first, it has been decided, on the construction of a railway statute containing nearly similar provisions to the 8 Vict. c. 16, that the land on which the railway is made does not pass by the mortgage, and that a mortgagee is not entitled to maintain ejectment. The Court, in coming to this determination, said, that there was no reason to suppose that the Legislature intended so inconvenient a thing to the public and the company, as obliging the company to part with that property by which their undertaking was carried on (z). Neither can an action at law be maintained against the company on the mortgage-deed. This was decided by the Court of Common Pleas in Pontet v. The Basingstoke Canal Company (a). In that case Chief Justice Tindal says, "The acts of Parliament are public acts, and they enable the company to raise the money upon the credit of the undertaking, and the rates or duties granted; and it is distinctly said that the creditors shall be creditors on the rates or duties in equal degree one with another. This is not, therefore, a security which gives the plaintiff any right of action in a court of common law. It would be most destructive to the parties engaged if they were held to be so liable." It seems, therefore, that the only remedy which a mortgagee can resort to, in the absence of the power in the special act before alluded to, is to apply to a court of equity for relief (b); and upon such an application it appears to be a rule that all the (2) Doe d. Myatt v. St. Helen's Railway Company, 2 Q. B. 364; S. C., 2 Railway Cases, 756; and see note (k), post, 141. As to mortgages given by the trustees of a turnpike, see Doe d. Watton v. Penfold, 3 Q. B. 757; Doe d. Levy v Horne, Id. 757; Pardoe v. Price, 11 M. & W. 427; 13 M. & W. 267. (a) 3 Bing. N. C. 433; 3 Hodges, 46. See also Pardoe v. Price, 11 M. & W. 427; and Same v. Same, 13 M. & W. 267. (b) It is probable that a mandamus will lie in some cases. See Doe d. Myatt v. St. Helen's Railway Company, 2 Q. B. 372, per Coleridge, J.; R. v. The Margate Pier Company, 3 B. & Ald. 220; Pardoe v. Price, 13 M. & W. 267, arguendo ; and R. v. Comm. of St. Paul's, Shadwell, 1 Man. & Ry. 591. other mortgagees must be made parties to the suit. Thus, in the case of Mellish v. Brooks (d), where a bill had been filed by a mortgagee of turnpike tolls, praying that a receiver might be appointed, to enable the plaintiff to recover his mortgage debt and interest, Lord Langdale, M. R., observes, "As to the form of the suit, it is to be observed, that the tolls which are collected under the acts are the security to which the plaintiff and all other persons who have lent money on the credit of the acts are entitled; that the plaintiff is one of several, and is entitled to the benefit of only a share of the tolls, namely, a share bearing such proportion to the whole as the amount due to him bears to the aggregate amount of all the other sums borrowed on the credit of the tolls; and the question is, whether the plaintiff, in the absence of the other mortgagees, can sue alone for his share. He asks to be paid what is due to him out of the monies received or to be received under the acts of Parliament, and that a receiver of the same may be appointed; but the other mortgagees are interested in those monies, and the plaintiff cannot be paid in full without diminishing the fund out of which they are entitled to be paid; and under these circumstances, I am of opinion, that, in this form of suit, the plaintiff is not entitled to the general relief which he prays (e)." With respect to bond creditors, it is to be observed, that, by the form (g) of the bond, the railway company are bound, under their common seal, to pay the obligee a certain sum of money on a day named; and no reference being made to the security of the undertaking, or the rates, tolls, &c., (d) 3 Beav. 22. See also Doe d. Banks v. Booth, 2 B. & P. 219. (e) A mortgagee of tolls may recover more than six years' interest on his debt, the 42nd sect. 3 & 4 W. 4, c. 27, not being applicable. See Mellish v. Brooks, 3 Beav. 22; and see Hodges v. The Croydon Canal Company, Id. 86. (g) See the form, post, App., 116. it seems that a bond creditor may sue the company upon the bond in a court of law. And although the 44th section of the statute (h) may possibly, in some cases, operate so as to justify the interference of a court of equity for the purpose of protecting other creditors, it is not by any means clear that an injunction would be issued to restrain an action at law on a bond. In Hill v. The Proprietors of the Manchester and Salford Water-works (i) it was decided that a bond could be put in force against a company incorporated by statute, although in one of the sections it was declared that all bond creditors should be equally entitled to a claim or lien on the rates, and without any preference by reason of the priority of date of any securities, or on any account whatsoever. It was intimated that the effect of this section was to give a lien to the holders of bonds; but still the bond was a security