draw, accept, or indorse bills of exchange. (Bateman v. Mid-Wales Ry. Co., L. R. 1 C. P. 499; 35 L. J. C. P. 205.)

The production of a document bearing the seal of a company or corporation is prima facie evidence that the seal was properly affixed (D'Arcy v. Tamar Ry. Co., L. R. 2 Ex. 158; 36 L. J. Ex. 37; Royal British Bank v. Turquand, 5 E. & B. 248; 6 Ib. 327; 24 L. J. Q. B. 327; 25 Ib. 317); but where the plaintiff relies upon an instrument bearing the seal of a company or corporation, the defendants may (except in cases where by their conduct or otherwise they are estopped from so doing) show by way of defence that the seal was affixed improperly and by persons who had no authority to use it (D'Arcy v. Tamar Ry. Co., supra; Bank of Ireland v. Evans' Charities, 5 H. L. C. 389; In re Metropolitan Bank, 2 Ch. D. 366; 45 L. J. Ch. 525; Mayor of the Staple v. Bank of England, 21 Q. B. D. 160; 57 L. J. Q. B. 418). As to when a company or corporation is estopped from showing that their seal was affixed improperly and without authority, see Royal British Bank v. Turquand, supra; In re County Life Ass. Co., L. R. 5 Ch. 288; 38 L. J. Ch. 231; Shaw v. Port Phillip Co., 13 Q. B. D. 103; Mayor of the Staple v. Bank of England, supra; Bank of England v. Vagliano, (1891) A. C. 107, 115; 60 L. J. Q. B. 445.

Where the directors or agents of a company have, on its behalf, entered into contracts which are ultra vires of the company, as not being within the scope of its constitution, or as being expressly or impliedly prohibited by any statutes by or under which it is created, such contracts are not binding on the company. (Copper Miners Co. v. Fox, 16 Q. B. 229; 20 L. J. Q. B. 174; Bateman v. Ashton-under-Lyne, 3 H. & N. 323; 27_L. J. Ex. 458; Bateman v. Mid-Wales Ry. Co., L. R. 1 C. P. 419; 35 L. J. C. P. 205; Ashbury Ry. Carriage Co. v. Riche, L. R. 7 H. L. 653; 44 L. J. Ex. 185; Attorney-General v. G. E. Ry. Co., 5 App. Cas. 473; 49 L. J. Ch. 545; Wenlock v. River Dee Co., 10 App. Cas. 354; and see 66 Corporation," post, p. 690; "

Societies," post, p. 842.)

In the case of companies formed under the Companies Act, 1862, the scope of their constitution is defined and limited by their memorandum of association, and they have no power of entering into contracts for purposes not covered by that memorandum either expressly or by reasonable implication therefrom. (Ashbury Ry. Carriage Co. v. Riche, and AttorneyGeneral v. G. E. Ry. Co., supra; Ashbury v. Watson, 30 Ch. D. 376.) But ambiguous statements in such memorandum may be explained by extemporaneous articles of association. (In re Pyle Works, 44 Ch. D. 534; 59 L. J. Ch. 489.)

Contracts which are ultra vires of the company are incapable of being ratified even by the unanimous consent of all the individual shareholders. (Ib.; and see infra.) As to the ordinary implied powers of a trading company to borrow money for the purposes of its business, see General Auction Co. v. Smith, (1891) 3 Ch. 432; 60 L. J. Ch. 723.

Persons dealing with a company are deemed to have read the public documents relating to the constitution of the company, for instance, the Act or Acts of Parliament by or under which it is established, and, in the case of a company formed under the Companies Act, 1862, the memorandum and articles of association, and to have had notice of everything therein stated, including all limitations or qualifications therein contained of the powers of the directors or officers of the company. (Ernest v. Nichols, 6 H. L. C. 401, 417; Balfour v. Ernest, 5 C. B. N. S. 601; 28 L. J. C. P. 170; In re County Life Ass. Co., L. R. 5 Ch. 288; 38 L. J. Ch. 231;

