Page images
PDF
EPUB

COURT OF CHANCERY, 1851.

DAWSON V. Tabor.

Provisional Committee-Railway Company
Scrip holders-Plaintiff suing on behalf of
Class-Demurrer.

a

Where a suit was instituted by two members of
joint stock company on behalf of a class of scrip-
holders who diesented from the acts of the provi-
sional committee, against whom, as representing
the scrip-holders assenting to these acts, the bill
was brought, and it did not appear that there
was an identity of interest between the plaintiffs
and the class of shareholders whom they professed
to represent. Held, that the bill was bad upon
demurrer.

THE bill stated that in the month of January, 1845,
the Armagh Coleraine and Portrush Railway Com-
pany was projected for the professed purpose of
connecting the city of Armagh with the town and
seaport of Portrush. That the said company was
provisionally registered according to the Act of
Parliament, in that behalf made and provided, and
that a prospectus was published containing a scheme
for the prosecution of the said undertaking. That
the sum of £600,000 was by said prospectus pro-
posed to be subscribed for the capital of the said
company in 24,000 shares of £25 each, and that a
deposit of £1 7s. 6d. per share was to be made upon
each of the said shares. That the names of the
directors of the said company were duly published,
comprehending the names of several influential and
wealthy persons, being for the most part landholders
and inhabitants of that part of the country through
which it was proposed to run the said railway. That
the several persons hereinafter mentioned, that is to
say-Clement Tabor, Swynfen Jervis, Charles Fox,
Richard Heaviside, John Malleson, Charles Wil-
liam Spicer, William Ayscough Wilkinson, Griffin
Curtis Galt, Edward Nicholls, James Vickers,
James Hartley, all of whom, with the exception of
Richard Heaviside and James Vickers are defend-
ants, hereto were appointed the provisional direc-
tors of the said company, and all of whom under-
took and agreed to act as the provisional committee
of management thereof, and took upon themselves
the sole and exclusive management of the affairs of
the said company. That applications were made to
the said committee for shares by a large number of
individuals, and greatly exceeding in the whole the
number of shares in said company. That if the said
committee had duly and fairly proceeded with the
allotment of the said shares they could easily have
raised the full capital required. That the said pro-
visional committee allotted only a small number of
shares in the said company greatly short of 24,000,
and that the whole of the said shares so allotted
were not subscribed for, and that the deposits upon
a small number only of the said shares were paid
into the hands of the bankers of the said company.
That the said provisional committee ought to have
allotted the whole of the said shares, as they might
have done if they had proceeded fairly with the said
allotment, but plaintiffs state that the said directors
reserved for themselves, and for the purpose of re-

alizing certain expected advantages to them individually, the residue of said shares, but they or any of them never paid any monies by way of deposit or otherwise, on foot of the said reserved shares or any of them, and the deposit thereon still remains wholly unpaid to the said company. That a large number of persons, on whose behalf as well as their own, plaintiffs prefer to your Lordship this their bill of complaint, applied for and obtained letters of allotment of certain shares in the said company, under the impression and belief that said provisional committee would allot shares to all applicants of sufficient solvency and respectability until the whole intended stock of shares would be allotted. That under said impression the said persons duly paid' into the bankers of the said company the deposits on their said shares, and received from the said bankers receipts specifying the amount of the deposits so paid by them respectively as aforesaid. That the said letters of allotment contained an express proviso or stipulation in the words and figures, or to the purport or effect following, that is to say, "should the act of Parliament about to be applied for not be obtained the shareholders will be entitled to receive back their deposits less the expenses which it is provided by the deed of agreement shall not exceed 7s. 6d. per share," as by the said letters, to which plaintiffs crave leave to refer when same shall be produced will appear. That the said provisional committee of management, as aforesaid, caused a subscriber's deed of agreement and a parliamentary contract to be prepared by their solici tors, wherein the purpose and object for which the shareholders had become responsible were stated to be in accordance with the objects described in the prospectus and they published advertisements in several newspapers circulating in Great Britain and Ireland, wherein it was stated, contrary to the truth, that the whole of the said shares had been allotted. That the said allottees of shares (believing such advertisements to be true, and having great confidence in the said committee on account of their character and apparent respectability, and also particularly upon the faith of the said proviso contained in the said letters of allotmeut,) executed the said agreement and parliamentary contract. the said allottees, on execution of the said subscribers agreement and said parliamentary contract, and on delivery to the agents of the said company of the said bankers receipts, received in return from said agents scrip certificates of shares, and same were signed by the said defendants or some of thein, and the said scrip certificates purported on the face thereof, to entitle the holders of the same to shares in the said company, when the act for authorising the same should have been obtained. That very many of the said scrip certificates, ever since the formation of the said company, have been publicly bought and sold, and dealt with by the public as articles of commerce on the several stock exchanges of Great Britain and Ireland, with the full knowlege and concurrence of the said committee, and the said scrip certificates were in like manner as the scrips of other provisionally registered railway companies by the custom of the said stock exchanges transferrable by delivery merely from hand to hand.

