liament for an act, and to do all that was necessary for forming a railway as proposed. Scrip certificates for shares were issued, and the defendant subscribed for ten shares. The directors obtained an act incorporating the company, authorizing it to make a railway from Dublin to Mullingar only, and to purchase a canal existing between Mulingar and Athlone, and to work such canal. The act provided that every one who should have subscribed to the undertaking or should be otherwise entitled to a share, and whose name should be entered on the register, should be a shareholder. The defendant had sold his scrip, but he was nevertheless registered by the company as a shareholder, and he was held to be a shareholder notwithstanding his contention that the company actually formed was materially different from that to which he had subscribed. (x) Again, where a banking company was projected with a capital of 1,000,000l. to be trebled if necessary, and the Norman v. Mit *111*subscribers signed an agreement reciting that application had been made to the Crown for a charter, and nominating certain persons with power to arrange the terms of the charter in such manner as they should think necessary, in compliance with the requisitions of the Crown, and to narrow or extend the objects of the company as might be necessary, it was held that a charter incorporating the subscribers with a capital of 644,000l. with power to increase it to 1,000,000%., with the consent of the Lords of the Treasury, was one which the directors had authority to accept, and that the subscribers were bound by it. (y) chell. Even where the subscriber's agreement is less general in its language, the terms of the act of Parliament incorporating the be such as to convert the subscribers company may Change of scheme authorized by act of Parliament. to a company of a particular description into shareholders in another company materially different from it. A construction of the act leading to such a result is to be avoided if possible; but if its language is clear and precise, no court can lawfully decline to give effect to it, nor hold that a person expressly made a shareholder by the legislature, is not a shareholder to all intents and purposes. (2) When two companies are amalgamated by (x) Nixon v. Brownlow, 2 H. & N. 455, and 3 ib. 686, and Cork and Youghal Rail. Co. v. Paterson, 18 C. B. 414, are similar cases. () See Norman v. Mitchell, 5 De G. M. & G. 648; and 19 Beav. 278. (z) See Kidwelley Canal Co. v. Raby, 2 Price, 93; Cromford and High Peak Co. v. Lacey, 3 Y. & J. 80; Scott v. Berkeley, 3 C. B. 925. an act of Parliament which enacts that the shareholders of the old companies shall be entitled to shares in the new company, nothing more is required to make them members thereof. (a) scheme subse quently assented to. A person who has applied for shares and has had them allotted to him under circumstances which entitle him to reject change of them, may nevertheless elect to retain them; and this election may be evidenced not only by an express agreement but by conduct. It need hardly be added that, if a person knowing the circumstances which entitle him to reject shares which have been allotted to him, retains them without objection, and acts as if he were a shareholder, it will be too late for him afterwards to repudiate them upon the ground that they were not *112 what he applied for, or upon the ground that the terms of the company's prospectus have not been adhered to. (b) * Allotment with of change in But although a person may acquiesce in a change in the objects of a company, yet, where those objects are changed after an application for shares and before the allotment alleged notice of them, and the attention of the applicant is not drawn scheme. to the change, and he is really ignorant of it, the mere fact that he receives the shares and pays the deposit on them, will not preclude him from denying that he ever agreed to take then. (c) The same principle applies to registered companies; and it has been decided that the mere circumstance that the applicant receives a letter of allotment or certificate stating that the shares are to be held subject to the company's memorandum and articles of association, is not enough to call his attention to a material difference between the prospectus on the faith of which he applied for shares, and the memorandum of association which fixes the objects of the company. (d) (a) Spackman v. Lattimore, 3 Giff. 16; and see Cork and Youghal Rail. Co. v. Paterson, 18 C. B. 414. (b) See Tredwen v. Bourne, 6 M. & W. 461; Peel v. Thomas, 15 C. B. 714; Steigenberger v. Carr, 3 Man. & Gr. 191; London and Continental Assurance Co. v. Redgrave, 4 C. B. N. S. 524. Compare these cases with those on p. 108, note. (s) (c) Blackburn's case, 3 Drew. 409 This case was reversed on appeal (8 De G. Mac. & G. 177); but the principle on which it was decided by the Vice-Chancellor remains unimpeached. On the appeal, additional evidence was adduced and the Court was satisfied that when Blackburn paid his deposit he must have known what shares he was taking. (d) Webster's case, 2 Eq. 741; Ship's case, 2 De G. J. & Sm. 544. See, also, Beck's case, 9 Ch. 392, where the allottee was registered. Delay in repudiation. But the strong tendency of modern decisions is that as regards companies formed under the Companies Act, 1862, an allottee of shares is bound to inform himself of the contents of the memorandum of association within a reasonable time, and that if he keeps the shares allotted to him without taking the trouble to ascertain whether there is any decrepancy between the prospectus and the memorandum of association, he cannot afterwards repudiate the shares. (e) In the application, however, of this rule, it is important to distinguish cases in which the allottee repudiates his shares before the company is being *wound up from those in which he does not. Much more is necessary to deprive a person of his right of repudiation where the company is still going, than is required to preclude repudiation after its winding-up has commenced. (f) The following cases, which arose before any winding-up had commenced, may be usefully referred to on this head. *113 Repudiation in time. In Stewart's case (g) the application to be removed from the list was successful although twelve months had elapsed since the allotment of shares, and the allottee had in Stewart's case. the interval tried to sell them, and had attended a meeting called for the express object of altering a clause in the articles relating to the increase of capital beyond the amount stated in the prospectus; but both the V.