Symington v Symington's Quarries Ltd
| Jurisdiction | Scotland |
| Judgment Date | 21 November 1905 |
| Date | 21 November 1905 |
| Docket Number | No. 18. |
| Court | Court of Session |
Lord President, Lord Adam, Lord M'Laren, Lord Kinnear.
CompanyWinding-upJust and EquitableCompanies Act, 1862 (25 and 26 Vict. cap. 89), sec. 79 (5).
Sec. 79 of the Companies Act, 1862, enacts:A company under this Act may be wound up by the Court under the following circumstances (that is to say) (5) whenever the Court is of opinion that it is just and equitable that the Company should be wound up.
Two brothers, H. and D., who had carried on a partnership for working quarries which they held on lease, entered into an agreement to make over the working of the quarries to a private limited company, the shares in which were to be issued one-half to each of the two brothers or their respective nominees, with a small holding to J., a third brother, to enable him to hold balance for voting. The Company was formed and registered in 1899, H., D., and J., under the articles of association, being appointed directors of the Company, and H. being appointed the managing director. The memorandum of association set forth that the object of the Company was to carry on the business of quarrymasters, but contained no reference to the taking over of the business of the partnership or to any assignation of the rights of the partners. The minute of the first meeting of the directors bore that it was arranged to allot one share to each of the subscribers of the memorandum, and after the balance-sheet of the former partnership was prepared and the assets transferred, to allot the balance of the shares. The shares were never allotted, and the assets of the former partnership were never formally transferred to the Company, though the Company entered into possession of the quarries and worked them. Quarrels between the brothers having ensued, at a meeting of the Company in April 1905 it was moved and carried by a majoritythe majority consisting of H. and four members of the Company whose interest in it was merely nominal, and the minority consisting of D. and J.that H. should be the sole director.
In a petition presented by D. and J. for the winding-up of the Company, held that it was just and equitable in the sense of sec. 79 (5) of the Companies Act, 1862, that the Company should be wound up, and petition granted.
This was a petition by David Kennedy Symington, Belmont, Coatbridge, and John Symington, Leslie House, Airdrietwo brotherscontributories of Symingtons' Quarries, Limited, incorporated under the Companies Acts, 1862 to 1900, and having its registered office at Bank Street, Coatbridge, praying for an order that Symingtons' Quarries, Limited, be wound up by the Court.
In 1899 the petitioner D. K. Symington and another brother Hugh Symington were in partnership at Coatbridge under the firm name of D. K. & H. Symington. Among the assets of the firm was the right to work two quarries, the Kipps Quarry and the Annanlea Quarry. In June 1899 an attempt was made to arrange for a dissolution of the firm by buying out one or other of the partners by means of sealed tenders for the lots into which the partnership assets were divided, but this attempt failed, and on 15th August 1899 the partners executed a memorandum of agreement, one of the articles of which was in the following terms:
2. The parties agree to make over lots 2 (Kipps), 3 (Annanlea), and 6 (furniture) to a private limited company to be registered under the name of Symingtons' Quarries, Limited. The nominal capital of the Company to be 20,000 in ordinary shares of 1 each, and 15,000 to be issued one half to David and the other half to Hugh or their respective nominees. Hugh to be managing director for three years at an annual salary of 500, and David and John to be ordinary directors. John Symington to take 100 in shares to enable him to hold balance for voting.
The memorandum of agreement was signed by D. K. Symington and Hugh Symington, the two partners, and by John Symington, the third brother.
Symingtons' Quarries, Limited, was incorporated and registered under the Companies Acts, 1862 to 1898, on 28th September 1899.
The memorandum of association of the Company bore that the objects for which the Company was established were, inter alia, to carry on the business of quarrymasters, but did not contain any reference to the memorandum of agreement above-mentioned, or to the business of D. K. & H. Symington. The capital of the Company was declared to be 20,000, divided into 20,000 shares of 1 each. The memorandum of association was subscribed by seven personsviz., Hugh Symington, John Symington, a chartered accountant who was the auditor of this Company, and four members of the firm of law-agents who were the legal advisers of the Company. The memorandum bore that one share was taken by each of these subscribers.
Under the articles of association Hugh Symington was appointed managing director, and D. K. Symington and John Symington were appointed directors.*
The petition for winding-up was presented in July 1905.
The petitioners stated that although it was not disclosed in the memorandum of association, the Company was primarily formed to take over from the firm of Messrs D. K. & H. Symington the working of two quarriesKipps and Annanleathen held on lease by that firm. No formal agreement for this purpose was entered into between said firm and the Company or anyone on its behalf. The members of said firm, however, before the incorporation of the Company subscribed the memorandum of 15th August 1899, above mentioned. No formal transfer of these quarries has ever been made to the Company, but the Company has proceeded upon the footing that the leases of the said two quarries belonged to it, and it has conducted no other business than the working of said quarries. At the first meeting of the directors of the Company held on 24th January 1900, it was agreed, inter alia, to allot one share to each of the subscribers of the memorandum as well as to the petitioner D. K. Symington.No share certificates have however been issued to the subscribers, and no payment has been made to the Company for said shares. No other shares in the Company have ever been allotted to anybody.
The petitioners further stated:The said Hugh Symington, as managing director of said Company, has from the beginning appropriated to himself the management and control of the Company, its business, and properties. From the outset he, as managing director of the Company, failed to carry out the instructions of the board of directors in the conduct of the business. In particular, he has from time to time made use of the Company's plant and horses in executing work for his own account. He has failed to submit to the directors, for their sanction of payment, numerous accounts incurred by him in the name of the Company. Since 11th March 1901 no meeting of the directors has been held, in consequence of the said Hugh Symington's declinature to take part therein, and on or about the said 11th March 1901 he changed the
Company's bank account from the name of the Company into his own name, and has since then operated with the moneys of the Company wholly through said personal account. No inventory has ever been made by the said Hugh Symington of the plant and other chattels taken over by the Company from the said firm of D. K. & H. Symington, and although these items appear in the balance-sheet...
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