Page images
PDF
EPUB

it should perform; and that was surely all which those who had dealt with the projectors could claim as their right. For those reasons his Lordship was of opinion that on principle there was no ground for holding that a company was bound by any engagement made by those who obtained the Act of incorporation, unless those engagements were embodied in the terms of the Act itself.

His Lordship, in considering how far the question was settled by authority, after reviewing the case of Edwards v. The Grand Junction Railway Company, Stanley v. The Chester and Birkenhead Railway Company, and Lord Petre v. The Eastern Counties Railway Company, observed that in all these cases Lord Cottenham clearly considered that the company was bound by the contract of the promoters. His Lordship thought that such doctrine rested on no sound principle. “I am, however," added his Lordship, “relieved from the necessity of coming to any positive decision on this point, because I think the present case is distinguishable from those decided by Lord Cottenham, and so, that even if those authorities are to be held binding, still they do not govern the present case.

“In all the cases before Lord Cottenham, the contracts which he held to be binding on the company were contracts to do things warranted by the terms of the incorporation. ... But here, what the projectors of the railway company contracted to do is to apply the funds raised under legislative authority for the purpose of the railway to an object foreign from that of the railway; namely, the construction of a pier and harbour at Helensburgh. It is vain to say that such an application of the funds might, if the projected branch line from Dumbarton to Helensburgh had been made, have been beneficial to the railway company. It is a sufficient answer to such a suggestion, that it is not the purpose for which the shareholders subscribed their money; and there are numerous authorities, both in England and Scotland, to show that such a diversion of the funds from their statutable destination cannot be permitted. Any shareholder in a railway company may, by legal proceedings, prevent its directors from applying its funds to a purpose not authorized by the Act of incorporation; and it is inconsistent with such a principle to hold that the company can be compelled, even in pursuance of the contracts of its own directors, and much more in pursuance of engagements entered into by its projectors before it had any existence, to do that which it can only do by being guilty of a breach of duty towards the shareholders.. I am therefore of opinion that, even supposing the law to be--and in this respect the laws of England and Scotland are the same that in respect of con

VOL. I. NO. II.

3 K

tracts entered into by the projectors of a company, that the company, when formed, shall do acts within the scope of their powers in a particular mode or on specified terms, the company is bound; still that doctrine does not apply here, where the act to be done was not an act for the effecting of which the company, when established, could lawfully devote its funds."

11. ARMSTRONG V. BURNETT. 20 Beav. 424. Specific Legacy of SharesWhether Legatee or general Personal Estate

liable for future Calls. A question sometimes arises whether a specific legatee of shares in any company takes them subject to the liability of paying all future calls, or whether such calls are to be paid out of the general personal estate of the testator. In the above-mentioned case of Armstrong v. Burnet, Sir John Romilly, M.R., after an elaborate examination of the authorities, has clearly laid down the principles by which the Court should be guided in determining such questions. In the above-mentioned case of Armstrong v. Burnet, a banking company was established in 1836. By the deed of settlement, 5l. per share was payable immediately, and the directors were empowered at any time to make a further call of 51.; and on non-payment the shares might be forfeited. The shares were transferable, and on transfer the former proprietor was released. Legatees and executors might sell, but were not to be members until a transfer to them, and until then were not entitled to the current dividends. The shareholders thereby covenanted to observe the clauses of the deed. A shareholder died in 1843, having specifically bequeathed his shares to infants. The executors, in 1845, transferred the shares into their own names, and they assented to the legacies. Afterwards, in 1848, the further call of 51. per share was made. It was held by Sir John Romilly, M.R., that it was payable by the legatees, and not out of the testator's residuary estate. “Although," said his Honour, “it may not alone dispose of the whole question, still an important consideration in the case is, whether the liability of the testator's estate to the payment of this call did subsist at the time when the call was made. I have not found any case in which the general personal estate of the testator has been compelled to bear this payment, unless where such liability subsisted at the time when the call was made." After referring to Blount v. Hipkins (7 Sim. 43), Jacques v. Chambers (2 Coll. 435; 4 Railw. Cas. 499), Clive v. Clive (Kay, 600), Marshall v. Holloway (5 Sim. 196), Wright v. Warren (4 De G. & Sm. 367), Barry v. Harding (1 J. & L. 475), Fitzwilliams v. Kelly (10 Hare, 266), his Honour added : “I am disposed to believe that the distinction which regulates these cases is involved in the answer to this question,--Was the subject-matter of the testator's bequest complete in itself when the bequest took effect? In Blount v. Hipkins and Jacques v. Chambers, the testator bequeathed shares in a company to be formed; the shares and the interest of the testator in them were not complete, and therefore the liability he was under to complete his interest therein fell on his general personal estate. This seems to me also to be the principle of the decision in Marshall v. Holloway, and also in Fitzwilliams v. Kelly. Where the interest of the testator in the subject-matter which he professes to bequeath is complete, or where it is so treated and considered by him and by all persons unconnected with it, as in the case suggested of an insurance company, I think that the future calls fall on the legatee, and not on the general personal estate; but where further payments are required to make perfect the interest which the testator professes specifically to bequeath, then I think that his general personal estate is applicable for that purpose.

