balance-sheets, and reports of the directors, auditors, and (if any) of the actuary, to compel the production of any book, paper, deed, or document belonging to the society, and, generally, to control the board of directors, to authorize any act for which the sanction of a general meeting is hereby made requisite, and to discuss, and, subject to the following clause and the provisions of these presents, to determine upon any question, matter, or thing relating to the affairs of the society which shall arise in the course of the conduct or management thereof, and shall be brought before such meeting by any shareholder whatsoever: Provided that every shareholder shall be at liberty to submit to a general meeting any motion not relating to the business for which such general meeting shall have been convened, upon [732] giving fourteen days' previous notice in writing of such motion to the manager, and also, if such motion should relate to the removal of any director, manager, auditor, trustee, or other officer or servant of the society, upon sending a written notice of such motion to every shareholder, seven days at least before the day appointed for holding such meeting.

12. "That it shall be competent for any extraordinary general meeting, and no other, and such meeting, and no other, is hereby impowered, by a majority which shall consist of at least two thirds in number of the shareholders of the society for the time being, or of the holders of policies of the society for life and for not less than 5001. each on the participating scale (and on which two annual premiums at the least shall have been then paid), and also of two thirds in number of the shareholders and the said qualified holders of policies present personally or by proxy at the meeting, and which shareholders shall hold together at least two thirds of the shares in the said capital stock of the society which for the time being may have been subscribed for, by any resolution or resolutions to increase at any one time, or from time to time, the capital stock of the society, and for that purpose to create a sufficient number of new or additional shares of the same amount per share as the said present shares of 11. each, as to such meeting shall seem fit; provided that such addition or additions to the capital of the society do not exceed in the whole the sum of 990,000l., and to make all other changes and do all other acts consequent thereon or incidental or necessary thereto; and also to impower and require the directors to borrow and take up on mortgage of the said estate or chattels real belonging to the society, or on such other securities as to such meeting may seem fit, any sum or sums of money which such meeting shall deem expedient, and which the directors for the time being are not authorized to raise [733] under the power in that behalf hereinafter contained, not exceeding in the whole the sum of 50,0001. Provided always that no general meeting, ordinary or extraordinary, shall have power so to affect or alter the rateable division of the profits and liability to the losses of the society, as between the shareholders, as to render the shareholders entitled to such profits or liable to such losses otherwise than in proportion to the amount and number of the respective shares held or subscribed for by them in the capital stock of the society, or to affect or alter the provisions hereof for the indemnity of the officers or the dissolution of the society.

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20. "That a common seal shall be provided for the society, bearing such device as the directors shall think proper; but the name of the society shall be inscribed thereon; and the directors shall have power to break and alter the same, and to provide another seal in place thereof and such seal shall be kept in some secure place selected by the directors: and such common seal shall not be affixed to any policies or other documents of the society, except by the order of three directors, signed by them, and countersigned by the manager, or, in his absence, by such officer as the directors shall appoint."

The 27th clause provided that it should be lawful for the directors of the said society to effect insurances on lives and survivorships, to sell out and purchase reversions and annuities, and to grant endowments for children, and generally to effect all such other insurances, whether life, guardian, guarantee, or otherwise, upon such terms and conditions, and in such manner, as the directors should think proper.

28. "That every policy, endowment, grant of annuity, or other instrument required in any of the transactions aforesaid, shall be given under the hands of not less than three of the directors, and be sealed with the common seal of the society; and that there [734] shall be contained therein, and in every other contract to be entered into on behalf of the society in or about the premises, a reference to these presents, and a proviso limiting the scope and effect of the contract thereby created, so that the same shall take effect and be satisfied only out of such funds and property of the society as under the

provisions hereinafter contained shall at the time at which such liability shall accrue be at the disposal of the directors in that behalf, and negativing an unconditional liability: Provided always that nothing herein or in such contract contained shall limit the liability of any shareholder as to the performance of such contract, or prejudice the rights of any person or persons against any shareholder under or by virtue of the aforesaid statute.

