(12) LIABILITY OF MEMBERS. inferring that the order for the work was given by his authority, or that the work was done upon his credit. Patrick v. Reynolds, 1 C. B. (N.S.) 727.

The plaintiff was appointed engineer to a railway company at a meeting of the provisional committee. The defendant had previously agreed to join that committee, and had forwarded applications for shares, but whether before or after the meeting was uncertain. An individual answering the defendant's name was present at the meeting, and visited the office of the company :-Held, that there was no evidence of the defendant's identity with that individual. Giles v. Cornfoot, 2 Car. & K. 653. See Barker v. Stead, 3 C. B. 946.

A. B. consented to act as a provisional committee-man, and signed an agreement to take one or more shares. He was then requested to take up twenty-five shares out of the one hundred to which he was entitled, and to pay the deposit of two guineas per share. Before paying the required amount, or taking up the shares, the undertaking was abandoned, and the provisional committee-men were requested to pay a sum equal to the deposit upon twentyfive shares, to cover the expenses incurred. This sum was then paid by A. B., and subsequently two further sums to the same amount were paid upon a threat of being otherwise exposed to legal proceedings. The master placed A. B.'s name on the list of contributories -Held, upon appeal from this decision, that A. B. had never consented to take up any shares, but had paid the calls upon him pacis causâ, and his name was therefore struck off the list of contributories. Stocks, Ex p., 22 L. J. Ch. 218.

A. was a member of the provisional committee of a projected railway company, and at a meeting thereof joined in appointing solicitors and engineer, and immediately afterwards a committee of management was appointed. A.'s name was put on this without his knowledge. He never acted in any further or other way. Expenses were incurred by the solicitors and engineer subsequently to the formation of the managing committee, and by their direction. It did not appear that any other expenses had been incurred :-Held, that A. was not a contributory. Hight, Ex p., 1 Drew. 484; 22 L. J. Ch. 902.

At some of the meetings of the managing committee of a provisionally registered railway company, at which A., one of the committee, was present, it was resolved that certain proceedings should be advertised. At another meeting, attended by four of the body, but not by A., it was resolved that a circular should be sent to the members of the provisional committee, which included the members of the managing committee, stating that, on payment of £160 each, they should be released from all liability. A. and others paid this amount, and A. never attended any subsequent meeting. Meetings of the managing committee were afterwards held, at which some of these payments were referred to, and the terms of the circular were recognised and acted upon. The company was wound up under the winding-up Acts, and it appeared that one of the provisional committee had been compelled by proceedings

at law to pay the bill of the advertising agent :-Held, that A. was primâ facie liable for some part of the demand, and was not exonerated by his payment of £160, and the subsequent conduct of his co-committee-men, but had been properly placed on the list of contributories. Pearson's Executors' Case, 3 De G. M. & G. 241.

no

The local agent for a provisionally registered railway company applied to a landowner on the proposed line to become connected with the company, assuring him, from the managing committee, that he would incur no liability thereby; and the landowner thereupon became a provisional committee-man. On his subsequent application for two hundred shares, subject to the subscribers' agreement," allotment of any shares to him was proved; but when a claim for calls on shares was made, he asked time to pay them. No subscribers' agreement was ever prepared. On the winding-up of the company, under the windingup Acts-Held, that the landowner was a provisional committee-man, who had taken shares in the company within the decision in Upfill's Case (2 H. L. Cas. 674), and that he was a contributory. Markwell's Case, 5 De G. & Sm. 528; 16 Jur. 989. See also Carrick's Case, 1 Sim. (N.s.) 505; 20 L. J. Ch. 670; 15 Jur. 645; Barber, Ex p., 20 L. J. Ch. 146; 15 Jur. 51; Clarke, Ex parte, 20 L. J. Ch. 14; and Osborne, ex p., 15 Jur. 72.

vi. Managing Committee.

Acting as Agent for.]-In an action against a provisional committee-man on a contract entered into by the committee of management appointed by the provisional committee, it is a question for the jury whether he appointed the managing committee his agent to pledge his credit. Williams v. Pigott, Railw. Cas. 544; 2 Ex. 201; 17 L. J. Ex. 196; 12 Jur. 313.

