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nothing is taken from either (a) the nominal this misunderstanding which led Cozens-Hardy capital of the company, or (6) the capital L.J. astray. It seems, further, to be a mistake assets actually in the hands of the company, to regard the company as the holder of suror (c) the potential capital asset represented by rendered shares. It is no more the “holder" uncalled capital; for the share continues to of such shares than it is of the ordinary unexist; nothing is paid out of the company's issued shares of its capital. assets for the surrender; and the holder has So far this question of the gratuitous surrender not, by the surrender, escaped from any of a fully paid share involving, per se, a reduction liability to the company. What has happened of capital has been dealt with as if there were is that a fully paid share, previously forming no authority to set against that of Cozenspart of the company's issued capital, and being Hardy L.J. and the text-writers who accept so in a position in which the company had his dictum. But, fortunately for the writer, nothing more to get in respect of it-it was a that is not so. Another judge, equally eminent,

, liability only–has now passed into a position and specially versed in company law, had in which the company, relieved of its liability the point before his mind, and expressed his to the former holder, is able to issue the share view upon it. In the case of In re Denver to a new holder, and to receive from him a Hotel Co. Ltd.([1893]1 Ch. 495), in which certain second time the amount thereof. It is, it is fully paid shares were to be surrendered and submitted, difficult to descry in a transaction cancelled, Lindley L.J. (as he then was) points having such results any reduction of the out that a surrender of fully paid shares involves company's capital. The statute seems to con- no release by the company of any of its rights firm this view. For while the examples given against the surrenderor, but is pure gain in section 46 of the 1908 Act do not profess to to the company, and goes on, in an opinion be exhaustive of the ways in which a company concurred in by the other members of the may reduce its capital, it is, nevertheless, Court, to say (p. 505): “We see no reason why worthy of note that these examples involve the company should not accept the surrender. either (a) diminution of nominal capital alone,

Under these circumstances the transor (6) diminution of both nominal capital and action is not really a purchase by the company paid-up capital, or (c) diminution of actual of its own shares.

The aid of the Court paid-up capital alone. None of these results is not wanted to sanction the transaction except follows from the gratuitous surrender of a fully so far as the company desires to treat the shares paid share which is not to be cancelled, and when surrendered as permanently extinguished. without one or other of them no reduction of Unless the capital is formally reduced the capital seems possible.

surrendered shares may be again issued.” One is naturally anxious to see what is the Lindley L.J. is, accordingly, just as clear that explanation of the error into which, as it is surrender by itself does not involve reduction of submitted, Cozens-Hardy L.J. had fallen in capital, as Cozens-Hardy L.J. was that it did, making the observation under discussion. In and the opinion of the former has not had its the first place, in the case before him there was authority taken away by any subsequent release of liability, and, therefore, a reduction adverse judicial comment. It is true that, in of capital was involved. This may have the case of British and American Trustee, etc. affected the learned judge's mind. But the Corporation v. Couper ([1894] A.C. 399), Lord explanation seems to be really found in this, Watson, speaking of the surrender in the that Cozens-Hardy L.J. had misapprehended Denver case, while not challenging the decision, the speeches of Lord Watson and Lord Mac- said: naghten in the cases of Trevor v. Whitworth I am by no means satisfied that the (supra) and Couper (infra). For he says that surrender in that case was one which careful reading of these speeches has satisfied the company could lawfully accept him that the objection to surrender does not without the sanction of the Court." depend upon the giving of consideration by His Lordship did not say in terms what were the company, but rests upon a larger proposition the grounds of his doubt; but it is probably to which he indicates to be that a company be inferred that it arose from a suspicion that cannot be the holder of its own shares. (This the surrender in Denver formed part of the conagain, be it noted, is a different objection from sideration for the transfer of assets in that case; that of inherent reduction of capital.) As is for his Lordship’s next sentence is : shewn later in the present article, however, “In Trevor v. Whitworth Lord Macnaghten neither Lord Watson nor Lord Macnaghten said, “I conceive that there can be no indicated any objection to surrender a part objection to a surrender of shares which from cases in which there was something are liable to forfeiture. A surrender of equivalent to a purchase of the shares by the shares in return for money paid by the company. And it would seem to have been

company is a sale and open to the same

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objections as a sale, whatever expression condition that they were not to be cancelled may be used to describe or disguise but were to be available for re-issue) in exchange the transaction. I

in that for certain other shares of the same company opinion."

