•»•- - THE ACCOUNTANT'S COMPENDIUM BY SIDNEY STANLEY DAWSON ■i (Of the firm of Dawson, Langley, Chevalier London. Master of Commerce— University of Birmingham. Fellow of the Institute of Chartered Accountants in England and Wales. (Senior Hononrsman, Intermediate Examination, December 1895) (Senior Honoursman, Final Examination, December 1897) Fellow of the Chartered Institute of Secretaries. Fellow of the Royal Statistical Society. Author of "A Lexicon for Trustees and Liquidators," AND "Accounts of Trustees, Liquidators, and Receivers." Contributor to the Encyclopedia of Accounting, Sec. ^3 S> ,* • it •!•••• * • • •• , PREFACE. THE First Edition of this work appeared in 1898, the Second in 1904, and the Third in 1908. The provisions of the Companies (Consolidation) Act, 1908, have been embodied throughout the present edition in the appropriate places, and the precise text of the Statute has been strictly adhered to. Many of the articles on Accounting subjects have been revised and, where necessary, enlarged, while several new subjects have been introduced. As hitherto, I accept responsibility for the whole of the work — every line of which has received my personal attention, but I desire to express my indebtedness to my partner, Mr. H. R. Graves, A.C.A., F.C.I.S., and also to Mr. W. E. Burnley, B.A., A.C.A., and Mr. F. K. Raymont, A.C.A. (past articled pupils of my firm), for the invaluable help they have rendered to me in connection with this edition. SIDNEY S. DAWSON. August 191 1. 241706 CORRIGE NDA. Page Column Line Subject 280 1 — Income Tax The decision in Clark v. Sun Insurance Office was reversed on appeal. {See title Unexpired Risks, p. 720.) 315 1 23 Interest in respect of proof of debt For " 1886" read " 1885.'' 353 2 — License The chief statutory provisions relative to Licensing are now embodied in the Licensing (Consolidation) Act, 1910. 375 1 — The rules applicable to the winding-up of limited partnerships are set out under title Winding- up, on p. 743. 467 2 6 Perpetuity For "£17,492.4 " read " £1,492.4.' ' 612 2 23 For " 1891 " read " 1892." 626 2 1 and 2 For "was" read " were." For "proves" read " prove." THE ACCOUNTANT'S COMPENDIUM. Abandonment of Vessel or Cargo. — Subject to any express provision in the policy, where a vessel or cargo has been insured the subject-matter insured may be reasonably abandoned either (i) on account of its actual total loss appearing to be unavoidable, or (2) because it could not be pre- served from actual total loss without an expendi- ture which would exceed its value when the expenditure had been incurred. Under such circumstances there is a construc- tive total loss, and the insured may either treat the loss as a partial loss or abandon the subject- matter to the insurer and treat the loss as an actual total loss. Notice of abandonment must iven with reasonable diligence, and may be given verbally or otherwise provided it is uncon- ditional. (Marine Insurance Act 1906, sections 61, 02.) (See Total Loss.) Abatement. — A deduction, an allowance; com- mercially, a discount for prompt payment. (See Discount, Income Tax, Legacy.) Abrogation. — The repeal or annulment of a law. Later laws abrogate contrary prior laws. Absconding Contributory. — The Court, at any time either before or after making a winding-up order, on proof of probable cause for believing that a con- tributory is about to quit the United Kingdom, or otherwise to abscond, or to remove or conceal any of his property for the purpose of evading payment of calls, or of avoiding examination respecting the affairs of the company, may cause the contribu- tory to be arrested, and his books and papers and movable personal property to be seized, and him and them to be safely kept until such time as the Court may order. (Companies Act 1908, section Absconding Debtor. — If a person depart out of England, remain out of England, or otherwise absent himself, with the intention of defeating or delaying his creditors, he by so doing commits an act of bankruptcy. (1SS3 Act, section 4.) If a person in respect of whose estate a receiving order is made, depart out of England (or attempt to do so) after or within four months before the presentation of a petition, taking or attempting to take with him property to the amount of £20 or upwards, which ought to be divided among his creditors, he commits a felony punishable with imprisonment for a period not exceeding two years, unless the jury are satisfied that the debtor had no intent to defraud. (Debtors' Act 1869, section 12.) The Court may cause a debtor to be arrested if it appears that he has absconded, or is about to abscond, in order to avoid or delay bankruptcy proceedings. (1883 Act, section 25.) It has been held by the Court of Appeal that the words "has absconded" are without limita- tion as to time, and include the case of a debtor who has absconded before notice of a bankruptcy petition having been presented against him. (Northallerton case, 1898.) Where a receiving order has been made against a debtor, and the Official Receiver satisfies the Court that he has absconded, the Court may, on the application of the Official Receiver or a creditor, forthwith adjudge the debtor bankrupt. (Rule 191.) Abstract of Title. — A summary of the evidence of ownership (generally of land) setting forth in chronological order (if possible) the dates, nature, and material parts of the deeds, wills, or other documents affecting the title, so that the B Abstract] solicitor of a purchaser or mortgagee may more readily peruse the title to the property. Acceptance. — An agreement to proposed terms ; a bill of exchange after acceptance by the drawee. Acceptance and Receipt. — These requirements with regard to a contract for the sale of goods of the value of ;£io or upwards must be distinguished. There may be acceptance of goods without receipt and vice versa, but the Sale of Goods Act 1893 (section 4) requires both ; for although receipt is often evidence of acceptance it is not the same thing. There is an acceptance within section 4 when the buyer does any act in relation to the goods which recognises a pre-existing contract of sale, whether there be an acceptance in performance of the contract or not. Receipt may take the form of actual delivery to the buyer or to a carrier named by him ; so also, if the seller agrees to hold the goods for the buyer, or a third party notifies the buyer that he holds the goods on his behalf, there is receipt bv the buyer. Acceptance for honour supra protest. — Where a bill of exchange has been protested for dishonour by reason of non-acceptance, any person, not being a party already liable thereon, may, with the consent of the holder, intervene and accept the bill supra protest for the honour of any party liable thereon, or for the honour of the party for whose account the bill is drawn. The bill must not be already overdue, and must have been pro- tested (or at least noted) even though an inland bill. The acceptance must state that it is for honour, and if it does not state for whose honour it is made, it is deemed an acceptance for the honour of the drawer. Such an acceptance may be for part only of the amount in the bill, and the acceptor for honour engages that he will, on due presentment,'*pay the bill according to the tenor of his acceptance, if not paid by the drawee, provided the bill has been duly presented for pay- ment and protested for non-payment, and that he receives notice of these facts. The acceptor for honour is liable to the holder and all parties sub- sequent to the one for whose honour he has accepted. (1882 Act, sections 65, 66, and 67.) Acceptance Acceptance of a Bill. — The acceptance of a bill is the signification by the drawee of his assent 10 the order of the drawer. The acceptance must, be written on the bill and signed by the drawee, but his signature is sufficient without additional words. The accept- ance is incomplete and revocable until delivery of the bill, or notification of the acceptance be given. The acceptance must not express that the drawee will perform his promise by any other means than the payment of money. (Bills of Exchange Act 1882, sections 17 and 21.) A bill may be accepted (1) before it is signed by the drawer, (2) while otherwise incomplete, (3) when overdue, or (4) after dishonour by previous refusal to accept, or by non-payment. (Section 18.) An acceptance may be general or qualified. A general acceptance assents without qualification to the order of the drawer. A qualified acceptance expressly varies the effect of the bill as drawn, such as: — (1) Acceptance subject to the fulfilment of a condition (conditional) . (2) Acceptance to pay part only of the amount for which the bill is drawn (partial). (3) Acceptance to pay at a specified place and not elsewhere (local). (4) Acceptance to pay on a different date from that in the bill as drawn (temporal) . (5) Acceptance by one or more of the drawees, but not all (aliquot). (Section 19.) The holder of a bill may refuse to take a qualified acceptance, and treat the bill as dis- honoured, but where a qualified acceptance is taken without the previous authority or subse- quent assent of the drawer or an endorser, such drawer or endorser is discharged from his li- on the bill. (Section 44.) A forged or unauthorised signature purporting to accept a bill is wholly inoperative, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority. An unauthorised signature not amounting to forgery may, however, be ratified. (Section 24.) Acceptance [Accommodation The above section (24) is subject to the pro- visi ns of sections 80 and 82, which afford some protection to bankers paving or receiving pay- ment of cheques in good faith and without negligence. The delivery by a person of his signature upon a blank stamped paper, so that it may be con- d into a bill, is prima facie authority to fill same up as a complete bill for any amount the stamp will cover, using the signature for that of drawer, acceptor, or endorser. The bill must be filled up within a reasonable time, and strictly in accordance with the authority given, but if the dter completion is negotiated to a holder in course, he may enforce it as if it had been duly filled up as to time and instructions, and it will be valid and effectual for all purposes. (Section 20.) (See title Signature.) Acceptance of an Offer. — See Simple Contract. Acceptor. — A person who accepts a bill of exchange drawn upon him; until he accepts he is called the drawee, and he is not liable as acceptor of the bill until he has signed it as such (1882 Act, sec- tion 23) and delivered it (section 21). On acceptance he is primarily liable to pay the amount of the bill according to the tenor of his acceptance, and is precluded from denying to a holder in due course (a) the existence of the drawer, the genuineness of his signature and his capacity and authority to draw the bill, (b) if the bill be payable to the drawer's order, the t!'. :i capacity of the drawer to endorse, but not i' • genuineness or validity of his endorsement, and (c) if the bill be payable to the order of a third person, the existence of the payee and his then capacity to endorse, but not the genuineness or validity of his endorsement. (Section 54.) A bill of exchange being a simple contract the acceptor is liable to the holder for six years from the maturity of the bill; and as regards other parties, no action on a bill can be maintained against any party thereto after the expiration of six years from the lime when a cause of action first accrued to the then holder against sucli party. For capacity to accept a bill see title Infant (Rills of Exchange). Accident Insurance. — Although to some extent a contract of indemnity, this class of insurance is rather an undertaking to pay a certain specified sum in the event of death or injury from acci- dent. This distinction is important, for the insurer on paying the sum in question is not sub- rogated to the rights of the assured, and if damages are recoverable in respect of the injurv or death from those who were responsible for the accident, such rights of the assured remain, notwithstanding the fact that the person injured had been insured, and the damages recoverable are not now liable to diminution by reason of the fact that the deceased was insured against acci- dents. (Fatal Accidents Act 1908.) (Sec title Assurance Companies Act.) Accommodation Bill. — A bill to which the acceptor, drawer, or endorser, as the case may be, has put his name, without consideration, for the purpose of accommodating some other party -wlio is to provide for the bill when due, or, if the accom- modation party be the acceptor, the bill is one whereof the principal debtor (according to the terms of the instrument) is in substance a mere surety for some other person, who may or may not be a party to the bill. An accommodation bill is discharged when it is paid by the person who is in substance, though not in form, the principal debtor. (18S2 Act, sec- tion 59.) Where two parties exchange specific accommodation acceptances, such acceptances are not without consideration, for the acceptance of the one party is deemed to be consideration for the acceptance by the other. (Rolfe v. Caslon, 1 795-1 (See Proof in respect of Rills of F.xchange.) Accommodation Party. — A person who has signed a bill as drawer, acceptor, or endorser, without receiving value therefor, and- for the purpose of lending his name to some other person. The accommodation party is liable on the bill to a holder for value, and it is immaterial whether, when such holder took the bill, he knew such partv to be an accommodation party or not. (1882 Act, section 28.) The person accommo- dated engages (a) that he will provide funds for B 2 Accommodation] Accumulated payment of the bill at maturity, and (6) that if (owing to his omission to do so) the accommoda- tion party is compelled to pay the bill, he will indemnify such party. The contract of indemnity arising out of the transaction does not require to be in writing. In general the Statute of Limita- tion runs against the accommodation party and yn favour of the person accommodated from the time the former was compelled to pay. An accommodation party who is compelled to pay a bill has all the rights of an ordinary surety under such circumstances, so that (inter alia) he is entitled to any security which may be held by the creditor. Accord and Satisfaction. — Accord. An agreement between two persons, one of whom has a right of action against the other, that the latter shall do or give something in satisfaction of the right of action. When the agreement is executed and satisfac- tion has been made it is called accord and satisfaction. "Accord and satisfaction " bars the right of action, but accord without satisfaction does not. In the case of an ascertained debt, the accept- ance of a smaller sum without further considera- tion is no satisfaction, for it is simply a reduction of the debt pro tanto, and an agreement without consideration to waive the balance. If, however, a negotiable instrument be given for the smaller amount there would be satisfaction, as a general rule, and an action for the balance would not be maintainable. Account. — A statement, narrative, record, or explanation of some particular matter in words or figures ; commercially, a statement in money, showing, with any necessary explanation, the result, effect, or position of a specific business, transaction, or person, the precise form varying according to the circumstances of the case. (See titles Consignment Ledger, Ledger, Manu- facturers' Accounts, Nominal Accounts, Personal Accounts, Profit and Loss Account, Real Account.) Account Current. — An account of the financial transactions between two or more p< rs I firms in cases where it is agreed to allow the account to run on, instead of settling each item as it occurs. Interest is generally chargeable, and is entered on both sides of the account, the balance thereof being bi ought in as principal at the end of each financial period. The term is generally applied to a copy of a personal account in a Ledger, which is being sent to the person whose account it is in order to show the state of the account between the parties. Account Day. — .See Settling Days. Accounting Party. — A person liable to account; particularly one who officially or otherwise acts and deals with property for the purported benefit of others, such as an agent, executor, trustee, liquidator, and receiver. " It is the first duty " of an accounting party to be constantly ready " with his accounts." Account Sales. — An account of goods sold on com- mission rendered to the principal by the agent to whom the goods were consigned. The gross pro- ceeds are credited and all expenses in connection with the consignment [including the agent's com- mission] deducted therefrom, thus showing the net proceeds. Account stated. — An account between parties, show- ing a balance which has been agreed upon. It differs from an open account to the extent that the burden of proof is thrown upon the party who seeks to impeach it. The admission of a balance due upon an account imports a promise to pay such balance, and gives rise to an action ex contractu. All accounts stated with infants are declared absolutely void by the Infants' Relief Act 1S74. Accretion. — The act of growing to a thing. A specific bequest if vested carries all the net income and profits which may accrue upon it after the testator's death. (Sec Apportionment.) Accumulated Profits. — Profits of a concern undis- tributed among its proprietors. Such profits must not be subject to the replacement of any known shrinkage of the assets of the concern. Accumulated [Acknowledgment otherwise the accumulations are really diminished to the extent of that shrinkage. " Carrying profits to a Suspense or to a " Reserve Account does not necessarily change " their character, still less their ownership; they " remain the undrawn profits of those persons to '• whom thev belonged — dedicated, no doubt, to " certain purposes, but not otherwise altered in "th-ir character or ownership. If the purpose " for which those profits are set apart fail, they " become divisible, not as capital, but as " undrawn profits " (Lindley, I. .J., Re Bridg- Co. See also In re Spanish Prospecting Co., Lim. (Court of Appeal, 1910). The Companies Act 1908, section 40, provides that " when a company has accumulated a sum undivided profits which with the sanction " of the shareholders may be distributed among " the shareholders in the form of a dividend or us, it may by special resolution return the " - le or any part thereof to the shareholders " in reduction of the paid-up capital of the com- " panv, the unpaid capital being merely increased " bv a similar amount." There are two funds to be dealt with — (1) the 1 fund, and (2) the accumulated profits, and 1 distribution of a certain amount amongst the shareholders cannot reduce both funds to the exti ' t of the amount distributed. Either the 'iilated profits fund must remain intact, or the capital paid up must exist as before. If the latti r procedure be adopted, the section really allows of another method of increasing the capital, for \t is provided that the unpaid capital is increased by the amount distributed. If a sum of distributable profits should be dis- tributed by way of reduction of capital, and as a quence the balance at the credit of Revenue int remains the same, such portion of the credit balance of revenue so distributed would need to be carefully " earmarked " by a transfer credit of some special account to avoid its distribution a second time as dividend. Although from an accountancy point of view the section has been (1) construed as autho- rising the reduction of two funds by the same payment to the full extent of such payment, and (2) declared an impossibility, the Court upon rare occasions appears to have sanctioned schemes thereunder. (See Nealc v. City of Birmingham Tramways Co., 1910, 2 Ch. 4^4.) Accumulation of Income. — The prospective accumu- lation of income is restrained b\ 39 & 40 George III, c. 98. This statute is called Lord Lough- borough's Act, or more commonly the Thellusson Act, from the case which caused its enactment. The Act declares that no person shall by deed, will, or otherwise dispose of any property, whether real or personal, in such a manner that the income thereof shall be accumulated for a longer period than (1) the life of the grantor, or (2) twenty-one years from the death of the grantor, or (3) during the minority of any per- son living, or en ventre sa mere at the death of the grantor, or (4) during the minority of any person who would, if of full age. be entitled to the income to be accumulated. The effect of the statute is to leave directions for accumulation valid so long as they are not contrary to the pro- visions of the Act. If the directions for accumu- lation aim at a duration beyond the statutory limits, they are valid until the date upon which (according to the circumstances) the statutory limit is reached, when such directions cease, and become of no effect. The Act does not extend to ( 1 ) any provision for the payment of debts, (2) any provision for raising portions for a child of the grantor, or a child of a person taking an interest under the grant, or (3) anv direction with regard to timber upon any lands. The Accumulations Act 1892 provides that no property shall be settled in such manner that the rents, profits, or income thereof shall be wholly or partially accumulated for the purchase of land only for any longer period than during the minority or respective minorities of any person or persons who under the uses or trusts of the instrument directing such accumulation would, for the time being, if of full age be entitled to receive the rents, profits, or income so directed to be accumulated. Acknowledgment of Debt or Liability — The acknowledgment by a person of a debt or liability after the expiration of the particular period pre- scribed bv the Statutes of Limitation for bringing Acknowledgment Actio ail action thereon, whereby he is deprived of the benefits of the statutes. The acknowledgment must be (a) in writing, signed by the party to be charged (or his duly authorised agent), or (b) by- part payment of principal or interest. " There must be one of these three things to " take the case out of the statute. Either there " must be an acknowledgment of the debt from " which a promise to pay is implied; or, secondly, " there must be an unconditional promise to pay " the debt; or, thirdly, there must be a con- " ditional promise to pay the debt, and evidence " that the condition has been performed." (Re River Steamer Co., L.R. 6 Ch. 828.) An acknowledgment as to simple contracts is said to create a new obligation, whilst an acknowledgment as to specialties revives the old one. Part payment in respect of a simple contract will not revive the whole debt unless a promise to pay the balance can be fairl)' inferred from the part payment, but in the case of specialties, part payment, like a written acknowledgment, revives the old obligation, and the whole debt is revived irrespective of any promise to pay the balance. With regard to contracts in respect of which two or more persons are jointly liable, and one of them makes an acknowledgment sufficient to " take the case out of the statute," there is again a difference between simple and specialty con- tracts. As the acknowledgment of a simple con- tract creates a new obligation the party making the acknowledgment is alone liable thereon. But in the case of a specialty it revives the old obliga- tion and sets the action free against all parties, except where the acknowledgment is made by the executor of one of the obligors. (Head v. Price, 1900.) The Mercantile Law Amendment Act 1856 pro- vides, however, that part payment of a statute- barred debt by one or more co-contractors shall not affect the position of the others, whether the liability is under simple or specialty contract. A person is bound bv an undertaking to pay a statute-barred debt, even though there be no fresh consideration for the promise to do so. The authority of executors (in respect of the administration of the estate) being a several one, one executor can revive tin- statutes without the others, but only as against the estate (i.e., a liability to pay de bonis testatoris), it having been held that " chargeable " in section 1 of 9 Geo. IV, chap. 14 (Tenterden's Act), means "personally chargeable." Thus, an acknow- ledgment by one or more executors binds the estate, but docs not bind the other executors personally. The acknowledgment of a debt contained in a debtor's statement of affairs (under bankruptcy procedure) will not operate to revive such debt if statute-barred. Such an admission does not either express or imply a promise to pay, except as to part of the debt, or in some qualified manner which is not a sufficient acknowledg- ment. (Ex parte Topping. 1865.) The acknowledgment of a statute-barred debt is also termed the " revival of the statutes." (See Limitation of Actions.) Acquittance. — A written discharge of a debt due or sum of money payable, whereby the party to whom the payment is due, on receipt thereof, admits that he has been paid, .so that he cannot demand the sum again if the acquittance be produced. Actio personalis moritur cum persona. — A personal right of action dies with the person. This is the rule of common law, but it has been materially modified by statute as follows : — • .; Edward III, chap. ~. Personal Estate. — Executors have the same right of action for trespass done to the goods and chattels of the testator and may recover damages in like manner as the testator might have done had he lived. (Administra- tors arc within the statute.) ; and -/ William IV, chap. .,<->. Real Estate. — Executors (or adminis- trators) may mjkitain an action for trespass for any injury done to the real estate of the testator in his lifetime, provided the injury was done within six months prior to the death, and the action be brought within one year after the death of the testator. Actio [Act Real and Personal Estate. — Actions may be maintained against executors (or adminis- trators) in respect of any wrong done by the testator in his lifetime, whereby injury was done to the real or personal estate of another, provided the injury was done within six months prior to the death and the action be brought within six months after the executors (or administrators) have taken up the administration of the estate. Lord Campbell's Act, o &> 10 Vict., chap. 03. This Act, as amended by 27 & 2S VJCt., C. 95, provides that the personal representa- tives of a deceased person can sue for damages for tin- benefit of his mar relatives if his death was caused by circumstances of such a character that if the man had not died he would himself have been able to maintain an action for injuries. The repre- sentatives must sue within twelve months of the death, but if they do not sue within six months of the death, the persons entitled to the damages may themselves sue. Employers' Liability Acts. A right of action is given to the repre- sentatives of a workman who is killed in the course of his employment. In addition to the Employers' Liability Acts the Workmen's Compensation Act of 1906 makes a still further encroachment upon the above common law rule. (.Sec title Workmen's Compensation.) With regard to the provisions of 3 & 4 William IV (supra) it has been held that the time prior to the death runs from the date the injury is done, and not from the time the wrong is committed which caused it. Damages recovered by executors or administrators are to be treated as personal estate, tt hilst damages pay- able by them are to be treated as simple contract debts. Except so far as the common law rule has been modified by statute it is still in force, no action being maintainable in respect of purely per- sonal wrongs, either by or against the legal representatives. The general rule applies to a claim for damages in respect of fraudulent misrepresentation (Peek v. (iurney, L.R. 6 H.L. 377), but the executors or administrators of a director or other person who made the misrepresentation may be liable to the extent to which the estate of the deceased benefited by the misrepresentation. {Phillips v. Homjray. 24 CD. 439.) Active Debt. — A debt in respect of which part pay- ment of principal or interest is from time to time being made. Active Trust. — A confidence in connection with which there are duties to be performed. Act of Bankruptcy. — An act the commission of ' which by a debtor empowers a qualified creditor to present a bankruptcy petition against him. (See Bankruptcy Petition.) The various acts of bankruptcy fall into the following classes: — (1) Conveyance or assignment of property to a trustee for the benefit of creditors generally (even though unregistered). (See Deed of Arrangement.) (2) A fraudulent gift or conveyance of property or any part thereof. (See Fraudulent Conveyances, &c.) (3) Any conveyance of property, or creation of a charge thereon, which would, in the event of bankruptcy, be deemed a fraudulent preference. (Sec Fraudulent Preference.) (4) Departure or remaining out of England, or from dwelling-house, &C, with intent to defeat or delay ^editors. (See Absconding Debtor, Keeping House.* (5) Levy of execution by seizure and sale of goods; or seizure and retention b\ the sheriff for 21 days, provided that the time occupied by interpleader proceedings (if any) is not to be counted as>«rt of the 21 days. (See Execution Creditor.)"' (6) Declaration of inability to pay debts filed in the Court or presentation of a petition by the debtor himself. {See Bankruptcy Petition.) Act] [Address (7) Non-compliance with the requirements of a bankruptcy notice. (See Bankruptcy Notice.) (8) Notification to creditors that payment of debts has been or is about to be suspended. (See Suspension of Payment.) (1883 Act, section 4; 1890 Act, section 1.) (9) The making of a receiving order by the Court in response to and in lieu of an application to commit the (judgment) debtor. This is deemed to be an act of bankruptcy. (1883 Act, section 103.) (See Judgment Creditor.) An act of bankruptcy is only available for the presentation of a petition thereon for the three months next following such act (section 6), and the term " available act of bankruptcy " is defined as " any act of bankruptcy available for a " bankruptcy petition at the date of the presenta- " tion of the petition on which the receiving order " is made." (Section 168.) The trustee's title relates back to the act of bankruptcy upon which the petition is grounded, or if there have been other acts of bankruptcy the trustee's title relates back to and the bankruptcy- is deemed to commence at the time of the earliest act of bankruptcy proved to have been committed within three months next preceding the date of the presentation of the petition. (1883 Act, section 43.) (See title Relation Back.) The execution by partners of a deed of assign- ment of the joint estate for the benefit of the joint (i.e., the firm's) creditors is not an act of bank- ruptcy which is available to enable a (separate) creditor of one of those partners to present a petition in bankruptcy against that partner. (In re Phillips, 7 Mans. 277.) Act of God. — A direct, violent, sudden, and irresistible act of Nature, which could not by any human intervention, care, or reasonable precau- tions have been foreseen or prevented. Act of Parliament.— A law made by the Sovereign, with the advice and consent of the Lords spiritual and temporal, and the Commons, in Parliament assembled. Before an Act is passed it is termed a " Bill." The Acts are either (1) public; (2) special; or (3) private. Acts of Parliament are sometimes termed statutes. Where common law and statute law differ, the common law gives place to the statuU — similarly an old statute gives place to a contrary new one. (See title Law.) Actuarial Report. —A report made by an actuary based upon calculations made by him. The Assurance Companies Act 1909 provides that every life assurance company and bond investment company shall, once in ever} five years, or at such shorter intervals as may be pre- scribed by the instrument constituting the com- pany or by its regulations or bye-laws, cause an investigation to be made into its financial con- dition, including a valuation of its liabilities, by an actuary, and shall cause an abstract of the report of such actuary to be made in the form prescribed by the Act. Printed copies of such report must be deposited with the Board of Trade within six months after the date to which it has been prepared, and a printed copy must also be forwarded to every shareholder and policy-holder of the company, upon application being made. Assurance companies carrying on employers' liability insurance business must cause an invi -ti- gation and report to be made by an actuary every year. (See title Assurance Companies Act.) Actuary.— A person skilled in the calculation of the value of life interests, annuities, and life assurance matters. The officer of a life assurance company whose duty it is to make the necessary computations in connection with the statistics and finances of life assurance, and the actuarial reports required by the Assurance Companies Act 1909. An officer appointed to keep the accounts of a savings bank. Address Book. — The Companies Clauses Consoli- dation Act 1845 applies to certain companies incorporated by special Acfyfcind every such com- pany is required to keep a Shareholders' Address Address Adjudication B '^ containing the full names of the share- holders in alphabetical order and their respective esses and descriptions. Every assurance company which is not regis- tered under the Companies Acts, or which has not inc rporated in its deed of settlement the above provisions of the Act of 1845, must also comply with the above provisions in pursuance of the Assurance Companies Act 1909. Register of Directors and .Managers, R< _ister of Members.) Ademption. — The taking away of a legacy b\ the alienation or conversion of the subject-matter oi thtr legacy by the testator during his lifetime. specific legacies are subject to ademption, but demonstrative legacies, on the failure of the par- ticular fund, rank as general legacies. Adhesive Stamp. — A stamp attached to a document by the party as distinct from an impressed stamp affixed by the Revenue authorities. Foreign bills and promissory notes, inland bills payable on nd, receipts for the payment of money, nients under hand, and a protest of a bill of mge are instances where an adhesive stamp is permitted. Section 8 of the Stamp Act 1891 provides : — An instrument, the duty upon which is required or permitted by law to be denoted by an adhesive stamp, is not to be deemed duly stamped whh an adhesive stamp unless the person iied by law to cancel the adhesive stamp cancels the same by writing on or across the Stamp his name or initials, or the name or initials of his firm, together with the true date of his so writing or otherwise effectively cancels the stamp and renders the same incapable of being used for any other instrument, or for any postal purpose, or unless it is otherwise proved that the stamp appearing on the instrument was affixed thereto at the proper lime. Where two or more adhesive stamps are used to denote the stamp duty upon an instrument . two halfpenny stamps in lieu of a penny one), each or every stamp must be cancelled in the manner aforesaid. livery person who, being required by law to cancel an adhesive stamp, neglects or refuses duly and effectually to do so in the manner aforesaid shall incur a fine of ten pounds. (See Impressed Stamp.) Adjourned Meeting. — A continuation of an original meeting at another time, nt the same or another place. In the absence of special provision to the contrary there is no necessity to give notice of an adjourned meeting. But, as a rule, the regula- tions of a company provide that no business shall be transacted at an adjourned meeting except such as was left unfinished at the original meeting. Adjournment. — Postponing to another time or place ; a continuation of a meeting from one day to some other. The vacation of the chair by the chairman does not per se adjourn a meeting, for if those present consider the chairman has acted improperly, they can elect another chairman and proceed. Adjudication. — The act of the Court whereby a man is declared bankrupt and is divested of his property, which is to be applied in payment of his debts. Where a receiving order is made against a debtor the Court adjudge him bankrupt : — (1) If the creditors at the first meeting, or any adjournment thereof, by ordinary resolution so resolve. (1883 Act, section 20.) (2) If the creditors pass no resolution thereon. (Ibid.) (3) If the creditors do not meet to consider the matter, or a quorum does not attend trie" meeting called by the Official Receiver, or one adjournment thereof. (Ibid., and Rule 191.) (4) If a composition or scheme is not accepted and approved within fourteen days after the public examination has been concluded, or such extended time as may be allowed by the Court. (Ibid.) (5) Where the Official Receiver sanies the Court that the debtor has absconded^ (Rule 191.) Adjudication 10 Administration (6) Where the public examination of the debtor is adjourned sine die. (Rule 192A.) (7) Where the debtor does not intend to pro- pose any scheme or composition. (Rule 191.) (81 Where an estate is being wound up in a summary manner and the Court is satisfied, as a result of the public examination, that a scheme or composition ought not to be sanctioned, by reason of the conduct of the debtor. (Rule 273.) (q) Where the debtor applies to the Court to be adjudged bankrupt. Such application mav be made orally and without notice. (Rule 190.) (10) Where the debtor fails to submit his state- ment of affairs to the Official Receiver without reasonable excuse. (1883 Act, section 16.) An order of adjudication may be made although the debtor lias died since the commencement of the bankruptcy proceedings. (1883 Act, section 108. and Re Walker, 1886.) Xo order of adjudication will be made against a firm in the firm-name, but it will be made against the partners individually. (Rule 264.) There are three cases in which the Court mav annul the adjudication, viz. : — (1) Where a composition or scheme is accepted by the creditors and approved by the Court after adjudication. (1883 Act, section 23.) (2) Where, in the opinion of the Court, the debtor ought not to have been adjudged bankrupt. (Section 35.) (3) Where it is proved to the satisfaction of the Court that the debts of the bankrupt have been paid in full. (Ibid.) It does not neces- sarily follow that the Court will annul an adjudication on the payment of 20s. in £; all the circumstances will be inquired into. {See Arrangements in Bankruptcy, Bank- ruptcy Petition, Infant, Lunatic, Married Woman, Receiving Order, &c.) Adjudication Stamp. — The stamp affixed to an instrument after the Commissioners of Inland Revenue have, on request, in cases of doubt, assessed the duty payable on the instrument. Administration, Letters of. — Where a person dies intestate, and under certain other circumstance! (see titles Administrator, et seq.), letti i administration are granted by the Court to some proper person, called the administrator. Grants of administration are either (a) general or unlimited, or (b) special or limited. In the former case the whole of the estate is committed to the administrator's charge, and his powers and functions vary little from those of an executor, but a limited administration extends only to a part of the estate, or to a certain locality or for a specified time. Generally, the widow or widower (as the case may be) has the prior right to administer an intestate's estate, and then in the following order come the children, grand-children, great grand- children, father, mother, brothers and sisters, &c, all being equally entitled as regards those of the same degree. Males are generally preferred to females, and those of whole blood to the half- blood, other things being equal. The Land Transfer Act 1897 provides that where the intestate dies possessed of land, the heir-at-law, if not one of the next-of-kin, shall be nevertheless equally entitled to the grant of administration. A person who is entitled to administration may renounce the right. The Court, however, will not grant administration unless those having the prior right have either renounced or have been cited to appear before the Court to assent to the grant to another. Failing any other person entitled, the Court may grant administration to a creditor, but only where the creditor has no security for his debt, and undertakes to pay all debts pro raid. An administrator is not deemed to have had that personal confidence of the deceased wdiich is presumed in favour of an executor. By section 81 of the Probate Act 1857 every person (other than the solicitors to the Treasurv and Duchv of Administration Administration Lancaster obtaining administration for the benefit of the Crown) to whom any grant of administration shall be committed shall give bond, urn/, ij the Court shall require, with one or more surety or sureties conditioned for dulv collecting, getting in, and administering the per- sonal estate of the deceased. In rare cases the discretion conferred by this section is exercised by the Court and the personal bond of the applicant, only, is accepted and sureties dispensed with. Although an executor who has proved a will cannot Sake steps to revoke the grant of pro- bate, it is the duty of an administrator, should he discover a will of the testator, to inform the Court, and take such steps as may be necessary to revoke the grant of administration. Although an executor's right is derived from the will, and the law knows no interval between the death of the testator and the vesting of the right in the executor (the subsequent grant of probate being the mere evidence of the right), the title of an administrator is derived solely from the letters of administration, and strictly the administrator has no authority or title before the grant has been made, and even then only in respect of the estate as it exists, or in respect of things afterwards coming into existence. This state of things, if strictly adhered to, would obviously result in loss to the estate pending the grant, because no one would have title or authority in the interval to protect the assets. &c. ; the Courts, however, in order to pre- vent such a state of things, have " adopted the " convenient fiction that letters of administration, " when obtained, operate retrospectively, having " relation back to the death of the deceased, so " as to enable the administrator to sue before the " grant to him of administration, or after " administration in respect of matters occurring " previously thereto, but it would appear that he " can only sue when the act done is for the " benefit trf the estate." In any event, as in the case of an executor, the administrator cannot proceed (before the grant of administration) beyond the point where proof of title becomes necessary by production of the letters of administration. The above are the more important distinctions between the office of an executor and an adminis- trator, their rights, liabilities, and duties being generally similar in other respects. (See Administration of Assets, Executor.) Administration of Assets (of a deceased person).— In the administration of the estate of a decea- d person the assets are to be applied in payment of the debts in the following order : — (i) The general personal estate not bequeathed. or bequeathed only by way of residue. (2) Real estate devised in trust to pay debts. (3) Real estate descended to the heir and not charged with debts. (4) Real or personal estate, devised or bequeathed subject to the payment of debts. (5) General legacies and annuities. (6) Specific legacies. [Demonstrative legacies are treated as specific if the fund remains, if not, they are treated as general legacies.] (7) Real or personal estate subject to a general power of appointment which has been exercised in favour of volunteers. (8) Paraphernalia of the widow. The debts are payable out of the assets in the following order: — (1) Reasonable funeral and testamentary expenses. (2) Debts due to the Crown by record or specialty. (3) Debts to which particular statutes give priority, such as income-tax, poor rates, debts owing to building or friendly societies ex officio, regimental debts, &C. (4) Registered judgments against the deo (within five years prior to the death), and unregistered judgments if recovered agai -t the personal representatives themselves. (5) Recognisances and statutes. (0) Specialty contracts (if lor valuable sideration) and simple contracts, including unregistered judgments recovered against the deo ased in his lifetime. Administration Administration (7) Voluntary bonds or covenants. If, however. ;i voluntary bond be assigned for value in the lifetime of the deceased it will rank as though originally given for valuable consideration. Prior to Hinde Palmer's Act (32 & 33 Vict. c. 46) all specialty debts ranked equally with simple contract debts as against equitable assets, but in priority as against legal assets. Section 10 of the Judicature Act 1875 provides that in the administration by the Court of the assets of any person dying after 1st November 1875, and whose estate may prove insufficient to pay his debts in full, the same rules shall be observed as to the respective rights 0/ secured and unsecured creditors, and as to the debts provable, 8x., as may be in force for the time being under the law of bankruptcy. This section docs not adopt the whole of the bankruptcy rules, the following having no application to the administration : — (11 Limitation of the landlord's right of distress. (2) The avoidance of voluntary settlements. (3) The avoidance of fraudulent preferences. (4) The " order and disposition " doctrine. (See Deceased Insolvent, Hinde Palmer's Act, Land Transfer Act 1897, Legal Assets, Preference, Retainer.) Administration Order. — (1) Where a judgment has been obtained in a County Court and the debtor is unable to pay the amount forthwith, and alleges that his whole indebtedness amounts to a sum not exceeding fifty pounds, inclusive of the debt for which the judgment is obtained, the County Court may make an order providing for the administration of his estate, and for the payment of his debts by instalments or otherwise, and either in full or to such extent as to the County Court under the circumstances of the case appears practicable, and subject to any conditions as to his future earnings or income which the Court may think just. (2) The order shall not be invalid by reason only that the total amount of the debts is found at any time to exceed fifty pounds, but in such case the County Court may, if it thinks fit, set aside the order. (3) Where, in the opinion of the County Court in which the judgment is obtained, it would be inconvenient that that Court should admin- ister the estate, it shall cause a certificate of the judgment to be forwarded to the County Court in the district of which the debtor or the majority of the creditors resides or reside, and thereupon the latter County Court shall have all the powers which it would have under this section had the judgment been obtained in it. (4) Where it appears to the Registrar of the County Court that the property of the debtor exceeds in value ten pounds, he shall, at the request of any creditor, and without fee, issue execution against the debtor's goods, but the household goods, wearing apparel, and bedding of the debtor or his family, and the tools and implements of his trade to the value in the aggregate of £20, shall to that extent be protected from seizure. (5) When the order is made no creditor shall have afly remedy against the person or pro- perty of the debtor in respect of any debt which the debtor has notified to a County Court, except with the leave of that County Court, and on such terms as that Court may impose; and any County Court or inferior Court in which proceedings are pending against the debtor in respect of any such debt shall, on receiving notice of the order, stay the proceedings, but may allow costs already incurred by the creditor, and such costs may, on application, be added to the debt notified. (6) If the debtor makes default in payment of any instalment payable in pursuance of any order under this section, he shall, unless the contrary is proved, be deemed to have had since the date of the order the means to pay the sum in respect of which he has made default, and to have refused or neglected to pay the same. Administration !3 Administrator (7) (8) Money paid into Court under the order shall be appropriated first in satisfaction of the costs of the plaintiff in the action, next in satisfaction of the costs of administration (which shall not exceed two shillings in the pound on the total amount of the debts), and then in liquidation of debts in accord- ance with the order. (9) ■ • (io) Any creditor of the debtor, on proof of his debt before the Registrar, shall be entitled to be scheduled as a creditor of the debtor for the amount of his proof. (u) Any creditor may, in the prescribed manner, object to any debt scheduled, or to the manner in which payment is directed to be made by instalments. (12) Any person who after the date of the order becomes a creditor of the debtor shall, on proof of his debt before the Registrar, be * scheduled as a creditor of the debtor for the amount of his proof, but shall not be entitled to any dividend under the order until those creditors who are scheduled as having been creditors before the date of the order have been paid to the extent provided by the order. (13) When the amount received under the order is sufficient to pay each creditor scheduled to the extent thereby provided, and the costs of the plaintiff and of the administration, the order shall be superseded, and the debtor shall be discharged from his debts to the scheduled creditors. (1883 Act, section taa.) Where an application to commit is made to a County Court, and it appears to the Court that the total liabilities of the judgment debtor do not exceed fifty pounds, the Court may, if it thinks that an order for committal ought not to be made, make an administration order under section 122 of the Act, in lieu of making a receiving order under section 103. (Rule 358.) Where an administration order has at any time heretofore been or shall hereafter be made, such order may at any time be set aside or rescinded by the Judge in any of the following cases, namely : — (1) Where two or more of the instalments ordered to be paid are in arrear. (2) Where the debtor has wilfully inserted in the list attached to his request the wrong name or address of any of his creditors, or has wilfully omitted therefrom the name of any creditor. (3) Where the debtor subsequent to the date of the order has obtained credit to the extent of £2 or upwards without informing the creditor that he has an administration order. (4) Where the order has been obtained by fraud or misrepresentation. (5) Where a receiving order has since the date of the administration order been made against the debtor. Where an order is set aside or rescinded under the last preceding rule, it shall be without pre- judice to anything already done or suffered under the order. Any money paid into Court under the order may be dealt with as if the order had not been set aside or rescinded. Notice shall be sent by the Registrar to the debtor and to every creditor named in the schedule that the order has been set aside or rescinded. Where it appears that the debtor is unable to pay any instalment, by reason of illness or other unavoidable misfortune, the Registrar may from time to time suspend the operation of the order until the next sitting of the Court, and the Judge may from time to time suspend the operation of the order for such time as he shall direct, or make a new order for payment by Instalments. (Rules 15, 16, and 17 as to Administration Orders.) Administrator ad litem. — A person appointed as administrator of a deceased person's estate for the purpose of litigation only. Administrator 14 Affreightment Administrator cum testamento annexo. — A person appointed to administer the estate of a deceased person who, having left a will, has either named no executor or has named one either unable or unwilling to act. Administrator de bonis non (administratis). — A person appointed to complete the administration of the estate of a deceased person on the death of the executor or administrator before the estate has been fully administered. Administrator durante absentia. — A person ap- pointed to administer the estate of a deceased person during the absence of another who is strictly entitled to the administration. Administrator durante minore aetate. — A person : ppointed to administer the estate of a deceased person during the minority of the executor or of one entitled to grant of administration. Administrator pendente lite. — A person appointed to administer the estate of a deceased person pend- ing any suit respecting the validity of the will or any other matter in dispute. Ad valorem Duty. — Duties or customs levied upon goods according to their value. Stamp duties payable in respect of certain documents accord- ing to the value of the subject-matter involved, or the amount of the consideration therein expressed. (See Nominal Consideration.) Advance Freight. — See Freight. Advance Note. — A note given to a seaman stating that a certain sum will be paid to the bearer thereof at a certain future date, on account of the seaman's wages, conditionally on the seaman i^oing to sea in pursuance of his agreement. The sum payable must not exceed one month's wages payable under the agreement. Adventure. — See Consignment. Adverse Claim. — See Interpleader. Adverse Possession. — Occupancy of realty, without molestation, by one other than the person rightly entitled, which may ultimately give a good title. An action to recover possession of land must be brought within twelve years of the time when the right lirst accrued. Advice. — An opinion of counsel or others; a com- mercial report ; information by letter ; written instructions to bankers or merchants relative to bills of exchange; notification of arrival or despatch of goods. Advowson. — A right of presentation to an ecclesi- astical benefice. There is a distinction between a right of presentation and a right of nomination, and they may be possessed by different persons in respect of the Same benefice. Presentation is the offering of the person to the bishop ; nomination is the offering of the person to the one who has the right of presentation. A right of nomination only to a vacant benefice does not pass to the trustee in the event of the bankruptcy of the person possessing such right, but a right of presentation does. (1883 Act, section 44.) Affidavit. — A pledge of one's faith; a written state- ment sworn before a person having authority to administer an oath (generally a Commissioner for Oaths). A trustee in bankruptcy and a liquidator of a company being wound up under an order of the Court may, for the purpose of their respective duties in relation to proofs of debt, administer oaths and take affidavits. Affinity. — Relationship by marriage between the husband and the blood relations of the wife, and between the wife and the blood relations of the husband. For legacy and succession dutv pur- poses, the husband or wife of a blood relation of a deceased person is treated as being of the same blood relationship to the deceased as his or her spouse ; but relations of the husband or wife of the deceased are treated as strangers in blood unless they are themselves related in blood to the deceased, (See Consanguinity.) Affirmation. — A solemn declaration without an oath. (See Declaration, Oath.) Affreightment. — See Freight. After-acquired] J 5 Agent After acquired Property. Bankrupt. See Undischarged After Sight. — A bill of exchange expressed to be ible at a stated period after sight signifies such period after the bill has been accepted, or after the date it has been noted or protested for non-acceptance. (1SS2 Act, section 14 (3).) Where a bill is payable after sight, present- ment for acceptance is necessary in order to fix the maturity of the instrument. (1882 Act, section 39.) Winn a bill is payable at sight it is presented for acceptance and payment at the same time. Agenda. — Memoranda of the business to be transacted at a meeting. Agent. — A person appointed to transact the busi- ness of another, who is termed the principal. Agencies may be divided into three classes : — Special, General, and Universal. A Special agent is one authorised to perform a single act, or a series of acts relating to one subject-matter. A General agent is one authorised to transact all the business of the principal, or at least all the business of a particular class. A Universal agent is one appointed to do all the acts which the principal can personally do. This is a class of agency which rarely occurs, and is not referred to by some writers. There are various classes of agents, such as : — Auctioneers, Brokers, Factors, Masters of Ships, Partners (inter sc), Solicitors, &C. These are specially dealt with in their respective places. An infant cannot act as principal, but, save under certain circumstances (such as proxy in company liquidation and bankruptcy procedure), an infant can act as an agent, for as agent he is not deemed to exercise his own powers, but those which have been transmitted to him by his principal. Appointment. \n agency may be created either verbally, in writing, or from a course of dealing, but an agent who is required to execute and deliver a deed must be appointed by deed. A del credere agent may be appointed verbally, notwithstand- ing the provisions of the Statute of Frauds. Which require a guarantee to be in writing. There appear to be two grounds for this : — (1) If a del credere agent be regarded as the guarantor of the customers of his principal, the main object of the contract of agency is none the less to appoint the agent, not to obtain the guarantee from him, the latter being merely a term of the agent's appointment. (2) The appointment does not involve a guarantee of the solvency of the principal's customers, but an indemnity to the principal against any loss arising from the agent's per- sonal inadvertence in entering into contracts on behalf of his principal with persons who fail to perform them. Authority. The nature and extent of an agent's authority will include all the necessary means of carrying out his instructions. But where an agent's authority is known to be of a particular or limited character, those who deal with him should inquire whether the authority given justifies the act contemplated. Where, however, an agent exceeds his authority, the principal is not bound, unless he is estopped from denying the want of authority. The agent in such a case may nevertheless be liable to the party with whom he has dealt, on the ground that he has committed a breach of his warranty of authority. A general agent may be subject as between him- self and his principal to some particular restric- tion, but such restriction does not relieve the principal as against strangers who deal with the agent without notice of such particular restric- tion, if the act done falls within the ordinary scope of the general agency. On the other hand, the power of a special agent is strictly bound by the express authority he has received, and a stranger dealing with such special agent has no right to assume the act will be binding on the Agent 1 6 Agent principal. Where, however, any act is done by an agent which is in fact beyond his authority, such act may be subsequently ratified by the prin- cipal, and such ratification will be equivalent to a previous authority to perform such act, pro- vided that (i) the agent acted as agent for a principal who was in contemplation and in exist- ence at the time, and (2) the act in question was one the principal himself might have lawfully lone. For instance, a corporation on coming into existence cannot ratify acts purporting to have been done on its behalf prior to incorporation. Remuneration. In the absence of agreement or a trade usage to the contrary, the employment of an agent implies an undertaking by the principal to pay or reward the agent for his services. In general, the services originally stipulated for should be completed before an agent can claim his remuneration, but in cases where he is willing to complete his contract, but is prevented by the principal from so doing, he might be entitled to a proportion of his remuneration — that is, to a quantum meruit for the actual services rendered. An agent is, however, entitled to no further reward, profit, or advantage from any acts or dealings on behalf of his principal other than the reward which has been agreed upon by his principal. All other profits whatsoever belong to the principal, and he may recover any secret com- missions, profits, or double commissions from the agent, or damages for loss sustained by such dealings from either the agent or the party deal- ing with him. No trade usage can be alleged to justify these secret commissions. Such a usage has been characterised as a usage of fraud and plunder. Where an agent was entitled to a stated amount of remuneration, and his " out-of-pocket " expenses in addition, he was held liable to account to his principal for certain special dis- counts allowed in respect of the latter, on the ground (inter alia) that to claim the gross amount was to claim more than the agent's " out-of-pocket " expenses. (Ilipperslcy v. Knee Brothers, 1904.) (With regard to secret commissions see title Corruption : Prevention of.) Liabilities of Agent. An agent is liable for any loss sustained by reason of neglect of his duties without reasonable excuse. An agent is also liable (equally with the prin- cipal) for a tort purporting to have been done under authority. Where an agent has not disclosed his principal to the party with whom he deals he may be held liable to such party. The chief exceptions tc this rule are : — (1) Where a trade usage settles otherwise, and (2) Where it is expressly stated that the 1 acts as such (although the principal is not disclosed) . An agent may be liable in respect of his ings, even where he discloses his principal. for instance : — (1) Where he agrees to be so. (2) Where he contracts by deed in his name. (3) Where the custom of the trade makes him liable, and (4) (In some cases) where he acts for a foreign principal. Rights of Agent. He has a right to indemnity by his principal for all advances and disbursements made which may have been right and proper in connection with the duties of the agency, and in cases where he has an interest in the proceeds of a contract made by him for a disclosed principal he may sue thereon. An agent may also sue in respect of any contracts made by him for an undisclored principal. In addition to the ordinary remedies bv action against his principal an agent may deduct any moneys due to him from any moneys of his prin- cipal which may be in his hands, and in certain cases where custom has established the right, an agent has a lien upon the principal's goods for any moneys due. Agent »7 [Aggreg,. Liabilities of Principal. A principal may be sued upon all contracts validlv entered into by his agent for him, and where he has been undisclosed he may be sued on discovery, " subject to the qualification that " the state of the account between the principal " and the agent is not [subsequently] altered to " the prejudice of the principal." Rights of Principal. A principal may sue upon all contracts validly entered into by his agent for him, whether he was disclosed or undisclosed, provided that where the agent has been allowed to appear as the real contracting party the principal must allow any set-off or other equity which the third party may have against the agent. As a general rule the principal is entitled to the benefit of the personal service of the agent, but the maxim " Delegatus non potest delegare " (q.v.) does not always apply. Termination of Agency. The relationship of principal and agent may be terminated by : — (1) Withdrawal of authority by the principal. (2) Ruirement of the agent. (3) Expiration of a fixed period. (4) Completion of a specified act or series of acts. (5) Death or insanity of either party (subject to sections S and 9 of the Conveyancing Act 1882). (6) Bankruptcy of the principal (subject to Conveyancing Act 1SS2). Either the principal or agent may retire from the relationship at any time, but if: — (1) it will act prejudicially t.. th. .iil^r party, (2) tb' agency is a power A^Hiled with an interest, or V,\. . (3) the agency was created for t fixed period, which has not elapsed, or (4) it was expressly agreed that the authority should be irrevocable. the agency can only be terminated with the assent of both parties, otherwise a right of action for damages will lie. A gratuitous agent may renounce his office at any time, but even under these circumstances he should give reasonable notice of his intended withdrawal. A gratuitous agent is, however, not liable for non- feasance, there being no consideration for the contract, but having commenced his duties he is liable for misfeasance; the " confidence induced " on his commencing his duties being held sufficient consideration to bind him as an ordinary agent. Agents' Balances. — These may represent moneys due to or from the agents of a concern. If moneys are due from the agents, care should be taken when including the items as " assets " that they are stated separately from ordinary book debts, and that the net amount only, after deducting commissions and other charges, is brought into the Balance Sheet. Insurance companies supply their agents each quarter with pro formA statements of the busi- ness between them, and the agents are required to complete and certify the same, and these accounts constitute the vouchers for the sums stated to be in the hands of the agents, and should be examined by an auditor and compared with the books. Agents' Returns. — These are reports made by agents to their principals, which may be either statistical or financial ; the statistical reciting prices, market movements, inquiries, &c, while the financial will include cash transactions, deliveries, and purchases of goods, &c, enabling the principal to prepare his accounts and show his position with the agent or with the parties with whom the agent has dealt on his account. Aggregate Corporation. — See Corporation. Aggregation. — The act of collecting parts/ whole mass or sum. The Finance Ac provides for the aggregation of all pc ing on the death of a person which to estate duty, so as to form on^ rate of duty payable is the pro in respect of the aggre^ Aggregation] 18 Allocatur Exceptions are made in respect of (1) small estates, and (2) property passing in which the deceased never had an interest, and in certain cases of settled property, the property so settled is not aggregated, but treated as an estate by itself. (See Estate Duty.) Agio. — The difference between the real and nominal value of the currency of a country. Agistment. — The taking of other men's cattle into pasture land. Agreement. — The reconciliation of two or more minds as to anything done or to be done; the agreement of parties is the very essence of contract. (See Contract.) Alien. — Subject to certain conditions, aliens are not now under any disability as regards the taking, holding, or disposing of real and personal pro- perty in the United Kingdom. An alien is under no contractual disability, and may make a will or act as an executor or administrator; and if he has ordinarily resided or had a place of business or been domiciled in England during the year pre- ceding the presentation of a petition, he is amen- able to the bankruptcy laws of England. He is liable to pay income-tax upon all profits and gains received by him in this country (wherever earned), and upon all profits and gains earned by him 111 this country (wherever received). An alien may not own or possess any share or shares in a British ship, but he may hold shares in the capital of a registered company which owns one or more British ships. Alienation. — The transferring of property from one ownership to another. Alimony. — The allowance made to a wife out of her husband's estate for her support after or during a matrimonial suit. In the event of the husband's bankruptcy, future payments of alimony are not provable on the ground of being incapable of fair estimation (Linton v. Linton, 1885), nor can arrears of alimony be proved for whether accruing before or after the receiving order (Kerr v. Kerr, 1897). The husband is liable to continue the payments notwithstanding his bankruptcy or discharge. " A " List. — See Contributory. Allocatur. — (It is allowed.) The certificate of allowance of costs by the taxing master. In bank- ruptcy procedure no costs must be paid to any solicitor, accountant, auctioneer, or other agent for the trustee except upon production of an allocatur for the amount claimed, otherwise such payments will not be allowed to the trustee in the audit of his accounts. (Bankruptcy Act of 1883, section 73.) Before taxing the bill or charges of any solici- tor, manager, accountant, auctioneer, broker, or other person employed by an Official Receiver or trustee, the taxing officer shall require a certifi- cate in writing, signed by the Official Receiver or trustee, as the case may be, to be produced to him, setting forth whether any, and if so what, special terms of remuneration have been agreed to, and in the case of the bill of costs of a solici- tor, a copy of the resolution or other authority sanctioning the employment. (Rule 117.) Where any bill of costs, charges, fees, or dis- bursements of any solicitor, manager, accountant. auctioneer, broker, or other person has been taxed by a Registrar of the County Court, the Board of Trade may require the taxation to be reviewed by a bankruptcy taxing master of the High Court. (Rule 124.) The fees payable on taxation may be added to the amounts respectively allowed, and charged against the estate. In summary cases the costs of any person (other than a solicitor) may, under certain circumstances, be paid and allowed without taxation. (Rule 273.) The trustee's remuneration is not a taxable charge. (1883 Act, section 73.) The foregoing provisions apply. mutatis mutandis, to the winding up of a company by the Court. (Rules 183, 1S5, &c.) Allonge] i9 Allotment Allonge. — When there is no room on a bill of schange for further indorsements, a slip of paper, called an allonge, may be attached thereto, and all indorsements upon the allonge are deemed to be written upon the bill itself. (18S2 Act, section 32.) As a preventative against fraud the first signa- ture requiring an allonge should commence on the bill and end on the allonge. Some foreign codes require this procedure. The allonge does not require a stamp. Allotment. — The appropriation or distribution of stock, shares, debenture stock, or bonds in a joint-stock company in response to applications therefor, or in pursuance of contracts already entered into. An application for stock or shares may be withdrawn at any time before allotment, but when notice of allotment is duly addressed and posted the applicant is bound, even though the notice may never reach him. A valid allotment may also be made verbally. Although usually allotment follows an applica- tion, yet it is equally effective if allotment first be made and is then followed by an acceptance. A contract with a company to take up and pay for any debentures may be enforced by an order for specific performance. (Companies Act 1908, section 105.) It is not necessary formally to allot the shares subscribed for by the signatories to the memo- randum of association, for they are deemed to have agreed to become members of the company, but in practice allotment generally takes place. If the shares are not taken up by the signa- tories they will be liable to pay for them in the event of the liquidation of the company, unless the whole of the authorised capital has been allotted to other persons. (Mackley's case, 1 -Ch.D. 247.) Statutory Restrictions upon Allotments. Companies Act 1908, section 85. — (1) No allot- ment shall be made of any share capital of a com- pany offered to the public for subscription, unless the following conditions have been complied with, namely : — (a) the amount (if any) fixed by the memo- randum or articles and named in the pros- pectus as the minimum subscription upon which the directors may proceed to allotment; or (b) if no amount is so fixed and named, then the whole amount of the share capital so offered for subscription, has been subscribed, and the sum payable on application for the amount so fixed and named, or for the whole amount offered for subscription, has been paid to and received by the company. (2) The amount so fixed and named and the whole amount aforesaid shall be reckoned exclusively of any amount payable otherwise than in cash, and is in this Act referred to as the minimum subscription. (3) The amount payable on application on each share shall not be less than 5 per cent, of the nominal amount of the share. (4) If the conditions aforesaid have not been complied with on the expiration of forty days after the first issue of the prospectus, all money received from applicants for shares shall be forth- with repaid to them without interest, and, if any such money is not so repaid within forty-eight days after the issue of the prospectus, the direc- tors of the company shall be jointly and severally liable to repay that money with interest at the rate of 5 per centum per annum from the expira- tion of the forty-eighth day: Provided that a director shall not be liable if he proves that the loss of the money was not due to any misconduct or negligence on his part. (5) Any condition requiring or binding any applicant for shares to waive compliance with any requirement of this section shall be void. (6) This section, except subsection (3) thereof, shall not apply to any allotment of shares subse- quent to the first allotment of shares offered to the public for subscription. (7) In the case of the first allotment of share capital payable in cash of a company which does not issue any invitation to the public to subscrib C 2 Allotment! 20 [Allotment for its shares, no allotment shall be made unless the minimum subscription (that is to say) :— (a) the amount (if any) fixed by the memo- randum or articles and named in the state- ment in lieu of prospectus as the minimum subscription upon which the directors may proceed to allotment ; or (b) if no amount is so fixed and named, then the whole amount of the share capital other than that issued or agreed to be issued as fully or partly paid up otherwise than in cash, has been subscribed and an amount not less than 5 per cent, of the nominal amount of each share payable in cash has been paid to and received by the company. This subsection shall not apply to a private company or to a company which has allotted any shares or debentures before the first day of July nineteen hundred and eight. Effect of Irregular Allotment. Section 86. — (1) An allotment made by a com- pany to an applicant in contravention of the pro- visions of the last foregoing section shall be void- able at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, and shall be so voidable notwithstanding that the company is in course of being wound up. (2) If any director of a company knowingly contravenes or permits or authorises the contra- vention of any of the provisions of the last fore- going section with respect to allotment he shall be liable to compensate the company and the allottee respectively for any loss, damages, or costs which the company or the allottee may have sustained or incurred thereby : Provided that proceedings to recover any such loss, damages, or costs shall not be commenced after the expiration of two years from the date of the allotment. Return as to Allotments. Section 8S. — (1) Whenever a company limited by shares makes any allotment of its shares, the company shall within one month thereafter file with the Registrar of Companies — (a) a return of the allotments, stating the number and nominal amount of the shares comprised in the allotment, the names, addresses, and descriptions of the allottees, and the amount (if any) paid or due and payable on each share ; and (b) in the case of shares allotted as fully or partly paid up otherwise than in cash, a con- tract in writing constituting the title of the allottee to the allotment together with any contract of sale, or for services or other con- sideration in respect of which that allotment was made, such contracts being duly stamped, and a return stating the number and nominal amount of shares so allotted, the extent to which they are to be treated as paid up, and the consideration for which they have been allotted. (2) Where such a contract as above mentioned is not reduced to writing, the company shall within one month after the allotment file with the Registrar of Companies the prescribed par- ticulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing, and those particulars shall be deemed to be an instrument within the meaning of the Stamp Act 1891, and the Registrar may, as a condition of filing the particulars, require that the duty payable thereon be adjudicated under section 12 of that Act. (3) If default is made in complying with the requirements of this section, every director, manager, secretary, or other officer of the com- pany, who is knowingly a party to the default, shall be liable to a fine not exceeding fifty pounds for every day during which the default continues : Provided that, in case of default in filing with the Registrar of Companies within one month after the allotment any document required to be filed by this section, the company, or any person liable for the default, may apply to the Court for relief, and the Court, if satisfied that the omis- sion to file the document was accidental or due to inadvertence or that it is just and equitable to grant relief, may make an order extending the time for the filing of the document for such period as the Court may think proper. Allotment 21 Alteration Issue of Certificates of Shares, &c. Section 92. — (1) Every company shall, within two months after the allotment of any of its shares, debentures, or debenture stock, and within two months after the registration of the transfer of any such shares, debentures, or debenture stock, complete and have ready for di livery the certificates of all shares, the deben- tures, and the certificates of all debenture stock allotted or transferred, unless the conditions of issue of the shares, debentures, or debenture stock otherwise provide. (2) If default is made in complying with the requirements of this section, the company, and every director, manager, secretary, and other officer of the company who is knowingly a partv to the default, shall be liable to a fine not exceeding five pounds for every day during which the default continues. (See titles Commencement of Busi- ness, Minimum Subscription, &c.) Allotment Letter. — A written or printed notice given to an applicant for shares or debentures in a joint- Mock company informing him of the number which has been allotted to him. A letter of allotment requires id. impressed stamp where the nominal amount to which the letter of allotment relates is less than five pounds, and 6d. impressed stamp where the nominal amount is five pounds or over. A separate duty is chargeable in respect of letters of allotment and letters of renunciation. even though they be contained in the same document. (Finance Act 1899, section 9.) Allotment Notes. — Notes issued for the payment periodically to a savings bank or to a near relative of a seaman, of stated sums on account of his wages during his absence at sea. The total amount payable under such allotment notes is limited to one-half of the total wages payable. Allowance. — A deduction from either weight or price for certain reasons. Commercial allow- ances are various, the following being examples : — Trade Discount. — An allowance of a certain percentage from the " list " price of goods irre- spective of the date of payment. A trade discount will vary from 10 per cent, to as high as 80 per cent, according to the nature of the goods, or class of customer. Cash Discount. — An allowance made in con- sideration of payment within a certain time. A cash discount is in addition to the trade discount (if any), but is computed on the balance remain- ing after deducting such trade discount. Draft is a deduction from the gross weight of goods, to ensure the buyer obtaining full weight. Tare is a deduction from the gross weight of packed goods of the weight of the box, case, wrapper, or other package in which the goods have been weighed. This deduction may be either based upon actual, estimated, or customary weight as the case may be. The balance of weight after deduction of tare is called subtle or net we r "lit. Tret is a deduction of four pounds for every 104 pounds of subtle weight as an allowance for sand, dust, Src, but this practice is becoming obsolete, the practice now being to allow for same in the price. An auditor should require all unusual allow- ances of substantial amount (which have been passed to the credit of customers' accounts) to be vouched in some manner, either (1) by written acknowledgment of the particular cus- tomer, or (2) by the initials of the principal or some responsible official being affixed to the entries in the Allowance Book. Defalcations are sometimes successfully effected by (1) the non- accounting for moneys actually paid by cus- tomers, and (2) passing to the credit of the customers' accounts unauthorised " allowances " to the extent of the moneys not accounted for, the accounts thus being closed. Payments made by an accounting party are also called allowances. (See Discount.) Alteration. — Deed. — The alteration of a material part of a deed after execution vitiates the instrument. (See titles Blank Transfer, Deed.) Will.— No alteration of a will shall have effect unless the meaning of the words prior tc the Alteration! Analysis alteration was not apparent, or unless the altera- tion be duly initialled by the testator and the witnesses who attested the execution of the will. Bill of Exchange. — A material alteration of a bill (e.g., date, sum payable, time or place of payment) without the assent of all parties liable thereon avoids the bill, except as against a party who has himself made, authorised, or assented to the alteration, and subsequent indorsers, pro- vided that if the (material) alteration is not apparent, payment of the bill according to its original tenor may be enforced by a holder in due course as though the bill had not been altered. A bill may be altered at any time before issue, and it may be subsequently altered to make it accord with the intention of the parties at the time of issue, but otherwise a material altera- tion after issue may be held to create a new instrument and require a fresh stamp. (See Articles of Association, Award, Memo- randum of Association.) Alternative Director. — See Substituted Director. Alternative Drawee. — An order (purporting to be a bill of exchange) addressed to two drawees in the alternative or in succession is not a bill of exchange. (1882 Act, section 6.) A drawee in case of need is not an alternative drawee. (See Drawee.) Alternative Payee. — A bill of exchange may be made payable to one of two or more payees. (1S82 Act. section 7.) Amalgamation (of Joint-Stock Companies). — This procedure is resorted to in order to combine two or more businesses for the common advantage. It may be performed either (1) by the transfer of all or part of the assets and liabilities of one or more existing companies to another existing company; or (2) by the transfer of all or part of the assets and liabilities of two or more existing companies to a new company. Under both operations the members of the transferring companies may have a right of becoming members in the company to which the properties, &c, have been transferred. In the first case the company acquiring the properties, &c, of the other company or com- panies is not wound up, but the companies whose properties, &c, t're being transferred must be so dissolved. In the second case all the previously existing companies must be wound up. Amalgamations are generally effected (1) under section 192 of the Companies Act 1908, or (2) under a special power in the memorandum of the transferring company, to sell the whole undertaking for shares in another company, com- bined with a power in the articles to divide the assets in a winding-up in specie. As to the amalgamation of assurance com- panies and the transfer of assurance business from one company to another, see title Assurance Companies Act. Where an existing company acquires the whole undertaking of another company, under a scheme of amalgamation, it may then, if thought fit, alter its name, by special resolution, to meet the changed circumstances, but it is none the less the same company, not having been formally wound up. (See Arrangements, Joint-stock Companies, Reconstruction.) Amortisation. — This term is used, in a legal sense, to express the alienation of lands in mortmain, but in an accountancy sense it is applied in con- nection with the redemption of a liability, or reduction of the book value of an asset (such as a lease) , by means of a sinking fund or otherwise. Analysis. — An arrangement of matter, under appro- priate heads, according to requirements or circumstances. In its application to accounts, the recapitulation of a statement which shows a certain result, but in such a form as to expose the constituent parts contributing to such result. Careful analysis of accounts often provides information of considerable value in regard to a business; in particular it affords data for com- parison of items — as regards periods, depart- ments, districts, &c. Analysis] 23 [Annual Analysis of the Ledger. — An expedient resorted to ; arithmetical check upon the postings to the Ledgei -here it would be impracticable to call over such postings in detail. Analysis sheets are used and are ruled to allow of columns for the folio, name, commencing balance debit or credit), the various subsidiary books (debit and credit), and the concluding balance debit or credit), so that the entries in each Ledger Account may be extracted under thesi' Ik ids. The analysis of each account should be self-balancing; as also each schedule and the summary of the schedules. The totals of thf various columns (debit and credit) repre- senting the subsidiary books should agree with the totals of the entries in the subsidiary books themsel\'.<. Thus, if the books do not agree, the error or errors may be located. This expedient is also of value (1) in cases of Investigation where the period of access to the Ledger is limited, provided, of course, the accountant is permitted to make and take away such extracts from the Ledger; and (2) where it is df sired to complete the " double-entry " figur.-s, owing to the (improper) practice having obtained of entering transactions direct into the Ledger without the intervention of subsidiary books. (See Trial Balance.) Ancient Lights — The enjoyment of light for upwards of 20 years does not necessarily entitle the owner of a tenement to all the light which enters his windows without any diminution whatsoever. In order to give a right of action for loss of ancient lights as a result of illegal obstruction it is not sufficient to show that there is in fact less light than before ; it must be shown that there has been a substantial priva- tion of light so as to render the occupation of the house uncomfortable, and (in the case of business premises) to prevent the plaintiff from carrying on his accustomed business on the premises as beneficially as he had formerly done. {ColU v. Home and Colonial Stores, H.L. U9°4) A -C 179.) Annual General Meeting. — {See General Meeting.) Annual List and Summary. — Every company (to which the Companies Act 1908 applies) having a share capital shall once at least in every year make a list of all persons who, on the fourteenth day after the first or only ordinary general meeting in the year, are members of the com- pany, and of all persons who have ceased to be members since the date of the last return or (in the case of the first return) of the incorporation of the company. The list must state the names, addresses, and occupations of all the past and present members therein mentioned, and the number of shares held by each of the existing members at the date of the return, specifying shares transferred since the date of the last return or (in the case of the first return) of the incorporation of the company by persons who are still members and have ceased to be members respectively and the dates of registra- tion of the transfers, and must contain a sum- mary distinguishing between shares issued for cash and shares issued as fully or partly paid up otherwise than in cash, and specifying the following particulars : — (0) The amount of the share capital of the company, and the number of the shares into which it is divided; (b) The number of shares taken from the commencement of the company up to the date of the return ; (c) The amount called up on each share; (d) The total amount of calls received; (e) The total amount of calls unpaid; (/) The total amount of the sums (if any) paid by way of commission in respect of any shares or debentures, or allowed by way of discount in respect of any deben- tures, since the date of the last return ; (g) The total number of shares forfeited ; (h) The total amount of shares or stock for which share warrants are outstanding at the date of the return; (1) The total amount of share warrants issued and surrendered respectively since the date of the last return ; (fe) The number of shares or amount of stock comprised in each share warrant; Annual 24 Annuity (/) The names and addresses of the persons who at the date of the return are the directors of the company, or occupy the position of directors, by whatever name called; and (m) The total amount of debt due from the company in respect of all mortgages and charges which arc required (or, in the case of a company registered in Scotland, which, if the company had been registered in England, would be required) to be regis- tered with the Registrar of Companies under this Act, or which would have been required so to be registered if created after the first day of July nineteen hundred and eight. The summary must also (except where the company is a private company) include a state- ment, made up to such date as may be specified in the statement, in the form of a Balance Sheet, audited by the company's auditors, and contain- ing a summary of its share capital, its liabilities, and its assets, giving such particulars as will disclose the general nature of those liabilities and assets, and how the values of the fixed assets have been arrived at, but the Balance Sheet need not include a statement of profit and loss. (See " Counsel's Opinion " under article Auditor, and also title Assurance Companies Act.) The above list and summary must be contained in a separate part of the register of members, and must be completed within seven days after the fourteenth day aforesaid, and the company must forthwith forward to the Registrar of Com- panies a copy signed by the manager or by the secretary of the company. (Note. — The Registrar will not accept the signature of a director.) If a company makes default in complying with the requirements of this section it shall be liable to a fine not exceeding five pounds for every day during which the default continues, and every director and manager of the company who know- ingly and wilfully authorises or permits the default shall be liable to the like penalty. (190S Act, section 26.) A registration fee of 5s. is payable upon the filing of the copy of the annual list and summary with the Registrar. (See titles Foreign Companies, Register of Members, Share Warrants.) Annual Rests. — See Rest. Annual Return. — The annual list and summary (q.v.) which a company having its capital divided into shares is required to file is some- times called the " annual return," but the term is obviously applicable to all accounts, or reports which have to be prepared and filed annually. Annual Value. — The amount assessed as issuing annually out of, or by virtue of, the subject- matter in question, whether lands, personal pro- perty, trade, profession, or otherwise. The term is chieflv used in connection with the assessment and collection of income-tax (Schedule A) and local rates. Although the basis of valuation is not the same as for the purpose of income-tax assess- ment, the annual value of lai.ds is generally used for the valuation of such lands, so that the prin- cipal value may be stated as being at the rate of a certain number of years' purchase. Annuity. — An annual payment, usually determined on the death of the annuitant; it may. however, be granted for a fixed term, and may be trans- mitted by will. An annuity may also be created by will, when it will rank and abate as a general legacy. Legacy duty (if chargeable) is payable upon the value of the annuitant's interest, calculated according to tables provided for the purpose. The duty is payable in four annual instalments, which are due and payable as and when the first four payments of the annuity are made, the first instalment being due on completion of the pay- ment of the first year's annuity. Simple interest at the rate of three per cent, per annum, without deduction of income-tax, is payable on all unpaid instalments of duty. Annuities are also subject to estate duty to the extent to which any beneficial interest accrues by survivorship on the death of a person, but a single survivorship annuity, if less than ^25, is exempt. If there be more than one such annuity, then only the first granted is entitled to exemp- Annuity] 25 Anticipation tion. The estate duty may be paid by four equal yearly instalments, the iirst of which is due at the end of twelve months from the date of the death, with interest at the rate of three per cent. per annum, without deduction of income-tax, upon all unpaid instalments of duty, which interest must be paid with each instalment after the first year. An annuity created by will runs from the death of the testator; the first payment is therefore due at the end of a year from the death, unless the annuity is directed to be paid monthly or quarterly, in which cases the instalments will be payable at the end of the first month or quarter. If an annuity is directed to be paid, say, in quarterly instalments, and a day is appointed for the first payment, which is less than three months from the death, the first payment would be made on such appointed day, but the second would not be payable until six months from the death ; or if the annuity were appointed to be paid in, say, monthly instalments payable on the first of each month, then the first payment would be appor- tioned (if necessary) in respect of the period between the date of the death and the 1st of the following month, the first payment being such apportioned part, and all subsequent payments being a full month's proportion. Although the point is not free from doubt it has been held that a bequest of an annuity " free from any deduction," although relieving the annuitant of legacy duty, will not relieve him of income-tax. (Lcthbridge v. Thurlow, 21 L.J. Ch. 538, and Saddler v. Richards, 6 W.R. 533.) Pay- ment of annuities without deduction of income- tax, when such should be deducted, will amount to a breach of trust to the extent of the tax. A testator may, however, expressly direct that the income-tax upon an annuity shall be payable out of his estate. An annuitant may prove against the estate of a bankrupt, by whom the annuity is payable, to the extent of the present value of such annuity, whether it be for life, for a term of years, or otherwise. For the rules as to the valuation of annuities in the winding-up of a Life Assurance Company, see title Assurance Companies Act. Annuity certain. — One payable over a definite period, as distinct from an annuity dependent for its duration upon some contingency — e.g., the existence of a given life. Ordinarily, annuities are payable at the end of the periods to which they respectively have reference; if an annuity be payable at the commencement of such periods it is called an annuity-due. A perpetual annuity is termed a perpetuity, whilst a deferred annuity is one which is not to be enjoyed until the expiration of a given number of years. A reversionary annuity is one which is to com- mence on the death of a given person. (See Expectation of Life and Life Annuity, and for an explanation of the Annuity system of redemption of loans see Sinking Fund.) Antedate. — To date a document as though executed before the true date of execution. A bill of exchange is not invalid by reason only that it is ante-dated. (1882 Act, section 13.) Antenuptial Debts. — A woman, married after 18S2, remains liable for her ante-nuptial debts, con- tracts, and torts to the extent of her separate propertv, and her husband will only be liable for them to the extent of any property he may have acquired through his wife. Anticipation. — The doing of an act or the acquiring of a thing before the appointed time. Married women may be restrained by the terms of a will or settlement from alienating, by way of antici- pation, property settled to their separate use during coverture, but no restraint against alienation imposed by a woman upon herself will be valid as against her ante-nuptial debts. The Court has now power, even where a woman is restrained from anticipation, to make a judgment or order binding her interest in her separate pro- perty, if the woman consents thereto, ar.d the Court is satisfied that it will be to her benefit to do so. Anticipation oi Profit.— This term is not used in the sense of " expectation of profit " (for such a prospect justifies the existence of every trader, Anticipation 26 [Apportionment as mich), but rather in the sense of taking credit in the accounts for profits as though they were earned, when they are only partly so, or depend for finality upon sonic future performance or other contingency. Thus, to take credit for the profit on sales made for future delivery is an anticipation of such profit if (say) the particular goods in question have not been acquired by the vendor at the time of preparing the accounts and there is an uncertainty about his ability to effect delivery. The valuation of stock-in-trade at sell- ing prices, and in the majority of cases the prac- tice of " writing-up " assets, are other forms of anticipation of profit. (See Profit, Realised Profit.) Appearance. — When a person is served with a sum- moning process from a Court he generally comes into such Court to defend himself by " entering an appearance " with the proper officer. Appear- ance to an action in the High Court must be entered within eight days from service of the writ, and may be entered in person or by attorney. Appointment, Power of. — A power to give or dis- tribute property, given by one person to another in somi instrument. Such a power may be either general or special. A general power enables the donee of the power to appoint to anyone he pleases — even to himself. A special power restricts him to appointment among particular individuals only or not at all. Apportionment. — Apportionment may be made in respect of time or in respect of estate. At common law there is no apportionment in respect of time of any periodical payments except interest on money lent. The reason for the excep- tion with regard to interest is set out in a decision nearly two centuries old, thus: — " Interest being " due de die in diem is not one entire thing, but " is an aggregate of many distinct things." Per contra, the reason given for the non-apportion- ment of rent at common law was that until the rent day nothing was due or payable, and that the whole rent belonged to the person entitled on the day of payment, however recent his title. The common law rule was the cause of injustice and inconvenience, and was modified by statute from time to time. The last Act dealing with the subject is the Apportionment Act of 1870, which provides inter alia (a) All rents, annuities, dividends, and other periodical payments in the nature of income (whether reserved or made pay- able under an instrument in writing or otherwise) shall, like interest on money lent, be considered as accruing from day to day, and shall be appor- tionable in respect of time accordingly (section 2). (6) The apportioned part of any such rent, annuity, dividend, or other payment shall be pay- able or recoverable in the case of a continuing rent, annuity, or other such payment when the entire portion of which such apportioned part shall form part shall become due and payable, and not before, and in case of a rent, annuity, or other such payment determined by re-entry, death, or otherwise, when the next entire portion of the same would have been payable if the same had not so determined, and not before (section 3.) (c) The word "dividends" includes (besides divi- dends strictly so called) all payments made by the name of dividend, bonus, or otherwise out of the revenue of trading or other public companies divisible between all or any of the members of such respective companies, whether such pay- ments shall be usually made or declared at any fixed times or otherwise ; and all such divisible revenue shall, for the purposes of this Act, be deemed to have accrued by equal daily increment during and within the period for or in respect of which the payment of the same revenue shall be declared or expressed to be made, but the said word " dividend " does not include payments in the nature of a return or reimbursement of capital (section 5). The Act does not extend to life insurance premiums ; nor does it apply to the proceeds of investments sold cum dividend (during the cur- rency of the period in respect of which the dividend is declared), when such invest- ments have been bequeathed to one for life with remainder over, the whole of the proceeds being treated as capital, although a full period's dividend may be about to be declared upon the investments in question. On the other hand, if Apportionment] 27 [Apportionment an investment be made during the currency of a period when a dividend is accruing due, the i t-for-life will be entitled to the whole of such id when declared. This was decided in the f Re Duff; Muttlebury v. Muttlebury in The purchase or sale must, however, be in the due course of the administration, for some Special circumstances may induce the Court to Order an apportionment, as in the case of Bulkcley v. Stephens (1896). In Re Sir Robert Settled Estates (1910, 1 Ch. 3S9) War- 1, J., drew a distinction between " pur- " chases or sales made during the currency of " the half-year which was the dividend-earning " period," and cases where " the whole dividends " had been earned before the purchase was " made." Dividends received under the latter circumstances were capital and the tenant-for-life was n :>t entitled to them. With regard to dividends and interest upon - or debentures in public companies, rily they must be apportioned according to lie or period in respect of which they are deemed to have been declared, regardless of the actual date of receipt. Thus, if a person died on 20th October, and a dividend were declared in the following February upon one of his investments in respect of the year ending the intervening 31st December, the proportion from 1st January to Jo;h October would be treated as capital, and the balance (.;,,%, of the whole dividend) would I eated as income. So, if a dividend be d in respect of a half-year, such as on railway stock, the apportionment between capital and income would be based upon the number of days' dividend to which these accounts were 1 lively entitled out of the actual number of days in the particular half-year. If, however, an interim dividend be declared 1 irdinary shares at the rate of 5 per cent. ! mum, for the half-year ending 30th June, and is paid in August, and the following Febru- ary a dividend is declared for the half-year ending 31st December, at the rate of 10 per cent, per annum, and expressed at the time of declaration I supplementary to the interim dividend, making a total dividend for the year of -3 per cent., then if a person died (say) on the 5th September, holding some of these shares, it is submitted (there being no direct decision on the point) that the apportionment would be : — Capital. — The proportion of dividend at ~\ per cent, per annum, from 1st January to 5th September, less the amount of the interim divi- dend paid in August. Income. — The balance of dividend received in February, after' deducting the net amount appor- tioned to capital — that is, the proportion of divi- dend at per cent, per annum from 5th September to 31st December. Where a final dividend is small compared with the interim dividend received during the lifetime of a testator, or where no final dividend is declared, so that on an apportionment being made as suggested above the final dividend is less than the " computed " sum due to income, it is submitted that income can only be credited with the amount of the final dividend, no portion of the interim dividend being chargeable to capital in order to augment the sum to be credited to income. The Apportionment Act 1870 expressly states that the word " dividends " includes (besides dividends strictly so called) all payments made by the name of bonus or otherwise out of the revenue of trading or other public companies (see above) ; but where a public company declares a dividend or bonus, without paying the same in the ordinary way, but with the intention of appropriating the amount so declared as an increase of the company's capital and without any option to the shareholders, such " dividend " or its equivalent does not belong to the life- tenant, but must be treated as capital (Bouch v. Sproulc (1S87I, 12 A.C. 385). The rents in respect of a specific devise of real property, and the dividends accrued on a specific bequest of personalty, are apportionable to the date of the testator's death as between capital and the respective devisees or legatees. A person entitled to a specific legacy is liable for the cost of the upkeep, care, and preserva- tion of his legacy between the death of the tes- tator and tin- assent by tile executor*. (In re I'carcc; Crutchley :•. HY//.v, 25 T.L.R. 497.) Apportionment] 28 Apportionment The profits of a private partnership are not apportionable under the Act, although they may be declared at regular intervals; for such profits are not " rents, annuities, or periodical pay- ments," nor are private partnerships " trading or other public companies " within the meaning of the Act of 1870 (Re Griffith, 12 Ch.D. 655), but the interest payable on a partner's capital is apportionable (lbbotson v. Elam (1866), 1 Eq. 188). The articles of partnership generally provide for the ascertainment of profits as at the date of dissolution, whether occasioned by death or otherwise, so that although the question of apportionment in such cases may not arise as between the partners, it may in exceptional cases as between the life-tenant and the remaindermen of a deceased partner's estate. Where arrears of dividend in respect of cumu- lative preference shares are ultimately received, a difficult question of apportionment arises as between capital and income in the event of the death of the shareholder during the period when the " arrears " of dividend were accumulating. There is no legal decision bearing directly upon preference shares, but In re Taylor's Trusts; Matheson ~\ Taylor (1905, 1 Ch. 734) dealt with arrears of interest on bonds, which interest (like preference dividends) was only payable condition- ally upon there being profits out of which such interest could be paid. It was decided that the " arrears " on receipt were not apportionable over the whole period during which they were accumulating, but only over the period during which profits were earned out of which the interest was payable, for prior to that period there was no legal obligation to pay, and there- fore no question of income accruing due within the meaning of the Apportionment Act. There- fore if a testator died before the commencement of the period when profits commenced to be earned, all interest declared subsequently would be credited to income. If the testator died during that period there would be apportionment as between capital and income, having regard to the date of his death during that profit earning period, not the whole period while " arrears " had been accumulating. It is open to question whether the decision in In re Taylor's Trusts (supra) would applv equally to " arrears " of preference dividends. The principles of apportionment between capital and income involved in the administra- tion of a deceased person's estate (or in any other case where applicable) may be summarised as follows : — (1) Rents, annuities, dividends, and inter* ^t on money lent are apportionable from day to day. But rent payable in advance by agreement is not apportionable. The whole sum is due on the first day of each period. (Ellis v. Rowbotham, App. Cas. 1000.) (2) The profits of a private partnership, the profits from a voyage of a ship owned in 64th shares, and life insurance premiums are not apportionable. (3) A dividend received as part of the pro- ceeds of sale of an investment sold cum. div. is capital unless the whole dividend has been earned, before the sale was made. (4) The first dividend received upon an invest- ment made during the currency of a period is income unless the whole dividend has been earned before the investment was made. (5) Ordinarily dividends and the like are apportionable according to the period in respect of which they are declared, regard- less of the date of receipt. (6) Dividend or bonus declared with the intention of increasing the capital of a concern to the extent of the amount declared, and with no intention of paying same in the ordinary way, must be treated as capital. (7) The provisions of the Apportionment Act do not extend to any case in which it is expressly stipulated that no apportion- ment shall be made. The principle of apportionment, as between life- tenant and remainderman, of a fund representing the proceeds of the realisation of an authorised but insufficient mortgage security upon which there are arrears of interest due, in order that Apportionment 29 [Apportionment then may be rateable equality in the incidence of the deficiency, is to take the amount due to the tenant-for-life in respect of arrears (only) of Interest, and the amount due to the remainder- man in respect of capital, and to apportion the realised fund in proportion to those amounts tively (Re Atkinson; Barber's Company v. I smith, Court of Appeal, 1904). Thus: Amount advanced 10 years ago £1,000 t" 4'; — loterest received £300. Net Interest in arrear (after deducting interest and rents received on account) jC 10 °- Secirity realised £Soo. Apportionment : — Life-tenant (or Income) Remainderman (or Capital) 1,000+ too [.000 1,000+ too of £3oo m £ 7 2fi of TSoo = £727i\ Prior to the above decision — there was a conflict of decisions on this question — it was at one time held that the amount actually received by the tenant should be brought into " hotchpot " thus :— Advance .. £1,000 Security realised £Soo Interest to years 400 Interest received 300 £1,400 £'>ioo Life-tenant— It of £400 = £314? Ler-i already received 300 M* Remainderman— }J of A.ooo 7i>5r jfbOO Hut this latter method of apportionment was overruled in Re Atkinson (supra), when Romer, L.J., said: "As to the interest which was paid to " the tenants-for-life, it is clear that the tenants- " for-life were entitled to receive it, and that the " remaindermen could have no possible claim " upon the sum so received by the tenants-for- " life — no equity against the tenants-for-life in ipect of those sums in any point of view " whatever. That being so, what is the position " of the tenants-for-life and the remaindermen so '• far as concerns the property that represents " the security for the debt? They are simply in " the position of persons who have one security " for the two debts belonging to them respec- " tively. Notwithstanding the payment of interest to the tenants-for-life, so far as concerns their arrears of interest they have a right, as against remaindermen, to see that those arrears are charged upon the security. The security is a security not only for principal but for interest, and that is a right the tenants-for-life had. And I fail to see any equity on the part of the remaindermen which would enable them to challenge the position or right of the tenants- for-life. That being so, when the security is insufficient to pay the two debts charged upon the security, I should have thought that it would follow as a matter of clear right that the tenants-for-life would say to the remaindermen : 'Apportion our security, which is a security for ' our debt as well as yours, between us in pro- ' portion to the amount of the respective debts, ' in the same way as you would if you had a ' joint mortgage given on one security — a ' security for two separate debts, and the ' security is insufficient.' In such a case you apportion the insufficient proceeds between the two mortgage debts. That is the simple prin- ciple, and there is no possible equity that I can see to prevent the ordinary rights applying and being enforced." Sometimes property not producing income is given to trustees in trust to convert and re-invest and to pay the income thereon to a tenant-for- life with reversion to others, but the conversion of the property into an income-producing fund may be properly deferred for the benefit of the estate. In such a case, the Court will order the apportionment between capital and income to be effected as follows : — Ascertain the amount which, if put out at interest on the day the property came into the trustees' hands (e.g., the day of the death of the testator), and accumulated at compound interest with yearly rests, less income-tax, would produce an amount equal to the pro- ceeds of the property upon the day such pro- ceeds were actually received. The rate of interest used to be 4 per cent., but it has now been laid down that for the future it should be 3 per cent. The sum so ascertained, after making provision for payment to the Inland Apportionment! Revenue Authorities of the income-tax deducted, is to be treated as capital, and the difference between that sum and the actual proceeds as income. The life-tenant will then receive compound interest at 3 per cent., less the current income- tax, upon the amount treated as capital, for if the above process be reversed, commencing with the final figure, whatever it may be, and interest (less tax) be added and compounded in yearly rests, the accumulations will bring the amount apportioned as capital to the equivalent of the actual proceeds of sale at the date thereof. The complication between capital and income, arising from the postponement of sale of non- income-producing assets, is often avoided by the insertion of a clause in the will, allowing post- ponement of sale, and providing that no allow- ance shall be made to the life-tenant in respect of any loss of income pending realisation. (See also title Executorship Accounts.) In Allhusen v. Whiltell (1867, 4 Eq. 295) an important rule of apportionment (re-affirming earlier decisions) was clearly laid down to the following ,• fleet:— Inasmuch as that portion of the capital ol a testator's estate which is required to pay the debts, legacies, funeral expenses, and such like is not part of the true residue of the estate, the life-tenant is not entitled to the income upon that portion of the capital which is so required. In other words, the capital of the estate must not be charged with the gross amount of the debts, legacies, and expenses, but only such a sum as with the income thereon for one year from the death, will make up the amount necessary to pay such debts, &c. This rule was also followed in Lambert v. Lambert (16 Eq. 320), the actual figures in that case being: Capital £10,209, first year's income £l,57I, debts, legacies, and expenses £4,729. Therefore £4,099 of the latter item was held chargeable to Capital Account, and £630 (the balance) was treated as the income earned upon the £4,099, leaving £941 f or the life-tenant. The method of apportionment may be illustrated thus: — 30 I Apportionment Gross Capital at date of death f lo 20 a income for first year, equal to 15-39 per cent. 1,571 Apportionment thereof: — Debts, Legacies, and Expenses— ~~~~~ Amount required to produce ^4,729 In one year at 1539 per cent ^4.000 Accretion thereto at 1539 per cent ^" per annum g 30 Ntt Capital Fund:— ' i4,7n Gross Amount Ao*og Less Amount required to be set aside ' for Debts, Legacies, and Expenses 4,099 Income for Ufe-Unanl 1539 per cent. ~ on £6,110 for one year, being the actual income £1,571 less the amount transferred 10 Capital Account to "assist" in the payment of the Debts, Legacies, and Expenses .... gjt £11,780 The rule is seldom applied in practice— in fact, it would raise considerable difficulties in many cases, for the rule is based upon the unwarranted assumption that the debts and expenses are not paid for one year after the death. For instance certain death duties must be paid earlier, and in many cases carry interest until payment. Many of the debts of a testator are found to be carrying interest and are paid promptly. Even legacies are in main cases directed by the will to be paid within a certain (limited) time after the death. In these respects the " executor's year " cannot be said to apply. In some instances a clause is inserted in the will excluding the operation of the rule, so that that portion of the capital of a testator's estate ultimately required for the payment of debts, legacies, &c, may be treated as " residue " until actually applied to such purposes. For the rule of apportionment in Howe v. Lord Dartmouth see article Executorship Accounts. Bankruptcy and Company Liquidation. —When any rent or other payment falls due at stated periods, and the receiving order or the winding. up order or resolution to wind up (as the case may be) is made at any time other than one of those periods, the person entitled to the rent or pavment may prove for a proportionate part thereof up to the date of the receiving order or winding-up order or resolution as if the rent or payment accrued due from day to day. (Bankruptcy Act 1883, 2nd Schedule, Rule 19, and Winding-up Rule 96.) Commercially, apportionments are made in respect of various matters not only upon a change of proprietorship, as in the case of the sale of a Apportionment J 3i [Apportionment business or an incoming or outgoing partner, but also upon each date the position of a concern is ascertained. Such items as interest, rent, rates, and fire insurance premiums, which accrue from dav to dav, require adjusting in order to show the position with accuracy, for some may be paid in advance whilst others are accruing due. It is sometimes contended that the omission to include apportionments does not materially affect commercial accounts, the " commencing " and " ending " figures compensating each other. Although this may generally be true as regards the Profit and Loss Account, it is not the case with the Balance Sheet, in which apportionments must be included if a proper statement of the position is to be prepared. In the case of annual payments there does not appear to be much difficulty as to their proper apportionment between two given periods, but where payments are made (say) quarterly in respect of an annual sum, there appears to be great difference of opinion. For instance, to take the familiar case of rent — a rental at the rate of £92 10s. per annum in respect of certain property is payable upon the usual " quarter days " — that is to say, ^23 2s. 6d. each quarter. The property is sold on the 9th September, the vendor having already received the rent payable on the previous 24th June, and an inquiry as to the amount pay- able to the vendor in respect of the rent accrued during the 77 days from 24th June to 9th Septem- ber elicited four different solutions, viz. : — Amount payable to vendor for accrued rent i s d 19 10 3 £ s d (■) ,V>.of £92 10 o <-) ',7 of £"3 26 (There are 97 days between 24th June and 29th September) of £92 10 o 5 1 4 The Purchaser is entitled to 20 ^^^s^ days' rent out of the current quarter's rent, therefore the vendor takes 23 2 6 Less 514 (4) The vendor is entitled to the por- tion of rent which has accrued since the date in the year from which the premises were origin- ally let. Thus, if the premises were let on 25th March in any year the vendor is entitled in this case to $3* of £92 10 o .. 42 it 6 Deduct Amount received on 24th June 23 2 6 iS The above solutions are set out at length in order to show the various principles involved, but the true solution would in all cases appear to be inseparable from the precise terms of the tenancy. Thus, if the rent is an annual one, but payable quarterly or otherwise for convenience, Solution No. 1 (above) is correct; whilst if the rent be a quarterly one, being referred to at its annual equivalent merely for comparative purposes. Solu- tion No. 2 is correct. Solution No. 4 would not only depend upon the terms of the agreement, but upon the terms of the receipt given for the rent received on 24th June. Where the sum to be apportioned is an annual one the apportionment may be effected readily by the use of an ordinary 5 per cent, interest table. Thus : — Ascertain the capital sum which if put out for one year at 5 per cent, per annum will produce the sum to be apportioned. Then find the interest at 5 per cent, per annum upon the capital sum so ascertained for the number of days in respect of which the apportionment is required. The amount of interest so ascer- tained is the apportioned part required. For example: — ^755 15s. gd. per annum; required the apportioned part for 97 days. The first part of the rule can speedily be carried out, for as £1 at 5 per cent, will produce one shilling per annum, conversely, every shilling and frac- tional part of a shilling in the interest represents a corresponding number of pounds and fractions thereof as capital. The annual sum therefore only requires to be reduced to shillings, and then termed pounds, to arrive at the capital sum. Thus ^755 15s. gd. interest is derived from 7J15.115 15s. capital ; and 97 days' interest upon the latter sum at 5 per cent, per annum is £200 16s. iod., which is the required portion of £755 15s. gd. for 97 days. Interest tables may also be made use of for apportionment purposes in another way when numerous apportionments are required of the same sum. For instance, required the respective apportionments of the annual sum of £tj us. for 87, 32, 27, and 219 days. Apportionment] 32 Arbitrator As x days' interest on £b is equal to b days' interest on £x, it follows that if the annual sum is less than ^18 5s. the problem may be reversed, and in the example given, instead of apportion- ing in the ordinary way by multiplication and division, all that is necessary is to find the inter, st at 5 per cent, on ,£87, ^32, £27, and ^219 for 352 days ( the number of shillings in the sum to be apportioned) and the required appor- tionments are obtained, the total of which should equal the annual sum ; thus a check is obtained. As the whole of these results are upon one page in an ordinary interest table, it is obviously the more rapid method. Appraisers. — Persons employed to value goods, &c. ; they are required to take out a licence, paying £2 per annum therefor. Appropriation Account. — An account to which the balance of a Profit and Loss Account is trans- fern d, so that the amount may be divided or appropriated according to the respective rights of those interested. For example, in the case of a company, part of the profits may be set aside to reserve, part divided amongst the preference shareholders and the ordinary shareholders, and the balance carried forward. Appropriation of Payments. — If a debtor owes more than one debt to a person, and makes a payment insufficient to satisfy the whole, the money is appropriated as follows : — (1) To the debt the debtor desires, if he • \ercise the option at the time of pay- ment. The appropriation may be by word, in writing, or by conduct. (2) If the debtor does not make any election, then the creditor may place the money igainst any debt he pleases. This he may Jo at any time before action is brought, and having done so he may alter his appro- priation, provided he has not notified the debtor, and so disclosed the previous state . f the account. Provided a debt really exists — that is to say, the contract upon which it is founded must not have been void — the creditor may place the money (if unappropriated by the debtor) against such debt, even though a right of action thereon may be barred by the Statute of Limitation. (3) If there be a general account between the parties, and no appropriation of payments by debtor or creditor, the presumption is that the payments have been appropriated to the items in order of date. " The first " item on the credit side is to be placed " against the first item on the debit side." (Clayton's case, 1 Mer. 585.) This pre- sumption may be rebutted by evidence. As against a cestui que trust a trustee who has mixed trust money with his own moneys in his banking account may not set up the rule in Clayton's case (No. 3 above), and it will be pre- sumed that in drawing out of the bank he drew upon his own funds and not the trust money. (In re Hallett's Estate, 13 Ch.D. 696.) Clayton's rule will, however, apply as between two cestuis que trustcnt under similar circumstances. Arbitration. — The determination of a matter or matters in dispute by the decision of one or more persons called arbitrators, who, in case they dis- agree, may call in an umpire to make a final decision. Arbitrations generally are governed b_v the Arbitration Act 18S9, if the submission is in writing. Under the 1889 Act (1) the parties agree in writing to submit differences to arbitra- tion ; (2) the arbitrator hears all the evidence ; (3) the award is drawn up; and (4) the Court will enforce the award as if it were a judgment or order to the same effect. (See Arbitrator.) Arbitrator. — A person appointed to decide matters in dispute between two or more parties. When the reference to arbitration is made by the Court, the arbitrator is termed an official or special referee. Although in general the arbitrator should be an impartial person, yet, if the parties with full knowledge of the facts select a man known to be biassed, there would be some difficulty in avoid- ing a trial before him. Arbitrator] 33 [Arrangement* The duties of an arbitrator are to hear and determine all the questions at issue, and exercise such skill as he possesses in arriving at a decision. His authority depends largely upon the terms of the submission, but he cannot order anything to be done which would amount to an illegality, nor can he decree a divorce or deal with criminal cases. He can only deal with matters within the strict ambit of the submission. An ordinary arbitration clause in a partnership agreement is sufficient to confer upon an arbitra- tor, appointed in pursuance of such clause, a power to award a dissolution and state the terms thereof. The arbitrator is not bound by any rules of procedure, although it is usual and proper to follow the proceedings of a trial at law. Notes of the evidence should be taken, and, on deciding to clos, the proceedings, prior to coming to his decision, the arbitrator should formally notify the parties thereof, after which it is improper for him to listen to either of the parties. The arbitrator cannot delegate his powers and duties to another; he must be present throughout the hearings, and, although he may call in legal or scientific experts and may delegate mere ministerial acts to his clerk, a solicitor, or an accountant, it is the decision of the arbitrator himself which must prevail, the award must be his, and he must not adopt the theories or opinions of anv of the experts he consults, unless he is convinced of their truth. The admission or rejection of evidence is in the discretion of the arbitrator, but if he refuse to hear evidence which clearly bears upon matters within the submission the validity of the award may be imperilled. Witnesses may be compelled to attend, give evidence, and produce documents, but they cannot be compelled to produce docu- ments which are not liable to be produced at a trial at law. Unless the submission shows a con- trary intention, the witnesses may be examined on oath or affirmation, and for that purpose the arbitrator may administer oaths to, or take the affirmations of, the parties to the submission, and the witnesses appearing before him. Persons wilfully giving false evidence are guilty of perjury, as if the evidence had been given in open Court. If a point of law arise the arbitrator may (i) deal with it, or (2) he may state a special case for the opinion of the Court, or (3) he may put his award in the form of a special case — that is to say, he may state the findings on the facts, and further state that if one view of the law be correct he finds for one party, or if another view of the law be correct he finds for the other party. Either party may ask the Court to compel the arbitrator to state a question of law for the opinion of the Court in the form of a special case. In the absence of anything to the contrary in a submission, it is implied that the reference is to a single arbitrator. (See Arbitration, Award, Special Referee, Submission, Umpire.) Arrangements in Bankruptcy. — An arrangement may be entered into between a debtor and his creditors either before or after adjudication. The procedure is as follows : — The debtor must lodge his proposal for a scheme or composition in writing with the Official Receiver within four days after submitting the statement of affairs. The proposal must contain the terms of the composition or scheme, and state the particulars as to sureties or securities, if any. A meeting of the creditors will then be called to consider the proposal before the close of the public examination, and if a majority in number and three-fourths in value of all the creditors who have proved their debts resolve to accept the proposal, and the Court approve, the scheme is binding on all the creditors. Any creditor who has proved his debt may assent to or dissent from the proposal by a letter addressed to the Official Receiver, and, if received a day prior to the meeting, the letter counts as if the creditor had attended the meeting and voted. Upon every application to the Court to approve a composition a fee is payable computed upon the gross amount of the composition, viz., £1 on every £100 or fraction of £100 up to £5,000, and Arrangements 34 Arrangements ios. on every ^ioo or fraction of £100 beyond ^5,000. Upon every application to the Court to approve a scheme of arrangement a fee is pay- able computed on the gross amount of the esti- mated assets (but not exceeding the gross amount of the unsecured liabilities), viz., £1 on every ^100 or fraction of £100 up to £$, 000, and 10s. on every £100 or fraction of ^'100 beyond ^5,000, provided that, where a fee has been taken upon a previous application to the Court to approve a composition or scheme, or where a fee has been paid upon the gross amount of the assets realised and brought to credit in the Cash Book when submitted for audit, seven-eighths of the amount thereof shall be deducted from the fee payable on application to approve a composition or scheme. Note. — The fee must be paid before the applica- tion can be heard. The Court cannot approve a scheme : — (1) Where the terms of the proposal are not reasonable ; or (2) Where the scheme is not calculated to benefit the general body of creditors; or (3) In any case in which the Court is required, where the debtor is adjudged bankrupt, to refuse his discharge. (And see below as to preferential payments and costs.) Where the estate of a bankrupt would entail great expense and involve considerable delay in realisation the Court is reluctant to refuse approval of a scheme which has been approved by the creditors, because prima facie they are the persons who are most interested in the matter, and are generally best able to judge as to whether a proposed scheme is really for their benefit. But where any facts are proved which would necessitate a conditional discharge, or the refusal or suspension of same, in the event of bankruptcy, the Court cannot approve a scheme unless it provides reasonable security for payment of not less than 7s. 6d. in the £ upon the unsecured debts provable at the date the scheme comes before the Court. (Re Ashmead Bar tie tt, 1901.) Creditors otherwise settled with can be excluded when providing the security, but the Court cannot sanction a scheme in which claims have been only conditionally withdrawn. (Re Pilling, 1903.) The effect of the approval of a composition upon the various debts due from the debtor is much the same as it would be had he been adjudged bankrupt — that is to say, the scheme is binding upon all creditors as regards debts provable in bankruptcy, but does not release the debtor from any liability under a judgment against him in an action for seduction, or under an affiliation order, or under a judgment against him as a co-respondent in a matrimonial cause except to such extent as the Court expressly orders. Where the Court approves of a composition or scheme after adjudication, it may make an order annulling the bankruptcy. The acceptance by a creditor of a composition or scheme does not release any partner of or joint-debtor with the debtor, or any person who was surety for him. No composition or scheme can be approved by the Court unless it provides for the payment in priority to other debts of all preferential payments in bankruptcy. The Court must also, before approving a com- position or scheme, be satisfied that provision is made for payment of all proper costs, charges, and expenses of, and incidental to, the proceed- ings, and all fees and percentages payable to the Official Receiver and the Board of Trade, under the scale in force for the time being. If default is made in payment of any instal- ment due in pursuance of any composition or scheme, or if it appears to the Court on satis- factory evidence that the composition or scheme cannot, in consequence of legal difficulties, or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on applica- tion by the Official Receiver or the trustee or by any creditor, adjudge the debtor bankrupt and annul the composition or scheme, but without prejudice to the validity of any sale, disposition, or payment duly made, or thing duly done, Arrangements] 35 [Arrangements under or in pursuance of the composition or scheme. Where a debtor is adjudged bankrupt as aforesaid, any debt provable in other respects, which has been contracted before the adjudica- tion will be provable in the bankruptcy. (An important article dealing with arrange- ments in bankruptcy appeared in The Accountant, 1902, p. 644.) Arrangements (Joint Stock Companies).— Where a compromise or arrangement is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the Court may, on the application in a summary way of the company or of any creditor or member of the company or, in the case of a company being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the com- pany or class of members, as the case may be, to be summoned in such manner as the Court directs. If a majority in number representing three- fourths in value of the creditors or class of creditors, or members or class of members, as the case may be, present either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors or the class of creditors, or on the members or class of members, as the case may be, and also on the company or, in the case of a company in the course of being wound up, on the liquidator and contributories of the company. In this section the expression " company " means any company liable to be wound up under this Act. (1908 Act, section 120.) Note. — The foregoing applies even if the com- pany is not in the course of being wound up. Voluntary Liquidation*. Any arrangement entered into between a corn- pan) about to be, or in the course of being, wound up voluntarily, and its creditors shall, subject to any right of appeal, be binding on the company if sanctioned by an extraordinary resolution, and on the creditors if acceded to by three-fourths in number and value of the creditors. Any creditor or contributory may, within three weeks from the completion of the arrange- ment, appeal to the Court against it, and the Court may thereupon, as it thinks just, amend, vary, or confirm the arrangement. (1908 Act, section 191.) Sale to another Company. Where a company is proposed to be, or is in course of being, wound up altogether voluntarily, and the whole or part of its business or property is proposed to be transferred or sold to another company (in this section called the transferee company), the liquidator of the first-mentioned company (in this section called the transferor company) may, with the sanction of a special resolution of that company, conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, receive in compensation or part compensation for the transfer or sale, shares, policies, or other like interests in the transferee company, for distribu- tion among the members of the transferor com- pany, or may enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies, or other like interests, or in addition thereto, par- ticipate in the profits of or receive any other benefit from the transferee company. Any sale or arrangement in pursuance of this section shall be binding on the members of the transferor company. If any member of the transferor company who did not vote in favour of the special resolution at either of the meetings held for passing and con- firming the same expresses his dissent therefrom in writing addressed to the liquidator, and left at the registered office of the company within seven days after the confirmation of the resolution, he may require the liquidator either to abstain from carrying the resolution into effect, or to purchase his interest at a price to be determined by agree- ment or by arbitration in manner provided (by the Companies Clauses Consolidation Act 1845). D 2 Arrangements 36 [Articled If the liquidator elects to purchase the member's interest the purchase money must be paid before the company is dissolved, and be raised by the liquidator in such manner as may be determined by special resolution. A special resolution shall not be invalid for the purposes of this section by reason that it is passed before or concurrently with a resolution for winding up the company, or for appointing liquidators ; but, if an order is made within a year for winding up the company by or subject to the supervision of the Court, the special reso- lution shall not be valid unless sanctioned by the Court. (1908 Act, section 192.) Note. — A dissentient shareholder has only the rights here set out ; he cannot impeach the sale. On the other hand, he is not compelled to accept shares in any other company, to which, as a result of the sale, he might become entitled. General 'Scheme of Liquidation by Arrangement. The liquidator may, with the sanction following (that is to say) — (a) in the case of a winding-up by the Court with the sanction either of the Court or of the committee of inspection ; (b) in the case of a winding-up subject to supervision, with the sanction of the Court ; and (c) in the case of a voluntary winding-up, with the sanction of an extraordinary resolution of the company, do the following things or any of them : — (i) Pay any classes of creditors in full ; (ii) Make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging them- selves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable ; (iii) Compromise all calls and liabilities to calls, debts, and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, ascer- tained or sounding only in damages, sub- sisting or supposed to subsist between the company and a contributory, or alleged contributory, or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding-up of the company, on such terms as may be agreed, and take any security for the dis- charge of any such call, debt, liability or claim, and give a complete discharge in respect thereof. In the case of a winding-up by the Court the exercise by the liquidator of the powers of this section shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers. (1908 Act, section 214.) Any conveyance or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void to all intents. (190S Act, section 210 (3).) (See Amalgamation, Reconstruction.) Articled Clerk. — Where, at the time of the pre- sentation of a bankruptcy petition, any person is apprenticed or is an articled clerk to the bank- rupt, the adjudication of bankruptcy operates as a complete discharge of the indenture or articles of agreement, if either the bankrupt or appren- tice or clerk gives notice in writing to that effect to the trustee, and if any money has been paid by, or on behalf of, the apprentice or clerk to the bankrupt as a fee, the trustee may, on the appli- cation of the apprentice or clerk, or of some person on his behalf (but subject to an appeal to the Court), pay such sum as he (the trustee) thinks reasonable out of the bankrupt's property, to or for the use of the apprentice or clerk — regard being had to (1) the amount which was paid to the bankrupt as a fee ; (2) the time served by the apprentice or clerk prior to the bankruptcy; and (3) any special circumstances. Articled 37 [Articles Where it appears expedient, the trustee may, upon application by the apprentice or clerk, instead of making a payment as compensation, transfer the indenture or articles of agreement to some other person. (1883 Act, section 41.) In the winding-up of an insolvent company, the same rules prevail as to the respective rights of secured and unsecured creditors, and as to debts and liabilities provable as are in force for the time being under the law of bankruptcy, and all persons who in bankruptcy would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding-up. (Companies Act 1908, section 207.) An apprentice or articled clerk would probably be entitled to preferential payment out of the assets of a company, but the point is not without doubt. Being a personal contract, an apprenticeship or articled clerkship ordinarily terminates on the death of either party, but if a master has covenanted to clothe and feed (as well as educate) the apprentice or clerk, the master's representatives in the event of his death will be required either to carry out the covenant to clothe and feed, or to compensate for the breach thereof, so far as they may have assets. Articles of Association (of a Company). — The internal regulations of a company, defining the mode and form in which the business of the com- pany is to be carried on. The Companies Act 1862 contained a pro formd set of regulations called Table A ; these were amended by the Board of Trade as from 1st October 1906, and are embodied, with further slight amendments, in the Companies (Consolida- tion) Act of 1908. A company limited by shares may adopt, in whole or in part, the provisions contained in Table A, or may be registered with a specially drawn set of articles. If no articles of associa- tion are registered with the memorandum, or if articles are registered, then in so far as they do not exclude or modify the regulations contained in Table A, such regulations shall so far as applic- able be the regulations of the company in the same manner and to the same extent as if thev were contained in duly registered articles. Specially drawn articles must be printed, divided into paragraphs, numbered consecutively, and bear a 10s. stamp, as if they were contained in a deed. The signatories to the memorandum must also sign the articles, such signatures being duly attested, but the number of shares the sub- scribers take must not be stated, as required in the case of the memorandum. (1908 Act, sec- tions 10, 11, and 12.) (See title Table A.) The effect of such signatures is similar mutatis mutandis to the signing of the memo- randum. (See Memorandum of Association.) On the registration of the articles a fee of 5s. is payable. The memorandum of association of a company limited by guarantee or unlimited must be accompanied by specially drawn regulations, and if the company has a share capital the articles must state the amount of share capital with which the company proposes to be registered. If it has no share capital the number of members with which it is proposed to be registered must be stated. (Section 10.) There are forms for guidance in the Third Schedule of the Act of 1908. Where it is desired to register a private com- pany as defined by section 121 of the Act, it will be necessary to register articles, for Table A does not comply with the requirements of that section. The restriction on the right to transfer partly paid-up shares, and shares on which the company has a lien, &c. (clause 20), is not considered sufficient restriction on " the right to transfer," for the Registrar contends that the restriction must apply to all shares. Clauses 35 to 40 inclusive, as to share warrants, must also be deleted, as they nullify the provisions of section 121, and clause 5 cannot apply to a private company. (See Private Company.) Briefly, the clauses of a company's articles deal with such matters as : — (1) Shares, as regards certificates, calls, for- feiture, lien, transfer, warrants to bearer, conversion, increase, and reduction of capital, rights attached to the shares, &c. Articles] 38 Articles (2) Borrowing powers, manner of raising loans ; how powers exerciseable, i.e., whether by company or by directors ; limit (if any) . (3) Meetings, proceedings, quorum, votes, minutes, &c. (4) Directors, proceedings, powers, qualifica- tion, remuneration, disqualification, retire- ment, &c. (5) Accounts, audit, dividends, reserve funds, &c (6) Arbitration, (7) serving of notices, anil (8) sundry other internal matters. The articles of association must keep within the ambit of the memorandum, for, as becomes a subsidiary document, they cannot in any way extend or amplify the memorandum. The articles of association cannot deprive the members of their statutory rights. For instance, a clause in the articles substituting certain rights in lieu of those contained in section 192 of the Act of 1908 (formerly sections 161 and 162 of the Act of 1862), as regards dissentient members in a recon- struction arrangement, has been declared void bv the Court of Appeal. (Re Gould, 1899.) So a clause in the articles purporting to forbid, or attempting to qualify, a shareholder's right to present a petition for winding-up is inoperative. Subject to the provisions of the Act of 1908, and to the conditions contained in its memorandum, a company may by special resolution alter or add to its articles; and any alteration or addition so made shall be as valid as if originally contained in the articles, and be subject in like manner to alteration by special resolution (section 13), and the company cannot be deprived or deprive itself of this power, for an article purporting to declare the regulations unalterable is void. Where articles have been registered a copy of every special resolution for the time being in force must be embodied in or annexed to every copy of the articles issued after the confirmation of the resolution. A copy of every special resolution must be printed and tiled (within 15 days of the confirma- tion of the same) with the Registrar of Joint Stock Companies, and a fee of 5s. is payable thereon. Default in printing or forwarding the copy of a special resolution to the Registrar, or in embody- ing or annexing it to the articles, renders the company and every director and manager know- ingly permitting the default liable to certain fines. (Section 70.) At one time it was a common practice for directors of companies to take power in their articles of association " to make from time to " time such bye-laws as may be found necessary " for the internal regulation of the company's " affairs." This provision must now be care- fully expressed as applicable only to the conduct of the business and the control of the company's servants. If the provision be of such a nature as possibly to affect the rights, privileges, and liabilities of members, it will be looked upon by the authorities as affording scope (under the guise of bye-laws) for making such changes in thc- regulations as would amount to an alteration of the articles. As this would, under ordinary circumstances, require a special resolution, the Registrar will refuse to register articles contain- ing such a clause unless restricted as stated. The articles are only a contract by the share- holders inter sc as such, and do not constitute a contract with any outside person named therein, even though he may be a signatory to the memo- randum and articles, so that a solicitor or auditor nominated as such in the articles cannot enforce the appointment. The nomination merely amounts to an authority to the directors to- appoint the person or persons in question ; the articles must be regarded as regulations, and not as a contract with the nominees. Therefore, it is- usual to appoint the chairman of directors, the secretary, solicitor, and auditors, at the first meeting of directors, or to adopt the appointment of any of the officers if mentioned in the articles. Every person having dealings with a company, whether a member or a creditor or otherwise, is deemed to have constructive notice of the memo- randum and articles of association, so far as regards the external position of the company. Article*] 39 [Articles Every number of a company is entitled to have a copy of the memorandum and also of the articles of association (if any) forwarded to him on payment of the sum of is. or any less sum prescribed by the company for each copy. Any company making default in forwarding a copy of the memorandum and articles of association upon request is liable to a fine not exceeding one pound. (Section iS.) Where articles have not been registered a copy of every special resolution must be forwarded in print to any member at his request on payment of one shilling, or such less sum as the company may direct. Default renders the company and every director and manager knowingly permitting same liable to a fine not exceeding one pound. . tion 70.) The original memorandum and articles of association (together with copies of special reso- lutions altering same, as stated above) are open to the inspection of the public at the office of the Registrar of Joint Slock Companies on payment of the prescribed fees. (Section 243.) (Si\- Memorandum of Association.) Articles of Partnership. — Although a partnership may !>■ constituted by verbal agreement, it is more usual for the partners to enter into an agreement in writing, either under seal or under hand only. If the agreement be under seal it is referred to as the partnership deed, and if under hand only, the articles of partnership. Both documents, however, are drafted in " article form " — that is to say, in distinct para- graphs or divisions, each dealing with a separate matter for convenience of reference. The principal matters usually dealt with in a partnership agreement are : — (1) The names of the partners and the style of the firm. (2) Nature of Business. (3) Term of Partnership. (4) Capital to be contributed. (5) The banking account and the right to sign cheques. (6) How profits and losses are to be shared. (7) Whether interest on capital is to be allowed, and, if so, the rate. (8) Whether any acting partner is to receive a salary. (9) Whether partners are to be allowed to draw against accruing profits; if so, the amount; whether interest is to be charge- able thereon ; and, if so, the rate. (10) Whether partners are to devote their whole time to the business of the partnership or not. (11) Whether an\ r partner is to have extra- ordinary powers, or any partner's authority is to be restricted. (12) Provisions as to the notice required to effect a dissolution. (13) Rights of various partners on dissolution, retirement, or death, as regards — (a) Goodwill. (b) Proportion of accrued profits or losses. (c) Conditions of repayment of capital. (d) Competition with firm (in case of retirement). (e) Surplus assets (in case of dissolu- tion) . (14) Provisions as to proper books of account being kept and audited, and as to the partners signing the Balance Sheets. (15) Arbitration in case of dispute. The foregoing are general matters usually dealt with, the peculiar circumstances of each case requiring special clauses. The partners may determine their respective rights, interests, powers, and duties as they may think fit, but they cannot affect the rights of third parties, nor can their arrangements inter se operate to the prejudice of strangers. It is the ordinary apparent authority of a partner which a stranger is entitled to act upon, Articles] 40 Assurance so that if any restriction be placed upon the ordinary powers of a partner, such restriction will only be operative as against third parties who have been notified of it. In the absence of any agreement between the partners, the provisions of the Partnership Act 1890 apply so as to determine the respective rights, duties, and interests of the partners. (See Partnership.) Since 1st January 1908, articles of partnership in the case of " limited partnerships " must con- tain special provisions as to the capital con- tributed (and not to be withdrawn) by the limited partner or partners, &c. (See title Limited Partnership.) Assessment. — The valuation of property or other subject-matter for the purposes of taxation. (See titles Annual Value, Income-tax.) Assets. — Property available for the payment of the debts and legacies of a deceased person ; com- mercially, the stock-in-trade, land, buildings, machinery, tools, book debts, cash, &c, of a trader. Assets may be classified variously according to the particular circumstances of the case, viz. : — As regards value, they may be wasting assets (see titles Depreciation, Profits available for Dividend, Trust Investments, Wear and Tear), or they may be fluctuating assets, e.g., investments subject to the fluctuations of the Stock Exchange. Tangible assets are such as are readily realisable, whereas intangible assets are not actually fictitious but such as are difficult to convert into money, e.g., Goodwill. Fictitious assets are those which are not realisable at all, e.g., preliminary expenses of a company, or the cost of a debenture issue, which are considered too heavy to charge against the profits of the year in which they were incurred and are being written off over a period of years, the diminish- ing balances being meantime treated as assets in the Balance Sheet. As regards the character or nature of the assets, they may be legal or equitable, fixed, floating or circulating. (As to these see titles Capital, Fixed Capital, Floating Capital, Legal Assets.) Assignment. — The transfer of property or an interest therein to another. (See D'fd of Arrangement.) Assurance. — See Insurance. ■ Assurance Companies Act 1909. — This Act consoli- dated and amended the law relating to life assurance companies, and extended the same in some respects to companies carrying on insurance and bond investment business. The Act applies to all persons or bodies of persons (called in the Act " assurance com- panies "), whether corporate or unincorporate, and whether established before or after the commencement of the Act (1st July 1910), and whether established within or without the United Kingdom, who carry on business within the United Kingdom in connection with (a) life assurance (life policies and life annuities) ; (b) fire insurance; (c) insurance against per- sonal accidents, including sickness and disease; (d) employers' liability insurance; or (e) bond investments as defined by the Act. Note. — A company registered under the Com- panies Acts which transacts business of any such class as aforesaid in any part of the world is deemed to transact such business within the United Kingdom. The Act does not apply to bodies of persons registered under the Acts relating to friendly societies or trade unions (section 1), or to employers' liability insurance business, carried on by companies as incidental only to the business of marine insurance or by certain associations of employers for the mutual insurance of members. (Section 33.) Nor does it apply to a member of Lloyd's, or of any other association of under- writers approved by the Board of Trade who carries on assurance business of any class, pro- vided he complies with the requirements set out in the Eighth Schedule to the Act and applicable to business of that class. (Section 2S.) These requirements inter alia involve the deposit of £2,000 by each member, or, as respects fire and accident insurance business, the compliance with alternative conditions. Assurance 4i Assurance Subject to the provisions below, every assurance company must deposit, and keep deposited, with the Paymaster-General for the Supreme Court the sum of £'20,000, which shall be invested by him in such authorised securities as the company may select, and shall be deemed part of the assets of the company, and interest accruing due on any such securities shall be paid to the company. (Section 2.) Where a company carries on life assurance business the obligation to deposit the £20,000 applies, notwithstanding the fact that the com- pany has previously made and withdrawn its deposit or been previously exempted therefrom under enactments repealed by the 1909 Act. (Section 30.) Where a company carries on, or intends to carry on, more than one class of assurance busi- ness, a separate sum of £20,000 must be deposited in respect of each class of business (section 2), provided that it shall not be necessary to make a deposit in respect of fire (or accident insurance) business where the company has made a deposit in respect of any other class of assurance busi- ness, and where a company having made a deposit in respect of fire or accident insurance business commences to carry on life assurance business or employers' liability insurance busi- ness the company may transfer the deposit so made to the account of that other business, and thereafter it shall be treated as if it had been made in respect of such other business. (Sections 31 and 32.) The provisions of the Act with regard to deposits do not apply — (1) In respect of the fire insurance, accident insurance, or bond investment business of a company which had commenced to carry on that business within the United King- dom before the passing of the Act (3rd December 1909), or in respect of the employers' liability insurance business of a company which had commenced to carry on that business within the United King- dom before 28th August 1907; or (2) In respect of a business wholly or mainly carried on by an association of owners or occupiers for the purpose of the mutual insurance of its members against fire damage. (Sections 31 to 34 inclusive.) As soon as the employers' liability fund or the bond investment fund set apart and secured for the satisfaction of the claims of the respective policy holders or bond holders amounts to £40,000, the money deposited by a company in respect of the employers' liability insurance busi- ness or bond investment business must be returned to the company if the company has made a deposit in respect of any other class of assurance business. (Sections 33 and 34.) Where an assurance company transacts other business besides that of assurance, or transacts more than one class of assurance business, a separate account must be kept of all receipts in respect of the assurance business, or of each class of assurance business, provided that the investments of the various funds need not be kept separate. (Section 3.) This require- ment does not apply as regards fire insurance business and accident insurance business. (Sections 31 and 32.) The funds of the various classes of assurance business shall con- stitute the security and must be exclusively applied to the purposes of the specific class to which they are applicable. (Section 3.) Special provisions are contained in the Act a= regards the specific liability of certain funds in the case of life assurance companies established prior to 1870. Every assurance company must at the end of each financial year prepare a Revenue Account, a Profit and Loss Account (except where the company carries on assurance busi- ness of one class only, and no other business), and a Balance Sheet, in the prescribed forms. (Section 4.) Every life assurance and bond investment com- pany shall once in every five years, or at such shorter intervals as may be prescribed by the regulations of the company, cause an investiga- tion to be made into its financial condition by an actuary, and shall cause an abstract of the report of such actuary to be made in the prescribed forms. (Section 5.) Companies carrying on accident and employers' liability insurance business must file statements annually in the prescribed forms. (Sections 32 and 33.) Assurance ; 42 Assurance Note. — The forms may be modified with the consent of the Board of Trade for the purpose of adapting them to the circumstances of any particular company. (Section 22.) Every account, Balance Sheet, abstract, or statement hereinbefore required to be made shall be printed, and four copies thereof, one of which shall be signed by the chairman and two directors of the company and by the principal officer of the company, and, if the company has a managing director, by the managing director, shall be deposited at the Board of Trade within six months after the close of the period to which the account, Balance Sheet, abstract, or state- ment relates: Provided that, if in any case it is made to appear to the Board of Trade that the circumstances are such that a longer period than six months should be allowed, the Board may extend that period by such period not exceeding three months as they think fit. The Board of Trade shall consider the accounts, Balance Sheets, abstracts, and statements so deposited, and, if any such account, Balance Sheet, abstract, or statement appears to the Board to be inaccurate or incomplete in any respect, the Board shall communicate with the company with a view to the correction of an)' such inaccuracies and the supply of deficiencies. There shall be deposited with every Revenue Account and Balance Sheet of a company any report on the affairs of the company submitted to the shareholders or policy holders of the company in respect of the financial year to which the account and Balance Sheet relates. Where an assurance company, registered under the Companies Acts, in any year deposits its accounts and Balance Sheet in accordance with the provisions of this section, the company may, at the same time, send to the Registrar a copy of such accounts and Balance Sheet ; and, where such copy is so sent, it shall not be necessary for the company to send to the Registrar a state- ment in the form of a Balance Sheet as required by subsection (3) of section 26 of the Companies (Consolidation) Act 1908, and the copy of the accounts and Balance Sheet so sent shall be dealt with in all respects as if it were a statement sent in accordance with that subsection. (Section 7.) (See title Annual List and Summary.) A printed copy of the last-deposited accounts, Balance Sheet, abstract, or statement shall, on the application of any shareholder or policy-holder of the company, be forwarded to him by the com- pany by post or otherwise. (Section 8.) The Board of Trade may direct any documents deposited with them under the Act, or certified copies thereof, to be kept by the Registrar of Joint Stock Companies, or by any other officer of the Board of Trade ; and any such documents and copies shall be open to inspection, and copies thereof may be procured by any person on pay- ment of such fees as the Board of Trade may direct. (Section 20.) Where the accounts of an assurance company are not subject to audit in accordance with the provisions of the Companies (Consolidation) Act 1008, or the Companies Clauses Consolidation Act iS.|5, relating to audit, the accounts of the com- pany shall be audited annually in such manner as the Board of Trade may prescribe, and the regulations made for the purpose may apply to any such company the provisions of the Com- panies (Consolidation) Act 1908, relating to audit, subject to such adaptations and modifications as may appear necessary or expedient. (Section 9.) (See title Auditor.) livery assurance company which is not regis- tered under the Companies Acts, or which has not incorporated in its deed of settlement section 10 of the Companies Clauses Consolidation Act 1845. shall keep a " Shareholders' Address Book," in accordance with the provisions of that section, and shall, on the application of any shareholder or policy-holder of the company, furnish to him a copy of such book on payment of a sum not exceeding sixpence for every hundred words required to be copied. (Section 10.) Every assurance company which is not regis- tered under the Companies Acts shall cause a sufficient number of copies of its deed of settle- ment or other instrument constituting the com- Assurance 43 Assurance to be printed, and shall, on the application of any shareholder or policy-holder of the com- pany, furnish to him a copy of such deed of settlement or other instrument on payment of a sum not exceeding one shilling. (Section n.) Where any notice, advertisement, or other 1 publication of an assurance company con- tains a statement of the amount of the autho- capital of the company, the publication shall also contain a statement of the amount of the capital which has been subscribed and the amount paid* up. (Section 12.) Where it is intended to amalgamate two or more assurance companies, or to transfer the nice business of any class from one assurance company to another companv, the directors of any one or more of such companies may apply to the Court by petition to sanction the proposed arrangement. (Section 13.) No amalgamation or transfer shall take place unless sanctioned by the Court in accordance with the provisions of Section 13 of the Act. But such provisions with respect to amalgamation do not apply where the only classes of assurance business carried on by both of the companies are lire insurance business and/or accident insurance business, nor do they apply with respect to the transfer of fire insurance business or accident insurance business from one company to another. (Sections 31 and 32.) The Court shall not sanction any scheme of amalgamation or transfer affecting life assurance business where life policy- holders representing one-tenth or more of the total amount assured in the company dissent from the scheme. (Section 30.) The Court max order the winding up of an assurance companv in accordance with the Com- panies (Consolidation) Act 190S, and the pro- visions of that Act shall apply accordingly, sub- ject, however, to the following modification: — The company may be ordered to be wound up on the petition of ten or more policy-holders owning policies of an aggregate value of not less than ten thousand pounds. Provided that such a petition shall not be pre- sented except by the leave of the Court, and leave shall not be granted until a primA facie case has been established to the satisfaction of the Court, and until security for costs for such amount as the Court may think reasonable has been given. (Section 15.) But the Court, in the case of an assurance companv which has been proved to be unable to pay its debts, may, if it thinks fit, reduce the amount of the contracts of the company upon such terms and subject to such conditions as the Court thinks just in place of making a winding-up order. (Section 18.) Where an assurance companv is being wound up by the Court, or subject to the supervision of the Court, or voluntarily, the value of a policy of any class, or of a liability under such policy requiring to be valued in such winding- up, shall be estimated in manner applicable to policies and liabilities of that class provided by the Sixth Schedule to the Act. (See infra.) The rules in the Sixth Schedule to the Act shall be of the same force, and may be repealed, altered, or amended as if they were rules made in pursuance of section 238 of the Companies (Consolidation) Act 1908, and rules may be made under that section for the pur- pose of carrying into effect the provisions of the Act with respect to the winding-up of assurance companies. (Section 17.) The Sixth Schedule of the Act provides as follows : — Roles for Valuing Policies and Liabilities. (a) As respects Life Policies and Annuities. Rule for Valuing an Annuity. An annuity shall be valued according to the tables used by the company which granted such annuity at the time of granting the same, and, where such tables cannot be ascertained or adopted to the satisfaction of the Court, then according to such rate of interest and table of mortality as the Court may direct. Rule for Valuing a Policy. The value of the policy is to be the difference between the present value of the reversion in the sum assured, according to the contingency upon Assurance 44 Attachment which it is payable, including any bonus or addition thereto made before the commence- ment of the winding-up, and the present value of the future annual premiums. In calculating such present values interest is to be assumed at such rate, and the rate of mor- tality according to such tables, as the Court may direct. The premium to be calculated is to be such premium as, according to the said rate of interest and rate of mortality, is sufficient to provide for the risk incurred by the office in issuing the policy, exclusive of any addition thereto for office expenses and other charges. (M As respects Fire Policies. Rule for Valuing a Policy. The value of a current policy shall be such portion of the last premium paid as is propor- tionate to the unexpired portion of the period in respect of which the premium was paid. (c) As respects Accident Policies. Rule for Valuing a Periodical Payment. The present value of a periodical payment shall, in the case of total permanent incapacity, be such an amount as would, if invested in the purchase of a life annuity from the National Debt Commissioners through the Post Office Savings Bank, purchase an annuity equal to 75 per centum of the annual value of the periodical pay- ment, and, in any other case, shall be such pro- portion of such amount as may, under the circumstances of the case, be proper. Rule for Valuing a Policy. The value of a current policy shall be such portion of the last premium paid as is propor- tionate to the unexpired portion of the period in respect of which the premium was paid. (d) As respects Employers' Liability Policies. Rule for Valuing a Weekly Payment. The present value of a weekly payment shall, if the incapacity of the workman in respect of which it is payable is total permanent incapacity, be such an amount as would, if invested in the purchase of an immediate life annuity from the National Debt Commissioners through the Post Office Savings Bank, purchase an annuity for the workman equal to 75 per cent, of the annual value of the weekly payment, and in any other case shall be such proportion of such amount as may, under the circumstances of the case, be proper. Rule for Valuing a Policy. The value of a current policy shall be such portion of the last premium paid as is propor- tionate to the unexpired portion of the period in respect of which the premium was paid, together with, in the case of a policy under which any weekly payment is payable, the present value of that weekly payment. (c) As respects Bonds or CertiScati >. Ride for Valuing a Policy or Certificate. The value of a policy or certificate is to be the difference between the present value of the sum assured, according to the date at which it is pay- able, including any bonus or addition thereto made before the commencement of the winding- up and the present value of the future annual premiums. In calculating such present values, interest is to be assumed at such rate as the Court may direct. The premium to be calculated is to be such premium as, according to the said rate of interest, is sufficient to provide for the sum assured by the policy or certificate, exclusive of any addition thereto for office expenses and other charges. (See Accident Insurance, Insurance. Life Assurance Companies, Workmen's Com] lion.) Ats. — An abbreviation denoting " at the suit of," used by the defendant in referring to the action against him, thus: — Jones (defendant) ats. Williams (plaintiff). At sight. — See After sight. Attachment of Debt. — A judgment creditor may apply to the Court (1) to have a judgment debtor orally examined as to any debts due to him from Attachment 45 [Auction third parties, and (2) for an order attaching such debts owing or accruing in the hands of any third parties (called garnishees) . A garnishee may then be required to appear before the Court to show cause why he should not pay the judgment creditor the amount he (the garnishee) owes to the judgment debtor, or so much as is necessary to satisfy the judgment debt. An attachment of a debt due to a bankrupt will not be good as against the trustee unless com- pleted (by receipt of the debt) by the judgment creditor before (1) The date of the receiving order; and (2) Notice of a bankruptcy petition by or against the judgment debtor, or notice of the commission by him of an available act of bankruptcy. (Bankruptcy Act 1883, section 45.) Attendance Book. — A book used for recording attendances at meetings of the members of any committee or similar body. It is usual to employ such a book in the case of joint stock companies, and it is particularly advisable where the directors are either paid a fee for each attendance, or where the total amount voted to ihe " board " is divisible among the directors in proportion to their respective attendances. Attestation Clause. — The statement upon a written instrument that such instrument was executed in tin' presence of those who sign the " clause." Allhough such a clause is generally set out at length on a will or codicil, the Wills Act 1837 expressly provides that no form of attestation is necessary. (Sec title Will.) Attorney. — One appointed to do something for another. There are two kinds : — Attorney-at-Law. — Now called a solicitor of the Supreme Court. Attorney in fact. — One appointed to do some special business; a kind of special agent. The appointment must be by deed, commonly called a " power of attorney." (q-v.) Attornment. — The acknowledgment of a new lord ; the assent of a tenant of one person to become the tenant of another. Auction. — A public sale of property conducted by biddings of intending buyers, each successive bid increasing the price, the highest bidder becoming the purchaser. When goods are sold by auction each lot is deemed to be the subject of a separate contract of sale. The acceptance of the offer of an intending buyer is signified by the " fall of a hammer " in the hands of the auctioneer, or by some other customary sign. Until the fall of the hammer any bidder may retract his bid (and semble the auctioneer may withdraw his offer of the goods for sale), but upon the fall of the hammer the contract of sale is completed, subject, of course, to the conditions of sale being complied with ; for instance, that the reserve price has been obtained. Where a right to bid is expressly reserved, but not otherwise, the seller or his agent may bid at an auction ; any sale contravening this rule may be treated as fraudulent by the buyer, who may have the contract rescinded and recover the price if already paid. A sale by auction may be notified to be subject to a reserve or upset price. The qualifications are generally included in the printed conditions of sale and read out by the auctioneer prior to commencing the auction. A trustee in bankruptcy is accountable for the proceeds of every auction sale (of the bankrupt's property) authorised by him (Rule 295), and the gross proceeds must be recovered from the auctioneer and included among the trustee's receipts, and the auctioneer's charges, when taxed, paid over in due course. (See Allocatur.) The auctioneer's Sale Accounts should be forwarded to the Board of Trade by the trustee, when submitting his accounts for audit. The scale of allowances to auctioneers is fixed by the appendix to the Rules of 1S90, and although the trustee may arrange with the auctioneer that the scale charges be subject to a reduction, they cannot be exceeded without the sanction of the Board of Trade. Where either the trustee or his firm acts as auctioneer (or valuer) no special charge for such services will be allowed, as the trustee is only entitled to the remuneration voted to him in the prescribed manner. (Board of Trade Regulations.) The above provisions apply (mutatis mutandis} to the winding-up of companies by the Court. (See Auctioneer, Dutch Auction.) Auctioneerj 46 Audit Auctioneer. — A person appointed to sell goods, mer- chandise, or other property at a public auction for a recompense, generally in the form of a com- mission. He must have a licence, paying a duty therefor of ^10 per annum. Until the " fall of the hammer " an auctioneer is the agent of the seller only, but after the sale is completed he becomes the agent of both parties, and his signa- ture is prinid facie sufficient to satisfy section 4 of the Sale of Goods Act 1893; but the presump- tion may be rebutted, for instance, where the auctioneer is himself the vendor. The auctioneer is personally liable on his con- tracts, and may ordinarily himself sue thereon, and in his own name. He must obtain the best price for the goods or property sold, and should sell only for cash, being responsible for: — (1) The proper storage of any goods in his charge prior to the sale, and (2) The price of them after sale. He has, however, a special property in goods in his possession, and a lien upon them for his charges. He has, impliedly, authority to do all such acts as are within an auctioneer's province, and may receive the proceeds of the sale of goods, but only the deposit in respect of the sale of lands. His authority cannot be delegated. Whilst a broker has not the possession of the subject-matter of sale an auctioneer often has such possession ; further, a broker can both buy and sell publicly and privately, whilst an auctioneer (qua auctioneer) can sell only, and is restricted to public auction. (See Auction.) Audit. — An authorised examination of accounts. The term is capable of many constructions, vary- ing in their degree with the extent of an auditor's powers, duties, and responsibilities, although the Legislature evidently assumes that the word has a recognised meaning, for the Municipal Corporations Act 1882 provides that the treasurer shall submit his accounts, with the necessary vouchers and papers to the auditors, " and they shall audit tliem." The many conflicts of opinion as to the precise meaning of these few words have placed the audit of the accounts of municipal bodies upon an unsatisfactory basis. Some of the questions arising in the course of an audit are dealt with under the under- mentioned titles: — Accumulated profits. Agents' balances. Agents' returns. Allowance. Analysis of the Ledger. Anticipation of profit. Apportionment. Appropriation of payments. Articles of Association. Articles of Partnership. Assurance Companies Act. Audit Note-book. Auditor. Bad and doubtful debts. Balance Sheet. Bank Book. Bills discounted. Bills receivable. Book debts. Borough Auditors. Branch Accounts. Branch Banks. Building Societies. Cancellation of scrip. Cancellation of vouchers. Capital. Capital expenditure. Capital receipts. Carriage and cartage. Cash Book. Charges recoverable. Cheque Book. Circulating Capital. Completed audit. Consignment. Continuous audit. Contra. Conversion of stock. Cost Accounts. Cost Book Mining Company. Credit note. Creditor. Dating forward. Deferred ordinary shares. Departmental Accounts. Depreciation. Directors. Discount. Double-Account System. Doubtful Debts Ledger. Drawings. Empties. Equation of payments. Error. Establishment Account. Falsification of Accounts. Filed Capital. Fixtures. Forfeiture of shares. Founders' shares. Fraud. Free of income-tax. Friendly Societies. Goodwill. Gross Profit. Head office charges. Hire and purchase agree- ments. Imprest system. Income. Income and Expenditure. Income-tax. Incomplete work. Inscribed Stocks. Inspection. Interest. Interest on calls in arrear. Interest on capital. Interest on capital during con- struction of works. Interest on moneys in advance of calls. Interim dividend. Intermediate balancing. Internal check. Investigation, Investment. Joint stock company. journal. Land tax. Life Assurance Companies. Loose plant and tools. Manufacturers' Account:.. Memorandum of Association. Minutes and Minute Book. Misfeasance. Mortgage (Ship). Municipal Accounts. Petty cash. Poitage bill. Preference stock and shares. Preliminary expenses. Premiums on shares. Profit. Profit and Loss Account. Profits available for dividend. Profits prior to incorporation. Prospectus. Proving the balances. Public Trustee. Rate of exchange. Realised profits. Rebate on bills discounted. Receipt. Receipt Book. Receipts and payments. Redeemable debentures. Registered capital. Register of Members. Register and Registration of Mort- gages. Rent roll. Repairs and renewals. Reserves and Reserve Funds. Royalty. Sale Contract. Savings Banks. Sectional Ledgers. Selling-price System. Single- Account System. Sinking Funds. Slip Bookkeeping. Statement of Account. Statutory meeting. Stock-in-Trade. Stock Register. Suspense Account. Till takings. Trial Balance. Unclaimed dividends. Unexpired risks. Unpresented cheques. Voucher. Vouching back. Voyage Account. Wages. " Writing down " assets. " Writing up " assets. Audit 47 Auditor Audit Note Book. — A Memorandum Book wherein are recorded the nature of the work performed in respect of a particular set of accounts, the names of those by whom the work is done, and the date thereof. A record is also made of all matters requiring special attention (including extracts from the Articles of Partnership or Articles of Association and Minute Books, &c), or which call for inquiry and explanation, so that (i) they may be dealt with at a later stage without interfering with the course of audit ; and (2) the replies may be noted for future reference. When the Note Book is ruled to meet the requirements of a particular audit, it serves as a ground plan of the work to be performed, and minimises the risk of any portion of the audit work being left uncompleted either (a) by the omission to examine subsidiary books, or (b) by the omission to apply any special test, such as vouching or comparison with other records which any particular book may render necessary. There is an excellent form of Audit Note Book published which is applicable to a large number of cases, and capable of modification to meet particular instances. Auditor. — A person appointed to examine and report upon certain accounts; he has also the right of examining, and hearing the explana- tions of, any persons responsible for the accounts under examination ; in fact, it is believed that the ancient system of conducting an examination of accounts was carried out orally, hence the derivation of the word. The varying circumstances under which an auditor may be appointed, the extent of his duties and attendant responsibilities, are beyond I the scope of this work, and for more exhaustive treatment of the subject reference must be made to books devoted solely to these particular ques- Itions. Throughout this work, however, in their appropriate places (see title Audit), numerous references are made to matters concerning the duties and responsibilities • of an auditor, the office being one of the most important elements of the practice of a professional accountant. The Companies Act 1900 first rendered the appointment of an auditor compulsory in respect of every company registered under the Companies Acts of 1862 el scq., and the provisions of the Act of 1 goo, as amended by the Act of 1907, are now embodied in the Companies (Consolidation) Act of igoS. Some of the most important Acts of Parlia- ment which contain " audit provisions " are: — Assurance Companies Act 1909. Building Societies Act 1894. (See title Build- ing Societies.) Companies Clauses Consolidation Act 1S45. Companies (Consolidation) Act 1908. District Auditors Act 1879. Friendly Societies Act 1S75. Municipal Corporations Act 1S82. (See title Borough Auditors.) Public Health Act 1875. Regulation of Railways Act 1S6S. Trustee Savings Bank Act 1S93. (See title Savings Banks.) With regard to companies to which the 190S Act applies, the following are the statutory pro- visions as to auditors : — Every company shall at each annual general meeting appoint an auditor or auditors to hold office until the next annual general meeting. Xoie. — The Act does not prescribe any par- ticular qualification for the auditor. If an appointment of auditors is not made at an annual general meeting, the Board of Trade may, on the application of any member of the company, appoint an auditor of the company for the current year, and fix the remuneration to be paid to him by the company for his services. A director or officer of the company shall not be capable of being appointed auditor of the company. A person, other than a retiring auditor, shall not be capable of being appointed auditor at an annual general meeting unless notice of an inten- tion to nominate that person to the office of auditor has been given by a shareholder to the Auditor] 48 fAuditor company not less than fourteen days before the annual general meeting, and the company shall send a copy of any such notice to the retiring auditor, and shall give notice thereof to the shareholders, either by advertisement or in any other mode allowed by the articles, not less than seven days before the annual general meeting : Provided that if, after notice of the intention to nominate an auditor has been so given, an annual general meeting is called for a date fourteen days or less after the notice has been given, the notice, though not given within the time required by this provision, shall be deemed to have been properly given for the purposes thereof, and the notice to be sent or given by the com- pany may, instead of being sent or given within the time required by this provision, be sent or given at the same time as the notice of the annual general meeting. Note. — If through inadvertence or otherwise the necessary notice to appoint another auditor has not been given, the shareholders, if they desire a change of auditor, may decline to re-elect the retiring auditor, under which circumstances the Board of Trade would presumably make the appointment (supra) — not the directors, as in the case of a casual vacancy (infra). The first auditors of the company may be appointed by the directors before the statutory meeting, and if so appointed shall hold office until the first annual general meeting, unless pre- viously removed by a resolution of the share- holders in general meeting, in which case the shareholders at that meeting may appoint auditors. The directors may fill any casual vacancy in the office of auditor, but while any such vacancy continues the surviving or continuing auditor or auditors, if any, may act. The remuneration of the auditors of a company shall be fixed by the company in general meeting, except that the remuneration of any auditors appointed before the statutory meeting, or to fill any casual vacancy, may be fixed by the directors. (Section 112.) Every auditor of a company shall have a right of access at all times to the books and accounts and vouchers of the company, and shall be entitled to require from the directors and officers of the company such information and explana- tion as may be necessary for the performance of the duties of the auditors. The auditors shall make a report to the share- holders on the accounts examined by them, and on every Balance Sheet laid before the company in general meeting during their tenure of office, and the report shall state — (a) Whether or not they have obtained all the information and explanations they have required ; and (b) Whether, in their opinion, the Balance Sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the company's affairs according to the best of their information and the explanations given to them, and as shown by the books of the company. Note. — The words " as shown by the books of the company " were commented on by Lindley, L.J., and are referred to later. The Balance Sheet shall be signed on behalf of the board by two of the directors of the com- pany or, if there is only one director, by that director, and the auditors' report shall be attached to the Balance Sheet, or there shall be inserted at the foot of the Balance Sheet a refer- ence to the report, and the report shall be read before the company in general meeting, and shall be open to inspection by any shareholder. Any shareholder shall be entitled to be furnished with a copy of the Balance Sheet and auditors' report at a charge not exceeding sixpence for every hundred words. If any copy of a Balance Sheet which has not been signed as required by this section is issued, circulated, or published, or if any copy of a Balance Sheet is issued, circulated, or published without either having a copy of the auditors' report attached thereto or containing such refer- ence to that report as is required by this section. Auditor] 49 Auditor the company, and every director, manager, secre- tary, or other officer of the company who is know- ingly a party to the default, shall on conviction be liable to a fine not exceeding fifty pounds. (Section 113.) In the case of a banking company registered after the fifteenth day of August eighteen hundred and seventy-nine — (a) If the company has branch banks beyond the limits of Europe, it shall be sufficient if the auditor is allowed access to such copies of and extracts from the books and accounts of any such branch as have been transmitted to the head office of the com- pany in the United Kingdom ; and (b) The Balance Sheet must be signed by the secretary or manager (if any), and where there are more than three directors of the company by at least three of those direc- tors, and where there are not more than three directors by all the directors. (Section 113.) Holders of preference shares and debentures of a company shall have the same right to receive and inspect the Balance Sheets of the company and the reports of the auditors and other reports us is possessed by the holders of ordinary shares in the company. The foregoing provision shall not apply to a private company, nor to a company registered before the first day of July nineteen hundred and eight. (Section 114.) The summary to be forwarded to the Registrar under Section 26 of the Act must " (except where •' the company is a private company) include a " statement, made up to such date as may be " specified in the statement, in the form of a " Balance Sheet, audited by the company's " auditors, and containing a summary of its share capital, its liabilities, and its assets, giving " such particulars as will disclose the general " nature of those liabilities and assets, and how " the values of the fixed assets have been arrived " at, but the Balance Sheet need not include a " statement of profit and loss." (Section 26 (3).) Counsel's Opinion. The following is a joint opinion of Counsel obtained by the Institute of Chartered Account- ants on the duties of auditors as regards the Balance Sheet and Report. The opinion is dated 13th March 1908, and was given on the " audit sections " when contained in the 1907 Act, before their repeal and re-enactment in the Consolida- tion Act of 1908. The references have therefore been extended accordingly : — 1. In our opinion the Auditors' Report to be made pursuant to paragraph (2) of section 19 of the Companies Act 1907 (now paragraph (2) of section 113 of the 1908 Act) should in cases where the auditors have no special comments to make run as follows : — Report of the Auditors to the Shareholders of , Limited. We have audited the Balance Sheet of the , Limited, dated the day of , and (here identify it as : " above set forth," or " within contained," or " a copy of which is annexed hereto and initialled by us," or " a copy of which has been initialled by us "). We have obtained all the information and explanations we have required. In our opinion such Balance Sheet is pro- perly drawn up so as to exhibit a true and correct view of the state of the company's affairs according to the best of our informa- tion and the explanations given us and as shown by the books of the company. We consider that the Report should identify very clearly the particular Balance Sheet to which it refers, so that there max- be no room for after dispute or confusion, and no danger that by mistake or otherwise the Balance Sheet submitted to the shareholders, though bearing the proper date, should not be the one actually referred to in the Report. Perhaps the surest mode of identification is to write the Report at the foot or indorse it on the Balance Sheet to be submitted, for by these means the two documents are made insepar- able ; in other words, the Report runs with the F. Auditor 50 Auditor Balance Sheet. But, as above appears, there are alternatives open. In any case the auditors should keep a copy of the Balance Sheet they audit, and place a memorandum of identity thereon, so that if the question arises they may be able to testify certainly as to the matter. 2. Under the section the Auditors' Report is to be attached to the Balance Sheet or referred to at the foot thereof. In the former case we consider that the attachment should be effected either by printing the two documents con- tinuously on the same sheet of paper or by fastening the Report to the Balance Sheet. We consider that the best mode of attachment is that the Report should be written or printed at the foot of the Balance Sheet or indorsed thereon. 3. If the Report is not attached to the Balance Sheet there should at the foot of the Balance Sheet be words referring to the Report, e.g. : — " The Report to the shareholders of " Messrs. the company's auditors on " the above Balance Sheet is dated the " day of , and is open to inspection." In our opinion it is for the directors to make the reference and settle the form thereof, and not for the auditors. 4. In our opinion the Act does not impose on the auditors the duty of seeing that the Report is attached to the Balance Sheet or referred to at the foot thereof. This duty, we consider, is imposed on the company and its directors. 5. It appears to us that it is not the duty of the auditors to see that the Balance Sheet is signed by the required number of directors. Subsection (3) of section 19 (now subsection (3) of section 113) clearly contemplates that the Balance Sheet is to be issued after the Report has been made, for a copy is to be attached or referred to. As to cases in which there are no officers called directors, the Balance Sheet should be signed by the manager, or other person occupying the position of director, for section [285 of the 1908 Act] provides that the term " director " includes any person occupying the position of director, by whatever name called. 6. In our opinion it is not the duty of the auditors to supply to shareholders when requested copies of the Balance Sheet and their report, or to furnish information to individual shareholders. 7. In our opinion the statement in the form of a Balance Sheet referred to in section 21 of the Act of 1907 (now subsection (3) of section 26 of the 1908 Act) is a document to be submitted by the directors to the auditors for audit. The document must contain, as the section requires, a summary of the company's capital, liabilities, and assets, giving such particulars as would disclose the general nature of such liabilities and assets and how the value of the fixed assets has been arrived at, but it is not necessary to include in it a statement of profit or loss. We consider that in many cases the last audited Balance Sheet will be a sufficient statement in the form of a Balance Sheet, but where the Balance Sheet does not state how the value of the fixed assets has been arrived at it would, in order to comply with the section, have to be supplemented by a note or memorandum stating how the value of such assets was arrived at. Where the Balance Sheet, whether supple- mented as aforesaid or otherwise, is adopted for the purposes of the section as a statement in the form of a Balance Sheet, it should in our opinion be accompanied by a copy of the Report of the Auditors on such Balance Sheet, and if it is so supplemented the auditors should certifv that according to the best of their information the method specified in the supple- mental note or memorandum has been adopted. We consider, however, that it is open to the directors to frame the " statement in the form of a Balance Sheet " referred to in Section 21 (now subsection (3) of section 26) in more general terms than the Balance Sheet, provided that it complies with the requirements of the section, but in such case the statement must be audited by the company's auditors and the result of the audit should be certified at the foot of the statement. Auditor] 5i [Auditor S. As to the general duties of the auditors under section 19 of the Act of 1907 (now under section 113 of the 1908 Act), we consider that they should perform these duties with due regard to the provisions of the company's articles of association in so far as those articles are consistent with the Acts, and that they should call for all such information and explanations as they consider requisite to enable them to make the Report to the shareholders contemplated by the section. They should not have the least hesitation in reporting fully as to any unsatisfactory features in the position. Lastly, we do not consider that the auditor's duties are limited to a comparison of the figures in the Balance Sheet and those in the books. No doubt he has to examine the books, but, as Lord Justice Lindley said in Re The London and General Bank (1895, 2 Ch. 683), " he does " not discharge his duty by doing this without " inquiry and without taking any trouble to see " that the books themselves show the com- " pany's true position. He must take reason- " able care to ascertain that they do so." Section 113 directs that the signatures of the two directors on the Balance Sheet are to be attached " on behalf of the Board," and a reso- lution should therefore be passed giving them the necessary authority where the number of directors exceeds two. The question as to whether the Auditor's Report should be the subject of a separate document or be set out at the foot of the Balance Sheet remains a debatable one, and must depend upon the special circumstances of each case. Obviously a Balance Sheet issued without any certificate or report is not a satisfactory docu- ment. On the other hand, the report of the auditor, if published, might upon occasion damage the particular company's credit. To place the Report at the foot of the Balance Sheet when it was satisfactory and withhold it when not so would be equally damaging. If the auditors of all companies under all circumstances merely stated at the foot of every Balance Sheet that they had duly reported upon the Balance Sheet to the shareholders, and signed such statement, the uniformity of the practice would lead share- holders to make a point of hearing or obtaining a copy of the report. The wording of the Act clearly indicates an intention that the report may form the subject of a separate document, for it is provided that it is sufficient if " a reference to the report " is inserted at the foot of the Balance Sheet. It is the directors of a limited company, not the auditor, who must keep true accounts and prepare a Balance Sheet therefrom for submission annually to the shareholders of the company in general meeting. The duty of the auditor (qud auditor) is to examine the accounts submitted to him — he must be satisfied that the books correctly record the transactions of the company and that the accounts and Balance Sheet correspond with the books; he must make such inquiries from directors and officers of the company as he may deem necessary to clear up doubtful points; pre- pare and submit to the shareholders a report (comprehensive or formal, according to circum- stances) in the terms of section 113 (2) of the Companies Act 1908. If the accounts are not such as the auditor can honestly certify as correct he must say so in his report ; if the accounts are substantially correct, but the auditor takes objec- tion to the " form " in which the Balance Sheet is prepared, he may make representations thereon to the directors, and the directors may adopt the suggestions of the auditor. But should the directors decline to amend the form of the Balance Sheet, the auditor has no power to insist upon his ideas being carried out; all he can do is to report the facts and his opinions to the shareholders. "An auditor is not bound to exercise more than " reasonable care and skill in making inquiries " and investigations. He is not an insurer; he " does not guarantee that the books do correctly " show the true position of the company's affairs; " he does not even guarantee that the Balance " Sheet is correct according to the books of the " company. If he did, he would be responsible " for error on his part, even if he were himself " deceived without any want of reasonable care " on his part, say, by the fraudulent concealment " of a book from him. His obligation is not so E 2 Auditor] 52 [Auditor " onerous as this. Such I take to be the duty of " an auditor. He must be honest, i.e., he must " not certify what he does not believe to be true, " and he must take reasonable care and skill " before he believes that which he certifies is " true. What is reasonable care in any particular " case depends upon the circumstances of that " case. Where there is nothing to excite sus- " picion, very little inquiry will be reasonably " sufficient, and in practice I believe business men " select a few cases at haphazard, to see that " they are right, and assume that others like " them are correct also. Where suspicion is " aroused, more care is obviously necessary; but " still an auditor is not bound to exercise more " than reasonable care and skill even in a case " of suspicion." (Lindley, L.J., In re London and General Bank.) " The duties of auditors must not be rendered " too onerous. Their work is responsible and " laborious, and the remuneration moderate. I " should be sorry to see the liability of auditors " extended any further than in In re London and " General Bank. Indeed, I only assented to that " decision on account of the inconsistency of the " statement made to the directors with the " Balance Sheet certified by the auditors and pre- " sented to the shareholders. This satisfied my " mind that the auditors deliberately concealed " from the shareholders that which they had com- " municated to the directors. It would be difficult " to say this was not a breach of duty. Auditors " must not be made liable for not tracking out " ingenious and carefully-laid schemes of fraud; " frauds are perpetrated by tried servants of the " company and are undetected for years by the " directors. So to hold would make the position " of an auditor intolerable." (Lopes, L.J., In re Kingston Cotton Mills Company.) (See also titles Depreciation, Stock-in-trade.) In support of his examination of the ordinary financial books : — (1) The auditor of the accounts of a company registered under the Companies Acts should examine the memorandum of asso- ciation and the articles of association (if any), the agreement for purchase of the business, the prospectus (if any), and the Minute Books of the company; also the register of members, the register of direc- - tors, the register of mortgages and charges, and the last annual list and summary. (2) The auditor of the accounts of a company- incorporated by special Act of Parliament should examine such special Act. (3) The auditor of the accounts of a company, the preparation of whose accounts is regu- lated by statute (such as railways, gas undertakings, and the like) should see that the accounts are prepared in accordance with the statutory forms and regulations. (4) The auditor of the accounts of a partner- ship firm should examine the articles of partnership (if any) and satisfy himself that the accounts are in accordance therewith. The duties of a professional accountant retained to " close the books " and prepare accounts for a private undertaking should be carefully distinguished from those of an auditor engaged as such. Where the accountant is required only to " make up " the accounts, the terms of his engagement will usually form the subject of a special arrangement between himself and his client, and the accountant should for his own protection clearly define in his report and/or in his bill of charges the nature of the work which he has performed. An auditor was deemed an " officer " of a company within the meaning of section 10 of the Companies (Winding-up) Act 1890 (now section 215 of the Act of 1908) if he is appointed to the office of auditor to the company and acts as such ; and no irregularity in his appointment will then affect his liability. But, as the word "Auditor " does not occur in this section, the performance of auditor's work upon a given occasion by a person who has never been appointed to the office of auditor of the company does not make that person an " officer " of the company so as to render him liable under the section. (In re Western Counties Steam Bakeries c~ Milling Co., 1897.) Auditor] 53 [Average It was held in the London and General Bank case, 1895, that auditors appointed by a banking company in pursuance of the Companies Act 1879, section 7, now repealed, and spoken of as officers in the articles of association, were officers within the meaning of section 10 of 1890 (now section 215 of 1908), and in the Kingston Cotton Mills case, 1896, it was settled that the auditor of any limited liability company having a normal set of articles of association was an officer of the company. (Sec title Misfeasance.) With regard to the words, " as shown bv the books of the company," which may form part of the expression of opinion of the auditor as set out in the Act (supra), the following extract from the judgment of Lindley, L.J., in the London and General Bank case is important: — " The auditor's business is to ascertain and " state the true financial position of the com- '" pany at the time of the audit, and his duty is " confined to that. But then comes the question, " How is he to ascertain such position? The " answer is. By examining the books of the com- " pany. But he does not discharge his duty by " doing this without inquiry, and without taking " any trouble to see that the books of the com- " pany themselves show the company's true " position. He must take reasonable care to " ascertain that they do. Unless he does this. " his duty will be worse than a farce." As lo an auditor's attitude in connection with lb'' accounts of a company possessing a secret reserve, see title Reserves and Reserve Funds. (Sec Inspection.) Authorised Capital. — The amount of capital which a company has power to raise or issue. (See Registered Capital.) Aval. — The Continental term used to express an indorsement by a person who signs a bill other- wisethan as drawer or acceptor, thereby incurring the liabilities of an indorser to a holder in due course. Average.— The mean quantity of two or more quantities obtained by adding the quantities together and dividing by the number of them. An average is a medium of comparison, but once an average is ascertained it cannot be used as an element with other averages so as to obtain an " average of averages," for such a result is an impurity. If (say) three averages have been ascertained they must not be added together and divided by three upon the assumption that the result is the aggregate average. To ascertain the latter, the quantities involved in the three separate averages must be all brought into one total and the aggregate average deduced directly from the quantities themselves. Thus, suppose the following : — 9 shops, 1st year, profits, £1,800; average per shop, £200 12 . 2ml » » 1,800; , , 150 20 „ 3rd „ „ 4,400 ; „ „ 220 The total of the averages for the three years ' s £S7°i but the " average per annum per shop " for the three years is not £190. The total profits for the three years are £8,000, and the total of the varying numbers of shops is 41. Therefore, if 41 shops were possessed at the same time they would theoretically earn £8,000 in one year, the average per annum per shop being £195 (odd). The following is another instance of the import- ance of closely examining the factors in an average result. Suppose the profits of a company for a period of three years to have been as follow : — 1900-1 Profits for ij year £9,000 1902 H 1 H 10,000 1903 „ \ * 6,000 Total for 3 years £25,000 Annual Average £8,333 By the following re-arrangement the above figures may be made to show £1,000 per annum in excess of the above sum of £8,333, tn u s : — 1900-1 Profits for i£ year =£9,000, or £6,000 per annum 1902 „ „ 1 ' „ = 10,000 . 1903 * ■ first \ m — 6,000, or 12,000 . Total for 3 years . . £28,000 » Annual Average . . £9.333 It will be observed that a half-year (by pro- portion) is discarded in the first period, when profits were low, and an " additional " half-year (by proportion) is inserted in the last period, when profits were more satisfactory. (See titles General Average, Investigation, Particular Average, Percentage.) Average] 54 Award Average Adjuster. — One skilled in insurance matters, particularly in the preparation of accounts showing the rateable distribution of losses. Average Adjustment. — The ascertaining of the amounts which all the insured, after making proper allowances, are entitled to receive under the respective policies, and the fixing of the pro- portion which each underwriter has to pay. Average Date. — See Equation of Payments. Average Loss. — See Partial Loss. Average Policy. — See Fire Insurance. Award. — Although in its primitive sense an award was the taking into consideration of the circum- stances of a matter and the pronouncing of a judgment thereupon, at the present time the term is used exclusively in connection with the consequent judgment. There is no special form required by law nor ■need an award be in writing, but a written sub- mission renders a written award necessary, unless the submission expresses a contrary intention. Prior to 1906 written awards were liable to an ad valorem stamp duty, but by the Revenue Act 1906 a uniform duty of ten shillings is now chargeable on all awards, irrespective of the amount involved. The decision embodied in the award must be that of the arbitrator (or umpire) himself, but having finally settled the terms of his decision he may allow his solicitor to draw up the award in proper form. Joint arbitrators should all sign the award, at the same time and in each other's presence. When the award has once been made and declared, the arbitrator cannot change his mind, but he may amend any clerical error arising from any accidental slip or omission. Notice of the execution of the award should be given to the parties to the submission, to any one of whom it may be delivered. The award (if the submission be in writing) should be delivered within three months after entering on the refer- ence unless there is something to the contrary in the submission, but the arbitrator may extend the time by notice in writing to the parties. It is usual for the award to be delivered only on payment of the costs; and in doubtful cases arbitrators sometimes obtain a written under- taking that their costs will be paid in any event, e.g., when no award is made because the parties come to agreement and decline to proceed with the arbitration. The costs may be fixed by the arbitrator himself if the submission does not otherwise provide, but the Court may intervene if the amount be excessive. In Brown v. Llandovery Terra Cotta, ) of incompleted transactions and out- standing liabilities. From the records of the transactions of a con- rein kept by single-entry a statement of assets and liabilities may be compiled, for such a statement may be prepared from any available data, but it does not operate as a Balance Sheet in s<> far as the records in such a ease are not kepi upon a system which admits of reconcilia- tion. But if the records are kept by double-entry, ill. statement of affairs deducible therefrom will nut only act as a statement of affairs, but will serve as a Balance Sheet as regards the equi- librium of tin- Ledger. Although a Balance Sheet presupposes a double-entry system of accounting as its base, the statements prepared from single- entry records are sometimes referred to as Balance Sheets also; possibly because the popular concep- ii. - . of a Balance Sheet is that it is a statement of affairs, and has no other function. To a very great extent this is so in practice, inasmuch as the equilibrium test is afforded by the Trial Balance, which, as its name implies, is a device whereby an accountant endeavours to balance his records before proceeding to prepare his Balance Shed r. For present purposes it will therefore be convenient to assume that the Trial Balance affords the necessary test as to the accuracy of the records, and, that the Balance Sheet confines itself to an exposition of the financial position of the concern to which it appertains. This will enable reference to he made to the functions of a Balance Sheet and a statement of affairs in synonymous terms as regards a going concern, since, assuming accuracy, tin mode of compilation is probably the only important difference between the two, for both are intended to afford, as on a specified date, a fair view of the financial position of the concerns to which they respectively refer. Upon which sides should the assets and liabilities respectively appear in the Balance Sheet? The general practice in England at the present time is to place the assets upon the right- hand or credit side, with the capital and liabili- ties upon the left-hand or debit side. It would appear, however, that this is not in accord with the practice in America and upon the Continent; . furthermore, the present practice in England has really grown up during compara- tively recent years, and even yet admits of some difference of opinion in this country. Although an asset appears in a trader's Ledger as a debit item, that same item appears upon the credit side in a Balance Sheet drawn in the form to which we are now accustomed. This reversal of sides does not form part of the system propounded in any one of the nine leading bookkeeping works published between the years 172 1 and 1858, the authors of same, without exception, showing the assets and liabilities on the same sides as those upon which they respectively appear in the Ledger, in the form of a Balance Account. These writers do not appear to have used the term " Balance Sheet " at all, but confined their svsicm to the Balance Account, viz., an account in the Ledger to which the balances of every other Ledger Account were transferred each balancing date, so that, in effect, every Ledger Account was closed. Cory (a barrister, by the way) thus refers to it in his work published in 1839: — " The Balance Account contains upon its debit " side the quantities and value of all the mer- " chant's property, and of all the debts due to " him at the time the Rest is made; and upon its " credit side it contains all the debts or liabilities " he owes. Deducting one from the other, the '• Balance Account, therefore, contains upon its " debit side a balance showing the property of " the merchant when he closes business upon " this occasion." It was remarked by Inglis in 1858 that some systems adopted the reversed method while others Balance] 58 Balance did not, and it appears that of the authors of the works published during the following two or three years one advocated one method while another supported the reverse. It therefore seems that the statutory form of Balance Sheet annexed to the original Table A of the Companies Act of 1862, which came into prominence at a time when opinions evidently differed, had much to do with the " schism " of English accountants, for the latter form of Balance Sheet, although optional, has certainly been substantially adopted by the trading community. If this should be so, it is incongruous that accountants should take their cue from statutory forms. Fortunately, no difference of opinion exists as to the proper side upon which, say, the credit items of a Revenue Account should appear, yet the compulsory forms prescribed for adoption by assurance QOtnpanies by the Assurance Companies Act 1909 places the income upon the left-hand side and the expenditure on the right-hand side. The distinction between truths and rules in bookkeeping is not overlooked. The truths are inviolate, but the rules may be varied at will; there is no absolute necessity that credit items should appear upon the right-hand side, although it is in the interest of the uniformity of accounts that it should be so. However, certain English writers have evidently considered it necessary that the reversal of sides in a Balance Sheet should be justified, and they state that the firm or company (considered for the purpose quite distinct from the individual proprietors or share- holders, as the case may be) prepares a Balance Sheet so as to render an account of its steward- Receipts and Kxpkndit Amount expended Amount expended during lasl half. year Total Expendi- ture to date ship to the proprietors or shareholders in ques- tion. For this purpose the firm or company is entitled to take credit for assets possessed, and must be debited with the capital invested and any liabilities incurred. This is, however, character- ised by some accountants as a convenient fiction. But it would appear that so long as one side of a Balance Sheet is headed Capital and Liabilities, the other, Property, Assets, and Expenditure, and the items appearing thereunder are correctly stated, it is hardly a matter of importance, except for uniformity in accounts, upon which side they respectively appear. Apart from the question of reversed sides, a Balance Sheet may be prepared in either of two forms, viz., the double account form or the single account form. The double account Balance Sheet is adopted where the capital of a company is contributed by the share- holders for a specific purpose, such as the con- struction of a railway, or the acquisition of a gas undertaking, &c, the amount actually paid for, or in respect of same being shown as against the total capital raised, the balance only being brought into the general Balance Sheet ; in other words, the Balance Sheet is divided into two parts. (See Double Account System.) In the appended pro forma Balance Sheet it will be noted that the Legislature, in separating the Capital Account from the remaining items of the Balance Sheet, reversed the sides, and dealt with the account in the form of Receipts and " Expenditure." Extract from the Forms of Account prescribed by the Regulation of Railways Act r868 : — : on Capital Account. Amount Amount received Iota! received (hiring Receipts to last half- t' 1 . £ s d ♦ Thus the double account system can only be adopted in a limited number of cases, and it is, therefore, the single account form with which accountants generally have to deal. The order in which the assets should succes- sively appear upon a Balance Sheet is not of verv great importance, so long as they are properly described and fairly grouped, but the question of grouping is a momentous one. Assets may be so grouped that, despite correct description of the groups, the true position of the concern may be misrepresented. Intangible assets should not be grouped with those which are readily realisable; the former should always be set out separately. Goodwill is a prominent example of an intangible asset. More particularly fictitious assets (viz.. those not really realisable at all), such as preliminary expenses, should be stated as separate items. As regards order, the pro forma Balance Sheet annexed to the original Table A shows (i) immovable property, such as lands and build- ings; (2) movable property, such as stock-in- trade; (3) choses in action, e.g., bills and book debts; (4) investments; and, lastly, (5) cash in hand and at bankers. This form commences with the more stable assets, and gradually arrives at the actually liquid asset of available cash, and this would appear to be the best form for an ordinary industrial concern. Note. — The form of Balance Sheet set out in the original Table A annexed to the Companies Act 1862 was omitted from the new Table A. which came into force on 1st October 1906, and also from the Table A annexed to the Companies (Consolidation) Act 1908. Balance Go | Balance On the other hand, financial institutions desire rather to give prominence to their liquid assets, and, as a consequence, the order in which the assets appear in the Balance Sheet of a banking concern is almost the reverse of that stated above, the cash in hand, at Bank of England, at call and at short notice, and the easily realisable invest- ments, being invariably set out at the head of the assets, while the real estate, if any, and such assets as bank premises, generally appear last. Reverting to the pro iorinii Balance Sheet annexed to the original Table A, the capital and liabilities are set out somewhat in the following order : — Capital, mortgages and debentures, bills payable, sundry liabilities, reserved profits to meet contingencies, and, lastly, the balance at the credit of Profit and Loss Account available for dividend. This order is generally adopted by trading com- panies and, mutatis mutandis, by partnership concerns also. The object in placing the capital first was probably to give that item due pro- minence, but it might be urged that it would be more correct, at all events mure consistent, to place the capital last. The order adopted would then more closely exhibit the varying rights of the parties concerned in and against the assets on the other side of the Balance Sheet, viz., creditors holding security first, unsecured creditors next, shareholders' claims last. Probably as a relic of the old-fashioned Balance Accounts, the Balance Sheets of many partnership concerns do exhibit the capital last, but the more authoritative writers place the item at the head of the liabilities, and it would appear that while the business in question is a going concern the resultant prominence to the amount of capital is desirable. It is, perhaps, a convenient expression lo say that a Balance Sheet shows the assets of a concern upon one side and on the other side states to whom, and in what proportions, those .isscts equitably belong. So much to share- holders, or partners, for capital contributed; so much to creditors for various goods supplied or services rendered ; so much to the shareholders (again) for reserved and undistributed profits. Thus, assuming solvency, every item included in the capital, liabilities, and undistributed profits is represented amongst the assets. Of course, under ordinary circumstances, it is not possible to earmark the particular assets which represent the capital, nor in the absence of a specific mortgage can a liability be set against a particular asset, but assuming solvency, the various items of capital, liabilities, and undivided profits set out on one side of a Balance Sheet may be said to be an apportionment of the total assets appearing on the other side. Suppose the items in a Balance Sheet could be earmarked as under : — Sundry specified assets purchased with or representing the paid-up capital £10,000 Sundry specified assets acquired on credit as yet unpaid for 3,200 Sundry specified assets representing profits earned by the concern, and as yet undistributed 2,500 £i5." 00 In such a case there would be no necessity for a contra side to the Balance Sheet. But in practice this cannot be done, the circulation of the capital rendering it difficult, if not impossible, to state specifically (in the absence of a mortgage or charge) which assets represent the capital, which assets represent the profits, and which assets are the proceeds of liabilities incurred. The question of ranking against assets in a winding-up is not being considered at present, but rather the earmarking of assets against the liabilities and capital in the Balance Sheet of a going concern ; and all that can be done in such a case, apart from the concerns to which the double account system is applicable, and in the absence of a mortgage or charge, is to set the total assets against the total amount of capital, liabilities, and undivided profits. In other words, the assets cannot be allotted specifically to their equitable owners, whether creditors or capitalists, but they can be apportioned; and a contra side is therefore required setting forth the equitable owners of the assets, and the amounts of their respective interests therein. Balance 61 Balance Thus, taking the foregoing example, assuming the assets cannot be specifically allotted, the contra side showing the equitable owners will appear thus : — Capital paid up ^10,000 Sundry creditors 3.200 Surplus of assets over capital and liabilities arising from profits earned, but undistributed 2,500 ^i5.7oo For convenience, so that the statement may be compact and comparative, the two schedules may be set against each other thus : — Capital 10,000 Sundry Creditors . . 3,200 Surplus 2,500 £15,700 This exhibits the framework of a Balance Sheet as at present prepared ; but it must be noted that, although practical difficulties prevent specific allotments of the assets so that a second side is necessary to show the financial position, the fact remains that the capital and surplus exist, if at all, among the assets. In other words, the assets are concrete, but the items capital and surplus on the left-hand side (above) are mere abstract records. The liabilities are concrete, apart from the question of the existence of assets to meet them ; if there are no assets the creditors may not be paid, but the right to payment might remain. In the case of the capital and surplus this is not so. If there are assets to represent the abstract amounts of same, then the capital and surplus exist; if there are sufficient assets to represent the amount of capital only and none to represent the alleged surplus, then the latter is non-existent; if there are sufficient assets for the creditors only and none representing either the capital or surplus, there is no capital or surplus, nor has the " owner " of the capital and surplus (ordinarily) any rights remaining. Every auditor of a company to which the Act of 1908 in this respect applies shall make a report to the shareholders on the accounts examined bv hi in and on every Balance Sheet laid before the company in general meeting during his tenure of office, and the report shall state (a) whether or not he has obtained all the information and explanations he has required ; and (b) whether, in his opinion, the Balance Sheet referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the company's affairs, according to the best of his information and the explanations given 10 him, and as shown by the books of the company. (See title Auditor.) The Balance Sheet shall be signed on behalf of the board by two of the directors of the com- panv, or if there is only one director, by that director, and the auditor's report shall be attached to the Balance Sheet, or there shall be inserted at the foot of the Balance Sheet a refer- ence to the report, and the report shall be read before the company in general meeting, and shall be open to inspection by any shareholder who shall be entitled to be furnished with a copy of the Balance Sheet and auditor's report at a i charge not exceeding sixpence for every hundred/ words. If any copy of a Balance Sheet is issued, circu- lated, or published, without being signed as required by the Act, or without either having a copy of the auditor's report attached thereto or containing such reference to that report as is required by the Act, the company and every director, manager, secretary, or other officer of the company, who is knowingly a party to the default shall, on conviction, be liable to a fine not exceeding fifty pounds. (Companies Act 1908, section 113.) Xote. — As the section directs that the signa- tures of the directors on the Balance Sheet shall be attached thereto " on behalf of the Board." a resolution should be passed giving them the necessary authority when the number of the directors exceeds two. Holders of preference shares and debentures in companies registered on and after 1st July 1908 (other than " private companies ") are entitled to ret t ive and inspect the Balance Sheets and reports of auditors and other reports in the same way as holders of ordinary shares. (Section 114.) Balance] 62 Bank The total amount of commissions paid on shares or debentures, or discounts allowed on debentures, or so much thereof as has not been written off shall be stated in every Balance Sheet of a company to which the Companies Act 1908 in this respect applies until the whole amount has been written off. (Section 90.) Where interest is paid out of capital, under the power contained in the Companies Act 1908 the accounts of the company shall show the share capital on which, and the rate at which, interest has been paid out of capital during the period to which the accounts relate. (Section 91.) Every company (other than private companies) required to forward to the Registrar a summary under section 26 of the Companies Act 1908 shall include in that summary a statement, made up to such date as may be specified in the statement, in the form of a Balance Sheet audited by the company's auditors, and containing a summary of its capital, its liabilities, and its assets, giving such particulars as will disclose the general nature of such liabilities and assets, and how the values of the fixed assets have been arrived at, but the Balance Sheet need not include a state- ment of profit and loss. (Section 26.) (Sec also title Assurance Companies Act.) Every company incorporated outside the United Kingdom having a place of business in the United Kingdom must, in every year, file with the Registrar such a statement of its affairs, as would, if it were a company incorporated in the United Kingdom, and having a capital divided into shares, be required as above to be included in the annual summary. (Section 274.) (See titles Annual List and Summary, Statement of Affairs.) Ballast. — Heavy material placed in the lowest part of a vessel to give her stability, which is required where there is a short cargo, or a full cargo but a light one. (See Kentledge.) Bank Book. — A book supplied by a banker to each of his customers, wherein the banker periodically enters in detail the deposits, withdrawals, and other transactions of the customer, so that the state of the account between them may be ascer- tained and agreed upon. It is also termed a Pass Book. The Bank Pass Book should be the banker's record of the transactions between the bank and the customer : the banker should not, therefore, permit the customer or his employee to make any entry in the Pass Book. In the case of the Brighton Empire and Eden Syndicate v. The London and County Bank, decided in March 1904, the bank was held liable for the losses caused by the defalcations of the customer's manager, who had been permitted by the bank from time to time to make up the Bank Pass Book himself, several of the entries so made being false as to date or amount. The responsibility of the banker for the accuracy of the Bank Pass Book is further emphasised by the important case of Chatterton v. The London and County Bank, by which it was established that although a banker may make up a Pass Book and hand it to the customer, together with the paid cheques, the customer is under no obligation to examine the book, and the banker has no right to infer that it has been examined. (See also Kcpitigalla Rubber Estates, Lim. v. The National Bank of India, Lint., 1909, 2 K.B. 1010.) A customer is entitled to act on the faith of the correctness of the entries made by the banker in his Pass Book, and to recover damages he may sustain by acting thereon in good faith in the event of the entries being inaccurate, although the banker is entitled to have the wrong entries ulti- mately corrected. (Holland v. The Manchester and Liverpool District Banking Co., Lim., 25 T.L.R. 386.) The examination of the Bank Pass Book and comparison thereof with the books of account usually form an important part of an auditor's duty. The devices of dishonest employees in connec- tion with Bank Pass Books are numerous, and are dependent upon the particular type of defalca- tion the manipulation of the Pass Book is intended to assist and conceal. The method generally employed is one or other of the following : — Bank 63 [Bank (a) Alteration of dates in the Pass Book where moneys have been lodged on dates later than those appearing in the Cash Book. (6) Alteration of amounts in the Pass Book where the moneys actually lodged are less than those entered in the Cash Book. (c) Making entries in the Pass Book which are inaccurate — such false entries not being detected by the Pass Book clerk at the bank. (d) Operating with a " duplicate " Pass Book. One book is sent regularly to the bank, but the duplicate is wholly written up by the dishonest employee to accord with his requirements. The banker's record is carefully withheld from the auditors, and the duplicate utilised for the purposes of audit. Sometimes bills receivable are deposited (duly indorsed) for collection with the bankers, and are treated as bills receivable on hand. But a dis- honest cashier defrauded his employers of a large sum of money by arranging with the bank for the discounting of some of the bills, the proceeds of which were then brought to credit in the Bank Pass Book instead of being stated " short," the cashier still treating such bills as in the hands of the bank for collection. As such they, or the bills fraudulently substituted therefor, in after years formed part of the debit balance of Bills Receivable Account, and were included in the assets at each balancing time (for several years), although the bills so treated had in fact been " realised " and the proceeds brought to credit. (See title Bills Receivable.) The balance shown by a Bank Book should be supported by a certificate from the banker before being accepted by an auditor as a voucher for the bank balance stated in the accounts. The certificate should expressly refer to the position I" after close of business " on a specified date and should also state the particulars and amounts of bills receivable held by the bank for collection and not brought to credit in the account. Generally, the balance shown in the IBank Book do?s not agree with that stated in the accounts, and this is accounted for by (1) unpre- Sented cheques; (2) cheques paid in but not 1 I. arid at the date in question; and (3) other causes. A Reconciliation Account must then be prepared taking all these matters into considera- tion. An auditor should, however, satisfy him- self that all items which are necessary to reconcile the balances arc bond fide, and as many of them at the date of actually completing the accounts will have already " come through " thev can be readily tested. The mere agreement of the balance in the Banking Account of the customer with that certified by the banker (whether reconciliation be necessary or not) is not con- clusive evidence that all is in order. The details, both as regards dates and amounts, should be compared with the customer's books, for deposits may have been made which are correct as regards amount but several days later than the date recorded in the customer's books, while a large amount may have been entered as a deposit in the customer's books, but in the Bank Pass Book it may be represented by two or more smaller items on different dates. Obviously these irregularities would not affect the ultimate balance, therefore details must be compared. The auditor of a banker's accounts should also examine the Bank Books of the customers, or as many as possible, and see that they agree with the respective customers' accounts in the bank's Ledger. Many banks have an Audit Department of their own, and circularise their customers periodically with forms of certificate showing the balance according to the bank's Ledger, and the customers are requested to compare these certificates with their Bank Pass Books and Ledgers and to return them duly signed to the bank. The auditor of a savings bank must examine from time to time throughout the year the Pass Books relating to at least 10 per cent, of the entire number of active accounts in the current Deposit Ledgers. Some trading concerns keep a single cash column book wherein they record by addition a'nd subtraction the deposits and withdrawals day by day, thus enabling them to ascertain the avail- able bank balance at any time, allowing for unpresented cheques, without having to await the banker's convenience in the matter of writing up the Bank Book. Bank 64 [Bank Bank Commission. — The amount payable to a banker for the services rendered as banker to his customers. It is either a charge of a fixed sum per annum as agreed, or a certain rate per cent, upon the withdrawals. In some cases it is not charged on the understanding that a sum agreed upon is maintained as a minimum balance to the credit of the customer, no interest being allowed upon that balance. Bankers' Books Evidence Act 1879. — The object of this Act is to enable proof in Courts of justice of transactions recorded in the books of account of a banker without requiring the production of the books themselves. A duly sworn copy of any entry or entries in the ordinary books of account of a banker is deemed prima facie evidence of such entry or entries in all legal proceedings. Upon the application of any party to a legal proceeding the Court may order that such party may be at liberty to inspect and take copies of any entries in a banker's books for any of the pur- puses of the legal proceedings. The Court may make the order without summoning the banker, but in ordinary cases the order must be served upon the banker three clear days before it is to be obeyed. The order may be enforced against the haulier as if he were a party to the proceedings, and the banker may be liable for costs and expenses caused through his default and delay in connection with the order. In Pollock v. Garlc, 1897, the Court of Appeal held that this Act does not give rights to litigants to inspect a banking account which was not in fact or in substance the account of one of the parties to the action, but of third persons who had nothing to do with the litigation, although there might be exceptional cases, such as where there was an undisclosed principal, where an order would be made to inspect the account of a third person. Bank Note. — A Bank of England note, as distinct from the notes of other banks of issue, the latter l»ing termed country notes. The Bank of England cannot refuse to pav a note presented for payment ; such notes cannot therefore be " stopped," but if the Bank officials are advised of the numbers of notes which have been lost or stolen, the discovery of the holder may be facilitated. In England and Wales, Bank of England notes payable to bearer on demand are a legal tender for any sum of £5 or upwards (so long as the bank continues to pay its notes in legal coin), except at and by the bank itself or its branches. The bank in London is bound on pre- sentation to pay the holder of any of its notes; its branches are bound to pav only such notes as are made specially payable at the particular branch where the note is presented for payment. Certain banks established before 1S44, not having since lost their privileges, have the right, subject to certain conditions, to issue notes pay- able to bearer; but with these exceptions, the Bank of England has the exclusive privilege of issuing notes payable to bearer on demand. (See title Marked Cheque.) Bank of Issue. — A bank lawfully issuing its own notes. The Bank of England has the monopoly in London and within a radius of three miles; beyond three miles and within 65 miles the monopoly is shared with banks of less than ten persons established before 1S44; and beyond the 65 miles limit the monopoly is shared with all banks established before 1S44 which have not since lost their privileges. Xo new banks of issue can now be formed, and as each existing bank of issue becomes extinct, or loses its privilege. two-thirds of the amount of notes it was autho- rised to issue is added to the " authorised issue of the Bank of England. The holders of shares in a bank of issue, not- withstanding registration under the Companies Acts with limited liability, are unlimitedly liable for the note issue, section 251 of the Consolida- tion Act of 1908 (formerly section 6 of the 1879 Act) providing (1) for the payment of the notes outstanding, and (2) for the indemnity of the general creditors to the extent of the general assets used in payment of the note-holders, whether in so doing the nominal amount of the liability of members is exceeded or not. Bank Pass Book. — Sec title Bank Book. I'.ank 65 [Bankruptcy Bank Post Bills. — Bills issued by the Bank of England generally payable at seven or sixty days' sight They form a convenient means of remitting to any part of England. The lowest sum they are issued for is jfio, and no charge is made by the Bank for the accommodation. Bank Rate. — The rate per cent, at which the Bank of England is prepared to grant loans for limited periods and to discount approved bills of exchange. The rate is fixed every Thursday, and although considered the minimum rate, trans- actions are carried out in exceptional cases at a less rate. In times of emergency the rate has been changed during the currency of the week for which k had been fixed, but such occasions are ran. in fixing the rate the directors of the Bank ar< influenced by the supply of and demand for gold, and the general conditions of the money market. The rate is largely adopted as a standard for the transactions of the other banks of the country, the interest chargeable upon loans being an agreed rate (say 1 per cent.) over the bank rate for the time being, and the interest allowed upon deposits an agreed rate under that ruling at the Bank or" England. Bank Return. — The report issued by the Bank of England every Thursday afternoon showing the financial position of the Bank and setting forth (1) the amount of bank-notes in circulation, (2) the stock of bullion and coin in reserve, and (3) details as to the banking department. The issue and banking departments must be stated separately. Th ■■ ( Mowing is a pro forma specimen of the turn : — ISSUE Department. otes issued i ■ 56,591.050 w Government Debt Other Securi- ties Gold Coin and Bullion £ 11,015,100 7,434,900 38,141,050 £56,591,050 (a) 13) (4) £56.591.050 Banking Department. Proprietors' £ Government £ Capital 14,553,000 CO Securities . . '5,874,770 do) Rest 3,681,854 (6) Other Securi- Public Deposits 16,862,841 (7) ties 29,696,428 (■■) Other Deposits 40,148,554 (8) Notes 28,388,005 (12) Seven-day and Gold & Silver other Bills . . 12,936 (9) Coin.. 1,299,982 (■3) £75,259,185 £75,259,185 The form of this return was prescribed by the Bank Charter Act 1844, prior to which date the Liabilities and Assets of both Depart- ments were respectively consolidated. The Government Debt (2) stood at £1,200,000 in 1694, and gradually grew to £11,015,100 in 1835, at which amount it has since remained. The item, Other Securities (3) is represented by investments of the highest class, and the three amounts (2) (3) (4) together constitute the guarantee that the Bank Notes will be paid on presentation. In the above Specimen Return: — (a) The Notes in actual circulation amount to £28,203,045 (being 1 — 12) (6) The Cash and Bullion amounts to £39,441,032 (being 4 + 13) (c) The Liabilities amount to. . .. £57,024,331 (being 7+8+9) (rf) The Reserve {i.e., against the Liabilities) amounts to .. .. £29,687,987 (being 12+13) (Note.— The Rest, or withheld profits, is not deemed the Reserve.) (c) The Ratio of the Reserve to the Liabilities is 52 per cent. Bankrupt. — Colloquially, one who is unable to pay his debts in full, but legally one who has been formally adjudged bankrupt by the Court. (See Adjudication.) Bankruptcy Notice. — If a creditor has obtained a final judgment against a debtor for any amount, and execution thereon has not been stayed, he may serve upon the debtor in England, or by leave of the Court elsewhere, a notice called a bank- ruptcy notice, requiring him to pay the judgment debt in accordance with the terms of the judg- ment, or to secure or compound for it to the satis- faction of the creditor or the Court. A fee stamp of 5s. is payable upon every bank- ruptcy notice. If the debtor does not within seven days after service of the notice (or within the time fixed if served out of England) either (1) Comply with the requirements of the notice, or (2) Satisfy the Court that he has a counter- claim, set-off, or cross demand which equals or exceeds the amount of the judg- ment debt, and which he could not set up in the action in which the judgment was obtained, Bankruptcy] 66 Bankruptcy he commits an act of bankruptcy upon which a petition may be presented. (1883 Act, section 4.) A bankruptcy notice can only be presented in respect of a final judgment, and although formerly the assignee of a judgment debt and the trustee of a judgment creditor could not serve a bank- ruptcy notice, the Act of 1890 (section 1) has amended this, providing that " a person who is " for the time being entitled to enforce a final " judgment shall be deemed a creditor who has " obtained a final judgment." A garnishee order absolute is not a final judg- ment in this connection, nor is an order made under section 12 of the Arbitration Act 1889; but an order for payment of money made by the Court under section 215 of the Companies Act 1908 (the " misfeasance " section) is deemed a final judg- ment upon which a bankruptcy notice can be issued. A bankruptcy notice must be in the prescribed form, and must state the consequences of non- compliance therewith. (1883 Act, section 4.) Although leave may be obtained to serve a notice out of England, no notice can be served upon a foreign debtor when resident out of the jurisdiction. (Re Pearson, 1892.) It has also been decided that a bankruptcy notice cannot be issued upon a judgment against a married woman, although if trading separately from her husband, she is otherwise subject to the bankruptcy laws as if she were a feme sole. (Re Lynes, 1893.) Where non-compliance with a bankruptcy notice is the act of bankruptcy relied upon in presenting a petition, the Court may, if it thinks fit, stay or dismiss the petition if an appeal from the judgment is pending. (1883 Act, section 7.) The issue of a bankruptcy notice is extensively resorted to by creditors, for although about one-sixth only of the total notices issued result in receiving orders being made, this small propor- tion accounts for twice as many receiving orders as all the other acts of bankruptcy taken together. (Board of Trade Reports.) Bankruptcy Petition. — A petition presented to the Court, either by a creditor or the debtor himself, that a receiving order be made against the debtor for the protection of his estate. Any creditor, whose debt is sufficient to entitle him to present a bankruptcy petition against all the partners of a firm, may present a petition against any one or more of the partners of the firm without including the others. A creditor shall not be entitled to present a bankruptcy petition against a debtor unless : — (1) The debt owing, or if two or more creditors join in the petition the aggregate of the debts owing, amounts to £50 or upwards. Note. — If the petitioning creditor is a secured creditor he must, in his petition, either state that he is willing to give up his security for the benefit of the creditors in the event of the debtor being adjudged bankrupt, or he must give an estimate of the value of his security. In the latter case he may be admitted as a petitioning creditor to the extent of the balance of debt due to him (after deducting the value so estimated) in the same manner as if he were an unsecured creditor. (2) The debt is a liquidated sum, payable either immediately or at some certain future time. (3) The petition is founded upon an act of bankruptcy which has occurred within three months next before the presentation of the petition ; and (4) The debtor is domiciled in England, or within a year before the date of the pre- sentation of the petition has ordinarily resided or had a dwelling-house or place of business in England. Although not stated in the Act, it is necessary as a result of a common law rule in bankruptcy that the petitioning creditor's debt should have accrued due before the commission of the act of bankruptcy upon which it is intended to found the petition. And if the debt is on a bill of exchange the bill must have been issued before the act of bankruptcy, although it may not have vested in the petitioning creditor until after such act. Jankruptcyj 67 ^Bankruptcy A creditor cannot set up as an act of bank- ruptcy any deed of assignment or other arrange- ment to which he has assented. As to what amounts to such assent, see title Deed of Arrangement (Creditor's Assent). The petition must be verified by an affidavit of either the creditor or someone acting for him having knowledge of the facts. A copv of the petition must be served on the debtor, and the petition will not be heard by the Court until the expiration of eight days from such service, unless it is shown to the satisfaction of the Court that the debtor has absconded, or unless the debtor has filed a declaration of his inability to pa}' his debts, in which cases the Court may hear the petition earlier. Where two or more bankruptcy petitions are presented against the same debtor, or against joint debtors, the Court may consolidate the pro- ceedings, or any of them, on such terms as the Court thinks fit. A stamp duty of £5 as a Court fee is payable on the petition, and a further sum of £5 must be deposited with the Official Receiver to cover any expenses which he may have to incur. Both these amounts are, however, repayable to the creditor out of the estate in the event of a sufficiency of assets : and for better protection they rank in priority to the majority of the expenses of administering the estate. In special cases the deposit for expenses may be a sum less than £5, and on a debtor's petition the fee of £$ is not payable where the Official Receiver certifies that there is reasonable ground for believing that the assets are sufficient to meet the expenses of administration. In such a case, however, the Court fee (i.e., ^5) will be payable upon the making of the receiving order. At the hearing of the petition the Court requires proof of (1) the creditor's debt, (2) ser- vice of the petition, and (3) the act of bankruptcy alleged, and, if satisfied with such proof, the Court may make a receiving order, but if the Court is not satisfied therewith, or for some sufficient cause considers that no order should be made, the petition may be dismissed. The processes of the Court must not be used for the purposes of extortion. The Court will not permit a petition in bankruptcy to be presented and then used, not for the purpose of obtaining a receiving order but for the purpose of extracting money from the debtor. A bankruptcy petition once presented, whether by the debtor or a creditor, cannot be withdrawn without the leave of the Court. And the Court will have regard to the conduct of a petitioning creditor before the presentation of a petition, for where a creditor had endeavoured to make some secret arrangement whereby he would obtain an advantage over the other creditors, and had threatened that if the debtor did not agree to the suggestion a bank- ruptcy petition would be presented against him, it was held in Re Shaw (83 L.T.R. 754) that upon such a petition being presented there was " sufficient cause " under section 7, subsection 3, of the Act of 1883 for the Court to decline to make a receiving order. The decision in Re Shaw was followed in Re Goldberg (1904) by the Divisional Court and upheld by the Court of Appeal. Although formerly there was statutory remedy for persons aggrieved by the improper filing of a bankruptcy petition, under the present Acts there is apparently no remedy. But an action might be brought under the common law for maliciously presenting a petition and thus abusing legal process, the plaintiff being required to show malice and a want of " reasonable and probable " cause for presenting the petition. A debtor may petition for a receiving order against himself, filing a declaration of his inability to pay his debts beforehand, or merely stating that fact in the petition itself. Where a petition is filed by a debtor the Court will make a receiving order forthwith. The Court fee of £5, and deposit ,£5, are generally payable as in the case of a creditor's petition ; but, as already stated, the amount of the deposit may be reduced in a special case, and the fee may be dispensed with where there are sufficient assets, in which case the ^5 fee is charged upon the making of the receiving order. The Court may stay any action, execution, or legal process against the property or person of F 2 Bankruptcy] 68 [Bill the debtor at any time after the presentation of a petition, and any Court in which proceedings are pending against the debtor on proof of a bank- ruptcy petition having been presented, may either stay the proceedings or allow them to continue as it may think just. If a debtor by or against whom a bankruptcy petition has been presented dies, the proceedings in the matter shall, unless the Court otherwise orders, be continued as if he were alive. Where the debtor dies before service of the petition, the Court may order service on the personal representatives. Where the petitioning creditor does not proceed with due diligence on his petition, the Court may substitute as petitioner any other creditor to whom the debtor may be indebted in the amount required by the Act in the case of the petitioning creditor. (See Receiving Order.) (1883 Act, sections 6, 7, 8, 10, 106, 107, 108, no.) Bank Shares. — All contracts and agreements for the sale of shares or stock in any joint stock banking companv in the United Kingdom are null and void to all intents and purposes unless such con- tracts or agreements set forth the distinguishing numbers of the shares or stock, or where there are no such distinguishing numbers the person or persons in whose name or names the shares or stock are or is registered. (Leeman's Act.) Although treated upon the Stock Exchange as a dead letter, this Act has been declared as still of full legal force. (See Bank of Issue.) Barratry. — The term barratry includes every wrong- ful act wilfully committed by the master or crew to the prejudice of the owner, or as the case may be, the charterer (vide the rules for the construc- tion of a policy where the context does not other- wise require, contained in the first schedule to the Marine Insurance Act 1906). Barratry is a crime, and any act sought to be held as such must have been wilful and must have proceeded from criminal motives. ' Barter. — To exchange one commodity for another, as distinct from a sale which requires a money consideration. Bear. — Sec Bull and Bear. Bearer.— A bill of exchange is payable to bearer which is expressed to be so payable, or on which the only or last indorsement is an indorsement in blank (18S2 Act, section S) ; a bill payable to bearer is negotiated by delivery (section 31). (See Transfer of a bill by delivery.) Benefice. — See Advowson. Beneficial Interest. — A term sometimes applied to the interest of a cestui que trust in the property held by the trustee, but the term is capable of general application. A " beneficiary " has, generally speaking, a right to demand accounts and statutory provisions as to audit, &c., exist in special cases. (See titles Judicial Trustees Act 1896, Public Trustee Act 1906, Trustee, Liquidator's Accounts, Deed of Arrangement, Auditor.) Benefit Building Societies. — Associations estab- lished for the purpose of raising funds by small periodical subscriptions from their members for mutual assistance to purchase property. They are regulated by the Building Societies Acts. (See Building Societies.) Bequeath. — To leave personalty by will to another, whilst the word devise is used for the transmission of real property. Both words, however, may be used indiscriminately, without affecting the validity of the intended gift. Bequest. — A gift of personalty by will; a legacy. (See titles Devise, Legacy.) Bid. — An offer of a price for an article on sale, generally at an auction. A person may withdraw a bid at any time, before it has been accepted, which acceptance at an auction sale is evidenced by the fall of the hammer. (See Auction.) Bill in a Set. — Where a bill is drawn in a set it is commonly drawn in a set of three, one part only being stamped, the remaining parts being exempt, unless issued or in some manner negotiated apart Bill] from the stamped part ; but presentment for acceptance is not a negotiation, therefore the drawing of a bill in a set not only allows of transmission by different routes, and obviates the inconveniences arising from the miscarriage or loss of a bill, but affords an opportunity of nego- tiating the stamped part whilst the unstamped parts are in transit for acceptance. This is a great advantage in the case of bills drawn upon persons residing in foreign countries. If the bill parts be numbered and each part refers to the other parts, then the whole of the parts are only one bill. If there be no reference to the other parts then each part becomes a separate bill in the hands of a bond fide holder. Where an indorser has negotiated two or more parts, or a drawee has' accepted two ur more parts, they are respectively liable as though each part was a separate bill, if tin i are negotiated into the hands of holders in due course. Subject Id the foregoing, where any one part of a bill drawn in a set is discharged by payment or otherwise, the whole bill is discharged. (1882 Act, section 71.) The parts are called First of Exchange, Second of Exchange, and Third of Exchange respec- tively. (See Sola.) Bill of lintry. — An account of goods entered at the Custom House both outward and inward stating the name of the merchant, the quantity and nature of the merchandise, and the place to which the goods are going or from which they have teen imported. When a merchant cannot state definitely the rial quantities or qualities of imports he may make a bill of siglit or prime entry, giving the p St description possible. The goods may then be landed and examined in order that a perfect entry may be made. (See Post Entry.) The term bill of entry is also applied to the daily statement issued by the Custom House, giving detailed particulars of the exports and imports. Bill of Exchange. — An unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand "9 [Bill or at a fixed or determinable future time a sum certain in money to or to the order of a specified person or to bearer. (1S82 Act, section 3.) A bill payable on demand, or at sight, or on pre- sentation, or within three days after date or sight, requires id. stamp, which may be either impressed or adhesive. A bill payable otherwise than on demand requires an ad valorem stamp by scale up to ;£ioo, the stamp for £100 being one shilling, and for all greater amounts one shilling per ^100 or fraction thereof. The ad valorem stamp on inland bills must be impressed, while in the case of foreign bills adhesive stamps must be affixed of sufficient amount and duly cancelled before the bills are presented for acceptance, indorsement, or payment, or being otherwise negotiated in this country. The duty on foreign bills was reduced by section 10 (1) of the Finance Act 1899. A bill is a chattel, and may be sold as such; it is also a chose-in-action, and may be assigned as such by indorsement and delivery. Bills are, however, excluded from the term " Goods " in the Sale of Goods Act 1893. The various matters in connection with bills of exchange are dealt with in detail in their appro- priate places throughout this work, viz. : — Acceptance of a bill. Exchequer Bills. Acceptance for honour supra Extension of protest. protest. Fictitious p< 1 Acceptor. First of Exchange. Accommodation Hill Foreign Bill. Accommodation Party. Forged acceptance. Advice. Forged indorsement. After sight. General acceptance. Allonge. Holder in due course. Alteration. Honoured bill. Alternative drawee. Immediate parties. Alternative payee. Inchoate instrument. Ante-date. Indorsement. At sight. Indorser. Aval. Inland Bill. Bank note. Interest secured by Bill of Bank Post Bills. Exchange. Bearer. I O U. Bill in a set. [SS4M, Bills Payable. Lost bill. Bills Receivable. Marked clieipie. Blank acceptance. Negotiable instruments. Blank cheque. Negotiation back. Blank indorsement. Notary. Blank signature. Noting a bill of exchange. Cheque. Not negotiable. Conditional acceptance. Oihti cheque. Conditional indorsement. Order. Consideration. Overdue bill. Country notes. Partial acceptance. Cross llill. Partial indorsement. Crossed cheque. Payment for honour supra Dale. protest. Days of grace. Per procuration. Demand ipavable on). Poet-dated cheques. Discharge of bill. Presentment for acceptance. Dishonoured bill. ttment for payment, Dishonour, Notice of. Promissory note. Draft. Proof in respect of bills of Drawee. exchange. Drawer. Pre* Bill Hill Qualified acceptance. Qualified Indorsement. Kate of exchange. Rebate on bills discount* d. Re-draft. Re-exchange. Referee in case of need. Refer to drawer. Re-issue. Remote parties. Renewal of a bill. Restrictive indorsement. Retired bill. Sans recours. Second of Exchange. Securities deposited against bill. Short bills. Sight bills. Signature. Sola. Special indorsement. Stale cheque. Third of Exchange, Transfer by delivery. Treasury bills. Unauthorised signature. Unprescnted cheques. Usance. Value in merchandise. Value received. Waring, Ex parte. Without grace. Bill of Lading. — A receipt for goods put on board a ship, signed by the shipowner or his agent (generally the captain), and stating the terms upon which the goods are delivered to, and received by, the ship. Bills of lading are usually made out in sets, three or more copies being prepared. The captain retains one, and hands the consignor two or more, so that he may forward a copy to the consignee. A clause is generally inserted that, upon the accomplishment of one of the bills, the others are to be void. Every shipowner who carries goods for hire in his ship undertakes to carry them at his own absolute risk, the act of God and of the King's enemies excepted, unless by agreement between himself and a particular shipper, on a particular voyage, he limits his liability by further exceptions. The consequence of this rule of law is well described by Mellish, L.J. :— " Modern bills of " lading contain a long list of excepted perils, " exemptions from, and qualifications of, liability, " printed in type so minute though clear as not " only to fail to attract attention to any of the " details, but to be only readable by persons of " good eyesight." The bill of lading is. however, not the contract with the shipper, but only evidence as to its terms. The effect of the indorsement and delivery of a bill of lading by the person entitled to hold it depends partly upon custom and partly upon statute : — (i) By Mercantile Custom. — Indorsement and delivery of the bill, after shipment of the goods, but before delivery to the person entitled to them under the bill, transfer such property as was intended bv the indorsement. (2) By Bills of Lading Act, /eV},. — The indi ment of the bill transfers to the indorse* not only the property in the goods but all rights of suit and all liabilities in respect of the goods, as if the contract evidenced by the bill of lading had been made with himself. (3) By Admiralty Jurisdiction Act.