Biddulph and District Agricultural Society v Agricultural Wholesale Society
| Jurisdiction | England & Wales |
| Judge | The Lord Chancellor,Lord Shaw,Lord Sumner,Lord Parmoor,Lord Blanesburgh |
| Judgment Date | 29 July 1926 |
| Judgment citation (vLex) | [1926] UKHL J0729-1 |
| Date | 29 July 1926 |
| Court | House of Lords |
[1926] UKHL J0729-1
House of Lords
Lord Chancellor.
Lord Shaw.
Lord Sumner.
Lord Parmoor.
Lord Blanesburgh.
After hearing Counsel, as well on Tuesday the 8th, as on Thursday the 10th, days of June last, upon the Petition and Appeal of the Biddulph and District Agricultural Society, Limited, whose Registered Office is situate at 61 Derby Street, Leek, in the County of Stafford, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 23d of April 1925, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, and that the Petitioners might have the relief prayed for in the Appeal or such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of the Agricultural Wholesale Society, Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 23d day of April 1925, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
The real question arising in this action is whether the appellant society, a shareholder in the respondent society, is or is not bound by contract to take up additional shares in that society.
The respondent society was registered on the 14th September 1914 under the Industrial and Provident Societies Act, 1893, under the name of the Farmers' Central Trading Board, Limited, but subsequently changed its name to the Agricultural Wholesale Society, Limited. The original rules of the respondent society included the rules following:—
Rule 9.—Shares to be held by members. Each society or company which is a member shall hold at least one share for each 50 (or fraction of 50) of its members.
Rule 59.—Mode of amending rules.—The rules may be amended by resolution of a three-fourths majority at a special general meeting. No amendment of rules is valid until registered.
In the month of November, 1914, the appellant society (which is also a co-operative society registered under the Act of 1893) became a member of the respondent society and (having then between 50 and 100 members) took up, in accordance with the rules of the latter society, two shares in that society of £1 each.
By a resolution passed by the requisite majority at special general meetings of the respondent society held on the 1st and 16th May, 1918, the respondent society amended its rules. The rules as so amended included the following provisions:—
Rule 6. Conditions of membership.—( a) Every existing member shall, within three calendar months after the 1st June 1918, take up such a number of shares in the A.W.S, as together with the existing shares of such member in the A.W.S. will make up the number of shares which such society, if a new member, would have had to take up.
( b) Every society or company (not being an allotment society) hereafter admitted to membership, shall take up at least one share of ?1 in the A.W.S. for each member of such society or company and additional shares of an amount taken at the par value thereof equal to 2 per cent, on its turnover as below defined.
* * * * *
( d) For the purposes of this rule the following provisions shall apply:—
* * * * *
5. Every such society or company shall within six months after the end of each financial year of such society or company apply for and take up such further shares as shall represent any increase in membership and turnover over that on which its then present holding of shares shall have been calculated.
The effect of this alteration of rules was that the appellant society, if and so soon as it became bound by the alteration, would come under an obligation to take up additional shares in the respondent society sufficient to make up its holding to one share for each member of the appellant society with additional shares in respect of its turnover as defined in the rules, and also thereafter, within six months after the end of each of its financial years, to take up further shares representing any increase in membership and turnover during that year.
By a letter dated the 12th August, 1918, the respondent society brought this alteration of rules to the notice of the appellant society; and the appellant society thereupon by letter dated the 20th August asked for an estimate of the number of shares for which it was liable, and on being informed that it was liable to take up additional shares sufficient to make up its holding to 472 shares, duly applied to the respondent society for the additional 470 shares required for that purpose. These shares were accordingly issued to the appellant society, which duly accepted the same and paid up the amounts payable on the shares.
The membership and turnover of the appellant society increased from year to year, and it is not disputed that at the end of the year 1921 it was the duty of the appellants—assuming them to be bound by the rules of 1918—to take up 2,211 additional shares, making up their total holding to 2,683 shares.
