various sums of money, which from 1867 to 1875 had been paid under the name of interest at 5 per cent. on the shares; there having been no profits to justify such payments, which had therefore been de facto paid out of capital.

(ii.)-That cach director's liability should be in respect to the particular payments during his tenure of office.

(iii.)-That the order on the directors was not to interfere with their right of proportionate recovery, from each shareholder, of the interest so paid.

3. In the first case it was the liquidator who took out the summons in the winding-up, and the respondents contended that a creditor alone could make the application. Respecting this Jessel, M. R., observed:

"I read the section [of the Companies Act] literally, that is, as I understand it, the liquidator, or a creditor, or a contributory, may apply. It is for the court to put the section in force, if it thinks proper; and, if it is proper, to put it in force.

"I take it that the order may be made on the application of any one of those persons. It does not appear to me to be necessary to inquire what the position of a liquidator, suing third persons or suing shareholders, may be. All I have to do is to obey the Act of Parliament, which is clear, plain, and unambiguous in its terms.

"But to avoid any possibility of question, not because I entertain any doubt about it, but out of respect to some of the dicta (which may, possibly, be understood in the sense in which they have been urged upon me), I will allow the summons to be amended by adding a creditor."

4.-These decisions are in accordance with the general principle that the creditors of a company have a distinct right to have the "paid-up capital" kept for payment of their debts. It is on this understanding that a com

pany trades, and if the capital be (under any disguise) paid to the shareholders it is, in such a case, "misapplied." The payments would amount to a breach of trust, and be subject to the words of the section. The question of the directors not intending any wrong would not afford them any excuse.

It is to be observed that, in the articles of both the companies concerned, a clause existed which authorized the payment of interest. The idea of the framers of the articles apparently being that, if the paid-up capital were invested at interest, interest might be paid to the shareholders.

The two points, however, overlooked were:-Firstly, that full 5 per cent. interest per annum might not be carned by the investment of the capital, especially if a portion of the capital were used in the necessary expenses of starting the company; and secondly, that even if 5 per cent. interest were earned, yet the general business itself might be resulting in a loss, in which case the capital and its produce would be subject to the creditors' claims.

One important point arises from these decisions, viz., that the practice of attaching-in advance to share warrants to bearer (authorized by the Companies Act, 1867)-coupons for the half-yearly interest dividends at

5

per cent. must be abandoned, unless directors are prepared to incur the liability to make good the amount so paid, with but a remote contingency of getting any portion back from the share warrant holder.

ERROR.

1.-Error in Lease as compared with counterpart.

In a comparatively recent case, referring to an error that occurred nearly a century ago, by which a lease differed from its counterpart, the term being stated as 94 years in the one and 91 in the other, the majority of the Court differed from the opinion of Kelly, C. B., and held that there was, on the facts, sufficient ground for rectifying the error by making the lease to accord with the counterpart.-Burchell v. Clark, 1876, Ct. of App. (Cockburn, C. J., Bramwell and Amphlett, JJ. A.,— Kelly, C. B., dissenting); L. R. 2 C. P. Div. 88; 35 L. T. (N. s.) 690; 46 L. J., C. P., 115. (Judgment of Common Pleas Division reversed.)

2.-Misdescription-Absence of Wilful Misrepresentation -Compensation, after conveyance, ordered.

There is no rule in equity, which debars a purchaser from obtaining compensation from his vendor for a misdescription of the estate sold, merely on the ground of his having accepted a conveyance. Manson v. Thacker (L. R. 7 Ch. D. 620) questioned.-Re Turner and Skelton, 1879, Jessel, M. R.; L. R. 13 Ch. D. 130; 41 L. T. (N. s.) 668; 49 L. J., Ch., 114.

3.-Misdescription in particulars of sale-Under-lease described as lease-Compensation-Conditions of sale.

At a sale by auction, the premises were described in the particulars of sale as held on lease, whereas the

premises were in fact held by the vendors under an under-lease, and it so appeared from the conditions of sale. In an action to enforce specific performance of the contract of sale,

Held, that the under lease being described as a lease was not such a misdescription as would prevent the court from decreeing specific performance of the contract. Madeley v. Booth (2 De G. & Sm. 718) commented upon.-The Camberwell, etc., Building Soc. v. Holloway, 1879, Jessel, M. R.; L. R. 13 Ch. D. 754; 41 L. T. (N. s.) 752; 49 L. J., Ch., 361.

4.-Mistake in Lease as to number of years-Principle of caveat emptor.

A. agreed to take an under-lease from B. for the residue of the term which B. held. By mistake of B.'s solicitor the under-lease purported to grant a term seven years longer than B. held. The under-lease contained the usual qualified covenant for quiet enjoyment. A. entered into possession and held it till nearly the end of B.'s real term. Then B.'s executors, finding out the mistake, wrote to A. that they would be obliged to require him to give up possession at the end of the term which B. really held. A. procured a fresh lease from the ground landlord at an increased rent, and claimed the amount of such increased rent for the seven years, as damages for misrepresentation and breach of the covenant for quiet enjoyment.

Held, that it was the duty of A. to look at the original lease, and, not having done so, he could not recover damages for the common mistake, and that there had been no breach of covenant, and that caveat emptor applied.—Besley v. Besley, 1878, Malins, V.-C.; L. R. 9 Ch. D. 103; 38 L. T. (N. s.) 844; 27 W. R. 184.

EQUITABLE MORTGAGE.

Equitable Mortgage-Foreclosure-Bankruptcy Act, 1869, Sections 12 and 78; Rules of 1870, Nos. 78, 79, 80,

1. The trustee in bankruptcy of an equitable mortgagee by deposit may bring an action in the Chancery Division for foreclosure against the trustee in bankruptcy of the mortgagor, and is not obliged to make his application to the Court of Bankruptcy to have the property sold.-Waddell v. Toleman, 1878, Fry, J.; L. R. 9 Ch. D. 212; 38 L. T. (N. s.) 910; 26 W. R. 802.

2.-An equitable mortgage was lately held not to be a breach of covenants in a lease against mortgaging, or assigning, or otherwise parting with the "indenture of lease or the premises thereby demised or any part thereof."

(i.) The lessee made an equitable deposit of the lease, with a memorandum to the effect that the depositee should hold the lease “ by way of equitable mortgage" as security for a sum of money due to him by the lessee, and should have a lien on the lease to the extent of £2,000.

Held, that this equitable deposit was not a breach of the covenant by the lessee not to "mortgage, sell, assign, or otherwise part with" the lease or premises, inasmuch as an equitable deposit could not be placed higher than a specific agreement to execute a mortgage, and therefore could not be regarded as a breach of a covenant not to mortgage, any more than an agreement by a lessee to assign would be a breach of a covenant against assigning; and also that the intention of the lease was to prohibit the imposing of a new tenant, or a change in the possession of the demised premises, which result was not produced by the equitable deposit.

(ii.)—The point in the above case was connected with the expression "equitable mortgage." By Doe d. Pitt v. Hogy (4 D. & R. 226) a