A prospectus issued by a projected company, gave the names of a provisional committee, and also of a committee of management, and one of the clauses of the prospectus empowered the committee of management to apply the funds of the company for all the expenses incurred in the formation of the company :Held, that the committee of management was not thereby empowered to pledge the credit of the provisional committee for advertisements inserted in a newspaper. Dawson v. Morrison, 5 Railw. Cas. 62; 16 L. J. C. P. 240.

There

When Authorised to Act.]-A member of the provisional committee of a company took part in a resolution appointing eight specified persons to be a managing committee, and directing them to take the most energetic measures for carrying on the scheme. was no provision in the resolution, as proved, that any number less than the whole might act; there was no evidence of any usage that any number less than the whole usually acted in such cases; or of any intention on his part that any number less than the whole should act in the present case :-Held, that the authority must be taken, on the evidence given, to have been a simple one to the eight specified persons to act; and that, therefore, he was not bound

(12) LIABILITY OF MEMBERS.

by a contract, within the scope of the authority, made by only six of them, with the plaintiff. Brown v. Andrew, 18 L. J. Q. B. 153; 13 Jur. 938.

A review was established by an association of shareholders, who passed written resolutions for its management and regulation. A committee of shareholders was appointed to assist the editor in promoting the prosperity and circulation of the review, and to obtain, as far as possible without expense, literary contributions, and to aid the editor as he might require in all matters connected with his department-Held, that this resolution did not empower one of the committee to contract with any person for the supply of literary articles, or to bind the shareholders to pay for them when supplied and inserted in the review. Heraud v. Leaf, 5 C. B. 157; 17 L. J. C. P. 57.

Chairman of Taking no Part in Proceedings.]-Where an allottee in a projected company had paid his deposit into a bank named in the prospectus, which had been circulated by the defendant's sanction, his name appearing therein as one of the provisional committee, and as chairman of the committee of management, but he had not personally superintended the allotment of shares, and had taken no active part in the concern, and had been present once only at any meeting, when he acted in the capacity of chairman, but dissented from the proceedings, in an action by the plaintiff against the defendant, for the recovery of his deposit on the abandonment of the scheme -Held, that he was not liable. Burnside v. Dayrell, 6 Railw. Cas. 67; 3 Ex. 224; 19 L. J. Ex. 46.

Member taking Part in Proceedings.]—A member of a committee of management, taking an active part in the concerns of a charitable institution supported by voluntary contributions, is liable for goods furnished by a tradesman for the use of the institution, although it appears that such tradesman did not furnish them on any contract with the committee; but having at first furnished goods on the credit of an individual, who, previously to the formation of a committee, had the sole management, continued to send them in afterwards on orders given as before, by the servants of the institution, without any inquiry as to who was liable to pay him. Glenester v. Hunter, 5 Car. & P. 62.

All Members Proper Parties.]—A shareholder in a cost-book mining company filed a bill against the managing committee and against a creditor of the company, to restrain an action brought against him by the creditor at the instigation of the committee. The bill also asked for an account as to the amount of the plaintiff's liability to the company. The court granted an injunction to restrain the action, but dismissed the bill as against the committee, on the ground that as the company was a simple partnership, formed under no Act of Parliament, it was necessary, in order to have an account, that all the members should be made parties to the bill. Sibley v. Minton, 27 L. J. Ch. 53; 5 W. R. 675.

Orders given before, fulfilled after.]—A member of a joint-stock company is not liable to be sued for the price of goods ordered by the company to be made for them before he became a member, although such goods were delivered afterwards. Whitehead v. Barron, 2 M. &

Rob. 248.

A member of a provisional committee who first takes part in the affairs of a company, so as to make himself individually liable, on a given day, does not thereby make himself liable for services performed for the company after that day, where the order was given before it. Newton v. Belcher, 6 Railw. Cas. 38; 12 Q. B. 921; 18 L. J. Q. B. 53; 13 Jur.

253.

So, a member of a committee formed for the purpose of promoting an improvement Bill in Parliament is not liable to the solicitor of the committee for work done by him for the committee as such solicitor before he became a member of the committee. Bremner v. Chamberlayne, 2 Car. & K. 560.

