187 / 736
his action could deprive the employees of their
rights against the company at the date of the
liquidation.
The authorities cited in support of the argu
ments of parties make it clear that the decision
turned on the fact that the trust funds held on
behalf of the employees in. No. 2 account had
never lost their identity and therefore could be
claimed by them in the liquidation; but a wider
issue is involved in the first passage quoted from
Lord Eraser's judgment, viz., whether the bank
itself would be entitled to have regard to the
state of all accounts held by them in name of
their customer and to claim that the actual in-
debtdness of that customer to the bank is
the
sum arrived at after setting off the various debtor
and credit balances thereon. That right of com
bining the total balances was long regarded by
bankers as unquestionable but was shaken by a
dictum of Swift, J. in Greenhalgh v. Union Bank
of Manchester (1942) 2 K.B. 153 that where a
bank agrees with a customer to open two separate
accounts in the latter's name, the banker has no
right "without the assent of the customer ... to
move either assets or liabilities from the one ac
count to the other. The very basis of his agree
ment with the customer is that the accounts shall
be kept separate". This has been regarded as en
tailing that the bank must
in all cases give
reasonable notice before combining the accounts.
Paget, however (Law of Banking, 7th ed., p. 126),
considers that the general right of the banker to
combine the accounts remains "unless by agree
ment, earmarking, course of business or the like
there is an obligation to keep them separate. Even
the obligation is terminable by reasonable notice".
In the present case this issue did not arise for
decision. The case was decided essentially on the
principle of following the trust funds and since
the bank had in fact taken no action to merge
the accounts the identity of the trust fund re
mained apparent.
(Smith and Others v. Liquidator of James
Birrell Ltd., 1967 S.I.T. [Notes] 116).
Company Law :
Objects Change
A company formed in 1961 had as
its main
object the provision of information and services
to tourists. The memorandum of association con
tained the usual diverse objects and these con
cluded with a declaration that each of the pre
ceding sub-clauses should be construed indepen
dently of and should be in no way linked by re
ference
to any other sub-clause and that the
objects set out in each such sub-clause were in
dependent objects of the company. One of the
sub-clauses enabled the company to borrow or
raise money in such manner as it thought fit.
In 1958, 398 of the 400 issued shares changed
hands and there was a complete change of the
board of directors. In 1960 the company began
pig breeding as its only business and borrowed
money from its bankers on the security of a deben
ture for the purpose of developing that business,
the bank being fully aware of the purpose for
which the money was required and also having
a copy of the memorandum and articles of associa
tion. The company subsequently went into com
pulsory liquidation and the question arose as to
whether the borrowing from the bank had been
ultra vires the company.
Held :
1. On the construction of the memorandum the
carrying on of the business of pig breeding
as the sole business of the company was ultra
vires the company.
2. The borrowing clause on its true construc
tion gave the company power to borrow in
connection with its ligitimate purposes and
borrowing for the purpose of business of pig
breeding was therefore ultra vires.
(Re Introductions Ltd., Introductions Ltd. v.
The National Provincial Bank Ltd., 2 ALL E.R.
1968, 1221).
Right in rem or personam?
In 1965 an infant, a German citizen, was seriously
injured at a swimming pool owned and occupied
by a Limited Company. In 1967 the Company
went into voluntary liquidation and on the 12th
April, 1968 it was deemed to have been disolved.
At a late date the claim was placed in the hands
of an English solicitor and a writ was issued on
the 9th July, 1968 against the pool manager and
the Liquidator only as the Company was legally
defunct. Even if the action were successful there
was little chance of recovering against either of
the Defendants. As the limitation period would
expire on the 30th August and the infant and his
mother, a next friend, were resident in Germany
the . partner
in
the
firm of English
solicitors
applied ex parte under Section 252 of the Com
panies Act, 1948
(corresponding Irish provision
being Section 310 Companies Act, 1963) for an
order declaring the disolution void so that the
resuscitated Company might be joined as a De
fendant. The Section provides that an application
to the Court may be made by the liquidator or
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