That

That the said committee intended to comprise under of the deposits, after deducting thereout the exthe denomination of holders contained in the said penses properly incurred, not exceeding 7s. 6d. certificates, and did in fact thereby comprise all per share, according to the term of the undertaking such persons as should from time to time become as originally propounded. That the said committee purchasers of such scrip certificates or assignees of wholly refused to comply with the said demands. original allottees, and the sellors thereof intended That the said shareholders, who had protested to confer, and did confer on such purchasers and against the legality of the said meeting, then withassignees all their rights, benefits, and interests in drew from the same without recording their votes such scrip certificates, and the deposits paid thereon, in the said question, and that the said chairman and provisoes contained therein, with the full know-announced that there was a large majority of votes ledge and concurrence of said committee. That in in favour of the said amalgamation. That the the month of August, 1846, the said committee said committee recognised the exclusive right of all caused advertisements to be inserted in the principal persons actual holders of scrip certificates, whether newspapers circulating in Great Britain and Ireland, entitled as original allottees, or by assignment (or and thereby summoned a special general meeting by mere delivery), from such to vote at the said of the scrip holders of the said Armagh, Coleraine, meeting, and the sole test required for voting by and Portrush Company; and the object and pur- the said committee was the then actual possession port of the said meeting therein stated to be for the of scrip certificates, whether acquired by allotment, purpose of taking into consideration the terms of a assignment, or by mere delivery, as aforesaid. That proposed agreement for the amalgamation alleged the said committee, by means of scrip certificates to have been entered into with the committee of which they had purchased, or caused to be held by the said Dublin, Belfast, and Coleraine Junction persons under their influence, and by the illegal Company. That, accordingly, the said meeting was use of proxies, obtained from absent shareholders, held on the 28th August, 1846. That before the and other undue means, procured the said majority business of the said meeting was gone into a protest of votes at the said meeting, and the said commitin writing, signed by nine shareholders in the said tee untruly allege, and pretend that a majority of company (on whose behalf plaintiffs are suing), the shareholders, in said company, sanctioned and against the constitution of the said meeting, was approved of the said amalgamation, and authorised handed into the said chairman, and that the protest the said committee to proceed therewith, whereas was to the purport and effect following, that is to plaintiffs charge the contrary to be true, and shew say," To the Chairman of the Armagh, Cole- that the said defendants had, previous to the said raine, and Portrush Railway Company. Sir, meeting, and in order to enable them to obtain an Herewith we hand you a copy of notice, signed by authority to proceed with the said amalgamation, nine shareholders of the above company, which purchased, or procured to be purchased, for small was served at the office of the company yesterday, sums of money, a large number of scrip certificates, and we are directed to request that you will read of shares in the said company, to an amount suffithat notice to the meeting of this day, as also this cient to enable them to carry a resolution at the communication, the shareholders who have signed said meeting in favour of proceeding with the said that notice having directed us to protest, in their amalgamation, which said defendants were unable names, against the passing of any resolutions at to accomplish by reason of the great depression of such meeting, the notice convening the same being the value of said shares at said period. That in irregular and improper, and the object thereof or about the month of September, 1846, the said being inconsistent with the rights and interests of committee, by advertisements published in the prin the shareholders, and will, therefore, be rejected cipal newspapers of Great Britain and Ireland, by the persons we represent. We are, sir, your summoned a general meeting of the scrip holders obedient servants, Philips and Son, 28, Lawrence in the said Armagh, Coleraine, and Portrush Com Pountney Lane, August 28, 1846: as by the said pany, pursuant to the provisions of an Act passed protest to which your suppliants crave leave to in the ninth and tenth years of the reign of Her refer, when the same shall be produced, will ap- present Majesty, intituled an Act to Facilitate the pear." That the chairman, with the knowledge Dissolution of Certain Railway Companies. That, and assent of said committee, refused to read said accordingly, the said meeting took place at the protest to the meeting, and stated, as his reason London Tavern, in the City of London, on the 2nd for so refusing, that the object of the said meeting day of October, 1846. That at the said meeting might be defeated by the reading of the said pro- a majority of votes appeared against the dissolu test. (That your suppliants were not able to attend tion of the said company. That, nevertheless, a the said meeting, but they authorised the said Phi- large majority of the bona fide shareholders in the lips and Son duly to represent them at the said said company, at the time of the holding of the said meeting); in respect of the shares then vested in meeting, were very desirous, and ever since have plaintiffs as aforesaid, and the said Philips and Son been, that the said company should be dissolved, did in fact so represent plaintiff's at the said meet- and the deposits be returned. That the said coming, and did then and there express plaintiff's dis-mittee procured the said majority, at the said meetapprobation of the objects thereof. That many of said shareholders, at said meeting, and also the said Philips and Son, on behalf of plaintiffs, protested against the said committee proceeding with the said amalgamation, and insisted upon a return

