McCraken v. McIntyre, , 1 S.C.R. 479 (1877)
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McCraken v. McIntyre, , 1 S.C.R. 479 (1877)
Supreme Court of Canada
McCraken v. McIntyre, 1 S.C.R. 479Date: June 28th 1887Thomas McCraken (Plaintiff) Appellant;andPeter McIntyre (Defendant) Respondent.1887: January.Present: The Chief Justice, and Ritchie, Strong, Taschereau, Fournier, and Henry, J.J.ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.Public Company under 27 & 28 Vic., Ch. 23-Shareholder's Liability.Certain shares in a Company incorporated by Letters Patent, issued under 27 & 28 Vic, c. 23, were allotted, by a resolution passed at a special general meeting of the shareholders, to themselves, in proportion to the number of shares held by them at that time, at 40 per cent. discount, deducted from their nominal value, and scrip issued for them as fully paid up. G., under this arrangement, was allotted nine shares, which were subsequently assigned to the Appellant for value as fully paid up. Appellant enquired of the Secretary of the Company, who also informed him that they were fully paid-up shares, and he accepted them in good faith as such, and about a year afterwards became a Director in the Company. The shares appeared as fully paid up on the certificates of transfer, whilst on each counterfoil in the share-book the amount mentioned was "Shares, two, at $300=$600."Held:-Reversing the judgment of the Court of Appeal for Ontario, that a person purchasing shares in good faith, without notice, from an original shareholder under 27 & 28 Vic, c. 23, as shares fully paid up, is not liable to an execution-creditor of the Company whose execution has been returned nulla bona, for the amount unpaid upon the shares.(The Chief Justice and Ritchie, J., dissenting.)Appeal from a judgment of the Court of Appeal for Ontario, ordering that the rule obtained by the Respondent in the Court of Queen's Bench to enter judgment for him should be made absolute[1].This action was brought by Plaintiff, who had recovered a judgment against the Lake Superior Navigation Company (limited), under which an execution had been issued and returned nulla bona, against the Defendant for the amount not paid up on nine shares of the stock of the said Company held by him. A charter was granted to the Company in February, 1871, under the provisions of the statute of Canada, 27 & 28 Vic. c. 23. Sec. 5, sub-sec. 19, no. 27[2] of the statute makes each shareholder liable until the whole amount of his stock has been paid up to the creditors of the Company to an amount equal to the sum not paid up thereon. The petition on which the charter was granted, stated the nominal capital to be $64,000. Number of shares 128 at $500 each. Sixty-five shares, $32,500 of the stock, were subscribed when the charter was granted. About a year after the Company went into operation, it appears additional funds were required to carry on the business, and in July, 1872, it was resolved to call a special general meeting of the shareholders to lay before them a proposal to allot the unsubscribed portion of the stock to the shareholders in proportion to the number of shares held by each, at the rate of 60 per cent. of the nominal value of the shares.At a general meeting of the shareholders on the 15th March, the proposition was agreed to, and resolutions passed for carrying it into effect. In accordance with the resolutions, ten shares (nine of which came afterwards into Defendant's hands) were issued on the 5th April, 1872, to Thos. Griffith & Co., at the rate of 60 per cent. of the nominal value, which price they paid. These shares passed from Thos. Griffith & Co. to W. Griffith, and from him to Defendant and were treated as paid-up shares, though in the share book they were not entered as paid-up shares in the name of Thos. Griffith & Co., as other shares that were taken by them were entered; and in the counterfoils of the shares in the share-book the amount was mentioned (each for two shares) "Shares, two at $300-$600," whilst on the certificate itself the shares were mentioned as $500 each. It was represented to the Defendant when he became the purchaser of the shares, which were taken by him towards payment of a debt due the Bank of which he was the cashier, that the shares were fully paid-up and he was so informed by the officer of the Company on enquiring at the office.The Defendant became a Director of the Company on the 4th February, 1874. The shares were transferred to him individually on the 30th January of that year, he having held them as trustee of the Bank from April, 1873.The Plaintiff recovered in his action against the Company, on 19th December, 1874, on a bill of exchange, dated 1st July, 1878, for $750. He issued his writ in the present action against the Defendant on 23rd January, 1875.In the declaration it is averred that "the Defendant (Appellant) was a shareholder in the Lake Superior Navigation Company, holding nine shares, on which there was due and unpaid th...See the full content of this document
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