“To apply this to the present case: if the transfer had not taken place to the executors, I should still be of opinion that the burden of paying this call must fall on the legatees; but if this call had been contemplated before the death of the testator, and had been required to make his interest in that share complete (as, for instance, if the further call were required before the company could be worked, or before any dividend could be paid), then I should have been of opinion that the general personal estate of the testator ought to have borne the expense of these calls. This distinction may possibly give rise to some difficulty and some nicety in some cases, but not, I think, an insurmountable one. Whether, however, this be so or not, it appears to me to be a reasonable principle, and one by which all the decisions on this subject may be reconciled.”

12. MORLEY V. MORLEY. 5 De Gex, Mac. & G. 610. Tenant for Life Discharging Bond Debts-Presumption-Statute of

Limitations. When an incumbrance is paid off by a person having a partial interest (that is, an interest less than the whole inheritance), unless there is something to show a contrary intention, the presumption is, that he meant to do that which, in law and equity, he might have done, namely, to keep it alive for his own interest, and that the omission was a mere oversight; in such case the Court of Chancery will supply that omission by giving him, or by causing the proper parties to give him, if necessary, an assignment, or an instrument, which shall put him in the same position as if he had obtained it for himself.

The same presumption, however, does not arise from the payment, by a tenant for life, of the bond debts of the testator from whom he derived his estate, which debts, even if assigned, only place him in the same position as any other bond creditor. Thus in the above-mentioned case of Morley v. Morley, a testator, being indebted by bond, devised real estates to his son for life, with remainder, subject to a term for the payment of legacies, to his grandson in tail, and died. Upwards of twenty years after the date of the latest of the bonds, the tenant for life and his assignee for value filed their bill against the tenant in tail and the legatees, alleging that the tenant for life had paid off the bonds, and seeking to stand in the place of the obligees as against the inheritance. The tenant in tail pleaded the Statute of Limitations, the other legatees did not. It was held by the Lord Chancellor, affirming the decision of Sir John Stuart, V.C., that the payment of the bonds by the tenant for life did not constitute him an incumbrancer on the estate, and that the bonds themselves being more than twenty years old, the presumption was, that they were satisfied.

13. Davis v. EARL OF DYSART. 20 Beav. 405. Title-deedsWhen Bill may be Filed by Remainderman for Production of.

Any person entitled to a vested remainder in an estate, or his mortgagee (who stands in his place), may maintain a bill in equity against the tenant for life, for the sole purpose of requiring the production and inspection of the title-deeds and documents relating to the estate, in the possession of the tenant for life, in order to enable the remainderman to deal with his property as he may consider most for his advantage; and if it be suggested that the purpose for which the documents are required is an improper one, the burden of proof of this lies on the person resisting the production. Where, however, there is a probable cause of litigation with regard to the title of the remainderman, he cannot compel such production. Thus in the abovementioned case of Davis v. Earl of Dysart, the mortgages of A. (an alleged remainderman) filed a bill against B. (the alleged tenant for life), for the mere production of the title-deeds. B. set up a bona fide objection that A.'s estate had become forfeited ; and also, that by the terms of the mortgage-deed, the estates in question were not comprised therein. The assignees of A. (who had become bankrupt), though interested in the latter question, were not parties to the suit. Sir J. Romilly, M.R., dismissed the bill with costs. “The Court,” said his Honour, “cannot give the plaintiff the relief he seeks, without deciding in his favour various collateral questions of considerable nicety and difficulty as to the right to the estate; questions not now properly ripe for decision, and which will, or may, hereafter have to be tried at law or in this court. It is in effect to decide incidentally these questions in a manner to conclude no one, but in a way which may prejudice rights hereafter to arise and to be determined. In a clear case, the plaintiff is entitled to such production, but if the case be not clear, the Court will not give him that relief through the incidental decision of collateral points, but will leave him to establish his right to the estate, at the proper time and in the

proper

manner.

14. FORSHAW v. HIGGINSON. 20 Beav. 485. Trustee— When and upon what Terms he can Retire from the Trust. In this case the Master of the Rolls has laid down some very useful rules upon a subject very bare of authority; viz. how far a trustee is justified in retiring from acting in the trusts.

“A trustee,” said his Honour, “cannot from mere caprice retire from the performance of his trust, without paying the costs occasioned by that act. Any circumstances, however, arising in the administration of the trust, which have altered the nature of his duties, justify him in leaving it, and entitle him to receive his costs; but to justify him in that course, the circumstances must be such as arise out of the administration of the trust, and not those relating to himself individually."

A trustee desirous of retiring from the trust, on the ground of want of confidence in his co-trustee, cannot properly get rid of the trust by procuring the co-trustee, in whom he felt no confidence, to appoint in his place another person, not only not sanctioned, but opposed and objected to by the cestuis que trust; “ for although," said his Honour, "I do not say he would have been liable for any misconduct that might afterwards have been committed by the trustees, yet the Court would certainly have greatly disapproved of such a proceeding, and he would have rendered himself liable to great risks, such as no trustee should be called upon to incur."

In Forshaw v. Higginson a trustee, for reasons of a private nature not arising out of the trusts, not feeling confidence in his co-trustee, was desirous of retiring from the trusts. The cestui que trust refused to give him a release. It was held by

« PreviousContinue »