The Film Renter and Moving Picture News (May-Jun 1923)

June 23, 1923. THE FILM RENTER & MOVING PICTURE NEWS. 2t Litigation over a Cinema Company A Concern which Came to Grief. R. JUSTICE SARGANT, in tho Chancery Division, on Tuesday, heard an action brought by Ernest Henry Reddish, of Rydal Mount, Edwalton, Nottingham, against Albert Ball, Thos. Shipstone, Horace Wm. Wright, of Nottingham; Francis Bernard Whitty, of West Bridgford; Robt. Harbidge, of Nottingham, and Bernard Condor Whitty, of West Bridgford, for damages for alleged non-compliance to the requirements of the Companies (Consolidation) Act in the issue by the Croydon Picture House Company, Ltd., of a prospectus dated September 1, 1920, on which the names of the defendants appear as directors and on the faith of which plaintiff subscribed for 1,600 £1 shares in the company. He further claimed compensation for loss sustained by him by reason of alleged untrue statements in the prospectus. Mr. Grant, K.C., and Mr, C. L. Fawell, appeared for the plaintiff, and Mr. Maugham, K.C., Mr. Galbraith, K.C., and Mr. A. Sims for the defendants. Mr. Grant stated that the first three defendants were the proprietors of the company which was tormed to establish a kinema theatre in’ North End, Croydon. The nominal capital was £55,000. ‘The development of the scheme was left to Wright, who entered into negotiations for the purchase of a building, formerly used as a drill hall, for £10,000. In addition Mr. Wright agreed to purchase for £5,000 certain adjacent property at 127, North End, but nothing was done to get in a lease to which that property was subject. The drill hall was conveyed to the company by Wright, Ball and Shipstone, but they were not satisfied to transfer the property for £10,000, and they doubled that figure. It was a lamentable fact, said Mr. Grant, that they were not straightforward enough to tell the public what they had done. At this time Croydon,. with a population of 190,000, possessed 17 kinemas and halls licensed for kinema purposes, and these premises had seating accommodation for 12,447 persons. In the kinema theatres alone there was seating accommodation for 8,740 people, and several of these places were within easy reach of the drill hall, and some of them were actually in North End. These figures, said Counsel, were important in view of a statement in the prospectus to the effect that formidable competition was absent from the scheme for the sufficient reason that the position acquired was one of the best in the district, and further, that the huge surrounding population was far from adequately catered for by the capacity of the picture bouses in Croydon, which only provided seating accommodation for under. 5,000 people. There was nothing in the prospectus, said Mr. Grant, to tell the. public that the directors were not.coming’in on the same footing as ordinary shareholders. It was a prospectus issued to Nottingham men, and chiefly Nottingham people were interested in the company. The prospectus was not advertised in the Press, but circulated among people whom the local directors could influence. His Lordship would not be surprised to hear that the company had:come to grief and had been voluntarily wound up in February, 1922, The company had a short and disastrous career and the position now was that there was practically nothing for the shareholders, the shares “béing valueless. At the resumed hearing on Wednesday a consultation took place between the parties with a view to a settlement. Mr. Grant eventually informed his lordship that a very satisfactory settlement had been come to. The lines which the settlement had taken were that defendants were paying in cash a sum of £9,000 for shares which they had taken on the sale to the company of the property mentioned in the prospectus. His Lordship said ho thought the shares had already been paid for. Mr. Grant: No. The shares were merely transferred to nominees. The liquidator thinks that with the assistance of this capital it will be possible to make the company a successful and dividend-paying concern. Everyone hopes for that and, of course, plaintiff, as one of many shareholders, is entirely satisfied with this settlement and feels that he has been dealt with quite fairly. Mr. Maugham said he desired to say that his clients were extremely well known in Nottingham, and they had a very high reputation. He would like to be allowed to say that when the prospectus was issued the greatest care was taken and Counsel’s advice was obtained on the very point as to whether it was necessary to make any further disclosures. If the case had proceeded defendants would have shown that they tock every step they reasonably could take from the point of view of their personal honesty and integrity to see that ths prospectus was in complete compliance with the Act. It might be that there was some trifling non-compliance with the Act, especially with rogard to the underwriting, and defendants, who were people of great respectability, were extremely sorry that the ¢ompany which started under their auspices had been unfortunate. -They had seen thoir way to find a very substantial sum to put the company on its legs again, and they hoped it ‘would be successful. He would like to add that if the case had proceeded he would have been able to satisfy His Lordship that the defendants had acted with complete honesty. Mr. Grant: I desire, of course, to withdraw unreservedly any charge of fraud or dishonesty against the defendants. Mr. Maugham said the order in the action would, in substance, be to.stay all further proceedings on the terms mentioned in the schedule. As. part of the terms defendants would pay the £9,000, which. would find its way into the coffers of the company. Mr. Grant said the costs were. agreed. Mr. Maugham: Plaintiff is asking for nothing for himself ‘apart from his costs. His. Lordship said that all the other shareholders would benefit. -from the settlement. ‘'Mr..Grant: Yes. Plaintiff takes no personal benefit what ever except that tie gets his costs. ~ FERRESTONE PRESS UNDER NEW CONTROL. ECENT developments in‘ connection with the Ferrestone .Press Compuny will be of great interest to. members of the kinema trade. This enterprising concern has,! for several years, been owned by the Provincial Cinematograph Theatres, Ltd., and has, since its inception, been extraordinarily successful within the limits of its capitalisation. I} has long been felt by those acquainted with its achievements, however, that considerable expansion would be profitable. Recently, the matter has been tackled in earnest and Mr. A. E, Newbould, Mr. W. A. Northam, and one or two friends have now purchased the business and formed a very strong board that should engure the success of the company in its new form. The company has established West End offices at Grand Trunk Pacific Building, 17, Cockepur Street. ~