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but chose to file a bill in equity against the directors ; and upon that occasion Vice-Chancellor Wigram observed : “ It is only necessary to refer to the clauses of the act, to shew, that, whilst the supreme governing body, the proprietors at a special general meeting assembled retain the power of exercising the functions conferred upon them by the act of incorporation, it cannot be competent to individual corporators to sue in the manner pre posed by the plaintiffs on the present record. This, in effect, purports to be a suit by cestui que trusts, complaining of a fraud committed, or alleged to have been committed, by persons in a fiduciary character. The complaint is, that those trustees have sold lands to themselves, ostensibly for the benefit of the cestui que trusts. The proposition I have advanced is, that, although the act should prove to be voidable, the cestui que trusts may elect to confirm it. Now, who are the cestui que trusts in this case ? The corporation, in a sense, is undoubtedly the cestui que trust; but the majority of the proprietors at a special general meeting assembled, independently of any general rules of law upon the subject, by the very terms of the incorporation in the present case, has power to bind the whole body, and every individual corporator must be taken to have come into the corporation upon the terms of being liable to be so bound. How, then, can this Court act in a suit constituted as this is, if it is to be assumed, for the purposes of the argument, that the powers of the body of the proprietors are still in existence, and may lawfully be exercised for a purpose like that I have suggested? Whilst the Court may be declaring the acts complained of to be void at the suit of the present plaintiffs, who, in fact, may be the only proprietors who disapprove of them, the governing body of proprietors may defeat the decree by lawfully resolving upon the confirmation of the very acts which are the subjects of the suit. The very fact, that the governing body of the proprietors assembled at the
special general meeting may so bind even a reluctant minority, is decisive to shew, that the frame of this suit cannot be sustained whilst that body retains its functions. In order, then, that this suit may be sustained, it must be shewn, either that there is no such power as I have supposed remaining in the proprietors, or, at least, that all means have been resorted to, and found ineffectual, to set that body in motion. This latter point is nowhere suggested in the bill : there is no suggestion that an attempt has been made by any proprietor to set the body of proprietors in motion, or to procure a meeting to be convened for the purpose of revoking the acts complained of.”
There is, however, a distinction between unauthorised acts on the part of directors, voidable only, and which it is competent for the governing body to confirm at a general meeting; and acts which are altogether void, and which may not be so confirmed(x). Thus, if directors are guilty of fraud or misconduct in committing unauthorised acts, in the name of the company, proceedings in equity may be taken against them by the governing body, and the Court will hold the parties liable, for all losses and expenses sustained by their misconduct (y). And, in cases of this kind, where the liability aries from the wrongful act of the parties, each is liable for all the consequences, and there is no contribution between them; and each case is distinct, depending upon the evidence against each party. It is, therefore, not necessary to make
may, more or less, have joined in the act complained of, parties to the suit. All such suits ought in general to be prosecuted in the name of the corporation (z); but it has been said, that if a case should arise of injury to a corporation by some of its members, for which no adequate remedy
(2) Ware v. The Grand Junction Water Works Company, 2 Russ. & M. 470; Ward v. The Society of Attornies, 1 Collier, 370.
(y) The Attorney-General v. Wil.
son, 1 Craig & Ph. 1; The Society for Practical Knowledge v. Abbott, 2 Beav. 559; Jones v. Rose, 4 Hare, 52.
(2) Foss v. Harbottle, 2 Hare, 461,
remained, except that of a suit by individual corporators, in their private character, and asking in such character the protection of those rights to which, in their corporate character, they were entitled, the court of equity will dispense with the presence of parties, who would, according to the general practice, have been necessary parties to the suit (a).
3. With respect to the keeping the accounts of the company, the stat. 8 Vict. c. 16, requires the directors to cause full and true accounts to be kept of all matters and things for which monies have been received or paid. (Id., s. 115, post, App. 106). The books must be balanced at the times prescribed by the special act, or, if no time be there prescribed, fourteen days at least before each ordinary meeting; and an exact balance sheet must be made up, exhibiting a statement of the capital stock, credits, and property of the company, and the debts due by them, with a distinct view of profit and loss on the preceding half-year. (Id., s. 116, post, App. 106). The books and the balance-sheet are to remain open for the inspection of shareholders, at the office, for a time prescribed, before and after each ordinary meeting, and extracts may be taken (6); but, at any other time, the books cannot be inspected, unless by a written order signed by the directors. (Id., ss. 117, 119, post, App. 107). And, at the ordinary meeting, the balance-sheet and report of the auditors must be produced to the shareholders. (Id., s. 118, post, App. 107). A book-keeper must be appointed to enter the accounts and keep the books, and
3. The accounts of the company, and their audit.
(a) Preston v. The Grand Collier Dock Company, 2 Railway Cases, 335; S. C., 11 Sim. 327; Wallworth v. Holt, 4 My. & Cr. 619; Lund v. Blanshard, 4 Hare, 9; Ibid. 290.
