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Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included in one exposure are filmed beginning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les cartes, planches, tableaux, etc., peuvent etre filmds d des taux de reduction diff^rents. Lorsque le document est trop grand pour etm reproduit en un seul clich6, il est film6 d partir de Tangle sup6rieur gauche, de gauche d droite, et de haul en bas, en prenant le nombre d'images ndcessaire. Les diagrammes suivants illustrent la m^thode. 1 2 3 1 2 3 4 5 6 JOINT STOCK COMPANIES. ■m T [ { \i rywhere, it varies in many points of detail in different countries, and varies still more in this country from the fact that the authorization ef companies and corporations is regulated by different statu- tory enactments in the iliii"erent Provinces of the Dominion. \i. I'UKKArK. And tlu'St! cimctiiiciits tlioii^li in tlir niiiiii ropii'd iVoiii out! }Mi<)tlit'r also (lil't't r in iiuniy points uf dctjiil and lia.vt' Ixcn [lio Hul>jiH't of IVrijni'nt iiltcrntinii and iiniciidnifiit tVnm luiie to tinit'.. Again it li:is nlways sct'iui'd to me, wlictlicr ii«;htly or wrongly I cannot say, tluit soiiu' confnsion of ideas existed as to tho relii,tiv(! positions of coniijanies and (tov£)oi'ations, Avhich to nniny minds wove and at the same time wei not tlu! same thing. In Isngland for examph- they are treated of, as a rule, s(.'[)ai'ately, and indeed tJie Joint Stoeiv Coni- j>any tlieie differs in so man}' impcn'tant |)firticidars from tho old common law corporation as to jnstify the distinction there made. In the I'niteil Stiites howt-Ncr, no such dis- tinction exists, the rule there hein;.,^ that any Ixidy of jiersons authori/.eil to sue and he sued, antl to act as oiie r-ir all the pui'poses of its creation, is a eorporatio.^ within the full nuMning of that term. As stated l)y Ik'onson, J. in the l*vi>j>!r. v. J.s.svs.s'oy.s' of ll'dlrrlnirH,' — ■' An association under one giiueral \\en{\ for a village! lihrary or to tan hides j)ossesses all the essiiutial attrihiites of a corporation in as great perfection as the Hank of Kngland or the East Indi.-i Company." In the (,'i\il Code of the Province of (^uehec on the contrary -' Joint Stock Companies (following the Kvencli system) are (dassed with conunercial partnerships: though a recent Xct providing for tin; winding up of Joint Stock Companies,' says that the articles of the code respect- ing cor[)orations (which are treated of in a diffenmt part of tlie work) are modified therehv. • Vide post p. 3). ■ Art. iSSg, :< 42 Vic. Cap. ^i. PRKFACR. VII. Ill onliT to iiH'oiifilc tlii'si' i4»paroiit (UricropiiucicH I liavo ill the introductory [hv^hh endeavorod to trace tlio ori^jiii of tilt! ditri;r(,'iit tonus of association from an oarly period ; on tli(! principh; stated I)y iin American wi'itiu-' that no law ciin l)c' tlioroU',dily understood without somo kno\vled<,'o of its earlier forms and systenis ; and tliat to com[)roliend clearly what it is, it is necessary to see how it came to he so. In (loiu.i;- this I fouml that, under Muf^lish hiw at least, the Joint Stock ('om[)any of the [)r(>sent day was a sort of hiistard ot'fs[)rin.Lf of the old civil corporation ; or in other wDrds was the c ssential [)rinciple of the civil corporation, taken, like the rih tVom the si(h_' of our lirst parent, and hy a little statutory remo jelling — lettin;^-out liere and takin<,'- in tlusre — adapted to the wants and recpiirements of com- mercial life. l>ut the impulalion of hastardy 1 found must he coiilined strictly to com[)anies under tlie I"in<^disli law. 'I'hat in P'rance the sorii^fr jmr iictimiH or Joint Stock (;ouii)any came hy a re;j;ular and well delnieil process of devfilopment from tlie simi)k(st form of partnershi[), to wjiich it could he triicdd hy th(.' most direct a,nd unexcep- tionahle linea'/e. In the construction of the work I Imve aimed chiefly at conciseness, statin<' l)oth authoritv and conclusion in the hriefest manner compatihle with an intelligent understand- ing of the i)roposition involved. 1 have consistently avoided advancing any theories or arguments of my own, though where from given premises a certain conclusion seemed inevitahle I have not hesitated to set it down. i As a basis for the text of the work I have, for obvious reasons, selected the Dominion or General Act, and have iu llaJley, Intro, to Roman Liiw, p. j,$. 4 vni. PllEFACK. iloing HO attomptod tlio rather inmsual and diniciilt feat of dividing; it into (diaptors or heads. In ilhistration of the (lifTeront sections 1 have drawn from all availahle sources of ini'orination, supportinj^ the rules given by reference to sucli cases as appeared to he of the greatest authority either in this country or in England. "Many of these cases are taken from leading English and American writers (who are at the same time crculited therewith) while all the most recent, of which th(;re are a great many not hitluu-to found in any work on the subject, I have taken directly from the reports themselves. In this way I have been aide to bring together information on a greater number of questions arising oiit of the affairs of Joint Stock Companies than are I believe to be found in any other single work. The vast amoimt of money annually invested in joint stock enterprise and the vast number of joint stock concerns, which are annually chartered, has given rise to a mass of decisions, respecting the rules by which they are governed unparalelled in the history of jurisprudence. And so important, are these decisions deemed, that in Eng- land scarcely a year passes that does not give birth to a new treatise on the subject, or a new edition of an old one. Upwards of a dozen English writers of greater or less note have treated of Joint Stock Companies within the last few years ; while, in one case at least,' the work has reached a seventh edition. A very useful and elaborate work of which a third edition was issued last year is that of Buckley on the Companies' Acts; while another eminent work, "Thring on Joint Stock Companies," has just reached its fourth. In the United States a work of great merit just published ' ("ox, Joint Stock Companies I'lilCFACK. IX. is that of " '''lioinpson on the Liability of Sharolioldcrs," l)oin<^ tli(! first attempt of any note; in that country to treat of the utfairs of tra(Un<; associations, apart from those of corporations in general. In Canada no work on this sub- ject has been before attempted, nltiiou^'h, as has been pointed out, not only the system, but the rules, difVcr in many respects from those both of Kngland, the I'nited States, and ditlfer also from each other under the Statutes of the different Provinces. J3esides brin^'ing these various Statutes k 'pother and illustrating them in the manner already described, con- siderable attention has been given to the irtevnnl mana<:,o- ment of companies, the calling and ccniduct of mcolings, the maimer of voting, etc.; and a number di lurms have been added, so as to make it as far as i)ossibIe, not only useful to the professional man, but to the directors of com- panies and the public at large. C. H. S. Montreal, April i, 188 J. 11 1 a T-A.ELE OF- ACTFIOKMTIES C 1 T j: 1 ) I Abbotts Diufst of C.oriDr.uioi, Cases. Ameiican Dif^t-st. An-ell & Ainc's' CoiporatMuis, liatcluilder. Joint StoLk f:.)m- paiiies. Beavves Lex Mcrcaioiia. BlackstoiK!. ("oinin.'ijtaries. IJouchaivl. /,„/ ,/,.,; ,/„„^, 7',,/,/, ^._ Hracton, i.aw of l';n;.'lan,i Brice, Ultra Vii,s. Hroun, Joint Slock Companies. Buckley on the C:o!iipanirs' Acts ChittN, Coiniiieaial l^aw. Clark, l'artiieis!iip;,ti,l (,,int Siu, k Companies, Co.ie Civile du I, as Canada Code (hi Conimenc Code Napoleon. Code of i.oinsiaiia. Code of I'locediiteof Oiie!)e-; Collier. Law of Contribiitorie^ Coke on Littleton Comyn's Di,i;est. Cornelius Nepos, Digby , Sale and Transfer of Shares. DjJan-le, S,»r/eVucl>ec Law Digest. Keevvs Hist'.ry of Knghsh Law. Xll. rAnLK oi" AiriaoiunmaD? c:rraj>. Robinson's Dif^est. Savary, Parfait Nenociaiu. Savi^ny, Konian Law. Shelford, Joint Stock Companies Sirey, (Commentaries. Smith, Wealtii of Nations Smith, Mercantile Law. Statutes of Canada. " Ontario. " Quebec. Stephen, Commentaries on l..a\v of England. Stevens' Digest of N'ew Brun.s- wick Reports. Story, Partnership. Thompson, Liability of Stock- holders. TlirniisE, Joint Stock Companies. Toiii, Parliamentary Govern- tEDtnJIL. Toia Ptivate Rill Practice. ToE3iicir. Droit Civil. TiTo^iion^r, Socic'tJs. Tro^iloai^r Iitjiuciice Ju Chris- t/iiiBltiiSilti! . TmoiBuiaifl, Limited Partnership. ViimcinM., S<)ci^U'.i Par actions WMxkm» Di:jest. WuiiBmr.)'*'* Corporation Cases. Woirfewarth. Joint Stock Com- giaincies. W'OciberspoGn, Insolvent .\.ct. 1875 les. vc-rn- Chris- TABLE OF CONTENTS. ;s. Com- 1875 Page. INTRODUCTION CHAPTEU I. DEFINITION OF STOCK COMPANIES. Wliat are Joint Stock Companies ? — May be Incorporated or Unin- corporated — What are Corporations ? — Difference between Cor- porations and Companies — Law applicable to Companies — Growth of Companies— May be Commercial or non-commer- c-al — May be Public or Private — Canadian Legislation 51 CHAPTEU II. PROMOTION OJ' COMPANY. t. Prospectus — Form of — Effect of Misrepresentation in — Recourse in Damages — May be Indicted Criminally — Rule does not include E-icaggeration — Contract not Void but Voidable—Variance be- tween Prospectus and Letters Patent — Conditions to be ob- served 62 2. l^omoters — Position of — Secret Profits — May take Remuneration. 69 J. Preliminary E.xpenses ^7 4. Recovery of Deposit 78 CHAPTER III. FORMATION AND INCORPORATION OI- COMPANIES. i . Citation jj , i. Interpretation of A rt 82 }. How Incorporated— By Letters Patent — Number of Persons — "A Body Corporate and Politic" — Purposes or Objects .'•;2 4. Nature of Application — Notice — Name of (^jmpany — Purposes or Objects — Place of Business — Amount of Capital — Division uito Shares — Names of Applicants—" The Majority of Whom." iHz 3. Petition and Contents — The Notice — Must recite the I'acts— And must state the amount of Stock taken by such Applicant- Contents of Lttters Patent ny 0. Evidence of Petition— ^Before the Letters l\'Ui'nt are issued.... ijr XIV. OONI'ENI"^. Pack 7. The Letters I'atent 122 8. ( Jovernor may chanf_( 3. Meetings — Notice of -Ordinary and l^xtraordinary — Where held — Quorum — Each share represented to carry a vote — Must have paid calls — Manner of voting -Election of Directors at — Where disputed — Quo n'on-foi^;— Meetings of Directors — Va- cancies occurring ih^ 4. Powers of Directors — In general — Status of a Director — Not individually Agents — But bind the (""ompany — May appoint S r- vants — May buy and sell— May bornnv money — May issue negotiable Instruments— May take Legal Proceedings — Acts, ultra 77>r.s— -Nature of I'\)rmalities — (Conditional F'owers— May make By-Laws -Allotment of Stock —The making of calls thereon — The appointment of Servants :oi' 5. By-Laws — I'.ffcct of 212 6. Bo.)ks to ha. Kept — Contents of — Inspection of Books — Effect of, as Evidence — Production of, as Evidence — Penalties with respect to — May he summoned to answer ni, CHArXEli V. STOCK, CALLS, ETC. 1, Nature of — "Shall be deemed personal estate" -And .shall lie transferable 2jtc) ivft CONTKNIS. XV. Page. 1. Allotment ()'—" If the Letters Patent "—" Shall ho allottud "— IndiK't'd by fraud —To bo puid in c.ush — Paid up shar;^s What is an issue of shares i^o \. Sale and transfer of — Kight of transfer — " In such manner c n!y'' — Nature of contr.ict— -Repudiation of contract — Un.il the entry then.'of — What is a transfer — "No transfi.T of shares" - \'ali,i transfer — Refusal to repister — Formalities- — Transfer obtained by fraud -Tran^icr ;\(u:v insolvency -Transferor must ha\f ])ai(l all calls -And must not be indebted — Transfer to infant 'I'o marrieil woman '. 203 4. Transmission of Stock- -Uy death of member, etc 288 5. Transfer by Keprescntative 2g,-, 6. Lial>ilit\' of Nfe.nbers on Stock — Restricted to am )unt unpaid — How terminated — Surrender of shares — Surrender and for- feiture 291 7. Liability of Executors, etc— Of Trustees— Of Pledgee 300 8. Ri.;hts of Executors, etc — 0( Pledgor jm g. I, lability of Company in Respjct of Trusts 301 10. Calls — Power of Directors with regard to — Meaning of term — What are — " The Directors " — " May from time to time " — "And in such payments " — " A call shall be deemed to have been made " — Notice of calls — -When a call is deemed to have beer, made — " Shall be liable to pay interest," etc — Payment of calls in advance 302 11. l--orfeiture (jf Shares—" If after such demand," etc— P'orfeiture after surrender — Illegal forfeiture — Holder still liable 300 12. .\ction for Calls— " The Company may," etc — Plea of compen- sation 314 13. Directors may be Indemnified — " Every Director," etc — Per- sonal liability of Directors — Liability of Company generally — Liable for acts of agents 310 14. Dividends — Nature of — What are profits — Profits of one year not liable for losses of previous years — Dividends cannot be en- forced until declared — To whom they belong — Set-:)ff of divi- XVI. CuNTliNTS. Pack. 6. Forfeiture of Charter — Form of proceediiif,' 373 7. Le.:.;islation j75 8. Fees 3/6 g. Proof of matters 377 in. Letters Patent not void for irregularity 378 11. The worl " limited " 3S0 12. Existinj( Companies may obtain Charter 381 13. Subject to the provisi^ms of the Act— Companies formed under former Acts — Kecorporation — " And thereupon all the rights" — Formalities necessary — Liability of Shareholders to Directors — " All the provisions," etc 381 14. Payment of shares 385 15. Prospectus 385 16. Power to borrow on Bonds, Debentures, etc 386 17. Company may have Agencies 387 j8. Directors to submit Statement 388 CHAPTER VII. DISSOLUTION AND WINDING UP. I. Winding up — " The Company shall be subject," etc — When Com- pany to be wound up — Mode of winding up under English Act- Power to wind up voluntarily— Eflect of dissclution — When winding up commences — ("essation of business — Status of liqui- dators — Compulsory winding up 389 i. Contributories— -Liability of, after w inding up ccMiimences — Eflect of transfer when winding up intervenes 399 CHAPTER Till. LOAN COMPANIES. 1. Capital stock of 415 •J, Objects and Powersof— To what they extend— To be distinguished from 15uilding Socieiies jid 3. Powers of Directors of Loan Compimy- -May bmrow money — May receive money on deposit — Pri'viscjs- -Difference between power to lend and power to borrow — Not to buy stock in other Companies , 451S 4. Company may hold real estate Vi! 3. May charge commission .4.2 : (). May charge interest 42 .: 7. Must keep regi ter 421 8. May amalgamate with other Loan Companies — Power of Direc- tors to that end— Agreement to be submitted to Shareholders- Shall form one Corporation — Effect of as to assets, etc 422 9. To send statement to Finance Minister 423 10. Aci of 1869 rep jaled — Hut not to effect applications pending .. 424 i I. (.>:pies of Noti^'es to be pullished 424 12. Company shall make r.turns 424 1 TABLE OF FORMS. SCHEDULE A. OF ACT. Page. Notice of issue of letters patent .... 425 SCHEDULE B. Notice of issue of supplementary letters patent changing capital .... 425 SCHEDULE C. Notice of issue of supplementary letters patent changing powers. . . . 425 Form of prospectus of company for manufacturing purposes 426 Form of application for shares — Form of notice of allotment — Form of proxy — Form of certificate of shares . 427 Form of transfer of shares — Tariff of fees on .implication for letters patent 428 1 TABLE OF STATUTES. THE CANADL\N JOINT STOCK COMPANIES' CLAUSES ACT Preamble — Citing title —Interpretation clause — Special Act— Com- pany, meaning of term — Undertaking — F^eal estate — Share- holders 429 ..\pplication of this Act, and to what companies — How clauses of this Act may be excepted from applying to any special Act — ^General corporate powers of companies — Powers to be subject to this Act unless excepted — Directors — Provisional directors — Qualifi- cation of directors thereafter appointed — Election of directors and term of office 430 Provisions respecting elections — Notice of general meeting — Votes — Ballot — Vacancies — President and officers— Failure to complete election, how remedied — Powers of directors — By-laws as to stock — Officers' meetings, fines — Altering by-laws 431 b !: I i f! XVlll. TAHI.E OF STATUTES. Page. Proviso ; Ccinfirmation of by-laws— Eviilence of by-laws— Stock to be personal est ite —Allotment of stock — Instalments i.ierco i liow called in — ('alls of ten per cent, at least to be made annually until paid in full — Payment of calls, enforcement of, b-, action.. 432 Or by forfeiture of shares — Restriction as to transfer — Shareholders in arrears — Stock book to be kept: its contents — I'wers and liability of directois as regards transfers in certain cases 433 Transfers valid only after entry — Stock book to be open for inspec- tion — IJooks to be prima facie evidence — Penaltv for false entries — Nef^lect to keep books open — Company not li d^le in respect to trusts— Contracts, etc., when binding on comijany — Non-liability of company servants — -I'roviso 434 Company not to purchase stock in other corporations —[liability of shareholders — l.iniitcd to amount of stock — Trustees, etc., not personally liable — Trustees, etc., may vote as sliareholJers -Li- ability of directors paying divid ;nd when company insolvent — How it may be avoided 435 No loans by comp my to shareholders — Directors liable — Contracts must be so male as to she^v limited liability — -Friability of direc- tors for wages, etc. ^Proviso — Service of process on company — Action between company and shareholders — Future legislation Winding up Acts to apply 436 AN ACT RESPECTINCx JOINT STOCK COMPAXIKS TO CON- STRUCT WORK:. TO FACILITATE THE TRANSMIS- SION DOWN RIVERS AND STREAMS. Companies may be formed for the improvement of streams — Shares to be $20 each and to be personal property — Not to interfere with public or private property without the consent of the Crown or of the owners — Not to interfere with other companies or with public works without consent — Five or more having subscribed stock, may execute an instrument 437 How registration to be made — Persons paying six per cent, per share on behalf of defaulters may recover the amount — I5efore works commenced a report to be made to the Commissioners of Public Works and to the municipal councils — -Contents of report — When works may be commenced — When the company to be- come chartered 438 I35'-laws may be made and altered— Copies of the By-laws to accom- pany the reports — When By-laws to come into force — As to im- posing penalties — Management of affairs for first year — By-laws to regulate elections — To be published— May be amended — A failure to elect directors provided for 439 I The Whe TABLE OK STATUTEB. XI \. Page. When rLMieweil election to be liel'l —Who to b(3 electors — Who quali- iiecl t ) be diroctofs -Oiionuii —A presi lent t) be ele:;tei by di- rectors — Vacanci( s in dire.iturs— Directors to report yearly to the ('. mniissioners of I'nblic "Works — What the rejKirt is to con- tain 440 Every compuiy to kueji regular l)ooks of acconnts -Provision forex- ten f>bstructcd Tells tw !;^ collected on timber only — Rights of parties as to water powers created by the cninpany — Principles on which tolls to be calcu- lated—Ratio of tolls 446 The annual account to be rendered by the company to contain a schetlule of tolls— Company may demand of owner statement of quantity of timber liable to toll — .\t the peril of double t .11 — On what timber toll may be taken — Right of company to examine — May sue for toll — If tu!l toll te.i leie 1, company liable to costs — Toll to be apportioned to extent of works used 447 When and how timber may be seize 1 for tolls— Penal consequences of malicio.us injuries — Or of impeding the operations of the com- pany — How J. P.s to procee 1 in prosecutions under this Act — How fines, etc., recov>3rable 448 i! . !j XX. TABLE OF STATITKS. r'Ar,!-:. If no goods, offender to be imprisoned — Fines, etc., to be paid to Treasurer of corni)any — (Jflicers and servants to be competent witnesses— Limitation of actions — Within what time works to be completed — Works to be kept in good repair 441) When companies may be united — Legislature may alter Act at dis- cretion — When the governor in council may declare a company dissolved — Arbitration in such casa 450 How company to proceed in Lower Canada when title to lands is taken, is doubtful — Real owner may interven* — Schedule 451 AX ACT TO AMEND THE ACT RESPECTING JOINT STOCK COMPANIES, TO FACILITATE THE TRANSMISSION OF TIMBER DOWN RIVERS AND STREAMS. Preamble Con. Stat. Can., cap. 68— Penalty on company not comply- ing with 27, 28 and 60 — How recovered and appropriated — Con- struing this Act 452 AN ACT TO AMP:ND THE ACT l^ESPECTING JOINT STOCK COMPANIES, TO CONSTRUCT WORKS TO FACILITATE THE TRANSMISSION OF TIMBER DOWN RIVERS AND STREAMS. Preamble Con. Stats. Can., cap. 68, section 59, of said Act repealed — Tolls to be collected 45.5 AN ACT TO ATITHORK/E CORPORATIONS AND INSTITU- TIONS, INCORPORATED WITHOUT THE LIMITS OF CANADA, TO LEND AND INVEST MONEY THEREIN. Preamble — British company incorporated for lending money, may be licensed by Secretary of State to carry on its business in Canada - — Proviso : real estate to be sold — Within five years from time of its acquisition — Formalities to be observed by licensed corpora- tion before commencing its business in Canada — Service of pro- cess in suits against such licensed corporations and proceedings thereon 454 Publication of notice of license or of having ceased to carry on busi- ness in any place — Evidence on which licenses shall be issued by Secretary of State — Fee for license 455 ONTARIO STATUTES. 45^ 45.5 AN ACT CONTAINING GENERAL PROVISIONS AFI'LICABLE TO JOINT STOCK COMPANIES [N-..OR1'ORATED BY SPECIAL ACT FOR CERTAIN PURPOSES. (Rev. Stats. Ont.. Cap. 149.) Short title, s. i— Interpretation, ss. 2-3 456 Companies to which Act applies, s. 4 J37 Mode of incorporating this Act with special Acts, s. 5 — General corporate powers, ss. 6, 7 458 Directors — Qualification and election, ss. 8-13 458 Powers, ss. 14, 15 459 Proof of By-laws, s. 16 — Special meetings, s, 17 — Stock, allot- ment, calls, etc., ss. 18-24 4C0 Shareholders in arrear not entitled to vote, s. 25 — Books to be kept and entry made of transfers of stock, etc., ss. 26-31... 461 Company not bound to see to execution of trusts, s. 32 — Con- tracts, etc., of company, how to be executed, s. 33 — No stock to be held in other corporations unless specially authorized, s. 34 — Liability of shareholders, ss. 35-38 463 Liability of directors — On contracts in Writing unless liability stated i!^ be ' Limited," s. 39. — If they pay dividends where company is insolvent, s. 40. — If they lend company's money to share- holders, s. 41 464 Actions between company and its shareholders, s. 42. — Service of process on the company, s. 43 465 AN ACT RESPECTING THE INCORPORATION OF JOINT STOCK COMPANIES BY LETTERS PATENT. (Rev. Slat. Out., Cap. 40.) Short title, s. i 466 Interpretation, s. 2 — Companies which may be incorporated by let- ters patent, s. 3 — Procedure to obtain incorporation, ss. 4-10. . . . 4O7 Changing of name of company in certain cases, ss. 11, 12 469 XXll. ONTARIO STATl'TKH. I'AdE. Infornialiiics not to avoiil letters patent, s, i j Cdrpi.rate jiowt is of comi'anics, s. 14 — SulxJivisicn of slian.s, s. 15— Increase or re- duction of cajitial, ss. 16-20 — I'osvirs nt loiiipatiy in 1( iters patent to lie subject to tliia Act, s. 21 470 Directc - ,- Number and (lualitication, ss. J2 ,.'.( 471 lilection, ss. 25-27 47 j Change in number of, s. 2S 473 Powers — (lenerally, s. jg— Special powers, s. 30 473 Special meetings, s. 31 -I'roof of by-laws, s. 32 — Stock, alli tiiient, calls, transfer, etc., ss. 33-40 474 Sh;ireli()l(!eis in airear not tiititied t ; .',ite, s. 41 — Books to be kept and entry made ol transfers of htock, ss. 4J-48 473 Yearly statement of aflairs of the company, s. ^y 476 Company not bound to see to e.xecuti 11 cjf trusts in respect of sli.ires, s. 50— Contracts, etc., how to be e.\ecuted, s. 31 — Coiiipaiiy not to hokl stock in other corporations, s. 52 — Lirdjility of sliari- holders, ss. 53-55 478 Trustees, mortgagcjrs of stock, etc., may vole, s. 56 479 Liability of directors — I'a) ing dividends where company is insolvent, s. 57 — Lending company's money to sliareholilns, s. 58 -l'\)r wages of employees, s. 59 479 Service of process on the c2 — Forfeiture of chaiterby non-user, s. 63 — Fees on incorporation, s. 0.\ -Incorporation of existing companies under this Act, ss. 65, fo 480 Adidavits under this Act, s. Ct'j — Winding-up Acts, to fipply, s. 68 .. 481 AN ACT KESrhX/nXG JOINT STOCK COMPANIES VOYi THE CONSTRUCTION OF WoKKS TO FACILITATE THE TRANSMISSION OI' TIMHER DOWN RIVERS AND STREAMS. [Riv. Slats. Out.. Cap. 153.) Incorporations, ss. 1-7 482 Conditions to be performed before commencing works, ss. 8-1 1 .... 484 Bydaws, ss. 12-15 483 Directors, ss, 16-26 486 ONTARIO STATUTES. Xxiil. I'AC.K. Annual rcjioit of tliu ('omniis.qoner of Public Works, s. 2'^ -Hooks to be kept, s jS . . .|,S7 Extension of the works or capital, ss. 2^-32 — Calls on stock, ss. 3J-.(0. 4vSS Arbitration prnceedinns to ascertain comjiensation for lands taken, etc., by ( onipany, ss. 41-52 jSg Company not to t.ike mill sites without Cf)nsent I'f owner, s, 53 — Where no dainajjes recoverable for overtlowiiiK lands, s. 54 — Company not to obstruct navigable waters, s. 5 5 yyi Rights as to w.iter powers created by company's works, s. 56— Tolls, ss- 57-''5 '. 4')J Offences ami peiialtits -Malicious injury to works, C. S. C, c. f)8, s. <'7i P- 'J9J -Impeilinj,' operations (jf compiiny, s, 66 - Recovery of penalties, ss. 67 -6c) },j5 Appropri ition of penalties, s. 70 -Limitation of actions against jiersons acting under this Act, s. 71 4or> Miscellaneous — Time for completion of works, s. 72 4(j6 Repair of works, s. 73 — Union of companies, s. 74 — Dissolution of company, s. 75 497 AN ACT KE.Sl'KCTIXO JOINT STOCK COMPANIES, FOR SUI^ PLVINO CITIES, TOWNS AND VILLAOES WITH OAS AND WATER. {Rev. Stats. Out., Cap. 157.) Interpretation, s. i — I'\irmation of companies, ss. 2-S 4^9 Hy-lavvs, ss. y-10 501 Directors and Oflicers, ss. 1 1-20 502 Special meeting , s. 21 — Yearly leport, s. 22-23 — Liabdity of direc- tors and other l flicers, ss. 24-31 "03 Directors to keep books, ss. 32-37 — Shares and their transfer, ss. 38- 41 5"5 Increasing the capital stock, ss. 42-43 506 Calls, ss. 4449 507 Municipalities taking stock, ss. 50-51 — Aliens may hold st.ick, s. 52 — Powers of companies, ss. 53-59 508 ! owers to borrow, ss. 60-68 51 y Restrictiijns of pi)wer, ss. 69-70 510 Prohibitions and penalties, ss. 71-78 511 Iviforcemeiit of pjiialties, ss. 79-81 512 Arbitrations, ss. 82-85 514 Miscellaneous, s3. Su-88 514 ! 'I XXIV. ONTARIO STATUTES. AN ACT RESPECTING THE CHANGING OF THE NAMES OF INCORPORATED COMPANIES. Page Rev. Stat, Ont., Cap. 172 515 AN ACT TO PROVIDE FOR CERTAIN AMENDMENTS OF THE LAW. 40 Vic, Cap. 8, sees. 62-77 (both inclusive) 516 AN ACT RESPECTING THE WINDING UP OF JOINT-STOCK COMPANIES. (41 Vie.. Cap. 5.) Interpretation 518 When companies may be wound up 519 Consequences of commencing to wind up 520 General powers of liquidators 521 Liability of contributories 5 24 Liquidators' duties 526 Expenses — Meetings of contributories 527 Assistance of the Court 528 Matters of practice 533 Dissolution of company , 534 Rules to carry out 536 AN ACT TO MAKE CERTAIN AMENDMENTS IN THE REVISED STATUTES. 41 Vic., Cap. 8 537 \w\ li QUEBEC STATUTES. THE JOINT-STOCK COMPANIES GENERAL CLAUSES ACT. (31 Vic. Cap. 24.) Page. I Uerpretation of term, s. i 538 Application of Act, s. 2 539 To be incorporated with Special Act, s. 2-3 — Powers of company, s. 4-5 540 Directors — Number of, s. 6— Qualification of, s. 8 — Electi >n of, s. q. 541 l-)'ections not otherwise provided for, 3. 10 — Failure of election, s. ir —Powers of directors, s. 12— Special meetings, s. 13 542 Proof of by-laws, s 14 — Transfer 01 stock, s. 15 — Allotment of stock, s. 16 — Calls, ss. 17, iS, iQ- 543 I'orfeiture of shares, s. 20 — Calls to be paid before transfer, s. 21 — Members in arrears not to vote, s. 22 — Books to be kept, s. 23 — Directors may refuse transfer, s. 24 544 Books to be kept open, s. 26 — Books to be evidence, s. 27 — Penalty for untrue entries, s. 28 — Penalty for rot keeping, s. 30 — Con- tracts, s, 31 545 Company not to buy stock, s. 32 — Liability of memb..-rs, s. 33 — Lia- bility of trustees, etc., s. 35 546 Dividends, s. 37— No loans to members, s. 38 — Liability for wages, etc., s. 39— Actions, ss. 40, 41 — Short title, s. 42 — Repeal, s. 43. 547 AN ACT TO AMEND THE JOINT -STOCK COMPANIES GENERAL CLAUSES ACT. 32 Vie., Cap ^2 548 AN ACT . ESrECTING THE INCORPOR.\TION OF JOINT- STOCK COMPANIES. (31 Vic. Cap. 25.) Interpretation of Act 550 i'urposes enumerated 551 Notice of application — Petition for letters patent — Preliminary con- ditions — Issue of letters patent —General power* of company , . 552 ^.icrease and decrease of capital — Supplementary letters patent. . . . 553 Powers to be subject to Act 554 XXVI. QUEBEC STATrTES- Page. Directors— Qualification of — Election of — Vaiu:nincies in — To elect a President .- 534 Powers 01 555 Special inevjtinj,'s — Proof of by-laws — t ransfeir General nieetiiif^ respecting, s. 2 — Vole of 1 iiici>-nlinrL-> necessary, s. 3 — Cvjrporate powers continued, s 4 — Aji^iui^iuiieiit of li luiJators, s. 5 — Removal of licjuidators, s. 6— Aj'jiotijcnieat by the Court, s. 7 — Res ilution to be registered, s. ^ — iL>^j;ti»e3, etc., of licjui- datois, s. (J 5(7 Payment of debts of company, s. 1 1 — Collan«om lOt'elaims, s. 12 — Re- in unerativ)n of liquidatiirs, s, 13 56 S Lii TABLE OF CASES. 561 01 56. 5<'7 570 Abbott V. Thompson, 142 Accidental ami Marine Insurance Co. V. Davis, 316 Adamsons case, 173, 257 Addie v. Western Bank of Scot- land, 67. 251, 252, 2bt), 271 Adriance v. Rome, 354 Adriatic Mills v. McOinnis, 372 Agar V, Athena'um Life Assurance Societv, 210 Albany, 'etc., R. R. Co. v. The I'eople. 207 Albert Life Insurance Co. v. Par- tridge, 252 Albert Mining Co. v. Fellows, 165 Allan V. Harris, 344 Allen V. C'lark, 73 Allen V. WDonsacket Co,, 134 Amazon Life Assurance ("0., in re, f.8 Andjiose LakeTm and CopperCo., iM re Clark's case, 255 American Coal Company v. Smith, 301 Am. R. R. Frog Co. v. Haven, 371 American Silk Works v. Solomon, 131 Amcry v. Rex, 375 Andress' case, 2^.\ Andrews v. liiown, 70 An.d 'Sea Colliery Co., in ri\ 397 Antilo-Califcrnian Gold Mining C )., ex p. Williamson, 174 Antietam Manufacturing Co. v. Ilnghes, 31.S Argvll v. Lake, 70 Arrison ft ■. Co.. 304 Baird v. The H.uik of Washing- ton 130 Ball V. Cleland, ^5, 78 Baltimore, etc., K. R. C". v. Oler. 3i<'> Bank Lick Turnjiike Co. v. Kent- 01 County Ct., 123 Bank of Hr.tish North America v. Langhrcy, 350. Bank of England v. Cityof I!( rne, no Bank of Ilin., in re Independent Assurance Co., 378 Birk'Nihead R'y Co. v, I3ailey, 304 Birmingham flanking Co., ex p. Brinsley, 227 Bishop's case, in re, zyCi Black V. Homershaw, 344 Black & Co.'s case, in re, 701 Bla klock v. Macduff, 229 Bloxham v. Metropolitan R. R. Co, 344 Blue V. Gas and Water, etc., Co., 3f'3 Blyth's Case, in re, 262 Board of Education v. Moore, 235 Board of Management of Tem- poralities Fund V. Dobie, 141 Bond V. Mount Hope Iron Co., 279 Booth V. Mon real and Bytown Ry. Co., 347 Bos V. Princess of Reus, 115, 265 Bourgouin v. The Montreal, Otta- wa and Occidental Ry. Co., go Bourne v. Freeth, 63, 70 Bowes V. Hope, etc.. Society, 398 Brady v. State, 59 Bramley v. South Eastern Ry. Co., no Branch v. Tomlinson, 375 Brewster v Chapman, 71 Brewster v. Hartley, 144, 191 Bridport Old Brewery Co , in re, 186 Briggs V. Oriental Steam Co., 249 Briggs, ex p., in re Hop and Mat E.Nchange Warehouse, 69 Bright V. Hutton, 70 Brighton Arcade Co. v. Bowling, 315 lirighton Club Co., in re, 398 Brinsle\-, ex p., 227 I^iiitowe V. Grissel, 26O British .American Friendly Society V. Browning, 208 British and Foreign Cork Co., in re Leifchild's case, 105 British Farmers' Pure Linseed Oil Cake Co., in re Potter & Brown's Case, 254 British MutualSociety v. Southall, 383 British Nation Life Assurance .Association, ex p., 138 British Provident Assurance Co. V. Norton, 213 British Provident Life and Fire Assurance Society , ex p. Grady, 212, 214 British Provident Life and Fire .Assurance Society, ex p. Stanley, 206 Britton v. St. Charles Manufac- turing Co., 316 Brooke v. The Bank of Upper Canada, 392 Broughton v. Jennings, 67. Brown v. Andrews, 70 TABLE OF CASES. XXIX. lall, lince I Co. ^ire idy, "ire tley, Ifac- [iper ;Brown v. Chandler, 567 Brown v. Corporation of Town of Belleville. 362 Brown v. Harts, 392 Brown v. Ornamental Pyrographic Co., 162 Brown V. Ornamental Wood Works Co., 3if) Brown et ai. v. Provincial Insur- ance Co., 252 Brown's case, in re, 254 Brown's c.ise, in re Metropolitan Public Carriage Co , 171 Browning v. British American Friendly Societv, 208 B. K. R. & M. K.' Co. v. Palmer, 250 Brush V. Ridgefield R. R. Co., 247 Buffalo & Lake Huron R, R. Co. v. Whitehead, 362 Buffum V. Hoppin, 301 Burbridge v. Morris, 78 Burkinshaw v. Nicholls, 260 Burrows v. Cataraqui Cemetery Co., 145 Bussey v. Harper, 124 Buteau v. Fraser, 197 Butler v. Cumpston, 191 Butler, Sir. O. v. Rex, 380 Caack v. Manufacturers National Bank, 115 Cady T. Potter; 2S1 Calvin v. Prov. Ins. Co., 136 Campbell v. National Life Ins. Co., 350 Canada Car, etc. Co. v. Harris, 124 Canada Car and Manufacturing Co. V. Harris, 319 Canada Southern R. R. Co. v. Gebhardt, in Cape Guardian, etc., Railway Co. V. Kitchen, 143 Carr v. Ottawa Agricultural Ins. Co , 145 Card'ff I'reserved Coal Co., ex p., Hia, 174 ■Carlton v. Bagnall, 73, 74, 77 Carpenter v. New York and New Haven R. R. Co.. 342 Carroll v. Mullanphy Savings Bank, 279 Carron Iron Co., v. Maclaren, 348 Cartun v. Father Mathew, etc.. Society, 215 Carwarthen v. Cardigan R. R. Co., v. I'oiintain, 211 Case v. Marchand, 567 Castello's case, in re, 39^ ('astleberry v. Georgia Company, 72 Cataraqui Cemetery Co. v. I i:r- rows, 145 Cayley v. C. P. & M. R. R & M. Co., 143 Cennell v. liarnes, 65 Central Darjeeling Tea Co., in re 174 Central Railway and Banking Co. V. Ward, 281 Central etc., Express Co. v. Sam- uels, 213 Central R R. Co. v. Georgia, 142 Central R. R. Co. v. Scott, 339 Central R. R. Co. of Venezuela v. Kisch, 65, 66, 69, 269 Chambers v. Gaskell, 347 Chandler v. Brown, 567 Chanman v. Brewster, 71 Ci.-.fjman v. Clark an:l the Unity Life Assurance Association, 349 Chapman v. New Haven R. R. Co , 163 Charitable Corporation v. Sutton, 201 Chartered Bank v. Robinson, 278 Chase v. Vanderbiit, \ci,2 Chaudiere Gold Mining Co. v. Desbaras, 1 12, 127 Chlorier v. Natioii.il Ins. Co., 253 Chiiia Steamship C'u. in re, 284 Christin v. Coinpagnie Navigation Union, 231, 240, 255 Christopher v. Fiist National Bank t f Highstowii, 350 Church and Kmpin; l~ire Ins. Co. in re Pagin & Ciill's ca^e, 234 Citizens' \i. R. Co. v. State Hoard of Agrit ulture, 135 City Bank ex p. in re General ^•states Co., 105 City and County Bank v. Stone, 69, 401. City of Berne v. Bank of England, no City of Chicago v. Ducat, 107. City ot Glasgow Bank v. Houlds- worth, 271 City of Glasgow Bank v. Alex. Mitchell, 283 City of Glasgow Bank v. Nelson Mitchell, 2a2 City of Glasgow Bank v. Muir, 300 City of Glasgow Bank v. Tennent, 270, 294, 401 XXX. TA15LE OF CASES. Claplin V. Slack, 249 Clark V. Allen, 73 Clarke v. Hart, 310 Clark V. Imperial Gas Co., 211. Clark V. Kiclimond, etc.. Associa- tion, jiM Clarke and the Unity Life Assur- ance Association v. Chapman, 349 Clark's case in re, 255, 313 Cle^'g V. I'are, 379 Cleland v. Bail, 65, 78 Cleveland I'ire Brick Co. v, Or- ton, U)6 Cleveland, etc., Railway Co. v. Comiecticut Mutual Life In- surance Co.. 212 Clifton V. Fo.'i, 70 Clive V. (31ive, 340 Coleman v. Imperial Mercantile Credit Association, 174 Coleman v. L. R. T. R. Co., 130 Colle>,'e R(j;idCo. v. Williams, 228 Colles v. Trow City Directory Co., 136 CoUingwoo 1 V. Berkeley, 65 Colt V. Wolaston, 79 Comean v. Cuilil Farm Oil Co., 27S. Commercial I'ank v. State, 375 Commercial Bank of India in re, 34« Commercial Insurance Co. v. Mehlman, 145 Commercial Union Ins. Co. v. F. ote, 210. Commissioners of Penn v. Quick- silver Mining Co., 116 Commissioners of Tippecanoe v. Reynolds, 175, 202 Commonwealth v. Ariison et al., Compagnie de Navigation Union V. ("hristin, 231, 240, 255 Compston v. Butler, 191 Comstock V. Connecticut and Pas- sumpsic Rivers R'y. Co., 11 1 Congreve v. Hickens, 74 Connecticut and I'assumpsic Rivers R y. v. Comstock, 11 1 Connecticut iMutual Life Insur- ance C'o. V. Clev. land, etc., R'y. Co., 212 Connecticut I'eat Co. v. Leavitt et al., 358 '.'onti:'ct (.Corporation ex p. in re Barned's Hanking Co., 2G5 'Tooper v. Craux's Improved Soap Co., 384 '"onybeare v. New Brunswick Land & Railway Co., 67 Corporation of Grantham v. Cou- ture, 2(j8 Corporatiori of Lebanon v. Mc- J^iooin, 360, 372 Corporation of Town of Belle- ville V. Brown, 362 Couillanl v. Union Navigation Co., 293 County Life Assurance Go's Case in re, 175, 210 Courtw right v. Deeds, 317 Couture v. Corporation of dran- tham, 208 Cowan v Wright, 93 Cowdrcy v. Paterston J^ R. Co. .87 Cowie V. 'Irudeau, 234 C.,P..S:M.R.R.& M.Co. v. Caylev, 143 Craig V. Ciregg, 272 Cramp v. Tlie Mayor, etc., of Montreal, 558 Crawford v. Spear, 130 Credit Harbor Co. v. Raines, 363. Cree v. Soinervail et til., 298 Cressey's Company v. .Moseley, 79. Crosby v. NocUuls, 77, 79 Croskey v. Jiank of Wales, 302 Cross' case, (';; re, 298 Cruse V. Paine, 191 Cumberland Black Lead Mine Co. V. Bales, 163 Cumberland Coal, etc., Co. v. Parish, 202 dimming v. Prescott, 173 Currie v. Ogilv)', 69 Curson v. Watson, 70 Curtis V. Leavitt, 206. Cushman v. Thayer Manufactur- ing Co., 279 D Danbury v. Stevens, 354 Dangertield v. Shackleford Ford etc., Co., I.) 7 Dr.vis, Accidental Insurance Co. v. Davis V. Littlewort, 134 Dawe's cas-;, 284, 313, 395 Dawson v. (juebec & Richmond Railway Co., 222, 294 Deeds v. Cartwright, 317 Deeds v. Mitchell, 358 Denison v. Leslie, 246 Denton v. Macneil, 78 Desbarats v. Chaudiere Gold Min- ing Co., 1 12, 127 Diamond Fuel Co. in re, 397 Diamond Fuel Co. in re, Metcalf case, 175 TAHLK OF CASKS. XXXI. >nd 111- ilf Dickenson v. Dodils, 24J nickcnson v. V'alpy, -jo Diokev v. Ontario Wood Pave- ment ('(),. 372 Dioks rris v. l''rench, 317 D )vvline v. Jirighton .\rca le Co., Diew V. National HxciianKe Hank of (ilasi;o\v, 26y Dry Dock Co. v. Harris, 313 D icit V. City iif Chicago, 107 D;inc,m v. reninsuhi K. K. Co., D.irant's case in re, 248 D iranty ex />. /)/ re Liverpool Borough liank, 07 J Iyer V. Mc(jo\van, 271 E. Kt^le Insurance Co., ex />., 210 E lies V. Cumberland 131ack Lead Mine Co., 103 l-'ales V. Watson, 211, 312 Karle V. Augusta, locj I'.arle v. I aylor, 392 I'larle v, Wet)b, 343 ICast Oluucester Ky. Co. v. Bar- tholeinew, 316 K:ist Norf Ik Tramway Cos case, 168 liast Pont Du Mining Co. v. Mer- ry weather, 175, 190 East Wheal I^ore Mining Co., 69 Ebbw's case //; re, 158 lule v. (larwood, 78 Edwards v. Grand Junction Ry. Co., 72 Elkington's case, 248, 253 Ellis v North Carolina Institution, 354 Elmore v. the People, 279 Emma Silver Mining Co v. Lewis, 74 Englehart v. Upton, 268 Eanis v. West Clare K.R.Co. in re, 171, 191 Euniskillen Oil Refining Co. v. Wingate, 363 Equity Law Life Company v. Law Life Company. 103 Erie Ky. Co. v. Heath, 234 Erie R. R. Co. v. Ranisav, 1S3 ICrlangerv. New Sombrein Cii., Esparte Trailing Co., /';( ;c, i 171, 250 Instates Investment Ceniprmy l^oss, (14 European .\rbitr,ition, in re, :■- European (S: North. Vmerican K. Co. V. Lloyd, 131 liuropean & North Amtric lU 1 Co. V. Thomas, 85 European, etc., K. R. Co. v. 1' 73 08, V. '/.T J02 ICvans V. Hudon, go, loi E\ans V. Spackiu m, 401 Everdcll V. Siieb()yj;an, eu-., R. Co., 330 ^ y or. R. F. Falls V. Watson, 284 Faiibault v. St. L aus & Kichelieu Co., 132 Farmers' Trust I'v Lo,in (d. v. Racine & .Miss. R. R. v_o., 143, 3(" arijuhar v. Mollatt, 273 .irrar v. Walker, 2G8 arrell v. Ritchie, .\S4 ather Mat'.io'.\ , i-Xc, Society v. CarS Hopkins v. Higgins, 70 Hopkins v. Wyld, 70 Hoppin V. Puftnin, 301 Hornbv's case, in re. 395, 396 Hornsby v. I'ine, 240 Horst:y's cl im. 130 Houldswoith v. City of fllasgow ]?ank. 271 Houston V. Diiectors &c., 59 Howard's case, /// re Leeds Hank- ing Co., 221 Howbeach Coal Co. v. Ttague, 303 Hubbel V. Meigs, 268 Hudon V. Evans, 90. loi Hudson V. York and North Mid- land Ry. Co., 202 Hughes V. .Antietam Manufac- turing Co., 318 Hull CJlass Co. V. Smith, 201. 209, 7,57 H umber Iron Works, in re. 3S6 Hunter v. Sun Mutual Insurance <■<>•■ 355. Hurd v. Lindsay Petroleum Co., 75 Hurlord v. First National Bank, 317 Hutton V. Bright, 70 Hutton v. Scarborough Hotel Co., 154 Hutton v, Thompson, 70 I. I. C. & L. U. R. v. Jones, 141 Ilfrarombe Railway Co. v. Picker- '"K. 3«7 Imperial Cas Co. v. Clark, 211 Imperial Mercantile Credit Asso- ciation v. Coleman, 174 Imperial Mercantile Credit .\sso- ciation, Marino's case. 265 Independent Assurance Co. ex p. Bird, 378 Inderwick v. Snell, 183 'Si' ,'.i it XXXIV. TAnr.K OF CA91«8. Inns of Court Company v. Ru- dolph, 306 International Life Insurance So- ciety, in re. 205 International Petroleum Co. v. Hanna, i6j Iowa, etc., R. R. Co. v. Perkins, 242 Ireland v. Ontario Marine In- surance Co., 304 Iron Ship Coating Co. v. Blunt, 174 Irwin V. Scales, 248 J. Jackson v. Provident Savings Ins. Co. ,277 James v. May, igi Japanese Curtains Co. v. Pat. Fab- rick Co., 359 Jenners case, in re, 168 Jennings v. liroughton, 67 Jersey Imperial Hotel Co. v. Mc- Dougall, 162. Jessup V. Tomlinson, 376 Jewsbury v. Swift, 269 Johnson v. (ioslett, 79 Johnson v. Jones, 181, 190 Johnson v. Little's Iron Agency, 3" Joint Stock Co. in re, 228 Jones V. I. C. & L. R. R., 141 Jones V. Johnson, i8t, 190 Jones V. Montreal Cotton Co. 250 Juneau v. Beliveau, 197 K. Kane v. Montreal Telegraph Co., 342 Kansas, etc. Ins. Co. v. Libling, 348 Kantowiez v. Beck, 74 Keens Executor's Case, in re, 291 Kent V. Legendre, 339 Kent V. The Freehold Land and Brick Making Co., 69, 74 Kenton County Ct. v. Bank Lick Turnpike Co., 123 Keyford Co., in re Peel's case, 119 Keys V. Quebec Assurance Co., 222 Jviely V. Kiely, 199 Kierzkowski v. Cirand Trunk R. K. Co., 128 King V. Hansel, 195 Kini{ V. Osgood, 259 King V. Wood Hydraulic Co., no Kings Cross Industrial Dwellings Co., in re, 398 Kingston Street R'y Co. v. Foster, 243. 247 Kipling V. Todd, 16? Kirstall Brewery C. , in re, 158 Kisch V. Central Railway Co. of Venezuela, 65, 66, 69, 269 Kitchen v. Cape Guardian, etc., R. R. Co , 143 Knight's case, in're, 312 Krebs v. State, 160 Kuntze v. U. S. Ex. Bank, 107 Lacan v. Henderson, 64 Lacroi.x v. Perrault de Liniere, 237 Lafarge v. Lafarge, 558 Lafayette Insurance Co. v. French , 349 Lafayette Savings Bank v. St. Louis Stoneware Co., 209 Laframboise v. Windsor Hotel Co., 69, 318 Lake v. Argyll, 70 La Manufacture de laine d' Yam- achiche v. Pratt, 207 Lamar Insurance Company y. Melvin, 251 Lambert v. Northern Railway Co. of Buenos Ayres, 166 Lambert v. Barnett, 70 Lancashire Cotton Spinning Co. t. Greatorex, 227 Lancashire Ins. Co. v. Goodwin, ■*45 Lancaster v. Miller, 142. Lancaster Mills Co. ▼. Seelye, 364 L. & S. W. R. R. Co. V. Water- house, 282 Langham v. East Wheal Bore Mining Co., 69 Langhrey v. Bank of British North America, 350 Langley Mill Co., in re, 398 Larnett v. Weir, 272 La Societe de Construction, du Canada V. LaBanque Nationale, 208 La Societe de Construction de Soulanges, 230 TABLE OF CASES. XXXV. Jore lorth I du lale, de Law Life Co. v, Equity and Law Life Co., loj Lawrence's case, in re, 68 Lawrencebnrg v. Aurora, etc., R. R. Co. if>3 Lawson v. Bank of London, 104 Laymond v. l-ranklin, 266 Leavitt et til v. Connecticut, Peat Co., 358 Leavitt v. Curtis, 206 •Lee V. Haley, 103 Leeds Banking Co., in re How- ard's case, 221 Legendre v. Cirand Trunk Co, 347 Legendre v. Kent, 339 Leifchild's c;ise, /';/ re British and Foreign Cork Co., 103 Leprohn v. The Cor. of the City of Ottawa, 8g, go, loi Leslie v. Denison, 246 Les Remortjueurs de St. Laurent V. Murphy, 228 Level Steam Cotton Press v. St. Rome, 340 Lewis V. Atlanta Mutual Life Insurance Co., 204 Lewis V. Emma Silver Mining Co., 74 Lewis V. Reynolds. 70 Libling v. Kansas, etc., Insurance Co., 348 Lindsay Petroleum Co. v. Hurd, 75 Lintott, ex />., 308 Little's Iron Agency v. Johnson, Littlewort v. Davis, 134 Liverpool Borough Bank, ex p. Duranty, 67 Liverpool Water Co. v. Sparks, 3'3 Llanharry Hematite Co. in re Roney's Case, 172 Lloyd v. E. & N. A. Ry. Co., 131 Loan, etc. Association v. Mar- chand, 77 Logan v. McAllister, 123 Lombard v. Wilsi>n, 359 Londesborough v. Ward, 79. London v. Caledonia Marine Ins. Co. in re, 394 London & Liverpool .'\ssurance Co. v. London Assurance Co., 103 London v. Mercantile Discount Co., in re 190 London & Provincial Law .\ssur- ance Society v. Provincial Joint Stock Life Assurance Co., 103 London Architectural Co. v. Goulton, 311 London Assurance Co. v. London & Liverpool Assurance Co. 103 London, Birmingham, etc.. Bank in re 28(1 London Dock Co. v, Sinnott, 365 London Granite Co, in re i6f) London, Hamburg & Continental Exchange Bank. Zulueta'sclaim 105, 143, 296 London Taverns Clo. in re 158 Lord Claud Hamilton's case in re 167 Lord Ebury v. Scott, 71 L. R. T. R. Co. V. Coleman, 130 Lundy v. Dickson, 350 Lushington v. Pender, 190 Lycoming Insurance Ce. v. Ham- ilton, 205 Lyle v. Phelps, 174 M Macduff V. Blaiklock, 229 Maclaren v. Carron Iron Co., 348. Macneil v. Denton, 78 Macon etc. R. R. Co., v. Vason, 304,306,315. J Maddick v. Henning, 191 Maddick v. Marshall, 78. Madrid ]3ank v. Bayley, 222 Mair v. Himalaya Tea Co., 211, 221 Maitland's case, in re, 70, 176, 204 Maitland's case, in re, Gloucester etc. Railway Co., 220 Mangles v. Grand Collier Dock Co., 316 Manhattan Insurance Co., v. Hobbs, 115. Manufacturers' National Bank v. Caack, 115 Maraquita Mining Co. v. Regina, 227 Marchand v. Case, 567. Marchand v. Loan etc. .Associa- tion, 77 Marino's case in re Imperial Mercantile Credit Association. 263 Mars'iall v. Maddick, 78 Martin v. Zellerbach, 240 Martyn v. Penrose, 381 Master's cas« in re, 277 May v. James, igi Maynards case in re, 256 XXXVl. TAHLK OF CAHKH. Mayor and Corporation of Swan- sea V. (,)uirk, JJ7 Meif^s V. lluhlH^l, J(j8 Meililman v.C'oMiniurcial Ins. Co., 145 Melvin v. Lamar Ins. Co., 251 Mendeth ix />. /'// i-f State Tire In- surance ("<)., Ji2l Mercantile Association Co. v. At- torney (ieneral, 5J. Merchants Hank v. United ICm- pire Club, 208 Merrywcather v. ICast I'ont du Mininf,' Co., 175, 190 Metcalf s case in re Diamond Tuel Co., 173 Metropolitan Public Carriage Co. in re Browns and Green's case, 171 Metropolitan Railway Co. v. Bloxliani, 344 Metropolitan Railway Warehous- ing Co., /'/) re. it)2 Mexican Railway Co. v. Harri- son, 154 Michigan Railway Co. v. Swart- want, 163 Middleton v. Poole, 273 Miller v. Lancaster, 142 Mills V. Northern Railway of Buenos A res Co., 337, 344 Mitchell, Ale.x. %•. City of Cilasgow BauK, 2S3 Mitchell, Nelson v. City of Cilas- gow l>ank, 2S2 Mitchell V. Deeds, 358 Mitchell V. Norman, 31 1 Mitchell V. Vermont C(jpper Min- ing Co., 187, 215 Moffat V. Farquhar, 273 Montefiore v. Ramsgate Hotel Co., 250 Montreal & Bytown Railway Co. V. Booth, 347 Montreal Cotton Co. v. Jones, 250 Montreal, Ottawa & Occidental Railway Co. v. Bourgouin.cjo Montreal Telegraph Co. v. Kane, 342 Moore v. Board of Education, 235 Moore v. Hammond, 211 Moore v. Port Bruce Harbor Co., 182 Moore el al. v. McLaren, 299 Moor's case in re Florence Land and Public Works Co., 387 Morgan v. Skiddy, 65 Morrice v. Aylmer, 239 Morris v. Barbridge, 78 Morris v. Cillan, 320 Mosi.'ley v. ('lessey's Co., 79 Mount Hope Iron Company v. Bond, 279 Mowait V. West c:ornwall Ry. Co., 315 Muggendge v. New Brunswick & ("anada Ry. and Land Co., 6^ Muir V. City of (ilasgow Bank, 300 Midlanphy Savings Bank v. Car- roll, 279 Murgatnyd's case /(I re, 276 Murphy v. Les Remonjueurs de St. Laurent, 228 Murphy v. Windsor Hotel Co., f>9, r 3, 294, 31O, 373 Murphy v. Stephens, 371 Mutual Insurance Co. of Stan- stead V. Pattison, 347 Mc. McAllister v.Lo'j;an, 123 McBroom v. ( • rjxiration of Le- banon, 340, 37.; McClanaghan v. St. Ann's Mutual Build ng Society, loi McCracken v. Mclntyre, 260 McCreight v. Stevens, 319 McCullough V. Taledega Insur- ance Co., 361 McDaniel v. State, 167 McDaniel's Manufacturing Co. in re, 180 McDonald V. Upper Canada Min- ing Co., ..,63 McDougall V Jersev Imperial Hotel Co., 162 McElhennysapp., 74 McEntyre v. McCracken, 260 McFariane v. Niagara District Fire Ins. Co., 116 McCiinnis v. Adriatic Mills, 372 McGowan v. Dyer, 271 Mclver v. State, 278 McKean R. R. Co. v. Winans, no McKinley v. Bates, 339 McLaren v. Moore et al., 277 McLister v. Garden Gully Co., iSf', 303. 313 McPherson et al., v. The St. Law- rence and Inland Insurance Co. 349 TAULK OF CASKS. XXXVll. N. Nanty-(;io. Iron W'cirks Co. v. Ciravos, i()() Nasli V Kfctor, 34S Natal Investment Co., in re WW- son's case, 243 National Anns ("o. in re, 158 Nat. Hank v. (ilobe Works, 134 National Ivxchange Bank of (lias- ^ow V. Drew, jfig National Fun., 280 Penu. R. R. Co. v. Thorp, 142 Penrose v. Martyn, 381 People V. Albany, etc., R. R. Co., 181 People V, .Assessors of Water- town, 54 People V. Elmore, 279 People V. Hills, 182 Percy & Kelly, Nickel Cobalt and Chrome Iron Mining Co.'s case, in re, 168 Perkins v. Iowa, etc., R. R. Co., 242 I'erkins V. Sanders, 123 Perrault de Liniere v. Lacn ix, 237 Peru'i.in Railway Co. v. Thames & V ersey Marine Insurance Co., 134 Phelps V. Lyle, 174 Philpot V. Screver Hose Com- pany, 133 Phoenix \Varehousing Company V. Badger, 242 Phosphate of Lime Co. in re Austin's case, 218, 303 Phospates' Sewage Co. v. Hart- mant, 76 Pickering v. Ilfracorabe Railway Co., 387 Pickering v. Stephenson, 202 Pickering v. Templeton, 243 Planters' Bank of Georgia v. Bank of United States, 60 Plumb V. Nield, 344 Plymouth v. Ridley, 54 Poole V. Middleton, 273 Poole's case in re, 309 Pooley Hall Cc'.liery Co. in re, 387 Poor V. European, etc.. Railway Co., 175, 202 F'orcelain Manufacturing Co. v. Thew, 3S7 Port Bruce Harbor Co. v. Moore, 182 Poston V. Gibb, 197 Potter V. Cady, 281 Potter's case in re, 254 Pratt V. La manafacture de laine d'Yamachiche, 207 Prescott V. Cumming, 173 President and Truste s of College of California v. State of Cal , 393 Preston v. Grand Collier Dock Co., 311 Prince v. Prince, 365 Princess of Reuss v. Bos, 115, 265 Prichard's case in re, 26.; Proprietors of Central Bridge, 3y3 I'rovident Saving Ins. Co. v. Jackson, 277 Prov. Ins. Co. v. Brown et al, 252 i rovinci:il Insurance Co. v. Cal- vin, 136 Provincial Insurance Co. v. Tough 245 Provincial Insurance Co. of Can- ada V. Shaw, 2^4 Provincial Joint Stock Life As- surance Co. V. London & Pro- vincial Law Assurance Society, i'->3 Pul brook V. Richmond Mining Co., 172 Pulford V. Fire Department, 215 Pulsford V. Richards, 252 Puseyv, N. J., etc., R. R. Co., 354 Pym V. North and South Subway Co., 177 Q. Quebec Agricultural Implements Co. V. Hebert. 395 Quebec Assurance Company v. Keys, 222 TAHLE OF CASES. XXIIX. ay V. re, line lepe :al. )ock , 265 idge, V. •252 Cal- lugh :an- As- iPro- liety, fning 215 Co.. jway Harbour Co. lents ky V. Quebec and Richmond Railway Co. V. Dawson, 222, 294 ^ueen v. Shropshire Union R. K. Co., 191 ^ueen v. The Government Stock Investment Co., 193 ^ueen v. Ward, 182 Quicksilver Mining Co. v. Com- missioners of Penn., 1x6 ■Quirk V. Mayor and Corporation of Swansea, 237 E. Rabway White Rubber Co. y. Wells, 188 Racine and Miss. R. R. Co. v. Farmers' Trust and Loan Co., 14J. 361 Raines v. Credit 363 Ramsay v. Erie R. R. Co., 183 Ramsgate Hotel Co. v. Montefiore and Golsmid, 250 Ranee's case in re, 337, 341 R.ankan'scase in re Pat. Davit and Boat Detaching Co., 177 Rascony v. Union Navigation Co., 293 Rector v. Nash, 348 Reese River Mining Co. v. Smith, 63, 251, 398 Regent United Service Stores »'« re, 257, 347 Reg v. Maraquita Co., 227 Reg V. Wilts and Berks' Canal Navigation Co., 227 Rex v. Amery, 375 Rex V. Sir O. Butler, 380 Reynell v. Lewis, 70 Reynolds v. Barned s Banking Co., Ill Revnolds v. Commissioners of Tippecanoe, 175, 202 Reynolds v. Stark Co., 205 Reynolds v. Toledo etc. R. R. Co., 350 Rhind v. Hearle, 210 Ricar v. Baquie, 213 Rice v. Walker, 371 Richards V. Pulsford, 252 Riche V. Ashbury, 125, 135 Richmond etc. Association v. Clarke, 318 Richmond Mining Co. v. Pul- brook, 172 Ridgefield etc. R. R. Co. v. Brush, 247 Ridgeley v. Webb, 274 Ridley v. Plymouth, 54 Ritchie v. Farrell. 2S4 Ritchie v. Hall, 93 Ritso s case in re, 243 Robinson v. Chartered Bank, 278 Rockford, ttc, R. R. Co. v. Sagn, 71 Rocky Mountain, etc.. Bank v. Union, etc.. Mining Co., 354 Rogers v. Hastings, etc., R. R. Co.. 165 Rome v. Adriance, 354 Ronry s case in re Llanharry Hematite Co., 172 Rose v. Thames Haven Dock Co , 303 R(jse V. Estates Investment Co., 64 Rowland v. Hatch. 241 Roy v. Thibault, 197 Royal British Bank v. Turquand, 201, 210 Royal British Bank in re Nichols case. 67 Royal Bank of India s case in re, 223 Royal Insurance Co. v. Taunton, 201 Rudf)lph V. Inns of Court Co.. 306 Russell V. Gas Co., 31-6 Russian Vyksounksy Iron Works ex p. Stewart, OS s. Sage V. Rockford etc. R. R. Co., Samuels v Central etc. Express Co., 213 Samuel v. Halladay, 185 Sanders v. I'erkins, 123 Sankev Brook Coal Co. in re, 3«7' Scarborough Hotel Co. v. Hatton, 154 Scott V. Central R. R. Co., 339 Scott V. IjotA Eburr, 71 Screven Hose Co v. Philpot, 135 Scales V. Irwin. 248 Seelve v. Lancaster Mills Co., 364 Selwyn v. Harrison. 320 Sebi.ia etc. R. R. Co. v. Harbin, 142 Shackleford, Ford & Co. v. Dangerfield. 147 .5'' xl. TAULE (•!• CA^Es. Shacl., 69 Shields v. Ohio, 142 ship's case /'/; re, 67 Shropshire Union R. R. Co. v. the Oueen, iiji Sichell s case in re, 301 Silkstone Fall C >. in re, 186 Simartl v. Henry, igj Singer's case in re, 299 Sir John Moore (iold Mining Co., in re, 56J Silber I.ijjhtCo. v. Silber, 194,372 Skiddy v. Morgan, 0^ Slack V. C'laplian, 249 Smiley V. the Mayor of Chata- nooga, i;04 Smith V. HulKilass Co., 201, 209, 357 Smith V. American Coal ( o,, 301 Smith V. Newell, 35S Smith V. Reese River Silver Min- ing Co,, (13, 251, 39S Smith V. Whalley Bridge Calico I'rinting Co., 76 Snell V. Inderwick, 183 Snow's case in re, 277 Solomon v. American Silk Works. 131 Soldiers' Orphans' Home v. Shaf- fer, 355 Somer.ail et al.. v. Cree, 298 Southall V. British Mutual Society •74. 3«3 South Eastern Ry. Co., v. Bram- ley ,110 Spackman v. Evans, 404 '^iiiirgoe's case in re. >^b, 257 Sparks v. Liverpool Water Co., 313 Spear v. Crawford, 130 Spillen V. I'aris Skating Rink Co., St. Anr>s Mutual Building Society loi St. Charles Manufacturing Co. v. Britton, 316 St. Francis Mine Co. v, Toupin 347 St. Lawrence and Inland Marine Ins. Co. V. Mcl'herson, 349 St. Louis and Richelieu ("o. v. Faribault, 132 St- Lcsm* Stoneware Co. v. Lafay- Mif SiTiiu^s Bank, 209 St Kcffiiair* V. Level Steam Cotton !':«»„ j4;o Stamluffliik \r. Fern ley, 268 SlanRcy rfji ^. ill re Briti.sh I'rovi- deni Wirit and Life Insurance ScicaMy. 206 StapltiJoinii Colliery Co. ('im.) in re t.STKO'x * case, 258 StaxK C;- V. R.^vnolds, 205 Stale T.. Bteaville Oil Works, 228 State ffiioiardof .Vgriculture v. Citi- zens BLR. Co., 135 PtaTex Eiridy, 59 Stale; T. (Ci3m.merci:d Bank, 375 State F'ure Casiirance ("o. in re, ex _/>, M^tsD iietn. 22 r State T. (Gnioc^ii Meii:al Society, 371 State T Krebs, iho Stat-e^- M.D'.miel, 167 Stai-e X. McCver, 278 State T rni-m Merchants' Ex- preiis in 5 Stale oc (C.ilitornia v. I'res. and TrcMBtee* of College of Cali- fcxmiiiL ji>j- Stemjii«r * o'l-se, in re. 337 Stt^TiMsn-sioa v. Pickering, 202 SifTeaa-x D^mbury. 354 Stev«tMi 1. Mc(>eight, 319 Ster-tm* X Sif array. 371 Stt^-eimoni tit re. 401 Stewan tf.n p.. in re Russian VyisoxEiiuksy Iron Works, &8 '^lirJinu: x Hayes, .So Stwfei m Ilron Co. in re, 286 Stoctem ■» case in re Overend, iGiBLTMNi A Co., 308 P1 '- -.- pir-^iierman, 396 Si ■; ;ry and County Bank, StonfomliD E^ane Colliery Co. in re. Stnuai Ma^iic Hall in re. 213,386. Straitfomil Jk Horeton Railway Co. V Soratton., 305, 319 Stniatawr 4 ca.se in re, 341 SatBctii . White, ■^57 I he Ciovernmcnt Stock Invest- ment Co. V the Oiiei^n, U)3 The London and Provincial Tele- graph Co. ill re. jgi The Mayor etc. of Chattanooga v. Simley, 204 The Mckean \l. R. and Navigation Co. v. Winans. joS The Miners Hitch Co. v. Zeller- bach. 59 Thaw V. Porcelain Munufacturing ^^o . 3.^7 Thibaul v. Roy. 197 Thorn, i' v. Kuropean and North Ap.-.c r. Ry, Co., 85 Thompsc. .\bbott, 142 Thompsor v. Hank of Montreal, 373 Thompson v. Hutton, 70 'Thorp v. Penn. R. R. Co., 142 Tipton, Petersburg and Berlin 'Turnpike Co. v. Class, 372 'Todd V. Bellows, 187 Todd v Kipling, i68 Toledo etc. R. R. Co, v. Reynold!, 350 Tomlinson v. Branch, 375 Tomlinson v. Jessup, 376 Tough v. Provincial Ins. Co., 245 Toupin V. St. Francis Mine Co., 347 Trebilcock v. Upton, 315 Trow City Directory v. Colles. I3fi Trudeau v, Cowie, 235 Tucker v. Wright, 339 Turnbull v. Payson, 299 Turquand v. Oakes, 67, 69, 125, 251. 37S Turquand v. Royal British Bank, 201, 210 Twycross v. Grant, 70 u. Union Merchant's Express v State, 215 Union, etc., Mining Co .Mountain, etc., liank Union Na\igation Co. lard, 293 Union Navigation Co. v. Rasconv, 293 Union St. Jaccjues v. Belisle, 88, 99 United Empire Club v. Merchants i5ank, 208 U. S. E-x. Bank v. Kunt/.e, 107 Upper Canada Mining Co. v. McDonald, ^f^i Ujitoii V. I'^ngleliart, 268 Upton V. 'Trebelcock, 315 V. Rocky 354 V. Couil- V. \'ale of Neath Brewery Co. in re Walter's case, 211 Valois V. Compagnie Navigation Union, 255 Valpy V. Dickinson, 70 Vanderbilt v. Chase, 142 Vason V. Macon, etc., R. R. Co., 304, 306, 315 N'eiiiioiit Copper Mining Co. v, Mitchell, 187 '15 ■asmi xlii. TA15LE OF CASES. w. Walker v. Farrar, 26S Walker v. Rice, 371 Walls case in re, 246 Walters case in re Vale of Neath Brewery Co., 21 1 Ward V. Central Kail\va\' and lianking Co., 281 Ward V. Londe.sborongh, 79 Ward V. The (.Hiceii, 182 Waterhouse v. L. & S. W. Rail- way Co., 282 Watson V. Carson, 70 Watson V. Eales, 2ii,j)i2 Watson V. Falls, 284 Watts ap])eal in re, 130 Webb V. I'larle, 343 Webb V. Ridgeiey, 274 Webbs case in re, 205, 207 Webster v.Cirand Trunk Railway Co., 273 Wedge wood dial and Iron Co. in re, I go Weir V. Larnett, 272 Wells V. Kabwav White Rubber Co. 188 Welsh Flannel Co. in re. 307 \Vest Carolino etc. Insurance Co. in re. 374 West Clare Railway Company v. Knnis, 171, njt West Cornwall Ry. Co. v. Mowatt, 315 West Hartlepool Ry. Co. v. Wil- son, 337 West Jewell Tin Mining Co. Weston's case, 74 Western Assurance Co, v. Taylor, 137 Western Bank of Scotland v. Addie, 67, 251, 252, 269, 271 Western liank v. (iilstrap, 204 Weston's case in re, 264, y)^ Weston's case /;/ re West Jewell Tin Mining Co., 74 Whaley Bridge C^aiico Printing Co. V. Green t. Smith. 76 White ex p. in re the (iovernment Security Fire Ins. Co., 257 Whitehead v. Buffalo and Lake Huron R. R. Co., 3*'-; Whitley Partners /// re, 247 Whitney Arms Co. v. Barlow, 136 Wight V. Tucker, 339 William's case in re, 276 Road Williams v. College etc. Co., 228 Williamson e.y f>.. 174 Wilson V. Ferguson, 200 Wilson V. (iintv, 250 Wilson V. La Societe do construc- tion de Soulanges, 236 Wilson V. Lombard, 35c) Wilson's case in re Natal Invest- ment Co., 243 Wilson V. Proprietors of Central Bridge, 293 Wilson V. West Hartlepool R. R. Co • 357 Winans v. The McKean R. R. Co. and Nav. Co., 568 Windsor Hotel Co. v. Lafram- boise, 6g, 318 Windsor Hotel Co. v. Murphy, rig, 223, 294, 316, 373 Wingate v. Knniskillen Oil Refin- ing Co., 363 Wilts and Berks Canal Naviga- tion Co. V. Rcgina, 227 Wolaston v. Colt, ~i) Wood Hydraulic Co. v. King, no AVood V Ontario and (,)uebec R, R Co., 364 Wood V. Shaw, 208, 361 Woodrup V Harris, 278 Woolaston's Case /(; re, 313 Woonsacket (x). v. Allen, 134 Worth ex />. /;; re National Patent Steam Fuel Co,, 67 Wouter V. Slirairp, 79 Wright V. Cowan. 93 Wright's case, in re, 297 Wyld V. Hopkins, 70 Y. York & North Midland Ry. Co. v. Hudson, 202 Yorkshire Fibre Co . in re 228 z. Zellerbach v Martin, 240 Zellerbach v The Miners Ditch Co., 59 Zuluetas Claim, in re London, Hamburg and Continental Ex- change Bank, 105, 143, 296 INTRODUCTION. if ^ rpHE principle of ashfociiition for niutnal prolit is of very -•- ancient origin. Indeed, if detaching- the term pnf/it from the narrow idea it conveys wben used in a nicrehant's ledger, Wf t'Xpand it so as to mean, protection, support, or advantage of any kind, \\v will find the principle coeval with mankind itself.' Commencing within that limited circle we call a family, it has spread like a circle on a pool mitil it has emhraced almost all the relations of life, and has given rise to countless assoeiations fornu'd either for pleasure or for profit, l^linerging like a mountain stream from the dark recesses of prehistoric or patriarchiil tinu's, it has followed its di'vious course uiu-easingly, now hurying its head amid the unwritten customs of rude unlettered tribes, now reappearing to the light of i-is ili/.ation among more cultured peoples. l''rom theocratii- -ludea it passed to PlKenecia, to Greeee, to IJonu', to the more modi'rn nations of the world, alwiiys the same in principle, though ever presenting new forms and develo[)ing new i»o\vi'rs. We are not surprised then to lind its advantiiges for mutual (/(till merely ri'cogni/ced. also, at a very early period : and so naturally has the principl(> heen developed in this direction that the ancient primiti\e family has heen com- ' It was iKjt iiiiti! SDiiU' months alter this was written that 1 '^or." Bat the compariso)i ends here. The association of the primitive family "^vas :v "^he main factitious. It did not contain the essentuii elements of what was known to the Roman law as norictas and to English law as a partnership. This, in the course of time and guided by the ever-increas- ing requirements of commercial and industrial life drew away from the primitive association, insomuch that the family became one thing, and the aor'n'taa or partnership another. The former comprised those who, by birth, marriage or adoption, fell under the same putrid potcaias, or were bound together by the same family tie. The latter were thosi' who deliberately associated themselves or put something in common for their mutual i>rofit. It is with the latter that we are now more particularly concerned. The latin term, xncictds, is derived from the idea of union — the union of the parties to the contract — the I'^nglish twin jxirfncrsJiip from the idea of division — the division of the result of that union — whether of profit or of loss. A ' Maine refers no doubt to what is known as a civil corporation which would make this sentence somewhat paradoxical in effect, but the analogy between corporations civil and corporations commercial, is so great at the present day as to justify the use here made of the term. The evidence however is that corporations civil preceded by several centuries the simplest form of commercial association. INTRODUCTION. a division of profits only however appears to be essential to the existence of a contract of partnership as the following definitions indicate. I'artnersliip is referred to in the lioman law as follows: Si)cief(itriii coin' hoIi'iiiiih (txt toforidii hoiionan, qudiii (iraeci sjn'ciiditcr Kommiia^Luv iippclldiit ; aiit hhIiih (ilictijuti itaiovia- limiis, rrhiti iiuuicipioniin I'lih'ndornm vcudcudorum, ant olei, riiii, frnmcnti cmcudi rciidntdiqiti'. In French law previous to the code as " uii rout rat par- Icqucl (h'HX on pliisiciirH pcrsonncs nictteut on s'obliffent de iiirftrc ot conimiiii qnclquc rlioxc pour fnirc en romnuin un jirnjit ]io)int'ftf, doiit lis Hohliiii'ut n'ciproqin'ment da se rciidn' coinpfr,'"' \n the code as " //// coutrat par IrqiicI dcii.r ok jdiisiriirH pirxDiiiirH conrlcnuant dc iiicttrc qnchnn' rhosi' cii rouninni (hiiii If rue dc purtuficr hi liciicficc qui poiirni cii rcsnlter.''' In English law, as " a contract between two or more iHisons for joinintj; together their money, goods, labor, 1111(1 skill or either or all of them upon an agreement, that the gain or loss shall be divided proportionably between tluiu, and having for its object the advancement and pro- tection of fair and open trade.'" In the United States, as " A monetary contract between two or more competent persons to place their money, effects labour or skill, or some or all of them in lawful commerce witli the understanding that there shall be a communion of till' profits thereof between them."^ Ill the Civil Code of Lower Canada, as "A contract in wliieli it is essential that it should be for the common profit of the partners, each of whom must contribute to it, pro- l>i rty, credit, skill or industry."' ' I'othier, SociJte'. Code Civil Art, 1832. ' Watson, followed by Gow. ♦ Story, Part, 6th Ed., p. 4. ^ Civil Code of Quebec Art, 1830. % H 4 INTRODUCTION. In the Civil Codt' of Louisianu, us a synjilliij^'matic and connmitativf contract, made ])ctwt'en two and more i^ersons for the mutual participation in the proiits which nuiy accrue from property, cri'dit, .dull or industry furnished in deteruiined [treportions by th" parties.' But before attempting' to descrilte the coinuierciiii associa- tion of the present day, it may l)e of use and interest to glance at its coiulition in times past, to nuirk the rudiments from whi(di itsprunj^'; to trace briefly its evolution from the germinal for)u in which it presented itself during the early Kcmian period to its present robust development throughout the connnercial world. In doing this, we will see that evevy new form which it has assumed, every new power which it has developed, has ])vvn, not the result of legal speculation, but of a yielding to the necessity of adapting its borders to the ever expanding and increasing demands of commercial life. At no time has the prevision of the Legislature or the abstract reasoning of the jurist gone Iteyoud the actual requirements of the present. Each new capal)i]ity which the law of association has i)resented has been well understood and utili/.ed long before it was atteuipted to l)e deJiued l>y [)riiicii)les or bounded l)y rules. IJcMring tiiis in view, we are not surprised to tiud that the references to a connnercial a ssocia'iou or -s-or/r^rs made by the [{oman Jurists even up to the time of (laius, attempt no definition of its principles. The references anu)unt to nothing more than m sim[ile statement of what actually ex- isted. Gains says : We are accustomed to enter into part- nership f HDch'tidfiii coin' sole III IIS J either of all our goods (diif (otonini. hoiioniiii), called l)y the (irei'ks Koivoirixi^iav (Koiii(tj)ni.iii)n) or for some single enter[)rise, {ant iiiiiiis tiliciijiiH ncijotiitthniis) as, for instance, the buying and selling of slaves or of corn, wine, oil, etc., {rrlnfi iiKnicijiioniin eiiiru- iloniiH rc'iid(',nun to aim at sciontilic nii'thod or seieiitilic iic- fUiacv In the discussions which ari tl (ISC ii'om tiic apjinca- tioii of the law W(> see the dawn ol' i)rincii)lr-, which, like some constellation, the existence ol which was lait faintly j^'Uessed at centuries ago, has lon,,,iihiii, which they found themselves unable to reconcile with their notions of the contract, aiid the .svn/c/r/.s of nnecpial shares, they were apparently unable to see any essential difference in principh". But the age in which these dilHculties arose was the age of the greatest legal activity, of the greatest legal progress, of the most rapid development of legal pro- positions. It was, indeed, the summer-age of iu»-i>i>ru (lence in which its principles are seen daily unfolding to the light like the blossoms of sonn- fruitful tree and giving prom se of the rich harvest it was destined to yield. The vigorous intellectual attrition which these disputes occasioned very soon rul)bed from the t'yes of the early jur- ists the scales which covered them and enabled them to see illi if ' ii -jiM- 6 INTUODUCTION. with \in()l)Ktrnct('(l vision and to cstaljlish upon an ininiiit- ablc hiisis principles which remain unshaken to this day. These difficulties once removed, the idea of associaticm for purposes of <;ain exi)iinded very rapidly, insomuch that while (laius enumerated only the two descriptions of part- nership mentioned ahove, Ulpian, who followed very shortly after him, mentions no less than five, viz.: 1st. Socii'tiis totoniiii Jxnioriiiii, or of all the property of the partners. 2nd. S()cicf((x (jin- ex (incain rcncrcnf, or of the profits merely of the partnership. 8rd. Si)ci<'f((H H('(i()ti<(ti()iiin (tUriiJna, or for some special enteri)rise. 4th. Sorictiin rcrtiii((lis, or partnership formed for the purpose of farming the public revenues. 5th. Socirtdx n-i niiiiis, or partnership in which a single object is placed in commcm, as a house or a horse. Further on we will have an opportunity of contrasting these forms of partnership, these applications of the principle of association, with those known both to mediieval and modern times. For the present it will not be without interest to see to what extent these forms of association entered into the actual every day life of the Roman people. It is certain that the Romans were in the habit of forming associations for the purpose of (tarrying ou((U k'ui(Unf' coni- niciridl ojH'.nttiona both by land luid sea. Then, as now, there A'ere associations formed for all kinds of enterprises from the two professors mentioned by Paul, who entered in a partnership to teach grammar, to the company spoken of by Livy, which was formed to raise the means necessary to enable the two Scipios to carry on the Cartha- ginian war. Then, as now also, there were banking com- panies which derived considerable profit fron cxchdiifn', from lend in(i at interest, from deposits, from arranging set- INTRODUCTION. tlemcnts between clel)tor and creditor, etc. These com- panies were subject to an unliMiited responsibility, had hir<^e capitals and a corresponding,' credit.' There were also associations to lease mines from the f,'o\'ernment and work them, and a verycomi ion form of association was that called by Ulpian sorirfdH cfctinftlis, orj,'anized for the pnrpose of farming the public revenues. These latter till no in- considerable a place both in Pioman literature and Roman law. They comprised companies for the col- lection of tolls, customs-dues and special rates or tithes levied on the different provinces of Rome. The lease of these dues was made at Rome hy the public minister for a price to be paid by the company, and which represented the actual revenue derived from them. These farmers of the public revenues were called publicans {piililiadii), and belonged for the most part to the patrician or upper cbisses, having, in many cases, indeeu, previously filled the highest oftices of State. Among them also were to be found cap- italists of almost unlimited means, men who, like llabi- rius of that time, or like Rothschild of tlu^ present, lent large sums to the kings and governments of other countries. Cicero mentions a number of the companies which were of great notoriety in his day on account of the vast means they possessed and the vast powers they enjoyed. These powers, however, were susceptible of great abuse and very naturally caused the holders of them to be held in the most unenviable regard by those on whom they were exercised. But though any system by which the public revenues are sold or let to others for gain, whether to com- panies or individuals, would now be regarded as utterly vicious in principle, the existence and organization of these particular associations form one of the more inter- esting facts in the history of commercial associations. In their formation, some of the partners or associates were mancijx's, those were the persons who actually took the lease from the government, and were responsible to the government for the obligations imposed by it ; others, called ;b ti I ' ■ ■ Troplong Soc. p. XVII. 8 INTItoDlCTION. pynni's. were sureties merely for the first: otliors contrihiitod 11 certiiiii aiuoiiiit to the riiiids of tlie iissoeiution. niid w- C(^ive(l a pr()])(»rtioii!il .-.liare of the profits, hut had iiothiiif^ to do with the athiiiiiistratioii or inanaj^oiueiit of itsathiirs. The interest of each associate was iu proportion to what he coiitrihiited. Thi' nianai^enient washy one or niori' directors cillhil iiiii;iislii. These iiidiiistri, whose ht'Uihiiuirters were always at Home, administered all the aiVairsof the company, entered into and dischar^^ed ohlinatioiis, conducted all the corri'S[)ondence with the pro\inces and were the deposi- tiiries of the hooks and act-ounts. When mutters of nion tliiin ordinary im[)ortance arose ^^eneral meetinj^s of the associates were called in ovdw to decide upon what course to piu'sue. These associations had tlu>ir ramilications all over the country, and employed ii larj^e numher of persons, some of whom had shares in the comi)any and some not. I'Mnally, it was di'cided in order to render their existence more stahle and continuous that they were not dissolved hy the death of a partner hut coiitiinied just as hefore. In an association of this kind we see somethinj^ more than the }^'erm of the Joint Stock Ccmipany of the present day. \\ I' have the association for the carryino; out of an im- mense enterprise with an enormous capital and with a nominally unlimiti'd numher of associates. We have the administration hy managers and suh-managers, and the periodical meetings of those interested for the purpose of taking into consideration the affairs of the .compaiiy, and we have the continuous succession. 'I'his development, this practical application of the prin- ei[)k of association helongs to what is known as the second l)eriod in the history of lloman jurisi)rudence, vi/ : from 100 B.C. to 250 A.])., helongs indeed to the former part of that period. Under the Emperors no change in the law of socirhiH is ohserved, no new form of commercial associa- tion is presented, no further development of its principles can he traced. The monopolies already referred to for the ¥-■ iNTiionrcTfoN. n colloction of tithes iinposid Ity tlif ;;(»\( rnimiit lic^jim to l»c restri(^tt'(l in tlirir [jowcrs. 'I'lic tithes themselves were chan^'cd to a fixed sum, piiyiihle direetlv to the ^^ovenununt. niul the collet'tion of whicli wns eiitnisted ti» ma^^'istnites appointed hy the Kuipevor himself.' This was dnviiij:,' the time of the early I'lnipei'ois. I'lider th( hiter Mmpe- rors 11]) to tlie time of .Justinian and the fall of the l'',mi)ire. \vhi(di eoniprises the third of tiie periods refeiTed to hy Uonian law writers, the principles of I Ionian law v Justinian hims(df, while others, relating;' chietly to the amelioration of personal status, resulted from the adoption of the christian reli- f;ion. lint in tlii' main the period was one of codilication rather than of devilopmeiit, of contraction rather than expansion. The statement of the law concerning' xorirtdH in tile Digest occiipit'S a very short ' cli[»ter indeed. It adds nothing to what was laid down hy (iaius o\-er three hundred years before, and in fact it would not, pei- haps. he too much to believe, when we remeiuher the violent political changes through whiidi the l"'ni[)ire had passed in that interval, the assaults which she had had to en- counter, and the general deniorali/ation which had long been sapping the energy of her people, it perhaiis would not be too much to believe that the principles of the law of com- mercial associations were less generally and less thoroughly understood and appreciated than they wei'o three centuries before. The history of commercial associations and the princi- ples which underlie them, during the five centuries which followed the death of .Justinian and the final collapse of the I'^mpire, is the history of civilization itself during that ptriod — a history obscure in detail and unfruitful in inter- est. Irregular an:l seini-barliarous com[)ilations had sup- planted the stately works of Justinian, while the earefullv !l.^ i I I ;|i I ' Troplong, Soc. p. XXXIV, ' Troplong — Injiiicnce dii Cliristiaiiisnu. y ^^- 10 INTRODUCTION. elaborated doctrines of the Digest and the Inntitutea maintained a scattered and vagrant existence throughout the towns and cities of Italy.' Commerce was dead, and learning, such as it was, was guarded in close confhie- mert in the abbeys and monasteries of Europe. The world for five centuries may be best described as lying in chrysalis. The elements out of which modern civilization was to spring were undergoing a process-; of fusion wdiicli admitted neither of progress nor development. These elements were of a very diverse kind. They were divers" in race, in religion, in manners. There were the fragmentary relics of the Ro- man Empire — the savage tribes of the North, the semi- civilized peoples of the West, all mingling and blending into one — the modern European. There was the municipal system of liome, the ecclesias- tical system of Christianity, tlu; l)arbaric system of the Goths and Huns all mingling in that grand iiuhiiifie. There was the desire, the feeling of independence side by side with the most abject submission, the military patron- age of feudal life rubbing shoulders with ecclesiastical domination, the spiritual power with the temporal power, the legislation of civilized Itome with the unwritten customs of the l:5arbarians.- In the twelfth century commerce in common with the other distinguishing features of civilization began to revive. For six centuries it had lain dormant : its most active and indeed its only representative being tlie City of Anialfi which had maintained a connnercial intercourse between the Christians and the Saracens from the sixth century until the first crusade in 1095, and forms as it were the connecting link l)etween the old civilization and the new.' The ri'vival of commerce in the thirteenth and four- teenth centuries was very rapid, though strange to say the ' Savigny — Histoirc dc droit Ruiiitiiii iii inoyiii ngc. = (juizot — Civiliztition en Europe. 1 Hallain s History of the Middle Ages. INTRODUCTION, n principal object of commerce at this time a[)pear to have been what is usually regarded as the medium simply of commercial transactions — money itself. Money was very scarce and interest very hif;h. Early in the thirteenth century the trade in money which had been for some time very great, j)assed from the .Kw- -who were everywhere persecuted — to the Lombards, and so rajtidly did it increase hi their hands that Letters of Credit and jiills of l%xchange were introduced in (nder to atford increased facilities for its operation. By 1400 the latter were drawn in sets and worded as at the present day.' The revival of commerce led v»ry miturally to the revival of connnercial associati(ms. Jianks and banking companies were formed at a very early period, though in what manner or subject to what rules does not very clearly api)ear. The Bank of Venice is spokt-n of as early as 1171. The Bank of Jiarcelona, which is said to have been the earliest bank of deposit, instituted for the accom- modation of private merchants, in 1401.' At a very early period also, coninn-'vial transactions commenced to be conducted, and commercial associations formed as at present under a firm name. Muratori gives the name of a firm with whom in r233 the Pope (Jngory IX arranged his revenue accounts. This firm — Angelerio Solaficu vt Co., — {AtKjclcriiim Suhiiitii it rjus soiiDs). had arranged with the Pope for the recovery of arrears of tribute due the Church by France. England, and other countries. The term " Comiiany." which is of such com- mon use in the present day all ovtr the civili/ed world is of feudal origin, and its growth is very graphically described by Troplong. lie says: — "From the tirst moment that history throws u:?y light on feudal civiliza- tion, under which the inferior classes lived in the servici' of the soil, are to be seen families organized into tacit hereditary associations. The association wab of a 1 the ' Hallam's History of tlic Middle Ages. = Ibid. I i) m u 12 IXTRODICTIOX. incmbers of tlu- family .ifatljtvtd niH'drr Itlie same roof on the same domain for the iinri>os<- of j-l-aiirnni: in ont- com- mon fund the results of thcii- lahoiHir-. it was hy this means only, by tlie union of their aram--- and their means that they contrived to maintain an K-\is1trEre at all inde- pendent. Every one, old and youo;;. miiK-ni and women, married and sinLjlf, remained froia faAtfr to son in this patriarcdiial associatie ttBiie term <; mi pi mi/, that is to say, eatin associates when anythinij; of impoi'tam-e was to ]»e tran-sat-tMh All con- tracts were made under a ii''ni rjaMn- a> >'-< iiml So. ciir1tnfrshi[>. Matdi l)roujj;bt to it all his earnin.^s or iwhi'try, and tbe whole forme(l the connuon pro]»erty of the As>io»ttt;t,t;ion. The company so formed, though bavj.j littU' in connuon with the ordinary commercial a>soi'ialj"3!i. r.imnu'ueed at a very (iii'ly peiiod to j^ive itsnanx' to i]j, irr-r in almost all its forms. Accoidinu; to sonn of tbt v>:;-, :^ tju^ addition. (■(in. or com tn^illiir ami f'niii Imi nl INTUODUCTION. 13 <(■ Co., ill a lii'm titk' iiuliciitcd that thf paitncrs only whose names were mentioned in the title were liable for all the dehts of the purtnershii), that those whose names were eoncealed behind the form, <('■ Co., were liable only in pro])orti<)n to what they had contributed to the jiartncr^hii) eai)ital, — in other words, that sueh ii lirm title sifrnilicd a partnership cii coiitnitnulit)' or limited partnership; while others maintained the contrary. (Questions like these arose. it will 1)0 readily understood, ahnost simultaneously with the appearance of such associations themselves and were discussed a with }j;reat deal of scientific acumen and le;^'al ability by writers of a very early date. Uartole. who wrote in the fourteenth century, says that it was the custom tlu'ou^diout Italy for one of the partners to i)e descrilted in the comniereia! books and on nu'rehant's liills by his pri)- per nanu' and the others by a common appellation a> " Titiiisd Co.," and e\[)resses the o[)ini()n that such n style indicated no more than that TItius was the head of the part- nership and the others were entitled to their share in the partnershi[) [)roperty, and were held .sDliiliiirriiKiit for all its oblij:;;atious. This interesting (piestion as to the rlt'ect of the addition, <(■ Co., as will be seen farther on Wiis still the subject of controversy at a very recent period, nnd is construed diti'erently in ditt'erent countries at tlu' pit -eiit day. The necessities of conuuercial life, and the mnltipliea- tiou of connuercial associations soon ea\e rise to the nt - cessity of classiticatit)n. Some were found to be based on something which dilferid in [)rin(Uple from others: som< Were louiul to require a more liberal, a more (dasti(; i^itei- |)retation of the law applicable to tlieni than others. The lirst dassilication which presented itself was identi- cal with that observed liy (laius, viz: uni\trsal and |>:irti- cular^ — of all the proi)erty of the associates or only of certain s|ieeitied property, or for a certain s]iecitied object. The lattei- coinprebeud all ordinary partiierslii|is of the pre- sent day. The next dassilication was a sid»-division of theparticu- 8'; ( ■ r U ir 14 INTRODUCTION. liir partnorsliips into civil and commercial. The first compris- ed all those to which the rules of the civil law of the country in which they existed could he strictly applied. The second, those whose relations with foreign countries and the world generally, rendered it indispensahle to treat in a more liheral manucir, to suhject to broader rules, and to regard as exempt f'/om a rigorous interpretation of the civil law, much in the sam.' way as the Roman prr found means of granting reliet to those on whom a strict interpretation of the civil law would operate unjustly. Indeed the dis- tinction hetwe(>n civil and commercial has heen traced hy careful writers to the wisdom of the Eomans. "Com- merce" says one, " cannot he civilized, cannot he natural- ized. It belongs to all nations — its tendency is to embrace the whole world in its operations and to make of merchants everywhere a. single association. To the members of this vast association, differing in religion, in government, in man- ner and laws, separated by oceans, aiulby deserts, what other rule of liiw or of autlun'ity ean be im})osed than that of natui'.'il justice"? What other rules can be used to govern transactions which embrace the entire globe, than those of good faith and e(piity, or in other words of natural right. Til' Uoniaus I'ven after the fall of the Empire were struck liy the fact and were careful to exclude from their positi\c legislatit)n transactions of a commercial nature which they regarded as Ixdonging to the JKn r eiiteiprise having gain simply for its object. I'"\en the leading idea in the .above delinitioii that co:ni)ierce is the reciprocal exchaiige of mor,iihhs does not ■leem to be held an essential principle in coinmeice b\ some of the foremost writers. " For several years past," says Troplong, " vast partnerships have been entered into for the purpose of buying and selling real estate, (Ics biiHs fouds) by which large profits have been made, notwithstanding several heavy reverses. These partnerships nevertheless are not regarded as commercial, they being opposed to .\rt, 6jj of the Code de Commeice. The purchase of immoveables to sell again with a view to gain is not I haii'cterized by that Code as a commercial act. Assuredly this is an oversight (iiuc laniiirj. It is haril to see why they should not be regarded as merchants who treat real propert} as a merchandise. Troplong, soc.,. sec. 319. 16 INTUODUCTION. iiinijKiiiics' were I'oniied to carry itoii, and inuiiy morcliants l)fCiiiiit' so rich as to rival in wealth the most ancient and the most powerful of the nohility. Two Morentian com- panies in partie-uhir, attained to ;j;r(;at power and wealth durinij; the tirst half of the fourteenth century. These were till' ljan(U and the Pcru//i, the niemhers of which were l)y turns nu'rchants and statesmen, antl were conspicuous in politics and war as well as in linances. They wero credit- ors of I'jdwiud III, to whom tiiey loaned vast amounts of money to carry on his wars. When war was declared l>e- tween France and Enj^iland he owev tliL Ui'iiis luiiipiiiiits licir iiMil must not III' uiu stock coiiiii.in\ (it Uu' i>ri'st'iit ila\, Imt riulicr voluntary associations <rounds none of them wished to underfake, a luuuher of them eould form a common fund, a joint capital, and [)uttin;^f forward one of them or some of other party as manager of the enterprise, foi'ui an an arranj^euient hy which the receipts would he p'lnlcl (to use the modern term), for the Id'nelit of the whole. liut great as were the operations of tho Italians and others throughout l-'urope and the East, they were still greatly in- creased hy the disctovery of the Xew World, which opened an almost unlimited held to commercial enterprise; and commercial speculation, and gave rise to still other and more expansive forms of commercial association. Out' oi" these was the Hncictc (ihdiii/iik', or anonymous partnershi[). The aocictc ((iidhi/iiii', though possessing nnich iu connn'.ni with the socii'tr rii roininaiiditf differed from it in this important particular— it had no personal representative. From the idea of a partnership having a numher of partners who were not personally hound it was a very easy transition to that of a partnership, in which none of the partners were liahle heyond the amount which they had coutrihuted. Its personality consisted only in the partnership fund. Its name was the name of the ohject for which it was tV)rnied. The names of none of its memhers were made puhlie. Jiut at the same time they were not voluntary associations as ordinary partner- ships, hut were formed under and by .syxv/a/ oKtlioriti/. For each anonymous partnership which puhlie authority con- sidered it expiMlient to license ut the names of the parties by whom they were sold are record- id. This would seem to l)e a much more analagous and proba- l)le circumstance than the other when it is considered that the East India Co., already referred to, whose capital was un- •loubtedly divided into shares, was formed in 1002, oidy a- ■ td ^ m f n ^P 20 INTRODUCTION. few years later, and that the Italians uniformly took the lead in commercial inventions and commercial advance- ment at that time. But whatever traces — whatever germs of the system may be discovered in the early history of commercial associa- tions, certain it is that the discovery of the new world and the subjugation of the old lent an immense impetus to its development. Countless associations sprang into existence ; some for the cultivation of the East Indies, and some for the exploration of the West. The reputed wealth and wonders of the latter especially attracted thousands to its shores. "Every ship from the new world came freighted with marvels which put the lic- tions of chivalry to shame." ' Its inexhaustible stores of gold and minerals, the fertility of its soil, the wealth of its waters, its fabled fountains of perpetual youth, all lent an ar- dour to commercial enterprise, and an eagerness to com- mercial adventure, unknown even to that romantic and adventurous age. The means to carry on these enterprises was furnished sometimes by individuals, and sometimes by the association of capital. Though Francis I. encouraged his subjects to emigrate and to explore, neither his government nor his successors took any active part in the organization of these enter- prises or granted them any material aid. In 162G Louis XIII licensed a company called La Compaf/nie St. ChriHtophe, which entered exclusively into the colonization and cultiva- tion of the islands of the Antilles, — Martinique, Guada- loupe, St. Dominique, etc., but having exhausted its capital they were obliged to sell, and the company was dissolved. In 1G28, another company was organized to carry out the same obje Iciidiii^' IViitun's of the " Joint Stock Coiii- pMUy" (liinitfdi, oC to-;land as early as 1800, the rules by connnercial relations were ![ jnriit/ii triide. its |»ri\ ile^^es. rules and restrictions were too wide a field and alien to the pur- l)ose of this treatise irliirli in rmiliiifil In tin Inn- i>l' I'liiiildiiil, whereas no nnniieijjal law is sidlicieiit to order and deter- mine the eonii)lieated affairs of forei;;n eonniierce, or has jiroper authority for this purjiose. l''or, as these an transuetions carried on hetween the suhjects of independent states, the nnniicii)al laws of one will he shewn no re^'ard to hy the other. 'I'herefore, the affairs of lutrehants art re^'ulated hy a law of their own called /'■'■ iiicrcKtorid, in whicli all nations a^,'ree. Jt is held in i)articular to hi a part of the law of ]"]n^dand, and that often even in matters .'•'latin^' to domestic trade, as for instance the drawinj,', acceptance and transfer of inland hills of exchanf^'e." Jiesides tliis, in s[)eal\inm this, that a corporation could not for a long time take property Ijy inheritance or even by legacy. The personality attributed to it at a later period' was not yet recognized ; l)ut after the introduction of Christ- ianity, important modifications were made in the law. The manumitted slave of a municipal body, a city corporation ; might be appointed heir, and thus, a right of succession ae(piired for the municii>ality itself. Churches, monasteries and pious foundations of every kind also received the right of inheritance. Other corporations, could have it by special concession of the government.' I I': Pladley, Introduction to Roman Law. 26 INHiOI»I"CTK*\". It is to these " clmrelus. iiKiuastrritc:* ami other pioib foimdatioiis "■ that Kn^^flaud is ir"W4«-*i for the i)rinciples of incorporation. It was throu<:lii ttPntrm and the Cane', Law hy whieli they wt-re yovtnj^-ii. ^Stat coriiorate Ixjilies Were intnxhict'd into (ireat J>rit;diiii. The first Corpora- tions of note there, were churchi-s au"l (e»Ue;^'es : hut in the course of time and the proj^'ress of c«:»ii)uii!M<'.retal development '■ tra(hn^' eom[»anies " for tlie ]air5«(»&rs •)>£ their enterjjrise deman(h'd incorporation, anil cLartnrr> of incor[)oration appi'ar to have heeii ;^n'anted tlii-m vu aiue i)rinciple and subject to much the same rul^ > stml conditions as to eori)orations of a non-eonnnerc-ia] <-3iiain:iirl!er. Hence they are referred to hy lUackstone as a kiiii«l i-ir instance of civil corporations, as contra(listin^uishe(3fr'i'im''/^f'<^//*'M////<«/7/ which is the otiu r ffreat sub-divivision of ^v «^>ri)orations. This will he more clearlv understood bv eiitinit; his own words. He says : " L rli-t'iiKiniimirii. IV cornorations are <»f two kiud^ iin I and Tile civil are ert-t-t'eii for :t variety of tem- poral purposi's. The Kin;,', for in-Haiire. to prevent an interre;,'num ; tradiii},' corporatiou^ »'.»jr l:h>' riijiilntinti of tnith ,1 !■ iint( coiiinicri'i' and otlurs f(h ami French law is this, that while in the bitter a well recogiiiz<-', and consi»icuous!y Ixtweeii civil and commercial assiK-iata«»us and corporations the counterpart of civil ci>rp(irati«»us an Knu'lish law is elee- mosynary.' Tlie only evidence 4»f a Baw regnbiting the <-onimercial alfairs and relations of 3af*- a.> distinct from the ' 'I'lic use i<( till" tt;rin "Civil, as a It^sJ icinr h.v-i ijrDwn ti) l)i' vet\ vaunt' and iiiisalislactory. L'scii with n Icri.tiC'c i I.iw nenrrally il is .sii]!- pDscil ti) It fiT t'l till' turf^iis juris or l\"Tii,in Li» ln.itht.-r rt;lati(iiis it is tist'cl ill Liintr.i-ilistiiution to li'Ihiiu'ii. li] IsiH to cruninal law. In ecclesi-istical lau. ancl ,is we sot; by the text iia indi«»MaiL«r tu curporations a^ < DiitratlistinKiiis'lii'ti from elcoin'jsyn.iiy INTUODl ( "HON. 27 roiniiion liiw of the conntrv, is that uuiitioiu'il liy liliick- >toiu'. an 1 (|Uotc I all ivc. in which he spt'iiks ot" I'orciyn tiailf ami thi' /'•/■ nn natori)!. Xo (]istinction. as in the FiKiieh hiw, is niudu Ixtwcen romnicivial associations of a corporate eliaraeter and cor- poiiitions ;,fcnerally. This is the more astouishin;^ when \\v )ninn'r('ial rehition? consider the importance to which the co of Great Dritain li: ■ attained, long prior to the time at whiidi Bhiekstone wr t. \N' len we consu ler tl le CO imtl ess associations which had l)een estahHshed eitlier hy royal or [cirlianicntary auth( n pro- perly (pia htied. upon payment of a certain " line," and upon ; hrir a,L;reeing to suhmit to the reguhitions of the company, llatdi mendtcr traded upon hi^ own sto k and at liis own ri^k. When tiu-y tradelali li-hed Dec. 5)1. HJdO, hy (diarfer from (,)iii(ii I'llizahcth, was liist a re<,Mdattil company, hut in 18(12 was (diaiij^'ed into a ■/"/;;/ .S/(*(7.- ('(/;«y*/n///, constituting' them a hody corporate liy tlje style of "The (Jovernor and Company of the Mer- I A H Smith— Wealth of Nations, p. y)j. Ibid. 3i.<. 28 INTRODUCTION. chantH of London tradinfj; to the East Indies." They had a common seal, and wore to he manaf^csd l»y a p;overnor and twenty directors, to l)e changed yearly on tlie first of July, or within six days after. FoUowinf^ the East India Company, many important monopolies were j^ranted to companies of this kind hy the Jh'itish Government, so extensive and so ah- solute as to niiiko the possessors of them sovereipjns of the country which they acquired, and over which their monopoly extended." These companies, however, as pointed out by Smith, were not successful in proportion to the powers and priviUi^es conferri'd upon them. " The Directors," he says, " of such companies lK'in<,' the mana}j;ers of other people's money, rather than their own, it cannot well l)e expected that they would watch over it with the same anxious vigi- lance with whicli tlu! partners in a private co-partnery frequently watch over theirs. It is on this .account that Joint Stock Companies for foreign trade have seldom heen able to maintain the competition against private adventures. (< rpi il They have accordingly very seldom succeeded without an exclusive privilege, and frequently have not succeeded with one. The nhltt' Morctti gives a list of fifty-live Joint Stock Companies for foreign trade whi(di have heen estab- lished indilTerent parts of Europe since IGOO, which, accord- ing to him have all failed from mismanagement, notwith- Btanding they possessed exclusive privileges. " The only trade which it seems possible for a Joint Stock Company to carry on successfully without an extdusivc privilege are those of which all the operations are capable of being reduced to what is called routine, or to such a uni- formity of method as admits of little or no variation. Of this kind is peihaps the banking tradi, the trade of insur- ance from firt! and sea risks, the trade of making and nuiin- taining a navigable cut or canal, and the trade of bringing water for the supply of a great city." These were the views of a French writer with regard to Joint Stock Trading Companiiis, after a hundred years trial, » Beawe's Lex mcrcatoria. INTRODUCTION. 29 and it is wortliy of remark that these were the principal objects for which they were first established and in which they have been most uniforn^'y successful up to the present time. ])urin<; the latter half of the seventeenth century, viz.: durinlii)'y Coiniiimy. tin (iliiss l>()ttl(' Coiniiiiiiy. the Alum C'oinpiiiiy. the I'.lytln- Coal ('onipaiiy. 'riicvc was a Tapcstvy Coiiiiiaiiy. wliicli would ^ooii ftiniisli ])rittv lian^iuf^s for all the [)arlorsof tin iiiiildlc (-lasses, i iiid \'nv all the Itcd-cdiaiulM'Vs of tlir liii^Iic Tl ici'c was a ('o[)[)(V C"oiii[)aiiy ,Ili(dl [)Voi )OSr( I t O (•\l)|OV(' the iiiiiics of I'liij;laud, and held out a hope that tiicy would ]»vo\"f no less valualilc than those of I'otosi Tin re was a I )i\ iiiLjConipuny, whieh undertook to liiin.'j; up precious effects from shipwrecked vessels, and wliicli annouuoed that it had laid in a stock of wonderful machines resenihlinu complete suits of armour. There was a (Jreenland l"'ish- \\\'^ Company, wiiiidi could not fail to drive tin Dutch whalers and herrin^^ l)usses out of the Xorther 1 Ocean. 'I'liere was a Tannin^^- Company, which pr(»mised to furnish leather su[)erior to the hest thai was hroui dit f rom Turl ke\- or Itussia Tl .'ere was a societ\ w liich undertook tlie ottice of Kivinjf jfentlenien a lilteral et lucation on low terms, ami whi(di assumed th -ouudniLT li name of the Uoyal Academies (."omi)i!ny. In a [i ini[tou^ advertisenunt it was amiounced that the directois of th< lioyal Academies Company had eu}^'ap;ed the he>t niaster> in every l»ran(di of knowled to 1)1^ a lotterv, tw») thousand prizes were to he di awn, in( the fortiniate holchrs of the prizes were to he taught, at the ciiar;^fe of the Comi)any: fjatin, (Jreek, Hehrew, French, Si)anish,ConicSi'ctions,Tri^'onometrv,I[eraldry,.Tapamiin^', Fortilication, ]^)ok-kee))in'j[, and tlie art of IMayinjj; the Theorho. Some of these companies took larj,'e mansions and printed their own advertisements in ^^ilded letters. Others, less ostentatious, were content with ink, and met at colfet'-houses in tile neif^dihourliood of the lioyal Kxchanj^e. .lomithan's and (larroway's were in a constant ferment with hrokers, huyers, selleis, meetin<,'s of directors, medium's of ii INTKOnrcTION. ;u piopvii'tor; Tiiiic Itiii'Liiiiiis soiiu (•.iiiir Into t'iishion. M\- ti'iisivc C()inl)iiiiitii'!is wrve lonnnl, iiud inoustvdus t'uhlcs Were circiiliitcd I'ni tlir [)in'[>()sc of I'iiisiiij;- or (Icprcssin;^ tliL' price 1)1' shjircs, A lii;iui;i, of w'lidi the syiiiptoilis Wire fsscntiiilly the saiix' with those of tlie iiiiinia of 17'li), of tile mania of IS-J."). of the uiiiniii of 1S|"», seized the puhh'c mind. An inipatienee to he ricli, a t'onti'ni[)t foi' tho^e slow hut sure ^'ains whicdi are tlu' i)roi)er re\vai'(l of industry, patienee and thrift, sjjread throu^^h society. 'I'he spirit of the coj^'f^in^' d'cers of Whitefriars took possession of tiie l^ruve senators of the city, wardens of trades, (h'j)uties, IS easier, and nuich nioi'e luerative, to i)Ut lulernien. It Wi fortli a \y\n>s, pr()s[)ectus announciui;- a n w stock, to [xr- ■-uade iriii from a, very early period, hut its houndaries a[)pear to have liren very narrow, and these hut partially un(h'rstood or a|il>reciated. That there must he rules and [)rinci[)les of law applicable to merchants, and their transactions, on(! with another, (htVerent from those applied t,, oilur nie^tihers of the connnunity — dift'eri'iit from the ordinary rules of the titnnuon law, api)ears to havt' heen recoj^nized in En^dand its well as in France. But for numy centuries no attemi»t was made to delhie them. Jiy all tlu' old writers the Ifx II it !■ 32 INTRODUCTION. |i • I mcrcatorin is spoken of in the most vague and shadowy manner. In what it consisted or wherein it was to be foiUK^ contained, is never very satisfactorily revealed. The only idea which can he gathered concerning it is, that it consisted in what was termed " the custom of merchants," which was proveahle by the merchants themselves. Coke, following Littleton, refers to the h'x mercatoria once or twice, but in the most incidental manner. For example, underthe head of " Joynt-tenants," he says, — that to the rule, that all the debts, duties, etc., shall go to the survivor of them, " an exception is to be made of two joynt merchants, for the wares and merchandise which they shall have as jojnit merchants shall not survive but shall go the executor of him that deceaseth, and this inperlenem viercatoriiun, which, as has been said, is part of the law of the realm, etc." And in another place following the Statute, 10 Heniy VII., he says : " If two joynt merchants occupy their stock, goods and merchandise in common, to their common profit, one of them, naming himself a merchant, shall have an account against the other, naming him a merchant, and shall chargehim as receptor deiKiriorium, etc., that is as re- ceiver of the money of him, B., for whatever cause and contractit shall redound to the common profit of them, A. and Ji., as may be made appear by lex mercatoria.'' The Statutes, concerning it were very few and very meagre in information. By the Statutes of Edward III. it was provided that " If any disturbance or abuse be offered them (j. f ., foreign merchants) or any other merchants in a corporation, and the head officer there do not provide a remedy, the franchise shall be seized, and the disturber shall answer in double damages and suffer one yeiir's imprisonment." In Williams' Digest of the Public Statutes, from Magiia Charta to 48 George III. there is no mention whatever of partnership byname, though, as we have se^m above, several Statutes had been passed, affirming the law applicable to joynt merchants, as diKtinguished from other " joynt tenants." INTRODUCTION. 33 TiKU'ctl till' miinli(.r of Statutis passed (luriii<,' tliat long and iiii})()rtant period of l-^iii^lish law having' nfcri uct- to iiicrcliants at all, and which may he icj^ardi-d as rfi»risi-ut- ing the whole stuftitori/ expression of the law niercdiant is very small, not exceeding twelve or lifteen, and the greater part of these helong to what would he callid now the com- mercial i)olicy of the country, ratlur than to the common law, governing the right of merchants among themselves in the multifarious relations they have to one another. For exam[)le, hy !\I;igna C'harta, it was enacted tliat all strangers, if they were not openly prohihited, were to be allowi'd N.) come, go, stay or pass, through the realm, hy the vighlfid customs, except in time of war, and then they wt-re to he well I'ntnated, "if our merchants hc^ well entreated there." JUit though thepulilic Statutes, as wellastheimblic writers of Kngland, jtreservi' an almost unbroken silence on the subject of connui'rcialassociationsduring so longa period, cases arising out of iiarliui'ship and joint adventures must have tVom time to time bren submitti'd to the law courts, tlie di'cisiou of which, cNcii at a very I'arly period, began to form the foundation of that jurisprudi'uce. of those tlalior- ate treaties which are tlu' subjict of so nuich admiration at the [iresent day. And thus, we Ihid in Comyns' jMge.st of the reported cases, a considerable nund)er of decision? on this subject, which, being arranged in soritthing like a lni:;u-iil ordir, form, as it Wire, the skeleton of the present hiw of partiu'rshiii in that country. ' All these, however, though eiid)racing apitarently all the published rules on the subject of partnership are not found in r>r}i<> partner- ship at all, but under the heading " merchant." Indeed, the term " iiartnershii)," as signifying a separate ;iii(l distinct branch of jurisprudence, seemw u[» to this tiiiK' to have bein nowhere recognized in English law. The couse(pienre is a certain anu)unt of confusion between com- im rcial and non-connnercial partnerships, which continues ill Knglish law up to the present time. Thus, though a Comyn's Dig., \\il. v., p. 65. S.C. r - 34 INTRODrCTION. m. vaf,'uc and ill-(lofnu\l, or, povhaps, altoi^'other undetinod tlu'orv iittriltutt'd to the law iiuTfluint nilfs, principles and an application altof^i'tlicr distinct from the common law of the t'ouiitrv, whik' Comyns, who attained to the hij^'hest honors of the proft-ssion and enjoyed, apparently, a reputa- tation of ^^r eat distinction and rt'si)ect, arran^'es all the jur- isprudence on the suhject of partm-rship under the headinj; of "merchant," the connnon law writers, on the other hand, refer to it incidentally as part of the law of joint tenancy and partition. The nearest approach to an actual expres- sion of the law merchant on the suhject, is contained in two of the decisions {^iven hy Comyns. One of tlu-se points out what constitutes a merchant. It says : " There are four species of merchant, viz., merchant adventurers, merchants dormant, travellers, and merchants resident. /// ncni'ml, ifcrji dUi' ulntll hi' II nu't'cliant irlio trujiirK hi/ iriiji i>/ hiii/iiin iiitd si'llinii or hnrtrrinij af iinnih or unif nii'irhiimlizc uitliin till' rciihii or iu/ori'i'jn ])iirt)t." ]^y the other, the law mer- chant, with re^'ard to survivorship, is said to exti'nd to all merchants, thmuili tlwij do not ;io iti'i/oml the nm. This seems to confirm an impression which every one nnist de- rive from the early references to commerce in the lawbooks, that is, that counaerco meant simply international tradinjj;, and that commercial law was the law applicahie to such internatioiuil tral'tic and the transactions which arose from it, and was distinct alto;j;ether from the connnon law of the country. Assuminjf this to he the case, and the decisions just quoted ap[)ear to atford the stron^'est possible evidence of it, this would account for much that is anonnilous and con- fused in the references to tlie Jcr nvrcntorin and the class of transactions and contracts which were subject to it. Thus, IMackstone, in s})eakinf^ of the Kin<^, says : " He is also the arl)iter of domestic commerce {mtt offoreiiin, ichicJi is reortance, that the interests of society and of connnerci', irliidi itrr iiisi'jmnihlf, re(piired that a line should be drawn hetween the two orders of things, and recognizing this, had hy two dilVerent statutes declared the rules which ^'ovenied the oiie. and the rub's wliiili governed the other. rbe r( suit, as has been said, was the ordonniince of H\7copt and ohject of this kind of association was hilt imperftctly undi r>too 1, and. in coiise(jUence, was much e\aj;^'erated everywhere. In the liiinds of desi^Miiii;^- and unscru[)ulous men. it hecame a rt'ady and powerful instrument of fraud; olh'rs a^'ain, tinui^di in the hest of faith, Wen- themselves the \ictims of its attractions. Law, whose name will last as lon^' as hanks and hank-stocks I'li- diire, it is impossihle to helie\-e. saw, himself, the disastrous results of the maf^niticent enterprise lie was setting' on foot. There can he no douht whatever hut that he, himself, was as much a victim of the ///»/.s i'(itiui>i created l>y this new system of conduct iiijjj commercial operations, as those who crowded daily the line Qiiincdiiijxii.i-, demanding shares. It is an interi'stin^!; and noteworthy fact that the South Sea Company in I'higland and Law's Mississippi Scheme were or<^'ani/ed, if not th<' sanu' year, as, indeed, is stated by some writers, at least within the same decade. The former ixTiionrcTioN. 87 is said to liavo ln'cn started in 1710. nclnii^'if,' ulio^'ivcs iin interi'stiiif^ skiteli of Law's scIk nic, iilacrs the toiiuda- tioii of it ill 1717. The National liank, wliieli he fovnied. was tlio outeomo of the Mississiit|)i Sclicnir and East India Company coni- liined, and of tln' fond li(>[)cs and illusions to wliicli tiicsc ;^'ave vise, 'riicsc ai'eattriinitrd liv Dclanj^lf totlie fact, tliat this was the lirst instance in I"" ranee of stocks or shaves ad- vancing^' to a [ircniiuiu, or price aliove their faci' value. The no\elt\" of this nio\enient, and the a|»i»arently un- limited extent to which it mi^dit he carried, seemed t(H)pen to the exciti'd minds of the puhlic of all (Masses, the means of untold Wealth. The shares rose rai)idly. and at one time attained a heij^dit forty times that of their ori.Ljinal value.' Xohlemen, who, hy the edicts of 1(')«)4, Were enahled to take part in sueh connnercial and Ihiancial operations without lU'roi^'ation of rank, hesei^^ed Law's hea\ niiiarkablc fcniurcnf tlic^c evenis however, is till vi ry small i)larf wliich tlity occupy in the le;,'al lit- erature t»f tile day. Iniinat iJritain es[»eeially, they appear to have excited iio r( luaik. Tliat tliev had any important- ■ from a le^^'al point i4' view appeared tit liave been entirely unperceived. No leLial sta1n>. a[iail I'rnm that of ordinary corporations, wa-- accoril' d the associations which caused them. IJliukstoiie. wh" wr'/te Ion;,' suliMiplently to these events, as has lieeii alnaily stated, refers to "tradinj^ com[)anies '' in the nio^t incideutrl maii'ier. ])urin^' the next ball' a re;.inry associations of this kind made ' try little pm^io.-., eitbt r in I'rani'e or E!»<,dand. In ' Hav.i ti' iiat\ >ueh 'iniijtiiiiiiir.f, they Were reco'Miized and endtodied in the '"«/<• (/<'fo/////i(r'c. w hicli estahlislu'd that no partm-rship of this kind coultl he *' .rmtd, without a special i>rdinanee liy which it was to be govinied. 'HH'v ¥ W ¥ Tlu' Cod' (h' Cnnii/icrri' does two thinj,'s. It sejjarati-s and di'tines eituuiurt'ial associations from tliosj- xnriih'n which Were rej,'ulated strictly i)y the ('<<(/«■ i'irit,,^ and it ^ives the rules especially ai)plicable to the norii'ti' iDiHiiiiiriiilf. The touchstone of the socit'ti' rniniiiirriiilr is a list of transactions oi- (tpciMtioiis, which it t( iiii^ «/<7..>j »/.• »v»//j>HtTC''. All i)art- nersliips which do not conieunder oin- ,*{• the other of t'< .• ob- jects enUUlerji'.ed ill this list, arc not nnc'u'U'n ruihiin muh'Sf and the rul<'s ;,'overnin^' suidi xnciittA do not apply to tin ui. \W the commo.'i law of Knj^land no -.ueh definition is at- tiinpteil. The <|Uestion as to the commercial or non-com- mercial luiture of a trauMK-tion or of an a>s.>f those casi's in which «loubt nnist ut-ces- barily arise, and \\ill. tluri fore, tend to hamper and confuse ' I 40 INTRODrCTIOX. rntlior thnn assist in tln' •lncif ^uch doubts.' On till' (itlur, that tlic diinj^'cr ami oonfu>«»>n i.s more a|)|)an'nt than real, and that when- tlje^e qud-^stioa-s art- deciflcd and estahiish('(l hy hiw. justice is lanre iikt-ly ti> \ye donr than whrn- they an> left t<» thr uncertain opiiuion of a judj^f, or the still niort' uncertain vi»w> <»f a jury. This latter view appears to derive >oni( force from tin*- fciet that the Mn^dish lei^'islature in niakiu!^' provi^^iori for 'Ij-t- miidinu u[» of hank- nipt estates, has, of late vearr^. f^iHtuici it necessary to enumerate those who are deeuied ** tratlo-rs." In thedilTer- ent Provinces conii>risin^' the IVuminum of Canada, the Knjjtlish system is liowever folIr, although in the Troxince of (,)uehee, the cl.^^^.ili^•4l1i■on <*( pjirtnersliii)s anil particularly of commercial i»!iniant mlhctil'.'t, th<' nhi«c-t <«fwliit?-h i."> to dohU:-iness under a lirm na)ne, and the prind|«fil <-fff»?t of whiidi is (as distini^Miished from other associati<*n*' to hind the partih'rs joi'.itly and severally for the ohlitrali-'H-r »>f the partnershii). '1. F.H ('iiiiiiiniiiilit.\ the ol)U<-< of vhich is the same, hut in which some of the partmr* ar- merely hailors of money or merchandize to (»thers. an-l incur no such li:;hil- ity as lon^,' as tlu'y do not take part iu tlie management of the partot r>hip atVairs. ;{. Ainiiijimi', an association of cupitel nther than|>«akin^ commu- nities, is, as we have seen, derived (i^.ni th*' othi-r forms of connuercial association in th«-order iu vhich they are placed ' Smith's Mercantilf L.iu, Intrn. = Dc'Ianulo, Hoc Cum. [\ ji. 1 iXTnonucTioN'. 41 liy slow Imt rrj^uliitfd {^'rowtli. Snmr of its fciitnivs. it if trm \v fvc IxuTowcd from other ountrics, us tlic divisi on of cnpitiil into slmrrs to luartr, wliicli, iiccordinj,' to tin- inoiltrn l''r«ncli writers' piissfd ti-om Ifollnnil to I-ln^'laml, and tiience to France, but, in tlic main, the xiiric'ti-'ininni(mi' is di rived hy re^'tilar jtro^^'ression from tlu' simi)lest forms of connnercial associations in France. Cpwardsofa thousand of i\u'<.i' associations, it is said, are annuallv authorized in hil France at tlie present day,' winle a siuular nuuiher an- nually liecome haukrupt, and are wound up for oue rea- p'>n or another, aud pass out of e\ist■ nauies and domiciii s ui the petitioners, the amount of (■a[(ital, whether Ity simple suhscription or hy share s. the time within which tile capital is to he jtaid, the chief oftice and place of husi- nc- . th' system of mana},'euieiit, and linally, the arti(des of p,!,:lM!'rship. Tile charter i^raiited, ti\es a miniuunu helow which the capital canuot .it scend without forfeiture. Such are the pi-inci[tal forms of commercial associations in France at the i)rcsent day. the alVairs of whicdi. like all connnercial alTairs, wlun an aitpeal to judicial arhitration is neci'ssary, are decided hy a trihuna. of n-erchants called the TriliKii'il t of th< >e suh-di\ isions coi-responds to the stnr'u'lf »;///..//( (•(»//*•(•/»/ of th.' French law, and the second to the ' I'elatiKle, Sue. Cciii. y. .\. [i.irt II. A r.ins tt'k'Ki im of Oct i, 1S71), says:— The r>t.'«ie>;r«te stock snh- »t:iipt)i'iis mvittijti.i the l.i.st tlin-L- muntli"., exclusive el the l'aii;inia 'nial, ntnoiint to r ,(KiS,nof),rxxi fiaius. and ytt now schtnji-s are boinij pul«hshci. ' The limitoil pattiiership ivstcm is quite common l>oth in this country and the rnitd States the hmitc I partner In-im; known snmetiines .xs a "silent" or • slcj'pinv; Imt inne cominonh' as a " spt\ .al i^artncr* '1 ' ? t' wr BMH 42 INTRODUCTION. They are also dividfd into I'rivato and ruhlic. Tlic latter arc usually ttrnifd i-onipanics, wlu-ri' a lai";4i' nunihcv of \ivv- Hon.s arc conccrnt'd, and the stock is dividi'd intn shares — the ohjcct of tlu' undcrtakinj:; Id'inj^ of an important naturi', and often einhracinf^ puhiic as well as private interests. But these, in most cases, are mere [irivatc associations, fur, in the sense of the law. no com[>any isa puhlic com[)any whose intercKts do not exclusively belong to the puhlic, and are exclusively subject to public control.' In Scotland, they are divided into ordinary pra'tnerships, Joint Stock Com[)anies, and Public Companies. 'J'here an ordinary iiartnership differs from an association of the same (diaracter in Kn^dand, inasnnudi as it is dei'uied a si'parate person in law, c:ii>al)le of enterinj.; into contracts, of holdinjj; personal property and of carrying' on lej^al pr ci'edin;^'s by its distinctive nanu' or lirm. In this respect, it resend)Ies an inecn-porati'd » omitany or association !> issessin^' an existenci' altoj;ether apart from ihe (litVei'eiit numbers com- posin}^ it, and can sue ev( .1 its own mend)ers and be sued by them. ])Ut, by tile law of Mnart from the members comprisii';^' it, the continuity of su(di existence is not atVecled by (dian^'es anion/j; its mend)ers. Therefore, all corporations, or in- corporated eomi)anies, formed for the pur[>ose of <,'ain, ' Story, Part. six. 71. » Mackenzie. INTRC'DUCTION. 