Page images
PDF
EPUB

539

CHAPTER XX.

RAILWAY

AND PARLIAMENTARY WORKS' COMPANIESCORPORATIONS AT COMMON LAW-PARTNERSHIPS UNDER LETTERS PATENT, AND JOINT STOCK BANKING

COMPANIES.

SECTION 1.-Railway and Parliamentary Works' Companies.-Provisional registration thereof— Inutility of complete registration-Liabilities of the promoters during provisional registrationRecovery of deposits-Sales of letters of allotment and scrip-Of the bankruptcy and dissolution of provisionally-registered railway companies-Incorporated railway companies-Registration of the subscribers and scripholders-Extinguishment of the liability of the original subscribersTransfers of shares and stock after incorporation-Transmission of the interest therein by bankruptcy or insolvency, marriage or death-Of the liability ex contractu of the directors and shareholders-Of the liability for calls-Mandamus to make calls-Of the power of the directors and committees to bind the company-Execution against the shareholders.

SECTION II.-Corporations at Common Law.-Effect of incorporation at common law-Liability ex contractu of the body corporate-The common seal the hand and mouth of the corporation-Of the affixing of the common seal to contracts-Of corporate meetings, and the concurrence requisite in corporate acts-Exceptions to the general rule that a corporation can contract only under its common seal-Liability of corporate bodies upon simple contracts entered into in the discharge of its ordinary functions --Of the dissolution of corporations.

SECTION III.-Partnerships under Letters Patent.—Of the grant by the crown of certain corporate privileges to partnerships without incorporation-Of the privilege of suing and being sued in the name of a public officer-Limitation of the liability of the partners by the letters patent-Of the form of the partnership deed, and of the conditions to be complied with before letters patent can be obtained.

SECTION IV.-Joint Stock Banking Companies. Of the creation and establishment of joint stock banking companies-Incorporation of the company-Transfers of shares--Liabilities of the shareholders to the company, and of the company to the shareholders individually-Payment of calls— Liability of the company and shareholders to third parties-Execution against the shareholders— Contribution between them to the common loss-Of the dissolution of the company-Companies and copartnerships excepted from the operation of the act.

SECTION I.

RAILWAY AND PARLIAMENTARY WORKS' COMPANIES.

Of the formation and establishment of Railway and Parliamentary Works' Companies.-We have already seen, that by the fourth section of the Joint Stock Companies' Act, every company or association for the execution of any work under the authority of parliament must, before the proposal for its formation has been made public, be provisionally registered by the promoters; and that for this purpose returns of the proposed name and object of the company, and of the names, occupations, and addresses of the promoters must be made to the registrar, together with the other customary returns required from all joint stock companies coming within the operation of the fourth section of the statute, (ante, s. 1, 511.) After being provisionally registered, the company may proceed to get an act of incorporation, and the requisite powers for the carrying on of the undertaking. Complete registration is not usually sought for, as no advantage occurs therefrom. By the 26th section of the Joint Stock Companies' Act, it is provided, with regard to companies for executing any bridge, road, cut, canal, reservoir, aqueduct, water-work, navigation, tunnel, archway, railway, pier, port, harbour, ferry, or dock, which cannot be carried into execution without obtaining the authority of parliament, that on the complete registration of any such company, and before such company shall have obtained its act of incorporation, or other act, whereby the authority of parliament shall be granted for executing such work, it shall not be lawful for any such company, or the directors or officers thereof, to enter into contracts otherwise than conditionally upon obtaining such act, or to exercise the power to purchase and hold lands, or to exercise the power to receive instalments from shareholders, beyond the sum or per centage necessary to be deposited in compliance with the standing orders of either house of parliament, or such other sum as may be requisite for obtaining the act of incorporation, or other act, for granting the authority of parliament to execute such work, or to exercise the power of borrowing money or declaring dividends. But the company may perform all such acts as are necessary for obtaining an act of incorporation, and the authority of parliament for the execution of its works; and upon the obtaining and coming into operation of such act of parliament, all the powers conferred by the Joint Stock Companies' Act,

and all the provisions and regulations thereof which shall apply to such company are to cease and determine.

Recovery of deposits in case of the abandonment of the undertaking.We have already seen, (ante, 513,) that if a joint stock company is formed for the purpose of obtaining the authority of parliament for the execution of a railway, or other works, and the projectors abandon the undertaking, they are bound to return the deposits to the shareholders and subscribers, in the absence of an express agreement providing for the appropriation of such deposits and subscriptions in liquidation of the preliminary expenses. The original subscribers and shareholders are the only parties (strictly speaking) entitled to sue the projectors and managers for the recovery of these deposits; and if they have sold their shares and transferred their letters of allotment and scrip certificates to the purchasers, the latter cannot bring an action for the recovery of such deposits in their own names, but must sue the managers and projectors in the names of the original subscribers and shareholders from whom they derive their title.(a)

Sales and transfers of letters of allotment, and of scrip and shares in provisionally-registered railway and parliamentary works' companies, are not, as previously mentioned, within the 26th section of the Joint Stock Companies' Act, and are not, consequently, prohibited and rendered illegal by that statute. (b) Letters of allotment and scrip certificates of shares may consequently be bought and sold as soon as the company has been provisionally registered.

