rises the company to borrow up to £10,000 and a person lends to the company £20,000, he does so at his peril.

But a person dealing with a company is not bound to inquire into the regularity of the company's internal management: in the absence of knowledge to the contrary he is entitled to assume omnia rite acta. If, therefore, the articles of association empower the directors to fix a quorum, whether any and what quorum is fixed is a mere matter of internal management as to which a purchaser for value is not concerned to inquire. Such a purchaser will, therefore, if he takes in good faith, and without notice of irregularity, acquire a good title even though in fact the number of directors by whose authority the contract was made, or the common seal affixed, was less than that prescribed by the resolution of the board (County of Gloucester Bank v. Rudry Co., supra). In that case the directors, having power to determine their quorum, fixed it at three. At a board meeting at which only two directors were present, the seal was authorised to be affixed to a mortgage, and the seal was affixed in the presence of those two directors. It was contended that the deed had not been regularly executed and was, therefore, void. But the House of Lords held that the irregularity was one of internal management and that the execution of the deed was valid. In the course of his judgment Lord Halsbury said: "All the public documents with which an outside person would be acquainted in dealing with the company would only show this, that by some regulation of their own-what Lord Hatherley described as the indoor management --they were capable, if they had thought right, of making any quorum they pleased: and an outside person knowing that, and not knowing the internal regulations, when he found a document sealed with the common seal of the company, and attested and signed by two of the directors and the secretary, was entitled to assume that that was the mode in which the company was authorised to execute an instrument of that description. It turns out that their own internal regulation was that the number of directors should exceed two. But that is a matter which was known to them and to them only. The only external fact with respect to the management of the company of which an

outside person would be cognizant, would be that they had power to make any quorum they pleased, and I think he would be entitled to assume that the proper quorum had been properly summoned and had attended to effect the completion of that instrument.”’

Therefore, where a director of a company purports to do as managing director an act, the doing of which is, under the articles of association, within the power of his codirectors to delegate to him, persons dealing with him in the ordinary course of business may assume that he has the power which he professes to have: they are not bound to inquire whether or no it has in fact been delegated to delegated to him; and they will not be affected by any informality in the delegation of which they had no notice (Biggerstaff v. Rowatt's Wharf, 65 L. J. Ch. 536; (1896), 2 Ch. 93).

And where the articles of association contain provisions as to the appointment of directors and certain persons assume the office of directors without having been properly appointed, the fact of the irregular appointment will not affect persons dealing with the company bona fide and without notice. In Mahoney v. East Holyford Co., supra, persons purporting to act as directors, but improperly appointed, communicated to the bankers of the company an alleged resolution, in accordance with the articles, as to the form in which cheques were to be drawn. The bank acted upon this communication and honoured cheques drawn in the manner described. It was held, in an action by the liquidator to recover the amount of the cheques drawn, that as the bank had dealt bona fide, in a manner authorised by the articles, with persons who were the de facto directors of the company, suffered by the shareholders to occupy that position, it was not liable to refund the money so paid.

Where a company has power to borrow money upon debentures, and a debenture is issued which is regular on the face of it, the holder will not be prejudiced by the fact that the document has been issued irregularly (Duck v. Tower, etc., Co., 50 L. J. K. B. 625; (1901), 2 K. B. 847; and see Channel Collieries Trust v. St. Margarets, etc., Ry., 84 L.J. Ch. 28; (1914), 2 Ch. 506). And where the articles provide that any debenture bearing the common seal

of the company and issued for value shall be binding on the company notwithstanding any irregularity touching the authority of the directors to issue the same, a bona fide holder of a debenture for value is protected though the seal is affixed at a meeting of the directors not properly summoned, or at which an insufficient quorum is present, and although the resolution to issue may have been passed by the vote of a director disqualified from voting (Davies v. Bolton & Co. 63 L. J. 743; (1894), 3 Ch. 678).

The rule has no application in a case where the person dealing with the company has notice of the irregularity (Tyne, etc., Association v. Brown, 74 L. T. 283; Howard v. Patent Ivory Co., 57 L. J. Ch. 878; 38 C. D. 156; and see Transvaal Lands Co. v. New Belgium, etc., Co., 84 L. J. Ch. 94; (1914), 2 Ch. 488). And the company will not be bound by a document where the signatures of the directors have been forged, although the document is in proper form and delivered by the secretary in the ordinary course of his duty (Ruben v. Great Fingall Consolidated, 75 L. J. K. B. 843; (1906), A. C. 439).

"Time to be of Essence of Contract."

Specific Performance.