In an action against A., B. and C., three members of a committee of a proposed company, for not accepting or paying for machinery and for goods bargained and sold, it appeared that the committee of which A. and B. were members, had ordered machinery under a written contract, prior to the time of C.'s joining the company. By the terms of the contract the plaintiff was to be allowed to draw such sums monthly as he wished, not exceeding the price of the work done. Subsequently C. joined the company, and became one of the committee, and during that time, as the work progressed, advances were made according to the terms of the contract. C. took an active part in making experiments and suggesting alterations in the works, and on one occasion promised payment -Held, that as C. was not liable on the special contract, he being no party to it, there was no ground for implying a second and new contract, to which C. was a party, from his having united in giving directions about the machinery, or from his subsequent promise of payment, or from his having afterwards acquired an interest in the subject-matter of the contract, and, therefore, that the plaintiff was not entitled to recover for goods bargained and sold. Beale v. Mouls, 5 Railw. Cas. 105; 10 Q. B. 976; 16 L. J. Q. B. 410; 11 Jur. 845.

viii. Personal Liability of Member excluded.

In an action by a surveyor against the defendant, one of the acting committee of a projected railway, it appeared that prospectuses were issued, and large sums received as deposits upon shares. At a meeting of the committee, at which the defendant was present, there was written a resolution that S. should be employed to make a valuation of the land and houses on the intended line. S. would not act, and G., another member of the committee, applied to the plaintiff, and, at a subsequent meeting, the defendant assented to the plaintiff's appointment. The fact having been communicated by G. to the plaintiff, he acted upon it and sent in his report. The defendant was afterwards a party to an agreement entered into to refer the

(12) LIABILITY OF MEMBERS. West Mining Association, of which the defendants were directors. The plaintiff, July 10, 1839, agreed to sell to this company 1,000 shares in the Penzance Mills Mining Company, to be paid for by £1,385, and by the delivering to him of 200 scrip certificates of shares in the West Mining Association. The money was to be paid on August 1, 1841. Immediately upon the execution of the agreement, 200 scrip certificates were obtained by the plaintiff's agent, and entered in the register book of the West Mining Association in the plaintiff's name. The defendants afterwards gave the plaintiff the following note, dated August 17, 1839 : "We jointly promise to pay to J. F. (the plaintiff) £1,385 on the 1st August, 1841, for value received, in Penzance shares, pursuant to annexed contract.' This note was signed by all the defendants in their individual names. The deed of settlement of the West Mining Company provided that holders of scrip certificates should not be considered as qualified proprietors; and that a proportion of the net profits of the year should be divided amongst the shareholders and scrip certificate holders, in proportion to their several shares and interests. The plaintiff had not paid any instalments nor signed the deed of settlement, but continued to be the holder of the scrip certificates -Held, in an action brought upon the note, that a plea that the defendants made the note as directors and on behalf of the mining co-partnership, and that the plaintiff was a partner with the defendants, was not supported by proof of these facts. Fox V. Frith, 10 M. & W. 131; Car. & M. 502; 11 L. J. Ex. 336.

ii. For Contribution.

Legal Expenses paid by Director.]-A. and B., directors of a joint stock company, being sued for debts due from, and for damages done by the company, employed C. to defend them upon their joint responsibility. A. paid the whole of C.'s bill of costs :-Held, that an action was maintainable by A. against B. for contribution. Edger v. Knapp, 5 Man. & G. 753; 6 Scott (N.R.) 707; 1 D. & L. 73.

