Document Request: 1839 Litigation - Richardson v Richardson
Document Description: A casual conversation is insufficient notice to prevent reputed ownership. The Court will restrain assignees from proceeding at law to invalidate transfer of shares by virtue of reputed ownership.
Transcription URL: https://richardson.surnametree.com/library/vdocs/D_31#31
Document Transcription:CASES IN BANKRUPTCY
Ex parte ANN RICHARDSON -- In the matter of CHRISTOPHER RICHARDSON
C of R Jan 14, 1839
A casual conversation is insufficient notice to prevent reputed ownership. The Court will restrain assignees from proceeding at law to invalidate transfer of shares by virtue of reputed ownership.
MR RICHARDSON, the bankrupt, was one of the original shareholders in certain mines in Germany. The produce consisted of copper, silver, lead and iron; and the property in them was transferred by deeds registered in the German courts to three English trustees, for the benefit of thirty-six shareholders.
Mr. Richardson applied to his sister, the petitioner, for a loan upon the security of these shares. She consented, and sold £2,000 three per cent. annuities, and paid the proceeds, £1,800, to her brother, on the 1st March 1937.
On the same day he delivered to his sister a packet, on which was indorsed, in his own handwriting, the following words: “Shares in the German mines, the property of Miss Richardson.”
The packet contained the original certificates of the mining shares, and also a receipt for the sum paid by him upon a call on the shares, together with a memorandum in the bankrupt’s handwriting, addressed to the petitioner, as follows:
“Limehouse, 1st March 1837.
“My dear Ann,
“The accompanying two shares in the German Mining Company (Nos 74 and 75), and for which I have this day been offered £2,100, I deposit with you as a security for the £2,000 three per cent. reduced annuities you have this day placed at my disposal; and I do hereby engage to transfer the said two shares to you, on being requested so to do.
“(Signed) CHRISTOPHER RICHARDSON.”
“To Miss Ann Richardson”
On receiving this packet she put the same, together with other documents belonging to her, into another packet, and sealed the whole up with her seal.
The petition then stated, that the petitioner then proposing a visit to the continent, and being then resident in the house of her said brother, and having no suitable place of deposit for the security of the said packet, delivered the same in its sealed state and condition, with its before-mentioned contents or enclosures, to the said Christopher Richardson, for safe custody, requesting him to take charge thereof; which he consented to do, expressing his intention to place the same for that purpose in the iron safe in his counting-house, and which he accordingly did. That the petitioner shortly afterwards visited the continent, and returned home to the said brother’s house in the second week in November 1837; shortly after which she requested him to re-deliver the said packet to her, and the said Christopher Richardson did accordingly return the said packet to the petitioner, with the seal perfect, unbroken, and in all respects in the same state and condition as when she delivered it to him as aforesaid; and the said certificates,
receipt and letter have ever since been in the possession of the petitioner. That the said German Mining Company was established for the working of mines in the kingdoms of Bavaria and Russia and the grand duchy of Nassau, and was possessed of and interested in various mines or mining properties, or interests and rights of mining, locally situate in those countries, the same being property of an immovable nature or character. That the said mines or mining property have been conveyed to the trustees for the said company, of whom Bernard Hebeler, thereafter named, was one, being shareholders, their heirs and assigns for ever, in trust for themselves and the other shareholders of the said company, of whom the said bankrupt was one. That the said company was not of a trading or commercial description, but was to all intents and purposes a mining company. That the shares of the company were not goods and chattels, but represent the interest of the members in mines or mining property. That it is provided by the deed of the said company that no shares of the said company shall be transferred or assigned without the consent of a board of directors; and that on a transfer being made the original certificate or certificates of the party transferring the same shall be delivered up to the directors to be cancelled, and a new certificate or certificates shall be given to the party to whom such transfer shall be made. That due notice of the said deposit of the said shares, and of the title and interest of the petitioner of the same, was in fact given to the said company and to the board of directors before the said bankruptcy of the said Christopher Richardson. That the facts and particulars of the said deposits of the said two shares by the said Christopher Richardson, by way of security to the petitioner upon the said loan or advance by her, were afterwards, and a considerable time before the said bankruptcy, distinctly communicated and made known by the said Christopher Richardson to the said Bernard Hebeler, then and still one of the directors of and a trustee as before mentioned for the said company, who was a near connexion of the petitioner, he having married a near relation of hers; and he was and continued from that time to the time of the said bankruptcy perfectly well aware of the petitioner’s title and interest in the two mining shares under and by virtue of such deposit. That at a meeting of the board of directors of the said company, at which the said Bernard Hebeler was present, upon the name of the said Christopher Richardson, together with other shareholders, being mentioned by the secretary to the said board as not having paid the amount payable under a call upon shares then lately made, the said Bernard Hebeler then openly stated and made known to the said board, in the hearing of the directors and secretary then present, that the said Christopher Richardson had mortgaged his said shares to his sister, Miss Richardson, the petitioner; and that the amount of the said call would be paid by her; and which last-mentioned statement was made before the bankruptcy of the said Christopher Richardson. That the said assignees, in prosecution of their said claim, have lately expressed their intention and in fact intended to commence some action at law or other proceedings against the petitioner for the recovery of the said certificate of the said shares; and the petitioner was advised that the said assignees ought in the meantime to be restrained, by the order and injunction of this Court, from commencing or prosecuting any such action or other proceedings for the recovery of such certificates.
