1858. BATEMAN v. MAYOR, &C., OF ASHTON. 5 & 6 Wm. 4, c. lxi., it appears that the Company was incorporated for the supply of water from particular sources to a limited district. The inhabitants of the district had an interest in the funds of the Company. By section 87, UNDER-LYNE. they are entitled to a reduction of the water rents when the dividends of the Company exceeded 77. 10s. per cent. It was therefore not legal to divert the funds of the Company from the purposes to which the Act directed that they should be applied. Preparing plans to enable the Company to apply to parliament for enlarged powers is not a proper application of the funds according to the Company's Act. Being a public Act, the plaintiff must be taken to have had notice of its provisions. It makes no difference that the application was for the benefit of the Company and the district. The Company had only a limited authority; and their funds can only be applied for the purposes directed and provided for by the statute: The East Anglian Railways Company v. The Eastern Counties Railway Company (a). [Bramwell, B.-These acts of parliament are two fold, consisting partly of that which is in the nature of a deed of settlement, and partly of powers with reference to the public. Perhaps it was a mistake to hold that the part which resembles a deed of settlement has the force of a public statute; but, if so, that doctrine can only be reversed in the House of Lords.] Here, the Company proposed to form a new Company with increased capital and enlarged powers; and this work was done in order to enable them to proceed with the necessary application to parliament. The Attorney General v. Andrews (b) is an express authority that this was not carrying into execution the powers of their Act," and that they had no power to apply their funds to such a purpose. That case is in point, because the Company (a) 11 C. B. 775. (b) 2 IIall & Twells, 431. 66 TRINITY TERM, 21 VICT. 1858. BATEMAN v. MAYOR, &c., OF here sought to do away with the existing Company, not merely to improve the existing works. The case of Bright v. North (a) is distinguishable, because opposing a bill for a project likely to be injurious to banks which the corporation ASHTONwere bound to maintain, was merely a prudent and neces- UNDER-LYNE. sary step for the protection of the property entrusted to their care. But, in Munt v. The Shrewsbury and Chester Railway Company (b), the Master of the Rolls said: "Companies possessed of funds for objects which are distinctly defined by act of parliament cannot be allowed to apply them to any other purpose whatever, however advantageous or profitable that course may appear to be to the Company;" and he therefore held that the directors of a railway company, whose prosperity depended in a great measure on the navigation of the river Dee being kept in a good state, could not legally apply any of the railway capital in payment of the expenses of promoting a bill in parliament for the preservation and improvement of the navigation. [Martin, B.-Suppose an Act had passed increasing the capital of the Company. Bramwell, B.-That might have been a parliamentary recognition that the Company, in obtaining it, were not acting ultra vires.] If there be no defence to this action, the Court of Chancery could never say that the funds of the Company should not be applied in payment of their legal debts. The cases in Chancery therefore, in which companies have been restrained from applying the funds to purposes foreign to the object of the incorporation, shew in effect that such contracts are illegal. [Martin, B.-Should not the defence have been pleaded?] In The Copper Miners' Company v. Fox (c) a similar defence was given in evidence under nonassumpsit (a) 2 Phill, 216. (b) 13 Beav. 1. (c) 16 Q. B. 229. 1858. BATEMAN v. MAYOR, &c., OF ASHTONUNDER-LYNE. The learned Judges differing in opinion, the following judgment was now delivered, on behalf of himself and Channell, B., by MARTIN, B.-(His Lordship after stating the facts as antè, p. 324, proceeded as follows):—It seems quite clear that if the plaintiff be unable to recover in this action he cannot recover at all. The 22nd section of the 5 & 6 Wm. 4, c. lxi., enacts that the members of the committee shall not be personally answerable for the performance of agreements into which they shall have entered on behalf of the Company; but the section proceeds to enact, that persons with whom any contract shall be entered into by the committee shall have power to proceed against the Company, either at law or in equity, for the performance of such contracts; and the joint stock and property of the Company shall be answerable for the due performance of the contracts entered into by the committee, and for the damages by reason of their breach. This, no doubt, must be taken to mean legal contracts; and the question, in my opinion, is, whether the contract with the plaintiff was a legal one. The argument on behalf of the defendants was, that under the act of parliament the power and business of the Company was strictly confined to the works and undertaking sanctioned by the Act; and that the provision, that the income and profit of the undertaking should be divided amongst the shareholders to the extent of 77. 