the full and entire annulment of the allotment and returns his shares. I apprehend from that time they were completely bound. It does not lie in their mouths to set up their own fraud and throw open the case, and it would not lie in Mr. Wright's mouth, after having done what he has done in expressing his desire to be free, to say afterwards, supposing the concern had become prosperous, "I intend to revoke all this and become a shareholder." If he was conclusively bound after what took place, the directors were conclusively bound; and as regards the shareholders, all they are entitled to, according to Oakes v. Turquand (ubi supra), is this that no status of any subscriber shall be altered from the state in which it was at the date of the winding up. I think at the date of the winding up the directors on the one hand had annulled as they were bound in duty to annul the contract, and that Mr. Wright, on the other hand, had exercised his option and annulled the contract; and that it is impossible for him to replace himself in the position he would have been in except for the steps that have been taken.

If

Then there were difficulties suggested depending upon the circumstance as to there being fraud. It is said this was done just before the winding up. it was done for the purpose of escaping that which could not otherwise be escaped from, if it was done with a fraudulent desire on the part of the directors to liberate some of their friends, they being conscious of fraud on their part, and still to leave others liable, that may be a matter of consideration when such a case comes to be discussed. Here there has been nothing more done than was already done when the winding up took place. The winding up was for the purpose of going on, if I may use the expression, for it was for the purpose of amalgamating one company with another, and the only mode of doing it was by putting an end to one company and starting in association with another company. Mr. Higgins used the expression that at the time all parties thought it was a solid concern, and there was therefore nothing which would induce one to say there was fraudulent combination between these two parties to the contract.

The real thing is this, I find that one party to the bargain is very anxious that the contract should be annulled, and the other parties know that if the matter is investigated they will be compelled to put him in the position in which he was previously to the winding up; so that when those who have a right to call upon the B. shareholders investigated the matter, they would find not that he had forfeited his shares, but that he was represented as a person who had never entered into the original contract, or had so entered into it that, although it might be available against him if not avoided, it was under the circumstances avoided. I think substantial justice can only be done by so holding.

I think, therefore, that the order of the Vice Chancellor must be discharged, and Mr. Wright's name struck off the list. The costs must be paid out of the fund.

Legacy-Infant-Real Estate-Charge -Condition- Personalty-Sufficiency

Deficiency-Executor-Default.

Where a legacy is given to an infant vesting at once but payable on the infant's attaining twenty-one, and real estate is charged with so much of the debts and legacies as the personal estate shall be insufficient to discharge, the time for determining whether and to what extent the real estate is charged is the death of the testator, and not the time at which the infant attains twentyone, and if the personalty is then sufficient, the real estate will not be affected by a deficiency subsequently a.ising from a default of the executor. Howard v. Chaffer (32 Law J. Rep. (N.S.) Chanc. 686; s. c. 2 Dr. & S. 236) distinguished.

John Morton, by his will, dated the 27th of June, 1855, bequeathed to Thomas Richardson, then an infant, the

sum of 350l., with interest at 41. per cent., till he should attain twenty-one, to be paid to his father in the meantime for his maintenance. And, after bequeathing other pecuniary legacies, to be paid twelve months after his death, he gave his hereditaments at Boustead Hill and Burgh Marsh to his brother William Morton and his wife and the survivor of them for life, charged and chargeable as hereinafter mentioned, and subject thereto he devised the same to his nephew, Thomas Morton, in fee. And he gave to five other nephews and nieces 1001. a piece, to be paid to them without interest when his nephew, Thomas Morton, should come into possession of his said estate at Boustead Hill, and he charged the same upon the estate accordingly in exoneration of his personal estate, the said legaIcies to be vested interests in the said legatees from the date of his said will. And, after making certain specific bequests, the testator gave all the rest of his personal estate to his said brother, William Morton, for his own use, but subject to the payment of his debts and funeral and testamentary expenses, and the aforesaid legacies, and in aid thereof he thereby charged and made chargeable his said. hereditaments situate at Boustead Hill aforesaid, with the payment of such residue of his just debts, funeral, and testamentary expenses, and the legacies aforesaid, as his personal estate should be inadequate to discharge, and the said testator thereby nominated and appointed his said brother, William Morton, sole executor of that his will.

