ASHBURTON CHEESE & BUTTER FACTORY COMPANY.

Ashburton Guardian, Volume V, Issue 1365, 8 October 1886, Page 2

ASHBURTON CHEESE & BUTTER FACTORY COMPANY.

AN IMPORTANT DECISION.

An important decision was given by

Mr H. C. S. Baddeley, R M., yesterday inasmuch as it effected the validity of claims made for calls ujjon unalloted shares which were taken up by the shareoldors in the Ashburton Cheese and Butter Factory Co. at a meeting held in 1883 It will be remembered that a case brought by the Factory Company against Jas Osborne one of the shareholders, was heard at great length a fortnight ago, and as several legal points were involved the Magistrate reserved his decision. The claim was for £6 3s lOd and a set off for £l2 had been filed.

Judgment was given this morning. Mr Parnell appeared for the Company, Mr Oaygill, for Mr White, for the defendant. The following are the terms of the judgment :—This action is brough by the Co mpany against the defendant to recover over due calls and interest. The chief defence is that of Misrepresentation, in strong con-

tract to the defence in the last case by the same Company for calls, Fraud or vfisrepresentation being then oarefuHv left out of the question The learned counsel for the defendant said that he would show that the defendant was not liable on these shares as he Had been induced by fa ! se representations to apply for them. The large bmount of evidence take on this point was to be out out altogether if the defence failed in its proof. Brockwell’s case (4 Drew, 206). was relied on: In that case the Company had its vary i ic piency injfraud, continued in fraud, and all documents emanating from its directory were fraudulent; the Company was steeped in fraud, it was r epresented annually aa most flourishing, whereas it was hopelessly insolvent. M'or the defence set up in the present case to be effective it must be shown that the misrepresentation was intentional. Here there is a clear contract between the parties a n d that contract was executed. The defendant objects to pay the calls made upon him by force of that contract, and as was said in Barnes v Pennell (2 Hof L cases 529) it w raid require a very strong case of fraud, it would require not merely a general aver ment that there had Jbeen irregular conduct on the part of the Directors, not only a general averment that they bad behaved trickily, so to speak; it must be shown that there had been some specific fraduient conduct, which gave rise to the particular contract in question, and if there is such an averment there must be no failure of proof. Now, what are the facta of this case : This Company was never In a flourishing state; the bilancesheats show this) snd, although the Directors were always hope ul, still it must have been apparent that it was not at ail a paying concern from the reports themselves. The Directors carried ic on for some time at a gr at loss to themselves and the reason cf the shares being taken up was to enable the Company to continue its existence. The very milk accounts of the last supply were paid out of the

Directfra’private pockets. The evidence with regard to the resolution is moat conflicting. Osborne’a recollection regarding matters that he might have been expected to remember wai proved to be uncertain, and it was quite likely he was m staken about this. I can only suppose in consequence of the din and rattle which seems to have been going on during the meeting that th *re has been some mistake but this should have been cured at the meeting to confirm the minutes. The res -lutiun was a tered and probably the wrong one g°t ii.t) the hands of the reporter, for he rightly characterises the one published as ambiguous, The mover is uncertain whether the words “shareholders present” were in the resolution but Mr A corn, wb» took an active part in framing it gives a reason for his being confidant that that was the effect of the resolution put to the meeting, and the Uhairman also swears that the resolution as it appears in the minute book was the one put to t>e meeting The reason given by Oabo ne for not being present when the minuter were confirmed was not a satisfactory one I don't consider that the defendant tra> at all coerced by the Secretary relative to the payment of calls. If the paymen was not voluntary why did he not tike s-eps to get his name remove ’ from the share register, or, at least take steps to recover the £4 Having gone through all the evidence very ca efully, I find that there has been no misrepresentations and it seems a great pity that such an imputation should have been made against the Directors and I am surprised (the charge being made) that much more evidence bearing on the point was not

brought before me Considerable stress was aid on the iiqti ator having called the matter a “aw ndle,” Some people are given to the use of such words on slight occasions ; they use them, perhaps, in a Pickwickian sense, and, for aught I know, the Hqul lator is one of these. But his oiling it a swindle does not make it one, and, of all the shareholders swindled, to nsej the expression, the J directors were the moat so. Had fraud or misrepresentation been shown 1 should have held that the defendant was stopped by conduct from setting it up. He had paid calls, having full knowledge of the state cf the conuany ; he cannot blow hot and cold In this way. He cannot now. say he U not a shareholder or a contributory (Barnes v Penn all, 2 H of L cases, 529, and Lindley on Partnership, p. ICI and 1087). By clause 103 of the Gompmiea A t 1882, the minute book is statutory evidence, and, there being no fraud proved, the resolution therein appearing and confirmed must be taken to be the one passed and the defendant having, In terms absolute, applied for shares which have been allotted to him must pay the calls and interest now sued for. With regard to the set iff the case of Brighton Arcade v Dowling (L Hep SOP. cases 175) is conclusive ; in an action of this kind when a company is wound up voluntarily no doubt a set-off can be pat in. Clause 164 of the Companies Act has no relat'on to the case of a voluntary winding up, bat as the onus of proof in a set-off iies upon the defendant, as that of proving the case lies upon the plaintiff usually, and as the plaintiff has failed altogether in his proof I cannot allow it. The £d a gallon for milk was dependent on a contingency, which contingency has not happened. This set-.if appears to have been quite an afterthought of the defendant. Tbe liquidator, of course, stands in a stranger post'ion than the directors, and defences which might be available against them when in r ffice are not available against the liquidator. I would point out too that all the receipts for milk supplied to the Company are in full to date. Judgment for plaint ffj with costs. In a similar case. Cheese and Butter Factory Company v Houston; claim £5 3j 3d, tin defendant agreed to abide by the decision given above and it was agreed between the counsel that costs \ should be equally divided between both ciees.