The Northumberland and Durham District Banking Company, and The Joint Stock Banking Companies Act, 1857
| Jurisdiction | England & Wales |
| Judgment Date | 26 May 1858 |
| Date | 26 May 1858 |
| Court | High Court of Chancery |
English Reports Citation: 44 E.R. 1028
BEFORE THE LORDS JUSTICES.
S. C. 27 L. J. Ch. 356; 4 Jur. (N. S.), 419; 6 W. R. 527. See In re Nassan Phosphate Company, 1876, 2 Ch. D. 615; Geo. Hill & Company v. Hill, 1886, 55 L. T. 771; Baroness Wenlock v. River Dee Company, 1887, 36 Ch. D. 693.
[357] In the Matter of the northumberland and durham district banking company, and In the Matter of the joint stock banking companies act, 1857. Before the Lords Justices. March 19, 20, 24, 25, 29, April 19, 1858. - |S. C. 27 L. J. Ch. 356 ; 4 Jur. (N. S.), 419; 6 AV. E. 527. See In re Nassau Phosphate, Company, 1876, 2 Ch. D. 615; Geo. Hill cfc Company v. Hill, 1886, 55 L. T. 771; Baroness Wenlock v. Riser Dee Company, 1887, 36 Ch.' D. 693.] A joint stock banking company constituted under 7 Geo. 4, c. 46, became insolvent, and in November 1857 stopped payment, but no resolution was passed for dissolving it. In the following month it was registered under the Joint Stock Banking Companies Act, 1857, in pursuance of a resolution come to after the stoppage. Held, by the Lord Justice Turner, dissentients the Lord Justice Knight Bruce, that the registration was valid, for that in order to bring a company within the 6th section of the Act, it is not necessary that it should continue to carry on business up to the time of its registration. The registrar's certificate is not conclusive as to the provisions of the Act being applicable to a company. / Consideration of the circumstances which will induce the Court to prefer a conipul- '- sory winding up of a company to a voluntary winding up. This was an appeal by certain creditors of the Northumberland and Durham District Banking Company from an order of Arice-Chancellor Kindersley, approving of a voluntary winding up of the company. The company was formed by a deed of settlement, dated 1st July 1836, by the first clause of which it was provided, that " the several persons, parties to these presents, all of whom are distinguished by the title of proprietors, and the several other persons who, for the time being, shall become and be proprietors of shares in the capital of the company, shall constitute and form an association, or public joint stock banking co-partnership, to be called, and shall be and are called, ' The Northumberland and Durham District Banking Company,' and that they, the parties, shall and will from time to time, so long as they shall continue and remain members thereof, promote the interests of the company, and the said com-[358]-pany shall have continuance until the same shall be dissolved under or in pursuance of the provisions in that behalf hereinafter contained." The capital was to consist of 500,000, divided into-50,000 shares of 10 each, with power to increase the capital by additional shares. The 102d clause provided, that if losses to a certain extent therein specified should occur, the directors should call a special general meeting of the shareholders, and,, upon the amount of loss being established, the chairman should, if required by a majority of the meeting, declare the company dissolved, and the company should stand and be dissolved accordingly to all intents and purposes, except for the purpose of winding up and settling its affairs. Except this clause there was not in the deed anything authorizing or contemplating a dissolution of the company. Some time after the establishment of the company the capital was increased by the addition of 10,000, and afterwards of 6775, new shares of 10 each. The whole-of the capital, with a trifling exception, was paid up. On the 26th of November 1857 the company stopped payment. On the 22d of: SDEQ. &J. S89. DURHAM DISTRICT BANKING COMPANY 1029 December, Mr. Bourne, a shareholder, presented a petition for winding up the company under the Joint Stock Companies Winding-up Acts, 1847 and 1849. On the 26th of December a meeting of shareholders was held for the purpose of considering whether the company should not be registered under the Joint Stock Companies Act, 1857, and a resolution was passed that it should. It was registered accordingly on the 30th of December 1857. On the 22d of January 1858, a meeting of share-[359]-holders was held, and it being found that the circumstances had occurred which were necessary in order to bring the 102d clause of the deed of settlement into operation, resolutions were passed that the chairman should declare the company dissolved, and that it should be dissolved accordingly, subject to the provisions of the deed of settlement and of the Joint Stock Banking Companies Act, 1857, and that the company should be wound up voluntarily under the Joint Stock Banking Companies Act, 1857. Liquidators were appointed and various provisions made as to their powers, which were the subject of much comment; but as the judgment of the Lords