ing, by the like improper and fraudulent means, by which they had procured a majority of votes in favour of said amalgamation, at the meeting held on the 28th August, 1846, as herein before more particularly mentioned. That petitioners, and many

other shareholders, on whose behalf they sue, have frequently, both by letter and otherwise, applied to the said committee, and requested them to give to plaintiffs, and said other shareholders, a full and true statement and account of the expences properly incurred by the said defendants as such committee of management as aforesaid, and to return to plaintiffs, and said other shareholders, the deposits paid on the shares held by them respectively in the said company, after deducting thereout the expenses properly incurred by the said committee, not exceeding 7s. 6d. per share; and plaintiffs hoped that the said defendants would have complied with the said request, but they refused, and still refuse. That the interests of the shareholders, in whose behalf they sue, so far as regards the relief sought in this suit, and the accounts hereinafter required are identical with those of the plaintiff's, and that the said shareholders have not any interests adverse to those of plaintiff's, in respect of the matters herein mentioned; and that the said shareholders are fully represented by plaintiffs, and have a common interest in obtaining the relief hereby prayed. That the interest of all the other shareholders, not represented by plaintiffs, are fully represented by the said defendants, and that petitioners are ignorant of the names and addresses of all, or any of, the shareholders, except those who are parties to this suit. Demurrer.

F. Fitzgerald, Q.C. with W. C. Henderson, for the demurrer. The plaintiff's being scrip holders only cannot sustain this bill; they have only a contingent right to these shares. Jackson v. Corker, (4 Beav. 59; 4 Rail. Cas. 674.) The case of Bagshaw v. E. R. Company, (7 Hare, 114, 13 Jur. 602,) is different from this. Anti-Dryrot Co. v. -, (10 Mee. & Wel. 309); Blair v. Aiger, (2 Sim. 289.) The bill is not on behalf of the plaintiffs and all the other shareholders, but it is on behalf of a class; they should, therefore, show their interest to be identical with the class which they represent, and that class being those shareholders who dissented from the resolutions passed at the meetings of the 28th of August, 1846, and 2nd of October, 1846. It is essential, therefore, that they should themselves have dissented, which does not appear from the bill. Columbine v. Chichester, (2 Phil. 28); Doyle v. Muntz, (5 Hare, 516); Richardson v. Larkin, (2 You. & Col. 536.)

The Solicitor-general and M'Blain, in support of the bill, cited Apperly v. Page, (1 Phil. 779); Chancey v. (Pre. Cha. 592); Walworth v. Holt, (4 M. & Cr. 619); Bagshaw v. E. Railway Company, (2 Hall & Twell. 213, 14 Jur. 491); Doyle v. Muntz, (5 Hare, 509); Young v. Smith, (15 Mee. & W. 121); Beckitt v. Bilborough, (14 Jur. 238): Cooper v. Webb, (15 Sim. 454.)

