Hutton v The Scarborough Cliff Hotel Company Ltd, B
| Jurisdiction | England & Wales |
| Judgment Date | 24 July 1865 |
| Date | 24 July 1865 |
| Court | High Court of Chancery |
English Reports Citation: 62 E.R. 717
HIGH COURT OF CHANCERY
See the Previous case and the notes thereto.
Joint Stock Company. Preference Shares. Injunction.
[521] hutton v. the scarborough cliff hotel company (limited), B. July 22, 24, 1865. [See the previous case and the notes thereto.] Joint Stock Company. Preference Shares. Injunction. The power given by section 50 of the Companies Act, 1862, to a general meeting by special resolution, to modify the regulations of the company, is limited to altering the regulations relating to the management of the company, but not to altering its constitution. Therefore, where a general meeting altered the articles of association by inserting power to issue new shares with preferential dividend (no such power existing before) : Held, that such alteration was an alteration in the constitution of the company, the (1) [NOTE.-This decision was affirmed on appeal by Lord Chancellor Westbury. Fide 13 W. E. 631.-eep.] 718 BUTTON V. SCARBOROUGH CLIFF HOTEL CO. (LTD.) 2 DR. & SM. 52?, intention of all parties to the original contract being that all shareholders should stand pari passu with regard to the receipt of dividends, and the Court granted a injunction restraining the issue of preference shares. The directors being unable, in consequence of the injunction granted by the Vice-Chancellor on the 23d of March (as appears from the preceding case, and which was. affirmed on appeal by the Lord Chancellor Westbury on the 25th day of April), to issue any of the unallotted shares with a preferential dividend, proposed to increase the capital of the company by the sum of about 59,000, 10s., by issuing new shares-to that amount of 9, 10s. each, with a preferential dividend not exceeding 7 per cent., and for the present at least not to issue the unallotted shares in the original capital. This they proposed doing under the articles of association of the company,, which provided by section 17 that "upon a report by the board of directors recommending an increase of the capital, and upon a resolution passed by an extraordinary-general meeting convened for the purpose, the company may from time to time-, increase the capital from 120,000 to any amount not exceeding 180,000," and by section 18, that, "The increased capital shall be raised from time to time in the-number of shares, and of the amount and value and, subject to these articles, on such conditions as the...
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...as subject to implied limitations. The problem has been to say where the line should be drawn. In Hutton v Scarborough Cliff Hotel Co. (1865) 2 Dr & Sm 521Kindersley V-C said that, in the absence of contrary provision in the memorandum of association, it was a fundamental condition of a com......
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