of persons, who have laid out their property in judicious workings and arrangements for raising tin, copper, silver, lead, &c. and have even worked to the lodes (or veins) and succeeded in discovering the riches of those nines; yet, for the want of the means of providing machinery, steam engines, &c. have been obliged to work either by whims, and light water-wheels, with insufficient power to render them profitable, or to abandon them altogether. These circumstances, combined with the opportunity of an advantageous employment of capital, have induced the formation of the present company, and it is fair to suggest that benefits of considerable magnitude may be realized. The directors consider themselves warranted in making this assertion; because, they have the opportunity of selecting, as well in Wales as in the counties of Devon and Cornwall, several approved mines now working, and others in a state fit to make returns as soon as steam engines, &c. can be erected. They therefore calculate on obtaining almost immediate benefit for the adventurers in the undertaking. Applications for shares to be made by letter, addressed to the bankers, or the solicitors of the company.-A legal opinion has been taken, by which it is ascertained that this

company will not require an act of parliament or charter, it being completely protected in its object by the Stannary laws.'"

That, about the same time, advertisements, inviting applications from the public for shares in the scheme, were inserted in many of the London newspapers, by and under the direction and authority of the defendants, or the majority of them; and that, in consequence of such prospectus and advertisements, many persons made application for shares. That the number of shares so applied for, previously to May 1825, exceeded 20,000l.: that, to the extent of 6,200 shares, and to that extent only, the applications so made were answered and acceded to; and that the defendants abstained from answering, or acceding to any further applications, with a view to keep for themselves individually the remaining 3,800 shares, in case it should be found that a profit could be made by the sale of them, and if not, to reject them.

That circular letters were, by the order, and on behalf of the defendants or a majority

of them, addressed and sent by their secretary, solicitors, or agents, to the several applicants for shares, apprizing them of the number of shares which were allotted to them, and directing them to pay a deposit of 51. per share, into the hands of the bankers of the company to the account of the directors. That the several applicants to whom the 6,200 shares had been allotted, accordingly paid the required deposit, and had scrip receipts delivered to them;by which means, sums of money to the amount of 30,000l. and upwards, were previously to June, 1825, received by the banking firms as the agents, and upon the account, and for the use of the directors. Thet, subsequently, many of the scrip receipts were sold by the persons holding the same, and entitled to the benefit of the deposits therein acknowledged, to other persons for valuable consideration; and that the purchasers thereby acquired the rights of the persons so selling, to the said sums deposited and paid by them respectively, and became placed in the same situation as the vendors in respect to the proposed company. That some of such purchasers afterwards made resales and transfers of a similar nature to other persons: and that some of the parties to the indenture of the 30th January 1826, were not, but others of them were, persons who were original applicants for shares in the manner aforesaid, and who paid deposits or sums to the banking firms in the manner before mentioned. That by the means, and in the manner aforesaid, the plaintiffs, and the several other parties to the indenture of the 30th of January 1826, became, and were, previously to November 1825, the beneficial holders of, and entitled to 1,690 shares in the proposed company, and entitled to all right, benefit, advantage, and interest to, of, and in the said deposits and sums paid in respect of the same shares respectively. That the majority of the defendants were persons named as directors in the said prospectus, and such defendants so named therein, caused themselves to be so named, and have always and uniformly held themselves out, and professed to be, and acted as directors of the proposed company, and still do so and were consequently persons by whose directions, and on whose account, and for whose use the deposits were paid.

