appointment as managing director of the bank, of which he had been the principal promoter.

The Chief Clerk had allowed him £300, in lieu of notice. The liquidator appealed, and Jessel, M. R., held that, as a managing director was not a servant and could not, therefore, be entitled to notice, the sum certified by the Chief Clerk must be disallowed.-Re Hull, etc., Bank, Ex parte Stanley, August, 1877, Chancery Division. (Not reported.)

PAID UP SHARES.

See SHARES.

PARTNERSHIP.

Partnership Amendment Act, 1865, (28 & 29 Vict. c. 86.)

See PROFITS TO LENDERS.

POLICY.

1.-Fire Insurance-Fire after Contract, but before Completion-Right to Insurance Moneys.

A vendor entered into a contract with a purchaser for the sale to him of a house, which had been insured by the vendor against fire. After the date of the con

tract, but before completion, the house was burnt down and the vendor received the insurance money from the office.

Held, that the purchaser was not entitled to recover the money from the vendor, or to be allowed the same in reduction of his purchase-money.-Rayner v. Preston, 1880, Jessel, M. R.; L. R. 14 Ch. D. 297; 28 W. R. 808.

2.-Fire Insurance-Contract of Indemnity-Contracts between Landlord and Tenant-Right of Insurance Company to be recouped its loss on Policy by any benefit from other Contracts, whereby Loss is diminished.

The above important points arose in the following

case:

F. was the owner of a house in Brighton; he demised it to B. by a lease, which rendered the lessee bound to repair, "except casualties by fire, demolition by storm or tempest of the building or any part thereof, or destruction by foreign enemies." F. insured the house in the U. Society (of which the plaintiff was secretary) by a policy against fire covering injury by explosions of gas. In 1877, the corporation of Brighton repaired the streets by a steam roller, which owing to its weight damaged a pipe and caused an escape of gas into the house demised to B., where it exploded and did considerable damage. F. sold the house and the policy to the defendant, and after some negotiation the U. Society paid to the defendant a sum of £750. The lessee, B., received compensation from the corporation of Brighton for the damage done to the house by the explosion, and, with the sum received, re-instated the house. At the time when the U. Society paid to the defendant the sum of £750 they were unaware that by the terms of the lease the lessee was bound to make good injuries done by an explosion of gas. The U. Society upon hearing that the house had been re-instated by B., claimed from the defendant the sum of £750, and, upon his refusal,

brought the present action in the name of the plaintiff. The claim of the society was held by the Court of Appeal to be good.

The decision was that, as a policy against loss by fire is a contract of indemnity, the insuring company, which had paid, was entitled to the benefit of all contracts entered into by the assured whereby the loss was diminished.-Darrell v. Tibbitts, 1880, Ct. of App. (Brett, Cotton, and Thesiger, L. JJ.); W. N., 1880, p. 87; 42 L. T. (N. s.) 707 (Lush, J., reversed.)

PREFERENCE SHARES.

1.—If the issuing of Preference shares be intended, this should be clearly stated in the memorandum and articles of association, otherwise the issuing of such would be ultra vires as altering the constitution of the company. If the memorandum and articles of association of a company are silent on the subject, it is an implied condition that the shareholders are entitled to rank equally as regards dividend, without preference or priority between themselves. With regard to the memorandum of association, however, in the following case, Jessel, M. R., held, that the omission as to preference shares therein was not fatal, and that implication as to no preference may be rebutted if the articles of association, contemporaneous with the memorandum, contain clear provisions as to the preference or priority of classes of shares.--Harrison v. Mexican Railway Co., 1875, L. R. 19 Eq. 358; 44 L. J., Ch., 403; 32 L. T. (N. s.) 82; 23 W. R. 403.

This decision can hardly be taken as final on the point involved, for the memorandum of association of a company represents its constitution, which cannot be altered, while the articles appear by the Statute to have been designed merely as the regulations for the conduct of its business, and in this view a specimen set of regulations was furnished by Table A. in the 1st. Schedule to the Statute of 1862, but the articles can be altered by a special resolution of the company.

2. The issuing of a subsequent batch of preference shares must, also, be distinctly provided for. Where power is only given to issue a limited number of shares an increase in the number cannot be authorized by a special resolution.—Melhado v. Hamilton, 1873; 28 L. T. (N. s.) 578; 29 L. T. (N. s.) 364; 21 W. R. 874. (Malins, V.-C., affirmed.)

3.-Power for the company to increase its capital, "with or without special privileges or preferences" "as it may from time to time deem expedient," has been held to authorize the creation of shares with preference in repayment of capital as well as in payment of dividend.—Re Bangor Slate Co., 1875; L. R. 20 Eq. 59 ; 32 L. T. (N. s.) 389; 23 W. R. 785.

4.-Dividends on Preference Shares.

If a company, having power to do so, issues preference shares, carrying a dividend at a fixed rate payable halfyearly, and with no words to restrict the preference share

holder to the profits of the current year, it has been held that if the profits of any one year are insufficient to pay the full dividend, the deficiency, as between preference and ordinary shareholders, is to be made good out of the subsequent profits.-Henry v. Great Northern Railway Co.; 1 De Gex & J. 606; Webb v. Earle; L. R. 20 Eq. 536; Ashton Vale Co. v. Abbot, W. N., 1876, p. 119.

PROFITS TO LENDERS.

(See DEBENTURES.)

The Partnership Amendment Act, 1865, (Bovill's Act, 28 & 29 Vict. c. 86.)

Some points to be attended to in Agreements between Borrowers and Lenders, who are to have a Share in Profits.

1. The borrowing of money by a company can fre1.—The quently, with advantage, be effected under the powers given by the above Statute. The practice of issuing debentures is very general amongst companies, with the view to increasing the funds available for the extension of business. The mistake is, however, often made by sanguine directors of attaching to the debenture a higher dividend and a larger bonus on repayment than is profitable, or even safe, to the undertaking.

The more prudent course would undoubtedly, in most cases, be to give a share in the profits to a definite extent