swarb.co.uk - law index
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Company - From: 1900 To: 1929
This page lists 75 cases, and was prepared on 09 April 2015.Townsend -v- Jarman  2 Ch 698
A partner gave a covenant not to carry on the business of a corn, seed or manure merchant or nurseryman within a distance of 40 miles from Chard. The partners sold the business to a company, of which they remained directors. It was wound up, and the goodwill sold to Mr Townsend. Held. The benefit of the restrictive covenant passed as incident to the goodwill. Where there is a sale of the goodwill of a business, an assignment of a restrictive covenant will be implied, if it is not expressly excluded.
Dixon -v- Kennaway & Co; 1900 -  1 Ch 833
In re Ford, Ex parte the Trustee  2 QB 211
Allan -v- Gold Reefs of West Africa Ltd; CA 1900 -  1 Ch 656
Gluckstein -v- Barnes; Re Olympia Ltd, ex parte Gluckstein; HL 1900 -  AC 240;  69 LJ CH 385;  82 LT 393;  16 TLR 321;  7 Mans 321
Borland's Trustee -v- Steel Brothers & Co Ltd  1 Ch 279
Mr Borland was a shareholder. The company's articles contained pre-emption rights, such that on a shareholder's bankruptcy, he had, on receiving a transfer notice from the directors, to transfer his shares to a manager or assistant at a fair value calculated in accordance with the articles. His trustee said that the transfer articles were void because, among other reasons, they amounted to a fraud upon the bankruptcy laws, and could not prevail when bankruptcy had supervened, since the trustee was forced to part with the shares at less than their true value, and the asset was not fully available for creditors. Held: Farwell J said: "a simple stipulation that upon a man's becoming bankrupt that which was his property up to the date of the bankruptcy should go over to some one else and be taken away from his creditors, is void as being a violation of the policy of the bankrupt law". It was a commercial arrangement, and the provisions were were a fair agreement for the business of the company. They were binding equally on all shareholders. There was no suggestion of fraudulent preference, and nothing obnoxious to the bankruptcy law in a clause which provided that if a man became bankrupt he should sell his shares. The price was a fixed sum for all persons alike, and no difference in price arose in the case of bankruptcy. The purpose was that there should be in the company, if it were so desired, none but managers and workers in Burma. There was nothing repugnant in the way in which the value of the shares was to be ascertained. It would have been different if there were any provision in the articles compelling persons to sell their shares in the event of bankruptcy at something less than the price that they would have otherwise obtained, since such a provision would be repugnant to the bankruptcy law
He described the nature of a company share: "It is the interest of a person in the company, that interest being composed of rights and obligations which are defined by the Companies Act and by the memorandum and articles of association of the company." and one with limited liability in a company: "A share is the interest of the shareholder in the company measured by a sum of money, for the purpose of liability in the first place, and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders inter se in accordance with section 16 of the Companies Act 1862. The contract contained in the articles of association is one of the original incidents of the share. A share is . . an interest measured by a sum of money and made up of various rights contained in the contract, including the right to a sum of money of a more or less amount."
Borland's Trustee -v- Steel Brothers; 1901 -  1 Ch 279
Dovey and The Metropolitan Bank (of England and Wales), Limited -v- Cory; 1901 -
Taff Vale Railway Co -v- Amalgamated Society of Railway Servants; HL 22-Jul-1901 -  UKHL 1;  AC 426
Aerators Ltd -v- Tollitt  2 Ch 319
When looking at whether a proposed company name was too similar to an existing one, the registrar could look to the sort of name chosen by the existing company.
