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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> The Belfast and Ulster Brewing Co. (Ltd) v. William Trimble [1872] ScotLR 9_604 (9 July 1872) URL: http://www.bailii.org/scot/cases/ScotCS/1872/09SLR0604.html Cite as: [1872] ScotLR 9_604, [1872] SLR 9_604 |
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Page: 604↓
The articles of association of a joint-stock company provided—“The directors may commence the business of the company as soon as they see fit, notwithstanding the whole of the capital may not be subscribed for or taken.”
Page: 605↓
Held that a formal resolution to commence business was not necessary to enable the directors to commence business, and make calls to carry it on, they having de facto commenced business.
This was an appeal from the Sheriff-court of Lanarkshire, at Glasgow.
The Belfast and Ulster Brewing Company, Limited, incorporated under the Companies Act, 1862, sued William Trimble, yarn-agent, Glasgow, for certain sums, amounting to £180, being the amount of calls due by the defender, as the holder of twenty shares in the pursuers' company.
The defender admitted that he had applied for twenty shares, and subscribed the memorandum and articles of association, but he alleged that he was induced to do so by the fraudulent representations of the secretary to the company, and that the whole scheme was falsely and fraudulently concocted to provide salaries for the secretary and manager. He also maintained certain more technical objections to the validity of the claims made against him, which sufficiently appear from the opinion of the Lord President.
The Sheriff-Substitute (Erskine Murray), On 3d February 1870, pronounced an interlocutor, in which he found that the defender, having signed the memorandum and articles of association, became, on the registration of the company, as incorporated, a shareholder therein, and therefore liable in payment of all calls properly made on him, and remains such until he shall succeed in obtaining the deletion of his name from the register of shareholders, or the reduction of the documents signed by him, as granted by him on fraud and misrepresentation; but that it falls on the pursuers to prove, as under article 15 of the articles of association, that the name of the defender is still on the register of members of the company as a holder of the number of shares in relation to which these proceedings are taken, and that notices of the respective calls were given in pursuance of the articles of association.
Article 15 provides—“In any proceeding by the company against a shareholder in respect of a call, it shall be sufficient for the company to prove that the name of the person proceeded against is on the register of members of the company, as a holder of the number of shares in relation to which the proceeding is taken, and that notice of such call was given in pursuance of these articles; and proof of the said matters shall be conclusive evidence of the debt, and it shall not be necessary to prove the appointment of the directors who made the call, or that a quorum of directors was present at the meeting of the board at which the call was made, or that the board was duly convened or constituted, or any other matter whatsoever.”
After various procedure, the Sheriff-Substitute, on 1st July 1871, found that the pursuers had proved all that was necessary to fix liability on the defender, and decerned against the defender, in terms of the conclusions of the summons. To this interlocutor the Sheriff ( Glassford Bell) adhered on 17th February 1872.
The defender appealed.
Scott and Lancaster for him.
Solicitor-General and Asher, for the pursuers, were not called upon.
At advising—
The third plea is the one chiefly insisted on—“(3) The capital of £60,000 not having been subscribed for, and no lawful resolution of the directors to begin business on less having been made and recorded, the directors were not entitled to begin business and make calls to carry it on.” The plea is founded on article 81 of the articles of association, which provides—“The directors may commence the business of the Company as soon as they see fit, notwithstanding the whole of the capital may not be subscribed for or taken.” The fact of the whole of the capital not having been subscribed is therefore not in itself an objection to the directors commencing business. But it is maintained that they are not entitled to commence business unless they have come to a formal resolution to do so. The ground of this contention is that article 93 provides that the directors shall cause minutes to be made of the proceedings of all their meetings. I cannot say that a formal resolution to commence business is required. Article 81 leaves it entirely in the hands of the directors to commence business.
The other objections are directed to the evidence on which the Sheriff proceeded in holding the pursuers' case to be made out, as to the defender being still on the register of shareholders, and as to the calls having been duly made. The register has been kept in accordance with the Act of Parliament: it contains all the necessary particulars. The objection founded on article 133 is certainly the thinnest I ever heard. That article directs that notices are to be sent to shareholders by prepaid letters. It is assumed that the notices of calls were sent and received. But we are asked to suppose that the call notices were not prepaid!
The other Judges concurred.
The Court refused the appeal.
Solicitors: Agents for Pursuers— J. & R. D. Ross, W.S.
Agent for Defender— John Walls, S.S.C.