That since the plaintiffs, and the persons whom they represent in interest, became so entitled, they for the first time discovered, and the fact is, that such of the persons named as directors in the prospectus, as are not defendants, are not, and were not at any time, and never acted as directors of the proposed company, and are, and have always been, entirely strangers thereto, and to the affairs and concerns thereof, and never have interfered with, and never have had any power, authority, control, right, or interest, in, to, or over the deposits. That the defendants who are not named as directors in the prospectus, have for some considerable time held themselves out, and professed to be, and acted as, and still hold themselves out, and profess to be, and still act as directors of the proposed company, jointly with the other defendants. That by these means all the sums and monies so paid to the banking firms, came under the control, and into the power, and into the actual and virtual possession of all the defendants, and they became, and are answerable and accountable for the same, as monies received by them under the circumstances aforesaid, as to part thereof, from persons who are parties to the indenture of the 30th January 1826; and as to the residue thereof, from persons represented in rights and interest by parties to that indenture. That the plaintiffs, and all other the parties to that indenture, are ignorant of, and unable to set forth the names or name of any persons or person not being parties or a party to that indenture, who made, or ever became, or is, or are interested in any of the deposits or payments. That after the said deposits and payments of 51. per share had been made as aforesaid, the said defendants published advertisements, and issued and distributed circular letters, requiring the payment of a further deposit of 51. for every of the 6,200 shares. That the defendants, having for some period before that time conducted themselves, with respect to the proposed company, in a manner which appeared mysterious and unsatisfactory, an explanation of the conduct of the defendants was demanded from them by a great number of the parties to the indenture of the 30th of January 1826: that explanation was for some time evaded and withheld, but, at last, the defendants, find

ing themselves pressed, met together and framed a document or report relating to the company, which in Nov. 1825, they caused to be printed, published, and distributed. Fom this report it appeared that the directors had paid a large sum to the projector of the company, and had likewise purchased 970 shares with the money of the company; and that mines had been procured, which the company was proceeding to work.

The bill then alleged, that, in consequence of the said directions, conduct, and acts of the directors, and particularly those avowed in and by their report, the plaintiffs and the several other parties to the indenture of 30th day of January 1826, resolved to give up all connexion with, and to retire from the said proposed company, and to demand the return of the sums deposited and paid on their shares, which resolution and determination were immediately, or very shorly after the publication of such report, notified to such directors on the part of the plaintiffs. That, under the circumstances aforesaid, the said monies paid in respect of the said shares were obtained by fraud, or by what in the view of a court of equity amounts to fraud, and by means of misrepresentation, and for a purpose which hath failed of effect, and cannot now be carried into effect according to the intent and meaning of the said prospectus: and that the plaintiffs are therefore entitled in equity to recover their monies back from the defendants, and that the defendants having had the use of such monies at their bankers and otherwise, ought to pay in

terest.

The bill also charged, that by an indenture dated 30th of January 1826, made between the persons whose names were mentioned in the schedule thereto annexed, who had sealed and delivered the same, of the first part, and the plaintiffs of the second part; after reciting that it had been proposed to form the said Royal Stannary and British Mining Association, with a capital of 250,000l. in shares of 50%. each; and that the persons, parties to that indenture of the first part, being desirous of becoming interested in such proposed association as it was represented to the public, to be paid into the hands of Sir John Perring and Co., or Martin, Stone and Co. respectively, to the account of the Direc

tors of such association, 5l. per share, upon the number of shares of 50l. each, mentioned opposite to their respective names; and that the monies so paid had been unduly appropriated and misapplied by the directors, it was witnessed, that the persons, parties thereto of the first part, bargained, sold, and assigned unto the plaintiffs, the several sums of money so paid as aforesaid, in respect of the shares held by the persons who were parties of the first part, to hold the same upon the trusts therein mentioned; and the persons, parties of the first part, appointed the plaintiffs their attornies, for the better recovery of the monies; and for adjusting and settling all questions relating to the said shares. The trusts were, to reimburse themselves the expenses of executing the trust, and then to pay over the surplus to the persons, parties of the first part, in proportion to the sums set opposite to their names respectively.

The prayer was, that the defendants might be decreed to pay to the plaintiffs the sums paid on the aforesaid shares, with interest, the plaintiffs offering to return the scrip receipts for such shares.

To this bill a general demurrer was put in.

Mr. Hart and Mr. Theobald appeared for the demurrer ;

The Attorney General and Mr. Knight were in support of the bill.

The argument for the demurrer was to the following effect:

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This bill is filed by five persons, representing interests of their own, and the interests also of a great number of other persons, who are parties to a certain deed, by which they assign their shares upon trust, to pay the expenses of the suit, and, subject to those expenses, upon trust for themselves. This, therefore, is a suit instituted by a trustee, without the cestuis que trust being parties. Such a suit cannot be entertained by the Court.