-C. Wood and the Court of Appeal held that these circumstances did not preclude the shareholder from having his name removed, it being clearly proved that he, in fact, knew nothing of the great change which had been made in the objects of the company. (h) In Webster's case (2), which was another in the same company, the allottee had exchanged the banker's receipt for a certificate that he was the proprietor of fifteen shares "subject to the provisions of the memorandum and articles of association; " but even this and the lapse of one year after the allotment, and ten months after the receipt, were held not to deprive him of his right to be removed. Webster's case. (e) See the judgments in Peel's case, 3 Ch. 674; Lawrence's case and Kincaid's case, 2 ib. 412; Wilkinson's case, ib. 536; also in Downs v. Ship, L. R. 3 H. L. 343, and Oakes v. Turquand, 2 ib. 325. (f) Compare with the cases referred to in the next notes, Peel's case, 2 Ch. 674; Hare's case, 4 Ch. 503. (g) 1 Ch. 574, ante, 108. See, also, Wynne's case, 8 Ch. 1002, and Beck's case, 9 ib. 392. (h) Compare Brigg's case, 1 Eq. 483. (i) 2 Eq. 741. Nichols' case. (k) A prospectus of a projected company stated (in effect) that its objects were to rear poultry, and to Nichols' case. enable consumers to buy eggs and poultry at half the usual price. The prospectus stated that the articles of association might be seen at the company's office; but neither the prospectus nor the articles referred to the memorandum of association. On the faith of this prospectus, application was made by Nichols for shares, and they were allotted to him. Shortly afterwards the company was registered, and by its memorandum of association its objects were stated, to be not only to rear poultry and deal *in poultry and eggs, but also "the dealing in game and *114 wild birds, the cultivation and growth of vegetables, fruit, and agricultural produce, the acquisition, use, or sale of inventions for artificial hatching, the preservation of poultry or meat, and any other purpose connected with the business of the company, and the carrying on the business of poulterers, egg merchants, dealers, market gardeners, and farmers." Nichols took no part in the proceedings of the company, and did nothing whatever except pay for the shares on allotment. A year after the allotment he, for the first time, became acquainted with the objects of the company as formed, and he at once repudiated his shares. The V.-C. Wood removed his name from the register of shareholders, being of the opinion that there was nothing to put Nichols on inquiry, and that under those circumstances the time which had elapsed since the allotment of shares was immaterial. Baily's case. In Baily's case (7), a person applied for shares, and paid the deposit on them; the company was afterwards registered, and it issued another prospectus, materially differing from the first; the shares were then allotted, but this was some months after the application for them; the allottee declined to accept them, and asked for his money back; nothing further was done for eighteen months, when a call was made upon him; he then applied to have his name struck off the register of shareholders, and it was ordered to be struck off. This case is instructive, not only on the effect of delay after repudiation (m), but as showing, that even although the memorandum of association and the prospectus may not vary, still a material departure by the company from the (k) 2 W. N. 77. (1) Ex parte Baily, 3 Ch. 592, and 5 Eq. 428. (m) Compare Hare's case, 4 Ch. 503, where the company was being wound up. prospectus on the faith of which the shares are applied for, entitles the applicant to decline to accept them. Repudiation On the other hand, where a person knowing the change of the objects of the company delays to repudiate his shares, too late.. he will be treated as electing to hold them, and any subsequent attempt to repudiate them will be unsuccessful; and a de lay of four months has been held fatal, even although during *115 that time the shareholder had done nothing which was in consistent with his repudiation. (n) It need hardly be observed, that if after knowledge of the facts entitling a person to repudiate his shares he acts as a shareholder, e. g., by attending meetings, paying calls, or attempting to sell his shares, his right to repudiate them will be at an end. (0) Further, if a shareholder knowing of one ground of variance, or having his suspicions aroused, chooses to remain quiet, it will be too late for him afterwards to repudiate his shares, and he will be a contributory. (p) So will delay be fatal after the right of the shareholder to repudiate his shares is denied. (9) shares after a company is formed. In all the foregoing cases it will have been observed that the apApplication for plication for shares preceded the formation of the company. Where a company is actually formed, and a person afterwards applies for shares in it, and they are allotted to him, an agreement between him and the company is thereby concluded, and in the absence of fraud is binding on both parties. In such a case a definite thing is applied for, viz., a share in an existing company, the objects of which are defined by the memorandum of association, with which he is bound to be acquainted; the thing applied for is acquired; the contract, therefore, is complete and can only be impeached, if at all, for fraud. (r) In order the more effectually to protect shareholders prospectus 1 from frauds on the part of the promoters of companies, Fraudulent (n) Lawrence's case, 2 Ch. 412; Kincaid's case, ib. See, also, Wilkinson's case, 2 Ch. 536. (0) See Brigg's case, 1 Eq. 483. (r) See Lord Cairn's judgment in Peel's case, 2 Ch. 684, and the judgments in Kisch v. Central Railway of Venezu ela, 3 De G. J. & S. 122, and L. R. 2 H. L. 99; Oakes v. Turquand, ib. 325; and see, as to the immateriality of altering the articles of association, Lyon's case, 35 Beav. 646. 1 See Cooley on Torts, 494; Terwilligar v. Telegraph Co. 59 Ill. 249; Booth ads. Wonderley, 36 N. J. Law, 250; Paddock v. Fletcher, 42 Vt. 389. |