Chap. XV. as may be best under the circumstances in which it may be § 3. placed, and, as a correlative right, he is entitled to charge its owner with the expenses properly incurred in so doing (y). He has no power to sell or mortgage the cargo or any part thereof except under the pressure of severe consummate distress (z) either of the ship, as when the master has no other means of procuring supplies or repairs, or of the cargo, as where it lies perishing at some intermediate port. It is not sufficient to prove that the master was doing the best for all concerned (a). Though the ship is a wreck, and the cargo on the wreck, still he has no power to sell the cargo if he can store it (b).

Notice to master.

Bottomry bonds and

respondentia.

A mortgagee of cargo should, immediately upon the execution of the mortgage, give notice thereof to the master of the ship. Where mortgagees of cargo did not send notice of their mortgage till two months after the date of the deed, so that such notice was not received by the master till after the mortgagor had become bankrupt, and it appeared that there were means of earlier communication, it was held that the cargo was in the reputed ownership of the mortgagor at the commencement of the bankruptcy (c).

Hypothecations of cargo, otherwise than by way of mortgage, will be considered in a subsequent chapter (d).

(y) Tronson v. Dent, 8 Moo. P. C. 419; Notara v. Henderson, sup. ; Australasian Navigation Co. v. Morse, L. R. 4 P. C. 222; Cargo ex Argos, L. R. 5 P. C. 165.

(2) Gratitudine, 3 C. Rob. Adm. 240. (a) Tronson v. Dent, 8 Moo. P. C. 419; Acatos v. Burns, 3 Ex. D. 282; Atlantic, &c. Co. v. Huth, 16 Ch. D. 481, C. A.

(b) Notara v. Henderson, L. R. 7 Q. B. 227; Acatos v. Burns, 3 Ex. D. 290; Atlantic, &c. Co. v. Huth, 16 Ch. D. 481, C. A.

(c) Exp. Lucas, Re Gwire, 3 De G. & J. 113. See Acraman v. Bates, 6 Jur. N. S. 294. See further, as to reputed ownership, ante, pp. 187 et seq. (d) Post, Chap. LXIV. Sect. II.

CHAPTER XVI.

OF MORTGAGES OF STOCK AND SHARES.

SECTION I.

MORTGAGES OF STOCK.

SIR WILLIAM GRANT, when M. R., justly remarked that public Stocks are stocks or funds are, in fact, perpetual annuities granted for ever, annuities. perpetual redeemable by the public; that they are a mere right, and the circumstance that Government is the debtor makes no difference; and that they constitute a mere demand of dividends as they become due, having no resemblance to a chattel moveable or coinmoney capable of possession and manual apprehension. He determined that if stock be transferred into the name of a married woman, and her husband die in her lifetime, without having accepted the stock in the bank books, or otherwise reduced it into possession, the stock will survive to the wife, although the husband and wife should in his lifetime have signed partial transfers of the stock (a).

In another case (b) the M. R. remarked, there was a very untechnical expression used with regard to stock; there is literally no such thing as one hundred pounds stock: knowing, however, that in common parlance people, speaking of stock, will so express themselves, the Court will apply it.

Stock in the public funds is transferable by the stockholder How stock is in person, or under the authority of a letter of attorney, accord- transferred. ing to the form prescribed by the Bank of England.

Express powers were not formerly necessary in mortgages of Power of sale. stock, or in the instruments of defeasance executed by the transferee; nor need a mortgagee of stock now rely on his statutory power in order to realize his security by sale (c).

(a) Wildman v. Wildman, 9 Ves. 174. (b) Kirby v. Potter, 4 Ves. 748, 751.

VOL. I.-C.

(c) Approved, (1901) 1 Ch. p. 73, per Farwell, J.

U

Chap. XVI. § 1.

Misdescription.

If stock or shares are made the security for money, and the day appointed for payment is past, the mortgagee may at once proceed to sell the stock, and repay himself principal and interest, without any authority from the mortgagor, and without commencing an action of foreclosure (d). Where no time for payment has been fixed, then the mortgagee cannot sell until he has given to the mortgagor reasonable notice demanding payment, and such notice should fix a day for that purpose (e). It seems that a mortgagee of shares is not bound to watch the market so as to sell them at the highest price, and he does not by failing to sell at the most favourable opportunity lose his right to prove against the estate of the mortgagor (ƒ). The rule is founded on considerations of mercantile usage and convenience. But the mortgagee will be decreed to account for the surplus (g). He may, however, foreclose if he prefer it, and that, too, although an express power of sale is given him by the mortgage deed, and whether his interest be legal or equitable (h); and the mortgagee of a reversionary interest in stock may have foreclosure if he desire that remedy (i).

Where reversionary stock was described as 3,000l. when really 5,000%., only 3,000l. passed (k).

SECTION II.

MORTGAGE OF SHARES IN A COMPANY.

i. Introductory Remarks.-Where, by the rules of a company, shares are not to be transferred until all arrears of calls are paid, it would seem that a mortgagee by transfer cannot be recognized as transferee until payment of all arrears; but if the company recognize him as such, they cannot call upon him pay the arrears (1).

to

(d) (1901) 1 Ch. at p. 73; Tucker v. Wilson, P. Wms. 261; Lockwood v. Ewer, Atk. 303.

(e) Deverges v. Sandeman, Clark & Co., (1902) 1 Ch. 579, C. A.

(f) Re McMurdo, Penfield McMurdo, (1902) 2 Ch. 684, Č. A.

V.

