employment, and shall not acquire to themselves, while they remain directors, an interest adverse to their duty. Benson v. Heathorn, 1 Y. & Coll. C. C. 326; York and North Midland Railway Company v. Hudson, 16 Beav. 495; 22 L. J., Ch. 529; Hudson v. Same Co., 18 Beav. 70.

The directors of a company are trustees and have attached to them for the benefit of the shareholders all the liabilities and duties which attach to a trustee or agent, if therefore a director enters into a contract for the company, he can derive no personal benefit from it. Great Luxembourg Railway Company v. Magnay, 4 Jur. N. S.

839.

A railway company furnished a director with a large sum of money to enable him to purchase the concession of another line. He purchased it, as it turned out, from himself, he being the concealed owner of it: it was held that the transaction could not stand, but that the company must adopt or repudiate the transaction altogether. Ib.

The company having sold the concession, pending a suit impeaching the transaction: it was held also, that they could have no relief, either as to the application of the money or otherwise. Ib.

Directors are the servants not of the individual shareholders but of the company; and if a shareholder is aggrieved by their misconduct, his course is to call upon the company to bring the directors to account, and having done that then to get relief from the company itself. Orr v. Glasgow, Airdrie and Monklands Junction Railway Company, 6 Jur. N. S. 877; 8 W. R. 643, H. L.

It was questioned how far directors can be regarded as the agents of a company for the purpose of making false representations, by which the shareholders or the publicare deceived. Re Hull and London Life Assurance Company, ex parte Gibson, 2 De G. & J. 275; 4 Jur. N. S. 1005.

The managing committee of a projected railway company as well as the directors, after its formation, are not merely the agents of the shareholders but their trustees, and are liable to account as such. Williams v. Page, 24 Beav. 654; 4 Jur. N. S. 102; 27 L. J., Chan. 425.

When the managing committee of an abortive company have rendered their accounts and divided the money in their hands without comment or remonstrance on the part of the shareholders, the court would not, three or four years afterwards, decree an account against them. Ib. Directors of a company, on the transfer of its business

to another company, received from the latter a large sum for compensation, the particulars of which they withheld from their members: it was held that they were trustees of the money for the members, and they were ordered on an interlocutory application to pay it into court. Gaskell v. Chambers, 26 Beav. 360.

A bill by a company alleged that a defendant had agreed to accept shares. The articles of association were silent as to the mode of acceptance, and the act 19 & 20 Vict. c. 47, s. 9 and schedule B. applied (see ante, p. 356), by which the acceptance must be in writing and signed by the applicant. The defendant had never signed an acceptance. This fact and the statute were set up by plea: it was held, first, that the plea was bad in form, as it raised no fact not raised by the bill. New Brunswick and Canada Railway and Land Company v. Muggeridge, 4 Drew. 686. Secondly, that the agreement was good to do that which the statute required. Ib.

And that the decree would not be nugatory, as in a joint stock partnership, a partner cannot put an end to the partnership but only to his own quality of shareholder; he must remain shareholder or constitute another person shareholder in his place. Ib.

The directors of a loan company were empowered to borrow money, but directors who were "concerned in or participated in the profits of a contract with the company," vacated their offices. The chairman lent money to the company at high interest, which was afterwards lent out at a profit: it was held, that the loan was not warranted by the rules. Discounting the bills of a director is a lending of money within a clause prohibiting loans to shareholders. Bluck v. Mallalue, 27 Beav. 398; 5 Jur. N. S. 1018.

A contract made between the projector and the directors of a joint stock company provisionally registered, but not in terms made conditional on the completion of the company, is not binding upon the company, which is subsequently completely registered, although confirmed by the deed of settlement. Gunn v. London and Lancashire Assurance Company, 12 C. B., N. S. 694; Hutchinson v. Surrey Consumers' Gas Company, 11 C. B.689; Payne v. New South Wales Coal and International Steam Navigation Company, 10 Exch. 283.

The original promoters of a railway project have no power to bind the corporation ultimately constituted by the act of parliament. The corporation so constituted, though owing its existence to the exertions of the pro

moters, is not bound to fulfil their contracts. The promoters are not agents by anticipation of the corporation. Anterior engagements can only bind the corporation when incorporated in their act, or when deliberately adopted by them. Caledonian and Dumbartonshire Railway Company v. Magistrates of Helensburg, 2 Macq. H. L. 391.

A company, having no power to lend, lent money to another company which had no power to borrow, the borrowers being aware of such facts. The borrowers purchased a canal with the money, and such purchase was afterwards set aside with an order to refund the purchase-money. A decree was made in favour of the lending company for repayment, with interest, of the balance due to them on the original loan out of the purchase-money, which had been refunded. Croysdill, 6 Jur. N. S. 740; 29 L. J., Ch. 580.

Ernest v.

shareholders.

