Lord v The Governor and Company of Copper Miners and Others
| Jurisdiction | England & Wales |
| Judgment Date | 05 December 1848 |
| Date | 05 December 1848 |
| Court | High Court of Chancery |
English Reports Citation: 41 E.R. 1129
HIGH COURT OF CHANCERY
S. C. 1 Ha. & Tw. 85; 18 L. J. Ch. 65. Clinch v. Financial Corporation, 1868, L. R. 5 Eq. 482; Ward v. Sittinffbourne, &c., Railway Company, 1874, L. R. 9 Ch. 492, n.; MacDougall v. Gardiner, 1875, L. R. 20 Eq. 393; 1 Ch. D. 21.
[740] lord v. the governor and company of copper miners and others. Dec. 5, 1848. [S. C. 1 Ha. & Tw. 85; 18 L. J. Ch. 65. Clinch v. Financial Corporation, 1868, L. R. 5 Eq. 482 ; Ward v. Sittinffbaurne, &c., Railway Company, 1874, L. R. 9 Ch. 492, n.; MacDougall v. Gardiner, 1875, L. R. 20 Eq. 393; 1 Ch.' D. 21.] A demurrer to a bill by one of the shareholders of an incorporated mining company on behalf of himself and all the other shareholders, except the members of the governing body, who were Defendants, impeaching several transactions of that body, which, it appeared, had been sanctioned by majorities at general meetings of the shareholders, and amongst which was a project to vest all the property of the company in trustees for the purpose of liquidating its affairs, was allowed, notwithstanding som& vague and general charges of fraud and misconduct on the part of the Defendants, and an allegation that, by the constitution of the company, no one but the governing body could convene a general meeting; the specific acts complained of not being clearly such as, in the opinion of the Court, it was incompetent to a majority of shareholders to sanction. The doctrine of Foss v. Harbottle (2 Hare, 492) and Mozley v. Alston (1 Phill. 700), as to the interference of this Court in the internal administration of incorporated companies, confirmed. This was an appeal from an order of Vice-Chancellor Knight Bruce, overruling two general demurrers to the bill, which was filed by the Plaintiff on behalf of himself and all the other shareholders in the company, except the members of the governing body, against the company itself, the members of the governing body, the Bank of England, and several other parties who were alleged to be holders of C. xxi.-36* 1130 LORD V. THE GOVERNOR AND CO. OF COPPER MINERS 2 PH. 741. debenture^ notea, or other securities affecting the property of the company, which the bill sought to impeach. The bill commenced by setting forth an abstract of certain letters patent of William and Mary, by which the company had been incorporated by the name of the Governor and Company of Copper Miners in England; from which abstract it appeared that the company was empowered to hold land not exceeding the yearly value of £6000, and goods and chattels to any amount, and to raise a joint stock, and the same to increase or diminish from time to time, as the company and their successors should find most fitting and convenient: that the man-[741]-agement of the affairs of the company was vested in a governor and deputy-governor, and ten or more assistants, who were to be annually elected at general meetings of the shareholders, and that the governor and company and their successors were empowered to hold courts lor the purpose of consulting concerning the affairs of the company. The bill then set forth various prospectuses which had been issued by the governing body of the company in the years 1841 and 1842, and in consequence of which it alleged that many shares had been disposed of, announcing that the nominal capital of the company was £1,000,000, consisting of 10,000 shares of £100 each, a considerable number of which still remained unappropriated; but that it had been calculated that òa paid-up capital of £650,000 would be sufficient to carry on the contemplated business of the company, being £65 per cent, on the nominal amount of the shares, òof which £33 waa to be paid immediately, and the remainder in calls not exceeding .£10, at intervals of not less than two months. The bill then stated that the whole management of the concerns of the company òdevolved upon the court of assistants, consisting of the governor and assistants, who rendered no accounts to, and were subject to no supervision of, the shareholders at large, but that twice in every year general meetings of the shareholders were òconvened by the court of assistants, at one of which the election of the elective òofficers of the company was carried on, and at each of which the governor and deputy-governor would deliver a speech or report to the shareholders, purporting to inform them of the condition and prospects of their affairs. The bill then stated that, at the half-yearly general meeting of April 1844, the governor had announced [742] that all the shares in the company had been disposed òof, and had represented the affairs of the company as in a highly prosperous condition; and that at the half-yearly general meeting of April 1846, after making a similar representation, he proceeded to state that it had appeared to the court that they were best