understood; and which indeed could scarcely have worked beneficially, unless coupled with all the other principles which, in the English system of jurisprudence, limited their application and supplied their defects. As we shall afterwards see, the English law never recognised the existence of even a quasi persona in any society other than a proper corporation, but always refused to see anything in a partnership, however large, beyond a mere aggregation of individuals. Nay, soon after the middle of last century, the pressure of this English doctrine began to be felt in the Scotch law of partnership; and since that period it has continued to operate with increased force, until the effects of the old Scottish doctrine of the quasi persona have become greatly weakened, and even entirely eliminated from some departments of partnership law. In other respects also, the English and Scottish systems of partnership law have, since the middle of last century, been gradually approaching each other. This process has gone on silently, and almost unconsciously. English principles have been infiltrated into the Scottish practice, partly through the medium of the appellate jurisdiction, and partly from the habit of quoting English authorities before the tribunals; nor must it be forgotten, that in a large class. of cases presenting questions of novelty, both systems have taken a simultaneous development in the same direction. At the present time, the English and Scottish systems of partnership law, as regards private firms and simple partnerships, may be said to resemble each other so closely, that in many respects they are coincident. But they still differ on some important points, and will often be found attaining the same equitable results by very different media. These variances are sometimes traceable to an original difference in principle, but more frequently to differences in other branches of the respective laws of the two countries, which, as they run into and affect the law of partnership, communicate to it their distinctive colouring. UNINCORPORATED COMPANIES. When, on the cessation of the civil wars, the material resources Origin of unof this country, as well as of England, began to develop themselves, companies. incorporated 6 Geo. I. c. 18. Non-obser vance of its provisions. and the energies of the people were directed to commercial enterprise, many undertakings presented themselves, calculated not less to benefit the public than their promoters. Large capital was required for such undertakings, and this could only be raised by means of associations containing a great number of shareholders. The management of these associations had, in consequence of their very size, to be entrusted, not to their members, but to officers or directors appointed for the purpose. And it soon became evident, that it would greatly conduce to their prosperity, if the members, whose contributions consisted merely of money, should be able to transfer their shares like other marketable commodities. Thus by degrees, as called forth by the exigencies of advancing commerce, the joint-stock company evolved itself out of the private partnership. To associations of this kind the principles of the Roman Societas, or the common law partnership, were applicable only by analogy; yet there is reason to believe, that had it not been for the interference of the Legislature, and the hostility of the tribunals, the common sense of the mercantile community would have established a system of consuetudinary law sufficient for the regulation of jointstock companies in all ordinary cases. This would have been more certainly the result in Scotland, where, as already pointed out, the separate persona of an ordinary partnership was distinctly recognised. But towards the beginning of the last century a spirit of reckless speculation began to manifest itself in England, giving birth to a number of futile, and, as it proved, ruinous projects; and among others, to the celebrated South Sea scheme. The monetary embarrassment and wide-spread misery which this baseless undertaking produced, led to the enactment of 6 Geo. I. c. 18, commonly known as the Bubble Act. This statute, on the recital, that whereas in many cases undertakers or subscribers have presumed to act as if they were corporate bodies, and have pretended to make their shares transferable or assignable without legal authority either by Act of Parliament or charter from the Crown for so doing,' enacts that all such undertakings and attempts shall be deemed 'illegal' and 'void,' and put down as 'common and public nuisances.' If this enactment had been rigorously carried out, the existence of joint-stock companies, otherwise than by charter or statute, would have been impossible. But as soon as the losses and panic caused by the South Sea scheme and its accompanying bubbles began to fade from the public mind, it became evident that the Legislature had gone too far in its well-meant endeavours to check unprincipled speculation; and, accordingly, it would seem that, notwithstanding the Bubble Act, joint-stock companies, after a temporary check, went on increasing both in number and importance. In Scotland it does not appear that the Bubble Act ever received much attention (a); for in the preamble to the 6 Geo. IV. c. 131 (1825), it is stated that the practice had prevailed in Scotland of instituting societies having joint stocks, with shares either transferable or conditionally transferable for the purpose of carrying on banking and other commercial concerns, many of which had transacted business for a number of years to the advantage of that country." The Bubble Act was virtually repealed by the 6 Geo. IV. c. 91. But the consequences of hasty legislation were not the only difficulties with which the joint-stock company principle had to struggle. In England, the tribunals both of law and equity appear to have been hostile to the very existence of such associations from their first