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Form 194. same were so paid. Let the deft. co. and P. &c. and M. T., the exix. of the late T., within 1 month after the date of the chief clerk's certe. pay to the plt. the amount certified to be due to him upon the balance of the said accounts. Defts. to pay plt.'s costs of suit. And in case deft. M. T. shall not admit assets of late deft. T. deceased, for the purpose of this decree [account of personal estate to be taken]. And let plt. be at liberty to prove under the winding up of co. for what shall be certified to be due to him from deft. co. upon the balance of said account, and also for such costs as aforesaid, and to apply at chambers as to any such costs. Notice of decree to be given to registrar. Lib. to apply. Kent v. Freehold Land Co., Wood, V.-C., 3 Aug. 1867. A. 2239, 5 Eq. 588: 3 Ch. 493.

Form 195 Judgment setting aside

In the above case the bill was not filed until after the presentation of a windingup petition, upon which an order was subsequently made, and accordingly on appeal, following Oakes v. Turquand, L. R. 2 H. L. 325, the bill was dismissed on the ground that it was filed too late, but the order was to be without prejudice to any claim by the plaintiff against the directors in some other proceeding. See supra, p. 170.

Declare that the sale to the plt. co. of the concession of 8 May, 1869, in the pleadings mentioned was fraudulent, and ought to be set aside, and order and decree the same accordingly. Declare that H. and the sale of conces estates in liquidation and sequestration of the defts. B. and P. L. & Son

sion and

ordering repayment.

as a co., and C. L., &c., the only partners of the said co. as individuals in the pleadings mentioned, are jointly and severally liable to make good to the plt. co. the sum of 65,000l. so paid for the purchase of the said concession, together with interest thereon at the rate of 4 p. c. p. a. from 31 May, 1871, and the costs of this suit. Declare that the defts. E. & K. are jointly and severally liable to make good to the plt. co. the said purchase money to the extent of 15,0007. improperly paid to the said defts. as in the pleadings mentioned together with interest on the said sum of 15,000l. at rate aforesaid from 31 May, 1871, and the costs of this suit. And deft. H. not electing to take an account of the profits (if any) made by the plt. co. from the working of the Island of A. V. since 31 May, 1871; Let deft. H. on or before 1 June, 1876, pay to the plt. co. 65,000l., together with interest at 4 p. c. p. a. from 31 May, '71, to the time of payment. Liberty for co. to prove against estates of the deft. B. under the liquidation proceedings initiated by him, and also under the sequestrated estates of P. L. & Son as a co., and C. L. &c. as individuals, for the said 65,000l. and interest at 4 p. c. p. a. from 31 May, 1871, up to the dates of the liquidation and sequestration respectively, and for the costs of this suit. And let defts. E. and K. on or before 1 June, 1876, pay to the plt. co. sd. sum of 15,000l. with interest, &c., to the day of payment. Declare that the persons paying the said 65,000l. and interest and plt.'s costs of suit as aforesaid shall be entitled to the benefit of the letters patent granted, &c., and of the document or concession, &c. And plt. co. shall at the expense of such

persons paying as aforesaid deal with said letters patent and concession Form 195.
as said persons shall reasonably require, or in case of difference as the
Court shall direct. And declare that any sum which shall be paid to
the plt. co. by the defts. E. and K. or either of them on account of the
15,0007. and interest shall be taken in satisfaction pro tanto of the
65,000l. and interest payable by the deft. H., and provable, &c., and
that any sum or sums over and above 50,000l. with interest, &c., which
shall be paid to plt. co. by deft. H., and the estates of, &c., shall be taken
Defts. to pay costs

in satisfaction pro tanto of the 15,000l. and interest.
of suit. Dismiss bill as against L. without costs. And plt. co. having
arranged to pay the deft. R. 1501. for the costs of suit bill, dismiss bill as
against him. Liberty to apply. Phosphate Sewage Co. v. Hartmont,
Malins, V.-C., 22 Mar., 1876. B. 481.