— The indorsement of the bill of lading may give the indorsee rights of action in the Admiralty Court against the ship. Where goods are shipped in pursuance of a con- tract of sale the property in the goods passes to the buyer, unless the seller shows a contrary intention. He may show such intention by (1) taking a bill of lading in his own name, (2) making the goods deliverable to his order, or the order of his agent, and (3) instructing his agent not to deliver the bill except under certain con- ditions, such as payment of the price of the goods. Here the jus disponendi is reserved by the seller, and no property passes to the buyer by shipment. The seller may also draw upon the buyer for the price, and transmit the bill of lading and bill of exchange together. Here the property in the goods does not pass until the buyer has either accepted or paid the bill, as the case may be. A bill of lading is assignable without notice, but it cannot be termed negotiable in the widest sense, for its assignment cannot give a better title than the assignor possessed, with one exception, viz. : — An assignment (indorsement) bona fide and for value relieves an assignee, if he takes from an assignor with a good title at the time of indorse- ment, from liability to the vendor's right of stoppage in transitu which might have been exercised against the original consignee. A bill of lading requires a 6d. impressed stamp, which must be affixed before execution of the bill. Bill of Parcels. — An account given by a seller of goods to the buyer, stating the quantities and prices of the goods bought. It is also called an invoice. Bill] 7i [Bill Bill of Sale. — The term bill of sale is applied to a document whereby the right and property in per- sonal chattels are transferred to a person called the grant". A bill of sale may be absolute, the property in the chattels assigned passing upon the execution of the deed, or it may be conditional by way of mortgage to secure the payment of money on a future day. In the latter case the property in the goods passes to the grantee, but the right of possession remains in the grantor. On default tin property in the goods vests in the grantee freed from the condition. The particular statutes referring to Bills of Sale are the Bills of Sale Act 1878, repealing the Act of 1854 as amended by the Act of 1866, and the Bills of Sale Act 1882 as amended by the Acts of 1890 and 1891. Though it is necessary for some purposes to construe the Acts together, the Act of 1878 refers to absolute bills of sale, whereas the Act of 1882 refers to those which are conditional. The expression " bill of sale " includes bills of sale, assignments, transfers, declarations of trust without transfer, inventories of goods with receipt thereto attached, or receipts for purchase-moneys of goods, and other assurances of personal chattels, and also powers of attorney, authorities or licences to take possession of personal chattels as security for any debt, and also any agreement (whether intended or not to be followed by the execution of any other instrument) by which a right in equity to any personal chattels, or to any charge or security thereon, shall be conferred. (Bills of Sale Act 1878, section 4.) The following are not included in the term " bill of sale " within the meaning of the Bills of Sale Acts : — (1) Assignments for the benefit of creditors. (2) Marriage settlements. (3) Transfers or assignments of ships or shares therein. (4) Transfers of goods in the ordinary course of business. (5) Bills of lading. (6) Warehouse keepers' certificates and other documents used in the ordinary course of business as proof of possession or control of goods. (7) Letters of hypothecation of imported goods. (8) Debentures of mortgage, loan, or other incorporated company. In Standard Manufacturing Co. (1891, 1 Ch. 627) it was held that the Bills of Sale Acts did not apply to companies registered under the Companies Act of 1862 et seq., but now a charge given by a company, and evidenced by an instrument which if executed by an individual would require registration as a bill of sale, must be registered with the Registrar of Joint Stock Companies. (Companies Act 1908, section 93.) Hiring agreements are not within the Bills of Sale Acts, for no right of property passes under them to the hirer. The Bills of Sale Act of 1878 refers to absolute bills of sale, but one given by way of security for the payment of money is governed principally by the amending Act of 1882, which requires : — (1) The bill to be in the prescribed form. (2) The consideration to be set forth. (3) The consideration to be £30 or upwards. (4) The bill to contain or have annexed a schedule specifically describing the chattels comprised. (5) The bill to be attested by one or more credible witnesses who are non-parties. (6) The bill to be registered within seven clear days of execution, and registration to be renewed at least once in every five years. The Register is open to public inspection. A bill of sale given by way of security does not of itself afford any protection against (1) Distress for rent, rates, or taxes. Bill] 72 fBills (2) The effect of the " reputed ownership " clause in the event of the grantor's bank- ruptcy. Note. — But the " reputed ownership," or " order and disposition " clause does not apply to chattels not in a bankrupt's trade or busi- ness, and even with regard to chattels in the way of trade or business its effect can be defeated if it can be shown that a well-known custom of the trade exists which excludes any reputation of ownership of chattels held under such circum- stances. The chattels comprised in such a bill of sale can only be seized by the grantee under the following circumstances : — (1) Default in payment of sums secured or breach of covenant for maintenance of the security. (2) Bankruptcy of the grantor. (3) If distress be made for rent, rates, or taxes, or if execution be levied under any judgment. (4) Fraudulent removal of the goods. (5) Failure to produce last receipts for rent, rates, and taxes. But, as already stated, the right of seizure is subject to the right of distress for rent, rates, &c, and subject also to the possible effect of the reputed ownership rules of bankruptcy. Thus, if the grantor becomes bankrupt and the goods are not deemed within the grantor's order and disposition, they will pass to the grantee ; but if such goods are held to be in the order and dis- position of the grantor in his trade or business under such circumstances that he is the reputed owner thereof, the goods will pass to the trustee in bankruptcy. (See Debenture, Distress, Reputed Ownership.) An agreement accompanying a pledge of chattels to secure a debt is not a bill of sale and does not require registration. (Ex parte Hubbard, 55 L.J. Q.B. 490.) This is because in the case of a pledge the possession of the subject- matter is not retained by the pledgor. Bill ol Sale (Shipping) The instrument of transfer of any British ship or any shar* therein. It must contain a sufficient description of the ship to enable it to be identified, and lx executed by the transferor in the presence of. and be attested by, a w-itness. When duly ea every bill of sale for the transfer of a ship or any share therein must be produced to the registrar of the port of registry of the ship, together with a " declaration of transfer," stating th< trans- feree's qualifications to own a British ship, and the registrar shall thereupon register the bill and indorse the fact of such registration on the bill, stating the day and hour thereof. See Form A, Part I, lirst schedule. Merchant Shipping Act 1894. A bill of sale is not liable to stamp duty, but there is a small customs fee pavable on registration. A bill of sale will, however, only effect the transfer of shares (64ths) in ships. Sh;ires in the capital of companies owning ships ar<- transfer- able by ordinary transfer deed and are liable to the ad valorem duty of 10s. per cent. (See British Ship.) Bill of Sight.— See Bill of Entry. Bills Discounted. — Bills of exchange upon which the " present value " has been received by the payee from a banker or other person, before the maturity of the bill. The banker charges a per- centage called " discount " for the accommoda- tion afforded, and hands the holder of the bill the net proceeds, recouping himself by collecting the face value of the bill on maturity. (See title Discount.) Until the bill is paid by the person primarily liable thereon (acceptor or otherwise) , the party who has obtained such proceeds is, nevertheless (under ordinary circum- stances) , contingently liable upon the bill , but a person who has negotiated a bill by mere delivery (see Transfer of a Bill by Delivery) or indorsed it " sans recours " will not be liable thereon. Where a trader is contingently liable apon bills receivable which he has discounted with his bankers a note of the total amount of such out- standing bills should be appended to h\-= Balance Bills] 73 Bills Sheet, particularly where the amount is com- tively large, or where there is any pro- bability of one or more of the bills being dishonoured. Where a banker closes his books at the end of his financial period he has invariably a number of unmatured " discounted bills " on hand. The whole of the interest (or discount) charged on the respective bills cannot properly be taken to credit in the Profit and Loss Account for the period under review, as provision should be made (or interest on the bills from the " closing date " until they respectively mature. This provision is termed " Rebate on bills discounted " (q.v.). Bills Payable.— See Creditor. titles Rills Receivable, Bills Payable Account.— The account in the Ledger of a specified person wherein are recorded upon the credit side all bills in respect of which the person is primarily liable as acceptor or other- wise; and upon the debit side all payments against such bills. The credit side of the account may be compiled (i) from the Journal in summary form, or (2) from the Bills Payable Book, either (a) in totals periodically, or (/') by recording each bill as accepted. The balance of the Bills Pay- able Account at any time should agree with an extracted list of outstanding bills, as shown by the Bills Payable Book. Bills Payable Book.— A chronological record of all bills accepted by a person, ruled in appropriate columns, to show : — Date of Bill. Date accepted. Name of drawer. Amount of bill. Period. Date of maturity. To whom payable. Where payable. Ledger or Journal folio. Remarks. Some merchants use the Bill Book as a Ledger Account to represent the bills payable, posting the several items to the debit of the respective drawers. Others periodically journalise the contents of the Bill Book in a summarised form. Another method is to post the various amounts of the bills to the drawers' accounts, and periodically credit a Bills Payable Account in the Ledger with the total of the bills accepted during the particular period, whilst yet another method is to deal with the bills through a special column in the Cash Book. Bills Receivable. — The term used to signify those bills the proceeds of which are receivable by a specified person, either as the drawer or as indorsee. It is a bookkeeping term distinguish- ing the bills in question from bills pavable, viz., those in respect of which a specified person is primarily liable, either as acceptor or otherwise. To verify the item " Bills Receivable " in a Balance Sheet, an auditor should: — (1) Require a list of the bills outstanding at the Balance Sheet dale to be extracted from the Bills Receivable Book and agree the list with the balance of the Ledger Account. (2) Require the production of the bills at the same time as the other securities belonging to the concern, and compare them with the extracted list referred to above. (3) Where any of the bills have been deposited with the bankers for collection, require a certificate from the bankers that they held such bills, and that none of the proceeds thereof had been credited to the customer's account prior to the balancing date. (4"! See that any cash received for bills met or discounted since the Balance Sheet date (if the examination is made after that date) has been duly accounted for. (5) Take a note of the dates of the bills to see that none are overdue or dishonoured, and see that a proper provision against loss has been made for bills of a doubtful character. (See titles Bank Book, Bills Discounted.) Bills Receivable Account. — This account operates conversely to a Bills Payable Account, so that the same remarks apply, mutatis mutandis, to both accounts. (See Bills Payable Account.) Bills H [Book Bills Receivable Book. — This book deals with bills receivable in the same manner as a Bills Pay- able Book treats with bills payable, and the same remarks apply, mutatis mutandis, to both books. (See Bills Payable Book.) Blank Acceptance. — See Acceptance. Blank Cheque. — A cheque form, containing the signature of the drawer, leaving the amount for which the cheque is to be drawn (and sometimes the name of the payee and the date) to be filled in by the holder. Where a person signs an ordinary bill of exchange before any amount is inserted therein the amount that may be subsequently inserted is limited by the value of the bill stamp (1882 Act, section 20) ; but in the case of a cheque requiring a penny stamp only, whatever the amount involved, the limit prima facie depends only on the amount to which the banker would honour the cheque. (See Inchoate Instrument.) Blank Indorsement. — See Indorsement. Blank Signature. — See Acceptance. Blank Transfer. — A form of transfer of shares or other interest in a joint stock company executed only by the transferor, the transferee not being named. The intention of the transferor is that the person to whom the document is handed is thereby authorised to fill in the name of the transferee, whether a purchaser, mortgagee, or nominee. When the instrument of transfer is required by the regulations of the company to be in writing merely, a blank transfer may be filled in at any time and sent in for registration, and no objec- tion can be raised by the company as to its validity. Table A of the 1908 Act does not require transfers of shares to be by deed but in writing only. Where, however, the transfer is required to be by deed, this practice is, strictly speaking, not available, for a deed executed in blank is inopera- tive, the delivery of a deed by the party in the form in which it is to operate being one of its essentials. (Powell v. London and Provincial Bank, 1893, 2 Ch. 555.) The practice is nevertheless carried out, even with deeds, in the expectation that the company, on registration, will either not know of or not notice or take advantage of the irregularity. B. List. — See Contributory. Blue Book. — A Governmental report or statement in book form, usually with a blue paper cover. Bond. — A promise under seal defeasible upon a con- dition subsequent — that is to say, it imposes a penalty for the non-performance of a condition which is avoided on the performance of the con- dition, such performance being the real object of the bond. Notwithstanding the amount of the penalty, the rights of a promisee are limited to the actual loss sustained by breach of the condition. Bonded Stock. — The goods of a trader which are liable to customs or excise duties as the case may be, and which are left in duly certified bond warehouses until required, the duties thereon not being paid until the goods are removed. On removal and payment of the duty, the goods are termed " Duty paid Stock." Bonus. — A premium; an extra dividend; a distri- bution of profits amongst policy-holders of a life assurance company. Book Debts. — Debts due and accruing due to a person in the ordinary course of his trade or busi- ness, which are usually entered by a trader in his trade books. Book debts are not chattels within the meaning of the Bills of Sale Acts, but trade book debts are deemed within the order and disposition of the trader in the event of his bankruptcy, unless the debts have been assigned and notice of the assignment has been given to the various debtors prior to the commencement of the bankruptcy. An assignment of book debts carries the books in which thev are recorded. BookJ 75 Book Every mortgage or charge created on any book debts of a company to which the Companies Act 1908 in this respect applies shall, so far as any security on the company's property or under- taking is thereby conferred, be void against the liquidator and any creditor of the company unless filed with the Registrar of Joint Stock Com- panies within twenty-one days after its creation, but without prejudice to any obligation for repay- ment of the money thereby secured, and when a mortgage or charge thus becomes void the money secured thereby shall immediately become pay- able. Where a negotiable instrument has been given to secure the payment of any book debts of a company the deposit of the instrument for the purpose of securing an advance to the company is not within the section. (Companies Act 1908, section 93.) (See title Register of Mortgages.) The regulations of some companies prohibit the granting of loans or the extension of credit in its officers, but in any case book debts due to a company by any of its directors or other officers should bo separately stated upon the face of the Balance Sheet. The pro formd Balance Sheet annexed to the original Table A of the Com- panies Act 1862 specially provided for this, though such form of Balance Sheet is not con- tained in Table A of the Act of 1908. With regard to the examination of book debts from the point of view of the realisable value, the " age " of the debt, the regularity of the debtor in making payments and meeting acceptances, and the volume of business done are important points. Where the examination of the book debts is being conducted a little while after the date at which the book debts are stated to have been owing, there is the additional advantage of being able to refer to payments actually made in the meantime, and in many cases it may be possible, in the examination of schedules of book debts, by marking off those actually paid between the date in question and the date of the examination, to reduce considerably the number of outstanding debts for consideration. With regard to the verification of the items themselves, as distinct from their realisable value, much will depend upon circumstances. Where the bookkeeping and cash keeping are in the hands of a few, sometimes even in the hands of one, nothing short of a detailed examination will suffice, but where the number on the staff of the particular concern is so large that it is possible to divide the work and to institute a system of internal check, an auditor may rely upon that internal check to some extent. Whether it is necessary to conduct a detailed examination, or whether this may be dispensed with to some extent in consequence of an efficient internal check, depends entirely upon circumstances. Where an auditor is called upon to verify the item of book debts in a Balance Sheet, he should satisfy himself as to the following : — (1) That the amounts constituting the sum stated in the Balance Sheet as book debts agree with the several balances of the debtors' accounts in the Ledgers. (2) That such Ledger balances represent bond fide debts so far as can reasonably be ascertained. (3) That adequate provision against loss from doubtful debts has been made, and that all debts which (according to available data) are actually irrecoverable, have been altogether written off. In an Irish case (Irish Woollen Co., Lim. v. Tyson), Holmes, L.J., said: "As to the provision " for bad debts, if there is any one thing upon " which an auditor is dependent upon the officers " (of the company) it is the writing off, or the " making of a prospective allowance for bad " debts." But in the case in question it was clear that the auditor had exercised reasonable care and skill in this connection. The auditors of some concerns are permitted to communicate direct with the debtors by circular, stating the amount of indebtedness shown by the books as due by each respectively, and asking for a reply direct to the auditors in the event of any discrepancy. This, in most of the cases where the practice is adopted, is an effective check, while the moral effect upon the staff of the knowledge that the svstcm is carried out must Book] 76 'Bookkeeping be great; but if tbe directors of a particular com- pany disapprove of the practice, the auditor cannot claim as of right to issue such circulars. Should the auditor consider, under the par- ticular circumstances, that the issue of circulars is essential, his remedy would be to communicate the facts to the shareholders, leaving them to decide the question. (See Bad and Doubtful Debts, Chose-in-action, Future Book Debts.) Book lintry. — The term given to the record of a transaction in the books, which really amounts to nothing further than an internal adjustment. For instance, if A. had two accounts with B., one in credit and the other in debit, and it was arranged to consolidate the two accounts, one of them (perhaps both) would be closed by the operation of the " book entry " which carried out the arrangement. Bookkeeping.— Bookkeeping is the art (based on certain scientific principles) of correctly record- ing transactions, generally mercantile, which involve the transfer of money or money's worth. The chief aims of bookkeeping are : — (1) To record the financial effect of any one transaction. (j) To record the combined effect (if all the transactions within a given period so that the financial position of the transactor at the end of that period may be ascertained. There are two systems of bookkeeping in use, viz. : — I), nible Entry. — Bookkeeping by double entry was called in the earlier works the Italian method, from the fact that, although such a system is believed to have been in use in earlier times, it was left to Italy to revive the system by its adoption in the commercial cities of that country, whence it ultimately spread throughout Europe. As every transaction is a transfer of mone\ or money's worth, involving a yielder and a receiver, it follows that the effect of each transaction is that some person or account is benefited or increased to the same extent as another person or account suffers detriment or is decreased. Thus " every debit requires a corresponding credit," and in principle each transaction involves a "double entry." Upon this fundamental truth the whole superstructure of bookkeeping by double entry has been raised. In order to n the effect of each transfer and yet obviate the necessity of making the continuous addition and subtraction (and the consequent increase in clerical work) which the recording of numerous transactions would entail, (1) A Journal and separate books for various, classes of transactions are utilised to collect and classify the various records of transactions before being carried to the Ledger, and (2) The Ledger Accounts are divided into two parts, giving a left-hand side, to which side all increases or debits are exclusively con- lined, and a right-hand side, to which all decreases or credits are placed. Tin re are various devices, such as the Columnar system, to expedite the preparation of the records; Sectional Ledgers and Departmental Accounts, to classify customers, districts, and departments; subsidiary books to amplify the records, and " self-balancing " Ledgers to facilitate the balancing of the accounts. But ili'-.. .few 1. nly among many — are the result of carefully adapting the double entry system to varying circumstances — the inevitable outcome of increasing commerce, and the enhanced experi- ence of accountants. Although, to the. unin- itiated, they are apparently complications tending to obscure the principle involved, they are in fact mere subdivisions of one system based upon one simple truth. It has been said there is but one truth; and, to make this a little clearer, it may be neces to point out the distinction between this funda- mental principle and bookkeeping rules which are based upon mere expediency. The truth involved in the transfer is universal and inviolate: the rule which places the debit items to the left-hand side of a Ledger Account, and the credit items to the right-hand side, is not necessarily universal, and the sides might be reversed without affect- ing the principle involved. Furthermore, one Bookkeeping 1 side of the Ledger could be dispensed with, and both debits and credits placed in the remaining adding debits and deducting credits; in fact, it has bun suggested upon good authority that ngle column was the first method adopted. The cause and effect of recording transactions b) double entry may be summarised thus: — (i) A transaction is a transfer of money or money's worth, (2) Necessitating a yielder and a receiver, (3) So that an account must be increased (or debited) and another account reduced (or credited) by an equivalent amount; (4) An equilibrium in the Ledger is thus maintained, so that by means of the Trial Balance the clerical accuracy of the entries in the Ledger as regards amounts may be tested. (5) From the items in the Trial Balance the losses and gains are selected, and they . constitute the Profit and Loss Account; while the remaining items, the assets and liabilities, form the basis of the Balance Sheet. (6) The difference between the assets and liabilities (including capital) should equal the balance of the Profit and Loss Account. (7) Thus, the Balance Sheet and Profit and Loss Account arc confirmatory of each other, whilst details tire afforded as to how the resultant profit or loss has been derived or sustained, as the case may be. Single Entry.— This system is an incomplete record of tin- transactions with which it deals, varying in extent according to circumstances, but generally recording only the personal obligations of or to the person in question, and omitting the complementary Revenue Accounts. What is termed single entry is in fact not a distinct system of bookkeeping, but rather the double entry system in an incomplete state. The procedure and effect of single entry may be summarised as follows: — (1) i he cash transactions are recorded as in the case of double entrv. 77 Bookkeeping (2) The sales and purchases are charged and credited respectively to Personal Accounts. (3) The cash received and paid in respect of sales and purchases is posted in the Ledger to the credit or debit of the personal accounts of those concerned. (4) But there is no detailed or classified record of the gains or losses, nor is there any arithmetical check afforded as in double entry. (5) The financial position is ascertained by the preparation of a statement of affairs which is compiled from all available data, viz. :— Balances of debtors' and creditors' accounts in the Ledger, cash in hand, balance of banking account, stock-in-trade as taken and valued, and particulars of such items as plant and machinery as set out in the previous statement of affairs, due allowance being made for further out- lay thereon, or sales thereof meantime, and for depreciation during the period under review. (6) The profit or loss is ascertained from a comparison of the past and present financial positions of the trader, after allowing for additions to or withdrawals from capital meantime. System.— The chief practical features of a satisfactory system of bookkeeping should be: — (1) Adaptability to the particular business. (2) Maximum of result for the amount of clerical labour involved. (3) Ready and authoritative reference to the records of past transactions. (4) Simplicity as to points of detail so as to ensure a high degree of clerical accuracy. (5) Efficient safeguard against fraud. The principles underlying the system adopted should not be obscured by the necessary details, therefore in the operative part of the scheme decentralisation of the work should be aimed at, so that at the conclusion of a given period of trading codification of results may be more readilv attained. Bookkeeping'] 78 Borough These codified results should clearly show the trader : — (1) The amount of profit or loss for the period in question, (2) Particulars as to how the result has been attained, and (3) His financial position at the end of the period. (See titles Foreign Systems of Accounting, Journal, Journal Entry, Ledger, Trial Balance.) Books of Account. — The books forming part of a system of accounting, such as the Ledger, Journal, Cash Book, Purchase and Sales Books, and other connected subsidiary books. The pre- cise extent of the term varies according to the system adopted, for in certain instances the Cost Books would be connected with the balancing of the books, whilst in others (the majority) the Cost Books would be treated as merely statistical records. Books of Original Entry. — Those in which the various transactions are recorded in the books of account for the first time — for instance, the Sales Day Book is ordinarily the book of original entry as regards the sales, although full particulars as to the goods delivered may have been previously recorded in a Warehouse Book, for the latter is not a book of account. Book Value. — The amount appearing from time to time in the books of a concern as the " value " of a particular asset or group of assets. It generally represents (1) the actual and direct cost, or (2) the cost (whether direct or indirect, original or additional), or (3) either of the fore- going less the amounts which have been written off by way of depreciation. The original cost of an asset may have been excessive ; additional and capitalised expenditure thereon may not have resulted in a corresponding increase in value, and the amount written off by way of deprecia- tion may have been inadequate, so that the resultant book value would be in excess of the true value whether regarded from the point of view of a going concern or otherwise. On the other hand, depreciation may have been provided for excessively, or unnecessarily because of appreciation in value from special causes. ■1 Sometimes the book value of an asset i> a nominal amount which is obviously not the real value — e.g., the book value of the Bank of England (land and buildings) in the books of that institution. (See titles Depreciation, Value.) Borough Auditors. — The three auditors appointed under the Municipal Corporations Act 1882, two of whom are elected by the burgesses, and called elective auditors, the other being appointed by the mayor, and called mayor's auditor. An elective auditor must be qualified to be a councillor, but may not be a councillor, or the town clerk, or the treasurer. The mayor's auditor must be a councillor. The term of office of each auditor is one year, and the election and appointment of the three auditors takes place on the same day; and although the method of appointment is different, the distinction between elective and mayor's auditor would ^ppear to end there, for generally their duties and responsibilities are the same. The treasurer is required to make up the accounts of the borough half-yearly, at such dates as may be appointed, and within one month from the date to which the accounts are to be prepared he must submit them, with the necessary vouchers and papers, to the borough auditors, and they shall audit them. On the completion of the second half-year in each financial year, the accounts for the year are to be consolidated and issued in printed form. These provisions have been described as " exceedingly meagre and unsatisfactory " — in fact, although the Act of 1835 required the auditors to sign the accounts if they found them correct, the Act of 1882 contains no such pro- vision. The duties of the auditors have conse- quently given rise to much difference of opinion, many officials whose accounts are subject to the audit attempting all means of limiting the scope of the auditors' functions. Many boroughs have, however, obtained private Acts of Parliament allowing them to Borough 79 L Branch employ professional accountants, and thus replace the elective auditors entirely, or allow the duties of the latter to be merely nominal. » Bottomry Bond. — A type of mortgage of a ship by which her keel (or bottom) is pledged for the repayment of a sum of money. The repayment depends upon the safe return of the ship. When the loan is secured upon the cargo the contract is known as respondentia. Bought Note. — A broker records his transactions in his Contract Book, and sends a transcript of the entry of each transaction to his particular prin- cipal. If it is a purchase he has made, the transcript is a bought note; if a sale, it is a sold note. (See Contract Note.) Bounty. — A premium paid to producers, or exporters of certain goods, with a view of encouraging and developing an industry, when considered of importance to the country. Some- times one country importing the " bounty fed " produce of another country levies import duties upon such produce in an attempt to counteract the effect of the bounty upon prices in the import- ing country. Such import duties are sometimes called " countervailing duties." Branch Banks. — Branch banks are regarded as mere agencies of a single bank, and not as dis- tinct banks. Thus a bank, in the absence of special agreement, may consolidate the accounts of a customer who has balances to his credit in certain branches and balances against him in others. The accounts so consolidated must, how- ever, be in the same right, e.g., the banker cannot combine a Personal Account with one which he is aware is a Trust Account. The right of consolidation does not apply in favour of the customer without the bank's con- sent; therefore, if a customer without consent draws upon a branch bank where he has no account, the bank is justified in dishonouring the cheque, although there are funds at another branch of the same bank. Branch banks are treated as separate banks for the purpose of calculating the time within which notice of dishonour of a bill of exchange must be given. The auditor of every company is entitled to have delivered to him and he shall have access to all books and accounts of the company, so that he may examine them ; but with regard to bank- ing companies registered after 15th August 1S79 having branches beyond the limits of Europe, it is to be deemed sufficient if the auditor is allowed access to such copies of, and extracts from, the books and accounts of such branches as may have been transmitted to the head office of the banking company in the United Kingdom, (Companies Act 1908, section 113.) Branch Establishments, Accounts of. — The main points to be kept in view when devising a system of accounts for branch establishments .ire those which will ensure : — Control and supervision by head office. Separate results of the trading of each branch. Facility of centralising and comparing such separate results. In order to keep each branch under the control of those in authority, a thorough system of statistical periodical report should be instituted, including such matters as the following (varying according to circumstances) : — (a) Orders received and having attention. (b) Orders on hand, but not commenced (in case more workmen are required). (c) Goods required from headquarters. (d) Special goods required by the branch, not stocked at headquarters. (e) Schedule of accounts due for payment. (/) Schedule of debts overdue. (g) Complaints from customers. (h) Rough idea of stocks on hand. &c. &c. With regard to the financial requirements, as distinct from the statistical, branch establish- ments mav be divided into two classes. Branch 80 Breach (1) Small .establishments making only periodical returns to the head office, from which returns the books of account are compiled. These returns should include a Daily Statement of the gross cash taken, the expenses in detail, small purchases (if any) and the net cash, &c. The cash balances should be paid as often as possible either direct to head office, or to the local banking account for transmission to head office. Book debts are " returned " at each stocktaking similarly to stock-in- trade. As to the check upon stocks, this may be effected either by a Stock Register (see that title) or by a comparison of the respective percentages of gross profit {see Percentage) realised from time to time : — (a) With the past results of the par- ticular branch for the corresponding periods of previous years; and, (6) With the past and present results of similar branches. (2) Important branches keeping an indepen- dent set of books, which are periodically balanced, and of which only the final results are transmitted to head office. These final results will be sent in the form of a Trial Balance divided into two sec- tions — viz., General section, consisting of Sundry Creditors and Debtors, apportion- ments of Rates and other periodical pay- ments, Cash and Bank Balances, &c, the balance of these items agreeing with the balance of the Private Ledger section, which will contain the balances of the Impersonal and Private Accounts, and of the accounts with other branches, from which particulars, together with the valua- tion of Stock-on-hand, the head office accountant can prepare the Trading and Profit and Loss Accounts for the particular branches, and incorporate the results in the head office accounts. Each branch must keep a careful account of all goods supplied to and received from either head office or the other branches, and also of cash transac- tions therewith. At balancing time the » total of the head office and various branch credits should equal the total of the head office and branch debits, and when the balances of all these cross accounts are transferred at the end of the trading period to the head office books they can be entered in the form of a Reconciliation Account, both sides of which will agree, thus eliminating the balances after they have served their purpose — viz., the pre- paration of distinct Trading Accounts for each establishment. Head office expenses are sometimes appor- tioned over the various branches either in propor- tion to the trade done or on some other basis, according to the special circumstances of the particular business. In the consolidated Balance Sheet the assets and liabilities should be set out under their respective headings ; the method sometimes adopted of inserting only head office assets and liabilities and recording the branch figures as " Balance due to or from " the various branches is inaccurate. Breach of Trust. — A violation of duty by a trustee or other person in a fiduciary position. The act amounts to a misdemeanour, and may subject the defaulter to fine and imprisonment. Where a cestui que trust (not being under a disability) has concurred in, or confirmed, any act amount- ing to a breach of trust, or has released the trustee from the consequences thereof, he may thereby have barred any remedy which might otherwise have been enforced against the trustee in respect of the breach, provided the cestui que trust acts with full knowledge of all the facts of the case. The Trustee Act 1S93 provides that where a breach of trust has been committed at the insti- gation or request (which need not be in writing), or with the written consent of the beneficiary, the Court may, even in the case of a married woman restrained from alienation, impound the interest of such beneficiary by way of indemnity to the trustee. Breach] 81 [Breach In ordinary circumstances, however, the remedies of a cestui que trust upon a breach of trust are : — s (i) A right of action against the trustee. The personal liability of trustees is joint and several, and the breach of trust constitutes a simple contract debt. The claim is provable in bankruptcy, but a bankrupt trustee is released from further liability for the breach on obtaining his discharge, unless the breach be of a fraudulent character. Where the trustee has not been guilty of fraud, the action must be brought within six years from the breach, for in such a case the trustee may claim the benefit of the Statute of Limitation as though he had not been a trustee. (2) A right of following the trust estate into the hands of any alienee, except a bond fide purchaser for value having the legal estate before notice of the trust. Where a trustee has committed a breach of trust, and before his bankruptcy makes good the breach out of his own property, the trustee in the bankruptcy cannot recover the property under section 48 of the Bankruptcy Act of 1883, for it has been decided that such an act does not amount to a fraudulent preference, but an endeavour by the bankrupt to cover up his wrong and so prevent proceedings being taken against him. (Xew's Trustee v. Hunting, 1897.) (3) A right of following the property into which the trust fund has been converted so long as it can be traced. Where the trustee mixes the trust funds with his own moneys, and the trust funds are still in his hands, the cestui que trust is entitled to all moneys in the trustee's possession which he cannot prove to be his own. The rule in Clayton's case as to appropriation of payments (see that title) does not apply in this instance, the trustee being deemed to have drawn upon his own moneys first, irrespective of dates. (4) A right of impounding any beneficial equitable interest, to which the trustee committing the breach is entitled under the trust instrument. (5) A right to claim interest. The rate is usually 4 per cent., but it will be at a greater rate (a) where the trustee ought to have received more ; (b) where he has actually received more; (c) where he is presumed to have received more (e.g., where the trustee has traded with the trust funds he will not only be liable for the funds, but also interest with yearly rests (i.e., compound), or the actual trading profits at the option of the cestui que trust) ; (d) where the trustee has been guilty of direct breaches of trust or gross misconduct. (SnelPs Equity.) Where a member of a partnership being a trustee makes improper use of trust moneys in the business, or on account of the partnership, no other partner is liable therefor to the persons beneficially interested, provided he was not aware of the breach of trust; but the trust money can be recovered if still in the possession of the firm or under its control. (Partnership Act 1890, section 13.) The Judicial Trustees Act 1896 (see that title) provides that if it appears to the Court that a trustee, whether appointed under that Act or not, is or may be personally liable for any breach of trust, whether the transaction alleged to be a breach of trust occurred before or after the pass- ing of that Act, but has acted honestly and reasonably and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the Court in the matter in which he committed such breach, then the Court may relieve the trustee either wholly or partly from personal liability for the same. If in any proceeding against a director of a company for negligence or breach of trust it appears to the Court that the director is or may be liable in respect of the negligence or breach of trust, but has acted honestly and reason- ably, and ought fairly to be excused for the negligence or breach of trust, the Court may Breachj 82 I Brokerage relieve him, either wholly or partly, from his liability on such terms as the Court may think proper. (Companies Act 1908, section 279.) Break-up Value. — The ultimate selling value of a specified tiling when worn out or superseded; for instance, the " scrap iron " value of an old machine. This is one of the factors in deter- mining the rate of depreciation to be adopted in respect of an asset. (See Depreciation.) British Ship. — One that has been registered as such, and is owned wholly by those entitled by- law to hold a British ship, viz. :— (1) Natural born British subjects who have never taken an oath of allegiance to a foreign Government, or, having done so, have taken a subsequent oath to the British Sovereign, and whilst owners remain resident in the King's dominions, or are partners of a firm carrying on business therein. (2) Naturalised persons, or denizens by letters of denization who have taken the oath subsequently to naturalisation, and are resident as above. (3) Bodies corporate established under, and subject to the laws of, and having their prin- cipal place of business in, the United Kingdom or a British possession. With certain exceptions every British ship must be registered. The pro- perty in a British ship is divided into sixty-four shares, and no more than sixty-four persons may be registered at the same time as owners of one ship, but any share may be held in joint owner- ship, and the joint owners not exceeding five in number may be registered and shall be con- sidered as constituting one person, and any num- ber of persons may have a beneficial title in a single share or number of shares, the registered holder representing such persons; a corporation or company may hold a share or the whole of the sixty-four shares (e.g., a single-ship company), the members of the corporation or company holding shares in the capital of the corporation or company and not in the ship. No person may be registered as owner of a fractional part of a share. All the necessary particulars as to the ship and its owners must be given to the Registrar, who enters them in the " Register Book," and issues a " Certificate of Registry " containing the details entered in the Register Book. The Register may be inspected by any person upon payment of a fee not exceeding one shilling. (See Bill of. Sale (Shipping), Co- owners, Mortgage of a Ship, Port of Registry.) Broker. — "An agent employed to make bargains " and contracts in matters of trade, commerce, or I " navigation between other parties for a com- " pensation commonly called brokerage." Brokers are distinguishable from factors, in that factors have the possession of the subject matter of the contract, whilst brokers have not; further, a broker cannot sue or act in his own name, whilst a factor can. Having no possession of the subject matter, a broker consequently has no right of lien, but there are exceptions in the case of an insurance broker who, generallv speak- ing, has a lien on the policy for his general balance. A broker is generally not liable on the contract if it be made known that he contracts as a broker. Unless otherwise agreed, however, a marine insurance broker is directly responsible to the insurer for the premium, and the insurer is directly responsible to the insured for the amount which may be payable in respect of losses, or in respect of returnable premium. (Marine Insurance Act 1906, section 53.) (Sec Agent, Factor, Jobbers.) Brokerage. — The remuneration of a broker for negotiating the purchase or sale of certain goods, stocks, shares, &C., generally bv way of a com- mission or percentage of the price of the subject matter. In particular the remuneration payable to a shipbroker, usually by way of percentage of the freight, for securing a charter for a ship. Although section 89 of the Companies Act 190S restricts the payment of commissions, and pro- hibits the application by a company of its shares bv way of commissions for subscribing or agree- ing to subscribe or procuring subscriptions for shares in such company, th,e power to pay such brokerages as are lawful is expressly reserved to a company. (See title Underwriter.) Bucket 83 [By- Products Bucket Shop. — A slang term applied to the offices of outside brokers— that is, men who are not Members of the Stock Exchange. Building Lease. — A lease of land for a long term of y< ars at a ground rent, the lessee agreeing to and maintain during the term certain edifices which are to revert with the land to the less 1 it the end of the term. (See titles Rev. rsion, Reversion Duty.) Building Societies. — The secretary or other officer df every building society under the Building Socii ties Acts (1874 to '^94) must, once in every year at least, prepare an account of all the receipts and expenditure of the society since the preceding statement, and a general statement of its funds and effects, liabilities and assets, show- amounts due to the holders of the various - of shares respectively-, to depositors and creditors for loans, and also the balance due or Outstanding on their mortgage securities (not including prospective interest), and the amount ed in the funds or other securities. Every such annual account and statement must be made the end of the official year to which it relates, and must be in the form prescribed for I use by the Chief Registrar of Friendly Societies. In particular the statement must give full information with regard to the mortgages to the society, distinguishing between : — (1) Mortgages upon each of which the debt does not exceed ^5,000 (not being mortgages included under (3) and (4) below). — Grouped in classes as regards amount. (2) .Mortgages where the repayments are not upwards of 12 months in arrear, and the property has not been upwards of 12 months in possession of the society, and where the debt exceeds ^5,000. — Set out in detail. .Mortgages of property of which the society has been upwards of 12 months in posses- sion. — Set out in detail. (4) Mortgages where the repayments are upwards of 12 months in arrear, and the property has not been upwards of 12 months in possession of the society. — Set out in detail. The annual account and statement must be examined by auditors. Notwithstanding any- thing in the rules of any society, one at least of the auditors of the society shall be a person who publicly carries on the business of an accountant. The auditors in attesting the accounts are required either to certify that the " account and statement " is correct, duly vouched, and in accordance with the law, or to report to the society in what respect they find it incorrect, unvouched, or not in accordance with the law. In addition, the mortgage deeds and other securities belonging to the society must be pro- duced to the auditors, and they must certify, when certifying the accounts, that they have at that audit actually inspected such deeds and other securities, stating the number of properties the deeds with respect to which they have actually inspected. Every member, depositor and creditor for loans is entitled to receive a copy of the annual account and statement from the society, and a copy must be sent to the Chief Registrar of Friendly Societies within fourteen days after the general meeting at which it is presented, or within three months after the expiration of the official year of the society, whichever period expires first. (Building Societies Acts : 1874, section 40, and 1894, sections 2 and 3.) Bull and Bear. — A bull is a speculator who buys stock with a view- of selling the same at some future date at a higher price, and thus profiting by the difference, whilst a bear is a speculator who hopes to benefit by the reverse operation, i.e., by selling stock of which he is not possessed, but which he expects to be able to buy at a lower price at a future date. In view of the confusion often experienced in distinguishing between these two terms, one of the suggested origins of the terms may assist materially in this direction, viz. : — A " bull " is called so because he speculates for a rise, and a bull's natural method of attack is to toss up with its horns. A " bear " is called so because he speculates for a fall, and a bear is inclined to press down its adversary with its paws. BV'Products. — Sec Residual Products. G 2 Cable] 84 Calls Cable Transfers. — See Telegraphic Transfers. Calendar Month. — In all Acts of Parliament since 1850 the term month means calendar month. If four bills of exchange were drawn at two months' date on the 28th, 29th, 30th, and 31st December 1897 respectively, they would all have become due and payable on the 3rd March 1898, allowing the days of grace. So if a bill had been drawn on 28th February 1899 at three months' date, it would have become due and payable on the 31st May following. Call Book. — A book recording all " calls " made at an establishment, stating the name of caller, date and time, and person attending thereto. It is principally used in professional offices. Calls. — Instalments of the share capital or deben- tures of a joint stock company which the members or holders are from time to time called upon to pay. The procedure for making calls on shares is regulated by the articles of association, although, as regards the first issue, the prospectus of a company often provides for the payment of the whole of the moneys due under the shares and specifies the due dates of payment. A company, if so authorised by its articles, may do any one or more of the following things, namely, — (1) Make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares : •2) Accept from any member who assents thereto the whole or a part of the amount remaining unpaid on any shares held by him, although no part of that amount has been called up : (3) Pay dividend in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others. (Companies (Consolidation) Act 1908, section 39.) Every call made becomes a debt due to the company and is of the nature of a specialty (1908 Act, section 14), for which the con; can sue within twenty years. The regula- tions of the company usually provide for the pay- ment of interest upon calls in arrear, or, in extreme cases, subject to the prescribed pro- cedure, the forfeiture of the shares in default. (See title Interest on Moneys in advance of Calls.) Compulsory Liquidation. The Court may, at any time after making a winding-up order, and either before or after it has ascertained the sufficiency of the assets of the company, make calls on and order payment thereof by all or any of the contributories for the time being settled on the list of the contri- butories to the extent of their liability, for pay- ment of any money which the Court considers necessary to satisfy the debts and liabilities of the company, and the costs, charges, and expenses of ' winding up, and for the adjustment of the rights of the contributories among themselves. In making a call the Court may take into con- sideration the probability that some of the con-1 tributories may partly or wholly fail to pay the! call. (1908 Act, section 166.) The Rules prescribe the circumstances and , conditions under which the liquidator as an officer of the Court, and subject to the control ofl the Court, and with either the special leave at the Court or the sanction of the committee ofl inspection, may make calls, viz. : — Where the liquidator desires to make any call on the contributories, or any of them, for any purpose authorised by the Act, if there is a com-| mittee of inspection he may summon a meeting . of such committee for the purpose of obtaining! their sanction to the intended call. The notice of the meeting shall be sent to each! member of the committee of inspection inl sufficient time to reach him not less than seven I days before the day appointed for holding the] meeting, and shall contain a statement of the pro- , posed amount of the call and the purpose fori which it is intended. Calls] Notice of the intended call and the intended meeting of the committee of inspection shall also Ivertised once at least in a London nevvs- r, or, where the winding-up is not in the High Court, in a newspaper circulating in the district of the Court in which the proceedings are pending. The advertisement shall state the time and place of the intended meeting of the com- mittee of inspection, and that each contributory may either attend the said meeting and be heard, or make any communication in writing to the liquidator or members of the committee of inspec- tion to be laid before the meeting in reference to the said intended call. At the meeting of the committee of inspection any statements or representations, made either to the meeting personally or addressed in writing to the liquidator or members of the committee by any contributory, shall be considered before the intended call is sanctioned. The sanction of the committee shall be given by resolution, which shall be passed by a majority of the members present. Where there is no committee of inspection the liquidator shall not make a call without obtaining the leave of the Court. (Rule 83.) An application to the Court for leave to make any call on the contributories, or any of them, for any purpose authorised by the Act, shall be made by summons stating the proposed amount of such call, which summons shall be served four Hear days at the least before the day appointed for making the call on every contributory pro- to be included in such call ; or, if the Court so directs, notice of such intended call may be given by advertisement, without a separate notice to each contributory. (Rule 84.) When the liquidator is authorised by resolu- tion or order to make a call on the contributories he shall file with the Registrar a document in Form 58, with such variations as circumstances may require, making the call. (Rule 85.) When, in pursuance of a resolution of the com- mittee of inspection, or an order of the Court, a call has been made by the liquidator, a copy of the resolution or order shall forthwith after the 8 5 [Calls call has been made be served upon each of the contributories included in such call, together with a notice from the liquidator specifying the amount or balance due from such contributory in respect of such call, but such resolution or order need not be advertised unless, for any special reason, the Court so directs. (Rule 86.) Various powers with reference to the enforce- ment of the payment of calls are conferred upon the Court by the Companies Act 1908, sections 165 et seq. The payment of the amount due from each contributory on a call may be enforced by order of the Court to be made in chambers on sum- mons by the liquidator. (Rule 87.) (See title Balance Order.) A liquidator in compulsory winding-up may, with the sanction of the Court or of the com- mittee of inspection, compromise all calls and liability to calls. (1908 Act, section 214.) Winding-up under Supervision. For the purposes of making and enforcing calls, an order for a winding-up subject to the super- vision of the Court shall be deemed to be an order for winding-up by the Court. (190S Act, section 203.) Voluntary Liquidation. Where a company is being wound up volun- tarily the liquidator may from time to time exercise the powers of the Court of settling the list of contributories and may make such calls as he may deem necessary to pay the debts and liabilities of the company, and the costs of winding-up the company, and for the adjustment of the rights of the contributories between them- selves (1908 Act, section 186), and the liquidator may, in making a call, take into consideration the probability that some of the contributories upon whom the call is made may partly or wholly fail to pay their respective portions of the same. The liquidator should make a call by an instrument in writing, but no special formalities are to be complied with. Calls] 86 [Capital The liquidator in voluntary liquidation settles the list of contributories, but the list is only primd facie evidence of the liability of the persons named therein (1908 Act, section 186), therefore if any calls be not duly paid in a voluntary winding-up, payment must be enforced either by action brought by the liquidator in the name of the company against the defaulting contribu- tories, or by proceeding under section 193 of the 1908 Act, which gives power to (voluntary) liquidators to apply to the Court in respect to the enforcing of calls and other matters whereon the Court may exercise any powers which it might have done in case the company were being wound up by the Court. This latter procedure is con- sidered the better to adopt. A voluntary liquidator may, with the sanction of an extraordinary resolution of the company, compromise calls and liability to calls. (1908 Act, section 214.) Debentures. A contract with a company to take up and pay for debentures may be enforced by an order for specific performance. (Companies Act 1908, sec- tion 105.) Cambist. — One skilled in the values of foreign coins, weights and measures, and the exchanges in connection with same. A trader and dealer in promissory notes and bills of exchange. Cancellation of " Scrip." — When a share certificate is lodged with an instrument of transfer in respect of the whole or part of the shares com- prised in the certificate, it is necessary to cancel such certificate when issuing a new certificate to the transferee for his shares, and another to the transferor called the " balance scrip," for the shares (if any) retained by him. A company incurs a serious responsibility in issuing new certificates, except in exchange for the old ones, which latter should be immediately cancelled. This is usually done by a cross-cut through the certificate, cancelling the seal and signatures of the directors. Sometimes a certificate is issued in pursuance of the regulations of the company, in place of one which has been lost or destroyed; but und< r circumstances a satisfactory indemnity should be required. The cancelled certificate or the indemnity (as the case may be) should be retained for produc- tion to the company's auditor upon request. Cancellation of Vouchers.— The marking or defacing of a voucher for payment, or any other] matter, e.g., by the initial of the person examining same, so that he may not only know which vouchers he has examined, but also prevent the same from being fraudulently presented a second time. If due care is exercised in examining and comparing the dates of the various vouchers, the ■ danger of a second presentation is further 1 guarded against. Capacity.—" Capacity must be distinguished trom " authority. Capacity means power to contract " so as to bind oneself. Authority means power " to contract on behalf of another, so as to bind " him. Capacity to contract is the creation of I " law. Authority is derived from the act of the 1 " parties themselves. Want of capacity is . " incurable; want of authority may be cured by j " ratification. Capacity or no capacity is a ques- " tion of law; authority or no authority is usually " a question of fact." [Chalmers.] Capital. — .1. Economic. That part of a person's possessions which he constitutes as his fund for the purpose of repro- duction. The question whether a fund is or is not capital does not depend upon the class of commodities which constitute the fund, but solely upon the intention of the capitalist; for, how- ever ill-adapted the property in question may be for the particular object, it is none the less capital so soon as it is set apart for reproductive purposes. Some economists divide capital into fixed and circulating, and also into positive and negative. Fixed Capital is wealth expended upon land, buildings, factories, canals, railways, docks, and such like things which are not intended to be Capital] Bold, but to be retained to produce additional wealth. Although called fixed capital it is not absolutely so, but only as compared with circu- lating capital; for " wear and tear " and depre- ciation are inevitable, necessitating ultimate replacement, notwithstanding constant repair during the " life " of the particular property. Circulating Capital is wealth used in the pro- duction of commodities, the character of which is changed by a single use, such as (a) raw materials, and (b) cash for the payment of wages, collectively used to produce a manu- factured article. The term " circulating " is derived from the circumstance that this portion of capital is in constant circulation. Cash is employed in the purchase of stock-in- trade; when sold again takes the form of a book debt, the ultimate collection of which restores the capital (generally with a profit) to its original form of cash ready for further circulation. Thus cash, stock-in-trade, and book debts are instances of circulating (sometimes called floating) capital. A^ain, machinery is the stock-in-trade (the circulating capital) of its manufacturer, and Incomes the fixed capital of the person who acquires it for reproductive purposes. Positive Capital is represented by money, land, buildings, stock-in-trade, and all material objects, whilst Negative Capital is composed of credit, -ocli as the right to demand payment of a debt. I B. Commercial. It may be said that the whole of the property and assets of an undertaking constitutes its capital irrespective of the existing liabilities; for if it be absolutely necessary to possess the whole of such property and assets to allow of the busi- ness being carried on profitably, then it follows that if credit were not obtainable (to the extent of the liabilities referred to) the proprietor would Reed to increase his investment in the business to the extent of those liabilities. In such a case, a statement showing the proprietor's financial position would be a mere schedule of property and assets, the total thereof being the proprietor's capital in the business. But the question as to 8 7 [Capital what constitutes capital does not depend upon and vary with the extent of the credit obtain- able by respective proprietors, hence: (i) The capital of a concern is the total amount of the property and assets employed therein, contributed partly by the proprietor and partly by those who have chosen to give him credit; and (2) the capital of the proprietor in that concern is the surplus of the property and assets over the liabilities to third parties. C. Legal. (1) Administration. — Where property is given to one for life or other limited period, e.g., widowhood, and remainder to another, the " tenant-for-life " is entitled to the income from such property, and the " remainderman " to the corpus or capital. The capital may be either a specific sum of money, an investment, or (say) the residuary estate of the testator. In the administration of the trust great care is necessary to distinguish between capital and income so that the original fund may be kept intact. The dis- tinction depends largely upon the circumstances of each case, instances of which are dealt with under the titles "Apportionment" and "Executor- ship Accounts." (2) Joint Stock Companies. (a) Authorised Capital, Nominal Capital, Registered Capital. — These are synony- mous terms, being the amount of capital which a company is authorised to issue, or With which it is registered, as the case may be. Companies registered under the Act of 1 90S must pay a registration fee based by scale according to the amount of the capital (or number of members when the capital is not divided into shares), and in addition an ad valorem stamp duty of 5s. for every ^100 or fraction thereof of the registered capital. (b) Issued Capital, Subscribed Capital- Capital which has been issued, subscribed for, and allotted to holders of shares or stock. Capital] 88 [Capital (c) Unissued Capital. — Authorised capital which has not been issued ; that is to say, which has not been subscribed or agreed to be subscribed for by any person. (d) Paid-up Capital. — That portion of the issued capital which has either been paid up in cash, or is considered to have been paid up. (See Registered Contract in respect of Shares.) (e) Uncalled Capital. — The unpaid portion of the subscribed capital which the holders have not been formally called upon to con- tribute, but in respect and to the extent of which they remain liable. A limited company may by special reso- lution determine that any portion of its share capital which has not been already called up shall not be capable of being called up, except in the event of, and for the purposes of, the company being wound up, and thereupon that portion of capital shall not be capable of being called up, except in the event and for the purposes aforesaid. (Companies Act 1908, section 59-) A resolution to the above effect amounts to an alteration of the memorandum of association, and it would appear that the alteration cannot be recalled by a subse- quent special resolution. Where directors are empowered either expressly or by necessary implication to borrow upon the security of the future calls (that is, the uncalled capital) they may do so, but in the absence of such power it would be ultra vires to charge the uncalled capital. The articles of association some- times give the directors power to authorise the mortgagee to make the calls upon the members so that he may be better secured. But where a company has passed a reso- lution in pursuance of section 59 of the Act of 1908 (supra) appropriating any portion of its uncalled capital for the purposes of winding-up the portion so appropriated cannot be mortgaged. (Bartlctt v. tfayfair Co., 1898.) Legally, it is only the share capital which is considered as the capital of a company, and the holders of such shares (or stock) are members of the company. Although money raised by (1) mortgage, (2) debentures, or (3) other forms of loan, is capital from a commercial point of view, and is often referred to as Loan Capital, it must be carefully distinguished from the share capital, as the mortgagees or lenders are obviously creditors and not members of the company. The Companies Act 1908, section 65, expressly requires a company to include in its abstract of receipts an account of its capital (part of the pre- scribed information to be issued in the statutory report for the first meeting of shareholders) moneys received from debentures as well as from shares. The capital of a registered company or of other corporations differs from that of the proprietors of an ordinary partnership concern, for whilst (say) the accumulating losses of the latter will affect the amount of capital from time to time this is not the case with a corporation, the original capital being, by a legal fiction, deemed to exist until formally reduced by statu- tory methods. (See also title Double Account System. That the capital of a corporation is in point of law something distinct from either the com- mercial or economic view of the term may be seen from the following extracts : — (1) The Companies Act 190S confers power on a company (subject to certain procedure being followed) to reduce its capital by way (inter alia) of cancelling capital which is lost or unrepresented by available assets. (Section 46.) Here the Legislature recognises the technical existence of capital and confers power and provides formalities whereby a company may cancel such capital, although in so far as the same has already been lost, or is admittedly unrepresented by available assets, it is ipso facto non-existent. Capital 89 [Capital (2) It is quite obvious that with respect to such a property as a mine or mineral deposit every ton of stuff got out of that which was bought with capital represented a por- tion of capital. It was said that the division of the profit arising from the sale of such was a returning of capital. If that was so, it was not at all events such a return of capital as is prohibited by the Companies Acts. . . . The notion that the company is debtor to its capital may be convenient from an accountant's point of view, but it has nothing to do with law. If a company is formed to acquire or work a property of a wasting nature (e.g., a mine, quarry, or patent), the capital expended in acquiring the property may be regarded as sunk and gone, and if the company retains assets sufficient to pay its debts, any excess of money obtained by working the property over the cost of working it may be divided among the shareholders, and this is true although some portion of the property itself is sold, and in one sense the capital is thereby diminished. (Lindley, L.J., Lee v. Neuchdtel Co.) For Increase, Reduction, and other alterations of Capital see " Memorandum of Association," " Registered Capital," and " Reserve Liability." The following notes as to verification of share capital may be found of assistance to the auditor of a joint-stock company : — ( 1 ) At the first audit of the accounts of a company and at each succeeding audit until the full amount of authorised capital has been issued and paid up :— (a) Compare amount issued with memo- randum of association, and resolutions altering the capital (if any). (b) Check Application and Allotment Forms and Bank Pass Book with Application and Allotment Book. (c) Check entries from Application, &c, Book into Register of Members, Journal, and Cash Book, and postings into Ledger. (d) Repeat same operations with regard to each call. (e) Check allotments and calls made with the Minute Book, and see that any special pro- visions contained in prospectus are com- plied with. (/) See that Statutory Return of Allotments has been duly filed with the Registrar of Joint Stock Companies. (g) If allotment is for consideration other than cash, examine a copy of each contract in connection therewith, and see that the original contract or the prescribed particu- lars have been filed. (h) Take out balances shown by Register of Members, and agree with Share Capital Account in books of account. (1) Compare Register of Members with Share Certificate Book and Register of Transfers. (j) Check Register of Transfers with Transfer Deeds. (2) At audits after the full amount of autho- rised capital has been issued and paid up it will only be necessary to apply tests (a), (h), (i), (;) (above) , but special care should be directed to the Share Certificate Book. The issue of every new certificate should be substantiated by the produc- tion of the old certificate (or certificates) in the case of transfers, and by the production of a proper indemnity where the old certificate is alleged to have been lost. Capital Expenditure.— An exchange of one pro- perty for another; a payment of cash or the crea- tion of a liability for an equivalent value of real estate, machinery, merchandise, &c. In its more restricted sense the term implies the expenditure of the capital receipts of a company or other body upon the construction of a particular work, e.g., a railway. Capital Receipts.— These are in the nature of con- tributions from shareholders and debenture- holders, &c, in the case of a joint stock company, although moneys raised on loan are not (legally) capital. The term is, however, of general application, distinguishing cash received on account of capital from receipts on account of Capital] go rCarrier For the purposes of the account required for the statutory report to be issued in connection with the first (statutory) meeting of a company, receipts on account of capital are expressly required to include receipts from an issue of debentures. (Companies (Consolidation) Act iyo8, section 65.) Card Ledgers. — See Slip Bookkeeping. Carriage and Cartage. — Payments made by a trailer for the transport of goods by rail and road respectively. Such expenditure may be divided into " Inward " and " Outward," the former being treated as part of the " purchase price " of the goods, whilst the latter forms part of the cost of distribution. The reason for this distinction is based upon the assumption that if the goods were purchased " carriage paid " or " delivered " the price of same would be increased to the extent of the cost of transport. This argument would appear to apply equally to a sale, as more would be obtained for goods to be delivered by the seller than under an arrangement requiring the buyer to pay the cost of transit, but it is usual to charge " carriage inward " to the Trading Account, and treat " carriage outward " as an item of expense in the Profit and Loss Account. Some persons, however, deduct " carriage out- ward " from the total value of the sales. In some trades it is customary for the seller to deliver all goods, for which he is entitled to make a small charge. Such " recovered carriage " should be carefully distinguished in the Sales Book from the price of the goods themselves, so that the total amount recovered may be credited to the " Carriage and Cartage Account," and information be thus obtained as to whether the transport department " pays its way." All pay- ments to railway companies and other carriers, stable expenses, wages of carters and porters, are types of expense of transport, and it is often important to know to what extent the " carriage recovered " reduces such expenditure. Carrier. — A common carrier is one who under- takes to carry for hire from place to place the goods of anyone who may employ him. A per- son who carries passengers only is not a common carrier. Ditties. — Me must carry all goods delivered to him, provided : — (1) They are of the class he usually carries. (2) The consignor is prepared to pay the charge or hire; and, (3) There is room in the carriage. The goods should be carried by the ordinary route (not necessarily the shortest) without undue delay. Liabilities. — Prior to the passing of the Carriers Act 1830 common carriers were liable for every loss or injury to the goods they carried, however much such loss or injury might involve, and whether the carrier knew or not "of the valuable character of the goods, unless the loss or injury was caused by (1) The act of God, (2) The King's enemies, (3) The consignor's neglect (wholly), or (4) The inherent vice or defect of the subject- matter of carriage. The Act of 1830 provides that no common land carrier for hire is to be liable for loss of, or injury to, any article or articles or property of the descriptions following, viz. : — Gold, silver, precious stones, jewellery, watches, clocks, bills and other securities for money, maps, paintings, writings, title-deeds, glass, china, silks, and such like valuables, con- tained in a parcel and delivered to him to be carried for hire, or to accompany the person of any passenger, when the value of the property exceeds the sum of ^10, unless at the time of the deliverv thereof to the carrier the value and nature of the property be expressly declared by the consignor and an increased rate of charge be accepted by the carrier. The Act requires the carrier to exhibit a public notice in some conspicuous part of his office stating the increased rate of charge to be paid as compensation for the greater risk and care to be taken of the goods. If the carrier dues not exhibit such notice he is not entitled to the benefits of the Act. Carrier] 9i [Cash Prior to the Act carriers endeavoured to limit their liability by exhibiting a public notice to the effect that they would not be responsible beyond a stated sum, but section 4 provides that no land carrier shall limit his liability by public notices, except to the extent provided by the Act in respect of valuables exceeding ^10 in value. Section 6, however, allows carriers to make a special con- tract (limiting their liability) with each person delivering goods. This latter privilege was largely availed of by means of printed conditions and limitations on the back of the receipt tickets, which were, in all probability, not noticed by the consignor; and although all carriers other than railway companies and canal companies may still limit their liability in this way, the latter classes of carriers cannot avoid responsibility without complying with the Railway and Canal Traffic Act 1S54, which provides (1) that public notices limiting their responsibility are ineffectual, and (2) that special contracts may be made with a view of restricting liability, provided that (a) The contract be signed by the person delivering the goods, and (b) The contract contains conditions which are just and reasonable in the opinion of the Judge before whom any question relating thereto is tried. The various points in connection with sea- carriage are dealt with in their appropriate places. Carry-over. — See Settling Days. Case ol Need. — Sec Referee in case of need. Cash. — In its strict sense, the term " cash " is applied to coined money, but Bank of England notes are now treated as cash, being legal tender in England and Wales for sums of £5 and over. In its widest sense cash may be said to mean money, banknotes, cheques and bills payable on demand. Cash Account An account of the receipts and payments of the party rendering such account. An account in the Ledger showing the cash transactions (in aggregate) where the Cash Book totals are posted (but see title Cash Book). Cash Book. — The book wherein all receipts and payments of cash are recorded. Some advocate the entering of the bills (receivable and payable) through the Cash Book, but the better opinion is that it is more correct to pass them through the Journal or Bill Books. Cash Books are devised at the present time with a view of saving labour and facilitating the balancing of the books. In some cases the " Sectional Ledger " system necessitates columns in the Cash Book to correspond with the various Ledgers, whilst in many businesses the receipts or payments, or both, are analysed by means of appropriate columns, the totals only being posted periodically to the Ledger. , The majority of Cash Book " rulings," how- ever, are still restricted to a separate record of cash, bank, and discount transactions. The audit of a Cash Book is considerably facilitated if each item entered therein, particu- larly- on the payments side, is given a consecu- tive number in a special column, such number also being placed upon the voucher therefor. Vouchers are thereby more readily placed in order, and are then more easily compared with the respective entries. Apart from any question of analysis by means of columns, the Cash Book, in a system of bi * k- keeping by double entry, may be said to perform three distinct duties, viz. : — (1) It forms a record of the cash and bank transactions showing the balance of cash in hand and at the bank from time to time. (2) The entries for a specified period consti- tute a Journal entry in a convenient form, the receipts being in the form of cash Dr. to the sundry persons or accounts from whom, or in respect of which, the cash has been received; the payments being the reverse. (3) It is unusual to post the totals of the receipts and payments to a Cash Account in the Ledger, the Cash Book itself being generally treated as a Ledger Account, necessitating the inclusion of the lash Book balances in the Trial Balance of the Ledger. Cash] 92 [Certificate Thus each and every entry in the Cash Book is (as it were) doubly posted by one entry in the Ledger. A receipt is posted to the credit of the payer, and by adopting the Cash Book as the Ledger Account, the " corresponding debit " is effected by the already existing entry in the Cash Book. ' Many students find the " cross post " from the Cash Book difficult to comprehend, but it may be explained as follows : — A Cash Book contains (say) one month's trans- actions, and it is required to post such transac- tions to the Ledger. The operator will say, " I " adopt the Cash Book en bloc as my Cash " Account in the Ledger." The theoretical effect of this rs that all the receipts (on the debit side of the Cash Book) have been bodily posted to the debit side of the Ledger, and all the payments to the credit side of the Ledger. The operator, then, using his pen for the first time, commences to make the " opposite entries " in detail, and, as he naturally obtains such details from the Cash Book, the actual postings he makes from that book are the cross postings only. To verify the amount of cash in hand stated in a Balance Sheet, the auditor should either count the cash on the date to which the accounts are made up, or attend at some later date and check the balance then in hand, vouching back the Cash Book to the earlier date. (See Vouching Back.) Cash Creditor. — One whose claim has arisen out of cash transactions or loans, as distinct from a trade creditor, whose claim arises from trading transactions, such as the delivery of goods, &c. For bankruptcy purposes there is, under ordinary circumstances, no distinction between these two classes, but see Postponed Creditors. Cash Discount. — See Discount, Trade Discount. Cash Order. — An inland draft on demand drawn by one trader on another and (as a rule) passed through a bank for collection. Many banks object to the practice. Cash orders are subject generally to the law of bills of exchange. Cash Sales. — Sales made for cash payment at the time of sale or delivery. They are sometimes termed " till-takings." (See that title.) Casting Vote. — A vote given by the chairman of an assembly or meeting when the votes of those present for and against a given proposition are equal, so that a decision may be arrived at. A chairman at common law has no casting vote, so that the privilege must be expressly con- ferred by the meeting or the regulations govern- ing the same. In some cases the chairman is not allowed to vote except to give a casting vote — that is, when the votes of the other persons present for and against a given proposition are equal, but the articles of association of a company generally confer a casting vote in addition to any vote or votes to which the chairman may be entitled as a member, whether on a show of hands or at a poll. Catching Bargain. — One made for an inadequate consideration, under such circumstances that the aggrieved party was not in a position to nego- tiate upon equal terms; such as a purchase from an expectant heir of his expectancy by one having a better knowledge of its real value. Caveat. — A warning. To " enter a caveat " is to endeavour by legal process to stay some pro- jected act, e.g., to stay the probate of a will, the granting of letters of administration, the issuing of a lunacy commission, &c. Caveat emptor. — Let a purchaser beware. (See Warranty.) Certificate. — Share Certificate : A document which testifies to the ownership of stock or shares in a joint stock company. Ordinarily it is issued under the common seal of the company, and signed bv one or more directors, and generally countersigned by the secretary. Section 23 of the Companies Act 190S provides that a certificate under the common seal of the company specify- ing any shares or stock held by any member shall be primA facie evidence of the title of the Certificate] 93 [Certificate member to the shares or stock. But in order to complete the title of the member the purport of the certificate must be recorded in the register of members. This applies only to the member named in the certificate, or his legal representa- tive, for the title to the shares, &c, can only be transferred by the registration of an instrument of transfer, whereupon a new certificate is issued to the transferee. A share certificate must be dis- tinguished from a share warrant in this connec- tion. A company may be estopped from denying the truth of what is stated in a share certificate issued by it. Thus, where shares were allotted for a consideration other than cash, and no con- tract had been filed under section 25 (now repealed) of the Companies Act 1867, the com- pany having issued a certificate stating that the shares were fully-paid was estopped from deny- ing this to a third party who had taken the shares in good faith and for value, on the strength of the company's certificate. (In re Ottos Kopje Diamond Mines, Lim., 1893, 1 Ch. 618.) Again, if a company by means of a forged transfer purporting to transfer shares from A. to B., is induced to issue a share certificate to B., it will be estopped from denying to C. that B. is, in fact, a shareholder if C, on the strength of the certificate, has, in good faith, given value for the shares to B., and the company will therefore be liable to him in damages when A., whose title is not defeated by the registration of the forged transfer, requires the restoration of his name to the register. On the other hand, the company would be entitled to be indemnified by the person presenting the transfer for registration, who impliedly held it out as a genuine document. (Sheffield Corporation v. Barclay ts cash balance by £130,000. Clearing a Vessel-The entry of , vesseFs "ame and an account of her cargo in the Custom iiouse books on her entering or leaving the port, 99 Codicil and the compliance with all necessary formalities to enable the vessel to discharge or proceed. Cosing Entries-The term used to express the adjustments necessary to enable a set of books to be closed » and the final accounts prepared. Generally, .t may be said that the closing entries are those which transform the Trial Balance into the Balance Sheet. Club Statement of Purchases— The secretary of every registered club must deliver to the Com m.ssioners of Inland Revenue in the month of January ,„ every year, or within such further frne as the Commissioners may in any case allow, a statement of the purchases during the preceding calendar year of intoxicating liquor to be supplied in or to the club or on behalf of the club to the members thereof in such form and containing such particulars as mav be prescribed by the Commissioners. Every such statement shall be charged with an Excise Duty of 6d. for every £ of the purchases shown in the statement. Failure to deliver the statement after notice in writing renders the secretary liable to penalties. If any such duty remains unpaid after the first day of March in any year the duty may be recovered by distress on the club premises, pro- vided that notice in writing requiring payment has been first given. Non-compliance with the provisions as to the statement or payment of the duty also renders the club liable to disabilities. (Finance (1909-10) Act 1910, section 48.) Code— A collection or system of laws; a collec- tion of words, figures, or other signs, each with a respective meaning or conveying a particular phrase, thus enabling the possessors to com- municate by telegraph, cable, or otherwise, more economically and with greater secrecy. Code de Commerce— See Foreign Systems of Accounting. Codicil— A supplement to a will, to add to, explain, or revoke the contents or part contents of the will. It must be executed with all the formalities of a will. In the Wills Act 183; the term " will " includes a codicil. H 2 Collateral] ioo [Colonial Collateral Security. — One given as security for a debt in addition to the principal one already existing. (See Secured Creditor.) Colonial Companies. — See titles Colonial Register, Foreign Companies, Land. Colonial Register. — The Companies (Consolida- tion) Act 1908 provides as follows : — Section 34. — (1) A company having a share capital, whose objects comprise the transaction of business in a colony, may, if so authorised by its articles, cause to be kept in any colony in which it transacts business a branch register of members resident in that colony (in this Act called a Colonial Register). (2) The company shall give to the Registrar of Companies notice of the situation of the office where any Colonial Register is kept, and of any change in its situation, and of the discon- tinuance of the office in the event of its being discontinued. (3) For the purpose of the provisions of this Act relating to Colonial Registers the term " colony " includes British India and the Commonwealth of Australia. Section 35. — (1) A Colonial Register shall be deemed to be part of the company's register of members (in this and the next following section called the Principal Register). (2) It shall be kept in the same manner in which the Principal Register is by this Act required to be kept, except that the advertise- ment before closing the register shall be inserted in some newspaper circulating in the district wherein the Colonial Register is kept, and that any competent Court in the colony may exercise the same jurisdiction of rectifying the register as is under this Act exerciseable by the High Court, and that the offences of refusing inspection or copies of a Colonial Register, and of authorising or permitting the refusal may be prosecuted summarily before any tribunal in the colony having summary criminal jurisdiction. (3) The company shall transmit to its regis- tered office a copy of every entry in its Colonial Register as soon as may be after the entry is made ; and shall cause to be kept at its regis- tered office, duly entered up from time to time, a duplicate of its Colonial Register, and the duplicate shall, for all the purposes of this Act, be deemed to be part of the Principal Register. (4) Subject to the provisions of this section with respect to the duplicate register, the shares registered in a Colonial Register shall be dis- tinguished from the shares registered in the Principal Register, and no transaction with respect to any shares registered in a Colonial Register shall, during the continuance of that registration, be registered in any other register. (5) The company may discontinue to keep any Colonial Register, and thereupon all entries in that register shall be transferred to some other Colonial Register kept by the company in the same colony, or to the Principal Register. (6) Subject to the provisions of this Act, any company may, by its articles, make such pro- visions as it may think fit respecting the keep- ing of Colonial Registers. Section 36. — In relation to stamp duties the following provisions shall have effect : — (a) An instrument of transfer of a share registered in a Colonial Register shall be deemed to be a transfer of property situate out of the United Kingdom, and, unless executed in any part of the United King- dom, shall be exempt from British stamp duty : (b) On the death of a member registered in a Colonial Register the shares of the deceased member shall, if he died domiciled in the United Kingdom, but not otherwise, be deemed, so far as relates to British duties, to be part of his estate and effects situate in the United Kingdom for or in respect of which probate or letters of administration is or are to be granted, or whereof an inventory is to be exhibited and recorded, in like manner as if he were registered in the Principal Register. Colonial Stock Act 1900. — See Trust Investments. Columnar] IOI Commission Columnar System. — A system of accounting by means of columns appropriately ruled in the books of account. It is particularly adapted to Departmental Accounts, analysis of sales, pur- chases, expenditure, &c, and reduces the volume of clerical work, the postings being effected in total sums instead of single items. The totals of the columns also serve as a check upon much of the work, varying according to the precise system adopted. Commencement of Business (Restrictions on). — A company shall not commence any business or exercise any borrowing powers unless — (a) shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription ; and (6) every director of the company has paid to the company on each of the shares taken or contracted to be taken by him, and for which he is liable to pay in cash, a pro- portion equal to the proportion payable on application and allotment on the shares offered for public subscription, or in the case of a company which does not issue a prospectus inviting the public to subscribe for its shares, on the shares payable in cash ; and (c) there has been filed with the Registrar of Companies a statutory declaration by the secretary or one of the directors, in the prescribed form, that the aforesaid con- ditions have been complied with ; and {d) in the case of a company which does not issue a prospectus inviting the public to subscribe for its shares, there has been filed with the Registrar of Companies a statement in lieu of prospectus. The Registrar of Companies shall, on the filing of this statutory declaration, certify that the company is entitled to commence business, and that certificate shall be conclusive evidence that the company is so entitled : Provided that in the case of a company which does not issue a prospectus inviting the public to subscribe for its shares the Registrar shall not give such a certificate unless a statement in lieu of prospectus has been filed with him. Any contract made by a company before the date at which it is entitled to commence business shall be provisional only, and shall not be binding on the company until that date, and on that date it shall become binding. Note. — This applies to all contracts — not merely those concerning the particular business to be acquired by the company (Re Otto Electrical Manufacturing Company, 1906) ; therefore the guarantee of the promoters or directors should be obtained in doubtful cases before outlay is incurred on behalf of a company which will require a certificate to commence busi- ness but has not at the time actually obtained it. Nothing in this section shall prevent the simultaneous offer for subscription or allotment of any shares and debentures or the receipt of any money payable on application for debentures. If any company commences business or exercises borrowing powers in contravention of this sec- tion, every person who is responsible for the contravention shall, without prejudice to any other liability, be liable to a fine not exceeding fifty pounds for every day during which the con- travention continues. Nothing in this section shall apply to a private company, or to a company registered before the first day of January nineteen hundred and one, or to a company registered before the first day of July nineteen hundred and eight which does not issue a prospectus inviting the public to subscribe for its shares. (Companies Act 1908, section 87.) (See Profits prior to Incorporation, Certificate of Incorporation.) Commencement of the Bankruptcy.— See Act of Bankruptcy, Relation Back. Commencement of the Liquidation.— See Winding- up. Commission.— Commercially, the order under which one person negotiates business for another; the remuneration of a broker or other agent, generally by way of an agreed percentage Commission! 102 [Committee upon the value of the subject-matter involved. (See beading Remuneration under title Agent; also title Corruption, Prevention of.) It shall be lawful for a company to pay a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, if the payment of the commission is authorised by the articles, and the commission paid or agreed to be paid does not exceed the amount or rate so authorised, and if the amount or rate per cent, of the commis- sion paid or agreed to be paid is — (a) In the case of shares offered to the public for subscription, disclosed in the pro- spectus; or (6) In the case of shares not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of pro- spectus and filed with the Registrar of Companies, and, where a circular or notice, not being a prospectus, inviting sub- scription for the shares is issued, also dis- closed in that circular or notice. Save as aforesaid, no company shall apply any of its shares or capital money either directly or indirectly in payment of any commission, dis- count, or allowance, to any person in considera- tion of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares of the company, or procuring or agreeing to procure subscriptions, whether absolute or con- ditional, for any shares in the company, whether the shares or money be so applied by being added to the purchase money of any property acquired by the company or to the contract price of anv work to be executed for the companv, or the money be paid out of the nominal purchase money or contract price, or otherwise. Nothing in this section shall affect the power of any company to pay such brokerage as it has heretofore been lawful for a company to pay, and a vendor to, promoter of, or other person who receives payment in money or shares from, a company shall have and shall be deemed always to have had power to apply any part of the money or shares so received in payment of any commis- sion, the payment of which, if made directly by the company, would have been legal under this section. (Companies (Consolidation) Act 1908, section 89.) (See title Underwriter.) Where a company has paid any sums by way of commission in respect of any shares or deben- tures, or allowed any sums by way of discount in respect of any debentures, the total amount so paid or allowed, or so much thereof as has not been written off, shall be stated in every Balance Sheet of the company until the whole amount thereof has been written off. (Section 90.) hull particulars of commissions paid in connec- tion with any issue of debentures must also be filed when the debentures are being registered with the Registrar. (See also title Annual List and Summary.) Commissioners for Oaths. — Solicitors and any other fit and proper persons whom the Lord Chancellor appoints to administer oaths and take affidavits. (See Oath.) Commission in Lunacy. — An inquiry as to whether a person alleged to be a lunatic is so or not. Committee. — A body of persons elected to conduct some particular business. In special cases, how- ever, a committee may consist of one person only. Committee of a Lunatic. — A committee (which may consist of one person only) to whose care and custody the person and property of a lunatic are entrusted by the Court. Committee of Inspection. — Bankruptcy. A committee consisting of not more than five nor less than three persons, appointed for tin- purpose of superintending the administration of a bankrupt's property by the trustee. The members of the committee are selected by the creditors by ordinary resolution, and any creditor or the holder of a general proxy or general power of attorney from a creditor may be Committee] 103 [Committee appointed, whether the debt be proved or not, I provided that the creditor must prove his debt, and his proof must be admitted before he (or his proxy or attorney) acts upon the committee. The committee meet at such times as they shall from tini' to time appoint, and, failing such appoint- ment, at least once a month; and the trustee or anv member of the committee may also call a nn i ;ing of the committee as and when he thinks necessary. They may act by a majority of their number pi > sent, provided a majority of the whole com- mittee is present at the meeting. The con- tinuing members of the committee may act, not- withstanding any vacancy in their body, provided there be not less than two such continuing nn mbers. On the occurrence of a vacancy the trustee must forthwith call a meeting of creditors to fill same. No defect or irregularity in the election of a member of a committee of inspection shall vitiate any act done by him in good faith. Where the number of members of the com- mitUt is, for the time being, less than five, the creditors may elect additional members, but the total number of members must not exceed five. Any member of the committee may resign his office by notice in writing delivered to the trustee, and any member may be removed by an ordinary resolution at any meeting of creditors, of which notice has been given stating the object of the meeting. I f a member of the committee becomes bank- rupt, or compounds or arranges with his creditors, or is absent from five consecutive nn 1 tings of the committee, his office thereupon becomes vacant. (Bankruptcy Act 1883, sections 22 mid 143; Bankruptcy Act 1890, section 5.) Any alteration in, or addition to, the committee should be at once notified to the Inspector- ial in Bankruptcy by the transmission of a certified copy of the resolution effecting such alteration or addition. (Board of Trade Regulations.) Powers. The committee may be empowered by the creditors to appoint a trustee and to fix his remuneration (see title Trustee in Bankruptcy, sub-titles Appointment and Remuneration), and the trustee may consult the committee upon all important matters in connection with the administration of the estate. In particular, the trustee may not do the following things without the permission of the committee, viz. : — (1) Carry on the business of the bankrupt, so far as may be necessary for the beneficial winding-up of the same. Notes. — The word " necessary " in the same connection as regards company liqui- dation has been held to mean " highly expedient under all the circumstances of the case," and not to be synonymous with " beneficial." (Wreck Recovery Co, 1880.) The business ought not to be carried on with the object of paying dividends out of profits, or of increasing the value of the goodwill. Such a practice necessarily involves risk of loss to which the creditors ought not to be exposed, and has, moreover, been held to be contrary to law. (Board of Trade Circular.) (2) Bring, institute, or defend any action or other legal proceeding relating to the pro- perty of the bankrupt. Note. — Where a trustee brings an action on behalf of the estate, although no personal benefit can accrue to him as a result of the litigation, he will be person- ally liable for the costs; so that, if the estate of the bankrupt is insufficient for the payment of any of such costs, the trustee would have to pay them (or the balance of them) personally. The proper course, therefore (and the usual course), for the trustee is to obtain an indemnity against the costs from the committee of inspection or the creditors personally before commencing litigation. (Ex parte Angerstein.) Where an action is brought against a trustee (or the Official Receiver) as representing the estate of the debtor, or where a trustee (or the Official Receiver) is made a party to a cause or matter on the application of any other party thereto, he shall not be personally liable for costs unless the Court otherwise directs. (Rule 108.) Committee] 104 [Committee (3) Employ a solicitor or other agent to take any proceedings or do any business which may be sanctioned by the committee of inspection. Note. — The sanction for the employment must be obtained before the employment, except in cases of urgency, and in such cases it must be shown that no undue delay took place in obtaining the sanction. (1890 Act, section 15.) (4) Accept as the consideration for the sale of any property of the bankrupt a sum of money payable at a future time subject to such stipulations as to security or other- wise as the committee think fit. (5) Mortgage or pledge any part of the pro- perty of the bankrupt for the purpose of raising money for the payment of his debts. (6) Refer any dispute to arbitration, com- promise all debts, claims, and liabilities, whether present or future, certain or con- tingent, liquidated or unliquidated, sub- sisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt, on the receipt of such sums, payable at such times and generally on such terms as may be agreed upon. (7) Make such compromise or other arrange- ment as may be thought expedient with creditors, or persons claiming to be creditors, in respect of any debts provable under the bankruptcy. (8) Make such compromise or other arrange- ment as may be thought expedient with respect to any claim arising out of or inci- dental to the property of the bankrupt, made, or capable of being made, on the trustee by any person, or by the trustee on any person. (9) Divide in its existing form amongst the creditors, according to its estimated value, any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold. (10) Appoint the bankrupt himself to super- intend the management of the property of the bankrupt, or of any part thereof, or to carry on the trade (if any) of the bank- rupt for the benefit of his creditors or in any other respect to aid in administering the property in such manner and on such terms as may be directed. (n) Make such allowance as may be con- sidered just to the bankrupt out of his property for the support of the bankrupt and his family, or in consideration of his services if he is engaged in winding up the estate. The amount of allowance may be reduced by the Court, and such allowance must be in money, unless the creditors by special resolution determine otherwise. The permission of the committee of inspection which is required in respect of the foregoing, must not be a general permission to do all or any of the above-mentioned things, but must only be a permission to do the particular thing or things for which permission is sought in the specified case or cases. (1883 Act, sections 57 and 64.) Any postponement beyond the prescribed date with regard to the first dividend, or any post- ponement beyond the limit of two months of a declaration of dividend, after notice of intention to declare same has been gazetted, must be sanctioned by the committee of inspection. (1883 Act, section 58, and Rule 232.) Duties. The committee must audit the trustee's Cash Book at least once every three months, and certify same. If the trustee carries on the busi- ness of the bankrupt, the " Trading Account " must be audited by the committee at least once every month. (Rules 288 and 308.) Generally, it is the duty of the committee to control the trustee in the administration of the estate — powers are conferred upon the com- mittee, and it is their duty to exercise those powers. (See Powers, supra.) The trustee must have regard to any directions of the creditors or the committee, but in case of conflict the direc- Committee] !°5 [Committee tions of the creditors in general meeting override any directions given by the committee. (1883 Act, section 89.) A member of the committee is debarred from purchasing any part of the bankrupt's estate without leave of the Court, either directly or indirectly, by himself or any partner, clerk, agent, or servant. Any such purchase may be set aside by the Court upon the application of the Board of Trade or any creditor. (Rule 316.) No member of a committee of inspection shall, except with sanction of the Court, directly, or indirectly, by himself or any employer, partner, clerk, agent, or servant be entitled to derive any profit from any transaction arising out of the bankruptcy, or to receive out of the estate any payment for services rendered by him in connec- tion with the administration of the estate, or for any goods supplied by him to the trustee for or on account of the estate. If it appears to the Board of Trade that any such profit or payment has been made, they may disallow such payment or recover such profit, as the case may be, on the audit of the trustee's account. (Rule 317.) The cost of obtaining (or applying for (?)) the sanction of the Court under Rules 316 and 317 must be borne by the person in whose interest such sanction is obtained (or applied for (?)) and cannot be charged against the estate. (Rule 316A.) The sanction of the Court to payment being made for services rendered to the estate by a member of a committee of inspection will only be given when the services performed are of a special nature. No payment will be allowed under any circum- stances to a member of a committee of inspec- tion for services rendered by him in the discharge of the duties attaching to his office as a member of such committee. (Rule 317A.) The members of the committee may be paid their actual out-of-pocket expenses necessarily incurred provided the approval of the Board of Trade be obtained. (Rule 125.) If there be no committee of inspection appointed by the creditors, any act or thing, or any direction or permission, which by the Bank- ruptcy Act 1883 is authorised or required to be done or given by the committee, may be done or given by the Board of Trade on the applica- tion of the trustee, and any functions which devolve on the Board may (subject to any special directions) be exercised by the Official Receiver. (1883 Act, section 22, and Rule 337.) Upon every application by a trustee to an Official Receiver acting as the committee of inspection, a fee is payable as follows : — Where the assets are certified by the Official Receiver as not likely to realise more than £50°, 5 s - Where the assets are likely to exceed £500, 10s. Deeds of Arrangement. Usually a committee of inspection is appointed, either by the deed or by the creditors, to supervise the trustee. There are no statutory provisions as to the duties of the committee, but bankruptcy procedure is followed to a great extent. Company Liquidation. When a winding-up order has been made by the Court, the Official Receiver shall summon separate meetings of the creditors and contribu- tories of the company for the purpose of — (a) determining whether or not an application is to be made to the Court for appointing a liquidator in the place of the Official Receiver; and (b) determining whether or not an application is to be made to the Court for the appoint- ment of a committee of inspection to act w-ith the liquidator, and who are to be the members of the committee if appointed. The Court may make any appointment and order required to give effect to any such deter- mination, and, if there is a difference between the determinations of the meetings of the creditors and contributories in respect of any of the matters mentioned in the foregoing pro- visions of this section, the Court shall decide the Committee] 106 [Committe* difference and make such order thereon as the Court may think fit. In case a liquidator is not appointed by the Court the Official Receiver shall be the liquidator Of the company. (Companies (Consolidation) Act 1908, section 152.) Note. — If the Official Receiver is liquidator of the company no committee of inspection is appointed. The appointment of a committee of inspection must be advertised by the liquidator (in such manner as the Court directs) immediately after the appointment. (Rule 55.) A committee of inspection appointed in pur- suance of this Act shall consist of creditors, and contributories of the company or persons holding general powers of attorney from creditors or con- tributories in such proportions as may be agreed on by the meetings of creditors and contribu- tories, or as, in case of difference, may be determined by the Court. The committee shall meet at such times as they from time to time appoint, and, failing such appointment, at least once a month; and the liquidator or any member of the committee may also call a meeting of the committee as and when he thinks necessary. The committee may act by a majority of their members present at a meeting, but shall not act unless a majority of the committee are present. Any member of the committee may resign by notice in writing signed by him and delivered to the liquidator. If a member of the committee becomes bank- rupt, or compounds or arranges with his Creditors, or is absent from five consecutive meet- ings of the committee without the leave of those members who together with himself represent tlir creditors or contributories, as the case may be, his office shall thereupon become vacant. Note. — In Bankruptcy procedure his office becomes vacant if absent for five consecutive meetings with or without leave of his co- members. Any member of the committee may be removed by an ordinary resolution at a meeting of creditors (if he represents creditors), or of con- tributories (if he represents contributories) of which seven days' notice has been given, stating the object of the meeting. On a vacancy occurring in the committee the liquidator shall forthwith summon a meeting of creditors or of contributories, as the case may require, to fill the vacancy, and the meeting may, by resolution, re-appoint the same or appoint another creditor or contributory to fill the vacancy. The continuing members of the committee, if not less than two, may act notwithstanding any vacancy in the committee. If there is no committee of inspection, any act or thing or any direction or permission by this Act authorised or required to be done or given by the committee may be done or given by the Board of Trade on the application of the liquidator. (1908 Act, section 160.) Note. — Any functions which so devolve upon the Board of Trade may (subject to special directions) be exercised by the Official Receiver. I Upon every application by a liquidator to an Official Receiver acting as a committee of inspection a fee of 10s. is payable. Control over the Liquidator. The liquidator in a winding-up by the Court shall have power, with the sanction either of the Court or of the committee of inspection — (1) To bring or defend any action or other legal proceeding in the name and on behalf of the company : (2) To carry on the business of the company, so far as may be necessary for the beneficial winding-up thereof : (3) To employ a solicitor or other agent to take any proceedings or do any business which the liquidator is unable to take or do himself; but the sanction in this case must be obtained before the employment, except in cases of urgency, and in those cases it must be shown that no undue delay took place in obtaining the sanction : (190S Act, section 151.) Committee] (4) Pay any classes of creditors in full : (5) Make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable : (( ) Compromise all calls and liabilities to calls, debts, and liabilities capable of resulting in debts, and all claims, present or future, certain or contingent, ascertained or sound- ing only in damages, subsisting or sup- posed to subsist between the company and a contributory, or alleged contributory, or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding-up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim, and give a complete discharge in respect thereof. In the case of a winding-up by the Court the exercise by the liquidator of all the fore- powers shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any ise or proposed exercise of any of those powers. (1908 Act, section 214.) The liquidator shall not make any call upon contributories without either the special leave of tin Court or of the committee of inspection (sec- tion 1 73 ) . and application to the Board of Trade for a local Bank Account (see that title) when- such is desired must be made by the committee. (Section 154.) The bankruptcy rules (supra) as to members of the committee (1) purchasing or dealing with the estate, or (2) making any profit thereout, or (3) receiving payment for services 1 d, apply equally to winding-up procedure, he committee's duties relative to the audit of the accounts of the liquidator see title Liquidator's Accounts. 107 [Commutation The committee have the power (unless the Court otherwise orders) to fix the remuneration of the liquidator and to sanction a postpone- ment of the payment of dividends. (See title Liquidator [sub-titles Remuneration and Dividends].) Voluntary Liquidation. At the meeting of creditors to be called by any liquidator of a company being wound up volun- tarily within twenty-one days after his appoint- ment, the creditors, in addition to determining whether an application shall be made to the Court for the appointment of any person in the place of or jointly with the liquidator appointed by the company, must also determine whether application shall be made for the appointment of a committee of inspection. If the creditors so resolve, the application may be made to the Court at any time not later than fourteen days after the date of the meeting, by any creditor appointed for the purpose at the meeting, and the Court on the application may make any such order as, having regard to the interests of the creditors and con- tributories of the company, may seem just* There will be no appeal from the order. The Court shall make such order as to the costs of the application as it may think fit, and if it should be of opinion that, having regard to the interests of the creditors in the liquidation, there were reasonable grounds for the applica- tion, may order the costs to be paid out of the assets of the company, notwithstanding that such application is dismissed or otherwise dis- posed of adversely to the applicant. (Companies (Consolidation) Act 1908, section 188.) This procedure was first provided by section 27 of the 1907 Act, and the question arose as to what powers the committee if appointed possessed, and what were their duties. Now that the Acts have been consolidated, rules will no doubt be issued in due course settling these matters. Common Seal. — The seal used by a corporation as a symbol of its incorporation. (See Seal.) Commutation. — Conversion; the giving of one thing in satisfaction of another; the payment of Commutation] 1 08 [Compensation a lump sum instead of annual or other pay- ments, as in the case of tithes, land tax, and certain of the death duties. Companies Acts. — This term included all the Acts of Parliament relating to joint stock companies which prior to 1st April 1909 were to be con- strued as one with the principal Act of 1862. These Acts, as set out below (except to the extent that they had been in whole or part previously amended or repealed), were consolidated by the Companies (Consolidation) Act 1908, which came into force on 1st April 1909. (1) Companies Act 1862 (2) Companies Seals Act 1864 (3) Companics'Act 1867 (4) J o i n 1 1 Stock Compan Arrangement Act 1870 (5) Companies Act 1877 (6) Companies Act 1879 (7) Companies Act 1880 (8) Companies Act 1883 (9) Companies Act 1886 (10) Companies Act 1890 (Memorandum) (11) Companies Act 1890 (Winding-up) (12) Directors' Liability ActiSgo (13) Companies Act 1893 (14) Companies Act 1898 (15) Companies Act 1900 (16) Companies Act 1907 (17) Companies Act 1908 The Principal Act. Seals in Foreign Countries. Unlimited Liability of Directors. Reduction of Capital. Associations not for Profit. Subdivisions of Shares. Calls upon Shares. Share Warrants to Bearer. Contracts. &c. &c. lies I Arrangements with Creditors. Interpretation of Act of 1867. Banking Companies, and other matters. Returning Accumulated Profits. Defunct Companies, &c. Colonial Registers. Power to alter the objects of the Company. Winding-up Procedure. Liability of Directors and others forstatementsin Prospectuses, &c. Amendment of Section 10 of the Winding-up Act 1890. Amendment of Section 25 of 1867 Act. Conclusiveness of Certificate of Incorporation. Qualification of Directors. Restrictions on Allotment and Underwriting. Restrictions on commencement of business. Requirements as to filing and issue of Prospectus. Statutory Meeting. Registration of Mortgages and Charges. Audit and Auditors. &c. fto< Obligations of Companies where no Prospectus is issued. Payment of Interest out of Capital. Registration of Mortgages and Charges. Re-issue of Redeemed Deben- tures in certain cases. Audit and Auditors. Filing of Balance Sheets. Rights of Shareholders to demand Accounts. Rights of Creditors in Volun- tary Winding-up. Requirements as to Companies incorporated outside the United Kingdom. Filing of Accounts of Receivers and Managers. Creation of Private Companies. Colonial Companies and Land in United Kingdom. In addition to the above there are: — (1) Preferential Payments in Bankruptcy Act 1888 Repealed and re-enacted by the Companies (Consolida- tion) Act 1908 as regards Sections i, 2, and 3, so far as they relate to Companies. (2) Preferential Payments in Bankruptcy Act 1897 Repealed and re-enacted by the Companies (Consolida- tion; Act 1908. (3) Workmen's Compensation Act 1906 (4) Assurance Companies Act 1909 (5) Companies Clauses Con- solidation Act 1845 (6) Companies (Converted Societies) Act 1910 Priority in Winding-up of certain] Rates, Taxes, and \\ Priority of the above to DebeiJ tures secured by a rloatinjfl charge. Priority in Winding-up au moneys due for compt-nsatiflfl in certain caaet. Life Assurance, Fire and Acci- dent Insurance, and Bonds Investment. Compan ies I ncorporat ed by; Special Act. Validity of Conversion of certajM Friendly Societies into Com-J panies. Company. — "A society of persons joined in a " common interest, generally for the purpose ofl " carrying on some commercial or industrial " undertaking." In the Companies (Consolidation) Act [90a " company " means a company formed and 1 tered under that Act or under the Joint Stuck Companies Acts or under the Companies Act 1862. (Section 285.) Companies may be incorporated or unincor- porated. An unincorporated company is reallv an ordinary partnership and has many disadvantages compared with a corporation. A company, asso- ciation, or partnership formed after 1862, having] for its object the acquisition of gain, and COM sisting of more than twenty persons (or ten in3 the case of a banking business), is illegal if unregistered. (See Corporation, One-man Com- pany, Private Company.) Comparative Statement. — A statement, generally in! digest form, showing comparatively the par-1 ticular matters with which it deals. It is J especially useful in connection with matters ofl account, such as trading results for different! periods, and often includes quantities (where! available and useful) as well as the values and 1 the percentages of the various items. Compensation. — Making amends; that which isl paid in satisfaction of an injury to property orl person. (See Goodwill [Compensation], License! [Compensation], Workmen's Compensation.) Compensatory] Compensatory Errors are such as do not prevent the arithmetical balancing of a set of accounts, one error being neutralised by one or more other errors having a similar effect in the contrary direction. For instance, a short post of ^10 to the debit side of the Ledger would " com- pensate " for the errors of a short post of £6 and a " miss-post " of ^4 to the credit side of the Ledger. Competent to dispose. — A person is deemed com- petent to dispose of property (within the mean- ing of the Finance Act 1894) if he has such an estate or interest therein or such general power as would, if he were sui juris, enable him to dispose of the property. (Sec Estate Duty, Succession Duty.) Competitive Proof. — Where the joint estate of a firm or the separate estate of a partner is being administered, no partner in the firm may prove in competition with the creditors of the firm t-ithi r against the joint estate of the firm or Igainst the separate estate of any other partner until all the debts of the firm have been paid in full. Exceptions : — ( 1 ) Where distinct and separate businesses have been carried on and the indebtedness has arisen in the ordinary way of business. (2) Where there has been fraudulent conver- sion of the property of the firm to the use of a partner or vice versa. (3) Where a partner, having been a bankrupt, has been discharged and afterwards becomes a creditor of the firm or another partner, the discharge having released him from the firm's liabilities. A partner may also prove against the separate of another partner if the result of so doing i to deprive the joint estate of a surplus or to be the means of reducing same — that is to say, proof may be made if the debtor-partner's estate solvent, even if the creditor-partner's claim be excluded. (Ex parte Topping, 1865.) It was doubted whether a creditor-partner could prove against a debtor-partner, even though within the last-mentioned rule, if such creditor- 10 9 [Composition partner's estate showed a surplus without the aid of a dividend receivable from the estate of the debtor-partner, the suggestion being that as the surplus of the creditor-partner's estate would go to the joint estate, the admission of the proof against the debtor-partner's estate in effect enabled the joint creditors to prove against a separate estate, in so far as the dividend upon such proof increased the surplus to be transferred from the creditor-partner's estate to the joint estate. Such a proof would, however, be allowed, it having been held that, by the time the dividend in the form of an increased surplus has reached the joint estate, it has ceased to be part of the separate estate of the partner out of whose estate it was originally paid. (Re Head, 1894.) Circumstances are conceivable, moreover, where the trustee of one partner might prove against the estate of another, and by so doing deprive the joint estate of a surplus or be the means of reducing same to the apparent detriment of the joint creditors; and yet such proof would be the means of increasing the surplus of the creditor- partner's estate to a greater extent than that by which it has reduced the other partner's surplus. The joint creditors would thus eventually benefit by a proof which was primarily a competitive- one. This result would happen where (1) the creditor-partner was solvent without the dividend his estate would so receive ; and (2) such divi- dend was greater than the surplus on the debtor- partner's estate, which would have existed but for the admission of the creditor-partner's proof. The executor of a deceased partner is in no better position than the deceased would have been. (Nanson V. Gordon, 1876.) Completed Audit.— One conducted after the accounts have been completed and submitted for examination, or at least after the completion of the Trial Balance. (See Continuous Audit.) Composition. — An agreement between an insolvent debtor and his creditors providing for payment of a portion only of the various debts in full satis- faction of the whole. The consideration for the unpaid portion of the debts arises out of the mutual forbearance of the various creditors. (See Deed of Arrangement.) Compounding] no Consideration Compounding, — Making an arrangement with creditors for payment of a composition. Compounding a Felony. — Where a party is robbed and knows the thief, he compounds a felony if he agrees not to prosecute on surrender of his goods ; this is an offence punishable by fine and imprisonment; Compound Interest.— See Interest. Compulsory Order (Winding=up). — An order to wind up a company made by the Court, as distinct from a voluntary winding-up which is the result of a resolution of the company. A winding-up under such an order is carried out by the Court (through the liquidator). The Court may make an order upon the applica- tion of the company itself, but such an order, when made, can hardly be termed compulsory, although the subsequent procedure is the same. (See Petition to wind-up, Winding-up.) Concurrent Consideration. — See Consideration. Condition. — A stipulation ; a restraint placed upon a thing. Where a contract for the sale of goods is subject to a condition, the buyer may, upon the breach of such condition by the seller, either : — (i) Repudiate the contract; or (2) Waive the condition and adopt the con- tract ; or 1(3) Elect to treat the breach of condition as a breach of warranty, adopt the contract and claim for the consequent damage. Provided that, where the contract is not sever- able, and the buyer has accepted the goods or part of them, or where the contract is for specific .goods the property in which has passed to the buyer, a breach of condition by the seller can only be treated as a breach of warranty, unless there be a term in the contract, express or implied, to the contrary. In the absence of a contrary intention, there is an implied condition that the seller has a right to sell the goods, or will have such right at the [time the property is to pass. The remaining implied conditions in a contract for the sale of goods are dealt with (for con- venience) under the head of Warranty. (See Defeasance.) Conditional Acceptance. — See Acceptance. Conditional Indorsement. — See Indorsement. Conditional Legacy. — A contingent legacy. (Sce\ Legacy.) Conditions of Sale. — The written conditions upon which property, goods, or any interest therein is to be sold. Conduct Money. — Money paid to a witness for his travelling expenses. Consanguinity. — The relation of persons descendedj from the same stock or common ancestor. It is I either lineal or collateral. Lineals are descended in a direct line, such as grandfather, father and son, whilst collaterals do not descend directly, I although they descend from a common ancestor (e.g., brothers and cousins). (See Affinity.) Consecutive Order. — Succeeding in regular orderJ Documents, book entries, &c, may be placedl in consecutive order, either alphabetically, chronologically, or numerically, according tol circumstances. Consideration. — The price or subject matter which I induces a contract. Consideration is one of the I essentials of a simple contract, but with the | exception of (1) those tending to the restraint of I trade, and (2) those of which specific perform- 1 ance is required, contracts under seal (special-1 ties) do not require consideration to make then I binding, some writers stating that the solemnity I of a deed "imports consideration," whilst I others assert that the law presumes sufficient! consideration, which the parties are estopped \ from denying. It would appear, however, that the more correct view is that given by Sir William Anson, to the effect that a deed owi s its ' efficacy entirely to its form, which statement is historically supported, inasmuch as a contract I under seal was in full efficacy before the doctrine I of consideration had been developed. Consideration! in [Consideration Where consideration is required to support a contract, it must be valuable, i.e., legal. The following are amongst the various classes of consideration : — Valuable consideration. — " Some right, in- " terest, profit, or benefit accruing to the one " party, or some forbearance, detriment, loss or " responsibility given, suffered, or undertaken by " the other." This is sufficient to support a contract, and provided the consideration is fairly within the definition, the Courts will not inquire into the sufficiency of it, provided it is not a mere pre- tence — it is for the parties themselves to say what the terms of their bargain shall be. Good consideration. — An equitable considera- tion based upon natural love, affection, and gratitude; it is insufficient of itself to support a contract. Moral consideration. — One based upon a moral obligation, which a person feels bound in honour and integrity to fulfil. This also is insufficient of itself to support a contract. Illegal consideration. — One which violates the principles of the statute law or the common law, including in the latter public policy and morality. Such consideration may be either wrong in itself or wrong because it has been positively pro- hibited. A contract based upon such a considera- tion cannot be enforced. Impossible consideration. — One the perform- ance of which is beyond the limit of human capacity. A contract to perform an act which is absolutely impossible will not be binding, but if such an act is possible at the time of entering into the contract, and subsequently becomes impossible, the person so contracting will be liable for the breach. Executed consideration. — (i) An act or for- bearance given for a promise which simul- taneously constitutes the proposal (or acceptance) and the consideration for the promise given in return for it, or (2) the offer of an act for a promise, or (3) the offer of a promise for an act. This must be distinguished from a past consideration. Past consideration. — Some act or forbear- ance in time past by which a person benefits without incurring any legal liability, but in respect of which he subsequently, from personal or other motives, makes a promise. Such a " consideration " has no legal effect, and cannot be enforced, being based upon motive, and not upon consideration. Three exceptions to this rule are said to exist : — (1) A past consideration will support a subse- quent promise, if the consideration was given at the request of the promisor in con- templation of the subsequent promise. (2) A debt barred by the Statutes of Limita- tion is sufficient consideration for a subsequent promise to pay it. (3) Where a " plaintiff voluntarily does that " whereunto the defendant was legally " compellable, and the defendant after- " wards in consideration thereof expressly " promises, he will be bound by such " promise." Note. — It would appear that this last exception is not of general application, having arisen solely out of the liability of parish authorities inter sc, respecting the expenses of paupers incurred in parishes other than their own. (Sec also title Consideration for a Bill of Exchange.) An interesting instance of voluntary payment occurs in the case of the formation of a com- pany. A person voluntarily paid the registra- tion fees of a company, but it was held by the Court of Appeal in Re National Motor Mail Coach Co., Lim. (1908, 2 Ch. 515), that it did not create an obligation to repay on the part of the company. Kennedy, L.J., in the course of his judgment, said he could not differentiate between " a payment made without request in " the case of a statutory obligation (i.e., to pay " such fees) and a similar payment in case of any " other obligation, and it was certainly not the " law that a person can recover money paid by " him (without request) because the person on Consideration] 112 [Consideration " whose behalf it was paid was under a legal " obligation to pay." This creates a somewhat anomalous position, for, as a company cannot come into existence until the preliminary fees are paid, and cannot request anything to be done on its behalf until it comes into existence, every company could according to this decision successfully repudiate liability, if it so desired, for the money paid to bring it into existence. This obviously requires rectifying by statute. Executory consideration. — One to be performed subsequently to the promise, as in the case of mutual promises. This will support a contract if otherwise legal. Concurrent consideration. — One performed simultaneously with the making of the promise. (Sec Executed Consideration, supra.) Continuing consideration. — One executed or performed in part only, the remainder requiring to be performed subsequently. This will support a contract if otherwise legal. (See Executory Consideration, supra.) The consideration for a contract must move from the promisee, and a stranger to the con- sideration cannot maintain an action upon a con- tract, for the consideration " must have passed " from the person seeking to enforce the " promise which was made in return for it." (Tweddle v. Atkinson, 1861). But a third party may have rights under a contract as cestui que trust, if words amounting to a declaration of trust are used by one of the contracting parties. (Empress Engineering Co., 1880.) In a marriage settlement the children are " within the consideration," and as beneficiaries they can enforce the terms of the settlement. Even children by a former marriage are within this rule, but under a " separation deed " the children are deemed strangers to the contract. A principal may enforce the terms of a con- tract made by an agent, but he can hardly be deemed a stranger to the consideration. Consideration for a Bill of Exchange. — Valuable consideration for a bill may be constituted by : — (a) Any consideration sufficient to support a simple contract ; or (b) An antecedent debt or liability. Such a debt or liability is deemed valuable con- sideration, whether the bill is payable on demand or at a future time. (Bills of Exchange Act 1882, section 27.) The consideration for a bill is presumed in favour of the holder, unless fraud or illegality be admitted or proved in connection with the acceptance, issue, or subsequent negotiation of the bill, in which case the holder must prove that subsequent to the alleged fraud or illegality value has in good faith been given for the bill. (Section 30.) Want of consideration is a matter of defence between immediate parties, but not against a remote party who is a holder in due course; thus the donee of a bill cannot sue the donor thereon, but if the donor were a holder in due course, the donee can sue all parties prior to the donor whom the latter could have sued. Although it is usual to insert the statement as to value in the bill, such as " Value received," " Value in account," " Value in merchandise," &c, it is not essential (section 3) because of the legal pre- sumption of consideration. On the other hand, extrinsic evidence is admissible between imme- diate parties to impeach the consideration by showing its absence or illegality even where the bill expresses that value has been given therefor. (See Accommodation Bill, Accommodation Party.) Consideration for Annuities Granted. — Money received by an assurance company in considera- tion of which it undertakes to provide an annuity for life or for a term of years (to be presently enjoyed or deferred) to the individual or indi- viduals by whom or on whose behalf such pay- ment is made. The money so paid to the assurance company becomes its absolute pro- perty, and it takes the risk of finding so much per annum for the agreed number of years or for the life of the annuitant, as the case may be. The Government carry on the same kind of business in a small way, through the medium of the Post Office, the consideration for the annuities granted being used to cancel Consols. Consideration! 113 [Consignment i A company granting annuities upon human life is an assurance company within the mean- ing of the Assurance Companies Act 1909, and is suhji ct to its provisions. (See title Assurance Companies Act.) Consideration for Stock, &c, transferred. — The sum named in the instrument of transfer may not agree with the amount receivable by the original seller (who signs the document as transferor) owing to a subsale by the original purchaser, and so on through other hands at different prices. The price paid by the last buyer is the one which fixes the ad valorem duty payable upon the transfer. Usually when the transfer is not the outcome of a purchase and sale (e.g., a transfer by way nt security for a loan) a nominal consideration is inserted, and a ten-shilling stamp is required in. spective of the amount of stock being trans- ferred. (See Nominal Consideration.) Consignment. — The sending or delivering of goods to another person (generally in another town or country) for the purpose of sale. The person who sends the goods is called the consignor and thr general property in the goods remains in him until they are sold by the agent. The person no iving the goods is called the consignee, agent, Or factor, and occupies a position of trust as : ils his dealings with the goods. He must lawfully account to the consignor for the pro- ceeds. The goods themselves are also referred to is a consignment. (See Consignment Ledger.) Consignment Account. — See Consignment Ledger. Consignment Ledger. — A Ledger used for record- ing separately the transactions in connection with the various consignments (for sale) of a trader, or agent. Consignor. & . far as regards the consignor, the con- signment merely amounts to a transfer of a portion of his stock-in-trade from one place to another, and he must record the consignment at " stock " prices, adding any proper expenses Incurred in connection with the transit. These amounts will be posted to the debit of the par- ticular Consignment Account, and any cash received on account credited to the Personal Account of the consignee. On receipt of the account sales from the consignee showing the gross proceeds of the consignment and his expenses and commission, the Consignment Account may be adjusted and the amount due from the consignee brought to the debit of his Personal Account, whilst the profit or loss on the consignment may be transferred from the Con- signment Account to the General Profit and Loss Account of the trader, or to a Summary of Con- signment Accounts, as the case may be. Until the account sales is received from the consignee, enabling the Consignment Account to be finally adjusted, it is usual (at all events, more correct) to treat the balance of the Consignment Account when closing the books merely as so f much unsold stock in the hands of the consignee. Special circumstances, such as a " certain sale " or otherwise, may, however, affect this general rule. Per contra, it may be necessary to make a provision against probable loss. Consignee. With regard to the consignee, as he is really liable for the goods in specie, the property in the same remaining in the consignor until the goods are sold, the Consignment Ledger kept by him should merely record the quantities and all necessary particulars to enable him to account for the disposal of same. Obviously a consignee should not mix consigned goods with his own stock (if any). The entries in the books of account of the consignee should be in respect of the proceeds of the goods as and when he receives same, his expenses (including commission) and the remittances to the consignor. Special circumstances may here also affect the general rules — for instance, where the consignee acts as a del credere agent, and he is required for the facility of settlement to treat the proceeds of the various sales as cash in his hands irrespec- tive of the time of payment by the purchaser. In this case he would debit the purchaser and credit the consignor with the proceeds imme- diatelv upon sale. I Consignment] 114 [Consul Sometimes an invoice at a suggested selling price, or at the cost price, is forwarded to the consignee, but such prices must be regarded as mere guides to the agent, as he cannot be held responsible for the price of the goods if he has used all reasonable care and diligence, and has, nevertheless, failed to sell the goods or to realise the expected prices. Consolidation of Loans. — This is a financial arrangement sometimes entered into by a local authority. It consists of the actual amalgama- tion of a number of existing loans into one loan, so that a uniform sinking fund instalment is necessary periodically for the redemption of the loans so consolidated, instead of separate sink- ing fund instalments for each of the pre- existing loans. Consolidation may be effected as a mere internal arrangement by which the lenders are in no way affected; or the scheme may involve the issue of a new loan, out of the proceeds of which the several existing debts are repaid. As in most cases the loans consolidated are redeemable at different dates and by different methods, their consolidation generally necessitates the equation of the periods allowed for the exist- ing loans. (See Equation of Loan Periods.) The Local Government Board has power to sanction consolidation schemes in respect of certain classes of loans, but apparently not in respect of loans sanctioned under the Public Health Act 1875. The exclusion of such loans from any scheme of consolidation would render the scheme of little worth, and as a consequence most schemes for the consolidation of loans are effected by a special Act of Parliament. Consolidation of Mortgages. — If a person has mortgaged lands to another, and subsequently mortgages other lands to the same person for a further advance, the right to treat both advances as secured upon the whole of the lands is called a right of consolidation. The right has been extended to the case of mortgages of different lands to different persons by the same mortgagor becoming vested by transfer in the same mortgagee. The right of consolidation has been consider- ably curtailed by the Conveyancing Act 1881, section 17 providing that, unless a contrary intention is expressed in the mortgage deeds, or one of them, a mortgagor seeking to redeem any one mortgage may do so without redeeming any other mortgage. The distinctions between consolidation and tacking are mainly : — (1) Consolidation is the right to throw together upon one estate several advances made upon different estates, whilst tacking is the right to amalgamate several advances made upon the same estate. (2) Consolidation prejudices the borrower, but tacking affects an intermediate incum- brancer. (3) Tacking depends entirely upon the protec- tion afforded by the legal estate, but consolidation does not. (4) Notice of the intermediate advance at the time of making a subsequent loan is fatal to a right of tacking. (See Tacking.) Consolidation of Shares. — See Memorandum of Association. Consols. — A contraction of the term " consolidated' funds " and " consolidated stock." Various funds (income) of the Government have been consoli- dated, and various classes of the public debt have been similarly treated, so that the consolidated funds are pledged for the payment of the interest , on the consolidated stock. (See Exchequer Bills, Exchequer Bonds, Inscribed Stocks, Treasuryl Bills.) Constructive Total Loss. — See Total Loss. Constructive Trust. — One " raised by construction A " of equity in order to satisfy the demands of " justice without reference to any presumable i " intention of the parties, either express or! "implied," e.g., a vendor's lien upon land for' the unpaid purchase-money in respect of same. I Consul. — An officer appointed to represent a country in another country, in order to facilitates commerce between the two. He has also to attend to the grievances of, and afford the neces- sary protection to, all persons belonging to the country appointing him, who may be resident in or visit his official area. Contango 115 [Continuous Contango. — See Settling Days. Continental System. — See Foreign Systems of Accounting. Contingent Account. — An account to which a sum is transferred by a charge to Revenue Account, as a provision against (1) unforeseen liabilities; or (2) liabilities known to exist, but uncertain as to amount. Some businesses maintain a " Contingent Account " merely from conservative considera- tions as a matter of prudence. In such a case, the amount at the credit of the Contingent Account, not being pledged for the purposes of any contingency, is really a reserve or a surplus according to circumstances. Contingent Legacy. — See Legacy. Contingent Liability. — A liability which will only exist definitely upon the happening of some event which may or may not happen. For instance, a party (other than the acceptor) to a bill of 1 xchange which is in other hands is contin- gently liable thereon until the bill is paid or otherwise satisfied, the liability only attaching definitely on the default of all prior parties. Contingent Remainder. — A remainder limited so be to depend upon an event or condition which may never happen or be performed. (See Reversion.) Continuation. — See Settling Days. Continuing Consideration. — See Consideration. Continuing Guarantee (or Guaranty). — An under- taking by one to answer for the continuing liabilities of or for the performance of a series of duties by another— a common instance I of which is afforded by the guarantee of a I current account. It is often difficult to decide whether a I guarantee was intended to be a continuing one I or only for a single transaction or duty. It I appears that no rule can be drawn from the cases, each having been decided upon the par- ticular facts involved. The Partnership Act 1890 provides that : — "A " continuing guaranty . . . given either to a " firm or to a third person in respect of the " transactions of a firm is, in the' absence of " agreement to the contrary, revoked as to " future transactions by any change in the con- " stitution of the firm to which, or of the firm " in respect of the transactions of which, the " guaranty . . . was given." Although a contrary intention to the above cannot be inferred from the fact that the primary liability (that is, the liability of the principal debtor) is an indefinitely continuing one, such a contrary intention " may appear ' by " necessary implication from the nature of the " firm ' where the members of the firm are " numerous and frequently changing, and credit " is not given to them individually, as in the " case of an unincorporated insurance society." In the absence of special circumstances a con- tinuing guarantee may be withdrawn at any time, as regards future transactions, and death (with notice thereof) relieves the estate of the guarantor from liability in respect of advances or transactions made or entered into subse- quently, but where and whilst there is a con- tinuing relationship (e.g., a tenancy which has been created on the faith of the continuing guarantee) the guarantee cannot be withdrawn at will, nor will death, in such a case, release the guarantor's estate from continuing liability. A surety on a joint and several continuing guarantee will be liable for advances made after the death of his co-surety (and notice thereof to the creditor), unless he gives notice to tht creditor determining his liability. The particular instrument of guarantee may contain provisions expressly modifying the fore- going. (See Guarantee.) Continuous Audit. — One conducted by frequent visits during the course of the period under review — that is to say, weekly, monthly, or otherwise; sometimes pre-arranged and regular visits; in other cases, irregular and without notice. I 2 Continuous] nG [Contract Some of the advantages of a continuous audit, over what is termed a completed audit, are : — (i) Earlier rectification of errors. (2) Errors more readily discovered. (3) Books of account kept up to date ; and (4) As a consequence, the accounts can be completed and a more exhaustive exami- nation made by an earlier date after the close of the financial period than would otherwise be the case. The most serious objection to this class of audit is the possibility of the figures and entries being tampered with after they have been passed by the auditor. (See Completed Audit, Investigation.) Contra. — Against ; the opposite side. At the present time the term is restricted in bookkeep- ing to the heading of the payment side of the Cash Book, but in the earlier works on book- keeping (e.£-, Cory, 1839) the Ledger Accounts are similarly treated, the title of the account appearing at the head on the debit side and the word contra on the credit side. Contra accounts are those in respect of which parties give and take mutual credit. Where accounts are " set off " the debtor on balance paying over to the creditor only the balance due, the transaction may be recorded in the Cash Book in one of two ways, namely : — (1) The full amount due from the other party as a receipt and the full amount due to him as a payment. (2) The net amount of cash actually passing as a receipt or payment as the case may be. Where method (1) is employed it is suggested that the cashier should give and take receipts for the full amount due to and from his principals. The objection to this method is that it places in the hands of the cashier a receipt for a larger sum than he has actually paid away, and an auditor should carefully ascertain whether the cashier has given a receipt for the full amount due to his principals. The same objection applies to method (2) unless (a) the cashier takes a receipt for the net amount onlv, or {b) the fact that the settlement is in respect of a contra transaction is distinctly stated upon the receipt. It is difficult to lay down a hard and fast 1 but it will be seen that the point is one upon which special care is required on the part of an auditor. From the point of view of bookkeeping as dis- tinct from audit, method (1) is probably the better one. The effect of it is to keep the salel to and purchases from each customer as distinct as if they were transactions with different con- cerns although they may be contained in the same Ledger Account. It also prevents confusion and unnecessary Journal transfers where " Sundry Debtors " and " Sundry Creditors " accounts are kept in " total " form, for sectional balancing purposes. The correct statement of contra accounts in Balance Sheets is of importance, and particularly so in " Statements of Affairs " prepared by orl on behalf of insolvent debtors : the net balance only should be brought into the statement, as the inclusion of gross figures might give a materially inaccurate view of the position. For treatment of contra accounts in bankruptcy see title Mutual Credits, &c. Contract. — An agreement enforceable at law. madel between two or more persons, by which rights are acquired by one or more to acts or for-l bearances on the part of the other or others. '■ (Anson.) Contracts may be subdivided into : — Formal — (a) Contracts of record. (b) Contracts under seal. Simple — (a) Contracts required to be in some form other than under seal. (6) Contracts for which no form is required, and which may be either] express or implied. (See Chose in Action, Consideration, Deed, Express Contract, Implied Contract, Simple Contract.) Contract] Contract Book. — In general, a book recording par- ticulars of contracts entered into by the proprietor of a business; e.g., a builder or an engineer. In particular, when a broker makes a contract tin terms thereof are entered into his Contract Honk and signed by him, a memorandum thereof being sent to each party — that is, a bought note to the buyer and a sold note to the seller. In the event of any difference between the terms in I the bought and sold notes, the entry in the Con- tract Book provides the terms of the agreement, Lord Hlknborough having decided that the entry in the Contract Book is the binding contract. Where the notes differ, and no entry is made by broker in his book, there is no contract. I See Contract Note.) Contract Note. — A brief statement of the terms of ltract. The term is commercially applied to lit and sold notes issued by brokers in respect iroduce, stock, or marketable securities. Notes relating to stock or marketable securities are I liable to stamp duty as follows: — When the stock bought or sold is of the value 5 or upwards, but not exceeding £100, the duly is sixpence. When the stock bought or sold is of the value 100 or upwards the duty is an ad valorem I duty varying from one shilling to £i (the latter amount being payable when the value of the k bought or sold exceeds £20,000.) The (tamp duties are to be denoted by an adhesive p appropriated to a contract note, and the I stamp must be effectively cancelled by the person by whom the note is executed. Where a note advises the purchase or sale of more than one description of stock or market- able security, the note is deemed, for the purposes I I of stamp duty, to be as many contract notes as I there arc descriptions of stock purchased or sold. I- or purposes of stamp duty the provisions as to l»n tract notes apply to sale or purchase of II options. Any stamp duty on a contract note may be 1 to the charge for brokerage or agency; but Many person who makes or executes a contract "7 [Contributory note which is chargeable with duty, not duly stamped, incurs a penalty of £20, and has no legal claim for his brokerage in respect of the contract. A broker is also subject to a penalty of £20 if he neglects to send a contract note to his principal when such contract note would, if sent, be chargeable with duty. For the purposes of the Finance (1909-10) Act 1910 the term " contract note " is defined as: — " The note sent by a broker or agent to his " principal, or by any person who by way of busi- " ness deals, or holds himself out as dealing, as " a principal in any stock or marketable securi- " ties, advising the principal or the vendor or " purchaser, as the case may be, of the sale or " purchase of any stock or marketable security." (See Contract Book.) Contract of Affreightment. — An agreement between a shipowner, or person acting through or for him, and another person whereby the shipowner agrees to carry goods by water, or provide a ship for that purpose, in consideration of a sum of money to be paid to him called freight. When the agreement is to carry a complete cargo, or to furnish a ship for that purpose, the contract of affreightment is called a charter-party (q.v.), and when the agreement is to carry goods which form only part of the intended cargo of the ship, the contract of affreightment as to each parcel of goods shipped is evidenced by a bill of lading (q.v.). Contribution. — The payment or performance of a share of the liability under a contract by each of two or more persons liable thereon. A right of contribution must be distinguished from a right of recoupment. For instance, the remedy of co-surety against co-surety is for con- tribution, whilst the remedy of the sureties against the principal debtor is for recoupment. (See Contributory, Co-surety, Partnership [distribution of assets].) Contributory. — The term " contributory " means every person liable to contribute to the assets of a company in the event of its being wound up, and. Contributory] 118 [Contributory in all proceedings for determining and in all pro- ceedings prior to the final determination of the persons who are to be deemed contributories, includes any person alleged to be a contributory. (Companies (Consolidation) Act 1908, section 124.) Xotes. — (1) A winding-up order or an effec- tive resolution to wind up alters the position of members or shareholders and makes them contributories. (2) The holder of fully-paid shares is a con- tributory, and is entitled to the benefit of the provisions for the adjustment of the rights of contributories amongst themselves, and he, if otherwise qualified, may also present a petition for winding up the company. But a fully-paid shareholder is not liable to be placed upon the list of contributories unless he so desires, for he is not liable to contribute anything to the assets of the company. In' the event of a company being wound up, every present and past member shall, subject to the provisions of this section, be liable to con- tribute to the assets of the company to an amount sufficient for payment of its debts and liabilities and the costs, charges, and expenses of the winding up, and for the adjustment of the rights of the contributories among themselves, with the qualifications following (that is to say) : — (i) A past member shall not be liable to con- tribute if he has ceased to be a member for one year or upwards before the com- mencement of the winding-up : (ii) A past member shall not be liable to con- tribute in respect of any debt or liability of the company contracted after he ceased to be a member : (iii) A past member shall not be liable to con- tribute unless it appears to the Court that the existing members are unable to satisfy the contributions required to be made by them in pursuance of this Act : (iv) In the case of a company limited by shares no contribution shall be required from any member exceeding the amount, if any, unpaid on the shares in respect of which he is liable as a present or past member : (v) In the case of a company limited by guarantee, no contribution shall be required from any member exceeding the amount undertaken to be contributed by him to the assets of the company in the event of its being wound up : (vi) Nothing in this Act shall invalidate any pro- vision contained in any policy of insurance or other contract whereby the liability of individual members on the policy or con- tract is restricted, or whereby the funds of the company are alone made liable in respect of the policy or contract : (vii) A sum due to any member of a company, in his character of a member, by way of dividends, profits, or otherwise, shall not be deemed to be a debt of the company, payable to that member in a case of com- petition between himself and any other creditor not a member of the company; , but any such sum may be taken into account for the purpose of the final adjust- ment of the rights of the contributories among themselves. In the winding-up of a limited company, any director or manager, whether past or present, ■ whose liability is, in pursuance of this Act, unlimited, shall, in addition to his liability (if any) to contribute as an ordinary member, be liable to make a further contribution as if he were at the commencement of the winding-up a member of an unlimited company : Provided that— (i) A past director or manager shall not be] liable to make such further contribution if he has ceased to hold office for a year or] upwards before the commencement of the winding-up : (ii) A past director or manager shall not bej liable to make such further contribution in , respect of any debt or liability of the com-l pany contracted after he ceased to hold office : (iii) Subject to the articles of the company, a director or manager shall not be liable to make such further contribution unless the] Court deems it necessary to require that] contribution in order to satisfy the debt! and liabilities of the company, and the-i costs, charges, and expenses of the winding-up. Contributory] 119 [Contributory • In the winding-up of a company limited by guarantee which has a share capital, every member of the company shall be liable, in addi- tion to the amount undertaken to be contri- buted by him to the assets of the company in the event of its being wound up, to contribute to the extent of any sums unpaid on any shares held by him. (Section 123.) The liability of a contributory shall create a debt of the nature of a specialty accruing due from him at the time when his liability com- menced, but payable at the times when calls are made for enforcing the liability. (Section 125.) Married Woman. — The husband of a female contributor}' married before the date of the commencement of the Married Women's Property Act 1882 shall, during the continuance* of the marriage, be liable as respects any liability attaching to any shares acquired by her before that date, to contribute to the assets of the company the same sum as she would have been liable to contribute if she had not married, and he shall be a contributory accordingly. Subject as aforesaid, nothing in this Act shall affect the provisions of the Married Women's Property Act 1882. (Companies (Consolidation) Act 1908. section 128.) The Married Women's Property Act 1882, sec- tion 7, provides that shares in any company which after the commencement of that Act shall be allotted to, or placed, registered, or trans- ferred in or into or made to stand in the sole name of any married woman shall be deemed, lines'; and until the contrary be shown, to be her separate property, and in respect of which, so far as any liability may be incident thereto, her separate estate shall alone be liable whether the same shall be so expressed in the document whereby her title to the shares is created or certified, or in the book or register wherein her title is entered or recorded, or not. Section 23 further provides that a woman, after marriage, shall continue to be liable in respect and to the extent of her separate property for all contract* entered into before her marriage, including any- sums for which she may be liable as a con- tributory, either before or after she has been'- placed upon the list of contributories, under and. by virtue of the Acts relating to joint stock com- panies. Section 14 provides that a husband (married after 1882) shall be liable for his wife's, ante-nuptial debts, contracts, and torts, including, any liabilities as a contributory, but only to the extent of any property belonging to his wife' which he acquired or became entitled to from or through his wife. Bankruptcy. — If a contributory becomes bankrupt, either before or after he has been placed on the list of contributories, then — (1) his trustee in bankruptcy shall represent him for all the purposes of the winding-up, and shall be a contributory accordingly, and may be called on to admit to proof against the estate of the bankrupt, or otherwise to allow to be paid out of his assets in due course of law, any money due from the bankrupt in respect of his liability to contribute to the assets of the company ; and (2) there may be proved against the estate of the bankrupt the estimated value of his liability to future calls as well as calls already made. (Companies (Consolida- tion) Act 1908, section 127.) (See Debts provable in Bankruptcy.) Although a contributory who is also a creditor of a company is not allowed to set off moneys due to him as a creditor against moneys (calls) due from him as a contributory, an exception is made when a contributory becomes bankrupt. In such a case the trustee in bankruptcy may set off against the calls any moneys due by the company to the bankrupt (except money due to the bankrupt as a member) and a claim may be made for the balance (if any) either in the bankruptcy or the winding-up, as the case may Contributory] 1 20 Contributory be. If any moneys are due from a bankrupt contributory his trustee is placed upon the list of contributories, and is deemed to represent the bankrupt for the purpose of the winding-up, unless he has disclaimed before a call has been made, for (notwithstanding section 153 of the Companies Act 1862, now section 205 of the Act of 1908) he may disclaim after a winding-up has commenced. In the event of a disclaimer there is, of course, a right of proof against the con- tributory 's estate for the resulting injury. Death.— If a contributory dies either before or after he has been placed on the list of contributories, his personal representatives and his heirs and devisees shall be liable in a due course of administration to contribute to the assets of the company in discharge of his liability and shall be contributories accordingly. Where the personal representatives are placed on the list of contributories, the heirs or devisees need not be added, but, except in the case of heirs or devisees of any such real estate in England, they may be added as and when the Court thinks fit. If the personal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for administering the personal and real estates of the deceased con- tributory, or either of them, and of compelling payment thereout of the money due. (Section 126.) " The liability of a contributory is (by section " 125) a specialty debt, debitum in prcesenti, " solvendum in futuro, and may be enforced, so " long as the shares are left standing in the " deceased member's name, or in that of his " executors as executors merely, both against " his personal estate and against his real estate " in the hands of devisees. " If the personal representatives make default " in payment of calls, the personal and real " estates of the deceased member may be " administered. The heirs and devisees need not " necessarily be placed on the list of contribu- " tories as well as the personal representatives, " but may be added when the Court thinks fit." (Subsection 2.) " Upon the death of a member, and until his " shares are personally accepted, transferred, or " disposed of by the executors, the dec< tei " member- -that is, his estate — remains a " member, and his representatives are on the one " hand entitled to the benefits accruing upon, and, on the other, are in their representative " capacity, but not necessarily personally, " liable for calls in respect of his shares. But " for the purpose of determining the number of " members neither the dead man nor his " executors are members. " Whether the shareholder dies after the com- " mencement of the winding-up, and either before " or after he has been placed on the list of con- " tributories, or whether he had jdied many years " before the winding-up, but his shares have not " been either personally accepted or otherwise " disposed of by his executors, the liability of his " estate is the same, and is that which would " have been the liability of the shareholder if " living. " Executors should be careful, before proceed- " ing to distribute the estate among the bene- " ficiaries, to see that they have provided for the " contingent liability in respect of such shares " as they have not disposed of, for otherwise " they may become personally liable." — Buckley. Executors, when placed upon the list of con- tributories in respect of their testator's shares, are liable only in their representative capacity and not personally, unless (1) they have personally accepted the shares, or (2) they have made them- selves liable for a devastavit. The mere recording in the Share Register of the names of the repre- sentatives of a deceased member on production of probate or letters of administration does not per se amount to an election on the part of the representatives to become registered as the holders of the shares of the deceased member; there must be a " distinct and intelligent request " on the part of the representatives. (Cairns, -L.C., Re Buchan.) Contributory] Trusts. — No notice of any trust, expressed, implied, or constructive, can be entered on the Share Register (igoS Act, section 27), the object being to free the company from the responsibility of inquiring after persons for whom shares are held in trust; the trustee, therefore, cannot evade personal liability in respect of the shares standing in his name. If there are several trustees each is liable for the total amount due in respect of thi shares of which he is one of the joint holders. The entry of the Public Trustee by that name in the books of a company does not constitute notice of a trust. As between the trustee and his cestui que trust, the latter is bound to indemnify the trustee against all liabilities attaching to the shares. Infancy. — The articles of association of a company sometimes prohibit the allotment or transfer of es to an infant, but even apart from such a clause the company cannot be compelled to admit .111 infant as a member. If, however, shares be held by an infant transferee the company may, on ascertaining that fact, apply for a rectification of the register, so as to restore the name of the transferor. If a shareholder be an infant at the date of winding-up he cannot be placed upon the list of om tributaries, but if he originally held the shares as an infant, and is of full age at the date of winding-up, it is then a question whether or not he has elected to take the shares. If, on coming of age before the winding-up, he lias elected to take the shares he will be liable as a contributory. Such election may be evi- denced by (1) exercising any act of ownership over the shares, or (2) failure to repudiate the -hairs within a reasonable time after coming of age. List of Contributories. — As soon as may be after making a winding-up order the Court shall settle a list of contribu- tories, and in settling same shall distinguish between persons who are contributories in their own right and persons who are contributories as 121 Contributory being representatives of or liable for the debts of others. (Section 163.) There may be one, or more than one, class of contributories, according to the constitution of the company, for the members may as between themselves be liable in a different degree, or in a different order, for the payment of the debts of the company. Apart from these distinctions, the Act also provides for two classes of contri- butories, viz., present members, i.e., those who are members of the company at the commence- ment of the winding-up, and past members, i.e., those who have ceased to be members within a year next before the commencement of the winding-up. The lists of contributories are settled as soon as may be after the commencement of the winding-up. The present members an; recorded upon what is commonly called the "A" list, the past members being placed upon the " B " list. But the " B " list is in many cases not settled at all, and is never settled unless it appears to the Court that the contributories on the "A" list will be unable to satisfy the debts and liabilities of the company. For procedure as to settling the lists see infra. Transfers of Shares (after winding-up). — In the case of voluntary winding-up. every transfer of shares, except transfers made to or with the sanction of the liquidator, and • very alteration in the status of the members of the company made after the commencement of the winding-up, shall be void. In the case of a winding-up by or subject to the supervision of the Court, every disposition of the property (including things in action) of the company, and every transfer of shares, or alteration in the status of its members, made after the commencement of the winding-up, shall, unless the Court otherwise orders, be void. (Section 205.) Note.— A liquidator in voluntary winding-up has, therefore, the power to register a transfer after winding-up, and the transfer when regis- tered will have full effect. (AY National Bank of Wales, 1897.) Contributory] 122 [Contributory The "A" list of contributories will, as already indicated in detail, consist of the following : — (i) Every person who was a member at the commencement of the winding-up, who has not since died or become bankrupt (subject to the provisions as to infancy stated above) . (2) The personal representatives of every member who has died since the com- mencement of the winding-up, or, having died previously, whose shares were not per- sonally accepted by his representatives. (3) The trustee in bankruptcy of any con- tributory, provided the shares have not been disclaimed before a call has been made. (4) The husband of a female shareholder, subject to the provisions of the Married Women's Property Act 1882, which are expressly reserved by the Companies Act 1908, section 128 (supra). The " B " list of contributories will consist of all persons who have ceased to be members within a year next preceding the commence- ment of the winding-up, and, in the case of suc- cessive transfers of shares within the year, although as between themselves each transferor has a right to be indemnified by his transferee, yet, as regards the company, all parties to such transfers are liable to be placed upon the " B " list, and the liquidator may apparently come upon any one of them for the calls, leaving them to settle their rights inter se. (See Measure of Liability, infra.) For the purpose of determining the year pre- ceding the winding-up see title Winding-up. Procedure. — In the winding-up of a company by the Court, or under the supervision of the Court (1908 Act, sections 163 and 203), the procedure in settling the list of contributories is as follows : — The liquidator shall, with all convenient speed after his appointment, settle a list of contribu- tories of the company, and shall appoint a time and place for that purpose. The list of contribu- tories shall contain a statement of the address of, and the number of shares or extent of interest to be attributed to, each contributory, and shall distinguish the several classes of contributories, and shall also distinguish between persons who are contributories in their own right, and per- sons who are contributories as being representa- tives of, or liable for, the debts of others. (Rule 77.) The liquidator shall give notice in writing of the time and place appointed for the settlement of the list of contributories to every person whom he proposes to include in the list, and shall state in the notice to each person in what character, and for what number of shares or interest, he proposes to include such person in the list. (Rule 78.) On the day appointed for settlement of the list of contributories, the liquidator shall hear any person who objects to being settled as a contri- butory, and after such hearing shall finally settle the list which, when so settled, shall be the list of contributories of the company. (Rule 79.) The liquidator shall forthwith give notice to every person whom he has finally placed on the list of contributories, stating in what character, and for what number of shares or interest, he has been placed on the list, and in the notice inform such person that any application for the removal of his name from the list, or for a variation of the list, must be made to the Court by sum- mons within twenty-one days from the date of the service on the contributory, or alleged con- tributory, of notice of the fact that his name is settled on the list of contributories. (Rule 80.) Subject to the power of the Court to extend the time or to allow an application to be made notwithstanding the expiration of the time limited for that purpose, no application to the Court by any person who objects to the list of contributories, as finally settled by the liquidator, shall be entertained after the expiration of twenty-one days from the date of the service on such person of notice of the settlement of the list. (Rule 81 (1).) The liquidator may, from time to time, vary or add to the list of contributories, but any such variation or addition shall be made in the same Contributory] 123 [Contributory manner in all respects as the settlement of the original list. (Rule 82.) Where a company is being wound up volun- tarily, the liquidator settles the list, and, although it is advisable to follow the procedure of a com- pulsory winding-up, it is not essential to do so. The list, however, in any case, when settled by a voluntary liquidator, is only primd facie evi- dence of the liability of the persons named therein to be contributories. (1908 Act, section 186.) lire of Liability. — The "A" list contributories are primarily liable to pay the debts of the company, and before the Court will sanction a call upon the " B " list con- tributories (i.e., the past members), proof must be given (1) that debts remain unsatisfied which existent at the dates the respective contribu- tories ceased to be members, and (2) that the - of the company and the contributions recoverable from the whole of the contributories on the "A" lis% will be insufficient to satisfy all the debts. Even when the liability of a " B " list con- tributory has arisen, it is limited: — (i) In the case of a " limited company," to the amount left unpaid on the specific shares he formerly held, after allowing for the contributions (if any) received from the "A" contributory; and (2) Whether a limited or unlimited company, to the balance unpaid of such debts of the company as were existent at the date he ceased to be a member, after allowing for the amounts paid in respect of same out of the assets of the company, including the contributions which have exhausted the present members on the "A" list. Although the existence of the debts referred to above (No. 2) is the direct cause of liability attaching to " B " list contributories, their con- tributions, when received, are not distributable exclusively among such " old " creditors, but are treated as a common fund, i.e., as part of the general assets of the company, and applied for the benefit of all the creditors of the company. " You will apply all that you can get from the " existing members in payment of the existing " debts, no matter of what date. If after you " have done that, there remain debts unsatisfied, " so that you have to resort to members who " have passed away from the company within a " year, then you will be compelled to classify the " residuum of the debts so remaining, and ascer- " tain what part of that residuum is to be " attributed to past debts — that is, to debts which " pre-existed the transfers made by past " members, and what portion is to be attributed " to the new debts, which have arisen subse- " quently to the date of the last transfer. When " you have ascertained the proportion which is " attributable to debts which existed when the " transfers were made, if there have been several " transfers within the year, you will be com- " pelled of necessity to subdivide that portion of " the residuum into several portions, according " as you find that transfers have been made " within the past year." (Lord Westbury in Webb v. Whiffin, L.R., 5 ILL., 711.) There is, however, no rule requiring the liqui- dator to exhaust the later members of the " B " list before calling on the earlier ones. All are simultaneously liable as regards debts incurred whilst they were respectively members. With regard to successive transferees of the same share during the year preceding the winding-up, all (being on the " B " list) are apparently liable for the sum due in respect of such share, subject to a right of indemnity by each transferor from his transferee. (Brett's case and Morris's case, 1873.) Where the registration of an out-and-out transfer of shares has not been obtained by any falsehood or concealment practised by the trans- feror towards the company, the company is bound by such registration, and the liquidator in the winding-up of the company is not entitled to take advantage of any equitable rights which the transferee may have as against the transferor to have the transfer set aside. (In re The Dis- coverers' Finance Corporation, I.itn.; Lindlar's case (1910), 1 Ch. 312.) Contributory [ 124 [Controlling The liability of a " B " list contributory with regard to the costs and expenses of winding-up is restricted to such costs and expenses as have been necessarily incurred in calling upon him for contributions in respect of debts. Adjustment of the Rights of Contributories inter se. — When the assets of a company in the course of being wound up have been realised and collected, and the debts, costs, and expenses have been paid, the Court where the winding-up is being conducted by the Court (section 170), or under the supervision of the Court (section 203), or the liquidator where the company is being wound up voluntarily (section 1S6), shall adjust the rights of the contributories among them- selves — i.e., divide any surplus among them according to their respective rights and interests. No contributory who is indebted to the company for calls or otherwise can participate in the dis- tribution, unless and until he pays the amount due from him. If a contributory becomes bank- rupt and a dividend (only) is paid in the bank- ruptcy upon the company's claim for unpaid calls, the trustee of the contributory's estate cannot participate in any distribution in respect of fully-paid shares. Before making a distribution amongst the general body of contributories, the claims of those who were debarred from a right of set-off in respect of dividends and other sums due to them qud members must be taken into account. Where a call has been made upon " B " list contributories, and it is afterwards ascertained that the contributions were sufficient to the extent that such " B " list contributions need not have been made, the " B " contributories have a preferential right against the surplus for any sums they may have so paid. (Ilelbert v. Banner, 1871.) In the absence of special provisions the general distribution of assets must be made in such a manner as to allot the loss of capital to the members in proportion to the nominal amounts of capital respectively held by them. To give this result where all the shares fully paid, or, being of the same nominal amount, had equal sums paid up thereon, the distribution would be pro raid; but in some companies of the shares are fully paid up and others only partly paid, so that in order to allot the li capital in proportion to the nominal amounts of capital held it would be necessary to (1) call up the difference between the " short paid " shares and the " fully paid " shares, and (2) distribute the assets (augmented by the calls just made upon the " short paid " shares) amongst the con- tributories pro raid. Where certain shares had been issued at a discount the holder was held liable to pay up the amount of such discount in cash to the liquidator, even though the liabilities of the company had been paid, and the " call " I had been made merely to adjust the rights of the contributories between themselves. (Welt on v. Saffery, 1897.) In Birch v. Cropper (Bridgewater (1889) the House of Lords held that the surplus remaining after discharging the liabili- ties and repaying the capital was to be divided among all the shareholders in proportion to the nominal amount of the shares held by them, and not in proportion to the amounts respectively paid up thereon. Express provision is, however, generally made by the memorandum or articles of a^>< .. for the distribution of the surplus assets after payment of debts, particularly providing for the prior payment out of the assets of the preference share capital, for without some such provision preference shares do not confer a preferential right to return of capital in a winding-up : but on the other hand, in the absence of any restrict- ing clause, the preference shares would be entitled to participate rateably with the ordinary shares in respect of any surplus remaining after paying off the whole of the paid-up capital. With regard to the necessary qualifications of a " contributory " to entitle him to present a petition to wind up a company, see title Petition to Wind up a Company. (Sec also Absconding Contributory, Calls, Surplus Assets.) Controlling Accounts. — See Sectional Ledgers. Control] I2 5 [Conveyance Control over Debtor. — Every debtor against whom a receiving order is made shall, unless prevented l>v sickness or other sufficient cause, attend the firs! meeting of his creditors, and shall submit to such examination and give such information as the meeting may require. He shall give such inventory of his property, such list of his creditors and debtors, and of the - due to and from them respectively, submit tn such examination in respect of his property or his creditors, attend such other meetings of his creditors, wait at such times on the Official R< eiver, special manager, or trustee, execute such powers of attorney, conveyances, deeds, and instruments, and generally do all such acts and things in relation to his property and the dis- tribution of the proceeds amongst his creditors nay be reasonably required by the Official Receiver, special manager, or trustee, or may be prescribed by general rules, or be directed by the Court by any special order or orders made in nee to any particular case, or made on the -ion of any special application by the Official Receiver, special manager, trustee, or any creditor or person interested. lie shall, if adjudged bankrupt, aid, to the Utmost of his power, in the realisation of his property and the distribution of the proceeds among his creditors. If a debtor wilfully fails to perform the duties imposed on him by this section, or to deliver up possession of any part of his property which is divisible amongst his creditors under this Act, and which is for the time being in his possession or under his control, to the Official Receiver, or to the trustee, or to any person authorised by the Court to take possession of it, he shall, in addition to any other punishment to which he may be subject, be guilty of a contempt of Court, and may be punished accordingly. (Bankruptcy Act 1883, section 24.) The debtor cannot, however, be compelled to submit himself to a medical examination, so that the trustee may be enabled to effect an assurance on his life. (Board oj Trade v. Block, 1888.) (See Discovery, &c. Public Examination, Ri -direction of Letters.') Conversion of Shares into Stock.— See Memo- randum of Association. Conversion of Stock. — The exchange of one class of stock (newly created) for another class (to be extinguished). The conversion is generally made to equalise the rate of interest payable upon the whole or the greater part of a certain class of stock — for instance, suppose a stock to be divided into 4 per cent, and 3 per cent, classes, the class bearing interest at 4 per cent, could be converted into 3 per cent, stock, the holders being allotted such a nominal amount of the 3 per cent, stock as would afford them the same income as pre- viously, e.g., a holder of £500 of 4 per cent. stock would receive ,£400 of 3 per cent, stock on the conversion. Where such a conversion of stock causes an increase in the nominal capital, additional ad valorem stamp duty must be paid upon such increase of capital. (Midland Railway Co. v. Attorney-General, H.L., 1902.) Where, however, a duly stamped statement has been delivered by a company in respect of loan capital which has been wholly or partly applied for the purpose of the conversion or consolida- tion of existing loan capital, the company can claim repayment in respect of the duty charged on the statement so delivered at the rate of 2S. for every £"100 of the capital to which the statement relates which has been applied for the purpose of the conversion or consolidation. (Finance Act 1907, section to.) (See title Memorandum of [Capital].) Association Conveyance. — A term of wide application, but in practice restricted to a transfer of freehold pro- pertv from one person to another. Stamp duty is chargeable per ad valorem scale on the basis of .£1 per cent, unless the value of the consideration for sale does not exceed £500, in which case the scale of duty is at the rate of 10s. per cent. Co -owners! 126 Copyright Co=owners. — Co-owners are not necessarily partners, the distinctions between co-ownership and partnership being : — (1) Partnership is based upon agreement, but co-ownership is not necessarily the result of agreement. (2) Partners are, unless restricted, agents for each other, but co-owners are not so unless specially authorised. (3) Partners cannot ordinarily dispose of their partnership shares without the consent of the other partners, but a co-owner has a right of free disposition over his property without the consent of his co-owners. (4) Partnership involves the idea of working for a profit, but co-ownership does not necessarily imply this. Partnership may, and invariably does, include co-ownership, but it cannot be said that the reverse will apply. Although a partnership may not consist of more than 20 persons (in the case of a banking firm, the limit is 10 persons) there may be numerous co-owners — for instance, there may be 64 co-owners of a ship, each owning one sixty- fourth share in such ship, trading with their com- mon property with a view of profit, but such co-ownership does not per se create a partnership. Co-partnership. — See Partnership. Copyhold. — A base tenure founded upon im- memorial custom and usage. The tenant's estate partakes of the nature of a freehold, but because it is held by a base instead of a free tenure it is called a copyhold. The evidence of the copyholder's title is the court-roll, which he can inspect, and, should he desire, he can make copies of entries thereon. As this class of tenure derives its whole force from immemorial custom, no copyhold estate can be created at the present day. A fine is payable to the lord of the manor on every grant or descent of the copyhold. The manorial rights ma}', under certain circum- stances, be commuted and the lands enfranchised, so that they become freeholds. {See Land Transfer Act.) With regard to a copyhold held by a bank- rupt, his trustee may either (1) disclaim same, or (2) deal with it as if it had been duly sur- rendered, or conveyed to such uses as he may appoint, and any appointee of the trustee is to be admitted or otherwise invested with the pro- perty accordingly. The trustee is not bound to be admitted to the land himself. Copyright. — The sole and exclusive privilege or liberty of printing or otherwise multiplying copies of any book, volume, pamphlet, sheet of letterpress, sheet of music, map, chart, or plan. The copyright of a book, &c, published in the lifetime of the author endures for his lifetime and jseven years after his death, or for 42 years after the date of first publication, whichever is the longer term. If the work is first published after the author's death the copyright exists for 42 years from the date of first publication, and belongs to the proprietor of the manuscript. Copyright is created by statute, and does no t depend upon registration, which is permissive only, and not compulsory. The copyright thus commences from the date of first publication, but jio^proprietor of copyright in any book, &c, can take any proceedings in respect of any infringement of his copyright unless before com- mencing his proceedings he has registered his book; the infringement complained of may thus precede registration. A proprietor of copyright desiring to register at Stationers' Hall must lodge there a demand in the prescribed form, setting forth the particulars of the book, &c, for the purpose of registration. The demand must be signed by the proprietor and duly witnessed, and a fee of 5s. is payable on registration. A book cannot be registered before it is published. Copyright is an incorporeal right, is personal property, and may be bequeathed by will. In the case of the owner's bankruptcy it vests in his trustee as property available for the creditors. Copyright can be assigned (wholly or in part), but the assignment must be in writing, not necessarily under seal. If the original proprietor has been registered, the assignment must also be registered before the assignee can sue thereunder. Copyrightj 127 [Corruption If, however, the copyright has not been regis- tered prior to assignment, the latter document need not be registered, as the assignee can be registered as though he were the original pro- prietor — but, in any case, registration must pre- cede any action in respect of the copyright. The Act of 1842 provides a mode of assign- ment by entry of the assignee's name and address by the proprietor in the register at Stationers' Hall, on payment of a fee of 5s., and such assignment is as effective as an assignment by deed, and is not liable to any stamp duty. An amount representing copyright invariably appears in the accounts of publishers, news- paper proprietors and others, being based upon (1) cost; (2) accumulated expenditure (advertise- ments, losses in earlier years, &c.) ; (3) a stated number of past years' profits, or otherwise, according to circumstances. The treatment of copyright in the accounts involves to a great extent considerations similar to those affecting Goodwill (q.v.). The precise character of the work or works, the length of period unexpired, and the probability of the work retaining its commercial value during the period of copyright, must all be considered in dealing with the item. Accumulated expenditure does not necessarily represent the value of a copyright, although it may be said that (indirectly) it represents the cost of acquisition, and in assessing its value for Balance Sheet purposes this fact must be taken into account. Where the system of valuing upon a basis of a stated number of past years' profits (say four years) is adopted, the annual fluctuation, be it increase or decrease, is net a revenue item. The general tendency, however (particularly in the case of joint stock companies where the capital cannot be affected by adjustments), is either to leave the item undisturbed as regards amount, or interfere with it only with the idea of its ultimate elimination from the accounts by instalments out of profits. Corporation. — " Corporations are artificial persons " created by law and endowed by it with the " capacity of perpetual succession. They con- " sist of collective bodies of men or of single " individuals; the first are called corporations " aggregate, the second corporations sole {e.g., " a bishop). The existence of corporations is " constantly maintained by the succession of new " individuals in the place of those who die or " are removed." Thus a corporation is considered as a distinct individual from the persons composing it. The property of the corporation and not that of its members is liable for its debts, although the members may be liable to contribute to the assets of the corporation. The corporation may sue and be sued by its own members (but see Public Officer). The public trustee appointed under the Public Trustee Act 1906 is a corporation sole. Although a corporation " has neither body to " be kicked, a soul to be saved, nor a mind to " harbour ill-will," it apparently may be sued for wrongful acts. So, in the case of a com- pany registered under the Companies Acts an intent to prefer a creditor may be proved against the company in the event of winding-up (upon evidence of any act in relation to the company's property, which, if done by an indi- vidual trader, would have been deemed a fraudu- lent preference in the event of his bankruptcy), and the act rendered invalid accordingly. (See Company, Public Trustee.) The Interpretation Act 1889 provides that the expression " person " shall, unless the contrary intention appears, in every Act passed since 1889, include any body of persons, corporate or unincorporate. Corpus. — See Capital (Legal). Corruption, Prevention of. — If any agent corruptly accepts or obtains or agrees to accept or attempts to obtain, from any person, for himself or for any other person, any gift or consideration as an, inducement or reward for doing or forbearing to Corruption] 128 Cost do, or for having after the passing of this Act done or forborne to do, any act in relation to his principal's affairs or business or for showing or forbearing to show favour or disfavour to any person in relation to his principal's affairs or business; or If any person corruptly gives or agrees to give or offers any gift or consideration to any agent as ail inducement or reward for doing or for- bearing to do, or for having after the passing of this Act done or forborne to do, any act in rela- tion to his principal's affairs or business, or for showing or forbearing to show favour or dis- favour to any person in relation to his principal's affairs or business; or If any person knowingly gives to any agent, or if any agent knowingly uses with intent to deceive his principal, any receipt, account, or other document in respect of which the principal is interested, and which contains any statement which is false or erroneous or defective in any material particular, and which to his knowledge is intended to mislead the principal he shall be guilty of a misdemeanour, and shall be liable on conviction on indictment to imprisonment, with or without hard labour, for a term not exceeding two years, or to a tine not exceeding five hundred pounds, or to both such imprisonment and such fine, or on summary conviction to imprisonment with or without hard labour for a term not exceeding four months, or to a fine not exceeding fifty pounds, or to both such imprisonment and such fine. For the purposes of this Act the expression " consideration " includes valuable consideration of any kind; the expression " agent " includes any person employed by or acting for another; and the expression " principal " includes an employer. A person serving under the Crown or under any corporation or any municipal borough, county or district council, or any board of guardians, is an agent within the meaning of this Act. (Prevention of Corruption Act 1906.) Cost Accounts. — The term " Cost Accounts " in its widest sense implies a system of accounting for the materials and labour employed, and in some cases the working expenditure incurred, in the manufacture of a commodity or commodities, or a class of commodities, or in connection with a given work, so as : — I. To ascertain the prime cost or cost of pro- duction (according to the system employed) — (a) As estimated beforehand for quoting or tendering for work, &c. (6) As actually incurred in doing work, &c, so that i — (1) Where the price is fixed for the work the profit or loss can be ascer- tained, and where the cost as esti- mated is not borne out by results the errors in estimating may be detected, and where such errors are errors of principle the method of estimating may be amended. Thus similar discrepancies may be avoided on future occasions. (2) Where the price is not fixed the price to be charged can be ascer- tained upon a sound basis, fair to the customer and safe as regards profit to the " contractor." In this connection accurate costing avoids two evils — (1) Loss being sustained on work actually obtained ; (2) failure to obtain future work through overcharges. II. To constitute a check upon : — (a) The amount paid for productive wages. (6) The amount paid for materials; and, (c) The goods placed in store and used on the various products of work in small quantities, for if : — (1) The cost of materials consumed and labour employed be charged against the cost I of the various productions, and such costs of ; production are not excessive, but yield a satis- factory margin of profit, and are substan- tially in agreement with the original estimates (if any) ; (2) The aggregate of such margins of profit (as ascertained from the costs of the various commodities) agrees approximately with the corresponding balance shown by the financial books. {Cost] then it follows that the expenditure in respect of materials and labour has been justified, and that the system of costing is a sound one. The question as to whether it is practicable or necessary (,) to ascertain the cost of each arncle produced, or (2) to ascertain the cost of eadi department only, or (3) to ascertain both individual and collective costs, must depend upon I the particular circumstances in each case. The precise method adopted will necessarily vary with the different classes of business or com- modities, and even vary as between two similar businesses. Almost every business demands (if only in some minor respect) some special rrangement in its costing system. The goods or work may be similar, but the process different The goods and manufacturing processes of two businesses may be identical, yet the general organisation of each respectively may be such as to require different methods of costing The principles involved will always be the same Jthough methods vary, but the system adopted for determining the cost of manufacture should always be such as will also afford means for controlling the cost where unsatisfactory. There are various classes of Cost Accounts viz. : — ' M Multiple Costs.-The term used where the products are made in parts-such as boots, agricultural implements, bicycles and household furniture-where the stan- dardisation of the parts is a special feature (a) Terminal Costs.-Are those where definite terminating work is concerned-such as a terrace of houses, a steamship, or a bridge. (3) Process Costs.-Are those where the neces- sary conversion of material takes place- e-g., bread baking, chemical products. 'A) Single Costs.-Are applicable where a common unit can be used as a base-such as in collieries (ton), gold mines (ounce) quarries (cubic foot). i) Operating Costs.-Are applicable to the costs of working railways, tramways, gas- works, and such like undertakings the cute 5 fe b ric. t0n - miIe ' Car - mi,e ' « «"» 129 [Cost I Ingredients of Cost:— « Materials.-*** or partIy manufactured or wholly manufactured (including carriage inward) . & (2) Fittings, and ornamental work. (3) Wages directly productive. (4) Factory Expenses:— Coal, power, light. Foremen's wages and other costs of supervision. Rent, rates, and insurance of factory. Compensation insurance, depreciation of machinery. (5) Patterns and Plant (the whole cost, or an apportionment thereof, according to circum stances). (6) Establishment Charges:— Management salaries (proportion). Office rent and rates (proportion). Taw charges (proportion). Audit fee (proportion). The cost of the materials and directly produc- tive wages form the prime cost of the com- modity or work, and the other expenditure, being -direct, is called the on-cost, the two together making the full cost of production. (Costs of distribution-such as agents' and travellers' salaries and expenses, advertising, outward carriage, and bad debts-are excluded.) Materials obtained solely and specially for a specific work or class of commodity should be charged direct to the Cost Account of that work or class. Materials obtained for general purposes should be charged to a Stores Account, for which the storekeeper will be held responsible, any goods sup- plied or given out for specific work being credited to Stores Account and charged to the particular work. (See title Stores Account.) Wages should be charged directly against the work where specific, and apportioned where not so. All other expenditure-establishment and such like— must Cost] 130 ^Co-surety be apportioned to the various jobs either by a per- centage based upon (1) material used, (2) wages, (3) time occupied, or (4) total prime cost, or upon some other basis depending on and varying with circumstances, and even differing in the same business, e.g., some items may be appor- tioned according to time occupied, and others according to total cost, and so on. Owing to fluctuations of output the apportion- ment of the establishment expenses, however carefully done, is often a matter of difficulty and a cause of error, either by way of overcharge or undercharge, and the basis of such apportionment requires careful consideration and readjustment from time to time should serious discrepancies be discovered. Many costing systems are now grafted on to the financial records, and with the assistance of minor adjustments (chiefly in connection with the apportionment of the establishment charges) are balanced with and form part of the double-entry records. This is obviously the best possible type of cost- ing system, but it is by no means generally adopted as yet. The usual source of error in costing, as in many other branches of accounting work, is that of omission to charge some item forming part of the cost. But even without actually incorporating the costs and finances as one system, it is possible to ascertain in aggre- gate that the purchases made, the stores given out, and the direct wages paid are substantially accounted for in the Costing Records. (See Cost of Production, Manufacturers' Accounts, Stores Account.) Cost Book Mining Company. — A company formed by a number of persons who have decided to con- tribute capital in certain proportions in order to search for ores, or work a mine. They appoint an agent called the purser, who conducts the affairs of the mine. The purser keeps a Cost Book wherein are entered the names of the shareholders and the number of shares respec- tively held by each. The minutes of all pro- ceedings are also recorded in this book, and are required to be signed by all present at the various meetings. The purser enters all receipts and payments in respect of the mine in the Cost I and prepares a statement periodically showing the financial position. This must be done on< 1 least in every sixteen weeks, but it is generally done about once in every two months. A mi 1 of the shareholders is called to consider the purser's reports and accounts, and if a profit has been made, to declare a dividend. Subject to any special provision to the contrary a shareholder in a Cost Book partnership may relinquish or transfer his shares upon paying to the purser his share of the liabilities (if any) to date. Where the shares are relinquished notice must be given to the purser, and where they are transferred an entry of the transfer must be made by the purser in the Cost Book. Although a Cost Book mining company is prac- tically a partnership, it does not constitute a partnership within the meaning of the Partner- ship Act 1890. These companies appear to occupy an intermediate position between an ordinary joint stock company and an ordinal partnership. ' This class of company is peculiar to the Stannaries of Devon and Cornwall. Cost of Production. — The total expenditure in- curred in the production of a commodity, as distinct from the prime cost, which is the original or direct cost of same. (Sec titles Cost Accounts, Manufacturers' Accounts.) Co-surety. — One who is a surety in conjunction with another or others. One of several sureties on paying the debt has a right of contribution from his co-sunties (1) whether they are bound jointly or severally; (2) in the same or in different instruments; and (3) whether aware or ignorant of their mutual relationship, provided they are sureties for the same debtor and the same transaction. They must contribute in the same proportions as those for which they have agreed to becomfr sureties, and in default of such agreement, they must contribute equally. Co-surety] 131 [Coupon No contribution can be recovered from a eo-surety for any sum beyond the amount for which he has agreed to be bound, nor does the right to recover contribution arise until a surety has paid more than his just and proper propor- tion as agreed between him and his co-sureties, although he may have paid a considerable sum and his co-sureties have paid nothing. Where, however, a creditor has obtained a judgment against one or more of co-sureties for thr ivhole of the debt, the surety may, without paying the debt, bring an action against a co- surety for help to meet the amount of the judg- ment, for it is clear that if there are two or more sureties equally liable, the satisfaction of a judg- ment for the full amount of the debt by one surety will involve a payment by him in excess of his due proportion, and give rise to a right of contribution. But, as already stated, the surety is not in such a case called upon possibly " to ruin himself before seeking relief." Cu-sureties are entitled to the benefit of all securities obtained bv one of their number, whether they were aware of such securities or not. In addition to his right of contribution from co-sureties in respect of any payment in excess of his just proportion, a co-surety has his right of recoupment from the principal debtor for the whole amount he has paid to discharge his obli- gation, after deducting, of course, any sums received from co-sureties. In the event of the insolvency of one or more of a number of co-sureties, the due proportions for which the solvent sureties were liable are correspondingly increased. Thus, if there were originally five co-sureties and two became bank- rupt (the estates providing no dividend) any surety paying the whole of the debt guaranteed would be entitled to recover contribution to the extent of one-third from each of the other solvent co-sureties, instead of the one-fifth for which they were originally liable. But where three persons signed a guarantee which it was intended should be signed by four persons as a joint and several guarantee, and the fourth person did not in fact execute the document, it was held that the three who had signed were not liable on the guarantee. (National Provincial Bank v. Brackenbury, 1906.) The liability of a bankrupt co-surety to contri- bution, although unascertained at the time of the bankruptcy proceedings, is a debt provable in the bankruptcy. The discharge of a bankrupt, or the acceptance by a creditor of a composition or scheme under the Bankruptcy Acts, does not release any person who was jointly bound or had made any joint contract with the bankrupt or debtor. The Statute of Limitation does not begin to run against a surety suing a co-surety for con- tribution until the liability of the surety is ascertained, i.e., until the claim of the principal creditor has been established against him; although at the time of the action for contribu- tion the statute may have run as between the principal creditor and the co-surety. (See Guarantee.) Countersign. — The signature of a subordinate officer upon a document, to vouch for the authenticity of the signature or signatures of his superior officer or officers upon the same docu- ment — e.g., the signature of the secretary of a joint-stock company upon a cheque verifying the signatures of the directors. Country Notes. — The bank notes of all banks of issue, other than the Bank of England. They do not constitute legal tender. Coupon. — A piece cut off. The interest payable upon debenture bonds and the like is sometimes distributed by means of coupons. Upon or after the issue of a bond a sheet is issued, containing a certain number of " pay orders," representing the successive periods in which interest will become payable. As each due date comes round the particular section of the sheet must be detached, and payment will be made thereon, as and where indicated upon the coupon itself. A coupon for interest attached to or issued with any security, or with any agreement or memorandum for the renewal or extension of time for payment of a security, is exempt from K 2 Coupon] 132 Credit duty (of id.)— Stamp Act 1891— and the exemp- tion applies whether the coupons are issued with the security or issued subsequently in a sheet. (Finance Act 1894.) Covenant. — An agreement under seal between two or more parties, by which one (or more) of the parties pledges to the other, or others, either that some act has been done or will be done, or stipulates for the truth of certain facts. Cover. — Securities in the form of bonds, scrip, cer- tificates, &c, deposited with a lender as security for a loan, generally with a margin in value, to cover the risk of loss in the event of the default of the borrower. The term is also applied to the deposit some- times required by stockbrokers before entering into speculative transactions on behalf of a client. Cover Note. — A note issued by an insurance com- pany (generally fire, accident, or guarantee) setting forth the terms and subject matter upon which a proposal for insurance has been made, and declaring that subject to certain conditions the proposer shall be " covered " until a policy has been prepared and issued in conformity therewith, or until notice be given that the pro- posal has been declined. A cover note generally remains in force for 30 days only. As to Marine Insurance, see title Slip. Coverture. — The (legal) state of a woman during marriage. Formerly it gave rise to certain dis- abilities in respect of property, but since 1882 these have been almost entirely removed. Credit. — Trust or confidence ; commercially a person is said to give credit when he advances money upon loan, or transfers goods or other property to another, without stipulating for immediate payment. In economics credit is treated as negative capital, for it enables those who have an industry but no (positive) capital — or an insuffi- ciency of it — to carry on such industry, credit being the capital of others which serves to sup- plement and render more complete the available resources of the trader. In bookkeeping the term credit is applied to all entries corresponding with, or as opposed to, the debit entries. The placing of an amount to the credit of a personal account records either a right of the particular person to demand such amount, or else the satisfaction of an equivalent cross demand. The general rule in bookkeeping is to place all credit entries upon the right-hand side of the various books of account, the debit entries being placed upon the left-hand side. This is, however, a rule ensuring uniformity of practice rather than a bookkeeping principle. (See Debit.) Defoe (writing in 1731) makes the follow- ing observations in his Complete English Tradesman : — "A tradesman ought to consider and measure " well the extent of his own strength; his stock " of money and credit is properly his beginning; " for credit is a stock as well as money. He that " takes too much credit is really in as much " danger as he that gives too much credit; and " the danger lies particularly in this, if the " tradesman overbuys himself, that is, buys " faster than he can sell, buying upon credit, the " payments perhaps become due too soon for " him; the goods not being sold, he must answer " his bills upon the strength of his proper stock — " that is, pay for them out of his own cash; if " that should not hold out, he is obliged to put " off his bills after they are due, or suffer the " impertinence of being dunned by the creditor. " . . . This impairs his credit; and if he " comes to deal with the same merchant or " clothier, or other tradesman again, he is " treated like one that is but an indifferent pay- " master; and, although they may give him " credit as before, yet, depending that if he " bargains for six months, he will take eight or " nine in the payment, they consider it in the " price and use him accordingly ; and this " impairs his gain, so that loss of credit is, " indeed, loss of money, and this weakens him " both ways. Credit] 133 [Creditor " It is not possible in a country where there ' is such an infinite extent of trade as we see ' managed in this kingdom, that either on one ' hand or another it can be carried on without ' a reciprocal credit both taken and given ; but ' it is so nice an affair that I am of opinion as ' many tradesmen break with giving too much ' credit as break with taking it. The danger, ' indeed, is mutual and very great. Whatever, ' then, the young tradesman omits, let him ' guard against both giving and taking too much ' credit." (See Bookkeeping, Capital.) Credit Note. — An advice, acknowledgment, or admission of indebtedness sent or made in writing by a debtor to his creditor. The term is used commercially in connection with the note of allowance made by a vendor in respect of : — (1) Goods returned; (2) Short weight ; (3) Abatement in price; (4) Packages returned, &c. The issue of credit notes should be as care- fully supervised as the issue of receipts for cash, either by means of consecutively numbered carbon copies or other counterfoil books. Creditor. — One who credits, believes, or trusts another ; commercially one to whom a sum of money is due. (See Secured Creditor.) The verification of the amount stated in a Balance Sheet as the total sum due to " creditors " necessarily forms part of an auditor's duty. Liabilities to creditors may be divided into three classes : — (1) On bills payable. (2I On open account. (3) On loan account. (1) The liabilities stated in the Balance Sheet as bills payable should agree with the balance at the credit of the Bills Payable Account in the Ledger, and should be compared by an auditor with a list of the unpaid bills extracted from the Bills Payable Book. (See Bills Payable Account.) The payments stated to have been made to meet bills during the year may be vouched by the production of the returned bills themselves. (2) Creditors on Open Account. — The total of the list of balances should be compared with the Balance Sheet. The balances themselves should be compared in detail with the Ledger, and debit balances in accounts usually in credit should be scrutinised closely, and explanation should always be required of the payment of any round sum which appears in whole or in part as a debit balance in an account which ordinarily would have a credit balance. The explanation may be that the amount in question is a payment on account in respect of a transaction for which only a pro forma invoice has been rendered. In such a case it should be ascertained that no part of the consignment has been taken into stock or (alternatively) treated as the subject of a sale. Ledger Accounts should be examined with special regard to the possible omission of invoices just prior to stocktaking date (say December 31st), e.g., that in what appears to be a regular monthly account the " December invoice " is included. Where a special examination is called for, all items passed to the credit of the creditors' accounts may be compared with the invoices, or in view of the possible omission of invoices, the creditors' statements may be compared with the detailed list of balances. (3) Loan Accounts. — These should be com- pared with the Ledger Accounts, and attention should be directed to the interest (if any) periodically paid thereon. Some distinction must be made between unsecured and secured creditors. If creditors have a " floating " charge or hold security belonging to the firm or company owing the money, it is essential that the fact should be stated on the face of the Balance Sheet, and where a security takes the form of a charge upon; a specific asset it is desirable to deduct the amount of the advance from the value of the asset so charged. Creditor] 134 [Crossed But whatever form of distinction be adopted, liabilities which are secured by a mortgage, or charge, or the deposit of security, should not be merged in the amount due to creditors who are not so secured. Credit Sales. — Sales made, in respect of which pay- ment is postponed, the price being recorded in the books of account of the vendor. The buyer becomes a debtor, and the price of the goods a book debt. Cross Bill.— See Re-draft. Crossed Cheque. — When a cheque bears across the face the addition of two parallel transverse lines, either with or without the words " and Com- pany," or any abbreviation thereof, or with or without the words " not negotiable," that addi- tion constitutes a crossing and the cheque is crossed generally. Thus : — (1) (2) (3) JVoie. — The above are instances of " general crossings." When a cheque bears across its face an addi- tion of the name of a banker, either with or without the words " not negotiable," that addi- tion constitutes a crossing, and the cheque is crossed specially and to that banker, thus : — (1) pal* *V .***** (3) •n\o° \>' B* j* t V* ,d°n Note. — The above are instances of " special crossings." The Bills of Exchange Act 1882 does not recognise the words " account payee," or the name of the payee in full (written across the face of a cheque) as part of the crossing. The drawer may issue a cheque, crossed either generally or specially, or he may issue it uncrossed. Where uncrossed the holder may cross it generally or specially, or being crossed generally he may cross it specially, and whether crossed generally or specially he may add the words " not negotiable." Where an uncrossed cheque, or a cheque crossed generally, is sent to a banker for collection, he may cross it specially to himself, and where a cheque is crossed specially to a banker, that banker may cross it again to another banker for collection. The crossing is a material part of the cheque, which cannot be lawfully obliterated or altered except as stated above. (1S82 Act, sections 76, 77. 7«-) Crossed 135 [Cum A crossed cheque is only payable through a banker, that is to say, the holder cannot obtain a direct cash payment from the banker (as can be done in the case of an " open " cheque), but must pass the cheque through a banking account, either with the banker upon whom the cheque is drawn, or with some other banker. Where a banker pays a cheque crossed generally, otherwise than to a banker, or if crossed specially, otherwise than to the banker to whom it is crossed (or his agent for collection being a banker), he is liable to the true owner ayable on issue (2s. 6d. per cent.) must cover he amount of the premium as well as the " face alue " of the debenture (Rowell's case, 1897, : O.B. 194.) But in Knight's Deep v. Commis- ioners (1900, 1 O.B. 217) it was held that stamp luty was not payable on a premium payable only f redemption took place at the company's option it an earlier date than that originally fixed. (See Redeemable Debentures.) Of course, in the ■vent of a transfer, the 10s. per cent, is payable ipon the consideration for such transfer. Debentures to bearer are those which are pay- ible to the bearer thereof, and which pass by li livery. The holder is not registered, nor is any written assignment necessary, the transfer stamp luty being thus avoided, but the stamp duty ble upon the debenture itself is two shillings or even ten pounds or fractional part of ten lounds of the money secured. Debentures to bearer are not issued so requently as registered debentures. (See Negotiable Instruments.) A further distinction must be made, viz., etween redeemable or terminable debentures and rredeemable or perpetual debentures. Redeemable debentures are those which pro- idc for repayment of the principal sums (1) upon pecified dates, (2) upon being " drawn " for exemption, or (3) after certain notice has been ;iven of intention to repay. Irredeemable or Perpetual debentures are those irhich are issued upon condition that the prin- ipal sums secured are repayable only (1) on efault of payment of interest, (2) on the wind- Pg-up of the company, or (3) on default as s some special condition. I Section 103 of the Companies (Consolidation) ct 1908 declares that a condition contained in any ;l>entures, or in any deed for securing any deben- I ures, shall not be invalid by reason only that I hereby the debentures are made irredeemable or mable only on the happening of a con- ingency, however remote, or on the expiration of !>eriod, however long, any rule of equity to the untrary notwithstanding. J 39 [Debenture Debentures issued by a company may, there- fore, be classified as follows : — (1) Charge — (a) Under trust deed, with a charge, either with or without covering debentures. (6) Without a trust deed, but debenture containing a charge. (c) Without any charge. (2) Holder— (a) Registered. (6) Bearer. (3) Repayment — (a) Redeemable or terminable. (b) Irredeemable or perpetual. There is no statutory limit imposed as to the amount a company can borrow upon debentures, but the articles of association sometimes impose such a limit. The company must, however, have power to borrow, and this will depend upon its memorandum and articles of association. Generally, the memorandum expressly authorises the issue of debentures, but it appears that a company may borrow upon an implied power in the memorandum. Authority to borrow upon the security of the uncalled capital requires to be in more definite terms, but the power may be con- tained in either the memorandum or the articles, a provision in the latter being sufficient if the memorandum is silent thereon ; but such a power in the articles will be of no avail if inconsistent with the memorandum. Where the memo- randum and articles are silent upon the point, the articles may be altered by special resolution so as to enable the company to charge the uncalled capital. The rights and remedies of a debenture-holder having a charge upon the company's property are : — (1) To sue for repayment of principal, interest, and costs. (2) To present a petition to wind up the company. (3) To prove in the w inding-up. (4) To appoint a receiver. The last named is the most usual course, but, as a general rule, these rights accrue only on the Debenture] 140 [ Debenture default of the company, in respect of all or any of the conditions under which the debenture was issued. Issues at a Premium, at Par, or at a Discount. Debentures may be issued at par, at a premium, or at a discount, but the actual liability of the company so issuing is measured by the nominal amount (or par value) of the deben- tures in question. Where the debentures are issued at a discount the par value must appear among the liabilities, and the discount among the assets. The latter should, of course, be written off by instalments over a period of years, and be entirely written off by, or before, the date the debentures are redeemable. In the case of an issue of debentures redeemable at a premium, the contingent liability in respect of such premium must be recognised, and, where redemption at the premium is certain or probable to take place, gradually provided for. Where debentures are issued at a premium and are redeemable at par, the premium is available for dividend unless the terms of issue or the articles of association of the company provide otherwise. But as a rule, irrespective of any such restrictions, a company making such an issue reserves the premium for further working capital. In any case any expenses incurred in connec- tion with the debenture issue should be charged against the premiums received. The total amount of the sums paid or allowed by way of commission or discount in respect of any debentures must also be stated in the annual summary made next after the payment of the commission, or the allowance of the discount (Companies (Consolidation) Act 1908, section 26), and the total amount thereof, or so much thereof as has not been written off, shall be stated in every Balance Sheet until the whole amount thereof has been written off. (Section 90.) Reissue. In Tasker c~ Sons, Lim. (1905), it was held that although debentures may be transferred from one holder to another (either by written assignment or by delivery, according to the terms of the debenture) they cannot be trans- ferred to the company itself, or assigned blank " and subsequently reissued. It was said that once the debenture is paid off by the com- pany the debt and the security therefor are non-existent, and the subsequent issue of a deben- ture to a third party purporting to be a mere transfer of the original debenture would be inoperative. As from 28th August 1907 a com-i pany is deemed always to have had power to keep the debentures alive for the purpo^ reissue, unless (1) the articles of association of the company, or (2) the conditions of issue of the debentures expressly otherwise provide, or unless (3) the debentures have been redeemed in pursuance of any obligation on the company so to do not being an obligation enforceable only by the person to whom the redeemed debentures were issued, or his assigns. For the purposes of stamp duty, but not for the purposes of any pro- vision limiting the amount or number of deben- tures, the reissue is deemed a new issue. (1908 Act, section 104.) Registration. Every mortgage or charge created by a com- pany since 1st January 1901, being a mortgage or charge for the purpose of securing any issue of debentures, " shall, so far as any security on " the company's property or undertaking " thereby conferred, be void against the liqui- " dator and any creditor of the company, unless " filed with the Registrar for registration in " manner required by this Act within twenty-one " days after the date of its creation, but without " prejudice to any contract or obligation for " repayment of the money thereby secured " (i.e., the debt due by the company may be good, but the remedies available for enforcement <■ such debt will only be those open to sfl unsecured creditor). The foregoing was enacted by the Act of 1900, but it was repealed as from 1st July 190S, and re-enacted by section 10 of the Companies Act 1907, with the proviso that where a mortgage or charge thus becomes void, the money secured thereby shall immediately become payable. These provisions are now embodied in the Consolidation Act of 190S. Isbenture] 14 1 [Debenture The " manner " of registration " required by he Act " is the entry by the Registrar on pay- nent of the prescribed fee in a register to be :ept by him of (1) the date of creation of the harge, (2) the amount secured, (3) short par- iculars of the property charged, and (4) the ames of the mortgagees or persons entitled to he charge. With respect to a series of pari assu debentures, it is only necessary to record 1) the total amount secured, (2) the dates of lie resolutions authorising the issue of the series nd of the covering deed (if any), (3) a general escription of the property charged, and (4) the ames of the trustees (if any) for the debenture- olders. Where more than one issue is made of deben- ares in the same series, there shall be sent to le Registrar for entry on the register par- culars of the date and amount of each issue, ut an omission to do this shall not affect the alidity of the debentures issued. Where any commission, allowance, or discount as been paid or made, either directly or idirectly, by the company to any person in con- Ideration of his subscribing or agreeing to sub- tribe, whether absolutely or conditionally, for iiy debentures of the company, or procuring or freeing to procure subscriptions, whether abso- lve or conditional, for any such debentures, the prticulars required to be sent for registration p above shall include particulars as to the :nount or rate per cent, of the commission, dis- >unt, or allowance so paid or made, but an nission to do this shall not affect the validity I the debentures issued. Provided that the pposit of any debentures as security for any Mlt of the company shall not for the purposes of bis provision be treated as the issue of ie debentures at a discount. The Registrar must give a certificate of such gistration (which certificate is conclusive evi- nce of compliance with the requirements), and e company must cause a copy of this certificate be indorsed on every debenture or certificate debenture stock issued by the company, the ment of w-hich is secured by the mortgage or ge so registered. It is the duty of the company to supply the Registrar with the necessary particulars for registration, but the charge may be registered on the application of any person interested therein, and he is entitled to recover from the company any fees properly paid by him to the Registrar. The register is open to inspection by any person on payment of the prescribed fee, not exceeding is. for each inspection. (Companies Act 1908, section 93.) A copy of every instrument creating a charge requiring registration as aforesaid is to be kept at the registered office of the company, and to be open to inspection by the members and creditors of the company free of charge. A copy of one debenture is sufficient in the case of a uniform series. (Companies Act 1908, sections 93 and 101.) In the event of omission to register or the mis- statement of any particular, a Judge of the High Court is given discretionary power to order, on the application of the company or of any person interested, that the time for registration be extended, or that the omission or misstatement be rectified. (Companies Act 1908, section 96.) In Re Joplin Brewery Company, Lim. (1902, 1 Ch. 79), Mr. Justice Buckley stated that in cases where the time for registration is extended, the order (following the practice upon similar appli- cations under the Bills of Sale Act 1878 (section 14)) ought to contain the words: " But this order "is to be without prejudice to the rights of " parties acquired prior to the time when such " debentures shall be actually registered." In Re Erhmann Bros., Lim.; Albert v. Erhmann Bros., Lim. (1906), it was first of all held that by virtue of these words any unsecured creditors whose debts had been incurred before the date of the registration were to take pari passu with the debenture-holders registered under the order, the share of the assets which such debenture-holders would have taken if they had been duly registered within the prescribed time. The Court of Appeal, however, reversed this decision, holding that the unsecured creditors do not come within the terms of the proviso, which is only meant to protect intervening Debenture] 142 Debenture rights — that is to say, the rights of creditors who may have acquired a charge on the assets subse- quently to the issue but prior to the actual registration of the debentures. The Registrar may order a memorandum of satisfaction to be entered on the register on proof that a registered charge has been satisfied, and shall, if required, furnish the company with a copv thereof. (Companies Act 1908, section 970 The company and its officers who wilfully make default in registration of any mortgage or charge, and any persons who permit the delivery of a debenture without indorsement thereon of the copy certificate, are liable to penalties. (Section 99.) In addition to the register kept by the Regis- trar, the company is required to keep one. (Section 100.) (Sec Register and Registration of Mortgages.) Audit. It is important that an auditor should examine the conditions upon which debentures have been issued, for although it may not be incumbent upon him or advisable in all cases to inform the shareholders that a breach of such conditions has been committed, it is desirable that he should acquaint himself with the facts, so that he can exercise his judgment as to whether or not he should refer in his report to any such breach. An example of a breach of condition is the creation of specific mortgages on freeholds or leaseholds ranking in priority to existing deben- tures, notwithstanding an undertaking of the company not to do so. An auditor should also examine the Register of Mortgages. The term debenture is also a Custom House term used to signify the certificate given by the Customs authorities to an exporter of goods upon which drawback is allowed entitling him to receive the amount therein specified. (Sec Debenture-holders, Drawback.) (Sec titles Debenture-holders, Drawback. Execution Creditor, Floating Charge, Preferential Payments, Redeemable Debentures, &c, Trust Deed.) Debenture holders. — As applied to companies, the persons to whom the interest and principal moneys secured by debentures are payable, and win 1 possess the rights and privileges conferred either by the debentures themselves or by the trust deed by which the debenture-holders are further secured. (See title Debenture.) Thev are creditors of the company, and where the debenture (as is usual) confers a floating charge they rank before the unsecured creditors, ranking only after specific mortgages (if any), and the preferential payments provided for bv the Companies (Consolidation) Act 1908. (See sections 107 and 209.) Holders of (preference shares and) di tures of a company shall have the same right to receive and inspect the Balance Sheets of the company and the reports of the auditors and other reports as is possessed by the holders of ordinary shares in the company. This sectS shall not apply to a private company, nor tojft company registered before the first day of July nineteen hundred and eight. (Section 114.) Debenture-holders may inspect the Re-gister of Members kept by the company (section 30), and the documents filed with the Registrar of Joint Stock Companies (section 243), the Register of Mortgages, and copies of instruments creating mortgages requiring registration (section 101), and the Register of Debenture-holders. (Section 102.) (See Debenture, Execution Creditor, Floating Charge, Receiver, Register and Registration of Mortgages.) Debenture Stock. — In reply to the self-imposed question, " What is the difference betweeB debentures and debenture stock? " Sir F. B. Palmer says: — " Debenture is the name given tt " an instrument embodying a contract usually under seal. Debenture stock is the name given to a debt usually created by a trust deed or debenture. Hence they differ as much inter se " as a mortgage deed and a mortgage debt." Ordinarily debenture bonds are only transfer- able in their entirety, but debenture stock may Debenture^ H3 [Debtors ransferred in whole or part, provided that such part docs not involve a fraction of a stated ount. Usually the stock is made transferable in multiples, say, of ^10, and in some cases each of the multiples has a distinguishing number, similar to the method of identifying shares. Debit. — In bookkeeping the term " debit " is applied to all entries corresponding with or opposed to the credit entries. The placing of an amount to the debit of a Personal Account Is cither a right to demand such amount from the particular person, or the satisfaction of quivalent cross demand. The general rule in bookkeeping is to place all debit items on the left-hand side of the various books of account, tin credit entries being placed upon the right- hand side. With regard to items placed upon the debit ride, such as will ultimately be received or con- tinue to be enjoyed (e.g., book debts and lands purchased) are to be considered as assets, anil those which will not be recovered (e.g., trade expenses) represent losses or charges against profits. Conversely, items placed upon the credit sid' which will ultimately have to be paid (by the person whose accounts are under review) must be treated as liabilities, whilst the credit items which do not involve a liability (e.g., com- missions received) are to be treated as profits. is , Bookkeeping, Credit.) Debit Note. — An advice of indebtedness sent or made in writing by a creditor to his debtor; a statement of goods sold or expenses incurred. Debt. — A sum of money due from one person to another. (See Chose in Action.) f Debtor. — A person who owes a sum of money to another. (See Book Debts, Bills Receivable.) Debtors Act 1869. — Any person adjudged bankrupt . . . shall in each of the cases following be deemed guilty of a misdemeanour, and on con- viction thereof shall be liable to be imprisoned for any time not exceeding two years, with or without hard labour: that is to say, (i) If he does not, to the best of his know- ledge and belief, fully and truly discover to the trustee administering his estate for the benefit of his creditors all his property, real and personal, and how, and to whom, and for what consideration, and when he disposed of any part thereof, except such part as has been disposed of in the ordinary way of his trade (if any), or laid out in the ordinary expense of his family, unless the jury is satisfied that he had no intent to defraud : (2) If he does not deliver up to such trustee, or as he directs, all such part of his real and personal property as is in his custody or under his control, and which he is required by law to deliver up, unless the jury is satisfied that he had no intent to defraud : (3) If he does not deliver up to such trustee, or as he directs, all books, documents, papers, and writings in his custody or under his control relating to his property or affairs, unless the jury is satisfied that he had no intent to defraud : (4) If after the presentation of a bankruptcy petition against him ... or within four months next before such presenta- tion ... he conceals any part of his property to the value of ten pounds or upwards, or conceals any debt due to or from him, unless the jury is satisfied that he had no intent to defraud : (5) If after the presentation of a bankruptcy petition against him ... or within four months next before such presentation . . . he fraudulently removes any part of his property of the value of ten pounds or upwards : (6) If he makes any material omission in any statement relating to his affairs, unless the jury is satisfied that he had no intent to defraud : (7) If knowing or believing that a false debt has been proved by any person under the • bankruptcy ... he fail for the period of a month to inform such trustee as aforesaid thereof: Debtors] 144 Debtors (8) If after the presentation of a bankruptcy petition against him ... he prevents the production of any book, document, paper or writing affecting or relating to his property or affairs, unless the jury is satis- fied that he had no intent to conceal the state of his affairs, or to defeat the law : (9) If after the presentation of a bankruptcy petition against him ... or within four months next before such presentation . he conceals, destroys, mutilates, or falsifies, or is privy to the concealment, destruction, mutilation, or falsification of any book or document affecting or relating to his property or affairs, unless the jury is satisfied that he had no intent to conceal the state of his affairs, or to defeat the law : (10) If after the presentation of a bankruptcy petition against him ... or within four months next before such presentation . . . he makes or is privy to the making of any false entry in any book or document affecting or relating to his pro- perty or affairs, unless the jury is satisfied that he had no intent to conceal the state of his affairs, or to defeat the law : (11) If after the presentation of a bankruptcy petition against him ... or within four months next before such presentation . . . he fraudulently parts with, alters, or makes any omission, or is privy to the fraudulently parting with, altering or making any omission in any document affecting or relating to his property or affairs : (12) If after the presentation of a bankruptcy petition against him ... or at any meeting of his creditors within four months next before such presentation . . . he attempts to account for any part of his property by fictitious losses or expenses : (13) If within four months next before the pre- sentation of a bankruptcy petition against him ... he by any false representa- tion or other fraud has obtained any pro- perty on credit and has not paid for the same: (14) If within four months next before the sentation of a bankruptcy petition ag him ... he, being a trader, obtains, under the false pretence of carrying on business and dealing in the ordinary way of his trade, any property on credit, and has not paid for the same, unless the jury is satisfied that he had no intent to defraud : (15) If within four months next before the pre- sentation of a bankruptcy petition n^ him . . . he, being a trader, pawns, pledges, or disposes of, otherwise than in the ordinary way of his trade, any pro- perty which he has obtained on credit and has not paid for, unless the jury is satisfied that he had no intent to defraud : (16) If he is guilty of any false representation or other fraud for the purpose of obtain- ing the consent of his creditors or any of them to any agreement with reference to his affairs or his bankruptcy. (Section 11.) Section 11 of the Debtors Act 1869 shall have effect as if there were substituted therein for the words " if within four months next before the " presentation of a bankruptcy petition against " him," the words " if within four months next " before the presentation of a bankruptcy petition " by or against him, or in the case of a receiving " order made under section 103 of the Bank- " ruptcy Act 1883, before the date of the order." (Bankruptcy Act 1890, section 26.) If any person who is adjudged a bankrupt . . . after the presentation of a bankruptcy petition against him ... or within four months before such presentation . . . quits England and takes with him or attempts or makes preparation for quitting England and for taking with him any part of his property to the amount of twenty pounds or upwards, which ought by law to be divided amongst his creditors, he shall (unless the jury is satisfied that he had no intent to defraud) be guilty of felony, punish- able with imprisonment for a time not exceeding two years with or without hard labour. (Debtors Act 1869, Section 12.) Debtors H5 [Debts Any person shall in each of the cases follow- ing be deemed guilty of a misdemeanour, and on conviction thereof shall be liable to be imprisoned for any time not exceeding one year, with or without hard labour: that is to say, (i) If in incurring any debt or liability he has obtained credit under false pretences, or by means of any other fraud : (2) If he has, with intent to defraud his creditors, or any of them, made or caused to be made any gift, delivery, or transfer of or any charge on his property : (Semble under the Act of Elizabeth and/or the Bankruptcy Acts.) (3) If he has, with intent to defraud his creditors, concealed or removed any part of his property since or within two months before the date of any unsatisfied judgment or order for payment of money obtained against him. (Section 13.) If any creditor in any bankruptcy . . . wilfully and with intent to defraud makes any false claim, or any proof, declaration, or state- ment of account which is untrue in any material particular, he shall be guilty of a misdemeanour punishable with imprisonment not exceeding one with or without hard labour. (Section 14.) Where a trustee in any bankruptcy (or the Official Receiver) reports to the Court . . . that in his opinion a bankrupt has been guilty of any offence under this Act, or where the Court is satisfied upon the representation of any creditor or meml;r of the committee of inspection that there is ground to believe that the bank- rupt has been guilty of any offence under this Act, the Court shall, if it appears to the Court lhat there is a reasonable probability that the bankrupt may be convicted, order the trustee to prosecute the bankrupt for such offence. (Section .6.) >ebts Provable in Bankruptcy. — All debts and liabilities, present or future, certain or con- tingent, to which the debtor is subject at the date of the receiving order, or to which he may become subject before his discharge by reason of any obligation incurred before the date of the receiving order, shall be deemed to be debts provable in bankruptcy, with the following exceptions : — (a) Unliquidated damages arising out of a tort, and (6) Debts which, in the opinion of the Court, are incapable of being fairly estimated. (Bankruptcy Act 1883, section 37.) If judgment has been obtained in an action of tort, before the date of the receiving order, the claim becomes a judgment debt and is provable, but the consideration for a judgment debt may be inquired into. " If a judgment were conclusive, " a man might allow any number of judgments " to be obtained by default against him by his " friends or relations without any debt being due " on them at all." ( James, L.J.) With regard to a debt contracted by a person with the debtor, after notice of an available act of bankruptcy having been committed by the debtor, it has been held that section 37 (2) of the Bankruptcy Act 1883 does not provide that such a debt is " not provable " in the bank- ruptcy, but only that the creditor is under a per- sonal disability in respect of proof. (Buckwell v. Norman, 1898.) If, therefore, the debt (but for the notice of the act of bankruptcy) would have been a provable debt, the creditor has no remedy — he cannot prove in the bankruptcy, being personally debarred, nor can he sue the debtor after he has obtained his discharge, for the discharge releases him from all debts provable in the bankruptcy. Note. — This provision does not apply to a bill holder, who being himself liable on the bill, was compelled to take up the bill after notice of an act of bankruptcy. (McKinnon v. Armstrong, 1877.) Although ordinarily debts provable in bank- ruptcy are in respect of obligations incurred before the date of the receiving order, where a debtor is adjudged bankrupt upon the annulment of a composition or scheme which has been pre- viously sanctioned by the Court (but for some Debtsl 146 Debt* reason not carried out), in such cases any debt provable in other respects which has been con- tracted before the date of the adjudication will be provable in the bankruptcy. (1890 Act, section 3(i5)-) The following are some special instances of debts which are, or are not, provable, as the case may be : — Life Annuities. — The value of these can be estimated and proved for. Alimony. — There can be no proof for arrears of alimony which have become due since the date of the receiving order. An order for the payment of alimony may be varied from time to time according to the means of the husband; there is, therefore, no means of placing a value upon the future payments for the purpose of proof in bankruptcy. (Linton v. Linton, 1885.) The uncertainty as to the continuance of the obliga- tion to make the payments exists not only as to future payments but also as to arrears, for the Divorce Court can and will wholly or partially relieve a husband from payment of arrears if it is just to do so, and it was decided in Kerr v. Kerr (1897) that arrears of alimony, even though due at the date of the receiving order, were not provable in the bankruptcy. Voluntary Bonds. — Proof will be admitted in respect of these (ranking pari passu with the other creditors), provided they are not fraudulent as against creditors, and there are no special circumstances to justify rejection. Debts founded upon fraud or an illegal con- sideration, or statute-barred debts, are not provable. Calls on Shares. — A company, whether in liquidation or not, may prove for arrears of calls and the liability to future calls in the event of the bankruptcy of a contributory. (1908 Act, section 127, and Fuller v. McMahon, 1900, 1 Ch. 173.) But if the shares are marketable the claim for future calls can be avoided by a sale and transfer to some person acceptable to the company. The contingent liability to be placed upon the " B " list in the event of a winding-up order being made within twelve months of the transfer may, however, need to be considered in some cases. Arrears of salary and commission (apart from the Preferential Payments Act) may be prove* for, but there is apparently no right of proof for future commissions. Where a manager or other servant is under an Agreement for a period of years, he may prove for future salary for the unexpired portion of the term, less an allowance for the probability of his obtaining other employ- ment (Yelland's case, L.R. 4 Eq. 350), and qucere, less an allowance for the probability of his decease, if a long period. Section 37 (8) of the Bankruptcy Act 1SS3, provides : — " Liability " shall for the purposes of this Act include any compensation for work or labour done, any obligation or possibility of an obliga- tion to pay money or money's worth on the breach of any express or implied covenant, con- tract, agreement, or undertaking, whether the- breach does or does not occur, or is or is nofj likely to occur or capable of occurring before the discharge of the debtor, and generally it shall ' include any express or implied engagement, agreement, or undertaking to pay, or capable of] resulting in the payment of money or money's; worth, whether the payment is, as respect* amount, fixed or unliquidated ; as respects time, present or future, certain or dependent on any one , contingency or on two or more contingencies; as to mode of valuation, capable of being ascer-7 tained by fixed rules, or as matter of opinion. (See Competitive Proof, Differences, Dis- claimer, Double Proof, Empties, Interest in \ respect of Proof of Debt, Joint and Separate Estates, Postponed Creditors, Proof in respect ofl Bills of Exchange, Proof of Debt, Secured • Creditors.) Debts Provable in Winding-up. — In every winding-} up (subject in the case of insolvent companies toi the application in accordance with the provisions! of this Act of the law of bankruptcy) all debts j payable on a contingency, and all claims against! the company, present or future, certain or con- tingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, ' Debts of th' value of such debts or claims as may be t to any contingency or sound only in damagi s, or for some other reason do not bear a i value. (Companies Act 1908, section In the winding-up of an insolvent company in England or Ireland the same rules prevail and be observed with regard to the ctive rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities • in force for the time being under the law of bankruptcy with respect to the estates of persons adjudged bankrupt; and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the com- pany may come in under the winding-up, and make such claims against the company as they lively are entitled to by virtue of this '• (Section 207.) Thus, if a company is insolvent, a claim for Unliquidated damages arising otherwise than by a contract promise or breach of trust is not provable; but such a claim would be provable against a solvent companv. Where the articles of association of a company provide for the payment out of the funds of the Company of a stated annual sum by way of remuneration to the directors, such remuneration I deemed as being due to them in their character of members of the company, but under a separate and distinct contract, and the directors art. therefore, entitled to prove and rank as ordinary creditors in the winding-up of the com- pany for any mpaid fees. (New British Iron Co., 189S.) The Court may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribution made before those debts are proved. (Section 169 of Act of 1908.) (See Debts Provable in Bankruptcy.) Deceased Insolvent.— Any creditor, whose debt would have been sufficient to support a bank- ruptcy petition had his debtor been alive, may, after the death of the latter, present a petition paying fur an order for the administration of the *47 [Deceased debtor's estate, according to the law of bank- ruptcy. A fee stamp of £5 is payable upon every such petition. (Bankruptcy Act 1883, section 125.) "Creditor" means one or more creditors qualified to present a bankruptcy petition as provided by the Bankruptcy Act. Such a petition may not be presented after proceedings have been com- menced in any Court other than the Bankruptcy Court; but upon proof of the insolvency of th« estate, that other Court may transfer the pro- ceedings to the Bankruptcy Court, whether any creditor makes application for such transfer or not. The mere fact that a creditor who has com- menced proceedings in the Chancer}- Division wishes the case to be retained there is not a sufficient reason for refusing to transfer it to the Bankruptcy Court, but (1) where questions of difficulty will arise necessitating references to the Judge from time to time, or (2) where the pro- ceedings have already been far advanced, the Chancery Court will consider it better to retain the case and not transfer it. (In re Eade, 1906.) One advantage to creditors arising from the transfer from the Chancery Court to the Bank- ruptcy Court would be the limitation of the landlord's right of distress, which would not be imposed in the Chancery Court. (Fryman v. Fryman, 1888.) On the making of an administration order the personal representative must lodge in duplicate with the Official Receiver an account of his deal- ings with, and administration of, the deceased's estate, a list of the creditors, a statement of the assets and liabilities, and such other information as may be required by the Official Receiver. The account, list, and statement are to be made out and verified, as nearly as may be, in accordance with the practice, for the time being, of the Chancery Division of the High Court. The expense of preparing, making, verifying, and lodging these documents, after being taxed, and on production of the necessary allocatur, is allowed out of the deceased's estate. The creditors have the same powers as to the appointment of a trustee and committee of inspection as they have in other bankruptcy L 2 Deceased] 148 [Deceased cases, and the general provisions of the Bank- ruptcy Acts, mutatis mutandis, apply, subject to the exceptions stated below. The provisions of the Bankruptcy Acts as to the examination of witnesses, &c. (section 27 of the Act of 1883 and Rule 66), and as to the avoid- ance of voluntary settlements and fraudulent pre- ferences (sections 47 and 48, ibid), were held, prior to 1S90, not to apply to administration orders in respect of a deceased person's estate (Re Hewitt, 1885, and Re Gould, 1887, 19 Q.B.D. 92), and the provisions of section 21 of the 1890 Act have apparently not affected these decisions. The Court held, in Re Gould (supra), that sec- tion 125 applied only to the mode of administra- tion and not to the subject-matter which was to be administered; also, that the effect of the section was not to enlarge the assets of the deceased insolvent (by avoiding settlements or prefer- ences), but only to provide the mode of admin- istration in respect of the existing assets. This principle was upheld by the Court of Appeal in Hasluck v. Clark (1899), when it was decided that section 45 of the Act of 18S3, and sections 11 and 12 of the Act of 1890 (restricting the rights of execution creditors), were not applicable to administrations under section 125. But the pro- visions of 13 Eliz., cap. 5, apply to the estate of a deceased insolvent whether the estate be admin- istered by the Bankruptcy Court or not. (Taylor v. Coenen, 1876, 1 Ch. 636.) The payment of proper funeral and testa- mentary expenses is to be made in full out of the deceased debtor's estate, in priority to all other debts; this priority is specially reserved in the Preferential Payments in Bankruptcy Act 1888. The priority of debts prescribed by the latter Act, and semble by the Workmen's Compensation Act 1906, applies in the case of a deceased person who dies insolvent, as if he were a bankrupt, and as if the date of his death were substituted for the date of the receiving order. Notice to the legal personal representative of a deceased debtor of the presentation by a creditor of a petition is deemed, in the event of an order for administration being made thereon, as an equivalent to notice of an act of bank- ruptcy, and after such notice no payment or transfer of property made by the personal repre- sentative will operate as a discharge between him- self and the Official, Receiver or truster (if appointed), provided that nothing shall invalidate any payment made or any act or thing done in good faith, by the personal representative before the date of the order of administration. Where an administration order is made, such order is gazetted and advertised in the same manner in all respects as an order of adjudica- tion is gazetted and advertised. Not only has an executor the right to retain his own debt prior to notice of the presentation of a petition, but the Court of Appeal (confirming the decision of the Court below) ruled, in Re Rhoades (1899), that an order for administration did not affect the right of retainer. The executrix in this case, in ignorance of her rights, had in fact actually paid over the whole of the funds in her hands to the Official Receiver and lodged a proof in respect of her debt. The funds were more than sufficient to pay the executrix in full, and after withdrawing her proof of debt she was held entitled to recover from the Official Receiver the full amount of her debt. Where any surplus remains in the hands of the Official Receiver or trustee, after payment in full of all the debts due from the deceased debtor, together with costs of administration and interest, as provided by the Bankruptcy Acts, such surplus must be handed over to the personal representa- tive of the deceased debtor. (1883 Act, section 125; 1890 Act, section 21; and Rules 275 and 278.) (See Death of Bankrupt or Debtor, Public Trustee.) Sometimes the administration of the estate of a deceased insolvent is conducted by the executor or administrator with the consent and under the supervision of the creditors or a committee of I them. As to this sea title Administration of Assets. Decimal] Decimal System. — A system of money, weights, and or measures, in which the standard unit in the ascending series is multiplied by ten, and in the descending series is divided by ten. (See Metric System.) | Declaration. — The Statutory Declarations Act 1835 provides for the making of solemn declarations without oath before a Justice of the Peace, notary public, commissioner for oaths, &c. The instru- ment of declaration requires a 2s. 6d. stamp, unless the declaration is within the exemptions in the Stamp Act 1891 (as amended). Declaration oi Transfer. — .See Bill of Sale (shipping.) Declaratory Statutes. — Those which declare the law as it previously existed according to the common law. Deed.