Life Assurance 1872. tables cannot be ascertained, then the Government Annuitants' Experience Tables; and the time as from which the valuation will be made is the date of the order to wind up (a). In the conflict of opinion which has thus arisen with respect to the Companies Act, valuation of current life policies, the Life Assurance Companies Act, 1872 (35 & 36 Vict. c. 41), provides with respect to companies the commencement of whose winding-up is subsequent to the 6th of August, 1872, that the value of annuities and policies shall be estimated in manner provided by the first schedule to that Act (b), being the method adopted in Lancaster's Case (v. supra). The section does not apply to any winding-up commenced before the date above given unless the Court having cognizance of the winding-up so order, which order that Court is empowered to made, if it think it expedient so to do, on the application of any person interested in the winding-up. European Lessor to company. Continuing damage. Lord Westbury, in the European Life Assurance Society Arbitration (c), has adopted the method of valuation provided by this Act. "Where a creditor has a claim which is admissible as a contingent claim, that ought to be admitted to the catalogue of claims admissible to proof in the winding-up. Such a proof is not a proof for anything payable in præsenti, but it is admissible as a proof for something which may ripen into a right for present payment.” (d). Thus, where a company are lessees, the lessor is entitled to enter a claim for future rent, whether the lease have been assigned by the company to a purchaser (e) or not (f); and where, in Scotland, a company are feuars or assignees of the original feuars, the superior is entitled to enter a claim in respect of the capitalized value of future feu duties (g). But though such claim may be entered for the whole estimated value of the future rent, yet the lessor, having been paid all rent accrued due, is entitled to no present right at all-and on the payment of a dividend he is not entitled to have a dividend on the estimated amount set apart to secure the future rent (ƒ). The question is, however, different in the case of a distribution of assets, not to creditors, but to shareholders in a proposed reduction of capital under sect. 9 of the Companies Act, 1867 (v. infra), and in such a case the Court will see that the contingent claim is secured before the assets are distributed (h). Whether the existence of a contingent claim ought ultimately to prevent making the order (sect. 111) for the dissolution of the company, quære (i). Where a company has entered into a contract, in respect of which (a) Lancaster's Case, ubi supra. See (c) Blundell's Case, Nov. 5, 1872, not (d) Per James, V.C., In re Telegraph Construction Co., L. R. 10 Eq. 384, 388. (e) In re Haytor Granite Co., L. R. 1 Eq. 11; Ibid. 1 Ch. 77. (f) Horsey's Claim, L. R. 5 Eq. 561. (g) In re Gartness Iron Co., Ex parte Lord Elphinstone, L. R. 10 Eq. 412. (h) In re Telegraph Construction Co., L. R. 10 Eq. 384. (i) In re Haytor Granite Co., L. R. 1 Ch. 77. some damage has been sustained, by the party contracting with the company, at the date of the winding-up, and after the date of the winding-up there is a continuing breach of the contract going on, the damages will continue to run after the winding-up, and the claim in respect of such damages will fall within this section, notwithstanding the 25th rule of the Gen. Order of the 11th Nov., 1862 (v. infra), which provides that such claims "shall, so far is possible, be estimated according to the value thereof at the date of the order to wind up the company" (a). In the case last-mentioned, Wood, V.C., said (b): "I am rather inclined to the view that all creditors having claims which they cannot at the time establish as debts certain, but which still remain uncertain, have the power of making claims and proving the debts, irrespective of the circumstance of the debts being contingent, and there being no means at present of ascertaining them. The 25th rule only follows that, and says that the value of the debt must be estimated, so far as is possible, according to the value at the date of the order to wind up the company. It would not prevent any creditor who prefers to wait and see if the event takes place upon which the contingency is determined, from doing so, unless the time for bringing in claims has expired.” Where A., being under liability upon his acceptance to a limited SET-OFF; banking company, took an acceptance of the bank, which fell due and was dishonoured, and subsequently an order was made for winding up the bank, and A.'s acceptance matured in the hands of the official liquidator, it was held that A.'s right of set-off was not interfered with by the winding-up order (c). But where, after a winding-up order, a company was under present liability in respect of dishonoured bills, and S. & Co. were under future liability in respect of bills not yet due, of which the company were holders, it was held that S. & Co. had no present right to set these off one against the other, and were not entitled to have their bills retained by the official liquidator until a right of set-off arose, but the official