Contribution from Co-directors - Death of Director-Actio Personalis.]-Directors of a company issued a prospectus which contained an untrue statement that the only contracts to which the company was a party were two, omitting a third which was material to be disclosed. An action against some of the directors was brought and judgment obtained by a shareholder who had taken shares on the faith of the prospectus, for compensation for loss or damage sustained by reason of the untrue statement, under s. 3 of the Directors' Liability Act, 1890. After appeal to the House of Lords, where the judgment of the Court of Appeal, affirming the judgment of the court below, was affirmed, a compromise was arrived at between the parties to the action, under which the shareholder was to receive an agreed sum of £300, by way of compensation or damages, the taxed costs of an inquiry which had been begun, but was agreed not to be further proceeded with, and £700 for additional costs. The amounts were paid, together with

the taxed costs of the action and appeals, by the present plaintiffs, who were some of the directors, and who contributed to the payment in equal shares. A number of other similar actions were commenced or claims made against the present plaintiffs, of which some were compromised, in others judgment was entered by consent for an inquiry as to damages, in others money was paid into court to answer the claims. In respect of these the present plaintiffs had paid or become liable to pay large sums, and incurred considerable costs and expenses. They commenced this action under s. 5 of the Directors' Liability Act against their co-directors and the representatives of deceased co-directors for contribution to the payments they had made or become liable for, and to the costs and expenses they had incurred, and to their own solicitor and client costs and reasonable expenses :-Held, that they were entitled to contribution to (1) sums paid for compensation for loss or damage, (2) taxed costs of the plaintiff in the original action up to and including judgment, and (3) costs paid to other claimants (whether under judgment in actions or agreement); but not (4) the additional costs of the plaintiff in the original action, nor (5) the present plaintiffs' own costs in that action, nor (6) costs in the Court of Appeal and the House of Lords. Shepheard v. Bray, 75 L. J. Ch. 633; [1906] 2 Ch. 235; 95 L. T. 414; 54 W. R. 556; 13 Manson, 279; 22 T. L. R. 625.

Appeal of executors of deceased directors from the decision of Warrington, J., allowed by consent, the court stating that it must not be taken that, as at present advised, they were prepared to assent to the whole of the decision of Warrington, J. 76 L. J. Ch. 692; [1907] 2 Ch. 571; 97 L. T. 729; 14 Manson, 310; 24 T. L. R. 17-C. A.

Right of Contribution from Co-directors.]— A right to contribution given to a director of a company against his co-directors by s. 5 of the Directors' Liability Act, 1890, in respect of a liability incurred under s. 3 of the Act for an untrue statement in the prospectus of the company, applies to a liability incurred by reason of an untrue statement fraudulently made, which might have been the subject of an action at common law. Gerson v. Simpson, 72 L. J. K. B. 603; [1903] 2 K. B. 197; 89 L. T. 117; 51 W. R. 610; 10 Manson, 382; 19 T. L. R. 544-C. A.

Excessive Payment by one Member.] Where several members of a provisional committee jointly entered into a contract with a third party, and one of them is compelled to pay more than his share of the debt, he may maintain an action against his co-contractors for contribution. Batard v. Hawes, 2 El. & Bl. 287; 3 Car. & K. 277; 22 L. J. Q. B. 443; 17 Jur. 1154; 1 W. R. 387.

In order to determine the aliquot part the amount to be recovered is to be calculated according to the number of original co-contractors, and not according to the number of those who were alive when the payment was made, and against whom the right of the creditor to sue at law had survived. Ib.

Joint-tenants in a Demise not Partners.]— A., B. and C. (three members of the provisional committee of a projected company) became tenants, on a joint demise to them dated April 11, 1846, of premises for the use of the company, who took possession on April 27. A. and B. executed the deed of settlement, which was registered on September 29, and which, after reciting that there was due to A. a sum of money advanced in the formation of the company, and for rents of offices, provided the business of the company should be conducted at these premises, that A. and B. should be two of the directors, that the directors should maintain offices for the business of the company, and all acts done by the directors in the formation of the company were thereby confirmed. The landlord having sued A., B. and C. in a joint action on the demise for rent due during the occupation by the company, and recovered judgment, he levied the whole debt and costs upon A. :-Held, that A. and B. were not partners, so as to preclude the former from recovering contribution from the latter. Boulter v. Peplow, 9 C. B. 493; 19 L. J. C. P. 190; 14 Jur. 248.

Action for, by Third Party-Costs.]—The plaintiff, having a claim against a proposed company agreed with the defendant (a member of the managing committee) to sue other members of the committee who refused to contribute, so as to relieve the defendant to the extent of the amount thus recovered :-Held, that the sum paid by the plaintiff to his own attorney for his costs in bringing these actions was properly recoverable from the defendant as money paid to his use. Bailey v. Haines, 13 Q. B. 815; 19 L. J. Q. B. 73; 14 Jur. 80.

