83
In the case of Re. The Harmony & Montague Tin & Copper Mines Co., Ltd., (28 Law Times N. S. page 153),
commonly known as "Spargo's Case" this principle was finally and definitely settled and the same principle has been follow-
ed subsequently in other cases.
The headnote of the case in question states :- "Where "there is a bona fide debt, payable in money at once by "a company to one of its shareholders, and a bona fide "liability of the same amount on shares payable at once
one "by the shareholder, and in settling accounts the one debt "is set off against the other, that amounts to a payment "for the shares in cash within the 25th Section of the
"Companies Act, 1867".
Section 25 of the Companies Act, 1867 states as
follows:- "Every share in any Company shall be deemed "and taken to have been issued and to be held subject to "the payment of the whole amount thereof in cash unless "the same shall have been otherwise determined by a "duly made in writing and filed with the Registrar of Joint "Stock Companies at or before the issue of such shares".
In Spargo's Case, Lord Justice James in giving
judgment states as follows:-
contract
"If, however, the transaction
"resulted in this, that there was a bona fide debt payable "in money at once on the same one side, and a bona fide
"liability on shares payable at once on the other side, "under this section it would be a perfectly good and valid
"transaction, if bank notes were handed from one side of "the table to the other in payment of calls, and handed
"back in payment for the property.
If that had been done,
that this Act of
"it appears to me it did appear to me in Fothergill's
"case, and it does appear to me now "Parliament does not make it necessary that the formality
"should be gone through of the money being handed over
If it came
"by one and handed back by the other person.
"to this a debt in money payable immediately and mother
- 4