The Express.
London, England, 1867-01-19 00:00:00

4,

Lab) fate!ligenct.

EQUITY COURTS.—JAN. 18.
(Before Yict-likaucelor 311.1in' a.)

nV2M", GrielEY. AND Co/IPA:IV—OAKES' AND penes

CASE..

'Before the resumption of the he►ring of these motions.
Mr. Polly (with the Attorney•th nerall stated that the
eroee•etamination of Mr. Birkbeck was not completed
►efore the examiner. and the arrangement was that it
should be continued in court if necessary. He should not.
however, think it necessary to carry the crow-examination
further.

Mr. Coxburgh intimated that he did not intend to re-
eit :Mill°. and the evidence therefore was complete.
Mr. Boiiy wished to draw attention to the facts that
the memorandum and articles of association were signed
is July. 1865, and the deed at the end of the month, and
that the bank stopped payment on the fah of May.
This would go far to show that the statements of the pro-
apectus tnat the concern was a growing and prosperous one
eould net be true, otherwise it would be most extraordi
wary that eight months after 1,500,0001. of new capital had
been brought in the bank should stop. It was clear that
when the prospectus was issued the company was insolvent
to the extent of :1,000,0001. He did not mean to say that
if they included the private property of the members of
loth the London and Norwich firms, and the value of the
goodwill of both, there might nut be a balance in favour of
the partnership, but the business was not solvent. From
the evidence of Mr. J. H. Gurney and Mr. Rlrkbeck it ap-
peared that from 1856 to 1865, the date of the transfer,
with the single exception of 18.58 no profit was made in
soy one year. and both these gentlemen admitted the in-
solvency of the old firm, stating that their own capital had
been lost, and they had incurred heavy liabilities besides.
It wax quite possible that the parties to the transfer were
of opinion that the new capital which would be introduced
would enable them to extricate the business from its diffi-
culties, end to make it again a profitable concern, and it
was out necessary for his purpose to show that they had
amy other intention. The point was that two deeds were
executed, one of which was intended to be made public,
and the other to he concealed, and that the public in sub-
scribing for shares were deceived as to the value of the
property transferred. The position of the company was
known to the directors at the time they issued the pro-
spectus, and if they bad informed the public how the
matter stood it was not to be supposed for a moment
that the shares would have been subscribed for.
The Vice-Chancellor thought no one would venture
to say that any sane man would have taken shares if he
bad been told that the company was 3,000,000/. in debt,
and that be was to rely upon the value of the private pro-
perty of the partners, upon which he had no lien.
. Bally submitted that the prospectus was beyond all
doubt the act of the company, and in support of his view
cited " Rem v. the Estates Investment Company," before
Vice-Chancellor Wood, and Blake's case.
The Vice-Chancellor mentioned the case of " Rawlins
v. Wickens." in which an innocent person, who was • part-
wet in a bunk, having induced another by an erroneous
statement to join the company, was held liable to the
extent of his property to make good his representation.
Mr. Daily said the question was what was the statue
of the different members of the company with regard to
creditor.. It had been suggested that prima facie this
was like the case of any ordinary partnership, but there
was this material difference, that a creditor of • joint
stock company had no more right to bring his action or
Ale his bill against any individual member of the partner.
ship, than a person having a claim against the corporation
of London hail a right to take proceedings against some
one Diem; er of theComman Council. Whatever, therefore.
might be the equities, in these eases, between the corpora-
tion on the one side, and individual members on the other,
those equities were binding upon the creditors. Creditors
were aware that any person on the register might sell his
shares, and after a certain time fixed by the deed fin this
case twelve months), all his liability in respect of such
'harem would cease. A creditor wishing to have the wets
of the company applied for his benefit could do so by
action against the company, or by a winding.up order ;
but the creditor of a company bad no remedy against any
member of the partnership ; and in trusting the company,
be did to with a full knowledge of the law in this respect.
The Vice-Chancellor remarked, that if the registration
of shareholder, was to go for nothing, there was an end to
the protection to creditors which these acts of parliament
proposed to afford. Surely shareholders were in a Letter
position to obtain information as to the actual condition of
• company than creditors.
Mr. Roily contended that in this case Mr. Oakes had no
means of ascertaining the actual state of affairs.
The Vice-Chancellor—The fact is you took your shares
upon the faith of the name of Overend, Gurney, and Co.,
and Mr. t)ppenheim and the other creditors trusted their
money with the company for the same reason ; and the
question is, who are to be the sufferers—the shareholders
or the creditors? The argument for this motion would
cover the Cases of all shareholders except the directors.
Mr. Bally admitted that that was the csse. The
sets of parliament relating to joint-stock companies
gave the creditor no right except as against the
emote of • company. He did not suppose that any ere-
ditto would take the trouble to look over the register of
shareholders. -