appearance. The English law of partnership, as not recognising the persona of the firm, was at the outset a very. unpromising stock on which to engraft the requirements of the joint-stock company; but there is reason to believe that the courts greatly intensified the evils of the existing law beyond what would have resulted from the most judaical interpretation. By a rigorous, and one should say a senseless application of the principle, that a company, however large, was a mere aggregation of individuals, the courts of equity as well as of law refused all action to companies against their members, and to all members against their companies; and indeed refused to interfere in any circumstances, except on condition that the concern should be wound up. This state of matters called loudly for legislative interference; and hence the origin of the Registration Acts, which were introduced into England long before it was deemed necessary to extend their operation to this part of the kingdom. (a) The only case in which it seems to have been referred to was that of the Masons of the Lodge of Lanark v. Hamilton, etc., 1730, M. 14554. But here the judgment seems to have pro- Hostility of the tribunals in England. Effect of this in Scotland. In Scotland, the law of private partnership, inasmuch as it recognised the separate person of the firm, formed a much more favourable point of departure for the joint-stock company; and our Scottish tribunals, instead of being opposed to such associations, were apparently inclined to foster their interests, by giving as elastic an interpretation as possible to the law of partnership. Yet, as already mentioned, the pressure of English notions appears to have arrested the natural development of the Scottish principles of 'Society; and to have banished from our legal system all traces of the Société en commandite, which seems at an early period to have been finding its way into Scotland. Still, though the law of Scotland in relation to the unincorporated joint-stock company has not received due development, in consequence of external pressure and the want of a more extended commerce, its principles, even as they now exist, appear to be fundamentally sounder than those adopted in English law. Indeed, so satisfactorily did the Scottish law of joint-stock companies work before the introduction of the Registration Acts, that except for the purpose of attaining limited liability, and more precision in management, the want of such enactments was scarcely felt; while in England the evils of the existing system had become so intolerable, that legislative interference was altogether indispensable (a). Origin of incorporated companies. COMPANIES INCORPORATED BY ACT OF PARLIAMENT, ROYAL From a very early period in the history of Great Britain, the Crown had been in use, by an exercise of prerogative, to erect corporations with the usual privileges of perpetual succession, power of acting and transacting in the corporate name like a natural person, and with authority to make bye-laws to bind their own members. Limitation of liability to the funds of the company was also a necessary consequence of incorporation (b). When, therefore, at a later period, commercial undertakings were projected of a nature requiring greater privileges than the mere joint-stock company as existing at common law could furnish, recourse was had to incor(a) See Report of Mercantile Law Commission, 1854-5. (b) See Chapter on Chartered Companies. poration by royal charter; and many undertakings of the utmost benefit to the country have been carried out in this manner. If, again, as was often the case in later times, the projected schemes required to possess special and aggressive powers in addition to the privileges of incorporation, they were formed under a special Act of Parliament. But the great expense and ruinous delay which attended the obtaining of royal charter or special Act came to be severely felt, as the advancing prosperity of the country multiplied the number of undertakings requiring their aid, and led to the abandonment of many that would have been highly beneficial to the public and their projectors. These considerations, and the undeniable benefits which the joint-stock principle, cramped and fettered as it was by the existing state of the law, had conferred on the country, seem gradually to have liberated the Legislature from the ancient prejudices against its free operation, even though they still lingered in the tribunals. Acts. This change of sentiment was evinced by certain enactments Letters Patent known as the 'Letters Patent Acts,' which may be characterized as a compromise between the old notions and the new, seeking to derive as much benefit as possible from the joint-stock principle, at the least possible concession of the privileges peculiar to corporations. The first of these enactments, 6 Geo. IV. c. 91, which virtually 6 Geo. IV. c. 91. repealed the Bubble Act, empowered the Crown, when it should see fit, to incorporate companies by charter, without at the same time conferring on them the privilege of limited liability. As was foreseen by all practical men, this enactment failed to meet the exigencies of the case. The difficulty and expense of obtaining charters of incorporation placed them beyond the reach of ordinary companies; and as to such larger associations as could afford to surmount these obstacles, the privilege of limited liability was precisely that of which they were most desirous, and without which mere incorporation was of little importance. c. 94. In 1834, the evils of the existing system again forced themselves 4 & 5 Will. iv. on the attention of the Legislature, and the Act of 4 and 5 Will. IV. c. 94 was passed. This enactment rendered it competent for the Crown to confer on any joint-stock company, by letters patent, any privilege or privileges which, according to the rules of the common law, it would be competent to his Majesty to grant to such |