Scottish Court of Session Decisions

The Florida Mortgage and Investment Company, Limited, was incorporated under the Companies Acts 1862 to 1883 on 25th November 1884, and upon 5th November 1888 it was resolved that the company should be wound up voluntarily. On 27th November an order was pronounced continuing the winding-up subject to the supervision of the Court.

Francis More, chartered accountant, Edinburgh, the liquidator of the company, on 3rd December 1888 made a call of £3 per share upon all the shareholders of the company, and among those included in the A list of contributories was James Doyle, 42 Newington Causeway, Surrey, who was entered as the holder of 430 shares.

On 25th June 1889 the said liquidator presented a note to the Court for the rectification of the register of members of the company by deleting the name of James Doyle, and substituting therefor the name of Edward Hodson Bayley, whom he alleged to be the real owner of these shares.

The liquidator averred—“From inquiries which he has instituted the liquidator has ascertained that the said James Doyle is a labourer in the employment of the said Edward Hodson Bayley; that the said shares were transferred to him to be held for behoof of the said Edward Hodson Bayley; and that the said £130 and £300, or any other sufficient consideration, was not paid for the same. The liquidator believes and avers that the said James Doyle was then, and still is, a person without means, and that the said transfers to him were not bona fide absolute transfers, but were made to him in order that he might hold the said shares for the said Edward Hodson Bayley, the real owner thereof, with the view of the latter escaping liability in respect thereof, while he at the same time retained the real proprietary interest therein. These facts were, however, purposely withheld from the company, who would have objected to the transfers if the facts had been disclosed to them. The said James Doyle has failed to pay the said call or any part thereof.”

Bayley lodged answers, in which he averred that he had parted with the said shares absolutely to Doyle, who was his coachman, and who had been for eighteen years in his service; that in June 1885, at the date of the transfer, the prospects of the company were remarkably good, and that the company did not get into difficulties until October 1888. He had no beneficial interest in the said shares, the transfer of which were bona fide absolute.

From a proof allowed by the Lord Ordinary ( Kinnear) it appeared that the company had been formed for the sale and purchase of land in Florida, including an estate which belonged to a syndicate in England which included the respondent, who had contributed £293, 12s. towards the original purchase. Although the respondent was not a party to the sale, the company ascertained his interest in the estate, and the directors issued a certificate for 300 shares in his name, and offered it along with debentures for £130 as the amount of the purchase price owing to him. The respondent at first demurred to this proposal, but finally consented to abide by any agreement made by a Mr Adderley, one of the syndicate, on the assumption that if shares were allotted to him, these, as vendor's shares, would be fully paid up.

The following correspondence took place between Mr Cæesar, the secretary of the company, and the respondent:—

On 2nd April 1885 the secretary wrote—“Some weeks ago I sent Mr Hanbury a share certificate in your favour for 300 shares of this company, of which he acknowledged receipt. Your name was accordingly put down for that number, but on looking into the matter Mr Hanbury now finds that your shares should be £215 and your debentures £215, and he has sent me the original certificates to be altered. This is, as you may be aware, almost an impossibility, and my object in writing is to know if you will take £300 shares, and £130 debentures instead of the above numbers.”

And on 7th April—“I have to thank you for your telegram reading, ‘I will to same proposal as Adderley,’ in answer to mine of this date informing you that Mr Adderley had agreed to take 300 shares and £130 debentures, as proposed to you; and I understand your telegram to mean that you will do as Mr Adderley has done.

And on 20th April the respondent wrote—“I have received from Mr Hanbury share certificate for 300 shares, and from Mr Adderley cheque for £100. I do not understand this, and must ask you to cancel the shares and let me have the amount due to me wholly in debentures or cash. What I wrote to you was that I would accept the same proposal as Mr Adderley, and he advises me that there will be due to him and to me £215 in ordinary shares and £215 in debentures. Please favour me with full explanation by return of post.”

