1. On June 23, 1922, one Chas. Millar executed in favour of the respondent, McBride, a transfer of one share in the appellant company, the Ontario Jockey Club, Limited. The transfer was presented to the company for registration, but registration was refused on the ground that the provisions of the agreement and by-law presently mentioned had not been observed. Thereupon the respondent, on November 24, 1923, brought this action to enforce registration. The litigation ran its course, and resulted in an order dated November 20, 1925, and affirmed by the Supreme Court of Canada on December 15, 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.
2. The transferor 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 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 transferor 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 transferor. They therefore proceed to deal with the case upon the merits. [After dealing with facts the judgment concluded :]
3. That restrictions may be placed upon a shareholder's right of transfer of his shares cannot be questioned. The cases are numerous in which such restrictions have been upheld. Shares are prima facie transferable. But there is no law which precludes the shareholders from contracting for value that they shall each submit to any reasonable restriction which they choose to agree to. It may be for the benefit of the company that, for instance, shares shall not be transferred to rivals in the company's trade. A restriction which precludes a shareholder altogether from transferring may be invalid, but a restriction which does no more than give a right of pre-emption is valid. The restriction in the present case is of that kind. For these reasons their Lordships are of opinion that when the transfer, accompanied by the certificate bearing the restrictive footnote, was tendered for registration the company was entitled to refuse to register.
4. Under these circumstances it is unnecessary to express any opinion upon some interesting points of law which in the absence of this agreement it would have been necessary to decide. It is unnecessary to determine whether the Ontario Statute of 1912 is retrospective so as to invalidate a by-law valid under the Statute of 1907. It is unnecessary to determine whether the affirmative and operative word 'restrictions' in both the Act of 1907 and that of 1912 is curtailed by the administrative word 'regulate' in each of those Acts. It is unnecessary to decide whether if there had been no agreement the by-law as a by-law would have been binding, It is unnecessary to consider whether the decision of this Board in Canada National Fire Insurance Co. v. Hutchings  A.C. 451extends beyond the case of an unrestricted power to disapprove transfers. It is unnecessary to call in aid the decision in Lord Strathcona Steamship Co. v. Dominion Coal Co.  A.C. 451 upon which Idington J, relied as being in his opinion conclusive against the transferee. That case has, in fact, in their Lordships' judgment, little, if any, bearing upon this case. The question there was whether the purchaser who had got the slip was bound by the restriction as one attaching to the slip. The question here is whether the trans-feree who has not got the share, is by the restriction prevented from getting it. The present case falls to be decided on the ground that by the agreement of the transferor and of every other shareholder in this company, the shares in this company are transferable only subject to the right of pre-emption ex- Lord pressed in the language found in by-law No. 37.
5. Their Lordship will humbly advise His Majesty that this appeal should be allowed and the action dismissed with costs before this Board and below.