(6) Where a shareholder was sued for calls, due on his shares, an application made by him to the Court, for an order to inspect the minute-books
of the company, was refused. Birmingham and Thames Junction Rail. way Company v. White, 1 Q. B. 282; S. C., 2 Railway Cases, 863. As to when a bond creditor may exa. mine the books of a company, see Pontet v. The Basingstoke Canal Company, 2 Bing. N. C. 270; S. C., 2 Scott, 543.
if he fails to permit them to be inspected by shareholders, he may be fined £5. (Id., s. 119, post, App. 107).
An annual account of receipts and expenditure, certified by the directors and auditors, must also be prepared; and, if required, a copy must be transmitted to the overseers of the parishes, and clerks of the peace of the counties, through which the railway passes; and the public may inspect such account. A penalty of £20 is incurred by the company, if, when required, they neglect to transmit such account. (8 V’ict. c. 20, s. 107, post, App. 186).
Before any person is entrusted with the custody or control of money, the directors must take sufficient security from him. (8 Vict. c. 16, s. 109, post, App. 105). Every officer, when required, must render an account of all monies received by him, and deliver the vouchers for all payments,
pay over the balance due to the directors. (Id., s. 110, post, App. 105). If any officer fails to account, he may be summoned before two justices, who may determine the matter in a summary way, and adjust the balance owing, and order the officer to pay the amount, and, on default, levy the same by distress, or commit the offender to gaol for three months. (Id., s. 111, post, App. 105). Or, if an officer refuses to deliver up vouchers, books, or other property, the justices may commit him until he does deliver them. (Id., s. 112, post, App. 106). If an officer is about to abscond, he may be apprehended by warrant, instead of being summoned to appear before the justices. (Id., s. 113, post, App. 106). But no such proceedings taken against an officer will deprive the company of any other remedy against the officer, or his surety. (Id., s. 114, post, App. 106).
At the ordinary meeting after the passing of the special act, and every year afterwards, two auditors are to be chosen by the shareholders, unless a different number be prescribed by the special act. (Id., s. 101, post, App. 104). An auditor
must be a shareholder, but he cannot hold another office in the company. (Id., s. 102, post, App. 104). One auditor goes out of office every year by seniority; but he is eligible to be re-elected. (Id., s. 103, post, App. 104). If a vacancy among the auditors occurs during the current year, the shareholders may supply it. (Id., s. 104, post, App. 105). Ordinary meetings for the election of auditors are subject to the same provisions as ordinary meetings for the election of directors. (Id., s. 105, post, App. 105). The directors must deliver to the auditors the half-yearly or other periodical accounts and balance-sheet, fourteen days before the ensuing ordinary meeting at which they are to be produced; (Id., s. 106, post, App. 105); and it is the duty of the auditors to examine them. (Id., s. 107, post, App. 105). Accountants and other persons may be employed by the auditors, and the auditors may make a special report on the accounts, or simply confirm the same. (Id., s. 108, post, App. 105).
4. The registry of shareholders, and
4. By the 8 Vict. c. 16, the capital of the company transfer of shares. directed to be divided into shares, of the prescribed number
and amount, and numbered in arithmetical progression, beginning with number 1. (Id., s. 6, post, App. 87). Such shares are declared to be personal estate, and transmissible as such (c). (Id., s. 7, post, App. 87). Every person who shall have subscribed the prescribed sum or upwards, to the capital of the company, or who shall have otherwise become entitled to a share in the company, and whose name is on the register of shareholders, is to be deemed a shareholder. (Id., s. 8, post, App. 87).
(c) This provision disposes of objections which would otherwise arise on the construction of the Statute of Frauds. Humble v. Mitchell, 11 A. & E. 207. It also prevents a right of dower from attaching to shares.
Buckeridge v. Ingram, 2 Ves. jun. 652.
It seems that railway shares are not within the Statute of Mortmain. Thompson v. Thompson, 1 Collier's Rep. 381.