— An instrument in writing or printing on paper or parchment, sealed and delivered. In practice it is always signed. The parties to a deed are identified by their respective seals, whilst the deed is operative from the date of its delivery. With regard to the " sealing " of deeds by individuals the practice is to affix a wafer beforehand, and the party in executing the instru- ment merely touches the wafer and adopts it as his seal, and formally "delivers" the document as his deed. In the case of a company (corporation) the act of " sealirng " imports delivery. Thus the attestation clause affixed to the deed of an indi- vidual usually reads : — Signed, sealed, and delivered in the presence of ; whereas in the case of a company or corporation the attesta- tion clause merely recites that " the common " seal of the company (or corporation) was " affixed hereto in the presence of " (i.e., the director or directors and/or secretary of the company, or officers of the corporation, as the case may be). (See title Seal.) When a deed is delivered subject to a con- dition it does not take effect unless and until such condition has been fulfilled, but on the per- formance of the condition the effect of the instru- ment is retrospective. Such a document is called H9 [Deed an Escrow, an example of which is afforded in the execution of a conveyance of land by a vendor and delivery to his solicitor, on the condition that the deed is delivered only upon payment of the purchase money. A deed is also termed (a) a contract under seal, (6) a specialty contract, or (c) a formal contract. The characteristics of a deed are : — (1) Estoppel. (2) Merger. (3) Right of action thereunder is generally barred after twenty years from the time the right first accrued. (4) Its efficacy rests upon its form and not upon valuable consideration (see title Con- sideration), therefore a gratuitous promise is binding if made under seal. There are, perhaps, two exceptions to this : (a) Con- tracts in restraint of trade must be reason- able, and consideration would form an element of reasonableness ; (b) specific per- formance cannot be obtained of a gratuitous promise even if made under seal. A deed requires a 10s. stamp. The terms of a deed cannot be amended or rescinded either by an agreement under hand or by a verbal arrangement, but only by another deed. (See Contract.) Deed of Arrangement. — A deed of arrangement, or private arrangement made between a debtor and his creditors, is one whereby those creditors who may assent to it, in consideration of each other's assent, accept either : — (1) An assignment of the debtor's property, (2) A stated composition ; or (3) Payment in full by instalments in discharge of their respective debts, either absolutely or upon stated conditions. Any conveyance or assignment made by any company registered under the Companies Acts (now the Act of 1908) of all its property to trustees for the benefit of all its creditors shall be void to all intents. (1908 Act, section 210.) Deed] 150 [Deed Note. — This does not prohibit any arrangement with creditors other than by way of assignment, but the Companies Act 1908 provides more appropriate schemes of arrangement, which, moreover, bind minorities. (See title Arrange- ments (Joint Stock Companies).) The Deeds of Arrangement Act 1887 defines a deed of arrangement for the purposes of that Act as including " any of the following instruments, " whether under seal or not, made by, for, or in " respect of the affairs of a debtor for the benefit " of his creditors generally (otherwise than in " pursuance of the law for the time being in force " relating to bankruptcy), that is to say: — "(a) An assignment of property. "(b) A deed of or agreement for a composition. "And in cases where creditors of a debtor " obtain any control over his property or " business : — "(c) A deed of inspectorship entered into for " the purpose of carrying on or winding " up a business. "(d) A letter of licence, authorising the debtor " or any other person to manage, carry " on, realise, or dispose of a business with " a view to the payment of debts. "(e) Any agreement or instrument entered into " for the purpose of carrying on or wind- " ing up the debtor's business, or autho- " rising the debtor or any other person to " manage, carry on, realise or dispose of " the debtor's business, with a view to the " payment of his debts." (Section 4.) Note. — The term " creditors generallv " includes all creditors who may assent to, or take the benefit of, a deed of arrange- ment. (Section' 19.) (See " Creditor's Assent," infra.) Every such deed as defined above is void unless registered with the Registrar of Bills of Sale within seven clear days after the first execution thereof by the debtor or any creditor, or if it is executed in any place out of England, then within seven days after the time at which it would in the ordinary course of post arrive in England if posted within one week of the execu- tion thereof. (Section 5.) The Court upon being satisfied that the omission I within the prescribed time was accidental or due to inadvertence, or to some cause b control of the debtor and not imputable t negligence on his part, may on the appli' of any party interested and upon such terms just and convenient extend the time for such registration. (Section 9.) It will be noted that an extension of time for registration is in effect to revive under Section 9 a deed already void under Section 5. Presumably the words and convenient " will protect the righl persons who may meanwhile have obtained against the property affected by the deed, e.g., I the sheriff. If the deed is not registered it is void ab initio, and as a consequence it is not even binding on the debtor, so that on its avoid- ance he can collect the assets in his own name, The deed must be executed by the trust assignee before registration-, but where a deed was executed by the debtor, the trustee, and one 1 creditor only before registration, and v quentlv executed by other creditors, this fact was held not to be such an alteration of the di to vitiate its registration. (Ex parte Milne : re Batten, 1889, 22 O.B.D. 685.) The " deed '*J must be stamped with the proper inland revenue duty (10s. if under seal), and in addition a stamp denoting a duty of one shilling per £'100 or fraction of £100 of the value of the property ing, or (where no property passes under the deed) the amount of composition payable thereunder. The stamps must be affixed before production of the deed to the Registrar. There is al>. an ad valorem " filing duty " of £1 per £i.< fraction thereof (with a maximum of £5 duty). payable upon the value of the property pass: the amount of composition payable under the deed, as the case may be. Where an ad valorem \ fee cannot be applied, a fixed fee of £2 is payable. The registration is effected as follows : — A true copy of the deed, and of every schedule or inven- tory thereto annexed or therein referred to, must be presented to and filed with the Regis- trar within seven clear days after execution, together with an affidavit by some person present thereat verifying the time of execution, and con- Deed] *5' TDeed taining a description of the residence and occupa- tion of the debtor, and ot the place or places where his business is carried on, and an affidavit bv the debtor stating the total estimated amount of property and liabilities included under the deed, the total amount of composition (if any) payable thereunder, and the names and addresses of his creditors. (Section 6.) Care should be exercised in the preparation of the documents accompanying the deed when pre- 1 for registration, for attempts are some- times made by judgment-creditors to set aside a peed bv proving some informality in connection •\ itli the registration. Tha debtor in his affidavit must state the total estimated amount of his pro- perty comprised under the deed and the net amount Mt< r deducting the value of securities, if any, held by creditors. H; must also state the total pstimated amount of his liabilities included under his deed, and the net amount thereof after Deducting the amount (if any) which will be icd by the value of the securities held by creditors. Thus the net assets available for the unsecured creditors are disclosed. The debtor must also give in a schedule to his affidavit the names of his creditors, with their addresses and the amount of debt due to or claimed by each respectively. The schedule must be signed by the debtor. With regard to this schedule of creditors it should be pointed out that the " deed " is pre- sumed to be for the benefit of " creditors generally," and this means all creditors who may [assent to or take the benefit of the deed, viz., unsecured creditors, and the official form of the schedule demands " the amount of debt due to V or claimed by' each creditor after the deduction ," of the value of securities held by the creditor." Thus partly secured creditors need only be included for the amount for which they hold no security, and fully secured creditors need not be scheduled. (Chaplin v. Daly, 2 Mans, i.) An honest omission to include a creditor in the •schedule, or the omission of a claim honestly disputed or believed to be contingent only, would nut invalidate the deed so far as registration is poncerned. (Maskelyne O Cook v. Smith, 1903, 1 K.B. 671.) The Court upon being satisfied that an omission or misstatement of the name, address, or description of any person was acci- dental or due to inadvertence, or to some cause beyond the control of the debtor, and not imputable to any negligence on his part, may, on the application of any party interested, and on such terms as are just and expedient, order such omission or misstatement to be supplied or rectified. (Section 9.) The omission of an important claim from a schedule of a debtor's liabilities may, however, affect the position as regards creditors who have been induced to assent to the deed upon the basis of figures showing a probable dividend which will be substantially reduced if the claim so omitted is admitted to rank for dividend. The register is open to public inspection upon payment of the prescribed fee, viz. : — For searching the register (i.e., for every name inspected) and on inspecting the filed copy of the deed, including the extracts allowed by the rules, the fee of 2s. 6d. Note. — The extracts are limited to the dates of execution and registration, the names, addresses, and descriptions of the parties to the deed, and a short statement of the nature and effect of the deed. A deed of arrangement, as already stated, is void if not registered in accordance with the Act of 1887, and section 17 provides that " nothing '• in this Act shall be construed to repeal or shall " affect any provision of the law for the time " being in force in relation to bankruptcy, or " shall give validity to any deed or instrument " which by law is an act of bankruptcy or void " or voidable." So that such a deed may be avoided notwithstanding registration — (1) If it contravenes the provisions of 13 Eliz. chap. 5, relating to frauds upon creditors, and (2) Bv a receiving order being made against the debtor (followed by adjudication) upon a petition presented within three months after the date of the deed. Note*— The Public Trustee Act 1906 provides that the Public Trustee shall not accept any trust under a deed of arrangement for the benefit of creditors or for the administration of any estate known or believed by him to be insolvent. Deed 152 [Deed Deed of Assignment. A deed by which a debtor assigns his property, real and personal, land, houses, furniture, stock- in-trade, book debts, &c, to a trustee, whether himself a creditor or not, in trust to realise same, and after payment of the expenses and the pre- • ferential claims to distribute the balance pari passu amongst the assenting creditors, who in consideration of (1) the assignment and (2) the dividends received (if any) release the debtor (either absolutely or conditionally) from the debts respectively owing to them. Where a deed provides for the disposal of the ■whole of the proceeds of sale of the debtor's estate thereby assigned, i.e., where the trust is " to divide the sum realised amongst the creditors " in rateable proportions according to the amount " of their debts," there will be no resulting trust in favour of the debtor as regards any surplus, should the proceeds be more than sufficient to pay the creditors in full, for in such a case the assignor divests himself of all interest in the pro- perty, and the creditors (accepting the assignment " for better for worse ") agree to release the debtor in consideration thereof. But if the deed does not provide for the disposal of the whole of the proceeds, i.e., where the trust is " to dis- " charge the debts or to divide the proceeds of " sale of the estate assigned in or towards pay- " ment of the debts " the property assigned is placed in trust for a limited purpose, and if in sucli a case the deed does not expressly provide for the disposal of any surplus there may chance to be after payment of the debts in full, there will be a resulting trust in favour of the assignor. (Smith v. Cooke, 1891, A.C. 297.) Although deeds are usually employed, it is not absolutely essential to the validity of an assign- ment of personal property that it be under seal. It is customary to exclude from the deed any leasehold property of the debtor, particularly where it is subject to onerous covenants, the deed, however, generally expressing that " the " debtor shall stand possessed of all leasehold " property to which he is now entitled upon trust " for the trustee and the creditors," and further declaring that the debtor " shall assign and dis- " pose of the same and any income arising there- " from in such manner as the trustee shall from " time to time direct," the net proceeds f such disposition being payable to the trustee, who must apply the same in accordance with the provisions of the deed. This is done because the trustee has no power of disclaimer (such as is possessed by a tri in bankruptcy), and should the leaseholds vest in the trustee, he would be personally liable for the rent and covenants thereof whilst he continued to hold the property. Should the trustee sell a leasehold interest which has been excluded from the assignment but is held by the debtor at the disposition of the trustee, he will require the debtor to execute the necessary instrument of transfer. Such a document has been held to be mere " convey- ancing machinery," so as to give the trustee title to that over which he had formerly only power of control, and consequently does not require registration under the Deeds of Arrange- ment Act of 1887. (Re Cranmer , s Contract, I903-) Whore the deed comprises " lands, messu; " tenements, and hereditaments, corporeal or] " incorporeal, of any tenure " it should not only be registered under the Deeds of Arrangement J Act 1887, but also under the Land Charges | Registration, &c, Act 1888, which provides that every deed of arrangement ^hall be void as against a purchaser for value of any land com-j prised therein or affected thereby, unless and until | such deed is registered at the Office of Land 1 Registry and Deeds of Arrangement. The deed may be so registered upon the application of the trustee under the deed, or an assenting creditor. < The effect of non-registration is that a purchaser of the land for value from the debtor (with or without notice of the deed) would be entitled tol the land as against the trustee and the creditors. The method of administering the estate, its realisation and distribution, is invariably detailed in the deed itself, the bankruptcy procedure being as a rule adopted, and a Committee of Inspection appointed. Deed !53 [Deed Where any employer has entered into a con- tract with any insurers in respect of any liability under the Workmen's Compensation Act 1906 to any workman, then, in the event of the employer making a composition or arrangement with his creditors, the rights of the employer against the Insurers as respects that liability shall be trans- fers \v that his income is derived from his own nal labour, and also that the total does not I i2,ooo or ^3,000, as the case may be, and he must make his claim at the time of making his " return " before the 30th day of r in the year of assessment. Ni tc. — This provision is strictly construed, and officials contend that the claim must be ed by them not later than the 29th Septem- ber in order to constitute a literal compliance with the words " before the 30th day of September." N" nlief will be allowed in respect of income on v hich the taxpayer is entitled to deduct tax out of any payment made to another person. Dilapidation. — Decay. The term is used to signify tin of repair to property for which a tenant is held liable to a landlord when yielding up demised premises at the end of a term, when such premises were held under a lease requiring the premises to be delivered in good repair. Diminishing Balances. — The term used to signify tin values at which a property stands in the - and accounts from time to time, such (or balances) diminishing by and to the !69 [Directors extent of the amounts periodically passed to credit of the account as and for depreciation or otherwise. (See Depreciation.) Directors. — The officers who conduct the affairs of a joint stock company. They are the special, not general, agents of the company, for they can only exercise such powers as are conferred upon them by the memorandum and articles of asso- ciation. As all persons dealing with a particular company are presumed to have knowledge of the contents of these documents, they are deemed to have notice of the extent of the directors' powers, and the nature of the special restrictions (if any) placed upon them by the memorandum and articles. The regulations as to appointment, qualifica- tion, remuneration, and retirement, are also contained in the articles. Appointment and Qualification. — Directors are generally appointed in one of the following ways : — (a) By name mentioned in the articles of association. (b) By the signatories to the articles of association in accordance with express power given thereunder. (c) By the shareholders in general meeting. (d) By the other directors in order to fill a vacancy. Sometimes — although rarely — they are ap- pointed for purposes of formation only, and are either re-elected or replaced at the statutory meeting. Clause 70 of Table "A," Companies (Con- solidation) Act 1908, requires the directors of companies adopting its provisions to hold at least one share in the company appoint- ing them as a qualification for office, and the articles of association of most companies provide for a share qualification — in fact, the London Stock Exchange require it before grant- ing a quotation for the shares. There are, how- ever, many companies having directors who do not possess any share or stock qualification, the articles of association of such companies not imposing any. Directors] 170 'Directors Beneficial ownership of qualifying shares is not absolutely necessary — they may be held in trust for some other person (Pulbrook v. Rich- mond Consolidated Mining Company, 1878), and even where the articles of association expressly state that the director must hold the shares in his own right, it is merely a stipulation that the company may deal with him as the owner of the shares whatever his real interest in them may be (Bainbridge v. Smith, 18S9), but shares belong- ing to another company w ? hich was in liquida- tion and registered in the name of the liquidator as such, were held not to be his in his own right for qualification purposes. (Boschoek Pro- prietary Company v. Fuke, 1906.) Sir F. B. Palmer suggests that where it is required that directors should be beneficially interested in their qualification shares the articles of association should provide that " the qualifica- " tion of a director shall be the holding of (a " stated number of) shares as sole absolute " beneficial owner, and not merely as trustee." The Companies (Consolidation) Act 1908 provides as follows : — Section 72 (1) A person shall not be capable of being appointed director of a company by the articles, and shall not be named as a director or proposed director of a company in any prospectus issued by or on behalf of the company, or in any statement in lieu of prospectus filed by or on behalf of a company, unless, before the registra- tion of the articles or the publication of the pro- spectus, or the filing of the statement in lieu of prospectus, as the case may be, he has by himself or by his agent authorised in writing — (i) Signed and filed with the Registrar of Companies a consent in writing to act as such director; and (ii) Either signed the memorandum for a number of shares not less than his qualifi- cation (if any), or signed and filed with the Registrar a contract in writing to take from the company and pay for his qualification shares (if any). (2) On the application for registration of the memorandum and articles of a company the applicant shall deliver to the Registrar a list of the persons who have consented to be directors of the company, and, if this list contains the name of any person who has not so cons^ the applicant shall be liable to a fine not < ing fifty pounds. (3) This section shall not apply to a private company nor to a prospectus issued by < behalf of a company after the expiration year from the date at which the compai entitled to commence business. Section 73. — (1) Without prejudice to the restrictions imposed by the last foregoing - it shall be the duty of every director who i< by the regulations of the company required to 1. specified share qualification, and who is not already qualified, to obtain his qualification within two months after his appointment, or such shorter time as may be fixed by the regulations of the company. (2) The office of director of a company shall be vacated, if the director does not within two months from the date of his appointmei within such shorter time as may be fixed by the regulations of the company, obtain his qualifica- tion, or if after the expiration of such period or shorter time he ceases at any time to hold his ' qualification; and a person vacating office this section shall be incapable of bein^ n- appointed director of the company until hi obtained his qualification. (3) If after the expiration of the said period or shorter time any unqualified person acts director of the company, he shall be liable to a fine not exceeding five pounds for ever; between the expiration of the said peri shorter time and the last day on which proved that he acted as a director. Note. — The provisions of the above sections do not impose a qualification, they merely enforce the requirements (if any) of the com] regulations in this respect. Where a share qualification is necessary the holding of share warrants is not sufficient quali- fication. (Companies (Consolidation) Act 1908,! section 37.) Directorsj The number of shares (if any) fixed by the articles of association as the qualification of a • director must be stated in the prospectus (Com- panies Act 1908, section 81), but no provision is made for the insertion of such particulars in the " Statement in lieu of Prospectus " (see that title) which is to be filed by certain companies before the first allotment of shares or debentures. The acts of a director or manager shall be valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification. (190S Act, section 74.) Remuneration. — • Directors are only entitled to remuneration if the articles of association so provide (Ditnston v. Imperial Gas Company, 1832) ; and any such provision must be stated in the prospectus. (Companies Act 1908, section 81.) No provision is, however, made for the insertion of such par- ticulars in the " Statement in lieu of Prospectus " referred to above. The regulations of some companies provide for th. icmuneration of the directors out of the profits of the company, whilst others make the remuneration payable out of the company's funds — an obvious distinction. Where the articles of association provide for the payment by the company of a stated annual sum by way of remuneration to the directors, it has been held that even where directors must of necessity be members such remuneration is not due to them in their character of members of the company, but under a separate and distinct contract, and directors are therefore entitled to prove and rank as ordinary creditors in the winding-up of the company for any unpaid fees in pursuance of the articles of association. (New British Iron Co., 1S98, 1 Ch. 324-) A director of a company who is appointed to a plac on the board of another company, and holds his qualification shares in the latter company in trust for the former, is not liable to account to the " parent " company for remuneration earned as a result of such appointment: the remunera- tion is received by him by way of payment for 171 [Directors work done. (In re Dover Coalfield Extension, Lim., C.A. 24 T.L.R. 52.) If the articles provide, or a resolution passed in pursuance of the articles states, that the directors are to be remunerated at the rate of so much a year, they will be entitled to an appor- tioned part for services for part of a year (Salton v. New Beeston Cycle Co., 1899), Dut U? a director is entitled to a stated sum per annum bv way of remuneration, he is not entitled, while the com- pany is a going concern, to any part thereof unless he acts for the full year. (Inman v. Acroyd &~ Best, Lim., 1901, 1 K.B. 613.) Where it is intended, when voting directors' remuneration at the first general meeting of a company governed by Table A, that the first directors shall be remunerated for past services rendered since their appointment by the sub- scribers of the memorandum of association, the resolution should clearly state the intention. (See In re London Gigantic Wheel Company, C.A. 24 T.L.R. 618.) Unless specially provided for, directors cannot be paid their travelling expenses in connection with attending the board meetings, or the income-tax upon their remuneration. Responsibilities. — Directors are not only the agents of the com- pany in respect of the transactions they enter into on its behalf, but also quasi-trustees for the company, as the funds of a company may be regarded as a trust-fund of which the directors have the administration. It is said that directors are also trustees " for the shareholders of the powers which have been committed to them." A director stands in a fiduciary relation towards the company, and as a consequence he cannot contract with the company, unless the- articles otherwise provide, but it is customary to allow directors to contract with the company, provided they do not vote when any question relating to their particular contracts is being considered by the directors as a body. It follows that in order to render valid a reso- lution in regard to a proposal in which any director is financially interested, there must be Directors 172 Discharge present a quorum of directors exclusive of the particular director so interested. Directors may be held personally responsible for acts ultra vires which are also ultra vires the company, or which, though intra vires the com- pany, the members decline to ratify — unless such acts are the result of an honest mistake or an error of judgment, and they have otherwise acted in good faith. If the acts are ultra vires the directors but Intra vires the company, they may be ratified by the members in general meeting, but if the acts are ultra vires the company they cannot be ratified. If in any proceeding against a director, or person occupying the position of director, of a company for negligence or breach of trust it appears to the Court hearing the case that the director or person is or may be liable in respect of the negligence or breach of trust, but has acted honestly and reasonably, and ought fairly to be excused for the negligence or breach of trust, that Court may relieve him, either wholly or partly, from his liability on such terms as the Court may think proper. (Companies Act 1908, section 279.) Ordinarily, the liability of a director, apart from fraud and acts ultra vires, is that of an ordinary member in respect of the shares he may hold, but the Companies Act 1908 (sections 60 and 61) provides that the liability of the directors of a limited company may be unlimited if so pro- vided by the memorandum of association (as originally prepared or as altered by special reso- lution). This provision is, however, not taken advantage of, and may be regarded as a " dead letter." The fact that some of the directors of a com- pany have acted irregularly in transacting business on behalf of the company when a quorum was not present, will not be allowed to prejudice third parties who have acted without notice of the irregularity, for although all persons having dealings with a company are fixed with notice of its memorandum and articles as regard external affairs, they are not presumed to have knowledge of its " indoor management." But as regards the liability of a company in respect of bills of exchange improperly negotiated by a director for his own benefit see Premier Industrial Bank, Lim. v. ]. <2~ IF. Crabtree, Lint. (25 T.L.R. 17). In any case, anything alleged to have been done on behalf of a company at a meeting of directors, where a quorum was not present, may be subsequently ratified and confirmed at a duly constituted meeting of directors; when so ratified, the act will be valid ab initio. A special liability attaches to directors in con- nection with the issue of a prospectus and also as l,o irregular allotments. Every company shall keep at its registered office a register containing the names and addresses and the occupations of its directors or managers, and send to the Registrar of Com- panies a copy thereof, and from time to time I notify to the Registrar any change among its directors or managers. If default is made in com-, pliance with this section, the company shall be liable to a fine not exceeding five pounds for every] day during which the default continues ; and every director and manager of the company who knowingly and wilfully authorises or permits the default shall be liable to the like penalty. (Com- panies (Consolidation) Act 1908, section 75.) The annual list and summary must specify the names and addresses of the persons who at the date of the return are the directors of the company. (Section 26.) (See Allotment, Governing Director, Local Director, Managing Director, Prospectus, j Statement in lieu of Prospectus, Statutory Meeting, Substituted Director.) Directors' Liability Act 1890.— The Act was repealed by, and its provisions re-enacted in, the Companies (Consolidation) Act 1908, as from] 1 st April 1909. (See title Prospectus.) Discharge of a Bankrupt. — A bankrupt may, at anv| time after being adjudged bankrupt, apply to the Court for an order of discharge, and the Court . will appoint a day for hearing the application, but ! such application will not be heard until the Discharge] 173 [Discharge public examination of the bankrupt has been con- cluded. A bankrupt intending to apply for his discharge must produce to the Registrar a certificate from the Official Receiver specifying the number of his creditors of whom the Official Receiver has notice (whether they have proved or not). The Registrar shall, not less than 28 flays before the day appointed for hearing the application, give notice of the time and place of the hearing of the application to the Official Receiver and trustee, and the Official Receiver shall forthwith send notice thereof to the Board of Trade for insertion in the Gazette. The Official Receiver must also send to each creditor a notice of the day appointed for the hearing of the debtor's application for discharge, not less than 14 days before the day so appointed. But it is not necessary in summary cases to send notices to creditors of less than £2. The application must be heard in open Court. The Official Receiver must make a report upon the bankrupt's conduct and affairs, and the Court takes the report into consideration upon the hearing of the application, and may either (1) i^rant or (2) refuse an absolute order of dis- charge, or (3) suspend the operation of the order for a specified time, or (4) grant an order of discharge subject to conditions as to future earnings or after-acquired property, provided that the Court shall refuse the discharge in all cases where the bankrupt has committed any misde- meanour under the Debtors Act 1869 (q.v.) or the Bankruptcy Act 1883, or any other misde- meanour, or any felony in connection with the bankruptcy, unless the Court for special reasons shall otherwise determine. The Court shall also, upon proof of any of the facts hereinafter mentioned, either : — (1) Refuse the discharge, or (2) Suspend the discharge for a period of not less than two years, or (3) Suspend the discharge until a dividend of not less than ten shillings in the pound has been paid to the creditors, or (4) Grant an order of discharge conditionally upon the bankrupt assenting to judgment being entered against him by the Official Receiver or trustee for the balance or part of any balance of the debts provable in the bankruptcy, such amount to be payable out of future earnings or after- acquired property, but execution thereon not to be levied without leave of the Court. Such an order may be modified by the Court if after the expiration of two years the bankrupt satisfies the Court that there is no reasonable probability of his being in a position to comply with the terms of the order. Note. — If a bankrupt by arrangement consented to judgment being entered against him for such a sum as with the dividend coming from his estate would allow of a further dividend, making (say, only) three shillings in the pound in all, he could obtain an immediate discharge if a friend forthwith discharged the judg- ment on his behalf, provided, of course, the bankrupt had not been guilty of any serious bankruptcy offences. The facts hereinbefore referred to are : — A. That the bankrupt's assets are not of a value equal to ten shillings in the pound on the amount of his unsecured liabilities, unless he satisfies the Court that the fact that the assets are not of a value equal to ten shillings in the pound on the amount of his unsecured liabilities has arisen from circumstances for which he cannot justly be held responsible. B. That the bankrupt has omitted to keep such books of account as are usual and proper fn the business carried on by him and as sufficiently disclose his business transactions and financial position within the three years immediately preceding his bankruptcy. " The omission to keep proper books is " not a slight but a serious offence against " trading morality. It is not enough that " there should be books with entries in " them which would require a prolonged " examination by a skilled accountant in " order to ascertain the result of them. Discharge] !?4 [Discharge " That is not keeping proper books. The " books should be properly kept and " balanced from time to time, so that at " any moment the real state of the " trader's affairs may appear at once. 11 Those are the books which traders " ought to keep." (Lord Esher.) C. That the bankrupt has continued to trade after knowing himself to be insolvent. " When a man is insolvent he has no " right to take upon himself to decide " whether his business is or is not to be " sold, or whether his business is or is not " to be carried on. When he is insolvent " he really is carrying on his business at " the risk and expense of his creditors. " Sometimes he may, by great good " fortune, succeed in pulling through, if " he is not too deeply involved, but, as a " general rule, one knows from experience " that is not so, and that going on with " trading under those circumstances leads " to bankruptcy in the end and to a " greater deficiency than there would be if " the debtor were to pull up as soon as he " found he was insolvent. A man, there- " fore, is not justified in going on or in " selling, or, in fact, taking any step at a " time when he is insolvent without the " concurrence of the creditors, who have to " bear the burden if that step turns out to " be a disastrous one." (Cave, J.) D. That the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reason- able or probable ground of expectation (proof whereof shall lie on him) of being able to pay it. E. That the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities. F . That the bankrupt has brought on, or con- tributed to, his bankruptcy, by rash and hazardous speculations, or by unjustifiable extravagance in living or by gambling, or by culpable neglect of his business affairs. "A man is bound, not to keep up " appearances but to pay his debts, and if " his profits will not allow of his living at " the particular rate he has been accus- " tomed to live at, then his plain duty is to " reduce his scale of living, and not to go " on living out of the money of creditors." (Cave, J.) G. That the bankrupt has put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action properly brought against him. H. That the bankrupt has within three months preceding the date of the receiving order incurred unjustifiable expense by bringing a frivolous or vexatious action. /. That the bankrupt has within three months preceding the date of the receiving order, when unable to pay his debts as they became due, given an undue preference to any of his creditors. Note. — An undue preference is wider than a fraudulent preference, for although a preference may not be such as would be avoidable as a fraudulent preference, it may nevertheless be deemed undue, and affect the debtor's discharge. /. That the bankrupt has within three months preceding the date of the receiving order incurred liabilities with a view of making his assets equal to ten shillings in the pound on the amount of his unsecured liabilities. K. That the bankrupt has on any previous occasion been adjudged bankrupt, or made a composition or arrangement with his creditors. L. That the bankrupt has been guilty of any fraud or fraudulent breach of trust. The onus of proof of any of the foregoing facts (except where stated otherwise) lies on the person or persons opposing the application for a I grant of discharge. The Court may also refuse or suspend an order of discharge, or grant an order subject to con- ditions, where the bankrupt has made a fraudulent or unjustifiable marriage settlement. Discharge] 175 [Discharge Thi powers of the Court of suspending and of ing conditions to a bankrupt's discharge ma\ now be exercised concurrently. A order of discharge docs not release the bankrupt — (1) From any debt on a recognisance, nor from any debt with which the bankrupt may be chargeable at the suit of the Crown, or of any person for any offence inst a statute relating to any branch of the public revenue, or at the suit of the sheriff or other public officer on a bail bond entered into for the appearance of any person prosecuted for any such offence, unless the Treasury certify their consent in writing to his being discharged therefrom. From any debt or liability incurred by means of any fraud or fraudulent breach of trust to which he was a party, nor from any debt or liability whereof he has obtained forbearance by any fraud to which he was a party. (1883 Act, section 50.) From any liability under a judgment against him in an action for seduction, or under an affiliation order, or under a judgment against him as co-respondent in a matrimonial cause, except to such an • Mint and under such conditions as the Court expressly orders in respect of such liability. (1890 Act, section 10.) The onus lies on the bankrupt to show some 1 reason why the Court should make an order under section 10 of the Act of 1890 releasing him from the liability for the debts ii d in section 10. With the foregoing exceptions, an order of dis- charge releases the bankrupt from all debts provable in the bankruptcy. With regard to debts contracted by a person with the debtor after notice of an available act of bankruptcy having been committed by the debtor, it has been held that the Bankruptcy Act 1883 1 _\y (2)) does not provide that such a debt is non-provable in the bankruptcy, but only that tlie creditor shall not prove in respect thereof. (Buck-sell v. Norman, 1898.) The effect of this decision is important, for as the debt is not deemed non-provable, the bankrupt will be released therefrom' on obtaining his discharge. So that the creditor ( 1 ) may not prove in the bankruptcy by reason of a personal disability, nor (2) may he at any time sue the debtor therefor. An order of discharge does not release any person who at the date of the receiving order was a partner or co-trustee with the bankrupt, or was jointly bound or had made any joint contract with him, or any person who was surety or in the nature of a surety for him. An order of discharge is conclusive evidence of the bankruptcy and of the validity of the pro- ceedings therein, and in any proceedings that may be instituted against the bankrupt who has obtained an order of discharge in respect of any debt from wh : ch he is released by such order, the bankrupt may plead that the cause of action occurred before his discharge, and may give the Bankruptcy Acts and the special matter in evidence. Where one member only of a firm has been adjudicated bankrupt his discharge operates to release him from his joint as well as his separate debts (Ex parte Hammond, 1873), an d where all the members of a firm have been adjudicated bankrupt and each has been granted his discharge they are released from the separate and joint liabilities. (Howard v. Poole, 1734.) A discharged bankrupt shall, notwithstanding his discharge, give such assistance as the trustee mav require in the realisation and distribution of such of his property as is vested in the trustee, and if he fails to do so he will be guilty of a con- tempt of Court, and the Court may also, if it thinks fit, revoke his discharge. (1890 Act, sections 8 and 10; and Rule 235.) Where a bankrupt is discharged subject to the condition that judgment shall be entered against him, or subject to any other condition as to his future earnings or after-acquired property, it shall be his duty, until such judgment or condition is satisfied, from time to time to give the Official Discharge] 176 [Discharge Receiver such information as he may require with respect to his earnings and after-acquired property and income, and not less than once a year to file in the Court a statement showing the particulars of any property or income he may have acquired subsequent to his discharge. (Rule 244.) . Any statement of after-acquired property or income filed by a bankrupt whose discharge has been granted subject to conditions shall be verified by affidavit, and the Official Receiver or trustee may require the bankrupt to attend before the Court to be examined on oath with reference to the statement contained in such affidavit or as to his earnings, income, after- acquired property, or dealings. Where a bank- rupt neglects to file such affidavit or to attend the Court for examination when required so to do, or properly to answer all such questions as the Court may put or allow to be put to him, the Court may, on the application of the Official Receiver or trustee, rescind the order of discharge. (Rule 244A.) Upon every application for an order of dis- charge a fee of £1 10s. is payable (which includes the expense of gazetting), and a further fee is payable at the rate of one shilling for each creditor who has to be notified of the applica- tion. A bankrupt is not entitled to have any of the costs of or incidental to his application for his discharge allowed to him out of his estate. (Rule 239.) (See Undischarged Bankrupt.) Discharge of a Bill of Exchange.— A bill is dis- charged when all rights of action thereon are extinguished. It then ceases to be negotiable, and subsequent holders acquire no right of action on the instrument. The discharge of a bill does not, however, extinguish any right of action which a party to the bill may have in respect of a transaction which arose out of the bill, but which is nevertheless independent of it. For example, a bill is discharged by payment in due course, by or on behalf of the drawee or acceptor (1882 Act, section 59), and although payment of a bill by one of joint acceptors operates as a dis- charge of the bill, the payer still has his right of contribution from his co-acceptors. II a bill (duly accepted) be given for a ^^H and the acceptance is paid, both the debt ai bill are discharged. Where an accommodation bill is paid in due course by the party accommodated the bill is discharged (section 59), but if paid I* accommodating acceptor he has a pe; right of action for indemnity from the party accommodated. The discharge in bankruptcy of an acceptoM does not operate as a discharge of the bill; it Operates only as a discharge of the accep- the extent of the amount proved for, and as a discharge of the drawer and indorsers to the extent of any dividends received. In any caS the holder cannot receive more than 20/- in £. (See Proof in respect of Bills of Exchang The discharge of a bill must also be careful! distinguished from the discharge of one or ma parties thereto by reason of want of notice dishonour, or some other informality. " Payment in due course " for the purpose determining the discharge of a bill means pay- ment made at or after the maturity of the bill to the holder thereof in good faith and without notice that his title to the bill is defective. (Section 59.) Part payment of a bill in due course operates as a discharge pro tanto. When the acceptor of a bill is or becomes holder of it at or after its maturity in his ow; right the bill is discharged. (Section 61.) When the holder of a bill at or after ib maturity absolutely and unconditionally renounc his rights against the acceptor the bill is charged. The renunciation must be in writing unless the bill is delivered up to the acceptor.- (Section 62.) The importance of this formality has been emphasised by the Court. A drawer renounced his rights on a bill verbally, but delivered the bill to a legatee of the acceptor (the latter having died) . On the death of the drawer also, the executors of the drawer sued upon the bill and recovered, the ratio decidendi being " that the " bill had not been renounced in writing nor had " it been delivered up to the acceptor, the latter " at the time being dead." Discharge] Where a bill is intentionally cancelled by the holder or his agent, and the cancellation is apparent thereon, the bill is discharged. The intentional cancellation by the holder, or his agent, of the signature of a party liable on a bill operates as a discharge of that party and also of those who would have had a right of recourse against him. (Section 63.) The unintentional cancellation of a bill, or of a signature or a cancellation made under a mistake or without authority, is inoperative on proof that the cancellation was made uninten- tionally, or under a mistake or without authority. (Section 63.) The right of action under a bill of exchange is (under ordinary circumstances) barred after six years from the date it falls due. (See Alteration, Renewal of a Bill.) 177 [Disclaimer disclaimer. — Bankruptcy. A trustee in bankruptcy may disclaim land of any tenure burdened with onerous covenants, unprofitable contracts, shares, stocks, or other property unsaleable or not readily saleable owing to its possession entailing the payment of money I or the performance of onerous acts. This right is not affected by the exercise of any act of I ownership by the trustee over the property, whether in an endeavour to sell, in taking posses- I sion of it, or otherwise. The disclaimer must be in writing, signed by the trustee (the signature II of the trustee's solicitor is not sufficient), and I made within twelve months of the first appoint- I ment of a trustee, or if the existence of the pro- should not come to his knowledge within month of his appointment, the disclaimer should be made within twelve months after the trustee first becomes aware of it. Should, how- ijver, any person interested make application in 'Writing requiring the trustee to decide whether he will disclaim or not, he must so decide within 28 days after the receipt of such application, other- •vis, he loses his right of disclaimer, and in the case of a contract, if the trustee after such application does not within the proper period dis- claim the contract, he is deemed to have adopted it (but see infra). The period of twelve months commences to run from the date of the first appointment of a trustee other than the Official Receiver (under section 21 of the Act of 1883) and not from the date of the order of adjudication, on which date the Official Receiver becomes trustee until a trustee is appointed by the creditors. (Re Cohen, Court of Appeal, 1905.) All the above periods may, however, be extended by the Court in a proper case. Leaseholds cannot be disclaimed without the leave of the Court except — (1) Where the premises have not been sub-let nor any mortgage created on the lease, and (a) The rent is less than ^20 per annum, or (b) The estate is being summarily administered, or (c) The lessor has been served with notice of intention to disclaim, and does not within seven days give notice that he requires the matter to be brought before the Court; or (2) Where the premises have been sub-let or a mortgage has been created on the lease, and the lessor, sub-lessee, or mortgagee has been served with notice of intention to disclaim and none of such persons has within 14 days required the matter to be brought before the Court. A disclaimer made without leave of the Court in pursuance of the above rule will not be void or otherwise affected on the ground only that the notice required by the rule has not been given to some person who claims to be interested in the demised property. Where any person claims to be interested in any part of the property of the bankrupt burdened with onerous covenants he must, at the request of the Official Receiver or trustee, furnish a statement of the interest so claimed by him. Where the trustee is entitled to disclaim with- out leave, the Court cannot impose terms (e.g., order compensation to the landlord). (Ex parte Zerfass, 1885.) N Disclaimer 178 [Disclaimer Where a trustee disclaims a leasehold interest he must forthwith file the disclaimer with the proceedings in Court, and the disclaimer must contain particulars of the interest disclaimed, and a statement of the persons to whom notice of the disclaimer has been given. Until the disclaimer is filed by the trustee it is inoperative. A disclaimer operates to determine from the date of the disclaimer the rights and liabilities of the bankrupt, and also discharges the trustee from all personal liability in respect of the pro- pertv disclaimed as from the date when it vested in him, but, except so far as is necessary for releasing the bankrupt and his property and the trustee from liability, a disclaimer does not affect the rights of other persons. Note. — Notwithstanding the latter portion of the above subsection (55 (2) of 1883 Act), the Court of Appeal held in Stacey v. Hill (1901) that the guarantor of the rent of the premises tenanted by the bankrupt was relieved from liability for any rent accruing after the date of the disclaimer of the lease by the trustee. If the trustee does not disclaim a lease he becomes personally responsible for the rent and covenants as from the date of his appointment — that is, from the date the lease first vested in him, irrespective of the question of actual or beneficial occupation by him. (Titterton v. Cooper, 1882.) But the trustee is entitled to indemnity from the estate. As the disclaimer of an onerous lease is not now retrospective, but operates from the date of the disclaimer (if duly filed in Court), the trustee may before disclaiming remove the tenant's fixtures or call upon the landlord to take them over at a valuation. Should the landlord decline to pay for the fixtures he must give the trustee reasonable time and opportunity to remove them. On the application of any party claiming an interest in any disclaimed property the Court may- make a vesting order on such terms as it may think fit, and the property vests without further conveyance or assignment. In the case of lease- holds the vesting order will be made in favour of a sub-lessee or mortgagee on the condition that he takes the property with the same liabili- ties as the bankrupt was subject to at the date of the petition, but under the Act of 1S90 (section 13) the Court has now a further discretion in thr matter, and may vest the property subject to the same liabilities and obligations as if the lease had been assigned at the date of the petition, and (if it be necessary) as if the lease comprised only the property dealt with in the vesting order. If no person claiming under the bankrupt is willing to accept a vesting order under such terms, the Court may vest the bankrupt's interest in any person in any way liable to perform the lessee's covenants, but freed and discharged from all incumbrances created by the bankrupt. The intention of the Legislature was, while they were providing for the relief of the trustee from liability in respect of onerous obligations of the bankrupt, including the obligations arising under a lease, to do so with as little disturbance as possible of the rights and liabilities of third persons, by reason of the disclaimer. But the conditions of the lease and the exact state of things, as between the lessor, the bankrupt lessee, and the sub-lessee or mortgagee, will be carefully considered. It is now settled that the lessor may apply for a vesting order as well as the parties claiming under the bankrupt. (Ex parte Shilson, 20 Q.B.D. 343.) A trustee in bankruptcy may disclaim shares held by the bankrupt in a company (registered under the Companies Acts) either before or after the commencement of the winding-up, notwith- standing the provisions of section 205 of the Companies (Consolidation) Act 1908. With regard to onerous contracts which have not been disclaimed, some difference of opinion exists as to the meaning of the words of section 55, subsection 4, of the Bankruptcy Act 1883. to the effect that if the trustee does not disclaim the contract "he shall be deemed to have adopted it." (1) In case of adoption the trustee will be held to be personally liable in respect of the contract, subject to such indemnity as he may be entitled to out of the estate. (Robson.) Disclaimer] (2) The effect of the provision as to adoption of the contract is not to make the trustee personally liable, but only to effect a novation by which the trustee as repre- senting the body of creditors is substituted as the party liable for the trustee as representing the bankrupt contractor. (Williams; also Benjamin on Sale.) Any person injured by the operation of a disclaimer is deemed to be a creditor of the bankrupt to the extent of the injury, and may accordingly prove the same as a debt under the bankruptcy, but if it is the true interpretation that a trustee who adopts a contract is personally thereon, there would apparently be no right uof against the bankrupt's estate in respect of a breach of contract after the date the trustee deemed to have adopted it. Again, the d of Trade, in the regulations issued to trustees, notifies them that any neglect on their part to disclaim onerous contracts, &c, will be taken into consideration when application is made for release, presumably because such ct is deemed prejudicial to the respective estates being administered. The Court may, on the application of any person who is as against the trustee entitled to the benefit or subject to the burden of a contract made with the bankrupt, make an order rescind- ing the contract on such terms as to payment by or to either party, of damages for the non-per- formance of the contract or otherwise as to the Court may seem equitable, and any damages payable under the order to any such person may- be proved by him as a debt under the bank- ruptcy. The above provision as to power to apply for rescission does not appear to be limited as to time ; if, therefore, an application to rescind the contract be made after the trustee is deemed to have adopted the contract, the effect of an order rescinding a contract would be to relieve tiie trustee personally of any liabilities he may have incurred in the meantime, for it is expressly provided that the damages (if any) payable under the order shall be proved as a debt under the bankruptcy. J 79 [Disclaimer In the case of a lease, the measure of damages under a disclaimer would ordinarily be the present value of the rent payable under the lease, less the rent obtainable for the residue of the term in the event of the premises being re-let; if there is a liability for dilapidations that would need to be considered also. Where the premises can be re-let immediately at a similar rent there would be no injury (so far as regards rent) as a result of the disclaimer. Com- pensation may also be payable to a lessor in respect of occupation by the trustee where such occupation has produced a benefit to the bank- rupt's estate " or was contemplated as likely to produce a benefit." Where a lease is of value, and it contains a forfeiture clause in the event of the lessee's bankruptcy, it is inoperative as against the trustee in bankruptcy by reason of the trustee's right of disclaimer. In the case of shares of a company, the com- pany may prove for the whole amount due on the shares, whether by way of arrears of calls or the liability to future calls. The measure of damage as to shares is also subject to any value in the shares which the company may acquire by reason of the disclaimer. (But see Debts Provable in Bankruptcy.) The provisions of the Bankruptcy Acts relative to a trustee's power of disclaimer are binding on the Crown. (1883 Act, sections 55 and 150; 1890 Act, section 13, Rule 320.) Company Liquidation. A liquidator of a duly registered company has no power of disclaimer, for he does not by taking or retaining possession become person- ally liable for the rent and covenants of leases; the company's property does not vest in him, and the occupation is not that of the liquidator but of the company, whose " ministerial officer " the liquidator is whilst the company remains in existence. (Wearmouth Co., 19 Ch.D. 640.) Assignment. A trustee under a deed of assignment will become personally liable for the rents and N 2 Disclaimer] 1 80 Discovery 1 covenants reserved by any lease which may be comprised in the property assigned, and as the trustee has no power of disclaimer it is usual in practice to exclude from the deed any leaseholds under rack-rent or burdened with onerous covenants, the assignor declaring that he stands possessed of same upon trust for the trustee and the creditors. Should the deed include a lease- hold in respect of which the trustee becomes liable for the covenants he may rid himself of all subsequent liability by assigning the lease to another, even though the assignee be a " man of straw." Disclosure ol Contracts. — See titles Prospectus, Statement in lieu of Prospectus. Discount. — An abatement from a debt or any prin- cipal sum. The difference between a sum due at a future date and its present value. There are various classes of discount, viz. : — Cash Discount. — A deduction (in the nature of interest) made in consideration of payment on or before a fixed date, or for prompt payment, as the case may be. The amount allowed depends — (1) Upon the period of credit generally allowed in the particular trade; (2) The length of the unexpired period of credit at the date of payment; and (3) The rate per cent, allowed. There are two kinds of cash discount, viz., true discount and banker's (or mercantile) discount. When discounting a bill (i.e., paying the cash value of the same prior to maturity) the banker deducts such an amount as represents the rate per annum on the face value of the bill for the period prior to maturity, but the true discount would be the difference between the present value of the bill at the required rate of discount (or interest) and its face value ; for in the latter case the amount advanced would be such a sum as, with the required interest thereon, would amount to the face value of the bill at the date of maturity. Trade Discount. — An allowance made accord- ing to the particular class of trade or goods, and irrespective of the time of payment therefor. The rate allowed also varies according to the extent of the trade done with the various customers; thus, instead of quoting different prices accord- ing to the volume of business done, traders are enabled to issue " standard list pi : applicable to all, the adjustment of the actual prices paid being regulated by the varying rates of trade discount. These " standard " lists also enable traders UW cope with fluctuations in price, occasioned by the rise and fall of raw materials, &c, by means of an alteration merely in the rate of trade discount allowed. Allowance. — Sometimes an abatement is made from a debt for no special reason other than to induce a settlement or to make the sum payable an even amount. This should not be confused with a credit in respect of " goods returned." In preparing a Trading Account and Profit and Loss Account, trade discount and returns should be deducted from " sales," while cash discount and allowances should be treated as an expense in the Profit and Loss Account. (See Allowance,-; Debts Provable in Bankruptcy, Gross Profit, and Underwriter.) Discovery, Examination, &c. — The Court may, on the application of the Official Receiver or trustee, at any time after a receiving order has been made against a debtor, summon before it the debtor or his wife, or any person known or suspected to have in his possession any of the estate or effects belonging to the debtor or sup- posed to be indebted to the debtor, or any person whom the Court may deem capable of giving information respecting the debtor, his dealings or property, and the Court may require any such person to produce any documents in his custody or power relating to the debtor, his dealings or property. If any person so summoned, after having been tendered a reasonable sum, refuses to come before the Court at the time appointed, or refuses to produce any such document, having no lawful impediment made know-n to the Court at the time of its sitting and allowed by it, the Court may, by warrant, cause him to be appre- Discovery] hended and brought up for examination. The Court may examine on oath, either by word of mouth or by written interrogatories, any person so brought before it concerning the debtor, his dealings or property. If any person on examination before the Court admits that he is indebted to the debtor, the Court may, on the application of the Official Receiver or trustee, order him to pay to the Official Receiver or trustee, at such time and in such manner as to the Court seems expedient, the amount admitted, or any part thereof, either in full discharge of the whole amount in question or not, as the Court thinks fit with or without the costs of the examination. If any person on examination before the Court admits that he has in his possession any property belonging to the debtor the Court may, on the application of the Official Receiver or trustee, I order him to deliver to the Official Receiver or I trustee such property or any part thereof, at such time and in such manner and on such terms as I to the Court may seem just. The Court may, if it thinks fit, order that any I person who, if in England, would be liable to be brought before it under this section, shall be examined in Scotland or Ireland, or in any other place out of England. (Bankruptcy Act 1883, I section 27.) The provisions of this section have been held I not to apply to orders for the administration of thi- estates of deceased insolvents. (Re Hewitt, 1885.) Every application to the Court 'under section 27 shall be in writing, and shall state shortly the grounds upon which the application is made. Where the application is made on behalf of the trustee, Official Receiver, or Board of Trade, it need not be verified by affidavit. (Rule 78.) The Court has (mutatis mutandis) similar powers in connection with the winding-up of companies. (Companies (Consolidation) Act 1908, section 174.) {See Public Examination.) Dishonour (Notice of).— When a bill has been dis- honoured by non-acceptance or by non-payment, notice of dishonour must be given to the drawer J 8i [Dishonour and each indorser, and any drawer or indorser, to whom such notice is not given is discharged, provided that — (1) Failure to give notice of dishonour by non- acceptance does not prejudice the rights of a subsequent holder in due course without notice of the omission, and (2) Where notice of dishonour by non-accept- ance has been given it is unnecessary to give a subsequent notice of dishonour by non-payment unless the bill has been accepted in the meantime. (Bills of Exchange Act 1882, section 48.) The rules as to notice of dishonour requisite for a valid and effectual notice may be sum- marised thus : — By whom given. — The holder or any indorser liable on the bill at the time of giving notice, or any person acting on their behalf. Notice to a party enures for the benefit of all parties having a right of recourse against that party. How given. — In writing, or verbally, or both. It may be informal so long as it is unmistakable as to effect. A misdescription of the bill is not material unless the party is really misled thereby. To return the bill itself is sufficient notice of dis- honour as regards form. Due notice is deemed to have been given if properly addressed and put into the post office, notwithstanding its mis- carriage. To whom given. — To a party liable or his agent. Where there are two or more drawers or indorsers who are not partners, notice must be given to each of them unless one has authority to receive notice for the others. The notice may be given when a party (a) is bankrupt, to him or the trustee ; (b) is dead, to his personal represen- tative ; (c) is a company in liquidation, to the liquidator. When given. — Notice may be given at once, but must be given within a reasonable time. In the absence of special circumstances notice is not deemed to have been given within a reasonable time unless : — (1) Where the party giving and the party receiving notice reside in the same place the notice is sent off so as to be received the dav after the dishonour of the bill. Dishonour] 182 [Dishonoured (2) Where they reside in different places the notice is sent off the day after the dis- honour of the bill, or if no post at a con- venient hour on that day, by the first post thereafter. An agent of a party, which includes a branch bank as regards the head office, or another branch, is treated as an independent party for the purpose of giving notice of dishonour, and may give notice to his principal or to any parties liable. Where a party to a bill receives notice he has the same period of time for giving notice to antecedent parties as the holder has after dishonour. (Section 49.) Excuses for delay. — Delay in giving notice is excused where the delay is caused by circum- stances beyond the control of the party giving notice, and not imputable to his default, mis- Notice dispensed with. — Notice is dispensed with — (a) When, after reasonable diligence, notice cannot be given to, or does not reach, the party sought to be charged. (6) By waiver, express or implied, before or after the time for giving notice has arrived.' (c) As regards the drawer : — (1) Where the drawer and drawee are the same person. (2) Where the drawee is a fictitious person or one incapable of con- tracting. (3) Where the drawer is the person to whom the bill has been presented for payment. (4) Where the drawee or acceptor is as between himself and the drawer under no obligation to accept or pay the bill. (5) Where the drawer has counter- manded payment. (d) As regards an indorser : — (1) Where the drawee is a fictitious person or one incapable of contract- ing, and the indorser was aware of the fact at the time of indorsing the bill. (2) Where the indorser is the person to whom the bill has been presented for payment. (3) Where the bill was made or accepted for the accommodation of the indorser. (Section 50.) It is not necessary to give notice of dishonour to the acceptor of a bill in order to render him liable thereon. (Section 52 (3).) Dishonoured Bill (of Exchange). — A bill which onl due presentment has been refused acceptance or payment, or of which acceptance or payment has been neglected, as the case may be. When a bill is duly presented for acceptance, and is not accepted within the customary time, the person presenting it must treat it as dis- 1 honoured by non-acceptance. If he does not, the holder loses his right of recourse against the I drawer and indorsers. (1882 Act, section 42.) When a bill is dishonoured by non-acceptance, an immediate right of recourse against the drawer and indorsers accrues to the holder and no pre-I sentment for payment is necessary (section 43), but such right of recourse will be suspended 1 where the holder resorts to a " case of need "] and obtains an acceptance for honour (q.r.).J (Section 65.) When a bill is duly presented for payment and 1 payment is refused or cannot be obtained, or I when presentment for payment is excused and the bill is overdue and unpaid, the bill is dis- honoured by' non-payment, and an immediate right of recourse against the drawer and indorsers accrues to the holder (section 47) unless payment | for honour (q.v.) has been obtained. (Section I 68.) Where a bill is dishonoured the measure • f damages, which are deemed to be liquidated I damages, is as follows : — Dishonoured] (1) The holder may recover from any party liable on the bill, and the drawer who has been compelled to pay the bill may recover from the acceptor, and an indorser who has been compelled to pay the bill may recover from the acceptor or from the drawer, or from a prior indorser : — (a) The amount of the bill. (b) Interest thereon from the time of pre- sentment for payment, if the bill is payable on demand, and from the maturity of the bill in any other case. (c) The expenses of noting, or when pro- test is necessary, and the protest has been extended, the expenses of protest. <2) In the case of a bill which has been dis- honoured abroad, in lieu of the above damages the holder may recover from the drawer or an indorser, and the drawer or indorser who has been compelled to pay the bill may recover from any party liable to him, the amount of the re-exchange (q.v.), with interest thereon until the time of payment. (3) Where interest is recoverable as damages, such interest may, if justice require it, be withheld wholly or in part ; and where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as interest proper. (Section 57.) dissolution. — See titles Limited Partnership, P.uiin . rship, Winding-up. Distinguishing (or Distinctive) Numbers. — The consecutive numbers given to each of a succes- sion of things whereby they may be distinguished from each other; or numbers given to a series of things in order to identify them. The sections of an Act of Parliament, the clauses of articles of association, articles of partnership, and memo- randa of association are instances in one direction, whilst the shares in a public company, and deben- ture bonds, admission tickets to public gather- ing, invoices for goods purchased, vouchers for money paid, are also given distinguishing num- for identification and reference. 183 [Distress Distress. — The seizure of goods and chattels as a pledge for the satisfaction of a demand. All chattels and personal effects found upon the premises may be distrained upon by a landlord for rent due to him, whether they belong to the tenant, an under-tenant, or a stranger, with the exception of : — (1) Fixtures which, having once been removed, cannot be restored to their original condition. (2) Goods delivered to a person in the way of his trade, e.g., a chattel for the purpose of repair. (3) Wearing apparel and bedding of the tenant or his family, and the tools and imple- ments of his trade, to the value of ^5, unless the tenant's interest has expired, and distress has not been made until seven days after a demand has been made for possession. (4) Loose money. (5) Goods in the custody of the law, e.g., the sheriff, under a writ of execution. (6) Goods belonging to any lodger, under- tenant, or stranger, provided such lodger, under-tenant, or stranger serves the superior landlord or agent with the notice prescribed by the Law of Distress Amend- ment Act 1908, and gives such undertaking as to payment of any rent due or to become due by him to his immediate land- lord as is required by the Act. (7) Goods belonging to the Crown. There are other exceptions in addition to the above, subject to special conditions, but the fore- going are the most important. A distress must be made between sunrise and sunset. A purchase by a landlord of the goods dis- trained on by him is invalid. (Moore, Nettlefold v. Singer, 1903.) A landlord as such is neither a secured nor a preferential creditor in respect of rent due to him from a bankrupt (or a company being wound up). He is an unsecured creditor, but possesses Distress] 184 Distress a right of distress subject to certain limitations and conditions. Where a lease or tenancy provides that the rent shall be payable in advance it may be distrained for in advance, and where the rent is payable in advance " if demanded " the demand need not be made at the commencement of each period to entitle the landlord to distrain ; he may make such demand at any time during the period. (London &* West Loan Co. v. London <5v North- Western Railway Co., 1893.) Bankruptcy. Rent due from a " bankrupt " may be dis- trained for either before or after bankruptcy, provided that, if the distress be levied after the commencement of the bankruptcy, it is available only for six months' rent accrued due prior to the date of the order of adjudication, but the landlord or other person to whom the rent may be due from the bankrupt may prove under the bankruptcy for any surplus due, for which the distress may not have been available. (1883 Act, section 42 ; 1890 Act, section 28.) Where in order to avoid distress a trustee undertakes to treat a landlord's claim for rent as a first charge upon the proceeds of the goods which were so liable to distress, he must satisfy the landlord's claim out of such proceeds before deducting the cost of administration. (Re Chapman ; ex parte Goodyear, 10 T.L.R. 449.) If a trustee does not disclaim a lease he becomes personally liable for the rent as from the date of his appointment — that is, from the date the lease first vests in him. And it is not necessary to show, in order to make the trustee liable, that he has had beneficial or actual occupation of the property. (Titterton v. Cooper, 18S2.) But the trustee is entitled to indemnity from the estate. A landlord may distrain for rent accruing due if the trustee remains in possession without dis- claiming, even though it be rent which under the terms of the lease is payable in advance. (Ex parte Hale; re Binns, 1 Ch.D. 285.) Company Liquidation. • Section 211 of the Companies (Consolidation) Act 190S provides that a distress against the estate or effects of a company (being wound up by or under the supervision of the Court) , after the commencement of the winding-up, is void to all intents. This section, however (when forming section 163 of the 1S62 Act), was held to be subject to, and to be controlled by, sections $5 and 87 of the same Act (now also incorporated in the 190S sections 140 and 142), so that the right of a land- lord to distrain after the commencement of the winding-up is in the discretion of the Court : but ordinarily such distress is not allowed in ri of rent accrued due prior to the commencement of the winding-up. As regards rent accrued after the commence ment of the winding-up, the Court may, upon the application of the landlord or other person, give liberty to distrain, or direct payment of such rent, for, under ordinary circumstances, tin panv or the liquidator will be responsible for the rent of premises demised to the company during the period of the company's or the liquidator's beneficial occupation, if possession has beefl retained by the liquidator. These restrictions do not apply to a landlord who is a "stranger" to the company, e.g., where the company is in possession under an assign- ment of a lease which has been made without the landlord's consent (Ex parte Ilcavan, 6 Ch. 462), for the landlord cannot prove as a creditor of the company, and, therefore, his only n is to distrain upon the goods on the land. In the event of a landlord or other person difl training or having distrained on any goods afl effects of a bankrupt, or a company bring wound up, within three months next before tin date of the receiving order or the winding-up ordfl respectively, the debts to which priority is givew by the Preferential Payments Act 18SS. or the Companies Act 1908, section 209 (i.e., wagessj rates, &o), are constituted a first charge upon the goods or effects so distrained on. or the pro- ceeds of the sale thereof, provided that, in respect Distress of any money paid under any such charge, the landlord or other person attains the same rights of priority as the person to whom such payment is made. Note. — The date referred to throughout sub- section (i) of section 209 of the Companies (Con- aion) Act of 1908 (being the date to which irious accruing preferential debts are to be computed) is defined by subsection 5 of the said section, according to the particular mode of winding up, whether compulsory, voluntary, or under supervision, whereas subsection 4, Which imposes conditions upon a landlord's right of distress (as set out above), refers to the date of a winding-up order only, and it is suggested lh.it such restrictions upon a landlord's right of distress might possibly be held not to apply to a voluntary liquidation, inasmuch as in such a case there is no winding-up order made. When any rent or other payment falls due at ■1 periods, and the receiving order (or order solution to wind up, as the case may be) is made at any time other than one of those periods, Hie persons entitled to the rent or payment may for a proportionate part thereof up to the of the receiving order (or winding-up order -•■lution) as if the rent or payment grew due from day to day. (Bankruptcy Act 1883, 2nd lule, Rule 19, and Winding-up Rule 95.) Rent.) Distribution, Statutes of. — Statutes of Car. II. ling for the distribution of the effects of a sed intestate, after payment of his debts and funeral and testamentary expenses. The estate is distributable amongst the next- of the deceased (if any) in certain 1 rtions, according to the nature of their relationship. In the event of a married woman dying I tate, her husband takes the whole of the per- sonal estate, and by the intestates Act 1890 an iant alteration was made in the law as ds tlic provision for the widow of a man dying intestate, this Act providing that, where an tate leaves a widow, but no issue, his real and personal estate passes absolutely to the 185 [Distringas widow to the value of ,£500. If the total estate is less than ^500, the widow takes the whole; if the estate exceeds ^500 in value, the widow- obtains a charge upon the estate rateably out of realty and personalty for ^500, with interest at 4 per cent, per annum from the date of the death until the date of payment ; in addition to which the widow will take out of the balance of the estate such proportion as she would have been entitled to under the law previously in force. If a person leaves a will, but only part of the estate is effectually disposed of, he is, for the purpose of the Statutes of Distribution, deemed to be intestate as to the balance and his next-of- kin become entitled thereto. But it has been held (In re Twigg's Estate, 1892, 1 Ch. 579) that such a person does not " die intestate " within the meaning of the Act of 1890, for at least part of his estate has been disposed of by will. In a later case (Re Citffe, 1908, 2 Ch. 500), although there was a will, the deceased was held to have died intestate because the executor and all the intended beneficiaries had pre-deceased the testator, so that the will had become w holly inoperative, and, having left no issue, the widow was granted the benefit of the Act of 1S90. (See Hotchpot.) Distringas (that you distrain). — Formerly a dis- tringas was issued to restrain the transfer of stock or the payment of dividends by the Bank of England, but the Rules of the Supreme Court provide that no such distringas shall in future be issued, and substitute therefor a " notice in lieu of distringas,'" which has the same effect upon anv company served therewith, as a writ of distringas would have had against the Bank of England. Where any person claims to be beneficially interested in any stock, shares, or securities or dividends thereon of a company, whether incor- porated or not, such person may make and file at the Central Office of the High Court of Justice an affidavit in the prescribed form setting forth his title to the stock, shares, or securities, and annexing thereto a notice in the prescribed form. Distringas 186 Docket An office copy of the affidavit, and a staled duplicate of the notice, may then be served upon the company sought to be affected. On receipt of notice, the company will not transfer the stock, shares, &c, or pay dividends thereon (if dividends are included) without giving eight days' notice to the persons so claiming to be beneficially interested. The notice may be withdrawn by the person by whom, or on whose behalf, it was given, on a written request signed by him, or its operations may be made to cease by an order of the Court obtained by any other person claiming to be interested in the stock, shares, &c. The object of serving a " notice in lieu of dis- tringas " is to prevent improper dealings with securities registered in the names of trustees, for the person who serves the notice, or someone on his behalf, upon being informed by the com- pany that application has been made to transfer the securities, may take steps to obtain a restrain- ing order. This must be done within the eight days allowed, otherwise the effect of the distringas ceases. Having regard to the fact that no notice of any trust, express, implied, or constructive, shall be entered on the Register of Members of any com- pany registered under the Companies (Consolida- tion) Act 1908, section 27, the power to issue a " notice in lieu of distringas " is important. Dividend. — Something to be divided ; commercially, the sum distributed periodically amongst the shareholders and stockholders of a railway, banking, or other company. Dividends become due from the time they are declared, and then become debts due to the respective shareholders. (Re Severn Railway Co., 1896, 1 Ch. 559.) But the articles of association generally provide that dividends shall not bear interest against the company. Table A (190S Act) so provides. (See title Unclaimed Dividends.) The dividend is apportioned among the various holders of stock or shares, usually in proportion to the paid-up amounts of stock, shares, &c, they respectively hold, in accordance with the par- ticular rights attached thereto, as prescribi the company's regulations. The term is also applied to the sum or sums distributed among the creditors and/or contribu- tories of a bankrupt or of a company in liquida- tion, as the case may be. Although, strictly, the term " dividend applicable to the total sum distributable, it is usually adopted when referring to the portion ni . ived by any one holder of stock, Sec. (See) Apportionment, Profits available for Dividend.) (For dividends in winding-up and bankruptcy pro- cedure see Liquidator and Trustee respectively.) Dividend Warrant. — An order or authority, (generally issued upon a banker) by means of which shareholders, stockholders, and other! obtain payment of their dividends. The docuJ ment must be stamped as a bill of excham that if payable upon demand a penny stamd (either adhesive or impressed) is necessary. The following, inter alia, are exempt from - duty :— (1) Coupons or warrants for interest. &c.,l whether attached to and issued with any security or issued subsequently in a sh (2) Warrants for the payment of interest oil dividend out of the Government Funds. Section 95 of the Bills of Exchange Act 188S enacts that: " The provisions of this Act as to " crossed cheques shall apply to a warrai " the payment of dividend." Section 97, subsection 3, clause d, of the samel Act recognises as valid " any usage relating to dividend warrants or the indorsement thereof. '1 The practice of paying dividend warrants pay-J able to the order of two or more persons upon the indorsement of any one of such persons has thus received the sanction of the Legislature, although the regulations of the company issuing a wa may affect this. Docket. — A slip or ticket. Petty cash dockets are memoranda (as distinct from formal receipts) given by employees and ethers, stating the particulars of petty expenditure. (See also title Slip Bookkeeping.) Dock Dock Warrant. — A receipt given by the owner of a dock for goods deposited with him. The receipt Tim-it bear a 3d. stamp, and will pass the property in the goods by indorsement. Dock warrants are often deposited with bankers as security for advances. )ocument of Title. — The expression " document of title " (within the meaning of the Factors Act 1889) includes any bill of lading, dock warrant. warehousekeeper's certificate and warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by indorsement or delivery, the possessor of the document to transfer or receive goods thereby represented. The Act (supra) further provides that a pledge of the documents of title to goods is deemed to be a pledge of the goods. (See Factor.) domicile. — The place where a person has his home ; legally, his principal place of abode, to which whenever absent he intends to return. There are three kinds of domicile— origin, . and operation of law. I he domicile of a limited companv is its Bgistered office for the time being. A rreditor is not entitled to present a bank- ruptcy petition against a debtor unless (inter pa) such debtor is domiciled in England, or within the preceding year has ordinarily resided or had a dwelling-house or place of business in tul. This requirement, however, is only (applicable to petitions, for it has been held that a Ireceiving order can be made against a foreigner in lieu of a committal order (under section 103, ttct of 1S83). (oratio mortis causa. — A gift of personal property by a person who anticipates death, the gift l» ing evidenced either by manual delivery by him (> r by another in his presence at his direction) to nee or someone for him, either of the pro- h» rty itself or of the means of obtaining same, land upon the condition that the gift is only to ■ike effect absolutely in the event of the death of 187 [Dormant the donor from the existing disorder and before revocation of the gift. It would appear that the subject of a valid donatio mortis causA must be property, the title, or tin- evidence of title, to which will pass by delivery. A donatio mortis causa differs from a legacy and resembles a gift inter vivos, thus : — (il It takes effect (sub modo) from the delivery in the donor's lifetime; and (j) H requires no assent upon the part of the executor. It differs from a gift inter vivos and resembles a legacy thus : — (1) It is revocable during donor's lifetime; (.?) It is liable to donor's debts on a deficiency of assets ; and (3) It is subject to estate and legacy duty. Sole. — A gift inter 'vivos is, however, also subject to estate duty, if made by the deceased within three years of his death, unless made or effected for public or charitable purposes. (See title Estate Duty.) Dormant Partner. — One whose name does not appear, and who is not known to be a partner, except perhaps to comparatively few. He is sometimes referred to as a sleeping or silent partner. He has all the rights of a partner as regards profits, and has all the liabilities of a partner, but he remains passive, taking no part in the conduct of the business. On retirement, however, he ceases to be liable for debts con- tracted subsequently, and does not need to notify the world at large of his retirement, but merely those (if any) who wire aware of his position. {See title Holding Out.) On and after 1st January 1908 all partners are deemed to be either " general " partners or " limited " partners, but a dormant partner will ordinarily be a general partner. It may, how- ever, be found convenient to register a partner- ship which includes a dormant partner amongst the members of the firm under the Limited Partnerships Act 1907. (Sec title Limited Partner.) Double] Double Account System. — A system of accounting adopted where the capital of a company is con- tributed by the shareholders for a specific purpose, such as the construction of a railway or the acquisition of a gas undertaking, &c, the amount actually paid for or in respect of same being shown against the total capital raised in the form of receipts and payments, the balance only being brought into the General Balance Sheet; in other words, the Balance Sheet is divided into two parts. The Double Account system is compulsory in the case of certain rail- way and tramway companies, and all gas companies incorporated by special Act of Parlia- ment. The system is applicable, however, to many classes of companies which sink their capital in what are called " permanent assets," and it is frequently adopted by such companies. The difference between computing profits by Double Account and Single Account respectively is one of principle, and invariably affects the financial result. The system of Single Account recognises the principle that wastages of capital should be made good out of revenue in ascertain- ing the profits. Double Account regards capital and revenue as distinct accounts, so that an excess of receipts on Revenue Account over revenue expenditure is regarded as profit, irre- spective of capital losses. Single Account endeavours to ascertain the true profit by pro- viding for wastage of capital out of revenue; Double Account only recognises the necessity for repairs, renewals, and maintenance, disregard- ing depreciation and all fluctuations in the value of the capital assets other than the sale of exist- ing assets and the purchase of additional property. The following example will show the difference of treatment and the effect thereof of the same transaction under the two systems : — A station built for ,£21,000 is at the end of 20 years pulled down, £1,000 being received for old materials. No depreciation has been pro- vided. Owing to the advance in the cost of building materials and labour, the station, if rebuilt on original lines, would now cost [Double £30,000. It is eventually decided to build a largi station costing £75,000. 1. — Single Account. Old Asset Account. Dr. .; Cr. By Cash for Old Materials 1 .000 1 New Asset Account. Dr. Revenue Account. To Cost of Old Asset less residual value of old materials . . 2. — Double Account. Capital Expenditure Account. Dr. To Original Cost of Asset IM „ Cost of New Station £75,000 I. rss proportion chargeable to revenue .. 30,000 Revenue Account. Dr. To proportion of Cost of New Station representing replacement of previously existing asset . . £30,000 Less received for Old Materials 1,000 Thus in this instance, if the " Single Account ' system be adopted, the charge to Revenue £20,000 only and £75,000 is treated as Capit Expenditure, but if the " Double Account ' system be adopted, the charges are £29,000 £66,000 respectively. Depreciation has been ignored in the illustra- tion, but had periodical provision been made therefor, the result would not be affected, the charge to Revenue in both systems being merelje apportioned over the whole period. Double] The terms " double account " and " single account " must be carefully distinguished from the terms " double entry " and " single entry." Profits may be ascertained by double account or bv single account, and the particular system adopted will generally affect the amount shown as profit. Books may be kept by double entry or bv single entry, but the particular system adopted should not affect the amount shown as profit, although the procedure is different and the result under single entry is not confirmed. (See titles Bookkeeping, Profit, and Single Account m.) )ouble Entry. — See Bookkeeping. )ouble Insurance. — The effecting of an insurance with two different insurers for the same loss in respect of the same subject-matter. As insurance (save in certain cases of life assurance) is a con- tract of indemnity only, the assured can only recover the amount of his loss, but he may recover against either insurer, the one paying being entitled to recover contribution from the other. Sometimes it is provided in policies that if there are other insurances on the same subject- matter, the insurer's liability shall only be in proportion to his ultimate liability, to obviate the necessity of recovering contribution from other insurers who may also be liable. Under certain circumstances where the insurer has really fever been under risk for the whole amount of the policy, a proportion of the premium may be recovered. Double Proof. — If a debtor, at the date of the receiving order, be liable in respect of distinct contracts as a member of two or more distinct firms, or as a sole contractor and also as a member of a firm, the circumstance that the Arms are in whole or in part composed of the same individuals, or that the sole contractor is ;»Iso one of the joint contractors, shall not pre- vent proof in respect of the contracts against the properties respectively liable thereon. (Bank- ruptcy Act 1883, 2nd Schedule, Rule 18.) That is, if there are distinct contracts, and dis- tinct estates being wound up, a creditor may prove against the respective estates, but double proof is not allowed in respect of the same debt 189 [Draft on any one estate, although there may be two distinct contracts. (Re Oriental Commercial Bank, 1871.) Thus a surety cannot prove for a debt in respect of which the creditor has already proved. In the case of Re Pyke; Davis v. Jeffreys (1910) the debtor executed a deed of assignment in the usual form upon trusts for realisation and distribution according to the law of bankruptcy. The plaintiffs had guaranteed the bank overdraft, and the bank proved under the deed for the amount of the principal and interest due at the date of the deed and received a dividend. It was held that the plaintiffs were not entitled to prove for the deficiency of prin- cipal made good by them to the bank, but that under their covenant to pay interest so long as the debt should be subsisting, the guarantors were entitled to claim that the interest from the date of the deed until payment, should be ascertained, and that such claim should be admitted for dividend. (See Joint and Separate Estates, Proof in respect of Bills of Exchange.) Doubtful Debts Ledger. — A Ledger to which all debts are transferred from the Debtors' Ledger so soon as they are considered doubtful, in order that they may not be overlooked (as they might be amongst so many other accounts), but rather receive special attention. Such a Ledger is usually specially ruled to allow of extra informa- tion being recorded, both as to the circumstances connected with the debt, and as to the progress made in respect of same since its transfer to the Doubtful Debts Ledger. It is also found useful to arrange the book alphabetically, similarly to a Sundries Ledger (q.v.) This class of Ledger, if properly attended to, affords considerable assistance to an auditor when engaged upon the question of the debts out- standing. (See Bad and Doubtful Debts.) Draft. — A written order for the payment of a sum of money addressed to some person who holds money in trust, or who acts in the capacity of agent or servant of the drawer. A draft must be distinguished from a bill, in so far as the former is not drawn upon a debtor. The terms " bill " and " draft " appear, however, to be used indiscriminately in business circles. Draft 190 DrawinjfS Draft against Cargo. — Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading together to the buyer to secure the acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honour the bill of exchange, and if he wrongfully retains the bill of lading the property in the goods does not pass to him. Drawback. — A term applied to those duties of Customs or Excise which are repaid bv the Government after a certain period, when the goods, upon which the duties have been pre- viously levied, are exported. Thus the exporter can sell his goods in a foreign market unbur- dened with duties. The certificate given to the exporter by the Custom House authorities, entitling him to receive payment of the duties, is called a " debenture." Drawback must be distinguished from a bounty. A bountv enables a commodity to be sold abroad for less than its natural cost, whereas a drawback enables it to be sold at its natural cost, so far as taxation is concerned. Drawee. — The person on whom a bill of exchange is drawn. He is not liable on the bill until he has signed it, when he becomes the acceptor. (Bills of Exchange Act 1882, section 23.) He must be named or otherwise indicated in the bill with reasonable certainty. Capacity to incur liabilitv on a bill is co-extensive with capacity to contract. There may be two or more drawees, whether partners or not, but alternative or successive drawees are not permissible. (Section 6.) Where in a bill the drawer and the drawee are the same person, or where the drawee is a fictitious person, or a person not having capacity to contract, the holder may, at his option, treat the instrument either as a bill of exchange or as a promissorv note. (Section 5.) {See Acceptance of a Bill. Acceptor.) Drawer. — The person who makes a bill of exchange and addresses it to the drawee. Capacity to incur liability on a bill is co-extensive with capacity to contract, provided that a corporation may incur no liability on a bill either as drawer, acceptor, or indorser, unless it is competent so to do under the law for the time being in force relating to corporations. Where a bill is drawn or indorsed by an infant or a corporation having no capacity or power to incur liability on a bill, a holder may nevertl enforce payment of the bill against any other party thereto. (Bills of Exchange Act 1882, section 22.) The drawer engages that on due presentment the bill shall be accepted and paid according to its tenor, and that if dishonoured he will com- pensate the holder or any indorser who is com- pelled to pay it, provided due notice of dishonour be given, and the drawer is precluded from deny- ing to a holder in due course the existence of the payee and his then capacit} to indorse. (Section 55.) The drawer is not liable on the bill until he has signed it as such (section 23) and delivered the bill (section 21), and then he becomes secondarily and conditionally liable thereon to the holder, the primary liability resting with the acceptor. Where a bill is payable to the order of the drawer and the drawer is a fictitious ; within the contemplation of the bill it may be treated as payable to bearer. (See Fictitious Person.) Drawings. — The term applied to the sundry sums withdrawn by a proprietor out of the bus funds on account of the accruing profits, or in reduction of his capital. In a partnership con- cern the drawings are sometimes regulated in proportion to profits, so that interest need not be computed thereon. In other instances, an amount is allotted to each partner, free of interest, irrespective of his proportion, whilst another system is to treat with interest in current account, and allow each partner to draw the amount or amounts he may think fit, provided such amounts are reasonable under the circum- j stances. There should be no " drawings " in the accounts of a joint-stock companv, the ' officers receiving fixed sums as prescribed. I Should (say) a director draw moneys of the com- pany on account of dividend on the ground that \ he holds a large proportion of the share capital, such moneys are really loans from the company, ! )rawings] Ind apart from the impropriety of the proceed- such sums should bear interest, because nds, however certain, do not belong to the I shareholders until actually declared. Such drawings should be stated separately in Balance Sheet of the company and not nled amongst " sundry debtors." luces tecum subpoena. — A summons to appear at 1 1 a trial in Court or before an arbitrator (Arbitra- \ct 1889), requiring the person upon whom summons is served to bring with him and ice at the trial certain written documents I which it is desired shall be put in evidence thereat. tue. — A debt is due immediately it comes into [(existence as a debt, although it may be payable at la future time. For instance, the liability of a I member of a company registered under the Com- s Acts creates a debt in respect of the money I payable on his shares at the time he becomes a I member, but such debt is payable as and when \calls are formally made upon the members. The nvord line may, however, mean either " owing " Or " payable," according to the context in special leases. Rent and other periodical payments, although deemed to accrue from day to day, are Hnot due until the expiration of the particular Hfcriod in question, the Apportionment Act pro- Ividing that, on the apportionment of an accruing limount. the apportioned part is to be payable llwhen the next entire portion shall have become due. So, where a testator directed his executors * to forgive to any tenant all rent or arrears of f rent which may be due and owing from him at " the time of my decease," it was held that this ■ il\ applied to rent due at the quarter-day pre- Ciding the date of the death, and not to the lecniing rent apportioned to the date of the death, i)ut where rent is by agreement payable in chance it is not subject to apportionment, for Jnder Mich circumstances the whole of the rent for a period i> deemed to have already accrued ■hie on the first day of each period. (Ellis v. Wowboiham, App. Cas. 1900.) 191 [Duty A covenant in a mortgage deed for " punctual payment " has been held to mean " payment upon the day fixed for payment." (See also title Dividend.) Dues. — Charges for accommodation of various kinds afforded to ships, such as : — Dock Dues or Harbour Dues. — For use of a dock or harbour. Canal Dues. — For the right of passing through a canal. Light Dues. — A levy on vessels as a contribu- tion towards the expense of maintaining light- houses, lightships, &c. Dummy Men. — The term applied to fictitious names placed upon a wage sheet by a fraudulent clerk, or number of clerks acting together, whereby money is obtained for the (extra) wages alleged to be due, and fraudulently retained by the perpetrators. (See Wages.) Dunnage. — Pieces of wood, planks, mats, or other articles used for protection in stowing a vessel's- cargo. Duress. — Compulsion, cither by unlawful and' tortious imprisonment, or by threats, whereby the person subjected thereto is in fear of either him- self or his wife, parent or child, suffering bodily harm. A contract entered into by a person under duress is voidable at the option of the party so compelled, provided the duress was prac- tised by the other party to the contract, or some person acting with his knowledge and for his advantage. Dutch Auction. — Ordinarily, at a sale by auction, the highest bidder in an ascending scale of com- petition becomes the purchaser; but in what is called Dutch auction the article is put up at a certain nominal price which is gradually lowered, and the first person who offers to pay the sum mentioned by the auctioneer becomes the pur- chaser. No licence is required by a person con- ducting a Dutch auction. Duty Paid Stock.— See Bonded Stock. Earned] 192 Empties Earned Income. — See Differentiation. Earnest. — A sum (generally nominal) given by a buyer of goods to the seller with the express intention of ratifying the contract of sale. An earnest is one of the alternative requirements of the Sale of Goods Act 1893, as evidence of a contract for the sale of goods of the value of £10 or upwards. Easement. — A privilege which the owner of one neighbouring tenement has of another, in respect of their several tenements, e.g., a right of way over another's land. Elective Auditors. — See Borough Auditors. Eleemosynary Corporations. — Corporate bodies con- stituted for the perpetual distribution of alms. Elegit. — (He has chosen.) A writ of execution, so called because a creditor " has chosen " this writ in preference to others. Prior to the Bank- ruptcy Act 1883, by means of this form of writ, a creditor could come upon the goods and chattels of his debtor and value them, instead of selling ; he would then take delivery of the goods and chattels to himself at such valuation, in satisfac- tion or part satisfaction of his judgment debt. If he had not fully satisfied his debt by this means, he could then take possession of the lands. As, in the above procedure, the goods were not sold, it did not amount to an act of bankruptcy to suffer execution of this writ, but now, as a result of section 146 of the Bankruptcy Act 1883, the sheriff is no longer allowed to deliver goods under a writ of elegit. Embargo. — A prohibition to pass; a detention of ships imposed by belligerent States in time of ' war. Embezzlement. — The taking of the moneys of an employer by his servant or clerk for his own use. Embezzlement is distinguished from larceny, as the subject-matter is not at the time of the embezzlement in the actual possession of the owner. Emblements. — Such vegetable products as yield an artificial annual profit as a result of labour bestowed upon land. They are personal pro| and are included in the term " goods " within the meaning of the Sale of Goods Act 1893. Employers' Liability. — See Workmen's pensation. Empties. — The treatment of " empties " importance in the accounts of many trading cerns where casks, cases, boxes, bottles, or sacks are used. In some concerns a Memorandum Ledger is kept, in which there is an account with each customer, recording in numbers the caskH cases, &c, supplied and returned. The balances of this Ledger are treated as " stock." Other concerns charge the packages, &c, sB given prices, and credit is given at the prices for all returns, so long as their condition is such as to permit of their further use. Another useful method is to divide the accounts in the Sales Ledgers into two columns, viz., PackagH and Goods. In stating the value of " book debts " in the Balance Sheet, the balances due on Packag Empties Account, whether the " count " money " system be adopted, must be sub- jected to some proper allowance (dependent upon circumstances) for loss likely to arise from non- return or non-payment, as the case may be. With regard to proof of debt against aH insolvent estate where an amount for " empties'* forms part of the claim, the trustee of the insol- vent estate cannot call upon the creditor to raflfl for dividend upon the gross sum and subsfl quently demand credit for any empties he return at the same price at which they afl charged in the claim, but he is entitled to redn^B the claim at the same rates charged for anm empties he may return, and permit the creditor to rank for dividend on the balance. So if the trustee should dispose of the stock-in-trade, including any empties which he may not have returned, and the creditor shall have received a dividend on the whole claim, including an amount which has been charged for package* the person who has purchased from the trustee the packages or empties, as the case may be, mpties cannot claim to be allowed by the creditor the full sum originally charged to the insolvent for such packages. In such a case there has been no contract between the creditor and the sub- purchaser, and irrespective of the amount the sub-purchaser may have paid to the trustee of the insolvent estate for the packages the creditor can only be called upon to allow on their return such a sum as would be equivalent to the divi- dend he received upon that portion of his claim represented by the packages ultimately returned. In other words, the creditor must not be placed in a worse position than he would have been had the empties been returned by the debtor or the trustee of the insolvent estate and the amount charged therefor deducted from the sum to be admitted for dividend. ndowment. — The application of moneys to some special purpose; the creation of a fund to provide for the maintenance of an institution. ndowment Policy. — One in respect of which the premium is payable only (i) for a stated number of years should the assured survive, or (2) until death should it occur before the maturity of the policy. The sum assured is payable at the end of a fixed period or at death, whichever event happens first. The premium payable upon an endowment policy is much heavier than that which would be required for a " whole life " policy for a similar amount. nfranchisement.— Making free. The conferring of a right of voting at a Parliamentary election. The conversion of a copyhold tenure into a freehold. ■tail.— An estate or fee settled with regard to the rule of its descent. In England an estate tail is an estate limited to a man and the heirs of his body (tail general), or to a man and the heirs male or female of his body (tail male or female I general), or to a man and the heirs of his body by a particular wife (special tail). |nteriiig a Vessel — The act of announcing its arrival to the Custom House authorities and lodging the necessary documents, such as the manifest. (See titles Bill of Entry, Post Entry.) Utering Short.— See Short Bills, Stated Short. 193 [Equation Entry — A record of a transaction in the appro- priate book. When a transaction is set down in writing for the first time in the books of account such entry is called the original entry, and the book containing same is termed a " book of original or first entry." All subsequent dealings with the original entry in the books of account are called " post entries," and the operations are termed " posting." Equation of Loan Periods. — Where a local authority obtains Government sanction to borrow money for a certain object the loan is ordered to be repaid within a given number of years. The period is fixed as nearly as can be gauged either to correspond with, or at least having regard to, the " life " of the object to be acquired. But where the length of life varies with the respective component parts of a scheme (e.g., the land, tramway track, and rolling stock of a tramways undertaking) the practice has grown up of grant- ing an equated period for the repayment of the loan instead of fixing separate periods according to the lives of those parts. Actuarially the equated period is equivalent to the various periods that might otherwise have been fixed, but obviously it allows of the debt in respect of " short lived " assets being extended many years after the assets will have been exhausted or abandoned. Where such assets require renewing, the Local Government Board will only sanction reborrowing for such renewal to the extent that the original debt in respect of such assets has been paid off or provided for. The following example will illustrate the method of ascertaining an equated period for the repayment of (say) three different sums, by the annuity method of redemption, taking interest in all cases at 3 per cent, per annum. O Equation] 194 [Equation Thus the present worth of the three different sinking fund instalments amounts to £34,069.06, and such sum would amount at 3 per cent, to £69,255.38 in 24 years, and to £70,000 in (approximately) 24 years and four months. Therefore the equated period would be fixed at 24 years, and the necessary annual instalment of principal and interest (combined) to redeem the £70,000 in 24 years would be £2,033.32. The effect of the equation of the periods upon the various years' contributions compared with those payable if the separate periods were adopted is shown as regards the foregoing example by the following table : — First 12 years Next 12 „ 24 . Next 2 „ Next 14 „ 40 » 60S" .£« I G C ? 379:66 2nd „ 384 -;20O 3291-66 3rd , 288 32O0 2625- 4th „ 152 ,200 625' 5th . 96 52 O 625- 6th , — 625- 7th „ — 625- 8th » — ^ £16000" £1440 £16000 The system of equating the periods for the redemption of various loans for diverse objecBI whether (a) when originally raised, or (b) under some scheme of consolidation, is not to be com- mended. However carefully the equated period may be computed, it works out unsatisfactorily in practice. If land and buildings, tram track, over- head equipment, and rolling stock be acquired and constructed for a given tramway undertaking, and (say) 30 years be granted for the whole of the cost, confusion arises when the tramcars have been scrapped, though only about one-half of the debt may have been redeemed. The fact is not generally appreciated that, as the direct effect of the equated period, so much of the detfl as is not redeemed in respect of short-lived and exhausted assets has been (theoretically at least) over-redeemed on the more lasting assets still remaining to the undertaking. And while the practice of the Local Govern- ment Board is to allow an authority to borrow for the purpose of the renewal of an exhausted asset before the expiration of the equated loan Equation] 195 Equation period, that permission is restricted to the amount which has up to the time of renewal been set aside towards repayment of the cost of the original asset. But as only one-half of the cost mav have been redeemed under an equated loan period, the balance of the cost of renewal must be provided out of revenue or accumulated revenue, to wit, the Renewals Reserve Fund. This means that during the earlier portion of the equated period the cost of the short-lived assets must be wholly provided for out of me by the time they will require to be renewed : — (1) By sinking fund contributions at the rate necessarv under the equated period, and (2) By voluntary contributions to a Reserve Fund to make up the shortage of Sinking Fund contributions by the time the renewal of the short-lived assets becomes necessary. The theory underlying an equated period for redemption is the extension of the period for the short-lived assets, and the shortening of the period for those of a more lasting character. But, as already indicated, the practical effect is to reduce the period for the redemption of the cost of the more abiding assets, and to confine the period for providing out of revenue (by the two methods just mentioned) the cost of the short- lived assets to the actual length of their life. In commercial accounting detailed classification of assets is attempted, so that the varying rates of depreciation can be more closely assessed ; so in the case of municipal accounting the outlay and corresponding loans cannot be too minutely classified if the periods for the redemption of the various loans are to be fixed satisfactorily, and closely in proportion to the respective lives of the assets. Of course, the classification and sub- classification could be carried out indefinitely, for even if tramcars (say) are treated separately from (say) overhead equipment the various parts of a tramcar would be capable of subdivision according to their respective lives. But this undoubted fact is no reason why classification of assets with appropriate loan periods should not be carried further than is the practice at present. The operation of equating the periods of loans is also resorted to in connection with the consoli- dation of existing loans, whereby under such a scheme loans may be grouped or consolidated and made subject to redemption within an equated period, with a single annual payment for the (joint) redemption, although the loans so con- solidated may originally have been granted subject to redemption within some other period which was itself an equated period. (See title Consolidation of Loans.) Equation of Payments. — An arithmetical operation whereby a date is determined upon which a single payment can be made in lieu of several payments upon various dates. Suppose it is necessary to find the average date (or equated date) of the following advances : — July 1 ... ... ... £465 Aug. 9 ... ... ... 29 Sept. 20 ... ... ... 350 Oct. 4 ... ... ... 216 The method of making these calculations may be stated in general terms as follows : — Take any date from one of the dates mentioned in the ques- tion, multiply each of the amounts mentioned in the question by the number of days' interval between that date and the date previously fixed, divide the sum of the products by the sum of the original amounts, and the quotient will be the number of days between the average due date and the date originally taken. Applying this rule, suppose we take as our arbitrary date July 1st, the first date mentioned in the question ; then the position appears as follows : — Amounts. Days. Products. £4 6 S X O = O 29 X 39 = 1,131 350 x 81 = 28,350 216 x 95 = 20,520 -f 1 ,060 50,001 Dividing ^50,001, the sum of the products, by 1,060, the sum of the original amounts, we find a quotient of, approximately, 47. The average due date is thus 47 days after July 1st — that is, the 17th August. O 2 liquation 196 Equitable Now, supposing, instead of taking July 1st, we had selected October 4th as our arbitrary date from which to base our calculations, then the position would be as follows :— £4°S * 95 = 44. '75 29 x 56 = 1,624 350 x 14 = 4,900 216 X o = o £1,060 50,699 Dividing the sum of the products by the sum of the amounts as before, the result is that the average due date is nearly 48 days previous to October 4th— that is, the 17th August, or the same result as that shown previously. It is not essential, however, that either of the outside dates should be selected as the basis of calculation, the only modification necessary being that, if one of the inside dates is employed, then the difference must be taken between the products previous to, and subsequent to, that date. Thus, supposing we select the 20th September as the basis of our calculation, the problem works out as follows : — £465 x 81 = 37,665 29 x 42 = 1,218 350 X o = o 216 x 14 = 3,024 The sum of the amount is, as before, 1,060; but in this case we have to deduct the last product from the two previous, giving a net sum of the products of 35,859. Dividing this by the 1,060 as before, we produce a quotient of 34 nearly; and as the products are the higher previous to the date selected, this means 34 days before the 20th September — that is, the 17th August as before. In practice, it is convenient to take one of the dates named in the problem, as there is then one less product to be calculated (any figure multi- plied by o producing o) ; but the same result would be produced whatever date be taken. On the score of convenience, also, it is preferable to select either the first or the last date, rather than an intermediate one. In order to average accounts — that is to say, ascertain an equated date whereon to pay the balance of debit and credit items of varying dates : (1) Treat each side independently (as shown in the above example) and ascertain the respective totals of the debit and credit " products." (2) Divide the difference between the debit and credit products by the actual balance of the account. (3) The quotient shows the number of days from the " base " date. This method is applicable to the equation of periods for the repayment of loans where the repayment is effected by equal instalments of principal, plus interest upon such balances of the loan as may from time to time be owing; but a different method is necessary where the annuity system (equal instalments of principal and interest combined) is employed and as a conse- quence compound interest is involved in the problem. (See title Equation of Loan Periods.) Equitable Assets. — See Legal Assets. Equitable Execution. — Where the only property of a judgment debtor is such that it cannot be taken in execution under the ordinary process of the Court, a receiver may be appointed by the Court by way of equitable execution. Instances of this are where the property consists of an equity of redemption or the reversionary interest under a will, or the share of a partner in the profits and assets of a partnership business. For the pur- poses of the Bankruptcy Acts an execution against an equitable interest is completed by the appointment of a receiver. (Bankruptcy Act 1883, section 45 (2).) " Equitable execution is not like legal execu- " tion ; it is the equitable relief which the Court " gives because execution at law cannot be had. "It is not execution, but a substitute for " execution." (Bowen, L.J.) Equitable Lien. — See Lien. Equitable Mortgage. — A contract for a mortgage; it may take the form of :— (1) A written agreement (only) to make a mortgage, or Equitable] (2) A deposit of title deeds of land with a creditor with or without a written memo- randum, or even without a verbal com- munication. This has been referred to as an apparent " judicial repeal " of the Statute of Frauds. (See Frauds, Statute of.) The memorandum of deposit (if any) must bear an ad valorem stamp duty of one shilling for every .£100 or fraction thereof of the charge thereby created upon the property. Charges of this kind, when made by a com- pany registered under the Companies (Consoli- dation) Act 1908, should be recorded in the Register of Mortgages. (See Legal Mortgage, Register and Registration of Mortgages.) Equity. — See Law. ■quity of Redemption. — The right of a mortgagor to compel the mortgagee to reconvey the legal estate of the mortgaged lands to him upon pay- ment of principal, interest, and costs. The right must be exercised before foreclosure, or within la years from the date the mortgagee took posses- sion, or from the date of the last written acknowledgment of the mortgagor's title. Although the conveyance to the mortgagee is absolute at law, in equity it is regarded as security only, and ordinarily no arrangement between the parties is allowed which will tend to clog the borrower's right to redeem; but where a mortgage deed provided for the continuance of the loan for five years, and the mortgagor covenanted that he would not take, during the continuance of the loan, any malt liquors except such as were purchased from the mortgagee (the latter covenanting to supply same at stated prices) it was held that as the covenant as to the malt liquors was not unconscionable or oppressive, and did not interfere with the right of redemption, the mortgagee was entitled to an injunction against its breach. On the other hand, in Rice v. Noakes (1900, 1 Ch. 213), where the mortgagor of the lease of a lici used house had covenanted in the mortgage ill id not to purchase during the lease any malt 197 [Error liquors except from the mortgagees, it was held that upon paying off all principal, interest, and costs, the mortgagor was entitled to a reconvey- ance of the leasehold, free from the " tie " as to liquors, although the lease did not expire for a further 20 years. "It is idle to say that the equity of redemp- " tion would not be clogged if a house which was " mortgaged as a ' free ' house was to be taken " back by the mortgagor as a ' tied ' house." (Rigby, L.J.) Again, in Morgan v. Jeffreys (26 T.L.R. p. 324) it was held that a clause precluding redemption of a mortgaged security (also clogged by a con- dition as to purchase of intoxicating liquors) for a term of 31 years could not be enforced, and that the mortgagor was entitled to redeem the security on tendering principal and interest with six months' interest in lieu of notice. Error. — Errors in accounts may be divided into three main classes — principle, commission, and omission. Examples of errors of principle may be given from the accounts of a joint-stock company, viz. : — (a) Capitalising revenue items, and vice versd. (b) Preparing the accounts in a form other than that prescribed in the company's regulations. (c) Issuing share capital or borrowing in excess of or outside the scope of the company's powers; and (d) Anticipating profits as a result of some improper method adopted in valuing the stock-in-trade or other assets. The computation of depreciation upon the " reducing balance " of an asset at the same rate per cent, as should be periodically deducted from the original cost is a specific instance of an error of principle. Errors of commission take the form of entering items in the books of account which ought not to be so treated, or of recording transactions (legitimate in themselves) incorrectly as regards (a) amount or (b) the particular Ledger Account. Error 198 Estate One type of error of commission is termed an error of " transposition." For instance, an entry of £y 4s. od. instead of 7s. qd. Errors of omission arise from the failure to enter in the books of account, transactions which are essential to a correct record. Errors of commission and omission may be either intentional or arise through inadvertence. Errors (whether of commission or omission) made with an intention to defraud are generally difficult to detect— certainly more so than a clerical error (i.e., a. mistake in entering or copy- ing made inadvertently) . It may also be said that errors of omission, whether accidental or intentional, are generally more difficult to trace than those of commission. There is another type of error (or rather errors) whereby the effect of one or more of them will obscure the effect of another or others. For instance, a " short-post " of £10 to the debit side of one Ledger Account would be neutralised by a " short-post " of £6 to the credit side of another Ledger Account, and (say) a " mis-post " of £4 in respect of the credit side of another Ledger Account. The arithmetical accuracy of the accounts may thus appear to have been tested by means of a Trial Balance, if constructed with Ledger balances or Ledger totals only, although these compensatory errors have not been discovered and corrected. An auditor may commit an error through- want of knowledge of the technical point involved, or he may commit an error of judgment by (say) relying upon some statement made to him which, upon personal examination, would have proved untrustworthy. Errors and Omissions Excepted. — (E. and O. E.) A note sometimes appended at the foot of an account sales, invoice, or other such document, reserving the right to amend the account in question should any errors be subsequently discovered. Escrow. — See Deed. Establishment Account — This is an account chiefly met with in the accounts of publishing concerns, »uch as music publishers, newspaper proprietors, &c. Taking a newspaper concern as an example, the earlier years of its existence usually result in an excess of expenditure over income, and in any case a considerable expenditure is necessarily entailed in " establishing " the paper, the full benefit of which will not accrue until a future period. It is, therefore, customary to capitalise some portion of this expenditure either tempo- rarily or permanently. In so far as the expendi- ture can be shown to be equivalent to the pur- chase of a goodwill the principle is sound, but a limit should be set to the number of years during which additions are allowed to be made to the account, and an auditor should see that the nature of the " asset " is clearly set out in the accounts which he signs. The considerations as to writing down an Establishment Account are the same as those which apply in connection with goodwill. (See that title.) Establishment Expenses. — The general expenses of: a manufacturing concern which cannot be directly charged against any particular process or.' commodity. (See titles Cost Accounts, Head- Office Charges, Manufacturers' Accounts.) the quantity of interest M in property ; as commonM Estate. — Technically person possesses applied, the property itself. An estate may be legal, customary, or equitable. The assets of a deceased person or of a bank- rupt, or the lands, houses, &c, of a landlord, arej colloquially referred to as " the estate." Estate Duty. — A duty created by the Finance Acti 1894, which, with the exceptions expressly pro-l vided by that Act, is payable upon the principal value of all property, real and personal, settled or^ not settled, which passes on the death of anyj person dying after 1st August 1894. Property' passing on the death is deemed to include* (inter alia) for the purposes of estate duty : — (1) Property of which the deceased was at thfl time of his death competent to dispose. (2) Property in which the deceased, or any other person, had an interest ceasing the death of the deceased, to the extent which a benefit accrues or arises bv the state 199 [Estate cesser of such interest, but exclusive of property the interest in which of the deceased or other person was only an interest as holder of an office or recipient of the benefits of a charity, or as a corporation sole. (3) Gifts of realty or personalty (e.g., donationes mortis causd) purporting to operate as immediate gifts inter vivos made within a year preceding the death. Note. — The provisions of the Finance Act 1894 were extended in respect of surrenders and dispositions of property prior to death by section 11 of the Finance Act 1900, and section 59 (1) of the Finance (1909-10) Act 1910 has extended the period from one year to three years in the case of a person dying on or after 30th April 1909 making gifts or dispositions other than for public or charitable purposes on or after 30th April 1908. The following are exempted : — (1) Gifts in consideration of marriage. (2) Gifts which, having regard to the circumstances, are normal and reasonable. (3) Gifts in the case of any donee which do not exceed £100 in the aggregate. (Finance (1909-10) Act 1910, section 59 (2)-) (4) Gifts, inter vivos, of realty or personalty, even when made over twelve months from the death, if there has been reserved, by contract or otherwise, some interest or benefit to the donor. But if by subsequent surrender or other- wise the property is enjoyed to the entire exclusion of the donor for a period of three years prior to the death, the property is not to be deemed to pass. (Finance (1909-10) Act 1910, section 59 (3).) (5) Any annuity or other interest purchased or provided by the deceased, either by him- self alone, or in concert or by arrangement with any other person, to the extent of the beneficial interest accruing or arising by survivorship or otherwise on the death of the deceased (subject to Exemption No. 2 below) . [Moneys payable under a policy of assurance on the life of the deceased taken out for his own benefit by another person having an insurable interest, all the premiums having been paid by that person, are not deemed to be property passing at the death.] Immovable property situate out of the United Kingdom is not chargeable with estate duty, but movable property so situate is chargeable where (1) the deceased was the owner and was domiciled in the United Kingdom at the time of his death, or (2) speaking generally, where the deceased was only interested for life, and at his death the property formed the subject of a British trust, or was vested in a British trustee. Exemptions (inter alia) : — (1) Estates under ^ioo gross value. (2) A single survivorship annuity not exceed- ing £25, or if more than one such annuity, the first only. (3) Property held by the deceased as trustee only. (4) Property passing only because of a bond fide purchase from the person under whose disposition it passes, for full valuable consideration paid to the vendor for his own benefit. (5) The property of common seamen, marines, or soldiers, who are slain or die in the service of the Crown. [Further remissions of duties in respect of the estates of officers and men may be made under certain circumstances (see section 14 of the Finance Act 1900).] (6) Works of art, &c, given for national pur- poses, if the Treasury remit the duty; and pictures, prints, books, manuscript, &c, and other things not yielding income which appear to the Treasury to be of national, scientific, or historic interest, and settled so as to be enjoyed in kind in succession by different pefsons; provided that the Estate] 200 Estate exemption will only continue until the pro- perty is sold or comes into the possession of a person competent to dispose of it. In the case of any person dying on or after 30th April 1909 the exemption applies, whether the property is settled or not; objects of artistic interest are also included and the duty is only to become chargeable when the property is sold, and then only in respect of the last death on which the property passed. Valuation: — The principal value of any property shall be estimated to be the price which, in the opinion of the Commissioners of Inland Revenue, such property would bring if sold in the open market at the time of the death of the deceased ; provided that in the case of agricultural property (when not affected by expectation of increased income therefrom) the principal value shall not exceed twenty-five times the annual value as assessed under Schedule A of the Income Tax Acts, after making such deductions as have not been allowed in that assessment, but are allowed under the Succession Duty Act (i.e., all necessary out- goings), and also a deduction for expenses of management not exceeding five per cent, of the annual value so assessed. Note. — In the case of any person dying on or after 30th April 1909 this proviso applies only (1) to property consisting of a tenancy from year to year, and (2) for the purpose of determining the total value of " small estates." (See infra.) The Commissioners may authorise any person to make a valuation of property for the purpose of estate duty, but the Commissioners must defray the expense of such valuation. In estimating the principal value of any pro- perty in the case of any person dying on or after the thirtieth day of April nineteen hundred and nine the Commissioners shall fix the price of the property according to the market price at the time of the death of the deceased, and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time : Provided that where it is proved to the Com- missioners that the value of the property has been depreciated by reason of the death of the deceased, the Commissioners in fixing the price shall take such depreciation into account. Every estate shall include all income accrued upon the property included therein down to, and outstanding at, the date of the death of the deceased. With regard to stocks and share*, published quotations, or broker's certificates or letters from the secretaries of the companies showing the market price at the date of death, should be sub- mitted. Where there is a published quotation, a price, one-quarter of the difference between the official closing prices added on to the lower, should be adopted as an estimated price. For example : — Where the closing prices are 9S-100, the market price is to be taken at ijSl. Where the death occurs on a Sunday or other day for which no prices are available, the price for the day before should be taken. Dividends and interest declared and accrued due to date of death must be included, but it should be noted that if the market price is " cum dividend," this price includes the accrued divi- dend or interest, and no further sum need be included in the Estate Duty Account in respect thereof. Deductions : — (1) Reasonable funeral expenses. Note. — The costs of mourning, tomb- stone, and/or transfer of the body of the deceased to any distant place of interment are not allowed to be deducted under this head. (2) Debts and incumbrances (including 'mort- gages) incurred or created by the deceased bond fide for full consideration in money, or money's worth, wholly for his own use or benefit, and taking effect out of his interest in the principal value of the estate. No deduction is allowed in respect of any debt whereof there is a right of reimburse- Estate] 201 Estate ment from any other estate or person, unless such reimbursement cannot be obtained. An allowance will not be made in the first instance for debts due from the deceased to persons resident out of the United Kingdom (unless contracted to be paid in the United Kingdom or charged on property situate within the United King- dom) except only from the value of any personal property of the deceased situate out of the United Kingdom in respect of which estate duty is paid; and there shall be no repayment of estate duty in respect of any such debts except to the extent to which it is shown that the personal pro- perty of the deceased, situate in the foreign country or British possession in which the person to whom such debts are due resides, is insufficient for their payment. (3) Where any property liable to duty is situate out of the United Kingdom, and its admin- istration or realisation will necessitate increased expense, an allowance not exceeding 5 per cent, of the value of the property may be made out of the principal value of such property. (4) Where any " death duty " is payable in a foreign country upon property situate therein, the amount of such duty may be deducted from the principal value of the property. (5) Where any " death duty " is payable in a British possession (to which the Finance Act has been applied by an order in Council) in respect of property situate therein, a sum equal to such duty may be deducted from the estate duty, which would otherwise be payable. This provision has been applied bv successive Orders in Council to practically the whole of the British possessions. (6) Where on the death of a person dying on or after 1st July 1896, estate duty becomes payable on property passing under a settle- ment which took effect before 2nd August 1894, and " death duties " have been paid thereon, there may be deducted from the estate duty which would otherwise be payable : — (a) A sum equal to the " death duty " paid; or at the option of the person by whom the duty is payable, (6) The amount which would have been payable if the duty were calculated on the value of the property on which estate duty is payable. (Finance Act 1896, section 21; Finance Act 1907, section 15.) (7) Any increment value duty payable on the death of any person in respect of the fee simple of any land or any interest in land comprised in the property passing on the death of that person. (Finance (1909-10) Act 1910, section 62.) A debt created in consideration for the acquisi- tion of any interest in expectancy will not usually be allowed as a deduction from the estate of a person dying after 29th April 1910 where the person originally entitled to the interest in expectancy becomes again entitled to it under the will or intestacy of the deceased. (Finance (1909-10) Act 1910, section 57.) Aggregation : — For determining the rate of estate duty pay- able on any property passing on the death of the deceased, all property so passing in respect of which estate duty is leviable must be aggregated so as to form one estate, and the duty shall be levied at the proper graduated rate on the principal value thereof with the following exceptions : — (1) Property in which the deceased never had an interest. (2) Where the net value of the property, real and personal, in respect of which estate duty is payable on the death of the deceased, exclusive of property settled otherwise than by the will of the deceased, does not exceed ^1,000. (3) Settled property passing on the death of a person dying after 9th April 1900, under a disposition made by a person dying before 2nd August 1894. Estate] [Estate Estates coming within the above exceptions are not to be aggregated with any other property, but are to be treated as separate taxable estates, and estate duty levied thereon at the proper graduated rate accordingly. There are special provisions in the Finance (1909-10) Act 1910 with reference to timber lands. Graduated Rates of Estate Duty Payable in accordance with the Finance Act 1894: — Rate Win re the , % principal } value ot ihe I does not exceed £100 .. nil aggregated ' I but does i Do. exceeds £100 J not £500 . . 1 I exceed ) Do- u 500 t> i.oco .. 2 Do. „ 1,000 „ 10,000 .. 3 I ' h 10,000 „ 25,000 . . 4 Do. * 25,000 „ 50,000 .. 4^ 1 } ' „ 50,000 „ 75,000 .. 5 « 75.000 „ 100,000 . . 54 h 100,000 „ 150,000 . . 6 150,000 „ 250,000 .. *6$ „ 250,000 „ 500,000 . . *7 500,000 „ 1,000,000 ..*7j Do, „ 1,000,000 *8 *Under the Finance Act 1907, section 12, the rates upon estates not exceeding ^150,000 are unaltered, but the following scale obtains in the Case of persons dying on or after the 19th day of April 1907: — Where tl)' principal value of the estate when aggregated exceeds:— I but does ) Rate % £150,000 - not .- £250,000 .. 7 I exceed ) 250,000 „ 500,000 . . 8 500,00c „ 750,000 . . 9 on 750,000 „ 1,000,000 .. 10 remainder 1,000,000 „ 1,500,000 .. 10 on £1 ,000,000 and 11% 1,500,000 „ 2,000,000 ..10 „ „ 12 2,000,000 „ 2,500,000 ..10 „ „ 13 2,500,000 „ 3. 000, coo . . 10 „ „ 14 3,000,000 10 „ „ 15 In tin: case of persons dying on or after 30th April 1009 the following is the estate duty payable : — \\ here the principal value of the estate when aggregated exceeds: — £100 hut does not exceed £500 1% 500 „ 1,000 2 1,000 „ 5,000 3 5,000 „ 10,000 4 10. 000 „ 20,000.. .. .. .. ..5 20,000 „ 40,000 6 40,000 „ 70,000 . . . . . . . . 7 70,000 „ 100,000 . . . . . . . . . . 8 100,000 „ 150,000 . . . . . . . . . . 9 150,000 „ 200,000 10 200, oco „ 400,000 11 400,000 „ 600,000 . . .. .. .. ..12 600,000 „ 800,000 . . . . . . . . . . 13 800,000 „ 1, coo, 000 ''14 1,000.000 rg (Finance (1909-10) Act, igio.) Provided that where an interest in expectancy (within the meaning of the Finance Act 1894) has before 19th April 1907, or 30th April 1909 (as the case may be) been bond fide sold or mortgaged for full consideration, then no higher duty is to be payable by the purchaser or mortgagee when the interest falls into possession than if section 12 of the 1907 Act, or Part III of the Finance (1909-10) Act 1910 (as the case may be), had not been passed, and any higher duty payable by the mortgagor shall rank as a charge subsequent to that of the mortgagee. By the Finance Act 1900 it is provided that estate duty is to be computed upon the exact net value of the estate. The executor or administrator of a dec person shall pay the estate duty in respect of all personal property, and may pay the estate duty upon any other property which is under his control, or where not under his control, if the persons accountable for the duty in respect thereof request him to make such payment. Estate duty is due upon the delivery of the Inland Revenue Account by the representatives or upon the expiration of six months from the death, whichever first happens, interest at 3 per cent.j per annum without deduction of income-tax being payable upon the duty from the date of the death until payment, or until the expiration of six months from the death, whichever first happens. Should payment of estate duty be in arrear the rate of interest is raised to 4 per cent, per annum. Provided : — (1) That the duty due upon an account of real property may, at the option of the persons delivering the account, be paid by eight equal yearly instalments, or 16 half-yearly instalments, with interest at the rate of J.* per cent, per annum, without deduction of income-tax, from the expiration of 12 months from the death, and the interest on the unpaid portion of the duty is to be added to each instalment and paid accord- ingly; but the duty for the time being unpaid with interest to date of payment may be paid at any time. Where such pro- perty is sold, the portion of duty unpaid, if any, must be paid upon completion of the sale, otherwise the unpaid duty will be state 2 °3 [Estate treated as duty in arrcar, and interest will be payable thereon at 4 per cent, per annum. That the duty due in respect of an annuity or other definite annual sum, whether terminable or perpetual, may, at the option of the person delivering the account, be paid by four equal yearly instalments, the first of which shall be due at the end of 12 mouths from the date of the death, and after the end of those 12 months interest at the rate of 3 per cent, per annum, without deduction of income-tax, upon the unpaid portion of the duty is to be added to each instalment, and paid accordingly,; but the duty for the time being unpaid with interest to date of payment may be paid at any time. That the Commissioners may if they think fit, on the application of any person liable to pay estate duty in respect of any real (including leasehold) property, accept in satisfaction of the duty, in whole or part, such part of the property as may be agreed upon between the Commissioners and that person. No stamp duty is payable on any conveyance or transfer of such property to the Crown. V Fish; Lea v. Fish (1897) it was held t the interest on estate duty from the date of death must be paid out of the capital of the iduary estate, presumably because section 6 of the Finance Act 1894 provides that such " shall form part of the estate duty." is decision, however, only applies to cases of thi occurring before the amending Act of 1896, repeals the words " and shall form part of j ate duty " in the enactment as to interest, institutes the words " shall be recoverable i if it were part of the dutv." Ii is provided that interest at the rate of 3 per >nt. per annum shall be payable on estate duty the date of the death, but that where the is payable by instalments it shall run from lie expiration of 12 months from the death (see . In any case it is to be recoverable in the arm manner as if it were part of the duty. In Re Earl Howe's Settled Estates; Earl Howe v. Kingscote (1903) Buckley, J., said that pritnd facie a tenant-for-life whose income was increased by the postponement of the payment of duty ought to bear the interest thereon as the price of the postponement. The duty in this case was, however, in respect of real estate, and was being paid in eight annual instalments. The point is not altogether clear, but it is submitted that interest on estate duty should, in the absence of special provision to the contrary, be treated as a charge against income. Small Estates : — Estates under .£100 gross value are not liable to estate duty, and where the gross value of an estate (less any charge created for the purpose of purchasing any property included in the estate) exceeds ,£100, but does not exceed £300, a fixed duty of thirty shillings is payable, and where the gross value of the estate (less any charge created for the purpose of purchasing any interest in the estate) exceeds ^300 but does not exceed ^500 a fixed duty of fifty shillings is payable. Where, however, the net value of the estate as compared with the gross value is such that it would be more advantageous to the estate to pay " by scale," the latter method may be resorted to. A further benefit is conferred upon small estates, for probate may be obtained by payment (in addition to the fixed duty of thirty shillings or fifty shillings) of fifteen shillings for Court fees and expenses, and two shillings and sixpence for sealing the probate. Where the fixed duties of thirty shillings or fifty shillings are paid within twelve months of the death, no interest is payable. Where the net value of the property, real and personal, in respect of which estate duty is pay- able on the death of the deceased, exclusive of property settled otherwise than by the will of the deceased, does not exceed ;£ 1,000, such property for the purpose of estate duty is not to be aggre- gated with any other property, but is to form an estate by itself (as already mentioned), and where estate duty has been paid upon the principal value Estate] 204 [Excise of such estate, settlement estate duty, legacy duty, or succession duty shall not be payable in respect thereof. Estate duty is payable out of the general residue of the estate of the deceased so far as such duty relates to property of which the deceased at his death was competent to dispose. (See titles Increment Value Duty, Legacy Duty, Settlement Estate Duty, Succession Duty.) Estoppel. — " Where one by his words or conduct " causes another to believe the existence of a " certain state of things, and induces him to act " on that belief so as to alter his own previous " position," the former is estopped from denying the existence of such state .of things. Estoppel is one of the characteristics of a deed, or contract under seal, for " where a man has " entered into a solemn engagement by and " under his hand and seal as to certain facts he " shall not be permitted to deny any matter he " has so asserted." (See Certificate, Holding Out.) Examination. — Sec Public Examination. Excepted Articles. — Bankruptcy. — In addition to " property held by the bankrupt on trust for any other person," the following articles are not divisible amongst his creditors : — " The tools (if any) of his trade and the neces- " sary wearing apparel and bedding of himself, " his wife and children, to a value, inclusive of " tools and apparel and bedding, not exceeding " twenty pounds in the whole." (1883 Act, section 44.) Administration Order. — Where an administra- tion order has been made against a debtor and it appears to the Registrar of the County Court that the property of the debtor exceeds in value ten pounds, he shall at the request of any creditor and without fee issue execution against the debtor's goods, but the household goods, wearing apparel, and bedding of the debtor and his family, and the tools and implements of his trade, to the value in the aggregate of twenty pounds, shall to that extent be protected from seizure. (1883 Act, section 122.) Xote. — The exception in section 44 extends only to necessary wearing apparel, bedding, and tools, but under section 122 household goods are protected from seizure. Distress for Rent. — The wearing apparel and bedding of a tenant and his family, and the tools and implements of his trade, to the value of five pounds, are protected from distress for rent, unless the tenant's interest has expired and dis- tress has not been made until seven days after a demand has been made for possession. Exchange. — See Exchange. Par of Exchange, Rati. of Exchequer Bills. — Bills issued by the Treasury fc raise money for the temporary purposes of the Exchequer. They are issued in multiples of ,{"100 with interest coupons for five years paya' bearer, and may be renewed after that time. The interest is only fixed for a year, therefore thf amount of interest is not stated on the coupons. The holder may, however, demand repayment of the principal at the end of any one year from the date of issue. (See Treasury Bills.) Exchequer Bonds. — Although issued by the same Commissioners and for the same purpc - Exchequer Bills, the bonds differ as follows : — (1) They are issued for a definite period not exceeding six years, interest ceasing upon maturity of the bond. (2) The rate of interest payable is fixed at the time of issue for the whole period, and the amount of interest is printed on ea<9 coupon. (3) The bonds may be inscribed in the booJB of the Bank of England and certificates 0$ registration given in lieu of bonds. In this event no coupons are issued, the intereH being paid as in the case of Consols. (See Treasury Bills.) Excise Duties. — Those laid on certain articles pro- duced and consumed at home. (.See Drawback.) !x dividend x dividend. — Sec Cum dividend. xecution Creditor. — A writ of fieri facias, or other writ of execution against goods, shall bind the property in the goods of the execution debtor, as from the time when the writ is delivered to the sheriff to.be executed; and for the better mani- festation of such time, it shall be the dutv of the sheriff, without fee, upon the receipt of any such writ, to indorse upon the back thereof the hour, day, month, and year when he received the same. Provided that no such writ shall prejudice the titli to such goods acquired by any person in good faith and for valuable consideration, unless such person had, at the time when he acquired his title, notice that such writ, or any other writ by virtue of which the goods of the execution debtor might be seized or attached, had been delivered to, and remained unexecuted in the hands of, the sheriff. (Sale of Goods Act 1893, section Note. — The term " sheriff " includes any officer charged with the enforcement of a writ of execution. The above section is a re-enactment of section 16 of the Statute of Frauds, and section 1 of the Mercantile Law Amendment Act 1856. A warrant issued in one County Court and forwarded to another County Court for execution lot bind the goods until it is delivered to the second Court. (Birstall Candle Co. v. Daniels (Saunders claimant), 24 T.L.R. 572.) With regard to notice of the writ, Bramwell, B., in Gladstone v. Padwick (1871), stated that notice of the probable delivery to the sheriff of a writ of fi. fa. did not amount to a notice sufficient to take the case out of the operation of the section. "A notice of something certain and " inevitable — as of the rising of the tide — though " given beforehand, might perhaps, after the " event, be treated as notice of the fact, but this " cannot be said with respect to what is merely " probable." Bankruptcy. Hi' rights of judgment creditors who have ■sued execution against the property of a bank- rupt debtor are restricted by the Bankruptcy Acts IS83 and 1890. 2 °5 [Execution Section 45 of the Act of 18S3 provides:— (1) Where a creditor has issued execution against the goods or lands of a debtor, or has attached any debt due to him, he shall not be entitled to retain the benefit of the execution or attachment against the trustee in bankruptcy of the debtor, unless he has completed the execution or attachment before the date of the receiving order, and before notice of the presentation of any bankruptcy petition by or against the debtor, or of the commission of any avail- able act of bankruptcy by the debtor. (2) For the purposes of this Act, an execution against goods is completed by seizure and sale; an attachment of a debt is completed by receipt of the debt; and an execution against land is completed by seizure, or, in the case of an equitable interest, by the appointment of a receiver. Section 11 of the Act of 1890 provides:— (1) Where any goods of a debtor are taken in execution, and before the sale thereof, or the completion of the execution by the receipt or recovery of the full amount of the levy, notice is served on the sheriff that a receiving order has been made against the debtor, the sheriff shall, on request, deliver the goods and any money seized or received in part satisfaction of the execu- tion to the Official Receiver, but the costs of the execution shall be a first charge on the goods or money so delivered, and the Official Receiver or trustee may sell the goods, or an adequate part thereof, for the purpose of satisfying the charge. (2) Where, under an execution in respect of a judgment for a sum exceeding twenty pounds, the goods of a debtor are sold or money is paid in order to avoid sale, the sheriff shall deduct his costs of the execu- tion from the proceeds of sale or the money paid, and retain the balance for 14 days, and if within that time notice is served on him of a bankruptcy petition having been presented against or by the debtor, and a receiving order is made against the debtor Execution] 206 [Execution thereon or on any other petition of which the sheriff has notice, the sheriff shall pay the balance to the Official Receiver or, as the case may be, to the trustee, who shall be entitled to retain the same as against the execution creditor. Note. — The 14 days run from the date of the completion of the sale, and not from the time the purchase money is paid. (Re Cripps c~ Co., 1888.) These sections (45 and 11) are not applicable to the administration of the estate of a deceased insolvent under section 125 of the Act of 1883. (Hasluck v. Clark, 1S99.) Section 46 of the 1883 Act provides that : — An execution levied by seizure and sale on the goods of a debtor is not invalid by reason of its being an act of bankruptcy, and a per- son who purchases the goods in good faith under a sale by the sheriff shall in all cases acquire a good title to them against the trustee in bankruptcy. In order that a landlord's right of distress may not be defeated by collusion between tenants and their respective judgment creditors, the statute 8 Anne, chap. 14, provides that no goods or chattels shall be liable to be taken by virtue of any execution, unless the judgment creditor shall, before the removal of the goods from the premises by virtue of such execution, pay to the landlord all sums due for rent not exceeding one year's rent, and the sheriff shall levy and pay the execu- tion creditor as well the money so paid for rent, as the execution money. In commenting upon the above attention was drawn to an interesting point in an article in the Law Times of 17th December 1898 as to the effect of section 11 of the 1890 Act upon an execution levied in disregard of the precise provisions of the statute of Anne : — " There is no doubt that it is almost the " universal practice of sheriffs by their officers to " disregard the plain provisions of the statute of " Anne, and notwithstanding notice of rent due to " the landlord, to sell, without requiring the " execution creditor to satisfy the landlord's claim " as a condition precedent to the sale. T^ " sheriff satisfies the claims of the landlord aoj| " of the execution creditor out of the proceed^H " the sale and no one complains ThflJ " if a sheriff follows the ordinary practice, aril " with notice of rent due proceeds to sell (with structing an executor's accounts "), the journal- ising of the Probate Account, but only as regards the items, " as their value in money would not vet be inserted." Executorship] 213 [Executorship " As an executor, in starting, deals only in " estimates, he need not insert the values of " the items; but as many of the real accounts " may not be disposed of when his time to " account comes, he should use a double- " columned Ledger, one column to contain the " sums actually received, and the other to con- " tain the (probate) value of the items still " outstanding." (Cory.) With regard to the system of adopting the probate values en bloc in the accounts, Mr. O. Holt Caldicott, F.C.A., has said :— " To my mind it has one great defect, in that "it is founded upon unreal figures, the result " of valuations, some of which are a mere " matter of opinion, and some of which are only " temporary in their relation to the property. I " consider that an account is a record of trans- " actions and not a schedule of valuations, and " my opinion is that the executor should refer " to the affidavit for probate for particulars of " the estate at the death, and that he should " produce his accounts to show how far he has " administered the estate, and what estate is " outstanding." The following reply to Mr. Caldicott appeared in The Accountant newspaper: — " We appreciate thoroughly the intention of " Mr. Caldicott's form of accounts, but we " suggest that a bare record of transactions " which have been made is not absolutely all " that an executor is required to keep, w-ith a view to giving an account of his stewardship. " It seems to us that he is required to keep " such accounts as will show not only what he " has done, but also what he ought to have, " and, perhaps, has not, done. Moreover, there " are circumstances which, perhaps, come " under neither category, but which have a " material bearing upon the position of the estate, and these also should be recorded in Executorship Accounts — unless, indeed, it is to " be conceded that Executorship Accounts need not be complete. The form of accounts which " we are advocating has, according to Mr. " Caldicott, the one great defect that it is " founded upon ' unreal figures,' the result of " valuations, some of which are a mere matter " of opinion, and some of which are only tem- " porary in their relation to property. This is " an objection which must, under all normal " circumstances, apply to every set of books " of account. We venture to think that no " Balance Sheet which can be said to be " entitled to the name at all has ever been pre- " pared, which was not — at all events, to a " certain extent — based upon figures which " would be the ' result of valuations,' which " valuations in all cases are naturally a ' mere " matter of opinion,' while in most cases they " have only a ' temporary relation ' to the pro- " perties to which they refer. If this be a " defect at all, it is an indictment against book- " keeping as a whole, and not against Executor- " ship Accounts in particular, unless any " special reason can be advanced in the case of " Executorship Accounts, which makes it more " desirable that such valuations should not be " introduced therein. . . Any account which " (whether annual or otherwise) is in the " nature of an intermediate account, showing " the progress of a venture, during a certain " period, and its position at a certain date, " must, in the nature of things, be of a ten- " tative type. This applies, like every other I' principle in bookkeeping, whether the person " whose property is being dealt with is alive or " dead at the time; and this circumstance, in " itself, so far as we can see, need have no " bearing whatever upon the fundamental prin- " ciples upon which the system of bookkeep- " ing is to be founded. If there is any funda- " mental distinction, as we have already stated, " we think it a pity that Mr. Caldicott does not " emphasise it. At the moment we are " unaware of any such, and, therefore, it seems " to us Executorship Accounts should be kept " on the same lines as any other accounts " dealing with transactions of a similar " description." Quoting again from The Accountant : — " The executors have to give an account of " the property which passes through their " hands, and this can be best shown if only the •' ascertained facts are recorded in the books. Executorship] [Executorship " Indeed, it is difficult to suggest any reason " for either failing to record the full details " which we have suggested ... or for " recording additional details which do not " directly bear upon the matter at issue; unless, " indeed, the idea be to so complicate the " accounts as to render any detection of devastavit upon the part of executors more " than usually difficult." Having stated the salient features of the two systems, the main points in connection with the preparation of Executors' Accounts may now be summarised thus : — ■ Books. — A Cash Book and Ledger must be kept, but it is optional whether a Journal be utilised, and where the " cash basis " is adopted, a Journal may readily be dispensed with. Cash Book. — The Cash Account will commence with the amount of " cash in the house " and the bank balance as at the death. As to whether the Cash Book will be columnar or not must depend upon circumstances. Some suggest that the bank items be separated from the cash, whilst others advocate separate columns for Capital and Revenue. The former is, however, inadvisable to the extent that no cash transactions should be encouraged. All receipts should be specifically lodged in the bank, and all payments made bv cheque. The receipts and payments should be entered in order of date, the letters accompanying the dividend warrants and the vouchers for payments being numbered consecutively in the order in which the entries appear in the Cash Book and filed on separate files. Moneys received or paid by the executors, in the " nature of income," but in respect of a period wholly prior to the date of the death of the tes- tator must be treated as on account of capital of the estate, but receipts and payments of such a character which are in respect of a period extend- ing over the date of the death must be carefully apportioned as between the capital and income of the estate. Rents, annuities, dividends, and other periodical payments in the nature of income are, in the absence of an express stipulation to the contrary, to be considered as accruing from day to day, and apportionable in respect of time accordingly, so that the portion of " income " accruing due to the date of the death must be treated as capital of the estate, and the portion accruing subsequently to the death as income thereof. The principles involved in the appor- tionment of capital and income are dealt with under the title " Apportionment." Should any difficulty arise in connection with the apportion- ment of an item as between capital and income, legal advice should be taken by the executors, but, failing their willingness to do this, the " golden rule " is to place the doubtful amount to capital, being obviously the less of two evils. Having the fund in hand, an executor can more readily satisfy a tenant-for-life, in the event of such fund being declared income, than he could recover the amount should it be declared capital, after it has been distributed as income. Subject to modification by the Court, in specia cases where the circumstances are peculiar, the rights of a life-tenant and remainderman respec- tively, and the consequent adjustments as between capital and income in the accounts of an executor or executor-trustee, are governed by the following rules : — A life-tenant of specific property under a will without any trust for conversion is entitled to the income actually produced during the life- tenancy, whether the property be permanent, such as real estate, or of a wasting character, such as a leasehold. But where the propertv is of a wasting nature and there is a trust for sale, without any express provision as to the income derived therefrom pending sale, the life-tenant is not entitled to the whole of the income actually produced, but only to so much of it as would equal the dividends from such an amount of Consols as might have been pur- chased with the proceeds of sale had the settled property been converted at the end of a year from the testator's death, the income actually received in excess of such computed amount of dividend being treated as capital. Generally, a devise of residuary real estate will carry with it the actual rents therefrom. On the other hand a life-tenant of residuarv , Executorship] personalty is not generally entitled to all the income produced by unauthorised investments, the rule (generally referred to as the rule in Howe v. Lord Dartmouth) being that such investments must be converted into Consols or other authorised securities of a permanent nature for the benefit of all parties interested. This rule is not based upon any presumed inten- tion of the testator that the property should be so converted, but rather upon the presumption that he intended the property to be enjoyed in succession, an intention which can only be carried out by conversion and investment in permanent securities. The rule obviously applies to property of a wasting or perishable nature, such as terminable annuities and lease- holds; and if property to which this rule applies be not converted, an apportionment as between capital and income will be necessary either on a 3 per cent, basis or upon the basis of what income would have been derived from a proper investment of the proceeds of conversion. The rule in Howe v. Lord Dartmouth may be excluded if it appears from the will, either by express declaration or by necessary implica- tion, that the testator intended that the property should be enjoyed in its existing state or the equivalent. With regard to (a) dividends and bonuses in respect of shares in companies; (b) profits of a firm ; (c) the apportionment of the proceeds of sale of non-income producing assets, where, for the benefit of the estate, such sale has been postponed; (d) the apportionment as between capital and income of the purchase money or proceeds of sale on a change of investment when the payment or receipt, as the case may be, includes accruing dividend; and (e) the apportionment of a loss of principal and interest on realisation of a mortgage security, see title Apportionment. Unless expressly forbidden by the will a trustee may insure against loss or damage by fire any building or other insurable property to any amount not exceeding three-fourths of the full value thereof, and pay the premiums out of the income of the property or out of the income of any other property subject to the same trusts 2I 5 [Executorship without obtaining the consent of any person who may be entitled to the income. (Trustee Act 1893, section 18.) A life-tenant is not liable to bear the cost of repairs unless made liable by some provision in the will or by statute in special cases; but, on the other hand, a life-tenant is not entitled to have repairs done out of capital. In certain special cases substantial repairs, which have been ordered to be done by the Court so that a property might be rendered tenantable, have, however, been allowed out of capital. As between the life-tenant and the remainder- man, the life-tenant is not liable to repair even in respect of leaseholds, although the lease may contain a covenant to keep in repair; but this also may be affected by the will, and in some cases is affected by statute. Each case must depend upon its own circumstances, but the general practice is to charge ordinary current repairs against current income and to capitalise expenditure of an exceptional nature, or spread same over a period of years. With regard to death duties, estate duty is payable out of capital, but if it is borrowed on the security of the capital the life-tenant must pay the interest on the loan. Legacy duty is payable out of capital when so directed by the will, but it is payable out of the respective legacies when not bequeathed free of duty. So, succession duty is a charge against the par- ticular interest liable therefor, but where legacy duty or succession duty payable on per- sonalty (e.g., leaseholds) is payable in respect of a life interest, the duty is payable out of capital only if the rate of duty payable by the life-tenant and remaindermen would be the same. If the rate of either legacy or succession duty chargeable on the life interest is different from that chargeable to the remaindermen, then the duty on the life interest is payable by the life-tenant and the duty on the remainder is payable by the remaindermen. Settlement estate duty payable in respect of a legacy or other personal property settled by Executorship] 21G Executorship will (unless the will contains an express pro- vision to the contrary) is payable out of such settled legacy or property in exoneration of the rest of the deceased person's estate. With regard to interest payable to the Revenue authorities upon estate duty, the matter is not free from doubt, but it is submitted that it is a charge upon income, for, in the words of Buckley, J., in the case of Earl Howe v. Kingscote (1903), a tenant-for- life whose income is, primd facie, increased by the postponement of the payment of duty, ought to bear the interest thereon as the price of the postponement. In this case, however, the duty was payable in respect of real estate, and was being paid in eight annual instalments. (See title Estate Duty.) Where the settled property is subject to incumbrance, the life-tenant is responsible only for the interest thereon out of the rents and profits of the estate, and is not, in the absence of a provision to the contrary in the settle- ment, liable to discharge any part of the prin- cipal sum owing. If the rents and profits are insufficient to pay such interest, the life-tenant is entitled to have part of the property sold to reduce the incumbrance, but where the income is only temporarily insufficient to pay the interest on the incumbrance, the arrears may be recouped out of subsequent income accruing during the same life-tenancy; but apparently any arrears of interest on the death of one life- tenant are not recoverable out of the income of the subsequent life-tenant. Losses properly incurred in carrying on a business as authorised by a settlement are as a rule liable to be made good out of subsequent profits and not out of capital, but losses incurred in carrying on a business under an order of the Court where postponement of sale has been authorised because the business could not previously be profitably sold, are apportion- able as between capital and income on the basis of such loss representing the accumulation of a sum at 4 per cent, compound interest (probably it would now be 3 per cent.) from the time when the business ought to have been sold, the amount representing such interest being charged against income, and the balance of the loss being charged against capital. (See the method of computation as applied to the apportionment of non-income producing pro- perty under title Apportionment.) Annuities bequeathed by a will are payable out of the income of the residue, and a life- tenant is not entitled to call upon the trustees to purchase an annuity out of the capital to satisfy the bequest, but is, per contra, entitled to the additional income which would be the result of the death of the annuitant. (See title Annuity.) With regard to costs and expenses, those incurred in the preparation of an account for the purposes of estate duty are considered pay- able out of capital, as is the estate duty itself. Accountancy charges for an annual audit of the books of a business carried on by the executors (such audit having been expressly .stipulated for by the testator) have been held to be payable out of capital. The costs of preparing accounts in respect of the life-tenant's interest are pay- able out of income, and so the costs of proceefl ings taken by a life-tenant in respect of his life interest under a settlement are not chargeable against capital as a rule, particularly if the pro- ceedings have been taken for his sole benefit. But where a life-tenant's proceedings are the means of determining the rights of the remainderman also, the costs and expenses are generally a capital charge. The costs of appointing a new trustee and (generally) the costs of appointing an additional trustee are payable out of capital. The costs of changing investments in accorfl ance with directions in the settlement are a capital charge, as are also the expenses of « proper application to the Court by the trusteeB for directions. The foregoing are, of course, subject to th* 1 terms of the settlement and to the orders of the Court made in each case, for sometimes, owing to the wrongful acts of a particular party, the Court may order that party to pay the costs he has occasioned. Executorship] .As a general rule, an executor or executor- trustee will be entitled to employ and remunerate an accountant to keep the books and accounts in connection with the testator's estate, particularly so where the work is of such a character that he coidd not reasonably be expected to do it himself. This may be emphasised or qualified, as the case may be, by the terms of the will. The will may also direct in what manner such expense is to be borne, and if the estate becomes the subject of litigation, orders of the Court may decide what proportions are payable out of capital and income respectively. In the absence of any special circumstances, it is usual to charge the whole or the greater part of the expense in connection with the preparation of the first year's accounts to capital, and in subsequent years to charge the whole or the greater part of the accountant's charges to income. This apportionment will depend to some extent upon the nature of the estate. It may be that a considerable amount has been charged in respect of income matters even during the first year, and t may be that owing to various causes a sub- stantial sum may be attributable to Capital Account in later years, so that to some extent the ppnrtionment of accountants' charges will be a jnatter of circumstances. : But apart from any direction contained in the will or any special order of the Court, the general practice is, as already stated, to charge capital with practically all the first year's accountancy charges, and income with all subsequent charges, leaving the extent to which this general rule should be departed from to be decided by the circumstances affecting each estate. Journal. — Where the probate values are incor- porated in the accounts, a Journal may be used for opening the books and " adjusting " the items from lime to time. The Journal is also useful for transferring the Ledger balances or other items from one account to another. Ledger, — Where the probate values are not Bicorporated in the accounts, it is usual to set out in detail, at the commencement of the Ledger, the Schedule of the estate as prepared for probate, so that the assets may be " marked off " as and 217 [Executorship when realised, with particulars of the realisation recorded against each ; but under either system (probate values or cash) a copy of the will and codicils (if any), with an epitome of same, is generally placed on the front pages of the Ledger — a few plainly ruled pages being provided for this purpose. Note. — A copy of the will, with codicils (if any), and a copy of the schedule of the estate as prepared for probate, are indispensable to one who is responsible for the preparation of the accounts in connection with the administration of a deceased person's estate. Where the probate values are incorporated in the accounts, the Ledger should be ruled with three cash columns for (1) the nominal value of investments ; (2) the assessed value of same ; and (3) income items. Where the probate values are treated in the Ledger Accounts in memo, form only, or where all unrealised values are ignored, the cash columns must be modified accordingly. A separate Ledger Account should be kept for each asset, but where several investments are made in the same class of stock or shares, they should be recorded in the same account. The Ledger Accounts usually opened are : — (1) Capital (or Estate) Account. All capital receipts and payments are respec- tively credited and debited to this account either direct (from the Cash Book or Journal, as the case may be, and according to the system adopted) or by transfer from some special account as explained below. (2) Income Account. All receipts and payments on account of income are respectively credited and debited to this account. Sometimes a specified sum has been set apart so that the income thereof may be enjoyed by certain beneficiaries, in which case such income must be recorded distinct from the general income of the estate. (3) Interest and Dividends accrued to date of Death. This account records the apportioned parts of any receipts in the " nature of income " (in respect of a period covering the date of the Executorship] 218 Executorship death) which are deemed capital of the estate, and also all interest and dividends due or declared or wholly earned prior to the date of the death, but not actually received until after the death. (See also the rule in Allhasen v. WhitteU, 1867, 4 Eq. 295, referred to under title Apportionment.) When all such items are included, the total of same is carried to the credit of Estate Account. (41 Debts due to the Testator. This account records all receipts in respect of moneys due (or where probate values are adopted, the whole of the moneys due) to the testator at the date of the death, the total of same when ascertained being carried to the credit of the Estate Account. (5) Debts due by the Testator. This account records all payments in respect of the debts of the testator, the total of same when ascertained being carried to the debit of the Estate Account. (6) Funeral and Testamentary Expenses. These expenses may be kept together or in separate accounts; when the total of same has been ascertained, it is carried to the debit of Estate Account, being a charge against capital. (See Funeral Expenses, Testamentary Expenses.) With regard to an account for legacy duty, see below. (7) Executorship Expenses. An executor may charge against the estate all proper expenses incurred by him in carrying out the provisions of the will, but he will not be allowed any remuneration for his own time and trouble unless authorised by the will, nor will he be allowed to remunerate out of the testator's property any agent (solicitor, accountant, &c), unless the services rendered were (1) really necessary, and (2) of such a character that he could not reasonably have been expected to per- form them himself. But this general rule of law as to remuneration and reimbursement is, of course, subject to any contrary direction in the will. (Sec title Executor (Remuneration).) (8) Legacies. A separate account should be kept showing the payment of all legacies, and it is also advisable where some legacies are bequeathed free of duty, and others not so, to keep a separate account for legacy duty paid, so that the books may show that the precise pro- visions of the will in this connection have been carried out. (See Legacy Duty.) In addition to the foregoing, separate accounts should be opened for (a) each investment (» asset where probate values are adopted) ; (b) each annuitant, tenant-for-life arid/or residuary legatee according to circumstances. Where the testator was the proprietor, or part proprietor, of a trading concern, and the executor carries on or assists in carrying on the business, the assets and liabilities thereof should be kept distinct in the books of such business and not incorporated in the executor's accounts. All that is required to be done in this connection is to pass through the estate books such moneys, whether on account of capital or income, as may from time to time be received from the business, meanwhile keeping a record of its financial position as shown bv the Balance Sheets prepared from time to time. Where the probate values are adopted, the value of the deceased partner's (or proprietor's) interest in the trading concern will, of course, be passed into the Ledger as a single item to the credit of the Estate Account, and treated as an asset in the accounts. Quite apart from the question of the " probate value " or " cash basis " systems, it is essential that the detailed accounts of a " trading executor " be not incorporated with the ordinary accounts of the administration, particularly where the executor's powers as to trading are limited to the amount of capital invested in the business at the death, or are otherwise restricted. The accounts of the estate should be periodically balanced, and this is generally done annually, either upon the anniversary of the death of the testator, or upon some other convenient date. In particular, the accounts should be carefully balanced before making any specific appropriation of either capital or income to particular bene- ficiaries, so that where income is distributed half- Ifecutorship r otherwise, the accounts should be pre- ared and balanced accordingly. For this pur- however, no apportionment of income hould be made in favour of the Income Account hi -sumption that as dividends, interest, &c. accruing due they will ultimately be received v th< executor. (The position of the estate at any date will be xhibited as follows : — (i When the accounts are kept upon a cash basis, by a Balance Sheet recording the result of the executor's transactions! sup- plemented by (a) a schedule of the out- standing liabilities, if any (e.g., unpaid legacies), and (6) an inventory of the assets as yet unrealised. (2) Where the probate values are adopted, by a Balance Sheet showing upon the asset side (r control by some other Act of Parliament. Although in Scotland a firm is a legal person listinct from the partners of whom it is com- >osed, the law of England does not recognise uch a distinction, the use of the firm-name being inly a convenient form of referring to the xisting partners of the firm. An Act sanctioning the principle of limited lartnership was passed in 1907, and provides titer alia for the registration of such partner- hips. (See title Limited Partnership.) Actions. — The firm-name may be used in legal istruments, and actions may now be brought by r against partners in their firm-name. Where person trades alone in a name or style other ban his own name, he may be sued in his own or lie firm-name, but he must sue in his own name. Bankruptcy. — For the purposes of the Bank- uptcy Acts a firm may act by any of its members, nd may take proceedings or be proceeded gainst in the name of the firm. But a declara- ion by a firm of inability to pay its debts or a ankruptcy petition of a firm must be made in le names of all the partners, or if in the firm's ame must be accompanied by an affidavit of the artner who signs the firm's name showing that II the partners concur. (Bankruptcy Rule 261.) receiving order made against a firm operates as it were made against each of the existing artners, and the debtors must submit a state- lent of their partnership affairs, and each debtor mst submit a statement of his separate affairs. 1S83 Act, sections 115, 148. Rules 262, 263.) An order of adjudication is not made against a rm in the firm-name, but against each partner ttfividually. (Rule 264.) (For the administra- on of the assets sec Joint and Separate Estates.) 22 3 First Companies. — The name of a firm cannot be entered on the register of members of a joint-stock company. (In re Vagliano Collieries. 1910.) Executorship. — A firm may be appointed executors, but in such an event probate would be granted to the individual members of the firm. (See Partnership.) (As to infant members of a firm see Infant.) First Entry (Books of).— Those books in which entries of transactions are first recorded in a system of bookkeeping, e.g., Cash Book, Journal. (See title Journal.) First Meetings. — Compulsory Liquidation. When the Court has made an order for winding up a company the Official Receiver must summon separate (first) meetings of the creditors and contributories for the purpose of determining whether or not application is to be made to the Court : — (1) For the appointment of a liquidator in the place of the Official Receiver. (2) For the appointment of a committee of inspection to act with the liquidator, and also for the purpose of selecting the members of the committee of inspection should one be appointed. (Companies (Consolidation) Act 1908, section 152.) These separate meetings should be held within 21 days from the date of the winding-up order, unless a special manager has been appointed, in which case the meetings should be held within one month from the date of the order. The Court may, however, extend these periods. (Winding- up Rules 1909, Rule 115.) Voluntary Liquidation. Every liquidator appointed by a company in a voluntary winding-up shall, within seven davs from his appointment, send notice by post to all persons who appear to him to be creditors of the company, that a meeting of the creditors will be held on a date not less than fourteen days nor more than twenty-one days after his appointment, and shall also advertise notice of the meeting once in the Gazette and once at least in two local news- First] 224 [Fixtures papers circulating in the district where the regis- tered office or principal place of business of the company was situate. At the meeting the creditors shall determine whether an application shall be made to the Court for the appointment of any person as liquidator in the place of or jointly with the liquidator appointed by the company, or for the appoint- ment of a committee of inspection. (Companies (Consolidation) Act 1908, section 188.) (See Voluntary Liquidation.) Bankruptcy. The first meeting of creditors should be sum- moned for a day not later than 14 days after the date of the receiving order, unless the Court for some special reason extends the time. (For first meeting of a company see title Statutory Meeting.) First Mortgage. — A charge upon property having priority to all others. If it is a legal mortgage the legal ownership of the property is vested in the mortgagee, the equitable ownership remain- ing with the mortgagor, who has a right to redeem his property. (See title Equity of Redemption.) First of Exchange. — See Bill in a Set. Fixed Capital. — Capital employed in the purchase of lands, in executing works, erecting buildings and machinery, not for the purpose of selling same at a profit, but for the purpose of making a profit, or a series of profits, from their use and employment during a period of time. Such capital, however, is not, strictly speaking, fixed, it is only fixed for a time (varying according to circumstances), as the assets representing the out- la)- are subject to wear and tear and other depre- ciating factors. In ascertaining the profits derived from the outlay, the necessary " replace- ment " should therefore be allowed for. Legal decisions have in certain instances been given, relieving joint-stock companies of the necessity of providing for the shrinkage of " fixed " assets, such as quarries, mines, patents, permanent investments, &c, but this does not affect the fact that such a policy is unsound financially, for there is obviously no necessary relationshij between that which should be done as dictated by accountancy principles, and that which neec not be done, merely because no legal obligatior exists. (See titles Annual List and Summary Balance Sheet, Capital, and Depreciation.) Fixed Charges. — Expenditure more or les: inevitable, occurring periodically in determine! amounts. Ordinarily, such expenditure does no vary with the volume of trade done in the par ticular period, but remains fixed, rent, rates, am debenture interest being familiar instances of it Fixed Plant. — Machinery and its accessorie: employed in manufacture or in carrying on I business; so called from the fact that it is per manentlv located upon the business premisesB lands — e.g., engines, boilers and shaftings. (Se Depreciation, Loose Plant and Tools.) Fixtures. — Things annexed to houses, buildings, lands, which on annexation become part of th land. As between landlord and tenant where chattB are not let into the land they may be remove! by the latter, not being deemed fixtures; tag where they are affixed to the land or the premise thereon, they cannot again be severed without th landlord's assent. Machinery and the like maj however, be erected in such a manner that the will not be deemed fixtures, and may then! removed. In any case trade utensils and accffl sories may be removed by the tenant, provided th' removal does not injure the landlord's property and it is upon this principle that marke gardeners, nurserymen, &c, are allowed I remove their fruit trees and shrubs, as formin| part of their stock-in-trade. Bankruptcy. — Fixtures are not included in tb term " goods " within the meaning of th " order and disposition " clause, but if they M removable by the tenant they form part of th property divisible amongst his creditors in th event of bankruptcy. As the disclaimer of I onerous lease is not now retrospective but operate from the date of disclaimer (if duly filed ii Court), a trustee in bankruptcy may before dis claiming remove the tenant's fixtures, or call upoi the landlord to take them over at a valuation ixturesj Should the landlord decline to pay for the fixtures, he must give the trustee reasonable time and opportunity to remove them. Mortgage.— In the absence of a contrary inten- tion, fixtures annexed to the land will pass to the mortgagee under a mortgage of the land, and form part of the security, whether mentioned or lot, and whether affixed before, at, or after the execution of the mortgage deed. Fixtures are within the scope of the Bills of Sale Acts when separately assigned or charged, but fixtures (which here exclude trade machinery) are not ivithin the Acts when assigned together with the : reehold or leasehold interest in the land to which hey are annexed. Trade machinery is therefore led to be " personal chattels " for the pur- of the Acts, and is there defined as • machinery used in or attached to any factory )r workshop," exclusive of fixed motive powers, wilers, shafting, steampipes, &c. Thus, if a nortgagee acquires an interest in the trade Machinery above defined distinct from the land, vith powers of selling such machinery separately, me Acts will apply and he must take a bill of lie. But if they are not separately assigned by of a bill of sale they still pass to the [agee along with the freehold, and form part >f it. He can thus acquire a title to and sell the vhole of the motive powers, boilers, &c, and fixed " trade machinery," including belting, &c. he., along with the freehold, but he cannot sever me from the other. (Batcheldor v. Yates, C.A. 888; and Brooke v. Brooke, 1894.) Sale.— The expression " goods " in the Sale of ioods Act 1893 includes " all things attached to ' or forming part of the lands which are agreed ' to be severed before sale or under the contract rf sale." To bring a sale of fixtures within the let there must therefore be an agreement as to everance, and it appears that an implied agree- ment to that effect is insufficient. Treatment in Accounts.— Although the fixtures f a trader may not be removable by him, he has beneficial interest in them during the period of is tenancy, and as a consequence he may rightly onsider the fixtures as an asset, at a value < pendent upon circumstances. The probable 225 [Floating fixity of tenure must be considered in dealing with the asset, and where a lease exists the matter is simplified. Assuming a trader has a lease of his premises, the cost of the fixtures would form the " foundation value." The fixtures, with their respective costs, then require to be divided into " removable " and " immovable." The " removable " class must then be depreciated at such a rate as will reduce the book value to the residual or " break up " value at the date of sale or expiration of lease, whichever happens first. The rate of depreciation of the " immovable " class must be such as will entirely exhaust the book value at the expiration of the lease, but some reduction may be made in such rate in special cases where there is reasonable cause to expect a renewal of the lease. On the other hand, in assessing the rate of depreciation con- sideration must be given in some cases to the possibility of being compelled to replace some of the fixtures at a late period in the lease with little opportunity subsequently of writing same off out of profits. Of course, in common with other assets which are subject to wear and tear and depreciation, the fixtures should be classified in order to arrive at the respective rates for the different groups, but where the " life " of a wasting asset is longer than that of the lease of the premises wherein it is fixed, and the asset is immovable on the expiration of the lease, the length of the lease is the material factor in assessing the rate of the depreciation. (See Depreciation.) Floating Capital—The assets of a trader which are being continually transformed; such assets as he parts with and replaces (in some cases at a profit) in a single operation. Cash, debts, and stock-in-trade, are instances of floating capital. (See titles Capital, Fixed Capital.) Floating Charge.-"A floating security is an " equitable charge on the assets for the time " being of a going concern. It attaches to the '' subject charged in the varying conditions in " which it happens to be from time to time. It " is the essence of such a charge that it remains " dormant until the undertaking charged ceases " to be a going concern, or until the person in Q Floating] 226 Floating " whose favour the charge is created intervenes. "His right to intervene may, of course, be " suspended by agreement. But if there is no " agreement for suspension he may exercise his " right whenever he pleases after default." (Lord Macnaghten, Manila Railway case, 1897, A.C. 81.) Note. — In Illingworth v. Houldsworth (1904, A.C. 355) Lord Macnaghten explained that his observations in the Manila case (supra) were not intended as a definition of a floating charge, but only as a description sufficient to enable such a charge to be distinguished from a specific mortgage. " They (the debentures) constitute a floating " security — that is to say, they allow the com- " pany to deal with its assets in the ordinary •' course of business until the company is wound " up, or stops business, or a receiver is appointed " at the instance of the debenture-holders; or, as " it has been said, they constitute a charge, but " give a licence to the company to carry on its " business. So long as the debentures remain a " mere floating security, or, in other words, the " licence to the company to carry on its business " has not been terminated, the property of the " company may be dealt with in the ordinary " course of business, as if the debentures had not " been given, and any such dealing with a par- " ticular property will be binding on the deben- " ture-holders, provided that the dealing be com- " pleted before the debentures ceased to be merely " a floating security." (Romer, J., Robson v. Smith, 1895, 2 Ch. 118.) A seizure under an execution on a judgment against the company is not a dealing by the com- pany in the ordinary course of business. The transaction cannot be called a dealing by the com- pany at all — it is rather a compulsory legal process directed against the company. (Davey <5v Co. v. Williamson 6- Sons, 1898, 2 Q.B. 194.) But see Evans v. Rival Granite Quarries, Lim. Every mortgage or charge created after the 1st July 1908 by a company registered under the Companies Acts (now the Consolidation Act of 1908), and being a floating charge on the under- taking or property of the company, must be registered with the Registrar of Joint Stock Companies. (Companies (Consolidation 1908, section 93.) (See title Register and Registration ol Mortgages.) A floating charge created within three month! of the commencement of a winding-up shall unless it is proved that the company immediate^ after the creation of the charge was solvent, tx invalid except to the amount of any cash paid the company at the time of or subsequently to thf creation of, and in consideration for the charge, together with interest thereon at 5 per cent, pa annum. (Companies (Consolidation) Act 1908, section 212.) The definition of the word " solvent " in this connection may give rise to some difficulty, par- ticularly in view of section 130 (iv) of the safl Act. The Courts have held that insolvencj means inability to pay debts actually due— -tm debts which can be demanded to be paid instan™ (Re European Life Assurance Co., 39 L.T. 136; L.R. 9 Eq. 122.) This was a question aifl whether an order to wind up the company should be made under sections 79 and 80 of the CoH panies Act 1862 (now sections 129 and 130 of fl Consolidation Act of 1908), on the ground that ■ company was unable to pay its debts. And in R. v. Sadlers Co. (32 L.J., O.B. 337) YVilles, J., said, " in insolvent circumstanced lias always been held to mean not merely beifl behind the world if an account were taken, but insolvency to the extent of being unable ; . . pay just debts in the ordinary course of business«M (The Sale of Goods Act 1X93 adupts this definition.) But section 130 (iv) of the Companies (Con- solidation) Act 1908 provides that in determinM whither a company is unable to pay its defl within the meaning of section 129 the Court shall take into account (not merely the present afl certain debts as hitherto but also) the contingH and prospective liabilities of the company. Pre- sumably, these must be taken into account in liquidation proceedings when considering the ques- tion of solvency if a floating charge has been given within three months of the commencement of the winding-up. Floating] 227 [Foreign Subsection 2 of section 48 of the Bankruptcy Act 1883, which defines a fraudulent preference in bankruptcy, expressly states that the rights of any person making title in good faith and for valuable consideration through or under a creditor he bankrupt shall not be affected. No such protection is afforded by section 212 of the Com- panies (Consolidation) Act 1908; therefore a person taking a transfer of debentures secured by a floating charge on a company's assets given within three months of the transfer, should Satisfy himself that the charge is not liable to be aside under section 212. (See lilies Debenture, Execution Creditor, Receiver, Undertaking.) Floating Policy. — One issued for a large amount to cover a certain specified class of risk, which amount is subsequently appropriated in smaller amounts by declaration made from time to time by the insured. Flotsam. — Sec Jettison. F.O.B. — Free on board. Goods purchased " f.o.b." are not at the risk of the purchaser until on board, but when on board they are at the pur- chaser's risk and he is liable for the freight. (See C.F.I.) Folio. — A sheet so folded as to make two leaves without further folding; in law writing, a folio sometimes means a single page, and in other pases so many words, varying from 72 to 100; in bookkeeping, a folio, strictly, consists of the two 3 presented to view when a book is laid wide open, both of which are indicated by the same " page number "; the term folio, however, is often used to denote all types of page notation, whether " folio " or otherwise. Footage.— The royalty payable by the lessee of a mine is sometimes calculated at a fixed rate " per foot in thickness " of the area worked during the period. This is termed " footage." Foreclosure.— The determination of a mortgagor's right to redeem his pledge; the extinguishment of the equity of redemption. (See that title.) Foreign Bill.— See Inland Bill, Protest. Foreign Exchanges.— See Par of Exchange, Rate of Exchange. Foreign (Incorporated) Companies.— The Com- panies (Consolidation) Act 1908 provides: — Section 274. — (1) Every company incorporated outside the United Kingdom which establishes a place of business within the United Kingdom shall within one month from the establishment of the place of business file with the Registrar of Companies — (a) A certified copy of the charter, statutes, or memorandum and articles of the com- pany, or other instrument constituting or defining the constitution of the company, and, if the instrument is not written in the English language, a certified translation thereof ; (b) A list of the directors of the company; (c) The names and addresses of some one or more persons resident in the United King- dom authorised to accept on behalf of the company service of process and any notices required to be served on the company; and, in the event of any alteration being made in any such instrument or in the directors or in the names or addresses of any such persons as afore- said, the company shall within the prescribed time file with the Registrar a notice of the alteration. (2) Any process or notice required to be served on the company shall be sufficiently served if addressed to any person whose name has been so filed as aforesaid and left at or sent by post to the address which has been so filed. (3) Every company to which this section applies shall in every year file with the Registrar such a statement in the form of a Balance Sheet as would, if it were a company formed and regis- tered under this Act and having a share capital, be required under this Act to be included in the annual summary. (See title Balance Sheet.) Foreign] 228 [Foreign (4) Every company to which this section applies, and which uses the word " limited " as part of its name, shall — (a) In every prospectus inviting subscriptions for its shares or debentures in the United Kingdom state the country in which the company is incorporated; and (b) Conspicuously exhibit on every place where it carries on business in the United King- dom the name of the company and the country in which the company is incorporated; and (c) Have the name of the company and of the country in which the company is incorpo- rated mentioned in legible characters in all bill-heads and letter paper, and in all notices, advertisements, and other official publications of the company. (5) If any company to which this section applies fails to comply with any of the require- ments of this section the company, and every officer or agent of the company, shall be liable to a fine not exceeding fifty pounds, or, in the case of a continuing offence, five pounds for every day during which the default continues. (6) For the purposes of this section — ■ The expression " certified " means certified in the prescribed manner to be a true copy or a correct translation ; The expression " place of business " includes a share transfer or share registration office ; The expression " director " includes any person occupying the position of director, by whatever name called ; and The expression " prospectus " means any prospectus, notice, circular, advertisement, or other invitation, offering to the public for subscription or purchase any shares or debentures of the company. (7) There shall be paid to the Registrar for registering any document required by this section to be filed with him a fee of five shillings or such smaller fee as may be prescribed. Note. — The Islands of Man, Jersey, Guernsey, Alderney, and Sark are not within the United Kingdom. Foreign Systems of Accounting. — France. There is no particular form of accounts pre- scribed by law, but every trader is required by the Code of Commerce to keep three books — the Journal, Inventory Book, and Letter Book. Before commencing to use a Journal, every folio must be initialled by a Judge of the Commercial Tribunal (or other officer), who also certifies the number of folios in the book. The initials of the Judge placed upon the pages are intended as a preventative against the extraction of leaves from the book, or the manufacture of special books either for presentation to the Court in an action at law, or for presentation to the official in the event of bankruptcy. The trader must enter all his transactions in the Journal day by day — his acceptances, negotiations, and indorse- ment of bills, and his receipts and payments — and he must set out month by month the sums dis- bursed on his household expenses. No erasures, blanks, or marginal additions to entries are per- mitted. To avoid erasures and marginal addi- tions a rough or draft Journal is kept by some concerns. The pages of the Inventory Book must also be initialled by a Judge of the Commercial Tribunal (or other officer), and must contain a private inventory of the trader's real and per- sonal estate and his debts, prepared annually, and signed by the trader. The Letter Book must contain a press copy of all letters issued by the trader. This book does not require to be initialled officially. Of course, traders may, and in many cases they do, keep other books, varying according to the requirements of the particular businesses, and the compulsory Journal is to a great extent a mere repetition of the entries in the Cash Book, Sales Book, Purchase Book, and such like subsidiary books, in weekly, monthly, or other periodical totals. Non-compliance with the provisions of the code will deprive a trader of the form of evidence required by the Courts where accounts are con- cerned; therefore, where the compulsory books Foreign] are of themselves insufficient to provide suitable records, auxiliary books are resorted to, and the compulsory records are kept in an abbreviated or total form. This obviously nullifies the undoubted benefit which in many cases lies in that chrono- il record which the orthodox treatment of a Journal affords, and to a great extent weakens the check which the initialling of the books by the Judge is supposed to exercise. With regard to the interpretation of the Com- mercial Code opinions vary largely. The code B 'ins to be used principally as a weapon with which to combat any suggestions for alterations or improvements in the existing systems of book- keeping. If an accountant makes a suggestion to a French bookkeeper as to an alteration in his methods, he is at once confronted with the pro- visions of the Commercial Code. The interpreta- tion put on the code by one person will be that the Cash Book entries may be summarised and put through the Journal in total, and that the Sales Book entries may be similarly treated, but that it is absolutely imperative that purchases should be ■own in the Journal in detail. Another will contend that, while the purchases might be put through the Journal in total, the sales must undoubtedly be shown in detail, so that if any dispute arises as to the balance owing by a debtor, the Ledger, if produced in Court, can be proved by the Journal. . Yet another bookkeeper will include in the Journal the totals of the Purchase Book and the Sales Book, but will put all cash and bill transactions through in detail. However, an eminent French counsel, in deal- ing with the question of books in evidence, has pressed the opinion that, so long as the require- nts as to the compulsory books are correctly mplied with, however formally, the auxiliary oks may be produced in evidence to support in il what is contained in the compulsory books total. But the auxiliary books cannot be pted as evidence to contradict the compulsory ks. Germany. There is no special form of compulsory book- keeping, but the code provides that every 229 [Foreign commercial man shall keep books and enter therein all his transactions so as to show his financial position. The account books must be bound, and the pages numbered; all letters received and copies of all letters despatched are to be retained. Xo blank spaces are to be left in the books; an original entry, if incorrect, is not to be erased, the alteration must be struck out in such a way that the original entry shall not be illegible, and so that there will be no uncertainty whether the amended entry belonged to the original entry or was made afterwards. The letters and copies are to be retained, and account books kept for a period of ten years. The period as regards books runs from the date of the last entry in same. An inventory and Balance Sheet are to be drawn up when commencing business, and at the end of every business year within a reasonable time after the balancing date commensurate with the regular conduct of the business. Where stock-in-trade, from its nature or its size, is difficult to take, the inventory of same may be taken every two years, but an annual Balance Sheet must be prepared notwithstanding. The Balance Sheet and inventory must be entered in a book and signed by all the proprietors. Non-compliance with the legal requirements of the code as regards accounts may seriously affect the merchant's rights in the Court in the event of legal proceedings, and may possibly non-suit him, and in the event of bankruptcy his position will be prejudiced, but there would appear to be no direct penalty for breach of the law with regard to account keeping. The German law does not prescribe a Journal. But the law of Germany is unique in that it requires the books of a merchant to be bound and the pages numbered consecutively. Therefore, although the Card Ledger and Loose-leaf Ledger systems are being advertised on the Continent as they are here, it is considered at least doubtful whether any unbound records will be admissible in a German Court of law. Some contend that if the subsidiary books are kept they will be admissible, although the Ledger is on the Loose- leaf or Card system. At all events, the repre- sentatives of the Loose-leaf Ledger system frankly Foreign] 230 Foreign recognise the difficulty with regard to this par- ticular requirement of the German Code, but it will probably be settled upon the basis of the French practice already referred to. The Journal is, however, in use in Germany, and the Double-entry system is generally adopted. Moreover, subsidiary books of first entry are now being used instead of passing all entries through one Journal. In " share-capital " companies in Germany the practice obtains of accepting from a shareholder a bill of exchange or promissory note for some portion of his unpaid capital, the shares then appearing in the books as fully-paid, the bill or note being treated as an asset. It is interesting to note that the German Code provides that the accounts shall be expressed in the State currency, and the books kept in the words and characters of a living language. United States. There are two forms of law : Federal, applying to all States in the Union ; and State law, applying to particular States. The Bankruptcy Law 1898 (Federal) provides that a bankrupt's discharge may be refused if (inter alia) he has failed to keep books of account or records from which his financial con- dition might be ascertained. Apart from this, there is no law (whether Federal or State) pro- viding for bookkeeping by traders. There are no statutory forms of accounting pre- scribed either for insurance companies or railway companies. But under the various State laws certain annual returns have to be made by insurance companies in the different States. Railway companies also have to make certain annual returns, not only to the capitals of their respective States, but also to Washington, giving full details of the Revenue Accounts and Balance Sheets. The forms of account adopted by the various railway companies in the United States are those prescribed by the Inter-State Commerce Commission, as compiled by the Association of American Railway Accounting Officers. These particular forms are largely adopted and tend to uniformity. They are not compulsory, but they were designed to some extent to meet special requirements of the returns, which compulsory. The accounts of the National Banks, St Banks, and certain of the trust companies subject to an official audit, but no statutory form of accounts is prescribed for same. Belgium. Every merchant must keep a Journal showing day by day his assets and liabilities, his business operations, his negotiations, acceptances, and indorsements of bills, and all his receipts and payments on whatever account, and he must exhibit month by month the sums he has dis- ' bursed on his household expenses, and all this must be recorded independently of the other books used in the business, which are not compulsory. He must file and retain all letters and telegrams received, and preserve copies of all such issued. He must prepare a Balance Sheet annually, and enter same in a book kept for this special pur- pose. The Journal and Balance Book must be initialled by a prescribed officer. All entries must be made in order of date, without erasures or transfers, and there must be no blanks. The books must be kept for ten years from the date of the last entry therein. Spain. The Commercial Code of Spain (based up the Code Napoleon) provides for the keepil of the following books: — Inventory. Journa Ledger, Letter Book, and Invoice Book, but special form of accounting is prescribed. Portugal. No particular form of accounting is prescribe but every trader must keep a Balance Book, Journal, Ledger, and Copy Letter Book. The Journal need not be a chronological record, for auxiliary books may be kept classifying the entries as regards sales, purchases, cash, and so on ; but in such cases summary entries in total form must be made in the Journal either weekly or monthly. I reign] 231 [Forfeiture •' ; Russia. No particular form of bookkeeping is pre- cribed, or any special books, but the laws are irict as regards bookkeeping generally, and he penalties for non-accounting in the event of lankruptcy are severe; and as every business is to income-tax, some form of bookkeeping indirectly rendered compulsory, for the Govern- U11I officials have the right to examine the books f any concern for the purpose of determining the tent. What are called public share companies must upplv the Government with a Trading Account, 'rofit and Loss Account, and Balance Sheet each ind these accounts are published in a State t\\ spaper. Holland. No particular book or form of accounting is irescribed by law, but it is compulsory that a ommercial man shall keep books, in which he hall correctly record his (1) commercial transac- ions, (>) letters received, and (3) copies of letters ssued. He must also prepare a Balance Sheet nnually. and, within six months after the xpiration of each year, he must enter such ice Sheet in some book and sign same. There is no direct penalty for failing to keep roper books as prescribed by law, but, indirectly. k trader will be subjected to considerable dis- bility should he need to enforce any transaction lrough the medium of the Courts, and he may Iso suffer at the hands of the income-tax uthorities. Thin is a type of trading concern constituted mewhat similarly to our own limited liability mpany. having its capital divided into shares, Inch must publish its Balance Sheet in the tlte newspaper — the equivalent to our own Xindon Gazelle. ROUMAXIA. The Journal and Inventory Book are com- ulsory, and a small tax per page is payable. Ledger also must be kept, but it is not liable ) dutv. Forfeiture of Shares.— The articles of association of a company limited by shares invariably confer, power upon the directors to forfeit the shares of a member upon default in payment of calls, or, other moneys presently payable on the shares;, and to sell the same after forfeiture. Table A (Companies (Consolidation) Act 1908) where, applicable confers powers of forfeiture and pro- vides the necessary procedure. The formalities, required by the articles must be strictly complie4 with, for any irregularity may invalidate the for- feiture. The forfeiture must be exercised for the benefit of the company and adversely to the share- holder; if the purpose of forfeiture is to enable a member to avoid his liabilities as such, the trans- action may be set aside. Where the articles provide that, notwithstanding forfeiture, a mem- ber remains liable for calls owing at the date of forfeiture, the sale of forfeited shares may leave both the member whose shares have been for- feited and the purchaser liable for the amount due on forfeiture. The purchaser, however, would be entitled to credit for subsequent payments by the former holder. (Randt Gold Mining Co., 1904, 3 Ch. 468.) On the other hand, should the pur- chaser pay the whole amount unpaid on the shares, the former holder would be relieved from his liability. The forfeiture of a share merely, would not relieve the quondam holder of the liability to be placed upon the list of contribu- tories; nor would a " past " member who trans- ferred his shares within a year from the winding- up escape the liability of a " B list " contributory- even though the shares had been subsequently- forfeited through the default of his transferee. A valid forfeiture of shares does not amount to a reduction of capital within the meaning of the. Companies (Consolidation) Act 1908, and ordinarily the directors may re-allot, or otherwise dispose of, the forfeited shares as they may think fit. The annual return of capital must state the particulars of any forfeited shares, and it is sub- mitted that shares once issued, together with any moneys received in respect thereof, remain part of the capital of the company notwithstanding subsequent forfeiture. But it is necessary in the Balance Sheet of the company to state such Forfeiture] 232 [Forged shares and moneys separately from the " divi- dend bearing" capital; and when the forfeited shares are re-issued, any surplus thus obtained may be transferred to a Reserve Account, but as a matter of fact there is no general rule of law against such a surplus being distributed in dividend. That money received in respect of shares which have subsequently been forfeited may, neverthe- less, remain part of the capital of the company is shown by the decision in Morrison's case (189S). Here the articles of association of the company provided that forfeited shares should be deemed to be the property of the company, and that the directors might sell, re-allot, or otherwise dispose of the same in such manner as they might think fit. The company having a number of for- feited shares upon which the. sum of at least ^3 per share had been paid, entered into an agree- ment for the sale of these shares for 30/- per share on the condition that such shares be credited in the books of the company as being paid up to the extent of £2 5s. per share. An action was brought by a shareholder to restrain the company from carrying out the agreement on the ground that the transaction amounted to the issue of the shares at a discount; but it was decided that the company could deal with the shares and credit them as partly paid up to such extent as might be agreed upon, provided the amount so credited as having been paid up did not exceed the sum which had been paid up on each share at the time of forfeiture, and pro- vided, of course, such sum had remained undislributed. Forged Acceptance. — See Acceptance. Forged Indorsement.— See Indorsement. Forged Transfers of Shares, &c— The Forged Transfers Acts 1891 and 1892 provide:— (1) That any local authority or company duly incorporated may compensate by a cash payment out of its funds for any loss occasioned through the invalidity of a forged transfer. (2) That the company or other body may charge a fee for each transfer (i.e., an additional fee) to provide a fund for si compensation. (3) That the company or other body may compensation to a person who has sufi loss from a forged transfer, whether he h contributed to such fund or not. >r such A number of the larger companies pay com- pensation or have undertaken to do so without any fee, but the Acts do not impose an obliga. tion to compensate — they merely give a • which the company may exercise if it thinks fit. The above provisions refer to the loss incurred by the transferee under the forged transfer, for the real owner of the stock or shares in ques- tion is entitled to be re-registered, whether the " transferee " be compensated or not, and any dividends paid whilst his name has been off the register must be repaid to him by the company. (See title Certificate.) It is the practice of many companies, in order to ensure greater security, to send a letter to the transferor, or to each of the transferors named on a transfer deed, stating that certain stock or shares is or are about to be transferred from him to another, and that such transfer will be regis- tered unless due cause to the contrary be shown within a stated number of davs. This must necessarily have beneficial n -ults, for knowledge on the part of a fraudulently inclined person that such a practice is carried out by a company will act as a preventative, quite apart from the opportunity thus afforded to holders of stock to prevent a forged transfer being registered, but (1) The company is under no obligation to give this notice; and (2) The notice having been given, the alleged transferor is not estopped from subse- quently impeaching a forged transfer by reason only of his neglect to reply to such notice. In Sheffield Corporation v. Barclav account therefor. (2) A false statement as to cash paid away, or alleged to have been paid away. It will considerably assist an auditor, in the pre- vention of fraud of this nature, if a thorough system of bookkeeping is in force and a close internal check is kept by the various members of the staff upon each other; in particular as 8 matter of individual arrangement, no cashier should be concerned in the writing-up of Ledgers, and no Ledger clerk should be allowed to collect debts or otherwise become accountable for cash. One of the most common forms of tampering with cash is the falsification of the Bank Pass Book (see title Bank Book), either by an altera- tion of the entries therein, or by the obtaining of a duplicate from the bank under the plea that the old book has been lost, or otherwise. An auditor should, therefore, carefully verify the entries, including the dates, in the Bank Pass Book, andl also satisfy himself by application to the bank that the Pass Book submitted to him is genuine, or obtain a certificate as to the balance of the- account from time to time. In addition to the internal check by the staff, referred to above, cash received may be verified, where practicable, by Counterfoil Receipt Books, by surprise visits of the auditor to count the cash, and, where possible and expedient, by changing, the person in charge of the cash. (See title Register of Counterfoil Receipt Books.) I TJd 2 35 Frauds] 'ayments should be carefully vouched, rind care that all sums of any magnitude are paid by . The petty cash should be kept upon the : " system (q.v.). Ledger " transfers " I it< in* written off as " allowances " and " bad jits " should also be examined, and, where -il>]' , independently vouched. Journal entries s uld receive particular attention, and should be I in detail. rauds having for their object the. manipula- tii of accounts, apart from the cash transac- tjis. will usually take the form of : — 1) Understatement of liabilities (a) To trade creditors (e.g., by the sup- pression of a purchase of goods). (6) To loan creditors; and (c) To subscribers of capital. 2) Overstatement of assets, such as (n) Inflation of stock-in-trade; (b) Inflation of book debts, e.g., by the retention upon the Ledger of debts which have been collected or which are known to have become worthless ; and (c) Overvaluation of plant and other assets. II these are matters for careful scrutiny by an ilitor. (Sec title Investigation.) Fra s. Statute of (1677).— This statute requires lin transactions to be in writing or otherwise e\ enci d. lo prevent fraud and perjury. The pro- ms with regard to leases and conveyances e been amended by the Real Property Act i>;. and the combined effect of the two statutes be summarised thus:— ) Liases for three years or less need not be in writing if the reserved rent is at least two-thirds of the improved annual value. 1 I. rases for upwards of three years must be in writing, signed by the party or his agent authorised in writing (Statute of Frauds), also sealed and delivered. (Act of 1S45.) (3) Leases required to be by deed, but reduced to writing only, may be enforced as agree- ments for leases, but agreements for leases not in writing cannot be so enforced, even if for less than three years, because of sec- tion 4 of the Statute of Frauds. (See below.) (4) Assignments, grants, and surrenders of leases must be by deed. This applies to all leases, so that although certain leases may validly be by parol (sec No. 1 above), they can only be assigned by deed. The provisions as to leases for three years or less may be re-stated thus : — (a) A verbal lease is good ; (b) a verbal agreement for a lease is not enforceable; and (c) the assignment of a verbal lease must be by deed. The fourth section of the Statute of Frauds pro- vides that no action shall be brought in respect of the following unless the agreement or some memorandum or note thereof upon which such action is brought is in writing signed by the party to be charged or his agent duly authorised, viz. : — (1) A promise by an executor or administrator to answer damages out of his own estate. (2) A promise by any person to answer for the debt, default, or miscarriage of another (i.e., a guarantee, but not an indemnity). (3) An agreement made in consideration of marriage. (Note. — Not a promise to marry.) (4) A contract for the side of lands, &c, or any interest in or concerning them. Note. — A deposit of title deeds of lands with a creditor without a written memo- randum has been held sufficient to create an equitable charge on such lands notwith- standing the provisions of section 4. This has been referred to as a " judicial repeal " of the Statute of Frauds. Various reasons for this exception to the provisions of the section have been given, the following being the chief of them : — Frauds] 236 Frauds (a) Such a contract is partly executed and is not a contract to be performed. (b) The solemnity of the act of deposit is presumptive evidence that an agree- ment for an equitable mortgage was intended (although in fact no such agreement was made in writing). (c) To regard the deposit as invalid would be incompatible with the recognition of equitable mortgages. (d) Deeds so deposited could not be recovered at law, and if an attempt to recover them were made in equity the depositor would be required to do equity — that is, to pay the money he had borrowed on the security of the deeds. fe) As the Statute of Frauds is intended to prevent fraud, it is a general prin- ciple of equity not to permit it to be set up as a means of protecting fraudulent acts. (5) All agreement which is not to be performed within the space of one year from the making thereof. Xote. — An agreement which the parties intend shall not be performed within a year is within the statute, but an agreement not so intended will not be within the statute merely because the performance does, in fact, extend beyond a year. As an instance, a contract for a year's service to commence a month hence would, but an engagement for nine months would not, require to be in writing, even if the latter ultimately extended beyond a year. The fourth section does not require the whole of the contract to be in writing, a note or memo- randum thereof will suffice; and no special for- malities are necessary, but the memorandum should contain : — (1) The names of the parties. (2) The subject-matter of the contract. (3) The terms of the contract. (4) The consideration (except in the case of a guarantee). (5) The signature of the party to be charged or his agent duly authorised. These particulars or requirements necessarily appear on one document—' be evidenced by several (e.g., com provided they are connected, and the no memorandum may be made at any time t action is brought. Although for the pu the first section of the Act (leases, &c.) an a) must be authorised by writing, the foui requires no such formality ; the agent may b' appointed verbally, in writing, or by inference; may act by prior authority, when rati! his signature is sufficient: but one party canr act as agent for the other. It has been the signature on a telegram form is suffifl to comply with the statute, and it is that the use of the sender's telegraphic in lieu of his own name would suffice. After th " fall of the hammer " an auctioneer is for both buyer and seller, and may sign randum to satisfy the statute. (See tit' - Goods Act 1893.) It must be noted that a contract which '. ij within section 4, but not entered into in 1 pliance therewith, is neither void nor \ I but merely unenforceable by action for v proof. The seventh section provides that " all declara " tions or creations of trusts or confidi-n - " any hauls, tenements, or hereditaments, " be manifested and proved by som< " signed by the party who is by law enab^H " declare such trusts, or bv his last v •' writing, or else they shall be utterly " of none effect." The above provision does not require the AJ to be declared in writing, but only manil proved in such manner, so that no form i- sary either as to the language or the nat the instrument by which it is sought to est^H the trust, so far as regards satisfying th- visions of the statute. The statute does not apply to chattels persona so that, provided they are to take effect in ti time of the creator, such trusts may be n^H by parol. (See title Will.) The 17th section, as amended bv Tenterdeni Act, is now embodied in the Sale of Goo 1S93 (q.v.). Frudulent] lr 237 [Fraudulent diilent and Voluntary Conveyances and itlements. — The statute 13 Elizabeth, c. 5, pro- 's that all conveyances and gifts of lands, J?. &c, " to the end, purpose, and with ntent to delay, hinder, or defraud creditors and itbers of their just and lawful actions, debts, ic," shall be utterly void. The Act does not •ct conveyances, &c, for valuable considera- 1 and otherwise bond fide. principles and rules of the common Bv, as now universally known and understood, ■re so strong against fraud in every shape, Biat the common law would have attained Hvery end proposed by the statute 13 Elizabeth, 5. . . . It cannot receive too liberal -: ruction or be too much extended in "juppression of fraud." (Lord Mansfield.) Iny conveyance of property or creation of a iereon, which would in the event of bank- v tcy be deemed a fraudulent preference, is an of bankruptcy, and such act may in such event the commencement of the bankruptcy. ection 47 of the Bankruptcy Act 1883 provides K any settlement of property (not being (1) a Blent made before and in consideration of iage, or (2) made in favour of a purchaser icumbrancer in good faith and for valuable ideration, or (3) a settlement made on or for rife or children of the settlor of property h has accrued to the settlor after marriage in of his wife) shall be void against trustee in bankruptcy under the following ci|timstances : — ) Where the settlor becomes bankrupt within two years after the date of the settlement; ) Where the settlor becomes bankrupt at any subsequent time within ten years after the date of the settlement, unless the parties claiming under the settlement can prove (a) The settlor was at the time of making the settlement able to pay all his debts without the aid of the property com- prised in the settlement, and (b) The interest of the settlor in such pro- perty had passed to the trustee of such settlement on the execution thereof. It should be noted that, although a settlement may not be impeachable under the Bankruptcy Act 1883, it is still subject to the provisions of 13 Eliz., c. 5. On the other hand, whilst a past debt will constitute a valuable consideration for the purposes of the Act of Elizabeth, a convey- ance under such circumstances may amount to a fraudulent preference under the Act of 1883. The word " void " in section 47 of the Act of 18S3 (supra) should be read as " voidable," so that the title of a bond fide purchaser for value from the donee will not be defeated in the event of the subsequent bankruptcy of the donor. But where a person in order to defeat his creditors transferred his property to a bogus company, he thereby committed an act of bank- ruptcy, and upon bankruptcy supervening his trustee was held entitled to the assets of such com- pany, even though it had gone into liquidation. (Re Hirth, 1899, 1 Q.B. 612.) The questions as to whether (1) a purchaser for value could obtain an unimpeachable title under a voluntary settlement before the expira- tion of the periods mentioned in the Act of 1883, and whether (2) such a title could be forced upon an unwilling purchaser (who has ascertained the facts), have been the subject of conflicting decisions. The point was decided by the Court of Appeal (Carter's case, 1897) to the effect that : — (1) A voluntary settlement was not void under section 47, except as against the trustee in bankruptcy of the settlor. (2) A settlement could not be void as against such a trustee until there was one. (3) A trustee in bankruptcy could only avoid a settlement as against the volunteers, but a bond fide purchaser for value could make a good title ; and (4) The vendors of property who derived their title as grantees under a voluntary settle- ment could, therefore, force such a title upon the purchaser. The trustee of a settlement (which but for the bankruptcy of the settlor would have been valid) is entitled to a lien upon the property for Fraudulent! 238 [Fraudulent expenses properly incurred by him as trustee, not- withstanding the subsequent avoidance of the settlement under the above section. (Re Holden, so O.B.D. 43.) It was held, prior to 1S90, that section 47 did not apply to administration orders in respect of the estates of deceased debtors (Re Gould, 1887, 19 O.B.D. 92), and section 21 of the 1890 Act has apparently not affected this decision. But the provisions of 13 Eliz., cap. 5, are applicable to the administration of the estate of a deceased insol- vent. (Taylor v. Coenen, 1876, 1 Ch. 636.). (.See title Deceased Insolvent.) Ante-nuptial Settlements. (1) Where a settlement is made before, and in consideration of, marriage, and the settlor is not at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement ; or (2) Where a covenant or contract is made in consideration of marriage for the future settlement on or for the settlor's wife or children of any money or property wherein he had not at the date of his marriage any estate or interest (not being property of, or in the right of, his wife) ; and the settlor is adjudged bankrupt, or com- pounds or arranges with his creditors, the Court may refuse or suspend an order of discharge, or grant a conditional discharge, or refuse to approve a composition or arrangement, as the case may be (in like manner as if the debtor had been guilty of fraud) if it appears to the Court that (a) Such settlement, covenant, or contract was made in order to defeat or delay creditors, or (b) Was unjustifiable having regard to the state of the settlor's affairs at the time when such settlement was made. (Bankruptcy Act 1883, section 29.) Marriage being a valuable consideration — " the highest of all considerations " — ante-nuptial settlements are excluded from section 47 of the Act of 1883, and are not voidable at the instance of the trustee; but the granting of same un above circumstances is punishable in so such an act will affect the bankrupt's ■ Where, however, such a covenant or con is made for the future settlement on or for the settlor's wife or children of any money or pro. perty wherein he had not at the date of his marriage any estate or interest, whether v contingent, in possession or remainder (not bj money or property of, or in right of, his wife and the settlor becomes bankrupt before the pro- perty or money has been actually transit 1 paid pursuant to the covenant or contract it » be void against the trustee in bankrupt J withstanding that it was made in consi of marriage. (Section 47 (2).) \n application to set aside or avoid any 4H ment or conveyance must be heard and 4 mined in open Court. (Rule 6.) (.See title Married Woman.) Fraudulent Debtors. — The Debtors Act enumerates certain acts the commission of «■ by a bankrupt with intent to defraud rend^H liable to imprisonment. (See title Debt 1S69.) Fraudulent Preference. — Bankruptcy. Every conveyance or transfer of propert^M charge made thereon, every payment mad obligation incurred, and every judicial prod^H taken or suffered, by any person unable to pa] debts as they become due, from his own n;or in favour of any creditor or any person in trus for any creditor with a view of giving I creditor a preference over the other rretSH shall, if the person making, taking, paving, a suffering the same is adjudged bankrupt on i bankruptcy petition presented within thn months after the date of making, taking, or suffering the same, be deemed fraudulent ai void as against the trustee in the bankruptcy. I The rights of any person making title in go* faith and for valuable consideration through under a creditor of the bankrupt are not affec by the above provisions. (1S83 Act, section 48.)' raudulent] 239 [Fraudulent Where a receiving order is made against a hudgment debtor in lieu of committal under the pebtors Act 1869 . . . the provisions as to tin avoidance of fraudulent preferences shall fipplv as if the debtor had been adjudged bank- rupt on a bankruptcy petition presented at the uate of the receiving order. (1890 Act, section BO.) The intention of the bankrupt is the main factor in deciding whether any given transaction Is a " preference " or not, i.e., the bankrupt must have acted with a view of giving a creditor pre- ference over the other creditors, and the payment Which it is sought to impeach must have been miade to that particular creditor, so that a pay- ment made to a creditor in order to relieve a iiuretv cannot be recovered by the trustee as a [fraudulent preference. Where the transaction is the result of bond fide pressure, the trustee in bankruptcy will have some lifficulty in making out a case of fraudulent Preference. I So where a trustee has committed a breach of rust, and before his bankruptcy makes good the Beach out of his own property, tin- trustee in I ne bankruptcy cannot recover the property, for it as been decided that such an act does not Llmount to a fraudulent preference, but an Imdeavour by the bankrupt to cover up his wrong Ipd so prevent proceedings being taken against im. (Sharp v. Jackson, 1899, A.C. 419.) II Nor does the payment of a debtor's trade bills, p due course and in the ordinary way of busi- Bss, amount (of itself) to a fraudulent prefer. IJlce, the inference pritnd facie being that the I Ills arc paid, not to prefer the bill-holders, but m enable the debtor to continue his business. Ri' Clay of purpose and belief, the Bills of Exchange Act and the Sale of Goods Act both contain the following definition : — "A thing is deemed to be done in good faith I" within the meaning of this Act, when it is in " fact done honestly, whether it be done " negligently or not." The question has been raised as to whether the above definition excludes the maxim — Gross negligence is held equivalent to intentional wrong. oods. — The expression " goods," within the meaning of the Sale, of Goods Act 1893, includes all chattels personal, other than things in action and money. The term includes emblements, industrial growing crops, and things attached to and forming part of the land which are agreed to be severed before sale or under the contract of sale. " Future " goods are also subject to the Act, i.e., goods to be manufactured or acquired by a seller subsequently to tin making of a contract for the sale of them. The Factors Act 1889 provides that for the pur- poses of the Act the expression " Goods " includes Wares and merchandise. The Bankruptcy Act 1883 provides that the term " goods " includes " all chattels personal "; but fixtures attached to the freehold are not goods within the meaning of the " order or disposition " section. oods Account. — One to which the commencing stock and subsequent purchases and returned sales are debited, and the sales, returned purchases, and ending stock are credited, the balance showing the gross profit or loss during the intervening period. Or it may contain the above items exclusive of the stock valuations; but the more commendable 249 [Goodwill method is to keep a separate Sales Account and Purchases Account, treating with the respective returns in each case, to allow of the net sales and net purchases being shown by independent accounts. (See Gross Profit.) Should the business be capable of division into departments, or various classes of trading, separate accounts may be necessary for each sub- division, according to the analysis afforded by the Sale and Purchase Books, so as to show the result of each department or class independently. Goods in Transit. — Goods are sometimes shipped from one country to another through a British port. On the arrival of the goods at the latter port they are declared as in transit, and avoid customs (if any) and a certain proportion of the port dues. If it were not known at the time of shipment that the goods were in transit, and they had been declared as for home consumption, the declaration may be amended. A bond is required by the Revenue authorities to the effect that the goods (if dutiable) will be exported. (See Stoppage in transitu.) Goodwill. — Definition. — When considering the term " goodwill " the precise circumstances of the par- ticular case and the class of business in question are of importance. This being so, the varying classes of businesses to which goodwill applies render it difficult, if not impossible, to give one definition which would be complete and satisfac- tory for all cases. Consequently several of the various definitions (many of which are really " descriptions ") which have been given from time to time are deemed necessary for a thorough comprehension of the subject, for goodwill may be wholly, or in part, a question of locality, or of specific premises, of reputation, of quality of goods, or a matter of name only. Goodwill is property, and as such may be made the subject of sale, gift, mortgage, or bequest. Agreements for the sale or conveyance thereof are subject to ad valorem stamp duty. (Commis- sioners v. Angus <3~ Co., Urn., 23 O.B.D. 579.) Whether goodwill is realty or personalty depends upon the nature of the property to which it is attached and upon other circumstances. Goodwill] 250 [Qoodwill il, Goodwill was recognised as an asset in the Courts at least as early as 1743, but one of the earliest legal definitions was that in Cruttwell v. Lye (1810, 17 Ves. 33s), when Lord Eldon said. " Goodwill is nothing more than the pro- " bability that the old customers will resort to " the old place." In this case, however, the business was that of a waggoner or carrier, and the value of the goodwill depended almost wholly upon locality, but obviously this would not always be the chief consideration, and some years later, in the case of Churton v. Douglas (1859, 28 L.J. Ch. 841), Vice- Chancellor Wood said: — " Lord Eldon did not ' mean to confine the rights involved in the term ' goodwill to the advantage of occupying premises ' to which customers were in the habit of going." ' Goodwill " (the Vice-Chancellor proceeded to say) " must mean every advantage (affirmative ' advantage, if I may so express it, as contrasted ' with the negative advantage of the vendor not ' carrying on the business himself) that has been ' acquired by the old firm by carrying on its busi- ' ness, everything connected with the premises ' and the name of the firm, and everything con- ' nected with or carrying with it the benefits of ' the business." Goodwill is the " benefit arising from connec- tion and reputation." [Lindley.] Goodwill is " the advantage or benefit which " is acquired by an establishment beyond the " mere value of the capital stock, funds, or pro- " perty employed therein in consequence of the " general public patronage and encouragement " which it receives from constant or habitual " customers on account of its local position, or " common celebrity or reputation for skill or " affluence or punctuality or from other acci- " dental circumstances and necessities or even " from partialities or prejudices." [Story.] In the case of the Commissioners of Inland Revenue v. M idler (1901, A.C. 217), the question as to whether the words " property locally situate " used in the Stamp Act 1891 could be applied to goodwill was decided in the affirma- tive, and the following extract from one of the judgments is important: — Lord Macnaghten said: — "What is goodwill? " It is a thing very easy to describe, very difficult " to define. It is the benefit and advantage of " the good name, reputation, and connection of " a business. It is the attractive force which " brings in custom. It is the one thing which " distinguishes an old-established business from a " new business at its first start. The goodwill " of a business must emanate from a particular " centre or source. However widely extended or " diffused its influence may be, goodwill is worth " nothing unless it has power of attraction " sufficient to bring customers home to the source " from which it emanates. Goodwill is com- " posed of a variety of elements. It differs in its " composition in different trades and in different " businesses in the same trade. One element may " preponderate here and another element there. "... For my part, I think that if there is " one attribute common to all casts of goodwill " it is the attribute of locality, for goodwill has " no independent existence. It cannot subsist by " itself. It must be attached to a business. " Destroy the business and the goodwill perishes " with it, though elements remain which perhaps " may be gathered up and be revived again. No " doubt, where the reputation of a business is " verv widely spread, or where it is the article " produced rather than the producer of the article " that has won popular favour, it may be difficult " to localise goodwill." Mr. T. M. Stevens, D.C.I-., summarised the various definitions upon goodwill thus: — "All that " can be gathered from the various definitions is " that where the locality of the business premises " makes the trade, goodwill represents the advan- " tage derived from the chance that customers " will frequent the premises in which the busi- " ness has been carried on ; that where the busi- " ness is one which depends upon the reputation " of a firm, the goodwill consists of the advantage " which the owner derives from being allowed to- " represent himself as such; that where the busi- " ness is due to the individuality of the owner, " and where its reputation cannot be separated " from his, the goodwill is all but non-existent; " and that where the value of the business " depends upon the business connection, the good- Codwill will consists of the right to be properly intro- duced to those connections." .Mr. L. R. Dicksee, M.Com., F.C.A., in dis- ussing the basis of value of goodwill, says lat : — " When a man pays for goodwill he pays for something which places him in the position of being able to earn more money than he would be able to do bv his own unaided efforts." Mr. E. Guthrie, F.C.A., has said:—" The term goodwill is a very natural one, and, I think, indicates what is meant better than any other word would do. It represents the goodwill with which the person, the place, the name, or the association is regarded. It assures the direc- tion of the footsteps of customers towards the customary place — that involuntary cerebration, as the philosopher puts it, whereby the act of walking is performed without conscious exer- tion of the will. It is a magnetism generated in and about a person and his entourage ; some- times exerted solely from within, sometimes exerted solely from without, but, most generally, partly from within and partly from without. "And what is the measure of value in pecuniary terms of this intangible thing? I state it as the difference between the value of the normal results of the working of any business or pro- fession which may be established by, and as worked by, any person in any place, and the results of working any individual business of a similar character. Thus, given a business, the goodwill of which is for disposal, there would be no valuable goodwill if anyone could do just as well by establishing a business de novo. To start a business has its risks, which may often !»• described as very serious risks, but apart from the more perilous risks of failing to take proper root, there is the often weary time, some- limes a long term of years, during which a sufficient connection is being got together to bring the business up to a standard paying basis which will give it a goodwill value, or bring a goodwill value into sight. To be spared this period of what I may call perilous probation is thing worth paying for, even though its maintenance from this point needs the con- 251 [Goodwill " tinued energy and industry by which it was " built up by the original proprietor. Time, " money and anxiety saved is money made. This " is what is worth paying for, and, in this degree, " a goodwill value attaches to an established " business." Partnership. In the absence of an express agreement to the contrary between the partners the goodwill of the partnership is the common property of the firm, and on a dissolution, whether by the death of a partner or otherwise, each of the partners or his representative has the right to have the goodwill sold or otherwise brought into account for the benefit of all the partners, pending which sale (or other mode of settlement) the partners or sur- viving partners should not so conduct themselves (by recommencing business individually or other- wise) as to affect in any way the value of their common property. But the surviving or con- tinuing partners cannot be restrained from con- tinuing in business, that is to say, unless the surviving or continuing partners voluntarily agree to withdraw from the business, or such class of business, or from the particular district, the good- will of the business in question can only be sold, or brought to account upon the basis of and subject to the right of the surviving or continuing partners to compete against the buyer, subject, of course, to the general limitations imposed upon vendors set out under the heading Sale {infra). This right, therefore, considerably reduces the value of goodwill under the circumstances, even if it does not destroy it altogether. The method of dealing with the goodwill of a partnership business in the event of a dissolution arising from the death, bankruptcy, or retire- ment of a partner is, however, nowadays invariably provided for in the articles of partner- ship, not only the basis of valuation, but the mode of payment therefor being carefully settled. Sometimes it is expressly stated that upon a dis- solution no allowance whatever shall be made for goodwill, while in other instances a fixed sum is stated as being the agreed value for the purpose of adjusting the rights of the partners between Goodwill] 252 Goodwill themselves. A more equitable method, however (and one largely adopted), is to agree to take the goodwill as being worth one, two, three, or more years' purchase (dependent upon circumstances) of the annual profits of the business, such profits to be ascertained upon the average annual profits of the two, three, or more years immediately pre- ceding the date upon which the dissolution arises. As to the mode of payment of a deceased or retiring partner's share in the partnership (including goodwill), it is generally agreed that payment can be made in instalments spread over one, two, or three years, with stipulations as to interest upon unpaid portions of the share value. It should be stated here that where a partner retires under an agreement with his co-partner or co-partners, one of the terms of the agreement being that the goodwill of the business shall belong to the continuing partner or partners, he (the retiring partner) is subject to the same general restrictions with regard to competition, solicitations, &c, as a vendor of a goodwill for valuable consideration. (Trego v. Hunt, 1896, App. Cas. 7.) In the articles of partnership in Hunter v. Dowling (1895, 2 Ch. 223) it was agreed that if any partner should die during the continuance of the partnership the amount of his share and interest in the partnership should be taken as being the amount appearing as standing to his credit in the last annual Balance Sheet. Here the represen- tatives of a deceased partner were not allowed to claim anything for his share in the goodwill, because no amount representing the value of the goodwill had been included in any of the Balance Sheets. But in the above case the partners had really agreed in their articles upon the question of goodwill, and this decision does not affect the general rule that, apart from an agreement to the contrary between the partners, the goodwill of the partnership (for what it is worth under the circumstances set out above) is the common pro- perty of the partners, and the mere fact that the goodwill is not valued and included among the assets in the periodical Balance Sheets of the partnership whilst a going concern, does not of itself deprive a retiring partner or the representa- tive of a deceased partner of his due share of the value of the goodwill whatever that value may be. Sale. The purchaser of the. goodwill of a business acquires the right to represent himself as being the successor to the business, and (ordinarily) h may use the trade name by which the business has become known (Levy v. Walker, 1S79. 