Cæesar replied on 22nd April—“In answer to your letter of 20th inst. I would refer you to my letter of 7th inst., in which I stated that Mr Adderley agreed to take three hundred shares=£300, and debentures £130. You having agreed to do the same, your names were entered on the register, which of course cannot be changed. At the same time, if you wish to dispose of the difference, or 85 shares, I shall endeavour to

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get a purchaser for you. Mr Adderley writes you that £215 in shares and £215 in debentures was the arrangement, and so it was originally, but was subsequently varied to a small extent as above. To my mind the shares are better than the debentures.”

Bayley replied on 23rd April—“In reply to your letter of yesterday, I never agreed to take any shares at all, and shall not accept any with a liability attached. In all such cases as this, whatever shares are allotted, they are always fully paid-up shares. In any case it does not appear that Mr Adderley had consented to take £300 in shares at the time when you originally informed me that he had, so that my consent, which was contingent upon his, falls to the ground. I have no objection, however, to avoid giving you trouble, to take £300 in shares, but they must be fully paid up, or, as you say that you would not sell your own shares at par, I have no objection to receive cash at par for my shares and debentures for the balance; but I distinctly refuse to accept any liability for calls.”

On 2nd May Cæesar wrote—“I have today received a letter from Mr Adderley, in which he states that he did not know when he wrote me that the shares were not fully paid up, and from some other statements it seems that he must have written you that he had not agreed. I therefore send you a copy of his letter, upon the faith of which I wrote and telegraphed you on 7th April that he had consented, and if you read it along with the fact that Mr Adderley had gone carefully over the prospectus, you will be satisfied that my letter was not exactly or in any way what you more than hinted it was.

“ Copy Letter.” 5th April 1885.

Sir,—You can make out my shares and debentures as you wish, £300 ordinary shares, and £130 in debentures.”—Yours truly, C. L. Adderley.”

On 11th May Bayley wrote—“Will you kindly send me a copy of prospectus, as I have not seen one, and also copies of minutes which relate to my shares and debentures? I am not wishful to be obstructive, but I wish to have all the facts before me.”

On 12th May Cæesar wrote—“As requested I enclose a copy of the original prospectus. There have been no minutes in connection with your shares and debenture as the directors only meet monthly just now, but at the meeting held last week I submitted the correspondence about the matter, and it was minuted ‘These gentlemen have accepted the shares, and we cannot vary the arrangement.’ Please let me hear at your earliest convenience, that this matter may be settled and the debentures issued.”

On 21st May Bayley wrote—“I am obliged by your letter, but it does not give the information I require, and unless you can give it to me briefly in a letter, I should be glad if you would send me copies of the agreements referred to in the prospectus so that I can see for myself. (1) What I want to know is—What is my legal position, and what amount I am entitled to receive, 1st, in cash; 2nd, in debentures; 3rd, in shares. (2) Have I the option of taking payment in whichever of these three forms I choose? I have accepted and shall accept no liability for calls unless upon full consideration and with all the facts before me.”

On 22nd May Cæesar replied—“I sent a copy of the agreement referred to in the prospectus to Mr Adderley, but as it is rather long to copy unless it is necessary, I may tell you that it is simply and solely an agreement between Mr Hanbury and others in America and this company for the sale and purchase of Sarasota tract. The vendors therein agree to take £10,000 in shares of £5 (£1 called), and £10,000 in debentures, the balance in cash. Neither you nor Mr Adderley are mentioned in the matter, and no one would have known that you had any interest unless Mr Hanbury had stated so, and also stated that you received your interest in shares and debentures and cash pro rata with him. What your interest is we do not know, and does not affect the company in any way; and I am simply writing you to oblige Mr Hanbury, as we have really nothing to do with your private settlement with him. I cannot, therefore, answer your questions, as we have no information on the subject, and if you are not satisfied with the statement which I have sent you, and which I got from Mr Hanbury for the purpose of simplifying matters, I must refer you to him. Your connection with this company therefore simply is, that having an interest in Mr Hanbury's share of the purchase price, and being entitled to about £215 in ordinary shares and £215 in debentures, as per Mr Hanbury's statement sent you, I wrote asking you and Mr Adderley to take payment of your £215 shares and £215 debentures, as follows—£300 in ordinary £5 shares (£1 paid) and £130 debentures. Mr Adderley agreed to this request, and I sent you lately copy of his letter. I wrote you that he had agreed, and you also agreed to do the same.”