May 19.-LORd Chancellor. This case comes before me in the form of an appeal from the judgment of his Honor the Master of the Rolls. The demurrer was taken by the defendants to the bill of the plaintiffs. This case has been before the court upon several demurrers successively allowed, and on the last of them judgment was given by the Master of the Rolls for the plaintiffs. The bill is one filed upon a principle very well established, and

settled upon the authority of numerous cases, which allow such suits to be sustained by some of the members of a joint stock company suing on behalf of themselves and of the other members without bringing all interested parties actually before the court. Walworth v. Holt, (4 M. & C. 619); Apperley v. Page, (1 Phillips, 779); Cooper v. Webb, (15 Sim. 454.) This bill is filed against the Armagh, Coleraine, and Portrush Railway Company, and was originally brought by the plaintiffs on behalf of themselves and of all other shareholders, but the plaintiffs chose to amend, and to select a particular class, with whom they seek to make common cause, and they describe this class as those persons who dissented from the resolutions in favour of the amalgamation with another company, and against a dissolution of the company in which they were embarked. The bill states two particular transactions as having occurred in the company one was a negociation between this company and another company, mentioned in the bill as the Dublin, Belfast, and Coleraine Junction Company, for an amalgamation, and it states that this question was discussed at a meeting of the company convened to obtain the assent of the shareholders to the proposed amalgamation; it then states that the plaintiffs attended by proxy or deputy at that meeting, but it charges that the directors at that meeting obtained a majority of votes by means of fictitious proceedings, and against the protest of other parties, amongst whom were the plaintiffs. So far the plaintiffs appear to have been dissenting parties to that transaction. But the bill then states another transaction: a second meeting convened by the directors at which the question arose, whether the company, should be further proceeded with or not, and the bill charges that again a colourable majority was obtained by the directors by the same means as before, contrary to the wishes of the plaintiffs; it is then charged that expenses were incurred in this transaction which were not properly chargeable against the shareholders, and the plaintiff's now seek to obtain redress for what was done in this meeting, and have styled themselves as shareholders suing on behalf of the parties who dissented from the acts of the directors, of whom the majority opposed a dissolution. Now, to sustain this bill, the plaintiff's should show that they themselves have the same interest as the persons on whose behalf they are suing and that there was a common interest in both. In Doyle v. Muntz, (5 Hare, 509,) the court permitted a small number to sue on behalf of themselves; at p. 516, Wigram, V.C. says, "The court, in cases of this nature, permits a small number of shareholders to sue on behalf of themselves and others, assuming that the absent shareholders are adequately represented by parties having the same interest as themselves." So in Apperley v. Page, (1 Phillips, 779,) the bill there was filed on behalf of all the shareholders, and at p. 788 Lord Cottenham, after stating the allegations in the bill as to the purchase of shares, similar to those in this, says, "Now, so far as the defendants themselves purchasing shares, and thereby acquiring more influence at the meeting than they ought to have had, or would otherwise have had, that is merely an allegation affecting

the conduct of the defendants themselves; but the tained the character, and came within that class them. argument is, that all those who constituted the ma- selves. They by proxy, or, more correctly speaking, jority should be parties to the suit, and that they by deputy, attended at the first meeting, but no where cannot now dispute the propriety of those proceed- do I find any averment, nor can I discover that ings or of the expense incurred in consequence of they either in person, or by deputy, interfered in them. But, to sustain that objection, it must be the proceedings at the second meeting. They might shown that the bill contains allegations which would have been indifferent to the points discussed at constitute a defence to any relief on behalf of these that meeting, or might have bought shares from parties." In the case of Sharpe v. Day, (1 Phill. persons who were present at that meeting, and who 771,) it is stated that where one party sues he should assented to the continuance of the company, for it have the same interest as those on whose behalf he appears that they purchased shares at a period proposes to sue. In that case it appeared that a subsequent to that meeting (and there is no infor portion of the money alleged to be misapplied was mation respecting the parties from whom those a voluntary contribution of the shareholders, and shares were so purchased). It is true there are to which the plaintiff had not contributed, and it portions of the relief sought, in which all the share. was held he could not sue, having no common inte- holders have an interest against the directors. They rest." The Lord Chancellor, at p. 778, says, "1 are charged with having had shares allotted for cannot understand, however, by what right the which nothing was paid, and the bill prays that plaintiff claims to represent the subscribers to this they should be compelled to "reimburse out of their fund, or to unite himself with them in a suit respect- own pockets," (such are the words used,) the amount .ing it." The general proposition cannot be dispu- of such shares: so that ou this one portion of the ted that the shareholders suing must have the same bill the interest of all shareholders is common and interest. In the case before us the number of ob-identical. The bill fails in not shewing a dissent by jections taken was considerable. The first is, that plaintiffs were mere holders of scrip certificates, and it was argued that such documents were not assignable; and again, it was objected that the original holders of such shares have not been brought before the court. I cannot think it necessary to go into these objections, because throughout the bill there are numerous allegations that these transfers were with the permission of the company, and with their knowledge and concurrence, and there was ample opportunity to disprove these allegations, if untrue. The cases of Doyle v. Muntz, (5 Hare); Bagshaw v. East Railway Company, (7 Hare, 114); (and Hall and Twells, 201, on appeal,) show these objections to be futile. In these cases plaintiffsthough mere holders of scrips-were invested with the full rights of original allotees. Now, considering the averments in the bill, where the form of the scrip is set forth, giving right to transfer, I do not deem these objections as of any weight.