43 may I)t' said to 1)6 partnorships, but all partiKrships arc not corporations. ' Another distinction brtweon au ordinary partnirship and an incorporated company, which must not he lost si«j;ht of, is that the former usually ctmsists of a very litnited num- hcr of persons, all of whom are acfpiainted with each other, and who entertain towards each other a certain aniomit of friendship and contidencc, a coididence all the more ni'ccssary, iuasmu(di as all tlu- numhers heinj^ jointly and severally lialde for the undertakinj^'s and obli^'a- tions of the partnership, all arc su})posed to have a ri^^dit to take part in the oi)erations of the partnership, and to be consulted as to its atlairs, and to be in f.M-t the aj^onts of each other in all that ndatos to the business of the Ih-iu. In incor- porated companies th'jse features are entirely wantin;^'. There the dilVereut members cannot bind the association by their individual acts, iii>r are they as a rule consulted with rej^'ird to its atfairs, save at stated pi riods. In Canada, the l''nm tho se purely civil, such as is ^iveii in the Code de Commerce The only delinition is tl be {general olU that ted f( coitmierciM partnersliij)s are those which are contracted lor carryiiif^'on any trade, manufacture or other burinci[>al i'onns of commercial association in the dilVereiit countries mentioned, and the ditlVrent means eni[>loyed \nv settlinj^ the various (p'.estions arisinj^' out (jf them. Of these, the simpler and most common form in all countries, is the ordiiniry partiu'rshii) imder a col- lective or lirni name, as.lohn Smith \- (' 'his oll'ers the ^'reatest facilit les lor a nth III ordniarv atiairs ot commercnii life. It re(piiri's no formality exce[»t that in most countries, of a refj;istration of the names of the partners in some jiuhlic way, in order that the [tuhlic nniy have an opportu- nity of knowinu; with wiiom tlu-y arc dealin<,'. and whom they can le^'ally hold for thi' ohli<;ations of the partnership. The rules concernin;^ the ri;j;hts and ohli^'ationsof the part- ners, one toward each other, lu this form of partnership, tile rie;lits and ohli«,'ation> of the partiu'rs towards third persons, and the ditVeri'nt modes hy \vliich the partnership may he termimited, ar«' no\\ wt 11 understo»)d and cstahlished. >riilway hetween the o.dina)'y partnership just referred to. and the Join; Stock C'om[>aiiy,and partaking in sonn^ res* |)trts of the nature of hoth, stan Is the limited ))artnership. Tl jc oriLun or S.iciiti' ill ('niiiiiimiiliti' of the Fretich law. of this species ol ('( ninierciiil .Vssociation has already h( en referred to, and it ^ili sullice for rhe puri>o-'s of this work to mention here a lew of its prijicipal features. Iti»semhlcs an ordinary partnership in thih, that it has one or more IXTKODLCTION. 45 Sonoml partntrs whose nnim-s aw i)iil»lic, and who (irc w- s[)onsihle in nolidn and to thr full fxtiiit of their means for the ol)li<,'utions of the partnership. Hut while this nnist always he the ease, it partakes of the nature of a -loint Stock (.'ompany in this, that it must liave one or more eontril)utors to its eajtital who are called " s[»eeial partners," and who are liahle only to the extent of the cap- ital they have contributed, or have aj^reed to contribute. This resi'nililance to Joint Stock Coiu[tanies is "greater in l-'rance (than in the other countries nanudi since the Coilcih' Cuiinitcrcc which, hy the 87th Act, i)rovides that '* The capital of limited partnerships, may also (i.e., in the same manner as that of anonymous partnerships^ be divided into shares without any other dero^'ation from the rules estab- lished for this kind of partnership)." These shares may 1)0 held, circulated and transft'rred precisely as the stock of of charteri'd or incorporati'd couipanies. This provi'-ionof the French law necessarily creates another and iui[)ortant reseuil)lance to the .loint Stock Companies, viz.: the power possessed by the s[)eeial [lartuii's under this system to sell their shares at any time, aud thus retire from the lii'ui without producin;^ auy practical chan;;e in tiu' status of the partnerslii[). l»ut, uidike a Joint Stock C'om[)any, the re- moval or death of a j^eneral partner involves the dissolution of the partnership, miless otherwise provided for.' There are also several other and important distinctions, even in France, between the Limited Partnership and tlie Sccic'ti' Anoiijiiiif or Joint Stock Company. Thus, for instance, in the latter there is no division of the i)artners into general and s[)ecial. No i)articular mem- bers of the as:M)ciatiou are exclusively nsponsible. No particular meuil)ers are excluded from the administration of the all'airs of the association or are liable lor i U' terferiuif in such administration. A^'uin, in a Joint Stock Company, a^ we shall see more fuUv hereafter, there is cori)orate seal with corporate liability, a feature which is Truiibai. Limited r.irineislii['. p. .jj"). if i* i*'^' II !*f 46 INTRODUCTION. totally wanting in liinitcd partnorship iiHsociationK.' With regard to thcso points of dillVrt'iioe, Troplon;; says : '* Incor- ]»orate(l Coini)anii'S ht-ar hoiuo analo<,'y to lamitod Partncr- sliii)H, Imt they dith'r in one essi-ntial : that is, the corpor- ate and paid in capital has no representatives personally and indefinitely resijonsihli-. A c-ri^jration only otVers to the pulilic a patrimony as security, hut no guarantee ot persons.' And, hesides exemption for personal responsi- hility for all the debts, they permit the sharihohU>rs to take part in the nianagenu'nt and eomluct of tin* operations, to wateh and control tlu'ir agents, iind not like limiti'd pai'tuers, oliliged to trust to the good faith of their general [)artner.' And hdangh; still more 1,'raphieally dt • serilies this dilferenee. lie says: "The dilViiiiice hctwirn the organi/.ation of a limited eo-partnership and an iiu-or- porated eomi)any, estahlihli.d even for carrying on the same business, is, in regard to the management or direction, in nothing more striking thiiii in ihi' characters of the gen- eral i)Mrtnersin the fornu'r, and the president and director.^ in the lattir. In the one, thei-xistenceof the miinnging jtaitiiers is interwoven with the existenceof thecontracf of iissodation. A general partner is a suhstantial i»arty to the contract; and if, hy any unforseen event, his power as sucli shoidd he re- sisted or destroyi'd, the [jartiiership must at the >ame time stop or couu' to an end. In defiuilt of an express stipida- tion to the eontrary- he heing a party to the covenant the retirement or removal of a general partner dissolvi's a limited partnership. Not so in an incorponited pnrtner- ship. Then', {)erson is nothing. The jtartiK rs do not choose each other, they may he ignorant of ( iich other's existenet'. They constitute hut a reunion of cajtitals for the increment thereof. The diveetion, therefore, need not have a pernument organization. The persons com- posing it nuiy, without inconvenience or danger, he changed. The directors are simi)ly agents, and not partners, in view of law : revocahility is of the essence of their creation. ' 'i'mnbiit, I.imitiil I'iirtneislii|>, ji. .j^S- • Tri'jilniin, Soi:. \''>\ I,, p. ui. ' Tniplniin, (juitcil by Tionb.u. j' i.i^, IKTRODICTION. 47 They uuiy lie ('hjiii;^< to the Joint capital, shall iir in cash. ' i'-y tin civil code of tho Province of t^ui'hec also, it is pro\i(lud tluit the eontrihu- tioHs of special partners must he in i-;\>h. W itii rt ;4;ird to prolits and thi'ir distrilaition, durin.i^ the continuance »»f the partnership, hoth the doctrine and practice have varied at various times anil in variouscountries. Sonieof thedecisions of Trance have ^'one so far as to say, that le;^'itinnite jirolits divided and expended could he rtcalled. in case of loss or of an insullicieiicy of assets to meet the liahilities of the partuershi}). Hut liy the code of Louisiana, it is provided that thr partner in < nmiii'inl tut cannot If called upon hy the. ' Tr>iib.it. I.imittl I'artnersliip. p 42 • Out- C. C Art. i>7.\ i^ •1 48 INTKODICTIUX. pai-tncrHhi)) or its eroditors tn refund iiny dividend lie may liave recc'i I'd of net proiits, fairlv niadeduriu"' the solvency of the partios, and h<ieoura;j;e in a \'ery f.^i'eat dej^'rei' the formation of. or contrihution to limited piirtner- Hhii)s at all. J''or who. with money to invest, would care to emhiirk in an enterprisi- from which they could deri\t noth- ing' ? that even untd the termination of the enterjirise or the conclusion or dissolution of tlu' partner>hip ? Clearly it won Id e\c huh peoi .Ie of sma II 1 ueans from this kind of association tntiridy, while on the other hand some rule concerning' the divisi(>n of proiits, some restriction con- cerniii}^' the payment of money to sincial partners, in the shape of interest or otlurwisi', is calculatid to supply that safe^'uard, the want of which is such a IVe^pient cau.-^e of ruin anu)n<,' ordinnry partnerships, and of loss to creditors. 'J'here it seems impossihle to provide any restriction of this kind and the only secrrity which a creditor of an ordinary ])artnership jjossi'sses. is the character of the jtartners themselves. Two partners, who rei)resent themsi'lves as startinj^ in husiness to-day with ten thousand dollars cajii- tal, may havt drav.n out w^ixxw iiiilf that amount for their ■ Art JS14. » Art. 1882. INTltODlCTION. •Ill privat*' rxixiiditurc Ih'Ioic the cxpiriition (»!' tlir vcar. Tliis is indocd duc of tlic most prolitic Hourccs ctl" fiiiliiic in ordi- nary partiHTsliips, and it in to j^uard aj^'ainst tliis that rules sinular to the above are provided. A speeial partner may examiiu' into tlie afVairs of t'le partnership hut cainiot take part in tlie nnina^'ement of theiu witliout incurring' the ha- hihty of a ^'eneral partner. In some of the Cnited States, Ijowever, it has hei-u held that attorneys-at-lu\v may act as tlie Uf^'al advisers of the partnership in wliieh they are special partners. ' With rej^'ard to the fornuition and re^^istration of a limited partnership, the system appears to he the same in most of tlie countries referred to, except tlnit in France, the nanu-s of the special partners need not he nuide puhlic, Imt parties dealiu}^ with thc! tirm may learn thi' names of the co-part- ners l»y examiniu}^' the deed of partnership. ', The certili- cate for rej^istration in France nmst contain: 1. The husiness style of the partnership. *2. A desif^nation of such of the partners as have been Huthori/.ed to conduct the business, direct its affairs and sign for tlie lirm. H. The amount of values contributed or to be contributed ui>on shares or by the special partners. 1. The tiiue when the partnership is to commence and that of its termination. I'nder the Statute of Peimsylvaiiia, whii-h is given by Troubat as a fair specimen of those found in the ditVerent States of the I'nion, the contents of the certiticationai'e al- most identical with those designateil by the Civil ("ode of the I'rovince of (^)uebec, which, in turn, agree with those given above, with the excei>tion already referred to, vi/.: that in France the names of the special i»artners are omit- t«'d, whereas, in the others, they are essj-ntial to the valid- ity of the certiti(tat(^ This diU'ereiice arises (dearly from another already stated, vi/..: that in France the capital nniy ' 'riuiihat I.imiliil !'artni'rshi|), p 171. C'im/*' (/(■ CiDiiiiii II f, Art. 4J (I 'I 'I B.C. V IMAGE EVALUATION TEST TARGET (MT-S) 9 « ® 9 1.0 I.I 1.25 •i^nii III25 ■- m 112.2 I. I- ^ 12.0 U 1 1.6 1% <^ "c-1 /i :"^ ^? .^s. w// Pafck. ^ Photographic Sciences Corporation 23 WEST MAIN STREET WEBSTER, N.Y. 14580 (716) 873-4503 T ^L's i'o V /.,.%^ y^ 50 INTRODUCTION. .11 ■^!^} tr I be divided into shares payable to bearer, whereas, in the other countries such a system is unknown. Under such a system, if the names of the special partners were to be in- cluded in the certificate they would require to be changed with every transfer of shares, a system which would in- volve an unnecessary amount of labour, if, indeed, it would not be found to be virtually impracticable. This difference between the SocuW en CommmMte of France, and the lim- ited partnership of the United States and the Province of Quebec involves still another difference, and one which brings the limited partnership of the formor country into still closer relationship with the Joint Stock Company. It is that in France, where the capital consists in shares payable to bearer, t 3 laatli of a special partner does not involve the dissolution of the partnership. The shares may be passed in the fret possible manner, from hand to hand, without any cb v ge in the statutes of the partner- ship resulting therefrom. The partnership in fact contains in a rudimentary form, tiie germ or principle of perpetual succession. But this only in France, and as regards the special partners. The death of a general partner operates the dissolution of the partnership there as elsewhere. In all other countries the limited partnership is dissolved by the same causes as ordinary partnerships under a col- lective name. It can, however, be stipulated in the articles of associations that the partnership may, in ease of the death of a general or special partner, be continued in the heirs and successors of such partner. Any dissolution by the will of one or more of the partners before the time specified in the certificate, must be signified, in France, by the same for- malities as the formation, and in most of the United States, and also in the Province of Quebec, by the additional formality of publication in a public journal once a week for three or four weeks. This brings us to Joint Stock Companies the rules and practice of which, as followed in all English speaking countries at the present day, we propose now to consider. THE LAW AND PRACTICE (. m OF JOINT STOCK COMPANIES. CHAPTER I. DEFINITION OF, ETC. (ii) What are Joint Stock Com- panies ? (h) May be Incorporated or Un- incorporated. {c) What are Corporations ? ((f) Difference bctiveen Corpora- tions and Companies. [e) Law applicable to Companies. (f) Growth of Companies. {g) May be Commercial or Non- commercial. (/») May be Public or Private. (i) Canadian Legislation. 1. Definition of, etc. (a) What are Joint Stock Companies ? A Joint Stock Company is not easily defined with accuracy. It has been described as "an association of individuals for purposes of profit, possessing a common capital contributed by the members composing it, such capital being eommmiUf divided into shares of which each meml)er possesses one or more, and which are transferable by the ow^ner." ' This is not very exact- A Joint Stock Company is not necessarily formed for purposes of profit, but it is neces- 1; I h \ Shelford Joint Stock Companies. 2nd Ed., p. i. "i. 52 JOINT STOCK t'0:\n>.VNIKS, b siiry, at least according to almost all the Joint Stock Com- panies Acts, that the capital be divided into shares or stock.' ((') Mdi/ hr ihcorporatcd or iininrorjxtrdtcd. They maybe either incori)orated or unincorporated, but when unincor- porated, are, m the eyes of the law, only ordinary partner- sliips on a more extensive scale, ' and, by the Civil Code of (^)uebec, are subject to the same general rules as a part- nership under a collective name.^ By the law of England, a large [)firtncrship. having traiisfevablp shares, is treated as illegal, and by the -Toint Stock Companies Act, 186*2, ' "No Company, Association or Partnership consisting of more than twenty persons shall be formed for the i)urpose of carrying on any business that has for its object the ac- •piisition of gain by the company, association or partner- ship, or by the individual meml)ers thereof, unless regis- tered as a company under the Act, or formed under public authority in some other way." But when so formed or registered they constitute, as a nile,^ a body corporate by the name set forth in their memorandum, or charter, cap- able of exei'cising all the functions of an incorporated com- pany, et( . Such incorporated companies differ, neverthe- less, in several particulars, from a perfect corporation." ' Act (Imp.). 1862, sec. i8i. This is probably the only Act in existence which defines in so many words what a Joint Stock Company is. It says: " A Joint Stock Company shall be deemed to be a company having a per- manent paid-np or nominal capital of fixed amount divided into shares, also of fixed amount or held and transferable as stock, or divided and held partly in one way and partly in the other, and formed on the principle of having for its members, the holders of shares in such capital or the holders <■)( such stock and no other persons.'' ■ Dhelford, p. i. ' Civil Code Art.. 1889. ♦ Referred to supra. ■; By 7 Will. IV. and i Vic, chap. 73, letters patent could be granted, ■which did not convey incorporation at all, but merely some of the privileges of incorporation, such as suing and being sued by a public officer. ^ The term Joint Stock Company has never been used in the Statutes of Massachusetts as descriptive of a corporation erected by special Act of the Legislature and authorized to issue certificates of stock to its shareholders. It describes a partnership made up of many persons acting under articles of association for the purpose of carrying on a particular business and having a capital stock divided into shares transferable at the pleasure of the holder. The stati 'e provides that a number of persons thus associating themselves to carry on business may, upon complying with the requisite forms and regulations, become corporations. Differing so materially in DEFINITION Ul' JOINT STOCK lOM"ANY, r>'6 ((■) ]\')i(it (ire rorjmrdtidiis .' A corporation l>_v tlic coiii- nion law of England is a tictitious ])(rsou crcattMl liv special authority, and endowed hy that authority with a capacity to actpiirc rights and incur obligations. Its cxistenci' is entirely independent of the persons Ity wjioin it is com- posed, or represented, and its rights and liahilities are entirely independent of the rights and liahilities of such persons. In its operation and management it is governed l)y the rules of the common law. and of its (diarter. [d ) l)iticrriiic hctirii'ii rarjiDrntinns (iiul rniiijiniiii s. "Not so a Joint Stock Company, though constituted a hody cor- porate, with all the functions," etc. Though an artiiicial person in contemi)lation of law, its interests are, in most cases, strictly identical with those of the individuals (;om- l)0siiig it. They possess a direct interest and property in the assets of such company, and nuiy command at certain stated intervals, a division and distrihution of the profits, if any, arising from such assets, while on the contrary ihey may he liable for its losses to the full extent of their means. In their operation and management, they are governed by rules peculiar t(.) themselves, or to the legislative au- thority by which they wen oreated. ^\'hile it is doubted whether the members of a corporation can, under the com- mon law, \ ohmtarily allow it to die out. • express provi- sion is made by many of the C"(nnpanies" Acts for the wind- ing up of a company at the will of a majority of the mend)ers. In consecjueiice of these distinctions they have been said by one authority to occupy a position intermediate between corporations known to the connnon law and ordinary pitrt- nerships, as the law applical)le to them is dt lived as much their origin from corporations created by special chatter, the term "Joint Stock Company" is an apt ami proper ilescription ef them as companies or corporations originally formed under articles of association. Atlonuy- Gi'it. V. Mi'r. Ass. Co., 121 Mass , 5J4. Su. Ct. 1^77. ' F.indley, Part, p. 2, That is by a vote of the majority of them, or of a majority of a qu )riim of tliem taken at a regular meeting, but a single sharehfilder has no right to demand a division of profits. He can however sue for it after a dividend is declared, vide post. 1 Viih Sec. 25 of .\ct, post. * Brice, Ultra Vires. 2nd Ed., p. gio. !■ 54 JOINT STOCK companif;s. from the i)riiiciplt'S which govern ordinary partnerships as from those regulatinjf corporations, strictly so-called.' By an- other, they are duhbed quasi Corporations, ' as partaking of corporate i)o\ver, but with several incidents of partner- ship, and in another case held, that if they have registered as a company, they cannot afterwards register so as to lead the world to siipj^ose them a corporation. ' . In the United States, these distinctions are not appar- ently recognized. Any body of persons, authorized to sue and l)e sued, and to act as one for all the purposes of their creation, is there teruied a corporation, and comes under the general rules relating to such bodies, except in so far as otherwise specially provided for. This was very clearly laid down in TJn' People v. As- sessors of Wateriown"^ in which lironson, J., said "Whe- ther a corporation or not, does not depend upon the um- ber or magnitude of its powers, nor the manner in which they were conferred. An association under one general head for a village library, or to tan hides, possesses all the essential attributes of a corporation, in as great perfection as the Bank of England, or the East India Company. Nor is it im- portant in what mode or by what particular agency this artificial being transacts its business. It is enough that it has a capacity to act in some form as a legal being." The Constitution of New York also •* declares that the term cor- poration, as used in that State, shall be construed to include all associations or Joint Stock Companies, having any of the powers not possessed by individuals or partnerships. But in England, and indeed in this country, the differences mentioned still serve to distinguish Joint Stock Companies from the ordinary common law corporation. ' Liiidley, Part, 2. - Parke, B., in Ridley v. Plymouth, vide Grant Corporations, p. 625. Note. 1 Hill, 622. * Art. 8, sec. 3. s Hence in the United States the whole subject is treated of, as by Angel! & Ames, Field and others, under the generic title of corporations, while in England, Corporations and Joint Stock Companies are treated as subjects almost totally distinct from each other. DEFINITION OF JOINT STOCK COMPANY. 55 ((') Law appJ'u'ration whatever. Being therefore, in the eye of the law. but partnerships, but, at the same time partnerships to which the rules of partnership could l)e applied only with great tlilftieulfy. and oftentimes with hardship, the legislature was ivsorted to for relief. The iirst remedy attemjited was >imi>Ie if not profound. It was to supiiress them altogt-tht-r. This, however, did not succeed, and the Act wisrt'|«e;iletl in 18'25, and replaced by another, which empowertMl the Crown to provide, in granting charters of iiicorponttioij. that the members should be individually liable for the debts of the corporation. This was the second deviation from the ritles of ordinary corporations. In other words, the Cn>wn was authorized to grant patents of incorporation, which conveyed only some of the privileges of corporations proi)er, and by 1 Vic. cap. 78, ' Parliament, went still fm^ther, and authorized the Crow^n to grant letters patent, conveying some of the privileges of a corj^oration without incor- poration at all. Power was at the same time given to limit the liabilitv of the members to a certain amount on Referred to supra. DEFIXITIOX OF JOINT Slix K COMPANY, 67 (■aeh sliart'. ' lint it was not nntil IH')'), that u f^'ontrul sys- tem, snch as that at piesent in fon-c, was adopted, ]]y the Act. 1S-1«» Vie. cap. l;)8, all companies, except insu- rance companies, hy observing the rules rej;ar(lin<^' registra- tion presc tilled h\ the Act of 1844. were enahletl to obtain the in-ivile^'cs of a Joint Stock Company, with limited lia- bility. All the various enactments on the subject were con- solidated into one genei'al -loint Sto(d< ('omi)anies' Act in 185(» : and this again having sutl'ered numerous amend- ments and modilications, was n placed by the Act of 18()2, Avhich. with the ai«l of a >u[iplementarv Act in 1H71, an 1 one or two de<-laratory -inifudnnnts, still governs. The system iirovidctl by this Act is one of regi-.tration merely. A nunioiandum of associations is subscribed by the promoters, and delivered to the llegistrar of .loint Stock Companies, together with certain fees, whereupon they are entitled to receive a eertiticate of incorporation, according to the terms of tiieii* declaration, and their articles of asso- ciation : and the subscribers, together with such jx'rsonsas nniy from time to tiuu" become members, are a body eor- [)orate by the name contained in the memorancbnn of association, " capable of exercising all the functions of an incorporated company, and having a perpetual succession and a common seal, with power to hold lands," etc. Companies formed in this manner differ in scnne respects from those created by charter or special statute,, even for similar purposes: ' while, again, under the English Acts, as we have seen, letters patent nuiy be granted, which do not convey incorporation at all, although letters patent and charters aie in general the same thing.' .•>1j:' v\ 1 1 li' ' This (|uestion of limited liability appears to have been at all timi-s a )>;reat bug-bear with the common law advocates, A very recent English writer (Cox) opens with some bitterly satirical remarks on the principle of limited liability, but the still more recent Glasgow Bank disasters have demonstrated so forcibly the necessity of some such provision that the Legislature has just now (August, 1879,) passed an Act to enable those banks whose liability is tinlimiteii to change their basis in this respect. - Lindley, Part, p. 203. 3 Ibid, p. 145, and Blackstone gn 'Corporations.' I! h 58 JOINT STOCK COMPANIES. (/y) Coiiiiinrc'Ktl tiiiil non-commerriiil. That this Kvstiiii of incorpoi'iition ^'rew out of aiul was (k'sij^iu'd to meet the neeessitios of trade is clear from the tenor of tlie Acts tlieniselves, and from the manner in Avhich it has been treated by the numerous wr'ters who have regarded it al- most exclusively from a commercial jjoint ot view.' Jiut its advantaf^'es are not confined to these. All the English Acts (as well as the Canadian i are made to apply not only to ''trading companies," but to "other associations," while the "Imperial Act of 1 807. has a special clause providing for the registration of any association proved to be formed for the purpose of promoting commerce, science, religion, charity, or any other useful object, to which object its in- come is to be exclusively ai»plied, and that such associa- ti(m may obtain at the same time a certificate of limited liability, without the addition of the word " limited" to its name. But while all the Acts providing for the formation and incorporation of Joint Stock Companies, extend their pro- visions to those of a non-commercial as well as those of a commercial character, and such provisions and advan- tages have largely been made use and avail of by both, it is to trading associations chietly that the following chapters will refer. (//) Public tnid prinitc. Some confusion appears to exist also as to the exact meaning of the terms " public," and "private," when applied to incorporated bodies ; nor does it appear easy to lay down any general rule in regard to them. According to the latest English authority, = the term " pub- lic," when so applied, has two meanings — that is to say, that there may be a " public corporation," and there may be a " public company," and the two are different — the first, those which are created solely in the interest of, and are controlled by the public at large, such as Municipal Bodies ; the second, Joint Stock Companies in which the public have an interest, but do not necesarily control, as railways, ' c. g. Shelford, supra, p. x. = Brice, "Ultra Vires. " 2nd Ed., p. i8. DEFINITION OF JOINT STOCK COMPANY. 59 etc. J)iit this (listiiictiou seems a hard one to follow, as in all coin[)anios the public have more or less interest in proportion to tlicir importance to the general welfare of the country. Aceordin;^ to one American authority, "The main ilis- tinction hetwetii imblie and private eorporations is, that over the former, tlie lef^islature, as the trustee or ^niar- dian of the pul)lie interests, has the exclusive and unre- strained eontrol." ' According to another, "Public cor- porations are fornu'd or or<,fanized for the government of a portion of a State; all other corporations are private."- The latter classilication appears to go too far the other vay, as companies may be created for the management of roads, canals, etc., and which remain as such, though confided to managers and trustees, entirely under the control of the legislature. In a comparatively recent case in the United States, it was held that if created to advance private interests, though beneficial to the whole community, it is a private corporation.' And, in another, that a Canal Company* though chartered for public purposes, and authorized to take jn-ivate property for the use of its works, may be a l)rivate corporation, nor does the fact, that the State itself is a large shareholder, impart any of its sovereignty, or alter the status of the company.^ And, in another, that r/»a.s/-public corporations are, technically, private, but have in view great public enterprises in which the public inter- ests are directly involved to such an extent as to justify conferring upon them important governmental powers, such as the right of eminent domain. ^ The true test appears to be, has the legislature, in incor- porating such companies, retained control of them for the use and on behalf of the public ? If they have not the ' Angell & Ames, Corporations, sec. 31. = Code of California, Art. 284. 3 Directors, etc., v. Houston 71, 111. 318, Su. Ct., 1874. ^ Brady v. State, 26 Ind., 290, 302, App., 1866. 5 The Miners' Ditch Co. v. Zellerbach, Su. Ct. Cal. 250. rr^-«"^a «;o •lOINl' STOCK CdMI'ANIKS. ;• ?M 11 :S I compMiiv is a private one, uiid cannot hv intt'vlVrod with ' iis l(tnnii)anies tdiai'tered under the Joint Stoek C'onipanie-.' Acts, ari' private companies, and therefore it is with thcin in particidar that this work is (•oncern<'d. ~' (M (,'iuii((liiiii Li'iji-sldtiDK. Prior to 18(51 Joint Stock Companies in Canada were for the most part created un.der a system of re;j;istration similar to that laid down in the l^jU^dish Statutes already deserilied, and to that followed for a numher of special [jurjjoses in this country at tlu! present time.' The meniorandinn of assDeiati: u was sij^nied in dui)licate hefore the Ke^istrar of tlii' County, who forwarde(l one of the (-(([jies duly certilieil to the Provincial Secretary, who in turn issued his certiticate of incorporation. Asso^-iations formed under that Act, however, were confined to ci'rtain classes of ohjects, enum- erated in the Act. These weri' jU'incipally, manufacturin;;, ship-huildinjj,', mininj^f, working of (juarries, carrying on tisheries, constructing ro:ids, etc., as well as the formation of societies for s( cial, charitable, or educatirs in such company, a body corporate and politic," etc. In tjie following year, however, an Act was passed " to au- thorize the formation of companies or co-operative asso- ' A bank for instance may be created by the government for its own use, but if the stock is owned by private persons it is a private corporation, although it is erected by the sanction of public authority, and its object.? and operations partake of a public nature. Bank of U. S. v. Planters' Bank of Georgia, 9 Wheat 907, and see Angell & Ames, sec. 31. This is perhaps as strong a case as can be put of a private corporation which is to all appearance public. - Vide sec. 3 of Act, post. 3 Vide Statutes 0/ Ontario post. But by 23 V., c, 31, a system of judicial authorization was attempted and was in force until 1869. UEFINrriON OF JOINT STOCK COMPANY, 01 <-iiition.s, for the purpose of cairyiii}; ou in common anv trade or business."' This Act was entirely in(lc[)en(lcnt of the other, and proceeded on a system of registration simihir to that iihove mentioned. Any seven or more persons who desired to associate themselves for tlie purpose of carryin<^ on any labor, trade or l)nsiness, wholesah' or retail, ((xce[)t thosi' mentioned in the previous Act), mij^'ht do so by si^'nin<^ be- fore a Notary Public, or Justice of the Peace, and filinj? in the office of the Rej^istrar a certificate to that effect, upon evidence of which, the Provincial Secretary would issue a certificate of incorporation as before. Jiy the Act of 1860, 32-83 Vic. cap. 18, being the first Act passed on this , il>- ject by the Parliament of Canada, subsequent to the Cou- fcderatiim of the Provinces, all prior Statutes, vith tlie exception of the one just mentioned, were repeuii d ; and in lieu thereof Jt was provided that " The Governor i'.i Council may l)y letters Patent under the Great Seal, grant a charier to any number of persons not less than five, who shall petition therefor, constituting such persons and others who may become shareholders in the company, thereby created a body corporate and politic for any pur- poses or objects to which the leu i slat ire authoritij of the Parlia- ment of Canada extends' except the construction and work- ing of Railways, or the business of Banking, or issue of paper money and insurance. ^ This Act has since been superseded by the Act of 1877, at present in force. The Acts passed by the Provincial Legislatures, providing for the formation of Joint Stock Companies, proceed upon much the same system. The application, however, is to the Lieut.-Governor instead of the Governor in Council. Other dift'erences will be noted hereafter. ' This Act appear to be still in force, having, as far as can be discover- f 1, never been repealed. - The Confederation Act having divided the legislative authority of the 1 'i ovince between the local and federal legislatures, Joint Stock Companies thereafter became subject to the one or the other, according to the purpose for which their incorporation was to be sought. The questions of which and when, are discussed infra.] " These are usually the subjects of special legislation. ^!l 111?: Ill ; 11 (' W: > , ^f y. CHAPTER II. PROMOTION OF COMPANY. I. Prospectus — (a) Form of, {b) Effect of Misrepresentation in. (c) Recourse in Damages. ((/) May be Indicted Criminally. (f) Rule does not include Exag- geration, (f)Contract not Void but Voidable ig) Variance bctrveen Prospectus and Letters Patent. (//) Conditions to be observed. 2. Promote -js — (a) Position of. (b) Secret Profits. {c) May take Remuneration. Preliminary Expenses- Recovery CTF Deposit — 1. Prospectus. (a) Form of. A common, though not an essential pre- liminary to the promotion and formation of a company is the issue of a prospectus.' This document is intended to set forth to the public such details of the proposed scheme as will enable them to judge of the advisability, or other- wise, of taking part in it. In form it should be short and pointed. It should contain, as a heading, the name and proposed capital of the company, with its advantages and prospects, and an idea of the plan on which it is proposed to be worked. At the end is usually appended a short form of application for sliares.' ' The prospectus is sometimes issued after the company is formed. This plan, indeed, is recommended by some of the best writers, but the more common method is to issue a prospectus and obtain subscriptions before incurring the expense of incorporation. - By the 84th sec. of the Canadian (which is apparently copied from the English) Act, a prospectus must include also the nam-rs of the parties to any contract entered into by the company or on its behalf before the issue of the prospectus, Vide post. PROMOTION OF COMPANY. G3 (h) Effect of misrepresentation in. The legal effect of such ach'cular has from time to time been much discussed, especially as regards the subscription of shares on the faith of it. Thus it has been held that a mere signing of the prospectus does not make one liable as a shareholder,' and the rule has been broadly laid down that subscrip- tions induced by wilful misrepresentations in tlio prospectus or even by wilful concealment of material facts may be set aside as obtained by fraud. In the New Brunsu-ick and Canada Balheay and Land Company v. Mugf/cridfie,' Kindersly, Y.C., said, "that those who issue a prospectus setting forth great advan- tages to accrue to those who will take shares in the under- taking, and inviting them to take shares on the faith of the representations contained, are bound to state every- thing with strict and scrupulous accuracy ; and not only to abstain from stating as facts that which is not so, but to omit from stating no one fact within their knowledge, the existence of which might in any way effect the nature or extent or quality of the privileges and advantages which the prospectus holds out as an inducement to take shares." And, in a mining case, the judgment went so far as to say that a false statement in a prospectus need not be actually known to be false. It is sufficient if the parties issuing it do not know it to be true. In the case in question » the directors themselves had been deceived, the mine which they supposed valuable having proved to be worthless. Yet, held, nevertheless, that the}' should have made further inquiry.' And, in the same case. Turner, L.T., said: "If it can be shewn that a material representation which is not true is contained in the prospectus, or in any document forming the foundation of the contract be- tween the company and the shareholder, and the share- holder comes within a reasonable time and under proper K I! i ' Bourne v. Freeth, 9 B. & C. 632. and even signing a list agreeing to take shares. But see Montreal Cotton Company and Jones, Infra. = I Dr. and Sm., 38. 1 Per Lord Cairns, in Rcisc River Silver Mining Company v. Smithy L. R., 4 H. L., 64, 79. 64 JOINT STOCK COMPAN'IKS. i\ circumstances and demands to be released from that contract, the Courts are bound to relieve him from it, and to take his name off any list of shareholders or contributories on which it may have been placed."' In liuss V. The KHidtcH Itnw.atmcnt Company," the pro- spectus stated that " More than half the shares constitut- in verbally, the misrepresentation was held sufficient to cancel the contract. And where the prospectus stated that the directors and their friends liad subscribed for a large por- tion of the capital, and were offerin.g to the public the remaining shares ; the truth being that the directors had only taken ten paid up shares each, for which they were recouped, 140 only were taken through their influence, and somewhat less than one-half had been taken or agreed to be taken, altogether, held sufKcient to void the con- tract.^ A prospectus of a Railway Company stated that, " The Engineer's rejiorts, and majjs and plans, etc., maybe inspected, and further information obtained at the offices of the Company." An applicant for shares, signed the printed form of application, in which, as usual, it was stated that he agreed to be bound by the conditions and regulations contained in the memorandum and articles of association. An examination of all these papers would have afforded him the information, the want of which, lie alleged, as a ground for rescinding his contract. Trusting to the representations, he did not examine all, and it was held that his neglect xo do so, was no answer to his denuind ' Buckley. 3rd Ed., p. 86. ' 3 Eq. 122, 3 ch. 682 ; 36 L. J., ch. 54 ; 37 L. J., ch. 873. ' Henderson v. Lacon, L. K., 5 Eq. 249. rnOMOTION OF COMPANY. 65 to 1)0 rolii'vcd from the contract on the groimcl of there liuvinii; l)ceii misrcproseutation of facts.' (<•) Jicniiirsc in ddiiKifirs. Nor is the recourse of the party (kceived, confined to the rescission of the contract. In (hrhard v. Bates," a right to damages was clearly laid •down. In that case the plaintiff took shares in a company •on the faith of a i)rospectiis, which guaranteed to the hold- ers of 1,200 shares a minimum annual dividend of thirty- three per cent. The guarantee failed, and the plaintiff brought damages (((/niiist one. of the pvomoiers, on account of the loss incurred hy him in consequence. Held, that he was entitled to recover. \ And in Morf/an v. Shiddy, in the United States,^ held, that a director, who knowingly issues ■or sanctions a prospectus containing false statements in order to deceive and to induce the public to purchase the corporate stock, is liable for the damages sustained by one who. relying ui)on the statements, makes such a purchase, if the false statements were the principal, though not the sole inducement to purchase. But the mere fact that a trustee allows his name and credit to be used to promote the sale of stock which afterwards turns out to be worth- less, without knowledge on his part of any false represent- ation, does not constitute actionable fraud. '= (d ) My : 16 L. T., N. S. 500, Cox ; 7th Ed., p. 90. • 2 EU. & Bl.. 476. Thring, 3rd Ed., p. 30, and see also linrnarJ v. Bagshaw, i H. and M. (bg. Balex. Cleland, 4 F. & F. 117 ; CollingwooJ v. Berkeley, 15 C. H., N S. 145 ; Barnes v. Cenncll, 2 H. L. 497. * O2 N. Y. 319. App., 1875. .= Ibid. 6 8.C. lit 31- m 4 «)<> .lOINT STOCK COMPANIES. any shares which then nii<:[ht remain unaUotted, to and among the then sharehohhirs, in proportion to tlie number of shares respectively held by them, and such shares might be allotted as fully or partially paid up shares, although no' moneys might be received by the company in respect of such shares from an}' allottee thereof. Six weeks after the incorporation of the company, when only "25,000 shares had been allotted, of which nearly 'i'i. 000 were allotted as fully paid up shares, pursuant to duly registered contracts, the directors passed a resolution in conformity with the 11th clause of the articles, and thereupon, and by virtue of n duly registered agreement, the remaining 7o,000 shares were rateably allotted as fidly paid up shares among tlu: then existing shareholders of the company. The concern was then puffed up, and some 50,000 of these paid ujt shares were sold in the market as shares of i'l each at a premium of which shares brought 100. Sul>se(iuently the company, which was a hopeless failure fnmi the outset, went into voluntary li([uidation. Nine months afterwards .1 l)resented a petition for a compulsory order, alleging (among other tilings) great irregularities in the formation of the company, and in the conduct of the din'ctors, and that no c(msideration was given foi the 22,000 shares which had been allotted as fully paid up: tliat the 11th clause of the articles aiul the proceedings thereunder, were a fraudident scheme to float the company, and the voluntary winding ui> was improperly ol)tained, and uuder the control of the guilty [)arties, and was intended t > screen, them and [)r('- vent investigation. Ifrhl, that if the alleged fraud could be proved, tlu' guilty parties could be indicted for (-oii- spiracy.' ((;) Rtilf. doi'H not iiiiliKlc t;.i-ti(iii<'i\:tion.'—U\it this rule with regard to misrepresentations, is nt)t held to include every degree of exaggeration. As stated by Lord Chelmsford, in Cinfral luiilirKii m' I'fiii-ziii'ht V. Kinrli," every prudent man will nuike allow-^ ' Re Tlu; (lold Co. (in app.l. 4S I. aw J. Koj)., jSi. ■' L. K.. z H. I., i.j. Hf PROMOTION OF «OMPANY. 67 ance for tho sansi> j'ncto void. ' An. Duranty, 28 L. J., ch. 37; 2i\ liw'iv. j()8 , re The National Patent Steam Fuel Co,, <•./>. Worth, 4 Drew 529, and vide post. " Ship's Case, 2 Dc G. & S. 544. m %. I ' m ii\' I -' ;( '1 68 JOINT STOCK COMPANIES. A particular tea plantation, and the objects expressed in the memorandum were to cultivate tea plantations generally. ' Where the prospectus stated the company was formed for the purpose of ac(piirinl the defendant, to hold real estate to the amount of one Imndred acres and to collect toll unlimited as to amount and iluration." In each of these cases it was held that the li^fendant was not bound. And in Canada where the name of the company was changed irom the "Royal Hotel Company" to the Windsor Hotel ( ompany, and the capital had been clumged from $600,- "00 to $500,000, and it was not proved that these changes ' Lawrence's Case, 2 ch. 412; jfi L. J., ch. 490. -' Re the Russian Vvksounsky Iron Works Co., e.p. Stewart i. ch. 575; L.J..ch. 758. ' Barned's Hanking Co.. I'eel's Case, 15 W. R. 3(^1. ■ The Amazon Life Assurance, e.p., 3 Drew. 409. Angell & Ames, Corporations, sec, 538. ' Angell & .\me.s. Corporations, sec. 53y. .56 in PROMOTION OF COMPANY. 09 had been made prcviouH to the defeiulants signing the sub- scription list, he was reUeved from liability to calls.' (h) Conditions to he observed. — But an ajiplicant in order to take advantage of these rules must have observed certain conditions. Thus for instance, he is bomid to satisfy him- self of the truth of the statements contained in the prospec- tus, and when the company is formed, how far the pros- pectus tallies with the memorandum of association by any reasona])le means of information he may have." But he is not bound to make diligent examination and search of all the papers and documents connected with the scheme in order to determine the truth or falsity of the })rospectus. ' The application to avoid the contract also nnist be made within reasonable delay. In one case, held, that a delay from July 3rd to the beginning of the long vacation was fatal, and in another that a period of two months was.'* The right will also be held to be waived by any action on ihe part of the owner from which acquic cnce may be im- })lied. Thus an offer to sell, an acceptance' of dividends, an attendance at meetings, the payment of calls, are acts from which acquiescence will be implied ; and even if done Ijefore knowledge of the fraud, will be taken into consideration in determining whether the sul>scription should be set aside. j The right is also forfeited if a winding-up takes place be- fore proceedings are had to set aside the contract." 2. Promoters. (<0 Position of. This liability for the statements contained in the prospectus Ijrings us to the question — what is the ' Windsor Hutel Co. v. Laframhoisc, 22 L. C. Jur, 144. - Hallows V. Fcrnie, L. R., 3 ch., 477. * The Central Raihcay Co. of Venezuela v, Kisch, L. R., 3 E.iS: Ir. gy; 36 L. J., ch 849, and Laiighain v. the East Wheal Bore Milliner Co., 37 L. J.. ch. 253. -• Ogilvy V. Citrrie, 37 L. J., ch. 541, and Taite's Case, L. R., 3 Eq. 795 . 36 L. J., ch. 475. ? The Hop and Malt Exchange Warehouse Co., e.p. Briggs, L. R., i E(|. 4'^3 • 35 L. J., ch. 320; the .\thenaeuni Life Assurance Co., e.p. Shefiielcl, 437 ; 28 L. J., ch. 325 ; Kent v. the Freehold Land and Briekmak'nifr Co., L. R., 4 Eq. 588 ; Windsor Hotel Co. v. Murphy, 1 Leg. News. Men. 74. '■ Oakes v. Turquand, L. R., 2 E. & Ir. 325; 36 L. J., ch.tjuj; Stone v. the City and County Bank, 3 ('. P. I). 252. u !.«! 70 JOINT STOCK COMrAMKS. I if position occMipitMl In- proiiiotcrs in a ;,Mju-ral wav :* Thin question liiis Itccn the siihjcct of nmrh «li>cu>sion, imr- tic^uliivlv of liitc years. A promoter has 1k-«'!> >j»itl to hv one wlio undertakes to form a eompany with ivft-renee to a, ;j;iven object and to si't it ^'oiujj;, and who taki> the n( -essary steps to aeeonii>lish his purpose.' Jiut thou<;h several persons nniy he a>M»i-iatetl as pro- moters, and nniy work to«j;etlier for the e<*!aiiiMii ohject. they are not ]tartners and are not lialJe for f the com- mon ol)ject. where they have not otherwis*:- jsntlertaken to C( )ntribut( From this, it follows that tb«y are not the a;;ents of each other, and do not bind one an«>tber. nor are the subscribers of shares in a company. u«n yet formed, liable for th(> acts of the nnma^ers. and utbers actively interested in it. ' It has been held, nevertheless, that a general authority conferred by a pr(»m Bing. 776. E. C. L. R'., 19. ami (J Bing. 115. E. C. L. R. 23. ? Baructt v. Lambert, 15 M. & W. 489; Higgins v //t./'l.-«i, 3 Ex. 163; Lake v. Argyll. f> Q. B. 477. E. C. F^. R. 51. and M.iillanJs Case. 4 De G. M. & G. 769. •^^ Brotvn v. Andrews. 13 Jar., 938, O. B. rnoMOTIoX ()!• COMl'.WV, 71 ill promoting'. \ltlit»UL;li tluv uiiiy liccoinc nuiiilKrs of tlin <-<)init!iny. wlun tuniu'd. tlu' sliarclioldcrs as a hody liave no coinu'ctioii with tluui. nor arc tlicy n'si)onsil»I(' in any way f(»r tlniv act>. Tile case of Urtwsttr and ('liai»nuin, ' dcriiK'd in the (jhiccn's J^cndi. in Lower Canada, was a cii'--.' in point, in that case, a louipany. (hn'in<;' tlic time it was hcin^ incorporated, iinvv pr»»niissorv notes for sustain that rela- tion to the business in which the debt vas contracted.' ™* f And the case of SpiUoi v. Parln Skntituj Rink Compotni,' also would seem to be in contradiction of the doctrine above stated. In that case, a contract was made Oct. 'lit, 1875, between the plaintili' and the promoters of a pro- posed company. Dec. 16, 1875, the company came duly into existence, and subsequently ratified the contract and acted on it, on which it was held that the company was liable on the contract. The ratification, however, would appear to have been in the nature of a new contract. The relation of the promoters to the company ultimately formed, which was for some time, a matter of doubt, is now well settled l)y a number of leading cases to be that of trustees.' In the New Sombrero Coiiipaiii/ v. Krlaiifier, it was said " the case of a promoter seems an exceptionally stroug case of fiduciary relationship, inasmuch as the trustei- or agent, so Tar from being selected by his restiii que tritsf or principal, here actually creates the principal in whose afi'airs he acts. And as such trustees it would appear that they are not without liability. Thus, after the formation they can be held to account concerning acts or contra<^ts entered into or undertaken for the ostensible benefit of the company. For example, they ' AlliH V. Clark. 65 Barb. 563, Su. Ci., N. Y., 1873; Abb. Dig., Vol. II. • 7 Ch. D. 368. ' The AVfr Sombrero Co. v. Erlaitger, 5 C. P. Div. 73, 112, 118 and 123, 3, App. Cases, 1218, and Bagiiall v. Carlton, 6 Ch. D. 3S1. ' ■ i J i - l! 74 JOINT STOCK COMI'ANIKS. iiiiiy 1m' held to account coiici'niiii}^ imrcliascs nuidc fortius imrposcs ol' the coiiiixiiiy, ii(»i' will tlicy lie iillowcd to niiikta iH'i'sonal profit on siicli tiansacrioiis at tlic comiMmy's cn- |M'iisc.' P)iit a indiiiotcr may validly sell to tiic company. l»io|>(ily ahfi- " licloh^dn^' to liim, ko that tlu' onus would apiKurto lie on tile company, to shew that the })Vop(rty was |inrcii'is('d hy the promoter for the use and benelits of the company. ilut./'// /c'riie West Jewi'll Tin IMinin^' Company, AVeston's case, it was held, that when any person standin;;' in a fiduciary relation to a company, is ch irj,'ed with a misfeas- ance and a jniinn ntric ease is raised aj^'ainst him. the oiuis is on him. to shew the li(iii(( /idrs of the transaction. In liiiniiull V. ('arltiiiK ^ it was held that persons who. for any assistance which they may render, a , in shares of the company, in consideration *)\ their troiihle and of the loss of commission which Woidd necessarily ensue to them on the sale of the ore. 'i'ln' l"."»()0(> was to he included in the sale-price of the mine, r()lit he can induce them to pay, always of course, suhject to the ordinary rules concerning fraud. This was laid down in L'nnhiiii Pvtriilfiiiii Chiiijkiiii/ \. JIkhL ' \>\\t stated at the were to be liable for expenses, in order to hold them when the scheme is abandoned. And so, in (iilpiii v. (ircow, in Upper Canada, licliJ, that a party contributing to a Mining .Joint Stock adveiitur(> which does not go into effect, may recover back his money had and received, but the court must see that the cii- cumstances gave him a just right. Neither can one promoter charge a fellow promoter with these expenses unless he is willing that an account should be taken of tin; expenses incurred l»y all of the promoters. And even where the defendant authorized the insertion of his name as a director and suggested alterations in tin- ])rospectus when it was sent to him, it was held that he was in no way liable for the cost of advertising ordered by the. embryo company.* Where the formation of the company is completed, the ex- penses may l)e undertaken to be paid by the company in instalments spread over a number of years and dividends be paid in the meanwhile.^ 4. Rfx'overy of Deposit. This (piestion of liability for the preliminiary expi'uso of the company is akin to the general one of the right of the shareholders to get back their deposits, where tlu' for- ■ Ciiinfoutl V. /-'i/i', 1 liv. -!64, and a number of other cases. " 7 '>>■ B- 5S(): Kobinson's Dig. 785. < Denton v. Mociuil. Law Rep., 2 Eq. 352. < Ihirhidfif v. Morris, 34 I^. J. i.^i ex. ; 12 L. T. N. S. 4^(); Maddnk v. Marshall, 17 C 13. N. S. 820. ? Hall V. Clilaiid. 4 Im)s. & I". 117, 144, PROMOTION OF COMPANY. 79 raation is not completed and the scheme falls throu of being applied to the objects of the projected company, and that the project failed by reason of the fact that no company, or no company (•(niformable to tlu4)rospectus, was foruu'd. And in another case held that the right to recover de[)osits made in an abortive company is a personal right of action and uot a charge on any particular fund.^ "::i 'i;i ' Gnrii \. Barrett, i Sim. 45; Colt \\ Wohnton, 2 1'. \V. 154; yoliiisnn V (losUtt, icS (■ I). 7jS ; Xockfll ■■. Crosby, i, IJ.&C. S14: Wardw I^oucia- lh>roitgh, 12 C. 15. iji ; Woiitcr v. Sliairp, 17 L. J. C'. I'. j8 ; 4 ('. H 404. - Thriiig, Joint Stock Companies, p. 34. Most-ley V. Cri'ssiy s Coiiipnuy. \.;\\\ Rep., i ]Lt\. 405 . 1 _> Jur. N. S. ^h. * 14 Ir. Cum. Law Rep. 277. = Grant V. North of England Rtiila'tiy Coiiiptiiiy. <•./>. Caiiich, jn 1.. J . ch <>7o. •80 JOINT STOCK COMPANIES. And in sucli action it is necessary to set up that the scheme is al)ortive.' ]3ut the difficulty in this respect is now usually avoided hy a statement in the form of a letter of aiiplication authorizing the deposit to be applied to the payment of the preliminaiy expenses of the company." ■: f ' Hdvcs V. Stirling, 14 Ir. C. L. K. 277. A short form given by Thring is as follows: Gentlemen, — Having paid to your banker the sum of $ , I request you to allot me— shares in the — company, and I agree to accept the same or any less number that yon may allot me (subject to the articles of association), and I authorize you to apply the deposit of in the payment of the preliminary expenses ■of the company. CHAPTER III, FORMATION AND INCORPORATION OF COMPANIES. 1. Citation. 2. Interpretation of Act. 3. How Incorporated. (a) By Letters Patent. (b) Numhir cf Persuiis. {c) "A Body Corporate (tnd Politic" (d) Purposes or Objects. 4. Nature of Application. (a) Notice. (b) Name of Company. (c) Purposes or Objects, {d) Place of Business. {e)\ Amount of Capital, if) Division into Shares, {g) Names of Applicants. (h) " The Majority of Whom." 5. Petition and Contents. (a) The Notice. (b) Must recite the Facts. (c) And must state the amount of Stock taken by suck Applicant. (d) Contents of Letters Patent. 6. Evidence of Petition. {a) Before the Letters Patent are issued. 7. The Letters Patent. 8. Governor may change Name. 9. Notice of Granting Letters Patent. {a) Issue of Charter. 10. General Powers. (rt) Power to hold Lands. (b) Powers to Mortgage. (c) Pozi'er to acquire other Pro- perty. (d) Power to transact Business. (c) Power to Amalgamate. ( f^i Poiver to employ Agents. {g) Power to deal in Stock. (//) Power of suing and being sued. (/) Change of Venue. {j) Ultra Vires Transactions. 11. Change of Constitution. (rt) Change of Name. (b) Extension of Potvers. (c) Change of number of Directors. ((/) Change of chief place of busi- ness. (e) Sub-divisio)i of Shares. if) Increase of Capital, {g) Preference Shares. (//) Reduction of Capital. 12. Supplementary Letters Pa- tent. 13. Letters Patentto BE Subject to Act. An Act to amend the law respecting the Incorporation of Joint Stock Companies l)y Letters Patent. [Assented to 28th April, 1877.. T T ER Majesty, by and with the advice and consent of the Senate and ^ ^ House of Coinmons of Canada, enacts as follows : — I — Citation. I. This may be cited as "The Canada Joint Stock Companies' .ict. i877.' 7 B.C. mi W 1: if t i 1 ; i t 82 il JOINT STOCK COMPANIES. 2 — Interpretation of Act. 2a The following expressions in this Act, and in all letters patent ami supplementary letters patent issued under the same, shall have the mean- ing hereby assigned to them resf. 61. FORMATION AND INCOUI'OKATION OF COM"ANIKS. 83 drawbacks as well as its advantages. The i^ffect of the difference in method is to l)rinp; any proposed Joint Stock scheme, for which incorporation is sought, more directly under the scrutiny of the authorities, and to' give to the Governor in Council an opportunity of refusing in- corporation, should it seem to him expedient so to do. (h) Number of Prrnoiis. The minimum number of per- sons by all the principal Canadian Acts is five : by the English Act, seven ; by the code of California, five, but in many of the States no minimum limit appears to be fixed. (c) "A Body Corjto rate and Politic."' These are the same terms as are used with regard to the franchise of any other corporation, and are intended to convey full corporate powers and privileges in so far, at least, as they arc not restricted by the company's charter, and the provisions of tliis Act. ' (d) " Pi(rjy>seti or Ohjeetn.'" The division of legislative authority in matters of incorporation l)etween the federal and local legislatures, l)y the Act of Confederation, makes the definition of the "purposes or objects," to which this Act and the legislative authority of the Parliament of Canada extends, a matter of difficulty. Nor was it long after the consummation of Confederation before this difficulty made itself apparent. At the very first session of the Domin- i(m Parliament, we learn from a Parliamentary writer,' the (piestion arose on a numl)er of applications. But to under- stand the grounds of the decisions arrived at in these and subsequent cases, it will be necessary to refer to the clauses of the Confederation Act, by which the division of authority is made. By the 92nd section of that Act, it is provided that : — In each Province the legislature may exclusively make laws in relation to matters coming within the classes of subjects, next hereinafter enumerated, that is to say: — Sub-sec. 10. Local works and undertakings other than such as are of the following classes : » Vide supra / 52, ' Ted 1, Private Bill Practice, chap. 3. 84 JOINT STOCK CoMPAXlEi \ } (fl) Lines of steam or otlier ships, railways, canals, tele- graphs, and otlier works and undertakings, connecting the Province with any other or others of the Provinces, or ex- tending heyond the limits of the Pntviuce ; {b) Lines of steamships l^etween the Pronnce and any Jiritish or foreign country ; (c) Such works as although wholly .situate within the Province are hefore or after their execution declared hy the Parliament of Canada to he for the general advantage of Canada, or for the advantage of two or more of the Pro- vinces. Sub-sec. 11. The incorporation of companies with pro- vincial objects. Sub-sec. 16. Generally all matters of a merely local or private nature in the Province. The terms here employed, though intlieating, perhaps, as well as can be done in an Act of Parliament, the mat- ters which come within the purview of the Dominion and Local Legislatures respectively, have jjerhaps unavoidably left a great deal to future judgment and decision — to the merits of each particular case which may arise. Clause ((!), of the exceptions above enumerated, is e3i)ecially vague, and this vagueness the legislature has sought to overcome by throwing upon the Parliament of Canada the duty of saying whether such and such an enteiprise. either pro- jected or completed, is " for the general advantage of Cana- da, or for the advantage of two or more of the Provinces." If it is, it is within the authority and jiuistliction of the Pailiament of Canada. Cases in i>oint were two of those brought before the first session of the Dominion Parlia- ment. One was a bill to incorporate the jvoprietors of the Ottawa and Prescott Railway, by the name of " The St. Lawrence & Ottawa liailway Company," which contained a provision empowering the company to build a bridge over the River Ottawa, and to construct a branch to Lake Des- clienes, in the Province of Quebec. It was argued, how- ever, that this would not in itself justify legislation by the FORMATION AND INCORI'ORATION OF COMPANIES. 85 Dominion Parlianu'iit, in nfiTonco to a Railway Hituato wholly within ono Province, as it might aflford a dangerons precedent t(i parties desirous of evading the jurisdiction of the local legislatures, over works of a purely local charac- ter. The difticulty. however, was surmounted hy introduc- ing a clause in tlu' bill declaring that the railway therein referred to was. *' a work for the general advantage of (^anada." ' The other case was a bill concerning the Nor- thern Railway of Canada in which the same difficulty was overcome in the same way. The Bills, therefore, were passed under autliority of clause (r) above recited. Under clause («) also, several cases arose in the same Session, and several Bills were passed concerning com- panies whose operations lead directly into the United States. Of these were a Bill " To confirm a by-law passed by the directors of the Lake Memphremagog Navigation Company (whose steamers ply on a lake partly within the ter- ritory of the United States). To incorporate the Clifton Suspension Bridge Company, (international). AnA to authorize the carrying of gas-pipes across the river Niagara, in order to facilitate the lighting of the town of Clifton with gas, (international)." = Under clause il>\ no doubt appears to have arisen, nor does there appear any likelihood of difficulty concerning the interpretation of it, so that the question may be nar- rowed down to clauses («) and (c), instances of which have just been given, and sub-section 11 : "The incorporation of companies with Provincial objects." What is a company with Provincial objects? that is, must the objects of the company be exclusively Provincia;! ? or may it, under a charter from the Local Government, be authorized to transact business throughout the Dominion? ■ Todd, Private Bill Practice, 3rd Ed., p. 15. = Todd, Private Bill Practice. 3rd Ed., p. 17. See also European and Northern American Rnihwav Co. v. Thomas; Stevens' Dig. N. B. Rep., p. 762. 7^- 8G JOINT STOCK COMPANIKS. I ThcHo aro tlio principal qiustions which arise under this head, and ahout whidi \\\t arc concerned at present. Sev- eral instances of this class of cases also arose durinp; the first session of the Parliament of the Dominion. Two were pcititions for the incorporation of the Gore District Mutual Firc! Insurance Company, and of the Sorghum (i rowers Association of the County of Essex. The Committee, in each case, reported that, in their opinion, the matter came more properly within the juris- diction of the Local Legislature of Ontario." On the other hand, juititions for the incorporation of the iMerchant's Ex- ])ress Company of the Dominion of Canada, for the incor- poration of the Canadian Lake I'nderwriters' Association, and for amending the Acts relating to the Canada West Farmers' Mutual and Stock Insurance Company, were reported upon fuvourahly. and Bills introduced upon them were passed, and became law." The reason of the different conclusions in these different cases is not, how- ever, stated, and we «-an only infer that they proceeded upon differences in the circumstances of each case, and which pointed to the two first enterprises as of a more exclusively local character than the others which were more fortunate. This idea is supported by the discussion whicli took place on a petition to incorporate the Intercolonial Insurance Company, in which it was urged, on the part of the pro- moters, that the Company was desirous of transacting business in different parts of the Dominion, and were, therefore, in need of more extensive and general powers than could be conferred upon them by a Provincial Legis- lature, referring in support of their position to the case of the Jtaitli of Montreal v. lirthnrn-, in which it was hehl, that a fo- reign corporation, such as a ])ank, cannot maintain an action upon promissory notes received and discounted by them in the course of banking business in this Province, although they may maintain an action for money had and received to their use against the person for whom such notes were • Todd, Private Bill Practice, 3rd Ed., p. 18. FORMATION AND INCORPORATION OF COMPANIKS. 87 f the Dominion Government liahle to seizure for deht. Hi'' I, hy Bainville, J., sitting in the Superior court, that the Local Legislature had no such power. Very similar in effect with regard, at least, to the point in question, is the judgment just rendered hy the Prixy Council in Bourgouin and The Montreal, Ottawa A Occi- ' 22 L. C. Jur. 168. FORMATION AND INCORPORATION OF COMPANIES. 91 dental liaihvay Company. ' In that case the company, described in the deed as a body poHtic and corporate duly incorporated by statutes of the Province of Quebec, and of the Dominion of Canada, sold and convej'ed for certain consideration, all its right, title and interest in the uncom- pleted railway, which had in course of construction become a federal work, with all its appurtenances, and all the property, liabilities, rights and powers of the existing com- pany to the Quebec government. The appellants, under a Judgment against the company, seized its plant, etc., and were estopped from selling by an opposition, filed by the Attorney-General of the Province of Quebec, by which he claimed the whole of the property seized as the property of the Queen, for the use of the Province of Quebec. The appellants contested, on the ground that the transfer was invalid, and altogether inoperative to affect the obligations of the company. " They insist," said their Lordships, in de- livering the judgment of the court, "that, by the general law, and by reason of the special legislation which govern- ed it, the comi)any was incompetent thus to dissolve itself, to abandon its undertaking, and to transfer that, and its own property, liabilities, powers and rights to another body without the sanction of an Act of a competent legislature, and further, that the Legislature of Ciuel)ec was incompe- tent to give such sanction. This contention appears to their Lordships wi'll founded." fl ' • The same points arose, though in a more complicated form, in what is known throughout this country as the Pres- byterian Church Case. In that case, several dift'ereiit bodies of Presbyterians in Canada decided, in June 1875, l)y a large majority of the delegates present, to form v^ne United body under the name of "The Presliyterian Church in Canada." To this end a^jplication was made almost simultaneously to the Legislatures ot Quebec and Ontario for authority to give ett'ect to this decision, and to enable the new body to deal with the property of the churches so united. These ^ 3 I.' News, Mon. 187. l^i 92 JOINT STOCK COMPANIES. til churches had not previously l)een incorporated by any Statute or Charter, but when their share of the land known as the Clergy Reserve became fixed, an Act of the Legislature of United Canada (22 Yic. cap. 66) was passed to make provi- sion for the management and holding of certain funds of the Presl)y terian Church in connection with the Church of Scot- land, " now held in trust by certain commissioners here- inafter named, for the benefit thereof, and also of such other funds as may from time to time be granted, given, bequeathed, or contributed thereto." In accordance with the apphcation, the Ontario Legislature passed an Act, which vested all the property of the different churches so united in the united body under the name of " The Pres- byterian Church in Canada." Then came reservations and modifications of certain rights, and then, by section 4, certain legislation in Ontario, respecting the property of religious institutions is made applicable to the various con- gregations in Ontario, in communion with the Presbyterian Church in Canada. Section 5, declares) that all the pro- perty, real and personal, belonging to or held in trust for the use of any college, or educational, or other institution, or for any trust in connection with any of the said churches or religious bodies, either generally or for any special pur- pose or object, shall, from the time the said contemplated union takes place, and thenceforth, belong to, and be held in trust for, and to the use in like manner, of " The Pres- byterian Church in Canada." Sec. 7, then deals specially with Knox College and Queen's College in Ontario, and wiiL liliu Presbyterian College and with Morin College in the Province of Quebec. Sec. 8, deals with the Presbyter- ian Church of Canada in connection with the Church of Scotland, " Administered by a Board incorporated by Statute of the heretofore Province of Canada." Sec. 9, deals with the Widows' and Orphans' Fund of " The Can- ada Presbyterian Church," and "The Presbyterian Church of Canada in connection witli the Church of Scotland." Sec. 10, authorizes the new body to take gifts, devises, and bequests, and lastly, sec. 11, declares that "the Union of FORMATION AND INCORPORATION OF COMPANIES. 93 the said churches shall he held to take place so soon as the Articles of the Union shall have heen signed hy the Mod- erators of the said respective Churches." The legislation in the Province of Quehec took the form of two Acts, 38 Vic. caps. 62 and G4, the former respecting the Union of certain Presbyterian Churches, the latter, " An Act to amend the Act intituled " An Act to incorporate the Board of Management of the Temporalities Fund of the Presby- terian Church in Canada in connection with the Church of Scotland." The Act declares that the Union of the four Churches is to take place from the publication of a notice in the Quebec Gozctte, to the effect that the Articles of Union had been signed by the Moderators of tlie said respective Churches, it also adds a clause which says: "In so far as it has autliority to do so, the Legislature of the Province of Que- l>ec, hereby authorizes the Dominion Legislature, and the several Legislatures of the other Provinces, to pass such laws as will recognize and approve of such Union through- out and within their respective jurisdictions." The other of the Quebec Acts, transfers all of the whole of the Tem- poralities Fund over to the New Church, and confides its management to a Board constituted in a manner different from the Board under the old Act. The Union was per- fected in both Provinces in the manner prescribed by the Acts. From these circumstances arose first in Upper Canada the cases of Coican v. Wrvjht and Hall v. liitdiie,' in which the new or united body sought to restrain certain of the old congregations which had not entered their dissent in the manner prescribed by the Ontario Act from interfering with tl e new body in their use of the church. The question of the V stitutionality of the Act was thereupon raised, and it was contended that, " the whole question of these church properties as regards this union could only be dealt with by the Parliament of Canada, and not by the Provincial Legisla- « 23 Grant Ch. Rep. 616. I'i; r 94 .K)INT STOCK COMPANIKS. ifii ture."' Tlie same qufstion had been previously raised l)y " petitions addressed in the first instance to the Governor- General and afterwards to Her Majestj-'s Secretary of State, representing the serious and unprecedented infringment of rights, l)otli spiritual and temporal, and the setting aside of a Eoyal Charter passed under the Great Seal, proposed to he affected by these local Acts."= "On Novem])er 23rd, 1875, upon the recommendation of the Minister of Justice it was decided by the Governor-General in Council in the case of one of the Acts aforesaid (38 Yic. cap. 75), that it should be left to its operation, inasmuch as it dealt with matters with- in the competency of the Local Legislature, save only with respect to the seventh clause, which professed to deal with Presbyterian colleges at Montreal and Quebec, and with certain funds which are outside the Province of Ontario. These provisions were allowed to be idtni ritrs and ino^jer- ative, although the disallowance of the whole Act could not l)e advised on this account. On March 13th, 1876, the Governor-General transmitted the petitions and papers to the Colonial Secretary. In reply, the Secretary of State requested that the memoralists might be informed that he concurred in the opinion expressed by the Govenor-General in Council, that the Acts in question are now in full operation and no appeal can be brought against them, unless upon the plea that the Provincial Legis- lature was incompetent to pass them, " in which case it iroiild he open to test tliat qr<<'stion in a court of Itar." The complainants then availed themselves of the suggestion and brought the actions above alluded to. Judgment was ren- dered by the court in exact accordance with the opinion pro- nounced upon the Act by the Dominion ^linister of Justice. The validity of the Act itself was contirmed, save only as respects so much of the seventh section as claimed to deal with institutions and property outsidi' the limits of Ontario. That portion of the Act was declared to l)e iiltnt rires, but it was shewn that by legislation in the Province of Quebec this ' i?t' Goodhue, ly Grant, 360. ' Todd, Pari. Gov t. in the Colonies, 535. FORMATION AM) INCOKl'ORATION OF COMPANIES. 1)5 defect could be remedied, wluch removed all ground of objec- tion to the legality of the Statute and to the agreement be- tween the churches based thereuixm.' In the Quebec case, to which we now arrive, the Rev. Mr. Dobie, a minister of the Presbvterian Church in Ca- nada, in connection with the Church of Scotland, residing in Ontario, applied to the Superior Court, Montreal, for an injunction to restrain the new body from dealing with the Temporalities Fund. This application was refused on the same ground as that in Ontario, viz. : that under the clause of the British North America Act, giving to the Local Legislature power to make laws, concerning i)roperty and civil rights in the Province, the Act was ccmstitutional. In appeal the judgment was confirmed by three out of live judges, but of the three, one (McCord, J.,) was against the constitution- ality of the Act, but acquiesced in the judgment on other points. So that, with the Judge i^elow, opinion was equal- ly divided, and in point of fact, but for collateral questions the judgment in appeal would have pronounced against the new body, and the power of the Local Legislature to pass the Act in question. The remarks of the learned Judge who acquiesced for different reasons leave no doubt whatever on this point. He said : "As to the law of the case, I am of opinion that the Quebec Act, in so far as it alters the constitution, composition and succession of the Board for the management of the Temporalities Fund, is iiltni rircH. The Board in question is a corporation created by the Sta- tute of the late Province of Canada (now the Provinces of Quebec and Ontario) 22 Vie. cap. 60. It was created for the management of a fund derived from and existing in both Ontario and Quebec, and belonging to a Church, the territorial limits of which embraced both provinces, and the government or synodical management of which was not carried on in one province only, but in both. This cor- ' Todd, Pari. Gov'ts, in the Colonies, 356. I have chosen to quote the decision of Hlake, V.C., in C owan & Wright from Mr. Todd's excellent work rather than from the report itself, as, though not stated with strict legal accuracy, it gives the effect of the judgment in a very intelligible man- ner. 'if 1' i' :96 JOINT STOCK COMPANIES. poration was not created for a " provincial object " nor ^ as it a provincial character. On the contrary, it was created in the interest and for the advantage of both provinces. Being created for two provinces and applicable to them both, it can only be altered by a Parliament having power to legislate for these two provinces. The character and scope of this corjjoration could not cease or change by rea- son of the fund happening at anj^ time to be invested wholly ni one of the provinces, and of the place of business 'of the corporation being at that time within that province. The Board could at any time remove its investments and its place of business to the other province, and its powers of i-ianagemen: wt , wise confined to either province. The corporation s • a mere accessory of the property which it has to administer, and though the Provincial Legislature mny corAyol Vac " property" within its limits, .and even the "rights ' o^ tJ^e corporation in connection with that property, it cannot alter the corporation itself. If the legislative control of the property carried with it the power to alter the corporation the consequence would be, that if. as may be the case at any future time, one portion ■of the fund was invested in Ontario and the other in Que- bec, one Provincial Legislature could enact that the cor- poration should be composed of one set of persons and the other Legislature could ordain that it should consist of another set of persons. And the absiu'd conclusion would be that there would be two Boards of Management. It seems to me, therefore, that the provisions of the Act, 22 Vic. cap. 66, respecting the composition and formation of the Board have not been set aside by the Quebec Act, 38 Vic. cap. 64, and are still in force, for it is evident that they could not be set aside by the mere action of the Synod. It is true, as the respondents say in their factum, that it was the Synod who devised the mode of election and got the Act of Incorporation, but it required a competent Le- gislature to create the corporation and to establish the mode of election of its members, and the Synod could no more .change the corporation by altering that mode than it could FORMATION AND INCORPORATION OF COMl'ANIKS. 97 It le le Id in tlie first instance create the corporation. Consequently tlie present Board, which it is admitted is not com- posed of tlie persons or in the manner prescrihed by the Act, 22 Yic. cap. 66, is iHcgally constituted." And Ramsay, J., who reviewed the whole argument against the constitutionality of the Act in a very able and elaborate maimer, said : "As a fact, it is admitted that all the propert}' and money of the Temporalities Fund is situ- ated or invested in the Province of Quebec. The respon- dent, relying on sub-section 13 of section 92, B. N. A. Act, which gives legislative power to the Provincial Legislature over ' property and civil rights in the Province,' contends that, having full control over all property, the Legislature of Quebec has full power to deal with all property which may exist in the Province of Quebec, and consequently that it has the power to confiscate the funds of the Presbyterian Body situate in the Province of Quebec, and present them to some one else, and that this has been done. On the other hand, appellant contends that the Local Legislature has no right to incorporate any companies but those hav- ing provincial objects [lb. section 11), that this is tanta- mount to saying that the right to incorporate companies with other than local objects is exclusively reserved to the Dominion Parliament (Sec. 91, L. S. P.), that the board of management vvas an incori)oration for other than provincial ^)bjects, and therefore that it could not have been created a corporate body by a local Act, and consequently that its act of incorporation cannot be altered or amended by any local legislature. 1 must confess that the sections upon which tlie contending parties rely, to me appear to be ir- reconcilable by themselves. If the local power to legis- late over property and civil rights in the Province is to be -interpreted to mean over 'all' jjroperty, etc., then the j)ower of Parliament to incorporate is illusory. In practice it never has been contended that property means all pro- perty. Railway companies incorporated by Parliament, for instance, hold and manage their property under Dominion laws, and such companies evict people from their private 8 8.C. ^r :\ 'II 08 JOINT STOCK COMl'ASIES. property under Dominion laws. No one will venture to- affirm that a local Act could confiscate tlie property of hj- railway company incorporated by Parliament, or transfer it to another company or person: * ♦ * ^ * * nor could, l\y parity of reasoning, the Local Lep[is- lature confiscate the surplus funds of a bank on the pretext that it was property in the Province. It is impossible to conceive more obvious limitations to the right to legislate as to property, than these." And further on, answering the remai-ks of Blake, V. C, in Cowan v. Wrlfjhf, the same learned judge says : — " There is a sort of floating notion that by the conjoint action of different legislatures the incapacity of a local legislature to pass an Act may be in .some sort extended. Section 15 of the 38 Vic, caj). G2 (Quel>ec>. seems to have- been added under the infiuence of such an idea. By it the Dominion and Local Legislatures are ivrmitted to recognize and approve. I cannot luiderstand an\-thing more clear than this, that the Local Legislatures, by corresponding legislation cannot in any degree enlarge the scope of their powers. When the question is between the authority of Parliament and that of a Local Legislature, the forbearing to legislate in a particular direction by Parliament may leave the field of local legislation more unlimited. This is the only bearing I can conceive the case of the Union St. Jacques and Belle Lsle can have on this ease. What the Privy Council held in that case, was that a special Act for the relief of a corporate body did not fall within the mean- ing of "Bankruptcy and Insolvency," iB. N. A. Act, sect. 91. s.s. 21) and this more particularly as there was no Do- minion Act with which it interfered. It is, therefore, dead against the pretension of respondents in this case, for the legislation objected to upset a Dominion Act, that is to say, if corporations which have not alone provincial objects (provincial according to the meaning of the B. N. A. Act, i. e., relating to one Province under the Act) created before Confederation, are under Dominion Laws. On this point there has never been a doubt. For instance, the Acts of 1 rORMATION AND INCORPORATION OF COMPANIKS. 9r» incorporation of the G. T. Piailw.\y, an old Province of Canada incorporation, have been amendi'd by Dominion Acts, never ])y local ones. * * * This appears to me to be decisive in the present case, and I feel myself C(mipelled to come to the conclusion that a local act which disposes of the property of a corpora- tion created by a federal law is unconstitutional." ' The difficulty which has tluis arisen from ui)parently conllicting clauses of the British North America Act, does not appear to be altogether insurmountable. It is a well known rule of interpretation that languagi' must be interpre- ted in that sense in which it will have effect, ratlur than that in which it will have none, in that sense in which its ai)plicatioii will be practieable and not impracticable. And if the words *' property and civil rights in the Province," are held to mean " all property," and under all circumstances, general as v.ell as special, it will be found that in elfect the appli- cation of them in that sense is impossible. As pointed out Ity Pamsay, J., such an interpretation of them W(.uld bring them into hopeless conflict with rights which are undoubt- ed, and, as in the cases cited, with other provisions with which it would be impossible to reconcile them. They would be found to be in direct collision with almost every clause of the preceding section, which enumerates cate- gorically, the powers of the Dominion Parliament. But, if those words are interpreted to mean the power of mak- ing general laws, with regard to "property and civil rights in the Province," they will be found to have an intelligible meaning, and one capable of application, without danger of collision with other provisions of the same Act. In delivering the judgment of the Court, in L'Union St, Jacques and Belisle (which, by some strange view of its effect, has been quoted in favor of the constitutionality of the Acts in the Presbyterian Church case). Lord Selborne » 3 Legal News, 244. I have felt myself justified in quoting thus largely from the remarks of the dissenting judges, because, as stated in the text, the judges who agreed as to the unconstitutionality of the Act (which is the only point which concerns this work) were really a majority of the court. ii I fl 1(K> JOINT STOCK COMPANIES. m I •! said: "lint tlic onus is on the respondent, to show, that this h(>inf; of itself of ii local or private nature, is comprised in the enumeration of the classes of suhjects especially enmnerated in the 01st section. Now it has not been al- leged, that it comes within any other classes of the suhjects, so eiHunerated. except the 2lHt, ' Bankruptcy and Insol- vency." and the question, therefore is, whether this is a matter comin*; under the class 21, of l)ankruptcy and in- solvency ? " Their Lordships observed, that the scheme of enumeration in that section, is to mention various cate- f^ories of r/t'iirnil suhji'i-ta, which may he dealt with hy legis- lation. There is no indication, in anv instance, of anvthinK he- in- parently w'as otherwise a perfectly legitimate exercise of the power conferred upon them, by clause 13 of section 92, came into conflict with the rights of the Dominion Parliament, us conferred by section J)l ; while, in the Church case, the Local Legislatures, by passing Acts for the incorporation and regulation of an institution extending over both provinces. have over-stepped the limits prescribed for tlu'mselviis in such matters by no less than two clauses of section 1>J. viz.: clause 11, which confines their powersof incor )oration to companies with provincial objects ; and clause 1(5, which ' The case of McClanaghan v. St. Ann's Mutual Buildiiijf Society, referred toby Dorion, C. J., in Dobie v. Ttiiiponilitics Board, is scarcely a case in j)oiiU as not only is there no authority under the B. N. Act for legislation by the Dominion Parliament in matters of societies whose operations are confined to one Province, but independent of the clause which gives to the local legislatures jurisdiction in matters of property and civil rights under legisla- tion, it is opposed to the clause which gives to them control in all matters of a purely local or private nature in the Province. ,f 102 JOINT HTOCK COMI'AXIKM. says: " (iciU'riiUy all matters of a mcrchiocal or private imtiu't! in tin' ProriiKr." The rule lU'diiciblc from these cases tliero- I'ore wonllace of business: 4. The intended ; To sue or he sued in a foreign country ; III re (ieneral listates Co.. ex. p . City Hank. L. K., j ch. 758. " In rf Hritish & Foreign Cork Co., Leifchild s Case, L. R., i Ecj. 231. ' In re I-t)ndon, Hamburg and Continental E.\change Hank, Znlih't,i'i Claim, L. K., 5 ch. 444. < Vidf sec. .^2, poal. '' See further on this point, sec. <')0, />ost. and concerning the right to establish agencies, sec. 86, post. •^s n 106 JOINT STOCK COMPANIES. n n To sue 01' be sued any where, but where such chief place of ])usiness is situated. ' The first of these questions is a very pecuhar one. Ile- <;arded from the point of view of the common hiw it would involve merely the right of a corporation to do business in a foreign country, and therefore one necessarily governed by the law of that country, in which it attempted to estab- lish a part, or the whole of its business. "Were a company created by special Act, for instance, with poiri't; specially conferred, to do business in the State of New York, the only point which would arise in connection with the estal»- lishment there of its business would be — will its existence there be recognized by the law of the State of New York '? But were a company formed under the present Act to es- tablish business in New York a difterent (piestio'i would arise, viz. : " Has it power under the Act, and under its charter to extend its businiiss into foreign jurisdictions i" This question is one of some importance as involving the securitv of the shareholders and creditors, but it does not appear to have been raised in England under the Acts of lHfi*2 and 18G7, nor do these Acts make any provision rt- garding it except the language of section 211 may be taken as throwing some light upon it. By that section it is ixrmitted to Joint Stock Companies to change their regis- tered office "from any one part of the United Kingdom to any other part thereof," upon application, etc., but no- where is any jmwer given to a comi)any to carry its business, or any part thereof, into a foreign jurisdiction. But the first question, viz.: as to the ri;ilit of a company to carry on business in a foreign jurisdiction, has been the sultject of nuiny interesting decisions. " In the United States," says Brice," " where the same question has been raised, the decision seems to be absolutily nuC without qualification in the negative. A corporation ' And the converse of these questions is raised by clause Ti of this sec, pust. - Ultra Vires, p. y FORMATION AND INCORPORATION OF COMPANIES. 107 van have no legal existence out of the boundaries of the :5()vereignty by wliich it was created. It must dwell in the place of its creation, and cannot migrate to another sover- •eignty." But this doctrine, which is given as arising out of decisions rendered in the United States, must not, as the >-anie writer points out, be taken too literally. In a mnnber of later decisions this statement of the law has been very much modified, not so as to establish any in- Iierent right in a company to do business Ixnond the juris- diction in which it was created, but so as to recognize tlu- practice of allowing them to do so in conformity with the laws of the fort'ign state. The principle, as now regarded. was well stated in Diinit v. The Citif of Cliicdfio,' in which it was said that the right of a corporation created in one stati' to do business and make contracts in the full enjoy- ment of its powers in another state, is a right based upon the comity between the states, and is a voluntary act of the sovereign power, but when contrary to good policy or l>rtjudicial to the interests of the state, the comity ceases to be obligatory. And an averment that the defendant is a foreign corporation, recognized under the laws of an- other state, is a sutticient averment that the defendant is a <-itizen of such state. The right therefore of a company to do business in ;i foreign jurisdiction, cannot be regarded as inherent, but bestowed. And so far has the ai)plication of this principle been carried, that in two judgements rendered by the On- tario Court of Appeals in March and May 187'.>, concerning' eeitain Insurance Companies, it was held "that, while the re- gulation of trade and commerce in Canada was within the exclusive jurisdiction of the Dominion I'arliament, and wliile that parlianu-nt was competent to incorporate com- panies to transact insurance business throughout the Dom- inion, with liberty to enter into such cctutracts as should come Mitiiin the designatt'd purposes of tlu' ccunpany; yet that it Su. ("t. 111. 4j('>. L'. S /i.i Co. V. Kiiiitr.c. Su. Ct , 43. *l!j if: m\- i i .ir ^ 1 1 '■'■■I I IS -III 'iill 108 JOINT STOCK COMPAKIKS. had no power to confer privilefi;eH to bo exercised witliiu any of the Provinces, except with tlieir assent and recof^- nition, and could not authorize a company created by I Jo- minion le^ishition to make contracts in i)articuhir provinces, (xcept as the iej^ishiture of the i)rovince nii<^ht ratify ami approve. Anif jn-oiinrial hufinJaturc icdn coiiqn'tfiit in if< discretion to exclude a Pominion corporatittn from ciitcriini into contractti ;(»f insurance; within the limitx of the pnn'incr, or might exact \'hatever security they sliould r a particular kind, the courts of the state in which such l)usiness is conducted will presiwne that they act under a general, and not a limited authority.' So that the solution of the (piestiou depends upon tvvi*- things, viz.: 1. Tho jxnreni enjoyed by the company under its charter of inc(n-poration, and the law under which that charter was granted, and '2. its rii/ht, imder the law of th(? foreign state, to establish itself and do business .hei'e. That a state has the power to authorize a company " to migrate" and establish itself elsi!where, there appears to be no more reason to doubt than that it has the power to authorize an individual to do so. For a corporation is a person, though an artificial one, created for a certain object, and if, in furtherance of that object, it is found expedient to open a ' Tcxld, I'arl. (Jov't. in the Colonies, p. jyS. • If this somewhat stai tlinj^ prnnosition be correct, it would seem to l>s desirable that each Province should enact a general law to cover the point A'<;i' Kiigltiiid, fti., Ins. Co. v. Htuhrovk, J2 Ind. 447, Su. Ct., irtGij Alt FOUMATION AND INCORPOHATION OF COMj'ANIKS. 109 )>vam.l! estsiMishinent siud carry on Imsiiioss in a foreign ♦•.ountry, if that c-oinitry is willing to receive and recognize it. there seems no good reason why they should not he em- }>owered to do so. JJut th«' (juestion arises, can companies formed under the ja-escnt Act he so empowered '? And if we con- sider the language of sections 00 and 80,' we must come to llie eon(dusion that they cannot heyond the limits therein sp«(.-ially mentioned. On the principle cxpirHnio iitiivs e>-- ilnsioaltrriiis, tht authority given hy the Acttoenahle coni- j)anies formed under it to carry on husiness elsewhere than in Canada, ui' it l)e held to he confined to the places there- i)i mentioned : and that a company contemplating doing ])usiness in or extending its husiness to the United States, for example, woidd require a special Aet of Parliament to y the connnon law to foreij^^n companies and corporationn, esjH'cially those or>eyoud the jurisdiction in which it was created, it can also sue an«l be sued anywhere W ithin it, no matter whether such place l)e its chief place of business or not. The object of having a fixed legal domicile is for settling the place of ser\-ice of process or similar notice, and not of limiting the jurisscrilx*d and actually paid in, and only then at the beginning of its career. After a com- pany has been in actual existence for a length of time a knowledge of the actual condition of its affairs is the only safe guide to its trustworthiness. Losses may have occurred in the course of its operations by which its capital has become seriously impaired, and as the members cannot be looked to, where the capital is all paid up, the actual means in the hands of the company is all that the public have to rely upon for a settlement of its indebtedness. " If !i FORMATION AND INCORPORATION OF COMPANIES. lis the company," says Thring,' " intend to conduct a business dependent in a great degree on credit — by banking or dis- counting bills — and be formed on the principal of limited liability, the nominal capital should be considerably greater than the immediate necessities of the company require, as the balance remaining uncalled, will, if the shares are in the hands of substantial holders, be a sufficient security for the cred- itors. On the other hand, if the object of the company be to purchase u park, * * to make gas works, or to do any other work in which the current expenses will be small as compared with the cost of acquiring the property, the capital should be of adequate amount to make the proposed purchases, but need not leave a large reserve, as there will be no difficulty in raising money on the security of the pro- l>erty."' And by another authority,' it is said that " the amount of the capital stock of a corporation is not j><;r se a limitation of the amount of property, real or personal, which it may own or, by implication, of the amount of its liabilities or outstanding obligations, but is rather regarded as the sum upon whieh calls may be made ui)on subscril)ers and dividends are to be paid to stockholders. Accordingly, where the capital stock of a building corporation was one million dollars, it was held, that this did not restrict the company from expending in their buildings two million dol- lars, and from incurring del)ts on bonds and mortgages for the excess of cost beyond their capital — their power to take and hold real estate, being in other respects unlimited by the terms of their charter." Its nominal capital, as will be seen below,' may be reduced or increased from time to tiuii' as circumstances appear to warrant. (fj ]>irision into Shares. The division of the capital into shares payable to bearer is of course one ot the most strik- ' P. 132. -■ Angell & Ames. Corporations, sec. 131. ' I'itfc sec. 20 et seq., post. 9 s.c ^■i 114 JOINT STOCK COMPANIES. i • 1 ing features of a company organization as distinguished from an ordinary partnership. It is this which enables all the world to contribute to its capital fund, by which its membership may undergo daily alteration without any derangement of its corporate functions and which gives generally that elasticity to a company which forms its chief advantage. (( " Tlie amount of each share," says one writer,' " is a matter for much consideration, and will differ according to the nature of the comi)any." " If the objects of the com- pany be popular," says Tlning, " it may be advisable to make the shares of small amount, with the view of attract- ing numerous applicants." No limit is now placed as to the amount of each share, t'ither by the Canadian or Imperial Statutes, though for- merly, under the latter, the shares could not be less than 410. (//) Xami's of Applianitii, ftc. The mention of the names of the applicants is of eom'se, but the object of the mention, in the notice, of the names of the provisional directors is not so ol)vious.' The idea, probably is to give the Governor in T'ouncil some criteria by which to determine the expediency, or otherwise, of grant- ing the letters patent. But the names of the di- rectors always, in the interests of the company itself, form part of the prospectus and other public announcements, in order to enable the public to judge of the advisability of taking part in the scheme, and these names can always be verified by the books and records of the company. (/t) The majority of Whom, etc. This clause raises the converse of the question discussed under clause 3,' viz. : the right of foreigners and of foreign corporations to do business in this country in a corporate capacity. That a ' Chadwyck-Healey, Joint Stock Companies, p. 33. ^ No such provision is found in the Imperial Act, 1862, or its amendments. i Vide supra. FOr.MATION AND INCORPORATION OF COMPANIKS. 115 foroifin corporation can flo bnsincsK hero is governed by the Hjimc rule as that hiid down under the clause just alluded to; but to obtain the ])enelit of the Act, the majority of tlu; corpor- ators must reside in Canada. This would exclude foreign corporations from ol)taining corporation here, if they found it to their advantage to do so, but whether it would pre- vent a foreign corporation from forming, with others resi- dent here, a new corporation here, qiuerc. In England no such restriction is made. In re General Company for the promotion of Land Credit,' it was said that if it appears from the memorandum and articles of association, that some kind of management and business in England is contemplated, the company comes within the provisions of the Companies Act 1862, and may properly be registered under that Act, although all the subscribers to the memorandum and all the directors are foreigners re- siding abroad. And in Princess of Reiiss v. Bos," the de- cision went still further, and said, that foreigners on com- plying with the regulations of the Act, may obtain incor- poration under it, though the business of the company seems intended to be transacted abroad, and though some of the shares are not registered in conformity with the Act. And in the United States also, there appears to l)e no impediment to residents of a foreign state obtaining incor- poration there. Indeed in several cases, held that the members of a corporation are legally presumed to be citi- zens of the state, by the laws of which tlu; corporation was created.^ But though the members comprising it be all foreigners, the corporation itself will be a subject of the state by the laws of which it was ii)Corporated. In other words out of the foreign elements, an artificial citizen is created with all the rights and liabilities of citizen- ' L. R., 5 ch., 363. ' L. R., 5 H. L., 176. 3 Hobhs, ct 111. V. Manhattan Ins. Co., Su. Ct. of Maine, 583; Mannfnc- turcrs' National Bank v. Caack. ct al., C. C, N. V., 93; Withrow's Corpora- tion Cases. m^ II no JOINT STOCK C0MPANIK8. Hliip as far as it is capable of possessiiif^ thfin.' But though this ho so, the means possessed hy this artilieial citi/iOn will he such, and such only as are contributed to it by the foreign elements of which it is composed, and the security of its creditors beyond this, must for the time being at least, be looked for in the State to which such foreigners belong and which is often ditticult to reach. Honce no doubt the restriction embodied in this clause. A foreign corporation carrying on business in this country would seem to stand under the same objection, but the posi- tion is not altogether the same. There the whole body is foreign and has no pretence to citizenship. Those dealing with it may do so with a full knowledge and consciousness of the position in which they stand and the security to which they nnist look. And even in those cases where the tninsacti(ms involve extensive int(!rests, as in the case of foreign insurance companies, the government undertakes for the security of its subjects to exact such a dejiosit as will secure and guarantee its obligations. And where such corporations sue in the courts here, though they may have a general office and place of business in Canada, and even where a deposit has been made as above stated, the rule appears to be, that security for costs will be required to be given to the opposite party. ' On this point, however, the decisions conflict somewhat, as in the (ilol)c Mutual \. The Sun Mutual, in the Province of Quebec, Dorion, -T., held, that security for costs was unnecessary.' 4. — Petition and Contents. 6. At any time, not more than one month after the last publica 'n such notice, the applicants may petition the Governor-Gener: Ji the Secretary of State of Canada, for the issue of such letters ] ' Commissioners of Pi'iin.\. The Quicksilver Mining Co., Su. Ct., t . S 57 ; Withrow's Corporation Cases. ' Niagara District Fire Ins. Co. v. Macfarlanc, 20 L. C. Jur., 224; The Globe Mutual Life Ins. Co. v. The Sun Mutual Life Ins. Co., i Leg. News, p. 139. ' I Leg. News, p. 53; regarding service of process, see sec. 61, post. FOHMATION AND INCOIU'ORATION OF COMI'AMKS. 117 2. Such pciifir)!! iiiiist fecitc the facts st-t forth in tht- notice, and n)iisi further slate the amount of stock taken by each applicant, and also the amount paid in upon the stock of each a|)plicant, and the manner in which the same has been paid m, and is held for the Company; 3. The anKr^'K-itt^ "f the stock so taken must be at least the one-half of the total amount of the stock of the Company ; 4. The afjurenate so paid in thereon, must if theCotnpanv be not a f-oan Company, be at least ten per cent, thereof: if the Company be a Loan Company the aKgregate .so paienehcial to corporations may l)e presumed to have been accepted."' And in Loijan v. McAUiittvr,' it was held, that organizing and acting under a charter was suttieient evi- dence of accei>tance. And the same with amending idiarters.-' In Perkins v. Saudem,^ a charter of incorporation pro- vided that the pers(ms therein named, "and also others who are now or may hereafter become associated with them and their successors and assigns, be, and they are hereby created, a body politic and corporate, under the name and style," etc. Jlchl, that this provision was not a proposition to create a corporation upon the p«'rformanci' of precedent conditi(ms, but was the creation (^f the corporation, requir- ing no other Act but the acceptance of the charter by the corporators, and if they applied for the grant of the charter li ' Angell & Ames, Corporations, sec. 8i. -• lb. t 2 Del. ch. 176, Abb. Dig., Vol. II. ■• Kenton Co. Ct. v. Bank Lick Turnpike Co , 10 Bush 521J, Ct. of App. Ky. If .874. 5 Miss. 7i3- f ' 124 JOINT STOCK COMPANIES. that was an acceptance in advance. The provision that the capital stock of the company should amount to $60,000, and that it should be divided into shares of $100 each "did not make the subscription of the $60,000, a condition pre- cedent to the organization of the company by the election of directors, a president, and a secretary, it being expressly provided in the charter, that the corporation might make all rules, by-laws, and regulations for the management of its business, property and effects and the transfer of the stock, as to them may seem best." Under these provisions the president and secretary of such company, who wer<) elected before the $60,000 was subscribed to the capital stock, could bind tlie company by a contract made afte;; sr.ch subscription, if it was within the powers granted the corporation. And where an Act of incorporation has been accepted, and the company organized provisionally thereunder, the subsecpient withdrawal of some of the corporators cannot affect the validity of the acceptance." In this coun- try the question of acceptance of a charter does not appear to have arisen, though in the Canndu Car, etc., Co. v. J{arn. Subject to the special provisions herein contained respoctinj{ Loan Companies,' every Compan\ so incorporated may acquire, hold, sell and convey any rcil estate, reepiisite for the carryiniJ »>n of the undcrtakin)? of such romp.uiy. and shall forthwith In-come and be invested with all pro- perty and rights, real and personal, theretofore held by or for it under any trust created with a view to its incorporation, and with all the powers, jirivile^es and immunities re(iuisite or incidental to the carrying on of its undertaking, as if it were incorporated by a special Act of rarliament, embodying the provisions of this Act and of the letters patent. (a) power to lioU lunds. — The jKtwer to punhase lands, and to hold them for the l)i'netit of tlu-niselves and their suc- cessors, l)elon{,'ed to corporations <,jenerally l>y the common law.' This power, however, from a very early period was re- strained in Phi^dand l»y certain Statutes known as the Sta- tutes of Mortmain, which, in effect, prevented any hody, corporate or individual, from acquiring lauds which might come into mortmain without license of the Crown. This is the position of common law con>orations at the present day. " The license is grante«l imder the privy seal or hy letters patent," ' and, as a ruU-, forms part of its charter of incorporation. This license usually specifies the extent to which the cor- poration may hold land, hut if it d»X'S not. that is to say, if it he empowered to hold hind generally without any limit being fixed, it is empowered to acquire ml lihitian.* In the ease of Joint Stock Companies, the power is con- ferred hy Statute, as hy this section, but only within the limits therein indicated. "Without some provision of this kind (/.(■., without the power heing so conferred) a commer- cial C'lrporation, however greatly its enter])rise might re- (piire and point to the actpiisition of lands, would ho as ' Special provisions, with regard to Lt^n Companies and forming part of this Act, will be found, post. ■■ Hlackstone, cap. i8. Of Corporations. ' lirice, ultni vires, p. yz. * lb., p. 73. FORMATION AND INCOUI'ORATION OF COMPANIES. 127 much within the Statiit«'s of Mortmain as any other kind of corporation." ' Thus hy the civil code of the Province of Quehtc it was enacted that the diHal)ihties to which corporations are subject are inter alid," those comprised in the Ki'iieral laws of the country respecting mortmains and l)odies corporate, prohihitin}^ them from acquirinfj; immove- able property, or i)roperty so reputed, without the permis- sion of the Crown, except for certain purposes only, and to a fixed amount and value.' And except where the power to hold lands is conferred hy le<^islature or other competent authority, the disahility ai)plies to tradinj^ companies and corporations as well as others. This was well settled hy the judgment of the Privy Council, rendered in 1878 in Tin- ChaiKlitrc Gohl Miiiinif ('ompanif v. l)e.sheen evicted of the land Ijy subse(jueiit i)at(ntt'( s of the Crown. It was contended on behalf of tiie defendant, that by the law of Lower Canada, corporations could not ac- quire land, or an interest in it, without the license of the Crown, and consequently could not maintain an action for defect of title to land so acquired. The company replied that thf disabling law did not apply to trading corporations whether foreign or domestic, and further, that, if it did em- Inace them, such corporations were not incapacitated from i ' Drice. i«//r«i vires, p 74. ' Civil Cotle of (Juelwc, Art. 366. » 17 L. C. Jur . 275 ; 4 Kev. Leg., 645. lli ^p 12« JOIST STOCK COMPANIES. acquiring, hut only from holding lands, and that, in cither view, tht'ir action was maintainahle. The company were defeated on all these points in all the courts, and in deliv- ering the final judgment, their Lordships of the judicial com- mittee of the Privy Council stated the law on which it was hased in unmistakeable language. After referring to the French edicts of 1743 and 1749, regarding lands held in mortmain, they cited the opinion of His Honor, Mr. Justice Badgeley, of the Queen's Bench, as containing the correct view of the law under the code on this point and which said : " Whatever doubts might have existed heretofore as to the prohibitive application of the old law with reference to merely trading corporations, they have disappeared since the promulgation of the code which has declared these old law prohibitions to have been, and to be our provincial law. The terms of the code ai'ticle ' are too plain for u doubtful construction, and in their generality embrace all corporations (secular, lay or trading) and subject them all to the same disqualifications to acquire real property without the Royal or legislative i)ermission first had and obtained." And their Lordships go on to say, that for these reasons they " think the Court of Queen's Bench was right in hold- ing that the appellants were incapable without the license of the Crown, which it is not averred they possessed, to acquire any title to the lands sold to them by Foley."= It may therefore be considered settled law, that in the Pro- vince, of Quebec trading companies are like other corpora- tions, subject to the prohibitions concerning the holding of lands without permission of the Crown or legislature as by the present section. In the United States, according to an eminent writer, 'the « Viih- supra, p. 127. ^ It was also stated in the judgment of their Lordships that the opinion expressd in Kierzkowski v. The Grand Trunk Railway (before the C'ode) to the effect that trading corporations were not gens tie mortmain must be consitlered overruled by the Code. But one result of this important case was an Act of the Quebec Legislature, empowering British or United States corporations to hold land in that Province for their occupation or the purposes of their business, but no non-trading corporation to hold more than ten acres. Vide infra. I 2 Kent. Com,, 229. FORMATION AND INCOIU'OR ATION OF COMrANIt> 129 i\ Statutes of Mortmiiin. have not been picnerally re-enaoted or acted upon. In PenuHylvania, the Supreme Court held the English Statutes of Mortmain to be the law of that State, but this is understo'xl to apply to " dedications of property to superstitious uses, or grants to corporations without a statutory license. But it may be inferred from the special power given to various corporations by Acts of tlui State Legislatures to hold real estate to a certain limited extent, that statute corporations created for special objects would not have the power to take and hold real estate for purposes wholly foreign to those objects." ' But in a numbei- of cases held that the question could not be raised collat- erally, but must be by direct action." Companies created under the present Act are by this section authorized to "acquire, hold, sell and conviy, any real estate," but only in so far as is "requisitt' for the carrying on of the undertaking ;" and the (juestion naturally arises, what do these rather general terms include:^ And what would be considered as going beyond such limitation".' it is nuinifest that no detinite answer can l)e given to this question, and that it would have to be decided according to the circumstances of each particular case. Instances, how- ever, arc recorded which serve to throw some light upon it.' In England, on the winding up of a company, a landlord's claim was objected to on the ground that the taking of the premises was in excess of the powers of the company, inas- much as they had k't otf a portion of the premises which they did not recpiire, to others. Hild, that the real test of the (question was whethei they had taken the house for speculation or for their own purposes, and as it could not be shewn to have been taken for other than the actual purposes of the company, the landlord's claim was admitted.* ■ Angell & Ames, Corporations, sec. i^y. » Abb. Dig.. Vol. II., 47j. ' These instances would doubtless have been much more numerous, but for the fact thai no such restriction is found in the English Act of 1S6.;, jind conse(}uently no cases have arisen under it. * Horsev's Claim, L. U . 5 Kq. 561, and .see Hrice, Ultra I'ircs, p. 108. 10 s.e. ^n #lll 180 .lOINT STOCK COMI'ANIEH. And in tlif United Staks it was held, that a canal com- pany may purchase more hmd than the precise (piantity nee(h'd for the thnsad of tlie canal, and divide the excess amon}^' the stockhohlers, or dispose of it in any lawful niainier.' But held also, that land which a company can- not hold in its own name, it cannot hold in the name of another. Thus where hy its Act of incorporation, a hank \vas empowered "to hold such lands as were Ikuki jiilr mort- gaged or conveyed to it, 'in satisfaction of dehts previously contracted in course of its dealings,' the Supreme Court of Pennsylvania adjudged that a conveyance in trust to permit a corporation, which could not accept of the kgal title, to receive the rents and profits, or a conveyance that in any shapi! would entitle the corporation to he put in possession, wouhl he as nnich a violation of the law as a direct convey- ance of the legal title." ' And where the company has a limited right to acquire nnd hold lands, as under the present sectitm, the hurden will he upon the person ohjceting to shew that the acquisi- tion ohjected to was unnecessary.^ (/>) Poirrr to inortnafic — Vnd the power to hold land includes the power to sell or mortgage within the same limits. And in Watts' appeal,^ held, that such power was implied in an exju'ess power to the directors to disi)0se of its land hy deed of lease to the extent of securing a proper deht. ((') Power to ((cqitirc other propcrti/. — Immediately upon the issue of the letters patent, i. e., from the day of the date thereof, the company hecomes invested dc jdano, and without special transfer or any other formality whatever, ' spear V. Craic/ord, 14 Wend. 22, and see I'roffatt, Corporations, p 90. • Coleman v. S. R. T. R. Co., 4 he rtdundant, as a cDiiipany can hai'dly he said to liave held anything,' h/i itself licforo it had ail cxistenc-c,' and its lejj;al (Aistciicc dates tuily from the date of its incoriioratioii. l>ut tiaai^h a foinpaiiy could have had no rights irhidi it ciuilil ni' itxili'lmrr ininnnl prior to that jx'riod, it may ha\f existed as a company under a voluntary organization, and may have luld proi)erty and transacted luisinesH as such in so far as thcM- were iu Thorn J52, Su. ("t 1S7;, Abb. Dig., Vol. II. Wif mm ia2 JOINT HTOCK COMI'ANIKS. m u.iiml niiimicr. and tliose lioldin*; it would, as we have seen,' !)(• Iicld so to tniiislVr it without cliarj^u' or profit, other than the coniiiiiny. iitttr itsor^Minizatioii. niiiy a^rcc to pay them. 'lliUH also in tht I'rovinei of (^)iiv Imc a ri«,dit in (II to an action ('(tuld he assunu-d hy a reprise iV itiitaiirr.' I)ut. iiii(ir<\ whcthi'i- the coniiiany under, till' Code of l'roee(hn-e of the Provinei- of Quebec, wouhl he ohli;^'ed to take up the iiistain'e in a suit eoni- nicnced hy trustees or i;ronioters coiu'ernin^' rifjjhts since Vested in it l»y the ineli( it. It says that "all actions, suits, and other lc;j,ai proceediuf^'s. as may at the tini" of the rc^'istration of Mie compiuiy ' ' * have liet n commenced hy or ai^ainst such cnmiiany, or the piihlie oihcer or any memher tliereof, may he continued in the same nninner as if su(di rci^istration had not taken place; nevertlu'less e\«'c;ition sliall not issut- aj,'ainst the etVects of any individual niemher (»f su(di compnny upon anv jii('.;j;meiit, decree, or order, iilitained in any action, suit, or proceeding, so connnenced lis aforesaid, etc. 