10 Ch.D. 436), but he will not be permitted to use the old name in such a manner as would render the vendor liable for any debts incurred by the pur- chaser in the old name. (Thynne v. Shove, 1890, , 45 Ch.D. 577.) Per contra, the vendor may be restrained from continuing to trade in his own name if it was in that name that he formerly carried on the business, and it can also b shown (1) that he is attempting to deceive the public into the belief that he is still the owner of the old business; or (2) that it would be impos- sible so to trade without misleading the public. (Cash, Um. v. Cash, no L.T. 427.) Nor can the vendor of the goodwill of a business set up another business under any name which might lead people to infer that he was still carrying 01 the old business, and in particular the vendor may not personally or by circular solicit the customers of his former business, and ! deteriorate the value of the goodwill he has sold. But he may publicly advertise the fact that he has commenced a new business, for the restrictions imposed upon the vendor by the general law (as distinguished from any special covenants between the parties) do not extend so far as to prevent the vendor of a business from dealing with his former customers under aity circumstances, or to grant the purchaser the right to insist upon the virtual retirement from the trade of the late owner of the business. (See Trego v. Hunt, 1S96, App. Cas. 7, and the various decisions there cited.) In the course of the judgment in Trego v. Hunt Lord Macnaghten said: — "And so it has resulted that " a person who sells the goodwill of his business " is under no obligation to retire from the field. " Trade he undoubtedly may, and in the very " same line of business. If he has not bound " himself by special stipulation, and if there is no " evidence of the understanding of the parties toodwill] ' beyond that which is to be found in all cases, he ' is free to carry on business wherever he chooses. ' But then how far may he go? He may do ' everything that a stranger to the business, in ' ordinarv course, would be in a position to do. ' He may set up where he will. He may push ' his wares as much as he pleases. He may thus ' interfere with the custom of his neighbour as a ' stranger and an outsider might do; but he must ' not, I think, avail himself of his special know- ' ledge of the old customers to regain, without • consideration, that which he has parted with for ' value. He must not make his approaches from ' the vantage ground of his former position, ' moving under cover of a connection which is no ' longer his. He may not sell the custom and ' steal away the customers in that fashion. . . It is quite true that it would be better ' that the purchaser should protect himself by taking apt covenants from the person with ' whom he is dealing. But this, I think, is ' rather a counsel of perfection than a reason for ' leaving the purchaser entirely at the mercy of ' the vendor." Of course, the above considerations affect and ontrol a person who parts with his rights in the goodwill of a business for valuable consideration, xit it would appear that the restrictions as to :ompetition and the solicitation of the old ustomers do not apply where the alienation of he goodwill is involuntary, the Court having 'efused to restrain a bankrupt from soliciting Jrders from his old customers after the trustee in .In- bankruptcy had sold the business. (Walker Mottram, 1881, 19 Ch.D. 355.) It has been held, however, that a debtor under I of arrangement is not an involuntary party :o the sale of his business. Thus, where a trustee under a deed of assignment for the benefit of reditors sold the goodwill of the debtor's busi- [Jtss, the estate was held responsible for the i: .mage done to a purchaser as the result of sub- it canvassing by the debtor of the customers f tin business which had been sold. To avoid any possible misunderstanding it is ibviously desirable for a purchaser to protect him- by requiring the vendor to enter into an 253 [Goodwill agreement expressly restraining him from com- peting against or otherwise acting so as to deteriorate the business he is selling. This is more satisfactory for both vendor and purchaser, for the latter, instead of relying upon the general protective provisions of the law, may prescribe for himself such protective clauses as, in his opinion, the particular business and the peculiar circum- stances demand, while the vendor, finding in a concise form what is required of him in regard to his future conduct, may more fairly assess the consideration for the sale of his business, for it naturally follows that the more restrictive the agreement of sale, the more valuable the business will be to the purchaser, and the less valuable the future business prospects of the vendor. But it must be remembered that an agreement purport- ing to restrain trade must be reasonable, for if it be unreasonable it cannot be enforced, because such restraints are deemed injurious to the public interests of the country. The elements of reasonableness in this connec- tion are: — (a) Valuable consideration for the restraint (even though the agreement be under seal) ; and (6) partial restraint only, i.e., limited as to a particular area or a given number of years. In an exceptional case (Nordenfeldt v. Maxim Nordenfeldt Guns, <5>-c, 1894, App. Cas. 535) an agreement for total restraint was upheld, but that does not appear to affect the general rule that an unreasonable restraint of trade— an agreement going further than is really necessary for the pro- tection of the purchaser— cannot be enforced. The question as to whether or not the goodwill of a business passes on a sale or under a mortgage of the premises where such business is carried on, depends upon whether the goodwill and the premises are severable or not. If not severable the goodwill will pass with the property, but where the goodwill is dependent upon the per- sonal skill of the mortgagor it will not pass under a mortgage of the business premises. (Cooper v. Metropolitan Board of Works, 1883, 25 Ch.D. 4/2-) The vendor of the goodwill of a business who sells in consideration of a share in the future profits of the business will be postponed (as Goodwill] 2 54 [Goodwill will against other creditors) in respect of any claim he might have in respect of same against the pur- chaser of the business in the event of such purchaser becoming insolvent. (Partnership Act 1890, section 3.) Where a person pays a premium by way of purchase of an interest as a partner in the good- will (or profits) of a business, and the partner- ship is prematurely dissolved through no fault of that person, provision is made in the Partnership Act, 1890, section 40, whereby such person may obtain a return of a proportionate part of the premium so paid unless an agreement of dissolu- tion has actually been entered into between the partners, and such agreement contains no pro- vision for a return of any part of the premium. Valuation*. Not only the value of a goodwill, but also the method adopted in arriving at the value must necessarily depend upon circumstances, for the annual profits of a given business ascertained in the ordinary way will not, as a rule, be the precise basis for the valuation, while the number of years' purchase also varies considerably, depending so much upon the particular circum- stances affecting each business. The annual profits to be taken as the basis of valuation (assuming same to be agreed upon as a factor) require to be carefully examined and adjusted where considered necessary, so as to make proper allowance for — (1) The skilled supervision or other service necessary for the maintenance of the business, which has been exercised in the past by the pro- prietors. This, on a sale of the goodwill, would have to be undertaken either by the vendors (at a salary) or by the purchaser himself, or by a manager at a salary, and should be allowed for accordingly. (2) The interest on the capital which would necessarily be employed in the business (including in the case of purchase the amount about to be paid for the goodwill). The capital employed to purchase and carry on the business would need to be withdrawn from some other income-producing investment, and allowance for the resultant loss of income must therefore be made. (3) Some accountants contend that in ascertain- ing the annual profits, income-tax (Scheduf should not be treated as an expense in carrying on the business, while others are of the contrar opinion. But it is advisable, when negotiations for the purchase of the goodwill of a business are pro- ceeding upon the basis of so many years' purchase of the average annual profits, to state specifically not only the number of years' purchase, but also the number of years over which the annual average is to be computed, the rate of allowance (if any) to be made for the proprietor's services, | and the rate of interest to be allowed on the ■ capital to be employed (including the cost of I goodwill), and how special outgoings (e.g., income-tax) are to be treated in ascertainiiu amount of the average annual profits. The number of years' purchase of the a: profits (as adjusted) will vary according circumstances, and will depend mainly upon the probability of the continuity of the business with similar results to those of the past, notwithstand- ing the change in the proprietorship or manage- ment. Bearing upon this question of continuity, the following points may be considered : — (1) Date the business was established. (2) Whether proprietors are continuing their services. If not, will they compete with the | purchaser or be restrained from so doing ? (See title Restraint of Trade.) Nature and extent of services rendered in the past. If not continuing, can they be replaced without loss to the business? If to be replaced, what is the estimated cost of such replacement? (3) Nature of the business. Is the subject- , matter of trading a necessity, or a luxury, or something affected by the caprice of fashion? If the business attached to the " person " of the proprietor, or the premises, or the reputation connected with the trade name ? Is the volume of business done the result of successful compe- tition, or has the proprietor a monopoly? Are Uodwill] Ihere any circumstances or conditions likely to iffect the future working which were not ipplicable to the past (e.g., the recent establish. mat of a rival, or the expiry or supersession of a latent) ? (4) Tenure of premises. If leasehold, whether he future rent under the lease is to be higher han in the past— what is the probability of •enewal, and at what rent? (5) Number of customers, whether changeable >r constant? Is there any falling •ustomers off in best ? Generally, whether a declining busi- ness so far as can be judged from past results? .Vhether business mainly conducted by sales mder large contracts requiring periodical [enewal? Whether, assuming renewal, the same Irices will be obtainable in the future? Whether Iny unfavourable contracts are to be taken over? tome contracts may have been favourable up to Bie ending date of the period under review, while ubsiquent circumstances may have affected them onsiderably. Whether the results of the period nvestigated have been inflated by the happening f events, or the obtaining of exceptional con- racts, which cannot reasonably be expected to ecur? (6) Whether the purchases for the past have een made upon an ordinary basis, and one upon ,-hich it may reasonably be supposed future pur- hases may be effected, or whether exceptionally irge purchases were made by contract or other- ise under conditions which cannot reasonably be ipected to recur? Sometimes a business is offered for sale at a rice which contains little or nothing for good- ill (qu& goodwill), but as the purchase involves le acquisition of a large amount of machinery some of which may be old-fashioned), or the iking over of an onerous lease, it should be inember^d that the amount which is really being i aid for goodwill is larger than the amount ominally fixed for the same. The number of years' purchase of the goodwill [ a trading concern varies from one to four or re, although many high-class businesses have ought even more. The goodwill of a purely per- )iial business (e.g., a solicitor's) is of a doubtful 255 [Goodwill value apart from the continued co-operation of the person who has actually built it up, or of one who has at least been actively connected with the clients for some time. But some advantage in the nature of goodwill can be obtained by pur- chase, e.g., introductions to the clients, possession of the draft papers, particularly those relating to pending matters, the books of account, and, lastly, but by no means the least, the tenancy of the offices where the business has been carried on. In the event of a business being acquired by a company where, as Mr. L. R. Dicksee, M.Com., F.C.A., says, "the shareholders are not workers, but investors," the amount charged for goodwill is generally larger than would be obtainable from a single individual. This fact, however, is con- siderably affected by the circumstance of a vendor, or the vendors, being paid to a great extent in ordinary shares ; so much so, that where — to take an extreme case — a vendor takes the whole of the ordinary or deferred ordinary shares in payment or part payment of purchase- money, and the nominal value of such shares equals or exceeds the amount stated as being paid for goodwill, the magnitude of the amount so stated does not seriously affect the holders of the shares earning prior rights to those allotted to the vendor. The question of how much was " paid " for the goodwill would, however, affect any subsequent purchasers of the vendor's shares. It should be noted that section Si of the Com- panies (Consolidation) Act 1908 provides that: — Every prospectus issued by or on behalf of a company, or by or on behalf of any person who is or has been engaged or interested in the forma- tion of the company, must state (inter alia) the amount (if any) paid or payable as purchase- money in cash, shares, or debentures for goodwill. These particulars are also to be included in the " Statement in lieu of prospectus " (see that title), which has to be filed by certain companies. Compensation. Where a trader is compelled to vacate his premises by reason of the lands being taken under statutory powers, he is entitled to compensation Goodwill] 256 [Goodwill for such disturbance to the extent of any diminu- tion or extinction of his goodwill in consequence of the removal, quite apart from any compensa- tion he may be entitled to in respect of loss or damage to stock, fixtures, or other assets. " When lands, however, are taken under " compulsory powers, the goodwill is not pur- " chased by the promoters but remains the pro- " petty of the trader, and the loss suffered by " him is the diminution in its value in conse- " quence of his compulsory ejectment from the " premises he is occupying. So far from the " goodwill being purchased or destroyed by the " promoters, there are many cases in which the " diminution in its value is hardly appreciable, " although the trade premises have compul- " sorily been taken. If a business is of a " wholesale character, or is one which consists " of orders from a widely extended area, a " compulsory change of trade premises would " be productive of small loss. If, in addition, " convenient premises can be acquired in the " immediate neighbourhood of the premises " taken, the loss incurred through diminution in " the value of goodwill becomes merely " nominal, and the owner's only claim to com- " pensation is in respect of any reasonable " expenses which the taking of equally con- " venient new premises has rendered necessary. " On the other hand, there are cases in which " the diminution in the value of a goodwill " may almost equal the entire value of a good- " will. This is the case where a business is " retail and local, depending on neighbouring " customers, and no suitable premises can be " lound in the locality within which the busi- " ness connection extends. . . . Where " premises are taken and business is carried on " at a loss, the owner may be entitled to com- " pensation on the ground that, but for com- " pulsorv powers, he would have been entitled " to remain on the premises and to carry on " his business." [Cripps.] Treatment of Goodwill in Accounts. (1) Partnership. — Ordinarily the Balance Sheet of a partnership does not include any item for goodwill as an asset, and it has been already stated that the mere fact that no value for good- will is stated in the accounts docs not of itself affect the respective partners' rights in regard thereto in the event of a dissolution. Where because of — (1) the purchase of the goodwill of the business; (2) the purchase of an additional business ; (3) the sale of a portion of the existing business; (4) the admission of a new partner on terms as to goodwill ; (5) the retirement or death of a partner involving a payment in respect of his share in the goodwill, or because of some other special circumstance, an amount for goodwill does " transpire " (whether receivable or payable), it is as a rule either withdrawn entirely from the partnership property, or passed in proper propor- tions to the credit or debit (as the case may be) of the Capital Accounts of all or such of the partners who, in accordance with the arrange- ments entered into in each particular case, may be entitled thereto or responsible therefor. In eliminating the item goodwill from the accounts, it must, in the absence of an agreement to the contrary, be dealt with on the basis upon which profits are divided. For instance, if A. and B. are partners, sharing profits as to A. three- fourths and B. one-fourth, and C. pays £1,000 for one-fifth share in the future profits of the busi- ness, and brings a further £1,000 into the busi- ness as his capital, the latter £1,000 will be added to the assets of the firm, and credit therefor will be given to C. in his Capital Account with the firm. As regards the £1,000 paid for one-fifth share in the profits, A. and B. are entitled to it in the proportions of three-fourths and one-fourth respectively, for in future their shares of the profits will be less (viz., three-fifths and one-fifth respectively), and the price paid by C. for one- fifth share of the profits is the capital value of the forbearance by A. and B. in taking three-fifths and one-fifth in future instead of three-fourths and one-fourth as in the past. Thus A. is entitled to £750, and B. to £250, and this may be dealt with in various ways. The £1,000 need no! appear in the Partnership Accounts at all (or ma_\ appear merely as a memorandum), and A. and B can take their respective shares of the £i,ooc directly from C. On the other hand, it may bt I considered that, owing to the possible develop- I ioodwill merits caused by C.'s admission, the £1,000 intro- duced by him (as capital) is not sufficient addi- tional capital, and A. and B. may arrange to take credit for the ,£1,000 paid as goodwill in their Capital Accounts in the proper proportions, thus g the £2,000 in the business as additional capital. Another method of dealing with the above example is as follows : — A. and B. might put a value (say £5,000) upon the goodwill and include it among the assets, adding £3,750 and £1,250 respectively to their Capital Accounts, and then approach C, offering to allow him to place £2,000 in the business as his capital on the basis of the £5,000 for goodwill being deemed an asset of th. firm as newly constituted. This would amount to the same thing as regards the three partners as under the previous arrangement, for upon the elimination of the item of goodwill from the Balance Sheet at any future time, C. would be charged with one-fifth of the amount, leaving his capital, apart from his share in the goodwill, £1,000 as before. A point to be borne in mind where an amount for goodwill does appear as an asset in the Balance Sheet is this : it may have been " created " when partners divided profits in certain proportions, and it should certainly be eliminated by a proportionate charge against the Capital Accounts before any change takes place in the manner of dividing profits among the partners inter se. (2) Joint Stock Company. — The " capital adjustment " of the item of goodwill (permissible in the accounts of a private individual or a part- nership) cannot be effected in the case of a joint- stock company, the capital of which can only be increased or reduced by statutory methods, and some difference of opinion exists among account- ants as to the proper method of dealing with the item of goodwill after it has once become engrafted in the Balance Sheet, and included as part of the capital of the company. It is, of course, clear that, if it is decided to eliminate the asset from the Balance Sheet, the amount cannot be deducted from the capital of ompany. If, therefore, it is to be written off, in whole or part, it can only be so dealt with by an appropriation of revenue, whether current or 257 Goodwill accumulated. That such a course is incorrect in principle, so far as regards current profits, can hardly be doubted; and it may be pointed out that, as ordinarily the value of the goodwill of a busi- ness depends for its continued existence upon the profitable results of such business, the " writing off " of such an asset out of current profits would be in many cases theoretically improper, in that the possibility of its elimination in this way may afford the best proof of its value. At the same time, directors and shareholders may wisely agree to forego a portion of the " legally divisible profit " in order to reduce or eliminate the amount at which the goodwill stands ill the books, and so improve the financial position of the company, for, notwithstanding the reduc- tion of the book value of the goodwill, the actual value, if any, is unaffected (at all events not reduced) by such a proceeding. Some companies have written off the whole of the original cost of the goodwill by an appropriation of profits, but the Balance Sheets issued from time to time continue to state the original cost of the goodwill upon the assets' side, placing the amount in an inner column; and this practice overcomes to a great extent one of the objections raised by those who favour the retention of the goodwill at the original cost. The following extract from The Accountant newspaper may be taken as an expression of the more generally accepted accountancy view of this matter : — " Inasmuch as goodwill is a fixed asset, it is " an item which it is not necessary to value " for Balance Sheet purposes at its actual " realisable value at the date of the balancing. " The general principle upon which the fixed or " permanent assets of a company are valued for " Balance Sheet purposes is that of a going con- " cerri — that is to say, there is no occasion to " take into account temporary fluctuations " which might involve gains or losses, if the " whole undertaking had to be converted into " cash at short notice. Consequently, fluctua- " tions in the value of goodwill arising from an " increase or decrease in the average profits of " the company are an item which, from an Goodwill] 258 Goodwill " accountancy point of view at least, ought not " to be iaken into account in arriving at its true " position of affairs by means of a Balance " Sheet. The question as to whether or not it is " desirable or necessary that something should " be periodically written off the value of good- " will is quite another matter, however, and " one upon which there is a less unanimous " opinion." It has been held and stated by no less an authority than Mr. T. A. Welton, F.C.A., that it is undesirable to write anything off the value of ""goodwill as stated in the original accounts, he being of the opinion that it is very much more desirable that anything which it may be con- sidered expedient to put aside out of profits should be accumulated in the form of a reserve fund. There is certainly much to be said in favour of this view ; and, notwithstanding the fact that good- will may either appreciate or depreciate, it is quite wrong, as a matter of principle, that either variation should be considered as affecting, either one way or the other, the actual profits earned by the undertaking. If effect were to be given in the accounts to a temporary depreciation of good- will by charging the difference against diminished profits, the effect would be that the temporary decrease in the company's prosperity would be enormously exaggerated. The first object of accounts is to record a true statement, not only of the company's financial position, but also of its trading for the current period ; and this latter is naturally obscured if any extraneous profits or losses (which are entirely unrealisable or problematical, as the case may be) are allowed to affect the Profit and Loss Account. """Even when it is thought desirable to write off goodwill gradually, the proper method of doing so is undoubtedly not by means of a charge to Profit and Loss Account, but by an allocation of a por- tion of the net profits to that purpose, instead of the whole of such profits being distributed in dividends. That is to say, anything which is credited to Goodwill Account (like anything which may be credited to the reserve fund) must be a sum set aside out of profits, and is not a charge against profits. The further views of Mr. T. A. Welton, F.C.A., are as follow : — "As for depreciation of goodwill where an amount has been paid for same, I think a great deal depends on the question whether, by the light of experience, it appears that too heavy a price has been paid; if so, then a depreciation is desirable down to the point at which the real value is arrived at. I mean the value upon which a fair dividend can be earned. But the very paucity of earnings is likely to stand in the way of specially pro- viding for a depreciation, which practically affects the shareholder in the form of a fall below par in the market value of the shares. The poor income attainable needs to be again decreased for the sake of replacing misspent capital and bringing the market value to par. Existing shareholders ordinarily object to do so much for posterity. . . . One of the most singular contrasts I know of is that between a grave person who holds, against all argument, that goodwill is an unreal asset and ought to be written off out of profits, and the same person who buys, say, North- western Railway Stock at 160 per cent, (written in 1887), or bank shares at 2I times the sum paid upon them. Such people are oblivious that in paying such prices they are recognising goodwill handsomely; nor did I ever meet with one of them who forbore to eat up his dividend in such a case until out of profits he had replaced the premium in his purse." Mr. E. Guthrie, F.C.A., has said that as (with few, if any, exceptions) no goodwill may be pro- perly treated as eternal, some, provision, however small, ought to be made for its gradual reduction. However commendable and prudent it may be upon the part of the directors and shareholders of a company, it should be noted that no legal I obligation rests upon them to provide for the n reduction of the book value of the goodwill before • declaring a dividend ; and the attitude of an auditor of a company in this connection is well defined by Mr. L. R. Dicksee, M.Com., F.C.A., * in his excellent work on "Auditing": — oodwill] 259 [Goodwill " The amount at which goodwill is stated in ' a Balance Sheet is never supposed to repre- ' sent either its maximum or minimum value; ' no one who thought of purchasing a business ' would be in the least influenced by the ' amount at which the goodwill was stated in ' the accounts; in short, the amount is abso- ' lutely meaningless, except as an indication ' what the goodwill may have cost in the first ' instance. Inasmuch, therefore, as nobody can ' be deceived by its retention, there is no neces- ' sity for the amount of Goodwill Account to be ' written down. On the other hand, the prac- ' tice is not unusual where any profits are being ' made. The question is not, however, one ' upon which the auditor is required to express ' an opinion; and so long as the item is ' separately stated on the Balance Sheet, it is ' not desirable that he should interfere with the ' discretion of the management, although there ' is, of course, no objection to his offering an ' opinion when he is invited to do so." It should be noted, however, that the above remarks apply to the amount at which the item goodwill stood originally in the accounts of a par- ticular company, and not to expenditure upon advertising or losses and expenses in experiment- ing, &c, incurred by the company with the object of creating a goodwill, for although such expenses or losses may have a value in that they are the inevitable means to a desirable end, yet they should be capitalised most cautiously. In such a case, an auditor should see that the item is separately and plainly stated upon the Balance Sheet, so that shareholders may know that certain expenditure is being made or loss incurred which is not being charged to Revenue Account. Where, from the nature of the business to be carried on by a company, it is anticipated that extraordinary • > pi nditure on advertising, &c, will be necessary at the outset, the articles of association generally provide for the temporary capitalisation of same so that it may be gradually written off against profits. It may be mentioned that the original Table A attached to the Companies Act 1862 con- tained such a provision, but the new Table A, which came into force on 1st October 1906, is silent upon the point. In such cases an auditor may safely follow the provisions of the articles in this respect, although even under these circum- stances he should see that the expenditure capitalised (for the time being) is plainly stated in the Balance Sheet. As regards the treatment of the item goodwill in the accounts of a limited company, the position may be summarised thus : — (1) Fluctuations in the " value " of goodwill should not be recorded in the accounts. (2) In particular, such fluctuations should not be allowed to affect the current profits. (3) There is no legal necessity to reduce the amount representing the original cost of the goodwill. Note. — In Wilmer v. McXamara (1895, 2 Ch. 245) it was held that the goodwill of a trading company was in the nature of fixed capital, and accordingly it was not necessary (in the absence of some special provision in the company's regulations) to make good any depreciation of the goodwill in ascertaining the amount of profit avail- able for dividend. (4) The auditor therefore cannot object to the amount representing the original cost of goodwill being kept intact, so long as it is plainly stated in the Balance Sheet. But he should, nevertheless, carefully scrutinise capitalised expenditure (such as advertising, &c.) and see (a) that it is plainly stated in the Balance Sheet, (b) that the provisions (if any) in the articles in this connection are carried out, and (c) that no items are included which are clearly chargeable wholly against the current period's profits. (5) If the goodwill be written down it must be understood as an appropriation of profits, \ and not as a charge against same. (6) If a portion of the profits be so appro- priated instead of being distributed in dividend, some authorities consider it better to accumulate same separately, leaving intact the original amount representing the book value of the goodwill. S 2 Goodwill, 260 Gross Note. — Against this plan it is urged that in practice there is some difficulty in depriving shareholders of certain companies of the " full dividend " for general reserve purposes only, whereas if the portion of profit the directors desire to retain is " appropriated " to reduce or eliminate the goodwill, the difficulty is to a great extent removed, although the financial effect is the same. It is also contended by some that, if the amount of undistributed profit be not actually utilised in reducing or eliminating the goodwill, but is allowed to accumulate separately, there is a temptation to write such profits back again at some future date and distribute same in dividend should necessity arise. [Contributed by the author to the Encyclo- paedia of Accounting, and reproduced here (with revisions) by permission.] Governing Director. — When forming certain " private " limited companies the proprietor or chief partner of the business is appointed a governing director of the company. The terms of his appointment, the extent of his powers, &c, are enumerated in the articles of association, and generally take the following form : — Appointment. — For life, or until he voluntarily retires or ceases to hold a stated number of shares in the company ; in the latter event it is generally provided that he does not retire altogether, but becomes an ordinary director. Powers.— To control the ordinary directors generally, and in particular it is sometimes pro- vided that all transactions of the ordinary direc- tors involving an amount by way of purchase or loan in excess of a stated sum shall be subject to his veto. To appoint and remove the ordinary directors. Gratuitous Agent. — See Agent. Gross Profit. — The difference between the cost of goods which have been sold, and the proceeds of their sale, without any deduction in respect of the expenses of distribution of the goods or the cost of the general management and maintenance of the business. The cost of the goods includi the case of a manufacturer, materials, prod labour, rent, rates, &c, in respect of the premise! used jor manufacture, depreciation of such premises and of the machinery employed, and any other expenditure directly attributable to the manu- factory. The account which shows the gfl profit is called the Trading Account, but in the case of a manufacturing business the Trading Account may be divided into two parts, the Manufacturing Account and the Selling Account. (See title Manufacturers' Accounts.) There are differences of opinion among account- 1 ants as to whether or not discounts purchases and sales are factors in the deter tion of the gross profit of a concern, contend that discounts on sales are expenseeMI distribution, whilst discounts on purchases are th result of the financial resources and arrangenjB of the concern, and as a consequence must n be included in the Trading Account. It is *V| mitted that trade discounts on sales or purcha^l (viz., such as would be allowed by or to the cM cern irrespective of the date of paymen be deducted from the sales and purchases respec- tively in preparing the Trading Account, whilst, cash discounts must be excluded therefrom SM treated in the account which determines t! profit. So with regard to rent and rates of a nianu-. factory, although undoubtedly part of the prim cost of the goods produced, there are differences < opinion as to their treatment in the accou«(| Whereas wages and materials vary with t quantity of goods produced, items such as reifl factory do not, and some writers ad\ inclusion in the gross profit account of t^H classes of expenditure only which r. with the output. Having regard to the f that even the " stationary " items are admitH part of the prime cost it is more consign to treat them as such in the accounts.fi being fully recognised that a small turnov. proportionately bear a larger percentage of thesi " stationary " charges than would be the^^H if the turnover were larger. f-oss Carriage upon goods inward (i.e., purchases) Id be treated as part of the purchasing price ml as a consequence it constitutes a Trading Vccount charge, but carriage upon goods outward ;) is usually treated as an " expense of lUtion," although the principle involved is pparently the same, viz., that the price of goods urchased or sold " carriage paid " presumablv s the cost of carriage, whilst consignments iage forward " would (ordinarilv) be priced nver in consequence, and there is much to be i favour of deducting the amount of such utward carriage from the proceeds of " sales." title Carriage and Cartage.) The ascertainment of the gross profit of a con- cm is of gnat importance, for by a proper n of precentages a trader is enabled to insti- ute comparisons and obtain valuable information the results of his past trading. In this r the weak or strong points of the busi- less may be revealed, a guide for the future sell- ices is obtained (where not restricted by etition), and a check upon the stock of naterials, and the cost of labour is to some extent hirer. (3) Obyiously, the hire payments cannot b treated as profits during the period of hire and the goods hired as a gift from th ) dealer or manufacturer at the end of th , Ire] 267 [Hire term; nor, on the other hand, is it correct that the particular period in which the hiring agreement is commenced should be credited with the whole of the profit on the " artificial sale." The interest charged to the hirer's account, during the period of hire, is merely compensation for deferred payment, but the profit which would be derived if the transaction were an ordinary- sale is, under this system, wholly absorbed by the commencing period ; furthermore, it must be noted that, as the hirer is not com- pelled to pay for future hire, but may return the goods, there is an abnormal risk of the " artificial debt " not being fully realised. It has been suggested that as some interest in the agreement is soon acquired by the hirer, he rarely returns the goods, and, even where he cannot continue his payments, he may succeed in trans- ferring his rights to another person. It must be admitted, however, that where goods are returned they will be those under agreements which the hirer finds most profitable to him and most unprofitable to the dealer or manufacturer to return ; so that it can hardly be expected that profit- able returns will counterbalance those upon which the dealer or manufacturer would incur a loss, only such of the latter class taking place; the " profitable " being either continued to the end or assigned. . — " Sale " System : — (o) Open a Personal Account with the hirer, debiting him at the date of the agreement with the aggregate amount of the instal- ments — thus treating the transaction as an out-and-out sale. (b) Credit the periodical totals of these hire- purchase sales to a Nominal Account headed " Sales on Hire-Purchase." (f) At each stocktaking apportion these total sales for the period between the " cash down " price and the balance representing interest, the former being credited to Trading Account and the latter to an account headed " Hire-Purchase Interest Suspense Account." (d) Apportion this interest to the credit of Revenue over the term of the agreement — e.g., assuming a three years' agreement, credit the first year with (say) three-sixths, the second year two-sixths, and the third year with one-sixth of the interest, or other proportions, according to circumstances. Briefly, it may be said that this system has all the objections attaching to the Loan System. III. — Stock System: — Under this system the goods hired are treated as stock out on hire, the dealer's or manu- facturer's interest in same decreasing (theoreti- cally though not legally) to the same extent as the hirer's interest is acquired. Thus : — (a) An account is opened for the hirer in a Memorandum Ledger (i.e., distinct from the books of account) , all the particulars of the hiring agreement being placed at the head of the account. The whole of the due dates of the instalments and the amounts thereof are tabulated on the debit side of the account. The cost price of the goods hired is also stated (in cypher where necessary) at the head of the account. (6) All receipts in respect of hire are recorded in a separate column in the Cash Book. The items are posted in detail to the credit of the various hirers' (memorandum) accounts, and the total of the hire receipts is posted periodically to " Hire and Purchase " Account. (c) The cost prices of all goods sent out on " hire " are recorded in a Hire and Pur- chase Day Book. The total of these is posted to the credit of Stock Account and to the debit of Hire and Purchase Account, being a transfer of stock at cost price from one department to another. (d) All stock out on hire is valued periodically by extracting the unpaid proportion of the cost from the various hirers' Personal Accounts. For instance, if the cost price of Mire] 268 Hire a wagon is ^48, and it has been hired for four years at £15 per annum, the stock value of the wagon after three years' pay- ments had been made would be £12. The last year's hire payment of £i$ would show the same percentage of profit as those of the other years (viz., 25 per cent, upon cost). (e) All hire payments (if any) in arrear at the date of stocktaking are treated as debts, and the valuation of the goods on hire apportioned as if the hire had been duly- paid to date. The profit in respect of hiring for a particular period will then be shown in the " Hire and Purchase " Account in the following form : — Dr. Cr. Hire Receipts (gross) . . Stock out on litre at end of period (valued on the basis of the unpaid proportions of the various cost prices) . . Slock out on hire at com- mencement of period (valued on the basis of : li< unpaid proportions of the various cost prices) ■ Stock sent out on hire during the period, at rost. per paragraph (r) above Gross Profit for the period Phis system more correctly records the " interest " of the dealer or manufacturer, viz., that of stock-in-trade, and although legally such " interest " does not pass to the hirer until the whole of the hiring conditions are fulfilled, for accountancy purposes it is deemed to pass pro- portionately to the fulfilment of such conditions. Pi rhaps it is more correct to say that, pending the fulfilment of the conditions of the hiring agn ment, the hire receipts are (considered in ili' i,- strictest sense) revenue items, but as there is :, probability that the hirer may comply with tltc whole of tlie conditions and so acquire the subjt et-mnttter absolutely, in order to carry out the spirit, though technically net the letter, of the agn .merit, and further, as a matter of prudence, at apportionment is considered necessary so as to pr. vk'e for the loss of the subject-matter of hire when the property therein passes to the hirer. The stock system is well adapted to businesses such as in si' of piano manufacturers, where there an a considerable number of hirers, for no apportionment (as between capital and inC^^B of the numerous payments in respect of hi necessary — all being carried to one act whilst the Memorandum Ledger serves the d]9 purpose of a Hire Stock Register and a recotCfl the Personal Accounts of the hirers. The [>:■<■ fit under the various agreements is nppor rateably over tlie whole period of hire, whilst interest, which ordinarily is involved in a deft purchase -price, is similarly dealt with, equalisation of the interest is, perhaps, 1*5 strictly correct, and it may be further sugKvBfl that the commencing period (i.e., that whcr^H the transaction is effected) is at least entitf a larger proportion of profit than the laSa periods, but the system has at least thncgfl features : — (1) It records the manufacturer's asset 1 stock. (2) It obviates the necessity of app the " hire payments," and at the saSV time supplies a .Stock Register. (3) It errs, if at all, on the side of prudASa in taking credit for the profit on transaction proportionately over thi period of hire. It is worthy of note that, upon the sale manufacturer's business, or the assets of where the hire system is carried on. the standing asset, in respect of hired stock, shou be treated as stock-in-trade (the property in same not having passed to the hirer), so that I ad :■ ilnrem duty will be payable upon a " conv^H ance " thereof, for stock-in-trade will pa delivery - , while an assignment of I'ook de would be subject to such duty. The value tlie benefit of the hiring agreement will be alrtVa included in the general item " Goodwill." . his Accounts of tlie Hirer: — 1. — " It has been suggested that a simple and "safe method of dealing with the bookkeeping " pertaining to this system is to ascertain what " the ultimate value of the object will be when " the various instalments have been paid. anSj ire] " divide this ultimate value by the number of the " instalments and debit the quotient to capital h time an instalment is paid, the remainder " of the instalments being debited to Profit and - Account. For example, it is suggested " that in the case of a wagon purchased for £60, ' payable in twenty instalments, the ultimate ' value being £40, that as each instalment is ' paid, £2 should be charged to Capital Account, " and £1 to Profit and Loss Account." The points which suggest themselves with egard to this system are : — dO That it is undoubtedly simple, and assuming the accurate assessment of the ultimate value, the result at the end of the period of hire is the same as under the annuity system with interest and depre- ciation involved. (/>) That as interest is included in the deferred purchase-price it must be considered in arriving at the present value, and as depre- ciation affects the ultimate value it must be taken into account in assessing such ultimate value. (c Thus, in order to avoid the consideration of interest and depreciation in the appor- ttionment to capital, it is suggested that an ultimate value be ascertained. But ordinarily such ultimate value can only be ascertained by carefully considering the incidence of the interest involved in the price, and the depreciation of the subject- matter itself. The ultimate value may certainly be assumed, and a review of the essential factors of such value be thereby avoided, but although in such a case the system here suggested might retain its simplicity, it must necessarily cease to be either scientific or safe. (d) That, under any circumstances, interest and depreciation are sufficiently important and their functions so dissimilar that they are entitled to be separately recorded. II. -"An article having been acquired on the system should be debited to 269 [Hire Plant or other appropriate Account at its value " as if purchased for prompt cash, and the differ- " ence between that value and the aggregate amount payable under the purchase-hire agree- " ment should be taken to an ' Interest on " Deferred Payment Account,' the whole of the " liability being carried to the credit of a Per- " sonal Account with the vendor of the article." The obvious objection to this plan is that it adopts the transaction as an out-and-out pur- chase, thereby creating a fictitious asset and a corresponding fictitious liability — for the asset is only being conditionally acquired during the: agreed period of hire — in fact, it cannot strictly be said that the asset is even gradually acquired, for it is only deemed to be so for accountancy purposes, as already stated, in the Stock system of Manufacturers' Accounts (supra). This dis- tinction is important. For example : — Suppose a limited company has general assets £10,000, and liabilities £20,000, also £5,000 worth of wagons held under a hiring agreement, with only the first instalment, £1,000, paid. In this case the adop- tion of the whole asset and corresponding liability would affect the " paper position " of the com- pany, showing assets £15,000, liabilities £24,000, or t2s. 6d. in the £, instead of 10s. in the £ — the true position. For on a winding-up order being made the manufacturer, unham- pered by any reputed ownership clause as in bankruptcy, would take possession of the wagons in satisfaction of the alleged liability to him of £4,000. An article in The Accountant newspaper refers to this system thus : — " The usual method of dealing with this class " of transaction is in the first place to ascertain " the cash value of the wagons, to credit that " amount to the account of the manufacturer, " and to debit it to the account of the wagons. " The instalments paid are then debited to the " Manufacturer's Account, and the annual " amount of interest credited thereto and debited " to Interest Account; while the annual charge " in respect of depreciation is credited to the " Wagons Account and debited to Depreciation " Account. It wi'l be seen that in effect this Hire] 270 [Holder method of recording the transaction is per- fectly straightforward if it be assumed that the wagons are purchased out-and-out and that the payment therefor is spread over a term against which interest is charged. This, however, is by no means the nature of the transaction which has been embarked upon, therefore we have no hesitation in saying that this method of recording the facts is absolutely wrong, and we say this in spite of the fact that this is by far the most usual method of dealing with the matter in books of account. It is obviously wrong to debit in the accounts of the tenant (hirer) an item as an asset which does not belong to the tenant; and it is equally wrong to credit in his books a liability which he can never be called upon to pay." III. — (A) Where the agreed instalments (hire) are equal in the aggregate to what a cash price would have been, interest in addition being charged at an agreed rate per cent. p°r annum upon the unpaid portions of the total instalments (such interest accruing due with each payment of hire), each instalment may be treated as " capital," and the interest specifically payable must be carried to Profit and Loss Account. (B) Where the agreed instalments are based upon a deferred purchase price, interest at a certain rate, or a lump sum by way of interest, having been included in consideration of the deferred payments, the cash price should be ascertained by finding the present value of the total instalments under the various conditions as to interest and dates of payment. The successive instalments should be appor- tioned thus : — Interest (at the rate utilised in obtaining the present value) should be made up to the date of each instalment upon the unpaid portion for the time being of the ascertained cash price, and such interest should be charged to Profit and Loss Account, and the balance of the instalment treated as capital. The amounts capitalised as representing the hirer's " acquisition " in the property hired form a contingent asset, being subject to the due ful- filment of the terms of the hiring agreement. Of course, in addition to the interest refern above, the Profit and Loss Account must t charged with the proper amount of depreciation, for although the subject-matter does not belong to the hirer he must provide fur its depreciation, as the property when vesting absolutely on the fulfilment of all the agreed conditions will. 1 theless, pass to the hirer in its depreciated state. Under this system there is no anticipation Q liability, whilst the asset is " appropriated " gradually, but as, strictly speaking, even gradual appropriation cannot be claimed, the contingency attached to the accumulating asset should be : made apparent. For instance, a public company issuing a Balance Sheet during the currency of a hiring agreement might state the item thus: — Wagon Purchase Account. 300 wagons under hire-purchase agree- ment; period of hire 6 years; 3 years' hire paid. Capitalised hire payments ... £ — Less Depreciation This mode of stating the " asset " would show upon the face of the Balance Sheet that the item could only be deemed an asset on the assumption | that the hire payments for the three succeeding | years would be duly paid. Holder in Due Course. — One who takes a bill (a) complete and regular on the face of it, (6) before it is overdue, (c) in good faith and for value, and (d) without notice of previous dis- honour (if so) of the bill or of any defect in title of the person who negotiated it. A holder of a bill, whether for value or not (provided he has not been a party to any fraud or illegality affecting it), who derives title through 1 a holder in due course, has all the rights of the latter against the acceptor, and all parties prior to that holder. (Bills of Exchange Act 1SS2, section 29.) Every holder of a bill is primd facie deemed to be a holder in due course, but if, in an action < upon a bill, fraud or illegality in connection with tylder] he bill is admitted or proved, the burden of proof ; shifted unless and until the holder proves that, ubsequent to the alleged fraud or illegality, value as in good faith been given for the bill. (Section o.) But see Talbot v. Alex, von Boris and Vife (C.A. 191 1). Apart from the general right of the holder of a ill to sue upon it in his own name, where he is older in due course, he holds the bill free from ny defect of title of prior parties, as well as from lere personal defences available to prior parties mong themselves, and he may enforce payment gainst all parties liable on the bill. (Section 8.) Hiding Out. — Everyone who by words spoken or ritten or by conduct represents himself, or nowingly suffers himself to be represented, as a artner in a particular firm, is liable as a partner ) anyone who has on the faith of any such repres- entation given credit to the firm, whether the "presentation has or has not been made or com- lunicated to the person so giving credit by or ■ith the knowledge of the apparent partner laking the representation or suffering it to be lade. Such a person is held liable as a partner by stoppel, and the rule as to " holding out " xtends to bankruptcy administration. The continued use of the old partnership name, r of a deceased partner's name as part thereof, oes not of itself make the executors or adminis- \ ■ators of a deceased partner liable for debts con- •acted after his death. A partner who has retired from a firm may be able for debts contracted after his retirement if e has omitted to give proper notice and " hold- ig out " can be established against him by the irticular creditors. (See Limited Partnership.) Hding over. — Keeping possession of land by lessee I r the expiration of the term. H loured Bill (of Exchange). — A bill which has *n paid in accordance with the tenor. (See tie Retired Bill.) ses. — The sale of horses is regulated by statutes 2 & 3 Phil, and Mary, and 31 Elizabeth, which 271 [Hypothecation require a record of all sales at market, the inten- tion being (1) to prevent the sale of stolen horses, and (2) to give the true owner a right of recovery under certain conditions. An attempt was made to remodel the provisions of these statutes and embody same in the Sale of Goods Act 1893, but the sections as drafted were rejected and the Act merely confirms the older statutes. Hotchpot. — A blending of property ; the bringing in to a common fund of shares or amounts already received in order to become entitled to a share in the general distribution. The Statute of Distribution requires the children of a person dying intestate to bring into account such portions or advancements of per- sonalty as they may have received, so that, taking into consideration all such advances, each child may take in equal shares. The Act takes nothing away from a child out of that which may have already been received, although it may be in excess of a full share, nor is a child having been advanced a portion compelled to bring it into account; but if such be not done, the child so refusing is excluded from participation in the distribution of the estate. A clause requiring advances to be brought into hotchpot is also usual in wills and marriage settlements. A legatee who has to bring into hotchpot an advance by the testator, which comes within the definition of a gift inter vivos chargeable with estate duty, is entitled to deduct the duty from the amount to be brought into hotchpot if such duty is paid by the legatee. Household Effects. — Goods and furniture reserved for domestic purposes and personal use. A gift or bequest of household goods or household furni- ture, where a testator had a furnished private house, and also furniture at his place of business, was held not to apply to the latter. As to household effects in bankruptcy and under distress for rent, &c, see title Excepted Articles. Hypothecation. — The pledging of something as security for a debt or demand, but differing from a pawn, in that the possession of the subject- matter of the pledge is retained by the pledgor. Hypothecation 272 Impressed Hypothecation is not recognised by English law. All that a letter of hypothecation can do is to create a trust over the goods in favour of the lender, whose only remedy in case of a breach is to claim for damages. No property in goods can pass by a letter of hypothecation. The Bills of Sale Act 1800 provides that an instrument charging or creating any security on or declaring trusts of imported goods given or executed at any time prior to their deposit in a warehouse, factory, or store, or prior to their being re-shipped for export or delivered to a pur- chaser, not being the person giving or executing such instrument, shall not be deemed a bill of sale within the meaning of the Bills of Sale Act 1882. This exemption from the provisions of this Act does not, however, operate in bankruptcy proceed- ings so as to take the goods comprised in such letters of " hypothecation " out of the " reputed ownership " clause, if apart from such hypotheca- tion the goods would be liable thereto. {See title Reputed Ownership.) \ Illegal Consideration. — See Consideration. Illegal Contracts. — Agreements to perform acts for- bidden by law, or to omit to do acts required by law. They may be divided into : — A. — Breach of the common law: — (1) Contracts void or voidable on account of fraud, through either misrepresentation or concealment. (2) Contracts void as being contrary to good morals. (3) Contracts in violation of public policy : — (a) Restraint of trade. (b) Restraint of marriage. (c) Marriage brokerages. (d) Trading with an alien enemy. (e) Champerty, &c. B. — Breach of statute. Immediate Parties.— Parties to a bill of exchange, who are in direct relation to each other. For instance, the drawer and acceptor, the drawer and the payee, the indorser and his indorsee, are prima facie immediate parties. (See title Remote Parties.) Immovable Property. — Property which is " not ti " be forced from its place, the characteristic of " things real." Lands and leaseholds are immovable, although leaseholds are personalty. Immovable property situate out of the United Kingdom is not chargeable with (stale d succession duty. Impersonal Accounts. — Sec Nominal Accounts. I Impersonal Ledger. — See Nominal Ledger. Implied Contract. — An agreement which expressed either in writing or verbally, but which is inferred or deduced from conduct or a course | of dealing. (See Contract.) Implied Trust.— A trust not expressed, but arising! from the construction placed upon the conduct of the parties and the circumstances of the case.l Implied trusts may be divided into (1) those implied from the intent of the parties, and (2) those arising from operation of law. Impossibility. — If a man contracts to do a thinj; which is absolutely and physically impossible.' such contract will not bind him ; but whi contract is to do a thing which is possible at th< time the contract is entered into, but sabseq becomes impossible, he will be liable for t breach. Impossible Consideration. — See Consideration. I Impressed Stamp. — One impressed upon a don ment by the Revenue authorities as distinct fron an adhesive stamp placed upon the document b; the parties. The impressed stamp bears ti upon which the document is stamped. Certair documents must bear an impressed stamp, sucl^ as : — *Bills of exchange (inland and not payabl demand). •Promissory Notes. ♦Allotment letters (shares). •Bills of lading. Mortgage bonds. Deeds. Assignments. Conveyances and Transfers. *Share Warrants. *Tliese must be stamped before execution or issue, as ■! case may be. Iprest] 273 [Income prest System. — A system of disbursing by means f advances. It is carried out in some of the overnment departments, and is adopted in com- lercial concerns as being the best method of deal- g with petty cash in the accounts. The plan is to advance the petty cashier a round sum," out of which he makes his petty isbursements, and at the end of a week or lonth, as the case may be, he renders an i-count of his expenditure, usually analysed nder appropriate heads. The total amount of such expenditure is then aid over to him, and the particulars thereof are ieci Really entered in the General Cash Book, he original sum is thus restored to the petty ishii-r, and it appears as a standing asset in the aoks of the concern. An auditor should always require the " round jm " to be produced at the date of balancing, nd where the audit includes the periodical count- lg of the cash of the concern, the balances of le General Cash Book and the Petty Cash Book lould be produced at the same time. As an iternal check, the general cashier should require le production of the unspent portion of the imprest," in addition to an account of the ipenditure, before issuing a cheque or cash for it amount of the latter. not hoate Instrument. — One begun but smpleted. A simple signature on a blank stamped paper, elivered by the signer in order that it may be inverted into a bill, operates as primd, facie uthority to fill it up as a complete bill for any mount the stamp will cover, using the signature >r that of the drawer, or the acceptor, or an idorser. When a bill is wanting in any material articular, the person in possession of it has a rimd facie authority to fill up the omission in "i" way he thinks fit. In order that any such strument, when completed, may be enforceable gainst any person who became a party thereto »ior to its completion, it must be filled up within reasonable time and strictly in accordance with ie authority given. Reasonable time for this Jrpose is a question of fact. Provided that any instrument negotiated after completion to a holder in due course is valid and effectual for all purposes in his hands. (1882 Act, section 20.) In one case, a person signed a bill for ^500 as acceptor; the instrument was stamped sufficiently to cover ^4,000, and had been drawn in such a manner as to enable the drawer to alter the bill after acceptance. The blanks in the bill were sub- sequently filled up by the drawer, and the instru- ment was negotiated for value as a bill for ^3,500. The House of Lords held that the acceptor was, nevertheless, only liable to the holder for £500, the sum for which he really accepted the bill. Income. — Profits or gains by way of (1) rents from property, (2) interest or dividend on invested capital, (3) profits from trading, (4) remunera- tion for skill or labour, &c. Income from pro- perty or a capital fund may be defined generally as such receipts (periodical or otherwise) as are attributable to the employment of a property or fund — provided the property or fund remains intact. The question as to whether a particular item is capital or income is an important one in the administration of the estate of a deceased person. Much will depend upon the terms of the will or settlement. The question applies equally in the case of a joint-stock company in deciding what are profits available for dividend. (See titles Apportionment, Capital, Executor- ship Accounts, Income and Expenditure, Profits available for Dividend.) Income and Expenditure. — A statement of income and expenditure includes the entire income for the period under review whether actually received or not, and the whole of the outgoings properly chargeable against such income, whether actually paid or not ; that is to say, it is prac- tically equivalent to a Profit and Loss Account, adjusting the outstanding assets and liabilities at the commencement and end of each period. In the preparation of an Income and Expendi- ture Account many items have to be apportioned and others estimated. The Committee which considered the questions affecting the accounts of Income] 274 [Income Local Authorities recommended a system of income and expenditure for the accounts of all trading undertakings; but with regard to Rate Fund Accounts, a system is recommended which, though not a complete statement of income and expenditure, is more than an ordinary account of receipts and payments, viz., an account which includes all items, whether received or not or paid or not, which have actually become due for receipt or payment within a given period, but does not take into consideration accruing portions of income and expenditure not actually due, but capable of computation by apportionment to the end of the particular period. Thus there are three forms of account in this connection : — (1) A full account of income and expendi- ture, including all items whether received or not or paid or not, and whether due or not, including apportioned and estimated items if pertaining to the period under review. (2) An account of income and expenditure incomplete to the extent that it excludes all items not actually due for receipt or payment at the end of the financial period. (3) An account of actual receipts and payments only. In an Income and Expenditure Account the income is shown upon the credit side, and the expenditure upon the debit side, of the account, thus reversing the method adopted in the case of an account of receipts and payments. The headings " Receipts " and " Expendi- ture " are often used together, particularly in official forms of account, but such a combination of terms is not strictly correct. (See title Receipts and Payments.) Income Tax. — Introductory. Partners. General Provisions. Exemption. Summary of Taxable Income. Abatement. Schedule "A." Earned Incomes. Schedule "B." Life Assurance Premiums. Schedule " D." Allowance in respect of children. I. General. Married Woman. II. Mode of Assessment. Minor. III. Deductions. Super-tax. IV. Accounts. Repayment. Employees. Bankruptcy and Liquidation. Introductory. There are numerous Acts of Parliament relating to income-tax, but the most important are: — Income Tax Act 1842. Income Tax Act 1853. Taxes Management Act 1880. Customs and Inland Revenue Act 1890 (section 23). Finance Act 1894. Finance Act 1907. Finance (1909-10) Act 1910. Although the " permanent " Acts jointly pro- vide the " code of direction " for assessing and levying the income-tax when granted, the grant itself is made annually, when (a) the rate is fixed at which the tax is to be levied for the current financial year (from 6 April to 5 April following), and (6) any necessary modifications or amendments in the incidence of the tax are made. The tax is in the form of a " poundage " levied upon all taxable income from property, profes- sions, trades, offices, &c. The rate in force from 6 April 1909 to 5 April 191 1 was one shilling and twopence, and the rates in recent years have been as follow : — s d 6 April 1904 to 5 April 1909 .. .. .. .. ..10 „ „ 1903 H „ 1904 o » ■ 1902 ■ ■ 1903 13 „ „ i9or „ „ 1902 12. . » t9oo » „ igot 10 for several years previously 08 | It is not a graduated rate of tax, although the provisions as to abatement have the effect of a graduated rate in respect of incomes not exceeding ^700 per annum, while the provisions of section 19 of the Finance Act 1907 and section 67 of the Finance (1909-10) Act 1910, levying tax at specially reduced rates on " earned incomes " have the effect of a further graduation. (See infra.) There are also allowances in respect of life assurance premiums and relief in respect of children, and these points are dealt with in their appropriate places (infra). lome 275 [Income On the other hand, the provisions of the inance (1909-10) Act 1910 relative to " super- ix " (see infra) have imposed an additional tax i all incomes in excess of five thousand pounds. General Provisions. The aim of the Income Tax Acts is to enforce le collection of tax upon income at the source : such income (i.e., upon payment) so far as jssible, and with this end in view the duty of Electing income-tax (on behalf of the Revenue jthorities) is to a great extent imposed upon rsons paying rents, annual interests, and the •ce. If the person on whom the duty of collect- g the tax is imposed neglects to deduct it on ryment of interest, &c, he is none the less :countable to the Revenue for same. (See infra ider Schedule D.) The tax is granted for one year only, but in erv Finance Act provision is made that all such "lactments as were in force with respect to come-tax in the preceding fiscal year shall apply any duties of income-tax granted by the Act. uring the interval which necessarily elapses tween the 6th of April in every year and the issing of the current Finance Act there is, rictly speaking, no income-tax in force, and it is been contended that during this period the jthorities have no right to compel the taxpayer deliver a return, but the point is academic ercly, and it is probable that section 22 (1) of ie Finance Act 1907 confers such right since at Act became law, even if the right was not eviously possessed by the authorities. The ovisions of the Finance Bill are made known April of each year, and the general practice (in aking returns of profits, allowing and deduct- g income-tax on payment of rents, annual terests, and the like) is to proceed on the sumption that the Bill will eventually become As stated above, every Finance Act con- ins a provision making the " code " retro- ectivc to the commencement of the financial ar, and in cases where there has been an crease in the rate of tax the Act also ratifies all lyments or deductions made prior to the passing the Act at the rate prescribed therein, and stipulates that all payments or deductions which have not been made at such prescribed rate shall be amended accordingly. Where a person could have made a legal deduction but for the delay in passing the Act, he is authorised to make it out of his next payment to his creditor, and failing such " next payment " he is entitled to recover it as a debt due from the person as against whom the deduction could have been made originally. Where a taxpayer has received dividends or other income from which tax has been deducted at a lower rate than that which is eventually imposed, and there is no other method (e.g., by deduc- tion) of obtaining from him the difference, power is taken to make a special assessment in respect thereof. Recent examples of legislation of this character are contained in the Finance Act 1907, section 18 (2), and the Finance (1909-10) Act 1910, sections 65 and 95. In the Finance (No. 2) Bill 1910, power was sought to add similar pro- visions to the foregoing to the permanent code, but they have not yet (February 191 1) become law. When the rate of tax is altered (either by way of increase or decrease) another difficulty often arises, owing to the Government fiscal year fail- ing to coincide with the particular financial year of the company, or rent period of the property, or other period in respect of which income is derived. Thus the income may be partly subject to the old rate of tax and partly subject to the new, and in such circumstances the following statement made by the Chancellor of the Exchequer in the House of Commons on 17th July 1900 gives the rule for the ascertainment of the rate : — " Dividends and interest from the public " funds, from foreign or colonial loans or " foreign or colonial companies, and interest " paid by local authorities to creditors on rates " are by law chargeable with income-tax at " the rate in force when they become payable " in this country without regard to the period " during which they have accrued. ... In " other cases — such as mortgage interest and " ground rents, and the profits of public com- " panies in the United Kingdom— income-tax " is deducted at an average rate based on the T 2 Income] 276 [Income " rates in force during the period in which the " income-tax has been accruing." Summary of Taxable Income. The following income is subject to taxation : — (1) Income derived in the United Kingdom from whatever source, whether by resi- dents therein or not, and whether by subjects or aliens. (2) Income derived from sources outside the United Kingdom, but received in the United Kingdom, whether by subjects or aliens. The taxable income is classified thus : — Schedule A. Income from the property in lands and buildings; that is to say, it is a tax on the owner's rent. (See infra.) Schedule B. Income from the occupation of lands; that is to say, it is a tax on the tenant's profits from culti- vation. (See infra.) Schedule C. Income by way of interests, annuities, and dividends payable out of the Public Funds. In accordance with the principle of collection of tax at the source of income (as stated above) the tax upon this class of income (Schedule C) is retained when the dividends, interests, &c, are paid, so that any person enjoying such income, who is entitled to exemption from or abatement of income-tax must apply for repayment thereof. (See Repayment, infra.) Schedule D. Income by way of profits from professions, trades, or other call- ings. (See infra.) Schedule E. Income by way of annuities, salaries, &c, payable out of the revenue or the funds of public companies, and assessable on the actual income for the year of assessment, not upon any average basis. It is to be noted that the salaries of directors, secretaries, and other officers of joint-stock com- panies are assessable under Schedule E, and tha the tax thereon should be paid by the officer, unless otherwise sanctioned by the shareholders. If paid by the company without such sanction— 4 is sometimes incorrectly done — the practic amounts to a payment to the officer of his salarj plus tax thereon. Schedule A. There are certain provisions as to asses* ment of tithes and other profits issuing out of the property in lands covered by this schedule, but the main object of taxation under it consist of the annual value of lands and tenements. The assessment is upon the gross value or " racl rent," less the following allowances for repairs:- (1) One-eighth part of the assessment j lands, inclusive of a farm-house. (2) One-sixth part of the assessment upon anj house or building (except a farmhouse included with lands as above), where tl landlord has undertaken to boar the cos! of repairs. (3) Such a sum not exceeding one-sixth part of the assessment as is necessary ' reduce it to the actual rent payable, where the tenant has undertaken to bear the cos of repairs. In addition, if an owner shows that the cost t him of maintenance, repairs, insurance, ( management according to the average of the pre- j ceding five years has exceeded — (a) In the case of land, one-eighth part of tl annual value; (b) In the case of houses the annual value which does not exceed eight pounds, one- sixth part of the annual value, he is entitled to a further allowance in respect 1 of such excess, not exceeding — (a) In the case of land, one-eighth part of fl annual value, and (b) In the case of the houses affected, one- twelfth part of the annual value. Iipome] 277 [Income The term " maintenance " here includes the ^placement of farm-houses, farm buildings, bttages, fences, and other works where the ^placement is necessary to maintain the existing The assessment for Schedule A is made upon pe occupier, with the following exceptions : — I (1) Where the annual value of dwelling-houses is less than £10, and (j) Where the premises are let to a group of occupiers (e.g., a suite of offices), ne landlord may be assessed direct. In any case the occupier has a statutory right p deduct from his next rent payment to his land- krd the actual tax paid, or (in the case of an nient in excess of the rent) such a sum as pes not exceed tax at the current rate upon the ctual rent payable for the year. I A contract purporting to transfer the liability k pay the tax from the landlord to the tenant is bid. A landlord is subject to a penalty of £50 for frongfullv refusing to allow a deduction in pspect of income-tax. Subject to delay caused by exceptional circum- fances in fixing the rate of tax (already referred f), a tenant who neglects to deduct the tax [hen paid from his " next rent " cannot strictly) recover it afterwards. On the other hand, if a tenant relinquishes the remises leaving arrears of tax, and a subse- uent tenant is compelled to pay same, he has I right of deduction from the next rent he pays. Generally speaking, the annual value assess- ments under Schedule A follow the poor law psessments, and provision is made for appeals, Ihere desired by the taxpayer. In any case, hcition of the assessment, either in whole or prt, will be readily obtained where the tax- iyer proves that in fact the premises have been )id for all or part of the year. iThe annual value arising from stone, slate, id such like quarries, or from ironworks, gas- orks, waterworks, canals, docks, bridges, rail- ays, ferries, tolls, and other undertakings of a like nature, is computed upon the profit of the preceding year. The annual value arising from coal, tin, lead, copper, iron, and other mines is deemed to be the average of the five preceding years. Where, how- ever, the yield of any such mine has from any unavoidable cause been decreasing so that such average will not give a fair estimate of the annual value, the Commissioners may compute the annual value on the basis of the profits of the preceding year, and where the mine has wholly failed, any assessment made may be discharged. Schedule B. The tax under this schedule is levied on the occupier of lands in respect of his esti- mated profits arising from the cultivation of same. The measure of charge is one-third of the annual value, subject to the right of the tax- payer, if he occupies the lands for the purpose of husbandry only, to have the assessment reduced to his actual profits on proof to the General Com- missioners at the end of any year that his actual profits have fallen short of one-third of the annual value. Schedule D. (i) General. — The tax under this schedule is levied upon : — (1) Profits from trades, professions, employ- ments, &c, (a) carried on or exercised in the United Kingdom or elsewhere by persons residing in the United Kingdom, or (b) carried on or exercised in the United Kingdom by any persons whether subjects of His Majesty or not, although not resident in the United Kingdom. " If a business is wholly carried on " in this country, the whole of the " profits must be assessed to the " income-tax. If the business is " carried on partly in this country and " partly abroad, the whole of the " profits, whether made here or Income] 278 Income " abroad, must be assessed to the " income-tax. If the business is " wholly carried on abroad, the profits " received in this country must alone " be assessed to the income-tax." (Smith, L.J.) (Cf. Attorney-General v. Alexander (1874) and Gresham Life Assurance v. Bishop (1902).) In this connection the case of Kodak, him. v. Clark (C.A., 1903) is also important. A company resides in the United Kingdom for the purposes of income- tax if its " head and seat and direct- ing power " are in the United King- dom (De Beers Consolidated Mines v. Howe, A.C. 1906) ; and the right to exercise control as distinguished from the actual exercise of the control is the test to be applied. (American Thread Co. v. Joyce, 191 1.) Summarising these decisions, tax is payable on : — (a) Income received in the United King- dom wherever earned. (But see infra under sub-heading Abatement.) (b) Income earned in the United King- dom wherever received. (2) Profits from interests not already taxed by way of deduction by the payer of such interests. (3) Profits from colonial and foreign securities and possessions, and any other profits not falling under the above classes or under the other schedules, which have not already borne tax. With regard to profits from trades, profes- sions, employments, &c, a return must be made annually by each trader, &c, showing the balance of his profits, based : — (1) Upon the annual average of the three pre- ceding years, either ending on the 5th of April preceding the date of the return, or the date immediately preceding such 5th of April to which the annual accounts of the trade, &c, have usually been made up; or (2) If the trade, &c, has been set up or com- menced within three years, upon an annual average from the date of com- mencing same; or (3) If the trade, &c, has been commenced within the year of assessment, the profits are to be estimated in accordance with the knowledge and belief of the person making the return, in which case he must s the grounds upon which the amount has been estimated. Every person who receives a notice requiring him to make a return of profits under Schedule D or Schedule E must make a return in the form required by the notice, whether he is or is n chargeable with duty, and in default is liable ti penalties (£20 and treble the duty chargeabli if proved before the Commissioners and £50 if a information in a Court of law), provided that tl penalty shall not exceed £$ for any one offence, where the person making default proves that he was not chargeable to duties. (Income Tax Act 1842, section 55, and Finance Act 1907, section 22.) The Commissioners may amend an assessmea or make an additional first assessment, or a assessment on the estate of a deceased person, at any time within the year of assessment or withir three years after the expiration thereof. (Final Act 1907, section 23 (2).) A person who delivers a return which, alt> without fraud, is incorrect through his negligent or carelessness is liable under section 55 of tl 1842 Act. (Attorney-General v. Till, A.C. 1910.) In practice, Surveyors of Taxes will usual be found agreeable in the case of a new business to arrange that the Commissioners shall defer making an assessment until towards the close the Government financial year, in order I accounts of the actual result of the operations may be prepared. In the event of a change taking place in £ partnership, either by death or dissolution, 01 by admission of a new partner, or in the even; of any person succeeding to a trade, profession ome] :c, the profit is, notwithstanding such change, j be ascertained as if the change had not taken lace, unless it is proved to the satisfaction of the ommissioners, that the profits have fallen short, r will fall short, from some specific cause since le change took place, or by reason of it (1842 ct, section 100), when the profit will be ascer- lined as if the trade or profession, &c, had been ■t up as from the date of the specific cause. In ractice, the most frequent instance of this ssessment upon a " succeeding " basis is upon le conversion of a private enterprise into that of joint-stock company conducted by practically le same management on similar lines. Apart from ordinary trading fluctuations the uestion of directors' fees almost invariably lises difficulty in this connection. In arriving at le average profits for assessment under Schedule 1 allowance will not be made for management ilaries during the three years preceding the rmntion of the company, but directors' fees for le first year of assessment will be assessed under rhedule E at the actual amount payable by the >mpany. It is suggested that this is a specific tuse for diminution in the profits under Schedule , and some Surveyors will agree to deduct the nount of the Schedule E assessment (although iyable by a different taxpayer) from the :hedule D assessment of the company. If the or will not take this course, it is suggested at a formal appeal should be lodged under see- on 100 of the 1842 Act, as above, (ii) Mode of Assessment. — Persons assessable to come-tax under Schedule D may elect to be isessed either by the Commissioners of their dis- ict under a number or letter, or by the Special ommissioners of Income Tax. In the absence election, they will be assessed in the usual lurse by the Commissioners of their district, (iii) Deductions. — In computing the balance of ofits deductions are not allowed : — (1) For any sum beyond the sum usually expended for the repairs of premises occupied for trade purposes, or for the supply or repair of implements, utensils, tools, or articles employed therein, accord- ing to the average of the three preceding 2 79 [Income (2) For any loss not connected with or arising out of the trade, &c. (3) For investments or withdrawals of any capital sums. (4) For any sums expended in the improve- ment of premises, or any sums written off for depreciation of lands, buildings, or leases. (5) For any sums, by way of interest on capital, or in respect of any annual interest, or any annuity or other annual payment payable out of the profits or gains, the tax upon which should he deducted from the person to whom the payment is made. Note. — This does not extend to interest on bankers' loans for periods less than one year, nor to interest in respect of the dis- counting of bills, nor to bank " commis- sions." These charges are allowed as deductions in computing the balance of profits assessable. Where loans (whether acknowledged in the form of bonds or otherwise) are repay- able, under the terms of issue in instal- ments over a number of years, such instal- ments comprising part principal and interest at the agreed rate upon the unpaid portion of the loan for the time being, income-tax should be deducted by the payer from that portion only of each instalment which represents interest. (6) For any disbursements or expenses not wholly or exclusively laid out for the pur- poses of trade, &c. (7) For any expenses of maintenance of the person making the return, or the family of such person. (8) For any sums paid as salaries to partners. (9) For any sums paid as income-tax, either on the profits of the trade, &c, or on the annual value of premises. (10) For any sums in respect of bad debts, beyond the amount proved to be bad, or for doubtful debts, beyond the estimated amount of loss. Income] 280 [Income (11) For any sum recoverable under any con- tract of insurance or indemnity. (12) For any average loss under a contract of insurance, beyond the actual amount of loss after adjustment. The above are general rules as to deductions, and, in particular, the following are not allowed : Mortgage interest, law costs of negotiating a mortgage, debenture interest, chief rent, prefer- ence dividends, preliminary expenses of a com- pany, bad debt reserves (arbitrarily based), and certain voluntary subscriptions and charitable gifts. Note. — A subscription by a manufacturer to an infirmary (where his workpeople may be sent in the event of injury) is looked upon as a trade expense, and allowed as a deduction. Payments (either by way of penalty or contri- bution towards costs of administration) to a trade organisation formed for the purpose of maintain- ing prices is properly allowable as a deduction. (Guest, Keen <5» Nettlefolds, Lint. v. Fowler, 26 T.L.R. 337-) The taxpayer is also entitled to deduct a proper provision in respect of contingent liabilities, e.g., an insurance company may set aside an appor- tionment of insurance premium receipts against possible loss on unexpired risks. (Clark, Sur- veyor of Taxes v. Sun Insurance Office, 1910.) Where a dwelling-house is used also for the purposes of the business, the Income Tax Com- missioners may allow a deduction from the profits of a sum not exceeding two third parts of the rent or annual value, according to the value of the portion set apart for business purposes. In cases (such as public-houses) where rates, fuel, light, domestic servants' wages, and other expenses are incurred jointly on account of the business and the residential portion of the premises, the authorities also require an appor- tionment of these items. A minister of any religious denomination who pays rent and uses any part of his dwelling-house mainly and substantially for the purposes of his duty as a minister, will be allowed to deduct a portion of such rent not exceeding one-eighth of the whole. (Finance Act 1907, section 28.) Few (if any) Surveyors will now challenge a deduction from the profits for loss sustained by embezzlement (not covered by any insurance or suretyship), although at one time objection used to be taken to such a charge. It appears to be admitted that the occupier of a licensed house (i.e., the tenant where the house is let. and the brewer where the house is " managed ") is entitled to deduct from his gross profits as a licensed victualler such part of the compensation levy (see title Licence), "as he is not able to throw upon bis landlord." The Court of Appeal has decided (Kennedy, L.J.. dissenting) that a brewer who owns or licensed premises acquired and held solely 1 purpose of his business is further entitli deduct from his profits as a brewer that | of the compensation levy which falls upon him as owner or superior lessee, presumably whether the house is let to a " tied " tenant or whether ii l is " managed " on behalf of the br (Smith, Surveyor of Taxes v. Lion Brewer 1 9 10.) This case was taken to the House 1 Lords, but that Court being equally divided question the Court of Appeal decision stands. The Commissioners must allow such dtductic as they may think just and reasonable as senting the diminished value by reason 01 and tear during the year of any machinery plant used for the purposes of the concern belonging to the person or company by the same is carried on. (Customs and Inlan Revenue Act 1878, section 12.) Note. — The claim must represent diminished value during the year of <• ment, but see infra as to cases where the profii are insufficient to enable the full benefit 1 claim to be obtained. Claims for the deduction must be included i the annual statement of the profits or gains 1 the concern, for the purpose of which I machinery or plant is used. No deduction w be allowed in any year if the deduction wh( added to the deductions allowed in previous to the person by whom the concern is carried < icomej will make the aggregate amount of the deduc- exceed the actual cost to that person of the machinery or plant, including in that actual cost am capital expenditure by way of renewal, improvement, or reinstatement. Where full effect cannot be given to the deduc- tion in any year, owing to insufficiency of profits in that year, so much of the deduction to which effect has not been given shall be added to the amount of the deduction for wear and tear for the following year and so on for succeeding years. (Finance Act 1907, section 26.) It will be observed that the allowance is limited to plant and machinery. In addition to this statutory allowance for and tear the Inland Revenue authorities will concede a special allowance in cases of I obsolescence." (See title Wear and Tear.) (iv) Accounts. — An account of profits prepared for income-tax purposes may either take the form of the ordinary Profit and Loss Account of the business, with the necessary adjustments in ! of items not allowed shown upon the face of the account, or the account may be specially prepared for the purpose, showing nothing but that which is essential to a proper account. Sur- veyors of Taxes are certainly in favour of the former method, as it affords them information - what has really been included and excluded in arriving at the profits, and in the ra-i of joint-stock companies the Surveyors have ess difficulty in reconciling the Profit and Loss s with the Balance Sheet. The practical is a saving to both the taxpayer and the department of correspondence and inquiries, &c. The account showing the profits of a trader must, in any case, disclose the sales, purchases, and (working expenses and be based upon valuations of the stock-in-trade at the commencement and end of each period respectively. Where the person, firm, or company owns the premises occupied for trading purposes, the itssi ssment on which tax is actually paid under Schedule A may be deducted (as rent) from the balance of profits for assessment under Schedule If. The amount so deducted must, however, be the net assessment (i.e., five-sixths of the gross tffisi ssment). The practice used to be to ascer- 281 [Income tain the " average " profits under Schedule D over the prescribed period, and to deduct from such average when ascertained the actual Schedule A assessment for the year of assessment. The practice is now (more correctly) to charge against each of the years' profits comprised in the average the actual Schedule A assessment on which tax has been paid in each of those years, thus arriving at a net average for Schedule D. Although the Schedule A assessment may be deducted (in the case of ownership) in order to arrive at the amount (if any) assessable under Schedule D, obviously where a person or firm under such circumstances claims abatement or exemption, the amount of assessment under Schedule A for the year must be included in arriving at the total income from " all sources whatsoever." Whilst the taxpayer must (as stated) adjust what may be termed his " economic profit " (as shown by his books to be the result of his trading) by adding thereto any expenses incurred which are not allowable as deductions, he is entitled to deduct therefrom all sums included as income which have already been subjected to income-tax in some other form. For example, divi- dends received on investments, interest received on moneys out on loan at annual interest, rents of cottages or other properties, will all have paid income-tax by way of deduction or otherwise before receipt, and if they have been credited to the business Profit and Loss Account the profits assessable under Schedule D may properly be reduced accordingly. The whole object of the adjusted Profit and Loss Account is to ascertain the amount of profits assessable under Schedule D. When this has been ascertained the taxpayer who desires to claim abatement or exemption, or assessment at the earned rate of tax, must include in such claim the following income : — (1) The profits from his business. (2) The annual values of all property held by him, including the annual value of his business premises, although (or rather because) the Schedule D profits have been reduced by charging this annual value as rent. Income] 282 Income (3) Dividends on investments and interest on loans, &c, all items of this nature which are received through the business having been deducted from the business profits. (4) Any other income of himself or his wife. On the other hand, he is entitled to deduct as charges upon his income (in order to show his actual net income from all sources whatsoever) charges such as interest paid on mortgages or loans, ground rents, or similar payments. If the result of the trading is a loss, under ordinary circumstances no tax is payable, but should the average result be a loss or a profit less than the amount of interest on mortgage, chief rent, or similar payments from which tax has been deducted (simply as a collector for the revenue) by the person making the return, then he must return the gross amount of such pay- ments as the sum upon which he is prepared to pay tax. The taxpayer may, however, deduct from such gross amount for the purposes of the return any assessment on which he may have paid or mav have to pay in other ways, e.g., an assessment under Schedule A on the value of his business premises or private residence (if either is his own), or on private income of himself or wife, tax on which has been deducted upon payment. Ordinarily the taxpayer prepares an account of his profits, merely to ascertain the amount he should include in the return. It is only when the Surveyor is dissatisfied with such return, or where the taxpayer desires to appeal, that it is necessary to supply a copy of the account to the Commissioners, but in order to substantiate the return already made or to support the appeal (as the case may be) the account showing how the amount of profit has been arrived at should be prepared, with due regard to the rules briefly set out above. It is now the invariable rule for Surveyors of Taxes to ask (as a matter of courtesy) to be supplied with copies of the Profit and Loss Account and the Balance Sheet of joint-stock companies and of private firms whose business is of any magnitude. There does not appear to be any specific authority empowering Surveyors of Taxes to com- pel the production of any accounts, and it would seem that this view is shared by the authorities (at any rate so far as the Balance Sheet is con* cerned), as will be seen from the following letter from the Chancellor of the Exchequer to a correspondent, which appeared in The Accountant, 31st October 1908: — " Treasury Chambers, " Whitehall, London, S.W., " 23rd April 1908. " I am desired by the Chancellor of the " Exchequer to inform you in reply to your " letter of the 13th ulto., that a Surveyor of " Taxes has no power to enforce the produo " tion of Balance Sheets for his inspection. ( " The object, however, for which the Balance " Sheet is asked is to enable the Surveyor to " certify that he is satisfied with a return, and " it may obviously be in the interest of " the taxpayer to comply with the request " in order to obviate the necessity which " might arise of a personal appeal to the " District Commissioners." If, however, the taxpayer refuses to produce proper accounts to the Surveyor's satisfaction, it is always open to the Commissioners to make " such an assessment as according to the best of I " their judgment ought to be charged on the " taxpayer by virtue of the Acts." (Income Tax Act 1842, section 113.) The taxpayer may appeal against such an assessment in accordance with the provisions laid down under section 11S el seq. j of the Income Tax Act 1842, whereupon the Commissioners have power under section 120 to call upon the appellant to return to them " " schedule containing such particulars as the said " Commissioners shall demand . . . respect- I " ing the property of such person, or the trade, " manufacture, adventure, or concern in the " nature of trade, or the profession, employment, " or vocation respectively carried on or exercised < " by such person . . . and so from time to ^ " time until a complete schedule to the satisfac- j " tion of the said Commissioners of all the par- j " ticulars required by them shall be delivered." ncome] Some taxpayers, while agreeing to submit a Profit and Loss Account, object to furnishing a Balance Sheet, and in some cases (chiefly private firms) the Surveyors will be satisfied without the Balance Sheet. They will, however, almost always insist upon it in the case of a joint-stock company, particularly where any claim is made for allowance in respect of wear and tear. Experience seems to prove that the interests of the taxpayer are best served by supplying such reasonable information and accounts as the Surveyors may demand. The authorities require that all accounts shall be " certified " either by the taxpayer or his accountant. The question as to whether income-tax is pay- able upon the sale of goodwill is debatable. The Authorities often put forward claims to income- tax upon same, but it is submitted that under ordinary circumstances the sale of goodwill is not a profit, but the realisation of an asset pre- viously held. Even if a profit is made — that is to say, if the goodwill is sold for a larger sum than its estimated former value — yet such profit is not in the nature of income, but a capital or casual profit of such a nature that if the taxpayer made a loss instead of a profit, the authorities would not allow him to deduct such loss from any portion of his other income. Assuming, how- ever, that there is a profit, and that it is a profit which is assessable to income-tax, then, if the consideration is in the nature of shares which are not readily realisable, the taxpayer is justified in refusing to pay tax until the shares are in fact realised. Employees. Every employer is now required to make a return of (i) the names and places of residence of and (2) the payments made to any persons employed by him, except persons who are not employed in any other employment, and whose remuneration in the employment for the year does not exceed the sum for the time being fixed as the limit for total exemption. (Finance Act 1907, section 21.) 283 [Income Partners. Where a profession, trade, or vocation is carried on by two or more persons in partnership the assessment is made upon them jointly in respect of the profits of such profession, trade, &c, quite distinct from any tax chargeable on them or any of them in respect of income arising otherwise than by such trade, &c, but a partner may claim that his share of the partnership profits shall be separately treated, but not separately assessed for the purpose (1) of claiming exemp- tion, relief, or abatement (either as regards amount, i.e., less than £700, or rate, i.e., " earned income "), or (2) of accounting for separate con- cerns in which he is interested as a partner or sole proprietor, for the purpose of setting off a loss sustained in one concern against the profits acquired in any other of such concerns. If a partner's share of the partnership profits is separately treated for these purposes, it shall be deemed to be the share to which he is entitled during the year to which the claim relates. (Finance Act 1907, section 20.) Prior to the passing of the Finance Act 1907, the partner entitled to an allowance such as the foregoing could claim a separate assessment, but the third schedule to that Act expressly repealed this right. Exemption. Exemption from income-tax may be claimed when the income from all sources does not exceed ;£i6o per annum. In order to obtain exemption the claimant must state the full particulars of all income from every source whatsoever, whether already taxed or not, and, if taxed, whether by deduction or otherwise. (See headings Life Assurance Premiums and Married Woman, below.) The Crown is not within the Income Tax Acts, so that the King pays no income-tax, nor are the public revenues or landed properties in the occupation of the Crown subject thereto. The receipts of a company incorporated by Royal Charter from the sale of its lands are not chargeable with income-tax (presumably on the ground that any such " profit " is a capital profit). (Stevens v. Hudson's Bay Company, C.A. 190Q.) Income] 284 [Income The income received from property held on trust for charitable purposes is exempt from tax so far as it is applied to such purposes, and where such income has on receipt been already subjected to deduction in respect of tax, the amount so deducted may be recovered. The expression " charitable purposes " includes inter alia, " schools of learning." (See heading Repayment, below. Buildings owned by a literary or scientific institution, and used solely for the purposes of the institution, are exempt from tax under Schedule A. Registered friendly societies and registered trade unions, subject to certain limitations, are exempt from tax under Schedules A, C, and D. (Income Tax Act 1842, sections 61 and 88; Income Tax Act 1853, section 49; Trade Union (Provident Funds) Act 1893; and Finance (1909-10) Act 1910, section 70.) Claims for repayment of tax on the ground of exemption (where tax has, nevertheless, been paid by deduction or otherwise) can only be made in respect of the three years preceding the previous 5th April — in other words, a claim may be made at any time, provided that it must be made within three years next after the end of the year of assessment to which the claim relates. Abatement. Where a person's income from all sources whatsoever is within the undermentioned limits, an abatement may be obtained as follows : — Where the income exceeds ,£160 but does not exceed £400, an abatement of £160. Where the income exceeds £400 but does not exceed ,-£500, an abatement of £150. Where the income exceeds £500 but does not exceed £600, an abatement of £120. Where the income exceeds £600 but does not exceed £700, an abatement of £yo. In the case of " mixed " income (i.e., partly earned and partly unearned) these abatements will he deducted from the " earned " portion thereof, provided that if the earned portion be insufficient to afford the full allowance the balance will be deducted from the unearned portion. In order to obtain such abatement the claimant must state the full particulars of all income from every source whatsoever, whether already taxed or not, and, if taxed, whether by deduction or otherwise. For the purpose of any claim for exemption or abatement the income derived from the occupation of lands (chargeable under Schedule B) is to be taken at one-third the annual value thereof under that schedule, provided that where the lands are occupied for the purpose of husbandry only the actual amount of profits is tc be taken if the Commissioners are satisfied thereon. No exemption, abatement, or relief which depends wholly or partially on the total income of an individual from all sources shall be given to any person not resident in the United Kingdom, except in the case of a person : — (a) Who is or has been employed in the ser- vice of the Crown ; or (b) Who is employed in missionary service; or (c) Who is resident in the Isle of Man or Channel Islands; or (d) Who satisfies the Commissioners that he is resident abroad for the sake of health ; Provided that in each of the cases (a), (b), (c), and (d) his total income must be calculated as including all income, whether chargeable to British income-tax or not. (Finance (1909-10) Act 1910, section 71, subsection (1).) Income-tax shall not be payable in respect of the interest or dividends on any securities of a foreign State or a British possession which are payable in the United Kingdom, where it i proved to the satisfaction of the Commissioners that the person owning the securities and entitled to the interest or dividends is not resident in the United Kingdom ; but, save as provided by this or any other Act, no allowance shall be given or repayment made in respect of the income-tax on the interest or dividends on the securities of any foreign State or any British possession which are payable in the United Kingdom. icome] Relief from income-tax under this subsection may be given by the Commissioners either by way of allowance or repayment on a claim being made to them for the purpose within six months of the end of the year for which the income-tax is charged. (Finance (1909-10) Act 1910, section 71, subsection (2).) Claims for repayment of tax on the ground of abatement as regards amount can only be made in respect of the three years preceding the previous 5th April — in other words, a claim may be made at any time, provided that it must be made within three years next after the end of the year of assessment to which the claim relates. A limited company cannot claim the benefits of xemption or abatement from its profits for the purpose of income-tax assessment. This was clearly explained by the Revenue authorities in a reply to a claim by a company. The reply (dated 1898) was as follows : — 1 " I am to explain that under the income-tax " law the unit of taxation is not the company, I but each individual shareholder. It is true I that the profits of the company are assessed " in one sum before division. Each share- I holder consequently suffers deduction in respect I of his share of the dividend ; but whether " such deduction is permanent depends in each " case on the total yearly income from all " sources of the individual shareholder. If that " total income comes within the limit of exemp- I tion, or if he is entitled to an abatement " which has not already been allowed, he can " claim repayment of the tax. It makes no " difference from what source his income is " derived. " Your claim, therefore, in the form in which ■ you submit it — namely, that abatement " should be granted on the profits of your com- " pany as such — cannot be allowed, but, as has " been explained above, the assessment in full " of the profits of the company before division I does not impose on any of the shareholders " a tax in excess of his proper liability." (See headings Allowance in respect of Children, Earned Incomes, Life Assurance Premiums, Married Woman, and Minor, infra.) 2 §5 [Income Earned Incomes. In addition to the above abatements as regards amount, section 19 of the Finance Act 1907 allows an abatement of five pence in the rate of tax pay- able (as at February 191 1) upon the earned portion of incomes not exceeding £2,000 per annum from all sources, and section 67 of the Finance (1909-10) Act 1910 extends this relief to persons whose total incomes exceed £2,000 but do not exceed £3,000, the abatement in such cases (as at February 191 1) being two pence in the rate of tax. Claim for relief on earned income must be made either at the time the " return " is made, or before the 30th September in the year for which the tax is charged. Note. — This is strictly construed, and some officials contend that the claim must reach them not later than 29th September, so as to comply with the requirement " before the 30th September." (See title Differentiation.) Life Assurance Premiums. An allowance from the amount of income to the extent of the annual premium pay- able may be claimed by any person who shall have made insurance on his life, or the life of his wife, or who shall have contracted for any deferred annuity on his own life or on the life of his wife, in or with : — (1) Any insurance company (a) existing in 1844, or (6) registered under the Companies Acts ; or (2) Any legally established friendly society ; or (3) The National Debt Commissioners. The above provisions apply only to life insurances or contracts for deferred annuities effected in or with any insurance company legally established in any British possession or lawfully carrying on business in Great Britain or Ireland. (Finance Act 1904, section 9; Revenue Act 1906, section n.) Where the premiums payable to a friendly society are made for shorter periods than three months, a certificate must be produced to the Surveyor of Taxes for the district, signed by an officer of the society, and specifying the correct amount of premiums paid during the year. Income] 286 [Income Apparently no allowance can be claimed for the premiums paid on a " joint " policy (e.g., partnership insurance), payable to the survivor or survivors on the death of any one of the assured. The allowance is not authorised in respect of any annual premium beyond one-sixth part of the claimant's income from every source; nor has the allowance the effect of giving abatement in the event of the total income being thereby reduced below the respective limits which would otherwise give rise to a claim for abatement. In other words, the abatement is first deducted from the total income, as thus : — Total income £660, less abate- ment ^70 = ^590, less insurance premiums £&o = net assessment £510, and not £660, less insurance premiums ^80 = ^580, less abatement £120= £460. In the case of " mixed " incomes (i.e., partly earned and partly unearned) not exceeding £3,000 per annum, insurance premiums will be allowed from the " earned " portion thereof, provided that if the earned portion be insufficient for the full allowance the balance will be deducted from the unearned portion. In order to obtain the allowance in respect of such premiums, it is necessary that full par- ticulars should be given in the return, and, where required, the receipts for the premiums must be transmitted to the Surveyor, so that he may inspect and indorse same as having been allowed. If the allowance in respect of life insurance premiums is not made at the time of assessment a claim therefor to be entertained must be made within three years after the end of the year of assessment. An individual assessable for super-tax (see infra) is entitled to a deduction from his super-tax assessment of insurance premiums not exceeding one-sixth of his total income. Allowance in Respect of Children. Any individual whose total income from all sources does not exceed £500 is entitled to further relief from income-tax equal to the amount of tax upon £10 for every child he has living under the age of 16 years at the commencement of the year of assessment. The expression " child " includes a stepchild, but not an illegitimate child, unless hit or her parents have married each other after his or her birth. In the case of " mixed income," the allowance will be made from the earned portion of the assessment, and the unearned portion will only be resorted to in the event of the earned income proving insufficient to afford the taxpayer all the proper allowances to which he may be entitled. If it is necessary to claim repayment, the general provisions as to abatement apply, and the claim may therefore be made at any time within three years after the year to which the claim relates. (Finance (1909-10) Act 1910, section 68.) Married Woman. The income of a married woman living with her husband is deemed by the Income Tax Acts to be his income (notwithstanding any settlement, or the provisions contained in the Married Women's Property Act 1882) ; and any claim for exemption or abatement in respect of such income must be made by the husband. But where the total joint income of the husband and wife does not exceed £500, and the Com- missioners of Taxes are satisfied that such total joint income includes profits of the wife from any profession, trade, employment, or vocation, or any office or employment of profit, carried on or exercised by her own personal labour, and that the balance of the total income or any part thereof arises from profits acquired by means of the husband's own personal labour, and is uncon- nected with the business of the wife, a separate claim of exemption or abatement will be admitted in respect of such profits of the wife. Apparently, where the joint income of husband and wife does not exceed £3,000, they are each entitled to be assessed at the earned rate on the income from their separate personal labour. It is the duty of the husband of a married woman to include the income of his wife as his own income for super-tax purposes, and he is liable to pay the tax thereon. Proposals have been laid before Parliament to impose the duty of making the return and the liability for pay- ment of her share upon the wife in proper cases, icomej but these proposals have not yet (February 191 1) law. Minor. The parents or guardians of an infant are chargeable in respect of profits accruing to him during his minority. With regard to claims Kemption, abatement, or repayment (as the may be) the claim must be made by the infant's trustee. The rule as to contingent inti rests is as follows : — " Where income is allowed to accumulate " during the period of minority, in the case of " .1 minor who has merely a contingent interest " in the property, exemption or abatement is " not allowed; but in such a case the minor, on coming into possession, may claim repay- " ment of the tax extending over the whole " period of minority, provided he or she were " entitled to exemption or abatement for such " time." Where, however, a portion of the income from b contingent interest is applied towards the main- inance of the infant, repayment of tax where >aid (generally by deduction) may be claimed jpon such expenditure, and repayment of tax jpon the balance (if any) of the income may be rlaimcd when the minor comes into possession, provided he or she were entitled to exemption or abatement during minority. I Where an infant's interest in property is an Absolute one, and the amount of income therefrom tntitles the infant to exemption or abatement (as se may be), a claim for repayment (where ax has been overpaid) may be made irrespective bf whether any part of such income has been kpplied towards maintenance or not. Supkr-tax. Tin Finance (1909-10) Act 1910 made pro- 1-1011 for the assessment of an additional income- ;ik or super-tax in respect of the income any individual whose total income from all "lines exceeds £5,000. The rate of super-tax mm 6th April 1909 to 5th April 1910 was fixed in the £, and this rate was renewed from >th April 1910 to 5th April 191 1. Although every ndividual whose total income from all sources 28 7 [Income exceeds £5,000 is thus assessable for super-tax, the first £3,000 of income is exempt, and it is only upon the excess over £3,000 that the super- tax is payable. For the purposes of the super-tax the total income of the individual from all sources is to be taken as his total income for the previous year, estimated in the same manner as the total income from all sources is estimated for the pur- poses of exemption or abatement, and allowing all proper deductions from annual values, and life assurance premiums, &c. Income chargeable with income-tax by way of deduction is income of the year in which it is receivable, and deduc- tions allowable on account of payments made out of the profits are deductions in respect of the year in which they are payable. The effect of these provisions is that the statutory income for ordinary income-tax purposes for 1908-9 is the statutory income for super-tax for 1909-10, and so on from year to year. (See title Super-tax.) Repayment. (1) Where tax has been paid by deduc- tion or otherwise in respect of income from which a person is entitled to exemption or abate- ment, repayment of tax may be claimed, the amount repayable and the conditions imposed varying with the circumstances of each case. Claims for repayment, on the ground of either exemption or abatement, can only be made in respect of the three years preceding the previous 5th April — in other words, a claim may be made at any time, provided that it must be made within three years next after the end of the year of assessment to which the claim relates. Where the right to exemption or abatement is of annual occurrence, and the income is received subject to the deduction for tax, it is advisable to make the claim for repayment annually. In such cases the claims are more readily passed, and with each order for repayment of tax a form is forwarded by the authorities to enable the claim to be made the following year. The form when filled up must state the whole of the claimant's income from every source whatsoever, and also specify the tax which has been deducted from Income] 288 [Income each item thereof. The statement must be sup- ported by certificates of deduction from the payer of the income certifying that he has deducted (and accounted to the Revenue for) the tax which is now claimed. Where the income of a taxpayer is taxed before receipt, and for accommodation purposes he has a bank overdraft, upon which interest is payable to his bankers, the authorities on receipt of a proper claim will refund tax on the interest pay- able to the bankers, the reason being that the tax- paver's net income is reduced by reason of such interest. It is doubtful whether the taxpayer has any legal right to this repayment unless his income brings him within the statutory limits of abatement, and then the claim is not one for repayment of tax upon the bank interest, but a claim for the abatement to which he may be entitled. As stated, however, the authorities will generally admit such a claim, but they will not refund tax upon interest paid upon mere temporary loans. (De Peyer v. The King, 1908.) (2) In addition to tax overpaid by way of deduction, tax is often paid on a sum in excess of the actual income received, owing to assessments being fixed in advance (see supra) in order to meet the financial requirements of the country. The chief provision in this respect was section 133 of the Act of 1842 (as amended by section 6 of the Act of 1865), but it has ceased to have effect as respects income-tax charged for the year beginning 6th April 1907, or for any subsequent year. (Finance Act 1907, section 24, subsection But where a business has been set up or com- menced within the three years required for the usual " average " or within the year of assess- ment, a claim may be made at the end of the year of assessment for assessment on the actual amount of profits — and readjustment or repay- ment accordingly. Again, where a business is discontinued the assessment is to be on the actual profits of the year, and claim may be made — no time limit is mentioned in the sec- tion — for repayment of any tax overpaid during the previous three years. (Finance Act 1907, section 24, subsections (2) and (3).) The authorities contend that the above right of appeal in respect of a business " set up or conk menced " within the average period dors not apply to what is termed a " succession," and sometimes confusion is caused to the taxpayer in consequence, and he may possibly lose his rightful remedy against over-payment. The following suggestions may be helpful : — (1) As regards the vendor (or other original owner of the business) : — (a) If the business is discontinued entirel* he has a right of appeal under section 24 (3) of the Finance Act 1907. (b) If it is merely his own connection with the business which ceases, then he has a right of appeal under section 134 of the Income Tax Act 1S42. (S|B (3) infra.) (2) As regards the purchaser (or " com- mencer ") of the business: — • (a) If it is an entirely new business (as distinct from a new ownership), he has] a right of appeal under section 24 (2) of the Finance Act 1907. (6) If the business is treated as a " suc- cession " (that is to say, involvfll merely a change of ownership) , he hts I a right of appeal under section 100 of ' the Income Tax Act 1S42, provided; that he proves the profits have fallen • short from a specific cause (which is not usually a difficult matter). (See'j (6) infra.) (3) When a person ceases to carry on any trade, or dies, or becomes bankrupt or insolvent, he or his representatives may claim reduction in the assessment, and — if tax has been paid — repay--} ment of such portion thereof as seems just to the Commissioners. (Act of 1842, section 134.) The' amount of relief granted varies with circum- stances, and is decided according to the perioi during which trading has been carried on and tin I result of the trading during such period. This claim is to be made within three mouth: \ after the end of the vear of assessment. icome] In the case of a bankruptcy or an arrangement with creditors duly registered under the Deeds of Arrangement Act, Surveyors of Taxes will usually accept as conclusive for the purpose of this section a certificate by the trustee (if an accountant) as to the actual profits earned during the year of assessment. (4) " Where an)' person shall sustain a loss in " any trade, manufacture, adventure, or concern or " profession, employment or vocation, carried on " by him either solely or in partnership, or in the " occupation of lands for the purpose of hus- " bantlry only," the Commissioners may adjust his liability by reference to the loss and to the • arc amount of his income for that year estimated according to the several rules and direc- tions of the Acts. " The said Commissioners " shall on proof to their satisfaction of the " amount of the loss, and of the payment of " income-tax upon the aggregate amount of " income, give a certificate authorising repayment " of so much of the sum paid for income-tax as " would represent the tax upon income equal to " the amount of loss, and such certificate may " extend to give exemption or relief by way of " abatement." (Customs Act 1890, section 23.) This claim is to be made within six months after the end of the year of assessment, and it must be noted that, where repayment has been made to a taxpayer under this section, he is not allowed a deduction on the assessment for a subsequent year by reference to the amount of in respect whereof such repayment has been obtained. Owing to the elimination of the loss when com- puting succeeding average figures, the general effect of a claim under this section is only to Dhtain forthwith a benefit which would otherwise be spread over the next three years, but the following advantages may accrue : — (a) In the event of a continued series of losses, the proviso as to elimination of the loss would not be detrimental to the taxpayer, whereas it would be a distinct gain to him to have recovered tax possibly on several different schedules. 289 [Income (6) The same remarks apply to a discontinuing business, and particularly to the winding- up of insolvent estates. (But see also Finance Act 1907, section 24 (3), quoted under paragraph (2) (supra).) (c) In a bad year the recovery of tax in " advance " may be specially helpful to the taxpayer, and there is the minor considera- tion of interest thereon. (d) There may possibly be a future diminu- tion in the rate of tax; for instance, tax might now (191 1) be recovered under Schedule A at is. 2d., and the elimination of Schedule D losses from the computation of succeeding averages might only have the effect of increasing future " earned income " assessable at 9d. On the other hand (a) the rate of tax might increase, and (b) special care should be devoted to claims where the loss exceeds the whole of the tax-paid income. However heavy the loss, the repayment is limited, and properly so, to the tax actually paid. Some Surveyors contend that the result of the particular year upon which the claim under this section has been based should be omitted entirely from the calculation of the average of subsequent years; but it is submitted that this is not in strict compliance with the terms of subsection 4 of sec- tion 23, for, if there should have been any excess of loss in that year over and above the sum upon which tax was recovered, that excess may be brought into future averages. Generally speaking, the provision as to extending the relief so as to give exemption or abatement will not be of importance in a claim of this character. Where applicable, the effect should be separately considered. (5) There is also provided by the 1842 Act, sec- tion 171, and by the Taxes Management Act 1880, section 60, a right of repayment to any person of any " sum erroneously and doubly assessed upon him," whenever he shall by any error or mistake be twice assessed for the same cause, and on the same account and for the same year. There is no specified time limit within which this claim must U Income] 290 [Incomplete be made, but it is assumed that in any case it must be made within three years after the end of the year of assessment to which the claim relates. (6) Finally, as already mentioned, there is a right of readjustment of the assessment (or of repayment if tax has been overpaid) in the case of a " Succession," provided it can be shown that the profits have fallen short from a specific cause. (See supra.) ■ Note. — The taxpayer's right of appeal is in the first instance to the General Commissioners, who have a right to refuse the taxpayer the benefit of professional representation before them, but, should they so refuse, the appellant may appeal to the Special Commissioners, who " are required " to hear his barrister, solicitor, or accountant. " The term ' accountant ' in this connection " means a person who has been admitted as a " member of an incorporated society of " accountants." (Revenue Act 1903, section 13.) Bankruptcy and Liquidation. Income-tax is entitled to priority of payment subject to certain limitations. (See title Preferential Payments.) Incomplete Work. — If certain work under a con- tract is to cost, say, £8, 000, and is chargeable on completion at £10,000, and at the date of pre- paration of a Balance Sheet £7,000 has been expended thereon, then, if no reasonable grounds exist for doubting the soundness of the original estimate, the following alternative methods of dealing therewith are submitted : — (1) Contract No Period A. Dr. Cr. £ Materials, Labour, &c... 7,000 "Balance carried down, viz. : — Cost to com- plete .. £1,000 Proportion of Profit thereon 250 1,250 Balance to Profit and Loss Account . . . . 1,750 £io,ooo Dr. Period B. Cr. Materials, Labour, &c... 1,000 Balance to Profit and Loss Account . . . . 250 £-',250 ^Balance brought dov 1 '"•' -y Dr. (2) Contract No. Period A. £ Materials, Labour, &c... 7,000 Contract Price £10,000 Proportion of Profit - thereon carried to Profit and Loss Ac- *Balance carried down 8,750 count 1.750 £8,750 Dr. Period B. £8,750 Cr. ^Balance brought down 8,750 Materials, Labour, &c. . 1,000 Balance to Profit and Loss Account.. .. 250 Contract Price . . . . 10,009 £10,000 -C 10,009 _____ Under either system the profit is proportionate to the work done in the respective periods, as the profit on the incomplete portion is reserved in addition to the " cost to complete." But there is this difference: — Under Method (i) the position at the balancing date is represented by a book debt of £10,000, less a provision of £1.250 to complete the work, whereas under Method (2) the accounts show an asset representing incom- plete work to the amount of £8,750. Where there are doubts as to the reliability of the original estimate, a further percentage (dependent upon the degree of doubt) should also b^ reserved. But, as already stated, if the estimates are sub- stantially borne out, each period should derive the same percentage of profit upon its proportion of work done, so that indirect expenditure may be systematically provided for. In many cases the valuation of incomplete work may be complicated by the question of instalments payable as the work proceeds. The ■ usual course is to ascertain the cost to date plus a percentage for dead charges and profit, as , already suggested, and to deduct from the sum so obtained the total instalments received to date icomplete] 291 [Incomplete of the Balance Sheet. The net amount is then treated as an asset under the heading " Incom- W'ork " or " Work-in-progress." Where the contract has made substantial progress, an auditor may often obtain evidence in support of the valuation figures by reversing the process as follows, viz. : — Ascertain the value of the total instalments still to be received and deduct there- from (1) the estimated cost of finishing the work, and (2) a proper provision for further dead charges and future profit. As a general rule, it takes from one to two months (sometimes longer) to complete the accounts of a concern which carries out large con- In the meantime, many of those contracts which were " nearly finished " at the " time of balancing " may have been completed, so that one af the alternative methods suggested above can be tarried out with tolerable accuracy, as a proper m of estimating costing renders the ultimate percentage of profit (or loss) a known quantity. " When the business is a large one — or, to speak more accurately, when the number of contracts in which the firm or company is engaged at any one time is so large that there is a reasonable prospect of the profits and ■SSI - being averaged — it is less important that the estimated losses upon losing contracts should be anticipated. As a matter of prudence, however, it is never wise that the losses should be disregarded, unless it is really and honestly believed that they are of. so small a nature that they will, in any event, be con- siderably more than outweighed by the accruing profits upon the other contracts which are not being taken to credit. To put the matter generally, all that can be done in this, as in every other case, is to frame accounts showing results, which are as accurate as under the circumstances of the case it is pos- sible for accounts to be, while the concern is still in the nature of a ' going concern.' If, however, they are to err upon the one side or the other, it should be upon the side of caution, so that all anticipated losses are included; but prospective profits are not included until either actually realised, or in such a form that they " are believed to be actually recoverable." (The Accountant.) Mr. Edwin Guthrie, F.C.A., has said that " in " stating an account affected by the valuation of work in course of construction under contract, " great difficulty is often experienced, and the " difficulty is in proportion as the works in ques- " tion may be of great magnitude, few in number, and extending over a considerable period of time. If numerous and covering " comparatively short periods of duration, errors " of valuation may average themselves, but if " few in number and covering long periods the risk in obtaining a true appraisement is great. " This, however, is in the main a matter for the " technical management. The question for the " auditor is — What is the principle to be applied " in the taking of the periodical account? In " such a case it appears to me not only right but " obligatory that the value of the work done " should be taken on the basis of the contract " (or selling) price, otherwise the whole result " would take effect in the year or half-year in " which the contract was completed, which would " cause fluctuations in the apparent profits and " in the distribution of the income as between " one period and another." In many instances an auditor's precise difficulty does not arise from clerical discrepancies, but rather from differences of opinion with those " experts engaged in the trade " who are responsible for the outcome of a particular con- tract or contracts, and having, perhaps, been dis- appointed in their desire finally to complete a specified contract before " balancing time " naturally endeavour to alleviate their disappoint- ment by claiming the greatest possible advantage for the proportion of work done. Again, as it is by no means an uncommon experience to find that the estimates of the expert differ from the real cost as regards completed contracts, the estimates for incomplete contracts should in any case receive consideration. Thus an auditor may find himself pitted against the opinions of experts, as regards the principles upon which the valuations have been made, and obviously he requires some recognised principles to support his own views upon the subject. U 2 Incorporation 292 [Increment Incorporation. — The creation of a legal body, endowed with perpetual succession and exist- ence, unless specially restricted by the instrument or act of incorporation. (See title Corporation.) Incorporeal Chattels. — Rights incident to chattels, such as patents, copyrights, goodwill, &c. Increase of Capital.— Sec title Memorandum of Association. Increment Value Duty.— The Finance (1909-10) Act 1910 provides inter alia: — Subject to the pro- visions of this Act there shall be charged, levied, and paid on the increment value of any land a duty called increment value duty at the rate of one pound for every complete five pounds of that value accruing after the thirtieth day of April nineteen hundred and nine, and — (a) On the occasion of any transfer on sale of the fee simple of the land or of any interest in the land, in pursuance of any contract made after the commencement of this Act, or the grant, in pursuance of any con- tract made after the commencement of this Act, of any lease (not being a lease for a term of years not exceeding fourteen years) of the land ; and (6) On the occasion of the death of any person dying after the commencement of this Act, where the fee simple of the land or any interest in the land is comprised in the property passing on the death of the deceased within the meaning of sections 1 and 2, subsection (1) (a), (b), and (c), and subsection 3, of the Finance Act 1894, as amended by any subsequent enactment; and (c) Where the fee simple of the land or any interest in the land is held by any body corporate or by any body unincorporate as defined by section 12 of the Customs and Inland Revenue Act 1885, in such a manner or on such permanent trusts that the land or interest is not liable to death duties, on such periodical occasions as are provided in this Act, the duty, or proportionate part of the duty, so far as it has not been paid on any pn occasion, shall be collected in accordance with the provisions of this Act. (Section 1.) (1) For the purposes of this Act the in ment value of any land shall be deemed to be the amount (if any) by which the site val the land, on the occasion on which incn :..■ :.: value duty is to be collected as ascertain, accordance with this section, exceeds the original site value of the land as ascertained in accorS ance with the general provisions of this A to valuation. (2) The site value of the land on the occasion on which increment value duty is to be collected shall be taken to be — (a) Where the occasion is a transfer on sale of the fee simple of the land, the value of the consideration for the transfer; and (b) Where the occasion is the grant of any lease of the land, or the transfer on sale of any interest in the land, the value of the | fee simple of the land, calculated on the basis of the value of the consideration for the grant of the lease or the transfer of the interest; and (c) Where the occasion is the death of any person, and the fee simple of the land is property passing on that death, the prin- 1 cipal value of the land as ascertained for I the purposes of Part I of the Finance Act ( 1894, and where any interest in the land is property passing on that death the value of the fee simple of the land calculated on the basis of the principal value of the interest as so ascertained ; and (d) Where the occasion is a periodical occasion on which the duty is to be collected in respect of the fee simple of any land or of any interest in any land held by a body corporate or unincorporate, the total value of the land on that occasion to be esti- mated in accordance with the general pro- visions of this Act as to valuation ; subject in each case to the like deductions as are made, under the general provisions of this Act lcrement] 293 valuation, for the purpose of arriving at the rite value of land from the total value. (3) Where it is proved to the Commissioners in application made for the purpose within the time fixed by this section that the site value ijf any land at the time of any transfer on sale of the fee simple of the land or of any interest in the land, which took place at any time within twenty years before the thirtieth day of April nineteen hundred and nine, exceeded the original site value of the land as ascertained under this Act, the site value at that time shall I be substituted, for the purposes of increment value duty, for the original site value as so i lined, and the provisions of this Act shall apply accordingly. Site value shall be estimated for the purposes <.f this provision by reference to the consideration given i)ii the transfer in the same manner as it is estimated by reference to the consideration given on a transfer where increment value duty is to be collected on the occasion of such a transfer after the passing of this Act. This provision shall apply to a mortgage of the h i- simple of the land or any interest in land in the same manner as it applies to a transfer, with -ubstitution of the amount secured by the mortgage for the consideration. I An application for the purpose of this section must be made within three months after the wriginal site value of the land has been finally settled under this Act. (Section 2.) title Land Values.) fi) On each occasion on which increment lvalue duty is collected on the increment value of lany land, such an amount of duty shall be deemed to be unsatisfied as the Commissioners determine, after giving credit for the amount of duty paid on previous occasions. The Commis- sioners shall make such apportionments and [apportionments of any duty paid on previous casions as they think necessary for the purpose giving effect to this provision. (-') Where increment value duty is collected on e occasion of the transfer or passing on death the fee simple of any land, or any periodical casion in the case of land held in fee simple [Increment by a body corporate or unincorporate, the whole amount of the duty which is determined to be unsatisfied shall be collected by the Commis- sioners in accordance with rules made by them for the purpose. (3) Where increment value duty is collected on the occasion of the grant of a lease, or on the transfer or passing on death of any interest in land, or on any periodical occasion in the case of an interest in land held by a body corporate or uninc of the infant, but also to his actual requirements at the time of sale and delivery. (Nash v. Inman, C.A. 1908.) The Sale of Goods Act 1S93 provides thai, where necessaries are sold and delivered to an infant, he must pay a reasonable price therefor. An infant cannot be sued on a bill, even though given in respect of the price of necessaries supplied, but in such a case he could be sued upon the consideration. (2) That although ratification after full age of a promise made during infancy cannot be enforced, such a ratification must be distinguished from a new contract entered into after full age in the precise terms of the one made during infancy. (3) That an infant can make a binding con- tract for employment (if the contract as a whole is beneficial to him) ; and with regard to a lease of land, a share in a part- nership, or shares in a joint-stock com- pany, if a person has held same during infancy and does not repudiate the agree- ment within a reasonable time after coming of age, a ratification is implied. (4) That an infant is not estopped from setting up the Infants' Relief Act, even though he may have obtained credit by misrepre- senting that he was of full age. (Levene v. Brougham, C.A. 1908.) The various circumstances affecting an infant's position will, however, be dealt with. seriatim : — Administrator. Where the right of administration of an intestate's estate devolves upon an infant, the Court will grant administration durante minore atate to his guardian, or to such person as the Court thinks fit, for an infant cannot give a bond to administer faithfully, nor can he sue and recover the debts of the deceased. (See heading Executor, infra.) Agenxy. An infant cannot act as proxy for a creditor or contributory either in bankruptcy or winding- up procedure. Ordinarily, however (although he cannot act as a principal), an infant may be appointed an agent, for as an agent he is not deemed to exercise his own powers, but those which have been transmitted to him by his principal. (See heading Bills of Exchange, infra.). Infant] Bankruptcy. The liability of an infant to bankruptcy pro- ceedings is a matter of doubt ; whilst some writers suggest the possibility of an infant being liable to bankruptcy law in respect of (i) a judgment debt founded on a tort, or (2) a debt incurred for necessaries, it is settled that an infant cannot be made bankrupt in respect of debts incurred in trading, whether alone or in partnership. In the event of the bankruptcy of a firm having an infant partner, the infant will be excluded from the proceedings (Beauchamp Brothers, 1894), although the whole of the part- nership assets (but not the infant's separate estate) will be available for payment of the partnership debts. The following extract from the Fourteenth Annual (Bankruptcy) Report of the Board of Trade, under the 1883 Act, will be found appropriate : — " Infants practically enjoy immunity from " the bankruptcy law. They are incapable of " binding themselves by a contract, except by " a contract for necessaries (when it must be " shown that the goods obtained were neces- " saries suitable to the degree and quality of " the infant who was not otherwise supplied " with necessaries), or by a contract for hiring " and service for wages. It would seldom " occur that an infant would be liable, under " a binding contract of the nature referred to, " for a sum not less than ^50, which is the " minimum amount upon which a creditor's " petition can be founded. The only other " case in which an infant would, perhaps, be " made bankrupt appears to be where judg- " ment has been recovered against him for not " less than £50 in respect of a tort." The following extract from Lord HerschelPs judgment in Lovell eV Christmas v. Beauchamp Brothers (1894, A.C. 607) also bears directly upon this question : — " I think it clear that there is nothing to " prevent an infant trading or becoming " partner with a trader, and that until " his contract of partnership be disaffirmed, " he is a member of the trading firm. But 3° 2 Infant " it is equally clear that he cann "tract debts by such trading; although " goods may be ordered for the firm, fa " does not become a debtor in respect of them. " The adult partner is, however, entitled to " insist that the partnership assets shall be " applied in payment of the liabilities of the " partnership, and that, until these are pro- " vided for, no part of them shall be recenH " by the infant partner, and if the proper " steps are taken, this right of the adult partner " can be made available for the benefil " creditors. It is also clear that, even if there " are circumstances under which an infant mav " be adjudicated bankrupt, or a receiving order " may lawfully be obtained as a step towards " such adjudication, he cannot be made subject " to the bankrupt laws in respect of any debts " contracted by the firm of which he is a " partner." Goods belonging to an infant, but in the possession of another person by way of his trad or business, are not subject to the " repute ownership " clause in the event of the latter's i bankruptcy, for in such a case the goods req^H to lie in the " order or disposition " of the ba^H rupt, with the consent and permission of Wti true owner, and an infant is incapable of ; the necessary consent. Bills ok Exchange. Capacity to incur liabilin as a party to is co-extensive with capacity to contract. A minor cannot, therefore, incur any liabilil drawer, indorser, or acceptor of a bill, and even - where a bill is given by an infant for the price of necessaries supplied to him, he is not liable thereon, although he may be liable on the consideration therefor. Where a bill is drawn or indorsed by an infant having no capacity to incur liability thereon, the drawing or indorsing entitles the holder toM receive payment of the bill and to enfor against any other party thereto. " The I " incapacity of one or more parties to a bill in " no way diminishes the liabilitv of any of the I " other parties thereto: thus, the acceptor cannot ■■it] ct up the incapacity of the drawer, the drawer :annot set up the incapacity of the acceptor, md so on." The effect of an indorsement by an infant is ■ trely to transfer the property in the bill without ^y assumption of liability on his part, even I nigh he receives value therefor. But an infant no has been validly appointed the agent of an | ult person may bind his principal by his I ;nature to a bill of exchange, provided the ant acts within the scope of his authority. So infant cannot (as principal) draw or sign a feque, for he cannot give his banker a legal charge, but if a customer authorises a minor sign cheques on his behalf, such cheques will duly honoured by the banker. Building Society. in infant may be admitted as a member of iuilding society under the Building Societies t, and may give all necessary acquittances, ivided the rules of the society do not prohibit admission, but during his minority he is competent to vote or hold any office in the iety. Company. t is doubtful whether an infant can be a latory to the memorandum of association. Khe Registrar of Joint Stock Companies was re that one of the signatories was an infant [ would, no doubt, decline to register the aorandum, but the certificate of incorpora- on being issued by the Registrar, is deemed lusive evidence that all the requirements of lets have been complied with. articles of association of a company some- prohibit the admission of an infant as a iber, whether by allotment, transfer, or ••wise, but in any case an infant cannot ict effectually to take shares; and if shares stand in the name of an infant they will leld subject to the quondam infant's right to ■bdiate them on coming of age. As a result ■ection 2 of the Infants' Relief Act (supra) no Hon can be brought to charge a person on any ■fication after full age of a promise made Rng infancy. 3°3 [Infant To charge him there must be evidence of a new promise after full age, and acting as a member may possibly be evidence of such a new promise. If, however, an infant shareholder has been allowed to transfer his shares the company will be bound thereby. Where the articles of association of a company prohibit the registration of an infant as a member, but shares have been transferred to, and registered in, the name of an infant, the company may, on ascertaining that fact, applv for a rectification of the register, so as to restore the name of the transferor. Company Liquidation. If a shareholder be an infant at the date of. the winding-up of a company he cannot be placed upon the list of contributories, but if he originally held the shares as an infant, and is of full age at the date of winding-up, it is then a question whether or not he has elected to take the shares by a new promise after coming of age, such as acting as a member or expressly acquiescing in his registration as a member after attaining full age. Such election may be evidenced, not only by any express act of ownership over the shares by the member, but by failure to repudiate the shares expressly within a reasonable time after coming of age. If on coming of age (before the date of the winding-up) the member has elected, or is deemed to have elected, to take the shares, he will be liable to be placed upon the list of con- tributories. Where a director of a company induced his infant children to take shares in the company, the infants were not liable for the calls on the shares in the winding-up, but the father, being cognisant of the infancy of his children, was held liable for the calls (under the mis- feasance section) because of the loss occasioned to the company by his breach of duty as a director. Executor. The appointment of an infant as executor is not invalid, but there is apparently no instance of the Court having granted administration to a minor, as he cannot take upon himself the Infant 304 Infant liabilities of the office. Where there are two executors appointed, one of whom is a minor and the other of full age, the latter alone can execute the provisions of the will. Where an infant is appointed sole executor, probate of the will cannot be granted to him during his minority, but administration with the will annexed will be granted to his guardian or such person as the Court thinks fit until the infant attains his majority, when probate will be granted to him. (38 Geo. Ill, c. 87.) Further- more, the Probate Act 1857 confers power on the Court to exercise its discretion, and appoint such person as it may think fit to be the administrator of the estate of a person dying wholly intestate, or leaving a will, but without having appointed an executor willing and competent to take probate. An infant executor has been held not competent within the meaning of the above. (See heading Administrator (supra).) Limitation of Action. By 21 Jac. I, c. 16, an action in respect of a simple contract must be commenced within six years next after the cause of such action, and not after; by 3 & 4 William IV, c. 42, an action in respect of a contract under seal must be com- menced within twenty years next after the cause of such action, and not after; but, as regards an infant-plaintiff, the above periods of six years and twenty years respectively do not commence to run against him until the removal of his disability, i.e., until he comes of age. The Real Property Limitation Act 1874 pro- vides that no person shall enter, distrain, or sue to recover land or rent except within twelve years (twenty years if leased by deed) after the time at which the first right to bring the action accrued to such person ; but if he is under the disability of infancy when the right first accrues, action may be brought within six years after the disability ceases, or in the event of his death before coming of age his representatives may take action within six years from the date of the death, provided that a right to sue or make any entry on the land is absolutely barred after thirty years from the date the right first accrued. (See titles Income Tax, Maintenance.) Married Woman. Notwithstanding section 19 of the Married Women's Property Act 1882, a settlement or agreement for a settlement made after 1st January 1908 by the husband or inti nded hus- band, whether before or after marriage, respecting the property of any woman he may marry or have married, shall not be valid unless executed by her if of full age or confirmed by her after she attains full age. But if she dies an infant any covenant or disposition by her hus- band contained in the settlement or agreement shall bind or pass any interest in any property of hers to which he may become entitled on her death, and which he could have bound or dis- posed of if this Act had not been passed. (Married Women's Property Act 1907, secti Partnership. An infant may engage in trade, either . or in partnership, but he cannot be sued 01 trading debts or on contracts entered into in respect of such trading. In the event of the bankruptcy of a firm having an infant pa the infant will be excluded from the proceed- ings; the whole of the partnership assets not the infant's separate estate, will, hov be available for payment of the partni debts. But if a person, as an infant, enters into :' partnership contract, he will be held liable as ; partner for all partnership debts incurred afte he comes of age, unless he repudiates the par; nership contract within a reasonable time reaching his majority. In the absence of expres repudiation he is deemed to have adopted th contract. "If he wished to be understood as n " longer continuing a partner, he ought t " have notified it to the world." [Best, J.] j Will. An infant cannot make a valid will, unless is a soldier in actual military service, or ' mariner or seaman at sea. h Forma 305 [In rem Ii Forma Pauperis. — A person may be allowed to je or defend in the Superior Courts in formd auperis (i.e., as a pauper) on proof that he is ot worth £25, besides his clothes and the subject latter of the case, but he must first obtain >unsel's opinion that he has reasonable ground >r proceeding, which opinion, together with an ffidavit of the facts either by the party or his ilicitor, must be produced to the Court. When imitted to sue in this form, the Court may, if ssary, assign to him a counsel, or solicitor, • both, who may not refuse to act without good ■ason, and must act gratuitously. habited House Duty. — This duty is levied upon le annual value of inhabited houses and places business if also used as habitations except by le necessary caretaker. It is collected by the conn -tax authorities from the tenant and is • t deductible from the rent. the duty is levied upon the following scale: — Shops, Inns, Farm Houses, Registered Lodging Private Houses, &c. Houses, ropcrty of the annual value of £20 and 'H £40 2d. per £ 3d. per £ ^^n ot the annual value of £40 and f,6o 4 d. „ 6d. » . the annual value of which k I exceeds £60 fid. „ gi. » ■■'■■ — Property of an annual value less than per annum is exempt from inhabited house II motion. — A writ issuable by the Court to istrain the continued commission of a wrong, • the commission of a wrong which has been ireatcned. The following are examples of the is desired: — (1) The abatement of public ■ private nuisances, (2) the enforcement of >ecific performance, and (3) the restraining of fringments of copyrights, patents, trade Harks, &c ftnd Bill.— A bill which is, or on the face of it Jiports to be, (a) both drawn and payable ithin the British Islands, or (b) drawn within ie British Islands on some person resident en in. Any other bill is a foreign bill. Unless the contrary appear on the face of a 11, the holder may treat it as an inland bill. >ill- of Exchange Act 1S82, section 4.) Innkeeper. — An innkeeper is bound to admit all travellers into his inn and entertain them at a reasonable charge, if there is room and they pro- perly conduct themselves. He is liable for the loss of, or injury to, his guests' goods, &c, unless such loss is the result of inevitable acci- dent. The Innkeepers Act 1863 provides, however, that no innkeeper is liable to make good any loss or injury to goods or property brought to his inn (except a horse or other live animal, or any carriage) to a greater amount than £30, except : — (1) Where the goods are stolen, lost, or injured, through the wilful neglect or default of the innkeeper or any person in his employ; or (2) Where the goods have been deposited with the innkeeper expressly for safe custody. The innkeeper is only entitled to the benefit of the Act whilst a copy of section 1 of the Act is exhibited in a conspicuous place in the hall or entrance to the inn, and he will be deprived of the benefit of the Act where he either: — (1) Improperly refuses to receive goods for safe custody, or (2) So defaults that a guest is unable so to deposit them. An innkeeper has a lien upon the goods of his guests for board and lodging, but he may not detain his guests personally or seize any of their clothes in actual wear. Although a lien is ordinarily a right of a passive nature the Inn- keepers Act 1878 provides that the innkeeper may, after six weeks, sell by public auction all goods left with him by a guest leaving in debt, provided the sale be advertised at least one month beforehand. In personam. — A judgment in personam binds only the person and his representatives, whilst a judgment in rem is an adjudication pronounced upon the status of some particular subject-matter, such as the condemnation of a ship by the Admiralty Court. In rem. — See title In personam. Inscribed] 306 Inspection Inscribed Stocks. — These consist of the debts of various Governments, Consols, Colonial Stocks, &c, and are so called from the fact that the names of the holders of the various stocks are inscribed on the books of the London agent of the particular Government. Some municipal bodies now deal with their debts in the form of inscribed stock. No certificates are issued to the holders of inscribed stock, and in order to ascertain whether any particular person or company is entitled to certain inscribed stock a formal request for the verification of the Stock Account must be for- warded to the bank where the register is kept. The request must be signed by the stockholder or some duly authorised person, and in the case of the Bank of England, the London County and Westminster Bank, and the Crown Agents for the Colonies, the request must be accom- panied by a fee of 6d. for each class of stock required to be verified, with a minimum fee of is. In all cases other than the above, the banks which keep registers of inscribed stocks will verify same on application without charge. The auditor of a public company having invest- ments in inscribed stocks should insist upon the same being verified on each occasion the Balance Sheet is certified. (See title Investment.) Insolvency. — The state of a person who cannot pay his debts as they become due in the ordinary course; the state of a person whose liabilities exceed his available assets ; the state of a person who cannot pay twenty shillings in each pound (sterling) of his liabilities. It was held prior to the Companies Act 1907 that insolvency meant inability to pay debts actually due (i.e., debts which can be demanded to be paid instantly) (Re European Life Assurance Co., 39 L.T. 136; L.R. 9 Eq. 122) ; and in It. v. Saddlers Co. (32 L.J. Q.B. 337) Willes, J., said. " in insolvent circumstances " has always been held to mean not merely being behind the world if an account were taken, but insolvency to the extent of being unable to pay just debts in the ordinary course of business. (The Sale of Goods Act adopts the foregSfj definition.) But, re-enacting a provision in the 1907 section 130 (iv) of the Companies (Consolida- tion) Act 1908 provides that (or the purpose of determining whether a company is unable to pav its debts (and as a consequence liable to be wound up) the Court may take into account the con- tingent and prospective liabilities of the company. In specie. — In its own form, and not in the form its equivalent. Inspection. — Companies' Accounts. Inspectors may be appointed to investigati affairs of any company which is subject to the I provisions of the Companies (Consolidate, 1908 as follows : — (a) By the Board of Trade. The Board of Trade may appoint one or more competent inspectors to investigate and report.; in such manner as the Board direct : (1) In the case of a banking company having a share capital, on the application of members holding not less than one-third of the shares issued; (2) In the case of any other company having a ' share capital, on the application of members holding not less than one-tenth of the shares issued ; (3) In the case of a company not having a share capital, on the application of no than one-fifth in number of the pi on the company's register of members. The application shall be supported by such evi- dence as the Board of Trade may require for the; purpose of showing that the applicants have good reason for, and are not actuated by malicious motives in requiring, the investigation ; and the Board of Trade may, before appointing i inspector, require the applicants to give security for payment of the costs of the inquiry. It shall be the duty of all officers and agent of the company to produce to the inspectors all books and documents in their custody or power. spection] 307 [Inspection An inspector may examine on oath the officers ind agents of the company in relation to its busi- less, and may administer an oath accordingly. If any officer or agent refuses to produce any took or document which under this section it is lis duty to produce, or to answer any question elating to the affairs of the company, he shall be iable to a fine not exceeding five pounds in espect of each offence. On the conclusion of the investigation the nspectors shall report their opinion to the Board f Trade, and a copy of the report shall be for- ,-arded by the Board to the registered office of he company, and a further copy shall, at the equest of the applicants for the investigation, be elivered to them. The report shall be written or printed, as the loard direct. All expenses of and incidental to the investiga- on shall be defrayed by the applicants, unless le Board of Trade direct the same to be paid the company, which the Board is hereby uthorised to do. (Section 109.) )) By the Company. A company may by special resolution appoint spectors to investigate its affairs. Inspectors so appointed shall have the same >wers and duties as inspectors appointed by the oard of Trade, except that, instead of report- g to the Board, they shall report in such anner and to such persons as the company in neral meeting may direct. Officers and agents of the company shall incur e like penalties in case of refusal to produce y book or document required to be produced to bpectors so appointed, or to answer any ques- pn, as they would have incurred if the Spectors had been appointed by the Board of fade. (Section no.) the opinion of the inspectors in relation to any matter contained in the report. (Section in.) (See titles Auditor, Investiga- tion.) copy of the report of any inspectors whether winted by the Board of Trade or the com- ay authenticated by the seal of the company (lose affairs they have investigated, shall be nissible in any legal proceeding as evidence of General. Shareholders, creditors, mortgagees, debenture- holders, and auditors of companies are also entitled to copies of various documents and inspection of records. Creditors and the com- mittee of inspection have similar rights in bank- ruptcy; limited partners have rights in cases of limited partnerships; and " beneficiaries " are entitled to information and access to books under the Public Trustee Act. In addition, the general public may inspect on payment of prescribed fees documents filed with the proper authorities in pursuance of statutory obligations, and these are chiefly as follow : — (1) As regards companies and limited partner- ships, at the office of the Registrar of Joint Stock Companies. (2) In bankruptcy, at the County Court at which the adjudication is made. (3) As regards deeds of arrangement, at the Bills of Sale Registry. (4) As regards wills, &c, at the Probate Registry, Somerset House, and, where applicable, at the office of the Public Trustee. These various matters are dealt with in their appropriate places throughout this work. The Senior Bankruptcy Registrar of the High Court, and every Registrar of the County Court having jurisdiction in bankruptcy, must keep : — (1) A Register of Bankruptcy Notices, (2) A Register of Petitions, and (3) A Register of Receiving Orders, and these books, on payment of the prescribed fee, are open for public information and search, provided that the Registrar may in any case before allowing a search require the applicant to satisfy him as to the object for which such search is required. In the event of refusal by the Regis- trar there is a right of appeal to the Judge in Chambers. (Bankruptcy Rule 283.) X 2 Inspectorship] 308 [Insurable Inspectorship, Deed of. — .Sec title Deed of Arrangement. Insurable Interest. — At common law, the very essence of insurance was the existence of an interest in the assured; that is to say, the assured must have something at stake capable of being lost by him as the proximate effect of the loss of the subject-matter of insurance. This insurable interest was, however, often dispensed with by express agreement in the various policies, but statute law has now rendered the existence of an insurable interest an absolute necessity in marine, fire, and life insurance. These three classes will be dealt with separately : — Marine Insurance. — A contract of marine insurance by way of gaming or wagering is void, and the contract is deemed to be one of gaming or wagering where the insured has not an insurable interest. Every person who is interested in a marine adventure has an insurable interest. In particular a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure, or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof. The interest must exist at the time of the loss, provided that where the subject-matter is insured " lost or not lost " the insured may recover, although he may not have acquired his interest until after the loss, unless at the time of effecting the contract of insurance the insured was aware of the loss and the insurer was not. (Marine Insurance Act 1906.) Any person who effects a contract of marine insurance without possessing an insurable interest now commits a punishable offence. (Marine Insurance (Gambling Policies) Act 1909.) The basis of insurable interest ought to be the amount of expectation at the time of insuring, and the value of such expectation from the voyage is that which one estimates, at the tin« of insuring, the expectation will be worth safe accomplishment of the voyage. The amounts recoverable in case of total 1« are respectively : — Cargo. — Prime cost, expense of shipment, and cost of insurance, and in some cases percentage for loss of profit. Ship. — Value of ship at outset of voyage (including cost of outfit, stores, provisions fo crew), advance wages, and cost of insurance. Freight. — Gross freight and cost I insurance. Fire Insurance. — The statute 14 George III. c. 48, requires the name of the person intcresta to be inserted in every policy of insurance, l^H the contract being one of indemnity there mus be an interest at the time of the loss. " Then " must be an insurable interest in someone I " at the time of insuring and at the time " the fire happens." Life Insurance. — The Act of George III (su applies equally to fire and life insurance, an interest is essential at the time of ins but the contract being an absolute one to sum of money on the happening of a given and not necessarily a contract of indemnity, it sufficient if the assured had an insurable in^H at the time of insuring, and it is i; whether it is existent or not at the elate offl death of the life insured. A contract offl insurance may operate as an indemnity, &g where a debtor's life has been insured by creditor and death occurs before payment oH debt, but the insurance would be valid if ]M tinued by the creditor after payment of t debt which originally gave rise to the insutsl interest. Insurances on the lives of children * not void for want of interest, but the Friend Societies Act 1875 limits the insuranc^B children's lives according to age, the maxima for a child under ten years of age being ^10. A man has always been considered as haviil an interest to any amount on his own life, ai according to circumstances may have" insurable interest on the life of his wife. Griffiths v. Fleming and others, C.A. 1909.) ' fj In.irable 3°9 e Married Women's Property Act 1882 a nried woman may effect a policy on her own e or the life of her husband for her separate e. Further, a man may effect a policy on his ■ expressed to be for the benefit of his wife id children, or a woman may effect a policy 1 her life for the benefit of her husband and ildren, and in such cases a trust is created in vour of the objects named, and the moneys yable under the policies are not part of the tate of the man or woman, as the case may be, subject to the payment of his or her debts, t if it be proved that (1) the policy was effected 1 (2) the premiums were paid with intent to raud creditors, the creditors are entitled to ave out of the moneys payable a sum equal the premiums paid. (See titles Expectation Life Assurance Companies Act, &c.) ■ ranee. — The act of providing against possible by contracting with a person called the r (or underwriter) that in consideration of 1 called the premium paid by the insured Iften styled the assured), he will be indemnified pm such possible loss. In the case of life ^prance the contract may be, but is not usually, If of indemnity. [1'he distinction between life insurance (or Jsurance, to be more precise) and those forms J insurance which constitute an indemnity, is ^B)ly this: — That life assurance is a provision 4 secure a payment on the happening of an rjent which must ultimately happen, although B time of its happening is uncertain, e.g., «ath; while insurance such as marine or fire is i indemnity against any loss which may arise i the happening of some event which may not Ippcn. 1 [In all cases of life assurance or insurance, Tiether marine or fire, the insurer should be formed of every material circumstance within 'fc knowledge of the assured, such contracts Iniiiring uberrima fides. IjAn insurance company may be appointed ■stodian trustee under the Public Trustee Act \hii. (See title Public Trustee.) HSce titles Fire Insurance, Insurable Interest, in Assurance, Marine Insurance.) [Interest Interest is the compensation allowed for the loan or forbearance of a sum of money. It may be divided into two parts, viz., a portion for the mere use of the principal sum, and a portion as a premium for the risk of losing it, although the safety of a particular investment may reduce the latter to an unimportant quantity. Interest is regarded by some economists as the price of waiting while capital is in use; and the price, like all other prices, is governed largely by supply and demand (apart from the extra interest required where the risk of loss of the capital is greater). The theory of supply and demand is carried to extreme lengths by some economic writers. They say capital is increased by pro- duction and savings; the increase might result in such a supply of capital that interest would be nominal, and the capital available might reach such a point as compared with the demand that the " interest " w-ould even be negative. Recognising the great advantage of having their capital not only safe, but available on demand for future needs, and failing to obtain employment for their capital at interest because of the over supply, those who possessed such capital might consider the question of actually paying someone to take care of it until required, just as one already pays storage rent for the custody of chattels ! But this theory is not a tenable one if money be regarded, as it ought to be, as a mere medium of exchange. The rate of interest per annum current in a given community has been defined as an index of the preference in that community for a pound sterling or a pound's worth of goods at present over a pound sterling or a pound's worth of goods a year hence. To say that the rate of interest is 4 per cent, per annum is to say that £100 at present (either in money or goods to that amount) is the equivalent of money or goods to the value of £104 a year hence. Interest may be computed in two ways — simple and compound. Simple interest is that which is computed at the agreed rate upon the sum (or the outstanding balance of the sum) advanced or forborne only, Interest] 310 Interest irrespective of the fact that any interest accrued due may not have been paid to the lender. Compound interest is that which arises when simple interest, having accrued due at the end of any agreed period, instead of being paid to the lender, is added to the principal by which it was produced, thereby forming an increased principal upon which simple interest is charged during the succeeding period, and so on. The amount of £1 at compound interest at any rate per cent, for an}' period may be expressed thus:— (i+t)» where i equals the interest on £1 for one year and n represents the particular number of years. Compound interest tables are classified so as to show (inter alia) : — (1) The amount to which £1 will accumulate at the end of a given number of years, viz.: — (i + t)«. (2) The present value of £1 due at the end of a given number of years. (3) The amount to which an annuity of £1 will accumulate at the end of a given number of years. (4) The present value of an annuity of £1 to be enjoyed for a given number of years. (5) The uniform sum necessary to be set aside periodically to a sinking fund to redeem or amount to £1 in a given number of years. The particular rate of interest employed in the computation obviously affects the result, but having ascertained the amount to which £1 will accumulate at the end of a given number of years (No. 1 above) the remaining four results are readily deducible therefrom. Take 4 per cent, and a period of twenty years as an example, and assume interest tables not to be available : — (1) The amount of £1 at 4 per cent, at the end of twenty years is (i-o4) 20 . This can readily be computed thus : — (ro 4 ) x (1-04) = (ro 4 )' (1-04)2 x (i'04) 2 = (1-04)'* (1-04)* x (1-04)* = (ro 4 ) e (ro 4 ) 8 x (1-04)0 = (i-04)" (i-04) w x ([-04) 4 *= (i-04)«° = £2-1911231. (2) Having thus obtained the " amount " £1, the present worth of same is its reciprocal = £45638695. - 2-1911231 (3) The amount to which £1 will accumulate at compound interest over a period of years really represents the original £1, plus an accumu- lated annuity during the period equal to the interest on such original £1. If therefore such original £1 be deducted, the accumulation of an annuity of the annual interest on £1 remains, and the value of an annuity of £1 is only a question of proportion. Thus, amount to which £1 will accumulate at the end of twenty years = £2-1911231 Deduct the original £1 £r Accumulated amount of an annuity equal to the annual interest on £1 (viz., £04) = £1-191123: If £1-1911231 equals the accumulated amount of an annuity of £-04, then *' I 9 II2 3 I = accumulated amount of an annuity of £1 or £29-778078. (4) The present worth of an annuity of £1 tc be enjoyed for a given number of years i accumulated value of such annuity divided b the accumulated amount of £1 at the end of tt 29-778078 same period, viz. :— - 2 . lgII2jI or expressed in terms of the accumulated amour of £1 (2-1911231- 1) =£l3 . 5 oo326. •04x2-1911231 (5) With regard to sinking fund instalment?, it follows that if £1 per annum set aside ft twenty years at 4 per cent, amounts I £29-778078, the sum necessary to produce £1 that time is proportionate, being - 29-778078 expressed in terms of the accumulated amount of £1 '°+ = £033581. 2-1911231 - 1 Thus from the amount of £1 accumulated for any number of years at any rate per cent, (which itself can readily be computed), the other four results for such period and rate are readil deducible. fajerest] The periods in respect of which interest is imputed and added to the principal mark the sts in the calculation, and such rests may be ade yearly, half-yearly, or otherwise; but though in practice the rests are made on the Lpiration of some specified (and substantial) riod, the true and logical idea of compound ten st is the " momently " growth of principal ider its influence. A distinction must there- re be drawn between the nominal and effective tes per cent, per annum of interest, the latter ing greater than the former where the rest or eak is made more than once a year, and creasingly so where the rests are made at more squent intervals. Thus the nominal rate of 5 r cent, per annum is an effective rate of 3625 per cent, per annum when interest is cumulated half-yearly; when the accumulation made quarterly, the effective rate is 5.0946 per nt. per annum ; when the interest is capitalised omcntly (i.e., an infinite number of times per num), a nominal rate of 5 per cent, per annum affiles an effective rate of 5.1271 per cent, per num, while a nominal rate of 3 per cent, com- ■ ted momently becomes an effective rate of 5454 per cent, only, so that the effect of quent computations of compound interest is t so great as is generally supposed. If the rate per cent, per annum of interest a sum of money at which it is to be allowed to cumulate at compound interest in yearly rests divided into the number 71, the quotient will : i/e (approximately) the number of years in lich the original sum will double itself. Ordinarily, compound interest is not allowed by I ff on a sum lent or forborne, as the party titled to receive the interest is supposed to have I i remedy in demanding it as and when it 1 comes due. Simple interest is allowed in the following scs: — ()) Where provided for by agreement, express or implied. (2) Where it is the usage of the trade to allow it. 311 [Interest (3) Where the debt is a sum certain a jury may grant interest at the current rate as damages, if the debt is payable on a fixed day, and the contract is in writing, or if the creditor has made a written demand for the debt and notified his intention of charging interest in default of payment. (4) A judgment debt carries interest at the rate of 4 per centum per annum until the judgment is satisfied. (For the effect of interest in special connec- tions, see the following : — Interest in respect of Proof of Debt, Interest on Calls in Arrear, Interest on Capital, Interest on Capital during construction of Works, Interest on Moneys in Advance of Calls, Interest on Monthly Balances, Interest Secured by Bill of Exchange, Manu- facturers' Accounts, Sinking Fund, Usury.) Interest in Expectancy. — An interest in an estate to come in and be enjoyed in future, such as reversions and remainders. Interest in respect oi Proof of Debt (in bank- ruptcy and company liquidation) : — Bankruptcy. (a) The right to interest in the case of a Deficiency of Assets. (1) Where interest on a provable debt has not been reserved or agreed upon, but (a) the debt was payable by virtue of a written instrument at a certain time, or (6) a demand in writing was made for payment with notice of intention to charge interest on default and the debt is overdue at the date of the receiving order, the creditor may prove for interest at a rate not exceeding 4 per cent, per annum from the time the debt was payable, or from the time of demand for payment to the date of the receiving order. (Bank- ruptcy Act 1883, Schedule II, Rule 20.) Interest] 312 Interest (2) Where interest has been reserved or agreed upon proof can be made (for the purpose of voting) for the amount of such interest, but for the purposes of dividend interest shall be calculated at a rate not exceeding 5 per cent, per annum (to the date of the receiving order) without pre- judice to the right of a creditor to receive any higher rate of interest to which he may be entitled after all the debts proved against the estate have been paid in full. (Bankruptcy Act 1890, section 23; but see paragraph (/) (3) hereof.) (6) The right to interest in the case of a Surplus of Assets. (1) If there is any surplus after payment of the costs of administering the estate, the preferential debts, and all debts provable in the bankruptcy, such surplus shall be applied in payment of interest from the date of the receiving order at the rate of 4 per cent, per annum on all debts proved in the bankruptcy. (Bankruptcy Act 1883, section 40 (5) .) (2) The balance of interest reserved which is in excess of 5 per cent, and in respect of a period prior to the date of the receiving order, and therefore postponed, is also payable " when all debts proved have been paid in full." (Bankruptcy Act 1890, section 23.) (c) Proof for interest for Voting and Dividend purposes respectively. There is a right of proof both for voting and dividend purposes in the cases pro- vided for by Rule 20 of Schedule II of the Act of 1883. (See paragraph (a) (1) hereof.) But although in the case of interest being reserved in excess of 5 per cent, per annum such excess is postponed for dividend purposes (see paragraph (a) (2) hereof) it does not affect the right of proof for the full rate of interest for voting purposes. (Ex parte Jones; re Herbert, 1S92, 9 Mor. 253.) (d) Interest accrued prior to the date of the Receiving Order. Creditors who are within the provisions of paragraphs (a) (1), (a) (2), and (b) (2) hereof may prove for interest up to the date of the receiving order, subject to the conditions and limii mentioned. (e) Interest accruing subsequently to the date of the Receiving Order. (1) " There is a general rule in bankruptcy— " whether a right and reasonable rule or " not — that there is to be no proof in bank- " ruptcy for interest subsequent to " bankruptcy." (James, I. .J., in Re Savin, 7 Ch., at p. 764.) (2) But this rule ((e) (1) hereof) does apply where there is a surplus of (see paragraph (b) (1) hereof), and it is relaxed in favour of a secured ct^^H under special conditions. (See parageH (/) (2) hereof.) (/) Secured Creditor. (1) Even a secured creditor whose debt c; interest cannot (ordinarily) apply the pro- ceeds of sale or value of his security in payment first of interest subsequent to the receiving order (or winding-up order) and then In reduction of other portions 1 claim, and prove in the bankruptc liquidation) for the balance. His proof must be limited to what was due for prin- cipal and interest at the date of the bank- ruptcy (or liquidation) after deducting therefrom the proceeds of sale or val his security. But the interest, if a at a higher rate than 5 per cent., is restricted to 3 per cent., provided thai (a) it ceases at the date of the rec> order (or winding-up order), and that (1 after deducting the proceeds of sale 01 value of the security the creditor does not seek to prove for a balance of ii which exceeds 5 per cent. (London, Oc Hotels Company, 1S92, 1 Ch. p. 1 Iierest 3i3 [Interest Note. — This was an insolvent company being wound up voluntarily under super- vision of the Court, but the decision was based upon the rules in bankruptcy by virtue of that part of section 10 of the Judicature Act 1875, n(w embodied in section 207 of the Companies (Consolida- tion) Act 1 90S. (2) But where a secured creditor whose debt carries interest realises profits while in possession of his security he may set off profits so realised after the bankruptcy (or liquidation) against interest accrued on his debt during the same period. (London, <>v., Hotels Company. 1892, 1 Ch. p. 639.) (3) And where the interest is not reserved at a stated rate per cent, per annum upon the debt, but is " a lump sum agreed upon, " repayment of principal and interest " combined to be by periodical instalments " extending over an agreed period, the whole unpaid balance of principal and lump sum by way of interest to become " at once due and payable on failure to " pay any one instalment "; then in the event of bankruptcy ensuing, before the agreed period for the repayment has elapsed, the creditor having security may realise or value the same, and first apply the proceeds or allocate such value in dis- charge of the interest, even though part of such interest so discharged (a) would but for the bankruptcy have in effect been 111 respect of a period subsequent to the receiving order (viz., the unexpired por- tion of the agreed period over which the instalments by way of repayment were to extend) ; and (b) may have been more than the equivalent of the limit of a fixed rate of 5 per cent, per annum upon the amount of the debt, as prescribed by sec- tion 23 of the Act of 1890. (See para- graph (a) (2) hereof.) He may then apply or allocate the balance (if any) of the proceeds or value in further reduction of interest (if any remains unsatisfied) and principal, and prove for the balance owing. (/,; re Fox and Jacobs, 1894, 1 Q.B. p. 438.) But any balance so proved for must not include interest at a greater rate than 5 per cent. (See paragraph (a) (2) hereof.) (g) Joint and Separate Estates. Although separate creditors have priority over joint creditors in respect of the separate estate they are not entitled, having been paid in full, to any interest on their debts after the date of the receiving order out of any surplus on the separate estate until the joint creditors have also been paid in full, but if in the latter event there is still a surplus on the separate estate the separate creditors are entitled (whether their debts do or do not by law carry interest) to interest out of such surplus in priority to the joint creditors. (Whittingstall v. Grover, 35 W.R. 4.) Epitome of the Fori:i;oing. Bankruptcy. (1) Where there is a deficiency of assets, interest ceases on all debts as from the date of the receiving order (In re Savin, 7 Ch. at p. 764) ; but where a secured creditor whose debt carries interest makes a profit with his security while it is in his possession he may set off profits realised after such date against interest accruing during the same period. (London, &*c, Hotels Company, 1892, 1 Ch. p. 639.) (2) Interest to the date of the receiving order may be proved for only in respect of debts upon which interest has been reserved or in respect of which a right to interest has been otherwise acquired as indicated in Rule 20, Schedule II, Bankruptcy Act 1883. A judgment debt carries interest at 4 per cent, from the date of the judgment. A debt may also carry interest under an implied contract, evidenced by the course of dealing between the parties. (Re W. W. Duncan iS- Co., 1905, 1 Ch. 307.) (3) Where interest has been reserved or is implied by the course of dealing, the rate to be proved for shall be that so reserved or Interest] 3i4 Interest implied, provided that for dividend pur- poses the rate shall not exceed 5 per cent, per annum, without prejudice (a) to the right to be paid any interest to which a creditor may be entitled in excess of 5 per cent, after all debts have been paid in full (Bankruptcy Act 1S90, section 23) ; and (b) to the right of a secured creditor to apply the value or proceeds of his security in satisfaction of the whole of the interest to the date of the receiving order, or such of the interest as may be in excess of 5 per cent., and to prove for the balance of principal and interest (if any). (London, < ~i\, Hotels Company, 1892, 1 Ch. 639; Fox and Jacobs, 1894, 1 Q.B., p. 438.) As already mentioned, a judgment debt carries interest at 4 per cent, from the day of the judgment, but if the debt previously carried interest at a higher rate such would ordinarily merge in the judgment, so that the interest would henceforward be restricted to 4 per cent. (Ex parte Fewings, 1S83, 25 Ch.D. 338; and Re European Central Railway Company, 1877, 4 Ch.D. 33-) (4) Where interest has not been reserved, but a right to interest has been acquired, the rate must not exceed 4 per cent. (1883 Act, Schedule II, Rule 20.) (5) Where there is a surplus of assets, interest is payable at the rate of 4 per cent, from the date of the receiving order on all debts proved in the bankruptcy. (Bankruptcy Act 1883, section 40 (5).) Company Liquidation. (1) Bankruptcy rules as regards proof for and right to interest apply to the winding-up of insolvent companies (section 10 of the Judicature Act 1875, but now section 207 of the Companies Act 1908), whether such companies are being wound up compul- sorily or voluntarily (Thos. Salt 6- Co., 1908, W.N. 63, and L.J. 146) or under the supervision of the Court. (London, - Co., | 1905, 1 Ch. 307.) GENERAL Observations. The joint effect of paragraphs (a) (1) and (l (2) is that debts carrying interest are limited to • per cent, per annum where an estate is insol while those not carrying interest are deenKdl under certain circumstances to carry inten 9 : a rate not exceeding 4 per cent, per annum, both cases before the date of the receiving order. | Paragraphs (6) (1) and (b) (2) provid' 4 per cent, upon all debts after the date 1 receiving order, and for any excess as interest (disallowed previously) before the dale of the receiving order, out of any surplus, : . event of there being one. A difficulty might arise in bankruptcy i: event of a small surplus. I terestj 315 [Interest The Partnership Act provides for the postpone- rient of certain claims until all other creditors lave been satisfied. The Married Women's Property Act provides iimilarly with regard to a wife's claim on her lusband's estate. The Bankruptcy Act 1890 (section 23) post- >ones claims for agreed interest in excess of 5 >er cent, until all debts proved have been paid n full. Apparently paid in full means with n trust since the date of the receiving order mder section 40 (5) . (See section 65 of the 1883 let.) Thus the last-mentioned class of claims may e proved for at the outset, although for divi- end purposes excess interest is ignored pending tie ascertainment of a surplus, but the two Drmer classes cannot be proved for until all the laims of the other creditors have been satisfied. As regards the Partnership Act see Ex parte 'aylor, 1879, I2 Ch.D. 366; and as regards the tarried Women's Property Act see In re 'enese; ex parte District Bank of London, 1886, fi Q.B.D. p. 700.) Suppose there was a surplus, but not enough Dr all " secondary " claims, it is question- ble whether (1) the postponed claims for scess interest prior to bankruptcy already toved for, (2) the 4 per cent, since the (ankruptcy on all debts already proved, and |) the postponed claims under the Partnership ct and Married Women's Property Act (which ould not at the time have been proved for) ould rank pari passu and abate accordingly, or hether there is any priority inter se? Note the difference between " paid in full " id " satisfied " and the difference between debts proved "—e.g., for excess interest, and ose postponed debts which, though provable in certain event— e.g., loan by wife, have not ;ady been proved when the " surplus " first soloses itself. The reason why a secured creditor may under rcain circumstances avoid the limit of 5 per nt. interest prescribed by section 23 of the inkruptcy Act 1890 was emphasised in both « and Jacobs (1894) and the London, uld legally be paid and charged against capital iring construction of works without complying th the provisions of the 190S Act. In rest on Moneys in Advance of Calls. — Table (Companies (Consolidation) Act 190S confers a scretionary power upon directors to receive oneys from members in advance of calls actually ado, and to arrange to pay interest on such vances at such a rate (not exceeding, without 1 s sanction of the company in general meeting, per cent.) as may be agreed upon. Where Table A is not adopted, a similar pro- sion is usually contained in the company's i icles. The member is treated in respect of his ivance as though a creditor of the company, Tiilst the company is a going concern, and s agreed rate of interest is payable out 4 capital if there are no profits available lock v. Queensland Co., 1896), but in the 1 tribution of the assets of the company in viding-up, members cannot compete in respect c any money due to them in their character as 1 mbers against other non-member creditors, b such sums may be taken into account in the fid adjustment of the rights of the contribu- t'its amongst themselves. (1908 Act, section ) Sec title Calls.) 319 [Interim d; Intcst on Monthly Balances. — Where interest is able or chargeable upon loans, capital, or ning account, as the case may be, it is some- es arranged that such interest shall be com- P'sd upon monthly balances, and not upon each dut and credit item, according to the number of s involved in each case. This facilitates calculation, for as 5 per cent, per annum upon £1 for one month is one penny, it follows that the addition of the six balances at the (say) debit of a person on the first day of each month throughout (say) a half-year will give the interest (in pence) chargeable to him in respect of that half-year if the rate of interest be S per cent. Thus, if a customer's monthly debit balances are : — 1st Jan. £787 8 2 1st Feb. 521 7 3 1st Mar. 924 7 1 1st April 701 o 8 1st May 421 13 2 1st June 511 12 3 Total of balances £3.867 8 7 3,S67 pence equal ^16 2s. 3d. The interest chargeable upon the customer's account to 30th June, if at 5 per cent, per annum, would thus be ;£i6 2s. 3d. ; whilst if the rate be 4 per cent, only four-fifths of the result must be taken, and so on. Interest Secured by Bill of Exchange. — Where a bill is expressed to be payable with interest, such interest runs from the date of the bill, unless the instrument otherwise provides. If the bill is undated, interest will run from the issue thereof. The fact that interest is reserved does not affect the stamp on the bill ; thus, if a bill be for ^500 payable six months after date with interest at 4 per cent, per annum, the sum payable at maturity would be ^510, but the stamp required on the bill would only be 5s. Interest reserved in the bill itself must be dis- tinguished from interest forming part of the measure of damage on its dishonour. (See title Dishonoured Bill.) Interim Dividend. — A dividend declared before the expiration of the ordinary financial period, either on account of current profits, or out of accumulations of past profits. In the case of a joint-stock company dividends are declared by the company in general meeting, but the articles of association usually empower the directors to declare interim dividends when * they are satisfied that there are profits to divide. Interim] 320 Internal Table A (Companies (Consolidation) Act 1908) grants this power to companies having adopted same. It is customary, when an interim dividend has been declared, to obtain the approval (ratifica- tion) of the shareholders at the next ordinary general meeting, before proceeding to declare a further dividend. (See title Intermediate Balancing.) The proper treatment of interim dividends received in respect of trust estates is of importance. (See title. Apportionment.) Interim Receiver. — After the presentation of a bankruptcy petition, and pending the hearing thereof, the Court may, if it thinks fit, upon the application of a creditor or the debtor himself, and on sufficient grounds being given, appoint the Official Receiver as interim receiver of the property of the debtor. Before such appointment will be made the person making the application must deposit with the Official Receiver the sum of ^5 towards his prescribed fee and such further sum or sums for expenses which may be incurred as the Court may from time to time direct. If a receiving order is ultimately made, the deposits made by a creditor will be repaid to him out of the estate if there is a sufficiency of assets. Where a petition is dismissed (i.e., a receiving order is not made) and an interim receiver has been appointed, the Court will adjudicate upon any claim for damages arising out of the appoint- ment of the interim receiver (if made within twenty-one days of the dismissal of the petition) and may make such order as the Court may think fit. (Bankruptcy Rules 170 to 175.) (See title Provisional Liquidator.) Intermeddler. — See title Executor de son tort. Intermediate Balancing. — A system of balancing the books of a concern at intervals during the currency of the ordinary financial period. It may take the form of a mere Trial Balance to check the clerical accuracy of the postings, or, stock having been taken, it may be extended to the .ascertainment of the precise position at an inter- * mediate date, (1) to check the clerical accuracy of the books, (2) to give the proprietors an idea of the probable result of the full period's work- ing, and/or (3) to justify the payment of an interim dividend. In some concerns, intermediate stocktaking is resorted to ; that is, the books of account are* balanced as a whole, but stock is taken, so that the gross profit (only) may be ascertained. Intermediate Ledger. — Where the sales or pur- chases of a trader are of almost daily occurrence with the same persons, it is usual to have an Intermediate Ledger, to which the various items are posted in the usual way, and from which, either monthly, quarterly, or according to ti trade terms of credit, the totals of the various accounts are transferred to the debit or credit of the various accounts in the Ledger proper. Internal Check. — A term used in accounting ( denote the safeguard obtained by the institution of certain domestic arrangements in connection with the accounts of business concerns, with a view to the prevention and discovery of errors whether fraudulent or otherwise; as distinct from the periodical examination of the accounts by an auditor. The ideal system of accounting is one wpH combines a satisfactory internal check wi investigation of a professional auditor, usually the adoption of such a system is prac ticable only in comparatively large busifl^^H i.e., where a fairly large clerical staff is emp An auditor on commencinp; his duties shouli make himself conversant with the svstem 08 internal check (if any) in operation, and regu late his plan of audit accordinglv. At other advantages he ma}' thereby be enabled t save a considerable amount of detailed ch< The following suggestions (subject to I special requirements of each individual case) wi be found useful when devising a system <: internal check : — (1) All cash received should be banked dail and all payments other than petn items should be made bv cheque. Uernal 321 [Investigation (4) rhe Petty Cash Book should be kept on the imprest system, and a proper super- vision exercised by a responsible official. (See title Imprest System.) ( : 1 Printed counterfoil or (preferably) carbon copy receipt books should be used under proper supervision. The system adopted in some concerns is to place the books in charge of some responsible official who keeps a register of same, entering therein the total number received, the dates of issue and return, and the names of the persons to whom the books are issued. Customers should be notified that only the official printed form of receipt will be recognised. The cashier should not have any control over the posting of the entries in the Cash Book to the Ledgers. Purchase Invoices should be checked and initialled by the person or manager of the department (a) making the purchase ; (ft) receiving the goods; (c) responsible for the accuracy of the calculations, &c. (6) Ail creditors' statements should be listed and passed for payment by some respon- sible official, and, in the case of joint- stock companies, submitted to the board of directors. (7) Each Sales Invoice should be initialled by the salesman, or by an independent person who has checked it with the order form, and also by the person who has checked the calculations. (8) .Special attention should be directed to doubtful debts, e.g., by means of a Doubtful Debts Ledger, and the entry for each debt written off should be initialled by a responsible official. (9) All Ledgers should be self-balancing, and the clerks in charge of same should be changed periodically. I [10) Reliable Stock Accounts or Cost Accounts should be kept. 1 j A proper system of paying wages should be instituted which will involve the co-operation of several persons. (See title Wages.) Interpleader. — When two or more persons claim the same goods from a third party and such third party makes no claim to the goods himself, but fears he may be prejudiced by allowing the parties to proceed against him to recover the goods, he may compel the parties to litigate their title between themselves; that is to say, he may cause the claiming parties to interplead. Interpretation Act 1889. — An Act passed for the purposes of shortening the language used in Acts of Parliament, and defining certain terms used, or which may be used, in all Acts of Parliament passed after 1850. Interpretation Clause. — A section or clause in an Act of Parliament, articles of association, charter, or the like, defining the terms used therein. Inter vivos. — See title Gift inter vivos. Intestate. — One who has not left any effective will. (See title Distribution (Statutes of).) Intromission. — The assumption of possession and management of property belonging to another; the act of intermeddling with the effects of another (Scotch law). Inventory. — A .list, or catalogue, of articles; generally of furniture and chattels. The Bills of Sale Acts require an inventory of the chattels comprised in a bill of sale to be annexed to such bill. Executors and administrators are required to make an inventory of the deceased's " goods, chattels, wares, merchandise," &c, and although, in point of law, it is an executor's duty to exhibit such inventory, in practice it is rarely done. Investigation. — Examination; research; a special- ised audit. An investigation must necessarily be conducted upon a basis more or less dependent upon the circumstances and conditions connected with the particular subject-matter, and this fact alone prompts the widest possible interpretation of the term. The subject will be treated here as an investigation of the accounts of a business with the object of certifying as Y Investigation! 322 [Investigation to the annual profits on the occasion of some change in proprietorship — such as (1) the admission of a partner, or (2) the sale of a busi- ness, either to an individual or a limited com- pany, &c. Of course, the examination of the accounts of a concern would not be conducted upon similar lines, irrespective of the precise object of the investigation, but the various heads of inquiry given below will, mutatis mutandis, apply to the majority of investigations of the classes referred to. The points here raised must, however, be taken as merely suggestive, without any pretension to -entirety, but the reasons given for many of the inquiries will decide whether they may be followed up or disregarded in the case under review, whilst the circumstances connected with the business itself, the mode in which the accounts have been kept, or the object of the investigation, will suggest such further inquiries as may be considered necessary. The investigating accountant should clearly understand on whose behalf he is acting, what kind of a certificate is required of him, and what use is going to be made of his certificate when granted. Preliminary : — (1) Obtain a list of the books of account and important documents. (2) Arrange to take notes of all important matters. (3) Have the accounts been regularly balanced? Audited? Or specially pre- pared for the purpose of the investigation ? If so prepared, by whom? Period of Investigation: — (1) Period must depend upon circumstances and instructions. (2) Note the effect of lengthening and shorten- ing the period in order to ascertain the object (if any) of fixing the precise length of period decided upon ; but in any case, the actual period with dates thereof should be clearly stated in any certificate given. (3) In particular, the period should terminate at the latest possible date prior to the investigation (i.e., the examination should be " up to date ")• (See title Average.) Stocks on hand: — (1) Ascertain that (2) (3) the stocks have been valued upon similar bases at the 1 mencement and end of the period. If the valuation of the stock at I end of the period (as a result of an inde- pendent valuation) should be different from that based upon the lines previous adopted, the latter must be adhered to for the purpose of ascertaining the profits— although the former may be the amounl to be paid for the stock by a prospective purchaser. If the market price is highe than cost, and market prices are adopted for the purposes of the Profit and Loss Account the period under review obtair as profit the benefit of this difference;; and this is important, if the stocks carried are unduly large as a result of purchases made in excess of the normal requirements of the business. (See 7 infra.) Examine some of the " purchase " invoice of recent dates, and compare the prices with those for corresponding goods in tl Stock Sheets. Note whether market values or cost prices are adopted. Even where cost price is adopted, note whether any abnonw circumstances affected cost (e.g., marke extremely low at commencement of period — large stocks carried— subsequent rise is prices) . (4) Where interest is added to the cost prici of stock, on the plea that the stock mus be held for a certain time, or in any casi is improving in value whilst being held (e.g., wines and spirits), the question mil be carefully considered. The stock is pari of the capital of the concern, and, assuming the addition of interest '] justified in a particular case, such in should not be credited to the Trading Account unless there is some correspond- ing charge to the debit. That is to say, if the valuation of successive stocks includes accumulating interest on goods held ft lengthened periods, the Trading Account lvestijjation] 3 2 3 [Investigation should be debited each period with the correlative portions of such accumulating interest. The following account will illustrate this principle : — £ £ Stock on hand at com- Sales for year . . . . 18,500 mencement of year — t.. .. £10,000 Stock on hand at end of Accumulated year — Interest . . 800 Cost . . £15,000 10,800 Accumulated Interest — Purchases for year . . 20,000 LastA/c £800 Interest Interest tor year (per for year 560 1,360 16,360 31,360 GtDSs I'roht .. .. 3,500 £34.860 £34,860 = The £560 debited to the above account would be passed to the credit of Interest Account, and it will be seen that if interest were not charged in the account the gross profits would be overstated to that extent, and this is of great importance where th2 stocks have materially increased during the period under review. (5) If Cost Accounts or Stock Registers have been kept, inspect same — with the idea of substantiating prices or quantities — or com- pare therewith some of the " purchase " invoices, as the case may be. <6) Apply percentage tests to the results of the various periods. <7) Compare the values of the stocks held at the various dates throughout the period — pay particular attention to an abnormally large stock at the " ending " date, and especially so if the stock has been taken at market prices which are in excess of the cost, because the proprietors foresee- ing a rise in the market may have deliberately and quite properly purchased materials, &c, during the period under review greatly in excess of what was reasonably necessary for the immediate requirements of the business, and as a consequence there will be a large stock in hand upon which, if taken into stock at market prices, a profit will be shown — a profit which, under such circumstances, is the result of buying, not of selling, and not a profit which can be regarded as ordinarily resulting from the business carried on. (8) Where goods are included in the stock lists as "Stock out on approbation," or "on sale or return" inspect the Appro. Book. See that the various goods there recorded agree with the particulars in the stock lists. Examine the Ledger Accounts (if any) of some or all of the persons stated to have goods on appro. ; for some goods may have been accepted by the customers and duly charged as sales, the entry in the Appro. Book not having been cancelled. Where goods have been out for an unreasonable length of time, make inquiries about them, for the goods may either have been sold, and treated as sales (as already suggested), or they may have been returned and the entry in the Appro. Book overlooked. Such returned goods, of course, may have been subsequently sold to another person, or may still be in stock, and already included in the valuation of the stock on the premises. Conversely, see that no goods are included as stock which have been obtained from other firms " on appro." (9) With regard to uncompleted contracts and partly manufactured work, see title Incomplete Work. Note. — It is not within the province of an accountant either to weigh, measure, or value stock-in-trade, and he would no doubt be justified in accepting a certificate as to the value of same from a person who is in a position to value the stock, but an investigating accountant should apply every reasonable test (dependent upon circumstances) in order to satisfy himself as to the accuracy of the stock valuation, for the effect of an excessive valuation may render nugatory the whole of his efforts in other directions. (See title Stock-in-trade.) Sales : — (1) Have the goods purported to have been sold and entered as sales been delivered? Y 2 Investigation] 3H [Investigation Particularly those entered just prior to the " ending date." If not, have they been excluded from the stock? In the latter case, can " acceptance of delivery " by the reputed buyer be guaranteed? Is it usual for the business to be carried on in this manner (i.e., to defer delivery) ? Compare Cartage or Delivery Books with a few entries. The same remarks apply to deliveries of goods by instalments. (2) Is there a trade discount allowed? If so, is it provided for in the books, as regards outstanding debts? (3) Are packages, casks, boxes, wrappers, &c, charged for among the sales (generally at arbitrary prices) ; if so, how are they treated in the accounts, as regards the possibility of returns ? (4) Obtain particulars of the sales for each year separately — monthly, if possible — for comparative purposes. (5) Are goods sent out on approbation, on sale or return? These should not be included in the sales for more than the sum with which the " buyer " can be fairly charged, on the ground of having accepted or already re-sold the goods. (See Stocks on hand, note 8 above.) (6) Where branches exist, see that all transfers of stock, from branch to branch, have been strictly at cost, and that such transfers are not included amongst the sales and purchases, in any consolidated account. Note. — It is obvious that if branch trans- actions inter se were not recorded on a basis of cost, the profits of the business as a whole would be inflated to the extent of the paper profit on all unsold goods, really slock, so transferred. (7) Where plant or other capital expenditure has been acquired or effected by the labour ordinarily employed in the business, and/or out of the materials and stock-in-trade pur- chased in the ordinary course of the busi- ness, the allowance to Profit and Loss Account in respect of same should be at cost and carefully substantiated. Consignments : — (1) Pending actual sale, these represent so much stock, although recorded in a separate account for the sake of con- venience. Expenses of transit may be allowed in the valuation (but see title Consignment Ledger) . (2) Obtain evidence as to (a) the actual con- signment and (b) sales on account of same (if any) — the latter only should be included in sales — (the cost price of the balance (if any) of the goods consigned being proportionate to the cost of the total consignment). (3) The sales taken to credit should bear their portion of the consignee's charges. Purchases : — (1) Are all included in the accounts? (2) Inspect the Purchase Book entries for the following period, and search the invoice files — examine the dates of all invoices and the particulars (if any) as to date of despatch and mode of transit. In doubtful cases examine Warehouse (Inward) Book to see whether the par- ticular goods were really received before or after stocktaking. In some instances it may even be possible to earmark in the valuation of stock-in- trade, as at a stated date, goods which are the subject-matter of an invoice which is being treated as pertaining to the subse- quent period. Inspect the personal accounts of 1 largest trade creditors — a clue may thereby be found to a missing invoice, e.g.- Round sum paid on account, but no item passed to credit; or (2) no credit for (say^ the last month of the period to an other- wise regular monthly account. Note.— An explanation should always be required of any payment which appears in whole or part as a debit balance in a account which ordinarily should have i credit balance. nvestigation] (3) If possible compare the balances of the Creditors' Ledger with the " statements " rendered by creditors at the closing date. (4) Obtain particulars of the purchases for each year separately — monthly, if pos- sible — for comparative purposes. Expenditure : — (1) Is all expenditure included in the accounts? (2) Apportionments of rent, rates, taxes, travellers' and agents' commissions, accrued salaries, wages, &c. (3) Are necessary " out of pockets " of pro- prietor on account of the business properly charged against the working ? (4) Rent. Where the trader owns the freehold or the leasehold of the premises a fair rental must be charged against the business — generally the property tax assessment. Mortgage interest and ground rent (if any) must not be charged where a " covering rent " is included. Where the rent charged against the busi- ness is one considered fair as between land- lord and tenant, the repairs, fire insurance, taxes,. Sec, which would strictly be pay- able by a landlord out of such rent should not be charged against the business. In such a case the gross assessment for pro- perty tax should be charged as rent, for the one-sixth allowance is in respect of repairs. Where the tenure is leasehold provision must be made for ultimate loss (if any) of buildings, &c, being surrendered with the land on the termination of the lease (but see Depreciation, No. 8 below). (5) Fire Insurance. The proper proportion of premium must be charged against the Profit and Loss Account for insurance of stock, &c, whether the insurance has been effected or not. 3 2 5 [Investigation (6) Bad Debts. Past experience is not necessarily con- clusive as to a fair charge; in particular, the amount actually written off over (say) three years may be no guide — the smallness of the amount may not be evidence of the superior quality of the debts, but the cause of the doubtful character of some of those still outstanding. Obviously, the better test is to examine the debts still outstanding and judge each upon its merits. (See title Bad and Doubtful Debts.) (7) Repairs. Past experience in this case also is not necessarily conclusive as to a fair charge — in particular, if the trader is the owner of the business premises, the amount actually spent in repairs may not be evidence of the small amount necessary to maintain the premises, but the cause of their present unsatisfactory condition. The question as to whether there is any- thing connected with the business or its operations rendering frequent renewals and heavy repairs necessary requires consideration. These notes as to repairs are subject to the remarks under " Rent " (No. 4 above). (8) Depreciation. It is permissible to certify profits with- out taking into account the depreciation of the assets, and this is generally the practice, the fact that no depreciation has been provided for being, however, expressly stated in the certificate so given. The depreciation actually provided for in the past may or may not have been sufficient, and even if sufficient may not be so having regard to the increased amount (by reason of sale) at which the assets are to be transferred; but where the accountant is required to express some opinion as to the amount necessary to be set aside out of the profits for depreciation he should (inter alia) : — Trace the various " wasting assets " back for a lengthened period or to the Investigation] 326 [Investigation date of their acquisition, according to circumstances. Ascertain their age and probable after life. (See title Depreciation.) (9) General. Note whether any material decrease is alleged to have taken place in the working expenses in the later periods — particularly in proportion to the turnover, and, if so, inquire carefully into the cause. (10) Interest on Capital. (See Adjustments below.) Balance Sheets: — Carefully compare the Balance Sheets (if any) covering or in any way affecting the period under review, for an additional check upon many important points may be thereby obtained. Adjustments : — When the business is to be acquired by a company — (1) Rent need not be charged against the profits — if the premises are to be acquired and are freehold. (2) If leasehold, and the property is to be acquired, the profits must bear a charge for ground rent (if any), plus any neces- sary sinking fund against the expiration of the lease. (3) If the premises are subject to a mortgage, the mortgage interest will not be charge- able against the profits if the principal is to be paid off. (4) Partners' salaries. If all or any of the partners have been paid a salary, these may be omitted from the expenditure, but probably not where such salary has been paid in respect of services which would need to be specifically replaced by a paid servant. In such a case the excess of the ordinary remuneration might be all that should be omitted. (But see next paragraph.) (5) Interest on capital and specific loans which are to be paid off must be omitted from the account, but to " write back " (say) bill discounts which it is believed will be saved when the company takes over the business with increased capital is open to question, and should be carefully considered. Note.— Although interest on capital may be omitted when ascertaining the profits of a concern about to be acquired by a com- pany, in order to state in (sax) a pro- spectus the amount available for dividend and other purposes, this must not be con- fused with the assessment of the profits of (say) the same business for the purpose of valuing the goodwill upon the basis of a given number of years' purchase, for in the latter case a charge in respect of both interest on capital and proprietor's services should be made in arriving at the " profits " for such purpose. (Sec title Goodwill.) (6) Income-tax may be omitted from the expenditure. It is, however, usual (and most advisable) to state specifically in any certificate as to profits, what items have been excluded from the accounts, and where new obligations are about to be incurred, whether same have been dis- regarded or not— e.g., where the vendor of the business in question is to be appointed the managing director of the purchasing company and is to be paid a fixed salary. But the certificate should be in the clearest possible terms, devoid of problematic effect, and undoubtedly the best form is that which gives the precise figures year by year. These may be supplemented by a statement of the aggregate profits and the average annual profits for the period. An unqualified certificate stating the average annual profits (only) of a business may be the direct means of " covering up " the fact that such business was a declining one. (See ' title Average.) Should this be so, the certificate, although stating otic fact, would nevertheless be capable of misleading people with regard to the probable continuity of past results. It is generally accepted that accountants should not embody in their certificates of past results any opinion as to lne stigation] 327 [Investigation ture profits (particularly as to prospective creases of profits because of altered circum- mces) so as to induce the public to take shares the company in question. In this connection Mr. Pixley, F.C.A., has id:— ' The Chartered Accountant should, in his " report or certificate, strictly confine himself to statements of fact, and never allow himself " to be persuaded to include estimates for the " future, no matter how satisfied he may be ' that the business is progressive. The most ' satisfactory certificate, from a professional " point of view, is a simple statement of the net ' profits for the period under investigation. ' There can be no objection to amplify this ' certificate by the statement of the percentage ' this net profit bears to the capital of the " partners, or even to the registered capital of ' the company. " Should the Chartered Accountant be asked ' to give a certificate of the percentage the net ' profit bears to a partial issue of the capital, ' he must only acquiesce after he is satisfied ' that the partial issue is sufficient to discharge ' all the payments the company will have to after the allotment of shares, and leave ' sufficient working capital to carry on the ' business on at least as extensive a scale as ' in the days of the firm, otherwise his ' certificate might be most misleading. " Under no circumstances whatever should a ' Chartered Accountant give a certificate as to ' the possible dividend a company might earn were the business to increase either in ratio ponding with an increase of capital, or to attain to a certain volume. A statement ' of this nature might be justifiable for the ' board of directors, but never for the Char- ' tered Accountant, who should, as I have ' already stated, strictly confine himself to a ' certificate of fact." V few of the points affecting continuity may rtertheless be set out here for reference: — (1) Date business established. [?) Whether proprietors are continuing their services. If not, will they compete against tin purchaser, or be restrained? Nature and extent of services rendered in the past. If not continuing, can they be replaced without loss to the business? At what salary can they be replaced? (3) Nature of the business. Is the subject- matter of trading a necessity, or a luxury, or something affected by the caprice of fashion ? Is the business attached to the " person " of the proprietor, or the premises, or the reputation connected with the trade-name? Is the volume of busi- ness done the result of successful competi- tion, or has the proprietor a monopoly? Are there any circumstances or conditions likely to affect the future working which were not applicable to the past? (e.g., establishment of a rival business, the expiry of a patent, or the probable super- session of a patent process) . (4) Tenure of premises. If leasehold whether future rent under the lease higher than in the past. Probability of renewal, and at what rent. (5) Number of customers. Changeable or constant. Any falling off in best cus- tomers? Generally, whether a declining business so far as can be judged from past results? Is the business mainly conducted by sales under large contracts requiring periodical renewal? Assuming renewal, will the same prices be obtainable in the future? Are there any unfavourable con- tracts to be taken over? Some contracts may have been favourable up to the ending date of the period under review, whilst sub- sequent circumstances may have affected them considerably. Have the results of the period investigated been inflated by the happening of events, or the obtaining of exceptional contracts, which cannot reason- ably be expected to recur? (6) Have the purchases for the past been made upon an ordinary basis, and one upon which it may reasonably be supposed future purchases may be effected, or have excep- tionally large purchases been made by con- tract or otherwise under conditions which cannot reasonably be expected to recur? (See titles Inspection, Public Trustee.) Investment] 328 [Investment Investment. — Monev or some other species of pro- perty placed by one person in the possession or under the control of another, generally with the intention that a profit shall thereby accrue to the investor. In its restricted sense the term is applied to the purchase or acquisition of lands, stocks, or shares, or other money securities on the basis that the investor's profit shall consist of the interest, dividend, or other periodical earnings resulting from the outlay, the amount of which may either be fixed or capable of fair estimation. An investment may thus be broadly dis- tinguished from speculation, the latter generally involving an outlay or the incurring of a liability with the primary motive of making a chance profit upon the total withdrawal from the trans- action (by sale or otherwise), or by the receipt, at some future time, of abnormal earnings which are incapable of present estimation. In examining the securities of a company, the auditor should (1) Verify their existence. (2) Inquire into the legality of them, and (3) Consider the value at which they are stated in the accounts. Existence : — (a) Examine the mortgage deeds, bonds, share certificates, scrip, &c, and where interest coupons are issued, require the production of all " future " coupons. (b) In the case of inscribed stocks, require the production of certificates (as at the date of the Balance Sheet) from the respective banks where the stocks are inscribed. (c) See that the various documents are issued, or the inscribed stocks are registered either in the name of the company itself, or of the proper officers — due regard being had to any regulations of the company in this connection. Where investments of a com- pany are registered in the names of indi- viduals (generally two or three directors) the auditor should require the written declaration of such persons to the effect that they disclaim any personal interest in the investments. With regard to investments on mortgage, an auditor cannot be expected to certify (1) that the title to the security is good, or (2) that the advances are fully secured. So long as th< auditor satisfies himself by perusal of th< mortgage deed or otherwise (1) that the securit; is given in respect of the amount stated in thi books, taken in conjunction with the various con ditions as to interest, repayment and oth> and (2) that the directors took proper precautio at the time of the advance that full security wa being given (such as a proper investigation c title, and independent valuation of the propertj &c), he will have performed all that can reasor ably be expected of him. But in the case of long-standing mortgage he might suggest re-valuation. The Building Societies Act 1894 provides thi every auditor in attesting the annual account ( a building society should either certify that it correct, duly vouched, and in accordance wit law, or specially report to the society in flfl respect he finds it incorrect, unvouched, or not accordance with law, and shall also certify th; he has at that audit actually inspected tl mortgage deeds and otlier securities belonging the society, and shall state the number of pr perties with respect to which deeds have be< produced to and actually inspected by him. Although the ordinary work in connection^H an audit may be conducted at a later period^jfl examination of the securities should be ma upon the day following the date as at which t Balance Sheet is to be prepared, so that change in the investments, which will appear the Balance Sheet, can be made before t examination. The auditor should require t production of the whole of the securities at on> and, where practicable, having once comment his inspection, he should examine all of th*.' seriatim before ceasing, and he should not all' any security to be removed during the cxami: tion. Where, on account of the number of f] securities to be examined (or from any otl cause) it is not possible to inspect all of th' without intermission, the auditor should requ the whole of the securities to be put under control simultaneously, and by means of a priv ; vestment] room or sealed packages, or otherwise according to the circumstances, he should maintain his control over the whole of the securities until the examination is completed. Such a system will prevent the possibility of securities (after having been passed by the juditor) being made use of by pledge or other- wise, for the purpose of raising or redeeming jthcr securities which require to be similarly produced to the auditor. Legality : — The auditor should see that all investments are n accordance with the provisions of the com- lany's regulations. One of the " object clauses " n the memorandum may possibly restrict the >o\ver of investment, and even if a particular lass of investment be intra vires the company t may be ultra vires the directors, for the powers if the company, as defined by the memorandum, nay not all be conferred upon the directors by the irticles of association. In such a case the auditor hould ascertain that the sanction of the company las been obtained. 'aluation : — It is a good plan to prepare a schedule of the ivestments showing, in separate columns, (i) heir cost, (2) the amount at which they are to ppear in the particular Balance Sheet, and (3) heir present market value. Under ordinary urcumstances such a practice is not absolutely ^Bessary on every occasion that the Balance fheet is certified, but it is necessary where the uditor is desired to certify that the present larket values of the various investments are in xcess of the values included in the Balance heet. The safest method of arriving at the roper figures to be inserted in the Balance Sheet, respect of the investments, may be stated in words of Mr. Pixley, F.C.A. :— " If the securities have not depreciated since ' they were purchased, or are of greater value, ' the cost price is usually taken as the value ' for the Balance Sheet; but if there has been ' a depreciation from the cost price, taking the " investments as a whole, a reserve should be made and charged against revenue to cover such depreciation." 3 2 9 [Investment It should be pointed out, however, that the reserve referred to in the above extract is really a provision against a loss, which is presumed to have taken place already. If (1) the deprecia- tion could be definitely attributed to specific investments, and (2) such depreciation were con- sidered permanent, the proper method (where the depreciation is being recognised in the accounts) would be to " write down " the particular investments to the amount decided upon. But, as this is not always possible, the investments are considered as a whole, and the amount of depreciation based accordingly. If, in the opinion of the directors, the investments have really depreciated to the extent (at least) of the amount to be provided therefor, such amount is obviously not a reserve, but a replacement of capital already lost, and deductible, on the face of the Balance Sheet, from the total represent- ing the book value of those investments in respect of which the provision has been made. A " charge against revenue to cover deprecia- tion " can only be termed " reserve " to the extent to which such charge is superfluous. It is worth noting that as the " cum div." market price of a stock includes the value of the accrued dividend, credit should not be taken to revenue for both the accrued dividend and for any appreciation in value attributable to its inclusion in the market value. The question as to whether provision should be made for depreciation of investments which are in the nature of fixed capital (in an economic sense), before the distribution of a dividend, which might otherwise involve a payment out of capital, is dealt with under title " Profits avail- able for Dividend," but the following extract from the judgment of Lindley, L.J., in Verner v. General Trust (1894) w '" De found appropriate : — " It is plain there is nothing in the memo- " randum and articles of association which " requires lost capital to be made good before " dividends can be declared. On the contrary, " they are so framed as to authorise the sink- " ing of capital in the purchase of speculative " stocks, funds, and securities, and the pay- " ment of dividends out of whatever interest, Investment] 330 Jobbers " dividends, or other income such stocks, " funds, and securities yield, although some of " them are hopelessly bad, and the capital sunk " in obtaining them is gone beyond recovery. " There is no suggestion of any improper " juggling with the accounts, and there is no " payment of dividend out of capital." (See titles Gilt Edged Securities, Inscribed Stocks, Reserves and Reserve Funds, Sinking Fund, Trust Investments.) Invoice. — A written statement giving full par- ticulars of the quantities, prices, and nature of goods sold or consigned. Invoice Rook. — A record of invoices containing either (1) the entries from " purchase invoices," or (2) the invoices themselves, or (3) the press copies of " sales invoices," as the case may be. (See titles Guard Book. Purchase Book.) I O U. — (I owe you.) A written acknowledgment of a debt usually in the following form : — To Mr. B. R I O U Five Pounds, P. w 18 May 1907. In the above form it is neither a receipt, agreement, nor promissory note, and requires no stamp. If it contain a promise to repay, it must be stamped as a promissory note. If the name of the creditor be inserted, the instrument is evi- dence of an account stated between the parties; if the creditor be not named, the instrument is prima facie evidence only of an account stated, and may be produced by a plaintiff. The instrument is not negotiable. Irredeemable Debentures. — As a debenture imports a debt, a document which does not provide for payment of the sum thereby acknowledged can hardly be termed a debenture, but those issued upon the condition that the principal sums thereby secured shall only be payable (1) on default of payment of interest, (2) on the winding-up of the issuing company, or (3) in some other contingency, are called irredeemable or perpetual debentures. The fact that a debt is payable only in certain events does not render it any the less a debt. Debentures of this nature have been expressly declared to be valid by sec- tion 103, Companies (Consolidation) Act 1908. (See titles Debenture, Redeemable Debentures.) Issue. — A bill of exchange or promissory note i deemed to be issued when it is first delivered complete in form to a person who takes it as a holder. (Bills of Exchange Act 18S2, section 2.) The term is used to express (1) the legitimate offspring of parents, (2) the rents or profits of lands or other property, or (3) the distribution of shares in or debentures of a joint-stock company. The issue of a share in a joint-stock company does not mean merely allotment, or even the issue of the certificate therefor, but the bestowal of an absolute right to the share upon the holder. Issued Capital. — The actual amount of register* capital (or nominal capital) which has been issued. It is also called subscribed capital. (See title Registered Capital.) Jettison. — The deliberate throwing overboard i cargo, or of a ship's tackle, to lighten the ship in a storm or when otherwise in danger. The loss occasioned by jettison is made good by contribution. The term is also applied to the goods them- selves which are so cast overboard, if they sink and remain under the water, whilst the terms " jetsam " and " jetson " are sometimes used. The term " flotsam " is applied to goods which remain upon the surface of the water, and those which are tied to a buoy or cork, so that they may be recovered, are called lagan. (Sec title General Average.) Jobbers. — Members of the Stock Exchange are known as jobbers and brokers. The former are merchants; the latter are agents, who act for the outside public, buying and selling stocks lol>ers a I shares on commission. Their practice is to rort to a jobber, or merchant who keeps a supply o stocks, usually of a specific class, and who is nJv to buy or sell, as the case may be. He q tes two prices, the one price being that at w.ch he is willing to purchase and the other that fc which he will sell. But he does not know w ther the broker is an intending buyer or se;r. Whichever he elects to be, the jobber must dd with him at the quoted price. He makes hi own profit on the " turn " or difference bi.veen the two, and he determines the price, in petition with other jobbers, by the supply or d>, and thus it is that the law of supply and B md influences prices. When prices are 411 id as mj — 1125, the meaning is that an tat ijing purchaser would have to give I as. 6d. for every £100 of stock, while a ■ would receive only £111 17s. 6d. This is tin " turn of the market," which forms the ■ :r's profit. In addition, the broker's commis- 11-1 bi in.i. if tin,- bargain is made through A jobber does not, or should not, charge issiuii, for that would be making a second profit in addition to the one which he makes out of the difference between purchasing and selling prices. The Rules of the Stock Exchange per- mit commission to be charged on the actual value, but brokers do not always exercise this right, because over a large number of transac- tions a natural average adjustment takes place between stocks above and below the nominal value. Joint Account. — A record of the transactions of some particular undertaking, where two or more parties combine in contributing the necessary capital and services and share the profits or losses resulting therefrom. Joint Adventure. — A partnership confined to a par- ticular adventure or transaction, in which the partners as a rule use no firm-name, and limit their responsibility to the particular adventure. It almost invariably takes the form of a ship- ment or consignment of specific goods to a certain place to be dealt with by sale or other- wise for the joint benefit of the parties interested, in the proportions respectively agreed upon. Joint and Separate Estates. — Any creditor whose debt is sufficient to entitle him to present a bank- ruptcy petition against all the partners of a firm may present a petition against any one or more of the partners of the firm without including the others. (Bankruptcy Act 1883, section no.) A receiving order made against a firm operates as if it were a receiving order made against each of the persons who at the date of the order is a partner in that firm. (Rule 262.) No order of adjudication shall be made against a firm in the firm-name, but it shall be made against the partners individually. (Rule 264.) In cases of partnership the debtors shall sub- mit a statement of the partnership affairs, and each debtor shall submit a statement of his separate affairs. (Rule 263.) Distinct accounts must be kept of the joint estate and of the separate estates. (Rule 293.) Where a receiving order is made against a firm, the joint and separate creditors must collectively be convened to the first meeting of creditors. (Rule 265.) But the separate sets of creditors Joint] 332 Joint may act independently as regards the considera- tion of any proposal for a composition or scheme. (Rule 266.) Upon the adjudication in bankruptcy of a part- nership, the trustee appointed by the joint creditors or by the Board of Trade, as the case may be, shall be the trustee of the separate estates also. Each set of separate creditors may appoint its own committee of inspection, but in default of such appointment by any set of separate creditors the committee (if any) appointed by the joint creditors shall be deemed to have been appointed also by such separate creditors. (Rule 268.) The remuneration of the trustee is fixed by the creditors or the committees of the respective estates. (Rule 270.) The costs up to the date of the receiving order are to be apportioned between the joint and separate estates in such proportions as the Official Receiver may determine (Rule 127), and appli- cation for his certificate should, where neces- sary, be made to him by the trustee. The pay- ment of further costs of the joint estate out of the separate estates, or vice versd, requires the sanc- tion of the Official Receiver in the case of costs incurred prior to the appointment of the trustee, and the sanction of the committee of inspection, or of the Court, in the case of costs incurred after the appointment of the trustee. (Rule 128.) Dividends of the joint and separate properties shall (subject to any order to the contrary that may be made by the Court on the application of any person interested) be declared together; and the expenses of, and incidental to, such divi- dends shall be fairly apportioned by the trustee between the joint and separate properties, regard being had to the work done for, and the benefit received by, each property. (1883 Act, section 59-) Where partners have been adjudicated bank- rupt the joint estate is applicable in the first instance in payment of their joint debts, and the separate estate of each partner is applicable in the first instance in payment of his separate debts. If there is a surplus from the separate estate it is dealt with as part of the joint estate. I there is a surplus of the joint estate it is deal with as part of the respective separat* in proportion to the right and interest of eacl partner in the joint estate. (1883 Act, sectio 40, subsection 3.) In the case of dissolution arising from bankruptcy of any one partner, such dissoluti would date from the " act of bankruptcy," an the trustee of the bankrupt partm 1 require the accounts of the partnership be made up to that date, provided (1) 9 he would be entitled to an account of tb profits earned since the commencement of bankruptcy by the employment of the capital any) of the bankrupt partner, and (2) that tl trustee could not avoid bond fide transactions the firm with third parties having no notice ( the act of bankruptcy, and duly completed bef< the date of the receiving order. No transfer of a surplus from a separa^H to a joint estate on the ground that thi creditors under such separate estate shaD made until notice of the intention to makeS transfer has been gazetted. (Rule 293.) Where a trustee has already gazetted notice intention to declare a dividend in a 9^M estate, a Gazette notice under Rule 293 is required. When necessity arises for the transtJJ moneys from a separate estate to the joint estt or vice versd, the application for such ttU should be addressed to the Inspector-Geri^H Bankruptcy, and should state fully the chtBI stances which necessitate the transfer. The rule as to the administration of jo'uB separate estates is subject to the " repuu ownership " clause, so that where the separa property of one partner was in the reput' ownership of the firm, it was dealt with as p of the joint estate. (Ex parte Hare, 1835.) As already stated, joint creditors as a gena rule cannot prove on the separate estateJB can the separate creditors prove against the joi estate. The chief exceptions are : — 333 [Joint Where there is no joint estate and no solvent partner, the joint creditors may prove pari passu with separate creditors against a separate estate. {In re Budgett; Cooper v. Adams, 1S94.) Note. — A scintilla of joint estate will, however, be sufficient to deprive joint creditors of the benefit of this exception. In an old case the joint estate amounted to £12, and it was held that the joint creditors could not receive dividends from a separate estate until the creditors of such estate had been paid in full, although it did not appear that after payment of costs there would be any of the joint estate (£13) available for distribution. Where there has been fraudulent conver- sion of property from the joint estate to the separate estate, or vice versd, the firm or partner, or the trustee of either, as the case may be, may prove against the separate or joint estate, as the case may be, in respect of the property so fraudu- lently converted. {See title Competitive Proof.) Where a creditor of a firm obtains an adjudication order against one partner, it has been held that he is entitled in respect of his joint debt to prove against the separate estate of such partner in competi- tion with the separate creditors, the reason given being " that it would be inequitable " for the separate creditors to take advan- " tage of the bankruptcy proceedings, and " yet to exclude the author of them." This exception was created by decisions nearly 100 years ago, and a learned writer has suggested that it is possibly now obsolete. Where a creditor of a firm has also a dis- tinct contract for the same debt with one or more of the individual partners he may prove against the joint estate and also against the separate estates of the partners respectively liable, provided that he may not receive more than 20s. in the £. This right is conferred by Article 18, of Schedule 2, of the Bankruptcy Act 1883 :— " If a debtor was at the date of the " receiving order liable in respect of dis- " tinct contracts as a member of two or " more distinct firms, or as a sole con- " tractor and also as a member of a " firm, the circumstance that the firms " are in whole or in part composed of " the same individuals, or that the sole " contractor is also one of the joint con- " tractors, shall not prevent proof in " respect of the contracts against the " properties respectively liable on the " contracts." In the case of Ex parte Honey, 1871, a joint and several promissory note was signed by (1) a firm as such, (2) two members of that firm, and (3) certain other persons. The firm became bankrupt, and it was held that the holder of the note was entitled to prove against and receive dividends limited to 20s. in the £ in all from the joint estate and also the separate estates of the two partners who had signed the note. A joint creditor holding the security of one of the partners may prove against the joint estate without valuing or giving up his security, and vice versd. {Ex parte Caldicott, 1884.) In the bankruptcy of any one partner of a firm any creditor to whom that partner is indebted jointly with the other partners of the firm or any of them may prove his debt for the purpose of voting at any meeting of creditors, and shall be entitled to vote thereat (1883 Act, 1st Schedule, Rule 13), but he shall not receive any dividend out of the separate property of the bankrupt until all the separate creditors have received the full amount of their respective debts. (1883 Act, section 59.) Where one member only of a firm has been adjudicated a bankrupt his discharge operates to release him from his joint as well as his separate debts {Ex parte Hammond, 1873), and where all the members of a firm have been adjudicated bankrupt and each has been granted his dis- Joint] 334 'Join' charge they are released from the joint and separate liabilities. {Howard v. Poole, 1734.) The Bankruptcy Acts do not provide for the consolidation of joint and separate estates, but where such estates are inextricably mixed so as to render it impracticable to administer them separately, the Court has power to consolidate them. This power, however, will not be exercised unless the creditors assent, and the Court will also inquire whether the proposed consolidation will be for the benefit of the creditors generally. (Ex parte Sheppard, 1833, and Ex parte Strutt, 1821.) Joint and Several Liability. — One in respect of which the parties liable may be sued either jointly or separately. If a covenant be joint only, a judgment recovered against some of the co- covenanters (even without satisfaction) is a bar to an action against the others, but not so if the liability under the covenant be several as well as joint. (Set; title Partnership.) Joint Stock Bank. — A private bank is one carried on by an individual, or by a firm of partners not exceeding six in number. Where more than six persons enter into partnership to carry on the business of banking, the bank is termed a joint stock bank, but no association or partnership, consisting of more than ten persons, can now be formed for the purpose of carrying on the busi- ness of banking, unless registered as a company under the Companies Act, or formed in pur- suance of some special Act, or of letters patent. Originally, the joint stock banks were founded on the principle of unlimited liability, and some of them have continued upon that basis, but the majority of the banks took advantage of the Companies Act 1879, now incorporated in the Companies (Consolidation) Act of 1908, and were either registered with limited liability, or adopted the principle of reserve liability, whereby a com- pany may resolve by special resolution that a certain portion of the uncalled capital of the company (either already existing or specially created) shall not be capable of being called up except in the event and for the purposes of the company being wound up, and thereupon such apab! reserved (uncalled) capital shall not be cap of being called up, except in such event such purposes. (Companies (Consolidatii 1908, section 59.) A resolution in pursuance of the above section apparently cannot be recalled by any sub- resolution of the company. Notwithstanding registration with limite liability, the members of a banking company not entitled to limited liability in respect of ai notes issued by the company. (See titles Bank c Issue, Bank Shares, Reserve Liability.) Joint Stock Companies Arrangement Act 1870.- This Act was passed to facilitate compromis and arrangements between a joint stock com pany incorporated under the Companies Act iS and amending Acts, and the creditors and met bers, or any class thereof, whereby the wishes < the majority may bind the minority, but subjl to the sanction of the Court. It was repealed b the Companies (Consolidation) Act 190S, and provisions as to such arrangements are now a tained in the Act of 190S. (.See title .\rrangf ments (Joint Stock Companies).) Joint Stock Company. — An association of persi united for the purpose of carrying on some trad or other enterprise, the necessary capital bein: contributed, in various proportions, by the severa persons so associated, hence the name " stock." These associations were formed by instrument called a deed of settlement, whic! contained the regulations of the company, and tl nature of its constitution generally. The genera scheme was much the same as that adopted b registered companies at the present time, viz. :- (1) The joint stock (i.e., the capital) 1 divided into shares of equal amount, tt various members holding one or more ea (2) The succession of the members was main tained by the transfer or transmission the shares. (3) The management of affairs was vested ii a few shareholders, called directors, tl general body of the shareholders taking n active part in the business of the con pany, beyond controlling the directors a special occasions. J nt 335 [Joint (4) The members participated in the profits of the company in proportion to their shares. The Courts, however, treated these associations s ordinary partnerships in determining their glits and liabilities (1) as between the members lemselves, and (2) as between the company and lird parties. This led to considerable incon- •nicnce, and many of the existing companies >tained private Acts of Parliament conferring )on them the privileges of a corporation, but, timately, the Legislature recognised these com- mies, and general Acts were passed providing r the " registration and incorporation of joint sck companies." The various preliminary i 'islative attempts to deal with this subject, the est important of which were the Acts of 1844 ad 1S56, resulted in the Companies Act of 1862 ling passed. The Act of 1862 repealed all prior m ts regulating joint stock companies. This Act I died for over forty years the principal Act) , and t: numerous Acts passed between 1862 and 1908, x re consolidated into one Act in 1908, which cne into force on the 1st April 1909. (See title (mpanies Acts.) IjThe Companies (Consolidation) Act 1908, sec- Mi 1, provides that no company, association, or ■ tnership, consisting of more than ten persons, s 11 be formed for the purpose of carrying on tl business of banking, or of more than twenty m sons for the purpose of carrying on any other b iness for the acquisition of gain, unless it is ■ istered under the Act, or is formed in pur- si nee of some other Act, or of letters patent, or Cnpany.) ny seven or more persons (or where the com- ■ y to be formed will be a " private company," I two or more persons) associated for any laful purpose may, by subscribing their names to 1 memorandum of association, and otherwise cc plying with the requisitions of the Act in jBect of registration, form an incorporated copany, with or without limited liability. Such ftUtion of liability may be either (1) by shares or (2) by guarantee. (Section 2.) (See title Li lility.) a company working mines within the Innaries. (See title Cost Book Mining Private companies, as defined by section 121, may consist of two but not more than fifty members, the latter number being exclusive of persons who are in the employment of the com- pany. (See title Private Company.) With certain specified exceptions and subject to prescribed conditions, every joint stock company existing at the time of the commencement of the Act of 1862 (including any company already registered under the Joint Stock Companies Act 1856, &c), and every joint stock company formed after such commencement duly constituted by law, consisting of seven or more members, may at any time register itself under the Act of 1908, with or without limited liability, and no such registration will be invalid by reason that it has taken place with a view to the company being wound up. (Section 249.) The Act of 190S defines a joint stock company for the above purpose as one " having a per- " manent paid-up or nominal share capital of " fixed amount, divided into shares, also of fixed " amount, or held and transferable as stock, or " divided and held partly in one way and partly " in the other, and formed on the principle of " having for its members the holders of those " shares or that stock, and no other persons." (Section 250.) Joint Tenancy. — An estate held as a whole, the joint tenants having no estate in any particular part ; as the right of survivorship applies, the estate gradually concentrates from more to fewer, by the accession of the interest of those that die to the survivors, until it passes to one only, when the joint tenancy ceases. The estate can also be dissolved by voluntary or compulsory partition. " It is not quite clear whether the interest of " partners in the partnership property is more " correctly described as a tenancy in common " or a joint tenancy without benefit of survivor- " ship, but the difference appears to be merely " verbal. . . A surviving partner has some- " times been said to be a trustee for the deceased " partner's representatives in respect of his " interest in the partnership; but this is a meta- " phorical and inaccurate expression. The claim " of the representatives against the surviving Joint] 336 Journal " partner is in the nature of a simple contract " debt, and is subject to the Statute of Limita- " tions, which runs from the deceased partner's " death." [Pollock.] A joint tenancy does not, of itself, create a partnership as to anything so held, whether the tenants do or do not share any profits made by the use thereof. (See title Tenancy in Common.) Journal. — A Day Book ; a diary ; a chronological record. Double-entry bookkeeping is based upon the axiom that " every debit has a correlative credit," and this principle is clearly exemplified in every Journal entry. But whilst the basis of such a system of accounting will necessarily be em- bodied in every recorded transaction, whether shown upon the face of the accounts or not, the question as to what extent a Journal should be utilised in the system of bookkeeping by double- entrv has given rise to considerable discussion amongst accountants. The double-entry system at its inception involved the use of three books, viz., the Waste Book, the Journal, and the Ledger. The Waste Book was used to record every transaction immediately it occurred, whether purchase, sale, or otherwise, thus showing the various transactions in chronological order, irrespective of their varying nature. The Journal was employed as a technical trans- cript of the Waste Book with this distinction — that, although the transactions were recorded in the same order as in the Waste Book, they were arranged so as to show that the account to which the particular item passed was to be treated as debtor to the account from which its equivalent had been taken. In other words, the original function of a Journal was to arrange the transac- tions in a technical form ready for posting to the Ledger, or, to quote from one of the early writers upon the subject, " the Journal was devised to " save the accountant a prodigious deal of con- " sideration and perplexity, and at the same time " obviate the errors which would be otherwise " introduced into the Ledger." The multiplicity and greater complexity of mercantile transactions as a result of the great expansion of trade since the early days of d< entry accounting, first led to a more general adop- tion of the double-entry system (with a greater grasp of the principles involved as a natural con- sequence), and afterwards to a " breaking up" of the Journal into subsidiary books, such as Sale Book, Purchase Book, Bill Book, &c. By means of this subdivision the transactions are recorded chronologically (as regards each class) but in a more comprehensive form, and yet with less labour than was necessary in carrying out the double-entry system as originally devised. The functions of the various subsidiary books, however, are merely as aids to the Journal, and the entries in them are undoubtedly Journal entries. Thus, when the Journal is referred to, the book called by that name must be dis- tinguished from the preparatory records of a busi- ness which are either wholly recorded in such book or partly recorded there and partly in sub- sidiary books, for despite their number the latter must nevertheless be considered (theoretically) as one book, " bound up " in one common object, viz., to aid the Journal. There is yet another feature connected with the Journal entries — that is. the check which the totals of its entries afford upon the totals when extracted of the debit and credit postings to the Ledger. This check can, however, be obtained by the modern method of utilising subsidiary books; by recording in the Journal periodically the totals of the entries of such subsidiary books but even this is not considered necessary by some writers, the chief reason apparently being that, however commendable the practice of extracting the totals of the Ledger Accounts, and com- paring them with the totals of the Journal entries. may be, the fact remains that with isolated exceptions the modern custom is to base the i Balance upon the balances of the Ledger Accounts, and not upon the totals of the debit and credit sides. But if it should be desirable to base the Trial Balance upon totals and not upon balances this function of the Journal can be 1 readily and thoroughly applied with the aid of the subsidiary books, for by means of the totals of jurnal] ;uch books, not only may the postings of the ntries to the Ledger or Ledgers be checked as a .vhole, and as regards both debit and credit entries espectively, but by a system of Controlling \ccounts such Ledgers (should there be more ban one) may be checked independently of each ther. It would therefore appear : — (i) Thai a system of arranging the records of the transactions of a business preparatory to their being posted to the Ledger is indis- pensable to double-entry. That the manner in which such a system should be carried out — that is, the extent to which the Journal (itself) and its sub- sidiary aids should be respectively used must depend upon the circumstances con- nected with each case. (3) That notwithstanding the number of books utilised for the preparatory records such books are theoretically one — i.e., the Journal (4) That the question of actually consolidating such books periodically must, in the absence of any real necessity for such con- solidation, be dictated by the individual views of the various accountants perform- ing the work. Sectional batancing, where adopted, is an instance of such necessity. (See title Sectional Ledgers.) {5) That the journal at the present time is used in the great majority of cases simply for opening, adjusting, and closing the accounts, and for any emergency entries — in short, for such entries only as are either incapable of being relegated to a specially devised subsidiary book, or are not sufficiently numerous to justify such a course. The following is an extract from the Code de immerce in operation in France. Every trader must keep a Journal which Bows day by day his debtors and creditors, operations of his commerce, his negotiations acceptances or indorsements of bills, and generally all that he receives and pays under 337 [Judgment whatsoever category it may be, and which shows clearly month by month the sums drawn out for his household; the whole to be independent of the other books used in his business, but which (i.e., the other books) are not indispensable. Journal Entry. — In its origin a Journal entry was merely a technical transcript of the record of a transaction from the Waste Book, preparatory to being recorded in classified form in the Ledger, and although at the present time the term is applied only to such entries as are made in the Journal itself, theoretically every entry in the various subsidiary books (which, after all, are only aids to the Journal) is a type of Journal entry, prepared and ready for posting to the Ledger, the " contra-post " for which is made periodically and in aggregate to save labour and to facilitate classification. (See title Journal.) Judgment Creditor. — One who has recovered judg- ment against his debtor. He has — (1) A right of action for non-fulfilment of the judgment; (2) A right to issue execution ; (3) A right to issue a bankruptcy notice (if a final judgment) ; (4) A right to interest at the rate of 4 per cent, per annum until the judgment is satisfied ; and, under certain circumstances, (5) A right to apply for the committal of the debtor; but the Court may, if it thinks fit, decline to commit, and in lieu thereof, with the consent of the judgment creditor, make a receiving order against the debtor (Bankruptcy Act 1883, section 103), even though the judgment creditor's debt would have been insufficient to have enabled him to present a bankruptcy petition. Nor does the requirement as to the debtor being domiciled in England (applicable to petitions) apply under this section, for a receiving order in lieu of a committal order can be made against a foreigner if he is before the Court, although he may not /. Judgment] 338 [Judicial have a residence or place of business in England. (Re Clark, 1898, 1 Q.B. 20.) The Court has a further discretion with regard to an application for a committal order, Bankruptcy Rule 358 providing that, if it appears to the Court that the total liabilities of the debtor do not exceed fifty pounds, the Court may, if it thinks that an order for committal ought not to be made, make an administration order in lieu of making a receiving order. (See titles Administration Order, Bankruptcy Notice, Execution Creditor, Judgment Debtor, Receiving Order.) Judgment Debtor. — A debtor against whom a judg- ment has been obtained ordering him to pay a sum of money, which judgment remains unsatisfied. The Court may order him to be examined by the judgment creditor, and he may be compelled to produce his books, so that any debts due to the debtor by third parties may be attached. Judgments. — Obligations, dependent for their bind- ing force, not on the consent of the parties, but upon their direct promulgation by the sovereign authority acting in its judicial capacity. [Anson.] Although judgments are for convenience classed as contracts, they are not strictly so. The characteristics of a judgment are : — (1) Its terms are conclusively proved by its production. [There is an apparent exception in bank- ruptcy, for the consideration for a " judg- ment by default " may be inquired into.] (2) It merges all prior rights in connection with the same matter. (3) The creditor can have execution upon his judgment or may bring an action for its non-fulfilment. Judicial Trustees Act 1896. — This Act provides inter alia (1) for the appointment of judicial trustees, and (2) for the relief, under certain circumstances, of trustees (whether judicial trustees or not) from liability in respect of breach of trust. Judicial Trustee : — The Court may in its discretion appoint a per- son (or a corporation) to be a judicial trustee, either on the application of ( 1 ) a person creating or intending to create a trust, or (2) by or on behalf of a trustee, or (3) a beneficiary. The judicial trustee may be appointed either as sole trustee or jointly with any other person, or (if sufficient cause is shown) in place of all or any of the existing trustees of the particular trust. The administration of the property of a deceased person, whether a testator or intestate, is deemed a trust, and the executor or administrator i: deemed a trustee within the meaning of the Act. Any fit and proper person nominated for the purpose in the application may be appointed a judicial trustee, but in the absence of such nomination, or where the Court is not satisfied as to the fitness of the person so nominated, the Court may appoint an official of the Court (or any other fit and proper person). (Dougla Bolam, C.A. 1900.) In any case, a judicial trustee will be subject to the control and super- vision of the Court as an officer thereof. The rules under the Act provide that the Court is not precluded from appointing any person to be judicial trustee by reason of that person being (1) a beneficiary, or (2) a relation, or husband, or wife of a beneficiary, or (3) a solicitor to the trust, or to a trustee, or to any beneficiary, or (4) a married woman, or (5) standing in any special position with regard to the trust. A person may be appointed a judicial trustee of a trust, although he is already a trustee of the trust. The Court may, with or without request, give to a judicial trustee any general or special direc- tions in regard to the trust or the administration thereof, and the trustee may at any time request the Court to give him directions as to the trusi or its administration. A judicial trustee may be paid out of the trust property such remuneration as may be assigned by the Court, due regard being had to the duties entailed upon the trustee by the trust. The Court mav alter the rate or basis of remunera- idicial] 339 n at any time, and may also make special allowances for extra services by reason of excep- tional circumstances ; but in the absence of special directions the remuneration assigned to a judicial trustee must cover all his work and personal out- lay; nor will the trustee be allowed any deduc- ii account of professional assistance, unless (i) specially authorised, or (2) justified by the strict necessity of the case. A judicial trustee must give security for the due application of the trust property, unless the Court specially dispenses with same; but any jremium payable to any guarantee society may, f the Court so directs, be paid out of the trust property. A judicial trustee must, as soon as may be ifter his appointment (unless the Court considers t unnecessary), prepare a complete statement of he trust property, accompanied with an estimate )f the income and capital value of each item. The statement must be lodged with the Court, ind the trustee will be required to give such n formation to the Court as may from time to ime be necessary for the purpose of keeping the tatement of the trust property correct for the ime being. A judicial trustee must keep a separate account if his receipts and payments on behalf of the rust at some bank approved by the Court, and 11 documents of title and other securities of the rust property must be deposited either with that ank or in such other custody as the Court may irect. Once in ever)- year the accounts of every trust f which a judicial trustee has been appointed hall be audited at such date in each year as the lourt may fix. The accounts in ordinary cases ill be audited by the officer of the Court, but the "ourt, if it considers that the accounts are likely ) involve questions of difficulty, may refer them ) a professional accountant for a report to be pre- ared thereon, and order the payment to the ccountant of such amount in respect of his ser- iees in preparing his report as the Court may rhe accounts of the trust, when audited, are ) be filed, and the Court may, if it thinks fit, aving regard to the nature of the relation of [Judicial the applicant to the trust, allow any person on application to inspect the filed accounts on giving reasonable notice to the officer of the Court. The judicial trustee must send a copy of the accounts, or, if the Court thinks fit, of a sum- mary of the accounts, of the trust to such bene- ficiaries or other persons as the Court thinks proper. Subject to conditions, a judicial trustee may resign if he desires to be discharged from the trust, and, under certain circumstances, the Court may remove or suspend him. Bread: of Trust : — If it appears to the Court that a trustee, whether appointed under this Act or not, is, or may be, personally responsible for any breach of trust, whether the transaction alleged to be a breach of trust occurred before or after the pass- ing of this Act, but has acted honestly and reasonably and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the Court in the matter in which he committed such breach, then the Court may relieve the trustee, either wholly or partly, from personal liability for the same. (See also title Breach of Trust.) A person who accepted a trusteeship in con- junction with another person but did nothing in connection with the trust, relying solely upon his co-trustee without inquiry was held not to have acted " honestly and reasonably " within the meaning of the Act. A trustee, although he had acted honestly, had not acted reasonably, and was held liable for moneys which he had left in the hands of his solicitor, and which had been misappropriated. This Act does not affect the standard of care and diligence required of trustees, and in consider- ing whether a trustee has acted reasonably the term will be construed in the light of the pre- viously existing law, whereby a trustee is expected to act in connection with the affairs of the trust with the same amount of care as a reasonable business man would bestow on his own affairs. This Act does not extend to any charity. (See titles Directors, Public Trustee Act 1906.) Z 2 Jurat] 34° Land Jurat.