have his name removed from the register, has not, as between himself and the public, retired from the company; and if his liability to the public in respect of the company's debts and engagements depended upon ordinary principles of partnership law, that liability would continue until he gave notice to the public of his retirement by having his name removed from the register of shareholders. But here, as in other cases, the liability of shareholders Statutes must turns on the wording of the statutes applicable to the be looked to. companies in which they are shareholders, and too much reliance. must not be placed upon the general principles applicable to partnerships. The Letters Patent act expressly enacts that a person ceasing to be a shareholder in a company to which that act applies, shall for all purposes of liability be considered as a continuing shareholder until the fact that he is not so has been registered. (m) But as regards companies governed by other statutes, it will be found that with respect to liability for future debts, their shareholders are in the position rather of dormant than of ostensible partners, their liability depending not so much on what appears from the company's register, as on the fact of membership, of which the register is only prima facie evidence. (n) 2. Termination ers' liability in of sharehold respect of past Again, with respect to the liability of a late shareholder in a company for those debts and engagements of the company to which he was liable when he was a shareholder, it is necessary to consult the statute or charter by acts. which the company in question is governed. Without referring to particular enactments at length, it may be stated generally that the ordinary principles of partnership law, as explained in the foregoing pages, have not been materially departed from *462 in the case of ordinary joint-stock companies, except so far as regards the effect of lapse of time. The Joint-stock banking act, 7 Geo. 4, c. 46, §13, contains provisions continuing the liability of shareholders in re- Summary of spect of past debts until the lapse of three years after acts. they have ceased to be shareholders. (0) The Letters Patent act, 7 Wm. 4 & 1 Vict. c. 73, § 24, continues (m) 7 Wm. 4 & 1 Vict. c. 73, § 21. (n) See the section in the next chapter on Execution against Companies and their Shareholders. (0) The repealed acts, 7 & 8 Vict. c. 110, § 66; c. 113, § 10; and 19 & 20 Vict. c. 47, § 62, as to unlimited companies, contained similar provisions. But the 7 Geo. 4, c. 46, and 7 & 8 Vict. c. 110 and c. 113, only render a late the liabilities of late shareholders, but it does not contain any provision limiting the duration of such liabilities. The Companies clauses consolidation act contains no provision continuing the liability of a shareholder, after he has ceased to be such (8 & 9 Vict. c. 16, § 36). The liability of shareholders in a company formed under the Companies act, 1862, is continued, as to debts contracted before their retirement, for one year after they have ceased to hold shares (25 & 26 Vict. c. 89, s. 38). Liability to contribute not ed with liabili The liability of a retired shareholder to contribute to the debts of a company must not be confounded with his liability to be confound to creditors. For notwithstanding the continuance of ty to creditors. his liability to creditors, he may be entitled to a complete indemnity from the other shareholders, and may not therefore be a contributory with them, and this is a common case. On the other hand, a shareholder may be freed from liability to creditors, but not be freed from liability, to the other shareholders, to contribute with them to the payment of debts for which they only are directly liable. This, although not so common a case as the other. is still a possible case, and affords a striking illustration of the difference (constantly lost sight of by non-lawyers) between direct and indirect liability to the debts of a company. (p) This subject will be examined hereafter. 'Termination of liability in companies. It has already been seen that the members of an ordinary. *463 *partnership cannot get rid of their liabilities to creditors by retiring from the firm; and it is wholly immaterial whether all retire, so as to put an end to the firm altogether, or whether some only retire; the principle in each case being that a creditor is not affected by agreements come to between his debtors. Precisely the same principle renders it impossible for the members of a company to get rid of their liabilities as between themselves and their creditors, by simply agreeing to dissolve, or by transferring their rights and (so far as they can) their liabilities to some other company. Although, therecompanies. fore, a company may have transferred all its assets and liabilities to another company, the transferring company will still remain liable to those of its creditors who have not expressly or Amalgamating shareholder liable for debts contracted whilst he was a shareholder. The act of 1856 rendered him liable for debts contracted before he became a share impliedly released it from their claims. (2) What amounts to an implied release is often very difficult to determine; nor are all the cases on the subject easy to reconcile. In the first place, holders of policies of insurance must not be confounded with ordinary creditors. The holder of a Position of subsisting policy is not a creditor at all; and in order policy-holders. that he may become a creditor of the company which issued the policy, he must keep up his policy with the company, and the event insured against