to any restrictions imposed upon him, exercise all the powers without the sanction or intervention of the Court as he could have done if the Company was being wound up altogether voluntarily.1

Power to carry on Business of Company.-In the 95th section of the Act of 1862 the official liquidator has, with the sanction of the Court, power to carry on the business of the Company so far as may be necessary for the beneficial winding up of the same. It has been decided that the word " necessary as there used means that it must not be merely beneficial but something more, though the necessity must be determined by the Court, having regard to all the circumstances of the case. Hence, in a case where the object of a proposed business contract was to facilitate the reconstruction of the Company, it was decided that the Court had no jurisdiction to sanction the contract.2 Again, power to postpone the realisation of the property of the Company in the hope that the assets might increase in value, has been refused.3

Sale of Assets by Liquidator.-The liquidator has full powers conferred on him for the sale of the assets of the Company. He may dispose of the same by public auction or private contract. He may dispose of the whole assets to any person or Company, or he may sell the same in parcels.4 There is in the 95th section of the Act no limit whatever

upon what can be sold. Thus a liquidator, with the sanction of the Court, sold in the most general terms all the estate, property, and effects of the Company which he had power to dispose of. After the purchase price had been paid the liquidator brought forward claims against some of the directors, alleging that they had improvidently sold property of the Company at an under value, and seeking to make them liable for the loss. The existence of these claims was

1 Act 1862, sec. 151.

2 In re Wreck Recovery and Salvage Co., 1880, 15 Ch. D. 353.

3 Liquidator of Burntisland Oil Co. Ltd. v. Dawson, 1892, 20 R. 180.

4 Act 1862, sec. 95.

not known when the sale was made, but the Court decided that the purchaser was entitled to any benefit arising out of them.

Power of Liquidator to compromise Claims. The liquidator has, under certain conditions, power to compromise claims with debtors, creditors, and contributories of the Company.1 Where the winding up is by or under the supervision of the Court, the liquidator must get the sanction of the Court to the compromise. Where the liquidation is a voluntary one, the Company must by an extraordinary resolution sanction the compromise.

Where the compromise is with a contributory, such an arrangement, on the one hand, contemplates a complete discharge of the contributory so as to put an end to all connection between him and the Company and its liquidator; and, on the other hand, there is to be an entire surrender of all claims competent to the contributory against the Company and its surplus assets.2

The Court has no power to compel a liquidator to accept a compromise of which he does not approve.

Effect of Liquidation on Contracts made by Company. The mere fact that a Company has gone into liquidation does not of itself cancel contracts made by the Company. The liquidator has the option of completing the contract, but in such a case there is a risk that he may render himself personally liable for the due implement of contracts adopted by him. Such a liability is of necessity a question largely depending upon fact. When the liquidator does not adopt the contract, and it is not fulfilled on behalf of the Company, the person who has suffered damage thereby may rank in the liquidation for the amount of the loss sustained.

Contracts to supply Goods to Company.-Such contracts are binding on the Company during its life, and are equally binding after its dissolution, in this sense that the contracting 1 Act 1862, secs. 159 and 160.

2 Liquidators of City of Glasgow Bank, 1880, 8 R. 135.

parties can sue the Company for damages for any loss sustained for non-acceptance and non-payment in full of the price of the goods after liquidation.

Effect of Liquidation on Contracts with Servants of Company.1 -A winding-up order or a resolution to wind up constitutes notice of discharge to all the servants of a Company in liquidation. The effect of this notice is to entitle the servants to leave the service at once and to claim damages as for wrongous dismissal as on the day on which the liquidation commences. For such damages they will only receive the same dividend as other creditors.

The liquidator and the servants may agree to continue the contract of service; but such continuance is to all intents and purposes a fresh contract, for the due implement of which the liquidator is responsible.

Interest on Debts due by Company.—Where interest is exigible on a debt due by the Company, interest stops running from the date of the commencement of the winding up; but this does not prejudice the right of the creditor to interest subsequent to that date should there be surplus assets.

