which it is, by its own terms, to become complete, are complied with. If before that the scheme be abandoned, the provisional subscribers, or allottees, may recover back their deposits of the provisional committee, in an action for money had and received.2 So, too, if one is induced to accept of shares in the provisional company, by fraudulent representations, he may recover back the whole of his deposits.3

3. But if one actually become a subscriber, he is bound by the terms of subscription, without reference to prior oral representations, and must bear a portion of the expense incurred, if the subscription so provide. But if the directors, in such provisional company, in order to induce subscriptions, promise the subscriber, that in the event of no charter being obtained, he shall be repaid his entire deposit, this contract is binding upon them, and may be enforced by action, notwithstanding the subscriber's agreement authorized the directors to expend the money in the mode they did.5 4. But the contract of the directors will not excuse the subscriber from paying calls, if the terms of the subscriber's agreement require it. The contract of the directors in such case, and the deed of association, are wholly independent of each other, and neither will control the other.7

*

5. But it has been held, that persons, by taking shares in a projected railway, do not bind themselves to pay any expense incurred, unless it is so provided in the preliminary contracts of association, or the expense is incurred with their sanction and upon their credit.8 And even where such shareholder consents to act on the provisional committee, it will not render him liable, as a contributory, to the expense of the company.9

2 Walstab v. Spottiswoode, 4 Railway C. 321; s. c. 15 M. & W. 501. 3 Jarrett v. Kennedy, 6 C. B. 319.

Watts v. Salter, 10 C. B. 477. And if one subscribe the agreement and parliamentary contract, he will be liable, although he have not received the shares allotted to him or paid the deposits. Ex parte Bowen, 21 Eng. L. & Eq. 422. 5 Mowatt v. Londesborough, 25 Eng. L. & Eq. 25, and 3 El. & Bl. 307; s. c. in error, 28 Eng. L. & Eq. 119, and 4 El. & Bl. 1; Ward v. Same, 22, Eng. L. & Eq. 402.

• Ex parte Mowatt, 1 Drewry, 247.

7 Dover & Deal Railway, ex parte Mowatt, 19 Eng. L. & Eq. 127; s. c. 1 Drew, 247.

8 Maudslay ex parte, 1 Eng. L. & Eq. 61; 14 Jur. 1012.

• Carmichael ex parte, 1 Eng. L. & Eq. 66; s. c. 14 Jur. 1014; Clarke ex parte, id. 69; s. c. 20 L. J. N.S. ch. 14.

6. But in general, the form of the deeds of association is such, that if one takes shares without reservation, he is to be regarded as a contributory to the expense,10 and especially where he acts as one of the provisional committee, and also accepts shares allotted to him.10

7. But one who has obtained shares in a projected railway company, but without executing the deed of settlement, or any deed referring to it, was held not liable to contribute to the expense incurred, in attempting to put the company in operation,11 and especially if the acceptance of the shares is conditional, upon the full amount of the capital of the company being subscribed, which was never done.11

10 Burton ex parte, 13 Eng. L. & Eq. 435; s. c. 16 Jur. 967; Markwell ex parte, 13 Eng. L. & Eq. 456; s. c. 5 De G. & S. 528; Upfill's case, 1 Eng. L. & Eq. 13; s. c. 14 Jur. 843; Watts v. Salter, 12 Eng. L. & Eq. 482. See also St. James's Club in re, 13 Eng. L. & Eq. 589; s. c. 10 C. B. 477; as to the effect of proof of the subscriber being present when a resolution is passed.

"The Galvanized Iron Co. v. Westoby, 14 Eng. L. & Eq. 386; s. c. 8 Exch. 17. It was formerly considered, that all persons engaged in obtaining a bill in parliament for building a railway, were partners in the undertaking, and for that reason a subscriber, who acted as their surveyor, could not maintain an action for work and labor, done by him in that character, against all or any one of the subscribers. Holmes v. Higgins, 1 B. & C. 74. See also Goddard v. Hodges, 1 C. & M. 33.