of itself, and might be so enforced. So, it was decided in equity, in the case of Perkins v. Pritchard (k), by the Vice-Chancellor of England, that there was no equity to entitle the mortgagees of rates and tolls to restrain a subsequent mortgagee of the lands from enforcing his right, although the lands in mortgage contributed materially to earn the rates and tolls. If money is borrowed by companies in a manner unauthorised by their acts of incorporation, the securities have no legal validity (1). In 1844 a committee of the House of Commons reported that large sums of money had been illegally borrowed by railway companies on loan or mortgage, and that it was expedient that the practice should be discontinued for the future, but that the then existing securi (4) See the section, post, App. 94. (1) 2 B. & Ad. 544. (*) 3 Rail. Cases, 95; 13 Sim. 277. (1) See the preamble to sect. 19, 7 & 8 Vict. c. 85, post, App. 35. As to the doctrine of estoppel in cases where parties set up as a defence that a statute has been contravened, see Hill v. The Manchester and Salford Water-works Company, 2 B. & Ad. 544; Doe d. Chandler v. Ford, 3 A. & E. 649; Doe d. Levy v. Horne, 3 Q. B. 757; Doe d. Watton v. Penfold, Id. 757. 8. Powers to raise money by new shares. ties should be confirmed. In pursuance of this report, the stat. 7 & 8 Vict. c. 85, enacted, that, from and after the passing of that act [9th August, 1844], any railway company issuing any loan note, or other negotiable or assignable instrument purporting to bind the company as a legal security for money advanced to a railway company, otherwise than under the provisions of an act of Parliament, should, for such offence, forfeit a sum equal to the sum for which the loan note, or other instrument, purported to be a security. But it is provided, that any company might renew any loan note, or other instrument, issued by them prior to the passing of that act, for any period not exceeding five years from the passing of the same act (m). And where any railway company, before 12th July, 1844, had issued or contracted to issue any such loan notes, or other unauthorised instruments, it is enacted that the company should pay off such loan notes, or other instruments, as the same might fall due, subject as was thereinbefore provided; and until they should be so paid off, the loan notes, or other instruments, should entitle the holders to the payment of the principal sum and interest (n). The secretary of every company is also required to keep a registry of all such loan notes, &c.; such registry to be open to the inspection of certain interested parties (o). 8. If it be not otherwise provided by the special act, the company may raise the money authorised to be borrowed, by creating new shares, instead of by borrowing; but such augmentation of capital must be authorised at a general meeting of the company. (8 Vict. c. 16, s. 56, post, App. 96). Such additional capital is subject to the same provisions, as to payment of calls, &c., as the original capital, except as to the (m) 7 & 8 Vict. c. 85, s. 19, post, App., 35. (n) 7 & 8 Vict. c. 85, s. 20, post, App., 36. (0) 7 & 8 Vict. c. 85, s. 21, post, App., 36. time and amount of the calls, which may be fixed by the company. (Id., s. 57, post, App., 96). If the old shares are at a premium, then, unless it be otherwise ordered by the special act, the new shares must be offered to the shareholders in proportion to their existing shares, such offer to be made in the manner prescribed. (Id., s. 58, post, App., 96). Such new shares vest in the shareholders who shall accept them, and pay the instalments due thereon; and if any shareholder fails for one month to accept them, or pay the instalments, the company may dispose of them. (Id., 8. 59, post, App., 96). If the old shares are not at a premium when the capital is augmented, the company may issue the new shares on such terms as they think fit. (Id., s. 60, post, App., 96). 9. If any execution be issued against the company, and there cannot be found sufficient whereon to levy, such execution may (by order of the court, to be made after notice given to the shareholder) be issued against a shareholder to the extent of his shares not then paid up; and the party entitled to any such execution may inspect the Register of Shareholders, to ascertain the names of the shareholders. (Id., s. 36, post, App., 92). If the shareholder, by means of such execution, shall pay any money beyond the amount due from him for calls, he is entitled forthwith to be reimbursed such sum out of the funds of the company. (Id., s. 37, post, App., 92). The provisions of the above statute as to the power to issue execution against a shareholder are substantially the same as in those statutes where it has been decided that it necessary to issue a scire facias (p). It seems, therefore, (p) Eardley v. Law, 12 A. & E. field v. Barton, 2 Dowl. P. C., N. S., 803; S. C., 4 P. & D. 379: Clowes 1. Brettell, 10 M. & W. 506; Wing 355. If the shareholders have paid 9. Remedies of shareholders. creditors against |
