The facts, so far as they are material, were the following: Dr. Grady had been originally a holder of twenty-five * 489 * shares in the company's capital and one of its medical officers. Disagreements having arisen between him and the company some time previously to the month of March, 1859, he brought an action against the company to recover a sum of money to which he alleged that he was entitled. That action led to a negotiation which terminated in a compromise, according to the terms of which Dr. Grady was to receive a certain sum of money from the company, and it was part of the arrangement that his shares should be transferred to Mr. Sheridan, the managing director of the company. The transfer was made accordingly by deed dated the 29th of March, 1859, and was duly entered in the books of the company on the 4th of April, 1859; and in the return made to the registration office on the 30th of May, 1859, in the manner required by the statute, Mr. Sheridan was represented as the holder of the twenty-five shares by transfer from Dr. Grady. The official manager's case was, that Dr. Grady knew that Mr. Sheridan took as a trustee for the company; but, as the evidence was viewed by the Lord Chancellor, that case was supported by nothing save the inference to be drawn from the admitted facts, that the agreement to transfer the shares was part of the general compromise and agreement by which the action was settled; that Mr. Sheridan was the managing director of the company; and that the sum of money entered in the transfer of the shares as the consideration was in reality paid to Dr. Grady as part of the larger sum which was handed over to him from the funds of the company. On the other hand, Dr. Grady deposed that he had personally agreed with Mr. Sheridan to make a transfer to the latter of the shares, and that Mr. Sheridan, as a reason to induce him to come to terms of compromise, offered to take his shares off his *490 hands. He deposed * also that he had no knowledge or reason to believe that Mr. Sheridan was to hold them in trust for the company. Mr. Sheridan made no affidavit. By the 157th section of the company's deed of settlement it was provided, amongst other things, that it should not be lawful for the board of directors under the powers for the purpose given by the deed to purchase any share or shares in the capital of the company without the authority and sanction of a general meeting of the proprietors and members of the company previously obtained. Mr. T. A. Roberts, for Dr. Grady. - Upon the evidence as it stands Dr. Grady had not actual, and cannot be affected with constructive, notice that Mr. Sheridan, when taking a transfer of the shares in question, in March, 1859, was not purchasing on his own His name ought, therefore, to be removed from the list of contributories, either on that ground, Hollwey's Case, (a) or on the ground of the manner in which the transaction was acquiesced in and confirmed by the company. account. Mr. Baily and Mr. Karslake, for the official manager. The evidence is sufficiently clear to show that Dr. Grady must have had actual notice of the position of Sheridan in the matter of the transfer, and of the consequent invalidity of the transaction. Acquiescence for the purpose of binding the company is out of the question. They referred to Eyre's Case, (b) Ex parte Morgan, (c) Stanhope's Case. (d) *Mr. Shebbeare, for the creditors' representative, referred to Richmond's Executors' Case, (e) and Lawes's Case. (g) A reply was not heard. * 491 The Lord Chancellor, after noticing that it was incumbent on the official manager to establish a case to justify the Court in wholly disregarding the transfer of Dr. Grady's shares to Mr. Sheridan, and in arriving at the conclusion that those shares still remained vested in Dr. Grady, stated the facts and proceeded as follows: There is, therefore, the direct statement of Dr. Grady, and the question is, whether it is outweighed and disproved by the evidentia (a) 1 De G. & Sm. 777. (b) 31 Beav. 177. (c) 1 Mac. & G. 225. (d) 3 De G. & Sm. 198. (g) 1 De G., M. & G. 421. rei resulting from the transaction itself. The intrinsic evidence resolves itself merely into the facts of the one contract being entered into at the same time as the other, and of the money being paid to Dr. Grady in one sum, which included the consideration for the transfer. But I am not of opinion that I can infer from that, that Dr. Grady knew that Mr. Sheridan was to hold these shares on the part of the company, or that he was in reality to become the assignee of them as the property of the company. Sheridan's affidavit might have contradicted what is deposed to by Dr. Grady. There is nothing said either by the solicitor who acted on the part of the company or by the solicitor of Dr. Grady, or by any of the directors, to warrant me in coming to the conclusion that the statement made by Dr. Grady is erroneous or untrue. I must therefore arrive at the conclusion that the transaction was that which Dr. Grady represents. It may be perfectly true that it was part of the general compromise. It is very possible 492 that the directors might have found one of their own body, who, in order to avoid the exposure in the action, was willing to stand in the shoes of Dr. Grady. It is very possible that the money might not be paid separately and distinctly to Dr. Grady, but Dr. Grady might well be warranted in believing that that would be a matter of arrangement between