Such are the leading decisions on this celebrated act. Juster views of political economy, and of the limits within which legislative enactments should be confined, have led to the repeal of the statute in question, which, though deemed highly beneficial half a century ago, probably gave rise to much more mischief than it prevented. But the repeal of the act still leaves room for the contention that companies of the nature described in the act are illegal at common law. This question is one of present importance, especially in the colonies, and requires therefore careful consideration. Opinion of Duvergier v. Blundell v. Lord Eldon, who certainly had a great aversion to companies, seems to have been of opinion, in Kinder v. Taylor (y), that companies with large capitals, arising from numerous small contributions, and with transferable shares, were injurious to the public, and were illegal, independently of the Bubble act. The same opinion was expressed by the Court of Common Pleas, in a case which arose after the repeal of that act (z), and also by the Vice-Chancellor Shadwell, on a still later occasion. (a) In none of these cases, however, was it necessary to decide this question. In Duvergier v. Fellows (b), the company was formed for an illegal purpose, viz., the work*194 ing *of a patent which could not be lawfully transferred to more than five persons, and this was the ground relied on by the Court of Appeal. In Blundell v. Windsor (c) the Vice-Chancellor thought that there was held out to the public a false and fraudulent representation calculated to ensnare the unwary, viz., a representation that any shareholder when he transferred his shares ceased to be liable to the debts of the company; and he relied on this as a ground of illegality. Although, therefore, in each of these cases the Court was of opinion that the company was illegal, inasmuch as it trenched upon the prerogative of the Crown by assuming to do that which cannot be lawfully done without special authority, there were additional circumstances, rendering it unnecessary to decide on this ground alone. In Walburn v. Ingilby (d) Lord Brougham declined to declare an unincorporated joint-stock company, with transferable shares, illegal; although the deed of settlement stated that provision was to be made, in all engagements to be entered into by the directors, that no shareholder should be liable beyond the amount of his share, and his lordship thought this clause was nugatory. In Garrard v. Hardey (e) it was held that an unincorporated joint-stock company, which had assumed the name of "The Limerick Marble and Stone Company," and had a capital of 50,000l., divisible into 500 transferable shares, was not illegal at common law. It was in this case declared that the raising and transferring of stock in a company could not be held to be in itself an offense at common law. In Harrison v. Heathorn (ƒ) a similar conclusion was arrived at. In this case the company's deed Walburn v. Garrard v. Harrison v. (y) Coll. on Part. 917, ed. 2. (z) Duvergier v. Fellows, 5 Bing. 248; affirmed 10 B. & C. 826, and 1 Cl. & Fin. 39. (a) Blundell v. Winsor, 8 Sim. 601. (b) 5 Bing. 248, and 10 B. & C. 826, and 1 Cl. & Fin. 39. (c) 8 Sim. 61. This case cannot be supported. See Harrison v. Heathorn, 6 Man. & Gr. 81. In Blundell v. Winsor there was not in fact any such holding out as supposed by the Vice-Chancellor. (d) 1 M. & K. 61, and Cooper, temp. Brougham, 270. (e) 5 Man. & Gr. 471. (f) 6 Man. & Gr. 81. See, too, Sheppard v. Oxenford, 1 K. & J. 491. of settlement provided that a person ceasing to be a shareholder should be entitled to a certificate declaring him discharged from all liabilities on account of the shares formerly held by him. This was in fact, the same company as was held to be illegal by Vice-Chancellor Shadwell in Blundell v. Winsor, which, though not overruled on appeal, can scarcely be supported after the decision in Harrison ». Heathorn. Attempts have also been made to induce the Courts to declare scrip companies (i. e., unincorporated companies with shares transferable by de panies. livery) to be illegal at common law. (g) But these attempts have Scrip combeen unsuccessful. The case of Blundell v. Winsor, always relied upon as an authority by those who contend that such a company is illegal, has never met with approbation from the bench; nor has it ever been followed. from the cases. Upon the whole, therefore, it appears that there is no case deciding that a jointstock company with transferable shares, and not incorporated by Conclusion charter or act of Parliament, is illegal at common law; that opinions have nevertheless differed upon this question; that the tondency of the Courts was formerly to declare such companies illegal; that this tendency exists *no *195 longer; and that an unincorporated company with transferable shares will not be held illegal at common law, unless it can be shown to be of a dangerous and mischievous character, tending to the grievance of her Majesty's subjects. The legality at common law of such companies may therefore be considered as finally established. It is not easy to arrive at any other conclusion if the question is examined without reference to the decisions which have been noticed. For Observations 1. It is not illegal for persons, however numerous, to enter into an on the illegalordinary contract of partnership. 