688 CHAPTER VII. ON THE LIABILITY OF PROMOTERS AND PROVISIONAL COM MITTEE-MEN TO BE SUED FOR PRELIMINARY EXPENSES. THE extent of the liabilities incurred by persons who permit their names to be advertised as promoters or provisional Committee-men of Railway Companies, which fail to obtain special acts, has been much discussed of late in the courts of law, and upon facts which presented every possible state of circumstances which ingenuity could suggest, for the purpose of establishing the legal obligation to pay the debts incurred in the prosecution of the undertakings. In some cases the defendants were shewn to be the avowed acting managers of the Company, constantly attending at meetings, and giving personal directions to forward the progress of the intended scheme. In such cases as these, the liability of the parties to pay all debts incurred was clearly established. In other cases the proof depended upon evidence of a less decided character. In some instances it was only shewn that the defendant had consented to be placed on the Provisional Committee,—sometimes with the additional fact that he had signed a consent to act as a promoter or provisional committee-man for the purposes of registration (a). In other cases evidence was given to shew that the party charged had not only been thus placed on the Committee, but that he had also applied for shares in the undertaking,—had attended meetings,-or expressed an interest in the success of the undertaking. In (a) See 7 & 8 Vict. c. 110, s. 4, post, Appendix, 40. other cases the mere circumstance that prospectuses circulated with the knowledge of defendants, containing their names as provisional directors or committee-men, formed the principal ground on which the liability of the defendants rested. Other cases were still more complicated, by reason of the existence of a managing committee, as distinguished from the provisional committee or list of promoters. Much discussion ensued at Nisi Prius as to the proper directions which ought to be given to the jury by the judge, when cases of this description were submitted to them, and many conflicting decisions were arrived at, although the current of the decisions set strongly against the defendants. It seems, however, now to be established, that the mere agreement to become the promoter or provisional committee-man of a railway company, does not of itself necessarily render the party liable to be sued for the debts incurred in forwarding the progress of the undertaking: inasmuch as no partnership, or quasi partnership, exists in such a case. And it seems further, that the liability or nonliability of promoters or committee-men, must, in all cases, be determined by the ordinary rules of law which affect the relation of principal and agent. This doctrine has been clearly laid down in the late cases of Reynell v. Lewis and Wyld v. Hopkins, by the Court of Exchequer (a), in a well considered and elaborate judgment. It is unnecessary to say that this is a very important decision; because, if the plaintiffs had succeeded in establishing as a proposition of law, that a party, who consented to become a promoter or (a) See these cases, post, 697. The judgment was delivered on the 25th November, 1846, and since that period bills of exceptions have been tendered at Nisi Prius, to the summing up of several of the judges, in Y Y cases where the liabilities of provi- Provisional Committee-men are not Partners or quasi Partners. Provisional Committee-men are not Partners or quasi Partners. provisional committee-man, thereby became a partner in the undertaking, the usual consequences attending partnership would have resulted, and such parties would be liable for all debts and engagements incurred in the prosecution of the proposed undertaking (). The result appears to be, that in all cases the question is one of fact, which must be submitted to the jury (c),—i. e., did the defendant himself enter into the contract, or did he authorise the acting com (b) If a promoter of a scheme attends the preliminary meeting held for the purpose of establishing a company, he may become liable to pay for work performed in furtherance of the scheme, as for printing prospectuses, or the like, although he may never subsequently actually become a member in the proposed company, so as to be made liable for all the debts incurred by the parties, who afterwards endeavoured to accomplish the objects for which it was intended to form the company: Lake v. The Duke of Argyll, 6 Q. B. 477. See, also, Wood v. The Duke of Argyll, 6 Man. & G. 928. Where an agent, employed in endeavouring to carry a bill through Parliament for making a railway, sued the chairman of a committee of subscribers to the undertaking, in an action at law, for his expences incurred as such agent; and it appeared that the plaintiff was a subscriber to the undertaking, it was held that he was not entitled to recover: