to stay proceedings. The applicants are not "officers of the company" within the meaning of s. 10 of the Companies (Winding-up) Act, 1890. C. A. 1897 In re WESTERN COUNTIES STEAM BAKERIES AND MILLING Auditors who have been duly appointed by a company are, no doubt, "officers of the company": In re London and General Bank (1) and In re Kingston Cotton Mill Co. (2); but these gentlemen were only employed as casual auditors for a special COMPANY. purpose. The case comes within the observations of Kay L.J. in In re London and General Bank (3), where he said: "I wish to guard myself against being understood to hold that in every case of a joint stock company the auditor employed by the joint stock company is an officer of the company. I do not at present hold that opinion. I can quite conceive that there may be cases of a joint stock company who call in an auditor to make a particular audit where the auditor called in could not be properly treated as an officer of the company." This is just that case. The decision in In re London and General Bank (1) ought not to be extended to a case where there has been no formal appointment of an auditor. If these gentlemen have been guilty of any misfeasance, the proper course is to bring an action against them, as was done in Leeds Estate Building and Investment Co. v. Shepherd. (4) As casual auditors they are not subject to the summary jurisdiction under s. 10. Edwin Ward, for the deputy official receiver and liquidator. Where a person assumes the duties and accepts the remuneration of an office he must be taken to have accepted also its responsibilities: Coventry and Dixon's Case (5); Gibson v. Barton. (6) Auditors de facto are equally subject to the jurisdiction with auditors de jure, and these gentlemen certainly acted as auditors of the company. The balance-sheets were prepared and certified by them for the express purpose of being laid before the shareholders, and for their services they were paid by the company, their account having been rendered to the company expressly "for auditing." They were appointed to (1) [1895] 2 Ch. 166. (3) [1895] 2 Ch. 173. (4) (1887) 36 Ch. D. 787. C. A. 1897 In re COUNTIES BAKERIES AND MILLING COMPANY. frame a balance-sheet, and were asked to act as auditors, which they did. Hastings, Q.C., in reply. In Coventry and Dixon's Case (1) there was a formal election to the office. The decision of the Master of the Rolls in that case can only be regarded as a dictum, because it was reversed on appeal. Gibson v. Barton (2) is inconsistent with what was said in In re Kingston Cotton Mill Co. (3) There is no authority for the proposition that in order to make a person liable under s. 10 it is sufficient merely to prove that he took upon himself to act as auditor. The mere discharge of the duties of an office does not take the place of a regular appointment to that office for the purpose of bringing any one within the jurisdiction of s. 10. Cur. adv. vult. Jan. 27. STIRLING J., after stating the facts :-The question is one of procedure. It is not disputed that an action might be brought against these gentlemen in respect of any misfeasance of which they were guilty. But the question whether auditors are officers of the company within the meaning of s. 10 of the Act of 1890 is one of general importance; and it may possibly in this case have a special importance to the applicants; for if the remedy is by action the applicants may have a defence to it based on the Statute of Limitations which would not be available in the present proceeding. Now, if the matter were entirely free from authority, there would be much to be said in favour of the view that auditors are not officers of the company within the meaning of s. 10 of the Act of 1890; but the matter has been dealt with by the Court of Appeal in two cases, namely, In re London and General Bank (4) and In re Kingston Cotton Mill Co. (3); and I am bound not merely by the decisions, but by the principles on which those cases were decided. The former case was decided with reference to a banking company, one of a class of companies as to which special provisions on the subject of audit are contained in the Companies Act, 1879. I do not go into that in detail because in the second (1) 14 Ch. D. 660, 664. (3) [1896] 1 Ch. 6. case Lord Herschell thus explained the ratio decidendi (1): “I C. A. 1897 In re WESTERN COUNTIES STEAM BAKERIES AND MILLING COMPANY. Stirling J. C. A. 1897 they should not extend to the auditors in the present case. I cannot in substance distinguish the two cases. The reasoning which led to the conclusion in the one case seems to me necessarily to lead to it in the other." In that case, though doubt was thrown upon the accuracy of the previous decision, it was followed, and the auditors were held to be officers of the COMPANY. Company. In re WESTERN COUNTIES STEAM BAKERIES AND MILLING Stirling J. If, then, Messrs. Parsons & Robjent had been duly elected auditors of the company at the general meeting held in 1888, the present case could not have been distinguished from those to which I have referred. They were not, however, so elected, and the question is whether that circumstance entitles them to say that they are not officers of the company. Now, in Coventry and Dixon's Case (1) it was held by Jessel M.R. that de facto directors were subject to the provisions of s. 165 of the Companies Act, 1862, of which s. 10 of the Act of 1890 is an extension. The decision of the Master of the Rolls was reversed on appeal, but the judgments of James L.J., Baggallay L.J., and Bramwell L.J. shew that they agreed with this portion of his judgment. I think that the same thing applies to auditors. It seems to me that persons who have de facto acted as directors and officers of the company ought not to be allowed to escape from the jurisdiction created by such enactments as s. 165 of the Act of 1862 and s. 10 of the Act of 1890, by setting up defects in their own title to hold such positions. If a person duly elected to fill the office of auditor be subject to this jurisdiction, in my judgment a person who de facto fills the office is also subject to it. The only question which remains is whether the applicants did de facto fill the office of auditors. They were, in the language of art. 125, employed "to examine the accounts of the company" and to "ascertain the correctness of the balancesheet" for the year ending December 31, 1889. They knew that the balance-sheet and the certificate of its correctness would be laid before a general meeting, and that they were to be treated as auditors for the purpose of that balance-sheet. They were paid by the company. Finally the shareholders, (1) 14 Ch. D. 660. who knew that they had never been appointed auditors by a general meeting in accordance with art. 128, made no objection to receive their report, and acted on the footing that they were the auditors of the company. I think that, upon the assumption which I am bound to make, that the cases of In re London and General Bank (1) and In re Kingston Cotton Mill Co. (2) were well decided, the applicants were properly made respondents to the misfeasance summons, and that the present application ought to be refused. G. A. S. From this decision Messrs. Parsons & Robjent appealed. The appeal was heard on February 24, 1897. The Eve, Q.C., and Frank Evans, for the appellants. appellants were never appointed to the office of auditors of the company. They were simply called in by the directors to do a single act of service on a particular occasion for which they were paid a fee of 127. 12s. They looked upon themselves as acting for the directors, they were never brought into contact with the shareholders, and they never were officers of the company in any sense of the word. [In addition to the authorities cited by them in the Court below, they referred to In re Imperial Land Company of Marseilles (3), Carter's Case (4), and In re Liberator Permanent Benefit Building Society. (5)] Buckley, Q.C., and Edwin Ward, for deputy official receiver and liquidator. Although Messrs. Parsons & Robjent were never formally appointed, they knew that they were employed to make a report as to the accounts of the company which was to be submitted to the shareholders in general meeting and to form the basis of a dividend-in other words, that they were to perform the duties of auditors for the shareholders. A person who is de facto an auditor cannot be heard to say that he is not de jure an auditor. The appellants took upon themselves the responsibility of discharging the duties which the (1) [1895] 2 Ch. 166. (2) [1896] 1 Ch. 6. VOL. I. 1897. (3) (1870) L. R. 10 Eq. 298. (5) (1894) 71 L. T. (N.S.) 406. 1 C. A. 1897 In re WESTERN COUNTIES STEAM BAKERIES AND MILLING COMPANY. C. A. |