(to be deemed fully paid), of equal nominal And that the objection was on the ground above value but carrying right to a lower rate of suggested and not to surrender as such, seems dividend. The matter was fully discussed to be made plain by what Lord Macnaghten before the learned judge, and he delivered an himself said in the same case of Couper, for, opinion dealing with the cases cited to him, referring to the Denver case, his Lordship said: which included most of those referred to in the “In both cases (i.e. in Denver and in Couper) present article. In the result Warrington J.

as it seems to me you have a purchase reached the conclusion that the mere surrender by a limited company of its own shares; of shares which remained uncancelled did not for I cannot agree that a transaction effect a reduction of capital, and that accord-' which involves a surrender of shares as ingly the surrenders in the case before

im were part of the consideration is anything in order without the intervention of the Court. but a purchase of shares within the His Lordship pointed out that uncancelled meaning of the opinion of this House in surrendered shares continued to form part of Trevor v. Whitworth."

the capital of the company, and could be reIt is, at all events, clear that neither Lord issued without the necessity of any resolution Watson nor Lord Macnaghten held the view to increase capital, which would, obviously, afterwards expressed by Cozens-Hardy L.J. have been necessary had there been, through the that surrender per se involves reduction of surrender taking place, a corresponding recapital. Had that been their view, Lord duction of capital. Mr Stiebel suggests that Watson could not have referred to the the case of Rowell is not well decided, but this surrender in that case as being one which is apparently on the ground that the transrequired the sanction of the Court, nor could action in that case involved the giving of his Lordship and Lord Macnaghten have found consideration by the company for the surrender. it necessary to invoke the illegality of a com- That does not, of course, affect the question pany purchasing its own shares in order to presently under discussion. condemn the unsanctioned surrenders. For, It would appear, however, upon the foregoing on the view of Cozens-Hardy L.J., all surrenders survey of the authorities, that, of the judges alike would require judicial sanction as involving who have considered the matter, Cozens-Hardy reduction of capital. The criticisms of Lord L.J. stands alone in taking the view that every Watson and Lord Macnaghten upon the surrender of fully paid shares effects a reduction surrender in the case of Denver accordingly of capital, and requires, in consequence, the appear not only not to impinge in any way sanction of the Court before it can become upon, but rather to confirm, the general view operative. It is not easy, therefore, to see why regarding surrenders expressed by Lindley L.J. such able and careful writers as Mr Gore Browne in that case.

and Mr Stiebel should accept his view as being That it is, as above suggested, the presence the law, as against the view of Lindley L.J. and of the element of purchase or consideration by Warrington J., which latter is, as has been seen, the company which makes a surrender objection in harmony with the views of Lord Watson, able is also borne out by the passages in the Lord Macnaghten, and other judges. Mr W. F. opinion of Jessel M.R. in the Dronfield Silk- Hamilton, in his work, appears to accept the stone Co.'s case (already referred to), where he view of Lindley L.J. (Company Law, 2nd ed., “ But I am by no means prepared to say It seems, then, to the present writer that the

that there is right under the term view. of Cozens-Hardy L.J. is not well founded 'surrender' to buy up the shares. in principle for the reasons indicated in the That I think would be beyond the limit. earlier part of this article, and that the view

I can well imagine that certain of Lindley L.J. is sound in principle and cases are clearly within the limit and supported by authority. It is, accordingly, ought not to be treated as diminutions submitted that the true position is that a comof capital."

pany limited by shares may, at its own hand, Lord Lindley's view receives yet further competently accept from any of its members support from the reasoned opinion of Warrington the gratuitous surrender of fully paid shares J. (as he then was)—who, it may be noted, was held by him, where such shares are not, by the of counsel in Bellerbyin the case of Rowell v. John Rowell & Sons Ltd., referred to at the Buckley on the Companies Acts (10th ed., p. 143) beginning of this article. In that case certain couples Collins M.R. with Cozens-Hardy L.J. as also

taking that view. This, however, with all respect, fully paid shares were to be surrendered (on appears not to be warranted.

