DISTRICT COURT. HOKITIKA.

Inangahua Times, Volume IV, Issue 1, 11 April 1877, Page 2

DISTRICT COURT. HOKITIKA.

Thursday, Apsil 5. (Before His HWjoi 1 Ju.lge Wesfon.) (From iji- West Con^t T.mes,) **! ' Mm Honor' took hi* »o*u the Btj^ at^ff-pas^len, and d4Ufer«|t|ndgDDplt, int&e follc^ig efees :-*|J, &> % %\% ivutithboML Qoid % \n.\vtm cosrtiiMr isr Liqin^ATiosr, James Clinton under the circumstances to be presently narrated, invites the Court to remove his name from the list of contributories in this company. . On the 10th May, 1376,! the company of whifh, he was a director and shareholder, was indebted in about £300, to meet which, a call had been struck. With full knowledge of that fact, and also that the com* pany had just ceased operation? at their mine, he discharges his call and transfers his shares — admittedly unsaleable — to Kelly, an entire stranger, whose position if known to him, has nob been made manifest to the Court. The transfer is signed by both parties, the signature of each being witnessed by the other of then*, and then it is registered. The consideration for the transfer is stated at £5, but in reality, no taoney passed between the parties to it. On the 21st June following, an application was made to wind up the company. As I understand, the liquidator impeaches the transfer, firstly, on account of the indebtedness of tbe company when it was made, and secondly because tbe facts negative an absolute sale- Now, I cannot find a ease to establish the first proposition, if it is treated separately from the other. In Hyam's, Costello's, Budd's, Lnnn's. Hutton's »nd Weston's cases, upon all of which this court has hitherto endeavored to decide in cases of this character, the English Court of Chancery has accepted as binding a transfer of shares, disregarding the position of the company at the time it was executed, except it was to assist in testing the bona fides of tbe transaction in se and the parties to it. Upon this point tbe Master of the Rolls expressed himself in Budd's case, 31 L. J. cb., " That if a person bona fide, believing a company in wbich he is a shareholder to be insolvent, wishes to get rid of his shares, and before tbe thing is wound up sells the shares to a stranger or even gives a stranger money to take them off his hands, that is a perfectly good transaction, and will be supported by the court. It is only when, in fact after tbe company has been manifestly and publicly declared to be insol" vent in order to get rid of his liability, he gives his shares to a pauper or to a per- j son over whom he has peculiar influence, as in Hyam's case, and the like that I am of opinion the transaction cannot be sup* ported ; ard if there had been ** boit t €Je transfer of shares I should have been of that opinion.' 1 That case went to the Lord Justices on appeal, by whom tbe dictum does does not appear to have been dissented to. In Hyam's case, 29, L. S. Ch., referred to by the Bolls, it appeared that the Hyains' having shares in the Mexican Company employed a broker to sell them. To this broker they in* traduced their warehousraan, Hudson, a man with £150 per annum, as a pur« chaser. Out of certain Ottoman scrip entrusted to the broker for sale by Hudson, the purchase money was to be paid. It transpired, however, (bat the Ottoman s were in reality the Hyam's property Upon appeal the Lord Chancellor (Campbell) treated the transaction (a striking one) as a mere sham, he held that no sale took place, and that the transfer had no real operation. He sayed, " According to tbe decision of this Court, to which I respectfully bow, if it had been proved that they bad parted with all interest in v their shares, although for the express purpose of getting ridot their liability, and although they knew they were of no value, and that tbe transferee was % man of straw, they would have been absolved from liability and ought to be removed from the list of contributories." Wood, V.C., in Hutton's case, 31, L. J. Ch., also confirms that doctrine, and gave the following definition of the term " sale " : " There is no narrow interpretation to be given to the word ' sell,' but it must be something of a dealing between vendor and purchaser, and something' in the nature of an out and Out transfer between the parties." Upon such authorities and under. the circumstance of the case I think the onus rests upon Mr Clinton to prove the bona fids* of this transaction ; to show upon the definition given by Wood V.C., that it mat an out and out sale, in other words that there* was no scret agreement to in* detnnify ; that it was a real and substantial ' transaction, "not a mere device for the purpose of evading, fn an undue aad improper .gUnner, a liability tfhich the law afforded the* means of removing or escaping from, perhaps in a proper manner " (Costello's 0 ase) ; that such bona fides existed as would enab le Clinton to apply for a mandamus to compel the insertion of Kelly's name upon the list of contributories. The peculiar, if not irregular attestation to the instrument of transfer ; the falsity in the consideration for the transfer; the inability of Clinton to account for the whereabouts and position of Mr Kelly, give a color to the transaction, and force to the suggestion that he, a man of pro* pcrty, transferred his shares in form and not in substance for the sole purpose of endeavouring to escape from a liability,

which he saw they miM. in the future, cast upon him. Tor eirsh re.isons the final order will be withlu-UI until the next sittiifg at Reefton, with leave for Clinton to tet^w his application in the meantime, ittpotf notice to the liquidator. W^ JUMU3 TOQEL GOLD-MININO COMPACT i"C* IN LIQUIDATION. {_, *'> t'bis was an application m*4# tjSL .William James, Coates, of GreymenJ^ for the removal of bis name from the >9p of c*H#ibu tones in this liquMr^jd^ OpOlllhjfoeßister of shareholders, stin^B the name of Don Pedro Andersiou in respect of the shares. lam satisfied from the evidence that Mr Coates did not parchase an interest in the mine, to make which the company was formed. Mr Coates denied the authority of Mr Dairies to enter h»s name upon the memorial for registration of the company : indeed, Mr Davies admitted that before the re#s*w« j tion was effected— although it wan sub;** j quent to the preparation of the memorial— j Mr Coates refused to become & »lui-e- j holder. In such view the entrjof J'r, Coates in the register book was a rois'uS;^. ! How then is Mr Coates, liability dvat*^- ? ; The execution and registration of s ; transfer of the shares to VFi An lw>.-- U : the reply ; not that the transfer utr^x ; as it was by Anderson is valid, bat ! because, as Mr Newlon cantandeJ, | although invalid, it aynouttol to a ratification by Coates of Mr Davios' set. The transfer was presentei to *L? ' oates fer execution by the ger-tie^an who formed and managed the coavany; the instrument bears date close u> the moment of repudiation by Mr Coates, and prior to the formal registration of tin? company ; the proposed tmsferee was the gentleman from whom ii is sayed he purchased the original interest represented by the shares : and the consideration mentioned in the transfer is the amount stated to have been giren by Mr Coates for that interest. Cannot the Court therefore accept a* substantial Mr Button's argument th » t His client signed the document prescmel %• Mr Daties, merely to rectify an error made by the promoters of tiie company, and thac it cannot amount to a ratification of Mr Davies' insertion t I am impelled to that conclusion, and Mr Coates' name must therefore be removed. The liquidation will have power to amend the list. I think Mr Coates was imprudent: Firstly, in recognising the iistrn* ment of transfer, and secondly, hsving done so in fatting to see that it was , properly executed by the transferee. For these reasons he most be refused costs.