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United Kingdom House of Lords Decisions |
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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> City of Glasgow Bank Liquidation - (J. C. Cuninghame's Case) John Charles Cuninghame v. The Liquidators [1879] UKHL 819 (1 July 1879) URL: http://www.bailii.org/uk/cases/UKHL/1879/16SLR0819.html Cite as: [1879] UKHL 819, 16 ScotLR 819 |
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Page: 819↓
(Before the
Subject_Public Company — Winding-Up — Liability of Trustee — Where Stock Purchased by Trust — Want of Signature to Transfer — Authority.
Held ( affirming judgment of Court of Session) that where there was antecedent authority given to the law agent by a trustee to purchase stock in the City of Glasgow Bank, followed by subsequent recognition
Page: 820↓
on the part of the trustee of the purchase of the stock in a letter of mandate to draw dividends, the trustee's name was properly entered upon the bank's register, and subsequently on the bank's failure upon the list of contributories, and that it made no difference that the truster's signature was not appended to the deed of transfer. Observations per Lord Selborne and Lord Blackburn upon the decision of the House of Lords in Lumsden v. Buchanan with reference to the case of Dr Andrew Buchanan.
This was an appeal against the judgment of the First Division of the Court of Session finding that the appellant John Charles Cuninghame, along with four other trustees—the Earl of Eglinton, William Blair, Frederick Blair, and Roger Montgomerie—was rightly placed upon the list of contributories of the City of Glasgow Bank. The case is not reported in the Court of Session, but the facts so far as it is distinguishable from other previously reported cases sufficiently appear from the opinions of the House of Lords infra.
The trustees who had signed the transfer were separately reported.
The respondents were not called on.
At delivering judgment—
It is only necessary that I should remind your Lordships that there being five trustees, as to whose appointment and whose consent to act there is no question—five trustees of the marriage settlement of Mr and Mrs Cuninghame—in the year 1875 certain trust funds belonging to that marriage settlement fell to be invested. The spouses desired that a certain portion of those trust-funds should be invested in bank stock of the City of Glasgow Bank, and a request for that purpose was signed on the 6th of August 1875 by Mr and Mrs Cuninghame. It is addressed to the five trustees, it states that a sum of £12,000 of the trust-funds is to be reinvested, and it requests the trustees in these words, “that you will authorise the same to be reinvested in stock of the following banks, in your own names as trustees, at the price of the day,” and among other investments mentioned is “the City of Glasgow Bank, £1450 stock.” Now, my Lords, that being a clear and distinct request to make the purchase in their own names, it is answered by the five trustees all signing in this way—“We hereby sanction and approve the above investments.”
That being the request, and that being the answer, it is stated among the admissions that “Mr Thomas Strong, Writer to the Signet, Edinburgh, was the duly appointed law agent of the trustees;” that the bank stock was purchased, and that he (Strong) conducted the arrangements for the transfer of the bank stock; and it is stated that he “acted in the matter under the instructions and letter mentioned in the foregoing article,” the letter and instructions being what I have already read as passing between the spouses and the trustees. Then it is stated that the “transfers were sent to the bank by Mr Strong acting as the law agent of the trustees, and under the instructions and letter before mentioned, on the 11th of December 1875, for the purpose of being registered in the books of the bank.”
My Lords, I stop there for the purpose of saying that in law that was of course just the same thing as if those five trustees had themselves in their own persons walked to the bank with the transfers, and had there actually registered them themselves in their own names. The letter which Strong sent with the transfers is this—“Referring to the latter part of your letter of the 8th, I now enclose three transfers of £1450 stock (£450, £500, and £500), signed by a majority and quorum of the marriage-contract trustees of Mr and Mrs John Cuninghame (the purchasers), conform to accompanying printed schedule.”
Now, turning to the transfer itself which was handed in, it is in the usual form, and I have only to read a few lines from the central part—the trustees, the Earl of Eglinton, John Charles Cuninghame, William Blair, Frederick Blair, and Roger Montgomerie, “by acceptance hereof, being, in terms of the contract of copartnership of the said bank, subject to all the articles and regulations of the said company in the same manner as if they had subscribed the said contract”—that is the contract with the bank. It does not say that they have to become subject to the conditions of the copartnership by their executing the transfer, but by their acceptance of the transfer which was made to them. That acceptance may be in many ways besides the execution of a deed. The deed, we find, was executed by a quorum of the trustees; but, as I said, it was accepted by the whole five through their act in taking it as their deed—their instrument or title—and asking the bank to act upon it by transferring the shares into their own names.
That, my Lords, being what was done towards the bank, and that instrument having been sent in stating that they accepted this stock “subject to all the articles and regulations of the said company, in the same manner as if they had subscribed the said contract,” let us see what the articles of the company in fact say—articles 37 and 38 are referred to. Article 37 says—“Where the shares of any partner are transferred, conveyed, or sold in terms of the above articles, and that either by the partners or directors, the deed of transference thereof shall be prepared by such person as the ordinary directors may appoint at the Head Office in Glasgow, in such form and terms as the said directors may from time to time appoint.” Then the 38th article says—“The said deed of transference, as also every assignment of shares in security, or mortis causa, and confirmations thereof by right of succession, shall, after being completed, be recorded in a book to be kept for that purpose”—I stop there for the purpose of saying that I do not read these words “after being completed” as meaning of necessity after being executed by every transferee. It may be completed as between the transferor and the transferee by the execution of the transferor, if the transferor does not require more to be done, and if he is satisfied that the transferee has accepted
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Now, my Lords, to that I will only add, that after this was done I find this further document executed by four of the trustees, including the present appellant. It is dated the 13th of December 1875, and it is addressed to the secretary of the City of Glasgow Bank:—“Sir—With reference to the sum of £1450 of the capital stock of the City of Glasgow Bank standing in our names as trustees under the contract of marriage between John Cuninghame, Esq., residing at the Pavilion, Ardrossan, in the county of Ayr, and Mrs Mary Blair or Cuninghame, dated 21st April 1873, we hereby request that until further instructions the dividend-warrants on said stock may be made payable to” Mrs Cuninghame.
