Stevenson v Wilson
| Jurisdiction | Scotland |
| Judgment Date | 22 January 1907 |
| Date | 22 January 1907 |
| Docket Number | No. 68. |
| Court | Court of Session |
Lord Low, Ld. Salvesen, Lord President, Lord Kinnear, Lord Pearson.
Company—Shares—Sale of Shares—Refusal of company to register transferee—Rights of transferor and transferee respectively—Implied Trust.—
A sold to B certain shares in a company, whose articles of association provided—as was known both to A and B at the date of the sale—that the directors might, without assigning any reason, refuse to register any transfer of shares to any person not approved of by them. In an action at the instance of A against B decree was pronounced ordaining B to pay the price of the shares in exchange for a transfer of the shares in ordinary form. B thereupon paid the price, and having received a transfer from A, presented it to the company. The company refused to register B as proprietor of the shares or to pay him the dividends accruing on the shares. A, whose name remained on the register, and who did not propose to annul the contract of sale and return the price, declined to receive from the company the dividends accruing on the shares.
In an action at the instance of B against A the Court (aff. judgment of Lord Salvesen, Ordinary) granted declarator (1) that B had the sole beneficial right, title, and interest in the shares and dividends thereon, and (2) that the shares were held by A and his heirs, representatives, and successors whomsoever in trust for behoof of B so long as A's name should remain on the register of shareholders in respect of the shares and B continued to hold the beneficial interest therein, and also granted decree ordaining A from time to time to make payment to B of all dividends accruing on the shares.
In January 1900 John Wilson, chartered accountant, Glasgow, as trustee on the sequestrated estates of J. & D. T. Colquhoun, writers, Glasgow, and the individual partners of that firm, advertised for sale 700 A preference shares and 687 B ordinary shares in J. M. Smith, Limited, on certain printed conditions of tender, which were, inter alia, as follows:—
‘3. The said shares are for sale, and the tenders therefor will be received, under the whole objections and exceptions to which the said shares, or any of them, are or may be subject, and under the whole obligations which attach or may attach thereto; and also under the whole conditions, and subject to the whole provisions and regulations contained in the memorandum and articles of association of the said Company of J. M. Smith, Limited, which shall be held as incorporated herewith.
‘4. The tenders for ordinary B shares shall be made and received subject to the right of pre-emption contained in article 4, and subject to the stipulation in article 5 of the articles of association of the said J. M. Smith, Limited, which are to the following effect, viz.’:—
[Art. 4 of the articles of association was here set forth, providing that the Company should have certain rights of pre-emption in the case of a holder of B ordinary shares wishing to sell his B ordinary shares.]
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‘“5. The directors may, without assigning any reason, refuse to register any transfer of ordinary B shares to any person not approved of by them, or who is not at the time being an existing member of the Company.”
‘5. The trustee may open the said sealed tenders on or after the said 23d day of January 1900, and each and all of the tenderers shall be bound to implement their tenders, if and when called upon by the trustee to do so; and said tenderers shall not be entitled or at liberty to withdraw the tenders after receipt of same by the said John Wilson & Stirling upon any ground whatsoever.
‘7. The tenderers, if any, preferred to the purchase of the various lots of said shares, shall have right to the shares comprised therein from and after the 1st day of January 1900, and to all dividends thereon earned after that date. …
‘8. Upon payment of the price, and interest thereon, the trustee shall grant in favour of the preferred tenderers, if any, and at their several expense, including stamp-duty, a transfer of the shares comprised in the lot purchased, and shall lodge with the secretary of the said Company of J. M. Smith, Limited, the certificate or certificates applicable to said lots presently held by the trustee, and no claim of any kind whatsoever shall rest against the trustee at the instance of the tenderers or any of them, for either or both class of shares in the event of the stipulations in said articles 4 and 5 of said memorandum and articles of association coming into operation.
‘9. The trustee shall not be bound to exhibit or make forthcoming any writ or document other than the transfer to be granted as aforesaid.
‘10. The tenderers shall be held to have satisfied themselves before making their respective tenders of … any conditions or burdens affecting the same, and generally as to all other particulars of the said shares; and the tenderer or tenderers shall not be entitled, after acceptance of their tender or tenders, to withhold payment of the price or prices on any pretext whatsoever.’
By letter, dated 23d January 1900, Daniel Macaulay Stevenson, merchant, Glasgow, offered £16,099, 7s. for the shares, and on 30th January 1900 signed as relative to his offer a copy of the conditions of tender. By letter, dated 30th January 1900, Wilson accepted this offer.
On 17th March 1902, Stevenson paid to Wilson the price of the 700 A preference shares, and having obtained a transfer from Wilson, was thereafter duly registered proprietor of these shares.
A question having arisen between the parties as to the mode of transfer and payment of the price of the 687 B ordinary shares, Wilson, as trustee, in March 1902, raised an action against Stevenson in the Court of Session, concluding for payment of the price of the 687 B ordinary shares in exchange for a transfer of these shares. In this action Stevenson lodged defences in which he maintained that he was entitled to receive such a form of transfer as would enable him to deal with the dividends on the shares, if he was not registered as proprietor of these shares. On 19th May 1903, Stevenson's defences were repelled and decree was pronounced in terms of the conclusions of the summons. On 8th June 1903, Stevenson paid Wilson the price of the 687 B ordinary shares with interest from the date of purchase, and received credit for the dividends received by Wilson since that date. Transfers of the shares in ordinary form were granted by Wilson in favour of Stevenson.
Stevenson thereafter presented the transfers of the 687 B ordinary shares to J. M. Smith, Limited, but they refused to register him as a member of their Company in respect of said shares.
In this position of matters, Stevenson brought the present action on 13th February 1905 against Wilson, as trustee aforesaid, and as an individual, and against J. M. Smith, Limited, concluding for (1) declarator that the pursuer had the sole beneficial right, title, and interest in and to the 687 ordinary B shares of £10 each fully paid in the said J. M. Smith, Limited, registered in the name of the defender Wilson in the books of J. M. Smith, Limited, and to all dividends or bonuses declared on the said shares since 8th June 1903, and also to all dividends and bonuses which might be declared on the said shares in the future, and to all proceeds of liquidation in respect thereof, so long as the beneficial right in and to the said shares pertained to the pursuer; (2) declarator that the said shares ‘are held by’ the defender Wilson and his heirs, representatives, and successors whomsoever (and that whether he has been or may be discharged of his said trusteeship or not), in trust for behoof of the pursuer as from the 23d day of January 1900; (3) decree ordaining the defender Wilson to exhibit and produce an account of his intromissions from and after 8th June 1903 in connection with the said 687 ordinary B shares and all the dividends and bonuses declared thereon, whereby the true balance due by him to the pursuer might appear and be ascertained, and in the event of the said defender failing to produce this account as aforesaid, for decree ordaining him to make payment to the pursuer of £1500 as the amount of the said dividends and bonuses so far as declared and interest thereon; and (4) declarator that the defenders J. M. Smith, Limited, were bound to pay to the defender Wilson, as trustee foresaid, or as an individual, or to his heirs, successors, and representatives whomsoever, or to any judicial factor to be appointed by the Court on the estate in the said shares, all dividends and bonuses which may be declared on the said shares and proceeds of liquidation in respect thereof in the future, so long as the beneficial interest in and to the said shares pertained to the pursuer.
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