The Gazette 1967/71

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 45