Percival -v- Wright; 1902 -  2 Ch 421
Re Joplin Brewery Co Ltd; ChD 1902 -  1 Ch 79
In re I C Johnson; CA 1-May-1902 -  2 Ch 101
Wise -v- The Perpetual Trustee Company Limited (Executors of WH Paling (Deceased); PC 13-Dec-1902 -  UKPC 59;  AC 139
In re Anglo-Oriental Carpet Manufacturing Company; ChD 1903 -  1 Ch 914
In re Yorkshire Woolcombers Association Ltd; ChD 1903 -  2 Ch 284
In re London and Globe Finance Corporation Ltd  1 Ch 728
Insolvency, Crime, Company
A company which had gone from voluntary winding up, first to winding up under supervision and then to compulsory winding up, with the official receiver as liquidator. The company's former managing director was suspected of fraud, but the law officers declined to prosecute. Some of the shareholders wished to prosecute him, mainly at the expense of the company's assets (although they offered to pay into court at least £1,250 of their own money) while others opposed the prosecution as a waste of money. Held: The court authorised the liquidator, the official receiver, to do so at the expense of the company. Buckley J said: "the general scheme of the Acts with reference to the liquidation of a company no doubt is that the assets are to be realised to the best advantage for the benefit of those who are entitled to share in their distribution. But indications are not wanting that the assets may under the Acts be applied for some purposes other than these. Section 167 of the [1862 Act] is, having regard to the reasons which I have just given, one example of this, and in the [1890 Act] the same intent may be traced in sections 7 and 8 of that Act. These are sections which require the preparation of a statement of the company's affairs at the expense of the assets leading to a preliminary report, which is to show whether further inquiry is desirable as to matters relating to the promotion and the like, and, if necessary, to a public examination of parties incriminated, with the purpose, of course, of enforcing commercial morality. It is, therefore, in my judgement plain that the principle upon which I am to apply, or refuse to apply, section 167 is not measured or limited or even concerned with pecuniary benefit to be obtained for the shareholders or creditors."
' To deceive is, I apprehend, to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false. To defraud is to deprive by deceit: it is by deceit to induce a man to act to his injury. More tersely it may be put, that to deceive is by falsehood to induce a state of mind ; to defraud is by deceit to induce a course of action."
Companies Act 1862 167
Formby -v- Baker; 1903 -  2 Ch 539
Pulsford -v- Devenish; ChD 1903 -  2 Ch 625
In re Yorkshire Woolcombers Association Ltd  2 Ch 295
2 Jan 1903
Romer LJ, Vaughan Williams LJ
The court considered the nature of a debenture charge. Romer LJ: "I certainly do not intend to attempt to give an exact definition of the term 'floating charge', nor am I prepared to say that there will not be a floating charge within the meaning of the Act, which does not contain all the three characteristics …". "I certainly think that if a charge has the three characteristics that I am about to mention it is a floating charge. (1) If it is a charge on a class of assets of a company present and future; (2) if that class is one which, in the ordinary course of business of the company, would be changing from time to time; and (3) if you find that by the charge it is contemplated that, until some future step is taken by or on behalf of those interested in the charge, the company may carry on its business in the ordinary way as far as concerns the particular class of assets I am dealing with." and (Vaughan Williams LJ) "… what you do require to make a specific security is that the security whenever it has once come into existence, and been identified or appropriated as a security, shall never thereafter at the will of the mortgagor cease to be a security."
British Vacuum Cleaner Co Ltd -v- New Vacuum Cleaner Co Ltd; 1904 - (1907) 2 Ch 312
Re Tea Corporation  1 Ch 12
Vaughan Williams LJ, Romer LJ
A scheme was proposed in a liquidation and a meeting of, inter alia, ordinary shareholders was proposed, who were to be given shares in the new company in place of their shares in the old, so to that extent they were affected by the scheme. The shareholders voted against the scheme; the other relevant participants voted in favour of it. On the hearing for sanction the scheme was held to stand. At first instance the amount of the company's assets was the subject of an agreement and that amount negatived as a fact the notion that there could be any return to shareholders, so they had no financial interest. Held: In those circumstances the vote of the shareholders could be disregarded.
