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of persons, who have laid out their property of them, addressed and sent by their secrein judicious workings and arrangements for tary, solicitors, or agents, to the several apraising tin, copper, silver, lead, &c. and plicants for shares, apprizing them of the

have even worked to the lodes (or veins) number of shares which were allotted to · and succeeded in discovering the riches of them, and directing them to pay a deposit

those mines; yet, for the want of the means of 5l. per share, into the hands of the of providing machinery, steam engines, &c. bankers of the company to the account of have been obliged to work either by whims, the directors. That the several applicants and light water-wheels, with insufficient to whom the 6,200 shares had been allotted, power to render them profitable, or to aban- accordingly paid the required deposit, and don them altogether. These circumstances, had scrip receipts delivered to them ;combined with the opportunity of an ad- by which means, sums of money to the vantageous employment of capital, have in- amount of 30,000l. and upwards, were duced the formation of the present com- previously to June, 1825, received by the pany, and it is fair to suggest that benefits. banking firms as the agents, and upon the of considerable magnitude may be realized. account, and for the use of the directors. The directors consider themselves warrant- Thot, subsequently, many of the scrip reed in making this assertion; because, they ceipts were sold by the persons holding the have the opportunity of selecting, as well same, and entitled to the benefit of the dein Wales as in the counties of Devon and posits therein acknowledged, to other perCornwall, several approved mines now sons for valuable consideration; and that the working, and others in a state fit to make purchasers thereby acquired the rights of the returns as soon as steam engines, &c. can persons so selling, to the said sums deposited be erected. They therefore calculate on and paid by them respectively, and became obtaining almost immediate benefit for the placed in the same situation as the vendors adventurers in the undertaking Appli- in respect to the proposed company. That cations for shares to be made by letter, some of such purchasers afterwards made addressed to the bankers, or the solici- resales and transfers of a similar nature to tors of the company.-A legal opinion has other persons : and that some of the parties been taken, by which it is ascertained that to the indenture of the 30th January 1826, this company will not require an act of par- were not, but others of them were, persons liament or charter, it being completely pro- who were original applicants for shares in tected in its object by the “Stannary laws.' the manner aforesaid, and who paid depo

That, about the same time, advertise- sits or sums to the banking firms in the ments, inviting applications from the pub- manner before mentioned. That by the lic for shares in the scheme, were inserted means, and in the manner aforesaid, the in many of the London newspapers, by and plaintiffs, and the several other parties to under the direction and authority of the the indenture of the 30th of January 1826, defendants, or the majority of them ; and became, and were, previously to November that, in consequence of such prospectus and 1825, the beneficial holders of, and entitled advertisements, many persons made appli- to 1,690 shares in the proposed company, cation for shares. That the number of and entitled to all right, benefit, advantage, shares so applied for, previously to May and interest to, of, and in the said deposits and 1825, exceeded 20,0001.: that, to the ex- sums paid in respect of the same shares retent of 6,200 shares, and to that extent only, spectively. That the majority of the dethe applications so made were answered and fendants were persons named as directors acceded to; and that the defendants ab- in the said prospectus, and such defenstained from answering, or acceding to any dants so named therein, caused themselves further applications, with a view to keep to be so named, and have always and unifor themselves individually the remaining formly held themselves out, and professed 3,800 shares, in case it should be found to be, and acted as directors of the prothat a profit could be made by the sale of posed company, and still do so—and were them, and if not, to reject them.

consequently persons by whose directions, That circular letters were, by the order, and on whose account, and for whose use and on behalf of the defendants or a majority the deposits were paid.

