debentures in a specified form, and with the consent of shareholders in the manner prescribed. The directors afterwards borrowed money, but not with the formalities so required, and the money borrowed was applied to the purposes of the company, stated in the annual reports, and not objected to by the shareholders. It was held that after two years of such acquiescence, the debentures so issued were valid.-Re Magdalena Steam Navigation Co., 1860, Wood, V.-C.; 3 L. T. (N. s.) 147; 6 Jur. (N. s.) 975, Ch.

2.-Bond-Equities-Obligor and Obligee-Recognition of Assignee.

If a company accept notice of the assignment of a bond which it has issued, it is precluded from setting up against the assignee equities, between them and the original obligor, attaching to the instrument itself.-In re Hercules Insurance Company, Brunton's case, 1874, Malins, V.-C.; L. R. 19 Eq. 302; 44 L. J., Ch., 450; 31 L. T. (N. s.) 747; 23 W. R. 286.

3.-Debentures-Secured-Preference.

With respect to debentures held by shareholders Malins, V.-C., decided that debentures given by a company, by which it "mortgaged and charged all the property, book debts, credits, assets, monies, and other effects" of the company, were entitled to preference over the unsecured creditors. It was objected that the debentures were really documents representing an

advance of capital by the shareholders to the concern, the debentures in question being subscribed for by shareholders with hardly an exception; but the ViceChancellor held that where there was full authority to issue the debentures, the unsecured creditors had sufficient notice. The intention of the Companies Act, he remarked, was to exempt shareholders from all the incidents of partnership, except to the amount of the capital subscribed, and the exemption would not be complete if they were not, qua individuals, in the same position as strangers in lending to the corporation. There is nothing improper, therefore, in such individuals taking security for their advances, just as any stranger might do, and the unsecured creditors have no cause to complain unless the act gave them insufficient facilities for knowing what was being done.-In re General South American Co., 1876, Ct. of App.; L. R. 2 Ch. Div. 337; 34 L. T. (N. s.) 706; 24 W. R. 891. (Malins, V.-C., affirmed.)

4.-Mortgage Debenture-Chose in Action-Equitable Mortgage-Bankruptcy-Notice-Order and Dis

position.

A debtor handed a mortgage debenture of a mining company, endorsed in blank, to his creditor, as security for his debt. Eight days afterwards the debtor committed an act of bankruptcy, upon which he was adjudicated bankrupt. After the act of bankruptcy, the creditor gave notice to the company that he held the debenture. The trustee having claimed the debenture as having been in the order and disposition of the bankrupt at the commencement of his bankruptcy,

Held, that the debenture was a chose in action, and

wsa within the exception of sect. 15, sub-sect. 5, of the Bankruptcy Act, 1869, and that a valid transfer of it had been effected.-Re Pryce, Ex parte Rensburg, 1877, Bacon, C. J.; L. R. 4 Ch. D. 685; 36 L. T. (N. s.) 117.

5.-Debentures taken by Directors for money lent are valid Omission to Register.

A deed was executed in favour of trustees, charging all the property of the company in favour of the holders of debentures issued thereunder. The trustees were not directors of the company; but certain directors held debentures.

Held, that the debentures created no charge on the company's assets, but derived force simply from the mortgage deed; that there was nothing to show that the directors "knowingly and wilfully authorized or permitted" the omission to register; and that there was nothing in the Act and nothing in the general principles of equity to deprive these directors of their charge. It is the function of equity to relieve from penalties and not to inflict others in addition to those imposed by an Act of Parliament.-Re Globe, etc., Co., 1879, Jessel, M. R.; 40 L. T. (N. s.) 380; 48 L. J., Ch., 295; 27 W. R. 424; W. N., 1879, p. 18.

In this case, Jessel, M. R., when delivering a long and elaborate judgment, took occasion to animadvert strongly on the series of previous decisions, where Directors (situated nearly as in the present case) had been held

not to be entitled to stand as Creditors as against the general creditors. One of the points considered by the Master of the Rolls was that, (although the Debenture stated a loan and a promise to pay, and that the loan was part of a sum secured by the mortgage to trustees) the debenture did not itself create the charge, and that it was not the duty of the directors who received the debenture to register.

6.-Winding-up order-Debenture-holder-Refusal.

(See SHARE-BONUSES.)

(i.)—Bonds, with coupons attached, were issued by a limited company, so framed that each bondholder should be entitled to a "bonus-share" under a trust-deed, by which the company bound itself to pay to the trustees interest on the bond, and an annual sum as sinking fund to provide for the repayment of the bonds. Each bond contained a covenant by the company with the trustees to pay the bearer thereof £100, and to pay interest to the holder of the coupon.

(ii.)-Held, 1st.-that a Bondholder was not entitled to a winding-up order in respect of unpaid interest,-on the ground that, as he had no right of action except through the Trustees, he was not a creditor of the company, either in respect of the bond as to principal, or of the coupon as to interest; 2nd.-that, even if he were a Creditor, inasmuch as a large majority of the bondholders opposed the petition, and he would be in no better a position by obtaining his order, the court had a discretion, under section 91 of the Act of 1862, which in this case was properly exercised by a refusal of the winding-up order.

Re Uruguay, etc., Railway Co., 1879, Jessel, M. R.';

L. R. 11 Ch. D. 372; 41 L. T. (N. s.) 267; 48 L. J., Ch., 540.

DEBT.

When a debt is not a General specialty debt-Acknowledgment under Seal-Implied Covenant for Repay

ment.

Although a debt be acknowledged under seal and a security given, yet, if there is no covenant for repayment, the acknowledgment does not necessarily create a general specialty debt.-Jackson v. North Eastern Railway Co., 1877, Malins, V.-C.; L. R. 7 Ch. D. 573; 37 L. T. (N. s.) 664.

DIRECTORS,

(See INVALID CONTRACTS; also, EXPENSES, and PROMOTERS' CONTRACTS.)

1.-Liability for Misapplication or Misappropriation of Monies of a Company.

If the directors exceed their powers, and appropriate the funds of the company in a way not authorized by the articles of association or the deed of settlement, they are bound to make good out of their own pockets the