'I'his clause, however, it miul lie lionie in mind, refers iiicrelv to cDiiipanie^ which have existed i»revioiisly uiuh'r t'lV-reiif autlK'rity, nnd ohtain refj;istration under the Act nl |K(»2. With re;.;ard to compaiiii ■- havine \ut previous corporate existence niinirr. TliiK section, it will he noticed, say^ iiothine concerning' liitliilitii's ami ohli'^atit ns incurrid on hehaif ol tin com- ' (7)/ .»((/•) ii Fiirihoii!: \ Si l.rii,\ ii,iil till Ri '.till. ' (.'•)(!«! Ill ( vA rioLc'.iiii' Art .(17 * Sri . iS •, foil. ' S.T i.)3. S I.. C. Juv. 51 FORMATION AND rN('<)Ul'()nATI()N OF COMI'ANH'.H. \m paiiy prior to its incorporation. And this, in accordance with thf^ jurisprudence on the sultject, which, as liax heen seen,' does not consider the conii)any Hal)h' on c«)n • tracts entered into with a view to its i»romotion, except in so far as they arc undertaken hv the h-tters ])ate!it in each particuhir case. {f'i) Power fn tnttiHdit hiixiiifSH. Tlie incorporation has the effect also of invostin*,' the company " with all the powern. privile^^es and immunities roipiisite or incidental to the car- ryiuff on of its undi'rtaking." The (piestion of the"ol)- .jects " of the company have already Ix'en hrietly referred to,' hut, thou<,'h intinuitely relat(!d, the r*/>/»77.s and the/x^/rr/.s of a company are not (piite the same thinj^. " Few cpies- tions," says Thrin};, " have given rise to more litigation than th»)se relating to the powerH of a company as contra- distinguished from its ohjccts." These ])OWers and oljjects were at one time very strictly c(>nstrued ; hut s'- nuuh in- convenience resulted from it that a nuu-h more lil)eriii in- terpretation is now given them : and, l)y a numher of de- cisions, it has heen held, "that where an act is comlucive to tile o])jects of a company, a Court of E([uity will n(/i m- ti-rfere on the ground that it is not strictly within the let- ter of the company's constituti(m." ' Under such wonls also as "the doing all suidi things as are conducive or in- cidental to "hi' carrying out of the ohjects of the company. ' or, as in the present section "all the powers, »••.•., •(■(piisite or incideiital to the carrying on of its undertakiiig," acon- siderahle dasticity has heen accpiired in the working of a company. But these words, it nnist he reiuemhered," do not really confer any varying or deviating power,"' although where the directors had issued negotiahle instruments under authority of tlle^:e words, it was held, that they were under authority to do .so, though witliout tlnin they might not ' Supra, |v 71. - \'iitt' sitprti. ' TliritiK. Joint Stock Cos . \n\ tM , p. 10 1. * Healy, Joint Stock Cornpaiiifs, p n . l:tl .lOfNT STOCK COMl'.VNIKS. ! huvo been.' And wliero a corporation cntori'd into a part- Mcrsliip with an individual and tlurc was notlini^' in tins niHiic or i-hartcr of the cin-poriition indicatin«^' the liusincss tol)t'don( l»y it, and all its sto» l< was held hy one jx-rson, it was held that the contract of parti i-rship was not nltni rin's.' N'o alisojutc or invariable rule therefore, can be laid down as to what is ultra r/rcs, and what is not, what busi- iu'HS a company may undertake and what it nuiy not, ex- ce|»t, perhai»s this, that the business must have some con- nection with, and contribute in some way, either directly or indirectly, to the carrying; outt)f the obji cts of tlie com[)any art specilietl in its charter, or, if tht' ol)ject of thi' com- pany is to carry on a certain kind of business, the transac- ti(»ns enf,'aj,'t (1 in, must coiut rtasoiuibly under the head of ;b!tt business, accordinji; to it> usaj^i'. Tiuis. ill Littlriiiirt V. Ihiils, m the I'liited States, tho <.;;ciicral rule was hiid down that a contract by a coipova- tion outsi(b'tlie purposes (4' its creation is void for want of p^b in ho dniii<4 it ( \c(( d tiieiii, the pi i-^dii witli wlioui it dejiis, can- not set up >U(di violation of fiaiidiise to void the contract. And in another cas< said, that the doctrine of ultrii liirn has full apidication to avoid those contracts only, whi(di in- vo|\( an attein;.! to exercise a [xiwer whi(di has not been conferred upon the corporation. The abuse, in a inirticulai instiince, of a ;;en(ial power which a corporation tloes [ioh- HOf^!^, cannot be shewn by the cori)t»ration toa\ oid its contract, particularly where one has acted in tlealin^,' with the cor- poration, in reliance on the natural assertion of power im- plied in i>suiiiin}4 to pei-form the act/ And in a number ol I'hif^di.sh cases the general i»rinciple wns extemled to in- ' Viruvlan Riiilwiiv Co v. Tlh Thiinits iiml Mtrsiv Muriiu- I in. Co., L K , i Ch (117. • Alltii V. W (lull soi kit Co 11 I< 1 jSi> aiiil 1 l.«x News, 408. < '-,1) ivhss 40 < Sii Ct , 1S74. • S'lil liiiiik \ Cilobt Works. loi M.iss 57 Su. Ct.. l86(j. t •ORMATION AND TNCORPOR.VTION OF COMPANIES. l:l5 elude not only such iiuthority as was oxpn-ssly confiTrftl upon tlio corporation, but all such as was not cxiJn-ssly denied to it, at least so as to iiold it liable on its contracts tbus made." Hut under the i)resent section the power to <'outract is limited to such as is " reijuisite or incidental to tile earryinjf on of its undertakinjj;," and it is of importance oidy to discover, if possible, what these words include. One of till' principal Kiij^dish cases cited on this point is tlnit of liichcy. Aslihnr/t ItniUniji ('(irtimjv, dr., Coinjuini/, whicli were empowered, anions other tliin<^s, to carry on I he business of " general contractors," but were restraineti in tnakc a parni iilai i niitrail. but siu h c (iiitnirt is nut III violation of tfu; charttT nr "( any statutt; prdliihitiiiK it. ami the tiiiporatiun has. hy its pioniisi's, iniliict-d a party tc spt-ml nionuv to \»-i fill 111 Ins pait ilart'of, the im imiation is liable on the vontract. Sttit, liotirti of Af[riiulturi- v Citizim K, K. Cc. 47 hul 407, Su. Ct , 1S74 ' Hrice, uUni vins. p. 154. ' lb., p 155. * Jh.. p. 150. 5 Si-nvai Uusf Cu. v. Phil/xit 53 Ga. 6^5. Sa. Ct,, 1H7J. Abb. Di^.. Vol II. m 186 JOINT STOCK COMPANIKS. Mil corapany was organized for the piiri)08e of st'llin^' books, lu'incipally a city dircttory, and one (i. puhlishtd a sim- ilar directory, which he sold for a less price, and the trustees, in order to prevent the future publication of (i.'s directory, entered into an afireenient with (i.'s printer, by which the comi)any af^reed to purchase from the ju-inter half (»f (/,'« overdue notes for a certain sum, and for another certain sum, the printer a^^'reed to publish no more direct- ories for (i., and to sue upon and obtain judfj;ment on the indebtedness due from (i. iu order to ruin (i.'s credit, the ;i*^'reement was held to be xltni rircn and void, and that an injunction mij^ht hv {^ranted in a suit by a trustee and stockholder of the corporation in order to restrain his co- trustees from usin^ the funds of the corporation to carry such af^'reement into eiiVct. And where the corjjorate i)owers of a manufacturing conqiany were del'ned as being the numufacturing every variety of lirearms, and other implements of war applicable to the use of Ih'earms, and all kinds if mach'.nery adapted to the construction thereof it was lu-ld, thiit the luanufac- ture and sale of circular railroad locks v.ere not imduded. And in I'lJper ('anada, held, on demurrer to a plea setting up the absenci' of the corporate seal, that a parol agreement entered into by "the duly authorized agent of an incori)o- rated insurance company to ri'fer to arbitration the (piestiou of the legal liability of said company to bear any portion of the expense of raising and repairing a vessel insured by them and substijueutly lost, was not binding upon the company, as not i»eing a contract relating to the purposes for which the company was incorporated.' And where a company was iiu'orporated by Acts of the liCgislature of Canada and the State of Xew York respectively, for the l)urpos( of constructing a suspension bridge across the river ' Collis V Tnnc Cilv Dirnlorv Co., iS N. Y. Su. Ct. 3(17, 1877, Abb. Din , Vol. II. ■ ' ■ W'hitiny Arms Co. v. linrloiv jH N. Y. 554, Su. ('t , 1H75, Abb. Dif,'.. Vol II. ' Calvin V. Ptov. Ins. Co., zo C. V. 267; Robinson's Dig. 770. FORMATION AND INCORPORATION OF COMPANIES. 187 Niagara for railroad and otuer purposcH, with coinpiilHory powers as to tho taking of lands, etc., and having the right to impose tolls for the user of the hridge, etc., and the two companies so incorporated joined in a lease of the iippir or railway floor of the l)ridge, for the t^rni of their chartiu-, to a railway company, to he for their exclusive use and the use of such other railway comi)anies as the lessees might arrange with, it was held, that su<*h assignment was ultra vires and void." But where an insurance company was hy its charter authorized to hold real estate for tlu' immediate accommodation of the company, "or such as shall have heen bona Jidc mortgaged to it hy way of security, or con- veyed to it in satisfaction of dehts previously contracted in the coarse of its dealings, or purchased at sale upon judg- ments whicli shall have heen ohtained for such d('l)ts," and having sold and conveyed a vessel took from them a mortgage on real estate to secure the purchase money, this was hcU, to he a trnnsaction within the Act of incorporation, the price of the vessel heing a del)t existing previously to the execution of the mortgages.^ Again, it is said that corporations may have by implica- tion, power to engage in transactions outside their own proper husinesH, "such transactions having become hy change of circumstances essential to the corporate well being." ^ The judgment, however, from which this is de- duced, does not api)ear from the special circumstances which gave rise to it, to have heen intended to he drawn into a precedent, nor do those circumstances appear to warrant a general rule.'' (»') Vowt'r t<) AiihihidiiKitf. — Another ipiestion which is nuudi discussed under this head is the power of a company to amalganuite with another, so as to lose its original iden- ' Att(ir>icv-('rn. v. \ic Co., 20 Chy. 34 ; Robinson s 1 )in. 771 . ' Wcitirn Assurancf Co. v. Taylor, 9 Chy. 471 ; Robinson's Uig. 770. ' Urice, ultra vins, p. 156, and sec case tlicru Lited. * Under the present Act a similar change of circumstances would appear to warrant only an application for an extension of powers. Vide fast, "itc. 14. H 138 JOINT KTOCK COMPANIES. m ti 1 tity and form with that oth*. . a new corporation. Tlio resnlt of the cases is that a company i)ossesses no implied power to this eti'ect. That unhss there is an express i)ro- vision in tliat Ix'half, eitlier in the company's charter or in the Act undei' which its charter was ohtained, no such arrangement can he entered into hy the majority so as to bind the minority. The leading ruthority on this subject' lays down the following rules, that — 1. "Corporations may by means of, l)ut cannot without a very clear power in that behalf, directly transfer their legal entity to another corporation." Nor even indirectly, according to a recent decision." In that case the B. N. was a life and the insurance company, with a capital divided into t'lO shares, iiy its deed of settlement it was provided, that the capital and funds of the company siiould alone be answeralde for ''laims on the company, and that members should not be liable beyond the amount of their shares. There was a provision enabling two general meetings to alter and extend the objects of the association, and enabling an extraordinary general meeting to acijuire the business of any other association of a similar nature. The company passeany. subject to this proviso, that if any member of the company beinjj; wound up, who has not voted in favour of the sj)eeial resolution passed by tlu' company of wliidi he is a member, expresses his dissent in writing', not later than seven (biys after the date of the meetiuj; at which such special resolution was passed, such dissentient mem- ber may reipiire one of two lliin;,'s, viz., either that the company abstain from carryiiij,' such resolution into elfect, or purchase the inti'rest held by such dissentient nu-mbc r at a value to be tixed, etc. I'nder this section it was lii-lil.' that a dissentient shareliolder does not, by failin;; lo express his dissent within the seven days limited by the si-ction, become thereby comi»elled to take shares in the new or n ' Sec. Idi • Hank uf lliii'iiist.in, I, K Cam. ij W. U., "sMj, n I, T (ujo. ^ 140 JOINT STOCK COMPANIES}. (I purchiisinf^ rompany. But if bo do not so cxpresR his (liKHcnt, ho cannot take ailvantaj^o of the provision for the purchaso of his interest, lait must suhinit to lose his shares altogether if he refuse to aecojit the new shares. This is what is intended hy the ahove statement, as exeniphtied in another case,' in wliieli tlie articles of association of a com- pany provided that the directors might, "with tho consent of an extraordinary general meeting, transfer and sell the husinesH of the company, or purchase or amalgamate with the husiness of any othor eomj>any l^;l^;sha\^, I. R , 4 K(j 341. and se« Brice, ii/frit i/Vu. 71)7, and Hiicklf;,, Joint Sti}ck ("iimiiaiiit.'s. p. <,u). ' i 'idi' f'Oit. K"KMAr:l)t)iiii('(l.' lint when this is ohtaiiiod no one t'lsf is '.ntitltd to object. For unless tliere is an expri'ss ajin-enunt or provision ol" some sort t(» the contrarv, "a corporation not Itankrupl nniy deal with its ]iroperty as it pleases, without re^jard to the wishes of its ert'ditors." Hut thou^di a crt'ditor cannot prevent an arran^^'enient of this kind from heinj,' carried into ell't'ct, where the company dehtor is still solvent, ho is not therehy compelled to accept the new concern as his dehtor. In other words, there is no novation of his claim. This was exemplitii'd in several KnsliNh ea.ses,' in which also it was fnhl, that (the com- panies litiui,' insurane ' companies) thouf^di the creditors (policy holders) had pain premiums and taken receipts at the otVice of the uew conceiii and with the receipt heading,', that thix did not amount to ac(piiesccnce so as to constitute novation of their claim. An«l the etTect of sucli un arrangement has {i;iven rise to Hcveral interesting,' (piestions. Thus, in the State of Indi- ana it wa> held, that the consolidation of two corporations cxtint,'uishes the orij^inal corporation and minifies the pow- ers of both into a new »»ne. Hut in another case luhl, that the consolidation of two companies dors not necessarily work the dissolution of hoth and the creation of a new coiporation. The etV«'ct of the chanj^'e tlepends upoti Mie lej^'islative intent manifested in the Statute under which the consolidation took place.' J^ut ' Hruc- iiltni rirts. p. 713. lii Dnhii- v. Tlir linniil I't Mii>iiii;i m, )it of till Tttuponililti i I'ttnti of thi- I'nslivtiridH Clun\i\ So th«r fmir I'lisliyli-naii Chmchfs nr any ot their niiin- Iht wiicther a majority or a miiioritv. had a jicrfrtt ri^ht to form an a^vKTiation am! i all tiutmstlvus • Tht; I'rcshynTian C'htirch in Canada," \sithoiit tin- int>-r\ontion or pcriui^sidn of any l.cnislatiiro . but snch niini- bfis h.id no ri«ht to take tin- inisi funds and make them o\er to another body . nor could their adherem c' to a new boily anndiilale the old one, and so deprive Its remaining memliers of tin 11 interest in :.iu h funds It iii exidt-nt fioin the inline; in jiournoiiin s '.asc, alre.ady ( ited, that infoipouitt'd companies I ould not do so, and I fancy an incoiporaled association vsfiuld nut have jjreater jxiwcrs. ■■ Hricr. nllra :/ri-s, p. 72 ? , l)>it iiinhlc that, if it could he shown to be bankrupt, and that the arr.iiineiuent was about ti. be attemptetl to ;.void that r«-sult It I. uld be restraineil at the suit of a creditor. ' Ueferied to bs Mrice, p 7J4. (7 ix/ < /. C. «?» /.. R H. V. y,>iifi. Su Ct . Ind (si . Withrow s Cases If I I I 142 JOINT STOCK ('O.Ml'AMKS. wlicri' two corporatioiiH clmrtiTcd Wforc tli»' inissaj^t' of a j,M'iU'ral law of the Stati-, reserving to tlic Icf^iHlatiiit' the ni^'lit to alter or npral all corporate charters, were consoli- (lateerty, and answerahle for all the liahilities of the extini^niished one. iJut where one company was anial- ^anuited with another durin;^ the jtendin;^' of a suit aj^'ainst it, it was IkIiI improper to permit the plaintitf to take a judj^'inent aj,'ainst tlie company in its new name, without taking,' proper steps to hrinj; the new company as such heforo the court, and a judj,'ment so taken out ouj^dit to )te set asidi'.' .\nd to warrant a consolidated corporation suin^^ upon a sui)scrii)tion to one of the old comi)anies, a proceed- in;^ of consoliihition confornuihk' to the Statute must he proved.' Nor has a corporation formed hy the amalj^'ama- tion of previously existini^ companies any power to (h'clare a dividend, as su(di, of the earninj^s made prior to the con- solichition hy one of the companies which was mer^^'ed in the consolidation, or rf;i,i.g2 V S. Sii. Ct., (jOs ; Abb. Di«.. V..1. 11. Slii,!,ls V. Ohio. .»5 V. S. Su. Ct 319, Abb. Di^., Vol. II. ■ Thompson v. .Uibott, (>i Mo. fj(>. Su. Ct , 1S75; Millir v. Luiinistii- 5 Colilw. 514, Su. Ct Tenn. < sSitiuii, lie . R. R Co. V. Hurhiii. 40 (Ja. 71X.. Su. ft., 1870; .\bb. Di^ , Vol. II. /Vw/i. R R. Co. V. Thorp, 28 Mich. 5o(). ;ui ^^ O"^ u "1.^ -is^ #? ^ A ^>^ l/j ^^q* 144 JOINT STOCK COMPANIES. of joint stock companies generally. But with regard to the dealing by a company in the shares of other companies, it was said by Selwin, J.P,, in re Asiatic Banking Corpora- tion : ' "As to the capacity of a trading corporation to ac- cept shares in another trading corporation, it is sufficient for me to say, that I entirely agree with the judgment of Lord Cairns, in the case of Barned's Banking Co., viz.: that there is not either by the common or Statute law, any- thing to prohibit one trading corporation from taking or accepting shares in another trading corporation. There may, of course, be circumstances which render it improper to do so, having regard to its constitution," etc.= The rule in the Unit >d States, however, appears to be the reverse of this, viz. tiiat in the absence of provision a company may deal in its o ■; shares, but not in the shares of other companies.' By the present Act, nc provision is made concerning either, except the power to forfeit shares for non-pay- ment of calls,* can be so termed. But this can scarcelv be, as the holder is not thereby relieved from liabilit}*, and, therefore, the forfeiture of shares can in no wav be held to be either purchasing or dealing in its o\^ti shares. {h) Power of suing and being sued. The faculty of suing and being sued is incidental to every legally created cor- poration, and may be held to be included in the terms of the section as part of the " powers requisite to the carrying on of the undertaking." The right of action in particular cases is referred to in several parts of the Statute, and especially the right of action between the corporation itself ' L. R., 4 Ch. 252, 257. ^ See Brice, p. 174. ' lb., p. 176, and Angell & Ames, sec. 280. But in Brewster v. Hartley held, that a corporation has not the power either directly or by the inter- vention of a trustee, a stockholder in its own shares. 37 Cal. 15, Su. Ct.. 1869. * By the Quebec Ar^ however, there is a prohibition to deal in the shares of other companies. Vide post. FORMATION AND INCORPORATION OF COMPANIES. 145 and its members,' the manner in which action may be brought and the proof of formahties required in such actions. And this right, it appears, is not confineu to the province, state or county in which the company was created. According to a number of decisions quoted by Abbott,^ it is laid down that " in the absence of restraining Statutes, corporations created by the laws of any one state are competent, as artificial persons, to ])ring suit in the courts of other states.^ (i) Change of Venue. And in the Commercial Insurance Company v. Mehlman, decided in the Supreme Court of Illinois, it was held, that " a corporation equally with in- dividuals is entitled to a change of venue, when, by a veri- fied petition, it brings itself within the prorision of the Statute, and any recognized officer may be regarded as a party to the record for the purpose of making the necessary affidavit.'' And, in Cataraqui Cemetrjj Companif v. Burrou-,^ decided in Ontario, it was said, that " a suit brought by an incor- porated company will be removed (into a higher court '?) if it be shewn that difficult questions of law will arise as to the powers conferred by their act of incorporation. (./') Ultra Vires Transactions. In any of these cases whatever is done by a company which cannot be shewn to be in some way within its powers, either express or im- plied, is not only voidable, but absolutely void,* and may be set aside at the suit of a single shareholder." 11. Change of CoNSTiTrTioN. The constitution of a joint stock company, as established by its charter, may be altered at any time by supplementary ' Vide post, sec. 70. ^ Vol. II., p. 673. -, But see this point more fully discussed. Supra pp. 86 and 105, <7 seq. * Vide Abbotts Dig., Vol. II. 5 Robinson's Dig., p. 779. ' Brice, ultra vires, 2nd Ed., p. 176. 7 Car V. Ottawa Agricultural Iiis. Co . 22 Grant (Upp. Can. Chan. 1875) 512, followed by Hrice, 2nd Ed., 842 ; Angell & Ames, 390. 11 8.C. •il J ■ Ifr: "•I f 146 JOINT STOCK COMPANIES. letters patent, which, however, can only be obtained by observance of such formalities as are prescribed for the original. Thus the name of the company may be changed. 11. In case it should be made to appear, to the satisfaction of the Gov- ernor in Council, that the name of any Company (whether given by the original or by supplementary letters patent, or on amalgamation) incor- porated under the provisions of this Act, is the same as the name ol an existing incorporated or unincorporated Company, or so similar thereto as to be liable to be confounded therewith, it shall be lawful for the Governor in Council to direct the issue ot supplementary letters patent, reciting the former letters and changing the name of the Company to some other name to be set forth in the supplementary letters patent. 12. When a Company incorporated under the pro -isions of this Act is desirous of adopting another name, the Governor in Council, upon being satisfied that the change desired is not for any improper purpose, may direct the issue of supplementary letters patent, reciting the former letters and changing the name of the Company to some other name, to be set forth in the supplementary letters patent. 13. No alteration of its name under the two last preceding sections shall affect the rights or obligations of the Company, and all proceedings may be continued or commenced by or against the Company by its new name that might have been continued or commenced by or against the Company by its former name. {(i) Chancf. ;/ Name. — The question of a confusion of names has been referred to in a former part of this chapter," but several things may be ol)served with regard t ) these sections. It would appear from the terms of the first one that the Governor in Council may, ex mere motii, whenever it appears that there is a confusion of names or a dangei* of such confusion, issue supplementary letters patent, changing the name of the company to some other name set forth therein. The company whose name is thus changed must be the youngest, that is to say, the one whose charter was obtained subsequent to the one with whom it is in danger of being confounded. For, as the name of a company is not only a matter of considerable importance in most cases, but part of its vested and corporate rights, it cannot be disturbed in it by any subsequent organization. ' Vide supra, p. 102. F()r:mati()n and incoui-oration of companiks. 147 . 1 Thus in IIoliws v. Uolntes MdiiufactKring Co., in the United States," held, that where the name of a manufactur- ing corporation has been used to desij^nate the origin and ownership of the goods manufactured by it, such use of its name will be protected to the satiie extent and upon the same principle that individuals are protected in the use of trade marks. But it would appear also that the company charged with interference in this respect nnist have notice of such change, and opportunity of defending its right to the use of such name, before being deprived of it.° The comi>any itself also, when restrained from the use of a name, or from any other reason desirous of changing it, may ol)tain supplementary letters to that end ; but under the English system the change of name was held not to be complete until it had been made on the register, and a cer- tificate of incorporation, altered accordingly, had been issued by the Registrar, This was the decision in the case of Shackh'foi'il, Ford iC- Co., v. Datufcrjjtdd. On the 18th of July, 18<)7, the company passed a resolution to change its name, which was confirmed on the {)th of August. On the 23rd of the same month the directors made a call in the old name of the company, (ni the 7th of September the approval of the change of name by the Board of Trade was obtained, and on the 13th, notice of the call in the new name was given to the shareholders. On the 31st of December, same year, an action in the old name was brought against a shareholder who knew of the i)roposed change of name, to recover the amount of the call. The certificate of incorporation in the new name was not issued until the 13th of February, 1868. Held, that the action was properly brought in the old name < f the company, and • 37 Conn. 278. Ct. of Err., 1870; Abb. Dig., Vol. II. ^ The English Act does not provide for a change of name except on the application of the Company itself, but it prohibits the use of a name identical with that by which a subsisting company is already registered or so nearly resembling the same as to be calculated to deceive, and injunc- tion would be granted at common law to restrain it from the use of such name, when it would be compelled to apply for a change. The Quebec Act makes no provision for a change of name. m llii.-:. 148 JOINT STOCK COMPANIES. 1i that the notice of call in the new name was sujfficient, as it in fact gave the defendant notice that the call had been made.' In order to provide against a fraudulent use being made of tliis privilege, as also to avoid doubt and confusion in the transactions of the company, it is enacted that no change of name "shall aflfect the rights or obligations of the com- pany, and all proceedings may be continued or commenced by or against the company by its new name that might have been continued or commenced by or against the com- pany l)y its former name." But an incorporated company has no power to change its name without the authority of the legislature.^ I4> The Company may, from time to time, by a resolution passed by a vote of at least two-thirds in value of the total shareholders of the Com- pany, at a special general meeting called for the purpose, authorize the Directors to apply f r supplementary letters patent extending the powers of the Company to such other purposes or objects, within the purview of this Act, as may be defined in the resolution. VSm The Directors may, at any time within six months after the passing of any such resolution, petition the Governor, through the Secretary of State of Canada, for the issue of fuch supplementary letters patent: 2. The applicants for such supplementary letters patent must give at least one month's previous notice in the Cdiuula Gazette of their intention to apply for the same, stating therein the purposes or objects to which it is desired to extend the powers of the Compan) . I6< Before such supplementary letters patent are issued, the applicants must establish to the satisfaction of the Secretary of State or of such other officer as may be charged by the Governor in Council to report thereon, the due passing of the resolution authorizing the application and the sufficiency of their notice and petition ; and to that end the Secretary of State or such other officer, shall take and keep of record any requisite evidence, in writing, by solemn declaration under the Act thirty-seventh Victoria (1874), chapter thirty-seven, above mentioned, or by oath or affirmation. 17. Upon due proof so made, the Governor in Council may grant sup- plementary letters patent under the great seal, extending the powers of the Company to all or any of the objects defined u\ the resolution ; and notice thereof shall be forthwith given by the Secretary of State, in the Canada (razftif, in the (orm Sche hile C. appended, to this Act; and thereupon, from the date of the supplementary letters patent, the undertaking of the ■ Law Rep., 3 C. P. 407. ' Stevens' Dig., N. B. Rep., p. 339. FORMATION AKD INCORl'ORATION OF COMPANIES. 149 Company shall extend to and incliide the other purposes or objects set out in the supplementary letters patent, as fully as if such other purposes or objects were mentioned in the uri},'inal letters patent. (h) Extension of Poirers. These clauses, thou/ Directors. — The object of tin's section, as for as it refers to the number of directors, is not very evident. For as we have seen by section 4, sub-sec- tion 8, the exact number of the directors is not made a fundamental part of the constitution of the company. Indeed the same liberal margin is there laid down as ex- pressed in the present section, and again by section 26. And as we shall see further on, under section 32, the direc- tors themselves have the power to pass a by-law fixing their number within the same margin, subject to confirma- tion at a general meeting of shareholders. This clause therefore would appear to be in conflict with section 32, which provides for the regulation of the number of directors without the formalities here prescribed. These formalities, however, are not those prescribed for the ob- taining of letters patent, but simply the publication of such by-law in the Canada Gazette, and the deposit of a certified copy thereof with the Secretary of State. Under the Eng- lish Act the ( The Directors of the Company, other than a loan company, may at any time make a by-law sub-dividing the existing shares into shares of a smaller amount. 1} (e) Sub-division of Shares. — The amount, or nominal value of each share being fixed by the letters patent, any change thereof may be properly considered a change in the constitution of the company. Such a change is not pro- vided for by all the Acts to which reference has been made, except that of the Province of Quebec. The provision in the English law in the amending Act of 1867," which also provides that " in the sub-division of the existing shares, the proportion between the amount which is paid, and the amount (if any) which is unpaid on each share of reduced amount, shall be the same as it was in the case of the ex- isting share or shares from which the share of the reduced amount is derived. It also provides that each copy of the memorandum of association issued after the passing of such resolution, shall be in accordance with such resolution, subject to a penalty of one pound for each copy. Under the present section there is no limit either to the extent or the time at which such change may be made, or any other formality prescribed for the protection of creditors who, as stated by Lord Cairns, in re The Financial Corpora- ' Vide Act, 1867, sees. 2T-22. FORMATION AND INCORl'ORATION OF COMPANIKS. 153 tion,' may, upon a winding wyt, be loft with the unpaid capital of the company scattered through such i number of hands, that the sum recoverable from each would not pay for the trouble and expense of collection. 20« The Directors of the Company, at any time after the whole capital stock of the Company shall have been taken up and fifty jier cent, thereon paid-up, but not sooner, may make a by-law for increasing the capital stock of the Company to any amount which they may consider requisite in order to the due carrying out of the objects of the Company : 2. Such by-law shall declare the number of the shares of the new stock ; and may prescribe the manner in which the same shall be allotted ; and in default of its so doing, the control of such allotment shall be held to vest absolutely in the Directors. (/) Increase of Capital. Provision for the increase of the capital stock of a company is common to all the Acts. By the English Act,' the only formalities are the passing of a special resolution, altering the memorandum of asso- ciation to that effect, and the giving notice to the Registrar within fifteen days after the resolution has been adopted. By the schedule of regulations for the working of Joint Stock Companies appended to the Act, it is further provided however, that all new shares shall be offered to the mem- bers in proportion to the existing shares held by them, such offer to be made by notice, specifying the number of shares to which each member is entitled, and limiting a time within which, if the offer is not accepted, it will be deemed to be declined. No such provision is found in the Canadian Acts, but a stipulation to that eft'ect is gener- ally made part of the by-law to increase the capital, as, without doubt, is the right of the company to do. On the other hand, the English Act lays down no condi- tions precedent to the adoption of such a resolution, such as are contained in this section, which stijuilates that all the previous stock must be allotted and half ^ of it paid up before asking for an increase. ' L. R.. 2 Ch. 714, 733. = Sees. 12 and 34. 3 By the Quebec Act the whole of the stock must be paid in. Q., 31 Vic, cap, 25, sec. 9. ; t * 1 1 F^^"^ 154 JOINT STOCK COMPANIES. til The increase is ajiplied for and obtained with the snmo formaUties and dohiys as have already l)cen described for ()l)taininf4 extension of tlie company's powers, tlie object beinf^, doubtless, as in tliat case, to provide aj^'ainst too hasty lef^islation on the part of the company, and to ^ive those who may be opposed to such a step an opportunity of pro- tecting^ themselves against it. *' The l)y-law," says the second clause of the section, " may prescribe the manner in which the same shall bo allotted." This is in accordance with what has been already stated concerniufi; offering the new shares to the old members preferentially to strangers. (fl) Preference shares. And there appears to be very little doubt but that such new shares may be issued with right of preference, or privilege, to the shareholder as regards divi- dends, etc., if so provided by the by-law, and supplementary letters patent. But not otherwise, according to the English cases, wherein it has been decided that, in the absence of (express) authority for the purpose, the issue of preference shares is ultra vires, as it is an implied condition that the shareholders are entitled to rank equally in respect of divi- dend.' But where the articles provided that new shares might be issued with such privileges as the company should think fit, there was power to issue in'eference shares with privilege, " so far as regards participation in dividends or any other right whatever." ^ These cases, it will be understood, proceed upon a system under which nothing is necessary to such an alteration of the constitution of the company, but a resolution of the company itself; nothing is binding on the company but its original agreement and the will of a majority of its mem- bers. The government of a company, under the English sys- ■ Hutton V. Scarborough Hotel Co., 2 Dr. & Sm, 514; 4 D. J. & S. (,-]Z, - Buckley's Companies Acts, p. 141. 3 Harrhon v. Mexican Railway Co., L. R., ig Eq. 358. FORMATION AND INCORPOUATION OF COMI'ANIKS. 155 toui, is essentially luitocratic, and tliercfovo, it is the more necessary that the terms of its ori^'inal agrt'enicnt he the more strictly interpreted md the more rigidly adhered to, JJetsveen it and a company formed under the Canadian Acts referred to, there is a great difference in this respect. The hitter is constituted and created hy si)ecial authority, and any fundamental change in that constitution must he authorized and approved of l)y the same authority. The authority hy which such alteration is madetiierefore, heing tlu' same as that hy which the company was created, a stii)ulation in the hy-lawthat such new shares should carry u preference or privilege on the earnings of the c(-mpany, would he ))rought within the company's powers, and con- iiruied.' 2 'a The Directors of tlie Company, at any time, may make a by-law for dec: easing the capital stock of the Company to any amount which they ma) consider suflicient in order to the due carrying out of the undertak . , of the Company, and advisable : Provided that the capital stock of a i.oan Cloinpany shall nevev b> decreased to less than one hundred thousand dollars: i.. Such by-J:i\v shall declare the number and value of the shares of the stock as so decreased, and the allotment thereof, or the rule or rules by which the same shall be made. 22> But no by-law for increasing or decreasing the capital stock of the Cimpany, or sub-dividing the shares, shall have any force or effect what- ever, until after it shall have been sanctioned by a vote of not less than two-thirds in value of all the shareholders of the Company, at a general meeting of the Company duly called for considering the same, and after- wards confirmed by supplementary letters patent. 2. The liability of shareholders to persons who were, at the time of the reduction of the capital, creditors of the Company, shall remain as though the capital had not been decreases!. (/<) Reduction of Capital. It may he found desirable to reduce the nominal capital of a company, either Because the nominal capital is greater than the require- ments of the company, or Because the actual existing capital as represented by the assets of a company, has become so much less than the nom- ' As to the effect of such preference. See infra. i ! i { ! 156 JOINT STOCK COMPANIES. inal ' capital, that it is expedient to write off all or a great portion of the difference. Such a restriction may b'^ effected either 1. By cancelling shares unissued or redeemed, or 2. By reducing the value of each share.- It is quite comprehensible, that the promoters of a com- pany being over sanguine as to the amount of business to be done, should place the nominal cap'tal of a company at a much higher figure than is afterwards found to be necessary or desirable. The jjublic do not generally take the same sanguine view of the company's prospects, and the shares do not " go oiT." The experience of the company, after it has been for some time in operation, does not confirm the anticipations formed of it; while the shares are still further hampered and depreciated by the knowledge that a number still unissued remain in the company's vaults. Under these circumstances, it becomes desirable to re- duce the capital stock by cancelling such a number of un- issued shares, as will bring it to the level (or nearly so) of the actual requirements of the undertaking. ^ A reduction effected in this manner interferes in no wav with the rights or security of creditors, as the shares so cancelled have never been subject to their claims or any guarantee therefor. Again, it may occur after all the sto^'k has been paid up and while it is still in the company's bauds — that is unim- ' The word "nominal" is here used in a sense somewhat different from that in which it is used by some of the English writers. By the latter it is used in contra-distinction to the paid-up capital, while here it is used in contra-distinction to the actual value of the assets of the company, whether such " nominal capital " be paid-up or not. ^ The section says nothing as to the manner ir» which the reduction is to be made, but these .ire the recognized ways, and are both implied by the terms of the second part of section 21. 1 Where a company is incorporated by special Act, the same thing is effected by obtaining authority to that end from the legislature; see 40 Vic, cap. 70, authorizing the Royal Canadian Insurance Co. to reduce its capital in this way, from six millions to any amount not less than two millions. FORMATION AND INCORPORATION OF C0MI'A3inrES- 157 paired by losses — that a depression of trad*-, a Ifatlmg off in tiie industry undertaken by the compauv c-inataiils the means at its disposal of profitable investment, amiti makea it desirable, in order that the capital may not li^r Eillt^ on its hands, to redeem a certain portion of its stock amti cancel it. Again, where, by losses, the capital of a ic^o'inrnpany has become so impaired that the market valn^ of ther shares has fallen, with little or no hope of recovery, «'©rtiderably below par, it becomes desirable, in the int^r^pt olf the re- mainder of the capital, to bring the nominal capEttaJ of the tiompany down to something like its actual vaJm-t — much in the same way as an arm or a leg is sometimes lofped off hi order to save the rest of the body. This maj fee (ione y)y reducing pro tanto the value of each share — ;KSiT£ag at the 4ame time the liability of the holders for any amioant re- maining unpaid on them. Thus the holder All powers given to the Company by the letters patent or supple- mentary letters patent shall be exercised, subject to the provisions and restrictions contained in this Act. The meaning of this section at first glance is not as clear as it might be. It would appear, however, that the inten- tion of the section is, that the letters patent cannot give to a company any greater powers than those provided by the Act, and in so far as anj^ letters patent granted under the Act surpass the limits of the Act, they will be null. Nor can the company or the directors do anything under their charter for which authority is not found in the Act. To go beyond, that the company would require to be incorporated under a special Act, in which such additional powers would be embodied. And in the United States, held, that mere general words in a charter, do not authorize the corporation to do acts which are prohibited by the general public law of the State. Thus a provision in a charter, authorizing the corporation to dispose of property "in any manner they deem best," does not operate to enable them to resort to lottery to dis- pose of it, if lotteries are prohibited by the general law." And again, a charter authorizing the corporation thereby created to carry on a stock yard, does not authorize them to carry on such business in a way that would be injurious to others, or would materially affect their health, their comfort or their property.^ ■ State V. Krcbs, 64 N. C. 604, Su. Ct., N. C, 1870; Abb. Dig.. Vol. II. = Babcock V. New Jersey Stock Yard Co., 20 N. J. Eq. 296, 1869; Abb. Dig., Vol. II. CHAPTER IV. ORGANIZATION AND MANAGEMENT. w , Commencement of Business. . Directors. (a) Provisional. (b) Number of Regular Board. (c) Remimcration of. (tl) Qualification of. {e) Disqualification of. (f) "In his OK'H Right." {g) Acts of de facto Directors' Valid. (h) Retirement of. (/) Election of. (j) ''Shall be elected by the Share- holders." (k) " /;; general Meeting." (I) "At sonw place within the Domi- nion of Canada." (m) "At such Times." (it) Formalities. {o) Quo Warranto. (p) Removal of Directors. . Meetings. {a) Notice of. (b) Ordinary and E.xtraordinary. (c) Where held. (d) Quorum. ((•) Each share represented to carry a vote. (f) Must have paid calls. (g) Manner of voting. (/() Election of Directors at. (/) Where disputed. (J) Q"o Warranto. {k) Meetings of Directors. (I) Vacancies occurring. 4. Powers of Directors. (a) In general. (b) Status of a Director. (c) Not individually Agents. (d) But bind the Company. (e) May appoint Servants. (f) May buy and sell. (g) May borrojv money. (//) May issue negotiable Instru- ments. (/■) May take legal Proceedings. (j) Acts, ultra vires. (k) Nature of Formalities. (I) Conditional Powers. (»() May make By-laws. (;/) Allotment of Stock. (p) The making of calls thereon. (/>) The appointment of Servants. 5. Bv-Laws. (a) Effect of. 6. Books to be Kept. (a) Contents of. (b) Inspection of Books. {e) Effect of rt.T Evidence. ((/) Production of as Evidence. (e) Penalties with respect to. (f) May be summoned to answer. 1. Commencement of Business. A charter having heen obtained and other preHminary matters settled, it is competent to the company to com- mence business forthwith. As half of the total amount of the capital stock must be Ixnia jide sul)scribed before apply- 12 s.u. ,ii! l! M 162 JOINT STOCK COMPANIES. ■ I ing for the cliarttT,' it is not, as a rule, considered neces- sary to stipulate beyond this, that any particular proportion of the stock shall he taken uji before cnterinjj; upon the objects of the company, the persons who have subscribed the first iialf being themselves most interested and best capable of judging of the propriety of the step. ]5ut under the English system, which makes no such provision, it is not unusual for the shareholders to stipulate, in order to protect themselves, that the business of the company shall not be entered upon until a certain numl)er of shares have l)een subscribed. It was indeed, at one time discussed whether or not a company could commence business until the whole of the shares had been subscribed. But under the Act of 1862, and amending Acts, there is no restriction of this kind. And it is now no defence to an action for calls, to say that all the shares have not been subscribed.'' Nor will a Court in such case interfere to prevent business from being commenced.' And under the Canadian Act the intention doubtless is, that the company may commence their transactions and call upon the shareholders to con- tribute, as soon after the issue of the letters patent as the directors may deem expedient,^ whether or not a single share has been sul)scribed for beyond the number necessary to obtain the charter. And if no business is entered upon within three years the charter will be held forfeited by non- user.' And /'// /•(' Metropolitan Kailway AVarehousing Co.,*^ a company was ordered to be wound up on this ground, contrary to the wishes of a great majority of the share- holders, it being held, that the depositing of a sum of money with bankers could not be considered a commencement of business. And in the United States, Iichl, that the words "organize" and "organization" mean the election of olh- 1^ ' Viili- siifii'd, pp. 117, 118. -' Oi'iKiiiu'iifal Pyrographic Co. v. Broivii, 2 H.&(?. 63 ; 32 L. J. (Ex.) lyo. ' McDongall v. Jersey Iinpa-ial Hotil Co., 2 H. & M. 528 ; 12 W. K. 1 142. 4 Viilf sec. 32, post. 5 Vide sec. 72, post. Under the English Act the time is one year. Act (Imp.), 1862, sec. 79. By the law of Mass. two years, Batchelder, p. 43. ■^ W. N., 1867,94. OR(}ANIZATION AND MANAGEMENT. 103 cei's, constitutinff complete preparation for the transaction of business, and do not include payment of capital stock.' And in another case, hi'hl, that the life of a corporation dates from its organization, and not from the time it com- menced to do business." And the regularity and validity of the organization cannot be quashed collaterally,' as for instance, by way of defence to an action to recover a : un- paid balance of subscription to the capital stock. 2. Directors. 9 26* The affairs of the Company shall be managed by a Board of not less than three nor more than fifteen Directors. 27> The persons named as such, in the letters patent, shall be the Directors of the Company luitil replaced by others duly appointed in tluir stead. {(() I'l-orixioiidL — Until the first general meeting of tlie company, the jicrsons named in the letters-patent act as provisional directors, whose business it is to manage the affairs of the company and to call a g' neral meeting of its members, for the election of directoi.s and the fiu'ther organization of the company, as soon as conveniently can be had, with due regard to the delays and other formalities precedent to such meeting. No period is fixed l)y tlie Act within which such first meeting must be held, Init by the Imperial Act (Amending) of 1867,' a general meeting must be held within four months from registration, under a pen- iilty of five pounds for every day allowed to elapse tifter that time. Up to the time of such meeting the provisional directors have the same powers as directors elected by the shareholders. They may appoint one of their numljer to th(^ office of manager at a salary, subject of course to his vacation of the position of Director."^ From this it would ' Nc7c Hiircn R. R. Co. v. Chapnuvi, ^^ Conn. 56, 1S71 ; Abb. Dig. Vol. II. -■ Haiiita V. Iiitii'iiMtioinil Pctroiiiim Co., 23 Ohio St., 632, Lucr. 1873. ' Aitroni, ftc, R R. Co. v. La7iroportionod to the nuinlier of directors. Whether the board he large or small, it is usual to vote the same fee, etc." And other writers agree in the advisa])ility of small boards. "It is better to nppoint." says Healey,^ "a small number of good men to manage the company's business, and by substantial remu- neration make it worth their while to devote their best energies to the discharge of their duties." (r) lifnu'ih'fdtion of IHrcrtoyn. — But it is not always the case that the same fee is voted, whether tie board be large or small. Directors indeed, in the absence of agreement, - Under the Quebec Act, the maximum number is nine. (j. 31 ' <-ip. 25 sec. i^.post. By the Code of California, eleven. Proffatt, p r.y the law of Mass. no maximum is fixed. Cox. Joint Stock Cos , p. i.vi * Chid\\yc'j:-Healey, joiiU Stuck Cos., p. 131. Q. 31 Vic. 45 ORGANIZATION AND MANAGEMENT. 1(55 cannot, from the nature of their position alone, lay claim to any remuneration, however arduous may have heen tlu'ir duties. They occupy the position not of servants, but of manaf^ers and trustees, therefore an action for a qiinnium meruit would not lie.' In the Tnited States it is said that directors are not usually compensated for their services as such.= And in a number of leading cases held, that the law does not 'nri\)\y a promise on the part of corporations to pay their directors for services as such. There should be a by-law or resolu- tion of the board to compensate them for their services before thiy can recover.' But where a director renders ser- vices as secretary under a resolution of appointment, which does not specify his remuneration, he may recover the reasonable value of such services, and also of services rendered to the company at the request of the president and directors, as land commissioner and as attornev.'' In FcUoirs v. 'Hie Alhrrt Miniinj Co., in New Brunswick, the directors of a company passed a resolution allowing their president a salary of twelve hundred dollars for the year current, and ordered that a certificate of indebtedness under the corporate seal, should be issued to him in said sum, upon which the president caused the corporate seal to be attached to the certificate. There was no resolution of the stockholders voting the president remuneration for his services, nor was there any provision, either in the Acts of incorporation or the by-laws of the company, for such remuneration. Held, on an action brought on this certifi- cate, that the president was not by law entitled to receive pay for his services, that the board of directors had no right to pass the resolution referred to, that the act of affixing the cor- porate seal to the certificate was of no legal force, and it . I il:H :! l\ ' - 1 1 ' Dunstan v. The Imperial Gaslight Co., 3 B. & Ad. 125. =■ Angell & Ames, Corporations, sec. 317. ' Abb. Dig., Vol. II. •• Rogers v. Hastings, etc, R. R. Co., 22 Minn. 25, Su. Ct., 1875: Dig., Vol II. Abb. ■r n Ml! »ir IGO JOINT STOCK COAri'ANlKS, was open to ilio company to resist payment in n com-t of law.' Undoi'tlie English system however, it is usual to provide for the payment of the directors in the Articles of Associa- tion, and the rate and manner in which sudi payment shall he made. Some companies, as an incentive to exer- tion on the part of the directors, agree to set aside a honus for them, whenever a year's profits enahle a dividend at a given rate to ho declared."' That the remuneration of the directors is contemplated by the present Act is clear from section 82,' which makes the remuneration of the directors one of the matters for which the directors themselves may provide, subject to confirmation by the shareholders at a general meeting, — until which time, no by-law providing for the "payment of the president or any director shall be valid or acted upon." I'nder these circumstances it is usual and expedient, to settle these matters at the lirst general meeting in order to avoid ditliculty thereafter. And /// ir London Granite Co.,' it was iirhJ, that there is no presumption that their fees are to be paid out of the profits only, and that where no profits weri' made they could remunerate themselves out of the capital. xVnd in Orton v. 'J'lic i'lcrchind Firr Bvick C<>.,^ it was liclil, that where remuneration is provided by the Arti- cles of Association, it can be recovered by an action on a covenant. And, Hcmhlc, where it is provided by the by-laws of the company regularly passed and adopted. Jkit though directors are not entitled to recover remuneration where it has not been provided for, they arc entitled to indemnity for losses aid expenses incurred in discharge of their du- ties." And in Ldmhcii v. NoiiJtent lidilinti/ of Ihicnoa Ayrcs Co,,'' it was hchl, that a promise by directors to give their ' Stevens' Dig., 340. 2 Chadwyck-Healey, p. 139. ' Vide post. ■• Harvey Lewis' Case, 26 L. T. N. S. C73. s 13 W. R. 869. ^ shelford, Joint Stock Cos., p. 96. and see sec. ^"j.post. 7 18 W. R. 180. ORGANIZATION AND MANAGEMENT. 1G7 services gratuitously was a more hikIkiii jxictioii, and did not prevent them from recovering the salaries allotted to them under the pievious contract Avith the conipan}-, as defined l)v tlie Articles of Association. 'i!i 28> No person shall be elected or appointed as a Director thereafter, unless he is a shareholder, owning stock absolutely in his own right, anil to the amount recjuired bj* the by-laws of the Company, and not in arrear in respect of any call thereon ; and the major part of the Directors of the Company shall, at all times, be persons resident in Canada. (//) Qudlijicniion of. — The rule is, thf t a person to act as director in a Joint Stock Company, shTl be the honn jidr owner of a certain number of shares, as a guarantee of his interest in its affairs." The English Act, however, makes no stipulation of this kind, the matter being left entirely in the hands of the parties themselves, and the section above, though providing that a director must be the owner of stock, leaves the extent of such qualification with the Company itself. This question of qualification has given rise to a number of points, which have been the subject of litigation and judicial decision. One of these was as to the meaning of the term itself. In Lord Claud Hamilton's case,- the decision implied that "qualification" would mean qualification for election and not necessarily qualification for direc- tor. AVe say "implied" because this was not the direct holding. The case was of one, who, having sub- scribed the memorandum of association, was sought to be held as a contributor, under a clause subsequently added to the regulations of the company, l)y which the "future qualification" of a director was fixed at so many shares, and it was lichi, that this could apply only to directors elected subsequently to the addition of the clause, and not to directors acting as such by virtue of their position. ! t: t III i ill ' But in the absence of any statutory provision stock qualification may be dispensed with State v. McDaniel, 22 Ohio 354, Su. Ct., 1872. » L. R. 8, Ch. 548. 108 JOINT STOCK COMPANIES. w And so, by the terms of the above section, th(! provi- sional directors are oxchided from the liability to a share (lualilication, if it so happened, that any one or more of the ai)plicants were not the holdiTs of the stock at the time of the j,'ranting of the letters patent.' And the result has been held the same where a person who is not n shareholder is elected a director, and is allotted stock for tuj express purpose of (pialifvin^' liiiii to accept, but does not formally accept. Thus in the East Norfolk Tramway Co.'s case,- it was held, that a person who had been unanimously elected a di- rector, but who had refused to act, although the company had sent him twenty shares in order to his qualilication, could not be held liable as a contributory, lu the Percy \' Kelly Nickel, Cobalt and Chrome Iron Mining Co.'s case,' the articles of the company provided, that no person should l)e (pialified for director who was not the holder of fifty shares. The board of directors undertook to elect A. a director, though he had no stock. He attended two meet- ings and then resigned. Held, that his election was void. And in Jenner's case,-* (same company), the defendant hav- ing been chosen a director, attended six meetings of the board and took an active part in the proceedings, and his name appeared in the prospectus of the company as a director, but he never held any shares. Held, on a wind- ing up, that he had never been a director, and couid not be made a contributory. The result was the same in Kip- liii(f V. Todd.^ In that case, a railway company was incor- porated in 1866, by a special Act, which embodied also the Companies' Clauses Consolidation Act, 1845. ' But where the articles of association of a company provided that everj" director should at the time of his appointment, and thenceforth during his continuance in office hold, etc. Held that this applied to original directors named by the articles of association. In re Esparto trading com- pany 48, L. J. Ch. 573. = 5 Ch. D. 963, and i Leg. News, Men., p. 24. 1 5 Ch. D. 705, and i Leg. News, Mon., p. 35. ■• 7 Ch. D. 132, and i Leg. News, Men., p. 366. 5 3 C. P. D. 550, II. Leg. News, Mon., fii, 27 W. R. 84 ; 47 Law J. R 617, 39 L. T. 188. OUCiANIZATION .\N1> MANAdK.MKNT. 169 Tlie special Act provided, tbiit tlic ([iinlilication for directors should c fifty paid up shares, aiidT. an*' A.woro ajjpointed directors until the lirst ordinary ineetin<,' of the company. No such nieetiufj; was ever ludd. T. sent his vvh'v^- iiation to a meeting,' of the hoard of directors, ludd in Au^nist, 18()G, i)efore he had acted in any way as director, and it was accepted, and he ceased to have anything,' to do with the company in any way. No shares were ever allotted him, and no call was ever niade upon him. One S. acted as director from the time of T.'s resij^Miafion. A. acted as director until December, 1807, when he resij^ned. No shares were ever allotted him. From the time of his resi^,'nation, one B. acted as director. No re<^ister of shareholders ex- isted until 18(50, and then one was infornuilly drawn up. From that it appeared that all the shares had been allotted, but none to T. or A. Since 18G1), the company Ix'came in- debted to another, and in 187C, tlu^ latter j^'ot judj^ment for a larffe sum. This judj^ment was not satisfied, and thereupo)^ Kriir/dcidn was issued a<^ainst T. iv A. as the holders of fifty sliarcs each. IfchJ, that there was an implied acceptance by the company of T. and A.'s surrender of their inchoate rij^ht to shares and evidence enough of it, that tin,' claim of the company creditor had accrued since such accept- ance, and therefore, as against it, T. it A. were not estopped from denying their liability, and the scire fucum must be dismissed. A much stronger and more recent case of the same kind is that of the Xanti/. Glo. Iron Worhn Co. v. drart-H.' In that case, defendant improperly received from the pro- moters fifty shares of a company on his l)ecoming director, and acted as director until 1874, when he resigned. AVhile director, he assisted in carrying out a purchase by tlie company from the promoters. The company brought an action against him in 1877. Held, that the fifty shares be- longed to the company, and that defendant was a trustee for them, and that the company were entitled to elect to take L. R. 12, Ch. D. 738. P^-T- 170 JOINT STOCK COMPANIES. ;! 1)1 the value of the shares when received hy the defendant, and four per cent, from tlie date of the transfer. But where, under simihxr circumstances, a compulsory winding up was ordered, the i)arties were held liahle. In that case, the company was formed in 1871, under a s2)oeial Act incorporating the Companies' Clauses Consoli- daticm Act, 1815, and was registered in 1875, under the Compani("s' Act, 1862. At a meeting held on the ninth of July, 1872, it was resolved, that 200 paid up shares should he issued to A. & B., who were officers of the com- pany, in trust for the company. These shares were de- scrihed in th.e register, as held in trust for the company, the amount paid heing nil. At a meeting held on the 27th January, 1873, it was resolved, that 200 shares he allotted to C. (the chairman), to he held in trust for the company for the purpose of insuring a quorum at a certahi special general meeting. They were registered in C 's name, and descrihed as held in trust for the company, the amount paid heing /(//. At a meeting held o:i the :^9th Septeniher, 1875, A., B., it C. heing present and voting in respect of the shares hefore mentioned, a resolution was passed for the registration of the company under the Companies' Act, 18G2, and with a view to winding up. At a meeting of directors held on the 2Gth Novemher, 1875, C. in the chair, it was resolved that 200 guaranteed shares be allotted to C, and 150 to ]). (also an ofticer of the company), in trust for the company, for the sole purpose of insuring a (pio- rum for the extraordinarv meetings of shareholders to carrv out the winding up, the shares not to he voted on at other meetings. At an extraordinary gi'neral meeting, held the same day, a winding up was agreed upon, A. and 13. voting 1);* proxy, and C. ^: 1). heing present as holders of sliarcs respectively allotted to them. C. then signed the list of menihers, which was afterwards delivered to the Itegistrar of Joint Stock Companies under section 183 of the Com- panies Act, 18G2, in which A., B., C. and D. were described in the manner before mentioned. In the settlement of nominal capital delivered under section 183, it was ORGANIZATION AND MANAGEMENT. 171 stated that 1162 guaranti'ed shares Lai l>«t^E issued, and that on the 750 shares issued U* A.. B., C, and D. nothing had been paid. An ord'er was after- wards made for the compulsory winding ujxnf itliietn^tmpany, all its liabilities having been incurred before ttfc registra- tion. Held, that A., B., C. and D. were liaM-e a» eontribu- tories in respect of the shares allotted to tht-m." The most recent case is that of the Esitartvi Trading Co.,' in which A. and B., in July 18GG, signed the 3i,-::li' randum of association for one share each. A. was entere^d im tilie register for one share, and B. for four shares. B. -sira.- appointed flirector of the company by one of the artiiclte* of associa- tion, and by another, it was provided that ■^-th^tv director should at the time of his ap'jointnjenl. ;nj ii tliKnceforth (lurmg his continuance in office, hold at ]»;-(-■: :' rir shi;rts, B. acted for some time as director, and tLi ,:.. :ut due on his shares on allottment, and certain call-, wrre debited against him in the books of the company. A. siiud B. both signed the memorandum for one share, at tli-^ retj-uest of the promoter, and on the understanding tliatt itEtey should not be called upon to pay anything in res]*t'( t !* them, and in 1867, when they were asked to pay the v,.u.l-. they re- liuested the du'ectors to cancel the shares, aEmltljieilirectors did so. The directors had power under the articles, to cancel shares on non-payment o'' calls, lu l»i7eii fir^na timt.' t > time in different forms, but principally a« U* tlie liability ' In re Eniiis v. U'tst Clan R. R. Co.. 3 L. K It i«7 ^ 28 W. R. 146. ' Re Metropolitan Public Carriage Comjiany, l^rcwii i v.nm, L. R. o, Ch. roi ; ai.d Green's case, L. K. 18, Eq. 428. ! I mkk w 172 JOINT STOCK COMPANIES. d'lll of the person as a contributory on shares allotted to him for the express purpose of qualitication. The rule iledueihle from all the eases appears to be, that if a person is not (jualitied accordiag to the by-laws of the company, 'it thf time of hiH clccfioii, the whole transaction will l»e null, although a sufficient number of shares be afterwards allot- ted to him, in order to qualify him for the position. Nor will the rule be satisfied by a transfer to him of nominally paid-up shares.' But if a person accept an allotment of shares, and consent that his name be placed among the numl)er of directors, he cannot escape liability with respect to such shares." (f) " In A/.s oicn rii/Jit." — In Pidhrook v. liichminid Miuiti'i Co., a director was held still qualified though he had trans- ferred his shares, no change having been made in the register. In that case, one of the articles of association of the company provided, that no person should be eligil>le as a director unless he held as registered member, in his <>irn riiiJit, capital of the nominal value of £500: and another, that a director was to vacate his office if at any time he held ^'.s.s than the nominal amount of capital required as his qualification for election. P., whose name appeared on the register of the company as holder of 100 shares, was elected a director on the 23rd of August, 1877. He had, however, transferred the shares by way of mortgage in the previous January, but his name by agreement remained on the register. The other directors, being informed of the transfer by P., excluded him from the board of directors, on t'ae ground, that he had vacated his office l)y being no longer in his own right of the necessary qualification shares. On motion by P., in an action ag.ainst the com- pany and the other directors, to restrain them from so excluding him, it was held, that P. had a right of action as ' Rf Llanharry Hematite Co., Roneys case, 33 L. J.,Ch.73i, 736; and Great Northern Coal Co., Curries case, 3 D. G., J. & S. 367. -' As to contracts with third persons made by unqualified directors vide imfra. 1 48 Law, J. Rep. 65. ORGANIZATION AND MANAGEMENT. 173 for an individual wrong done to him personally, and that the words holder "in his own right" did not mean l)ene- ficial holder; hut that they must not he shares to which the holder is entitled as legal personal rei)resentative, hus- band of a female member, or trustee in l)ankruptcy. {(•) DiaqunlifivatwH of T>inrfors. — The Canadian Act makes no provision for the disqualification of Directors while holding office, though it may be presumed that in the event of their ceasing to own and hold the requisite number of shares, they would he considered disqualified, and na longer entitled to sit and act as directors.' But a mort- gage of his shares l)y a director, would not necessarily auioiuit to a disqualitication.- And, seiiihlc, that by the law of the Province of Quebec, the rule would be the same with regard to a pledge or transfer of such shares as col- lateral security. By the schedule of rules appended to the Imperial Act, 186"2, a director may also become disqualified if he holds any other office or place of profit under the company. The reasons given for this rule are, that the comi)any have a right to the entire services of their paid directors, and the general one that no trustee can derive any l)enetit from dealing with the trust funds, especially in cases like this, where the interest of the trustee would tend to de^n-ive the cf.sfiii qui trust of his advice and assistance to which, by his l)()sition of director, the latter would be entitled.' But it is perfectly competent to a company to stipulate that the right to these exclusive services on the part of their direc- tors is a benefit of which they do not desire to avail them- selves/ And, moreover, the rule is restricted to offices of profit, tliat is, for which he receives remuneration. And so where a director did the work of a secretary, without remu- ' Chadwyck Henley Joint Stock Ci-s., p. 136. ' Ciimming v. Pnscott, 2 V. & C. Ex. in Eq. 488. Shares being person- ality, vvou'd not be susceptible of mortgnge l)y the law of the Province of (,)i:ebec. Civil Code, Art. 2. Hill, 32 L. J., Ch. 154, 7 L. T. 656; Central Darjeeliiif; Tea Co., 15 L. T. J34 ; .\nKlo-Californian Gold Mining t'o., c. />. Williamson, 17 L. T. 164. OIUJANIZATION AND MANAGEMENT. 175 comi)any. It was provided, that the certificates of 5,000 shares should l)e retained by the company for two years from incori)orati()n. Immediately after the allotment of these shares to the vendors, they transferred 1,100 of them to M. without any consideration. The company was sul)- sequently wound up, and at the (Uite of the winding-up M. had still 855 of these shares registered in his name, having assigned the remaining 255, in some instances without any considiration. Ifin'(t(irii, ralid. And another jjoint worthy of remark is that, with respect to third parties at least, defects or irregularities in the appointment or election of a director, do not invalidate acts done l)y him hdiui jidr in that capacity. If it were otherwise, the affairs of a com- pany would l)e always subject to be thrown into confusion, if indeed, it would be possible for a company to carry on, owing to the lack of confidence .vhich such a state of things would naturally engender. In the County Life Assurance Co.'s case,^ it was held that third persons are not bound to ' /;( rf Diamoii'l Fuel Co., Metcalf's case, 28 \V. R. 417. - EiiropitiH, etc., K. K. Co. v. Pour, 59 Me. 277 Su. (^t. 1871. ! Cuvunissiuiurs of Tippcainoc v. Revnolds, 44 Iml. 509 Su. Ct Abb. Dig. Vol. II. * East Punt Dii Mining Co. v. Mcriyu'ciitluy, 2 H. I'v: M. 254. 5 L. K. 5, Ch. 288. i«7j; !i ■.■ ,i •:" 8V.i - IKVI I V ■ \ i ii : ', ■ i ill 17G JOINT STOCK COMPANIES. see that a director is properly appointed, and if they deal with directors in good faith, without knowledge of defects of appointment, the company will he hound.' But acts done l)y them affecting shareholders, <'. ()., the making of calls, or forfeiture of shares, would he fruitless. And the jurisprudence was, that such acts could not he suhsequently validated. Now however, the Act of 1862, makes good the acts of officers invalidly appointed until the invalidity of the appointment is shown." (/O Retirement of. Another point akin to this is the re- tirement of a director during the i)endancy of the perio 1 for which he was elected. Has a director or not the right to retire at will during the pendancy of such period '? The cases, so far as has heen discovered, give no definite or decisive answer to this. It was, indeed, decided in re Gloucester, etc., Railway Company,' that a director may retire, when the regulations of the company do not provide for retirement, whether his resignation he accepted or not ; "hut this case," says Healey,^ "api)ears to have turned somewhat upon the fact, that the regulations evidently did contemplate the possihility of a director hecoming unwilh'ng to act any longer, though they gave no directions as to the course to be adopted in effecting the retirement." Other writers discuss the question on general principles, arriving sometimes at exactly opposite conclusions. Considered in their capacity as agents, says one, they have the power to put an end to their agency at will, provided they give pro- per notice. Considered as trustees, says another, they cannot retire until the expiration of the term or the termin- ation of the trust. The only conclusion, then, which can he arrived at, after consideration of the authorities and cases, and which seems to be the true solution of the diffi- culty, is that each case would depend upon the circum- stances connected with it. That is to say, that if a director .!.! nvick-Healey Joint Stock Cos., p. 13S. ,t!on 67. '* .':' dnds case, 4 De. G. M. & G. 769. • '.ti. Kvyck-Healey Joint Stock Cos., p. 141. mw.i ORGANIZATION AND MANAGEMENT. 177 wished to retire from his office in medium officio, and there were no objection to it on the part of his co-directors, his resignation would doubtless be accepted. On the other hand, if he wished to retire merely to escape from the responsibilities of the position at a time when the company was suffering from adverse circumstances, or from difficulty or embarrassment of any kind, or if upon any other ground the company could show valid cause why he should not be allowed to retire, there is no doubt but they woulf^l be sus- tained in their objection by the Courts." And in North iC- South Si> Ames, corprs, sec. 498. 1 Sec. 319, and see Profifatt, corprs, CO. * Angell & Ames, sec. 497. pf 180 JOINT STOCK COMPANIES. oftici' for a lixod tcrin, and no meotinf? is considered duly orj^aui/iid unlcsH o^jcnod l)y liira, and sndi ortici'r is prc- vunt(id l)v the violence of members of the association from dischai'f:;ing liis duty at the accustomed place of meetinle V. Albany, etc., R. R. Co.. N. Y. Su. Ct., i86^. 1 Johnson V. Jones, 23 N. Y. 216, 1872 ; Abb. Dig. Vol. II. 4 Ibid. 5 People V. Albany, clc.R.R. Co.. 55 Barb, 344 N. Y. Su. Ct,, 1869 ; Abb. Dig. Vol. II. 1H2 .TOINT STOCK COM PA NIKS. ;vf///o,» laid by {iny intcrcstod person. But tlic Court will not v virtue of appointnu'ut. Thus, an action in tlie nature of a quo irar- ranfo will not lie a In default only of other express provisions in such behalf, by the letters patent or by-laws of the Company, — 1. Such election shall take place yearly, all the members of the Board retiring, and (if otherwise qualified) being eligible for re-election : 2. Notice of the time and place for holdijig general meetings of the Company shall be given at least twenty-one days previously thereto, in some newspaper published in or as near as may be to the place where the chief office or place of business of the Company is situate; 3. At all general meetings of the Company, each shareholder shall be entitled to give one vote for each share then held by him. Such votes may be given in person or by proxy, — the holder of any such proxy being him- self a shareholder. But no shareholder shall be entitled, either in person or by proxy, to vote at any meeting unless he shall have paid all the calls upon aU the shares held by him. All questions proposed for the consider- ation of the shareholders shall be determined by the majority of votes, — ' 2 Mac. & G. 216, and see nlso Hayman v. Governing body of Rugby School, L. R. 18, Eq. 28, and cases there cited. ■ Ramsay v. Eric R. R. Co.. 7 Abb., ir. N. S. 156, Su. Ct.. 1869; Abb. Dig., Vol. II. M n i iii 184 JOINT STOCK COMPANIES. iiiiiii the Chairman presiding at such meeting having the casting vote in case of an equality of votes: 4. Elections of Directors shall be by ballot ; 5. Vacancies occurring in the Board of Directors may be filled for the unexpired remainder of the term, by the Board, from among the qualified shareholders of the Company ; 6. The Directors shall, from time to time, elect from among themselves a I'resident, and if they see fit, a Vice-President of the Company; and may also name all other officers thereof. 31. If, at any time, an election of Directors be not made, or do not take effect at the proper time, the Company shall not be held to be thereby dis- solved ; but such election may take place at any general meeting of the Company duly called for that purpose; and the retiring Directors shall continue in office until their successors are elected. These two sections, and the power given by section 32,' to " ono-fourth part in value of the shareholders," to call a special general meeting, or, as it is termed in the English Act, " an extraordinary general meeting," embrace all that is laid down in the Act concerning the meetings of the com- pany. Mixed up with these rules concerning the calling and conduct of general meetings are also some further re- ferences to the election of directors. But lirst as to the meeting at which such elections are had. {(i) Notice <>t'. At least twenty-one days notice of such meeting, and of the time, place, etc,, at which it is to be held, must be given in a public newspaper pul)lislied in the place where the chief office or place of business of the com- pany is situated. By the Quebec Act, the length of notice is ten days," and the English Act,^ seven days is all that is con- sidered necessary. The longer notice, however, is probably prefera ' ;, especially with respect to companies formed under tiie Dominion Act, whose ramifications naturally ex- tend over a larger area of country, and whose interests will naturally be much more widely diffused than those of companies formed under the Quebec Act. Under the English Act the system of notifying is different — the notice i » PoU. ' sec 10. 1 sec. 52. 1): ORGANIZATION AND MANAGEME5T. 185 neing personal instead of. by publication in a aewspaper as is the case here. Whether the want of such notice -woald im all cases in- validate tlie meetinti; may be considered dorafellM. In Ston iicl V. Holhidajj, in the United States Ciix-raitt Court,' it was held, that where every member of a boar-iS of directors had notice of a special meeting and was in arii-ri lance, the fact that the noticj was verbal instead of in Tmcing was imma- terial. But the fact that one of the by-law^- lixes the day upon which the annual meeting for the elK-tiiiai; Knf directors shall be held, is not a sutKcient notice of tL<- time and place at which the meeting will be held.- (b) OnliiKiri/ iui(h'.rfr((i)r(Ii)i(trii. The e'en!-; rail meetings of a company may be (Hvided into two kinds, viz.: ordinary and extraordinary. The former are convenedal r-rvrular and stated periods, as established by the letters jtak u* « 'F Kv-Iaws of the company, as annually or semi-annually. Tine latter, those which are convened at any other time fo>T tiie transaction of special business not forseen or provid^ii for at the ordi- nary general meetings. By the Com] 'i:.: -' Act (Imp.), 1H67,' a general meeting of a company i^u>.-u h^ held not later than four months from the time of iime«>r|x>ration, and the subsequent ones at such times and plannes as may be prescribed. And by the Act of 1862,-' it L» provided that "All business shall be deemed special that i» transacted by an extraordinary meeting, and all that is transacted at an ordinary meeting, with the exception of saBi:tioniug a divi- dend, and the consideration of the accoimts. balance sheets, and the ordinary report of the directors." The object of this enumeration of matters which may W termed ordi- nary as distinguiclied from special ItusiuriN? and in which it is somewhat remarkable the electitsn of dirttL-tora is not in- cluded) is apparently to define when thi- n«>tiee must con- tain a detail of the business to be traufea<-l«Li>l, as we find by ' Kansas 139, Withrow's Corporation Cases. " Abb. Dig., Vol. II., p. 241. ' sec. 39. ■» Art. 36, Sch. I. 11^ M '' 11 ii 11 186 JOINT STOCK COMPANIES. ^■1 mi the precedinjj; article that the " General notice of such (special) business shall he given to the members in the man- ner hereinafter mentioned, that is, in the notices of the meeting. And this is in accordance with the jurisprudence which has established that, -vvhen an extraordinary meeting is called for tht- transaction of business of which notice is necessary, the notice must give substantial information of that which is proposed to be done.' And seiiiJ>h' when special biisiness (as above defined) is to be transacted at an ordin- ary general meeting. And therefore, where notice was given of a meeting '"for the purpose of considering, and if so determined on, of passing a resolution to wind up the company voluntarily," and at the meeting a resolution was passed, " That it has been proved to the satisfaction of the company that the company cannot, by reason of its liabilities, continue its business, and it is advisable to wind up the same," and appointing a liquidator, it was held, that the resolution was invalid as an extraordinary resolution, and that the notice though sufficient for the purpose of passing a resolution re- quiring confirmation, was insufficient for the purpose of passing a resolution requiring no confirmation.- And in another case, where the notice was "To take into consideration the position of the company's affairs and the desirability of bringing its operations to a close, and to pass a resolution for the voluntary winding-up of the company, should it be determined to do so," and to appoint liqui- dators; and at the meeting a resolution was passed in tliP words of section 129,^ this was also held to be invalid, and a supervision order which had been made was dis- charg'^d.'' But to understand the effect of these two decisions it must be borne in mind that under the Act a " winding-up ' Ctiirdiu (iitlly Co. v. Mc Lister, i App. Cas. 39. - Bridfort Old Brewery Co., L. R. 2, Ch. 191. < Providing; for the winding up of Companies. 4 Silkstone Fall. Co., i Ch., D. 38. ORGANIZATION AND MANAGEMENT. 187 resolution" may be validly passed in either of two ways, viz.: by a special resolution requirin*;- confirmation at a sul)sequent meetinp;, or l)y a linal resolution reipiiring no such confirmation; and in l)otli of tliese cases the decision went on the n;r()und, that the notice should have drawn attention to the fact that the proceeding proposed was final, and would require no sul)scquent confirmation. The gen- eral rule is, however, (though not expressly stated in the Statute,) that the notice or advertisement should state the special hiisini'ss which it is proposed to consider, either at in ordinary or extraordinarv meeting." {<•) WJtcrc held. As a rule the meetings, both of the cor- poration itself and of the directors, should l)e held at its chief office and place of business, or at least within the jurisdiction by Avhich it was created. But although it has been laid down that a corporation cannot enact or pass by- laws, or any rule or resolution for its government, exce[)t within such jurisdiction,' it has also been held, that the directors of a corporation may, as its agents, authorize a conveyance of its real estate at a meeting held outside of the State by which it was incorporated. ' {(I) Qiionini. The number which at such general meet- ings shall constitute a quorum for the transaction of busi- ness is not fixed by the Statute, but l>y the next section,-* is made the subject of a by-law, or could no doubt, thoagli not so stated, be settled in the letters patent. This latter would appear to be the i^referable method, as, if left to the company at its first general meeting, the question must necessarily arise : what constituti'S a quorum for the pas- sage of such by-law'.' or. in other words, what constiluUs a quorum for the constitution of a quorum '? In the ab- sence of any special provision, any number, however small, ' But see next section post, at the words "duly called for that purpose,' ■nd :\ho post, concernnig the winding u-' of Companies. - Mitchell V. Vermont Copper Mining Co., 40 N. Y. 406, 1876 ; Abb. Dig., Vol. II. I Bellows V. Todd, 39 Iowa 209, Su. Ct., 1874; Abb. Dig., Vol. II.. ami Poterston R. R. Co. v. Con-drey. 11 Wall. 459, H. S. Su. Ct., 1870; lb. * Vide Post. ' '! ii If I ] ; 188 JOINT STOCK COMPANIES. is in sucli case considered by law as constituting a quorum.' This, as is pointed out, refers to a body consisting of an in- definite number, as the number of shareholders in a com- pany, but where the whole number is definite, as the number of directors, the rule is that a majority constitute a quorum." Thus in Wdls v. lidhirai/ White Rnhhev Co., in the United States,^ it was said that, in the absence of any different regulations in the charter, etc., a majority of the directors form a quorum, and a vote of the majority of the quorum at a meeting duly convened, determined the action of the board. If there are five directors, a resolution passed by a vote of two, at which three are present, is pre- sumablv binding. The natural rule then to be observed by a general meet- ing, in the absence of any provision, would api^ear to be a representation of a majority of the shares issued and taken up, but by Art 37 of schedule 1, of the Imperial Statute of 1862, the quorum is to be ascertained as follows : "If the persons who have taken shares in the company at the time of the meeting do not exceed ten in number, the quorum shall be five ; if they exceed ten there shall be added to the above quorum one for every five additional members up to fifty, and one for every ten additional members after fifty, with this limitation, that no quorum shall in any case exceed twenty. Another useful rule, provided l)y the following article, viz.: Art. 38 is, " If within one hour from the time appointed for the meeting, a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved. In any other case it shall stand ad- journed to the same day in the next week at the same time and jilace ; and if at such adjourned meeting a quorum is not present, it shall be adjourned sine die.'" if) Chairmanship. A quorum having been obtained, and ready for the transaction of business, the chairman of the ' Thring, Joint Stock Cos., p. 95. = Ibid, p. 96. 3 19 N. J. 402, 1869 ; Abb. Dig., Vol. II. ORGANIZATION AND MANAGEMENT. 189 (lirectni's, if any, and if present, in the natural chairman of the lneetin^^ If none, then the meeting will choose one from ainonrj; its members in the ordinary manner. The rules governing the deliberations of the meeting are the same as those governing the proceedings of deliberative assemblies generally, except with respect to the voting, for which there are special rules in all Joint Stock Com- panies regulations, or all Joint Stock Companies Acts, as by the above section is herein laid down. That rule in the present case is that (/) Votiiu/. Each share represented shall can v a vote. This is a very simple rule, but one involving a little trouble in deter- mining beforehand to how many votes each member present is entitled. Under the English Act,' in the absence of any regulations, each memlx'r is entitled to one vote (as at any ordinary assemblage), but by article 44 of the schedvde of regulations appended to the Act, the following intricate method of voting is laid down : " Every member shall have one vote for every share up to ten, he shall have an addi- tional vote for every five shares beyond the first ten shares up to one hundred, and an additional vote for every ten shares beyond the first hundred shares." Thus, if a mem- ber had, for example, two hundred and sixty shares he would be entitled to forty-four votes, thus : 1 each first ten shares 10 1 each for every five between ten and a hundred 18 1 each for every ten beyond the first hundred 16 f ' iii h 44 The object of this system is clearly to strike a mean be- tween the injustice of allowing the holder of one share as much voice in the management of a company as the holder • Sec. 52. ■Jkfc... W I 190 JOINT 8TO0K COMPAMKH. of a hundred, and tlu; injustice of allowinj; two or three (tapitahsts to control to the prejudice of a hirge numl)er (it nuiy he) of small shareholders.' The freedom of every shareholder to vote as he thinks l)est for his ov.n interests is unrestricted, and in the ahsence of anything to the contrary in the articles (or hy-laws) of the company, may vote upon a question in which he is per- sonally interested.-' So that where the question was whether or not the company should adopt a hill which had heen filed to impeach the title of some of the shareholders, it was held that the shareholders in question were entitled to vote.' A lunatic or ii^' .y, according to the English articles already re ferret! v shy his cirrator bonis. And so with mhiors and married women. But as between the share- holder and the ."onipany, +he nerson entitled to the right of voting is the person k-al)y entitl h1 to the shares, the per- son whose name is on the register. The company have no . light to inquire into the beneficial ownership.^ And if one (»r more persons are entitled to a share or shares the member whose name stands first in the register of members as one of the holders of such shares, shall be entitled to vote in respect of the same.'' But in re Wcdgewood Coal and Iron Co.,' )irl(l that holders of debentures which pass from hand to hand by delivery, must produce them at or before a meeting called to vote upon a reconstruction scheme, in order to be entitled to vote at such meeting. ' This, as every one knows who has had any experience in Joint Stock Cos. is fre(iuently witnessed. - London & Mercantile Discount Co., L. R. i Eq. 277. ■f East Pant Dn Mining Co. v. Mcrryii'cather, 2 H. & M. 254. 4 Art. 45. 5 Pcndir V. Liishington, 6 Ch. D. 70 ; and in Johnson v. Jones, held that Stockholders who are not such on the day an election is held cannot vote, althou^'h they were Stockholders on the day it should have been held ; 23 N. J. Eq. 21G, 1S72. 6 Act 1862, Sch. I, Art. 46. 7 6 Ch. D. 627. ORGANIZATION AND MANAGEMENT. 191 Apiain, a person is by all the ConipaiiioH' Acts,' entitled to vote on shares held hy him in trust,"' and ficiiililc, even \vhere he is trustee for the company itself, if his name ap- pears on the register as the holder of such shares in trust. 13ut, in the United States held, that a corporation cannot vote upon stock held hy itself, even though held by a trus- tee as a i)ledge for money loaned by third persons to the corporation, or, in other words, it cannot be a holder of its own capital stock so as to be entitled to vote.' And the chairman also, it would appear, may vote on his shares as any other member, though he has by the section, the casting vote in case of tie, l)esides. And a person, though not present, may vote ])y proxy, under the above section, and indeed, according to the uni- versal practice of Joint Stock Companies, though no such right exists at common law, " except," says Thring,'' " in the case of a peer of England voting in the House of Lords." The object of this privilege is clearly to allow those who are unable to be present at a general meeting, either from sickness, distance, or any other cause, to exercise, through or by means of others, the right which their shares give them of influencing the affairs of an institution in which their means or fortunes are involved.^ ti rfj Miistliave jndd all calls. But the right of voting is suspended if the shareholder is in arrears upon calls made ' Post. - Shropshire Union Ry. v. The Queen, L. R. 7 H. L. 496; Butler v. CumpstoH, L. R. 7 Eq. iG; James v. May. L. R. 6 H. L. 32S ; Cruse v. Paine, L. R. 6 Eq. G41, 4 Ch. 441 ; Hemming v. Maddiek, L. R. 7 Ch. 395. ^ Breti'ster v. Hartley, 37 Cal. 15, Su. Ct., 1869; Abb. Dig., Vol. II. Sec however, Ennis v. West Clare Ry. Co., (ante p.) in which certain Directors were in the habit of voting on stock registered as held in trust for the Company. But the point was not raised. ^ Joint Stock Cos., p. 97, following May's Practice of Parliament. 5 By the Sch. to the Imp. Act 1862, see 49, the instrument appointing a proxy, must be in writing under the hand of the appointer, or if the appointer is a corporation, under their common seal, and sh?ll be attested by one or more witnesses, and shall be deposited at the registered office of the Company not less than seventy-two hours before the time for holding the meeting, and shall not be valid for more than twelve months from its date. For form of appointment see post. 192 JOINT STOCK COMPANIES. \ by the company. This provision which is found also in the otht-r Acts referred to, appears to be imposed as a penalty, or rather, as an extra inducement held out to shareholders to attend to the calls made in respect of their shares. But, if not expressly provided by Statute or by the letters patent of the company, no such suspension of their privilege would follow, as the rij^dit to vote in general meeting of a com- pany, exists by virtue of their position as members and in- ti'ri'UHi'i'x. The same restriction is by special provision also as we shall see hereafter, placed upon the right of a mem- ber to transfer his shares and to obtain recognition and re- gistration of such transfers. And these two restraints have between them, given rise to the rather nice question as to when a call is over due, and to the relation between the words '* due," and "payable." The language of the English Act,' is " No member shall be entitled to vote at any general meeting unless all calls due from him have been paid." And in Dawe's case,"" it was held that a mem- ber was indebted in respect of a call as soon as the reso- lution is passed, and before it becomes payable. By Art. 5 of the schedule also, it is provided that, "A call shall be deemed to have been made at the time when the reso- lution of the directors authorizing such call was passed ;" and the same language is used in a subsequent section of the present Act.^ These difiticulties, however, are now gen- erally and should be always avoided by a stipulation in the notice, that the call will be due and payable on and after a certain day, in which case the rights of the shareholder could not be affected until such day had passed without payment having been made. ig) Manner of rotinff. The ordinary manner of voting, unless otherwise stipulated, or unless the voice of the meet- ing is 80 unmistakeably in favour of the one side or the other, is by poll or count. "At any meeting mentioned in • Art. 47, Sch. i. 38 L. J. Ch. 512. i Sec. 53 post. OKdANIZATION AN'D MANAdKMK.NT. 19a this section," saya the 81st section of the Act (Imp.). 1802, *' unless a [)oll is demanded by at least five meml)ei-s, a de- claration of the elniirman that tlie resolution has l)een car- ried, shall he deemed conclusive evidence of the fact with- out proof of the numht'r or proportion of the votes recorded in favor of or aj^ainst the sanu;." Some rule of this kind is very necessary for the purpose of avoiding doul)ts and disputes as to the correctness of the chairman's decision, and the loss of time and "general dissatisfaction which invariably results therefrom. A.n interesting; case in point was that of the Qnvcn v. TJic (Jorcritmciit Stocli Invastineiit Co.' In that case, the articles of association contained the fol- lowing;-: " Art. 04. Upon all ({uestions at every meeting a show of hands shall, in the ih'st instance be taken ; and unless l)efore or immediately upon such shew of hands a poll l>e duly demanded, as hereinafter mentioned, su(!h question shall l)e decided l)v the result of a shew of hands. Art. 07. If a poll is demanded by shareholders qualified to vote and holding in the aggregate, 2, ()()() shares . . it shall be taken, .... and the result of such poll shall be deemed to be the resolution of the company. Art. 7f>. Votes may be given either personally or l)y proxy. Art. 79. A proxy shall be ... . in the following form: I, .appoint to be my proxy at the general meeting, , to vote for me in my name," etc. At a shew of hands at a general meeting for director, F. was declared l)y tlie chairman to have been chosen. A poll was then demanded by a shareholder holding twenty shares only, Imt having proxies for over 2,000. F. failed to get a majority, and anotln'r was declared elected. On mandamus by F., it was held, that he was entitled to the office, and should be installed. :.', il--^. 3; The election of directors however, is, by the fourth clause of the section, and in accordance with the general 3 Q. B. D. 442, 2 Leg. News, Mon. 14 62. s.c. ( t l!)l .lOINT STOCK ('(t.Ml'AMKS. |»nicti(;(' Ity hiillot, conccviiiii;:; which lu* instructions tire iic(n'ssiii'y. lint the stutcniciit in the third cliuisi' that '■ All (|iU'stions projioscd for the cousidci-atioii of the share- holders shall he dctcriuiiicd hy the majority of votes,"" is III i)|)eii and pal[)al)le contradiction of the pi'ovision con- cerning votinf^' on questions of a chanj^'e of the constitution referred to in sections 17 and '21.' for instance, \vhich pro- vides that the unijority necessary to a decision in favor of such a change is " two-thirds in value of the shari'holdeis present,"' etc.- The meaning, therefore, nnist he held to 1)0 that unless otherwise provided, the nnijority shall goxcrn. Thus, in 'I'lic SHIht Ijijht Co. v. Sillier, ■ an action hein.Li pending against the directors of a (rompany hrought l>y certain sliareholders sm'ng in the name of the company, at a general meeting it was resolvi'd, that the coniiian\ should he wound up voluntarily, and it was at the same time resolved hy an overwhelming majority of the share- holders, that the name of the comi)any should not he used as plaintiff in the action. Tlu' minority insisting on their right to continue tlu' action in the name of the plaintiff. It was lichl, on the application of the liquidator, that the minority were hound l)y the wishes of the majority, and that the name of the company must he struck out as i)laintiff, l)ut liherty was given to amend hy making the comi)any defendants. (h) Elcrfioii oj' Dinrfors, etc. The provisions concerning the election of directors and of presiding officers from among the directors are nnicli the same as those of the I'higlisli Act, wliicli, by the schedule of regulations appended thereto,-' provides further, that no irregularity or defect in the appointment of a director or directors shall tend to invalidate acts otherwise valid done by him or them. ' I'idf siipni, p.ji. 148 and 155. -' As some confusion is possible from the diffeient stvlcs of expression used in the Act it may lie as well to point out that a majority //) I'dliir an.l a majority deed apl)ear to he, to contllie the proceed- hVfi, hy (iitn ii'iirruiito to puhlic cor|)orations ; nor do there appear to ho any cases where an inl'orinati(»n was ;^ranted in reference to the ot'tici' of a, private c()r[)oration. Hut this may have heeii caused hy a, too strict followiii}^ of the Statute of Anne, passed at a time when Joint Stock Com- panies were unknown. " The l*'nl rr ' Re Spence, i N. S. 333, ^ 17 L. C. R. 77. ' If) L. C. R. 257. •• Fniser v. Ihitaui, 10 L. C. R. 289. 5 Bclivean v. yiincaii, 7 L. C. Jur. G3. '' lb. & Talbot V. Pacaiid, 7 L. C. Jur. 67. 198 JOINT STOCK COMPANIES. V. 'lliihiuiU,' Ihltl, tliiit the Court has a discretionary power to grant or withhold a 7'/" irai nnita information. By the hiw of Massachusetts, " any person whose i)rivatc right or interest has heeii injured, or is put in hazard, l»y the exercise of any private cor[)()ration or persons chiiming to he a private corporation, of a franchise or privilege n(»t conferred l)y hiw, may ai)ply to tlie Suprenu' dudicial Court for leavi' to tih' an information in the nature of a ifn<> iciirraiifi), wliich apphcation may he nuide and heard at a hiw or jury term in any county where the Court is in ses- sion. Leave to iile the same shall he granted hy the Court. (order having l)een taken for a sninnuiry hearing of the parties), if there appears prol)al)le cause to helieve that the party complained of has exercised a franchise or privilege not conferred hy law, theivhy injuring or putting in hazard the private right or interest of the com[)lainant ; and ujx)!! giving leave to tile such infornuition, or jit any time hefore tinal judgment, the Court may issue a writ of injuHction, restraining tlu' defendant and its managers, servants and agents, from exercising the franchise or privilege in (jues- tion, until the further {)rder of the Court. The information shall he tiled in the county where the defendant has its principal [»lace oi l)usiness ; a copy of the infornuition with an order of notice returnai)le, to Ih' served when and as the Court may direct, shall l)e served on the defendant and on the Attorney-Cieneral." ' By the Code of California it is provided that, " upon the application of any person or hody corporate, aggrieved Ity any election held hy any corporate body, or any lu'oceedings thereof, the District Judge of the district in which such election is held must proceed forth- with sunnnarily to hear the allegations and proofs of the parties, or otherwise in([uire into tlu' matters of complaint, and thereupon confuMU the election, order a new one, or direct such other relief in the premises as accords with right and justice." ' ■ 22 L. (' Jiir jSo. * Hiitclu'Iilor, I'liv (\M|>()i;itii>iis, ji. 1 rroflatt, ("(iiporatioiis. h^. i I ()It(i.VM/ATI()N AND MAXAk.EMEVT. 199 1 1.) Mci'thKjs of Pirt'i-tors. Questions aii-inj::; at a meeting,' of directors are decided like those at a jjriicful meetinj^, liv the votes t)f the majority of those }ir.e-^-i)iit. The periods and •hites of ineetinjj;, the iiundier wLk-lii *lij:tU ei institute ;i (luoruni for the transaction of ilU^j]J'*-.---, and other minor matters, are decided hv the directors llieuiLSt^ives, (/) ]'(i<(nirii's occurr'niij. Under tLit* claosf- may l)e cited a riither peculiar case which dccurrnd iu tl»e Province of Ontario, thou<^li not strictly aititlical»k- to eompanies formed under this Act. The Act of incorporation »>t* the Torojitn Street Kaihvay Company provided that ttlii»-re should not he less than three directors, eacli of wh«»iM sLofuld he a share- holder. The corporation consist<*d of ?liir»'t" shareholders, who were the directors. I'pon the HTf tlje tisv- .lireetors, althoufi;li the other refused to concur in the aj»p*>intment. Ih'lil, (ipon demurrer to the hill filed to h(>lders, each of whom was qualified to he a director.' I'OWKKS OF DiBEtTOB*. I > 32. The Directors of the Coinpan;. shall fcs->- -.:' pr>wer in all things to administer the aflairs of the Companv. and 1 — ^.\- r cause to be made tor the ('oinpany, any description of coDtract vL - --..•. (^.tmpany may by law enter into ; and may, from time to time r; • t r law, nor to the letters patent of the Compa- - • the allotment of stock, the makinf- of call^ • ■ the issue and registration 'f certilicates "f -- >.x for non-payment, the disposal of forfeite 3 -• > thereof, the transfer of s'.ock, the declaraii ■ - the number of the Directors, their term < ' -. ■ stock (jualitication, the appointment, fuiicti'ii* agents, officers, and servants of the CompauY. lie them to the Company, their remuneration anl that ttf any) of the Direc- tors, the time at which, and place where the amMal meetings of the Com- pany shall be held, the calling of meetmgs, fe^pILir and special, of th* • Kicly V. Kiily, ft til.. 3 App, Ont, 438. iws not contrary to T.; i Act, to regulate -. .• p.iyment thereof, ".-.'•: forfeiture of stock vr.'i of the proceeds : lymc-nt 01 dividends, tire amount of their ■ in. I removal of all <;i.u.rity to De gis'en by ri •200 JOINT STOCK COMPANIES. iH |=#I Board of Directors and of the Coinjiany, the quorum, the requirements as to proxies, and the procedure in all things at such meetings, the imposi- tion and recovery of all penalties and forfeitures admitting of regulation by by-law, and the conduct in all other particulars cif the aflairs of the C'ompany ; and may, from time to time, repeal, amend or re-enact the s.ime ; but every such by-law, and every repeal, amendment or re-enact- ment thereof, unless in the meantime confirmed at a peneral meeting of the Company, duly called for that purpose, shall onlv have f0(lifs, in gtiitval tornis, the whole powers of the directors andof theeonipanv itself throngh them. As a company acts entirely l»y its directors, as all the operations of a com])any, whether de- cided upon hy the managing hoard or aiitiiorized hy special resolution of the shareholders, tire set in motion hy the directors and otticers of the company, no very di>tinct line can be drawn between the ^jowers of tiie directors ami the powers of the ctunpany itself. Though not »'xactly identi- cal they are so merged in each other as to make a dis- cussion of the one, necessarily si discussion of the other. In a word, whatever the company can do the directors can do, subject, or otherwise, to contirmation by a general nieet'ugof shareholders.' The company., itself, cannot act in its own person, for it has no visible personality." So that the only way in which it is possible to speak of the powers of directors as distinguished from those of the company, is in reference to the acts whitdi they may or ' Thus, it has been no uncommnii thing iri'(tnr. Tlie i)osition of directors of a public company is that of a^'ents of the company." The directors are a^'ents of tiie company and in order to ascer- tain the extent of their authority it is necessary to con- sider the y>i (hi, tire ijisn fucto void,'" And, again,' "The director's general authority extends ' r'iiti' post, sec. f)C). - Jiuckley Joint Stuck Cos , p. 400. ' Ibid. 401. i ; mm-^ •204 JOINT STOCK COAIPANIKS. SI ! ;■ itii to all acts reasonably lU'Cfssary for innnaj^i'nu'nt. If they think i)roi)('r in a i)rospt'roiis year, to uvf Co.,' Ik Id, that the inability of a corporation to continue in l)usiness is no excuse for a breach of contract with an agent. MdjI ait/n. cIkuiios. It has been held that a connnittee may authorize the signing of cheques by a committee of themselves,' but this is generally done by the pn-sident and secretary, under the rules of the comi)any. ■ Hainpson & FTicc's raiullo ("o., 54 I.. T. 711. -' Joint Stock Cos., p. 41. t 45 Mo. 4i<), and Abb. DIk , Vol. II. * SniiliV V. Tlif Miiyor, ili.. of Cliiitl(iiii)(n;(i, Sii. (^t., Tenn.; \h\>. Dig. \'ol. 11. .\niill. Ill ii coiH)!!.' of Anu'i'ic'iin casi-s,' it WHS said tliiit. " !i corporation, l)_v the terms of its crea- tion, has the same cai)acity to l»uy and sell tliat an individual has who is competent to make contracts." Jiut this seems to hi- a much hroach'r statement of the law than is warranti;d, either hv t\w Canadian or Enj^lish statutes, ( I' by the <,fenerally reco}j;nize(l principles rej^mlatinjj; the powers of joint stock companies everywhere, l-'or all the powers of a corporation or joint stock company, especially tliat of enterinji; Into contracts, is, as we Juive seen, restrict- ed to the objects of the company; while the power of Jin individual in possession of his civil ri^dits is practically unrestricted in this respect. Thus, a company under the present Act could not deal either in its own stock ' or in that of other companies unless specially authorized b}' its charter so to do; and though a company might be formed for tlii' express purpose of dealing in certain chisses of merchandize, a contract respecting other classes of merchandize not con- nected therewith, or necessary thereto, would be iiltni rin's. ill) Md/i horroir niniifif. It has l)een lield also, that direc- tors have an iini)lied power to borrow money, within certain limits, for the purposes of the company. Jn rr Interna- tional Life Assurance Society,^ Malins, V.C., said: "It has i)een very strongly nrged in this case, that the company having no power to borrow, the l)orrowing was ultra riirs and improper, and that therefore no debt was created. 1 shouhl say, as indeed I have already said on many occa- sions, that in the ordinary course of transactions of a mercantile c«)ucern, whether it be un insurance otitice or anything else, where the possession of money is essential for tlie purpose of carrying on the business of the company, and the company finds itself in temporary ditticulties for want of money, I cainiot consider it beyond the powers of ' Ri-ynolds v. Sturk Co., 5 Ohio 205; and Hamilton v. Lyiomiii^ Ins. Co., 5 I'enn. Stat. J39 : and see Proffatt, Corporations, sec 354. » Vide supra, p. 14J. J Vide iii/ra. * Gibb & West's Case, L. K. 10 Eq. 312. 319. See also Healy. Joint Stock Cos., p. 148. ji j '1 •200 JOINT STOCK COMPANIKS. t;m ') ■. tlie flirt'ctors to olttiiin money iVoin tlitir Ixiiikcvs or others who will temporarily lend it to them tor tlie purpose ot prt'Vi-ntin^' tliiit which would ho disastrous to all, viz.: the stoppa.u;«' of the compuiiy, — that is to say, T cannot consider it hi-yond their [)owers to prevent that disaster hy means of loans to a moderate extent, su(;]i as would not he unreason- ahie, havinf^ re^'ard to the naturi' and extent of thehusiuess in which the com]»any is ('n,L,'a<^'ed, for the purjiose of carrv- intx on the husiness of tlie com|)anv."" And in dniis V. I.fiirit, ' held that every corporation, unk'ss pvo- hihited hy law, can incur oh!i<;atio)is as a horrower of money to carry on the le.nitimate husiness for which it is incorporateil, althoueh not s[)ecially authorized to horrow liv its charter. It is always desirahlo, however, says Healey, that tlie liorrowin^' })ower of the directors should l)e dttined hy the articles of association (or hy-laws of the company). Hut where this is not the casi', the elfect of the decisions is, that the company will he hound hy a reasonahle and temporary loan made hy tlu' directors to avoid a threatening- emhar- rassnunt. Where hy the articles of association, however, the il(l appear to refer to personal pro^jcrty only, at least it would not be conslderi'd a power inherint in tin directors to pled^'e tbe real property of tbe company f r tlu l)urp()se of raising; money. J3y a subsecpient section of the present Act,' however, this power is exi»i'essly controlled and delined, so that a vote of at least two-thirds in \alue ot the shareholders present or repri'si'uti'd at a meeting,' duly called, is necessary to authorize the raising of money on tht cn'dit of the company, I'ithei* l)y the issue of debentures or the i)led<4in<^ of the property, real or jjersonal, of the com- |)any. Jkit in a (Quebec case, in which the directois of a joint stock company had in f^ood faith, and for a sui'ticient con- sideration, mort<;a}j;ed the property of the company in favour of tlu'msi'lves, it was held that though the mortgage could not of itself bind the company, yet it was not absolutely null but only relatively null."' ill) Miifi issiii' ni'(i()ti((hlc iii>ifniniriitH. "Ihit this limita- tion shall not be held to apply to commercial paper dis- counted l)y the cfuiipany.'"^ In a number of cases cited by Thring,' held, that if the instrument of incorixtration be :-ilent, a trading company has an implied power to bind themselves by promissory notes or bills; and by section (»(),' power is expressly given to the directors to bind the comi)any in this manner witliout the necessity of i)roving that such negotiable instruments "were made, drawn, accepted or endorsed, as the case may be, in pursuance of ' Villi- Tilling Joint Stock Cos., j\ 107; and a number of cases there -ited. ^ I'atent I'ile Co., 6 Ch. 85, and CAhb & West's case, 10 l"(i. ]12. ' Sec. S5, post. ■> ih-dtt V. La Maiiufiutiii'i' dc Icitic d' Yniiuiihiilu', 2 Q. L. R. 65. s Sec. S5, post. " Joint Stock Cos., p. 104. 7 Post. ^ •208 .lolNT STOCK COMI'AMKS. any hv-luw, oi- speciiil voto or order." Nor docs the Hcction iiupoHc any restriction iirisiiifi; out of the luituri' or ohjects of the company, though where no such provision was nuidc the cases reported haN'e turned, to some extent, upon this consideration. Thus in an action on a hill of exchiuige, drawn hy the secretary of ii friendly socii'ty in his capacity as such, and endorsed to the i)laintilf, it was held not to l)c within tlu' power of the otlicers to hind the society to transactions hcvond the pur[»oses of its creation.' This case, however, must he (listiu'^uished from that of a tradin;^' association, in which tho si given the power to enter into such a contract, l)ut suhject to the approval of the shareholders expressed h}- resolution, the public have a right to infer that the resolution was actually passed.* "Where," says Shelford,^ "a person dealing with a com- pany cannot from his position tell whether formalities have been observed or not, the company cannot take advantage • ' Tlif ComnierJal Union Insurance Co, v. Footc, 3 Rev. Cri. 40. * I Leg. News, Mon., 62. ' L. R 5 Ch. 288. ■• Kovdl British Hank v. Turqaand, 6 Ell. & Bl. 327 ; Agarw. Atlun urn Life Assurance Society, 3 C. B. N. S. 725 ; Athena;um Life Assurance Society, e. p.. Eagle Insurance Co., 4 K- & J. 54^. 5 Joint Stock Cos., p. 77. OIKIANIZATION AND MANA(ii;Mi:NT. 211 i! of the noe directory, some disc-retionarv, and some imnerative.' 'J'liua, they wi're considered discretionary /// rr 'J'he \'alo of Neath Jircwery Co., Walter's case,^ in whidi it was h>l& pai't of the company ])efoi'e that power can he duly exercised, tht-n the person eontractinf,' with the directors, is not Inmnd to see that all tliese preliminaries have heen ohserved. He is entitled to presume, that the directors are actin<^ lawfully in what they do. In another case, Lord Westhury said : "If a company has power to do a thinj^f. and theie is onh re(piisite a particular formality, such as the consent of a ;^'eneral meeting, in order to warrant the exercise of that [Knver, and if 1 fhid a company dealinj; with an individual at arm's length, and taking a transfer of shares, duly com- l)leting that transfer and entering tlus transaction in hooks, so that I am warranted and justitii'd in imputing a know- ledge of it to every shareholder, I am fully home out, not only hy the- reason of the thing, l)ut hy the express authority of the case I have referred to in inferring, as against the company, that the formality which alone is wanting to the exercise of the power, has heen either ante- cedently sup])lied, or suhsecpiently added to the transaction." And, in the United States, precisely the same doctrine appears to he held. In I'oiniccticntt MnfiKil Life Insurdurr Co. V. Chvdaud, etc., litiiliroif Co.," it was said: "Third parties dealing with a corporation are hound to know the law ; that is, they are hound to take notice of the extent "f the powers of the corporation, hut they have a right to assume, in the ahsence of anything suggesting en(piiry. that it has proceeded regularly in the execution of its jxtw- ers, and it is not necessary to in(iuire ;. decide, whether the acts of the defendant were authorized or ratilied hy a vote of the stockholders, in accordance with the provisions of the said section of the Ohio Geneml Statutes, if the de- fendants had the gent-ral power to nnikethe guarantees ; for tiiese provisos were intended for the protection of the share- holders, and relate rather to tlu mode or numnerof the execu- tion of the power, and the plaintitV had a right to presume that ■ liritish Provident Life and Fire Assurance Society, c. p. (liadv, j2 L. J., Ch. J20; I I). J. A: S. 4S,S. ■< 4t Harb. 8, and see lirice, ultrn viris, />. 040. m ORGANIZATION AND M.VXA'GEMEXT. 213 1 the clffciidant had (lone its duty and Laid ppxrt'eded ref^ularly in the execution of its power." In another case, the stock- holders of a coi'ijoration, hy a two-thmLr vote, resolved to lease the property of the coritoratii*u- The board of di- rectors adopted ri'solutions srttlinf: tlie -TjH'citications and providing that public notice ^hoiild be ):^vt'n, inviting,' sealed proi)osals for leasing' the j»roi*ertv according to the specifications, and reservinj^f to theia-^-8ve^ the rij^ht to re- ject ail}' or all of the bids. The [ir<<>[jMj(»aIs received were opened and examined, and reject'e. the one mode did not preclude them from afterwards pur- suing another.' And, in .S'f/// /(./>■ \. C«elve«, who from their position, can ti'll whether tiie fttrmalitin.-* have been duly observed or iu)t, £)resumptioii of such »////. just quoted, would appear to go farther than this, ])ut that was a matter between the company and its shareholders, and does not warrant so broad a conclusion as that a c()ni].»any would be bound by a loan made by its directors, without the authority prescribed by the Act. ill {I) CondxtUnuil poiccra. In speaking of the powers of the directors, we have referred almost entirelv so far to their dealings with third persons, but, as it may be seen Ity re- ference to the section under consideration, they have the power, in their management of the company, to do many things affecting the relations of the ' orapany with its ohare- hoMers, conditional on their ratification l>y the company at its next general meeting, and which we have here termed for convenience, " conditional powers." All these things^ it will be observed, are d(me under the formality of a by- law, and differ in this respect from the powers already dis- cussed, which are subject to no such formality. They differ from the power to borrow, which, by the Both section, re- quires an express antecedent authority, in this, that in the latter case such authority would be re(pnred for each particu- lar transaction, while a by-law empowering the directors to do the things referred to in the i)resent section, would remain, perpetual, subject of course to alteration in the same manner, whenever it might seem desirable in the interests of the company so to alter it. Thus a power to mortgage a cer- ORGANIZATION AND MANAGEMENT. 