(g) Harrison v. Hart, Comyns, 393;

Langton v. Waite, L. R. 4 Ch. 402. (h) Slade v. Rigg, 3 Ha. 35.

(i) Slade v. Rigg, sup.; Wayne v. Hanham, 9 Ha. 62; Stamford, &c. Banking Co. v. Ball, 4 De G. F. & J. 310.

(k) Woodburn v. Grant, 22 Beav. 483. (Watson v. Eales, 23 Beav. 294.

as a con

Where shares in a joint stock company are transferred as Chap. XVI. security for a debt, the transferee is in the position of legal § 2 (i). owner of the shares, and becomes liable as a member to be When mortplaced on the list of contributories on the winding-up of the gagee is liable company (m). But an equitable mortgagee, in whose name the tributory. shares have not been registered, is not a contributory, nor will the register be rectified by the insertion of his name (n); but if shares which have been deposited with creditors are exchanged by them for shares in their own names, they are liable as contributories, though known to the company as holding the shares on security only (0).

A power to forfeit shares and to refuse to transfer shares unless debts due from the shareholder to the company are paid does not constitute a charge on the shares (p).

Where the holder cannot transfer shares until debts due to the company are paid, any debt will prevent the transfer, although it has nothing to do with the shares (q).

The right of a mortgagee of shares to sell or foreclose has Sale or forebeen already considered (").

ii.-How Mortgages of Shares are effected.-Mortgages of fully paid-up shares in joint stock companies are usually effected by a transfer of the shares to the mortgagee duly registered, accompanied by a deed of defeasance. If, however, the shares are not fully paid up it will generally be more prudent for the mortgagee not to take a complete registered transfer to himself, and so incur the liabilities of a shareholder (s). In such a case the mortgagee should require the certificates to be delivered to him, and also take a transfer to himself executed only by the mortgagor, which the mortgagee can at any time render complete by executing it himself and registering it.

closure.

A valid security may be made by a deposit of the certificates Deposit of of shares; and such security will apparently operate as a mort

(m) Re Land Credit Co. of Ireland, L. R. 8 Ch. 831. See Re Asiatic Banking Corporation, L. R. 4 Ch. 252; Re Patent Paper Manufacturing Co., L. R. 5 Ch. 294.

(n) Newry Rail. Co. v. Moss, 14 Beav. 64; Re Joint Stock Discount Co., L. R. 3 Ch. 119.

(0) Price and Brown's Case, 3 De G.

& S. 147.

(p) Re Dunlop, 21 Ch. D. 583, C. A. (a) Exp. Stringer, 9 Q. B. D. 436, C. A.

(r) Supra, p. 290.

(s) Newry Rail. Co. v. Moss, 14 Beav. 64; Re Land Credit Co. of Ireland, L. R. 8 Ch. 831.

certificates.

Chap. XVI. gage by deposit of documents of title and not as a pledge of the shares (t).

§ 2 (ii).

Notice to company of charge on shares.

Form of transfer of shares.

Transfer by delivery.

Transfers in blank.

Although the company are not bound to see to the execution of trusts, still it is important that notice should be given to the company of any charge upon shares, in order that the mortgagee, by giving such notice, may protect himself against any lien claimed by the company in respect of the mortgaged shares (u).

A transfer of shares must be in the form prescribed by the statute or by the regulations of the company; and the company may refuse to register transfers not according to the prescribed form (x). Unless required by the regulations, a transfer of shares in a company governed by the Companies Act, 1862, need not be under seal (y). By the Companies Clauses Consolidation Act, 1845, transfers of shares and stock of companies incorporated for carrying on undertakings of a public nature are required to be by deed (≈).

The Companies Act, 1867 (a), empowers companies to issue, with respect to fully paid-up shares and stock, share warrants to bearer transferable by delivery, the effect of which warrants is to entitle the bearer to the shares or stock specified therein, and the shares or stock may be transferred by delivery of the warrants. Except under the provisions of this Act, there appears to be no power to issue shares transferable by delivery (b).

If the shares are not fully paid up, and consequently the transfer is not registered, it has been a frequent practice for the mortgagee to take either a transfer in blank, or a mere deposit of the shares, together with a power of attorney to execute a transfer in the name of the mortgagor; the mortgagee's name would thus not appear on the register, and he would be enabled to transfer the shares directly to a purchaser. This practice is,

(t) Exp. Moss, 3 De G. & S. 599; Exp. Stewart, Re Shelley, 4 De G. J. & S. 543; Binney v. Ince Hall Coal Co., 35 L. J. Ch. 363; Re Tahiti Cotton Co., Exp. Sargent, L. R. 17 Eq. 273; Colonial Bank v. Whinney, 11 App. Ca. 426. See infra, p. 294.

(u) Bradford Banking Co. v. Briggs, 12 App. Ca. 29. And see post, Chap. LVI., Sect. I. (v).

(x) Re General Cemetery Co., 6 E. & B. 415.

(y) Re Tahiti Cotton Co., Exp. Sargent,

L. R. 17 Eq. 273. See also sects. 14, 15 of the Companies Clauses Act, 1845, as to the transfer of shares in companies governed by the Act.

(z) 8 & 9 Vict. c. 16, s. 14.

(a) 30 & 31 Vict. c. 131, ss. 27, 28.

(b) See Re General Co. for Promotion of Land Credit, L. R. 5 Ch. 363, affirmed in D. P., sub nom. Princess of Reuss v. Bos, L. R. 5 H. L. 176; McEwen v. West London Wharves Co., L. R. 6 Ch. 655.