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terms of the surrender, to be cancelled, but are of cases is 2254, which is 435 more than last to be retained by the company for re-issue. year. The increase is almost entirely attri

As a practical matter, however, it may be butable to the King's Bench Division, where that the cases in which a situation affecting a the number has risen from 563 to 992. Now company's financial position can be completely this is interesting, for the Lord Chief Justice dealt with by means of voluntary surrenders recently spoke with pardonable pride of the alone, will not be many. It will, probably, expedition with which that Division got be more generally the case that, even where through its work. Although a judge short the method of surrender (which has several last term, the Division disposed in the term advantages over reduction of capital) is adopted of more than 500 cases out of the 700 down for the purpose of rectifying the balance sheet, for trial in its rolls. There is undoubtedly a it will be found to be necessary to proceed by connection between the volume of litigation way of a scheme of arrangement under section and the speed with which cases come before 120 of the Act of 1908, in order to make the Court for disposal. Those accustomed to surrender to the extent required compulsory. the “law's delays " must have read with In this way surrenders for the purpose of re- admiration of the way in which an important adjusting a company's balance sheet may, in case arising out of a shipping collision in the general, come before the Court, But the Thames was brought into Court and decided. Court's intervention will be sought, not to The collision was in the middle of March ; validate the surrenders or to sanction the re- on 10th April “the President” issued his

“ sulting consequences, but to make the scheme judgment. Can it be that our elaborate system involving the surrenders binding upon all of pleading, designed as it is to try a case with members affected; and what the Court will be all the nicety of a goldsmith's balance, is a concerned with will be only the question of the deterrent to litigation, and that the English fairness of the scheme to such members. The method of a broad axe wisely encourages it? proposition contained in the immediately pre- Since these notes last appeared more than ceding paragraph is accordingly not affected one advocate has publicly avowed his adherence by such applications which, in various cases to the Labour Party, so that no future Socialist within the writer's knowledge, both in England Government, on assuming office, need find itself and in Scotland, have recently been granted in the awkward dilemma of being entirely unby the Court simpliciter without any suggestion represented in Parliament Hall. This is not that the steps appropriate to reduction of the place for politics, but one interesting and capital must first be taken. J. G. S. entirely innocuous train of thought is started

by the remarks of a recent legal convert to the left. Speaking on the desirability of “height

ening the standards of municipalisation of all NOTES FROM PARLIAMENT HOUSE.

our concerns (whatever that may mean), he

observed that were passing from the Members of the Bar have returned from stage of capitalism into the stage when the their spring vacation to find a session's work community was going to take charge of its awaiting them which can be viewed even by own concerns.' With the wicked capitalist the most optimistic with only “ modified abolished, the payment of lawyers will prerapture.” The total number of cases before sumably be in kind. The successful jury the Court at the beginning of the session was senior will be observed driving two or three 263, as compared with 245 in 1923, 306 in 1922, sheep and a swarm of miscellaneous poultry and 286 at the beginning of last winter session. down the Mound, while the needy junior who Sixty-two cases are in the First Division Rolls, has made the requisite number of motions will and 29 in those of the Second Division. In receive a ticket which entitles him to draw the Outer House Lord Blackburn has 15 cases, from the municipal bootmaker a pair of shoes Lord Ashmore 65, Lord Morison 28, Lord in which he may resume his hopeful march Constable 32, and Lord Murray 32. The upon the floor. senior Lord Ordinary for the time being usually Many questions were asked in the House of has the smallest number of cases in his Court; Commons about the position of the English litigants do not call cases before a judge who may Solicitor-General, and why he was still seatless. at any time be taken to the Inner House. Members have for the time being ceased to Lord Ashmore's relatively large roll consists to enquire about the Scots law officers, and a great extent of consistorial cases. The work the position seems to be accepted that the would seem therefore to be fairly distributed machinery of public prosecutions and of legal among the Lords Ordinary.

advice for members of the Government in dealing The English Courts shew a substantial with Scots affairs can be severed from any increase in their business. The total number particular political views. It was an accident


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that when the Government came into office it judge, while repelling the objection, evidently had no supporters in the Faculty; it is by felt that there was a good deal of weight in it. accidents like these that important constitu- It must therefore have been with some relief tional innovations are made.

