Miln and Gill v. Arizona Copper Co. [1900] ScotLR 37_602 (20 March 1900)

Miln and Gill v. Arizona Copper Co. [1900] ScotLR 37_602 (20 March 1900)

The transfer of 26,950 deferred shares to the company 'for behoof of the preferred shareholders' created a trust in favour of that class, not a surrender to the company. The subsequent scheme and resolutions purporting to extinguish the rights of the preferred shareholders to those shares were ultra vires, not authorised by the articles of association, and invalid. The shares remain held in trust for the preferred shareholders.

Citation
[1900] ScotLR 37_602
Parties
Pursuers: Miln and Gill; Defender: Arizona Copper Company, Limited
Jurisdiction
Scotland
Judgment Date
20 March 1900
Procedural Posture
Civil Action (company Law) / Appeal (reclaiming Note) From Lord Ordinary's Interlocutor
Outcome
Decree of reduction granted; scheme and resolutions set aside as ultra vires; declaration that 26,950 deferred shares are held in trust for preferred shareholders; other conclusions dismissed.
Legal Topics
Transfer of Shares, Company Holding Own Shares, Trust for Shareholders, Modification of Shareholder Rights, Ultra Vires Acts
Company Law Trusts and Equity Transfer of Shares Company Holding Own Shares Trust for Shareholders Modification of Shareholder Rights Ultra Vires Acts

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Parties

Miln and Gill

Pursuers

Arizona Copper Company, Limited

Defender

Procedural Posture

Civil Action (company Law) / Appeal (reclaiming Note) From Lord Ordinary's Interlocutor

Legal Issues

  1. 1 Whether the transfer of fully paid deferred shares to the company 'for behoof of the preferred shareholders' created a trust in favour of that class or amounted to a surrender to the company as a whole;
  2. 2 Whether the subsequent scheme and resolutions extinguishing the rights of preferred shareholders to those shares was ultra vires and invalid;
  3. 3 Whether a company can hold its own shares in trust for a class of shareholders;

Ratio Decidendi

The transfer of 26,950 deferred shares to the company 'for behoof of the preferred shareholders' created a trust in favour of that class, not a surrender to the company. The subsequent scheme and resolutions purporting to extinguish the rights of the preferred shareholders to those shares were ultra vires, not authorised by the articles of association, and invalid. The shares remain held in trust for the preferred shareholders.

Court Disposition

Decree of reduction granted; scheme and resolutions set aside as ultra vires; declaration that 26,950 deferred shares are held in trust for preferred shareholders; other conclusions dismissed.

Orders

  • Reduction of the agreement of 19th and 20th July 1898 and related resolutions.
  • Declaration that 26,950 deferred shares are held in trust for the preferred shareholders and belong beneficially to them.