liquidator was under sect. 95 (q. v.) allowed to negotiate the bills accepted by S. & Co. (d). holder. Where a policy-holder in the M. Company assigned his policy to the by policytrustees of the M. Company to secure a loan, and the M. Company, on an amalgamation with the A. Company, assigned the mortgage debt and security to trustees upon trust to satisfy all claims then due from the M. Company, and subject thereto for the A. Company, the policy (a) In re Trent and Humber Co., Ex parte Cambrian Steam Packet Co., L. R. 6 Eq. 396; Ibid. 4 Ch. 112. (b) L. R. 6 Eq. 400; and see Holdich's Case, L. R. 14 Eq. 72, 80, where Romilly, M.R., said with respect to proof on a policy or annuity: "No doubt the day of the winding-up order is the time at which the value of the policy or annuity is to be calculated; but subsequent facts may be given in evidence for the purpose of shewing what the real value was at that time;" 721. (c) Anderson's Case, L. R. 3 Eq. 337; but upon the point raised that a creditor may thus obtain payment in full, see the remarks in Smith, Fleming, & Co.'s Case, L. R. 1 Ch. 538, next cited; and in Grissell's Case, L. R. 1 Ch. 528, with respect to contributories. (d) Smith, Fleming, & Co.'s Case, L. R. 1 Ch. 538. SECURED holder (there being no novation) could not on being required to pay the mortgage debt claim in the winding-up of the M. Company to set off the estimated value of the policy - for his only right was, on payment of the debt, to have from the trustees a reassignment of the mortgaged property, including the policy, on which the M. Company, and not the A. Company, were liable (a). There being no question of novation, the general question of set-off by a policy-holder did not arise in the case last cited. It will be seen, however, by the following cases that the claim of the holder of a current policy in a life assurance company in liquidation not being an ascertained and liquidated claim, cannot be set off against a debt due from the policy-holder to the company. Thus, where a policy-holder has borrowed money from the company in which his life is insured, and has deposited his policy with the company as security for the loan, the liquidator in the winding-up is entitled to sue at once for the sum advanced, and a claim to set off against that sum the amount recoverable from the company in respect of the policy will not be allowed (b). Where it was a condition of the policy that the sum assured should not be payable until three months after the dropping of the life, and a winding-up order was made after the death of the person assured, but before the expiration of three months therefrom, no set-off was allowed, for the position of affairs must be determined at the date of the windingup order (c). But if each of two life insurance companies hold a policy granted by the other, and both the lives fall in before the winding-up of one of the companies, but the sums assured are not payable till after the windingup, then, both sums becoming payable after the winding-up, there is a right to set off the sums assured against each other (d). See further as to set-off, sects. 75, 101. Where a creditor of the company holds security for his debt he is entitled to prove in the winding-up for the whole amount that is due to him at the time of sending in his claim, and not merely, as in bankruptcy, for the balance remaining due after realising or valuing his security (e). By sending in the claim is meant a putting in of the claim under the General Order of the 11th November, 1862 (Rules 20-28): see In re Barned's Banking Co., Forwood's Claim (f), where it was held that the mere presentment of a guarantee by a notary, a mere demand, that is, for payment, with no record of it kept, was not such a sending in of the claim as was intended in Kellock's Case (e). If, before sending in his claim, the creditor realise his security (g), or receive payments on account thereof (h), or enter into a contract for the (a) Bourne's Case (Albert Arbitration), 15 Sol. J. 653. (b) Price v. Parlby (Albert Arbitration), 15 Sol. J. 654; Parlby's Case, 19 W. R. 382. (c) Delhi Bank's Case (Albert Arbitration), 15 Sol. J. 923. (d) Eagle Insurance Co.'s Case (Albert Arbitration) 16 Sol. J. 483. (e) Kellock's Case, L. R. 3 Ch. 769. (f) L. R. 5 Ch. 18. (g) Forwood's Claim, L. R. 5 Ch. 18. (h) Ex parte Maxondoff, L. R. 6 Eq. 582; and see Leech's Claim, L. R. 6 Ch. 388. sale, which in equity is equivalent to the sale, of the property included in the security (a), he can then prove only for so much of his debt as remains unsatisfied after deducting the amount realised on the security. Kellock's Case is applicable only in the case in which the company are in the position of mortgagors, and the same principles do not apply at all where the company are in fact in the position of mortgagees. Thus, where the B. Company, at D.'s request, gave to C., who had been instructed to purchase cotton for D., a letter of credit, authorizing him to draw upon them, the bills to be accompanied by bills of lading for cotton, to be handed to the company on their accepting the billsand bills were accordingly drawn and accepted by the company; but before they came to maturity the company went into liquidation, and