The respondent deponed—“(Q) Is your position that you never were a shareholder for these 300 unpaid shares?—(A) That was arranged at a personal interview between the secretary and myself. My view is that I never held those shares with the liability attached. (Q) You held them, but without the liability attached?—(A) Mr Cæesar wrote me pressing me very strongly to accept them with the liability, and I wrote to him again and again saying I would not accept any shares not fully paid up, and then he wrote me that he was coming to London, and I met him there. The letters show that the matter was to be arranged at a personal interview, and it was arranged at that interview. I have no writing about the matter beyond the correspondence and the transfers of the shares. (Q) Were you aware that you were registered as the holder of these 300 shares on 17th February 1885?—(A) I became aware of that when I received the certificate, which was about April or May, and I forthwith repudiated it… .

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I had agreed at that interview to take £430 in shares, on the understanding that they were to be made a present to my servant. James Doyle is my coachman… . Mr Hanbury sent me the certificate for the 300 shares, and directly I saw there was liability I said I would not take them. (Shown transfer by witness to Doyle, dated 29th June 1885)—I did not get £300 for those shares from Doyle. I did not get anything from him; I gave them to him as a present. He was not a man who could be expected to buy shares. When I gave them to him I knew there was £4 per share unpaid. (Q) Was not your reason for putting these shares into Doyle's name that they were unpaid shares, and that he was a man of straw?—(A) I arranged with Mr Cæesar that I should make them a present to Doyle. I first of all said I would not take them at all, and Mr Cæesar said it would put the company to great inconvenience if I did not take them, and tried to persuade me to take them. I said I would not take them if there was liability, and he said couldn't I dispose of them to somebody. I said nobody would buy them with that liability, but I would make them a present to a faithful servant of twenty years' standing, and he said that would do, and he would make out the transfers. He carried out that arrangement, and sent up the transfers, and, as arranged, I got them signed and sent them back to him. He sent one form of transfer filled up, the consideration being £130 paid by Doyle to Colonel Dunne; and I filled up the other one on the same lines, namely, £300 paid by Doyle to me. Mr Cæesar wrote and said I might fill up the transfer as for nominal consideration or real; but he sent one filled up as a sample, and I drew up the other on the same lines. … I said over and over again to Mr Cæesar that nothing would induce me to take them, but to get him out of a difficulty I presented them to Doyle, and Mr Cæesar took down Doyle's name and address, and afterwards sent me the transfers. (Q) Was not the reason that you did not sell them because you knew that nobody would buy them?—(A) I knew I could not have sold them. (Q) Was not the reason of that, that it was much more probable that they might become a liability than a lucrative asset?—(A) No, I cannot say that, because Mr Cæesar told me they were likely to pay well. (Q) It is your state of mind I want?—(A) My state of mind was derived from Mr Cæesar. (Q) Was it not because you believed that those shares were much more likely to become a liability than a lucrative asset that you thought nobody would buy them?—(A) No, certainly not. I did not attempt to sell them, because there was no market for them. (Q) Is not that merely another way of saying nobody would buy them?—(A) No, when shares are on the market you can buy them, but this was a company newly floated, and it is very difficult to sell the shares of a company newly floated with liability upon them, particularly when they are not quoted. I don't think any stockbroker could have sold them. (Q) Did you not think it was fully as probable that those shares would become a liability as a lucrative asset?—(A) Not at that time; the thing looked quite promising, and Mr Hanbury, who knew all about it, was very sanguine. I never paid anything for the shares; the certificate was sent to me, the shares having £1 paid and a liability of £4. On that assignment there would be a liability of £1200. I was quite aware that Doyle could not pay any part of that, and the secretary was aware of it also, because I told him.”

