The Deed of Settlement of a banking company may provide that the shares of the members shall be subject to a lien in favour of the bank for all moneys due to the bank in respect of any call or debt due from the shareholder, whether alone or jointly with any other person, to the bank. It has been held that such a power gives the bank a lien upon the dividends, as well as upon the shares.
The clause with regard to a lien may take the following form :—" The company shall have a first and permanent lien and charge available at law and equity on every share of every person who is the holder or one of the joint-holders thereof, for all debts and liabilities on any banking or other account whatsoever, and for all other debts, liabilities, and sums of money due or to become due from him, either alone or jointly with any other person, whether a member or not, to the company at any time whatso ever, whilst he is the registered holder, or one of the registered holders, of the share.
" The directors may forfeit and re-issue, or may sell and dispose of for the benefit of the company, any shares on which the company shall have such lien as aforesaid, without any further authority on the part of the holder or holders thereof, in order to obtain satisfaction or payment of all or any part of such debts, liabilities, or sums of money : Provided that no such forfeiture, sale, or disposition of shares shall take place without one calendar month's notice to the holder or holders of the shares in accordance with the articles relating to notice, and that when any shares shall be so forfeited, sold, or disposed of, the company shall credit such holder or holders in account in case of forfeiture or other disposition not being a sale for cash with the value of the shares so forfeited, sold, or disposed of, ascertained from the price paid on the last registered transfer of shares, and in case of sale for cash with the price received by the company as the actual price of the share sold : Provided also that the register of shares shall be conclusive evidence of the title of a subse quent holder of any share which the directors shall have purported to forfeit, sell, or dis pose of as aforesaid ; and the remedy of any shareholder in respect of any irregularity in the enforcing of any lien, or alleged lien, shall be in damages against the company only."
Where shares in another banking company are offered as security it should be remem bered that that company will probably have a first lien upon its own shares. But in the case of the Bradford Banking Co. v. Briggs & Co. (1886, 12 A.C. 29), where the articles of association of a company registered under the Companies Act, 1862, provided that the company should have " a first and permanent lien and charge, available at law and in equity, upon every share for all debts due from the holder thereof " it was held, revers ing the decision of the Court of Appeal, that notice to the company of the deposit of certificates with the bank was not a notice of a trust within the meaning of the Com panies Act, 1862, Section 30, and that the bank by giving notice of the deposit did not seek to affect the company with notice of a trust, but only to affect the company (which was a trading company) in their capacity as traders with notice of the interest of the bank. It was also held that the company could not in respect of moneys which became due from the shareholder to the company after notice of the deposit with the bank claim priority over advances by the bank made after such notice.
A vendor has a lien upon the land for any unpaid part of the purchase money as against a subsequent purchaser with notice ; but " a receipt for consideration money or other consideration in the body of a deed, or indorsed thereon, shall, in favour of a sub sequent purchaser, not having notice that the money or other consideration thereby acknowledged to be received was not in fact paid or given, wholly or in part, be sufficient evidence of the payment or giving of the whole amount thereof." (Conveyancing Act, 1881, Section 55, s.s. 1.) (See SET OFF, TITLE DEEDS.)