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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Goldie (Liquidator of Glenduffhill Co.) v. Torrance [1882] ScotLR 20_120 (15 November 1882) URL: http://www.bailii.org/scot/cases/ScotCS/1882/20SLR0120.html Cite as: [1882] SLR 20_120, [1882] ScotLR 20_120 |
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Page: 120↓
The promoters of a limited company placed upon their provisional list of directors, and also after the company was formed upon the register of shares, the name of a person who was expected to take shares, and who had in conversations with one of their number given him to understand that he intended to take shares. He received a letter of allotment and various calls to meetings of directors, and letters intimating calls on his shares, but returned no answer to any of them. The only evidence adduced to show that he had agreed to take shares was parole evidence that he had done so verbally in conversation with one of the promoters. In the judicial winding-up of the company, held that the facts proved showed no completed agreement on his part to take shares, but only an intention which he had never carried into effect.
This was a note at the instance of James Goldie, official liquidator of the Glenduffhill Coal Company (Limited), asking the Court, inter alia, to settle the list of contributories of the said company, in conformity with a list contained in a schedule annexed to the note. In this schedule there appeared, inter alia, the name of William Torrance, lime and coal merchant, as the holder of 100 shares of £10 each. Torrance lodged answers in which he stated that he never applied for or agreed to take shares, and that he had never consented to become a shareholder in the company.
A proof was allowed of the averments in the note and answers, and was taken by Lord Shand. From this proof it appeared that certain coal and mineral fields in the neighbourhood of Glasgow had been leased by a Mr Robert Brand, coal-master, Coatbridge; that Mr Brand had got into difficulties, and a number of his friends and creditors proposed to start a limited liability company to acquire his properties and mineral leases. By article 8 of the articles of association, prepared for the proposed company, the capital stock of the company was to consist of £50,000, in 5000 shares of £10 each. The company was incorporated, and began business in March 1879. 1420 shares were taken up, of which 812 were issued as fully paid-up shares, and 458 were fully paid up before the liquidation began. Several preliminary meetings were held in Glasgow in the early months of the year 1879, at which draft
Page: 121↓
articles of association were considered, and a provisional list of directors agreed upon. Among the names which appeared in this list was that of the respondent. The respondent, as it appeared, was first approached upon the subject of joining the company by Mr Brand about the beginning of 1879. At that time he refused to have anything to do with it. Mr Brand, however, left some papers with him to look over before finally making up his mind in the matter. These he returned to Mr Brand on the 22d January 1879, along with a letter, in which he said—“I have read carefully the report of the Glenduffhill Colliery, and decline having anything to do with it. Had trade been in an improving state it would have given me more encouragement.” Mr Waddell, one of the promoters of the company, thereafter spoke to Mr Torrance about taking shares, and had several interviews with him on the subject, the result of which, on Mr Waddell's mind, was that he thought Mr Torrance had consented to take shares, the question being rather as to the amount which he would take than as to his willingness to become a shareholder. One of these meetings was on 12th February 1879, when Mr Waddell and Mr Torrance met accidentally in Edinburgh, and the result of the conversations which then took place was that Mr Waddell telegraphed to Glasgow intimating to a meeting of directors which was then being held there that Mr Torrance would take 100 shares. After this meeting, and the telegram that followed upon it, Mr Torrance's name continued to appear in the provisional list of directors, and a letter of allotment was sent him on 5th April 1879, which was followed between that date and the beginning of February 1881, when the company went into voluntary liquidation, by numerous circulars calling him to meetings of the company, and by various calls on the shares allotted to him. To none of these various communications did Mr Torrance ever return any answer. He did not destroy these communications, but kept them, and they were recovered under a diligence. On the 17th November 1880, at a meeting of the company, Mr Waddell reported that he had had a conversation with Mr Torrance, and that he had promised to remit the amount due to the company in the course of a few days. On the strength of what was said at that conversation, several other directors joined with Mr Waddell in advancing money as the price of Mr Torrance's shares, and Mr Waddell communicated this fact to Mr Torrance by letter upon the 22d November, and requested him to repay the amount advanced as soon as possible. No answer was returned to this letter, the substance of which was repeated by Mr Waddell in a letter of 29th December of the same year, to which the following answer was returned the next day:—“Dear Sir,—In reply to your letter of the 29th inst., when I last met you you spoke to me about the shares of the Glenduffhill Coal Coy. At that time you will remember I gave you the reason why I never accepted the shares. You also said the company would draw on me, and this I wouldn't allow. I do not know who put these shares in my name, as no one had authority from me to do so.—I am, yours truly,” &c. On the 20th January 1881 Mr Torrance advertised in the newspapers that he “had no connection, nor ever had,” with the company. His own evidence at the proof was that he had never, either at any of his meetings with Mr Waddell, or at any other time, agreed to take shares, or gave any authority for the placing of his name on the list of shareholders. He deponed that both at his meetings with Mr Waddell, and with other persons who spoke to him on matters connected with the company, he had expressed himself to the effect that it was a rotten concern, and that he would not take shares, and, indeed, to the effect that he had no available funds to invest in it even if he thought better of it.
Argued for the petitioner—Looking to the fair import of the evidence, Mr Torrance had consented to take these shares. He had tacitly authorised his name to be inserted in the list of shareholders, and to remain there for a long time. The mere fact of his not repudiating the letter of allotment and the calls on his shares showed that he knew that he was considered as a shareholder of the company. It was clear enough had the concern been a success he would have paid up the calls and claimed a share in the profits. In these circumstances the respondent's name ought to be continued on the list of contributories to the effect of making him now liable to meet the calls of the liquidator.