Executory contracts for the sale and purchase of shares and scrip must, as we have already seen, (ante, 526,) be stamped with a common half-crown agreement stamp. They are fulfilled on the part of the vendor by a tender of letters of allotment of shares, if there are no shares in the market, and the letters of allotment are commonly bought and received as shares upon the Stock Exchange.(c)

A broker bought for the plaintiff certain scrip certificates of shares in the Kentish Coast Railway Company, which had been bought and sold in the market as genuine scrip, but which turned out to be forged, or to have been issued without the authority of the company; and the plaintiff brought his action against his own agent, the broker, to recover from the latter the amount that he had paid him for the purchase of the shares; and it was held that it was a question for a jury to determine, whether the

(a) Ante, 307, 342.

(b) Young v. Smith, 15 Law J., N. s. (Exch.) 84; 15 M. & W. 121, s. c. Shaw v. Holland, ib. 145. Lawton v. Hickman, and Loonie v.

Oldfield, 10 Jur. (Q. B.) 543.

(c) Mitchell v. Newhall, 15 Law J., N. S., (Exch.,) 292; 10 Jur. 318. Tempest v. Kilner, 15 Law J., N. s. (C. P.) 10.

plaintiff wished to buy and the defendant intended to sell him real Kentish scrip, or that which was in the market as such; (d) and if the broker, the plaintiff's own agent, had been guilty of no fraud or negligence in the execution of the commission entrusted to him, but had bought what was ordinarily sold in the market as Kentish Coast Railway scrip, he would not be bound to refund the money that he had received in payment of such shares, after it had passed through his hands, and been paid over bona fide to the purchaser. There is therefore no warranty or undertaking on the part of a broker employed to buy shares or scrip, that the article. which merely passes through his hands is anything more than what it purports on the face of it to be, and what it is generally understood to be in the market. In the case of Kempson v. Saunders, (decided 7 Geo 4th,) when sales of shares and scrip in projected joint stock companies were viewed in a far different light from what they are at present, it was held that a purchaser of scrip certificates of shares in a projected railway company was entitled to recover back the purchase money from the vendor, on the abandonment of the undertaking by the projectors. "The defendant," (the vendor,) observes Best, C. J., "was not an original subscriber, but purchased the shares from a broker who sold for another at a premium; these shares were, in fact, not saleable, or articles of any value, until the company should be formed, and receive the sanction of the legis lature. The defendant, therefore, in fact, sold mere pieces of parchment. worth nothing, and obtained money from the plaintiff for a thing of no value; and it is an established rule of law, that where money has been paid over by one party to another without a valuable consideration, or on a consideration that fails, an action for money had and received will lie to recover it back.-If," he further observes, "the defendant bought of another, he may sue the seller to him, and such seller the party from whom he purchased, till at last we come to the ORIGINAL PROJECTORS, and in getting at them a great service will be done." (e)

As sales of letters of allotment and of scrip certificates of shares in provisionally registered railway and parliamentary works' companies are now considered to be perfectly legal, it can hardly be contended that a purchaser is entitled to recover back the purchase money he has paid if there has been no fraud or deceit on the part of the vendor. He may be entitled to sue the projectors or promoters in the name of the original allottee for the recovery of the deposit paid on the shares, but could hardly be permitted, if the sale was a valid and legal sale, to resort to the seller

(d) Lambert v. Heath, 15 Law J., N. s. Exch. 297.

(e) Kempson v. Saunders, 12 Moore, 49; 4 Bing. 7. Watkins v. Huntley, 2 C. & P. 410, n.

for the recovery of the purchase money or any premium he may have paid the latter.

The rule of caveat emptor must apply to sales and purchases of scrip and shares, as well as to other commodities bought and sold in the public market. (Ante, 223.)

The discounting of a bill of exchange or promissory note, which afterwards turns out to be a forgery, (f) presents no analogy to the sale of scrip in the market. There the parties do not in general intend to speculate on the value of the bill, but the value is assumed as a known quantity, subject to no hazard except the insolvency of the parties whose names appear upon the face of it. But in the case of the sale of railway scrip, it is notorious that the whole transaction is a speculation on the value of the subject matter of the contract, which is subject to a variety of contingencies. We have before seen, in the case of sales and purchases of chattels, that the law does not imply from the mere seller of an article in its natural state, who has no better means of information than the purchaser as to its inherent condition, any warranty or undertaking beyond the ordinary promise that he is not cognizant of any defect materially lowering the marketable value of the goods; and it is apprehended that in the case of sales and purchases of letters of allotment and scrip there is no implied warranty on the part of the vendor that the scheme shall go on and the capital be raised, or that the public announcements respecting it shall be fulfilled. (g)

An undertaking by a broker that a third party shall deliver shares by a particular day, is not an undertaking to be answerable for the act or default of another within the Statute of Frauds, and requiring consequently to be authenticated by a note in writing if the third party has not contracted with the plaintiff for the delivery of the shares so as to be himself responsible upon the contract. (h)

Of the bankruptcy and dissolution of provisionally registered railway companies.-The recent act of 9 & 10 Vict. c. 28, enables parties who have entered into subscription contracts or agreements for the formation of a railway company to dissolve the company through the medium of a resolution of a majority of three fifths of the subscribers or shareholders in public meeting assembled. The committee of management or the provisional directors may (s. 2) call this

(f) Jones v. Ryde, 5 Taunt. 488. As to the stamp on contract for the sale of scrip, see Knight v. Barber, 10 Jur. 929.

(g) Ante, 223, Lambert v. Heath, 15 Law,

J., N. S., Exch. 297. Price v. Neal, 3 Burr. 1355. Shaw v. Holland, 15 M. & W. 136. Doyle v. Muntz, 10 Jur. 914.

(h) Hargreaves v. Parsons, 13 M. & W. 561.

N N

« PreviousContinue »