Power of Liquidator, or Contributory, or Creditor in voluntary winding up to apply to Court.-The liquidator, or any contributory, or creditor, in a voluntary winding up, is entitled to apply to the Court to determine any question fairly arising in the matter of such winding up.2 In virtue of this provision application has been made to the Court to settle disputes as to the compromise of a claim, to determine the rights of different classes of shareholders to surplus assets, to proceeds against directors for misfeasance, and for an examination and production of documents. It forms no part of the duty of a liquidator to go to the Court and ask a ruling as to whether or not a certain person should be placed on the list of contributories; the liquidator should exercise his own judgment in

1 As to preference for wages due, see Preferential Claims.

2 Act 1862, sec. 138, and Act 1900, sec. 25.

the matter, and let the person aggrieved take what action he thinks best.

The right of applying to the Court was only extended to creditors by the Act of 1900. Prior to that Act a creditor could not himself petition or compel the liquidator to make application to the Court to settle any dispute between him and the liquidator. The only remedy competent to a dissatisfied creditor was to raise an action to enforce his claim, and on obtaining decree to proceed either for a supervision order or a compulsory winding up.

Personal Liability of Liquidator for Expenses of Action raised by him. When the liquidator unsuccessfully pursues an action he may be found personally liable in expenses, whether he can reimburse himself out of the estate or not. This was decided in a case where the official liquidator was found liable in expenses to persons who had successfully resisted being placed on the list of contributories, although the assets of the Company were admittedly insufficient to meet these expenses. It is, however, probable that if the decree is merely against the liquidator "as liquidator," this would not imply a personal liability to pay expenses.1

LIST OF CONTRIBUTORIES TO BE MADE UP.2-As soon as may be after the commencement of the winding up, it is the duty of the liquidator to prepare a list of contributories. The definition of a contributory will be found in sec. 23 of the Act of 1862. Holders of fully paid-up shares are not put on the list of contributories, for the reason that no payments in respect of the shares are exigible from them. Where a transfer in favour of two persons in liferent and fee respectively is registered, both are contributories, and liable as such in a liquidation. Again, the following, among others, have been held to be contributories, namely, a pupil, a minor, a married woman, and a participating policy-holder. With regard to the position of trustees and executors, their 1 Craig v. Hogg, 1896, 24 R. 6.

2 As to enforcement of calls against contributories, see p. 117.

legal liability is now well defined, and it is this, that they are personally liable for calls on shares of which they are the registered proprietors. Where their own estate is insufficient to meet the calls, the liquidator is entitled to compel them to resort to the trust estate to make good the deficiency.

In a judicial winding up the list is settled by the Court, in a voluntary winding up by the liquidator, and in a winding up under the supervision of the Court it is prepared by the liquidator and sanctioned by the Court. The list first made up and settled is known as the "A list," and contains the names of those persons who are contributories in their own right, and persons who are contributories as being representatives of and liable for the debts of others.1

In a winding up by or under the supervision of the Court, notice is sent to each shareholder that the liquidator proposes to put his name on the list of contributors in respect of certain shares. It is otherwise in the case of a voluntary winding up. There no notice need be sent, and it is no defence to a demand for payment of a call that the contributory did not know his name had been placed on the list of contributories.

In the event of the money realised from the calls made on the persons named in the "A list" being insufficient to meet the debts of the Company a second list is made up, and it is known as the "B list."

The "B list" consists of those persons who have ceased to be members of the Company within the period of one year from the date of the commencement of the winding up in respect of shares which were liable in payment of calls.

Before the "B list" can be settled the following conditions must be satisfied:2-(1) there must be debts outstanding and due by the Company at the date of the winding up which were contracted prior to the date of such persons ceasing to be members of the Company, including any debt 1 Act 1862, sec. 99.

2 Ibid. sec. 38.