THE Privy Council decision in Kilmer v. British Colombia Orchard Lands, Ltd. (82 L. J. P. C. 77; (1913) A. C. 319) would appear to be an authority for the statement that specific performance may be decreed where default is made in making a payment provided for within a time specified, if the payment is in the nature of a penalty, notwithstanding that time is declared to be of the essence of the agreement. But the recent decision of the Privy Council in Steedman v. Drinkle ((1916), 114 L. T. 248) makes it clear that such a proposition is erroneous.

"Courts of Equity, which look at the substance as distinguished from the letter of agree ments, no doubt exercise an extensive jurisdiction which enables them to decree specific performance in cases where justice requires it, even though literal terms of stipulations as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement

that it is not to apply, by providing that time is to be of the essence of their bargain. If, indeed, the parties, having originally so provided, have expressly or by implication waived the provision made, the jurisdiction will again attach" (per Lord Haldane).

In the case referred to a purchaser was to pay a balance by certain instalments on specified dates, and in default the vendor was to be at liberty to cancel the agreement and retain as liquidated damages any payment already made. The agreement provided that "time was to be considered as the essence of the agreement." The assignee of the purchaser failed to pay the first instalment, and the vendor cancelled the agreement. Upon an action being brought claiming specific performance on the payment of the sum then due, it was held specific performance could not be decreed as time was made the essence of the agreement, but that as the forfeiture of the money paid was a stipulation in the nature of a penalty, relief therefrom could and should be granted on proper terms.

Interpleader and Partnership
Claims.

Ir is stated in some of the text-books, on the authority of Holmes v. Mentze, 4 Ad. & E. 127, that interpleader proceedings cannot be taken and an issue cannot be granted where the claim is in respect of a partnership. But the Court of Appeal have now decided that that case does not support the proposition, and that interpleader proceedings may be taken in such circumstances (Peake v. Carter (1916), 1 K. B. 652; 114 L. T. 273).

At the time of the decision in Holmes v. Mentze there was, as pointed out by Pickford, L.J., power to seize goods for one partner's debts, and the result of proving a partnership was not that the sheriff was obliged to withdraw, but that he could only seize the partner's interest and not the absolute property in the goods. Since the Partnership Act, 1890, the partnership goods cannot be seized for a partner's debts, and therefore to prove an interest as partner is to prove that the seizure was wrongful as against the claimant, and the sheriff must withdraw. "A proper way of deciding whether the claim to such an interest is well founded is, in my opinion, by inter

pleading proceedings, and I can see no reason in principle or authority why such proceedings do not apply to such a claim " (per Pickford, L.J.).

The present practice is stated by Swinfen Eady, L.J., as follows: "Seeing that the sheriff is no longer entitled to seize in execution the share of a partner in a partnership, if on such a seizure a claim is made that the property is partnership property and this is not disputed, an order should be made at chambers for the sheriff to withdraw. If the execution creditor disputes the partnership with regard to particular chattels, and claims that they are the sole property of the execution debtor, the other partner may maintain the claim of the partnership to the chattels upon an interpleader issue, and such a dispute will be the proper subject of an interpleader. If, on the other hand, the other partner maintains that certain chattels are his own property and do not belong to the partnership, this question does not properly fall to be determined on a sheriff's interpleader, as in neither case would the sheriff be right in seizing them under a judgment against the debtor partner. The dispute should be decided by an inquiry directed under sec. 23, sub-sec. 2, of the Partnership Act, 1890, to ascertain the particulars of the partnership assets and of the debtor's share and interest therein."

Contracts with Companies.

Points to be Considered.

WHEN entering into a contract with a company incorporated under the Companies Acts, the following questions will in many cases arise:

1. Is the company empowered by its memorandum of association, expressly or impliedly, to enter into the transaction? A company can do that which it is expressly authorised to do by its memorandum of association and that which is reasonably incidental thereto, butexcept things authorised by statute-nothing else.

2. If the proposed transaction is covered by general words contained in the memorandum of association, are the powers conferred ancillary and subservient to the primary or main object? If so, the words must be

construed with reference to the primary object and not at large.

3. If the transaction is ultra vires the company it is void ab initio and incapable of ratification. If the transaction is ultra vires the articles, but intra vires the memorandum of association, it may be ratified by the shareholders.

4. The articles of association are subsidiary to and cannot extend the powers contained in the memorandum.

5. Is the transaction illegal, immoral, or contrary to public policy? If so, no power in the memorandum can authorise its being carried into effect.

6. Is the seal of the company requisite? Any contract which, if made between private persons would be by law required to be in writing, signed by the parties to be charged, may be made on behalf of a company in writing signed by any person acting under its authority, expressed or implied. Any contract which if made between private persons would be by law required to be in writing, and under seal, may be made on behalf of the company in writing under the company's common seal (sec. 76 of the Act of 1908).

7. If the seal is requisite, has it been affixed in accordance with the provisions contained in the company's articles of association?