Cæesar deponed—“After the correspondence had gone on for some time I had a meeting with Mr Bayley in London at the City Liberal Club. The meeting was by appointment, and in reference to the shares. I have no recollection of Mr Bayley mentioning the name of a man Doyle at that meeting. He did not make any reference to a trusted servant of twenty years' standing. I gave him the information he desired about the position of the company. I afterwards got a letter from him dated 16th June 1885; that was the first intimation I had of a man Doyle in connection with those shares. I had not heard the name before. I had only the one meeting with Mr Bayley. In compliance with the letter of 16th June I would probably write Mr Bayley with the transfers to be filled up in the name of Mr Doyle.”

On 16th June 1885 Bayley wrote to Cæesar—“I shall be glad if you will allot the £430 due to me entirely in shares in the name of Mr James Doyle at the above address. I return the certificate enclosed.”

Doyle deponed—“My wages are 30s. a week. I got 430 shares of the Florida Company transferred to my name about June 1885. I did not pay anything for them. If calls upon those shares had been made to the extent of £1720 or anything like it, I would not have been able to meet them. My means simply consist of my wages. The shares were presented to me by my employer. I did not take any steps to find out what kind of company the Florida Company was, and I don't know yet. Mr Bayley did not tell me, and I don't know now what the business of the company was. I never got anything out of the shares, and I have never paid anything. Mr Bayley never told me whether there was any liability attaching to the shares. He never told me whether they were fully paid up or not, and I asked no questions. I did not care. At one time Mr Bayley wanted one share back, and I transferred it to him. I would not have given him all the 430 back if he had asked them. I gave him the one share back, so that he would see to the meetings for me. If he had asked the shares back I should have considered the matter. (Q) You never got the certificates of those shares?—(A) No. Mr Bayley kept them; I gave them to him to take charge of them for me. The papers and circulars from the company came to me, and I handed them to Mr Bayley. I did not read them; as soon as I saw what they were I handed them straight to him, and he took charge of them. (Q) Wasn't that because the shares were really his, and not yours, although they stood in your name?—(A)

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No. (Q) Can you give any other reason for not even reading them?—(A) No. I did not take any interest in the company. (Q) And he did apparently?—(A) Yes, he conducted for me.”

At the time of the transfer, and for more than two years after, the company was in good repute, and it was not expected that any call would be made in respect of the shares. Bayley retained no interest in the shares. After the transfer had been completed, Doyle re-transferred one share to Bayley in order that the latter might look after his interests, but the directors refused to register the re-transfer until a call on the shares had been met.

As to the state of knowledge of the directors about Doyle at the time the transfer in his favour was passed, Mr Pearson, one of the directors, deponed as follows—“I knew nothing of James Doyle. Article 29 of the articles of association contains this provision—‘The directors may decline to register any transfer made to any person not approved of by the directors. If we had been told that Doyle was a labourer in the employment of Mr Bayley, and that instead of giving £430 for the transfers he had given nothing, and that he was wholly unable to pay the amount that was not called up, I personally would not have agreed to the registration of the transfers. I have no doubt that would have been the view of the other directors also. If we had agreed to the registration, knowing those facts, it would have been acquitting without consideration £1720 of the capital of the company, to the prejudice of the creditors and also of the other shareholders. I would not have considered it according to the duty of a body of directors to do such a thing. Knowing the gentlemen I was associated with in the directorate, I am sure if they had known the real character of the transaction they would not have registered the transfers. (Referred to minute of 2nd August 1885)—That minute records that the directors declined to entertain a proposal to transfer one share from James Doyle to Mr Bayley until the call on the shares was paid. A call had been made on the shares at that time. The directors did not think they would be justified in passing the transfer until the call had been paid. I had no idea at that time that Doyle was a man of straw.”

