Skip to Content

Decisions of the Superior Courts of New South Wales, 1788-1899

Duquid v. Hobler (1843) NSW Sel Cas (Dowling) 829; [1843] NSWSupC 5

company law

Supreme Court of New South Wales

Dowling C.J., Burton and Stephen JJ, November 1843

Source: Dowling, Select Cases, New Series, Vol. 1, S.R.N.S.W. 2/3467, p. 107.

Where a third party recovered a judgment against the Hunter's River Auction Company, which was satisfied by one member of the company, and that member sought to execute the judgment against other members of the company; held the local Act, 6 Vic. No. 6 (1842), permitted execution to be levied against members "for the time being" of the company, being the persons named as members of the company within 30 days of the passing of the Act, without distinguishing between the time periods when those persons were members.*

Dowling C.J. This was a scire facias to obtain execution against certain members "for the time being" of the Hunter's River Auction Company, upon a judgment recovered by the plaintiff in an action on promises as managing director of the Sydney Commercial Bank for £1,584.19.11, against the defendant, Hobler, as chairman of the court of directors of the said Auction Company.

The writ recited that by the 7th section of the Hunter's River Auction Company's Act , 6 Vic. No. 6 (1842), it was enacted: "that execution upon any decree or judgment, in any action, suit, petition or other proceeding obtained against the chairman of the court of directors for the time being, or other member of the said company as aforesaid, whether as plaintiff or defendant, may be issued against and levied and satisfied upon and out of the goods, chattels, lands and tenements of any member or members whomsoever of the said company for the time being, as if such decree or judgment had been obtained against such members or members personally".

It then went on to aver that at and before the time of the making of the said promises by the said Hunter's River Auction Company, the defendants, against whom execution was prayed (all of whom were severally named, 15 in number) were members of the said Hunter's River Company and that although judgment had been given against Hobler as chairman of the company, yet execution of the damages and costs still remained to be made to the plaintiff and he therefore prayed a day for the defendants paying them, to shew why the plaintiff should not have execution against them or either of them according to the force of the judgment and of the said section of the act of the Governor and Council.

Several pleas were filed by different defendants denying their liability to which the plaintiff demurrered for insufficiency. Upon these and the demurrers thereto it is unnecessary to deliver any judgment. Three of the defendants pleaded that the names of each of them had been falsely inserted in a certain list purporting to be a list of the members for "the time being" of the said Hunter's River Auction Company and filed in the office of the Registrar of the Supreme Court pursuant to the act of Council in such case made and provided, without the knowledge, privity or consent of the defendants and with the fraudulent intent to render them liable to the provisions of the said Act as alleged members of the said Auction Company.

The same three defendants together with two others, further pleaded that the scire facias had been falsely and fraudulently sued out by the plaintiff not for the real and bona fide purpose of obtaining satisfaction of the judgment against defendants as members of the company but with intent to defraud defendants and other alleged members thereof and in pursuance of a fraudulent conveyance and collusive agreement and arrangement entered into after the recovery of the judgment before the date of the scire facias to wit on 20 March 1843 between plaintiff and one C.M. Doyle (then and still being a member of the Auction Company) without the knowledge and consent of the defendants whereby it was agreed between plaintiff and C.M. Doyle that in consideration of £1,584.19.11 to be paid by C.M. Doyle to plaintiff in payment and satisfaction of the judgment, plaintiff should transfer all his rights, title and interest in and to the judgment and the fruit thereof to C.M. Doyle and should hold the judgment and all the rights incident thereto only as a trustee for C.M. Doyle for the purposes after mentioned, and that plaintiff should endeavor to enforce and should take the necessary measures for enforcing the judgment against defendants and other alleged members of the company ostensibly to obtain payment and satisfaction thereof for and on behalf of the Banking Company, but in truth and in fact, for the fraudulent purpose of enforcing and exacting against and from defendants and other alleged members of the company contributions towards the assets of the company respectively and against and in spite of the equities subsisting between defendants and the said C.M. Doyle and the other alleged members of the company and the said Auction Company, and in fraud and contravention of the spirit and terms of the deed of settlement of the company and the rights and liabilities of defendants, seven other alleged members and the company as between themselves. The plea then went on to allege that on the same day and year C.M. Doyle paid plaintiff and plaintiff received from C.M. Doyle the said sum of £1,584.19.11 under and in pursuance of the agreement, and that plaintiff has permitted and still permits the judgment to remain in full force with the intent and for the purposes aforesaid.

One of the defendants in the last mentioned plea further pleaded that at the time of suing out the scire facias he was not liable to have execution upon the judgment issued against him, because on the 7th October 1842 he notified in The Government Gazette , as the fact was, that he had from the 1st of that month, retired from the company.

