BOWLING COMPANY SHARES.

Otago Witness, Issue 3803, 1 February 1927, Page 61

BOWLING COMPANY SHARES.

WELLINGTON, January 28. From August 17, 1907 (when he was elected) to 1924, James Dickson Sievwright, journalist, of Wellington, acted as-- and exercised the rights of a shareholder of the Wellington Bowling Club (Ltd.), and during the year 1917-18 acted as a director. In 1924 he was expelled from the company, and his share forfeited. The Court of Appeal upheld that expulsion on the grounds that Sievwright was not a member of the club because when he was elected and the one share was issued to him the capital of the club was over-issued by 334 shares, and there .. ..s no share to be allotted to him. The company by special resolution in 1926 adopted new articles of association in lieu of the old, and increased the capital to the amount of £lBOO by the creation of 250 shares of the nominal value of £3 each. On February 23 Sievwright applied for the allotment of a share in the new capital in the place of the share which the company purported to have allotted him in 1907. The company and the directors refused, and Sievwright took the matter to court. Reserved judgment ■was given by the Chief Justice (Sir Charles Skerrett) to-day in favour of the defendant company, with costs on the

lowest scale. “Until the amount of capital has been increased in the manner provided by statute.” said Sir Charles Skerrett. in his judgment, “a company cannot enter into a contract which purports to allot or deal with shares to an amount in excess of the amount of capital prescribed in the memorandum of association. Such a contract if entered into is absolutely void. The circumstances that the plaintiff had acted as a shareholder of the company for about 17 years, and had been treated by the company during that period as a shareholder, cannot affect the matter. The answer to the plaintiff’s claim is that he claims under a contract which was ultra vires of the company, and therefore void. “ But it is said that when the capital of the company was increased the company became bound to issue a share to the plaintiff under the agreement of 1907 and under an agreement to be implied from the long course of dealing between them. It is clear that the company would not have entered into any such new and independent contract with the plaintiff because of the friction which has arisen between the plaintiff. and the company. The claim that upon the increase of capital the company became bound to issue a share in the new capital to the plaintiff is only another way of suggesting that the contract of 1907 was voidable, and that by reason of the relationship of the parties during the period of 17 years the contract became binding on the company. This argument is wholly untenable. The original contract was wholly void and incapable of confirmation. It is plain that to entitle the plaintiff to an allotment of a share in the new capital he must show an enforceable contract on the part of the company to make such an allotment. * T '*»is he has failed to do.”