of the party being a director is more stringent than the fact of his being a member of the provisional committee.] In Cooke v. Tonkin, 9 Q. B. 936 (E. C. L. R. vol. 58), the defendant was by his consent a member of the provisional committee of a projected company: according to the prospectus, the affairs were to be under the control of a managing committee: a managing committee was appointed, and then the provisional committee ceased to act: after this, the solicitor to the company, who had been appointed by the provisional committee, gave orders for the publication of advertisements. In an action against the defendant for the expense of inserting these, it was proved that he had twice attended meetings of the provisional committee, *but that he was not on the managing committee, nor a share#162] holder: and it was held that these facts constituted no evidence for a jury, of the defendant having authorized the insertion of the advertisements, nor of his liability. In Bright v. Hutton, 3 House of Lords Cases 341, A. was a member of the provisional committee of a projected railway company which had been provisionally regis tered, and the affairs of which were put under the authority of a managing committee: he accepted shares, and paid a deposit on them, but did no further act; and the scheme was abandoned. It was held that on these facts he was not liable to a creditor for business done under the orders of the managing committee towards completing the projected undertaking and converting the association into a regular company, and consequently that he was not liable as a contributory under the winding-up acts. [WILLES, J.-Is that consistent with Hutton v. Upfill, 2 House of Lords Cases 674?] That case is observed upon by Lord St. Leonards in Bright v. Hutton, 3 House of Lords Cases 388. The real question here is, whether the defendants gave any authority for the doing of what was done, or held themselves out to the world as having given such authority,-for, since the cases of Reynell v. Lewis and Wyld v. Hopkins, the question has been properly treated as one of agency, and not of partnership. There is nothing in this prospectus calculated to induce any reasonable man to assume that the directors authorized anything to be done or any contracts to be entered into before the projected company was actually formed.

Daly, in suppport of Jadis's rule, submitted that there was no evidence whatever to affect him. Cur, adv. vult.

*163] *WILLIAMS, J., now delivered the judgment of the court:(a)Upon this rule the question has been whether there was any evidence for the jury, that the defendants were liable on the contract stated in the declaration.

The contract was made between the plaintiff and Henson. Henson had given to the plaintiff a prospectus describing the defendants, among others, as directors of the company therein mentioned, and himself (Henson) as secretary: and the plaintiff stated that he was induced, after reading that prospectus, to make the contract in reliance on the credit of Mr. Berkeley and another as directors.

Now, was there any evidence that the defendants had authorized Henson to make the contract for them, or that they by their permission were held out to the plaintiff as parties to the contract with him? (a) The case was argued before Erle, C. J., Williams, J., Willes, J., and Byles, J.

The defendants contended that the prospectus contained merely a proposal to form a company, and that their consent to become directors was only conditional in case the company should be formed and registered, and that they had never attended at the offices or acted in the directorship, and that there was no evidence that they held out to the plaintiff that business would be carried on by their authority until the above conditions had been fulfilled.

But we are of opinion that there was evidence to support the verdict.

The prospectus, although it speaks of a company to be formed and registered, yet it also speaks of business actually going on for the purpose of transport,-of past arrangements,—of matters in a course of completion, and of actual transport as about to commence forthwith (that is, when the prospectus was issued). It *states, "that the overland route from Canada has been organized by the pro[*164 moters of the Overland Transit Company. Several surveys have resulted in having a direct road, which, with a perfect organization of land-transport, is at once available." Then, after describing the route, it proceeds,-"The corporation will forthwith organize a perfect land-transport train of horses and spring-carts adapted for passengers and goods, and erect log-shanties at intervals, &c.; and cattle will be collected at these stations." "By the arrangements already in a state of forwardness in Canada, from instructions sent out to its agents, there can be no question but that the route will be placed in a perfect state. Applications have been made to the legislative councils of Columbia and Canada for charters," &c. "As the route from Fort William to the Red River would require some delay to be put in a state for traffic, the Overland Transit Company purpose, for the first twelve months, that passengers should proceed to Fond du Lac," &c., &c. "And, to obviate the necessity of the slightest delay in opening up the first portion of the route to Red River, reciprocal arrangements are in a course of completion, by which this company can without any delay forward its passengers to Detroit, and thence to Chicago, and thence to St. Paul's. "The British Columbia Overland TransitCompany is enabled to start with the full advantages of the act for limited liability, and may fairly expect to receive large dividends." These passages express to an ordinary reader that operations respecting transport had been and were then in the course of being carried on. To a technical reader, there are expressions which might raise suspicion; such as the variety of names, "company," "corporation," "promoters :" but the jury, from the words and circumstances, had a right to infer that it *was intended to induce passengers to pay fares for immediate transport, and applicants for shares to [*165 pay immediate deposits: and, if so, there is evidence that the defendants were by their consent held out as directing that concern, and therefore bound by contracts connected therewith made in a regular course of business.