And this was so far corroborated by Mr Paterson, one of the law-agents of the company, in the following passage in his evidence—“So far as I remember, there was nothing said to throw any doubt upon the truth of the statements which the transfers contained as to consideration. If anything had been said, it would have attracted my attention, and I expect I would have been asked about it as agent. I remember its being stated at a subsequent meeting that Doyle had been discovered to be a man of straw, and severe remarks were made by some of the directors to the effect that it was very wrong of Mr Bayley to pass his shares to a person unable to meet the calls. It was new at that time to the directors, as well as to me, that Doyle was a person of that kind. I know the provision in the articles under which the directors have power to decline to register transfers. If they had been apprised of the true state of the facts, I think they would have refused to pass the transfers to Doyle.”

On 11th January 1890 the Lord Ordinary ( Kinnear) refused the prayer of the note.

Opinion.—The purpose of this application is to remove the name of James Doyle from the register of shareholders and from the list of contributories, and to substitute the name of the respondent in both lists. Doyle's name has stood on the register since June 1885. But it is said that the respondent has all the while been the true owner of the shares, and that he obtained the registration of Doyle's name by a fraudulent misrepresentation.

The company was formed for the purchase and sale of lands in Florida among other purposes, and in particular, for the purchase of a certain estate which had been acquired by a number of gentlemen in England.

The respondent had advanced a sum of £293, 12s. as a contribution for the original purchase of this estate by the gentlemen who afterwards became vendors to the company; and on this account had an interest in the transaction between the company and the vendors. But he was not a party to the contract, and had no direct communication with the company until after it had been completed, when his interest in the matter was stated to the directors by a gentleman named Hanbury, who was one of the vendors, and who appears to have acted on their behalf in carrying out the sale. In consequence of the information given them by Mr Hanbury the directors issued a certificate for 300 shares in the name of the respondent, and proposed that he should accept these shares, and certain debentures for £130, as the amount to which he was entitled. The respondent was not satisfied with this proposal. But he ultimately agreed to accept the same terms, whatever they might be, which might be made for himself by another of the vendors, Mr Adderley.

The result was that Mr Adderley agreed to the terms which had been originally proposed to the respondent; and the directors accordingly held the respondent bound to accept the shares they had issued in his name, and put his name upon the register as the holder of these shares.

This would have probably concluded the matter as between the company and the respondent notwithstanding his original dissatisfaction; but he had assumed that whatever shares were to be allotted to him must, as vendor's shares, be fully paid up. It turned out that they were £5 shares, with only £1 paid up; and as soon as the respondent became aware that he was then asked to take shares with a liability of £4 upon each, he intimated to the company that he declined to accept them; that he would accept no shares with a liability attached; and that if he was to take shares at all they must be fully paid up. A correspondence

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followed upon this statement of his position, in the course of which he was informed by the secretary that the directors held that he ‘had accepted the shares, and that they could not vary the arrangement.’

The respondent answered, in effect, that he had not had sufficient information, and that he ‘had accepted and would accept no liability for calls except upon full consideration and with all the facts before him,’ and it was ultimately agreed that a meeting should take place between him and the secretary in London, when the matter might be arranged.

A meeting took place accordingly, on the 15th of June, and the respondent's statement is that on this occasion the secretary pressed him to accept not only the 300 shares already issued in his name, but also 130 shares more in place of the £130 of debentures which had been originally offered to him; that he refused to do so, on the ground he had stated in correspondence, viz., that he had never accepted, and would not accept, shares with a liability attached; that the secretary then pointed out that he was putting the company in a great difficulty, because the shares stood in his name in their books, that the shares could not be sold because they were not quoted on the Stock Exchange; and that in order to relieve them of this difficulty he ultimately said that while he would not accept them himself, he should make a present of them to his old servant Doyle; and that the secretary agreed to this being done, knowing that Doyle was a servant with no means, who could not be expected to meet his liabilities if calls should be made upon the shares. In consequence of this arrangement two transfers were prepared in favour of Doyle, one of 130 shares standing in the name of Colonel Dunne, and the other of 300 shares standing in the respondent's name. The first of these transfers was complete when transmitted to the respondent by the secretary, and bore to proceed on consideration of the payment of £130 by Doyle to Colonel Dunne. The respondent filled up the consideration of the second, taking that prepared by the secretary as a model, and accordingly stated as the consideration the payment of £300 to himself. Doyle, when he was told what his master proposed, said that he was much obliged, and accepted the shares. He afterwards asked the respondent to take care of the transfers, as he had no proper place to keep them. The respondent agreed to do so. But both the respondent and Doyle swear positively that the transaction was an out-and-out gift to Doyle; that the shares were made over to him absolutely as his property, and that the respondent retained no interest in them whatever.