Irvine v. Union Bank of Australia, 2 App. Cas. 366; 46 L. J. P. C. 87; Ashbury Ry. Carriage Co. v. Riche, supra; and see the cases next cited.) But persons who are dealing bona fide with a company or its directors or agents, and who have no actual notice of any irregularity, are not bound to make inquiry beyond the contents of the public documents above mentioned, and are not affected with constructive notice of the proceedings of the company as to matters of internal management. Such persons, therefore, where the companies Act of Parliament or articles of association authorize the directors to exercise certain powers subject to the fulfilment of certain conditions, and the directors or the persons acting as directors appear to be duly exercising those powers, are entitled to assume that the directors, or de facto directors, have been duly appointed, and that the conditions required for the valid exercise of their powers have been duly fulfilled. (Royal British Bank v. Turquand, 5 E. & B. 248; 6 Ib. 327; 24 L. J. Q. B. 327; 25 Ib. 317; Agar v. Athenæum Ass. Co., 3 C. B. N. S. 725; 27 L. J. C. P. 95; Totterdell v. Fareham Brick Co., L. R. 1 C. P. 674; 35 L. J. C. P. 278; In re County Life Ass. Co., supra; Mahony v. East Holyford Mining Co., L. R. 7 H. L. 869; In re Romford Canal Co., 24 Ch. D. 85; County Bank of Gloucester v. Rudry Co., (1895) 1 Ch. 629; 64 L. J. Ch. 451.)

Where the articles of a company provided in effect that the members should not be associated as members of the company until a certain amount of capital was subscribed, it was held that a contract made with the company before that amount of capital was subscribed was not binding. (Peirce v. Jersey Waterworks Co., L. R. 5 Ex. 209; 39 L. J. Ex. 156 ; see Lindley on Companies, 5th ed., p. 170.)

As to what amounts to a binding ratification by a company of contracts which, though within the competency of the company, were ultra vires of the directors or agents who made them on the company's behalf, see Ashbury Ry. Carriage Co. v. Riche, supra; Phosphate of Lime Co. v. Green, L. R. 7 C. P. 43; Wilson v. West Hartlepool Ry. Co., 2 D. J. & S. 475; Irvine v. Union Bank of Australia, 2 App. Cas. 366; 46 L. J. P. C. 87; Grant v. U. K. Rys. Co., 40 Ch. D. 135; In re Portuguese Copper Mines, 45 Ch. D. 16; Lindley on Companies, 5th ed., pp. 176, 223.

A contract made by promoters on behalf of an intended company before its incorporation, is incapable as such of ratification by the company when subsequently formed (see Melhado v. Porto Allegre Ry. Co., L. R. 9 C. P. 503; 43 L. J. C. P. 253; In re Empress Engineering Co., 16 Ch. D. 125; In re Northumberland, &c. Co., 33 Ch. D. 16; In re Skegness Tramways Co., 41 Ch. D. 215; 58 L. J. Ch. 737; "Company," ante, p. 187); and such promoters will in general be personally liable thereon, in the absence of a substituted contract by the company. (Ib.) But a contract made by the promoters, if it is one which is intra vires of the company, may be replaced by a fresh agreement on the same terms entered into by the company after its formation, and such agreement with the company, if so intended by the parties, may operate by way of novation and as a discharge of the former contract with the promoters. (Ib.; Healey on Companies, p. 35.)

As to how far there may be an equitable right to receive payment for services rendered of which the company has had the benefit, see In re Empress Engineering Co., supra; In re Rotheram, &c. Co., 25 Ch. D.

103.

As to the personal liability of directors for breach of warranty of authority, where they profess to bind the company by contracts which are

ultra vires, and unauthorised, and not binding upon the company, see Agent," ante, p. 92.

66

Directors are, in general, liable to account to the company for profits made by them in the exercise of their office, and by reason of their position as trustees or agents for the company. (See "Agent," ante, pp. 94, 95.)

As to the liability of directors or officers, &c., of a company which is being wound up to be ordered to make good any losses sustained by reason of misappropriation or misfeasance on their part, see the Companies (Winding up) Act, 1890 (53 & 54 Vict. c. 63), s. 10; Archer's Case, (1892) 1 Ch. 322; 61 L. J. Ch. 129; Re Lands Allotment Co., (1894) 1 Ch. 616; 63 L. J. Ch. 291; and see In re Kingston Cotton Co., No. 1, (1896) 1 Ch. 6; Ib. No. 2, (1896) 2 Ch. 279; 65 L. J. Ch. 145, 673.

As to the liability of directors and promoters for false statements in a prospectus, &c., see the Directors' Liability Act, 1890, cited 'Fraud," ante, p. 437.

A liquidator in a winding-up is not under any personal liability to individual shareholders or creditors of the company for the due performance of his duties, as to collecting and distributing the assets, and, apart from fraud or personal misconduct, they have no right of action against him for non-performance thereof. (Knowles v. Scott, (1891) 1 Q. B. 717 ; 60 L. J. Ch. 284.)