215 tiiiu piece of land, in order to raiso fnnds for the purposes of the company, would not warrant the directors in ])led^Mng other property at another time for the same purpose. Nor would a hy-law of the company adoi)ted this year, in con- formity with the 8;")th sc tion, to issue dehentur«'s, warrant the directors in making' another issue next year. J5ut a l)y-law duly passed and ratitied, empowering,' the directors to regulate tlu' makin<,' of calls for example, would, suliject always to alteration in the same maimer, he a suf- ficient warran u r that purpose at any suhsequont time, or to any suhseq:-' t directors. (in) Ma)i ni'ikc liii-lmoi. And while, as a rule, the power of a corporation to make and enforce such hy-laws as it deems hest for its own interests, will not he interfered with, it has heen laid down that such hy-laws nmst not he unreasonahle or oppressive. And so in the I'nited States, it has heen held that a hy-law of a hi'iievolent associa- tion, providing as a pi'ualty for the non-payment of dues, that the delincpient should forfeit his ri<,'ht to any henelit while in arrears, and for a period of three months after the paymi'ut of the arrears, is valid.' And in another case, held that a Ity-law of a merchants' e\chan<^e. which re- ({uires memhers to suhmit their controversies to arltitra- tion, on pain of expulsion, if they hrinj,' suit, is invalid.' And such by-laws, it has heen held, nni! t he enacted within the jurisdiction where the corporation was c^-ated. Thus, in Mitcltill v. I'lrniont ('iij)prr Miiiimj d*.,' it was laid (h)wn most distinctly, that •) corjioration cannot enact or pass a hy-law or any rule or restriction for its t^ov<'rn- ment, except within the State under whose laws it is reco;^'- ni'/A'd, and where it has a corporate existence. And, in Puljord v. Fire IhpKrtmiiit,* lulil, that all hy-laws, which are contrary to the general priiicipUs of the common law ' Cariun v Father Mnthtw.. etc., Sue, 3 Daly 20 N. Y., iHfi.t; Abb. l)i)<., Vol. II. • State V Union Merchants' Ex.. 2 Mo. App. 96, Abb. Dig , Vol. II. ' 40 N.Y. S. C.406, 1876; .\bb. DiK , Vol. II. ji Mich. 458 Su. Ct., 1875; Abb Dik.. Vol. II. I f 210 JOINT STOCK COMPANIES. li I! are void ; as is also an >:r jxmt/tirto l)y-la\v, at least in so far as its intended retro-action is concerned.' The directors then within these restrictions may make by-laws, suhject to i4)i)roval, to regulate the (//) Alloliiii'nt i,f stiirl.. This itrovision c(nicevninf^ the ])()wer of the directors in tiie allotment of stock is repeated by the 35th section under which the question of allotment will he found fully discussed. The present rt-ference is to the power of the directors merely. The allotment itself bein^' ii ni;ittei- simply of detail in the conduct of the affairs of the ct>m[)iiiiy, would naturally he sup[>i)sed to helonj^ to tlie diri'ctors, and the necessity of a by-law, suhject to the approval of the company, must be conceived to refer to the system on wliich such allotment is to he made, the rate at whicdi the shares are to be issued, the amount of deposit riMpiired per share, and mattt-rs of similar j^'eii- cral !ipi»lication. Thus, by the by-laws it may be estab- lished that the shares are to be issued at a premium, or at a discoimt, or with a preference, or with or without a deposit hiivinjj; first been made 1)V thi' ai)[»licant, matters cxercisiiif^ too im[>ortant a bearing' on the prosperity of the com[iiiny, and holding out too many temptations to personal ad\anta;;t' to be left entirely in the hands of a few, i)e they directors or not. Jhit these points beinjj; established, tiie by-laws may enqiower the directors to al- lot shares at discretion. This power however, it has been held, till' dii'ectors have no power to delej,'ate to others, unless authorized to do so. it is often found conve- nient t(» entrust matters of this description to one or two of the din[)lication. but authority to do this should, in order to avoid dilViculty, be included in the b\-law. {()) " 'Jlic III il.iii'i lit' i-(>sl. ' llealuy. Joint block Cos., p. 4(1, ainl casch there cited. ted in ORGANIZATION AND MANAOEMKNT. 217 the (liret'tors to make culls upon the shareholders for instiiliiu'iits of capital, is more expressly stated by section •52.' Jiut, thoui^di more express, it can scarcely be said to be more exi)licit. It si'ts forth nothinj^ more than is included in the words at tlu couimeneement of this paraj^raph. The effect of th.' latter part of the secti(m is to sur- round the (piestion with an air of aml)i<^uity, for which there is no foundation ; to raise the idea, that tliere i^ somethiu^; behind, by which the powers of the directors in rej^ulatin^ the makin<,' of calls, may be fettered and re- stricted. A brief consideration of the question will, how- ever, shew that this is not the case, at least that there is no other or <,'reater restriction or limitation of their power of making' calls than there is of any of the other powers conferred by this section. It perhaps would uot be f^oin^ too far, to say, that there is not so much as some of the matters entrusted liy this section to the discretion of the directors, are in many casi's rej^'ulated by the letters patent of the company, as for ex- ample the [daee where the annual nu'ctin^'s of the company are to l)e lu'ld, the mnnber of directors, the (piorum, etc.; wiiile the (pu'stion of makinj^' calls is invarialtly a nuitter of (h'tail, which it would be im[)ossible in the interests of those who are to take*i)art in the comi)any to rtjj;ulat<' ': ii !/ ; 'M •218 JOINT STOCK COMPANIKS. 'i it (liviik'tl into two hundred shaivs, to be sccun'd in such manner as the by-laws of the company direct, and should l»e paid in such sums and at such times as the directors should appoint, it was held to be not essential to the right of the company to sue for calls of stock, that by-laws for secnrinfj; the same should l)e made, provided the directors who made the call were duly appointed.' The Enpflish Act simil.irly does not pretend to ref^ulate the makin",' of calls, n(U- even to say in whom the power of making culls shall be vested, leaving it entirely in tlu- hands of the company itself; but the schedule of rules appended to the Act, and intended for the regulation of companies, where not otherwise si)ecially provided for, says:" "that tl e directors may from time to time make such calls upon the members, in rt'spect of all moneys un[)aid on their shares,, as they may think tit, proridi'd tlnit tirrntii-oiu' ihiiiH )totirc (If h'dst ix (jircii <>/ rarJi call, and each member shall be liable to pay the amount of calls so made to the persons, and at the times and places appointed by the directors." The restriction with regard to the notice is the only one placed on the authority of the directors even by these rules, which take the place (in the absence of other provision as already stated) of the by-laws of the company. The 'vjiok ([uestion of calls will be found fully discussed under that bead,' l)ut it may be stated here that a call made by directors not tluly appointed, or at a meeting of directors at which less than a ipiorum was present, or which from any other cause was irregular, is invalid, and cannot be enforced by law.* l^ut where in one case a call was made at a meeting at which the necessary number of directors was not present, but which was coniirmed subse(piently when a (piorum was present, was held good.' ' Stevens, Dig. 761. •- Art. 4, Table A. ' Vide post. * Buckley, Joint Stock Cos., 361 ; and cases there citeil. s In re Phosphate of Lime Co., Austin's Case, 24 L. P. 932. ORGANIZATION AND MANAOEMKNT. '2m As board me(.'tin<;s aro Honictimos licld in an informal maniu-r, owinj^ to till' 'litHi'ulty of {^cttin-^' a (luoruin toge- ther at the Hanie hour, it sometimes hin)i»ens that Itusiness is transacted without one, where the business is of such a nature as wouhl not be Hkelv to l)e objected to bv the others. As sueli proceedinf!;s, however, wouhl neverthcdess be iHef^'al, the case is of importance, as showinj^ tliat the Court will not in all eases bind the directors (h)wn to the strict letter of the law. It is a (juestion, however, whether the relaxa- tion should not be restricted to coniirmation flif sfiiiir (hi/i, as otherwise the rule re^'ardin<,' the necessity of a quorum would be in danp;er of being neglected altogether. Cox, in his form of memorandum of association, suggests the fol- lowing rules concerning meetings of directors : Three shall be a quorum. The chairman, in case of an equaliiy of votes, shall have a casting vote in addition to his original vote. Two directors may at any time summon a meeting of directors, on giving three clear days notice, but no reso- lution passed at a meeting so summoned shall be valid unless conlirmed at the next regular meeting of directors, except it be on some matti-r of urgency which ricpiires to be done before such regular meeting is held. The directors shall keep an attendance book, in which every director l)resent, within fifteen minutes after the hour appointed for the meeting, shall sign his name; which book, with an analysis showing the number of attendances by each director during the current year of otltice, shall be laid before every general meeting of the company. The directors in like manner may make by-laws (subject as aforesaid) to regulate all questions concerning the stock of the company, "the declaration and payment of divi- dends,"' "the number of directors,"-' etc. ip) The appointment of servants, etc. — A general power of appointing officers and servants, such as may be found to be necessary, must obviously be vi'sted in the directors. ' V'iilt post. '' Vide supra, p. 164. K! !i' 220 JOINT STOCK COMPANir.a. ^i-i" li in order to curry on the l)iisincsH ot tlu' company. And the power to appoint natnrally carries witli it the power to rcf^'nhite all matters incidental thereto, as the renumeration or reiroval of the jiersons so api)ointed. Th(m hy ri'solution of the hoard. The section in any <-ase, it nniy he as well to remark, is permissive throuj^hout, and merely indicates the power of the directors to make hy-laws for tlu' i)urposes therein mentioned, as may be found necessary. The Knn- iliit't in nil other tJi'mtja nf tin' ajfttirH o/ the conqunnj. These latter words have been italicized as they appear to contain a great deal which might he overlooked in the long enume- ration of matters specially set forth. Their etfect is to vest in the directors all the powers possessed l)y the company itself, which are not specially excepted and withheld.' Two of these exceptions are referred to in the latter part of the section, which provides that no by-law lor the issue, allot- ment, or sale of any portion of the unissued stock at any greater discount or any less premium than what has been previously authorized at a general meeting, or for the pay- ment of the president or any director, shall be acted upon until such by-law has been contirmed at a general meeting. ' Mair v, Hiiiuiliiya Tdi Co., i Ivij. 411. = Rf State Fire Ins. Co., c. />. Meiuleth, j2 L. J., Ch. 500. ' Ri Leeds Hanking Co., Ho\vai'.«l s Case. L. \i. i, Ch. 561. •• Vide siirpa, p. 1O4. 5 Villi siiprii, ji. 183. *■ \'i(U- post. ' Villi-, sec. 85, post. ■11 •222 JOINT STOCK COMIWN'IKH. El i'll i 5 ! ■ ■ All tliL'st' powers foiiso under the I'inj^liHh Act' upon the ii|»p()intnient of li(]ui(hitors "except in so far as tlu' coni- piiny in j^'eneral nieetiiifj;, (in case of a voluntary winding:; jip,) or the licjuidators may s.'inetion the continuance of such powers."' In Tlic Mmb'itl Bnuh v. litii/lt'if,- however, it was said that in neither case do they cease to be othcers of the company. The same would result from an assign- ment, or the issue of a writ of attadnnent, under the In- solvent Act of 1875, l;at it would seem more accurate to descrihe it as a suspensioji rather than a cessation of these powers, as on the (plashing of the writ or an abandonment of the proceedings they would undoubtedly revive, and the directors be vested with them as formerly.' 5 — Ih'-LAws. 33. A copy of any by-law of the Company, under their seal, and purporting? to be signed by any officer of the Company, shall be received as a;,'ainst any shareholder of the Company as prima /mic evidence of such by-law in ;dl courts in Canada. ((0 Kjlrct of. — A Joint Stock Company, as we have seen, has power to make by-laws within the terms of their in- strument of incorporation, and of this Act, for its regulation and government ; and, as every shareholder is a meml)er of the company, he must be held to be conversant with all its rules and by-laws, or at least to have had notice thereof, and to be bound by them. And it is sutHcient by the section in an action against a member to exhibit a copy of any by- law duly signed and sealed, in order to nuike pr'unn facie proof of its authenticity and binding i)ower. Jiut this is o\\\y prima facii'. And in A'c/z-s v. YV/c Quebec Astiurance Co.,* it was held that a shareholder in a joint stock comi)any may, in an action to account, contest the validity of a hy- law made by the directors. And a decision similar in principle was that of the Que- bec c(- liiclnnoiid llaiUcay Co. v. Ihiimon,'' that a share- ' Sec. 133, s. s. 5. ' L. R. 2, g. li. 37. 3 Vide post. * S. R. 425, K. H. 1830. s I L. C. R, 366. OIUIANIZATION AND MANAOKMKNT. 223 Jiolder ill 11 cliartcrt'd joint stocK eoinpaiiy nijiy. to an action hrou^'iit a|!;ainst him by such company, jjUad a noiicomph- ance with its Act of incorporation, and that l»y reason of such noncomphancc the comj)aiiy is not h'j^'ally in exist- ence. This princi))le, liowever, was departed from in the case of a municipal hy-hiw which, it was iield, couhl not he attacked by an incidental procedure, hut must lirst he attacked hy the direct i)rocedure indicatt'd hy the munici- lial codi'.' And in a still later case, in the Province of (^)uel)ec, Mr. Justice Johnson held that Acts amounting to a forfeiture of the company's charter could not be set up in answer to calls on stock.' A stranj^er, however, in dealing with the compain- under a by-law (such, for instance, as the loaning of money under section 85') is iiot bound to examine into all the proceed- ings relating to the adoption of such by-law, nor will be af- fected in the enforcement of a contract made thereunder ])y irregularities of which he has no knowledge, but is en- titled, on communication of a by-law on the contract, to assume that it has been regularly passed and adopted, and even to assume that in dealing with the ostensible direc- tors of the ctmipany, that they are sufficiently warranted in what they do.-* A transcript of all the by-laws must he kept in the l)Ooks described in the folunving section. G — IJooKS TO HE Kkpt, etc. 36> The Company shall cause a book or books to be kept by the Secre- tary, or by some other ofUcer especially charged with that duty, wherein shall be kept recorded — I. A copy of the letters patent incorporating the Company, and of anv supplementary letters patent, and of all by-laws thereof ; 2 The names, alphabetically arranged, of all persons who are or have been shareholders ; ,V The address and calling of e-ery such person, wh i'e such share- holder ; ■ Ptinnt V. The Corpn. of tin- Ptirish of St. Siiiiviur. 2 Q. L. R. 258. = W'imlsor Hotel Co. v. Murphy, 1 Leg. News, Mon., 74. 3 Vide post. * Royal Bank of India's Case, L. R. 4, Ch. 252 ; and see Buckley, 3rd Ed., p. 489. I m II iji« «i -.i 224 JOINT STOCK COMPANIES. 4. The number of shares of stock held by each shareholder ; 5. Th(! anioiiiits p.iid in and remaining unpaid, respectively, on the stock of each shareholder ; f). The names, addresses and calling of all perst)ns who arc or have been Directors of the Company, with the several dates at which each became or ceased to be such Director ; 7. A book called the Register of Transfers shall be provided, and in such book shall be cntiTed the particulars of every transfer of shares in the capital of the Company. 87> Such books shall, during' reasonable business hours of every day, e.\cept Sundays and holidays, be kept open for the inspection of share- holders and ere iifors of the Company, and their personal representatives, at the office or chief place of business of the Company ; and every such shareholder, creditor or representative may make extracts therefrom. 38> I'-very Company nej^lecting to keep such book or books as afore- said, shall forfeit its corporate rights. 39i Such books shall be prima facie evidence of all facts purporting to be thereby stated, in any suit or proceeding against the Company or against any shareholder. 40i Every Director, oflicer or servant of the Company, who knowingly makes or assists to make any untrue entry in any such book, or who refuses or wilfully neglects to make any proper entry therein, or to exhibit the same, or to allow the same to be inspected and extracts to be taken there- from, is guilty of a misdemeanor, and shall also be liable in damages for all loss or injury which any person interested may have sustained thereby. TlioHo sections contain all the provisions of the Act directly concernino; the books of the company. As a mat- ter of course and necessity, every enterprise of any import- ance, whether individual or associate, must include books in which a record of its proceedings and of its affairs is kept. Jiut particularly so in connection with joint stock enterprises, in which the means of a lesser or greater num- ber of persons taking no active part in the management of its affairs, and who are dependent upon such books for a knowledge of its affairs, are involved; and also where the liability of the members individually towards the creditors of the enterprise is limited to the amount unpaid on their shares. These causes together render the keeping of books l»y Joint Stock Companies a matter t)f so much importance that the legislature has not only made it compulsory to OIKiANIZATlON .\N1> MANAOKMKNT. 225 keep Hiicli l»o(tks, l)ut has (l»sc-ril»j'(l in dt'tail what siicli l)()oks shall contain and exhibit, and imposed jjcnaltics for ncj^dcct of snc'h i)Vovisions. And the importance of siiidi provisions ari' so ohvioiis that tlu-se or similar ones are now found in ahnost every Joint Stock Conii)anies' Act.' The princii)al (pusstions arising out of tiieni are: I. What the l)ooks shall contain and exhihit. '1. What the ri{,dits of nu'inhers and others with re^iard to tl lem. ;J. What their eflect as evidence of their contents. •i. What the penalties attached to violation or nej^lect of these provisions. 0. What other lial)ilities attach to the company or its directors with regard to them. (ii) ('i)iitrnt>i of. — What these hooks must contain and exhibit is set forth in the tirst of thesi' secti ons. Tl lev must contain a copy of the company's letters jiatent and hy-laws. This clause nnist he read in connection with, and as illustrating to some extent, a subject already discussed, viz: the validity of contracts entered into by the company, or by its otticors and agents with outside persons. The terms of these provisions taki' it out of the mouths of such persons to say, that in dealing with the company or its ollicers, thev had no means of knowin<' what were the ' The Iviij^lish Act, however, does not specify wliat the contents ot such books shall be. It says : — "The rc^jistcr of ineinliois comnuticiiij,' from the (late of the re^'istration of the Company shall be kept at the reKistered oflice of the Company, ami e.vcspf when closed, as hereinafter mentioned, it shall durinj^ business hours, but subject to s ich rrnsiinable restiiclions as the Company may in general ;;)eetinx nnpose, sn tint not less than two hours in each day be appointetl for inspection, be open t^ the inspection of any member gratis, and to the inspection "f any othk-r person on payrrenf of one shillinji, or such less sum as the Comjiany may prescribe fr)i- e;iti. inspection, ami every such inember, or other person, n«iy n'(|nire a copv of such rejjister, or any part thereof, in payment of sixpence for e\ery hundred words, etc. ' See J2, Act 1862. 'I'he ("ode of California says : — ' Kvery Corporation for profit nuisrt keep a book, to be known as the ' Stock and Transfer Hook." in which must be kept a ret:or(i of all stock ; the names of the stockholders or members alphabetically arran^jed : instal- ments paid or unpaid, .itisessments levied and paid or unpaid : a statement of every alienation, sale or transfer of st(.ck made, the date thereof, and bv and to who'ii, ami all such other records as the bv-laws prescribe. ' .\rt. .578. 10 s.e. 22r. JOINT STOCK COMPANIES. powers of tlic coinpiiny or its ollic-crs to enter into sucli coiitriicts. If they (loul)t of tlu' i)o\ver of tlie ('(tnijjany to do so, undir its letters patent, or of the authority of the (•iVieers assuniinj^' to act for the conii)any, they can easily verify either, if the company have coni[''' -d with the reipiire- ments of these provisions. If such pei'sons nej.^lcct to assure themselves in this manner of the powers of (he parties with whom they deal, they take the risk of the company repuihatin;^ its contract, and relyin;,' either on i linnlis.- "Such, hooks shall he kept op<'n during': reasonahle husiiiess liouis of every day, except Sun- (hiyH and holidays." Accorchne; to the Mn^dish \ct. as (pioted iihove. the com- pany nniy itself decich' the hours during which the j»uhlk- i.i:^ P. jl ORGANIZATION ANI» MAXAGEMEXT. 227 may inspect the hooks, provi proceeding's of the conii)iany ar*? recorded, does not fiive a shareholder a rij^ht t'O in*i)«r<-t the Iniok of min- ut( s of the proceeding's of the dirttiory. Hut in the Jiir- iiiiiif^ham JJankiii;' Co. /•,' jutri' BrinsU-y. laid, that the 'i.ioks and pai^rs of a coniiiany are tht? property of its shareholders it}it) dif rcoim- ai-tpiainted with matters which should l>e kept j-t-rtt. Hut it is their (l.'ty not to divul^'e such inforuiatioii »«> acfjuiV'd, and the Court will restrain them, 1»\ injuiK'tioii. from so doin*;, and will punish them should th«y oflV-iul. Nor ^-an ;i company refuse a shareholder an in'^jH-i-tion <.f th»- r-^^isti-r hecause lif is till! solicitor of parties eiitzaj:*-*! in liti«;ation aj^'ainst tile company, althouL!;h it he staU^i «>n ath,'e which ^ave liherty to defendant, after \tU-n. to iii p-.-t the re^istr\ (if shares, the allotment hiKik an«l t 228 JOINT STOCK COMPANIES. Ill spc'ction sliould hv imu\v at rcasonaMe times, and that the contents of the (locuincnts should not \x- improperly dis- closed.' liut in an'tther ease held that a elanse of this kind Kivi»n Ji rif^dit to inspect the hooks, ceases to api)l\ when the company ^'oes into voluntary licpiidation.- In the United States the same ;^'ineral rules hold good, viz., that a stock holder in any Joint Stock corporation is en- titled, during the usual hours of husiness, not only to in- spect the iiooks. hut to take extracts therefrom ; nor can the din-ctors hy resolution exclude one of the niemhers tVoui such ins[»ection, altliou;,'h they helieve him to he hos- tile to the niterests of the institution. "Jiut with res[)ect to a mere straiij^'er uiu-onuected in interest, such hooks are to he considered as the hooks of a private individual, and no inspection can he compelled."' And in WiUnunx v. CoUi'ije, ./(•., iioiid Co.,' it was said that a demawd for an oppor- tunity to insi)ect the stock hook must Ite accompanied hy a notice that the person niakinj; the demand is entitled to an inspection, in order to warrant him in suin^' for a refusal. In a recent case' it was held that the corporation was com- pellahle hy nuuidanuis to allow an inspection hy the stock- holder's a>;ent as well as ;»y himself. And in this country also, the proper proceedin<^' appears to he hy iiiidiildiiiiis to comj)el an inspection, as decided in lfi)hiiin t!ie inspec Ion, when or« '.'rs to the eontiary had hcen t,'iven hy the directors. Under th« very express i»rovi.sions of the al>ove jit'ctions, ' Ri- Joint StDck Cu., \V. .\. iSni), <.(i. » t'.i Vorksliirc I'ibrc (3o , L. K. nipelled to an- swer, althouf,'h the action is a penal one, and hy so doin;^' he may criminate himself. ?ii il '(') KjI'cct (if (IH rriilriu'c. — " Such books," says the section, "shall ])v jiriiiut j'dcir evidence of all facts {jurportinj; to ln' thereby stated in any suit or proceedin;^ aj^ainst the com- p ny or a<^ainst any shareholder." This is according,' to the common law of evidence, but the value of such evidence it is conceived wouiil vary with the nature of each particular case. Thus, as against the corporation itself, such entries duly nuide hy the proper otlicir would go near to making absolute proof ; whib' as against the members individually, any evidence would be admissible to show that the entry was wrongly made, and that the defendaiit could not be hound thereby. Ihit this can only l)e laid down in the most general way, and by no nuans as an unvarying rule. The liability to clerical ern.r in t'le keeping of such books Avould make them liable to ri'buttal at any time on this ground, and the right of any parties to 8U(di a suit to show that stich an error bad Iteeu nuide would be undis- puted. And though th«' niinuti' bool for instance would be jiriiiKi utrii' evidence of the regularity of the proceedings therein recorded, it is undoultted that the corporation itself even might show that such were not irregular. 'J'hus though where the miinites of a meeting are silent as ♦o whether a (luorum were present or not it will be assumed that a (luorum was pn sent, and that the meeting was per- fectly regular, evidence, nevertheless would be admitti'd, I Macduff V. Ulaikluck, (nut reportetl.) •I'M) JOINT HTOCK roMI'ANIKS. m iii to show that a (|Uorura was not prmcnt, and that the pro- cti'dinj^'s wiTc ilk'j^al.' But as against the corporation tlic strii'test i)r(»ot' will ])v rc(|uiri'(l <-f this.- But where the eorrectness (»!' the cntrv and the rejj;idarity of tlie proceed- ings are admitted, it may he assumed thatsucdi entries will he conehisivo evichiiee against it of its organization and existence, of its afcei>tance of the chartei-, of all matters relating to the allotment and transfer of shares, and of all contracts entered into with third parties, saving at all times in the latter case its right to show that any contract was heyond the powers conferred upon it hy its Charter. Hut of the fact that such contract was made, the entries, as against the corporation, would he concri[ilion list for example. In such case it appears that parol eviih'iice would not he admitted to vary or contradict the suhseription. This has just hei'ii the suhject of an authoritative decision in the Superior Court, Montreal, in the case of ir//.s(»» v. Lx .Sn- I'iili' ili' ('(iiiHli'Kctidii (Ir Smiliiiiifis tiiiil (liiirsiidniislifcu. In that case the garnishees suhscrihed stock in the defendant's society, and on heing gaiuisheed for the amount due on suidi stock, contested, dtclaring th.at the contract they nunle with the society's agent was conditional anl (ivideiicf of tliis, liowcvtr. was lu Id to he iimdinissiljlc. .lolmson. ..' ill delivering,' judHjnu-iit. siiid : "' Tlin-c have ht'on contlictiiij; ruling's in this case, oiie at rmiiicti' in one way. and another afterwards on motion to revise, in the I'raetice Coinf, the other way : hut there is not tlie shj^'ht- est dituht of the ilnty a)i(l power of the C'onrt. even to (hciiU' tinaily this as well as other points in the case, ^^y decid- ed opinion is, and I have >(> held icpeatedly. and so liave other jud<,'es liere, particularly Mr. Justice l'a[)ineau, in tin- cast! of the ('iinijxtiiiiic ill S'liriiiiilinn v. ( 'liristin, that verhal evidence is not achnissihie i)i such cases. Ahl)ott. in liis hif^'est of the Law of ('oi'p( rations, puts the point very plainly i». 7^1. par. lOl : " Parol evidence is not athnis- sihle to sliow that an instrunu n> containing,' on the fa -e of it an ahsolnte i)r.>niise for suliscri[>tion to stoidv in a corpor- ation, is conditional. I his states the case, and 1 neid j^o no farther."' Ill This rule. then, may ap[>arintly he laid down with re^'ard to tile value of such entries as a^rainst the cor[)oratioi' it- self, and aj^^ainst its niemhers individually, vi/., that in pro- ceedini^'s afj;ainst the former, the clerical correctness of •-utdi entries heinu' admitted, they wouhl he conclusive, a.:d parol evidence wniild not he admissihie to prove that they meant something; ditVereiit from what they pur[)orted to mean, or that the company, from some dtlier cause, was not to he i)oinid therehy, while as a^'ainst niemhers individually, the utmost latitude WouM he allowed to produce evidence lO vary or contradit-t them, e\ci pt where supporteil hy Iho sij.,'nature of the inemher himself. As aj^'ainst stianj,'ers, howeViT, they WOuM uf eouise lie of no effect evcept as evidence that the company had complied with funualities necessary to the validity of a (contract. Hut eiitrii s which are made in cor[)oration hooks of nnitter.s relati\e to any 3 Lt'K News. Moil. 79. Ah tu forinalUiL's, viili supra. w M 2;V2 .101 Nl' ST(t( K COMl'.VNIKS. lir()[Kity c)V iiV;lil claiiiicd liy '''cm, can hcmi' Itt- cvidciicc lor tlii'iii uiiKsH luadf >u liy Ad id' the Li'tfislutun'.' (//i Priithiiiliiii ill' (IX Kruli'iicf. — Hut it' the l)()olvS of ii c-oiupiiny iiiiiy make I'vidtiicf injudicial proceeding's, liow arc tlicy to lie prodncccl where tlu' company itself is not in- tei'csted in producing them ".* Tliis is a (piestion which per- tains !iio)'e particularly to the law of evidence, lint as it a[)- [jcars to he anythin;,' hut settled, it may 1)0 usefully referred to here. The connnon law writers are silent, or nearly so, with re^^ard to it : and from the wordin^'of See, ll") of tin; I'^n^flish Act of 1H(5'2. it would appear that the ri>,dit to com- pel a corporation to i)ro(hu'e its hooks and jtapers, does not t'xist at connnon law. In n)any cases permission has he(;ii j^ivcMi, even to stran^'ers, to inspect the hooks of a company ami to i {criiin. The Court said " the course for proving,' the hooks and papers of a hank, when it is the adverse party, is to /^ive notici- to produce them, and on its non-comi>liance to show the contents hy infirior evidenco in the causi'." And in the same case said : -"The cases in which the production of pai)ers may he coeree(l hy sul>po'na are wlure they ari' the property of a compi'tent witness." J5ut a cori)oration cannot ite summoned as a witness, and tlierefore tlu' production of the hooks under the common law canniit he coerced. And in a inu(di later 1 f ill ' In I'ln^laiul Acts li;ivo lucii jiassi'il Im llir jnuiiosc nf .tiitlinii/inn the use of certified fxtiacts fiimi tlu; Ixxiks of jniblic corpoiations, siicli as ilii- Hank of F.njiland, as evideme hnfoic tlu: Ctuiils. Act (nii|i ) v<^. 4" ^ " . ca(>. 48. ^ Evidence, sec. 477. * The oidy hint I have been al)ie t<)disi:over il;at sinli a iit,;lil may esisl IS containpcl in tht* 8th sec of the Act (Imp ) cunceiniiiK hank Ixmks l)efi>ie alltrJcd til, which says " No hank sliall ht; ciimpelleil to jiindnce the U iljjers, day L>o(;ks, casli hooks, ir nthi-v ;iciiinnt hooks of such hank in any legal pioceedniKS unless a jiid^eof .iiieof the Supciior Courts esiie- cialh cideis that .-.uih ledgers, day Uioks, cash hooks, hhuuld be j;iodiiceil at such le^al proceedings. * Sec. f.hj '2M4 JOINT STOCK i'OMI'ANIKS. tMI u tH |»H aise the rule wan distiiK'tly laid down that an ofliccr of a corporation cannot Ix' compelled in a I'nitid States Court, l)v attachment for contempt under Supreme Court rules in etpiity, to hrin^' its hooks froui its oHice and prochice them iaf(Ut' the Master.' The section of tin- I'ln^dish Joint Stock Companies Act h» fore alluded to. under the title " Mxtraordinarv i)o\vers of Court,"' says iiittr ulin " The Court nuiy, after it has made an order for winding' up a company, sunnnon hefore it any ollicer of the company * * * * and may reipiire any such officer or person to ))roduce any hooks, papers, deeds, writin<,'s, or other documents in his custody or ))o\ver relating' to the company," etc. I'nder this an olVicial liipiidator of the company was ordered to produce certain estiuuites and calculations respecting,' the assets of the company which had hecn pre- pared with a view to making,' an application for a call.' And other cases of similar import mi^^dit he cited, hut as thoy were hasad on the special provision ahove ipioted tln-y would hii\(' no heariu},' on cases under the present Act. In the Cnited States also the same view of the case apiu'ars to l»e taken. In a case to he presently noticed however, the following' Anu'rican decision f^'iven hy .\hi»ott in his report, of corj)()ration ' cases was cited in support of a rule a^'aiiist a hank for disrej,Mirdin<,' a sid)ptena ili(n'n ft'cnni. "As a f^eiural rule corporate hooks are admissihle only in cases involvinjj; tiu' corpor- ation and meudxrs and stockholders. They lire not competent aj^ainst stranj^'ers or in suits hetween third partii's." But thou^'h this decision does not ^o the length of saying' that a cor[)orati()n can he compelled to hring up itslMK)k8,arule was <,'ranted inthecas'. oWmrii'w 'l'rudt'/. Ry. Co. V. //■<»//(, H Hl.itcli , ^\\ N Y., 1S71 ; Ahl). Di^- , Vol. II. • Rt H-iriKils Mankind C'.) , L. K. .', ch. Ajip. 3511. ' 2inl Kil., p. M7. OROANIZATIOiN AND MANACiKMKNT. liis loss, alk'f^iii^,' falso stiitcmonts and i. ports. To piovc false statements the books of the hank were necessary. To compel the hank to hrin<^ them up a snliiunut was issued directed to the l)ank, to which they paid no attention, and an application for a rule was refused. The cashier was then suhpcrned to hrinj]; them up l)ut the directors passed a resolution forhiddinfr it. A suhptena was then issued to the president and directors who also i<,'nored it. and another application for a rule was refused, hut the judfje who refused this latter application said he would f^rant a rule aj^'ainst the haidv in iS corporate capacity and another suhpo'iui issued. The ml:' which followed wiis ar};ued not before the .Tud<,'e who prounseil it, but another (Jette, J., in. the Practice Court) who, in ^'rantiuf,' it, said, " If corporations are subject to incapacity resulting' from their nature or the provisions of the law which restrict in this re^'ard the exercise of certain rijflits and certain faculties, and in those incapacities an- included the serviuf,' as a wit- ness, there is no reason in law to extend the latter incapa- city to that part of the oblij^'ation of a witness which con- sists in the production of docuuuints which are in his possession. That althou^di a corporation is incapable of a})pearin},' personally in law, the law provides tint it nniy be representi'd by attorney duly appointed. That on the sif^nilication to the bank of the subp(ena issued in this case, it was the duty of the bank to appoint an attorney in laintilfs in the action, ildd, (hut the i»laintill's hii\- ing elected to put fi rward their solicitor to answi'r the interroj^atorii'S they could not avail themselves of the privi- le},'e which otiurwise attached to communications made to him in such oipacity, ' \ I. C. Jiir. I i,r>. ■■ 49 l.;iw J. Rcii. 157, I I > i ^W- ^. ^. >4^ v\ A # k\ K IMAGE EVALUATION TEST TARGET (MT-3) A {/ **" ^ /I, ^5 1.0 I.I 1.25 B 12,2 E l?i lU 36 2.0 1.8 JA IIIIII.6 <^ /; VI c*: / c*l ^> ^^' ■' ^v^ ^^' ■^/ ^x / / y j^ ^ M Photographic Sciences Corporation 33 WEST MAM STRfCT WEBSTH NY 14SM (716) •73-4503 ^ ^v V \\ ^** ^ "% V ^ ^ 4^ C/a n Mi 11 P CHAPTER V STOCK, CALLS, ETC. 1. Nature of. (a) ^' Shall be deemed personal 1,5- tater {b) Ana shall be transferable. 2. Allotment of. (a) " // the Letters Patent." (b{ " Shall be allotted.'' (c) Induced by fraud. (d) To be paid in cash. ((') Paid up shares. if) I^'^'"' '^ (I'l issue of shares. 3. Sale and Tkan.sfer of. ((() Right of transfer. (b) "In such manner only.'' (c) Nature of contract. (d) Repudiation of contract. (e) Until the entry thereof. (/) What is a transfer. {(t) "No transfer of shares." (//) Valid transfer. (i) Refusal to register, (j) Formalities. (k) Transfer obtained by fraud. (/) Transfer after insolvency, (ni) Transferor must have paid all calls. («) And must not be indebted. {0) Transfer to infant. (/>) To married wowan. 4. Transmission of Stock. [a) By death of member, etc. 5. Transfer by REi'RESEr.TAXivE. C. Liability of Memberson Stock (d) Restricted to amount unpaid. (b) Ho7i terminated. (e) Surrender of shares. () Of Pledgee. S. 'iGHTs OF Executors, etc. (. ; Of Pledgor. 9. Liability of Company in Re- spect OF Trusts. 10. Calls. (a) Po',i'er of Directors with regard to. (b) Meaning of term. (c) What are. (d) " The Directors." {e) " May from time to time.'' (/)" And in such payments." (g) " A coll shall be deemed to have been made." (h) Notice of calls. (/') When a call is deemed to have been made. (j) " Shall be liable to pay inter- est," etc. (k) Payment of calls in advance. 11. Forfeiture OF Shares. ((i| " If after such demand," etc. {b) Forfeiture after surrender. (e) Illegal forfeiture. (rf) Holder still liable. 12. Action for Calls. (a) " The Company may,"' etc. (b) Plea of compensation. STOCK, CALLS, ETC. 239 13. " Directors may be Indemni- KIED. (a) 'Every Director," etc. [b) Personal liability of Directors. {c) Liability of Company frcncrally. [d) Liable for acts of atrents. 14. Dividends. |rt) X at lire of. ib) What are profits. (c) Profits of one year not liable for losses of previous years. (d) Dividends cannot be enforced until declared. (e) To 7i'lio»t they belong. (/) Set off of dividends. (g) Liability of Directors paying dividends. (/() Preferential dividends. (/') Bonuses. U) Right to. I ', I. — -Nature of. 34> The stock of the Company shall be deemed personil estate, and shall be transmissible as such, and shall be transferable, in such mannf only, and subject to all such conditions and restrictions, as by this Act or by the letters patent or by-laws of the Company, are, or shall be pre- scribed. The term "stock" at the head of this chapter is used OL-nericall}-. It is intended there to mean the capital of the company in whatsoever manner divided. In a narrower sense, however, it means the funded capital of the company as distinguislied from shares simply or unfunded capital. ' This distinction it will he well to rememher as it is in this latter sense that it is used almost exclusively in the Eng- lish Acts, and hy the English writers. In the Canadian Acts, however, the terms stock and shares are used indifferently. In the English Acts, the term " shares" is invariahly employ- ed to denote the original parts into which the capital of a Joint Stock Company was divided. In the section of the Act of 1862,- corresponding to the present one, for instance it is said, " The shares or other interest of any memher in a company under this Act shall he personal estate," etc., while another provides for the conn'r.-iion of piid up .^}i(iri:H into .Htorh,^ etc. " The capital of a company is said to he divided into .s7/«/v'.s when it is contrihuted and dealt with in parcels of an equal amount, and into nIocI: when it is not n.'cessarily contrihuted or dealt with in parcels of an equal ' Morrice v. Alynier, L. R. 10, Ch. 148 ; 7 H. L. 717. - Sec. 22. s Sec. 12. Hi 240 JOINT STOCK COMPANIES. liilli^H I'' amount."' And again "the word share seems strictly to denote the rights arising from the contribution, ov the ha1)iHty to contribute, a certain definite proportion of the capital of the company." " In Harrison v. Xincs ^ an American ease, held tliat the words "shares" and "stock" in the Texas Act, 1873. relating to the taxation of bank stock, are used as synony- mous terms. And in Martin v. ZcUerlxicli ^ held that the term " capital stock " within the meaning of the statute embraces the capital on which it transacts business, whether it consist of money, property or other available commodi- ties. The principles regulating them hov^ever are, in what- ever concerns the rights of the parties thereto, the samt' whether the term s]tare or stock be employed. (a) '' Sliall be dcenied personal estate.'^ — "And," adds the English Act,' " shall not be of the nature of real estate." " This," says Shelford,* "is merely declaratory of what the law would be without special enactment. As between the real and per.sonal representatives the interest of a share- holder in even the real estate of an ordinary partnership is personal pr^'^erty.' And in a large number of cases it was held, that e . ^n shares in a company holding land were not interests in lands within the Mortmain Acts. ^ And, in a number, of others that they are not interest in lands within the -Ith section of the Statute of Frauds.' Nor are they goods and chattels, within the 17th section, and there- lore a parole contract respecting them will be binding.' ' Digby, Joint Stock Cos., p. 2. ■ //)/(/. f 46 Texas 15, Su. Ct., 1S76. ^ Su. Ct. Cal. 140. 5 Sec. 2Z. <• Shelford, Joint Stock Cos., p. 147. 7 Ihid, following Lindley, Part., p. O67. « Ibid. y Ibid. In the U. S., however, held to be within the Statute of Frauds. Fine V. Horusby, 2 Mo. App. Ci, 1876. '"Thring, 3rd Ed., p. 52, and cases cited ; but in Co)iipa^:iic dc Naviga- tion Union v. Cliristin, in Superior Court, Montreal, parole evidence of a guarantee on the part of the Company in connection with a subscription of stock was refused, i Leg. News, Mon., 27. STOCK, CALLS, ETC. 241 And bv others, that thev do not confer the riuht to vote for members of parliament.' Enactments have also been passed from time to time with a view of avoiding doubts as to their liability to seizm'e under writs oiH, fa, dc hoiti*. Thus, by the Canadian Statute, VI Vic, Cap. 23, Sec. 1.' it was enacted, "that all shares and dividends of stockh«tld- crs in incorporated companies, shall be held, consideree at- tached, seized and sold under writs of execution issue*! out 1 f any of Her Majesty's Courts in this Province, in like manner as other personal property may be sold under exe- cution."' And by the Code of Civil Procedure of the Pro- vince of Quebec, a like provision is made.^ But the seizure is only good from the time the writ is served on the <-<':ii- })any, and not from the time of its delivery to the Sherilf.- {b) "And xJidll 1)1' traii^/critldc," i:uit.-4 in an action for calls, read — "We, the undersirmri. io Iiereby subscribe for the numl)er of shares set opjiositrt -nr respective names, in the capital stock of the Kirgst.on ^uTfiet E.ailway Com- pany, and we do each, for himself find iif assigns, promise and agree with each other and wrfch ili- -aid (i'ompany, to pay the full amount of the said resju^tri^- -riiajres as follows, that is to say, in calls of ten ]«er ceirL. lH inch, times fis by the directors or provisional dii-ecaor- :c die company may be determined, or as tlie constructicii: :•:' die line may re- quire, and in October following, tht dtd-'zuUiJitH paid a call of ten ptr cent. Held a sufficient allotmrVL-j- There must then be an offer and an acceptance of tharr :tfer communicated to the party making the same, lldf Ta5 the result of Pellatt's case,-* in which Cairns, L. J- -raiil — "' I thiiik that where an individual apj)lies for shai-ef ija a. company, thvw l)eing no objection to let him have aiLj_ liere must be a . response by the company, otherwise lit^re is no contract."" And on this have been based a nmnl»ei: it' dttcisions estal)- lishing a right on the part of the ajjjo'.tiiii: to withdraw the application at any time before the ilj ~^'-at is communi- cated to him. 5 And in re '^he 'Sutai ir^estment Co., Wil- son's case,'^ it was held, thai, ibe witii irriwal may be made orally ; and in DicLcnso)! v. iHiddh.' Tile judgment went so far as to say, that it was sufficient iiiiiT party to whom the offer is made has actual kuowledgt "JLit the person wuo made it has done some act inconsist.ti:" Tith the continu- ance of the offer, e. //., as in the ea^:>t' an. offer to sell a propertj% that the person making tLt 6--^ lias since sold to another. And the same principles Lu^'*- been applied in several cases e cnnvcrso. Thu-- it L; - -i-ra ht^ld. that the ■ Hi ' PickcrUij:; v. Tciiiplctoii, z Mo. App. 424. 1^7^ ■-' Kingston Striit Ry. Cu. v Foster, ci a', f. C ^n; ('2. B. 55: 3 Thring, Joint Stock Cos., 3rd Ed., p. 39. * L. R. 2, Ch. 5^7. 5 HebL)'s Case, L. R. 4 Eq. 9 ; Rit; 1".^ Cast. 4 "li. 774. '^ 20 L. T. 962. ^ 2 Cli. Div. 463. 244 JOINT STOCK COMPANIES. communication of the allotment need not necessarily be in writing, but there must be either in writing, or verhalUj, or J))l c<))i(liict, something to show the applicant that there is a response by the company to his offer." There are, however, several cases which seem like excep- tions to these rules, especially that requiring notice of allot- ment, but in most, or all of them, the decision has been in- tluenced by special circumstances. Thus, in Cookney's cast',- the applicant verbally requested a director to obtain him shares in a company which was in course of formation, and subse(|uently paid him the deposit money. The shares were allotted to him, but he endeavored to withdraw on plea of want of notice. It was held, that the director to whom lie made application was constituted therel)y his agent, and did what was necessary to make him a shareholder.^ And this decision, moreover, appears to be in conflict with Robinson's case,^ in which he constituted the managing director his agent to apply for the shares, and in which it was held that though agent to apply for the shares, he v,^as not agent to receive notice of the allotment. But if the applicant stands in such a position that the must be aw'are aii allotment has been made, the notice will be dispensed with. Thus, where the application is made with a view of qualifying as a director, and the ap- plicant, by attending Board meetings, acts on the presump- tion that the allotment has been made, it will be held suf- licient.5 And where the applicant was appointed auditor and had access to the books it was held sufficient.* But in a similar case where the auditor swore he had never looked • Buckley, Joint Stock Cos., p. 47; and cases there cited. = 26 Beav. 6; 3 De. G. & J. 170. 3 And in New Brunswick held that a person appointed by a number of subscribers to receive and remit their subscriptions to the head office ot the Company is not the agent of the Company, but the agent of the sub- scribers. Stevens' Dig., p. 1096. •t L. R. 4, Ch. 330. 5 Fletcher's Case, 37 L. J., Ch. 49 ; 17 L. T. 136. Wheatcroft's Case, 29 L. T. 324. STOCK, CALLS, ETC. 245 into the books and was ignorant of the allotment lie was let off.' The time from which the allotment runs when com- municated by letter was decided in a number of eases to be from the time the letter is posted.^ This rule, however, seems to have been held (also in a number of cases ^) subject to a condition that the letter was subse- quently received by the party applying or his agent authorized for that purpose ; and so where it was shown that from some cause not due to the fault of the applicant himself the letter was not received, the contract was held incomplete. But where the applicant had given a wrong address and for that reason had not received the letter, he was held liable on the contract.* These cases appear to be perfectly reconcilable though they have been regarded otherwise. The principle underlying them seems to be simply to throw the burden of proof as to the receipt or non-receipt of the letter on the applicant, in order per- haps to a,void a too great facility of withdrawing, or what would be called in common language, of "backing-out" of the offer. It limits the duty of the company to the posting of a notice of allotment subject to the right of the appli- cant to show that he never received it. And as the duty of the company ends with the posting of the letter, so the commencement of the contract and the consequent liability of the allottee dates from that moment, subject as afore- said.^ This condition subsequent, however, would be held to extend only to a complete failure of carriage and delivery of the notice, and not to delay of arrival until after a cer- tain event. Thus, if a winding-up order was made prior to the receipt of the notice, which however came subse- ' Land Shipping Colliery Co., iS L. T. 786. ' See Buckley, Joint Stock Cos., p. 51 ; and cases there cited. 3 Ibid. * Ibid, p. 52. s The rule here stated, however, is opposed to that held in the Province of Quebec in a number of insurance cases, which seem to be parallel to this in which it was adjudged, that a notice of lejection of application did not take effect until receipt by the applicant. Tough v. Provincial Ins. Co., 20 L. C. Jul. 168 ; and Goodwin v. Lancashire Ins. Co., 18 L. C. Jur. i ; and see sec. 64, post. ii ili III 246 JOINT STOCK COMPANIES, (luentlj to hand, of course the appUcant would be held. And whore the applicant, the very day ho should have re- ceived the notice, wrote withdrawing the application, he was nevertlioless held lia])le in absence of absolute proof that the letter had never been received." And so also, when the allottee attempted to withdraw on the ground of the non-fulfilraent by him of a condition im- posed by the company. In that case it appeared that the defendant had signed the stock-book, which was headed with an agreement by the subscribers to become share- holders of the stock for the amount set opposite their re- spective names and upon allotment by thu company *' of uiy or our said respective shares," they covenanted to pay the company 10 jier cent, of the amount of said shares and all future calls. The directors subsequently passed a reso- lution directing the secretary to%issue allotment certificates to such shareholders for the shares held by them. The secretary accordingly prepared such certificates which cer- tified to the subscriber that the company, in accordance with his application, had allotted to him co many shares amounting to so much. The certificates were delivered to the company's broker to deliver to the shareholder. There was no evidence to show any formal notification to the de- fendant of the above resolution or that a certificate of allottment had been issued, and he never paid the 10 per cent. He, however admitted, that he had received notice asking for payment, and he supposed the first notice he received was for the 10 per cent. Held that the evidence was sufficient to prove that knowledge of the acceptance of his offer had reached the defendant and that he was therefore liable.^ The liability of the applicant, also, in several cases turned on the effect of a condition attached to the applica- tion. Thus, where the condition was that the applicant should get the contract for supplying certain goods to the company which it required and there was no evidence of the ' Walls' Case. L. R. 15, Eq. i8. = Denison v. Leslie, 3 App. (Ont.) 536. STOCK, C.VLL8, KTO. 247 aceei)tanco of the condition, or of acquiosence in the allot- rainit without the condition, ho was held not liahle.' And the same when the condition was of heinr; appointed a director which was not carried out."' The same when the condition was of being appointed local manager and being unable to pay the deposit the appointment was refused.' The same where the condition was, tliat the Acts hould be ol)tained limiting the liability which was not done.^ And also where it was understood as a condition, that an amalgamation was to be effected and it was not.- And in the United States held, that a subscription may be made on the condition that a j)rescribed amount should be subscribed before anything is called in, and the condition, if a part of the subscription, will be enforced as between the company and the subscriber.' Sed nlitcr ichere there is oiilfi a voUnieral (itireement. These cases, however, must be distinguished from those wherein the contract to take shares is absolute but accom- panied by a collateral contract or agreement. Thus in Steel's ease,' tjie application for shares was made in conse- quence of representations that balance sheets should be sent to him, and £1 was deposited on each share. An unstamped letter of allotment was sent to him, and he immediately wrote declining to pay calls till the balance sheets were sent. No balance sheet was ever sent, but afterwards a duly stamped letter of allotment was sent to him, which he returned and demanded back his de- posit. He continued to demand back his deposit until the company went into liquidation. Held, that he was liable as a contributory in respect of the shares. And in the Kimjston Street liailauui Company v. Foster, et al, in ■ Bucklev, 1, Ed., p. 53 ; and cases there cited. ' Ibid. 3 Ibid. * Ibid. 5 Ibid. < Ridgefield, etc., R. R. Co. v. Brush, Abb. Dig. Mr. p. 659. 7 Re Whitley partners, 28 W. R. 241. ill 218 .lolNT STOCK COMI'AKIES. Uplii'V Canada.' in wliifli tliu dolondants pleaded, in answ^T to an action for ealls, an a<:;reenient to pay in nur- oliandisc, it was held dismissing the plea, that the evidenec showed that the aj^rwnient to take merchandise was hide- pendent of and collateral to the apireement to take shares. In Elkin<,'ton's case, the collateral aj^n-eement was that :}()s. per share shouM hi- paid in cash and that sul)se([uent calls should he set off a':;ainst floods wluch they were to supply to the company. The allotment was mad<' out but no goods supplied, and on a winding-up it was held, that they had agreed to become shareholders in 2)ri's<'nti, and were placed on the list of contributories ; their recourse against the company on the collateral agreement, the Court held, being (piite another question. Gore & Durant's case ^ was pretty much of the same nature. In that case, certain patentees agreed to sell their interest in the patent of a company, and to receive payment partly in in \ aid-up shares, partly in shares not paid-up, and partly in cash, with the further stipulation that if the shares and cash were not paid inside two years the agree- ment should be void. The shares were issued but no cash paid, and the company was wound up within the two years. Held, that the vendors were liable on the unpaid shares. A similar case was that of Sfalcs v. Inrin in Upi)er Canada.^ In that case the plaintiff, a creditor of a company incorpo- rated by letters patent, sued defendant, a shareholder, w4io pleaded that there was nothing due upon his stock. It appeared that there were nine shareholders, two of whom held a patent right under which the company were to work. The defendant held $5,000 stock, on which he had paid in cash $1,000. It was arranged between the patentees and the other shareholders, that the latter should pay an addi- tional ten per cent, on their stock, making twenty per cent, in consideration of which the patentees, who were said to ' 44 Q B. 552. = L. R. 2, Ch. 511. 3 L. R. 2 Eq. 349; and see Buckley, 3rd Ed., p, 56. * 34 Q. B. 545, Robinson's Dig. 761. STOCK, CALLS, ETC. 249 have a large casli claim against the company for their right, were to i)ay v [) the halance of the unpaid stock of the seven shareholders, equal to $2, 800, out of this claim. In [)ursuance of this arrangement, each of the seven gave his rheque to the secretary for the halance of his unpaid stock, which the secretary passed on to the patentees, who acce^ft- ed them, and gav(^ receipts to the company fortlu? amount. The patentees then handed back the cheques and elfects to the secretary, who returned the cheques to the shareholders by whom they were given, it having been agreed beforehand that they were to be so returned and not used. Held, that this transaction was not a payment in full of the stock and that defendant was liable. ii H But where shares are clearly taken in payment of a debt due, they must be held paid by set-off of the .mount of the debt.' A number of cases ' also go to show thufc where the notice of allotment imposed a term or con- dition not in the letter of application, that the allotment was of no effect to bind the applicant unless accepted by him in turn. Thus where the notice stated that the appli- cant must sign the memorandum and articles or the shares would be forfeited, and this was not done, held not liable.^ And the same where the words ''not transferable" were introduced into the letter of allotment, and were held to introduce a qualification not found in the proposal.* But where the defendant subscribed for stock in a company about to be formed, and received a letter from the secretary stating that his stock was taken on the same condition as that subscribed by three persons whose names preceded his in the book, and who had appended the condition to their subscription, that the company was to be a hydraulic com- pany, and the defendant did not append such condition, nor was the hydraulic company formed, but a cotton company :l HJ h fi ll 'm\ 5 Buckley, 3rd Ed., p. 56 ; and a number of cases there cited. = Ibid. 3 Oriental Steam Co. v. Briggs, 2 J. & H. 625 ; 4 D. F. & J. 191 ; and see Buckley, 3rd Ed., p. 57. ♦ Claplin V. Slack, 4 Ex. 403 ; and see Shelford, 2nd Ed., p. 29. 250 JOIKT STOCK COMPANIES. !« only, held that the defendant having signed the book un- conditionally was not entitled to be relieved from liability for calls." And in the United States, held that the actual performance by the company of a condition may bind the subscriber equally with an insertion of it in the paper.' Again an application for shares may be determined and the applicant freed therefrom by unreasonable delay in allotment. Several cases are rejiorted in illustration of this.' Thus a delay from the 8ih of June to the 23rd November, was held to hlxrate the applicant.* And in another case a delay from the 6th October, 1865, to the 3rd February, 1866, though he made no application to take his name oflf the register until December, 1867. An allotment also made in pursuance of an agreement which is idfra tins is invalid, but the defect may be cured by acquiescence on the part of the allottee, at least in so far as to debar him fr^m taking advantage of it.' Thus in Wilson V. Gititif.' the plaintiff, a creditor of a railway com- pan3% sued the defendant as a sharehold for the amount unpaid on his shares. It appeared that the defendant had signed the stock-book of the company for forty shares, but he alleged that this was done upon the faith of a verbal agreement with one L.. a prominent director and chief promoter of the company, that defendant should receive the contract for building the road. There was no proof that defendant had received any formal notice of the allot- ment of the shares, but he paid ten per cent, thereon, be- cause as he alleged, L. told him he could not get the con- tract unless he paid it. Held, that the payment of the ten per cent, made him a shareholder, and,, that he could not repudiate his liability on the ground that he had not been awarded the contract, for L. had no power to bind the com- ' Jones V. The Montreal Cotton Co., i Leg. News, Mon., 450. => B. R. R. & M. R. Co. V. Palmer. 42 Iowa, 222, Su. Ct., 1875. 3 Buckley, Joint Stock Cos., p. 64. 4 Ramsgate Hotel Co. v. Montifion &> Goldsm'.J, L. R. I Ex. 109. 5 Thring, Joint Stock Cos., 3rd Ed., p. 43. * 3 App. (Ont.) 124. STOCK, CALLS, ETC. 251 pany by making such an agreement in his subscription. But the directors have no po'ver to cancel an allotment which is perfect and binding on the allottee,' except as under section 55 of the Act," which gives them the right to declare forfeit shares, the owners of which are in default to pay calls. And on the other hand where a person sub- scribed for stock in a corporation, and certificates in the usual form were issued to him, it was held, that a condition reserving a right to the subscriber to cancel his contract was void as against the other subscribers, though expressed on the face of the contract. •i 111 II ii (c) Induced hi fraud. But where a person has been in- duced by false and fraudulent representations to apply for shares and the shares have been allotted to him, an action will lie to rescind the contract. Not that the contract is void ah initio, but it may be avoided by the person so de- ceived.^ And this being so the rescission does not date from the making of the contract, but only from the time when jn'oceedings to rescind it were commenced.^ And this principle holds whether the false statements are issued by the corporation itself officially, or by its authorized agents, /. e., persons authorized to solicit and receive applications for shares ; or, in any case, if the company have assumed the contract and benefitted or seeks to benefit by it. This is the effect of the decision in the Western Bank of Scotland \. Ad- die,^ in which Lord Chelmsford said "that where a person has been drawn into a contract to pm'chase shares belonging to a company by fraudulent misrepresentations, (or by fraudu- lent concealment') of the directors, and the directors in the name of the company seek to enforce that contract, or tlie person who has been deceived institutes a suit against the ' Fletcher's Case, 37 L. J., Ch. 49 ; 16 \V. R. 75 ; 17 L. T. 136, Buckley, p. 67. " Vide post. 3 Melvin v. Lamar Ins. Co., So 111. 446, and i Leg. News Mon., p. 12. * Abb. Dig., Vol. II.. p. 65J. 5 Reese River Mining Co. v. .Smith, L. R. 4 H. L. 64, 73. « L. R. I, H. L. 145, 157 ; NicoU'sCase, 3 De. G. & J. 387. See Oakes r. Turquand, supra, p. 67, 69. Ill > * F^i^" w mn Si S! ;l 252 JOINT STOCK COMPANIES. company to rescind the contract on the ground of fraud, the misrepresentations are imputable to the company, and the purchaser cannot be held to his contract, because a company cannot retain any benefit which they have ob- tained through fraud of their agents." ' But if an officer of the company, not being a director, answer inquiries which do not properly fall within the business of the com- pany deputed to him, the representations of such officer cannot in the absence of proof be imputed to the directors.- Nor will the representations avail to set aside the contract unless they were present in the mind of the applicant as an inducement to enter into it.^ In the United States the effect of the decisions may be stated in general terms to be, that a contract of subscription may be avoided bj- proof that the subscriber was induced b}' fraud to make it, upon substantially the same principles as apply between individuals. A corporation cannot retain the benefit of a contract which its soliciting agent has procured by representations as to material facts fraudu- lently made with knowledge of their falsity. And in Paddock v. Fletcher,* held, that the promoters cf a proposed corporation who made the false representations, as well as the company itself, are liable in action of damages for deceit in inducing the plaintiff to subscribe. And in Upper Canada, a plea that defendant became holder of the shares by subscription, and was induced to do so by fraud of the company, and that he had received no benefit from and had repudiated the shares, was held good on demurrer.^ But held in the Province of Quebec, where misrepresentation was pleaded in answer to an action for calls, that verbal testimony of such misrepresentation could not be set up ' Bucklev, 3rd Ed.; p. 87. » lb Partridge v. Albert Life Ins. Co., 16 Sol. J. igg. 3 Puhford V. Richards, 19 L. & E. 387, 391 ; Nicoll's Case, 3 De. G. & J. 420 ; Western Bank of Scotland v. Addie, L. R. i ; P. H. 145, 158. 4 42 Ver. 389, Su. Ct., 1869. 5 Prov. lus. Co. V. Brown, et al, g C. P. 286; Robinson's Dig. 734, and de supra, Cap. II., p. O3, et seq. STOCK, CALLS, ETC. 253 against the written consent of the subscriher,' And a winding up order will act as a bar to the remedy of the allottee unless proceedings to repudiate and set aside the contract have been instituted.^ r (d) To he paid in cash. — By section 83' it is provided that all shares so allotted shall be held to be payable in cash, "unless otherwise determined by a contract duly made hi writing, and filed with the Secretary of State at or l)e- fore the issue of such shares.'" This provision, which is not found in the Act of 1865, nor in the Quebec Act, nor in the Ontario Act, is copied apparently from the Imperial Act of 1867, and has the effect of closing one avenue to fraud on the part of promoters and directors. Under this section, it is no longer permissible to accept shares in a company in order to get rid of a property acquired for the purpose of making a large profit at the expense of the compan}', or in order to secure the custom of the comj)any, on the under- standing that they are to be paid for in goods as wanted, which was the arrangement in Pellatt's case and Elking- ton's case.5 At least it is only permissible to do so by a regular formal contract registered with the Secretary of State, in order that any one who may be interested may inquire into the nature and terms of such contract, and govern themselves accordingly. The object of the provi- sion broadly stated is, clearly, to avoid bogus allotments, or, to speak more accurately, to put it out of the power of per- sons accepting such allotments, to avoid liability l)y plead- ing an agreement between themselves ana the directors, that the shares so allotted were to be paid for otherwise, than in cash. On the other hand, it would necessarily be ■ National I nsitntiicc Co. v. Clicvricr, i Leg. News, Mon., 591. = This is the English rule, though in the U. S. no absolute rule of this kind appears to have been ado)->ted. i Am. Law Rev. N. S. 208 ; rnd Thompson's " Liability of Shar. .'olders." 3 Vide post. 4 But in a New Brunswick case, held that a Joint Stock Company may take a pnmiissory note from a stockholder for an amount due by him on an assessment on his stock, there being nothing in the Act of incorporation to prohibit it. Stevens' Dig., p. 765. 5 L. R. 2, Ch. 511, 527; and see Colliers Law of Contributories, 21. 11 I til f 'I I ! t 'M I •■ nt 254 JOINT STOCK COMPANIES. ' ! '■:)■■: 1*3 « 8 I" i i considered too great a restriction of the company's actions and transactions to prohibit that which might be for the benefit of all concerned, to take away from it the right which exists between individuals of making any agreement consistent with public policy and good morals. Thus, it might be for the interest of all parties, that shares should be allotted to an individual or a firm in consideration that they should be paid for in a certain manufacturing mate- rial, for instance, at a certain rate, to be delivered from time to time as required by the company. This was the agree- ment in the cases last referred to, and which, though re- garded as perfectly right and proper as between the com- pany and the parties, was held not to relieve the latter on a winding up, from liability in cash to the creditors for the total amount unpaid on their shares. And so, in re The Church and Empire Fire Insurance Co.,' a company al- lotted a proprietor of a newspaper a number of shares in consideration of the newspaper advertising the company's prospectus, etc. The allotment was made April 7, and the first advertisement was inserted April 8. No contract was registered as required by the company's act. Held, that the shares were not paid for in cash, and the holder must be placed on the list of contributories as a holder of shares not paid for. And where the mortgagees of an estate which was, by an unregistered contract, contracted to be sold to a company for a consideration partly in cash and partly in paid up shares, agreed with the vendor to accept payment of their mortgage debt partly in cash and partly in paid up shares, and in pursuance of this agreement some of the vendor's shares were allotted to them as fully paid up, and they released their charge, it was held upon the winding up of the company that they must be treated as holders of un- paid shares." And in The Xatioiial Insurance Co. v. Hutton, in the Province of Quebec,^ in which a similar agree- ■ Pagin & Gill's Case, 6 Ch. D. 68i ; and Andress' Case, 8 Ch. D. 12G. ' Re the British Farmers' Pure Linseed Oil Ca':o Co., Potter & Brown' Case, 48 Law J. Rep. 5(3. 5 24 L. C. Jur. 26, in App. ^■U ill STOCK, CALLS, ETC. 255 ment was pleaded to an action for calls, held that aii agreement between a promoter of a company and a sub- scriber for shares, that the latter shall pay for his stock in services, will not bind the company. Nor can such an agreement be proved by parole. In Compaffiiie yarmi- tion Union v. Christin iC- Vdlois, defendant en (nimnti'e in the Superior Court, Montreal, Johnson, J., said. " The plamtiff en f/arantic alleges, that the defendants en (jar^mtie who were directors of tlie company, got him to sultscribe for the stock on an express guarantee by them that they would take merchandise in payment. The only jKtiut is. whether the guarantee can be proved by ] tan tie. The learned judge before whom the motion to revise the r uling at enquete was argued, maintained the objection to such evidence. So do I.'" The judgment in this case, it will l)e observed, decides not only the necessity of a writing to l)ind the company and its creditors to such a contract, as provided by the 83rd section of the present Act, but the \yeT- sonal liability of the directors without one, and will no doubt have the effect of checking any temptation to plt-atl bogus agreements in answer to calls by the comi>any. Nor can any injustice be urged on the part of the subsc-riWr. if the agreement be bona fide, as the proi)er course under any circumstances would be to reduce such a contract to wi-it- ing, and when that is done, and the contract is registereii according to the provisions of section 83, both the coni- l)any and its directors, creditors, etc., are bound, and the allottee incurs no liability beyond the terms of such ajrree- ment. An even where, by inadvertence, the contract wa.s not registered until after the issue of the shares, it was held immaterial, there being no fault or evidence of ba*i faith on the part of the parties thereto.' " (i ; ■ This case must be distinguisheil from a^'reements to take shares simpiir which are not within ;he 1 7 sec. of the Statute of I'rauds ; V idt sufrcp. 240. Here the contestation was not as to the agreement to take shares nt which there was no doubt), but as to the agreement on tlie part of tte directors to take merchandize in payment of such shares, which was qatle another and s.^parate agreement, and should have been in writing in orJer t) be proved. • In re Ambrose Lake Tin and Copp' r Co., Clarke's Case, S Ch. 635 . i Leg. News, Miui., 62. ! tl 256 JOINT STOCK C0MPAJisn<'()j's}i(ir('s.' The question of what constitutes the issue of shares under the section - has also arisen in some cases, in deciding whether or not the regis- tration was made prior to the issue, as required l)y the sec- tion. " It is not," says Buckley,^ " necessarily either the allotment of the share, or the issue of the certificate, that constitutes the issue of the share. The question is whether the shareholder has or has not been put in complete possession of his share, and this may be so although some formal act may not have been completed." Thus, in Blyth's case ^ it was decided that shares may have been issued, but for which no certificates have ever been issued ; and on the other hand shares as to which a resolu- , tion has been made may not have been issued. In Pritchard's case,^ it was said that shares issued as paid up under a registered contract, and the persons to whom they ' Buckley, p. 44 ; and cases there cited. = Vide sec. 83, post. ' P- 450. * 4 Ch. Div. 140. s L. R. 8, Ch. 956, 961. STOCK, CALLS, KTC. 2G3 aro allotted, should be so described in the contract as to be capal)le of identilication by persons insi)eetiu^ the contract and the re No transfer of shares, unless made by sale under execution, or under the decree, order or judgment of some competent court on that behalf, shall be valid for any purpose whatever, save only as exhibiting the rights of the parties thereto towards each other, and as rendering the transferee liable ad interim jointly and severally with the transferor to the Company and their creditors, until the entry thereof has bean duly made in such book as aforesaid. ' Buckley, Joint Stock Cos., 3rd E 1., p. 450 ; and cases there cited. ' Harwich Harbor Co., W. N., 1875, 235. ■!!, ii 264 JOINT STOCK COMPANIES. (a) R'hiht of TramjVr. — The right of transfernng one's share and membership, or any portion thereof, to another, at will, is of the essence of an incorporated company as dis- tinguished from an ordinary partnership." But a diversity of opinion seems at one time to have existed concerning the nature and origin of this right. The point of difficulty appears to have Vteen whether the right of transfer was a nat'U'al and inherent right, or whether it existed by and in so far as it was confen-ed by special statute ; or, in the ab- sence of statutory provision, by the regulations of the com- pany. The difficulty arose apparently from the anomalous position of tlie company itself, whose existence, in the eyes of the law. was only a tolerated one, and was due entirely to special legislation. In recognizing, however, its raiaoii (Vctn', t\w legislature must be held to have recognized and confirmed the principles upon which it was usually formed, and the rules by which it was usually governed. And one of the most prominent of these was the principle of the transferability of oue"s pai"t or share, or a portion thereof, to another. " without the consent of directors or sharehold- ers, or anybody." The question may now be said to be settled in accordance with this view. In the leading case on this point." Lord Ilatherly considered the free- dom of transfer to be a special incident of a Joint Stock ; Company, and this opinion seems to have been adopted in a large lunnber of eases since reporte HubhcU V. Meigs, 50 N. Y. 480, App. 1872; Abb. Dig, Vol. II. ' Vide allotment supn r, p. 251. STOCK, CALLS, ETC. •2Q9^ managers being agents of the company, that the com- pany could not be responsible for fraud committt^ bv them. And though it was held that directors are not agtuts of a company to commit a fraud, still, if the company havel)eDt'- iitted by the transaction, it will be bound. For where a corporation takes advantage of the fraud of its agents, it cannot afterwards repudiate the agenc}^ and say that the act which has been done by the agent is not an act for which it is liable." Reports and accounts, therefore, made or rendered by directors in the course of their duty concern- ing the affairs of the company, though made and issuetl to the shareholders only, are considered the representations of the company, not onhi to the slKtrchohkrs, hut to the puh- lic, if they are published and circulatedMn- authority of the directors or a general meeting.- And in the XtitioM'd Ej- chtinfie Bank of Gldsgov; v. Drcw,^ Lord Cranworth said, " AVhat is the consequence of a company receiving a report and publishing it to the v"" 'd '? I confess that, in my opinion, from the nature of things and^from the exigencies of society, that it must be taken, as between the company and third persons, to be a representation^by the"company." And Lord St. Leonards expressed the same opinion in the same case. He said, "I have certainlj' come to this con- clusion, that if representations are made by a company fraudulently for the purpose of enhancing the value of their stock, and they thereby induce a third person to pm-chase stock, those representations so made to them do bind the company " 4 The result of the decisions in rebus, The Westtni Bunk >>/ Scotland v. Ad(Ue,= and Kisc]> v. Ccntml liaihray Co., >>/ ' Stci/t V. Jcjcsbury, L. R. g, Q. B. 301, 312 ; and in PtcbUs v.'Pata^o Guano Co., 77 N. C. 233, the juclgment was that a corporation is^liable in an action of tort for the fraud and deceit of its agent in making^the sale. I'idc I Leg. News, Mon., p. 262. " Shelford Joint Stock Cos., p. 56. 3 2 Macq. 103. ^ Vide Shelford, p. 57 ; where these opinions are more fully 5 L. K. I H. L. Sec. 145. fi^ ( j 'H ' ■ i : 1 f Ill I 'i 1270 JOINT STOCK COMPANIES. I'l Wm i 1 ill i ■ Vcnezuala,' by the House of Lords, was, that a company cannot retain any benefit they have gained through the fraud of their agents; and, "therefore, a person who has been induced to i)urchase shares by fraudulent misrepre- sentations or fraudulent concealment on the part of the company, through its agents, is entitled to be relieved from his shares as (Ujninst the company, unless he is precluded from relief by lapse of time, or the mode in v/hicli he has dealt with the shares.'" Most of these cases and rulings apply more particularly to contracts with the company, but they have a limited ap- plication to the case of a sale and transfer from one indi- vidual to another. Of course where the shares are fully paid up it matters little, if any, to the company, who is the holder; and, consequently, though the purchase by the transferee maj' have been made on the strength of false re- ports and statements issued by the directors, the company cannot be said, in such case, to have benefitted by it. But can it be said that the company are wholly irresponsible in the premises ? It is clear that unless the vendors were aware of the misrepresentation, and repeated it in order to induce a purchase, that they could not be held liable ; and unless the company, or the directors, personally, were liable, the purcliaser would be without remedy. Jjut where a purchaser has unmistakably suffered loss through the fraud or misrepresentation of the directors acting in their capacity as such, it is clear that either the directors them- selves, or the company for which they acted, are liable. It has already been seen' that directors stand in a twofold re- lation to the company, viz., that of trustees and that of agents. They are trustees of the property and powers of the company ; they are agents in their ministerial acts for and on behalf of the company. Any misrepresentation ' De. G. J. & S. 122, L. k. 2, H. L. -^i rtr hound just so far as it had authorized or approved of ittjr in'ti? in question. If the statements alleged to be falst.. likiert^fore had been adopted and approved by the com] (Hiiuj it a regiilar meeting, the company would be liable.' i'.:" :' i third person has pur- chased shares on the HtrenptL '.i -rtatements not so adopted or approved of, or, in other v <:■'..'. statements made and circulated by the director-- oi i_rrir personal responsibility, he must look to them oiJy to bt indemnilied. The result is the same as if a du-ector Lfaii induced a person to pur- chase stock from the comjiauT .:b from, a third person by private verbal statements t_.1 turned out to be false. ° In 3/cGo»v<» V. 7>//cr" it wa^ I'.i 'iiat a company is not responsible for acts done by jt- miinaging director when he is acting in his private cajiacirtj.. antl not acting for the company, or in pursuance ff -iilt authority given by the company. And in the I^'^kt- -r E'-nh'-r Scotbind v. Addie,* held that a person defrauded 1 7 tlie directors, whose only romed}' is an action for fra:QL m^rxst bring it against the directors personally.- And. iu t aumber of cases, it was held that the directors were Ll .- -<-veralIy as well as joint- ly, and that the plaintiff wcra :1 Tte t^ntitled to relief against any of them without making liht i.thers parties to the suit." it 11 ' But in a recent English Case snifi -Sar ,t person induced by the fraud of the agents of a Company tci liec mit i f arrner can bring no action for damages against the Comj anv ^vhiit ]k r^^mains in it: his rnly remedy is restitutio in iutif;ruw. and if thai ItewnrHS imprssible by the winding up of the Company, or by any cither meain-. iiH .iction fcr damages cannot be maintained. Houldsuorih v C:i\ ir dhuts^w Bitvk, L. R. 5 App. cases 317- = If this statement of the lav Iht irrrract the necessity of appointing auditors of the most undoubted reliaiiiir^ m examme into the correctness of reports of the directors becomcF ig^aranr, .is it is in most cases impos- sible for each shareholder to ascertan: 5T5imself the correctness of such reports. ' L. R. 8. Q. B. 141. •1 L. R. I H. L. See 145. 5 With regard to damages for neplux:: za. tie part of the directors. Vide infra. ' Buckley, Joint Stock Cos., 3rd Efl,, ^i-zai ; and see cases there cited. .'1 i i 272 JOINT STOCK COMPANIES. i iiiil In Craifi v. Grqiff,' lioNvever, it was held th2 ; and such trustee is consequently entitled to be regis- tered as a member in respect of the shares held by the bankrupt, although the bankrupt be indebted to the com- pany.- 4>2i No transfer of shares whereof the whole amount has not been paid in shall be made without the consent of the Directors, and whenever any transfer of shares not fully paid in has been made with such consent, to a person being apparently of insufficient means to fully pay up such shares, the Directors, jointly and severally, shall be liable to the creditors of the Company, in the same manner and to the same extent as the transferring shareholder, but for such transfer, would have been ; but if any Director present when any such transfer is allowed, do forthwith, or if any Director then absent, do within twenty-four hours after he shall have become aware thereof, and able so to do, enter on the minute book of the Board of Direc- tors his protest against the same, and do within eight days thereafter publish such protest in at least one newspaper published at, or as near as •may be possible to, the office or chief place of business of the Company, such Director may thereby, and not otherwise, exonerate himself from such liability. {(j) No transfer of shares, etc. — In considering a question of transfer, it will be always important to notice whether the contract refers to paid up shares (on which no liability remains) or to shares respecting which the holder is still liable in whole or in part. For while the transfer of paid up shares is comparatively unfettered, it is not only the ■ i - ' ' Webb V. Ridgcly, 38 Md. 364 App., 1873 ; Abb. Dig,, Vol, II. = Re The Bentham Mills Spinning Co., 28 W. R. 26. 11 STOCK, CALLS, ETC. 275 right, but the duty of the directors to refuse registration of a transfer of unpaid shares, where the proposed transferee is a person of no apparent means, and the transfer is presumably made for the purpose of avoiding liability. For this purpose then every application to register a trans- fer of shares should be brought before a regular meeting of the Board of Directors, and granted or refused by the majority in the ordinary manner, on evidence of the fitness of the person proposed as transferee to be substituted in the place of the holder for the shares mentioned. If the Board is divided in opinion, the minority may save them- selves from liability in the manner laid down in the section. It is evident moreover that the majority, or whoever they are, who undertake the responsibility of consenting to the transfer, may be deceived by the misrepresentation of the parties asking for the registration ; and, with the best inten- tion in the world, may order the registration of a transfer to a totally irresponsible person. What would be the result in such case ? The practice of the Courts would have to be looked to for an answer. For although no such liability is attached to the directors under the Imperial Statutes, the question has frequently arisen as against the transferer. And the result of the decisions under those Statutes is, that where the consent of the directors has been obtained by misrepresentation, and the facts were such, that had they known them they would have refused the transfer, the transfer will be set aside and the transferer still held liable. And in re the European Arbitration, (a leading case) it was held that if the transferer, without having made any misrepresentation, knew in fact that his proposed trans- feree was not a proper and solvent person, then the transfer would be set aside and the transferer rendered liable.' In this case Lord Westbury said very forcibly : — " I do not care a rush whether the directors inquired or not, or whether there was misrepresentation or not ; but if I find • Buckley, 3rd Ed., p. 20, 26 ; and Healey, p. 54. '^■\ r t < i •i7() .lOINT STOCK COMPANIES. mm jifi the nirtii who desires to (h'spose of his shnvos in favor of A. li. knows very well in his mind, iit thut time thut A. Jj. WHS an insolvent man, or a dishonest man, or an improper man, to introduce into the partnership, 1 shall hold that the personal knowledge on the part of tlu; individual dis- posinf^ of his shares, forhade him to do what he desired to do, and that his persistinf^ in doinp; it relying on the ignorance of the directors, and concealing what he knew, was a fraud upon the directors,"' Applying these principles to the ahove section, it cannot l)e doubted that where the directors have used due diligence to discover the worthiness of the proposed transferee, and have been deceived by the parties they will have done all that the section requires of them ; but the transfer will be held void, /. e., voidable, at the instance of any ccjmpetent party. And not only that, but under the authority of the previous section up to the time such a transfer is set aside, the parties thereto will be held jointlij and sevcmlhi liable toward the creditors for the amount unpaid on the shares. But as the object of the above section manifestly is to make it a part of the duty of the directors to inquire as to the standing of the proposed transferee, the above decision will not apply so far as to absolve the directors from liability under any plea of concealment where they have neglected to use diligence to that end. As to what would in each case constitute diligence so as to absolve the direc- tors from liability under the section would be a matter for the Court to decide. But what constitutes misdescription or misrepresentation, so as to avoid the transfer, has been the subject of a number of decisions. Thus, wwere the transferee was described as " a gentleman," but proved to 1)0 a person of little or no means, and who lived in a house worth only £'i a year, it was held immaterial.' And so also where the transferee being- described as "a gentleman" i ■ ■ Healey, Ihid; Williams' Case, L. T. 125, 126. And in Murgatroyds Case, His Lordship went further and called upon the transfer r to make an affidavit, that he knew that the transferees were men of substance, etc. But this is not regarded with favour. - Bishor'S Case, L. R. 7, Ch. 396. • .' . ■ ' .■•:i . HTOCK, CALLS, KTC. 277 pvnvc'd to Ito 11 journoyniiin ItutclKV. and the son-in-liiw of tlic tniiislVvcr. And tliis, notwitlistiindin"^' Unit the trans- fer was nmdi' for a uu-rdy nominal fonsidi-ration,' and tho directors Inul the power to refnse improper transfers if they know them to he so. Hnt where a transfi'r was nnido to a person desiiilx'd as " of Cado;j;au terrace, fj^entleman," in consideration of I' 1,32(5, expressed to he paid, and tlie directors rej^nstered the transfer ; hut it suhsetpuntly trans- pired that the transferee was employed in a warehouse at a sahiry of less than I'lOO a yi'ar, and the consideration Avas paid only l>y a i)r()missory note ; held that the mis* description of the transferee and misstatement of the consideration were fatal, and that the transferor must he put upon the list," And in the United States, held that a transfer to an insolvent will not relieve the orioad to the plaintiffs to pay that call, and therefore did itou notwithstanding the trans- fer. To prove the tranrdea-. nR-- plaintiff's transfer book was produced, in which it -vraf ttati^red, the transfer and ac- ceptance being signed by iK T^iio waa then the plaintiff"s manager, as agent for bcftL inorties ; and their stock book was also produced, in wliicL "lxI.t -rtt^ck appeared in M's name. The powers of Attorinj were not produced, but the l)laintift's secretary, who proda-j-rii the I)Ooky, said he be- lieved they existed, and thaa aIL the papers were in the hands of the plaintiffs attonatj". Held that the transfer was sufficiently proved for tLr jrirposes of the action, being signed by the plaintiff's oftictj Ur agent for both parties, and recognized in theii- bot»kf : ahuit it was unnecessary to produce the bond given by dt-faaifcuit,, and that defendant was not estopped by haviui: ](iia£tihe call made in Decem- ber, 1858, from denying that in tiad transferred the stock before the call was made- 45> The Directors may declnit t; register any transfer of shares Iclonging to any member who ib mStiitiiii aj rhe Company. (//) .1//^/ miiHt not Jic iiicMtt^iS. — Two things may be noted concerning this section. Fi:--ri:.. that the power given to the directors apphes to all nbajHr^.. whether paid up or not, instead of as by the previcTUf i<^t:tion.s to shares on which something remains to l>e ]iai'L ><^cond, that the power is permissive, and not director^., h.^ in the previous sections. The section appears to bt u ti cy of the 10th Art. of the Schedule before alluded t, . ilIji i..- doubtless intended to cover questions which have aaii^tri a^j to the right of a com- pany to a lien on its share-- l:c iLebts due it by the share- holders. The effect of thr ritttimii is to create a lien for ii I ill h it 1 ID 28G JOINT STOCK COMPANIES. any debts due to the company, which it can enforce or not as it deems exijedient. It has been discussed, however, whether the debt must be actually due and payable at the time of the application for registration. " Thus a banking company having under its articles a lien upon the shares of any shareholder tor all moneys due the company from him, etc.," held bills of a shareholder for a debt due the bank. Held that the amount of the bills was, before they arrived at maturity, * moneys due to the company,' for Avhich it ha**, a lien on the shares." But where the articles provided that the company should have a lien for money ' due,' and that the company might decline to register a transfer by a member who was indebted, held that the word * due,' by virtue of the context, meant ' due and pay- able,' and that * indebted ' meant * indebted in money due,' but not yet payable, and that therefore the company could not refuse to register a transfer on the ground that they were indorsers and holders of a current acceptance by the transferer."- Following these decisions then and compar- ing them with the language of the section, a company could not refuse to register a transfer on the ground of indebted- ness, not 3^et due and 2)0 y aide. Nor does the article apply to a transmission of shares by devolution of law. Thus a shareholder in a company subject to the corresponding clause in table (A) of the English Act, became bankrupt and it was held, that the trustee in bankruptcy was entitled to be registered as the owner of the shares held by the bankrui^t, notwithstanding that the bankrupt was indebted to the company .3 Under the English system, as has been pointed out, the restrictions to be imposed on the freedom of transfer, are left entirely in the hands of the directors, which they are supposed to exercise reasonably and with a sole regard to the welfare of the company, and the protection of its credi- i j ; I 1 i ! iikk*.. JL.. ' London, Birmingham, etc., Bank, 34 Beav. 332 ; and Buckley, 3rd Ed., P- 372. = Ibid and Stockton Iron Co., 2 Ch. D. iot. 3 In re Bentham Mill Spinning Co., 48 Law Jur. Rep. 671. STOCK, CALLS, ETC. 287 tors. But on the principle e.rpressio unitis, cxdusioaltcrius, there can he no cloul)t that the powers of the directors of a company formed under this Act, are confined in this re- spect to those given to them hy these sections. In other Avords they could impose no other restrictions, or refuse to register a transfer of shares on no other grounds, than those there laid down. The ohject of the sections is clearly to limit the authority of the directors in this respect as com- pared with the English system. {()) Transfer to Infant. — A transfer of shares, however, may be set aside for the same causes as other contracts, viz : the legal incapacity to contract. Thus, a transfer to an infant may be repudiated by the infant at any time ; provided, he does nothing after attaining his majority from which an acceptance of them will be implied. And so also a company for the same reason may refuse to register a trans- fer to an infant ; and if it do register through mistake, the name of the transferer may be replaced on the list of con- tributories. But where to an action for calls, the defendant pleaded that he was an infant at the time he contracted to take the shares, the plea was held bad for want of an averment that he had repudiated the shares within a reasonable time after coming of age.' And so also a plea, that the defendant was an infant at the time ealls were made, was held bad.^ But as to what constitutes acquiescence after coming of age, held that where an infant having attained his majority allowed his name to be used, together with other shareholders, in an attempt to be struck off the list of contributories on the ground of misrepresentation, this did' not amount to acquiescence.^ {])) To married women, etc. — And so also as regards mar- ried women iu community with their husband, lunatics, and others incapacitated from contracting in theii* own ' Shelford, Joint Stock Cos., p. 125 ; and cases there cited. « Ibid. 3 Ibid, p. 126. % 288 .TOIXT STOCK COMPANIES. name. But there is nothing to prevent such persons from holding in the name of trustees, such as executors, adminis- trators, tutors, curators, guardians, etc. ; and sections 49 and 50 of the i)resent Act' make provision for the security of such persons and their rights as members of the com- pany. 4 — •Transmission of Stock. 43> Whenever the interest in any share or shares of the capital stock of the Company shall be transmitted by the death of any shareholder or otherwise, or whenever the ownership of or legal right of possession in any such share or shares shall change by any lawful means other than by trans- fer, according to the provisions of this Act, anJ the Directors or Company shall entertain reasonable doubts as to the legality of any claim to and upon such share or shares of stock, then, and in such case, it shall be law- ful for the Company to make and file in one of the Superior Courts of law or equity, in the Province in which the head office of the Company is situated, a declaration and petition in writing, addressed to the Justices of the Court, setting forth the facts and the number of shares previously belonging to the party in whose name such shares stand in the books of the Company; and praying for an order or judgment adjudicating and awarding the said shares to the party or parties legally entitled to the same; and by which order or judgment the Company shall be guided and held fully harmless and indemnified and released from all and every other claim for the said shares or arising therefrom : Provided always, that notice of such petition shall be given to the party claiming such share or shares, or to the attorney of such party duly authorized for the purpose, who shall, upon the filing of such petition, establish his right to the several shares referred to in such petition ; and the delays to plead and all other proceedings in such cases shall be the same as those observed in analogous cases before the said Superior Courts : Provided also that the costs and expenses of procuring such order and adjudication shall be paid by the party or parties to whom the said shares shall be declared lawfully to belong, and such shares shall not be transferred until such costs and expenses be paid, saving the recourse of such party against any party contesting his right. (^0 Ihj death of member, ete. — A provision similar to this is now found in most of the Company Acts or regulations. The object, of course, is to avoid liability on the part of the company, upon the decree of a member, as it might other' Avise incur loss by paying to the wrong person, or transfer- ring the shares at the request of one having no right' in them. The object, in short, is to settle the succession and Vide post. . STOCK, CALLS, KTC. 289 vifflit of property in tlic shiiros so as to frco the company from liability in respect of sm-h shares. The systi'in nndcr the Ent^Ush Statutes is somewhat different. The Acts themselves, indeed, make no such provision, hut the 13tli article of Tal>lc A, section 1. attached to the Act, says : That any person hecomin^' entitled to ji share in conse- (jucnce of tlu; death, hankrnptcy, or insolvency of any member, or in consequence of the marriaj^'e of any female member, may be registered as a member upon such evi- dence bein;^ produced as may from time to time be required by the company. As a matter of fact, however, the rules of the compaily usually provide that the legal personal re- presentatives of dece;:. jd shareliolders shall be the only persons recognized by the company as having a title to the shares ; and often, also, that any person becoming entitled to shares in consequence of death, bankruptcy, marriage, or, in fa(^t any other way than by transfer, may either be- come a member himself, or nominate someone else to be owner of the shares.' On the decease of a mem])er in any case, and until some other eligible person is substituted on the books of the company, the estate of the deceased is liable in the same way in respect of the shares as the share- holder would have been had he continued to live. How- ever, to escape the disadvantage under which the company is thus placed in having for holders of its shares merely re- presentative members, whose liability is limited by the amount oftlie assets of their testator, provisions have been commonly introduced into deeds of settlement putting upon executors a pressm'e either to transfer their testator's shares, or to be- come in their own persons proprietors in respect of them, by attaching the penalty of forfeiture to a neglect to do either one or the other within a limited time." J^nt the mere fact of the executors receiving dividend, .\ not amount to an acceptance of the shares by them,' and it makes no difference that one of the executors is a benelicial H ■ Healy, Joint Stock Cos., p. 75. ^ Buckley, 3rd Ed., p. 373. Thring, 3rd Ed., p. 85, and cases there cited. 20 s.c. I m '\ 1 1 200 JOINT STOCK COMPANIKS. rosidiiuvy Icsati'c and receives the sliurt's on his own ac- count. Nor that lie assents to a IxMiUcst of tlio shares, unless the company have accepted the h'^atee as a sliare- hrovided, that where the soual representative of a deceased contrihiitory is placed on the list, it shall not l)e necessary to add the heirs or de- visees of such contrihutory, thouf,'h hy ;} and 4 Wm. IV, C. 104, the liahilitics attaching to shares are dehts charged on the real estate of the testator in the liands of his heirs an:l devisees. Of course numerous cases may occur, even with the ma- chinery provided l)y the section, in Avhicli dilliculty may be experienced regarding the proper representatives of the de- ceased memher ; but the section is especially valuable in cases of intestate succession, and where no regular adr ''n- istrator of the estati' of the deceased has been appoin And the rule with regard to executors will apply cn'tfria jxiriliiis to assignees in bankruptcy. By the English Bank- ruptcy Act of 1861), section '2;3, the trustee in l)ankruptcy might ( ither sell and transfer the shares of a member, or, if the shares were onerous, might disclaim them. The effect of such a disclaimer would be that the shares would be deemed to be forfeited from that date.^ Calls made Ijefore the bankruptcy or due before the estate is wound up, are proveable imder the Insolvent Act, and rank on the estate.^ 5.- Tkansfeh hy Eepresentative. 46i Any transfer of the share or other interest of a deceased member, made by his personal representative, shall, notwithstanding such personal ' Keene's, Executors' Cas?, 3 D. M. & G. 272. = Adams v. Tcrrtck, 26 Beav. 384, 393. s Buckley, 3rd Ed., p. 374. * But as to calls not made at the time of the insolvency qucrre There appears, however, to be no reason why they should not rank the same as notes not yet due. Iilrosontative may iidl liiinsilf be a momher, he nf the samo validity as lit' liad bueii a nieiiiber at llic time (if his execution yf tlif mstniiMeiit of transfer. UiuU'i' this section (wliioli is itUaitli-al with section 'M of the English Act) a transfer by an iissif^noti to the hiinknipt I'stiite of a member wouhl bt; as vaHd as thon^ih mtide l)y the member himself ; but in re The London and i'rovinciul Telegraph (\)mpany,' in which the Company, live years after the shtires of a member had been taken possession of by his assignee and sold, having received no notice of the Itankruptcy, issued to tl;e shareholders executrix duplicate eertitieates on a strtutovy declaration that the original cor- tilicates had been lost, tiie executrix sold the shares and executed a transfer, and it was registered. Held, the pur- chaser's title prevailed against the assignee's. But in a ctise in New Brunswick, the exi'tiutors of the estate of C. invested a portion of its funds in bank stock in their own names, but for the bene lit of the estate by which the dividends were received. After their death, their re- presentative, by writing, agreed to transfer the stock to the widow of C, who had taken out letters of administration iiiin It'stdDU'uto (tniicxo th hmnH non. The stock certificates were handed over to her, and she afterwards received the dividends, but no transfer was made on the books of the l)ank as required by its charter and by-laws. The bank suspended, and the estates of the executors were placed by the judge on the list of contributories for the stock standing in their names on the register. Held, that they being prima facie legally liable, the judge was right in not alter- ing the register by substituting the party equitably entitled to the stock." 6 — Liability of Members on Stock. <17. Each shareholder, until the whole amount of his shares has been paid up, shall be individually liable to the creditors of the Company to an amount equal to that not paid up thereon ; but shall not be liable to an ■ L. R. 9 Eq. 653. ' Stevens' Dig., p. 764. I 29-2 JOINT STOCK COMPANIES. m action therefor by any creditor, before an execution against the Company has been returned unsatisfied in whole or in part ; and the amount due on such execution, not exceeding the amount unpaid oii his shares, as afore- said, shall be the amount recoverable, with costs, against such shareholder, and any amount so recoverable, being paid by the shareholder, shall be taken as paid on his shares. 48> The shareholders of the Company shall not, as such, be held resjHjnsible for any act. default, or liability whatsoever of the Company, or for any engagement, claim, payment, loss, injury, transaction, matter or thing whatsitver. relating to or connected with the Company, beyond the amount unpaid on their respective shares in the capital stock thereof, subject to the provisions of the next preceding section. (a) Reatri'tfil to iiniDinit unjxiid. — These two sections cover preci-stly the same gvouud. They define and descrihc the liahility of the memljors towards the creditois of the company. The memhers of a company formed under the English Act of 18G2, may he liahle in one or the other of two ways. Tht-y may he liahle to the amount unpaid on theii- shares as here descrihed or they may he liahle to such an amount " as the meml)ers may respectively undertake to contrihute to the assets of the coiupany in the event of its heing wound up."' This liahility is determined hy the memorandimi of association. Under the present Act no such alternative is provided for. The principle of liahility " limited by shares " has been adopted purely an Richmond Ry. Co. v. Dawson, in which it was held that a plea of non-compliance with its charter was a good plea to an action for calls, i L. C. K, 366. STOCK, CALLS, ETC, 205 bolder for the balance unpaid on bis shares is due really to the creditors of the compan}'. It is, in reality, a lial)ility to contribute to the assets of the comi any, or, in other words, to the security which the creditors have for their claims. The shareholder is a guarantor of the undertaking of the company to the amount unpaid on bis shares. And if, in consequence of irregularities on the part of a majority of the company, or rather of n majority of the members pre- sent at any regular nieeting, he could repudiate bis liabil- ity, then all those who did not consent to such irregularities might do so, and the creditors would lind a great portion — [)erbaps the greatest portion — of their security suddenly wiped out. So that the most a plea of forfeiture could effect would l)e to (h'j'cdf ihe ri;iJit ut a member may nevertheless surrender his shares without lirst paying them up in full if the Articles of Association oi'der the surrender." li- ■ As to forfeiture of charter by non-user. See sec. 72 l>ost. • Vide sec. Sj post .'UkI siiprii. p. 23;. 1 p. 7 patt- tt, tliat a holder of unpaid shares can he relieved of lialnlity l>y the ■company on any terms whatever.' {(1) Siivrcndcr ((iidforfeitiin'. — A f,'o«Kl deal of misappre- hension seems to have arisen from fctnfoiiuding the terms siirrciidi'r ttitd JoyJ'citiirr, l)etween which thert- apiH-ars to ho no connection or attinity wliatever. The |M>wtr to forfeit shares rri^en hy this Act," hy which no chaii-;*' is effected in the liahility of the holder, must he regar«le«l «for the rea- sons already given) as totally distinct from that of accept- ing th^ surrender of shares and relieving tin- holder from any farther liahility. This is clear, als. and C, on the ground 'hin the pm'chase of the shares l)y the directors in trust J:*: che company, was ultra vires. Hekl, that the pm-cLar^t '.ij lEreetors was not authorized hy the Articles of Associati:a, but the names of A., B. and C. could not be remoT^^d. However, in Singer's case,' where the directors were arntlK>r-:.-iL by the company's articles to act as they should d'- _ - : vedient, a shareholder who dis- sented from somt ]>row»tfiiaa- of the company, and was al- lowed to transfer his ♦ixun'r^r to a nominee for the company, was held not to be a c cTj-'ocdJory in respect of the shares transferred. ir Old shares also may Ik rurrendered for new ones (where an issue of the latt.er i« uuriiorized) bat this cannot be said to effect any change in liiir Ijiibility oi the holder in respect of his shares. The liability of the L uIJtL' may be terminated also by a lioiiiijidc sale and trai^r- : }t' his property in the shares to another, provided, ah ha.- b»-en pointed out,' that such other is accepted by the c(>m]UiCLy and an entry of the transaction made in the books (>f ll- 'ompany before a winding up is commenced. But a- j >!-_ i.r a person's name appears upon the books of the comiiaiij a» at stockholder, the presump- tion is that he is ownfir ;d tlie -toek, and in an action to enforce payment of in i- cessment, the burden of proof is upon him to show thai Lt lt not a stockholder.' 11: » W. N. 1869, 20C : and set Endiftn- jrd Ed., p. 33. Hut it is hard to see how this case can be reccmiuwt vrii the two proceeding ones. = Vide supra. 3 TurnhuU v. Parson. iC iijuaa i^i>jc Bank, 27 W. R. 603 ; L. R. App, 337: and many other cases arising out of that disaster. 5 Vide sec. 50 posi. (• Ibid. !? Ei:i;.f I STOCK, CALLS, KTC. 801 The position therefore, of a pU'(l«i;eo. is similar to that of a trustee, except as ref^ards rcpresc'iitiii,i,' the stock at Diert- ings, etc., the rif(ht of voting' theri'oii remaining; in tlic ph'df^or." Un(k'r the Enpthsh Act also the liahility is said to remain in the pledj^or, hut hy a process of reasonin;^ the revi'rse of that here stated, the pledj^'or l)elnj^' called the trustee, and the pledj];ec the owner or ccstKi ([iii tnisfr 8— Rights OK Exkci.toks, Etc. 60> I-lvery such executor, administrator, curator, j,'uar(lian or trustt-i- shall represent the stock in his hands, at all muetinj^s of the Company, and may vote accordingly as a shareholder ; and every person who pledges his stock may nevertheless represent the same at all such meetings, and may vote accordingly as a shareholder. ((/) Of' pJrihinr. — By this section a ditiferent rule is made with regard to the riaid upon such receipt. The ohject of the section is to simply avoid any doul»ts as to the liahility of the company towards either the trustee ■ Hut in Sinitli v. Aiticr'uan Cunl Co., held that a transfer of stock as ccillateral security transferred all the owner's title both legal and ecpjitablc subject onlv to liens or claims of the corporation. 7 Laws 317, Su ("t N. v.. 187/. Sichell's Case, L. K. 3. (^h. iiq. 3 Hopf'iii V. liiifl'itiii, g K. J. 51 J, Su. Ct., 1870; and vide siipni. il 802 JOINT STOCK COMPANIKS. !|H !i f ! or ccHtiii qui triisf, with rcf^ard principally to the payment of dividends or other moneys arising from shares held in trnst ; Imt nothing in the section, it nniy he conceived, is intended to ahsolve the company from liahility for neglect to make any entries in the hooks of the company, which may he recpiired in regard to such shares. 10— Calls. 62. The Directors may, from tiine to time, make such calls upon the nicinbL'rs in u.sjicct of all moneys unpaitl upon their respective shares, as ttuy shall think fit, at such times and places and in such payments or instalments as the letters patent, or this Act, or the by-laws of the Com- pany may require or allow. 63> A call shall be deemed to have been made at the time when the res ihuion of the Directors authorizing such call was passed; and if a shareholder fails to pay any call due from him, before or on the day appointed for the payment thereof, he shall be liable to pay interest for the same, at the rate of six per cent per annum, from the day appointed for payment to the time of actual payment thereof. ((() Poirrr of Directors. — The power of the directors to make hy-laws to regulate the making of calls is laid down in section 32,' which imlicates the powers of the directors generally. (//) Moanhuj of term. — The term "call" is used indiffer- ently to denote a demand made upon the shareholders for a contrihution, or the amount or sum of money demanded. It is used in hoth senses in hoth of the above sections. (<■) What ((re. — But though used to denote both the de- mand and the money demanded, it is used exclusively with reference to the liability of a shareholder on his shares. All moneys, however, paid in on account of shares, are not necessarily calls. This fact was brought out in Croskey v. Bank of Wales' in which it was held that deposits made on application, or payments made on allotment, were not calls ; and that consequently, though the prospectus stated that ' Vide supra, p. 216. " 4 Giflf. 314. STOCK, CALLS, KTC. 808 calls should not exceed L'5, and that at U'ast three months should intervene between the times of payment of t-vvo suc- cessive calls, a call of IT) mifflit he made with n three months from tlic making' of a deposit of i'l, or payment on allotment of i'l.' (<1) " 'I'lic dircrfors."' — That is, the numhcr of directors which, by the hy-laws of the company, constitute a quorum, or the number to which, by the same authority, is confided the mana,ut where an action was brouf^ht on a call made bj' certain sul)scril)ers of the memorandum of association of a company, and it appeared that the persons who made the calls were not such a quorum of the subscribers of the memorandum as the company's Articles required, the de- fendant was held not liable.^ Nevertheless, a call made at a meeting at which the necessary quorum of directors was not present, and confirmed when a quorum was present, was in another case held good.^ And calls made by directors who are such dc jure, though not de facto, are good ; though calls made by unauthorized persons or by directors not properly appointed, are invalid." In such cases, it is said, " a company is seeking to enforce against a member duties l( ■ Healey, Joint Slock Cos., p. no. - Healey, Joint Stock Cos., p. 103. Thames Haven Dock Co. v. Rose, 4 M. & Gr. 552. < Howbcach Coal Co. v. Teaque, 5 H. & N. 151 ; 29 L. J. Ex. 137. ^ In re Phospate of Lime Co.. Austin's Case, 24 L. T. 932. ' Garden Gully Co. v. McLister, i App. Cases 39. 804 JOINT STOCK COMl'ANIKH. I purport inj^ to be iinposod upon liiin l)y persons to whom he iiiid his co-shareholdcrH have iicvir dulc^^'ated the authority of iniposiu;; such (hitics."' And in the; L'nitcd Status, held that thu numhi'r and (piahticatiou of directors, as lixcd 1)^ the charter, must be adiierod to in onU-r to make calls vali'l.- But in l'[)per Canada, a call of four per cent, on t!»e ilrst investment of live per cent, made bv a (piorum only, and not by a majority of the directors, was held a good call under section !huid 12 \'ic., ca)). KKJ, IMaintitl's Act of Incor- poration. ((') '' Mnji from liiiv to time, etc" — The liability of a shareholder to eontril)ute to the assets of a company until his shares are fully paid up, is a debt which is always due and subject to be called when and how the directors may Digest, 756. demand. By e .;/t7; person at the time, i respective STOCK, CALLS, KTO. 805 agemeiit of a p,ohv^ concern as the court will dcfdine to un- dertake. A call, however, may be ille;^'al as bein^' made for a purpoHO not warranted by the constitution of the com- pany, that is to say, for something not within the objects of the company, as, for instance, to purchase stock in other companies where the power to invest in the stock of other companies, is denied by the Act under which it is formed, or by its letters patent. And if it be sliown tliat the call has l)een made for an ilU';j;al puvi)ose, such call cannot be enforced. And in a niunber of cases, held that the Court would interfere at the instance of a minority of sharehold- ers, or even of a singU' shareholder; on tlu' prineiple that one of several shareholders or partners is entitled to pro- tection against the illegal acts of a majority.' (,/') " And in such payments, etc." — The amount of a call when not regulated by the by-laws is in the discretion of the directors, nnd is governed by the above rules. But when so regulated, the regulation must be adhered to. Nor can the directors group the calls into one call, payable by instalments of the same amimnts, and at the same dis- tances of time, as if made in the regular way." liut a call is not irregular because prospective, that is to say, because made before the money was actually required, but when it was apparent that it would be required about the time called for. [ lish cases, and '^nxa rise to a diftVivi'ct of opinion among llie judfjos presiding tluTcat. ]>ut under tlic present Act these tjiKstious would not l^e likely to ;irise, as by section 50' a certiticatc under the seal of the company, and pur- porting to he signed l)y any otlticer of the ct)mpany, in iirinni I'ocir evidence that such eall has l)een made. {h) Xotirt' of call. — The length of nc^tic" rerpiircd t.> ho given of a call is generally provided for hy the rules of the company, Imt the call itself i' ('niirt ^'o.,'it was laid that a shareholder is not indebted on account of a call until duf notice of such call and of the tinu' and place for ]>aynient of it shall Inue been ; iveii in accordance with the rt'« ;ulati j<»ns of tln' comi»any And in .1// iiiii, I Ir. n. II. ( V. I'«ix.»;j, held, that if R charter exj^ressly re(|uires notice to he given in certain r- 'Wsji^pcfs for a icrtain number of days l»efore calls sliall be valid, the company cannot recover « I'iJ, f>osl. ' .\n<\ yo also by the Act of Om-h.'c, sec ^S ' This IS in aconlmce witii tlio Engiisli Acts an i regulations, I'idi Art. 5. Table A. .\ct iS<;2. * (hii C-'. V. Riisitll, it III, 6 g. I? 5(>7 . Ki.ilinsnn s F>ii; , 755. Steveii'i I>ig.. p. 760. 8 I-. 7 N S 331. STOCK, CALLS, ETC. 307 upon an assessment without sbowiniU /.s' (Ireiiiril to Jinn' Ixwii ninilr. — The setth-- lutiit of the time when a eall shall be (U'cmed to have been m ide is important in ascertaining^ who is lial)lc for a call. For as a eertain lenj^ffh of timt', called a "notice," s al- lowed usually to ilapse between the (hito of the resolution :i:i I the date of payment, it is evident that in the interim the shares in (jUestion may ehanf^e hands, and thereby, un- less otherwise determined, etYect a ehan;j;e in the person lial)le thereon. This question was a j^ood deal diseussed in some of the Kurdish cases, l)ut )»rovision fm* its settkinent is now pretty <,'enerally made on the principle here laid down, acconhn^' to which no chanjj;e would he etVected in the perst)n lial)le to the call by a transfer during' the period mentioned. (H " Slinll hi' linhli' to pa)/ inlrrrst, I'tr." — But tiiou^di a call is deemed to have been made on the day the resoluti.ui was passed for the [lurpose just stated, it is liot so for tlu' comi)utatioi)(i, p. ::45 ; and canes there cited. * L. K. 2v. liq. 3fx>. i ; 11 ! h i\ i i I 808 JOINT STOCK COMPANIES. where the shares were forfeited for non-payment, it was held that interest did not run after the date of the forfeit- ure, althourjh the holder was still liahlc for the arrears.' And ill re Overcnd, Garney & Co.,, it was heUltha' vhere it was ordered that in default of payment on a certain day, interest would he charged on calls made in a winding up, payment into Court to a "security account" till the liabil- ity of the contributories had been established, was not pay- ment so as to stop inrerest. B4> The Directors may, if they thini< fit, receive from any member willing to advance the same, all, or any part of the amounts due un the shares held by such member, beyond the sums then actually ca'l" 1 for; and upon the moneys s(j paid in advance, or so much thereof as sli.ill from time to time exceed the amount of the calls then made upon the sh.