The testator died on the 23rd of November, 1855, and his will was duly proved by William Morton. The testator's personal estate proved amply sufficient for all the purposes of his will, and William Morton paid thereout all his debts and expenses, and the legacies payable immediately, and duty on all the legacies payable out of the same. With respect to the legacy to Thomas Richardson, the infant, he filled up the form required by the Legacy Duty Office, inserting in the space for special matter necessary to explain the mode in which the legacy is given, the following words:

NEW SERIES, 41.-CHANC.

"Retained, the 20th day of May, 1857, the sum of 3501., being the legacy above mentioned, having first allowed or paid 101. 10s. for the duty thereon."

William Morton also paid interest at 41. per cent. on the legacy of 3501. regularly to the infant's father, but he did not appropriate any particular investment to answer the legacy, but left the amount of it mixed with his general property. It appeared that there were other sums in his possession in a similar way, amounting in all to about 1,1007.

William Morton died on the 18th of April, 1858, appointing James Morton his executor and residuary legatee, and leaving property sufficient to satisfy the legacy of 3501. and the other similar sums in his possession.

James Morton proved William Morton's will, and took possession of his assets, and paid the interest on the legacy of 3501. up to the beginning of the year 1866, but by that time he had squandered all the property he had the control of, and had become insolvent, without having paid the legacy of 3501. In the meantime Ann Morton had died and Thomas Morton had entered into possession of the estates devised by the will of John Morton.

On the 6th of September, 1870, Thomas Richardson attained twenty-one, and died shortly afterwards, and his/ father having taken out administration to him, instituted this suit against Thomas Morton and James Morton, claiming payment of the legacy of 3501. out of the estate at Boustead Hill.

Mr. Fry and Mr. Bury, for the plaintiff. -This case is governed by

Howard v. Chaffer, 32 Law J. Rep.

(N.S.) Chanc. 686; 2 Dr. & S. 236, the facts of which will be found on examination to be precisely similar to those which exist here. That case also followed

Humble v. Humble, 2 Jur. 696.

[THE MASTER OF THE ROLLS observed that in those cases the devisees of the estates were the same persons as the executors who squandered the personalty.]

That cannot affect the question of the construction of the will. It might give

C

the legatees a right to attach the execu tor's property to make good their default, but the case of Howard v. Chaffer went beyond that. For the devisees had mortgaged the estate, and the legatees were held to have priority over the mortgagees. The insufficiency of the personal estate must relate to the time at which the testator contemplated that the legacies would become payable, and as he gave a legacy to an infant it must be the time at which the infant came of age.

Mr. Southgate and Mr. Mounsey-Heysham for the defendants.-The cases cited for the plaintiff are distinguishable on the ground pointed out by your Lordship. The case does not appear to be covered by authority, but there are some cases approaching it, which are in our favour. There is an anonymous case in 1 Salk. 153, being a case in the House of Lords,

Hepworth v. Hill, 31 Law J. Rep. (N.S.) Chanc. 569; s. c. 30 Beav. 476,

the law was assumed to be, as we contend that it is, though it did not become necessary to decide the point.

Moreover, after the executor had filled in the legacy duty form in which he acknowledged that he retained this legacy, he became trustee and not executor, and the testator's estate was discharged as fully as if it had been paid over to a properly appointed trustee for the infant. That follows from

Philippo v. Munnings, 2 Myl. & Cr.

309.

Mr. Southgate also mentioned that he had lately conducted a case in which a bill was filed by a legatee to recover a

legacy twenty-seven years after the testator's death, and on its being shewn that the executor had signed a return to the Legacy Duty Office, acknowledging that he had retained the legacy, it was held that he thereby became a trustee, and the Statute of Limitations did not apply.