The petitioner prayed that she might be declared an equitable mortgagee, and that the assignees might be restrained from prosecuting any action for recovery of the certificates.

Mr Anderdon, for the petitioner, stated that this was a clear equitable mortgage, the consideration beyond dispute, the property of the lady in the funds having been sold out and received by the bankrupt. The affidavit of Mr. Bernard Hebeler, one of the directors, and a personal friend of the family, together with the evidence of the secretary of the company, prove the notice relative to the shares. Mr. Hebeler deposed that the bankrupt applied to him for a loan, when he advised him to part with his shares, but was told that they were already pledged to the petitioner for £2,000; that on a subsequent occasion, the day of the bankrupt’s insolvency, at a meeting of the directors, allusion having been made to arrears of calls due on Mr. Richardson’s shares, he notified the transfer to the sister, and an enquiry was made by the secretary to know who should be applied to for payment.
On a viva voce examination, Mr James, secretary to the company, stated, upon the examination of Mr Anderdon, that he well remembered the meeting of directorson the morning of 7th of December, and heard Mr Hebeler mention the mortgage and transfer of shares to Mr Richardson’s sister. One of the directors, a creditor, objected to the transfer. The meeting was over about three o’clock; and he believed the declaration of insolvency was filed the same evening.
This witness being examined by the Court stated that Mr Richardson paid the calls on the shares. Since the bankruptcy they have been paid by the assignees. Mr Richardson’s difficulties were the subject of conversation before Mr Hebeler’s mention of the deposit of the shares with Miss Richardson. His observation was incidental and casual. Had it been a formal notice of transfer he should have made a minute of it, which he had not done. It is the custom in the company to ask leave of the board for transfer of shares. When this is not done the shares are treated as in the hands of the original holders. Such applications were previous to transfer; the board knew nothing of deposits by way of mortgage.
Mr Bacon, on the same side, said that this notice was sufficient, and referred to Smith v. Smith (a), ex parte Harrison in the matter of Medley. (b) By the rules of the company, no transfer of the shares subsequent to that of the petitioner could have been made without delivery up of the certificates; and no transfer could have been made by the bankrupt without possession of the certificates, which were in the hands of the petitioner. Before the act of bankruptcy the reputed ownership of the bankrupt had ceased. All that was required in this kind of case was knowledge, and not a formal notice.
Mr Swanston and Mr Russell for the assignees:--
Sufficient has not been done to prevent the operation of the clause relating to the reputation of ownership. The certificates were not actually in the petitioner’s possession until after the bankruptcy. The alleged notice was a mere casual conversation amongst strangers, without Miss Richardson’s cognizance (a); and in the case of Smith v. Smith (b) the notice was to one of the trustees of private property; and with respect to the allegation in the petition, that this case is not within the statute, as it is in the nature of real property, the answer is obvious; this point was fully discussed, and the law settled, that in cases of this nature the property is personal. Ex parte Lancaster Canal Company. ( c ) This point has lately been under the consideration of the Lord Chancellor relative to property in Scotland (d); and although judgment has not yet been pronounced, the result seems to be clear.(e) And if, as the petitioner insists, this is to be considered as real estate, the lex loci must be considered, and the German law does not
recognize equitable mortgages.
Mr Anderdon was not called on to reply.
Sir J Cross: --
Upon the integrity of this case no doubt can be entertained. The petitioner lent the money to her brother, and received what she considered undeniable security. But it is said that sufficient notice was not given. The bankrupt had no power over the shares; and could not transfer them without the certificates.(a) The petitioner had therefore entire dominion over the property; the order and disposition were in her; and the bankrupt could have acquired no property in the certificates, except by the felonious act of breaking the petitioner’s seal. This is not like case of a bond which has been assigned; for there the original creditor might receive the amount due upon it, without its production. Bankruptcy ensued on the 7th of December in the evening, when the declaration of insolvency was filed; but the directors of the Company had knowledge in the morning of that day of the extinction of the reputed ownership. The petitioner is entitled to have the property sold for her benefit, and to become a creditor in the event of a deficiency.
With respect to ex parte Pollard, I still entertain the opinion I expressed when it was before this Court; but be that as it may, it very much differs from the present case.
Sir George Rose:--
I should have deeply regretted if the petitioner could, by non-compliance with any legal requisite, have been deprived of the property upon which she advanced this sum to her brother in his distresses; but there is not any foundation for the objection; the conversation with Mr. Hebeler was sufficient notice, even if it had not been mentioned before at the board. Notice, therefore, was given, and what can it signify by whom? Though a bankrupt was up to the ears in insolvency, notice at any fractional period of time before the act of bankruptcy would be sufficient to take the case out of the statute. Order and disposition is always a question of fact, and quite enough appears in this case to show it was not in the bankrupt. If this was to be taken as real property no notice was requisite, the authority having been completed by the writing on the deposit of the certificates. The German law on transfer is not in this case of any effect, this being merely a transfer of documents representing shares of interest in property, and the petitioner only seeking her portion of the profits of real estate, as in ex parte Pollard. The assignees must be restrained from proceedings at law for the recovery of these shares.
The petitioner declared entitled to relief as prayed, with the costs, there having been a memorandum in writing.
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