35. "That the directors shall also have full power and authority on behalf of the society to receive and (with the consent of an extraordinary general meeting in the manner herein before provided) to borrow on mortgage or otherwise, and also (at their own absolute discretion), and in the usual and ordinary course of the business of the society, to invest, lay out, or advance at interest, on government securities, or on such personal or other security as they shall think fit and advantageous and they lawfully may, such moneys, or such parts of the moneys and funds of the said society as they shall think expedient."

The following entry appears in a book used by the promoters of the company prior to its formation, viz.

"At an extraordinary general meeting of the shareholders of the Athenæum LifeAssurance Society, held at the company's office on the 16th day of May, 1851,

"The Rev. J. Bartlett in the chair.

"Resolved, 1. That the capital stock of this company be increased from 10,0001. to 100,0001.

"Resolved, 2. That 1400 shares be awarded to the original promoters of the society. [735] "Resolved, 3. That the appointment of Henry Sutton, Esq., as manager, and John Carrington Jones, Esq., as secretary to the company, be confirmed as settled by the board of directors on the 19th day of April, 1851.

"Resolved, 4. That the directors be hereby impowered to borrow any sum or sums of money not exceeding in amount the present increased capital of the company, on debenture under the common seal, or on such other security as to such directors shall seem fit.

"Resolved, 5. That a vote of thanks be given to the Rev. J. Bartlett, for his conduct in the chair. "J. BARTLETT, chairman."

The said entry is in the handwriting of, and signed by, Mr. Bartlett. There is no entry of such meeting, or of any other meeting authorizing the borrowing of money, in the registry-book of the general meetings of the shareholders, or in any other book; and it is alleged by the defendants that no meeting at which any authority was given to the directors to borrow money was in fact held: and, in support of that contention, they rely on the statement of Mr. William Shambrook Whitehead, who states as follows,-"That he was the principal cashier, and a shareholder of the company, from the time of the formation of the company, and so continued until its dissolution; and that he was in the habit of attending the general meetings of the company; and that, to his belief, during that period, no meeting of shareholders was held at which any authority was given to the directors to borrow money on debentures or otherwise; and that, to his belief, no meeting of the shareholders was held on the 16th of May, 1851."

The following persons appear to have executed the deed of settlement of the Athenæum Life-Assurance Society previously to the 16th day of May, 1851, at the dates, and for the number of shares, set opposite to their respective names, viz.

[737] The above shareholders, on the said 16th of May, held 3025 shares in the said company.

The first policy granted by the said society bears date the 8th of July, 1851, and was effected by John Syer Bristowe, junior, for the sum of 10001.

The said William Shambrook Whitehead, James Ashplant, John Rees Croker, and John Baldwin Buckstone did not attend the said alleged meeting, nor was any notice of the said alleged meeting given to them. It is not known, and has not been ascertained, that notice of the said meeting was ever advertised in any London newspaper, although the following newspapers have been searched from the 1st to the 9th of May, 1851, viz. the Times, the Daily News, the Morning Advertiser, the Morning Post, the Morning Chronicle, the Morning Herald, the Sun, the Globe, the Standard, the Weekly Dispatch, the Era, the Observer, Lloyd's Weekly Newspaper, the Weekly Times, the Sunday Times, being the principal daily morning and evening papers and the weekly papers published in May, 1851; and no advertisement or notice of any kind whatever relating to the Athenæum Life-Assurance Company can be found in any of the aforesaid papers between the said 1st and 9th of May, 1851.

The defendants contend, that, from the facts above stated, it must be taken that the plaintiffs had constructive notice of the circumstances stated in the case with reference to the authority of the directors to borrow money: and the court was to be at liberty to draw any inference of fact which a jury might have done.

A copy of the deed of the society was to form part of the case.

The questions for the opinion of the court were,-First, whether the said Athenæum Life-Assurance Society were not estopped by the recitals of the said debentures from denying that the money was in fact [738] borrowed, and the covenants entered into, by virtue and in pursuance of the powers contained in the deed of settlement of the said society, and by the direction and consent of more than two thirds of the shareholders of the said company present at a meeting convened for that purpose,-Secondly, whether, subject as aforesaid, the facts in evidence constituted any defence to the action.

