ANNULMENT SOUGHT

Poverty Bay Herald, Volume LXIV, Issue 19334, 26 May 1937, Page 5

ANNULMENT SOUGHT

COMPANY RESOLUTIONS

TRANSFER OF SHAKES

(Per Press Association.) INVERCARGILL, this day. In the Supreme Co»'t yesterday, before Mr. Justice Kennedy, an order declaring invalid certain resolutions passed by, and shares transferred in, the drapery company of Miller's (Invercargill) Limited, was sought bv George Maddams, of Rangiora, one of the shareholders of the company.

The defendants in 'the action were Miller's (Invercargill) Limited with James Thomas Sharp, ot Invercargill. manager, Alice Sharp, of Invercargill. Walter Garwood Winnocott, of Christchurch, draper, Thomas Loftus Jones, of Christ church, engineer, Charles Laidlaw Purdie, of Christchurch, retired. William Alfred Thomas, of Christchurch, tailor, and William Josiah Love, of Christ church, retired.

Mr. H. D. Macalister appeared for the plaintiff and Mr. L. J. Hensley, of Christchurch, for the defendants.

The plaintiff was a shareholder in the company, known as Miller's (Invercargill) Limited, an incorporated company carrying on business as drapers in Invercargill, said Mr. Macalister, in opening the case. Tho company was registered in 1933, with a capital of £IOOO. .The plaintiff held 3CO shares in the company, Sharp 350 and a Mr. Hanchard 350. Dividend of 150 Per Cent The company took its name as a result of its association with a Mr. Miller, a wholesale diaper of Christchurch, who supplied a number of shops bearing bis name throughout the Dominion. Apart from that he had no connection with the firm. The company started in Invercargill in Ifune of 1933 and became increasingly successful. Sharp was appointed as manager at £5 a week and in September this was raised to ,G 7 a week.

At the expiry of the period ended in September of 1934 there was a profit of £2318. The directors were then the three shareholders, Hanchard, Sharp, and Maddams, and in dealing with the surplus the directors were able to declare a dividend of 150 per cent, £ISOO being paid out as a dividend and £750 in addition, as the directors' fees.

The plaintiff would say that in recognition of Sharp's services during the strenuous first year, he was allocated £655 of the directors' fees, the balance of £95 going to the plaintiff and Hanchard. Immediately after the meeting on October 1, Hanchard resigned and Mrs. Alice Sharp was appointed in his stead, she acquiring 50 shares. Protest by Plaintiff

It would be proved that the defendant acquired the shares from Hanchard, and ns a result of a protest from Maddams, it was agreed that the latter should receive 33 of these shares. That was the position in October of 1934 and-the business was carried on by the defendant as managing director until the expiry of the year. In March of 1935, when the company showed a profit of £IBB6, after allowing for income tax, no meeting was held to deal with this balance sheet until after September 8t 1935. Prior to any action being taken, a series of minutes was prepared by Sharp in Invercargill, signed by himself and Mrs. Sharp as directors* and sent to Maddams for bis signature. Counsel then dealt with the various negotiations between the plaintiff and the. defendant, and said that the claim was based on a well-established principle of company law, that the majority could not obtain an unfair advantage at the expense of the minority. The defendant had over-ridden the plaintiff in the conducting of the business. No Evidence for Defence After evidence for the plaintiff had been given, Mr. Hensley said he did not intend to call any evidence. The broad position was that the company was part of Miller's organisation in Christchurch. All Miller got out of it was business from the stores in the supply of stocks, which provided a source of outlet—nothing more. The trouble between Sharp and Maddams seemed to have arisen at the time of the disposal of Hanchard's shares. Hanchard was at bberty to sell his shares as he pleased, and counsel submitted that the company would have to accept the transfer. Maddams actually signed for the shares and also signed a resolution appointing Mrs. Sharp a director. Maddams got an idea lie had been unfairly treated, and from that time he begaiu his bargaining. His signing of the transfer of the shares showed that he must have been satisfied at the time, and his latest statements were apparently an afterthought. The defendants had acted upon advice and had accepted the shares. The proceedings were perfectly valid and legal. "Dummy" shareholders were appointed to avoid a deadlock over the hold-up of the annual meeting and were not used in any other way. There was no desire to oppress Maddams or take away his rights. Mr. Macnlister was replying when the court rose for the day.