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36. Enumerate in their usual oriler the chief steps in the compulsory winding up by the Court of a limited company.
(1.) The presentation and answering of the petition, which must be made either by a creditor, or a shareholder, who has been such for six months, or is the original allottee, or the company, in pursuance of a resolution.
(2.) The advertisement and subsequent hearing of the petition, which may be preceded or succeeded by an ex parte application of the petitioners to stay pressing creditors from proceeding with their actions, executions or distresses either until the hearing of the petition, or except under the winding up proceedings, as the case may be, and if necessary for the appointment of a provisional official liquidator or a receiver (Re The General Financial Bank, 51 L. J. Ch. 490), and the order to wind up.
(3.) Advertisement of appointment in chambers to appoint the official liquidator, and the subsequent appointment and fixing his security.
(4.) Appointment of his solicitors and taxation and payment of petitioner's costs down to the liquidator's appointment.
(5.) Settling the A. list of contributories, and about the same time takes place the
(6.) Advertising for creditors and settling the list of creditors.
(7.) Making and enforcing the first and any subsequent calls made upon the contributories, after exhausting which takes place the
(8.) Settling of the list B. of the contributories.
(9.) Making and enforcing the first and any subsequent calls made
upon the B. list of contributories. (10.) Declaration and payment of the first and subsequent dividends.
(11.) Taxation and payment from time to time of the liquidator's costs.
(12.) Taxation of costs by anticipation to the end of the wind
(13.) Order finally dissolving the company and disposing of all outstanding matters in connection therewith, and the vacation of the liquidator's recognisance and destruction of the company's books, papers, and file of proceedings.
37. Has any alteration been made by the Judicature Acts in the winding up of companies in respect of proof of debts and executions on the assets of companies?
Yes, as to the proof of debts, for by sect. 10 of Judicature Act, 1875, it is provided (inter alia) that in the winding-up of any company under the Companies Acts, 1862 and 1867, whose assets may prove to be insufficient for the payment of its debts and liabilities and the costs of winding up, the same rules shall prevail and be observed as to the respective rights of secured and unsecured creditors, and as to debts and liabilities proveable, and as to the valuation of annuities and future and contingent liabilities respectively as may be in force for the time being under the law of bankruptcy with respect to the estates of persons adjudged bankrupt, and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of any such company may come in under the winding-up of such company and make such claim against the same as they may respectively be entitled to by virtue of that Act.
It has been decided (In re The Withernsea Brick Works, Limited, 50 L. J. Ch. 185; L. R. 16 Ch. D. 337) by the Court of Appeal that this section merely abrogates the old rule which obtained in Chancery in the winding up of companies, and which was to the effect that a creditor holding security for his debt was entitled to prove for the whole of his debt without making any deduction in respect of his security, provided he did not receive altogether more than twenty shillings in the pound for his debt, and substitutes therefor the rule in bankruptcy that a secured creditor can only prove for the balance of his debt after realising his security or giving credit for its value. The section does not introduce into the practice applicable to the winding-up of companies any of the rules in bankruptcy as to the avoidance of securities any more than it introduces the bankruptcy rules as to fraudulent preference or order and disposition into such practice. Where, therefore, a judgment creditor of a company issued a fi. fa. under which the sheriff seized, but before sale a petition was presented against the company on which a winding-up order was subsequently made, it was held in the last named case that the judgment creditor was a secured creditor of the company.
Neither the above section nor any other section of the Judicature Acts has made any alteration in regard to executions on the assets of companies.
38. On the windling-up of a limited company, it is found that the Register of Members includes the following persons :-(a.) a married woman without separate estute ; (b.) one with separate estate having taken shares before marriage ; (c.) an infant ; (a.) a trustee ; (e.) a person known to be a mortgagee of the shares. Who ought in these several cases to be placed on the list of contributories ?
(a.) The married woman, because the company has accepted her liability, knowing her to be a married woman, as a shareholder, and neither her husband, nor his executors, will be liable to be placed on the list (Re The London, Bombay and Mediterranean Bank, Limiteil, 50 L. J. Ch. 557). If she is proved to have obtained the shares by fraudulently representing herself as a single woman, or as her husband's nominee, and her husband turns out to have been the real shareholder, he would then be liable to be placed on the list.
(6.) In addition to the wife the husband may be placed on the list as a contributory under sect. 78 of the Companies Act, 1862, for he by the marriage became the debtor to the company, so far as contribution is concerned, and not merely the husband of the debtor. (In re The West of England and South Wales District Bank, Hatcher's Case, 48 L. J. Ch. 723; L. R. 12 Ch. D. 284. But now the wife is primarily liable (45 & 46 Vict. c. 75, s. 14).
