there can be no right of action. N. S. 543, H. L.

Davidson v. Tullock, 6 Jur.

If the directors of a banking company, which is in difficulties, make a flourishing report to the shareholders and public of the financial condition of the company, and it induces a person to purchase shares in open market or of third parties, and it turns out after he is registered in the books of the company that the report was altogether untrue and without foundation, and the company stops payment, still the purchaser is a shareholder, and liable as a contributory. Re Liverpool Borough Bank, Ex parte Duranty, 28 L. J., Ch. 37-R.

The directors of a company from time to time made to the general meetings of shareholders, and printed and published false and fraudulent reports of the affairs of the company; there was nothing to show that the shareholders were aware of the falsehoods of these reports. An issue of new shares having been made, a person was induced by these reports to take some of them: it was held, that notwithstanding the fraud, he was liable to be placed on the list of contributories. Re Royal British Bank, Mixer's Case, 4 De G. & J. 575.

A false representation by an officer of a company, even though made at the office, is not the representation of the company. Re Royal British Bank, Ex parte Frowd, 9 W. R. 328-V.C.K.

If directors, in the course of the performance of their duty, make false or fraudulent representations addressed to shareholders, and afterwards give to them an unauthorized circulation beyond the limits of the company, a stranger acting upon such representations and suffering loss in consequence, has no remedy against the company, unless he can show that the whole is a party to the fraud. Ex parte Nicol, Re Royal British Bank, 5 Jur. N. S. 205; 28 L. J., Ch. 257-L. J. Álthough directors are not directly authorized by the shareholders to make false or fraudulent representations, yet having the general management of the affairs of the company, the shareholders are liable to persons injured by such representations. Ib.-Per Turner, L. J. Shareholders are responsible for and can take no benefit under false and fraudulent representations made by those to whom they have intrusted the management of their affairs. Ib.

Although it may be too strict to hold that a director of a company is bound to look back through the minute-book into entries made in it before he became a director, yet, where subsequently to his becoming a director he is a party to dealings founded on those noticed in such prior entries, and allows his brother directors to act and proceed upon the notion that he affirms and adopts the transactions to which such entries relate, and this course of acting goes on during two years, he is precluded from impeaching such transactions,

unless he can establish a case of deception or want of due information. Burt v. British Nation Life Assurance Association, 4 De G. & J. 158.

A person applied in writing for shares in a company constituted under 19 & 20 Vict. c. 47, subject to a condition that he should have the supplying of certain articles required by the company. Shares were allotted to him, but the company never having come to any definite arrangement as to his supplying them with the articles mentioned in the conditions, he neither signed the articles of association, paid any deposit, nor did any act amounting to an unqualified acceptance of the shares. The company having been afterwards wound up under the 19 & 20 Vict. c. 47, it was held, that the applicant's name ought not to be placed on the list of contributories. Re Sunken Vessels Recovery Company, Ex parte Wood, 3 De G. & J. 85; 5 Jur. N. S. 1377; 28 L. J., Ch. 899. See New Brunswick and Canada Railway and Land Company, 4 H. & N. 580; 5 Jur. N. S. 1131.

A company registered under the Joint Stock Companies Act, 1856, was established for the purpose of accepting a transfer of and carrying into effect the undertaking of an existing railway company. Under one of the acts of the provincial legislature relating to this company, grants of land were made sufficient for the construction of a portion of the railway, and a power was reserved to the legislature of reentering into possession of such lands, supposing the railway should not be completed within ten years, and a further grant of lands was to be made on completion of the said portion of the railway. By another act grants of land adjoining the railway were authorized to be made to the company to the extent of 10,000 acres for every 10,000l. expended by the company in making the railway, and the act was to continue in force for ten years. By another act the provision in the first-mentioned act as to the completion of the said portion of the railway within ten years was repealed, and in lieu thereof it was enacted that if the said railway should not be completed within four years from the date of that act, all and every the grants of land conferred by the several acts relating to the company should be null and void, and the lands should revert to and revest in her Majesty as if no grants had been made; and it was further enacted, that the several grants made to or for the benefit of the company were thereby confirmed and declared valid to all intents and purposes. The articles of association of the new company recited the abovementioned acts, and provided that certain class A. shares should be entitled to a certificate for an allotment and appropriation of four acres of the land of the company to each share. The directors in London issued reports, on the faith of which the respondent applied at the office of the company, and was informed by the secretary that the class A. shares

were preference shares, entitling the holder to an allotment of four acres of land under the grants from the provincial government. Such reports also contained statements implying that the company had an indefeasible title to the lands granted. The respondent became the purchaser of a number of the class A. shares. He afterwards filed a bill to set aside his contract, on the ground that he had been induced by misrepresentations to take the shares, such misrepresentations consisting, amongst others, in the statement that the company had an indefeasible title to the lands granted: it was held (reversing the decision of the Lords Justices), that there were no misrepresentations on the part of the company, and that as to their title to the lands granted to them, such grants of land were made for the encouragement of the company, and therefore after they had become entitled thereto, that they were made for a consideration which, in the view of the legislature, must be taken to have been already paid by the company when they had expended so much money upon the works, and that the company had therefore an indefeasible title to the lands granted.

