Scottish Court of Session Decisions

The petition, inter alia, set forth—“The objects for which the company was established, as set forth in clause III of its memorandum of association, as altered by special resolution of the company passed on 21st December 1893 and confirmed on 8th January 1894, and confirmed by your Lordships by interlocutor dated 20th March 1804, are as follows, viz.—‘1. To carry through and complete a transaction for the purchase and payment of the price of “Walker's bonded stores and offices,” Strand Street and Croft Street, Kilmarnock, in the parish of Kilmarnock and county of Ayr, belonging to Alexander Walker, wine merchant, Kilmarnock, or the firm of John Walker & Sons, wine merchants there, of which the said Alexander Walker is the only individual partner, together with the goodwill of the business of said firm of John Walker & Sons, and their registered trade mark and whole machinery, fittings, and other apparatus in the said premises, and the whole stock-in-trade and other effects belonging to the said Alexander Walker or to his said firm; and of the lease of the shop and premises in Portland Street and Strand Street, Kilmarnock, held by the said firm of John Walker & Sons or the said Alexander Walker as an individual, and likewise the lease of the offices, vaults, and premises at 3 Crosby Square, Bishop gate Street, London, occupied by the said firm of John Walker & Sons, with the whole machinery, fittings, and other apparatus and whole stock-in-trade and other effects belonging to the said firm. 2. To work the business hitherto carried on by the said firm of John Walker & Sons, as bonded store keepers, wine and spirit merchants, Italian warehousemen, and commission agents, and to make the purchases and sales required in the said business, and to purchase and sell all such materials and goods as may be in any way used in connection with the said business, and also to carry on such other business operations as are connected with or incident to the said business. 3. To acquire the distillery known as Cardow Distillery, in the parish of Knockando, Morayshire, with the goodwill of the business now or lately carried on at said distillery, and the whole pertinents of the said distillery and business. 4. To carry on, in the United Kingdom or elsewhere, the business of distillers, maltsters, and merchants. 5. To purchase, take, or otherwise acquire any heritable or real property upon lease, feu, or ground annual or otherwise; and to sell, alienate, or dispose of any heritable or real property in like manner. 6. To acquire, hold, and exercise any patent right or licence, and to grant licences to others to use and exercise such patent right; also to disclaim, alter, or modify the same. 7. To register at home or abroad trade marks; to use such marks, and to grant licences or permissions to others to use them. 8. To let or hire all or any part of the property or effects of the company. 9. To draw, make, accept, endorse, and execute, and to discount and sell promissory-notes, bills of exchange, and other negotiable instruments. 10. To borrow any sum or sums of money by way of discount, cash credit, or overdraft, or upon bond, debenture, mortgage, promissory-note, or receipt, or in any other manner, and to grant security for all or any of the sums so borrowed, or for which the company may be or may become liable, and by way of such security to dispone, mortgage, pledge, or charge the whole or any part of the property, assets, or revenue of the company (including uncalled capital), or to dispone, transfer, or convey the same absolutely or in trust, and to give to lenders or creditors powers of sale and other usual and necessary powers, and also to raise money

