charge is properly inserted in the judgment, yet, if the company is in winding-up, the Court will not make such a declaration unless satisfied that the official receiver or the liquidator has no objection to the validity of the debentures. A letter of consent written to the plaintiff's solicitor by the official receiver or liquidator is not enough. The official receiver or liquidator must appear personally in Court or lodge a written consent with the registrar. Marwick v. Thurlow DEBENTURES-Form of Judgment-Foreclosure. A judgment in a foreclosure action should contain a direction that moneys in Court, or in the hands of a receiver, shall on the defendant's application be applied towards payment of the amount due. Cumming & Metcalfe v. London Hydro. Declaration of Charge-Immediate Sale-Order LI. r. 1B. In an action by a debenture-holder, which is brought on as a short cause, the Court can preface the judgment with a declaration that the plaintiff is entitled to a charge on the property designated in the debentures as a security for the money thereby secured, but the plaintiff will not be entitled as a matter of course to the order granted in Perry v. Clutton Coal Co., if he sues on his own behalf only. Parkinson v. Wainwright & Co. Receivers and Managers-Money Borrowed under Order of Court Where receivers and managers appointed in a debenture-holders' action had, in pursuance of certain orders of the Court, borrowed certain sums of money to carry on the business of the company, such sums constituting a first charge upon the assets : Held, on the construction of the several orders made in the matter, and on the facts of the case, that the lenders were not strangers to the action, and that the receivers and managers were the receivers and managers of all the parties, and as such were entitled to be paid their costs, charges and expenses, and indemnified from all liabilities properly incurred by them, in priority to the repayment of the sums borrowed, to the first and second debentures, and to the costs of the action. Strapp v. Bull, Sons & Co. - Borrowing Power-Charging Uncalled Capital, 246. See Borrowing. Extent of Charge" Property"—Uncalled Capital-Articles of A880 ciation. A debenture charging a company's "property," does not primâ facie include uncalled capital, but it may do so if the debenture is issued in pursuance of articles of association, treating uncalled capital as forming part of the property chargeable. Holme v. Drachenfels Banket Gold Mining Syndicate. PAGE 310 418 420 441 146 DEBENTURES-Ships-Subsequent Mortgage-Registration-PriorityNotice-Merchant Shipping Act, 1854 (17 & 18 Vict. c. 104), ss. 43, 66, 69; Merchant Shipping Act, 1862 (25 & 26 Vict. c. 63), s. 3. A statutory mortgage of a ship duly registered under the Merchant Shipping Act, 1854, has priority over an unregistered equitable mortgage of the same ship though earlier in date. Section 3 of the Merchant Shipping Act, 1862, only alters section 69 of the Merchant Shipping Act, 1854, to the extent of giving recognition to equitable titles, not priority or equality. A mortgagee of a ship having notice of debentures issued by his mortgagor charging ships, does not fix the mortgagee with constructive notice of a clause in the debentures prohibiting the creation of any prior charge or mortgage if the mortgagee had reasonable ground for believing that the debentures did not affect the ship mortgaged to him. Black v. Williams Liverpool Bank v. Turner explained. Floating Security-Going Concern-Garnishee Order-Notice to Garnishee-Priority. A debtor to a limited company is justified in paying a judgment creditor of the company under a garnishee order, notwithstanding that he has notice of a debenture charging all the assets of the company with the repayment thereof as a floating security, so long as the company is carrying on its business as a going concern. A debenture-holder, therefore, so long as the company is a going concern, cannot by notice to a debtor of the company single out any particular debt and require that it should be paid to him in order to satisfy his debenture. Hubbuck v. Helms followed; In re Standard Manufacturing Co. and In re Opera, Limited, distinguished. Where a debenture of the kind in question contains a provision that the company should not be at liberty to create any mortgage or charge upon any property in priority to the debenture, garnishee proceedings, being only a form of execution, do not lead to any 'charge,” in the true sense, being created by the company on the debt garnished. The word "charge" in a provision of this class is construed strictly. Robson v. Smith. 66 Execution against Chattels charged by Debentures-Execution Creditor and Debenture-holder-Priority. PAGE 86 422 Where chattels of a company have been taken in execution and sold, but the proceeds have not been handed over to the execution creditor, the holder of a debenture which creates a charge on the chattels may intervene on behalf of himself and the other debentureholders, and claim the proceeds of sale in priority to the execution creditor, if the amount secured by the debenture is presently payable, although the conditions endorsed on the debenture provide that the charge "shall be a floating security, and shall not hinder any deal- DEBENTURES-Floating Security-Right of Company to deal with its A debenture which contains no provision that on default in payment of interest the principal shall become payable, which is expressed to be a "floating security," and notwithstanding which the company is to be at liberty to deal with any of its property until three months after default in payment of interest, does not prevent the company from dealing with its property so as to give a good title, in priority to the debentures, to a mortgagee who takes with notice of the debentures, and of three months' default in payment of interest thereon. Such mortgagee will acquire priority unless the debenture-holders have actually obtained the appointment of a receiver so as to prevent the company from contracting further debts. Government Stock and Securities Investment Co. v. Manila Railway Registration under Bills of Sale Acts-Exemption-Industrial Society -"Incorporated Company." Debentures issued by an industrial society are invalid unless registered