(He was stopped by the Court.) Isaacs, in reply:-[Per Curiam. It is not evident from five directors being present that they had authority from all.] It is submitted not. Mayor, &c., of Merchants of the Staple of England v. Governor, &c., of the Bank of England 21 Q.B.D. 160. There is no evidence that the absent directors ever con OF CASES Duffy for the plaintiff respondent)-On the point meeting by 7 days notice which it was conceded were of estoppel defendant attended meetings, allotted not given, and accordingly it appears that the special himself shares, and recognised himself as a director. meeting was not duly held. Upon that conclusion, His name on the share-list is prima facie evidence defendant grounds an argument that all acts subsethat he is a member. The estoppel arises from his quently done by the directors named in one of the statement and conduct which induced us to allot him Articles of Association adopted at that meeting ha e certain shares. York TramwayCo. v. Willows is directly been invalid. That resolution was confirmed on the in point. Harward's Case L.R. 13 Eq. 30; Fowler's 28th October, and on the 29th December a meeting Case L.R. 14 Eq. 316. The Company certainly, and was held at which 4 out of the 5 directors appointed outsiders probably, are affected by his acts. He pur- by the Articles, attended and acted, the defendant ported to act under the Articles, by which he was being one of them. At that meeting a resolution was bound to take 50 shares. [Williams J.-Did he proposed and adopted that all the shares applied for know these proceedings were irregular?] He did in the company up to that date be and are hereby know he was accepting shares Cairncross e. Lorimer allotted. Defendant had previously applied for 200 7 Jur. N.S. 149. The company would be estopped shares, and was an assenting party to this resolution. from saying he was not a shareholder. Hull Flax He says now that the allotment and everything done Coy. v. Wellesley 6 H. & N. 38. Sheffield Railway by this body, of which he was a member was invalid. Co. r. Woodcock 7 M. & W. 574. Waiver and We do not think he has succeeded in showing this. estoppel are different. In the latter case it does not Assuming that the special meeting held on the 4th matter whether the fact is true or not. It resembles of October was invalid by reason of the absence of Pleading. Nolan v. Annabella Gold Mining Co. 6 the 7 days' notice, we have then to look at Table A W. W. & A'B (M) 38. It appears from the 52nd and 53rd Articles of Table A that "the number of directors and the names of the directors shall be determined by the subscribers of the Memorandum of Association," and "that until directors are appointed the subscribers of the memorandum shall be deemed to be directors." There were only 9 subscribers of the memorandum here, and it appears that at the meeting of the 4th October 5 out of these nine constituting not only the subscribers but the only shareholders at that time were present and acted. The 5 gentlemen and one stranger constituted the meeting which passed unanimously, the resolutions repealing Table A, and adopting Articles of Association, the 22nd of which appointed 5 subscribers not the same, one of whom was the appellant to be directors of the Company. It is said that this is no evidence of a determination by the subscribers that these gentlemen should be directors of the Association. It is not easy to say what evidence could be stronger, and in that view it is wholly unimportant whether this meeting was duly convened or not. It was a meeting at which the majority clearly intimated the determination that these 5 persons members of their own body should be directors, and the act of that majority has never been repudiated or dissented from by the remaining four. In that view these five directors were legally determined, and their acts, till other directors are appointed, would be valid whether the meeting was legally convened or not, and a majority of them would constitute a quorum of their own body, that quorum being determined by Table A to be in all cases a majority of directors. In that way the objection seems to be properly and sufficiently answered. Another auswer commends itself to my mind as abundantly sufficient, founded on the provisions of the 64th section of the Act, and the interpretation given to it by Holroyd J. in Buzolich Paint Co. v. Cornwell 11 V.L.R. 371, in which interpretation I entirely concur. In order to apply that section to this case the order of events must be remembered. On 4th October it is said this curred. Buckley on Companies, p. 456. Every individual member has a right to have a proper notice. North West Transportation Co. v. Beattie 12 Ap., Ca. 589 per Baggally J. Dawes' Case 1 De. G. Mc. & G. 421. An invalid resolution cannot be confirmed even by Annual General Meeting In re Railway Sleepers any HIGINBOTHAM, C. J.