At page

213, the Lord Chancellor says, "It is said the plaintiff is only the holder of the scrip; he was not the party with whom the contract was originally made. The party who holds the scrip is the party to whom the company looks, not merely the original contractor, but the party who holds the scrip. It is a marketable and transferible security, and, whoever holds it, is invested with all the rights of the original party who signed the scrip. He purchases it with certain rights attaching to that species of property, and this is one of those rights which he is endeavouring to assert." Some minor objections have been made as to particular parties interested, but I deem it unnecessary to advert to them, because the main objection is one that must be allowed; it is that the plaintiffs have not shewn their rights to be identified with those of the parties on whose behalf they profess to sue. The bill I understand to have been originally filed on behalf of all the parties shareholders, but the plaintiffs thought fit to amend, and to sue on behalf of a class, and change the bill to this specific form; but, in order to entitle plaintiff's to sue, it should appear that they sus

the plaintiff's from the second meeting, (therefore it is inoperative as on behalf of a class), and the plaintiffs having taken upon them such a limited character cannot be considered to sue on behalf of all. I do not observe that the Master of the Rolls referred to this ground of objection to the bill, although it appears to me to be a ground which makes it necessary to allow this demurrer. [Solicitor-general. That objection was taken before the Master of the Rolls, although he did not notice it in his judgment.] The whole case shews that the suit is one properly between all the shareholders and the directors, and not between a portion of the shareholders and the directors.

Solicitor-general.-Your Lordship will give us permission to amend our bill.

LORD CHANCELLOR.-It is a matter for the plaintiffs consideration whether they will do so. I give leave to amend.

COURT OF EXCHEQUER.—Easter Term. HAYES v. THE GREAT SOUTHERN AND Western RAILWAY COMPANY.-May 1, 1851. Covenant-Apportionment-Release of a part. A. having covenanted with B. to preserve his irrigation in as perfect a manner as it was before a certain event, and B. having for a consideration released him from that obligation as to one stream, (the irrigation consisting of several,) and no pro vision being made as to the rest. Held, that A. being thereby incapacitated from observing the original covenant in its integrity, was not liable in covenant for failing to preserve the remaining irrigation.

COVENANT. The first count of the declaration recited that by certain articles of agreement, sealed, &c. [profert], the defendants covenanted to purchase certain portions of the townland of Ardamadane, in the parish of Garrycloyne, and county of