In the above case, the promoters had formed the company and sold to it a concession which they knew was voidable; the real ownership was concealed ; the persons who agreed to buy on the company's behalf received a secret bonus of 15,000.; the directors were nominees of the promoters, and the prospectus contained serious misrepresentations. Upon discovery of the facts, a bill was filed by the company against the promoters, including the owners of the concession, the members of a provisional committee, the solicitors, secretary, and others, and a decree was made as above. The decree was affirmed on appeal. See report in 5 C. Div. 394.

In the New Sombrero Phosphate Co v. Erlanger, 5 C. Div. 73; 3 App. Cas. 1218, the promoters sold a property to the company without disclosing the fact that they were getting double what they had paid, and without disclosing the real ownership; the directors were nominees of the promoters, and the prospectus contained misrepresentations. Upon discovering the facts a bill was filed, and on appeal a decree was made as below mentioned. An appeal to the House of Lords was dismissed with costs.

The decree of the Court of Appeal declared that the contract ought to be set aside, and decreed the same; declared that the defts. were liable to repay the purchase money, and were liable for the shares issued in part payment; ordered them to pay the purchase money with interest; gave liberty to prove for amount against estates of bankrupt defts.; directed inquiries as to which of the shares still belonged to defts., and of proceeds of sale of those sold; directed a transfer of the former, and payment of such proceeds; gave liberty to prove against estates of bankrupt defts. for such proceeds; declared that co. entitled to be paid the purchase money and said proceeds out of estate of deccased deft.; declared defts. and estates of bankrupt and deceased liable for costs of suit, and directed payment, &c.; directed account of profits, if any, made by co. in working the island; ordered co. upon payment of the purchase money, &c., to deliver up island, and pay over such profits, if any; directed inquiries as to estate of deceased deft.; adjourned further conson.: dismissed bill with costs as against D. & W. Seton, 1358, where the decree will be found more fully set out.

Upon motion, &c., for defts., &c., And the applicants by their counsel Form 196 undertaking before 9 June, 1877, to pay into Court 50,658., and also Stay of prowithin 14 days from date of this order to deposit with chairman of plt. ceedings pending appeal. co. the certificates of 4816 shares now in their names and the bonus warrants in respect thereof, and if required by the plts. to transfer these shares into joint names of chairman and B., such shares not to be dealt

Form 196. with until decision of appeal by House of Lords: Let the applicants E., &c., on or before 9 June, 1877, pay into Court to the credit of this cause "New Sombrero, &c., The stay of Proceedings Account," 50,6587., and let the sum when paid in be placed on deposit: And let the accounts directed by the order of 26 Feb., 1877, except the accounts and inquiries directed in respect of V.'s estate, be proceeded with: And the costs directed by the said order to be taxed and paid are to be taxed and paid as directed by the said order, the plts. by their counsel undertaking to repay the same if repayment of costs is ordered.

And in other respects let all proceedings under the said order be stayed pending the appeal of the applicants to the House of Lords: And applicants to pay costs of application, and consequent thereon to be taxed, &c. New Sombrero Phosphate Co. v. Erlanger, Ct. of App., 9 May, 1877. B. 1349.

Form 197.

Sale of mines set aside.

This cause coming on for trial, &c., order by consent that the sale of the mines in the bill mentioned to the plt. co. be set aside, and that the co.'s interest in the same mines with all the plant, machinery, and effects in or about the same, subject to the mortgage thereof in the bill men tioned, be conveyed to the deft. S. at his expense forthwith after payment by him of the 4,7507. hereinafter mentioned. And let the deft. S. surrender to the plt. co. 900 fully paid up shares in the co., issued to him as part of the purchase money of the mines in the bill mentioned, or indemnify the co. against all claims in respect of any such shares which may be in the hands of third parties and not surrendered: And let the deft. S. pay and indemnify the plt. co. against all the debts due and owing by the co. on any account whatever including the claims on the mortgage of B. in the bill mentioned, but excluding such debts as have been incurred since the institution of this suit: And let deft. [transfer to secretary of co. other shares]: And S. having paid to the plt. co. 1,0007. order him to pay to the co. 3,7507. the balance within one month after the date of this order. Dismiss bill as against other defts., but without costs. Burrow and Butzen Co. v. Stevens, Fry, J., 30 July, 1877. A. 1739.

