Aldebert v Kearns
| Jurisdiction | England & Wales |
| Judgment Date | 01 January 1862 |
| Date | 01 January 1862 |
| Court | High Court of Chancery |
English Reports Citation: 71 E.R. 299
HIGH COURT OF CHANCERY.
S. C. 10 L. T. 185; 12 W. R. 462. See In re Argus Life Assurance Company, 1888, 39 Ch. D. 579; Cummins v. Perkins [1899], 1 Ch. 20.
Joint Stock Company. Policy - holder. Amalgamation. Ultra Vires.
1H. &M. 681. KEARNS V. LEAF 299 [681] kearns v. leaf. aldebert v. kearns. Nov. 25, 1862 ; Jan. 28, 29, 1864. [S. C. 10 L. T. 185 ; 12 W. R. 462. See In re Argus Life Assurance Company, 1888, 39 Ch. D. 579 ; Cummins v. Perkins [1899], 1 Ch. 20.] Joint Stock Company. Policy-holder. Amalgamation. Ultra Vires. A policy-holder, by whose policy the funds of a company were made liable to pay the sum insured, and certain shares of profit hy way of bonus : Held, entitled to an injunction to restrain the company from transferring its business and assets to another company contrary to the provisions of the deed of settlement, and without making provision out of its own assets for payment of the Plaintiff's policy. These two cases are reported together, although heard at different times, both of them being suits by policy-holders in the Argus Life Assurance Company, seeking to restrain a proposed transfer of the Argus business and funds to the Eagle Insurance Company. The former suit was compromised after a full argument, which it has been thought desirable to report as bearing equally upon both cases. The Argus Company was formed in 1833, under a deed of settlement without registration, with a nominal capital of .300,000, of which not more than .12,000 had been paid up. By the prospectus which was issued, and in practice, the, business was divided into the "Bonus or Profit Branch," and the "Non-bonus or Low Premium Branch ;" and the assured in the bonus branch were, by the terms of the prospectus and of their policies, to have 80 per cent, of the profits divided among them. The deed however contained no directions as to this division. The policies provided that the funds or property of the company should, according to the provisions of the deed of settlement, be subject and liable to pay within one month after the required proof of death the sum assured ; and the bonus policies also provided that the assured should, after the first five years, be entitled to share in 80 per cent, of the profits, .according to the annual valuation; and the 17lst clause hereinafter set forth of the deed of settlement was expressly incorporated as one of the conditions of each policy. The prospectus of the company pointed out that the greatest security was given to the assured by the large [682] proprietary and subscribed capital, atid by the accumulating premium fund. The Plaintiffs, Kearns and Aldebert, were holders of bonus policies. In 18G1 the (report of the company shewed an annual income of =85,000, and an accumulating premium fund of 500,000. In 1862 the directors of the Argus Company entered into a negotiation for the transfer of their business and funds to the Eagle Insurance Company. By a resolution passed arid confirmed at two general meetings of the proprietors of the Argus, on the llth of August and the Kith of September 1862, it was resolved that two clauses, A and B, should be added to the deed. Clause A was as follows : -That an extraordinary general meeting, specially called for the purpose, shall have full power, with the consent of three-fourths of the votes of the proprietors present and voting, to resolve that the business of this company shall be transferred to any other company associated for like purposes and carrying on the like business, upon such terms as may be agreed ; and to appoint a committee of not less than five proprietors, of whom three shall form a quorum, for the purpose of carrying such resolution into effect. And that such committee may thereupon proceed, in such manner as they shall think proper, to meet or provide for the existing engagements of the company, and cause so much of the funds or property of the company as shall not be required for the purposes aforesaid, after making such compensation to the directors and officers of this company as to the said committee shall appear just, to be paid and distributed among the proprietors for the time being, or their respective 300 KEARNS V. LEAF 1H.