C. sent in a claim for the whole amount in the winding-up, and subsequently received the proceeds of the sale of the cotton, he was allowed to stand as a creditor only for the balance (b). And if a company give security for a debt in various ways by documents involving only the liability of the company itself, as e.g. by acceptances for the amount of the debt, and debentures issued by the company as collateral security for the same debt, the creditor can prove only for the sum that is due to him, and cannot prove, in addition to the amount of his debt, for the amount secured by the collateral security (c). The rule in bankruptcy, that there cannot be a double proof against the same estate in respect of the same debt, is applicable to the case of a winding-up (d). As to secured creditors in the case of a winding-up in which proceedings were pending on the 31st of July, 1868, see the Liquidation Act, 1868 (31 & 32 Vict. c. 68), s. 12, infra, and General Order made 29th April, 1869, under sect. 13 of that Act. In the winding-up of an insolvent company by or under the super- INTEREST. vision of the Court, creditors whose debts carry interest are entitled to Winding-up dividends only upon what was due for principal and interest at the by or under supervision of date of the winding-up; and it is only in the event of there being a Court. surplus that they have any claim for subsequent interest; and in that case the dividends will be treated as applicable, first, in payment of interest, and then in reduction of principal (e). (With what justice can interest be computed in favour of creditors whose debts carry interest, while creditors whose debts do not carry interest are stayed from recovering judgment, and so obtaining a right to interest?) (ƒ) (a) In re Oxford and Canterbury Hall Co., L. R. 8 Eq. 691; Ibid. 5 Ch. 432. (b) Coupland's Claim, L. R. 8 Eq. 472; Ibid. 5 Ch. 167; Banner v. Johnston, L. R. 5 H. L. 157; and see Leech's Claim, L. R. 6 Ch. 388. (c) In re Blakely Ordnance Co., Metropolitan and Provincial Bank's Claim, L. R. 8 Eq. 244; but see Warrant Finance Co.'s Case (No. 2), L. R. 5 Ch. But where a creditor has a right of proof for the same debt against the estates of two companies in liquidation, this is in principle, as against one of the companies, the same as a debt with a separate security in the right of proof against the other company, and falls, therefore, within the principle of Kellock's Case (v. supra); and the rule in the Warrant Finance Co.'s Case (v. supra) (a) does not, therefore, prevent the creditor from receiving dividends from both estates until the full amount of his debt and interest has been satisfied (b). And there will not be an appropriation of payments made in such a way as to apply dividends received from the principal debtor to the reduction of principal only, and dividends from the other estate against which proof is made, first, in payment of interest, and then, as to the surplus, in payment of principal; but the dividends paid by either estate will be treated simply as paid on account, and as if there were no winding-up at all; and the secured creditor will not be deprived of his security until he has received his principal, interest, and costs in full (c). So, if the creditor hold a collateral security for his debt, whether the security is on part of the estate of the company, or not, he may receive dividends on the whole amount of his principal debt and interest at the date of the winding-up, and at the same time realise his security until the full amount of principal and interest has been satisfied (d). The rule as to interest in a winding-up laid down in Warrant Finance Co.'s Case (e) was not merely a settlement of the practice for the future, but a declaration of the law deduced from the statute (ƒ). It is settled by the Warrant Finance Co.'s Case (e) that an insolvent company is, by the winding-up order, relieved from a liability to pay interest, and it has been held in a very recent case that the company is also thereby relieved from a contract to indemnify a third person against the payment of interest. In the case referred to, Hughes's Claim (g), A. had sold to the C. Company shares in the W. Company, but no transfer was registered before both companies went into liquidation. Calls were made upon the shares upon which A. was ultimately obliged to pay £100 for calls, and £23 7s. 6d. for interest accrued due, with the exception of a fractional part, since the winding-up order. Proof was allowed by the Judge in Chambers in respect of the whole sum of £123 7s. 6d., but on a motion in Court to vary the order made in Chambers it was held that the amount of interest accruing due since the winding-up order could not be admitted to proof, and the claim in respect of interest was, therefore, (a) In re Humber Ironworks Co. (No. 1), L. R. 4 Ch. 643. (b) In re Joint Stock Discount Co., Warrant Finance Co.'s Case (No. 1), L. R. 5 Ch. 86. (c) In re Joint Stock Discount Co., Warrant Finance Co.'s Case (No. 2), L. R. 10 Eq.11. (d) In re Humber Ironworks Co., Warrant Finance Co.'s Case (No. 2), (e) In re Humber Ironworks Co., (No. 1), L. R. 4 Ch. 643. (f) Ebbw Vale Co.'s Case, L. R. 5 Ch. 112. (g) L. R. 13 Eq. 623. |