(c.) The infant is not liable by virtue of 37 & 38 Vict. c. 62; but the real shareholder is liable to have his name substituted for the infant's on the liquidator's application. (Nickalls v. Merry, 45 L. J. Ch. 575; L. R. H. L. 7 E. & I. App. 530; Heritage v. Payne, 45 L. J. Ch. 295; L. R. 2 Ch. D. 594.)
(d.) The trustee. He is personally liable, but he has a right of indemnity against all his trust estates, which, however, may or may not be of any value. (Re West Hartlepool Iron Co., E.c parte Gray, 45 L J. C. 342.)
(e.) The mortgagee, if he is a legal mortgagee, is personally liable ; but he has a right of indemnity against his mortgagor which may or may not be of value, and also against the shares, the proceeds of which, on sale by him, could be applied after payment of his own debt and interest and expenses of sale in payment of the amount of the contribution with interest thereon at £4 per cent., unless this is provided for in the mortgage, as is usually done, and that the interest should be at the same rate as is payable on the debt, and in either case the balance is payable to the mortgagor. If, however, the mortgagee is only an equitable mortgagee by deposit, with or without a written agreement, the mortgagor is only liable to be placed on the list. (The Patent Paper Manufacturing Co., Addison's Case, L. R. 5 Ch. App. 294; Weckersheim's Case, L. R. 8 Ch. 831 ; Sichels Case, L. R. 3 Ch. 119; Buckley on Companies, 3rd ed., 62–67.)
39. A shareholder in an unlimited company registered under the Companies Act, 1862, sells and transfers his shares, and thereby ceases to be a member. Does he, in the event of the subsequent winding-up of the company, remain liable to any, and what, extent, to contribute to the assets and debts of the company ?
He does not remain liable to contribute anything to the assets of the insolvent company under the winding-up upon the happening of either of the following events :
(1.) If he ceased to be a member for one year at the least prior to the presentation of the petition upon which the winding-up order has been made.
(2.) If there are no debts or liabilities contracted by or on behalf of the Company, except those contracted after the time at which he ceased to be a member.
(3.) If the existing shareholders are able to satisfy the contributions required to be made by them in pursuance of the Companies Acte.
If none of these grounds of exemption from liability exist, he remains liable to contribute to the assets to meet the debts of the company until all the debts and costs and expenses of windingup are paid, but only as a past member (i.e., in list B. of the contributories); and, therefore, only after the first (or A.) list of contributories is exhausted. (Williams' P. P., 10th ed., 256 ; 25 & 26 Vict. c. 89, s. 38.)
40. State the difference in construction of gifts upon conditions precelent and conuitions subscquent in respect to marriage, anul illustrate by examples. Is a gift over on the seconul marriage of a man valid?
As regards the validity of gifts in restraint of marriage, to which this question refers, the distinctions between conditions precedent and conditions subsequent are peculiar. In the former case the estate does not vest in the beneficiary until the condition is complied with. The condition opens the door to a benefit, and is, therefore, entitled to a favourable construction and to support, if at all reasonable. But a condition subsequent only operates after the estate has vested in the beneficiary, and its effect, being thus penal, is to be strictly construed. For examples : –
First, as to conditions precedent.
A condition precedent attached to a voluntary disposition of land is illustrated by cases in which a devise is made, or a portion directed to be raised out of land, on the condition of the beneficiaries marrying only with the consent of certain persons. Such a condition is valid, and no estate vests until it is complied with.
As regards conditions precedent, moreover, the rules applicable to gifts of personalty are the same; with, perhaps, the single difference that in this case, if consent is required, the restriction can only be applied until the attainment of a reasonable age, unless there is a gift over of the property in case of marriage at any time without consent.
The case of conditions subsequent is more complex,
It is necessary here to distinguish between a condition imposing a particular restraint and one which would have the effect of restraining marriage generally. Whether the property concerned be real or personal, it is permissible to bestow it subject to a condition subsequent prohibiting marriage with a particular person, or with a native of a particular country, or belonging to a particular religious body; or marriage may be forbidden until the attainment of a reasonable age, which is not restricted to majority. But it seems that, at least with regard to personal property, the condition in this case will be considered as merely in terrorem, and will not be insisted on, unless there is a gift over on breach of the condition.
Conditions subsequent in general restraint of marriage attached