Vaughan Williams LJ "In the present case the contributories were divided into two classes, preference shareholders and ordinary shareholders, and they voted in those classes, and the majority of the preference shareholders voted in favour of the scheme. It is said, however, that the scheme is rendered defective because the ordinary shareholders did not vote in favour of it. I think the right answer to this was given by Buckley J [the Judge at first instance]. You are to divide the shareholders into classes, and when you have done that you find that the preference shareholders have an interest in the assets. But when you come to the ordinary shareholders you find that they have no interest whatever in the assets, and Buckley J. was of opinion that, having regard to this fact, their dissent from the scheme was immaterial. I think that the learned judge was right in so holding. It seems to me that by the very terms of s. 24 you are to divide the contributories into classes and to call meetings of each class, and if you have the assent to the scheme of all those classes who have an interest in the matter, you ought not to consider the votes of those classes who have really no interest at all. It would be very unfortunate if a different view had to be taken, for if there were ordinary shareholders who had really no interest in the company's assets, and a scheme had been approved by the creditors, and all those were really interested in the assets, the ordinary shareholders would be able to say that it should not be carried into effect unless some terms were made with them." Romer LJ "Having regard to the evidence and the admissions made in the court below, I think [the judge] was right in drawing the inference that the ordinary shareholders had no interest and I base my judgment solely on that ground. That being so, I can see no difficulty in holding that this scheme is only an arrangement as between the company and their creditors and as between the company and the preference shareholders and as such it is authorised by s 2 of the Act of 1870 combined with s 24 of the Companies Act 1900. It is true that by the scheme some shares in the new company are offered to the ordinary shareholders in the old company; but I think that must be regarded as a gift by the creditors and the preference shareholders to the ordinary shareholders, and not as showing that they had an interest in the assets which they were surrendering."
Re Sussex Brick Co Ltd  1 Ch 598
Vaughan Williams LJ, Stirling LJ
The court should not generally order rectification of a company's registers where this would prejudice third party rights. Vaughan Williams LJ: "… I do not mean for a moment to suggest that any one is entitled to such an order ex debito justitiæ; it is a matter in the discretion of the judge, and there might be cases in which the judge, although he considered such an order essential to completely establishing the rights of the applicant, might refuse to do so because he thought it would work injustice to other members of the company. If I thought here that such an order would work injustice to other persons, especially to persons who are not in any way bound by the mistake of the company, I should feel considerable hesitation in making the order …"
Stirling LJ: "I may point out that the power … is not imperative. All it says is that the Court 'may' in a proper case make an order for rectification. Therefore the Court has full discretion to deal with every particular case which comes before it in such a way as may do complete justice …"
Illingworth -v- Houldsworth; HL 1904 -  AC 355
Re South African Supply and Cold Storage Co  2 Ch. 268
The court had to construe the words "reconstruction or amalgamation" in the memorandum of association of a company: "The only question I have to decide is whether, in the case of each of these two companies, there has or has not been a winding-up "for the purpose of reconstruction or amalgamation." Neither of words, "reconstruction" and "amalgamation", has any definite legal meaning. Each is a commercial and not a legal term, and even as a commercial term, there is no exact definite meaning. In each case one has to decide whether the transaction is such that, in the meaning of commercial men, it is one which is comprehended in the term "reconstruction" or "amalgamation"". And "Then it remains to consider whether what was done was for the purpose of "reconstruction or amalgamation." What does "reconstruction" mean? To my mind it means this. An undertaking of some definite kind is being carried on, and the conclusion is arrived at that it is not desirable to kill that undertaking, but that it is desirable to preserve it in some form, and to do so, not by selling it to an outsider who shall carry it on – that would be a mere sale – but in some altered form to continue the undertaking in such a manner as that the persons now carrying it on will substantially continue to carry it on. It involves, I think, that substantially the same business shall be carried on and substantially the same persons shall carry it on. But it does not involve that all the assets shall pass to the new company or resuscitated company, or that all the shareholders of the old company shall be shareholders in the new company or resuscitated company. Substantially the business and the persons interested must be the same. Does it make any difference that the new company or resuscitated company does or does not take over the liabilities? I think not. I think it is none the less a reconstruction because from the assets taken over some part is excepted provided that substantially the business is taken, and it is immaterial whether the liabilities are taken over by the new or resuscitated company or are provided for by excepting from the scheme of reconstruction a sufficient amount to answer them. It is not, therefore, vital that either the whole assets should be taken over or that the liabilities would be taken over. You have to see whether substantially the same persons carry on the same business; and if they do, that, I conceive, is a reconstruction."
Ellis -v- Joseph Ellis & Co; CA 1905 -  1 KB 324
In re West Coast Gold Fields Ltd; 1905 -  1 Ch 597
Law -v- Law  1 Ch 140
A person with a right to rescind a contract may be held to have affirmed the contract even if there are some material facts which he did not know at the time of the affirmation. However: "… there is a duty resting upon the purchaser who knows, and is aware that he knows, more about the partnership accounts than the vendor, to put the vendor on possession of all material facts with reference to the partnership assets, and not to conceal what he alone knows; and that, unless such information has been furnished, the sale is voidable and may be set aside."