— The statement at the foot of an affidavit of the names of the party or parties swearing it, and of the officer before whom it is sworn, with the date, place, and any other necessary particulars. Jus disponendi.— The right of disposition. If a vendor of goods retains a jus disponendi it evi- dences an intention not to part with the property in the goods until the happening of some event, or the performance of some condition. Justifying Security.— Sureties to an administration bond are sometimes required to make an affidavit to the effect that after payment of all their debts they are worth a sum therein specified. This is termed justifying security. Keeping House.— When a person, in embarrassed circumstances, confines or secretes himself in his house, with the intention of defeating or delaying his creditors, he is said to " keep house." This constitutes an act of bankruptcy. (Bankruptcy Act 1883, section 4.) A general order that a debtor be denied to all comers will, on denial to a creditor, constitute an act of bankruptcy, unless some satisfactory explanation of the denial be made. Kentledge or Kintledge.— The permanent ballast of a ship which is deemed to be a part of such ship. The ballast usually takes the form of pigs of iron, or some other weighty material. Lagan. — See title Jettison Land. — Every species of ground upon the earth- meadows, woods, water (the land under) and marshes; the term also embodies houses and all buildings upon the land. The Interpretation Act 1889 provides that in any Act of Parliament passed after 1850 the term " land " includes messuages, tenements, hereditaments, houses and buildings of any tenure. Land is classed as real estate, but a leasehold interest therein (however long the term) is per- sonal estate. Leaseholds are, however, liable (if at all) to succession duty, not tegacv duty. In partnership, unless a contrary intention appears, where land has become partnership pro- perty it is to be treated as between (1) partner and partner, (2) partner and the represent: of a deceased partner, or (3) heirs of a deceased partner and the executors or administrators of such deceased partner, as personal estate, and not real estate. (Partnership Act 1890, section f pro- 22.) Companies : — A company formed for the purpose of moting art, science, religion, charity, or any other like object, not involving the acquisition of gain by the company or by its individual members, shall not, without the licence of the Board of Trade, hold more than two acres of land ; but the Board may by licence empower any such com- pany to hold lands in such quantity, and subject to such conditions, as the Board think fit. (Com- panies (Consolidation) Act 1908, section 19.) Companies of this class are generally formed as limited companies, without the word " limited ' as part of their names, in pursuance of a special licence from the Board of Trade. (Section 20.) A company incorporated in a British Possession which has filed with the Registrar of Companies certain documents and particulars described in section 274 of the Act of 1908 (see title F< Incorporated Companies) shall have the same power to hold lands in the United Kingdom as i! it were a company incorporated under the panies (Consolidation) Act 190S. (Section Every mortgage or charge created by a com- pany comprising (inter alia) a mortgage or charge on any land, wherever situate, or any in therein, shall, so far as any security is tl conferred, be void against the liquidator and any creditor of the company unless filed with the Registrar within twenty-one days after its crea- tion, but without prejudice to any contrac ind] repayment of the loan, and where a charge becomes void under this section the money secured thereby shall immediately become payable. (Companies (Consolidation) Act 1908, section 93O (See title Register and Registration of Mortgages.) Audit:— An auditor should examine the title deeds of freehold or leasehold lands, said to belong to the business, the accounts of which he audits. The auditor will naturally restrict his examination to satisfying himself that the deeds are apparently in order on the face of them, as he will not claim iny qualification to pass judgment upon defects in title, &c. It is suggested, however, that in cases of difficulty— and where possible on everv first examination of the title-deeds belonging to a company— the auditor would be greatly assisted by the presence of the company's solicitor at his examination. Where lands are mortgaged, the will in all probability be in the possession of the first mortgagee, who should therefore be asked to give a letter certifying that he holds them without notice of any further charges thereon, other than those which are recorded in the books. In the case of copyholds the auditor should require the production of a certified copy of the ■oil from the lord of the manor. nd Charge.— A rent, or annuity, or any principal noneys charged upon land otherwise than by deed Jnder an Act of Parliament, e.g., the ' Land Drainage Act. Ind Charges Act 1888.— This Act provides for the •egistration of all land charges, otherwise such -barges will be void as against a purchaser for alue of the land so charged. This necessitates a double registration in the ■ase of assignments for the benefit of creditors vhere land forms part of the estate, viz., (1) Jtider the Deeds of Arrangement Act 1870, and (-■) under the Land Charges Act. (See title >eed of Arrangement.) Inding Weight.- -The weight of cargo as it is sken from a vessel at the port of discharge. As i general rule freight is agreed to be payable 34 J [Land upon the landing weight, but sometimes the ship- owner reserves to himself, in the contract of affreightment, the option to charge his freight upon the weight of the cargo " as shipped " or " as landed." In the case of cargoes which increase in weight in transit, this is an important advan- tage, but in the absence of any express arrange- ment, where any difference exists between the weights " shipped " and " landed," the freight is payable upon the weight landed. Landlord.— The person from whom lands and tene- ments are held. He has a right to distrain for the rent payable to him. (See title Distress.) Land Tax.— A tax payable annually in respect of the beneficial ownership of land. Generally, the charge is upon the landlord, and the tenant on paying same may deduct the amount from the next payment of rent. Although an agreement that the tenant shall pay the property tax (which is really the income-tax of the landlord upon the rent receivable by him) without any right of deduction from the rent is void, the tenant may nevertheless enter into a binding agreement with the landlord to pay and bear the burden of the land tax, and this is often done. The land tax was first imposed in 1698, and made perpetual in 1798. The amount to be paid annually was a fixed sum of a little over two millions sterling, and the counties and boroughs had each to contribute their quota based upon the valuations of 1698. Provisions have been made for the redemption of the tax, and about one-half of the two millions originally levied has been redeemed. The Finance Act 1896 provides for the remis- sion of land tax in excess of one shilling in the pound on the annual value of the land, and also provides greater facilities for the redemption of the tax and the raising of the redemption money. Subject to certain conditions and adjustments of the assessment (where necessary), the land tax may be redeemed (1) by the single payment of a capital sum equal to thirty times the sum last assessed upon the land ; or (2) by the payment of such annual instalments of the aforesaid capital Land] 342 1 Land sum as may be agreed upon, subject to interest at 3 per cent, per annum on so much of the capital sum as remains unpaid. In the latter case, the interest is payable with each instalment, but all the instalments remaining unpaid may be paid at any time. (See titles Increment Value Duty, Land Values, Mineral Rights Duty, Reversion Duty, and Undeveloped Land Duty for the land taxes imposed by the Finance (1909-10) Act 1910.) Land Transfer Act 1897. — In addition to the pro- visions for the registration of transfers of land (which are not dealt with here) , this Act provides for the establishment of a " real " representative of persons dying after 1st January 1898. This latter portion of the Act may be sum- marised as under : — (1) Real estate vested in any person without right of survivorship on death, becomes vested in the personal representatives, as if a chattel real, notwithstanding any testamentary disposition. (2) Real estate is not here deemed to include land of copyhold tenure, or customary free- hold requiring an admission or any other act on the part of the lord to perfect the title ; but the Act applies to real estate over which a person executes by will a general power of appointment, as if it were real estate vested in him. (3) The personal representatives hold the real estate in trust for those persons by law thereto entitled, and such persons have the same power of requiring transfer of real estate as they previously had as to personalty. (4) Probate and administration may be granted in respect of real estate, although there is no personal estate, and the same rules of law as to chattels real and the dealing with same before probate or administration and as regards cojts, shall apply to real estate, provided that it shall not be lawful for some or one only of several joint personal representatives to sell or transfer real estate without the sanction of the Court. (5) In the administration of the estate of a deceased person, real estate shall be subject to the same liabilities for debts, costs, and expenses, and shall be administered in the same manner and subject to the same inci- dents as personalty, provided nothing shall alter or affect the order in which real and personal estate are respectively applicable towards payment of funeral and testa- mentary expenses, debts and legacies, or the liability of the real estate charged with the payment of legacies. Note. — Real estate was previously liable (in the hands of the heir or devisee) for the payment of debts of the deceased, but only as a subsidiary fund — that is, after the personalty was exhausted. Now, the real estate will be liable in the hands of the personal representatives for the debts of the deceased, and the representatives may deal with such realty by way of sale, mortgage, or other- wise for the purpose of paying the debts, whether the real estate is charged for the payment of debts or not, but the realty still remains the subsidiary fund, and the residuary personalty tin; primary fund. As the Act distinctly provides that nothing therein shall affect the order in which real and personal estate are respectively applicable to the payment of debts, an executor's right of retainer has not been extended by this Act to real estate. Real estate is not subject to the payment of the legacies, unless specially charged therewith or unless the Court by marshalling so orders. In other cases, if there should be insufficient personalty to pay all debts and discharge the legacies, the legacies either fail or abate, as the case may be, and this rule is unaffected by this Act. (6) Where a person dies intestate and possessed of real estate, the Court in granting administration shall have regard to the rights of persons interested in the real estate; and the heir-at-law, if not one of the next-of-kin, shall be equally entitled to the grant of administration. (7) At any time after the death of the owner of land his personal representatives may llnd] 343 [Land assent to any devise contained in the will, or may convey the land to the person law- fully entitled, either subject to a charge for the payment of moneys which the personal representatives may be liable to pay, or without any such charge ; and upon such assent or conveyance the liabilities of the representatives in respect of the land shall cease, except as to acts done by them before such assent or conveyance. At the expira- tion of one year from the death, if the per- sonal representatives have failed to convey the land on request, the person entitled may apply to the Court for an order to convey. Note. — A written assent to a devise of real estate under this Act does not require a ios. stamp as a conveyance for a nominal consideration. The written assent is merely evidence that the property is no longer required by the executor for the payment of the testamentary expenses, debts, &c. (Kemp v. Commissioners of Inland Revenue, 1904.) The personal representatives of a deceased person may (in the absence of a contrary provision in the will), with the consent of the person entitled to any legacy, or residuary share, appropriate any part of the residuary estate, whether real or personal, in satisfaction of the legacy or share, pro- vided that before any such appropriation is effected, notice of intention to so appro- priate shall be given to all persons inter- ested in the residue. There shall be no higher duty payable in respect of a legacy so satisfied than there would be under ordinary circumstances. Nothing in the Act shall affect any debt payable in respect of realty, or impose on real estate any duties other than those pre- viously payable. (See title Administration of Assets.) I id Values. — For the purposes of the land taxes nposed by the Finance (1909-10) Act 1910 — (1) The gross value of land means the amount the fee simple of the land, if sold at the (.v 9) time in the open market by a willing seller in its then condition, free from incumbrances, and from any burden, charge, or restriction (other than rates or taxes) might be expected to realise. (2) The full site value of land means the amount which remains after deducting from the gross value of the land the difference (if any) between that value and the value which the fee simple of the land, if sold at the time in the open market by a willing seller, might be expected to realise if the land were divested of any buildings and of any other structures (including fixed or attached machinery) on, in, or under the surface, which are appurtenant to or used in connection with any such buildings, and of all growing timber, fruit trees, fruit bushes, and other things growing thereon. (3) The total value of land means the gross value after deducting the amount by which the gross value would be diminished if the land were sold subject to any fixed charges and to any public rights of way or any public rights of user, and to any right of common and to any easements affect- ing the land, and to any covenant or agreement restricting the use of the land entered into or made before the thirtieth day of April nineteen hundred and nine, and to any covenant or agree- ment restricting the use of the land entered into or made on or after that date, if, in the opinion of the Commissioners, the restraint imposed by the covenant or agreement so entered into or made on or after that date was when imposed desirable in the interests of the public, or in view of the character and surroundings of the neigh- bourhood, and the opinion of the Commissioners shall in this case be subject to an appeal to the referee, whose decision shall be final. (4) The assessable site value of land means the total value after deducting — (a) The same amount as is to be deducted for the purpose of arriving at the full site value from gross value; and (b) Any part of the total value which is proved to the Commissioners to be directly attributable to works executed, or expendi- ture of a capital nature (including any expenses of advertisement) incurred bona Land] 344 [Law fide by or on behalf of or solely in the interests of any person interested in the land for the purpose of improving the value of the land as building land, or for the purpose of any business, trade, or industry other than agriculture; and (c) Any part of the total value which is proved to the Commissioners to be directly attributable to the appropriation of any land or to the gift of any land by any per- son interested in the land for the purpose of streets, roads, paths, squares, gardens, or other open spaces for the use of the public ; and (d) Any part of the total value which is proved to the Commissioners to be directly attributable to the expenditure of money on the redemption of any land tax, or any fixed charge, or on the enfranchisement of copyhold land or customary freeholds, or on effecting the release of any covenant or agreement restricting the use of land which may be taken into account in ascertaining the total value of the land, or to goodwill or any other matter which is personal to the owner, occupier, or other person inter- ested for the time being, in the land; and (e) Any sums which, in the opinion of tin- Commissioners, it would be necessary to expend in order to divest the land of build- ings, timber, trees, or other things of which it is to be taken to be divested for the pur- pose of arriving at the full site value from the gross value of the land and of which it would be necessary to divest the land for the purpose of realising the full site value. Where any works executed or expenditure incurred for the purpose of improving the value of the land for agriculture have actually improved the value of the land as building land, or for the purpose of any business, trade, or industry other than agriculture, the works or expenditure shall, for the purpose of this provision, be treated as having been executed or incurred also for the latter purposes. Any reference in this Act to site value (other than the reference to the site value of land on an occasion on which increment duty is to be collected) shall be deemed to be a reference to the assessable site value of the land as ascertained ii accordance with this section. The provisions of this section are not applicable for the purpose of the valuation of min (Section 25.) The Commissioners were authorised under the Act to cause a valuation as at 30th April 1909, and on other periodical occasions, to be made of all land in the United Kingdom, and for that purpose to obtain returns of particulars from all pi interested in land. Provision is made for appeals against the valuations of the Commistioi desired. (Sections 26, 27. 2,s. 29, }o, 31, 33, and 34-) Lapsed Legacy. — See title Legacy. Lapsed Policy. — A policy of insurance which h; ceased to have effect by virtue of some default of the assured; generally for failure i premium thereon. Larceny. — A species of felony; the unlawful carry- ing away of things personal, with the intention of depriving the true owner of same. The Sale of Goods Act (section 24) provides:— " Where goods have been stolen and the offender " is prosecuted to conviction, the property in the " goods so stolen re-vests in the person who was " the owner of the goods or his personal repre- " sentative, notwithstanding any intermediate " dealing with them, whether by sale in marke " overt or otherwise." Lateral Additions. — Cross additions; the addition of amounts which are all upon the same line (i distinct from the same column ) . The total of such items is also, as a rule, put upon the sam line as the items themselves. Law. — Law is " a rule of conduct sanctioned by " authority, by which certain acts are either " enjoined or prohibited. The primary objects 01 " law are the protection of persons, of property, " and of society." The three princip;il divisions of the law are le Common Law, Statute Law, and Equity. Common Law, or unwritten law, is founded pon the maxims, customs, and observances hich have acquired force by immemorial usage, he best evidence of what is the common law, obtained from the decisions of the Courts. " The authenticity of these customs, rules, " and maxims rests entirely upon reception " and usage, as declared by our Judges, who " are the sworn depositories and interpreters " of our law." title Custom.) Statute Law, or written law, consists of or Acts of Parliament, i.e., law made the Sovereign with the advice and consent the Lords spiritual and temporal and the ummons in Parliament assembled. Before an :l is passed it is called a Bill, and after passing e Houses of Parliament it operates from the ite when it receives the Royal assent, unless herw ise provided for. Acts of Parliament are either (i) public, (2) ecial, or (3) private. Where common law and itute law differ, the common law gives place to statute, whilst an old statute gives place to a tnny new one. regard to the construction of a statute ssi id for revenue purposes, Lord Cairns said: — ' The principle of all fiscal legislation is " this — if the person sought to be taxed conies " within the letter of the law, he must be taxed, " however great the hardship may appear to " !' In other words, if there be admissible in " any statute what is called an equitable con- traction, certainly such a construction is not " admissible in a taxing statute, where you can simply adhere to the words of the statute." {gutty is a species of unwritten law, which had origin in the necessity for providing relief in I cial cases where the common law was harsh, silent, or altogether inapplicable. From the effect of time and precedent, equity ules and decisions have become fixed laws nemselves ; sometimes supplying, sometimes 345 [Lease controlling, as accident or occasion may have " directed, the institutes of common and statute " law." " The distinction between law and equity is a " matter of form and history rather than of sub- " stance or of principle. A Court of Equity is " now bound by settled rules and precedents as " completely as a Court of Law." As a result of the Judicature Acts, and the rules and orders made thereunder, one uniform system of procedure has been established in the Courts of Law and Equity; law and equity are to be concurrently administered, and where there is any conflict or variance between the rules of equity and the rules of common law with refer- ence to the same matter, the rules of equity are to prevail. Thus equitable remedies are now given in all the Courts — not in the Chancery Division alone. The House of Lords have declared that upon points of law they are themselves bound by their own previous decisions, which can only (where necessary) be affected by the Legislature. Law Merchant. — One of the branches of the unwritten or common law, consisting of customs which for the benefit of commerce have been ingrafted into the common law so that they may render valid all commercial transactions which have been based upon such customs. Lay Corporations. — Bodies politic; (1) civil for temporal purposes, and (2) eleemosynary for charitable purposes. Lay Days. — See title Demurrage. Lease. — A grant of property for life, or a period of years certain, or from year to year, by one who has a greater interest in the property than that granted. The consideration is generally an annual payment, although sometimes part of the consideration consists of a lump sum, called a premium. The grantor, who is possessed of the " rever- sion," is called the lessor, whilst the person to whom the property is granted is called the lessee. On the determination of a lease a reversion duty Lease] of io per cent, on the value of the benefit accruing to the lessor is payable under section 13 of the Finance (1909-10) Act 1910. (See title Reversion Duty.) A lease is sometimes called a demise. A " bankruptcy clause " in a lease providing for the forfeiture of I he lease in the event of bankruptcy is inoperative against the trustee in bankruptcy of the lessee for a period of twelve months, by reason of the trustee's right of Disclaimer. (See that title.) (See titles Depreciation, Land, Reversion.) Leasehold. — A dependent tenure derived from a free- holder, copyholder, or someone having a greater interest in the property than that granted. With regard to the method of valuing lease- holds, the following affords an illustration : — The present value of a lease of the annual value of ,£100 for 50 years is 15.76186 years' purchase, or £'576.186, taking interest at 6 per cent. But this means that £1576 (odd) will permit of a purchaser obtaining 6 per cent, on his invest- ments, and also will repay the whole of his purchase money only when he can obtain 6 per cent, upon his annual sinking fund contributions during the whole 50 years, thus : — Annual value £100.0000 Deduct 6 per cent, upon £1576-186 94.5711 £5-4289 346 Ledger £1 per annum at 6 per cent. will amount in 50 years to £290.3359 Therefore £5.4289 per annum will amount to £1576. But, in practice, 6 per cent, is not available upon sinking fund contributions; only 3 per cent, generally can be relied upon. The neces- sary sinking fund instalment for the replacement of £1 at the end of 50 years is £.oo8S66, with interest at 3 per cent. But if 6 per cent, is required on all outlay, the total annual amount required on each £1 invested would be £.068866. Now the present value of this annuity is, of course £1, and the present value of an annuity of ^ T iS ^.o68V66 0t ^ I *-5 2 °95. so that the lesser rate of interest— viz., 3 per cent.— obtainable upon the sinking fund contributions reduces the number of years' purchase from 15.76 to 14.52 ii cent, is to be enjoyed upon the original capital outlay. Leaseholds are personal estate, whatever the length of the term, but on the death of the they are subject (if at all) to succession dutv and not legacy duty. Ledger. — The principal book employed in the • of bookkeeping by double entry, wherein all the transactions recorded in the Journal and the sub- sidiary aids thereto (such as Saks Book, Pur- chase Book, &c.) are focussed, classified, and arranged for the purpose of ready reference. In the earlier days of " double entry," when the Journal (itself) recorded the ivlwlc of the trans- actions and was probably looked upon as the prin- cipal book of the system, the Ledger was regarded in the light of a mere index to the Journal. But this view is only correct I extent that the Ledger is an index to the Ji and all the modern subsidiary books in so I it contains a summary of the contents oi all. The word Ledger is, of course, used in th- comprehensive sense that all subdivisions Ledger (Personal Ledger, Nominal Ledg. ; otherwise) are really one book. That the Ledger is, and was always intended to he, the dominant book of the system does not appear to be do at the present time. The various kinds of Ledger Accounts may h grouped thus : — I. (a) Real Accounts. (1) Impersonal Accounts, and cash. (2) Personal Accounts, e.g.. il'btors and creditors. (b) Nominal Accounts, e.g., Sales Ace Purchases Account, &c. Alternatively they may be grouped thus : — II. (a) Personal Accounts, e.g., debtors and creditors, (b) Impersonal Accounts. (i) Real Accounts, e.g., land and cash. (2) Nominal Accounts, e.g., Sales Account, Purchases Account, &c. (See titles Bookkeeping, Consignment Ledger, oubtful Debts Ledger, General Ledger, Inter- ediate Ledger, Nominal Accounts, Nominal ;dger, Personal Accounts, Personal Ledger, •ivate Ledger, Sectional Ledgers, Sundries ?dger, Tabular Ledger.) In regard to Loose- if Ledgers, see title Slip Bookkeeping. i. man's Act. — See title Bank Shares. L(Bcy. — A gift of personalty by will. Legacies ay be divided into three main classes, viz., neral (or pecuniary), specific, and demonstra- 'e; but there are other qualifications, such as sted, contingent, cumulative, substitutional, ;acies in satisfaction, &c. General Legacy. — One payable out of the neral assets of the testator. Specific Legacy. — A bequest of a particular or ecific part of the personalty of the testator. Demonstrative Legacy. — A bequest which, ; Jugh general in its nature, is primarily pay- ; le out of a specific fund which has been ; pointed for this purpose by the testator, but lich, upon the failure or ademption of the jimary fund, is entitled to rank as a general 1 ;acy. Vested or Contingent Legacy. — A legacy is said 1 be vested when the right to the property t:rein is acquired notwithstanding the postpone- imt of the actual enjoyment of it, and the term iused to distinguish it from a contingent legacy, Mich depends upon the fulfilment of some con- (ion, such as the attaining of a certain age or «i'!rwise, the legacy lapsing upon the death of t: legatee before the fulfilment of the condition. ^legacy which is purely personal is payable, if "Wed, notwithstanding the death of the legatee t ore the time appointed for payment, and lapses i contingent only, but a legacy charged upon I d lapses on the death of the legatee before the 8 jointed time for payment or vesting (as the 347 [Legacy case may be), whether the legacy be vested or contingent. Cumulative Legacy. — Where a testator in the same instrument or different instruments bequeaths two or more legacies to the same person, and it is considered that the testator intended the legatee to take all, the legacies are termed cumulative, but where it is considered that the intention was that the legatee should take one legacy only, that legacy is termed substitutional. Legacies in satisfaction are such as are con- sidered to have been bequeathed, whether by express or implied intention, in satisfaction and as an extinguishment of some claim on the tes- tator. The chief classes are those in satisfaction of debts and portions. Abatement. — Should the assets of the testator be insufficient to pay the debts and legacies, the legacies must be abated. As between the legacies themselves, general or pecuniary legacies must first abate, and then specific legacies abate pari passu on the exhaus- tion of the general legacies. Demonstrative legacies are treated as specific whilst the primary fund exists, and as general legacies on the failure of that fund. Demonstrative legacies are thus favourable to legatees in so far as they are not liable to ademption like specific legacies and yet have the advantages of the latter as regards abatement, should the primary fund exist. Interest. — General legacies carry interest at 4 per cent, from the date they are payable, but as they are not (ordinarily) enforceable until a year from the death, they accordingly carry interest from that date unless the testator has expressly fixed an earlier date for payment. Legacies charged on land, legacies to infant children not otherwise provided for, and legacies in satisfac- tion of debts (upon which interest was payable) carry interest at 4 per centum per annum from the death of the testator. Specific legacies carry interest from the time they are payable, but as such legacies are deemed to be severed from the estate for the benefit of the legatee, as from the date of the death of the testator, they carry interest or other accretion from that date, even where there is an express direction to postpone payment of the legacy. Legacy] 348 Legacy Lapse. — If a legatee predecease the testator, the intended legacy lapses and falls into the residue of the estate, but if the legatee be a child or other issue of the testator, and predecease the testator, leaving issue living at the time of death of the testator, then such intended legacy does not lapse (unless a contrary intention appears in the will) , but takes effect as if the death of such intended legatee had happened immediately after the death of the testator. Limitation. — No action shall be brought to recover any legacy except within twelve years after the right to receive same has accrued to some person capable of giving a discharge there- for, or within twelve years after a written acknowledgment, or the last acknowledgment if more than one. (37 & 38 Vict., c. 57.) This applies to a share of the residue tinder a will, but an action to recover a share of the personal estate of an intestate may be brought within twenty years after a right to receive same has accrued, the time so prescribed by Lord St. Leonard's Act remaining unaltered. (See titles Administration of Assets. Donatio mortis causa. Gift inter vivos. Legacy Duty.) Legacy Duty. — The duty levied upon such of the personal property of a deceased person as passes to a legatee or next-of-kin. For the purposes of duty a legacy is a gift by will or devolution on intestacy, to be paid or satisfied out of the following main classes of property of the deceased: — (1) Pure personalty (leaseholds are, however, subject tci succession duty, not legacy duty). (2) Realty which, at the date of the death, would be treated in equity as personalty. The liability to legacy duty does not depend upon the situation of the property within the jurisdiction of the Courts of the United Kingdom, but upon the domicile of the deceased being within the United Kingdom. (1) Donaliones mortis causii, (2) bequests to executors, (3) the profits derived from the office of executor (expressly conferred by the will) , and (4) for- giveness of a debt due to the testator, are all subject to legacy duty, as also are ordinary pecuniary legacies to professional executors and fixed annual payments for the services of executors, but not profit costs. (See title Executor.) Prior to the passing of the Finance (1909-10) Act 1910 the husband or wife of the deceased was not chargeable with legacy duty, but in the case of a person dying on or after 30th April 1909 the husband or wife will be chargeable unless the bequest comes within the provisions stated in Exemption No. (10) (infra). Similarly, lincals, and the husbands or wires of such persons (otherwise chargeable with 1 per cent.), were exempt from legacy duty il estate duty had been paid upon the estate, bul in the case of a person dying on or after 30th April 1909, the exemption only applies if the bequest comes within the provisions of Exemptior No. (10) (infra). The rate of duty chargeable depends upon th( degree of relationship between the deceased am the legatee or next-of-kin, as follows: — Lineals of the deceased, or their husbands or wives (subject to the foregoing and to Exemp- tion No. (10) (infra) ... ... 1 ]>< Brothers and sisters of the deceased and their descendants, or the husbands or wives of such persons ... 3 ., In the case of a person dying on or after 30th April 1909 ... 5 Uncles and aunts of the deceased and their descendants, or the husbands or wives of such persons ... ... ... ... 3 .. In the case of a person dying on or after 30th April 1909 ... 10 .. Great uncles and great aunts of the deceased and their descen- dants, or the husbands or wives of such persons 6 .. In the case of a person dying on or after 30th April 1909 ... 10 .. Any person whose relationship is more remote, or who is a stranger in blood to the deceased 10 ,, .» (55 Geo. III., c. 184, Schedule, Part HI. (Finance (1909-10) Act 1910, section 5S.) bfacy] Relations of the husband or wife of the ceased are chargeable with duty at the rate of per cent., unless they are themselves related blood to the deceased. Thus: — A. and B. are husband and wife pectively, and C. is the brother of B. If A. :d leaving a legacy to C, duty would be pay- le at the rate of 10 per cent., but if C. left a art from the penalties mentioned above, all duty in arrear (i.e., not paid within 21 ■:; |, 351 [Legal days from the date of the legacy receipt) is sub- ject to interest at the rate of 4 per cent, per annum, and since the Finance Act 1896 simple interest upon legacy duty is payable from the date of the death of the deceased at 3 per cent, per annum, without deduction of income-tax. The burden of the duty falls upon the legatee and not upon the estate of the deceased, unless an express direction to the contrary is contained in the will; and, even then, should the residue prove insufficient, the legatee must pay the duty or balance thereof, and this is so, even where the legatee is the creditor of a third party and the legacy is expressed to be in satisfaction of the debt due from such third party. (See titles Free of Duty, Legacy, Succession Duty.) Legacy Receipt.— See title Legacy Duty. Legal Assets.— Property which creditors might make available in a Court of Law for the payment of the debts of a deceased person, such property having devolved upon the personal representative for that purpose, simply by virtue of his office. Equitable assets are property which creditors could make available only in a Court of Equity for the payment of debts, either from its peculiar nature or because of some express disposition of such property. An executor can only exercise his right of retainer out of legal assets, but otherwise the distinction between the two classes of assets has lost much of its importance as a result of recent legislation. As a result of the Land Transfer Act 1897 all real estate (except copyholds) will now be treated as legal assets, but an executor's right of retainer has not been thereby extended to real estate. Legal Estate — An estate in the contemplation of a Court of Law as distinguished from an equitable estate, to which a person was entitled only in the contemplation of a Court of Equity. In the case of a trust the legal estate is vested in the trustee, and the interest of the cestui que trust is called an equitable estate. Legal 352 Liability " The trustee, by virtue of his legal estate, has " the right and power to receive the rents and " profits ; but the cestui que trust is able, by " virtue of his estate in equity, at any time to " oblige his trustee to come to an account, and " hand over the whole of the proceeds." " Whin a person has an estate at law and " does not hold it subject to any trust, he has, 41 of course, the same estate in equity, but with- " out any occasion for resorting to its aid . . . " his legal title is sufficient ; the law declares " the nature and incidents of his estate, and " equity has no ground for interference." [Williams.] Legal Mortgage. — One whereby the legal estate of the mortgaged property is in the mortgagee, the mortgagor retaining only the equity of redemp- tion. (.See title Equitable Mortgage.) Letter of Credit. — See title Circular Letter of Credit. Letter of Indemnity. — A written indemnity con- taining an undertaking by the person or persons signing and issuing same to secure the person or persons to whom it is addressed and delivered from loss or damage which may arise on the happening or failure to happen of some specified event, or the performance or non-performance of some particular act, as the case may be. (See title Guarantee.) Letter of Licence. — .See title Deed of Arrange- ment. Letter of Regret. — A letter forwarded to an applicant for stock or shares, stating that no allotment has been made to him, and at the same time returning the deposit made — so called from the fact that it is usually commenced, "I regret to inform you," &c. Letter of Renunciation. — .See title Renunciation. Letters of Administration. — See title Administra- tion, Letters of. Lex mercatoria. — -See title Law Merchant. Lex non scripta. — The unwritten or common comprising general and particular custom* particular local laws. Liability. — An obligation ; the state of obliged in law or equity to perform some Companies. The liability of members of a joint slock coc pany may be limited or unlimited, whilst liability may be subdivided into (1) limit* shares, (2) limited by guarantee. (See Cor panics (Consolidation) Act 1908, section 2.) Limited by Shares. — Whore a company formed upon the principle that the liability its members shall be limited to the unpaid on their shares, no contribution shall required from any member exceeding the amoi (if any) unpaid on the shares held by him. (St title Contributory.) But if any company regi tend under the Companies Acts carries ness when the number of its members is less tha seven (or less than two in the case of a company) for more than six months while th number is so reduced, every person who is member of the company during the time that so carries on business after those six month and is cognisant of the fact that it is so c on business with fewer than seven members (< two members, as the case may be) shall t severally liable for the payment of the whole < the debts of the company contracted during th< lime (query after six months), and may be su< for the same, without the joinder in the actic of any other member. (Section 115.) A banking company, although registered s limited company, is not entitled to lim liability in respect of its notes. (See title of Issue.) A limited company may, by special resolutio declare that a portion of its uncalled capital shr not be called up, except in the event and for tl purpose of the company being wound up. (Cot panics (Consolidation) Act 1908, section (See title Reserve Liability.) Libility] 353 Ordinarily the liability of a director of a com- ny, apart from fraud and acts ultra vires, is at of an ordinary member (if a member) in i ;pect of the shares he may hold, but the Com- nies (Consolidation) Act 1908, sections 60 and , provides that the liability of the directors of limited company may be unlimited if so pro- • led by the memorandum of association (as < ginally prepared or altered by special resolu- n under power contained in the articles). This jhvision is, however, not taken advantage of, d may be regarded as a " dead letter." Limited by Guarantee. — Where a company is Imed and registered under the Companies consolidation) Act 1908 upon the principle that t! liability of its members shall be limited to *:h amount as the members respectively under- tce to contribute to the assets of the company i the event of the same being wound up, no otribution shall be required from any member t needing the amount so guaranteed. Unlimited Liability. — Where a company is fmed upon the principle that the liability of i members shall be unlimited, the members are, c any one of them is, liable to the full amount £ their or his estate for the debts of the c upany. Partnerships. 1 limited partnership consists of one or more psons called " general partners " who are liile for all debts and obligations of the firm, a I one or more persons called " limited taws " who at the time of entering into the tnership must contribute a fixed capital tlreto in cash or property, and are not liable the debts or obligations of the firm beyond st:i contribution, so long as they do not with- Co. (C.A. 1909.) A distinction must be drawn between securi- ties deposited with a banker merely for s custody and those which are sent to be dealt with by him in his capacity of banker. In the formei case the banker is an ordinary bailee and he hs no lien ; and where a banker receives bills fron a customer upon which he would ordinarily have a lien, such right does not attach where the banker is aware that the bills do not belong to hi customer. Securities may also be deposited with a banker upon such terms as to create a par- ticular lien to the exclusion of the general lien. 359 [Lien A bill broker may have a lien upon bills similar that of a banker. Where the holder of a bill exchange has a lien upon it, arising either in contract or implication of law, he is deemed be a holder for value to the extent of the sum which he has such lien. Carrier. — In the absence of any express agree- i -nt a cariitr, whether by sea or land, has a ; rticular lien upon the whole of the goods rried under the same agreement for the full nount of the freight or carriage. (See ading Warehouseman, below.) Executor. — An executor's lien is his right to i:ain out of the testator's legal assets as against ner creditors of equal degree the amount of y debt due to him by the deceased. (See lie Retainer.) Factor. — A factor has a lien upon the goods of 1; principal for any sum due in respect of com- ssion, or moneys advanced by the factor on his jincipal's behalf. By the general usage of trade 1 3 lien of a factor is a general one, and he may ain any of the property of his principal until general balance of the account between them satisfied. The lien, moreover, is available, not (ly against the principal, but against all persons < iming through him, e.g. : — (i) An indorsee of the principal on the bill of lading of goods in the factor's possession ; (2) The personal representatives of a deceased principal ; or [3) The trustee in the principal's bankruptcy. \lthough at common law a factor's lien was Apable of transfer to another person, being ijardcd as a purely personal right, the Factors t 1889 provides for the validity of any" pledge or f goods which are still in his possession is ntitled in the following cases to retain posses- ion of the goods until payment or tender of he price, viz. : — (1) Where the goods have been sold without any stipulation as to credit. (2) Where the goods have been sold on credit, but the term of credit has expired. (3) Where the buyer becomes insolvent (that is to say, has either ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become- due, whether he has committed an act of bankruptcy or not). The right of lien of an unpaid seller may be lercised not only by the seller but by any person •ho is in the position of a seller, as, for instance, 1 agent of the seller to whom the bill of tding has been indorsed or (2) a consignor or 3) an agent of the buyer who has himself paid r is directly responsible for the price of the goods the latter will include del credere agents, but it pparently excludes sureties). It should be noted that a right of lien cannot rise except where the property in the goods has I to the buyer ; but where the possession F and property in the goods both remain in the npaid seller, he has a right of withholding ilivcry similar to and co-extensive with his right : lien. The right of lien is conferred by implication of w, but the Sale of Goods Act provides that any *ht which would arise under a contract of sale .' implication of law may be negatived or varied .' express agreement or by a course of dealing itween the parties, or by usage, if the usage be n:h as to bind both parties to the contract. The unpaid seller loses his lien under the llowing circumstances : — - (i) When he delivers the goods to a carrier for the purpose of transmission to the buyer without reserving the right of dis- posal of the goods (but see heading Revival of Lien, below.) (2) When the buyer or his agent lawfully obtains possession of the goods. (3) When the buyer or his agent lawfully obtains possession of the documents of title to goods, and they are transferred by way of sale to a person who takes the docu- ments in good faith, and for valuable con- sideration, the unpaid seller's right of lien is defeated; where, however, the transfer is not by way of sale, but only by way of pledge or other disposition for value, the right of lien is not altogether defeated, but can only be exercised subject to the rights of the pledgee or other transferee. Note. — The lien is not affected by any re-sale or other disposition of the goods by the buyer unless (as above stated) (1) the documents of title are bond fide trans- ferred, or (2) the unpaid seller has assented to the disposition. (4) When he expressly or impliedly waives his right of lien. (5) When he takes a bill of exchange, not as conditional payment, but in satisfaction of the price. This, however, is an unusual course, and the onus probandi would lie upon the buyer, that the bill was taken as an absolute discharge. (See heading Revival of Lien, below.) (6) When he is estopped from exercising the right. If a vendor by word or conduct wilfully endeavours to make a person believe that his lien is satisfied, and suc- ceeds in so doing, he will be estopped from exercising his lien as against a bond fide purchaser who has bought under the belief so induced. (7) A lien may be lost by the operation of the •' mutual credits " section in bankruptcy (1S83 Act, section 38), whereby an account is to be taken of what is respectively due from one party to the other in respect of their mutual dealings, and the sum due from one party is to be set off against any sum due from the other party, and the balance of the account, and no more, claimed or paid on either side respectively. Xote. — Set-off is not allowed where credit has been given to the debtor with notice of an available act of bankruptcy, Lien] 362 lien but the section apparently operates regard- less of the fact that one of the parties may have a lien as security for his particular debt. Thus, suppose A. owes B. £3,000 on certain dealings, and B. owes A. £1,000 in respect of other transactions, A. having a lien on certain goods belonging to B. as security for the £1,000, B. having no security in respect of the £3,000. In the event of A. becoming bankrupt the position would be : — Amount owing to B. ... ... £3,000 Amount owing by B 1,000 Balance due to B. ... ... £2,000 The debt in respect of which the security was held is thereby extinguished, and the trustee in bankruptcy must release the goods held under the lien and allow B. to prove against the estate for £2,000. In other words, B. cannot be called upon (1) to pay the £1,000 to release his goods, and (2) prove for £3,000 against the estate. The trustee would have a similar right of calling for the security if it were held by the solvent party, and by the operation of set-off the claim of the latter against the bankrupt's estate (in respect of which he would be holding the security) would be extinguished. Unpaid Seller. — Revival of Lien : — (1) Where an unpaid seller has parted with the possession of the goods and the buyer becomes insolvent, he has a right of stoppage in transitu — that is to say, he may resume possession of the goods so long as they are in course of transit, and may retain them until payment or tender of the price. (2) Where a bill of exchange or other nego- tiable instrument is taken as conditional payment, as is usually the case, and the condition upon which it was received is not fulfilled by reason of the dishonour of the instrument, or otherwise, the seller becomes an unpaid seller, and if the goods are still in his possession the lien which was lost during the currency of the i ment thereupon revives. The lien will al* revive during the currency of the instru- ment if and when the buyer becomes open insolvent. The right of lien of an unpaid seller is not affected by reason only of any of the follo^H circumstances, viz. : — (1) That the buyer has effected a sale or sc other disposition of the goods un (a) The seller has assented thereto; ii which event a subsale would di right ; or (fc) The documents of title have been law- fully transferred to the buyer, and hi or his agent transfers same to a per- son who takes the documents in goo faith and for valuable con-: tion; in which event the right would be defeated if the transfer were by \ of sale but if only by way of pledge 01 other disposition for value, the right would still be exercisable, subject the right of the pledgee or cith transferee. Summarised : — A sale without the unp seller's assent does not affect his lien, but a bond fide transfer of the docu- ments of title by the buyer or his agew will either defeat or affect it acco: to circumstances. (2) That the seller has obtained judgment the price of the goods. (3) That the seller is in possession of the gooi as agent or bailee for the buyer. (4) That the seller has made part d. the goods, for he may exercise his right lien on the remainder unless such p delivery has been made under such circum- stances as to show- an agreement to waive the lien. (5) That a specific appropriation of goods (still in the seller's possession) has been made to the contract, or even that i buyer's name has by mutual consent been placed upon the goods. Lijn] (6) That an action for the price of the goods is barred by the Statute of Limitations. Unpaid Seller.— Resale. — Although ordinarily lien is a right of a passive nature and es not confer a right of sale, the unpaid Her may resell the goods and recover from e original buyer damages for any loss aaoned by his breach of contract under following circumstances, viz. : — When the - are of a perishable nature, or where je unpaid seller gives notice to the buyer of his tendon to resell, and the buyer does not within ; reasonable time pay or tender the price. The i paid seller may also resell and claim for < mages (if any) for the breach of contract, jiere the seller expressly reserved the right of *ale in the event of the default of the buyer, and . iginal contract of sale is thereby rescinded, 'lis latter right of resale is, however, the out- ine of the right of withholding delivery (not In), for as the contract is conditional, and the pperty in the goods as a consequence does not iss thereunder to the buyer (awaiting fulfilment jl the condition), a right of lien in the strict iise cannot arise. kVhere an unpaid seller has exercised his right < lien and subsequently sold the goods the buyer quires a good title thereto as against the '-it Africa (1900), 1 Ch. 656.) & [Lien But where a Stock Exchange quotation is required for the shares, the lien must not extend to fully-paid shares, as the Stock Exchange Committee require fully-paid shares to be trans- ferable without restriction. The original Table A attached to the Com- panies Act 1862 provided that " the company may " decline to register any transfer of shares made " by a member who is indebted to them." Although it has been held that this provision (where applicable to any particular company) is not limited to cases where the member is indebted for calls or otherwise in respect of the particular shares proposed to be transferred, but enables the company to decline to register a transfer if the member is indebted to the com- pany on any account whatever, the refusal to transfer is only a passive right giving no right of sale. No " active lien " is conferred except as regards dividends which may be declared upon the shares, and it was customary for the regula- tions of companies not adopting Table A in its entirety to provide for the enforcement of the lien by conferring upon the directors the power of sale. The revised Table A, which came into force on the 1 st October 1906, and which is now scheduled to the Companies (Consolidation) Act of 1908, provides (1) that the directors may decline to register .... any transfer of shares on which the company has a lien, and (2) that the company shall have a lien (extending to dividends) upon every share not being a fully-paid share : — (a) For all moneys (whether presently payable or not) called or payable at a fixed time in respect of that share; and (&) For all moneys presently payable to the company by the holder or his estate, if the share stands registered in the name of a single person. The directors, where the revised Table A applies, may declare any particular share or shares exempt from the lien clause, or they may enforce such lien actively by sale, where some Lien] 364 amount in respect of which the lien exists is presently payable and due notice demanding pay- ment has been given ; and the proceeds of the sale are to be applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue (subject to a like lien for sums not presently payable as existed upon the shares prior to the sale) paid to the person entitled to the shares at the date of the sale. It will be seen that the revised Table A com- plies with the Stock Exchange requirement that the lien must not extend to fully-paid shares where the particular company requires a " quotation " for such shares. Solicitor. — A solicitor's lien for his costs may be divided into three classes, viz. : — (1) He has a general lien for his costs, charges, expenses and general balance upon all the books and documents of his client which come into his possession in his pro- fessional capacity. But the lien does not extend to the papers and documents of third parties; a solicitor cannot, therefore, retain a deceased client's will. The lien is a dormant security, but the solicitor may assign a debt due to him for costs, with the benefit of any lien he may have for such costs. Whilst a solicitor has a general lien as against his client, a solicitor acting as agent for another solicitor has also a general lien against his principal, but only a particular lien against the principal's client. The lien is not lost by reason of an involuntary loss of possession of the docu- ments or by reason only that the right of action for the costs is barred by one of the Statutes of Limitation. The right of lien may, however, be excluded by express or implied agreement, and where the solicitor accepts security from a client for his costs, the primd facie inference is that he intends to waive his lien. In the event of a client's bankruptcy, his solicitor, if exercising a right of lien, is a secured creditor, and is governed by the rules as to proof of 1 such class of creditors. But the existence of a lien \ entitle a solicitor to refuse to produce the inspection of the trustee any do of the bankrupt in his possession. Toleman, 1880.) (2) He has a particular lien by the on law upon the proceeds of a judgmer obtained through his exertions in favo his client for all his costs in conn with the action, and the solicit) entitled to require that such proceeds i pass through his hands. The lien lost by reason only that the right to 1 is barred by any Statute of Limita (3) Under the Solicitors Act i860 he obtain a charging order for his costs, charges, and expenses in ri the suit, upon all property recove^H preserved by his exertions or through hj instrumentality. The charge may exter to property of any kind, including re- , estate, upon which latter, apart fro Act, a solicitor has no lien, the law right extending only to the docu and deeds relating thereto. Although the general lien upon ments and the particular lien u(] proceeds of a judgment, are not by the fact that the right of action costs is barred by one of the Statu Limitation, this Act provides charging order cannot be made " case where the right to recove " merit of such costs, charges, " expenses is barred by any Stat " Limitation." Where a company had issued debenture* a condition inter alia that the company cou create any mortgage or charge on its prop priority to such debentures, it was held claim of a lien by the solicitor of the con was not thereby postponed to the claims of debenture-holders, such lien being a right by law, and not a charge created by the con (Brunton's case, 1892.) lie 365 [Life ■'archoiiscman and Wharfinger. — Warehouse- ki )ers, dock-keepers, and wharfingers have a gceral lien upon the goods in their possession for thr rents and charges. This right has been ps blished in their favour by long usage, but in absence of an agreement to the contrary, tli- have no power of sale — merely a right of rention. carrier has no lien in his capacity of ware- beseman unless he is expressly constituted as stn, but he may remove the goods in question to ; wharf or warehouse, and provided he does nr allow them out of his possession or control he s deemed to hold the goods as carrier. In paicular it would appear that the master of a veel may on the default of the consignee to ta delivery in reasonable time, land and ware- he ;e the goods consigned to a foreign port, and his lien for the freight. Freighters' lien onargocs landed at a wharf or warehouse in the Hted Kingdom is specially provided for bv Wte. I orkman. — A workman has a particular lien by ammon law upon goods and chattels in his poession upon which he has expended labour in skill in their improvement, to the extent of ft charges for such services. Although in V lary cases the lien is specific, in certain ■sinces (such as some of those enumerated ■ e) the right has been extended to a general I as the result of the evolution of the law mi :hant ; for upon strict evidence being adduced to how the existence of a general lien, such |e will be judicially noticed. nermore, the right is not confined to a fcman or artisan, the specific lien being »ed in favour of businesses generally, but Sc are instances where even a specific lien does Wcxist although apparently within the prin- D involved. In the case of agistment and in ■set of the charges of a livery stable keeper, Wk\ is said not to exist, the reason for the latter ■C that the horses cannot be said to have Jtoved by standing in the stable. The general Kiplc, however, in certain cases appears to be ■ no lien can be allowed where the nature of .■employment presumes an immediate rcsump- M of possession by the employer and is as a consequence inconsistent with a right of reten- tion in the employed. The question as to whether an accountant has any lien for his fees upon the books which he has written up or otherwise expended labour upon is a difficult one, and would vary con- siderably with the circumstances of the case. (As to Bankruptcy see heading Official Receiver, supra.) The general opinion is that an account- ant has a lien for his fees upon any accounts he may have prepared (as distinct from the books of a client which he may have written up), but with regard to the books, if he has a lien it is only in a limited sense. Where a particular statute or the regulations of a (limited) com- pany expressly provide that some or all of the books shall be kept at the registered offices, it is doubtful whether an accountant could claim to have a lien on such books. Although it might be inexpedient under special circumstances to give up possession of the books until he has been paid, the accountant would probably render himself liable to damages for retaining the books in purported exercise of his lien after demand had been duly made for them. These damages might possibly be purely nominal, but the question of retention of the books by the accountant is one upon which a considerable amount of discretion should be used. (See also Burleigh v. Ingram Clark, Lim., 1901 ; Accountant Law Reports, p. 65.) Life Annuity. — An annual payment during the life or lives of one or more given person or persons. " The value of a life annuity is an average " quantity deduced upon the supposition of the " life or lives in question being associated with " a number of other lives of the same ages and " the prospect of longevity, upon which similar " annuities are conceived to depend; the " mortality among the whole mass being " assumed equal to that represented by some " given table. " The value of an annuity on a given life con- " sidered abstractedly, without reference to " others, is totally indeterminable; and the idea " entertained by those who regard the value of " an annuity on the life of any given age as the Life] " value of an annuity certain for as many years " as a person of that age is expected to live, is " altogether erroneous." The value of a life annuity is ascertained upon different principles (sec title Expectation of Life), and is generally less than the supposed value ascertained as suggested above. For instance, according to the Carlisle Table the expectation of life of one of a class of 35 years of age is 31 years. The following table, at different rates, shows the value of an annuity of ;£ioo for the life of a person of that age, and the " alleged " value based upon the " expecta- tion of life " :— Rate of Interest Employed Actuarial Value of Annuity of £100 Value of 1 Error (excess) Annuity of £100 shown by the according to , Expectation Expectation Basis of of Life Valuation 3% 4% 5% £ 1,604 1,412 £ 2,000 1,759 1,559 £ 157 155 M7 The reason for this discrepancy is that the expectation of life of A. ma}' be e years, but the value of an annuity of £p for the life of A. is not the present worth of £p per annum for e years, and the present value of the liability to pay £x on the death of A. is not the present value of £x due e years hence. As an approximation of an individual case the expectation of life serves, but as a basis of valuation involving thousands of pounds it is inadmissible. One thousand persons of 35 years of age would, according to the Carlisle Tables, live 31,000 years between them, and if interest were entirely ignored, it would take ^31,000 to pay £1 per annum to each of them during their respec- tive lives. But when the question of interest comes into the calculation, the expectation of life, even when used in conjunction with com- pound interest tables, is misleading. Where a life assurance company is being wound up, the value of every life annuity 366 [Life requiring to be valued in such winding-up is to be estimated " according to the tables used by " the company which granted such annuity at " the time of granting the same, and where such " tables cannot be ascertained or adopted to the " satisfaction of the Court, then according to " such rate of interest and table of mortality as " the Court may direct." (6th Schedule, Assurance Companies Act 1909.) Any annuity purchased or provided by a per- son (since deceased) either by himself alone or in concert or by arrangement with any other per- son, is deemed to be property passing on the death of the deceased, within the meaning of the Finance Act 1894, to the extent of the bene- ficial interest accruing or arising by survivorship or otherwise upon the death of the deceased, and is liable to estate duty accordingly; provided (1) that if any consideration was paid in respect thereof to the grantor, the value of such consider- ation will be allowed as a deduction from the value of the property for the purpose of estate duty, and (2) that a single annuity not ixcee* ^25 purchased or provided by a person (sin deceased) either alone or in concert with another for the life of himself and some other person and the survivor of them, or to arise on his own death in favour of some other person, is not liable to estate duty. If, in any case, there should be more than one such annuity, the first granted is alone entitled to such exemption. Annuities are assessable for income-tax, and any person paying an annuity should deduct— and account to the Revenue for — tax on the amount of same. Life Assurance. — A contract whereby, in sideration of certain periodical payments, called premiums, the assurer undertakes to pay to tt person entitled an agreed sum upon the death of the person whose life is assured, or upon tl death of one of two or more joint lives, or upon the happening of some specific event, such a: the attainment of a certain age by the person whose life is assured. This last is termed " Endowment Assurance." (See title Insurable Interest.) I e 367 [Life Is Assurance Companies. — Life assurance com- anies — or life offices — may be divided into two lain classes, viz. : Proprietary and Mutual. A roprietary office has a paid-up capital upon hich dividends are payable, a part only of the -ofits of the business being, therefore, avail- ale for distribution amongst the profit-partici- iting policy-holders. A mutual office has no paid-up capital, the hole of the profits of the business being dis- putable amongst the policy-holders. Some mutual " offices, however, whilst substan- llly adhering to this principle, are constituted jon different bases as regards the mode and Ltent of the distribution. In regard to Income-Tax : — (a) A proprietary assurance company is liable to be assessed on all its surplus, whether distributed to policy-holders or not. (b) A mutual company is not liable to assess- ment on its surplus. This is, of course, subject to adjustment in ipect of income by way of interest, dividends, :., which has been received by the company ; d forms part of the surplus, but from which is has already been deducted by those making 12 payments. In discussing the relative merits of proprietary id mutual life offices, Mr. Wm. Schooling - : — " Interest on capital, and dividends and ' bonuses to shareholders, is an important ' item ; it raises the question whether a mutual office, or a proprietary office whose share- ' holders and policy-holders each receive part ' of the surplus, is preferable from the latter's point of view. Many people are apt to take it for granted that a mutual office must ' invariably be the better, but this is by no ' means the case; judged by the actual results obtained, it cannot be said that either pro- prietary or mutual offices are necessarily the better. There are instances in which the shareholders receive so large a proportion of ' the surplus that the bonuses are exception- ' ally small; but in some proprietary offices ' there are sources of surplus that more than " compensate for the payments to shareholders. " Many proprietary offices transact an excep- " tionally large proportion of non-participating " business, in the profits of which participating " policy-holders share, with the result that the " profits so derived equal, if they do not exceed, " the payments to shareholders. In other cases, " especially when fire insurance business is " transacted as well as life, the Life Assurance " Account is sometimes only charged a fixed " percentage of the premiums — say, 10 per " cent. — for the management of the life busi- " ness, and the low rate of expenditure so pro- " duced is distinctly favourable to the par- " ticipating policy-holders. It may, perhaps, " be added that the additional security afforded " by shareholders' capital seems to attract the " purchasers of annuities, and the participating " policy-holders sometimes share in the profits " of the annuity business. It must, however, " be remembered that nearly all British life " offices, whether proprietary or mutual, are " so thoroughly sound that the additional " security of share capital is superfluous. It " thus appears that the question whether a " life office is proprietary or mutual is one o£ " entirely subordinate importance, and in, " selecting a life office this question plays a " very small part." Accounts : — Copies of the annual Balance Sheet and Revenue Account of every life assurance com- pany must be lodged with the Board of Trade as. prescribed by the Act of 1909. (See title Assurance Companies Act 1909.) The Balance Sheet of the company will not of itself give the precise financial position, for although it shows the amount and nature of the funds available in respect of the liabilities under the policies, &c, in force, it does not reveal the actual surplus or deficiency of the company, as the case may be. To ascertain this the " valua- tion returns " (in the forms prescribed by the Act of 1909) must be carefully examined. These valuations are prepared by the actuary, and show (1) the net liability of the office under assurance and annuity transactions, and (2) the net assurance and annuity funds to meet such. Life] liabilities, the latter agreeing with the respec- tive amounts in the Balance Sheet made up to the same date as the valuation return. In con- nection with these valuations, the rate of interest assumed on investments and the mortality table adopted are of great importance, for obviously a low rate of interest will necessitate a larger amount in hand to meet the liabilities than would be the case if a higher rate of interest were relied upon; so the adoption of a high rate of mortality will result in an exaggeration of the company's liabilities. Profits :— The sources of profit of a life office may be summarised as under : — (i) The gains from the adoption of a favour- able mortality table, whereby less deaths occur within a given period than the number stated in the mortality table. (2) The saving in office and establishment expenses — that is to say, the premiums are " loaded " (either arbitrarily or by per- centage) to meet expenses, and a profit will arise where the actual expenditure is less than the amount so provided. (3) The profits from interest in respect of the accumulating funds— that is, where the actual interest obtained is greater than that assumed in the previous actuarial calculations. (4) Profits from lapses and surrenders. (5) " Capital " profits from changing invest- ments, &c. Mr. H. W. Andras, F.I. A., thus refers to the accounts of a life assurance company : — ■ " The sources of profits or losses of a life " office (other than those arising from the " increased or decreased value of securities, " due to outside influences) are due to the " divergence of the actual experience year by " year from the assumptions upon which the " calculations are based, chiefly as to mortality, " interest, and expenses. " The profits (or losses) from mortality in " any year arise from the actual net claims " (that is, after deducting reserves in hand) " not exceeding (or exceeding) the amount V estimated to fall in out of the net sums ." assured at risk (that is, after deducting the 368 Life " reserves in hand) according to the mortality " table. " The profits from interest in the year arise " from the margin between the rate earned in " the year by the assurance fund, and the rate " assumed in the previous valuation as the " minimum rate likely to be earned in " to come. " The profit from expenses is the differen " between the marginal percentage provision " made therefor out of the premiums at tl " last valuation, and the percentage of the " premiums actually expended during the year " in commission and expenses of manage- " ment " The profits on a life assurance policy i " not, therefore, made by a sort of sinking fund " transaction, the premiums being accumulated " at compound interest until they reach the " sum assured, and after that the profit— i " that were the case, from what source wou " the claims and expenses be paid in the ear " vears of a life office? — but they arise from " the experienced results being better eai " than the assumptions made in the calcula- " tions, those assumptions being usually made " well on the side of safety. But for wha " purpose, then, you may say, are the reserves " of the office for contingent liabilities? Thes " reserves are necessary for the following " reasons: — Owing to the increasing cost of " assurance against death as age advances, " the risk premium charged by an office shoul' " really increase yearly; but all ordinary li " offices (called by the Americans level- " premium companies, in contradistinction t( " assessment companies) charge the same " premium throughout life in the case of a " ordinary whole-life assurance ; therefore, tl " excess premiums paid in the early years ol " the assurance beyond the natural or risk " premium have to be reserved and accumu- " lated to provide for the excess mortality risk " beyond the level premiums paid in the la " years of the assurance. Out of thos " premiums, as they are paid, a certain con- " tribution is made to the claims of the year, a " further contribution to the expenses of tl " year, and the balance goes to reserve, " stated. This complex subject of the source Ife 369 [Life " o( life assurance profits has a bearing on the " fact that accountants are not expected to "certify to the profits of life assurance com- " panies; that is strictly an actuarial matter, " and necessarily so, as the contingent liabili- " tits have to be valued as well as the assets " and immediate liabilities in order to arrive " at the surplus, and these contingent liabilities " can only be estimated by an actuary. . . . " It would be difficult also for an account- ' ant without actuarial knowledge to say, " in the case of a proprietary life assur- " ance company, whether the declaration of a " dividend to the shareholders is or is not " justifiable, and for this reason, in the case of " such an office valuing for the purpose of " ascertaining the surplus at longer intervals " than a year, the annual dividends are pro- " vided in anticipation out of the surplus " ascertained periodically, and are not declared " out of the annually accruing profits. In the " rare case of a proprietary life assurance com- " pany valuing annually and showing a " sufficient surplus the dividend could be " declared, of course, annually out of the 's profits " Balance Sheet. — And now as to the " Balance Sheet, and the important question, " peculiar to the province of the auditor, as to " whether it is a full and fair Balance Sheet " properly drawn up, so as to exhibit a true ' and correct view of the state of the com- ' pany's affairs. It is here that an auditor ' has to exercise his best judgment, and ' especially as to the question of values. He ' can only certify as a matter of fact to the ' arithmetical valuation of the public securi- ties, according to the daily list, on the prin- ' ciples laid down by the directors, whether by ' taking them at their full market price at the ' close of the books (after taking off accrued ' interest), or providing for fluctuations by ' either deducting a percentage from the ' market price or by setting up an investment ' reserve fund ; the former being, in my ' opinion, the better plan. With regard to ' other items in the Balance Sheet, I think an ' auditor can only express an opinion after ' obtaining information and reports from other ' parties; for example, as regards liquid ' securities not quoted in the daily list, he must ' obtain the best information possible through ' the company's stockbrokers as to their value; ' and as to the mortgages, he should from time ' to time (say every five years) ask for a ' special report from a committee of the ' directors on the subject, and similarly from the actuary of the company as to the values ' of any reversionary interests or life interests ' purchased or mortgaged. Having these ' various reports he is in a position to say that, ' in his opinion, the Balance Sheet correctly ' states the value of the assets; but I don't think, in the case of a life assurance com- ' pany, he can go so far as to say that it ' exhibits a true and correct view of the state 1 of the company's affairs; that is a phrase- ' ology which, it seems to me, might give too ' much confidence to anyone unversed in the ' technical meaning of such words. The assets 1 may be all good enough, but what about the ' liabilities? Is there a sufficient reserve for ' them on the other side of the Balance Sheet ? 1 I have known such a state of things actually ' exist, namely, the accounts and Balance 1 Sheet of a life assurance company duly ' audited and such a certificate given, the 1 office being really insolvent owing to the 1 insufficiency of the actuarial reserves. I am 1 quite aware that such a certificate is not necessarily a certificate of solvency, but many persons think so, and therefore it is, I think, desirable for an auditor using this form to use qualifying words to the effect that the Balance Sheet, in his opinion, exhibits a true and correct view of the state of the com- pany's affairs as regards matters of account, and he may go on to state to what extent he has been able to verify the values of the assets. " The auditor's certificate should, I appre- hend, contain a statement of what he has done to verify the accounts, and to satisfy himself that they have been properly and accurately kept; that, so far as he can say, the assets in the Balance Sheet are not over- BB Life] 37o Limitation " valued, and that all the securities are in safe " custody It is impossible for a " professional accountant to express any " opinion as to the solvency of a life assurance " company, unless he is also a qualified " actuary. " The source for that information is the " Valuation Balance Sheet of the fourth " schedule to the Assurance Companies Act " 1909, and that is usually published only once " in five years, the actuary making the valua- " tion being responsible for it. Even this can " only be of any value as evidence of solvency " when considered in the strictest connection " with the basis of valuation; that is to say, " (1) the mortality table, (2) the rate of " interest, and (3) the method of valuation " used in the calculations, and of the " sufficiency of this basis for adequate reserves " an actuary only can be a judge." The more important items in connection with the accounts and transactions of a life assurance company may be classified as under : — Income: — First premiums (new policies) . Renewal premiums. Consideration for annuities granted. Claims on account of re-assurances. Periodical interest and dividends from investments. Assignment fees. Transfer fees (if any). Profits on changes of investments. Expenditure : — Premiums on re-assurances. Claims, surrenders, and cash bonuses. Annuities. Expenses of management, including in addi- tion to the ordinary commercial expendi- ture, medical fees, policy stamps, printing and stationery in respect of booklets, pamphlets, proposal and other forms, pro- spectuses, annual reports, calendars, &c. Commissions, (a) new business, (b) re- newals, (c) commuted. General : — Branch and agency returns, policy loans and repayments, investments and chang' same, capital receipts and payments general. Balance Sheet Items : — - Investments. Outstanding premiums. Outstanding interest on investments. Balances in hands of bankers and/or agents. Claims admitted but not paid. (See title Assurance Companies Act 1909.) Life Interest. — The beneficial interest in p: or the income therefrom, for the life of t beneficiary. Life Tenant. — One beneficially entitled to properl for life. Lighterage. — The sum payable for the employn) of craft for lightening or loading a ve • (1) by taking off cargo in the event grounding of the ship, or (2) by bringing along- side or taking away from the vessel, cargo w which it is impossible or inconvenient to deal by means of quay accommodation. Limitation of Actions. — The various Statutes Limitation have been passed to compel person: having rights of action to bring their actions within specified times, or in default to lose sucl rights. The principles involved proceed from tl maxims (1) The vigilant, and not the sleepy, ai assisted by the laws; and (2) it concerns tl State that there be an end of lawsuits. Lapse of time raises a presumption of paymei or release, for it is not to be supposed that a creditor will wait indefinitely for payment furthermore, it would be a hardship to require : quondam debtor to keep his receipts and releases beyond a reasonable period. The statutes relating to personal actions merely bar the remedy by action, and do not extinguish any other rights attached to the particular case. e.g. :— .imitation] 37i [Limitation (1) A debt ill respect of which a right of action is barred will nevertheless justify the con- tinuance of a lien ; and (2) Where a debtor makes a payment to his creditor without making any appropriation of his payment, although he may owe more than one debt, the creditor may appropriate the payment to any debt he may think fit, even though a right of action in respect thereof may be barred by the Statutes of Limitation. The statutes relative to real actions — that is to say, actions relating to lands — not only bar the remedv by action but extinguish all rights. The Act of 21 James I., c. 16 (the principal Act affecting simple contracts), provides (inter alia) : — That all actions of account (including, since 1856, accounts between merchant and mer- chant), all actions of debt grounded upon any ling or contracting without specialty, all actions of debt for arrearages of rent, or any of them, shall be commenced and sued within six years next after the cause of such action or suit, and not after. Specialty debts are governed by 3 & 4 William IV, c. 42, which provides (inter alia) that all actions of debt for rent upon an indenture of demise, or covenant or debt upon any bond or other lit)-, shall be brought within 20 years after the cause of such actions or suits, but not after; provided that nothing in the Act shall extend to any right of action given by any statute where the time for bringing such action is or shall be by any statute specially limited. In cases of infancy, lunacy, or other dis- ability, at the time the right of action arises, the period ol limitation does not begin to run until the removal of the disability. Time runs against a plaintiff during his absence beyond the seas, but it is stayed in his favour should the defen- dant be beyond the seas; should the defendant, lowever, return to England, even though with- out the plaintiff's knowledge, and only for a very short period, time commences to run against the jlaintiff from the date of such return. Where one of two or more defendants is beyond the seas, an action brought against the other defendants who are not absent will not affect the plaintiff's rights against such of the defendants as may not be immediately accessible. The Real Property Limitation Act 1874 pro- vides (inter alia) that no action shall be brought to recover land rent or money charged On land (but see Barnes v. Glenton, 1899, 1 Q.B. 885), rent and legacies, except within 12 years after the right to receive the same has first accrued to some person capable of giving a discharge therefor, or within 12 years after the last payment of principal or interest, or after a written acknowledgment, signed by the person liable or his agent, or the last of such acknowledgments, if more than one. The above applies to legacies whether charged upon land or not, and includes a share of a residue under a will (but not a share under an intestacy — 20 years in such a case being still allowed). In cases of infancy, lunacy, or other disability at tlic time when the right of action arises, six years is allowed (wherein to bring the action) from the termination of the disability or from the date of death, if death occurs prior to the removal of the disability. Absence beyond the seas is not deemed a disability, and the utmost allowance for any disability is 30 years. The Rules of the Supreme Court 1883 provide that no advantage can be taken of the Statutes of Limitation unless an issue thereon be raised by the pleadings. The incidence of the statutes upon various classes of actions will be dealt with seriatim : — Accounts. — Time runs against each item separately, in the case of mutual transactions debit and credit, and as regards items in a running or current account, some of which are beyond, and others are within, the limit of time allowed, the Mercantile Law Amend- ment Act 1856 provides that no claim in respect of any matter arising more than six years before the commencement of the action, shall be BB 2 Limitation] 372 Limitation enforceable by action or suit by reason only of some other matter of claim comprised in the same account having arisen within six years next before the commencement of the action. (See title Appropriation of Payments.) Auditor. — An auditor has been granted the benefit of the Statutes of Limitation in respect of a liability for damages for breach of duty as auditor. (Leeds Estate Oc, Co. v. Shepherd, 1887, 36 CD. 787.) Award. — All actions upon any awaid, where the submission is by way of specialty, must be brought within 20 years after the cause of action, and where the submission is not by way of specialty, an action thereupon must be brought within six years after the cause of action. Banker. — The relation between banker and customer is ordinarily that of debtor and creditor, or vice versa, and their ordinary deal- ings by way of loan or deposit are within the Act of James I, and actions thereon may be barred by lapse of time. Bankruptcy and Liquidation (of Company). — Debts barred by any Statute of Limitation are not provable in bankruptcy or winding-up, as the case may be, but as regards debts not already barred the time ceases to run at the date of the receiving order and winding-up order respectively. The inclusion of a statute-barred debt by a bank- rupt in his statement of affairs is not per se sufficient acknowledgment to take the debt " out of the statutes." Such an admission does not either express or imply a promise to pay, except as to part of the debt (i.e., the dividend which is presumed to fall short of 20s. in the £), or in some qualified manner which is not a sufficient acknowledgment. (Ex parte Topping, 1865.) With regard to a debt due to the bankrupt, if during the continuance of the bankruptcy the trustee takes no steps to enforce the claim, and it becomes barred by the Statutes of Limitation, such claim will still be barred even though the bankruptcy be subsequently annulled. The Companies (Consolidation) Act 1908 (section 169) provides that the Court may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribution made before t debts are proved. This may be made appl to voluntary winding-up under section 193 of Act. (.See title Proof of Debt.) Bills of Exchange. — An action cannot be tained on a bill against any party thereto the expiration of six years from the time | the cause of action first accrued to the then holder against such parly. As regards the acceptor, time begins to run from the maturity of the bill, and as regards the drawr-r or an indorser (generally) from the date when notice of dishonour is received. Where a person issued a cheque by way loan, it was held that he had no right of action against the borrower until the cheque had beer cashed. (But sec Marrcco v. Richardson, 1908.) Calls on Shares. — Section 14 of the Com- panies (Consolidation) Act 1908 provides (inter alia) that " all money payable by any member to " the company under the memorandum or articles " shall be a debt due from him to the com- " pany and be of the nature of a " specialty debt." Section 125 of the 1908 Act provides that the liability of a contributory shall create a debt of the nature of a specialty accruing clue from him at the time when his liability commenced, but payable at the times when calls are made for enforcing the liability. Directors. — Directors being regarded as quasi trustees of a company, and the funds of the com- pany being regarded as a trust fund, any mis- feasance in connection with the funds is deemed a breach of trust, and the Statutes of Limitation will be no defence either to a director or his per- sonal representatives (in the event of his death unless the case is within the exceptions granted by the Act of 188S. (Sec Trustee, below.) Dividends. — Frequently the articles of associa- tion of a company prescribe the period (say three or four years) after the expiration of which all unclaimed dividends are liable to forfeiture, but the Stock Exchange Committee object to any such limitation. In the absence of any such limitation in the articles of association the position appears doubtful. The moneys due imitation] from a member are of the nature of a specialty debt (Companies (Consolidation) Act 1908, sec- tion 14), but there is no such provision in the Act relative to dividends due from the company. The decision in Re Severn Railway Co. (1896, 1 Ch. 559) would suggest that the period of limitation is six years only. (See also Corn- wall Minerals Co., 1897, 2 Ch. 74.) Executors. — An executor is not compelled to take advantage of the Statutes of Limitation, but may pay statute-barred debts; and he may retain his own debt even though it be statute- tarred. And this is so, even where the personal state is insufficient, for the payments will be illowed as against the devisees of the real estate, ipon which a burden may be thrown as the direct onsequence of satisfying such debts. But an ixecutor cannot pay a statute-barred debt of his estator if the Court has actually adjudged the lebt irrecoverable on that account. Time runs igainst an executor from the date of the death of he deceased, and if the statute has begun to run efore the death it is not stopped, whether the ised die testate or intestate. But, where a 1 dies intestate and the statute has not ilready begun to run, it will not commence to run gainst the personal representatives until letters f administration have been taken out, for no ause uf action can accrue until there is someone apablc uf suing. (See Trustee, infra.) es. — Legacies are payable a year after •aim's death, so that an action to recover inn must be brought within twelve years from ne year after the testator's death. With regard 1 a share of the residue, time runs against the ary legatee as soon as he has the present ight to receive the residue — that is to say, from le time the residue is or can be ascertained. See Trustee, infra.) Partner. — During the existence of a partner- tp, the Statutes of [.imitation do not apply as tween the partners, but upon the death of a artnir or a dissolution of the partnership, the nount due from the surviving or continuing irtmrs to an outgoing partner or the repre- ntatives of a deceased partner in respect of the Jtgoing or deceased partner's share is a debt renting at the date of the dissolution or death. 373 [Limitation This is, however, subject to any agreement to the contrary between the partners; and generally the partnership agreement provides for the payment of the amount of a deceased or outgoing partner's share either at the expiration of a fixed period after the date of the death or dissolution or in instalments at stated intervals. The claim in respect of the share of a deceased or outgoing partner is in the nature of a simple contract debt, is subject to the Statutes of Limitation, and will be barred after six years from the date or dates of the share or instalments thereof becoming payable. Trustee. — The Judicature Act 1873 provided that no claim of cestui que trust against a trustee for any property held on any express trust, or in respect of any breach of such trust, should be held to be barred by any Statute of Limitation, but section 8 of the Trustee Act 1888 has effected a material alteration in this rule of law, pro- viding, inter alia, that a trustee may have all rights and privileges conferred by any Statute of Limitation in the like manner and to the like extent as if he had not been a trustee, provided that in the action in which the statute is so pleaded the claim is not (1) founded upon any fraud or fraudulent breach of trust to which the trustee was a party or privy, or (2) to recover trust property or the proceeds thereof (a) still retained by the trustee, or (6) previously received by the trustee and converted to his use. The term " trustee " in the Act of 1888 includes an executor or administrator, and a trustee whose trust arises by construction or implication of law, as well as an express trustee, but it does not include the official trustee of charitable funds; and the provisions of the Act relating to a trustee apply as well to several joint trustees as to a sole trustee. The directors of the Lands Allotment Company applied moneys of the company to an ultra vires purpose, but without any fraud. As more than six years had elapsed before an action was brought, the claim against them was held to be barred by the Act of 1888. (In re Lands Allot- ment Co., 1894, 1 Ch. 616.) (See titles Actio personalis, &°c, Acknowledgment of a Debt, Distress.) Limited] 374 [Limited Limited Administration. — Administration of the effects of a deceased person, which is limited either as to time or as to the assets to be administered. Limited by Guarantee. — See title Liability. Limited by Shares. — See title Liability. Limited Company. — A company subject to the pro- visions of the Companies (Consolidation) Act 1908, whereby the liability of its members is limited, either (1) to the amount unpaid (if any) upon the shares respectively held by them, or (2) to the amount which they have respectively undertaken to contribute to the assets of the com- pany. Section 2 of the Act provides that : — Any seven or more persons (or where the company to be formed will be a private company within the meaning of this Act, any two or more persons) associated for any lawful purpose may, by sub- scribing their names to a memorandum of asso- ciation, and otherwise complying with the, requirements of this Act in respect of registra- tion, form an incorporated company with limited liability. The last word in the registered name of any such company must be the word " limited," and such registered name must be painted or affixed to the outside of every office or place in which the business of the company is carried on, in Some conspicuous position, and the full name (including the word " limited ") must be engraven upon the common seal of the company, and mentioned in legible characters upon all advertisements, notices, invoices, receipts, bills of exchange, cheques, and other documents. (Companies (Consolidation) Act 1908, sections 3, 4, and 63.) Every company incorporated outside the United Kingdom having a place of business within the United Kingdom which uses the word " limited " as part of its name shall — (a) in every prospectus inviting subscriptions for its shares or debentures in the United Kingdom state the country in which the company is incorporated ; and (b) conspicuously exhibit on every place wh it carries on business in the United Kil dom the name of the company and country in which the company incorporated; and (c) have the name of the company and of country in which the company is in porated mentioned in legible char; all bill heads and letter paper, and in all notices, advertisements, and other officia publications of the companv. (Sec 274-) Failure to comply with the foregoing requ ments renders the parties concerned liable certain penalties. If any person or persons trade or carry on ness under any name or title of which " limited ' is the last word, that person or those persons shall. unless duly incorporated with limited liability, liable to a fine not exceeding five pounds for every day upon which that name or till been used. (Section 2S2.) Where any association is about to be formed a limited company it may be registered as without the addition of the word " limited its name, if it is proved to the Board of Tn* that the association is formed for the purpose ( promoting commerce, art, science, relij charity, or any other useful object, and that the intention of such association to apply profits, if any, or other income of tin tion in promoting its objects, and to prohibit payment of any dividend to the members o! association. Companies of this class generally restricted to the holding of not than two acres of land. The Hoard of may at any lime revoke the licence g register such a company, and upon revocat Registrar shall enter the word " limited end of the name of the company upon regi-tcr. The company is entitled to notice of the intention to revoke and must be afforded an opportunity of being he opposition before the revocation takes (Sections 19 and 20.) (See titles To: (Incorporated) Companies, Liability, Partnership, Societe en Commandite.) Ljnited'i I nited Executor. — An executor whose appointment > qualified by limitations as to time or place therein, or the subject-matter as to which, the fiice is to be exercised. 1 nited Liability. — See titles Liability, Limited "ompany, Limited Partnership. I nited Partnership.— The Limited Partnerships let 1907, which came into operation 1st January 908, effected an important change in partnership aw. Apart from this Act one person can lend money o another person or to a firm under a written ontract that he shall receive a share of the profits by way of interest, but such lender is a reditor, not a partner, though his claim is post- poned until the claims of other creditors are atisfied. (See title Postponed Creditors.) This kind of arrangement may still be entered nto, for the Act of 1907 has not affected the Previously existing law except where expressly stated. now persons may become limited partners provided there is at least one general partner in he firm. As in the case of an ordinary partnership, there nust not be more than 10 persons for banking, md not more than 20 persons for any other pusiness. rhe limited partner or partners shall, at the of entering the partnership, contribute a sum or sum-; (or property valued at stated unounts) as capital, and they shall not be liable he debts or obligations of the firm beyond mounts so contributed; but the general r or partners will be liable for all debts obligations of the firm. A limited partner shall not, during the con- tinuance of the partnership, either directly or idirectly draw out or receive back any part of is contribution. If he should do so he will be liable for the debts and obligations of the firm :o the amount so received back. Note.— Presumably, if a limited partner draws profits without providing for deprecia- tion of assets, he will be receiving back 375 [Limited indirectly, under the name of profits, a part of his contribution. A body corporate may be a limited partner. A limited partner shall not take part in the management of the partnership business and shall not have power to bind the firm; but he may, by himself or his agent, at any time inspect the books of the firm, and examine into the state and prospects of the business, and may advise with the partners thereon. If a limited partner takes part in the manage- ment of the business he becomes liable in respect of obligations incurred while he so takes part as if he were a general partner. A limited partnership shall not be dissolved by the death or bankruptcy of a limited partner, and the lunacy of a limited partner shall not be a ground for dissolution of the partnership by the Court, unless the lunatic's share cannot be otherwise ascertained and realised. In the event of a dissolution the affairs of the firm shall be wound up by the general partners, unless the Court otherwise orders. Applications to the Court to wind up a limited partnership shall be by petition under the Com- panies Act, and, subject to the necessary modifications which may be made by the Lord Chancellor, the provisions of the Acts and Rules relating to the winding-up of companies shall apply to the winding-up of limited partnerships with the substitution of general partners for directors. Note. — It is conceivable that this will lead to conflict of jurisdiction as regards general partners, who would otherwise have a petition in bankruptcy presented against them. Subject to any agreement, expressed or implied, between the partners— (1) Differences as regards ordinary matters connected with the partnership business may be decided by a majority of the general partners. (2) A limited partner may, with the consent of the general partners, assign his share in the partnership. Limited] 376 [Liquidated (3) The other partners shall not be entitled to dissolve the partnership by reason of any limited partner suffering his share to be charged for his separate debt. (4) A person may be introduced as a partner without the consent of the existing limited partners. (5) A limited partner shall not be entitled to dissolve the partnership by notice. Every limited partnership must be registered by sending to the Registrar of Joint Stock Com- panies a statement signed by all the partners containing the following particulars — (1) The firm-name. (2) The general nature of the business. (3) The principal place of business. (4) The full name of each of the partners. (5) The term, if any, for which the partner- ship is entered into, and the date of its commencement. (6) A statement that the partnership is limited and the description of every limited partner as such. (7) The sum contributed by each limited partner and whether paid in cash or how otherwise. Any change made in any of the foregoing must be notified to the Registrar within seven days. Upon registration of a limited partnership a registration fee of £2 is payable, and also an ad valorem stamp duty of 5s. for every ^100, or fraction thereof, of the amount to be contributed by the limited partner or partners, or of any subsequent increase in that amount. Upon regis- tration a limited partnership is entitled to have a certificate of registration. Notice of any arrangement whereby a general partner becomes a limited partner in a firm, or whereby the share of a limited partner is assigned to any person, must be forthwith advertised in the Gazette, and until so advertised the arrange- ment shall (for the purposes of the Limited Partnerships Act) have no effect. The Registrar shall keep a Limited Partner- ships Register, which shall be open to public inspection on payment of a fee of one shilling, and copies may be obtained of documents upon payment of the prescribed fees. (See titles Differentiation, Sociite en Commandite.) Lineal Consanguinity. — The relationship subsistii between persons descending in a direct line, father, son, grandson. Liquid Assets. — Cash and such assets as caa\ instantly converted into cash. To take the of a banker, his liquid assets would consist < coin, bank notes, money at call, and readily realisable securities. Liquidated Damages. — The amount agreed betwea the parties, or otherwise ascertained as payaU in respect of a breach of contract or other Sometimes a sum is specified in a contract being the amount payable in the event of n performance, and in such a case the sum be either a penalty or by way of liquid damages. If the sum named be deemed a penalty, then it is the maximum sum payable, the actual amount recoverable being proportionate to actual damage sustained. Where the sum named is considered as being by way of liquidated damages, then such sum will be recoverable the event of breach. But it is a question of 1 struction whether the sum named is one or other, and the Court will not necessarily fo the description given in the contract, for if sum is, in fact, a penalty, it will be treated such, although specified in the contract as be bv way of liquidated damages. Where a fixed sum is expressed as being able under the following circumstances, itj deemed to be, and is treated as, a penalty not as liquidated damages : (1) Where the value of the subject-matter known, and the sum specified as payab in the event of breach is in excess of su value. Lididated 2) Where there are several terms in the con- tract, some of which are capable of present valuation, the others being of uncertain value, and the specified sum is payable in the event of the breach of any of the terms. 3) Where there are several terms in the con- tract, and " some may occasion serious and others trifling damage." (See title Unliquidated Damages.) Liq dator. — Compulsory Liquidation. Appointment. Security. Gazette notice. Remuneration. Committee of Inspection (special article). Powers : — Exercisable without sanction of the Committee or Court. Exercisable with such sanction. General. Control by Board of Trade. Duties. Creditors and Contributories (rights of) : — As regards meetings. As regards accounts. l)i\ idends. itton. Removal. 3 7 7 [Liquidator The same title has been bestowed upon the officer appointed by the Court in cases where application is made to the Court to wind-up the affairs of a limited partnership. (See title Limited Partnership.) Compulsory Liquidation (or Winding-up by the Court.) The liquidator is appointed by, and is the agent of, the Court, and if the company being wound up is insolvent, the liquidator is trustee for the creditors only. Limited Partnership. General. Voluntary Liquidation. Appointment. Security. Gazette notice. Remuneration. Powers. Duties. Liability, val. Winding- up under Supervision. neral. °tc. — The accounts of liquidators are ted in a special article entitled " Liqui- ors' Accounts." (q.v.) liquidator, in the special sense in which the 1 is now generally applied, is the officer rtiinted to wind-up a joint stock company, by 0, realising the assets, and making calls on con- torts where necessary and outstanding, (2) pa ng the costs and expenses of winding-up, paying the liabilities of the company, and (4) touting the balance (if any) amongst the ibers, or otherwise adjusting their respective tWts infer se. m Appointment. For the purpose of conducting the proceedings in winding up a company and performing such duties in reference thereto as the Court may impose, the Court may appoint a liquidator or liquidators. The Court may make such an appointment pro- visionally at any time after the presentation of a petition and before the making of an order for winding up. (The appointment may be made on the application of a creditor, contributory, or the company. (Winding-up Rules 1909, Rule 31.)) Where the proceedings are in England — (a) If a provisional liquidator is appointed before the making of a winding-up order, the Official Receiver or any other fit person may be appointed : (b) On a winding-up order being made the Official Receiver shall by virtue of his office become the provisional liquidator and shall continue to act as such until he or another person becomes liquidator and is capable of acting as such : (c) When a person other than the Official Receiver is appointed liquidator he shall not be capable of acting as liquidator until he has notified his appointment to the Registrar of Companies and given security in the prescribed manner to the satisfaction of the Board of Trade. (See heading Security.) Liquidator] 378 [ Liquidator If more than one liquidator is appointed by the Court, the Court shall declare whether any act by this Act required or authorised to be done by the liquidator is to be done by all or any one or more of the persons appointed. A liquidator appointed by the Court may resign or, on cause shown, be removed by the Court. A vacancy in the office of a liquidator appointed bv the Court shall be filled by the Court. In a winding-up the Official Receiver shall by virtue of his office be the liquidator during any vacancy. Note. — The Official Receiver shall on the request of not less than one-tenth in value of the creditors or contributories summon meetings for the purpose of determining whether or not any vacancy shall be filled. (Winding-up Rule 55.) A liquidator shall be described, where a person other than the Official Receiver is liquidator, by the style of the Liquidator, and, where the Official Receiver is liquidator, by the style of the Official Receiver and Liquidator, of the particular com- pany in respect of which he is appointed, and not by his individual name. 'I'lie acts of a liquidator shall be valid notwith- standing any defects that may afterwards be dis- covered in his appointment or qualification. (Companies (Consolidation") Act 1908, section -49-) When a winding-up order has been made by the Court the Official Receiver shall summon separate meetings of the creditors and contribu- tories of the company for the purpose of — in) determining whether or not an application is to be made to the Court for appointing a liquidator in the place of the Official Receiver ; and (b) determining whether or not an applica- tion is to be made to the Court for the appointment of a committee of inspection to act with the liquidator, and who are to be the members of the committee if appointed. The Court may make any appointment and order required to give effect to any such deter- mination, and, if there is a difference between es 1909 the determinations of the meetings of I creditors and contributories in respect of a: the matters mentioned in the foregoing visions of this section, the Court shall decide th difference and make such order thereon Court may think fit. In case a liquidator is not appointed by th Court the Official Receiver shall be the liquid of the company. (Section 152.) The decision of the creditors and contrib is determined by an ordinary resolution as 1 by Rule 12S of the Winding-up Rules (See title Resolution.) The meetings of creditors and contribute shall be held within 21 days, or if a S] manager has been appointed then within oi>: month, after the date of the winding-up ord within such further time as the Court approve. The dates of such meetings shall tx fixed and they shall be summoned by the Officia Receiver. (Winding-up Rules 1909, Rule The Official Receiver shall forthwith giv, notice of the days fixed by him for the first n ings of creditors and contributories to the Boar of Trade, who shall gazette the same. 116.) The Official Receiver shall summon meeting by giving not less than seven d notice of the time and place thereof i London Gazette and in a local paper, 2 shall not less than seven days before th appointed for the meeting send by post to e person appearing by the company's books to be creditor of the company notice of the meeting creditors, and to every person appearing b; company's books or otherwise to be a contribi of the company notice of the meeting of contri tories. (Rule 123.) The notices to creditors shall state a within which the creditors must lodge their pro in order to entitle them to vote at the first ing. (Rule 11S.) The Official Receiver shall also give to the directors and other officers of the co who, in his opinion, ought to attend the meetings of creditors and contributories oe l-iq dator] 379 [Liquidator d;>' notice of the time and place appointed for c' 1 meeting. The notice may either be dti'ered personally or sent by prepaid post-letter a; may be convenient. It shall be the duty of evy director or officer who receives notice of si 1 meeting to attend if so required by the Ocial Receiver. (Rule tig.) •fficial Receiver shall also, as soon as pi :ticable, send to each creditor mentioned in tii company'.-, statement of affairs, and to each peon appearing from the company's books, or ise, to be a contributory of the company, a sumary of the company's statement of affairs, in tiding the causes of its failure, and any ations thereon which the Official Receiver think fit to make. The proceedings at a m ling shall nut be invalidated by reason of anv sumary or notice required by these rules not b;ing been sent or received before the meeting. (lilc 120.) he meetings shall be held at such place as is in he opinion of the Official Receiver most con- vcietil for the majority of the creditors or con- trutories, or both. Different times or places, or Ixi, may, if thought expedient, be named for the in tings of creditors and for the meetings of a tributories. (Rule 125.) (facial Receiver or some person noini- B;d by him shall be the chairman at the mcet- (Rule U7.) A person shall not be ei tied to vol.- as a creditor unless he has duly Ic;ed with the Official Receiver not later than ft time mentioned for that purpose in the notice ling the inciting a proof of the debt which mis to be due to him from the company. (hie 1,53.) i her.' it appears to the satisfaction of the that any solicitation has been used by or '.ail of a liquidator in obtaining proxies or rocuring his appointment as liquidator, except Ik direction of a meeting of creditors or con- utoii.s, the Court, if it thinks fit, may order no remuneration shall be allowed to the i\ whom or on whose behalf the solicita- K 1 was exercised, notwithstanding any resolu- li 1 of the committee of inspection or of the ci liters or contributories to the contrary. (Rule No person acting either under a general or a special proxy shall vote in favour of any resolu- tion which would directly or indirectly place him- self, his partner, or employer, in a position to receive any remuneration out of the estate of the company otherwise than as creditor rateably with the other creditors of the company. Provided that where any person holds special proxies to vote for an application to the Court in favour of the appointment of himself as liquidator he may use the said proxies and vote accordingly. (Rule 146.) Security When a person other than the Official Receiver is appointed liquidator he shall not be capable of acting as liquidator until he has notified his appointment to the Registrar of Companies and given security in the prescribed manner to the satisfaction of the Board of Trade. (Section 149, subsection 3.) The following are the rules as to security : — (1) The security shall be given to such officers or persons and in such manner as the Board of Trade may from time to time direct. (The security may take the form of (a) a bond with one or more sureties, (6) a sum deposited in Court, or (c) the bond of an approved guarantee society.) (2) It is not necessary that security be given in each separate winding-up ; but security may- be given, either specially in a particular winding-up, or generally, to be available for any winding-up in which the person giving security may be appointed liquidator. (3) The Board of Trade fix the amount and nature of such security, and may, from time to time, as they think fit, either increase or diminish the amount of special or general security which any person has given (but security cannot, in any case, be entirely dispensed with). (4) The cost of furnishing the required security by a liquidator, including any premiums which he may pay to a guarantee soviet}, must be borne by him Liquidator] personally, and not charged against the assets of the company as an expense incurred in the winding-up. Note. — This differs from bankruptcy pro- cedure, inasmuch as a trustee in bank- ruptcy may, with the consent of the com- mittee of inspection, charge the premium on his guarantee bond against the estate. (5) The certificate of the Board of Trade, that a liquidator has given security to their satisfaction, is filed with the Registrar. (6) If a liquidator (a) fails to give the required security within the time stated for that pur- pose in the order appointing him or within any extension thereof, or (b) having given security fails to keep up such security, the Official Receiver reports such failure to the Court, who thereupon may rescind the order appointing the liquidator, or remove him, as the case may be, making such order as to costs as the Court may think fit. (Rules 57 and 58.) Remuneration. Where a person other than the Official Receiver is appointed liquidator, he shall receive such salary or remuneration by way of percentage or otherwise as the Court may direct; and, if more such persons than one are appointed liquidators, their remuneration shall be distributed among them in such proportions as the Court directs. (Section 149, subsection 8.) Gazette Notice. A copy of the order of the Court appointing a liquidator must be transmitted to the Board of Trade by the Official Receiver, and the Board of Trade, as soon as the liquidator has given security, cause notice of the appointment to be gazetted. The expense of gazetting the notice of the appointment must be paid by the liquidator, but may be charged by him against the assets of the company. The appointment of a liquidator or committee of inspection may also be adver- tised in such other manner as the Court may direct. 380 l-iquidato The remuneration of a liquidator, unless Court otherwise orders, is fixed by the commi of inspection, and must be in the nature c commission or percentage, of which one part sh be payable on the amount realised ;iii ing the sums (if any) paid to secured credito (other than debenture-holders) out of the procew of their securities, and the other part on ; amount distributed in dividend. If the Board Trade is of opinion that the remuneration fixed by the committee of inspection, is unnec sarily large, the Board of Trade may apply tc Court and thereupon the Court shall lis tj amount of the remuneration. Where there is r committee of inspection, the remuneration ol liquidator, unless the Court otherwise orders, fixed in accordance with the scale of fees and j centages payable for realisations and distrib tions by the Official Receiver as liquidat (Rule 154-) Note. — Assets realised by the Official Red and moneys expended in carrying on th< must be deducted from the gross realisations. The liquidator of a company is not entitle to receive out of the estate any remuneration services rendered to the company, except 1 remuneration to which under the Act Rules he is entitled as liquidator; in pa ticular, he must not make any arrangement ft or accept from any solicitor, auctioned other person connected with the company, employed in or in connection with the winding-u any gift or pecuniary or other consideration, n< shall he make any arrangement for giving part of his remuneration to any such sol auctioneer, or other person. (Rule 155.) Where no personal unfitness is shown, a pi fessional liquidator will not be removed so another may be appointed who will act grati tously (Civil Service, <&"C, Stores, 1884), may be removed on the petition of a majority of unsecured creditors, who allegi a saving of expenses and a better realisation the assets will accrue. (In re Association Land Financiers, 10 Ch.D. 269.) The claim for remuneration of a liquidator ir voluntary winding-up, whose appointment ' I. initiator al'ld, was rejected, except in so far as the c npany had accepted the benefit of his services spective of the liquidation, and except in so as the liquidator under the compulsory v )ding-up had availed himself of such services. Johnson c~ Foster, Lim., 1904.) Committee of Inspection. (Sec title Committee of Inspection.) Powers. iote. — In all cases where more persons than <•■ are appointed to the office of liquidator, the C.irt shall declare whether any act required or horised to be done by the liquidator is to be all or any one or more of such persons. iction 149, subsection 4.) I. Exercisable without the sanction of the mmittee of Inspection or the Court: — "he liquidator in a, winding-up by the Court II have power, a) To sell the real and personal property, and things in action of the company by public auction or private contract, with power to transfer the whole thereof to any person or company, or to sell the same in parcels : ) To do all acts and to execute, in the name and on behalf of the company, all deeds, receipts, and other documents, and for that purpose to use, when necessary, the com- pany's seal : c) To prove, rank, and claim in the bank- ruptcy, insolvency, or sequestration of any contributory, for any balance against his estate, and to receive dividends in the bank- ruptcy, insolvency, or sequestration in respect of that balance, as a separate debt due from the bankrupt or insolvent, and rateably with the other separate creditors: 1) To draw, accept, make, and indorse any bill of exchange or promissory note in the name and on behalf of the company, with the same effect with respect to the liability of the company as if the bill or note had 381 [Liquidator been drawn, accepted, made, or indorsed by or on behalf of the company in the course of its business : (e) To raise on the security of the assets of the company any money requisite : (/) To take out in his official name letters of administration to any deceased contribu- tory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot be conveniently done in the name of the company; and in all such cases the money due shall, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, be deemed to be due to the liquidator himself : (g) To do all such other things as may be necessary for winding up the affairs of the company and distributing its assets. The exercise by the liquidator in a winding-up by the Court of the powers conferred by this section shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers. Where a liquidator is provisionally appointed by the Court, the Court may limit and restrict his powers bv the order appointing him. (Section The liquidator may also apply to the Court for directions in relation to any particular matter arising in the winding-up of the company (sec- tion 158), and he may apply for the examination of any director, manager, or other officer who has misapplied the moneys or property of the company, or been guilty of any misfeasance or breach of trust in relation to the company. (Section 215.) The liquidator may summon general meetings- of the creditors or contributories for the purpose of ascertaining their wishes on all matters relating to the winding-up, and it shall be his duty to summon meetings at such times as the creditors or contributories, by resolution, either at the meeting appointing the liquidator or other- wise, may direct, or whenever requested in. Liquidator] 382 Liquidator writing to do so by one-tenth in value of the creditors or contributories, as the case may be. (Section 158.) B. Exercisable only with the sanction of the Court or of the Committee of Inspection : — The liquidator in a winding-up by the Court shall have power, with the sanction either of the Court or of the committee of inspection, (a) To bring or defend any action or other legal proceeding in the name and on behalf of the company : (6) To carry on the business of the company, so far as may be necessary for the beneficial winding-up thereof : Note. — The word " necessary " here means " highly expedient under all the circumstances of the case," and is not synonymous with " beneficial." (Re Wreck Recovery Co., 1880, 15 Ch.D. 353.) A winding-up order operates as notice of dismissal to the company's servants, but if the liquidator carries on the business and employs them in the business of the com- pany, it would appear that the liquidator re-engages them, and if no fresh arrange- ments are made, that the old terms apply. •(c) To employ a solicitor or other agent to take any proceedings or do any business which the liquidator is unable to take or do himself; but the sanction in this case must be obtained before the employment, except in cases of urgency, and in those cases it must be shown that no undue delay took place in obtaining the sanction. (Section 151.) The liquidator may also with a like sanction : — (i) Pay any classes of creditors in full ; (ii) Make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging them- selves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable ; (iii) Compromise all calls and liabilities calls, debts, and liabilities capable resulting in debts, and all claims or future, certain or contingent, tained or sounding only in damages, sisting or supposed to subsist li- the company and a contributory, alleged contributory, or other debtor person apprehending liability to th company, and all questions in any wa relating to or affecting the assets or th< winding-up of the company, on sue terms as may be agreed, and take an security for the discharge of any sue call, debt, liability or claim, am complete discharge in respect ;. (Section 214.) (iv) Make calls upon the contributo (Section 173.) (See title Calls.) But the exercise of these powers, as in the I of those exercisable without sanction, is to the control of the Court, and any credit! contributory may apply to the Court with to any exercise or proposed exercise of (Sections 151 and 214.) A liquidator has no power of disclaimer onerous property, for the property of tl pany does not vest in him (as in the case a trustee in bankruptcy), nor does he by taking retaining possession of leaseholds of the compan become personally liable for the rents covenants thereof, for the occupation is not of the liquidator, but of the company, " ministerial officer " the liquidator is, the company is in existence. (Wearmouth 19 Ch.D. 640.) If any person is aggrieved by any decision of the liquidator of a company wh being wound up by cider of the Court, t person may apply to the Court, and the Cour may confirm, reverse, or modify the act decision complained of, and make such order i the premises as it thinks just. (Section 158.) Subject to the provisions of the Comp (Consolidation) Act 1908 (and the Rules under), the liquidator shall use his own dis lion in the management of the estate of a com hich i Liuidator] any being wound up by the Court and its dis- ibution among the creditors. (Ibid.) The liquidator shall for the purpose of i-quiring or retaining possession of the property f the company be in the same position as if he ere a receiver of the property appointed by the [igh Court, and the Court may, on his applica- on, enforce such acquisition or retention ccordingly. (Rule 75.) Any contributory for the time being on the list f contributories, trustee, receiver, banker, or gent or officer of a company which is being ound up under order of the Court shall, on otice from the liquidator and within such time s he shall by notice in writing require, pay, tlivir, convey, surrender or transfer to or into le hands of the liquidator any sum of money or alance, books, papers, estate, or effects which appcn to be in his hands for the time being and D which the company is prima facie entitled. Rule 76.) Control by Board of Trade. The Hoard of Trade shall take cognisance of le conduct of liquidators of companies which are eing wound up by the Court, and, if a liquidator not faithfully perform his duties and duly e all the requirements imposed on him by tatute, rules, or otherwise with respect to the erformance of his duties, or if any complaint is lade to the Board by any creditor or contribu- ory in regard thereto, the Board shall inquire )to the matter, and take such action thereon as bey may think expedient. The Board may at any time require any iquidator of a company which is being wound up y the Court to answer any inquiry in relation to iy winding-up in which he is engaged, and nay, if the Board think fit, apply to the Court to tamine him or any other person on oath ijbcerning the winding-up. The Board may also direct a local investigation i) be made of the books and vouchers of the iquidator. (Section 159.) (See title Liquidators' \ccounts.) 383 [Liquidator Duties. The duties of a liquidator are (a) to take possession of the property of the company, pro- tect it, and in due course realise same; (b) to pay the costs, charges, and expenses of realisa- tion and liquidation; (c) to pay the debts and liabilities of the company in due order of prioritv (but pari passu as regards classes of equal degree), so far as the funds will allow; and (d) to distribute the surplus, if any, amongst the contributories, in accordance with their respective rights. The more important duties involved in carrying out the above are : — (1) The liquidator must, with all convenient speed, after his appointment, settle the list of contributories of the company, and must appoint a day for that purpose. (See title Contributory.) Xote. — The liquidator shall not without special leave of the Court rectify the Register of Members (section 173), but see Powers of a Liquidator under Volun- tary Winding-up (below). (2) Deal with the creditors' proofs. (See title Proof of Debt.) (3) Summon meetings of the creditors or con- tributories at such times as the creditors or contributories by resolution may direct, or whenever requested in writing to do so by one-tenth in value of the creditors or contributories, as the case may be. (Section 158.) (4) Keep and render proper accounts as pre- scribed. (See title Liquidators' Accounts.) (5) Pay all moneys received as liquidator into the Companies Liquidation Account at the Bank of England, and not into his private banking account. If any liquidator retains for more than ten days a sum exceeding £50, or such other amount as the Board of Trade in any particular case may authorise him to retain, he shall (1) pay interest on the amount so retained in excess at the rate of 20 per cent, per annum; (2) be liable to disallowance of all or such part of his remuneration as the Board of Trade may deem just; (3) be Liquidator] 3 8 4 I iquiila liable to be removed from his office by the Board; and (4) be liable to pay any expenses occasioned by reason of his default. But a liquidator is not subject to the above penalties where he can explain the reason for retaining any excess balance to the satisfaction of the Board of Trade. (Section 154.) See title Local Bank Account.) (6) The liquidator must give the Official Receiver such information, and such access to and facilities for the inspection of the books and documents of the com- pany, and generally must afford such assistance as may be necessary to enable the Official Receiver to perform his duties. (Section 153.) (7) Subject to the provisions of the Act, the liquidator shall, in the administration of the assets of the company, and in the dis- tribution thereof amongst its creditors, have regard to any directions that may be given by resolution of the creditors or con- tributories at any general meeting, or by the committee of inspection, and any directions so given by the creditors or con- tributories at any general meeting shall, in case of conflict, be deemed to override any directions given by the committee of inspection. Subject to the foregoing, the liquidator may use his own discretion in the management of the estate and its dis- tribution among the creditors ( ? and others entitled thereto) . (Section *s8.) Creditors and Contributories, Rights of. A. As regards Meetings. — The liquidator may summon general meetings of the creditors or contributories for the purpose of ascertaining their wishes, and it shall be his duty to summon meetings at such times as the creditors or con- tributories, by resolution, either at the meeting appointing the liquidator or otherwise, may direct, or whenever requested in writing to do so by one-tenth in value of the creditors or con- tributories, as the case may be. (Section 158.) In addition to the first meetings of ere and contributories, and in addition also to ings of creditors and contributories directed j held by the Court under section 219 of the ascertain the wishes of creditors or conti tories, the liquidator may himself from tin time summon, hold, and conduct meetings of creditors or contributories for the purpose . ascertaining their wishes in all matters rel; to the winding-up. (Rule 121.) The liquidator shall summon all meeting creditors and contributories by giving not than seven days' notice of the time and thereof in the London Gazette and in a paper ; and shall not less than seven days the day appointed for the meeting send by to every person appearing by the comp books to be a creditor of the company notic the meeting of creditors, and to every appearing by the company's books or other to be a contributory of the company notice of I meeting of contributories. The notice to each creditor shall be sent to address given in his proof, or, if he has proved, to the address given in the statemen affairs of the company, or to such other add as may be known to the person summoning meeting. The notice to each contributory be sent to the address mentioned in the pany's books as the address of such contributi or to such other address as may be known to t person summoning the meeting. (Rule 123.)] A certificate by the Official Receiver or oti officer of the Court, or by the clerk of any person, or an affidavit by the liquidator, or solicitor, or the clerk of either of such pers that the notice of any meeting has been posted, shall be sufficient evidence of such no having been duly sent to the person to whom same was addressed. (Rule 124.) The meeting shall be held at such place in the opinion of the liquidator most conveni for the majority of the creditors or contrib tories or both. Different times or places or may, if thought expedient, be named for meetings of creditors and for the meetings contributories. (Rule 125.) L^uidatorJ 3 8 5 The costs of summoning a meeting of creditors r contributories at the instance of any person thcr than the Official Receiver or liquidator hall be paid by the person at whose instance it l summoned, who shall before the meeting is ummoned deposit with the Official Receiver or quidator (as the case may be) such sum as may uired by the Official Receiver or liquidator s security for the payment of such costs. The hall be repaid out of the assets of the com- l.iiiv if the Court shall by order, or if the credi- • contributories (as the case may be) shall solution, so direct. (Rule 126.) Where a meeting is summoned by the Official receiver or the liquidator he or someone nomi- ated by him shall be chairman of the meeting. It ivory other meeting of creditors and con- Kbutories the chairman shall be such person as le meeting by resolution shall appoint. (Rule fro At a meeting of creditors a resolution shall be eemed to be passed when a majority in number hd value of the creditors present, personally or |v proxy, and voting on the resolution, have joted in favour of the resolution, and at a meet- ng of the contributories a resolution shall be leemed to be passed when a majority in number pd value of the contributories present, person- Ih or by proxy, and voting on the resolution, lave voted in favour of the resolution, the value f the contributories being determined according > the number of votes conferred on each con- ibutory by the regulations of the company, .ule 128.) The Official Receiver or (as the case may be) liquidator shall file with the Registrar a py, certified by him, of every resolution of a eting of creditors or contributories. (Rule here a meeting of creditors or contribu- is summoned by notice, the proceedings nd resolutions at the meeting shall, unless the ourt otherwise orders, be valid, notwithstand- that some creditors or contributories may Dt have received the notice sent to them. ule 130.) [Liquidator The chairman may with the consent of the meeting adjourn it from time to time and from place to place, but the adjourned meeting shall be held at the same place as the original place of meeting unless in the resolution for adjourn- ment another place is specified or unless the Court otherwise orders. (Rule 131.) A meeting may not act for any purpose except the election of a chairman, the proving of debts, and the adjournment of the meeting, unless there are present or represented thereat at least three creditors entitled to vote or three contributories, or all the creditors entitled to vote or all the contributories if the number of the creditors entitled to vote or the contribu- tories, as the case may be, shall not exceed three, If within half-an-hour from the time appointed for the meeting a quorum of creditors or con- tributories is not present or represented the meet- ing shall be adjourned to the same day in the following week at the same time and place, or to such other day as the chairman may appoint, not being less than seven or more than 21 days. (Rule 132.) Every person for the time being on the list of contributories of the company and every person whose proof has been admitted shall be at liberty, at his own expense, to attend proceed- ings, and shall be entitled, upon payment of the costs occasioned thereby, to have notice of all such proceedings as he shall, by written request, desire to have notice of; but if the Court shall be of opinion that the attendance of any such person upon any proceedings has occasioned any additional costs which ought not to be borne by the funds of the company, it may direct such costs, or a gross sum in lieu thereof, to be paid by such person ; and such person shall not be entitled to attend any further pro- ceedings until he has paid the same. (Rule 152.) B. As regards Accounts. — The liquidator shall transmit to the Board of Trade with his accounts a summary of such accounts in such form as the Board of Trade may from time to cc Liquidator] 386 Liquidator time direct, and, on the approval of such sum- mary by the Board of Trade, shall forthwith obtain, prepare, and transmit to the Board of Trade so many printed copies thereof, duly stamped for transmission by post, and addressed to the creditors and contributories, as may be required for transmitting such summary to each creditor and contributory. The cost of printing and posting such copies shall be a charge upon the assets of the company. (Rule 173.) Where an order has been made for winding-up a company by the Court, or subject to the super- vision of the Court, the Court may make such order for inspection by creditors and contribu- tories of the company of its books and papers as the Court thinks just, and any books and papers in the possession of the company may be inspected by creditors or contributories accord- ingly, but not further or otherwise. (1908 Act, section 221.) A liquidator, before making application to the Board of Trade for his release, shall give notice of his intention so to do to all the creditors who have proved their debts, and to all the contribu- tories, and shall send with the notice a sum- mary of his receipts and payments as liquidator. (Rule 197.) Dividends. Not more than two months before declaring a dividend the liquidator shall give notice of his intention to do so to the Board of Trade, in order that the same may be gazetted, and at the same time to such of the creditors men- tioned in the statement of affairs as have not proved their debts. Such notice shall specify the latest date up to which proofs must be lodged, which shall be not less than 14 days from the date of such notice. Where any creditor, after the date mentioned in the notice of intention to declare a dividend as the latest date up to which proofs may be lodged, appeals against the decision of the liquidator rejecting a proof, notice of appeal shall, subject to the power of the Court to extend the time in special cases, be given within seven days from the date of the notice of the decision against which the appeal is made, and liquidator may in such case make provision the dividend upon such proof, and the pro costs of such appeal in the event of the being admitted. Where no notice of appeal been given within the time specified in this rul< the liquidato/ shall exclude all proofs whi< have been rejected from participation in dividend. Immediately after the expiration of the fixed by this rule for appealing against decision of the liquidator he shall proce declare a dividend, and shall give notice to Board of Trade (in order that the same may i gazetted), and shall also send a notice of dend to each creditor whose proof has admitted. If it becomes necessary, in the opinion of liquidator and the committee of inspection, postpone the declaration of the dividend bey the limit of (the above-mentioned) two mo the liquidator shall give a fresh notice of intention to declare a dividend to the Board Trade in order that the same may be gazetl but it shall not be necessary for the liquidator give a fresh notice to such of the creditors tioned in the statement of affairs as have proved their debts. In all other respects same procedure shall follow the fresh notio would have followed the original notice. 'So-) Upon the declaration of a dividend the li dator shall forthwith transmit to the Boar Trade a list of the proofs filed with the Re trar, which list shall be in the prescribed form If the winding-up is in a Court other than High Court the list shall, on payment of prescribed fee, be examined by the Regis with the proofs tendered for filing, and if fo correct shall be certified by the Registrar, the winding-up is in the High Court the liqui- dator shall, if so lequired by the Board of Trade, transmit to the Board of Trade office copies < all lists of proofs filed by him up to the date the declaration of the dividend. Dividends may at the request and risk of the person to wh they are payable, be transmitted to him by pos iquidator] 3 8 7 If a person to whom dividends are payable desires that they shall be paid to some other person, he may lodge with the liquidator a document in the prescribed form, which shall be sufficient authority for payment of the dividend to the person therein named. (Rule 150.) The payment of dividend will in every instance, except where a special Bank Account has been authorised, be made by cheques on the Bank of England, or money orders, which will be prepared by the Board of Trade on the appli- cation of the liquidator, and will be transmitted to him for distribution amongst the creditors. The Board of Trade will require ten days' notice to enable them to prepare the cheques or money orders for dividends. As imperfect or inaccurate lists would cause considerable incon- venience and increased labour, great care should be exercised in the preparation of them, and in all eases of payment to executors, trustees, representative officials. &c, the name or names should be inserted in the list. The several payees in the lists should be num- bered consecutively, so that for the purpose of identification corresponding numbers may be affixed to the cheques and money orders. The total amount of the dividend payable should be charged in the Cash Book in one sum. If the dividend has been paid by cheques on the Companies Liquidation Account, the liquidator On the expiration of six months from the date of i>suc, or on application for his release, if that event occurs earlier, should return any cheques or money orders remaining in hand to the Accountant-General to the Board of Trade. If the dividend has been paid through a ipecial bank, the liquidator will be required, at the expiry of six months from the date of the ration of a dividend, to forward to the Comptroller of the Companies Department, for idit, vouchers for the dividends paid and a list those remaining unclaimed. The liquidator ill then be furnished with a receivable order jfor payment into the Bank of England of the nount of the dividends unclaimed. [Liquidator Under no circumstances should unclaimed dividends be credited to the estate without the previous sanction of the Comptroller. (Board of Trade Regulations, 1909.) The liquidator should make careful provision before declaring a final dividend for the various expenses incidental to the audit of his accounts and to his application for release. Resignation. A liquidator who desires to resign his office shall summon separate meetings of the credi- tors and contributories of the company to decide whether or not the resignation shall be accepted. If the creditors and contributories by ordinary resolutions both agree to accept the resignation of the liquidator, he shall file with the Registrar a memorandum of his resignation, and shall send notice thereof to the Official Receiver, and the resignation shall thereupon take effect. In .my other case the liquidator shall report to the Court the result of the meetings, and shall send a report to the Official Receiver, and thereupon the Court may, upon the application of the liquidator or the Official Receiver, deter- mine whether or not the resignation of the liqui- dator shall be accepted, and may give such directions and make such orders as in the opinion of the Court shall be necessary. (Rule 162.) (But see heading Release.) Removal. A liquidator may be removed by the Board of Trade (1) for retaining a sum exceeding £50 for more than ten days, unless he can explain such retention to the satisfaction of the Board of Trade (section 154), and (2) where he is not faithfully performing his duties and duly observing all the requirements imposed upon him by statute, rules, or otherwise, with respect to the performance of his duties. A liquidator may also be removed by the Court, (1) "on cause shown " (section 149), and (2) for failure to keep up his security. (Rule 58.) C C 2 Liquidator] 388 [Liquidator If a receiving order is made against the liqui- dator he shall thereby vacate his office, and his vacation shall operate as a removal. (Rule 163.) (But see heading Release.) Release. When the liquidator of a company which is being wound up by the Court has realised all the property of the company, or so much thereof as can, in his opinion, be realised without need- lessly protracting the liquidation, and has dis- tributed a final dividend, if any, to the creditors, and adjusted the, rights of the contributories among themselves, and made a final return, if any, to the contributories, or has resigned, or has been removed from his office, the Board of Trade shall, on his application, cause a report on his accounts to be prepared, and, on his com- plying with all the requirements of the Board, shall take into consideration the report, and any objection which may be urged by any creditor, or contributory, or person interested, against the release of the liquidator, and shall either grant or withhold the release accordingly, subject never- theless to an appeal to the High Court. Note. — A liquidator, before making applica- tion to the Board of Trade for his release, shall give notice of his intention so to do to all the creditors who have proved their debts, and to all the contributories, and shall send with the notice a summary of his receipts and payments as liquidator. (Rule 197.) Where the release of a liquidator is withheld the Court may, on the application of any creditor, or contributory, or person interested, make such order as it thinks just, charging the liquidator with the consequences of any act or default which he may have done or made con- trary to his duty. An order of the Board of Trade releasing the liquidator shall discharge him from all liability in respect of any act done or default made by him in the administration of the affairs of the companv, or otherwise in relation to his conduct as liquidator, but any such order may be revoked on proof that it was obtained by fraud or by sup- pression or concealment of any material fact. Where the liquidator has not previi resigned or been removed, his release shall operate as a removal of him from his office. (Section 157.) Where the Board of Trade have granted to : liquidator his release, a notice of the orde, granting the release shall be gazetted. The liqui- dator shall provide the requisite stamp fee the Gazette (5s.), which he may charge aga the company's assets. (Rule 197.) Upon a liquidator resigning, or being relca or removed from his office, he shall deliver to the Official Receiver, or, as the case may to the new liquidator, all books kept by him, all other books, documents, papers, accounts in his possession, relating to the 01 of liquidator. The release of a liquidator si not take effect unless and until he has deliv over to the Official Receiver, or, as the may be, to the new liquidator, all th papers, documents, and accounts which he is this rule required to deliver on his refl (Rule 175.) ase. The following are the documents which the liquidator should forward to the Board \ Trade on making application for release, in addi- tion to those required in connection with tl final audit : — (1) Formal application for release. (2) Affidavit verifying postage of notice intention to apply for release to all ere tors who have proved their debts, andl all contributories, with a copy of the notice as an exhibit. A 2s. winding-u stamp to be attached to the affidavit. (3) Certificate by committee of inspection any) as to realisation of all reasons assets. Note. — If the liquidator certifies that assets have been realised, this certificati will not be required. (4) Form of notice of release for insertion it Gazette. A 5s. winding-up stamp to be attached. (5) Cheques for unclaimed dividends (if any). liquidator] atement of dividend (or dividends) declared during last six months, dis- tinguishing between those claimed and unclaimed. Note. — There is no provision in com- pany liquidation; as in bankruptcy, for a fee to the Board of Trade on the appli- cation for release. Limited Partnership. Applications to the Court to wind up a limited partnership are to be by petition under the panics Acts i86j, ct scq., now Companies ;ulidntion) Act 1908, and the provisions thereof relating to the winding-up of companies by the Court are, subject to such modifications (if any) as the Lord Chancellor, with the con- lurrence of the President of the Board of Trade, may by rules provide, to apply to the winding up by the Court of limited partnerships, with the substitution of general partners for directors. (Companies (Consolidation) Act n;o.S, section 68.) Rules were made and issued accordingly ntitlcd " The Limited Partnerships (Winding- up 1 Rules 1909." (See title Winding-up.) Voluntary Liquidation. Appointment. When a company has resolved by valid resolu- Bn to wind up voluntarily, The company in general meeting shall appoint bne or more liquidators for the purpose of winding up the affairs and distributing the assets of the company, and may fix the remuneration to be paid to him or them : On the appointment of a liquidator all the powers of the directors shall cease, except so far as the company in general meeting, or the liquidator, sanctions the continuance thereof: When several liquidators are appointed, even" power hereby given may be exercised by such one or more of them as may be determined at the time of their appointment, or in default of such determination by any number not less than two. (Companies (Consolidation) Act J 90S, section 186.) 389 [Liquidator A voluntary liquidator may be appointed by the company in general meeting, by (a) ordinary, (b) extraordinary, or (c) special reso- lution. The resolution appointing a liquidator cannot, however, be effectively passed until after a valid and effective resolution to wind up has been passed, i.e., at the second meeting in the case of a special resolution to wind up, but a liquidator may be appointed at the meeting at which the resolution to wind up is passed, although the notice of that meeting does not refer to the intention so to appoint (Oakes v. Ttirquand, L.R. 2 H.L. 325) ; it is usual, how- ever, to give notice of the proposed appointment, and where the name of a proposed liquidator was inserted in the notice and resolution and another person was appointed at the meeting, the appointment was held to be a valid one. (Re Trench Tnbelcss Tyre Company, 1900.) The liquidator must be a person who will act independently. Where it appeared that the liquidator in the voluntary winding-up of a com- pany had an intimate business connection with several of the directors of the company who were also directors of other companies, between which and the company in question there had been dealings requiring investigation, the Court made an order removing him from the office, and appointed another liquidator in his place. (In re Charterland Goldfields, Lam., 1909.) Xote. — The voluntary winding-up of a com- pany shall not bar the right of any creditor or contributory of such company to have it wound up by or under the supervision of the Court, if the Court is of opinion in the case of an appli- cation by a creditor that the rights of the credi- tor, or in the case of an application by a con- tributory, that the rights of the contributories will be prejudiced by a voluntary winding-up. (See titles Execution, Petition to Wind up a Company.) Where a company is being wound up voluntarily, and an order is made for winding-up by the Court, the Court may, if il thinks fit, by the same or any subsequent order provide for the adoption of all or any of the pro- ceedings in the voluntary winding-up. (Sections 197, 198, and 199.) Liquidator] The liquidator in a voluntary winding-up shall, within twenty-one days after his appoint- ment, file with the Registrar of Companies a notice of his appointment in the form prescribed by the Board of Trade. If the liquidator fails to comply with the requirements of this section he shall be liable to a fine not exceeding five pounds for. every day during which the default continues. (Section 187.) Every liquidator appointed by a company in a voluntary winding-up shall, within seven days from his appointment, send notice by post to all persons who appear to him to be creditors of the company that a meeting of the creditors of the company will be held on a date, not being less than fourteen nor more than twenty-one days after his appointment, and at a place and hour, to be specified in the notice, and shall also advertise notice of the meeting once in the Gazette and once at least in two local news- papers circulating in the district where the registered office or principal place of business of the company was situate. At the meeting to be held in pursuance of the foregoing provisions of this section the creditors shall determine whether an application shall be made to the Court for the appointment of any person as liquidator in the place of or jointly with the liquidator appointed by the company, or for the appointment of a committee of inspec- tion, and, if the creditors so resolve, an appli- cation may be made accordingly to the Court at any time, not later than fourteen days after the date of the meeting, by any creditor appointed for the purpose at the meeting. On any such application the Court may make an order either for the removal of the liquidator appointed by the company and for the appoint- ment of some other person as liquidator or for the appointment of some other person to act as liquidator jointly with the liquidator appointed by the company, or for the appointment of a committee of inspection either together with or without any such appointment of a liquidator or such other order as, having regard to the 5 39o [Liquidator interests of the creditors and contributories of the company, may seem just. No appeal shall lie from any order of the Court upon an application under this section The Court shall make such order as to costs of the application as it may think fit, if it is of opinion that, having regard to the interests of the creditors in the liquidation, there were reasonable grounds for the application, may order the costs of the application to be paid out of the assets of the company, notwitfc standing that the application is dismissed or otherwise disposed of adversely to the applicant. (Section 188.) If a vacancy occurs by death, resignation, otherwise in the office of liquidator appointed the company in a voluntary winding-up, company in general meeting may, subject to arrangement with its creditors, fill the vacancy. For that purpose a general meeting may be convened by any contributory or, if there were more liquidators than one, by the contin liquidators. The meeting shall be held in manner pi scribed by the articles, or in such manner may, on application by any contributory or the continuing liquidators, be determined by the Court. (Section 189.) I If from any cause whatever there is no liquida- tor acting, the Court may, on the application a contributory, appoint a liquidator. The Court may, on cause shown, remove ; liquidator, and appoint another liquidator. (Section 186.) A company about to be, or in course of being, wound up voluntarily may, by extraordinary resolution, delegate to its creditors, or to any committee of them, the power of appointing liquidators or any of them, and of supplying vacancies among the liquidators, or enter i any arrangement with respect to the powers be exercised by the liquidators, and the manner in which they are to be exercised. Any act done by creditors in pursuance of any such delegated power shall have the same effect uidator] i if it had been done by the company. (Section bo.) Security. Then is apparently no necessity for a liqui- itor in voluntary winding-up to give security, jt the terms of his appointment may require im to do so. Gazette Notice, c~c. Notice of any special or extraordinary resolu- on passed for winding up a company volun- irily must be given by advertisement in the omlon Gazette. (Section 185.) Notice of a jecial or extraordinary resolution to wind up lust, in common with any other special or ttraordinary resolutions, be filed with the :egistrar of Joint Stock Companies within 15 sys. (Section 70.) of the meeting of creditors to be called i - Bvery liquidator appointed by a company lortlv after his appointment must also be ; . (See heading Appointment, above.) Remuneration. The remuneration may be fixed either by the smpany, the creditors or a committee of them, r by the Court. 1. By the Company: — In the ordinary course the remuneration would be sanctioned by the company in general meeting. (Section 186.) In prac- tice, where it is possible to judge the nature and extent of the services necessary, the remuneration is sometimes fixed at the time of the liquidator's appointment, but it may be arranged at any time during the pro- gress of, or at the conclusion of, the winding-up. Where the amount or basis has not been fixed, the liquidator usually himself assesses the amount, and inserts the item in the account which he must present to the members for approval at the final meeting. It need not necessarily be based by means of a percentage, as in compulsory liquidation, but may be a lump sum. 39 1 [Liquidator 2. By the Creditors : — In the event of the contributories dele- gating the power of appointing a liqui- dator, to the creditors, or to a committee of creditors (section 190), the creditors (or committee) would as a consequence fix the remuneration. Note. — Where the company is insolvent, the remuneration is a matter which more nearly affects the creditors than the contribu- tories, and in practice any committee of creditors appointed in pursuance of section 188 would always be consulted. 3. By the Court : — Any contributory or creditor dissatisfied with the remuneration of the liquidator could apply to the Court thereon under the provisions of section 193, and in difficult cases, where it has not been fixed by the members, and the liquidator cannot obtain a quorum at the final meeting to pass his account, it would afford him considerable protection if he himself applied to the Court to have the amount fixed. All costs, charges, and expenses properly incurred in the voluntary winding-up of a com- pany, including the remuneration of the liqui- dator, are payable out of the assets of the com- pany in priority to all other claims. (Section 196.) Note. — No provision is made for the priority of costs inter se, as in the case of winding-up by the Court. Powers. Note. — Upon the appointment of the liquida- tor all the powers of the directors cease except so far as the company in general meeting, or the liquidator, may sanction the continuance of such powers. (Section 186.) A. — The liquidator in a voluntary winding-up may without the sanction of the Court exercise all the powers under the Companies (Consolida- tion) Act 1908 given to a liquidator in a winding- up by the Court (section 186) , viz. : — ' (1) Bring and defend actions. (2) Carry on the business of the company, but only so far as may be necessary for the beneficial winding-up of the same. (3) Sell the property of the company. Liquidator] 392 Liquidator (4) Do all necessary acts, execute deeds, and use the company's seal. (5) Prove and draw dividends in the bank- ruptcy of any contributory. (6) Draw or accept and issue bills on behalf of the company. (7) Take out letters of administration to any deceased contributory. (8) Do and execute all such other things as may be necessary for winding up the affairs of the company and distributing its assets. Note. — The nature and extent of the above powers is stated more fully in con- nection with Compulsory Liquidation (above). B- — The liquidator may exercise the powers of the Court of settling the list of contributories, and any list so settled is prima facie evidence (only) of the liability of the persons named therein as contributories. (Section 186.) (See title Contributory.) C. — The liquidator may make calls (section 186), but his remedy for enforcement is either by action or by application to the Court. (See title Calls.) D. — The liquidator (or any contributory or creditor) of the company may apply to the Court to determine any question arising in the winding-up, or to exercise, as respects the enforcing of calls, or any other matter, all or any of the powers which the Court might exer- cise if the company were being wound up by the Court. (Section 193.) S. — The liquidator may from time to time, during the continuance of the winding-up, sum- mon general meetings of the company for the purpose of obtaining the sanction of the com- pany by special or extraordinary resolution, or for any other purposes he may think fit. (Section 194.) The following powers (inter alia) are exer- cisable only with the sanction of the company:— By extraordinary resolution : — (1) Pay any classes of creditors in full. (2) iMake compromises with creditors or persons claiming to be creditors. (3) Make compromises with contributor^ - respect of calls or liability to calls, arv with debtors in respect of any sums du to the company. (Section 214.) A compromise by the voluntary liquidator of company of a claim by the company against a third party was held to be binding on the pany, notwithstanding that it had not been tioned by an extraordinary resolution section 160 of the Companies Act 1862, section 214 of the Consolidation Act (Cycle Makers' Co-operative Supply ConA v. Sims, 1903, 1 K.B. 477.) By special resolution : — Sell or transfer the whole or part of! company's business to another company; consideration of shares, policies, or other interests in such other company for the pose of distribution among the memb the company being wound up. This : to the resolution receiving the sanction of Court in the event of an order being within a year for winding-up by or subje the supervision of the Court. (Compari (Consolidation) Act 1908, section 192.) title Amalgamation.) F. — The liquidator may sanction transfers 0: shares made after the date of the commenceinen of the winding-up (section 205), and can the Register of Members so far as may be ne sary to give effect to such transfers. National Bank 0/ Wales, 1897.) The liquid cannot, however, alter the status of a com: tory. (Section 205.) Note. — Where several liquidators are pointed, every power given by the Comp^H Act may be exercised by such one or m.ir them as may be determined at the time their appointment, or in default of such de mination, by any number not less than (Section 186.) Duties. Apart from the formal compliance with rules and regulations, the duties of a liquidator in voluntary winding-up are similar to those of liquidator under compulsory liquidation, but the liquidator] Former lias greater individual powers than the alter (as explained under the heading Powers). The duties may be briefly stated as under: — (i) To take possession of the property, books, and documents of the company, to settle the list of contributories, to wind up the affairs of the company, and to realise the assets. Xotc. — The liquidator cannot displace a receiver appointed by the debenture- holders or their trustees. He is entitled, however, to call upon the receiver for an account. (2) To advertise for claims. (3) f° pay the debts of the company and to adjust the rights of the contributories amongst themselves. (Section 186.) (4) To keep and render proper accounts in the manner prescribed. (See title Liquidators' Accounts.) (3) To summon a general meeting of the company at the end of each year to report upon the winding-up, in the event of the liquidation continuing for more than a year. (Section 194.) (6) To summon a final general meeting of the company as soon as the affairs of the company are fully wound up (whether the liquidation has continued for more than a year or not), for the purpose of laying his accounts before the meeting and of giving his explanations thereof. (Section 195.) Note, — The final meeting must be called by advertisement specifying the time, place, and object of such meeting, and such advertisement shall be published in the London Gazette one month at least previously to the meeting. (Section 195.) (7) Within one week after such final meeting to make a return to the Registrar of Joint Stock Companies of its having been held, and of the date on which same was held. The Registrar, on receiving such return, shall forthwith register it. On the 393 [Liquidator expiration of three months from the registration of such return the companv is deemed to be dissolved. (Section 195.) (But see infra.) Note. — If the liquidator makes default in respect of such return he is liable to a penalty. Where the final meeting return has been regis- tered the Court may, on the application of the liquidator or of any ether person who appears to the Court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the Court thinks fit (section 195), and. even where the dissolution has taken place, the Court may at any time within two years of the date of the dissolution on a similar application make an order declaring the dissolution to have been void, .and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved. The person on whose application the order was made must file with the Registrar an office copy thereof within seven days. Penalty in case of default, five pounds per day. (Section 223.) Liability. It is the duty of the liquidator to find out from the books and papers of the company and from the statement of affairs who are the credi- tors of the company, and if any creditor omits to put in his claim the liquidator should com- municate with him. Section 186 of the Com- panies (Consolidation) Act 1908 imposes a statutory duty on the liquidator to pay the debts of the company pari passu, and, subject thereto, unless the articles otherwise provide, to distribute the property of the company amongst the members; and whilst the liquidation con- tinues a contributory or creditor can apply under section 193 of the Act to the Court for relief in respect of his rights. When the com- pany is dissolved the statutory remedy is gone, unless the dissolution is declared void under sec- tion 223 of the Act (see above), but the duty of the liquidator remains, and a contributory or creditor has a remedy at common law for injury Liquidator] 394 [Liquidators' caused to him by a breach of the liquidator's statutory duty. (Puhfnrd v. Devenish, 1903.) (See title Misfeasance.) Removal. The Court may, on cause shown, remove the liquidator and appoint another liquidator to act in a voluntary winding-up. (Section 186.) Winding-up under Supervision of the Court. Where an order is made for a winding-up subject to supervision, the Court may by the same or any subsequent order appoint any additional liquidator (to the one appointed for the purposes of the voluntary winding-up) . A liquidator appointed by the Court under this section shall have the same powers, be subject to the same obligations, and in all respects stand in the same position as if he had been appointed by the company. The Court may remove any liquidator so appointed by the Court or any liquidator con- tinued under the supervision order and fill any vacancy occasioned by the removal, or by death or resignation. (Section 202.) Where an order is made for a winding-up subject to supervision, the liquidator may, sub- ject to any restrictions imposed by the Court, exercise all his powers, without the sanction or intervention of the Court, in the same manner as if the company were being wound up altogether voluntarily. A winding-up subject to the supervision of the Court is not a winding-up by the Court for the purpose of the following provisions of the Act, namely, those relating to : — ■ (a) Statement of Affairs (Section 147). (!»} Official Receiver's Report (Section 148). (c) Appointment of Liquidator (Section t49). (d) First Meeting of Creditors and Contributories (Section 152). (c) Regulations as to Books, Accounts, Banking of Moneys, Audit, Control of Liquidator, Release of Liquidator, &c. (Sections 153 to 159). (/ Committee of Inspection (Section 160). (S) Special Manager (Section 161). (/i) Receiver (Section 162). (*) Delegation to Liquidator of certain Court po\vers](Section 173). ij) Public Examination of Directors, &c. (Section 175). but, subject as aforesaid, an order for a winding- up subject to supervision shall for all purposes, including the staying of actions and other pro- ceedings, the making and enforcement of calk, and the exercise of all other powers, be dee to be an order for winding-up by the Cout (Section 203.) The remuneration of the liquidator when winding-up is under the supervision of the Court is fixed by the Court and not by the members of the company. Liquidators' Accounts. — Winding-up by the Court. Books. — The Official Receiver, until a liqui- dator is appointed by the Court, and thereafter the liquidator, shall keep a book to be called the " Record Book," in which he shall record i minutes, all proceedings had and resolutioni passed at anv meeting of creditors or contribu- tories, or of the committee of inspection, and all such matters as may be necessary to give a correct view of his administration of the com- pany's affairs, but he shall not be bound t insert in the " Record Book " any document a confidential nature (such as the opinion counsel on any matter affecting the interest e the creditors or contributories), nor need he exhibit such document to any person other than a member of the committee of inspection, or the Official Receiver, or the Board of Trade. (Winding-up Rules 1909, Rule 166.) With the exception just referred to, subject always to the control of the Court creditor or contributory may, either person or by his agent, inspect the books and reci of the liquidator. (Companies (Consolidation) Act 1908, section 156.) Where an order has been made for winding-up a company by, or subject to, the supervision ol the Court, the Court may make such order h . inspection by creditors and contributories of company of its books and papers as the C01 thinks just, and any books and papers in the possession of the company may be inspected by creditors or contributories accordingly, but not further or otherwise. (Section 221.) Uuidators'] The Official Receiver, until a liquidator is ppointed by the Court, and thereafter the liqui- ;itor. shall keep a book to be called the Cash Book " (which shall be in such form as le Board of Trade may from time to time irect), in which he shall (subject to the pro- isions as to Trading Accounts) enter from day i day the receipts and payments made by him. Rule 167.) Where the liquidator carries on the business f the company he shall keep a distinct account f the trading and shall incorporate in the Cash 00k the total weekly amounts of the receipts nd payments on such Trading Account. (Rule Kach receipt and payment should be entered i the Cash Book in such detail as will fully Kplain its nature. Payments for Rent, alaries, Wages, &c, due at the date of the immencement of the winding-up, or the date of le winding-up order, as the case may be (see lie Preferential Payments, &c), should be itered under the head of Preferential Pay- lents, and carefully distinguished (by appor- nt, if necessary) from similar payments hich may arise or become necessary while irrying on trade: the latter should be entered a separate Trading Account. Petty expenses lould be entered in the Estate Cash Book in ifficient detail to show that no estimated barges are made, and vouchers should, where ossible. be obtained. Tin Cash Book must record the actual dates pon which all moneys are received on account f the estate, and the payments out should be nund as of the date when the cheques are sued, except in the case of dividends, which iiould be entered as of the date when the heques arc received, and the total amount of ach dividend should be charged in the Cash !'K>k in one sum. In the case of any sale by rivate contract the account should show the Ine, address, and occupation of the pur- haser, and the mode in which the amount of ie purchase-money has been arrived at. Where property forming part of a company's sets is sold by the liquidator through an 395 [Liquidators' auctioneer or other agent, the gross proceeds of the sale shall be paid over by such auctioneer or agent, and the charges and expenses connected with the sale shall after- wards be paid to such auctioneer or agent on the production of the necessary certificate of the taxing officer. Every liquidator by whom such auctioneer or agent is employed shall, unless the Court otherwise orders, be accountable for the proceeds of every such sale. (Rule 176.) No payments in respect of bills or charges of solicitors, managers, accountants, auctioneers, brokers, or other persons, other than payments for costs and expenses incurred, and sanctioned under Rule 54 (i.e., in connection with the pre- paration of the statement of affairs), and pay- ments of bills which have been taxed and allowed under orders made for the taxation thereof, shall be allowed out of the assets of a company without proof that the same have been considered and allowed by the Registrar. The taxing officer shall satisfy himself before passing such bills or charges that the employment of the solicitor or other person in respect of the matters mentioned in the bills or charges has been duly sanctioned. Nothing contained in this rule shall apply to or affect costs which, in the course of legal pro- ceedings by or against a company which is being wound up by the Court, are ordered by the Court in which such proceedings are pending or a Judge thereof to be paid by the company or the liquidator, or the rights of the person to whom such costs are payable. (Rule 187.) Moneys. — All moneys received by a liquidator of a company which is being wound up by order of the Court are required to be paid, without deduction, to the Companies Liquidation Account at the Bank of England, unless an account with any other (generally a local) bank has been authorised by the Board of Trade. The remittances are to be made once a week, or forthwith if a sum of ^200 has been received. Remittances may be made direct to the Bank of England, Law Courts Branch, London, by cheque crossed Bank of England, credit of Companies Liquidation Account. Liquidators'] 396 Liquidators' The remittances to the Bank of England should be accompanied by a receivable order and the counterpart or advice letter should be transmitted bv the same post to the Accountant- General to the Hoard of Trade, who will furnish a certificate of receipt of the money so remitted. Halfpence should not be included in remittances. Forms of receivable order will be supplied on application to the Comptroller of the Companies Department, Board of Trade. A liquidator is absolutely prohibited from paving any sums received by him as liquidator into his private banking account (even when a local banking account has been authorised), and if a liquidator at any time retains for more than ten days a sum exceeding ^50, or such other amount as the Board of Trade in any particular case authorises him to retain, then, unless he explains the retention to the satisfaction of the Board of Trade, he shall (1) pay interest on the amount so retained in excess at the rate ot £20 per cent, per annum, (2) be liable to disallow- ance of all or such part of his remuneration as the Board may think just, (3) be liable to be removed from his office by the Board, and (4) be liable to pay any expenses occasioned by reason of his default. (Companies (Consolidation) Act I908, section 154.) All current bills of exchange should be remitted to the Companies Liquidation Account. Where a special Bank Account is sanctioned by the Board of Trade all moneys received must be paid into the appointed bank. [See title Local Bank Account.) All payments thereout must be made by cheques payable to order, such cheques to have marked on the face of them the name of the company, to be signed by the liqui- dator and countersigned by at least one member of the committee of inspection, and by such other person (if any) as the committee may appoint. (Rule 105.) The Pass Book with the special bank should be forwarded at each audit. All necessary disbursements made by a liqui- dator on account of a company to the date of his application for release will be repaid to him out of any monevs standing to the credit of the com- panv in the Companies Liquidation Account, 0: application to the Comptroller. Anv expenses properly incurred by 6 dator after applying for, but before obi his release, will be repaid to him by the Receiver out of any funds available purpose. Cheques to the order of the payee f( which become payable on account of t] pany may be obtained by the liquida application by him on the prescribed I": Under no circumstances will the Trade hold themselves responsible lor made on the requisition of the liquidator The Comptroller will be prepared to certifi balance standing to the credit of a Compaq the Companies Liquidation Account, from the liquidator a statement of the I shown by the bank columns of the Cash There appears to be no fee payable. Monevs withdrawn from the bank should be treated as receipts from realisations, should appear only in the " drawn from bai column of the Cash Book, the application ol monev being entered in the payment culu The payments into the bank should a only in the " paid into bank " column in Cash Book. (Board of Trade Regulations, 1909.) An account shall be kept by the Boa Trade of the receipts and payments in winding-up of each company, and when the balance standing to the credit of the accoufl anv company is in excess of the amount Wl in the opinion of the committee of inspect! required for the time being to answer dun in respect of that company's estate, Board shall, on the request of the conun invest the amount not so required in Govern securities, to be placed to the credit of the account for the benefit of the company. When any part of the money so invested is. in the opinion of the committee of inspection, required to answer any demands in respect of: the estate of the company, the Board of Trad Libidators'] II, on the request of the committee, raise such in as may be required by the sale of such part id securities as may be necessary. The dividends on investments under this sec- >n shall be paid to the credit of the company. WT.cn the balance at the credit of any com- nv's account in the hands of the Board of ade exceeds two thousand pounds, and the [uidator gives notice to the Board that the is not required for the purposes of the (nidation, the company shall be entitled to i on the excess at the rate of two per mum per annum. (Companies (Consolida- \ct iooS, section 231.) . — Although bankruptcy and compulsory |uid:ition procedure are, generally speaking, Hilar, there is no provision in bankruptcy of e same nature as the foregoing, but in reply an inquiry as to the disposition of a large sh balance not required for the immediate rposes of a bankruptcy, the Inspector-General Bankruptcy drew attention to the provisions the Bankruptcy Act 1883, section 74 (4), viz., at if required (inter alia) " because of the obable amount of the cash balance," a local ink Vccount may be opened. The trustee would US be able to arrange with the local bank for Best upon such balance. (See title Local ink Account.) Accounts and Audit. — The several audits and spections to which the accounts of a liquidator a compulsory winding-up are to be submitted ■y be summarised thus : — ■ Trading Account. — By Committee of Inspec- tion not less than once a month. Cash Book. — By Committee of Inspection not less than once every three months. Cash Book.— By the Board of Trade half- yearly. Cash Book. — By the Board of Trade so soon •is the assets have been fully realised and distributed. Summary of Account of Receipts and Pay- Bents. — Every six months (under Rule 156). To be approved by Board of Trade. 397 [Liquidators' Summary of Receipts and Payments (under Rule 180). — To accompany notice to creditors and contributories of intention to apply for release. And if the liquidation is not concluded within one year after its commencement, certain returns are also to be sent to the Registrar of Joint Stock Companies. (See heading Pending Liqui- dations, infra.) The following are the regulations relating to- the foregoing : — The Trading Account shall from time to time,, and not less than once in every month, be verified by affidavit, and the liquidator shalt thereupon submit such account to the committee of inspection (if any) or such member thereof as may be appointed by the committee for that purpose, who shall examine and certify the same. (Rule 171.) The liquidator shall submit the Record Book and Cash Book, together with any other requisite books and vouchers, to the committee of inspection (if any) for audit when required, but not less than once every three months (Rule 167), and the committee shall certify in the Cash Book under their hands the day or* which the said book was audited. (Rule 169.) The liquidator shall, at the expiration of six. months from the date of the winding-up order, and at the expiration of every succeeding six months thereafter until his release, transmit to the Board of Trade a copy of the Cash Book for such period in duplicate, together with the neces- sary vouchers and copies of the certificates of audit by the committee of inspection. He shall also forward with the first accounts a summary of the company's statement of affairs, showing thereon in red ink the amounts realised, and explaining the cause of the non-realisation of such assets as may be unrealised. The liquidator shall also at the end of every six months forward to the Board of Trade with his accounts a report upon the position of the liquidation of the company in such form as the Board of Trade may direct. Liquidators'] When the assets of the company have been fully realised and distributed the liquidator shall forthwith send in his accounts to the Board of Trade, although the six months may not have expired. The accounts sent in by the liquidator shall be verified by him by affidavit. (Rule 170.) Immediately the accounts become due for the official audit the liquidator should summon a meeting of the committee of inspection so that they may be audited before being forwarded to the Board of Trade ; but the accounts must not be delayed in consequence of any neglect on the part of the members of the committee to attend such meeting, for in such event a memo- randum should be inserted in the Cash Book to the effect that the meeting was duly summoned but a quorum was not present. The accounts should then be forwarded to the Board of Trade. When the liquidator's account has been audited the Board of Trade shall certify the fact upon the account, and thereupon the duplicate copy, bearing a like certificate, shall be filed with the Registrar. (Rule 172.) The liquidator shall transmit to the Board of Trade with his accounts a summary of such accounts in such form as the Board of Trade may from time to time direct, and, on the approval of such summary by the Board of Trade, shall forthwith obtain, prepare, and transmit to the Board of Trade so many printed copies thereof, duly stamped for transmission by post and addressed to the creditors and con- tributories, as may be required for transmitting such summary to each creditor and contributory. The cost of printing and posting such copies shall be a charge upon the assets of the company. (Rule 173.) Where a liquidator has not, since the date of his appointment or since the last audit of his accounts, as the case may be, received or paid any sum of money on account of the assets of the company, he shall, at the time when he is required to transmit his accounts to the Board of Trade, forward to the Board an affidavit of " no receipts or payments." (Rule 174.) 398 Liquidators' In practice the affidavit of no receipts or merits is seldom required; for even in cases where there are no assets coming to liquidator by virtue of his office, he will ii almost every period for which the return is required have to make some small disbura merits. Where it is unlikely that any assets come to the liquidator's hands, he may obtained an undertaking before accepting office that these disbursements will be repaid to by the parties for whom he is acting; but receipts by way of reimbursement from sources are not deemed to be on behalf of estate, the payments actually made by the I: dator are so considered. Upon one copy of the Cash Book (sho 1 the assets realised) forwarded bv the liquidatoi to the Board of Trade an ad valorem scale fi payable in money, not stamps, upon the g amount of the assets realised and brought credit, viz. : — Upon the first £5,000, or frai thereof, a fee of one per cent. ; upon the £95, ocx) or fraction thereof, a fee of one-half cent. ; over £100,000 the rates are less, gradu diminishing to one-sixteenth per cent. The following is a detailed list of the do ments, &c, which it is necessary to send to Board of Trade in connection with the perid official audit, viz. : — (a) A complete copy of the Estate Cash (with all analysis columns), which retained by the Board of Trade. (b) Affidavit verifying same. (<-) A copy of the Estate Cash Book o.ntain- ing " Bank " and " Total " columns only, for filing purposes. (J) The Trading Account or Accounts (if ! any), together with vouchers, and the' affidavit or affidavits verifying same in accordance with Rule 171 (supra). (c) Special Manager's Account (if any), with vouchers and affidavit. (/) Receipts for cash paid and allocaturs for taxed costs. liquidators'] 399 [Liquidators' (g) Vouchers in support of assets realised, such as Auctioneer's " Sale Account " -and " Marked Catalogue " (if any). [h) Record Book. (i) Bank Pass Book, where a special Bank Account has been authorised, together with a certificate by the banker of the balance due at the date of the account. (/) Order on the Companies Liquidation Account authorising the payment to the Board of Trade of the departmental fees upon the assets realised. (k) A list of dividends paid (if any declared) to creditors and of those unclaimed. (I) A list of dividends paid (if any declared) to contributories and of those unclaimed. I (m) A report on the position of the estate in the prescribed form must be sent with every account (Rule 170), and with the first account only there must be submitted a copy of the front sheet of the statement of affairs, and also of Schedules B, C, G, and H, attached thereto, duly certified by the Court. I (n) The summary of accounts prescribed by Rule 173. (See above.) I A liquidator, before making application to the (Board of Trade for his release, shall give notice bf his intention so to do to all the creditors who pave proved their debts and to all the contribu- reories, and shall send with the notice a summary bf his receipts and payments as liquidator. llRule 197.) This is a summary of the cash actions from the date of the winding-up [prder, and although the form follows the same Uines as that prescribed under Rule 173, the practical effect is that it must be sent to the [creditors and contributories in addition to the Uisual six-monthly accounts unless the liquida- tion is concluded within six months from the [commencement of the winding-up. In that case the one account, may accompany the notice of Intention to apply for release. Pending Liquidations. Where a winding-up of a company (whether compulsory, under supervision, or voluntary) is not concluded within one year after its com- mencement, the liquidator of such company shall, at the prescribed intervals (see below), transmit in duplicate to the Registrar of Joint Stock Companies a detailed statement of all the liquidator's receipts and payments on account of the company. (Companies (Consolidation) Act 1908, section 224.) The statement must be verified by affidavit. (Rule 189.) Every statement must contain a detailed account of all the liquidator's realisations and disbursements in respect of the company. The statement of realisations should contain a record of all receipts derived from assets existing at the date of the winding-up order or resolution and subsequently realised, including balance in bank, book debts and calls collected, propertv sold, &c. ; and the account of disbursements should contain all payments for costs and charges, or to creditors or contributories. Where property has been realised, the gross proceeds of sale must be entered under realisations, and the necessary payments incidental to sales must be entered as disbursements. These accounts should not con- tain payments into the Companies Liquidation Account (except unclaimed dividends; see below), or payments into or out of bank, or temporary investments by the liquidator, or the proceeds of such investments when realised, which should be shown separately : — (a) By means of the Bank Pass Book : (6) By a separate detailed statement of moneys invested by the liquidator, and investments realised. Interest allowed or charged by the bank, bank commission, &c, and profit or loss upon the realisation of temporary investments, should, however, be inserted in the accounts of realisa- tions or disbursements, as the case may be. Each receipt and payment must be entered in the account in such a manner as sufficiently to explain its nature. The receipts and payments must severally be added at the foot of each sheet. Liquidators'] iOQ [Liquidators' and the totals carried forward from one account tn another without any intermediate balance, so that the gross totals shall represent the total amounts received and paid by the liquidator respectively. When the liquidator carries on a business a Trading Account must be forwarded as a dis- tinct account, and the totals of receipts and payments on the Trading Account must alone be set out in the statement. When dividends or instalments of composi- tion are paid to creditors, or a return of surplus assets is made to contributories, the total amount of each dividend or instalment of com- pilation or payment to contributories actually paid must be entered in the statement of dis- bursements as one sum, and the liquidator must fur ward separate accounts showing in lists the amount of the claim of each creditor and the amount of dividend or composition payable to each creditor and of surplus assets payable to each contributory, distinguishing in each list the dividends or instalments of composition and shares of surplus assets actually paid and those remaining unclaimed. When unclaimed dividends, instalments of compositions, or returns of surplus assets are paid into the Companies Liquidation Account, the total amount so paid in should be entered in the statement of disbursements as one sum. Credit should not be taken in the statement of disbursements for any amount in respect of the liquidator's remuneration unless it has been duly allowed by resolution of the company in general meeting, or by order of the Court. (Winding-up Rules 1909, Form 92.) Where a liquidator has not, during any period for which a statement has to be sent, received or paid any money on account of the company, he shall, at the period when he is required to transmit his statement send to the Registrar of Joint Stock Companies the pre- scribed statement in duplicate containing the particulars required with respect to the pro- ceedings in, and position of, the liquidation, and with such statement shall also send a affidavit of " no receipts or payments." (Rule 190.) In practice the affidavit of no receipts or pay- ments is seldom required; for even in those cases where there are no assets coming to the liquidator by virtue of his office, he will i almost every period for which the return is required have to make some small dish merits. Where it is unlikely that any assets will come to the liquidator's hands, he may have obtained an undertaking before accepting office that these disbursements will be repaid to him by the parties for whom he is acting; but whil receipts by way of reimbursement from such sources are not deemed to be on behalf of the estate, the payments actually made by the liquidator are so considered. The first statement, commencing at the date when a liquidator was first appointed and brought down to the end of 12 months from the commencement of the winding-up, shall b sent within 30 days from the expiration of such 12 months, or within such extended period as the Board of Trade may sanction. The subsequent statements shall be sent at intervals of half a year, until the winding-up is concluded, each statement being brought down to the end of the half-year for which it is sent. (Rule 189.) No registration or ad valorem fees are pay- able in respect of the statements required section 224. For the purpose of the statements required to be transmitted to the Registrar of Joint Stock Companies the winding-up of a company i deemed to be concluded : — (a) In the case of companies wound up order of the Court, at the date on whi< the order dissolving the company has been reported by the liquidator to the Registrar of Joint Stock Companies, or at the date of the order of the Board of Trade releasing the liquidator. uidators'] 401 {b) In the case of companies wound up voluntarily or under the supervision of the Court at the date of the dissolution of the company (see tUle Winding-up), unless at such date any funds or assets of the com- pany remain unclaimed or undistributed in the hands or under the control of the liquidator, or any person who has acted as liquidator, in which case the winding- up shall not be deemed to be concluded until such funds or assets have either been distributed or paid into the Com- panies Liquidation Account at the Bank of England. (Rule 1S8.) As ordinarily a company in voluntary liqui- ;itioii is not deemed to be dissolved until le expiration of three months from the itc of registration of the final meeting having ;en held, it follows that in all cases of jluntarv winding-up where the final meet- ig has not been held and the fact registered ■ithin nine months jrom the commence- tent of the winding-up the Registrar of Joint tock Companies will require the return to j made. Note. — The Court has discretionary awer on due application to defer the date of le dissolution even beyond the time mentioned, Companies (Consolidation) Act 1908, section )5), or to declare the dissolution void at any me within two years thereafter. (Section J Any person stating himself in writing to be a editor or contributory of the company shall be ltitlfd, by himself or by his agent, at all asonable times, upon payment of a fee of i. 6d., to inspect the statement lodged with the egistrar, and upon payment of a fee at the rate F fourpence for every folio of 72 words or gures he is entitled to a copy thereof or extract lerefrom. But any person untruthfully so ting himself to be a creditor or contributory ill be guilty of a contempt of Court and shall punishable accordingly on the application of i liquidator or of the Official Receiver. I If a liquidator fails to comply with the squin ments with regard to this statement he lall be liable to a fine not exceeding fifty Junds for each day during which the default bntinues. (Section 224.) [Liquidators' Where the Registrar has reasonable cause to believe either that no liquidator is acting, or that the affairs of the company are fully wound up, and tha returns required to be made by the liquidator have not been made for a period of six consecutive months after notice by the Regis- trar demanding the returns has been sent by post to the registered address of the company, or to the liquidator at his last known place of busi- ness, the Registrar may publish in the Gazette, and send to the company a notice that at the expiration of three months from the date of that notice the name of the company will, unless cause is shown to the contrary, be struck off the Register, and the company will be dissolved. Provided that the liability (if any) of every director, managing officer, and member of the company shall continue and may be enforced as if the company had not been dissolved. (Section 242.) If it appears from any statement of the liqui- dator or otherwise that a liquidator of a com- pany has in his hands or under his control any money representing unclaimed or undistributed assets of the company which have remained unclaimed or undistributed for six months after the date of their receipt, the liquidator shall forthwith pay the same to the Companies Liquidation Account at the Bank of England, and shall be entitled to the prescribed certificate of receipt for the money so paid, and that certificate shall be an effectual discharge to him in respect thereof. (Section 224.) The amount to be paid to the Companies Liquidation Account shall be the minimum balance of such money which the liquidator has had in his hands or under his control during the six months immediately preceding the date to which the statement is brought down, less such part (if any) thereof as the Board of Trade may autho- rise him to retain for the immediate purposes of the liquidation. Such amount shall be paid into the Companies Liquidation Account within 14 days from the date to which the statement of account is brought down. Notwithstanding anything in this rule, any moneys representing unclaimed or undistributed assets or dividends in the hands of the liquidator at the date of the DD Liquidators'] 402 _ [Liquidators' dissolution of the company shall forthwith be paid by him into the Companies Liquidation Account. (Rule 191.) Money invested or deposited at interest by a liquidator shall be deemed to be money under his control, and when such money forms part of the minimum balance payable into the Com- panies Liquidation Account the liquidator shall realise the investment or withdraw the deposit, and shall pay the proceeds into the Companies Liquidation Account, provided that where the money is invested in Government securities such securities may, with the permission of the Board of Trade, be transferred to the control of the Board of Trade instead of being forthwith realised, and the proceeds thereof paid into the Companies Liquidation Account. (Rule 191.) Every person who has acted as liquidator of any company, whether the liquidation has been concluded or not, shall furnish to the Board of Trade particulars of any moneys in his hands or under his control representing unclaimed or undistributed assets of the company, and such other particulars as the Board of Trade may require for the purpose of ascertaining or getting in any money payable into the Companies Liqui- dation Account at the Bank of England. The Board of Trade may require such particulars to be verified by affidavit. (Rule 192.) The Board of Trade may at any time order any such person to submit to them an account, verified by affidavit, of the sums received and paid by him as liquidator of the company, and may direct and enforce an audit of the account. (Rule 193 (1).) For the purpose of ascertaining and getting in any money payable into the Bank of England (and representing unclaimed or undistributed assets of the company) the like powers may be exercised, and by the like authority, as are exerciseable under section 162 of the Bankruptcy Act 1883 for the purpose of ascertaining and getting in the sums, funds, and dividends referred to in that section. Any person claiming to be entitled to any money paid into the Bank of England in pur- suance of this section may apply to the Board ( Trade for payment of the same, and the Bo may, on a certificate by the liquidator that tl person claiming is entitled, make an order the payment to that person of the sum due. Any person dissatisfied with the decision of I Board of Trade in respect of any claim made i pursuance of this section may appeal to the High Court. (Section 224.) A liquidator who requires to make paymi out of money paid into the Bank of Engl either by way of distribution or in respect of costs and expenses of the proceedings shall a| in such form and manner as the Board of Ti may direct, and the Board of Trade may thi upon either make an order for payment to tl liquidator of the sum required to make such pay- ments, or may direct cheques to be issued to him for transmission to the persons to whom payments are to be made. (Rule 196.) The following fees are payable in respe unclaimed dividends, undistributed funds balances which have been paid into the panies Liquidation Account : — (1) On every application to the Board Trade for payment of money out of Companies Liquidation Account, every application for the reissue of I lapsed cheque or money order in res of moneys standing to the credit of Companies Liquidation Account : — Where the amount applied for does not exceed £\ ...01 Where the amount applied for exceeds ,£1 o M (2) On every payment of money out of Companies Liquidation Account, th: pence on each pound or fraction 01 pound to be charged as follows :- Where the money consists of unclaimed dividends, on each dividend paid out. Where the money consists of undis- tributed funds or balances, on the amount paid out. Liuidators' 403 [Liquidators' Winding-up UNDER Supervision. A liquidation subject to the supervision of the )ourt is really the continuation of a voluntary inding-up, and, subject to any special provision hich may be made by the Court in the order jr supervision, the accounts relating to such a quidation will be kept on the same lines and overned by the same regulations as those in oluntary liquidation ; for the provisions of sec- ions 153 to 159 dealing with the books, ■Jccounts, banking of moneys, audit, and other ers do not apply to a winding-up under .ision (section 203), but the requirements [ section 224 (as to unclaimed or undistributed • ssets and the accounts in connection with ime) apply to a winding-up under supervision. Sec heading Pending Liquidations, supra.) Voluntary Winding-up. In the event of a voluntary winding-up con- tinuing for more than one year the liquidator Must summon a general meeting of the company p the end of the first vear from the commence- J t • lent of the winding-up, and at the end of each ■keceeding year, or as soon thereafter as may be Hnvenient, and shall lay before such meeting an Bount of his acts and dealings, and of the con- flict of the winding-up during the preceding Bar. (Companies (Consolidation) Act 1908, Hetion 194.) ■Where a company is being wound up volun- mrily and the liquidation is concluded within lie year from the commencement of the Hnding-up, the liquidator is not required to file ■•y statement or account either with the Regis- I^ir of Joint Stock Companies or the Board of ■ade (see heading Pending Liquidations, pra) ; but, in any case (i.e., whether the ^nidation is extended beyond a year or not, and Bether accounts are sent to the Registrar or H(), the liquidator must, so soon as the affairs ■ the company are fully wound up, prepare a Hal account showing the manner in which such ■"ding-up has been conducted, and the pro- »tv of the company disposed of; and thereupon I must call a general meeting of the company r the purpose of laying before it the account and giving any explanation thereof. In addi- tion to the notices to be delivered in proper form and time to the members of the company, in accordance with the company's regulations, the meeting must be called by advertisement, specify- ing the time, place, and object of such meeting; and such advertisement must be published, as respects companies registered in England, in the London Gazette one month at least before the meeting. (Section 195.) Within one week after such meeting the liquidator must make a return to the Registrar of the holding of the meeting and of its date. The Registrar on receiving such return shall forthwith register it, and on the expiration of three months from the date of the registration of such return the company shall be deemed to be dissolved: if the liquidator makes default in making such return to the Registrar he shall be liable to a fine not exceeding five pounds for every day during which such default continues. (Section 195.) Note. — The Court may on due application before the three months expire order the date of dissolution to be deferred (section 195), and even after dissolution may declare the dissolution void within two years of the date thereof. (Section 223.) Although the liquidator may not be called upon to render any account unless the liquidation extends beyond a year, he will usually be asked by the Registrar for a certificate that he has no unclaimed dividends or undistributed assets in his hands or under his control. Disposal of the Company's Books. When a company has been wound up and is about to be dissolved, the books and papers of the company and of the liquidators may be dis- posed of as follows (that is to say) : — (a) In the case of a winding-up by or subject to the supervision of the Court in such way as the Court directs; (b) In the case of a voluntary winding-up in such way as the company by extraordinary resolution directs. DD 2 Liquidators'] After five years from the dissolution of the company no responsibility shall rest on the com- pany, or the liquidators, or any person to whom the custody of the books and papers has been committed, by reason of the same not being forthcoming to any person claiming to be inter- ested therein. (Section 222.) Subject to the above, the following rule applies to companies wound up by order of the Court : — Upon a liquidator resigning or being released or removed from his office, he shall deliver over to the Official Receiver, or, as the case may be, to the new liquidator, all books kept by him, and all other books, documents, papers, and accounts in his possession relating to the office of liquidator. The release of a liquidator shall not take effect unless and until he has delivered over to the Official Receiver, or, as the case may be, to the new liquidator, all the books, papers, documents, and accounts which he is by this rule required to deliver on his release. The Board of Trade may at any time during the progress of the liquidation, on the applica- tion of the liquidator or the Official Receiver, direct that such of the books, papers, and docu- ments of the company or of the liquidator as are no longer required for the purpose of the liquida- tion may be sold, destroyed, or otherwise dis- posed of. (Rule 175.) (See titles Liquidator and Special Manager.) Lloyd's. — An association consisting of under- writing and non-underwriting members. The underwriting members carry on insurance busi- ness, but independently; each member conduct- ing his own business in his own judgment at his own risk. The association also collects informa- tion from all parts of the world, and transmits same to members and others entitled to the information. Lloyd's Bonds. — Instruments under seal issued by a railway company or other corporate body, admitting indebtedness, generally for work done, and covenanting to pay the amount therein specified to the obligee with interest upon some 404 Loan future day. A Lloyd's bond given to secure » present advance is invalid, so that these bon cannot be used as a means of raising nion They will be good security for a debt other for money advanced, and even for a debt respect of a loan, if it is a past advance, and the money has been applied bona fide for the pur- poses of the borrowing company. Note. — This class of bond received its na from the counsel who originally settled terms of it. Lloyd's Certificate. — A document granted by Committee of Lloyd's Register, certifying the class and condition of a vessel, classed^ them, based on reports received from surveyors. Lloyd's Register. — A register containing ticulars of all vessels classed by the Commil of Lloyd's Register, and stating their respe orporations, and public bodies. (Sec lie Nominal Consideration.) Mket Overt. — "An open, public, and legally con- iitil.'l market," held in London every day £(pl Sunday, and in other places on certain d days. She Sale of Goods Act 1893 (section 22) pro- des that " where goods are sold in market oven according to the usage of the market, the foyer acquires a good title to the goods, pro- \k\< 1 he buys them in good faith, and without ■Otice of any defect or want of title on the part of the seller." by sample will not be sufficient to bring transaction within the above provision; the Bs themselves must be openly sold and trans- rrec! in market overt. Nor will a sale in a fete room or a transaction between sunset id sunrise afford protection to a buyer. Where, however, any goods have been Efi and the offender is prosecuted to convic- m, the property in the goods so stolen revests the person who was the owner of the goods, his personal representative, notwithstanding ly intermediate dealing with them, whether sale in market overt or otherwise. The sale of horses is regulated by special btutcs of Ph. & Mary and Elizabeth. (See le Horses.) •triage Settlement. — A settlement of property or her arrangement made before and in considera- )n of marriage (i.e., ante-nuptial) whereby, as rule, a jointure is secured to the wife and por- Ris to childrai in the event of the husband's |sith. (.s'ec title Fraudulent Conveyances, and Sttlements.) »ed Woman. — The Married Women's Property >2 provides (inter alia) that : — (1) Every woman who marries after 1882 shall he entitled to acquire, to have and in hold and to dispose of by will or other- wise as her separate property in the same manner as if she were a feme sole (and Without the intervention of any trustee), [Married all real and personal property which shall belong to her at the time of marriage, or shall be acquired by or devolve upon her after marriage, including any wages, earnings, money, and property gained or acquired by her in any employment, trade or occupation in which she is engaged, or which she carries on separately from her husband, or by the exercise of any literary, artistic, or scientific skill. (2) Every woman matricd before 1883 shall be entitled to have, to hold, and to dispose of by will or otherwise as her separate property in the same manner as if she were a feme sole (and without the inter- vention of any trustee), all real and per- sonal property, her title to which, whether vested or contingent, and whether in possession, reversion, or remainder, shall accrue after 1882, including any wages, earnings, money, and property gained or acquired by her subsequent to- hcr marriage under the circumstances already referred to. Notes. — The Married Women's Property Act 1907 declares that the •foregoing powers of a married woman as to disposal of real and personal property extend to her when acting as a trustee or personal representative. A settlement or agreement for a settle- ment made after 1st January 1908 by the husband or intended husband whether before or after marriage respecting the property of his wife or intended wife shall not be valid unless executed by her, if of full age, or confirmed by her after she attains full age. Provided that if she dies an infant any disposition made in the settlement or agreement by her husband shall bind or pass any interest in her pro- perty to which he may become entitled on her death, and which he could have bound or disposed of if the 1907 Act had not been passed. (Married Women's Property Act 1907, section 2.) Married] 416 [Married (3) A married woman shall be capable of entering into and rendering herself liable in respect of and to the extent of her separate property on any contract, and of suing and being sued either in contract or in tort or otherwise, in all respects as if she were a feme sole, and her husband need not be joined with her as plaintiff or defendant, or be made a party to any action or other legal proceeding brought by or taken against her; and any damages or costs recovered by her in any such action or proceeding shall be her separate property, and any damages or costs recovered against her in any such action shall be payable out of her separate property and not otherwise. (4) Every contract entered into by a married woman shall be deemed to be a contract entered into by her with respect to and to bind her separate property, unless the contrary be shown, and every such con- tract shall not only bind the separate property which she is possessed of or entitled to at the date of the contract, but also all separate property which she may thereafter acquire. Note. — The Married Women's Property Act 1893 has extended the above pro- visions to the extent that every such con- tract shall bind the separate estate acquired after the contract was made, although the woman possessed no separate property at the time of making the contract. ^5) Every married woman carrying on a trade separately from her husband shall in respect of her separate properly be subject to the bankruptcy laws in the same way as if she were a feme sole. Notes. — The liability of a married woman is not a personal one — it cannot come into existence unless there is a separate estate, and it is limited to that estate. On the other hand, it is not neces- sary to prove the existence of separate property at the time when a receiving order is made. against her, although existence of separate property is a that the Court will have to consider, long as the married woman is the proprietor of a business, the fact that husband has the management thereof immaterial. (In re a Debtor, 25 T, 140, C.A.) Although a judgment agait a married woman is against her, execu tion is nevertheless limited to her sep; property. It has been held that a ruptcy notice cannot be issued upon judgment against a married won* although she may be trading separal from her husband and otherwise subject the bankruptcy laws. (Re Lynes, i8<( The hearing of a bankruptcy pei against a spinster was adjourned, l before the hearing came on she married and it was held that she could not thei be made bankrupt. (In re a Debtor, T.L.R. 508.) On the other h; " trading " means so long as any debts remain unpaid which were inci by a married woman whilst actively ing on trading operations. (He Wor; 1901, 1 K.B. 309.) (6) A married woman may effect a policy 0: assurance upon (1) her own life, or the life of her husband, for her se] use, and the same and all benefit th shall enure accordingly. A policy of assurance effected — (1) By any man on his own life and oxpre to be for the benefit (a) of his wife, or (b) of his children, or (<-) of his wife and children, or ( receive and inspect the Balance Sheets of the :>mpa:n and the reports of the auditors and ther reports as is possessed by the holders of rdinary shares in the company. (Section 114.) The minimum number of members of a corn- any registered under the Companies Acts is xed at seven, except in the case of private tympanies so registered within the meaning of n 121 of the Companies (Consolidation) ,ct 1908, when the minimum number of ■ is is two; and the maximum number of pembers in such private companies is fifty, the number being reckoned exclusively of per- bns who are in the employment of the company. [See titles Contributory, Liability, and Limited iny.) Jmorandum of Association (of a Company) A ocument containing the fundamental conditions pon which a company is incorporated, under the nies (Consolidation) Act 1908. Any seven or more persons (or, where the ompany to be formed will be a private company ithin the meaning of the Act, any two or more ersons) associated for any lawful purpose may, y subscribing their names to a memorandum of ation and otherwise complying with the equipments of the Act in respect of registra- ion, form an incorporated company, with or ithout limited liability (that is to say), either— (i) A company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (termed a com- pany limited by shares) ; or \(n) A company having the liability of its members limited by the memorandum to such amount as the members may respectively thereby undertake to con- tribute to the assets of the company in the event of its being wound up (termed a company limited by guarantee) ; or (iii) A company not having any limit on the liability of its members (termed an unlimited company). (Section 2.) 419 [Memorandum Company Limited by Shares. In the case of a company limited by shares — The memorandum must state — (i) The name of the company, with " limited " as the last word in its name; (ii) The part of the United Kingdom, whether England (which includes Wales), Scotland, or Ireland, in which the registered office of the company is to be situate; (iii) The objects of the company; (iv) That the liability of the members is limited; (v) The amount of share capital with which the company proposes to be regis- tered, and the division thereof into shares of a fixed amount. Every subscriber of the memorandum must take at least one share and must write opposite his name the number of shares he takes. (Section 3.) Company Limited by Guarantee. In the case of a company limited by guarantee — The memorandum must state — (i) The name of the company, with " limited " as the last word in its name; (ii) The part of the United Kingdom, whether England (which includes Wales), Scotland, or Ireland, in which the regis- tered office of the company is to be situate; (iii) The objects of the company; (iv) That the liability of the members is limited; (v) That each member undertakes to con- tribute to the assets of the company in the event of its being wound up while he is a member, or within one year afterwards, for payment of the debts and liabilities of the company contracted before he ceases to be a member, and of the costs, charges, and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be EE 1 Memorandum] required, not exceeding a specified amount. If the company has a share capital — (a) The memorandum must also state the amount of share capital with which the company proposes to be registered and the division thereof into shares of a fixed amount; (b) Every subscriber of the memorandum must take at least one share; (c) Each subscriber must write opposite to his- name the number of shares he takes. (Section 4.) In the case of a company limited by guarantee and not having a share capital, and registered on or after the first day of January nineteen hundred and one, every provision in the memo- randum or articles or in any resolution of the company purporting to give any person a right to participate in the divisible profits of the com- pany otherwise than as a member shall be void. For the purpose of the provisions of the Act relating to the memorandum of a company limited by guarantee and of this section, every provision in the memorandum or articles, or in any resolution, of any company limited by guarantee and registered on or after the first day of January nineteen hundred and one, purporting to divide the undertaking of the company into shares or interests shall be treated as a provision for a share capital, notwithstanding that the nominal amount or number of the shares or interests is not specified thereby. (Section 21.) A company limited by guarantee and registered on or after the first day of January nineteen hundred and one may, if it has a share capital, and is so authorised by its articles, increase or reduce its share capital in the same manner and subject to the same conditions in and subject to which a company limited by shares may increase or reduce its share capital under the provisions of the Act. (Section 56.) Unlimited Company. In the case of an unlimited company — (1) The memorandum must state — (i) The name of the company; 420 [Memorandum (ii) The part of the United Kingdom, whether England (which includes Wales), Scotland, or Ireland, in which the regis- tered office of the company is to be situa (iii) The objects of the company. (2) If the company has a share capital — (i) Every subscriber of the memorani must take at least one share; (ii) Each subscriber must write op| to his name the number of shares he t (Section 5.) The memorandum of association in the case < a company limited by shares may, and in case of a company limited by guarantee unlimited must, when registered, be ac panied by articles of association signed by subscribers to the memorandum of associatidi and prescribing regulations for the company, the memorandum (in the case of a comp limited by shares) is not accompanied by artic or in so far as the articles do not exclude or I modify the regulations contained in " Tabli the last-mentioned regulations are, so far applicable, the regulations of the company the same manner and to the same extent as they were contained in duly registered artic (Sections 10 and 11.) (See title Article Association.) As between the memorandum and articles, the former is to be regarded as dominant instrument. Contemporaneous (not articles as amended) may, however, | referred to, to supply the construction to placed upon a doubtful phrase in the me randum, but this must be cautiously done, the articles cannot amplify or expand the me randum. Every person having dealings witl company, whether a member or a creditor otherwise, is deemed to have constructive notice 1 of the memorandum and articles of associa- 1 tion, as regards the external position of company. The memorandum has been describe as the charter of the company, defining the beyond which the action of the company can go, although within that area the shareholders may make such regulations for their government as they may think fit, subj< Mlnorandum] ways to the provisions of the Companies Act, id to general principles of law, e.g., a com- my cannot issue shares at a discount, even ough a clause in the memorandum purports to nfer such a power. It is usual in practice for e signatories to subscribe for one share only, though more are being taken in fact. But, ice the 1900 Act, where a company issues an vitation to the public to subscribe for shares e directors generally sign for the whole of their lalification shares (if any) to avoid the expense a specially prepared contract, which, since 00, would otherwise need to be filed with the »gistrar. The contents of the memorandum of associa- m must be set out in every prospectus issued or on behalf of a company. (See title tus.) memorandum may be in writing (though i practice it is printed), and must bear a 10s. amp as if it were a deed, and be signed by ich subscriber in the presence of, and be jested by, a witness (section 6), and on the lustration of the memorandum the company id the members thereof are bound thereby and I the same extent as if each member had sub- IHd his name and affixed his seal thereto, and ■fere were in the memorandum, on the part of Inse'.f. his heirs, executors, and administrators, ■tenants to observe all the provisions of such l'morandum subject to the provisions of the dmpanies (Consolidation) Act 1908. (Section I The signatories to the memorandum are ambers of the company on registration of the ent, and even though no shares have been sotted to them, or their names have not been [iced upon the Register, they can demand the Kres on the one hand, and are liable thereon d the other, unless the whole of the shares of m company have been allotted to other persons. hole. — A limited company may sign the pwnorandum by its duly authorised agent. On registration of the memorandum a regis- Ition fee is payable, rising by scale, according the capital of the company, from £2 (the nimum) to £50 (the maximum), and, in 421 [Memorandum addition thereto, there is payable an ad valorem duty at the rate of 5s. per centum on the capital of the company. Every company incorporated outside the United Kingdom which establishes a place of business within the United Kingdom shall within one month from the establishment of such place of business file with the Registrar a certified copy of the charter, statutes, or memo- randum and articles of association, or other instrument constituting or defining the constitu- tion of the company, and if the instrument is not written in the English language a certified trans- lation thereof, and in the event of any alteration being made in any such instrument, notice thereof must also be filed with the Registrar. (Section 274.) A share transfer office is a " place of busi- ness " within the meaning of the section. Penalties are incurred if a company fails to comply with these provisions. With regard to the various clauses of the memorandum of a company : — Name. A company may not be registered by a name identical with that by which a company in existence is already registered or so nearly resembling that name as to be calculated to deceive, except where the company in existence is in the course of being dissolved and signifies its consent in such manner as the Registrar requires. If a company, through inadvertence or other- wise, is, without such consent as aforesaid, registered by a name identical with that by which a company in existence is previously registered, or so nearly resembling it as to be calculated to deceive, the first-mentioned com- pany may, with the sanction of the Registrar, change its name. Note. — Special permission is required before certain words, such as " Royal," can be regis- tered as part of the name of a company. In practice, it is found advisable to obtain the Memorandum] 422 Memorandu provisional assent of the Registrar to a proposed name for a new company before proceeding with the printing and other arrangements. Any company may, by special resolution and with the approval of the Board of Trade signified in writing, change its name. Where a company changes its name, the Registrar shall enter the new name on the register in place of the former name, and shall issue a certificate of incorporation altered to meet the circumstances of the case. The change of name shall not affect any rights or obligations of the company, or render defec- tive any legal proceedings by or against the company, and any legal proceedings that might have been continued or commenced against it by its former name may be continued or com- menced against it by its new name. (Section 8.) Every limited company — (a) shall paint or affix, and keep painted or affixed, its name on the outside of every office or place in which its business is carried on, in a conspicuous position, in letters easily legible : (b) shall have its name engraven in legible characters on its seal : (c) shall have its name mentioned in legible characters in all notices, advertisements, and other official publications of the com- pany, and in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods purporting to be signed by or on behalf of the com- pany, and in all bills of parcels, invoices, receipts, and letters of credit of the company. Failure to comply with the foregoing pro- visions renders the company and those of its officers who wilfully permit the default liable to penalties. (Section 63.) Every company incorporated outside the United Kingdom, which establishes a place of business in the United Kingdom, and which uses the word " limited " as part of its name, shall (a) in every prospectus inviting subscriptions for its shares or debentures in the United King- dom, state the country in which the coi incorporated; and (b) conspicuously • every place where it carries on bu United Kingdom the name of the compan the country in which the company is porated; and (c) have the name of the co and of the country in which the compa incorporated mentioned in legible characte all billheads and letter-paper, and in all no advertisements, and other official pubi; the company. The company and every officer or agent company which fails to comply with requirements shall be liable to penalties. \ transfer office is a place of business withii meaning of the section. (Section 274.) Any association may be registered with lin liability without the addition of the word "lin to the name, on the Board of Trade being fied that it is being formed for the pur promoting commerce, art, science, religio charity, &c, and that payment of divider the members is prohibited — the profits (ifJ to be applied in promoting the objects company. (Section 20.) Such a company may not, without the tion of the Board of Trade, whether without the word " limited " or not. hold than two acres of land ; the Board of Trade I however, by licence empower any such con to hold lands in such quantity and subje such conditions as the Board thinl (Section 19.) The licence to register without the add of the word " limited " to the name may time be revoked by the Board of Trade. 20.) Registered Office. Every company shall have a registered to which all communications and notices ma addressed. Notice of the situation of the registered and of any change therein, shall be given Registrar of Companies, who shall record same. (Section 62.) Mmorandum] 4 2 3 Failure to comply with these requirements riders a company liable to penalties. The registered office of a company is generally, ough not necessarily, the domicile of the mpanv. The registered office must be situate that part of the United Kingdom specified in e memorandum of association (Wales for is purpose is deemed part of England), but it not necessary that it be situate where the mpanv carries on business, although the place, the principal place, of business is generally lopted as the registered office. (See also title jreign (Incorporated) Companies.) Objects of the Company. This clause is probably the most important irt of the memorandum. As a company cannot gaily act beyond the limits prescribed therein, e objects are usually stated very fully and cover wide area, because the alteration of such ijects is attended with some difficulty, the hire of such permissible alterations being irrowly defined. (See infra.) The more important general powers set out the objects clause of the memorandum, as stinct from those specially applicable to the irticul.tr company, are: — (i) to carry on busi- «s abroad, (2) to hold shares in other com- mies, (3) to borrow money and issue deben- res, and inter alia to create a charge upon e uncalled capital, (4) to sell the undertaking : a whole either for cash or shares in another impany, and such like extraordinary powers. See title Reconstruction.) With regard to possible alterations of the pjects of a company, it is provided as follows : — Subject to the provisions of this section a com- ity may, by special resolution, alter the pro- Lsions of its memorandum with respect to the pjects of the company, so far as may be .juircd to enable it — (o) to carry on its business more economically or more efficiently; or [Memorandum (b) to attain its main purpose by new or improved means ; or (c) to enlarge or change the local area of its operations; or (d) to carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company; or (e) to restrict or abandon any of the objects specified in the memorandum. The alteration shall not take effect until and except in so far as it is confirmed on petition by the Court. Before confirming the alteration the Court must be satisfied — (a) that sufficient notice has been given to every holder of debentures of the company, and to any persons or class of persons whose interests will, in the opinion of the Court, be affected by the alteration; and (6) that, with respect to every creditor who in the opinion of the Court is entitled to object, and who signifies his objection in manner directed by the Court, either his consent to the alteration has been obtained or his debt or claim has been discharged or has determined, or has been secured to the satisfaction of the Court : Provided that the Court may, in the case of any person or class, for special reasons, dispense with the notice required by this section. The Court may make an order confirming the alteration either wholly or in part, and on such terms and conditions as it thinks fit, and may make such order as to costs as it thinks proper. The Court shall, in exercising its discretion under this section, have regard to the rights and interests of the members of the company or of any class of them, as well as to the rights and interests of the creditors, and may, if it thinks tit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the Court for the purchase of the interests of dissentient members; and may give such direc- tions and make such orders as it may think Memorandum] 424 [Memorandum expedient for facilitating or carrying into effect any such arrangement : Provided that no part of the capital of the company may be expended in any such purchase. An office copy of the order confirming the alteration, together with a printed copy of the memorandum as altered, shall, within fifteen days from the date of the order, be delivered by the company to the Registrar of Companies, and he shall register the same, and shall certify the registration under his hand, and the certificate shall be conclusive evidence that all the require- ments of this Act with respect to the alteration and the confirmation thereof have been complied with, and thenceforth the memorandum so altered shall be the memorandum of the company. The Court may by order at any time extend the time for the delivery of documents to the Registrar under this section for such period as the Court may think proper. If a company makes default in delivering to the Registrar of Companies any document required by this section to be delivered to him, the company shall be liable to a fine not exceed- ing ten pounds for every day during which it is in default. (Companies (Consolidation) Act 1908, section 9.) Liability. As already indicated, a company may be registered with the liability of the members either — (1) limited to the amount (if any) unpaid on the shares held by them respectively, or (2) limited to the amount (if any) unpaid in respect of their guaranteed amounts respectively, or (3) unlimited. (Section 2.) Provision is made in the Companies (Con- solidation) Act 1908 (section 57) for the regis- tration of an unlimited company as a limited company. Provision is also made whereby a company can be formed with limited liability as regards its members, but with the liability of its direc- tors or managers or its managing din unlimited (section 60), and an existing li company, if authorised by its articles, may special resolution alter its memorandum so as render unlimited the liability of its directors managers or of any managing director. (Sectii 61.) These provisions are, ho%vever, not advantage of in practice. (See title Liability. Capital. A company limited by shares, if so autho by its articles (as originally framed or as by special resolution), may alter the cond of its memorandum as follows (that is to say may — (a) increase its share capital by the iss new shares of such amount as it expedient ; (6) consolidate and divide all or any share capital into shares of larger an than its existing shares; (c) convert all or any of its paid-up into stock, and reconvert that stock paid-up shares of any denomination ; (d) subdivide its shares, or any of them, shares of smaller amount than is fixe the memorandum, so, however, that in subdivision the proportion between amount paid and the amount, if unpaid on each reduced share shall same as it was in the case of the from which the reduced share is der (e) cancel shares which, at the date of j passing of the resolution in that have not been taken or agreed taken by any person, and diminish 1 amount of its share capital by the amo of the shares so cancelled. The powers conferred by this section respect to subdivision of shares must be cised by special resolution. Where any alteration has been made un this section in the memorandum of a comp every copy of the memorandum issued after date of the alteration shall be in accordance the alteration. .emorandum If a company makes default in complying with this provision it shall be liable to a fine not ding one pound for each copy in respect of which default is made; and every director and nanager of the company who knowingly and wilfully authorises or permits the default shall je liable to the like penalty. A cancellation of shares in pursuance of this n shall not be deemed to be a reduction of hare capital within the meaning of this Act. (Section 41.) of the exercise of the foregoing powers nust be given to the Registrar of Joint Stock Companies. (Sections 42 and 44.) A company limited by shares may, by special ion confirmed by an order of the Court, v the conditions contained in its memo- mdum so as to reorganise its share capital, hether by the consolidation of shares of ■rent classes or by the division of its shares to shares of different classes : Provided that no preference or special attached to or belonging to any class shares shall be interfered with except by a solution passed by a majority in number of areholders of that class holding three-fourths Be siiare capital of that class and confirmed a meeting of shareholders of that class in the ame manner as a special resolution of the com- any is required to be confirmed, and every reso- lltion so passed shall bind all shareholders of the lass. Where an order is made under this section an ffice copy thereof shall be filed with the Regis- rar of Companies within seven days after the laking of the order, or within such further time s the Court may allow, and the resolution shall Dt take effect until such a copy has been so led. (Section 45.) Subject to confirmation by the Court, a com- Ittiy limited by shares, if so authorised by its rt'ulis, may by special resolution reduce its hare capital in any way, and in particular without prejudice to the generality of the fore- rfng power) may — 425 [Memorandum (a) Extinguish or reduce the liability on any of its shares in respect of share capital not paid up; or (b) Either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or (c) Either with or without extinguishing or reducing liability on any of its shares, pay off any paid-up share # capital which is in excess of the wants of the company, and may, if and so far as is necessary, alter its memorandum by reducing the amount of its share capital and of its shares accordingly. (Section 46.) Where a company has passed and confirmed a resolution for reducing share capital it may apply by petition to the Court for an order con- firming the reduction. (Section 47.) On and from the confirmation by a company of a resolution for reducing share capital, or where the reduction does not involve either the diminution of any liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, then on and from the presentation of the petition for confirming the reduction, the company shall add to its name, until such date as the Court may fix, the words " and reduced," as the last words in its name, and those words shall, until that date, be deemed to be part of the name of the company : Provided that, where the reduction does not involve either the diminution of any liability in respect of unpaid share capital or the payment to an)- shareholder of any paid-up share capital, the Court may, if it thinks expedient, dispense altogether with the addition of the words " and reduced." (Section 48.) Where the proposed reduction of share capital involves either diminution of liability in respect of unpaid share capital or the payment to any shareholder of any paid-up share capital, and in any other case if the Court so directs, every creditor of the company who at the date fixed by the Court is entitled to any debt or claim which, Memorandum] if that date were the commencement of the winding-up of the company, would be admissible in proof against the company, shall be entitled to object to the reduction. The Court shall settle a list of creditors so entitled to object, and for that purpose shall ascertain, as far as possible without requiring an application from any creditor, the names of those creditors and the nature and amount of their debts or claims, and may publish notices fixing a day or days within which creditors not entered on the list are to claim to be so entered or are to be excluded from the right of objecting to the reduction. Where a creditor entered on the list whose debt or claim is not discharged or determined does not consent to the reduction, the Court may, if it thinks fit, dispense with the consent of that creditor, on the company securing pay- ment of his debt or claim by appropriating, as the Court may direct, the following amount; (that is to say) — (i) If the company admits the full amount of his debt or claim, or, though not admitting it, is willing to provide for it, then the full amount of the debt or claim ; (ii) If the company does not admit or is not willing to provide for the full amount of the debt or claim, or if the amount is contingent or not ascertained, then an amount fixed by the Court after the like inquiry and adjudication as if the com- pany were being wound up by the Court. (Section 49.) The Court, if satisfied, with respect to every creditor of the company who under this Act is entitled to object to the reduction, that either ids consent to the reduction has been obtained or his debt or claim has been discharged or has determined, or has been secured, may make an order confirming the reduction on such terms and conditions as it thinks fit. (Section 50.) The Registrar of Companies on production to him of an order of the Court confirming the reduction of the share capital of a company, and 426 [Memorandum the delivery to him of a copy of the of a minute (approved by the Court), shows with respect to the share capital of the com as altered by the order, the amount of the si capital, the number of shares into which it ii be divided, and the amount of each sh the amount (if any) at the date of thi tion deemed to be paid up on each share, register the order and minute. On the registration, and not before, the re tion for reducing share capital as confirmed the order so registered shall take effect. Notice of the registration shall be publish such manner as the Court may direct. The Registrar shall certify under his hand registration of the order and minute, and certificate shall be conclusive evidence that the requirements of this Act with respe reduction of share capital have been comp] with, and that the share capital of the is such as is stated in the minute. (Section The minute when registered shall be dee to be substituted for the corresponding part the memorandum of the company, and sha valid and alterable as if it had been origin contained therein ; and must be embodied every copy of the memorandum issued after registration. (Section 52.) In any case of reduction of share capital, Court may require the company to publish the Court directs the reasons for reduction, such other information in regard thereto as Court may think expedient with a view to proper information to the public, and, if Court thinks fit, the causes which led to reduction. (Section 55.) Where a company had a reserve fund ere out of undistributed profits the Court tioned a scheme for the reduction of its ca which provided for an apportionment of losses between capital and the reserve f (Re Hoare sue both partners. ■Ullage. — A dwelling-house, its outbuildings, and He adjacent land (if any) assigned to the use ■ereof. Brie System. — The system of weights and Measures involving the decimal system, wherein He standard unit in the ascending series is Multiplied by ten, and in the descending series is ■Vided by ten. Under this system linear llrface and cubic measure are related to weight lid volume. The system is based upon the Metre as the unit of measurement, which is lUted to be ^oo^o part of the quadrant of He meridian, and equal to 39.37079 English Hches. ■The unit of lineal measure is the metre. 10 millimetres = 1 centimetre. 100 millimetres } or V = 1 decimetre. 10 centimetres I = 1 metre = 39-37079 English inches. 1,000 millimetres ^ or 100 centimetres or 10 decimetres , 10 metres = 1 decametre. 100 metres = 1 hectometre. 1,000 metres = 1 kilometre = 1093-633 English yards. 10,000 metres = 1 myriametre Superficial Measure : — 100 square metres = 1 are = 119-6 English square yards. 10,000 square metres = 1 hectare = 2-471 English acres. Capacity or Volume Measure :— 10 litres = 1 decalitre = 2-2 English gallons. 100 litres = 1 hectolitre = 22-0 English gallons. 1,000 litres = 1 kilolitre = 220-0 English gallons. Solid or Cubic Measure: — 1 cubic metre = 1 stere. 10 cubic metres = 1 decastere. Weight Measure : — 1,000 milligrammes = 1 centigramme. 100 centigrammes = 1 decigramme. 10 decigrammes = 1 gramme. 10 grammes = 1 decagramme. 100 grammes = 1 hectogramme. 1,000 grammes = 1 kilogramme = 2-204621 lbs. avoirdupois. A gramme is a cubic centimetre of distilled water at the temperature of maximum density, and a cubic decimetre of such water is a litre, and as a consequence the lineal capacity and weight measures of the metric system are all connected, thus : — {£, metre) 1 = 1 cubic decimetre. 1 cubic decimetre of water = 1 litre. i litre =1 kilogramme. The metric system as a decimal system of weights and measures based upon the metre as a standard unit must be distinguished from decimal systems of coinage, which deal with values, and with which obviously the metre as a standard unit has no connection. Mineral Rights Duty.— There shall be charged, levied, and paid for the financial year ending the thirty-first day of March nineteen hundred and ten and every subsequent financial year on the rental value of all rights to work minerals and of all mineral wayleaves, a duty at the rate in each case of one shilling for every twenty shillings of that rental value. Mineral] 430 Minimum The rental value shall be taken to be — (a) Where the right to work the minerals is the subject of a mining lease, the amount of rent paid by the working lessee in the last working year in respect of that right ; and (b) Where minerals are being worked by the proprietor thereof, the amount which is determined by the Commissioners to be the sum which would have been received as rent by the proprietor in the last work- ing year if the right to work the minerals had been leased to a working lessee for a term and at a rent and on conditions customary in the district, and the minerals had been worked to the same extent and in the same manner as they have been worked by the proprietor in that year : Provided that the Commissioners shall cause a copy of their valuation of such rent to be served on the proprietor; and (c) In the case of a mineral wayleave, the amount of rent paid by the working lessee in the last working year in respect of the wayleave : Provided that if in any special case it is shown to the Commissioners that the rent paid by a working lessee exceeds the rent customary in the district, and partly represents a return for expenditure on the part of any proprietor of the minerals which would ordinarily have been borne by the lessee, the Commissioners shall substitute as the rental value of the right to work the minerals or the mineral wayleaves, as the case may be, such rent as the Commis- sioners determine would have been the rent customary in the district if the expenditure had been borne by the lessee. Note. — The expression " proprietor " includes a person entitled to the possession of land com- prised in a lease for any long term of years to which section 65 of the Conveyancing and Law of Property Act 1881 applies. " Rent " includes a fine or premium. Every proprietor of any minerals and every person to whom rent is paid in respect of any right to work minerals or of any mineral leave must (subject to penalties in case default) furnish to the Commissioners request particulars of rents received minerals worked. Mineral rights duty shall not be charged in respect of common brick clay, common brick earth or sand, chalk, lime stone, or gravel. (Finance (1909-10) Act 1910, section 20.) An immediate lessor paying the duty who is himselt a lessee ot the right to work the minerals or other wayleaves shall be entitled to deduct the duty from the rent paid by him his lessor. Where in any special case mineral rights has been charged on a rental value based on i rent which has been substituted under the pro- visions of this Act for the rent actually pay- able by the working lessee, or where in any special case the rental value with reference to which increment value duty is charged has been reduced under the provisions of this Act for the purposes of the collection of that duty, the Commissioners shall, on the application of am lessor from whose rent a deduction may made in respect of mineral rights duty 01 increment value duty, as the case may be, mak< a corresponding substitution or reduction a? regards that rent, if they consider that tht grounds for the substitution or reduction, case may be, are applicable in the case rent with respect to which the applicatii made. (Ibid, section 21.) Rating authorities are exempt from pa of mineral rights duty. (Ibid, section 35.) Minimum Rent. — See title Royalty. Minimum Subscription. — Minimum subsc is the term used in the Companies (Cons tion) Act 1908 in connection with the proviso therein to control the first allotment of sha directors of companies other than " pr companies " as defined by section 121. minimum subscription on which the dir may proceed to allotment is as follows : — (1) In the case of any share capital offe the public for subscription : — Tered ■ jVnimum] 43 1 [Minutes (a) The amount (if any) fixed by the memorandum or articles of associa- tion and named in the prospectus as the minimum subscription ; or (b) If no amount is so fixed and named, then the whole amount of the share capital so offered for subscription. (2) In the case of share capital payable in cash of a company which does not issue any invitation to the public to subscribe for its shares : — (a) The amount (if any) fixed by the memorandum or articles of associa- tion and named in the statement in lieu of prospectus as the minimum subscription ; or (b) If no amount is so fixed and named, then the whole amount of the share capital other than that issued or agreed to be issued as fully or partly paid up otherwise than in cash. The amounts so fixed and named or the whole : lounts aforesaid, as the case may be, must be rkoned exclusively of any amount payable i lerwise than in cash. (Companies (Consoli- (tion) Act 1908, section 85.) N'ot only must the minimum amount be sub- jibed for, but not less than 5 per cent, of the il amount of each share (payable in cash) nst have been paid to and received by the com- py. If the conditions of the minimum sub- s' iption are not complied with on the expiration d forty days after the first issue of the pro- S'Ctus, all moneys received from applicants for must be returned forthwith without 1 Brest. hole. — The Act requires the amount to be 1. but in Re West Yorkshire Darracq Icy, /.iiii. (25 T.L.R. 77) it was held that a percentage of the shares offered was a ent compliance with the section. titles Allotment; Commencement of ess, restrictions on; Prospectus; Statement of Prospectus.) r ■See title Infant. Mint Par of Exchange.— Sec title Par of Exchange. Minutes and Minute Book. — Bankruptcy. The chairman of every meeting shall cause minutes of the proceedings at the meeting to be drawn up, and fairly entered in a book kept for that purpose, and the minutes shall be signed by him or by the chairman at the next ensuing meeting. (Bankruptcy Act 1883, 1st Schedule, Rule 25.) A minute of proceedings at a meeting of creditors under this Act, signed at the same or the next ensuing meeting, by a person describing himself as, or appearing to be, chairman of the meeting at which the minute is signed, shall be received in evidence without further proof. Until the contrary is proved, every meeting of creditors in respect of the proceedings whereof a minute has been so signed shall be deemed to have been duly convened and held, and all resolutions passed or proceedings had thereat to have been duly passed or had. (1883 Act, section 133.) The Official Receiver, or, as the case may be, the trustee, shall send to the Registrar of the Court in which the matter is pending a copy, certified by him, of every resolution of a meeting of creditors. (Rule 255.) (Sec title Record Book.) Companies. Every company shall cause minutes of all pro- ceedings of general meetings and (where there are directors or managers) of its directors or managers to be entered in books kept for that purpose. Any such minute if purporting to be signed by the chairman of the meeting at which the pro- ceedings were had, or by the chairman of the next succeeding meeting, shall be evidence of the proceedings. Until the contrary is proved, every general meeting of the company or meeting of directors or managers in respect of the proceedings whereof minutes have been so made shall be deemed to have been duly held and convened, and all proceedings had thereat to have been duly had, and all appointments of directors, Minutes] 432 [Misfeasance managers, or liquidators, shall be deemed to be valid. (Companies (Consolidation) Act 1908, section 71.) In large companies the administration of affairs is usually divided, and committees are formed amongst the directors, in which case it is usual to have separate Minute Books for each committee, and in other cases the minutes of the general meetings of members are recorded in one book, and those of meetings of directors or of any committee in another. The auditor of a company should carefully inspect the Minute Books, and take short extracts therefrom of all resolutions or proceed- ings which affect the accounts, so that he may ascertain that the directions of the share- holders or of the directors have been duly observed. On second and subsequent audits, the auditor, if not invited to attend the annual general meeting, should examine the Minute Book to see that it is therein recorded that his report upon the accounts for the previous year was read to the members. Note. —An auditor is entitled to see all the books of the company. (Companies (Consolida- tion) Act 1908, section 113.) Company Liquidation. The chairman (of a meeting of creditors or contributories) shall cause minutes of the pro- ceedings at the meeting to be drawn up and fairly entered in a book kept for that purpose, and the minutes shall be signed by him or by the chairman of the next ensuing meeting. (Winding-up Rules 1909, Rule 138.) (See title Record Book.) Misdemeanour.— A breach of the law, which does not amount to, and is not so serious as, a felony. (See titles Debtors Act, Discharge of a Bankrupt.) Misfeasance.— Where in the course of winding up a company it appears that any person who has taken part in the formation or promotion of the company, or any past or present director, manager, or liquidator, or any officer of the com- pany, has misapplied or retained or liable or accountable for any money or pro of the company, or been guilty of any feasance or breach of trust in relation to company, the Court may, on the application the Official Receiver, or of the liquidator, any creditor or contributory, examine into- conduct of the promoter, director, mana liquidator, or officer, and compel him to repay restore the money or property or any thereof respectively with interest at such ra the Court thinks just, or to contribute sum to the assets of the company by way compensation in respect of the misapplicatk retainer, misfeasance, or breach of trus Court thinks just. This section shall apply notwithstanding the offence is one for which the offender ma criminally responsible. Where in the case of a winding-up order for payment of money is made this section, the order shall be deemed to final judgment within the meaning of graph (g) of subsection (1) of section 4 oi Bankruptcy Act 1883 (Companies (Cons tion) Act 1908, section 215) — that is to s bankruptcy notice may be founded upon order. It would appear that mere loss on realii in a winding-up as compared with the fig on the Balance Sheet immediately preceding winding-up is not of itself evidence that auditor has been guilty of misfeasance, if it can be shown that the auditor has exercised reasonable care and skill in the charge of his duties, the company's may not have been diminished as a consequence. Where a liquidator distributed the assets company without providing for a sum of inc tax due to the Crown it was held that he been guilty of misfeasance within section the Companies (Winding-up) Act 1890, now 1 tion 215 of the Companies (Consolidation 1908, and he was ordered to pay the income personally. (New Zealand Joint Stock General Corporation, 1907.) INsfeasance] 433 If in any proceeding against a director, or lerson occupying the position of director, of a ompany for negligence or breach of trust it ippears to the Court hearing the case that the lirector or person is or may be liable in respect if the negligence or breach of trust, but has icted honestly and reasonably, and ought fairly be excused for the negligence or breach of rust, that Court may relieve him, either wholly ir partly, from his liability on such terms as the ourt may think proper. (Companies (Con- olidation) Act 1908, section 279.) Uptake. — (1) Where two parties are brought into con- tractual relationship by a third party, who by fraud or negligence has induced one of the parties to contract with a person unacceptable to him, or to enter into a transaction which was not contemplated by him ; or (2) Where one of two parties mistakes the intention of the other to the knowledge of the latter ; or (3) Where the subject-matter of a contract has ceased to exist at the time the con- tract is entered into or where there is a mutual error as to its identity ; he contract may be set aside or otherwise iffected, or there may be no contract at all — JCcording to the precise circumstances. Where one is induced by mistake of fact to pay 1 sum of money to another he may recover the imount, provided that the payer would have been iable to make the payment had the particular nducement been a fact. But money paid under Kistake of law is not recoverable since " every is presumed to know the law." Policy. — One which combines the charac- iristics of a voyage and of a time policy. Aney Lenders' Act 1900.— See title Usury. . [Mortgage neys in Advance of Calls. — See title Interest on lone vs in Advance of Calls. Monometallism. — A system of currency based upon a single standard of value, with one metal only a legal tender for any and every amount; as dis- tinct from a system based upon a double standard, called Bimetallism. Monopoly. — An exclusive privilege; a licence from the Crown for the sole buying, selling, making, working, using, or otherwise dealing in any- thing. Monopolies were abolished in 1623 by the Statute of Monopolies, but the Act excepted patents for 14 years for the sole working of new manufactures by the true and first inventors thereof. (See title Patent Right.) Month.— In every Act of Parliament passed after 1850, the word " month " means calendar month, unless the contrary is expressed. Formerly the word " month " meant lunar month, or 28 days. The Bills of Exchange Act specially adopts the "calendar month for bills and notes, and in the absence of a contrary intention a calendar month is implied as against a lunar month in all com- mercial documents. Moral Consideration. — See title Consideration. Mortality Tables. — Tables based upon observa- tions on a large number of lives, recording the numbers living and dying at every age, so that by actuarial calculations information is afforded whereby a life assurance company or others may ascertain (1) the premiums payable in respect of life assurance, (2) the sum payable in respect of a life annuity, or (3) any other matter dependent upon the duration of human life. (See titles Expectation of Life, Life Annuity.) Mortgage. — A conditional transfer of property to secure payment of a sum of money (generally with interest thereon) at a given date. L'pon the payment of the moneys thereby secured the interest of the mortgagee in the property is annulled, but upon default by the mortgagor the legal estate (at common law) is perfected in the mortgagee. Equity, however, treats this as a penalty, and confers upon the mortgagor a right (under conditions) to redeem the property. FF Mortgage] 434 [Municipal After the time fixed for payment has passed, the mortgagor must give the mortgagee six months' notice of his intention to redeem the mortgaged property, or pay six months' interest in lieu thereof. (See titles Bill of Sale, Con- solidation, Equitable Mortgage, Equity of Redemption, Fixtures, Foreclosure, Legal Mortgage, Receiver, Register and Registration of Mortgages, Tacking.) Mortgage (ol a Ship). — A registered ship or a share therein may be made a security for a loan, and the instrument creating the security (in the prescribed form or as near thereto as circum- stances permit) may be recorded in the Custom House Register Book at the ship's port of registry. The Registrar notifies on each mortgage the day and hour of registration, and if there are more mortgages than one in respect of the same ship, the mortgagees shall have priority, one over the other, according to the date of registry, notwithstanding any notice, whether express, implied or constructive, and irrespective of the dates of the various mortgages. When a registered mortgage is discharged it may be produced to the Registrar so that the original entry in the Register may be annulled. A registered mortgage of a ship or share therein takes the subject-matter out of the order or disposition of the mortgagor, and in the event of his bankruptcy, such ship or share will be subject to the preferred rights of the mortgagee, provided the mortgage was duly registered before the commencement of the bank- ruptcy (i.e., the date of the first act of bank- ruptcy proved as having been committed by the mortgagor within three months next preceding the date of the presentation of the petition) . The Register may be inspected by any person on payment of a fee not exceeding one shilling, and it is advisable (and usual) for an auditor of a ship's accounts to avail himself of this opportunity, so that he may satisfy himself that no mortgage is in existence (at all events regis- tered) other than those disclosed, if any. A mortgage of a ship passes all articles sary for the equipment of the ship in her ture, on board when the mortgage was and all articles of a like kind brought on afterwards in substitution for those which there when the mortgage was given. (Colt v. Chamberlain, 25 O.B.D. 328.) But i doubtful whether this rule extends to sumable articles, or to articles used for accommodation of passengers of a special For example, the cabin fittings of a I would be part of the ship, and probably stores for maintenance of the passengers crew, but stocks of wines and spirits, and (l a catering plant (which must vary according the season and to circumstances) would bably be held not to pass under a mortgage ship. Mortgages, Register of. — See title Register ] Registration of Mortgages. Movable Property. — Personalty ; goods and movables. (See titles Estate Duty, Leg; Duty.) Municipal Accounts. — Audit.