Rule in Foss v. Harbottle.

It may be convenient here to refer to the rule in Foss v. Harbottle, 2 Ha. 461, and Mozley v. Alston, 1 Ph. 790, namely, that the company can alone sue in respect of wrongs done to the company.

"I think that it is of the utmost importance to maintain the rule laid down in Mozley v. Alston, and Foss v. Harbottle, to which as I understand, the only exception is where the corporate body has got into the hands of the directors and of the majority, which directors and majority are using their power for the purpose of doing something fraudulent against the minority." Per James, L. J., Gray v. Lewis, 8 Ch. 1036.

"I think it is of the utmost importance to all these companies that the rule which is well known in this Court as the rule in Mozley v. Alston, . . . and Foss v. Harbottle, should always be adhered to; that is to say, that nothing connected with the internal disputes between the shareholders is to be made the subject of a bill by some one shareholder on behalf of himself and others, unless there be something

illegal, oppressive, or fraudulent, unless there be something ultra vires on the part Form 197. of the company, quâ company, or on the part of the majority of the company, so that they are not fit persons to determine it; but that every litigation must be in the name of the company, if the company really desire it." Per James, L. J., Macdougall v. Gardiner, 1 C. Div. 13.

Accordingly the Court refused to interfere at the suit of a shareholder suing on behalf of himself and others in Foss v. Harbottle, ubi supra. Suit to compel directors to make good funds of company improperly expended.

Mosley v. Alston, ubi supra. Where directors were acting who had not been duly appointed. Gray v. Lewis, ubi supra. To recover property alleged to belong to the company. See also Russell v. Wakefield Waterworks, 20 Eq. 474.

Macdougall v. Gardiner, 1 C. Div. 13, where it was alleged that chairman had improperly refused to take a poll.

Duckett v. Gover, 6 C. D. 82. Action against company's solicitor and vendor to set aside an agreement alleged to have been a fraud on the company, and to recover money of the company.

The only exceptions to the rule are the following

(a) Where the act complained of is ultra vires the company. Simpson v. Westminster Palace Hotel Co., 8 H. L. Cas. 712.

(b) Where the act complained of is a fraud on the minority.

(c) Where there is an absolute necessity to waive the rule in order that justice may be done. See observations of M. R. in Pender v. Lushington, 6 C. D. 70. Accordingly the Court has interfered at the suit of one or more suing as above, in Clinch v. Financial Corporation, 5 Eq. 450; 4 Ch. 117. Ultra vires agreement. See Form 212, infra. Holmes v. Newcastle Co., 1 C. D. 682.

of capital.

Hope v. International Financial Soc., 4 C. Div. 327. shares. See Form 218, infra.

Ultra vires return

Ultra vires purchase of

Macdougall v. Jersey Hotel Co., 2 H. & M. 528. Payment of dividends out of capital. See Forms 216 & 217, infra.

Menier v. Hooper's Telegraph Works, 9 Ch. 350. Majority proposing to benefit themselves at the expense of the minority.

Mason v. Harris, 11 C. Div. 97. Action to set aside fraudulent sale to company, the vendor holding the majority of the shares.

Where a shareholder desires to complain of a wrong done to the company, and the case does not fall within the above exceptions, and the directors decline to proceed, the shareholder can sue in the company's name. But if it is shown that the majority do not support the action, the company's name will be struck out, and if there is a dispute as to the views of the majority, the Court will take means to ascertain them, e.g., by giving liberty to convene a meeting. Exeter & Crediton Ry. Co. v. Buller, 5 Rail. Cas. 211; 11 Jur. 527; Pender v. Lushington, 6 C. D. 70 ; Duckett v. Gover, ibid. 82.