My Lords, I have never seen in my recollection of joint-stock cases a case in which the catena of the title was so complete in every substantial point as it is here. The only thing that can be suggested as not being present is the formal imposition of a seal by the appellant to the deed of transfer. That, my Lords, seems to me to be the purest form, the merest ceremony, and the want of it can have no substantial operation whatever in the present case. You have from a time antecedent to the purchase of the stock the declared intention, consent, and authority of every trustee to buy this stock, and to have it placed in their own names. You have every step taken which was thought necessary by the bank, or by any person else, to procure the stock to be transferred into their names. You have it actually transferred in the books of the bank into their names; and you have under their own hand an immediate recognition by the present appellant and his cotrustees that it was so transferred; and you have them at once entering into the enjoyment of the property transferred by drawing dividends.
My Lords, that really is a case which is not susceptible of argument. I need not go into the other part of the case, as it was not relied upon at the bar. I have only to submit to your Lordships that the appeal should be dismissed with costs.
This is, in my opinion, a stronger case than most of those with which we have had heretofore to deal. We have here an antecedent sanction and authority given by this gentleman with the other trustees, which has not merely a general reference to what was to be done, but is a sanction distinctly approving of the investment, which is expressly stated and clearly described. That appears to me to involve in it the authority not merely to the agent but to everybody for the investment, with all the incidents of the investment, one of which was to put the investor on the register. That antecedent authority was followed by subsequent recognition in the letter of mandate which has been read by my noble and learned friend on the woolsack, which at once establishes the appellant's full knowledge of the transaction which had been so antecedently authorised, and the taking advantage of it for the purposes of the trust. Under those circumstances I am clearly of opinion that we have no alternative in this case but to affirm the judgment of the Court below.
My Lords, I should like to make one observation, and one only, upon the case which has been relied upon in the argument—namely, the case of Lumsden v. Buchanan, so far as regards Dr Andrew Buchanan. It is not at all necessary to consider to what extent and for what purposes that ought to be regarded as an authority which this House would consider binding upon itself in a case similar in its circumstances to that but in order
Page: 822↓
The House, I suppose, considered that every entry upon a register ought to have reference to a title; that the antecedent title there was shown to be anonymous — not to be Dr Andrew Buchanan's; and probably the House may have thought that there would be so much confusion and uncertainty and misconception as to the effect of the register in the mode of registration adopted as to make it unsafe to suppose that the registration could be attributed to any other title than that which was actually produced, that being a title not extending to Dr Andrew Buchanan. That 1 have always supposed must have been the ground of the decision—that the House did not think that there was any transfer intended, and that they did not think—in fact they could not possibly think on the facts before them—that the original contract was made by or on behalf of Dr Andrew Buchanan. Under these circumstances the House seems to have disregarded the registry altogether, although it was perfectly well known to Dr Andrew Buchanan, and acted upon by him, because they could not connect it with the antecedent title.
Here Mr Cuninghame agreed to become a shareholder in every way in which any man can agree. He under his own hand authorised the buying of the shares in his name by his agent, who had authority to act on his behalf; he caused the documents to be drawn up in such a way that the shares would be transferred into his name by his agent. Again, he wrote to the company saying that only three, which was a quorum, had signed the transfer, and asking them, though not in these precise words, to register the names of the five trustees, inasmuch as a quorum had signed. Immediately after that, he with his own hand wrote a letter saying that the shares were now standing in his name and asking that the dividend upon them should be paid in a certain way. Stronger evidence that he directed his name to be entered upon the register and agreed to be a shareholder I cannot conceive. If the learned counsel for the appellant had been able to show that there was any principle of the law of Scotland, or of the general law, which said that a man cannot be held to have become a shareholder in a company without signing his name to a transfer, that would have been another affair; but there is no pretence for saying that there is any such rule of law; and I think that the terms of the 38th section of the articles of the City of Glasgow Bank do not mean that. Even if they did, I do not think it would lie in the mouth of anyone, after the transfer had been made and had been acted upon for some time, and after the creditors had had an opportunity of seeing it, to say that it should have the effect of controlling the Act of Parliament.
Interlocutor appealed against affirmed, and appeal dismissed with costs.
Counsel for the Appellant— Herschell, Q.C.— Chitty, Q.C. Agent— William Robertson, Solicitor.
Counsel for Trustees who signed Transfer—Lord Advocate (Watson), Q.C.— Pearson, Q.C. Agent— Preston Karslake, Solicitor.
Counsel for the Respondents— Kay, Q.C.— Benjamin, Q.C.— Davey, Q.C.— Asher. Agents — Martin & Leslie, Solicitors.
