Mr. Sharman is supposed to be indebted for shares taken in the name of another person incapable of binding herself" or any person whom the Court may deem capable of giving information concerning the trade, dealings, estate, or effects of the company, and the Court may require any such officer or person to produce any books, papers, deeds, writings, or other documents in his custody or power relating to the company;" and if any person refuses to attend, then the Court may cause such person to be apprehended and brought before the Court for examination. It appears to me that the obvious object of that section is to enable the Court to obtain discovery from any person who is indebted to the company, or under any obligation to it, or who has any portion of its property in his possession. It would be a vain thing to have a person examined, and then to allow an objection to prevail that the evidence is incapable of being used. That is the objection here, that this gentleman, who applied for shares in the name of his daughter, a married woman, incapable of binding herself or her husband, may be summoned to give evidence, and that no use can be made of the evidence when given. I do not think the Legislature intended this result, and therefore I think that the evidence is admissible. The matter then stood over on the application of Mr. Higgins, in order that formal notice might be given to read the depositions. V.-C. M. 1872 PUGH AND SHARMAN'S CASE. March 2. Mr. Cotton, Q.C., and Mr. E. S. Ford, for the official liquidator : This is like an application by a person under a false name, or under the name of a non-existent person. There is, in fact, a false name and a false address, for there was no such person as Mary Pugh, of Leighton Buzzard, and no such person as Mary Pugh capable of taking shares. The Court has power to put the real owner of the shares on the list, as in Musgrave and Hart's Case (1) and will remove the name of a fictitious person. This was done by Vice-Chancellor James in Nickalls v. Furneaux (which came before His Honour on May 6th, 1869), where a similar point arose. (1) Law Rep. 5 Eq. 193. V.-C. M. 1872 PUGH AND SHARMAN'S CASE. Mr. Higgins, Q.C., and Mr. Tweedy, for Sharman :— Nickalls v. Furneaux was a suit for an indemnity, and no doubt as between a transferor and transferee the Court may substitute the name of a transferor for that of a transferee, as in Musgrave and Hart's Case (1). But a company guilty as this is of fraud and laches cannot come to rectify the register under sect. 35 of the Companies Act: Sichell's Case (2). Mr. Sharman wished to take the shares in his own name, but was told he could not do so, and the company cannot now turn round and say that he was a shareholder. The creditors had no representations held out to them that Mr. Sharman had taken the shares, and the company was bound, in allotting the shares, to know the name, address, and occupation of the allottee. It is of the essence of a case of rectification that the name should appear on the list of shareholders: Wright's Case (3). It is not certain that a married woman cannot contract: Mrs. Mathewman's Case (4). If a man applies in the name of a pauper he cannot be settled on the list. [They also referred to A. Levita's Case (5), G. H. Levita's Case (6), Ex parte Bugg (7), and Western Bank of Scotland v. Addie (8).] Mr. Pearson, Q.C., and Mr. Warmington, for Mr. and Mrs. Pugh :The first notice Mrs. Pugh had of being a shareholder was when she found herself placed on the list of contributories; and whatever happens, it is certain that her name must be taken off the list. Mr. Cotton, in reply: It is clear that Mr. Sharman applied for the shares for his own benefit. This is not a contract by Mrs. Pugh to take shares for Mr. Sharman, but a contract by Mr. Sharman to get the shares for himself by using the name of Mrs. Pugh; and it may be questioned whether Mary Pugh, of Leighton Buzzard, was an existing person. SIR R. MALINS, V.C., after stating and commenting on the facts, continued : Nothing can be more clear to my mind than that Mr. Sharman (1) Law Rep. 5 Eq. 193. (2) Ibid. 3 Ch. 119. (3) Ibid. 7 Ch. 55. (4) Ibid. 3 Eq. 781. (5) Law Rep. 3 Ch. 36. (6) Ibid. 5 Ch. 489. (7) 2 Dr. & Sm. 452. (8) Law Rep. 1 H. L., Sc. 145. intended to become the owner of these shares, and to derive from them all the benefits which they could give. Under these circumstances, I think it is perfectly clear that the name of Mrs. Pugh must be taken off the list of contributories, and the question to be decided is whether Mr. Sharman ought to be put on the list. Here is a man who desires to become a shareholder in a company. He is perfectly at liberty, if he thinks fit, to take the shares in the name of a trustee; and if he had any friend or agent capable of binding himself, nothing is more clear than that he would be entitled to take the shares in the name of the friend or agent, whose name would be put upon the register, and the company, looking only at the register, could not have resorted to Mr. Sharman. That, however, would only be an escape in form, for the trustee could, in the fullest manner, require Mr. Sharman to indemnify him for all