-iri-s in respect ot which such advance shall be made, the Company may pay interest at such rate, not exceeding eight per cent, per annum, as the mem- ber paying such sum in advance, and the Directors shall agree upon. (liJ Pd/fiiinit of (■(ili'i in (ulvnucc. — This section is identical almost with Art. 8 of Table A, appended to tiu- English Act of 18G'2, from which it is evi- dently taken. The object of it appears to bo to enable a company in immediate need of money to receive it from shareholders, able and willing to advance it, before a call is payable, or before it may be considered expedient for any reason to make a call. The section diiTi-rs from the provi- sion in the English regulations referred to, only in placing a limit to the rate of interest, which the directors may agree to pay for such advance. The limit may be regarded as a useful check to the temptatiou, which a director, witli capital, miglit be imder to advance money (with the con- nivance of his co-directors), at a rate of interest greater than he could obtain elsewhere, and than was warranted by the n ^cessities of the company. Tbis power to receive moneys on shares in advance of calls, it was held in (Jilbert's case,' is, like the power to ' Stoekens" (!ase, L. R. 5 ; E(j. 6 & j, Ch. 412. - Ex. p. Lintott. L. R. 4 Eij. 18.}. and Barrows' Case, L. R. 3, Ch. 784. < L. R. 5, Ch. 55y. STOCK, CALLS, ETC. 309 make calls, a fiduciary power, which the directors are bound to exercise hona fulc for the interests of the company. And therefore, where directors paid into the bank, the amounts remaining uncalled on their shares, and then appropriated the money to the payment of their fees, for which there were no other available assets, it was held that, having acted for their private interests only, they were not relieved from liability on their shares." But in Poole's case," held that the directors are trustees for the shareholders only, and not for -.■■(• creditors; and the latter cannot complain, if they ha <• exercised this power in such manner as to diminish the fund available for the company's debts. 11 — Forfeiture of Shares. B6t If, after such demand or notice as by the letters patent or by-laws of the Company may be prescribed, any call made upon any share or shares be not paid within such time as by such letters patent or by-laws may be limited in that behalf, the Directors, m their discretion, by vote to that effect duly recorded in their minuses, may summarily declare forfeited any shares whereon such payment is not made, and the same shall there- upon become the property of the Company and may be disposed of as, by the by-laws of the Company or otherwise, they may ordain ; but, notwith- standinR such forfeiture, the holder of such shares at the time of forfeiture shall continue liable to the then creditors of the Company for the full amount unpaid on such shares at the time of forfeiture, less any sums which may have been subse(iuently received by the Company in respect thereof. {n) "If after 8uch demand^ etc," — The question of forfeit- ure has l)een already alluded to.' It has been pointed out tiiat the power granted tc the directors to forfeit shares in default of payment of calls therein, has been, without rea- son, associated with the power to accept a surrender of shares, though on examination, ,they appear to have no real connection whatever. The latter is a matter pure- ly of bargain and agreement between the company and the shareholder, which, if it exist at all, must be exercised on the part of the directors with a sole regard to the interests If lii i ' iT ' Sykes" Case. L. R. 13 Eq. 255. • W. N., 1878, 102, 139; j8 L. T. 413, 659; 20 \V. R. 588, 8^3. • ViJc supm, p. ngy. i i 310 JOINT STOCK COMPANIES. of the company, while the former must be regarded as a penalty placed in the hands of the company wlierewith to intliu'ucc delintpient sa])scril)ers. It is clear that no such ri.uld be to give every man a right to seize hold of anything l)elonging to his neighbor who was in default to pay him what he owed, and to deprive him of it without any form or process (tf law whatever, it would be to lay down a principle in utter violation of the riglits of property as sancticmed by the common law." ii ■1 ' ' The power, tlu'U, to forfeit shares on which anything has been paid (as here provided) must be regardt;d as a portion of the penal power of Parliament conferred ujion such a society or association of persons known as a Joint Stock Company under the Act, in order the better to enabk' it to govern its members and secure a successful administration of its affairs.' An tlie Company iiKainst defaulting share- lidKlcrs. ' V'iiie Thring, Joint Stock Cos., p. 7S ; and i isr s tiiere cited. E%ery society or sub-coniiTiiinity rccof^iiizctl by law is an iinpiiiiiin in Impcrio, and in order to carry out the oliic, ts of its existence- nuist be endowed with a |iortiiin of that power wliiili belongs to the ciiicf conininnity — the State Itself. i Ihtrt V. Clarke. 6 Dc. (i. M. & G. 232 ; 6 H. L. C. 6jj. STOCK. CALLS, inc. 811 iiocessary pvcliniinarv to the execution of tbt- clet-ft. unci so luablc tluiu to forfeit the shares of a jK-rsou uegU-eting to pay the calls.' Aiul in ■JnJnuniii v. L»itth'* In>n .iftnrti, it was said that a^ a.^'ainst the eompany a very little inac- curaey in c inplyin;:; with tlie conditions prtCfd»nt to a forfeiture was as fatal as the f,'reatest. and such forfeiture would he restrained l)y injunction. In that ease, in the notice sent by the secret. try of a company to a shareholder to pay an overdue call or assessment, the latU-r was notified to pay the call with live per cent, interer-t from the day the call was voted, or lie would forfeit his stock, whereas the rules of the company prescribed interest in such eases only from the day when the call became payable. Held, that the notice was invalid, and no forfeiture t«M>k plaet-. And e\en where the forfeiture was shown to be oppres- sive, thou^di not in\alid. it was r«.->tramed. .\nd in I'nxti'ii \. 'I'lir (ii'iiiil I'oUiir Ih^t ContjKinii,* it was hcdd that directors would \iv restrained from t be made between formalities preliminary to the for- feiture and formalities sub^eipu-nt to it. Thus. l»y th*- present section, a demand of jiaymeut an«l notice to be re^julated by the by-law» is contemphitiil, and an omis- sion to nnike such 'lemand or serve sueli notice woulil be fatal to the forfeiture. So aUo. if the forfeiture is declare I within the time allowed by the notiee « which nuist be exclusive of the day of the notice- and of the resolution to forfeit' ), or the resolution is not regularly passed au4.S. •^ 5 Ch. Div. (hS;, ' Goultun V. Ltiiidoii Arcliiti\liinil Cc. \V. N. i'^tt. I41. * 2 R. C. 3J5- Stielfonl. .jticj i;d.. p. 133 : anil c.ises there cited. b Viil V iHpra. Calls. 312 JOINT STOCK COMPANIES. ontort'd according to the terms of the section. Thus, where the regulations of a company provided, that there should he a right of forfeiture of shares on giving ten clear days' notice, and notice dated the '27th of February was sent, warning shareholders that their shares would be for- feited "Monday, the 9th March;" it was decided that the notice was altogether insufficient, because the 9th of March did not fall on n Mondav. but on a Fridav, and also because it (lid not i)rovide more than nine clear days.' But where the company's articles prescribed that notice should be given to the holder a/fcr the forfeiture, it was lield, to be simply directory, and that the forfeiture wp.b valid though no notice had been sent.' But where, as by the present section, the notice referred to is preliminary to the forfeiture, payment may be made at any time before tlie expiration of the notice. {!>) I'ovh'iture after surrender. — But it appears that, after an acceptance by the directors of a surrender of shares, the company in general may still declare a forfeiture. In Barr/i v. Xavan and Kinifscouvt Raihcdii Co.,' A. who was registered as a shareholder of unpaid shares in a rail- way company sent a letter to the ehairman proposing to surrender them. The directors passed a resolution, accept- ing the surrender, but at a general mcetir.g a few months later the shares were declared to be forfeited. No further step was taken by A., or the directors, and a creditor of the company took proceedings against A. on a scire facias. Held, that A. remained lial)le as a shareholder. (c) Illii/al forfeiture. — But the right of redress or re- covery against an improper or illegal forfeiture may be lost by lapse of time. And consequentlv, if a person, whose shares have been declared forfeited, submits for a consider- able period, he will l)e held to have accpiiesced therein.^ ■ Healey, p. 99 ; and Watson v. Eali-s. 23 Beav. 204. ' KniRht's Case, L. R. 2 Ch. 321. 1 4 I. H. Ir. 6S. * Cox, 7tli Kci., p. 27 ; and cases there cited. u '.h:, i: vLLa, etc. 313 And where tberefort- -a.*- En Woollaston's case,' the forfeiture had been allowta to -^iLid f laipse of time can render it vahd.' And in the Gard-eti G'lif'ift Co. v. McLister,^ it was said that mere laches would li n ii.---«ntitle a shareholder to relief af^ainst an invalid dti-. ^LJinion of forfeiture. But the for- feiture will not be stn i.-.'[^ on the ground that it was made in consequence of ai i..i:uleat;il omission or neglect on the part of the sbajt^uittr/ Nor when a forfeiture has been validly declai'tvi. '.;iia it be disturbed by lileaded to an action for any other deht, either at connuon law or under the civil code of tlie Province of (j)uehi'C.' Thus ill! action foi- calls nuiy he set-otV pro liiiitn hy a dividend due from tlu' company. Or, if tlie c(inii)any is indebted to the shareholder uiah-r a contract, or for any other matter in a sum which is due and payable at the time the action for calls is instituted." It is, howevir, no defence to an action for calls tli;it the company has not carried out a collateral contract madi' ami enteied into at the time the dehndant sidiscribed for his shari-s.' And a contract between a cori)oration or its a^Miit^. and a shareholder, by which the liability of the latter on culls is limited, is void both as to the creditors of the company and its assif^'nee in baiduuptcy.-' And a stockholder who has participated or ac(|uiesced in the action of corporate oflicers in maKin}4 an assessment, as by voting f()r a by-law exact- ing or making payment of a call, with knowbflge of the facts is estoi)ped and cannot alteiwards sustain the objection that the assessnntit was laid without due authoritv. And I! ■ lUii in a recent EiiRlish Case, licM tliat a nntiiluitdry cannot set ofi a deht (iiic liim fium a ("cinpanv in xiluiitary iKinidaticii at;ainst a cl.'iini for calls, xWiitliLT made l)elure or aftti the luiuidatnii. liii^litun Annili Co. v, Duu'liuf;, \.. \\. 3; C. r. 175 ; 2 Lcr News, Mun., 88. ' I ';(/( sHpnt, ]>. 249. 3 Wist Cvim.iill Ry. Cv. v. Mouuitt, 15 (^ B. (j2y ; ig I.. J. .(7S. * Upton V. Tnbikock, 91 U. S. 45, Su. Ct., 1S75 ; Ai-b. Dig., Vol. II. ■! Mamn, etc.. R. R. Co v. Vason, 52 Ga. 314, Su. Ct., 1876; Al:)b. I>ig., Vol. II. 1 1 i ' ! 1 ii ■ 1 i t :ii 316 JOINT STOCK COMPANIKS. BO alao voting as a stockholder at a preliminary meeting for the election of directors, was held to estop the voter from denying the validity of the subscription, where the proof was that, instead of signing the subscription book, he had by mistake written his name in a book containing a list of subscribers.' l!> I Nor could such action be successfully resisted on the strength of a statement in the pi-ospectus that no further calls were contemplated.* Nor on the ground that notice of the call had not been given to other shareholders.^ Nor that the amount of stock prescribed by the company's special act had not been taken up previous to the call hav- ing been made.* Nor that the company had commenced business before the necessary amount of stock had been subscribed for.' Nor, as we have seen," that the company has forfeited its charter, unless the forfeiture be first pro- nounced. Nor that a call is i)ayable by instalments, and only one instalment is due.' And where a member sought to restrain a company from suing him at law on the ground that he was there precluded from showing that the direc- tors had not been properly appointed, held, that the com- pany need not prove the appointment of the directors who made the calls.** And, in the United States, held, that it is no defence to an action for calls that the company have received subscrip- tions to a greater amount in the aggregate than was authorized.' Nor that the subscriber had not signed the articles of association, or authenticated his subscription in • St. Charles Manufacturing Co. v. Britton, 2 Mo, App. 290, 187G ; Abb. Dig.. Vol. II. " Accidental ami Marine Insurance Co, v. Davis, 15 L. T. 182. s Shacklcford, it al, v. Owen, 37 I.. J. 151. « East Gloucester Ry. Co v. Ihirthulemew, L. R. 3 Ex. 15; 37 L. J. Ex. 17. s Ornamental Wood Work Co. v. Brown, 32 L. J. Ex. 190. * Windsor Hotel Co. v. Murpiiy, supra, p. 294. 7 Shelford, 2H<1 Ed., p. r45 and cases there cited. " Mangles v. Grand Collier Dock Co., 10 Sim. 519 ; 9 L. J. 177. 9 Olcr V, Baltimore, etc., R. R. Co., 41 Md. 583 ; Abb. Dig., Vol. II. STOCK, CALLS, ETC. 317 the commissioners' book.' Nor that the directors had pur- chased from themselves, for the use of the corporation, property at an extravagant price for the use of tlio stock- holders.' Nor that the corporation had failed to construct its works in the manner and within the time expected and stated when the subscription was procured. Nor the fact that tlie corporation had not executed its business at the place contemplated by the charter.^ And in the Province of Quebec, an agreement between the promoters and the defendant that the latter should pay for his stock in services, was held to be no answer to an action for calls. ^ But a person sued for calls may ph.'ad anything which will show that his name is improperly on the register, and that lie is not liable on the shares in question.' Or that the calls have been unequally made. In Nat. Ins. Co. v. Hatton," for calls, the action was dismissed on the ground that the subscriptions of two shareholders had been reduced without just cause, after the defendant had subscribed, and the calls were therefore unequal. And a change in the amount of the capital stock of a corporation, from lifty to one hundred and fifty thousand dollars, after a subscription to the stock had been made, and without the assent or subsequent acquies- cence of a subscriber, discharges him from all liability on account of his subscription; and the mere knowledge by him of the certificate of incorporation to which such subscrip- tion was annexed, he being at the time ignorant of tlit- > » ' Pcnn'iHsuUir R. R. Co. v. Duncnii, 2S Mich. ijo. = Dorris v. French, o Thorp. 5S1 ; 4 Hur. 292. 3 First National licv': v. Hurford, 2(j Iowa 579, Su. Ct , 1870. ■* Coiirtwrif^ht v. Deeds, 37 Iowa 503, Lu. Ct., 1873. 5 National Ins. Co. v. Hatton. in App. 24; L. C. J. 26, * Vide supra, p. 294, and post. 7 2 Leg. News, 138. But, held in appeal that evon if the shares of those who subscribeii betore the re.sponclcnt, were reduced without his knowledge after he subscribed ; yet, if he, after obtaining knowledge of that fact, did not immediately repudiate his stock, but on the contrary paid a first instal- ment thereon and took an active part both as solicitor and shareholder in promoting the aftairs of the Company he would be liable to pay the calls on the stock held by him as they are made by the directors. 24 L. C. Jur. 26. :mh Joint stock c<»mi'Aniks. i; I J cliiiii<^'(' thus iiuidc, cuiiiiot lu' coiisidcrtil as ii iicw contriict on Ills part, nor docs it stop him from rdyiii;,' on this do- ffuc'c in an action ujton the suhscription.' And wh<'ro per- sons ftHsocJatc for the [jurpose of fonnin;^ a .loint Stock Company umh-r tht! Statiitf of the State of Maine provid- inj^' for the forinution of such (iompanioH, and ussess ii mem- ber individually before iii('ori»oration, and incorporation is afterwards [n-ocnred without the concnrrenee of siudi mem- her. the company cannot inforce the assessment aj,'ainst him.' Ami in like nnmner where tlu^ defendant to an action for calls hy the Windsor Hotel Co., of ^[ontreal, i)leaded that he never subscribed for stock in the "Windsor Ifote] Co.," but in anotlu r Company called the "Royal Hotel Co.," and ad- mitted liis sifj[nature in a book in which the name " Wind- sor " had been substituti'd for " lioyal " and the ca[)ital liad bern chan^'ed from SfiOO.OOO to S-)(M),0()(>, it was held that in default of proof by the plaintitf'H that tlu' alterations were nuide beb)ro the defendant si<,'ned the book, that the action could not be maintained. Uut wliere to an action for calls, allej^'ed to be due by defendant to the " Canada Car and Manufacturinj^ Co.,'' defeiubint })leaded on equi- table j^vonnds, tiuit he Hubscribed for the shares and became a shareholder in a comi)any called the "Canada Car Co.," incoriiorated by letters i)atent, for certain specified purposes, and not otherwise; tliat afterwards, without tlu- assent and a^'ainst the will of defendant, that company applied to the dominion Lef^islature and obtained an Act constitutinj; the shareholders therein a body corporate inider the name of the Canada Car and ^ranufactnring Co., tlie new i)lain- titfs ; that by the said Act ^'reater powers were conferred u[)on the plaintitTs than were possessed by the Canada Car Co., and the nature of the bnsiness was varied and extend- ed, and the undertakin<^ rendered more hazardous than was contemplated by the Canada Car Co., or the delV'udant when he became a shareholder thereof, and that defendant never ■ Hiia^hrs V. Anticinm Mttitiifitcturing Co., 34 Md. 3i(j App., 1870 ; Abb. l)i;., Vol. II. » Richmond, etc., Association v. Clarke, 61 Me. 351, Su. Ct.. 1873. ' Windsor Hotel Co. v. Laframboise, i Leg. News, Mon., f'3, 1S77. STOCK, < AI.I.S. KTO. 819 Rptrci'd to btcoiiu' a sliiirclitildir of, or iiivost his iiiom yiii a foini'auy posHt'Hsini^'thc powers of tlic pluintiH", wlu'rclty dc- fi'iidiuit is nlii'vod from lialiilit y, it wan ludd that the Act was Itiiidiii^' on all the sharclioldcrs, whctln'r aHsc'ntiii;^ or nut to the aii[tH('ation for it, and that thu ('ourthad no jurisdiction to relieve tilt' (Ufcndant from a liiil)ility which the statute e\- [)reHsly declared he should continue to he suhject to.' The lioint, however, wil < referi'ncr to the (dianj,'e of name, seems to he coviri'd hy section 18' of the present Act, under which the rule would he that where the chan>,'e was authorized hy supplementary letters jiatent in llir manner provided hy the section [)ri'ce(lin^', that tiie chan;^U! coiihl not be Sit up as a defence to an action for calls. And so with re^'ard to any other chan;4e in the constitution or charter of the conii)any where the provisions of the Act have lieen com[»lied with. And in re the Stnii/orfl ami Moriiiiii 11. //. Cn. \. Slrattoii, it was held, that a shari'holdi'r was not estopped from disputing' a call because he had joinul in making' it and had paid it in part. But where the defendant [(leaded that he had ])een in- duced to take the shares by fraud, and ha " Erery Director," etc. — This section, a.s will Ix- oh- servewn to be fraudulent. The section ai)pears to be pecidiar to this Act. It is neither found in the Kngli.^h Acts nor in the other Canadian A;'ts. It is found, how- ever, among some of the forms of companies' articles given by the English writers, showing that it is within the powers of the comnanv to make bv-laws to that etlVct without anv (piestion of si»ecial authorization mider the statute.' ' As agents and trustees," says Lindley,- " directors are en- titled to be indeuniitied by the comi)any against all losses and exiH-nses In mn fide sustained and im u./i'd by them in the rxercisft of the trust nposed in tluni." But if tiiis right be expressly coniined and limit"(l l»y the articKs of the company, it camiot be extended beyond the limit thus expressly stt.' And if directors exered their authority and therrl)y incur loss, such loss must bi' borne by them and not by the company, unless the comi)any ratities what they have (lone.* Directors are either agents or trustees, and in which character they have acted in anything they have doiui as directors, nnist be determined entirely by the nature of the transaction. « Healey, Jontt Stock Cos., p. z-jq. • Lindley, l'artner.shi| jrd 11., \y 780. > Sci^eyn v Hiirnson, . J. \ II, 334; Gilitiu v. Mortis 11, i De. G.Ci S. 421. « Lindley. Par'nership, 3ril Ivi., p 78" , it Siij, STOCK, CALLS, ETC. 321 (h) Pcrsotvi^ linhilifif of Dit'i'cfor. — But this viilr lippoars to have hecn niiifonnly ol)sorve(l tliat where they have exceeilod thiir powers as aj^ejits. or viohited their trust as trustees, thi'V may ho hehl personally Hahlc. riiey act as a}i«-nts in (leulinj,' with or enterin;^' into ron- traets with thinl persons on hehulf of the '-onipany, Tliey act as trustees in deaHu",' with the property (tf the company : in th( allotment of its shares ; in the employ- ment of its funds ; in the payment of its dividends, etc.' hi the former capacity they may he held personally lial)le to such thinl persons where they have exeerded their p(»wers, or in any case in which hy the law of principal aiiix per cent, interest from dale," was held the note of the cor[)oration, and not tile individual note of the jin ^idi nt i' i! ; ' Ilucklcy, 3ril K<1., p. 403. Dutlim V. Mr.nh. L. H. (> Q. 13. 361. McCldlitn V. R.ynoUii. 49 Mo. ji.: ■ Abl) I)l^■ . Vul II 22 i.e. 822 JOINT BTOCK COMPANIES. i s * >* \ M« and directors whose names were attiicluMi thereto.' But bc- nn instrunu'iit in thesi' words : — " Twelve months fil'tcr date Iht' ]»r('sidcnt, hy the order of the Board of the II. and B.'s iJoad Co., |)roniised to [niy M. C. $iJ5(), with six per cent, interest frniii (hite," was held to he the ohlij^'ation of the president as an individual, and not of the corporation," In both of thrsf cases the jud^nuent turned ui)on the intention of the parties as }j;athertd from the writiii},'. In the lirst phui' it was saiay the anioiuit, and as the corjjoration must hi' assunii'd to contract liv its president and directors, it must be understood that the intention was to land the corpor- ation they represented and not themsehcs personally, in the latti-r case it was said that the hoard of directors, as such did not pr(»inise. ami the neitals intln' writin;^' inij)ly that it. the hoard, had finids in the hands of tlie i)resident to pay the del»t, and the writing,' was ratht r an acci ptaiice of the order of tin; boarti to imy the amount. A somewhat similiir case was one recently decided in the Province of Ontario. The charter of the Midland Hailway Company gave them power to become parties to bills and notes, and enacted that any bill accepted by the president with the counter signature of the secretary, or any two of the direc- tors, and under the authority of a majority of a (juorni i of the dii'cctors, should lie binding on the compahy; and every l)ill acccptee individually liable. A i)ill of exclninge addressed " to the President Midland Itailway Co." was accepted in tliese wonis : — "For t)ie Mi ClIpllllHl V PliilJ, Ih STOCK, CALLS, ETC. 323 iiif,' drawn upon the company.' And where the defendant was sued in Upper Canada as a director of the Victoria 13rid<^e Co. on an aj^reement headed '* Memoranda of an a<,freement made and entered into tliis 23rd of March, 1854, between the directors of the Victoria Bridge Co., etc., of the lirst part, and J. J. (the phiintilT, ) of the second, wliich was signed by the defendant, (b-scribing himself as " President of B." and the plaintiff, and it appeared that the company IiimI l>een duly incorporated, and that the plaintiff had re- ceived t'3o() from tlu'iii on account of work specified in the agreement, it was held that deft-ndant was not personally lii;))le.'' But wlierc, in consfijuence of arrangements for umting tlie (rrand Trunk Tdegrapli Co. with tiie Jiritish Ni.rtli American Association, the superintendent of the former company on the li)tb ])ec., 1854, wrote to its presi- (li lit and directors, expressing 1ms readiness (in order not to ( miiarrasH tbe comjiany in its operations,) to cease his eo!inection with it on tiu' 31st Dec, 1854, on tht- company guaranteeing to him bis salary for six months from the lirst of January, 1855, and the president reported : " We are in receipt of your ♦'nvor of this date, upon the subject of your retiring froui tbe ollice you now hold uncU-r us. We will be happy to meet you in, the way set forth, ami we bereby pledge ourselves to carry out the provisions men- tioned in your behalf. Signed, (l. 11. Cheney, president, on bebalf of myself and the directors of the G. T. H. Co." It was held tbat tlHq)resident's reply, amounted to a personal guarantee. And in like manner \vb<-re plaintiffs sued de- ft'iidants for breadi of an agreeuu'U-,, by which defendants IkmuuI themselves to carry hnnbi-r for the plaintiffs from l'» terboro to I'ort Hope, at a stipulated iiriee. The Hi-Tf en»« nt. which was dated Nov. I8t)5, set out that [)lication of the money of the coiuiJany and a bnfach of trust, and that the directors were jointly and severally liable to repay the whole sum so misapplied.'^ Atid where the members of a company which owned certain property and owed certain debts, formed a new corporati.in, wliieh chose for its oni<-i'rs, tlu' olVicers of the old corporation, and tht; persons owning tlie stock of the old corporation received in exchange therefor stock of the new, and the trustees then caused tlie property of the old corporation to be conveyed to the new, lield, that the conveyance was a fraud upon the creditors of the old corporation.'' And so in like manner it has been held that the managers and orticers of a stock coinpa.iy are ' MiDoufjnll, it III., V. Court, it ill.. iS ('. 1'. iiq; Kol)insoii's Dig. 764. •' Ibid, ji. 402; aiiil (^'isc iif {•'I'f^rusoii v. W'ilsiiii, l. R. 2, Ch 77; there ( ited, Miissiuii v. (iol Ithuuiitf, J4 Tex. 125, Sii. Ct., 1870; Abb. Dig., Vol. II. < Iiiii erial Land Co. of Marseilles, L. R, 10, Eq. 2i)8. * Joint Stock Discount Co. v. lirvwn, L. K. 8, Kq. 3S1. ' In re National Funds Association Co., 27 W. K. 302 ; L. K. 10 Ch. I). 118 ; 48 L. J. i6j. '■ Son Francisco, etc , R. R. Co. v. Bcc, 48 Cal. 398, Su. Ct., 1874; Abb. Dig.. Vol. II. STOCK, CALLS, ETC. 325 ))iny the the in truth, if not in form, trustees for its stockholders and creditors, and have no rij^ht to enter into any combination, the object of which is to divest the company of its property, and obtain it for tliemselves at a sacrifice.' And so also wliere gross negligence or deceit may be shown, personal liability \s'u\ attach. For the nile is as laid down in Gibbs' tiiHe," that directors, as ai^ents of the company, are bound to use the same amoiuit of pnubnce which, in the same cir'nimstances, thev would i-xt-rcise on their own behalf. And especially is this the case wht-re the directors are paid to use diligence in the interests of the company.' Thus in Vnrk^T v. McQiieHtin,* in Upi>er Cfinada, the plaintitr sued (b fcndant as director of a bank, alleging in substance that in a report nuide to the bhariiiDlders in 18(56, and a statement accompanying it. the 'ii'i ' 'If I fl'f! 'if m This was dono, and for sovoral years ho regularly received his intorost on a niortK-tRe of property in South Africa. Finally the company failed, and in the course of the liqui- dation, it appeared that the mortgage securing the plain- tilfs loan, had heen paid of!" a year hefore that event; hut that the company, instead of paying over the money, or reinvesting it in securities of a similar character, had applied it to the general uses of the husiness, continuing the payment of interest, nevertheless, as if the money was seciu'cd as formerly. The plaintiff sued the three direc- tors of the company who were present at the various hoard meetings in which the management of his money came under consideration. After consultation with his associates, the Lord Chief Justice diiH^jted the jury to fmd for the de- fendants for reasons hest given in his own words — '* The company." said his Lovdshii), "entered into agreement to invest Mr. Wilson's money, and they have taken that un- dirtiiking. The plaint'lf's remedy is against the company, and the company alon(\ The directors are not responsihle iipiirt from /nntd, except to the company, and f.-aud is not charged. All that is charged is negligence and })reach of duty. Tht' duty, however, of the direct(n-s, v.*aj to the conii)any and not to Mv. Wilson. Mr. Wilson, as the in- \-cstor, had no right to hold the directors liai)le for their alleged nt gligence, any more than hns the cust;)mer of a trndesman to hold the manager or foreman personally liahle to him wlu-n he has a reine(ly againsi the employer." And where mere error of judgment is proved, they will no^ he held personally liahle. This was the effeet of the judgment in Pii(>n,' and in h num- hi'r of other leading cases. Thus, in Spering's Appenl,' in the I'nited States Supreme Court, held, that, while responsihle as such trustees for hreach of trust, or U)ss from gross negligence in prevent- ing fraud, they are not liahle for mistakes of judgment, although so gross as to appear ahsurd, if honest an;! t law or other mismanagement, that he is personaUy muiue. And in a numWir oc ocher cases it was held that where the director* 'virf* still acting indiscreetly the court could not inttj at) matter how foolish their conduct might seem. lEiiut** it be shown that it if prompted by fraudulent and i- • r motives.' But if they are using their power-- iiLjo -•fly — i.f., from improper motives — tiiev mav be restrani^tL I ; I ; h Thus, in the Unii^'O ^-m,'>.. held, that a corporation may i)e restrained by injuij'.'ii.' a fn^m carrying its assets out of the State from whjt_ .'. lerived its existence.^ ]3ut an injunction will nctt hi " ■ pri-v»?nt the board of directors from merely aliowinj i.- it.rrect a fraudulent account against the corjicvraia:-!!- Nor will an injunction be granted at the suit of a BtockbcuiJi*E no restrain the general manage- ment of the corjiora.!^ t-" '■•-rty, such as tlie mode of invest- ing its surjilus mtiaj_- ■ ss a clear violation of (xpress law or a wide dt]iiirr.E> from charter powers is shewn.* But when an iiijunrijio, es served upon an otilicer, the ' Arthur v. Gma'oiif, 55 X T. 4C0. N. Y. Ct. of Apjv, 187.1 , Abb. Dig., Vol. II. - Buckley. 3rd Ed., j' 4;^; nui c.-ues there cited. ' Cniinoit V. Traik. L T 1-\ r6,y and see Kmu' v. Mmitiiuil Tile- graph Company, 20 L t * Mnthev'^ v. 7-;,. • '; ;. i-q C P., 1^69. ' Rogtrs V Lafavrtif j. , r.->d \\\wki, 52 Ind. 2^(\ Sn. Ct., 1875 Abb. !%., Vol li li. * Buck V. Pach. v., 1872. 1 C.)., 12 .Vbb. pr N. S. .4(15, Su. Ci. N. li ;-i;^ m HV^^^ h! i< II 328 JOINT STOCK COMPANIES. person HO served, or having knowledge, is bound to obey the injunction.' But thoufjh a director may plead proper motives and g0()ks of the company.* Nor are the directors liable for ranking bad del)ts as gtuMl unless they can be lixed with knowledge of the fact that they are bad ; nor, in the absince of fraud, for improvideiitly advancing money to one of themselves.' And where the manager of a bank nuide ndv.inces to a conijiany ni which hi' was a shareholder, such transactions l)eing in the ordinary course of the bank's l)usij)ess, and th" manager iiad not exceedi-d his authority, it was held, that as no fraud was shown in the transnctions, he could not be held liable for the advances.* But where a board of directors sanctioned the payment of money which had been expended in Kj)eculations in their own shares, the directors who atti'uded Hie l)oard were held lial/le to recouj) the com- pany.' And where loss was occasioned, first by continuing the business of a company without calling a meeting to consider the propriety of dissolving it, and by advances to ■ Hatch V Chiiiii^ro, Kock Island 6- Pacific R R. Co.. N. V. C. C. 79. Withrows ("orjioratioii Cases. - LiDiil Credit Co of Ireland v. Lord rtrmuy. L. R. 8, liq. 7, il, 3 I.. K. 6, K(i Hi, I JO. * Halliii.-irk s Case, jS r,, T. .J13. r>r)(i. 5 Turquand v. Marshall, L. R. 4, t'h. 376. « Hank of Upper Canada v. Bradshaw. L. R. i P. C. 479; and 17 L. C. R. 27J- 7 Shelforil, .Mid VA., p. 99; and see also case of Gloucester, etc. Ry, Co., there cited. STOCK. CAI.I.H, KTf. 82y ;ool)ev tlie )tivi'H iiiul anco 80 as .'lit out of Miu-HhiiU,' Lcquaintod tlicy arc iil)ility l)y wy mij^'lit imputi' to •ks of tlio ikiiij,' had wlcd-^'t" of of fraud, 'lusolvos.' ici'H to a nsactioiiH )('ss, and sva.s held, h(- could hoard of liad ht'cii directors tilt! C())ll- iitiiuiin<.; 'L'tiiij^ to 'auccs to . C. C. 7. 7'J. II. 7L, C.K. etc. Kv. tho directors, both of which wore contrary to express pro- visions of the deed of settlement of the company, it was held that the directors who so ne^dected the provisions of the deed of settlement were liahle ill a suit, instituted hy the ollicial liquidator, to make ^'ood the loss.' I)ire('tors are also liahle for the payment of a dividend on the stren^^th of a false or frauduh-nt halance sheet, but not if the halance sheet he made in ^ood faith.' ]»ut where the directors of iin incorporated comj)any mis- appropriate the funds of the corporation, a hill a^^'ainst them and the company in respect of such misappropriation cannot he sustained hy some of the stockholders on heliaif of all exc( pt the directors; the company must he made plaintilVs whether the acts of the directors are void or only voidable, and the stockholders liave a ri;.;ht to make use of the name of the com[)any as plaintiffs in such proceed in}.,'s.' And, in Sdinud v. llolhuUi}!,* held, that, if a sto(dvholder in ut where directors have personally spent money in good faith for matters within their powers, belonging to the com- pany, they are entitled to be indenniilied, whether tlie mon(\v has been spent in the execution of contracts on be- half of the company, or in tln' defence of actions to whicli tliey were not personally liable. Thus, where two trustees of a joint stock trading company, at the request of the dire(!t(n's, gave a bond for a .1' 1,000 lent to the company, and one of the trustees was sued, and paid the debt, with interest iind costs, ho was allowed to prove for these, but not for expenses incurred by him in raising the money.' l^ut when! certain trustees had the control of an expedition to explore land, on which to found a colony in accordance with resolutions of the company, the (fxpense of which was not to exceed a certain sum, nor the subscription to be liable beyond that sum, l)ut on the arrival of the trustees in the country in (piestion, they were seized and thrown into prison, by which the whoh> project failed, and the loss greatly exceeded the amount lixed, it was held that the trustees could not call on the subscribers for more than the amount. (c) Lidhilitif of Compami (jencralUi. — The liability of com- panies and corporations generally has, of late, been very much extenled. Though at one time considered that an ' nundle Rrewery Co., ex. />. Croxton, 5 Del. & Sm. 432. In the Pro- vince of yiicbec, where directors are sued personally, the proper course for them would be to call in the Company en frarantic, and show that they are not personally liable. '' Gillttn V. Morrison, 10 Y. & Son. 421, STOCK, CALLS. ETC. 3JU action would not lie a<^'ainst a corporation except on a contract, cxprcHH or implied, it is now well settled that they they may bo liable, also, for fniuds and wrongs, and in fact, in almost all cases in which an individual would be liable. This is the result of a larik\ diifersfi-om it in this respect, that the proceeds of the fraud were ap- propriated to the use of the agent himself, and the princi- pal derived no benefit from it. That, however, though involving precisely the same question, is not a corporation case, nor does their appear to be any such case in which the principle was directly affirmed, that where the agent of a company commits a wilful and deliberate fraud for his own personal benefit, and without the knowledge or sauction of his principal, even though it be in the line of his accustomed duty on behalf of the company, that the com- pany will be held liable.' And in Maiinard v. Firemen's Fund Insurance Company,* in the United States, held, that • Brice, 2nd Ed., p. 471. " L. R. 3 App. 106; Evans Prin. and Agent, 472. 3 See Mitchell v. Crassjvcllcr, in which the defendants were sued for damages caused by defendants servant in running ova.' plaintiff and his wife, while using the horse on his own account, and without his masters knowledge, and in which CresswcU, J. remarked : — " If a servant in exe- cuting the order, express or implied of his master, does it in a negligent, improper and roundabout manner, the master may be liable. But here the man was doing something which he knew to be contrarj- to his duty. and a violation of the trust reposed in him. Evans, Prin. and .\gent. 4S2. * 34 Col. 48, Su. Ct.. 1867, Abb. Dig., Vol. II. il i 11 { 834 JOINT STOCK COMPANIES. I i there is a distinction l)etween subordinate agents and the directors who, in their capacity as a board, are the con- trolHng power in the corporation, so that the corporate body may be held liable for wrong, such as the publication of a libel ordered by the directors, when they might not be for the same done by subordinate agents. But a corpora- tion knowingly employing incompetent or drunken servants may become liable for exemplary damages.' And this lia- bility of corporations has been extended to include a liability to indictment for certain species of crime " which are in reality public torts, as for disobedience to an order of justices, requiring them to execute works pursuant to a statute ; for misfeasance, for cutting through and obstruct- ing a public highway ; for non-repair of a highway and the like."" But whether this can ever be extended to felonies or misdemeanors, the essence of which is malice, is very doubtful.^ 14. — Dividends. 58. The Company '-..^ not make any dividend whereby their capital will be, in any degree, r idced. The English Act leaves the question of dividends entirely to the regulations of the company. " The right," says Thring,* " of a shareholder to dividends is, of course, governed by the regulations of the company." It is so in effect by the present Act ; that is to say, the right to, rate and time of payment, with all other questions incident thereto, are matters entirely within the company's control. The present section is for the protection of the creditors of the company, as is also section 67,^ which is the comple- • Illinois Central R. R. Co. v. Hammer, 72 111. 347, Su. Ct., 1S74 ; Abb. Dig., Vol. II. But a corporation whicli gives out a work to be done by contract, retaining no control over the doing of it, is not liable to a laborer employed by the contractor, and injured by the fall of machinery used in the work. Barrett v. Singer Manufacturing Co., i Sweeny 545, Su. Ct., 1869 » Brice, ultra vires, 2nd Ed., p. 482. 3 Ihid. 483. 4 3rd Ed., p. 56. s Vide post. I STOCK, CALLS, ETC. 835 rnent of the present one, and imposes a heavy liabihty up- on threctors who, in contravention of the present one, pay dividends out of that which belongs to the creditors. The rule with regard to the rights of creditors in this respect was well stated in a case' in the United States Su- preme Court, in which it was said that the property of a corporation is regarded as held in trust for the payment of its debts, and creditors may pursue it into the hands of all persons except those of bona fide purchasers ; nor will a sale of the capital stock and a division of the proceeds among the stockliolders defeat the rights of creditors, but such stockholders may be compelled to contribute j)ro rata to the payment of the corporate debts out of the moneys so received. (a) Nature of. — For the term " dividend " really means and refers to that which is to be divided among the share- holders, and that only which pioperly belongs to and can be divided among the shareholders is the fund created by the net profits of the company. It is for this and this only they have invested in its shares, and if, contrary to their expectations, there are no profits, thei: Jiey must wait until there are ; or if there is no reasonable expectation of there being any, then the company should be wound up, and after the creditors have all been paid, they may divide the surplus assets among themselves. But having induced and obtained credit on the strength of the capital fund which they have contributed, it would be manifestly unjust to allow them to withdraw such capital or any part thereof, either by the name of dividends or any other name, as soon as they see that their expectations are not likely to be realized. Thus, in Pittsburgh, etc., R. R. Co. v. Alleghany County," it was held that payment of interest at regular intervals il ' Chicago, Rock Island &• Pacific R. R. Co. v. Howard et. al., Su. Ct , U. S. I. Withrow's Corporation cases. ^ 63 Pa. St. 126. Su. Ct., T869; Abb. Dig.. Vol. II. m 336 JOINT STOCK COMTAXmS. i m f:ij out of capital was within a chart.t3r firovision prohibiting payment of dividends out of ctapmall; and therefore an agreement by a corporation for thf fuijoient of interest or dividends on its capital stock with omit meforence to its ability to pay them from the earnings of ttht mpany, is contrary to public policy and void.' And tlit izruurantee of a divi- dend by a corporation means notl.nnii.'g more than a pledge upon the funds applicable to the piiiif oees of a dividend ; and if in any case it appear that tibe iliividend has not been earned, the holders of stock upom which a dividend ''j guaranteed cannot recover in a snal tt.O' enforce payment of such dividend." As long as the ooanjpajiy is earning suffi- cient to pay a satisfactory dividend, afctre is no temptation to draw upon the capital for tlia.t pimfioti^ ; I ut as soon as it falls below that, the interest of allL, hs^k especially of the large shareholders, create a strong •fcemmiptation to pay bogus profits out of capital in order t© maintaiii the credit of the company and the price lof its shares. And it is this temptation, clearly, irlnkli! has caused the Legislature to remove the question loxniti of the domain of company regulation, and, by one ihovt provision, make every payment of dividends out of lumjtihlng but the actual profits of the company illegal." Tht ctipital then belongs to and is the proper pledge of the (irti(I15liors of the company, and the net profits only are all thait tihe shareholder can claim until the company is wound ic^ This rule seems to be so well rt that where expenses properly chargeable to capital have been paid out of revenue, the comj^any are justified in ret-oaping the revenue account at a subsequent time out of capital. But, in a number of cases, held, that when directors order a dividend to any given amount, they implie*ily decHre to the world that the company has made profits. wLieh justify , such a dividend ; and if no such profits have l)een made, but the directors have conspired to raise the market value of the shares by the publication of a fictitious dividend, to the iujmy of the public, that will amount to an indictable ofience.* And in Ranee's case,^ it was said that even if a dividend be declared without a proper investigation of the financial jw^sition of the compraiy, and no profit and loss account )>e prepared, but only an account of receipts and paATnents, making no allowance for risks, the burden is on the (lireetors to show that the dividend was properly de- clared. The proper and legitimate way of arriving at a statement of profits is, says Buckley,* to take the facts as they stand, and after forming an estimate of the assets as they actually exist, to draw a balance so as to ascertain the result in the shape of profit or loss. If this be done fairly and honestly without any fraudulent intention or purpose of deceiving any one, it does not render the dividend fraudu- lent that there was not cash in hand to pay it, or that the company were even obliged to borrow money for that pur- pose, and the fact that an exaggerated value was put upon assets wliich were then in jeopardy, and were subsequently lost, does not render the balance sheet delusive and fraudu- f? h ' L. R. 5, Ch. 621 and 631. - Healey, p. 120; and cases there cited. The offence referred to is that of conspiracv. 3 L. R. 6, Ch. 104. ♦ P. 414, CoUoving the decision in Stemfer's Case, L. R. 4 ; Ch. 473. 23 s.c. i i ![ fff'' if i ii 1 ' i . 1 11 1 ii ' ' 338 JOINT STOCK COMPANIES. lent.' This case, ■which appears to be a leading one on the question of dividends, was that of a company' formed for (dockade running, where the articles provided that no divi- dends should be payal)le except out of the profits arising from the business of the company, etc., and it was decided that a dividend paid on a balance sheet, in which the ships engaged in the trade and other risks were bona fide esti- mated at the full nominal value, must be considered to have been paid out of profits, although the company had actually to l)orrow money to pay it." (c) Profits of one yenv not liable for losses of previous fiears. — Again the question has been raised under the English Act, f. 3 to whether dividends could be paid as long as capital lost in the business is unrestored. But, according to the companj' regulations already quoted,'' it is not assumed at all that the dividends of one year can be made dependent upon losses of previous years ; and cer- tainly, l-'y the language of the present section, no such thing is contemplated. The results of every year may be said to stand alone, so far as the right of the shareholders is concerned ; and whether written off or not, lost capital has no claim to be recouped from the profits of future years. Thus, if a company, as the result of its first year's business makes a loss equal to five per cent, of its capital, and the next year makes a net profit of like amount, each share- holder will be entitled to withdraw his five per cent, in the • Articles 79 and 80 of the schedule of regulations appended to the English Act, provides that once at least in every year the directors shall lay before the Company in general meeting, a statement of the income and expenditure, made up to a date not more than three months before such meeting, and that such statement shew arranged under the most con- venient heads the amount of gross income, distinguishing the several sources from which it has been derived, and the amount of gross expen- diture, distinguishing the expense of the establishment, salaries, and other like matters ; every item of expenditure fairly chargeable against the years income shall be brought into account, so that a just balance of profit and loss may be laid before the meeting ; and in cases where any item of expenditure may in fairness be distributed over several y. ars has been incurred in any one year the whole amount of such item shall be stated, with the addition of the reasons, why a portion only of such item of ex- penditure's charged against the income of the year. • Healey, Joint Stcck Cos., p. 121. Vide note supra. STOCK, CALLS, ETC. 839 1 1 /eral shape of a dividend, without devotinj:; it to the nsstonition of the previous year's loss. For the hmguaj^e of the si'e- tion is that no dividend shall bo paid, " whereby the capi- tal will be in any decree reduced," and if a net profit, as the result of any year's business has been made, a dividend can be paid in proportion to such profit, no matter to what extent the capital may have suffered by previous losses.' {(1) Dividend cannot he enforced till deehircd. — But the de- claration of dividends is part of the internal management of the company, which is governed in its ultimate arrange- ment by the will of a majority of the shareliolder 51. And, therefore, it has been said that " till a dividend is declared, a shareholder has no legal title, nor even an equital)le right thereto, which can be enforced by suit."^ And in the United States, held, that in an action by a stockholder to recover a dividend, he must prove the making of a dividend and a demand therefor before suit.^ (e) 2'o H'hoin they t)elo)ifi. — A question may sometimes arise also as to the person to whom the dividend really belongs, as when a change takes jdace in the holding be- tween the time of the declaration and the payment of the dividend.^ In Wif/ht v. Tucker,'' shares were settled on A. for life and then over. Held, that a dividend declared before A.'s death, but not payable till afterwards, belonged to A.'s estate. And where a testatrix died after a dividend was declared, but before it was paj^able, it was held to belong to her general estate." And in Bates v. MrKinley,' held that a diviilend declared after the death of a testator, though not ■ But where revenue has been applied to capital it may he recouped. Supra. ' Brice, Hltfc. vires, 2nd Ed., 401. ^ Scoft V. Ctiitral R. R. Co., 52 Barb. 45, Su. Ct.,.i8G8; Abb. Dig., Vol. 11. ■• See as to effect of transmission by death, etc. Supra, p. 288. r J. & H. 266. Lcgcndrc v. Kent, L. R. 4, Eq, 283. .ii L. J., Ch. 388. 840 JOINT STOCK COMPANIES. out of profits made during his lifetime, belonged to the legatee. And in the case of a specific legacy of bank stock, it was said that if the testator had died a few days before the dividend day, the legatee would take the dividend, although payab'e in respect of profits earned during the ■ life of the testator.' But the payment of a tlividend to a person not authorized to receive it will not protect the com- pany from paying it again to the true owner, and the statute of limitations will not begin to run against the latter until the time when he becomes aware of his right to claim the dividend.^ 69« Tlie directors may deduct from the dividends payable to any mem- ber all such sums of money as may be due from him to the company, on account of calls or otherwise, r. i Ji {})) Set-off^' of Dividends. — This section is a corollary of section 45,' which gives to the company a hold or lien upon the shares of a member who is indebted to the company ; and if on the shares, then on the dividends arising from the ; shares. This is In accordance also with the English regula- tions and practice, though not so declared by statute. Indeed, it has been said that the company has a natural lien on the shares for anything which may be due upon them, and so, of course, on the dividends. But there seems no good reason why it may not be affirmed out and out that the law of set-ofi^ or compensation a])plics as well to debts due to and from a company as to debts due to and from an individual. The company in its corporate chaiacter is an individual ; while the individual shareholder, as between him and the company in which he holds shares, is as a third person, as one having an existence independent and rights independent of his character as a member of that company. His right to payment of a dividend accrued to him is one which he can, in the absence of any special bar, i : u.^ ' Clive V. Clivc. r K. 600; 23 L. J.. Ch. oSr. See also for these cases Shelford, Joint Stock Cos., 2nd Ed., p. 157. = St. Koniis V. Level Steam Cotton Press, 20 La. Ann. 381, S'l. Ct.. :3ofi ; Abb. Dig, Vol. II. 3 Vide supra, y. 285. STOCK, CALLS, ETC. 841 enforce by law against the company ; while, on the other hand, as we have seen,' the company has a right to the same jirocess to enforce payment from him. Debts, there- fore, equally due and payable on both sides, must extinguish each other p/v) tanto, according to the law of compensation, or set-off, as between private individuals. The section, therefore must be considered as declaratory merely of what the law is or should be on the subject. 67. If the Directors of the Company declare and pay any dividend when the Company is insolvent, or any dividend the payment of which renders the Company insolvent, or diminishes the capital stock thereof they shall be jointly and severally liable, as well to the Company as to the individual shareholders and creditors thereof, for all the debts of the Company then existing, and for all thereafter contracted during their continuance in office, respectively ; but if any Director present when such dividend is declared do forthwith, or if any Director then absent do within twenty-four hours after he shall have become aware thereof and able so to do, enter on the minutes of the Board of Directors his protest against the same, and within eight days thereafter publish such protest in at least one newspaper published at, or as near as may be possible to, the office or chief place of business of the Company, such Director may thereby, and not otherwise, exonerate himself from such liability. iq) Liability of directors pai/iiui dividend. — The liability imposed on directors by this section for contravention of section 58 is not a light one. It places in the hands, not only of the creditors, but also of the shareholders, a remedy for any loss they may have suffered, and any risk they may have incurred through such contravention. And it cannot be doubted that both the director who has paid, and the shareholder who has received, may be compelled to • restore such moneys into the funds of the company for the benefit of the creditors. At least, such is the effect of section 165 of the English Act, under which it was held in Stringer's case, already re- ferred to,' that an order may be made to compel a con- tributory or director to repay a dividend paid under a de- lusive or fraudulent balance sheet. And in Ranee's case.. » Vide supra, p. 314. « L. R. 4, Ch. 475. \\ I ! i !• 342 .lOINT STOCK CJMrANIKS. I ' ■ '1 H nlso alluded to aliovo,' it wiis held that a bonus credited to a dire(ttor a|,'ainst payments duo from him on calls is money paid to or retained by him within the section. In another case, the directors of a company who had l)aid no profits, had, with the consent of the shareholders, l)aid intere;;t on the shares out of the paid-up capital. Jlcild, on an application by the liquidator, under the Com- panies' Act, that such payment was a misaiii)lication of the funds, and a breach of trust, and that the directors were jointly and severally liable to repay the whole smii so mis- applied." And in Carpcntvrv. New York d-Ncic Haven li. Co.,' it was held, that an action may be maintained by a stock- holder in a moneyed corporation to enjoin the paj'ment of a dividend, where the directors are about to misapply the funds of the corporation in paying such dividend, there being in fact no money earned for such a purpose.' In Hill V. Fmzicr,'' it was held that a director of a manufac- turing company, who assents to a dividend amounting to more tlian the profits, may be sued for such violation of duty, without johiing with him the company as co-defen- dants. In re. the National Funds Assurance Co.,'' an English case, directors of a company, pursuant to a resolution of shareholders, ))aid interest on the fully paid-up capital. This interest was, in fact, paid out of capital, there having been no profits of the business of the company ; but such payments were, from time to time, approved of at the an- nual general meetings of the company. Held, that the directors had been guilty of misfeasance within section 165 of the companies' Act, 18G'2, and were personally liable to repay, not only the interest which they themselves had re- ' L. R 6, Ch. 104. * In re National Funds Assurance Co., 27 W. R. 302 ; L. R. 10, Ch. D. 118; 4S Law J. Rep. 163 ; 39 L. T. 420. 3 5 Abb., p. 277. * As to procedure in such cases see Kane v. Montreal Telegraph Co., 20 L. C. Jur. 120. 5 22 Penn. St. 320, * 48 Law J. Rep. 163. STOCK, CALLS, KTC. 34:; ceivcd, but the interest paid to the shareholders duriiif,' the time they were respectively directors. (/•) Pre/ere nfinl Divulovh. — The Act makes no provision concerning preferential shares ; but wh )re such are autho- rized, several questions may arise as to the respective rights of the ordinary and preference shareholder. These ques- tions must be determined in a great measure by the authority under which the preference is created. For, while the term preference stock and preference shares is com- monly understood to mean a right to be paid a certain rate of dividend, or a certain rate of interest in preference to the ordinary shareholders, this meaning may be modified by the authority creating them. One question which has arisen in connection with the subject, is whether the prefer- ence shareholders have a right to be paid out of all the available funds of the com;;^nn\', not only of the current year, but of any previous or subsequent year, to the exclu- sion of the ordinary siiareholders. In the leading case on this point,' the question was decided in the affirmative, the Court holding that if the profits at any period of distribu- tion were insufficient to meet the claims of the preference shareholders, they might indemnify themselves for their loss out of any subsequent profits, to the exclusion of the ordinary shareholder.' And this decision was followed in Wchh V. Eorle,' in which a company, having power so to do. issued preference capital, carrying a dividend of ten per cent, per annum, payable half-yearly, and with no words to restrict the preference shareholders to the profits of the current year ; and it was held that if the profits of any one year were insufficient to pay the ten per cent, in full, the deficiency was, as between the preference and ordinary shareholders, to be made good out of subsequent profits. L' i * i ! i 1: I (/) Bonuses. — Of the nature of dividends are what are ■called bonuses. And, indeed, in several cases, Kindersly, ' Henry v. Great Northern Ry. Co., i De. G, & J. 606. » Thring, 3rd Ed., p. 57, s L. R. 20 Eq; 536, 344 JOINT STOCK COMPANIES. il 1? V.C., held that certain payments called bonuses were really only dividends.* The same rules \nth regard to payment, out of capital, set-off, etc., which have been above stated, in respect of dividends, will apply also to bonuses, or, indeed, to any other distribution of the funds of the company among the shareholders. But, in Milh v. The Northern Ry. Co. of Buenos Ayrcs," it was held, that though the im- proper payment of a dividend will be restrained by injunc- tion on a bill filed by a shareholder, a mere simple contract creditor cannot sustain such a bill on the ground that the fund for the payment of the debt is thereby diminished. And in Bloxham v. The Metrojwlitan Ry. Co.,^ held, that dividends may be paid out of debenture capital, though not out of share capital. But this must be distinguished from dividends ordinarily so called, being rather interest at a fixed rate, payable, at all events, on debentures which had been issued for the construction of works which had proved unproductive. (j) Right to. — The defendant sold by auction, and the plaintiff bought shares in a company, on the 21st August. In accordance with the conditions of sale, the purchase was completed on the 29th of August. The ordinary half-yearly meeting of the shareholders was held, and a dividend de- clared on the 28th August. Held, that the plaintiff' was entitled to the dividend.* ' Plumb V. Nield, 29 L. J. Ch. 618; and Hallis v. Allan, 12 Jur. N. S 638. •> L. R. 5 Ch. 621. 3 L. R. 3 Ch. 337. 350- *■ Black V. Hom&sham, 27 W. R. 171 ; L. R. 4 Ex. D. 24 ; 48 Law J. Rep. 79; 39 L. T. 671. \I4 m- m i I CHAPTER VI. OFFICES, OFFICERS, ETC. 1. Offices. (a) Head Office. (b) Agencies. {c) Service of Notices, etc. (d) Foreign Companies. (c) Constructive Notice. {/") Notices to Members. 2. Powers of Officers. (a) Of Directors. (b{ Of Subordinate Agents. (c) Appointment of. (d) Power to bind the Company, (c) Necessity cf Seal. (/■) Other Formalities. 3. Loans to Shareholders. 4. Liability of Directors for Wages. 5. Actions by and against Com- pany (a) By one Shareholder against another. 6. Forfeiture of Charter. (a) Form of Proceeding. 7. Future Legislation. 8. Fees. 9. Proof of Matters. 10. Letters Patent not void for Irregularity. 11. The Word " Limited." 12. Existing Companies may ob- tain Charter. 13. Subject to the Provisions of the Act. (a) Companies formed underformer Acts. (b) Recorporation. (c) "And thereupon oil the rights.'' (d) Formalities necessary. (e) Liability of Shareholders to Creditors. (/) "All the Provisions." etc. 14. Payment of Sharks. 15. Prospectus. 16. Power to Borrow on Bonds, Debentures, etc. 17. Company may have Agencies. 18. Directors to Submit State- ment, 1. Offices .\nd Notices. 60> The Company shall, at all times, have an office in the city or town in which their chief place of business shall be, which shall be the legal domicile of the Company in Canada ; and notice of the situation of that office and of any change therein shall be advertised in the Canada Gazette ; and they may establish such other offices and agencies elsewhere in the Dominion of Canada, as they may deem expedient. SI. Any summons, notice, order, or other process or document required to be served upon the Company, may be served by leaving the same at the said office in the city or town in which their chief place of business may be, with any grown person in the employ of the Company, or on the President or Secretary of the Company, or by leaving the same at the domicile of either of them or with any grown person of hi family or in i: II it r , 1 i 5 1 11 |||||L , wmWil fl^jnr'T'.ir ■m \ ; iW: l< I '1 1 nil 1 < 'ii . 1 'Bflwfll"' 846 JOINT STOCK COMPANIES. his employ ; or if the Company have no known office or chief place of business, and have no known I'resident or Secretary, then the Court may order such publication as it may deem requisite, to be made in the pre- mises ; and such publication shall be held to be due service upon the Company. (a) Head Office. — The object of fixing and maldng public the place where the head office or legal domicile of the company is situated, is to determine the jurisdiction to which the company is amenable, and the place where service of any notice or legal process may be made. In other words, the main object of the provision is the jn'o- tection of the creditors of the company. By section 4, ' it is provided that the notice of application for letters patent shall indicate the chief place of business of the company, and this being copied into the letters patent themselves, ati'ord a means to every one dealing with the company of obtaining such information in this respect as may, at any future time, be required in enforcing obligations which the company, in the course of such dealings, may have incur- red. Under the English Act" a penalty not exceeding five pounds is imposed for every day w-hich the company carries on business without having a registered office, as prescribed by the same section. The present Act, how- ever, nor, indeed, any of the Canadian Acts, imposes a penalty; and although the section uses the strongest im- perative, it would be difficult to say how it would be enforc- ed, or what risk the company would run by disregarding it. {h) Af/encies. — The question of the right of the company to establish agencies outside of the jurisdiction by which it was incorporated has already been referred to.^ The language of the present section, " and they may establish such other offices and agencies elsewhere in the Dominion of Canada as they may deem expedient," seems in the most undoubted manner to confirm what is there stated, that Vide sHpra,^. 102. » Act (Imp.) 1862; sec. 32. 3 Vide supra, p. 105. OFFICES, OFFICERS, ETC. 347 except as provided by section 86,' "a company under the present Act cannot be empowered to establisb agencies outside of tbe Dominion of Canada." (c) Si'rricc of Xoticfs, etc. — The service at the domicile of the president or secretary is an extension of the means of service not found in i)revious Acts. But when the ser- vice is at the office of the company it must be at the chief office; and, therefore, where the service was at the office of the manager of the company which was not the chief office of the company, it was held, that notwithstanding the operations of the company were carried on there, the ser- vice was insufficient." And so, also, where the service was at the office of a person who did business for it, and in a different district from that in which the head office of the company was situated.^ And where service was made uix>n the Grand Trunk Railway Company at one of its stations, it was held to be insufficient, and that the service should have been at its principal place of business.' But where service was accepted by a solicitor appointed for the piu'- pose, on behalf of the company, it was held sufficient.^ In a Lower Canada case, where the service in the absence of any discoverable officer, was made on "the last president" or "the late secretarv," or on "the last secretarv,"' it was held sufficient." And so, also, in an Enghsh case, where the compaii}' had practically ceased to exist, and had uo office or officers, it was ordered, that service of a bill, in a suit in which the company were defendants, on " the late deputy chairman and late secretary," should be good ser- vice.' But it is extremely doubtful whether these decisions would hold under the present section, which makes provi- sion for service in such cases, by publication, as in the case ' vide post. - Toupin V. The St. Francis Mine Co. 5 Rev. Leg. 209. 3 Pattison v. The Mutual Ins. Co. of Staustead & Sherbrooke, 16 L. C. Jur. 25- * Legendre v. The Grand Trunk Ry. Co. 6 L. C. R. 105. s In re Regent United Service Stores, 8 Ch. Div. 75. « Booth V. The Montreal & Bytown Ry. Co. 3 L. C. Jur. 196 ? Gaskell V. Chambers, 26 Beav. 252. I! * ISi WA : ii 348 JOINT STOCK COMPANIES. of absentees. In the United States the service of compa- nies is regulated as herein, by special statutes. And where service was made on an agent of an insurance company sent to solicit risks, it was held bad.' (d) Foreign Companies. — The section, however, makes no provision for the service of foreign companies, and it be- comes necessary to see what the practice is in this regard. Eeasoning from the ruling in the English cases, it is said by an English writer,* that " a company capable of being wound up under the Act, may be served at their principal place of business in this country; and by reference to an- other case, it is pointed out that a company may be wound up under the Act, although all its operations are in a foreign country, " if the management be in this country, and the business be substantially transacted here."' And in an- other case,^ an order was made to wind up a company incorporated by registration in India, with but a branch office and manager in England. These cases, perhaps, are not strictly applicable, the companies concerned having there business registered in England, under a provision of the Act that enables them to do so ; but a much more pointed dictum was that delivered in Canon Iron Co. v. Madaren,^ in which it was said, " a foreign company, resi- dent in England, is considered resident in this country, for the purpose of being served with notice of legal proceed- ings. In the United States, service cannot be made on the agent or agency of a foreign company, except so provided by special statute, and in Nash v. Rector,^ it was held that service could not be made on the officer of a foreign cor- poration, merely because he is found within the jurisdiction > 1 j) ■•'> 1 (l. i> . ti « L. ' Libling v. Kansas, etc., Ins. Co., 82 Pa. St. 413, Su. Ct. 1876. ' Buckley, 3rd Ed., 474. 3 Ibid, p. 172. < Commercial Bank of India, L. R. 6 Eq. 517. 5 5 H. L. 416; and see Shelford, Joint Stock Cos., 2nd Ed., p. 411. ' Cited in Angell <&• Ames' Corporations, sec. 637. OFFICES, OFFICERS, ETC. 349 of the state/ The reason of this is that a corporation has no existence outside of its own jurisdiction, and cannot he legally summoned anywhere else, not even hy representa- tion. " But if a statute enacts ti*at process in a suit against a foreign corporation may be served on its agent residing in the state, a judgment obtained on such process is binding on the corporation, and entitled to the same credit in the state where it exists as in the state where rendered.'"* The difficulty is now pretty generally provided for by special statute in the different States of the Union. The practice in this country, however, following, appa- rently, that of the English courts, which is based on expediency rather than strict law, has been to allow service on agencies of foreign companies. Thus, in Chapman v. Clarke and the Uniti/ Life Assurance Association,^ garnishees wherein the garnishee was a foreign corporation, having its principal place of business and head office in England, but its chief agency in ]V[ontreal, and the service was made at " the agency in Montreal, where the writ of summons issued, the service, on contestation, was held good. And in McPhcrson, et. al., v. Tlie St. Lawrence d- Inland Marine Insurance Co.,* which w^as an action on an insurance i)olicy issued in Upper Canada, where the chief office and place of business of the company was situated, and service was made on the agent at Montreal, the service was held in- sufficient, but on the ground that the agent was not in i! the ided ;hat cor- tion ' Ibid — Note from Lafayette Ins. Co. v. Freneh, 5 McLean C. C. 461. " By an Act of the State of California for instance it is provided that — " Every corporation heretofore created by the laws of any other State and doing business in this State shall within one hundred and twenty days after the passage of this Act, and any corporation hereafter created and doing business in this State within sixty days from the time of commencing to do business in this State, designate some person residing in the county in which the principal place of business of said corjioratitm in this State is, upon whom process issued by authority or under any law of this State may be served ; and within the time aforesaid shall hie such designation in the office of the Secretary of State; and a copy of such designation duly certified by said officer shall be evidence of such appointment, and it shall be lawful to serve on such person so designated any process issued as aforesaid." Proffatt, Corporations, p. 99. 1 3 L. C. Jur. 159. * 5 L. C. R. 403. 1. ■. ' i ■ i ■ : . f it '; . . • - *-J mUmm :! : '^ mi H iiii ii i I 1 ■ j 1 rji «ii fH I!;: I I Ml 350 JOINT STOCK 00Mir'Ji5aiE». charge of an office of the fomjiamj foff the transaction of biisinosrf generally. And in the rmiitetl States two very interesting cases of garnishment w*irif (iecir Mioney or property of the company in his hands ;' and im ttlit^ other, that process of garnishment could be sent to smj i.-oinity in the state where the garnishee could be fcviaimd. there behig no differ- ence in this respect between na.tiaii^iill gjersous and corpora- tions.^ But in Bunli of Jirititih X'OnrtHii Aiiurim v. Iauih- hreij,^ in Upper Canada, it was h^elcL that a debt due l)y a corporation having its head offitie im England, cannot be attached l)y service of the attacihiiDi^j; order upon an agent of the corporation in Upper (.'auaAji- But in Campbell v. The Ndtional Life Insurance Cf)^" it was held, that the general agents in Canada of a fcMrt%m company, must be regarded in the same light as iht- general agents at the head office in the foreign couutiy. (e) Constructive notiec. — The poimt lOMi which many of these questions turn is, whether the ptTnonni iweeiving notice is an agent for that purpose or not, Im ttliie eoise of an ordinary director, and even of an acting dixtK'itiOiu.the rule is that he is.* Though this rule may be aflfected hj enrcumstances. Thus a director of a bank, who was alt*o £ member of a firm, pro- cured at the bank the discount oi a note belonging to the firm, but not himself acting in niiiilbiiinig the discount. The note had been obtained from the nmiilkar by fraud, to the di- rectors knowledge, but he did not itionnum unicate that fact to the bank. Held that his knowlti%e was not constructive notice to the bank." "On the othta- SudUDuI a mere verbal, and it would seem even casual, notiiieatooii to the directors or ■ Evcrdcll V. Slicboygiui. etc.. R. R Co., 4D TOuh* jg5, Su. Ct., Wis., 1877. ' Toledo, etc., R. R. Co. v. Reynolds, 7^ HIL ^^7,. Sa. Ct., 1874; Abb. Dig., Vol. II. 3 2 L. J. N. S. 44 ; Robinson s Dig. jej ; :sai&Ltuuly v. Dickson, 6 L. Jj 1)2, Ibid. 4 24 C. P. 133; Ibid. 5 Brice, ultra vires, 2nd Ed., p. 612. ' First National Bank of Highstoifii r. Clari^i^^fur , iq km. Rep. 262. OFFICES, OFFICERS, ETC. 361 other responsible agents of a corporation, provided only that it be during the actual course of business, is sufficient."' "But coqwrations having common officials are not neces- sarily affevted through these with knowledge of each others transactions. Thus where company A. borrowed of com- pany B., on the security of a mortgage, money that was to be devoted to a purpose that was ultra vires of company A., and the person who negociated the loan was a du'ector in both corapanies, it was nevertheless held that company B. was not affected with notice of the illegality." ^ 63. N:-.:ce requiring to be served by the Company upon the members, ma-v be s-eriai either personally or by sending them through the post, in registered k-rters, addressed to the members at their places of abode as aji- pea:ia;-4 .»;3 :ae books of the Company. 64« A r otice or other document served by post by the Company on a member, sfeall be taken as served at the time when the registered letter con- taining :: . :1 1 be delivered in the ordinary course of post ; to prove the fact ani :.--:■ :•:' service it shall be sufficient to prove that such letter was properly i i iressed and registered, and was put into the post offi( and the time uiiaii h was put in, and the time requisite for its delivery in liie ordi- nary co~ri.^ of post. (jf) A''><'i>« to minnhers. — The notices here referred to are notices of allotment,' of meetings,' of calls,'" of forfeiture,^ etc., all of which have been referred to in connection with those subjects. It may be said, in addition, however, that the system here provided is the same as that which pre- vails in Great Britain, under the Act of 186*2, if not by the Act itself, by the articles for a trading association which accompany the Act. m V 1.- -PowERS OF Officers. i^„m AuT sammons, notice, ) 0/ subordinate af/ents. — The question then is, what is a sufficient authorization for the acts indicated in these three sections ? It is plain that if every person having an interest in or connection with the company could incur obli- gations sKo motii on behalf of the company, that its l)usiness would soon fall into hopeless confusion, and it would find it- self with more liabilities on its hand than it could ever hope to discharge. The authority, then, to order work to be done, to buy and sell, to sign or endorse promissory notes, and enter into contracts generally, must be confined to a few. Who these are and how they are to be appointed is gen- erally determined by the charter and by-laws of the company. When such rules exist, they must be conformed to, and it may safely be asserted in general terms, that whatever is undertaken by a person assuming to act on behalf of the company, and who has not been appointed in conformity with such rules, will be void. It is said, how- ever,' that if the appointment is by election, that an agent may validly act under colour of election, though his elec- tion be informal and on other grounds void. "Indeed, it seems to be clear law," says the same authority, following a number of English cases, "that the act of an officer de facto is good whenever it concerns a third person who had a previous right to the act, or had paid a valuable con- sideration for it, and this whether the act concerns the preservation of the corporation or not." III I li as ec- Vide supra, p. 200. Angell & Ames, Corporations ; sec 286. 24 B.C. ililllif ' 1 ■ 'h i ; i flji li 'l- m m 364 JOINT STOCK COMPANIES. (r) Apjmiittment <>/. — Where there are no special rules, agents and officers of companies may he appointed under the seal of the company, Imt the necessity of a seal seems now to he entirely dispensed with/ Even a writing of any kind is unnecessary in ord?r to confer authority to act, and a sufficient guarantee of tlnir authority, as far as concerns third persons, will be that they have been recognized by the company in that capacity. And when so recognized, they have "all the authority which either is given them expressly by their principals, or raised by implication from the nature of their appointment and consequential duties."- And an appointment by a i. c, a Company official. 5 That is, directors. OFFICES, OFFICERS, ETC. 357 acts for others who are termed principals. Subordinate officials of corporations, therefore, are said to have " all the authority which either is given them expressly l)y their principals, or raised by implication from the nature of their appointment and consequential duties.'" In Smith v. Hull Glnsa Co.,^ Maule, J., said :— " The •case differs in no respect from the ordinary one of dealing at a shop or counting house ; the customer is not called ujjon to prove the character or the authority of the shop- man or clerk with whom he deal s ; if he is acting without or contrarj' to the authority conferred upon him, that is their fault." Where the authority is express, of course, no diffi- culty need occur ; but where it is an implied authority, it will be a matter for the decision of the Court, or jury, as the case may be, whether the circumstances in question bring it within the reasonable construction of that term. " Thus, where a traffic manager of a railway company entered into an agreement for the sale of lands on behalf •of the company, the company was held bound by the agi'ee- ment, because they had been in the habit of recognizing such agreements entered into by him.'" But this judg- ment, though confirmed in appeal,* was confirmed on the ground of part performance, Turner, S. J., remarking that, in his opinion,there was not sufficient evidence of authority ; and that, if the manager had, in a few instances, made •contracts for the sale of lands, it would not be sufficient to •establish a general authority in all cases. Nor has the president any power merely as president to give a con- fession of judgment." But it cannot be objected by a cor- poration that an assignment of a note by its president was without authority, the proof showing that, by a resolution of the board of directors adopted prior to the assignment, I- ■ I I ally ' Brice, Ultra vires, p. 617. = II C. B. 897-928. Wilson V. West Hartlepool Ry. Co., 34 Beav. 187; and Shelford, Joint •Stock Cos., 2nd Ed., p. 50. D. J. & S. 475. 5 Thew V. Porcelain Manufacturing Co., 5 S. C. 415, Su. Ct., 1S74 ; Abb. Dig.. Vol. II. li'liii m i!ii t 358 JOINT STOCK COMPANIES. the president was authorized to pay off any debts owing by the company in any securities or other property of the cor- poration, and there being no evidence that it was assigned by him for any other purpose than that authorized in such resohition.' For a corporation may, unless otherwise pro- vided by its charter, by resolution or by-law, appoint any person an agent for the purpose of transferring or disposing of its property ov negotiable securities. And such power may be inferred, if the proof shows that the president is in the habit of exercising it. For the doctrine seems to be well settled that the president of a corporate body may per- form all acts which are incidental to the execution of the trust reposed in him, such as custom or necessity has im- posed upon the office, and that without exjiress authority ; and it is immaterial whether such authority exists by virtue of his office, or is imposed by the course of the business of the company.' And, in a case where the general freight and passenger agent of defendant had authority to sign C'.atracts of shipment, and his name was signed to a par- ticular contract by the clerk in his office, the execution of new contracts being a part of his duties, it was held that defendants were liable.' But where the by-laws of a corpora- tion authorized the president to endorse promissory notes, and a note was endorsed by the secretary, witliout the knowledge- of the corporation, to a person who was at the time a director, and charged with knowledge of the provisions of the by-law ; held, that the endorsement passed no title.* And, in New Brunswick, where the Tobique Mill Company authorized their agent, by power of attorney, "to manu- facture logs ipto lumber at the mills, transport them to market, and dispose of them " for the company's benefit, it was held that this did not authorize the agent to deliver over lumber at the mills in payment of securities given by him on behalf of the company, for debts contracted in the ■ Mitchell V. Dceth, Su. Ct.. 111. 461. = Ibid, Withrow's Corporation Cases. 3 Newall V. Smith, 49 W. 255 Su. Ct., 1877 ; Abb. Di,^., Vol. II. •» Lcavitt, ct. ai, v. Thf Conn. Peat Co., C. C. Conn. 113 ; Withrow'a Corporation Cases. OFFICES, OFFICERS, ETC. 359 course of his agency, and that such delivery vested no property in the creditor.' In another case, a secretary and financial agent of a ( ompany, having authority to get bills discounted, forged bills, and got them discounted. He paid the proceeds into a bank to the account of a firm to which he belonged, and, ii las character of a member of that firm, drew cheques on the account in favour of the company ; and it was alleged that, out of the amount so drawn, he actually made payment for the benefit of the company. The bill discounter had not negotiated the bills. In the winding up of the company, the discounter asked for an Liriuury, what amount of the proceeds of the bills had thus reached the company, and asked to claim for the amount when ascertained. Demand granted accordingly.* In this country, the doctrine of implied authority is illustrated by a number of cases, some of which have been already referred to.' To avoid personal liability on such contracts, the ageni must observe that they are entered into in the man- ner prescribed by the charter raid rules of the company, if such provision be made. But it is not necessary that he keep minutes of such transactions,' although it is customary for honrds of directors or agents to do so, in order to furnish a record of their proceedings. The proper mode in which an agent should contract in order to bind the company in matters oi simple contract is to name the company in the body thereof, and to sign as agent, or whatever the capacity may be ; " and this is the mode in which contracts of insurance and bills and notes are ordinarily executed."'' In any other way, there is always room for doubt and dispute, a fact which might be amply illustrated; but as it is a matter which concerns more ' Lombard v. Wilson, i Kerr 327 , Stevens' N. B. Dig. 335. » Thf jfapanese Curtains v. Pat. Fabric Co.. Exp. Shoolbred 28 W. 339 ' Vide supra, p. 143, 203. * Angell V. Ames, Corporations; sec. 291. s Ibid, sec. 293. \h[ ■ ', » ■ Hi i ;| (■ j ^ - i Mi h ' 860 JOINT STOCK COMPANIES. particularly the general law of agency, it is needless to enter into it here. With regard also to contracts made by officials in favour of the company, it would appear that such contracts may inure to the company, though really made in favour of such official. Thus, in McBroom v. Lebanon,^ it was said that a note made payable to the treasurer of a corporation, with- out giving the name of the treasurer, is, in fact, payable to the corporation, and shows that the corporation is the party in interest, and a suit on such note is properly brought in the name of the corporation. (e) Necessitif of seal. — The old idea of the necessity of evidencing every appointment of a servant or agent, or every contract into which a company enters by instrument under seal, has long been departed from, and the departm'e is recognized and ratified in these sections. Indeed, so far from requiring every such appointment, authority, or con- tract to be under seal at the present day, the rule is, and is recognized by law, that in a large number of cases such appointments are made without any writing at all. " The general rule is," says Story,* "that an agent or attorney may ordinarily be appointed by parol, in the broad sense of that term, at the common law ; that is by a verbal decla- ration in wilting, not under seal, or by acts and implica- tions," And, in another place,' " As the appointment of an agent may not always be evidenced by the written vote of such functionaries (t. e. the directors) it is now the set- tled doctrine, at least in America, that it may be inferred or implied frcun the adoption and recognition of the acts of the agents by such functionaries, or by the corporation. Thus, for example, if the cashier of a bank should openly act as such in all the common transactions of the bank, with the full knowledge and assent of the directors, his acts would be obligatory upon the bank, although there might be no written vote on record to establish his aijpoincment." • 31 Ind. 268, Su. Ct., 1869; Abb. Dig., Vol. II. » Story Agency, 6th Ed., p. 42. 3 Ibid, p. 49. OFFICES, OFFICERS, ETC. 361 And a corporation which suffers appearances to exist, and its officers and agents to so act as to give one employ- ed by such officers and agents, reason to believe that he is employed by the company, becomes liable to such person as his employer, to pay for the services rendered by him.' " In America," says Story,° " the general doctrine is firmly established, that whenever a corporation is acting within the scope of the legitimate purposes of its institution, all parol contracts made by its authorized agents raise an im- plied promise for the enforcement of v.hieh an action will lie against the corporation. And in Racine u- Miss. B. R. Co. V. Farmers' Trust d- Itoan Co., it was held that a cor- poration acting within the scope of its authority is bound by the parol contract of its authorized agent the same as an individual under like circumstances.' And in McCid- lough v. Taladega Ins. Co.* held that where bv the charter of a private corporation, it is authorized to borrow money and issue bonds therefor, an ordinary undertaking without seal is sufficient to bind the company. The same doctrine seems gradually to have found favor in England, and may now be deemed after repeated and well considered adjudi- cations to be fully established as the common law, at least, where the nature and business of corporations created by charter or statute, constantly, if net daily reqnire contracts to be made to carry on its corporate operations." And so also in the Province of Quebec the same rule holds, as stated in Wood, et. al., v. Shaw,^ which was an action on promissory notes given by the defendant to an insurance company and transferred, and the defendant pleaded want of authority on the part of the secretary of the company to endorse the notes, and it was held that, by the law of the province, commercial corporations were recognized or con- sidered as natural persons in their ordinary' transactions ; ' Gowan Marble Co. v. Tarrant, 73 111. 608. Su. Ct.. 1874. • Agency, p. 49. i Withrow's Corporation Cases. ' * 46 Ala. 376, Su. Ct., 1871. 5 3 L. C. Jur. 173. ' . i'.l ■ IN If 1 ( M f ,; 1 ;■; iili f Is 362 JOINT STOCK COMPANIES. and the old law of England, which held that a corporation could only contract in writing under its common seal, is now repealed, and the publicly recognized officers of such a corporation, must, from the nature of things, be intrusted with such powers as would enable them to carry out the ordinary affairs of the institution. In the Province of Ontario the decisions appear to have varied with the special circumstances of each case, the principal of those maintaining the right of action on parol, and other contracts not under seal, are : — 1. Whitehead v. Buffalo d' Lake Huron R. R. Co.,^ in which the managing director of a railway company entered into a contract in his own name, adding " acting on behalf of the company," with a person for the construction of the road, and for keeping it in repair. On a bill filed to en- force this contract, held that the contract did not require the common seal to render it binding. On appeal, the judg- ment was varied in so far as it allowed damages to the con- tractor for not being allowed to complete the contract. 2. Brownw. The Corporation of the Toivn ofBcllevilh'.* — in which defendants wished to dredge their harbour, and the plaintiff had a dredge then in the state of New York, which, after negotiations with the chairman of the committee on harbor and town property, he offered to lend to the corporation on certain terms, one of which was, that the corporation should pay the cost of its transport to Belleville. The committee recommended this offer to the council and it was adopted. The chairman then told the plaintiff to bring the dredge to Belleville, which he did, at a cost of $373. The committee afterwards decided to let out the dredging by contract to another person. Held, that the corporation w^ere liable to the plaintiff for the cost of bringing the dredge, although there was no contract under seal.' ' 7 Ch. 351 ; Robinson's Dig., p. 774. » 30 Q. B. 373 ; and Robinson's Dig., p. 774, 3 This case is all the stronger as being with a public Corporation in whose contracts greater strictness of form is usually required. ! I OFFICES, OFFICERS, ETC. 863 3. By the decision in Raines v. Credit Harbor Co., it appeared that a municipal corporation may be liable, on a parol contract, to have a clerk or servant to render services to their ordinary business.* 4. In Blue v. Gas and water Co.,^ assumpsit was held maintainable against defendants for the non-performance of a special parol agreement with plaintiff for the supply of water to the Toronto baths. 5. In McDonald v. The Upper Canada Mining Co.," the plaintiff was held entitled to compensation, for discovering to defendants a valuable mining location under an informal agreement that he should be compensated. 6. In Hamilton and Port Dover Railway Co. v. Gore Bank, an agreement by which the Bank was to garnish certain debts due to the railway company, in satisfaction of a debt due from the latter to it, the c^-'t of which, as between attorney and client, the railway company was to pay, was held good without seal. So also in several cases of lease, the want of a seal was held no objection to an action on the lease. But otherwise, where the contract was exe- cutory only. A trading company entered into a written con- tract, but not under a corporate seal, for the purchase of a quantity of barrels ; held that the contract being executory, that defendants, though a trading corporation, were not liable for not refusing to accept barrels not then manufac- tured, nor for refusing to allow the plaintiff to continue to manufacture barrels according to the agreement.* And in New Brunswick, where a written contract was made in the name, and on l)ehalf of a corpcation called the "Lancaster Mill Company" by their agent, with the plain- tiffs, whereby the plaintiffs, for certain stipulated payments which would amount to over £600, to be made by the com- pany, engaged to cut, raft and draw to the company's mills a large quantity of logs in the coiurse of the ensuing sea- Robinson's Dig., p. 775. ' Ibid, p. 776. ^ Ibid, p. 778. * Wiugatc V. Enniskillen Oil Refining Co., Robinson's Dig., p. 777. 364 JOINT STOCK OOiWElJinEg. son, it was held, that the comjiamj was not liable on the contract, because there was no smifffieient proof of the agents authority, or of a recognition of itSueietoatractby the corpora- tion, or of the appointment of loiSietfrs under th*^ Act of incorporation to manage the busimeijs of the company, and because the contract was of ?mth nature and extent as could only be made under the «eoaiinimon. seal of the com- pany.' (/) Other formaUties. — Anollai«r interesting case, involv- ing, not the use of the seal, but ottfer formalities necessary to show a perfect contract of emplbjiiiient, was that of Wood V. The Ontario tC Quebec R. R. Oc.^' in which the plaintiff sued defendants for services j>ertliorEaed by him as their agent in obtaining bonuses from ik- Asen Except only in the case of a Loan Company," no loan shall be made by the Company to any shareholder, and if such be made, all Direc- tors and other officers of the Company making the same, or in any wise assenting thereto, shall be jointly and severally liable to the amount of such loan, with interest, to the Company, and also to the creditors of the Com- pany for all debts of the Company then existing, or contracted, between the time of the making of such loan and that of the repayment thereof. The penalty here imposed on directors for making loans ^o shareholders contrary to the Act, it will be observed, is tue same as that imposed by section 67 ' for paying dividends when the company is insolvent, or when there has been nothing earned to warrant the payment of dividends. The penalty is a very sweeping one, and should act as a power- ful check upon the temptation to make such loans. The check, however, cannot be said to be a needless one. ' Hatch V. Barr, i Ohio 390. » With regard to Loan Cos., vide post. 3 Vide suprut .! !1 OrriCES, OFFICERS, ETC. 867 Nothing perliaps has been a more fruitful source of disaster to companies than the tendency in directors to speculate, either directly or by the medium of others, with the funds under their control. And regarding this very obvious reason for the provision of such a check, it must be held to apply as well to loans made to themselves, or to one another, as to loans made to shareholders who are not on the management. The provision is not new, having formed part of the Act of 1869, and is part also of the companies' clauses' Act of that year, as well as other Canadian Acts. 4. Liability of Directors for Wages. 69. The Directors of the Company shall be jointly and severally liable to the clerks, labourers, servants and apprentices thereof, for all debts not exceeding six months' wages due for service performed for the Company whilst they are such Directors respectively ; but no Director shall be liable to an action therefo'-, unless the Company has been sued therefor within one year after the debt became due, nor yet unless such Director is sued therefor within one year from the time when he ceased to be such Direc- tor, nor yet before an execution against the Company has been returned unsatisfied in whole or in part; and the amount due on such execution shall be the amount recoverable with costs against the Directors. The logic of this section is not very apparent. Why the directors should incur any personal liability in respect of wages, more than in connection with any other matter within the scope of their duties, will require some ingenuity to discover. The section is in direct contradiction of, and must be regarded as an exception to the rule laid down in section 57,' which says that every director and his heirs, etc., is to be indemnified and saved harmless out of the funds of the company from all charges and expenses, which he shall sustain or incur in or about the affairs thereof, " except such costs, charges and expenses as shall be occa- sioned by his own wilful neglect or default." As therefore the employment of clerks and servants is as a rule indis- pensable to the carrying on of the affairs of a company, there appears no good reason why the directors should be personally liable for this item of expenditure, (which is ' Vide supra, p. 320. ii 1^ 368 JOINT STOCK COMPANIES. *s ; -6' ' m m m often a very important and considerable one), except it is as a check upon the tendency to make money by the appointment of relations a,t good fat salaries. But as such appointments can always be controlled by the shareholders in general meeting,* this can scarcely be regarded as a satis- factory explanation of the object of the section.^ The liability however, is hedged about with so many conditions that very few cases, it may safely be assumed, would arise under it, in which the directors would be condemned to pay in consequence. Thus the wages sued for must have been earned during the directorate of the person sued. The suit must first have been brought against the company itself, and judgment had, and execution returned unsatisfied before the recourse to the directors becomes open and available. And it must have been so brought against the company within a year from the time the wages claimed were earned, or else all recourse to the directors is lost ; and finally, it can only be for six months' arrears of wages," that is for services actually rendered, so that the directors, it would appear, would not be liable for future wages, i.e., for breach of contract to employ, as where the company is wound up, etc., or from any other cause, the ser- vices of the plaintiff are no longer required. Of course, in a winding up or insolvency/ it might so hap- pen that the assets, being insufficient to pay all the creditors in full, the employees of the company would find it necessary to avail themselves of the provision of the section. And, indeed, it would only be under such circum- stances, that they would be driven to that step ; and then they would, under the Dominion Insolvent Act of 1875 and its amendme'nts,^ be entitled to two months' arrears in full out of the assets of the company. And where the Insolvent ii :! I ' Vide, sec. 32, supra p. 200. ' The provision, though common to the Canadian Acts, is not found in either the English or American, so far as I have discovered. 3 Under the former Act (1869) and also under the Companies' clauses Act, and under the local Acts of Ontario and Quebec, a years wages or salary may be claimed under the same circumstances. * Vide Winding up, post. 5 38 Vic, cap. 16, sec. 91 ; and 40 Vic, cap. 41, sec. 22, now repealed. OFFICES, OFFICERS, ETC. 309 for full Ivent lied. Act does not apply, they would be entitled to three months' arrears under the Quebec code.* But where the estate of the corai)any is actually and regularly in the hands of a receiver or assignee to bo wound-up, it may be doubted whether the conditions precedent concerning judgment and execution against the company would be required. Proof, however, would be necessary to show that no more could be obtained from the assets of the company, or perhaps that the affairs of the company had been regularly wound- up, and the company no longer existed. It will be observed that the section prescribes no limit to the time within which the action against the directors may be brought; and the right of action therefore, it may be assumed, would be barred only by the common law of prescription of the place in which the action was brought. No such provision appears to exist in any English or American Act at present in force. 6. Actions by and against Company. 70i Any description of action may be prosecuted and maintained between the Company and any shareholder thereof ; and no shareholder shall, by reason of being a shareholder, be imcompetent as a witness therein. 71. In any action or other legal proceeding, it shall not be requisite to set forth the mode of incorporation of the Company, otherwise than by mention of it under its corporate name, as incorporated by virtue of letters patent — or of letters patent and supplementary letters patent, as the case may be — under this Act ; and the notice in the Canada Gazette, of the issue of such letters patent or supplementary letters patent, shall be prima facie proof of all things thereby declared ; and on production of the letters patent or supplementary letters patent themselves, or of any ex. emplification or copy thereof under the great seal, the fact of such notice shall be presumed ; and, save only in any proceeding by scire facias or otherwise for direct impeachment thereof, the letters patent or supple- mentary letters patent themselves, or any exemplification or copy thereo under the great seal, shall be conclusive proof of every matter and thing therein set forth. We have already seen' that actions may be instituted by the company against shareholders for arrears of calls, and ' Quebec Civil Code, Art. 2006. ' By sec. 56, vide supra, p. 314. 25 8.0. i! f! si f i. I . L ' i I 1 , ■'i ^ 1 ' • ;■■,-. ' i'!i ' 11 mw 370 JOINT STOCK COMPANIES. tlio pleading and evidence required to sustain them. We have seen also that actions may be instituted by share- holders on the other hand apiainst the company for various causes, such as the rescission of a contract to take stock, damages caused by misreprosentation, etc. Ho that the first of these two sections establishes simply in general terms what might otherwise be understood to have been the intention of the legislature with regard to the principle in question. The section moreover is declaratory of that which has been found, by universal experience to be an essential feature of Joint Stock Companies, viz : a right of action by and against its own members. And this right of action ccmstitutes one of the leading ditferences between a Joint Stock Company and a simple partnership at common huv, in which no right of action exists for money due, or in settlement of accounts, while the partnership continues. The section therefore may be regarded as a useful one in affirming in language about which no doubt can arise this general right of action between a company and its own members. The same principle is fully recognized, both in England and the United States ;^ but the party suing must be ac- tually and at the time of bringing the action a member of the company. " Therefore a person who has sold his shares, even though he still remain under liabilities, cannot insti- tute proceedings" as a slia reholder. The same is the case respecting intending shareholders, but whose contract is not complete, or who have not complied with all thd formalities necessary to be classed as mem- bers, a company who is owning shares in another company, or a creditor, such as a policy holder in an insurance com- pany, whose contract gives him an actual interest in the Company's affairs.' But where the rights of an actual member are violated or refused, an action will lie either by ■ See Act (Imp.) 1862, and Angell & Ames' Corporations ; sec. 390. ' Brice, ultra vires, p. 845. ' Ibid, p. 846. This, however, it is conceived would not apply to holders of policies in Mutual Companies who are ostensibly members. f OFFICES, OFFICEnS, ETC. 371 summons, manclamus or otherwise to enforce them. Thus in the State v. the Ocor The Governor in Council may, from time to time, establish, alter and regulate the tariff of the fees to be paid on application for letters patent and supplementary letters patent under this Act ; may designate the department or departments through which the issue thereof shall take place, and may prescribe the forms of proceeding and record ia respect thereof, and all other matters requisite for carrying out the object of this Act: 2. Such fees may be made to vary in amount, under any rule or rules — as to nature of Company, amount of capital, and otherwise — that may be deemed expedient : 3. No step shall be taken in any department towards the issue of any letters patent or supplementary letters patent under this Act, until after the amount of all fees therefor shall have been duly paid. Under the English system the schedule of foes is append- ed to the Act ; or rather the maximum amounts charge- able for registration, the precise amounts being apparently II ' Tomlinson v. yessnp, 15 Wall. 454, Su. Ct. U. S.. 1872; Abb. Dig.. Vol. " Supra, p. 160, 3 Vide supra, p. 145. OFFICES, OFFICERS, ETC. 377 under the control of the Board of Trade." The system indicated in the present section, however, and indeed the language of the section is identical with that of the other Canadian Acts, the Governor-in-Council being changed to the Lieut-Governor-in-Council in the local Acts." The de- partment having been designated bj' the Act," this clause leaving it to the Governor-General-in-Council to regulate such matters would seem to be inconsistent with previous provisions of the Act. But the object of the clause is, doubtless, no more than to give to the Governor-General- in-Council power to regulate matters which may arise, the regulation of which is found to be otherwise unprovided for. By the third clause the payment of the fees is wisely made a condition precedent to anything being done towards the granting of letters patent. 9. — Proof of Matters. 76. Proof of any matter which may be necessary to be made under this Act may be made by solemn declaration under the Act thirty-seventh Victoria, (1874) chapter thirty-seven, or by affidavit before any Justice of the Peace, or any Commissioner for taking affidavit to be used in any of the Courts in any of the Provinces of the Dominion, or any Notary Public, who are hereby authorized and empowered to administer oaths and receive affidavits and declarations for that purpose. The matters here referred to must be presumed to be ex jym'tc matters arising out of the provisions of the Act ; such as are mentioned in sections G, 16, 23 etc., and not ■I 1. .ii ' The section of the Act which refers to fees reads as follows : — " There shall be paid to the registrar by a Company having a capital divided into shares in respect of the several matters mtntioned in the Table marked H, in the first Schedule hereto, the several fees therein specified, or such smaller fees as the Board of Trade may from time to time direct ; and by a Company not having a capital divided into shares, etc. All fees paid to the said registrar in pursuance of this Act shall be paid into the receipt of Her Majesty's Exchequer, and be carried to the account ol the Con- solidated Fund of the United Kingdom of Great Britain and Ireland." Act 1862, sec. 17. ' The tariff of fees under the present, and also under the local Acts, will be found in the appendix ; post. 3 The department through which all '.he forms and proceedings having reference to the issue of letters patent under the Act are taken is said in the commencement of the Act to be 'hat of the Secretary of State. Vide, sees. 6, 9, 15, etc. 378 JOINT STOCK ;CiC)affliXIES. matters of a contentious or liitigftoma character, of which proof would be required in th* .oarlimairy manner,^ 10. Letters Patent not TiO)iiiD» fob Irregularity. 77. The provisions of this Act relaimc tij matters preliminary to the issue of the letters patent or supplemrarrirv fetters patent shall be deemed directory only ; and no letters patent en ynfffftementary letters patent issued under this Act shall be held void or voiSaMs- on account of any irregularity in any notice prescribed by this Act. or mi 71.'' The section itself however, appears to be ne<; ,l Han legislation. It is not found in the Act of 186:3, or icdi ttiae Quebec Act of 1868 ; and has been inserted here i-.s. vfl^claBiatr-ry of what the law was found to be according to li . ^.e^. . .^s in the EngUsh cases ; and which gave rise to & ifiomresponaing provision in the English Act, 18G2.-' Thus im "Mhv v. Turqianul,^ Loi'd Chelmsford said " 1 think the ■e>eirtliliea,te prevents all recur- rence to prove matters essentiaJl M> registration, amongst which is the subscription of a, Memorandum of associa- tion by seven persons ; and ttEMift It is conclusive in this case that all previous rtKjnakciies have been complied with." And in Batuven Iron <.'%'. v. Burnett^ the Court, under 7 and 8, Vic. Cap. IIG irttftoiaeii to hold the registra- tion void, (at least as far as inri^airds shareholders,) be- cause all the requisites of the Ajtt had not been complied with. Nor could persons on than ,:.;roimd have their names removed frdm the list of contrilHiiittories.' In re Barneds !l ' Vide sec. 71, supra p. 369. " Vide supra, p. 122. 3 Supra, p. 369. * Act 1S62, sec. 18. — A certificate of nftu- mcorpt^ration of any Company given by the registrar shall be conclnshw twiiience that all the requisitions of this Act in respect of registration hsxt Baea complied with. 5 2 L. R 3 E. & I. 325 ; 36 L. I. Ch. s^fj, « 19 L. J. C. P. 17; 8 C.B. 406. 7 Independent Assurance Co., E. P. IBdrJ.. 20 L. J. Ch. 30; i Sim. N. S. 47- OFFICES, OFFICERS, ETC. 879 Banking Co., Peel's case,' the registrar objected to the memorandum of association as going beyond the prospectus ; whereupon the bearer, then and there, and without any communication with the persons who signed it, made alter- ations to remove the registrar's objections, and he at once registered it in the altered form. The company was held to be duly constituted, the certificate of registration being under thi~ section conclusive evidence that the requirements of the Act had been complied with. And where one of the seven sul>soril)ers of the memorandum was an infant at the time of the registration, the Company was, nevertheless, held to l>e- effectually incorporated." And in Pure v. Clegg, it was held that the certificate of the registrar of friendly societies was conclusive evidence of the society being lega as regards contracts. And in New Brunswick held that that where a corporation is credited by letters patent un- der the great seal of the Province, and under the signature of the Lieut-Governor, it will be presumed that such letters patent were properly issued.* But in re Northumberland and District Banking Co." Turner said, "If a company was not authorized to be registered, it is quite clear that the certificate of registration could be of no avail. And held also in the same case that 19-20, Vie. 47, sec. 13, did not enable the registrar to extend the Act to companies not within his scope ; and the certificate had no effect to incorixjrate a company which was not entitled to be incor- porated. And so the letters patent, though under the pre- sent section covering any irregularity or omission in the formalities preliminary to their issue, would not cover a defect in the jurisdiction by which they were issued; and letters i>atent therefore which would be found to be un- authorized by the Act, or to be ultra vires of the authority 1. N. S. » L. R. 2 Ch. 674 ; 36 L. J. Ch. 757. * Nassau Co., 2 Ch. D. 610. 3 7 im. S. S. 1 136. * Stevens' Dig., p. 336. 5 2 De. G. ac J. 371 ; 27 L. J. Ch. 354. m^'^ 880 JOINT STOCK COMPANIES. purporting to issue them, would be set aside by a competent Court.' 11. The Word "Limited." 78i The Company shall paint or affix, and shall keep painted or affixed, its name, with the word " limited " after the name, on the outside of every office or place in which the business of the Company is carried on, in a conspicuous position, in letters easily legible, and shall have its name with the said word after it, engraven in legible characters on its seal, and shall have its name, with the said word after it, mentioned in legible characters in all notices, advertisements and other official publications of the Com- pany, and in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods, purporting to be signed by or on behalf of such Company, and in all bills of parcels, invoices and receipts of the Company. 79. If the Company does not pai-.t or affix, and keep painted or affixed, its name, with the word "limited" after it, in manner directed by this Act, it shall be liable to a penalty of twenty dollars for not so painting or affixing its name, and to a penalty of twenty dollars per day for every day during which such name is not so kept painted or affixed; and every direc- tor and manager of the company who shall knowingly and wilfully authorize or permit such default shall be liable to the like penalties; and if any director, manager, or officer of such Company, or any person on its behalf, uses or authorizes the use of any seal purporting to be a seal of the Com- pany whereon its name, with the said word " limited " after it, is not so engraven as aforesaid, or issues or authorizes the issue of any notice, advertisement or other official publication of such Company, or signs or authorizes to be signed on behalf of such Company any bill of exchange, promissory note, endorsement, cheque, order for money or goods, or issues or authorizes to be issued any bill of parcels, invoice, or receipt of the Company, wherein its name, with the said word after it, is not mentioned in manner aforesaid, he shall be liable to a penalty of two hundred dollars, and shall further be personally liable to the holder of any such bill of exchange, promissory note, cheque, or order for money or goods, for the amount therecf, unless the same is duly paid by the Company. These two sections are almost identical with sees. 41 and 42 of the English Act of 1862. The penalty under the latter Act is five pounds. By the amending Act of 1867," however, "associations not for profit," that is non-trading associations, are relieved from the necessity of using the ' As to mode of proceeding to impeach letters patent see section 71, p. 369. And in Rex. v. Sir O. Butler, 3 Lev. 220, it was said : — " Letters patent are repealed by a writ of scire facias, which is founded on the record of the patent." = Sec. 2'. OFFICES, OFFICERS, ETC. 881 word "limited" after their name. No such exception is made by the present Act, but as a matter of fact large numbers of such associations are carried on without ti. Very few cases appear to have arisen out of neglect of this provision, but in Penrose v. Martyn,^ where the secretary of a limited company had accepted on behalf of the com- pany a bill directed to the company, and omitted the word "limited" as part of its name, and the bill was dishonoured, the secretary was held personally liable. 12. — Existing Companies may obtain Charter. 80> Any Company for purposes or objects within the purview of this Act, heretofore incorporated, whether under a sj-ecial or a general Act, and now being a subsisting and valid corporation, may apply for Letters Patent under this Act. and the Governor in Council, upon proof that notice of the application has been inserted four weeks in the Canada Gazette, may direct the issue of Letters Patent, incorporating the shareholders of the said Company as a Company under this Act, and thereupon all the rights or obligations of the former Company shall be transferred to the new Com- pany, and all proceedings may be continued or commenced by or against the new Company that might have been continued or commenced by or against the old Company ; and it shall not be necessary in any such Letters Patent to set put the names of the shareholders; and after the issue of the Letters Patent the Company shall be governed in all respects by the provi- sions of this Act. except that the liability of the shareholders to creditors of the old Company shall remain as at the time of the issue of the Letters Patent. 81. Where a subsisting Company applies for the issue of Letters Patent under this Act, the Governor in Council may, by the Letters Patent, extend the powers of the Company to such other objects within the purview of this Act as the applicants may desire, and as the Governor in Council may think fit to include in the Letters Patent, and which have been mentioned in the notice of the application for the same, in the Canada Gazette, and may, by the said Letters Patent, name the first Directors of the new Com- pany, and the Letters Patent may be to the new Company by the name of the old Company or by another name. 13. Subject to the Provisions of the Act. 82. All the provisions of this Act touching the obtaining of supple- mentary Letters Patent by Companies incorporated hereunder shall, so far as applicable, apply and extend to applications for Letters Patent under the eightieth and eighty-first sections hereof. n > I ti ' E. B. & E. 499. jiism 382 JOINT STOCK COMPANIES. By reference to that part of the English Act of 1862, which refers to this suhject, several useful hints may be obtained concerning matters not to be found in these sec- tions. The English Statute goes into the subject much more fully and minutely than the present one. (a) Companies formed under former Aets. — And, first, as to the position of a company already in existence at the time the present Act came into operation. Is it affected, and if so, to what extent by the provisions of this Act ? Is it affected in such Avay as to make it desirable to cast off its old garments and to clothe itself in the authority of the present Act only ? Some light may be obtained on these questions by reference also to section 105 of this Act.* There it is provided that no provision of any previous Act shall, as touching any company formed under it, " be in anywise affected by this Act.'"