That since the plaintiffs, and the per- ing themselves pressed, met together and sons whom they represent in interest, be- framed a document or report relating to the came so entitled, they for the first time company, which in Nov. 1825, they caused discovered, and the fact is, that such of to be printed, published, and distributed. the persons named as directors in the Fom this report it appeared that the direcprospectus, as are not defendants, are not, tors had paid a large sum to the projector and were not at any time, and never act- of the company, and had likewise purchased ed as directors of the proposed company, 970 shares with the money of the company ; and are, and have always been, entirely and that mines had been procured, which strangers thereto, and to the affairs and the company was proceeding to work. concerns thereof, and never have interfered The bill then alleged, that, in consequence with, and never have had any power, au- of the said directions, conduct, and acts of thority, control, right, or interest, in, to, the directors, and particularly those avowed or over the deposits. That the defendants in and by their report, the plaintiffs and who are not named as directors in the pro- the several other parties to the indenture spectus, have for some considerable time of 30th day of January 1826, resolved held themselves out, and professed to be, to give up all connexion with, and to reand acted as, and still hold themselves out, tire from the said proposed company, and to and profess to be, and still act as directors demand the return of the sums deposited of the proposed company, jointly with the and paid on their shares, which resolution other defendants. That by these means and determination were immediately, or all the sums and monies so paid to the very shorly after the publication of such banking firms, came under the control, and report, notified to such directors on the part into the power, and into the actual and vir- of the plaintiffs. That, under the circumtual possession of all the defendants, and stances aforesaid, the said monies paid in they became, and are answerable and ac- respect of the said shares were obtained by countable for the same, as monies received by fraud, or by what in the view of a court of them under the circumstances aforesaid, as to equity amounts to fraud, and by means of part thereof, from persons who are parties to misrepresentation, and for a purpose which the indenture of the 30th January 1826; and hath failed of effect, and cannot now be as to the residue thereof, from persons repre- carried into effect according to the intent sented in rights and interest by parties to and meaning of the said prospectus : and that indenture. That the plaintiffs, and all that the plaintiffs are therefore entitled in other the parties to that indenture, are ig- equity to recover their monies back from norant of, and unable to set forth the names the defendants, and that the defendants havor name of any persons or person not being ing had the use of such monies at their parties or a party to that indenture, who bankers and otherwise, ought to pay inmade, or ever became, or is, or are interested in any of the deposits or payments. The bill also charged, that by an inThat after the said deposits and payments denture dated 30th of January 1826, of 51. per share had been made as afore- made between the persons whose names said, the said defendants published adver- were mentioned in the schedule thereto antisements, and issued and distributed circu- nexed, who had sealed and delivered the lar letters, requiring the payment of a further same, of the first part, and the plaintiffs deposit of 51. for every of the 6,200 shares. of the second part ; after reciting that it That the defendants, having for some period had been proposed to form the said Royal before that time conducted themselves, with Stannary and British Mining Association, respect to the proposed company, in a man- with a capital of 250,0001. in shares of ner which appeared mysterious and unsatis- 501. each ; and that the persons, parties to factory, an explanation of the conduct of the that indenture of the first part, being dedefendants was demanded from them by a sirous of becoming interested in such progreat number of the parties to the inden- posed association as it was represented to the ture of the 30th of January 1826 : that ex- public, to be paid into the hands of Sir John planation was for some time evaded and Perring and Co., or Martin, Stone and Co. withheld, but, at last, the defendants, find- respectively, to the account of the Directors of such association, 6l. per share, upon Many of the persons, in respect of whose the number of shares of 501. each, men- shares this suit is brought, were not origitioned opposite to their respective names ; nal subscribers to the company, but are and that the monies so paid had been un- merely purchasers of what are called scrip duly appropriated and misapplied by the receipts. Original subscribers had no power directors, it was witnessed, that the persons, to sell their shares. The transfer of these parties thereto of the first part, bargained, shares was an illegal transaction; and theresold, and assigned unto the plaintiffs, the fore no relief can be had in respect of inteseveral sums of money so paid as aforesaid, rests springing from such an origin. in respect of the shares held by the persons The company is of an illegal character. who were parties of the first part, to hold They have assumed to themselves to act as the same upon the trusts therein mentioned ; a corporation : no suit therefore can be enand the persons, parties of the first part, ap- tertained with respect to interest in its pointed the plaintiffs their attornies, for the shares. better recovery of the monies; and for adjusting and settling all questions relating to The Attorney General and Mr. Knight the said shares. The trusts were, to reim- contrà. burse themselves the expenses of executing The ground, on which the bill was filed, the trust, and then to pay over the surplus is this—that the directors have obtained the to the persons, parties of the first part, in money of the plaintiffs, by what, in the view proportion to the sums set opposite to their of the Court, amounts to a fraud. The subnames respectively.


scribers advanced their money on the faith, The prayer was, that the defendants that the persons, named as directors, were to might be decreed to pay to the plaintiffs the have the direction and disposal of their sums paid on the aforesaid shares, with inte- money. In fact, some of these persons rest, the plaintiffs offering to return the knew nothing of the association; their names scrip receipts for such shares.