Mr. Fry, in reply.-The executor was bound to pay 41. per cent. interest on the legacy till the legatee attained twentyone. He could not, therefore, appropriate a sum to the legacy and convert himself into a trustee, for if invested in Three per Cent. Consols it would not pay 41. per cent. interest. The interest must be paid by him out of the general assets, and as executor, and the time for determining whether there is or is not a deficiency of the personal estate is when the legatee attains twenty-one. The executor could only have discharged the estate by paying the money into Court under the Legacy Duty Act, 36 Geo. 3. c. 52. s. 32. Even after an appropriation the persons interested in a legacy may go against the residuary estate, if the appropriated fund prove insufficient, owing to any cause, as, for instance, a reduction in the rate of dividends on a Government stock

Gordon v. Bowden, 6 Madd. 342;
May v. Barnett, 1 Russ. 370;
Williams on Executors, part iii. bk. iii.

ch. iv. s. 4.

The real estate ought to be held charged if the personal is deficient from any cause. On the defendant's contention the land would be free if the personalty was sufficient at the time of the testator's death, but depreciated in value afterwards, and the Court might in fact be called upon to take an account of the value of the personal estate at the testator's death. all the cases cited by the defendants the fund had been raised out of the land, and so it was discharged, but that is not the case here.

In

THE MASTER OF THE ROLLS (on November 10). In this case I have considered very fully the point raised, and it appears to me that it is a very simple condition on which the real estate is to be charged, and I must say I see no reason to hold that it is liable to pay this legacy.

The condition is that the personal

estate should be insufficient to pay it. Now if a legacy were given to a person on condition of his not being in possession of a certain estate at the particular time of the testator's death, he would not be entitled to it if he were then in possession, and it would be immaterial that he ceased to be in possession afterwards. So here a legacy is given payable out of land if the personal estate is deficient at some particular time, and if it is not deficient at that time it will be immaterial that it became deficient afterwards. All I have to do, then, is to determine the time at which the value of the personal estate is to be estimated. This, therefore, raises the question argued by Mr. Fry as to what was the time for payment of the legacy. Now the time at which a legacy is payable is not altered in the legal sense of the term because the person entitled to it is an infant. This was a vested legacy from the first, and the infant was entitled to have it secured, and steps might have been taken for that purpose. But nobody thought it necessary to do so, because the executor in whose hands it was was a person of substance, and he admitted that he held the sum on account of the infant, and paid the interest regularly. He died, however, and his son came into possession of this legacy money, and of considerable property besides. In a few years, however, he wasted it all, and is left penniless. He has not been made bankrupt, but he is a day labourer at present, and the money is entirely gone. No step whatever was taken for the purpose of preserving the legacy, when it was found that this man, after his father's death, was beginning to spend a great quantity of money, though the present plaintiff was the father of the infant legatee, and might easily have taken measures to secure it. This might have been done indeed at any time after the testator's death, and I must hold that that was the time at which the sufficiency or insufficiency of the personal estate was to be determined. The estate might, no doubt have become unexpectedly greater or less in value after that time, but as that has not happened it is immaterial at present that it might have come to pass. The condition, therefore, on which the

legacy was to be payable out of the land has not been fulfilled, and consequently the case fails.

The bill must be dismissed with costs against Thomas Morton; you may take any decree you like against James.

I should add that I have looked up the cases which were cited very carefully, and am of opinion that the remark I made yesterday applies to those in which the devisee of the land was also the personal representative. That identity of the two characters prevented them from raising the defence which has succeeded here. Solicitors-Messrs. Sharpe & Ullithorne, agents for Messrs. Hodgson & McKeever, Wigton, for plaintiff; Messrs. Jennings, White & Buckston, agents for Messrs. S. & S. G. Saul, Carlisle, for defendants.

LORDS JUSTICES. In re THE ORIENTAL COM-
1871.
MERCIAL BANK (LIMITED).
Nov. 2, 3.
MORRIS'S CASE.

Companies Act, 1862, sect. 38, sub-sect. 1-4-Contributories-Past Members.

