Morris v. Union Bank of Canada / Code v. Union Bank

Morris v. Union Bank of Canada / Code v. Union Bank

The court held that absent the written agreement required by section 27 of the Companies Act, services cannot be treated as payment in lieu of cash and the shareholders remain liable to the liquidator for the unpaid balance on the shares; accordingly the appeals were dismissed and the lower courts’ judgments affirmed.

Citation
(1901) 31 SCR 594
Parties
Defendant/appellant: W.D. Morris; Defendant/appellant: R.G. Code; Plaintiff/respondent/appellant: The Union Bank of Canada; Defendant/respondent: Mary A. Morris
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
16 November 1901
Procedural Posture
Collection Action Arising in Company Winding Up; Appeal to Supreme Court of Canada / On Appeal From the Court of Appeal for Ontario; Judgment on Appeal Delivered
Outcome
Appeals dismissed with costs; judgments below affirmed.
Legal Topics
Payment for Shares, Written Agreement for Money's Worth (s.27 Companies Act), Shareholder Liability in Liquidation, Transfer to Purchaser for Value Without Notice
Source Language
English
Commercial Law Company Law Corporate Law Payment for Shares Written Agreement for Money's Worth (s.27 Companies Act) Shareholder Liability in Liquidation Transfer to Purchaser for Value Without Notice

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Parties

W.D. Morris

Defendant/appellant

R.G. Code

Defendant/appellant

The Union Bank of Canada

Plaintiff/respondent/appellant

Mary A. Morris

Defendant/respondent

Procedural Posture

Collection Action Arising in Company Winding Up; Appeal to Supreme Court of Canada / On Appeal From the Court of Appeal for Ontario; Judgment on Appeal Delivered

Legal Issues

  1. 1 Whether services rendered could constitute payment for shares in lieu of cash absent a written agreement required by section 27 of the Companies Act
  2. 2 Whether the transfer of shares to Mrs. Morris made her a purchaser for value without notice and relieved liability
  3. 3 Whether shareholders remain liable to the liquidator for unpaid balance on issued shares when no written agreement for money’s worth exists

Ratio Decidendi

The court held that absent the written agreement required by section 27 of the Companies Act, services cannot be treated as payment in lieu of cash and the shareholders remain liable to the liquidator for the unpaid balance on the shares; accordingly the appeals were dismissed and the lower courts’ judgments affirmed.

Court Disposition

Appeals dismissed with costs; judgments below affirmed.

Orders

  • Appeals dismissed with costs