Wallingford v Mutual Society

APPEAL against a decision of the Court of Appeal in a matter relating to orders under the Judicature Act, 1875.

On the 20th of September, 1868, the Mutual Society was registered as an unlimited company under the Companies Acts of 1862, 1867. The declared object of the society was to accumulate capital by means of monthly subscriptions from members, to advance such capital to the members in rotation, to secure payment of such advances by taking over and holding real or other securities — and ultimately to divide among the members all the profits that had been made. The directors had powers to do all things necessary to accomplish these purposes. The Appellant (who was originally the Defendant in the action), was a member of the society, and for some years acted as its agent. The mode of operation appeared to be this: To obtain subscriptions from members, to advance them money, on interest, upon “certificates of appropriation.” The 9th “article of association” declared that “an appropriation certificate shall be a document issued to every such member on his entering the society, and shall certify his title to receive an advance out of the funds of the society, as well as to participate in the profits pursuant to the conditions and regulations hereinafter contained.” Any member might nominate a life upon which a certificate was to held, and the members holding these life certificates were to be entitled to tontine bonusses. An “appropriation,” or advance was to be made (Art 22 B.) “according to the number of certificates held by the member successful in obtaining the appropriation.” By Art. 27 it was declared that “appropriations shall be allotted in two ways, the first and every fourth one thereafter, by drawing, free of any premium or interest, while those intermediate shall be allotted to the member or members tendering the highest premium for the same respectively.” All appropriations were to be repaid by equal quarterly payments extending over twenty years from the advance. The Appellant took up appropriation certificates and obtained advances. The directors complained that he did not, regularly, make the required payments. He gave them certain securities, and, among others, on real property, called “mortgage bonds.” On the 3rd of August, 1878, an action was commenced against him for a considerable sum of money alleged to be the accumulation of loans, interest, and subscriptions. The action was by writ, which was specially indorsed with the particulars of the amount claimed (£12,703 10s.) pursuant to the provisions of Order III., rule 6, of the Judicature Act, 1875. The Appellant entered an appearance to the writ, after which, under Order XIV., rule 1a, the Respondents took out a summons for leave to sign judgment on an affidavit that there was “no defence” to the action^F1.

The Appellant alleged generally that he had by fraud and misrepresentation been induced to enter the society, but did not give particular instances of the alleged fraud. This charge he afterwards withdrew. He also alleged disputed accounts and counterclaims, and insisted that he had a good defence to the action.

This summons was heard before Master Francis (one of the Masters of the Common Pleas Division) who, in the result, made an order that, on payment by the Appellant into Court, within ten days, of £11,703 10s., or giving security to that amount, the Appellant should have leave to defend the action. The Appellant took out a summons before Mr. Justice Manisty, at Chambers, for a dismissal of this order, and Mr. Justice Manisty varied it by reducing the sum to £5000 payable into Court within one month. By Order LIV. rule 6, “Every appeal to the Court from any decision at Chambers, shall be by motion, and shall be made within eight days from the decision appealed against.” By Order LVII., rule 6, the time may be enlarged by a Court or Judge, and such enlargement may be ordered, although the application for the same is not made until after the expiration of the time appointed or allowed. Nothing was done by the Appellant as to the order of Mr. Justice Manisty within one month. Judgment was signed, and on the 10th of October, 1878, the costs were taxed. On the 24th of October, 1878, a fi. fa. was issued to the sheriff of Hampshire to levy £7091 14s. 5d., that being the balance then claimed as due, after giving credit for the securities in the possession of the society. Execution was levied. On the 26th of October the Appellant took out a summons for time to appeal to the Divisional Court against the order of Mr. Justice Manisty. This was supported by an affidavit of the clerk to the Appellant's solicitors stating that the motion required by Order LIV., rule 6, had not been made as it was Vacation and no Divisional Court was sitting. There was an affidavit on the other side stating all the circumstances of the case. The summons was heard before Mr. Justice Field, who dismissed it with costs. On the 2nd of November a motion was made in the Common Pleas Division to review the decision of Mr. Justice Manisty on the ground that a good defence on the merits had been shewn by the affidavits before him. It was also treated as an appeal against the order of Mr. Justice Field refusing the extension of time. The Common Pleas Divisional Court dismissed the summons. The case was taken to the Court of Appeal. A preliminary objection was then taken on the ground that the Common Pleas Division had not purported, nor had power, to deal with the order of Mr. Justice Manisty, and that therefore the appeal could not be supported. The Appeal Court dismissed the appeal with costs. This appeal was then brought to this House. The irregularity of these various judicial orders was insisted on, and it was urged that in a case, like this, of complicated accounts, it was impossible to say there was no defence. It was also urged that the constitution of the society itself was illegal, as its promised benefits were to be given to the members by drawings, which made the society illegal under the Lottery Acts, whereby the Respondents were rendered incapable of suing the Appellant under his covenants, and also that the right to enforce payment of all that was due, on default being made as to any part, was in law a penalty and therefore could not be enforced.

In May, 1879 the...