If the court was of opinion, that, under the circumstances, the plaintiffs were entitled to recover, judgment was to be entered for the plaintiffs, with costs of suit. If not, judgment was to be entered for the defendants, with costs of suit.

Bovill, Q. C. (with whom was Norman), for the plaintiffs (a). The plaintiffs rely (a) The points marked for argument on the part of the plaintiffs were,"That the society is estopped from alleging that the debentures on which the

Attesting witness.

upon an instrument under the common seal of the company, and signed by two [739] directors. It is submitted that that is sufficient under the statute, and that the defendants are estopped from denying that that instrument was duly issued by virtue of their deed of settlement, and by the direction and consent of more than two thirds of the shareholders present at a meeting convened for the purpose. These provisions are directory only, and immaterial as regards the public and persons dealing with the company. By the 7 & 8 Vict. c. 110, s. 7, before obtaining a certificate of complete registration, there must be a deed of settlement in the form prescribed in Schedule A., which is to contain, amongst other things, a provision "for ensuring the safe custody of the seal of the company, and for regulating the authority under which it is to be used." That has been complied with here; for, the 20th clause of the deed of settlement directs "that a common seal shall be provided for the said society, and such common seal shall not be affixed to any policies or other documents of the said society except by the order of three directors, signed by them, and countersigned by the manager:" and the case finds that there was such an order. The 44th and 46th sections of the act contain provisions for the regulation of contracts by joint-stock companies. The 44th section, "for the purpose of regulating contracts entered into on behalf of any joint-stock company completely registered under this act (except contracts for the purchase of any article the payment [740] or consideration for which doth not exceed the sum of 501., or for any service the period of which doth not exceed six months and the consideration for which doth not exceed 501., and except bills of exchange and promissory notes)," enacts "that every such contract shall be in writing, and signed by two at least of the directors of the company on whose behalf the same shall be entered into, and shall be sealed with the common seal thereof, or signed by some officer of the company on its behalf, to be thereunto expressly authorized by some minute or resolution of the board of directors applying to the particular case; and that, in the absence of such requisites, or of any of them, any such contract shall be void and ineffectual (except as against the company on whose behalf the same shall have been made); and that every such contract for the purchase of any article the consideration of which doth not exceed the sum of 501., or for any services the period of which doth not exceed six months and the consideration for which doth not exceed 501., entered into on behalf of any joint-stock company completely registered under this act, may be entered into by any officer authorized by a general bye-law in that behalf; and that every such contract, whether under seal or not, shall immediately after the same shall have been entered into be reported to the secretary or other appointed officer of the company on whose behalf the same shall have been entered into, who shall enter the same in proper books to be kept for action is brought were not duly issued by virtue of the deed of settlement of the society, and by the direction and consent of more than two thirds of the shareholders of the company present at a meeting convened for the purpose.

"That the court cannot infer as a fact from the circumstances stated in the special case that such meeting was not held.

"That, whether such meeting was held or not, inasmuch as the plaintiffs advanced the money in good faith, and without notice that such meeting had not been held, and inasmuch as the money was in fact actually paid to and received by the society, any irregularity in the holding of the supposed meeting cannot be set up as an answer to the claim of the plaintiffs in this action.

"That the clauses of the deed relied upon by the defendants may be binding on the directors and shareholders of the company; so that, if the directors have acted in excess of the powers therein conferred upon them, such excess of authority may have been a breach of trust on the part of the directors, but cannot affect the rights of persons dealing with the company in ignorance of such breach of trust

"That the deed gives powers to the directors and to general meetings to borrow money and to grant annuities other than such powers as are given by the 12th clause of the deed.

"That the several clauses of the deed relied on by the defendants are either simply directory or impowering, and not restraining clauses.