But it is now regarded as well settled, in all the courts in Westminster Hall, that there subsists between the subscribers to such an enterprise no relation of general partnership whatever, and no power to bind each other for expenses incurred in carrying forward the enterprise. Each binds himself only by his own acts and declarations, unless he acts by virtue of some authority conferred by the deeds of association. Parke, Baron, in Bright v. Hutton, 3 H. L. Cases, 341, 368. And an agreement, aside of the deed of association, that one of the promoters shall indemnify another, is held valid. Connop v. Levy, 5 Railway C. 124; s. c. 11 Q. B. 769. But a general indemnity against costs will only extend to costs in suits lawfully brought. Lewis v. Smith, 2 Shelford, Bennett's ed. 1030.

And in regard to liability, for expenses incurred in carrying forward railway projects, it often happens, that one who has been active may thereby make himself liable to tradesmen and others who have performed service in behalf of the enterprise, upon the expectation he would see them paid. In Lake v. Duke of Argyll, 6 Q. B. 477, 479, Denman, Ch. J., said: "But when persons meet to prepare the measures necessary for calling the society into existence, attendance on such meeting, and concurrence in such measures, may be strong evidence, that any individual there present, and taking part in the proceedings, held himself out as a paymaster to all who executed their orders; and though not liable as a member or shareholder, yet his declared intention to become

SECTION IV.

Contracts of the Promoters adopted by the Company.

1. Liability may be transferred with assent of n. 3. Powers of provisional company to concreditors. But not unless that is equitable. tract limited by statute.

§ 5. 1. The company when fully incorporated may assume the liabilities of the preliminary association, incurred in obtaining * the special act, or as is sometimes the case, where the association the president, or a member, in whatever event, or to take a share under any conditions, may be material evidence to show that he authorized contracts with those whose services were required by what may be called the constituent body."

But a charge to the jury, that before surveyors, in such case, could recover of the provisional committee, they must be satisfied that defendants did, by themselves or their agent, employ the plaintiff to do the work, or that, being informed of their having done it, on their credit, by the employment of some one not authorized, they consented to be held liable, was affirmed in the Exchequer Chamber. Nevins v. Henderson, 5 Railway C. 684; Williams v. Pigott, 5 Railway C. 544; s. c. 2 Exch. 201. See also Spottiswoode's case, 39 Eng. L. & Eq. 520. Since the publication of the second edition of this work, the English courts have made numerous decisions bearing upon the general subject discussed in this note. In Maddick v. Marshall, 10 Jur. N. S. 1201, the defendant was employed by the parties in interest to act as provisional director in connection with others, under the assurance from the solicitor of such parties, that they were safe and would incur no personal responsibility; and the directors thereupon appointed the principal party in interest secretary, and passed a resolution to advertise, which resolution was signed by the defendant as director. The plaintiff, upon taking the order, was shown the resolution certified by the defendant as authority for the order. The court held this testimony for the jury to consider, tending to show a personal undertaking by defendant, and that they could not disturb a verdict against him. See also Swan v. The North British Australasian Co., 7 H. & N. 603; s. c. 8 Jur. N. S. 940, as to what acts will create an estoppel in such cases.

Under the English statute, all the subscribers are constituted directors until they designate who shall act in that capacity, and have authority to appoint one of their number to an office in the company. Eales v. The Cumberland Black Lead Mine Co., 6 H. & N. 481; s. c. 7 Jur. N. S. 169.

It seems to be considered essential, in order to fix the liability of a subscriber to the articles of association on that ground alone, that the subscription should be in his own handwriting, and not by procuration merely. Richardson ex parte, 4 Law T. N. S. 589. The company are not bound to give notice of the allotment of shares in order to bind the subscriber to take them. It is his duty to take notice of the allotment, and to make payment of all future dues fixed by law, or the terms of the contract. Bloxam ex parte, 10 Jur. N. S. 814; s. c. 33 Beav.

*

make an assignment of their property. But even an express provision in the charter, that the company shall be solely liable for the debts of the association, will not exonerate the association unless by the consent of the creditors.2 But when the company assume the debts of the association, by the assent of their creditors, they will be relieved. But where the plaintiff contracted

529. But in order to render the allottee liable to pay calls on shares, they should be specifically numbered and appropriated by number. Irish Peat Co. v. Phillips, 7 Jur. N. S. 413; s. c. affirmed 7 Jur. N. S. 1189, 1 B. & S. 598. But semble he may be estopped to deny his membership. So, too, it was considered in this case, that in order to bind an associate to pay future calls, it was essential that he should have subscribed the deed of association.