10s. per cent., and if the income exceeded that sum then a reduction should be made in the water rates, was conclusive to establish that this contract could not be legally made, because the payment in respect of it would necessarily reduce the dividend. I do not think that provision much affects the case; for by the section (the 87th) the dividend is to be made after the payment of the expenditure of the Company and 1858. BATEMAN v. MAYOR, &c., OF ASHTON the managing committee; and if there was a legal contract the payment in respect of it would be lawful expenditure. The real question, therefore, is,-can a Waterworks Company, for the supply of a town and district with water, being a corporation established by an act of parliament, the UNDER-LYNE. members of which are entitled to the net profits to be divided amongst them, with the consent and sanction of the body at a legal meeting duly convened, take steps to apply to parliament for an extension of the undertaking, the extension being (as it must be taken to be in this case) for the benefit of the corporate body; and is the contract made by the corporation to pay for the labour essential to the application to parliament of necessity illegal and void, and incapable of being enforced in a Court of law? I think the law on this subject is correctly laid down by Lord Wensleydale in his judgment in The South Yorkshire Railway Company v. The Great Northern Railway Company (a), and by Mr. Justice Erle in The Mayor of Norwich v. The Norfolk Railway Company (b). It is to the effect that generally speaking corporations are bound by their contracts as much as individuals: that where the seal is affixed on the contract made by a corporation in a manner binding upon them the contract is the contract of the corporation, to be governed by the same rules of law as the contracts of private persons. But where a corporation is created by an act of parliament for particular purposes, with special powers, another question arises, and the contract does not bind them if it appear by the express provisions of the statute creating the corporation, or by necessary and reasonable inference from its enactment, that the contract was ultra vires, that is, that the legislature meant that such a contract should not be made. The question, Lord Wensleydale says (c), appears (a) 9 Exch. 84. (b) 4 E. & B. 413. (c) 9 Exch. 85. 1858. BATEMAN v. MAYOR, &c., to be this," Whether it can be reasonably made out from the statute that the contract is ultra vires-in other words forbidden to be entered into;" and in another part of his judgment (p. 88), he states that "it not being made out UNDER-LYNE. that the Act prohibits the contract, it must be enforced." Mr. Justice Erle adopts the same view of the law. OF ASHTON The question, therefore, in my judgment, is,—Is the contract with the plaintiff forbidden by the Act of 1835? I think it is not. There is no express prohibition, and I think there is no implied one. It appeared in evidence that in the period of nineteen years, from 1835 to 1854, the population of Ashton-under-Lyne had more than doubled; that the water obtained from the old works was deficient in quantity, and as to part of the supply so bad, as to be unfit for use for domestic purposes. Under such circumstances, nothing seems to me more reasonable than that the Waterworks Company should apply to parliament for an extension of their powers, and especially as the step was taken with the concurrence and sanction of the shareholders duly convened at a special general meeting. The extension itself must be taken to be an advantageous and beneficial proceeding for the Company. I cannot see that there is any prohibition, express or implied, against the Company and its committee of management taking the step. On the contrary, to my mind it is what I should expect to occur, almost of necessity, after a period of nineteen years, in the case of waterworks for the supply of such a town and neighbourhood as Ashton-under-Lyne. Suppose every shareholder in the Company had been present at the special general meeting of the 13th of December, and a resolution confirmatory of the proposal to apply to parliament, and of the employment of the plaintiff by the committee of management, had been unanimously made, would the contract to pay the plaintiff have been unlawful? |