were introduced in the prospectus without

their authority; they had no concern with To this bill a general demurrer was

the speculation,--and the subscribers there

fore had not the benefit of their experience, Mr. Hart and Mr. Theobald appeared for wisdom, and character. On the other hand, the demurrer;

individuals, of whom the subscribers knew The Attorney General and Mr. Knight nothing, have been introduced among the were in support of the bill.

directors; and these individuals have

thereby had the disposal given to them, of The argument for the demurrer was to monies, with which the contributors never the following effect :

intended that they should be intrusted. This bill is filed by five persons, as

Again, the undertaking was to consist of representing interests of their own, and a certain number of shares; only a portion the interests also of a great number of of the shares have been subscribed for. other persons, who are parties to a cer

The directors had no authority to proceed tain deed, by which they assign their to lay out any portion of the money in the shares upon trust, to pay the expenses of speculation, till the whole of the proposed the suit, and, subject to those expenses, capital was raised. In taking a different upon trust for themselves. This, therefore, course, they have falsified the representais a suit instituted by a trustee, without the tions which they held out to the subscribers. cestuis que trust being parties. Such a suit But why is it that all the shares have not cannot be entertained by the Court.

been subscribed for? The bill states, that The deed, by which these plaintiffs are it was because the directors reserved a great constituted trustees for other shareholders, number, to be appropriated to themselves, savours of champerty. The plaintiffs ac- if they could be sold at a profit ;-to be require by it an interest in, and a right to jected, if the shares in the speculation prosecute a suit with respect to matters in should not rise to a high premium. Such which they had no previous interest. They conduct was a direct fraud. The various are in fact trustees of a Chancery suit. acts, which, in the report set forth in the

put in.

bill, the directors admit that they have done, No defence can be rested on the ground, or caused to be done, are all inconsistent that some of the shares, in respect of which with good faith. For these reasons the the plaintiffs sue, have been acquired by subscribers, who did not participate in the transfer from original subscribers. Accordfraud, are unquestionably entitled to recovering to the case stated in the bill, each subtheir money.

scriber had a right to recover back his It is true, that they might proceed by an money from the directors. Why should he action at law: but the circumstances of such not be able to assign in equity this right ? a transaction as that which is stated in these At all events, some of the shares, upon pleadings, call particularly for the inter- which the bill claims relief, have not been ference of a court of equity,—particularly transferred from the original subscribers. with a view to the great numbers of persons An essential requisite of those transwho are sufferers by the fraud, and who actions, which are said to savour of chamcould not join in an action. There is ex- perty, is, that a stranger shall, by means of press authority for the interference of the them, acquire

beneficial interest in the equitable jurisdiction in such a case. In fruits of the suit. These plaintiffs acquire, Colt v. Woollaston(1) a bill was filed against by the deed of assignment, no beneficial inthe proprietors and contractors of a bubble terest in the surplus which may remain company, by two purchasers of shares, in after the costs incurred in the discharge of order to recover back the money which they the duties reposed in them. had each contributed. There the Master of the Rolls said, (2) “ If this were a fraud Vice Chancellor.-Has a court of equity against any private or single person, a court ever perfected an assignment in trust, in of equity would relieve; à fortiori, where order that the cestuis que trust may escape it is a fraud against great numbers, against from the suit ? multitudes, where the mischief is more extensive, and many families are thereby ruined. Mr.Knight.There is a charge, that those It is no objection that the parties have their cestuis que trust are so numerous, that, if remedy at law, and may bring an action they were all made parties, it would be imfor monies had and received for the plain- possible ever to prosecute the suit with tiffs' own use; for in cases of fraud, the effect. We therefore come within the princourt of equity has a concurrent jurisdic- ciple, upon which, where parties are incontion with the common law,-matter of fraud veniently numerous, and stand in the same being the great subject of relief here. Ac- relation to those against whom relief is cordingly, cases of this nature have fre- sought, some are permitted to prosecute the quently met with relief in this court, as in suit in their own names, on behalf of the Aaron Hill's case, which was a patent for

others. extracting oil out of beech, which was also

Vice Chancellor.--This is a contrivance divided into shares (as this is), and a security proposed, and agreed to be made of by which a man may escape from a suit, lands, which came out to be terra incognita,

and yet contest a right, perhaps, by means betwixt the degrees of latitude 50 and 57." of a pauper. The general rule, unquestionThese principles apply exactly to the case

ably, is, that the cestui que trust must always before the Court; and the project in Colt

be before the Court, when any question, v. Woollaston, was not more a bubble or a

involving his rights, is to be discussed. . fraud than this is.