An unregistered association of more than twenty persons having gain for its object, and not authorized by statute or by letters patent, is rendered illegal by s. 4 of the Companies Act, 1862 (In re Padstow, &c., Assurance Ass., 20 Ch. D. 137; 51 L. J. Ch. 344); and, therefore, all contracts entered into with such association, or any trustee on its behalf, in the course of carrying on its business, are illegal, and are not enforceable either by the association or by such trustee (In re South Wales, &c. Co., 2 Ch. D. 763; 46 L. J. Ch. 177; Jennings v. Hammond, 9 Q. B. D. 225; 51 L. J. Q. B. 493; Shaw v. Benson, 11 Q. B. D. 563; 52 L. J. Q. B. 575; Shaw v. Simmons, 12 Q. B. D. 117; 53 L. J. Q. B. 29; Ex p. Poppleton, 14 Q. B. D. 379; 54 L. J. Q. B. 336; see 'Illegality," post, p. 727).

66

In an action against an incorporated company, or the public officer of a banking company, the defendants may set off calls due from the plaintiff to the company. (See Moore v. Met. Sewage Co., 3 Ex. 333; Melvain v. Mather, 5 Ex. 55; Leake on Contracts, 3rd ed. p. 882.)

Similarly, a shareholder sued for calls by a company, may, in general, plead a set-off of any debts due to him from the company, for which he could maintain an action against them (see Leake on Contracts, supra), but this rule is subject to exception in cases where the company is one which has been formed, and is being wound up under the Companies Acts (see note p. 683, infra).

Winding-up proceedings under the Companies Acts do not interfere with the right of an ordinary debtor of a company who is not a shareholder, and who is sued in the name of the company for a debt which has accrued in respect of transactions previous to the winding-up, to set off a debt which has accrued due to him from the company previously to the winding-up (Anderson's Case, L. R. 3 Eq. 337; 36 L. J. Ch. 73; Ex p. James, L. R. 8 Eq. 225; see Mersey Steel Co. v. Naylor, 9 Q. B. D. at pp. 661, 667); and it would seem (notwithstanding s. 101 of the Companies Act, 1862), that this would apply also to a shareholder, if the debt so sued for was unconnected with his character of shareholder.

In the case of actions brought by liquidators in the name of insolvent companies which are being wound up under the Companies Acts, the right of set-off on the part of defendants who are not shareholders has been extended by s. 10 of the Judicature Act, 1875, which applies in such cases the rules in bankruptcy with respect to set-off in cases of “mutual credit," or "mutual dealings" (see Bankruptcy Act, 1883, s. 38; "Set-off,” post, p. 829), and thus enables such defendants to plead in their defence a set-off or counterclaim for unliquidated damages in respect of transactions previous to the winding-up, though only to the extent sufficient for a defence to the action (Mersey Steel Co. v. Naylor, 9 Q. B. D. 648; 9 App. Cas. 434; 53 L. J. Ch. 497; see Ex p. Pelly, 21 Ch. D. 492; Lee and Chapman's Case, 30 Ch. D. 216; 54 L. J. Ch. 460; Eberle's Hotel Co. v. Jonas, 18 Q. B. D. 459; 56 L. J. Q. B. 278; Sovereign Life Ass. Co. v. Dodd, (1892) 2 Q. B. 573; 62 L. J. Q. B. 19); and in such cases the defendant may plead such counterclaim without obtaining leave to do so under s. 87, cited infra, p. 681 (Mersey Steel Co. v. Naylor, supra).

It appears that the right of set-off or counterclaim conferred by s. 10 of the Judicature Act, 1875, in the case of a winding up, is somewhat wider than the corresponding right in bankruptcy, as it may in the case of a winding up enable a defendant to set up such counterclaim as above mentioned, even in respect of damages for a tort, by way of a defence to a pecuniary claim, because by s. 158 of the Companies Act, 1862, such damages, though they could not be proved for in bankruptcy, may be proved for in a winding up. (Eberle's Hotel Co. v. Jonas, supra.) But it seems that in order to admit such right of set-off or counterclaim, the claims on both sides must be pecuniary ones. (Ib.)

This right of set-off, &c., in respect of "mutual dealings" on transactions previous to the winding-up, has no application to the case of a shareholder who is sued for calls (see Gill's Case, 12 Ch. D. 755, cited in note infra, p. 683), though it would seem applicable (notwithstanding the provisions of s. 101 of the Companies Act, 1862) to actions against shareholders where the claim against them is not a claim in respect of money payable on their shares.