must happen whilst the policy is so kept up. Consequently it was held in many cases that if an insurance office had transferred its business to another company, a holder of a policy who had notice of the transfer and who paid his future premium to the new office, ought to be treated as having agreed to accept the new office in lieu of the old; and unless this inference could be rebutted he was held to have discharged the old office. The following cases illustrate this: A. Original company held to be discharged. (a) The original having had, by its deed of settlement, express power to transfer its business, and the policies having been issued subject to this power. Hort's case, 1 Ch. D. 307. Grain's case, ib. Harman's case, ib. 326. Cocker's case, 3 Ch. D. 1. Dowse's case, ib. 384. A case of an annuity. *(b) The policy-holder having accepted the new office after notice *464 of the transfer. National Provincial Life Ass. Soc. 9 Eq. 306. Merchants' and Tradesmen's Ass. Soc. 9 Eq. 694. Times Life Ass. Soc. 5 Ch. 381. Anchor Ins. Co. 5 Ch. 632. Spencer's case, 6 Ch. 362. Fleming's case, 6 Ch. 393. B. Original company held not to be discharged. (a) The policy-holder having had no sufficient notice of the transfer. (q) See, in addition to the cases cited below, Hardinge v. Webster, 1 Dr. & Sm. 101, in which the creditor was a member of the transferring company, and the defendant was a member of both companies. (b) The policy holder having refused to accept the new company. In order, however, to remove the difficulty of determining in 35 & 36 Vict. c. 41, 8 7. these cases whether a policy holder has or has not released the old office, it has been enacted by 35 & 36 Vict. c. 41, § 7, as follows: § 7. Where a company, either before or after the passing of this act, has transferred its business to or been amalgamated with another company, no policy-holder in the first-mentioned company, who shall pay to the other company the premiums accruing due in respect of his policy, shall by reason of any such payment made after the passing of this act, or by reason of any other act done after the passing of this act, be deemed to have abandoned any claim which he would have had against the first-mentioned company on due payment of premiums to such company, or to have accepted in lieu thereof the liability of the other company, unless such abandonment and acceptance have been signified by some writing signed by him or by his agent lawfully authorized. *465 Actual credit ors. But even in the case of policy-holders who have apparently accepted the new office, in lieu of the old, if it should appear that the amalgamation was ultra vires so that the new company is not liable to pay the policy, the old office will not be discharged. (r) *As regards persons who are actually creditors of the transferring company, they are not held to have released their orig inal debtor simply by receiving payments from the new company and giving receipts to it (s); there must be some clear and distinct agreement to accept the new company as the debtor in lieu of the old; and where an annuitant who knew of the amalgamation had done nothing more than for several years receive his annuity from the new company and give receipts to it, the Court held that he had not ceased to be a creditor of the old company. (t) But creditors whose claims are limited to the funds of a company which has power to transfer those funds and its business, lose their rights against the company after it has transferred its funds and business to another. (u) (r) See Re Saxon Life Assurance Society; The Anchor's case, 2 J. & H. 408, and on appeal, 1 DeG. J. & Sm. 29. (s) Commercial Bank Corp. of India and the East, 16 W. R. 958, where there was no sufficient notice of the transfer of the business; and see Ex parte Gibson, 4 Ch. 662, where there was notice but a refusal to accept the new company. (t) Family Endowment Society, 5 Ch. 118; Nat. Prov. Life Ass. Soc. 9 Eq. 306. (u) Dowse's case, 3 Ch. D. 384. *CHAPTER III *466 OF ACTIONS BETWEEN PARTNERSHIPS AND COMPANIES AND NON-MEMBERS. In order to complete the subjects discussed in the preceding chapters (which determine the manner in which obli- General obsergations are contracted by partnerships and companies, vations. and the nature, extent, and duration of the direct liabilities to creditors of individual partners and shareholders in respect of such obligations), it is necessary to examine the remedies by which those obligations and liabilities can be enforced; and in connection with this subject it will be convenient to notice the remedies of which a partnership or company can avail itself for the purpose of enforcing its own rights against non-members. It is unnecessary to dwell upon criminal prosecutions, for although partners may be prosecutors or prosecuted in respect of criminal offenses, the fact that they are partners has little, if any, effect on their position in a criminal point of view. The remedies which alone are of sufficient importance to require consideration in a treatise like the present are actions, defenses by way of set-off, proceedings to enforce judgments, proceedings in bankruptcy, and proceedings to wind up companies. The subjects of bankruptcy and winding up will be discussed hereafter, and the present chapter will therefore be confined to actions, set-off, and execution. SECTION I.-ACTIONS BY AND AGAINST PARTNERS. The Judicature Acts, 1873 and 1875, and the rules issued under their authority, have materially altered and improved legal proceedings by and against partnerships and *unincorporat- *467 ed companies. They do not, however, render it unnecessary |