Sheffield Corporation -v- Barclay; HL 1905 -  AC 392
De Beers Consolidated Mines Ltd -v- Howe, Surveyor of Taxes; HL 1906 -  AC 445
Attorney-General -v- Mersey Railway Co  AC 415
In Re Bourne  2 Ch 427
Vaughan Williams LJ
On the dissolution of a partnership and in the absence of some agreement to the contrary, the partners have the right, and the duty, to realise the partnership properly and for the purpose of that realisation to carry on the business if it is necessary so to do.
Partnership Act 1890
Trimble -v- Goldberg  AC 494
The parties entered into a partnership to acquire "stands of land" for conversion into a township and subsequent re-sale. The land was acquired, along with shares in a company owning other stands in the same locality. One of the partners then bought that company's other stands himself, having been shown them while in Johannesburg for the purpose of finalising the terms of the partnership's acquisition. Held: The partner was not liable to account because "the purchase was not within the scope of the partnership", even though he found out about the land while on partnership business and his personal purchase was an identical type of investment to that of the partnership. A breach of contract arising as a result of breach of a term of good faith not to purchase property for a partner's own purposes sounds in damages.
The parties entered into partnership to acquire "stands of land" for conversion into a township and subsequent re-sale. The land was acquired, along with shares in a company owning other stands in the same locality. One of the partners then bought that company's other stands himself, having been shown them while in Johannesburg for the purpose of finalising the terms of the partnership's acquisition. Held. The partner was not liable to account because "the purchase was not within the scope of the partnership", even though he found out about the land while on partnership business and his personal purchase was an identical type of investment to that of the partnership.
Ruben -v- Great Fingall Consolidated; HL 1906 -  1 AC 439
In re Ehrmann Brothers Ltd; CA 1906 -  2 Ch 697
In Re Jackson & Bassford Ltd; ChD 1906 -  2 Ch 467
In re Bulawayo  2 Ch 458
The court asked as to the possibility of appointing a company as a director of another company in the absence of an express power in the articles.
Companies Act 1862
Hill -v- Clifford  2 Ch 236
Cozens-Hardy MR and Buckley LJ
(Majority) An earlier decision of the GMC striking the defendant off the register of dentists was prima facie evidence of the truth of the charges against him.
Clark -v- Balm, Hill & Co; 1908 -  1 KB 667
Great Eastern Railway Company -v- Lord's Trustee; HL 1909 -  AC 109
In re John Tweddle & Company Ltd; CA 1910 -  2 KB 697
Stubbs -v- Slater; 1910 -  1 Ch 632
Weiner -v- Harris; CA 1910 -  1 KB 285
Attorney-General -v- Boden  1 KB 539
Company, Taxes - Other
There was a partnership between a father and his two sons. The sons were obliged to devote their whole time to the practice, the father only so much time as he wished. On his death the sons were to pay out to his estate the value of the capital but not including any charge for goodwill. The revenue sought to bring in the father's share of the goodwill. Held: Allowing for the different obligations, the sons acquired their father's share in the goodwill as bona fide purchasers for value. Where it can be shown that the partnership agreement represented a true bargain, it was arguable that the only asset that passed for estate duty purposes was the right of the estate to receive the payment provided for in the agreement.
Pink -v- Sharwood; 1913 - (1913) 30 RPC 725
Transvaal Lands Co -v- New Belgium (Transvaal) Land and Development Co  2 Ch 488
A director has a duty to account for any secret profit if he has an undisclosed and unapproved conflict of interest. The rule against self dealing applies to cases where the fiduciary has conflicting duties to each of the contracting parties.
Allen -v- Hyatt (1914) 30 TLR 444
The court considered the duties of directors toward shareholders in circumstances of them making representations to secure options to purchase shares of shareholders and undertaking to sell shares of shareholders in agency capacity.