Holmes v. Higgins, 1 Barn. & C. 74; 2 Dowl. & R. 196. Nor will an action lie by the secretary of a projected railway company who is one of the registered promoters of it, against the provisional committee by whom he was appointed secretary, for his salary as such secretary, unless it be shewn that the defendants have contracted with him in their indivi dual capacity, and not as projectors of the company: Wilson v. Lord Curzon, 11 Jur. 47: and see the remarks made on this case, 11 Jur. 17. And a person performing work or services for a company, cannot escape from this disability to sue the company, by holding shares therein in the name of another person who is the ostensible partner: Goddard v. Hodges, 1 Cr. & Mee. 33. But if a shareholder in an undertaking lends money to another shareholder on his personal security, he may recover it, although he may know that it is required for the purposes of the undertaking: Colley v. Smith, 2 Moo. & Rob. 96; Fox v. Frith, 10 M. & W. 131; Lanyon v. Davey, 11 M. & W. 222. (c) This course has been adopted by Lord Denman, C. J., since the decision in the Exchequer, in cases where the only evidence to affect the defendant consisted of proof that he had consented to become, and had, with his knowledge, been advertised as, a member of the committee: Alley v. Gain, 8 Law Times, 216. Other judges have nonsuited plaintiffs under similar circumstances. In a recent work, which contains some very ju dicious remarks upon the liabilities of members of railway companies, the Provisional Committee-men are not Partners or mittee, or solicitor, or secretary of the company, (as the case may be), who actually incurred the debt or liability, quasi Partners. to contract on his behalf and as his agent?-if the jury decide in the affirmative the defendant is liable; otherwise not. It is not necessary here to treat with greater particularity on this subject, as it would involve a treatise on the law of Principal and Agent. Moreover, it may with truth be affirmed, that until the bills of exceptions, already alluded to (d), are finally disposed of, it would only be likely to mislead to lay down the law respecting the liabilities of promoters and provisional committee-men, with too much confidence. It will be sufficient to insert the facts and judgments in the cases already mentioned (e), and to refer the learned reader to the reports of the arguments of the counsel, which contain all the authorities bearing upon the question under discussion (f). It may here be stated, that provisional committee-men, promoters, and others, who are sued for debts due from an unincorporated railway Company, are entitled to plead in abatement the non-joinder of any persons as co-defendants. : following observations are made :- become one of law merely, and the (d) Ante, 689, n. (a); 690, n. (c). (e) See post, 697. Pleas in abate ment by provi sional committee men. by Provisional Committee-men. Pleas in abatement On this subject the statute 3 & 4 Will. 4, c. 42, s. 8, enacts, that no plea in abatement for such non-joinder shall be allowed, "unless it shall be stated in such plea that such person is resident within the jurisdiction of the Court, and unless the place of residence of such person shall be stated with convenient certainty, and an affidavit verifying such plea;” and, by section 10 of the same statute, it is enacted, "that in all cases in which after such plea in abatement the plaintiff shall, without having proceeded to trial upon an issue thereon, commence another action against the defendant or defendants, in the action in which such plea in abatement shall have been pleaded, and the person or persons named in such plea in abatement as joint contractors, if it shall appear by the pleadings in such subsequent action, or on the evidence at the trial thereof, that all the original defendants are liable, but that one or more of the persons named in such plea in abatement, or any subsequent plea in abatement, are not liable as a contracting party or parties, the plaintiff shall nevertheless be entitled to judgment, or to a verdict and judgment, as the case may be, against the other defendant or defendants who shall appear to be liable; and every defendant who is not so liable shall have judg ment, and shall be entitled to his costs as against the plaintiff, who shall be allowed the same, as costs in the cause, against the defendant or defendants who shall have so pleaded in abatement the non-joinder of such person: provided that any such defendant, who shall have so pleaded in abatement, shall be at liberty on the trial to adduce evidence of the liability of the defendants named by him in such plea in abatement." In many cases it is however extremely difficult for a defendant to avail himself of this plea, however unreasonable it may seem to be, that he should be singled out and made liable to pay a large demand incurred by a railway |