that he found himself entitled, in his charge, “ Assembly week" has come and gone. to impress pretty strongly on the jury the The weather was none too favourable for the possibility of a Not Proven verdict. This augmented stream of top-hats which is seen on was duly returned. But all concerned would the Mound at this season of the year, but all undoubtedly have discharged their respective the functions passed off successfully. There functions with an easier mind had there been a was a large attendance of the Faculty at the Court of Appeal in the background, to which Levée, which may or may not have been due the point could be referred. to the personality of the present Lord High Lord Darling has since his retirement made Commissioner. At least one of our evening several appearances in the House of Lords. papers remarked on the circumstance with He is always heard with respect, for he is cynical surprise, in view of what it was pleased eminent both as a judge and as a man, but his to term the “ultra toniness ” of the Bar. This attempt to introduce a Criminal Responsiprovides yet another epithet to be added to bility (Trials) Bill was a complete failure. those which have been lavished so freely on The Bill was designed to declare and amend Scots lawyers in recent months. An unwonted the law relating to the criminal responsibility element of gaiety was added to the Levée pro- of accused persons,” and it was intended to ceedings by one of the officials, who, evidently do this by carrying out the principal recomhaving failed to keep abreast of the latest mendations of Lord Justice Atkin's Lunacy developments in the feminist movement, got Committee. The important clause, and the somewhat confused among the sexes in reading one which wrecked the Bill

, proposed that a out the names of those presented to His Grace. prisoner should not be held criminally respon

It is believed that the members of the sible in the circumstances formulated in the American and Canadian Bars will be entertained Macnaghten rule, and also “if at the time the by their legal brethren in Edinburgh shortly act was done or omission made he was suffering after the close of the present session. About from such a state of mental disease as there1700 passages, including those for ladies, from to be wholly incapable of resisting an have been booked from the United States, impulse to do the act or make the omission.” and about 300 others from Canada. It is to Lord Sumner opposed the Bill in an incisive be presumed, however, that not all of these speech, and pointed out that it is hard to see will visit Scotland.

how one can be incapable of resisting an A Bill has been introduced in the House of impulse to commit a crime if he is capable of Commons for the purpose of establishing a appreciating its nature and character, and of Court of Criminal Appeal in Scotland. It is appreciating that it is wrong. The Bill would simply a duplicate, with the “ necessary modi- confuse juries and lead to the acquittal of the fications," of the English Criminal Appeal undeserving. Lord Haldane and Lord Dunedin Acts of 1907 and 1908. It is not a Government both spoke to the same effect. In view of the measure, and its sponsors are evidently unaware unanimous hostility of his noble and learned of some rather elementary points. Thus, brethren, Lord Darling withdrew his Bill.

the Lord President," not the Lord Justice- The old controversy between doctor and lawyer General, is to preside over the suggested tri- thus remains pretty much where it did. bunal, while " the Court of Session” is made responsible for Acts of Adjournal. But these are small points; what the profession would

EXTRA CIRCUITS. do well to consider is whether, on the larger issue, the promoters of the Bill are not perfectly

JUNE-JULY, 1924. justified. There must be few, if any, English

WEST.—The Hon. Lord Ormidale and The practitioners prepared to deny that the English Hon. Lord Ashmore. Glasgow-Monday, 30th Court has been beneficial, and is there any June 1924, at eleven o'clock. Pleading Dietreason to suppose that a corresponding Court Friday, 20th June 1924. Service-Friday, in Scotland would not be so equally? A case 13th June 1924.

Alexander Maitland, Esq., in point recently occurred on circuit, where an Advocate-Depute; Messrs Alexander Rae and accused was on trial on a charge of culpable V. S. M. Marshall, clerks. homicide. Counsel for the defence brought up NORTH.—The Hon. Lord Anderson and The for the judge's consideration what, as he con- Hon. Lord Sands. Dundee-Monday, 23rd tended, was an incurable defect in the indict- June 1924, at eleven o'clock. Pleading Dietment. The point was one eminently suitable Friday, 13th June 1924. Service-Friday, for a Court of Criminal Appeal. The presiding 6th June 1924.


Perth-Wednesday, 25th

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June 1924, at half-past ten o'clock. Pleading Kay, Morton, Hendry & Stuart, at 19 Elmbank Diet—Saturday, 14th June 1924.