Dublin City Distillery (Great Brunswick Street, Dublin) Limited & Another -v- Doherty; HL 1914 -  AC 823; 111 LT 8
Von Hellfield -v- E Rechnitzer and Mayer Frères & Co  1 Ch 748
Buckley Phillimore LJJ
Company, Litigation Practice
A French partnership did not carry on business within the UK. It was sued in its firm name in respect of a contract signed in the name of the firm. The evidence of French law did not establish that the French partnership was a totally separate legal entity from the individual partners in it, although it was a legal person for the purpose of service of legal proceedings upon it. Held: The Court upheld the judge's order setting aside the writ which named the firm as the defendant on the ground that Ord 48A did not apply and that the writ was not properly issued naming the firm as a defendant.
Phillimore LJ: "According to our modern practice there are three classes who can sue, or appear to writs, - persons, corporations, and firms. The introduction of partnerships is comparatively modern and since the Judicature Act, but the fact is merely for convenience of nomenclature and of service; the results are in the end the same as if the individuals composing them sued or were sued by their individual names. It is clear from the case of Dobson v Festi, Rasini & Co (1) that some similar procedure now obtains in Italy, and it appears from this case that some similar procedure now exists in France. That may well be, but our law, being very careful how it interferes with the rights of foreigners, has not allowed service to be effected upon individuals who are engaged in a foreign partnership by serving the partnership as in England. The foreign partners cannot be sued by their firm name, and there is nothing to enable service upon some manager carrying on business for the partners or service on one as service on the rest."
and "They are not enough for this purpose; they are not enough to shew - which is necessary for this purpose - that a société en nom collectif is like a corporation in this respect, not merely that it has a separate persona, but that it has a separate ownership of property and separate liability from the ownership or liability by or of the persons composing the aggregation. I can conceive certain cases of bodies of which one might be doubtful whether they were corporations or not; and upon a writ properly framed alleging that the body sued was a separate entity, and making it clear that no relief was sought against any individual opposing that entity any more than it would be against shareholders in a corporation, I can conceive it being possible to suggest that such a body might be treated as a corporation and might be sued and served as a corporation. But this is on the face of it apparently a partnership, and the affidavit of service of the writ plainly and boldly describes it as a partnership. The rules of English law provide that our ancient process in respect of English people should remain in respect of foreigners."
D & J Nicol -v- Dundee Harbour Trustees; HL 10-Dec-1914 - 1915 SC (HL) 7;  AC 550; (1914) 2 SLT 418;  UKHL 4
Lennard's Carrying Company Limited -v- Asiatic Petroleum Company Limited; HL 1915 -  AC 705
Lovesy -v- Palmer; 1916 -  2 Ch 233; [1916-1917] All ER 1034
In re Yenidje Tobacco Co Ltd; CA 1916 -  2 Ch 426; [1916-17] All ER 1050
Cook -v- Deeks and Hinds; PC 1916 -  1 AC 554
Daimler Co Ltd -v- Continental Tyre and Rubber Company (Great Britain) Limited; HL 1916 -  2 AC 307
Healey -v- Societé Anonyme Francais Rubastic  1 KB 946
A director of the company claimed arrears of salary for work done notwithstanding that he had been summarily dismissed for misconduct. There was no question of a claim for damages for breach of duty.