There is nothing to show that the company had not been incorporated, or might not be at any moment. Also, there is nothing showing that the company would not act, as it lawfully might, before incorporation: and there is evidence to show that the words were

intended to represent arrangements for transport actually existing; for, the plaintiff states that he found arrangements made as described. His evidence in effect is, that he was carried smoothly under the described arrangements as far as St. Paul's, and might have been carried on to his destination, if the company had been in credit with their correspondents there who were expected to supply horses and carts from thence, and who refused to act because they would not take bills on the company for their services, but required cash.

The conduct of the defendants in accepting the office of directors, warranted the jury both in adopting any construction of the prospectus which the words would bear to support the plaintiff's claim, and also in disregarding the argument for them founded on the want of notice of the proceedings in Copthall Court.

The evidence relating to that conduct on the surface is very concise. Henson showed the prospectus, and asked each, "Will you be a director?" Each in effect answered, "Yes, provided I am qualified and indemnified." This is all that is on the surface. But beneath there was matter of deep significance for the jury to consider. There was some evidence that schemes for *companies abounded: *166] every letter refers to more than one; and Mr. Berkeley, in a letter, observes to the effect that he was a director of so many that his estimation would be perilled with his constituency. There was also some evidence that men of established credit, willing to sell the use of their names as directors to the projectors of these schemes, abounded also. The language and the manner used on the occasion, that is to say, a short question and answer, showed that the transaction was of frequent occurrence.

There was no inquiry of the nature of the scheme, or of the character of Henson or of his principal, and no indication that either defendant ever intended to employ either thought or money in furtherance of the scheme, whatever it might be. The truth was, that Colonel Sleigh, a schemer in discredit, wished to obtain the cash of the unwary upon a prospect of a land transport to Columbia. This purpose might be effected, if he could hold out men of credit as directing it. Mr. Berkeley, from his position in parliament, and Mr. Jadis, a government officer, in the department of the Board of Trade, would give assurance that the scheme was sanctioned by honour and sense and money. Therefore Colonel Sleigh sent to buy the use of their names; and they sold it to him for an indemnity and a premium, possibly of the value of 20007., to be taken from the funds of the company; that is, they were to have Colonel Sleigh's indemnity against any responsibility caused by the use of their names, and, if Colonel Sleigh by that use raised the whole or a sufficient part of the projected capital of 500,000l., they were to receive each 200 paid-up shares of 107. each.

This transaction of the prospectus bears the meaning here attributed to it. It authorized Henson or Sleigh to hold out that the defendants *167] were really directing them *in obtaining fares from emigrants for transport and deposits from applicants for shares. As against these defendants, the jury were warranted in deciding that they did whatever Henson by their authority represented they were doing, within the limits of the operations described in the prospectus,

and that therefore they were liable on the contract, within those limits, which Henson made for them on the credit of their names.

It is a rule, that, when one of two innocent parties is to suffer by the fraud of a third, he who gave occasion for the fraud should bear the loss. Upon this principle, the decision ought to be against the defendants, if there was a balance. The plaintiff is certainly an innocent party; but the defendants, though not guilty of direct fraudulent intention, gave the occasion which made the fraud successful.

