Anderson v Kemshead
| Jurisdiction | England & Wales |
| Judgment Date | 05 November 1852 |
| Date | 05 November 1852 |
| Court | High Court of Chancery |
English Reports Citation: 51 E.R. 806
ROLLS COURT
806 ANDERSON V. KEMSHEAD U BBAV. 329. [329] anderson v. kemshead. June 10, 11, 12, Nov. 5, 1852. The Plaintiffs were equitable mortgagees of the shares of J. H. in the Woollen Cloth Company, and the Dhobah Company were general creditors of J. H. Both companies having notice of the Plaintiffs rights, the Dhobah Company commenced proceedings in the Lord Mayor's Court, and attached the dividends on the shares in the hands of the Woollen Cloth Company. The same solicitor was employed for both companies, and two persons were directors in both companies. No defence was made, and the Dhobah Company obtained payment. Held, first, that the Plaintiffs could not recover them back from either company ; but, secondly, that the Dhobah Company could not avail themselves of a similar attachment in the Lord Mayor's Court, obtained pending this suit; and, thirdly, that the Plaintiff was entitled to a receiver of the future dividends. Though the facts of this case are very fully stated in the judgment of the Court, the following short abstract of the circumstances will be useful:- James Hay was possessed of 150 shares, of £100 each, in the Patent Woollen Cloth Company of Leeds, a joint stock company constituted by deed of settlement. The deed provided that the shares should not be transferable, except with the consent of a board of directors. It contained the usual provisions for registering the shares in the Share Registry Book, and provided that, notwithstanding any assignment, the receipt of the registered shareholder should be a good discharge, and that the Share Registry Book should be conclusive evidence of the proprietorship of any shares. In 1846 James Hay, being indebted to the Union Bank of Scotland, deposited his 150 shares with them, as a security, with authority to sell them. [330] In April 1848 Mr. Hay, being about to go to India, appointed Messrs. Anderson, two of the law agents of the banking company, his attornies, to sell the shares and receive the dividends, and he also executed to them a transfer of the shares. Notice of the power of attorney was held by the Court to have been given to the Cloth Company on the 19th of October 1848, but no notice ol the equitable mortgage of 1846 was given to the Cloth Company until the 14th of May 1850. Two dividends, of JE378 each, were declared on Mr. Hay's shares, and which became payable in April 1849 and Apiil 1850 respectively. Mr. Hay, being indebted to the Dhobah Sugar Company, the Defendants Kemshead and Stewart (two of its directors), acting by Messrs. Roy, their solicitors, commenced a suit against Mr. Hay in the Lord Mayor's Court, on the 5th of September 1848, for the purpose of attaching all his monies, &c., in the hands of the Woollen Cloth Company, and they served their secretary with notice of the attachment as garnishees. He pleaded nil habet, and the proceedings were thereupon discontinued. However, on the 26th of June 1850, the Defendants Kemshead and Stewart, as directors of the Dhobah Sugar Company, issued a second attachment against themselves (Kemahead and Stewart) and five other of the Defendants, as directors of the Woollen Company, attaching the monies of Hay in their hands. The garnishees made no defence, and judgment was recovered against them on the 22d July 1850 awarding £756 (being the two dividends on Hay's shares), and that sum was thereupon paid by the Woollen Company to Kemshead and Stewart. A further dividend was declared, and Kemshead and [331] Stewart recommenced the same process in the Lord Mayor's Court, but they were stopped by the present suit, filed on the 22d April 1851 by the Scotch Bank against them, against the five other directors, and against Hay and the Andersons. The bill prayed a declaration that the Plaintiffs were entitled to the 150 shares, and for repayment by the directors of the Dhobah Company of the £756. Mr. R. Palmer and Mr. Cairns, for the Plaintiffs. The Plaintiffs, as equitable mortgagees, by virtue of the memorandum of deposit of 1846, have a better title to the shares and their produce than the Dhobah Company. It is said that the Cloth Company were not bound to notice an equitable assignment of shares, and that they MBBJLV. 3ffl. ANDERSON V. KEMSHEAD 807 were not assignable. That is not the law ; even the profits of a college fellowship are assignable in equity, and the college cannot disregard such an assignment, Feistel v. King's College (10 Beav. 491), where the Court granted a receiver of a college fellowship. After the dividends had been declared, they became the separate money of each shareholder, to be dealt with as he pleased, Carlisle v. South-Eastern Railway Company (1 Macn. & Gk r. 689). The Dhobah Company had notice of the Plaintiffs' rights, at all events on the 14th of May 1850; and they could not, with such notice, acquire any interest in the shares as against the prior iucumbrancers. Secondly, the proceedings in the Lord Mayor's Court were fraudulent and collusive. Kemshead and Stewart were directors of both companies, and Messrs. Roy were solicitors for both parties litigant. The Cloth Company, instead of making a proper defence, admitted the title, as against absent parties, and they must take the consequences. Third parties cannot be bound by judi-[332]-cial proceedings in their absence, and aueh a judgment is wholly inoperative as against them; Fordyce v. Bridges (10 Beav. 90, and 2 Phillips, 497); Nan-is v. Wright (14 Beav. 291). Thirdly. It was the duty of the company to make a proper defence; they were trustees for the Plaintiffs, Pintett v. Wright (2 Hare, 120, and 12 Cl. & F. 764), and might have pleaded nil habent and set up the assignment of which they had notice. A debt cannot after assignment be attached; 2 Bacon's Ab., tit. Custom (p. 595); Lewis v. Wallis (Sir T. Jones, 222). Mr. Campbell and Mr. Nichols, for the Patent Woollen Company, and Mr. Glasse and Mr. Cole, for the Dhobah Sugar Company. The deposit of the shares was not binding on...
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