If this story is true there is no ground for taking Doyle's name off the register and putting the respondent's in its place. It is said that he transferred his shares for a nominal consideration to a man of straw in order to escape liability. But it has been decided in a great variety of cases that that is not in itself a ground for invalidating a transfer. No doubt such a transfer will be viewed with suspicion if it is made at a time when the company is in difficulties, and when a liability for calls has already attached. But even in that case the transaction will be sustained if there be no trust or reservation for the benefit of the transferor, and if no fraud or deceit has been used to obtain the registration of the transfer. And the respondent's position is much more favourable. There was no immediate liability which he was bound to meet as a shareholder. The company was just beginning business, and everybody concerned appears to have taken a very sanguine view of its prospects. But the shares were not fully paid up; and the desire to reject them upon that ground was perfectly legitimate. The respondent appears to have thought that he was under no obligation to accept them. I am not disposed to uphold that view, because I think that, whether a contract had been made for him by Mr Hanbury or not (as to which there is no sufficient evidence), he had bound himself to accept the terms agreed to by Mr Adderley. But at all events he was not in the position of a shareholder in an insolvent company who is trying to escape liability for debts already accrued. His desire to avoid future liability was perfectly legitimate, and there was no reason why he should not do so by making a gift of the shares to his servant, if the gift was absolute, and if the transaction was not tainted with fraud.

The petitioner, however, maintains that the gift to Doyle was merely simulated; and that the respondent remained the true owner of the shares. It is said to be incredible that he should have given away 430 shares in a promising adventure for no consideration; that his statement is selfcontradictory, because the reason he alleges for rejecting the shares would have led him to accept the £130 of debentures instead of exchanging them for shares; that he kept the transfers in his own possession, and that in 1888 when the company was supposed to be in difficulties, he obtained a retransfer of a single share in order that he might be able to attend the meetings of the company.

The argument from the supposed improbability of the gift does not appear to me to be of much weight. The respondent says that the amount of his advance was to be repaid; and the shares represented merely his profit on the transaction. There is nothing incredible in his statement that he preferred to give up the chance of profit and get rid of the shares rather than to accept them with a contingent liability to the extent of £1200 or £1500. The other considerations to which I have adverted might have been more material if there had been any direct evidence of an understanding that he should recover the shares if the company were successful. But both he and Doyle swore distinctly that the gift was absolute. The case against him is one of fraud, supported by perjury; and it is impossible to hold such a case to be proved by

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mere suppositions, or by any evidence that is not conclusive. The observations of Lord-Justice Mellish in Masters' case (L.R., 7 Chanc.) appear to me to be very applicable to the present. The transferor and the transferee ‘both swear that the transaction was real, and although that may not be conclusive yet in order that we may say judicially that the statement is not true the contrary must be brought home conclusively.’

The question is one of credibility, and it is right to say that both the respondent and Doyle gave their evidence with apparent candour; and they are not contradicted by any evidence which can be weighed against their positive statement. I am unable to attach any weight to the contrary evidence of Mr Cæesar, the secretary, because although there is no imputation whatever against his truthfulness, he has no recollection of any of the circumstances that are in dispute. A witness who does not remember anything that passed at an interview cannot say from memory what did not pass; and it was obvious that throughout his evidence Mr Cæesar was not speaking from memory, but from his present impression as to the course which he must have taken, or ought to have taken, in circumstances which he did not distinctly recal.