The jury were also warranted in thinking that the conduct of the defendants after the interview with Henson, indicated that they had intended all along to leave the management of the affairs of the company to the direction of the projectors, without interference on their part. Upon any other supposition, it is strange that men in the position of these defendants, living in London, if they intended to be real directors, should not during two months make a single inquiry about their company, or visit the offices, or send for Henson to know what was going on. Strange, also, that their names should be advertised in the Times for weeks, and they should not see it, and no one should mention it to them, unless the nature of the transaction was understood to be as last described. Still more strange, that neither of the defendants interfered to inquire or remonstrate, when it was known that contracts in their names had been made for transport, and that the hardships and perils so shocked the humanity of strangers as to produce the letters signed "West Canada," and the inter- [*168 ference of a member in parliament to endeavour to save the emigrants from their fate. Mr. Jadis did nothing. Mr. Berkeley in his letters expresses neither suspicion nor dissent in respect of the contracts made: and those letters result in merely withdrawing his name from the directorship, for the sake of avoiding responsibility after that date, leaving the liability for transactions previous to that date as it might be established. The jury may have thought that the defendants had trusted all arrangements to the discretion of the projector, and that therefore they must trust now to an indemnity from him against the responsibility brought by him on them.

The facts of this case are peculiar, and differ materially from those that have been cited; so that it is not worth the time to analyze them further than to say, that in Doubleday v. Muskett, 7 Bingh. 110 (E. C. L. R. vol. 20), 4 M. & P. 750, two directors of a proposed company were held liable for contracts made by the board without their knowledge before the company was formed, because they had consented to a commencement of the works of the intended company. Here, the defendants, as directors, according to one construction of the prospectus, had represented that the works of the intended company had been and were in operation. In Bourne v. Freeth, 9 B. & C. 632 (E. C. L. R. vol. 17), 4 M. & R. 512, the defendant was a real shareholder, who had really paid up a deposit, and belonged to an entirely different class from that of these defendants; and a decision in his favour is of no avail for these defendants.

The question before us has been confined to the claim for breach of contract: and we think the plaintiff has a right to recover an indemnity upon a count in form ex contractu; and it is not relevant now to

*169]

*inquire whether he could have recovered the same indemnity in form ex delicto, for holding out false representations, to the damage of those who acted on them.

It may be true that the defendants did not themselves speak what they knew to be false, and nevertheless they may be liable for holding out false representations: and, if it was supposed that the Chief Justice had expressed an opinion upon the law to the contrary of this at the trial, his meaning was not understood. Rule discharged.

END OF TRINITY VACATION.

*170]

*IN THE EXCHEQUER CHAMBER.

SIR JOHN BROCAS WHALLEY SMYTHE GARDINER, Bart., v. ELIZABETH JANE JELLICOE, Widow. July 4.

Judgment of the Common Pleas (12 C. B. N. S. 568) affirmed.

THIS was an appeal against a decision (by a majority) of the Court of Common Pleas, making absolute a rule to enter a verdict for the plaintiff in an action of ejectment brought by him to recover the possession of certain lands in the county of Lancaster, called "The Clerk Hill Estate," which he claimed to be entitled to under the will of his grandfather, Sir James Whalley Smythe Gardiner, Bart., deceased.

The appeal was argued on the 19th and 20th of June, 1863, before Pollock, C. B., Wightman, J., Crompton, J., Channell, B., and Blackburn, J., by

Sir Hugh Cairns, Q. C. (with whom were Manisty, Q. C., and Udall), for the appellant, the defendant below, and by

The Solicitor-General (with whom were Mellish, Q. C., and Quain), for the respondent, the plaintiff below.

The Court took time to consider; and their unanimous judgment was now delivered by

POLLOCK, C. B.-We are all of opinion that the judgment of the court below should be affirmed.

As to the first point made by Sir Hugh Cairns for *the de*171] fendant, it seems to us that the estates limited by the deed of 1814 were legal estates. The parties seised of the legal estate convey expressly to the use of Robert and his sons, and then to the uses declared in the will of the testator, which are clearly legal uses, to which the trustees having the legal estates are by the will directed to limit the legal estate. This could hardly be denied, except as to the estates to arise under the shifting-clause; and, even if the estates to arise under that clause were merely equitable estates, as the preceding estates are clearly legal, the result would be that the plaintiff claiming under a limitation of the legal estate would be entitled to succeed in this ejectment, and the defendant's remedy under the shifting-clause would be in equity only.

We think, however, that the deed is intended and does carry out