The Joint Stock Companies Winding-up Acts, 1848 and 1849, and The Royal British Bank Mixer's Case
| Jurisdiction | England & Wales |
| Judgment Date | 16 July 1859 |
| Date | 16 July 1859 |
| Court | High Court of Chancery |
English Reports Citation: 45 E.R. 223
BEFORE THE LORD CHANCELLOR LORD CAMPBELL AND THE LORDS JUSTICES.
S. C. 28 L. J. Ch. 879; 7 W. R. 677. See Addie v. Western Bank of Scotland, 1867, L. R. 1 Sc. App. 156.
[575] In the Matter of the joint stock companies windinu-up acts, 1848 and 1849, and In the Matter of the royal british bank. mixer's case. Before the Lord Chancellor Lord Campbell and the Lords Justices. July 16, 1859. [S. C. 28 L. J. Ch. 879; 7 W. R. 677. See Addie v. Western Bank of Scotland, 1867, L. R. 1 Sc. App. 156.] The charter of a company empowered the directors to increase the capital by the issue of new shares of 100 each, but not by less than 10,000 at a time, and it was provided that the additional capital derived from such new shares should not be published and declared as a portion of the capital of the company till the Board of Trade was satisfied that the whole amount of the increase of capital from time to time determined on had been subscribed for the shares issued, at least 50 per share paid up, and a supplementary deed executed by the persona taking the shares. An issue of 2000 new shares was determined upon, the subscribers to be entitled to 5 per cent, interest on the sums paid by them until they had paid up 50 per share, and afterwards to participate in dividends. M. took some of them, paid up 50 per share, and executed a supplementary deed, obtained certificates of shares and received interest, but only a small part of the 2000 shares were ever 224 RE THE UOYAL BKITISH BANK iOEQ.tiJ.S7S. subscribed. for. The sums received in respect of them were entered in the reports under the head of: liabilities. Held, that1-M. was a shareholder liable to be placed on the list of contributories, and not entitled to rank as a creditor for what he had paid. The directors of a company from time to time made to the general meetings of shareholders and printed and published false and fraudulent reports of the affairs of the company. There was nothing to shew that the shareholders were aware of the falsehood of these reports. An issue of new shares being made, M. was induced by these reports to take some of them. Held (overruling Urockwdl'n case, 4 Drew. 205), that, notwithstanding the fraud, he was liable to be placed on the list of contributories. This case was brought before the full Court in the first instance at the request of Vice-Chancellor Kindersley, the questions being whether Mr. Mixer was a contributory of the Royal British Bank, and also, whether he was a creditor on monies paid by him in respect of shares allotted to him. The bank was established under 7 & 8 Viet. c. 113. The original charter of incorporation was dated the 17th of September 1849, and recited the deed of settlement, by the second clause of which it was provided, " that the capital or joint stock of the company for commencing [576] business should bo =100,000 divided into 1000 shares of 100 each, such capital to be increased if need were by the creation of additional shares as therein mentioned, arid that the shares which at the date thereof had not been subscribed for, and also those which might thereinafter be created as thereinafter provided, should be allotted to such persons and in such manner and on such terms as the court of directors should think best for the interest of the company, and that all profits arising therefrom should be carried to the ' surplus or reserved fund.'" By the 6th clause it was provided, " that every member of the company, immediately on obtaining an allotment of any shares, other than the said shares to be classed and distinguished as thereinafter directed, should pay to the court of directors, or as they should direct, the sum of =10 in respect of every share ao allotted, and that the holder of every such share should pay the further sum of 90 in respect thereof at such times and in such instalments and generally in such manner as the Court should require, but that, after the sum of 50 should have been paid up in respect of each such share, no call for further payment thereon should be made except by a resolution passed by the vote of a majority of at least three-fourths of the whole number of the court of directors." By the G5th clause it was provided, " that it should be lawful for the court of directors, from time to time, with the consent of three-fourths in number and value of the shareholders present at a general meeting specially convened for the purpose, to present a petition to Her Majesty in council, praying for leave to increase the capital of the company by creating additional shares to such extent not exceeding in the whole 19,000 shares of =100 each as they might think proper; and that in every such petition should be stated the amount of capital proposed to be raised, the number of shares proposed to be issued for the purpose, and the proposed amount of each share [577] not being less than 100; and that, if Her Majesty should see fit to...
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