Authority— Somerville, January 11, 1871, L.R., 6 Ch. 266.
Argued for respondent—After Torrance's letter of 22d January 1879, his name could only have been put upon the list of shareholders wilfully or through gross carelessness. Waddell's telegram seems to have been the cause of the whole mistake, and this was sent through a misunderstanding. Shareholders were wanted who were not creditors of Brand, and who would pay up in full; hence the great desire of the promoters for Torrance as a shareholder. There was nothing here but a mere intention to take shares, which was never carried out.
At advising—
On the 10th February 1879 the secretary Mr Smellie writes to Mr Waddell, one of the promoters of the company, as follows … “No
Page: 122↓
And on the 11th of February, the following day, Waddell's clerk writes to Torrance as follows:—“Dear Sir,—Enclosed is prospectus and form of application, which I trust you will fill up for 100 shares or so, and send it in at once, as, if the matter is to be gone on with it must be done at once, otherwise we will lose it, and, as you know, it is really a good thing. Of course you know it is not proposed to call up but a small part of the capital, as it is all ready for starting to-morrow for that part of it. I also enclose copy of special note I am writing to my friends, and have no doubt if we all put our shoulders to the wheel the thing will be a success. Place send in your application to-morrow.—Yours truly,” &c. The special note here referred to was a letter recommending the company, which was sent to a number of Waddell's friends. Now, I think that down to this date it is not suggested that Mr Torrance had agreed to become a member of this company, because even the number of shares which he was to hold was not fixed.
On the 15th of March 1879 the secretary writes to Mr Waddell in these terms—“All the applications must be in by Wednesday; would you kindly get the following gentlemen to send theirs, viz., Mr Torrance and Mr J. Currie.”… So that up to this date the secretary did not understand that Mr Torrance had made any application for shares. But previous to this, there is some parole evidence which must be taken into consideration. On the 12th of February 1879, Mr Waddell met Mr Torrance in Princes Street, Edinburgh, and had a conversation with him with reference to his becoming a shareholder of this company, and also as to the number of shares which he should subscribe for. The import of that conversation was that Waddell asked Torrance how many shares he would be willing to take, but there was no reference to any antecedent agreement to take shares. No doubt Mr Waddell thought that there was some agreement of this character, and assumed this throughout the whole negotiations, for in his evidence at the proof he thus explains his understanding on the matter—“We were also anxious to get in new blood,—shareholders who would pay the full amount of their shares. I was not anxious to get Mr Torrance or anyone in unless they had a mind to subscribe, and I may state that I never asked Mr Torrance to take shares; it was put before me that Mr Torrance had promised to take shares, and upon that information I spoke to him. I think it was Mr Brand and Mr Smellie who told me that Mr Torrance had promised to take shares. All my communications with Mr Torrance proceeded on the footing that he had already undertaken to subscribe for shares.”
Now, in all this there is nothing to show that Torrance at this time was or had consented to become a shareholder of this company. Mr Waddell further says—“I did not in any way press him on the subject of the shares, or trouble him about it, because I had got his promise before that, and I knew him so well that I did not like to be always speaking to him on the subject. I never heard Mr Torrance express an unfavourable opinion of the company at any conversation I had with him. I never spoke to Mr Torrance about the number of shares after the meeting I have referred to. On that occasion he said, ‘Fifty, I think, is as many as I can take.’ I said, ‘I think you ought to take 100. I am going to take 200.’ ‘Very well,’ he said, ‘I will endeavour to take 100;’ and he led me to believe he would take 100. He said if it were necessary for him to take 100 he would do so.” And there ends Waddell's evidence as to the number of shares which he thought Torrance had taken. Now it is very doubtful if the import of all this was not merely an intention at some future time to take shares in this company, whereas up to that time Torrance had refused to have anything to do with it.
In that state of matters I cannot affirm the proposition that Torrance is to be held as a member of this company. As to Torrance's position in this transaction, as it appears from his own evidence, it is simply untenable, and must be put out of consideration and the case must be viewed apart entirely from his account of the matter, and so viewed, I fail to see anything from beginning to end of this whole transaction to constitute him a member, and so to render him liable for calls in the present liquidation. I am therefore for refusing the prayer of this petition so far as regards Torrance.
Page: 123↓
My impression is that while Waddell thought that Torrance had already taken these shares, what Torrance really said was that he might some day take them. One must throw overboard entirely Torrance's evidence. At the time of the proof I did not believe Torrance when he said that “he had all along thought the thing a rotten concern and he would have nothing to do with it.” If Torrance had maintained that his position was that at some future date he might be persuaded to take shares in the company that would have been intelligible. His whole actings from beginning to end were very unlike those of a business man, and his not repudiating the letters of allotment and keeping them among his papers are not satisfactorily accounted for. The liquidator, it appears to me, was put in a very peculiar position, after all that had taken place in the matter, and he was bound I think to try this question.
The Court directed the liquidator to remove the name of William Torrance from the register of shareholders of the Glenduffhill Coal Company.
Counsel for Liquidator— Lorimer. Agent— John Latta, S.S.C.
Counsel for Torrance— Mackintosh— Darling. Agents— Waddell & M'Intosh, W.S.
