DUNCAN r. DUNCAN. | *391 | strative legacies, do not affect this case, and that this must be considered a specific legacy. His Honour then declared, that the legacies of 2,000l. *and 1,000l. were specific, and ought to abate, by reason of the debt of 4,000l. having been reduced to the sum of 2,1207. And he declared, that William Rathbone Duncan and Phillis Barbara McMurdo Duncan were not entitled to have the whole of the sum of 2,120l. applied rateably in satisfaction pro tanto of their legacies, but that a rateable proportion of the sum of 2,1207. ought to be attributed to the sum of 1,000l. directed to sink into the residue. And he declared, that, having regard to the trusts declared of the residue, the legacies of 2,000l. and 1,000l. ought to be increased, out of the surplus of the testator's estate, in proportion to the reduced amounts payable in respect of the legacies of 2,000l. and 1,000l. after such abatement as aforesaid. 1859. July 8. Rolls Court. DUNCAN v. DUNCAN (No. 2). A testator bequeathed to his nieces 5001. owing to him from A. B., his and he directed that if his estate should not be sufficient to pay legacies in full, they should (exclusive of that to his nieces) abate proportionably, and if it should be more than sufficient, they should be increased proportionably. The testator received the debt, and by a subsequent codicil, "in the place of the said intended legacy," gave his nieces 5001., to be paid out of his general personal estate: Held, that the second legacies were substitutionary, and subject to the same incidents, and that the nieces were not entitled to have them increased proportionably out of the undisposed of estate. By his will, made in 1843, the testator gave legacies to his nieces, Isabella Duncan and Lucy Christian, and he thereby also bequeathed to them any sum belonging to him which might be in the hands of his cousin Charles M'Murdo, not exceeding 5001. And he directed, as to any residue, that if his estate should be deficient, the legacies (except that of the debt from Charles M'Murdo) should abate proportionably, but if more than sufficient, they should be increased proportionably. By a codicil made in 1849, reciting the bequest of the debt due from Charles M'Murdo and his death, and that the debt had been paid, the testator, "in the place of the said intended legacy," gave Isabella Duncan and Christian Duncan the sum of 500l., to be paid out of his general estate. The estate was more than sufficient to pay the legacies, and one question was, whether the legacy of 500l., bequeathed to the nieces by the codicil, ought to be increased out of the surplus of the testator's estate, under the provision in his will. Mr. R. Palmer and Mr. Trevor, for the defendants Isabella The legacies of 500l. are not substitutional, and are not liable to the same incidents as the legacies previously given: Chatteris *v. Young (1), Alexander v. Alexander (2). Here the gift is not of the same character, but essentially different; the original gift was specific, but this is a general legacy payable out of the general personal estate. Mr. Follett and Mr. Whitehorne, contrà, were not heard. THE MASTER OF THE ROLLS: This is exactly the same legacy, merely substituting one in the place of the other, and it cannot make any difference that one is a general legacy of 5001. and the other a specific bequest. I must declare that the legacy of 500l. ought not to be increased out of the surplus of the testator's estate, under the general direction for the increase of his legacies. POYNTZ v. FORTUNE. (27 Beav. 393-394.) A landlord had agreed to grant his tenant a lease, but no lease had been granted, though the tenant had for many years been in possession. On a bill by the tenant for specific performance, the landlord set up, by way of defence, that the tenant had committed waste. The COURT directed the lease to be executed and ante-dated, and the question of waste to be tried at law. [The Judicature Act now enables the Court to determine questions in cases of this kind without ante-dating deeds or directing further trials at law.-O. A. S.] HESKETH v. MAGENNIS. (27 Beav. 395–397.) [This was a decision upon the construction of a will which did not present any question of difficulty or general application, and as the judgment merely contains a bare expression of opinion without any reasons, it is not thought useful to retain the report here.-O. A. S.] BLUCK . MALLALUE. (27 Beav. 398-405.) The directors of a Loan Company were empowered to borrow money, but directors who were "concerned in or participated in the profits of any contract with the Company vacated their offices. The chairman lent money to the Company at high interest, which was after.. wards lent out at a profit: Held, that this was warranted by the rules. Discounting the bills of a director is a lending of money within a clause prohibiting loans to shareholders. Decree to compel directors in a Joint-stock Company to take shares subscribed for by them, which were transferable, refused. THE bill was filed by a shareholder of "The Western Deposit and Advance Company (Limited)," on behalf of himself and all (1) 26 R. R. 44 (2 Russ. 183). (2) 59 R. R. 566 (5 Beav. 518). DUNCAN t. DUNCAN. [ *393 ] 1859. July 15. 1859. July 23, 26. 1859. Feb. 15, 17. Rolls Court. [398] other the shareholders, except the defendants, under the following circumstances: In 1857, the defendants Mallalue, &c. and other persons being desirous of forming a Company, signed a memorandum in the form required by "The Joint-stock Companies Act, 1856" (19 & 20 Vict. c. 47, ss. 3, 5, 7, and schedule, Form A). The objects of the Company were stated to be "for receiving or borrowing money, either on deposit, or loan notes, or debentures, or other security or property of the Company, and allowing or paying interest thereon," and "for granting loans to any person or persons, whether shareholders in the Company or not." They subscribed the memorandum of association in the form required, which concluded thus: "We, the several persons whose names and addresses are subscribed, are desirous of forming into a Company, in pursuance of this memorandum of association, and we respectively agree to take the number of shares in the capital of the Company set opposite our respective names." The number of shares set opposite to the names of the defendants were, Mallalue, 20; Best, 10; Davis, 25; M'Evily, 60. The articles of association were afterwards signed by the same persons. They provided (45), that the business of the Company