Mr. Hart in reply. The objection of want of parties, would have applied in Colt v. Woollaston, if it Colt v. Woollaston is a solitary case, could hold here ; for there, the bill was which is very nakedly reported, and filed by only two persons, the holders of which has never been followed. It cannot twelve shares, though upwards of a thou- be regarded as any authority, except, sand had been sold.

at the utmost, in a case precisely simi

lar; and this case is, in many respects, (1) 2 P. Wms. 154.

widely different. In Colt v. Woollaston, the (2) Idem, 156, 157.

scheme was to extract oil out of English

their money

radishes :

: no oil was made; no radishes shares had been sold, a deed of the regulawere sown. Another part of the scheme tion signed, and the powers of managewas, that, as part of the advantages to be ment defined ; and that, although 6,200 yielded by the speculation, certain lands shares only had been sold, and only a were assigned upon trust, as to the sur- portion of the instalments thereon had plus which should remain, after paying been paid up, the defendants entered upon, 85,0001. for the benefit of the contributors. and commenced working the mines; and, Yet these lands had been recently purchased further, that the defendants had employed for only 31,800l. What is there in the pre- the money raised, not for the purposes of sent case, which resembles either of these the undertaking, but in the purchase of circumstances ? Woollaston's project was, shares for their own private advantage. For in itself, necessarily a delusion; and it was these reasons, the plaintiffs insisted, that clearly intended by him to be a fraud. This they had a right to retire from the concern, mining company has a feasible, perhaps, a and to call on the directors for a return of beneficial object : the case stated against the directors is one of misconduct, rather. The defendants demurred to the bill, than fraud ; and even if it should amount for want of equity ; but my opinion is, that to a fraud in them, that fraud does not, that demurrer must be overruled. therefore, become a part of the scheme Another objection has been taken, founditself.

ed on the want of parties. The five

plaintiffs sue on behalf of themselves, and Vice Chancellor.—This is a bill filed by certain other persons, who have executed a five persons, shareholders in the proposed deed, by which they assign to the plaintiffs Royal Stannary Mining Association, on their their interest in this concern, and constitute own behalf, as well as on behalf of the re- them their attornies, to institute any action maining subscribers for 1,690 shares in the or suit ; but on condition that, after payment company, who have, by deed, assigned to the of the expenses, they should hold in trust for plaintiffs their interest in those shares. The the benefit of the others, whatever they, defendants are certain persons, who either the plaintiffs, may recover from the defenhad been named as directors in the first dants by this proceeding. The defendants prospectus of the company, or have subse, insist, that all those persons must be parties quently described themselves as such, and to the suit. The counsel for the plainhave acted in that capacity. The purpose of tiffs admit the general principle; but althe suit is, to compel the defendants per- , lege that the ends of justice would be desonally, to repay to the holders of the feated by an application of the principle 1,690 shares in question, the instalments here. paid thereon.

There are special cases in which the The equity on which the plaintiffs relied Court has permitted one or two persons to was, misconduct of the defendants in the represent others in the same interest : but concerns of the association. They alleged that is the exception, not the general printhat the prospectus stated the capital at ciple; and it has never been done in a case 500,0001., to be raised by 10,000 shares; analogous to the present. If I were to that the shares contemplated in the pro- yield to the reasoning of the plaintiffs here, spectus had not all been issued ; that the I should be making a new practice. directors had refused to part with any more The demurrer ore tenus must be allowed. of the shares, although applications had been made to them for more than double the amount of those supposed to be issued ; that the directors had reserved 3,800 undisposed 1826. shares, which they were to keep for their Nov. 2, 7. own benefit alone, if the concern proved profitable. The plaintiffs further alleged,

Joint Stock Companies-Fraud- Relief that, in conformity with the terms of the of Shareholders against Directors. prospectus, the directors should not have Where a joint stock company is repregone to work, until the whole number of sented as about to be formed, not with a fair




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