A TEST CASE

Evening Post, Volume CXXVI, Issue 134, 3 December 1938, Page 14

A TEST CASE

INSURANCE LEVY

CLAIM BY COMPANY

MEMBERSHIP ISSUE

(By Telegraph—Press Association.)

AUCKLAND, December 2,

What was described by counsel as a test case in which many people were interested was brought before Mr. Justice Fair in the Supreme Court, when the Public Mutual Insurance Company of New Zealand, through its liquidator, Joyce William Hyland, claimed £26 5s and costs from Walter Harold Hunter, taxi proprietor, Auckland.

The statement of claim set out that every person desirous of becoming a member of the company had to sign an application to that effect, or for a policy of insurance. The granting of a policy was sufficient proof of membership. The defendant had, .on June 7, 1937, satisfied both those requirements. A policy was granted to him and subsequently renewed, for ,a period expiring on June 7, 1939. On August 11, 1938, the directors made a levy upon air members of two and a half times their current annual premiums, to be paid on September 16 last. Hunter's levy was not paid.

The statement of defence denied all knowledge of a decision on September 23, 1938, to wind up the company or that the defendant lodged an application for membership. It was admitted that he took out an insurance cover with the company last year, and renewed it for a further period, but he denied that he was entered as a member of the company or that he had knowledge of the decision to make a levy upon members. It was denied that Hunter was lawfully liable for the" levy of £26 5s made upon him.

QUESTION OF MEMBERSHIP. ,

Mr. Richmond, for the plaintiff, said the action had been taken as a test case. The real matter at issue was whether the defendant was a member or had been a member of the plaintiff company. The action had arisen becau/e the defendant argued that there never was in effect any register of members, and that he never was entered upon any register of the company.

"That matter, of course, affects all other persons who are alleged to be members of the company, excepting those persons who signed the memorandum of association," Mr. Richmond continued, "and those who may be still members. If the defendant is not and never has been a member of the company, the result would be that at the meeting on September 23, 1938, at which members or those who purported to be members passed a resolution to go into liquidation, there would not be a quorum. If that is the position the company is not in liquidation, and the gentleman who purports to be the liquidator would not be the liquidai tor."

There was a very large amount involved, counsel said. The liability of all persons who were proved to be members was, of course, unlimited. There was a debenture of £23,700 and there were claims against the company in respect of policies and other creditors. The levy made by the directors before the company went into liquidation was sufficient to produce £90,000, assuming that all members paid or were capable of paying. The net amount required from members was £40,000. DEFENDANT'S CONTENTION. Douglas Arthur Young said that at the beginning of August, 1938, he was appointed general manager of the com- j pany. Witness said he had not been J able to find any book labelled or titled "Register of Members." He said that the defendant signed a proposal form, and an entry was made in the proposal book. The form was bound with others and a card was included in the system of indices which gave particulars ' relating to insured persons who claimed to be members.

Cross-examined by Mr. A. H. Johnstone, X.C, for the defendant, witness admitted that at no time would the renewals register show a full list of members of the company. There was no book to show membership, when persons became members or when they ceased to be members of the company.

That concluded ,the evidence for the plaintiff, whereupon Mr. Johnstone opened for the defence. He said it was submitted that the defendant was not liable for the sum claimed be-, cause he was not and never had been a member of the company. According to section 38 of the Companies Act, 1933, it was laid down that a member was one who had agreed to membership and whose name was entered on the company's register of members. The second condition of membership never was fulfilled in Hunter's case because, .it wty? submitted, there never was a register.

The hearing was adjourned till Monday. o*