The plaintiff demurred to the plea by the first three defendants for not traversing or confessing and avoiding any matter set forth in the scire facias and for not shewing that the plaintiff or the bank was or were connected with the supposed fraudulent insertion of their names in the list of members of the company. To the plea by the five defendants that the judgment was kept alive by fraud and for the purpose therein mentioned, the plaintiff demurred for not having confessing and avoiding the matters of the scire facias and that the matters alleged in the plea are no legal bar to the plaintiff's right to have execution and that no fraud is shewn to bar the plaintiff's legal rights.

To the plea pleaded by the single defendant, that he had notified in The Government Gazette his retirement from the company, the plaintiff replied that the defendant at the time of the averring of the causes of action for which the judgment was recovered to wit 1st January 1842 was a partner in the company. The defendant demurred to this replication for that it neither traversed nor confessed and avoided the material matter of the plea, that it tendered an immaterial issue, whether defendant was a partner in the company at the time of the averring of the causes of action on which the judgment was recovered, which defendant might be liable to and yet not be liable to be proceeded against under the Act of Council.

These several demurrers came on for argument last term. Upon the demurrer to the plea pleaded by the first three defendants we think the plaintiff, if there were no other points in the case, would have been entitled to judgment. The matter therein pleaded is mere matter of evidence namely whether those defendants' names were inserted in the list of members of the company in pursuance of the Act of Council or not. Whether they were fraudulently inserted or not, the plaintiff has nothing to do with it, nor is it alleged that he had any knowledge of the supposed fraud.

The like decision would have followed upon the plea pleaded by the single defendant, namely, that he had notified his retirement in The Government Gazette . It is matter of evidence whether he was in fact a member of the company "for the time being" at the time the judgment was obtained. The plaintiff replies that notwithstanding the notification of retirement in The Gazette , still he was a partner in the company at the time of the averring of the cause of action on which the judgment was recovered. The defendant does not reply that he was no partner, which was the material issue and matter of proof, but contends himself with demurring to the form of the replication which could not help him for his own plea was no answer to his liability as a member of the company "for the time being" a question to be determined by proof at the trial.

With respect to the main plea of a fraudulent agreement between the plaintiff and C.M. Doyle after the latter had the amount of the judgment in order to enable the plaintiff to enforce it against the other members of the company to the alleged prejudice of their rights inter se as partners it is to be observed that the judgment itself is not impeached. The mere charging this to be "fraudulent" will not make it fraudulent. The agreement pleaded remains to be finally executed. It is not alleged that the judgment recovered by the plaintiff has been fully satisfied. It is admitted that the money was paid, but the legal interest to the judgment may be in the plaintiff who still had the right of action. The substance of the plea is that after the Commercial Bank got a judgment against the company, the bank assigns it to one of the members upon being paid the amount the bank holding the judgment in trust for the party who satisfied it. The bank, it was contended, were, when they obtained the judgment, in a condition to take the amount from any one of the members for the time being. They go against Doyle, one of the members, who objects to pay it all because the other members are able to pay their proportions. The bank says "well if you pay us, you may use one name in getting execution on the judgment against the other members who are liable. We won't have any further trouble or risk." Can we say that such an agreement is fraudulent as against persons in the same situation in point of liability with Doyle who makes the arrangement? It may be a compendious mode of avoiding the expense and delay of a bill in equity in order to distribute the amount of the judgment amongst all the members. If the judgment had itself been impeached and tainted with fraud it would be a different matter.

There is a great difference however, between the validity of the judgment and the question how it shall be executed. The judgment being unimpeached, it is in contemplation of law against all who are bound to satisfy it and the question is whether these defendants, if they be members of the company "for the time being" and liable as such, there should not be execution against them in the name of the plaintiff as managing director of the company upon a valid judgment of the bank. If the judgment could be assailed that, no doubt, would be a reason for staying execution. The defendants have not pleaded in terms that the judgment is satisfied, but only that it is satisfied for a particular purpose. They don't plead any disability in the plaintiff to sue, but that the judgment is kept on foot fraudulently. We can not however hold that proposition to be maintainable.

The really important question raised on the argument was whether the scire facias, which must be regarded as a new declaration, disclosed a sufficient cause of action against the defendants or in other words whether the language of the 7th section of the company's Act, "members for the time being" means members at the time of the cause of action or at the time of suing out the scire facias. Here the declaration only alleged that these defendants "were" not "and still are" but "were" members of the company "at and before the time of the making of the said promises". There is nothing to show they were continuing members and in as much as the Act says that execution upon any judgment shall go only against members "for the time being" that is "members at the time of execution". It was contended that the scire facias did not disclose a sufficient cause of action; for non constat, they might be members for the time being at the time of cause of action, but not so when judgment was obtained and execution prayed and there was nothing to shew that they were continuing members. It was submitted therefore that the plaintiff must be left to his common law remedy which might be met by a plea in abatement. The force of the objection thus taken depends upon the construction to be put upon 6 Vic. No. 6.