2. It is not illegal for all those persons to agree that one of them shall retire, and that a person who is not a member of the firm, but who is willing to become one, shall take his place. ity of companies with transferable shares. 3. It is not illegal for partners, however numerous, to agree once for all that any partner who is willing to retire shall be at liberty so to do, and to introduce in his place any person selected by himself. 4. It is not illegal for an out-going partner of a firm established on this last principle, to retire in favor of an in-coming partner, upon any terms to which they both agree, provided those terms are not themselves illegal. 5. It is not illegal for an out-going and in-coming partner to agree that the latter shall pay the former more or less than he himself paid when he entered the firm. 6. It is not illegal for the members of a partnership to assume a name (h), and to agree that the management of its affairs, both external and internal, shall be entrusted to a select few, and that those few shall have the power to make rules which the others will obey. If these propositions are assented to, it will, it is conceived, be found impossible to establish the illegality at common law of unincorporated joint-stock companies with transferable shares. (i) (g) See Ex parte Barclay, 26 Beav. 177; Ex parte Aston, 27 Beav. 474, and 4 De G. & J. 320; Ex parte Grisewood, 4 De G. & J. 544. As to the effect of the act of 1862 on these companies, see infra, p. 196. (h) Ante, p. 194. See the qualification in p. 192, note (1). (i) See Walburn v. Ingilby, Cooper, temp. Brougham, 270. To say that such a partnership is illegal, because it assumes to act as a corporation, is untrue; for none of the above acts are characteristic of corporations. What distinguishes corporations from other bodies is their independent personality; and no society which does not arrogate to itself this character can be fairly said to assume to act as a corporation. Besides this, it is by no means clear that it is illegal at common law to assume to act as a body corporate. (k) To assert that unincorporated companies with transferable shares are mischievous and dangerous, and therefore illegal, is to assert a proposition the truth of which has not yet been established, and which therefore cannot be admitted as the basis of a judicial inference. This ground of illegality would probably not have been relied upon so much had it not been for the technical rules of pleading which required all the members of a firm, however numerous, to be made defendants to ac tions and suits against the firm. This rule undoubtedly created difficulties in *196 *dealing with large bodies of persons unless they were incorporated; but if the question is reduced to this, viz., whether the rule, or a company to which it is inapplicable, most deserves to be characterized as mischievous, the question must surely be answered in favor of the company and against the rule. The rule, however, being established at law, the judges felt bound to adhere to it, and then finding it difficult to deal with unincorporated companies, declared them mischievous and illegal. As will be seen hereafter, the difficulty presented by the rule in question has been to a great extent removed. Effect of non Companies act, 1862, Assuming an unincorporated joint-stock company not to be illegal at common law, it remains to be considered whether it registration. is rendered illegal, by statute, if not registered. The Companies act, 1862, is extremely important in this respect, for the 4th section says imperatively that no company, association, or partnership, shall be formed after the 2nd of November, 1862, except as therein mentioned. From this it follows that companies, associations, and partnerships required to register under that section, are illegal if not registered. (7) In this respect the act of 1862 differs from the Companies acts of 1856 and 1857 (m), and resembles the older acts of 7 & 8 Vict. c. 110, and c. 113. (n) (k) See 6 Man. & Gr. 107, where Tindal, C. J., says, "I am not aware that presuming to act as a body corporate was an offense at common law." As to assuming a corporate name and using a corporate seal, see ante, p. 192, note (7). (1) See acc. S. Wales Atlantic Steamship Co. 2 Ch. D. 763; Ex parte Hargrove, 10 Ch. 542; Harris v. Amery, L. R. 1 C. P. 148. (m) See 20 & 21 Vict. c. 14, § 3, and c. 49, § 5. (n) As to which see O'Connor v. Bradshaw, 5 Ex. 882, as to banks; and as to other companies, Butt v. Monteaux, 1 K. & J. 98; Sheppard v. Oxenford, ib. 491. The 7 & 8 Vict. c. 110, did not apply to companies formed before the passing of the act, Ex parte Aston, 27 Beav. 474, and 4 De G. & J. 320; and see Womersley v. Merritt, 4 Eq. 695. The question whether scrip companies formed since the act of 1862 are illegal, has not yet been determined (0); but it is of great practical importance, and before deciding it attention must be paid not only to the precise language of the act, but also to the difference between agreements to form companies and partnerships and companies and partnerships which are actually formed. (p) Scrip companies are not illegal at common law. (2) *Companies formed before the 2d of November, 1862, *197 and required by the Companies act 1862, to register under it, are not illegal, although the consequences of non-registration are severe (see § 210). SECTION II.