as a bill of sale. The exemption from registration contained in section 17 of the Bills of Sale Act, 1882, does not apply to an industrial society. Such a society is not an "incorporated company" within the meaning of the section. In re Coal Co-operative Society, Gt. Northern Co. v. Same Tramway Company-Sale of Undertaking-Receiver and Manager— Though an equitable charge or lien usually confers a right to have the property sold, the owner of an equitable charge or lien on an undertaking or business acquired under statutory powers and for public purposes is not entitled to a judicial sale of such undertaking for the payment of his debt, if the purposes for which it was acquired would be defeated or seriously affected thereby. A tramway company, like a railway company and a waterworks company, is within this exception to the general rule. Gardner v. London, Chatham and Dover Railway, and Blaker v. Herts and Essex Waterworks Company followed; Hope v. Croydon and Norwood Tramways Company, and Bartlett v. West Metropolitan Tramways Company disapproved. Marshall v. South Staffordshire Tramways Co. (C. A.) Public Undertaking Debenture holders Appointment of Receiver and Manager-Penalties-Leave to Distrain. Although the Court will not appoint a receiver and manager of a PAGE 238 435 621 292 tramway company (Marshall v. South Staffordshire Tramways Co.), nevertheless, where such a receiver and manager had been appointed prior to the decision in that case, a road authority (empowered by statute to distrain) was given leave to distrain on the property of the tramway company to recover penalties for the nonrepair of the tram lines, even though the purposes for which the undertaking was acquired might be defeated or seriously affected thereby. Pegge v. Neath District Tramways Co. DIRECTORS—Authority - Presumption omnia rite acta - Mortgage— Colliery-Receiver-Mortgagee in Possession-Discretion of Court. Where by the articles of association of a company the directors are empowered to fix by resolution what number of directors shall be a quorum, whether any and what quorum has been so fixed is a mere matter of the internal management of the company, as to which a purchaser for value (e.g., a mortgagee) is not concerned to enquire. Such a purchaser will therefore, if he takes in good faith and without further notice of any irregularity, acquire a good title even though in fact the number of directors by whose authority the contract was made or the corporate seal affixed was less than that prescribed by the resolution aforesaid. Royal British Bank v. Turquand, and Mahoney v. East Holyford Mining Co., followed and applied. D'Arcy v. Tamar, Kit Hill & Callington Railway distinguished. County of Gloucester Bank v. Rudry Merthyr Steam Colliery Co. Dispositions by, pending petition, 314. Misfeasance-" Officer"-Solicitor-Companies (Winding-up) Act, 1890 (53 & 54 Vict. c. 63), s. 10. Where a solicitor of a building society has agreed to accept an annual salary, out of which he is to provide offices, clerks, stationery, &c., and has agreed to forego all the ordinary rules with regard to payment, and to pay over to the society all fees and costs paid to him by the clients of the society in consideration of such fixed salary, he is an "officer" of the society within the meaning of section 10 of the Companies (Winding-up) Act, 1890, and his estate is liable to contribute to the assets of the society all sums he has received while solicitor of the society. In re Liberator Permanent Benefit Building Society Payment of Dividends out of Capital—Contribution from Shareholders-Third Party Notice. On a misfeasance summons under section 10 of the Winding-up Act, 1890, to render directors liable for dividends paid out of capital, the Court has no jurisdiction, by analogy to the third party procedure in an action, to give leave to the directors to serve notice on shareholders, who have received the dividends, claiming contribution. In re Land Securities Company Reconstruction-Interests of New Company-Bona fides. PAGE 474 223 100 127 Where the assets of a company in winding-up had under a scheme of arrangement been taken over by a new company, reserving to the old company its rights against its directors for misfeasance, the Court at the instance of the new company stayed misfeasance proceedings which the Official Receiver had initiated, as prejudicial to the commercial interests of the new company, being satisfied that its opposition was bonâ fide. In re New Zealand Loan & Agency Company DIRECTORS-Presents to out of Borrowed Money-Powers of Directors and General Meeting--“ Private Company"—Companies Act, 1862 (25 & 26 Vict. c. 89), 88. 191, 192—Appeal-Costs-Shorthand Notes of Evidence. Directors cannot make presents to one of themselves out of the assets of the company, and if they have done so must on a windingup repay the moneys so misapplied to the liquidator. Neither can the shareholders in general meeting make such presents except out of profits. In re British Seamless Paper Box Co. distinguished. Members of a private company cannot disregard their corporate character and do what they like with the property of the company. They get by registering the advantages of incorporation, and they must accept the attendant disabilities. Costs of a shorthand note of the evidence below allowed to a successful appellant, there being no note by the Judge. In re G. Newman & Co. (C. A.) Public Examination of Directors-Official Receiver's Report—Applica- A report of the Official Receiver made under section 8, subsection 2, of the Companies (Winding-up) Act, 1890, finding fraud will not, on the application of a person implicated, be taken off the file or sent back to the Official Receiver for reconsideration, because it omits some material facts: but the Court, in directing a public examination, exercises a judicial discretion, and will consider whether the facts stated in the report are sufficient to support an application for a public examination. In re New Travellers Chambers DISCOUNT-Shares issued at, 253. See Shares. FORMATION-Memorandum of Association, 596. One Man Co., 140, 449, 586. See One Man Co. See Memorandum of INDUSTRIAL SOCIETY- Registration of Debenture of, as Bill of Sale, 621. See Debentures. LIQUIDATOR-105, 148. See Winding-up. |