It must be premised that there is a marked distinction between the provisions of the 7th section of the local ordinance and those of the 13th section of the statute 7 Geo. 4 c. 46 (1826) "An act for better regulating co-partnerships of certain bankers in England" . The framers of the local ordinance had in view, no doubt, the provisions of the 13th section of the English Act but seem to have adapted the 7th section to the circumstance and object which they had in contemplation when applying to the local legislature. The act of Parliament clearly contemplated provisions applicable to companies in futuro or those already existing and purposing to confine their operations. Whereas the local Act appears to have been passed, not with a view to the establishment of a new company, but for the purpose of enabling an old company, which had become defunct, to wind up its affairs.

The English Act contemplates four classes of persons against whom execution might be had upon a judgment recovered against the public officer representing the company for the time being. First, any member for the time being; second, any person who was a member at the time when the contract in which the judgment may have been obtained was entered into; third, persons who became members at any time before such contract was executed; and fourth, persons who had become members at the time the judgment was obtained".

The 7th section of the local Act omits all these classes of persons except the first, namely "members for the time being". It provides that execution upon any judgment may be issued against the goods of any member "for the time being" and the substantial question would be (assuming the declaration to have been properly framed with apt averments) whether upon a reasonable construction of the Act (which is remedial) whether it makes any difference if he was a member before the cause of action, a member at the time of cause of action, a members at the time of judgment or a member before execution so long as he was a member "for the time being", i.e. at the time of execution.

First, what was the object of the local Act? This must be collected from the title and the preamble. The title is " An act to facilitate proceedings by and against the proprietors of a certain joint stock company lately carrying on business at Maitland &c ". It then recites that: "a certain joint stock company which lately carried on business as auctioneers at Maitland &c have met with great difficulty in the prosecution of actions brought for the recovery of debts justly due to the company and it would facilitate the settlement of the affairs of the said company and be of public ability and advantage that all claim for and against the said company existing before the passing of this Act should be sued for by and prosecuted against the said company in the name of some one member thereof, whose name and description should be recorded for the information of the public, but as these purposes cannot be obtained without the aid and the authority of the legislature: Be it therefore enacted &c".

This is obviously a remedial Act and must have a liberal construction for the purpose of carrying out the defect contemplated, namely the winding up of the affairs of the company and the adjustment of the dealings of the company between themselves and the public, before the passing thereof. It was passed on the 3rd August 1842. We must take it that the plaintiff's claim was a claim against the company existing before the passing of the Act. It then proceeds to make provisions for the purposes contemplated.

The first section provides that actions and suits by and against the company in respect of any debt "now subsisting", i.e. subsisting at the date of the Act, or to arise hereafter out of, or in respect of, or relating to any such debt, may be brought and sued by and against the company in the name of the chairman of the court of directors for the time being. The second section makes provision for prosecutions and other criminal proceedings, which shall be in the name of the chairman of the court of directors. The third section which is the most important in testing the sufficiency of this declaration, requires that within 30 days after the passing of the Act there shall be a memorial of the name of the chairman of the court of directors recorded on oath in the Supreme Court. The fourth section provides that until such memorial is recorded no action shall be brought in the name of the chairman. The fifth provides for the admissibility of the evidence of the chairman and members and officers on trials, notwithstanding their interest. The sixth section empowers the company to make contracts in the name of the chairman relating to any "such now subsisting debt".

Then comes the seventh section on which this proceeding is founded (and which is the most important in testing the sufficiency of this declaration), by which section it is enacted: "that execution upon any decree or judgment obtained against the chairman for the time being, or other member of the company may be levied out of the goods &c of any member or members whomsoever of the said company for the time being, as if such decree or judgment had been obtained against such member or members personally".

Then by the eighth section, which points out the mode of ascertaining who are the members for the time being for the purpose of the Act, it is enacted: "that for the purpose of giving better effect to the provision last herein before contained, the chairman of the court of directors for the time being shall within 30 days from the passing of this Act and thereafter in the month of January in each year, so long as this Act shall remain in force, cause a true list of the names of all the then existing members of the said company with their respective places of abode and descriptions to be recorded on oath in the office of the Registrar of the said Supreme Court; and the same shall be open for inspection at all reasonable times by any person requiring the same &c".