^ It is clear, therefore, that a re-incorporation under the new Act is not at all events a necessary proceeding. But though the provisions of previous Acts are not affected as regards companies formed under them by the provisions of this Act ; still, it by no means follows that such companies are not subject to such provisions of this Act as are not inconsistent with the Act under which it was formed. Indeed, by reference to sec- tion 73 of this Act,^ it would appear that such companies would be subject as to all future operations to such pro- visions. In such cas^3 then, they would be working partly under one Act and partly under another, or, in other words, that a company formed under the Act of 1869, for instance, (which still exists in reference to such company), would be subject not only to that Act, but also to such provisions of i ^ « Vide post. » Similar language is found in the previous Acts, and in the local Acts of Ontario and Quebec They would appear to differ however from the principle of the English Act, for by section 176. it is provided, that subject as hereinafter mentioned, this Act, with the exception of Table A, in the first Schedule, shall apply to Companies formed and registered under the said Joint Stock Cos. Acts (/, e,, previous Acts) or any of them in the same manner, as if such Company had been formed and registered under this Act. 3 Vide supra. OFFICES, OFFICERS, ETC. 383 the present Act as are not inconsistent therewith. Thus, section 43 of the present Act, which contains provisions concerninj^ the transmission of stock otherwise tlian hy transfer, which are n t found amonjf, and are apparently not inconsistent with the provisions cf the Act of 180*J, would he applicahlu to companies forued under that Act. This would fm'nish one motive for re-corporation, and it might he found further desirahle to shift from the readme of the old to that of the new Act, especially if amendments have heen made in the latter, of advantage to the com- pany.' {b) lie-corporaiiou. — A company may he thus re-corj/orated by the same name or by new name, with the same powers and objects, or with such increased powers as within the pro- visions of the Act, the Governor-General in Council may see tit to include in the letters patent. ((;) And thereupon all the rifihts " etc. — As soon as the new letters patent are obtained, all the property, rights and claims which the company possessed previously thereto, pass de piano, and by the sole operation of law, to the new company. This is doubtless the effect intended, though the expression " shall be transferred" used in the above sections, not so explicit as that used in the English Act, ** shall pass to and vest in the company."" But though cir- cumstances might arise under which doubt might be raised as to the precise legal effect of these words, " shall be transferred," in general practice they occasion little or no ' Thus, in an English case, it was said : — " The section provides that registration shall not be invalid by reason that it has taken place with a view of winding up, and thus a company which has no power of selling and transferring its business may by registration, followed by voluntary liquidation, acquire the power of sale given by section i6i. Southall v. British Mutual Society, L. R. 6, ch. 614. " The wording of the English Act in this connection is more explicit all through than the present one, though the terms of the above sections really embrace all that is intended by either. The English Act says, "All such property real and personal, including all interests and rights, in to and out of property real and personal, and including obligations and things in action as may belong to or be vested in the company at the date of its registration under this Act, shall in registration pass to and vest in the company as incorporated under this Act for all the estate and interest of the company therein. Act, 1862; sec. 193. , ! i 384 JOINT STOCK COMPANIES. §M§ (lilKculty. If a eomjiany, for inHtance, obtained a now cliarter, but by the same name as formerly, the company would to all intents and purjioses bo the sanu' company as that which existed before. Its identity would bo in no manner impaired, and no formalities would therefore ne- cessarily follow its re-corporation. It would continue pre- cisely in the same manner, and with the same riglits and obligations as it before possessed, except in so far as these may have been exi)reH8ly changed in its new charter. (d) Formalities luu-eaHnry. — Nor would any change of identity be occasioned l)y a change of name ; though in order to avoid doubt or confusion, certain formalities might be necessary. Thus, for this purpose it might be found necessary to renew the registration of any real property held by the company, so that it should not remain registered in the name of a company which, by that name at least, no long(n" existed ; though the right would not apparently be in any way aftected by the want of such renewal. For, as the section proceeds to say, " all proceedings may be con- tinued or commenced by or against the new company that might have been continued or commenced by or against the old company"; or, in other words, stating that the company is identically the same company, before and after re-corporation, and its rights and obligations remain iden- tically the same. And so complete is this identity that such proceedings may be continued or commenced ap- parently in either name, though perhaps the more correct way would be to plead or implead in the new name, refer- ring to the old one ; ex. gra. " The Moisic Iron Company, (limited), heretofore known and described as the Moisic Company, (limited), a body politic and corporate," etc. And all contracts direct or collateral remain the same. Thus, in Groiix's Improved Soap Company v. Cooper,^ (an English case), it was held that a surety to a company, re- gistered under one Act and re-registered under another, was not discharged by the re-registration. ' 8 C. B. N. S. 800. OFFICES, OFFICERS, ETC. 385 (r) " The lidlnlitif nf lilKtrchohlcrH to crrdifors" etr — Noithur is any change effoctod in the lial)ility of the share- holders to the creditors of the company hy the re- corpora- tion. The shareholders cannot avail themselves of aiiy difference hetwoen the present Act and the one under which they were previously incorporatetl to escape lial)ility. The pr' ns of all the Cnnadian Acts are, however, pretty much the same in this regard, the liahility (f the whareliolder to the creditors extending to the amount un- paid on his shares, and no more." {/) " .1//. thf prDiisioHs," etc. — Section 82 clearly mean^ that the forniiUities preliminary to obtaining letters patent hy an old company as to passing of resolutions, delays there- on, application, notice and evidence of these formalities, are the same as those for oldaining supplementary letters patent, described in sections 14, ct scq,- and that fees would be payable in like manner.' 14. Payment of Shares. 83« Subject to the provisions of sub-section five of section five of this Act, every share in the Company shall be deemed and taken to have been issued and to be held subject to the payment of the whole amount thereof in cash, unless the same shall have been otherwise determined by a con- tract duly made in writing and filed with the Secietary of State at or before the issue of such shares. < l\ 15. Prospectus. 84> Every prospectus of the Company, and every notice inviting per- sons to subscribe for shares in the Company, shall specify the dates and the names of the parties to any contract entered into by the Company or the promoters, directors or trustees thereof, before the issue of such pro- spectus or notice, whether subject to adoption by the directors or the Com- pany or otherwise ; and any prospectus or notice not specifying the same shall be deemed fraudulent on the part of the promoters, directors and officers of Company knowingly issuing the same, as regards any persoa " Under the Banking Acts, ho vever, it is different ; and the principle is therefore a useful one to establish. ' Vide supra, p. 148. 3 For fees see appendix, post. 4 Vide supra, p. 253, where this question has been already discussed. 26 B.C. i 1 m 386 JOINT STOCK COMPANIES. taking shares in tl*.e Company on the faith of such prospectus unless he shall have had notice of such contract.' 16. Power to Borrow on Bonds, Debentures, Mortgages, ETC. 86. In case a by-law authorizing the same is sanctioned by a vote of not less than two-thirds in value of the shareholders then present in person or represented by proxy, at a general meeting duly called for considering the by-law, the directors may borrow money upon the credit of the Company and issue the bends, debentures or other securities for any sums borrowed, at such prices as may be deemed expedient or necessary ; but no such debentures shall be for a less sum than one hundred dollars ; and the directors may, under the like sanction, hypothecate or pledge the real or personal property of the Company to secure any sums borrowed by the Curr.pany : Provided always, that the amount to be borrowed shall not at any time be greater than seventy-five per cent, of the actual paid-up stock of the Companj ; Provided also, that the limitation by this section made shall not be held to apply to commercial paper discounted by the Company. The general question of the power of the directors to pledge the credit of the Company for borrowed money, has already been to some extent discussed;" but there are several points of detail which may be noticed here. Where a company whose deed of settlement required that mort- gages should be executed with certain prescribed formalities, a security given to the solicitor of the Company, in which one of the formalities, viz, the sealing, was omitted, was held not binding on the Company.' But in another case it was said if there i>e i)ower to charge, and there be shewn an intention to tiiate a charge, a valid charge may be cre- ated, although till legal security given may be incomplete.' In the'Humbcr Inm Works Co's. case,* it was said that under a power to mortgage, a mortgage of arrears of a call already made is valid. And so is the mortgage of the pro- ceeds of a call not yet made, but determined on, although ' .\s to all questions rcl iting to the prospectus of a Company vide supni. Chap. II. ' Vide supra, p. 203 ^ (ieneral Provident .Vssiir.iiice Co., jo L \. 320. * Strand Music Hall Co.. 3 D. J. lS: S. 147. ^16 W. K. 474, 067. OFFICES, OFFICERS, ETC. 387 so determined upon with a view of giving a charge upon it.' And if the power to borrow is limited, as by the above section, and the directors borrow money or debentures at a time when the HabUities ah'eady exceed the limit, the de- Itentures are void, and the holders can come in only pari j»(s.sii with simple contract creditors.^ Again, it is said that debentures may be issued at a discount under a power to borrrow money on such terms as they think fit, or to boiTow or raise money, or to borrow simply.' But in the present case this power is clearly implied in the terms of the section which authorizes the issue of bonds, debentures, etc., at such prices as may be deemed expedient or neces- >ary. What arr Bonds, etc .' — This question arose in a recent case in England.* A company with an office in London, in. lorporated for the purpose of acquiring land in Florence, Ituilding thereon and selling mortgages, or leasing such property, gave power by its articles of association to its directors in order to the management of the company to borrow money by mortgage on any part of the property of tla company, or by "bonds, debentures, or mor+^age de- li^ntures ;" such bonds, etc., to entitle the holders to be liiiid out of the moneys, property and effects of the com- pany. The company, in pursuance of these powers, issued obligations in the year 1868, by each of which they purpor- ted to bind themselves, their successors, and assignees, and ail their estate, property and effects, to repay the sum of £100, in the year 1875, with power to the company to re- deem a certain part of the obligations in each of the inter- mediate years. The bonds were payable to bearer, and carried interest till payment. Held that, construed in the ■ Sankey Brook Coal Co., L. R. 9 Eq. 721 ; Pickering v. Ufracombe Ry. Lv . L. K.3, C. P. 235, 247. • I'ooley Hall Colliery Co., 21 L. T. 690. Vidt, Buckley Joint Stock Cos., 3rd Ed., p. 136. * In rt Florence Land and Public Works Co., Moor's Case, 27 W. H 231.. mmm 388 JOINT STOCK COMPANIES. f m light of the articles of association, the bonds constituted a charge on the property of the company for the time being, subject to the jDower of the directors to dis^sose of such property in the ordinary course of the l)usiness for which the company was constituted. 17. — Company may have Agenciks. 86> The Company may have an agency, or agencies, in any city or town in England, Scotland or Ireland.' 18. DlRECTOItS TO SUUMIT STATEMENT. 87. The directors ot" every Company shall lay before its shareholders a full and clear printed statement of the affairs and financial position of the Company at or before each general meeting of the Company for the elec- tion ot directors.^ ■ Vide siiprtj, p. log. • As to liability for false reports vide supra, p. 269. CHAPTER VII. DISSOLUTION ANJ) WINDING IT. I WlNlJUNG L'l'. (a) " The Company shall he sub- ject," etc. (b) When Cunipaiiy to be 7t'oiiiul up. (e) M^ode of ivntdliip; itp under Entrlish Act. (d) Power to -ivind up voluntarily, ie) Effect of dissolution. {f) When windinfT up commences. (^••I Cessation of business. (/.) Status of liqu'dators. (i) Compulsory winding up. 2. CONTRIBUTORIES. ((7) Friability of. after winding up commences. {b} Effect of transfer when wind- ing up intervenes. 1. WlNniNG Uv. 76. The Company shall be subject to the provisions of any Act for the winding up of Joint Stock Companies, and to the provisions of ■• The In- solvent .Act of 1S75," and the amendments thereto, relating to incorporated companies. {(1) " Till' compntin '^IkiH f>'' >ii(hj<'rt, etc/'' — No provision is made l)y this or any other Dominion Companies' Act for the winding np of companies formed nnder it. In the English Act, on the contrary, a vi')-y hirge space is devot<.d to this hranch of the sul)joet. and the whole ([uestion, in almost all the books on Joint Stock Companies, i> most elaborately treated.' ib) Whi'ti Conij)(()iy to !><■ iriHiml up. — It is manifest that there are two entirely different sets of circumstances under which it maybe deemed necessary to wind up a com- l)any. 1. When the objects of the Company are fulfilled, or when from any other cause it is considered inexpedient to continue. ' The English Act, however, it must be remembered makes provision for more than one kind of Company, and more than one kind of liability, '.vhich gives rise naturally to greater complicationb in winding up. II li I I ^ 390 JOINT STOCK COMPANIES. 2. When the company is insolvent, and a winding up in the interests of the creditors is unavoidable. The first has been aptly termed a voluntary winding up ; the second, an involuntary. The first is decided upon at the instance of the company itself; the second, as a rule, at the instance of its creditors. The present Act makes no provision for either.' (c) Mode of windinri np under English Act. — By the English Act three different modes of winding up are provided: viz., Winding up by the court, as when a '^orapany is insolvent and a compulsory order has been is-sued to that effect.* Voluntary winding up; and Winding up subject to the supervision of the court. The difference between these different modes of winding up a companv, is thus stated — "In the first case the liquidators are agents of the court, and, if the company l)e insolvent, are trustees only for the creditors; while in the second case, the liquidators are trustees for the company, and the winding up, so far from implying insolvency, may be only a scheme for dissolving the company, with a view to changing its constitution, or amalgamating with some other company. In the third instance of winding up, sul)- jeet to the supervision of the court, the liquidators are ap- pointed by the company, but are subject to tlu- control of the court."' The difference in expense of these different systems, makes it in all cases a matter of importance to those interested, as to which is adopted. It is for this '■ By a recent Act of the Quebec Legislature, provision is made for the voluntary winding up of Companies formed under the Quebec Joint Stock Companies Acts. Vide post. " The Company, however, need not be insolvent to be so wound up, nor is the order necessarily a compulsory one. A Company may be wound up by the Court under any of the following circumstances; — i. Whenever the Company has passed a special resolution requiring the Company to be wound up by the Court. 2. Whenever the Company does not commence business within a year from its incorporation, or suspends its business for the space of a whole year. 3. Whenever the members are reduced in number to less than seven. 4. Whenever the Company is unable to pay its debts. 5. Wh«;never the Court is of opinion that it is just and equit- able that the Company should be wound up. 1 Thring, Joint Stock Companies, 3rd Ed., p. 174. DISSOLUTION AND WINDING UP. 391 reason, always an olyect to avoid the judicial method wherever it is possible to do so. *' The expense of each system" says the writer above quoted' varies almost directly in proportion to the extent in wliich the aid of the court is invoked," and if the assets be small, the chances are pro- portionately great, that they will be eaten up in litigation and the creditors get nothing. " A voluntary winding up," says Thring,^ " may in a great measure command the advantages without the disadvantages of a compulsory process ; and nothing but an extreme case of fraud on the part of the company or its officers makes it advisable for either creditors or contri'nitories to wind up a company altogether by the court." {[)t»iliintixo'Qi of the majority, so as to bind the minority ; but reiittf m.Jij be afforded a creditor or person interested in speeial rji.-5es by means of an in- junction restraining the eiomj^tjijnjy from proceeding with the winding up.- But this, mm a,> a matter of hiw, but of equity, where hardshi]> or iujinsttitfe must otherwise result. In the United States the rigiiit (Oiti Tolmitary dissohition ap- pears to be undonl)ti'd. "lnn ttlfeeoantry," says one autho- rity,'' " the power of a la-iraitit ifiO'Eporation to dissolve itself by its OAvn assent seems to ii* A,-K?amed by nearly all the judges who touch ujiou the i^jtomiL"" And, again, " It is held in ]\fassachusetts thai (tiorporations of a private natin-e, estal)Ushed solely fosr teailing or manufacturing puri)oses, may. l»y vote of a majority of their mem- bers against the protest o)f ^ minority, wind up their affairs and close their busiiij't*? if. in the exercise of a sound discretion tliey dt'tm 5it t-.rpedient, so to do ; that they may sell the whole cf ckeir property to a new corporation, taking paymf-nit m -shares of the new cor- poration, to l)e di>tril»uted aannomg those of the old stock- holders who arc willing to taikii- ttBirm." And in Harts v. Broivn,' in the I'nited Statt-s, lutcll. that when the directors of an insolvent corporatiou iiaiTe; given all the stock- holders an oppintunity of inalkMiL:- advances to relieve the company from cmbarrassmvM. fMit they refuse, and the corporation, has no means t>i laivioid a sale, the directors have a right to purchase th'. iml-Medness and accpiire title of the corjiorati' property Ly .i^i.i'inng a sale under a deed of trust given to secure such omtl'vloteilness. and the stock- holders have no right to comjnllaiiiiii!. In Taj/lor v. Karlc, ' Brice, ultra riris. p. 837. = I hid, p. H39, and cases tb.ere TeftjnnBdi in. ^ Angell & Ames, ("orporaticms : aac:. 7;ri. •• 77 111. 226, Su. Ct.. 1875 ; Abb. iDiif;,. VuL IL. ruSSOLUTION AND WINDING IP. 393 howev(-r, in the New York Supreme Court, in 187G,' it was held that a corporation has no power to transfer all its propertv, tiuis terrain \tiiiK its existence, and take in pay- ment stock in a toreij^n corporation carryinj^ on the same husine->s in another State. By the code of procedure of California,- a company may be dissolved l)y the County Judge of the county where its othce or principal place of hu5in«:-ss \^ situated, upon its voluntary application for that l»iiri>05e. In other States the mode of dissolution of a corpo- ration is prescribed by its charter or Act of Incorporation, " as by the consent in writinf]; of five-sixths in value of the meml>ers. or by the concurrence of three-fourths of the mem- l»ers present at a j^eneral meeting," etc. But a unanimous voteof the stockholders is not necessary to the surrender of the franchise of a corporation, and the dissent of one stock- holder -shouM not be allowed to prevent a dissolution desired by all the other meml)ers of the company. ' When a method of dLss'ilntion. however, is provided by statute, that method must l>e followed.' i! (•'J Kriirt nj iii.s.s<)liition. — But the forfeiture of the char- ter, or even an assignment in insolvency does not efiect a <--omplete dissolution of a corporation so as to terminate its existence. This was the result of several decisions in the Unite"! States, And in Upper Canada, in the case of Br»fjk' V. thf liiDik of rppcr Ctiiuuhf' the same thing was held. In that case process was served upon A. as presi- dent of tile bank, he having been elected in June, 1866, for ou»- year. N(» election as president or directors had taken place since then, and A. in fact, never resigned his office. In September, 1866, the bank suspended specie paxTuents, and l)efore sixty (h\ys thereafter assigned their projierty to trustees, and ceased to do l)usiness as a bank. ' 15 N. Y. Sa. Ct I, 1876: Abb. Di};.. Vol. II, - .\nicle 1227. Viiie Proffatt, Corporations, p, <)j. '■ U'iluim V Propriitors of Ccutral Brid'^c. q R. I, 5)0. Sii. Ct., 1S70; Abb. EHg.. Vol II. * Th* StaU 0/ Cal. v. The President lUid Triisttis of tli, College 0/ Cal., 5u. Ci. Cai . ifei. = 4 P. R. 162; Robinson's Dig., 783. 394 JOINT STOCK COMPANIES. It was provided by the charter that a suspension of specie payments for sixty days, or an excess of the debts of the bank by three times the paid up stock and deposits, etc. should operate as a forfeiture of the charter. Held, that the total annihilation of the bank was not contemplated by these provisions ; and it did not follow from the loss of the charter that there must be a dissolution for all purposes ; that some formal process was still necessary to finally de- termine and put an end to all the functions of the corpo- ration ; that the bank was still a corporate body, liable to have its property sold or administered for the satisfaction of its debts ; and that A. must still be looked upon as presi- dent ; and an application to set aside the service upon him was discharged vnth costs. The affairs of a company are fully wound up within the meaning of section 142 of the Companies Act, 1862, when all has been done that the liquidators can do to wind them up, even though there may be some assets outstanding, or debts unpaid ; and when there has been a dissolution of a company under a voluntary winding up, the court has no jurisdiction to impeach that dissolution, unless there has been fraud in the proceedings.' This then may be laid down as the position of Joint Stock Companies under the Dominion Act, that though no provi- sion is made by the Act for the voluntary winding up of such a company, the company may, nevertheless, on resolution of a majority of its shareholders, regularly passed at a meeting, called for the purpose, wind up its affairs and re- turn its charter into the hands of the Governor-in-Council, of which surrender notice should be given in the Cannihi Gazette, in the same manner as when the charter is issued. But as nothing is said in the Act* as to when and under » In re Loudon v. Caledonia Marine Ins. Co., 27 W. R. 713 ; L. R. ir Ch. D. 146 ; 40 L. T. 666. ' But where a Joint Stock Company had ceased to do business, and its directors had resigned, and its place of business had been burnt down, and the shareholders at a duly convened general meeting named the Secretary- Treasurer, Assignee, assisted by a Council of Advisers, composed of three DISSOLUTION AND WINDINO VT. 395 what circumstances such a winding up may take place, the company may be called upon by any person interested, and who is likely to suffer thereby, to shew cause for such a step, and why should they not be restrained from proceed- ing with it.' (/) When ivindinfi up vonimencea. — A few of the rules deducible from the English Act, and the cases arising under it with regard to a voluntary winding up, arc, first, that a voluntary winding up is deemed to commence at the time of the passing of the resolution authorizing it ;■ and, when the voluntary winding up takes place by means of a pre- liminary, followed by a confirmatory resolution, the com- mencement of the winding up dates from the passing of the confirmatory resolution/ And if the winding up is continued under an order of the court (as for compulsory liquidation) the result is the same; the order making no change in the date at which the winding up is deemed to have commenced.' (fl) Cessation of hisiacsH. — The business of the company ceases from the commencement of the winding up, except in so far as may be necessary to the profitable settlement of the late Directors, with full power to wind up the affairs of the Com- pany ; Held that such appointment was invalid, and that an action brought by such assignee in the name of the company would be dismissed. The Quebec Agricultural Implements Co. v. Herbert, i L. C. R. 363. This decision, however, went upon the ground that the company should have been wound up under the Insolvent Act. ■ Under the English Act, a company may be wound up voluntarily — (i) Whenever the period, if any. fixed for the duration of the company by the Articles of Association expires, or whenever the event, if any, occurs, upon the occurrence of which it is provided by the Articles of Association that the company is to be dissolved, and the company, in general meeting, has passed a resolution requiring the company to be wound up voluntarily. (2) Whenever the company has passed a special resolution requiring the company to be wound up voluntarily. (3) Whenever the comj)any has passed an extraordinary resolution to the effect that it has been proved to their satisfaction that the company cannot, by reason of its liabilities, con- tinue its business, and that it is advisable to wind up the same. Act, 1S6 ? ; sec. T29. ' Ibid, sec. 130. 1 Dawe's Case, L. K. 6 Eq. 232 ; Weston's Case, L. R. 4, Ch. 20; Horn- by's Case, 16 W. R. 1164 ; 19 L. T. 237. * Buckley, Joint Stock Cos., 3rd Ed., p. 255. . I :l^^ I I- iiji': 396 JOINT STOCK COMI'ANIKS. of its affairs.' No transfer of shares can be made after the commencement of the winding up, except with the sanction of the liquidators.- Nor cai^ the status of a holder after that period he changed, with regai'd to his memliership. And thus where a transfer was made to an infant who had still not attained his majority at the commencement of the winding up, it was held that the transferor might he placed on the list of contributorics, although the transferee attained his majority before the application to the court, and ex- pressed a wish to retain the shares.' But a transfer made and registered, hoiiajhic, in the interval between the pre- liminary and conljrmatorv resolutions, is valid and ett'ec- tual.' Nor is a transfer without the sanction of the liquid- ators, illegal, and an action will lie l)y, or against, any of the parties thereto, or on obligations arising therefrom, although the sanction of the liquidators has not been ob- tained.'' (/<) Status ()/li(iiii(l(it(>rs. — In a voluntary winding up, the liquidators are essentially the agents of the company, in- stead of the agents, as under a compulsory order of the court, "and the winding up, so far from implying insol- vency, may be only a scheme for dissolving the company, with a view to changing its constitution, or amalgamating with some other company.'"" (/) C(»iij)i(l>inr}/ If i lid i nil up. — A compulsory winding up of comi^anies formed under this Act was until recently governed by the provisions of the Insolvent Act of 1875 and amendments. The repeal of that Act, however, has taken away all provision for the compulsorj' winding up of a company or corporation, for the benefit of all the credi- tors, except such as may exist under the common law of the ' Act 1S62, sec. 131 ; and see also sec. 3 of Act of Quebec, post, and cases thereunder. ' Act i86j, sec. 131. ' Castello s Case, L. R. 8 Eq. 504; Lymon's Case, L. R. 5 Ch. 298. •> Hornby's Case, 16 \V. R. 1164 ; 19 L. T. 237. 5 Bicdermau v. Stoiw, L. R. 2 C. P. 504. '' Thring, Joint Stock Cos., 3rd Ed., p. 174. DISSOLUTION AND WINDINct I'P. 897 different provinces.' Under the English Act an order for a compulsory winding up may be applied for by a creditor, a contributory, or by the company itself. Under this the shareholder is lield entitled to apply, but is classed as a contributory even when his shares are fully paid up.- Jiut there seems to l)e no good reason to doul)t that whether ranked as a contributory, or not, he could petition, as he is essentially a creditor, and the lial)ility of the company to him, on the shares he holds, is one of the regular liabili- ties of the company, though its liquidation is postponed to those of other creditors. And notwithstanding it is in the nature of a suspended liability, being immature until a winding up takes place, nevertheless, such suspension is in point of fact, terminated by the insolvency of the com- pany, on evidence of which the shareholder would beciime an active creditor, and endowed with all the qualifications necessary to apply for the issue of a writ. Certain excep- tions, however, under the English Act appear to have been made to this rule in the discretion of the court. Thus in a number of cases' it was held that the shareholder must show sufficient grounds for a winding up, for his interest is only this, that if there he a sitrphis qfanHets he in entitled to ht- repaid a portion of siieh surplus. And in re The Diamond Fuel Co. ,^ it was held that if the Company's assets are in- sufficient for the payment of its debts a paid np shareholder has no interest whatever, and his petition may he dismissed irith costs. But where these objections did not exist an order has been granted, even upon the petition of the executors of a shareholder.'' With regard to other creditors, as a rule the petition will be rejected if the claim of the applicant is bona fide disputed. This at least ie the effect of a number of cases which have been decided under the English Act. ' Thus, in the Province of Quebec, a creditor may sue and obtain judg- ment, under which, if an allegation of insolvency be made, the creditors may be called in, and the estate wound up, whether that of an individual or a company. - Anglesea Colliery Co., L. R. 2 Eq. 379 ; lb. 1 Ch. 555. ' Buckley, 3rd Ed., p. 178. * \\. N.. 1878. II. 5 Norwich Yarn Co,, 12 Beav. 360. i! 398 JOINT 8T<»CK OOMl'ANIEd. Invi' The Catholic Publishing Co.' it was held that in case of the debt on which the petition is founded being houn jith' disputed by the company, the convenient and proper course is not to try the question of the del)t on the petition, but to adjourn the hearing of the petition until the debt has been established at law. And in another case it was said that if the debt was bona fide contested and there is no evi- dence, other than non-compliance with thestatutory notice to show that the company is insolvent, and the company denies its insolvency, the petition will be dismissed. But the company must show reasonable grounds for disputing the debt ;•' and in re the Kings-Cross Industrial Dwellings Co.,' it was said that if the court sees that the debt was dis- puted on some ground which is not substantial, the court will itself decide on the question of fact, and to save the trouble and expense of an action at law, a winding up order may be made with the direction that it be not drawn up for some short time in order to give the company an opportunity to meet the demand.' But when the debt is established it appears that the court has no discretion, if the application is within the Act. There are several decisions to this effect one of which is Bowes v. The Hope, etc., Society, '^ in which Lord Cranworth said : "It is not a discretionary matter with the court, when a debt is established and not satisfied, to say whether the company shall be wound up, that is to say, if there be a valid debt established, valid both at law and in equity. One does not like to say positively that no case could occur in which it would be right to refuse it, but ordinarily speaking, it is the duty of the court to direct a winding up.y In re The Langley Mill Co.' however it was said that if a majority of creditors are of a different opinion • 33 L. J. Ch. 325. ' L. R. ig Eq. 444, 448. 3 Brighton Club, etc., 35 Beav. 204. * L. R. II Eq. 149 ; 19 W. R. 225. s Vide Buckley, 3rd Ed., p. 168. *ii H. L. C. 389. 7 L. R. 12 Eq. 26. I.' lill DISSOLUTION AND WINDING UP. 39U to the petitioning creditor, the court is bound to have re- gard to their wishes, and may accordingly make a super- vision order instead of a compulsory order, or if tiie com- pany be already in voluntary liquidation, may refuse to make any order if a majority of creditors so desire.' T'nder the Dominion Insolvent Act,- the judge to whom application was made, could, l)efore granting the petition, order the official assignee to inquire into the affairs of the company, and report within a period of ten days from the date of such order; or he could without such examination or upon report made, order that a meeting of creditors be called, at which meeting the creditors present who should verify their claims under oath, could pass such resolutions, either for winding up the affairs of the company, or for allowing the business to be carried on as they deemed most advantageous, and tlu- resolutions so adopted, submitted to the judge, after forty- eight hours notice to the company, and by him confirmed, modifted, or rejected, as he might deem expedient. He could order the immediate issue of a writ of attachment, or suspend sucii proceedings for six months, during which time the Imsiness of the company would be underthe supervision of the assignee, or he could appoint a Receiver to take cliarge of the company's affairs, and report. During this six months another meeting of creditors was to be called, and on the nsolutions adopted thereat, the judge could grant a further delay of six months, or order the issue of the writ. If, at the expiration of the second period of six months the demands made against the company had not been satisfied, the judge had no further discretion, but was bound to order the issue of a writ of attachment, and the estnt( h ' * be wound up, unless the creditors, entitled to + ' writ, consented to a further delay.' 2 — CONTRIBUTORIES. ill Li(ihiUti) of. — The various questions which arise from th( liability of contributor ies under the English Act do ' See also Buckley. 3rd E . p. 166. ' (Repealed.) ' Insolvent Act 1875, sec. 147, sub-sec. 11. 400 .JOINT STOCK COMPANIES. not arise under the Dominion Act, inasmuch as hy thi' latter tliere is but one form of Habihty, viz., the liability to pay all that, remains unpaid on the stock in the holders hands.' In the English Act the term " contributory " is used technically, and refers only to those who are liabk' to contribute to the assets d/tcr a wiudituj up has comincnci'd. I'ither from insolvency or any other cause. As soon as such windnig up order is made, and the atiairs of the com- pany are placed in liquidation, these questions arise : Who are liable to contribute to the assets of the company ? and to what exti'iit are they liable? As has been stated, under the English Act this liability may arise in various ways, and be of ditfcrent kinds and degrees. Hence, many and often complicated are the questions raised l)y it. But the simplicity of the I )omin .on Act in this respect avoids these questions and makes their introduction here unnecessary. There are points, however, which may arise under this head, and which it may be useful to refer to. They relate principally to the effect of the issue of an order, or com- mencement of winding up proceedings, on those liable to contribute. As we have seen^ the right of a person whose name has been wrongfully placed on the share-list to havi' it removed is terminated by such proceedings, but if steps have been taken to have the name removed before tlie wind- ing up order has issued, then he will be entitled to continue and show that his name is wrongfully on tlie list, and he is not liable to contribute. This was the result of the decision in The R-'ese Hirer Silrer Miniiiif Co. v. iSmith,^ 'ii which Lord Westbury said, " that if on the ground of fraud well founded, the plaintiff tiles his bill anterior to the winding up order, to have his name removed from thj register, and to cancel the alleged relation asserted to have been created between him and the company, lie has a right to pursue < Eut by the Banking Act each shareholder is liable in case of insol- vency to an amount equal to the face value of their shares in addition to anything remaining unpaid thereon in the first instance. C. 34 Vic. oap. 5, sec. 58. » Vide supra, p. 69, 245. 253. 1 L. R. 4 H '- 77- of iiisol- ddition to Vic. uap. DISSOLUTION ANP WINDING UP. 401 that suit to its consequence, and to have the consequence given effect to, notwithstanding it may be attempted to bo interrupted by the obtaining of a winding up order." l^ut the mere fact of having initiated proceedings to liave the name removed prior to the issue of a winding up orck-r, or the presentation of a petition in compulsory liquidation, does not, oi couue, convey an absohite right to have the name removed, even where ground for voiding the con- tract can be sliown. For if the holder or contributory has a llowed his name to remain on tlie list for an un- necessary length of time before taking steps to repudiate the contract, presumably to see what the chances of gain may be, and only asks to have it removed when he sees tli.it the company is about to ])e wound up, and there; is a prospect of loss, he will be hold to have forfeited his riglit to plead misrepresentation or other defect in the contract. And it is not suflicient that he has been successful in re- sisting an action for calls on grounds which would void the contract : if his name has not l)eon removed from tbe list, it appears that he will still be liable to the creditors of the company for the l)alance due on the shares held by him. Thus, where a shareholder instituted no proceeding of bis own, but pleaded misrepresentation to actiini for calls, and obtained a verihct shortly before winding u[), it was held, subse(pient to a winding up order, tluit tliat did not entitle him to have his name removed from t'le register.' Though these cases are peculiar to a winding up, most of the cases \i'hich are ordinarily classed under tliis lu'ud are cases in which the only question involved is as to the liability of the alleged holder to calls under any circum- stances, tliat is whether his name is or is not rightly on tbe hsi. This question may, of course, be raised and decided at any time, for the liability of a person to contribute to the assets of o company is precisely the same before an after a winding up has been instituted ; the only difference being that, after a winding up has been commenced, the • In re Stevenson, i6 W, R. 95. 27 B.C. l'> 4 1 1 1 • i rmm 402 JOINT STOCK COMPANIES. '! :M! ! I rni :^ prima farie liability of a person whose name is on the list of shareholders cannot be removed. This was the result of the decision in Oakes v. Turqunnd,^ and Stone v. The City and Count if Bank ;^ the reason being thjit, before a winding up has commence:!, the liability is between the alleged shareholder and the company, that is, between the original parties to the contract ; while, after a winding up has been instituted, the liability is to the creditors of the company who are unaffected by the equities between the original parties. This point was stated very briefly and forcibly by Brauiwell, J., in the latter of the two last-men- tioned cases, in these words : " Whenever the rights of other persons intervene, a contract to take shares, though induced by fraud, cannot be rescinded. "•■" And in Black & Co.'s case,' it was said " that equities which might be good as between the shareholders and the company, cannot, after a winding up, be set up against the creditors of the com- pany." But in Spackinan v. Erans,^ Lord Chelmsford said: " There may be equities between the shareholders inter se, which may be adjusted in the course of working out the order, but with these the official manager and the creditors have nothing to do." A recent case in point was that of Tennent v. the City of Glasfioir liank,'^ arising, like many others, out of the failure of the Bank, wiiich stopped payment on the 2nd October, 1H78. On the 5th, the directors issued an advertisement calling a general meeting of the shareholders, for the pm'- pose of considering a resolution for the voluntary winding up of the company. Two accountants were employed to examine the books of the company, and to prepare a bal- ance sheet. The report and balance sheet were posted on the 18th, and were received by the shareholders on the « L. R., 2 H. L. 325. • 3 C. v. Div. 309. 3 Buckley, Joint Stock Cos., 3rd Ed., p. 96. * L. R., 8 Ch. 25^, 259. 5 L. K.. 3 H. L. 171,238. « 27 VV. R. 649. DISSOLUTION AND WINDING UP. 403 19th. The 20th was a Sunday, and on the 21st a share- holder presented a petition for the removal or his name from the list of contril)iitories, on the ground of fjaud on the part of the directors. A gon( ral meeting of thu com- pany was held on the 22nd, whei> it was resolved that the company sliould l)e voluntarily wound up. Held, that it was too late to repudiate his liability as a contrilmtorN' in winding up. " So long as the company is a going con- cern, and the rights of cv^'^itors are not involved, the right to repudiate, if one has _ * oneself at issue with the com- ])any, and done notliing i.tterwards inconsistent with repu- diation, is not ati'ected by neglecting to see that one's name is taken off the register.""' J^ut should a wimlinu' up intervene, the neglect will he fatal. If proceedings have l)een taken prior to a previous winding up order, or to i»ro- ceedings in compulsory li(piidation under the le^'i>lation ; or if one has joined with others in proceedings to fret- them- selves from liability, he wil! hv entitled to the bt-nt-lit of the result of such proceedings, even though compulsory or other li(piidation intervene. This was the effect of the tind- ing in I'a.vle's case ; and als«) in McXiel's case, l»oth of whom were dissentient allottees of shares in the " Estates Investment Co."' The two cases, however, were not pre- cisely the same. Pawle had joined with Boss and other? to attack the allotmtnts. This was to be done by means cf a test case in Ross' name ; but all joining in the costs an,v\ liii., p. 99. s 19 L. T. 758. " L. R., 2 H. L. ?., C. 29. DISSOLITION AND WINDING UP. 406 contract, stands only in the place of the company, anil cannot enlarge the engagement of the shareholder heyond that which he has entered into. And, for a similar reason, if the shareholder has effectually ce .sed to be a niemhrr, and the company only are in default in not removing his namei he cannot he held.' This rule then may be safely laid down as the result nf the English decisions, viz : that uidess an action to re- move a shareholder's name from the list is actually pending at the time the winding up commences, the holder, no matter under what circumstances he became so, must be held contributory. And this whether the order be for a compulsory winding up or involuntary licpiidation." In the United States, the rule appears to be pretty much the same, though the precise ett'ect of a winding up order in this regard, luis never l)een so distinctly atUrmed as it has l)een in England. The general rule, however, is that the shareholder must proceed with diligence to disavow his membership and resp()nsil)ility thereunder.' Another effect of a winding up order is to suspend all other legal proceedings against the company, either at the instance of a creditor or otherwise. By the English com- panies' Act, 18(V2,' it is i»rovided "the court may at nny time after tiie presentation of a petition for winding up a company under this Aet, and before making an order for winding up the company up m the application of the com- pany, or of any creditor or contrilnitory of the company, restrain further proceedings in any action, suit, or pro- ceeding against the company ui)on such terms as the court thinks lit." In tin English case this ride received the foUowin ,f illustration : — A garnishee order takes effect not from its date, but from its service. Consequently where I! ' Buckley, Joint Stock Cos., ^nl El., p. loi. 'Slum- V. City and County Bonk, ii Exch, 310, 312; Thonip=on's ' Liability of Shareholders,' sec. 148. ' Ibid, sec. iGi'. * Sec. 85. Hi * I i -I ■ 'tl l1 s §4 406 .TDIKT SToCTE O'-JCP-^TES. n garnislit'C ordtT Imd 1»fcu cMmh^iI hy a jiuljiinicnt creditor to answer an nnsatisfit-d j'Uiii:niiaiiti!ii; aizainHt a company ; but such order liad not been Ntmrn^l mpon the garnishee until after a petition liad been fii'twi. I'lm. which an order was sub- scfjucntly nindf lor the -uinMilni! .r n[' of the coni]iany: it was held that the garnislKc (U-tltir e • n Lavinji been si-rvcd prior to till' connncnt-enu n1 i-^ i]j., :. Lmg up. did not give any security to the judgimn' rr..4anMiir O'E the debts sought to be attached, and that tli« li(j-uiiil-an"'roceeding on the attachment.' |/^) Kjj'i'it i>j tviui^ur tvii'CtiM iicmdimi kji nittrniuH, — An- other point which may aii**^ (^o^nx^t: rning the liability of a shareholder upon a^vindingIaj". ii*. as to the etfect of a trans- fer, or agreement to iransi'^a. trvimmeneetl before, but not completed l>efore the instiniiilii";"flii of proceedings in liquida- tion. As we have seen in liir^rri-.-ijig the general rules con- cerning transfer,* the liabiioflj otf a holder is not removed until the transferee hfi> btitoii atf^nvpted in- the company, and his name entered upon tin ilii»lt. And even then to be ef- fectual in relieving th-' traim-tfriror. eertain elements are necessary. Thus, for iii>lM'm'nc. En must be. and be intended to 1)1' an absolut*' convt y.-ni.' •l -ill thv rights of the trans- feror in the shares tran>lf!r'ffH-'l. of. ;i> the luiglish writers call it, "an out and out Irsiaa-tdtr." The c<)nsent of the com- pany must have been obtarj li without deception or mis- representation, and will) ^ ;• Muate knowledge of the circumstances, and a t\i' . _ j^ gives l)irth to this ad- ditional ccwidition — \\ luu^1 Sttii\rtc bteii made in due time before the winding ujt ]iroce'- iomimenced. This does not mean lb'* ■ ^ ri'jth of time must elapse between the comi)lttion I'f ii -jiri-tVr and the commence- ment of the winding u}'. bui - !:i.i;'ly that it shall havi' lieen completed. For, as "wt Ljit» a«;tt.a, after the institution of ■ In re Stanhope Silkston«GenariMCD\. 17 W. K. 56.J ; L. K. 11 Ch.D. lOn ; 48 Law J. Kep. 409 , 4c L T »0k^. » Supra, p. 27G. DISSOLUTION AND WINDING fP. 407 such proceedings, the company continues only for the pur- pose of lieing wound up, and no change in the status of the memlxfrs is allowabk', except by leave of the court, on special cause shown.' But at the time of the institution of proceedings in liquida- tion, a uuml>er of contracts for the sale and purchase of shares may be pending, the transfer of which has not been completed, and the purchaser's name substituted for the vendor's, from one of these reasons. 1. Because the time has not yet arrived for the completion of the contract. 2. Because the vendor is in default. 3. Because the purchaser is in default. 4. Because the company has neglected or has refused to sanction the transfer. Under these different circumstances the rights of the parties will manifestly be different, and the question wbich will necessarily arise will be — to whom are the creditors (supi>osing that the winding up is caused l)y the insolvency of the company), to whom are the creditors to look for the amoont due on such shares ? With regard to the first position there would not ap- I»ear at first sight to be any great diiliculty. If no trans- fer can take place after proceedings in liquidation have heen taken, and nothing but an agreement on the one side to sell, and on the (jther side to accept and pay for, has been entered into prior to the event, and nobody was in default, the agreement, every one would say, falls to the ground, and there is an end of the matter. But supposing ihe broker through whom the agreement to purchase was « The fangaage of the English Act is : — " Where any Company is being voood up by the Court all dispositions of the rroperty, effects, and things in action of the Company, and every transfer of shares or alteration in the status of the members of the Company made between the commencement of the winding up and the order for winding up shall, unless tha Court otberwiae orders, be void. " Act, 1862, sec. 153. I ': I ■ » 408 JOINT STOCK COMPANIES. n ii ; I fin ' .iiiii made, proceeds to carry it out at the proper time, not- withstanding:,' tlie steps talitni towards a windinf^ up, and notwithstanding^' the name of his principal cannot he re- gistered as holder of tiie shares, and in pursuance of the agreement pays to the vendor the money which is the price of the shares, will an action lie ])y the purchaser to recover the money, or will he be compelled to reimburse his broker if the latter has advanced the monc^y himself. This was the position of affairs out of which arose the two cases of Taiflor v. Strdi/,^ and Stnii/ v. Russell,'^ old cases, but still important from the leading principles of law ex- pressed. The lirst case was tiiat of the broker against his principal, the purchaser, for reimbursement of the money he had paid for the shares. The decision of the (!ourt turned upon this, that the vendor had tendered what he had contracted to deliver, viz., shares in a chartered com- pany which still existed, though the business was sus- pended. "J3ut," said Wills, .)., " If after the l)ank had stopped the directors had made a standing order to refuse consent to all transfers, or had refused consent to this par- ticular transfer, and that fact had been known to the plain- tiffs at the time they paid the money, it would ai)pear that the plaintiffs were in the wrong, and they would have no claim against the defendant."' This decision was prior, how- ever, to the Companies' Act, 18()'2, whicli, as we have seen, makes void all transfers subsequent to proceedings in in- solvency or liquidation, and is more important now from the al)stra(!t principles it involves than from the result of the decision itself. And that principle was clearly this, that had the transfer been one whieh would not have availed the purchasi'r to become a member of the company in place of the vendor, (as it clearly would not be in the case supposed of proceedings in liquidation being commenced pending the completion of the contract), then the tender to the broker would not have been a tender of what the « 26 L. J. C. P. 165. » I E. & E. 888. 3 Digby, " Sale and Transfer of Shares," ect., p. 49. 'I; : DISSOLUTIOX AM) WINDINCJ UP. 400 vendor had contracted to sell, and the hroker should have refused to accept, and the d(>cislon must have }j;one the other way. Stray, however, under the circumstances of the case, heing obli^'ed to reimburse his hroker, l)rou;j;lit action to recover the money from the vendor on the <,'round that the con- sideration for which the money was paid, had failed. The result was the same as before, that is, the defeat of the pur- chaser; but the principle of law enunciated was, as before, that if the transfer tendered, had been one which could not have made him a member of the company, the vendor would have l)een obh\'e(l to refund the money. The {jjround on which the decision of the court turned was, that the con- sideration hadnot wholly failed, and that the plaintilf should have executed the transfer, and left them at the bank for ro<^istration, when, if the bank had refused to register, he would have been in a position to have raised the (piestion of failure of consideration. It will be seen, therefore, while the actual dt'cision in both these cases turned upon techni- calities, the principle of law enunciated, iimounted to this: that where, before the completion of a contract to deliver and accept shares, anything' occurs which prevents the pro- posed purchaser from becomiuff a member in the room and stead of the vendor, the latter is no louf^er in a position to fulfil his part of the contract, and the agreement is void. The decision of the Court of Common IMeas, in ll'hita- head v. Izod,^ has been said to be in conllict with the principle here stated. But even that decision, which was stronger than .S7/v(// v. Iimtm'H, in its adherence to techni- calities, does not deny the |>vinciple that where the tender is one which cannot avail to make the purchaser a mem- ber of the company in the place of the vendor, that it is not a tender of that which was agreed upon ; that it is not an offer to complete the contract; and the purchaser cannot < I L. R, 2 C. P. 228. I:' J j 1 < i 1: i M Hi 410 JOINT STOCK COMPANIF.S. be held liable eitlior towards the company or his vendor.^ In Ward and Henry's case,' and in Marino's case,'' the same doctrine was applied, the Court rcfuHin^ to order an alteration in the rcfrister, althouj^h the vendor in such case had done all that was incuinl)cnt upon hlni under his con- tract. Indeed, the only difficulty in all these cases appears to have arisen from a doul)t as to the proper con- struction of sec. 35 of the Act of 1802, wliich ;L,'ive.s tlu' Courts power to order a rectification of the re^^ister where the name of any person is without sufficient cause entered in or omitted from it ; or wlien default is made, or unneces- sary delay takes place in entering on the register the fact of any person having ceased to be a member of the company, and which section would of course have no ai)plication to cases arising under the present Act. Where the vendor is in default his name of course remains, and as the great desire of all parties in such cases, especially where the liquidation is compulsory, is to avoid mombcrshii), no difficulty can arise ; but where the purchaser is in default^ the case is different. If through such default it has become impossible to remove tiie vendor's name from the share-list, and substitute that of the purchaser, and the former is sub- ject to a loss, he is entitled to his remedy. And this ac- cording to the English decisions is of several kinds. In Hianhlcx. Ijungston'' it was held, that the vendor, under such circumstances, who has been made to pay calls by reason of his name remaining on the share list through the fault of the purchaser, has a right to recover the amount so paid as special damage. But the decision in Burnett v. Li/i'di ' L. R.. 2 Ch. Ap. 431. ' L. R., 2 Ch. Ap. 596. The decision in this case turned upon the wording of sec. 153 {vide supra, p 407, vole) " unless the Court otherwise orders," the Court (Willes, J.) holding that the purchaser could not urge that the contract was void until he had taken means under tliese words, that is, made application to the Court, to find out whether it was so or not. ♦ By "default" is of course meant neglect on the part of purchaser to do auytiiing which it was incumbent upon him to do in fulnlment of the agreement, and this includes not only wilful, but accidental neglect. Digby Transfer, p. 43 note. 5 7 M. & W, 529. DISSOLUTION AND WINDING II'. 411 carried tlic (loctrinc still fiirtlur, mikI said, "that wluvi' the transftror of shares had doiii' all in his powi-r to vest them ill the transferee, and tlu' transferee had acecpted the shares from the transferor, there is cut nnpUt'il ohUiiathm on the j)iirt (>/ the tranx/eree to indemnify the transferor a m } I fill 1 1 , . I. J ' 1 u ' |i III 11 ji'Mlih . • 1 J ■H 1 ii 412 JOINT STUCK COMi'ANIEb, trauHfcror to see to the rofristnition.' No nhsoluto rule ap- l)carH, liowcvcr, to bo laid down iinywlicrc on tliu Hultjuct, tlie (|iitstion Ix'iiiff {^'ovonu'd in each |iavticiilar caso, hy the ruU's of tilt' cuniifany, or the nik's of the exchan;^'(' in which the transaction takes place, or hy the undertaking' and agreoment of the parties thenisolven. In Sftri-nxy. Medina' — held that the expense of completion of the transfer is on the purcl laser. It sometimes hap[)ens, however, that neither the trans- feror nor the transferee, nor their aj^ents, hut the com- pany i- in default to make tiie necessary alteration in the share-list, and to complete the transaction, and the en- quiry naturally arises, wiuit iuippens in that caso ? It is clear that if neither the vendor nor purchaser is in default they ou;^'ht not to sutler ; yet, if prior to the regis- tration of the transfer in the company's hooks, proceedings in licpiidation are instituted, one of them must he held liable. Where the litpiidation or winding up is voluntary, there is very little ditliculty, hut wliero it is compulsory and the company is insolvent, the estate is really in the hp.nds of the creditors of the company, and tiie persons whose names are on the share-list at the initiation of such proceedings, remain, aswehave seen, liable to the creditors, and their names cannot be removed. The result of the English decisions unvaryingly is, that the court would order the removal of the vendors name and the substitution of that of the vendee.'' In Nations case,^ which is the strongest in point, the transfer was executed and left for registration on the 17th February, but the company omitted to register it, and on the 7th of March a petition for winding up was ' The laiif^uaE^c of that section is : — " A Company shall on the appli- cation 'if the transferor of any share or interest in the Company enter in its register of members the name of the transferee of such share or in- terest in the same manner and subject to the same conditions as if the application for such entry were made by the transferee. And see also Buckley, note to this section, p. 451. » I Q B. 422. 3 Viilf, Ward and Henry's Case, L. R. 2 Ch. Ap. 431 ; Marino's Case, L. R. 2 Ch. Ap. 59G; and Shepherd s Case, L. R. 2 Ch. Ap. 16. * L. R. J Eq. 77. DrsSOM'TIoy AND WINPIN'O I'l'. 413 prOHoiitt'cI. Ili'ld, l»y Ijord lioinillv, tliut in the absi-ncu of any special reason at^ainst tlio transfer, the directors ought to have ro<:(iHtered it on the first occasion of their meeting after the transfer liad heen deposited ; conHequently that there had been unnecessary delay, and the transferor was entitled to have his name removed, and that of the trans- feree substituted.' Till! dilliculty in eitlui' of these positions arises fiMin the triangular nature of the triuisactit '\. Xot only is the eon- soiit of tlie parties, transferor or transfi'ree, hut the con- sent of a third party, tin; conipuny itself, an essential part of the contract. Not only must the vendor l>e willing that the purchaser should hi' substituted in his place and stead, with all his rights and interests as a member, but the company must be willing to accept him as such, and to substitute his name for that of the vendor. This is clearly under section 42 of the ju-esent Act," an implied eoiidition of every agreement to sell and accept shares, and without which the transaction will be altogether voi . \ 1'' f M i 414 JOINT STOCK COMPANIES. the rogistratiou has not been effected throii.!];h the fault of the purchaser, he will be held liable for whatever loss the vendor may suffer in consequence, as on any other contract. I3ut where the company itself is in fault, the rf^^istcr will be rectified by the court, and the parties placed in the posi- tion they would have occupied but for the company's neglect.' These principles, it appears, are applied also in cases in which the whole contract is entered into after the winding up coiii!nonc(Ml, but where one or l)oth of the parties were ignorant of the wiiuliiig up proceedings. Wlu'vo both v/er<' aware of tiiom however, the result will bo according to the ruling in Walker's case* that they will be presumed to have been aware that no change of nieniber- sliip could take place; but had agri-ed, notwithstanding that tile purchaser should, on the one hand, make good to the veil lor any loss which Ik^ might suffer by remaiuing on the list of shareholders, and the vendor on the other hand account to \\w. purchaser for any moneys which may accrue from a (livisit)n of surplus assets. But whatever the rigbts of the parties among them- selves, the rule as regards the creditors ef the company is, (and this rule has been reci'utly ai'tirmed in the most un- ([ualitied numner by the House of Lords, in two cases aris; ing out of tlie failure of the City of (ilasgow Hank.!'' that after the stoppage of a company on account of insol- vency, and the issue by the directors of a notice concerning a meeting of tluf shareholders, for the [)ur[)ose of consider- ing a voluntary win.ding up, the directors of the company are justilifcd in susixmhng the registration of all transfers, and the pi'rsoas whose nanu's a])pear on the n^gister re- main lial)le to the cri'ditins for everything which may be due in respect of such shares. V'u\i\ l^inl'V "Transfor," y. ij : Sliolfonl, joii)! StocI' Co.'s. p. 170. which tlicy bclniiK ; it hasljoeii held tliat the ■ may I ni.„ ictioii of assuiHfut for moii'-ys paid within their powers in t -ther'nce of such contracts. ' As to the (Uscretion of the Coinf-any in refusing? re^'istration, vid* supra, p. ^78. ■» L. R. 2 Eq 554. 3 Vide anti\ p, 282. CHAPTER VIII. LOAN COMPANIES. 1. CaI""^' , S70CK OF. 2. Oiijiccrs AND Powers of. (it) To whiit they extend, (b) To be ilistiiifruishcd/toiii Build- iiiif Soeieties. 3. poweks ok dikectoks of i^oan Company. {(i) May hi)rro7i> money, {b} Miiy receive m iiwy un def'osii. (e) Provisos, (d) Difference hetiveen poh-er to lend iind poner to horroin. \e) Nut to buy stock in othir Com- f>iinies, 4. Company may hold rkai, estate. 5. May ciiak'WC commkssion. 6. May c;iiAi<(ii? iniekest. 7. Must keep register. S. May AMALGAMATE WITH OTHER Loan ("omi'aniks. ((/) I'ouur 0/ Directors to that end. {h\ Ai^reeiiient to be submitted to shareholders. (il Shall form one Corporation, (d) Effect of as to assets, etc. ij. To SEND STATE.MENT TO FiNANCB Mini.iikk. 10. .\(T OF 1869 REPEAt.ED. ((f) /{/(/ not to effect applieat'jus pcndinv;. 11. I'ol'lES Oi- NOTICES TO UE PUB- I.ISIII.D. 12. Company shall make returns .1. C.M'n'.M. Stock of. 88. T!n' ca\ut.-il stock of every Loan ('oiiipaiiy sliall be diviileil into shares 'f one bniulrens ooiitiiiii .spociiil provic; mi* with ro^iii'il to loan companies not louml in any provioiw or other ('aniuliivn Act. IJndor those, eircunistancos, it wouUl have Ijoen well if ^onKsthiiii; likti a ilotinition ot' what con- .-titiitert a loan company had been j,'ivon, Aa it is, the meaniiii? of the term loan company mnst be leathered from a study of the powers acorded to it hy tho tollowinir bcu- tions, ji9 stated in sec. 2, >*.i». JJ.' It ap|)ears, however, tliat the capital slock of such a company nmsr not ho less than one liundred thotisaml dollars,' nor the sharea less than one » Vidf supra, p, ?2. ' Sec. 4 s,H. 4. .■.upia p 102. i\m N 41C JOINT 'iTttCK COMI'ANIKS. hundred dollurt? each. Of this ciipital, the wliole iviuount must 1)0 piiid ill where it does not exceed a huii(h-ed thou- Haiid (hjlhirs, before a eharter can he ohtaiiiod, and not less than ten ]»er cent, in any case.' In al other respects, it will he governed hy the rules applicahle to joint stock companies generally, subject tt» its charter and the I'uHowing provisions, 2. OnjEOTS AND Powers of. 89. Any 1.1 Mil (■( ipiii;in\ may, from time tntinu', It-iid ;m(l aiKance money, by \s.iy of loan m othcr\ ise, for sudi jurriods as tiny may (Icoiii t\[ii'(iient, on any real security, or on tin- j)ulilic securities of t!ie Dominion, or of any of the Provinces tlu-rcof, or on tlie security of debentures of any nuini- cipal or other corporation, issued under or in pursuance of any statutory autiiority, and upon sm li terms an irs wh.itsoevei, m ilu; opinion of the ilirectois of the ("ompany, requisite or expedient to be done or e.xercjsed in relation tlieruto. 90. The C'ompany are hiii by empowered to act as an ajjency assneia- tion and for the interest and on behalf of otli>rs who may eiiuust them with money for th.i'. purpose, ;md eitlu-r in the name of the Company or of such others, to lend ;ind adv.mce money to any person or persons, upon such securities as arc mentioned in the List precedinj; section, or to any body or bodies cor)K>rate whomsoever, or to any municipal or other autho- rity, or any board or body of trustees or commissioners whatsoever, upor such terms and upon such security as to the Comp,in> shall appeal satis- ' Sec, 5 s.s. 4, .:;r(i p. 117, LOAN COM'WNir.a. u; factory, and to purchase ami aciiuin> any securities on which they are authorized to advance money, and a>?ain to re-sell the same ; .tn.l the con- ditions and terms of such loans and advances, and of such purchases and re-sales may be enforced by the (Company for their l>enefit. and for the l)ene- tit of the person or persons or cor]>oration for wli. in such money has been lent .'iml ailvance nient <'( the interest, or b'lth. of any moneys intrusted to the Company for investment, and for all or everj* or any of tiie foret,;i>iiiK purposes, may lay out and employ the capital and property, for the tiini' bcin^,', of thtt ('ompan\', or any part of the moneys authorixed to be r.used i)y the ("(niip.iiiv-. in addition to their capital for the time bein^;, or anv moneys so entrusted to them as aforesard, and may do, assent li' lud exercise all acts whatsoever, in the opmion ol the directors of the* .,'iny for the time beinK, recjuisite or expedient to be done in refill tluueto; and inoneysof which the repayment of the principal orpav- mcnt of interest is ^'uaranteed by the Company, shtll f. >r the purjMjst>s of this Act be deemed to bi money borrowed by the Company. ((() To irli'ii ih'iji lini'l. -'V\\i-M- twD set'tioiis caili.xly tlu' main ohjcfts ami business of such a {•oini»:iny. viz : lo in- vest nioijov "itlu'i' tiifir own or others, hy wjiy of loans, (r, & Sm. 417, and Uric •, Ibid, LOAN COMl'AMKS. 419 'IS in (Ultll- llh. k- the paiiv in rales ut 11(1 upon such terms as they may, from time to time, think proper ; nnd the Direc- tors may, for tliat pur|)ose, execute any debentures, mortgaj^es, Ixmds or other instruments, under the common seal of the t."ompany. for sums of not less than one hundred dollars or twenty pounds sterliiif; each, or assign, transfer or dejiosit, by way of eipiit.ible mort^aKe or otherwise, for ihesums so borrowed, iii^y of the documents of title, di-eds, muniments, securities or property of the Company, and either witii or without power of sale or other special provisions, as the directors shall deem expedient.' (h) Miifl imiif iitimrif mi thpnsit. — 92a Subject to the conditions .iiid provisions hereinafter made, the ; ' Compare sec. 8;,, siiff tlir ('"mi>nny, or di'|i(>siteil !)>• thiiti :n anv chHretfrttitbiink, or boj, . shall l)e (K'>hu;ti-d I'rom tin; a;^!,'''^'^'"^* ainoa-ni erf nib* liabiUtir-s \v:in.h thi- ('i)niiiaiiy has then incurn- 1, as ab^ve nMnmijiutil, in cilculatin;^ such agnii-gatu ainoum fill thr purp isc». crfiiii* «i!b<-««n;rii)n (. I'l^'vidml always, thai in tbf «,cinBio\\ inioiiioratcd. availiii:^ itself nf ihf ]irt'\ • Wt tor tht- purpnstujf fn!.u>;iiig its jxnvcrs to borri'w ni'iU'. .i.-i.:^:iires, nuthm}4 iierciu cuiilaincd shall be cotistrui'l as aiioCTJtir -or at any wi;ie impairing th«! right ol tlif hiiMi'iN (if iiflK-nturfsiiinnriS iw rhe •»ai'l I'miipaiiv ((/ 1 I )iih II nrihit in I n y«..#ry>f ", . /,//,/ ,iii,l jxunr In hiiri'oir, — It will 1m' ol)st'rvfil liiai lijiiiH- i.- a lUrtV-rtuct' lu'twrcii tlic Wording' t»f tlu-st^ sections , iHtfciTioj.^' to tlw powir to Icinl. Ill rt'lVrcnci' to tin |)o\\t-r1.o« lifcnl. it is simply stated lluit "till foiiipuiiv limy,*" or "niiuH- i!*oiu[)uuy is ciniKtwi rid."' l)ut in ii rtriiici' to lilt ]»oTJK-ir Uixiiton'ow " tht'dirt'ctors may, with tin- (•oii>tnt cftl/' i-.nj:]i]uiny in i^fiural iiifttiuj,,'." 'I'lic dilVt'iiiicf intrniii'd. iij'jwi' jjniiy i-^ that. Uiidiiit^ ht im; tlic real ohjtct and ltu^inf^> '»il nBur com[)any, tlu' makiiij^; i»l' loans i> an act of oi(linaj-;v .ii.ili!niini>tration. and may there- fore he imdertakcn aui'i oiirTihrvl throii^di hy the directors without the consent of u ;:Kni!trr4.l rut't'tin;; esjU'cially had for that purpose. 15m lli-r awn ^A borvowine; not heinjj; pari of the ostcnsihie 1 insjuH;-*;^ lol the eom[»any is onl\' to he imdcrtalveii mnUr certain rDmentmstaiices — as, for instance, wlu'ii the fnnd» of the cotjjU'iiirv :ii>- insntticieiit for the re- (piir<'ment> of its huMiat>.> — tud with the consent of a general nieelin;^.' Till -aaiite; i> aUo the case with the piiwi r to reeei\' ni >iit} othi I >ni.jT\ Iu^c>d l.^nafroay * ' With icgard ti> tli^- disimctiMK stJLi mprn. p iuj ■< Villi-, sec. 1)2. iHpru • With regard t t.u jnrMta >C k CoMfOB^r t>> Ival ui the stoik nf other ('ciinpanius i/i/i mpra, p i^j5 Loxs c(»Mi'\>:ii:s. 421 4. ("o.MI'ANV MAY llol.h IIkaI. MsTATK. ir. — 1 the . iunl l.'ixl. I Unit •ri'd." iiKiy, Tlu' 1^ tlu' ii« of Itlifn- tors luul piivt til )ll' im f, of a h tlu" loiin (. Tho C>imp:\uy may hold such n-al estate as may bo noctssary for iht :ranAai:tion ot their biisiin'ss, not t-xcee liii)4 in yearly value the sum nf len tboasand ilollars in all or as bjins moit>,'as{e(l or hypothecated to tnem, may be .icjuired by them for tin- protection of their investments, an,i()ns t-annot acijnirc real property for the purpose of iiMt'stnu'iit or speeuhition. .'). May (iiARtin ('ommisskin. 99. The Company when actitiK as an .iKoiKy association, ma\ cliaif^e »iu>.b comtnissioii to tin; letider or b )rrower, or b >th, up >n tho tnonevs investetl on their behalf as m ly be a>;reed upon, or as may be reas(jnable lu that behalf. »». M\Y I lIAl!«iK InTKUKST, K.Tf. #T. The Company may stipulate (or, take, reserve and exact any rate of mierot or dts«:ounl that tna\ be lawfully taketi by individuals, or in the Prminceof Quel)ec by incorporated Companies under like circumstances, AXkil may also receive an annual pa\inciit in any loan by way of a sinking fund for the gradual extinction of such loan, upon such terms and in such manner as may be re>?ulatecl by the bylaws of the Cotnjiany : Provided always th.it no tine or pi'nalty shall be stii>ulate 1 for, taken, resi-rvcd or exacted m resper i|iecifyinK thr- nature and am mnt of such s-'curitv, ami tin- \ol the parties thereto with their proper additions, shall be mil'' in socli ragisler.. ,.1 i.'her • Vsdt p 2JJ uifira, as to books io be kept by i idinary coinpan\ •J ; I iij 1 \ ■ ■* t ' ' ^!^n^ 422 .lOINT STOCK COMTANIKS, H. ^f.W AMAF.(iAM\TK WITH OTHKIl LoAN Co.MI'ANIKS. 09. It shall 111' lawful for the Coinpniiy to unite, aiiiulgamate and con- soliilatu Its stock, propert)-, Imsinc-^s and franchises with tliosi' of any other company or society inc>>rporati;d or chartered to transact a like business, and any other bnsini^ss in lonnection with such Imsiness. or any building, savings or loan company or society heretofore or hereafter incor- porated or chartert.'d, or to purchase an! accpiiie the assets of any such company or society, and to enter into all contracts and agreements there- with necessar) to such union. amalt;amation, consolidation, purchase or accpiisitioti. (d) I'liirrr iif I hmiiirx to tlnit iml. — 100. Thr directors of the Company, and of ans other such company or so;:iety, may eiitisr into a joint aKreement under the corporate seals of each ot the said corporations, foi' the uiii in, ;iinalnaiii,'ition or consolidation of the said corporations, or for the purchase and ac(piisition by tin; Company of the assets of any other such company or society, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the new corporation, the number of the directors and other oHicers thereof, and who shall be the (irst (hrectors and oHicers thereof, the manner of converting the capital stock of each of the said corjiorations into that of the new corporation, with such other details as they shall deem neces sary to perfect such new organiz.itiou, and the union, amalg.iinatioii and consolidation of the said corporations, an! the after management and Working thereof, or the terms and in )de of payment for the assets of any i)ther such company or suciety purcli.ise I or acijuired by the company, (/(I Aiirci'iiiiitt hi III' aidiniittcd tn Sltdrcl oldi'l'S. lOr Such agreement shall be submitted to the shareholders of each of the said corpor.itions at a nu'eting theriMjf to be held separately for the purpose of taking the same into consideration. Notice of the time and place of such meetings, and the obji'cts thereof shall be given by written or printjd notices, adilressc'd to each sii.ireholder of the srdd corporations respectively, at his last known post ollice .address or place of residence, and also by a general notice to be published in a newspaper jiiiblished at the chief place of business of such corporations, once a week, tor six suc- ces ive weeks. At snch meetings of shareholders such agreement shall be considi'fed, and a vote by b.illot taken for the ailoption or fi'jcction of the same, — each share entitling the holder thereof to one vot". and the said ballots being cist in person or b\- pro\y ; and if two-thirds of the votes of all the sh.iielioldeis of such corporations shall be for the adoption of such agreement, then th.it fact will be certified upon the said agreement by the secret.irv of e.ich of such incorporations, uiKlcrthe corporate st als thereof; and if the said agreement shall be so adf consolidation as aforesiid. all and singular the business, property, real, personal .and mixed, and all rights and incidents afipurteii.mt thereto, all stock, mort'jages or other securities, subscrij)tions and other debts due on whatever account, and oth>?r things in action belonging to such corporations or eitlxir of them, shall be taken ,ind ileeiiie 1 to be transfcrreil to .ind vested in such new cor- poration without further act or deed : Provided, however, that all rights of creditors .and liens upon the pnijicrty of either f)f such corporations shall be unimpaired by such consolid;ilion, iind .ill debts, lial)ilities .iiid dutii^s of either of the saiil corporati(Uis sli.ill thenceforth attach to the new corpora- tion, and bi' enfoiv.eil .against it to the same extent ;is it the s.iiil debts, liabilities and duties had been incurieil or been contracted by it; aiul pro vided also that no action or proceeding, legal oreipiitable, by or against the said corporations so consolidated, or either of them, shall .abate or be affected by such consolid.ition, but for all the purposes of such action oi proceeding such corporation may be deemed still to exist, or the new cor- pcjration m;iy be substituted in siicli .irtioii or pmceediiig in the pl.ace thereof.' {). To Send Statkmknt to Financk Ministku. I04> The Company sh.dl tr.insniit on or before the lirst ilay of Mircli in each year to the Minister of l-'inanco a statement in duplicate, to the tiiirty-first day of December inclusive of the previous year, venlied \>\ liu' oath of their President or Vice-President and M.mager, setting out the ■ With regard to Amalgamation generally vldt supra . y. 137. I,-/' \':^ 121 .KtlNT SliiCK COMI'ANIKS. ) I 9 r),i 1 j '( , t Mii 1 ■ I capital stick of the Company, aiiil tin.' propoitinn thereof paiil up, the assi'ts anil h.iliilitii's of tht; ("oinp.iiiv, tht; ainoiiiit ainl nature of thi: in- Vi'stniutils made by thi; t'ompaiiy, Imth on tlicir own In.'half ami on behalf of others, and thti averaj^c rate of interest (lerived therefrom, ilistinnuishin;: the classes of securities, and .ilso the I'Xtent and vahu; of the l,inds held hy them, under the ninety lifth section : and such other details as to the nature ami »;xtent of the business of the ('umpany as may be retpiired by the Minister of I'mance; and in such form and with such " Tilt CiVKuiti yoini Stork Ci'mpdiiiis I. titers I'dltiif Act, iS6^h this Act had not been passeil 11. CopiKs OF XorrcKs to kk Pi'iimsiikd. 1001 .^ Copy of every notice of issue of letters, patent or supplementary letters ]i;itent •\liich, under the provisions of tins Act, tiie Secrel.iiy of State is required to insert in the Caiuiilii Cmzctt, , sliall (onliwith. alter such insertion, be, by the Conip,iny to which such notice relates, insertetl on tour siver.il occasions in at least one iu:wspaper in the county, city ur pl.ice where the heail otlice or chief af^enc) is established. VI. Company .siiai.l m.vkk I^ktuuns, 107. livery corpor.itioii or institution incorjioi-.-ited witiiont tin; liinitsol C'anada. which has been or may be authuri/ed, under the provisions of ihe .\ct |>;isseil in the thii ty-seventh ye.ir of Her Majesty s lei^ii. chaptered foity-mne, to lend anil invest money in C'anadi, sli.ill, by the aKcnl or manager in Canada, make returns to the Minister of I'inance, of all the business done by it in Canada, at tlie -ame tiiiit; and in the s.inu; m.inn(;r as if such corporation or .nslituiioii li.id been incorporated under the provisions of this Act. Vide siipnt, p. lOo. FOUMS •1-25 sciii:i)i'Li:s SCMKDI'LIC A. Public notice is hereby niven. tli.it iiu It'i /'//,• diinttlii Juiiit Stock Cum- />«»/(■< 5 Acl. 1H77. It'ttcrs pattern liavi- b • 'ii issue I iiii'lor the Kreat seal of the Dominion of Canada, bearing 'late the day of incorporalini? [hirr slate iiainn, iiiiilress aiiil i-dlliiifr of ciich corporator named in the letters patent], for tlie purpose of [here state the undertakhn^ of the Company, as set firth in the letter:< patent], by th(' name of [here state name of the Company, as in letters patent], with a total capital stock >i| dollars, divided into shares of dollars. Dated at the office of the Secretary of St.ate of Tanada, this day of i,S A. JV. Secretary. SCHEDUM-: U ['ublic notice is hereby Kiven, that tindi'r The Canada Joint Stock Com panics Act. 1S77. siippleinentar\- letters pattMit hasc Ixieii issU('d uiuler the Hreat seal of the Dominion of Canaila, beariiij,' date the day of whereby the total capital stock of \here stale the mime of the Company] is iiure.ised {or decreased, (is the case may be] from dollars to iloUars. Dated at theolhce of the Secret.iry of State of Cmada this day of 18 A H , Secretary. SCIli'.DrLH c. Public notice is hereby given, that under The Canada Joint Stock Com- panies Act, 1S77, supplement.iry letters p.itt.-nl li.ive been issued under the threat seal of the Dominion of Can.ida, be.iring d.ate the da>' of , whereby the undertaking of the Companv has been extended to include [here set out 'he other purposes or objects mentionid in the supplementary tetters patent]. Dated at the office of the Secretary of State of Canada this d.'iy of i.S A. H., Secretary. ^> v«> "' -^^ IMAGE EVALUATION TEST TARGET (MT-S) /. ^ .// i^o S^J^ 1.0 I.I ;: m 1.8 1.25 1.4 1.6 .4 6" - ► h v] -^ /a (? / Photographic Sciences Corporation 33 WEST MAIN STREET WEBSTER, N.Y. MSBO (716) 872-4503 <" €i.. ^ i/.x \ \ 6^ f''y I ■ »■ ^ijijilii;;; H ADDITIONAL FORMS IN CONNECTION WITH THE ORGANIZATION AND MANAGEMENT OE A COMPANY. No. 1. PROSPECTUS OF THE MONTREAL MANUFACTURING COMF\:vY. CAPITAL, ftioo.ooo, IN looo S, 'l^.S OF ^loo EACH. PROVISIONAL DIRECTORS: John Smith, Esq., Montreal ; Thjma. Brown, Esq., Toronto; William Jones, Esq., Montreal ; Jamls i'obinson, Esq., Toronto. SECRETARY : Jam ks 1' h o m p s o n. BANKERS : The Bank of Montreal. The Montreal Manufacturing Company is formed for the purpose of carrying on the business of manufacturini,' in all its branches. Owing to the largely increased demand for this article as compared with any previous period, and the facilities which this city affords for its manu- facture, a profit of at least 20 per cent is assured. For this purpose the Company propose to erect on street, in Montreal, a building capable of turning out gross per month — the maximum cost of s.-iid building to be $15,000, and to be furnished with all the latest improvements in use in this manufacture. In order to push sales it is proposed to establish agencies in various parts of the Dominion, a charter to be obtained, and the Company to commence business as soon as one-half of the proposed capital stock is Jioitd fidi' subscribed. ADDITIONAL FORMS. 427 Applications for shares may be addressed in the following form, and accompanied by a deposit of ten per cent to the Secretary at the office of the Company, No. street. To THK Directors of the Montreai, Manufacturing Co., (Limited.) He pleased to allot me ten shares in this Company, on account of which I have deposited the sum of $ioo to the account of the Company at the T3a:ik of Montreal, Montreal. Shares applied for in this way should be allotted, and the app'icant notified of such allotment in a brief form as follows : — I'ORM No. 2. THE MONTREAL MANUFACTURING CO., (LIMITED.) Office, No. Street, Montreal. Sir, — The Directors have this day allotted to you ten shares in the Company according to the terms of your application. Alimtreal, August 1880. Form No. 3. Pro.xv. MONTREAL MANUFACTURING CO., (LIMITED.) I, John Smith, of Montreal, in the district of Montreal, being amembe'" of the Montreal Manufacturing Company, (limited,) hereby appoint Thos. Jones, of Montreal, to vote for me and on my behalf at the (ordinary or extraordinary, as the case may be) general meeting of theCompany to be, held on the day of and at any adjournment there of {or at any meeting of the Company that may be held in the year.) Witness my hand this day of Signed in presence of Form No. 4. CERTIFICATE OF SHARES. The Montreal Manufacturing Company, (limited,) incorporated on tin dav of No. 1 ;. This is to certify that A. 13. of is the proprietor of the share No. of the Montreal Manufacturing Company, (limited,) subject to the regulations of the said Company, and that up to this day there has been paid in respect of such share the sum of J Given under the common seal of the said Company the day of 18 (Signature of two directors.) Sec. "^a* 428 .JOINT STOCK COMPANIES. FOKM \(J, 5. Transitu ov Shakes. In this country no form of transfer is ordinarily used, but in England, where the custom is for the parties to si>;n a deed or documeiit the follow- inf,' form is ^iven : I, A. B., of in consideration of the sum of § paid to me by C. D., of do hereby transfer to the said C. D. shares in the Company standing in my name in the bcjoks of the Company to have and to hold unto the said C. D., his execu- tors, adminisirators and assigns, subject to the several conditions on which I hi.'ld the same at the time of the execution thereof. And I, the said C. D. do hereby agree to take the s;iid shares subject to the sai.ic comlition. As witness our hands and seals the dav of 18 iHii m FEES PAYABLE ON AI'l'LICATION FOR LETTERS PATENT AND SUPPLEMENTARY LETTERS PATENT UNDER THE CANADA JOINT STOCK COMPANIES ACT, 1877. By order of the 22iid day of October, 1S77, His Excellency in Council directed that the following tariff of fees to be paid on application for Letters Patent and "i pplemcntary Letters Patent under the Canada Joint Stock Companies \^t 1S77, be, and the same was adopted, that is to say : — When the proposed capital stock of the company is ^500,000 and upwards the fee to be 9200.00 When the proposed capital stock is Uaoo.ooo and up- wards, but less than :B5oo,ooo 150.00 When the proposed capital stock is |ioo,ooo or up- wards, but less than ^200, 000 joo.oo When the proposed capital stock is less than f 100,000.. 50.00 On application for supplementary letters patent the fee to be one-half of that charged on the original letters patent. His Excellency was also pleased to order that the department of the Secretary of State be, and the same was designated as that, through which the issue of letters patent or supplementary letters patent shall take place. His PIxcellency was also pleased to order that the forms of proceeding and record prescribed by the Act in reference to the issuing of letters patent be for the present ado^ ted.' Canada Gazette, Vol. II., p. 441. igland, follow- DOMINION AND LOCAL ACTS. paiil to c in the 3 execu- n which id C. D !)n. 18 ATENT < R THE 1 Council ation for ada Joint ihat is to 00.00 50.00 1 00. 00 ^o.oo ane-half of lent of the .;h which I shall take lirocoeding of letters D(>MINION AND LOCAF. ACTS Ol A (iKXEKAl. XATlRi: STILL IN FORCE 1\ C.WADA RESPECTINC THE IN- CORPORATION, ETC., Ol' JOINT STOCK COMPANIES, THE CANADA JOINP STOCK COMPANIES CLAUSES ACT. (3^ '■'^ ii Vic, C:\f I J I Assriilid to June 22.nd, iShcj. Her Majesty, by anil with the consent of the House of Cnninions of Canada, enacts as foll.nv.s ; la This Act may be (]uoted as the Canada Joint Slock Companies' Clauses Act, 18G9. 2. Tlu! f(jllowing words and expressions, both in this and the Special Acts, shall ha\e the meanin.tjs hereby assi,i,'ned t them, unless there is something in the subject or context repugnant to such construction ; that is to say : \. The expression, '-The Sin-cial .\ct," used in this ,\ct, shall be con- strued to mean any Act incorporating a company V) which this Act applies, and with which this Act is incorporated, as hi'reinaftcr pros ided . antl also all Acts amending such Act ; J. The expression " the company,' shall mean the compan\' incorporated by the Special Act ; J. The expression, "the undertaking," shall mean the whole of the works and business of whatever kind which the company is authorized to undertake to carry on. 4. The expression "Real Estate," or "Land." sh.ill iucludi' all real estate, messuages, lands, tenements, and hereditaments of an\- tenure. 5. The word "Shareholder" shall mean e\er\ subscriber ti) or holder of stock in the coiTipany, and shall extend to a;id inchuU' the personal representative of the sharehoUler. 430 JOINT STOCK COMPANIES. ;J2-83 V., C, 12 W: m 3. The provisions of this Act shall apply to every Joint Stoc.< Company hereafter to be incorporated by any special Act of the Parliament of ("anada for any of the purposes or objects to which the leRiskitive autho- rity of the Parliament of Canada extends,' except companies for the con- struction anfl working of railways or the business of banking and the issue of paper money, or insurance, and shall, so far as they are applicable to the undertaking, and are not expressly varied or excepted by the special Act, be incorporated with it, and form part thereof, and shall be construed therewith as forming one Act. 4. For the purpose of excepting from incorporation with the Special Act any of the provisions of this Act, it shall be sufficient in the Special Act to enact that the sections and sub-sections of this Act proposed to be excepted (referring to them by the number they may bear), shall not be incorporated with such Act, and the Special Act shall thereupon be con- strued accordingly. 6. Every Company incorporated under any S; jcial Act shall be a body corporate under the name declared in the Special Act, and may acquire- hold, alienate, and convey any real estate necessary or requisite for the carrying on of the undertaking of such Company, and shall be invested with all the powers, privileges and immunities necessary to carry into effect the intentions and objects of this .\ct and of the Special Act, an' which are incident to such corporation, or expressed or included in ti.i. interpretation Act. 6. All powers given by the Special Act to the Company shall be exer- cised, subject to the provisions and restrictions contained in this Act- except such onl> as are by the Special Act expressly excepted from incor- poration with It. 7. The affairs of the Company shall be managed by a Board of not less than three, nor more than nine directors. = 3. The persons named as such in the Special Act shall be the directors of the Company until replaced by others duly named in their stead. 9. No person shall be elected or named as director thereafter, unless he is a shareholder holding stock absolutely in his own right, and not in arrear in respect of any call thereon ; and the major part of the after directors of the company shall at all times be persons resident in Canada and subjects of Her Majesty by birth or natuialization. 10. The after directors of the Company shall be elected by the share- holders in general meeting of the Company assembled at such times, in such wise, and for such term, not exceeding two years, as the Special Act, or (in default thereof) the by-laws of the Company may prescribe. ' Vide supra, p. 83, as to legislative authority of Parliament. - Under the General Act the margin is between three and fifteen, supya, p. 102. Vide ,c.l2 impany nent of autho- he con- le issue :able to special instrued Special : Special icd to be [ not be 1 be con- le a body acquire- ! for the invested arry into Act, an- sd in tin. be exer- this Act- im incor- 32-33 v., c. 12. CANADA CLAUSES ACTS. 431 11. In default only of other express provisions in such behalf by the Special Act or by-laws of the Company — such election shall take place yearly — all the members of the Board retiring, and (if othijrwise qualified) being eligible for re-election. 2. Notice of the time and place for holding general meetings of the Company shall be given at least ten days previously thereto in some news- paper published at or as near as may be to the place in which the office or chief place of business of the Company is situated ; 3. At all general meetings of the Company every shareholder shall be entitled to as many votes as he owns shares in the Company, and may vote by proxy ; 4. Elections of '".rectors shall be by ballot ; 5. Vacancies occurring in the Board of Directors may be tilled for the unexpired remainder of the term by the Board from among the qualified shareholders of the Company. 6. The directors shall from time to time elect from among themselves a President of the Company ; and shall also name, and may remove at pleasure, all other officers thereof. 12. If at any time an election of directors bf not made, or do not take effect at the proper time, the Company shall not be held to be thereby dis- solved ; but such election may take place at any general meeting of the Company duly called for that purpose, and the retiring directors shall con- tinue in office until their successors are elected. )f not less directors bad. ler, unless |nd not in the after In Canada |he share- times, in ecial Act, len. Vide 13. The directors of the Company shall have full power in all things to administer the affairs of the Company, and may make, or cause to be made for the Company any description of contract which the Company may by law enter into ; and may from time to time make by-laws not contrary to law, nor to the Special Act, nor to this Act, to regulate the allotment of stock, the making of calls thereon, the payment thereof, the issue and registration of certificates of stock, the forfeiture of stock for non-payment, the disposal of forfeited stock and of the proceeds thereof, the transfer of stock, the declaration and payment of dividends, the number of the directors, their term of service, the amount of their stock qualification, the appointment, functions, duties and removal of all agents, officers, and ser- vants of the Company, the security to be given by thei.' to the Company, their remuneration and that (if any) of the directors, the time at which and place where the annual meetings of the Company shall be held, the calling of meetings, regular and special, of the Board of Directors and of the Company, the quorum, the requirements as to proxies, and 'he proce- dure in all things at such meetings, the imposition and recovery of all penalties and forfeitures admitting of regulation by by-law, and the con- duct in all other particulars of the affairs of the Company ; and may, from % ■ 1 432 JOINT STOCK COMI'.VN'IKS. 32-3;) V., C. 12 tiim; to time, repeal, ameinl or re-enact the same ; but every sucli by-law, and every repe,il, amendment or re-enactment thereof, unless in the mean- time confirmed at a f,'entTal meetiuf,' of tlu," Company, duly called for that purpose, sh.'iU onl\- have force until the next annual nieetin,!,' of the Com- pany, and in difault of confirmation thereat, shall, at and from that time only, cease to have f)rci', Provided always, that t)nc-fourth part in value of the shareholders of the Company shall at all times have the right to call a special meetinj,' thereof for the transaction of any business specified in such written requisition and notice a-j they may issue to that effect. 14. A copy of any by-law of the Company, under their seal, and pur- porting to be signed by any officer of the Company, shall be received as primti fiicic evidence of such by-law in all Courts of Law or Equity in Canada, f5. 'I'he stock of the Company shall be deemed personal estate, and shall be transferable, in such manner only, and subject to all such con- ditions and restrictions as by this Act or by th(> Sjiecial Act or by-laws of the Company, shall be prescribed. 16. If the Special Act makes no other delinite provision, the stock thereof shall be allotted when and as the directors, In' by-law ^ir other- wise, may cjrdain. 17. 'J"he directors of the Company may call in and demand from the shareholders thereof, respectively, all sums of money liy them subscribetl at such times and places, and in such payments or instalments as the Special .Vet, or as this .\ct may retjuire or allow, and interest shall accrue and fall due at the r;ite of six per centum per annum uptm the amount of any unpai.l call from the day appointed for pa}'ment of such call. 18. Not less than ten per centum upon the allotted stock of the Com- pany shall by means of (jue or more calls be called in and made payable within one year from the incorporation of the Company, and for every year thereafter, at least a further ten per centum siiall in like manner be called in and made payable until the whole shall have been st) calletl in. 19. The Company may enforce payment of all calls and interest thereon by action in any competent Court, and in such action it sliall not be ne- cessary to set forth the special matter, but it shall be sufticient to tleclare that the defendant is a holder of one share or more, stating the number of shares, and is indebted in the sum of money to which the calls in arrear amounl, in respect of one call or more upon one share or more, stating the number of calls and the amount of each, whereby an action hath accrued to the Company under this Act ; and a certificate under their seal, and purporting to be signed by any o.Ticer of the company, to the effect that the defendant is a shareholder, that such call or calls has or have been made, and that so much is due by him and unpaid thereon, shall be received as against the defendant in all Courts as prima facie evidence to that effect. illii ,c.l2 32-33 v., c. 12. CANADA CLAUSES ACTS. 433 jy-law, : mean- □r that e Com- at time n valiu; ri^^ht to pccilicd jct. nd pur- 2ivcd as juity in ale, and uch con- ,--la\vs of ho stuck or other- from the ibscribod Its as the ill accrue .mount of lihe Cotn- payable for every lanner be .ol in. [it thereon u)t be ne- to declare luimber of in arrear fe, stating ition hath Itheir seal, the effect Is or have 1, shall be •iilence to O. If, after such demand or notice as by the Special Act or by-laws of the Company may be prescribed, any call made upon any share or shares be not paid within such time as by such Special Act or by-laws may be limited in that behalf, the directors, in thc'f discretion, by vote to that effect, reciting the facts, and duly recorded in their minutes, may sum- marily forfeit any shares whereon such payment is not made, and the same shall thereupon become the property of the Cornpany ami may be disposed of as by the by-laws, or otherwise, they shall ordain. 21. No share shall be transferable until all previous calls thereon have been fully paid in, or until declared forfeited for non-payment of calls thereon. 22. No shareholder being in arrear in respect of any call shall be en- titled to vote at any meeting of the Company. 23. The Company shall cause a book, or books, to be kept by the Sec- retary, or by some other officer, especially charged with that duty, wherein shall be kept recorded, 1. The names, alphabetically arranged, of all persons who are or have been shareholders ; 2. The address and calling of every such person, while such share- holder ; 3. The number of shares of stock held by each shareholder ; 4. The amounts paid in and remaining unpaid, respectively, on the stock of each shareholder ; 5. All transfers of stock in their order as presented to the Company for ent'y with the date and other particulars of each transfer, and — 6. The names, addresses and calling of all persons who are or have been directors of the Company, with the several dates at which each ever became or ceased to be such director. 24. The directors may refuse or allow the entry into any such book of any transfer of stock, whereof the whole amount has not been paid in. and whenever entry is made into such book of any transier of stock not fully paid in to a person not being apparently of sufJicient means the directors jointly and severally shall be liable to the creditors of the Com- pany in the same manner, and to the same extent as the transferring shareholder, but for such entry would have been ; but if any director pre- sent when such entry is allowed, do forthwith, or if any director then absent, do within twenty-four hours after he shall have become aware thereof and able so to do, enter on the minute book of the Board of Directors his protest against the same, and do within eisjht days thereafter publish such protest in at least one newspaper published at or as near as may be possible to the place in which the office or chief place of business 29 s.c. m 484 .lolNT STOCK COMI'ANIKS. 32-33 V., 0.12 I 'I , . i , 1 ■i* of the Company is situated, such director may thereby, and not otherwise, exonerate himself from such liability. 2B. No transfer of stock unless made by sale under execution shall be valitl for any purpose whatever, save only as exhibiting the rights cjf the parties thereto towards each other, and as rendering the transferee liable lid intcrihi jointly and severally with the transferor to the Company and their creditors until the entry thereof ha.l been duly made in such book or books. 26. J.>uch books shall during reasonable business hours of every day, except Sundays and holidays, be kept open for the inspection of share- holders and creditors of the Company and their personal representatives at the office or chief place of business of the Company, and every such shareholder, creditor, or representative, may make extracts therefrom. 27. Such books shall he prima focie evidence of hll facts purporting to be thereby stated in any suitor proceeding against the Company, or against any shareholder. 28- Every director, officer, or servant of the Company, who knowingly makes, or assists to make, any untrue entry in any such book, or who refuses or neglects to make any proper entry therein, or to exhibit the same, or to allow the same to be inspected, and extracts to be taken therf- from, is guilty of a misdemeanor, and being convicted thereof, shall be punished accordingly. 20. Every Company neglejting to keep such book or books open for inspection as aforesaid shall forfeit its corporate rights. 30- The Company shall not be bound to see to the execution of any trust, whether express or implied, or constructive in respect of any share, and the receipt of the shareholder in whose name the same may stand in the books of the Company shall be a valid and binding discharge to the Company for any dividend or money payable in respect of such share, and whether or not notice of such trust shall have been given to the Company ; and the Company shall not be bound to see to the application of the money paid upon such receipt. 31. Every contract, agreement, engagement or bargain made, and every bill of exchange drawn, accepted or endorsed, and every promissory note and cheque made, drawn or endorsed on behalf of the Company, by any agent, officer or servant of the Company, in general accordance with his powers as such under the by-laws of the Company, shall be binding upon the Company ; and in no case shall it be necessary to have the seal of the Company affixed to any such contract, agreement, enj;agement, bargain, bill of exchange, promissory note or cheque, or to prove that the same was made, drawn, accepted or endorsed, as the case may be, in pursuance (.>t any by-law or special vote or order ; nor shall the fr.ity so acting as agent, officer or servant of the Company be therebj subjected individually to any ,c.l2 5V2-;WV.,C. 12. CANADA CLAUSKh' A(IS. 435 nerwise. shall be ,s of the ;e liahle )any and ich book ,ery day, j{ share- entatives ery such ifrom. sorting to jr against liability whatsoever to any third party thertfdr , Provided always that nothing in this Act shall be construed to ai'.thoM/f the Company to issUg any note payable to the bearer thereof, or any jiroinissdry note intended to be circulated as money, or as the note of a bank, or to engage in the busi- ness of banking or insurance. 32 No Company shall use any of its funds in the purchase of stock in ;iny other corporation, unless in so far as such purchase may be specially authorized by the Special Act, and also by the Act creating such other corporation. 33. Hach shareholder, until the whole amount of his stock has been paid up, shall be individually liable to the creditors of the Company to an amount equal to that not paid thereon, but shall not be liable to an action therefor Oy any creditor before an execution against the Company has been returned unsatisfied in whole or in part ; and the amount due on such execution shall be the amount recoverable with costs against such share- holders. ;nowingly ,k, or who xhibil the ken therp- , shall be s open for ion of any [any share, ly stand in frge to the share, and Company ; Ithe money land every ;sory note Iny, by an> le with his ^ding upon 5eal of the |t, bargain, same was Irsuance of Ig as agent, lally to any 34. The shareholders of the Company shall not as such be held respon- sible for any act, default, or liability, whatsoever of the Company, or for any engagement, claim, payment, loss, injury, transaction, matter, or thing, whatsoever relating to or connected with the Company beyond the amount of their respective shares in the capital stock thereof. 36. No person holding stock in the Company as an executor, adminis- trator, tutor, curator, guardian, or trustee, shall be subject personally to liability as a shareholder ; but the estates and funds in the hands of such person shall be liable in like manner, and to the same extent as the testator or intestate, or the minor, ward or interdicted person, or the person interested in such trust fund would be, if living and competent to act and holding such stock in his own name ; and no person holding such stock as collateral security shall be personally subject to such liability ; but the person pledging sucn stock shall be considered as holding the same, and shall be liable as a shareholder accordingly. 36. Every such executor, administrator, tutor, curator, guardian or trustee, shall represent the stock in his hands at all meetings of the Com- pany, and may vote accordingly as a shareholder, and every person who pledges his stock may nevertheless represent the same at all such meetings, .ind may vote accordingly as a shareholder. 37. If the directors of the ("ompany declare and pay any dividend when the Company is insolvent, or any dividend the payment of which renders the t\)mpany insolvent, or diminishes the capital stock thereof, they shall be jointly and severally liable as well to the Co:npany as to the individual, shareholders and ere. 1. tors thereof, for all the debts of the Comp.my then existing, and f.ir all thereafter contracted during their continuance in office lespectively ; but if any director present when such dividend is declared do f,)rthwith, or if any director then absent do within twenty-four hours -tmm 430 Joint siocK (•(•mpanii:^ 32-mn'..c.l;i alti 1 111' sli.ill liave become aware thereof, ami able so to ilo enter on the immites of tlu; Hoard of Pireetors his protest against the saiiH*. anarties to the e\ti;ut of such loan, with U'f^al inter(\st for all debts of the Company contracted from the time of making such loan to that of the repayment thereof. 39. The directors of the Company shall be jointly and severally liable upon every written contract and uudertakinj,', of the Company on the face whereof the word " Limited," or the words " Limited Liability. " are not distinctly written or jirinted after the name of the Company, where first occurrin-,' in such contr.ictors' undertakinj,'. 40. Ihe directors of the Company shall be jointly and severally liable to the laborers, servants ami apt have no known office or chief place of business and have no known President or Secretary, then upon return to that eflect duly made, the Court shall •■ rder sucii publication as it may deimi recpiisite to be made in the premises, for at least one month in at least one newspaper, and such publication shall be held to be good service upon the Company. 42. Any description of action may be prosecuted and maintained between the Company, and any shareholder thereof; and no shareholder. not being himself a party to such suit, shall be incompetent as a witness iherein. 43. The Company shall be subject to such other and further provisions as Parliament may hereafter deem expedient. 44. The Company shall be subject to the provisions of any general Act of this or any future session for the winding up of the Joint Stock Com- pany. C. S.C.I'.^jB. TliANSMISSIOS OF TIMItK.K. •l:J7 Iter on ne, ami .vsparer le cftice tor raav AN ACT KKSFHCTlNf; JOINT STOCK CoMI'ANII.S TO CON- STRUCT WORKS TO FACILITATE THK TRANSMISSION Ol' TIMBER DOWN RIVERS ANI» STREAMS. r, and if kinc the lly liable arties to 'ompany rpayment lly liable y on the lity. are ny, where ally liable ot exceed- while they 1 an action nless. such ceased to npany has e on such Inch direc- ihe Com- f ylace of jthcreof. or Coraf>any rresideni ourt shall ide in the and such laintained lareholder. Is a witness provisions general Act stock Com- (Con. Stat Can . Cap 6S), Her Majesty, by and with the advice and consent of tlie I,o,L,'isl,-uivc Council and Assembly of Canada, enacts as follows ; — 1. Any nuinbor of persons, not less than tive. ni,-iy form theinsehcs into a Company, untler the provisions of this Act, for the purpose of acquiring or constructin),' and maintaining any dam. slide, pier, boom, or other work necessary to facilitate the transmission of timber down any riviT or stream in this Province, and for the purpose of blasting rocks, or dreilKin^ v removing shoal.s, or oiIut imjx,*diments or otheruise, of improvin;; \\:c. navif,'rition of such streams for the said purpose 2. Each share in the Company shall be twenty dollars, and ,d lo regarded as personal pr(;perty, and shall be transferable upon the books of the Company in th" 'i anner, to be provided by a by-law, to be mnde by the Directors in that behalf. 3. No such Company shall construct any such works over or upon or otherwise, interfere with or injure any private property, or the property of the crown without first having ottaineif the consent of the owner or occupier thereof, or of the crown, except as hereinafter pro\ided. 4. No such Company shall be formed, under the provisions of this .\ct, to improve any river or stream for the improvement, of uhicti an\' oth';r Company has been formed, either under this Act or any other Act of the Legislature, or upon which there is constructed any provincial work with- out the consent of such other company, or of the (lovernor in Council respectively which consent shall be formally expressed in writing, and shall be registered together with the instrument, by which such Company has been incorporated as hereinafter provided 5. In case five or more persons having formed themselves into a Com- pany under this Act have subscnbe>l stock to an amount adefpiate in their judgment to the construction of the intended work they shall execute an instrument in duplicate according to the form m the schedule to this Act, and the Company, or one of their number, or the directors nam(.tl in the said instrument shall pay to the treasurer of the l^ompany six per cent upon the amount of the capital stock of the Company mentioned in the said instrument, tog(^ther with a receipt from the treasurer of the Company for the payment or instalment of six per cent, and also the approval in writing of the Commissioner of Public Works mentioned in the tenth section of this Act. ii. J' ■ n -.1 U I i' n]'i ■ i i: i|; ' 438 .I'lINT ^r(MM\ (iiMI'A.NMK-^. c.s.Cc.ns 6. Kct,'istralion shall be made by leaving one ( f the ori,t,'inal instrii ments and the receipt and approval aforesai 1 with the rcjjistrar of anj- one- county in which the intended works are wholly or partly situated, or are intended to be made ; and such refjistrar shall copy the said instrument, receipt and approval into a book to be provide 1 by him for that puipose, and shall afterwards ritain and *ile the said original documents in his ofTice, and for such rejiistration the Ke<,'istrar shall be entitled to chart;e the same fees as for tlu^ registration of the memorial of a deed. 7. In all cases where a stockholder has not paid six per cent on the share or shares held by him, but some other party paid the same on his bell ilf, the p,irt\' so p.i\int; nri\' recover t'.ie amcjunt as a tlebt in any com- petent court, althoui,'h not pre\ i(>usl\- atithonzeti to pay tlu; money oii behalf of such stockholder 8. Every Company, before commencing; any of the works in its contom plation, shall cause a Iveport to be laid before the Commissioner of Public Works, and a copy of such Report before the Muuiciiial (,ouncil of the County, in which sucli works ;ire proposed to be situated ; or if the works are situated in mere th.in one Countw then before the > unicipal Council of the Counties in ov on the l)ouiid,'iries, which such works are proposed to be situated ; or if such proposed works are in unsurveyed lands, not contained within the bounds of any Counts', then before the Chief Com" missioner of Public Works alone. 9. The lieport shall contain : — 1. A c(j;iy of ihe instrinnent by which the Company is incoriiorated 2. A detiiled descri[nion of the works to be undertaken ,'ind an estimate of their cost. 3. An estimate from the best available sources of the (piantity of dif- ferent kinds of timber e.\pecte 1 to come down the ri.er ye n ly after the works hive been co:npleted ; and 4. A sjhe iule of the tolls proposed to be collected. 10. Tlie Coinpan\' shall not commence any such works until the approval of the Commissioner of Public Works has been sij^nified in writing, nor until after the expiration of thirty days from the la, ing the Report or Reports aforesaid before the Municipal Council or Councils (as the case may be), although the approval of the Commissioner of Public Works has been signiiied in writing be ore tlie e.\piration of that period. 11. When the re luiremcnts, containeii in the preceding sections have been complied with, the Company shall become a chartered and incor- porated Company, by the name designated in the instrument so to be reg'stered as .ifores aid, ;ind b\ such name they and their successors shall be capable of purchasing, holding and conveying, selling and departing, with any lands, tenements ,in 1 hereditaments whatsoever, which may be C.S.Cc.OS. TP.ANSMissioN or Tn;!;i;i;. 43t> useful anl r.-jcessar)' for the purji )ses of the corporation ; anil t'vers- such work as afo •csaid an 1 all the materials from time to time providtHJ for constructinfi, niaintainint;, or repairinii the same, shall be veste 1 in such company and their successors. 12. livery such Company may make by-laws, and from time to time alter and amend the same for the purpose of regulaiin.u the safe and orderl) transmission of timber o\er or through the works of the Company, and the na\igation therewith connected. 13 Copies of such b\ -laws shall be anne.xed to the Reports rerpiired to be made by the Company by the 8th and gth set tions of this Act, and copies of all new by-laws and of all amended by-laws shall be annexed to the annual Reports require 1 by the 27th section of this Act. 14. y.o such by-la\s ' :' amended by-l.iw shall have any force imtil one month after it has lieen included in such Report; but if at the end of one month such l)y-law has not been disallowed as it may be by the Commis- sioner of I'ublic Works, it shall have full force, and be binding upon the Company, and upon all per.sons using the works 15. No such by-law shall impose any penalties, or shall contain anything contrary to the true meaning and intention of this Act. 16. Tlu- affairs, stock, pro[x;rt\' and concerns of e\ery such Company shall for the first year be managed and conducted by five Directors, to be named in the instrument, so to be registered as aforesaid, and thereafter to be annually elected by the stockholders on the second Monday of December, according to the provisions of a by-law to be passed by the Directors for thai purpose. 17. Such by-law shall regulate — I The manner of voting ; J The place and hour of meeting for the election of directors and of candidates for the direction ; and 3. Any other matters except the day of election, which the directors deem necessary to carry out the provisions of this and the last preceding section. 'Srl' 18 Such by-lau shall be published for three successive weeks in the newspaper, or one of the newspapers nearest the place where the direc- tors of tlie Company usually meet for the transaction of business. 19 The directors may alter, change or ainend, any such by-law, and such amentled by-law shall be published in the manner above provided. 20 If the annual election of directors does not take place at the time appointe 1 theCompan> shall not thereby be dissolve 1 ; but the directors for 440 JOINT STOCK COMPANIES. 1 ,:;:■:: Dnttii- hhIIu i 9 lii ' ^1 Iffll 't "ir'^' C.S.C.,c.68 iii mv ii the time being shall in that case continue to serve until another election of directors has been held. 21. Another election, when necessar>', shall be held within one month "".fter the time appointed by law, and at a time which shall be provided for by by-law to be passed by the directors of the Company for that pur- pose. 22. At any election ofjdirectors each stockholder shall be entitled to one vote for every share he holds in the Company, and upon which he is not in arrear on any call in respect thereof. 23. Any person being a stockholder and not in arrears as aforesaid, shall be eligible as a director. 24. A majority of the directors shall be a quorum for the transaction of business. 25. The directors may elect one of their number to be the President, and may nominate and appoint such officers and servants as they deem necessary ; and in their discretion may take security from such officers and servants respectively for the due performance of their duties, and that they will duly account for all money comini; iiuo tiieir hands to the use of the Company. 26. If any vacancy happens amongst the directors during the current year of their appointment, said vacancy shall be filled up for the remainder of the year by a person nominated by a majority of the remaining direc- tors, unless it is otherwise' provided by some by-law or regulation of the Company. 27. The directors of every Company incorporated under this Act shall annually, in the month of January, report to the Commissioner of Public Works, which report shall be under the oath of the treasurer of the Com- pany, and shall specify ; 1. The cost of the work ; 2. The amount of all money expended ; 3. The amount of the capital stock, and how much p.ii 1 in ; A. The whole amount of tolls expended on such work ; 5. The amount received during the year from tolls and all other sources, stating each separately, and distinguishing the tolls on different kinds of timber ; 6. The amount of ilividentis paid ; 7. The amount expended for repairs ; and — 8. The amount of debts due by the Company, specifying tiie objects for which the debts respectively were incurred. C.S.C.,C.G8. TRANSMISSION OF- TIMBER. 