The main legal point established in the judgment is that restrictions on the transfer of shares are valid if agreed upon by the shareholders, and the company is entitled to refuse to register the transfer based on the agreement signed by the shareholders.

Lord Wrenbary -

On 23rd June 1922, one Chas. Millar executed in favour of the respondent, McBride, a transfer of one share in the appellant company, the Ontario Jockey Club, Ltd. The transfer was presented to the company for registration, but registration was refused on the ground that the provisions of the agreement and bylaw presently mentioned had not been observed. Thereupon the respondent, on 21st November 1923, brought this action to enforce registration. The litigation ran its course, and resulted in an order dated 20th November 1925, and affirmed by the Supreme Court of Canada on 15th December 1926, by which the company was ordered to enter the name of McBride on the register. This is an appeal by special leave from the judgment of the Supreme Court.

The transferrer Millar is not a party to the action. The order under appeal to put McBride's name on the register is necessarily an order to take Millar's name off. Apart from the merits of the case their Lordships, had they been in favour of the respondent on this appeal, would have found difficulty in affirming an order for rectification made in an action to which the transferrer was not a party. But inasmuch as upon the merits they think that the order cannot be sustained, they have no difficulty in dealing with the case in the absence of the transferrer. They therefore proceed to deal with the case upon the merits.

The appellant company was incorporated on 29th April 1881, by letters patent issued under the then existing Ontario Company's Act, R. S. O., 1877, Ch. 150, with a capital of $20,000, divided into 200 shares of $100 each. On 28th June 1909, Charles Millar was the registered holder of one share.

In 1910, before the increase of the shares from $100 each to $1,000 each and before the issue of the new shares presently mentioned, he obtained a second share. On 10th November 1910, the committee of the company passed and on 30th November 1910, the company ratified a bylaw in the following terms;

By-Law No. 37:

1. Save as hereinafter provided, no shares or interest in the Club shall at any time be transferred to any person not already a shareholder, until the Club has had an opportunity to find a purchaser for such share or interest as hereinafter provided.

2. Any shareholder desiring to sell his share or shares, or any portion thereof, shall give notice in writing to the Club that he desires to sell and transfer the same, and such notice shall constitute the Club such shareholder's agent for the sale of such share or shares to any purchaser at a pries to be ascertained as hereinafter provided or at any lower price that may be fixed by the shareholder desiring to sell.

3. That if the Club shall within the space of 30 days after such notice find a purchaser desiring to purchase such share or shares and shall give notice thereof to the person desiring to sell, he shall be bound at such time within 10 days thereafter as the Club shall appoint upon payment of the price named or to be ascertained as hereinafter provided to transfer such share or shares to such purchaser

4. That if in any case the selling shareholder after becoming bound as aforesaid makes default in transferring such share or shares, the Club may receive the purchase money and shall thereupon cause the name of the purchaser to be entered upon the register as the holder of such share or shares, and shall hold the purchase money in trust for the selling shareholder, his executors, administrators or assignees and the receipt of the Club for the purchase money shall be a good discharge to the purchaser, and he shall not be bound to see to the application thereof and after the name of the purchaser shall have been entered in the register in purported exercise of the aforesaid power the validity of the transfer entry or the proceedings shall not be questioned by any person and the purchaser shall be deemed and taken to be the owner of the said share or shares.

5. That subject to the next succeeding paragraph the price t