The deed, by which these plaintiffs are constituted trustees for other shareholders, savours of champerty. The plaintiffs acquire by it an interest in, and a right to prosecute a suit with respect to matters in which they had no previous interest. They are in fact trustees of a Chancery suit.

Many of the persons, in respect of whose shares this suit is brought, were not original subscribers to the company, but are merely purchasers of what are called scrip receipts. Original subscribers had no power to sell their shares. The transfer of these shares was an illegal transaction; and therefore no relief can be had in respect of interests springing from such an origin.

The company is of an illegal character. They have assumed to themselves to act as a corporation: no suit therefore can be entertained with respect to interest in its shares.

The Attorney General and Mr. Knight

contrà.

The ground, on which the bill was filed, is this that the directors have obtained the money of the plaintiffs, by what, in the view of the Court, amounts to a fraud. The subscribers advanced their money on the faith, that the persons, named as directors, were to have the direction and disposal of their money. In fact, some of these persons knew nothing of the association; their names were introduced in the prospectus without their authority; they had no concern with the speculation, and the subscribers therefore had not the benefit of their experience, wisdom, and character. On the other hand, individuals, of whom the subscribers knew nothing, have been introduced among the directors; and these individuals have thereby had the disposal given to them, of monies, with which the contributors never intended that they should be intrusted.

Again, the undertaking was to consist of a certain number of shares; only a portion of the shares have been subscribed for. The directors had no authority to proceed to lay out any portion of the money in the speculation, till the whole of the proposed capital was raised. In taking a different course, they have falsified the representations which they held out to the subscribers.

But why is it that all the shares have not been subscribed for? The bill states, that it was because the directors reserved a great number, to be appropriated to themselves, if they could be sold at a profit ;-to be rejected, if the shares in the speculation should not rise to a high premium. Such conduct was a direct fraud. The various acts, which, in the report set forth in the

bill, the directors admit that they have done, or caused to be done, are all inconsistent with good faith. For these reasons the subscribers, who did not participate in the fraud, are unquestionably entitled to recover their money.

It is true, that they might proceed by an action at law: but the circumstances of such a transaction as that which is stated in these pleadings, call particularly for the interference of a court of equity,-particularly with a view to the great numbers of persons who are sufferers by the fraud, and who could not join in an action. There is express authority for the interference of the equitable jurisdiction in such a case. Colt v. Woollaston(1) a bill was filed against the proprietors and contractors of a bubble company, by two purchasers of shares, in order to recover back the money which they had each contributed. There the Master of the Rolls said, (2) "If this were a fraud against any private or single person, a court of equity would relieve; à fortiori, where it is a fraud against great numbers, against multitudes, where the mischief is more extensive, and many families are thereby ruined. It is no objection that the parties have their remedy at law, and may bring an action for monies had and received for the plaintiffs' own use; for in cases of fraud, the court of equity has a concurrent jurisdiction with the common law,-matter of fraud being the great subject of relief here. Accordingly, cases of this nature have frequently met with relief in this court, as in Aaron Hill's case, which was a patent for extracting oil out of beech, which was also divided into shares (as this is), and a security proposed, and agreed to be made of lands, which came out to be terra incognita, betwixt the degrees of latitude 50 and 57." These principles apply exactly to the case before the Court; and the project in Colt v. Woollaston, was not more a bubble or a fraud than this is.

The objection of want of parties, would have applied in Colt v. Woollaston, if it could hold here; for there, the bill was filed by only two persons, the holders of twelve shares, though upwards of a thousand had been sold.

(1) 2 P. Wms. 154. (2) Idem, 156, 157.

No defence can be rested on the ground,' that some of the shares, in respect of which the plaintiffs sue, have been acquired by transfer from original subscribers. According to the case stated in the bill, each subscriber had a right to recover back his money from the directors. Why should he not be able to assign in equity this right? At all events, some of the shares, upon which the bill claims relief, have not been transferred from the original subscribers.