— The audit of the accounts of municipa corporations is provided for by the Munici| Corporations Act 1882. The auditors are in number, two, called elective auditors, elected by the burgesses (by ballot if more two are nominated), the third being appoi by the mayor and called major's auditor elective auditor must be qualified to be a cillor, but may not be a councillor, or the clerk or treasurer. The mayor's auditor be a councillor. (See title Borough Audita Accounts. — The treasurer is required to up the accounts of the borough half-yiarl; such dates as may be appointed. On the pletion of the second half-year in each fin: year, the accounts for the year must be c< dated and issued in printed form. The Government Board require the annual rei to consist of receipts and payments only that they shall be merely an analysed Account without taking into account ami outstanding, whether assets or liabilities, at Jtinicipal] ling or end of the period. Some local authori- 5ue their printed accounts also in this form, >ut ns such an account does not ordinarily xhibit the true financial result of a particular >criod, other authorities have adopted the iractice of issuing the Account of Receipts and \ivments together with an Income and Expendi- \ccount. This enables them, while com- ilying with the requirements of the Local nment Board, to show the true result of nod under review. As to the Balance Sheet, there have long been lifferences of opinion among accountants as to he best method of stating the assets, some con- ending that all capital expenditure, whatever its ature, should appear as an asset at its original others consider that only that portion ihich represents realisable property should tand permanently in the Balance Sheet, the emaining assets being gradually written-off out f Revenue; while a third contention is that all le assets should stand in the Balance Sheet, but t the amounts remaining due in respect of each espectivelv (i.e., at the unpaid amount of the >an by means of which they have been cquired), or, in other words, that they should e " depreciated " periodically by such propor- ons of the Sinking Fund instalments as ;present Capital repayments. The Departmental Committee appointed to iquire into the accounts of local authorities lade a report in July 1907, and amongst other lings recommended (1) that the most efficient stem of account keeping for local authorities a system of income and expenditure in which 1 incomings and outgoings pertaining to any iven period, whether actually received and dis- Jrsed or not, are included in the accounts of lat period; (2) that full accounts should be ;pt of stores and accurate Cost Accounts pre- Jred of work executed by direct labour tiployed by the local authority; (3) that parate Revenue Accounts, Net Revenue ccounts, and Balance Sheets should be pre- tred of all trading undertakings; (4) that here tin; loan in respect of a given asset has to t repaid within a period not longer than the 435 [Municipal probable life of the asset (due allowance being made for contingencies and the risk of obso- lescence), the repayment of the debt may be regarded as provision for depreciation, but if the period allowed for repayment of the loan be excessive, it may be necessary to make further provision for depreciation ; (5) that all assets having an abiding or realisable value, including the whole of the assets and capital outlays in respect of each trading undertaking, should be maintained in the Balance Sheets at their original cost, so long, of course, as they remain in the possession of the particular authority; (6) that other capital expenditure, such as street improvements and sewers, should be periodically reduced by the amount of the pro- vision made for the repayment of the debt thereon ; (7) that although it is not considered practicable to present the accounts of all local authorities to the ratepayers completely uniform, it should be made compulsory that all the accounts of local authorities should be kept upon one general system. With regard to Rate Fund Accounts, the Departmental Committee referred to the desira- bility from an accounting point of view of apply- ing the system of income and expenditure to all accounts, whether in respect of Trading or Rate Fund Accounts, but recognised the difficulty with regard to Rate Fund Accounts, and advanced opinions which had been expressed to the effect that in the latter respect the circum- stances did not call for an Income and Expendi- ture Account in the full sense of the term, but one which included (a) all receipts and pay- ments, and also (6) all outstanding debit and credit items which had actually become due at the date to which the account was being made up, but which did not include apportionments of items not actually due. Municipal Trading. — With regard to municipal trading there is much difference of opinion, some condemning municipal trading altogether, others advocating its extension to all branches of trading. But the general opinion appears to be that municipal trading is advantageous and commendable so long as it is confined to those trading departments which it is desirable in the FF a Municipal] 436 [Mutual public interest should be under public control. Of these, gas, water, electric light, tramway and ferry undertakings, are prominent examples. From an accountant's point of view, the subject is of interest, particularly as regards the method of ascertaining and disposing of the profit of such trading. The chief difference of opinion as to the dis- posal of the surplus arises in connection with the provision for loss arising from depreciation of assets. There are three methods advocated: (1) To charge against earnings the interest on the loan and the Statutory Sinking Fund instalment to redeem such loan. (2) To charge against earnings not only the interest on the loan and the Statutory Sinking Fund instalment, but also the ordinary provision for depreciation which would be made in the case of a privately owned company. (3) To charge against earnings (a) the Statu- tory Sinking Fund instalment or provision for depreciation, whichever is the greater, and (b) the interest upon the loan. It is contended by the advocates of method (1) that the Sinking Fund instalment fixed by statute is sufficient provision for depre- ciation, but while this may be legally correct, it is not so from an economic standpoint unless the expected " life " of the asset is equal to or less than the period during which the Sinking Fund instalments have to be provided and at the end of which the loan is to be paid off. If this proviso be fulfilled, this method then becomes equivalent to that set out under heading (3). In support of method (2) it is usually urged that if the Sinking Fund instalment is by statute directed to be paid out of " profits," there can be no " profits " until after adequate pro- vision has been made for depreciation. But it is submitted that this is an endeavour to attach too limited a meaning to a word obviously of wide application (compare " profits for income- tax purposes," " profits available for dividend," &c). Whatever be the nature of the under- taking, public or private, if capital be repaid by periodical instalments out of earnings, Revenui should be relieved pro tanto from its obligai to provide depreciation. As to method (3) the economic pn undoubtedly the same depreciation as would bi chargeable in the case of a privately owned a cern, and if the Sinking Fund instalment than such provision, the difference should b charged in addition to the Statutory Si Fund instalment. The instances where Sinking Fund instalment is greater than provision for depreciation are rare, but where any such exist, then the statutory oblii must necessarily be fulfilled, notwithst; that it exceeds the economic requirem regards depreciation. In addition it may be desirable to set some portion of the surplus to a reserve fui meet contingencies before transferring any in aid of the rates, for even after pro' depreciation in such amounts as may a] necessary, having regard to past experi there are so many municipal undertakings involve the acquisition of plant and mac! in connection with entirely modern indu e.g., electric dynamos, that sufficient exp has not yet been attained to enable the rate of depreciation, or the probable " life, such assets to be gauged with the same pre as is possible in other cases. But the ai so set aside should not be unreasonabl ideal should be to hold an even balance bei present day and future ratepayers; in fact, of the local Acts limit the sums so to aside. The economically correct charge a Revenue is such a sum as is sufficient to pa] loan and interest thereon during the lift utility of the asset, and yet during the pei question to reduce the loan so that the liability is fairly commensurate from ti time with the utility value of the part asset. (See titles Equation of Loan Pei Sinking Funds.) Mutual Credits, Debts, and Dealings. — Section of the Bankruptcy Act 1883 provides that : — Where there have been mutual creuit mutual debts, and other mutual dea M|tualJ between a debtor against whom a receiving order shall have been made under this Act, and any other person proving or claiming to Move a debt under such receiving order, an account shall be taken of what is due from the one party to the other ir! respect of such mutual dealings, and the sum due from the one party shall be set off against the sum due from the other party, and the balance of the account and no more shall be claimed or paid on either side respectively; but a person shall not be entitled under this section to claim nefit of any set-off against the property of a debtor in any case where he had, at the time of giving credit to the debtor, notice of an act of bankruptcy committed by the debtor and available against him. The term " mutual credit " is wider than mutual debt." Lord Brougham distinguished em thus : — " Now, although generally speaking debt I and credit are correlative terms, and A. " giving credit to B. may seem to imply that I B. is indebted to A., yet it may be admitted I that the introduction of the words ' mutual I credit ' extends the right of set-off to cases I where the party receiving the credit is not I debtor in prcesenti to him who gives the I credit. Accordingly the relation contem- I plated by the statute has been held to be " established when the debt is immediately I due from the one party and only due on a "future day from the other." (Young v. Bank of Bengal, 1836.) JThe term " mutual dealings " includes every tse of provable claim, so that provided there mutuality, all claims provable in the bank- uptcy may be the subject of set-off. The fact hit one claim arises on a deed and the cross- laim arises on a simple contract will not prevent hem from being set off against each other. It'.v parte Law, 1846.) A secured debt and an nsecured debt may also be set off against each ther, and the set-off operates as payment pro into, so that if the amount of set-off be equal ) the secured debt, the debt is satisfied and the 4.37 [Mutual security must be released. (Ex parte Barnett, 1874.) Thus, suppose A. owes B. £3,000 on certain dealings, and B. owes A. £1,000 in respect of other transactions, A. having a lien on certain goods belonging to B. as security for the £1,000, B. having no security in respect of the £3,000. In the event of A. becoming bankrupt the position would be : — Amount owing to B £3> 000 Amount owing by B 1,000 Balance due to B. £2,000 The debt in respect of which the security was held is thereby extinguished, and the trustee in bankruptcy must release the goods held under lien and allow B. to prove against the estate for £2,000. In other words, B. cannot be called upon (1) to pay the £1,000, (2) to release his goods, and (3) to prove for £3,000 against the estate. The trustee would have a similar right of calling for the security if (1) it were held by the solvent party, and (2) by the operation of set-off the claim of the latter against the bank- rupt's estate (in respect of which he would be holding the security) would be extinguished. " In order to constitute that mutuality of " debts, credits or dealings which is required by " the statute, it is necessary that the debt, credit " or dealing, which is set off, and the debt, credit " or dealing against which it is set off, should " be between the same parties, and therefore a " joint debt cannot be set off against a separate " debt, nor a separate debt against a joint debt, " nor a debt due from three partners against " a debt due to two of them, or the like." (Williams.) Further, in order that debts may be set off, they must ordinarily be respectively due in the same right, e.g., a debt due from an executor on his own account cannot be set off against a debt due to him as executor. " The right of set-off in bankruptcy does not " appear to rest on the same principle as the " right of set-off between solvent parties. The " latter is given by the Statutes of Set-off, to Mutual] 438 [Necessaries " prevent cross-actions, and if the defendant " could sue the plaintiff for a debt due to him, " not in his representative character, he might " set it off under these statutes in an action by " the plaintiff suing in his individual character " also, though the plaintiff, or defendant, might " claim their respective debts as trustee for a " third person. If the debts were legal debts, " due to each in his own right, it would be " sufficient. But under the bankrupt statutes the " mutual credit clause has not been so con- " strued. The object of this clause is not to " avoid cross actions [for none would lie against " assignees, and one against the bankrupt would " be unavailing], but to do substantial justice " between the parties where a debt is really due " from the bankrupt to the debtor to his estate; " and the Court of King's Bench, in construing " this clause, has held that it did not authorise " a set-off where the debt, though legally due to " the debtor from the bankrupt, was really due " to him as trustee for another, and though " recoverable in a cross action, would not have " been recovered for his own benefit." (Parke, B., in Forster v. Wilson.) There are, however, possible exceptions to the rule that in order that debts may be set off they must be respectively due in the same right, for under certain circumstances agents del credere and those acting for undisclosed principals have, or are subject to, a right of set-off in respect of transactions on their own behalf and those on behalf of their respective principals. Although the section provides that " a person " shall not be entitled to claim the benefit of any " set-off against the property of a debtor in any " case where he had, at the time of giving credit " to the debtor, notice of an act of bankruptcy " committed by the debtor and available against " him," yet, as regards the holder of a bill of exchange, if he was himself liable upon the instrument and was compelled to take it up, the rule as to notice does not apply, and he may set off any liability of the bankrupt in respect of the bill against any claim the trustee may have against him, notwithstanding the fact that at the time he took up the bill he had notice of an available act of bankruptcy having been mitted by the debtor. (Mackinnon v. strong, 1877.) The bankruptcy rules as to set-off imported into winding-up procedure by se 207 of the Companies (Consolidation) Act and although a contributory cannot ordina set off a debt due to him from the compan against calls due from him to the liquidator (but must first pay his calls and then rank for dend in respect of his full claim) , yet, ii case of a bankrupt contributory, his trustee set off against the calls any debt due from company to the contributory, except a debt to the bankrupt qu& member. (Re Duckwo 1867; and Companies (Consolidation) Act section 123 (1).) Mutuality. — Reciprocity of obligation; the sta things in which one person is bound to pe: some act for the benefit of another, that being bound to do something for the benefit the former. Mutuality of assent — where both know clearly what each of them is undert; to do. Mutuality of remedy — where each party to contract can enforce it against the other. N Narration. — In its application to bookkeeping, details of a recorded transaction ; in partic the description and full particulars appended an entry in the Journal. Necessaries. — " Necessary meat, drink, app " physic, and such other necessaries, and " wise good teaching and instruction whe " one may profit himself afterwards." [Co " Goods suitable to the condition in life of " person, and to his actual requirements at " time of sale or delivery." Where necessaries are sold and delivered to infant, or to a person who, by reason of me incapacity or drunkenness, is incompetent to Ntessaries] ict, he must pay a reasonable price therefor, ale of Goods Act 1893.) An infant cannot, however, be sued on a bill exchange or promissory note, even though it is given for necessaries. (See title Infant.) Niotiahle Instruments. — Negotiability in its use means : — (1) Free transferability by (d) Delivery, or (ft) Indorsement and delivery. Conferring : — (2) An indefeasible title in favour of a bond fide transferee. Negotiable instruments as a consequence : — (a) Give a right of action to the holder of the document for the time being, although he may be unknown to the person liable thereon ; and (6) Give a holder in due course a title free from any defects in the title of the assignor. Cheques are negotiable unless or until they e: — (1) Drawn with the addition of the words " not negotiable." (See title Not Negoti- able.) (2) Restricted by indorsement or by the terms of the instrument to a special purpose or person ; or (3) Discharged by payment. An overdue bill can only be negotiated subject any defect of title affecting it at its maturity. >ee titles Indorsement, Transfer of a Bill by livery.) Bills of exchange, promissory notes, bank rtes, cheques, exchequer bills, East India 3nds, and dividend warrants, unless they are ipressly drawn " not negotiable," are negoti- ate, provided they are in condition to be sued pon by the bearer, i.e., if, being originally pay- >le to order, they have been indorsed in blank, ost office orders, share certificates and arrants, share transfers, and I O U's are not 439 [Nominal negotiable. Scrips, bonds (including under the latter term debentures) are in a doubtful position, but in this connection see Goodwin v. Robarts (L.R. 10 Ex. 337 and 1 App. Cas. 476). Bills of lading are assignable without notice, but they are not " negotiable " in the wider meaning of the term, an assignee taking the bill of lading subject to the defects (if any) in the title of the assignor. (See title Bill of Lading.) Negotiation Back.— See title Re-issue of a Bill of Exchange. Net Proceeds. — The net amount issuing out of any particular matter or venture. Generally applied to the net balance due to the consignor in respect of a particular consignment, as shown by the account sales prepared by the agent or consignee. (See title Account Sales.) New Style. — The modern system of computing time. This was introduced into Great Britain in 1752, the 2nd day of September of that year being treated as the 14th. (See title Old Style.) Next of kin. — Those standing nearest in blood relationship to a given person. (See title Distribution, Statutes of.) Nominal Accounts are accounts in name only, used for the purpose of classifying income and expenditure under such heads as rent, rates and taxes, discounts, sales, purchases, wages, general expenses, &c. When finally adjusted, the balances of these accounts are transferred to one account at a specified date, thus forming the material for the construction of the Profit and Loss Account. These accounts are sometimes included under the term Impersonal Accounts as distinguished from the strictly Personal Accounts which show a trader's position with those with whom he deals, but it is hardly correct to assert, as a foreign writer does, that these accounts " represent neither personal interest nor obliga- tion," for, as the trader's name is implied at the head of each Nominal Account (e.g., John Rowlands, Sales Account, or ignoring the full name of the trader, My Sales Account), he has a personal interest and obligation in all such Nominal] accounts, and on the balance of same being struck in the form of a Profit and Loss Account the trader is entitled to, or responsible for, such balance, according to whether there be a profit or a loss. (See titles Ledger, Real Account.) Nominal Capital. — See title Registered Capital. Nominal Consideration. — The stamp duty on transfers of marketable securities (see title Marketable Security) is at the rate of ios. per cent, (by scale) upon the consideration or agreed consideration therefor, but where the amount stated in the deed or other instrument of transfer as the consideration is a merely nominal sum (e.g., five shillings) a fixed duty of ios. is payable. With regard to transfer " deeds " wherein a nominal consideration is ' inserted, the following regulations have been issued by the Stamp Office, viz. : — (A) If the transfer is made (i) on a sale, or (2) in satisfaction in whole or in part of a pecuniary bequest, or (3) in liquidation of a debt, or (4) in exchange for other securi- ties, or (5) by way of gift inter vivos, ad valorem duty is payable at the rate of ios. per cent, (by scale) on the value or agreed value of the consideration. (B) The fixed duty of ios. is only payable when the transaction falls within one of the following descriptions : — (a) Vesting the property in trustees on the appointment of a new trustee, or the retirement of a trustee. (b) A transfer, as for a nominal consider- ation, to a mere nominee of the trans- feror where no beneficial interest in the property passes. (c) A transfer by way of security for a loan ; or a re-transfer to the original transferor on repayment of a loan. (d) A transfer to a residuary legatee of stock, &c, which forms part of the residue divisible under a will. (e) A transfer to a beneficiary under a will of a specific legacy of stock, &c. 440 [Nomination (/) A transfer of stock, &c, being the property of a person dying intestate, to the party or parties entitled to it. Where the true consideration for a transfer is " nominal," the fixed duty of ios. is none tl less payable, although the real market value the property or the par value (in the case stocks and shares) may be such that ad valorem duty would be less than ios. Nominal Exchange.— See title Par of Exchang Nominal Ledger.— A Ledger used for sepa recording the transactions in connection with various Nominal Accounts; it is somet' called the Trade Ledger. (See title Xom Accounts.) Nominal Partner. — One who has no act interest in the trade, business or profits partnership, but who allows his name to be u in connection therewith. If he holds himself 1 to the world as apparently having an intere the partnership he is liable for the debts though he were a partner. The fact that a retiring partner allows name to remain as part of the firm-name his retirement does not of itself make him li; for debts contracted subsequently. He exonerate himself by giving express notic his retirement to all who have had de with the late firm, and by " gazetting " the solution, which will operate as notice to all have not had dealings before the retirements The continued use of a deceased partne name in the firm-name does not of itself the executor's or administrator's estate or effects of such deceased partner liable for par ship debts contracted after his death. (See titles Dormant Partner, Gazette Not: Holding out, Partnership, Limited Partnersh Nominal Value.— Face value; the value which' been assigned to anything, such as share* stocks, as distinct from the market value. title Book Value.) Nomination. — The act of mentioning a name. (Se title Advowson.) Nnage] Niage.— Minority. (See title Infant.) Ni cumulative Preference Shares. — See title reference Stock and Shares. Ni feasance. — An offence of omission. N ary or Notary Public. — An officer who takes a ote of anything of a public character, prin- pally in mercantile affairs, such as protesting ills of exchange. He also attests documents to xe them authenticity in other countries. (See tie Noting a Bill of Exchange.) Nice. — Notice may be either in writing or verbal, vccpt where required by statute or otherwise to e in writing. Notice is either (i) statutory (i.e., by legisla- ve enactment) ; (2) actual; or (3) constructive. Ictnal Notice is that which directly brings the nowledge of a fact to the party. Constructive Notice (implied or imputed) is ally evidence of notice, but evidence so strong s to raise such a presumption of notice that (iiitv will not allow the presumption to be butted; for instance, (1) actual notice of a fact hich necessarily leads to notice of another fact; nd (2) the wilful avoidance of reasonable lquiry by the party requiring notice. Bankruptcy. — A person is deemed to have ptice of an act of bankruptcy (1) if he has Inowledge of it ; or (2) if he wilfully abstains rom acquiring such knowledge ; or (3) if he nous facts from which any impartial person ould naturally infer that an act of bankruptcy ad been committed. TTie notice by a debtor to any of his creditors lat he has suspended, or is about to suspend, ayment of his debts, need not, to constitute an t of bankruptcy, be in writing, but it must be iven formally and deliberately, for a mere &sual conversation will not amount to notice of uspension of payment. A notice calling a meeting of a man's creditors 3 consider his position does not per se amount : notice of suspension of payment. (See title uspension of Payment.) 441 [Notice All notices and other documents for the service of which no special mode is directed may be sent by prepaid post letter to the last known address of the person to be served therewith. (Bank- ruptcy Act 1883, section 142.) Company. — A shareholder of a company is deemed to have notice of (1) the Act under which the company is incorporated, and (2) the memorandum and articles of association (if any) ; and a knowledge of the contents of these documents is also imputed to strangers who have had dealings with the company, so far as regards the external position of the company. As regards a promoter: — "To inform a " person of a fact is one thing; to give him the " means of finding out, if he will take trouble " enough, is another thing. A promoter of a " company whose duty it is to disclose what " profits he has made does not perform the duty " (of disclosure) by making a statement not dis- " closing the facts, but containing something " which if followed up by further investigation " will enable the inquirer to ascertain that profits " have been made (by him out of the company) " and what they have amounted to." (Lindley, M.R., Re Olympia, Lim., 1898.) The various periods of notice required in different circumstances are dealt with in their appropriate places. (See titles Foreign (incorporated) Companies, Gazette Notice.) -Notice to Treat. — When a public company requires lands for the purposes of its undertaking, and is empowered so to do by the Lands Clauses Act 1845, it gives to all parties interested in such lands a notice to treat for the purchase thereof by the company; generally the notice cannot afterwards be withdrawn, and its effect is to constitute an incomplete contract between the company and the owners of the lands, the pur- chase money being afterwards ascertained or agreed upon in the manner provided by the Act. The term is also applied to a similar notice issued by a municipal corporation to the owners of lands and buildings required by it for street widening or other purposes. Noting] Noting a Bill of Exchange.— By noting is meant the minute made by a notary public on a dis- honoured bill at the time of its dishonour. The noting consists of the notary's initials, the date, the notary's charges, and a mark referring to the notary's register, all written upon the bill itself. The notary makes a full copy of the bill in his register, and either by himself or his clerk makes the " notarial presentment." If the bill be not accepted or paid, as the case may be, the notary attaches a small ticket or label to the bill and writes thereon the answer given when the bill was presented. When a bill is noted it must be noted on the day of its dishonour, but the notary having made his minute, the formal notarial certificate, or protest, may be drawn up at any time thereafter, as of the date of the noting. There is no necessity to note or protest an inland bill in order to preserve the recourse against the drawer or indorsers (Bills of Exchange Act 1882, section 51 (1)), but it is necessary to protest (or at least note) an inland bill :— (1) As a necessary preliminary to acceptance or payment for honour ; (2) Prior to presentment for payment to a referee in case of need ; (3) On dishonour by non-payment by an acceptor for honour. (Section 67.) In practice, however, most inland bills are noted as evidence of due presentment. Where a foreign bill, appearing on the face of it to be such, has been dishonoured by non- acceptance or non-payment, as the case may be, it must be duly protested, otherwise the drawer and indorsers are discharged. (Section 51 (2).) It is not necessary to protest a foreign note (section 89), nor is it necessary to protest any bill, whether inland or foreign, in order to charge the acceptor. (Section 52.) (See titles Exten- sion of Protest and Protest.) Not Negotiable. — Negotiability in its widest sense means : — (1) Free transferability by (a) Delivery, or (b) Indorsement and delivery. 442 [Nuncupative Conferring : — (2) An indefeasible title in favour of a bon& fide transferee. The words " not negotiable " do not prohibit the transfer of a cheque, but they deprive, i document of the quality of conferring an il feasible title upon the transferee. The Bills of Exchange Act 1882 pro\ ; Where a person takes a crossed cheq which bears on it the words " not n by the Court, but the Court shall not make winding-up order on the petition unless it is tisfied that the voluntary winding-up or wind- g-up subject to supervision cannot.be continued ith due regard to the interests of the creditors contributories. (Companies (Consolidation) t 190S, section 137.) (See title Petition to iid up a Company.) Limited Partnership. The provisions of the Companies (Consolida- ) Act 1908 with respect to winding-up apply ject to modification} to the winding up of partnerships, and the Limited Partner- ships (Winding-up) Rules 1909 provide (inter alia) as follows : — For the purposes of the application of sections 148 and 175 of the Companies (Consolidation) Act 1908 the preliminary report of the Official Receiver to the Court shall be a report : — (a) As to the contributions of the parties and the estimated amount of assets and liabili- ties of the limited partnership; and (b) If the limited partnership has failed, as to the causes of the failure; and (c) Whether in his opinion further inquiry is desirable as to any matter relating to the promotion, formation, or failure of the limited partnership or the conduct of the business thereof. The further report or reports (if any) of the Official Receiver shall state the manner in which the limited partnership was formed and whether in his opinion any fraud has been committed by any person in its promotion or formation or by any partner, general or limited, in relation to the limited partnership since the formation thereof, and any other matters which in his opinion it is desirable to bring to the notice of the Court. Ihe Court may, on consideration of any such further report stating that in the opinion of the Official Receiver a fraud has been committed as afore- said, direct that any person who has taken part in the promotion or formation of the limited partnership or has been a partner, general or limited, shall attend before the Court on a day appointed by the Court for that purpose, and be publicly examined as to the promotion or forma- tion or the conduct of the business of the limited partnership or as to his conduct and dealings as a partner. Official Referees. — Permanent officers of the Court to whom such matters are referred as may be referred to a special referee. (See title Special Referee.) Old Style. — The method of computing time accord- ing to the Julian reckoning. The Gregorian calendar was adopted by Pope Gregory XIII in GG 45° Old Style] 1582 as the new stvle. This gradually spread over Europe, and Great Britain ultimately adopted it by Act of Parliament, the 2nd September 1752 bein S accounted as the 14th September. Russia, however, still adheres to the Julian or Old Style. One Man Company.— In Salomon's case (1896) the facts were these :— Salomon converted his busi- ness into a limited liability company which was duly registered under the Companies Act 1862 (now the Companies (Consolidation) Act i 9 o8). Salomon held 20,001 fully-paid shares and six members of his family (as signatories to the memorandum) held one share each; there were no other shareholders. Salomon had also taken mortgage debentures for £10,000 in part payment of the purchase-money. Salomon was solvent at the date of the formation of the com- pany, but subsequently the company became insolvent, and a winding-up order was made. The liquidator of the company questioned the validity of the debentures held by Salomon, and Vaughan Williams, J., held that the company was entitled to be indemnified by Salomon to the amount of the unsecured liabilities. The Court of Appeal affirmed the decision of Vaughan Williams, J., and declared that the whole scheme was a fraud upon the policy of the Act, and that the Legislature had never intended that a com- pany should consist of one substantial person and six dummies devoid of any real interest. The House of Lords reversed the decision of the Court of Appeal, declaring that the require- ments of the Acts had been complied with by the company. The following extract from the judgment of Lord Herschell shortly states the ground upon which the decision of the House of Lords was based: — " It is said that the respondent company is " a ' one-man ' company, and that in this " respect it differs from such companies as " those to which I have alluded. But it has " often happened that a business transferred " to a joint stock company has been the pro- " perty of three or four persons only, and that " the other subscribers of the memorandum [One -Man " have been clerks or other persons " possess little or no interest in the cone " I am unable to see how it can be la? " for three or four or six persons to form " company for the purpose of employing " capital in trading, with the benefit " limited liability, and not for one persoi " do so, provided, in each case, the requir " ments of the statute have been compliec " with, and the company has been validly " stituted. How does it concern the " whether the capital of the company is I " by seven persons in equal shares, wit " right to an equal share of the profi " whether it is almost entirely owned 1 " person who practically takes the whole " the profits? The creditor has notice that I " is dealing with a company the liability " the members of which is limited, and! " Register of Shareholders informs him h " the shares are held, and that they are s " stantially in the hands of one person, if! " be the fact. The creditors in the presei " case gave credit to and contracted witj "limited company: the effect of the decisi " [of the Court of Appeal] is to give tl " the benefit, as regards one of the sha " holders, of unlimited liability. . ■ It n " be that a company constituted like that ui " consideration was not in the contemplat " of the Legislature at the time when theH " authorising limited liability was " that, if what is possible under the ena •' ments as they stand had been foresee^ " minimum sum would have been fixed as « " least denomination of share permissl " and it would have been made a conditl " that each of the seven persons should hav " a substantia! interest in the company, i " we have to interpret the lav, not to mail " it; and it must be remembered that no (X " need trust a limited liability company unta "he so please, and that before he dc " can ascertain, if he so please, what is tl " capital of the company, and how it is held.' With regard to the latter part of L« Herschell's statement it may be added that botl the Register of Members and Register ■ Man] lortgages of a company are open to the inspec- on of anv person. (See titles Register of [embers and Register and Registration of iges.) In his Sixth Annual Report (1896) on the orking of the Companies Winding-up Act 1890 low repealed and re-enacted in the Consolida- on Act of 1908) the Inspector-General in Com- mies Liquidation drew special attention to the rge and increasing proportion of one-man com- mies to the total of companies wound up. He cpressed the opinion that in the larger number '■ cases these companies " constitute an abuse Of the Limited Liability Acts, although formally complying with their requirements." e stated that generally speaking the basis of le company was the transfer of an insolvent or declining business, the object being, first, to transfer to a limited company obligations for which the promoters were personally liable, the personal debts being paid off by the proceeds of fresh debts contracted by the com- pany : second, to obtain means for carrying on the business through the facilities for obtaining credit afforded by the Companies Acts, which the vendors could not have obtained as private individuals " (e.g., debentures). Iln his Twelfth Annual Report (1902) the hspector-General again referred to the ques- bn, especially in connection with the working the Companies Act 1900, which is now incor- wated in the Consolidation Act of 1908. After capitulating the reasons which induced the epartmental Committee, presided over by Lord avey, to restrict to " public " companies the ligation contained in the Committee's draft 111 requiring disclosure of material facts jlating to the constitution, capital, and promo- p-i profits of companies, the Inspector-General lied :— f 1 Hut even the very moderate provisions ■which the Departmental Committee deemed fcecessary to meet the abuses arising from the .■formation of private companies were subse- quently eliminated. . . . The provision Ifor winding up companies formed to defraud icreditors was omitted from the Bill in the 45 1 [One -Man " House of Lords, and the provision for allot- ment only on the minimum subscription was " restricted in the House of Commons to com- " panies which offered shares for public subscrip- " tion. The result is that private companies are " free from nearly all the restrictions of the Act " in regard to the manner of their formation." That these restrictions have operated in a " powerful manner with regard to the formation " of public companies is clearly shown by the " great diminution in the total number of com- " panies registered .... and the present " tendency of company formation is clearly in " the direction either of ' one-man ' companies "or of companies which obtain their capital " without any restriction on allotment or on " commencing business and without the dis- " closure of facts required by .... the " Act." " I estimate the reduction in the number of " companies issuing a prospectus during the last " two years immediately preceding the passing " of the new Act at about 70 per cent." " This great reduction in so far as it is due " to the suppression of enterprises which could " not bear the test of publicity enforced by the " new Act "will probably be regarded as a public " advantage, but the evasion of this test by the " mass of the new joint-stock enterprise of the " country is a matter which appears to call for " serious consideration. A strong representa- " tion on this subject has recently been made by " the Committee of the London Stock Exchange, " who complain that the proportion of com- " panies seeking a settlement which issue no pro- " spectus has largely increased, and call atten- " tion to the danger to public interests which " the practice involves." These considerations doubtless led to the framing of many provisions of the Companies Act 1907 (now incorporated in the Consolidation Act of 1908), whereby companies are divided as follows : — (1) Public Companies (a) which issue a prospectus on or with reference to their formation, GG 2 One -Man] 452 [Order (6) which do not issue such a prospectus. The latter class of company must file a " Statement in lieu of Prospectus " (see that title), containing most of the information which companies of class (a) have to include in the filed prospectus. (2) Private Companies. These companies are freed from the restrictions as regards the " Statement in lieu of Prospectus," filing Balance Sheets, &c, and their constitution is defined by section 121 of the 1908 Act as follows: — They must by their articles (a) restrict the right of transfer of all the shares, (b) limit the number of members (exclusive of persons in the employment of the company) to fifty, and (c) pro- hibit any invitation to the public to sub- scribe for any shares or debentures of the company. A special and important concession is afforded by the Act reducing the mini- mum number of members of a " private company " to two. (See title Private Company.) Onerous Legacy. — A legatee may reject a legacy, and so he may decline one the acceptance of which would render him liable to perform any onerous act; but if an onerous legacy and a beneficial legacy are given together as one entire gift, or where there is an intention that they shall be taken together, the legatee must take Onerous Property. — A lease, shares, a contract, or other property, the liabilities in respect of which are greater than the probable benefits attached thereto. (See title Disclaimer.) Open Account.— An account, the items of which are not finally agreed upon, and which (if neces- sary) are to be proved by the party seeking to enforce the effect of the account. When a bill of exchange is received in respect of the balance of an account, the account then ceases to be an open one, for value is presumed in favour of the holder of the bill. Open Cheque. — A cheque not crossed and payable either to bearer on presentation, or to ordrr on presentation duly indorsed. (See title Crossed Cheque.) Open Court. — A court to which the public have a right of access. Opening Entries.— The term applied to the entrie or set of entries, necessary to prepare a set of books of account before commencing to record the current transactions. Open Policy — One in which the value of the ship or goods insured is not stated, same being fixed subsequently. (See title Floating Policy.) Options. — A mode of dealing in stocks, shares, or other commodities, whereby, in return for tl payment of a premium, an operator bei entitled either to buy or sell the commodity, at ai agreed price, at any time within a fixed period, his loss, if any, being limited to the amount ol premium paid, the profit depending solely upon the movements of the market and the e>: of the option. The call option gives a right to buy or call for a certain quantity of the commodity, whilst ; put option gives a right to sell or put quantity bargained for. These are called sin options. A put and call option gives a right to buy or sell according to whether the market price of the commodity rises or falls. This is termed a double option. Order. — A bill is payable to order which is expressed to be so payable, or which is expi to be payable to a particular person, and does not contain words prohibiting transfer or eating an intention that it should not be ferable. (Bills of Exchange Act 1SS2. s 8.) A bill payable to order is negotiated by the indorsement of the holder, completed by delivery. (Section 31.) OJer] er or Disposition. — See title Reputed Owner- lip. inary Business. — The term given to the busi- ess transacted at an ordinary general meeting f a joint stock company, as prescribed by the 'gulations of the company. The ordinary busi- ess generally includes (i) the consideration and doption of the accounts and the reports of the irectors and auditors (N.B. — The auditors' >port must be read), (2) the election of directors nd auditors, and the fixing of the remunera- on of either or both of these classes of officers, nd (3) the declaration of a dividend. Other business is generally classed as special," the articles providing that such usiness shall only be transacted at an extra- rdinarv general meeting of the company. (See tie General Meetings.) Olinary General Meeting.— See title General leetings. Olinary Resolution.— Sec title Resolution. Olinary Shares. — Shares which do not confer Iny special or deferred rights or privileges upon line holders thereof. ' I They are subject to the special rights attached ) preference shares and founders' shares (if ny), but where deferred shares are issued, the rdinary shares have priority over same, either s regards capital, dividend, voting power, or therwise, the precise status of the various lasses of shareholders depending upon the lemorandum and/or articles of association, or le deed of settlement, or the Act of Parliament as the case may be) pertaining to the company p, question. (See title Preference Stock and es.) I Censible Partner.— Sec title Holding out. |llt> — For the purpose of marine insurance the ;rm " outfit of a ship " includes all necessary tores put on board for use upon the voyage. If 453 [Paid the voyage be of a special character, necessi- tating special outfit and apparatus, the term will include all such requirements provided the character of the voyage was known to all parties to the contract of insurance. Output. — The term used to express the deliveries or shipments of an undertaking during a specified period, the word " turnover " being colloquially applied to the amount of the output stated in money. Thus a merchant would say : " My ' turnover ' is j£2o,ooo a year, and my " ' output ' is 4,000 tons." Outstanding Accounts. — This is an ambiguous expression, which may mean either debts due to a trader (debtors or book debts) or sums due from him to others (creditors). The use of the term cannot be recommended. Overdue Bill. — Where an overdue bill is " negoti- ated " it can only be so dealt with, subject to any delect of title affecting it at its maturity. The person taking it cannot acquire or give a better title than that which the person from whom he took it had. A cheque or bill of exchange payable on demand is deemed to be overdue when it appears, upon the face of it, to have been in circulation for an unreasonable length of time. What is an unreasonable length of time for determining whether or not such a cheque or bill is overdue is a question of fact. (Bills of Exchange Act 1882, section 36.) A bill payable otherwise than on demand is overdue after the expiration of the last day of grace. Overt Act. — An open act. Packages. — See title Empties. Paid on. — A term used by railway and shipping companies and other carriers to denote charges Paid] 454 Par paid by them to other parties concerned in the forwarding or transport of goods. Where goods are transhipped and there is no through rate in operation, and charges such as sea freight, custom house duty, port dues, wharfage, &c, are actually incurred, the railway or shipping com- pany receiving the goods from the carter or wharfinger must pay such charges before posses- sion can be obtained. These payments thus constitute actual disbursements of the railway or shipping company, and are recoverable by them from the consignee in addition to their own freight charges. There is no profit on these pay- ments, and railway companies and other carriers keep them carefully distinguished from their own freight charges and include them as a separate item on the advice and debit note rendered to the consignee. Paid = u p Capital (of a Company). — The actual amount which has been paid up, or is (legally) considered as paid up, in respect of the capital. (See title Registered Capital.) Paper Money. — Bills of exchange, bank notes, and the like. Par. — Equal value. Stocks and shares are said to be "at par " when their respective market and nominal values are the same. Shares in a limited company are generally issued at par. They may be issued at a premium, but they cannot legally be issued at a discount. Paraphernalia. — The personal apparel and orna- ments of a wife which she possesses and which are suitable to her rank and condition of life. Par of Exchange.— If the debts due by two given countries to each other were equal in every respect, that is to say, if there were no differ- ences as regards amounts, the dates upon which the money is receivable or due, currency in which payable, and the degree of credit of those so indebted, there would not, theoretically, be any fluctuation in the rates of foreign exchange, and the rate would be said to be at par. But such a state of things (i.e., exchanges at real par) purely ideal. [•"or instance, if an Australian merchant g one hundred pounds sterling for a sight draft fo that exact sum on London (the cum this case being, of course, the same), that could hardly be called an exchange at par, for the cash paid in Australia could not be collected ai used in London for some weeks later; so thai the question of interest must be considered. The Mint par of exchange is determined by tl Mint regulations of the various countries, ami shows the relation between the legal weight and fineness of the coins of their respective countries. For instance, the fine gold in a sovereign (£i) is equivalent to that in 4. S6H (U.S.A.) d or 20.43 (German) marks, or 25.2.2.1 (Fn francs. With the Mint par of exchange as a basi-- rates of exchange between the various coui. rise and fall owing to the inequalities in the amounts, dates, currency and credit, whicl already stated, render the real par of exc! a mere ideal. Nominal par of exchange is closely connected with the Mint par of exchange, but differs from it in so far as the former invokes a comp. of the fluctuating values of gold and silver, and recognises any depreciation of the paper curraB that may take place in those countries which possess such a currency. If at a given date the balance of indebtedness between England and France is against France and in favour of England there will be a greater demand in Paris for bills on London than Paris can supply. Consequently those who have m make payments in London will enter into com- petition for the available bills, which as a result will command a premium, i.e., realise more than their nominal value. But the premium ordinarily is limited by the gold point or specie point, that is, the price beyond which it would pay a person in Fiance remitting to London to export bullion and pay 455 [Partnership e cost and insure against the risk of transit, stead of buying a bill on London. ■IConversely, if the balance of indebtedness was ( feainst England, there would be an excess ipply in Paris of bills on London, and they I be offered at a discount, i.e., something ss than their nominal value, but as in the case a premium, the discount is limited by the eric point. Under special circumstances, however, the dinary range of fluctuations between the cie points " may be departed from, for in Idition to the variations caused by the balance indebtedness, the question of the general state credit, the ruling rates of interest on money, lifferences in the due dates for payment and al disturbances, all have their effect upon Me rates of exchange from time to time. I The rate of exchange may be stated in two flpys : in one the sterling is fixed and the foreign Honey is variable; in the other the foreign loney is fixed and the sterling is variable. Ipus in the former method £i would be stated It being equal to (say) 20.43 German marks, Hid in the latter mode a 20 mark piece would I set out as equal to 19s. ;d. (See title Rate [1 Exchange.) P»l Agreement.— See title Simple Contract. Htial Acceptance.— .See title Acceptance of a Bill. flUal Indorsement. — See title Indonement. Hial Loss arises when the subject-matter of IJsurance is only partly damaged, ot" when the ner is called upon to make a general average rment in respect of damage or loss to other Is. It is also termed Average loss. (See lie Total Loss.) b Hucular Average.— Every kind of involuntary Hkpense incurred, or accidental damage sus- Hined, short of total loss, in respect of a par- |4:ular thing, whether ship or cargo, which is to Hi borne by the owners of such thing. The ■(trine Insurance Act 1906 defines a particular r ~"" ~ matter insured caused by a peril insured against, which is not a general average loss. The liability of the insurer in respect of particular average is excluded by the operation of the " average clause," or memorandum, in the policy, certain goods being specified and per- centages stated, below which the underwriter is not liable. But if the article insured does not properly come within the words of the excluding clause, the underwriter will be liable, and if the subject-matter is excluded from average then the underwriter is liable only when the loss or damage exceeds the stated percentage for such class of goods. The insurance under the latter circumstances is said to be " war- ranted free from average," or " free from particular average." or F.P.A. (See title General Average.) Particular Lien. — See title Lien. Particulars of Sale. — See title Conditions of Sale. Partly Secured Creditor. — See title Secured Creditor. Partner. — One who partakes; a sharer; a member of a partnership or firm. A sole trader is often erroneously referred to as the sole partner — an obvious contradiction of terms. (See titles Limited Partnership, Partnership.) Partner by estoppel. — See title Holding out. Partnership. — The relation which subsists between persons carrying on a business in common with a view of profit. The relation of partnership does not exist between members of a registered joint stock company by reason of such member- ship. (Partnership Act 1890, section 1.) The number of persons who may form either a " General " or a " Limited " partnership is restricted to 10 in the case of a banking busi- ness, and to 20 in respect of any other business. (Companies (Consolidation) Act 1908, section 1 ; Limited Partnerships Act 1907, section 4.) Joint tenancy, tenancy in common, or part ownership does not of itself create a partnership, nor does the sharing of gross returns. Partnership] 456 [Partnership The receipt by a person of a share of the profits of a business is primd facie evidence that he is a partner, but standing alone it is not con- clusive, and in particular : — (1) The receipt of a debt by instalments, (2) The remuneration of a servant, (3) An annuity to a widow or child of a deceased partner, (4) Payments to a lender of sums by way of interest, under a written agreement, or (5) Payments by way of purchase-money for the goodwill of the business, do not by reason only of such receipt make the respective recipients partners, although such payments may be in the form of shares in the profits of the business. (Partnership Act 1890, section 2.) Since 1st January 1908 partnerships have been divided into two classes, " general " and " limited." The following is a summary of the law relating to " general " partnerships: — Nature of relationship. — Every partner is an agent of the firm and of his other partners for the purpose of the partnership business, and although the partners may agree between them- selves to restrict the ordinary powers of one or more partners, such restriction must be notified to third parties, or they will be entitled to deal with any restricted partner on the basis of his apparent authority. (Partnership Act 1S90, section 5.) Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal represen- tatives, and, subject to any agreement to the contrary, every partner must account to the firm for every benefit or profit derived by him without the consent of the other partners : — (1) From any partnership transaction. (2) From the use of the partnership property, name, or connection. (3) From any business of the same nature as and competing with that of the firm. (Sections 29 and 30.) Property. — All property and rights, and interests in property, originally brought into the partnership, or acquired by purchase or other- wise on account or for the purposes of the part- nership, are termed partnership property, and must be held and applied exclusively for the purposes of the partnership ; provided that the legal estate in land shall devolve according to the nature and tenure thereof and the general rules of law applicable thereto, but in trust so far as is necessary for the persons beneficially interested therein. (Section 20 (1).) Unless a contrary intention appears :- (1) Property bought with money belonging ti the firm is deemed to have been bought on account of the firm, and to be partner- ship property. (Section 21.) (2) Where land has become partnership pro perty, it is to be treated as between I (a) Partner and partner, (b) Partner and representatives of : deceased partner, (c) Heirs of a deceased partnt r am executors or administrators of sue] deceased partner, as personal estate and not real (Section 22.) The interest of partners in the partnershi; property is a tenancy in common, or what i practically the same thing, a joint tenai out the benefit of survivorship. The mode c ascertaining the value of an outgoing or d cease partner's share depends in the majority of case upon the partnership agreement, and varies con siderablv; but in the absence of any agreeiU to the contrary, every item of value (includirt the goodwill, if any) must be brought in( account. The amount payable to an outgoin partner or the representatives of a decease partner in respect of such share, unless there I an agreement to the contrary, is a debt accruin at the date of the dissolution or death, and is i the nature of a simple contract debt, and subje to the Statute of Limitations. (Section 43.) Where any member of a firm has died • otherwise ceased to be a partner, and the su viving or continuing partners carry on the bus ness of the firm with its capital or assets wit Frtnership] ut any final settlement of accounts as between he firm and the outgoing partner or his estate, hen, in the absence of any agreement to the ontrary, the outgoing partner or his estate is milled at the option of himself or his representa- ives to such share of the profits made since the lissolution as the Court may find to be ittributable to the use of his share of the part- tership assets, or to interest at the rate of 5 per ent. per annum on the amount of his share of he partnership assets. Provided that where by the partnership con- ract an option is given to surviving or con- inuing partners to purchase the interest of a -id or outgoing partner, and that option is luly exercised, the estate of the deceased partner, >r the outgoing partner or his estate, as the case nay be, is not entitled to any further or other hare of profits; but if any partner assuming to ict in exercise of the option does not in all nalerial respects comply with the terms thereof, ie is liable to account under the foregoing pro- 'isions of this section. (Section 42.) Assignment of a Share in the Partnership. — \a assignment by any partner of his share in the lartnership, either absolute or by way of BOrtgage or redeemable charge, does not as igainst the other partners entitle the assignee, luring the continuance of the partnership, to Hlterfere in the management or administration )f the partnership business or affairs, or to equire any accounts of the partnership transac- ions, or to inspect the partnership books, but Entitles the assignee only to receive the share of jrofits to which the assigning partner would itherwise be entitled, and the assignee must iccept the account of profits agreed to by the mrtners. In the case of a dissolution of the partnership, whether as respects all the partners or as respects tie assigning partner, the assignee is entitled receive the share of the partnership assets which the assigning partner is entitled as letween himself and the other partners, and, for he purpose of ascertaining that share, to an ccount as from the date of the dissolution. Partnership Act 1890, section 31.) 457 [Partnership In the absence of agreement to the contrary, the assignment of a partnership share does not give the partner or partners other than the assigning partner an option to dissolve the part- nership, as in the case of a charge being made thereon in respect of the partner's separate debt (infra), but such assignment might consti- tute a ground for application to the Court for a dissolution under the " just and equitable " clause. (Section 35, below.) Separate Debt of a Partner. — A writ of execu- tion cannot now be issued against partnership property in respect of the separate debt of a partner, but the Court may make an order charging that partner's interest in the partner- ship property and profits, and may also appoint a receiver thereof. The other partners may at any time redeem the interest so charged, or, in case of a sale being directed, they may purchase same. Such receiver has no right to interfere in the management of the business, and the other partners may at their option dissolve the partnership. (Section 23.) As in the case of an assignee under an assign- ment by a partner of his share in the partner- ship, a receiver is (ordinarily) bound to accept the account of the profits agreed to by the other partners, for it was held in Brown Janson v. Hutchinson that the discretion given by the Partnership Act (section 23) to direct accounts should only be exercised under special circum- stances, e.g., with a view to a dissolution; so that although a receiver of a partner's share may not be entitled to an account during the continuance of the partnership, he would, on a dissolution, be entitled to a full account of the realisation of the assets. Partnership Debts and Liabilities. — Partner- ship debts are joint only, with the following exceptions : — (1) The estate of a deceased partner is also severally liable in respect of debts incurred whilst he was a partner (but subject to the prior payment of his separate debts). (Section 9.) (2) Partners are jointly and severally liable in respect of any loss or injury done Partnership] 458 [Partnershi] ' (a) To a person not a partner by reason of a wrongful act or omission of a partner either in the ordinary course of business or in pursuance of his co-partners' authority, and (b) Where one partner within the scope of his apparent authority receives money or property of a third person and misapplies it, or the firm in the ordinary scope of business receives money or property of a third person, and any one of the partners mis- applies it whilst it is in the custody of the firm. (Sections 10, 11, 12.) Where a partner, being a trustee, makes improper use of trust moneys in the business, or on account of the partnership, no other partner is liable therefor to the persons beneficially interested, provided he was not aware of the breach of trust; but the trust money can be recovered if still in the possession of the firm or under its control. (Section 13.) A person who is admitted as a partner into an existing firm does not thereby become liable for debts incurred previous to his admission, nor does retirement itself release a partner from debts of the firm incurred previous to retirement, but a retiring partner may be so released by a tripartite agreement between : — (1) The retiring partner. (2) The new firm. (3) The creditors. The assent of the creditors is essential, but it need not be given expressly, for it may be inferred from a course of dealing. (Section 17.) This contract of substituted liability whereby a creditor accepts a new firm for an old one, or one debtor for another, is called novation. Where a person deals with a firm after a change in its constitution, he is entitled to treat all apparent members of the old firm as still being members of the firm until he receives notice of the change. (Section 36 (1).) Thus, a retiring partner ordinarily remains liable for existing debts, and, with three excep- le has deemed d deal- tions (below) , he may be held liable for debt incurred after his retirement unless he given due notice thereof. (Section 36 (2).) An advertisement in the Gazette is de sufficient notice to all who have not had ings with the firm — that is to say, to the world at large, but it is necessary to give separate notices to all those who have had dealings with the firm. No special form of notice is neces- sary; it is sufficient to prove that notice has, in fact, been given. (Section 36 (2).) On (1) the death, or (2) the bankruptcy, of i partner, or (3) the retirement of a dormant partner, the estate of such partner, or deci partner, as the case may be, is not liable for partnership debts contracted after the death, bankruptcy, or retirement, respectively. (Section 36 (3).) (See title Holding out.) Rights and Duties. — Partners may, to a j extent, regulate the terms of their partnership, but they cannot affect the rights of third parties. In the absence of agreement to the contrar the Partnership Act 1890, section 24, determine the rights, interests, and duties of the partners, such as : — (1) Equal distribution of profits or contribu- tion to losses. (2) No interest payable in respect of capital, but interest allowed at 5 per cent, on distinct advances. (3) Every partner entitled to be indemnified in respect of payments properly made for the firm. (4) No partner entitled to remuneration far his services. (5) Every partner may take part in the management of the business. (6) No person to be introduced as a partner without the consent of all the partners. (7) Differences on ordinary matters to t decided by a majority of the partners, but no change to be made in the nature of the business without the consent of all the partners. P.-tnership (S) Partnership books to be kept at the principal place of business, and every partner to have access to them and a right to make copies thereof. Xote.— The right to inspect the books and copy same or make abstracts therefrom may be exercised by the duly authorised agent of a partner. (Bevan v. Webb, 1901, 2 Ch. 59.) V partner cannot be expelled by a majority of partners unless such a power has been hferred by express agreement between the ]rtners. (Section 25.) .lion. — A partnership may be dissolved :\ion of time. : initiation of a single adventure. l>er notice by any partner. 141 Death of any partner (as regards the surviving partners, or the deceased's representatives). (51 Bankruptcy of any partner (as regards all the partners). (1) Death of any partner (as regards the deceased). (2) The happening of an event which makes the partnership business unlawful. (3) Assent of all the partners. (41 Decree of the Court. The appointment of a receiver of, or the making of a charging order against, a partner's interest in respect of his separate Sebt. (Sections 32, 33 and 34.) Subject to any agree- ment be- tween the partners. Ipso facto. At the op- tion of the other partners. I tn the case of dissolution arising from the iikruptcy of any one partner, such dissolution ate from the " act of bankruptcy," and ■would be upon that date that the trustee of » bankrupt partner would require the accounts clth' partnership to be made up, provided (1) tkt he would be entitled to an account of the fpfits earned since the commencement of the Iikruptcy, by the employment of the capital ( am) of the bankrupt partner; and (2) that I: trustee could not avoid bond fide transac- ts of the firm with third parties having no ; the act of bankruptcy, and duly com- piled before the date of the receiving order. >urt may decree a dissolution of partner- In) upon application in any of the following 11) Where a partner is found a lunatic by inquisition, or is shown to the satisfaction of the Court to be permanently of unsound 459 [Partnership mind. In such a case application may be made either on behalf of that partner or by any other partner. (2) When a partner, other than the partner suing : — (a) Becomes in any way permanently incapable of performing his part of the partnership contract. (b) Has been guilty of conduct which, in the opinion of the Court, is prejudicial to the partnership business. (c) Wilfully or persistently commits a breach of the partnership agreement. (d) So conducts himself in partnership matters that it is not reasonably prac- ticable for the other partner, or partners, to carry on business with him. (3) When the partnership business can only be carried on at a loss, or where circum- stances have arisen which, in the opinion of the Court, render it just and equitable that the partnership be dissolved. (Section 35-) Distribution of Assets. — In settling the accounts between partners after a dissolution, in the absence of agreement to the contrary, the following rules are to be observed: — A. Losses, including losses and deficiencies of capital, shall be first paid out of profits, next out of capital, and lastly, if neces- sary, by the partners individually in the proportion in which they were entitled to share profits. B. The assets of the firm, including any sums contributed by the partners, to make up losses or deficiencies of capital, are to be applied : — (1) In paying the debts of the firm to persons who are not partners. (2) In paying to each partner rateably what is due from the firm to him for advances as distinguished from capital. (3) In paying to each partner rateably what is due from the firm to him in respect of capital. Partnership] 460 [Partnership (4) The ultimate residue, if any, is to be divided among the partners in the proportion in which profits are divisible. (Section 44.) Without prejudice to the priority of the " external debts " of the firm, the above rules as to the incidence of losses and as to the distribu- tion of the assets may be modified as between the partners themselves in any way they may think fit. liights of Partners inter se. — The decision in Garner v. Murray (19x14, 1 Ch. 57) is of con- siderable importance in this connection. The position of affairs was as follows : — ■ Capital Accounts. £ Garner 2,500 Murray 314 £2,814 Assets. £ Cash 1,916 Wilkins {over- drawn) .. .. £263 Deficiency of Firm .. .. 635 £2,814 Wilkins was unable to pay anything. Profits had been distributed equally. There was no special agreement between the partners as regards their respective rights under the circumstances, and the Court had to decide as to the distribution of the assets in the winding- up of the partnership affairs. Prior to the date of the decision in Garner v. Murray the generally accepted method of adjust- ment was to treat the deficiency of the firm and Wilkins' irrecoverable debt as partnership losses and write them off against Garner and Murray in the same relative proportions as they had previously participated in profits, thus : — Capital Account. Garner, Capital Ac- count . . . .£2, 500 Less half share of £'898 . . 449 2,051 A ssets. £ Cash 1,916 Murray, half share £898 .. .. £449 Less Capital Ac- count . . . . 314 '35 £2.051 £2,051 ==== ==> ^ Thus under former methods Murray would have paid in £135, and Garner would have taken the ,£2,051. But in the case under notice Joyce, J., held that the loss sustained by some of the partners, because of the default of another partner when adjusting their respective right! inter se after all the debts due to 01 creditors had been paid, must be distinguii from a loss of the firm as a whole, and must not be borne by the non-defaulting partners in to the proportions in which they had previa participated in profits, but rateably according to the amount of capital respectively due from firm to them, due account being taken of tl contributions from each partner in respect of any deficiency of capital. In other words, after a partner has fulfilled his obligations to outside creditors, and has con- tributed his own share of capital deficiency any), he is not liable on a dissolution under sec- tion 44 (supra) to make a further contribution to a defaulting partner's deficiency, as paragraph A of section 44 refers to losses of the firm as a whole and not losses of some only of the partners thereof. It will be noted that losses of the firm as a whole must be borne by all the partners in certain proportions, but a loss caused by the default of one of the partners ex necessitate rei cannot be borne by that partner. The true adjustment of the rights of Garner and Murray on the basis of the figures set out above would therefore be : — Capital Accounts. Assets. Garner's contribution ■ 10 his deficiency of fl Capital, one-third of £'635 -'* Murray do. .. .- M Wi 1 kins, over- drawn One-third of defi- ciency . . . . 211 * 47* £2,814 £*M Adjustment. f Garner : — .. ,;of £2 l 340 = £2,o 7 8 Less Contribu- tion due 212 ,866 Murray: — fM of £2,340= 262 Less Contribu- tion due 212 50 £ ,916 £l,9lt pitnership] It has been suggested that Murray (in this might claim to set off the contributions le from himself and Garner against their spective capital sums, and then divide the 1,916 of cash rateably as to £2,288 and £102 1 ly — giving Garner £1,834 ar| d Murray 52, but it is submitted that the true bases of iportionment are the amounts of capital after le contribution of any deficiencies thereof, and )t the amounts of capital which have been minished because the prescribed contribution to ie deficiency has not in fact been made. Following the rule laid down in Garner v. urray, if the following were the position on a ssolution where three partners are interested, Capital Account. £ 702 £7^ Assets. Cash 351 Y., overdrawn .. .. 117 Z-, „ .... 234 £702 hen X. would take all the cash plus whatever as recoverable from Y. and Z., provided that ie contributions of either of the latter partners ould be limited to the amounts set out above spectively — neither being liable for any default the other (indebted) partner. Remembering (1) that moneys due by the firm partners in respect of advances in excess of leir capital rank in priority to capital when ie assets are being administered on a dissolu- on, (2) that partners are liable to contribute sficiencies of capita! in order to adjust the ghts of the partners inter se, and (3) that any isses arising from the default of any partner in :spect of his levy or overdraft must fall upon ie other partners in proportion to their capital, ie matter of agreement between the partners as their precise amounts of capital ought to Bvi attention. The original amounts of .pital agreed upon should in all cases appear tparately in the books and upon the Balance in is of the firm from time to time. It is often und that losses and excesses of withdrawals cr profits are charged against the Capital iccounts instead of being paid in by the 4 DI [Partnership partners, as evidently contemplated by the Act, and as in fact generally provided by the partner- ship agreement. Per contra, any excesses of profits over withdrawals thereof are in practice added to the capital sums. Thus, in many Part- nership Accounts the Capital Accounts are a fluctuating quantity, and the original sums agreed upon as capital soon lose their identity. Of course, the partners can, by agreement between themselves, from time to time vary the amounts to be regarded as their respective capitals. They may increase such amounts by paying in further cash, or by transferring part of their shares of profits to Capital Account, or they may reduce the amounts by not paying in their shares of losses or their excess drawings. Possibly a periodical Balance Sheet signed by the partners may amount to a fresh agreement as regards the respective capital sums to be provided from time to time, but it is submitted that as the basis of the adjustment of the rights of the partners inter se is the amount of agreed capital, it is important to know what was the amount last agreed upon as such, and it would be an advantage if the Capital Accounts in a partnership Balance Sheet always repre- sented the amounts of agreed capital, whatever those amounts might be, and whether they varied or not. Then (1) the amount due to a partner as an advance could be readily dis- tinguished from the sum due to him in respect of capital ; (2) the amount (if any) which he was liable to contribute to make up deficiencies of capital would become more apparent ; and (3) the basis upon which the rateable distribution of assets and the consequential apportionment of losses occasioned by the default of any partner on a dissolution ought to be effected, would be more satisfactorily ascertained. Of course, partners can decide in their partner- ship agreement, or mutually agree at a subse- quent date in the clearest terms possible the method of dividing both profits and losses, whether of capital or otherwise, and whether as a going concern or on a dissolution, for the operation of sections 24 and 44 of the Partner- ship Act 1890 can be excluded by any agreement to the contrary between the partners. But where partnership] 462 L Patent no such contrary arrangement has been made, arid more particularly where, as is often the case, the articles of partnership expressly state that on a dissolution the provisions of sec- tion 44 shall apply, the correct interpretation of that section and the true meaning of the decision in Garner v. Murray are of the greatest importance. The provisions of the Partnership Act 1890, and the rules of equity and common law appli- cable to partnerships, except so far as they are inconsistent with the express provisions of that Act (see above) shall, subject to the provisions of the Limited Partnerships Act 1907, apply to Limited Partnerships. (Limited Partnerships Act 1907, section 7.) For the provisions of the last-mentioned Act see title Limited Partnership. The provisions of the Companies (Consolida- tion) Act 1908 as to winding up of Companies wound up by the Court apply (subject to modifi- cation) to the winding up of limited partnerships by the Court. (Companies (Consolidation) Act 1908, section 268.) (See title Winding-up.) (See also titles Articles of Partnership, Dormant Partner, Firm, Goodwill, Holding out, Joint and Separate Estates, Nominal Partner, Partnership at Will, Postponed Creditors, Soc'Uti en Commandite.) Partnership at Will. — A partnership determinable at the will of any partner. The Partnership Act 1890 provides : — Where no fixed term has been agreed upon for the duration of the partnership, any partner may determine the partnership at any time on giving notice of his intention so to do to all the other partners. (Section 26 (1).) Where a partnership entered into for a fixed term is continued after the term has expired, and without any express new agreement, the rights and duties of the partners remain the same as they were at the expiration of the term, so far as is consistent with the inci- dence of a partnership at will. (Section 27 (i)-) The Limited Partnerships Act 1907 provir: Subject to any agreement, ex] implied, between the partners, a limited partner shall not be entitled to dissolve the partnership by notice. (Section 6 (5).) Part Owners. — .See title Co-Owners. Part Payment. — Part payment is one of the altern- ative requirements of the Sale of Goods Act 1893 (see that title), as evidence of a contract for the sale of goods of the value of £10 or upwards. Part payment will (in certain cases) operate as a revival of the Statutes of Limitation. title Acknowledgment of Debt.) Party Wall. — Where a wall separating adjoining properties is used in common by the own is presumptive evidence that the wall and tl ground on which it stands belong equally to I adjoining owners. Pass Book. — See title Bank Book. Passive Debt. — One upon which no interest is being paid, and which is not being reduced In- payments on account, as distinct from an active debt, which has one or both of the abo< characteristics. Passive Trust. — One which does not involve a active duties. Past Consideration.— See title Consideration. Patent Agent. — The Patents and Designs Act 1907 provides that a person is not entitled to <1 himself as a " patent agent " (for ok patents in the United Kingdom) whether b advertisement, by description on his place of business, by any document issued by hit otherwise, unless he is registered as a patent agent under that Act or an Act repealed by it.- A person who knowingly contravenes thi: vision is liable to a fine not exceeding ^20. Patent Right. — The exclusive privilege granted b; the Crown to the true and first inventor of a new manufacture, or method of making article; according to his invention. The duration of a patent when granted is 14 years, but every patent ceases on failure of thf' patentee to make the prescribed payments within P ent le prescribed times, provided that the comp- oller of patents shall, upon the application of ie patentee and on receipt of the prescribed lditional fee, not exceeding £10, enlarge the me to such an extent as may be applied for, )t exceeding three months. A patentee may tition the High,_Co.url for an extension of the rm of his patent, but the petition must be pre- ntcd at least six months before the expiration the term. If the Court is of opinion that the itentee has been inadequately remunerated by s patent, it may be extended for a further term, it not exceeding seven years, or under excep- mal circumstances not exceeding 14 years, or e Court may order the grant of a new patent such term as may be specified in the order, i containing any restriction, condition, and ovisions the Court may think fit. The fees payable on obtaining patents and on renewal thereof are : — On application for provisional protection £1 On filing complete specification £3 On the sealing of the patent £1 On certificate of renewal before the expira- tion of the fourth year from date of patent in respect of the fifth year ... £5 with further annual fees, in respect of each year, increasing by £1 annually. The renewal fees may, however, be paid in inual instalments as prescribed by the Act. atents and Designs Act 1907.) ■Mthough a corporate body, such as a regis- tfed company, cannot be " the true and first i r entor," within the meaning of the Act, the cporation may (in conjunction with the true : d first inventor) apply for a patent. iVith regard to the treatment of patent rights i the Balance Sheet of a company, see title ] Dfits Available for Dividend. «\part from the question of valuation, an litor should first require the production of £ the necessary documents to show that the I i:nts which are taken credit for in the Balance icet are actually in force; and he should ft her take note of the number of years which patents have respectively to run, so that he 463 [Pawn may properly form an opinion as to whether or not sufficient depreciation (if any) has been pro- vided for, and report thereon should he think it necessary. Pawn (or Pledge). — A transfer of the possession of property (chattels personal corporeal) by one person (the transferor, pledgor or pawnor) to another (the transferee, pledgee or pawnee) to be retained by the latter as security for the pay- ment by the pledgor of a sum of money or the performance by him of any other specified engagement. In a pledge, a special property (only) in the subject-matter passes to the pledgee, the general property therein remaining in the pledgor. An agreement accompanying a pledge of chattels to secure a debt is not a bill of sale and does not require registration. (Ex parte Hubbard, 55 L.J. O.B. 490.) This is because the possession of the subject-matter is not retained by the pledgor. On the expiration of the period for which the pledge was given, or in default of a fixed period, at any time, the pledgor may " redeem the pledge " and recover possession of the subject- matter of pledge, upon payment or tender of the sum, or on performing the engagement, for which the pledge was given as security. On the other hand, when the date fixed for the payment of the sum of money has arrived, if a power of sale expressly or impliedly has been given to the pledgee, he may sell the property and repay himself out of the proceeds. Where no date for payment has been fixed, the pledgee should first demand payment of his debt, and then, on default, give reasonable notice to the pledgor of his intention to realise his security if he is not paid by a stated date. The pledgee's remedy against the security is by sale only, and any surplus out of the pro- ceeds must be handed over to the pledgor; on the other hand, should there be a deficiency, the pledgee has a right of action for the balance due, for a pledge is only a collateral security. The rights and liabilities of the pledgee in respect of the subject-matter of the pledge may be summarised thus : — Pawn 464 Pawnbroker (1) If expensive to keep, such as a horse or cow, he may use same in a reasonable manner, e.g., he may ride the horse or milk the cow, by way of recompense for the cost of keep. (2) If the subject-matter would be " the worse for the use " (e.g., a suit of clothes) the pledgee must not use same. (3) If use is really necessary for the due pre- servation of the property, then use of same is not only justifiable but indis- pensable to a proper discharge of the pledgee's duty towards the pledgor. (4) If the use will neither improve nor in any way prejudice the property, the pledgee may use same. (5) The pledgee is liable for ordinary neglect whilst he is in possession of the property, but if he detains the property after tender of the amount for which it is security, he becomes an insurer, and, as a conse- quence, will be absolutely responsible for any loss or injury to the property. (6) Expenses incurred by the pledgee, in respect of the subject-matter of the pledge, must be reimbursed by the pledgor if such expenditure was necessary, but to the extent of anv expenditure which was merely useful, the pledgor is not bound to reimburse, unless such expenditure was incurred by his express or implied authority. A contract of pledge may be terminated or extinguished : — ■ (1) By payment or other discharge of the debt, or fulfilment of the engagement, in respect of which the pledge was given. (2) By extinguishing the debt, thereby extin- guishing the right to the pledge. (3) By accepting a higher or different security in respect of the same debt or engagement, without reserving a right to retain the subject-matter of the pledge. (4) By the perishing of the property itself. (5) By any act of the pledgee showing a renunciation, release, or waiver of the pledge or the subject-matter thereof, e.g., deliberately returning the property to the pledgor. (See titles Factor, Hypotheca- tion, Lien, Pawnbroker.) Pawnbroker. — The business of pawnbrokers is regulated by the Pawnbrokers Act 1S72, which, however, only applies to loans of money not exceeding £10. As to loans between forty shillings and £10, a special contract may, how- ever, be made with a pawnbroker outside of tl Act. The rate of interest which may be taken by a pawnbroker is — on pledges for sums n exceeding ten shillings, one halfpenny for even two shillings (or part) per month ; after the first month, less than fourteen days is counted as half a month ; fourteen days and not exceeding one month as one month, whilst one halfpenny is payable for the ticket. On pledges for sum; exceeding ten shillings, the rate is the same as above, but one penny is payable for the ticket on pledges above forty shillings, one halfpenn per month (or part) for every 2s. 6d. (or part) and one penny for the ticket. These rates mui be printed on the tickets. Pledges are redeemable within one year anc seven days from the day of pawning. Pledge of ten shillings or under become the absolut property of the pawnbroker after that date. Pledges of upwards of ten shillings an redeemable until actual sale, but such sale mus be by public auction, and at any time withil three years after the auction the holder of th pawnticket may inspect the pawnbroker's & books, or the " filled in " particulars in t catalogue of the auction, on payment of penny, and if the proceeds of sale would shos any surplus, after deducting the amount of th loan and interest due at the time of sale, th pawnbroker must, on demand, pay such surplu to the holder of the pawnticket, but a deficienc made on the sale of any other pledge by tl same pledgor within 12 months before or afte such surplus is obtained may be set off again? the amount otherwise payable. Pa vi broker] he pawnbroker must produce the pledge to tti holder of the ticket, who is presumed to be 1 owner. A pawnbroker must take out a nee, and pay an excise duty of £y ios. per a um for each pawnbroker's shop kept by him. T: licence is only granted on production of a ir^istrate's certificate. If the pawnbroker ttlcs in plate (without regard to weight) he nst pay an additional duty of £5 15s. per a um. Paj ent.— See titles Appropriation of Payments, Tider, Voucher. I'a\ent for honour supra protest.— Where a bill h been protested for non-payment, any person ay intervene and pay it for the honour of any pty liable thereon, or for the honour of the p son for whose account it is drawn. v'here two or more persons offer to pay for tl honour of different parties, the person whose p mem will discharge most parties shall have tl preference. 'ayment for honour in order to operate as s h, and not as a mere voluntary payment, B st be attested by a notarial act, which may b appended to the protest. )n payment of the bill, and the notarial erases incidental to its dishonour, the payer f honour is entitled to receive the bill and the I test, and all parties subsequent to the party i whose honour the bill was paid, are dis- cirged, but the payer for honour is subrogated 1 and succeeds to the rights and duties of the 1 der as regards the party for whose honour f has paid, and all parties liable to that party. ^ iere the holder of a bill refuses to receive pay- ' "t supra protest he loses his right of recourse »t any party who would have been dis- cirged by such payment. (Bills of Exchange \ 1882, section 68.) (See title Acceptance for ipour supra protest.) Pemiary Legacy.— See title Legacy. follty, a um •—A sum payable by way of punishment; 1 specified in a contract as being payable in event of non-performance, the amount being 4 6 5 [Percentage the maximum sum recoverable, but reducible in proportion to the actual damage sustained. A penalty must be distinguished from liquidated damages. (See that title.) Peppercorn Rent.— A nominal rent, stipulated for primarily as a mere acknowledgment of tenure. Per Capita.— By the number of heads (indi- viduals), as against per stirpes, by the number of families. Thus, if a man leaves his property among all his grandsons, and has seven grand- sons, one of whom is an only son, and the other six are brethren, then, if the division be per stirpes, the " only son " would take one half of the goods and the other half would be divided among the other six grandsons: but if the division be per capita, then each of the seven grandsons would take an equal seventh part. Percentage.— A sum or number either concrete or in the abstract denoting a ratio to one hundred. A percentage may represent an allowance, a discount, a commission, remuneration, or the like. When commercial or other results are reduced to " percentages " for the purpose of com- parison, the latter are really a type of average recorded upon a common base. Where several independent results have been reduced to percentages for comparative pur- poses, the average of those percentages is not the percentage of the whole of the " results " taken together. In order to obtain the " all round " percentage the individual percentages must be ignored, and the whole of the results (themselves) must be added together, so that the required percentage may be specially computed. Thus : — 30 is 15 per cent, of 200 40 is 10 ,, 4 oo 70 6o^> The average of 15 and 10 is 12J, but the true percentage of the aggregate result is uf. Profits are compared by means of percentages, and they may be either based upon cost or selling HH Percentage] 466 Peril. price. The more usual method is to make the calculation upon the selling price, but this is undoubtedly an impure method, mathematically regarded. In taking the sale price as the base, the profit is necessarily included therein — thus the base will vary with the profits, although the underlying motive of comparison by means of percentages is to reduce results to a common base. This variation is, moreover, uncontrolled by any principle, being, in the case of a large pro- portion of profit, entirely disproportionate to the variation caused by a smaller rate of profit. As an instance, 10 per cent, of profit computed upon the cost price is equal to grV per cent, when the same result is taken on the selling price, but if 50 per cent, of profit on cost prices be computed upon selling prices it will only show 33J- per cent. Furthermore, as the sale price is composed of the cost price and the profit, the latter cannot exceed the sale price, from which it follows that a profit based upon selling prices cannot exceed 100 per cent., nor even equal 100 per cent., if the goods have cost anything at all. None of these impurities or limitations exist in connection with a cost price percentage. Of course, a given percentage computed upon the cost will always show a certain other percentage if the same result as regards profits is computed upon selling prices, i.e., 10 per cent, based upon cost is at all times equivalent to 9^ per cent, of the selling price : 50 per cent, of cost is always equal to 33J P er cent, of sale price and so on : There- fore, so long as the rate of profit is under 25 per cent., and does not vary greatly, comparisons of results based on selling prices will not be as mis- leading as they would be otherwise, and may be adopted without great danger, provided the nature of the base upon which they are com- puted is always borne in mind. It is often urged that a sale price percentage is adopted on the score of convenience, the cost of the articles being difficult to ascertain on account of the difference of stocks and other obscuring elements. But the cost incurred in respect of the sales effected can be obtained by a simple expedient so soon as the amount of profit has been ascertained. As above stated, the cost and profit combined equal the selling price — thtrf fore, if the amount of profit be deducted from th net sales, the cost of the goods sold must be th result, quite independently of the questii purchases, differences of stocks, &-c. The following extract will show that the cos price percentage is not only the true mathematically, but is also in accord witl economic principles : — " The capitalist, then, may be assumed t " make all the advances and receive all th " produce. I lis profit consists of the execs " of the produce over the advances; his rat " of profit is the rate which that excess bear " to the amount advanced " [John Stuar Mill.] When considering and comparing percentagi it should be remembered that where there i wide divergence of results as between 01* action (or article) and another, the pi 1 of the whole of the results will not give accurate idea as regards the type of the resu obtained, e.g., suppose £no of sales of articles produce ^10 profit, and another £240 c sales of other goods produced £.\o profit, tl resultant percentage from a combination of thes two classes of trading would give the aggregat result, but it would not give an accurate ide of the tvpe of transactions as regards profi earned. Casing the percentages upon cos prices it wall be seen that the 10 per cent, in on case and the 20 per cent, in the other si: per cent, profit on cost in respect of the who of the sales, which result is not typical of efth of the individual results referred to. This inseparable from any system of a\ where there are known to be wide d of results, percentages are inure in . the actual type of transaction if the s matter is classified before being reduced to tf form of percentage. Perils of the Seas. — The rules contained in the Firs Schedule to the Marine Insurance Act i' the construction of a policy where the conte docs not otherwise require, provide that th " perils of the seas " refers only to fnrtuitc accidents or casualties of the seas, and thai Pen do an P e: :;clude the ordinary action of the winds waves— that is, the term includes casualties r; :h way but not consequences which must uc r. i the sea is a much wider term than the sea. Pertinent Building Society. — Sec title Terminating Bi dini; Society. Pent. — A licence or instrument granted by the of excise, certifying that the excise certain goods have been paid, and per- ing the removal of the goods from one place ilother. 4 6 7 [Personal Perp ual Debentures. — See Di en I title Irredeemable Perp uity. — L'nlimited duration. An annual sum ■livable in perpetuity, e.g., rent from a free- ho property as distinct from a leasehold. (See tit Accumulation of Income.) ippose a person requires 5 per cent, upon an stment in perpetuity (e.g., a freehold »:e), of course he could afford to give 20 t' purchase of the net annual value if the lerty came into possession immediately; but i had to wait for some years for the expira- I of a lease or the death of some person inter- could not afford to give 20 years' pur- Hie, but only such a sum as would amount at S cent, to the equivalent of 20 years' pur- Be by the time the property would come into - an .state of the net value of £100 per tm with immediate enjoyment is worth jt°> then one of the same value with the t deferred for six years is only worth 92. j. This is ascertainable in two ways: — ) The full present value of the estate is But from this must be deducted the present value of the benefit to be enjoyed by another, viz., the present worth of £100 per annum for six years at 5 per cent. 507.6 Leaving as the present value of the estate to the purchaser of the reversion £1,492.4 £2,000 on the basis of 5 per cent. (2) As the purchaser is prepared to pay £2,000 six years hence for immediate possession, he will only pay now for the reversion the present value of £2,000 due six years hence, viz.: — £.7462x2,000 = £17,492.4. Per procuration (per pro.). — By procuration; an agency. Bills of exchange may be drawn, accepted or indorsed, by procuration, if the agent has authority for such purpose, but a signature by procuration operates as notice that the agent has but a limited authority to sign, and the principal is only bound by such signature if the agent in so signing was acting within the limits of his authority. (Bills of Exchange Act 1882, section 25.) An infant cannot (as principal) draw or sign a cheque, for he cannot give his banker a legal discharge, but if a customer authorises a minor to sign cheques on his behalf, such cheques will be duly honoured by the banker. Person. — The Interpretation Act 1889 provides that " in this Act, and in every Act passed after the " commencement of this Act, the expression " ' person ' shall, unless the contrary intention " appears, include any body of persons, corpo- " rate or unincorporated' (See title Fictitious Person.) The words " a respectable and responsible person " in a lease include a corporation. (U'ilhnott v. The London Road Car Co., him., C.A. 1910.) Personal Accounts are those which show the state of the account between a trader and every person with whom he has had dealings, whether for buying, selling, borrowing, lending, banking, or otherwise. They resolve themselves into two main heads, viz.. Debtors and Creditors. (See titles Ledger, Sectional Ledgers.) Personal Ledger. — One used for separately record- ing the Personal Accounts of a trader. Personal Property. — Money, goods, leases for years (however long), furniture and other chattels as distinct from real property, which includes free- hold houses, lands, &c. HH 2 Personal] 468 [Petith " It is a clear proposition . . . that per- " sonal property has no locality . . . that " is, not that personal property has no visible " locality, but that it is subject to that law " which governs the person of the owner. " With respect to the disposition of it, with " respect to the transmission of it, either by " succession or the act of the party, it follows " the law of the person." [Rosslyn.] Shares in the capital of a company registered under the Companies Acts 1862 to 1908, now the Companies (Consolidation) Act 1908, are per- sonal estate (1908 Act, section 22), but in rare instances shares in corporations such as the New River Company, and the River Avon Naviga- tion, have been held to be real estate. These are, however, corporations of very long stand- ing, the shares of corporations of more recent creation under special Acts of Parliament being deemed personal estate. Per contra, where land (or any heritable interest therein) has become partnership property, it shall, unless the con- trary intention appears, be treated as between the partners (including the representatives of a deceased partner) and also as between the heirs of a deceased partner and his executors or administrators as personal or movable and not real (or heritable) estate. (Partnership Act 1890, section 22.) Leaseholds, although personal property, are liable (if at all) to succession duty, not legacy duty. Personal Representatives. — Executors or admini- strators. (See titles Administration, Letters of; Executor, Land Transfer Act, &c.) Personalty. — See title Personal Property. Per stirpes. — See title Per capita. Per testes. — See title Probate. Petition in Bankruptcy.— See title Bankruptcy Petition. Petitioning Creditor.— A creditor who presents a petition to the Court for a receiving order in respect of the estate of a debtor, or a winding-up order in respect of a company or limited partner- ship indebted to the petitioner. (See titles Bai ruptcy Petition, Petition to wind up a Compan Petition to wind up a Company. — An applicat to the Court to wind up a company (registei under the Companies (Consolidation) Act igc must be by petition. The petition may be p sented by the company, or by any creditor (even merely contingent or prospective— see below) or a duly qualified contributory, or by all or any such parties, either together or separately. (Co panies (Consolidation) Act 1908, section 137.) the case of a life assurance company, a polii holder also has a right to present a petition. Where the paid-up capital of the compa does not exceed ^10,000, and the registered off is situate within the jurisdiction of a Cour Court having jurisdiction under the Compan (Consolidation) Act 1908, a petition to wind the company may be presented in that Cour Court. In other cases, the petition must be present in the High Court or (if the company is witt their jurisdiction) the Palatine Courts. (Sec Upon every petition to wind up a company, fee stamp of £2 is payable. Contributory 's Petition. A contributory shall not be entitled to pres* a petition for winding up a company unless— (i) Either the number of members is reduc in the case of a private company, bel- two, or, in the case of any other cc pany, below seven ; or (ii) The shares in respect of which he is contributory, or some of them, either V originally allotted to him or have b>| held by him, and registered in his nai| for at least six months during the eight months before the commencement of t winding up, or have devolved on I through the death of a former holi' (Section 137.) Note. — The time during which shares may have been registered in K name of the wife of the contribute it lion] 469 [Petition either before or after marriage, or a trustee for the wife or contributor}-, may be treated as part of the six months referred to above. Jnder ordinary circumstances a contributory, vjo has not paid any calls which may have bn made in respect of his shares, cannot p sent a petition to wind up the company, but I: might be permitted to do so if he made out a s rial case and paid his calls into Court, or (.:<: an undertaking to do so. (Crystal Reef (., 1892, 1 Ch. 408.) I company may be wound up by the Court if It is made in filing the statutory report or i holding the statutory meeting (section 129), I: such a petition shall not be presented by any f son except a shareholder, nor before the t >iration of fourteen days after the last day t which the meeting ought to have been held ( ction 137), but if such a petition is presented t Court may, instead of directing that the com- py be wound up, give directions for the statu- ty report to be filed or a meeting to be held, or rlke such other order as may be just. (Section The qualifications of a petitioning contributory (Uained in section 137 (supra) do not apply the case of default as to the statutory report statutory meeting. V clause in the articles of association of a ( npany purporting to forbid or attempting to ( alify a shareholder's right to present a petition winding up is inoperative. Creditor's Petition. \nv creditor may present a petition, there ng no special qualification as regards amount in the case of bankruptcy. The assignee of debt may petition as though he had been the ginal creditor. Vny contingent or prospective creditor shall a creditor entitled to present a petition. Pro- led that the Court shall not give a hearing to petition by such a creditor until such security costs has been given as the Court thinks sonable, and until a primd facie case for iding up has been established to the satisfac- ♦n of the Court. (Section 137.) In this connection the case of In re British Equitable Bond «S" Mortgage Corporation (1910) is of interest. The fact that a debenture-holder has obtained the appointment of a receiver does not per se prevent him from applying for a winding-up order. (Portsmouth Tramways, 1892, 2 Ch. 362.) Where a company is being wound up voluntarily or subject to supervision, a petition may be presented by the Official Receiver attached to the Court, as well as by any other person authorised in that behalf under the other provisions of this section, but the Court shall not make a winding-up order on the petition unless it is satisfied that the voluntary winding up or winding up subject to supervision cannot be continued with due regard to the interests of the creditors or contributories. (Section 137.) The voluntary winding up of a company shall not bar the right of any creditor or contributory to have it wound up by the Court if the Court is of opinion, in the case of an application by a creditor, that the rights of the creditors, or in the case of an application by a contributory that the rights of the contributories, will be prejudiced by a voluntary winding up. (Section 197.) But after a voluntary winding up has com- menced a compulsory order will not, under ordinary circumstances, be made upon the appli- cation of contributories, unsupported by credi- tors. While the fact that a voluntary winding up has actually commenced is a strong reason why the Court should decline to interfere, special circumstances may induce the Court to make a compulsory order. For instance, the resolution to wind up may have been passed fraudulently, or the Court may consider that those who are opposing the order are either directly implicated in charges of fraud or are desirous of screening others who are so implicated. In such cases a^i order may be made on the petition of a share- holder. (Hay craft Gold Reduction and Mining Co., 1900, 2 Ch. 230.) ♦ A compulsory order to wind up was made in Re Hermann Lichtenstein <2v Co., Lim. (1907, Petition] 470 Petition 23 T.L.R. 424), upon the petition of a creditor. The company was already in voluntary liquida- tion, and the creditor did not show that he would be prejudiced by the voluntary winding up, but he made out a case for inquiry, and an order was made. The Court would not formerly make an order to wind up a company which, at the date of the presentation of a petition therefor, had already been dissolved by voluntary liquidation, but it is probable that in future an order will be made, in a proper case, on an applica- tion by petition, where the dissolution has been declared void under section 223 of the Companies (Consolidation) Act 1908, which provides that where a company has been dissolved, the Court may at any time within two years of the date of the dissolution, on an application being made by any person who appears to the Court to be interested, make an order, upon such terms as it thinks fit, declaring the dissolution to have been void, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved. " The section (14 of 1890, now 137 (2) of " 1908) includes every case where the powers " of the voluntary liquidator are proved, in the " opinion of the Court, to be insufficient for " the purposes of winding-up, in so far as the " interests of creditors or contributories are " concerned. If, in short, the Official " Receiver, after a compulsory winding-up " order, would possess any power which the " voluntary liquidator cannot exercise, and " which is shown to be necessary in order " that there may be an efficient winding-up in " the interests of creditors or contributories, " then the section applies." (Re Jubilee Sites Syndicate, 1899.) Every petition must be advertised seven clear days before the hearing, (1) once in the London Gazette, and (2) once at least in a London daily paper (in the case of a London company), or a local newspaper circulating in the district where the registered office of the company is situate. (Winding-up Rules 1909, Rule 27.) If the petitioner or his solicitor does not, within the time prescribed or within such extended time as the Registrar m; advertise the petition in the manner pre the appointment of the time and place at j the petition is to be heard shall be cancel! the Registrar and the petition shall be re from the file in the Companies Win Office, unless the Judge or the otherwise direct. (Rule 27.) A creditor who has presented ; wind up a company is not bound t petition to a hearing, but when a pen consents to withdraw his petition or to be dismissed or the hearing adjoum< to appear in support of his petition w called on in Court on the day origin.-! the hearing thereof, or on any day to \vhi< hearing has been adjourned, or. if does not apply for an order in the ;• prayer of his petition, the Court may. terms as it may think just, substiti tioner any creditor or contributor}- v opinion of the Court, would have a right t< present a petition, and who is desirous of pro- secuting the petition. (Rule 36.) Except where the petition is presented I the company, every petition shall be served up company at the registered office of the company, or if there is no registered office, :.: ::s prin- cipal or last-known principal place of bus by leaving a copy with any member. servant of the company there if such pla< person can be found, otherwise by leaving a at such registered office, or principal place ( business or bv serving the petition member or members of the Company & show of hands, there is also a common law right of demanding a poll, but the regulations of: particular body (e.g., creditors, members, may exclude or restrict this right. Company. — Unless the articles of associatio; otherwise provide, a poll may be demanded upon any question put before a meeting of members, but, unless the demand is made in strict accordance with the articles of associatio oii; the chairman may not grant it. Generally, the articles provide that a poll can only be demanded stated number of members at the least, and holding in the aggregate a stated number of shares, or a certain proportion of the capital of the company. The articles, as a rule, further provide for the method of taking the poll, the appointment of scrutineers, &c. The provisions of Table A to the Companies (Consolidation) Act 1908 as regards a poll are as follow : — On a show of hands every member present in n shall have one vote. On a poll every member shall have one vote for each share of which he is the holder. On a poll votes may be given either personally or by proxy. At any general meeting a resolution put to rote of the meeting shall be decided on a show of hands, unless a poll is (before or on declaration of the result of the show of hands) demanded by at least three members. . . If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the reso- lution of the meeting at which the poll was demanded. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote. A poll demanded on the election of a chairman, or on a question of adjournment, shall be taken forthwith. A poll demanded on any other ques- tion shall be taken at such time as the chairman of the meeting directs. The foregoing will only apply to such com- plies as have adopted Table A. Variations roni these provisions can be made by the com- ;>anv's articles either as originally framed or as imended by special resolution. But the follow- ng is by section 69 of the Consolidation Act made ipplicable to all companies under the Act :— At any meeting at which an extraordinary "esolution is submitted to be passed or a special 473 [Portage resolution is submitted to be passed or confirmed a poll may be demanded, if demanded by three persons for the time being entitled according to the articles to vote, unless the articles of the company require a demand by such number of such persons, not in any case exceeding five, as may be specified in the articles. When a poll is demanded in accordance with this section, in computing the majority on the poll reference shall be had to the number of votes to which each member is entitled by the articles of the company. Thus the articles of association may fix the number of persons necessary to demand a poll, whether for an ordinary, extraordinary, or special resolution, and in the case of an ordinary resolution such number may be large or small and may involve stated shareholding qualifica- tions in addition ; but with regard to extraordi- nary and special resolutions, the number of persons fixed by the articles must not exceed five, and no share qualification can be imposed beyond that necessary for membership, namely, the holding of one share. (See titles Proxy, Vote.) Portage Bill. — A statement prepared by the master of a ship at the expiration of each voyage (or at such other times as circumstances may require) , showing : — (1) Names of the crew. (2) Respective ratings of the crew. (3) Dates they joined the ship. (4) Agreed rates of wages. (5) Advances made. (6) Allotments paid. (7) Date or dates crew discharged from ship. (8) Total wages due. (9) Balance wages due (after deducting advances, allotments, &c). (10) Particulars of wages forfeited (deserters) ; and (11) (Sometimes) detailed particulars of the receipts and payments of the master on behalf of the owners of the ship, together with a concise summary of the same. Port 474 [Postpor Port Charges.— The sum payable for the dock or harbour accommodation afforded to a vessel. Port of Registry.— With the exception of coasting vessels not exceeding 15 tons burden, and certain fishing boats, every British ship must be registered. Generally, the chief officer of Customs acts as the Registrar at the respective ports, and the port at which the ship is regis- tered is deemed the port to which she belongs, and is called her " Port of Registry." The Register contains the name and dimen- sions of the ship, the names of the builders and year of building, the names and addresses of the owners, and (generally) particulars of any mortgage on the vessel. Any person may inspect the Register on payment of a fee of one shilling for each ship the records of which are examined, and auditors of ship-owning companies often avail themselves of such an inspection to verify the title to, and incumbrances upon, the par- ticular company's vessels. Possessory Lien. — Sec title Lien. Postdated Cheque. — A bill of exchange is not invalid bv reason only that it is post-dated. (Bills of Exchange Act 1882, section 13.) For many purposes a post-dated cheque is equivalent to a bill payable at a fixed future date, but the practice of issuing such cheques (in effect) amounts to a breach of the stamp laws, and the drawer thereby renders himself liable to a penalty ; but so long as the holder does not enforce the cheque until after the date contained in the instrument and it bears a penny stamp (as a cheque), the Courts will admit it in evidence. The death of a drawer of a post-dated cheque before its maturity would cause some inconvenience, for a banker's authority to pay is revoked by notice of the drawer's death. It has been held that where a partner or agent has authority to draw and issue cheques, but not bills, he has no authority to draw and issue post-dated cheques. Post Entry. — When a bill of sight (or prime entry) has been given to the Custom House in respect of goods, and it is discovered, after weighing and examining the goods, that the descriptions and quantities are inc a post-entry must be made giving the particulars. This must not be confounded with the " post-entries " applied to certain entriei bookkeeping. {See titles Bill of Entry, Entry.) Post-nuptial Settlement.— A settlement made marriage, which is deemed voluntary unl made in pursuance of a written undertaken entered into before and in consideration marriage. (See title Fraudulent Conveyances, &c.) king Post-obit Bond. — A bond for the payment by t obligor of a sum of money to the obligee upon the death of some other person, the other person being usually one from whom the obligor expects to derive some property. Postponed Creditors. — In the administration of tl estate of a bankrupt the creditors may 1 roughly classified into (a) preferential, secured (fully or partly), (c) general unsecured, and (d) postponed, the last-name being those who are disentitled to rank aga the estate until all other creditors for valu consideration in money or money's worth been satisfied. The following are the chief instances of this class of creditors : — (1) A lender of money to a person or fan under a contract in writing that he sha! receive a rate of interest varying with t profits, or shall receive a share of t profits of the business. Xote. — The requirement that such contract must be in writing is to aff« proof that the lender is really not lis as a partner. If the contract is not writing the lender would still be a poned creditor, and would have to pn that he was not a partner in some c way. (Re Fort, 1S97.) The Limited Partnerships Act 1907 1 not altered the law in this connect: but is of interest. (See title Limiti Partnership.) ostponed] (2) A seller of the goodwill of a business in consideration of a share of the profits (to the extent of any unpaid share of the profits). (3) Any money or other estate of a wife lent or entrusted by her to her husband for the purpose of trade 'or business carried on bv him or otherwise, is treated as assets of her husband's estate in the event of his bankruptcy, and the wife is treated as a postponed creditor for the amount. Note. — It has been held that this post- ponement does not apply to a loan to a firm of which the husband is a member only (Re Tuff and Nottingham, 19 O.B.D. 88), nor to a loan to the husband for purposes other than his trade or busi- ness. (Ex parte Tidswell, 4 Mor. 219.) In the administration by the Court of the estate of a deceased insolvent the widow's claim for money lent to her husband (the deceased) for the purpose of his trade or business was held to be postponed to the claims of other creditors by virtue of sec- tion 3 of the Married Women's Property Act 1S82, and section 10 of the Judicature Act 1875. (In re Leng, 1895, 1 Ch. 652.) This decision was applicable only to the widow's right to dividend. Where a widow was executrix of her husband's estate and had assets in hand, it was held that she was entitled to exer- cise her power of retainer in respect of her " postponed " claim for money lent. (Re Ambler, 1905, 1 Ch. 697.) The claims of creditors in respect of interest exceeding 5 per cent., when a greater rate has been reserved, are also postponed to the ordinary -laims in administering a bankrupt's estate, subject to the right of a partly secured creditor lb allocate his security to the interest and prove for the principal. Semble a creditor having a claim which would under ordinary circumstances be " postponed " is not debarred from availing himself of a set-off f he has one, nor are his rights as a mortgagee effected if the claim be secured by a mortgage. 475 [Power (Ex parte Shcil, 1877, and Badeley v. Consoli- dated Bank, 1888, 3 Ch.D. 238.) Nor are the rights of a creditor who holds security for a postponed claim affected. Although a postponed claim in respect of excess interest is restricted as regards dividend it is not affected as regards the right of proof. (Ex parte Jones; re Herbert, 9 Mor. 253.) This is not the case, however, with regard to the other classes of postponed claims enumerated above, such not being provable even for the purpose of voting until the other creditors have been satisfied. (Ex parte Taylor; re Grason, 1879, 12 Ch.D. 366; and Re Gencse; ex parte District Bank of London (1885. 16 O.B.D. 700.) (See title Interest in respect of Proof of Debt.) Power of Attorney. — Where a pow-er of attorney is given for valuable consideration and, in the instrument creating the power, is expressed to be irrevocable, then, in favour of the purchaser, the power shall not be revoked at any time, either by anything done by the donor of the power, or by the death, marriage, lunacy, or bankruptcy of the donor of the power, and the purchaser shall not at any time be prejudicially affected by notice of anything done by the donor of the power, without the concurrence of the donee, or of the death, marriage, lunacy, or bankruptcy of the donor of the power. If a power of attorney, whether given for valuable consideration or not, is in the instru- ment creating the power expressed to be irrevocable for a fixed term not exceeding one year from the date of the instrument, then, in favour of a purchaser, the power shall be abso- lutely irrevocable during such fixed term, and any act done within such term by the donee in pursuance of the power shall be as valid abso- lutely as if done by the donor; and neither the donee of the power nor the purchaser shall at any time be prejudicially affected by notice either duiing or after that fixed time, of anything done by the donor during that fixed time without the concurrence of the donee, or of the death, marriage, lunacy, or bankruptcy of the donor within that fixed time. Power] 476 Preference " Purchaser " includes a lessee or mortgagee, or an intending purchaser, lessee, or mortgagee, or other person, who for valuable consideration takes or deals for property. (Conveyancing Act 1882, sections I, 8 and 9.) Precept. — In its application to accounts, a man- date from a responsible person, or body of persons, authorising or requiring specific pay- ments or other acts. Pre-emption. — A right of pre-emption confers the power of purchasing something before others. Preference (Bankruptcy). — See title Fraudulent Preference. Preference (Executor). — In paying the debts of the testator an executor may, amongst creditors of equal degree, pay one creditor in preference to another; and even where an action has been com- menced by a creditor, the executor may, before judgment has been obtained, and with notice of the action, voluntarily pay another creditor of equal degree. (See title Hinde Palmer's Act.) The right of retainer is not affected by a decree for administration, but the right of preference ceases in such an event; but a decree for administration will not be made merely to pre- vent the executor exercising his rights in this respect. The executor may pay statute-barred debts even though the personal estate is insufficient for all (i.e., he may even prefer such debts), but he cannot pay or prefer any debt which is unen- forceable because of the provisions (as to form of contract) of the Statute of Frauds, the Sale of Goods Act, or otherwise, nor can he pay a debt which is statute-barred if the Court has actually adjudged the debt irrecoverable on that account. As in the case of retainer, an administrator will be deprived of the right of preference by the terms of his bond requiring him to pay the debts pro rata. Preference Stock and Shares. — Stock (or shares) entitling the holder thereof to preferential rights as regards dividend and/or capital, or otherwise. Accounts. — Holders of preference shares in companies registered on and after 1st July igoS have the same right to receive and inspect the Balance Sheets of the company and the reports of the auditors and other reports as is pos by the holders of ordinary shares in the pany. But this provision does not apply to private company. (Companies (Consolidation) Act 1908, section 114.) Dividend. — The preferential rights as to dhri dend may be either cumulative, or non-cumula- tive, according to the conditions upon which the stock, &c, was issued. I ted If cumulative, the holder is entitled to a stal rate per cent, per annum out of the profits of the company, or other corporate body, and in the event of the profits of any particular year, years, being insufficient to pay the full prefa ence dividend, such deficiency, or accumulated deficiency, is payable out of the profits of subse- quent years, or the undistributed profits of past years. With regard to the apportionment as between capital and income of arrears of cumulative preference dividend when ultimately paid, s title Apportionment. If non-cumulative, the holder is entitled to ; stated rate per annum, but such dividend is pay- able out of, and entirely dependent upon, tl profits of each particular year, so that in the event of a deficiency in any one year, it is n payable out of the profits of any other year. Where one class of shares is entitled to dividend at a fixed rate in preference to another class, the dividend is, prima facie, cumulative— therefore, where it is intended that the divider should be non-cumulative the regulations should expressly prohibit the right, in the event of a deficiency in any one year, to resort to the profits of subsequent years, or the undistributed pro of past years — that is to say, the holders in such a case cannot receive more than the stated rate of dividend in any one year, but will receive Ie if the profits of a particular year do not allow ol the stated rate being paid, and will have no right to receive any such shortage out of the profits of t-eference] future years or the undistributed profits of past years. Preference dividends are payable and should always be paid, subject to deduction of income- tax, at the current rate. (See title Free of Income-tax.) Capital. — Preference stock, &c, may also (and generally does) confer a preferential right, in the event of the company being wound up, to repayment of capital, and, further, after the repayment of the whole of the paid-up capital of the company {i.e., preference and ordinary), the holders of the preference stock, &c, may be entitled to a proportion of the surplus assets after such repayment; or they may be specially restricted to the repayment of their paid-up capital without any rights as regards any surplus assets. But (i) unless expressly pro- vided, preference stock, &c, does not confer a priority in respect of capital in the event of the company being wound up, and (2) unless other- wise provided, after all the paid-up capital has been repaid, preference stock, &c, is entitled to rank pari passu with ordinary shares for participation in the surplus. (See title Surplus Assets.) Voting. — The holders of preference stock, &c, Tiay have rights as to voting and attending meetings equal to those of the holders of ardinary stock, &c, but it is usual to restrict the rights of preference shareholders or stock- lolders in this connection to such matters as are considered directly to affect their rights and interests, e.g., a right to attend and vote at a meeting when a proposition for the issue of debentures or the granting of any other charge jpon the company's assets or any other question directly affecting their interests is to be considered. Sometimes the rights of the preference stock- holders are contained in the memorandum )f association of a company registered under the Companies Acts, in which event such rights are rendered immutable, but in other cases the clauses referring thereto are relegated to the articles, so that they may be altered (if thought expedient) by special resolution. 477 [Preference The question as to whether a company regis- tered under the Companies Acts could issue preference shares although the memorandum of association did not contemplate such a course, was decided by the Court of Appeal in Andrews V. Gas Meter Co. (1897), as follows: — ■ (1) Section 12 of the Act of 1862 (now section 41 of 1908) confers a power to increase the capital, whether such a power is con- tained in the memorandum or not. (2) The terms of the increase of capital and the rights of members may be dealt with in the memorandum. (3) If such terms and rights are not dealt with in the memorandum they may (and more properly so) be dealt with in the articles of association, either as originally framed or as altered from time to time by special resolution. (4) Therefore where the memorandum and articles are both silent upon the point, the issue of preference shares may be effected by (a) the alteration of the articles of association by special resolution to meet the circumstances of the case, and (b) an increase of the capital in the terms of the articles (as amended) in pursuance of section 41 of the 1908 Act. It must be particularly noted, however, that where the memorandum contains provisions as to the issue of preference shares and the rights of existing and (possible) future members, such provisions are immutable, and the articles, even as originally framed, will not override the memorandum. Sir F. B. Palmer states that rights which are once unconditionally attached by the memo- randum to a particular class of shares cannot be altered or infringed. (Ashbury v. Watson, 30 CD. 376.) But if the rights are not uncon- ditionally attached, that is, if though specified in the memorandum they are coupled with a clause in the memorandum providing for alteration, such a specification in the memorandum does not take effect as an unalterable condition. ( Welsbach, t payment of general creditors are insufficient 3 meet them, the foregoing debts shall have rioritv over the claims of holders of debentures nder any floating charge created by the corn- any, and shall be paid accordingly out of any roperty comprised in or subject to that charge. It will be observed that rates due are included 1 " debts," although the relation of creditor and ebtor does not arise between rating authorities :id ratepayers. Section 107 of the Companies (Consolida- on) Act 1908 provides for the payment of rates, C, due when a receiver has been appointed on half of debenture-holders: — (1) Where .... either a receiver is appointed on behalf of the holders of any debentures of the company secured by a floating charge, or possession is taken by or on behalf of those debenture-holders of any property comprised in or subject to the charge, then, if the company is not at (he time in course of being wound up, the debts which . . . are ... to be paid in priority to all other debts, shall be paid forthwith out of any assets coming to the hands of the receiver or other person taking possession ... in priority to any claim for principal or interest in respect of the debentures. " ) Any payments made under this section shall be recouped as far as may be out of the assets of the company available for payment of general creditors. Mere the winding-up is by or subject to the liervision of the Court any distress or execution t in force against the estate or effects of the after the commencement of the lding up is void to all intents. (Section 211.) irs, creditors, or contributories may ply to the Court to determine any question arising in any winding up; and proceedings against the company can be restrained until an execution is completed by sale, although an express application to prevent realisation of an execution or distress is necessary in a purely voluntary winding up. (Westbury «&* Sons v. Tu'igg t~ Co., 1892, 1 Q.B. 77.) The appointment of a receiver or liquidator does not operate as a change of occupancy of a company unless where appointed by the Court with order for the company to give up posses- sion. Those officials manage the business of a company which continues to occupy premises until dissolved. As a rule debentures give the holders an equitable charge on the goods of a company. This does not prevent rating authorities from recover- ing rates from the company, although they have to take out a summons for leave to distrain on goods of a company in liquidation under super- vision of the Court. The property in goods sub- ject to a floating charge remains with the com- pany. It may be where debenture-holders are secured by a trust deed that the goods are thereby conveyed to trustees and leave to distrain cannot be given, but usually goods of a company are not covered by a trust deed. (In re Marriage^ Nea-ve " or property belonging to the society " or branch, or if any execution or other " process ... is issued against am " such officer, then his heirs, executors " administrators, or his trustee in " ruptcy, or the sheriff or other pe " executing the process . . . sh upon demand in writing of the trustee of the society or branch, or of any tw>! of them, or of any person author " . . . pay the money or deliver " the property to the trustees of I " society or branch, in preference to " other debt or claim against the estate 1 " the officer." pjferential; Note. — The words " by virtue of his office " have been strictly construed. In one case a secretary had collected moneys which the treasurer ought strictly to have collected, and on the secretary's death the above provision was held not to apply. If the claim is within the section, the societv is entitled to be paid out of the bankrupt's estate, although the money so owing is not in the possession of the bank- rupt, and cannot be specifically traced. (Be Miller, 1893.) (4) Savings Bank Act 1891, as to priority of debts due to a savings bank from any of its officers. (5) Stannaries Act 1S87, as to the priority of miners' wages in the winding up of mining companies. Note. — But the compensation aforesaid if payable to a miner or the dependants of a miner has the same priority as is con- ferred on such miners' wages. (Work- men's Compensation Act 1906, section 5, subsection (4).) It must be noted that the Acts deal only with le distributable property of a bankrupt or ssets of a company, as the case may be, that is say, the assets remaining after " the retention of such sums as may be necessary for the costs of administration or otherwise," so that, part from the special provisions of the Com- anies (Consolidation) Act 1908, sections 107 and 09 (applicable only to such companies as may ave issued debentures secured by a floating harge), the rights of secured creditors are not rejudiced; nor is the priority of payment of the lists of liquidation in any way affected. (See He Priority of Payments [Costs].) But the exceptions referred to (viz., those com- mies which have issued debentures secured by floating charge) create an anomaly in this spirt. f or by placing the preferential claims >ifore the claims of the debenture-holders, the ict places the preferential creditors in a better osition than that they would occupy if there 481 [Preferential were no debentures — that is to say, they have priority to the costs of the liquidation where there are debentures secured by a floating charge, and rank after such costs where there are no such debentures. The following regulations as to assessed taxes have been approved by the Board of Trade and Inland Revenue authorities. Although recorded here in their application to bankruptcy pro- cedure, they are also applicable mutatis mutandis to the winding-up of companies, including the substitution of section 209 of the Companies (Consolidation) Act 1908 for section 1 of the Preferential Payments in Bankruptcy Act 1S88:— (1) Where a receiving order is made on or after the 1st December in the year of assessment, or the Official Receiver or trustee remains in possession of the premises, in respect of which King's taxes are assessed, under a receiving order made prior to 1st December, until the 1st January next following the date of the receiving order, the collector shall be entitled to prove for the said taxes, viz., the income-tax (Schedule "A"), inhabited house duty and land tax, assessed on the debtor up to the 5th April next following the date of the receiving order, in the same manner as if such taxes had become due and payable at the date of the receiving order, and such proof shall rank for dividend. Note. — Proofs of debt for King's taxes are exempt from stamp duty. (2) Where a receiving order is made prior to the 1st December in the year of assessment, the Inland Revenue authori- ties will make no claim on the Official Receiver or trustee for income-tax (Schedule "A"), inhabited house duty and land tax for the year ended 5th April next following the date of the receiving order, unless the Official Receiver or trustee remains in possession of the premises (in respect of which the taxes are assessed) until the following 1st January. II Preferential] 482 [Preferential (3) Where the Official Receiver or trustee dis- poses of a business as a going concern, he will allow to the purchaser the proportion of the income-tax (Schedule "A") and land tax for the current year to the date of the completion of the purchase, and the pur- chaser will become liable to the Inland Revenue authorities for the taxes in ques- tion for the whole year. (4) Provided always that nothing in these regulations shall be deemed to interfere with the right of the Crown to enforce payment of income-tax (Schedule "A") and land tax actually due and payable, by distress levied on the property of the debtor. These taxes for the year ending 5th April next following the date of the receiving order should, therefore, be dealt with on the footing of " secured " debts and be paid by the Official Receiver or trustee on demand 'without any proof on the part of the collector, if on or after the 1st January in the year of assessment there are on the premises sufficient goods belonging to the debtor's estate on which the collector might levy, and notice of any such claim should be given to the Official Receiver by the collector forthwith upon the making of the receiving order. If at such time there are no goods upon which distress can be levied, proof of the debt may be made by the collector as directed in paragraph 1, and such proof shall, if found correct, be admitted to rank for dividend. (5) In like manner any income-tax (Schedule "A") and land tax assessed on the debtor up to the 5th April next before the date of the receiving order should be dealt with as secured debts if there are at the time of the collector's demand sufficient goods on the premises on which he might levy. If there are no such goods, proof of the debt may be made by the collector, and such proof shall, if found correct, be admitted as a preferential claim in so far as it relates to taxes payable in full under section 1, subsection 1 (a) of the Prefer- IV the will, on tor, with a ential Payments in Bankruptcy Act 1888, and as ranking for dividend for any part thereof not so payable in full. (6) Where income-tax is outstanding under Schedule " B," " D," or Inland Revenue authorities receipt of an affidavit by the debtor, certificate by the Official Receiver trustee, setting out that the debtor I made no income taxable under such schedule, forego all claim to pavnif: the tax, whether the same is payable full under section 1, subsection 1 (a), oi the Act of 1888, or otherwise, but waiver of claim under this regulation shall not embrace rents, royalties, interest of money, or annuities, from which, deductions have been made on account of income-tax. In cases where the debtoi attendance cannot be obtained by reason c his illness, absconding, or other cause, the certificate of the Official Receivi 1 trustee may be accepted as sufficier evidence without any affidavit by 1 debtor, but the reason for no such affidavit being furnished is to be stated. Note. — Liquidators and trustees shouli carefully inquire whether any such deduc- tions of income-tax have been made eithe by the company or bankrupt (as the cas may be) just prior to the liquidation or bankruptcy, and if made the amount of ta thereon should be provided for before t estate is distributed. In practice clain are often made by the surveyors after tl dividend has been paid by the liquidate but his duty remains even if there be n assets, and he may be held personal responsible for the tax as for any oth claim which he has neglected to pay (Pulsford v. Devenish, 1903.) (See ti Misfeasance.) Where a parochial or other local rate is levied payable by instalments, any of which fall at a date subsequent to the date of the receiving order, only such instalments as were actual!) Referential] lue at the date of the receiving order are pay- in full under the terms of the Preferential 'ayments in Bankruptcy Aet 1888 or the Com- lanies (Consolidation)" Act 1908. Rates or nstalments of rates are only payable for the >eriod during which the premises in respect of vhich the claim is made are in the actual occupa- ion of the debtor or the trustee. Claims for gas md water supplied prior to the receiving order lo not come within the terms of the Preferential Payments in Bankruptcy Act 1888 or the Com- janies (Consolidation) Act 1908, and are not pay- ible in full, except in cases where the authorities lave power to recover the amount due in the same way as a landlord can recover rent in irrear — that is, by way of distress without legal broccss, in which event the claim may be paid provided the property available for distress is of sufficient value. Note. — Where a general rate is compulsorily levied for water irrespective of the quantity used 3\ each consumer the amount due therefor may be a rate and entitled to priority. A fortiori where a water rate is levied whether water be used or not, and a water rent is charged in addition where a water supply is taken. Tithes are not payable in full under the Preferential Payments in Bankruptcy Act 1888 lor the Companies (Consolidation) Act 1908, and should only be so paid where, after the pre- scribed notice, there is property of the debtor upon which distress can be levied. Not more than two years' tithes are recoverable by distress. (Board of Trade Regulations.) ISii- titles Articled Clerk, Distress, Prefer- ential Creditors, Secured Creditor.) Limited Partnership. — Where a limited part- nership is wound up by the Court the provisions of the Companies (Consolidation) Act 1908 (and therefore the provisions as to preferential payments) apply. (Limited Partnerships Act 1907, section 6 (4).) (.See title Winding-up.) eferred Ordinary Stock.— Sec title Deferred Ordinary Stock. 483 [Preliminary Preliminary Expenses. — The expenditure in con- nection with the promotion, formation, estab- lishment, and registration of a company. The expenses comprise (1) the cost of pre- paring and printing the memorandum and articles of association ; (2) the preparing, print- ing, issuing, and advertising of the prospectus; (3) the charges of solicitors, accountants, valuers, and others properly employed in con- nection with the formation and registration of the company; (4) the fees and stamp duties pay- able in respect of the registration of the com- pany and the sale contracts, transfers, assign- ments, and conveyances in connection with the acquisition of the various properties; (5) broker- ages on the " placing " of shares and, where intra vires, the commission payable in respect of the issue of the capital or debentures or both; (6) the cost of share registers, seal, and all such special expenditure which the formation of the company has necessitated, provided it will not be of annual occurrence. Although this class of expenditure is inevitable, and is not capital expenditure in the strictest sense, yet it would be obviously unfair to charge the whole amount to the Revenue Account for the first period (year or otherwise) of the company's existence. The expenditure is therefore temporarily capitalised, and written off over a period of years, varying according to circumstances. The majority of companies charge Revenue Account with one-fourth or one-fifth per annum for the first four or five years respectively, whilst in extreme cases the instalments extend over ten years. There is not, however, any statutory obligation to write off the preliminary expenses out of revenue. Where the articles of association provide for the treatment of this item an auditor may safely follow the directions there laid down. As the practice of writing off such expenditure over a period of years is generally recognised, the auditor may safely allow it to be tempo- rarily capitalised, provided the item is separately stated in the Balance Sheet. II 2 Preliminary] 484 [Premiums In this connection the provisions of sections 26 and 90 of the Companies (Consolidation) Act 1908 are of interest, viz. : — That the total amount of the sums paid by way of commission in respect of any shares or debentures, or allowed by way of discount in respect of any debentures, shall be stated in the annual summary made next after the payment of the commission or the allowance of the discount, and the total amount so paid or allowed, or so much thereof as has not been written off, shall be stated in every Balance Sheet until the whole amount has been written off. The income-tax authorities will not allow a charge under this head as a deduction from profits assessable under Schedule D. Where the expenses are paid by the vendor, or where founders' or other shares are allotted to the promoters in consideration of their paying the preliminary expenses, the item does not, of course, directly affect the company. At the same time, as the share capital is pro tanto increased, the equivalent must appear as part of the assets, either as " goodwill " or in the form of an increased price for the properties acquired. (.See title Premiums on Shares.) The amount or estimated amount of prelimi- nary expenses must be stated in every prospectus of a company or intended company issued prior to the expiration of one year from the date at which the company is entitled to commence business (Companies (Consolidation) Act 1908, section 81), and in the report to be issued to the shareholders of a company other than a private company as defined by section 121 of the Act with the notice summoning the statutory meet- ing, an account or estimate of the preliminary expenses of the company must be set out. (Section 65.) Every company (other than private companies as defined by the Act) which does not issue a prospectus on or with reference to its formation, must, before the first allotment of either shares or debentures, file a " statement in lieu of prospectus " containing inter alia par- ticulars of the estimated amount of the pre- liminary expenses. (Companies (Consoli Act 1908, section 82.) A person voluntarily paid the registration fees of a company, but it was held by the Court of Appeal in Re National Motor Mail Coach Co., Lint. (1908, 2 Ch. 515) that it did not create an obligation to repay on the part of the company Kennedy, L.J., in the course of his judgment, said he could not differentiate between " a pay. " ment made without request in the case of " statutory obligation (e.g., to pay such fees) " and a similar payment under any other obliga- " tion, and it was certainly not the law that a " person can recover money paid by him without " request because the person on whose behalf it " was paid was under a legal obligation to pay. " An express promise to repay made by the cora- " pany after it came into existence would no " doubt be binding on the company though the " promise was for a past consideration." (See title Consideration.) But as a company 1 come into existence until the preliminary fee; are paid, and cannot request anything to be don'' on its behalf until it comes into existence, every company could, according to this decision, suc- cessfully repudiate liability for th" monev paid to bring it into existence. This obviously requires rectifying bv statute. Premises. — Propositions assumed or proved ; houses- and/or lands ; the commencement of a deed, which sets forth the parties and the particu subject-matter. Premiums on Debentures. in two connections This term may be namelv : — (1) Where debentures are issued at premium, i.e., the company receives fron the subscriber for the debentures more than the nominal value, and (2) Where they are redeemable at a premium, i.e., the company must on redemption pay to the subscriber more than the nominal value. In the first instance there is a present profit to. the company and in the second a future ■ regards debentures redeemable at a premium, :he proper course is to make provision out of jrolks over the term of the debentures for the pay- ment thereof in due course. Usually the nominal amount only of the debentures is stated in the Balance Sheet, together with a memorandum of the amount and date at which they are to be Iflkemed ultimately. The best way of dealing rvith repayment of debentures is by means of a proper Sinking Fund (see that title), and where this is done the sinking fund should, of course, anake provision for the redemption of the premiums as well as the nominal amount of the debentures. (.See titles Debenture, Redeemable Sbenti femiums 485 ards the treatment of these transactions count, it is suggested by some authorities hat premiums received on debentures may pro- h rlv be looked upon as a revenue profit. It is that there is a difference between premiums 1 shares and premiums received on lebentures, the former being a "profit" i'd by the shareholders at their own xpense or that of part of their own body, and he latter being a " profit " derived from a dis- inct body. But if the regulations of the com- xiny restrict dividends to " profits arising out of he business of the company " it is clearly per to credit premiums on debentures to le. Whether legal or not, it is suggested hat such a practice would be economically nd, although there is not the same objec- ion to tlii premiums being applied in reduction f the cost of issuing the debentures as there is o the policy of applying premiums on shares in eduction of preliminary expenses. Thus the urns may be written off " Expenses of Debentures Issue " Account, and the balance (if my) should be credited to reserve. Where the debentures are issued at a premium md repayable at par, the nominal amount of the lebentures will appear as a liability in the Balance Sheet and the balance of the premiums (if any) still standing in the books will be stated is a reserve. [Premiums Premiums on Shares. — When shares are issued at a premium, either at the formation of a com- pany or otherwise, the amounts representing such premiums should (strictly) be treated as receipts on capital account, for it is undesirable that they should be taken credit for in the Revenue Account, and distributed in dividends. Should the directors, however, insist upon dis- tributing the premiums in dividends, the auditor of the company cannot object, if the company's regulations do not prohibit such a course. The auditor should nevertheless see that the accounts arc framed in such a manner as clearly to dis- close the transaction, for dividends from such a source are not from profits earned in the ordinary course of the company's business. It is a matter for the consideration of possible applicants for shares which are being issued at a premium as to whether such premiums can, by the regulations of the company, be distributed in dividends in future years, or whether either by the special terms of the issue of the shares or by the regulations of the company such premiums are to be treated as capital receipts and reserved accordingly. An accountancy writer suggests that the pre- miums may " with great propriety be applied " towards the liquidation of an unrealisable " account on the credit side of the Balance Sheet, " such as that of preliminary expenses." It is submitted that the legality of such a course depends upon the articles of association, for it is little removed from the practice of directly crediting revenue with the amounts of the premiums, for " preliminary expenses " are temporarily capitalised because (according to the same author) " it would press unfairly upon the " Revenue Account of the first year were the " total amount thus expended charged against " it; therefore it is usual for the articles of " association of a limited company to contain a " clause empowering the directors to charge " only a proportion, varying from one-tenth to " one-fifth, against each year's Revenue " Account . . . until the account be thus " gradually extinguished." It is apparent that the practice of utilising the premiums on shares or any other fund in the Premiums; 486 ^Presentment reduction of an item which in the ordinary course would have been written off out of revenue (even though spread over a period of years) is ultimately tantamount to the passing of such premiums or fund to the credit of revenue. (Sec title Premiums on Debentures.) Presentment for Acceptance. — (1) Where a bill is payable after sight, presentment for acceptance is necessary in order to fix the maturity of the instrument. (2) Where a bill expressly stipu- lates that it shall be presented for acceptance, or (3) where it is drawn payable elsewhere than at the residence or place of business of the drawee, it must be presented for acceptance before it can be presented for payment. With the exception of the three above- mentioned cases presentment for acceptance is not necessary in order to render liable any party to the bill. (Bills of Exchange Act 1882, section 39.) Where presentment for acceptance is optional, bills are nevertheless presented for acceptance, so that (1) the drawee may be secured as a party to the bill, which he does not become until he " accepts " it, or (2) in case of refusal to accept by the drawee the holder may have an immediate right of recourse against antecedent parties. Unless presentment for acceptance is excused (see below) a bill payable after sight, when negotiated, must either be presented for acceptance or negotiated by the holder within a reasonable time, otherwise the drawer and all indorsers prior to the holder are discharged. (Section 40.) A bill is duly presented for acceptance when presented in accordance with the following rules : — ■ (1) The presentment must be made by or on behalf of the holder to the drawee or his agent at a reasonable hour, on a business day, before the bill is overdue. (2) Where there are two or more drawees who are not partners, presentment must be made to them all unless one has authority to accept for all. (3) Where the drawee is dead, presentment may be made to his personal representa- tive. If the drawee is bankrupt, present- ment may be made to him or his tru (4) Presentment may be made through the Post Office, where an agreement or usage allows it. Presentment is excused : — (1) Where the drawee is dead or bankrupt, or is a fictitious person, or one not having capacity to contract. (2) Where, after exercise of reasonable dili- gence, such presentment cannot be effected. (3) Where, although presentment has been irregular, acceptance has been refused on other grounds. In the above cases the holder may treat the bill as dishonoured by non-acceptance. The fact that a holder has reason to believe that a bill on presentment will be dishonoured does not excuse its presentment. (Section 41.) I (See title Acceptance.) Presentment for Payment. — Unless presentment is dispensed with, as referred to subsequently, a bill of exchange must be duly presented for pay- ment. If it be not so presented, the drawer and indorsers are discharged. (Bills of Exchan ; Act, 1882, section 45.) ^ But when a bill is accepted generally present- ment for payment is not necessary in order to render the acceptor liable. (Section 52 (1).) A bill is duly presented for payment when pre- sented in accordance with the following ruli s :— When not payable on demand, presentment j must be made on the day the bill falls due. (See title Days of Grace.) When payable on demand, presentment | must be made within a reasonable time after issue to make the drawer liable, and within a reasonable time after indorsement to make the indorser liable. P^sentment] Presentment must be made by the holder or his agent at a reasonable hour on a business day, at the proper place, to the payer or his agent. The proper place for presentment is : — (i) The place stated in the bill, or (2) The address of the drawee or acceptor, as stated in the bill. If no reference is made thereto in the bill, ten (3) The drawee's or acceptor's business place or residence, if known, otherwise the last known address of the payer. Where a bill is presented at the proper place, nd (after the exercise of reasonable diligence) person authorised to pay or to refuse pay- lent can be found there, no further presentment ; necessary. Where a bill is drawn upon or accepted by .vo or more persons who are not partners, and place of payment is specified, presentment lust be made to them all. Where the drawee or acceptor of a bill is dead, nd no place of payment is specified, present- lent must be made to a personal representative, such there be, and if with the exercise of isonable diligence he can be found. Presentment may be effected through the Post >ffice where authorised by agreement or usage. Section 45.) Where the holder of a bill presents it for pay- lent he must exhibit the bill to the person from .horn he demands payment, and when a bill is aid the holder must forthwith deliver it up to lie party paying it. (Section 52.) Delay in making presentment for payment is soused when caused by circumstances beyond le control of the holder, and not imputable to lis default, misconduct, or negligence. Presentment for payment is dispensed with : — (1) Where after the exercise of reasonable diligence presentment cannot be effected. The fact that the holder has reason to believe that the bill will be dishonoured 487 [Present on presentment does not dispense with the necessity for presentment. (2) Where the drawee is a fictitious person. Note. — The fact that the drawee is a person not having capacity to contract does not of itself excuse presentment for payment. (3) As regards the drawer, where the drawee or acceptor is not bound as between him- self and the drawer to accept or pay the bill, and the drawer has no reason to believe that the bill would be paid if presented. (4) As regards an indorser, where the bill was accepted or made for the accommodation of that indorser, and he has no reason to expect that the bill would be paid if presented. (5) By waiver of presentment, express or implied, and before or after the time for presentment. Note. — Waiver of notice of dishonour does not of itself include a waiver of presentment for payment. (Section 46.) A promissory note payable on demand, which has been indorsed, must be presented for pay- ment within a reasonable time after the indorse- ment. If it be not so presented the indorser is discharged. In determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade, and the facts of the particular case. (Section 86.) (As to cheques see title Unpresented Cheques.) Presents. — A written instrument is referred to in the instrument itself by the phrase " these presents." Present Worth. — As applied to a sum of money pavable at a future date, this term expresses the amount which, if improved at a stated rate of interest per annum thereon during the period intervening between the present and future dates, will equal the proposed sum as and when it becomes due. The term may be applied to (1) a fixed sum, (2) equal payments recurring at Present] 488 Priority regular or irregular dates, or (3) unequal pay- ments recurring at regular or irregular dates. The difference between the proposed sum or sums and the present worth thereof is termed the " discount." The rate of interest applied may be either compound or simple, and (in the former case) the rests may be made annually, half-yearly, or otherwise. The present worth forms the basis of com- parison between various amounts payable at different times — thus, supposing a person were desirous of surrendering a particular reversion for an immediate life annuity of a proposed amount, the present worth of each benefit would be ascertained in order to determine whether the proposition was acceptable or not. The present worth of £1 due x years hence at y per cent, per annum if deducted from £1 gives the present worth of an annuity for x years of y per cent, interest on £1. (See titles Discount, Interest.) Primage. — This was originally a small payment made by the merchant to the master of a ship for his care and attention to the goods shipped, but in this connection the term is now practically obsolete. It was also called " hat money." The term is now used to express a certain per- centage on the freight payable by the merchant to the shipowner. For instance, the freight may be quoted as 15s. per ton with 5 per cent, primage, which would make the freight in reality 15s. gd. per ton. Sometimes it is arranged that upon a shipper giving (and carrying out) an undertaking to ship all goods to certain ports by the ships of one company or fleet, a certain percentage of the freights paid by him to the company during the year or other period will be returned to him. This is called " returned primage " or " rebate freight." Prime Cost. — The original or direct cost of an article, as distinct from the " cost of produc- tion," which term includes all expenditure incurred in manufacture, whether direct or indirect. (See title Manufacturers' Accounts.) Prime Entry. — Sec title Bill of Entry. Principal. — See title Agent. Priority of Payments (Costs, &c). — Bankruptcy. The assets in every matter remaining payment of the actual expenses incurred in realising any of the assets of the debtor shall, subject to any order o? the Court, be liable to tht following payments, which shall be made in the following order of priority, viz. : — (1) The actual expenses incurred bv Official Receiver in protecting the pro- perty or assets of the debtor, or any part thereof, and any expenses or outla\ incurred by him or by his authority in carrying on the business of the debtor. (2) The fees, percentages, and charges pay- able under Table B of the scale of fees; and any other fees payable to, or costs, charges, and expenses incurred or autho- rised by, the Official Receiver. (3) The fee which under the scale of fees foi the time being in force is required to b( affixed to the copy of the Cash Book wher, forwarded for audit. (4) The deposit or deposits lodged by the petitioning creditor. (5) The deposit or deposits lodged on am application for the appointment of ar interim receiver. (6) The remuneration of the special manage: (if any). (7) The taxed costs of the petitioner. Note. — The. taxed costs of the peti- tioner's solicitor must be paid, irn tive of any question of set-off against thf petitioner. (S) The remuneration and charges of 1 person (if any) appointed to assist debtor in the preparation of his statemen of affairs. Note. — An arrangement must be with the Official Receiver, as in the of winding-up procedure (infra). Pririty] V\ (9) Any allowance made to the debtor by the Official Receiver. 10) The taxed charges of any shorthand writer appointed by the Court. Note. — Where a shorthand writer is appointed at the instance of the Official Receiver to take notes of the examination of the debtor at his public examination, the cost of such notes shall be deemed to be an expense incurred or authorised by the Official Receiver, and be paid in priority accordingly. ) The trustee's necessary disbursements other than actual expenses of realisation heretofore provided for. 12) The costs of any person properly employed by the trustee with the sanction of the committee of inspection. A ote. — These payments are subject to the regulations as to taxation (infra). 13) Any allowance made to the debtor by the trustee with the sanction of the committee of inspection. 14) The remuneration of the trustee. Note. — This is not a taxable charge. (Bankruptcy Act 1883, section 73.) |R5) The actual out-of-pocket expenses neces- sarily incurred by the committee of inspec- tion, subject to the sanction of the Board of Trade. (Rule 125 of 1886.) Ml bills and charges of solicitors, managers, »»untants, auctioneers, brokers, and other J rsons. not being trustees, shall be taxed by the ]?scribed officer, and no payments in respect iTeof shall be allowed in the trustee's accounts 'tJiout proof of such taxation having been 1 ide. I livery person shall, on request by the trustee hich request the trustee shall make a ilficient time before declaring a dividend), ••liver his bill of costs or charges to the proper --•icer for taxation, and if he fails to do so 1 thin seven days after receipt of the request, or I* further time as the Court, on application, 4 8 9 Priority may grant, the trustee shall declare and dis- tribute the dividend without regard to any claim by him, and thereupon any such claim shall be forfeited as well against the trustee personally as against the estate. (1883 Act, section 73.) Before taxing the bill or charges of any solicitor, manager, accountant, auctioneer, broker, or other person employed bv an Official Receiver or trustee, the taxing officer shall require a certificate in writing, signed by the Official Receiver or trustee, as the case may be, to be produced to him, setting forth whether any, and if so what, special terms of remunera- tion have been agreed to, and in the case of a bill of costs of a solicitor, a copy of the resolu- tion or other authority sanctioning the employ- ment. (Rule 117.) Company Liquidation. ! oluntary Liquidation. — All costs, charges, and expenses properly incurred in the voluntary winding up of a company, including the remuneration of the liquidator, are payable out of the assets of the company in priority to all other claims. (Companies (Consolidation) Act 190S, section 196.) Note. — There is no prescribed order of priority inter so as in the case of bankruptcy and winding up by the Court. Winding up by the Court. — The assets of a company which is being wound up remaining after payment of the fees and actual expenses incurred in realising and getting in the assets shall, subject to any order of the Court, be liable to the following payments, which shall be made in the following order of priority, viz. : — (1) The taxed costs of the petition, including the taxed costs of any person appearing on the petition whose costs are allowed by the Court. Note. — If the petitioner is a shareholder, and subsequently becomes liable as a con- tributory in respect of calls, he is entitled to his costs, free from any set-off in respect of such calls. (2) The remuneration of the special manager (if any). Priority] 490 Prii >riorit> (3) The costs and expenses of any person who makes, or concurs in making, the com- pany's statement of affairs. Note. — A person who is required to make or concur in making any statement of affairs of a company shall, before incurring nny costs or expenses in or about the preparation and making of the statement, apply to the Official Receiver for his sanction, and submit a statement of the estimated costs and expenses which it is intended to incur; and, except by order of the Court, no person shall be allowed out of the assets of the company any costs or expenses which have not, before being incurred, been sanctioned by the Official Receiver (Winding-up Rules 1909, Rule 54.) (4) The taxed charges of any shorthand writer appointed to take an examination provided that, where the shorthand writer is appointed at the instance of the Official Receiver, the cost of the shorthand notes shall be deemed to be an expense incurred by the Official Receiver in getting in and realising the assets of the company. (5) The liquidator's necessary disbursements, other than the actual expenses of realisa- tion heretofore provided for. (6) The costs of any person properly- employed by the liquidator with the sanction of the committee of inspection. Note. — No payments in respect of bills or charges of solicitors, managers, account- ants, auctioneers, brokers, or other persons (other than payments for costs and expenses incurred in connection wuth the preparation of the statement of affairs and sanctioned by the Official Receiver and payments of bills which have been taxed and allowed under orders made for the taxation thereof) shall be allowed out of the assets of the company being wound up by the Court, without proof that same have been considered and allowed by the Registrar. This rule does not apply to costs in connection with legal proceedings taken by or against a company which i being wound up by the Court, which ar ordered by the Court in which such pre ceedings are pending to be paid bj company or the liquidator. (Rule 1 (7) The remuneration of the liquidator. (8) The actual out-of-pocket expenses neces sarily incurred by the committee of inspec tion, subject to the approval of the Boar of Trade. (See title Committee Inspection.) (Rule 187.) It will be noted that the order of priority i bankruptcy is mutatis mutandis the same a that in winding-up procedure, with the followin exceptions : — (1) The additional provisions for an allowanc to the debtor by the Official R> and, or trustee, and (2) The reversal of the priority as betwee. the remuneration of the special manage and the costs of the petitioner. The priority of the costs of administration i bankruptcy and company liquidation is nt affected by the provisions of the Preferenti; Payments Act 1888 or the Companies (Consolid: tion) Act 1908, the preferential claims therei provided for being payable out of the remaining after the retention of the net sums for administering the respective e> except in the case of a company having I debentures, secured by a floating charge. Hr; the Companies (Consolidation) Act 1908, I 209, creates an anomaly, placing the pref' .•; claims against a company which has I debentures secured by a floating charge ^^H the claims of such debenture-holders, and. consequence, conferring upon them a p^^H over the costs of winding up. Deed of Arrangement. The order of priority in which the payl^Bfl in pursuance of a deed of arrangement are Ml made is generally provided for in the deed and generally the rules in bankruptcy pr are adopted. i'.-rity Vlun a limited partnership is wound up by Court the provisions of the Companies (Con- i dation) Act 1908 (and therefore the provisions 10 priority of payments) apply. (Limited tnerships Act, section 6 (4).) See lilies Preferential Creditors, Preferential I ments in Bankruptcy and Winding up.) Limited Partnership. te Company. — Prior to the passing of the C npanies Act 1907 no statutory definition -ted "f a " private company," although the C npanies Act 1900 had introduced certain dis- ti lions between companies which issued a pro- ctus and those which did not. The effect of t se distinctions was that in practice the first- nned class of company were considered ublic " companies and the latter " private " ipanies. he following remarks by Sir F. B. Palmer a of interest, although they were made prior to ing of the 1900 Act, and must be read ject to the provisions of the Consolidation Act 1908:— " No satisfactory — that is exhaustive — definition of a private company can be given; the term is too elastic, but some leading characteristics may be indicated. One is that the private company is started and worked without appealing to the public for capital. A company which appeals to the public by prospectus, circular, or other- wise, is not classed as a private company. i. . . Another characteristic is that it is std of a very limited number of members, perhaps 7, 8, or 9. . . . And ily are the members few in the case of a private company, but the great bulk of the shares are usually in the hands of only some of those few members. ... A further characteristic is that the right to transfer shares is, in the case of most private com- panies, closely fetteted, and that the con- tinuing members are commonly given a pre- ferential right to purchase the shares of an Outgoing member. . . . The private character of such a company may at any 491 [Private " time be terminated by the public being let " in and allowed to take shares, either by " allotment or transfer." For the purposes of the Companies (Consolida- tion) Act 1908 the expression " private com- pany " means a company which by its articles: — (a) Restricts the right to transfer its shares; and (b) Limits the number of its members (exclusive of persons who are in the employment of the company) to fifty; and (c) Prohibits any invitation to the public to subscribe for any shares or debentures of the company. Note. — To qualify as a private company the articles must provide for all the foregoing and the restriction of the right to transfer shares must apply to all the shares of the company, and not be limited to a particular class, e.g., to ordinary shares only. A private company may, subject to anything contained in the memorandum or articles, by passing a special resolution and by filing with the Registrar of Companies such a statement in lieu of prospectus as the company, if a public company, would have had to file before allotting any of its shares or debentures, together with such a statutory declaration as the company, if a public company, would have had to file before commencing business, turn itself into a public company. Where two or more persons hold one or more shares in a company jointly they shall, for the purposes of this section, be treated as a single member. (Section 121.) All companies, other than those coming within the foregoing definition, are public companies, and may be subdivided as follows : — (a) Those which issue a prospectus (i.e., an invitation to the public to subscribe for shares or debentures) on or with reference to their formation. (b) Those which do not issue such a prospectus. Private] 492 Privati As to what amounts to " an invitation to the public," Farwell, J., has said, "An offer is not " the less made to the public because it is sent " to (existing) shareholders or debenture- " holders as well as to other persons, or because " it is not advertised in the public newspapers," and it would seem that a general invitation for subscriptions, however limited the circle to which it is addressed, is an invitation to the public, so long as any of the persons directly approached are not already members of the company. The minimum number of persons which it is necessary to be associated in order to form a private company is two, as against seven in a public company. (Section 2.) Several restrictions are imposed upon public companies which do not apply to those formed " privately." The following are the four chief restrictions connected with the formation : — (1) The filing with the Registrar of Joint Stock Companies of a prospectus or a statement in lieu of prospectus (as the case may be) containing specific information. (2) The filing with the same official, by directors named in the articles of associa- tion and/or prospectus or statement in lieu of prospectus, of their consent to act as directors, and also of their undertaking to take and pay for their qualification shares (if any). (3) The filing on application for registration of the memorandum and articles of a list of the persons who have consented to act as directors. (4) The prohibition of proceeding to allotment, unless the " minimum subscription " has been received. To ensure compliance with these provisions a " public " company, before commencing any business or exercising any borrowing powers, is required to obtain (in addition to the Certificate of Incorporation necessary for all joint stock companies), " a certificate that the company is entitled to commence business." To effect registration of a company without compliance with the formalities above referred to, the articles of association must 1 provisions required by section 121 of the 1 (sec above). Where it is desired to register a ] company as defined by section 121 Act, it will be necessary to register specie articles, for Table A does not comBJ^^H the requirements of that section. Tt^^H lion of the right to transfer partly tt^M shares and shares on which tin has a lien, &c. (clause 20), is m sidered sufficient restriction of " the transfer," for the Registrar contends that tl restriction must apply to all shares, t to 40 inclusive as to share warrants muj^HI be deleted, as they nullify the provisic tion 121, and clause 5 cannot apply to a privat company. (See titles Articles of AssociHbri Table A.) In addition to the exemptions set <■■; affecting the formation of a company, privat companies are also exempt from the foM^Hj provisions : — (1) The inclusion in the annual summ an audited Balance Sheet. (Co (Consolidation) Act 1908, section (2) The forwarding and filing of the report. (Section 65.) (3) The right of preference shareholdei debenture-holders to receive and Balance Sheets and reports. (Section A private company may pay commissioi the issue of shares in the company, provid the payment of the commission is author: the articles ; (2) the commission paid or to be paid does not exceed the amount or authorised ; and (3) not being (of cour: issue of shares to the public, the amount per cent, of the commission paid or agn paid is disclosed in a statement in the pre: form signed in like manner as a statement of prospectus and filed with the Registi Companies, and, where a circular or not! being a prospectus, inviting subscription fi shares is issued, also disclosed in that circul: notice. (Section 89.) (See title One-Man Company.) »ri ite; "riiie Ledger. — A Ledger reserved for the use and m of the partners or other proprietors of It usually contains particulars as to I capital in the business, the Profit and Loss and other private matters (varying acprding to circumstances). In this Ledger the fidl adjustments of the accounts may possibly whilst the successive Balance Sheets are invariably entered therein, though, of In the form of a memorandum only. Me Ledger Account. — An Account in the Gjeral Ledger or one of the General Ledgers uch are not self-balancing) showing the luce of the items in the Private Ledger, so the chief bookkeeper may balance the G it;.! Ledgers without recourse to the Private LJger. The principle involved is somewhat Sflar to that upon which Controlling Accounts tructed. (Sec title Sectional Ledgers.) rofjte.— The official proof of a will; the copy of ;i nil under the seal of the Probate Court. Iprmerly, only those instruments (i) which ■rained a testamentary disposition of personal ■nerty, or (2) whereby realty was disposed Jnd the testator had appointed an executor, p admitted to probate, but since the Land llisfer Act 1S97, probate may be granted ■ispect of real estate. (See title Land •fjnsfer Act.) I will disposing only of property in a foreign ttitry is not entitled to probate, whilst the rt may, and occasionally does, admit part of instrument to probate, and may refuse t' as to the remainder. person named as executor, and he only, ri.vi a will; he cannot transfer his right to IBcr person not named executor in the will. utor is not bound to accept jjoflice. lie may renounce, but having lanced, the Court has power to permit him ttract his renunciation if considered desirable he interests of the estate. (Re Stiles, 1897, ".L.R. 61.) liriunciation must, however, be made before itorial act has been performed or before 493 [Probate the person has otherwise shown that he has elected to act. A will may be proved in common form or per testes (solemn form). The common form is used for ordinary and undisputed cases, the executor merely presenting the will with the deposition that same is " the true, whole, and last will and " testament of the deceased," whereupon the Court annex the seal. When the will is proved in solemn form, or in form of law, the parties interested are cited to be present, when the will is produced and the witnesses are sworn, examined, and their deposi- tions published. In case of sufficient proof the Court then pronounces for the validity of the will. An executor having proved the will in solemn form is not compellable to prove it any more, but if probate has been granted in common form he may be compelled to prove it again in solemn form. " The right of an executor is derived from " the will and not from the probate; he has his " right immediately on the death of the testator, " and the right draws after it a constructive " possession ; probate is a mere ceremony, evi- " dence of his right, and is of the same effect as if the will had been proved immediately after " the death of the testator, by reason of the rela- " Hon (back) of the probate. The property of " the deceased vests therefore in his executor " from the time of his death, the law knowing no- " interval between the testator's death and the " vesting of the right in his representative, i.e., " his executor." The jurisdiction of granting probate of wills is exercised in the Probate Court, having a Principal Registry at Somerset House and Dis- trict Registries for the various parts of England and Wales. A District Registrar has full power to grant probate of a will provided the deceased had his permanent place of abode within the par- ticular district at the time of his death. The wills of persons who at the time of their death resided either in London or a district not having a District Registry must be proved at Somerset House, whilst the wills of those who have resided in the districts having Registries may be proved Probate] 494 Profit either at the respective Registries or at Somerset House. The executor will require to make two affidavits, the one being the " oath of the executor " in the prescribed form, and the other the Inland Revenue statement for the purpose of assessing the estate duty payable. (See titles Administration (Letters of), Estate Duty, Executor, Will.) Probate Duty. — The stamp duty payable in respect of the personal estate and effects for which pro- bate or letters of administration were (or may be) granted in the case of persons dying before 2nd August 1894. Estate duty is payable in respect of the pro- perty of persons dying after 1st August 1894, and probate duty is not levied in such cases. Profit.— Economic. — " Profits must not be confounded " with the produce of industry primarily " received by the capitalist. They really con- " sist of the produce or its value remaining to " those who employ their capital in an industrial " undertaking after all their necessary payments " have been deducted, and after the capital " wasted and used in the undertaking has been " replaced. If the produce derived from an " undertaking, after defraying the necessary out- " lay, be insufficient to replace the capital " exhausted, a loss has been incurred. If the " produce is merely sufficient to replace the " capital exhausted, there is no surplus — there is " no loss, but there is no profit, and the " greater the surplus is the greater the profit." [McCulloch.] " Capital is consumed in producing; capital is " wealth, and there must be restoration of such " wealth as is not destroyed by enjoyment, but " in creating other wealth. If that new wealth " were not forthcoming there could be no motive " to apply any wealth to capital. Profit, which " is reward, cannot begin till the replacement of " the things consumed has been completed." [Bonamy Price.] How ascertained : — (1) Single Account System. — The " Single Account System " and " Double Account System " must be carefully distinguished Iron the terms single entry and double entr titles Bookkeeping, Double Account Sytfe Single Account System.) While the double account system of . ing profits is based upon the assumption thai Capital Account and Revenue Account must b» deemed distinct for that purpose, the advocate* of the single account system aver that such a distinction has no foundation in principle, and that the true profits can only be ascertained b\ a Balance Sheet showing the true financial position of the company — not (Sir F. B. Pata says) " a Capital Account showing, as a matte " of history, how the capital contributed has beer " applied in the past, but a living account show- " ing the true financial position of the compan; " at the date." The single account method applicable either to a company or an ordina partnership. If the total of the items on t credit or " assets " side of the Balance Shte exceeds the (paid-up) capital and liabilities of I concern, and any necessary " reserve," then so excess is considered profit. Of course, in addi tion to the Balance Sheet, reference may be madi to a Profit and Loss Account, compiled from th< complementary figures supplied by the doul entry system of bookkeeping. Thus, the p of a concern, as ascertained bv the single acco system, is the excess of the assets over thi liabilities (including capital), whilst the profit fa' a particular period (assuming there has been distribution of profit or further contribution c capital meanwhile) is the difference between tl excesses as at the commencement and end of th period respectively. If the transactions of concern are recorded upon the single a system and by single entry, the true (ecoi profit for a particular period may be ascertain but if the accounts are kept, not only upon single account system, but by double entry, th not only is the true (economic) profit for .1 ticular period ascertained, but the Balance Sb* is supported by a Profit and Loss Account she ing the constituent parts contributing to 1 result. The single account system, based as it is u] a Balance Sheet showing the true fina: >rJit] 495 Idlion of a concern at any given date, neces- sily recognises the principle of charging tenue with the exhausted values of wasting *ets and treating only as assets in the Balance Let that which is considered as the unex- fcisted portion of the cost price. (L) Double Account System.— Lord Justice Hckley, in his work on the Companies Acts, Irocates the double account system, as f declaration of a dividend. Thus, a dividend may not legally be regarded as a payment out of capital if the capital be sunk in property of a wasting nature (e.g., a mine or a quarry), even though the dividend be paid out of the excess income derived from the work- ing of such wasting property, if the constitute of the company contemplates a distribution of such income without providing a fund thereout tc replace the inevitable waste. This principle was extended in the case Of] Vernerv. General Trust (1894) to investments by Pbfits] ay of stocks, shares, &c. Here the articles of ition did not require lost capital to be made before dividends could be declared, but ere, in fact, so framed as to permit the com- any to sink its capital in the purchase of stocks nd other securities (even though speculative), nd to pav dividends out of whatever interest or livtdends such stocks or securities might yield, lthough some of the investments might have onsiderablv depreciated in value, and part of the wan-fixed capital as a consequence might be lost id recovery. It was held that the payment .f a dividend under such circumstances did not mount to a payment out of capital. The general law does not require the main- ■ ■ of fixed capital as a condition precedent ill. payment of a dividend. Thus fixed capital nay be sunk and partly lost, jet the excess of urrent receipts over current payments may be iistributed in dividend ; but floating or circulating apital (e.g., stock-in-trade and book debts) must aintained, otherwise it will enter into and form part of the excess of current receipts over ■urrent payments. To divide such excess without feducting any capital which may form part of it would be contrary to law. With stronger reason, where the current expenses exceed the current gains, and there are no reserved profits of past years available, there can be no distribution as dividend. Obviously, in a distribution under such circumstances, it would pital that was being paid away in dividend, amounting thereby to a misapplication of such capital, and where capital is misapplied, the directors, or other officers implicated, may be compelled to make good the amount. Premiums derived from an issue of share capital are generally treated as a receipt on Capital Account and held in reserve; for although not carrying a right to dividend, and thus not capital in the strict sense, they are not profits earned in the ordinary course of carrying on a business. Where the articles of association expressly restrict the dividend fund to profits of the latter class, premiums are certainly not available for dividend. 499 [Profits As already stated, there is no necessary rela- tionship between the amount representing the true economic profit of a concern and that amount which, by reason of the regulations of the company or the peculiar nature of its opera- tions, may become legally divisible as dividend without infringing the rule that dividends cannot be paid out of capital. But it must be borne in mind that the legal decisions, which for reasons varying with each case have allowed companies to deviate from sound financial principles, are what are called permissive decisions. They do not require, or necessarily recommend, the adop- tion of the principles they propound — they merely permit companies to conform to their own regula tions on financial matters, provided such con- formity does not involve a breach of the rule that the capital must not be distributed by way of dividend; and subject to any special regulation to the contrary, they construe this latter rule to the following effect : — (i) To distribute the excess revenue without providing thereout for the depreciation of fixed capital would not amount to a dis- tribution out of capital to the extent of such depreciation. (>) To distribute the excess of revenue without maintaining the circulating capital would amount to a distribution of capital to the extent of any deficiency of same, for as the circulating capital is deemed to merge in the revenue, unless the full amount of such deficiency is deducted therefrom, capital would, in effect, pro tanto form part of the so-called excess of revenue distributed. (3) To distribute a dividend when the current payments exceed the current gains and when there is no accumulation of past profits, will amount to a payment out of capital. The return of capital which may be involved in a distribution of profits which have been ascertained without regard to depreciation is perhaps not objectionable in itself so long as creditors are not prejudiced thereby, and so long as the shareholders are made fully aware of the K K z Profits] circumstances ; but the evil lies in the distribution of moneys ns profit without identifying (a) the proportion which is really profit, and (b) the extent to which the distribution is undeniably a return of capital. Fortunately, the permissive decisions of the Courts are not generally adopted, and in very many instances the regulations of the company expressly require a proper provision out of revenue for the inevitable depreciation of the company's property. The endeavour of those responsible for the finances of most concerns is to maintain the capital upon a reliable basis by providing for all known shrinkage of assets, whether by way of depreciation, or wear and tear, and whether of fixed or circulating capital, so that, so far as possible, having regard to the risks involved in commercial undertakings, share- holders may be assured that they are receiving as dividend only such moneys as represent the true economic profit, and that, as a consequence, the amount of paid-up capital is fairly represented amongst the assets. However commendable these endeavours may be, they are factors in a counsel of perfection which is very difficult to apply in actual practice, many complicated questions having to be decided upon their particular merits in the case of each company. The following extracts from three different judgments of Lindley, L.J. (now Lord Lindley), are typical of the legal views on this question : — " It is true that if the working expenses " exceed the current gains, profits cannot be " divided, and that if in such a case capital is " divided and paid away as dividend the capital " is misapplied, and the directors implicated in " the misapplication may be compelled to make " good the amount misapplied." (Lindley, L.J., Lee v. Neuchdtel Company, 1889.) " The excess of current receipts over current " payments may be divided, but floating or " circulating capital must be kept up, as other- " wise it will enter into and form part of such " excess, in which case to divide such excess, " without deducting the capital which forms 500 Profits " part of it, will be contrary to law." (I L.J., Verner v. General Trust, 1894.) " It is not possible for the Court to s< " the law prohibits a limited company. 1 " limited banking company, from paying divi- " dends unless its paid-up capital is intact. " Suppose a heavy unexpected loss is sustained, " it must be met if there are assets to mi " with. The capital, even uncalled capital, must, " if necessary, be applied to meet it. . . . " There is no law which, in the case supposed, " prevents the payment of all future dividends " until all the capital so expended is made good." (Lindley, M.R., In re The National Ba, ■ Wales, 1899.) There is also a valuable collection of judicial dicta bearing upon this question in the Appendix to a paper by Mr. A. A. James, F.C.A. Accountant, 1901, p. 1131.) The foregoing deals with the question of profit available for divitlend from the point of view of the shareholders of a company as a whole, but there are sometimes difficult questions to decide as between different classes of shareholders. For instance, where the holders of ordinary shares are entitled to a certain rate of dividend out of the profits from time to time available for divi- dend, and the holders of founders' shan entitled to a certain proportion of the profits in excess of such rate of dividend, the profits avail- able for dividend have been held to mean tl profits after making all proper deductions, that if the regulations of the company emp the directors before declaring any dividend aside out of the profits of the company such sums as they may think proper as a reserve fund or a fund for repairs or contingencies they may do so, although the effect may be to leave sufficient profits to pay a substantial dividend on t ordinary shares, but no " surplus " to pay a dividend on the founders' shares. (Fisher t Black and White Publishing Company, C.A. 1901, 1 Ch. 174.) (See titles Capital. Deprecia- tion, Profit, Profits prior to Incorporation.) Profits prior to Incorporation. — Obviously a com- pany cannot earn profits until after it has come into existence (i.e., after incorporation), or until ■ hi in*. . to set 1 Plfits ter it is entitled to ".commence business " see infra) and has employed its own capital <\d resources in the earning thereof, so that tied profits " acquired by a company by jrchase are part of its capital assets, and to pay dividend thereout would be a payment out of ipital. An existing business is taken over by a com- my as from the date of incorporation, or from le date it is entitled to " commence business," tin case may be, and not from any prior date an which " accrued profits " are supposed to be tjLiir. ■ I : therefore, in such a case, the assets hich represent those profits are taken over by le company without any specific price being dd for them. If a company acquires a business on the basis ' a Balance Sheet as at a date (say) three onths previous to incorporation (a more correct ■scription of the transaction) and the purchase oney has been fixed at £20,000, then, if profits ive accrued during the intervening three months the amount of £1,500, the actual amount of le ass posed undertaking, and inviting them to tS shares on the faith of their representation therein contained, are bound to state everything with strict and scrupulous accuracy, and n only to abstain from stating as fact that whit is not so, but to omit no one fart within their know- ledge the existence of which might in any degree affect the nature or extent or quality of tl pri\ ill ges rind advantages which the prospeCJ holds out as inducements to take shares. (Kindersley, V.C. (1861).) Sir F. B. Palmer, referring to the al says : — This " golden rule " is, perhaps, some! of a " counsel of perfection "; at all events, has been qualified by subsequent decisions. The main legal requirements of a prospectU re : — (1) There must be no misrepresentation of S material fact, or omission of any material fact, and the wording should not be decep- tive, misleading, or ambiguous. (2) The provisions of the Companies (Consoli- dation) Act 190S (see below) must b complied with. Pti pectus] n the event of non-compliance with the above, a allottee of shares may be entitled according t( circumstances either to: — -Hi) Repudiate allotment and obtain rescission of the contract to take shares; or 12) Claim damages or compensation from the directors, promoters, or other persons responsible for the issue of the prospectus, either (a) in an action for deceit, or (6) under the Companies (Consolida- tion) Act 190S, or •h) Prosecute the directors, managers, or public officers responsible for the issue of the prospectus, under section 84 of the Larceny Act 1S61, or under section 281 of the Companies (Consolidation) Act 1908. 5°9 [Prospectus 1) Rescission. — To obtain rescission an uist prove: — 1) That the prospectus was issued bv the company or its responsible agents. >) That the prospectus contained a material misrepresentation or a material omission; and ) I hat he (the allottee) was in consequence, or upon the faith of such, actually induced, in whole or in part, to subscribe for the shares. the allottee having proved (a) and (6) m contends that he was induced to take the ■ because of the misrepresentation or omis- complained of, the company, in order to ain I lie contract with the allottee, must prove such was not the case, e.g. : I Bi ■ause he had subscribed for the shares before he saw the prospectus. ' B ause he really subscribed in pursuance Of an arrangement with the promoters. I Because it is improbable that a man with the experience of the allottee would be misled by the particular matter complained of, Sec. &c. uly a shareholder who has applied for |es in a company in response to a prospectus till:, I to rescission on the grounds of misre- presentation in the prospectus; a person who has purchased shares from another shareholder cannot ask for rescission, although he has read the prospectus and purchased his shares on the faith of it, unless some direct connection can be shown between the company and himself in the communication of the prospectus (Peek v. Gumey, 1873, 6 H.L. 37;), or unless it can be shown that the prospectus was intended by the company to be the means of inducing people to purchase its shares on the market. (Andrews v. Mockford, 1896, 1 O.B. 372.) A contract to take shares, &c, when induced by misrepresentation of facts, or omission to state fatts, under such circumstances that the shareholder has a right to repudiation and rescission of the contract, is voidable, not void; the shareholder may adopt or avoid the contract at his option, and such contract is good until avoided. But this right to avoid must be exer- cised promptly, for If a man claims to rescind his contract to " take shares in a company on the ground " that he has been induced to enter into it by " misrepresentation, he must rescind it as soon "as he learns the fact, or else he forfeits all " claim to relief." [James, L.J.] " The Court would be most careful to see " in the case of a company going on and " trading, in which the rights of the share- " holders and others varied from day to day, " that a person, coming to complain of mis- " representations and coming to avoid a void- " able contract, came within the shortest limit " of time which was fairly possible in such a " case." [Cairns, L.C.] The right to rescission may also be lost if a shareholder by his conduct shows an intention to adopt the contract, for if, after ascertaining the facts which give him the right to rescind, he attempts to si 11 the shares or pays calls thereon, receives a dividend, or attends and votes at a meeting of the company, he would be deemed to have affirmed the contract. In particular a shareholder cannot exercise his right to rescind after the commencement of a winding-up, as the rights of third parties (the company's creditors) will have intervened, but if Prospectus] 5io Prospectus the " shareholder " has taken the proper course and obtained a rescission of the contract to take the shares before a winding-up has been com- menced, he cannot be placed upon the " B " list of contributories (i.e., as a past member, if the winding-up commences within a year after rescission), for the contract is avoided ab initio, and the position of the " shareholder " is as though the contract had never been made. " Although it is the undoubted duty of this " Court to relieve persons who have been " deceived by false representations, it is equally " the duty of the Court to be careful that, in " its anxiety to correct frauds, it does not " enable persons (who have joined others in " speculations) to convert their speculations " into certainties at the expense of those with " whom they have joined." [Turner, L.J.] An allotment of shares made by a company to an applicant in contravention of the provisions of section 85 of the Companies (Consolidation) Act 1908 as to minimum subscription and certain other requirements affecting the allotment of shares shall be voidable at the instance of the applicant within one month after the holding of the statutory meeting of the company, and not later, and shall be so voidable notwithstanding that the company is in course of being wound up. (Section 86 (1) of the Companies (Consolida- tion) Act 1908.) (2 (a)) Deceit.— To sustain an action for deceit the plaintiff must prove: — (1) That the defendant issued or was respon- sible for the issue of the prospectus. (2) That it contained a misrepresentation of a material fact. (3) That the plaintiff was induced to sub- scribe for shares as a consequence of the misrepresentation. (4) That the misrepresentation was made fraudulently; and false. In order to establish fraud it it at least be shown that the defendant d: not in fact believe the statement tap true. Although the remedy provided by t panies (Consolidation) Act 1908 may be efficient than an action for deceit, there may many cases where this remedy is not availa| for the Act of 1908 only applies to prospectu or notices inviting persons to subscribe for shai in or debentures or debenture stock of a compa registered under that Act. {Sec headinf Liability for Statements in a Prospectu An action under the Companies Act wou! an action of (statutory) debt, but an actij deceit is one of tort. The distinct! important, for a right of action under the panies Act would, on the death or bankruptcy person entitled thereto, pass to his personal sentative or trustee, as the case ma; if a person liable under the Act died, his sentatives would be liable in the due coui administration of the estate of the dei to the extent thereof. If a person liable the Act became bankrupt the liability appear to be provable in the bankruptcy u incurred by fraud, in which case it might excluded from proof; but the bankrupt's charge would not release him from a provable debt. A right of action of tort for fraudulent representation whereby a person has lost p»spectus[ 5 11 [Prospectus ill also pass to the personal representatives or jstee in bankruptcy, as the case may be, but e effect of the death or bankruptcy of a person We in respect of fraudulent misrepresentation list be distinguished from the effect upon an tion under the Companies Act. Death. — The maxim Actio personalis moritur m persona (see that title) applies to an action deceit, but the representatives of the person 10 would have been liable had he lived may verthclcss Be liable " to the extent to which the estate of the deceased benefited by the 'misrepresentation." Bankruptcy. — A claim for damages for fraudu- ht misrepresentation is not provable in bank- iptcy (unless judgment be obtained therefor Iforc the date of the receiving order), but the nkrupt's discharge will not release him from I such liability. \ right of action of deceit is barred unless ljught within six years from the time when the r;ht of action arose, but if the party deceived [ not immediately discover the fraud and had reasonable means of ascertaining the truth re he actually did so, then the Statutes of Imitation will not commence to run against n until the time of such discoverv. HThe foregoing is a summary of the position ■perally in regard to the liabilities attaching to Hse connected with the issue of prospectuses. I (The general provisions of the Companies Monsolidation) Act 1908 with regard to pro- Jectuses are as follow : — Provisions as to Filing. ■Every prospectus issued by or on behalf of a ■Jnpany or in relation to any intended company ■til be dated, and that date shall, unless the ■Wary be proved, be taken as the date of ■■cation of the prospectus. mote. — A prospectus can be issued and filed Int to the registration of an intended company, tf the name of the company could not be taken ■ definitely settled until the certificate of incor- Iration was obtained. A copy of every such prospectus, signed by every person who is named therein as a director or proposed director of the company, or by his agent authorised in writing, shall be filed for registration with the Registrar of Companies on or before the date of its publication, and no such" prospectus shall be issued until a copy thereof has been so filed for registration. The Registrar shall not register any prospectus unless it is dated, and the copy thereof signed, in manner required by this section. Every prospectus shall state on the face of it that a copy has been filed for registration as required by this section. If a prospectus is issued without a copy thereof being so filed, the company, and everv person who is knowingly a party to the issue of the pro- spectus, shall be liable to a fine not exceeding live pounds for every day from the date of issue of the prospectus until a copy thereof is so filed. (Section 80.) Specific Requirements as Regards Particulars to bl Contained in Prospectus. Every prospectus issued by or on behalf of a company, or by or on behalf of any person who is or has been engaged or interested in the forma- tion of the company, must state — (a) The contents of the memorandum, with the names, descriptions, and addresses of the signatories, and the number of shares subscribed for by them respectively ; and the number of founders or management or deferred shares, if any, and the nature and extent of the interest of the holders in the property and profits of the company; and (6) The number of shares (if any) fixed by the articles as the qualification of a director, and any provision in the articles as to the remuneration of the directors; and (c) The names, descriptions, and addresses of the directors or proposed directors; and (d) The minimum subscription on which the directors may proceed to allotment, and the amount payable on application and allotment on each share : and in the case Prospectus] 512 of a second or subsequent offer of shares, the amount offered for subscription on each previous allotment made within the two preceding years, and the amount actually allotted, and the amount (if any) paid on the shares so allotted; and [Note. — A prospectus offering debentures only is within this section (see section 285), but under such circumstances this sub-clause could not be complied with, because the minimum subscription applies to offers of shares only. (See section 85.)] (e) The number and amount of shares and debentures which within the two preceding years have been issued, or agreed to be issued, as fully or party paid up otherwise than in cash, and in the latter case the extent to which they are so paid up, and in either case the consideration for which those shares or debentures have been issued or are proposed or intended to be issued; and (/) The names and addresses of the vendors of any property purchased or acquired by the company, or proposed so to be purchased or acquired, which is to be paid for wholly or partly out of the proceeds of the issue offered for subscription by the prospectus, or the purchase or acquisition of which has not been completed at the date of the issue of the prospectus, and the amount payable in cash, shares, or debentures, to the vendor, and where there is more than one separate vendor, or the company is a sub-purchaser, the amount so payable to each vendor : Provided that where the vendors or any of them are a firm the members of the firm shall not be treated as separate vendors ; and (f>) The amount (if any) paid or payable as purchase money in cash, shares, or deben- tures, for any such property as aforesaid, specifying the amount (if any) payable for goodwill ; and (/;) The amount (if any) paid within the two preceding years, or payable, as commission r Prospectus for subscribing or agreeing to subscribe, or procuring or agreeing to procure tions, for any shares in, or debentun the company, or the rate of any commission : Provided that it shall not necessary to state the commission payable to sub-underwriters; and .. («') The amount or estimated amount of liminarv expenses; and (;') The amount paid within the # two pre years or intended to be paid to any moter, and the consideration for any payment ; and (fe) The dates of and parties to every mab contract, and a reasonable time and at which any material contract or a thereof may be inspected : Provided this requirement shall not apply to a tract entered into in the ordinary course the business carried on or intended carried on by the company, or to any 1 tract entered into more than two before the date of issue of the prospectl and (I) The names and addresses of the au< (if any) of the company; and (m) Full particulars of the nature and e: of the interest (if any) of every d in the promotion of, or in the properl proposed to be acquired by, the eompan; or, where the interest of such a directt consists in being a partner in a firm, tb nature and extent of the interest of ti firm, with a statement of all sums paid agreed to be paid to him or to the firm cash or shares or otherwise by any either to induce him to become, qualify him as, a director, or otherwi services rendered by him or by the firm connection with the promotion or form: tion of the company; and («) Where the company is a company havir: shares of more than one class, the right >! voting at meetings of the company ew ferred by the several classes of shar respectively. J r .pectus 5 X 3 For the purposes of this section every person sill be deemed to be a vendor who has entered anv contract, absolute or conditional, for the e or purchase, or for any option of purchase, any property to be acquired by the company, any case where — (a) The purchase money is not fully paid at the date of issue of the prospectus; or (b) The purchase money is to be paid or satisfied wholly or in part out of the pro- ceeds of the issue offered for subscription by the prospectus; or c) The contract depends for its validity or fulfilment on the result of that issue. iVhere any of the property to be acquired by t: companv is to be taken on lease, this section sill apply as if the expression " vendor " i hided the lessor, and the expression " purchase uney " included the consideration for the lease, si the expression " sub-purchaser" included a S)-lessee. \ny condition requiring or binding any zjlicant for shares or debentures to waive com- ■iince with any requirement of this section, or frporting to affect him with notice of any con- t ct, document, or matter not specifically 1 erred to in the prospectus, shall be void. [Where any such prospectus as is mentioned i| this section is published as a newspaper wertisement, it shall not be necessary in the jwertisement to specify the contents of the I morandum or the signatories thereto, and the i mbcr of shares subscribed for by them. I n the event of non-compliance with any of the i [uirements of this section, a director or other 1 'Son responsible for the prospectus shall not i ur any liability by reason of the non- cnpliance, if he proves that — a) As regards any matter not disclosed, he was not cognisant thereof; or ,b) The non-compliance arose from an honest mistake of fact on his part : Yovided that in the event of non-compliance h the requirements contained in paragraph ( ) (above) no director or other person shall ur any liability in respect of the non-com- [Prospectus pliance unless it be proved that he had knowledge of the matters not disclosed. This section shall not apply to a circular or notice inviting existing members or debenture- holders of a company to subscribe either for shares or for debentures of the company, whether with or without the right to renounce in favour of other persons, but subject as aforesaid, this sec- tion shall apply to any prospectus whether issued on or with reference to the formation of a com- pany or subsequently. The requirements of this section as to the memorandum and the qualification, remunera- tion, and interest of directors, the names, descriptions, and addresses of directors or pro- posed directors, and the amount or estimated amount of preliminary expenses, shall not apply in the case of a prospectus issued more than one year after the date at which the company is entitled to commence business. Nothing in this section shall limit or diminish any liability which any person may incur under the general law or this Act apart from this section. (Section 8i.) Statement in Lieu of Prospectus. A company which does not issue a prospectus on or with reference to its formation, shall not allot anv of its shares or debentures unless before the first allotment of either shares or debentures there has been filed with the Registrar of Com- panies a statement in lieu of prospectus signed by every person who is named therein as a director or a proposed director of the company or by his agent authorised in writing, in the form and containing the particulars set out in the second schedule to the Act. (See title Statement in Lieu of Prospectus.) This section shall not apply to a private com- pany or to a company which has allotted any shares or debentures before the first day of July nineteen hundred and eight. (Section 82.) A company shall not previously to the statutory meeting vary the terms of a contract referred to in the prospectus or statement in lieu of pro- spectus, except subject to the approval of the statutory meeting. (Section 83.) LL Prospectus] 5H [Prospectus Liability for Statements in a Prospectus. Where a prospectus invites persons to sub- scribe for shares in or debentures of a company, every person who is a director of the company at the time of the issue of the prospectus, and every person who has authorised the naming of him and is named in the prospectus as a director or as having agreed to become a director either imme- diately or after an interval of time, and every promoter of the company, and every person who has authorised the issue of the prospectus, shall be liable to pay compensation to all persons who subscribe for any shares or debentures on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue Statement therein, or in any report or memo- randum appearing on the face thereof, or by reference incorporated therein or issued there- with, unless it is proved — (a) With respect to every untrue statement not purporting to be made on the authority of an expert, or of a public official document or statement, that he had reasonable ground to believe, and did up to the time of the allotment of the shares or debentures, as the case may be, believe, that the statement was true ; and (b) With respect to every untrue statement purporting to be a statement by or con- tained in what purports to be a copy of or extract from a report or valuation of an expert, that it fairly represented the state- ment, or was a correct and fair copy of or extract from the report or valuation. Pro- vided that the director, person named as director, promoter, or person who autho- rised the issue of the prospectus, shall be liable to pay compensation as aforesaid if it is proved that he had no reasonable ground to believe that the person making the statement, report, or valuation was competent to make it; and (c) With respect to every untrue statement purporting to be a statement made by an official person or contained in what pur- ports to be a copy of or extract from a public official document, that it was a correct and fair representation of ment or copy of or extract document : or unless it is proved — (i) That having consented to director of the company he wit consent before the issue of the pros; and that it was issued without 1 authority or consent; or (ii) That the prospectus was issued with, his knowledge or consent, and that becoming aware of its issue he forthv gave reasonable public notice that it » issued without his knowledge or CO or (iii) That after the issue of the prospeel before allotment thereunder, B becoming aware of any untrue statenM therein, withdrew his consent then gave reasonable public notice of the k drawal, and of the reason therefor.J Where a company existing on the eifl^H day of August one thousand eight hundrt-'l ninety has issued shares or debentures, ai the purpose of obtaining further capital b; scriptions for shares or debentures issues a pro- spectus, a director shall not be liable in respeel of any statement therein, unless he has autho- rised the issue of the prospectus, or has adopted or ratified it. Where the prospectus contains the name* person as a director of the company, or agreed to become a director thereof, and he h not consented to become a director, or has with- drawn his consent before the issue of the pro- spectus, and has not authorised or consented to the issue thereof, the directors of the company, i any without whose knowledge or consent the pro- spectus was issued, and any other persrm w authorised the issue thereof, shall be liable t indemnify the person named as aforesaid agai all damages, costs, and expenses to which he ma;. be made liable by reason of his name having be inserted in the prospectus, or in defending hi self against any action or legal proceeding brought against him in respect thereof. pjspectus] Even person who by reason of his being a rector, or named as a director or as having 'reed to become a director, or of his having nhorised the issue of the prospectus, becomes ible to make any payment under this section ay recover contribution, as in cases of con- from any other person who, if sued paratelv, would have been liable to make the ime payment, unless the person who has come so liable was, and that other person was nlty of fraudulent misrepresentation. For the purposes of this section — The expression " promoter " means a pro- moter who was a party to the preparation of the prospectus, or of the portion thereof Containing the untrue statement, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company : .pression " expert " includes engineer, valuer, accountant, and any other person whose profession gives authority to a state- ment made by him. (Section 84.) A person shall not be capable of being (pointed director of a company by the articles, id shall not be named as a director or proposed rector of a company in any prospectus issued by ' on behalf of the company, or in any state- lent in lieu of prospectus filed by or on behalf I a company, unless, before the registration of |e articles or the publication of the prospectus, Ithe filing of the statement in lieu of pro- ectus, as the case may be, he has by himself I by his agent authorised in writing : — (0) Signed and filed with the Registrar of Companies a consent in writing to act as such director; and ) Either signed the memorandum for a number of shares not less than his quali- fication (if any) or signed and filed with the Registrar a contract in writing to take from the company and pay for his qualification shares (if any). n the application for registration of the orandum and articles of a company the 5 T 5 [Prospectus applicant shall deliver to the Registrar a list of the persons who have consented to be directors of the company, and, if this list contains the name of any person who has not so consented, the applicant shall be liable to a fine not exceeding fifty pounds. This section shall not apply to a private com- pany nor to a prospectus issued by or on behalf of a company after the expiration of one year from the date at which the company is entitled to commence business. (Section 72.) Every company incorporated outside the United Kingdom having a place of business within the United Kingdom and using the word " limited " as part of its name, shall, in every pro- spectus inviting subscriptions for its shares or debentures in the United Kingdom, state the country in which the company is incorporated. (Section 274.) Failure to comply with this requirement entails certain penalties. As already stated, the expression " prospectus " means any prospectus, notice, circular, advertise- ment, or other invitation, offering to the public for subscription or purchase (note, not actually inducing the public to subscribe for or purchase) any shares or debentures of a company. (Section 285.) Apart from these statutory requirements the information contained in a prospectus must of necessity vary according to circumstances. There will, however, be a general statement as to the capital and the terms of issue, and the following matters, if applicable, are usually dealt with or referred to in a prospectus : — (1) Object of formation of a company. (2) Where a business is acquired — (a) its nature, and (b) the reason for conversion (e.g., co-operation with the customers; more capital required in order to extend the business; an amalgamation, &c). (3) Prospects of the company. (4) Valuations of properties to be acquired. (5) Accountants' certificate as to profits. LL 2 Prospectus] 5i6 Protest (6) Statement (by directors) showing probable dividend capacity of the company, having regard to the certified profits and the capital, &-c, proposed to be issued. (7) Statement (where applicable) that pre- ferential allotments will be made to customers of the business to obtain their co-operation. (8) Statement (where applicable) that no debentures have been issued and that none will be issued except with the sanction of the preference shareholders (if any), or if any debentures or specific mortgages are outstanding a statement as to the extent of such. (9) Recital (where applicable) as to the limitation of the rights of preference shareholders, as to (1) attending at general meetings, and (2) voting thereat. Note. — Public companies registered after 1st July 1908 must confer on preference shareholders and debenture-holders the same rights as regards receiving and inspecting the Balance Sheets, auditors' reports, and other reports as are possessed by holders of ordinary shares. (Com- panies (Consolidation) Act 1908, section 114.) (10) General regulations as to applications for shares, &c. (11) Recital where contracts and memorandum and articles of association of the company may be inspected and prospectuses obtained. Note. — In an}' case particulars of the contracts, the whole of the memorandum, and certain of the clauses in the articles of association must be set out in the pro- spectus. (See above.) (12) Statement (where applicable) that appli- cation will be made in due course for a Stock Exchange quotation or a special settlement. Protected Transactions. — Subject to the provisions of the Bankruptcy Acts with respect to the effect of bankruptcy on an execution or attachment, and with respect to the avoidance of certain ments and preferences, nothing in the ruptcy Acts shall invalidate in the case bankruptcy : — (a) Any payment by the bankrupt to any his creditors; (b) Any payment or delivery to the bankrupt; (c) Any conveyance or assignment by the bankrupt for valuable consideration; (d) Any contract, dealing, or transaction by or with the bankrupt for valuable consideration. Provided that both the following conditions are complied with, viz. : — (1) The payment, delivery, conveyai assignment, contract, dealing, or trans- action, as the case may be, takes plact before the date of the receiving order^H (2) The person (other than the debtor) to, by, or with whom the payment, delivery, con- veyance, assignment, contract, dealing, 01 transaction was made, executed, or ente«l into, has not at the time of the payment, delivery, conveyance, assignment, contract, dealing, or transaction, notice of any able act of bankruptcy committed by tl bankrupt before that time. (Bankrupt Act 1883, section 49.) Note. — The onus of proving leant 0)1 notice lies upon the person who claim! the protection of the section, and not upon the trustee in bankruptcy. (See titles Debts Provable in Bankrupt** Execution Creditor, Fraudulent Conveyance^ Settlements, Fraudulent Preference.) Protest. — A solemn declaration, generally onej dissent. A writing drawn up by the master of a certified by a consul or a magistrate, recW the circumstances under which disaster occurred to the ship or cargo, or any circumstances calculated to affect the liabilit the shipowner or charterer. Potest] A notarial certificate prepared by a notary testing the dishonour by non-acceptance or m-payment of a bill of exchange. The protest based upon the noting and must contain : — (1) An exact copy of the bill. (_>) A statement of the parties for whom and against whom the bill is protested. he date and place of protest. (4) A statement that acceptance or payment was demanded, with the terms of the answer (if any). (5) A reservation of rights against all parties liable. (6) The subscription and seal of the notary. Although ordinarily a protest is made by a )tarv public, it may be made by any respectable habitant in the presence of two witnesses when e services of a notary cannot be obtained at the ace of dishonour. \ protest must be stamped. The stamp may an adhesive one and must be of the same Hnount as that on the bill when the latter is ■ jss than one shilling, and in all other cases the ■lamp upon the protest is one shilling. Protest dispensed with by any circumstances which Mould dispense with notice of dishonour. It is ■ pt necessary to protest a bill of exchange in ■ rdcr to render the acceptor liable thereon (1882 Wet, section 52 (3)), nor is it necessary to pro- im inland bill in order to preserve the course against the drawer or indorser. (Sec- Mi 51 (1).) (See titles Extension of Protest, ■lotice of Dishonour, Noting a Bill of Exchange.) ■fable Debts.— See Debts Provable in Bank- ; pptcy, Debts Provable in Winding-up. ■king the Balances. — A term applied to the Hccific appropriation of one or more items on debit side of a Ledger Account against one nore items of an equivalent amount on the it side of such account, so that the account be " closed," or the balance may be oved " to the extent that its constituent its may be ascertained. This operation acilitated by the practice of lettering each payment in an account, and placing such 517 [Proxy distinguishing letter against the item or items to which such payment corresponds. Provisional Liquidator. — Where a petition has been presented to the Court for a winding-up order against a company, the Official Receiver or any other fit person may be appointed provisional liquidator of the company (on the application of a creditor, contributory, or the company (Winding-up Rules 1909, Rule 31)) at any time after the presentation of such petition , and before a winding-up order has been made; but upon a winding-up order being made the Official Receiver (by virtue of his office) becomes the provisional liquidator of the com- pany, and continues to act as such until he or another person becomes liquidator and is capable of acting as such. (Companies (Consolidation) Act 1908, section 149.) (See titles Liquidator, Official Receiver.) Proxy. — A person appointed to vote at a meeting for another person who would have been entitled to vote personally. The proxy may be entitled to vote according to his own discretion, or to the instructions of his appointor, dependent upon the terms of the appointment. As there appears to be no common law right to vote by proxy, special power so to do should be given by the regulations controlling the particular meeting. A single person cannot hold a " meeting," even though he may have been appointed proxy for a number of persons. Company. — The articles of association generally confer power upon members to vote personally or by proxy, and provide that the appointment of proxies shall be in writing under the hand of the appointor (attested by one or more witnesses), and that the form of proxy shall be deposited at the registered offices of the company a stated time before the meeting at which it is to be used. The form of proxy in Table A (Companies (Consolidation) Act 1908) does not provide for the attestation of the signature of the appointor. The forms in special articles may also dispense with this requirement. The articles of association gem rally provide that no person can be appointed as a proxy Proxy] ;i8 Proxy unless he is himself a member of the company, but section 6S of the Companies (Consolidation) Act 1908 provides that any company which is a member of another company may, by resolution of the directors, authorise any person to act as its representative at any meeting of that other company. On a show of hands no vote can be given by a member on behalf of another member repre- sented by proxy — the. proxy can only vote on a poll being taken. (Ernest v. Loma Gold Mines, 1897, 1 Ch. 1.) But the representative of a company appointed under section 68 of the Companies (Consolida- tion) Act 1908 (above) is entitled to exercise the same powers on behalf of the company which he represents as if he were an individual share- holder. A proxy may be appointed either by a share- holder or his attorney, if the regulations of the company permit, but the attorney cannot per- sonally act as the proxy unless he has executed a proxy in his own favour, but if it is necessary under the regulations that the proxy be a member of the company the attorney must appoint as proxv some other person who is a member. An instrument of proxy, for the sole purpose of appointing a proxy to vote at any one meeting (whether the number of persons named in the instrument be one or more) is charged with the duty of one penny, which may be denoted by either an impressed or an adhesive stamp, but the instrument must be stamped before execution. Anv other instrument of proxy is liable to a duty of 1 os., e.g., a proxy to vote " at any meeting or " meetings which may be held during the next " six months." It is usual to insert the names of two or three persons as proxy (in the alter- native), so that any one of them may act, for it might not be possible for one particular person to attend the meeting; but where the proxy is intended for one meeting only, and the duty of one penny is paid, the instrument of proxy must specify the date upon which the meeting, at which it is intended .to be used, is to be held, and such proxy is to be available only at the meeting so specified, or any adjournment of such meeting. The appointment of a proxy may be 1 at any time, but if a proxy gives a vote befi either he or the company rec ; revocation the vote so given will be vali Sometimes forms of proxy are issued directors of a company when calling a of the members, but the propriety 1 stamped forms and paying for same out I company's funds has been questioned, and, k an early case, Kay, J., held that it was ultra vires for directors to expend the money of the company in sending out proxy forms \\ ith the names of the directors filled in as prox withstanding this decision, such a practic not unusual, and in 1906 the Court of A in Peel v. London and Xorth-Westcn Company, overruled the decision of Kay. J., and held that so long as the directors hoi believed the policy they were asking shareholders to support was for the benefit of the company, the expense of issuing stamped proxies and stamped envelopes for their return was charge- able against the funds as an expense fairly and reasonably incidental to the business of the company. Company Liquidation and Bankruptcy. — The following regulations as to proxies (stated ii terms applicable to winding-up) are, mutati mutandis, identical under both winding-up bankruptcy procedure : — A creditor or a contributory may vot in person or by proxy. Every instrument of proxy shall be in the pre- scribed form, and shall be issued by an OiTicia Receiver, or by the liquidator of the company, and every written part thereof shall be in the handwriting of the person giving the proxy, 61 of any manager or clerk or other person in his regular employment, or of a commissioner t administer oaths in the Supreme Court ( Judicature in England. The authorised agent of a corporation may fill up blanks and sign for the corporation, thus : — " For the Company, "A.B. (duly authorised under the seal ( the company)." ip and Pny k proxy given by a creditor (or contributory) n y be filled up and signed by any person having a general authority in writing to sign for such c ditor. Such person shall sign : — "A.B. (duly authorised by a general authority in writing to sign on behalf of . . . .)" The Official Receiver or liquidator may r uir<- the " authority to sign " to be produced f his inspection.] icnoral and special forms of proxy shall be s it to the creditors and contributories with the r :ice summoning the meeting, and neither the rne nor description of the Official Receiver or any other person shall be printed or inserted the body of any instrument of proxy before it i so sent. The proxy of a creditor blind or incapable (c writing may be accepted if such creditor has £ ached his signature or mark thereto in the psence of a witness, who shall add to his s nature his description and residence : provided lit all insertions in the proxy are in the hand- I king of the witness, and such witness shall Jve certified at the foot of the proxy that all }:h insertions have been made by him at the i |uest of the creditor, and in his presence, lfore he attached his signature or mark. |\ creditor or contributory can onlv give a jneral proxy to his manager or clerk, or some submission by the debtor of his statemen affairs. ement c; a' of deb! rig) may Any creditor who has tendered a proof (or his representative authorised in writing) question the debtor concerning his affaii the causes of his failure. The Official Re and the trustee (if appointed) may also take pari in the examination, whilst the Court ma; such questions to the debtor as it may expedient. The debtor is. examined upon oath, and he must answer all such questions as tht Court may put or allow to be put to bin:. he cannot refuse to answer any such questions or. the ground that his answers may tend incriminate him. Such notes of the exami; as the Court thinks proper are to be taken I in writing, and are to be read over either I by the debtor and signed by him, and may I after be used in evidence against him, but the cannot be used as evidence in connection with pro- ceedings in the same bankruptcy against partiei other than the debtor. Any creditor may i the notes of the examination at all reasonable times. The Court may adjourn the examin; from time to time, but when the Court is opinion that the affairs of the debtor have sufficiently investigated it will, by order, cl that his examination is concluded ;. but sucl order must not be made until after the appointed for the first meeting of creditors. (1883 Act, section 17; 1S90 Act, section :• ; Reg. v. Scott, 1856; Re Brunner, 1887; &c.) The Court has power to reopen the public- examination of a bankrupt, but will only do SC in cases where there appears to be good reason for making further investigation into ' bankrupt's affairs. P Jlic] Although, as a rule, every debtor against hom a receiving order has been made must ibmit to a public examination, there are cceptions, viz. : — iii For the purpose of approving a composi- tion or scheme by joint debtors, the Court may, if it thinks fit, and on the report of the Official Receiver that it is expedient so to do, dispense with the public examina- tion of one of such joint debtors if he is unavoidably prevented from attending the examination by illness or absence abroad. (1883 Act, section 105.) (2) Where the debtor is a lunatic or suffers from any such mental or physical affliction or disability as in the opinion of the Court makes him unfit to attend his public examination, the Court may make an order dispensing with such examination or directing that the debtor be examined on such terms, in such manner, and at such place as to the Court seems expedient. (1890 Act, section 2.) (3) Where the Court has under exceptional circumstances rescinded the receiving order before the debtor has undergone his public examination. Company Liquidation. Where a winding-up order has been made and le statement of affairs has been lodged with the fficial Receiver, that official must make a 'eliminary report to the Court stating: — (a) The amount of capital issued, subscribed, and paid up; (fc) The estimated amount of assets and liabilities; and (c) If the company has failed, the causes of the failure ; and •(d) Whether, in his opinion, further inquiry is desirable, as to any matter relating to the promotion, formation, or failure of the company, or the conduct of the business thereof. The Official Receiver may also, if he thinks , make a further report or reports stating: — (a) J he manner in which the company was formed. 521 [Public (b) Whether, in his opinion, any fraud has been committed by any person in the pro- motion or formation of the company, or by any director or other officer, and (c) Any other matters which, in his opinion, it is desirable to bring to the notice of the Court. (Companies (Consolidation) Act 1 90S, section 148.) Although the Board of Trade for some time thought otherwise (and acted thereon), it was held by the House of Lords (Ex parte Barnes, 1896) that a public examination cannot be ordered as a result of the Official Receiver's pre- liminary report, but only upon his making a further report containing an allegation of fraud against some specified person or persons. It was further held that even when a public examination is ordered, only those individuals against whom fraud has been alleged can be examined. In a proper case, therefore, the Court, after consider- ing the further report of the Official Receiver, will direct that a certain person (or persons) be publicly examined, and will appoint a day for that purpose. The responsibility for any further report rests exclusively with the Official Receiver. It is his duty to collect and consider the facts upon which a judgment can be formed by him, as to whether or not any such report shall be made. If he decides to make a report, it is his duty to communicate the draft report, and the facts upon which it is founded, to the Board of Trade, in order that the Board may make such observations and suggestions as may occur to them with a view to insure that the Court is placed in possession of all the material facts and circumstances of the case. The observations and suggestions will be made in writing upon the draft report, which draft should be retained by the Official Receiver. If the Official Receiver does not propose to make a further report under the section, he shall forth- with furnish to the Board a statement of his reasons for thinking a report unnecessary, and shall send a copy of the statement to the Regis- trar acting in the winding-up of companies. Upon the Board of Trade communicating their observations to the Official Receiver, whether upon the draft report or upon the statement of Public; 522 Public reasons for thinking a report unnecessary, it becomes his duty to give careful consideration to them, and thereupon to determine, on his personal responsibility alone, whether the report shall be presented or not, and, if presented, the terms in which it shall be expressed, and the opinions which it shall record. (Board of Trade instructions.) I Public Officer.— Banking companies formed prior to 1844, and not registered under the Companies Act, have certain privileges, one of which is the right of suing and being sued in the name of a public officer. These companies (partnerships strictly) have to make an annual return to the Stamp Office, and amongst other things the return must contain the names and addresses of two or more persons (members of the partner- ship) resident in England, together with their titles of office, who have been appointed the public officers of the company. Public Trustee. — Establishment of Office and Security. — The Public Trustee Act 1906, which came into opera- tion on the 1st January 1908, provides inter alia for the establishment of the office of a public trustee, and imposes upon the Consolidated Fund of the United Kingdom the liability to make good all sums required to discharge any liability which the public trustee if he were a private trustee would be personally liable to discharge. (Sections 1 and 7.) The public trustee is a corporation sole under that name. Appointment and Fees. — The public trustee is appointed by the Lord Chancellor, and may retain out of the trust property any expenses ■ which might be retained or paid out of the trust property if he were a private trustee. The trust property will also bear such fees as the Treasury with the sanction of the Lord Chancellor may fix, and such fees are to be paid to the Treasury direct. The fees are to be arranged from time to time so as to produce an annual amount sufficient to discharge the salaries and other expenses inci- dental to the working of the Act (including such sum as the Treasury may from time to time determine to be required to insure the Con- solidation Fund against loss under this Act) and no more. The incidence of these fees and expenses as between capital and income is to be determined by the public trustee. (See heading Fees Chargeable, infra.) Capacities in which he may act. — The public trustee is authorised, if duly appointed, to any of the following capacities : — (1) Executor or executor and trustee of will. (2) Trustee or custodian trustee of a ment (including a will). (3) Administrator under a will or intestacy. (4) Administrator of estates of small v; (5) Judicial trustee. (6) Administrator of the property of a coi under the Forfeiture Act 1870; and (7) Investigator and auditor of Trust Ac Application to Act. — An application to Public Trustee to act as trustee or custom trustee may be made — (a) Where appointment made by testat any trustee or beneficiary. (6) In case of intestate's estate— by person apparently beneficially interest (c) In any case — by any person having po to make the appointment. (See hcadi Custodian Trustee, Ordinary Tru (Rule 10 (1).) General Privileges and Duties. — The P Trustee has, in addition to certain privileges f erred upon him by the Act, all the same po duties, and liabilities, and is entitled to the rights and immunities, and is subject to the control and orders of the Court, as a prt trustee acting in the same capacity. The Public Trustee must not decline to ai any trust on the ground only of the small v of the trust property. On the other hand, b must not accept any trust (a) which invo! the management or carrying on of any bus: Pule I under the special provisions referred to uier heading " Carrying on of a business " (i ra) or (b) under a deed of arrangement for nefit of creditors, or (c) for the administra- ii of any estate known or believed bv him to solvent, or (d) made solely by way of ity for money, or (c) exclusively for us or charitable purposes. (Section 2, and Rles 7 and 8.) ll'i'Ms. — The Public Trustee may be appointed Her alone or jointly with any other person or psions as executor, or as trustee, or as executor ai trustee of a will, and either as ordinnrv trtee or as custodian trustee. tldministration of Small Estates. — Any person trp in the opinion of the Public Trustee would ■entitled to apply to the Court for an order for n administration by the Court of an estate, ■ gross capital value whereof is proved to the ■paction of the Public Trustee to be less than ■ thousand pounds, may apply to the Public Tlstee to administer the estate, and, where any all application is made, and it appears to the ■flic Trustee that the persons beneficially Htled are persons of small means, the Public jstee shall administer the estate, unless he sees reason for refusing to do so. (Section )•) the Public Trustee undertaking by declara- in writing signed and sealed by him to |»inister the estate, the trust property other stock shall by virtue of the Act vest in him, tin right to transfer or call for the transfer ny slock shall also vest in him. As from ve-iing any trustee entitled under the trust ^minister the estate shall be discharged all liability attaching to the administration pt in respect of past acts. (Section 3 (2).) here proceedings have been instituted in any for the administration of an estate the may order that the estate shall be listered bv the Public Trustee. (Section •) fustoJian Trustee. — The Public Trustee, or Any banking or insurance or guarantee or trust company or friendly society, and any 523 [Public such body corporate established tor charitable or philanthropic purposes as may be approved by the Public Trustee and the Treasury may be appointed custodian trustee, either (a) By the Court; (6) By the testator or settlor, when creating a trust by will or settlement; or (c) By the person having power to appoint new trustees (in the case of an existing trust). He may be appointed even although the full number of trustees exist and none is desirous of retiring. The trust property in such a case shall be transferred to the custodian trustee as if he were sole trustee, but the manage- ment of the trust property shall remain vested in the other trustees referred to in the Act as managing trustees. (Section 4-) The duties of a custodian trustee are restricted to preserving the trust property in the sense of ensuring that it is not made away with. On appointment all securities and documents of title relating to the trust which would otherwise have remained in the custody of the ordinary trustees are to be transferred to the Public Trustee. But the management of the trust property as distinct from the custody of the securities, &c, remains in the hands of private trustees who are accordingly termed in the Act the " managing trustees." On them devolves the responsibility of selecting investments and generally managing the trust property. Note. — The approval of the Public Trustee and the Treasury to a body corpo- rate may be withdrawn at any time, and the Public Trustee may require payment by any applicant for his approval of a fee not exceeding ten guineas. It shall be the duty of any person appointed by a testator to be co-trustee with the public trustee, and not renouncing or disclaiming the Public] 524 Public trust to give to the public trustee notice in writing of such appointment as soon as prac- ticable after the same has come to his knowledge. (Rule 10 (2).) Ordinary Trustee. — The Public Trustee may be appointed to be trustee of any trust either as an original, new, or additional trustee. He may be appointed either alone or jointly with any person or body of persons in the same cases and in the same manner and by the same persons or Court as if he were a private trustee, with this proviso, that, though the trustees originally appointed were two or more, the Public Trustee may be appointed sole trustee. (Section 5.) Executor or Administrator. — Any executor who has obtained probate or any administrator who has obtained letters of administration and not- withstanding he has acted in the administra- tion of the deceased's estate may, with the sanction of the Court, transfer such estate to the Public Trustee for administration either solely or jointly with the continuing executors or administrators. (Section 6 (2) .) The fact that an executor or administrator has acted in the administration of the deceased's estate is no bar to such transfer. The Public Trustee is equally entitled with any other person to letters of administration of the estate of a deceased person, but he is not to be preferred to the widower, widow, or next-of-kin unless for good cause shown. (Section 6 (1).) Existing Settlements. — Apart from special pro- visions in the trust instrument the Public Trustee can only be appointed as trustee of an existing settlement where there is a vacancy on the body of the trustees. The following are instances of how vacancies may arise; the trustees originally appointed may be: — (a) Reduced in number by death, or (b) Rendered ineffective as a body (e.g., by absence abroad or illness), or (c) Desirous (one or all) of retiring from the trust. s h . if then nuing 01 adminis Thereupon the Public Trustee may bt appointed to fill the vacancy, and, il c. — The Public Trustee may employ the purposes of any trust such solicitors, banker- accountants, and brokers, or other persons as ! may consider necessary. In determining th persons to be so employed in relation to any tru< the Public Trustee shall have regard toS interests of the trust, but subject to this shal whenever practicable, take into consideration tl wishes of the creator of the trust, and of other trustees (if anv) and of the beneficiarif either expressed or as implied by the practice £ the creator of the trust, or in the pn management of the trust. (Section 11 (2)* Investigation and Audit of Trust Accounts.- Apart from the Public Trustee Act, the means bv which an audit of Trust Accounts ( be obtained from trustees declining to fuitlis satisfactory accounts is by application to tl Court. The Act enables those interested to obtaij an audit without any such application, and tt auditor on completion of his audit must for to the parties interested and to every trustee 1 copv of the accounts and of his report upon Unless the Court otherwise orders, the dition and accounts of any trust shall upon cation being made and notice thereof being (de of payment of any of these fees which, in e circumstances, appears to him to be reason- ie. He may also agree to accept a lump sum settlement of the amount due or to become due respect of capital or income fees. -A person who attends a sale by auction r the purpose of bidding on behalf of the owner the subject-matter of sale, and thus raising the against other bidders. Such a practice illegal unless a right to bid on behalf of the iner has been reserved — whether in respect of hds (30 & 31 Vict. c. 48) or goods (Sale of pods Act 1893). (See title Auction.) Iiase Book. — A record of the purchases made a trader, generally compiled from the invoices in I by the various creditors. The book is etimes called the Bought Book, the Invoice ok, or the Creditors' Journal. The general erne of such a book is to provide for consecu- e numbers to all invoices, the dates of the pur- es, the creditors' names, and full (or con- Wed) particulars of each purchase. (See title jinrd Book.) Ht is necessary in some businesses to analyse je. purchases by means of columns, as between le various classes of goods or according to apartments, as the case may be. (See title rpartmental Accounts.) In large concerns, where the transactions are nerous, it is found necessary to record the 1 rchases in sections, to allow of the independent llaneing of the Ledgers and to render it possible 1 subdivide, the clerical labour. The purchases K then kept in separate books, with Ledgers to Ijrrespond, either in alphabetical, departmental, 1 geographical classes, according to circum- linces. (See titles Journal, Sectional Ledgers.) 5 2 7 [Quasi-Partner including the keeping of the accounts of provisions received and consumed, copying manifests, &c. IL es Account. — See title Goods Account. Pl.er. — A person having the management of a >st Book mining company : also a person iployed on board a vessel carrying passengers, .< in the capacity of treasurer and secretary, Put and Call Option.— See title Options. Qualification Shares.— .Sec title Directors. Qualified Acceptance. — See title Acceptance. Qualified Indorsement.— See title Indorsement. Quantum meruit.— See title Agent. Quarter Days. — England. — Lady-day, 25th March ; Midsummer, 24th June; Michaelmas, 29th September; Christmas, 25th December. Scotland. — Candlemas, 2nd February; "Whit- sunday," 15th May; Lammas, 1st August; Martinmas, nth November. Quasi. — When this word is placed before a noun the combined effect of the two words is that although the thing signified does not precisely comply with the definition of the noun (alone) it has much the same qualities and is otherwise approximate thereto. Quasi-Partner. — One who advances money on loan to a person or firm, receiving interest varying with the profits, or a fixed proportion of same by way of interest. On proof that he is not a partner, either by the production of a written agreement defining his rights in respect of the loan or by any other means, he is treated as a postponed creditor in the case of the bankruptcy of the borrower, being liable for nothing beyond the amount already advanced, but entitled to repayment only after all other creditors have been satisfied. The Limited Partnerships Act 1907 does not alter the status of a quasi-partner, and it is not necessary for him to register under the Act in order to limit his liability. Quasi- Partner] 528 [Quorum The term is also applied to persons who are not in the relation of partners to each other, although they are co-owners of property which is employed for their common benefit. (See titles Limited Partnership, Postponed Creditors, Sociiti en Commandite.) Quinquennial Valuation. — At intervals of five years the Inland Revenue Authorities require a return of the rentals and other particulars of property assessable to " property tax " (or income-tax under Schedule A), so that they may review, and if necessary revise, the assessment thereof. (See title Income Tax.) As to quinquennial valuations for assurance companies see title Assurance Companies Act 1909. Quittance. — (Acquittance.) A release. Quorum. — (Of whom.) The number of members of an administrative body whose presence is necessary to give validity to the acts of such body. Company. — The number required to constitute a quorum at meetings of the members or direc- tors respectively of a joint-stock company is usually prescribed by the company's regulations. Table A to the Companies (Consolidation) Act 1908 (where adopted) provides (1) that the directors may themselves determine the quorum necessary for the transaction of busi- ness at a directors' meeting ; unless the quorum is so fixed it shall (when the number of directors exceeds three) be three, and (2) that the number of members necessary for the transaction of busi- ness at a general meeting of the members shall be three members personally present. Where a company is registered with its own regulations, to the exclusion of Table A, the quorum for a general meeting of the company is generally fixed low (such as three or four members in the case of a small company), whilst the necessary quorum may in general be consti- tuted by members " present " either in person or by proxy; but a single person cannot hold a " meeting," even though he may have been appointed proxy for a number of persons. Where, however, the n-hole of a particular . of shares were held by one person, his assent to a modification of the conditions under which such shares were issued was deemed suflicii nt com- pliance with the company's regulations to the effect that assent to the proposed modifications could only be validly given by a specified majority at a " meeting " of the holders of such si (East v. Bennett Bros., Lim., 1910.) The common law rule is that two members form a quorum in the absence of any regula- tions thereon; but it has been held that where the articles of association of a company do not prescribe the number of directors necessary to form a quorum, the number who usually act in I conducting the business of the company will be a quorum. It is submitted that, in calculating the number, of directors present at a meeting at which busi- ness with the company is transacted in whict one (or more) director is personally inter- such director (or directors) must be deemed tt be " not present " for the purposes of a quorum The fact that some of the directors of a com pany have acted irregularly in transacting busi ness on behalf of the company when a quorun was not present will not be allowed to prejudic third parties who have acted without notice the irregularity, for although all persons havin!' dealings with a company are fixed with notic of its memorandum and articles as regard external affairs, they are not presumed to hav knowledge of its " indoor management." In any case, anything alleged to have bee! done on behalf of a company at a meeting c directors, where a quorum was not present, ma> if otherwise intra vires, be subsequently ratifk and confirmed at a duly constituted meeting < directors, and when so ratified the act will I valid ab initio. Company Liquidation (Compulsory). — A mee« ing may not act for any purpose except the ele tion of a chairman, the proving of debts, and tl adjournment of the meeting, unless there ail present or represented thereat at least thr> creditors entitled to vote or three contributorie or all the creditors entitled to vote or all the cot Qujrum] tbutories if the number does not exceed three. i,'inding-up Rules 1909, Rule 132.) Bankruptcy. — A meeting shall not be com- ment to act for any purpose, except the election a chairman, the proving of debts, and the journment of the meeting, unless there are it or represented thereat at least three ditors, or all the creditors if their number does t exceed three. (1883 Act, 1st Schedule, ] tie 23.) Ra(i Rent. — The full annual value of a propertv ; I: uttermost rent. Ranay Commissioners. — Commissioners, three in mber, appointed under the Railway Regulation ts, to hear and determine certain complaints ction with railway matters. Ri: of Exchange. — The price of the money of one mntry stated in the money of another country, the price at which bills of exchange on one untry are sold in another countrv. The settlements in connection with the foreign if this country are largely effected f means of bills of exchange drawn and Igotiated abroad and duly accepted and paid London. As the person who draws and gotiates the bill must fix the rate of exchange ereon for the purpose of negotiating same, it Hows that the rates of exchange between this untry and most other countries is largely con- Dlled by those constituting the money markets •road. The fluctuations of the rates of exchange in countries are regulated (inter alia) by following considerations : — IP) The relative' value of money. (2) I lu relative indebtedness, caused by the influences of trade fluctuations. (3) Stock Exchange transactions when (inter- nationally) on a large scale. (4) Political matters. USee title Par of Kxchange.) 5 2 9 [Rate Where a bill of exchange is drawn in another country and is payable in this country after a certain length of time — three months usually — the price of the bill at the time of purchase or negotiation is fixed by the long rate of exchange, called the " long exchange." It is made up in London by taking (1) sight rate of exchange, plus (2) interest for the period at the foreign rate, (3) the foreign bill stamp, and (4) some slight allowance for financial risk pending maturity of the bill. It is made up abroad by deducting (1) the interest at the London rate, (2) the English bill stamp, &c. The Stamp Act 1891 provides that where an instrument is chargeable with ad valorem dutv in respect of any money in any foreign or colonial currency, such duty shall be calculated on the value of such money in British currencv, according to the current rate of exchange at the date of the instrument. (Section 6.) The Bills of Exchange Act 1882 provides that where a bill is drawn out of, but payable in, the United Kingdom, and the sum payable is not expressed in the currency of the United Kingdom, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts, at the place of pay- ment, on the day the bill is payable. (Section 72.) With regard to the treatment of foreign currencies in books of account : — (1) Fixed assets and liabilities may be taken at the figure they actually cost or repre- sent in sterling — that is to say, at the rate of exchange of the day the assets were acquired or the liabilities were incurred (subject, of course, to provision for depre- ciation where necessary, this being a matter for separate consideration). (2) Floating assets and liabilities should be taken at the rate of exchange as at the date of balancing the books. (3) Revenue items can be taken either (a) at the average rate for the period in question, (b) at a normal rate throughout the period in question, or MM Rate] 53° (c) where the number of transactions is limited, at the rate of exchange on the ciav of each transaction. A convenient practice, so far as the Head Office Books are concerned, is to have the Branch Office Account ruled with double columns for the particular currency and sterling respectively. In the currency columns the figures supplied by the branch are inserted, and a periodical agreement of the balance shown by the Branch Trial Balance may then be ascertained from the difference between the debit and credit currency- columns. These currency figures may then be converted to sterling according to one of the methods indicated above. All or any differences arising from the neces- sarv adjustments of exchange are placed to the debit or credit of " Difference in Exchange " Account, for the adjustment may result in either a loss or a profit. The balance of this account, as at the date of " closing " the books, must be transferred to Profit and Loss Account for the period under review or Suspense Account. Where a profit is shown as a result of a favourable movement in the rate, which might " recede," it would be unwise — in fact improper — to utilise such a " temporarv " profit for dividend purposes. Ratification. — Confirmation. (See titles Acceptance of a Bill, Agent, Infant, Prospectus.) Ratio.