Where the liquidator of a company under the Companies Acts, which is being wound up by or under the supervision of the Court, brings an action in the name of the company in respect of transactions of the defendant with the liquidator, subsequently to the commencement of the winding up, the defendant, whether he is a shareholder or not, cannot, under ordinary circumstances, set off or counterclaim for any debts or damages which have accrued to him in respect of transactions with the company previously to the winding-up. (Sankey Brook Coal Co. v. Marsh, L. R. 6 Ex. 185; 40 L. J. Ex. 125; Ince Hall Co. v. Douglas Forge Co., 8 Q. B. D. 179; 51 L. J. Q. B. 238; In re Pyle Works, 44 Ch. D. 534; 59 L. J. Ch. 489.) It would appear that this would, in general, apply where the winding-up was voluntary. (See In re Whitehouse, 9 Ch. D. 595.)

At any time after the petition for the winding-up of the company under the Companies Acts, 1862 to 1893, and before the making of the winding-up order, the division of the High Court before which any action is pending against the company may, upon the application of the company or of any creditor or contributory, restrain further proceedings in such action upon such terms as may be thought fit. (See the Companies Act, 1862, s. 85; Jud. Act, 1873, s. 24 (5); In re People's Garden Co., 1 Ch. D. 44; 45 L. J. Ch. 129; In re General Service Stores, (1891) 1 Ch. 496; 60 L. J. Ch. 586.)

Defence to an Action for a Call, that the Call was not duly made (b).

The said call was not duly made.

Particulars:-[State the ground of defence on which the defen

There is a similar power in the case of a voluntary winding-up. (See Ib., and s. 138 of the Companies Act, 1862; Walker v. Banagher Distillery Co., 1 Q. B. D. 129; 49 L. J. Q. B. 134; In re Lloyd, 6 Ch. D. 339; Rose v. Gardden Lodge Co., 3 Q. B. D. 235 ; 47 L. J. Q. B. 338 ; In re Artistic Colour Printing Co., 14 Ch. D. 502; 49 L. J. Ch. 526; Lindley on Companies, 5th ed. p. 676.)

The 87th section of the Companies Act, 1862, enacts that "when an order has been made for winding up a company under this Act, no suit, action or other proceeding shall be proceeded with or commenced against the company, except with the leave of the Court, and subject to such terms as the Court may impose."

In actions brought or proceeded with against a company contrary to the above enactment after a winding-up order, the defendant would, in general, be entitled to obtain a stay of proceedings under s. 24 (5) of the Jud. Act, 1873, on application for that purpose at Chambers in the action, and such application seems the proper course to adopt under such circumstances (see Garbutt v. Fawcus, 1 Ch. D. 155; In re People's Garden Co., 1 Ch. D. 44; In re South of France Pottery Works, 37 L. T. 260; In re Artistic Colour Printing Co., supra), though it is conceived that the facts bringing the case within the statutory prohibition would also be pleadable as a defence (Ib.; and see also Sankey Brook Colliery Co. v. Marsh and Mersey Steel Co. v. Naylor, above cited).

After an order has been made for the winding-up of any company under the Companies Acts, the judge, in whose Court such winding-up is pending, has power to order the transfer to himself of any action pending in any other division brought or continued by or against such company. (0. XLIX. r. 5.)

(b) In actions by companies for calls on shares the defendant is not entitled to plead a mere general denial of the alleged debt, but must specifically deny such of the matters of fact, from which his liability is alleged to arise, as he disputes, and must allege such matters (if any) as he relies upon by way of defence, so as to show distinctly on what grounds he disputes the claim. (See "Denials," ante, p. 548.)

The registers of shareholders which, under the provisions of the Companies Clauses Consolidation Act, 1845, and the Companies Act, 1862, respectively, are required to be kept by the company, are only primâ facie evidence of the statements contained in them, and those statements may therefore be rebutted by contrary evidence. (Shropshire Ry. Co. v. Anderson, 3 Ex. 401; Waterford Ry. Co. v. Pidcock, 8 Ex. 279: Lindley on Companies, 5th ed. pp. 59 et seq.) The provisions of s. 9 of the Companies Clauses Consolidation Act, 1845, with respect to the sealing and the mode of keeping the register of shareholders are directory only, and the fulfilment of those provisions is not essential to constitute a person a shareholder. (East Gloucestershire Ry. Co. v. Bartholomew, L. R. 3 Ex. 15; 37 L. J. Ex. 17; Wolverhampton Waterworks Co. v. Hawkesford, 11 C. B. N. S. 456; 31 L. J. C. P. 184). As to registers, see further, " Company," ante, p. 379.

As to the defence in an action for calls, that the defendant was not a shareholder, see Belfast Ry. Co. v. Strange, 1 Ex. 739; Shropshire Ry. Co.