The capital of a company was fixed at 10,000l., with Acquipower for a general meeting of the shareholders duly escence of convened according to certain forms, and by a majority of two-thirds of the then shareholders, to increase that amount to 100,000l. No such meeting was held, but a false entry was made by the chairman in the minute-book of the company, stating that at an extraordinary general meeting of the company it had been resolved to increase the capital from 10,0007. to 100,000l. The capital having been de facto increased, new shares having been issued and taken, profits having been made upon the increased capital and dividends paid on such profits among all the shareholders for four years: it was held that the shareholders must be taken to have acquiesced and could not then object to the irregular manner in which the shares had been increased. Re Richmond, Re Painter, 4 Kay & J. 305; see Lawes's Case, 1 De G., M. & G. 443; Morgan's Case, 1 De G. & S. 750.

bind share

Where a director of a public company availing himself Power of of his position obtains a private advantage by transactions directors to with the company, the company cannot afterwards re- holders. pudiate those transactions, when they have by their conduct, with a knowledge of the transactions, put it out of their power to restore all parties to their original position. Great Luxembourg Railway Company v. Magnay, 4 Jur. N. S. 839.

Where contractors for the works of a railway company agreed to accept preference shares in the company in part payment, upon the faith of representations made by the directors (who were acting ultra vires) that only 31. per

share would be called up, or that if more than 37. should be called up they would receive payment of the additional amount in preference shares, or exchange the 31. for paid-up shares, and the company afterwards refused to comply with these terms: it was held that there was no equitable relief against the directors personally, either by way of specific performance or on the misrepresentations, but that the remedy, if any, was by an action for damages. Ellis v. Colman, 4 Jur. Ñ. S. 350; 27 L. J., Chan. 611.

Seven individuals associated themselves together for the formation and working of a mine, upon the costbook principle, and issued a prospectus describing the company as having a capital of 12,000l., in 12,000 shares of 17. each, to be paid upon allotment; and setting forth the reports of the mining captain that the mine was in full operation, and stating that the money was to be paid to L. & Co., the bankers of the company. The plaintiff applied for and obtained an allotment of fifty shares, and paid 50l. to L. & Co., who gave him a receipt, describing that sum as having been received by them for the company. The plaintiff having afterwards discovered that not more than 1,435 shares had ever been subscribed for or paid upon, brought an action against the directors to recover back his deposit, on the ground of failure of consideration: it was held (affirming the judgment of the Common Pleas), that all the directors were liable, notwithstanding the account at the bankers was kept in the names of five of them only, for the entry of the receipt of money to an account of the particular directors could not affect the right of those making the payment. Johnson v. Goslett, 3 C. B., N. S. 569; 4 Jur. N. S. 50; 27 L. J., C. P. 122, Exch. Cham.

Such directors of an insurance company as had declared a dividend which was not warranted by the state of the funds of the society, were held to be liable to make good the amount of the dividend. The directors who had bought a number of shares with the funds of the society, were held to be liable for the amount so applied, such a dealing with the funds being altogether at variance with the scope of the deed of settlement. Evans v. Coventry, 2 Jur. N. S. 557; 25 L. J., Ch. 489; see also 19 & 20 Vict. c. 47, s. 14.

The deed of settlement of a company provided for the transfer of shares, with the approbation of the directors. Some of the shareholders threatened to take proceedings to set aside a purchase and lease for fraud, whereupon the directors agreed with them that they should be allowed

to transfer their shares on payment to the company of a sum, out of which a claim of one of the directors against the company should be satisfied. The money was paid, and the claim satisfied out of it, and the shares transferred to nominees of the directors for a nominal consideration it was held, that the transaction was inconsistent with the duty and beyond the power of the directors, and that the shareholders were, notwithstanding the transfer, properly placed on the list of contributories. Bennett's Case, 5 De G., M. & G. 284; 24 L. J., Ch. 130.

bind mi

Although the majority of the partners of a company Power of may bind the minority upon every point which the deed majority to authorizes by their common contract, yet they have no nority. authority whatever to bind the minority on any matter which is not within the common contract. Under the deed, which is the origin of the company, certain persons came in and are shareholders, whether originally or by purchase is not very material, whereby they take on themselves the liabilities of the company. Such deed is equally binding on those who sign the deed and upon those who become shareholders with them.

In pursuance of a resolution passed at an extraordinary general meeting of an unincorporated company, a shareholder sold his shares to the directors, upon the terms that he should withdraw from the company and be no longer liable to any debts of the company. No power to enter into such an arrangement was contained in the deed of settlement of the company: it was held, that the shareholder was still liable to the debts of the company, and was properly included in the list of contributories under the Joint Stock Companies Winding-up Act, 1848. Ex parte Morgan, Re Vale of Neath and South Wales Brewery Joint Stock Company, 1 H. & T. 320; 1 Mac. & G. 225.

By the deed of settlement of a company its directors had the power of purchasing on behalf of the company shares in the capital of the company, when there should be a surplus fund of 10,000l., and there was no prohibitory clause in the deed restricting the purchase under other circumstances. The deed provided the mode by which a shareholder parting with his shares was to be relieved from subsequent responsibility. The deed also contained clauses regulating the mode of convening extraordinary and general meetings, and provided that, where an extraordinary meeting was to be convened, notice should be given of the specific object of