but more especially in the latter, are resorted to, every effort is made to suppress, as much as possible, transactions which reflect upon the private character of the parties, and that those transactions only are made public where all efforts at compromise have failed, the total amount of discreditable dealings with trust property must be very large.

It cannot be doubted, that, by every principle of law and justice, the fraudulent misappropriation of trust property ought to be rendered punishable as a crime. When it is considered what important interests are confided to the honour and integrity of trustees, how many, the least able to protect themselves from fraud, and the least competent to promote inquiry, are intrusted to their guardianship; and what fearful ruin ordinarily attends the dishonesty of persons invested with so large, and practically so irresponsible a power, it seems difficult to conjecture why trustees were especially excepted from the provisions of the 7 & 8 Geo. IV., c. 29. Whatever reasons then existed for that exception, it appears to the Committee that experience, as well as reason, both concur to demonstrate the injustice, as well as the impolicy, of any longer protecting breaches of trust from criminal punishment. Considering, however, the embarrassments in which, by the rules of equity, trustees, even those who have endeavoured conscientiously to discharge their duty, are now occasionally involved, it is feared that if a law were enacted imposing additional liabilities on trustees, and also, in certain cases, making them criminally responsible, few persons would be found to accept an office which even now, in the discharge of the duties incident to it, necessarily exposes the holder to considerable difficulty; while certainly it appears to be as just in principle that honest trustees should be protected by law, as that those who are dishonest should be punished.

The Committee therefore venture to recommend, and have chalked out a measure, by which both these principles may be at once carried out; and by which, at the same time, an expeditious and inexpensive mode of inquiring into the state of trust estates may be established. Trustees who have acted conscientiously might thus be enabled at once to obtain exoneration from all liabilities by submitting their accounts to examination,

VOL. I. NO. I.

Q

and a certificate of exoneration be granted in all cases where the trusts have been properly fulfilled. Where the trustees have desired to act correctly, but have erred in judgment, or have been misled, their errors might, by such a tribunal, be immediately corrected, and the trust property saved from ruin. Where the trustees are acting dishonestly, and misappropriating or squandering the estate intrusted to them, those interested in it might at once rescue it from their grasp, and the parties offending forthwith be brought to punishment. It is further to be especially borne in mind, that unless some summary and expeditious tribunal be established, to which the owners of trust property can have easy and cheap access, it is impossible for them to obtain an investigation into the state of their property, and so to bring to justice at once those trustees who are acting fraudulently. In order, however, to prevent vexatious measures against trustees, it is proposed that criminal proceedings against them should originate only with the tribunal to be constituted for the investigation of trusts.

Certain other provisions are proposed to be introduced into the measure alluded to, in order to render it efficient and as beneficial as possible to all parties. Resort to this new tribunal it is nevertheless intended shall be entirely voluntary, and in no case compulsory.

The following are the principal provisions contained in the measure prepared by the Committee:

Two Commissioners, and also a certain number of Auditors of trust estates, are to be appointed by the Lord Chancellor; a descriptive statement of the property and parties to be sent by any trustee, cestui que trust, or the next friend, desiring an examination into the trust fund, to the Commissioners. The Commissioners may thereupon examine, or appoint a Commissioner of Bankruptcy, or a Judge of a County Court, or an Auditor, as may be most convenient, to take an examination. The Commissioners may require bail to be given by any trustee for his appearance. They may have power to employ an accountant, summon witnesses, and administer an oath. After the examination, balance-sheets and reports, signed by the Commissioner or person taking the examination, shall be registered.

Where the trusts have been duly performed, trustees may obtain a certificate of discharge exonerating from all liability. Where trusts have been violated by mistake, error of judgment, or ignorance, the Commissioners may grant a certificate, which shall be conclusive in answer to any criminal charge, but shall not exonerate from civil proceedings. Where the trusts have been fraudulently violated, the Commissioners shall order criminal proceedings to be taken against the trustee. The Commissioners may order the costs to be paid, either wholly or in part, out of the trust fund, or altogether by the trustee.