-This is an appeal from the County Court in which the plaintiff, The Federal Mutual Live Stock Coy. sue the defendant Donaghy for an amount due upon 200 shares allotted to and held by him. There were originally three grounds of appeal, but the only ground argued was whether there was or was not a valid allotment of shares to the defendant. As his name is entered on the Register of this Company it lies on him to prove that it was improperly entered and unless he can show that he must be taken to be a member, and to be liable to pay calls as money due on allotment. His defence is that the company was incorporated on the 2nd October, 1886, and on the 4th October a special meeting was held, a Special Resolution was passed repealing Table A of the second schedule of the Companies Statute 1864, and substituting the Articles of Association annexed to the resolution for Table A. By the 35th clause of Table A which binds until superseded by the Articles of Association, this meeting should have been summoned as a special illegal rescission of Table A and the illegal adoption of articles took place, and from that time everything was illegal. See on 64 seems to be intended to prevent any such disastrous consequences, for disastrous they well might be both to strangers and members-n the event of a radical mistake being discovered. That section provides that "Until the contrary be proved every general meeting or meeting of directors or managers in respect of the proceedings of which minutes have been so made shall be deemed to have been duly held and convened and all resolutions passed thereat and proceedings had to have been duly passed and had." It does not appear till the present argument that the resolution of the 4th October has been proved to be invalid, and this section down to this point appears to me to provide that in all cases when a company under this Act does what is required of it, keeps minutes, &c., that down to the time at which the validity of the acts done and resolutions passed at these meetings are proved to be invalid, they shall be deemed to have been valid, the meeting duly convened, and the resolutions duly passed- -so down to the present time it was the duty of the directors to act as if they were what they believed themselves to be duly appointed directors. As soon as the discovery is made that the meeting was not duly convened, the directors not duly appointed, and the resolutions not duly passed, then for the future no validity can be given to acts shown to be illegally done it may be but until the present time they must be deemed to have been valid. Then section 64 proceeds— "And all appointments of directors managers or liquidators shall be deemed to be valid and all acts done by such directors managers and liquidators shall be valid notwithstanding any defect that may be afterwards discovered in their appointments or qualifications.” A term is put to the valid operation of certain continuing things, but acts completely done during the time when no validity has been discovered are good for ever. transferred these shares to a third person the Company would be equally estopped from saying he was not a val'd holder of these shares and that he had no power to transfer. valid. HOLROYD J. I agree that the appeal should be dismissed. The view I take of the position of the defendant as regards the Company is this. His name appears on the Register of Shareholders for a certain number of shares and he is sued by the Company for money agreed to be paid on allotment of these shares to him. He has to prove that the allotment was not What he proves is that the Company was incorporated on the 2nd October and that a meeting purporting to be a special meeting was held on the 4th October at which certain resolutions were passed. On looking at the Articles of Association supposed to be adopted by the Resolution we find a clause providing that the first directors of the principal board in Melbourne should be certain persons named not less than 5 in number. It appears by Act 35 of Table A that 7 days notice to each member of every general meeting is necessary--7 days notice could not have been given for the 4th October. Therefore since the notice of the meeting was invalid the resolution was invalid and could not be validly confirmed. 5 out of the 9 subscribers (with one other person) were present. They all concurred in passing those Articles supposing they had a legal right---None of the other four expressing any dissent nor have they done so up to the present. There is no evidence in what But manner the subscribers of the Memorandum of Association determined the number or names of the first directors as provided for in 52 Art of Table a From the fact of a majority of the subscribers being present and assenting and none of them ever dissenting it is to be inferred that the subscribers have determined the number to be 5 and the names those inserted. If that be so then 3 would constitute a quorum at the meeting at which the shares were allotted to Defend ant. If that view be correct the allotment of shares to defendant by himself and other directors constituting a quorum of an illegally appointed body on the 4th October not only was but is valid at this moment, even after the discovery of the invalidity of the meeting at which the directors were appointed, I prefer to base my judgment on these two grounds rather than on the consideration of the further question of estoppel. The inclination of my opinion is that he is estopped, but I do not base my judgment on this. The appeal will be dismissed with costs. WILLIAMS J. I concur. Though not perfectly clear I have a strong opinion that defendant is estopped from saying that there was not a valid allotment of shares to him. He acted as director of this Company being app inted at his own request, met others who purported to act as directors and all of them proceeded to allot shares. Defendant as a director allotted these shares to himself accepted the allotment got himself placed on the