8. Has the company become entitled to commence business? If not, and the company is a public one, the contract is provisional only and does not become binding on the company until it has become so entitled (sec. 87 (3)).

9. Is the name of the company correctly stated? The name is correctly stated although the abbreviation Ltd." is used instead of the complete word "Limited" (Stacey & Co. v. Wallis, 106 L. T. 544).

10. Has the deed been delivered? The affixing of the seal imports delivery, and it is sufficient merely to say: The common seal of the company was affixed hereto in the presence of But a company can execute a deed in escrow, and the affixing of the seal must be done with the intention of passing the property (Derby Canal Co. v. Wilmot, 9 East, 360). But where the seal is affixed, primâ facie, the deed becomes operative (London Freehold, etc., Co. v. Suffield, 66 L. J. Ch. 790; (1897), 2 Ch. 608).

EARLIEST LAW REPORTS.-Recitals in early charters give occasional accounts of lawsuits and decisions even before the Norman Conquest (see Bracton's Note Book, Ed. F. W. Maitland, 1879). But law reports proper do not make their appearance till near the end of the thirteenth century. Between Coke's time and Blackstone's, law reporting was in a precarious condition. "The reports published by various booksellers, without any kind of system, were still commonly posthumous, and seldom properly authenticated, not to say edited. Some of the inferior ones were in such bad repute that judges would not hear them cited. Sir James Alan Park related that when at the bar he was reprimanded by Lord Kenyon for citing Keble (Adams v. Gibney, 6 Bing. at page 664). Modern reporting may be said to begin with Sir John Burrow's reports (1756). From that time we have continuous reports in the Court of King's Bench, and in the other courts, except the Exchequer, which then hardly counted as a superior court, from about twenty years later. Thenceforth for a century, reporting was carried on by private enterprise in each court separately one reporter, or associated set of reporters, was, however, understood to be specially authorised by the judges, and to have an exclusive, or at least prior, claim to the judg ments as settled and revised by them. These 'authorised' reports were generally accurate, but the system was costly and dilatory. A partial remedy was provided by the legal newspapers issuing cheaper and earlier reports of their own, which acquired an independent standing.' In 1863 the Bar appointed a Committee to consider the whole matter, and the result was the establishment of the Council of Law Reporting. Several independent series of reports, of which the oldest are the Law Journal Reports, are still carried on (see Encyclopædia of the Laws of England, Vol. VII., page 325; Lord Lindley's "History of the Law Reports" in Law Quarterly Review, 1, 137).

UNDUE INFLUENCE.-In the case of a daughter who continues, after coming of age, to live under her father's roof, the parental influence almost necessarily continues, and the mere fact that she has for some years been of full age does not put an end to the presumption that she is still acting under that influence. Documents, therefore, which are executed by an unmarried woman living at home should not be too readily accepted without inquiry as to whether she understood what she was doing, and whether father had any say in the matter (London, etc., Discount Co. v. Bilton, 27 T. L. R. 184).

*

ADVICE AS TO INVESTMENTS.-Unless one is a stockbroker, it is never wise to give advice as to investments. If the advice turns out profitable, you will probably receive no thanks; if it turns out otherwise, you will probably receive a writ. It is particularly injudicious for a solicitor to advise as an investment a property which is owned by one of his clients, especially if the person advised happens to be a young unmarried woman. But if the transaction is fully explained to her, the solicitor may escape liability for damages for improper advice when things go wrong (see Stewart v. McLean (1915), S. C. 13-Ct. of Sese).

CREMATION.-Even before the Cremation Act, 1902, it was held, by Stephen, J., that cremation is not illegal (R. v. Price, 12 Q. B. D. 257). Since that decision crematories have been established, and the Act referred to, by implication, authorises the burning of dead bodies. The Act, however, does not affect the fact that there is no property in a corpse. And a direction by will that the testator's body is to be given to a particular person for the purpose of being cremated is inoperative (see Williams v. Williams, 20 C. D. 659; and see Re Dixon (1892), P. 386). The Cremation Regulations provide that it shall not be lawful to cremate human remains of any person who is known to have left a written direction to the contrary.

64

IMMOVABLE.'

"MOVABLE" AND The terms movable and immovable are not technical terms in English law, though they are often used, and conveniently used, in considering questions between English law and foreign systems which differ from that law. But where the two systems are identical, quære, whether the terms are appropriate (per Cozens-Hardy, M.R., in Re Hoyles, 80 L. J. Ch. 274; (1911), 1 Ch. 179). Mortgages on land are deemed to be immovables, and governed, therefore, by the lex rei sitæ (ibid.). And so are leaseholds (Forbes v. Stevens, L. R. 10 Eq. 178; Frek v. Carberry, L. R. 16 Eq. 461; In the Goods of Gentili, Ir. R. 9 Eq. 541).

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