should be managed by the directors. The other articles principally relied on were as follows: 47. The office of director shall be vacated if he ceases to hold the qualification mentioned in the preceding article; if he holds any other office or place of profit under the Company; if he becomes bankrupt or insolvent; if he is concerned in or participates in the profits of any contract with the Company; if he participates in the profits of any work done for the Company. "67. The Company may receive or borrow money either at call or on deposit, or on the security of loan notes or debentures, or other security or property of the Company, or on the directors' own individual responsibility (either joint or several), for such time or times and at such rate or rates of interest as the directors may think proper: provided always, that the amount or amounts so borrowed do not, in any case, exceed the amount of the unpaid portion of the capital of the Company. "68. The Company shall employ its funds, as well as the moneys that may have been borrowed, in granting loans at interest, in sums not exceeding 2,000l., to any person or persons, whether shareholders in this Company or not, or to any body or bodies corporate, upon any sort of security (real or personal, British or foreign) which the directors shall consider sufficient. 70. The Company may discount bills of exchange and pro missory notes for shareholders of the Company and other persons. 71. The directors may also lend to any shareholder of the Company an amount equal to 75l. per cent. of the amount paid on the shares held by such shareholder, who shall deposit such shares as a security for the repayment thereof with interest, as shall be agreed between such shareholder and the directors. "75. No loan or loans shall be granted by the Company to any of the directors, or other officers of the Company, beyond the 751. per cent. upon the amount paid upon his shares, and which shares shall form the security for repayment of the amount borrowed, with interest; nevertheless, the directors may receive the suretyship of a director, or other officer of the Company, for the repayment of loans granted to other persons, if they should deem it expedient so to do." The Company was duly registered under the statute, a proper certificate of incorporation was given by the Registrar of Jointstock Companies, and the Company became a body corporate, and proceeded to carry on its business. By this bill, the plaintiff complained that the defendants, the directors, had been carrying on the affairs of the Company in a manner inconsistent with the articles of association, and had dealt improperly with the funds and affairs of the Company. The principal charges of complaint were: First. That Mallalue, the chairman, was in the habit of drawing bills and promissory notes in his own name, and of mixing up his own dealings with those of the Company. That he had been in the habit of lending moneys to the Company at a rate of interest between 10l. and 151. per cent., which they afterwards employed in discounting bills, &c., and that he had thereby made considerable profits out of the property of the Company, centrary to the 47th article. Secondly. That the directors had, contrary to the *73rd clause, lent the moneys of the Company to the directors on personal security, beyond the amount of 751. per cent. upon the amount paid upon their shares, and, in particular, had lent 150l. to the defendant Davis. Thirdly. That the defendants M'Evily, Davis and Mallalue had taken a far less number of shares in the Company than those for which they subscribed the memorandum of association. Thus, M'Evily has subscribed for sixty shares and had only taken ten and had disposed of the others to other persons. The bill sought, first, to make Mallalue account for the profits received by him for loans, &c. to the Company, or, at all events, for the interest received by him on his loans beyond 51. BLUCK v. MALLALUE. [ *400 ] [401] per cent.; secondly, that the directors might be made liable for the loans to the other directors; thirdly, that Mallalue, Davis and M'Evily might be declared liable for the number of shares subscribed for by them. It also prayed an injunction to restrain the acts complained of. Mr. R. Palmer and Mr. Bevir for the plaintiff. Mr. Selwyn and Mr. Elderton for the defendants. In this suit, the grounds of complaint are three: First. That the defendant Mallalue, who is the chairman, draws bills and promissory notes in his own name, and mixes up his own dealings with those of the Company. Secondly. That loans have been made by the directors to members of their own body. Thirdly. That the *directors have not fulfilled the contract they entered into on the formation of the Company, they having taken a less number of shares than they agreed to take. I think the plaintiff has not proved the first, so far as it is essential. It is true that the Company is a corporation, and that the corporate name ought to be used in all its transactions; but if, practically, the transactions have been by the corporation, and for the benefit of the corporation, I do not think that the omission to use the name of the corporation is such a matter as calls for the interposition of this Court; it is a mere departure from form. It is certainly established that Mallalue has mixed up his own name with these transactions, but it is also proved, that bankers and others will not deal with a limited Company, unless some name they consider of sufficient responsi bility is on the paper negociated, and Mallalue has put his name on the bills negociated for and on the part of the Company; but this mixing up the name of the chairman with the Company on paper negociated cannot be complained of. It There is then a complaint that on loans made to strangers, Mallalue has obtained a portion of the profit with the Company, and that this is directly at variance with the rules of the Company, and contrary to the principles of equity generally. is important to observe what are the objects of the Company; they are to borrow money to lend it again, and by such means to get any amount of interest at the cheapest rate. The nature of these transactions appears, on the evidence, to be this: The Company had no money except deposits, and on various occasions Mallalue has lent money to the Company at one rate of interest, and the Company has then lent it out again to strangers at an *increased rate. Mallalue took 10l. per cent., but in every case the Company obtained a benefit. |