Service - Street, Glasgow. Saturday, 7th June 1924. Aberdeen-Tuesday, 8th July 1924, at half-past ten o'clock. Pleading Diet-Saturday, 28th June 1924. Service older advocates of Aberdeen, has died at his —

MR ANDREW MURRAY, advocate, one of the - Saturday, 21st June 1924.

A. C. Black, Esq., Advocate-Depute; Messrs Alexander Rae and residence, 1 Marine Place, Aberdeen, in his V. S. M. Marshall, clerks.

seventy-sixth year. A native of the city, Mr Murray, after receiving his education at the

Gymnasium, Old Aberdeen, under his uncle, the MR A. B. NOBLE, W.S., of Messrs Auld & late Dr Anderson, entered the office of Messrs Macdonald, W.S., Edinburgh, has been Davidson & Garden, advocates, and qualified appointed by the General Assembly Custodier after attending classes at Aberdeen University, of Titles to the United Free Church of Scotland subsequently entering his father's office, the in succession to the late Mr James Macdonald, firm then being Messrs Murray & M'Combie, W.S.

and subsequently Messrs Murray, M‘Combie &

Bennett. He retired from practice in 1906. ASSOCIATION OF PROCURATORS-FISCAL.--The Mr Murray was for eighteen years Consular annual meeting on 24th May received with Agent at Aberdeen for the United States. great regret intimation that Mr H. Hilton Brown, Edinburgh, felt it necessary to resign the office of president, and they resolved " to record in the minutes their cordial recognition DECISIONS IN THE ENGLISH and thanks for the valuable services which,

COURTS. as secretary and president, he had for so many years rendered to the Association; and to

Inland Revenue Commissioners v. Burrell. express the hope that he may soon be able to resume his official work, and before long see a REVENUE-SUPER-TAX—COMPANY-DISTRIBUsatisfactory result of the efforts to obtain

TION OF UNDIVIDED PROFITS ON WINDING-UPimproved conditions of service for which he POSITION OF SHAREHOLDERS RECEIVING SUCH has so long and zealously contended.”

PROFITS-FINANCE (1909-10) ACT, 1910 (10 EDW. The meeting unanimously appointed Mr J. VII. CAP. 8), SECTION 66. — Certain steamship

Drummond Strathern, Glasgow, to fill the companies, each of which was formed to own a vacancy.

particular ship, had gone into liquidation in The Association are to be congratulated that, accordance with their respective articles of at this critical juncture in the affairs of the association when the ship which each owned Service, they have been able to secure as their had been sold or lost. On winding-up, the leader a gentleman of Mr Strathern's person-assets of each company, including undistributed ality and well-known capacity, representing profits, were divided among the shareholders. probably the most important fiscalship in The Special Commissioners held that that Scotland.

portion of the assets which represented un

divided profits did not form part of the reMR A. AKN WATSON, solicitor, 79 West spondents' income for super-tax purposes when Regent Street, Glasgow, intimates that he has distributed by the liquidator to the shareremoved to Chambers at 15 Gordon Street, holders on the liquidation of the companies. Glasgow.

This decision was affirmed on appeal by

Rowlatt J. Held that distribution Mr William ARMOUR, solicitor, 153 Queen liquidation reached the hands of the shareStreet, Glasgow, intimates that he has assumed holders quite irrespectively of the sources

from which the assets had accrued to the as a partner his son, Mr Ian Henderson Armour, solicitor. The business will be carried on at company, and that, although the money in the above address, under the firm name of question had come into the hands of the comWilliam Armour & Son.

pany as profits, it now formed part of the general assets and had been divided as such;

and that, therefore, the recipient shareholders MESSRS DAVID H. KAY & MORTON, solicitors were not chargeable to super-tax in respect of and notaries, 224 St Vincent Street, Glasgow, their share of such undivided profits. Decision intimate that their firm and the firm of Hendry of Rowlatt J. ([1923] 2 K.B. 478; 1923, S.L.T. & Stuart, solicitors, 108 West Regent Street, 128) affirmed.-Court of Appeal (Sir Ernest Glasgow, have been amalgamated. The joint Pollock M.R., Atkin and Sargant L.JJ.).-4th businesses will be carried on under the name of April 1924.

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