nor were any of the parties aware of. the provisions of Section 34 of the Companies Act, 1883. 'His Honor said that, in consequence of advice received, from the company's solicitor on a question as to the issue of £1 shares at a discount, Knight's attention was drawn to the fact that the shares issued to him were such as would render him liable to calls. Whether he thought of the matter or not did not appear, but he took no steps to jepudiate the shares issued to him or to have his name removed from the shareholders' register. After referring to other circumstances, his Honor said the conclusion he had come to v/as that Knight when he knew that he had not obtained fully paid-up shares, for which he had bargained, but had obtained shares in respect of which calls might be made, was nevertheless satisfied to retain the shares issued to him. Had Knight not assented to holding the shares issued to him, in lieu of those for which he stipulated, he would have had two answers to the claim. Pirat, that he had never agreed to become a shareholder in respect of the shares issued to him or assented to his name being placed on the list of shareholders (Amot's case, 36 Chancery Division 702, and in re Macdonald, Sons, and Co., 1891, 1. Chancery, 89); and, second, that the company and liquidator were estopped from denying that these were fully paid-up shares (Blqpnienthal v. Ford, 1837, Appeal Cases 156). But, having adopted the transaction as, his Honor thought, it was evident he did, he coiild not now fall back on his original position. An order would therefore be made as asked for La the summons, together

with costs £5 ss. This ca3e was brought as a. test case, and will decide a number of others.