1. A declon that the special resolution of the co, passed at the Form 292. general meeting held on the day of is ultra vires and illegal. 2. An injunction to restrain the defts from acting on the sd resolution or applying the profits of the co otherwise than in accordance with the special resolution of the co passed the day of This form was adopted when a resolution was passed purporting to alter the rights of different classes of shareholders as defined by a former special resolution. [Plt and defts as in Form 292.] The plt claims as a shareholder in the deft co 1. A declon that the resolution passed at the ordinary general Form 293. meeting of the co on the -day of -, declaring a dividend on the Dividend in ordinary shares is ultra vires and illegal as against the holders of pre- prejudice of ference shares in the deft co. 2. An injunction to restrain the paymt of the dividend so declared, and to restrain the declon or paymt of any other dividends on the ordinary shares in prejudice of the rights of the holders of preference shares in the deft co. [Plt, A. (on behalf), and defts, the co and the directors.] preference shares. 1. A declon that the resolution declaring a dividend, passed at the Form 294. ordinary meeting of the deft co held on, &c., is ultra vires and illegal. Dividend out 2. An injunction to restrain the defts from acting or further acting of capital. on the sd resolution, and from paying such dividend or any dividend out of the capital of the deft co. 3. A declon that the defts other than the deft co are jointly and severally liable to make good to the deft co all monies (if any) pd by them out of the deft co's assets on account or in respect of the dividend so sanctioned and judgmt against them jointly and severally for repaymt of such monies accordingly. As a general rule the company ought to sue for the recovery of any assets misapplied. Gray v. Lewis, 8 Ch. 1036. But in a case as above the Court would have jurisdiction. Russell v. Wakefield Waterworks, 20 Eq. 481. [Plt, the co. Defts, the directors.] 1. A declon that the dividends pd to the shareholders in the plt co Form 295. since its formation have all been pd out of the plt co's capital, and that Recovery of the defts are jointly and severally liable to make good the amount of the dividends dividends so pd with interest. 2. Judgmt against the defendants accordingly. As regards misapplication of the monies of a company it must be borne in mind that "the money of the company is a trust fund, because it is applicable only to the special purposes of the company in the hands of the agent of the company, and it is in that sense a trust fund applicable by them to those special purposes; and a person taking it from them with notice that it is being applied to other purposes cannot in this Court say that he is not a constructive trustee.” Per Jessel, M. R., Russell v. Wakefield Waterworks Co., 20 Eq. 479. And in case improperly paid. Form 295. of fraud or breach of trust the parties are jointly and severally liable. See Forms 321, 339, infra, and Wye Valley Railway Co. v. Hawes, 16 C. Div. 489. Form 296. To enforce resolution of company. Form 297. Exclusion of director. Form 298. To restrain de [Plt, the co and A., on behalf, &c. Defts, the directors.] An injunction to restrain the defts from acting in contravention to a resolution to the effect that, &c., passed at a general meeting of the co, held on, &c. In the above case it is assumed that A., makes the company a co-plaintiff, in order to escape the rule in Foss v. Harbottle, infra, p. 367. See Pender v. Lushington, 6 C. D. 70; Harben v. Phillips, 23 C. Div. 14. [A., plt. The co., B., C., D., defts.] 1. An injunction to restrain the defts, other than the deft co, from preventing or hindering in any way the plt from acting as a director of the deft co, and from excluding the plt from meetings of the directors of the deft co. 2. Damages in respect of the matters afsd. See Pulbrook v. Richmond Mining Co., 9 C. D. 610. [Plts, the co and A., B., and C. Defts, D., E., and F.] The plts' claim is for an injunction to restrain the defts, D., E., facto directors and F., from acting as directors of, or dealing with the funds of, or from acting. using the seal of, or otherwise interfering in the managemt of the plt co, and to restrain the deft D. from acting as a director of, or dealing with the funds of the co, or using the seal of, or otherwise interfering in the managemt of the plt co, otherwise than as a member of the Board of Directors of the plt co, elected on the 1883 (which Board consists of the plts A., B., and C., and the deft D.), and to restrain the defts from representing that the four persons who first subscribed their names to the memorandum of association of the plt co continued after May, 1883, or now continue or are directors of the plt co, or that either of the defts E. and F. after that date continued or now continues or is a director of the plt co, and from preventing or hindering the plts A. and B. or either of them from acting as directors of, or taking pt in the managemt of the plt co, or excluding them or either of them from the Board meetings of the plt co. 2. Damages in respect of the matters afsd. In this case the plaintiff, as in Pender v. Lushington, 6 C. D. 70, makes the company a co-plaintiff, inasmuch as the company can alone complain of persons not duly appointed acting as directors. Macdougal v. Gardiner, 1 C. Div. 15; Harben v. Phillips, 23 C. Div. 14. See further cases in regard to directors not duly appointed. Imperial Hydropathic Co., 23 C. Div. 1; Harben v. Phillips, Ibid. 41; Munster v. Cammell Co., 21 C. D. 183. Rule in Foss v. Harbottle. It may be convenient here to refer to the rule in Foss v. Harbottle, 2 Ha. 461, and Mozley v. Alston, 1 Ph. 790, namely, that the company can alone sue