Mr. Sheridan and the other directors, that is, between Mr. Sheridan and the company. I cannot, therefore, arrive at the conclusion that a mere suspicion, to be derived from the mode of completing the transaction, when the fact which I am desired to infer from that suspicion might have been directly proved either by the evidence of Sheridan or by the evidence of the solicitor, is to be placed in the scale as sufficient to weigh down the positive statement of Dr. Grady. It might be sufficient to rest there, but I am by no means disposed to overlook the rest of the case. Let it be for a moment assumed that Mr. Sheridan, in point of fact, was acting on behalf of the company. I find that this company was not at all disqualified from purchasing shares, and in that particular the case is wholly in contrast with the cases which have been cited at the bar. It approaches much more nearly to the case of Bargate v. Shortridge, (a) which was decided in the House of Lords, than it does to those cases. If a company has no (a) 5 H. L. Cas. 297. power to do a particular thing, undoubtedly neither can that power be given to the company by the agreement of the shareholders, nor can the particular thing be inferred to have been done legally merely from acquiescence or from subsequent delay in questioning the transaction. But if a company has power to do a thing, and if there be only requisite a particular formality, such * as * 493 the consent of a general meeting in order to warrant the exercise of that power, then if I find the company dealing with an individual at arms' length and taking a transfer of shares, duly completing that transfer, entering the transfer, and entering the transaction in books, so that I am warranted and justified in imputing a knowledge of it to every shareholder, I am fully borne out, not only by the reason of the thing, but by the express authority of the case to which I have referred, in inferring as against the company that the formality which alone is wanting to the exercise of the power had been either antecedently supplied or has been subsequently added to the transaction. It has been said in answer to that, that Dr. Grady was a shareholder in this company. That does not in the smallest degree make the matter different as far as regards the inference as to the observance of the formality. If Dr. Grady was a shareholder, as he undoubtedly was, he was a shareholder dealing at arms' length with the company. The company proposed that he should put an end to his action, and they engaged that they would take a transfer of the shares. They had a perfect right to do so provided the shareholders either subsequently acquiesced or had previously given them authority. I am of opinion that I am perfectly warranted in inferring the fact that that formality was not wanting from the combined effect of all the circumstances of the case. The transfer was duly entered in the books of the company on the 4th of April, 1859. In another book, called the ledger of the company, it also appears that the return was made to the registration office in the manner required by the statute on the 30th of May, 1859. In that return John Sheridan is represented as the holder of the *494 twenty-five shares by transfer from William Grove Grady, and there is therefore every thing required for a valid transaction, and every thing that was necessary to give notice to every shareholder of what had taken place, even if I suppose what had taken place to be in reality a purchase by the company. That it was a purchase by the company there can be no doubt. That that would be totally immaterial as affects Dr. Grady, unless he had notice of it, I have already observed; but even if he had reason to believe it, yet if I find the transaction dealt with in the manner I have described and acquiesced in by the shareholders of the company for more than two years after the regular completion of it, I do not go beyond that which reason requires and authority justifies in holding that the formality of the consent of the shareholders must be presumed as against this company. I shall therefore direct the name of Dr. Grady to be taken off the list of contributories. * 495 In the Matter of THE JOINT-STOCK COMPANIES WINDING-UP ACTS, 1848 and 1849; AND In the Matter of THE JOINT-STOCK COMPANIES WINDING-UP AMENDMENT ACT, 1857; AND In the Matter of THE BRITISH PROVIDENT LIFE AND FIRE ASSURANCE SOCIETY. COLEMAN'S CASE. 1863. February 14, 21. April 25. Before the Lord Chancellor Lord WEST BURY. C. executed the deed of settlement of a company, which provided that no person should be entitled to the rights of a proprietor, who should not have been previously accepted as such by the directors; that no person purchasing shares from the directors should be considered approved by the board as a proprietor until he should have paid down the price, and that upon his making such payment the board should cause his name to be entered in the register of shareholders as a proprietor; that every person who should subscribe for or take or purchase or acquire any shares should from the time of the entry of his name on the register as the proprietor be considered as a proprietor; that every entry or alteration in the register should, as between the company and the last proprietor, be binding; and that the register should, as between the company and every person claiming to be a proprietor, be conclusive evidence on behalf of the company to show whether he was a proprietor. |