consulting the interests of the shareholders by delaying, as far as was practicable, the making of calls, and that as that view had appeared to meet with the iull approbation of the shareholders at several previous meetings, they had from time to time borrowed considerable sums of money, for terms varying from two to seven years, and that, owing to unforeseen circumstances, it had become necessary to make immediate arrangements for liquidating a considerable portion of thoae loans, and for which purpose, in order to avoid the necessity of making additional calls upon the proprietors, which they conceived would be inexpedient, they proposed to raise a òsum not exceeding £500,000, by the issue of preference shares of £25 each, redeemable by the company after the expiration of ten years, at a sum not exceeding £30 per share, the holders of such shares in the meantime to have a priority of right to a dividend, not exceeding a certain amount, before any dividend should be declared upon the original shares. The bill then stated that a resolution to that effect was unanimously adopted by the meeting, and that at the half-yearly general meeting of April 1847, the governor announced that the sum of £400,000 had been raised by the issue of such preference shares, and that, having accomplished the immediate objects they had in view considerably within the limit which had been voted, the court of assistants had discontinued the issue of any more such shares : that the governor then made various statements to shew the prosperous condition of the company, and concluded by announcing [743] a dividend of 1\ per cent, on the paid-up capital of the preference shares, and a dividend of 5 per cent, on that of the original shares The bill then alleged that shortly after the delivery of that speech, the company became so embarrassed in ita circumstances that it was no longer practicable for the court of assistants to withhold from the shareholders the knowledge of the truth, but that, instead of immediately convening a general meeting, they called together a a PH. TH. LORD V. THE GOVEENOB AND CO. OF COPPER MINERS 1131 private meeting of the preference shareholders, to which the Plaintiff, who was then the holder of scrip certificates for 200 of such shares, was summoned, and at which, after stating generally that the company was much embarrassed owing to various untoward circumstances, the court proposed that a fresh issue of preference shares should be made for the purpose of raising more money, to which proposition several of the preference shareholders then present at first assented, but that shortly afterwards it was disclosed by some member of the court of assistants, as the fact was, that the court had converted, or assumed to convert, a number of the preference shares already issued into debentures, or some similar security on the property of the company, upon which the Plaintiff immediately requested to be allowed to convert his own preference shares into such debentures or securities, but that such application was refused, the deputy-governor stating that no fresh conversion would take place, in consequence of a promise to that effect made by the court to the Bank of England; upon which the Plaintiff protested against the whole proceeding as illegal. The bill then stated that, after some further discussion, the proposal to issue additional preference shares was ultimately rejected, and that in consequence of such rejection die court of assistants convened a special general meeting of the share-/^/^. ft &C ò holders for the 13th [744] of October 1847, when, after adverting to the pressure/ then existing in the money market, and the numerous failures of commercial establishments, and referring to what had passed at the meeting of preference shareholders, the governor stated that the court of assistants had agreed with the Bank of England, subject to the sanction of the shareholders, for a loan of £270,000 at 5 per cent, on mortgage of the real estate of the company, of which sum £150,000 would liquidate òengagements of the company already in the hands of the Bank, and the remaining .£120,000 would come into the company's possession in cash. The bill then stated that a resolution to that effect was, in fact, carried without any dissentient voice; but it charged that the meeting had been convened without any notice being given of its object, or any knowledge on the part of the shareholders of the state of the finances of the company, except the general statements which had been made at the previous meeting of the preference shareholders; and that owing to the crowded state of the :room, and the alarm and bewilderment of the shareholders present, sufficient time and opportunity were not afforded for discussion, and that upon some of the shareholders expressing a desire to be informed of the nature of the alleged liabilities of the company to the Bank of England, and the mode in which they had been created, the court of assistants had flatly refused to give any...
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