RESIDENT MAGISTRATE'S COURT.

Nelson Evening Mail, Volume XI, Issue 117, 9 May 1876, Page 2

RESIDENT MAGISTRATE'S COURT.

I Para Para Iron and Coal- Company (Limited m v Bussell. j| Tho Resident Magistrate delivered the fol-H lowing j udgment this morning : — B This is an action to recover £59 from theg defendant, being. £25 allotment-money, nndEg two sums of £12 10s. each for calls due upon fa shares in the plaintiffs' Company. The factsß are as follows :— On the 3rd January. 1874-.R] a prospectus was issued by the provisionals directors of the proposed Company, 'in which B ie waa stated : " The Company will be formed ,H and shares allot tel, as soon as applications forß 8,000 shares have been received.'' Thedefend-g ant made application, on the, 28th of March ,B 1874,f0r 25 shares, and received a receipt for hUm deposit from the Dunediu agents of the Coni-W pany. On tbe 3 ist of August, a letter was | sent to him signed R. Blackwood, chairman, | and James Anderson, secretary pro tern;, in- | forming him that 6,500 shares having been | applied for, the provisional directors had i determined to allot them and proceed tb busi- 1 ness. Defendant was further informed, that I 25 shares had "been allotted to him, and he 1 <ras '* requested to pay the sum of j625 (being i the amount due oo allotment) to the Coin- | pany's bankers or agents, on or before the 14th | September, 1874, which payment will be ta'<bn | by the provisional directors aB indicating; §| your approval of the. course now adopted "M Defendant did not pay the money because he|| disapproved the proposal to start the Com-t| pany with the 6,500 shares, and indeed, such^ a proposal might well induce a prudent per-|| son to; hesitate. A scheme which muht bea worked to Rdiantage with -a capital of £40,000 j|

IK would possibly result in failure, if there were| only -je3'?,500 "available At any rate, thej propo-ecl alteration in the terms of the prpg-g pectus waV gui el sufficient! tn justify the| defendant iin; refusing-' to take; up the shares.! It is admitted by plaintiffs that the circular, sog far as it ftoesywas written by the a*.creditei , | ageßtof tne. Provisional ' Directors, and noi advantage is ""proposed to' be taken of any 1 ! I want oi author'ty on his psrt. About a | -nonth afterwards, namely, on the 24th | September, a second circu or, signed by the » ■mmc persons as the former one, was sent to f defendant, informing him thst the lull number | (JB,000)i of had been.'.FUbscribed 3 fbr, and ag* i v all;dt'ng hi.n 25, ahd requesting j payment of the allotment raone/. Tha dt- ! fendant took no notice of this second cir.ular, \ the date on which by tbe first circular he | was to take up or refuse his shares, namely. % tbe 14th September, having passed The* Company was not incorporated until the 23th '{ of November, 1874. lt is argued thit the < •i> fendant's name being on the register is j prima facie evidence of his being a shate* l holder. The Company bave of course a right \ tb register the allottee in. all cases wbere a j binding agreement, to accept shares can be i Shewn to exist. Now, the prospectus constitutes! the contract, on the faith of which the defend-! ant. applied for shares; and it has already beenl seen that in one important particular the t-rmsi aoi the prospectus were proposed to be altered, « ■and thit defendant refused to acquiesce in the j ■alteration.; But by the. prospectus thres Bthings were to be done before defend|pbti coull be called upon to p.y his allotgajent moiey.*- The 8,000 shares were to ■be subscribed ■ for, the Company was to be; B formed, that is, " incorporated," and then Wthe shares were to be allotted. That this was 8 the clear intention oi 'the provisional dire<-> 9torß, is manifest from the next line in the gprospestus : ■•* in' the event of the Company j anot 3 being formed, deposits will be returned j 3to applicants without any deduction ;" — tha ! i j| is, until the due incorporation of. the Com i ■ pany persons wanting .hares were simply j 3'4'applicants," not allottees. And the Bth; 9>f the , articles of association provides: B '-Any shares riot taken by the subscribers 1)f the memorandum of association, shall be Sailbtted to such person or persons in mch ■ proportions as, tho • Directors for tho time ■being shall direct." ' This means apparently! ■ that the ten persons who signei the] ■ memorandum ot atsociation wore at " the; Bilate of incor oration t'.e only actual share-! Bholders. The Direotors were afier incorpo-j ■ration y to allot the remaning shares to Btlit. various applicant, iti such proportions nst gthey thought fit". lam of opinion that there H was no .binding agreement between the.desj fondant and the Provisional Directors, th-t athe allotments of stiares on the 31st August Band 24th Sept; mber were irregular, and that Bsince incorporation the Company h«s made ■no allotment .'of ..shares, therefore, that the Bdefendant's n-inv.! ha< been improperly pl ced ■upon the register of sbari holders, and that he ■is'-not liable in this action. It is not nece>sary 9 for rae to decide in the pres nt case the ■question as to the legality of making calls, a Bq'.orum^.of the-. Direc:to*s..not, having, beenl ■fifed. ' Lyst'er's cisc 4L. R., Equity, 237 J Smay throw some light upon the point. Thisj B action serves to illustrate sotn 9 of the many [ ! difflcu'ties attending - the transactions of as I Company in : its inchoate state of existence,*; £ and to show how unadvisable it is to issue »j I prospectus' and solicit subscriptions until the | Company is du'y incorporated. | -Judgment for defendant with costs. 1 Shortly after last harvest three and isixperice per bushel was offered for bats ratiOamaru, The oats which have been Istbred since that, time are' now worth ionly two shillings per bushel. 1 JThe prospectus 6f the Mount Rangiitoto Silver-mining Company has been ipublished. The proposed capital is] j£3o,ooo;m 6000 shares of £5 each, the Bcbpapany to be registered as soon as] |2000 shares are subscribed . for. The ■provisional' directors number twenty Isix, and include the leading business imen of Hokitika. The (Secretary, pro] mem, is Mr John Bevan, of Pollock and i Bevan.