Register of Shareholders and now says he is not a Shareholder. If he It is said that the subscribers have only to determine the number and names but until directors are duly appointed-as opposed to "determined" the subscribers shall be deemed to be directors by Art 53 of Table A-Their appointment was attempted to be made and though it turns out to be invalid that is cured by Sec. 64 and their acts are valid notwithstanding that defect and it is no longer an objection subscribers present. I adhere entirely to what I said to their acts that there was not a quorum of the in Buzolich Paint Coy, v. Cornell 11 V.L.R. 371 But I am not sure that it goes so far as the learned Chief Justice seems to think. In that case I said : I think that the clause commencing with the words "until the contrary is proved" ends with the words "shall be deemed to be valid" and so far as regards the appointment of directors the meaning is in my opinion not that such appointments are to be deemed for ever valid if supposed to be valid when made but that the proof of their nvalidity rests upon those who impeach them. By that I mean that when it is shown and clearly proved that the appointment was invalid the ap point nent is deemed to be always invalid-I further and giving them the general costs of the action, he said: There remained a still more important case to be provided for. It would have been only a half measure to raise a legal presumption in favour of the validity of the appointments of directors and yet to allow their acts honestly done in the belief that they had been duly appointed and possessed the necessary qualifications to be set aside or repudiated if it should be subsequently shown that this belief was ill founded It was therefore enacted that all acts done by such directors should not be merely deemed valid but should be actually valid that is as valid as if they had been lawful directors notwithstanding any defect that might afterwards be discovered in their appointments or qualifications. Taking the view I have arrived at of the evidence in this case I think that the acts of the persons present at the meeting were the acts of the persons supposed | to be then lawful directors, that a defect in their ap. pointment was afterwards discovered but in spite of that defect their acts were legal and that therefore the Company were entitled to recover the money which the defendant agreed to pay on the allotment of those shares. (Before Higinbotham C.J. Williams and Holroyd J. J.) Sep. 23. WOLFE V LANG & Co. Practice-Order 65 rule 1-Costs-Discretion of judge-Trial by jury-" Good Cause." Whether there was good cause" shown to give a judge jurisdiction to deprive a successful party of his costs is a question of fact to be determined by the judge at the trial, and his determination is subject to appeal. Whether being satisfied that he has jurisdiction. the judge will interfere with the operation of the Rule that costs shall follow the event is a question of discretion, and the exercise of that discretion will not be interfered with by the Court on appeal. Where a person sends goods in wrappers which bear false statements calculated to deceive the public as to the nature of the goods, his culpable negligence in not making himself acquainted with the statements on the wrappers in not ascertaining whether those true or false constitutes " good cause" for depriving him of his costs under Ord. statements were 65. R. 1. Per Holroyd J. The definition of "good cause" in Jones v. Curling 13. Q.B.D. 262 and Harnett v. Vise 5 Exch. Die. 307should be extended to include cases in which a successful party has been guilty of conduct contrary to public policy, or calculated to injure or defraud the public. Appeal from order of Kerferd, J. by which in directing judgment to be entered for the defendants, deprived them of costs of an issue relating to a charge of fraudulently selling schnapps in bottles with wrappers intended to deceive the public and make them believe that they were purchasing the plaintiff's goo ls. The appeal was made on the ground that there was no good cause for depriving the defendants of their costs of this issue. : Dr. Madden and Isaacs for the defendant appellants. The question whether there was "good cause" is matter for appeal. It never reached the stage of discretion. This case is very different from Newman e. Pinto, 57 L. S., 37, on which the learned judge relied as there was no jury and it was a matter of discretion. Here there was a jury. As to when Court will find fraud In re Bannister, 12 Ch D.. 131. [Higinbotham, C. J. That must be qualified when agent has a guilty mind.] Joliffe v. Baker, 11 Q.B. D., 255 at Р 270. There is no such thing as legal As to what is good fraud apart from moral fraud. cause, Jones v. Curling, 13 Q. B. D. 262; Huxley v. West London Railway Coy., 17 Q. B. D., 373; Rooke e. Czarnikow IV. Times, L. R. 669. For discretion the Court may look at the after conduct of parties and general facts not for "good cause." The Court must see that there is good cause between the parties in the suit Wright e. Shaw, 19 Q. B. D., 396; Harnett v. Vise, 5 Ex. D., 307. Hodges for plaintiff respondent. The question is, was there any fact existing which would justify the learned judge undepriving defendant of his costs of this issue? If so this Court will not disturb his If there is cause it these finding. The question here is not of punishing a party, but the Court says we will