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by the issue of debenture stock. 11. To advance money by way of loan, with or without security, to any company, society, or individual who are or may be customers of the company, where such advances shall be deemed to be for the convenience or advantage of the company or the furtherance of its interests; to allow time for the repayment of any such loan, and to allow time for payment of any debt which may be due to the company. 12. To enter into and subscribe all writings necessary for carrying through the said transactions, and conducting the business and otherwise carrying out the objects and transacting the business of the company.… At an extraordinary general meeting of the company duly convened, held on 30th June 1913, the following resolution was duly passed, and at a subsequent extraordinary general meeting, also duly convened, held on 18th July 1913, the same was duly confirmed, so as to become a special resolution of the company, viz.—‘That clause III of the memorandum of association of the company be altered so as to include the following additional objects, namely—13. To subscribe for, take, purchase, or otherwise acquire and hold shares or other interests in or securities of any other company having objects altogether or in part similar to those of this company or carrying on any business capable of being conducted so as directly or indirectly to benefit this company. 14. To enter into arrangements with local, municipal, and other authorities or companies, corporations, or persons, and to obtain any rights, guarantees, or privileges, and to carry out such arrangements. 15. To acquire, carry on, or undertake the whole of the business and assets and to undertake the liabilities of any person, firm or company possessing any property suitable for any of the purposes of this company, or carrying on any business which this company is authorised to carry on or which can conveniently be carried on in connection with the same, and as consideration or part of the consideration for such acquisition to pay cash or to issue shares, stock, or obligations, or to acquire any interest or to amalgamate with or enter into any arrangement for sharing profits or co-operation with any firm, person, or company. 16. To establish and support associations and institutions to benefit the employees of this company, to subscribe money for charitable or benevolent objects, and to give pensions to the servants and employees of this company. 17. To sell, improve, manage, develop, exchange, lease, mortgage, dispose of, turn to account, or otherwise deal with the undertaking of this company, and all or any part of the property and rights of this company, either for cash, shares, debentures, or debenture stock, or any other consideration. 18. To do all or any of the above-mentioned things as principals or agents or otherwise, or by trustees, agents, or otherwise, and either alone or in partnership. 19. To do all such other things as may be incidental to or connected with any of the above mentioned objects.’”

On 15th October 1913 the Court remitted to Sir George M. Paul, W.S., “to inquire into the regularity of the procedure and the reason for the proposed alteration of the memorandum of association, and to report.”

In December 1913 Sir George M. Paul reported that the procedure had been regular and that the proposed alteration might be confirmed, but only subject to the deletion of the power to amalgamate from the proposed article 15, and the power to sell, exchange, lease, mortgage, dispose of, turn to account, or otherwise deal with the undertaking of the company from the proposed article 17.

The petition came before the First Division on 15th January 1914.

Argued for the petitioners—The additional powers as passed by the company should be confirmed without alteration. No doubt in Young's Paraffin, Light, and Mineral Oil Company, Limited, January 16, 1894, 21 R. 384, 31 S.L.R. 303, powers to purchase other businesses, to sell the company's own business, and to amalgamate were refused confirmation, but even in that case the Court was prepared to consider any special transaction, and what was objected to was the granting of general powers. The view against granting general powers had now been departed from. In the Glasgow Tramway and Omnibus Company, Limited, v. Magistrates of Glasgow, March 13, 1891, 28 R. 675, 28 S.L.R. 467, power to promote and dispose of tramways was refused confirmation, but that was on the ground that such a power was foreign to the original purposes of the memorandum of association. Of recent years the practice both in England and Scotland had been to include powers to sell and to amalgamate in original memoranda. These powers had also been granted by the Court in Scotland— Innerleithen Gas Company, 1902 (not reported); London and Edinburgh Shipping Company, Limited, 1909 S.C. 1, 46 S.L.R. 85; The King Line, Limited, January 30, 1902, 4 F. 504, 39 S.L.R. 337. The King Line could not, however, be founded on as an authority, as it appeared from the session papers that power to amalgamate was contained in the original memorandum. In the recent case of the Biggar Auction Mart, decided by the First Division on 14th May 1912, powers to sell and amalgamate were refused, but that case should be reconsidered. The English practice was to sanction powers to sell and to amalgamate— re New Westminster Brewery Company, Limited, 105 L.T.,N.S. 946; re Anglo-American Telegraph Company, Limited, 105 L.T.,N.S. 947. The opinion expressed in Palmer's Company Law, 9th ed. p. 416, against confirmation of power to dispose of the undertaking, was omitted from Palmer's Company Precedents, 11th ed. 1311–1313. The Cyclists' Touring Club, 1907, 1 Ch. 269, did not apply. Section 9 should be interpreted in the broad practical sense, not in a narrow technical sense. Power to sell the undertaking to a new company was a convenient method of effecting a reconstruction, and a company so reconstructed

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although theoretically a new company practically continued the life of the old company. Such a reconstruction therefore came within the spirit of section 9 (1) ( b).

At advising—