full amount of money misappropriated.--Grimes v. Harrison, 1859, Romilly, M. R.; 28 L. J., Ch., 827; 33 L. T. 115, Ch.; 26 Beav. 435; 5 Jur. (N. s.) 528. (See Simpson v. Westminster Palace Hotel Co., 8 H. L. Cas. 712. In re Troup, 29 Bac, 353; and 30 id. 225, as to borrowing money.)

2.-Directors de facto-Power as to Cheques.

The nature of the authority of the officers and directors of a joint stock company to sign cheques, so as to discharge the bank paying them, was reviewed and decided upon by the House of Lords in July, 1875.

A bank had paid cheques in pursuance of a letter received by the manager of the bank, signed by A., as secretary of the company, enclosing what purported to be a copy of a resolution requesting the bank to pay all cheques signed by W., and one of two other directors mentioned, and countersigned by the secretary. One of these persons, however, subsequently stated that he did not know that he had ever been appointed a director; and on the company being wound up, it was ascertained that W. and the other directors and secretary were selfelected, never having been appointed in pursuance of the articles of association. The liquidator accordingly sued the bank for the return of the money which they had paid; but the finding in the highest Court is that the bank was justified, under the circumstances, in honouring the cheques which were drawn by persons who were, at all events, de facto directors of the com

pany. Re The Irish National Bank, Mahony v. East Holyford Mining Co., 1875; L. R. 7 H. L. Cas. 869; 33 L. T. (N. s.) 383.

3.-Directors' duties towards Creditors.

(i.)—Directors are trustees for the shareholders, and if they exercise their powers in breach of trust for their own benefit, they are liable, like all other trustees, to make good to their cestuis que trust the consequences of their breach of trust.

(ii.)-But directors are trustees for the company and its members, and not for the creditors of the company. The creditors have certain rights against the company and its members, but they have no higher or special right against a director than against any other member of the company. They have only those statutory rights against members of the company, which are given to them, by the Act, after the winding-up.

(iii.)-There is nothing to prevent directors from paying a debt of the company, for which they are themselves liable, in priority to other debts, provided that the payment does not amount to a fraudulent preference, under sect. 164 of the Act of 1862. The payment would not be a breach of trust or of duty towards the only persons for whom the directors are trustees.—Re Wincham, etc., Co., Poole, Jackson, and Whyte's Case, 1878, Ct. of App.; 38 L. T. (~. s.) 413, 659; 26 W. R.

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588, 823; W. N., 1878, pp. 102, 139. (Bacon, V.-C., reversed.)

4.-Consideration for Paid-up Shares.

An agreement was entered into between a company and one of the directors that, in consideration of his giving up certain benefits under a former agreement, he should be credited in the books of the company with a sum equal to three-fourths of the amount paid up by him on his shares. The money was duly credited in pursuance of the agreement.

Held, that the sum so credited amounted to a cash payment by the director within the meaning of the 25th section of the Companies Act, 1867; and that there was nothing fraudulent or improper in such an agreement being entered into. The costs of the liquidator and the director were ordered to be paid out of the estate.-Re Regent United Service Stores, Fx parte Bentley, 1879, Fry, J.; L. R. 12 Ch. D. 850; 41 L. T. (n. s.) 500; 28 W. R. 165,

DIRECTORS' KNOWLEDGE.

1.-Director's Position afterwards in respect to alleged Fraudulent Transactions known to him before taking Office-Companies Act, 1862, s. 165.

A director of a company who has knowledge of a fraud, breach of trust, or misfeasance, committed before he was a director of, or connected with, the company, by which the company's money was lost, is not liable.

under section 165 of the Companies Act, 1862, or otherwise, for not communicating such knowledge to the company, or for not instituting proceedings for the recovery of the money lost.-Re Forest of Dean Coal Mining Co., 1878, Jessel, M. R.; L. R. 10 Ch. D. 450; 40 L. T. (N. s.) 287; 27 W. R. 594.

2.-Knowledge of Entries in the Books of the Company.

(i.)— . . . Attendance at directors' meetings is not sufficient to make a person (who had so attended, but had never applied for shares) a contributory, in respect of shares which had been allotted to him and been entered, without his knowledge, in his name on the register, although no notice of the allotment had been sent to him. The result of the more recent decisions (per Bacon, V.-C., in Hallmark's Case) is that:

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If you impute to a man a contract to take shares, you must make out something like a contract. There was no evidence here of any contract to take shares. Being advertised as a director,-acting as a director, and attending directors' meetings, are not enough to fix him with a knowledge of the allotment of the shares, in the face of an affidavit that he did not know anything of the contents of the minute book or the register, and that he had never intended to take shares, and that he became a director on that express understanding." (See QUALIFICATION.)

(ii.)--The old doctrine (Ex parte Brown, 19 Beav. 97) that, where a person is a director, he will be taken to know what appears in the books of the company, is not now recognized.

In Hallmark's Case, 1878, Jessel, M. R., said:

"The contention on the part of the liquidation is that, because H. was a director, he must be taken to have known all the contents of every

book of the company. There is no rule of law requiring that such knowledge shall be imputed to a director. As a matter of fact, a director of a great company could not be expected to know the contents of all the company's books, and, if such knowledge were to be imputed to him, the imputation would be of knowledge which did not exist in fact, and it would involve an extension of the doctrine of constructive notice and imputed knowledge far beyond what has been decided."

Re Wincham, etc., Co., Hallmark's Case, 1878, Ct. of App.; 38 L. T. (N. s.) 413, 660; 26 W. R. 589, 824; W. N., 1878, pp. 103, 139. (Bacon, V.-C., affirmed.)

DIRECTORS' LIABILITIES.

See EXPENSES OF COMPANY.

DIRECTORS, PRESENTS TO.

(See SHARES.)

1.-A director who has received a present of a part of the purchase money, and being knowingly in the position of agent and trustee for the purchasers, cannot retain that present as against the actual purchasers.

Whether such a purchase is or is not an advantageous one for the company, whether the property is or is not worth the increased price paid for it by the company, is wholly immaterial.

A director, in such a case, will be deemed to have obtained the present under circumstances, which made him