give no assistance to either of a pair of rogues. cannot be confined to any particular issue, Harnett v. Vise 5 Ex. D., 307, then within general jurisdiction. The defendant's attention was called to wrappers by our reply, and if, as he states, he did not look at them, he was guilty of culpable negligence, and his own misconduct has brought this on him. The case of Newman v. Pinto, was not one of good cause, but as in Jones v. Curling, 13 Q. B. D., 262, the principals which guide as to what is good cause are laid down. If there were materials before the learned judge or evidence on which he could find good cause his finding will not be disturbed. Isaacs (in reply.) The ground of Jones v. Curling is that appeal is on a question of fact, and this Court can go into the facts and draw inferences for themselves. HIGINBOTHAM, C.J. This is an appeal from part of the judgment of Kerferd J. By this judgment the action of the plaintiff was dismissed with costs on the higher scale, but the learned judge deprived the defendants of that portion of the costs relating to the alleged fraudulent sale by the defendants of goods similar to those of the plaintiff, and which it was said were so wrapped as, to induce the public to believe they were the plaintiff's goods. The appeal is brought infringing a trade-mark. The case was tried before under Order 65, which provided that "Subject to the Mr. Justice Kerferd and a jury. The jury arrived at provisions of the act and these rules, the cost of and certain findings, which were subsequently dealt with incident to all proceedings in the Court, including the by the Full Court. They found in answer to certain administration of estates and trusts, shall be in the questions that certain statements made upon a wrapper discretion of the court. Provided also that where any or circular accompanying the plaint ff's bottles were action, cause, matter, or issue is tried with a jury, the false; also, that the plaintiff knew of the falsehood of costs shall follow the event, unless upon application the statements, and that those statements were inmade at the trial, for good cause shown, the judge by tended to deceive the public, and did deceive the whom such action, cause, matter, or issue, is tried, or public. The jury found-and this Court affirmed the the Full Court, shall otherwise order." This proviso, finding-that the plaintiff was guilty of fraud in the according to the interpretation which has been put legal, and ordinary, and proper use of the word. A upon it, and which has been followed in this Court, similar charge had to be considered as against the is difficult of application. The effect of the rule is defendants. The defendants had used a wrapper that the judge at the trial should first determine as to accompanying the bottles they sold, which contained the question of fact whether there was good cause the same statement as the wrappers employed by the shown. That is a question of jurisdiction, and if the plaintiff. They were charged with fraudulently using judge arrives at an erroneous determination on that that wrapper, and the jury were asked to say whether question, his determination is a subject matter of the defendants fraudulently intended to induce purappeal to this Court. The determination of the ques- chasers to believe that the defendants' goods were tion whether there is good cause involves a question of those of the plaintiff. The jury answered it thusfact, namely, whether the facts of the case show that "We think that the bottle and the label were not it would be more just that the costs should intended by the defendants to deceive the public to either in whole or in part follow that event. the plaintiff's detriment; but we think that the inThat consideration applies to the conduct of sertion of the wrapper makes, with the other get up the parties, and also I am disposed to think of the bottle, a package which might deceive the pur. questions not confined to the conduct of the parties, chaser. The evidence tendered shows that the but which might come into consideration in the course wrapper was inserted by the packer, but there is no of the case. The question is a question of fact, and evidence that it was inserted with the defendants' like all other questions of fact, when it comes before knowledge. No satisfactory evidence has been given the appellant tribunal, it lies upon the party appeal to show that any person has been deceived, and we ing to satisfy the appellate Court that the judge in the think it probable that very little damage has Court below has arrived at an erroneous conclusion been done to the plaintiff.” Now, the findings of upon the question of fact, and unless he satisfies the the jury upon this question, with regard to the plaintiff Court of Appeal that the judge has arrived at an and the defendants, are totally different and distinctly erroneous conclusion upon the facts, the decision of opposed to one another. In the case of the plantiff, he the Court below will not be disturbed. After the was found by the jury to be guilty of fraud; in the Court has decided that it has jurisdiction by reason case of the defendants, they found there was no of good cause existing, it then becomes a question of intention to deceive. It is improbable in point of fact discretion for the judge, whether and to what extent that the public were deceived. It is unnecessary to go he will interfere with the operation of the rule, that into all