By the ninth section it is enacted: "that every person whose name shall be so recorded, shall be considered a member of the said company and he liable as such until a new list of the members' names shall be recorded as aforesaid, or until he shall have given notice in The New South Wales Government Gazette of his retirement from the said company".

Provision is then made for reimbursing the chairman and members against whatever execution shall be levied out of the funds of the company or any damages or costs they may be respectively put to "and all such remedies shall be allowed as between the several members of the company for the time being, as if this Act had not been passed". Then followed other enactments not necessary to refer to in the consideration of this case. By the sixteenth section, the Act is to commence and take effect from the passing thereof and shall continue in force for two years thereafter and not longer, save and except as to any action &c actually commenced, which, notwithstanding this Act, shall have expired, may be carried on in all respects whatsoever as if the same had continued in force.

This a temporary Act having been passed for the sole purpose of winding up the affairs of a company which had existed and whose affairs could not be wound up without the assistance of the legislature. We must now take it that this was a debt due from the company to the plaintiff before the Act passed and which he could not have enforced at common law without joining all the members as defendants, but availing himself of the Act for substituting the chairman as representative of all the members, he recovers a judgment against him nominally and now by scire facias prays execution under the seventh section of the Act against the members for "the time being".

The question is what is meant by "members for the time being". We apprehend that the eighth and ninth sections give us the clue. The eighth section, for the purpose of giving better effect to the provision of the seventh section, which gives execution against members "for the time being", enacts by reasonable construction that such members shall be those who shall be then existing members. Thirty days from the passing of the Act, a list was set down of the then existing members and recorded on oath by the chairman for the company in the Supreme Court and the ninth section enacts that every person whose name shall be so recorded shall be considered a member of the said company and be liable as such until a new list of the members names shall be recorded as aforesaid. The Act certainly does not in terms say that they shall be considered as "the members for the time being" - but the obvious construction, having reference to the temporary character of the Act and to the intent with which it was passed, is that execution was to be had against every person recorded as a member within 30 days from the passing of the Act and so on toties quoties recorded in the month of January, so long as the temporary Act continued, whether he was a member at the time of cause of action, time of judgment or time of execution. The Act has made no distinction between persons who have been members at different periods as pointed out by the English Act but it simply confined the execution to one class of persons namely "continuing members". If any more had been intended it is not so expressed by the legislation, which confines and ties up its operation to members "for the time being" recorded in the list made out by the chairman as existing members of the company .

Were we to give the Act a different construction and make a distinction between persons who were not members at the time of the cause of action, nor at the time of judgment, nor at the time of execution, we should defeat the seeming intention of the Act by enabling solvent members to retire before execution and leave the creditors of the company to the barren remedy of taking out execution against mere insolvents. The legislature by the eighth and ninth sections have said in sufficiently intelligible terms who shall be considered the members "for the time being" against whom execution may be had. And therefore it would be reduced to a simple question of fact, if the declaration were properly formed, whether those defendants, and which of them, were members for the time being in the manner pointed out by the Act. The difficulty however which presents itself to the mind of the Court is whether the plaintiff has so framed his scire facias which for this purpose is a new declaration, as to bring the defendants within the description of members "for the time being", intended to be designated by the Act.

It is here averred only that these defendants "at and before the time of the making of the said promises, by the said Auction Company, were members of the said company"; but it does not aver that they are now members for the time being, within the intent and meaning of the Act or were recorded within thirty days as in and by the said Act is required for anything that appears to the contrary by the declaration; they were not members even at the time of the passing of the Act that they were so at the time the scire facias issued. This is really the hitch in the case and it is competent to the defendants to assail the declaration by maintaining that the plaintiff has not brought them within the most liberal construction of the Act by shewing that they are in fact members "for the time being" according to the Act. It is true that three of the defendants plead that their names were surreptitiously put on the list after the passing of the Act and another that he had given notice of his retirement, but still these pleas will not get rid of the infirmity of the declaration for want of shewing a sufficient cause of action against these defendants and consequently judgment must be given for the defendants.

We have not thought it necessary to advert to the cases of Bosanquet v. Ransford (1840) [ Bosanquet v. Ransford (1840) 11 Ad. & E. 520, 113 E.R. 513], Eardley v. Law (1840) [ Eardley v. Law (1840) 7 M. & W. 203, 151 E.R. 739], and Cross v. Law (1840) [ Cross v. Law (1840) 6 M. & W. 217, 151 E.R. 388], because those cases went upon the construction of the statute 7 Geo. 4 c. 46, s. 13 the distinction between which as a general public Act for the better regulating co-partnerships of bankers in England and the local Act in question has been already pointed out.

Judgment for the defendants.

Published by the Division of Law, Macquarie University