"That the plaintiffs are not bound to inquire into the regularity of the issuing of the said debentures, and whether the said loan and debentures had been authorized or not by the said directors or by the society."

that purpose; and that, if any such contract be not so reported and entered, then the officer by whose default such contract shall not be so reported or entered, shall be liable to repay to the company on whose behalf such contract may be made, the amount of the consideration to be paid by or on behalf of such company in respect of such contract." That section has been complied with here. The 45th [741] section applies to bills and notes by the company. And s. 46 enacts "that all deeds and instruments bearing the seal of the company shall be signed by two at the least of the directors of the company." The 28th clause of the deed of settlement in this case provides "that any policy, endowment, grant of annuity, or other instrument required in any of the transactions aforesaid, shall be given under the hands of not less than three of the directors, and sealed with the common seal of the society," &c. Now, if the statute had required the signatures of three directors, the omission to comply with that direction would not have rendered the transaction void: Cole v. Green, 6 M. & G. 872, 7 Scott, N. R. 682. The doctrine laid down by Lord Wensleydale, in Ernest v. Nicholls, 6 House of Lord Cases, 401, 419, which will probably be relied on by the other side, has been much discussed, and is not quite in accordance with the doctrine of this court in Smith v. The Hull Glass Company, 11 C. B. 897. Under the 91st section of the Companies Clauses Consolidation Act, 1845 (8 & 9 Vict. c. 16), the determination as to the remuneration of the secretary of a company is to be exercised only at a general meeting; but, in Bill v. The Darenth Valley Railway Company, 1 Hurlst. & N. 305, it was held that it is no answer to an action by a secretary for his salary, that no determination as to such salary had ever been exercised at any general meeting of the company. "These acts of parliament," says Bramwell, B., are construed as if they were partnership deeds. To violate them may be a breach of trust as between the directors and the shareholders; but acts not done according to them may bind the company. If the directors, without such authority, have agreed to give the plaintiff 5001. a year, they may be guilty of a breach of trust, but that is all" The next question is, whether the defendants are not estopped from saying that there was no such meeting [742] duly held according to the statute and the deed of settlement. This point, it is submitted, is settled by the case of The Royal British Bank v. Turquand, 5 Ellis & B. 248, affirmed on error, 6 Ellis & B. 327. There, the plaintiffs declared against the defendants, a joint-stock company completely registered under the 7 & 8 Vict. c. 110, on a bond, signed by two directors, under the seal of the company, whereby the company acknowledged themselves to be bound to the plaintiff in 20001. The plea set out the condition, which appeared to be for securing to the plaintiffs, who were bankers, such sum as the company should, to the amount of 10001., owe to the plaintiff on the balance of the account current, from time to time, and for indemnifying the plaintiff to that amount from losses incurred by reason of the account between the plaintiff and the defendant: the plea further set out clauses of the registered deed of settlement, by which it appeared that the directors were authorized, under certain circumstances, to give bills, notes, bonds, or mortgages; and one clause provided that the directors might borrow on bond such sums as should from time to time, by a general resolution of the company, be authorized to be borrowed: the plea then averred that there had been no such resolution authorizing the making of the bond. The replication set out the deed of settlement further, by which it appeared that the company was formed for the purpose of carrying on mining operations and forming a railway it also set out a general resolution, which, as suggested, authorized the making of the bond. On demurrers to the plea and replication, the court of Queen's Bench held, that the plaintiff was entitled to judgment, the defendants admitting on the record that the bond was the deed of the company, and no illegality appearing,-the opening such an account with a bank being presumably within the authority of [743] the directors and for the benefit of the company,-and it not being shewn that the obligee knew of any excess of authority, if there was any, or of any prejudice done to the shareholders, and no such prejudice being shewn in fact: and this whether or not the resolution set out in the replication authorized the making of the bond. Lord Campbell, in delivering the judgment of the court below, says: 'A mere excess of authority by the directors, we think, of itself would not amount to a defence. The bond being under the seal of the company, the gist of the defence must be illegality. If the directors had exceeded their authority, to the prejudice of the shareholders, by executing the bond, and this had been known to the obligees, illegality, we think, would have been shewn.

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