441 28. Every Company shall keep re}:;ular books of accounts, in which shall be entered a correct statement of the assets, receipts and disburse- ments of the Company, and such books shall be at all timt'S open to the inspection and examination of any stockholder, or any person for that purpose appointed by the Commissioner of Public Works, and every such inspector may take copies or extracts from the same, and may require and receive from the keeper of such books, and also from the president, and each of the directors of the Company, and all the other officers and ser- vants thereof, all such information as to such books and the affairs of the Company generally, as the inspector deems necessary for the full and satisfactory investigation into, and report upon the state of the affairs of the Company, so as to enable such inspector to ascertain whether the tolls levied upon such work are greater than this Act allows to be levied. 29. If at any time after the formation of any such Company, the direc- tors are of opinion that it is desirable to alter, improve, or extend the said work, or that the original capital subscribed will not be suflicient to com- plete the work contemplated, the said directors, under a resolution to be passed by them for that purpose, may issue debentures for sums not less than one hundred dollars each, signed by the president and countersigned by the treasurer of the Company, and not exceeding in the whole one fourth of their paid up capital, or may borrow upon security of the Com- pany, by bond or mortgage of the works and tolls thereon, a sufficient sum to complete the same ; or may authorize the subscription of such number of additional shares as may be named in their resolution, a copy whereof, under the hand of the president and seal of the Company, shall be en- grossed at the head of the subscription list to be opened for subscribers to the additional shares. 30. When such a number of new shares have been subscribed as the directors deem desirable to have registered, the presitlent shall deliver such new list of subscribers to the registrar having the custody of the original instrument, and he shall attach such new list of suliscribcrs thereto, and such list shall thenceforth be held and taken to be part and parcel of the said instrument. . 'I ' i' 31. All the subscribers to such list, and those who afterwards enter their names as subscribers there(jn, with the consent of the directors, signified by a resolution of the boarti, under the hand of the president and seal of the Company, shall be subject to all the liabilities, and entitled to all the rights, benefits, privileges and ailvantages of original subscribers, as well with respect to the first works undertaken as to any extension or alteration thereof, as aforesaid ; and such list and the subscriptions therei^n shall thenceforth be consitiered as part anil parcel of the original under- taking. 32. Such additional shares and stock shall be called in, demanded and recovered in the same manner and under the same penalties as proviiied iir authorized in respect of the original shari's and stock of the Company. 1 1 -.^1 II Nil u M. 442 .MINT STOCK Ci'Ml'ANIK-. C.S.(".,e.r)8 ii; li!*'' '■i ?, "iiilil 33. Tin: ilirocinrs mny call in and demand from the stockholders of the Ciimpany, respectively, .ill sums of money by them subscribed, at such times and in such payments or instalments, not exceeding ten per cent, at any one time, as the directors deem proper, upon notice requiring sucli payment, published for four successive weeks in the newspaper, or one of the newspapers nearest the place where the directors usuall}' meet for thi' transaction of business. 34. .\ny shareholder neglecting or refusing to pay a rateable share of tile calls, as aforesaid, for the space of two months after the time appointeil for the pasinent thereof, shall f(;rfeit his shares, which forfeiture shall go to the Compan} for the benelit thereof. 35. No ad\antage shall be taken of the forfeiture, uidess the stock is declared to be forfeited at a general meeting of the Company, assembled at any time after such ftirfeiture has been incurred. 36. Such a forfeiture shaH bean indemnification to the shareholder so forfeiting against all actions or prosecutions whatever for any breach of contract or agr-3ement between such shareholder and the other share- holders w ith regard to carrying on such imdertaking. 37. The t'oinpany ma\', in any court having jurisdiction in matters of simple contract to the amount demanded, sue for and recover of (jr from ,-iny stockholder in tlu' Company, the amount of any call or calls of stock wliich such stockholder has neglected to pay. after public notice thereof for two weeks in the newspaper, or one of the newspapers publisheil near- est the place wherc^ the directors of theCompan\' meet for the transaction of business, 38. In any suit by the Company against a stockholder brought to re- cover the money due for any call, it shall not be necessary to set forth the special matter, but it shall be sufficient for the Company to aver that the defendant is the holder of one share or more (stating the number of shares), in the stock of the Company, and that he is indebted to the Com- pany in the sum of mone\' to which the calls in arrear amount, in respect of any call or more upon one share or more (stating the number and amount of each of such calls) whereby an action hath accrued to the Com- pany by virtue of this Act. 39. On the trial or hearing of any such suit, it shall be sufficient for the Company to prove that the defendant, at the time of making the call, was the holder of one share or more in the undertaKing, (of which, when there has been no transfer of the shares, piroof of subscription to the original agreement to takt; stock shall be sufficient evidence of the amount subscribed), and to prove that such call was in fact made, and such notice thereof given as is required, whereupon the (."Company shall be entitled to recover the amount due upon such call, with interest thereon, unless it appears that due notice of such call was not given, and it shall not be necessary to prove the appointment of the Directors who made the call or an\- other matter whatever. ('.s.('.,c.r)H. ■liANSMISSION OF Ti.':; I'.!;. 443 40 I'hc oath of the TreasurtT shnll he deemccl suflicient proof of si;ch notice, and a copy thereof shall be filed in the office of the Clerk of the ("oiirt. where the trial taker place. 41. If upon lieinan 1 made hy the Direciors of the Company, the owner (.ir occupier of any land o\-er, tiirou<;li, or upon which the Company desires to construct any such work, or which would be flooded or otherwise interfered with, or upon which an>- power given bs' this Act to the Company is intended to be exercised, neglects or refuses to agree upon the price or amount of damages to be paid for, or for passing through or using such land, or for flooding or otherwise interfering with the same, and for appro- priating the same to and for the use of the Company, or for the exercise of any such power as aforesaid, the Comp.anN' may name one arbitrator, and the owner or occupivr of such land may name anothei arbitrator, and the said twri arbitrators may name a third to arbitr.ite and determine upon the amount which the Cnmpan\' shall pa\' before taking possession of such land, or exercising such power, and the decision of anv two of the said arbitrators shall be final 42. In ascertaining the amount aforesaid due, attention shall be had by tile arbitrators to the benetits which will accrue tfi the {•)arty demanding compensation by the construction of the intendiHl wori\s. 43 The Ccjmpaiiy ma\' tender the sum a-\,-u\led to the party claiming compensation, who shall thereupon be b'und to execute a conveyance of the land to theCompany, or such othjr diicumeut as may be requisite, and the C')mpany, after such tender, whether a conveyance or other document be executed or not, may enter upon and take possession of the laud to, and for the uses of the Company, and may hold the same, or exercise such power as aforesaid in the same manner as if a conveyance thereof or other document has been executed. 44 If anv such owner or occupier neglects to name an arliitrator for the space of twenty days after having been notified so to do by the Company, or if the said two arbitrators do not within the space of twenty days after the appointment of such second arbitrator agree upon a third arbitrator, or if any one of the said arbitrators refuses or neglects within the space t)f ten days after his appointment to take upon himself the duties thereby imposed, then, upon the applicaticn of the Company, or of t'le other party, the Judge of the County Court of the County in Upper Canada, or of the Circuit Court of the Circuit in Lower ("Canada within which the land lies, shall nominate a disinterested competent person from any township or parish adjoining the township or parish in which such land is situated, to act in the place of the arbitrator so refusing or neglecting ; and every arbi- trator so appointed by the Judge of the ('ounty Court or ("ircuit Court, as the case may be, shall hear an 1 determine the matter to be submitted to him with all convenient speed after he has been no nominated as aforesaid ; and any award made by a majerity of the arbitrators shall be as binding as if the three arbitrators had concurred in and made the same. iiliWii 444 JOINT STOCK COMPANIES. C.S.C.,C.68 46. In case any lands required by the ("Company for tlie purjioso of any such work, or with regard to which any such power is to be exercised as aforesaid, are held or owned by any person, body, politic, corporate, or collegiate, whose residence is not within this Province, or is unknown to the Company, or in case the title to any such lands is in dispute, or in case such lands are mortgaged, or in case the owner or owners of such lands are unknown or unable to treat with the Company for the sale thereof, or the exercise of any such power as aforesaid by the Company, or to appoint arbitrators as aforesaid, the Company may nominate one indifferent person- and the Judge of the County Court, or of the Circuit Court, where such lands are situate, on the application cf the Company may nominate and appoint one other disinterested competent person from any township or parish adjoining the township or parish in which such lands are situate who together with one other person to be chosen by the persons so named before proceeding to business, or in the event of their disagreeing as to the choice with one other person to be appointed by such Judge as aforesaid, before the others proceed t5 business, shall be arbitrators to award, de- termine, adjudge, and order the respective sums of money which the Company shall pay to the party entitled to receive the same for the said lands or damages as aforesaid, and the decision of a majority of such arbitrators shall be binding. 46. When demanded the Company shall pay, or cause to be paid to the several parties entitled to the same, the amount so awarded. 47. A record of the award shall be made up and signed by the arbi- trators, or a majority of them specifying the amount awarded and the costs of arbitration, which may be settled by the said arbitrators, or a majority of them ; and such record shall be deposted in the Registry Office of the County in or along which such lands are situate, and the Company may thereupon enter and take possession of such land to and for the uses of the Company, and may proceed with the construction of the works affecting the same. 48. The expenses of any arbitration under this Act shall be paid by the Company, and by them deducted from the amount of the award on pay- ment thereof to ihe parties entitled to receive the same if the Company before tlie appointment of their arbitrator had tendered an equal or greatei sum than tliat awarded by the arbitrators, otherwise such expenses shall be borne by the Company, and the arbitrators shall specify in their award by which of the parties the said costs to be paid. 49. All lands taken by the Company for the purpose of any such work, antl which have been purchased and paid for by the Company in the manner hereinbefore provided shall become the property of the Company, free from all mortgages, incumbrances and other charges. 60. If any such work be constructed upon or otherwise interferes with any tract (jf land, or property belonging to or in possession of any tribe of Indians in this Province, or if any property belonging to them be taken, or C S.C.C.OB. TRANSMISSION OF TIMBER. 44;") any act be done under authority of this Act, occasioninf,' damage to their properties or their possessions, coinpensatit)n shall be made to them tiiere- for in the same manner as provided with respect to the property, pos- session or rights of other individuals, and whenever it is necessarv' for arbitrators to be chosen by the parties for settling the amount of such compensation, the chief officer ot the Indian Department within the Pro- vince shall name an arbitrator on behalf of the said Indians, and where the said lands belong to any tribe or body of Indians, the amount awarded shall be paid to the said chief officer for the use of such tribe or body. 51. The arbitrators so appointed shall fix a convenient day for lu ariiig the respective parties, and shall give eight days' notice at least of the day and place; and having heard the parties or otherwise examined into the merits of the matter so brought before them, the said arbitrators or a majority of them, shall, within thirty days of their appointment, make their award or arbitrament thereupon in writing, which av.ard or arbitra- ment shall be final as to the amount in dispute. 52. In case there be already established by any party other than a Company formed, under this Act or some other Act of this Province, any slide, pier, boom or other work intended to facilitate the passage of timber down any water for the improvement of which a Company is formed, under this Act, such Company may take possession of tlir works; ami the owners thereof, or (if they have been constructed on tl property of the crown), the persons at whose cost they have been constructed may claim a compensation for the value of such v^orks, either in money or in the stock of such Company, at the option of such owner or the person at whose cost the same was constructed, and may become stockholders in the said Com- pany for an amount equal to the value of such works, such value to be ascertained by arbitrators appointed in the manner hereinbefore provided; and all the provisions of the 45th to the 4gth sections of this Act shall apply to such work, and the proprietors or possessors thereof in the same manner, and to the same extent as to land required by such Company, and to the proprietors and occupiers thereof. ; ( 53. And in case any such Company purchases or takes possession of such works as aforesaid, and does not make or construct any other works than those so acquired, it shall not be requisite for the Company to observe the formalities rcquiretl by the 8th and yth sections of this Act, excepting only that such Company shall furnish the Commissioner of Public Works with t!ie Report and copy of Report in the said sections mentioned. iken, or 54. Nothing herein contained shall authorize any Compan}- formed, under this Act, to take possession of, or in any wise injure any mill site, upon which there is existing any mills or machinery, or any hydraulic works other than those intended to facilitate the passage of timber ; and no Company formed, under this Act, shall commence any work, which interferes with or endangers any such occupied mill site without the assent in u riling of the proprietor thereof previously obtained, or an award of P'l^'M ii ' W^U.^ P-' i'ii 446 JOINT STOCK COMPANIES. C. 8.C.,C.68 arbitrators appointed as herein provided, to the effect that the proposed works will not injure such mill site, which assent or award shall be regis- tered in the same manner as the instrument of incorporation of such Com- pany. 55. The provisions of the 17th and 18th sections of the 48th chapter of the Con. Stat, of U. C, respecting mills and mill dams, shall e.xtenfl to similar land in Upper Canada overflowed by any of the works constructed by the Company formed under this Act. 56. Nothing herein contained shall authorize any Company formed, under this Act, to obstruct any waters already navigable, or to collect any tolls other than those upon timber. 57. If by reason of any dam erected by any Company formed under this Act, any fall or water power be erected, the Company shall in no wise have any title or claim to the use of such water power; nevertheless, if the owner or occupier of the land adjoining has made a claim for compensa- tion for damages arising from such dam, the arbitrators may take into account the increased value of his property by reason of the water power so created. 58. The tolls for the first year shall be calculated upon the estimates hereinbefore required to be made of the cost of the works, and the quantity of different kinds of timber expected to pass down the stream ; and the tolls in all future years shall be calculated upon the cost of the works, and the quantity of different kinds of timber expected to pass down tht stream ; and the receipts and expenditure, according to the accounts of the then preceding year, as rendered in accordance with the provisions of the 27th and following sections of this Act, and the tolls shall be so calculated that after defraying the necessary cost of maintaining and superintending the works, and collecting the tolls, the balance of the receipts may as nearly as possible be equal, and in no case exceed ten dollars for every hundred expended and invested in the said works ; and if in any year the receipts from tolls are such, that, after defraying all the current expenses, there remains a clear profit of more than ten dollars upon every hundred of the capital expended, there shall nevertheless be divided among the shareholders no greater dividend than after the rate of ten dollars for every hundred, and the remainder shall be carried over to the receipts of the following year. 59. The tolls to be collected upon different kinds of timber shall bear to each other the following proportions, viz. :— Red and White Pine, per piece id. Oak, Elm, and other hard wood, per piece i^ Spars, per piece 3 Masts, per piece 5 Saw logs, per piece _\ Saw lumber, per m.b.m i Staves, " 15 Firewood, shingle bolts, and other ti"i\-tr, per cord. ... 2 C.S.C.e.OB. TRANSMISSION OF TIMBER. 447 60. The annual report required to be read by every Company shall con- tain a schedule of the tolls calculated as aforesaid, which it is proposed to ccjllect in thefollowinjs'year ; and if it has not been notified to the president of the Company, on or before the 15th day of March in each year, that the schedule of tolls has been disallowed by an order of the Commissioner of Public Works, the president of the Company shall cause the said schedule of tolls to be published for the space of one month in some newspaper published within the county nr counties, dir,tri>.t ur districts, in which or nearest to which such works are situate, and such tolls so publishetl shall be the lawful tolls for that year ; but if it appears to the Cor missioner of Public Wc^rks that the proposed schedule of tolls has not been calculated, according to the true intent and meaning of this Act, such Commissioner may, by an instrument under his hand, alter or vary the saiil schedule of tolls, so as to make them correspond with the true meaning of this Act, and such amended schedule of tolls shall be notified to the president of the Company, and shall by him be published as aforesaid, and shall be the lawful tolls for that year. 61. Every such Company may demand from the owner of any timber intenderl to be passed through ar y portion of the works of the Company, or from the person in charge of the same, a written statement of the (juantity of each kind of timber, and of the destination of the same and of the sections of the works through which it is intended to pass; and if no such written statement is given when required, or a false statement is given, the whole of such timber or such part of it, as has been omitted by a false statement, shall be liable to double toll. 62. Every such Company may demand and receive the lawful toll upon all timber which has come through or over any of the works of the Com- pany, and the Company by its servants shall have free access to all such timbering for the purpose of measuring or counting the same. 63- If the just tolls be not paid on demand, the Company may sue for the same in any Court of competent jurisdiction, and recover from thf> (nvner of the timber the amount of the toll and the costs of suit. ill bear 64. If the owner of the timber objects to the amount of tolls demanded and tenders a sum which he claims to be the true and just amount of the tolls the Company shall pay the costs of the suit, unless the judgment obtained is for a greater amount than the sum so tendered. 65. If tiinber has not c(mie through or over the whole of the works of the Company, but only through or over a part thereof, the owner of the timber shall only be liable to pay tolls for such sections ol the whole works as he has made use of, if in the schedule of tolls the work is divided into sec. ions, and if not, then to pay such a portion of the whole toll as the distance such timber h.i^ come thnjugh the works bears to the whole >^hstaiice over which such works e.xtend. 448 JOINT STOCK COMPANIES. C.S.CcOB 66 If the tnic owntT of any timber whicli lias passed throuj,'!! any er for offering just protection to the public, or to any person, or body, corporate, or politic, in respect to their estate, property, right or interest therein, or any advantage, privilege, or convenience connected therewith, or in respect to any way, or right of way, that may be aftected by any of the powers given to any such corporation.' 79. Whenever it is found expedient for the public service, the Governor in Council may declare any Company formed under this Act dissolved, and may declare all the works of any such Company, Provincial works, upon payment to such Company of the then actual value of the works to be decided by arbitrators, one of whom shall be apppinted by the Commis- sioner of Public Works and one by the Company, and if they do not agree to an award, the Judge of the County Court for the County in Upper Canada, or the Judge of the Circuit Court in Lower Canada, in or adjoin- ing which the works are situate, shall be the third arbitrator. ' Vide supra, p. 375. .,c.f)8 itructed d by the >air, any X of the ible time een com- rson may Company ; as their Hereof in ription or iscription •egistered, ■egistered, injury of the wilful ;rvants. as rks on any jnsoliJated tne of such ; corporate id enjoy all Companies arate Com- ■■ the union C.S.C.,c.()8. TRANf^MISSION OF TDIDER. 461 80. In every case where any lands or works in Lower Canada have beoi. aciinireil or purchasoil or taken possession of, under the jimvihions of tliis Act, and when the Company purchasiu)^ or taking; p-sscssiun of such lands or works have cause to believe th.it the occupier or \m m in possession of such lands or works is not the Ii^al owiur tiurcof, or that such lands or works are already mortnaj^ed or hypoihecrued, the Com- pany sh,dl not be bound to pay the amount of the purchase money or of the award provided for by this Act to the occupier thereof, nut may deposit in the hands of the Prothonotary of the District in which such lands or works are situate, the purchase money of such land or works, or the amount awarded therefor, together with their deed of purchase and award, as the case may be. an^! may proceed to obtain a ratific.ition by the Superior Court, sitting in such district of such deeil of purchase or awanl in the mannir practised for the ratification of title deeds. 61. The real proprietor of such land or works and all others having claims in or upon the same, may intervene in such proceeding and claim and obtain the purchas,- money or amount awarded for sue li Luids or works, or there due share thereof, ami the court may f,'rant such ratifica- tion, and upon the ratification shall become and he the le^'al and indefea- sible proprietor of the lands or works, free and clear of all claiuis, iharj': s and incumbrances whatsoever, and the m(.)ney so deposited shall stand in lieu of such land or work, and in case of substitution, or where minors or interdicted parties are interested the Court may make such order as seems meet for the protection of the parties entitled to the same. ScHEDCLE — See Sec. 5. Legislature \ct, or such for offering irporate, or rein, or any n respect to .owers given he Governor ssolved, and works, upon works to be Lhe Commis- do not agree ty in Upper in or adjoin- Be it remembered that on this our Lord, dav of in till- \'ear of We, the undersigned stockholders, met at County of in the lYovince of Canada, and resolved to form ourselves into a Company, to be called ( , according to the provisions of the Con. Stat. Can. intituled an Act, etc. for the purpose of constructing a slide, wharf, pier, (or other such work as aforesaid, describing the nature, e.xtent and situation hereof,) and we do hereby declare that the capital stock of the said Company .nail be dollars i^ be divided into shares, at the price or sum of twenty dollars each, and we, the undersigned stockholders, do hereby agree to take and accept the number of shares set by us, opposite to our respective sig- natures, and we do hereby agree to pay the calls thereon according to the provisions of the said, in part recited Act, and of the rules and regulations resolutions and by-laws of the said Company, to be made or passed in that behalf, and we do hereby nominate to be the first Director of said Company. il • i I ^m '■ 1 1; ^1 l> '»' ■ •:!jii ■ : I III ii ' : :"i{[IIH : ' 1 '. ' 1 ' 452 JOINT STOCK COMPANIKS. .11! n:i-- iM m 'i ii 1 1 36V.,c.O^ AN ACT TO AMEND THE ACT RESPECTING JOINT STOCK COMPANIES TO CONSTRUCT WORKS TO FACILITATE THE TRANSMISSION OF TIMBER DOWN RIVERS AND STREAMS. (36 Vic, cap. 64.) Assented to zyd May, 1873. Whereas it is eSpedient to amend the sixty-eighth chapter of the Con- solidated Statutes of Canada intituled: ''An Act respecting yoint Stock Companies to construct 7i'orks to facilitate the transmission of tintbcr down rivers and streams : therefore Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows : 1. Every Company heretofore formed, or which may be hereafter formed under the above recited Act, or any Act or Acts rmending the same, who shall neglect or omit to comply with the twenty-seventh, the twenty-eighth and the sixtieth sections of the said above recited Act, shall incur a penalty of not less than fifty dollars, and not more than two hundred dollars, cur- rent money of Canada, and such penalty shall be recoverable with costs in a summary manner before any Justice of the Peace upon the oath of one credible witness, and such Justice of the Peace shall levy such penalty and costs, if not forthwith paid by warrant of distress and sale of the goods and chattels of such Company, and such penalty shall belong to Her Majesty for the pulilic uses of the Dominion. 2. This Act shall be construed as forming part of the above recited Act. «H' iii: 43V.,C.9. AN ACT TO AMEND THE ACT, ETC. 4/53 AN ACT TO AMEND THE ACT RESPECTING JOINT STOCK COMPANIES '^O CONSTRUCT WORKa TO FACILITATE THE TRANSMISSION OF TIMBER DOWN RIVERS AND STREAMS. (43 Vic, cap. g.) Assented to zgth April, 1880. AVhereas, it is expedient to amend the Act, being chapter sixty-eight of the Consolidated Statutes of the late Province of Canada, intituled "/1« Act respecting yoint Stue': Companies to construct works to facilitate the transmission of timber down rivers and streams ;' Therefore Her Majesty by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows : — I. Section fifty-nine of .he said Act is hereby repealed and the following substituted therefor : — e recited Act. 59. The tolls to be collected upon different kinds of timber shall bear to each other the following proportions, viz : Red and White Pine, Tamarac, Spruce and Hemlock, square, per piece ic. Oak, Elm, and other hardwood, sipiare or flatted i^ Spars 3 Masts 5 Sawlogs, 1 7 feet and under o\ Red and white pine, Tamarac, Spruce r- ' Hemlock, round or flatted, over 17 feet, and under :;5 feet long 01^ Do. do. J5 to 35 feet long oi Do. do. 35 feet and upwards in lengih oj^ Sawed lumber per M. board measure 3 Staves, per M 15 Firewood, Shingle, and other lumber, per cord 2 I li 454 JOINT STOCK COMPANIF.S. 87 V. C.49 AN ACT TO AUTHORIZE CORPORATIONS AND INSTITU- TIONS WITHOUT THE LIMITS OF CANADA TO LEND AND INVEST MONEY THEREIN, (37 Vic, cap. 49.) Assented to 26th May, 1874. Whereas it would greatly tend to assist the progress of public works and other improvements now going on within the Dominion of Canada, if facilities were oftered to institutions and corporations, incorporated with- out the Dominion of Canada for the purpose of lending moneys, to lend their money within the Dominion, and with that object it is expedient to confer on such institutions and corjiorations powers to contract and also to hold as security, lands within the Dominion. Therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:— 1. It shall be lawful for any institution or corporation, duly incorpor- ated under the laws of the Parliament of Great Britain and Ireland, for tlie purpose of lending, on receiving a license from the Secretary of State, authorizing it to carry on business within the Dominion of Canada to transact any loaning business of any description whatsoever within the said Dominion of Canada in its corporate name, except the business of banking, to take and hold any mortgages of real estate, and any railway, municipal, or other bonds of any kind whatsoever, on the security of which it may lend its money, at any rate of interest not exceeding the rate permissible on such securities by the Acts incorporating similar Companies in the several I'rovinces of the Dominion, and whether the said bonds form a charge on real estate within the said Dominion or not and also to hold such mortgages in its corporate capacity, and to sell and transfer the same, and to hold and convey the title to real estate so accpiiretl, within five years from the time that the mortgage on the said real estate shall become due and payable under the terms of the instrument creating such mortgage. 2. Every Company obtaining such license, as aforesaid, shall before the commenciinent of such business, file in the office of the Secretary of each Province, in which the Company proposes to do business, a certified copy of the charter, Acts of incorporation or articles of association of such Com- pany and also a power of attorney to the agent or manager of such Com- pany, in such Province, signed by the president or managing director and secretary thereof, and verified as to its authenticity by the oath of the principal agent or manager of such Company, in the Dominion, or by the nath of any person cognizant of the facts nccossaiy for its verification, which power of attorney must expressly authorize such agent or manager as far as respects business done by such agent or manager within such Province, to accept process in all suits or proceedings against such Com- V. C.49 87 v., C. 63. FOIiEIGN COMPANIES MAY LEND MONEY. 455 ^STITU- D LEND pany, in the Province, for any liabilities incurred by such Company there- in, and must declare that service oi' process on such agent or manager for such liabilities shall be legal and binding on such Company to all intents and purposes whatever, and waiving all claims of error by reason of such service. *', 1874. .vorks and anada, if ited with- s, to lend ledient to t and also nt of the incorpor- cland, for ,' of State, Canada to vithin the usiness of y railway, scurity of ,g the rate ompanies onds form so to hold the same, five years icome due rtgage. before the ry of each ified copy uch Com- uch Com- rector and ith of the , or by the :rification, r manager ithin such luch Com- 3. After such certified copy of the charter and such power of attorney are filed as aforesaid, any process in any suit or proceeding against such Company for any liability incurred in any Province may be served upon such manager or agent m the same manner as process may be served upon the proper officer of any Company incorporated in such Province, and all proceedings may be had thereupon to judgment and execution in the same manner as in proceedings in any civil suit in such Province. 4. Every Company obtaining such licence as aforesaid shall forthwith give due notice thereof in the Official Gazette, and in at least one news- paper in the county, city, or place where the principal manager or agent of such Company transacts the business thereof, and shall continue the publi- cation thereof for the space of one calendar month, and the like notice shall be given when such Company shall cease or notify that they cease to carry on business within the Province. 6. The Secretary of State may if he see fit, issue such license as afore- said on being furnished with evidence of the due incorporation of the Company, applying for such license under the laws of the Imperial Parlia- ment of Great Britain and Ireland, or any foreign State, v.hich evidence shall be a certified copy of the charter. Act of incorporation, or at^ticles of association of such Company, and on being furnished with a power of attorney from such Company to the person appointed to be the principal agent or manager of such Company within the Dominion, under the seal of such Company, and signed by the president or managing director and secretary thereof, and verified by the oath of an attesting witness, expressly authorizing such agent or manager to apply for such license, and the fee to be paid by such Company on the issuing of such license shall be tweni\ dollars. B '^- iJ^ :l\ li !<■■( iiJ. j'l iil .. ONTARIO STATUTES. CHAPTER 149. AN ACT CONTAINING GENERAL PROVISIONS APPLICAJ3LE TO JOINT STOCK COMPANIES INCORPORATED BY SPECIAL ACT FOR CERTAIN PURPOSES. (Rev. Stats. Ont., Cap. 149.) Short title, s. i. Interpretation, ss. 2-3. Companies to jvhich Aet applies, s. 4. Mode of incorporating this Act ivith Special Acts, s. 5. General corporate pozvers, ss. 6, 7. DiRKCTOus : Qualification and Election, ss. 8-13. Pojiurs, ss. X4, 15. Proof of By-laivs, s. 16. Special Meetinfrs, s. 17. Stock, allotment, calls, ctc.ss. iS-24. Shareholders in arrear not entitled to vote, s. 25. Books to be kept and cnfrv made of transfers of stock, etc., ss. 26-31. Company not bound to see to execu- tion of trusts, s. 32. Contracts, etc., of Company, ho%v to be executed, s. 33. No stock to be held in other Corpor- ations unless specially author- ized, s. 34. Liability of Shareholders, ss. 35-38, Liability of Directoks; On contracts in zvriting unless liability stated to be " Limit- ed,'' s. 39. If they pay dividends zvhcre Ctnn- pany is insolvent, s. 40 If they lend Company's money to Shareholders, 5. 41. Actions bctivcen Company and its Shareholders, s. 4J.. Service of process on the Company, i' 43- # 1 i 1 f I: 1 >t4 T_T ER M.VJESTY, by and with the advice and consent of the Legisla- ■*• tive Assembly of the Province of Ontario, enacts as follows : — la This Act may be cited as " The Ontario Joint Stock Companies General Clauses Act." 2i The expression "The Special Act," when used in this Act, shall be construed to mean any Act incorporating a Company for any of the pur- poses herein mentioned, and with which this Act is incorporated, in manner hereinafter mentioned, and also all Acts amending such Act. 24 Vic, c. 18, s. 3. R.8.0.,C. 141). ONTARIO CLAUSES ACT. 457 IDlhsS Liiiiit- 3. The following words and expressions, both in this and the Specia Act, shall have the meanings hereby assigned to them, unless there is something in the subject or context repugnant to such construction, that is to say : 1. "The Company shall mean the Company incorporated by the Special Act ; 2. " The undertaking " shall mean the whole of the works and business of whatever kind, which the Company is authorized to undertake and carry on ; 3. "Real estate" or "land," shall include all real estate, messuages, lands, tenements and hereditaments, of any tenure ; 4. " Shareholder " shall mean every subscriber to or holder of stock in the Company, and shall extend to and include the personal representatives of the shareholder. 24 Vic, c. 18, s. 4. 4. When not otherwise expressly enacted, this Act shall apply to every Joint Stock Company, subject to the Legislative authority of the Legisla- ture of this Province, and incorporated by anv ""special Act passed since the eighteenth day of May, 1881, or hereafter, for any of the following purposes : — 1. The carrying on of any kind of manufacturing, shipbuilding, mining, mechanical or chemical business ; 2. The erection and maintenance of any building or buildings to be used in whole or part as a Mechanics' Institute, or Public Reading or Lecture Room, or as a place for holding Agricultural or Horticultural Fairs or Exhibitions, or as a place for Educational, Library, Scientific or Religious purposes, or as a Public Hotel, or as a place for Baths and Bath-houses ; 3. The opening and using of I'etroleum, Salt or Mineral Springs; Legisla- mipanies shall be he pur- ated, in Vet. 24 4. The carrying on of any Fishery or Fisheries in this Province, or the waters thereto adjacent, and the building and equipping of vessels required for such Fishery or Fisheries ; 5. The carrying on of any general foi warding business, and the con- struction, owning, chartering or leasing of ships, steamboats, wharves roads, or other property required for the purpose of such forwarding business ; 6. The supplying of any place with Gas or Water, or with both Gas and Water ; 7. The constructing of any line or lines of Telegraph ; m i; 468 JOINT STOCK COMPANIES. E. S. 0., C. 149 8. The acquiring or constructing, and maintaining of any dam, slide, pier, boom or other wori< necessary to facilitate the transmission of timber down any river or stream in this Province, and the blasting of rocks, the dredging or removing of shoals or other impediments, or the improving otherwise of the navigation of such streams for such purpose ; g. The acquiring or constructing, and maintaining of any plank, mac- adamized or gravelled road, or of any bridge, pier, wharf, dry dock, or marine railway ; And this Act shall be deemed to be incorporated with every such Special Act ; and all the clauses and provisions of this Act, unless they are expressly varied or excepted by any such Special Act, shall apply to the Company thereby chartered, so far as applicable thereto, and shall, as well as the clauses and provisions of every other Act incorporated with such Special Act, form part of such Special Act, and be construed together therewith as forming one Act. 24 V., c. 18, s. i. 5t For the purpose of incorporating this Act, or any of its provisions with a Special Act for purposes other than aforesaid it shall be sufficient in such Special Act, to enact, that the clauses of this Act, or such of them as in such Act may be particularly designated to that end, shall be incor- porated with such Special Act; and thereupon, all such clauses, save in so far as they arc expressly varied or excepted by such Special Act, shall be construed as if the same were formally embodied and reproduced there- in. 24 v., c. 18, s. 2.. 6> Every Company incorporated for any of the above purposes, unaer any Special Act, shall be a body corporate under the name declared in the Special Act, and may acquire, hold, alienate and convey, any real estate necessary or requisite for the carrying on of the undertaking of such Com- pany, and shall be invested with all the powers, privileges and immunities necessary to carry into effect the intentions and objects of this Act and of the Special Act, and which are incident to such incorporation, or expressed or included in " The Interpretation Act."' 24 V., c. 18, s. 5. 7 1 All powers given by the Special Act to the Company shall be ex- ercised subject to the provisions and restrictions contained in this Act. 24 v., c. 18, s. 6. 8i The affairs of every such Company shall be managed by a Board of not less than three, nor more than nine Directors. 24 V., c. t8, s. 7. The persons named as such, in the Special Act, shall be the Direc- ' i of the Company, until replaced by others duly named in their stead. -;*- jvr. person shall be elected or named as a Director thereafter, unless i . iiareholder, owning stock absolutely in his own right, and not in arrear in respect of any call thereon ; And the major part of the after R. S.O.,C.149. ONTARIO CLAUSES ACT. 459 Directors of the Company shall, further, at all times, be persons residents in this Province, and subjects of Her Majesty by birth or naturalization. 24 v., c. iS, s. 9. 11. The after Directors of the Company shall be elected by the share- holders, in general meeting of the Company assembled, at such times, in such wise, and for such term, not exceeding two years, as the Special Act, or, in default thereof, the by-laws of the Company may prescribe. 24 V., c. iS, s. 10. 12. In default only of other express provisions in such behalf, by the Special Act or by-laws of the Company, — 1. Such election shall take place yearly, all the members of the Board retiring, and (if otherwise qualified) being eligible for re-election ; 2. Notice of the time and place for holding general meetings of the Com- pany shall be given at least ten days previously thereto, in some news- paper published at or as near as may be to the place in which the office or chief place of business of the Company is ; 3. At all general meetings of the Company, every shareholder shall be entitled to as many votes as he owns shares in the Company, and may vole by proxy ; 4. Elections of Directors shall be by ballot ; 5. Vacancies occurring in the Board of Directors may be filled for the unexpired remainder of the term, by the Board, from among the quali- fied shareholders of the Company ; 6. The Directors shall from time to time elect from among themselves a President of the Company ; and shall also name and may remove at plea- sure, all other officers thereof, 24 V., c. 18, s. 11. 13. If at any time an election of Directors is not made or does not take effect at the proper time, the Company "^hr-U not be held to be thereby dissolved ; but such election may take place at any general meeting of the Company duly called for that purpose; and the retiring Direct(>rs shall continue in office until their successors are elected. 24 V., c. 18, s. 12. 14. The Directors of the Company shall have full power in all things to administer the affairs of the Company, and may make or cause to be made for the Company any description of contract which the Company may by law enter into. 24 V., c. 18, s. 13. 15. The Directors may from time to time make by-laws not contrary to law, nor to Special Act, nor to this Act, to regulate — (a) The allotment of stock, the making of calls thereon, the payment thereof, the issue and registration of certificates of stock, the forfeiture of i 'ijiii I l , : : !!' ! I lilt 460 JOINT STOCK COMPANIES. it. S. 0., C. 14i) stock for non-payment, the disposal of forfeited stock and of the proceeds thereof, the transfer of stock ; (//) The declaration and payment of dividends ; (c) The number of the Directors, their term of strvice, tlic amount of their stock qualification ; {(!} 'Jlic appointment, functions, duties and removal of all agents, offi- cers and servants of the Comp.iny, the security to bt j^iven by them to the (Company, their remuneration and that (if any) of the Directors; (e) The time at which and place where the annual meetings of the Com- pany shall be held ; (/) The calling of meetings, regular and special, f)f the Board of Direc- tors, and of the Company, the quorum, the roquir.inents as to proxies, and the procedure in all things at such meetings ; (g) The imposition and recovery of all penalties and forfeitures admit- ting of regulation by bylaw; and (/i) The conduct in all other particulars of the affairs of the Com- pany ; and may from time to time repeal, amend or re-enact the same ; but every such by-law, and every repeal, amendment or re-enactment thereof, unless in the meantime confirmed at a general meeting of the Company duly called for that juirpose, shall only have force until the next annual meet- ing of the Company, and in default of confirmation thereat, shall, at and from that time only, cease to have force. 24 V., c. iS, s. 13. 16. A copy of any by-law of the Company, under its seal, and purport- ing to be signed by any officer of the Company, shall be received as privia facie evidence of such by-law in all Courts of Law or Equity in this Province. 24 V., c. iS, s. 14. 17. One-fourth part in value of the shareholders of the Company shall at all times have the right to call a special meeting thereof, for the trans- action of any business specified in such written requisition and notice as they may issue to that effect. 24 V., c. 18, s. 13. 18 The stock of the Company shall be deemed personal estate, and shall be transferable, in such manner only, and subject to all such con- ditions and restrictions as by this Act, or by the Special Act or by-laws of this Company, may be prescribed. 24 V., c. 18, s. 15. 19. If the Special Act makes no other definite provision, the stock thereof shall be alloted, when and as the Directors, by by-law or other- wise, may ordain. 24 V., c. 18, s 16. 20. The Directors of the Company may call in and demand from the shareholders thereof, respectively, all sums of money by them subscribed, at such time and places, and in such payments or instalments, as the II ,c.l-19 iroceetls lount of 3nts, offi- ;m to the the Com- of Direc- o proxies, •es admit- the Coin- but e%-ery jof, unless pany duly fiual meet- ill, at and purport- as prima ty in this pany shall the trans- notice as ;state, and such con- by-laws of the stock or other- d from the ubscribed, ts, as the R.S.0.,C.119. ONTARIO CLAUSES ACT. 461 Special Act, or as this Act may require or allow ; and interest shall accrue and fall due, at the legal rate for the time being, upon the amcjunt of any unpaid call, from the day appointed for payment of such call. 24 \'., c. iS, s. 17. 21. Not less than ten per centum per annum upon the cilluted stock n^ the Company shall, by means of one ui rriDie calls, be called in and matle payable within one year from the incorporation of the Company ; and for every year thereafter, at least a further ten per centum shall in like man- ner be called in and made payable, untd the whole is called in. 24 V., c. iS, s. 18. 22. The Company may enforce payment of all calls and interest there- on, by action in any Court of ccjuipetent jurisdiction ; and in such action it shall not be necessary to set forth the special matter, but it shall be sufficient to declare that the defendant is a holder of one share or more, stating the number of shares, and is indebted in the sum of money to which the calls in arrear amount, in respect of one call or more upon one share or more, stating the number of calls and the amount of each, where- by an action has accrued to the Cninpany under this .\ct ; and a certificate under the seal, and purporting to be signed by an officer, of the Company, to the effect that the defendant is a shareholder, that such call or calls has or have been made, and that so much is due by him and unpaid thereon, shall be received in all Courts of Law and Equity rxs prima facie evidence to that effect. 24 V., c. 18, s. 19. 23. If, after such demand or notice as by the Special Act or by-laws of the Company is prescribed, any call made upon any share or shares is not paid within such time as by the Special Act or by-laws is limited in that behalf, the Directors, in their discretion, by vote to that effect, reciting the facts, and duly recorded in their minutes, may summarily forfeit anv shares whereon such payment is not made ; and the same shall thereupon become the property of the Company, and may be disposed of as by bv- laws or otherwise it may ordain. 24 V., c. 18, s. 20. 24. No share shall be transferable, until all previous calls thereon have been fully paid in, or until declared forfeited for non-payment of calls thereon. 24 V., c. 18, s. 21. 26. No shareholder being in arrear in respect of any call shall be en- to vote at any meeting of the Company. 24 V., c. 18, s. 22. 26. The Company shall cause a book or books to be kept by the Secretary, or by some other officer specially charged with that duty, where- in shall be kept recorded — I. The names, alphabetically arranged, of all persons who are or have been shareholders ; M I •ii! i 462 JOINT STOCK COMPANIES. R. S. 0.,C. 149 ^'^:m i. The address and calling of every such person while such share- holder ; 3. The number of shares of stock held by each shareholder ; 4. The amounts paid in, and remaining unpaid, respectively, on the stock of each shareholder ; 5. All transfers of stock, in their order as presented to the Company for entry, with the date and other particulars of each transfer, and the date of the entry thereof ; and — 6. The names, addresses and calling, of all persons who are or have been Directors of the Company ; with the several dates at which each person became or ceased to be such Director. 24 V., c. 18, s, 23. 27. The Directors may refuse to allow the entry in any such book, of any transfer of stock whereof the whole amount has not been paid in ; and whenever entry is made in such book, of any transfer of stock not fully paid in, to a person not being of apparently s.ilficient means, the Directors, jointly and severally, shall be liable to the creditors of the Com- pany, in the same manner and to the same extent as the transferring shareholder, but for such entry, would have been ; but if any Director present when such entry is allowed forthwith, or if any Director then ab- sent, within twenty-four hours after he has become aware thereof and able so to do, enters in the minute book of the Board of Directors his protest against the same, and within eight days thereafter causes such pro- test to be published in at least one newspaper published at, or as near as may be possible to, the office or chief place of business of the Company, such Director may thereby, and not otherwise, exunerate himself from such liability. 24 V., c. 18, s. 24. 28. No transfer of stock shall be valid for any purpose whatever, save only as exhibiting the rights of the parties thereto towards each other, and as rendering the transteree liable ad interim jointly and severally with the transferor, to the Company and other creditors, — until entry thereof has been duly made in such book or books. 24 V., c. 18, s. 25. 29. Such books shall, during reasonable business hours of every da^, except Sundays and statutory and obligatory holidays, be kept open for the inspection of shareholders and creditors of the Company, and their personal representatives, at the office or chief place of business of the Company ; and every such shareholder, creditor or representjitive may make extracts therefrom, 24 V., c. 18, s. 26. 30. Such books shall be prima facie evidence of all facts purporting to be thereby stated, in any suit or proceeding against the Company or against any shareholder. 24 V., c. 18, s. 27. E. S.O.,C.149. ONTARIO CLAUSES ACT. 463 [Section 28 0/24 v., c. 18, is as follows : — 28. Every Director, ofiicer or servant of the Company, who knowingly makes or assists to make any untrue entry in any such book, or who re- fuses or neglects to make any proper entr) therein, or to exhibit the same, or to allow the same to be inspected and extracts to be taken therefrom, shall be guilty of a misdemeanor, and being convicted thereof shall be punished accordingly.] 31. Every Company neglecting to keep such book or books open for inspection as aforesaid, shall forfeit its corporate rights. 24 V., c. 18, s. 2y. 32. The Company shall not be bound to see to the execution of any trust, whether e.xpress, implied or constructive, in respect to any shares ; and the receipt of the shareholder in whose name the same stand in the books of the Company, shall be a valid and binding discharge to the Com- pany for any dividend or money payable in respect of such shares, and whether or not notice of such has been given to the Company ; and the Compan)- shall not be bound to see to the application of the money paid upon such receipt. 24 V., c. 18, s. 30. 33. Every contract, agreement, engagement or bargain made, and every bill of exchange drawn, accepted or endorsed, and every promissory note and cheque made, drawn or endorsed on behalf of the Company, by any agent, officer or servant of the Company, in general accordance with his powers as such under the by-laws of the Company affixed to any such contract, agreement, engagement, bargain, bill of exchange, promissory note or cheque, or to prove that the same was made, drawn accepted or endorsed, as the case may be, in pursuance of any by-law, or special vote or order ; nor shall the party so acting as agent, officer or servant of the Company, be thereby subjected individually to any liability whatsoever to any third party, therefor; 2. Nothing in this section shall be constructed to authorize the Com- pany to issue any note payable to the bearer thereof, or any promissory note intended to be circulated as money, or as the note of a bank. 24 V., c. 18, s. 31. 34. No Company shall use any of its funds in the purchase of stock in any other corporation, unless in so far as such purchase is specially au- thorized by the Special Act, and also by the Act creating such other cor- poration. 24 V., c. 18, s. 32. 35. Each shareholder, until the whole amount of his stock has been paid up, shall be individually liable to the creditors of the Company, or an amount equal to that not paid up thereon ; but shall not be liable to an action therefor by any creditor, before an execution against the Company has been returned unsatisfied in whole or in part ; and the amount due on such execution shall be the amount recoverable with costs, against such shareholders. 24 V., c. 18, s. 33. 464 JOINT STOCK COMPANIES. R.S.O.,C.149 38. The shartholders of the Company shall not as such be held re- spoiisiijlc f(jr any Act, (liifault or liability whatsoever, of the Company, or for any i;n>,'aKcment, claim, payment, loss, injury, transaction, matter or thing whatsoever, relating to or connected with the Company, be)ond the amount uf their resj'ective shares in the capital stock thereof. 24 V,, c. iH, s. 34. 37. No person holding stock in the Company as an executor, adminis- trator, tutor, curator, guardi.iii or trustee, shall be persfinally subject to liability as a shareholder, but tli • estates and funds in the hands of such person, shall be liable in like manner, and to the same extent, as the tes- tator or intestate, or the minor, ward and interdicted person or the per- son interested in such triist fund, would be, if living andcomj^etent toact.and holding such stock in his own name ; and no person holding such stock as collateral security, shall be personally subject to Huch liability, but the per- son pledging such stock shall be considered as 1. elding the same, and shall be liable as a shareholder accordingly. 24 V., c. 18, s. 36. 38. Every such executor, administrator, tutor, curator, guardian or trustee, shall represent the stock in his hands, at all meetings of the Com- pany, and may vote accordingly as a shareholder ; and ever)- person who pledges his stock may nevertheless represent the same at all such meetings, and may vote accordingly as a shareholder. 24 V., c. iS, s. 36. 38. The Directors of the Company shall be jointly and severally liable upon any and every written contract or undertaking of the Company on the face whereof the word "Limited" or the words " Liinitid Liability" are not distinctly written or printed after the name of the Company where first occurring, and also to the labourers, servants and apprentices of the Company, for all the debts not exceeding one year's wages, due for service performed to the Company while they are such Directors respecti%'ely ; but no Director shall be liable to an action upon any such contract or un- dertaking or for recovery of any such debt, unless the Company has been sued upon or for the same within one year after the same became exigible, nor yet unless such Director is sued thereon or therefor within one year thereafter ; nor yet before an execution against the Company has been re- turned unsatisfied in whole or in part ; and the amount due on such execu- tion shall be the amount recoverable, with costs, against the Directors. 24 v., c. 18, s. 39. 40. If the Directors of the Company declare and pay any dividend when the Company is insolvent, or any dividend the payment of which renders the Company insolvent, or diminishes the capital stock thereof, they shall be jointly and severally liable, as well to the Company as to the individual shareholders and creditors thereof, for all the debts of the Com- pany then existing, and for all thereafter contracted during their continu- ance in office, respectively ; but if any Director present when such dividend is declared, forthwith, or if any Director then absent, within twenty-four hours after he has become aware thereof, and able so to do, enters on the Hiii E. S.O.,C.149. ONTARIO CLAUSES ACT. 465 minutes of the Board of Directors his protest against the same, and within eight days thereafter causes such protest to be pulilished in at least one newspaper published in. or as near as may be possible to the place where the office or chief place of business of the Company is, such Director may thereby, and not otherwise, exonerate himself from such liability. 24 V., c. 18, s. 37. 41. No loan shall be tcid-j by the Company to any shareholder, and if such is made, all Dirt^tor;. >id other officers of the Company makin.L,' the same, or in any wise assenting thereto, shall be jointly and severally liable to the Company for the amount of such loan, — and also to third parties, to the extent of such loan with legal interest, for all the debts vf the Com- pany contracted from the time of the making of such loan to that of the re-payment thereof. 24 V., c. 18, s. 3S. 42. /^ ny description of action may be prosecuted and maintained be- tween the Company and any shareholder thereof. 24 V., c. 18, s. 41. 43. Service of all manner of summons or writ whatever upon the Com- pany, may be made by leaving a copy thereof at the office or chief place of business of the Company, with any grown person in charge thereof, or elsewhere with the President or Secretary thereof; or if the C(nnpany has no known office or chief place of business, ami has no known President or Secretary, then, upon return to that effect duly made, the Court shall order such publication as it may deem reijuisite, to be made in the premises, for at least one month, in at least one newspaper ; and such publication shall be held to be due service upon the Company. 24 V., c. 18, s. 40. dividend of which thereof, as to the the Com- continu- dividend enty-four ;rs on the 31 s.c. im '•'-) lawiB CHAPTER 150. , J AN ACT REPRESENTING THE INCORPORATION OF JOINT STOCK COMPANIES BY LETTERS PATENT. (Rev. Stats. Out., Cap. 150.) flf ill I' > V f Short title', s. I. Y'cayly statement of affairs of the Interpretation, s. 2. Company, s. 49. Companies jK'hieh may he incorporated Cotapany not bound to see to cxecu- hy letters patent, s 3. Procedure to obtain incorporation, ss. 4-10. Cliaiii^nuL^r uf name of Company in certain cases, ss. 11, 12. Informalities not to avoid letters patent, s. ij. Corporate p07i'ers of Companies, s. 14. Subdivision of shares, s. 15. tion of trusts in respect of stiares, s. 513. Contracts, etc., how to be executed, s. 51. Company not to hold stock in other corporations, s. 52. Liability of shareholders, ss. 53-55' Trustees, niortt^ai^ors of stock, etc., may rote, s. 56. Increase or reduction of capital, ss. Liaisilitv or Diuixtous II)-20. Pojccrs of Company in letters patent to be subject to fliis Act, s. 21. DiKECTOKS : Number and qualification, ss. 22- 24, Election, ss. 25-27. Change in number of s. 28. Powers : Generally, s. 29. Special p. -i^crs, s. 30. Special meetins;s, s. 31. Proof of by-laws, s. 3 1 . Stock, allot lit, calls, transfer, etc.. ss. 3j ,0 Paying dividends where Company is insolvent, s. 57. Lending Company's money to shareholders, s. 58. For 'ii'i'ges of employees, s. 59. Service of process on the Company, s. ()0. Actions bct'wecn the Company and shareholders, 5. 61. Mode of reciting incorporation of Company in legal proceedings, s. 62. Forfeiture of charter by non-user, s, 03. Fees on incorporation, s. 64. Shareholders in arrear not entitled Incorporation of existing Con,pan,es to rote, s. 41. "'"''''' '"'^ ''^'"'' ^^' ^5' ^ ' Books to be kept and entry made of Affidavits under this Act, s. 67. transfers (f stock, ss. 42-48. Winding-up Acts, to apply, s. 68. T T !•: •: MA|ESTY, by and with the advice and consent of the Legislative •*^ Asseniblv of the Province of Ontario, en.icts as follows : — I, This Act may be cited as " The Ontario Joint Stock Companies' Letters Patent Act." II. S. 0., C. 150. ONT.VltIO LETTHUa PATENT ACT. I(i7 JOINT rs of the to cxccu- H'SpCCt of • executed, ■k in other ss. 53-55' stock, etc.. Company money to s. 59. Company, npany and horntion of iveeedings. 2> The following expressions in this Act, and in all letters j'atent and supplementary letters patent issued under the same, shall have the mean- ing hereby assigned to them, unless there is something in the subject or context repugnant to such construction, that is to say : 1. "The letters patent" shall mean the letters patent incorporating a Company for any purpose contemplated by this Act ; 2. "The supplemonta y letters patent" shall mean any letters patent granted for the increasing or reducing of the capital stock of such t"om- pany ; 3. "The Company ' shall mean the Company so incorporated by letters patent ; 4. " The undertaking" shall mean the whole of the works and business of every kind, which the Company is authorized to carry on : 5. "Real estate" or "land" shall include all iin::K)vable real [)ro- perty of every kind ; 0. " Sharehi>lder ■ shall moan every subscriber to, or holder of stock in the Company, and extend to, and include the personal representatives of the shareholder. 37 V., c. 35, s. z. 3, The Lieutenant-Ciovernor in Council may, by letters patent iimler the Great Seal, grant a charter to any number of persons, not less than five, who shall petition therefor, constituting such persons and others who may become shareholders in the Company thereby created, a body corpo- rate and ]iolitic, for any purposes or objects to which tiie legi.'^kuive authority of the Legislature of Ontario extends, except the construction and working of Railways and the business of Insurance. 37 V., c. ^^ s 3. 4> The applicants for such letters patent must give at least one month's previous notice in the Ontario Gazette, of their intentinn to apply for the same, stating therein : )y non-user, 64. Companies 65, 6t). ', s. 67. ly, s. 68. Legislative Companies (a) The proposed corporate name of the Company, wiiich shall imt be that of any other known Compruiy, incorporated or unincorporated, or any name liable to be unfairly confounded therewith, or otherwise on public grounds objectionable ; (b) The object for which its incorporation is sought ; (i-) The place or places within the Province of Ontario, where its opera- tions are to be carried on, v '.h special mention if there be two or more such places, of some one of cneni as its chief place of business ; (1/) The amount of its capital stock ; '■-^mBm^ 408 JOINT STOCK COMPANIF.S. !R.S.O.,C.150 (<■) The number of shares and amount of each share ; (/) The names in full and the address and callin'may consider reijuisite for til • due c.irrying out of the objects (if the Coni])any ; 2. Such by-law shall declare the number and value of the shares of the new stock ; and may prescribe the manner in which tlie same is to be allot- ted ; and in default of its so doing, the control of such allotmert shall bi; held to vest absolutely in the Directors. 37 V,, c. 35, s. 12. 17 The Directors of the Company, if they see fit at any time, mav make a by-law for clecreasing the capital stock of the Company to any amount \vhich tlu^y may consider suflicient for the due carrving out of the under- taking of the Company, and advisable. 2 Such by-law shall declare the number and value of the shares of the stock as so decreased; and the allotnient thereof or the rule or rules by which the sriine is to l)c made. 37 \'., c. 2^. s. 13, 3. The liability of shareholders to persons who were, at the time of the reduction of the capital, creditors of the Company, shall remain as though the capital had not been decreased. 37 \., c. 35, 14, (2.) 4. lUit no by-law for increasing or decreasing the capital stock of the Coiniiany. or sub-dividing the shares, shall ha\e any force or effect what- R. S. 0., C. 150. ONTARIO LETTERS PATENT ACT. 471 ever, until after it has been sanctioned by n vote of not less than two-thirds in value of the shareholders at a general meeting of the Company duly called for considering the same, and afterwards confirmed by supplemen- tary letters patent. 37 V.,c. 35, s. 14, (i.) 18. At any time not more than six months after such sanction of such by-law, the Directors may petition the Lieutenant-Governor, through the Provincial Secretary, for the issue of sujiplementary letters patent to con- firm the same. 2. With such petition they shall produce such by-law, and establish to the satisfaction of the Provincial Secretary, or of such other officer as may be charged by order of the Lieutenant-Governor in Council, to report there- on, the due passage and sanction of such by-law, and if the petition is in re- spect of increase or decrease of capital, the buna fide character of the in- crease or decrease of capital thereby provided for, and that notice of the application for supplementary letters patent has been inserted for one month in the Ontario Gazette. 3. The Provincial Secretary, or such other officer, may for the purposes aforesaid take and keep of record any requisite evidence in writing, under oath or affirmation ; and he, or any Justice of the Peace, or Commissioner for taking aflitlavits in the Superior Courts, may administer every requisite oath or affirmation. 37 V., c. 35, s. 15. 19. L'pon due proof so made, the Lieutenant-Governor in Council may grant such supplementary letters patent under the Great Seal ; and notice thereof shall 1)C forthwith given by the Provincial Secretary in the Ontario Gazette, in the form of the Schedule B appended to this Act ; and there- upon, from ihe date of the supplementary letters patent, the shares shall be sub-divided, or the capital stock of the Company shall be and remain increased, or dccreasud, as the case may be, to the amount, in tho manner, and subject to tlu; conditions set forth by such by-law ; and tho whole of the stock, as so increaseoard of Directors may, unless the by- laws otherwise direct, be filed for the unexpired remainder of the term, by the Boar 1, from among the ipialified shareholders of the Company ; 0. The Directors shall, from time to time, elect from among themselves, a President of the Company ; and shall also name, and may remove at pleasure, all ntlier officers thereof. 37 V., c. 35, s. 22. 26. If at any time an election of Directors is not made, or does not take effect at the proper time, the ("ompany shall not be held to be thereby dissolved ; but such election may take j)lace at any general meeting of the Company duly called for tl at purpose ; and the retiring Directors shall Continue in office until their successors are elected. 37 \'., c. 35, s. 2^. 7. A Company incorporated un ler this Act may by by-law increase or decrease the number of its Directors, or may change the Company's chief place of business in Ontario. 2. No by-law for cither of the said purposes shall be valid or acted upon unless it is sanctioned by a vote of not less than two-thirds in value of the shareholders present, in person or by proxy, at a genera; meeting duly called for ct)nsideriug the by-law, nor until a copy of such by-law has been certified under the seal of the Company to the Provincial Secretary, and Iso has been published in the Ontario (hizcttc. 38 V., c. 23, s. 2. R. S. ()., C. 150. ONTARIO LETTERS PATENT ACT. 473 28. The Directors of the Company shrill have full power in all things to administer the affairs of the Company ; and may make, or cause to be made, for the Company, any description of contract which the Company may by law enter into. 37 V., c. 35, s. 24, purt. 29. The Directors may, from time to time, make by-laws not contrary to law, or to the letters patent of the Company, or to this Act to regulate — [a) The allotment of stock ; the making of calls thereon ; the payment thereof ; the issue and registration ot certilicates of stock ; the forfeiture of stock for non-payment ; the disposal of forfeited stock and of the pro- ceeds thereof ; the transfer of stock ; [b) The declaration and payment of dividends ; [c) The number of the Directors, their term of service, the amount of their stock qualilication ; ((/) The appointment, functions, duties and removal of all agents, officers and servants I. f the Company; the security to be given by them to the Company; and their remuneration ; (c) The time at which, and place where the annual meetings of the Company shall be held ; the calling of meetings, regular and special, of the Board of Directors, and of the Company ; the quorum ; the rerpiire- ments as to proxies ; and the procedure in all things at such meetings ; (/") The imposition and recovery of all penalties and forfeitures admit- ting of regulation by by-law ; antl (if) The conduct in all other particulars of the affairs of the Com- pany ; and may, from time to time repeal, amend or re-enact the same ; but every such by-law, and every repeal, amendment or re-enactment thereof, unless in the meantime confirmed at a general meeting of the Company, duly called for that purpose, shall only have force until the next annual meeting of the Company; and in default of confirmation thereat, shall, at and from that time only, cease to have force ; and in that case no new liy-law to the same or like effect shall have any force, until confirmed at a general meeting of the Company. 37 V., c. 35, s. 24, part. 30. In case a by-law, authorizing the same, is sanctioned by a vote of not less than two-thirds in value, of the said shareholders, then present in person or by proxy, at a general meeting duly called for consideri'ig the by-law, the Directors may ])orrow money upon the credit of the Company, and issue the bonds, debentures, or other securities of the Company, and may sell the said bonds, debentures, or other securities at such prices as may be deemed expedient or be necessary ; but no such debentures shal be for a less sum than one hundred dollars; > -r 474 JOINT STOCK ("():\n'ANii;s. li. S.().,c. 150 ..:!fr 2. The Directors may, under the likj sanction, hyi5Jthejate, mortgas^'. or j)ledf,'o the real or jiersonal propjrty of the Company, to secure any .-)Uia or sums borrowed for the purpose.! thereof. 37 \'., c. 35, s. 25. 31. Otie-fourth part in value of the shareholder.s of the Company shall • u all times have the right to call a special inoc-tini? thereof, for the trans- action of any Ini.siness specified in such written requisition and notice as they may issue to that effect. 37 V , c. 35, s. 124, part. 32. A copy of any by-law of the Company, under its seal, and purport- in"^ to be sif^ned by any officer of the Company, shall be received as prima facie evidence of such by-law in all Courts of Law or Eipiity in Ontario. 37 v.. c. 35, s. 2G. 33. The stock of the Company shall lu deemed pers mal estate, and shall be transferable, in such manner only, and subj<;ct to all such con- ditions and restrii.''')ns as by this Act, or by the letter.s p.itent or by-laws of the Company, may be prescribed. 37 V., c. 35, s. 27. 34. If the letters patent make no other definite provision, the stock of the Company, so far as it is not allotted thereby, shall he allotted when and as the Directors, by by-law or otherwise, ordain. 37 V., c. 35, s. z8. ilf m 35. No by-law for the allotment or sale of stock at any greater discount or at any less premium than what has been previously authorized at a general meeting, or for the payment of the President or any Director, shall be valid or acted upon until the same has been confirmed at a general meeting. 37 V., c. 35, s. 24, part. 36. The Directors of the Companx' may call in anil demand from the shareholders theie,^, s. yy. Hi 47. Xo Director, officer or servant of the Company, shall knowingly make or assist to make any untrue entry in any such book, or shall refuse or neglect to make any proper entry therein ; and any person violating the provisions of this section shall, besides any criminal li.ability which he may thereby incur, be liable in damages for all loss or injury which any person interested may have sustained thereby. 37 V., c. 35, s. 40. 48. Any Director or oflicer who refuses to permit any person entitled thereto to inspect such book or books, or make extracts th, refrom, shall forfeit and pay to the party aggrieved the sum of one hundred dollars ; and in cas ; the amount is not paid within seven days after the recovery of judgnu'ut, the Ccjurt in which the judgment is recovered, or a Judge thereof, m;iy direct the imprisonment of the offender for any period not exceeding three months, unless the amount with costs is sooner paid. 37 v., c. i^, s. 41. 49. M\ery Company incorporated under this Act shall on or before the first day of February, in every year, make a list in triplicate (verified as is hereinafter re(piired) of all persons who on the thirty-first day of December previously, were shareholders of the Company ; and such list shall state the names alphabetically arranged, and the addresses and callings of all such persons, the amount of stock held by them, and the amount unpaid thereon ; and shall also make out a summary, verified as hereinafter required, of the state of the affairs of the Company, on the thirty-first day of December preceding. 2. Such summary shall contain the following particulars : — Firstly — The names and residences and post oflice addresses of the Directors, Secretary, and Treasurer of the Company ; Secondly — The amount of the capital of the Company and the number shares into which it is divided ; \'m E. S. 0., C. 150. ONTARIO LKTTEllS PATENT ACT. 477 e number Thirdly — The number of shares taken from the commencenuiu of the Company up to the thirty-lhst tlay of l)cccnibLr picceding the date of the summary ; I'oiirthl) — The amount of stock (if any) issued free from call ; if none is so issued, this fact to be stated ; Fifthly — The ,t lount issued subj ct to call ; S/,v//(/v— The amount of calls i.iadf on each share; Seventhly — The total amount of calls received ; Eighthly — The total an.ount of calls unpaid; Niiiil 'y — The total amount of shares forfeited ; Tcnthly — The total amount of shr. 'es which have never been allotted or taken up ; Eleventhly — The total amount for which shareholders of the Company are liable in respect < f unjiriid stock held In" them ; Twelfthly — The s;.i I sui..mary may also, after f^iving the iiiformation hereinbefore required, give in a concise form, such further inlormation respecting the affairs of the Company, as the Directors may consider expedient. 3. The said list and summary, and every duplicate thereof required by this Act, shall be written or printed on only one side of the sheet or sheets of paper containing the same. 4. The said list and summary shall be verified by the affidavit of the President and Secretary, and if there are no such officers, or they, or either of them are or is at the jiroper time, out of this Province, or other- wise unable to make the same, by the affidavit of the President or Sec- retary and one of the Directors, or two of the Directors, as the case may require; and if the President or Secretary does not make or join in the affidavit, the reason thereof shall be stated in the substituted affidavit. 5. One of the duplicate lists and summaries, with the affidavit of verifi- cation, shall be posted in the head office of the Company in Ontario, on or before the second day of February ; and the Company shall keep the same so posted, until another list and summary are posted under the provisions of this Act ; and the other two triplicate lists and summaries of v:;iti- cation shall be deposited with the Provincial Secretary, on or before ihe eighth day of February ne.\t after the time hereinbefore fixed for making the summary. 6. If any Company makes default in complying with the provisions of this section, such Company shall incur a penalty of twenty dollars for every day during which such default continues, and every Director, Manager or Secretary of the Company, who knowingly and wilfully authorizes or permits such default, shall incur the like penalty. 37 V., c. 35, s. 42. 478 JOINT STOCK COMPANIKS. R. S.O.,C. 150 llM m f ■ ^ 80. The Company sliall nut l)o bound to see to the execution of atiy trust, wlicthcr expiuss, imi'lied or constructive, in respect of any share; and tho receipt of the shareholder in whose name the same stands in the books of the Company shall be a valiil and binding' discharge to the C'om- pany for any dividend or money payable in respect of such share, whether or not notice of such trust has been Riven to the Company; and the C(jni- p.iny sliall not bo bound to see to the application of the money paid upon such receipt. 37 V., c. 35, s. 43. 61. livery contract, agreement, engagement or bargain made and e\ bill of e.xchange drawn, accepted or endorsed, and every promissory note and cheipie m.ade, drawn or endorsed im behalf of the Company by any agent, ollicer or servant of the I'ompany, in general accordance with his powers as such umler the by-laws of the Company, siiall be binding upon the Ci)inp,-iny; and in no case shall it be necessary to have the seal of the Company aliixed to any such contract, agieement, engagement, bargain, bill of exchange, promissory note or cheque, or to prove that the same was made, drawn, accejttiid or endorsed, as the case may be. in pursuance of any bydaw, or sjxicial vote or order; nor shall the party so acting as agent, officer or servant of the Cjaipany, be thereby subjected iadividually to any liai)ility whatsoever to any third party therefor 2. Nothing in this Act shall he construed to authorize the Company to issue any note payable to the bearer thereof, or any promissory note in- ten led to be circulated as money, or as the note of a bank, or to engage the business of Banking or Insurance. 37 V., c. 35, s. 44. 62. No Company shall use any of its funds in the purchase of stock in any other corpcn-ation, unless e.xpressly authorized by bydaw contirmed at a general meeting. 37 V., c. 35, s. 45. 63. Each shareholder, until the whole amount of his stock has been paid up, shall be individually liable to the creditors of the Company, to an amount eipial to that not paid up thereon, but shall not be liable to an action therefor by any creditor, before an e.xecution against the Company has been returned unsatisfied in whole or in part; and the amount due on such execution shall, subject to the provisions of the next section, be the amount recoverable with costs, against such shareholders. 2. Any shareholder may plead, by way of defence, in whole or in part, any set-off which he could set up against the Company, except a claim for unpaid dividends, or a salary, or allowance as a President or Director. 37 V„ c. 35, s. 4fj. 64. The shareholders of [the Company shall not as such be held re- sponsible for any act, default, or liability whatsoever, of the Company, or for any engagement, claim, payment, loss, injury, transaction, matter or thing whatsoever, relating to or connected with the Company, beyond the unpaid amount of their respective shares in the capital stock thereof. 37 v., c. 35. s- 47. B. S. 0., C. 150. . .MAKI< • I,K riKUS PATENT A(rr. 479 55. No person hoMini; stock in tht; Company as an executor, i.lniinis- trator, tutnr. curator, nuafiliau or trustee, shall be personally subjuct to liability a.> a shareholder: but tin- estates and funds in the hands of such person shall be liable in like iiiannor, and to the same extent, as the testator or intestate or the minor, waul or interdicted person, or the person interested in such trust fund uonid be, if livin^,' and com]i(!ti.'nt to act and holdinj^ such stock in his own name ; and no person holdinjj such stock as collateral security, shall be personally subject to such liability, but the person plcilKing such stock shall lie considered as holding the same and shall be liable as a sharehcjlder acconliuKly. 37 V., c. 35, s. ^S, 56. Every such e.vecutor, administrator, tutor, curator, Riiardian, or truMce, shall represent the stock in his hands, at all meetings cf llie Com- pany, and may vote accordingly ,( ■ a shareliokler ; and every person who pledges his stock may nevertheless represent the same at all siicii meet. ings, and may vote accordingly as a shareholder. 37 \'., c. 35, s. ^(j. 57. The Directors of the Ccjmpany shall not declare or pay any divi- dend when the Company is insolvent, or any dividend the iia\'mciit of which renders the Company insolvi-nt, ( r diminislie.; the capital sic'ck thereof, but if any Director present when such dividend is dccl.-ued. forth- with, or if any Director then absent, within twenty-four liouis after he has become au are ther^-of and able so to do, enti ; s on the minutes of the i^(jard of Directors liis protest against the s.ime, and within iiglit days thereafter causes such protest to be published in at least one newspaper published at or as near as may be p ssible to, the ottice or chief place of iiiisiness of tho Company, such Director may thereby, and not otherwise, exonerate himself from liability. 37 \' c. 33, s. 50 58. No loan shall be made by the company to any shareholder, and if such is made, all Directors an.l other ofhcers of the (vomj\any making the same, or in anywise assenting thereto, shall be jointly and severallv liable to the Company lor the amount of such loan, and also to third parties, to the extent of such loan with legal interest, for all debts of the Company contracted fr..im the time of the making of such loan to that of the repay- ment thereof: But this section shall not apply to a Building Society, or to a Company incorporated for the loan of money, in any matter to which the authority of this Legislature or the meaning of this Act applies. 37 v., c. 35, s, 51. 59. The Directors of the Company shall be jointly and severally li.djle to the labourers, servants and apprentices thereof, for all debts not exceed- ing one year's wages due for services performed for the Company while they are such Directors respecdvely ; but no Director shall be liable to an action therefor, unless the Company has been sued therefor within one year after the debt became due, nor yet unless such Director is sued there- for within one year from the time when he ceased to be such IMrector, nor yet before an execution against the Company has been returned unsatisfied in whole or in part ; and the amount due on such execution shall be the amount recoverable with costs against the Directors. 37 V., c. 35, s. 52. ' ■' J ' ;■ 1 : J ;' '' - i I i Hi it 480 JOINT STOCK COMPANIES. 1{. S. 0., C. 150 60. Service of all manner of summons or writ whatever upon the Com- pany may l.e made by leaving a copy thereof at the office or chief place of business of the Company, with any grown person in charge thereof, or elsewhere with the I'resideut or Secretary thereof; or if the Company has no known office or chief place of business, and has no known President or Secrnary, then upon return to that fact duly made, the Court shall order such publication as it may deem refjuisite to be made in the premises, for at least one r.ionth, in at K-ast one newspaper; ami such publication shall be held to be duj service upon the Company. 37 \'., c. 35, s. 53. 61. Any description of action may be prosecuted and maintained between the Company and any shareholder thereof. 37 V., c. 35, s. 54. 62. In an action or other legal proceeding, it shall not be requisite to set forth the motle of incorporation of the Company, otherwise than by mention of it under its corporate name, as incorporated by vi.tiic < f letters patent, or of letters patent and supplementary letters patent, ;,s the case may be, under this Act ; and the letters patent or supplenu :.iary letters patent themselves, or any exemplification or copy thereof under the (Jreat Seal, shall be conclusive proof of every matter and thing there- in set forth. 37 v., c. 35, s. 55. 63. '/he charter of the Company shall bo forfeited by nonuser during three consecutive years at any one time, or if the Company does not go into actual operation within three years after it is granted : and no decla- ration of such forfeiture by any Act of the Legislature shall be deemed an infringement of such charter. 37 \^, c. 35, s. 56. 64. The Lieutenant-Governor in Council may from time to time estab- lish, alter, and regulate the tariff of the fees to be jiaid on applications for letters patent and supplementary letters patent under this Act ; may designate the Department or Departments through which the issue thereof shall take place ; and may prescribe the forms of proceeding and record in respect thereof, and all other matters retjuisite for carrying out the objects of this Act. 2. Such fees may be made to vary in amount, under any rule or rules — as to nature of Company, amount of capital, and otherwise — that may be deemed expedient, 3. No step shall be taken in any Department towards the issue of any letters patent ct supplementary letters patent under this Act. until all fees therefor are duly paid. 37 V , c. 35, s. 58. 65. Any Company for piirj'oses or objects within the scope of this Art. heretofore incorporated, whether under a Special or a General Act, and now being a subsisting and valiil corporation, may apply for letters patent under this Act ; and the Lieutenant-Governor in Council, upon proof that notice of the application has been inserted for fou.- weeks in the Onttirio Gazitlf, may direct the issue of letters patent incorporating the share- R. S. 0., C. 150. ONTARIO LETTERS PATENT ACT. 481 holders of the said Company as a Company under this Act, and thereapon f the Company, in the manner provided by a by-law tu be made by the Directors in that behalf. C. S. C, c. 08, s 2. 484 JOINT STOCK COMPANIES. R. S. ()., C. 15:^ V- 3. No such Company shall construct any such works over or upon or dtherwiso interfere with or injure any private property or the property of the {'rown, without first having obtained the consent of the owner, or oc- cupier thereof, or of the Crown, except as hereinafter provided. C. S. (-., c. TjS, s. 3. 4>. No sut'h Company shall be f(3rinc(l und<;r the provisions of this Act to imjirove any river or stream, for the improvement of which any other Company has been formed eithfr under this Act 01 any otlur Act of the Legislature, or upon whiih there is constructed any Provincial work, without the consent of sucii nthei Company-, or of the Lieutenant- (iovernor in Council rt^spectively. which consent shall be formally ex- pressed in writing, and sIimII be registered, together with the instrument by which such Company h.is been incorporati^d, as hereinafter provided' C, S.C. c. r),S, . 4. 6 In case five or more [lersons, having formed themselves into a Com- pany under this .\ct, have suljscribed stock to an amount adequate in their judgment to the construction of the intemied work, they shall execute an instrument in duplicate according to the form in the Schedule of this Act and the Company or one of their ntimber, or the Directors named in the said instrument, shall pay to the Treasurer of th-.- Coniii.my six per cent upon the amount of the capital stock of ihe Conipany mentioned in the said instrument, and shall register the instniinent, togetht;r with a receipt from the Tn^asiirer of the Company, for the paxineiU or instalment f)f six per cent., and also the appro\al in writing of the Commissioner of I'ublic Works mentioned in the tenth section of this .\ct. C. S. C, c. 68, s. 3. 6. Registration shall be m.ide by leaving one of the original instru- ments ancl the receipt of the apj^roval afor>>said. with the Registrar of anv one County or other Registration Division in which the intended works are wholly or partly situated, or are intended to be made, and such Regis- trar shall copy the said instrument, rcceiitt and approval into a book to b(-' provided by him for that purpose, and shall afterwards retain and file the said original documents in his office, and for such registration the Regis- trar shall be entitled to charge the same fees as for the registration of a deed. C. S. C. c. OS, s, 0. 7. In all cases whi;re a shareholder has not [laiil six per cent, on the share or shares held by him, but some other party pays the same on l!i>. behalf, the party so paying may recover the .imoutit as a debt, in any com- petent Court, although not previously authorizivl to pay the nn ney "u behalf of such shareholder. C. S. C, c. dS, s. 7. 8. Rvery Companv, before commencing any of the works in itscontein plation, shall cause; a Report to be laid before the (^inimissionerof I'ublic Works, and a ('opy of such report before the Muiiieip.d Council of the County in which such works .are proposed to be situ.ited ; or if the wi.>rks are situate in more than one County thi.» befoie the Municipal ('ouiiciis ,,c.l5J5 1».S.().,C. 153. TIIANSMISSION Ol'TIMHF.U. 485 upon make by-laws, and from time to time alter and amend tlie s.ime, for the purpose of regulating the safe and orderly transmission of timber over or through tlie works of the Com- pany, and the navigation tlu're\\ith connected. C. S. C., c. OS, s. 12, 13. (llopios of such by-laws sli.ili lie annexed to the reports required to bv made b>' the Coinj)any by the oiglith and ninth sections of this Act, and Lopie-i of all new by-laws an8, s. ij. 14. No such b\ -l.iw or amended bylaw shall ha\e any force until one month after it has ben included in such report, bui if at the end of one Jl .' 111! r 486 JOINT STOCK COMPANIES. R. S. 0., C. 1 53 ■' V: i Ml month such by-law has not been disallowed, as it may be by the ('om- missioner of Public Works, it shall have full force and be binding upon the Company and upon all persons using the works. C. S. C, c. 68, s 14. 16. No such by-law shall impose any penalties or "shall contain .thv- thing contrary to the true meaning and intention of this Act. ^:. S. ("., c. 68, s. 15. 16. The atlairs, sttick, property and concerns of every such Company shall, for the first year, be manageil and conducted by five Directors, t > be named in the instrument so to be registered as aforesaid, and thereafter Vt be annually elected by the shareholders, on the second Monday of Decem- ber, accordmg to the provisions of a by-law to be passed by the Directors for that purpose. C. S. C, c. 68, s. jO. 17. Such by-law shall regulate — 1. The manner of voting; 2. The place and hour of meeting for tiie election of Directors ; and 3. Any other matters, except the clay of election, which the Directors ileem necessary to carry out the provisions of this and the last preceding section. C. S. C, c. 68, s. 17. 18. Such by-law shall be published for three successive weeks in the H' wspapcr or one of the newspapers, nearest the place where the Dire t>rs of the Company usually meet for the transaction of business. C. S. (".. c. 6S, s. 18. 19. The Directors may alter, change, or amend any such by-law. and such amended by-law shall be published in the manner above provided. (^ S. C, c. 68, s, ig. 20. If the annual election of Directors does not take place at the time appointed, the Compnny shall not thereby be dissolved, but the Director^ for the time being shall in that case continue to ser\e until another electiiin of Directi rs has been held. C. S. C. c. 68, s. 20. 21. Another election when necessary shall be held uithin one inor.th after the time appointed by law, and at a time which shall be provided f^r by by-law to be passed by the Directors of the Company for that pur- pose. C, S. C, c. 68, s. 21. 22. \i any election of Directors, each shareholder shall be entitled to one vote for Cv-ery share he holds in the Company, and upon whicti he is not in arrear on any call in respect there of. C. S. C , c. 68, s 22. 23. Any person being a shareholder and not in arrear as aforesaid, shall be eligible as a Director. C S. C, c. 68, s. 23. ■ H.S.O.,C.153. TUANSMISSIO.V UF riMUKIi. 487 24 A majority of the Directors shall he a iiiioruiii for the transaction of business. C. S. C, c. ()S, s. 24. 26. The Directors may elect one of their number to be the President, and may nominate anrl appoint such officers and servants as they deem lujcessary ; and in their discretion may take security from such officers and servants respectively for the due performance of theiv duties, and that tliey will duly account for all moneys commt^ into tliei; huid'^ to the use of the Company. C. S. C, c. 08, s. 25. 26- If any vacancy happens amongst the Dirtjctors durinu; the current year of their appointment, such vacancy shall be filled up for the remain- der of the year by a person nominated by a majority of the remaining Directors, unless it is otherwise jirovided by some by-law or rej^ulation of the Company. C. S. C, c. 68, s. 26. 27. The Directors of every Company incorporated under this Act shall annually in the month of January make a report to the Commissioner of I'ublic Works, which report shall be under the oath of the Treasurer of the Company, and shall specify — I The cost of the work ; z. The amo\int of money expendectivcl\ were inclined I" S C , c. GS, s. 27. 28. I'-very Company sliall keep rcijular b.lok^■ of accounts, in which shall be entered a correct statement of the assets, receipts ,ind disburse- i;;ents of the Company, and such books shall be ,it ,dl times open to tiio inspection and examination of any shaiiholder or ,inv person for that purpose ,ip))ointed by the Commissioner of Public WOrks, and exciv such lns|X'Ctor may take copies or extiacs from tin; s,uue, ;ind may reijuiiv and receive from the keepiT ot such books, and also from tiie I'resident and e ich of the Directors of the Company, ;iud all the other officers and ser- v,uits thereof, all such informati(;n as to such books, and the affairs of the Company generally, as the Inspector deems necessary for the full and 'I" (I M 1^: f t 14 ^ i i i I •I i-i If I. , : i-i ■■ I- 488 JOINT STOCK COMPANIES. R.S.O.,C.158 satisfactory investigation into and report upon the state of the affairs of the Company, so as to enable such Inspector to ascertain whether the tolls levied upon such work are greater than this Act allows to be levied. C. S. C, c. G8, s. 28. 29. If at any time after the formation of any such Company, the Direc- tors arc of opinion that it is desirable to alter, improve or extend the said work, or that the original capital subscribed will not be sufficient to com- plete the work contemplated, the said Directors, under a resolution to be passed by them for that purpose, may issue debentures, for sums not Lss than one hundred dollars each, signed by the President and countersigned by the Treasurer of the Company, and not exceeding in the whole one fourth of their paid-up capital, , s. 30. 31. All the subscribers to such list, and those who afterwards enter their names as subscribers thereon, with the consent of the Directors, signified by a resolution of the Board under the hand of the President and seal of the Companw shall be subject to all the liabilities and entitled to all the rights, benefiis, privileges .ind advantages of original subscribers, as well with respect to the tirst works nn lertaken as to any extension or alteration thereof ;is afoie.->;iid, and such list and the subscriptions thereon shall thenceforth be consulered as part and parcel of tlie original under- taking r. S. C , c OS, s. ji. 32 Such additional shares ami stock shall be called in, demanded and recovered, in the same manner and under the same penalties as provided or authorized in respect of tiie original shares or stock of the Company. C S. C. c. 68, s. j2. 33. The Directtu-s m,iy eall in and demand from the shareholders of the Company respectively, all sums of money by them subscribed, at such time and in such p.iyments or instalments, not exceeding ten per cent, at any one time, as the I)irectt)rs deem pro[ijr, upon no'.ice recpiiring such payment, published for tour successive weeks in the newspaper or one of the newspapers nearest the place where the Directors of the Company usually meet for the transaction of business. C. S. C, c. 68, s. jj. li. H. 0., C. 153. TRANSMIHSION OF TIMBKR. 489 34. Any shareholder neglecting or refusing to pay a rateable share of tlic calls as aforesaid, for the space of two months after the time appointed tnr the payment thereof, shall forfeit his shares, which forfeiture shall go to the Company for the benefit thereof. C. S. C, c. 68, s. 34. 36. No ailvantage shall be taken of the forfeiture, unless the stuck is declared to be forfeited at a general meeting of the Company, assembled at an\ time after such forfeiture has been incurred. C. S. C, c. 68, s. 35 36 Such a forfeiture shall be an indemnification to the shareholder so fi'ifeiting, against all actions, or prosecutions whatever, for any breach of contract or other agreement between such shareholder and the other siiareholders with re'^ard to carrying on such undertaking. C. S. C, c. 68, s. 36, 37. The ("ompany may, in any Court having jurisdiction in matters of si'nple contract to the amount demanded, sue for, ami recover of or from any shareholder in the Company, the amount of any call or calls of stock which such shareholder has neglected to pay after public notice thereof f^i two weeks in the newspaper, or one of the newspapers, published III ,ircst the place where the Directors of the Company usually meet for th'- transaction of business. C. S. C, c. 68, s, 37. 38. In any suit by the Company, against a shareholder, brought to re- cmer the money due for any call, it shall not be necessary to set forth the special matter, but it shall be sufficient for the Company to aver that the defendant is the holder of one share or more, stating the number of shares in the stock of the Company, and that he is indebted to the Company in the sum of money Ui which the calls in arrear amount, in respect of one call or more upon one share or more (stating the number and amount of each of such calls) whereby an action has accrued to the Company, by virtue of this .\ct. C. S. C. c. TiS. s 38. 39. On the trial or bewaring of any such suit, it shall be sufficient for the Company to prove that the defendant, at the time of making the call, was a holder of one share or more in the undertaking (of which when there lias b en no transfer of the shares, proof of the subscription to the origi- nal agieemenl to take stock shall be suffii ient evidence to the amount sub- scribed), and to prove that such call was in fact m;i le, and such notice thereof given as is required; whereupon the Coinp.iny shall lie entitled t(j recover the amount due upon sui'h call, with interest thereon, unless it appears that due notice of sui.h call was not given, and it shall be neces- sary for the Company to prove the appointment of the I)irectors who made thj call, or any other matter whatever. C. S C, c. OS, s 39. ♦0. The oath of the Treasurer shall be deemed suflicient jiroof of such notice , and a copy thereof shall be filcfl in the office of the Tk-rk of the Court where the trial takes place. C, S. C, c. 68. s. 40. ♦I. If upon demand made bv the Directors of the Company the owner 4 i: I til i I iHii 11 # ■! i I'll l^^^i r||l., iif' ^'ti' 490 JOINT KTO(.K (;()M"ANIKS. R. S.().,C.lo8 or occupier of any Irind, over, through or upon which the Company desires to construct any sucli work, or which wouiii he Hooded or otherwise inter- fered witii, or upon which any power is given by this Act to tlie Company is intcndf 1 to he exercised, neglects (yr refuses to agree ujion the price ^r .'iinount (jf damages to l)e paid for, or for passing throu.'h or using such land, or for Hooding or otherwise interfering witii the s.ime, and for appro, priating the same to and for the use of the ("omjiany, or for the exercise of any such power aforesaii, the Comp.iny may name one Artiitr.itor, and the owner or occuper of such lantl may name another Arbitrator, and the sai 1 two Arl)itrators may name a third, t > arbitrate and determine upon the amount which the Company shall pay before taking possession of or exer- cising such power, an' may tender the sum awarder 1 to the parly claiming com]iensation, who shall thcieui>on be bound to execute ,1 convt!yance f)f the land to the ("ompany, or such other document as ma;,' be reijuisite , and th • Company, after such tender, whether a conveyance or other document h;is been executed or not, may enter upon and take possession of tlu' land. to and for the uses of the Company, and may hold the same, or exercise sach power aforesaid in tiie same manner as if a conveyance thereof or ol'ier document had been e;e;utcd. C. S. C, c. 6S, s 43. 1 ♦♦ If any such owner or occu])ioi neglects to n.i'nc an .\rbitrat' days .liter the appointment of such second .\rbitr,itor agree upon a third Arbi- tr itor, or if any one of ihe said Arbitrators refuses or neglects, within the s,i ice of ten days after his app )intinent, to take upon himself the duties th reby imp )se 1, then, upon the application of the '.rompany, or of the other party, the Judge of the County Court of the County within which tlie land lies, shall nominate a disint^-rests; I com(iJtent person, from any Township ailjoining the Township in whi.di such Ian 1 is situate, to act in the place of the .Vrbitrator so refusing (jr neglecting; and every Arbitrator so appointed by the J a ige of the C ainty ("oarl, sliall ht'ar and iletermine the matter to be submitte 1 to him. with all convenient speed, .after he has been so nominated as afores.iid; and any .award ma le by a in.ijority of the Arbitrators shall be as binding as if the three Arbitrators had concurred in and made the same. C. S. C , c. 6S, s. 44 ♦8. In case anv lands rei|uired b\' the Company for the purpose of any such woik, or with regar.i to which any such power is to be exercised as aforesaid, are held or ,' such for appm. L'xcrcise nf r, aiid the il the sai 1 upon the )f or exer- ators sh'ill ill be had deinand- C. S. C, Company, or in case the title to any siu h lands is in dispute, or in ease such lands are mortt;aK'ed, or in case the owner or owners of such landsare unknown, or unable to treat with the (.'ompany for the sale thereof, or the exercisij of any such posver as af»jresaid by the Company, or to appoint Arbitrators as aforesaid, the Company may nominate and appoint one indifferent person and the Judge of the County Court where surh lands are situate, on the application of the Company, may nominate ami appoint one other disinterested competent person from any Towi^ship adjoininK the Township in which suc!i lan When demanded, the Company shall pay or cause to be paid to the several parties 'jntitled to the .samf", the amount so awarded. C S. C c. (.8, s. .\(-,. ♦7. A record of the award shall be tnade up and signed by the .Vrbi- irators, or a majority of them, specifying the amoimt awarded and the costs of arbitration, which may be settled by the sad .\rbitrators, or a majority of tiiem ; and such record shall be deposited in the Registry ( )tfice of the (bounty (jr other Registration Divisicjn in or along which such 1 incl'. are situate, and the Company may thereupon enter and take posses- sion of such laud to and for the uses of the Company, .iiid may procei il with the construction of the works affecting the same. C. S.C., c. 68, s. 47. 48ii The expenses of any Arbitration under tliis .Vet shall be paid by the Company, and by them be deducted from th : amount of the award on payment thereof to the parties entitled to recei\ethe saiu". if the Com- pany, before the appointment of their .\rbitrator, hail tendered an t(]iial or greater sum than that awarded by the Arbitrators, otherwise such cv- pense shall be borne by the Company, and the .Xibitrators shall specify in tiieir award by which of the parties the said costs shall be paid. C. S. C , c. ()8, s. 48. 49> All lands taken by thi; C^>mpany. f.-r the piiri)ose of any such work, and which have been purchased anil paid for by thi; Company, in the manner hejeinbcfore provided, shall become the property of the Com- pany, free iV.MVi all mortgages, incumbrances and other charges. C. S. C, c. 68, s. 49. B0> The Arbitrators so appointed shall fix a convenient liay for hear- ing the respective parties, and shall give eight days notice at least of the day and place ; and having heard the parties or otherwise examined into the merits of the matter so bri ught before them, the said .Arbitrators or a 4<)2 JOINT HTOCK rOMI'ANIKS. U. S. 0., C. 153. I i; m I ! majority of them shall, within thirty (lays of their appointment, make their award or arl)itrainent thereupon in wriiim; which award or arbitra- ment shall be final as to the anionnt in dispute, f. S. C, c. 68, s. 51. Bli In case there is already estal)lishcd by any party other than a Company formed under this Act or some other Act of the late Province of Canada, or of this Province, any slide, pier, boom, or other work intended to facilitate the passage of timber down any water, for the improvement of which a Company is formed under this Act, such Company may take possession of the works, and the owners thereof, or (if they have been con- structed on the property of tho C'rown) the |>ersons at whose cost they have been constructed, may claim a comjiensation for the value of such works either in money or in stock of such Company, at the option of such owner or the person at whose cost the same was constructed, and may become shareholders in the said ("ompany for an amount equal to the value of such works (such value to be ascertained by Arbitrators apjiointed in the manner hereinbefore provided) , and all the provisions of the forty-fifth to the forty-ninth sections of this Act shall apply to such w.)rk and the pro- prietors and possessors thereof in the same manner and to the same ex- tent as to lands acquired by such Company and to the proprietors and oc- cupiers thereof. CSC, c. 68, s 52. 62> And in case any such Company purchases or takes possession of such works as aforesaid, and does not make or construct any other works than those so actjuired, it shall not be requisite f> The provisions of the fifteenth and s;\teenth ^ of The Act Ttil^citing Mills and Mill Dams, shall extend to similar 1 overHowed by any of the works finstructed by any Company formetl under this Act. C. S. C, c. 68. s, 55. 66> Nothing herein contained shall authorise any Company formed under this Act to obstruct any waters already na\igable. or to collect any tolls other than those up.m timber. C. S. C. c. 68. s. 56. R.S.O.,e. 153. TRANSMlSStON OF IIMHKH. 4\ni 86> If by reason of any dam erected by a Company formed under this Act, any fall or water power is creattni, the Company sliall in nowise have any title or claim to the use of such water power , nevertlieless, if the owner or occupier of the land adjoining has made a claim for compensa- tion for damages arising' from such dam the Arbitrators may take into account the increaseil value of his property by reason of the water power so created C S. C. OS, s. 57. B7. The tolls for the first >(;ar shall be calculated iipim the istiniates hereinbefore reijuircd to be male of the cost of the works, and thf qiian- tity of difterent kinds of timber expected to pass cIdwm ilie stream, and t e tolls in all future years shall be calculated upon the cost of the works and the quantity of different kinds of timber expected to pass down the stream, an'l the receipts andexpeiulitur«, according to the accounts of the then next preceding' year, as rendered in accordance with the provisions of the twenty-seventh and following,' sections of this Act ; and the tolls shall be so calculated that, after ilefrayin^ the necessary cost of maintaining and superintending the works and collecting the tolls, the balance of the re eipts may as nearly as possible be eijual and in no case exceed ten dollars for every hutulred expended and invested in tiie said works; ainl if in any year the receipts from tolls are such, that, after defraying all the current expenses, there remains a clear profit of more than ten dollars upon every hundred of the capital expended, there shall nevertheless be divided amongst the shareholders no greater dividend than after the tate of ten dollars for every hundred, and the remainder shall be carrii d over to the receipts of the following year. C. S. ('., c. 68, s. 5.S.] S8> The tolls to be collected upon different kinds of tind)er shall bear to eai h (jther the fidlowing proportions, viz.: * cts. Red an'l White fine per piece o i ;^ Oak 1-dni, and other hard wooil " o j^ Spars " o 5 Masts " o S^ Sa\v Logs " o ^ Sawed Lumber per NL board measure. o ]'^ Staves per M o 23 Firewood, shingle bolts, and other timber per cord > j^ C. S. C , c. ti8, s. 59. 59. The annual account recpiired to be rendered by every Comp.-my .shall contain a schedule of the tolls, calculated as aforesaid, which it i.s proposeil to collect in the following year, and if it has not been notified to the President of the Company, on or before the fifteenth day of .March in each year, that the schedule of tolls has been disallowed by an order ot the Commissioner of I'ublic Works, the President of the Company shall cause the said schedule of tolls tq be published for the sp.-rce of one month in some newspaper pul)lfshed within the County or Counties, District or Districts in which or nearest to which such works arc situate, and such ': p* f i:! •r. uV f!:i< 494 JOINT STOCK COMPANIKS. li. H. ()., C 153. tolls so published shall be the lawful tolls for that year; but if it appears to the Commissioner of Public Works that the proposed schedule of tolls has not been calculated according to the true intent and meaning of this Act, such Commissioner may, by an instrument under his hand, alter or \ary the said schedule of lolls so as to make them correspond with the true meaning of this Act ; and such amended schedule of tolls shall I'e notified to the President of tlie Company, and shall by him be published as aforesaid, and shall be the lawful tolls for that year. C. S. C, c. 68. s. 6o. 60> livery such Company may dcmanf any timber intended to be passed through any portion for the works of the Company, or from the {lerson in charge of the same, a written statement of the (luantity of each kind of timber and of the destination of the same, and of the sections of the works through which it is intended to pass, and if no such written statement is given when required, or a false statement is given, the whole nf puch timber, or such part of it as has been omitted by a false statement, shall be liable to double toll. C. S. C, c. 68, s. di. 8I> Every such Company may demand and receive the lawful toll upon all timber wliich has come through or over any of the works of the Com- pany ; and the Company, by its servants, shall have free access to all such timber for the purpose of measuring or counting the same. C. S. C, c. 68, .s 62. 62i If the just tolls are not paiil on demand, the Company may sue for the same in any Court of competent jurisdiction, and recover from the owner of the timber the amount of the tolls and the costs of suit. C. S. C, c. ()8, s. 6j. 63« If the owner of the timber objects to the amount of tolls demanded, and tenders a sum which he claims to be the true and just amouni of the tolls, the Company shall pay the costs of the suit, unless the judgment obtained is for a greater amount than the sum so '-"idered. C. S. C, c. 68, s. 64. ^. If timber has not come through or over the whole (;l the works of the Comp.iny. but only tb.rough or over ;i part thereof, the owner of the timber shall only be liable to pay tolls lOr such sections of the whole works ;is he has made use of, if in the schedule of tolls tlu: work is divideil into sections, and if not, then to pay such a portion of the whole toll as the distance such timber has come through the works, bears to the whole ilistance over which such works ixtend C. S. C, c. 68, s. 65 8B> If the true owner of any timber which has passed thrnugh anv of the Works of the Company cannot l)e ascertained, f>r ' lif fi)iiiiii. it within tv.fiity iiiilos cf .tiiy siu'li uork.s, shall, upon tho oath of any Director i r servant of il.e Company that the jnst tolls have not been paid, issue a warrant for the seizure of such tMiiber, or so much thereof as will be sulticicnt to satisfy the tolh;, which warrant shall be directed to any Constable oi any person sworn in as a Special ("unstable for that purpose, at the discretion of the Maf^iitrate. ami shall authorize the pcrscni to whom it is directed, if the tolls are not paid v.i^l'in fourteen days from the date thereof, to sell the said timber. and out of the proceeds to pay to the Company the just tolls, tofjether with the costs of the warrant and sale, renderim: the surplus on demand to the (.iwner. C. S. C, c. 18, s. (16. OIFENCKS AND rENALTIEH. Sn-tioH 67 0/ C. S. ('.. c. 6'S, ciuicta as /nllmrs. 67 If any person wilfully and maliciously burns, breaks down, injures, cuts removes or destroys, in whole or in part, any dam, pier, slide, boom or other work of any such Company, or any chain or other fastening at tached thereto, or wilfully and maliciously impedes or blocks up any cli.in- nel or passage intended for the transmission of timber, he shall l)ef,'uilt\- of a misdemeanor, and on conviction thereof shall be punished by line and imprisonment in the Common Cia^'l for any term not exceeding one \e,iv at the discretion of the Court before whom '.heoffender is convicted. 10 \"., c. pji, s. 28. J 86. If any person resists or impedes any of the servants of any such Company in the transmission of any timber through any sich works, or in carrying out any regulations of the Comjiany for the greater safety and regularity of such transmission, or resists any such servants who may require access to any raft or other timber to ascertain the just trsonally or by leaving a copy theretjfat his list. 1 place of abode, or with any adult person belonging to the raft to which such party is attached, the Justice mav either proceed to hear and determine the case <•.» /•(ir/c, or issue his w.irtatu f.r apprehending and Ill ll 496 JOINT STOCK COMPANIES. R. S. ()., C. lo^. briiiKinR such party before himself or some other Justice of the Peace 'ir the Justice may, without previous summons, issue such warrant, and the Justice before whom tin; parties appear or are brought shall proceed to hear and determine the case. C. S. C, c. fj8, s. fxj. 68 'I'lie tines and forfeitures authorized to be summarily imposed In this .\ct may be recovered upoti information and complaint before any Justice of the Peace of the County within which the same have been incurred, anr thing donr in pur- suance of this Act, shall be brought within si.\ months next after the fact committed, and not afterwards ; and th defendant therein may plead the general issue only, and give this Act and the special matti'i in evidence on the trial. C. S. C, c. 68, s. 74. MISCKLLANKOrS. 72. l'lver>- such Compans sh.dl, within two years from the day of tin ir lirciining incorporated, complelt! each and every w.irk uiulertakeii l)> thiin. ami for the completion whereof they may bt; incorporated : in dcf.uilt wheri'of they shall forfeit all the corporate and other powers and aiuhorit\ which they have in the meantime acipiired, and all tlieir cor- porate' powers shall thenceforth cea.se and determine ; unless farther time is granted by a by-law of the t'oui.ty or Counties, L>istrict or Districts in or .idjoining which the work is situate ; and if any Comi'iany formed under tliis Act. for the sp.iceof one year ab.uulons any works cf)mpleted by theiu s 1 that the same .ire not in sulficient repair an 1 cannot be used for the purpose propose I in the instrumeii' ol incorpor.ition of the Comoany. then the si()N oi' riMMKi;. 407 Peace, 'H" , and the iroceed to iposed In L'fore any have been sale of the )f distress conviction irrant, the or roiints )f comniit- ;ntioned in [)f this Act ^ m respect 1 ime of thf nr ui pur- r the fact plead the dence on ay of ihi ir jrtaken li> ivated . in )\vers and their cor- irlhev time )istricts in nicd under d l)y them M' 1 f.'r ih<- C>»m"aii> • determiniv 73> Allc: .ui\ u.rks con-^inutcd li\ ,i <"(impaii. under this Ail h:\\n lien iiinipli'lod an 1 td!-, f>t ddislu-d, \.hi: ("nnipanv >-hail ivcep the !,.'