calls which he might be liable to pay. In Hemming v. Maddick, which is now before the Court of Appeal (1), I expressed my view of the law upon the point; and there is no doubt that if Mr. Sharman had taken the shares in the name of a trustee he would have been liable to pay indirectly, though not directly, to the company. He, however, chooses to use the name of his daughter, who was as incapable of contracting as if she had been an infant, and who, it is perfectly clear, could not have taken the shares. It is very remarkable that the point has not arisen before, whether a man is liable to be treated as the owner of shares by applying for them in a false or fictitious name; for I must treat this as a false or fictitious name. I must attribute to Mr. Sharman the knowledge that his daughter, being a married woman, was incapable of contracting, and I must add that his conduct in describing her as of Leighton Buzzard was grossly improper. That was a deception practised upon the company, and the agent of the company, who was perfectly well aware of the facts, was also guilty of gross impropriety in sending in the application. Now, although he was the agent of the company, he was not such agent for the purpose of committing this fraud, but simply for obtaining bona fide applications for shares; and I cannot attribute to the company at large any share in the misrepresentation of which he or Mr. Shrubb, the secretary of the company, was (1) Since affirmed, Law Rep. 7 Ch. 395. V.-C. M. 1872 PUGH AND SHARMAN'S CASE. 1872 PUGH AND CASE. V.-C. M. guilty in this transaction. It is perfectly clear that if Mr. Sharman's name had been on the register, and he had desired to get rid of his liability, and had made a transfer on the 6th of January, SHARMAN'S 1866, into the name of his married daughter, such a transfer would have been wholly inoperative, and he would have remained a contributory notwithstanding the transfer. In my opinion there can be no difference between a fraudulent attempt to get rid of liability by a transfer of shares, and a fraudulent attempt to obtain shares by taking them in a false or fictitious name. A man who applies for shares, and intends to make himself the owner of them, is, in the language of the 23rd section of the Companies Act, 1862, a person who agrees to take shares, and he becomes a contributory. I think, on general principles, that Mr. Sharman, by applying for shares in the fictitious name of his daughter, is as liable to take the shares as if he had taken them in his own name. I call Mrs. Pugh's name fictitious, because Mr. Sharman knew perfectly well that she could not bind herself. If he had applied in the name of a person capable of contracting, the case would be different. One of the grounds of defence was, that the company was guilty of fraud. The company may have been guilty of the grossest fraud, but I take it to be perfectly clear since the case of Oakes v. Turquand (1), that where there is a question of whether a man is a contributory or not, no misconduct of the company, or false representation or misrepresentation made by them as a means of inducing him to take shares, will relieve him from bearing the responsibility which he, at all events, owes to creditors, whatever effect it may have as between himself and other shareholders. In the present case creditors, to a large amount, remain unpaid, and I consider that Mr. Sharman's name ought to have been on the list for these shares since 1866, and I feel it my duty to put it on now. Then it is said that there are several cases bearing on the point, and Sichell's Case (2) was mentioned, but I think it has no application to this case. In it the name was, I think, for a short time on the register, but was taken off by a binding contract before the winding-up. (1) Law Rep. 1 H. L. 325. (2) Law Rep. 3 Ch. 119. Mr. Cotton :-There was a transferee whom the company refused to put on. The VICE-CHANCELLOR :-Yes. That being the case, the company, having refused to put the name on, could not turn round and insist upon its going on. Levitas' Cases (1) have no application that I can see. There was an arrangement to take the shares. Both the Levitas were put on the register, and agreed to take the shares: in one case one of them appointed McHenry his agent to accept the shares, and he had done so. It therefore appears to me that I must deal with the whole transaction precisely as if Mr. Sharman had been originally put upon the list of contributories, and he had attempted to get rid of his liability by transferring the shares into the name of a person who was incapable of accepting such a transfer. By the result of the transaction he would have taken the benefit of any advantages arising from the shares, and I must make him a shareholder from the beginning. I must consequently accede to the two applications, and remove the name of Mary Pugh, and substitute for it that of Mr. Sharman. Mr. Sharman will have no costs, and the costs of Mr. and Mrs. Pugh will come out of the estate. Solicitors: Messrs. Merriman, Powell, & Co.; Mr. T. C. Russel; Messrs. Robson, Tidy, & Herbert. (1) Law Rep. 3 Ch. 36; 5 Ch. 489. V.-C. M. 1872 PUGH AND SHARMAN'S CASE. |