An appeal is proposed to be given from the Auditors, Bankruptcy Commissioners, and County Court Judges, to the Commissioners of Trusts. Hearings are to be in private, where the parties apply for it. Trustees and executors may apply to the Court for direction. Where a deed or will directs the trust to be submitted to the Court, it will be imperative on the trustees to apply to it; but no declaration that they need not resort to it shall exonerate them from doing so, and no releases to trustees shall discharge them from breaches of trust. The Court is to be empowered to give general directions about changing and amending investments of trust property. Provision is also made respecting the liabilities of trustees for each other, where only one party is actually guilty of a breach of trust; also for the renewal of incompetent, insolvent, or unwilling trustees, and in some cases for the appointment of official trustees. Notice of a trust for six months, and omission to disclaim it, are to constitute an acceptance of it, so as to charge liability. And trustees are to be responsible for all losses by their neglect, which are to be made charges on the estate of the trustee, and to take precedence of all other debts.

And in order to secure the punishment of embezzlements committed by trustees, it is proposed to be enacted as follows:

"That every trustee against whom a charge of embezzlement shall be preferred, by order of the Commissioners of Trusts as aforesaid, to whom any money or valuable security shall have been or shall hereafter be intrusted, with or without any direction in writing to apply such money or any part thereof, or the proceeds or any part of the proceeds of such security, for

any special purpose, who shall, in violation of good faith, in anywise convert to his own use or benefit such money, security, or proceeds, or any part thereof respectively, or who shall, by mortgage, loan, or pledge of any such security, fraudulently raise or obtain thereon any sum or sums of money in breach of his trust, shall be guilty of a misdemeanour; and being convicted thereof, shall be liable, at the discretion of the Court, to penal servitude for a term of not less than four years, or imprisonment for three years."

III. REPORT OF THE SPECIAL COMMITTEE ON THE JOINT-STOCK COMPANIES BILL.

The great object of this Bill is to allow persons associated together for any lawful purpose to form themselves, by a simple process, into an incorporated company, with or without limited liability, but subject to certain rules for the administration and management of its affairs. It discards the principle on which the present Joint Stock Companies Act is founded, viz. that it is in the power of the Legislature to prevent the institution of fraudulent companies. It limits public registration to the original formation and constitution of the company, and such changes in the latter as may be agreed on by a certain proportion of the shareholders, and also any increase of capital or change of registered office, but requires a full and complete system of registration of shareholders and amounts paid up in books kept by the company, which are made open to public inspection. Non-compliance with this and other requirements subjects the company to penalties, but does not affect its privileges or the position of the shareholders. The effect of the measure, therefore, is to require from persons dealing with such companies the same caution and discrimination as in dealing with ordinary partnerships or with individuals, and to oblige companies to rely for credit solely on the soundness of their constitution and the honesty of their transactions.

The Committee have carefully considered both the general design and the various details of the Bill as amended in committee; and, while approving of the principle of the measure and

the object it is intended to effect, they feel bound to state that many of the provisions are unsatisfactory, and that there are certain fundamental errors running through the Bill which appear to them greatly to detract from its value, and to be inconsistent with its main object and scope.

In the first place, while the Bill allows seven persons to associate themselves under its provisions, and to form themselves into an incorporated company, those provisions seem framed only with reference to large companies, where a more systematic mode of administration may be advantageous, and where the shares are transferable by the owner without the consent of the other shareholders. A company of seven would differ little from an ordinary partnership; and in such a case it might be extremely inconvenient to conduct its affairs in the manner prescribed by the Bill, and extremely desirable that the shares should not be transferable without the consent of the other shareholders. Such a company, also, should most clearly be subject to the Bankrupt Laws; but on this matter the Committee will have to speak more at length in a subsequent part of the Report. That companies consisting of a small number of shareholders might be worked in a manner advantageous both to the shareholders and to the community at large, no one who is alive to the plastic nature of modern commerce can doubt; and, considering the great importance that capital should be allowed to aggregate itself in whatever forms may be deemed desirable in particular cases, it seems most objectionable to prescribe by law the uniformity which the Bill enjoins, and which would greatly hamper small companies, and exclude those with shares not transferable from the benefit of its provisions.

Another fundamental error in the Bill, and connected with that already mentioned, is, that while rejecting the old system of requiring a minimum amount of capital as a condition of incorporation, it still requires seven or more shareholders as such condition. Now, independently of what has been already said on the first point, it is impossible not to regard this as an obvious inconsistency. If weight is to be rejected, why is tale to be retained? Ponderantur non numerantur is the rule which would naturally apply to a case of this nature. It is the amount