Hood -v- Anchor Line (Henderson Brothers) Limited; HL 1918 -  AC 837
Piercy -v- Mills; ChD 1920 -  1 Ch 77
Moriarty -v- Regent’s Garage & Engineering Co Ltd  1 KB 423
Lush J, McCardie J
A company director sought payment of his directors fees of £150 per annum where during the course of the year he had ceased to be a director. There was no allegation of impropriety on his part. The company’s articles provided that the directors should be entitled to fees of a certain amount per annum. The need for apportionment arose from the fact that the director in question had retired by agreement in the course of the year. Held: Directors’ fees constituted "salaries" for the purposes of the 1870 Act. The court could use the 1870 Act to apportion the payment due to him. The "Act, which was passed to remedy a grievance, undoubtedly affected common law rights and obligations." '…the attitude in the minds of the tribunals was to regard the Apportionment Act as a wrongful encroachment upon common law proprieties. I take exactly the opposite view. The Act remedied a grave injustice; it is a remedial Act, and the inclination of every tribunal should be to extend rather than to restrict its operation.' ( McCardie J). As to whether a salaried person would be entitled to apportionment if he had been dismissed for misconduct, the judges disagreed. Lush J: "…I should hesitate to agree with the suggestion that he can claim in such circumstances. It is quite true that the salary is to be considered as accruing from day to day, and it is quite true that a dismissed servant is entitled to salary that has already accrued at all events up to the date of the act of dishonesty, but the Act does not say that in such a case, or for all purposes, the salary shall be deemed to have accrued from day to day; it only says that it shall be considered as accruing from day to day. That provision was merely inserted to facilitate or to extend the apportionment which the legislature was saying should be made. The sum cannot logically be apportioned unless it is treated as accruing from day to day; it is only for that purpose that it is deemed to accrue from day to day. If something has happened during the service which forfeits the right to the salary it may well be that the servant cannot take advantage of the Act… " McCardie: "I do not fail to see the wide stretch of the results which follow from the decision we are now giving, and one of the questions that must arise in the future is whether or not the Apportionment Act will destroy the operation of the rule under which a servant who is dismissed for misconduct loses the whole of the money accruing to him, although he is entitled to get the money that has actually accrued… I express no opinion on this very serious question, which does not arise for direct decision. It may well be said that no servant dismissed for misconduct can rely on that misconduct as a basis for invoking a remedial Act… On the other hand I am not altogether satisfied as to the justice of denying the benefit of the Apportionment Act to a man who has been guilty of misconduct. Suppose a salary is payable half yearly to a man, and suppose he has fulfilled his duties with absolute propriety up to the last week; that he then commits an act which justifies his master in dismissing him. Upon the law as it stands the man gets nothing for his five and a half months’ work. Is it right that he should be deprived of remuneration for five and a half months’ work because during the last fortnight he has done something for which he has been dismissed? I express no opinion upon that point. Ere long it must arise for decision. "
Apportionment Act 1870
Jenkin -v- Pharmaceutical Society of Great Britain  1 Ch 392
At common law that a member of a company incorporated by Royal Charter is entitled to an order restraining the commission of acts outside the scope of the charter which may result in the forfeiture of the charter and the destruction of the society.
Moriarty -v- Regent’s Garage & Engineering Co Ltd  2 KB 766
2 Jan 1921
Whilst the point was obiter in this case: "… it seems to me that there is no decision binding on the Court of Appeal as to whether directors’ fees are salary within the Apportionment Act in the case where the agreement… is simply for payment of so much per year. I do not express any opinion one way or another. It seems to me a very arguable point, and there does not seem to me at present anything to prevent that question being considered in the Court of Appeal when it arises."
Apportionment Act 1870
Union Bank of Australia Ltd -v- McClintock; PC 1922 -  1 AC 240
Belton -v- Bass; CA 1922 -  2 Ch 449
Cruikshank -v- Sutherland; HL 1923 - (1923) 92 LJ(Ch) 136
Clarkson -v- Davies; PC 1923 -  AC 100
De Renzy -v- De Renzy; 1924 -  NZLR 1065
In Re City Equitable Fire Insurance Company Limited; ChD 1924 -  Ch 407;  3 All ER 485
Loch -v- John Blackwood Ltd; PC 1924 -  AC 783 PC; 93 LJPC 257;  B&CR 209; 131 LT 719; 68 SJ 735; 40 TLR 732
Performing Right Society Ltd -v- Ciryl Theatrical Syndicate Ltd; 1924 -  1 KB 1
Macaura -v- Northern Assurance Company Limited; HL 1925 -  AC 619; (1925) 133 LT 152;  All ER 51;
In re Glyncorrwg Colliery Co Ltd  Ch 951
In a receivership the costs of the receivership (including the cost of realising the property comprised in the charge) had priority to the claims of the charge holder. The preferential payments must be paid before the debenture holders "but not before the costs of liquidation".
Manley -v- Sartori; ChD 1927 -  1 Ch 157
British American Nickel Corporation Ltd -v- M J O'Brien Ltd; PC 1927 -  AC 369
The Ontario Jockey Club -v- McBride; PC 25-Jul-1927 -  UKPC 83;  AC 916
In re Windsor Steam Coal Co. (1901) Ltd  1 Ch 151
Company, Insolvency, Professional Negligence
The courts look more favourably on applications by gratuitous trustees than on those by paid trustees. In a company winding up the liquidator may be liable to the company for negligence on his part in making a compromise.
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