— The relation or proportion which one thing, such as a quantity, bears to another. Percentages and averages are special methods of dealing with ratio. Although the respective shares of partners in the partnership profits are usually referred to according to their fractional parts of the whole, yet in some cases it is necessary to deal with them according to their relation to one another, such as on the admission or retirement of a partner. Suppose A., B., and C. share profits as to g, A, and A respectively, and D. is admitted on [Res the basis of receiving J of the total pro original partners retaining the same ratio of prof as compared one with another. In such a ca' they would divide g of the total profits in tl same proportions as they previously divided tl whole. Thus A. would take f of £ ,J B. C. D. i the agreed proportion But this result can be obtained from the rati<^ thus, suppose A., B., and C. divide profits to ?, {'f, {'f respectively, and C. retires, .'. B. agreeing to continue as before. In such case they would divide the whole, as thi previously divided » f ; their new proportions quickly be ascertained when the ratio < previous shares is known, without recount! fractions. A. previously took ,* f whilst B. tc 1 S + , the ratio therefore is as 4 is to 5 ; thus takes J and B. 5 of the whole proits under tr new arrangement. (See title Goodwill (as remri accounts).) Raw Material. — The unadapted materials emplo; in the production of the commodities of ticular trade. The manufactured or partly nip factured articles of one trade may be tl materials of another. Raw material for stoc taking and " Balance Sheet " purposes should valued at prime cost, plus all subsequent dirt charges for freight, duty, handling, insj &-c. Real Account. — The term is used to designate various classes of account which represent tj capital employed in a business, such as \i buildings, machinery, plant, patents, stodl ships, shares, consignments, bills receivable debts, &c. They are sometimes called Propet Accounts. Book debts are the balances of Pi sonal Accounts, but they are none the less R< Accounts. (See title Nominal Accounts.) Real Action. — An action brought for the sped recovery of lands. Rel Re 531 [Receipt Estate. — Lands (including the buildings t-reon). whether of freehold or copyhold tenure; It not leaseholds, however long the term. For t enue purposes, however, leaseholds are liable at all) to succession duty, not legacy duty. ice titles Land Transfer Act 1897, Personal loperty.) Reisation Account. — A statement showing the ■ suit of winding up an estate or business; an .-•ount in the Ledger specially opened for the [rpose of adjusting the accounts of a concern Men about to be transferred as a going concern, i wound up, as the case may be. Reisation (Costs of).— See title Priority of Pay- rnts (Costs, Sec.) Reised Profits.— Profits actually realised or the nult of completed transactions involving legal I bility, which it is expected will ultimately be « ly discharged. One of the articles of association of the Uford Building Society provided that " no divi- dends shall be payable except out of the 'realised profits arising from the business of the I company. " The business of the society consisted of Iend- ,' money to builders on mortgage at a large ite of interest, the principal and interest being able in instalments over a period of years. i V directors, upon the estimates made by their rvevor (who was also their secretary), took • (lit in the Balance Sheets of the society for e " present value of the repayments on Jrtgag.s held by the company," and the esti- ltes wt it based upon the assumption that every it\ was ample to provide for principal, st and costs. The directors thereupon lated the surplus so ascertained as being profit tillable for dividend, and paid dividends for ine years accordingly. it was held (in 1S86) that the word realised have its ordinary commercial meaning, h, if not equivalent to " reduced to actual -h in hand," must at least mean " rendered langible for the purpose of division." The directors were held jointly and severally ible for the dividends improperly paid during each year of their respective directorships. (See title Profit.) J Real Par. — See title Par of Exchange. i Real Property.— See title Real Estate. Real Representative. — See title Land Transfer Act 1897. Realty.— See title Real Estate. Rebate. — An allowance; a deduction; discount. Rebate on Bills Discounted. — When a banker closes his books at the end of his financial period, he has, as a rule, a number of unmatured " dis- counted bills " on hand. The whole of the interest (or discount) charged on the respective bills cannot, therefore, be taken to credit in the Profit and Loss Account for the period under review, as provision must be made for interest on the various bills until they respectively mature. This provision is termed " rebate on bills discounted." Receipt. — The Stamp Act 1891 imposes a stamp duty of one penny upon every receipt given for or upon the payment of money amounting to £2 or upwards, with the following exceptions, viz. : — (1) Receipt given for money deposited in any bank, or with any banker, to be accounted for and expressed to be received of the person to whom the same is to be accounted for. (2) Acknowledgment by any banker of the receipt of any bill of exchange or promis- sory note for the purpose of being pre- sented for acceptance or payment. (3) Receipt given for or upon the payment of any Parliamentary taxes or duties, or of money to or for the use of His Majesty. (4) Receipt given by an officer of a public department of the State for money paid by way of imprest or advance, or in adjust- ment of an account, where he derives no personal benefit therefrom. (5) MM a Receipt] 532 [ Receipt (6) Receipt given by any officer, seaman, marine, or soldier, or his representatives for or on account of any wages, pay, or pension due from the Admiralty or Army Pay Office. (7) Receipt given for any principal money or interest due on an Exchequer bill. (8) Exemption No. 8 read " Receipt written " upon a bill of exchange or promissory " note duly stamped," ... but this was repealed as from 1st July 1895 by section 9 of the Finance Act 1895, which is as follows : — Exemption numbered (8) under the head " Receipt " in the First Schedule to the Stamp Act 1891 is hereby repealed ; and the duty shall be charged as if the exemption had not been contained in that schedule, provided that neither the name of a banker (whether accompanied by words of receipt or not) written in the ordinary course of his business as a banker upon a bill of exchange or promissory note duly stamped, nor the name of the payee written upon a draft or order, if payable to order, shall constitute a receipt charge- able with stamp duty. (See title Cheque.) (9) Receipt given upon any bill or note of the Bank of England or the Bank of Ireland. (10) Receipt given for the consideration money for the purchase of any share in any of the Government or Parliamentary stocks or funds or in the stocks and funds of the Secretary of State in Council of India, or of the Bank of England, or of the Bank of Ireland, or for any dividend paid on any share of the said stocks or funds respectively. (11) Receipt indorsed or otherwise written upon or contained in any instrument liable to stamp duty, and duly stamped, acknow- ledging the receipt of the consideration money therein expressed, or the receipt of any principal money, interest, or annuity thereby secured or therein mentioned. (12) Receipt given for any allowance by way of drawback or otherwise upon the exporta- tion of any goods or merchandise from the United Kingdom. (13) Receipt given for the return of any duly of customs upon a certificate of over-enti In addition to the foregoing exemptions (1) The Bankruptcy Act 1883, as bankruptcy proceedings; (2) The Finance Act 1895, as reg compulsory liquidation of comr. (3) The Building Societies Act 1S74; (4) The Friendly Societies Act 1895, as the internal affairs of the resp societies ; (5) The Act of Will. IV, 4 & 5 c. regards Poor Law Authorities, provide for the exemption from stamp certain receipts and other documents. Institutions which devote their funds to charitable purposes are practically from stamp duty in respect of receipts for tions and subscriptions to their funds, for ii receipt therefor be given unstamped (as is the Commissioners do not enforce the pens But although for many years the Con sioners did not claim stamp duty upon indorsements of briefs by barristers by \va acknowledging receipt of their fees, the missioners obtained a declaration of the 1906 that such indorsements were " R and liable to stamp duly when the amount ' £2 or upwards. The Act of 1891 provides:— For the purposes of this Act the expi " receipt " includes any note, memoranda writing, whereby any money amounting t pounds or upwards, or any bill of ex (which term includes a cheque) or proi note for money amounting to two poun upwards, is acknowledged or expressed to been received or deposited or paid, or whj any debt or demand, or any part of a d demand, of the amount of two poun upwards, is acknowledged to have been sei satisfied, or discharged, or which signifies imports any such acknowledgment, and whethi the same is or is not signed with the name any person. (Section 101.) Ret ipt] he dutv upon a receipt may be denoted by a adhesive stamp, provided that the person by warn the receipt is given cancels the stamp by rig on or across the same his name or initials, o the name or initials of his firm, together wh the true date of his so writing, or other- effectively cancels the stamp and so renders itncapable of being used for any other purpose, o provided it is otherwise proved that the stamp a learing on the instrument was affixed thereto a the proper time. (Section 8.) l receipt given without being stamped may b stamped with an impressed stamp upon the tins following, that is to say: — ji) Within 14 days after it has been given, on payment of the duty and a penalty of five pounds ; 2) After 14 days, but within one month, after it has been given, on payment of the duty and a penalty of ten pounds ; afi shall not in any other case be stamped with impressed stamp. (Section 102.) |f any person 111) Gives a receipt liable to duty and not duly stamped, or 112) In any case where a receipt would be liable to duty refuses to give a receipt duly stamped, or 113) Upon a payment to the amount of two pounds or upwards gives a receipt for a sum not amounting to two pounds, or separates or divides the amount paid with intent to evade the duty, ■ shall incur a fine of ten pounds. (Section 103.) Note. — •' The only means known to the law I' of compelling a person to give a receipt is r provided by this section, which applies to I' receipts liable to duty. Information must be II given to the Commissioners, who usually r insist upon the giving of a stamped receipt [' is a condition of compromise of proceedings. P' The obligation to provide the receipt stamp is f' virtually thrown upon the person to whom f' the payment is made." [Alpe.] 533 [Receipt It is no longer necessary that, in order to com- plete the offence of refusing to give a stamped receipt, the debtor should present a stamped form of receipt to the payee, but to constitute an offence under the section the payee " must refuse " to give a stamped receipt to the person entitled " to take it, and a mere neglect or omission to " complv with a request to send a stamped " receipt by post is not considered a refusal for " the purposes of the section." In Cole v. Blake (King's Bench, 1793), Lord Kenyon said: — " It has already been determined " that a party tendering money could not in " general demand a receipt for the money." (See titles Acquittance, Voucher.) Receipt Book. — An auditor should usually examine the Receipt Book (counterfoils) and compare same with the respective entries upon the debit or " Receipts " side of the Cash Book. Even the best form of counterfoil receipt book is not always a real preventative of fraud, but a duplicate carbon book may be found very useful. The books should be numbered consecutively and a register thereof kept. (See title Register of Receipt Books.) This system is specially appli- cable to cases where the receipt (and consequently the carbon duplicate beneath) can be prepared by one clerk and initialled by another — a common example being shop cash takings. The existence of a Receipt Book, as forming part of the system of accounting, has, in any case, its moral effect, and it can hardly be dis- puted that a Cash Book is better vouched by being compared with counterfoil receipts, than under circumstances where there is no Receipt Book and the loose practice of " receipting invoices " is adopted. Some concerns, for the sake of uniformity, issue their own form of receipt with all remittances, but there is an objection to this practice, as it would be an easy matter under these circumstances for a dishonest clerk to present a " receipt " for money alleged to have been paid by him, whereas the form of official receipt of the intended payee would not have been so easily procured. Receipts] 534 Receipts and Payments. — A statement of cash actually received and paid, either in detail or in a summarised form. Such a statement is not necessarily an account of the earnings of a busi- ness or other concern for the period to which it relates, for the following reasons : — (i) Items of a " capital " nature (receipts or payments or both) may be includedj and (2) The outstanding assets and liabilities (if any) at the commencement and end of the period are disregarded. A reconciliation between the " income and expenditure " and the " receipts and payments " of a particular period may be effected by the pre- paration of a separate account of the receipts and payments affecting the " capital " transactions and an adjustment of the outstandings referred to. Although the income and expenditure of a period, in an account showing same (really a Ledger Account), are set out on the credit and debit sides respectively, a statement of receipts and payments (as becomes a Cash Account) is exhibited in the reverse form, viz., receipts on the debit side and payments on the credit side. (See title Income and Expenditure.) Receiver. — Receivers are appointed in two ways. They may be appointed (1) under a deed, e.g., a mortgage or a debenture deed; (2) by the Court. (Note. — Where there is a deed which contains no power of appoint- ment of a receiver, and does not incorporate the provisions of the Conveyancing Act (see infra), the aid of the Court must be invoked, so that in such a case so far as the authority, &c, of the receiver are concerned, the deed is practically non-existent.) The nature of the office, powers, and authority of the former class, however, and that of those of the latter are totally different. The receiver in the one case deriving all his authority and very existence from the deed, cannot go beyond the powers thereby conferred ; in the other, being an officer of the Court, he acts under its .direc- tions and supervision. Accordingly, the prin- ciples which regulate the proceedings of the latter class of receivers have only a partial application, [ Receiver ' by way of analogy, to those of appointed by deed. As an illustration ol difference may be mentioned the oxen power of distress. A receiver appoint in order that he may exercise this po the name of his appointor, must haw and specific authority given him for that whereas a receiver appointed by the Court as a rule, exercise such power on his authority, without first applying to tin a particular order for that purpose, unl indeed, the rent in question is in arrear for* than a year, or the legal title is doubtfi Receivers appointed by the Court. — It posed to deal first with receivers appdj the Court. A receiver is an indifferent person bi'twi parties to a suit appointed by the Ci receive the rents and profits of real e to get in and collect personal estate, things in question, pending the suit, does not seem reasonable to the Court thai parlv should do so, or where a party is incom petent to do so, e.g., an infant. In other « the Court appoints a receiver on the principle 1 preserving property, pending litigation which to decide the rights of the litigants \vb parties thereto. Where the assets subject to a floating are in jeopardy the Court has power to aj a receiver, although the moneys secured b charge are not due, and then, the s& having crystallised by the appointment receiver, to make an order for realisation. re Carshalton Park Estate, Lim.; Turn Company, 1908.) Under section 25, subsection S, of the Ju ture Act of 1873, and order 50, rule 6, of the of the Supreme Court, a receiver ma appointed by the Court in all cases in whii appears to the Court to be just or convei that such order should be made, and any order may be made conditionally or upon terms and conditions as the Court thinks The Court has a discretion in the matter, liberal construction should be placed on words " just and convenient." Rei ver 535 [Receiver iave in the cases of lunatics and infants, the ( art will not appoint a receiver unless a suit action is impending. ally speaking, a receiver should be a -holly disinterested in the subject-matter lit. Accordingly, one of the parties to will not be appointed without the assent . tli.- other party, or parties, unless a very • rial rase is made out (e.g., see Stubbs and < other v. Chamberlayne, 1910) or unless he dertakes to act without remuneration. A rson should he appointed consistently with lose professional life so much time as is neces- ry for the management of the estate can be ared, and if a probable ground is laid that the attention cannot be given, though it ay not form an absolute disqualification, it ust he taken into consideration in making ! appointment. Those whose duty it is peck and watch over the receiver are insuitable for the appointment. It is )t, therefore, customary to appoint a trustee, ive in special cases where the appointment ould be peculiarly beneficial to the estate, and 3 one else can be found who would act with le same benefit. Even in such a case, however, trustee will not be appointed unless he agrees ( act without remuneration. For the same reason, viz., that it is his duty to atch over and check the receiver, the solicitor 1 the cause will not be appointed, though there i no objection to a solicitor as such. Another point of objection is that the person ought to be appointed is clothed with certain rivileges which exempt him from the ordinary emedies it may become proper to enforce, accordingly, a Peer or Member of Parliament 'ill not be appointed, though Lord Eldon lined to say that a Member of Parliament was bsolutely disqualified. Where an order is made for winding up a ompany compulsorily or subject to supervision- it all events, when that order is made upon a letition of a date anterior to the appointment of he receiver appointed at the instance of deben- ure-hoklers— if nothing else appears, prima acie, the Court, in order to prevent two persons performing the same duties, and to save expense, will appoint one person receiver and liquidator, that person being the liquidator. The rule is dis- cretionary only, and may easily be displaced. If it appears that the whole, or practically the whole, of the assets belong to the secured creditors or debenture-holders, and thus there is really nothing for the liquidator to do, the Court will not displace the receiver. Nor will it do so where the assets of the company are of such a nature that it is not probable that they will be realised in the best way for the debenture-holders, e.g., if there is something in the nature of the securities to be realised, and the moneys to be collected, which requires negotiations, and bar- gainings, and compromises. By section 162 of the Companies (Consolidation) Act 1908 it is provided that where an application is made to the Court to appoint a receiver on the behalf of the debenture-holders or other creditors of a com- p'any which is being wound up by the Court the Official Receiver may be so appointed. Any person who obtains an order for the appointment of a receiver or manager of the pro- perty of a company must within seven days from the date of the order give notice to the Registrar of Joint Stock Companies, who is to enter the fact on the Register of Mortgages and Charges. Penalty for non-compliance with this provision — a fine not exceeding £5 per day. (Companies (Consolidation) Act 1908, section 94.) A person to be appointed receiver must, unless otherwise ordered, first give security, to be allowed by the Judge to whose Court the action is attached; duly account for what he shall receive on account of the rents and profits for the receipt of which he is appointed, at such periods as the Judge shall appoint; and account for and pay the same as the Court shall direct, or, as the case may be, be answerable for what he shall receive in respect of the personal estate, for the getting in and collecting of which he is appointed, and account and pay the same as the Court shall direct. The security required is usually the recognisances of the receiver, with two sureties, for double the annual rental of the property. Where the receiver has to get in capital sums the security is generally fixed at the Receiver] 536 Receiver full (or something above the full) amount which is ordered or expected to be received. Guarantee societies are frequently accepted as securities, and where such a society is offered as security a bond of the receiver and the society is accepted in place of the recognisances or bond required in other cases. The partners in trade of the receiver, persons in partnership together, and the solicitor in the cause, are not usually accepted as securities for a receiver. The securities must be living within the juris- diction, even when the person appointed receiver is resident abroad, and is to collect assets there. Additional security may be required when the property over which the receiver is appointed has since increased in value. The Court will not generally dispense with security, even by consent of the parties inter- ested, when asked to appoint a receiver, but if the parties being competent so to do consent to appoint a receiver of their authority, the Court will allow him to act without giving security. When no salary is given to the receiver, it is not unusual to dispense with security. So, too, when the receiver will only have to incur expen- diture, or where he does not enter into posses- sion or receive anything, and undertakes not to act without leave of the Court. Until security has been given the appointment is not complete, although on its being given the order will relate back to the day of its date. The receiver may, however, be authorised to act before he has given security. A receiver is personally bound as receiver from the time he begins to act as such, and to receive moneys due to the estate, and though, as against third parties, he cannot set up his title as receiver where he has not completed his security or taken possession, yet he is none the less under the liability of a receiver. Should a surety procure his discharge during the continuance of the receivership, the receiver must enter into a fresh recognisance with new sureties; and where a surety becomes bankrupt the receiver is usually required to enter into a fresh recognisance wit! two or more solvent sureties. The sureties are, as a general rule, to the extent of the sum secured by the r< nisancc for everything for which, by thi dition of the recognisance, the receiver h: is liable, and also for everything which is I necessary consequence of his default, includin interest, costs, and expenses incurred in proceedings against the receiver, and in n him, and in the appointment of a new 01 In special circumstances, however, the will not enforce such liability in all its stric Sureties are liable from the date of thil receiver's beginning to act as such, and no merely from the date of the bond or recognis It has been held that where a receiveKwl " rents and profits " of real estate had (1 ■ insured some of the farm buildings in his owr name, and received and misapplied the insurano! money; (2) received and not accounted foi dividends on Consols in Court representing proceeds of sales of real estate; (3) rei under an order of the Court money represc personal estate, to be spent in repairs, which hi had misappropriated, the sureties were properl; charged in respect of these three items. A receiver is generally continued until th' decree, but he may, under certain circumst; be discharged at an earlier period, e.g., should the object of his appointment be fullv effected, a- where he is appointed to get in debts due out the rents and profits of an estate, and such debt: are discharged ; or where he has been app> at the instance of an annuitant whose annuity i in arrear, and all such arrears are paid off' Where, however, a receiver is appointed fo infants, the object for which he is appointeAI not considered as being fully effected until al . the infants attain their majority, and he will not, before that happens, be discharged evenM to the share of one of such infants who ha;l attained the age of twenty-one. Should, too. th'l receiver's continuance in office become unne«i« sary, as where the plaintiff's claim is admitM and satisfied, or, where having been appointed b<| R eiver •f the refusal of the executors to act ider a will, on such executors subsequently nsenting to act, he may be discharged. ustence, too, of any of the following ill render the receiver liable to removal : — regularity in carrying in and want of clearness the statement of his accounts; neglectful and rtial conduct; great dereliction of duty, pecially failure to have regard to, and to carry t, the orders of the Court in reference to his mini accounts. But where nothing is charged against the teiver in regard to the manner of conducting mself in the office of receiver, or to the way lich he passes his accounts, the mere fact • his being an illiterate person will not induce r Court to remove him. Bankruptcy of the receiver is another ground : ' his removal. It may also be a ground for discharge that the i :eiver has changed his residence* to an incon- 1 nient distance from the estate over which he lis appointed, or that a substitute can be I tabled at a less salary. ■\ receiver, being appointed for the benefit of | parties interested, will not be discharged erely on the application of the party at whose Stance he was appointed. N'or where a receiver has been appointed and 1 s given security, will he be discharged upon his in application, without showing some reason- ile cause why he should put the parties to the i sense of a change. Reasonable cause was con- : ered to exist where the receiver showed that was suffering from bodily and mental iirniity, and that such infirmity was heightened A the anxiety occasioned by acting as receiver. application to the Court is generally necessary ie discharge of a receiver, but where the expires over which the receiver has been ted, as, e.g., where a tenant-for-Iife, over iose estate a receiver has been appointed, dies, |? remainderman has a right immediately, on <; death of the tenant-for-life, to enter into '•11, without making any application to t" Court to discharge the receiver. 537 [Receiver A receiver, unless he consents to act without remuneration, is entitled, unless the Court other- wise orders, to a proper salary or allowance. Such remuneration may take the form of— (a) A percentage upon the sums collected and received, or (6) A lump sum of money. Formerly it was customary, where the remuneration took the form of a percentage, to allow- 5 per cent, on the collection of rents of freehold and leasehold estates, and a rate vary- ing from 2 J to ii per cent, in other cases. Now, however, 3 per cent, is very commonly given, but there is no fixed scale, nor is the scale followed in the case of liquidators any guide. The rate will depend very much on the circum- stances of each case, 5 per cent, being still allowed in cases of difficulty (e.g., where the sums to be got in are very small, or the pay- ments very frequent), and in rare cases so high a rate as 10 per cent. On the other hand, should there be very great facility in receiving the sums to be collected, less than the ordinary rate may be given. (But .see provisions of the Convev- ancing Act, quoted infra.) A± has been already stated, a trustee, if appointed receiver, is generally required to act without remuneration, but there is no inflexible rule to this effect, the Court having a discretion in the matter. The amount of the receiver's salary or allow- ance is usually not fixed until the passing of the first account. The Court is bound to see that the receiver is paid his remuneration, without regard to the sufficiency of the estate to meet the claims upon it. In addition to his salary, a receiver may be entitled to an allowance for extraordinary trouble and expenses incurred by him in the dis- charge of his duties and on account of the estate, but as the Court will take care that all which the receiver is bound to do for his salary is done, in order to be so entitled he must either have acted under express orders or be in a position to show that benefit has resulted to the estate from his (extra) exertions and expenditure. A receiver, however, may not make interest for his own benefit in respect of moneys received by him, between the time when they come into his Receiver] 53* Receiver hands and the time when he passes his accounts. And, although his recognisance only requires him to pass his accounts yi arjy, lie may at any time apply to the Court to pay in moneys in hand ; and if, in the interval between passing his accounts, he receives any sums of such an amount as to make it worth while to lay them out, he ought to apply for an order to have them paid into Court, that they may be there made productive for the benefit of the estate. Should a receiver neglect to leave and pass his accounts, and to pay over the balance thereof at the times fixed for this purpose, the Judge before whom he is to account may, from time to time, whin his subsequent accounts are produced to be examined and passed, disallow the salary therein claimed. Liability for Credit Incurred. — As regards the responsibility for credit incurred of a receiver appointed by the Court, he should in all cases obtain the sanction of the Court. Without such sanction the amount may be disallowed. Where he makes an advance himself for a proper purpose and has not previously obtained the sanction of the Court, the pay- ment may be subsequently ratified, but he will not be allowed any interest, whereas if he obtains leave he will be allowed interest at 5 per cent. Assuming the sanction to have been duly obtained., even then the receiver and not the company is responsible, although, of course, he is entitled to be indemnified out of the assets so far as they are sufficient. {Burt v. Bull, 1895.) While he may give a charge upon the assets (after obtaining the proper sanction), he should expres-.lv negative personal liability. (National Bank of England v. Basden, 1905.) On the Other hand, in a recent case, Re A. Boynton, l.un. (1910), it was decided that although the deed did not expressly exclude the personal liability of the receiver and manager, yet upon 1 lit construction of the deed the bank was content to rely upon their security and upon that alone. The assets eventually proved insufficient to pay in lull the costs of the plaintiff in the debenture- holders' action, (he remuneration of the receiver and manager and the amount advanced by the bank. It was decided that the costs of the tiff and the remuneration of the rei manager had priority over the claim by bank for the sum advanced. (See also Gh Cupper Miuex, Lim., 1906.) In Re R viands Class <~ Engineering ( (L.T. Vol. 11S, p. S7), it was decided that a receiver, appointed by the Court to si receiver appointed by parties, uses goods for purposes of the business which have ordered by his predecessor, the creditor who 1 supplied the goods is entitled to be paid in pria to the debenture-holders. The appointment of a receiver <>pi r; discharge of the clerks and other oil if a clerk is dismissed by the receiver wit] notice, it is an illegal dismissal so far as tl company is concerned, the default in not comply- ing with the terms of the debentures lu nig the wrong imputed to the company. The clerk therefore, bring an action against the company — not the receiver — for wages in lieu of ; (Rcid v. Explosives Co., 19 O.B.I). 264. Upon appointment as receiver and 111 particularly where the appointment is life be continued for a lengthy period, an inv should be taken forthwith of the furnj fittings, fixtures, machinery, and pla: valuation made of the stock-in-trade. IQ^H case upon appointment immediate' steps should be taken to obtain possession of all documen title, leases, agreements, and insurance poll and proper inquiries should be instituted in sufficiency of the insurances, whether in rfl^H of lire, accident, burglary, or otherwise, accord- ing to the circumstances of the particular business. (See suggestions under heads Receivers appointed by Parties, intra.) Equitable Execution. — Where the only perty of a judgment debtor is such that it be taken in execution under the ordinary pt of the Court, a receiver may be appointed Court by way of equitable execution. The usual instances are : — Repiver] (i) A share of a partner in the property and profits of a partnership. (2) An interest in an estate, such as the rever- sionary interest under a will. appointment of the character first men- I must be distinguished from a receiver of li partnership assets in the event of dissolution. I e procedure is governed by section 23 of the 1 rtnorship Act 1890, as follows : — III) After the commencement of the Partner- ship Act 1890 a writ of execution shall not issue against any partnership property except on a judgment against the firm. I'h< High Court or a Judge thereof, or the Chancery Court of the County Palatine of Lancaster, or a County Court may, on the application by summons of any judgment creditor of a partner, make an order charging that partner's interest in the partnership property and profits with pay- ment of the amount of the judgment debt and interest thereon, and may by the same or a subsequent order appoint a receiver of that partner's share of profits (whether already declared or accruing), and of any other money which may be coming to him in respect of the partnership, and direct all accounts and inquiries, and give all other orders and directions which might have been directed or given if the charge had been made in favour of the judgment creditor by the partner, or which the circumstances of the case may require. 3) The other partner or partners shall be at liberty at any time to redeem the interest charged, or in case of a sale being directed, to purchase the same. This section shall apply in the case of a Cost Book company as if the company were a partnership within the meaning of this Act. Note. — A receiver appointed under the above section has no right to interfere in the management of the business, and the other partners may at their option dissolve the partnership. 539 [Receiver As in the case of an assignee under an assignment by a partner of his share in the partnership, a receiver is ordinarily bound to accept the account of the profits agreed to by the other partners, for it was held in Brown Janson v. Hutchinson (1S95) that the discretion given by the Partnership Act (section 23) to direct accounts should only be exercised under special circumstances, e.g., with a view to a dissolution; so that, although a receiver of a partner's share may not be entitled to an account during the continuance of the partnership, he would on a dissolution be entitled to a full account of the realisation of the assets. (Sec titles Equitable Execution, Partnership (Assignment of Share).) Accounts. — The following regulations as to the accounts of receivers appointed by the Court should be noted : — When a receiver is appointed with a direction that he shall pass accounts, the Court or Judge shall fix the days upon which he shall (annually, or at longer or shorter periods) leave and pass such accounts, and also the days upon which he shall pay the balances appearing due on the accounts so left, or such part thereof as shall be certified as proper to be paid by him. And with respect to any such receiver as shall neglect to leave and pass his accounts and pay the balances thereof at the times so to be fixed for that pur- pose as aforesaid, the Judge before whom any such receiver is to account may from time to lime, when his subsequent accounts are produced to be examined and passed disallow the salary therein claimed by such receiver, and may also, if he thinks fit, charge him with interest at the rate of ^5 per cent, per annum upon the balances so neglected to be paid by him during the time the same shall appear to have remained in the hands of any such receiver. (O. 50, r. 1S.) Receivers' accounts shall be in the form pre- scribed (see below), with such variations as circumstances may require. (R. 19.) Every receiver shall leave in the chambers of the Judge to whom the cause or matter is assigned, his account, together with an affidavit Receiver] verifying the same, in the prescribed form, with such valuations as circumstances may require. An appointment shall thereupon be obtained by the plaintiff or person having the conduct of the cause for the purpose of passing such account. (R. 20.) The form prescribed for receivers' accounts is that of an account of receipts and payments. In the case of real estate the form must be ruled so as to provide columns for the following items : — (a) Receipts. — No. of item. (Note. — The order in which the properties are entered in the first account should be followed in all subse- quent accounts.) Date when received. (Note. — One year's rent, although paid half-yearly, quarterly, or monthly, should be entered in one item ; the date of the latest receipt being entered in this column.) Tenants' names. Description of premises. Annual rent. Arrears due at . Amount due at . Amount received. Arrears remaining due. Observations. (6) Payments and Allowances. — No. of item. Date of payment or allowance. Names of persons to whom paid or allowed. For what purpose paid or allowed. Amount. Note. — " In the first account of rents the " receiver must state in the column for observa- " tions how each tenant holds; and every " alteration should be noticed in subsequent " accounts: in this column he should also enter " any remarks he may think proper to make as "to (i) arrears of rent, (2) state of repairs " or otherwise." 54° Receiver In the case of personal estate the form is 1 below — (a) Receipts. — No. of item. Date when received. Names of persons from whom received. On what account received. Amount received. (b) Payments and Allowances. — No. of item. Date when paid or allowed. Names of persons to whom paid or alio For what purpose paid or allowed. Amount paid or allowed. The accounts in each case must be accomp by summaries showing the balances due from I receiver on account of real estate and pers estate respectively. The items on each side of the account s be numbered consecutively, and the account shall be referred to by the affidavit as an exhibit, and be left in the Judge's chambers, or with the official or other referee, as the case may be. (O. 33- r. 4.) All accounts, copies and papers left at chambers shall be written upon foolscap paper, bookwise, unless the nature of the document renders it impracticable. (O. 66, r. 2.) Every alteration in an account verified affidavit to be left at chambers shall be ma with the initials of the commissioner or otl before whom the affidavit is sworn, and alterations shall not be made by erasi (O. 38, r. 22.) A certificate of the chief clerk stating result of a receiver's account shall from time time be taken. (O. 50, r. 22.) " Upon passing his accounts the re " brings in his bill of costs, which is " and the amount allowed included in " disbursements. " The account is vouched by the produc " of the proper vouchers, such as receipts; " these are initialled by the proper officer of I " Court as evidence of their production " allowance. Rjceiver] " Vouchers will be admitted as evidence of " payment of the sums specified, and credit " given to the accounting party in the account, " unless the other side shows some reasonable " ground for impeaching the vouchers, but if " any party objects the affidavit or oral evi- " dence of the person receiving the money may " be required, or proof given of his signature " to the voucher. " Vouchers must be duly stamped, otherwise " they will be rejected ; sums under 40s. may " be substantiated by the oath of the account- " ing party, but he must mention in. his " account to whom, for what, and when the " amounts were paid. " When the account is passed . . . the " chief clerk's certificate is made stating the " amount due from the receiver and the day " on which it is to be paid into Court. " Any large sum in the receiver's hands " should be paid into Court forthwith without " waiting to pass his accounts; otherwise he " may be charged with interest upon sums " retained by him." Note. — Small items of the same class, such as tty disbursements in managing a business, tould be summarised for each month, or, if rge, for each week, and the Petty Cash Book lould be produced on passing the accounts. eekly or monthly salaries and weekly wages iou!d be summarised in like manner, and Uaries and Wages Books produced. When the :counts are heavy it is advisable to obtain direc- ts at chambers as to their form and contents fore preparing them. \(See titles Interim Receiver, Official Receiver.) | Receivers Appointed by Parties. — In connec- with mortgages made by deed, provided ding to the contrary is contained therein, the veyancing Act 1881 confers upon a mortgagee owers (inter alia) to sell and to appoint a river (section 19), and further provides: — ction 20. — A mortgagee shall not exercise the er of sale conferred bv this Act unless and 541 [Receiver (1) Notice requiring payment of the mortgage money has been served on the mortgagor or one of several mortgagors, and default has been made in payment of the mortgage money, or of part thereof, for three months after such service ; or (2) Some interest under the mortgage is in arrear and unpaid for two months after becoming due ; or (3) There has been a breach of some provision contained in the mortgage deed or in this Act, and on the part of the mortgagor, or of some person concurring in making the mortgage, to be observed or performed, other than and besides a covenant for pay- ment of the mortgage money or interest thereon. Section 24. — (1) A mortgagee entitled to appoint a receiver under the power in that behalf conferred by this Act shall not appoint a receiver until he has become entitled to exercise the power of sale conferred by this Act, but may then, bv writing under his hand, appoint such person as he thinks fit to be receiver. Note. — A mortgagee appointing a receiver or manager of the property of a company under any powers contained in any instrument must give notice to the Registrar within seven days of the appointment. A penalty is incurred on default. (Companies (Consolidation) Act 1908, section (2) The receiver shall be deemed to be the agent of the mortgagor; and the mortgagor shall be solely responsible for the receiver's acts or defaults, unless the mortgage deed otherwise provides. (3) The receiver shall have power to demand and recover all the income of the property of which he is appointed receiver by action, distress, or otherwise, in the name either of the mortgagor or of the mortgagee, to the full extent of the estate or interest which the mortgagor could dis- pose of, and to give effectual receipts accordingly for the same. (4) A person paying money to the receiver shall not be concerned to inquire whether any Receiver] 54 2 case has happened to authorise the receiver to act. (,) The receiver may be removed, and a new receiver may be appointed from time to time by the mortgagee by writing under his hand. (6) The receiver shall be entitled to retain out of any money received by him, for his remunera- tion, and in satisfaction of all costs, charges, and expenses incurred by him as receiver, a commis- sion at such rate, not exceeding five per centum on the gross amount of all money received, as is specified in his appointment, and if no rate is so specified then at the rate of five per centum on that gross amount, or at such higher rate as the Court thinks fit to allow, on application made by him for that purpose. Note. — The effect of this provision is that if no rate is fixed upon appointment there is a pos- sibility of a receiver obtaining more, but apparently there is no prescribed procedure by which a receiver may be compelled to take less than five per cent. (7) The receiver shall, if so directed in writing bv the mortgagee, insure and keep insured against loss or damage by fire, out of the money re, , ived by him, any building, effects or property comprised in the mortgage, whether affixed to the freehold or not, being of an insurable nature. (S) The receiver shall apply all money received bv him as follows (namely) : — ( r Act of 1881 to receive the rents and profits lands and buildings may be summarised thus :- (a) He should ascertain the exact state of th< 1 rent roll to date. (6) He should advise all tenants of hi appointment and that future rents must b paid to him. (c) He should ascertain what (if any) «t( and similar liabilities are unpaid. (n v. Cms Light c~ Coke Co., 1896, and ■bey v. London Electric Supply Corporation, lb, Cannon Brewery Co. v. Gas Light nstruction 549 [Reconstruction Initiator either (a) to abstain from carrying resolution into effect, or (b) to purchase the i crest of such dissentient member at a price to I determined either by agreement or arbitration, i :h purchase money to be paid before the com- I lv is dissolved and to be raised by the liqui- tlor in such manner as may be determined by •cial resolution. The resolution empowering liquidator to sell will not be invalid by reason it it was passed before, or concurrently with, resolution for winding up the company or f appointing liquidators, and in practice where r onstruction is contemplated, the special resolu- tns (a) to wind up, (6) appointing a liqui- c :or, and (c) authorising such liquidator to sell t: undertaking for shares, are all passed at the sue meeling or meetings, thus simplifying the | icedure. The special resolution may confer I r>n the liquidator a general authority to sell, c an authority in respect of a particular agree- r nt. Where such a resolution has been passed ilhorising the- liquidator to sell, and an order is r ile within a year for winding up by or subject t the supervision of the Court, such resolution s ill not be valid unless it is sanctioned by the lurt. (Sec Companies (Consolidation) Act : 8, section 192.) Thus, although the special resolution may be issed by the requisite majority, application be mat!.- to the Court at any time within Hear to set aside the sale. Ihe articles of association of a company may fport to confer certain rights in favour of " dis- stient members " in lieu of those contained in : Companies Act, but so far as regards the llM of ascertaining the price to be paid to a I sentient member in respect of his shares, the Kbion In re F. B. Gould, <5>c. (Court of Ipeal, May 1899), will considerably affect the IWity of such substituted " rights." It will be IW that section 192 provides that the price is pbe determined by agreement, or, in the event ■ dispute, by arbitration. Where il lias been Wired to avoid arbitration, the articles of asso- Mbn have provided (in the words of the clause Mquestion in Gould's case) " that the purchase ' money to be paid for the interest of any dis- " sentient member shall be such sum of money as " the liquidator can obtain by selling the shares, " stock, or other property to which such dis- " sentient member would have been entitled upon " the completion of the sale or arrangement, had " he not expressed his dissent." This was, how- ever, held not to exclude the right to arbitration, for although the articles of association may amount to an agreement between the company and the members in some respects, the require- ment of the Act in order to avoid arbitration was construed by the Court of Appeal to be an agree- ment between the liquidator and the dissentient member. Lindley, M.R., said. " To say that it " meant a clause binding en bloc all members, " assenting or dissenting, would be an unwarrant- " able suggestion." But whatever method be adopted in com- pensating a dissentient member, he cannot impeach the sale. On the other hand, a dis- sentient member, whether he takes the necessary steps to protect himself or not, is under no obli- gation to accept any shares or other interest in the purchasing company. If a member has not voted in favour of the resolution to sell the under- taking he may surrender his interest and be com- pensated in pursuance of the Act, provided he takes the necessary steps. If he neglects to com- ply with the formalities with regard to dissent, he must either assent or forfeit his interest. But a scheme which imposes upon a member of a company the alternative of accepting liability for a larger sum than the liability on his shares or of being dispossessed of his status as a shareholder upon terms which he is not bound to accept is contrary to the Companies (Consolida- tion) Act 1908 and ultra vires. (Bisgood v. Henderson's Transvaal Estates, Lim., C.A. 1908.) The voluntary winding up of a company (although perfectly solvent) for the purposes of reconstruction or amalgamation will cause a for- feiture of a lease which provides for re-entry if the lessees being a company shall enter into liquidation whether compulsory or voluntary. Such a proviso is " a condition for forfeiture on Reconstruction] 550 [Redeemable the bankruptcy of the lessee," within section 14, subsection 6, of the Conveyancing Act 1881. (Fryer v. Ewart, 1902, App. Cas. 187.) Reconstructions will of necessity involve the closing of the books of the old company and the opening of fresh books for the new concern. Ordinarily the accountancy work necessary will be similar to that involved in a liquidation and acquirement of a new business respectively, but it may be helpful to suggest that as regards the new company (1) where the purchase-price exceeds the book values of the general assets acquired, the difference should be debited to Goodwill Account ; and (2) where the book values of the assets exceed the purchase price, the difference should be credited to a special Reserve Account. (See titles Amalgamation, Arrange- ments (Joint Stock Companies), Profits Prior to Incorporation.) Record Book. — The book required to be kept by a liquidator (in compulsory liquidation) or a trustee (in bankruptcy) recording all minutes, all proceedings had, and resolutions passed, at any meetings of creditors and/or contributories (as the case may be), or of the committee of inspec- tion, and all such matters as may be necessary to give a correct view of the administration of the company's or the bankrupt's affairs (as the case may be). The liquidator or trustee is not bound to insert in the Record Book particulars of any document of a confidential nature, such as the opinion of counsel upon any matter affecting the interests of the creditors and/or contributories, nor need he exhibit such document to any person other than a member of the committee of inspec- tion or (in company liquidation) the Official Receiver or the Board of Trade. (Bankruptcy Rule 285 ; Winding-up Rules 1909, Rule 166.) The debtor has no right to inspect the Record Book. (In re Solomons, 1904.) The chairman of every meeting shall cause minutes of the proceedings at the meeting to be drawn up and fairly entered in a book kept for that purpose, and the minutes shall be signed by him or by the chairman of the next ensuing meeting. (Bankruptcy Act 1883, 1st Schedule, Rule 25 ; Winding-up Rules 1909, Rule 138.) The Record Book in both winding-up am bankruptcy procedure must be submitted the Cash Book) to the committee of in^j for the purpose of audit not less than once three months, and when the accounts 1 liquidator or trustee are being submitted I Board of Trade for audit, the Record Book m also be submitted. (See title Minutes Minute Book.) Reddendum. — The clause in a lease which r the rent to be paid; it commences with " yieMB and paying " or some equivalent words. Redeemable Debentures, &c— Debenl bonds are generally issued payable (1) at expiration of a fixed term, or (2) on being drav for redemption, or (3) on notice b< ing gives " pay off." (See titles Debenture, Irredcen* Debentures.) As the terms of issue may be at par, jgl premium or at a discount, so the conditions to payment may be subject to agreement. It not unusual to make the debentures payable the end of a fixed number of years at par, earlier on the company giving the holder S months' notice to pay off, provided that in tr latter case the company pay a premium a agreed rate. Debentures are sometimes issued payable scries, e.g., an issue of £100,000 payable in fo series of £25,000 each at the expiration of thre six, nine, and twelve years respectively. Accounts. — When debentures are issued|^B discount the full nominal amount should appc amongst the liabilities forthwith, the differed between that amount and the cash actus received being treated temporarily as an assf say, " Cost of Issue of Debentures," whii " asset " or " so much thereof as has not w " written off shall be stated in every Balan " Sheet of the company until the whole amou " thereof has been written off." (Compani (Consolidation) Act 1908, section 90.) Tl should be written off as soon as possible, but pr vided the articles of association do not forb such a course, such charge against revenue m: Reeemable] spread over the period for which the deben- es have been issued. I debentures are issued at par and redcem- : .• :it a fi.xed date at a premium, it would be ■ ficient to include the " issue price " among the I bilities, and gradually provide out of revenue ■ the premium required at the redemption date. lis advisable, however, where this is done, that 1- narration of the debentures and the redemp- 1n fund in the Balance Sheet should state the 1 :t that the debentures are redeemable at a pmium, so that there can be no misunderstand- to the ultimate liability. Where debentures are issued at a premium and a redeemable at par or at a less premium than lit in the issue price, the surplus should be [fried to reserve; but if there is nothing in 1: articles of association of a company prohibit- i* such a course the auditor of the company < mot object to the premium being carried to Account for dividend purposes if the MCtors expressly desire to do so. The auditor lould, however, require the directors to inform holders from what source their dividends king derived, and in the event of the directors lining to give such information, he should Bder the advisability of drawing attention to fact in his report. [ode of Redemption. — Debentures may be Memed in different ways, of which three are iiportant, viz. : — (l) Out of revenue : — ( not only to preserve the good name of the rawer or indorser (as the case may be), but to possible expense, for in the event of dis- lonour of the bill in the absence of a " case of iced " the holder is entitled, in the case of a oreign bill, to protest same and draw a re-draft t sight for the amount of the re-exchange, with nterest until time of payment. The re-exchange nay include expenses of protest, postages, ustoman commissions on the re-draft, and the (rice of the stamp. A referee in case of need iho is ready to accept or pay the bill may avoid ■ xtras and save the honour of the party in [Uestion. (See title Re-exchange.) fference. — A submission of a question between >artiks are properly returned to him and should line them carefully upon return. (See title Igister of Counterfoil Receipt Books.) stcr of Cash=Takings Books. — Sec title gister of Cash-Salts Books. Re ster of Counterfoil Receipt Books. — The best in of receipt book is a specially printed form in carbon duplicate books, and all oices, statements, &c, should contain an aiouncement that only the firm's printed form receipt will be recognised. The receipts tuld be bound and numbered consecutively in of, say, i to ioo, 101 to 200, and so on, a register should be kept by a responsible containing the following particulars, t)ks a] I son n nely : — ) List of books received from the printers, with their consecutive numbers. ) Date each book is given out to the cashier, collector, or other official; and 3) Date it is returned. t is not an uncommon practice for a default- official to use an " extra " receipt book the purpose of concealing frauds, and auditor who purports to check cash received counterfoil receipt books should at his mination call for all the receipt books, in use or not, including all new books have been received from the printers, and are them with the register to see that all properly accounted for. 11 nil ■ ether Inch ' 'P 557 Register heading " Register of Counterfoil Receipt Books " (see that title) is of assistance in hoping a record as to their whereabouts. Register of Directors or Managers. — Every com* pany registered under the Companies Act must keep at its registered office a register containing the names and addresses and the occupations of its directors or managers, and send to the Regis- trar of Companies a copy thereof, and from time to time notify to the Registrar any change among its directors or managers. If any company makes default in keeping a register of its directors or managers, or in slid- ing a copy of such register to the Registrar, as aforesaid, or in notifying to the Registrar any change that takes place in such directors or managers, such delinquent company shall be liable to a fine not exceeding five pounds for every day during which such default continues, and every director and manager of the company who knowingly and wilfully authorises or permits such default shall be liable to the like penalty. (Companies (Consolidation) Act 1908, section 75.) The copy "Annual List and Summary " (see that title) sent to the Registrar of Joint Stock Companies must contain (inter alia) the names and addresses of the persons who are directors at the date of the summary. (Section 26.) R«| ter of Credit Note Books. — In businesses m ere goods are returned inwards in large qjntities (e.g., a newspaper office, where lrns are daily occurrences), and it is necessary give credit in consequence to customers for amounts charged to them in respect thereof, proper system of credit notes should be ipted. Many businesses use a duplicate fcbon book. These books should be numbered executively, say, 1 to 100 and 101 to 200, and Hon, and kept in the charge of a responsible Ojcial, being handed out by him only to persons plperly entitled to issue credit notes. A register othe books on the system suggested under the Register of Members. — Every company shall keep in one or more books a register of its members, and enter therein the following particulars: — (i) The names and addresses, and the occu- pations, if any, of the members, and in the case of a company having a share capital a statement of the shares held by each member, distinguishing each share by its number, and of the amount paid or agreed to be considered as paid on the shares of each member; (ii) The date at which each person was entered in the register as a member; (iii) The date at which any person ceased to be a member. Register] If a company fails to comply with this section it shall be liable to a fine not exceeding five pounds for every day during which the default continues; and every director and manager of the company who knowingly and wilfully autho- rises or permits the default shall be liable to the like penalty. (Companies (Consolidation) Act igoS, section 25.) On the issue of a share warrant (transfer- able by delivery) in respect of any share or shares, the company must strike out of the Register of Members the name of the member entered therein as holding such share or shares as if he had ceased to be a member, and the fact of the issue of the warrant, with the date of issue, and the distinguishing numbers of the shares included in the warrant, are to be entered in the register. (Section 37.) No notice of any trust, expressed, implied, or constructive, shall be entered on the register, or be receivable by the Registrar, in the case of companies registered in England. (Section 27.) (But see title Distringas.) The register of members, commencing from the date of the registration of the company, shall be kept at the registered office of the company, and, except when closed under the provisions of this Act, shall during business hours (subject to such reasonable restrictions as the company in general meeting may impose, so that not less than two hours in each day be allowed for inspection) be open to the inspection of any member gratis, and to the inspection of any other person on payment of one shilling, or such less sum as the company may prescribe, for each inspection. Any member or other person may require a copy of the register, or of any part thereof, or of the list and summary required by the Act, or any part thereof, on payment of sixpence, or such less sum as the company may prescribe, for every hundred words or fractional part thereof required to be copied. If any inspection or copy required under this section is refused, the company shall be liable for each refusal to a fine not exceeding two pounds, and to a further fine not exceeding two pounds for every day during which the refusal con- 558 tinues, and every director and manager company who knowingly authorises or p. 1 the refusal shall be liable to the like penalty; as respects companies registered in England, ; Judge of the High Court, or the Judge c Court exercising the stannaries jurisdic the case of companies subject to that ju tion, may by order compel an imme inspection of the register. (Section 30.) A person inspecting the register has no i make his own copies or take extracts there (In re The Balaghat Cold Mining Co., 1901.) He must request and pay for (But see title Register and Registratio Mortgages in this connection.) It was held by the Court of Appeal in Re , Coalfields Syndicate, Lim. (in liq.) (18 Q.B. 754), that this right of inspection only to a " going company." In order to i the register after liquidation has superve will be necessary to apply to the Court. If the name of any person is without sufficien cause entered in or omitted from the register c members of a company, or default is made c unnecessary delay takes place in entering on tli register the fact of any person having ceased i be a member, the person aggrieved, or an- member of the company, or the company, nun apply to the Court for rectification of the regjitej (Section 32.) In Ex parte Cammell (1S94, 2 Ch. 302) K; L.J., said: " I do not consider I he word ' boolij " in section 25 of 1862 (now section 25 of 19c: " to be essential, and if these sheets had reall] " been treated as the register until the form " book had been prepared, I should be inoM " to hold that the entry of the name in the " sheets would be a sufficient compliance MB " the Act of Parliament relative to registration j (See titles Annual List and Summary, CafljflJ Register, Share Warrants.) The auditor of a company should compare total paid-up capital as stated in the register* members with the records in the financial He is required to give a certificate that accounts are "as shown by the books of I company," and it is submitted that his dutj Reister] it confined to an inspection of the financial Inks only. Rester and Registration of Mortgages. — Every 1 iked company shall keep a register of s and enter therein all mortgages and inrges specifically affecting property of the corn- giving in each case a short description of t> property mortgaged or charged, the amount thi' mortgage or charge, and (except the case of securities to bearer) the names of t- mortgagees or persons entitled thereto. If any director, manager, or other officer of the impany knowingly and wilfully authorises or ] rmits the omission of any entry required to be i ide in pursuance of this section, he shall be (ble to a fine not exceeding fifty pounds. ompanies (Consolidation) Act 1908, section x) l!ut omission to enter particulars of a 1 jrtgage or charge in the company's register les not of itself invalidate same, even though be given in favour of a director of the fnpany. A charge created by mere deposit of deeds within the s< ction and needs to be recorded in .• company's register of mortgages, for it is t a description of the instrument creating the that is required, but a description of i property charged. Prior to the passing of the Companies Act J7 members or creditors (only) were entitled fespect the register (free of charge) ; this rded no protection to an intending creditor, i>t July 1908, in addition, any son oilier than a member or (actual) creditor land an inspection thereof on payment ■' i', not exceeding one shilling for each . as may be fixed by the regulations of company. (Companies (Consolidation) Act section 101.) addition to this register the company is required to keep at its registered office a of every instrument creating any mortgage Brge requiring registration under the Com- s Act. (Section 93.) Such copy instru- is open to inspection at all reasonable 559 [Register times by the members and creditors (only) of the company, free of charge. (Section 101.) In the case of an issue of a series of uniform debentures a copy of one of the debentures is sufficient. (Section 93.) The right to inspect the register of mortgages includes the right to take copies. (Nelson v. Anglo-American Land Agency, 1S97.) (But see title Register of Members in this connection.) Every register of holders of debentures of a company shall, except when closed in accordance with the articles of the company during such periods (not exceeding in the whole 30 days in any year) as may be specified in the articles, be open to the inspection of the registered holder of any such debentures, and of any holder of shares in the company, but subject to such reasonable restrictions as the company may in general meet- ing impose, so that at least two hours in each day are appointed for inspection, and every such holder may require a copy of such register or any part thereof on payment of 6d. for every 100 words required to be copied. A copy of any trust deed for securing any issue of debentures shall be forwarded to every holder of any such debentures at his request on payment in the case of a printed trust deed of the sum of is. or such less sum as may be prescribed by the company for such copy, or, where the trust deed has not been printed, on payment of 6d. for every 100 words required to be copied. If inspection is refused, or a copy is refused or not forwarded, the company shall be liable to a line not exceeding ^5, and to a further fine not exceeding £2 for every day during which the refusal continues, and every director, manager, secretary, or other officer of the company who knowingly authorises or permits such refusal shall incur the like penalty. (Companies (Con- solidation) Act 1908, section 102.) In addition to the register of mortgages to be kept by the company at its registered offices, certain mortgages and charges given by a com- pany must be registered with the Registrar of Joint Stock Companies. Section 93 of the Companies (Consolidation) Act of 1908 provides that: — Register] 560 Res Every mortgage or charge created after the first day of July nineteen hundred and eight by a company registered in England and being either — (a) a mortgage or charge for the purpose of securing any issue of debentures; or (6) a mortgage or charge on uncalled share capital of the company; or (c) a mortgage or charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale; or (d) a mortgage or charge on any land, wherever situate, or any interest therein ; or (e) a mortgage or charge on any book debts of the company ; or (/) a floating charge on the undertaking or property of the company, [Note. — An agreement accompanying a pledge of chattels to secure a debt is not a bill of sale. (Ex parte Hubbard, 17 Q.B.D. 690.)] shall, so far as any security on the company's property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the mortgage or charge, together with the instrument (if any) by which the mortgage or charge is created or evidenced, are delivered to or received by the Registrar of Companies for registration in manner required by the Act within twenty-one days after the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a mortgage or charge becomes void under this section the money secured thereby shall immediately become payable. The foregoing provisions, however, are subject -to the following modifications : — (i) In the case of a charge created out of the United Kingdom comprising solely pro- perty situate outside the United King- dom ; a copy of the instrument, verified in the prescribed manner, may be sub- stituted for the instrument itself, and an extension of the period of 21 provided in the section, shall be all< (ii) Where the charge is created I United Kingdom but comprises outside the United Kingdom, the ment may be sent for registration withstanding that further pn may be necessary to make the effectual according to the law < country in which the properly is situa (iii) Where a negotiable instrument has t given to secure the payment of any ! debts of a company, the deposit instrument for the purpose of securilj advance to the company shall not fo purposes of the section be treated mortgage or charge on those book (iv) The holding of debentures entitling tf< holder to a charge on land shall not deemed to be an interest in land. The Registrar shall keep, with respect to earl company, a register in the prescribed form of the mortgages and charges created by the com| pany after the first day of July ninetecj hundred and eight and requiring registration under section 93, and shall, on payment of till undermentioned fees, enter in the register, wftl respect to every such mortgage or charge, tfcJ date of creation, the amount secured by ij short particulars of the property mortgaged (j charged, and the names of the mortgageMl persons entitled to the charge. Where a series of debentures containing, 1 giving by reference to any other instrument any charge to the benefit of which the debenture holders of that series are entitled pari passu i created by a company, it shall be sufficient there are delivered to or received by the RegistrJ within twenty-one days after the execution of V deed containing the charge or, if there is no sum deed, after the execution of any debentures of B series, the following particulars : — (a) the total amount secured by the whej series; and (b) the dates of the resolutions authorising tj issue of the series and the date of tj covering deed, if any, by which d security is created or defined; and Regter] 561 [Register of the property ) a general description charged; and /] the names of the trustees, if any, for the debenture-holders ; her with the deed containing the charge, or, if lere is no such detd, one of the debentures of th series, and the Registrar shall, on payment of th prescribed fee, enter those particulars in the re ster : rovided that, where more than one issue is mle of debentures in the series, there shall be se to the Registrar for entry in the register p; iculars of the date and amount of each issue, bi an omission to do this shall not affect the vsJity of the debentures issued. "here any commission, allowance, or discount h; been paid or made either directly or indirectly b; he company to any person in consideration of hi subscribing or agreeing to subscribe, whether ablutely or conditionally, for any debentures of th company, or procuring or agreeing to procure sucriptions, whether absolute or conditional, iv such debentures, the particulars required tcbe sent for registration shall include par- ti lars as to the amount or rate per cent, of the ciimission, discount, or allowance so paid or mle, but an omision to do this shall not affect tr validity of the debentures issued : rovided that the deposit of any debentures as surity for any debt of the company shall not for tl purposes of this provision be treated as the ■$5ie of the debentures at a discount. he Registrar shall give a certificate under his h d of the registration of any mortgage or clrge registered, stating the amount thereby sured, and the certificate shall be conclusive •elence that the requirements of this section as t< registration have been complied with. 1 umpany shall cause a copy of every c ificate of registration given under this section rti le endorsed on every debenture or certificate of V enture stock which is issued by the company, f I the payment of which is secured by the rtgage or charge so registered : rovided that a certificate of registration of any or charge so given need not be endorsed on any debenture or certificate of debenture stock which has been issued by the company before the mortgage or charge was created. It shall be the duty of the company to send to the Registrar for registration the particulars of every mortgage or charge created by the com- pany and of the issues of debentures of a series, requiring registration, but registration of any such mortgage or charge may be effected on the application of any person interested therein. Where the registration is effected on the appli- cation of some person other than the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Registrar on the registration. (Section 93.) If any company makes default in sending to the Registrar of Companies for registration the particulars of any mortgage or charge created by the company, and of the issues of debentures of a series, requiring registration with the Registrar, then, unless the registration has been effected on the application of some other person, the com- pany, and every director, manager, secretary, or other person who is knowingly a party to the default, shall on conviction be liable to a fine not exceeding fifty pounds for every day during which the default continues. Subject as aforesaid, if any company makes default in complying with any of the require- ments as to the registration with the Registrar of any mortgage or charge created by the com- pany, the company and every director, manager, and other officer of the company, who knowingly and wilfully authorised or permitted the default shall, without prejudice to any other liability, be liable on summary conviction to a fine not exceeding one hundred pounds. If any person knowingly and wilfully autho- rises or permits the delivery of any debenture or certificate of debenture stock requiring registra- tion with the Registrar without a copy of the certificate of registration beiny fndorsed upon it, he shall, without prejudice to any other liability, be liable on summary conviction to a fine not exceeding one hundred pounds. (Section 99.) OO Register] 562 Registe Scale of Fees Payable on Registration : — Where the amount of the charge does not exceed ^200, ten shillings. Where it exceeds £200, twenty shillings. In the case of a series of debentures, these fees will be charged on the first debenture, and a further fee of 6d. on each subsequent debenture of the same series. The register kept by the Registrar is open to inspection by any person on payment of one shilling. (Section 93.) Thus any person may inspect the register kept by the Registrar and the company's register of mortgages; members and creditors only may inspect the copy of the instrument registered, kept by the company; and shareholders and regis- tered debenture-holders are entitled to inspect the register of holders of debentures of the company. The register kept by the Registrar will not contain any record of mortgages and charges other than those expressly included in section 93 ; for example, equitable mortgages by deposits of share certificates or debentures with bankers, &c, but such other mortgages or charges come under section 100, and should be recorded in the company's register. The annual summary must specify (inter alia) the total amount of debt due from the company in respect of all mortgages and charges which are required to be registered with the Registrar of Companies under the Act, or which would have been required so to be registered if created after the first day of July nineteen hundred and eight. (Section 26.) Although the time within which the mortgage or charge is to be registered with the Registrar is twenty-one days, a Judge of the High Court, on being satisfied that the omission to register a mortgage or charge within such time, or that the omission or misstatement of any particular with respect to any such mortgage or charge, was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to pre- judice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to gram relief, may, on tt application of the company or any person int.- ested, and on such terms and conditions as seu to the Judge just and expedient, order that fi time for registration be extended, or, as the ca= may be, that the omission or misstatement h rectified. (Section 96.) The Registrar may, on evidence bein^ to his satisfaction that the debt for which at registered mortgage or charge was given h; been paid or satisfied, order that a memorandui of satisfaction be entered on the Register, shall, if required, furnish the company copy thereof. (Section 97.) Note. — Every memorandum of sntisfactic- filed with the Registrar must now be verifi a statutory declaration. If any person obtains an order for the appoint-' ment of a receiver or manager of the propi 1 a company or appoints such a receive! manager under any powers contained in an;. 1 instrument, he shall within seven days fror date of the order, or of the appointment under the powers contained in the instrument, notice of the fact to the Registrar, and Registrar shall, on payment of the presi fee, enter the fact on the register of moriL and charges. If any person makes default in complying with the requirements of this section he shall be liable to a fine not exceeding £5 for everv day during which the default continues. (Section 94.) Section 45 of the Companies Clausi - Consoli- dation Act 1845 provides : — "A register of mortgages and bonds shall be " kept by the secretary, and within 14 days " after the date of any such mortgage or bond " an entry or memorial, specifying the number " and date of such mortgage or bond and the " sums secured thereby, and the names of the " parties thereto, with their proper additions, " shall be made in such register; and such " register may be perused at all reasonable " times by any of the shareholders, or by i RcjLster tgagee or bond creditor of the company, " or bv any person interested in any such ' mortgage or bond, without fee or reward." liter of a company should compare the of mortgages with the accounts which is called upon to certify. leister of Ships. — See titles British Ship, Lloyd's ■gister. Port of Registry. Rester of Transfers. — A book wherein are all transfers of shares, stock, or bonds the capital of, or part of the loans to a com- |hiv. The date, names of parties (transferor id transferee), with full address and descrip- n of the latter, the particulars of the subject- of transfer, and other necessary details ■ded. generally in one line and in the fm of a Journal entry, so that the transferor tiy be debited in the Share Ledger with the £iount of capital (or otherwise) which he is t nsferring. and the transferee may be duly t dited therewith. Re slrar of Joint Stock Companies. — The officer i jointed by the Board of Trade to carry out duties and exercise the powers of Registrar d by the Companies (Consolidation) •\ - 1e has also certain duties to perform in con- ation with limited partnerships. ["he following is a summary of the documents h must be filed with the Registrar of Joint Companies by (i) companies, (2) receivers, a I (3) those responsible for the conduct of 1 ited partnerships : — »(a) Memorandum of association. jp) Articles of association, (c) Declaration of compliance with requi- sitions of Companies (Consolidation) Act 1908. (d) Statement of nominal capital. (e) Contracts by directors to take up their qualification shares (if any). *(/) Consent of directors to act as such. 563 [Registrar *(g) List of persons who have consented to be directors. (h) Notice of situation of registered office. *(j) Prospectus or statement in lieu of Prospectus. *(j) Declaration that conditions necessary for issue of certificate to commence business have been complied with. (fe) Agreement for issue of shares other- wise than for cash. (I) Particulars of such an agreement where same not reduced to writing. (m) Return of allotments. (n) Return as to mortgages and charges or debentures. (o) Deed containing the charges or one of a series of debentures. *(p) Report for statutory meeting. (lace at the moment when the act of bank- ' uptcv was committed. Then, he being a ' >ankrupt. all the money which he then had, ' md all the money that was owing to him, ' >assed to the trustee in the bankruptcy for the 1 mrpose of being distributed by him amongst tnkrupt's creditors." (In re Pollitt, j)3.) (But see title Protected Transactions.) Re lse. — After breach of a contract, the party h'ing a right of action thereon may waive such r ht, but the release must be made under seal ; cierwise (for want of consideration) it will not t binding upon the party executing it. There is : exception to this rule in favour of bills of < :hange and promissory notes. Bill of Exchange. — When the holder of a 11 at or after its maturity absolutely and t conditionally renounces his rights against !• acceptor, the bill is discharged. The nunciation must be in writing, unless the bill i delivered up to the acceptor. The liabilities ( any party to a bill may in like manner be nounced by the holder before, at, or after its nturity, but nothing in this section shall affect t' rights of a holder in due course, without nice of renunciation. (Bills of Exchange Act 1 S2, section 62.) (See title Discharge of a Bill t Exchange. ) Executor. — An executor cannot demand a Imal release from a pecuniary legatee, for in rpect of a single transaction, such as the pay- 1 nt of a legacy, the executor must be satisfied Vh a simple receipt. But where, as invariably tlii case, an executorship involves a series of 1 nplicated transactions — receiving and paying, king investments and changing same — the ;cutor has a right to demand a release under i from the residuary legatee. ' He has a right to be clearly discharged, and lot to be left in a position in which he may be xposed to further litigation, because he fairly ays, ' unless you give me a discharge on the face of it protecting me, I cannot safely hand over the fund.' " (Kindersley, V.C.) Trustee (Bankruptcy) .—When the trustee has realised all the property of the bankrupt, or so much thereof as can, in his opinion, be realised without needlessly protracting the trusteeship, and distributed a final dividend, if any, or has ceased to act by reason of a composition having been approved, or has resigned, or has been removed from his office, the Board of Trade shall, on his application, cause a report on his accounts to be prepared, and, on his complying with all the requirements of the Board, shall take into consideration the report and any objection which may be urged by any creditor or person interested, against the release of the trustee, and shall either grant or withhold the release accordingly, subject nevertheless to an appeal to the High Court. Where the release of a trustee is withheld the Court may, on application of any creditor or person interested, make such order as it thinks just, charging the trustee with the consequences of any act or default he may have done or made contrary to his duty. An order of the Board releasing the trustee shall discharge him from all liability in respect of any act done or default made by him in the admin- istration of the affairs of the bankrupt, or other- wise in relation to his conduct as a trustee, but any such order may be revoked on proof that it was obtained by fraud or by suppression or con- cealment of any material fact. Where the trustee has not previously resigned or been removed, his release shall operate as a removal of him from his office, and thereupon the Official Receiver shall be the trustee. (Bank- ruptcy Act, 1883, section 82.) A trustee, before making application to the Board of Trade for his release, shall give notice of his intention so to do in the form prescribed to all the creditors of the debtor who have proved their debts, and to the debtor, and shall send with such notice a summary of his receipts and payments as trustee in the form prescribed. Pro- vided that w-here such application is made upon the trustee ceasing to act by reason of a com- position having been approved, such notice and summary shall be sent to the debtor only. (Rule 3°9-) Rel ease] 566 Releas. Upon every application for release by trustees in non-summary cases a stamp fee is payable at the rate of 2s. 6d. on every ;£ioo, or fraction of ;£ioo, of assets realised and brought to credit. Where the Board of Trade have granted to a trustee his release, a notice of the order granting such release shall be gazetted. The trustee shall be required to provide the requisite stamp fee (5s.), which may be charged to the estate. (Rule 3'°-) The release of a trustee shall not take effect unless and until he has delivered over to the Official Receiver all the books, papers, docu- ments, and accounts which by the Bankruptcy Rules 1886 he is required to deliver over on his release. (Rule 3x0a.) The following are the actual documents which it is necessary for the trustee to forward to the Board of Trade on making application for his release in addition to those required for the final audit : — (1) Formal application for release. (2) Affidavit verifying postage of notices of intention to apply for release (see above), with a copy of the notice as an exhibit. A 2s. bankruptcy stamp should be attached to the affidavit. (3) Certificate by trustee and Committee of Inspection (if any) as to realisation of all reasonably available assets. (Note. — If trustee certifies in his formal application that all assets have been realised, this certificate will not be required.) (4) Form of notice of release for insertion in Gazette. A 5s. bankruptcy stamp to be attached. (5) Order on the Bankruptcy Estates Account to credit to the Board of Trade 2s. 6d. per ;£ioo on the assets realised and brought to credit. (6) Statement of dividend (or dividends) declared, distinguishing between those claimed and those unclaimed. (7) Cheques for unclaimed dividends (if any). (8) Certificate as to disposal of perty on form Tr. 14, together with offi copies of all disclaimers exicut" 1 trustee. Liquidator. — When the liquidator of 2 pany, which is being wound up by tin Cour realised all the property of the compa: much thereof as can, in his opinion. b> without needlessly protracting the liq and has distributed a final dividend, if any, tot! creditors, and adjusted the rights of the « tories among themselves, and made a fin j return, if any, to the contributories. or h. I resigned, or has been removed from his ■ Board of Trade shall, on his application, cause report on his accounts to be prepared, and, ( I his complying with all the requirements of t! Board, shall take into consideration t: and any objection which may be urged by at' creditor, or contributory, or person int^HM against the release of the liquidatur. and sha] either grant or withhold the release accordBj subject, nevertheless, to an appeal to I Court. (Companies (Consolidation ) Act section 157.) A liquidator before making application Board of Trade for his release shall £ of his intention so to do to all the creditors wU have proved their debts, and to all the contrib., tories, and shall send with the notice a summa;! of his receipts and payments as liquidate ! (Winding-up Rules 1009, Rule 197.) Where the release of a liquidator is withhe the Court may, on the application of any crfl or contributory, or person interested. make^M order as it thinks just, charging the Kq^H with the consequences of any act or defauK^H he may have done or made contrary to his dut» An order of the Board releasing the liquids shall discharge him from all liability in respe" of any act done or default made by him in tlj administration of the affairs of the compafll otherwise in relation to his conduct as liquidate, but any such order may be revoked on proof th.j it was obtained by fraud or by suppression '] concealment of an} - material fact. Relate Vhtre the liquidator has not previously r gned or been removed, his release shall rate as a removal of him from his office. 567 [Rente ction 15;.) Vht-re the Board of Trade have granted to a liiidator his release, a notice of the order grant- ii t!< -hall be gazetted. The liquidator s 11 provide the requisite stamp fee for the l:ette (5s.). which he may charge against the cnpany's assets. (Rule 197.) 'pon a liquidator resigning, or being released removed from his office, he shall deliver over t the Official Receiver, or, as the case mav be, t the new liquidator, all books kept by him, aJ all other books, documents, papers, and sj-uunts in his possession, relating to the office t liquidator. The release of a liquidator shall r take effect unless and until he has delivered to the Official Receiver, or, as the case 1 iy be, to the new liquidator, all the books, uments, and accounts which he is by rule required to deliver on his release. '75-) I'he documents which it is necessary for the l|uidator to send to the Board of Trade in con- 1 with his application for release in addi- n to those required for the final audit of his founts, are very similar to those which a : bankruptcy has to send on making a '<-: application (see above). The only material fferenccs are (1) that it is not necessary for je liquidator to send an order to credit the hard of Trade with 2s. 6d. per ^100 on the sets realised and brought to credit, for there no provision for the payment of such a fee in e regulations governing company liquidation; Id (2) that the provision as to the certificate as us property does not apply. {Limited Partnership.— The provisions of the pmpanies (Consolidation) Act 1908 as to "din- up of companies by the Court (and Pfore presumably the provisions as to release liquidators) apply t.> limited partnerships Wind up by the Court. (Limited Partnerships 7. section h.) ; by reason of his goods not having been r" to him in accordance with the contract of bail ment. (In re Button; ex parte Haviside, 1907.) Company Liquidation. — Although, by 207 of the Companies (Consolidation) Ac 1908 the principles of bankruptcy law wit! regard to the respective rights of secured ' and unsecured creditors, debts provable, anc the valuation of annuities and future anc contingent liabilities, have been made applicable to the winding-up of insolvent comp such assimilation does not extend to th' | doctrine of reputed ownership, which app! bankruptcy procedure only. Requisitionist. — One who makes a requisition. e.g., a member of a public company who desire- the directors to summon a general meeting for some stated purpose. (See title Gener • Meetings.) Requisition Order. — See title Stores Account. Requisitions of Title. — Requests and inquiries respecting the title of lands, &c, made by the solicitor of a proposed purchaser, which the vendor must satisfy and reply to. s Ad Re Sale. — Section 48 of the Sale of Goods fl 1893 provides (inter alia) : — Where the goods (which are the subject of a contract of sale) are of a perishable nature, or where the unpaid seller gives notice to the buyer of his intention tc re-sell, and the buyer does not, within a reason- able time, pay or tender the price, the unpaid seller may re-sell the goods and recover from the original buyer damages for any loss occasioned by his breach of contract. Where the seller expressly reserves a right ol re-sale, in case the buyer should make default, and on the buyer making default, re-sells the goods, the original contract of sale is thereby rescinded, but without prejudice to any claim th seller may have for damages. The Factors Act 18S9 provides : — Section 8. — Where a person having sold g' continues, or is, in possession of the goods, or of ' R. Sale] 573 [Reserves e documents of title to the goods, the delivery transfer by that person, or by a mercantile ent acting for him, of the goods or documents title under any sale, pledge, or other disposi- m thereof, or under any agreement for sale, :dge, or other disposition thereof, to any rson receiving the same in good faith and thout notice of the previous sale, shall have e same effect as if the person making the livery or transfer were expressly authorised by e owner of the goods to make the same. Section o. — Where a person, having bought or ; rted to buy goods, obtains, with the consent • the seller, possession of the goods or the i cuments of title to the goods, the delivery or iinsfer, by that person or by a mercantile agent ;ting for him, of the goods or documents of lie, under any sale, pledge, or other disposition I ?reof, or under any agreement for sale, pledge, i other disposition thereof, to any person reiving the same in good faith and without i tice of any lien or other right of the original ! ler in respect of the goods, shall have the sme effect as if the person making the delivery i transfer were a mercantile agent in possession i the goods or documents of title with the irisent of the owner. With the exception of the words in italics the :ove provisions are also contained in section 25 1 the Sale of Goods Act 1893, the term " mer- 1 utile agent " (see that title) having the same i-aning in both Acts. Re ission.— The act of rendering void. (See lies Allotment, Prospectus [Rescission].) Wive Liability. — A limited company may, by 'ccial resolution, determine that any portion of share capital which has not been already lied up shall not be capable of being called up, cept in the event and for the purpose of the mpany being wound up, and thereupon that rtion of its share capital shall not be capable of ing called up, except in the event and for the rposes aforesaid. (Companies (Consolidation) t 1908, section 59.) A resolution in exercise of is power amounts to an alteration of the memo- ndum of association, and it would appear that the alteration cannot be recalled by a subsequent special resolution. It was held by the Court of Appeal that capital reserved in pursuance of the corresponding sec- tion of the Act of 1879 could not be charged by way of security to debenture-holders, even though a company was empowered by its memo- randum of association " to borrow money and " issue debentures charged upon the property and " rights of the company both present and future, " including the uncalled capital." In the course of his judgment, Lindley, M.R., said " there " was nothing in the Companies Acts which gave " a company power to dispose of assets which " in the nature of things could not come into " existence until the company was wound up." It was further stated that the true intent of the section was to provide means whereby a portion of the capital might be preserved for the general purposes of winding up, and that the payment of a mortgagee or prior assignee out of such reserved capital was not such a use thereof as was contemplated by the Legislature. (Mayiair Co., 1898.) Reserves and Reserve Funds. — The multiplicity of terms in use in connection with this subject is unfortunate, and the indefinite character of the nomenclature is confusing and misleading. Amongst the terms used are reserve, reserve account, reserve fund, margin, surplus, and rest. As a consequence, elaborate distinctions have been drawn by the respective adherents purport- ing to show the meaning of the various expres- sions in an endeavour to justify their continued employment. Some contend that profits earned but withheld from distribution so that they may be employed in the ordinary way of business of the concern which earned them are capitalised profits and not a reserve; and, further, that the term reserve fund should only be used when the sum in question is specifically invested in " out- side securities." Others have expressed the opinion that the word reserve is rightly applicable to any of the general resources of a concern, even including a part of the paid-up capital, so long as such resources are in cash or readily realisable securities; but it is more Reserves] generally contended that a reserve must neces- sarily have its origin in profit of some form or other, whether from carrying on the business of the concern in question, from premiums upon the issue of shares or loan capital, or otherwise. It is certainly a fact that in the majority of cases a reserve has its origin in profits, but whether this necessarily implies that a concern which claims to possess a reserve must possess a sum of undis- tributed profits, or the converse, viz., that possession of undistributed profits is of itself evi- dence of the existence of a reserve, is a matter of opinion upon which there are different views. A reserve has been long recognised as the amount by which the assets of a concern exceed the sum of its paid-up capital and liabilities. But such a definition might be more accurately applied to the surplus of a concern, leaving the question as to whether such surplus is or is not a real reserve to be decided by an examination of tin assets involved. A concern may have a genuine surplus of assets as defined above, and yet be financially embarrassed as the result of an inadequate amount of paid-up capital. On the other hand, the Court has sanctioned a scheme for the reduction of the paid-up capital . of a company on the ground that the portion of the capital to be reduced was unrepresented by avail- able assets, although the scheme involved the retention (in whole or part) of a certain Reserve Fund as an element in the finances of the company when reconstituted. For the purpose of ascertaining the extent of a surplus the assets may be taken at the bond fide value of a company's property as a going concern. The liabilities are taken upon that basis, and it is only reasonable that the assets should be similarly treated. Whilst creditors are subject to the ordinary " trade usages " of a going concern, and shareholders are not in a position to demand the return of their capital, the assets may fairly be valued at their worth to the particular concern under those circumstances. Where, from the nature of the business carried on, a concern is subject to the liability of a run upon its funds, as in the case of a banking company, so that the assets might be subjected 574 ^ Reserve. to sale under forced circumstances, an otherwii genuine surplus might certainly be sacrificed, y it will not be seriously contended that the pci ciples involved in ascertaining the amount of surplus are unsound upon that account. 1 special circumstances must be dealt with \t considering the form in which the should exist in order to constitute a real A surplus may, therefore, be defined as amount by which the assets of a concern, at such values as are consistent with the lar circumstances and upon the basis of a concern, exceed the sum of its paid-up and liabilities. So long as the excess of assets over liab referred to in the definition is maintained, long must a surplus be deemed to exist; bu question of its degree of utility must not be o fused with the ascertainment of its existence ai extent ; for while the latter may to a great extent be governed by a general definition, such as that already given, the question as to the form in which the surplus should exist, in order that it may attain the highest degree of utility to the particular concern, or, irrespective of it immediate utility, that it may constitute a n reserve in the event of contingencies, is one entirely dependent upon the circumstances of each case. The term reserve appears in the form of Balance Sheet annexed to (the original) Table A of the Companies Act 1862, and is there described as " the amount set aside from profits to meet contingencies." As a definition, how. ever, this narration is incomplete, for it does IK deal with the question of what form th should take once it has been created, although the item " investments " which appears on the assets side of the specimen form is sugge^ The words " set aside from profits " are, htf* ever, important, for the fundamental distinc between a real surplus and a mere prov against some estimated loss lies in the fact that a real surplus is something set aside out profits, whilst a provision against some mated loss is the outcome of a charge \vt is in fact really necessary before the amo le: rvesj 575 [Reserves trin profit can be ascertained. Credit bances in accounts which have been created 1) such charges often bear a title of which tl word " reserve" forms a part; but they Illy represent a sum which is deemed neces- i ounteract an over-valuation or probable r-valuation of some asset or assets. In- following typical instances of what con- fute a real or fictitious surplus respectively will ■ dealt with simultaneously, so that what is ■ I and what is not so may be more clearly ured necessitates a payment by a policy- holder in earlier years in excess of actual requirements, and in later years the Reserves] 576 Res reverse is the case, for the actual cost of insuring against death for each year gradually increases with the age of the " life." Thus a considerable proportion of the apparent surplus is required to pro- vide against the " short premiums " in the future. Moreover, the amount actually in " reserve " in the commercial sense is not attempted to be shown in the ordinary Balance Sheet of a life assurance company, this being shown in the Valuation Balance Sheet. (See titles Assurance Companies Act 19091 Life Assurance Companies.) (e) Reserve of a Fire Insurance Company. This is a real surplus to the extent only that it exceeds all premiums paid in advance, and a proportion, say one-third, of the annual premiums as a provision against unexpired risks. The same applies to a Marine Insurance Company. (See title Unexpired Risks.) The distinction between a surplus and a reserve may now be dealt with. What is a Reserve? What is a Reserve Fund? It must be emphasised that these questions are not (1) ought a company or other concern to withhold a certain proportion of its profits or surplus instead of distributing the whole in dividends or otherwise ; and (2) ought a com- pany, having so reserved profits, to utilise them in its business or invest them in " outside " securities? These latter questions are purely administra- tive matters for the management to consider. It might be deemed improper for a bank- ing company to purchase real estate with its surplus funds, thereby diminishing its more easily realisable securities. On the other hand, it would be considered bad finance for an industrial concern to invest a large sum in Consols at the low rate of interest resulting therefrom, when that money could be more advantageously employed in purchasing goods for the business for cash instead of on credit terms, because the savings from discounts and better prices would considerably exceed the intern the Consols. - But these considerations affect the questions " What is a resi ■< " What is a reserve fund "? Whether a concern should or should not have a reserve reserve fund is a matter for manac_ tors, or shareholders to decide according I circumstances. But whether all concerns should describe as a reserve or reserve fund thri undivided profits irrespective of the state i which they exist is a matter not only for directors and shareholders, but for creditors — in fact, fo the general public. The mere withholding of distributable from shareholders does not of itself create reserve asset ; the assets so withheld, or their equivalent, must already exist in, or else be sub- sequently placed in, a state of preparedness in order to constitute a true reserve fund. r The reservation of profits which might legal!) ) be distributable is one act ; the creation of a \ reserve — an asset held as a hostage for contin- \gencies — is distinctly another. In the majority of cases the " setting aside" will necessitate a change in the nature of som< asset or assets. The change itself has nothing to do with bookkeeping. The bookkeeping reow of the decision to reserve is admittedly effected by a transfer from Profit and Loss Account, bt a reserve cannot be created by Journal 1 This credit balance, or mere arithmetical index to certain assets, is not a reserve. Something varying with circumstances quite distinct fi bookkeeping must be carried out in conn with the assets in order to create the rest: Assuming, for the sake of clearness, a company without liabilities, excepting to the shareholder! we have in its Balance Sheet assets which con- stitute (1) the capital as legally defined, and (2) the undivided profits, whether the latter in whol< or part be termed reserve, surplus, or balance Profit and Loss Account. The classification of the assets, whereby tl various characters are distinguished, is effectf on the " asset side " of the Balance Sheet. The origin of the assets, so far as regard amount, i.e., whether derived from paid-up 577 [Reserves or from profits earned but undistributed, d on the other side. arding a Reserve, Reserve Fund, Surplus, n, or Rest as an asset, and regarding the balance bearing the particular name merely record of its dimensions, there ma}' be alia : — A reserve against contingencies. A reserve for the purpose of equalising dividends. A reserve for the purpose of repairing and maintaining the property of the concern. A reserve against the future depreciation of capital assets, and A reserve for the purpose of providing at some future date working capital in excess of the legal capital upon which dividends are payable. first three classes above are stated in (the al) Table A annexed to the Companies Act and they were in Table B of the previous riiev obviously necessitate the maintenance ets representing the reserves in such a form ate that they can be applied to those >es as and when required. Gas Works Clauses Act 1847, and the Works Clauses Act of the same year, both sly provide for the investment of the profits ess of the prescribed rate of dividend, for lrpose of equalising dividends and meeting ossible extraordinary claims. pse 99 of Table A, annexed to the anies (Consolidation) Act 1908, confers on the directors of a company adopting the to set aside out of the profits of the corn- such sums as they may think proper as a c, which sums may, pending their applica- iwards the equalisation of dividends or the * ig of contingencies, be either employed in j>iness or separately invested. ! obviously a reserve is taken to be an capable of being invested or employed in jsiness pending application in other direc- ts If it be invested " outside " it is in excess of requirements — if employed within it must be regarded as an " extra " — not permanently employed, otherwise it will not be capable of withdrawal to meet those cases to provide against which the reserve was actually made. Numerous instances have occurred where com- panies have possessed so-called reserves (i.e., credit balances bearing that name), but they have none the less become embarrassed, although a really available reserve (i.e., asset) of half the amount of the nominal credit balance bearing that name would have sufficed to carry the concern through its financial difficulties. Suppose a company raises capital to the extent of £50,000, and borrows £20,000 on debentures ; £78,000 is expended in purchasing and developing a given property. The extra money (£8,000) required is raised by means of a " floating " overdraft at the bank. A profit of £1,500 is made during the first year the pro- perty has been working. This is not distributed in dividend, because the bank declines to lend for that purpose; yet a Balance Sheet will duly appear as under : — Capital and Liabilities. Capital . . . . . . £50,000 Debentures . . . . 20,000 Bank Overdraft . . 6,500 Reserve Fund (!) .. 1,500 £78,000 Property and Assets. Property — at Cost plus Expenses of Development . . £77,500 Office Fittings, &c. .. 500 £78,000 Assuming the property to be fully worth the value stated, there is certainly a surplus of assets representing undivided profits, which has been applied in the reduction of the indebtedness to the bank, but there is no reserve asset. The concern could not pay a debt of £10 except upon the sufferance of the bank authorities. The company has no reserve fund at all, and has a surplus of £1,500, only upon the basis of the valuation of properties at cost. The difficulties in connection with a proper comprehension of this subject appear to result mainly from the confusion of distinct issues. As already stated, the valuation of the assets of a company for the purpose of a Balance Sheet may, to some extent, be the subject matter PP Reserves] 57$ of opinion, but once this has been agreed upon the question as to whether a surplus exists or not may be materially governed by a general definition; but the question as to the form in which a surplus should exist in order that it may afford the highest degree of utility — the question as to whether an actual surplus should be a surplus simpliciter or a surplus which allows of the maintenance of a reserve asset — must neces- sarily be dependent upon and vary with the circumstances of each case. A given concern may have a very large surplus of assets over its paid-up capital and liabilities, and yet have none of that surplus in such a form that it can be relied upon as a reserve asset to meet a contingency. This arises from the fact that the surplus either upon its creation had become, or subsequently became, merged in the general assets of the concern— possibly " locked " assets. The value of these assets, taking the Balance Sheet on the basis of a going concern, might be a reasonable one, and the surplus as a consequence might fairly be deemed to exist, but there is no reserve, no asset to resort to in the event of a contingency. On the other hand, a company may have a reserve asset in so far as it exists in the form of cash or is invested in easily realisable securities, and yet it has in reality no surplus, because the reserve asset forms part of the original capital, or, having arisen from a surplus, such surplus has since ceased to exist because of a subsequent shrinkage in the value of other assets of the company, whereby the value of its total assets has fallen short of the liabilities and paid-up capital. A concern may have a reserve asset without possessing a surplus, and it may have a surplus but no reserve; and the mere circumstances that reserves generally originate in undivided profits and disappear because of subsequent shrinkages are not inconsistent with this proposition. If the assets which represent these undivided profits are absolutely necessary under normal conditions, and become merged immediately in the trading agsets of the concern, they assuredly constitute a surplus, but they cannot be relied [Reser i hand, upon as a reserve. On the other hana, surplus may constitute a reserve, becau- the form in which it exists, (2) of the nattr f the contingencies which may arise, an i surplus is in excess of normal requirement! 3 for these reasons under certain circir there may be a reserve asset, although the ■ . cern in question may not possess a surpli f assets over its paid-up capital and liabilitit- As already mentioned, the Court has ad< i this latter view and sanctioned a scheme for ; reduction of the paid-up capital of a compan; 1 the ground that the portion of the capital I • reduced was unrepresented by availatii although the scheme involved the retentio: 1 whole or part of a certain reserve fund a; 1 element in the finances of the company w 1 reconstituted. A reserve fund will be affected by th- ing events or circumstances : — (1) A shrinkage in the value of the as- constitutes the fund. (2) The conversion of the asset to an propriate state, having regard to the natur f the contingencies likely to arise. (3) The variation of the nature of such - tingencies, so that assets previously ap] as a reserve become inappropriate. (4) Permanent utilisation (in the course of business) of the assets previously - stituting the reserve, so that on a contini I arising they would not again be available to : t special requirements. An asset necessarily employed in carrying '• the operations of the business so that it a be released or lost without detriment to the e - ing standard of working does not constitu reserve, even though its origin and present e • ence may be attributable to a surplus, i.e. fi undivided profits of the past. An asset « ' can be released, realised, or converted, so th J loss or a fresh requirement to an extent : exceeding its value may be met without ■ event impairing the degree of effective previously existing, constitutes a reserve. . -rves 579 [Reserves he essence of a true reserve is that it should b> something which is not in use, but is in p, session for possible future use. t appears to be recognised " that if a secret •' .e., undisclosed) surplus is to serve any use- " il purpose whatever, it is to provide moneys " hicli may be available for any required pur- " ase when the need for such moneys may •' ise "; and, further, " that such need would •' i the nature of things almost invariably arise ■' lddenly and unexpectedly. Such reserve, to • of any real use, must therefore be invariably nted by investments in gilt-edged " curities." (The Accountant, 24th February JO.) ; a reserve which is held secretly must be reesented by an asset capable of sudden realisa- ti and application if it is to be of any real use, tr e are surely stronger reasons why a reserve oply and professedly held should also be czible of being utilised in any emergency. ijmmarising matters, there are (1) the " eserve " which is in reality a charge against pi it for depreciation or loss of assets, (2) the e " which is in reality a mere surplus omssets over paid-up capital and liabilities, all tH assets of the concern being employed in the Huness, and (3) the " Reserve " represented by ariisset which is not employed in the business, buis available at any time to meet contingencies eno provide further working capital if required. (S«i an asset is invariably the outcome of a Bf cy of reserving profits, and in such a case til particular concern would have a surplus. » ut a reserve asset can be possessed, and in He cases is possessed, by concerns which have ni surplus, the asset forming part of the paid-up tal of the company. So a reserve asset, even tr igh originally created out of profits and repre- ing a surplus, can be possessed and will ain a reserve notwithstanding the fact that sequent losses may have been sustained which sufficiently large to have absorbed the whole uch surplus, the reserve asset then necessarily ning part of the paid-up capital of the n pan; . The losses in question would no doubt neces- sitate the immediate conversion of the reserve asset into cash, stock-in-trade, plant, or other assets required for the ordinary business of the company, but until this was actually done the reserve, though not a surplus, would remain. In fact, the very possibility of its conversion from a state of readiness to a condition of usefulness should establish this self-evident proposition. It is a matter for consideration as to whether different titles should not be used in respect of the three foregoing sets of circumstances instead of the present indiscriminate use of the terms " Reserve Fund " or even " Reserve." Secret, Hidden, Internal or Inner Reserve. — This is a form of undisclosed surplus, and may arise in various ways, e.g. : — (1) An excessive provision against depreciation or possible losses from bad debts, or from other alleged causes, the amount of such provision being deducted from the value of the asset in the Balance Sheet. (2) The maintenance of assets at cost (without remark) which have permanently increased in value, such as lands and buildings and invest- ments in stocks and shares. (3) The omission of assets from the Balance Sheet, on the plea that " it is so much more to the good," e.g., the omission in a bank Balance Sheet of any amount representing the bank premises, or the inclusion of such an asset at a merely nominal sum, the whole or part, as the case may be, of the proper sum representing the asset having been written off out of the profits of past years. (4) Making a secret charge against the Revenue Account of a concern and withdrawing a corresponding amount in assets from the Balance Sheet to be held and applied secretly. These practices cannot be recommended, for it is quite as incorrect in principle to understate a company's position as it is to overstate it; and as an indirect result, at least, a shareholder might be induced to part with his shares at a less price than their real value. Furthermore, PP 2 Reserves] 580 ' Residuar as a Balance Sheet is intended to show the assets of a concern it should show all, so that the auditor or a shareholder may trace any particular item. The motive prompting the non-disclosure of a part of the profits of a concern so as to create a surplus which is not set out on the Balance Sheet is to provide for future losses or meet expenditure of a special character without dis- closing the effect of the same upon the resources of the concern. Under ordinary circumstances a special loss or some extraordinary revenue out- lay would reduce the profits for the current period or diminish the disclosed surplus, but by the maintenance of a secret surplus or reserve a con- cern may sustain and provide against exceptional loss or expenditure without exposing the fact upon the face of its published accounts. Leading accountants, having special knowledge of bank- ing accounts, report approvingly of the practice among the principal banks of the country. It is, however, conceivable that a steady dividend might be declared and paid by a concern for years, despite a declining business, by gradually absorbing a previously existing secret reserve, and thereby the shares might command buyers at possibly enhanced prices, whereas as a matter of fact such shares were annually deteriorating in value. The Birmingham Small Arms Company passed a special resolution altering their articles of association by inserting provisions that, in addition to providing an ordinary reserve fund, the directors might (without disclosing the fact) set sums aside out of profits to form an internal or secret reserve fund ; that the secret fund need not, of course, be shown on the Balance Sheet and no information thereon need be given to the shareholders; that the directors might invest it as they thought fit, and might apply it for any pur- poses which they considered would advance the interests of the company; and that, while the particulars as to the fund were to be disclosed to the auditors, it should be the auditors' duty not to disclose any information with regard to it to the shareholders or otherwise. II W LMCII •riifitd . But Buckley, J., held, in Newton v. Birmit ham Small Arms Co. (1906), that the p articles of association would be ultra vires a- that the proposed restriction upon the audita- duty was invalid because inconsistent with ti (then) provisions of the Companies Act w (which prescribed the duty of the auditors regards their report to the shareholders, it auditors considered that the true state of the co: pany's affairs was affected by facts known to the relating to the internal or secret reserve A Balance Sheet cannot properly bi ce*j a " full and fair Balance Sheet and in accoi ance with the books of the company " if it do< not disclose assets belonging to the company, ar an auditor cannot be said to have complied wit his statutory duty to make a report upon t accounts and the Balance Sheet if he with information obtained in the course of the aud which has an important bearing upon financial position of the company. Seer reserves, though in principle indefensible, mi under special circumstances, with a boai directors acting bona fide, prove both U and commendable, but in the hands of a unscrupulous board, secret reserves might manipulated to 'he serious prejudice of shar holders and public alike. (See titles Rest, Sinking Fund.) - Residual Products. — The residue of which have been used for the product! primary commodities, e.g., the residual produ arising from the manufacture of gas, are cok> breeze, tar and ammoniacal liquor. The pn ceeds of sale or value of residual produc operate to reduce the cost of the raw mateti consumed in the production of the prim commodity or commodities. Residual Value. — The ultimate selling value H particular property when worn out or s»lp< seded. It is also referred to as the " bn value" or "scrap value." (See title DepreciM Residuary Account. — An account whereby amount of the residue (or the net bali subject to legacy duty or succession duty) I Resluary] est e of a deceased person is ascertained, en. ling the necessary legacy (and in some cases mission) duty to be paid. 'ie account must be rendered by the legal per- I representative of the deceased, and must be >repared in accordance with the following no », which are extracted from the official form of xount (known as Form No. 3) which must se scd for the purpose of returning particulars of ie estate so that legacy duty may be paid 1 : — i) Money and property converted into money at the actual amounts received, and property held by the executors or administrators not converted into money at the values as at the date of retainer {i.e., bringing in the Residuary Account.) Note. — All personal estate, including income accrued to date of death should be included here, and also, where mixed up with the personal estate, all moneys arising from the sale, mortgage, or other di -position of all real estate directed by the will to be sold, &c. iil Deduct payments made out of the estate, viz. : — (a) Probate or administration. (6) Funeral expenses. (( ) Executorship or administration expenses. (if) Debts due by deceased at death (sup- ported by schedules signed by the executor or administrator). (e) Pecuniary legacies (supported by statement annexed). (/) Securities purchased, &c. ji) Add interest, dividends, rents, &c, since the death. Note. — All rents, dividends, interest, and profits arising from the personal estate of the deceased or from the real estate directed by will to be sold, &c, subsequently to the time of the death, and all accretions thereon down to the 58 ! [Residuary time of retainer, must be considered as part of the estate, and be accounted for accordingly. The Apportionment Act 1870 applies and an apportioned part of income accruing due to the date of the retainer where necessary should, be included. It should be noted that the stocks and shares (if any) still held by the executors or administrators included in the first part of the account, will probably have been valued cum div., and no apportionment will therefore be necessary in respect of the dividends accruing due thereon. (iv) Deduct payments out of interest, er shall have one vote). (Section 67.) J r the purposes of this section notice of a n ng shall be deemed to be duly given and h neeting to be duly held when the notice is jj and the meeting held in manner provided bj le articles. (Section 69.) copy of every extraordinary resolution shall w n fifteen days from the passing of the reso- lu 1 be printed and forwarded to the Registrar Dmpanies, who shall record the same. a company makes default in printing or fol irding a copy of an extraordinary resolution ■ e Registrar the company and every director ■ manager knowingly and wilfully authorising 11 ermitting such default shall each be liable fine not exceeding two pounds for every during which the default continues. Ion 70.) e principal matters for which an extra- lary resolution is necessary are : — 583 [Resolution (1) To wind up voluntarily other than by special resolution, where the company cannot by reason of its liabilities continue its business. (Section 182.) (2) To delegate to the company's creditors the power of appointing liquidators, or enter into any arrangement with respect to the powers to be exercised by the liquidators, in the case of a company about to be or in course of being wound up voluntarily. (Section 190.) (3) To sanction any arrangement entered into between a company about to be or in the course of being wound up voluntarily and its creditors, so as to bind the company. (Section 191.) (4) To sanction the liquidator in a voluntary winding-up to pay any class of creditors in full, make compromises and arrangements with creditors, compromise calls, debts, claims, &c. &c. (Section 214.) (5) To give directions as to the disposal of the books and papers of a company in voluntary liquidation about to be dissolved, and of the liquidator thereof. (Section 222.) (6) To exercise or sanction any powers which the company's regulations require to be exercised or sanctioned by extraordinary resolution. An extraordinary resolution to wind up volun- tarily must be gazetted. (Section 185.) (C) Special Resolution. — A resolution — (a) Passed in manner required for the passing of an extraordinary resolution (see above), and (6) Confirmed by a majority of such members entitled to vote as are present in person or by proxy (where proxies are allowed) at a subsequent general meeting, of which notice has been duly given, and held after an interval of not less than fourteen days, nor more than one month, from the date of the first meeting. (Section 69.) In default of any regulations as to summon- ing general meetings seven days' notice in writing must be given (see title General Meet- ings), but the regulations may and sometimes Resolution] 584 [Resolution do provide for a shorter notice. The interval of not less than fourteen days and not more than one month which must elapse between the first and the confirmatory meetings cannot be altered by the regulations. It is desirable and usual to state in the notice calling the first meeting that, in the event of the proposed resolution being passed by the requisite majority, it will be submitted for con- firmation at a second meeting to be subsequently ■convened. Notice of any meeting shall for the purposes of section 69 (supra) be deemed to be duly given and the meeting to be duly held, when the notice is given and the meeting held in manner prescribed by the articles. (Section 69.) If the articles so provide, the two meetings necessary may be convened by one and the same notice, and it is no objection that the notice only convenes the second meeting contingently on the resolution being passed by the requisite majority at the first meeting (In re The North of England Steamship Company, C.A. 1905), although previous to this deciston it was con- sidered necessary to issue separate notices. An imperfect notice cannot be aided by dis- closure at the meeting, for the rights of absentees must be regarded; but under certain circum- stances a slight alteration in the wording of the original " resolution " as set out in the notice may be made at the first meeting. This, how- ever, cannot be done at the subsequent or con- firmatory meeting, the notice convening which must contain the terms of the resolution as amended and passed, and there is no power of subsequent modification, so that the second meeting must either confirm or reject the resolution. A special resolution is deemed to have been passed as at the date of the confirmatory meeting. At any meeting at which a special resolution is submitted to be passed or confirmed, a declara- tion of the chairman that the resolution is carried shall, unless a poll is demanded, be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against the resolution (but see infra). A po! may be demanded if demanded by three person for the time being entitled according to th> articles to vote, unless the articles of the con: pany require a demand by such num! persons, not in any case exceeding d be specified in the articles. (Sei Table A to the Act requires a demand three members. When a poll is demanded in accordance « the section in computing the majority on t!,< reference shall be had to the number of v< I which each member is entitled by the artii the company (section 69), and, in default ol regulations in the articles as to voting, c member shall have one vote. (Section 67.)] There is apparently nothing in section 69 t< prevent the articles providing that every meobe shall have one vote for every share held b and that all questions whatsoever general meetings of the company shall be >'. according to the number of votes to which the members present are respectively entitled, am! not by show of hands, thus rendering a c for a poll unnecessary. The chairman's declaration that i resolution has been passed is not condu- it shows on the face of it that the statute majority has not been obtained. (AV Cj (New) Mines, 1902, 2 Ch. 498.) A copy of every special resolution within fifteen days from the confirmation resolution be printed and forwarded I Registrar of Companies, who shall record same. Where articles have been registered, a Off of every special resolution for the timi force shall be embodied in or annexed to efe copy of the articles issued after the continual of the resolution. Where articles have not been regi: copy of every special resolution shall forwarded in print to any member at his red on payment of one shilling or such less sui the company may direct. If a company makes default in r. forwarding a copy of a special resolut: flotation] egistrar it shall be liable to a fine not exceeding o pounds for every day during which the fault continues. If a company makes default in embodying in or nexing to a copy of its articles or in forward- s' in print to a member when required by this ction a copy of a special resolution, it shall be a fine not exceeding one pound for oh copy in respect of which default is made. Every director and manager of a company who howingly and wilfully authorises or permits any fault by the company in complying with the jijuirements of this section shall be liable to the |:e penalty as is imposed by this section on the mpany for that default. (Section 70.) A special resolution to wind up voluntarily 11st be gazetted. (Section 185.) Die principal matters for which a special reso- 1 :ion is necessary are to obtain a company's ->ent : — (1) To alter its articles of association; (2) To reduce its capital ; (3) To reserve part of the uncalled capital for the purposes of winding up ; K4) To alter its objects; K5) To alter its name; 1(6) To be wound up by the Court ; 'l(") To be wound up voluntarily (except where unable to pay its debts, when an extra- ordinary resolution will suffice) ; (S) To sanction a liquidator to sell the under- taking to another company for shares, policies, &c. ; 1(9) In the case of a private company, to " turn itself " into a public company where l«'~-ible ; 10) To appoint inspectors to investigate its affairs. here a special resolution is passed to autho- a liquidator to sell the undertaking to her company for shares, policies, &c. (see 8, supra), in pursuance of section 192 of the banies (Consolidation) Act 1908, and an is made within a year for winding up the any by or subject to the supervision of the rt, the special resolution shall not be valid 585 [Resolution unless sanctioned by the Court. (See title Reconstruction.) (D) Resolution necessary to interfere with special privileges attached to shares. — A company limited by shares may, by special resolution con- firmed by an order of the Court, modify the conditions contained in its memorandum so as to reorganise its share capital, whether by the con- solidation of shares of different classes or by the division of its shares into shares of different classes : Provided that no preference or special privilege attached to or belonging to any class of shares shall be interfered with except by a resolution passed by a majority in number of shareholders of that class holding three-fourths of the share capital of that class and confirmed at a meeting of shareholders of that class in the same manner as a special resolution of the company is required to be confirmed, and every resolution so passed shall bind all shareholders of the class. In this connection see the case of East v. Bennett (1910). Where an order is made under this section an office copy thereof shall be filed with the Regis- trar of Companies within seven days after the making of the order, or within such further time as the Court may allow, and the resolution shall not take effect until such a copy has been so filed. (Section 45.) (E) Resolution to sanction a compromise or arrangement. — Where a compromise or arrange- ment is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the Court may, on the application in a summary way of the company or of any creditor or member of the company or, in the case of a com- pany being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be summoned in such manner as the Court directs. If a majority in number representing three- fourths in value of the creditors or class of creditors, or members or class of members, as the case may be, present either in person or by Resolution] proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors or the class of creditors, or on the members or class of members, as the case may be, and also on the company or, in the case of a company in the course of being wound up, on the liquidator and contributories of the company. In this section the expression " company " means any company liable to be wound up under this Act. (Section 120.) (See title Arrangements (Joint Stock Com- panies).) 586 [Resti-i At a meeting of creditors a resolution shall be deemed to be passed when a majority in number and value of the creditors present, personally or by proxy, and voting on the resolution, have voted in favour of the resolution, and at a meet- ing of the contributories a resolution shall be deemed to be passed when a majority in number and value of the contributories present, person- ally or by proxy, and voting on the resolution, have voted in favour of the resolution, the value of the contributories being determined according to the number of votes conferred on each con- tributory by the regulations of the company. (Winding-up Rules 1909, Rule 128.) (See titles Proxy, Vote, Voting Letter.) Res perit domino.— The loss falls on the owner. The Sale of Goods Act 1893 (section 20) provides that, unless otherwise agreed, goods which have been sold remain at the seller's risk until the property therein is transferred to the buyer, but when the property therein is transferred to the buyer, the goods are at the buyer's risk, whether delivery has been made or not, provided : — (1) That where delivery has been delayed through the fault of either buyer or seller, the goods are at the risk of the party in fault as regards any loss which might not have occurred but for such fault. (2) That nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party. Respondentia. — See title Bottomry Bond. Rest. — This term in the weekly return of the of England signifies the balance of assets liabilities including proprietors' capital, and sists of the undivided profits of the bank, to that extent a reserve against such con- tingencies as may arise. The term is also used to denote a " break " is a current account by striking the balance thereof, particularly in connection with accounts involvin: interest. If the conditions of an account werf (say) 5 per cent, in annual rests, the result woul: be that every year the amount of interest woul: be inserted in the account, and be hencefortl- treated as principal, i.e., compound interest woul; ensue. So, if the conditions as to interest wer; half-yearly rests, the interest would be " capita!, ised " half-yearly, and so on. (See title Int. Restraint of Princes. — Forcible interference by the 1 Government of a State or country by taking possession of a ship and its cargo by arrest, blockade or embargo. The rules contained in the first schedule to th; Marine Insurance Act 1906 for the construction of a policy where the context does not otherwise require, provide that the term " arrests, &c, ol kings, princes, and people," refers to political 01 executive acts, and does not include a loss cause: by riot or by ordinary judicial process. Restraint of Trade. — A contract in general restrain!, of trade — that is, that a party shall not carry or a particular trade at all — is void on the grounc of public policy, but contracts in partial rcstrainl of trade — that is, limited to a particular time or a particular area — are good, if otherwia reasonable. There must be consideration for the restiainl even though the contract be under seal. Thf reason for this exception to the rule as to deeds arises from the fact that consideration is lookec upon as an element of the reasonableness of tht transaction. In the case Re Nordenfcldt (1894) an agree- ment for total restraint was upheld ; but thi Retraint] (cumstances there were exceptional, and this crision does not affect the general rule. iV'hcre a contract contains a covenant in r traint of trade (and is good in law) the rights ider the covenant pass to an assignee of the c itract who has purchased the goodwill of the t.iness for the protection of which the restraint vs originally imposed. (Wei stead v. Hadley, 3ut an important point in this connection was c :ided by the House of Lords (confirming the j Igment of the Court of Appeal) in the matter c the General Bill Posting Co. v. Atkinson (ioS). Here the manager was entitled under avritten agreement to twelve months' notice of ion to terminate his engagement, and in t t agreement he had covenanted not to accept a similar position with " opposition " concerns o set up in business himself within a radius of 5 miles within two years after his engagement v h the company should terminate. He was dis- used without notice for alleged misconduct, but s ceeded in an action for damages for wrongful d missal. He then committed a breach of the r traint clause in his agreement, and his late is attempted either to obtain damages injunction, but failed. Lord Robertson — " It seems to me that the covenant not to f'et up business is not only germane to but 'picillary to the contract of service, and that nee the contract of service is rescinded the ther falls with it." Lord Collins said: — "he true question is whether the acts and " onduct of the party (the employer) evince an ''Mention no longer to be bound by the con- "ract. I think the Court of Appeal had ample " rounds for drawing this inference from the "onduct of the employers here in dismissing ' lie employee in deliberate disregard of the ' urns of the contract, and that the latter was ' hereupon justified in rescinding the contract " nd treating himself as absolved from the 'urther performance of it on his part." Sec also Measures Bros. (Lint.) v. Measures, io.) See title Goodwill.) 587 [Retainer Restraint on Anticipation. — Where property is settled on a married woman, it is usual to impose a restraint on her power of dealing with her interest therein, e.g.. by way of mortgage, charge, or assignment, or of anticipating receipt of income. Where such a limitation is imposed, the woman can only receive the income as it becomes due, and cannot deprive herself of it. Should her husband die this restraint ceases, and she can deal with the income absolutely ; but the restraint will revive should she marry again. The Court has now power, even where a woman is restrained from anticipation, to make a judg- ment or order binding her interest in any separate property, if the woman consents thereto, and the Court is satisfied that it will be to her benefit to do so. Restrictive Indorsement. — See title Indorsement. Retainer. — An executor, in the event of his being a creditor of the testator, may retain the amount of his own debt out of the testator's legal assets in priority to any other debt of the testator of equal degree. (See title Hinde Palmer's Act.) This privilege is afforded to the executor because he cannot commence an action against himself as representative of the deceased to recover his debt, and as it is the rule that a creditor who sues for his debt obtains priority of payment, it follows that as the executor could not sue, he would either be paid last, or (if the estate were insol- vent) lose his debt altogether, unless he were allowed to retain it. The right of retainer is merely a form of payment, and where a creditor executor has properly retained his debt, he is not deemed, as regards other creditors, to have assets still in his hands to the extent of such debt. (Re Fludyer, 1898.) It must be noted that there can be no retainer except out of legal assets, and that the right can be exercised only as against creditors of equal degree with the executor. The right of retainer has not been extended by the Land Transfer Act 1897 (q.v.), although real estate of the deceased (except copyholds) is now a legal asset. The right of retainer may be exercised notwithstand- ing a decree for administration or for the pay- Retainer] 588 Retired merit of the assets into Court, for neither of these, per se, abrogates the powers of the executor. The right may, however, be defeated by that which would necessarily supersede his functions, such as the appointment of a receiver of the estate, which can only take place where the executor consents or where he is under a personal disability or guilty of gross misconduct. But a receiver will not be appointed merely to defeat the executor's right of retainer. A creditor of a testator obtained a judgment against an executrix de bonis testatoris, and the executrix not having pleaded plene adminis- Iravit and not having claimed 1 a right of retainer in respect of a debt due by the testator to her, the creditor obtained an order for the administra- tion of the estate. The assets of the estate proved insufficient to pay all the debts of the tes- tator, and the executrix then claimed to be entitled to exercise her right of retainer in respect of her debt, but it was held that it was too late to do so. (Crawler v. Marvin, 1905.) " The rule of the Court in cases of retainer is, " unless the party can show a legal right to " retain we never give it to him; if he can show " a legal right we never take it from him." [Verney, M.R.] Where an order is made under section 125 of the Bankruptcy Act 1883 for the administration in bankruptcy of the estate of a person dying insolvent the right of retainer is unaffected even in respect of a claim otherwise " postponed." {See title Postponed Creditors.) In Re Rhoadcs (1899, 2 Q-B- 347) where the executrix in ignorance of her right of retainer had gone so far as to pay over to the Official Receiver the whole of the funds in her hands, which exceeded the amount of her debt and had actually lodged a proof in respect of her claim, it was held that she was entitled to withdraw her proof and recover the full amount of her debt from the Official Receiver. In the course of his judgment, I.indley, M.R., said: — "An executor has no right to retain against " creditors of a higher degree than himself, but " his right to retain is a right to withdraw from " the assets in his hands distributable amongst " himself and other creditors of equal di " enough to pay himself in full. His right to " retain does not extend to assets which b " not got in and which are not in his possession, " nor to equitable assets; but no question as to " these arises here. His right extends both " law and in equity to all legal assets which " has in his hands, and there is nothing i " section 125 to deprive him of this right." The position may therefore be sunimarii thus : — The executor has a right of retainer his debt out of legal assets which are in I possession, and having by possession acquired right of retainer, bankruptcy or administratk by the Court will not deprive him of it ; I - regards assets (even though legal) which are n yet in his possession, he cannot exercise 1 right of retainer, and if in the meantime an order for administration or an order under the Bank- 1 ruptcy Act has been made, the right to retain against such outstanding assets will apparently be defeated. The position is, of course, fui controlled by the limitation of the right to retain as against creditors of equal degree. An executor can retain in respect of a m due to the firm of which he is a partner joint creditors of whom he is one. If there are two executors and both l creditors of equal degree, one executor eann< retain his debt to the prejudice of his co- executor, for, if the estate be insufficient, they must abate rateably. An executor may retain his debt, even though it is statute barred, but not where the Court hi already declared the debt irrecoverable, ^orj a debt be retained which is unenfor because of the Statute of Frauds or the Sa^H Goods Act. The theory of the doctrine of retainer applies to an administrator (who happens also to be a creditor) equally with an executor ; but, in prac- tice, letters of administration are only granted to a creditor upon his undertaking to pay all debt! pro rati. (See title Preference [Executor].) Retired Bill (of Exchange). — To retire a bill note is to withdraw it from circulation. This is done by any one of the parties thereto pa; t red holder and retaining the bill or note until ihturitv. If the bill or note is " retired " by the ;eptor or maker (or other person primarily ] bio) at or alter the maturity of the instru- i-nt, it is discharged, and all remedies on the 1 1 are extinguished; but if the party who > bill is not primarily liable thereon, he lids with all his remedies intact. Sometimes a 5 retired for the purpose of cancellation, but nerally to enable the person primarily lble to substitute another in its place payable SOtne later date (interest being added for the iimniiidation) because he cannot meet the bill retired at the original due date. R( rned Primage. — See title Primage. Re rn of Allotments. — See title Allotment. Hiras Book. — This is a term of general applica- lo, being used in connection with returned Hes, returned purchases, returned sacks, its," \v. |f\n auditor should require all unusual allow- fclces of substantial amount (which have been ■jsscd through the " Returns " Book to the Bdit of customers' accounts) to be vouched in ■hie manner, either (i) by the written acknow- ^■gment of the particular customers, or (2) by p initials of the principal or some responsible •ficial being affixed to the entries in the Allow- ■jce Book. Defalcations are sometimes success- Mly effected by (1) non-accounting for moneys ■jtualiy paid by customers, and (2) " adjusting " It accounts in question by passing to the credit Id the customers unauthorised " allowances " to fle extent of the monevs not accounted for. Bsnue. — Income. In its widest sense a Revenue L count deals with all earnings, profits, and §kt income, on the one hand, and all charges llainst such income, on the other. In most iding concerns it is necessary to classify the ■Sue, and the Revenue Account is subdivided Brdingly, e.g., Manufacturing Account, adiiiLi Account, and Profit and Loss Account ■v. I . In its application to a joint stock com- lly the term " Revenue Account " is often plied to the record of the sums available for 589 [Reversionary dividend and the amount so distributed. (See titles Departmental Accounts, Gross Profit, Profit and Loss Account, Income, Manufacturers' Accounts, Profit, Profits available for Dividend.) Reversion. — The remaining portion of an estate, after a grant (short of the whole of the estate) has been made to another person by the owner. Reversionary Interest. — That which is to be enjoyed at some future time, when an intermediate interest has been determined. The following illustration shows, so far as the arithmetic is concerned, the methods of valuing the reversion to a perpetuity : — Suppose a person requires 5 per cent, upon an investment in perpetuity (e.g., a freehold estate), of course he could afford to give 20 years' pur- chase of the net annual value if the property came into possession immediately; but if he had to wait for some years, for the expiration of a lease, or the death of some person interested, he could not afford to give 20 years'* purchase, but only such a sum as would amount at 5 per cent, to the equivalent of 20 years' purchase by the time the property would come into possession. If an estate of the net value of £100 per annum with immediate enjoyment is worth £2,000, then one of the same value with the benefit deferred for six years is only worth £1,492.4. This is ascertainable in two ways : — (1) The full present value of the estate on the basis of 5 per cent. is ,£2,000.0 But from this must be deducted the present value of the benefit to be enjoyed by another, viz. : The present worth of £100 per annum for six years at 5 per cent. £5°7-6 Leaving as the present value of the estate to the purchaser of the reversion (-•) As the purchaser is prepared to pay £2,000 six years hence for immediate possession he will only pay now for the reversion the present value of £2,000 due six years hence, viz. : — £.7462 x 2,000 = £i.49-M- Reversionary] 590 [Reversion The value of the reversion to a lease may now be computed. Suppose (1) a leasehold for an unexpired period of 40 years of the net annual value of £100; (2) 5 per cent, to be required upon outlay and 3 per cent, only is to be credited to the sinking fund con- tributions to repay the purchase money; and (3) a 19 years' lease has been granted to some other person : what is the present value of the reversion to the 21 years, i.e., to commence 19 years hence? When the property comes into possession it must yield 5 per cent, per annum plus the necessary sinking fund contribution on a 3 per cent, basis. The annual sinking fund contribution for redemption of £1 in 21 years at 3 per cent, is £.03487178, and, the required interest being £.05, the lease must return £.08487178 per annum for every £1 invested, and as it returns £100 per annum the purchase price for an immediate enjoyment is £- u = £1178.248. .08487178 But this is not the present value of the rever- sion, but the value 19 years hence. The present value of £1 due 19 years hence at 5 per cent, is £.39573, so that the present value of the 21 years' reversion is £1,178.248 x .39573 = £^66.276, which means that the purchaser can wait 19 years, adding 5 per cent, compound interest to the purchase-money. Then he will have £1,178.248 at stake. The income from the lease will give him 5 per cent, per annum upon the £1,178.248 for the following 21 years, and provide a sinking fund which, at 3 per cent., will repay the £1,178.248 on the expiration of the lease. Reversion Duty. — On the determination of any lease of land there shall be charged, levied, and paid, subject to the provisions of this Act, on the value of the benefit accruing to the lessor by reason of the determination of the lease a duty, called reversion duty, at the rate of one pound for every complete ten pounds of that value. For the purposes of this section the value 0! benefit accruing to the lessor shall be deemed to be the amount (if any) by which the total valuf (as defined for the purpose of the general pro- visions of this Act relating to valuation) o land at the time the lease determines, subji the deduction of any part of the total value which is attributable to any works executed or expendi- ture of a capital nature incurred by the 1« during the term of the lease and of all comp< tion payable by such lessor at the determination of the lease, exceeds the total value of the land at the time of the original grant of the leas. be ascertained on the basis of the rent reserve! and payments made in consideration of the 1< (including, in cases where a nominal rent has been reserved, the value of any covenant undertaking to erect buildings or to expend ai sums upon the property), but, where the ';■ is himself entitled only to a leasehold interesHj value of the benefit as so ascertained shall reduced in proportion to the amount by which 1 value of his interest is less than the value of tl fee simple. Where, in the case of a reversion to a leas* purchased before the thirtieth day nineteen hundred and nine, the lease on whic the reversion is expectant determines within fort years of the date of the purchase, no reversio duty shall be charged under this Act on $ determination of the lease: Provided that tl exemption shall not apply where the lease fc determined within forty years by agreemet between the lessor and the lessee, whetto express or implied, not contained in the lea» itself, unless the lease would, apart from a such agreement, have determined within t period. No reversion duty shall be charged on a determination of the lease of any land which at the time of the determination agriculture land, nor on the determination of a lease, tl original term of which did not exceed twenty- one years, nor shall reversion duty be charged where the interest of the lessor expectant on a determination of a lease is a leasehold interes which does not exceed that number of years. Aversion] 591 [Reversion Whore a lease of any land is determined efore the expiration of the term of the lease y agreement between the lessor and the lessee, hether express or implied, and a fresh lease of le land is then granted to the lessee the term f which extends at least twenty-one years yond the date on which the original lease ould have expired, the Commissioners shall ake an allowance in respect of the reversion jty payable of 23 per cent, of the duty for every ?ar of the original term of the lease which is lexpired when the lease is determined, and any 1m so allowed shall be treated as having been lid: Provided that the allowance shall not exceed 1 per cent, of the whole duty payable. Where on any occasion on which increment due duty is due in respect of any increment due it is proved to the satisfaction of the Com- issioners that reversion duty has been paid in spect of any benefit accruing to a lessor, or irt of such a benefit, which is identical with the crement value, such sums as the Commissioners Mermine to have been paid in respect of the mefit or part of the benefit shall be treated as ting also a payment on account of increment llue duty ; and where on any occasion on which version duty is due in respect of any benefit periling to a lessor, it is shown to the satisfaction I the Commissioners that increment value duty ks been paid on any increment value which is kntical with that benefit or any part of that metit, such sums as the Commissioners deter- ine to have been paid in respect of that value all be treated as being also a payment on count of the reversion duty in respect of that nefit or part of a benefit. Where a reversion has been mortgaged before e thirtieth day of April nineteen hundred and pe, and the mortgagee has foreclosed before e lease on which the reversion is expectant termines, the mortgagee shall not be liable to IV reversion duty in excess of the amount by ich the total value of the land at the time of determination of the lease exceeds the nount payable under the mortgage at the date the foreclosure. r Reversion duty shall be recoverable from any lessor to whom any benefit accrues from the determination of a lease as a debt due to His Majesty, but shall rank pari passu with all other debts due from such lessor. Every lessor shall (subject to penalties in case of default) on the determination of a lease on the determination of which reversion duty is pay- able under this section, deliver an account to the Commissioners setting forth the particulars of the land and the estimated value of the benefit accruing to the lessor by the determination of the lease. Section 17 of the Customs and Inland Revenue Act 1885 (which relates to the power to assess duty according to accounts rendered, and to obtain other accounts) shall apply with respect to any account delivered under this section (with the exception of any provisions relating to appeals). (Finance (1909-10) Act 1910, sections 13, 14, and 15.) (See title Increment Value Duty.) No reversion duty shall be charged on the determination of a mining lease, except as a duty payable annually under this Act. (Ibid, section 22.) (See title Mineral Rights Duty.) Rating authorities are exempt from payment of reversion duty. (Ibid, section 35.) Where in pursuance of any public, general, or local Act any capital sum or any instalment of a capital sum has been paid to any rating authority in respect of the increased or enhanced value of any land due to any improvements made, or other action taken by the authority, the amount of that capital sum or instalment shall be deducted from the value of the benefit accruing to the lessor for the purposes of reversion duty. (Ibid, section 36.) No reversion duty shall be charged in respect of land or any interest in land held by or on behalf of any governing body constituted for charitable purposes (as defined by the Act) while the land is occupied and used by such a body for the purposes of that body. (Ibid, section 37.) Reversion duty shall not be charged in respect of any land whilst it is held by a statutory com- Reversion] 592 [Royalty pany (i.e., any railway or similar company autho- rised under any special Act of Parliament for the purposes of the undertaking) and cannot be appropriated by the company except to those purposes. (Ibid, section 38.) Revival of the Statutes (of Limitation).— See title Acknowledgment of Debt. Rigging the Market.— See title Making a Market. Rotation. — The articles of association of a com- pany registered under the Companies Act 1862 or Companies (Consolidation) Act 1908 generally provide for the retirement annually of one or more of the directors by rotation. The vacancy so created is filled at the general meeting of the company, but the retiring director is invariably eligible for re-election. The procedure and regulations as to (1) retirement, (2) re-election, (3) how many directors shall retire, and (4) how the retiring directors shall be determined, depend upon the terms of the articles of associa- tion of each company. Table A, both in its original form and as revised, contains provisions as to " rotation " for companies adopting that table as their regulations. Royalty. — A payment to a patentee of an agreed amount on every article made or sold (as the case may be), or to an author on every copy of his book published or sold. In connection with mines, a royalty is a pay- ment made by the lessee to the lessor, or surface owner, for the privilege of " getting " the mineral, whether coal or otherwise. The amount of the royalty may be arrived at by charging either : — (1) A fixed sum per ton raised; or (2) A fixed sum per acre worked; or (3) A sum varying with the price of the mineral — that is, a sliding scale. Generally, however, the lessee is required to pay a minimum rent of a certain amount per annum, merging in a royalty, whether the mineral raised during the period justifies it or not ; in fact, such amount would be payable if the mine were not worked at all. This minimum rent is also termed annual rent, fixed rent, dead rent, certain rent, head rent, and sleeping rent. The difference between the amount of royal t. actually due as based on the output of mineral, and the amount of minimum rent payable is, it the royalty be the lesser amount, called " - workings " or " shorts," and is treated temporary asset, where (as is usually, the case) the lessee is allowed to recoup himself of In- payments in respect of " short workings " ■ future royalties which may be in exi 1 minimum rent. This right when conferred lease is often referred to as the " av< clause." Generally there is a limited peri regards the right to recoup, but sometimes thfr is no limit as regards time, and in c instances the right is even carried forward int; new leases. It may happen, however, although there is power to recoup the short work ings out of subsequent " excess royalties," thi lessee may be unable to fulfil the cond' which entitle him so to recoup himself — that i to say, he may be unable, on account of peculia: or unforeseen circumstances, to raise sut; mineral to " overtake " the burden oi annual dead rent. This being so, it is inadvisable to charge ; Short Workings Account with the payments i; that connection (thus relieving revenue to suci extent) unless: — (1) The lessee has full power to recoup self of same out of subsequent royaltit in excess of the dead rent ; and (2) There is every probability, as view from the length of lease and all Othe circumstances, that the lessee will be ii position to avail himself of such power. Although an average clause confers a right t recoup " short workings " out of future " ovel workings," it does not permit of the application of the over workings of past years towards su sequent short workings, because of the opeflffij of the minimum or dead rent clause. A lessee, on paying any royalty, is entitled t deduct income-tax therefrom, he being accounts able to the Revenue for the tax on the royalty Ity] 593 [Sale nv er's income in pursuance of the principle w reby the authorities collect — wherever pos- sil ■ — tax upon income at its source. 'here during any year or a number of years th dead rent exceeds the royalty (or where the rent is paid although the mines are not be g worked) and income-tax is deducted from th actual payments made to the landlord, such ta being duly accounted for to the Revenue rities, the lessee, notwithstanding this latter fa , must pay tax upon all sums recouped (in if short workings) out of royalties in >s of the dead rent in future years. Clearly, th Revenue receives tax twice over in respect of th short workings so recouped, hut it was so ■ (1 in the case of the Broughton Co. ({B.D. 1SS4), the ratio decidendi being that igh the short workings had already borne such tax had not been paid by the lessee, bi by the lessor ; the lessee was therefore held III e to pay tax upon such portions of the short »vi kings as were recovered, because they were dened to represent part of the profits of the rtaking for the respective periods when such tv was made. Runjng Account. — See title Account Current. Sala . — The compensation payable for services re !ered, which are, as a rule, not mechanical, I rather administrative. The amount is ■ Tally fixed at so much for the year, and pay- b either quarterly, monthly, or otherwise, is not usual to call a weekly payment for 1 salary, such being generally termed Iflfe. and the periods in respect of which the Bf-ments are made appear to satisfy practical retirements in making the necessary distinction fct'een a wage and a salary, but some autho- would appear to distinguish the two classes he amounts paid, whilst others look to the ■aire of the services rendered, for the dis- til uishing feature. tlaries may be either productive or unpro- ccording to circumstances, and their treatment in the accounts of a concern depends upon this distinction, which, when determined, necessitates their being dealt with similarly to productive and unproductive wages respectively. In the absence of agreement to the contrary, partners are not allowed any remuneration for their services in connection with the business of the partnership, but in any case such a charge is not permitted in ascertaining the profits of the business for the purpose of assessing the amount of income-tax payable. The salary of a bankrupt, or any part thereof, may be attached by direction of the Court. The salary of a clerk or servant for services rendered within four months before the receiving order or winding-up order or commencement of the winding-up, as the case may be, but not exceeding ^50, ranks as a preferential claim ; this applies mutatis mutandis to the administra- tion of the estate of a deceased insolvent. (See titles Preferential Payments in Bankruptcy and Winding-up, Wages.) Sale Contract. — Although this term is applicable to every agreement (of whatever nature) for the sale of property, accountants are principally con- cerned with that form of sale contract which constitutes the agreement whereby a registered company acquires a business or undertaking from a person termed the " vendor " (see that title). Where the property is acquired on behalf of the proposed company prior to the date of incorporation, the sale in the first instance is sometimes made to a trustee for the proposed company, and this agreement is referred to in the memorandum and articles of associa- tion, power being taken therein for the company to adopt and carry into effect such contract so soon as the company comes into existence and is otherwise in a position to do so. This adop- tion is generally effected by a short supplemental agreement to which the vendor, the trustee, and the company are parties. Where the consideration, or any part thereof, consists of shares, the sale contract, or, if the contract has not been reduced to writing, the prescribed particulars thereof, must be filed with the Registrar of Joint Stock Companies within 00 Sale] 594 [Sa one month after the allotment of the shares. (See title Allotment.) Apparently the contract may be in writing or verbal. In the latter case, however, should the consideration consist of shares, it will be neces- sary to prepare a statement containing the pre- scribed particulars for filing purposes. (Sec above.) The usual form of written sale contract provides for : — (i) The sale to the company of (a) the goodwill and trade-marks of the business; (6) land and buildings (or vendor may merely lease to company) ; (c) plant and machinery; (d) stock - in - trade, implements and utensils; (e) book and other debts, with securities attaching thereto (or the vendor may retain the book debts, the company undertaking to collect same on his account without making a charge therefor) ; (/) benefit of pending contracts; (g) cash at bank and in hand (or vendor may retain same to his own use) ; (h) all other property to which the vendor may be entitled in connection with the business. (2) The amount and nature of the considera- tion to be paid for the sale, which may be either wholly or partly cash, debentures, founders' shares, preference shares, ordinary shares, and/or deferred shares. Part of the consideration may be the satisfaction by the company of the liabili- ties of the vendor in connection with the business. (3) Particulars of the title and encumbrances (if any) of the properties to be acquired. (4) Date fixed for completion of purch interest payable by company on : portion of consideration in event of defaj (5) Vendor to carry on the business of the company until completii contract from the date of the for sale or some other fixed dat Note. — As a company cannot profits for dividend purposes until cc pliance has been made with the statut requirements, it is necessary to apport: the profits earned during the first tradii' period in cases where a company ta% over a business as from a date prior to til at which it is entitled to comme' business. (See title Profits prior Incorporation.) (6) Stipulations as to books of account, fi insurance, by whom preliminary expens are to be paid, &c. &c. In practice, the accountant will only required by the solicitor to prepare the necessa figures for insertion in the written agreement, the statement of the prescribed particular- necessary), prior to the completion thereof, b subsequently he may be interested therein in least two capacities — firstly, to prepare a Bala Sheet for submission with the agreement to dj Revenue authorities for payment of Stan duties; and secondly, in his capacity as audit the company, for verification of the entries in books recording the purchase transactions, possibly he may be called upon to I arbitrator in connection with disputes or A ences which may have taken place between parties thereto, particularly where some unfo seen question of account has arisen which not been expressly provided for. The statement of account for submission to Revenue authorities should be prepared and items arranged so as to distinguish the asse upon which ad valorem duty is payable fro those which are duty free, e.g. : — Sal j ithies taken over by company Bi ice, being Vendor's Purchase-money Total consideration , L e Plant and Tools £232 6 3 St (-in-trade 1,060 2 6 C« at Bankers (Current Account) .. 370 7 o -'; In fund 37 4 3 'ate— The above are deemed to pass by delivery and are accordingly free from Stamp Duty, but cash at bankers on Deposit Account is chargeable with ad valorem duty of £1 per cent.* 1 hold Land and Buildings 'ote.— As this property will have to be ''conveyed " it will be chargeable on conveyance with ad valorem duty of £1 per cent.* B« Section 73 of Finance (1909-10) Act, 1910. 595 [Sale £ s d 206 9 6 3,300 o o £3,506 9 6 ote. — The above must be assigned and are subject to an ad valorem duty of £i per cent.* 506 9 6 £3,506 9 6 iction 59 of the Stamp Act 1891 provides for mi in of duty on the " consideration " (sub- to certain exempted items), and section 57 I'ides that if, as a further consideration, the pchaser undertakes to pay the liabilities of the iness owing as at the date of transfer, the anunt of such liabilities must be ascertained det-nied part of the consideration. This may bi stated somewhat differently, for in the state- ir it as drawn above the liabilities, plus the Vi dor's consideration, equal the assets, and the is payable on those assets which are not dined to pass by delivery. Ote. — If encumbered freeholds are included he sale, ad valorem duty must be paid upon full value of the property (that is to say, illusive of the mortgage and the accrued rest thereon) not upon the value of the equity If the sale is to take effect from a date :, and the purchaser undertakes to pay liabili- incurred after that date only, such liabilities not to be included in the consideration. be stated at which such contract, or a copy thereof, may be inspected by intending applicants for shares of debentures. (1908 Act, section 81 (0 (ft).) A company shall not previously to the statu- tory meeting vary the terms of a contract referred to in the prospectus, or statement in lieu of prospectus, except subject to the approval of the statutory meeting. (190S Act, section 83.) Sale Note.— See title Bought Note. Sale of Goods Act 1893. (Abridged.) — Part I. — Formation of Contract. (A) Contract of Sale. 1. — (1) A contract of sale of goods is a con- tract whereby the seller transfers, or agrees to transfer, the property in goods to the buyer for a money consideration, called the price. There may be a contract of sale between one part owner and another. (2) A contract of sale may be absolute or conditional. (3) Where, under a contract of sale, the pro- perty in the goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time, or subject to some condition thereafter to be fulfilled, the con- tract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled, subject to which the property in the goods is to be transferred. 2- — Capacity to buy and sell is regulated by the general law concerning capacity to contract, and to transfer and acquire property. Provided that where necessaries are sold and delivered to an infant, or minor, or to a person who by reason of mental incapacity or drunken- ness is incompetent to contract, he must pay a reasonable price therefor. Necessaries (here) mean goods suitable to the condition in life of such infant or minor or other person, and to his actual requirements at the time of the sale and delivery. Sale] (B) Formalities of the Contract. 3. — Subject to the provisions of the Act (see section 4), a contract of sale may be made in writing (either with or without seal) or by word of mouth, or partly in writing, and partly by word of mouth, or may be implied from the con- duct of the parties. Provided that nothing herein shall affect the law relating to corporations. (See title Seal.) 4. — (1) A contract for the sale of any goods of the value of ten pounds or upwards shall not be enforceable by action unless the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment, or unless some note or memorandum in writing of the con- tract be made and signed by the party to be charged or his agent in that behalf. (See title Void and Voidable.) Note. — A parol sale of goods might, according to the common law, have been in every instance effected either by an agreement to be completed in prccsenti coupled with tender of the pri£e or part of it, or tender of the goods or part of them. A note or memorandum under this section is exempt from stamp duty. (2) The provisions of this section apply to every such contract, notwithstanding that the goods may be intended to be delivered at some future time, or may not, at the time of such con- tract, be actually made, procured, or provided, or fit or ready for delivery, or some act may be requisite for the making or completing thereof, or rendering the same fit for delivery. (3) There is an acceptance of goods within the meaning of this section when the buyer does any act in relation to the goods which recognises a pre-existing contract of sale, whether there be an acceptance in performance of the contract or not. (C) Subject Matter of Contract. 5. — (1) The goods which form the subject of a contract of sale may be either existing goods, owned or possessed by the seller, or goods to be manufactured or acquired by the seller after the making of the contract of sale, in this Act called " future goods." 596 [S II'- ECU - r or m e goods (2) There may be a contract for the sale goods, the acquisition of which bv the depends upon a contingency which may not happen. (3) Where by a contract of sale the se] ports to effect a present sale of future the contract operates as an agreement to se goods. 6. — Where there is a contract for the sal specific goods, and the goods, without the know, ledge of the seller, have perished at the timi when the contract is made, the contract i« 7.— Where there is an agreement to specific goods, and, subsequently, the goods without any fault on the part of the sell buyer, perish before th" risk passes to the 1 the agreement is thereby avoided. (/)) The Price. 8- — (1) The price in a contract of sale maybe fixed by the contract, or may be left to be fixed i manner thereby agreed, or may be deters by the course of dealing between the parties. (2) Where the price is not determined ir accordance with the foregoing provisions tl buyer must pay a reasonable price. What reasonable price is a question of fact depe: on the circumstances of each particular 1 Note. — Where the terms of a contract ; to be in writing, the consideration shou appear, but there are exceptions (1) in the a of a contract of sale where the price has been fixed by the parties as above, and the case of a contract of guarantee. title Frauds, Statute of.) 9- — (0 Where there is an agreement to goods on the terms that the price is to be ! by the valuation of a third party, and such party cannot or does not make such valuati the agreement is avoided; provided that goods or any part thereof have been delivi to and appropriated by the buyer, he must a reasonable price therefor. (2) Where such third party is prevented! making the valuation by the fault of the or buyer, the party not in fault may maint action for damages against the party in fa Salt (E) Conditions and Warranties. In a contract of sale, unless the circum- st^ces of the contract are such as to show a rent intention, there is — ) An implied condition on the part of the r that in the case of a sale he has a right to :;<>ods, and that in the case of an agree- ■ t to sell he will have a right to sell the goods le time when the property is to pass : ) An implied warrant)' that the buyer shall ha' and enjoy quiet possession of the goods: i An implied warranty that the goods shall from any charge or encumbrance in ur of any third party, not declared or known he buyer before or at the time when the ract is made. (See also titles Condition and ranty.) ") Sale by Sample. (See title Sample (Sale and Pari II.— Effects of Contract. Transfer of Property as between Selle Buyer. , — Where there is a contract for the sale of certained goods no property in the goods is rferred to the buyer unless and until the s are ascertained. . — (i) Where there is a contract for the sale cific or ascertained goods the property in is transferred to the buyer at such time as rties to the contract intend it to be rred. For the purpose of ascertaining the inten- f the parties regard shall be had to the of the contract, the conduct of the parties, 'the circumstances of the case. • — Unless a different intention appears, the ping are rules for ascertaining the intention ^ parties as to the time at which the pro- ) the goods is to pass to the buyer. I. — Where there is an unconditional con- t for the sale of specific goods in a deliver- . the property in the goods passes to the r when the contract is made, and it is laterial whether the time of payment or the of delivery or both be postponed. 597 [Sale h'ote. — Goods are in a deliverable state when the buyer would, under the contract, be bound to take delivery of them. Rule 2. — Where there is a contract for the sale of specific goods and the seller is bound to do something to the goods for the purpose of putting them into a deliverable state, the pro- perty does not pass until such thing be done, and the buyer has notice thereof. Rule 3. — Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing be done, and the buyer has notice thereof. Rule 4. — When goods are delivered to the buyer on approval or " on sale or return " or other similar terms, the property therein passes to the buyer : — (a) When he signifies his approval or accept- ance to the seller or does any other act adopting the transaction. (b) If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration of such time; and if no time has been fixed for the return of the goods, on the expira- tion of a reasonable time. What is a reasonable time is a question of fact. Rule 5. — (1) Where there is a contract for the sale of unascertained or future goods by descrip- tion, and goods of that description, and in a deliverable state, are unconditionally appro- priated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made. (2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to Sale] 598 Sale the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract. 19. — (1) Where there is a contract for the sale of specific goods, or where goods are subse- quently appropriated to the contract, the seller may, by the terms of the contract or appropria- tion, reserve the right of disposal of the goods until certain conditions are fulfilled. In such case, notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer until the conditions imposed by the seller are fulfilled. (2) Where goods are shipped, and by the bill of lading the goods are deliverable to the order of the seller or his agent, the seller is primd facie deemed to reserve the right of disposal. (3) Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading to the buyer together, to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honour the bill of exchange, and if he wrongfully retains the bill of lading the property in the goods does not pass to him. 20. — Unless otherwise agreed the goods remain at the seller's risk until the property therein is transferred to the buyer; but when the property therein is transferred to the buyer the goods are at the buyer's risk whether delivery has been made or not. Provided that where delivery has been delayed through the fault of either buyer or seller the goods are at the risk, of the party in fault as regards any loss which might not have occurred but for such fault. Provided also that nothing in this section shall affect the duties or liabilities of either seller or buyer as a bailee of the goods of the other party. (B) Transfer of Title. 21. — (1) Subject to the provisions of the Bills of Lading Act, the Factors Act, and this Act (as regards sales in market overt and re-sales under certain circumstances), where goods are sold b\ a person who is not the owner thereof, and doss not sell them under the authority or the consent of the owner, the buyer acquiri better title to the goods than the seller had unless the owner of the goods is by his conduc precluded from denying the seller's autho sell. 22. — (1) Where goods are sold in mark according to the usage of the market, the buyer acquires a good title to the goods provided be buys them in good faith and without noti' any defect or want of title on the pan seller. (See title Market Oven.) (2) Nothing in this section shall affect the relating to the sale of horses. (Sec title Ho; 23. — When the seller of goods has a voidable! title thereto, but his title has not been av< at the time of the sale, the buyer acquires a . title to the goods, provided he buys them in faith and without notice of the seller's defi title. 24. — (1) Where goods have been stolen offender is prosecuted to conviction, the pro] in the goods so stolen re-vests in the person w was the owner of the goods or his personal r sentative, notwithstanding any intermediate ing with them whether by sale in market or otherwise. (2) Where goods have been obtained by fraui , or other wrongful means not amount:' larceny, the property in such goods shall I re-vest in the person who was the owner of 1 goods or his personal representative by r onlv of the conviction of the offender. (See titles Bill of Lading, Factor, Malta Overt, and Re-sale.) Part 111. — Performance of Contract. 27. — It is the duty of the seller to deliver tM goods and of the buyer to accept and pay fl them in accordance with the terms of t contract of sale. 28. — Unless otherwise agreed delivery of tl goods and payment of the price are concurred conditions — that is to say, the seller must b Sale 599 [Sale rea- and willing to give possession of the goods to e buyer in exchange for the price, and the birr must be ready and willing to pay the price in change for possession of the goods. ;— (i) Whether it is for the buyer to take posission of the goods or for the seller to send tht to the buyer is a question depending in each n the contract, express or implied, between the parties. Apart from any such contract, expss or implied, the place of delivery is the sel 's place of business, if he have one, and if noi his residence. lovided that if the contract be for the sale of spt lie goods, which to the knowledge of the iai es when the contract is made are in some JtH- place, then that place is the place of ) Where under the contract of sale the seller is mnd to send the goods to the buyer, but no tin for sending them is fixed, the seller is bound o nd them within a reasonable time. h Where the goods at the time of sale are in i hour. What is a reasonable hour is a qu tion of fact. ) Unless otherwise agreed the expenses of incidental to putting the goods into a HHjtble state must be borne by the seller. III.— (i) Where the seller delivers to the buyer a liantity of goods less than he contracted to * the buyer may reject them, but if the buyer ♦ifpts the goods so delivered he must pay for thli at the contract rate. I|) Where the seller delivers to the buyer f Lantity of goods larger than he contracted to e the buyer may accept the goods included in contract and reject the rest, or he may reject whole If the buyer accepts the whole of the goods so delivered, he must pay for them at the contract rate. (3) Where the seller delivers to the buyer the goods he contracted to sell mixed with goods of a different description not included in the con- tract, the buyer may accept the goods which are in accordance with the contract and reject the rest, or he may reject the whole. (4) The provisions of this section are subject to any usage of trade, special agreement, or course of dealing between the parties. 31. — (1) Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof by instalments. (2) Where there is a contract for the sale of goods to be delivered by stated instalments, which are to be paid for separately, and the seller makes defective deliveries in respect of one or more instalments, or the buyer neglects or refuses to take delivery of, or pay for, one or more instal- ments, it is a question in each case depending on the terms of the contract and the circumstances of the case, whether the breach of contract is a repudiation of the whole contract, or whether it is a severable breach, giving rise to a claim for compensation, but not to a right to treat the whole contract as repudiated. 32. — (1) Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods tc a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, is, primd facie, deemed to be a delivery of the goods to the buyer. (2) Unless otherwise authorised by the buyer, the seller must make such contract with the carrier, on behalf of the buyer, as may be reason- able, having regard to the nature of the goods and the other circumstances of the case. If the seller omit so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself, or may hold the seller responsible in damages. (3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, under circumstances in Sale] 600 [Sa which it is usual to insure, the seller must give such notice to the buyer as may enable him to insure them during their sea transit; and, if the seller fails to do so, the goods shall be deemed to be at his risk during such sea transit. 33. — Where the seller of goods agrees to deliver them at his own risk at a place other than that where they are when sold, the buyer must, nevertheless, unless otherwise agreed, take any risk of deterioration in the goods necessarily incident to the course of transit. 34. — (1) Where goods are delivered to the buyer which he has not previously examined he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract. (2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reason- able opportunity of examining the goods for the purpose of ascertaining whether they are in con- formity with the contract. 35- — The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when after the lapse of a reason- able time, he retains the goods without inti- mating to the seller that he has rejected them. 36. — Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them. 37. — When the seller is ready and willing to deliver the goods and requests the buyer to take delivery, and the buyer does not within a reason- able time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods. Provided that nothing in this section shall affect the rights of the seller where the neglect or refusal of 1 buyer to take delivery amounts to a repudiaj of the contract. Part II'.— Rights of Unpaid Seller against 1 Goods. 38. — (1) The seller of goods is deemed to an " unpaid seller " within the meaning Act :— g of 1 (a) When the whole of the price has not be paid or tendered; (6) When a bill of exchange or other neg: able instrument has been received as cci ditional payment, and the condition which it was received has not b; fulfilled by reason of the dishonour of t' instrument or otherwise. (2) In this part of the Act the term " includes any person who is in the position seller, as, for instance, an agent of the seller whom the bil! of lading has been indorsed, or ' consignor or agent who has himself paid, or directly responsible for, the price. 39. — (1) Subject to the provisions of the Bi of Lading Act, the Factors Act, and this A< notwithstanding that the property in the goi) may have passed to the buyer, the unp. of the goods, as such, has by implication of lav (a) A lien on the goods or right to retain th; for the price while he is in possession them ; (&) In case of the insolvency of the buyer. right of stopping the goods j'ii transi after he has parted with the possession them ; (c) A right of re-sale as limited by this Act. (2) Where the property in goods has « passed to the buyer, the unpaid seller has, i addition to his other remedies, a right of initi holding delivery similar to and co-extensive wit his rights of lien and stoppage in transitu who the property has passed to the buyer. (See titles Lien (Unpaid Seller!, Re-sal Stoppage in transitu.) >e; art V. — Actions for Breach of the Contract. (A) Remedies of the Seller. 49. — (1) Where under a contract of sale the operty in the goods has passed to the buyer, id the buyer wrongfully neglects or refuses to ly for the goods, according to the terms of the mtract, the seller may maintain an action vhich includes set-off) against him for the price the goods. (2) Where under a contract of sale the price payable on a day certain irrespective of livery, and the buyer wrongfully neglects or fuses to pay such price, the seller may maintain 1 action for the price, although the property in e goods has not passed, and the goods have it been appropriated to the contract. 50. — (1) Where the buyer wrongfully neglects refuses to accept and pay for the goods, the Her may maintain an action against him for images for non-acceptance. (2) The measure of damages is the estimated ss directly and naturally resulting, in the dinary course of events, from the buyer's ach of contract. (3) Where there is an available market for the iods in question, the measure of damages is im& facie to be ascertained by the difference tween the contract price and the market or rrent price at the time or times when the ods ought to have been accepted, or if no time is fixed for acceptance, then at the time of the fusal to accept. (B) Remedies of the Buyer. 51. — (1) Where the seller wrongfully neglects refuses to deliver the goods to the buyer the iver may maintain an action against the seller r damages for non-delivery. (2) The measure of damages is the estimated *s directly and naturally resulting, in the dinary course of events, from the seller's each of contract. (3) Where there is an available market for the ods in question, the measure of damages is imii facie to be ascertained by the difference tween the contract price and the market or 601 [Sale current price of the goods at the time or times when they ought to have been delivered, or, if no time was fixed, then at the time of the refusal to deliver. S 2 - — In any action for breach of contract to deliver specific or ascertained goods, the Court may, if it thinks fit, on the application of the plaintiff, by its judgment, direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages. The judgment may be unconditional, or upon such terms and con- ditions as to damages, payment of the price and otherwise, as to the Court may seem just, and the application by the plaintiff may be made at any time before judgment. S3- — (') Where there is a breach of warranty by the seller, or where the buyer elects, or is compelled, to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may (a) Set up against the seller the breach of warranty in diminution or extinction of the price; or (b) Maintain an action against the seller for damages for the breach of warranty. (2) The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty. (3) In the case of breach of warranty of quality, such loss is, prima facie, the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty. (4) The fact that the buyer has set up the breach of warranty in diminution or extinction of the price does not prevent him from maintaining an action for the same breach of warranty if he has suffered further damage. 54. — Nothing in this Act shall affect the right of the buyer or the seller to recover interest or special damages in any case where by law Sale] 602 .Sale interest or special damages may be recoverable, or to recover money paid where the con- sideration for the payment of it has failed. Part VI. — Supplementary. 55. — Where any right, duty, or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement, or by the course of dealing between the parties, or by usage, if the usage be such as to bind both parties to the contract. " The effect of the section is to declare that " the preceding portions of the Act are not " absolute rules of law, but presumptions as " to the elements in a contract of sale which " may be negatived by the express or implied " terms of the particular contract as inter- " preted by the ordinary canons of construc- " tion. The construction of the contract is for " the Court, unless there is something peculiar " in the words by reason of the nature of the " trade or business to which it relates." [Lely & Craies.] 61. — (1) The rules in bankruptcy relating to contracts of sale shall continue to apply thereto, notwithstanding anything in this Act contained. (2) The rules of the common law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, and in particular the rules relating to the law of principal and agent, and the effect of fraud, misrepresentation, duress, or coercion, mistake, or other invalidating cause, shall con- tinue to apply to contracts for the sale of goods. (3) Nothing in this Act or in any repeal effected thereby shall affect the enactments relating to bills of sale, or any enactment relating to the sale of goods which is not expressly repealed by this Act. (4) The provisions of this Act relating to contracts of sale do not apply to any transaction in the form of a contract of sale which is intended to operate by way of mortgage, pledge, charge, or other security. 62. — (1) Unless the context or subject-matter otherwise requires, the term " goods " for the purposes of this Act includes all chattels per- sonal, with the exception of things in action (legal or equitable), money, negotiable instru- ments, and securities for money (such as shares in public companies). The term also includes emblements (i.e., such vegetable products as yield an artificial annual profit produced t labour — frucliis industriales) and things attache to or forming part of the land which ere agreed to be severed before sale or under the conti sale (e.g., timber). (See titles Acceptance and Receipt, Auctf Condition, Factor, Lien (Unpaid Seller), Market Overt, Re-sale, Sample (sale by), Siopp; transitu, Warranty.) Sale or Return. — Goods are often sent by facturers, wholesale dealers, and others to retailers or other persons in a position to tlisplai same for sale, upon the terms that the consignee shall only be liable to purchase same if and when he effects a sale. In the event of his bein unable to dispose of them he has a right to return them to the sender. Rule 4 of section 18 of the Sale of Goods Act 1893 provides that when goods are delivered to the buyer on approval or " on sale or return," or other similar terms, the property therei passes to the buyer : — (a) When he signifies his approval or ac ance to the seller or does any other adopting the transaction. (b) If he does not signify his approval or acceptance to the seller, but retains the goods without giving notice of rejection, then, if a time has been fixed for the return of the goods, on the expiration ol such time ; and if no time has been fixed for the return of the goods, on the expira- tion of a reasonable time. What is a reasonable time is a question of Bankruptcy. — Goods on sale or return at the commencement of the bankruptcy in the posses- sion, order, or disposition of a bankrupt in his trade or business may pass to the trustee under Sa ] 603 [Savings m 44 of the Bankruptcy Act 1883, but this c tingency will not arise where there is a his custom as to disposal of goods on sale ,. return in the particular bankrupt's trade. tie Reputed Ownership.) h-ed 0] Assignment. — Goods on sale or return w 1 not pass to a trustee under a deed of ignment, subject, however, to the provisions of 1 of section 18 of the Sale of Goods Act a), as the assignee cannot acquire any bter title thereto than his assignor. is to treatment in accounts of goods on sale return, sec title Investigation, heading Stock- ii Trade. Sal Account. — See title Goods Account. Sal ge. — Compensation made to those who have b their exertions saved a ship or goods from the pils of the seas, fire, pirates, or enemies. i&jo, that which is so saved, or that which is ndoned by the insured to the underwriter, the «ner claiming for a constructive total loss, *|ilst the benefits and responsibilities con- d with the subject-matter of insurance vest ill the underwriters on receipt of notice of diinim-nt. Hge Loss. — One ascertained by taking the ■erence between the net amount of salvage and ■ original value of the property. Sjjr- — A person who renders assistance to a ship ■distress, thereby becoming entitled to reward ■■Salvage. ■tie (Sale by). — A contract of sale is a contract ■ sale by sample where there is a term in the ■tract, express or implied, to that effect. Jin the case of a contract for sale by sample in ■Ution to the implications of law in the case :|an ordinary contract of sale, as regards (1) 1(2) quiet possession, and (3) freedom from :losed incumbrances : — There is an implied condition that the bulk shall correspond with the sample in quality. There is an implied condition that the buyer shall have a reasonable opportunity (c) There is an implied condition that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; and if the sale be by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the descrip- tion. (Sale of Goods Act 1893, section 13.) Where goods were purchased by sample but upon the express terms " cash against docu- ments on arrival of the goods," the buyer was held not to be entitled to compare the bulk with the sample before paying the price; but the right to reject if the goods are afterwards found not to correspond with the sample is not impaired by the fact that payment has been made. (Polenghi v. Dried Milk Company, 1904.) Sans recours. — See title Indorsement. Satisfaction. — See title Accord and Satisfaction. Savings Banks. — The Trustee Savings Banks Act 1863 provides (inter alia) that no savings bank shall have the benefit of the Act unless, in the rules and regulations for the management thereof, it shall be expressly provided (inter alia) : — (1) That the depositor's Pass Book shall be compared with the Ledger (a) on every transaction of repayment, and (6) on its first production at the bank after each 20th day of November. (2) That every depositor in a savings bank established under this Act shall, once at least in every year, cause his Deposit Book to be produced at the office of the said savings bank, for the purpose of being examined. (3) That a public accountant or one or more auditors be appointed by the trustees and managers, but not out of their own body, Savings] 604 'Savings to examine the books of the bank, and to report in writing to the board or com- mittee of management the result of such audit not less than once in every half- year; also to examine an extracted list of the depositors' balances, made up every year to the 20th day of November, and to certify as to the correct amount of the liabilities and assets of the bank. (4) That a book containing such extracted list of every depositor's balance, omitting the name but giving the distinctive number and separate amount of each, and show- ing the aggregate number and amount of the whole, checked and certified by such public accountant or auditors, be open at any time during the hours of public business for the inspection of every depositor as respects his own account, to examine his own Deposit Book therewith, and the general results of the same. Savings Banks Act 1891 provides (inter There shall be established an Inspection Committee of trustee savings banks. The Inspection Committee may appoint persons to inspect the books and accounts of trustee savings banks, and to examine and ascertain and report to the Committee from time to time, with respect to each bank, whether the bank has complied with the requirements of the Acts and rules relating to the bank as to the security to be taken from officers, the accounts of the bank, and the conduct of its business, and whether any portion of the expenditure is excessive or unnecessary ; and every trustee savings bank shall give all due facilities for enabling any such inspection or examination to be made. (3) The trustees of every trustee savings bank shall, on the requisition of the Com- mittee, supply the Committee with a copy of the Pass Book in use in the bank, of the annual general statement of the accounts of the bank, and of the rules of the bank, and of any amendments thereof. The alia) :- (0 (2) (4) If, in the opinion of the Commit: rules of any such bank are insufficiei the purpose of maintaining an e audit, the bank shall, with all conw speed, make such additional rules as m in the opinion of the Commitb required for the purpose. (5) If a bank do not, within a time t by the Committee from the date of bein required to make any such rules, comply with the requirement, the Committee ma; make such rules, and shall submit the rules so made to the Registrar of Frien Societies, to be certified by him; when so certified, they shall be 1 on the trustees. ice, me ivenient as may, f being comply ee may lit the binding [ The following is an extract from the circuli letter relating to the books of account issued the trustees of savings banks by the Inspect! Committee in April 1894 : — The Cash Book will summarise all the trar actions which are now shown in the Depositor Cash Receipt Books (or sheets) and Depos tors' Cash Payment Books (or sheets). It? show how all the moneys received by t treasurer and the actuary have been dispos of, and the balances of this book at any ti will be the amount in the hands of t treasurer, and the cash at the savings bank (il any) for which the actuary may be respon- sible. At the end of each month a balaii should be struck and compared by a trustee a manager or the auditor, with tin- shown in the treasurer's Pass Book. Probabl there will be no necessity for keeping a Petl Cash Book, though this can be done if thought desirable. The Journal will be used entirely for transfer entries. These often require an explanatioi more or less lengthy, which can be veniently given in the Journal, but for whic the forYn of Ledger generally in use is n adapted. It is not intended that the examples give should be followed in any hard and f manner, but they will probably illustrati treatment of most of, if not all, the tral^H Satngs] inns which take place in a savings bank. It \ ill be noticed that only one example of each ;ind of Journal entry has been given ; for nstance, only one transfer from the Post Iffice Savings Bank. As there may be several if these transfers, a similar entry will have be made from time to time, as advices are eceived from the National Debt Commis- ioners. In the case of banks where the ntries are sufficiently numerous to require pecial Day Books ruled for the purpose of ecording, in a convenient form, transfers, Uvidends, and any other kinds of special trans- Ctions, the totals of such subsidiary books at he 20th of each month need only be ournalised. Each bank possessing a com- ilete set of books balanced on the double entry yslcm will, doubtless, continue to use the orms which experience has found to be more uitable to its own particular circumstances; >ut the system of accounts which is here eeommended will be found generally con- enient for banks that have not yet adopted a {eneral Ledger, as by means of it the various ransactions of the bank are grouped in such a iay as to enable its financial position to be asily ascertained and checked. Tin Journal entries which deal with ' Depositors' Account " will have to be posted ■ice, once to the " Depositors' Account " in 1 General Ledger, and again to the indi- idual depositors' accounts which they affect n the Depositors' Ledgers. Entries in the Journal of this nature ought, therefore, to BVe Iwo references inserted. I'll' Ledger contains all the accounts which re required for making up the Annual State- lent, and also a Profit and Loss Account, >hich is not asked for by the National Debt Commissioners. This Profit and Loss Account .ill differ from the subsidiary statement which ppears at the bottom of the Annual Statement account for proving the surplus remaining on he General Account) in that it makes proper llowance for expenses due but not paid, nd fur depreciation (if any) of buildings and urniture. 605 [Savings The " Depositors' Account " is simply a summary of all the Depositors' Ledgers. Everything which is posted into these Ledgers in detail to the individual accounts will be posted in total to this account, so that, at any moment, the liability of the bank to depositors (subject to current interest due to them) can be ascertained from it by striking a balance. It will also have the advantage of acting as a check on the correctness of the postings into the Depositors' Ledgers, and on the results contained in those Check or Section Ledger Sheets used in certain banks. The liability to depositors at the end of the year will be ascer- tained independently by means of it, as the balance at 20th November should agree with the total balances of the Deposit Ledgers shown by the lists of extracted balances, after making any necessary adjustment for outstand- ing transfer certificates at that date. The account with the National Debt Com- missioners is now kept by some banks in a separate book, whereas, under the suggestions now made, it will find a place as a separate account in the General Ledger. If, however, it is still thought that it is more convenient to have it separately, then there is no reason why it should not remain so. The Profit and Loss Account will be made up at the end of the year by transferring to it the balances of all the Expense Accounts, and such Receipt Accounts as interest, dividends, &c. . . . Where payments for expenses are made only once or twice in the year, they might be posted direct to this account. The following is an extract from the circular letter relative to the audit of accounts, issued to the trustees of savings banks by the Inspection Committee in October 1894: — The annual general statement should be examined by the auditor in full detail, and if found correct should be certified by him. . . . . The form of this statement now in use is such that the auditor's certificate of its Savings] 606 [Savings correctness will render unnecessary a separate certificate as to liabilities and assets. If not satisfied of the accuracy of the statement the auditor should report in qualified terms to the trustees and managers, and also direct to the Inspection Committee. The accuracy of the postings from the detailed Cash Books to the Deposit Ledgers at least should be tested in all cases where the postings are not independently checked in the manner usual where the system obtains of balancing the Deposit Ledgers by sections of not more than 1,000 accounts. This could be done either by comparing the larger items, or, better still, by taking a section of the Cash Book for consecutive testings. The detailed calculations of interest should be tested in all cases where they are not checked independently by a second paid officer. A list of balances extracted in at least four columns (No. of account, principal, interest and amount) should be checked throughout in all respects as to extraction, castings, cross castings, and final summations, apart from any assistance by the actuary or other paid officer, and should be clearly certified. The auditor should report the general result of the audit for the half-year ended 20th May as soon as possible after that date, and not later than the 20th July, and the result of the audit for the year should be reported within nine weeks after 20th November of each year. It would be very convenient if the Inspection Committee could be supplied by the auditors of all banks with a list of work done on a form that will be provided. (See a suggested form in Appendix K, which will also serve as a guide for any auditor who may desire to have some indication of the points to which his attention may be most usefully directed.) Pass Books should be examined from time to time throughout the year to the extent of at least 10 per cent, of the entire number of active accounts in the current Deposit Ledgers. This examination will be practically useless if the Pass Books are left at the banks for any length of time prior to examination, or if they are sent to the auditor for audit with the of the bank. The examination, to be efficii should be made as the Pass Books are bri in by the depositors. Appendix K (referred to above.) Form in which it is suggested that auditor should acquaint the Inspection ( mittee at the end of each year with the details of the work done by him in auditing the books of a savings bank : — I certify that I have done the following during the course of my audit of the Savings Bank for the year ended 20th N ber 191 . N.B. — A pen may be run through the w that has not been done. 1. — General Cash Book. (a) Checked the receipts and payim from the Depositors' Cash Book (b) Checked the entries with the Banki Pass Book and agreed the (■on — occasions balance - weekly. I monthly. (c) Counted the cash in the actuary'; ion — occasions, hands 1 weekly. V monthly. (d) Checked the additions, (c) Checked the weekly totals with weekly statements sent to the Nation; Debt Office, and certified the same a! having been examined and foi correct. (/) Vouched the expenses. 2. — General Ledger. (a) Checked the postings. (b) Checked additions. (c) Agreed the balance of Depositors' Accounts at 20th November with the total of the extracted list of balances. (d) Verified the liabilities and assets each quarter/half-year and reported the result of such examination to the trustees and managers direct Savings] 607 [Savings Journal. (a) Agreed in total the figures in the two columns. (6) Vouched with the N. D. C. forms (transfers, purchases, and sales of stock, dividends, interest, &c). 4. — Depositors' Cash Books. (a) Checked) the agreement of the duplicate Tested I Cash Books. (b) Checked) „ . , : the additions. Tested ) (c) Checked ) the withdrawals with the de- Tested ) positors' receipts (where taken) or order cheques. (d) Checked) the receipts and payments by Tested I post. N.B. — The receipts may be compared with the letters enclosing the deposits, and the pay- ments with the acknowledgments sent by the depositors. 5- — Depositors' Ledgers. (a) Checked) the postings. (If tested only, Tested ) state the approximate percen- tage of postings verified.) (6) Checked) the additions and subtrac- Tested I tions. Or The Ledgers being balanced by the " section system," I have satisfied myself by examination that the system is correctly carried out. (c) Checked) the interest credited, paid, and Tested ) transferred. (J) Checked the balances into the ex- tracted list without the help of the staff. (e) Checked the additions of the ex- tracted list. (/) Certified the book containing the extracted list in the form suggested by the Inspection Committee. 6. — Pass Books. (a) Examined with the Ledgers from time to time during the year— Pass Books, having attended without notice — times for this purpose. (6) Examined with Ledgers during the audit — Pass Books. In both cases the Pass Books being taken as presented by depositors. 7. — Stock Books. (a) Agreed the stock as shown in the Stock Ledger with the total amount in the General Statement. (b) Checked ) the postings of the dividends Tested I to the Depositors' Ledgers. 8. — Annual General Statement. (a) Checked throughout with the books of the bank and agreed, (ft) Certified as having been examined and found correct. 9- — And I have also done the following additional work. I further certify that on every occasion of visiting the savings bank I have seen that the proper persons have been in attendance, and that they were parties to every transaction of deposit or repayment, and that the use of the necessary double check upon all such transac- tions has been permanently recorded at the savings bank in at least two different hand- writings apparently made independently at the time. (Signed) , Auditor of the Savings Bank. Address Date . To the Trustee Savings Banks' Inspection Committee. [The word " checked " is used in the sense of being verified in every detail. The minimum " test " should be 10 per cent, of the whole work, taken either as a percentage of the transactions of the period under audit, or of the number of days on which the bank was open for business during that period.] The following is a list of books in use at the Savings Bank : — (Here append the list.) Schedule] 608 Schedule. — A document appended to or accom- panying some larger work, generally in the form of a list or catalogue, affording further details as to some part of the larger work, and which, though essential to the completeness of the document or work to which it is attached, it is inexpedient to embody in the principal docu- ment itself. A schedule when referred to in an affidavit is called an " exhibit " (see that title). Strip.— A contraction of the word " subscription." Strictly scrip is a kind of provisional document given to an allottee entitling him to claim a certain specified number of bonds or share certifi- cates, indicating the number of bonds or shares for which he has subscribed. The scrip states the amounts and due dates of the various instal- ments, and when these have all been paid and bankers' receipts obtained therefor the scrip is exchanged for the bond or bonds or share certificate. The terms " share certificate " and " scrip " appear, however, to be used indiscriminately at the present time in commercial circles. A scrip certificate entitling a person io become the proprietor of any share in a corn- pan v, must bear id. stamp, which must be impressed, but a share certificate to the effect that the person named therein is a shareholder is not liable to any stamp duty. A scrip certificate differs from an allotment letter, the latter being merely an intimation by the company to the subscriber that his applica- tion for shares or debentures has been accepted. (See title Allotment Letter.) Every company shall within two months of the allotment or of the registration of the transfer of any shares or debentures complete and have ready for delivery the certificates therefor unless the conditions of issue otherwise provide. Failure to comply with this provision entails a liability to certain fines. (Companies (Consoli- dation) Act 1908, section 92.) (See title Certificate.) [Seal Scrivener. — One whose business is to place moi at interest for his clients, receiving a bonus or commission for so doing. The commission sometimes termed a " procuration fee." Scrutineer. — The articles of association of a ci pany sometimes provide for the appointment a scrutineer to compute the votes of the meml of a company in general meeting when a poll being taken. If the regulations of the company do not provide for such appointment, the members can elect scrutineers, or the chairman may nominate them with the assent of members. In the case of small companies chairman personally acts as scrutineer. Seal. — Section 16 of the Companies (Consoli tion) Act 1908 provides (inter alia) that a com- pany incorporated under that Act may have a common seal, and section 63 provides that the company (if limited) must have its name engraven in legible characters on its seal. A document to which the seal of a registered company is affixed is not necessarily a deed, e.g., a share certificate is not a deed; whilst section 91, subsection 2, of the Bills of Exchangi Act 1882 provides : — - 1 "In the case of a corporation, where by th " Act any instrument or writing is required to " be signed (acceptances, indorsements, &-c), " it is sufficient if the instrument or writing be " sealed with the corporate seal ; but nothing " in this section shall be construed as " requiring the bill or note of a corporation to " be under seal." Section 79 of the Companies (Consolidation) Act 1908 provides that companies registered under that Act, whose objects require or com- prise the transaction of business in foreign countries (e.g., the making of investments, the taking of mortgages, conveyances and leases, or the entering into contracts and engagements in such countries), may if authorised by the articles have an official seal for use in any place not situate in the United Kingdom. The seal is to be a facsimile of the common seal of the com- pany with the addition on its face of the name eal] 609 [Seal of every territory, district, or place where it is to be used. A company having such a seal as above may, by writing under its common seal, authorise any person appointed for the purpose, in any place not situate in the United Kingdom, to affix the same to any document to which the company is party in that. place; and any document to which any such seal has been duly affixed will bind the companv as if it had been sealed with the common seal of the company. Section 76 of the Companies (Consolidation) Act 1908 provides (inter alia) that any contract which, if made between private persons, would be by law required to be in writing, and if made according to English law to be under seal, may be made on behalf of the company in writing under the common seal of the company, and may in the same manner be varied or discharged. . . And all contracts made according to this section shall be effectual in law, and shall bind the com- pany and its successors and all other parties thereto, their heirs, executors, or administrators, as the case may be. I Contracts not required by law to be under seal may be signed by an agent for a company. (See title Simple Contract.) I The articles of association of a company ally provide (1) for the custody of the instrument of the seal, and (2) the necessary formalities for affixing the seal to documents, e.g. :— " The directors shall provide for the safe " custody of the seal, and the seal shall never " be used except by the authority of the direc- " tors, or a committee of the directors, " previously given, and in the presence of two " directors at the least, who shall sign every " instrument to which the seal is affixed, and " every such instrument shall be counter- " signed by the secretary or some other person " appointed by the directors." Sometimes, in the case of large companies, the of the seal, for the purpose of duly executing bare certificates (only), is delegated to one rector. It is usual and desirable to keep a register in a concise form of all documents (other than share certificates) to which the seal of a company has been affixed, recording in each case (1) the date, (2) the parties to the contract (other than the company), (3) the attesting directors, and (4) a short statement of the purport of the document. Where, as is usual, the seal is affixed only in pursuance of a resolution of the directors, the fact that a document has been " sealed " will be recorded in the Minute Book in the ordinary way, but a register of such documents in columnar form is much more satisfactory for future reference. It is a good plan to rule off a few pages at the end of the Minute Book for this purpose. With regard to the " sealing " of deeds by individuals, the practice is to affix a form of seal or a wafer beforehand, which the party when executing the instrument merely touches, and adopts as his seal. To give effect to a deed executed by an indi- vidual it must be sealed and delivered, the document taking effect (save in the case of an escrow) from the date of delivery; but in the case of a corporation the sealing imports delivery. "A " common seal fixed to the deed of a corpora- " tion is tantamount to a delivery." Thus the attestation clause affixed to the deed of an individual usually reads: " Signed, sealed, and delivered in the presence of "; whereas, in the case of a company, the clause merely states that " The common seal of the " company was affixed hereto in the presence " of " (i.e., the director or directors and/or secretary of the company, as the regula- tions may prescribe). (See title Deed.) Seal Register. — A record of the documents to which the common seal of a corporation or company has been affixed, stating the purport of the docu- ments, the parties, the date the seal was affixed, and the initials of the directors, &c, who signed the various documents. This record is often kept at the latter portion of the Minute Book, for although such docu- RR Seal] 610 [Sectional merits are recorded in the Minute Book from time to time, as and when the seal is affixed, it is found more convenient in large companies to keep a separate record to facilitate subsequent reference. Seaworthiness.— The quality of a ship being in such a fit state as to repairs, equipment, and crew, as to render her capable of withstanding such perils of the sea as she may be expected to encounter in a contemplated voyage. In the absence of agreement to the contrary, in a con- tract for the carriage of goods by sea, the ship- owner implies amongst other things that his ship is seaworthy. In marine insurance there is an implied warranty in every voyage policy that the ship is seaworthy. In a time policy it is not implied; but where, with the privity of the insured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness. (Marine Insurance Act 1906, section 39.) Second of Exchange.— See title Bill in a Set. Secret Commissions.— See titles Agent; Corruption, Prevention of. Secret Reserves. — See title Reserves. Sectional Ledgers.— In recording the accounts of some businesses, particularly where the transac- tions are numerous, it is found necessary to keep the Ledger in parts, such as : — (1) Debtors', or Sales, or Customers' Ledger; (2) Creditors', or Bought or Purchase Ledger ; (3) Consignment Ledger ; (4) Nominal or Trade Ledger; (5) Private Ledger; and so on. The Debtors' and Creditors' Ledgers are some- times subdivided, either alphabetically, depart- mentally, or .geographically, as the case may be. The subsidiary books, to a great extent, are also devised upon identical lines, either by separate subsidiary books, or " dividing columns " in the same books, arranged according to alphabet, department, district, or otherwise. This allows of a division of labour upon the accounts of a large concern which would not be otherwise possible, and, furthermore, by means of the totals of the various subsidiary books, in a system of controlling accounts it is possible to render each Ledger self-balancing, and thereby not only minimise the trouble and risk involved in the balancing of the books as a whole, but make each Ledger clerk responsible for the balancing of his own portion of the work. There are various methods of giving effect to this principle of self-balancing, and although some authorities advocate one method rather than another, yet the real test of the suitability of the ; particular method is to be found in the circum- . stances of the particular case. Subject always to the particular circum- stances of the case, the following method j is found to work well in practice :— The Private and Nominal Ledgers are so kept : as to contain between them in detail all ' the accounts of the business other than the I Debtors' and Creditors' Accounts. In addition, a Total Debtors' Account (representing the debts in the Debtors' Ledger) and a Total Creditors' Account (representing the liabilities in the Creditors' Ledger) are kept in the Nomina Ledger. The Total Debtors' Account will be kept I as illustrated below, it being understood that the j Total Creditors' Account is dealt with on similar lines, but conversely. Assuming the opera- j tions in the Total Debtors' Account are made j monthly, the following process is adopted :— The Total Debtors' Account at the commence- ment of the period is debited with the total of all the debts due to the concern as shown by J an extraction of the detailed balances from the] Debtors' Ledger. This account is then charged) each month with the total of the sales as shown by the Sales Day Book. It is credited (1) with the total of the cash received from debtors as shown either by a Special Cash Received BookJ or a specially ruled column in the Cash Book;^ (2) with the total of the discount allowed as.j shown by the Discount column in the Cash« Book; and (3) with the total of the goods.' ectional 611 [Secured returned as shown by the Returns Inwards Book. Effect must also be given in the Total Debtors' Account to any entries which have been made uorn amount of the estate; the Court has, however, a discretion as to the amount of the bond. (See titles Administration, Letters of; Justifying Security.) Liquidators and Special Managers (Winding-up by the Court). In the case of a special manager or a liqul dator other than the Official Receiver, the follow- ing provisions as to security shall have effect, namely : — (1) The security shall be given to such officers or persons and in such manner as the Board of Trade may from time to time direct. bcurity] 615 [Security (2) It shall not be necessary that security shall be given in each separate winding-up; but security may be given either specially in a particular winding-up, or generally to be available for any winding-up in which the person giving security may be appointed either as liquidator or special manager. I (3) The Board of Trade shall fix the amount and nature of such security, and may from time to time, as they think fit, either increase or diminish the amount of special or general security which any person has given. I (4) The certificate of the Board of Trade that a liquidator or special manager has given security to their satisfaction shall be filed with the Registrar. (5) The cost of furnishing the required security by a liquidator or special manager, including any premiums which he may pay to a guarantee society, shall be borne by him personally, and shall not be charged against the assets of the com- pany as an expense incurred in the winding-up. Xotc. — There is no power to transfer this expense to the estate as may be done in bankruptcy. (.See below.) If a liquidator or special manager fails to give me required security within the time stated for that purpose in the order appointing him, or any ixtension thereof, the Official Receiver shall report such failure to the Court, who may there- upon rescind the order appointing the liquidator or special manager. If a liquidator or special manager fails to keep Mip his security, the Official Receiver shall report such failure to the Court, who may thereupon remove the liquidator pr special manager and make such order as to costs as the Court think fit. (Winding-up Rules 1909, Rules 57 and 58.) Voluntary Liquidator. There is no necessity for a voluntary liquidator to give security, unless the terms of his appoint- ment require him to do so. Trustees and Special Managers (in Bankruptcy). With regard to a trustee or special manager the rules as to security in winding-up procedure, mutatis mutandis, apply, but in bankruptcy the cost of the premium on a trustee's guarantee bond will be allowed against the estate, if specially approved by the creditors — or the com- mittee of inspection where the committee have power to fix the trustee's remuneration. The trustee under a composition or a scheme of arrangement must give security in the same manner as a trustee in bankruptcy. (Rule 210.) The following is an extract from the Board of Trade regulations affecting the security of trustees in bankruptcy : — Renewal premiums on guarantee bonds are payable annually, and one month before the date of expiry of his bond a trustee, who has not obtained his release, will be required to renew his security, and failure to do so renders him liable to removal from office. The Board of Trade will, however, be prepared at the expiry of one year from the trustee's appointment, or at any time thereafter, to con- sider applications by a trustee for a reduction of security upon the accounts up to the date of such application being audited, and upon the production of a resolution by the committee of inspection recommending the reduction. Where the premium is paid out of the estate the trustee should make application for reduction so soon and as often as the circum- stances of the case require, and in the event of neglect will be surcharged with premiums needlessly paid. Where there is no committee of inspection an application for reduction of security should be accompanied by a short statement as to the estate realised, and the assets outstanding, and also by the written approval of the Official Receiver. Security cannot in any case be altogether dispensed with until the trustee has obtained an order of release, which should be applied for so soon as the whole estate has been Security] 616 [Settlement realised and distributed. If, however, the trustee has applied for his release and lodged his final account for audit not less than one month before the expiration of the bond, he need not renew his security, unless specially required by the Board of Trade to do so. Where the security is reduced, or where the trustee has obtained his release and the period over which the guarantee extends has not expired, the leading guarantee societies have intimated their willingness to grant a rebate in the case of renewal premiums, and where the premium has been paid by the trustee per- sonally, he should, upon receiving notification from the Board of Trade of his release, or that the security has been reduced, apply to the guarantee society for the rebate (if any) due to him ; but where the estate has borne the expense, the rebate (if any) must be credited to the estate, and if arising upon the release of the trustee will be claimed by the Official Receiver. Suit' Balancing Ledgers. — See title Sectional Ledgers. Selling Price System. — This system is used in some businesses for the purpose of recording the work- ing of branch establishments. It is based upon the assumption that if the " commencing " stock on hand is taken at selling prices, and the goods inward are charged to the branch establishment at selling prices, then the difference between these two items added together, and the stock on hand at the end of a period (also at selling prices), should represent the cash taken during that period. This would be a satisfactory method if it could be worked, but apart from the difficulties attending the system in practice, it ultimately comes to a question of percentage. Inevitable waste, allowance for scale " break- ing," loss of weight, and other deductions cannot be disregarded, and a certain percentage must be allowed for these, under a system which requires cash for the sale price of the goods consumed. But this consideration as to leakage would apply to the cost price system. If 25 per cent, profit is required whilst the actual yield is only 22 per cent., the question arises, is 3 per cent, an excessive allowance for the " trade shrinkages " ? This latter question, the gist of the whole matter, applies equally under cither system, for if. under a selling price system it appeared that a branch was short in its cash by ^5, or the equivalent of 3 per cent, of profit, it would be necessary to inquire whether the deficiency was justified or not, as in the case of the cost price basis. Furthermore, how could the following be charged out at selling prices?: — 100 dozen pairs hose, sale prices is. a pair; 3 pairs for 2s. 6d. ; 30 gallons petroleum, sale prices isd. per half-pint, -;d. a quart, is. 6d. a gallon; a sack of flour, which has to be manu- factured into bread by those in charge of the branch, the- ultimate weight of which may vary as much as 12 pounds per sack without calling for any special remark ; or, lastly, a barrel of beer, which, if sold for consumption on the premises, would realise 2jd. per pint, but if taken away in jugs would only bring lid. for three gills. Thus, if the probabilities of the relative retail- ing quantities are to be the subject of average in assessing the selling prices, it is clear the systenK cannot be better than a check by pure per- centage, based upon cost prices. (See title Percentage.) Separate Estates. Estates. -See title Joint and Sepa: title arate Set oil. — A cross claim. " The right of one party " who is bound under a contract towards " another, to set off a corresponding liability " upon the side of that other party, as counten " balancing the want of performance of the con- " tract sued upon." (See titles Agent, Con-'- tributary, Mutual Credits, Statement of Affairs, &c.) Settlement. — See title Fraudulent Conveyances and Settlements. Settlement Estate Duty. — Where property of a deceased person, in respect of which estate duty is leviable, is settled by the will of the deceased Settlement] 617 [Settling or having been settled by some other disposition passes under that disposition, on the death of the deceased to some person not competent to dis- of the property, a further estate dutv called " settlement estate duty," at the rate of one per cent, upon the principal value of the settled property, shall be levied, except where the filly life interest in the propertyj after the death of the deceased, is that of a wife or id of the deceased. In the case of a person dying on or after 30th April 1909 the rate payable is 2 per cent. (Finance (1909-10) Act 1910, section 54), pro- vided that where an interest in expectancy has before 30th April 1909 been bond fide sold or mortgaged for full consideration the duty shall be the same as if the 1909-10 Act had not d, and in the case of a mortgage any higher duty payable by the mortgagor shall rank as a charge subsequent to that of the mortgagee. (Section 64.) Si ttlement estate duty shall not be payable pore than once during the continuance of the inent. If estate duty has once been paid in respect of any settled property since the date of the settle- ment, it (estate duty) is not again leviable until the death of a person who was at the time of his death (or had been at any time during the con- tinuance of the settlement) competent to dispose of such property. But this is subject to the limitations imposed by section 55 of the Finance (1909-10) Act 1910. Where the interest of any person under any settlement fails or determines, by reason of his Death, before his interest in the property com- prised in the settlement becomes an interest in bossession, and subsequent limitations under the Settlement continue to subsist, such property shall not be deemed to pass on his death. Where ad valorem stamp duty has been charged on a settlement under the Stamp Acts, such duty may be deducted from the settlement festate duly payable in respect of the same property. The settlement estate duty leviable in respect of a legacy or other personal property settled by the will of the deceased is (unless the will con- tains an express provision to the contrary) pay- able out of such settled legacy or property in exoneration of the rest of the deceased's estate. Note. — This is sometimes construed as though the duty were payable " out of the income " of the settled property, but it is submitted that the intention is merely to exonerate that portion (if any) of the estate which is not settled, and that generally as between life-tenant and remainder- man, the duty only is a capital charge; the interest thereon being chargeable to income. Where settlement estate duty has been paid in respect of any property contingently settled and it is thereafter shown that the contingency has not arisen, and cannot arise, the settlement estate duty so paid can be recovered. Where the net value of the property, real and personal, in respect of which estate duty is pay- able on the death of the deceased (exclusive of property settled otherwise than by the will of the deceased) does not exceed ^1,000, and estate duty has been paid upon the principal value thereof, settlement estate duty is not payable thereon. (See title Fstate Duty.) The Commissioners of Inland Revenue may, if they think lit, accept land in satisfaction in whole or part of liability for settlement estate duty. (Finance (1909-10) Act 1910, section 56.) Settling Days. — The days upon which Stock Exchange transactions are balanced, differences paid, and the stocks (bought and sold) taken up and delivered, or " carried over " to the next account. The settlements are made fortnightly, and are termed " mid-monthly " and " end-monthly " respectively. The process of adjustment occupies three days, viz. : — (1) Contango day, carrying-over day, or making-up day, upon which all speculative accounts should either be closed or con- tinued to the following settlement. A charge is made for the latter privilege, which is termed contango in the case of a Settling] 618 ^Shares bull transaction, the supply of stock being plentiful, and backwardation in the case of a bear transaction, there being a scarcity of stock. Transactions which are carried over are sometimes termed continuances, and the first day of the settlement is sometimes called account day. (See below.) (2) Ticket, or name day, whereon the tickets are passed, and differences struck, or names of buyers declared. (3) Pay day, account day (proper), or settling day, whereon all differences are paid and received, securities delivered, and money obtained. Transactions are sometimes for cash, when they are settled at once without any recourse to the fortnightly process. Consols and a few other securities may be settled for once a month. A bargain made for an " account " must be settled at that account, but the practice of " carrying-over," or " continuation of an account " is a device of brokers and jobbers, which enables them (in effect) to postpone the obligation under a contract, without committing a breach of the rules of the Stock Exchange. The necessary parties to a continuation are the " giver-on " of stock or shares, and the " taker-in " of stock or shares, he who sells for the current account and buys for the ensuing account is the " giver-on," and he who buys from and sells to the former is the " taker-in." Thus the stock that a person has (say) bought for settlement on a certain day, he may sell for the same day, and concurrently agree to purchase the same quantity for the ensuing account from the person to whom he has just sold. He is then responsible for the purchase price at the next account, but must pay, or is entitled to receive, the difference between the two contracts apper- taining to the current account. A continuation may therefore be defined as " the combination of " a contract to sell and a contract to buy a " quantity of stock or shares made between the " same persons at the same time, but to be " executed at different accounts." Strictly, when a broker is instructed by his client to " carry- over," he should execute his orders by making the necessary contracts with a jobber, but a broker often " takes-in " upon his own account; he may contract with a jobber, or he may act as a principal, dependent upon the state of the market, personal convenience or otherwise. Doubts have been expressed as to whether a broker, having been instructed to " carry-over,^ is entitled to act as a principal and " take-in ; himself. Share Capital. — See title Capital. Share Certificate. — See title Certificate. Shareholder. — See title Member. Share Ledger. — See title Register of Members. Shares in Ships. — Every Registrar of British ships shall keep a book to be called the Register Book, and entries in that book shall be made in accord- ance with the following provisions : — (1) The property in a ship shall be divided into sixty-four shares : Note. — A share in a ship must be distinguished from a share in the capital of a limited company owning a ship or a number of ships. (See title Single Ship Company.) (2) Subject to the provisions of the Merchant Shipping Act 1894, with respect to joint owners or owners by transmission, not more than sixty-four individuals shall be entitled to be registered at the same time as owners of any one ship ; but this rule shall not affect the beneficial title of any number of persons, or of any company represented by or claiming under or through any registered owner or joint owner : (3) A person shall not be entitled to be regis- tered as owner of a fractional part of a share in a ship; but any number of per- sons not exceeding five may be registered as joint owners of a ship, or of any share or shares therein : Shares 619 [Share (4) Joint owners shall be considered as con- stituting one ptrson only, as regards the persons entitled to be registered, and shall not be entitled to dispose in severalty of any interest in a ship, or in any share therein in respect of which they are registered : (5) A corporation may be registered as owner by its corporate name. A person shall not be entitled to be registered s owner of a ship, or of a share therein, until ie, or, in the case of a corporation, the person authorised by the Act of 1894 to make declara- tions on behalf of the corporation, has made and signed a declaration of ownership, referring to the ship as described in the certificate of the surveyor, and containing a statement of his qualification to own a British ship, or, in the case of a corporation, of such circumstances of the constitution and business thereof as prove it to be qualified to own a British ship and other particulars. A registered ship or a share therein (when dis- posed of to a person qualified to own a British ship) shall be transferred by bill of sale. The bill of sale shall contain such description of the ship as is contained in the surveyor's certificate, or some other description sufficient to identify the ship to the satisfaction of the Regis- trar, and shall be in the form marked A in the first part of the First Schedule to the Merchant Shipping Act 1894, or as near thereto as circum- stances permit, and shall be executed by the transferor in the presence of, and be attested by a witness or witnesses. Where a registered ship or a share therein is transferred, the transferee shall not be entitled to be registered as owner thereof until he, or, in the case of a corporation, the person authorised by the Act to make declarations on behalf of the f~~rporation, has made and signed a declaration ailed a declaration of transfer) referring to the ip, and containing : — (a) A statement of the qualification of the transferee to own a British ship, or if the transferee is a corporation, of such circum- stances of the constitution and business thereof as prove it to be qualified to own a British ship ; and (b) A declaration that, to the best of his knowledge and belief, no unqualified per- son or body of persons is entitled as owner to any legal or beneficial interest in the ship or any share therein. (See title British Ship.) Every bill of sale for the transfer of a regis- tered ship, or of a share therein, when duly executed, shall be produced to the Registrar of her port of registry, with the declaration of transfer, and the Registrar shall thereupon enter in the Register Book the name of the transferee as owner of the ship or share, and shall indorse on the bill of sale the fact of that entry having been made, with the day and hour thereof. Bills of sale of any ship, or of a share therein, are entered in the Register Book in the order of their production to the Registrar. (See titles Bill of Sale (Shipping), Mortgage (ol a ship), Port of Registry.) Share Warrants. — A company limited by shares, if so authorised by its articles, may, with respect to anv fully paid-up shares, or to stock, issue under its common seal a warrant stating that the bearer of the warrant is entitled to the shares or stock therein specified, and may provide, by coupons or otherwise, for the payment of the future dividends on the shares or stock included in the warrant, in the Act termed a share warrant. A share warrant shall entitle the bearer thereof to the shares or stock therein specified, and the shares or stock may be transferred by delivery of the warrant. The bearer of a share warrant shall, subject to the articles of the company, be entitled, on sur- rendering it for cancellation, to have his name entered as a member in the register of members ; and the company shall be responsible for any loss incurred by any person by reason of the com- pany entering in its register the name of a bearer of a share warrant in respect of the shares or stock therein specified without the warrant being surrendered and cancelled. The bearer of a share warrant may, if the articles of the company so provide, be deemed Share] 620 to be a member of the company within the mean- ing of the Act, either to the full extent or for any purposes defined in the articles ; except that he shall not be qualified in respect of the shares or stock specified in the warrant for being a director or manager of the company, in cases where such a qualification is required by the articles. On the issue of a share warrant the company shall strike out of its register of members the name of the member then entered therein as holding the shares or stock specified in the warrant as if he had ceased to be a member, and shall enter in the register the following particulars, namely : — (i) The fact of the issue of the warrant; (h) A statement of the shares or stock included in the warrant, distinguishing each share by its number; and (iii) The date of the issue of the warrant. Until the warrant is surrendered, the above particulars shall be deemed to be the particulars required by this Act to be entered in the register of members; and, on the surrender, the date of the surrender must be entered as if it were the date at which a person ceased to be a member. (Companies (Consolidation) Act 1908, section 37-) After the issue by the company of a share warrant, the annual summary required by the twenty-sixth section of the Consolidation Act 1908 (sec title Annual List and Summary) shall con- tain the following particulars : — The total amount of shares or stock for which share warrants are outstanding at the date of the sum- mary, and the total amount of share warrants which have been issued and surrendered respec- tively since the date of the last summary, and the number of shares or amount of stock comprised in each warrant. There shall be charged on every share warrant a stamp duty of an amount equal to three times the amount of the ad valorem stamp duty which would be chargeable on a deed transferring the share or shares, or stock, specified in the warrant, if the consideration for the transfer ^Ship's liare* were the nominal value of such share or sha or stock. (Stamp Act 1891.) Share warrants to bearer are but little used in this country. Should dealings in the shares of a company be expected to take place on the Con- tinent, share warrants to bearer are found to be very convenient because of the saving of time and trouble in connection with the transfer regis- tration, &c. Although the Act permits the issue of " share " warrants to bearer in respect of slock or shares the Stock Exchange obj' their issue in respect of stock in respect of whii a quotation is required. Of course, a company which is empowered I issue share warrants cannot be a priva company. (See title Private Company.) Sheriff. — The chief officer of the Crown in (very county, appointed annually to carry out the Sovereign's business in the county. Ship. — For the purpose of marine insurance the term " ship " comprises the hull, tackle, apparel, ordnance, munition, boats, and other furniture, the last term covering the necessary provisions- for the crew. (See titles British Ship, Mortgage of a Ship.) Shipbroker. — A person (or firm) in a seaport carrying on business as agents for shipowners and attending to the affairs of vesseis whilst in harbour, such as entering and clearing the vessel, collecting freights, chartering for new freight, and generally. Ship's Articles. — The document forming the con- tract between the master and the crew of at vessel. The articles are signed by the master, and by each member of the crew (usually in the presence of a Board of Trade official or a Consul) and they contain particulars as to the " rating " of the men, the wages agreed upon, &c. &c. Ship's Husband. — An agent (usually a direct employee) appointed b\ the shipowner to super- intend a vessel as regards repairs, stores, and. such like. Ship's] 621 [Signature Ship's Papers. — The ship's register, articles, manifest, bill of health, the load-line certificate, &c. ; all documents necessary to a vessel when entering or leaving port. Short Bills. — Where bills are paid into a bank by a customer before maturity for collection it is the custom of some bankers to " enter them short," that is, not to carry them direct to the credit of the customer, but merely note the receipt of the bills, with their due dates and amounts in an inner column, carrying the pro- ceeds to the usual cash column as and when received. Such bills are sometimes called " Bills for collection." (See title Bank Book.) If the banker becomes bankrupt the bills deposited with him and entered short do not pass to the trustee under the " reputed ownership " clause, as the bills are treated as i^oods in the hands of a factor. Where bills have been indoised and deposited by a bankrupt with a banker as security for an overdraft, proof for the purpose of divi- dend may be made on the full amount of the overdraft, but for the purpose of voting the banker must treat the liability to him (on the bills) of every person antecedently to the debtor (and against whom a receiving order has not been made) as security in his hands, and after estimating the value thereof, he must deduct same from his proof. (Bankruptcy Act 1883, 1st Schedule, Rule 11.) Bankers for their own purposes classify all bills having less than ten days to run as short bills. The term may therefore be applied to demand and sight bills, and also to (say) a three months' bill within ten days of maturity. I Short Entry.— See title Short Bills. hort Workings.— See title Royalty. Show of Hands. — The common law mode of ascer- taining the opinion or will of a meeting of persons. Section 67 of the Companies (Consolidation) Act 1908 provides that as regards companies registered under that Act in default of any regu- lations as to voting every member shall have one vote. Generally the articles of association of a com- pany provide for the determination by a show of hands of all questions submitted to a meeting of the members, in which case every person present has one vote only, though he may hold numerous proxies, but they generally provide also for the demand of a poll so that each member may have such votes as he may be entitled to according to the articles in lieu of the system of showing hands. On the other hand, the articles of association may exclude the method of show of hands altogether — by providing that all ques- tions shall be decided according to the shares held — thus rendering the demand for a poll unnecessary. (See titles Poll, Vote.) Sight Bills. — Bills payable at sight, or on demand — that is, when presented for payment to the person liable to pay same; no days of grace are allowed upon a sight bill. The most usual example of a sight bill is the ordinary cheque in every-day use. Signatories (to Memorandum). — See title Memo- randum of Association. Signature (on a Bill of Exchange). — No person is liable as drawer, indorser, or acceptor of a bill who has not signed it as such (and delivered the bill), provided that: — (1) Where a person signs a bill in a trade or assumed name, he is liable thereon as if he had signed it in his own name; (2) The signature of the name of a firm is equivalent to the signature, by the person so signing, of the names of all persons liable as partners in that firm. (Bills of Exchange Act 1882, sections 21 and 23.) The signature of a person may be made by him with his own hand, or be written by some other person duly authorised. A corporation may issue its bills under its seal, which is deemed a sufficient signature, but it is not bound to do so. (Section 91.) The Companies (Consolidation) Act 1908, sec- tion 63, requires every limited company registered under that Act to have its name mentioned in legible characters in all bills of exchange, Signature] 622 [Simple promissory notes, indorsements, cheques, and orders for money or goods purporting to be signed bv or on behalf of the company. Section 77 of the same Act provides that a promissory note or bill of exchange shall be deemed to have been made, accepted, or indorsed on behalf of a company registered under that Act, if made, accepted or indorsed in the name of, or by or on behalf or on account of, the company by any person acting under its authority. It should be noted that the above section does not confer upon all companies the capacity to issue bills or promissory notes : it simply pre- scribes the manner in which a company having the necessary power to issue same must exercise such power. A forged or unauthorised signature on a bill is wholly inoperative, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority. An unauthorised signature not amounting to forgery may, how- ever, be ratified. (Bills of Exchange Act, sec- tion 24.) The foregoing section is subject to the provisions of sections 80 and 82 of the same Act, which afford protection to bankers paying or receiving payment of cheques in good faith and without negligence. Where a person signs a bill as drawer, indorser, or acceptor, and adds words to his signature indicating that he signs for or on behalf of a principal, or in a representative character, he is not personally liable thereon ; but the mere addition to his signature of words describing him as an agent, or as filling a repre- sentative character, does not exempt him from personal liability. In determining whether a signature on a bill is that of the principal, or that of the agent by whose hand it is written, the construction most favourable to the validity of the instrument shall be adopted. (Section 26.) The drawer of a bill by drawing it : (a) Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or any indorser who is compelled to pay it, provided that the requisite proceedings on dishonour be duly taken : (6) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse. The indorser of a bill by indorsing it : (a) Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or a subsequent indorser who is compelled to pay it, pro- vided that the requisite proceedings on dishonour be duly taken : (b) Is precluded from denying to a holder in due course the genuineness and regularity in all respects of the drawer's signature and all previous indorsements : (c) Is precluded from denying to his imme- diate or a subsequent indorsee that the bill was at the time of his indorsement a valid and subsisting bill, and that he had then a good title thereto. (Section 55.) In view of the sections just quoted, viz., 26 and 55, officials of a company signing cheques or similar instruments on behalf of a company should make certain that their signa- tures are specifically stated to be on behalf of the company. (Landes v. Marcus t- _ c « rt v ets. Many accountants decline to recognise the distinction between (1) the assets (be they busi- a-sets or outside investments) which constitute a reserve fund or a sinking fund, and (2) the Nominal Account with a credit balance which merely records the amount of the particular fund. But it is submitted that all funds are dependent for their existence upon asset values, though not necessarily specific, and that whether sinking fund or reserve fund, the amount of same, but not the fund itself, is recorded Nominal Account having a credit balance to extent; this result is inseparable from the ciples of bookkeeping by double entry. (See title Reserves and Reserve Funds.) Sleeping Partner. — See title Dormant Partner, Slip. — A memo, issued by an underwriter (pend ing the preparation of a stamped policy) briefly setting forth the main terms of a contract of insurance. A contract of marine insurance is deemed to be concluded when the proposal of the insured is accepted by the insurer, whether the policy be then issued or not : and for the purpose of showing when the proposal was accepted reference may be made to the slip or covering note, or other customary memorandum of the contract, although it be unstamped. The con- tract must, however, be confirmed by the issue of a policy, either at the time when the contract is concluded or afterwards. (Marine Insuran 1906, section 21.) Slip Bookkeeping. — This is a system of bookke ing which has latterly attracted considerah notice in this country, although it has long used bv banks in " posting " from slips tenne " dockets." There are several systems, three of which as follow : — (.1) " Slip " posting. (B) Loose-leaf Ledgers. (C) Card Ledgers. (.1) Slips (or dockets) are generally utilis as a source of original entry and as a mediun from which postings may be made direct to Ledger. There are many variations of detail practice, but the following is an example of use of slip bookkeeping in place of the ordinar Sales Day Book : — A carbon duplicate Sales Book is kept, Sale Notes being numbered consecutively and separate Sale Note made out for each custome The particulars on these Sale Notes are posted at once direct to the debtors' Ledger Account the reference in the Ledger being the number the slip, the slip being then carefully filed in alphabetical and datal order. The credit postii lip 629 [Slip will be made either (1) by posting direct from the slip to the Sales Account, or (2) if an analysis of the sales is deemed necessary, then by I entry in a Dissection Book, the departmental totals of which are posted periodically to the credit of the various Sales Accounts affected. The advantages claimed are : — (1) Reduction in the number of subsidiarv books required, and consequent saving of labour both in writing up same and reference thereto. (2) The original Sale Note can be readily referred to direct from the Ledger Account by means of the reference number there entered. (3) Postings are more promptly made, the Sale Notes being sorted daily and handed to the various Ledger-keepers (if more than one). (4) Diminution of risk of error — there is no intermediate entry between the original Sale Note and the Ledger, both of which can at any time be compared with the carbon duplicate in the Sales Book. (B) 1. nose-leaf Ledgers consist of Ledger sheets ruled in the ordinary way, but devised with the view of retaining within the Ledger live " Accounts only. Two bindings are pro- vided for these sheets, one marked " current " and the other " closed." A stated number of sheets is printed, and they are numbered con- secutively, say 1 to 2,000, in the left-hand top comer. The disposal of these sheets is con- trolled by a principal who keeps a register of them, and on handing out any of them to the bookkeeping staff he makes a note of the account for which the sheet is obtained. The Ledger is arranged alphabetically A I, A 2, et scq., B I, B 2, et seq., C 1, C 2, et seq., and the book- keeper, on opening a new account, allocates to the customer a particular number (e.g., John Burns — B 4 — ), and that number will always appear on the right-hand top corner of every sheet of the account to which it is originally appro- priated. If the transaction is an isolated one so that the account is closed upon payment, or if the transactions are so numerous that another Ledger Sheet is shortly necessary, the first sheet is trans- ferred to the " Closed " Ledger, so that only " live " sheets are in the " Current " portion. If an isolated transaction is followed later on by new business with the same customer, the original sheet is brought back to the " Current " portion for so long a period as may be required. Loose-leaf Ledgers seem particularly suitable for Personal Accounts with debtors or creditors, but they are also made use of for other purposes, e.g., for registers of members where the company is a large one and the personnel of the members is subject to constant change. (C) Card Ledgers. — The principle under- lying these is the same as that attaching to Loose-leaf Ledgers, and the method of working somewhat similar, save that cards of a convenient size are substituted for loose leaves, separate drawers being allocated to Current and to Closed Accounts. The advantages claimed for the two methods (leaf and card) are : — The elimination from the Ledger of blank sheets and pages fully written on, and the avoid- ance of the backward and forward reference often rendered necessary by a badly arranged Ledger. As between the two it is urged upon behalf of the Loose-leaf System that : — (1) The Ledger Form is retained, with such advantages as it may possess. (2) It is equally applicable to large or small accounts, and if it is desired to go through the whole of a customer's account, a colla- tion of the sheets will give a better idea of the business done than an inspection of cards. (3) The sheets being larger there is less danger of their being mislaid or over- looked. On the other hand, the advocates of the Card Ledger maintain that cards are more easily handled, and that there is little pos- sibility of their being mislaid. Slip] 630 Small Two important objections urged against slip bookkeeping generally as a system are that : — (1) It may assist in the committal and con- cealment of fraud, despite the facts that the registration of the slips and sheets, &c, already referred to, is designed to prevent this, and that the Loose-leaf Ledger bind- ings and the card drawers are usually fitted with a patent locking device, the key of which can, if necessary, be retained by the principal. (2) It is not yet known how far slips or tickets will be recognised in English Courts of Law if put in as evidence of matters of account. Small Bankruptcy- — Section 121 of the Bank- ruptcy Act 1SS3 provides : — When a petition is presented by or against a debtor, if the Court is satisfied by affidavit or otherwise, or the Official Receiver reports to the Court that the property of the debtor is not likely to exceed in value three hundred pounds, the Court may make an order that the debtor's estate be administered in a summary manner, and thereupon the provisions of this Act shall be subject to the following modifications : — (1) If the debtor is adjudged bankrupt the Official Receiver shall be the trustee in the bankruptcy; (2) There shall be no committee of inspection, but the Official Receiver may do, with the permission of the Board of Trade, all things which may be done by the trustee with the permission of the committee of inspection ; (3) Such other modifications may be made in the provisions of this Act as may be pre- scribed by general rules with the view of saving expense and simplifying procedure ; but nothing in this section shall permit the modification of the provisions of this Act relating to the examination or discharge of the debtor. Provided that the creditors may at any time, by special resolution, resolve that some person other than the Official Receiver be appointed trustee in the bankruptcy, and thereupon bankruptcy shall proceed as if an order summary administration had not been made. ! The modifications in procedure referred to the above section are prescribed by Rule 273, the more important of which are as follow : — (1) There shall be no advertisement of any pro- ceedings in a local paper unless the Board of Trade otherwise direct. (2) The title of every document in the pro. ceedings subsequent to the making of the order for summary administration shall have inserted thereon the words " Sum- mary Case." (3) All questions of law and fact shall be determined by the Court having jurisdic- tion in the matter, and no application for a jurv shall be entertained. (4) If no proposal for a composition or scheme is lodged with the Official Receiver within the time specified Tor that purpose in sec- tion 3 of the Act of 1890 (i.e., within four days of submission by the debtor of his statement of affairs), or within such time thereafter as the Official Receiver may fix, or if the Official Receiver satisfies the Court that the debtor has absconded, or that the debtor does not intend to propose a composition or scheme, or that the com- position or scheme proposed is not reason- able or calculated to benefit the general body of creditors, the Court may forthwith adjudge the debtor bankrupt. A report by the Official Receiver under this paragraph shall be prima facie evidence of the facts stated therein. (5) If during or at the conclusion of the public examination of the debtor ifl appears to the Court that a composition or scheme ought not to be sanctioned by reason of the conduct of the debtor, the Court ma}- forthwith adjudge the debto^ bankrupt. (6) All payments shall, unless the Board ol Trade otherwise orders, be made into and J out of the Bank of England. nail 631 [Special (7) The first meeting of creditors may, where it is expedient, be held on the day appointed for the public examination, or on any other day fixed by the Official Receiver. If a quorum of creditors be not present, it shall not be necessary to adjourn the meeting. (X) Meetings of creditors shall, unless the Official Receiver for special reasons other- wise determines, be held in the town or place in which the Court usually holds its sittings, or in which the office of the Official Receiver is situate. (9) On application by a bankrupt for his dis- charge the certificate of the Official Receiver shall not include, nor shall notices be sent to, creditors whose debts do not exceed £2. (10) Notices of meetings, other than of first meetings, or of sittings of the Court, shall only be sent to creditors whose debts or claims exceed the sum of £2. (111 The time for the payment of the first divi- dend shall be extended to six months. ( 1 ■ ) The estate shall be realised with all reasonable despatch, and where prac- ticable distributed in a single dividend when realised. (13) The costs or charges of any person employed by the Official Receiver other than of a solicitor may be paid and allowed without taxation where such costs or charges are within the prescribed scale; provided that the Board of Trade may require such costs or charges to be taxed by the taxing officer. 