The Express.
London, England, 1866-01-31 00:00:00

IN THE NATTER OF THE CONTRACT CORPORATION 00WPANT

(mm
In this matter • rule had been) obtained, tinder the 35th
sec. of the Joint Stock Oompanies Act, 25 and 26 Via. chap.
80, calling upon the directors of the company to show cause
why the register of shareholders should not be rectified, by
placing thereon the name of • Mr. Williamson, instead of
that of • Mr. Holroyd, for 500 shares. The rule was
ranted on the application of Mr. Quain, on behalf of Mr.
Williamsoe, who stated in his affidavit that be had pur-
chased the shares from Mr. Holroyd for 251., and duly
lodged the deed of transfer with the company. After-
wards, Williamson sold 40 of the shares in the market for
431., but was unable to complete the purchase, in conse-
queer* of the company refusing to register his name. It
appeared that the company had • nominal capital of
4,000,0001., in shares of 1004 each. Holroyd had paid
a deposit of 101. per share, or a total sum of
5,0001., and we. responsible for 45,000 in addition
to that amount. There were eflidaeits to show that
the 25/. was a fair price in the market for the 5001.
taking into account the great discount at which they stood
and the responsibility attaching to so large a number of
shares. The directors in refuring to alter the register
acted under the 12th rule of the articles of emaciation,
which was to the effect that they might in any case decline
to register a transfer where they considered the transferee
en
irresponsible person.
Mr. Bosill, (lc., in now showing cause against the rule
ou the part of the company, said the directors had caused
inquiries to be made respecting Mr. Williamson. and were
of opinion that le was not • enfficiantly responeible person
to have transferred to him so large a number of share..
Mr. Mellish (with whom was Mr. Quoin), in support of
the rule, said the court bad to decide a question of fact se
well es • question of law. The question of fact was, did
the directors properly refuse to register the transfer on the
ground that the transferee was not responsible, and the
question of law was were the company bound by their articles
of association. _ _ .

—The Lord Chief Baron—The question is whether the jus-
tice of the ow requires as to oompel this directors to
register the transfer. We ought not to make =naives
parties to what no one can look upon but as a downright
fraud.

Mr. Mellish said a. the facts of the ease asalready stated
appeared to have bad a great effect upon their lordships'
minds, be would give his version of them. Mr. Holroyd
was a gentleman of large fortune, whom thedirectors would
be pleased to retain as a shareholder is ocewesquenos of the
amount of credit his name gave the company. He
treaders his shares to Mr. Williamson, who immediately
begins to dispose of them by small numbers. Now, although
Mr. Williamson might not be responsible for the sum of
45.000/. if the cell WWI made upon him at ones, he was able
to hold the shame for a short time, sod get rid of them at
a [Profit by degrees. Then was not the transaction bona
He? A court of equity would say that the transaction was
not bona Me where the holder of the shares merely pre-
tended to sell them, receiving the profits if there were any,
but putting forward a was of straw in case of loss. It was
not suggested on the other side that this was a transaction
of that nature, but merely that is meat be assumed not to
be bona He, because the shares were sold for 251., whereas
their market value was from 5001. to 1,0001.
Mr. Baron Martin—This is a moat important question
for these companies, for if the directors can stop the trans-
fer of the shares, it will put • stop to them altogether.
The Lord Chief Baron—But then, on the other hand, if
a man is permitted to dispose of his shares to any one when
the company is going down such unrestricted transfers
might facilitate frauds and swindles.
Mr. Baron Martin—But no fraud is alleged here.
Mr. Mellish—And the person who transfers the shares is
liable until a ar after.
Mr. Baron Martin—The matter had better be turned
into* special case, to be stated for the opinion of the court,
so that there may be an appeal, if so desired.
The Lord Chief Baron—l think that proposition is a very
proper one, as the property involved to this question
amounts to many hundred thousands of pounds.
Mr. Baron Martin—lt probably amounts to many millions.
After some further discussion, an endeavour was made
to carry out the suggestion of the curt, but after a long
consultation it was found to be impossible to arrange the
terms, and therefore the argument. will be resumed to-
morrow morning (this day).
IN THI MATITR or rag ASENTILATION OF WIDITIORTH AND