indemnify the directors against the consequences of any ultra vires acts so far as the remedy of the company may extend.

With regard to the continuance of the liability of a director in respect to any misfeasance or breach of duty committed by him, the rule is as follows:-Where a trustee receives money upon an express trust and wastes it the Statute of Limitations does not run against the claim of the cestui que trust; yet where a trustee receives money not belonging to the cestui que trust, but which the cestui que trust can claim on the ground that the receipt of it was a fraud upon him, as in the case of a bribe or a commission, the Statute of Limitations will run against the claim of the cestui que trust from the time when he discovers the fraud. [Metropolitan Bank v. Heiron, 5 Ex. D. 319.]

It has been held that claims against directors for misfeasance are not barred by the Statute of Limitations, and, consequently, in proceedings to enforce the repayment of dividends paid out of capital, the fact that the dividends had been paid more than six years previously was held not to bar the remedy. [Exchange Banking Co., 51 L. J. Ch. 525.]

A director guilty of misfeasance cannot set off against the amount payable by him to the company a debt due to him from the company. [Pelly's Case, 21 Ch. D. 492.]

Money repayable by a director through his misfeasance is a debt incurred by "means of fraud or breach of trust" within sect. 49 of the Bankruptcy Act, 1869, and therefore his liability is not released by his discharge under any bankruptcy proceedings. He remains liable to repay personally that sum less any dividends received under his bankruptcy proceedings. [Emma Mining Co. v. Grant, 50 L. J. Ch. 449.]

A liquidator making a claim against directors of a company for misfeasance must use the same promptitude as an ordinary claimant. But special circumstances, such as a change of liquidators, will be taken into consideration on the question of delay. [Mammoth Copperopolis of Utah, 43 L. T. 754; Alexandra Palace Co., 21 Ch. D. 149.]

In any dealings in the shares of the company which a director may have, he will not be allowed to use for his own advantage any special information which, as a director, he has obtained.

Thus, where a director, who was also a stockbroker, entered into negotiations with a shareholder for the purchase of his shares, and during the negotiations obtained information which he withheld from the shareholder who afterwards sold him the shares, the director was held liable to pay to the shareholder the profits he had realized on the shares. [Tucker v. Barker, 1881, W. N. 120.]

With respect to the criminal liability of directors, it is provided by 24 & 25 Vict. c. 96, s. 81, that "whosoever being a director, member, or public officer of any body corporate or public company, shall fraudulently take or apply for his own. use or benefit, or for any use or purposes other than the use or purposes of such body corporate or public company, any of the property of such body corporate or public company, shall be guilty of a misdemeanour.”

By sect. 82 it is provided that, " whosoever being a director, public officer, or manager of any body corporate or public company shall, as such, receive or possess himself of any of the property of such body corporate or public company, otherwise than in payment of a just debt or demand, and shall, with intent to defraud, omit to make, or to cause or direct to be made a full and true entry thereof in the books and accounts of such body corporate or public company, shall be guilty of a misdemeanour."

By sect. 83 it is enacted that, "whosoever being a director, manager, public officer, or member of any body corporate or public company, shall, with intent to defraud, destroy, alter, mutilate, or falsify any book, paper, writing, or valuable security belonging to the body corporate or public company, or make or concur in the making of any false entry, or omit or concur in omitting any material particular in any book of account or other document, shall be guilty of a misdemeanour."

By sect. 84, with reference to false reports and balance sheets, it is enacted that, "whosoever being a director, manager, or public officer of any body corporate or public company, shall make, circulate, or publish, or concur in making, circulating, or publishing any written statement or account which he shall know to be false in any material particular, with intent to deceive or defraud any member, shareholder, or creditor of such body corporate or public company, or with intent to induce any person to become a shareholder or partner therein, or to intrust or advance any property to such body corporate or public company, or to enter into any security for the benefit thereof, shall be guilty of a misdemeanour."

For any of the offences enumerated in these four sections the punishment is penal servitude for any term not exceeding seven years nor less than five years, or imprisonment for any term not exceeding two years with or without hard labour.

By sect. 166 of the Companies Act, 1862, any director, officer, or contributory of any company wound up under the Act who destroys or falsifies any books or securities of the company is guilty of a misdemeanour, and liable to imprisonment for any term not exceeding two years with or without hard labour.

By sects. 167 and 168 provision is made for the prosecution under a winding-up with the sanction of the Court, of any past or present director, manager, officer, or member who may have been guilty of any criminal offence in relation to the company.

CHAPTER XI.

DEBENTURES.

THE articles of association of any company usually contain borrowing powers expressed as exerciseable either by the directors without further authority, or by the consent of the company in general meeting. If these powers are not contained in the articles as originally framed, they can be added by means of a special resolution.

The borrowing powers of the company are most frequently exercised in the shape of debentures given under its common seal.

Under this heading are grouped mortgages, debentures, and bonds; the nature of the charge created by these instruments depends solely on the construction of the documents themselves. A debenture may thus be an absolute first charge on the whole property of the company, present and future; or it may not bind its after-acquired property; it may extend only to some. specific asset, or it may amount simply to a promise to pay without creating any charge on the property. [Russell v. East Anglian Ry. Co., 3 Mac. & G. 104.]

The most ordinary form of debenture is expressed as being a charge on the "undertaking" of the company. This term constitutes a charge upon all the property of the company, present and future, and entitles the holders of the debentures to be paid out of the property of the company in priority to the general creditors. [Panama Royal Mail Co., 5 Ch. 318; Marine Mansions Co., 4 Eq. 601.]

A debenture purporting to be an assignment of the undertaking and all the real and personal estate of the company, is

valid as a charge on all the personal estate of the company existing at the date of the debenture, but not on subsequently acquired personal estate. [New Clydach Iron Co., 6 Eq. 514.]

A debenture binding the company and "their successors, and their real and personal estate," entitles the holder to a first charge on all the property of the company in priority. [Ex parte Bradshaw, 15 Ch. D. 465.]

But debentures or bonds by which the company "undertake to pay," or by which they "bind themselves and their successors to pay," are simply promissory notes, and create no primary charge on the assets in priority to the general body of creditors. [Ex parte City Bank, 3 Ch. 758; Ex parte Colborne, 11 Eq. 478.]

Power is sometimes given by the articles to directors to mortgage the uncalled capital. In the absence of any express power to that effect, any mortgage of future calls is invalid. The capital not paid up is only sub modo the property of the company; a precedent condition to the absolute proprietary right of the company therein being the due making of a call by a resolution of the board of directors. [Bank of South Australia v. Abrahams, 6 P. C. 265.]

But a call already made or determined upon, as well as calls in arrear, may be validly charged, even though not immediately payable. [Sankey Brook Coal Co., 9 Eq. 721; 10 Eq. 381.]

Under a power to raise money by mortgage, with or without power of sale of any of the property of the company, book debts of the company not yet accrued due may be validly charged. [Bloomer v. Union Coal and Iron Co., 16 Eq. 383.]

The mortgage of the property and undertaking of a company to secure debenture-holders does not necessarily paralyze the business of the company so as to prevent the company from making a valid charge on a specific asset as a security for an advance of money necessary for carrying on the business. Any such charge can be validly made in the ordinary course of the business of the company at any time before the debenture