the circumstances, but it is sufficient for the costs shall follow the event, and with that discretion, present purposes to point out that the findings of the when it was exerc'sed, this Court would be very slow jury upon this point are opposed to one another; that to interfere, if, indeed, it would interfere at all. In the plaintiff has been found guilty of fraud, and the this case the action was brought, in the first instance, defendant not. The learned judge considered that for the infringement of a trade-mark. After a time good cause existed for diverting the ordinary rule that the pleadings were amended, and the statement of costs followed the event, because he said the defendants claim was altered so as to include a claim against the had done the same thing as the plaintiff. He expressed defendants for a fraudulent attempt to induce pur- it in different terms by saying that where a transaction chasers to believe that the defendants' bottles sold by was fraudulent by both parties the Court would not them were the bottles of the plaintiffs, by which the interfere to assist either side. I think that that conplaintiff's business was injured. That is a charge clusion is opposed to the findings of the jury, and I entirely distinct from the original one. It involves think it right to state that I do not concur, and could a question of a much more serious character to the not concur, in the conclusion of the learned judge defendants. The original complaint relates only to founded upon that ground. I think it is necessary the infringement of a civil right; the second involves and proper that I should state distinctly that I differ a charge of fraud, which, in the legal sense, bears the from the learned judge on that ground, because the use same meaning in this action. with fraud in its of that expression certainly contains an injurious ordinary use. It imputes to the person charged with reflection on the defendants, which it is the duty of fraud an intentional act of dishonesty, and is this Court in this proceeding to remove. If, therefore, of very serious import to the persons charged the learned judge found jurisdiction, and held that with it, beyond the civil consequences of the act of there was good cause to make this order as to costs of 27th Oct, 1888. If this issue on this ground, I should be prepared to good cause, the Court of Appeal will overrule him. dissent from that conclusion, and to overrule his he arrives at a right conclusion that there was good decision. But the learned judge also stated that, apart cause to deprive the successful party of his costs, then, from this, if it were necessary, he should hold, follow-no matter how inequitably the Court of Appeal might ing the authority of Harnett v. Vise 5 C Exch. Div. think that he had apportioned the costs, the court will 307, that the defendants had in a great measure not interfere. When once the jurisdiction, or good brought this action upon themselves by their incautious-cause, is established, then the case is in the discretion ness; that they imported these schnapps, and someone in their employment must have seen the samples in the sample-room, although they did not see them themselves. This constitutes an entirely different ground of good cause for depriving the defendants of the costs. I am not prepared to say that the learned judge was wrong in finding that there was good cause on this ground. The defendants have been carrying on this business for many years. They first obtained their goods in 1882, and had instructed their London agent to have their trade mark attached to the goods, which they imported from the manufacturer. These orders were carried out, and the defendants' trade mark was attached to the goods. And during the entire time during which the defendants were importing these goods they did not t ke the trouble, either from curiosity or any other reason, to examine the wrapper which was attached in connection with this trade-mark to these goods. The action was commenced as far back as 1884, and it was not till the year 1886 that charge of fraud was inserted in the statement of claim; and down to the date of the trial, which took place in September, 1887, the defendants did not make themselves acquainted with the particulars of the wrapper attached to the bottles. I will not say that it was negligence, but the defendants have certainly shown incaution, when they knew the nature of the claim against them, not to make themselves acquainted with the contents of the wrapper. This incaution might have operated prejudically to the plaintiff as well as (as the jury had found) causing some injury to the public. On this ground I think the learned judge was justified in concluding that good cause had been shown for making the order to deprive the defendants of their costs of this issue. Further, I am disposed to think in view of the public interests, that we are now at liberty to hold that the defendai ts were justly deprived of this portion of the costs in consequence of the incantion they displayed, in importing and selling these goods, as to the possible effect the wrappers might have had on the purchasers of the goods. I am of opinion that the appellants have failed in their obligation to satisfy the Court that the learned judge was shown for depriving the defendants of their costs of the issue, and the appeal will be dismissed, but without costs. of the judge. In the present case I think the defend- |