Scottish Court of Session Decisions

The Second Edinburgh and Leith 493rd Starr-Bowkett Building Society, incorporated under The Building Societies Act 1874 was duly registered on 7th February 1882. The object of the society was to make advances to members (chosen by ballot) on the security of heritable property, the funds for these advances being subscribed by the members, who were bound to pay sixpence a-week per share until they had subscribed £27, 6s. on each share of £100 held by them. The members who received advances were bound to repay them by instalments.

On 26th August 1890 an instrument of dissolution of the society was registered, which bore to be “signed by not less than three-fourths of the members holding not less than two-thirds of the number of shares in the said society.” At the same date the number of shareholders on the register was 203, and 158 signatures were appended to the instrument. The deed appointed Peter Ronaldson, C.A., trustee for the special purpose of the dissolution.

Page: 457↓

In March 1891 the society, and Peter Ronaldson as its trustee, brought an action against Thomas Aitken, a member of the society, for payment of £33, 10s. 6d., as the balance due by him in respect of advances which he had received from the society.

The defender denied indebtedness, and further stated various objections to the validity of the instrument of dissolution, and, inter alia, that the names of eleven shareholders were adhibited by mandatories, which was not authorised by the Act of Parliament

He pleaded—“(1) No title to sue.”

By the 32d section of the Building Societies Act 1874 it is provided, inter alia—“A society under this Act may terminate or be dissolved: (2) By dissolution with the consent of three-fourths of the members, holding not less than two-thirds of the number of shares in the society, testified by their signatures to the instrument of dissolution.” …

After a proof the Lord Ordinary ( ) on 1st December 1891 sustained the first plea-in-law stated for the defender, and dismissed the action.

“ Opinion—I am very unwilling to sustain this defence, for I see that if I do so there may be great practical difficulty in working out the society's remedy against this member, who is undoubtedly due, and must ultimately in some form pay a considerable sum of money to the society. But the question is, whether I have any option in the matter…. There are, it appears, eleven signatures to the deed which were not adhibited by the members themselves, but by certain persons alleged to be their mandatories. I shall assume that these persons had good mandates at the time they signed, although I am afraid I cannot hold that proved. But assuming that that is so, I am afraid that the terms of the 32d section of the Act make it really too clear for argument that a member cannot under this statute testify his consent to a dissolution otherwise than by his own signature. The words of the statute are, ‘as testified by their signatures to the instrument of dissolution.’ I think that contemplates that the member's own signature, and not his signature through a mandatory, must be adhibited. If that be so, I am afraid it is fatal, because, taking the shareholders on the register at May as 164, and adding the 39 shareholders who became members in August, the total number of members on the register when the deed of dissolution took effect was 203. I think these must all be taken as members, and that being so, how many sign this deed of dissolution? There are 158 signatures in all, taking everything most favourably for the pursuers. But if eleven mandates are to be deducted, as the signatures of mandatories, that leaves only 147 good and genuine signatures. Now, I am afraid that 147 is not three-fourths of 203, and therefore this deed was not well executed, and the procedure was irregular. I say nothing as to its effect with respect to those members who have acceded to the liquidation. It may very well be that they are bound by their actings, but with respect to this defender I do not think that he has become bound to recognise the title of the liquidator, and therefore I have no option but to sustain the plea of no title to sue.”

The pursuers reclaimed, and argued—The signatures adhibited by the mandatories must be held to be the signatures of the members, who had given the mandates, and such members had accordingly testified their consent to the instrument of dissolution in terms of the Act.

The defender was not called upon.

At advising—