1838.--Thorpe v. Hughes.

read, and what was alleged by counsel on both sides, this court doth order that the injunction issued in this cause do extend to stay the trial of the action commenced by the defendants, J. Dwyer, P. Jones, J. A. Palmer, H. Watson, D. Taylor, A. L. Saunders, J. Chambers, D. H. M‘Adam, and W. Hodges, in the name of the defendant W. Hughes, against the plaintiff, as in the plaintiff's bill stated.

The defendant Hughes now moved to discharge the last mentioned order.

Mr. Wakefield and Mr. Sharpe, in support of the motion :-This motion raises a very important question with reference to the construction of the act for regulating joint stock banks. The defendants to the bill are the public officer of a joint stock bank in Ireland (the party who now makes the motion and who is the nominal plaintiff in the action) and nine other individuals, who are joined as defendants with him, upon an allegation that they form the managing committee of the bank. As soon as the bill was on the file, the Vice Chancellor, upon an affidavit stating that all the parties were resident out of the jurisdiction, and that the nine last named defendants had commenced an action against the plaintiff in the name of their co-defendant Hughes, and that William Sharpe was the attorney of Hughes, in the action, made an order directing that service of the subpoenas upon Sharpe should be good service against all the defendants. Sharpe was the attorney of Hughes only, and had no authority to act for the others. The consequence was, that no appearance was entered for them; and at the end of the eight

days they were in contempt for want of appearance, and the commen *[750] injunction issued *against them. Then followed the application to

extend the injunction to stay trial, which the Vice-Chancellor granted, and which it is the object of the present motion to discharge.

Under the new rules of pleading at law, the general issue is a mere denial of the contract-it only goes to the fact of the promise or implied promise; and the question of fraud cannot be raised under that plea, but must be specially pleaded; Tidd's New Practice. (a) By his bill the plaintiff does not make the slightest reference to any one of the three points upon which, by his pleas, he relies as his defence at law. He does not raise a question as to any promise neither does he allege that the debt has been paid; or that the bank has establishments within fifty miles of Dublin; in short the whole of the case made by the bill is for the purpose of defence to the action, wholly irrelevant; and Lord Eldon has laid it down, that where, as in this case, the disclosure cannot possibly be material in aid of the defence, the court, notwithstanding the plaintiff's affidavit, will not extend the injunction; White v. Steinwacks. (b) But the singularity of the case is this, that whereas the injunction goes to restrain the other defendants, who are in contempt, from all proceedings at law in the name of the defendant Hughes, the latter is himself not affected by that injunction; and the action which he has brought is brought

(a) P. 350. 5 B. & Adol. App. viii.

(b) 19 Ves. 83.

1838.-Thorpe v. Hughes.

in his name by the co-partnership, which co-partnership, as appears from his affidavit, consists of 3000 shareholders. In Montague v. Hill,(a) and Lord Portarlington v. Graham, (b) where a somewhat similar question arose,

the action was considered and treated as "the action of the assignee, [*751] though brought in the name of the assignor: yet even there the court held that, the assignee not being in contempt, there could be no injunction. against him. Hughes, however, is not the assignee of his co-defendants, some of whom are sworn to be not even shareholders. The injunction originally granted was the common injunction to stay actions generally, and not to stay an action brought by the nine in the name of Hughes; and then, under pretence of extending that injunction, an order has been made to stay the trial. of an action brought in the name of Hughes; in other words, extending the injunction to a purpose to which it had no application originally. That is a mere abuse and perversion of the term "extending," and is wholly irregular. No instance has occurred of an injunction, granted against several defendants, being extended to stay the trial of an action not commenced by them, but by the public officer or managing directors of a co-partnership of which they are members.