-CONSEQUENCES OF ILLEGALITY. If a partnership, when it is formed, will be illegal, any contract to form it must be illegal also. Upon this ground it Consequences of was held in Duvergier v. Fellows (2), that a bond for illegality. the payment of money upon the formation by the obligee of an illegal company was invalid; and in Williams v. Jones (8), that no action lay for the recovery of a premium agreed to be paid by the defendant, on being taken into partnership with the plaintiff, and which partnership was illegal. Effect of illegality on the right to recover back subscrip It does not, however, follow that because an agreement to form a given partnership or company is illegal, those who subscribe to its formation cannot recover back their subscriptions. If money is paid by A. to B. to be ap- tions. plied by him for some illegal purpose, it is competent for A. to require B. to hand back the money if he, B., has not already parted with it. (t) Although, therefore, the subscribers to an illegal company have not a right to an account of the dealings and transactions of that company and of the profits made thereby, they have a right (0) The point was discussed in The Gen. Co. for the promotion of Land Credit, 5 Ch. 363, and Princess of Reuss r. Bos. L. R. 5 H. L. 176. It is tolerably plain that shares not paid up in full cannot be made transferable to bearer. (p) See ante, pp. 31 et seq. (q) Ante, p. 194. (r) 5 Bing. 248; 10 B. &. C. 826; and 1 Cl. & Fin. 39. (8) 5 B. & C. 108. (t) See Taylor v. Lendy, 9 East. 49; Varney v. Hickman, 5 C. B. 271; Diggle v. Higgs, L. R. 2 Ex. D. 422; Hampden v. Walsh, 1 Q. B. D. 189; Taylor v. Bowers, ib. 291. to have their subscriptions returned (u); and even though the moneys subscribed have been laid out in the purchase of land and other things for the purpose of the company, the subscribers are entitled to have that land and those things reconverted into money, and to have it applied as far as it will go in payment of the debts and liabilities of the concern, and then in repayment of the subscriptions. In such cases, no illegal conduct is sought to be *198 enforced; on the *contrary, the continuance of what is illegal is sought to be prevented. Actions for In Sheppard v. Oxenford (x), a company was started for working mines in Brazil. The members subscribed each a certain sum and received a sort of scrip certificate specifying the number of shares to which each was entitled. Mines, buildings, plant, and shares were bought, and at a meeting of the subscribers the defendant and another were appointed sole. directors and trustees of the property of the association. Disputes having arisen, a bill was filed against the defendant (his co-trustee being dead) by one of the shareholders on behalf of himself and the others for an account of the moneys received and paid by the directors, and of the debts of the association, and for payment of those debts out of the assets, and for a division of the profits among the shareholders, and for an injunction to prevent the defendant from selling the property, and for a receiver. It was contended that the company was illegal, and that no relief could be given; but it was held that the defendant as trustee could not dispute the trust on which he had accepted the property; and a demurrer to the bill was overruled and a receiver and manager was appointed.' (u) See Harvey v. Collett, 15 Sim. 332. Compare the cases in the next note. (x) Sheppard v. Oxenford. 1 K. &. J. 491. See, too, Butt v. Monteaux, ib. 98. If in these cases the companies were really illegal, they must be regarded as modifying the general proposition, that a court of equity will not assist a person to get back property which he has transferred to another for some illegal purpose. See Brackenbury v. Brackenbury, 2 J. &. W. 391; Groves v. Groves, 3 Y. & J. 163. 'After a partnership contract confessedly against public policy, has been car ried out, and money contributed by one of the partners has passed into other forms, a partner, in whose hands the profits are, cannot refuse to account for and divide them, on the ground of the illegal character of the original contract. Brooks v. Martin, 2 Wall. 70. Parties in Brownsville, in 1864, made a partnership for purpose of shipping merchandise from Matamoras, in Mexico, to Texas, with a view to obtaining cotton. In 1866, the parties on settlement adjusted their accounts, one executing his notes to the others: Held, that the vice of illegality would not fol |