The Vice-Chancellor apprehended that creditors would
look for their security to the fact that there was a capital
et ;i1 millions not called up.
Baily proceeded to contend that it was only upon
lair and equitable grounds that the Court of Chancery
would remove a name from the list of contributories, and
if a perron was improperly placed on the list there was
nothing in the acts of parliament which would take his name
or as against the company and yet retain it as against the
creditors. It was of course utterly impossible to ascertain,
before deciding whether certain names should be removed,
whether, supposing they were removed, there would be
sufficient left to pay the creditors and the question,
therefore, whether the list was right or wrong, must
be determined Irrespective of creditors' claims. A person
must be upon the list for all purposes or none, and if he
showed that his client was entitled to be taken off for one
purpose he must be taken off altogether. Creditors had
no right to appear at all upon the question whether certain
persons were or were not members of a company, that
being a question between the company and the members
concerned. If this had been a common partnership case
persona could not be made liable for debts incurred before
they joined the partnership, but the difficulty of taking
account when each person joined was avoided in these
ether's by making the company a corporation, and giving the
creditor a claim upon the sleets of the corporation.
The Vice-Chancellor said if this case could not be dis-
tinguished from Ship's cam his decision must be ruled
by it, though he could not comprehend the reasons upon
which the Lords Justices founded their judgment in that
CYO.

Mr. Enily submitted that the question was not one be-
tween two innocent persons who had been defrauded, hut
between an alleged shareholder who had been defmu.le,l
and a creditor who trusted the company knowing
what the law was, and that his only -lain was against
the assets. He held that the name of Mr. Oakes must be
taken off the list of contributories.
_ _ _

11;. Swanton followed on the woe 41., and contended
that all that it was necessary for his cli..nt to show was,
that the statements of the prospectus were untrue.
The Vice-Chancellor thought there would he no difficulty
as to the facts.

Mr. Claw said, on behalf of the directors, that he die.
puted the accuracy of all the facts which had been brought
forward in support of the motion.
Mr. Swanton observed that the alleged surplus of
688,0001., after including all the property of the individual
partners, was altogether illusory. It was arrived at by
calculating as assets 600,0001. value of the good will of
the London business, 300,0001. goodwill of the Norwich
business, and 45,0001. the value of the premises in
Lombard-street, whereas the goodwill of the London
business had been proved not to be worth aixpenoe, the
goodwill of the Norwich business was disposed of in
/Mach, 1866, for nothing, and the sum for which
the Lombard-street premises were taken was 26.0001. It
had been suggested that all that was intended to be
transferred was the banking and money-dealing business,
which justified the statement of the prospectus ; but there
was no doibt that the inteetion was to sell the whole,
and that this suggestion was only made to avoid the con-
sequences of the failure of the limited company. If Mr.
Oakes, in consequenoe of fraudulent representations,
was entitled to have his name removed from the
register of shareholders, the only doctrine upon
which he could be responsible to creditors was
that he had held himself out as a partner by
allowing his name to appear upon the register and the
question whether an individual so acted as to bold himself
out to creditors an a partner was • question of fact and
nut of law. It had been laid down distinctly that the
" holding out" in a private partnership must be before the
contract, and it would be perfectly impossible for com-
panies to be wound up by the Court of Chancery if a ques-
tion of this kind were to be raised by every shareholder
with respect to every debt. The creditors of a joint-stock
company trusted not individuals but a corporation, and
those only who were properly members of that corporation.
Tbedoctrine of "holding out" had been held to be an unjust
and harsh doctrine, and one that ought not therefore to
be extended, and the statute of 1862 was an express bar
to any suggestion of its being extended to joint-stock com-
panies. This case must be decided just in the same man-
ner that it would have been dealt with if there bad been
no winding-up order, but a bill had been filed to remove
the name of Mr. Oakes from the register of shareholders.
At the conclusion of the argument for the motion the
court rase.

COURT OF QUEEN'S BENCH.—JAN. 18.
Sittings in Bronco.—(Before the Lord Chief Jiurtice and
Justices Mellor and Lush.)

This was special paper day. The court disposed of
several cases out of a very long list on the paper, but they
were devoid of general public interest.

BAIL COURT.-JAN. 18.

Billings at Niai Prius at Westu•inster.--inefore Mr. Justice
Mee and Common Juries.)
REDMAN AXD WITI V. BATEY.

This was a very peculiar action. Ths plaintiff claimed
to receiver damages for injuries resulting from her drinking
longer beer manufactured by the defendant.
Mr. Pearce appeared for the plaintiff ; Mr. Powell and
Mr. Joyce sppeand for the delendeat.