A past member of a company, limited by shares under the Companies Act, 1862, who has transferred his shares within a year of the winding up is liable (if his transferee has not paid the unpaid capital on his shares, and if the present members' contributions are insufficient) to contribute, together with other past members, to the assets of the company to the full amount of the debts which were due at the date of the transfer, and which were still unpaid at the date of the winding up; but from that amount must be deducted the dividends already received in respect thereof from the present members.

Each past shareholder is liable to contribute to such unpaid debts, to the extent of the amount unpaid on the shares by his transferee, pari passu with all the other past shareholders who are liable for the same debts, and cannot require that the past members who transferred their shares after his transfer was registered should be exhausted before any call is made on him.

M. transferred 50 shares to P., who be came bankrupt. Of the debts owing by the

company at the date of the transfer, 6421. remained unpaid at the date of the winding up, which commenced within a year. The present shareholders paid 15s. in the pound of the company's debts, thereby reducing the 6421. to 1601. 10s. The unpaid capital in respect of 50 shares was 8001.: -Held, that M. was liable to contribute pari passu with the other past members who were liable for the same debts, but to the amount of 1601. 10s. only.

Order of BACON, V.C., varied.

This was an appeal by a Mr. John Morris from an order of Vice Chancellor Bacon, reported 40 Law J. Rep. (N.s.) Chanc. 520.

The question raised by the appeal was the mode in which in the winding up of companies limited by shares under the Companies Act, 1862, contributions are to be levied from past shareholders who have transferred their shares within a year from the commencement of the winding up, and whose transferees have not paid the whole of the capital on their shares.

The Oriental Commercial Bank was being wound up under the supervision of the Court. The winding up commenced in June, 1866. The contributions which the liquidator was able to obtain from the present shareholders, the "A. list of contributories, only sufficed to pay 15s. in the pound. The liquidator therefore proceeded to settle a supplementary or "B. list" of contributories, that is to say, of those persons who, having held shares in the company, had transferred them within a year from the commencement of the winding up, and whose transferees had failed to pay the calls due on such shares. The appellant was placed on the B. list for 50 shares, which he had transferred to Demetrio Pappa, who had become bankrupt, and whose estate paid no dividend. The transfer was duly registered in the books of the company on the 25th of November, 1865. On that day the debts of the company amounted to more than 200,000l., but at the commencement of the winding up only 6421. of these same liabilities remained undischarged; and this was further reduced to the sum of 1607. 10s.

during the course of the winding up by the 15s. in the pound paid by the A. list of contributories. The sum of 8001. still remained unpaid on the 50 shares which Morris had transferred.

The whole B, list of contributories comprised the particulars of the transfer of 4,436 shares, in respect of which there was an unpaid liability of 64,4927. 128. 7d.

In order to have the principle on which the liabilities of the past members were to be ascertained argued before the Court, the liquidator selected the case of Mr. Morris, and took out a summons for that purpose, which was heard by the Vice Chancellor Bacon, on the 6th of June, 1871, when his Honour decided that Mr. Morris was liable, to the extent of the calls unpaid by his transferee, to contribute with other past members to the full amount of the debts due by the company at the date of his transfer, and which were still unpaid at the date of the winding up, and that without deducting dividends received in respect of the contributions of present members.

From this order Mr. Morris appealed, and on his appeal contended, first-that the amount of the dividends paid by the present members ought to be deducted from the sum for which the past shareholders were liable; and secondly-that in settling the liabilities of the past shareholders inter se, each contributory in the B. list was entitled to require the liquidator to exhaust all the past members who were liable to the same debts, and whose transfers were subsequent to his own, before he himself was called upon to pay anything.

Mr. Fry and Mr. Westlake appeared for the appellant.

Mr. Kay and Mr. H. M. Jackson were for the liquidator, and

Mr. Eddis and Mr. Higgins for the creditors' representative.

LORD JUSTICE JAMES.-In this case an application was made by the official liquidator for the purpose of obtaining the opinion of the Court upon the question as to the extent and application of the funds which were to be contributed by the shareholders in what is ordinary called in these cases "Class B.," that is, those persons who