II. CAPITAL.

1. GENERALLY.

What is.]-Capital is the fund to be applied in carrying on the business of the company as defined in the memorandum of association (per Cotton, L.J.), Guinness v. Land Corporation of Ireland, 52 L. J. Ch. 177; 22 Ch. D. 376; 47 L. T. 517; 31 W. R. 341.

Nominal Capital.]-The capital stated in a company's memorandum of association is its nominal capital. Dronfield Silkstone Coal Co., In re, 50 L. J. Ch. 387; 17 Ch. D. 76; 44 L. T. 361; 29 W. R. 768-C. A.

Duty

"Nominal Share Capital Stamp Debenture Stock Converted into

Preference.]-Under the powers of a special Act of Parliament passed in 1890 which contained a recital that it was expedient that certain debenture stock of an incorporated company, where the liability was limited by Act of Parliament, should be converted into first preference stock, the said debenture stock was cancelled and an amount of first preference stock was created-Held, that this first preference stock was an increase of the

nominal share capital of the company within the meaning of s. 17 of the Customs and Inland Revenue Act, 1889, and that the company were bound to deliver a statement of the same to the Commissioners of Inland Revenue,

as provided by that section. The nominal share capital in that section means the nominal capital belonging to the shareholders, whether divided into shares or stocks, as distinguished from the capital which they have borrowed. A.G. v. Milford Docks Co., 69 L. T. 453; 57 J. P. 598.

"Paid-up share Capital."]-The promoters of the N. Railway Co. obtained an Act which incorporated the Companies Clauses Consolidation (Scotland) Act, 1845, the Companies Clauses Act, 1863, and Acts amending the same. A schedule to the Act contained an agreement between the company and the N. B. Co. whereby the latter company guaranteed a fixed dividend upon the paid-up share capital of the N. Co. The N. Co., having failed to obtain sufficient subscriptions to their shares, entered into an agreement with a syndi cate whereby the company undertook to issue to the syndicate their whole unissued capital, and the syndicate undertook to construct the railway. It was established by proof that the cost of construction was about 60 per cent. of the face value of the capital issued to the syndicate, and that the syndicate disposed of the shares 80 issued at less than

par :-Held (diss. the Lord President, Lord Kinnear and Lord Dundas), that the capital so issued to the syndicate was not

paid-up share capital" of the N. Co. in the sense of the agreement with the N. B. Co., and that the N. B. Co. were only bound to contribute to the dividend on so much of the capital of the N. Co. as was issued in consideration of cash or the equivalent of cash. Held, further (diss. Lord Johnston), that it was competent for the Railway and Canal Commissioners, sitting as arbiters, to determine what amount of the capital was issued in consideration of cash or the equivalent of cash. Newburgh and North Fife Railway v. North British Railway, [1913] S. C. 1166-Ct. of Sess.

Semble (per Lord Johnston, Lord Salvesen, and Lord Skerrington), a company incorporated under the Companies Clauses Acts is not entitled to issue its original shares at a discount. Whether such a company is entitled to issue shares for a consideration other than cash or the equivalent of cash, quære. Ib.

Statham v. Brighton Marine Palace and Pier Co. (68 L. J. Ch. 172; [1899] 1 Ch. 199) and Webb v. Shropshire Railways (63 L. J. Ch. 80; [1893] 3 Ch. 307) doubted. Ib.

Subscribed Capital.] - Capital cannot be said to be "subscribed unless there is an agreement under which there is a liability to pay up the shares. Arnison v. Smith, 59 L. T. 627.

46

Subscribe" bears a different meaning from pay,' when applied to the subscription of a capital for a company. Hawkins, Ex p., 2 Kay & J. 253; 25 L. J. Ch. 221; 2 Jur. (N.8.) 85; 4 W. R. 224.

Deposit.]-A deposit paid on application for shares becomes the property of the company. The relation between the depositor and the company is merely that of creditor and debtor. Moseley v. Cressey & Co., L. R. 1 Eq. 405.