By the 6 G. 4, c. 42, s. 6, the public officer of the bank must be himself a member of the company; and it is clear, from the other sections, and especially the 10th and 14th, that, upon the true construction of that act, nobody can be made a defendant to a suit against the company except the public officer. At all events, the act of parliament either operates to prevent any bill in equity or action at law against any one but the public officer, or it must leave the parties at liberty to proceed as if the act of parliament were not in existence. It is impossible to take a middle course, as has been attempted here, and file a bill both against the public officer and against certain individual members of the company. Such a bill would be defective for want of parties, unless all the shareholders were joined as defendants. The case is treated throughout as one of personal fraud on the part of the nine [*752] last named defendants, from the consequences of which the plaintiff is entitled to be relieved. The plaintiff treats the nine as individually liable, and not the company. The course adopted here, if sanctioned by the court, will furnish to every debtor of a copartnership of this kind an easy means of defeating any action by which the copartnership may seek to recover payment of their debts.

The order is irregular on another ground. The defendant had previously referred the bill for impertinence; but Neale v. Wadeson, (c) and Davenport v. Davenport,(d) are authorities to show that, pending a reference for impertinence, an injunction cannot be extended. The plaintiff has also been guilty of great delay in applying for equitable relief to this court, after the declara

1838.-Thorpe v. Hughes.

tion in the action had made him fully acquainted with the nature of the company's demand.

Mr. Jacob, Mr. Wigram, and Mr. Bagshawe, contra :-The question here goes a great deal farther than the case of an assignee suing at law in the name of his assignor, and a great deal farther than any thing that was decided in Montague v. Hill or Lord Portarlington v. Graham. It rather resembles the form of proceeding in actions of ejectment, where several parties bring their actions in the name of John Doe, or some other nominal plaintiff. There the common injunction would be granted against the lessor of the plaintiff, and would stop his action until all the parties had put in their answers. The act of parliament declares that in any action judgment shall be entered up against

the public officer, and execution shall be levied upon any of the mem[753] bers of the company. *This, too, it is to be observed, is an act of

parliament which gives to a company, consisting of 3000 shareholders, the privilege of being treated and suing as if they were one individual; and Hughes describes himself as being the public officer of the company. The act of parliament has no negative words, and the company must take the privilege for better and for worse. The act has not relieved the shareholders from the ordinary law of partnership, according to which, the declarations or admissions of any one of the 3000 would be good evidence in this action against the whole body. There would be no means of obtaining any admissions or useful discovery from the public officer, who, being a mere servant, probably knows nothing. The case made by the bill is that this is a mere bubble company, and the answers of the managing commitee may and probably will furnish most material admissions to establish that case.

The LORD CHANCELLOR :-If this be an order for a special injunction, then it is wholly contrary to the practice: it is the very order which in Lord Portarlington v. Graham the Vice-Chancellor refused to make. The rule of the court is a universal rule, that you cannot restrain proceedings at law except upon the defendant's default. Here there is no default either in Hughes or the company. Hughes is the plaintiff at law; but how does the court know anything except upon affidavit (and the introduction of the affidavit makes it a special injunction,) as to the connection between Hughes and the other defendants ?

Mr. Jacob:-The Vice-Chancellor considered the action as the action of all the parties who are the real plaintiffs in it, and therefore made an or[*754] der that service upon the *attorney of Hughes should be good service

upon them all; treating it as the action of the whole body, and holding that the plaintiff had the same right against them to get the action stayed until they had all put in their answers. Hughes cannot be in a better situation than Dwyer, and the others whom he represents. This is, in fact, the common case of an action brought by several persons, some of whom are in default and others not. It is the action of a great number of shareholders in copartnership, including these defendants, who have the privilege of using the name of a par

