Scottish Court of Session Decisions

On 26th November 1890 Samuel Chapman applied for twelve shares in the Sulphite Pulp Company, Limited, and deposited with the Royal Bank of Scotland the amount payable on application, in conformity with the conditions contained in the company's prospectus. On 12th January 1891 he made a further application for twelve additional shares, and again made the necessary deposit.

On 7th August 1891 Chapman's agents wrote to the secretary of the company saying “As Mr Chapman has received no intimation that these shares or any portion of them, have been allotted to him, nor indeed any other communication concerning them, he instructs us to write you withdrawing unconditionally his application for the shares referred to. Be good enough therefore to hand us your cheque for £120, in repayment of the sums paid by Mr Chapman as deposits.”

The company having failed to comply with this request, Chapman presented a petition to the Court for rectification of the register by deletion of his name, and for repayment of the sums paid by him upon application.

Answers were lodged for the company in which it was averred “that the company duly sent to the petitioner allotment letters

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for the twenty-four shares applied for by him, and that the petitioner had personal knowledge that the shares had been allotted to him.”

Proof was allowed, the result of which appears sufficiently from the opinion of the Lord President.

Argued for the petitioner—1. The result of the evidence was to show not only that no notices of allotment had been received by the petitioner before the withdrawal of his applications, but that no such notices had ever been posted by the company to his proper address, and the petitioner was therefore entitled to have his name removed from the register. In Redpath's case, 1870, L.R., 11 Eq. 86, it had been laid down that where an applicant for shares denied that he had received any notice of allotment, the onus was on the company to prove the contrary. The general application of the rule there laid down had been limited by later decisions, and the rule had been adopted that if an application for shares was made through the post, it was sufficient for the company to prove that a notice of allotment had been posted, properly directed, to the applicant, it being held that an applicant by applying through the post authorised the company to reply to him by the same channel, and that the post must in such a case be looked upon as the common agent of the parties. In the later authorities, however, the case of applications made personally was distinguished from the case of applications made by post, and the rule of Redpath's case still held as to the former; and at all events, to bind the applicant the acceptance must be properly directed to him— Household Fire Insurance Company v. Grant, 1879, L.R., 4 Exch. Div. 216, per Lord Justice Baggallay, 224; Bell's Comm. i. 343–4; Thomson v. James, November 13, 1885, 18 D. 1, per Lord President, 11; Mason v. Benhar Coal Company, June 2, 1882, 9 R. 883, per Lord Shand, 890. 2. It was not proved that the petitioner had ever been informed by the secretary to the company that shares had been allotted to him, and that he was on the register. If that had been proved, probably the mere omission to send a letter of allotment would not entitle him to have his name removed from the register.

Argued for the respondents—1. The petitioner was not entitled to succeed, as it was proved that letters of allotment, properly directed, had been posted in answer to his applications. There was no obligation on a company to see that letters properly posted were delivered— Harris' case, 1872, L.R., 7 Ch. 587; Household Fire Insurance Company, supra. 2. At all events, the petitioner had received information that the shares had been allotted to him, and was thus barred from insisting on the removal of his name from the register— Gunn's case, 1867, 3 Ch. App. 40; Levita's case, 1867, 3 Ch. App. 36.

At advising—