The second ground alleged for setting aside the transfer is, that the respondent procured their registration by the false statement that they were made for a full consideration in money; because, if the directors had known them to be gratuitous, they would have inquired as to the solvency of the transferee, and would certainly have rejected a transfer in favour of Doyle. To support this contention it is necessary to show, first, that the false statement as to the consideration was intended to deceive; and secondly, that it did in fact deceive the directors. I think neither of these points is made out. The respondent's answer is sufficient, that the secretary was well aware that nothing was to be paid by Doyle, and that in stating the consideration as he did he was simply following the form of transfer which the secretary had sent to him. His statement is confirmed by the terms of the transfer of Colonel Dunne's shares and by the correspondence. In transmitting the transfers the secretary says—‘You may fill up the transfer of the 300 shares either with a nominal or a real consideration.’ Mr Cæesar's explanation of this passage in his letter does not appear to me satisfactory. But it is intelligible if he knew that the shares were not to be sold to Doyle, but made over to him as a gift.

Nor does it appear to me to be proved that the directors were deceived. I assent to the observation of the Dean of Faculty, that directors who are left in ignorance of a material fact must be supposed to have been ready to act—as it would have been their duty to act—if they had known it. But the evidence of the directors who were examined is, that they have no recollection of the circumstances attending their admission of the transfers in question. This is not, to my mind, sufficient evidence that the secretary in presenting the transfers for their sanction did not report what had passed at his meeting with the respondent, or that his report was not in accordance with the respondent's statement. The importance to be attached to the statements of these gentlemen that they would not have passed a gratuitous transfer without inquiry appears to me to be diminished by the consideration that when the transfers were passed they were very confident of the prosperity of the company, and also because they were aware that the respondent had refused to accept the shares, and maintained that he was under no liability to do so.

Assuming that the transfer of the 300 shares which originally stood in the respondent's name could be set aside, the alleged misrepresentation would appear to me to afford no ground in law for putting his name on the register, in respect of the 130 shares transferred to Doyle from Colonel Dunne. There was no contract of any kind between the company and the respondent that the latter should take these shares. The only agreement that was ever made with respect to them was that they should be allotted to Doyle.”

The petitioner (the liquidator) reclaimed, and argued—That the evidence clearly showed that from the outset Bayley knew that Doyle was a man of straw, and quite unable to meet the calls in respect of these shares; and further, that he deceived the directors by filling in a fictitious consideration when in reality he had made a gratuitous transfer of these shares to avoid liability for calls. In such circumstances the transfer could not stand— Chinnock's case, January 31, 1860; Johnson's Chan. Dec., 714. Doyle really was a trustee for Bayley, who was deeply interested in the company — Buckley on Companies Acts, sec. 22, pp. 25, et seq.; Hyam's case, 1 De Jex, Fisher, & Jones, 75; European Assurance Arbitration Cases, 28 Law Times, appendix, and Simpson's case at pp. 778 there. When—ever there was a taint of fraud in any transaction to escape liability for calls, the transaction could not stand— Lund's case, March 4, 1859, 27 Bevan, 465.

Argued for respondent—The question was one of credibility of parties. If Bayley and Doyle were to be believed, there was an end of the matter, because they both deponed that the transfer was absolute, and that Bayley retained no interest whatever in these shares. There was no illegality in a shareholder transferring his shares to a man of straw in order to avoid liability for calls provided the transfer was out and out, and that there was no attempt at fraud. Bayley's position was clear throughout the transaction; he never consented to take shares with liability attached, and he only became a partner of the company in order to get out of it by transferring to Doyle. The whole transaction was to oblige Cæesar, and with a view to keep the books of the company in order. At the time this transfer was made

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the company was in good repute and for two years after. To cause the transaction to be cut down there must be misrepresentation with an intention to deceive, and that was entirely awanting here— Payne's case, December 11, 1869, L.R., 9 Eq. 223.

At advising—