In the year 1922 further alterations were made in the rules of the respondent society; but as the respondents' claim is not founded on the rules as so altered, it is unnecessary to set out the alterations in detail. It is enough to say that the rules did not increase the liability of the appellants to take up additional shares.
In the month of October, 1923, the Board of the respondent society called upon the appellants to take up the additional 2,211 shares in accordance with the rules of 1918, and ultimately allotted such shares to the appellants. This allotment being disputed, the respondents commenced this action against the appellants, claiming a declaration that the appellants were liable to take up and pay for the additional 2,211 shares and payment of the amount due on such shares. The action came before Mr. Justice Lawrence, who held, on the authority of his previous decision in ( Dibble v. Wilts and Somerset Farmers, Limited L.R. 1923 1 Ch. 342), that the appellants were not liable to take up the additional shares; but on appeal to the Court of Appeal that Court reversed the decision of the learned Judge and gave judgment in favour of the respondents. Hence the present Appeal.
It was argued on behalf of the appellants that a decision that they were bound by the rules, as altered in 1918, to take up and pay for the additional 2,211 shares would be inconsistent with the provisions of the Act of 1893 which permits an industrial and provident society to be registered with limited liability, and in particular with section 60 of that Act, which provides that, where a registered society is wound up, the liability of a present or past member of the society to contribute for payment of the debts and liabilities of the society, the expenses of winding up and the adjustment of the rights of contributors among themselves shall be qualified by the following among other provisions:—
"( d) No contribution shall be required from any individual, society or company exceeding the amount (if any) unpaid on the shares in respect of which he or it is liable as a past or present member."
It was further argued that such a decision, if applied to a company registered under the Companies Act, might effect a serious inroad upon the principle of limited liability established by that Act. To this it was answered that there was no question in this case of imposing upon a member of the respondent society any liability to make a contribution in a winding-up, and that the only question to be determined was whether the appellants, having accepted the rules of the respondent society as altered in the year 1918 and taken shares upon the footing of those rules, could now dispute their liability to take up additional shares in accordance with those rules. Reference was also made to section 22 of the Act of 1893, which provides that "the rules of a registered society shall bind the society and all members thereof and all persons claiming through them respectively to the same extent as if each member had subscribed his name and affixed his seal thereto, and there were contained in such rules a covenant on the part of such member, his heirs, executors, administrators and assigns, to conform thereto subject to the provisions of this Act."
My Lords, in my opinion the contention of the respondents, which has been accepted by the Court of Appeal, is right, and the appellants are under a contractual obligation to take up the additional 2,211 shares. It is unnecessary for the purposes of this appeal to decide whether, having regard to the terms of the Industrial and Provident Societies Act, 1893, an alteration of the rules of a registered society requiring the members of the society to subscribe for additional shares would be binding on a member who had not assented to the alteration; for the case of the respondents rests, not on any alteration of rules made after the appellants took up their shares, but on the rules of 1918, which were in force when the appellants subscribed for 470 shares. Still less is it necessary to determine whether in the case of a company registered with limited liability under the...
To continue reading
Request your trial
-
Hole v Garnsey
...his judgment. From the judgment of the Court of Appeal an appeal was taken to this House and the proceedings are reported in 1927 Appeal Cases, p. 76. 10 I have set out the facts in some detail because the first and, to my mind, the most difficult question in this case is whether the decisi......
-
Case v. Edmonton Country Club Ltd., (1974) 1 N.R. 563 (SCC)
...[para. 9]. Baird's case, [1899] 2 Ch. 593, dist. [para. 9]. Biddulph and District Agricultural Society v. Agricultural Wholesale Society, [1927] A.C. 76, dist. [para. Hole v. Garnsey, [1930] A.C. 472, dist. [para. 10]. Penney's Case (1872), L.R. 8 Ch. A. 446, folld. [para. 16]. Hodgson's Ca......