1838.-Thorpe v. Hughes

ticular individual as their plaintiff for the purposes of the action; but it is in substance the action of them all, and if some are in default, the action must be stayed till all have answered. The act of parliament cannot have taken away the right of suing the individual members of the copartnership, nor do the further rights or remedies thereby given exclude all resort to the old law. Suppose there was a company of ten partners, and that nine of them, the acting partners, had committed a fraud upon me, in respect of which I had an equitable defence against a demand of the company for which they were suing me at law; if I were to file a bill against all the partners, and get the common injunction against the nine, on their default, could the tenth come in and say, that because he was in no default, the injunction should be dissolved? That is, substantially, the present case; for all these defendants are bound up together in the fraudulent transaction, and are equally interested in the action. brought in the name of Hughes. All that in Lord Portarlington v. Graham the Vice-Chancellor meant to say was, that a party seeking to restrain proceedings at law must first get the common injunction. If that was not his Honor's meaning, the most mischievous consequences might follow in the case of assignor and assignee, and a wide door be opened to collusion and *fraud. The assignor would only have to go abroad, leaving the as- [*755] signee (who of course could safely put in an answer denying all knowledge) to bring his action in the assignor's name. In the case of the assignment of a bond, the assignee is not the plaintiff at law, whereas here the pub lic officer represents the other defendants. How are such cases to be dealt with, if actions brought by parties who stand in this situation cannot be reached by injunction? The Vice-Chancellor only said to the defendants that they were not to prosecute the action which they were then prosecuting in the name of another person. The injunction is only so far special, that an affidavit is required to connect one party with the other. The case of Lord Portarling ton v. Graham ultimately came before Lord Brougham, who continued the injunction, upon the terms of the plaintiff paying the money into court.

The reference for impertinence does not affect the other defendants who are not parties to that reference, and against whom the injunction is now sought to be extended. The affidavit of the plaintiff's attorney fully explains any apparent delay on the plaintiff's part in following up his remedy in this court. Mr. Wakefield, in reply.

The LORD CHANCELLOR :-If it should be found that the parties against whom actions are brought under the authority of the act of parliament by offi cers of these companies, require some protection which the present practice of the court does not afford, the court will be able to adapt its practice to meet that new case; but this is not the mode in which that object can be attained.

*In considering how a defendant, sued at law by a copartnership of [*756] this description, may receive that protection which the practice of a court of equity gives to ordinary persons who are so sued, and in laying down any rule or establishing any practice for the purpose of giving that protection, VOL. III.

68

1838.-Thorpe v. Hughes.

the court must be careful to see that it does not entirely defeat the object of the act of parliament. The object of the act of parliament was to promote these companies, consisting of a large number of persons, associated together for the purpose of carrying on great undertakings. Such associations, however, were found to be extremely inconvenient with reference to legal proceedings instituted on behalf of the company, and still more inconvenient to those with whom the company were dealing, and who, according to the rule of the court, were under the necessity of making all the individual members parties; a rule which resulted in defeating the ends of justice in a great variety of cases. The legislature, therefore, has enacted that a company of this kind, upon going through a certain prescribed form, shall be at liberty to sue and be sued by an officer nominated for that purpose. (a)

If I were to sanction what the Vice-Chancellor's order has done, I should establish a practice which would effectually prevent any of these copartnerships from ever bringing an action against any one who was desirous of avoiding the consequences of that action.

Take this very case-Here is a joint stock company consisting of 3000, or at least of a great number of persons, associated together as copartners. [*757] It is found necessary to bring an action on behalf of the company :

the action is brought; the particular defendant in that action files his bill against the officer representing the company, and any other person whom he chooses to select out of the 3000 shareholders, or against any person who may have no interest at all, but whom he thinks proper to allege to be a shareholder, or to be a person having connection with the company; and the whole proceedings on the part of the company are to stop, because the persons so selected put themselves in the situation of having an injunction granted against them. What protection have the company against it? If their proceedings are to be stopped by the default or misconduct of any person so selected by the individual whom they are suing at law, what means have they of prosecuting their claim, and of doing that which the legislature has said they should have the privilege of doing; namely, asserting their rights by an action to be brought in the name of their officer? It is clear that that course would be always resorted to by a dishonest defendant, and would effectually prevent any proceeding on the part of the company.

In this case what has been the course taken ?—I am not considering the propriety of the order substituting service on the attorney of Mr. Hughes, the plaintiff in the action, for the purpose of bringing before the court the other nine defendants. For the present purpose I will assume that to be right, because it is not complained of. Against Hughes there is no injunction-for what reason it is not now material to consider-but there is no injunction against him; and he is the plaintiff at law. Whether he is plaintiff at law under the circumstances stated by the bill, is a matter which can only be as

(@) In addition to the 6 G. 4, c. 42, see also the 7 G. 4, c. 46, and the 7 Will. 4, & 1 Vict, c. 73,