An essential requisite of those transactions, which are said to savour of champerty, is, that a stranger shall, by means of them, acquire a beneficial interest in the fruits of the suit. These plaintiffs acquire, by the deed of assignment, no beneficial interest in the surplus which may remain after the costs incurred in the discharge of the duties reposed in them.

Vice Chancellor.-Has a court of equity ever perfected an assignment in trust, in order that the cestuis que trust may escape from the suit?

Mr.Knight.-There is a charge, that those cestuis que trust are so numerous, that, if they were all made parties, it would be impossible ever to prosecute the suit with effect. We therefore come within the principle, upon which, where parties are inconveniently numerous, and stand in the same relation to those against whom relief is sought, some are permitted to prosecute the suit in their own names, on behalf of the others.

Vice Chancellor.-This is a contrivance by which a man may escape from a suit, and yet contest a right, perhaps, by means of a pauper. The general rule, unquestionably, is, that the cestui que trust must always be before the Court, when any question, involving his rights, is to be discussed.

Mr. Hart in reply.

Colt v. Woollaston is a solitary case, which is very nakedly reported, and which has never been followed. It cannot be regarded as any authority, except, at the utmost, in a case precisely similar; and this case is, in many respects, widely different. In Colt v. Woollaston, the scheme was to extract oil out of English

radishes: no oil was made; no radishes were sown. Another part of the scheme was, that, as part of the advantages to be yielded by the speculation, certain lands were assigned upon trust, as to the surplus which should remain, after paying 85,000l. for the benefit of the contributors. Yet these lands had been recently purchased for only 31,800l. What is there in the present case, which resembles either of these circumstances? Woollaston's project was, in itself, necessarily a delusion; and it was clearly intended by him to be a fraud. This mining company has a feasible, perhaps, a beneficial object: the case stated against the directors is one of misconduct, rather than fraud; and even if it should amount to a fraud in them, that fraud does not, therefore, become a part of the scheme itself.

Vice Chancellor.-This is a bill filed by five persons, shareholders in the proposed Royal Stannary Mining Association, on their own behalf, as well as on behalf of the remaining subscribers for 1,690 shares in the company, who have, by deed, assigned to the plaintiffs their interest in those shares. The defendants are certain persons, who either had been named as directors in the first prospectus of the company, or have subsequently described themselves as such, and have acted in that capacity. The purpose of the suit is, to compel the defendants personally, to repay to the holders of the 1,690 shares in question, the instalments paid thereon.

The equity on which the plaintiffs relied was, misconduct of the defendants in the concerns of the association. They alleged, that the prospectus stated the capital at 500,000l., to be raised by 10,000 shares; that the shares contemplated in the prospectus had not all been issued; that the directors had refused to part with any more 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 shares, which they were to keep for their own benefit alone, if the concern proved profitable. The plaintiffs further alleged, that, in conformity with the terms of the prospectus, the directors should not have gone to work, until the whole number of

shares had been sold, a deed of the regulation signed, and the powers of management defined; and that, although 6,200 shares only had been sold, and only a portion of the instalments thereon had been paid up, the defendants entered upon, and commenced working the mines; and, further, that the defendants had employed the money raised, not for the purposes of the undertaking, but in the purchase of shares for their own private advantage. For these reasons, the plaintiffs insisted, that they had a right to retire from the concern, and to call on the directors for a return of their money.

The defendants demurred to the bill, for want of equity; but my opinion is, that that demurrer must be overruled.

Another objection has been taken, founded on the want of parties. The five plaintiffs sue on behalf of themselves, and certain other persons, who have executed a deed, by which they assign to the plaintiffs their interest in this concern, and constitute them their attornies, to institute any action or suit; but on condition that, after payment of the expenses, they should hold in trust for the benefit of the others, whatever they, the plaintiffs, may recover from the defendants by this proceeding. The defendants insist, that all those persons must be parties to the suit. The counsel for the plaintiffs admit the general principle; but allege that the ends of justice would be defeated by an application of the principle here.

There are special cases in which the Court has permitted one or two persons to represent others in the same interest: but that is the exception, not the general principle; and it has never been done in a case analogous to the present. If I were to yield to the reasoning of the plaintiffs here, I should be making a new practice.

The demurrer ore tenus must be allowed.