Cork, from the plaintiffs, for a certain sum of money, and proceeded to aver that the defendants "did thereby for themselves and their successors further covenant and agree with the said plaintiff, his heirs, &c., that the irrigation of and at the western end or division of said lands should and would, when the said lands should be divided by a certain then intended railway therein mentioned, be preserved by said defendants for the said plaintiff in as complete a manner, and to as full an extent as said irrigation was at the time of the execution of said articles of agreement used and enjoyed by the said plaintiff." Averment, that the said lands were divided by the said railway, whereof the defendants had due notice. Breach-yet the said defendants did not nor would when the lands were so divided by said railway as aforesaid, nor at any time since (although often requested so to do) preserve the irrigation of and at the western end or division of said lands, in as complete a manner, or to as full an extent as said irrigation was at the time of the execution of said articles of agreement, but altogether omitted and neglected so to do; and on the contrary, the plaintiff saith that when the lands were so divided by said railway as aforesaid, to wit, on, &c. to wit, at &c., a large portion, to wit, four acres of the western end or division of said lands became and were wholly, and from thence hitherto have been and still are wholly deprived of said irrigation, for want of needful and proper preservation thereof by the said defendants, coutrary to the tenor, &c. The second and third counts contained averments similar to the above, as regarded failure to preserve the irrigation, the latter averring a total loss of the irrigation. The defendant in his first plea to the first count set out the agreement on oyer, and pleaded non est factum. 3rd plea, That in order to preserve the irrigation of and at the western end and division of said lands, when the said lands should have been divided by the said railway, for the said plaintiff, pursuant to the said covenants of the said defendants in that behalf, it was necessary that the said defendants should make and construct certain works, to wit, a certain irrigation culvert, at the western division of said lands under said railway, to wit, at, &c. and certain drains passages, and other works, and carry and pass a certain irrigation stream at the western division of said lands under said railway, to wit, at, &c., and that after the making of the said articles of agreement in the said first count mentioned, and before the said lands had been divided by the said intended railway, to wit, at, &c. by a certain agreement then and there made between the plaintiff and defendant, sealed, &c. [profert,] the plaintiff did agree to receive and accept of and from the defendants the sum of £35, in full for all compensation payable to or claimable by the said plaintiff, by reason of the plaintiff foregoing the construction of the said irrigation culvert at the western end or division of said lands, and permitting same to be constructed by the defendant between pegs 156 and 157 on said line of railway, and the said plaintiff thereby undertook to construct all other necessary drains and passages for the preserving of said irrigation, and the said irrigation stream, after it

should have been passed under the said railway by said culvert, at the said plaintiff's own cost and expense," [avers the making of such culvert and payment of £35 to the plaintiff, whereby the defendant was discharged from the original covenant. Verification.]

To this plea the plaintiff replied, craving oyer of the last mentioned agreement, and setting it out, whereby the plaintiff agreed to "accept the sum of £35 in full for all compensation payable to or claimable by the said Michael Hayes, his heirs, &c. by reason of the said Acts of Parliament, [7 & 8, 8 & 9, 9 & 10 Vic.] by reason of his foregoing the construction of the irrigation culvert at the western division of his farm, and allowing the same to be constructed between pegs 156 and 157, said Michael Hayes hereby undertaking to construct all other drains and passages for said irrigation stream, after it shall have been passed under said railway by said culvert from the western side, at his own cost and expense." The replication then proceeded as follows: "which being read and heard, the said plaintiff saith that he ought not, by reason of any thing in that plea alleged, to be barred from having and maintaining his aforesaid action thereof against the said defendant, because he saith that before and at the time of the execution of the articles of agreement in the first count of said declaration, and in the third plea mentioned, the irrigation of and at the western end and division of said lands was supplied and maintained by means of two streams of water which flowed from the eastern to the western end of said lands, one of the said streams being situate to the north of the other of said streams, and which said streams would be intersected by said railway in said articles of agreement mentioned, and by reason of said intersection of said two streams by said railway, it would be necessary, in order to preserve the irrigation of and at the western end or division of said lands, when the same should be divided by the railway as aforesaid, in as complete a manner and to as full an extent as said irrigation was, at the time of said articles of agreement, had and enjoyed by the plaintiff, that two separate and distinct good sufficient irrigation culverts should be made and constructed at the western end of said lands under said railway." Averment: that the articles of agreement secondly-above-mentioned refer to and are conversant about the southernmost of said streams only, and the culvert belonging thereto, and are not conversant about the other stream. New assignment: that the plaintiff hath not declared against the defendant for want of the preservation of the irrigation derivable by the plaintiff at the time of the execution of the articles of agreement from the stream mentioned in that agreement, but for want of preserving the irrigation derivable from the other stream. Averment: that such latter irrigation was not preserved by defendants, though often requested so to do. Verification: prayer of damages for the breach of covenant so newly assigned.

To this the defendant demurred, assigning (amongst others) the following causes of demurrer: that said replication is a departure from the cause of action stated in first count of the declaration;

« EelmineJätka »