cases, in both of which it was held that a sum due in respect of damages payable for breach of contract or misrepresentation made by the company on the occasion of the issue (as opposed to the purchase) of its shares were held to be excluded by the section. Before considering these cases, there are two background points to be made. First, there was a principle established in Houldsworth v. City of Glasgow Bank (1880) 5 App.Cas. 317 that a shareholder could not sue for damages for misrepresentation inducing his subscription for shares unless he first rescinded the contract and that once the company had gone into liquidation such rescission was impossible. This principle has now been modified by section 111A of the Companies Act 1985, as inserted by section 131(1) of the Companies Act 1989. Second, it was not until the decision of this House in Ooregum Gold Mining Co. of India Ltd. v. Roper; Wallroth v. Roper [1892] A.C. 125 that it was established that a company had no power to issue shares at a discount. In the Addlestone case, 37 Ch.D. 191 the company had issued £10 shares expressed as being fully paid at a discount of £2 10s.. Upon the company going into liquidation a call of £2 10s.. per share was made. The shareholders paid the call and then sought to prove in the winding up for damages of £2 10s.. per share "for breach of contract or otherwise in respect of the shares." Kay J. held that the claim was excluded by section 38(7) of the Act of 1862. He said, at pp. 197-198: "Now, unquestionably the applicants - retaining these shares and claiming damages because the shares are not exactly what they were represented to be - are making such claims in the character of members of the company, and the only question is whether such claims are for sums due 'by way of dividends, profits, or otherwise.' . . . Practically, what these applicants are seeking to recover by their proof is a dividend in respect of the £2 10s.. per share which they have been compelled to pay in the winding up. But as shareholders they have contracted that they will pay this money, and that it shall be first applied in payment of the creditors whose debts are not due to them as members of the company - that is,