&M.683. executors or administrators, in the proportions to which they shall respectively be entitled thereto. [683] On the 23d September 1862, in reply to an application on behalf of several policy-holders, the actuary of the Argus stated that no agreement had yet been entered into to amalgamate with another company, and that therefore no communication had been made to the Argus policy-holders. On the 25th September 1862 a circular was issued to the policy-holders by the actuary of the Argus, stating the negotiation with the Eagle, and that the principal terms were, " The Eagle, on receiving 360,000 of the funds of the Argus, to take all the liabilities of the Argus, the participating policy-holders to share pari passu with those of the Eagle." On the 14th October 1862, at a special extraordinary general meeting of the Argus proprietors, it was resolved that it was expedient to transfer the business of the Eagle on the basis of a proposal laid before the meeting; and a committee was appointed to negotiate and conclude the transfer or amalgamation. On the 28th of October 1862 a second circular was issued to the policy-holders, signed by the members of the committee, stating that an agreement had been entered into for the transfer of the business to the Eagle, and setting forth the supposed advantages which would accrue to the policy-holders. The agreement was entered into between the Argus committee and the trustees and directors of the Eagle Company, and executed on the 8th of November 1862, and provided that the business and goodwill of the Argus should be transferred to the Eagle as from the 30th of June 1862; that the debts and liabilities of the Argus should be borne by the Eagle, who were to indemnify the Argus against them ; that all the property of the Argus on the 30th of June 1862 should vest in the Eagle ; that [684] the Eagle Company should pay to the Argus 164,000, in such manner as the committee should direct; that shareholders in the Argus should have allotted to them five Eagle shares at 6 per share for every Argus share ; that Argus policy-holders should have the option of an indorsement on their policies or new Eagle policies for the same amount, at the same premium, and as to participating policies conferring the same privileges as if they had originally insured in the Eagle, including, as to bonus policies, the right of participating as from the 30th June 1862 pari passu with the Eagle policy-holders ; and also to receive such sum as would have been payable as bonus by the Argus Company up to the 30th of June 1862 ; that two directors of the Argus should join the Eagle board ; that either party might cancel the agreement by notice within the time specified. The two bills were filed to restrain the said transfer, the bill in Aldebert v. Leaf praying that it might be declared that the proposed or any like agreement ought not to be carried into effect with the Eagle or any other company ; that the Plaintiff' might be declared to be entitled to the security of the funds and property of the Argus, or a competent part thereof, and that such competent part might be secured to answer the Plaintiffs policy ; that any sum received by way of compensation by the Defendants, the directors and secretary of the Argus, might be treated as assets of the Argus, applicable to make good any bonus coming to the Plaintiff; that an account might be taken of the profits of the Argus represented by the said sum of 164,000, and that the Plaintiff might be paid such bonus as he was entitled to thereout; and for an injunction to restrain the directors and officers of both companies from proceeding with the said agreement; and that, if necessary, the Plaintiff might be taken as representing all the bonus policy-holders in the Argus other than the Defen-[686]-dants, and that the Defendants (some of whom held non-bonus policies) might be taken to represent all the non-bonus policy-holders. The deed of settlement of the Argus contained the following clauses:- 19. That three-fourths of the votes of the qualified proprietors present at two successive extraordinary general meetings specially called for the purpose, or at the ballots or ballot which may be taken in consequence of being demanded at such meetings or either of them, shall be requisite to make new laws, regulations and provisions for the company or to dissolve the company. 2G. That it shall be lawful for every annual general meeting to declare the amount lH.4tM.ea6. KEARNS V. LEAF 301 of the profits which shall have accrued to the company conformably to the statement made out by the actuary of the company, and to be produced at the meeting by the board of directors pursuant to the direction hereinafter for that purpose contained. [By a subsequent resolution, power was given to divide the whole or any portion of the profits among the proprietors according to their interests by way of bonus.] 28. That two successive extraordinary general meetings, specially called for the purpose, shall have full power to make any new laws, regulations and provisions for the company, or to amend, alter or repeal, either wholly or in part, all or any of the existing laws, regulations and provisions of the company. 29. That two successive extraordinary general meetings, specially called for the purpose, shall have full power to come to a resolution to dissolve the company, provided such dissolution shall have been previously approved of and recommended by the board of directors, but not otherwise. [686] 64. That the board of directors shall cause the sum to be claimed under every policy issued by the company, except in those cases in which the board are hereinbefore authorised to defer the payment...
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