1 n addition to the above, the law costs and fees payable in " summary cases " are in certain instances based upon a lower scale, and in other instances the summary cases are entirely exempt from fees. Small Damage Club. — A club by which members are covered against risks that do not usually come under the terms of an ordinary marine insurance policy. When funds are required for the payment of claims they are raised by con- tributions from all the members in the propor- tions which the sums insured by themselves respectively bear to the aggregate sum insured by the club at the ascertained dates of the losses in respect of which the contributions are made, or a fixed percentage may be periodically paid by members, so that the balance only (if any) will need to be called up at the date the losses are adjusted. Societe en commandite.— Partnerships (in France and certain of the American States) between one or more persons called general partners, and one or more other persons called partners en com- mandite. The business is carried on under the name of the general partners only, or their firm- name, and they are jointly and severally liable for the debts and losses of the partnership, while the partners en commandite contribute a certain amount of capital or stock, and their liability for debts and losses is limited to such amount. These partnerships are in effect the same as limited partnerships in England, but prior to the passing of the Limited Partnerships Act 1907 the nearest approach to the principle in English law was that contained in section 2 of the Partnership Act of 1890. (See titles Limited Partnership, Post- poned Creditors.) Sola. — Single, Solitary. The term, as applied to bills of exchange, signifies that only one copy of the bill is in circulation, as distinct from a bill drawn in a set of two or three. (See title Bill in a set.) Sold Note.— See title Bought Note. Sole Corporation. — See title Corporation. Sole Trader. — One trading alone, i.e., without a partner, often erroneously referred to as a sole partner — an obvious contradiction of terms. Sounding in Damages. — An action is said to sound in damages when it is brought for the recovery of unascertained damages. Special Agent. — See title Agent. Special] 632 Special Special Bank Account. — Sec title Local Bank Account. Special Business. — See title Ordinary Business. Special Indorsement. — See title Indorsement. Special Manager. — Bankruptcy. The Official Receiver of a debtor's estate raav, on the application of any creditor or creditors, and if satisfied that the nature of the debtor's estate or business or the interests of the creditors generally require the appointment of a special manager of the estate or business, other than the Official Receiver, appoint a manager thereof accordingly, to act until a trustee is appointed, and with such powers (including any of the powers of a receiver) as may be entrusted to him by the Official Receiver. (Bankruptcy Act 1883, section 12.) The Official Receiver may authorise the special manager to raise money or make advances for the purposes of the debtor's estate in anv case where, in the interests of the creditors, it appears necessary to do so. (Section 70.) Note. — The Official Receiver has an absolute discretion as to whether he will make the appoint. incut, and no appeal lies from his decision. (Re Whittakcr, 1884.) Where no appointment is made, it is the Official Receiver's duty to act as manager to the estate. (Section 70.) The special manager shall give security in such manner as the Board of Trade may direct. Failure to give or keep up the security is a ground for rescission of appointment or removal. (See title Security.) The special manager shall receive such remuneration as the creditors may by resolution at an ordinary meeting determine, or in default of any such resolution, as may be prescribed. (Section 12.) Where a special manager is appointed and his remuneration is not fixed by the creditors he shall be paid such remuneration as may from time to time be fixed by the Board of Trade. (Rule 343.) Every special manager shall account to Official Receiver, and such special man accounts shall be verified by affidavit in the scribed form, and, when approved by the Ofl Receiver, the totals of the receipts and payme shall be added to the Official Receiver's account (Rule 344.) The verified accounts of the special ma (so incorporated) must be forwarded to Board of Trade, together with the necessary vouchers at the first audit of the truste accounts. When the Official Receiver appoints a sp manager he may at any time remove him if employment seems unnecessary or unprofitable the estate, nnd lie shall remove him if so require* by a special resolution of the creditors. (Rule 331.) But in any case a special managership ceases on the appointment of the trustee. Company Liquidation (Compulsory). Where the Official Receiver becomes the liquidator of a company, whether provisionally or otherwise, he may, if satisfied that the nature of the estate or business of the company, or the interests of the creditors or contributorieaf generally, require the appointment of a special* manager of the estate or business of the company other than himself, apply to the Court to, and the Court may on such application, appoint a special manager thereof to act during such time as the Court may direct, with such powersw including any of the powers of a receiver or manager, as may be entrusted to him by the Court. (Companies (Consolidation) Act ioo8,S section 161.) I he special manager shall give such security* and account in such manner, as the Board oA Trade direct. (Ibid.) Failure to give or keefl up the security is a ground for rescission ofl appointment or removal. (See title Security.) An application by the Official Receiver for thfl appointment of a special manager shall be sujflj ported by a report of the Official Receiver, which I shall be placed on the file of proceedings and infl which shall be stated the amount of remuneratioifl which, in the opinion of the Official Receiver, .Special] 633 [Specific ought to be allowed to the special manager. No affidavit by the Official Receiver in support of the application shall be required. The remuneration of the special manager shall, unless the Court otherwise in any special case directs, be stated in the order appointing him, but the Court may, at any subsequent time, for good cause shown, make an order for payment to the special manager of further remuneration. A copy of the order appointing a special manager shall be transmitted to the Board of Trade by the Official Receiver. (Winding-up Rules iqog. Rule 48.) Every special manager shall account to the Official Receiver, and the special manager's accounts shall be verified by affidavit, and, when approved by the Official Receiver, the totals of the receipts and payments shall be added by the Official Receiver to his accounts. (Rule 49.) The verified accounts of the special manager (so incorporated) must be forwarded, together with the necessary vouchers, to the Board of Trade at the first audit of the liquidator's accounts. Special Referee. — A person to whom any question in any cause (other than a criminal proceeding) may be referred by the Court for inquiry and report, which report the Court may adopt either wholly or in part. The Court may also at any time order the whole cause or matter, or any question or issue of fact arising therein, to be tried before a special referee to be agreed upon by the parties, provided: — (1) All parties interested who are not under disability consent ; or (2) The cause or matter requires prolonged examination of documents, or scientific or local knowledge ; or (3) The question in dispute consists wholly or in part of matters of account. A special referee is deemed to be an officer of the Court, and his remuneration is Fixed by the Court. Special Resolution. — See title Resolution. Special Settlement. — When a stock is first admitted to a quotation on the Stock Exchange the Com- mittee fix a day upon which the first settlement of all prior dealings with the stock shall be made, and this day is called Special Settlement Day. Specialty. — A contract by deed. (See titles Contract, Deed.) Specialty Debts. — Bonds, mortgages, and other debts secured by writing under seal. Formerly they ranked in priority to simple contract debts in the administration of the estate of a deceased person, but this distinction was abolished as from 1st January 1870 by Hinde Palmer's Act (32 & 33 Vict., c. 46). (See rifles Contract, Oeed, Hinde Palmer's Act.) Specie. — Something in its own form and essence, and not in the form of its equivalent, such as coin, as distinct from paper money. Specie Point. — Sec title Par of Exchange. Specification. — A detailed account of a thing; com- mercially, full particulars of certain goods required or work to be performed (1) supplied to contractors and others, so that they may base their estimates of the cost thereon, or (2) sup- plied by a contractor, stating fully what he offers to do for the price he estimates therefor. Specific Legacy. — See title Legacy. Specific Performance. — The actual accomplishment of the thing stipulated for in an agreement between parties. The Court will enforce this where damages would be incommensurate with the injury sustained. The several requisites of a valid contract will be particularly demanded where specific per- formance is sought. Even if the contract in ques- tion be under seal, valuable consideration must exist; that is, there must be some consideration passing from the party seeking to enforce the promise made in return for it. A contract with a company to take up and pay for any debentures of the company may be Specific] 634 Spoilt enforced by an order for specific performance. (Companies (Consolidation) Act 1908, section IOS-) Spoiled Stamps. — Subject to such regulations as the Commissioners of Inland Revenue may think proper to make, and to the production of such evidence by statutory declaration or otherwise as the Commissioners may require, allowance will be made by the Commissioners for stamps spoiled in the cases hereinafter mentioned, that is to say : — (1) The stamp on any material, inadvertently and undesignedly spoiled, obliterated, or by any means rendered unfit for the purpose intended, before the material bears the signature of any person, or any instrument written thereon is executed by any party. (2) Any adhesive stamp which has been inadvertently and undesignedly spoiled or rendered unfit for use, and has not, in the opinion of the Commissioners, been affixed to an)- material. (3) Any adhesive stamp representing a fee capable of being collected by means of such stamp which has been affixed to material, provided that a certificate from the proper officer is produced to the effect that the stamp should be allowed. (4) The stamp on any bill of exchange signed by or on behalf of the drawer which has not been accepted or made use of in an}' manner whatever or delivered out of his hands for any purpose other than by way of tender for acceptance. (5) The stamp on any promissory note signed by or on behalf of the maker which has not been made use of in any manner whatever or delivered out of his hands. (6) The stamp on any bill of exchange or promissory note which from any omission or error has been spoiled or rendered use- less, although the same, being a bill of exchange, may have been accepted or indorsed; or, being a promissory note, may have been delivered to the payee, provided that another completed and duly stamped bill of exchange or promissory note is duccd identical in every particular, e: in the correction or omission, with spoiled bill or note. (7) The stamp used for any ot the follow instruments, that is to say : — (a) An instrument executed by any p; thereto, but afterwards found to absolutely void from the beginning. (6) An instrument executed by any thereto, but afterwards found unfit, reason of any error or mistake there: for the purpose originally intended (c) An instrument executed by any pa: thereto which has not been made of for any purpose whatever, a: which by reason of the inability refusal of some necessary party to sign the same or to complete the transac- tion according to the instrument, is incomplete and insufficient for the purpose for which it was intended. (d) An instrument executed by any pa: thereto, which by reason of the refusal of any person to act under the same, or for want of enrolment or regis: tion within the time required by la fails of the intended purpose becomes void. (e) An instrument executed by any par thereto which is inadvertently and undesignedly spoiled, and in lieu whereof another instrument made between the same parties and for the same purpose is executed and duly stamped, or which becomes useless consequence of the transaction in- tended to be thereby effected being effected by some other instrument duly stamped. Provided as follows : — (a) That the application for relief is made within six months after the stamp has been spoiled or become use- less, or in the case of an executed instrument after the date of the rty sal Spoiled] 635 Stag instrument, or, if it is not dated, within six months after the execution thereof by the person by whom it was first or alone executed, or within such further time as the Commissioners may prescribe in the case of any instrument sent abroad for execution, or when from unavoidable circum- stances any instrument for which another has been substituted cannot be produced within the said period. (6) That in the case of an executed instru- ment no legal proceeding has been commenced in which the instrument could or would have been given or offered in evidence, and that the instrument is given up to be cancelled. (c) That in the case of stamps used for medicines or playing cards the medi- cines or cards bearing the stamps are produced to an officer, and the stamps are removed therefrom in his presence. When any person has inadvertently used for an instrument liable to duty a stamp of greater value than was necessary, or has inadvertently used a stamp for an instrument not liable to any duty, the Commissioners may, on application made within six months after the date of the instrument, or, if it is not dated, within six months after the execution thereof by the person by whom it was first or alone executed, and upon the instrument, if liable to duty, being stamped with the proper duty, cancel or allow as spoiled the stamp so misused. In any case in which allowance is made for spoiled or misused stamps the Commissioners may give in lieu thereof other stamps of the same denomination and value, or, if required, and they think proper, stamps of any other denomination to the same amount in value, or, in their discretion, the same value in money, deducting therefrom the discount allowed on the purchase of stamps of the like description. When any person is possessed of a stamp which has not been spoiled or rendered unfit or useless for the purpose intended, but for which he has no immediate use, the Commissioners may, if they think fit, repay to him the value of the stamp in money, deducting the proper discount upon his delivering up the stamp to be cancelled and proving to their satisfaction that it was pur- chased by him at the chief office or at one of the head offices, or from some person duly appointed to sell and distribute stamps, or duly licensed to deal in stamps, within the period of six months next preceding the application and with a bond fide intention to use it. (Stamp Duties Management Act, sections 9 to 12.) The following regulations must be observed in connection with a claim for allowance for spoiled stamps : — (1) The owner of the stamps (i.e., the person for whose use and business the stamps are purchased) or his clerk, authorised by him it) writing, must attend in person to make a statutory declaration on an official form before a distributor of stamps, or at Somer- set House, respecting the property in the stamps, the reason for making the claim, and the grounds on which the claim is based. The declaration is not liable to stamp duty. The name, address, and occu- pation of the claimant must be written in full at the head of the declaration, and the declaration must be signed by him at the foot. (2) In the case of a claim in respect of an executed instrument, the reason of the instrument becoming useless must be fully set forth in the declaration. The instru- ment used in lieu (if any) must be pro- duced to the officer duly stamped and executed. A spoiled instrument must be presented in a complete state without mutilation, and the stamps thereon examined and counted by the officer, no instrument being received which does not fall within the conditions above set forth. Stag. — A slang name for a speculator who applies for shares or stock in new concerns, or new issues of capital of existing concerns, with a view of obtaining allotment, and immediately selling the same at a profit. Also one who sells before allot- ment, anticipating a successful application. Stale] 636 Statement Stale Cheque. — Sec title Unpresented Cheques. Stamp Duties. — See titles Adhesive Stamp, Adjudi- cation Stamp. Ad valorem Duty, Allotment Letter, Award, Bill of Exchange, Bill of Lading, Capital (Joint Stock Companies), Contract Note, Deed, Deed of Arrangement, Impressed Stamp, Limited Partnership, Memorandum of Associa- tion, Nominal Consideration, Proof of Debt, Proxv, Sale of Goods Act 1893, Share Warrants, Statement of Capital, Transfer (of stock or shares). Stannaries. — See title Cost Book Mining Company. Stated Short, — A term applied to the practice of recording items or transactions in books or accounts in an inner column, and resorted to in order to emphasise the existence or nature of such items or transactions, by bringing them into pro- minence with surrounding items. An instance is afforded in the Balance Sheet of a limited com- pany, when the issued capital is less than the nominal or authorised capital. Here the par- ticulars of the nominal capital would be " stated short." the amount of capital paid up being brought into account. (See title Short Bills.) Statement in lieu of Prospectus. — Since the 1st July 1908 the Legislature has contemplated (apart from foreign companies having a place of busi- ness in the United Kingdom) the existence of three classes of companies, registered under the Companies Act 1862 or the Companies (Consoli- dation) Act 1908, viz. : — " Private Companies " and two classes of " public companies." A private company is one which by its articles (a) Restricts the right to transfer its shares. (b) Limits the number of its members (exclusive of persons in the employment of the company) to fifty. (c) Prohibits any invitation to the public to subscribe for any shares or debentures of the company. A private company may be converted into a public company under certain circumstances. (See title Private Company.) All companies other than the foregoing are public companies, and they are subdivided into > not. rimed eben- those which issue a prospectus, on or with refer- ence to their formation, and those which do nt Section 82 of the Companies (Consolidation) 1908 provides that a company of the last na class must not allot any of its shares or del t tires unless before the first allotment of either shares or debentures there has been filed with the Registrar of Companies a " statement in lieu of prospectus " signed by every person who is named therein as a director or a proposed director of the company, or by his agent authorised in writing, in the prescribed form containing the following particulars : — The nominal share capital of the compan and its subdivision into shares. Names, descriptions, and addresses directors or proposed directors. Minimum subscription (if any) fixed by the memorandum or articles of association on which the company may proceed to allotment. The number and amount of shares and debentures agreed to be issued as fully or partly paid up otherwise than in cash and, in the latter case, the extent to which they are so paid up, and in either case the consideration for such issue. The names and addresses of vendors of pro- perty purchased or acquired, or proposed to be purchased or acquired by the company, stating the amounts payable in cash, shares, or deben- tures to each separate vendor. (See title Vendor.) Amount (if any) paid or payable in cash, or shares, or debentures for any such property, specifying amount (if any) paid or payable for goodwill. Amount (if any) paid or payable as commis- sion in respect of subscriptions for shares or debentures, and the rate per cent, of such commission. Estimated amount of preliminary expenses. The amount paid or intended to be paid to any promoter, giving the name of each pro- moter and the consideration for such payment. Dates of, and parties to, every material con- tract (other than contracts entered into in the Statement] 637 [Statement ordinary course of the business intended to be carried on by the company or entered into more than two years before the filing of the state- ment) . (Note. — A company shall not previouslv to the statutory meeting vary the terms of a contract referred to in the statement in lieu of prospectus except subject to the approval of the statutory meeting. (Section 83.)) Time and place at which such contracts or copies thereof may be inspected. Names and addresses of the auditors of the company (if any). Full particulars of the nature and extent of the interest of every director in the promotion of or in the property proposed to be acquired by the company, or of his firm if a partner, with a statement of all sums paid or agreed to be paid to him or to the firm in cash, or shares, or otherwise by any person either to induce him to become or to qualify him as a director, or otherwise for services rendered by him or by the firm in connection with the promotion or formation of the company. Nature of any provisions in the articles pre- cluding holders of shares or debentures receiving and inspecting Balance Sheets or reports of the auditors or other reports. It will be seen that these particulars are in nearly all essentials the same as those which must be disclosed by a company issuing a pro- spectus. There does not appear to be any pro- vision that all applicants for shares shall receive a copy of the statement in lieu of prospectus, and, further, the statement need not include par- ticulars of the following, which must be disclosed in a prospectus : — (a) The contents of the memorandum of asso- ciation, with the names, descriptions, and addresses of the signatories, and the number of shares subscribed for by them respectively; and the number of founders' or management, or deferred shares (if any) and the nature and extent of the interest of the holders in the property and profits of the company. (b) The number of shares (if any) fixed by the articles of association as the qualification of a director, and any provision in the articles of association as to the remunera- tion of the directors. (c) Where the company is a company having shares of more than one class, the right of voting at meetings of the company con- ferred by the several classes of shares respectively. But the disclosure of these last-mentioned matters in the memorandum and articles of asso- ciation which are filed and the filed statement itself are no doubt considered sufficient protection to persons desirous of obtaining information. In the case of the first allotment of share capital payable in cash of a company (other than a private company) which does not issue any invitation to the public to subscribe for its shares, no allotment shall be made unless the minimum subscription (that is to say) :— («) The amount (if any) fixed by the memo- randum or articles and named in the state- ment in lieu of prospectus as the minimum subscription upon which the directors may proceed to allotment; or (b) If no amount is so fixed and named, then the whole amount of the share capital other than that issued or agreed to be issued as fully or partly paid up otherwise than in cash, has been subscribed and an amount not less than five per cent, of the nominal amount of each share payable in cash has been paid to and received by the company. (Section 85.) An allotment made by a company to an applicant in contravention of the foregoing pro- visions shall be voidable at the instance of the applicant within one month after the holding of the statutory meeting of the company and not later, and shall be so voidable notwithstanding that the company is in course of being wound up j and if any director of a company knowingly con- travenes or permits or authorises the contraven- tion he shall be liable to compensate the company Statement] 638 I Statement and the allottee respectively for any loss, damages, or costs which the company or the allottee may have sustained or incurred thereby : Provided that proceedings to recover any such loss, damages, or costs shall not be commenced after the expiration of two years from the date of the allotment. (Section 86.) (See titles Allotment, Prospectus.) Statement (of account). — A written expression either in detail or in gross, showing : — (1) The financial position of an individual or a business ; or (2) The financial transactions between different parties. The former is dealt with under the heads of Balance Sheet ?nd Statement of Affairs (q.V.). With regard to the latter it is the custom for trading concerns to send to the debtors a sum- mary of the unpaid or unsettled items standing against them in the Ledger. Usually the state- ments are forwarded by post, or presented by travellers, monthly, but the length of the period depends largely upon the terms as to credit in each business. It is often found advisable for the auditors^ of a concern to check over the statements (already prepared for them) with the Debtors' Ledger Accounts, after the latter have been verified; and, on finding same to agree, the auditors place the statements in the Post Office, a small printed slip being attached to each statement asking the debtor to communicate direct with the auditors should anything be found inaccurate. This affords a fair check upon the debts, although the omission of a debtor to comply with the request should anything be wrong would not necessarily prejudice him. But, unless invited to do so, an auditor cannot insist upon direct communication with debtors. With regard to the checking of such statements from the debtor's point of view a good plan is to post to the Ledger Accounts the consecutive numbers placed upon the invoices as they are recorded in the Purchase Book. This enables a Ledger clerk when checking a statement to place against the various items therein the invoic numbers as he passes each amount. He then, by referring to the invoices themselv (either in a Guard Book or on files in consecutiv order) , ensure the accuracy of the statement fro its foundation, seeing also that the invoices hav been properly initialled by the various partie responsible. In practice, in very large concer where privity between the various officials is no always possible, it may be that an invoice is passed in proper form and duly recorded in tl books, but afterwards some unforeseen circun stance arises which considerably affects th invoice which has already been passed, salesman (who has seldom an accountanc mind) is most careful to alter the invoice whic has been entered up and tiled, and in so doin considers he has faithfully amended the who matter. If, before passing a statement for pay- ment, the invoices themselves are not scrutinised for any possible amendments since their first entry, such alterations as depicted above are made in vain. Statement oi Affairs. — Bankruptcy. Where a receiving order is made against debtor he shall make out and submit to the Official Receiver a statement of, and in relatio to, his, affairs in the prescribed form, verified affidavit, and showing the particulars of the debtor's assets, debts, and liabilities, the names residences, and occupations of his creditors, the securities held by them respectively, the date when the securities were respectively given, and such further or other information as may be pre scribed, or as the Official Receiver may require. The statement shall be so submitted within the following times, namely : — If the order is made on the petition of the debtor within three days from the date of the order. If the order is made on the petition of a creditor within seven days from the date of the order. But the Court may, in either case, for special reasons, extend the time. Statement 639 [Statement Xotc. — Where any debtor requires any extension of the time for the filing by him of his statement of affairs, he shall apply to the Official Receiver, who may, if he thinks fit, give a written certificate extending such time, which certificate shall be filed, and shall render an application to the Court unnecessary. (Rule 218.) If the debtor fails without reasonable excuse to comply with the requirements of this section, the Court may, on the application of the Official Receiver, or of any creditor, adjudge him bank- rupt. (Bankruptcy Act 1883, section 16.) When the debtor cannot himself prepare a proper statement of affairs the Official Receiver may, subject to any prescribed conditions and at the expense of the estate, employ some person or persons to assist in the preparation of the statement of affairs. (Section 70.) But it must be noted that it is none the less the debtor's statement, and not that of his accountant — in fact, as stated in greater detail later, the debtor must verify the statement of his affairs by oath or declaration. The rate of remuneration is, as a rule, fixed beforehand by the Official Receiver, and subject to " Board of Trade " instructions, the remunera- tion is left, as a matter of bargain, between the Official Receiver and the person employed. A person employed by the debtor without the sanction of the Official Receiver has no claim to any remuneration out of the estate. Whenever the Official Receiver employs any person to assist the debtor in the preparation of his statement of affairs he shall forthwith report the matter by letter to the Board of Trade, justifying his action therein and specifying the remuneration to be allowed to such person. (Rule 326.) (See title Priority of Payments [Costs].) Every debtor shall be furnished by the Official Receiver with instructions for the preparation of his statement of affairs. The statement of affairs must be in the prescribed form (brief particulars of which are set out below) with such variations or additions as circumstances may require, or in such other form as the Board of Trade may from time to time direct. The statement must be pre- pared in duplicate, and one copy must be verified; the latter being filed in Court by the Official Receiver. (Rule 217.) In cases of partnership the debtors shall submit a statement of their partnership affairs, and each debtor shall submit a statement of his separate affairs. (Rule 263.) Any person stating himself in writing to be a creditor of the bankrupt may, personally or by agent, inspect the statement at all reasonable times, and take any copy thereof or extract therefrom ; but any person untruthfully so stating himself to be a creditor shall be guilty of a con- tempt of Court, and shall be punishable accord- ingly on the application of the trustee or Official Receiver. (Bankruptcy Act 1883, section 16.) When issuing the notice calling the first meet- ing of creditors the Official Receiver should, if possible, send to each creditor mentioned in the debtor's statement of affairs a summary of such statement, together with the causes of his failure, and any observations thereon which the Official Receiver may think fit to make. (Bankruptcy Act 18S3, Schedule I, Rule 3.) The debtor is also required to give written answers to a number of questions (printed) and to certify such answers to be correct to the best of his knowledge and belief. The particulars required in the prescribed form of statement of affairs may be summarised as under : — List A. Unsecured Creditors. — The name, address, and occupation of each creditor, the amount of the debt, the date contracted, and the consideration therefor. The names must be arranged in alphabetical order and numbered consecutively, creditors for ^10 and upwards being placed first. Where there is a contra account against any creditor less than the amount of his claim against the estate, the amount of the creditor's claim and the amount of the contra account should be separately shown, and the balance (only) treated as the amount of debt. No such set-off should be included in List I. (See title Mutual Credits.) Particulars of any bills of exchange or promissory notes held by any creditor Statement 640 [Statemer should be inserted immediately below the name and address of such creditor. Note.— The inclusion of a statute-barred debt by a debtor in his statement of affairs does not amount to an acknowledgment sufficient to revive the debt. Such an admission does not either express or imply a promise to pay except as to part of the debt or in some qualified manner which is not a sufficient acknowledgment. (Ex parte Topping, 1865.) (See title Acknow- ledgment of Debt.) List B. Creditors Fullv Secured.— The same particulars as in the case of unsecured creditors, and, in addition, particulars of the security held, the date the security was given, the estimated value of the security, and estimated surplus therefrom (if any) . List C. Creditors Partly Secured.— The same particulars as in the case of creditors fully secured, but showing, instead of " estimated surplus," the " estimated balance of debt unsecured." List D. Liabilities of the Debtor on Bills dis- counted other than his own Acceptances for value. — The name, address, and occupation of each acceptor, the nature of the liability of the " debtor " (i.e., whether as drawer or indorser), the date the bill became or will become due, the amount of the bill (distinguishing between accommodation and other bills), and the amount expected to rank for dividend. List E. Contingent or other Liabilities. — Full particulars of all liabilities not otherwise scheduled, stating the name, address, and occupation of each creditor or claimant, the amourft and nature of the liability or claim, and the date same was incurred. List F. Creditors for Rent, ust be detached from the other lists and enumerated in List L, which must be dated and Pgned by the debtor, so that every list, whether apphcable to the circumstances or not, mav be satisfactorily accounted for. Front Sheet.— This constitutes the summary of the debtor's position, and is virtually a Balance Sheet. The assets are obtained from Lists H, I and J, and the surplus (if any) from fully secured creditors per List B. From the total of these must be deducted (1) the distrainable and preferential claims per Lists F and G, and (2) any sheriff's charges which may be payable under section n of the 1890 Act. (See title Execution Creditor.) The liabilities which are expected to rank against the estate are made up from Lists A, C, D and E, and the resultant balance, surplus or deficiency, should agree with the balance shown in Statement K. A column is also provided for the amount of the gross liabili- ties as distinct from those expected to rank against the estate. The front sheet must bear a 2s. bankruptcy stamp as a filing fee, and, as already stated, the statement must be prepared in duplicate, and one copy verified by oath or declaration, the debtor stating that to the best of his knowledge and belief the statement and the several lists annexed thereto are a full, true, and complete statement of his affairs at the date of the receiving order. The Debtors Act 1869 (section 11) provides that any person adjudged bankrupt shall be guilty of a misdemeanour, and on conviction thereof shall be liable to be imprisoned for any time not exceeding two years, if he makes any material omission in any statement relating to his affairs, unless the jury is satisfied that he had no intent to defraud. Company Liquidation. Where the Court has made a winding-up order there shall be made out and submitted to the Official Receiver a statement as to the affairs of the company in the prescribed form, verified by affidavit, and showing the particulars of its assets', debts, and liabilities, the names, residences, and occupations of its creditors, the securities held by them respectively, the dates when the securities were respectively given, and such further or other information as may be prescribed or as the Official Receiver may require. The statement shall be submitted and verified by one or more of the persons who are at the time of the winding-up order the directors, and by the person who is at that time the secretary or TT Statement] 642 other chief officer of the company, or by sucli of the persons being or having been directors or officers of the company, or having taken part in the formation of the company at any time within one year before the winding-up order, as the Official Receiver, subject to the direction of the Court, may require to submit and verify the same. (Companies (Consolidation) Act 1908, section 147.) Every person who has been required by the Official Receiver to submit and verify a state- ment as to the affairs of the company shall be furnished by the Official Receiver with forms and instructions for the preparation of the statement. The Official Receiver may from time to time hold personal interviews with every such person for the purpose of investigating the company's affairs, and it shall be the duty of every such person to attend on the Official Receiver at such time and place as the Official Receiver may appoint, and give the Official Receiver all information that he may require. (Winding-up Rules 1909, Rule 50.) The statement shall be made out in duplicate, one copy of which shall be verified by affidavit. The Official Receiver shall cause to be filed with the Registrar the verified statement of affairs. (Rule 50.) The statement shall be submitted within fourteen days from the date of the winding-up order, or within such extended time as the Official Receiver or the Court may for special reasons appoint. (Section 147.) Where any person requires any extension of time for submitting the statement of affairs he shall apply to the Official Receiver, who may, if he thinks fit, give a written certificate extending the time, which certificate shall be filed with the proceedings in the winding-up, and shall render an application to the Court unnecessary. (Rule St.) After the statement of affairs of a company has been submitted to the Official Receiver it shall be the duty of each person who has made or concurred in making it, if and when required, to attend on the Official Receiver and answer all such questions as may be put to him, and give Statement all such further information as may be requii of him by the Official Receiver in relation to the statement of affairs. (Rule 52.) Any person making or concurring in making the statement and affidavit shall be allowed, and shall be paid by the Official Receiver, out of the assets of the company, such costs and expenses incurred in and about the preparation and making of the statement and affidavit as the Official Receiver may consider reasonable, subject to an appeal to the Court. (Section 147.) A person who is required to make or concur in making any statement of affairs of a company shall, before incurring any costs or expenses in and about the preparation and making of the statement, apply to the Official Receiver for his sanction, and submit a statement of the esti- mated costs and expenses which it is intended to incur; and, except by order of the Court, no person shall be allowed out of the assets of the company any costs or expenses which have not before being incurred been sanctioned by the Official Receiver. (Rule 54.) (See title Priority of Payments [Costs].) If any person without reasonable excuse makes default in complying with the requirements of the section he shall be liable to a fine not exceeding ten pounds for every day during which the default continues, and such default may be reported by the Official Receiver to the Court. (Section 147 and rule 53.) The Official Receiver shall, as soon as prac- ticable, send to each creditor mentioned in the company's statement of affairs, and to each person appearing from the company's books of 1 otherwise to be a contributory of the company, a summary of the company's statement of affairs, including the causes of its failure and any obser- vations thereon which the Official Receiver may think fit to make. (Rule 120.) Any person stating himself in writing to be a creditor or contributory of the company shall be entitled by himself or by his agent at all reasonable times on payment of the prescribed fee, to inspect the statement submitted in pur- suance of this section, and to take a copy thereof or extract therefrom. But any person untruth- fully so stating himself to be a creditor or con-j statement' tributory shall be guilty of a contempt of Court, and shall be punishable accordingly on the application of the liquidator or of the Official Receiver. (Section 147.) The particulars required in the prescribed form of statement of affairs may be summarised as under : — List A. Unsecured Creditors. — The same par- ticulars as are required in List A in bankruptcy, save that the names of any creditors who are also contributories, or are alleged to be contributories of the company, must be shown separately, and described as such at the end of the list. Note. — The inclusion of a statute-barred debt in a statement of affairs does not amount to an acknowledgment sufficient to revive the debt. Such an admission docs not either express or imply a promise to pay, except as to part of the debt, or in some qualified manner which is not a sufficient acknowledgment. (Ex parte Topping, 1865.) {See title Acknowledgment of Debt.) List B. Creditors Fully Secured. — The same particulars as in List B in bankruptcy. Note. — Debenture-holders must not be included here. List C. Creditors Partly Secured. — The same particulars as in List C in bankruptcy, save that creditors who are also contributories of the com- pany must be stated separately. List D. Liabilities of the Company on Bills discounted other than own acceptances for Value. — The same particulars as in List D in bankruptcy. List E. Other Liabilities. — The same par- ticulars as in List E in bankruptcy. List F. Preferential Creditors for Rates, Taxes, Salaries, and Wages. — The same par- ticulars as in List G in bankruptcy. Note. — There is no list corresponding to List F in bankruptcy, for, ordinarily, distress will not be allowed after the commencement of the winding-up to recover rent accrued due prior to that date. List G. Debenture-holders. — The name and address of each debenture-holder, the amount of each claim, and a short description of the assets over which the security (if any) extends. 643 [Statement The names of the debenture-holders must be arranged alphabetically and numbered consecu- tively. Separate lists must be furnished of the holders of each issue of debentures should more than one issue have been made. List H. Property. — Full particulars of every description of property, not included in any other list, showing the amount which each class of pro- perty is estimated to produce and distinguishing between (a) Cash at bankers, (b) Cash in hand, (c) Stock-in-trade, (d) Machinery, (e) Trade fixtures, fittings, office furniture, and utensils, (/) Investments in stocks and shares, (g) Loans for which mortgages or other securities are held, and (h) Other property. List I. Debts due to the Company. — The same particulars as in List I in bankruptcy. List J. Bills of Exchange, Promissory Notes, c, on hand, available as assets. — The same particulars as in List J in bankruptcy. List K. Unpaid Calls. — The name, address, and occupation of each shareholder in arrear, the number in the Register, the number of shares held, the amount of call per share unpaid, the total amounts respectively due, and the amount which each is estimated to realise. List L. Founders' Shares. — The name and address of each shareholder, the number in the Register, the nominal amount of the share, the number of shares held, the amount per share called up, and the total amount called up. List M. Ordinary Shares. — The same par- ticulars as in List L (above). List N. Preference Shares. — The same par- ticulars as in List L (above). List O. Deficiency Account. — This account is intended to shew how the deficiency or estimated surplus (if any) as at the date of the winding-up order has been arrived at. Where the winding- up order is made within three years of the forma- tion of the company the Deficiency Account must cover the whole period of the company's exist- ence ; but where the winding-up order is made more than three years after the formation of the company the account must commence at a date three years previous to the date of the winding-up order. TT 2 Statement] List P. — Similar particulars to those contained in List L in bankruptcy. Front Sheet. — The assets and liabilities of the company as shown in the various lists are arranged in the bankruptcy form in order to show the position of the company " as regards creditors." The balance, being the estimated deficiency or surplus, as the case may be, is then carried down, and the amount of paid-up capital per Lists L, M, and N is brought into account in order to show the position " as regards contribu- tories," the resultant balance being the net surplus or deficiency of the company (subject to the costs of liquidation). Where the balance, " as regards the creditors," represents a deficiency, the nominal amount of capital liable to be called up to meet such deficiency must be stated. (See title Balance Sheet.) Statement of Capital, &c. — Every company being a limited banking company or an insurance com- pany or a deposit, provident, or benefit society shall, before it commences business, and also on the first Monday in February and the first Tues- day in August in every year during which it carries on business, make a statement in the form set out below, or as near thereto as circum- stances will admit. A copy of the statement shall be put up in a conspicuous place in the registered office of the company, and in every branch office or place where the business of the company is carried on. Every member and every creditor of the com- pany shall be entitled to a copy of the statement, on payment of a sum not exceeding sixpence. If default is made in compliance with this section, the company shall be liable to a fine not exceeding five pounds for every day during which the default continues; and every director and manager of the company who knowingly and wil- fully authorises or permits the default shall be liable to the like penalty. For the purposes of this Act a company that carries on the business of insurance in common with any other business or businesses shall be deemed to be an insurance company. 644 lent Statemen This section shall not apply to any life assur- ance company nor any other assurance company to which the provisions of the Life Assurance Companies Acts 1S70 to 1S72 (now consolidated, amended, and extended in the Assurance Com- panies Act 1909) as to the annual statements to be made by such a company, apply with or without modifications, if the company complies witli those provisions. Form oj Statement referred to. *The share capital of the companv is — divided into shares of each The number of shares issued is . Calls to the amount of pounds share have been made, under which the s of pounds has been received. The liabilities of the company on the first day of January (or July) were: — Debts owing to sundry persons by company : — On judgment, £ . On specialty, £ the On notes or bills, £ . On simple contracts, £ On estimated liabilities, £- The assets of the company on that day were : — Government securities [staling them], £ ■ Bills of exchange and promissory n< £ • Cash at the bankers, £ . Other securities, £ . *If the company has no share capital, portion of the statement relating to capital and shares must be omitted. (Companies (Consolidation) Act 1908, sectiol 108 and 1st schedule.) ' Upon the registration of a companv under the Companies (Consolidation) Act 1908, a fori statement of the amount of nominal capital mui be filed with the memorandum of association. This is required for the purpose of assessing registration stamp duty, which is payable at the rate of 5s. for every ^100 (or portion thereof) the nominal capital of the company. (See title Annual List and Summary.) Statements On registration of the memorandum of associa- tion of a company whose capital is limited by shan s a statement of the nominal amount of the capital must be delivered to the Registrar, and an ad valorem duty of 5s. per cent, paid thereon. On registration of a limited partnership, a statement of the amount contributed by the limited partner or partners, and on any subse- quent increase therein a statement of such I increase must be delivered to the Registrar and I an ad valorem duly of 5s. per cent, paid thereon in each instance. Statistical Books. — The books of a concern which I are (ordinarily) not connected with the financial ^ ; that is to say, they do not contain entries which fqrm an integral part of the system of Accounting. They may, however, be of such a character as to render them indispensable to a complete system of bookkeeping; for, in certain Eases, the financial books are not sufficiently self explanatory, and statistical books are utilised to afford further details. A book containing an analysis of the sales of a business as regards (1) periods of time, (2) classes of goods, or (3) districts supplied, in a comparative form, is an example of a statistical book. (See title Statutory Books.) itatute. — An edict of the Legislature ; an Act of Parliament. (See title Act of Parliament.) tatute ol Frauds.— .Sec title Frauds, Statute of. tatutes of Limitation. — Sec title Limitation of Actions. tatutory Rooks. — Every company formed and registered under the Companies Act 1862 or the Consolidation Act of 1908 must keep a Register of its members, and a Minute Book or Minute Books recording minutes of all proceedings of general meetings and of its directors or managers. (Companies (Consolidation) Act 1908, sections ^25 and 71.) Every limited company formed and registered as above must keep a Register of all mortgages and charges specifically affecting property of the company. (Section 100.) 645 [Statutory Every company formed and registered as above must keep at its registered office a Register con- taining the names, addresses and occupations of its directors or managers, and must send to the Registrar of Joint Stock Companies a copy of such Register, and must from time to time notify to the Registrar any change among its directors or managers. Any default in compliance with these provisions renders liable to a fine, the com- pany and every director and manager who know- ingly and wilfully permits the default. (Section 75-)' The Companies Clauses Consolidation Act 1845 provides that every company to which that Act applies must keep a Register of its members, a Register of Mortgages, a Shareholders' Address Book, and a Minute Book or Minute Books. The Stannaries Act 1887 provides that the purser of every Cost Book mine shall keep a Cost Book. The Assurance Companies Act 1909 provides that every company to which the Act applies, which is not registered under the Com- panies Acts, or which has not incorporated in its deed of settlement section 10 of the Companies Clauses Consolidation Act 1845, must keep a " Shareholders' Address Book," in accordance with the provisions of that section. (See titles Address Book, Annual List and Summary, Cost Book Mining Company, Minute Book, Register of Members, Register and Registration of Mortgages.) Statutory Meeting. — Every company limited by shares and registered on or after the first day of January nineteen hundred and one shall, within a period of not less than one month nor more than three months from the date at which the com- pany is entitled to commence business, hold a general meeting of the members of the company which shall be called the statutory meeting. Private companies (as defined bv section 121 of the Companies (Consolidation) Act 1908) are not required to forward or file the report mentioned below, but they are not exempted from the requirement as to holding the meeting. The directors shall, at least seven days before the day on which the meeting is held, forward a report (called " the statutory report ") to every Statutory] 646 Statu tor member of the company and to every other person entitled under this Act to receive it. The statutory report shall be certified by not less than two directors of the company, or by the sole director and manager (as the case may be), and shall state — (a) The total number of shares allotted, dis- tinguishing shares allotted as fully or partly paid up otherwise than in cash, and stating in the case of shares partly paid up the extent to which they are so paid up, and in either case the consideration for which they have been allotted; (b) The total amount of cash received by the company in respect of all the shares allotted, distinguished as aforesaid; (c) An abstract of the receipts of the com- pany on account of its capital, whether from shares or debentures, and of the pay- ments made thereout, up to a date within seven days of the date of the report, exhibiting under distinctive headings the receipts of the company from shares and debentures and other sources, the pay- ments made thereout, and particulars con- cerning the balance remaining in hand, and an account or estimate of the pre- liminary expenses of the company ; (d) The names, addresses, and descriptions of the directors, auditors (if any), managers (if any), and secretary of the company; and (e) The particulars of any contract, the modifi- cation of which is to be submitted to the meeting for its approval together with the particulars of the modification or proposed modification. The report shall, so far as it relates to the shares allotted by the company, and to the cash received in respect of such shares, and to the receipts and payments of the company on Capital Account, be certified as correct by the auditors, if any, of the company. (Companies (Consolidation) Act 1908, section 65.) It is suggested that only cash received should be included in the Abstract of Receipts and Pay- ments, the amount and nature of the conside tion other than cash for shares or debentu allotted being excluded. Doubt has expressed as to whether preliminary expi and the like should be included among the payments on Capital Account. Those who favour the omission contend that the provision by the statute for the separate statement of pre- liminary expenses (sec Par. (c) above) ob\ the necessity for its inclusion in the Abstract. The directors shall cause a copy of the stati tory report, certified as by this section require to be filed with the Registrar of Companies fo with after the sending thereof to the memh of the company. (Section 65.) The directors shall cause a list showing the names, descriptions, and addresses of the members of the company, and the number of shares held by them respectively, to be produced at the commencement of the meeting, and to remain open and accessible to any member of the company during the continuance of ihe mc< I The members of the company present at the meeting shall be at liberty to discuss any matter relating to the formation of the company, or arising out of the statutory report, whether previous notice has been given or not, but no resolution of which notice has not been given in accordance with the articles may be passed. The meeting may adjourn from time to time, and at any adjourned meeting any resolution of which notice has been given in accordance with the articles, either before or subsequently to the former meeting, may be passed, and the adjourned meeting shall have the same powers as an original meeting. (Section 65.) If default is made in filing the statutory report or in holding the statutory meeting the company may be wound up by the Court, on the petition of a shareholder (only) presented at the expira- tion of fourteen days after the last day on which the meeting ought to have been held, but the Court may, on hearing such a petition, instead of directing that the company be wound up, give directions for the statutory report to be filed or a meeting to be held, or make such order as may be just. (Sections 129, 137, and 65.) ttatutory] A company shall not previously to the statutory meeting vary the terms of a contract referred to I in the prospectus or statement in lieu of pro- spectus, except subject to the approval of the statutory meeting. (Section 83.) (Sec titles Final Meeting, General Meetings.) .tipulation.— A bargain. With regard to stipula- tions in contracts for the sale of goods sec titles Condition and Warranty. lock.— The chief distinctions between shares and stock are : — (i) Shares may not necessarily be fully paid up, but the amount of stock held is necessarily so. (2) While shares can only be transferred in their entirety (i.e., not in fractional parts), stock may be divided and transferred either in stated multiples or in any required amounts. (3) Each share must be distinguished by its appropriate number, but this requirement does not extend to stock. Section 41 of the Companies (Consolidation) Act 1908 provides that a company limited by shares, if so authorised by its articles, may alter the conditions of its memorandum (inter alia) by converting all or any of its paid-up shares into stock and by reconverting that stock into paid-up shares of any denomination. Section 43 of the Act provides : — Where a company having share capital has converted any of its shares into stock, and given notice of the conversion to the Registrar of Com- panies, all the provisions of this Act which are applicable to shares only shall cease as to so much of the share capital as is converted into stock; and the register of members of the company, and the list of members to be forwarded to the Regis- trar, shall show the amount of stock held by each member instead of the amount of shares and the particulars relating to shares hereinbefore required by this Act. Stockbroker.— One who buys and sells stocks and shares as the agent for others for a commission or brokerage. (See titles Defaulter, Jobbers.) 647 [Stock Stock Exchange Quotation.— The following are the principal rules of the Stock Exchange governing the grant of special settling days and official quotations : — The Committee will appoint a special settling day for transactions in the shares of a new company, provided that no allegation of fraud be substantiated ; that there has been no misrepresentation or suppression of material facts; that sufficient scrip or shares are ready for delivery; and that no impediment exists to the settlement of the account. The secretary of the Share and Loan Depart- ment shall give one week's notice to the Stock Exchange of any application for a special settling day previously to such application being submitted to the Committee, and shall require the production of the following documents, viz. : — The prospectus, the Act of Parliament, the articles of association, or a certificate that the company is constituted upon the Cost Book system under the Stannary Laws. The original applications for shares, the Allotment Book, signed by the chairman and secretary to the company, and a certificate verified by the statutory declaration of the chairman and the secretary, stating the num- ber of shares applied for and unconditionally allotted to the public, the amount of deposits paid thereon, and that such deposits are absolutely free from any lien. The Banker's Pass Book, and a certificate from the bankers stating the amount of deposits received. The Committee may order the quotation of a new company in the official list, provided (1) that the company is of a bond fide character, and of sufficient magnitude and importance; (2) that the requirements of the rule as to settling days have, been complied with; (3) that the prospectus has been publicly adver- tised, and agrees substantially with the Act of Parliament, or the articles of association, and, in the case of limited companies, contains the memorandum of association (Note.— This requirement is now included in the provisions Stock] 648 i Stock of the Companies (Consolidation) Act 1908) ; (4) that the prospectus provides for the issue of not less than one-half of the nominal capital, and for the payment of 10 per cent, upon the amount subscribed, and sets forth the arrangements for raising the capital, whether by shares fully or partially paid up, with the amounts of each respectively, and also states the amount paid, or to be paid, in money or otherwise, to con- cessionaires, owners of property, or others, on the formation of the company, or to contractors for works to be executed, and the number of shares, if any, proposed to be conditionally allotted ; (5) that two-thirds of the nominal capital proposed to be issued have been applied for and unconditionally allotted to the public (shares reserved or granted in lieu of money payments to concessionaires, owners of property, or others, not being considered to form part of such public allotment) ; (6) that the articles of association restrain the directors from employing the funds of the company in the purchase of its own shares; and (7) that a member of the Stock Exchange is authorised by the company to give full information as to the formation of the undertaking, and will be able to furnish the Committee with all par- ticulars they may require. The Committee will not consider any appli- cation for the quotation of shares or securities issued to the vendors, credited as fully or partly paid-up, until six months after the date when the shares or securities of the same class subscribed for by the public shall have been quoted in the official list. This rule does not necessarily apply to reorganisations or amalga- mations of existing companies. As a necessary condition to obtaining an official quotation of debentures (or debenture stock) the prospectus must set forth all terms, conditions and circumstances under which such debentures are, or may become, redeem- able or repayable. In cases where fully-paid shares have been granted in lieu of money payments, an official certificate will be required that the contract providing for the issue of such shares (or " the prescribed particulars," as the case may be) has been filed with the Registrar of Joint Stock Companies as required by the Companies (Consolidation) Act 1908. (See title Registered Contract.) Foreign companies whose capital has been partly subscribed for and allotted in this country shall not, unless under special circum- stances, be allowed a quotation in the official list until they have been officially quote the country to which they belong. A company issuing, or promising to issv new shares within twelve months after first settling day appointed by the Committee unless under special circumstances, shall liable to exclusion from the official list. (See title Settling Days.) Stock=in=Trade. — The legal position of audito with regard to the valuation of stock-in-trade contained in a Balance Sheet is expressed in the judgment of Lord Lindley (then F.J.), in the Kingston Cotton Mill case (1896), from whic the following is an extract : — " For several years frauds were committe " by the manager, who, in order to bolster up " the company and make it appear flourishing " when it was the reverse, deliberately " exaggerated both the quantities and value " of the cotton and yarn in the company's " mills. He did this at the ends of the years " 1890, 1891, 1892, and 1893. There was mv " book or account (except the Stock Journal " to which I will refer presently) showing the " quantity or value of the cotton or yarn vM " the mill at any one time. It would not be " easy to keep such a book. Nor is it wanted " for ordinary purposes. There is consider- " able waste (20 or 25 per cent, on the " average) in the manufacture of yarn from " cotton, and the market prices of both cotton " and yarn are subject to great fluctuations* " The Balance Sheets of each year contained " on the asset side entries of the values of the " stock-in-trade at the end of the year, and " those entries were stated to be ' as per " manager's certificate.' The quantities did 5tockl 649 [Stock " not appear in either case. The auditors " took the entry of the stock-in-trade at the " beginning of the year from the last pre- " ceding Balance Sheet, and they took the " values of the stock-in-trade at the end of the " year from the Stock Journal. This book " contained a series of accounts under various " heads, purporting to show the quantities " and values of the company's stock-in-trade " at the end of each year, and a summary of " all the accounts showing the total value of " such stock-in-trade. The summary was " signed by the manager, and the value as " shown by it was adopted by the auditors, " and was inserted as an asset in the Balance " Sheet, but ' as per manager's certificate.' " The summary always corresponded with " the accounts summarised, and the auditors " ascertained that this was the case. But " they did not examine further into the " accuracy of the accounts summarised. The " auditors did not profess to guarantee the " correctness of this item. They assumed no " responsibility for it. They took the item " from the manager, and the entry in the " Balance Sheet showed that they did so. I " confess I cannot see that their omission to " check his returns was a breach of their dutv " to the company. // is no part oj an auditor's " duty to take stock. No one contends that it " is. He must rely on other people for details " of the stock-in-trade in hand. In the case of " a cotton mill he must rely on some skilled " person for the materials necessary to enable " him to enter the stock-in-trade at its proper " value in the Balance Sheet. In this case the " auditors relied on the manager. He was a " man of high character and of unquestioned ' competence. He was trusted by everyone who " knew him. The learned Judge (Yaughan Williams) has held that the directors are not " to be blamed for trusting him. The auditors " had no suspicion that he was not to be trusted to give accurate information as to the ' stock-in-trade in hand, and they trusted him ' accordingly in that matter. But it is said ' they ought not to have done so, and for this ' reason. The Stock Journal showed the " quantities — that is. the weight in pounds — " of the cotton and yarn at tile end of each " year. Other books showed the quantities of " cotton bought during the year and the " quantities of yarn sold during the year. If *' these books had been compared by the " auditors they would have found that the " quantity of cotton and yarn in hand at the " end of the year ought to be much less than " the quantity shown in the Stock Journal. " and so much less that the value of the cotton " and yarn entered in the Stock Journal could " not be right, or. at all events, was so " abnormally large as to excite suspicion and " demand further inquiry. This is the view " taken by the learned Judge (Yaughan " Williams). But. although it is, no doubt, " true that such a process might have been " gone through, and that if gone through the " fraud would have been discovered, can it be " truly said that the auditors were 'wanting in " reasonable care in not thinking it necessary " to test the managing director's return ? I " cannot bring myself to think they were, nor " dc I think that any jury of business men " would take a different view." The following is an extract from a leading article in The Accountant newspaper of 30th May 1S96, commenting upon the above judgment : — It has now been held by the Court of Appeal that the auditor who does not attempt to verify a manager's valuation of stock is not guilty of legal negligence. We must, of course, accept this ruling, but it does not estop us from inquiring whether a more thorough audit is not sometimes possible. The problem which has to be considered, therefore, is the extent to which it is practicable that an auditor shall carry his independent scrutiny of the valuations which are submitted to him of assets which, in the nature of things, it must be admitted he himself is not really competent to value; and, so far as stock-in-trade is concerned, we pointed out in a previous issue how an auditor, by comparing the percentages of profits earned during different periods, may, up to a point, Stock] 650 Stock check the accuracy of the figures of stock-in- trade that may have been submitted to him. . . . In every class of trade there is a per- centage of gross profit which (within limits) will be found to be adhered to under all but abnormal circumstances, and a fortiori the same remark applies when one particular undertaking rather than one class of under- takings is considered. If, therefore, the auditor finds, upon a comparison of the percentages of profit earned during different periods, that there is a material variation in the rate of such percentage, we think it may safely be taken that, whatever the actual law may be, it is expedient that he should look upon the occur- rence as abnormal, and set himself to inquire as to what circumstances may have occurred during the period in question which could possibly account for such a variation in the percentage as has been observed. It may. of course, be that there exists a very excellent reason for the difference in question, and where the auditor after inquiry has satisfied himself that the reasons which have been advanced to him, and which he is convinced have actually existed, are sufficient to account for the variation, it must, we think, be admitted that he has done all that an auditor can do towards verifying the valuation of stock-in-trade which has been placed before him. The cases of Henry Squire, Cash Chemist, Lim. v. Ball, Baker <&» Co. and Meade v. Ball, Baker o 1 os. Trustee] 691 [Trustee Disclaimer. — A trustee's powers as to dis- claimer are separately dealt with under that title (q-v.). Moneys. — An account, called the Bankruptcy Estates Account, shall be kept by the Board of Trade with the Bank of England, and all moneys received by the Board of Trade in respect of pro- ceedings under the Bankruptcy Acts shall be paid to that account. Every trustee in bankruptcy shall in such manner, and at such times as the Board of Trade with the concurrence of the Treasury direct, pay without any deduction the money received by him and remit all current bills of exchange to the Bankruptcy Estates Account at the Bank of England, and the Board of Trade shall furnish him with a certilicate of receipt of the money so paid. Provided that if it appears to the committee of inspection that for the purpose of carrying on the debtor's business, or of obtaining advances, or because of the probable amount of the cash balance, or if the committee shall satisfy the Board of Trade that for any other reason it is for the advantage of the creditors that the trustee should have an account with a local bank, the Board of Trade shall, on the application of the committee of inspection, authorise the trustee to make his payments into and out of such local bank as the committee may select. Such account shall be opened and kept by the trustee in the name of the debtor's estate ; and any interest receivable in respect of the account shall be part of the assets of the estate. (See title Local Bank Account.) Upon any application by a committee of inspec- tion to the Board of Trade for a local Banking Account a fee of £1 is payable, and upon every order of the Board of Trade for such local Bank Account a fee of £2 is payable. There are no provisions in the Bankruptcy Acts similar to those contained in section 231 of the Companies (Consolidation) Act 1908 as to the investment of surplus funds awaiting distribution in a liquidation ; but in view of the probable amount of the cash balance a trustee in bank- ruptcy having a substantial sum which is likely to remain undistributed for some time, may apply for permission to open a local Bank Account (see above) and on such permission being granted (as it will be in a proper case) the trustee when transferring the balance from the credit of the estate at the Bank of England to his credit at such local bank may make his own arrange- ments as to interest. All necessary disbursements made by a trustee on account of an estate to the date of his appli- cation for release will be paid to him out of any money standing to the credit of the estate in the Bankruptcy Estates Account, on application to the Inspector-General in Bankruptcy. Any expense properly incurred by the trustee after applying for, but before obtaining, his release, will be repaid to him by the Official Receiver out of any funds available for the purpose. Cheques to the order of the payee for sums which become payable on account of the estate may be obtained by the trustee on application by him on the prescribed form for delivery by him to the parties entitled, but in the case of small amounts payment will be made by money orders. Under no circumstances will the Board of Trade hold themselves responsible for payments made on the requisition of the trustee. The trustee may apply to the Court in manner prescribed for directions in relation to any particular matter. The Inspector-General will be prepared to certify to the balance standing to the credit of an estate in the Bankruptcy Estates Account, on receiving from the trustee a statement of the balance shown by the bank columns of the Estate Cash Book. (Board of Trade Regulations.) If a trustee at any time retains for more than ten days a sum exceeding ^50, or such other amount as the Board of Trade in any par- ticular case may authorise him to retain, then, unless he explains the retention to the satisfac- tion of the Board of Trade, he shall pay interest on the amount so retained in excess at the rate of YY 3 Trustee] 692 [Trustee £20 per cent, per annum, and shall have no claim for remuneration, and may be removed from his office by the Board of Trade, and shall be liable to pay any expenses occasioned by reason of his default. (1883 Act, section 74.) No trustee in bankruptcy or under any com- position or scheme of arrangement shall pay any sums received by him as trustee into his private Banking Account. (1883 Act, section 75.) Directions of the Court, Committee, 6-C— Subject to the provisions of the Bankruptcy Acts (see Powers above) the trustee shall in the administration of the property of the bankrupt, and in the distribution thereof amongst his creditors, have regard to any directions that may be given by resolution of the creditors, or by the committee of inspection, and any directions so given by the creditors at any general meeting shall, in case of conflict, be deemed to override any directions given by the committee of inspection. The trustee may apply to the Court in manner prescribed for directions in relation to any par- ticular matter arising under the bankruptcy (1883 Act, section 89), and a fee of 5s. is payable upon every such application. Neither the trustee nor any member of the committee of inspection of an estate shall, while acting as trustee or member of such committee, except by leave of the Court, either directly or indirectly, by himself or any partner, clerk, agent or servant, become purchaser of any part of the estate. Any such purchase made contrary to the provisions of the rule may be set aside by the Court on the application of the Board of Trade or any creditor. (Rule 316.) The trustee may also be removed from his office. (Ex parte Reynolds.) Where the trustee carries on the business of the debtor he shall not, without the express sanction of the Court, purchase goods for the carrying on of such business from his employer (if any), or from any person whose connection with the trustee is of such a nature as would result in the trustee obtaining any portion of the profit (if any) arising out of the transaction. In any case in which the sanction of the Court is obtained under the above rules or under Rule 317, the cost of obtaining such sanction shall be borne by the person in whose interest such sanction is obtained, and shall not be payable out of the debtor's estate. (Rule 316A.) No member of a committee of inspection of an estate shall, except under and with the sanction of the Court, directly or indirectly, by himself or any employer, partner, clerk, agent, or servant, be entitled to derive any profit from any transac- tion arising out of the bankruptcy, or to receive out of the estate any payment for services rendered by him in connection with the adminis- tration of the estate, or for any goods supplied by him to the trustee for or on account of the estate. If it appears to the Board of Trade that any profit or payment has been made contrar to the provisions of this rule they may disallow such payment or recover such profit, as the case may be, on the audit of the trustee's account. (Rule 317-) Subject to the foregoing and to the provisk of the Bankruptcy Act (see Towers above), the trustee shall use his own discretion in the management of the estate and its distribution among the creditors. (1883 Act, section 89.) But the Court, on the application of the bank- rupt or any creditor aggrieved thereby, may con- firm, reverse, or modify the act or decision com- plained of, and make such order on the premises as it thinks just. (1883 Act, section 90.) Proofs. — The trustee shall examine every proof and the grounds of the debt, and admit or reject it, in whole or in part, or require further evi- dence in support of it. Where a creditor's proof has been admitted, the notice of dividend shall be sufficient notification to such creditor of such admission. If the trustee rejects a proof he shall state in writing to the creditor the grounds of the rejection. (1883 Act, 2nd Schedule, Rule 22, and Bankruptcy Rule 229.) Subject to the power of the Court to extend the time, the trustee, other than the Official Receiver, shall deal with every proof (which has not previously been dealt with by the Official Receiver), within twenty-eight days after it has. been lodged with him. Trustee] 693 [Trustee Provided that where the trustee has given notice of his intention to declare a dividend he shall, within seven days after the date mentioned in such notice as the latest date up to which proofs must be lodged, examine and in writing admit or reject every proof which has not been already admitted or rejected, and give notice of his decision rejecting a proof, wholly or in part, to the creditor affected thereby. (Rule 228.) If a creditor is dissatisfied with the decision of the trustee' in respect of a proof, the Court may, on the application of the creditor, reverse or vary the decision. (1883 Act, 2nd Schedule, Rule 24.) Subject to the power of the Court to extend the time, no application to reverse or vary the decision of an Official Receiver or trustee in rejecting a proof shall be entertained after the expiration of twenty-one days from the date of the decision complained of (Rule 230), but where any creditor, after the date mentioned in the notice of intention to declare a dividend as the latest date upon which proofs may be lodged, desires to appeal against the decision of the trustee rejecting a proof, such appeal shall, subject to the power of the Court to extend the time in special cases, be commenced, and notice thereof given to the trustee within seven days from the date of the notice of the decision against which the appeal is made. (Rule 232.) If the trustee thinks that a proof has been improperly admitted, the Court may, on the application of the trustee, after notice to the creditor who made the proof, expunge the proof or reduce its amount. (1883 Act, 2nd Schedule, Rule 23.) The Court may also expunge or reduce a proof upon the application of a creditor, if the trustee declines to interfere in the matter, or, in the case of a composition or scheme, upon application of the debtor. (Ibid, Rule 25.) For the purpose of any of his duties in relation to proofs, the trustee may administer oaths and take affidavits. (Ibid, Rule 26.) He is not entitled to charge any fee therefor. Where a trustee is appointed in any matter, all proofs of debt that have been received by the Official Receiver shall be handed over to the trustee. But the Official Receiver shall first make a list of such proofs, and take a receipt thereon from the trustee for such proofs. (Bankruptcy Rule 223.) Every trustee in bankruptcy, other than the Official Receiver, shall, on the first day of every month, send to the Registrar a certified list of all proofs, if any, received by him from the Official Receiver, or otherwise tendered during the month next preceding, distinguishing in such lists the proofs admitted, those rejected, and such ns stand over for further consideration ; and in the case of proofs admitted or rejected, he shall transmit the proofs themselves for the purpose of being filed. (Rule 225.) (See title Proof of Debt.) Dividends. — Subject to the retention of such sums as may be necessary for preferential claims and the costs of administration, or otherwise, the trustee shall, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts. The first dividend, if any, shall be declared and distributed within four months after the con- clusion of the first meeting of creditors, unless the trustee satisfies the committee of inspection that there is sufficient reason for postponing the declaration to a later date. Subsequent dividends shall, in the absence of sufficient reason to the contrary, be declared and distributed at intervals of not more than six months. (1883 Act, section 58.) In summary cases (small bankruptcies) the first dividend should be distributed within six months after the conclusion of the first meeting of creditors, but where practicable, the estate should be distributed in a single dividend when realised. (Rule 273.) Not more than two months before declaring a dividend, the trustee must give notice of his intention to do so to the Board of Trade (fee 5s.), in order that the same may forthwith be gazetted, and at the same time must give notice to such of Trustee] the creditors mentioned in the bankrupt's state- ment of affairs as have not proved their debts. Such notice shall specify the latest date up to which proofs must be lodged, which shall not be less than fourteen days from the date of such notice. If a dividend be not declared within two months of the notice of intention to declare, a fresh notice of intended dividend must be gazetted before the dividend can be declared (Rule 232) ; but it is not necessary to give a fresh notice to such of the creditors mentioned in the bankrupt's statement of affairs as have not proved their debts. (Rule 232.) Any postponement with regard to the first dividend, or any postponement (beyond the limit of two months) of a declaration of divi- dend, notice of intention to declare which has been gazetted, must be sanctioned by the com- mittee of inspection. (18S3 Act, section 58, and Rule 232.) Where dividends are declared in instalments a creditor who has not proved his debt is entitled to a notice before the declaration of each dividend (i.e., instalment) so that he may be afforded an opportunity of proving his debt, notwithstanding, his disregard of previous notices. (But see section 61, below.) The trustee must also give notice to the Board of Trade in order that the declaration of dividend may be gazetted (fee 5s.). Where joint and separate estates are being administered dividends out of the joint and separate estates shall (subject to any order to the contrary that may be made by the Court on the application of any person interested) be declared together. (1883 Act, section 59.) (See title Joint and Separate Estates.) In the calculation and distribution of a divi- dend the trustee shall make provision for debts provable in the bankruptcy, appearing from the bankrupt 's statements, or otherwise, to be due to persons resident in places so distant from the place where the trustee is acting, that in the ordinary course of communication they have not had sufficient time to tender their proofs, or to establish them if disputed, and also for debts provable in bankruptcy) the subject of claims not yet determined. He shall also make provision 694 [Trustee ee for any disputed proofs or claims, and any possible costs in relation thereto, and for the expenses necessary for the administration of the estate or otherwise, and, subject to the foregoing provisions, he shall distribute as dividend all money in hand. (1883 Act, section 60.) Any creditor who has not proved his debt before the declaration of any dividend or divi- dends shall be entitled to be paid out of an; money for the time being in the hands of trustee any dividend or dividends he may have failed to receive before that money is applied to the payment of any future dividend or divi- dends, but he shall not be entitled to disturb the distribution of any dividend declared before the debt was proved by reason that he has not participated therein. (Section 61.) Before declaring any subsequent dividend the trustee should therefore provide for all prior dividends on proofs admitted since the previous distribution — but a trustee need make no pro- vision in respect of any amount which may ulti- mately become provable by a secured creditor who has neither valued nor realised his security. (Ex parte Good, 1880.) Xor need any provision be made for claims of auctioneers, brokers, solicitors, &c, who have not sent in their bills for taxation within the prescribed time. (1883 Act, section 73.) When the trustee has realised all the property of the bankrupt, or so much thereof as can, in the joint opinion of himself and of the committee of inspection, be realised without needlessly pro- tracting the trusteeship, he shall declare a final dividend, but before so doing he shall give notice in manner prescribed to the persons whose claims to be creditors have been notified to him but not established to his satisfaction, and if they do not establish their claims to the satisfaction of the Court within a time limited by the notice, he will proceed to make a final dividend, without regard to their claims. After the expiration of the time so limited, or, if the Court, on applica- tion by any such claimant, grant him further time for establishing his claim, then, on the expiration of such further time, the property of the bankrupt shall be divided among the creditors Trustee] 695 [Trustee who have proved their debts, without any regard le claims of any other person. (Section 62.) >n the declaration of a dividend the trustee shall forthwith transmit to the Board of Trade a list of proofs filed with the proceedings. Such list shall be in the prescribed form, and if the proceedings are in a County Court the list shall be examined by the Registrar with the proofs red for filing, and, if found correct, shall be certified by the Registrar. A fee of 2S. is pay- able in respect of certified lists of proofs for each bankruptcy. If the proceedings are in the High Court, the list must be certified by the trustee and accom- panied by office copies of all lists of proofs filed. (Rule 225A.) The payment of dividends will in every instance, except where a local bank has been authorised, be made by cheques on the Bank of England or money orders which will be pre- I by the Board of Trade on the application of the trustee (in the prescribed form) and will be transmitted to him for distribution amongst (the creditors. The Board of Trade require ten days' notice to enable them to prepare the cheques or money orders for dividends. The creditors in the list should be numbered consecu- tively, so that for the purpose of identification corresponding numbers may be affixed to the cheques and money orders. The total amount of dividend payable should be charged in the Estate Cash Book in one sum. If the dividend has been paid by cheques on the Bankruptcy Estate Account the trustee, on the expiration of six months from the date of issue, or on appli- cation for his release, if that event occurs earlier, should return any cheques remaining in hand to tin- Hoard of Trade. If the dividend has been paid through a local bank, the trustee must, at the expiration of six months from the date of the declaration of a dividend, forward to the Board of Trade for audit, vouchers for the dividends paid and a list of those remaining unclaimed. The trustee will then be furnished with a " receivable order " for payment of the unclaimed dividends into the Bank of England. Under no circum- stances should unclaimed dividends be credited to the estate without the previous sanction of the Board of Trade. (Board of Trade Regulations.) When the trustee has declared a dividend he shall send to each creditor who has proved, a notice showing the amount of the dividend, and when and how it is payable, and a statement in the prescribed form as to the particulars of the estate. (1883 Act, section 58.) Every bill of exchange, promissory note, or other negotiable instrument or security upon which proof has been made must be exhibited to the trustee before payment of dividend thereon, and the amount of dividend paid must be indorsed on the instrument, but the Court has power on special grounds to dispense with the production (Rule 233), and in the event of a bill or note having been lost the person who was the holder may nevertheless prove in respect thereof, and the loss of the instrument shall not be set up provided satisfactory indemnity be given against the claims of any other person in respect of the instrument in question. (Bills of Exchange Act 1882, section 70.) The amount of a dividend may at the request and risk of the creditor be transmitted to him by post. (Rule 234.) No action for a dividend shall lie against the trustee, but if the trustee refuses to pay any dividend the Court may, if it thinks fit, order him to pay it, and also to pay out of his own money interest thereon for the time that it is withheld, and the costs of the application. (1883 Act, section 63.) Accounts and Audit. — The Official Receiver, until a trustee is appointed, and thereafter the trustee, shall keep a book to be called the " Record Book," in which he shall record all minutes, all proceedings had, and resolutions passed, at any meeting of creditors, or of the committee of inspection, and all such matters as may be necessary to give a correct view of his administration of the estate, but he shall not be bound to insert in the record any document of a confidential nature (such as the opinion of counsel on any matter affecting the interests of the creditors), nor need he exhibit such a docu- Trustee] 696 [Trustee ment to any person other than a member of the committee of inspection. (Rule 285.) In par- ticular the bankrupt has no right to inspect the Record Book. (In re Solomons, 1904.) Note. — Where joint and separate estates are being administered together, it would appear that one Record Book will be sufficient. The Official Receiver, until a trustee is appointed, and thereafter the trustee, shall keep a book to be called the " Cash Book " (which shall be in such form as the Board of Trade may from time to time direct), in which he shall (subject to the provisions of the rules as to Trading Accounts) enter from day to day the receipts and payments made by him. (Rule 286.) Note. — A separate Cash Book must, of course, be kept for each estate where joint and separate estates are being administered together. Where the trustee carries on the business of the debtor he shall keep a distinct account of the trading, and shall incorporate in the Cash Book the total weekly amounts of the receipts and payments on such Trading Account. The Trading Account shall from time to time, and not less than once in every month, be verified by affidavit, and the trustee shall there- upon submit such account to the committee of inspection (if any) or such member thereof as may be appointed by the committee for that pur- pose, who shall examine and certify the same. (Rule 308.) As already stated under the heading " Direc- tions, &c." (supra), the trustee when he carries on the business of the debtor must not, without the express sanction of the Court (previously obtained, and at the cost of the person in whose interest such sanction is sought) purchase any goods for the carrying on of such business from his employer (if any) or from any person whose connection with the trustee is of such a nature as would result in the trustee obtaining any portion of the profit (if any) arising out of the transac- tion. Nor can a member of the committee rightly make a profit from any transaction arising out of the bankruptcy, or receive any payment for goods supplied without previous sanction of the Court. (Rules 316 and 317.) The trustee shall submit the Record Book and Cash Book, together with any other requisite books and vouchers, to the committee of inspec- tion (if any) when required, and not less than once every three months. (Rule 287. The Committee of inspection shall. than once every three months, audit the Ca Book and certify therein, under their hands, day on which the said book was audited. The certificate shall be in the prescribed form, with such variations as circumstances mav require. (Rule 288.) Every trustee shall, at the expiration of six months from the date of the receiving order, and at the expiration of every succeeding six months thereafter until his release, transmit to the Board of Trade a copy of the Cash Book for such period (in duplicate), together with the neces- sary vouchers and copies of the certificates of audit by the committee of inspection. When the trustee is appointed the Official Receiver accounts to him, and the receipts and payments of the Official Receiver are incorporated in the trustee*! accounts and audited at the first audit of trustee's accounts. The trustee must forward, with the first accounts, a summary the debtor's statement of affairs in such form the Board of Trade may direct, showing thereon in red ink, the amounts realised, and explainin the cause of the non-realisation of such ass as may be unrealised. When the estate has been fully realised distributed, or if the adjudication is annulle the trustee shall forthwith send in his account to the Board of Trade, although the six mont may not have expired. The accounts sent in by the trustee shall certified and verified by him in the prescrib form. (Rule 289.) The trustee is also required to forward at each audit a report on the position, a form for which will be forwarded to him with notice of audit. (Board of Trade Regulations.) The affidavits verifying the trustee's accounts (or the affidavits of "no receipts or payments," as the case may be, see Rule 291, belon) should be so filled in as regards dates as to cover the * e Trustee] entire period from the date of the trustee's appointment to the date of his application for his release. The terms of these affidavits require that a trustee shall account for moneys received by his solicitor or any other person on his behalf, and for which the trustee will be held personally responsible. Upon being sworn to an affidavit verifying his accounts, the trustee should see that the account is duly marked by the commissioner or other person administering the oath. Where there is no committee of inspection the trustee should forward the accounts for audit as soon as they are due, but where there is a com- mittee the trustee should summon a meeting immediately the accounts become due, so that they may be audited before being forwarded to the Board of Trade, but the accounts must not be delayed in consequence of any neglect on the part of the members of the committee to attend such meeting, for in such event a memorandum should be inserted in the Cash Book to the effect that the meeting was duly summoned, but a quorum was not present. The accounts should be then forwarded to the Board of Trade. Upon one copy of the Cash Book, showing the assets realised, forwarded by the trustee to the Board of Trade, a fee is payable, according to the following scale, on the assets realised and brought to credit, viz., £i on every j£ioo or frac- tion of £100 up to £5,000, and 10s. on every £100 or fraction of £100 beyond £5,000. Provided that where a fee has been taken on an application to approve a composition or scheme of arrangement seven-eighths of the amount thereof shall be deducted from the fee payable upon the Cash Book. By an order dated 2nd February 1899 this fee is payable in money in lieu of stamps as formerly, and consequently a transfer of the amount payable will, on the request of the trustee, be made from the funds standing to the credit of the estate in the Bankruptcy Estates Account. If there are no funds, or insufficient funds, standing to the credit of the estate to cover the fees payable, a special remittance should be made to meet the same. In calculating the duty payable upon the copy of the Cash Book, the trustee should deduct from the gross 697 [Trustee realisations any payments made to secured creditors and any sums expended in carrying on the trade or business. (Board of Trade Regula- tions and Scale of Fees.) The accounts required at audit (which should be forwarded to the " Inspector-General in Bank- ruptcy ") are a copy of the Estate Cash Book, to be retained by the Board of Trade (verified by affidavit with a two-shilling stamp affixed thereto), and a copy for filing in the Court, each bearing copies of the certificates of audit by the committee of inspection, together with the vouchers for all payments, and allocaturs for tax- able charges. The Record Book should also be forwarded for inspection, together with any original resolutions of the creditors or committee not entered in the record. (Board of Trade Regulations.) When the trustee's account has been audited, the Board of Trade shall certify that the account has been duly passed, and thereupon the duplicate copy, bearing a like certificate, shall be trans- mitted to the Registrar, who shall file the same with the proceedings in the bankruptcy. (Rule 290.) Where a trustee has not, since the date of his appointment, or since the last audit of his accounts, as the case may be, received or paid any sum of money on account of the debtor's eslate, he shall, at the period when he is required to transmit his Estate Account to the Board of Trade, forward to the Board an affidavit of " no receipts or payments " (Rule 291), and the trustee must himself provide the stamp therefor and pay the affidavit fee, pending the receipt of assets. (Re Rowlands, 1887.) Where at the first audit the affidavit of "no receipts or payments " is furnished under Rule 291, the trustee should forward therewith two copies of the Official Receiver's account of receipts and payments as shown by the Estate Cash Book, on transfer to the trustee. (Board of Trade Regulations.) In practice the affidavit of " no receipts or payments " is seldom required, for even in those cases where no assets have come to the trustee by virtue of his office, he will in almost every Trustee] 698 [Trustee period for which the return is required have to make some small disbursements. Where it is unlikely that any assets will come to the hands of the trustee he may have obtained an under- taking before accepting office that these dis- bursements will be repaid to him by the parties for whom he is acting ; but while receipts by way of reimbursement from such sources are not deemed to be on behalf of the estate, the payments made by the trustee are so considered. An order of the Court annulling an adjudica- tion does not relieve a trustee from the liability imposed on trustees by the Acts and Rules to account to the Board of Trade for all transac- tions of such trustee in connection with the estate. (Rule 194 (3).) The following is an extract from the Board of Trade Regulations as to the form of the accounts : — Each receipt and payment should be entered in the Cash Book in such detail as will fully explain its nature. Payments for rent, salaries, wages, &c, due at the date of the receiving order should be entered under the head of preferential payments, and carefully distinguished from similar payments which may arise or become necessary while carrying on trade ; the latter should be entered into a separate Trading Account. (Rule 308.) Petty expenses should be entered in the Estate Cash Book in sufficient detail to show that no estimated charges are made, and vouchers should where possible be obtained and forwarded for audit. All bank transactions, whether with local banks or the Bankruptcy Estates Account, should be duly entered in bank columns. . . The Cash Book must record the actual dates upon which all moneys are received on account of an estate, and the payments out should be entered as of the date when the cheques are issued, except in the case of dividends, which should be entered as of the date when the cheques are received, and the total amount of such dividends should be charged in the Cash Book in one sum. In the case of any sale by private contract the account should show the name, address, and occupation of the purchaser, and the mode in which the amount of the purchase-money has been arrived at. The trustee is accountable for the proceeds of every auction sale authorised by him, and the gross proceeds must be collected and treated under the head of receipts, and the auction charges included amongst the payments, provided they have been duly taxed. In the case of partners, distinct accounts are to be kept and rendered of the joint and separate estates. Where a parochial or other local rate is levied! payable by instalments, any of which fall due at a date subsequent to the date of the reci ivin order, only such instalments as were actually due at the date of the receiving order are payable in full, under the terms of the " Preferential Pay- ments in Bankruptcy Act 1888." Rates or instal- ments of rates are only payable for the period during which the premises in respect of which the claim is made are in the actual occupation of the- debtor or the trustee. Claims for gas and water supplied prior to the receiving order do not come within the terms of the " Preferential Payments in Bankruptcy Act 1888," and are not payable in full except in cases where the authorities have power to recover the amount due in the same way as a landlord can recover rent in arrear — that is, by way of distress without legal process, which event the claim may be paid provided tin property available for distress is of sufficien value. Tithes are not payable in full under th< " Preferential Payments in Bankruptcy Act 1888," and should only be so paid where the landlord has, in pursuance of the Tithe Act 1891, paid the tithes and given 10 days' notice of his intention to recover same by distress and there is property of the debtor upon which distress can be levied sufficient to cover the claim to the extent of two years in arrear. Not more than two years' tithes are recoverable by distress. Creditors' Rights as regards Books and Accounts. — Any creditor of the bankrupt may, subject to the control of the Court, personally or by his agent inspect any of the books in which the trustee has recorded any entries or minutes of proceedings at any meeting of creditors or of the committee of inspection (1883 Act, section. Trustee] 699 [Trustee go), but the trustee is not bound to insert in the records any documents of a confidential nature (such as the opinion of counsel on any matter affecting the interests of the creditors) nor need the trustee exhibit such document to any person other than a member of the committee of inspection.' (Rule 285.) The trustee or Official Receiver shall, whenever required by any creditor so to do, furnish and transmit to such creditor by post, a list of the creditors, showing in such list the amount of the debt due to each of such creditors. The trustee or Official Receiver shall be entitled to charge for such list the sum of threepence per folio of seventy-two words, together with the cost of the postage thereof. (1890 Act, section 16.) It shall be lawful for any creditor, with the concurrence of one-sixth of the creditors (including himself), at any time to call upon the trustee or Official Receiver to furnish and trans- mit to the creditors a statement of the accounts up to the date of such notice, and the trustee shall, upon receipt of such notice, furnish and transmit such statement of the accounts. Provided the person at whose instance the accounts are furnished shall deposit with the trustee or Official Receiver, as the case may be, a sum sufficient to pay the costs of furnishing and transmitting the accounts, such sum to be repaid to him out of the estate if the creditors or the Court so direct. (1890 Act, section 17.) Note. — Section 18, with regard to meetings, lays one-sixth in value; but this section, with regard to accounts, does not state whether one- sixih in value or in number of the creditors is necessary to make the request for accounts. The cost of furnishing and transmitting such statement shall be calculated at the rate of three- pence per folio for each statement where the creditors do not exceed ten, and where the creditors exceed ten, one shilling per folio for the preparation of the statement and the actual cost of printing. (Rule 315.) When the trustee has declared a dividend he Shall send to each creditor who has proved, a notice showing the amount of the dividend, and when and how it is payable, and a statement in the prescribed form as to particulars of the estate. (1883 Act, section 58.) Any creditor who has proved his debt may apply to the trustee for a copy of the accounts (or any part thereof) relating to the estate, as shown by the Cash Book up to date, and, on paying for the same at the rate of threepence per folio, he shall be entitled to have such copy accordingly. (Rule 314.) Every creditor who has lodged a proof shall be entitled to see and examine the proofs of other creditors before the first meeting, and at all reasonable times. (1883 Act, 2nd Schedule, Rule 7.) All proceedings of the Court shall remain of record in the Court, so as to form a complete record of each matter, and they shall not be removed for any purpose, except for the use of the officers of the Court, or by special direction of the Judge or Registrar, but they may at all reasonable times be inspected by the trustee, the debtor, and any creditor who has proved, or any person on behalf of the trustee, debtor, or any such creditor. (Bankruptcy Rule 12.) Creditors' Rights as regards Meetings.— The first meeting shall be summoned for a day not later than fourteen days after the date of the receiving order, unless the Court for any special reason deem it expedient that the meeting be summoned for a later day. The Official Receiver shall summon the meet- ing by giving not less than seven days' notice of the time and place thereof in the London Gazelle and in a local paper. I'lii Official Receiver shall also, as soon as practicable, send to each creditor mentioned in the debtor's statement of affairs a notice of the time and place of the first meeting of creditors, accompanied bv a summary of the debtor's state- ment of affairs, including the causes of his failure and any observations thereon which the Official Receiver may think fit to make; but the proceedings at the first meeting shall not be invalidated by reason of any such notice or sum- mai -v not having been sent or received before the meeting. Trustee] 700 [Trustee The meeting shall be held at such place as is, in the opinion of the Official Receiver, the most convenient for the majority of the creditors. (1883 Act, 1st Schedule, Rules 1 to 4.) Where a receiving order is made against a firm, the joint and separate creditors shall collec- tively be convened to the first meeting of creditors. (Rule 265.) The notice of subsequent meetings to be issued to creditors by the Official Receiver or trustee shall be in the prescribed form, with such variations as circumstances mav require. Where no special time is prescribed, the notices shall be sent off not less than three days before the day appointed for the meeting. (Rule 251.) Where a meeting of creditors is called by notice, the proceedings had and resolutions passed at such meeting shall, unless the Court otherwise orders, be valid, notwithstanding that some creditors shall not have received the notice sent to them. (Rule 252.) It is not necessary to send notices of meetings (after the first meeting) to creditors under £2 where the estate is being administered summarily. (Rule 273.) Where a trustee summons a meeting of creditors he shall send to the Official Receiver a copy of the notice convening the meeting. (Rule 252A.) A meeting shall not be competent to act for any purpose, except the election of a chairman, the proving of debts, and the adjournment of the meeting, unless there are present, or repre- sented thereat, at least three creditors, or all the creditors if their number does not exceed three. (1883 Act, 1st Schedule. Rule 23.) In calculating a quorum of creditors present at a meeting those persons only who are entitled to vote at the meeting shall be reckoned. (Rule 257-) The chairman of every meeting shall cause minutes of proceedings at the meeting to be drawn up and fairly entered in a book kept for that purpose, and the minutes shall be signed by him or by the chairman of the next ensuing meeting. (1883 Act, 1st Schedule, Rule 25.) The Official Receiver or the trustee, as case may be, must send to the Registrar of Court in which the matter is pending a certified by him of every resolution of a meet of creditors. (Rule 255.) The trustee may, from time to time, summo general meetings of the creditors for the purp of ascertaining their wishes, and it shall be h« duty to summon meetings at such times as creditors, by resolution, either at the mectii appointing the trustee, or otherwise, may dire (1883 Act, section 89.) It shall be lawful for any creditor with concurrence of one-sixth in value of the credit (including himself), at any time to request trustee or Official Receiver to call a meeting the creditors, and the trustee or Official R' shall call such meeting accordingly within fourteen days. Provided that the person at whose instance th meeting is summoned shall deposit with the trustee or Official Receiver, as the case may be, a sum sufficient to pay the costs of summoning the meeting, such sum to be repaid to him out of the estate, if the creditors or the Court direct. (1890 Act, section 18.) Note. — Apparently the requisition need not in writing. Where, on request of the creditors, Official Receiver or trustee calls a meeting creditors, the cost of summoning such meeting including all disbursements for printing, sfc tionery, postage, and the hire of room for meeting, shall be calculated at the following rates for each creditor to whom notice is require to be sent : — Two shillings per creditor for the first 20 creditors ; one shilling per creditor for the next 30 creditors; and sixpence per creditor fo any number of creditors after the first 50 (Rule 254.) Removal. — If a receiving order is made agains a trustee he shall thereby vacate his office trustee. (1883 Act, section 85.) The creditors may, by ordinary resolution, a meeting specially called for that purpose, of Trustee] which seven days' notice has been given, remove a trustee appointed by them, and may at the same or any subsequent meeting appoint another person to fill the vacancy as provided in case of a vacancy in the office of trustee. (Section 86.) Where one-fourth in value of the creditors desire that a general meeting of the creditors be summoned to consider the propriety of removing the trustee, such meeting may be noned by a member of the committee of inspection, or by the Official Receiver, on the isit of a sum sufficient to defray the expenses of summoning such meeting. (Rule 311.) The vote of a trustee or of his partner, clerk, ;ior or solicitor's clerk, either as creditor or as proxy for a creditor, shall not be reckoned in majority required for passing any resolution ling the conduct of the trustee. (1883 Act, section 88.) If the Board of Trade are of opinion that a trustee appointed by the creditors is guilty of misconduct, or fails to perform his duties under the Bankruptcy Acts, the Board may remove him from his office; but if the creditors, by ordinary ition, disapprove of his removal, he or they 'may appeal against it to the High Court. (Sec- tion 86.) If a trustee at any time retains in his own hands for more than ten days a sum exceeding fifty pounds or such other amount as the Board 1 of Trade in any particular case may authorise him to retain, then, unless he explains such Retention to the satisfaction of the Board, he is (inter alia) liable to be removed from his office f as trustee. (Section 74.) The power of the Board of Trade to remove a trustee shall extend to any case in which the Board are of opinion that the trustee is, by reason of lunacy, or continued sickness, or absence, incapable of performing his duties, or that his connection with or relation to the bank- Irupt or his estate or any particular creditor might make it difficult for him to act with impartiality in the interests of the creditors generally, or where, in any other matter, he has been removed from office on the ground of misconduct. (1890 Act, section 19.) 701 [Trustee If the trustee purchases the estate or any part thereof the transaction may be set aside by the Court (Rule 316) and the act constitutes a ground for the removal of the trustee. (Ex parte Reynolds.) Where a trustee refuses to carry on an action which is considered beneficial to the estate the creditors may apply for his removal. (Ex parte Phillips.) Where two or more trustees have been appointed, any one of them may be removed without affecting the other or others. (Ex parte Newitt, 1884.) Where a trustee has given security in the pre- scribed manner, but fails to keep up such security, the Board of Trade may, if they think fit, remove him from his office. (Rule 302.) Where a trustee is removed by the Board of Trade, notice of the order removing him shall at once be transmitted by the Board of Trade to the Registrar of the Court, who shall file the notice with the proceedings in the matter, and give written notice thereof to the Official Receiver. The Board of Trade shall also cause a notice of the order to be gazetted. (Rule 303.) Upon a trustee being removed he must deliver over to the Official Receiver, or, as the case may be, to the new trustee, all books kept by him, and all other books, documents, papers and accounts in his possession relating to the office of trustee. (Rule 292.) A notice by the Board of Trade served on a trustee (who has been removed) requiring him to comply with this rule, may be enforced by an order of the Court. (Hincks &• Radcliffe, 1891.) A trustee who has been removed must none the less make formal application to the Board of Trade for his release (q.v.). In addition to the power of removal the Board of Trade have the right to refuse to certify an appointment of trustee. (See heading Appoint- ment, supra.) It shall be sufficient reason for refusing to certify the appointment of a person as trustee, that in any other proceeding under the Act, such Trustee] 702 [Trustee person has been removed from the office of trustee by the Board of Trade for misconduct or neglect of duties. (Rule 301.) Resignation. — A trustee intending to resign his office shall call a meeting of creditors to consider whether his resignation shall be accepted or not, and shall give not less than seven days' notice of the meeting to the Official Receiver. (Rule 304.) Upon a trustee resigning he must deliver over to the Official Receiver, or as the case may be, to the new trustee, all books kept by him, and all other books, documents, papers, and accounts in his possession relating to the office of trustee. (Rule 292.) The trustee so resigning must make applica- tion to the Board of Trade for his release (q.v.). On a vacancy in the office of trustee the same proceedings must be taken on the re-appoint- ment as in the case of a first appointment (q.v.) Release. — When the trustee has realised all the property of the bankrupt, or so much thereof as can, in his opinion, be realised without need- lessly protracting the trusteeship, and distributed a final dividend, if any, or has ceased to act by reason of a composition having been approved, or has resigned, or has been removed from his office, the Board of Trade shall, on his applica- tion, cause a report on his accounts to be pre- pared, and, on his complying with all the requirements of the Board, shall take into con- sideration the report and any objection which may be urged by any creditor or person interested against the release of the trustee, and shall either grant or withhold the release accordingly, subject, nevertheless, to an appeal to the High Court. (1883 Act, section 82.) A trustee, before making application to the Board of Trade for his release, shall give notice of his intention so to do in the prescribed form to all the creditors of the debtor who have proved their debts, and to the debtor, and shall send with such notice a summary of his receipts and payments as trustee in the prescribed form. Provided that where such application is made upon the trustee ceasing to act, by reason of composition having been approved, such nc and summary shall be sent to the debtor onl; (Rule 309.) On every application for release by trustees non-summary cases) a fee stamp is payable the rate of 2s. 6d. on every £100, or fractio of ;£ioo of assets realised and brought to cred With his application for release the trustee rmi forward a copy of the notice and summary issue to the creditors, and an affidavit that such no and summary were duly posted to all the credit who have proved their debts, and to the debta also a notice for publication in the Londo Gazette, with a 5s. bankruptcy stamp. (Bo of Trade Regulations.) The affidavit must a 2S. bankruptcy stamp. The following is a summary of the documen which it is necessary for the trustee to forward the Board of Trade on making application for his release in addition to those required for the final audit : — (1) Formal application for release. (2) Affidavit verifying postage of notices intention to apply for release (see above with a copy of the notice as an exhibit. 2s. bankruptcy stamp should be attache to the affidavit. (3) Certificate by trustee and committee of inspection (if any) as to realisation of all reasonably available assets. (Note. — If trustee certifies in his formal application that all assets have been realised, this certificate will not be required.) (4) Form of notice of release for insertion in Gazette. A 5s. bankruptcy stamp to be attached. (5) Order on the Bankruptcy Estates Account to credit to the Board of Trade 2s. 6d. per cent, on the assets realised and brought to credit. (6) Statement of dividend (or dividends) declared, distinguishing between those claimed and those unclaimed. Trustee] 703 [Truat (7) Cheques for unclaimed dividends (if any). (8) Certificate as to disposal of onerous pro- perty on Form Tr. 14, together with office copies of all disclaimers executed by the trustee. Where the release of a trustee is withheld, the Court may, on the application of any creditor or person interested, make such order as it thinks just, charging the trustee with the consequences of any act or default he may have done or made contrary to his duty. An order of the Board releasing the trustee shall discharge him from all liability in respect Of any act done or default made by him in the administration of the affairs of the bankrupt or otherwise in relation to his conduct as trustee, but any such order may be revoked on proof that it was obtained by fraud, or by suppression or concealment of any material fact. Where the trustee has not previously resigned or been removed, his release shall operate as a removal of him from his office, and thereupon the Official Receiver shall be the trustee. (Section 82.) Where the Board of Trade have granted to a trustee his release, a notice of the order grant- ing such release shall be gazetted. The trustee must provide the requisite fee stamp (5s.), but it may be charged against the estate. (Rule 3'°-) The release of a trustee shall not take effect unless and until he has delivered over to the Official Receiver all the books, papers, docu- ments, and accounts, which, by the bankruptcy rules, he is required to deliver over on his release. (Rule 310A.) See titles — Absconding Debtor Act of Bankruptcy Adjudication Advowson Allocator Arrangements in Bankruptcy Articled Clerk Bankruptcy Notice Bankruptcy Petition Committee of Inspection Competitive Proot Debts provable in Bankruptcy Deceased Insolvent I )eed of Arrangement Discharge of a Bankrupt Disclaimer Distress Double Proof Execution Creditor Fraudulent Conveyances and Settlements Fraudulent Preference Gazette Notice Interest in respect of proof of debt Interim Receiver Joint and separate estates Lien Local Bank Account Mutual Credits, &c. Official Receiver* Postponed Creditors Preferential Creditors Preferential Payments Priority of Payments (costs) Proof in respect of Bills of Exchange Proof of Debt Protected transactions Proxy Public Examination Receiving Order Record Book Relation Back Reputed Ownership Resolution Secured Creditor Securities deposited against Bills of Exchange Security Setoff Small Bankruptcy Special Manager Statement of affairs Stoppage in transitu Surplus Assets Trade Creditor Unclaimed Dividends Undischarged Bankrupt Undue preference Vote Voting letter Ac. &c. Trust Investments. — The following provisions of the Trustee Act 1893 apply to trust investments : — (1) A trustee may, unless expressly forbidden by the instrument (if any) creating the trust, invest any trust funds in his hands, whether at the time in a state of invest- ment or not, and may also, from time to time, vary any such investment in manner following, that is to say : — (a) In any of the Parliamentary stocks or public funds, or Government securities of the United Kingdom. (b) On real or heritable securities in Great Britain or Ireland. (This means an investment by way of advance on mortgage upon the security of real property, not the purchase of the real property itself. As to the limits within which such advance must be made, see infra.) (c) In the stock of the Bank of England or the Bank of Ireland. (<2) In India Three-and-a-half per cent. Stock and India Three per cent. Stock, or in any other capital stock which may at any time hereafter be issued by the Secretary of State in Council of India under the authority of Act of Parliament and charged on the revenues of India. (e) In any securities the interest of which is, or shall be, guaranteed by Parliament. (J) In consolidated stock created by the Metropolitan Board of Works, or by the London County Council, or in debenture stock created by the Receiver for the Metropolitan Police District. Trust] 704 [Trust (g) In the debenture or rent-charge, or guaranteed or preference stock of any railway company in Great Britain or Ireland incorporated by special Act of Parliament, and having during each of the ten years last past before the date of investment paid a dividend at the rate of not less than three per cent, per annum on its ordinary stock. (fe) In the stock of any railway or canal company in Great Britain or Ireland whose undertaking is leased in per- petuity, or for a term of not less than two hundred years at a fixed rental, to any such railway company as is men- tioned in sub-section (g), either alone or jointly with any other railway company. (i) In the debenture stock of any railway company in India the interest on which is paid, or guaranteed, by the Secretary of State in Council of India. (;') In the " B " annuities of the Eastern Bengal, the East Indian, and the Scinde Punjaub and Delhi Railways and any like annuities, which may at any time hereafter be created on the purchase of any other railway by the Secretary of State in Council of India, and charged on the revenues of India, and which may be authorised by Act of Parliament to be accepted by trustees in lieu of any stock held by them in the purchased railway ; also in deferred annuities comprised in the register of holders of annuity Class D, and annuities comprised in the register of annuitants Class C of the East Indian Railway Company. (k) In the stock of any railway company in India upon which a fixed or mini- mum dividend in sterling is paid or guaranteed by the Secretary of State in Council of India, or upon the capital of which the interest is so guaranteed. (/) In the debenture or guaranteed < preference stock of any company in Great Britain or Ireland, established for the supply of water for profit, and incorporated by special Act of Parlia- ment or by Royal Charter, and having during each of the ten years last pas before the date of the investment a dividend of not less than five pound per centum on its ordinary stock. (m) In nominal or inscribed stock issue or to be issued, by the corporation any municipal borough having, accord ing to the returns of the last censu prior to the date of investment, population exceeding fifty thousand by any county council, under the authority of any Act of Parliament Provisional Order. (h) In nominal or inscribed stock issued, or to be issued, by any Commis- sioners incorporated by Act of Parlia- ment for the purpose of supplying water, and having a compulsor power of levying rates over an are having, according to the returns of last census prior to the date of inves ment, a population exceeding fifr thousand, provided that during each of the ten years last past before the date of investment the rates levied by such Commissioners shall not have exceede eighty per cent, of the amount autho rised by law to be levied. (o) In any of the stocks, funds, securities, for the time being autho rised for the investment of cash unde the contts.1i or subject to the order, of the Court (for list of which see • below.) (2). — (1) A trustee may, under the powers of this Act, invest in an}' of the securities mentioned or referred to in section 1 of this Act, notwithstanding that the same may be redeemable, and that the price exceeds the redemption value. .Trust] 7°5 [Trust (2) Provided that a trustee may not, under the powers of this Act, purchase at a price exceeding its redemption value any stock mentioned or referred to in sub- sections (g), (i). (fe). (0. and ('") of section I, which is liable to be redeemed within fifteen years of the date of the pur- chase at par or at some other fixed rate, or purchase any such stock as is men- tioned or referred to in the subsections aforesaid, which is liable to be redeemed at par or at some other fixed rate, at a price exceeding fifteen per cent, above par or such other fixed rate. (3) A trustee may retain until redemp- tion any redeemable stock, fund, or security which may have been purchased in accordance with the powers of this Act. {3) Every power conferred by the preceding sections shall be exercised according to the discretion of the trustee, but subject to any consent required by the instrument, if any, creating the trust, with respect to the investment of the trust funds. (4) The preceding sections shall apply as well to trusts created before as to trusts created after the passing of this Act, and the powers thereby conferred shall be in addition to the powers conferred by the instrument, if any, creating the trust. (5). — (1) A trustee having power to invest in real securities, unless expressly forbidden by the instrument creating the trust, may invest, and shall be deemed to have always had power to invest : — (a) On mortgage of property held for an unexpired term of not less than two hundred years, and not subject to a reservation of rent greater than a shilling a year, or to any right of redemption, or to any condition for re-entry, except for non-payment of rent; and (fc) On any charge, or upon mortgage of any charge, made under the Improve- ment of Lands Act 1864. (2) A trustee having power to invest in the mortgages or bonds of any railway company or of any other description of company may, unless the contrary is expressed in the instrument authorising the investment, invest in the debenture stock of a railway company or such other company as aforesaid. (8). — (1) A trustee lending money on the security of any property on which he can lawfully lend shall not be chargeable with breach of trust by reason only of the pro- portion borne by the amount of the loan to the value of the property at the time when the loan was made, provided that it appears to the Court that in making the loan the trustee was acting upon a report as to the value of the property made by a person whom he reasonably believed to be an able practical surveyor or valuer instructed and employed independently of any owner of the property, whether such surveyor or valuer carried on business in the locality where the property is situate or elsewhere, and that the amount of the loan does not exceed two equal third parts of the value of the property, as stated in the report, and that the loan was made under the advice of the surveyor or valuer expressed in the report. (2) A trustee lending money on the security of any leasehold property shall not be chargeable with breach of trust, only upon the ground that in making such loan he dispensed either wholly or partly with the production or investigation of the lessor's title. (3) A trustee shall not be chargeable with breach of trust only upon the ground that in effecting the purchase of, or i.i lending money upon, the security of any property, he has accepted a shorter title than the title which a purchaser is, in the absence of a special contract, entitled to require, if, in the opinion of the Court, the title accepted be such as a person acting with prudence and caution would have accepted. ZZ Trust] 706 (9). — (1) Where a trustee improperly advances trust money on a mortgage security which would at the time of the investment be a proper investment in all respects for a smaller sum than is actually advanced thereon, the security shall be deemed an authorised investment for the smaller sum, and the trustee shall only be liable to make good the sum advanced in excess thereof with interest. The investment of cash under the control of, or subject to the order of, the Court is regulated by Rule 17 of Order XXII of the Rules of the Supreme Court. The following are some of the chief invest- ments authorised : — Two-and-a-half per cent. Consolidated Stock. Consolidated three pounds per cent. Annuities. Reduced three pounds per cent. Annuities. Two pounds fifteen shillings per cent. Annuities. Two pounds ten shillings per cent. Annuities. Local Loans Stock under the National Debt and Local Loans Act 1887. Exchequer Bills. Bank Stock. India Three-and-a-half per cent. Stock. India Three per cent. Stock. India Two-and-a-half per cent. Stock. India Guaranteed Railway Stocks or Shares, provided in each case that such stocks or shares shall not be liable to be redeemed within a period of fifteen years from the date of investment. Stocks of Colonial Governments guaranteed by the Imperial Government. Mortgage of freehold and copyhold estates in England and Wales. Metropolitan Consolidated Stock, three pounds ten shillings per cent. Three per cent. Metropolitan Consolidated Stock. iTrust Debenture, preference, guaranteed, or rent charge stocks of railways in Great Britain Ireland, having for ten years next before th date of investment paid a dividend on Ordinary Stock or Shares. Nominal Debentures or Nominal Debentd Stock, under the Local Loans Act 1S75, provii in each case that such debentures or stock not be liable to be redeemed within a period .fifteen years from the date of investment. The Colonial Stock Act 1900 has added to securities in which a trustee is authorised invest, Colonial Stock which conforms to following conditions : — (1) The Colony shall provide by legislation fo the payment out of the revenues of Colony of any sums which mav becon payable to stockholders under am' jud ment, decree, rule, or order of a Court : the United Kingdom. (2) The Colony shall satisfy the Treasury that adequate funds (as and when required) will be made available in the Unite Kingdom to meet any judgment, decre rule, or order. (3) The Colonial Government shall place record a formal expression of their opinio that any Colonial legislation which appea to the Imperial Government to alter of the provisions affecting the stock to injury of the stockholder, or to involve departure from the original contract in regard to the stock, would properly disallowed. Virtually all the existing Colonial Government Stocks are now (subject to the restrictions purchasing at a premium) available for the investment of trust funds. "It is the rule of the Court, that, in thd " absence of any special direction, it is the " duty of an executor or administrator " invest any sums of sufficient amount; he " has no right to have money, as it were,] " wrapped up in a napkin, though no doubtj Trust 707 [Trusts " if there are payments to be made, he is " justified in keeping balances adequate for " those payments. Where trust funds are " invested on an inadequate security, it is the " dutv of trustees to re-invest them, although " the written consent of the tenant-for-life, " rendered necessary to any change of invest- " ment, is refused, and the security is one " expressly authorised by the trust. And " though power is given to them to invest upon " such securities as they shall approve, they " are bound, nevertheless, to exercise a careful " discretion in selecting a security as to value. " The rule as laid down by Lord Eldon in " Howe v. Earl of Dartmouth amounts to this, " that, where there is a residuary bequest of " personal estate to be enjoyed by several per- " sons in succession, a Court of Equity, in " the absence of any evidence of a contrary " intention, will assume that it was the inten- " tion of the testator that his legatees should " enjoy the same thing in succession, and as " the only means of giving effect to such " intention will direct the conversion into per- " manent investments of a recognised character " of all such parts of the estate as are of a " wasting or reversionary character, and also " all such other existing investments as are " not of the recognised character, and are con- " sequently deemed to be more or less " hazardous." Note. — Where a tenant-for-life is entitled to enjoy in specie, the rule in Howe v. Dartmouth does not apply, and the investments to be so enjoyed may remain. Lord Watson, in delivering judgment in Lcaroyd v. Whiteley, said: — "As a general rule the law requires of a trustee no higher degree of diligt nee in the execution of his office than a man of ordinary " prudence would exercise in the management " of his own private affairs; yet he is not " allowed the same discretion in investing the moneys for the trust as if he were a person sin' juris, dealing with his own estate. Busi- " ness men of ordinary prudence frequently do select investments which are more or less of " a speculative character : but it is the duty of " a trustee to confine himself to the class of " investments permitted by the trust, and like- " wise to avoid all investments of any class " which are attended with hazard. So long as " he acts in the honest observance of these " limitations, the general rule already stated " will apply. The Courts of Equity have indi- " cated and given effect to certain general " principles for the guidance of trustees in " lending money upon the security of real " estate. Thus it has been laid down that, " in the case of ordinary agricultural land, the " margin ought not be less than one-third of " its value, whereas in cases where the subject " of the security derives its value from build- " ings erected on the land, or its use for trade " purposes, the margin ought not to be less " than one-half (but now see the Act of 1893, " supra). I do not think these have been laid " down as hard and fast limits up to which " trustees would be invariably safe, and " beyond which they could never be in safety " to lend, but as indicating the lowest margins " which under ordinary circumstances a care- " ful investor in trust funds ought to accept." (See titles Apportionment, Judicial Trustees Act.) A trustee who employs the fund entrusted to him in unauthorised investments (even acting bond fide, and believing that by so doing he will benefit the estate) renders himself liable not only for the capital, but for all profits made or alternatively for interest at 4 per cent, or 5 per cent, (according to circumstances). Trusts. — "A trust is simply a confidence reposed " either expressly or impliedly in a person " (trustee) for the benifit of another (cestui que " trust or beneficiary), not, however, issuing out " of real or personal property, but as a collateral " incident accompanying it, annexed in privity to " (i.e., commensurate with) the interest in such " property, and also to the person touching such " interest for the accomplishment of which con- " fidence the cestui que trust or beneficiary has " his remedy in equity only; the trustee himself " likewise being aided and protected in the ZZ 3 Trusts] 708 [Trusts " proper performance of his trust when he seeks " the Court's direction as to its management." [Wharton.] "An equitable obligation, cither expressly " undertaken or constructively imposed by the " Court, under which the trustee is bound to deal " with certain property over which he has " control for the benefit of certain persons " (called cestuis que trustent or beneficiaries) , of " whom he may or may not himself be one." [Underhill.] Trusts may be classified thus : (a) Express — (1) Executed. (2) Executory. (b) Arising by operation of law — (1) Constructive. (2) Resulting. (3) Implied. They may be also subdivided into active and bare, permanent and temporary. An express trust is one which is clearly expressed by the person creating it, whether verbally or by writing. An executed trust is one which is completely declared by and expressed in the instrument creating it. An executory (or directory) trust is one which is not completely expressed in the instrument creating the trust, but is indicated in general terms with a view to a complete declaration in a subsequent document. Executory trusts may arise from marriage settlements and wills. A constructive trust is one raised by construc- tion in order to afford justice, but " without " reference to any presumable intention of the " parties," express or implied. An instance of a constructive trust arises in the case of a vendor's lien upon lands for the unpaid purchase-money. (See title Lien, sub-title Unpaid Seller, (a) Land.) A resulting trust is one implied in favour of tl person creating the trust, or his representative It occurs in cases where the trust or otl purpose for which the transfer of the prope was made by the owner has been com, executed without exhausting the property, an the resulting trust applies to the unexhausti property. In some arrangements with creditors a debti assigns his property to a trustee for the bene of his creditors, upon condition that the surplus (if any) shall be reconveyed to him after payin twenty shillings in the pound upon all claii In the absence of such a provision as to surplus, there may or may not be a result trust in favour of the debtor. Where the deed provides for the disposal the whole of the proceeds of sale of the debtor': estate thereby assigned, i.e., where the trust is " to divide the sum realised amongst the " creditors in rateable proportions accordii " the amount of their debts," there will be resulting trust in favour of the debtor as rcgar any surplus, for in such a case the assign divests himself of all interest in the property, an the creditors (accepting the assignment " fo better, for worse ") agree to release the debto in consideration thereof. But if the deed does nn provide for the disposal of the whole of the pr ceeds, i.e., where the trust is " to discharge the " debts or to divide the proceeds of sale of the " estate assigned in or towards payment of the " debts," the property assigned is placed in trust for a limited purpose, and if in such a cas the deed does not expressly provide for the dis posal of any surplus there may chance to be afte payment of the debts in full, there will be resulting trust in favour of the assignor. (Smith v. Cooke, 1891, A.C. 297.) An implied trust is one founded, not upon the express intention of the party creating it, but upon an implied or presumed intention. An active trust is one in connection with which there are duties to be performed. Trusts] 709 [Trusts A bare trust is one in connection with which there are no active duties to be performed other than to convey or transfer the trust property to, or at the direction of, the beneficiary. A permanent trust is one created for the benefit of several persons in succession. A temporary trust is one which involves the performance of one particular duty only. A simple trust is one not qualified by the sealer, but left to the construction of law. All property, whether real or personal, and whether legal or equitable, which can be validly assigned, may be made the subject of a trust unless in the case of land the tenure under which it is held is inconsistent with the trust sought to be created. The Statute of Frauds provides that " all " declarations or creations of trusts or con- " fidences of any lands, tenements, or heredita- " ments shall be manifested and proved by some " writing signed by the party who is by law " enabled to declare such trust, or by his last " will in writing, or else they shall be utterly " void and of none effect." The above provision does not require the trust to be declared in writing, but only manifested ami proved in such manner, so that no form is necessary either as to the language or the nature of the instrument by which it is sought to establish the trust, in order to satisfy the provisions of the statute. I'll.- statute does not apply to declarations of trust as to chattels personal (other than lease- holds for years), so that, provided they are to take effect in the lifetime of the creator, such trusts may be created in writing (with or with- out seal) or by word of mouth, or partly in writing, and partly by word of mouth, but in all cases, whether in connection with lands or personal property, there must be an indication with reasonable certainty of (1) an intention to create a trust, (2) the trust property, and (3) the person who is to be the beneficiarv. Capacity to create a trust is regulated by the general law concerning capacity to dispose of property. Disclaimer. — Any person appointed a trustee may disclaim the trust either by writing, by word of mouth, or by conduct showing an intention to disclaim, but he must disclaim the whole trust and within a reasonable period, and before he has done any act showing an intention to accept the trust. A disclaimer by one of two or more persons appointed co-trustees vests the trust pro- perty in the other or others, and makes him or them sole trustee or trustees from the date of the inception of the trust. {See heading Renunciation, infra.) Powers and Duties. — Where two or more trustees are appointed, their power is a joint one, although the power of executors (as such I is joint and several, but where a power of trust is given to or vested in two or more trustees jointly, then unless the contrary is expressed in the instrument (if any) creating the power or trust, the same mav be exercised or performed by the survivor or sur- vivors of them for the time being. The latter provision applies only to trusts coming into operation after 1881. Ordinarily, a trustee cannot (without express permission in the instrument creating the trust), delegate his duties or powers as trustee either to a co-trustee or any other person. He must per- sonally exercise the utmost diligence in carrying out the trust, for such is his main protection from liability for loss of the trust property; but " the law requires of a trustee no higher degree " of diligence in the execution of his office than " a man of ordinary prudence would exercise " in the management of his own private affairs." [Lord Watson.] There may be occasions when a trustee of ordinary prudence would, in like circumstances in connection with his own affairs, employ a qualified agent, such as a banker, stock- broker, or accountant, to perform certain duties for him. Such a delegation is permissible, pro- vided the work so delegated is strictly within the scope of the business of the person employed. Where a discretion as to the mode of performing the trust is conferred on a trustee by the settlor, the trustee is not subject to any control in exer- Trusts] 710 Trusts cising such discretion, provided that he exercises it in good faith. As a general rule the trustee cannot be allowed any remuneration — he must not make a profit out of his. trust ; but there are exceptions to this rule ; a trustee may be remunerated (1) under an express or implied pro- vision in the instrument creating the trust, (2) under an express contract with the cestui que trust, having legal capacity to contract (3) when allowed by the Court, and under certain other special circumstances. But a trustee is entitled to pay or reimburse himself out of the trust property all expenses properly incurred in con- nection with the execution of the trust. He must not, under ordinary circumstances, purchase any part of the trust estate, or take a mortgage or lease from himself or a co-trustee. But he may do so if he is expressly authorised by the instrument creating the trust, or if he obtains the consent of the Court. So a trustee may, even without such authority or consent, acquire for value the interest of a beneficiary in the trust property, provided he gives a fair price therefor, and makes a full dis- closure to the beneficiary of all facts within his knowledge relating to the trust property and of the circumstances of the transaction. The bene- ficiary must also have competent and independent advice in respect of the transaction. Unless otherwise provided by the instrument creating the trust a trustee must keep clear and accurate accounts with regard to the trust pro- perty, and at all reasonable times at the request of a beneficiary, furnish him with full and accurate information as to the amount and state of the trust property, and permit the beneficiary or his duly authorised agent (at the expense of the beneficiary) to inspect and take copies of or extracts from the accounts and vouchers, and any other documents relating to the trust. (See also title Public Trustee.) The Trustee Act 1893 consolidates a number of the enactments relating to trustees, as regards investments, the appointment of new trustees, and/or separate sets of trustees for distinct parts of the trust property, powers of trustees as to (a) purchase and sale of property, (6) compromises and submissions to arbitration, &c, &c. i hum '• rinl The beneficiary, or, if there be more than any one of them, has the right to enforce formance by the trustee of his obligations to have any loss occasioned by a breach of made good by the trustee liable therefor. title Breach of Trust.) The Judicature Act 1873 provided that nod of a cestui que trust against a trustee for a property held on any express trust or in r of any breach of such trust, should be held barred by any Statute of Limitation, but si 8 of the, Trustee Act 1888 effected a mate alteration in this rule of law, providing alia that a trustee may have all rights and leges conferred by any Statute of Limitation in the like manner and to the like extent as if had not been a trustee, provided that in action in which the Statute is so pleaded claim (1) is not founded upon any fraud fraudulent breach of trust to which the trustei was a party or privy, or (2) is not to recover tru: property or the proceeds thereof (a) si retained by the trustee, or (6) previously receivi bv the trustee and converted to his use. The term " trustee " in the Act of li includes an executor or administrator, and trustee whose trust arises by construction implication of law, as well as an express truste but it does not include the official trustee charitable funds ; and the provisions of the Ac- relating to a trustee apply as well to sever joint trustees as to a sole trustee. Note. — The directors of the Lands Allotment Company applied moneys of the company to an ultra vires purpose, but without any fraud As mere than six years had elapsed before an action was brought, the claim against then was held to be barred by the Act of 1888. (In Re Lands Allotment Co., 1894, 1 Ch. 616.) Renunciation. — Ordinarily a trustee cannot renounce his trusteeship after having accepted it, unless — (1) The Court authorises him to do so, or (2) The beneficiary, or if more than one, all the beneficiaries, have legal capacity to contract and consent to his doing so, or Trusts] 711 [Uberrima (3) He is authorised to do so by the terms of the instrument creating the trust. (4) He retires under the statutory powers con- ferred by the Trustee Act 1893 (sections 10 and 11). Ill-termination of Trust. — A trust is determined (1) when the trustee completely performs the obligations imposed on him, or (2) when the trust becomes impossible of performance in conse- quence of the destruction of the trust property or otherwise without the fault of the trustee, or (3) when the whole of the legal and beneficial interests in the trust property become vested in the same person or persons. A trust may also be determined (1) by the exercise of a power of revocation expressly >d at the time of creating the trust, or (2) by all the beneficiaries, if they are absolutely entitled to the whole of the beneficial interest in the trust property, and they have legal capacity to dispose of property. Discharge of Trustee. — Upon the determination of the trust, the trustee is entitled to have the accounts of his administration of the trust pro- perty examined and settled by the beneficiary, and to an acknowledgment in writing by the beneficiary to that effect, and discharging him from any further liability in respect of the trust property. If a beneficiary should refuse to dis- charge the trustee in the manner here mentioned, the trustee is entitled to have his accounts taken by the Court. No notice of any trust, expressed, implied or constructive, can be entered on the Register of Members of any company registered in England. (Companies (Consolidation) Act 1908, section 27.) (But see title Distringas.) Summary of a Trustee's Duty for his own Guidance. (1) Terms of his trust. (a) Learn them or refer to them periodi- cally. (b) Adhere strictly to them. (2) Exercise such prudence and diligence in connection with the trust as he would in the management of his own affairs. (3) Observe the investment powers. (4) Keep proper accounts and be ready and willing to afford information to the cestui que trust when required. (5) Make no profit out of the trust, save the authorised remuneration, if any. (6) Co-operate with his co-trustees, if any. (7) When in doubt, protect himself by an application to the Court for directions. (See titles Apportionment, Breach of Trust, Deed of Arrangement, Directors, Executor, Fraudulent Conveyances, &c, Judicial Trustees Act 1896, Maintenance, Public Trustee, Trust Investments.) Turn of the Market implies the difference between the buying and selling prices of a stock — thus if a stock is quoted 107^-107^, the buyer will probably have to give 107J and the seller will receive 107I, the difference representing the dealer's or jobber's profit. (Sec title Jobbers.) Turnover. — See title Output. u Uberrima Fides.— Most abundant faith. Contracts requiring uberrima fides are avoided by the con- cealment of a material fact equally as by the misrepresentation of something affecting the contract. The following are of this class : — (1) Contracts for the sale of lands. (2) Contracts of suretyship. (3) Contracts to take shares in a public company. (4) Contracts of co-partnership. (5) Contracts of insurance, whether fire, life, or marine. Strictly, Suretyship and Partnership are uberrima? fidei only after being entered into, for " the intending surety and the intending " partner cannot claim the protection accorded " to the intending insurer, investor, or buyer of " land." [Anson.] Umpire] Umpire. — A person to whose sole decision a question between parties is, by consent, referred. In a submission to arbitration it is inferred, in the absence of anything expressed to the contrary, that if the reference be to too arbitrators, they may appoint an umpire at any time within the period during which they have power to make an award. If the arbitrators allow their time to expire without making an award, or have delivered to any party to the submission, or to the umpire, a notice that thev cannot agree, the umpire may forthwith enter upon the reference in lieu of the arbitrators. Where the parties, or two arbitrators, are at liberty to appoint an umpire and do not appoint him, or where, having been appointed as umpire, such person appointed declines to act, is incapable of acting, or dies, and the submission does not show that it was intended that the vacancy should not be supplied, and the parties or arbitrators do not supply the vacancy, any party may serve upon the other parties, or arbitrators, as the case may be, a written notice to appoint an umpire, and if such appointment is not made within seven clear days after service of the notice, the Court may make the appointment, on the application of the party who gave the notice. It is, of course, much better in important and urgent cases, where two arbitrators are appointed, to appoint the arbitrators and name the umpire in the submission, or make it a term of the submission that the arbitrators appoint an umpire before entering on the reference. This enables the umpire to sit with the arbitrators and hear the evidence, and thus save the expense and delay of re-hearing in case the arbitrators dis- agree, but until the arbitrators disagree the umpire has no right to take any official part whatever in the proceedings. When the umpire does enter upon the reference, he replaces the arbitrators, and possesses the same rights and assumes the same duties as the arbitrators. An umpire decides between the parties, not between the arbitrators. He has a lien upon his award for his costs, as in the case of an arbitrator. (See titles Arbitration, Arbitrator, Submission.) 2 [Unclaimed Unauthorised Signature. — See titles Acceptani Indorsement. Uncalled Capital. — See title Capital. Unclaimed Dividends. — Company. The original Table A provided that dividends (declared upon shares) remains unclaimed for three years after having declared, would be forfeited by the directors f< the benefit of the company, but the revised Ta of iyo6 and the new Table contained in the Con solidation Act of 1908 contain no such provision. Where a forfeiture clause is desired special provision must be made. The articles of assoc tion may provide for the forfeiture of all div dends remaining unclaimed after a given peric say five years. Sir F. B. Palmer says that : — " As to when " dividends are barred by lapse of time, . . . " upon the declaration of the dividend the " shareholder has a right of action, and ifl " this is not upon a specialty it is barred by " non-claim for six years under 21 Jac. I, c. 16 " (Severn, &>c, Co., 1896, 1 Ch. 559), when- " if it is upon a specialty it requires 20 years " bar the claim. (Cornwall Minerals Co., 1897 " 2 Ch. 74; 3 & 4 Will. IV, c. 27, section 3.") The Stock Exchange object to any claus in the articles as to forfeiture of unclaimed divi- dends, so that where a Stock Exchange quotatio is required no such clause should be included in the regulations. The revised Table A and new Table A, and, as a general rule, special sets of articles of associa- tion, provide that unclaimed dividends shall no bear interest against the particular company. Company Liquidation - . Section 224 of the Companies (Consolidation) Act 190S (as extended by general rules and the I regulations of the Board of Trade) provides that | where a winding-up of a company (whether com- pulsory, under supervision, or voluntary) is not concluded within one year after its commence- ment, the liquidator of such company shall Unclaimed] 7*3 'Unclaimed transmit in duplicate to the Registrar of Joint Stock Companies a detailed statement verified by affidavit of all the liquidator's receipts and payments on account of the company. The first statement, commencing at the date when a liquidator was first appointed and brought down to the end of twelve months from the commencement of the winding-up, shall be sent within thirty days from the expiration of such twelve months, or within such extended period as the Board of Trade may sanction, and the subsequent statements shall be sent at intervals of half a year, until the winding-up is concluded, each statement being brought down to the end of the half-year for which it is sent. (Winding-up Rules 1909, Rule 189.) If it appears from any such statement or other- wise that a liquidator of a company has in his hands or under his control any moneys represent- ing unclaimed or undistributed assets of the com- pany which have remained unclaimed or undis- tributed for six montljs after the date of their receipt, the liquidator shall forthwith pay the same to the Companies Liquidation Account at the Bank of England, and shall be entitled to the prescribed certificate of receipt for the money so paid, and that certificate shall be an effectual discharge to him in respect thereof. (Section «4 (4)-) The amount to be paid to the Companies Liquidation Account shall be the minimum balance of such money which the liquidator has had in his hands or under his control during the six months immediately preceding the date to which the statement is brought down, less such part (if any) thereof as the Board of Trade may authorise him to retain for the immediate pur- poses of the liquidation. Such amount shall be paid into the Companies Liquidation Account within fourteen days from the date to which the statement of account is brought down. Notwith- standing anything in this rule, any moneys representing unclaimed or undistributed assets or dividends in the hands of the liquidator at the date of the dissolution of the company shall forth- with be paid by him into the Companies Liquidation Account. (Rule 191.) iVole.— Although a liquidator may not be called upon to render any account unless the liquidation extends beyond the stated period, he will usually be asked by the Registrar for a certificate that any unclaimed dividends or undis- tributed assets have been paid into the Companies Liquidation Account. Money invested or deposited at interest bv a liquidator shall be deemed to be money under his control, and when such money forms part of the minimum balance payable into the Companies Liquidation Account the liquidator shall realise the investment or withdraw the deposit, and shall pay the proceeds into the Companies Liqui- dation Account, provided that where the money is invested in Government securities, such securities may, with the permission of the Board of Trade, be transferred to the control of the Board of Trade instead of being forthwith realised and the proceeds thereof paid into the Companies Liquidation Account. (Rule 191.) Every person who has acted as liquidator of any company, whether the liquidation has been concluded or not, shall furnish to the Board of Trade particulars of any moneys in his hands or under his control representing unclaimed or undistributed assets of the company, and such other particulars as the Board of Trade may require for the purpose of ascertaining or getting in any money payable into the Companies Liquidation Account at the Bank of England. The Board of Trade may require such particulars to be verified by affidavit. (Rule 192.) The Board of Trade may at any time order any such person to submit to them an account, verified by affidavit, of the sums received and paid by him as liquidator of the company, and may direct and enforce an audit of the account. (Rule 193 (1).) For the purposes of section 224 of the Act, and the Rules, the Court shall have, and, at the instance of the Board of Trade, may exercise, all the powers conferred by the Bankruptcy Act 1S83 with respect to the discovery and realisation of the property of a debtor. (Rule 193 (2).) Any person claiming to be entitled to any money paid into the Bank of England in pur- Unclaimed] 714 [Unclaimed suance of the section may apply to the Board of Trade for payment of the same, and the Board may, on a certificate by the liquidator that the person claiming is entitled, make an order for the payment to that person of the sum due. Any person dissatisfied with the decision of the Board of Trade in respect of any claim made in pursuance of the section may appeal to the High Court. (Section 224.) The following fees are payable in respect of payments out of the Companies Liquidation Account : — (1) On every application for the re-issue of a lapsed cheque or money order in respect of moneys standing to the credit of the account : — (a) A fee of is. where the amount applied for does not exceed £1 ; or (b) A fee of 2s. 6d. where the amount applied for exceeds £1 ; and (2) Where the money consists of unclaimed dividends, a fee of 3d. on each pound, or fraction of a pound, on each dividend paid out. Bankruptcy. Where the trustee, under any bankruptcy, composition or scheme pursuant to this Act, shall have under his control any unclaimed dividend which has remained unclaimed for more than six months, or where, after making a final dividend, such trustee shall have in his hands or under his control any unclaimed or undistributed moneys arising from the property of the debtor, he shall forthwith pay the same to the Bankruptcy Estates Account at the Bank of England. The Board of Trade shall furnish him with a certificate of receipt of the money so paid, which shall be an effectual discharge to him in respect thereof 'I he Board of Trade, with the concurrence of the Treasury, may from time to time appoint a person to collect and get in all such unclaimed or undistributed funds or dividends, and for the purposes of this section any Court having juris- diction in bankruptcy shall have, and at the instance of the person so appointed, or of the Board of Trade, may exercise, all the pi conferred by this Act with respect to the dis- covery and realisation of the property of a debtor; and the provisions of this Act with respect thereto shall, with any necessary modifications, apply to proceedings under this section. The provisions of this section shall not, except as expressly declared herein, deprive any person of any larger or other right or remedy to which he may be entitled against such trustee or other person. . . . (Bankruptcy Act 1883, section 162.) If the dividend has been paid by cheques on the Bankruptcy Estates Account, the trustee, on the expiration of six months from the date of issue, or on application for his release, if that event occurs earlier, should return anv cheques remaining in hand to the Finance Department of the Board of Trade. If the dividend has been paid through a local bank the trustee will be required, at the expiry of six months from the date of the declaration of a dividend, to forward to the Inspector- General in Bankruptcy for audit, vouchers for the dividends paid, and a list of those remaining unclaimed. The trustee will then be furnished with a receivable order for payment into the Bank of England of the amount of the dividends unclaimed. Under no circumstances should unclaimed dividends be credited to the estate without the previous sanction of the Inspector- General. (Board of Trade Regulations.) Any person claiming to be entitled to any moneys paid into the Bankruptcy Estates Account pursuant to this section may apply to the Board of Trade for payment to him of the same, and the Board of Trade, if satisfied that the person claiming is entitled, shall make an order for the payment to such person of the sum due. (Section 162.) The Board of Trade may require the applica- tion to be supported by the affidavit of the claimant. (Rule 346.) The following fees are payable in respect of payments out of the Bankruptcy Estates Account : — Unclaimed] 7i5 [Undertaking ( 1 ) On every application for the re-issue of a lapsed cheque or money order in respect of moneys standing to the credit of the account, a fee of 2s. 6d. ; and (2) Where the money consists of unclaimed dividends, a fee of threepence on each pound or fraction of a pound, on each dividend paid out. Deed of Arrangement. A trustee under a deed of arrangement is not required, like trustees in bankruptcy and liqui- dators in voluntary winding up, to pay over undistributed balances and unclaimed dividends to the Bank of England. .Many trustees, desiring to obtain a complete discharge from their trust, have voluntarily offered to pay over unclaimed dividends to the Bankruptcy Estates Account, but the Board of Trade have no power to accept them, and they accordingly remain in the hands mder the control of the trustees. \ professional accountant who acts as trustee in a considerable number of cases can meet the difficulty by paying all unclaimed dividends into a special banking account in his own name (not that of his firm where he is in partnership), allowing the same to accumulate, and keeping a careful record of them as regards (1) the estate, (2) the creditor entitled, (3) the amount, and (4) any subsequent payments of same. He would thin be prepared to deal with the matter in the (vent of any legislation in reference thereto which may be effected in the future on the lines of a well-known section of the Bankruptcy Act , of 18S3. Uncompleted Work. — See title Incomplete Work. Unconscionable Bargain. — See titles Catching Bargain, Usury. Under- 1. ease. — A grant by a lessee to another of a part of his whole interest under the original lease, reserving to himself a reversion ; it differs from an assignment, as the latter conveys the lessee's whole interest. Undertaking. — Debentures issued by a company not unusually create (inter alia) a charge upon its undertaking. " I take the object and meaning of the " debenture to be this, that the word ' under- " taking ' necessarily infers that the company " will go on, and that a debenture-holder " could not interfere until either the interest " which was due was unpaid, or until the " period had arrived for the payment of his " principal, and that principal was unpaid. I " think the meaning and object of the security " was this, that the company might go on " during that interval, and, furthermore, that, " during the interval, the debenture-holder " would not be entitled to any accounts of " mesne profits, or of any dealing with the " property of the company in the ordinary " course of their business. I see no difficulty " or inconvenience in giving that effect to this " instrument, but the moment the company " comes to be wound up and the property has " to be realised, that moment the rights of " these parties, beyond all question, attach. " My opinion is that, even if the company had " not stopped, the debenture-holders might " have filed a bill to realise their security. I " hold that, under these debentures, they have " a charge upon all property of the company, " past and future, by the term ' undertaking,' " and that they stand in a position superior to " that of the general creditors, who can touch " nothing until the debenture-holders are " paid." [Giffard, L.J., in Re Panama Mail Co., 1870.] Section 03 of the Companies (Consolidation) Act 1908 provides for the registration of every charge being a floating charge on the undertaking or property of a company. {See title Register and Registration of Mortgages.) Where a company is being wound up, a floating charge on the undertaking or pro- perty of the company created within three months of the commencement of the winding- up shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the company at the Undertaking] 716 [Underwrite time of, or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount at the rate of 5 per cent, per annum. (Companies (Consolidation) Act 1908, section 212.) As to the meaning of tb± word " solvent " herein see title Floating Charge. Undertenant. — One who holds from a lessee. (See title Under-Lease.) Underwriter. — An insurer; so called from his writing his name under the policy or contract of insurance. Apart from marine and lire insurance, it is now a common practice to underwrite the issue of capital of a joint stock company, the under- writers agreeing, in consideration of a commis- sion, to take up all shares which are not sub- scribed for by the public. Where there are many underwriters of the same issue of shares, they are liable for the short subscription in proportion to the amounts they have respectively under- written. Section 89 of the Companies (Consolidation) Act 1908 provides: — (1) It shall be lawful for a company to pa\ a commission to any person in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the company, or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the company, if the payment of the commission is authorised by the articles, and the commission paid or agreed to be paid does not exceed the amount or rate so autho- rised, and if the amount or rate per cent, of the commission paid or agreed to be paid is — (a) In the case of shares offered to the public for subscription, disclosed in the pro- spectus ; or (6) In the case of shares not offered to the public for subscription, disclosed in the statement in lieu of prospectus, or in a statement in the prescribed form signed in like manner as a statement in lieu of pro- spectus and filed with the Registrar of Companies, and. where a circular notice, not being a prospectus, inviting su scription for the shares i> issued, also closed in that circular or notice. (2) Save as aforesaid, no company shall app any of its shares or capital money either directl or indirectly in payment of any commission, count, or allowance, to any person in constdj tion of his subscribing or agreeing to subscrib whether absolutely or conditionally, for shares of the company, or procuring or agi to procure subscriptions, whether absolute or conditional, for any shares in the comp whether the shares or money be so applied by being added to the purchase-money of any pru pertv acquired by the company or to the contr price of any work to be executed for the co panv, or the money be paid out of the nomiti purchase-money or contract price, or othenv i> ■. (3) Nothing in this section shall affect power of any company to pay such brokerage it has heretofore been lawful for a company to pay, and a vendor to, promoter of, or other per- son who receives payment in money or shar - from, a company shall have and shall be deemed always to have had power to apply any part the money or shares so received in payment of any commission, the payment of which, if made directly by the company, would have been legal under this section. Note. — It is apparently permissible for Private Companies, as defined by section 121 of the Act, to pay such commissions if the provisions of the above sections are complied with. Section 89 is interpreted to mean that : — (a) A payment out of the capital money may be made by the company, whether public or private, if authorised and disclosed as prescribed, but even capital money cannot b>- so applied if not so disclosed and authorised. (b) A vendor to, or promoter of, or other person who receives payment in money or sliares from, a company, may apply any part of the money or shares received, in payment of any commission which the company could legally have paid. Underwriter] 7>7 [Undeveloped (c) Any direct application of a company's shares by the company (as distinct from its capital money) in payment of under- writing commission is prohibited under any circumstances, whether disclosed and " authorised " in the articles or not. The total amount of the sums (if any) paid by wav of commission in respect of any shares or debentures, or allowed by way of discount in respect of any debentures must be stated in the annual summary made next after the payment • of the commission or the allowance of the dis- count, and the total amount so paid or allowed, or so much thereof as has not been written off, must be stated in every Balance Sheet until the whole amount thereof has been written off. (Companies (Consolidation) Act 1908, sections 2(1 and 90.) Where any commission, allowance, or discount has been paid or made, either directly or indirectly, by the company to any person in con- sideration of his subscribing or agreeing to sub- scribe, whether absolutely or conditionally, for any debentures of the company, or procuring or agreeing to procure subscriptions, whether abso- lute or conditional, for any such debentures, the particulars required to be sent for registration with the Registrar of Joint Stock Companies, under section 93 of the Companies (Consolida- tion) Act 1908 (.sec title Register and Registra- tion of Mortgages), shall include particulars as to the amount or rate per cent, of the commission, discount, or allowance SO paid or made, but an Omission to do this shall not affect the validity of the debentures issued: Provided that the deposit of any debentures as security for any debt of the company shall not for the purposes of this provision be treated as the Usue of the debentures at a discount. (Companies (Consolidation) Act 1908, section 93, subsection 4.) Undeveloped Land Duty. — A duty of one halfpenny for every twenty shillings of the site value of undeveloped land payable lor the financial year ended 31st March 1910 and every subsequent financial year. For the purpose of the duty, land is deemed to be undeveloped if it has not been developed by the erection of dwelling-houses or of buildings for the purpose of any business, trade, or industry other than agriculture (but including glasshouses or greenhouses), or is not otherwise used bond fide for any business, trade, or industry other than agriculture. Provision is made for allowances in respect of moneys expended, and there are a number of exemptions, including : — (1) Any land where the site value does not exceed £50 per acre. (2) Parks and spaces open to the public as of right. (3) Certain agricultural lands. For the purposes of the duty undeveloped land does not include the minerals. Where at any time increment value duty (see that title) has been paid in respect of any undeveloped land, undeveloped land duty is to be charged only on the value in excess of the amount on which increment value duty has been paid. (Finance (1909-10) Act 1910, sections 16, 17, and iS.) Rating authorities are exempt from payment of undeveloped land duty. (Ibid, section 35.) Where, in pursuance of any public, general or local Act, any capital sum or any instalment of a capital sum has been paid to any rating authority in respect of the increased or enhanced value of any land due to any improvements made or other action taken by the authority, the amount of that capital sum or instalment shall be deducted from the site value of the land for the purposes of the collection of undeveloped land duty. (Ibid, section 36.) No undeveloped land duty shall be charged in respect of land or any interest in land held by or on behalf of any governing body constituted for charitable purposes (as defined by the Act) while the land is occupied and used by such a body for the purposes of that body. (Ibid section 37.) Undeveloped land duty shall not be charged in respect of any land whilst it is held by a statu- tory company (i.e., any railway or similar com- Undeveloped] 718 [Unearned pany authorised under any special Act of Par- liament) for the purposes of the undertaking, and cannot be appropriated by the company except to those purposes. (Ibid, section 38.) Undischarged Bankrupt. — Where a bankrupt, not having obtained his discharge, obtains credit to the extent of £20 or upwards from any person without informing such person that he is an undischarged bankrupt, he is guilty of a misde- meanour, and may be dealt with and punished as if he had been guilty of a misdemeanour under the Debtors Act 1869. (Bankruptcy Act 1883, section 31.) To convict a bankrupt of such an offence it is not necessary to show that there was an intent to defraud. " Until the trustee intervenes, all transactions " by a bankrupt after his bankruptcy (but before " his discharge) with any person dealing with " him bond, fide and for value, in respect of his " after-acquired property, whether with or " without knowledge of the bankruptcy, are valid " against the trustee " (Cohen v. Mitchell, 1890, 25 Q.B.D. 262), but this doctrine, while extending to leaseholds (Re Clayton <5v Barclay, iSc., 1909.) Voluntary] 728 [Voluntary Although perfectly solvent, a company in voluntary liquidation for the sole purpose of amalgamating with another company will thereby cause a forfeiture of a lease which provides for re-entry if the lessees " being a company shall be wound up compulsorily or voluntarily." Such a proviso is " a condition for forfeiture on the bankruptcy of the lessee " within section 14, subsection 6, of the Conveyancing Act 1881. (Fryer v. Ewart, 1902, App. Cas. 187.) Where there are debentures secured by a float- ing charge, the assets are applied in the following order : — (1) In payment of preferential claims. (See title Preferential Payments in Bankruptcy and Winding-up.) (2) In payment of the debenture-holders' prin- cipal, interest, and costs, including the remuneration of the receiver. (3) In payment of all costs, charges, and expenses properly incurred in the winding- up, including the remuneration of the liquidators. Note. — There is no prescribed order of priority inter se as in the case of bank- ruptcy and winding up by the Court. (4) In satisfaction of the unsecured liabilities pari passu. (5) By way of a " return " to the contribu- tories according to their rights and interests. Where there are no such debentures, the order in which the assets are applied is as follows : — (1) In payment of all the costs, charges, and expenses of the liquidation. (2) In payment of the preferential claims. (3) In satisfaction of the unsecured liabilities pari passu. (4) By way of a " return " to the contribu- tories according to their rights and interests. Note. — Secured creditors holding a fixed charge will, of course, obtain priority to the extent to which their respective securi- ties are of sufficient value to satisfy their claims. Where a company is being wound up volun- tarily the liquidator or any contributory or creditor may apply to the Court to determine any question arising in the winding-up, or to exercise, as respects the enforcing of calls, or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court. The Court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as the Court thinks fit, or may make such other order on the applica- tion as the Court thinks just. (Section 193.) Where a company is being wound up volun- tarily, the liquidator may summon general meet- ings of the company for the purpose of obtaining the sanction of the company by special or extra- ordinary resolution, or for any other purposes h may think fit. In the event of the winding-up continuing for more than one year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding-up, and of each succeeding year, or as soon thereafter as may be convenient, and shall lay before the meeting an account of his acts an dealings and of the conduct of the winding-u during the preceding year. (Section 194.) In the case of every voluntary winding-up, a: soon as the affairs of the company are full wound up, the liquidator shall make up an account of the winding-up, showing how the winding-up has been conducted and the property of the company has been disposed of; and there- upon shall call a general meeting of the com- pany for the purpose of laying before it the account, and giving any explanation thereof. The meeting shall be called by advertisement in the Gazette, specifying the time, place, and object thereof, and published one month at least before the meeting. Within one week after the meeting, the liqui- dator shall make a return to the Registrar of Companies of the holding of the meeting, and of its date, and in default of so doing shall be liable to a fine not exceeding five pounds for every day during which the default continues. Voluntary] 729 [Vote The Registrar on receiving the return shall forthwith register it, and on the expiration of three months from the registration of the return the company shall be deemed to be dissolved : Provided that the Court may, on the applica- tion of the liquidator or of any other person who appears to the Court to be interested, make an order deferring the date at which the dissolu- tion of the company is to take effect for such time as the Court thinks fit. It shall be the duty of the person on whose application such an order of the Court is made, within seven days after the m.-iking of the order, to file with the Registrar an office copy of the order, and if that person fails so to do he shall be liable to a fine not exceeding five pounds for every day during which the default continues. (Section 195.) The voluntary winding-up of a company shall .not bar the right of any creditor or contributory to have it wound up by the Court, if the Court is of opinion, in the case of an application by a creditor, that the rights of the creditors or, in the •case of an application by a contributory, that the rights of the contributories will be prejudiced by a voluntary winding-up. (Section 197.) Where a company is being wound up volun- tarily (or subject to supervision) a petition for winding up by the Court may be presented by the Official Receiver attached to the Court, as well as by any other person authorised in that behalf, but the Court shall not make a winding- up order on the petition unless it is satisfied that the voluntary winding-up (or winding-up subject to supervision) cannot be continued with due regard to the interests of the creditors or •contributories. (Section 137 (2).) " The section includes every case where the " powers of the voluntary liquidator are proved, " in the opinion of the Court,, to be insufficient " for the purposes of winding-up in so far as the " interests of creditors or contributories are con- " cerned. If, in short, the Official Receiver, after " a compulsory winding-up order, would possess " any power which the voluntary liquidator " cannot exercise, and which is shown to be "" necessary in order that there may be an " efficient winding-up in the interests of the " creditors or contributories, then section 14 (now " section 137 (2) of the 1908 Act) applies. When " a zealous voluntary liquidator acting under the " advice of counsel of great experience, arrives at " the conclusion that he cannot satisfactorily take proceedings for misfeasance without some " examination going beyond that which may be "obtained under section 115 of the Companies " Act 1862 (now section 174 of the 1908 Act) — " or, in other words, that a public examination " under section 8 of the Act of 1890 (now section "175 of 1908) is absolutely necessary — then a " winding-up order under section 14 of that Act " (now section 137 (2) of 1908) should be " made." (Re Jubilee Sites Syndicate, 1899.) Where a company is being wound up volun- tarily, and an order is made for winding up by the Court, the Court may if it thinks fit by the same or any subsequent order provide for the adoption of all or any of the proceedings in the voluntary winding-up. (Section 198.) (See titles Amalgamation, Calls, Contributory, Liquidator, Liquidators' Accounts, Reconstruc- tion, Resolution, Winding-up, &c. &c.) Voluntary Liquidator.— See title Liquidator. Voluntary Settlement. — One made upon a " good " but not upon a valuable consideration. (See titles Consideration, Fraudulent Convevances, &c.) Vote.— Company. The votes to which the members of a com- pany (registered under the Acts of 1862 and 1908) are respectively entitled may be conferred in the company's regulations. Section 67 of the 1908 Act provides that in default of any regula- tions as to voting every member shall have one vote (i.e., irrespective of the number of shares he may hold). The original Table A provided that " every " member shall have one vote for every share " up to ten ; he shall have an additional vote for " every five shares beyond the first ten shares up " to one hundred, and an additional vote for every " ten shares beyond the first hundred shares." Vote] 730 [Vote 'J'he " scale " system, however, was not generally adopted, the articles of association (where Table A did not apply) generally con- ferring one vote for every share held, viz. : — On a show of hands every member present in person shall have one vote. On a poll every member present in person or by proxy shall have one vote for every share held by him. The revised Table of 1906 and the new Table of 1908 contain similar provisions. As there appears to be no common law right to vote by proxy, it is necessary that special power be given by the company's regulations where the right so to vote is desired. The articles of association may provide (1) for a show of hands, and (2) for a poll (when share values are considered), or they may provide for share-value voting to the exclusion of a show of hands — thus rendering the demand for a poll unnecessary. (See title Show of Hands.) In some companies the right to attend and vote at any meeting of the company is not con- ferred upon a particular class of members (e.g., preference shareholders) unless the meeting is convened for the purpose of (1) reducing the capital, (2) winding up the company, (3) sanc- tioning a sale of the undertaking, (4) altering the regulations of the company, or (5) consider- ing and voting upon any proposition which directly affects the rights and privileges of such class of members. Where a company has shares of more than one class, particulars of the right of voting at meetings of the company conferred by the several classes of shares respectively must be set out in any prospectus issued to the public. (Com- panies (Consolidation) Act 1908, section 81.) Winding-up by the Court. Section 219 of the 1908 Act provides that the Court may direct meetings of creditors or con- tributories to be held for the purpose of ascer- taining .their respective wishes (referred to in the rules as Court meetings), and that — (1) In the case of creditors, regard shall be had to the value of each creditor's debt; and (2) In the case of contributories, regard sha be had to the number of votes conferred each contributory by the articles. In the case of a first meeting of credit (under section 152) or of an adjournment there a person shall not be entitled to vote as a credit unless he has duly lodged with the Offic Receiver not later than the time mentioned fo that purpose in the notice convening the meeting or adjourned meeting a proof of the debt which he claims to be due to him from the company. In the case of a Court meeting or liquidator's meeting of creditors (see Winding-up Ru 1909, Rule 121) a person shall not be entitle to vote as a creditor unless he has lodge with the Official Receiver or liquidator proof of the debt which he claims to be due him from the company and such proof has admitted wholly or in part before the date which the meeting is held. (Rule 133.) A creditor shall not vote in respect of any unliquidated or contingent debt, or any debt the value of which is not ascertained, nor shall a creditor vote in respect of any debt on or secured by a current bill of exchange or promissory note- held by him unless he is willing to treat the liability to him thereon of every person who is liable thereon antecedently to the company, and against whom a receiving order in bankruptcy has not been made, as a security in his hands, and to estimate the value thereof, and for the purposes of voting, but not for the purposes of dividend, to deduct it from his proof. (Rule 134.) For the purpose of voting, a secured creditor shall, unless he surrenders his security, state in his proof the particulars of his security, the date when it was given, and the value at which he assesses it, and shall be entitled to vote only in respect of the balance (if any) due to him after deducting the value of his security. If he votes in respect of his whole debt he shall be deemed to have surrendered his security, unless the Court on application is satisfied that the omission to> value the security has arisen from inadvertence. (Rule 135.) The Official Receiver or liquidator may within twenty-eight days after a proof estimating the value of a security as aforesaid has been used in Vote; 73i [Vote voting at a meeting require the creditor to give up the security for the . benefit of the creditors rally on payment of the value so estimated with an addition thereto of twenty per cent. Pro- vide! that where a creditor has valued his security he may at any time before being required to give it up correct the valuation by a new and deduct the new value from his debt, but in that case the said addition of twenty per cent, shall not be made if the security is required to be given up. (Rule 136.) The chairman shall have power to admit or reject a proof for the purpose of voting, but his decision shall be subject to appeal to the Court. If he is in doubt whether a proof should be admitted or rejected he shall mark it as objected to and allow the creditor to vote subject to the vote being declared invalid in the event of the objection being sustained. (Rule 137.) The foregoing rules (133 to 137 inclusive) do not apply to a Court meeting of creditors held prior to the " first " meeting of creditors. (Rule 133.) Where a creditor seeks to prove in respect of a bill of exchange, promissory note, or other negotiable instrument or security on which the company is liable, such bill of exchange, note, instrument, or security must, subject to any special order of the Court made to the contrary, be produced to the Official Receiver, chairman of a meeting or liquidator, as the case may be, and be marked by him before the proof can be admitted either for voting or for any purpose. (Rule 100.) A creditor or a contributory may vote either in person or by proxy. (Rule 139.) At a meeting of creditors a resolution shall be deemed to be passed when a majority in number and value of the creditors present personally or by proxy and voting on the resolution have voted in favour of the resolution, and at a meeting of the contributories a resolution shall be deemed to be passed when a majority in number and value of the contributories present personally or by proxy, and voting on the resolution, have voted in favour of the resolution, the value of the con- tributories being determined according to the number of votes conferred on each contributory by the regulations of the company. (Rule 128.) Bankruptcy. A person is not entitled to vote as a creditor at any meeting of creditors unless he has duly proved a debt (provable in bankruptcy) to be due to him from the debtor, and the proof has been duly lodged before the time appointed for the meeting. A surety for a debt who has not actually paid same cannot vote, nor can postponed creditors (unless the postponed claim be in respect of excess interest) vote whilst the ordinary creditors' claims remain unsatisfied. (See title Postponed Creditors.) A creditor cannot vote at any meeting in respect of any unliquidated or contingent debt, or any debt the value of which is otherwise not ascertained. For the purpose of voting a secured creditor must, unless he surrenders his security, state in his proof the particulars of his security, the date when it was given, and the value at which he assesses it, and such creditor is entitled to vote onlv in respect of the balance (if any) due to him, after deducting the value of his security. If he votes in respect of his whole debt he shall be deemed to have surrendered his security unless the Court, on application, is satisfied that the omission to value the security has arisen from inadvertence. A creditor is not entitled to prove in respect of any debt on, or secured by, a current bill of exchange or promissory note held by him unless he is willing to treat the liability to him thereon of every person who is liable thereon ante- cedently to the debtor, against whom a receiving order has not been made, as a security in his hands, and to estimate the value thereof, and for the purposes of voting, but not jor the purposes oj dividend, to deduct it from his proof. Where a creditor seeks to prove in respect of a bill of exchange, promissory note, or other negotiable instrument, he must, subject to any special order of the Court to the contrary, pro- duce the instrument to the Official Receiver, chairman of the meeting, or the trustee, as the case may be, before the proof can be admitted either for voting or dividend. Vote] 732 [Voucher The trustee or the Official Receiver may, within twenty-eight days after a proof esti- mating the value of a security as aforesaid has been made use of in voting at any meeting, require the creditor to give up the security for the benefit of the creditors generally on payment of the value so estimated, with an addition thereto of twenty per centum. Provided that where a creditor has put a value on such security, he may at any time before he has been required to give up such security as aforesaid correct such valuation by a new proof, and deduct such new value from his debt, but in that case such addi- tion of twenty per centum shall not be made if the trustee requires the security to be given up. Although interest upon a provable debt is limited for the purpose of dividend to 5 per cent. per annum, in cases where interest at a greater rate has been agreed for, this restriction does not affect a creditor's right to prove for the whole amount of the debt, and the agreed interest (or pecuniary consideration in lieu of interest) for the purpose of voting. If a receiving order is made against one partner of a firm, any creditor to whom that partner is indebted jointly with the other partners of the firm or any of them, may prove his debt for the purpose of voting (only) at any meeting of creditors, and shall be entitled to vote thereat. Where a receiving order is made against a firm the joint and separate creditors are collectively convened to the first meeting of creditors, but each separate set of creditors may consider and vote upon any proposal for a composition or scheme independently of each«other, and one set of creditors may accept a proposal, although the other sets of creditors may have refused their respective proposals. The chairman of a meeting shall have power to admit or reject a proof for the purpose of voting, but this decision is subject to an appeal to the Court. If the chairman is in doubt whether the proof of a creditor should be admitted or rejected he must mark the proof as objected to and allow the creditor to vote, subject to the vote being declared invalid in the event of the objection being sustained. A creditor may vote either in person or by proxy. In ascertaining the wishes of creditors by ordinary resolution, regard is had to the value of the debt proved for by each creditor present at the meeting personally or by proxy, and \ on the resolution ; in ascertaining their v. by special resolution, regard is had (1) to number of creditors present personally or by- proxy and voting on the resolution, and (2) to the value of the debts proved for by such tors; in ascertaining their wishes in regard acceptance of a composition or scheme of an. ment, regard is had, not only to the number and value of the creditors who are pres< nt and vote upon the particular resolution, but also to number and value of all the creditors who proved their debts, for those creditors who | their debts (and whose proofs have admitted) but do not vote in respect of a deb proposal for a composition or scheme are in this particular instance counted as having voted against it. (Bankruptcy Act 1883, 1st Schedule; Rules 265 and 267; and Bankruptcy Act 189 section 3.) (See titles Casting Vote, Proxy, Resolution, Voting Letter.) il vote f his i neet- Voting Letter. — Any creditor who has proved h: debt against a debtor's estate in bankruptcy may assent to or dissent from a proposal made by the debtor for a composition in satisfaction of hi: debts, or a scheme of arrangement of his affai by a letter in the prescribed form addressed to Official Receiver so as to be received by not later than the day preceding the me ing, and any such dissent or assent shall have effect as if the creditor had been pre: and had voted at the meeting. (Bi ruptcy Act 1890, section 3.) In respect of debtor's proposal all the creditors who I proved are factors in ascertaining the maj> necessary to determine their assent; so that creditors who have proved their debts, and win proofs are admitted, but do not vote on tl debtor's proposal, are counted as having voted against it. (See titles Arrangements Bankruptcy, Proxy, Resolution, Vote.) : Voucher. — A receipt for cash received or paid; documentary or other satisfactory evidence as I the accuracy of accounts. (See titles Cheque, Inscribed Stocks, Investiga- tion, Investment, Receipt, Savings Banks, Terrier, Wages, &c.) The following diagrams show the main sources of authority for, and evidence of, a payment respectively under the different circumstances. Voucher] 733 Authority for Payment. [Voucher I Company. i Partnership. Contracts, Agreements, i ■ ises, &c. Signature of Director or Manager. Partnership Agreement. Minute Books : Share- holders. Directors or Committee. Memorandum and/or Articles of Association. Clearly within the scope of the business. Partners' Minute Book. Contracts, Agreements, Leases, &c. Estate of a deceased person. I Assent of or Request by the cestuis que trustent. Deed of Arrange- ment between testuis que trustent. Order of the Court. Will or Codicils (if any). Where Testator's business is carried on. Same as partnership- mutatis mutandis. Written authority of a Partner. Clearly within the scope of the business. Clearly within the scope of the adminis- tration. Evidence of Payment. Primary. Certified return from Agent. Insurance Policy (if first Premium!. Certified Wage Sheet. (See title wag* i .1 Receipt (q.v.). Mortgage Deed, Conveyance, Share Certificate, Debenture Bond, or any other document ! admitting I receipt. i (See title i Investment ) Settled Account rendered by Payee embodying the particular payuu nt. I Secondary. i Discharged Bond, Bill of Exchange, or Order Cheque duly indorsed. Certificate of Bank Balance or Bank Book duly certified. Existence or possession of the subject matter. Branch Returns. Contra Items. Corre- spondence. Remittance letters. Petty Cash Docket. Bank Book uncertified. Receipt for subsequent payment expressing a settlement to date. Initialled entry in Cash Book t»j?., Partners' Drawings). Vouching] 734 Vouching. — The operation of vouching is most intimately associated with the audit of a Cash Account, and particularly with the payments, but the term is of much wider application, for it extends to the verification of all financial trans- actions and items in accounts. As an instance, under the Building Societies Act 1894, auditors have to certify, inter alia, whether or not the accounts are duly vouched and in accordance with law. The word " vouched " is here used in the widest sense. (See title Building Societies.) In vouching cash payments evidence is neces- sary, not only of the fact of payment, but also of the authority for same, in order to have complete evidence of justification for the charge against the partner, account, person, or estate. (See title Voucher.) So in the case of investments it may be neces- sary not merely to verify their existence, but also to inquire into the questions of the legality thereof and the title thereto. In special cases the value of such investments may also need to be con- sidered where the certificate of an auditor is required to deal with values. (See title Investment.) Where an accountant is examining accounts for some special purpose he may require to con- sider the questions of stock-in-trade on hand and on consignment, and to test the bona fides of book entries relative to sales, purchases, and other matters. As to the methods of procedure in these respects, see title Investigation. The entries made in the Journal are often a source of fraud, and they require vouching as much as Cash Book entries, the method of verification depending upon circumstances. Particular attention should ordinarily be devoted to the verification of credits in respect of (1) goods alleged to have been purchased, and (2) goods returned. In comparing an invoice with the Purchase Day Book, an auditor should examine (1) the date, (2) the title of the person or company to whom it is addressed, (3) the nature of the subject-matter, (4) the amount. (See also titles Allowance, Bank Book, Cancel- lation of " Scrip," Cancellation of Vouchers, Cheque, Inscribed Stocks, Receipt, Rent Roll, Savings Banks, Wages.) [Wager Vouching Back. — The term given to the pr whereby the position of affairs as at a past is substantiated. As an instance, suppose it were required count the amount of cash in the hands c cashier on the first day of a given month, as a matter of fact, it were not convenient practicable to count the cash actually until, the fifth day of that month. In such a case, the entries of receipts and ments between the two dates must be carefully vouched, and the balance in hand on the " fifth " duly counted. Where this is done, great care must be cised in vouching the " intervening entries,^ while the Bank Book should be certified to the same date as that upon which the cash w; actually counted, and not to the date the ca balance ought to have been substantiated Voyage Account. — An account showing the result \ the working of a vessel for a particular voyage., The freight, passage money, proceeds of sale oC dunnage, &c, are brought to credit, whilst the expenses of the voyage are charged against the earnings; such expenses will generally include port expenses (analysed between the various ports), cost of outfit and up-keep of the vessel, coals (if a steamer), wages of master and crew, provisions of master, crew, and passengers, ! brokerages and commissions, management, insurance premiums, &c. Port charges may subdivided into dock and harbour dues, towage, pilotage, agents' commission, &c. These may be considered as special items connected with Voyage Accounts, others being either ordinary or special, arising from the circumstances of the case. (See title Portage Bill.) Voyage Policy. — Sec title Time Policy. w Wager. — A contract whereby a person agrees to pay another a fixed sum upon the happening of a given event, in consideration of the latter agree- ing to pay a fixed sum to the former should the event not happen. Wager] 735 [Wages Wagers arc not of themselves illegal, but they are rendered unenforceable at law by the Statute 8 and 9 Vict. c. 109. The Gaming Act 1892 further restricts the right of action in respect of wagers, for it extends the provisions of the former Act to certain transactions collateral to wagers, to the effect that " any promise, express or implied, to " pay any person any sum of money paid by him " under or in respect of any contract or agree- " ment rendered null and void by 8 and 9 Vict. " c. 109, or to pay any sum of money by way of " commission, fee, reward, or otherwise in " respect of any such contract, or of any services " in relation thereto, or in connection therewith, " shall be null and void, and no action shall be " brought or maintained to recover any such sum " of money." As a result of the above, a person cannot legally recover his commission for making bets for another, nor can he recover moneys paid in discharge of such bets whether such payments are made in pursuance of a contract of regular employment as a betting commissioner, or as a result of a special request or otherwise, but a person may still recover moneys received by another in respect of bets made and won by the former. (Sec title Differences.) J Wager Policy.— At Common Law every insurance, unless the contrary were expressed, was required to be based upon an interest, but the parties were allowed to insert clauses in the policy dispensing with interest. The Marine Insurance Act 1906, however, pro- vides that " every contract by way of gaming or wagering is void." A similar provision was made in connection with fire and life insurance by a Statute of George III. Any person who effects a contract of marine insurance without possessing an insurable interest now commits a punishable offence. (Marine Insurance (Gambling Policies) Act 1909.) (See title Insurable Interest.) Wages may be defined as the compensation pay- able in money, usually by the hour, day, week, or piece, to workmen, labourers, and the like, for labour which is more or less mechanical. Labour is indispensable to production, although it does not necessarily have production for its effect. Political economists carry their analysis of labour much further than is necessary for the purposes of practical accountancy, even assuming the embodiment of their views in the preparation of accounts at all feasible, but it is, nevertheless, found necessary to divide the cost of labour to some extent. Thus labour, directly employed " in investing " material things with properties which render " them serviceable," or stated otherwise, labour directly employed in " adapting raw maccrial " is considered as an element of the cost of the articles in question when preparing Manufac- turers' Accounts. Carriage, cartage, and freight on goods inward, that is, the cost of the labour of the carriers, must be treated under this head, for such labour vests the commodity with the property of being in the place where it is wanted, instead of being in some other place. Accountants are inclined to class the labour rendered by clerks, warehousemen, and the like as unproductive, when their labour, although essential to the ultimate effect, is not conferred directly upon the production of the commodities with which they have to deal. Unproductive labour may be roughly subdivided into (1) establishment charges, such as the salaries of clerks, and (2) cost of distribution, such as the salaries of traveilers. (See title Manufacturers' Accounts.) The vouching of payments for wages, whether productive or otherwise, is a question of import- ance to auditors on account of the many facilities for fraudulent dealings which an imperfect system of payment affords. (See title Dummy Men.) Where wages are paid on a basis of tonnage (such as in mining concerns), some measure of check in the aggregate may be obtained from the total amounts of output and wages respectively, but the general principle underlying the various systems which have been Wages] 736 [Warranty suggested for the payment of wages appears to be to engage as many persons as possible in the system, so that nothing short of collusion can allow of any irregularities. The foreman should prepare, or be responsible for, the groundwork of the Wages Sheet, and this should be checked over by an independent clerk (say the cashier when handing over the money), another clerk (that is a third party) making the actual payments to the men. Time clocks are now largely used with bene- ficial results. Each employee is provided with a numbered ticket, and is required to insert same in the clock on arrival and departure, the clock stamping the time of insertion automatically. Supervision is necessary to see that employees do not by collusion stamp for one another. Where there is any ground for suspicion, it will sometimes be found advisable for a prin- cipal to pay the wages in person or for the auditors to attend unexpectedly at the Pay Table. The system of payment of seamen's wages is regulated by the Merchant Shipping Acts 1894 and 1906. The wages of any servant, labourer, or work- man cannot be attached to satisfy a judgment. An infant can himself sue in the County Court to recover wages due to him provided the amount does not exceed ^50. The weekly wages of a working man (should he become bankrupt) are not attachable under the Bankruptcy Act 1883. It is provided that in the distribution of the property of a bankrupt or the assets of a com- pany being wound up (also in the administra- tion of the estate of a deceased insolvent) the following shall be paid in priority to all other debts :— (1) Not exceeding one year's rates and taxes. (2) Not exceeding four months' salary of any clerk, and not exceeding ^50 in each case. (3) Not exceeding two months' wages of labourers or workmen, and not exceeding £25 in each case. These claims abate pari passu in the event of a deficiency of assets. (Preferential Payments in Bankruptcy Act 1888, and Companies (Con- solidation) Act 1908, section 209.) In the case of a company being wound up these claims are to be paid up to the date of the winding-up order, or the com- mencement of the winding-up, as the case may be, or up to the date of the debenture- holders taking possession, if the company is not being wound up, in priority to the claims of the holders of debentures under any floating charge created by the company. (Companies (Consoli- dation) Act 1908, sections 107 and 209.) In bankruptcy and winding-up procedure, where wages are due to a number of labourers, one proof may be made for the whole of such wages by the foreman or some other person act- ing on behalf of the workmen. (See title Preferential Payments, &c.) The Truck Acts prohibit the payment of wages in goods or in any way other than by money. Wagon=Hire Agreements. — See title Hire and Purchase Agreements. Waring, Ex parte (Rule in). — See title Proof in respect of Bills of Exchange. Warranty. — A guarantee : a stipulation. With regard to contracts for the sale of goods a warranty is defined as : — " An agreement with " reference to goods which are the subject of a " contract of sale, but collateral to the main " purpose of such contract, the breach of which " gives rise to a claim for damages but not to a " right to reject the goods and treat the contract " as repudiated." For convenience both warranty and condition are referred to here, but see title Condition. The general rule as to contracts of sale of goods is that a person buys at his own risk, the maxim caveat emptor applying; a warranty as to quality or fitness for a particular purpose may, however, be expressed at the time of the sale, but under certain circumstances as under, a condition or warranty may be implied : — - Warranty] 737 [Way-leave (a) Where a buyer, expressly or by implica- tion, makes known to the seller the particular purpose for which the goods are required so as to show that he relies upon the seller's skill or judgment, and the goods are of the description which it is in the course of the seller's business to supply, there is an implied condition that the goods shall be reasonably fit for such purpose (with a saving in favour of goods sold under patent or trade names). (Section 14 (1) Sale of Goods Act 1893.) (b) Where goods are bought by description from a seller who deals in goods of that description there is an implied condition that the goods shall be of merchantable quality, but if the buyer has examined the goods there is no implied condition as regards defects which such examination ought to have revealed. (Section 14 (2).) (c) Where goods are bought by sample there is an implied condition that the bulk shall correspond with the sample, that the buyer shall have a reasonable opportunity of com- paring the bulk with the sample, and that the goods shall be free from any defect rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. (Section 15 (2)-) (d) An implied warranty or condition as to quality and fitness for a particular purpose may be annexed by usage of trade. (Section 14 (3).) A good illustration of section 14, subsection 2 (supra), is afforded in the case of Wren v. Holt (1903, 1 K.B., 610.) Wren frequented a certain beerhouse of Holt's for the purpose of purchasing and consuming a particular manufacture of beer which he knew was sold there. The beer which was on one occasion supplied to Wren contained arsenic and poisoned him. He brought an action to recover damages for injury to his health. The jury found that he had not relied upon the seller's skill or judgment (under section 14, subsection 1), but had asked to be supplied with beer of the description he knew was sold there, and as there was consequently an implied condition that the goods should be of a merchantable quality he recovered damages. Of course, Wren had an opportunity of examining the beer before con- suming same, but the defect was not one which such an examination could reveal, for the presence of arsenic is discoverable only by chemical analysis. Apart from the question of quality, there is an implied warranty in every contract for the sale of goods (unless a contrary intention is shown) that (1) the buyer shall have and enjoy quiet possession of the goods, and that (2) the goods are free from undisclosed incumbrances. (Section 12.) Where a contract of sale is subject to a con- dition, the buyer may waive the condition or may elect to treat the breach of the condition as a breach of warranty. (Section 11 (ia).) If a statement is merely descriptive or com- mendatory of the subject-matter of a contract, but is not a representation which amounts to one of the terms of the contract, it cannot be either a condition or a warranty. An innocent misrepresentation (i.e., one not made fraudu- lently) which is not part of a contract does not give rise to an action thereon. Waste Book. — See title Journal. Wasting Assets. — See titles Depreciation, Profits available for Dividend, Trust Investments, Wear and Tear. Watered Stock. — An expression signifying the addition of stock to that already issued by a company or State without any additional pro- vision for the payment of interest on the same; or securities, the nominal value of which has been increased without a corresponding payment in cash. (See title Conversion of Stock.) Way Bill. — A record of passengers or goods being carried by public conveyance. Way-leave. — A right of way over another's land. A way-leave under a colliery lease may be pay- able for the right of carrying the coal of another mine, through the demised premises : 2BB Way-leave] 738 Wear (1) In order to be raised to the surface on other lands, or (2) In order to be " brought to bank " on the demised premises. Income-tax should be deducted by the payer when paying way-leaves, and accounted for to the Inland Revenue authorities, inasmuch as such way-leaves represent income to the land- lord, and there is a statutory provision to the effect that income-tax thereon must be paid at the source and accounted for to the Revenue by the person paying over the income. Wear and Tear. — By the Customs and Inland Revenue Act 1878, section 12, it is enacted as follows : — " Notwithstanding any provision to the con- " trary contained in any Act relating to income- " tax, the Commissioners . . . shall, in " assessing the profits or gains of any trade, " manufacture, or adventure, or concern in the " nature of trade, chargeable under Schedule " D, or the profits of any concern chargeable " by reference to the rules of that schedule, " allow such deduction as they may think just " and reasonable as representing the diminished " value by reason of wear and tear during the " year of any machinery or plant used for the " purposes of the concern and belonging to the " person or company by whom the same is " carried on." The allowance for wear and tear is specially deducted from the assessment, after the profits assessable on the proper average basis have been ascertained, and is to represent the diminished value during the year of assessment. For the purpose of enabling deductions for wear and tear to be allowed by the Commis- sioners, claims in respect of those deductions shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains of the concern for the purpose of which the machinery or plant is used, and the Commissioners in assessing those profits and gains shall make such allowances in respect of those claims as they think just and reasonable. No deduction for wear and tear or repayme on account of any such deduction shall be allowed in any year if the deduction when added to the deductions allowed on that account in any previous years to the person by whom the con- cern is carried on will make the aggregate amount of the deductions exceed the actual cost to that person of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on machinery or plant by way of renewal, improve ment, or reinstatement. Where, as respects any trade, manufactu adventure, or concern, full effect cannot be given to the deduction for wear and tear in any year, owing to there being no profits or gains charge able with income-tax in that year, or owing to the profits or gains so chargeable being less tha the deduction, the deduction or part of th deduction to which effect has not been given, as the case may be, shall for the purpose of making the assessment for the following year, be added to the amount of the deduction for wear and tear for that year and deemed to be part of that deduction, or if there is no such deduction for that year, be deemed to be the deduction for that year, and so on for succeeding years. (Financ Act 1907, section 26.) The allowance in respect of repairs and depre- ciation is in the hands of the District or Special Commissioners, as the case may be, and they have to decide in each case as it arises the adequacy of the deductions allowed, but in 1897 the Board of Inland Revenue — in response to a memorial of the Association of Chambers of Commerce of the United Kingdom — undertook to give instructions to surveyors, where neces- sary, that where a claim is made in respect of the introduction of more modern machinery in a factory, no objection is to be taken to the allow- ance, as a deduction from the assessable profits of the year, of so much of the cost of replace- ment as is represented by the existing value of the machinery replaced. Any excess in the cost of the new machinery over the actual present value of the old is an addition to the capital of the business, and cannot properly be regarded Wear] 739 [Will as a charge upon revenue for the purposes of income-tax assessment. For ordinary wear and tear (as distinct from obsolescence just referred to) the allowance on plant and machinery is usually at the rate of 5 per cent, per annum on the reducing value. In regard to ships the Liverpool Commis- sioners of Income Tax in 1901 fixed the follow- ing basis of allowance for depreciation in 1901-2 and future years : — 3 per cent, per annum on the prime cost of sailing ships, 4 per cent, for passenger and ordinary cargo steamers, and 5 per cent, for oil tank steamers. The Liverpool Commissioners further decided that depreciation to the extent of 97 per cent, for sailing ships and 96 per cent, for steamers is to be allowed, the " breaking up " values being considered 3 per cent, and 4 per cent, respec- tively, and if during any year or years the profit made is insufficient to exhaust the depreciation, the years during which depreciation will be allowed will be extended so that the full 97 per cent, or 96 per cent, may be obtained. (See Finance Act 1907, section 26, supra.) The original prime cost is to be used for determining the basis of depreciation, without regard to any subsequent purchase price, but the net cost of renewing engines and boilers may be added to the prime cost, and depreciation will then be allowed on the aggregate so obtained. The cost of ordinary repairs and renewals (exclusive of renewals of engines and boilers) is to be allowed as a deduction in the expense account. The allowance in the case of refrigerators or refrigerating plant is to be 6£ per cent, until the original cost has been allowed. The Liverpool Commissioners will specially consider any case coming under either of the following categories : — (1) Where the total allowance is exhausted before the termination of the ship's life and the ship subsequently changes hands. (2) Where a shipowner can prove that in con- sequence of special circumstances his vessel is depreciating by wear and tear more rapidly than others of a similar class. (See titles Depreciation, Income Tax.) Wharfage. — The charges payable for the use of a wharf when loading or discharging the cargo of a vessel. Wharfinger. — A person who owns or keeps a wharf for the purpose of shipping or taking delivery of goods. He has a general lien upon goods in his possession for any moneys due to him from the owner. Whole Life Policy. — One in respect of which the premium has to be paid during the whole life of the assured, while the sum assured is not pay- able until death. (See title Endowment Policy.) Will. — " The legal declaration of a man's inten- " tions, which he wills to be performed after his " death." The Wills Act 1837 provides that : — No will (which includes a codicil) shall be valid unless it shall be in writing, and executed in manner hereinafter mentioned (that is to say) it shall be signed at the foot or end thereof by the testator, or by some other person in his presence and by his direction ; and such signa- ture shall be made or acknowledged by the testator in the presence of two or more witnesses present at the same time, and such witnesses shall attest and shall subscribe the will in the presence of the testator, but no form of attestation shall be necessary. The above provision is qualified by the Act of 1852, which provides that a will shall be valid if the signature shall be so placed at, or after, or following, or under, or beside, or opposite to the end of the will, that it shall be apparent on the face of the will that the testator intended to give effect by such his signature to the writing signed as his will, and no will shall be affected by the circumstance that the signature shall not 2BB 2 Will] 740 > follow, or be immediately after the foot, or end of the will, or by the circumstances that a blank space shall intervene between the concluding word of the will and the signature, or by the circumstance that the signature shall be placed among the words of the testimonium clause, or of the clause of attestation, either with or with- out a blank space intervening, or shall follow or be after, or under, or beside the names, or one of the names of the subscribing witnesses, or by the circumstance that the signature shall be on a side or page, or other portion of the paper, or papers, containing the will whereon no clause, or paragraph, or disposing part of the will shall be written above the signature, or by the circum- stance that there shall appear to be sufficient space on or at the bottom of the preceding side or page, or other portion of the same paper on which the will is written, to contain the signature. Although no form of attestation is necessary, it is desirable and usual to state that the formalities of the Wills Act have been complied with. Section 5 of the Statute of Frauds provides that all devises of any lands shall be in writing and signed by the party so devising same, or by some other person in his presence and by his express directions, and shall be attested and sub- scribed in the presence of the said devisor by three or four credible witnesses, or else they shall be utterly void and of none effect. Section 3 of the Wills Act 1837 provides (inter alia) that it shall be lawful for every person to devise by his will, executed in manner therein- after required, all real (and personal) estate which he shall be entitled to, either at law or in equity, at the time of his death, and which if not so devised would devolve upon the heir-at- law, or the customary heir of him, or (if he became entitled by descent) of his ancestor. As, apparently, real estate of a testator dying without heirs does not come within the latter section, it has been suggested by some writers that the will of a devisor dying without heirs should be in accordance with the Statute of Frauds and attested by three or four credible witnesses, for the provisions of the latter Act (by section 2 of the Act of 1837) still subsist as to wills to which the Act of 1837 docs not extend. If any person attests a will containing any bequest, or devise to, or conferring any interest upon him or her, or the wife or husband of such person, the directions in the will in that respect will be " utterly null and void," but the fact that a will has been attested by a person bene- ficially interested will not otherwise affect the validity of the document. This provision does not apply to a creditor of the testator, nor to a person by reason only of his being named an executor in the will. The signatures of either the testator and/or the witnesses may be made by a mark, whether he or they can write or not. No obliteration, interlineation, or other altera- tion made in any will after the execution thereof shall be valid or have any effect, except so far as the words or effect of the will before such alteration shall not be apparent, unless such alteration shall be executed in like manner as hereinbefore is required for the execution of the will ; but the will, with such alteration as part thereof, shall be deemed to be duly executed if the signature of the testator and the subscrip- tion of the witnesses be made in the margin or on some other part of the will opposite or near to such alteration, or at the foot or end of, or opposite to, a ' memorandum referring to such alteration, and written at the end or some other part of the will. Everyone, except those under disability, may make a will, and disability may arise from infancy, idiocy, or lunacy. Ordinarily a person under twenty-one years of age cannot make a will, but any soldier being in active military service, or any mariner being at sea, may dis- pose of his personalty by will, irrespective of age ; in fact, under these circumstances, soldiers and sailors may still make a will verbally before witnesses, so as validly to dispose of personal estate. A lunatic may make a valid will during a lucid interval. Will] 741 [Will Apart from the foregoing, a will is void which has been obtained by force, fear, or undue influence. Every will shall be construed, with reference to the real estate and personal estate comprised in it, to " speak " and take effect as if it had been executed immediately before the death of the testator, unless a contrary intention shall appear by the will. Revocation. — A will is always revocable, even though the testator may declare it to be irrevocable. Every will made by a man or woman shall be revoked by his or her marriage (except a will made in exercise of a power of appointment when the real or personal estate thereby appointed would not, in default of such appointment, pass to his or her heir, customary heir, executor, or administrator, or the person entitled as his or her next-of-kin, under the statute of distributions). No will shall be revoked by any presumption of an intention on the ground of an alteration in circumstances. No will or codicil, or any part thereof, shall be revoked except as afore- said, or except by another will or codicil executed in manner hereinbefore required, or by some writing declaring an intention to revoke the same, and executed in the manner in which a will is hereinbefore required to be executed, or except by the burning, tearing, or otherwise destroying the same by the testator, or by some person in his presence, and by his direction, with the intention of revoking the same. Revival. — No will or codicil, or any part thereof, which shall be in any manner revoked, shall be revived otherwise than by the re-execu- tion thereof, or by a codicil executed in manner hereinbefore required, and showing an intention to revive the same ; and when any will or codicil which shall be partly revoked, and afterwards wholly revoked, shall be revived, such revival shall not extend to so much thereof as shall have been revoked before the revocation of the whole thereof, unless an intention to the contrary shall be shown. Every will and other testamentary instrument made out of the United Kingdom by a British subject (whatever may be the domicile of such person at the time of making the same or at the time of his or her death) shall as regards per- sonal estate, be held to be well executed for the purpose of being admitted in England and Ireland to probate, and in Scotland to confirma- tion, if the same be made according to the forms required either by the law of the place where the same was made, or by the law of the place where such person was domiciled when the same was made, or by the laws then in force in that part of His Majesty's dominions where he had his domicile of origin. With regard to real estate, the position is not quite clear, for the Act refers only to personalty, and it might be suggested that, under similar circumstances, there would be an intestacy as to realty, but the better opinion seems to be that as regards realty also a will executed outside the United Kingdom will be good if executed in accordance with the formalities required by the Wills Act. Every will and other testamentary instrument made within the United Kingdom by a British subject (whatever may be the domicile of such person at the time of making the same, or at the time of his or her death) shall, as regards personal estate, be held to be well executed, and shall be admitted in England and Ireland to probate, and in Scotland to confirmation, if the same be executed according to the forms required by the laws for the time being in force in that part of the United Kingdom where the same is made. No will or other testamentary instrument shall be held to be revoked or to have become invalid, nor shall the construction thereof be altered by reason of any subsequent change of domicile of the person making the same. A depository for the safe custody of wills and codicils of living persons has been provided at Somerset House. Wills and codicils enclosed in sealed envelopes are received by the Registrars at the principal or any district registry, and placed in, or forwarded to, the depository upon compliance with the prescribed regulations, and payment of a fee of 12s. 6d. Envelopes for wills, with the necessary indorsements and forms of Will] 742 [Winding- up affidavits, may be obtained on application at the principal registry above-mentioned. (See titles Accumulation of Income, Administration, Letters of, Administration of Assets, Codicil, Distribu- tion (Statutes of), Estate Duty, Executor, Free of Duty, Land Transfer Act, Legacy, Locke King's Act, Maintenance, Married Woman, Probate, Trust Investments, Trusts.) Winding-up. — The legal process by which an estate is collected and distributed. The term is most frequently applied to the process whereby the assets of a joint-stock company, which may or may not be insolvent, are distributed amongst those entitled thereto, and the company formally dissolved. Procedure. — There are three methods of wind- ing up a company, viz. : — (1) By the Court, (2) Under supervision of the Court, and (3) Voluntarily. Where the amount of the share capital of a company paid up or credited as paid up exceeds ^10,000 a petition to wind up the company must be presented to the High Court, or, in the case of a company whose registered office is situate within the jurisdiction of the Chancery Courts of the Counties Palatine of Lancaster or Durham, either to the High Court or to the Palatine Court having jurisdiction. Where the amount of the share capital of a company paid up or credited as paid up does not exceed ^10,000, and the registered office of the company is situated within the jurisdiction of a County Court having jurisdiction under this Act, a petition to wind up the company shall be pre- sented to that County Court. (Companies (Consolidation) Act 1908, section 131.) Commencement. — The winding-up of a com- pany by the Court is deemed to commence at the time of the presentation of the petition for the winding-up. (Section 139.) A voluntary winding-up is deemed to com- mence at the time of the passing of the resolu- tion authorising the winding-up (section 183), that is, in the case of a special resolution, the date of the confirmatory meeting, but if a com- pulsory order is made by the Court after the commencement of a voluntary winding-up, the winding-up recommences as from the date of the presentation of the petition to the Court. Where a supervision order is made it merely continues a voluntary winding-up, and acco inglv the proceedings are deemed to have co menced with the voluntary winding-up. Conclusion. — Winding-up proceedings, where conducted by the Court, are concluded and the company is dissolved from the date of an order of the Court to that effect. A voluntary winding-up is concluded when liquidator has distributed all the assets and la an account of the liquidation before the fin meeting of members. Within one week after meeting the liquidator must make a return the Registrar of Companies of the holding of the meeting and of its date. The Registrar on receiving the return must forthwith register it, and on the expiration of three months from the registration of the return the company shall be deemed to be dissolved : Provided that the Court may, on the application of the liquidator or of any other person who appears to the Court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the Court thinks fit. (Section 195.) Where a company has been dissolved, the Court may at any time w-ithin two years of the date of the dissolution, on an application being made for the purpose by the liquidator of the company, or by any other person who appears to the Court to be interested, make an order, upon such terms as the Court thinks fit, declaring the dissolution to have been void, and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved. (Section 223.) It shall be the duty of the person on whose application any such order deferring the date of, or declaring void, the dissolution was made, within seven days after the making of the order, to file with the Registrar an office copy of the order, and if that person fails so to do he shall be liable to a fine not exceeding five pounds for Winding-up] 743 [Winding-up every day during which the default continues. (Sections 195 and 223.) For the purpose of the statements required to be forwarded by the liquidator to the Registrar of Joint Stock Companies under Section 224 of tin Act, the respective liquidations are deemed to be concluded as under : — (1) Winding-up by the Court. — At the date on which the order dissolving the company has been reported by the liquidator to the Registrar, or at the date of the order of the Doard of Trade releasing the liquidator pursuant to section 157 of the Act. (2) Winding-up voluntarily or under super- vision. — At the date of the dissolution of the company unless at such date any funds or assets of the company remain unclaimed or undistributed in the hands or under the control of the liquidator, or anv person who has acted as liquidator, in which case the winding-up shall not be deemed to be concluded until such funds or assets have either been distributed or paid into the Companies Liquidation Account at the Hank of England. (Winding-up Rules 1909, Rule 188.) The term " winding-up " is also used in con- nection with the realisation and distribution of the assets of a limited partnership. In the event of the dissolution of a limited part- nership, the affairs of the firm shall be wound up by the general partners unless the Court otherwise orders. (Limited Partnerships Act 1907, section 6 (3).) Section 268 of the Companies (Consolidation) Act 1908 provides that : — In the case of a limited partnership the pro- visions of this Act with respect to winding-up shall apply with such modifications (if any) as may be provided by rules made by the Lord Chancellor with the concurrence of the President of the Board of Trade, and with the substitu- tion of general partners for directors. The Limited Partnerships (Winding-up) Rules 1909 made under the foregoing section provide inter alia as follows : — The provisions of the Companies (Consolida- tion) Act 1908, with respect to winding-up, and the provisions of the Companies (Winding-up) Rules 1909, so far as applicable to the proceed- ings in a winding-up by the Court, shall apply to the winding-up by the Court of limited partner- ships subject to the modifications following,- that is to say : — 1. The following expressions shall unless the context or subject-matter otherwise requires, be substituted in the applied provisions and in the forms prescribed by the said Rules for the expres- sions hereinafter particularly mentioned, that is to say : — " Limited Partnership " for " Company." " General Partner " for " Director " and for " Secretary," and for " Secretary or Chief Officer." " Manager, Clerk, or Servant " for " Officer." " Partner " for " Member " or " Share- holder." " Principal place of business as registered " for " registered office." 2. In these Rules, unless the context or subject- matter otherwise requires, the expression " the Act " shall mean the Companies (Consolidation) Act 1908, and the expression " the Court " shall mean the Court which has jurisdiction to wind up the limited partnership. 3. For the purposes of the application of sec- tion 124 of the Act, the provisions of these Rules with regard to the liability of partners and others as contributories shall be substituted for the pro- visions of section 123 of the Act. 4. In the event of a limited partnership being wound up by the Court every present and past partner, general or limited, shall be liable to con- tribute to the assets of the limited partnership to an amount sufficient for payment of its debts and liabilities, and the costs, charges, and expenses of the winding-up, and for the adjustment of the rights of the contributories amongst themselves, with the qualifications following, that is to say : — Winding-up] 744 [Winding-up (i) No present or past limited partner shall be liable to contribute as such to the assets of the limited partnership to any greater amount than the amount of any part of his contribution as such limited partner which he may have drawn out or received back since he became or whilst he remained a limited partner, except in the case of a present limited partner who is a past general partner and in the case of a past limited partner who has become a present general partner. (2) No past general partner shall be liable to contribute as such to the assets of the limited partnership, except in respect of part- nership debts and obligations incurred whilst he continued to be a general partner; but every past general partner who has become a limited partner shall in addition to any amount which he may be liable to contribute in respect of partnership debts and obligations incurred whilst he continued to be a general partner be liable to contribute to the assets of the limited partnership to an amount equal to the amount of any part of his contribution as such limited partner which he may have drawn out or received back since he became or whilst he remained a limited partner. , (3) No past partner, general or limited, shall be liable to contribute as such to the assets of the limited partnership unless it appears to the Court that the existing partners are unable to satisfy the contributions required to be made by them in pursuance of this Rule. (4) No sum due to any partner, general or limited, in his character of a partner, by way of capital, dividends, profits, or otherwise, shall be deemed to be a debt of the limited partner- ship payable to such partner in a case of com- petition between himself and any other creditor not being a partner; but any such sum may be taken into account for the purpose of the final adjustment of the rights of the contributories amongst themselves. 5. In the event of any contributory dying in insolvent circumstances and of an order being made for the administration of his estate accord- ing to the law of bankruptcy, either before or after he has been placed on the list of contribu- tories, the trustee of his estate shall be deemed to represent the deceased for all purposes of the winding-up of the limited partnership and shall be deemed to be a contributory accordingly, and may be called upon to admit to proof against the estate of the deceased or otherwise to allow to be paid out of his assets in due course of law any moneys due from the deceased in respect of his liability to contribute to the assets of the limited partnership being wound up. 6. For the purposes of the application of sec- tion 268 of the Act, the expression " principal place of business " as used in that section shall mean the principal place of business as regis- tered, and the word " member " as used in that section shall mean a general partner only and shall not include a limited partner. 7. The provisions of section 131 of the Act shall not apply, but every petition for the winding-up of a limited partnership registered in England shall be presented to the High Court, and that Court shall, subject as hereinafter mentioned, be the Court having jurisdiction to wind up limited partnerships registered in England. Provided always that the Judge of the High Court may, by the winding-up order or by any further order, direct that the winding-up of the said limited partnership shall proceed in either of the Chancery Courts of the Counties Palatine of Lancaster and Durham or in any County Court having jurisdiction to wind up a company within the jurisdiction of which said Palatine or County Court the principal place of business as registered of such limited partnership shall be situate. And thereupon the said winding-up shall pro- ceed accordingly, and the said Palatine or County Court shall for the purposes of such winding-up have all the jurisdiction and powers of the High Court in relation to the winding-up of that limited partnership ; and every officer of the said Palatine or County Court who, as the prescribed officer in relation to the winding-up of companies in that Court is bound to perform any duties in relation to such winding-up, shall perform the like duties in relation to the winding-up of a limited partner- Winding-up] 745 Winding-up ship, and shall for that purpose have all the powers of the prescribed officer of the High Court. 8. The provisions of section 137, subsection (1), paragraphs (a) and (&), and subsection (3) of the Act shall not apply. A petition for the winding-up of a limited part- nership if presented in the name of the firm shall be signed by all the general partners, if there are more than one. 11. Every demand for payment, and every notice of the institution of any action or other proceeding under section 268 of the Act as applied by these Rules, and every petition for the winding-up of a limited partnership unless pre- sented in the name of the firm by all the general partners jointly, if there are more than one, shall be served upon the limited partnership at the principal place of business of the limited partner- ship as registered, by delivering the same to one of the general partners there or to some person having at the time of service the control or management of the partnership business there, unless the Court or a Judge shall otherwise direct. Every petition for the winding-up of a limited partnership presented in the name of the firm by all the general partners, jointly, if there are more than one, or presented by any general partner, shall be served on each of the limited partners personally unless the Court or a Judge shall otherwise direct. Every notice and other document requiring to be served upon the limited partnership for the service of which no special mode is prescribed may be served by post or by leaving the same at the principal place of business of the limited part- nership as registered in an envelope addressed to the limited partnership in the firm-name as registered. 12. For the purposes of the application of sec- tions 148 and 175 of the Act the preliminary report of the Official Receiver to the Court shall be a report, (a) as to the contributions of the partners and the estimated amount of assets and liabili- ties of the limited partnership ; and (6) if the limited partnership has failed, as to the causes of the failure; and (c) whether in his opinion further inquiry is desirable as to any matter relating to the promotion, formation, or failure of the limited partnership or the conduct of the business thereof. The further report or reports (if any) of the Official Receiver shall state the manner in which the limited partnership was formed and whether in his opinion any fraud has been committed by any person in its promotion or formation, or by any partner, general or limited, in relation to the limited partnership since the formation thereof, and any other matters which in his opinion it is desirable to bring to the notice of the Court. The Court may, on consideration of any such further report stating that in the opinion of the Official Receiver a fraud has been committed as aforesaid, direct that any person who has taken part in the promotion or formation of the limited partnership or has been a partner, general or limited, shall attend before the Court on a day appointed by the Court for that purpose and be publicly examined as to the promotion or forma- tion or the conduct of the business of the limited partnership, or as to his conduct and dealings as a partner. 13. For the purpose of settling the list of con- tributories the Court shall have power to rectify the Register of the limited partnership in respect of:— (a) The name of any of the partners whether general or limited; and (6) The sum contributed by any limited partner; and (c) The nature of the liability of any partner, whether general or limited as therein registered and otherwise as may be neces- sary for the purpose aforesaid, upon the application of any person aggrieved or of any partner whether general or limited. 14. Any report of the Official Receiver under Rule 74 of the Companies (Winding-up) Rules 1909, as applied by these Rules, may extend to Winding-up] 746 [Workmen's the conduct of the limited, as well as of the general partners. 15. The Official Receiver shall give to each of the limited partners also the notice to attend the first meetings of creditors and contributories to be given to general partners under Rule 119 of the Com- panies (Winding-up) Rules 1909, as applied by these Rules, and it shall be the duty of every such limited partner to attend accordingly. 16. Every person who is or has been a partner, whether general or limited, of a limited partner- ship which is being wound up shall be entitled free of charge to inspect the file of proceedings and to take copies or extracts under Rule 19 of the Companies (Winding-up) Rules 1909, as applied by these Rules, and shall be entitled to be furnished with such copies or extracts at the rate therein mentioned. 17. Notwithstanding anything contained in sec- tions 127 or 151 of the Act, the liquidator shall not, in the event of any contributory being adjudged bankrupt, entering into an arrangement to pay his creditors less than twenty shillings in the pound, or dying in insolvent circum- stances, and of an order being made for the administration of his estate according to the law of bankruptcy, have power to prove, rank, claim, and draw a dividend for any balance against the estate of such contributory, or to take and receive dividends in respect of such balance, until the claims of the other separate creditors of such contributory for valuable consideration in money or money's worth have been satisfied. 18. The provisions of section 172 of the Act shall apply only when the affairs of the limited partnership have been completely wound up by the Court under an order for winding-up not made on the ground that the limited partnership has been dissolved. 19. The provisions of section 222 of the Act shall apply where any limited partnership has been wound up by the Court under an order for winding-up made on the ground of the previous dissolution of the limited partnership as well as where the limited partnership has been wound up on any other ground. (See titles Arrangements [Joint Stock Com- panies], Calls, Contributory, Liquidator, Liqui- dators' Accounts, Petition to Wind up a Com- pany, Resolution, Supervision Order, Voluntary Liquidation, &c, &c.) Winding-up Order. — See titles Supervision Order, Winding-up. Without Prejudice. — A phrase used when ne dating for a compromise of some dispu negativing all waiver of rights in the event of the offers of settlement proving ineffectual. Negotiations commenced " without prejudice " are all without prejudice notwithstanding the omission of the phrase from future correspon- dence. But a written notice, if it amounts to an act of bankruptcy, will be admissible as evidence of such even though it be expressed to be " without prejudice." (Re Daintrey, 1893, 2 Q.B. 116.) Without Recourse to Me (or Sans Reconrs).—See title Indorsement. Working Account. — A Manufacturing Account, and sometimes a Trading Account, is called a Work- ing Account. (See titles Gross Profit and Manufacturers' Accounts.) Working Capital. — See title Capital. Work in Progress. — See title Incomplete Work. Workmen's Compensation. — The principal statutes relative to the liability of employers to their employees for injuries to the latter in the course of and arising out of their employment are the Employers' Liability Act 1880 and the Work- men's Compensation Act 1906. The Workmen's Compensation Act 1906, which came into operation on 1st July 1907, repealing the Acts of 1897 and 1900, gives to employees the right to claim compensa- tion from their employers for personal injuries sustained and certain specified industrial diseases contracted in the course of their employment, pro- vided, however, that the injury disables them for a period of at least one week from earning full wages. This Act constitutes a material advance on those superseded, and though not of universal application is very comprehensive. The only employees excepted are : — Workmen's! 747 [Workmen's (i) Persons employed otherwise than by way of manual labour whose remuneration exceeds ^250 per annum. (2) Persons whose employment is of a casual nature and who are employed otherwise than for the purposes of the employer's trade or business. (3) Members of a police force. (4) Outworkers, i.e., persons to whom work is given to be done in their own homes or other premises not controlled by the employer. (5) Members of the employer's family dwelling in his house. (6) Persons in the naval or military service of the Crown. The amount of compensation payable by the ■employer may be stated generally as follows : — (a) Where total or partial incapacity for work results from the injury, a weekly payment during the incapacity not exceeding 50 per cent, of the employee's average weekly- earnings calculated in accordance with the first schedule to the Act, such weekly pay- ment not to exceed £1. Provided, however, that if an injured employee, who is totally incapacitated, is under 21 years of age at the time of injury, and his average weekly earnings are less than 20s., he shall be paid the full amount of the average up to 10s. per week, and that in any case where the employee is a minor at the date of the injury, the amount of the weekly payment may be increased after twelve months' disablement to 50 per cent, of the weekly sum he would probably have then earned but for the accident, but not in any case exceeding £1. (b) Where death results from the injury — (1) If there are dependants wholly depen- dent on the deceased's earnings, a sum equal to his earnings, actual or esti- mated, as the case may be, in accord- ance with the first schedule to the Act, during the three years preceding the injury, or the sum of ^150, whichever is the larger, but not exceeding in any case ^300 : provided that the amount of any weekly payments under para- graph (a) above shall be deducted from such sum. (2) If the employee leaves dependants partially dependent upon him a sum to be determined by agreement, or in default, by arbitration, under the Act. (3) If he leaves no dependants, the reason- able expenses of his medical attend- ance and burial, not exceeding £10. If any question arises in any proceedings under the Act as to the liability to pay compensation under the Act, or as to the amount or duration of compensation under the Act, the question, if not settled by agreement, shall, subject to the pro- visions of the first schedule to the Act, be settled by arbitration in accordance with the second schedule to the Act. A weekly payment or a sum paid by way of redemption thereof shall not be capable of being assigned, charged, or attached, and shall not pass to any other person by operation of law, nor shall any claim be set off against the same. The following section (5) of the Act is of special importance to accountants : — (1) Where any employer has entered into a contract with any insurers in respect of any liability under this Act to any work- man then, in the event of the employer becoming bankrupt, or making a composi- tion or arrangement with his creditors, or if the employer is a company, in the event of the company having commenced to be wound up, the rights of the employer against the insurers as respects that liability shall, notwithstanding anything in the enactments relating to bankruptcy and the winding-up of companies, be trans- ferred to and vest in the workman ; and upon any such transfer the insurers shall have the same rights and remedies, and be subject to the same liabilities as if they were the employer, so, however, that the Workmen's] 748 [Writing insurers shall not be under any greater liability to the workman than they would have been under to the employer. (2) If the liability of the insurers to the work- man is less than the liability of the employer to the workman, the workman may prove for the balance in the bank- ruptcy or liquidation. (3) There shall be included among the debts which, under section 1 of the Preferential Payments in Bankruptcy Act 1888, and section 4 of the Preferential Payments in Bankruptcy (Ireland) Act 1889, are in the distribution of the property of a bankrupt, . to be paid in priority to all other debts, the amount not exceeding in any individual case one hundred pounds, due in respect of any compensation the liability wherefor accrued before the date of the receiving order .... and those Acts .... shall have effect accordingly. Where the compensation is a weekly payment, the amount due in respect thereof shall, for the purposes of this pro- vision, be taken to be the amount of the lump sum for which the weekly payment could, if redeemable, be redeemed if the employer made an application for that purpose under the first schedule to this Act. Note. — The preferential debts payable in the distribution of the assets of a company being wound up include, unless the com- pany is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another com- pany, all amounts (not exceeding in any individual case one hundred pounds) due in respect of compensation under the Workmen's Compensation Act 1906, the liability wherefor accrued before the pre- scribed date, subject nevertheless to the provisions of section 5 of that Act. (Com- panies (Consolidation) Act 1908, section 209.) (See title Preferential Payments in Bankruptcy and Winding-up.) (4) (5) The provisions of this section with respect to preferences and priorities shall not apply where the bankrupt or the com- pany being wound up has entered into sue a contract with insurers as aforesaid. Note. — It would appear that where the liability of the insurer to the employer is not so great as that of the employer to the workman, the last- named, having regard to subsection 5, may be in a worse position than if his employer had not insured at all, e.g., if the liability of the employer to the workman were £100, and the former only insured to the extent of £50, the workman would get £50 from the insurer and prove as non-preferential creditor for the balance; wherea if his employer had not insured he would be a preferential creditor for the whole .£100, and (subject to assets) would be paid in full. The Assurance Companies Act 1909 applies to companies transacting employers' liability insurance business. [See title Assurance Companies Act 1909.) Writing-Down Assets. — The term given to the process of reducing the book value of assets. It may have a wider effect than the practice of merely providing for wear and tear and deprecia- tion, in so far as assets may be written down to- a given amount, or written off altogether (irre- spective of their actual value) as a prudential measure. (See title Reserves and Reserve Funds (Secret Reserves).) Writing=Up Assets. — The term given to the process of increasing the " book value " of assets, upon the assumption that they have improved in value, although the alleged increase has not been- actually realised. This is not a practice to be recommended, particularly in the case of a joint- stock company, but an auditor cannot prevent the directors of a company from increasing the book values of their assets in a bond fide manner. The- " profit " resulting from such an increase in values would not be available for dividend where the regulations provided for the distribution of " realised profits " (q.v.). But in the case of the- Writing] 749 [Yearly Natal Land Co. the company credited the Profit and Loss Account in the year 1882 with a sum of about £70,000 in respect of an increased value attributed to their lands in South Africa, over and above the cost price of such lands at which thcv had previously stood in the company's books, and by so doing neutralised the effect of a bad debt of a somewhat similar amount which had been written off to the debit of the Profit and Loss Account, and also practically balanced the profit and loss of the company as at a given date. A profit having been subsequently earned a divi- dend was declared thereout in 1886. The Court was asked to restrain the payment of such divi- dend on account of the increased book value of the assets already referred to, same being in excess of the true value of the lands in question at the time of declaring the dividend. The Court held that, " assuming that a part of the capital " had in fact been lost, and not subsequently " made good, no sufficient ground was thereby " afforded for restraining the payment of the " dividend; that the fact of the company having " written up the value of their land in 1882 and " credited the increase to the profit of that year " in the manner described, did not place them " under any obligation to bring into account in " every subsequent year the increase or decrease " in the value of their lands; and that, having " regard to the case of Lee v. Neuchdtel " Asphalte Co., it was not correct, in estimating " the profits of a year, to take into account the " increase or decrease in the value of the capital " assets of the company." (Bolton v. Natal Land Co., 1892, 2 Ch. 124.) Yearly Tenancy. — A tenancy from year to year, or yearly tenancy, is constituted by a letting which is liable to be terminated at the end of the first or any following year, by either landlord or tenant, by a notice to quit, which is a six months' notice, expiring with the current year. Thus, a yearly tenancy commencing 1st January 1899, ' s determinable by a notice given any time up to 30th June 1899, which notice would expire on 1st January 1900, when the tenancy would terminate; but if the notice were not given by, at latest, 30th June 1899, the tenancy could not end until 1st January 1901, and then only if six months' prior notice had been given. In the absence of any notice, the tenancy may continue for any number of years, until the tenant gives up his interest or the landlord's title expires. Death would not, of itself, be sufficient to terminate the tenancy, but in the event of death the notice must be given to or by the parties for the time being entitled to the term or the rever- sion, as the case may be. A tenancy " for one year certain, and so on from year to year," is a tenancy for two years certain ; but a tenancy for " a year " or for " one year certain " is good for one year, and requires no notice at the end of the year. A tenant for a certain term who remains in possession after the end of his lease, and con- tinues or agrees to pay the same rent, is a yearly tenant on the same conditions as those in the lease, so far as applicable to a yearly tenancy, but only in the absence of any agreement to the contrary. THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO SO CENTS ON THE FOURTH DAY AND TO Sl.OO ON THE SEVENTH DAY OVERDUE. : 1935 m/w 1*7 193i i pflA" »■* lo "' ■., St ii n JlH * ■ LD 21-100m-8,'34 I JUL-1^ A J 241706 .ARY