Justices in no way proceeded upon them, it is needless further to refer to them. The chairman thereupon declared the company dissolved, subject to the provisions of the deed of settlement and of the Joint Stock Banking Companies Act, 1857. On the 29th of January 1858, Mr. Bourne's petition was withdrawn. On the 28th of January, George Milner, a contributory, and W. J. Cookson, a creditor of the company, presented a petition, intituled in the matter of the Joint Stock Banking Companies Act, 1857, and in the matter of the company, praying that an order absolute might be made for winding up the company, by the Court, under the provisions of the Joint Stock Banking Companies Act, 1857, and that all actions and suits against the company might be restrained, or that the voluntary winding up might be allowed to continue, subject to the supervision of the Court, with liberty for any creditor or contributory of the company to apply to the Court. The Appellants, who were three creditors of the company, and two of whom had, before the registration, com-[360]-mencecl actions for the recovery of their debts, appeared on the hearing of the petition, and contended that the voluntary winding up ought not to be allowed to continue. A very large majority, however, as to amount, of the creditors, preferred the voluntary winding up to a compulsory one. On the 17th of February 1858, Vice-Chancellor Kindersley made the following order:- "This Court doth order that so much of the said petition as prays that an order absolute may be made for winding up the said company by the Court, under the provisions of the Joint Stock Banking Companies Act, 1857, do stand over ; and this Court doth approve of the voluntary winding up of the Northumberland and Durham District Banking Company in the petition mentioned, and doth order that such voluntary winding up do continue. But the liquidators under the said voluntary winding up are not to act under the 17th section of the Joint Stock Companies Act, 1857, nor to compromise or compound any claim against any shareholder or representative of a shareholder, either in respect of any call or debt, without the leave of this Court, nor to compromise the debt of any other person to the amount of 2000 or upwards, without the leave of this Court; and it is ordered that the costs of the Petitioners, and of the said banking company, of this application, be paid out of the estate of the said company. And the creditors, contributories and liquidators, and all other parties interested, are to be at liberty to apply to the Court as they may be advised." From this order the present appeal was brought. Mr. Glasse and Mr. W. D. Lewis, for the Appellants. We submit, firstly, that this company had under the circumstances no power to register itself under the Joint Stock Banking Companies Act, 1857. Banking com-[361]-panies formed under 8 Viet. c. 113, or under 10 Viet. c. 75, are by this Act compelled to be registered under it. The present company was not formed under either of those Acts, but under 7 Geo. 4, c. 46, its registration, therefore, was not imperative, and whether it could be registered must depend on the question whether it came within the terms of sect. 6(1) of the Act. We contend that, on a fair interpretation, this section only applies to companies which at the time of registration are actually carrying on the business of banking. The preamble to the Act states its object to be "to amend the law relating to co-partnerships and companies carrying on the business of banking, and 1030 IN RE THE NORTHUMBERLAND AND iOEO.tcJ.262. hereinafter included under the term 'banking companies,'" language which clearly points to companies actually carrying on business. The heading to the class of sections (sects. 3-10), which includes the 6th section, is, "registration of existing banking companies," which must refer to companies existing as banking companies at the time of registration. Then, as to the language of the sections itself, companies to be regia-[362]-tered under it must be, firstly, "banking companies," which pri'ind facie means companies carrying on the business of banking. This company was not doing so, having ceased to carry on any banking operations long before its registration. Next, it must be a company "having a capital of fixed amount," which this company was not, having lost all its capital. The concluding part of the section clearly points to companies in actual operation, and points to the time of registration as the period when, to bring themselves within the Act, they must be so, and this agrees with the general scope of the Act, which is, to regulate the carrying on the business of such companies. The words " consisting of more than seven members " evidently must refer to the time of registration. We submit, then, that this company, which at the time of registration was not a company existing for the purpose of banking, but merely retained a qualified existence for the purpose of being wound up, and had...
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