The provision of the English statute as to the period within which the register of shareholders shall be made and sealed is regarded as directory, so far as the liability of shareholders is concerned, and they will not be exonerated from responsibility by a failure of the company to comply with the direction. W. N. W. Co. v. Hawksford, 11 C. B. N. S. 456; 8 Jur. N. S. 844 in Exchequer Chamber.

The company, when fully incorporated, may sue in their own name upon calls made by the directors of the preliminary incorporation. Hull Co. v. Wellesley, 6 H. & N. 38.

A registered shareholder in a company, which was afterwards incorporated with a new company, is entitled to be regarded as a shareholder in the new company, if the act of incorporation so provide, although he may not have exchanged his certificate for shares in the old company for those in the new company. Spackman v. Lattimore, 3 Giff. 16; s. c. 7 Jur. N. S. 179. It was further decided in this case, that the subscribers could not charge their own subscriptions against the company as money advanced for their benefit.

Where a subscriber has paid for the expenses of the promoters all that the terms of association required, he cannot be charged further, because he made the payment without taxation. Croskey v. Bank of Wales, 4 Gif. 314.

The property in shares vests in the subscriber upon the execution of the deed and complete registration of the company, and the delivery of scrip certificates is not requisite to vesting the shares, but they are to be regarded merely as the indicia of property. Hunt v. Gunn, 3 F. & F. 223.

1 Haslett's Ex'rs v. Wotherspoon, 1 Strob. Eq. 209; Salem Mill Dam Co. v. Ropes, 6 Pick. 23.

2 Witmer v. Schlatter, 2 Rawle, 359.

3 Whitwell v. Warner, 20 Vt. 425. But by the English statutes companies provisionally registered are not allowed to make any contract, not indispensable to carrying forward the project to full registration. And where the directors of such a company contracted for plans, sections, and books of reference, to the value of £3,000, it was held a violation of the statute and illegal, and that no recovery could be had upon it. Bull v. Chapman, 20 Eng. L. Eq. 488; s. c. 8 Exch. 444; 7 & 8 Vict. ch. 110.

A contract made between the projector and the directors of a company pro

with the promoters of a railway bill to bear the costs of obtaining it, and the bill passed with the usual clause that the costs of obtaining it should be borne by the company, it was nevertheless held, that the contract would preclude the recovery of the costs of the corporation.*

SECTION V.

How contracts of the Promoters may be adopted by the Company.

Cannot assume the benefit without the burden.

§ 6. Wherever a third party enters into a contract with the promoters of a railway, which is intended to enure to the benefit * of the company, and they take the benefit of the contract, they will be bound to perform it, upon the familiar principle that one who adopts the benefit of an act, which another volunteers to perform in his name and on his behalf, is bound to take the burden with the benefit.1

visionally registered, but not in terms made conditional on the completion of the company, is not binding upon the subsequently completely registered company, although ratified and confirmed by the deed of settlement. Gunn v. London and Lancashire Assurance Co., 12 C. B. N. S. 694.

The promoters of a railway company agreed with the tenant for life of settled estates to pay him £20,000 for obtaining his support to their scheme. This agreement was afterwards adopted by the provisional committee of a second company, which stood in place of the first. The second company's bill passed, and an indenture was made under the company's seal, by which, on the ground of doubts as to the absolute right of the tenant for life to the £20,000, the company was to retain the sum and pay interest on it. Interest was paid for some years, but at length the company refused to make any further payment. Upon a bill by a subsequent tenant for life of the estates to have the company's liability declared, and obtain payment of the £20,000 for the benefit of the settled estate: Held, that the contract was ultra vires, and could not be enforced.

Held, also, that this was not within the meaning of the Companies' Clauses Consolidation Act, sec. 65, as being in respect of "costs incurred in obtaining the special act, and incident thereto." Lord Shrewsbury v. North Staffordshire Railw. V. C. Kindersley; 12 Jur. N. S. 63.

Savin v. Hylake Railway, Law Rep. 1 Exch. 9; s. c. Law Rep.1 Eq. 593. 'Gooday v. The Colchester & Stour Valley Railway, 15 Eng. L. & Eq. 596; s. c. 17 Beav. 132; Preston v. Liverpool & M. Railway, 7 Eng. L. & Eq. 124; s. c. 1 Sim. N. S. 586; Edwards v. Grand Junction Railway, 1 Mylne & Cr. 650. The cases in support of this general proposition are very numerous, and will be more fully examined in the next section.