If reports are made to the shareholders of a company by their directors, and the reports are adopted by the shareholders and afterwards industriously circulated, representations contained in those reports must be taken to be representations made with the authority of the company, and therefore binding the company; and if those reports, having been industriously circulated, be clearly shown to have been the proximate and immediate cause of shares having been bought from the company, it cannot be permitted to retain the benefit of the contract and keep the purchase-money that has been paid.

Representations made by the secretary to a person in a general conversation, without a view to any definite statement by that person that he wants to purchase shares, are not binding on the company.

If, however, an incorporated company, acting by an agent, induces a person to enter into a contract for the benefit of the company, that company can no more repudiate their fraudulent agent, than an individual can repudiate his, consequently the company are bound by the misrepresentations of their agent.

Misrepresentation entitling to relief must be a misrepresentation of fact, and not merely a conclusion of opinion.

When a case is constituted of fraud it should be most accurately and fully stated; a mere general charge that something has been done by or obtained from a party under the influence of fraud is not sufficient, it must be shown in what it consists and how it has been effected.

When a charge is made involving the imputation of fraudulent misrepresentation or fraudulent concealment, if that charge fails it ought to fail with the ordinary penalty of the

court directing the party, who makes it without ground, to indemnify his antagonist in costs. New Brunswick and Canada Railway and Land Company (Limited) v. Conybeare, 31 L. J., Ch. 297; Conybeare v. Same, 1 De G., F. & J. 578.

cles of asso

Under the 19 & 20 Vict. c. 47, a printed copy of the me- Memoranmorandum of association or articles of association may be dum of artisigned by a subscriber before the original is signed or regis- ciation. tered in pursuance of the third section, and such signature of the subscriber is an authority for placing his name on the register of shareholders. New Brunswick and Canada Railway and Land Company v. Boore, 3 H. & N. 249; 27 L. J., Exch. 330.

Therefore, where a defendant having applied for shares in a proposed company and paid a deposit, signed a printed form of memorandum of association, agreed to accept certain shares allotted to him, and some weeks afterwards the original memorandum of association and articles of association were signed and registered and the defendant's name was placed on the register of shareholders: it was held, that the defendant was a shareholder in the company and liable for calls. Ib.

liability of

7. The liability of the members (a) of a company Mode of formed under this act may, according to the me- limiting morandum of association, be limited either to the members. amount, if any, unpaid on the shares respectively held by them, or to such amount as the members may respectively undertake by the memorandum of association to contribute to the assets of the company in the event of its being wound up.

(a) The word "members" is substituted for the word "shareholders," which was used in the previous statutes as to joint stock companies. See definition of word "member," sect. 23, post, p. 31.

ciation of a

company

8. Where a company is formed on the principle Memoranof having the liability of its members limited to the dum of assoamount unpaid on their shares, hereinafter referred to as a company limited by shares, the memorandum of association shall contain the following things, (that is to say,)

(1.) The name of the proposed company, with the addition of the word "limited"

last word in such name:

as the

(2.) The part of the United Kingdom, whether England, Scotland or Ireland, in which the registered office of the company is proposed to be situate:

limited by shares (b).

Changing objects of company.

(3.) The objects for which the proposed company is to be established (c):

(4.) A declaration that the liability of the members is limited:

(5.) The amount of capital with which the company proposes to be registered divided into shares of a certain fixed amount (d):

Subject to the following regulations :

1. That no subscriber shall take less than one share (e):

2. That each subscriber of the memorandum of association shall write opposite to his name the number of shares he takes.

(b) See 19 & 20 Vict. c. 47, s. 5.

(c) See form (A) in second schedule to this act, post. The funds of a joint stock company established for the purposes of one undertaking cannot be applied to another, and the attempt so to apply them, though sanctioned by all the directors and by a large majority of the shareholders, is illegal. But where a company was established for the erection, furnishing and maintenance of an hotel, the carrying on the usual business of an hotel and tavern therein, and the doing all such things as are incidental or otherwise conducive to the attainment of the above objects, and the directors, while the hotel was in the course of being built, agreed to let off, for a stipulated period of short duration, a large portion of it to the head of a government department for the business of his office, and evidence was given that such a letting was calculated to be productive of advantage to the company in its intended business, and that a majority of shareholders had sanctioned the act: it was held, that the arrangement was valid within the words of the clause, "all such things as are incidental or otherwise conducive to the attainment of the objects for which the company was established." No costs were given by the Lords, because the Lords Justices were divided in opinion as to the propriety of the Vice-Chancellor's decree. Simpson v. Westminster Palace Hotel Company, 8 H. L. C. 712. In this case it was argued that the object of the agreement was entirely different from that of carrying on the business of an hotel keeper, for which the company was instituted. The occupation of rooms for the purposes of the public business of the government was not occupation for the business of an hotel, more especially when the occupants did not take their meals there nor sleep there; such letting therefore did not fall within any of the words defining the power of the directors, and consequently was not an act which could by law be confirmed and rendered valid even by the