in respect of wrongs done to the company. I think that it is of the utmost importance to maintain the rule laid down in Mozley v. Alston, and Foss v. Harbottle, to which, as I understand, the only exception is where the corporate body has got into the hands of the directors and of the majority, which directors and majority are using their power for the purpose of doing something fraudulent against the minority. Per James, L. J., Gray v. Lewis, 8 Ch. 1036. "I think it is of the utmost importance to all these companies that the rule which is well known in this Court as the rule in Mozley v. Alston, . . . and Foss v. Harbottle, should always be adhered to; that is to say, that nothing connected with the internal disputes between the shareholders is to be made the subject of a bill by some one shareholder on behalf of himself and others, unless there be something illegal, oppressive, or fraudulent, unless there be something ultra vires on the part of the company, qua company, or on the part of the majority of the company, so that they are not fit persons to determine it; but that every litigation must be in the name of the company, if the company really desire it." Per James, L. J., Macdougall v. Gardiner, 1 C. Div. 13. Accordingly the Court refused to interfere at the suit of a shareholder suing on behalf of himself and others in Foss v. Harbottle, ubi supra. Suit to compel directors to make good funds of company improperly expended. Mozley v. Alston, ubi supra, and Hattersley v. Shelburne, 10 W. R. 881. Where directors were acting who had not been duly appointed. Gray v. Lewis, ubi supra. To recover property alleged to belong to the company. See also Russell v. Wakefield Waterworks, 20 Eq. 474. Macdougall v. Gardiner, 1 C. Div. 13, where it was alleged that chairman had improperly refused to take a poll. Duckett v. Gover, 6 C. D. 82. Action against company's solicitor and vendor to set aside an agreement alleged to have been a fraud on the company, and to recover money of the company. For further proceedings in this case, 25 W. R. 554. The only exceptions to the rule are the following (a) Where the act complained of is ultra vires the company. Simpson v. Westminster Palace Hotel Co., 8 H. L. Cas. 712. (b) Where the act complained of is a fraud on the minority. (c) Where there is an absolute necessity to waive the rule in order that jus- 6 C. D. 70; Russell v. Wakefield Waterworks, 20 Eq. 474; Harben v. Accordingly the Court has interfered at the suit of one or more suing as above, in Clinch v. Financial Corporation, 5 Eq. 450; 4 Ch. 117. Ultra vires agreement. See Form 332, infra. Holmes v. Newcastle Co., 1 C. D. 682. Ultra vires return of capital. Hope v. International Financial Society, 4 C. Div. 327. Ultra vires purchase of shares. See Form 338, infra. Macdougall v. Jersey Hotel Co., 2 H. & M. 528. Payment of dividends out of capital. See Forms 336 & 337, infra. Menier v. Hooper's Telegraph Works, 9 Ch. 350. Majority proposing to benefit themselves at the expense of the minority. Mason v. Harris, 11 C. Div. 97. Action to set aside fraudulent sale to company, the vendor holding the majority of the shares. Where a shareholder desires to complain of a wrong done to the company, and the case does not fall within the above exceptions, and the directors decline to proceed, the shareholder can sue in the company's name. But if it is shown that the majority do not support the action, the company's name will be struck Form 298. Form 298. out, and if there is a dispute as to the views of the majority, the Court will take means to ascertain them, e.g., by giving liberty to convene a meeting. Exeter & Crediton Ry. Co. v. Buller, 5 Rail. Cas. 211; 11 Jur. 527; Pender v. Lushington, 6 C. D. 70; Duckett v. Gover, ibid. 82; Harben v. Phillips, 23 C. Div. 14. But the fact that the approval of the majority has not been obtained before the writ is issued, does not prevent the Court from giving interlocutory relief by injunction or otherwise. Pender v. Lushington, ubi supra. See further, Lindley, 896; Seton, 266; Buckley, 396. The rule above referred to does not prevent a member from suing in respect of an individual wrong. Pender v. Lushington, ubi supra, and see Forms 331, et seq., infra. 1. Your petr, the above-named co (hereinafter called the co), was incorporated in the year, under the Cos Acts, 1862 and 1867, as a co limtd by shares. 2. The registered office of the co is situated at 3. The objects for which the co was established are [the working of coal mines] and other objects set forth in the memorandum of association thereof. 4. The capital of the co is 100,0007. divided into 5,000 shares of 201. each. 5. Shortly after the incorporation of the co it commenced and has since carried on business. 6. The co has issued 4,200 of its shares, and no more, and the sum of 107. per share has been pd up thereon. 7. By Clause 37 of the articles of association of the co it is provided that the co may from time to time by special resolution reduce its capital. 8. By a special resolution of the co duly passed and confirmed, in accordance with Section 51 of the Cos Act, 1862, at extraordinary general meetings of the co held respively on the day of and day of, it was resolved as follows, namely: "That the capital of the co be reduced from 100,0007. divided into 5,000 shares of 201. each to 75,0007. divided into 5,000 shares of 157. each by reducing the liability on each share to the extent of 51.” 9. The form of minute proposed to be registered is as follows: "Minute approved by the Ct. The capital of the Co, Limtd, is 75,0007. divided into 5,000 shares of 157. each. At the time of the registration of this minute the sum of 107. has been and is to be deemed pd up on each of the sd shares." BB Form 299. Petition to confirm reduction of capital under Act of 1867. |