But the fact that the approval of the majority has not been obtained before the writ is issued, does not prevent the Court from giving interlocutory relief by injunction or otherwise. Pender v. Lushington, ubi supra. See further, Lindley 896; Seton, 266; Buckley, 396.

The rule above referred to does not prevent a member from suing in respect of an individual wrong. Pender v. Lushington, ubi supra, and sce Forms 206, et seq. infra.

IN ACTIONS AGAINST PROMOTERS AND DIRECTORS IN RESPECT OF
SECRET PROFITS.

See supra, pp. 174, 177. That a claim against a person in a fiduciary position may be lost if proceedings are not taken within six years of discovery, see Metropolitan Bank v. Heiron, W. N. 1880, 158.

Declare that the defts. C. & G. are jointly and severally liable to pay Form 198. to plt. co. the 85,0007. in the pleadings mentioned, together with interest Judgment

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moters to

refund secret

profit.

Form 198. at 4 p. c. p. a. from 26 Ap. 1873, till payment. And declare that the deft. R. is also liable to pay to the plt. co. 10,0007. (part of the 85,0007.) with interest [as above]. And declare that the deft. J. N. is also liable to pay to the plt. co. 5007. (further part, &c.), with interest, &c., from 9 July, 1873, till payment. Declare that defts. E. N. and J. N., as the legal pers. representatives of W. S. N. deceased, if they shall admit assets of the said W. S. N. sufficient to answer the said sum and interest hereinafter mentioned, are also liable to pay to the plt. co. 5007. (further part, &c.) with interest, &c., from 9 July, 1873, until payment. And declare that the liability of the said several defts., C., &c., to pay the 85,0007. and interest on the several proportions of said sum and interest for which they are hereinbefore declared liable, or any part or parts thereof respectively, may be discharged pro tanto by such defts. respectively, transferring to the plt. co. debentures of the plt. co. which the said defts. respectively may have originally received in respect of the said 85,000l. or the part or parts thereof which they are herein before declared to be liable to pay respectively, and accounting to the plt. co. for the interest which may have been received by such defts. respectively on such debentures. And declare and adjudge that defts. C. and G. do jointly and severally on or before 25 July, 1877, pay to plt. co. said sum of 85,000l., together with interest at 4 p. c. p. a. from 26 Ap., 1873, until payment. Order against R. as to the 10,0007. and against J. N. as to the 5007. with interest. Order that defendants E. N. and J. N. as the legal personal representatives of W. S. N. deceased, if they admit such assets as aforesaid, do, on or before 25 July, 1877, pay to plt. co. the 5007. (further part, &c.) together with interest, &c., from 9 July, 1873, until payment. And in case defts. E. N. and J. N. do not admit assets of the estate of W. S. N. sufficient for that purpose or for the purpose of the payment of the costs hereinafter directed to be paid, let [usual act. of personal estate of W. S. N.]. And order C. G., &c., and the said J. N. and E. N., as such leg. pers. reps. as aforesaid of the said W. S. N. deceased, if they admit assets of his estate to answer the said costs, pay to the plt. co. the costs of this suit up to and including this trial, and also the costs of the motion for injunction of 21 Dec., 1875. To be taxed. Liberty to apply. Bagnall v. Carlton, Bacon, V.-C., 25 Ap., 1877, A. 869.

In the above case, the promoters R. C. & G., formed the company and effected a sale to it of a colliery belonging to B. and others. The promoters received secret payments of large amount from the vendors. The prospectus contained misrepresentations. Upon discovering the facts, the company sued the vendors, the promoters, and the vendors' solicitors, who became solicitors to the company, praying rescission and repayment. Before the suit came to a hearing, it was compromised as regards the vendors upon their paying 31,0007., and rescission was abandoned. At the hearing the promoters were held liable for the secret profits they had made, and all the defendants were held liable for the costs of the suit. On appeal, the decree was varied by allowing the promoters certain deductions, and dismissing the bill with costs as against the solicitors. See Form 199. See this report in 6 C. Div. 371.

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