.inf in j,'oo I and sufficient repair; and if any such worlds have not been con- structt' 1 a 1 ordiu!,' Ill till' (lescri .tion j^iven thereof in the report rripiired liv tiie ninth s ■ction of th\s Act. or have beconn' insufficient or out of re- pair, au\ p.'isDU interested in lh(! navifiation ina\ serNc upon any serv.inl of the t"ompan> a notice of sucli inFUlficicnc> , and if within a reasonaidc tune after the service of such notice the necessar\' repairs have not been completed, such Company sh.all be liable for fht; dainage which any pecs^n may sustain fioin the continuance of such insufficiency ; but m Companv liMuied undt.'r this o ■ sii.di be lield liable fo- any iamaK(>, so long as their woiks are in accoi '. c ce uitli the descrijition or specification thereof in ti.i' original insti ument reipiired to be registered or in any descriptimi or s]-)e> i- licalion subseipiently approved of an^l legistemi, noi for an\' damre^e arising from the accidental destrurtion or injur\ ^f their works, but onl\ for the damage which ina\ arise from the wdfid neglect of the ("omjimv after notict! served upon one of its servants, as hereinbefore provided ('. S. C . c (iS, s. 70. 74i Any tuo ( '1 'mj'anies fninieil fi r tile ('•n-^trui ii";i nf wurks on an\ streams contiguous in c'.ich uilur. in.iv unile an! lorm nne consolid.ited (?o;npanv, on such teims a.s to tlu'in seem niei i aiid the name of such unite 1 ("ompanies to be then as-iumeil shall ther.« a fi.nh be the c-orporate n.inie thereof, and such nnite>l t'nmpanies ma\ then 1 \eiiis<' and enjov all the rights, and shall be sidijeci to aU the li.ib litu s 1 d' cither (\iinpan'es iormeil undi'r the provisions of this Act, ,ind which the sep.iraie ("omp.m- ie , h.icl and enjoyed or were subji'ci nr liable to befoi" the union thereof, C S, (■ . c I S. s 77. 76a \\ heiievei It IS f lunl <\\h dient |.i|- l!ie pnlilic- s<'i\ iee, I hi' l.ieuteii- aiitt iovernoi in ("oiiiuil m,i\ declare an\ t 'iimi'any fniineii under this Ait dissolved, and may declare all the woiks of any such ("ompan\-, I'ri" inci.il W'lirks, upon pavnunt to smh i'oin]>any of the then actual value of the works, to 111' decided l)\ Aibi .ito.s, 0111; 'if uhoin -,h.dl be .ippdintel bv the Commissioner of Public Works, and . 'j' b\ the t'oinp.mv, and if they do not agree to .an awai I. the |ad^e of the County t'ourl tor the County in 01 adjoining which the wnrks .ir- situ.ile shall be ilu- iliir I \il iir.itnr. C. S. C , c. (jS. s. 70. ^tiii:!>ii.i:. I Si.livii 5 J INSIKIMIIM 111- Im . Kl iiKA 1 loN, Me it remembered that nn this da> of lit our l.iird one ihous.ind eii;lu hiindn 1 ;ind sigiifd Siiarelicildi rs, met .it in the in the year , we, the under- ( 'ouiily C C. r Vr !i.i .V) 498 TRANSMFHSION OF TlMItKH. H. S. O.. C. 1 .'>;$. of , ill tlif rroviiice of Ontario, and resolved to form our- selves into a {"ompany, to he called {hen' insert the corporate mime intended to be taken by the Conipaiiy), according to the provisions of chapter 153 of •■ The Revised Statutes 0/ Ontario," entitled " An Aet, (P^y. {insert the title of this Act), for the purpose of constructing a slide, wharf, pier [or other sueh works as ah>resf Shares Amount 15:^. >rm our- intendid r 153 of ihf title [itr other thereof). Company price or ilders, (1(1 ; opposite the calls ict and of mpany, to (the names lU ciiapti:k 137. \N ACT lacsi'E.rriNG joint stock coMfANiiis, 1-oK sur- PLYIN'C, CITIKS, TOWNS AND Vn.LA(;ES WITH C.AS AND WATER. (Rev. Stats. Ont., Cap. 157.) hiterprclatlon, s. i I'onnation of Companies, ss. i-.S lly-laws. ss. g-io. Diviitors and Officers, ss. 11-20. Speeial Meetiiif^s, s. 21. VfOrly Report, s. 22-23. Liability of Direelors and other Officers, ss. 24-31. Directors to keep Books, ss. 32-37 Shares and their transfer, ss. 38-41. liicreasinp; the capital stock . ss. 42-43. Calls, ss. 44-49 Municipalities takin<^ stock, ss. 50-51. Aluns may hold stock, s. 52 Po7i'ers of Companies, ss. 53-59 I'on'crs to horror,', ss. 60-68. Restrictions on poicer, ss. 69-70 Prohibitions and Penalties, ss. 71-78. Enforcement of Penalties, ss jg-Si. Arbitrations, ss. 82-S5. .Miscellaneous, ss. 86-88. r_T ER M.AJI^STY, by and with the advice and consent of the Legisla- tive .Assembly of the I'rovince of ()ntari(j, enacts as follows : INTERl'HKTATION. I. The word " Company," wherever it occurs in this Act. shall be con- strued to mean a Joint Stock Company incorporated b>- registration under the provisions of this Act or of some former Act respecting (ias and Water Incorporated Joint Stock Companies. C. S, C, c. ^15, s. 85 I'OUMATION OF COMPANIES. 2. Any live or more persons who desire to form a Companj for supplv- itig any City, Town, incorporated Village, Township or oilier Municipality with (jas or Water, or with both (las and Water, may make and sign a statement or declaration in writing, in which shall be set forth ; 1. The corporate name of the Company , 2. Tlie object for which the same is formed ; 3 The amount of capital stock of the Company, which shall be divided into shares of twenty dollars each, and such stock, in the case of a (las ruid Water Company in a City, shall not exceed three hundred thousand dollars, if (ias or Water only is to be supplied, and six hundred thousand ■ . i I > 1 i ■ ■ f ' i 1 m 500 JOINT STOCK ( OMI'ANTI'.S. 1 1. S. ().. c. 1 ." (liillars if bdil) (las aiiil Water are to Ix,' suiiplied : ant yvdv ; f>. 'I'he name of the Municipalit\ in w.hich the operati';-, ■. v.f the ("oni- panv ar(! intended to be carried on and 7. The term ol the ('onip,in\\ proposeil existence, which sh;dl hmi exceed t'ift\' yens. ('. S. (' , c t'5. s. 1 ; j< \' c. ^j. s. 1. 3. 'I'lie persons making the statement (jr deil.iration sh.ill acknowled^' the same in duplicate before the Mayor or Thief Magistrate of the Muni' ! ])ality, and he shall receive the same, and urani a ctriiticate thereof (". S. C, c ()5, s J ; J i \' . c. ^2, s I. 4« If upon tlu' petition nf the persons desirmi,' li> f. tin tlie(."ompan» the Munii_ii>al Council ot the Municip.ilit\' in which the opirations of ilu- ('ompanyare to be carried on pass within ihirts da\ s from the uch Municipalit, , till- Kej^'istrar of the ("otinty or other Kc^'istration Hnision in which il.r same is situate on the production of one of the duplicates of such state- ment or del l.iratitui, \^ith a projx.'r certificate of the acknowledfiineis thereof endoiseil tliei con. .lud a diil\ certilied icip\ of such by-law attache' thc'reto. shall die the same ,ind make an entry thereof in a book to be keji by him fi>r that luujiose. and the other of the diiplie,iies, w ith a proper certificate, endorsed thereon of the acknowledf^uuiu thereof, and of tlii liliii'^ and re^'istration theri'nf, aiiil of sir h b\ l.iw ,ind with a certitiel copy of the Iw law theicto aniu xeil, slull forthwitli be transmitted to and filed in the oiTk i V , c. s^. s, I the I'rosiiuial SeeretaiA (" S C. B. When the form.tlities required by the fore^'oiny sections of this .\r; have been complied with, the persi.ns who have sijjned the statement •■v declaration, and all persons who thereafter become shareholders 1 if tl e ('ompan\- thereb\ established, sh.ill be a bod\ corjxirate, b\ the -ivleaad title mentioned in such st.itenuiit nr deilaration. ('. S. (' ^5 s ^, 6« I'ompliance \\\\\\ the formalities prescnbeil m the foreKoinK si'Ctioii-. of this Art for till fcirm.ilion nf .my Comp.inv sh.ill be cnuclusixelvcstali- '! > ' V ().,(•.! "'7. tlu' CilSl' lit I dollars if (>;i- i!(.ll;irs if ln'ili aiswl shrill It acquirins aivl as and Wabr mai-L' the ci'ii- :•, of tlu' C<>\\\- hiuli shall iV'i 11 aiknnwlfd^' •nf the Mulli' : itKatc thtMi-'i l;.S.(). C.l.'T. 'iAS ANH U \TI.1! COMI'AMI.S. "lOl li-^hcil h> the insfi'tion in the Onlniio (iir-ctt, of a noti' c to ihai t-ffi'i I li\ ihe l'ii'piit) to ho a true copy, shall be received in .dl (ouiis ;md places as friiiiii /oiii evidence of the facts therein stateil (". S. C 65, s. 0. 81 Any Company incorporated under this Act may. in theii corporate i.ame, purchase ami hold, sell and convc\ lands, tenements and hereilita- iiients for them and their assigns and successors for the use of the said ( l.is Works or \\ aicr Works, or (las and Water WOrks, and such real i-itate h(jlden li\ an\ such Company shall he held foi the purposes for which the Con)p,-in\ is incorporated in constructing their necessary works ind fir no ollui purpose. ;iiid sli.ill not at aii\ time .\ceeil in v.'iliie tliirl> ! /'iu-:md doll.ir-- C S C .r I'i. s -. I;N LAW-. 9. .\ majoril\ of tlie sli.irehoMer;^ of an\ such Company present at -piri.il >;eniral iiir •ting may make such by-laws as the\ deem proper •.■'Y tile follo\\ini; put poses: — 11 the l^omp.iii.^ lerations of ilir )m the dat'' "! Ii pfrson- a- I ( ias. or boll" I Municipalit;. . n in which il.' f svich st.-itr cknowledjiinent >vdaw attach' '■ 00k to be ki", ' with a prop ■ eof, and ot ill' vvith .1 ceriiii'- i ■niitted to I ■ c. <.5, s. .? -•! "11-. of this \<' • st.il.inellt 'I' ■eh'-lders of li )\ the -l\l<- .' ri-K<'ini; si'cti"':- II bisi\i'l\ e-; I ' I. lor till' ni ina'4e:n<-nt and .li>po iti'iii of the ^tock. busiiier^s aii'l a!; iii> of the ( oni; ;iny : -v lor till' appointment of oflicers and jirescribiiiK their dulii-s. .tnil iliosr of .ill artificers ,ind si'i\ants that nia\ be employed and for c.irivMiL; "H all kind-, of business within the objects, .iii'l purposes ol the Coinp.un . i bor appoiiiimn the number 'f i >ireitors of the Compaiis who shall n"t exceed nine, nor be les^ than three inclu'lin.L,' the Hea'l of ,iny Munici- I'dity holding >t'nk in tin ( innpain to the .'imount of ten thousand do! I.iis or upwards as piescribeil by subsection twenty-four of the f'lur hiin 'Ired .ind sixt\-'irst sec i')ii of •■ Mnnitif^ii! Ait;' and for determinin;; the niiiuber of sh.ires it shall be necessary for a sh.iielioliler to hold t" i|iialif\ him t ' act as a I)irector . ( lor the |),i\inent of l•.^c^l'lr^ with the I'lnseiit of ,1 majority of the shareholders ,it the annual lucetin^;. 01 tor the .ippoiniinent of one or more I'ai 1 r>iiector> 5 I'or till ,iiuiiidin>;. .dtcrin;; or rei^'alin^ an> b\' l.iw of the Compaiu nia'le under the .iiithoritx of this or an\ oth' r Statute C S. C. c. t'j, s. S lOa .\ copy of any b> -l.iw of the C'unpain. purporting to be under the h tn.l of the Clerk, Secretary or other ollicer thereof, anil h.ivinv! the coi - I: 'ill II ! ■1 ■ i 1 i iil '■ 1 fi; ;.i il 602 JOINT STOCK COMPANIKS. K. S. 0., i:. 157. jjorate seal of the Company affixed to it, shall be received as prima facie L\ idence of such by daw in all Courts of Law or Equity in this Province. (• S. C, 65, s. 9. DIRECTORS AND OFFICERS. Ila The stock, property and concerns of every Company incorpoiated under this Act or any former Act for a like purpose, shall be managed by not less than three nor more than nine Directors, as provided in the by- laws, and such Directors shall respectively be shareholders in the Com- pany, and a majority of the number of such Directors shall constitute a ']v.orum for the transaction of business. C. b. C, c. 65, s. 10. 12. The Directors, except for the (irst year, shall be annually elected by tlie shareholders at a time and place which shall be directed by the by- la\vs of the Compainy. ('. S. C, c. 05, s. 11. 13a Notice of the time and place of holding such election shall be pub- lished not less than ten days previous thereto in a newspaper printed in th<.' Municipality where the operations of the Company are carried on, or if there be no newspaper so printed, then in a nevvspaper published in the County Tiiwii ( '. S, (" , c. 65., s. i^ ; jj V., c. 32, s. j ; 40 \'.. c. 7, Sclud. A (i.)<.). ' I4> The election shall be made bv such of the shareholders as attend foi that purpose either in person or lis proxy. C. S. C , c. 65, s. 13. 15. All eleciions shall le ly 1 .illot. ,ind e.ich shareholder shall lie entitled to as many votes as lie owns shares of sin k in the Company C S. ('., c. (15, s i.|. 16. The persons receiving the gre.itest number I'f votes sh.ill be Dirict ors. (,'. S. C., c. 65, s. 15. 17. Wlien any vacancy happens amongst the Directors by death, resig- n.iiii'U nr otherwise, it shall be filled for the rem.dnder of the year in the manner provide 1 by the bv-lawsof tiie Company. C. S. C, c. 65, s. ifi. i8. it the election of Directors is not made on the day when according to the by-laws of the Com]iany it ought to be made, the Company shall not for that re.asin be dissoKi'd, but tlu' shareholders mas hold the elec- tion on any other day m the manner provided for by such by-laws, and all acts of Directors until their successors are elected shall be valid and binding as against the C'ompany. C. S. C , c. 65, s. 17. - I I9> The Directors shall elect from among themselves a Chairman or President, and the Company shall also have such subordinate officers as the by-laws thereof rtniuire. C. S. C., c. 65, s. 18. 20. i'he subordinate oUieers shall be .ippointed by the Directors, and iil Li m t;.0.,(;.157. ns prima facie this Province. • incorporated ; managed by led in the by- > in the Coni- 1 constitute a (). ally elected by ted bv the bv- shall be pub- per printed in carried on, or blished in the v.. c. 7, SchitL lers as attt nd •5. s 13- eholder shall Ik' Company lall be Dirt It death, resit,'- le year in the 65, s. 16. len according; ompany shall hold the elec- laws, and all be valid and Chairman f»r ite officers as • ireclors, and R.S.().,c. l^T. \v.\ri:i! comi-aniks. r.():? be required to give such security for the faithful performance of the duties of their respective oftices as may be jimvidcd by the bydaws of the Com- pany C. S. C. C. 65, S. IQ. Sl'KflAL MKETINdH. 2I> The President or any three Directors of any such Company in.iy call a sp.'cial general meeting of the sharehol li'rs f )r miiv purpose, giving at Ic isi ton days' notice by advertisi^ment in one ur more newspapeis published in the Municipality where the business of the Conipanv is carried on, or by a circular mailed to the address of each s'nreholder .it least ten days previous to the time .ippoi'ited for hi>ldii; ; the meetin,'. I ". S. C, I 65, s JO z. If there be no newspaper so publislm^J. the notice in:iy be given i;i the same m.mner as under section thirteen nf this .\ct, ,1 notice of tie Mine ;ind |)l,ii e for h.ildin,' eh'Ctions in.iv b.- ..'iveil, J.; \' ■ 1,2, S. 3 ; .((> \' . c. 7, ,S'i //( (/. A 1 1 I" I .\NNIAb KKI'OI!!. 22. Pvery ("onip.iny incorporated iindi : this .\i t sh.dl. annu.ill;. within twenty da>s froin the first day of );inuaiy. m.ike a report uhii h shall be inserted in s )ine newspaper published in the .Municipality where the business of the Company is carried on, stating the amount oi capital stock of the Company, and the prop:irtion thereof then actually paid in. together s'.ilh the amount of the existing debts of the ('onipany. ' ' S C . c. 05. S. Jl. z. If then: be no newspaper s ) published, the report shall, within liie time aforesaid, be inserted in a newspaper published in the County Town. 23 v., c. jj, s. 3 ; 4(j \'., c. 7, Sclitil .\ (1.(1.1 23. Such report shall be signed by tlii Chairman or President, and a ir,.-ij(jrity of the Directors, and shall be verihe ollIKU OFFICKUS. 24> The Directors of anv Company f.iiling to ■ ompiy with the re(piir- nieiits of the two last preceding sections, shall be jointly and severally liable for all the debts of the C If the Directors of any Company declare and pay any dividend when the Company is insolvent, or any dividend the payment of which would render it insolvent, or which would diminish the amount of its capital stock, they shall be jointly and severally liable for all the debts of 1' t :\ ^ 1 HP 1 ; ; ij ■V- ■1i » j 1 : 1 r l"' ' ; 1 !!l !,. : V ■ mh Bm ■ •! Ill I 501 .lOlNT STOlK lO.MI'AMI.S. l;. S. ()..(■. ],')7. tlip Coiiiiians tliL'ii fxistiiiK' .'iiil fur all thcTi;afli'r (.oiitrartcd (liiriiii; their continuance in oflice ii's|u;clively : but if any Diioctor ohjccts ti> tin- declaring or payment of siu h dividend, and, at any time before the time fixed for the payment there )f, files a ui ittei) statement of siuh objection in the office of the S(xretary of the Company, and also in the Ke^^istrv Office of the County or other Ke^istration Division, such IHrector shall be exempt from such li.ibilily. C S. (' . c 63, s .'4 26> No lo.in of money shall be made !>>■ aii> t'ompans to an\ sh.ire hohler therein , and if ,iny such loan Ije made to a shareholder, the olhcer:< who make or assiMit thereto sh.ill be jointly and severally liable to the extent of such In.iu, with lof,'al interest tiiereon for all the debts of the Companv theieitiei runlr.ut d until the repayment of the sum lo;ined r. S. C . c 05. s .-i 27> If an> certificate or iep.)rt mule, or public notice Kiveii by the oflicers of an_\- ("ompany, in pursuance of this Act. is f.ilse in any matirial re]iresentatioii, all the oilicers who si^jncd the same shall bi- jointly and severally liable for all the debts of the Company contracted uhile they are officers or shareholders thereof resixictively. C. S. C, c. t'^. s 2i> 28« If the indebtedness of the Company at an> lime cxcoe Is the amount of its capital stock, tlie Directors assenting thereto shall be personally and individually liable to the cretlitors of the Conr.vuiy f'r such excess. C. S. C , i . os. s, zj. 29. N\) per.son JMldiiiL,' stock in an\ Company as executor, administra 1 ir. tutor cur.tti'r. j,'iiariliaii or trustee, shall l)e personally subject to an> ii ii)ility as shareholder of such Company, bin the estates and funds m the h inds of such executor, administrator, tutor, curator, guardian or tnistei-. sii.ill be liable in like manner and to the same extent as the testator or iiUe.state, or the minor, ward or interdicted p(.'rson, or the persoi\ interest- ed in such trust fund would be if he were livinj* and competent to act and held the s;ime stock in his own name: and no jierson holdint; such stock as collateral securit\- sImI! be person.ills subject to any li.ibility as share holder of such ( ()mp,i!iy. but the peison pUdj^mu such stock shall be considered as lujUlim; the s,iine, and shall be liable as shareholder accoril- ingly. C. S. C., c, (13, s. jS. 30> livery such exeoitui, adininisirator. luii'r, curator, guardian or trustee, shall reiueseiu the shares of stock in his hands at all meetings of the CompauN, and ma> \(ite accorilingly as a shareholder; and e\i.r\ person who pleilges his st.nk as aforesaid, may nevertheless represent the same at all such meetMii;s, ,ind may xote accordin^ls' as a sharelioldeiv C. S. C, c, 05, s. ^.j, 31. No person holding stock as executor, administiator. tutor, curator, guanlian or trustee, shall be a Director or hold any office in the service of such Company ; and all voles gi\en to them or either 1 f tlu'in shall be void, C, S. C., c. Tij, s. JO 1 <\ I U.S. ().,(• I.")7. (,AS AND WATI'.Il (( iMIANIKS. ')(•.) STOCK l;i)OKS, 32. I In; l»ireLt(>rs of e\t:i\ ('onipaii\ ^hall cause a In ok ic 1 c ki'i'i ly th(' 'I'ri'asurer or Clerk thereof, coiUainiiiK, in alplial itiial okIcp, ilie names of all j)ersi)ns \\h'> are or have been shareholders of the (niiipaiiy^ and showing : I, 'I'hi'ir jijaiis o( residenee ; J. Tiif iiuiiilur of shares of siolI-: held !>> them nspec ti\t'l\ j, 'I'll,' urn \\lintlie> resi)ucii\cly beeame the ouners of tin >l.ai fs ; an- paid in. (" S.C.e Oj.s.ji. 33, Such books shall, diinii:; thf iisa.al b'l'^iiuss hours of the day, oi, ever\ day excein Sund.i> s and hiJihiNs, be open for the inspection ot shareholders and credilorsof the ("ompans , and their pi .sonal itpresent,! ti\es. at lh(! olfice or jiiincipal pbice of business of the ("oinpans when- the o]ie:ations of the Comp.ins are carried on (.' S. (' . e. (15. s <2. 34-. livery shareholder, creditor or represiniative may make cMract.-. from snch book: and no transfer of stock shall bi' valid for any purpose \vhate\er t \, cpt to len ler 'hr person to whom it is transferrid liable lor the debts of ijic (Onip.my, until an entiy theii'of ha-, been made as required by the thirty-second section of this Act, and showing to and from whom such stock h is been traiisferre 1 C. S. C, c. 05, s ^3 36. Such books shall be f>niiiti /d./V evidence of the facts therein Slated in favour of the iilaintiff in any suit or proceeding against the Com piny or against any one or more shareholders C. S. C.,c. d^. s. 54. 36> b\er\ olticer or agent of an\ Company who refuses or neglects to make aiw proper eiur\ m sm h bock, or to exh.bit the sime. or allow the same to be inspected and extracts to be taken therefrom, shall be liable to a tini' of forty dollars, or more or less, at the tliscretion of the I>irectors. C. S. C. c. 63. s 35, 37. I^er\ Conip;tn\- that ne.;lectsto leepsiicli book open for msiiection as aforesaid, sli.ii: forfeit the corporate rights, character and jirivileges aciHiired b\- it in pursuance of this Act C. S. C., c. 65, s. 30 Sll.VUKS AM) THEll! THANSl'KK. 38, The stock of every Company shall be deemed personal property, notwithstanding the conversion of the funds into real estate, and shall go io the personal lepresentativis of the shareholders, and shall 1 e assignable >()<; JOINT STOCK ((iMPANIKS. I{. S. ()., C. lilT. and tiansfoialilc in sncli manner as may hf prtstril)e "i till- Tompany. C. S. C . c. 0^. s ^7. 39. No shares shall Ik,' transferable until all previous calls thereon, aii.l all (lc'l)ts (hie to tin; Company liy the sharehoMer wishing to transfer his shaie, for Kas, water rent, fixtures or otherwise, have been fnllv paid i>r until the shanks h.ive been declared forfeited for the non-pavmenl of ( .ills tlieri'on. ('. S. ('., c. 65, s. 5*<, <40> Xo transfer of sharer, shall be vaiid unless entered .md registered ill a book or iiooks to be kept for that pur{X)se in the manner pro\idi;d by tile bv laws of the' CoinpaiiN (" S. (" . c. 1)5, s jij. 41. Xo t'ompany shall use any of its funds in the pnrLhase of stock in any other corporation. C S. C... c. t>5, s. 40. ill 1^ INfltKASlNci THl". CVriTAL STOl'K. 42« Wlu never ,1 majority of the Directors of any Company are of opinion th.it the i.ipit.d stock thereof i-, jnsutficient for the purposes for wliiih the Company li.is been incorp«irated. they may call a ;;encral meet- iiij,' of the sliareholdtrs of the Company (jjivinf; at least ten days notic of the time and place of mei^tini;, either by advertisement in one or mor. "f the newspapers publislijd in the Municipality where the operations of ilio CfJinpany ;iru carried on, (or if, there is no newspaper so published, ttiin ill the manner pres;rib 'd in s ction thirteen for fjivin^ notice of the time ol holding a ineetinv; for the election of l)irectors.) or by a circular ad- ilresscd to each sliareholder, and mailed at least ten days previous to tlu time appointed for holding such nieetingl. antl a uicijority of theshareliold. ers who attend .and are present at sir, h meetins; mav pass a bydaw t'oi lu- cre. isiiig the capital stock of the Company to such .imoiint as tlie\ diem necessary for carryinn out the ptir{x>st»s of the Company, but not in tiie whole exccedin.i,' the amounts resj-x-ctively hereinbefor»r mentioned, .and for .uithorizing the raisin^; of such .idditional capital by increasing the num- ber of shares of twenty dollars e.ach into which the capital of the Com- pany is or may be divided, anil for enabling the Directors to recei\e suii- scriptions for the whole or any p irt of such additional capital from .un- person or body corporate, or otherwise, under such regulations as may b • made by the Directors in that behalf. C. S C, c. ^5. s. 41. ; 23 V., c, _>,2. s. } ; 40 v., c, 7, Sthtd. .\. (14"). 43. The name of every subscriber for any new or additional stock s > .luthorized to be subscribed for in any such Company, shall be forthwith 1 ntered as that of a sharehoUler in the register of shareholders of the t.'oinpany, with the date of subscription and number of shares subscribed for; and thereupon such shareholder shall become liable to the r)irectors of every such Company for the payment of the full amount subscribed, ill such instalments, and at such times as the sai all the I{..S.O.,t'. I'JT. (IAS AMD WATKU CO.Ml'ANII-H. r)(>7 conditions, restrictions and linliilitics, and iiilitlfil to all the ri;,;hls, privi- lej^es, l>fnetits ami advantant's to uhich tlii- original sliarfhuldtTs may thenceforth be subject nr tntit ed. . . S. (' , c. ()5. s ^j. CWA.a. 44. Every sharfluikk'r shall he In Id liable to the Directors of the Company for the payment of the full amount subscribed, and the Di- rectors may call in and demand from the shareholders thereof, re- spectively, all sums of money by them subscribed, at such times and in such payments or instalments as such Directors deem jiroper. pro\iItil (hat no ..ne instalment sh.ill exceiul ten per cent., and that not less than one month shall intervem; betwei'ii the calls for any two instalments is.ue and except in the case of any original stock of any Company forme 1 be- fore the thirtieth day of May, in the yerir of our Lord one tln'iisaiul eif,'ht hundre.i and lifty-fue, in which latter case not less than three months shall intervene between such calls). C S. C , c. 05, s. 4 ! 45. If payment is not inade by the sh.ircholilers respectively within sixty (lays after a personal demand, or after notice reijuirinn such pay- ment has l)een published for six successive weeks in a newspaper published in the Municip.ility where the business of the (^)mpany is curled on, or if there is no newsp.iper so published, then a newspapei' published in thi- t'ounty 'I own. the Directors may declare forfeited the shares npon which the said instalments have not bei-n paid ; which forfintun; sh.dl be a dis- charge to the holders of the shares so forfeited ficjin all further liability either to the Company or to any third p.irty in respect of the; shares so forfeited ; but the holders of shares so forfeited shall lose whatever sum or sums they have paid on or for such sh.ires, and 110 more. I". S. C, c. 66, s 44 . jj v., c. 32, s. J ; 40 v., c. 7, Silini. A. 1 142). 46. The I^irectors may sue any shareholder for the amount of the e.iU .)r calls on his stock due ,ind not p,'iid, instead of ft)rfeiting tiie same, C S C, c. hj. s. 43. 47. it at the time appoinx-il for the pa>inent of any call, any share- holder fails to pay the amount of the call pay.ible by him, he shall be liable to pay interest, at the le^al rate for the time bein^'. for the same fpim the day app 'inted for payment thereof to the time of the actual pa> - mtnt, and may be sued by the Directors for such call and interest in ;iny Court of Law or Kquity of competent jurisdit tion. C S. <^ , c.65. s. 4I). 48. In a suit or action to recover any money due u^ion any share, it shall not be necessary to set forth the special matter, but it shall be sufficient to declare that the defendant is the holder of one share or more, stating the number of shares, and is indebted in the sum of money to which the calls in arrear amount, whereby an action has accrued to the Company by virtue of this Act. C. S. C, c. (15, s. 47. ,')< IH .miM S|<'( K (iiMI'AMKS. II. S.O., C. l')?. 49 \i llir trial nf sin.li .ictiim it shall lie siiflUicnt to yvovo the facts so • Ic liif 1, ami tlu' cviiiciHo of oiu- witness in h.'S|h'i t of .ill facts ic(]tiircil td 111' piiivi'il slial! lit' priiua f'tuir siillii ii'iii witlioui the ]iiiiiliuliiMi of .-in\' ("oi iiMirntaiv I'liiof \vhatc\('r ('. S. C , i'. 63, s, 4,«. .MINK II'AI.ITIKS 'lAKINCi Sl'txK. BO. Aii\ oi till' MimiLipalitits ill wliicli tlu' works of any sir li (■oin)Min' an- iMCcteii or placiMl inav snbsiribc t > or lako stock in tlu; (■onipnns . 01 iiia\ loan any sum of iii'iiu'>. on inort^;aK<' or oihcruisc, to the ("oinpan\. 01 ■ ontribnti' in any nianni:r lo\^arils ai!\aiuinK the ohjc. i foi whiili the (■'•inpaiu has been incorpoiatc<; ( ' S. C . c (15. s. 50 SI. Tlif iloail for the tunc ln-in),' of am Miinii'ipality hoMinf,' stork m ail) such foinpany to the extent of ono-tciitli pan 01 iiiori' of the ulioli' of the capital st(x.'k tliercof. shall he < i i>fii,ii> a Uiieetorof the Coiiiiany so l-'H;; as such Municipality eontimies to h.iM stm k t" the < stent afori said c. s. c c. 05, s. 51. AMKNS. B2a Aliens iii.i\ hoi 1 ■^t 'ik in an\ siu h (".iiiipam. and enjoy all the )in\ i!'. K'<"' in the ('oiiipin\ wliii 1 1 M i|e-.t\ (■ S (■ . ( (.5. s I iliev w.ni '1 hl\i'iftlle\ \M| •■ silijei Is of >i ! bni roWKIlS or CnMI'AMIs 83* I \ei\ ("oinpinv iiia\ s( 11 aiil ilispo'-,' of >^as nii'iii ■> and v;a , and u i'.-y ■itinijs of i'\civ (li^scripiioii I'm; tlie iilis!riiciit, conipanv or corporation whatsoi'ser, a^ well as coke, coal tar an 1 all an 1 evcr\- the pr.)ducts of tlieii wurk^. refuse c.r ivsidiiinn arisiii,; 01 to hrobtaine 1 fi. kh the materials used in 'r iieer^sarv to|- tlu- in iiiiifavture of (las; aiiij e\erv Coiiipany mi\' le-t out to hiri' ^as iirMers. an 1 HA-i a!id .sater (ittiii'.^s of every kind an I description, at siidi rite and liUits ,is in tv 1>.; ai,'re ■ 1 up >ii hetwe.n the cousiiiners or tLMiaiiis I sill ii ('limp, 111) (■ S (" , c. fii •)''• jBi4i .\ii> siu h (' I'll ;i III \ 111 i\ lirt'.ik up, di^ ,in I lieiu h s 1 nniv h .and s III IT «f the siii'eis, sipiiie.. hinhways. l.llles .nid public pl.ues of tli MuMicipnhtics foi su|>pl> in;; whii li witli (iasor Water, or both, the om P n. has b< Ml ill •iipnrated, .IS lie, t'ss.ar\ for la\iIl^; the iii.iiiis .md pipes to CO'- lilt I the (i. IS or W aiei "I botli, fioni the works of the ("om p.ipy t 1 the cimsiiiuer-i tiieri-of, dom; n 1 uiini'iiMsary dain.iKe m die pre mise.s .iiid t,ikin« c.ire .is far .n may be t• mares, highways, lanes and pubhc •pi act's, while till- uoiK^aie in pn (■ S ( 5.1 6Ba W hen aii\ sill li (■oiiipin\ h.is l.inl down main pipes for the siippl) of (i.is or W iii'i I'l 01 th'oii^h .iii\ of the strrots. sipiares or pubhc places m >i H I . H.S ().,(•. ir)7. <-AS AND WATKK COMI'ANII^S. :)()!> of an\ Municipality, no otlicr ) km son or pcisniis. lioiln'-, poliiii mi oi pi.i.iii', shall, without the consent of such Company tiist li.nl ,iii-i'r Wati'i" within s!\ fct.-t of sulIi ("oinpany's main iiipes.(>r if it lie inpr.n-- ticabU' to tut ilrains for such otiu-i main pipes at as^tj-atii distaiu" tlicu as Mi-arK si\ tc-ct as tiie i ircumstatici's of the < ase will ailniit. ( . S. < " . ( . 6i, s s»- 66i \\ lull tilt It' ,ii't' lanliliii;;s uidiin tlu' Municipality the >lillt'i< lit parts v.heieof heloiiK to ijiffereiu jiroprietois, or ate in possession nf ililferent tenants oi lessees, the Company may tairy pipes to any pan of any building' so situate, passing oxf- the property of one or more propiietors ip.' in possession of oiv; or niori; tenants to convey thetiasor Water i>r both, to the piopiits ot another or in possession of another, and siu li pipes shall lie carri'-d up m.l .utaclifd to tlu' outside if ilic biiildiii'^ (' ^ i", '-•• f>5 '^- 55 91, The Company may also break up and uplift all passages ounmoii ti 'lei^^hiiourmi' proprietors orten.ints, ;incl Aiji m t iit trciu es therein I'm- the p;iT (lost! i.f layinj^ down pipes or takin){ up or rep. ni inn t'lu same, tloiitk,' as litde dania;,'!! as may be in tin ■ Aecution of the powers ^^ranted by this A t C C c. 05, s. 88> I^\''iy Company .sli.ill iii.ikf ^.itisfaction to ihe owners I'l |>roprii ii >i s ' liuiMinns or other proptuiv, or to the piiblit . for all ilaiiiauesby them -ustaiiu;il in or by ilie e\i i ulion if .ill or ;in\ ot the said pi'Ui r-- subject to which provisions thi-; \i 1 sl-.all be -.utlii i-'iit to ludeiimifv ev. 1 v siuliCiii- p.iiiy and their ser\ants .and those by them emploved. for \vli,it they or any of tlieiii do in pursii.in e o| the p.)\\ers hert;by granted C. S C , 13. s. 57. 80. I-AOrv sui li C.uiip.iln sh.ill loiistlUtt .le' Im.ite tlliil 1 I.i^ Welles .Old W'.iler W.iik-- .iiid all .ip, .1I11-. .md .ip[ t ti ii.iiii . ■> tlnieunt" belon^inv: or appeii.iinin^,'. ^'V tli' with tonnei,;' .iinl wheresocxei siiiia;ed, s I .IS not to I iid.mnri the piiblii he.ilth Mr s.ifei\ C S (" c, ('.5, s, sS. (OMI'VNIKS lUiIIKdW INi; MdNKV. 80 Anv ; °oni|>.'iii\ in.iv, 1 itiii 1 111 thi-> i"io\ im c or .ut of it boriow iiiiini> ,it .in> rate ol interest, (mioiitoitiiit'. \mi1i the law>ol ('.inada) tli.ii the I'resident and Oirectors of the t'oni|Mn\ deem necess.arv- t". S. ('. f »i5, s.fi^, 81. The sum so borroui'd >h.tll not e\y an 1 with (lie c.insctit ol ri majority of tlic Director;, m ty iii(irtL;ai,'('. si'citn' aii'l assign the real cstativ works, rales, revef.iie., rents aii'l future calls on shareholders of tiie ("i .nipan\ (" S. C , c 65, s (k) 63« All bonds, (khentures or other securities granted for the purpose afoH'said may l>e made payable to bearei or transferable b> endorsement or .'therwise. as the Diiectors see tit : but no such bond .r debenture shall Im- made (>r^j;ra!ited r(.r a less sum than two hundred dollars. C. S. C. c. 65. s 70 'I'he bonils debeniiiies, future calls or other securities so granted ant.1 pledged as securities for money borrowed, shall he eipiitably and propurtionabi)- liquidated or paid out of the funds or receipts of the C'oin- pain . without lucference to any of buch securities over each other. C. S. (■ . c. t'S, s 71 68> N" sui li bonds or debentures or other securities so pled(i;ed siiall prevent the Directors of the Cotnjiany from receiviii},' and applying such .>ituii » .ills to the purposes of the t'oinpany, so loii^ as the money due <'ii all sn> h bonds .and debentures dcx's not I'xceed the amount i)f all trio calls stdl remaining unpaiil (' S. C, c. ()5. s. 72. 66i I'he Directois of any such Company, by a resolution entered upiui the books of such Company, and without the foi niality of |5, s. 74 6Bi All such bondv conti.tcts. mort>(aR<'s and instruments so si^;ne 1 and sealed by tin pi^rson ,iuthori/od a-; , (foresaid, an i .ilso such notes and bills so signed, di.iwn or accepte.l In tin person authorized as aforesaid, shall be valid and binding on the ('omp.iiu', and bi' lu-ld to be the ,11 t and deed of tiie Company ; but such bonds, bills or debentures and securities as afores »ifl shall not exceed the amount which the Company is by this Act euijMivered to boirow C S C , c. 63, s 75. ItKHTHlCTlONf. 00 Nothing containt d in this Act sh.dl .uithorize any such Company, or any pers<»n acting under iht; authoiii> ( U.S. ()..('. 1">7. liAS ANI> WATKl: COMI'ANIKS. r.ii injuic fur the i)tiri)iis('s of the Comiiaiiv , .iny Imusc or oihrr iMiildiii);, or ain' land usud or si't apart as a nardfii, orchard, yard, park, padduck. plantation, plaiitcil walk i>r avenue ' > a house, or nursery ^Tound for trees, or to convey from the premises oi an\ jierson any water already appro- pi iated and necessary for his domestic uses, without the consent, in writiufj, I • the owner oi owueis iliereof first ha^ 70 NotliiiiK in this Act shall aiitliori/e any Tompany establislu'd under !t !■) interfere with or infringe upon any exclusive privilege )»rantcil In any th.-r ('omp,-iny. v". S. C, c (15, s. 86. ii;(»iiiiUTi(».Ns ,\,M> i'i;NAi,rii;s. 71. 1.' an> person la\s or cans s to be laid ans' pipe or main, to com- inuiiicate with aii\ I'ipe or main behjiiKinn tn any such Comiiany.or in .ins ua\ obtains oi' uses its (las or Water wiihout ihe consent ol th'' (!!oinp.iii> . he shall forfeit and pay to the Conip,!!!) the sum of one liiimired and I', ni lollars. and also ,1 further sum of lour dollars for each d.n during uluch such i-ommuiiic;itiou remains, which sums. toK'ether with co^t-. of suit in that behalf incurred, m,i\ be recovered by civil action in any Court ol Law in this I'rovince h.-iMii^ the jurisdiction to the amount claimed. c. (.5, 5') '?2 If aiu' iK'ison — I. Wilfulh or ni,iliuously breaks up, pulls dowudi d.imanes, injures, put^ out of order or destroys, any m.nii pq*'-. engine water-house jiiiH\ piuu or other wurk.s, or apparatus, appiirien.inces or dependencies thereof I r an) matter or iliin^; made and provided for ilu' purjX'se aforesaid, 01 .any of the materials used and provide I for the same. <.r orderein wliich tlie wi.ter belonging lo the t omp.iny is lo lie supplied or cotivevcd : or I Increases the supply of d.t, or Water aiiieevl for with the Coiiipiin, bv incre.ising the niimbei or si/e ol the hole-, in the n is bnriieis, or nsir,i{ the gas Willi 'III burners, 01 otheiwise wrongtull) mgligenti) or wjtslefuily i i ' .'■ •■l ;, \ , 1 K 1 m% hi'i .IdlNT SI'Oi K (•()M".\NIi;s ILS-O-.C'.]."*? liMinin^; tlu' same, or liy uinnt^fiilly or iiiipiopi'ilj biiiiiinj^ ilif saiiu', in thr locality uhorein the offence has been conimitteil, be compclleil to pay for the us(i of the Company a pt iialty not <>x( i;o(linL( twenty dollars, together with costs of prosi'cntion.or be conliiU'l in the coninioii gad of snc h <"oiint>' for a spaije of time not exceeding three months, as to such Justice seems meet. C S. ('.. c. (15, s fio. 73 Noihini; in this \lI contaiiicd sliall pievent any [urs. lU fiMm com- sirnctiiif; an> uorKs for the sujiplv of (las or Water lo liis own pKiiiises (■ S. (" . e. (1=;. s 01. 7^ NCithir the service noi I onm . lini; pipesof -,ii(h ('.■Mipan\ nor anv mi'ters. lustri's, lamps, pipes, L;as !tttiuj;s or any other property o( any kiuil whatsoever of the fompany, .-.hall be subject to or liable for rent, nor liable to be seized or attacheil in an> way b>" the possessor or owner of the premises wlieroin the same ma> lie. nor be in any way whatsoever liable to an\' person for the debt of any pi'rson to and for whose use or the iiseof whose hous'; or building the sani' 'nay be supjilied by such Company, notw uhstandinu I'e acinal or apparent possession ihereol \\\ -,\v h person. (' S ( ' , ( f)5 s f).>. 76 If an-, iH'ison w Willi V or tnali' loiis Iv .la or causes or kii' ngly sutlers to be dama^;ed any meter, lamp, bistre, servije pipe, or lit. tint's belouuiiiK to any such ('ompaii\. or ilfidl y impairs 01 knowi ukIv utieis ilu" same to be altered or im[)aired so tliat the meter o- mett.'rs dilate Ks-. K.is than a(tiiall> passes thr. in- the same, siieli person shall lllCll r ,1 peiiallv to the use of the ("oiiipan> for e\i ry illenee, ot a sum not less iliaii four dollars nor esceedill^; t\\<'ntv dolKn , ;inil shall also pay all charges necess,ir\' tor the lepaiiinj^ or r( plauii:; the s.-ed iiuti'r, pijX'S or hitings anil doidile the \alue ,i| the surplus ;^as so ii'iisiimed; li il. images penalties ,ind ( hargi's to be reioMMe 1 with costs as here 111- ifter del - f , C. Ili 7© If an> jieisoii wilfullv exiiunuishis any of the public lamps .ir iglits, or w iltii lb ives. ilesiro>s, damages, fraudulently alters o r in an> \say injures an\' pi|H', j)cdesial. post, plug, lamp or other apparatus or thing btdou;.;ing to tin- Company, he shall forfeit and pay to the use of the Coiiip.iin aptiialtv , lot less tiian f(jur dollar-i nor more than twenty dol- lars, and shall also be h.iblc to m. ike gooil all d.imagfs and charges, to in- recovered wilh I osts as heieinalter provided ^. ( 77 If ipplud In the (■onip.iiu wiili ( ;.i> W.it er. or both iieglec Is to p.iN tile reiii, rate or charge due to the Company ;it any of the imies li \j d toi the p.iyiuent thereof, the Conpiuy ot .mv (lersoii aitiug tiiidei till II authority, on giviiij; forty eight hours previous notice. >..(•.! ) ( . 1{. S-O-.C-loT. (IAS AND WATKI! COIM I'ANIKS. 618 line, nr l>\' ty u herein 1st! of the ill costs of or ;i space ;et. r S. from coii- I iiu-inisi's. \ 11' ir .nu- ll .Ills kiii'l r rent, nor r owner of i('\er liable the use(jf ('oinpan\-. 1 h person. 1 know- 1" , I'r lit. knowiiifily neti'r-; in- is.in shall leni e, I if a shall .ilso iaiil meti'r. Misuineil , IS lleli-ill lanip-^ .ir teis oi ill iaratii> m use of the entv cl"l- ;es to lie 'I- S\ater. 'ir i\ ,ii .my per>"M noiu c, niav stop the supply of ("las or Water, or both, from entering the premises of the person m arrcar as aforesaid, by ciitlin;,' off the service pipe or pipes, or by such other means as the (Company nr its officers see tit, and may re. cover the rent or char>,'e due up to such time, tof,'ether with the expenses of euttinK off the '^'-as or Water or both, as the case may l)e, in any compe- tent Court, notwithstanding any contract to furnish for a longer time. (' S. C c. C)!^, s, 65. 78. In all cases where the ("oiiipaiiv nia\ lawfully cut oti and takeaway the supply of Oas 01 Water, or both, troiii any house, building or prem- 'ses, the Coiiipanw their .agents ,ind workmen, upon giving forty-eight hours previous notice to the peisoii in charge or the occupier, may enter into the hi Use. builihng or premises between the hours of nine oclock in the forenoon and four in die afternoon, making as little distuibance and incoiU' nieiic<' as possible, and iiiav remove an^l take away anypifx-, meter, ccx;k, i)rancli, lamp, Itttings or app.iiatus. thi' projiertv of and belonging to the '^ompany, and any servant of the ('ompany duly authorized may, be- tween the hours aforcisaid, enter any house into which (ias or Water or bcth have been taken, for tln^ purpose of repairing and making good any ^uc!^ house, building or premises, or for the purpose of examining any meter, pipe, or apiiaratus b(>longing to the Company or used for their 'las or Water or both, and if an\' person refuses to permit or does not jieriiiit the servants and nfficiMs of the Company to enter auvl perform the acts .aforesaid, the person so refusing or obstiiuting shrill incur a penalty tf» the Coaipanv of forty dollars, and a fin tlier penalty of four dollars for every ft. KNFOUCT.JIKNT OK I'KNATTIES. T9 .Ml lines, penalties .ui.icit\. where the offeni:e has been ciniimitted. on th'' oath o| .my mii- < icdible uiiness (■ S C , c 6s. s 70. 80 .Ml a( tioiis for damagi^s or }n.-nahi( s nr both given by this .\c 1 shall 1 e liroiight in ("ourts h.'t\ ing juiisdi( tiou to the .amount involved in sue I1 suit, uiih'ss otherwise siTeeialK jMnvided .and .luliiori/eil by this Act. C. S C, c, r.v s. 77. 81 WluT.; daniiages as well as a peii.ilt> m.ay be gi\'n such damages, and penalty may be sued for separatelv. auil such lines penaltie-. ami ilimagesmay be levied by distn;ss from the goods of the defendant, .and in 1 ise the defendant has no goods to satisfy the same, he shall \ic ommitted to the common gaol for such period not exceeding two months as tin- |us- lice or Court m.a\ dire* t. C S C . i C)^,. ^. 7S S4 H.r. '•'Il''' 11.'; 1.1 511 JOINT STOCK COMl'AN'IKS, 15. S. ( )., C. 157. Al;' 'IHATIONS. 82. If it In; fiiuiul necc-ssaiy or deemed propc-r to conduct any of the pipcfs oi- to i:;irry any of the works of tlie tJoinpany through the lands of any jierson, lyinn williin ten miles of the Municipality for supplyinK which 'he Company is incorporated, anil the consent of such jxjrson cannot be obtained fm ihat purpose, the ("ompans may nominate anil appoint one iridiftiTeiit pers in, and tlie owner f the land taken or damaged may nominate an;'; what sum or sums of money respectively shall be paid to the owner or owners of the properls so t iken 01 daiiLi^e 1 bs the t" jmpany. (' S. C, c. 65, s. Si. 84 'I'lu' sum iT sums of mone\ so a\>arded shall be paiil within three iiMiith^ lifter the d.ite of the aw.ird. and in default of such payment, the pii'piietor inav resume the possession of his property, with all the riKhls ,i|il ' rt.iiniu).; thereto. (". S. ("., 65. s. Sj. 8B< 111 tile e\ent of either the Coinpaiis or the owner of such pro|»erty f.iiiiiij; to appi.int an Arbitrator, after ei^'hi days notice frum one of the s,iid parties to the other, or of the s.iid two .Vrbitrators failing; to appoint a third, the |ii.lKe of the (\)unty Court of the County within which the sai 1 propeiu lies ma\ appoint a third Arbitrator, and the decision of the sai 1 thr<'e .\rbitr.it"rs, or a majority of them, sh.iU be bindiu),; on ,ill j.ar- lies concerned. C. S. (.".. c. t>s. « ^.< MISCKI.I.AM.ors, 88 '11 .lb i'ioi.ee lin).;s which ma> ha\i' been li.id or taken undiM' the .\ct jiassed i;; ti,e sixteenth ye.ir of Ibr Maje>;\ s reikjn tn provide fi r the fi>r in.ition ipf Incorporated [oini Sink Companies f.^r supplying; Cities, 'r'iwr> ancl N'ill.i); s with (ias ,Mid W.iter, or in or about an\ I'onijiany in- coipoiateil therenndi r, the wmd " 'rriistees. wheie\er the same occurs, shall be tal- n to be .tnd lon^tiiied t" me.m the Directors. C S. C . c. 65, s s- S7. Kverv C.mipany f.)rmol cr m the- course of bemu formed under any fimner ^Mieral .Vet respecting Joint Stock ( ompanies for the jmrposo nienlione 1 m thi. .\ct, when this .\ct takes effect, snail continue, or the loimatton thireof be coin(ileled under and subject to the provisions of thii \ct III like 111 inner as it such Coinp.inii;', h.il origin. dl> been formed un- !»•! this .\u C S (' , I o ,. ^ s^ 98 No .iiiiendnient or lepe.il 111 tlii^ Vil. nor the colisetiueiU dissulii- II n of an> corporation create 1 under this .\ct, shall take away or impair any reined v jjiven against an;, such corporatKJn. its shareholders or oHi cers, foi ;ip\ liibil'ty which had ls«?,-n |>reMi>usly incuired. C. S. C, c 65. s. !Siiu ssliii h till on lit till' ill pal- er the Act r the for UH Cities inpaiiv iii- le occurs, (' c. (15. ned Ulldcl e iiiirpose> lie. or tlie ons of thi-. onned tin 111 dissulii or impair Ts or oiti S. C, c t.5, CHAPTKK 17 J. AN ACT HMSI'ECTINO THK CHAXGINC Ol THI': NAMLS (>!• INCoKl'OKATHD COM PAN IKS. (Rev. Stats Out . Cap 1-2 ) Chiiii^f of iiiiiiii- 11)1 iippliiiitiiiii to Cliniifri- (if udiiir not to afhcl liiihili- the Litutiiiiiiit-dovtrnor, ss. 1-5. liti of thr Coiiipauy, i. 6. IT l-.H MAJIIS'J'V, by and with tlie advice and consent of the Lenisia- *■ •*■ ti\e .\sseinbly nf the I'rovince of Ontario, enacts as follows; — I. Where an> iiicorpnrated company within the lej^islative atithorit)' of i!ie LeKislalure of the Province, whether inco_.iorated iindei .1 special or >;nu'ral ,\ct, is desirous of channinn its name, the Lieutenant-Ciovernor .ipoti beinj; satisfied that the Company is in a solvent condition, that the change desired is not fur any improper purpose, and is not otherwise ob- jectionable, and that the notice hereinafter [irovided for tias been duly ^;ivell may, b\ Order in Council, change the name of the Company to some i..ther name set forth in the said Order. 40 \'., c. S, s. (j(j (i). 2 The (.'ompany shall yive at least four weeks' previous ixnice in the Uiiliiiio (iiizitti and m some other newspaper published in the locality in v.hich the operations of the Company are carried on, of the intention tu apply for the change of name, and shall state the name proposed to be adopted. 40 v., c, 8, s. 60 (4). 3 In case the proposed new name is considered objectionable, the !.ieutenant-(iovernor in ('ouncil may, if he tliinks (it, change the name of il'.e ("ompany to some other unobjectionable name without itMpiiring any iiirilur notice to be given. 40 \' c. 8, s 66 (4), 4 Such change shall be conclusively established by the insertii;n in the Ontario (iiitittt of a notice thereof i'\ the I'roxincial Secretary. 40 V., c. h s. 66 (J). S. .\ny affidavit or aftirmatinn proposed to be submitt(;d for the pur- I'losesiif this Act, may be sworn or maile before any Commissioner for taking affidavits in any of the Superior Courts, 40 V., c. S, s. f)t> (2) #. No contract or engagement entered iiito l.y or with the Company, and no liability incurred by it shall be affected by the change of name, and all -uits comtmnceil by or against the Company prior to the change of name may be proceeded with against 01 by the Compan\ under its former name. 40 '»' c 8. s. 69. CHAPTER 8. A\ ACT TO ria)\Tl)r. VOR certain AMKN'DMKNTSOl'TTri- I.AW (.)() Vic , Cap. S, Sees. C)2—C>y both inclusive.) (.lsi ScLtion ten of •The Oiitaiio Joint Stoik Companie?.' I.ctturs Patent Act, if^74. is heitjby amended by strikinj,' out tlic \v()rds "any real estate rc(]uisite for the carrying; on of the undertaking of such Companv'. and substitutinR therefor '■ real estate subject to any restrictions or ci'n- ditions in the Letters Patent set forth." 64> Where a notice has been published acconling to iht> rules of tlu- LeRislative .Assembly for an .\ct incorporatiiif^ any Company, the incorpo- ration whereof is sought for objects for which incorporation is authorized by the 'Ontario Joint Stock "ompanies' Letters I'aKmt .\ct, 1874," and a Hill has been introduced into the said .\ssembly in at.cordarce with such notice, and is subseipiently thrown out or withdrawn, then in case a {tt'tition to the Lie\iteiiant-Cio\eriior tor ihi: incorporation under such .\ct of such Company is tiled with tln' Provincial Secretary within one month from the day of the termination i>i the Session of the .\ssembly for which the said notice was niven, such n( tice may 1 e arc >pted in iieu of the notice reipiired by thi' fourth section of the saiil Act, ENTS 01" THK f m.iilIi. 187; : nt of the I.ci;'.--h- as follows: — \TKNT. )tock i"onipanio> le following snl'- :ite stich of tlii? ;tal)lishe>' I.rtltiis words ■' an\ real such Company, •strictions or ron- o th(" rules of tin- my, the incorpo- tion is authorized t Act, 1874," and )rdarc<; with sui.li 1, then in case .1 )!i under such .\ct within one month ssembly for whuh lion of the notice AN ACT TO AMKN'I) TlIK LAW. r>i7 6B> Tile Lieiiteiiant-dovenior may dispense with the publication of the notice mentioned in section four of said .\cl in any case in which the cajiitai of the p.oposed crompany is three thousand dollars or under, and in such case the petition to the Lieutenant-Ciovernor shall state the jiar- ticulars inemioned in section four in addition t j the particulars mentioned in section live. CiiANiiE OK Name of Comi'aniks. 66« Where any incorpuratcd Company wiihiii the legislative authority of the Legislature of this Province, whether incorporated iiinler a special or Keneral Act, is desirous of chaii;,'ing its name, the Lieutenant-Governor upon being satisfied that the Company is in a solvent condition, that the v.han,!;e tlesired is not for any improper pu.pose, and is not otherwise objectionable, and that the notice hereinafter provided for has been duly given, may, by Order in Council, change the name of the Company to some other name set forth in the said Order. (2 ) Any affidavit or affirmation proposed to be submitted for the pur poses of this section may be sworn or made before any Commissioner for taking affidavits in any of the Superior Courts, (3.) Such change shall be conclusively established by the insertion in the Ontario Gazette of a notice thereof by the Provincial Secretary. (4.) The Company shall give at least four weeks' previous notice in the Ontiiriu Gazette and in some other newspaper publish»id in the locality in V, hich the operations of the Company are carried on, of the intention tJ ajiply for the change of name, and shall state the name proposed to be a lopted ; ami in case the proposed name is considered objectionable, the Lieutenant-Ciovernor in Council may if he thinks fit, change the name of the Company to some other unobjectionable name without requiring any further notice to be given. 67. No contract or engagement entered into by or with the Company, and no liability incurred by it shall be affected by the change of name ; and all suits commenced by or against the Company prior to the change of name may be proceeded with against or by the Company under it.-i former name. ii 1:1 ts; ; I CHAl'THK 3. AN ACT IxESPECTINc; Till': WINDINC IP Ol- JOINT STOCK roMPANirs (41 Vic , cap 5 ) [Asscuti-t".> incorporatiul by the Le^islalnri! of the Province of ( mi.irio. or nndor the authority of any Act of this I'rovince, and to all companies ami associa- tions which wen^ incorporated by the Parli.Mnrnt of the Province of Cpper Canada, or of the Pro\ince of Canada, or under the aiithoriiy of an\' .\ct of the I'rovince of Canada, whose incorporation and the afl.iirs thereof, li- the particulars hereinafter mentioned, are subject to the li'^islative antlvir- itv of this Province. INTEnriU'.TATIoN. 9 Unless otherwise expresseil, or otherwise in the assets of a company under t!iis Act, in the event of the sanu; beiim wound up; it shall, also, in all proceedinj;s prior to the final di;terniin,it: m of such persons, include any j'wrson alleged to be a contributory . },. If any contributory dies either before or after he has been placed on the list of contributories herinafter mentioned, his personal representa- tives, heirs and de\ isees shall be liable in due course of administration to contribute to the assets of the company in dischaiuf of the liability >t vuch deceased contributory. an v;iven ; 5. The expression "special resr)lution ' in tins Act means a n-sointiun passed in the manner necessary for an extraordmary resolution, where the resolution, after liavinjj been so passed as aforesaid h;is been confirmed by a majority of such members (t-ntitled accordinjj to the .Act, charter or instrument of incorporation or the regulations of the company to voti 1 as may be present ir. person or by proxy, at a subseijuent general meetnii;, o| svhich notice has been dul\' yiven. and held at an interval of not less than fourteen days or more than one month from the ilate of the ineetin>» at which the resolution was tirst passed. WHKN CO.Ml'ANII'.S MAY liK, WolND IT. ♦. .\ company may bi^ wo.ind up under the \< t I. Where the [lerin 1, if any. lixed for the cluration of ih,- company by the Act. charter or instrument of incorpf)ration has lApireil : or where tho i\ent (if an>) has occurreil, upon tho occurrence of which it is provided liv the Act or charter or instrument of incorporation th.at the comj^any is to be dissolvid ; and the company in ;;eneral meeting has passed a resolu- tion leqiiirinf* the company to be wound up; J. Where the company has passed ;i sjn-c ial resolution (as hereinbefore delinei has passed an extraordinary resolution (as hereinbefore defiiiel by the liipiidator, may be registeied in the registry office of any county, riiling or ssHd .^% IMAGE EVALUATION TEST TARGET (MT-3) 1.0 I.I fM IIIIIM 1^ 12.0 1.8 1.25 1.4 III ,.6 •• 6" ► %. ^ /a y y m A Photographic Sciences Corporation 23 WEST MAIN STREET WEBSTER, N.Y. 14580 (716) 872-4503 ^^ 520 JOINT STOCK COMPANIES. Ont. Stat., i. I j ■.": i 'it 1 i 1 1- ill registration division wherein the company may have any real estate ; such resi)lutii)n or order shall be accompanied by a description of the real es- tate belonf^ing to the company in the County, and certified by the liquida- tor to be a correct description ; and the Registrar shall register the said order and description upon payment to him of a fee of one dollar. CONSEQUENCES OF COMMENCING TO WIND UP. 8. The following consequences shall ensue upon the commencement of the winding up of a company under the authority of this Act : (i). The company shall from the date of the commencement of such winding up, cease to carry on its business, except in so far TlS may be re- quired for the beneficial wind'ng up thereof; and any transfers of shares, except transfers made to or with the sanction of the liquidators, or any alteration in the status of th' members of the company, after the com- mencement of such winding ;., , slial) be void, but the corporate state and all the corporate powers of the v.'-rr .-■any shall, notwithstanding it may be otherwise provided by the Act, cl, . f t instrument of incorporation, con- tinue until the aft'ai;.-, of the con ,.; •!> <.re wound up. (2). The property of the company shall be applied in satisfaction of its liabilities ; and subject thereto, and to the charges incurred in winding up its affairs, shall, (unless it is otherwise provided by the Act, charter, or instrument of incorporation) be distributed amongst the members accord- ing to their right and interests in the company. (3). Liquidators shall be appointed for the purpose of winding up the affa-rs of the company and distributing the property. (4), The company, in general meeting shall appoint such persons or per- son as the company thinks fit to be liquidators or a liquidator, and may fix the remuneration to be paid to them or to him, and they shall give such security as the contributories or the court may determine. (5). If one person only is appointed, all the provisions herein contained in reference to several liquidators shall apply to him. (6). Upon the appointment of liquidators, all the powers of the direc- tors shall cease, except in so far as the company in general meeting, or the liquidators, may sanction the continuance of such powers. (7). Where several licjuidators are appointed, every power hereby given may be exercised by such one or more of them as may be determined at the time of the appointment, or at a subsequent meeting, or, in default of such determination, by any number not less than two. (8). The contribatories may at any meeting appoint one or more Inspect- or or Inspectors, to superintend and direct the proceedings of the Liqui- dator in the management and winding up of the estate; and in case of ii 41 v.. f. o. WINDING LI' JOINT STOCK COS. 521 nccment of an Inspector bein>i appointeil, all the powers of the Liquidator shall be tAercised subject to :he advice and direction of the Inspectors ; an^' the contributories may also at any subsequent meeting held for that purp .">se, revoke any such appointment : and upon such revocation, or in the case of death, resifjnation or absence from the Province of an Inspector, may ap- point another in his stead ; and such Inspector may be paid such remuner- ation as the contribuiories may tletermine ; and where anythinp is allowed or directed to be done by the Inspectors, it may or shall be done by the sole Inspector, if only one has been appointed. (j). The contributories may, at any meeting, pass any resolution or or- HNKKAL POWERS OF LIQUIOATOR.S. 9. The liquidator may be described in all proc.edings by the style of A. B., the liiiuidator of " (the particular company in respect of which he .6 appointed), and shall have power to do the following things : 1. To bring or defend any action, suit or other legal proceeding in the name, and on behalf of, the company ; 2. To carry on the business of the Company so far as may be necessary for the beneficial winding up of the same ; j. To sell the real and personal property of the company by public auc- tion or private contract, according to the ordinary mode in which such sales are made, with power to transfer the whole property to any person or company, or to sell the same in parcels, and on such terms as shall seem most advantageous ; but no sale of the assets <■« i/of shall be made with- out the previous sanction of the contributories given at a meeting called lor tiiat purpose , 4. And in case, after having acted with due diligence in the collection of the debts, the liquidator finds that there remain debts due, the attempt to collect which would be more onerous than beneficial to the estate, he shall report the same to the Contributories, or Inspectors (if any) ; and with their sanction, he may sell the same by public auction, after such advertise- ment thereof as they may order ; and pending such advertisements, the liquidator shall keep a list of the debts to be sold, open to inspection at his office, and shall also give free access to all documents and vouchers ex- planatory of such debts; but all debts amounting to more than one hun- dred dollars shall be sold separately, except as herein otherwise provided ; ii ■'■■ r S^Bp 522 JOINT STOCK COMPANIES. Out. Stat. ij-l 5. To draw, accept, make and endorse any bill of exchange or promis- sory note in the name and on behalf of the company; and to raise upiri the security of the assets of the company, from time to time, any requisite sum or sums of money ; and the drawing, accepting, making or endorsing of any such bill of exchange or promissory note as aforesaid, on behalf f f the company, shall have the same effect, with respect to the liability of the company, as if such bill or note had been drawn, accepted, made or en- dorsed by or on behalf of such company in the course of carr\ing on the business thereof; 6. To take out if necessary, in his official name, letters of administration to any deceased contributory ; and to do in his official name any other act which may be necessary for obtaining payment of any money due from rv contributory or from his estate, and which act cannot be conveniently done in the name of the company ; and in all cases where he takes out letters of administration, or otherwise uses his official name, for obtaining payment of any money due from a contributory, such money shall, for the purpose of enabling him to take out such letters or recover such money, be deemed to be due to the liquidator himself: ;i'i 7. To execute in the name of the company all deeds, receipts and other documents ; 8. And to do and exercise all other acts and things that may be neces- sary for the winding up of the affairs of the company and the distribution, of its assets ; ,ir d for such purposes to use when necessary, the Compans s seal. 10. The liquidator may fix a certain day or certain days on or within which creditors of the company and others having claims thereon, are to send in their claims. 2. Where a li juidator has given such or the like notices of the said day as would be given by the Court of Chancery in an administration suit for creditors and others to send in to an executor or administrator their claiin.s against the estate of a testator or intestate, the liquidator shall, at the ex- piration of the time named in the said notices, or the last of the said no- tices for sending in such claims, be at liberty to distribute the assets of the company, or any part thereof, amongst the parties entitled thereto, ha\ iug regard to the claims of which the litpiidator has then notice: and the liqui- dator shall not be liable for the assets or any part thereof so distributed to any p)erson of whose claim such liquidator had not notice at the time of distributing the said assets or a part thereof, as the case nia_\ be ; but nothing m the present Act contained, shall prejudice the right of any cred- itor or claima- t to follow assets into the hands of the person who may hive received the same. II. The liquidators may, with the sanction of an extraordinary re.s.du- ion of the company, make such compromise or other arrangement as the 41 v., c, 5. WIXOING UP JOINT STOCK COS. .r23 liquidators fetm expedient, with any creditors, or persons claiming to be creditors, cw persons having Dr alleging to have any claim, present or future, cer-.air. or contingent, ascertained or sounding only in damaee?, against the ci'Cipaiiy, or whereby the company may be rendered liable 12 The ';: . t.i'^rs may, with the sanction of an extraordinary resolu- tion C'f the :.:".f.i:iy, compromise all calls and liabilities to calls, debt?. and liabilitit* capable of resulting in debts, and all claims, whether present or future. cer-Laia or contingent, ascertained or sounding only in damages, subsisting cc supposed to subsist between the company and any cnntribu- tory or other iefator or person apprehending liability to the company, and all questices za any way relating to or aftecting the assets of the company or thew^ndirtz np of the company, upon the receipt of such sums, payable at such tirij-er, and generally upon such terms, as may be agreed upon . with power fcir the liquidators to take any security for the discharge of such debts ■ r !'ir.iii:ies and to give a complete discharge in respect of all or any sach ■..--i'.i iebts or liabilities. > and other 13 AMier^ iiy company is proposed to be or is in the course of being wound up ir. i :.-• whtjle or a portion of its business or property is pr'> posed to be uaasferred or sold to another company, the liquidators of the first meritic>Ti*!i company, with the sanction of a special resolution of the company by -isi.om they were appointed conferring either a general author- ity on the Yiiz^ixi'ts or an authority in respect of any particular arrange- ment, can reD»^re in compensation or in part compensation for such trans- fer or sale, si^ares or other like interest in such other company, for the purpose of iisnnbation amongst the members of the company which is being woud'S mp. or may, in lieu of receivi' ,; cash, shares, or other like in- terests, or in aMition thereto, participate in the profits of or receive any other benefit irom the purchasing company. (2). .\iiy i.il~ r.-iie or arrangement entered into by the liquidators in pur- suance of this 5«ction shall be binding on the members of the company which is lie:n£ --V'-'und up, subject to this proviso, that if an\' member o' the compai!;. i.r.ich is being wound up, who has not voted in favour of the special resclTiti-oa pa.sseti by the company of which he is a member, at either ol the EBaetings held for the passing the same, expresses his dissent from any suci special resolution, in writing, addressed to the liquidators or one of then-, ar. i left at the head office of the company not later than seA'- en days afitr ..■ t 'ite if the meeting at which such special resolution was passed, sut: ' -■ .-.tient member may recjuire the licpiidators to do one of 'he follow::. - -.js a.s the liquidators may prefer, that is to say fij Either to altsiaia from carrying such resolution into effect; or (J) to pur- chase the iT.-^-~<: held by such dissentient member, at a price to be deter, mined m rc'.r.-tr hereinafter mentioned, such purchase-money to be paid before the company is dissolved, and to be raised by the liquidators in liuch manner as ma.j he determined by special resolution. (3I. No ^wcial resolution shall be deemed invalid for the puq>oses of this section hr reason that it is passed antecedently to or (oncurrently y-p 524 JOINT STOCK COMPAN'IKS. Out. Stat. with any resolution for winding up the company, or for appointing licpiuia- tors : (4). The price to be paid for the purchase of the interest of any dissen- tient member may be determined by agreement ; but if the parties dispute about the same such dispute shall be settled by arbitration ; (5). For the purpose of such arbitration the liquidator shall appoint one arbitrator, and the dissentient member shall appoint another, and the two arbitrators thus chosen (or in case they disagree, the County Judge) shall appoint a third arbitrator ; (t>) The arbitrators thus chosen or any two of them, or the arbitrator of one party and an arbitrator appointed by the County Judge (in case of the refusal or neglect of either party to appoint an arbitrator) shall finally de- termine the matter in dispute; (7). In case of the disagreement of two arbitrators, where two only are acting, they may appoint an umpire, whose award shall be conclusive. LI/BILITY OF CONTKIIJUTUKIKS. 14. As soon as may be after the commencement of the winding up of a company, the liquidator shall settle a list of contributories. nil 2. Every shareholder or member of the company or his representative is liable to contribute the amount unpaid on his shares of the capital, or on his liability to the company or to its members or creditors, as the case may be, under the Act, charter or instrument of incorporation of the com- pany ; and the amount which he is liable to contribute shall be deemed assets of the company, and to be a debt due to the company payable as ma\- be directed or appointed under this Act. i ' Ml 1 1 : ( 1 1 i w 1 1 il jit ■„: .1 ) i 1 1 3. Where a shareholder has transferred his shares under circumstances which do not by law free him from liability in respect thereof, or where he is by law liable to the company or its contributories or any of them to an amount beyond the amount unpaid on his shares, he shall be deemed a member of the company for the purposes of this Act, and shall be liable to contribute as aforesaid to the extent of his liabilities to the company or the contributories independently of this Act, and the amount which he is so iiable to contribute shall be deemed assets and a debt as aforesaid. 4. The list of contributories shall distinguish between persons who are contributories as being representatives of or liable for others. 5. It shall not be necessary where the personal representative of any deceased contributory is placed on the list to add the heirs and devisees of such contributory ; ne%'ertheless such heirs or devisees may be added at anv time afterwards. 41 v., CO. WlNDlNc; \V .lOlNT STOCK COS. .■)25 0. Any list so settled shall he prima facie evidence of tiie liability of the persons named therein to be contributories. 16. The list of contributories may be Svittled by the ("ourt. in which case the liquidator shall make out and leave at the chambers of the Juil«e a list of the contributories of the company ; and such list shall be verified by the affidavit of the liquidator, and shall, so far as is practicable, state the respective addresses of, and the number of shares or extent of interest to be attributed to, each such contributory, and distinguish the several classes of contributories ; and such list may from time to time, by le.ivo of the Judge, be varied or added to by the lii]uidator. 2. Upon th'^ list of contribuiories being left at the chaiiiburs uf the Judge, the liq lidator shall obtain an appointment for the Judfic to settle the same, and shall give notice in writing of such appointnii in to every person included in the list, and stating in what character ; and for what number of shares, or interest, such person is included in the list ; and in case any variation in or addition to such list is at any time made by the liquidator, a similar notice in writing shall be given to every person to whom such variation or addition applies. All such notices shall be served four clear days before the day appointel to settle such list, or such varia- tion or addition. 3. The result of the settlement of the list of contributories shall 1 e stated in a certificate by the Clerk of the Court ; and certificates may be made from time to time for the purpose of stating the result of such settle- ment down to any particular time, or to any particular person, or stating any variation of the list. 16. If any person made a contributory as personal representative of a deceased contributory makes default in paying any sum to be paid by him, proceedings maybe taken for administering the personal and real estate of such contributory, or either of such estates, and for compelling payment thereout of the money due. 17. The liquidators may, at any time and before they have ascertained the sufficiency of the assets of the company, call on all or any of the con- tributories, for the time being .settled on the list of contributories to pay, to the extent of their liability, all or any sums the liquidators deem neces- sary to satisfy the debts and liabilities of the company, and the costs, charges and expenses of w inding it up and for the adjustment of the rights of the contributories amongst themselves ; and the liquidators may, in making a call, take into consideration the probability that some of the con. tributories upon whom the call is made, may partly or wholly fail to pay their respective portions of the same. 18. Where a person's naire is on the list of contributories or is liable to be placed thereon, he shall be subject in respect of his liability, and on the application of the liquidator, to arrest and imprisonment, like any ( ther I i I'liW: 526 JOINT STOCK COMPANIES. Ont. Stat. debtor ; and he shall for that purpose be deemed a debtor to the Com- pany, and a debtor to the liquidator, and his arrest may be by an order of the County Court Judf^e, whether the amount of his liability exceeds or not the ordinary jurisdiction of the said court : and his beinfj placed on tlie list of contributories under this Act shall be deemed a judgment, and the liquidator shall be deemed a creditor, within the meaning of the Act respecting Arrest and Imprisonment for Debt : and the said persons shall respectively have the same remedies, and the County Court and Judges a;id other officers of justice shall in such cases have the same powers and duties (as nearly as may be), as in corresponding cases under the said Act. liquidator's duties. 19. No liquidator shall employ any counsel, solicitor, or attorney-at-law without the consent of the Inspectors, or of the contributories. 2. No liquidator or inspector shall purchase, directly or indirectly, any part of the stock in trade, debts or assets of any description of the estate. 3. The liquidator shall deposit at interest in some chartered bank to be indicated by the inspectors or by the Court, all sums of money which he may have in his hands, belonging to the company, whenever such sums amount to one hundred dollars ; 4. Such deposit shall not be made in the name of the liquidator gener- ally, on pain of dismissal ; but a separate deposit account shall be kept for the company of the moneys belonging to the company, in the name of the liquidator as such, and of the inspectors (if any) ; and such moneys shall be withdrawn only on the joint cheque of the liquidator and one of the inspectors, if there be any. 5. At every meeting of the contributories, the liquidators shall produce a bank pass book, showing the amount of de})osits made for the company, the dates at which such deposits were made, the amounts withdrawn and dates of such withdrawal ; of which production mention shall be made in the minutes of such meeting, and the absence of such mention shall be pi'inid facie evidence that such pass book was not produced at the meet- ings; ill 6. The liquidator shall also produce such pass book whenever so order- ed by the Court at the request of the inspectors or of a contributory, and on his refusal to do so, he shall be treated as being in contempt of the court. 7. Every liquidator or inspector shall be subject to the summary juris- diction of the Court in the same manner and ♦o the same extent as the or- dinary officers of the Court are subject to its jurisdiction ; and the perform- ance of his duties may be compelled, and all remedies sought or demanded for enforcing any claim for a debt, p/ivilege, mortgage, lien or right of pro- 41 v.. c. 5. WINDING VV JOINT STOCK COS. 527 peny upon, in ur to any effects or property in tlie hands, possession or custody of a licjuidator, may he obtained by an order of the Court on summary petition, and not by any su t, attachment, seizure or other pro- cf-edinK of any kind whatever, and obeilience by the liquidator to such order may be enforced by such Court under the penalty cf imprisonment, as for contempt of the Court or disobedience thereto , cr he may be re- moved in the discretion of the Court. KXPENSES. 20 All costs, charges and e.xpenses properly incurred in the voluntary v.'indin<; up of a company, including the remuneration of the 'iquidators. shall be payable out of the assets of the company, in priority to all other vlaims. 21. In case of their being no agreement or provision fixing the remun- eration i;f a liquidator, he shall be entitled to a commission on the net proceeds of the estate of the company of every kind, aft'-r deducting ex- penses and disl Virsemjnts, such commission to ))e of fi\e per cent, on the aniuunt realized, not exceeding one thousand dollars, the further sum of tv.o :uu\ a half per cent, on the amount realized in excess of one thousand dollars, and not exceeding the thousand dollars, and a further sum of one and a quarter per cent, on the amount realized in excess of five thousand the Court to determme any question arising in the matter of such wimling- up; or to exercise all or any cf the powers following; and the Court, if satisfied that the determination of such question, or the required exercise of power, will be just and beneficial, may accede wholly or partially t ■ such application, on such terms and subject to such conditions as the Court thinks fit ; or it may make such other order on such application as the Court thinks just. z. The Court, at any time after the presentation of a petition for wind- ing up a company and before making an order for winding up the com- pany, may restrain further proceedings in any action, suit, or proceeding against the company (other than under the Insolvent Acts m force at the time, or any other authority with which the Legislature has no jurisdiction) in and upon such terms as the Court thinks fit. 3. The Court may make an order that no suit, action or other proceed- ing shall be proceeded with or commenced against the company except UW 41 v., c. 5. WINDIN<; n* JOINT STOCK (OH. >29 with the leave of the Court, .iri'l subject td sucli terms as the Court may impose; but this section does not apply to proceedings untler aii> Act of the Parliament of Canada under its jurisiliction in matters of ljai)kruptc\' and insolvency or otherwise; a copy of such order shall forthwith be ad- vertised as the Coun may direct. 4. The Court may settle the hst of contributoiies, 5. The Court may direct meetings of thecontrilnilnries tobe summonecF, held and conducted! in such manner as the Court thinks lit, for the pur- pose of ascertaining their wishes, and may appoint a person to act as chairman of any such meeting, and to report the result of such meeting to the Court. 6. The Court may require any contributory for the time being settled on the list of contributories, or any trustee, receiver, banker f)r agent or offi- cer of the company, to pay, deliver, convey, surrender or transfer forth- with, or within such time as the Court directs, to or into the hands of the liquidator, any sum or balance, books, papers, estate, or effects which hap- pen to be in nis hands for the time being, and to which the company is prima facie entitled. 7. The Court may make an order on any contribiitory for the time being settled on the list of contributories, directing payment to be made, in man- ner in the said order mentioned, or any moneys due from him or from the estate of the person whom he represents, to the company, exclusive of any moneys which he or the estate of the person w hom he represents may be liable to contribute by virtue of any call made or to be made by the Court in pursuance of this Act. 8. The Court may order any contributory, purchaser or other person from whom money is due to the company to pay the same into any bank appointelicatiori of a contributory, appoint a liquidator or liquidators ; 3. The Court may also on due cause sho»-n, remove any liquidator, and appoint another liquidator. 4. When there is no liquidator the estate shall be under the control of the Court until the appointment of a ntv Itquidator. 26. Any one or more contributories who-se claims in the aggregate ex- ceed five hundred dollars, who may be dissatisfied with the resolutions adopted or orders made by the contnbuiories or the inspectors, with any action of the liquidator for the disposal cf the property of the company, or any part thereof, or for postponing the disposal of the same, or with re- ference to any matter connected with the management or winding up of the estate, may, within four cle r days after the meeting of the contribu- tories in case the subject of dissatisfactica is a resolution or order of the contributories, or within four clear days after becoming aware or having notice of the resolution of the mspectors or action cf the liquidator where such resolution or action is the subject of dissatisfaction, give to the liqui- dator notice that he or they will apply to the Court, on the day and at the 532 JOINT STOCK COMPANIES. Ont. Stat.. hour fixed by such notice, and not beinfj later than four clear days after such notice has been f^iven, or as son thereafter as the parties may l^e heard before such Court, to rescind such resolutions or orders ; 2. The Court, after hearing the inspectors, the liquidators and con- tributories present at the time and place so fixed, may approve, rescind nr modify the said resolutions or orders ; 3. In case of the application being refused the party applying shall pay all costs occasioned thereby, and in other casei the costs and expenses shall be at the discretion of the Court. 27. Any paity who is dissatisfied with any order or decision of the ("ourt in any procee.lini,' under this .\ct, may appeal therefrom to the Court of Appeal, or to any one of the Judges of the said Court ; but any appeal to a sinijle Judge may, in his discretion, be referred, on a special case to be settled, to the full Court, and on such terms in the meantime as he may think necessary and just. 2. No such appeal shall be entertained unless the appellant has, within eight days from the rendering of such final onier or judgment, taken pro- ceedings on the said appeal, nor unless within the said time he has made a deposit or given sufficient security before a Judge that he will duly prosecute the said apperd and pay such damages and costs as may be awarded to the respondent. 5. If the party appellant does not proceed with his appeal, as the case may be, according to the law or the rules of practice, the Court, on the application of the respondent, may dismiss the appeal, and condemn the appellant to pa\' the respondent the costs by him incurred. 4. The judgment of the said Court of .Vppeal shall be final. 28. Any powers by this Act conferred on the Court shall be deemed to be in addition to, and not in restriction of, any other powers subsisting, either at law or in equity, of instituting proceedings against any contribu- tory, or against any debtor of the company for the recovery of any call or other sums due from such contributory, or against any debtor of the com- pany, for the recovery of any call or other sum due from such contribu- tory or debtor, or hk estate, and such proceedings may be instituted accordingly. 29. All orders made by the (\)urt may be enforced in the same manner as orders of such Court made in any suit pending therein, or orders of the Court under the Insolvent Acts in force at the time in.'iy be enforced ; and for the purposes of this part of the Act, the County Courts and the Judges t'lereof shall, in addition to their ordinary powers, have the same power of enforcing any orders made by it, as the Court of Chancery has in rela- tion to matters within the jurisdiction of that Court ; and for the last- 41 V.,c.5. WINDING UP JOINT STOCK COS. 538 IS the case mentioned purposes the jurisdiction of the County Court Judge shall he i i! 'Hi a it! j ' j 534 JOINT STOCK COMPANIES. Ont. Stat. rely, in plain and concise language ; and to the interpretation thereof, the rules of construction applicable to such language in the ordinary transac- tions of life shall apply. 36- All books, accounts, and documents of the company and of the liquidator, shall, as between the contributories of the company, be pritna facie evidence of the truth of all matters purporting to be therein re- corded. 37. All rules, writs of subpcena, orders and warrants issued by any Court in any matter or proceeding under this Act, may be validly served in any part of Ontario upon the party affected or to be affected thereby, and the service of them may be validly made in such manner as is now prescribed for similar rervices, and the person charged with such service shall make his return thereof under oath. 38. Except when otherwise provided, four clear juridical days' notice of any petition, motion, order or rule shall be sufficient ; and service of such notice shall be made in such manner as a similar service in a civil suit. 39. Any affidavit, affirmation or declaration required to be sworn or made under the provisions or for the purposes of this .\ct, may be sworn or made in Ontario, before the liquidator, or before any liquidator, judge, notary public, commissioner for taking affidavits, or Justice of the Peace ; and out of Ontario, before any Judge of a Court of Record, any commis- sioner :or taking affidavits to be used in any Court in Canada, any notary public, the chief municipal officer for any town or city, any British consul or vice-consul, or any person authorized by or under any Statute of the Dominion or of this Province to take affidavits. 2. All Courts, judges, justices, commissioners and persons acting judi- cially, shall take judicial notice of the seal, or stamp or signature (as the case may be) of any such Court, judge, notary public, commissioner, justice, chief municipal officer, consul, vice-consul, liquidator or other person, attached, appended or subscribed to any such affidavit, affirmation or declaration, or to any other document to be used for the purposes of this Act. DISSOLUTION OF COMPANY. 40. As soon as the affairs of the company are fully wound up, the liquidators shall make up an account showing the manner in which such winding up has been conducted, and the property of the company disposed of ; and thereupon they shall call a general meeting of the company for the purpose of having the account laid before them, and hearing any explanation that may be given by the liquidators ; the meeting shall he called by advertisement, specifying the time, place, and object of such meeting ; and the advertisement shall be published one month at least previously thereto, 41V., c. 5. WINDING UP JOINT STOCK COS. 535 (2). The liquidator shall make a return to the Provincial Secretary of such meeting having been held, and of the date at which the same was held ; which return shall be filed in the office of the Provincial Secretary ; and on the expiration of three months from the date of the filing of such return, the company shall be deemed to be dissolved. 41. Or whenever the affairs of the company have been completely wound up, the Court may make an order that the company be dissolved from the date of such order, and the company shall be dissolved accord- ingly : which order sh^ll be reported by the liquidator to the Provincial Secretary. 42. If the liquidator makes default in transmitting tn the Provincial Secretary the return mentioned in the fortieth section, or ia reporting the order (if any) declaring the company dissolved, he shall be liable to a peralty not exceeding twenty dollars for every day during which he is in default. 43. All dividends deposited in a Bank and remaining unclaimed at the time of the dissolution of the company, shall be left for three years in the I3ank where they are deposited, and if still unclaimed, shall then be paid over by such Bank, with interest accrued thereon, to the Treasurer of Ontario, and, if afterwards duly claimed, shall be paid over to the persons entitled thereto. Every liquidator shall, within thirty days after the date of the dis- solution of the company, deposit in the Bank appointed or named as here- inbefore provided for, any other money belonging to the estate then in his hands not required for any other purpose authorized by this Act, with a sworn statement and account of such money, and that the same is all he has in his hands; and he shall be subject to a penalty not exceding ten dollars for every day on which he neglects or delays such payment ; and he shall be a debtor to Her Majesty for such money, and may be compelled as such to account for and pay over the same. (2.) The money so deposited shall be left for three years in the Bank, and shall be then paid over with interest to the Treasurer of the Pro- vince, and if afterwards claimed shall be paid ovt-r to the person entitled thereto. (3.) Where any company has been wound up under this Act, and is about to be dissolved, the books, accounts antl documents of the company and of the liquidators may be disposed of in such a way as the company by an extraordinary resolution directs. (4.) After the lapse of five years from the date of such dissolution no responsibility shall rest on the company or the liquidators, or any one to whom the custody of such books, accounts and documents has been com- II 536 JOINT STOCK COMPANIES. Ont. Stat. i '^ii i;Vh ii i 5fi mitted, by reason that the same or any of them cannot be made fortli- coming to any party or parties claiming to be interested therein. RULES TO CARRY OUT. 46. The Board of County Judges from time to time shall make, and frame and settle the forms, rules and regulations to be followed and observed in proceedings under this Act, and shall make rules as to the costs, fees and charges which shall or may be had, taken or paid in all such cases by or to attorneys, solicitors or counsel, and by or to officers of courts, whether for the officers or for the Crown, and by or to sheriffs, or other persons whom it may be necessary to prov/de for, r>r for any service performed or work done under this Act. (:;). The Board of County Judges or any three of them, shall under their hands, certify to the Chief Justice of the Court of Appeal, all Rules and Forms made under this Act and the Judges of the said Court (of whom the said Chief Justice shall be one) may approve of, disallow or amend any such Rules or Forms ; and the Rules or Forms so approved of {with or without amendment, as the case maybe) shall have the same force and effect as if they had been made and included in this Act. (3). Until such forms, rules and regulations are so approved and subject to any which shall be approved, the practice under this .\ct shall in cases not hereinbefore provided for, be the same (as nearly as may be), as under tlij Insolvent Acts for the time being in force in this Province. CHAPTER 8. AN ACT To MAKE CERTAIN AMENDMENTS IN THL REVISED STATUTES. (41 Vic, Cap. S, Sec. 16.) [Assciilfd to jtli March. 187S.] T TEK 5iIAJESTV, by and with the advice and consent of the Legisla- th.•; right to select a certain stated proportion of the board of direticTE^ '.z may give them such other control over the affairs of tfct- Compan} a.i may be considered expedient. {31. Nc i-z--h by-law shall have any force or effect whatever until after it has l>een ti-An:mously sanctioned by the vote of the shareholders, preb«:i in person cir by proxy at a general meeting of the Company duly calleil for con?-^':- -; the same, or unanimously sanctioned in writing by tb? sharehclctr- ,i such Company. (4I. .yj ifce provisions of The Ontario Joint Stock Letters Patent Act no*. inconsistent witfc this Act ..hall appl\- to Companies who may create and issue preftTftntial stock hereinunder ; and holders of such stock shall be j-hartholdi-Ts -within the meaning of the said Act, and shall in all respects possess lie ri«Bita and be subject to the liabilities of shareholders w-ithin the meanin? of the said Act, provided, however, that in respect of divj- dends and «herwise they shall, as against the original or ordinary share- holders be fniitled to the preference given by any by-law as aforesaid. (5). KothJBg in this section shall affect or impair the rights of creditors of any Ct'napany. ! ]i"iWMIt''i 35 ■/ > i i m M QUEBEC STATUTES. CHAPTER 24. THE JOINT STOCK COMPANIES GENERAL CLAUSES ACT. (31 Vic, Cap. 24.) [Assented to February 24, 1868.] Interpretation of terms, s. 1. Application of Act, s. 2. To be Incorporated zi'ith Special Att s. 2-3. Powers of Company, s. 4-5. Directors : Number of, s. 6. Qualification of, s. 8. Election of, s. g. Elections not otherzvise provided for s. 10. Failure of Election, 5. 11. Powers of Directors, s. 12. Special Meetings, s. 13. Proof of By-laws, i. 14. Transfer of Stock, s. 15. Allotment of Stock, s. 16. Calls, s. 17, 18, ig. Forfeiture of Shares, s. 20. TJ ER MAJESTY, by and with the of Quebec, enacts as follows :- Calls to be paid before transfer, s.21. Members in arrears not to vote s. 22. Books to be kept, s. 23. Directors may refuse transfer, s. 24. Books to be kept open, s. 26. Books to be evidence, s, 27. Penalty for untrue entries, s. 28. Penalty for not keeping, s. 30. Contracts, s. 31. Company not to buy stock, s. 32. Liability of Members, s. 33. Liability of Trustees, etc., s. 35. Dividends, s. 37. No loans to Members, s. 38. Liability for wages, etc.. s. 3g. Actions, s. 40, 41. Short title, s. 42. Repeal, s. 43. advice and consent of the Legislature ,,l I. The following expressions, both in this and the Special Act. shall have the meanings hereby assigned to them, unless there is something in the subject or context repugnant to such construction, that is to say — 1. The expression "the Special Act" means any Act incorporating a Company for any of the purposes contemplated by this Act, and also all Acts amending such Act ; 2. The expression "the Company " means the Company incorporated by the Special Act ; Q. S.,31V.,C.24. GENERAL CLAUSES ACT. 539 3. The expression " the undertaking" means the whole of the works ant! business of every kind which the Company is authorized to carry on ; 4. The expression "real estate" or "land" includes all immoveable property of every kind ; 5. The expression " shareholder" means every subscriber to, or holder of stock in the Company, and extends to and includes the personal repre- sentatives of the shareholder. 2. When not otherwise expressly enacted, this Act shall apply to every Joint Stock Company incorporated by any Act hereafter to be passed for any of the following purposes : — 1. Carrying on any kind of manufacturing, shipbuilding, mechanical, printing and publishing, or chemical business ; 2. Mining for gold, silver, copper, or other metals or ores, or for coal, plumbago, or other minerals ; 3. Washing, dressing, smelting, and otherwise preparing for market the ores of all kinds of metals ; 4. Erecting, maintaining and using dams, sluices an ipparatus for ex- cavating and washing auriferous earth in the process of gold mining ; 5. Opening and working quarries of marble, slate, or other economic minerals or mineral substances, and the manufacture, exportation, and sale thereof ; 6. Boring for, opening, and using petroleum, salt, or other mineral springs ; Legislature 7. Erecting and maintaining any building or buildings to be used in whole or in part as a mechanics' institute or public reading or lecture- room, or gymnasium, or as a public hotel, or as baths or bath-houses, or for skating or curling rinks, or for agricultural or horticultural fairs or exhibitions, or for libraries, or for educational, literary, scientific, or re- lif,iouE purposes, or as houses to be leased ; 8. Carrying on any fishery or fisheries in this Province or the watt-is thereto adjacent, or in the Gulf of St. Lawrence, and building and e(iuip- ping vessels for such fishery or fisheries ; 9. Carrying on any forwarding business, and constructing, owning, char- tering, or leasing ships, steamboats, wharves, roads, or other property required for the purpose of such forwarding business ; 10. Acquiring, constructing and maintaining any plank, macadamized or gravel road, or any bridge, pier, wharf, dry-dock or marine railway, or 640 JOINT STOCK COMPANIES. Que. Stat. any clam, sluice, raceway, or other hydraulic apparatus for manufacturinj? use of any kind ; 11. Acquiring, holding and carrying on any model farm or garden, and dealing in improved stock, seed, grain, and other articles for agricultural use ; 12. Reclaiming and improving tracts of marshy and other waste land by drainage, or planting of trees, or otherwise ; 13. Supplying any place with gas or water, or with both gas and water ; 14. Constructing any line or lines of telegraph ; 15. Acquiring or constructing, and maintaining any dam, slide, pier, boom, or other work necessary to facilitate the transmission of timber down any river or stream in the Province, and blasting rocks, dredging, or removing shoals and other impediments, or improving otherwise the navigation of such streams for such purpose ; And this Act shall be incorporated with every such Act, and all the clauses and provisions of this Act, unless expressly varied or excepted by any such Act, shall apply to the ('ompany thereby chartered so far as applicable thereto, and shall as well as the clauses and provisions of every other Act incorporated with such Act form part of such Act, and be con- strued together therewith as forming one Act. 3. Tor the purpose of incorporating this Act, or any of its provisions uith a Special Act, it shall not be necessary in such Act to enact that the clauses of this Act or such of them as in such Act may be particularly designated to that end shall bf mcorporated with such Act ; but all such clauses, save in so far as they are expressly varied or excepted by such Act, shall be construed as if they were formally embodied and reproducetl therein. 4. Any Company incorporated for any of the above purposes under any Special Act shall be a body corporate under the name declared in the Special Act, and may acquire, hold, alienate, and convey any real estate requisite for the carrying on of the undertaking of such Company, and shall be invested with all the powers, privileges and immunities requisite to carry into effect the intentions and objects of this Act and of the Special Act, and which are incident to such corporation, or expressed or included in the Interpretation Act. 6. All powers given by the Special Act to the Company shall be exer- cised subject to the provisions and restrictions contained in this Act. 8. The affairs of the Company shall be managed by a board of not less than three nor more than nine directors. 7. The persons named as such in the Special Act shall be the directors of the Company until replaced by others duly named in their stead. JF^" -'b;: .aJKz^aj 31 v., e. '24. (iENKRAL CLAl'SKS ACT. )41 8. No person shall be elected or named as a director thereafter, unless he is a shareholder owning stock absolutely in his own right, and not in arrear in respect of any call thereon, and the major part of the other directors of the Company shall further at all times be resident in Canada, and subjects of Her Majesty by birth or naturalization. 9. The after directors of the Company shall be elected by the share- holders in general meeting of the Company assembled, at sue' times, in such wise, and for such term, not exceeding two years, as the Special Act, or (in default thereof,) the bydaws of the Company may prescribe. 10. In default only of other express provisions in such behalf by the Special .\ct, or the bydaws of the Company :^ 1. Such election shall take place yearly, all the members of the board retiring, and, if otherwise qualified, being eligible for re-election ; 2. Notice of the time antl place for holding the general meetings of the (Tompany shall be ^iven at least ten days previously thereto, in some news- paper published at or as near as may be to the office or chief pla.e of business of the Company ; 3. .\t all general meetings of the (Company every shareholder shall be entitled to as many votes as he owns shares in the Company, and may vote by proxy ; 4. Klections of directors shall be by ballot ; 5. Vacancies occurring in the board of directors may be hlled for the unexpired remainder of the term by the board from the (jualified share- holders of the Company ; (). The directors shall, from time to time, elect from among themselves a president of the Company ; and shall also name, antl may remove at pleasure, all other officers thereof. 11. If at any time an election of directors be not made, or do not take eflect at the proper time, the Company shall not be held to be thereby dis- solved ; but such election may take place at any general meeting of the Company duly called for that purpose ; and the retiring directors shall continue in office until their successors are elected. lard of not less 12. The directors of the Company shall have full power in all things to rulminister the affairs of the Company, and may make, or cause to be made ffir the Company, any description of contract which the Company may by law enter into, and may, from time to time, make by-laws, not contrary to 1-iw, to regulate the allotment of stock, the making of calls thereon, the payment thereof, the issue and ret^istration of certificates of stock, the for- feiture of stock for non-payment, the disposal of forfeited stock and of the proceeds thereof, the transfer of stock, the declaration and payment of iiiii' ■li 542 JOINT STOCK COMPANIES. Que. Stat. dividends, the number of the directors, their term of service, the amount of their stock qualification, the appointment, functions, duties, and re- moval of all agents, officers and servants of the Company, the security to be given by them to the Company, their remuneration, and that (if any) of the directors, the time at which, and the place within this Province where, the am ual meetings of the Company shall be held, the place or places where it,> business shall be conducted, the calling of meetings, regular and special, 01 the board of directors, and of the Company, the quorum, the re- quirements as to proxies, and the procedure in all things at such meetings, the imposition and recovery of all penalties and forfeitures admitting of regulation, and the conduct in all other particulars of the affairs of the Company, and may, from time to time, repeal, amend, or re-enact the same ; but every such by-law and every repeal, amendment, or re-enactment thereof, unless in the meantime confirmed at a general meeting of the Company duly called for that purpose, shall only have force until the next annual meeting of the Company, and in default of confirmation thereat, shall, from that time only, cease to have force. 13. One-fourth part in value of the shareholders of the Company shall at all times have the right to call a special meeting thereof for the transac- tion of any business specified in such written requisition and notice as they may issue to that effect. W. A copy of any by-law of the Company, under their seal, and pur- porting to be signed by any officer of the Company, shall be received as pyiina facie evidence of such by-law in courts of law in this Province. IB. The stock of the Company shall be deemed personal estate, and shall be transferable in such manner only, and subject to all such condi- tions and restrictions as by this Act or by the Special Act, or the by-laws of the Company shall be prescribed. 16. If the Special Act makes no other definite provision, the stock of the Company shall be allotted when and as the directors by by-law or otherwise may ordain. 17. The directors of the Company may call in and demand from the shareholders thereof respectively all sums of money by them subscribed at such times and places, and in such payments and instalments as the Special Act, or as this Act may require or allow, and interest shall accrue and fall due at the rate of six per cent, per annum upon the amount of any '.inpaid call from the day appointed for payment of such call. ■'■^li 18. Not less than ten per cent, upon the allotted stock shall by means of one or more calls be called in and made payable within one year from the incorporation of the Company, and for every year thereafter, at least a further five per cent, shall in like manner be called in and made payable, until the half shall have been so called in. m • ■ «■> ; 31 v., c. 24. GENERAL CLAUSES ACT. 543 19. The Company may enforce payment of all calls and interest thereon I'V action in any competent Court ; and by such action it shall not be necessary to set forth the special matter, but it shall be sufficient to declare that the defendant is a holder of one share or more, stating the number of ehares, and is indebted in the sum of money to which the calls in arrear amount in respect of one call or more upon one share or more, stating the number of calls and the amount of each, whereby an action has accrued to the Company, and a certificate under their seal and purporting to be signed by any officer of the Company to the effect that the defendant is a shareholder, and that such call or calls has or have leen made, and that so much is due by him and unpaid thereon shall be received in all Courts of law as prima fncit evidence to that effect. 30. If after such demand or notice as by the Special Act or by-laws of the Company may be prescribed, any call made upon any share or shares be not paid within such time as by such Special .^ct or by-law may be limited in that behalf the directors in their discretion by vote to that effect reciting the facts and duly recorded in their minutes may sum- marily declare forfeited any shares, whereon such payment is not made ; and the sime shall thereupon become the property of the Company, and may be disposed of as by by-law or otherwise they may ordain. eal, and pur- 21. No share shall be transferable until all previous calls thereon have been fully paid in, or until declared forfeited for non-payment of calls thereon, or sold under execution. 22. No shareholder being in arrear in respect of any call shall be entitled to vote at any meeting of the Company. 23. The Company shall cause a book or books to be kept by the Sec- retary, or by some other officer specially charged with that duty, wherein shall be kept correctly recorded — 1. Everj- by-law thereof ; 2. The names alphabetically arranged of all persons who are or have been shareholders ; 3. The address and calling of everj- such person while such share- holder ; 4. The number of shares of stock held by each shareholder ; 5. The amounts paid in and remaining unpaid respectively on the stock of each shareholder; 6. All transfers of stock in their order as presented to the Company for entry, with the date and other particulars of each transfer, and the date of the entry thereof; and ^ ij ' 1 , .'■ 1 < \ is ' ■; 1, r ''' 1 544 JOIXT STOCK COMPANIES. Qwo. Stat. 7. The suniis. iiiilresses, ami calling of all persons who are or have been directciTfcotf «ft«: Company, with the several dates at which each l)ecame or teased totiefncfc director. Tilt- fiTKCtors may refuse tn allow tliu entry into any such i)Ookof any iianKlw nut m ' by sale under execution, of stock \. hereof the whole arnosBt imf iioc been p.iid in ; and wheneverentry is maile in such Ijook of any Buci tiimtfer of stock not fully paid in to a person not hcini,' apparent- 1\ of KU±6ca*&t means, the directors, jointly and separately, shall In; liable to the cTBilftoin of the Company, in the same manner and to the same extent uh sib*- transferrin;,' shareholder but for such entry would have Ivien ; "bul f laty director present when such entry is allowctl. do forthwith. or if any Hzsvizov then absent, do within twenty-four hours after he shall have beticoitt' ar.vare thereof, and able so to do, enter on the minutes of the boa-" ' ; 'actors his protest against the same, and do within eisht days tiie--:; -• |;ablish such protest in at least one ne\\si\aptr published at or as ntJinr a« may be possible to the office or chief place of business of the CcdEjimy. such director n/ay thereby, and not otherwise exone- rate bimstif nrrim such liabdity. 28. Sv "Tinafer of stock, unless nade l)y sale under execution, shall be v;did for set purpose whatever, save only as exhibitinjj the rijjhis of the parties liHOWHiJi Diwards each other, and as rendering the transferee liable nd itiUri in y^inxlv a.nd severally, with the transferor to the Company and their cTediaor?- iintd entry thereof has been duly made in such Ix^ok or books III 26 Sncli SinoUs shall, clurinj^ reasonable business hours of everyday, except SuDiSs^;* and holidays, be kept open for the inspection of share- holders iCQii irattors of the Company and their personal representatives at the c«feci* jc chief place of business of the Company, and every such shareb'adtn. liTftiiiror. or representative may make extracts thirefrom. 27 5uc2d Book.'i shall be prima facie evidence of all facts purpor;-.^ to be ihertiln iCitttiim any suit or proceeding against the Company m ajiamst anv shaT>4):flfer. 28 Eitsr? liirector, otiicer, or servant of the (^ompany who knowingly makcE or a«HHti dj make any untrue entry in any such book, or who refuses orneglecit tia make any proper entry therein, or to exliibit the same, or tr. allow tbe smmtto be inspected and extracts to be made therefrom, shall be liable to a penalty of one hundred dollars for every day of such untrue entry. aa<3 ioc e^ery such refusal or neglect, and also in damages for all loss or xapsTx which any party interested may have sustained thereby. 28 E^'trT (Company neglecting to keep such book or books so open for iE^it:c:a:tr *hall forfeit its corporate rights. T^i^ ~ mpany shall not be bound to see to the execution of any trust. wixfUitr express, implied or constructive in respect of any shares; U'. Stat. 31 v., c. '24. (iENEKAL CLAUSES ACT. 545 have been iHJcame or ich l>ook of f the whole ich lK>ok of ^ apparent- n be liable ;o the same \\o\M have n forthwith, ter he shall e minutes of within eight ;r published : of business •^visc. cxone- tion. shall be rights of the nsferee liable l^ompany an' I such book or of every day. ion of share- ipresentatives il every such trefrom. ljnirpor*i"!2t to inv or .n.jamst and the receipt of the shareholder in whose name the same may stand in the books of the Company shall be a valid and hmding discharge to the Company for any dividend or moner payable in resjiect of such shares, and whether o" not notice of such trust shall have been given to the C^om- pany, and the Company shall noi be bouml to see to the application of money paid upon such receipt 81. Every contract. aRreement. engagement, or bargain made, and every bill of exchange drawn, accepted or endorsed, and every promissory note made, drawn or endorsed on behalf of the Company by any agent, officer, or servant of the Company in general accordance with his powers as such, under the bydaws of the Company shall be binding upon the Company, and in no case shall it be neoessary to have the seal of the Company affixed to any such contract, agreement, engagement, bargain, bill of ex- change, promissory note or cheque, or to prove that the same was made, dr.awn, accepted or endorsed, as the case may be, in pursuance of any bydaw or special vote or order . ncr ahill the party so acting as agent, officer, or servant of the Comp-irjy ryi thereby subjected individually to any liability whatever to any ih.r : ; ■.::■/ the'efor ; provided always that nothing in this section shall be c ---.rued to authorize the Company to issue any note payable to the l-oartr -.hereof, or any promissory note in- tended to be circulated as money - ; .i :ae note of a bank. 82. No Company shall use any li in funds in the purchase of stock in any f)ther corporation, unless in so far as such purchase may be especially authorized by the Special Act, and al»o by the .\ct creating such other corporation. 33. Each shareholder until the whole amount of his stock has been paid up shall be individually liable to the creditors of the Company to an amount equal to that not paid up thereon ; but shall not be liable to an action therefor by any creditor before an execution against the Company has been returned unsatisfied in whole or in part, and the amount due on such execution shall be the amouct recoverable with costs against such shareholder. Iho knowingly \)T who refuses he same, or to Ifrom, shall be such untrue nages for all I thereby. Dks so open :ution of any If anv shares . 34. The shareholders of the Company shall not as such be held responsible for any act, default or liability whatever of the Company, or for any engagement, claim, payment , ioss. jnjary, transaction, matter or thing whatever relating to or connected ->«-ith the Company, beyond the amount of their respective shares in the capital stock thereof. 36. No person holding stock in ihe Company as an executor, adminis- trator, tutor, curator, guardian, or tru^^iee, shall be personally subject to liability as a shareholder, but the estate and funds in the hands of such person shall be liable in like manner and to the same extent as the testator or intestate, minor, ward and interdicted person, or the person interested in such trust fund would be, if living and competent to act, and holding such 86 8.C. 546 JOINT STOCK COMPANIES. Que. Stat. stock in his own name ; and no person holding such stock as collateral security shall be personally subject to such liability, but the person pledg- ing such stock shall be considered as holding the same, and shall be liable as a shareholder accordingly. 36. Every such executor, administrator, tutor, curator, guardian, or trustee shall represent the stock in his hands at all meetings of the Com- pany, and may vote accordingly as a shareholder. 37. If the directors of the Company declare and pay any dividend when the Company is msolvent, or any dividend the payment of which renders the Company ii. solvent, or diminishes the capital stock thereof, they shall be jointly and severally liable as well to the Company as to the individual shareholders and creditors thereof for all the debts of the Company then existing, and for all thereafter contracted during their continuance in office, respectively ; but if any director present when such dividend is declared, do forthwith, or if any director then absent do within twenty-four hours after he shall have become aware thereof and able so to do, enter on the minutes of the board of directors his protest against the same, and within eight days thereafter publish such protest in at least one newspaper pub- lished at, or as near as may be possible to, th*. office or chief place of busi- ness of the Company, such director may thereby, and not otherwise, exon- erate himself from such liability. 38. No loan shall be made by the Company to any shareholder, and if such be made, all directors and other officers of the Com[)any making the same, or in anywise assenting thereto, shall be jointly and severally liable to the amount of such loan, with interest, to the Company — and also to third parties to the extent of such loan, with legal interest — for all debts of the Company contracted from the time of the making of such loan to that of the repayment thereof. 39. The directors of the Company shall be jointly and severally liable to the laborers, servants and apprentices of the Company for all debts not exceeding one years wages due for service performed for the Company whilst they are such directors respectively ; but no director shall be liable to an action therefor, unless the Company has been sued therefor within one year after the debt became due, nor yei unless such director is sued therefor within one year from the time when he ceased to be such director, nor yet before an execution against the Company has been returned un- satisfied in whole or in part ; and the amount due on such execution shall be the amount recoverable with costs against the directors. 40. Any description of action may be prosecuted and maintained be- tween the Company and any shareholder thereof; and no shareholder, not being himself a party to such suit, shall be incompetent as a witness therein. wep>twifft t ii . ii ii.t i^ i> ) c n B L Que. Stat. as collateral jerson pledg- lall be liable guardian, or of the Com- ividend when ^hich renders :of, they shall he individual lompany then lance in office, d is declared, ity-four hours , enter on the le, and within wspaper pub- place of busi- lerwise, exon- 31 v., c. 24. GENERAL CLAUSES ACT. 547 r'-'^y^^^^^^^^^^^^ -r i'^^--- "p- the col' business of the Company with anv^r "' '^' "'^^ ""' ^^'^^ P'^^e of where with the PresLn o SecretarvTh'"7" " '^'^'"^^ 'hereof, or else- no known office or chief place of busresfrdh "' -^'^ """"^^"^ '^^^ secretary, then -.pon return to thT'Zrl'r, """^ ^"°^^" P'-^^ident or such publication L it may deel rL.f '. "'"'^' '''' '''"''' ^^all order at least one month, in " fea'Tol T' ' '° '" "^'^ ^" '^^ P^---- for ''eheldtobedueservicluprtrermtr;." ^"' ^"^' PU^Hcation shall ^:^t::s:r i:::::;:;^^;:^;- ^ ^- ^^ sufficient, in citing the Act,' "^ '^ ■'°'"* ^'"^"^ Companies General Clauses »l1'licable ,o this Province i, repel" """ "'«" '" « '="• " " '' holder, and if ly making the everally liable —and also to or all debts of h loan to that everally liable r all debts not the Company shall be liable herefor within rector is sued such director, returned un- ;xecution shall naintained be- areholder, not as a witness il { ' n i i ,1 1 CHAPTER 42. AN ACT TO AMEND THE JOINT STOCK COMPANIES GENERAL CLAUSES ACT. (32 Vic. cap. 42.) ^Assented to April 3, 1867. TTER MAJESTY, by and with the advice and consent of the Legislature ■*■ of Quebec, enacts as follows : — 1. The eighth sub-section of the second section of the Joint Stock Com- panies General Clauses Act is hereby so amended as to read in the follow- ing words: — " Carrying on any fishery or fisheries and building and equipping vessels for such fishery or fisheries." 2. This Act shall be held to all intents, as forming part of the said Act, and the expression " the Joint Stock Companies General Clauses Act,'' shall be a sufficient citation as well of this Act as of the Act hereby amended. lilft ■.i' I ii ' < ! CHAPTER 25. AN ACT kp:specting the incorporation of joint STOCK COMPANIES. (31 Vic, cap. 25.) Interpretation of Act. Purposes enumerated. Notice of Application. Petition Jor Letters Patent. Preliminary Conditions. Issue of Letters Patent. General Powers of Company . Increase and Decrease of Capital. Supplementary Letters Patent. Poivers to he Subject to Act. Directors ; Qualification of. Election of. Vacancies in. To Elect a President. Powers of. Special Meetings. Proof of By-Laws. Transfer of Stock. Allotment of Stock. Calls. [Assented to February z^th. 1K6S. Forfeiture of Stock. Holder in arrears not to vote. Books to be kept. Liability of Directors for improper transfer. Books to be kept open. Penalty for false entries in. Penalty for refusing inspection of books. Company not liable for trusts. Contracts. Company not to deal in stock. Liability of Shareholders. Liability for Dividends. Liability for Servants' Wages. Actions. Forfeiture of Charter. Fees. Acts Repealed. Short Title. T TER MAJESTY, by and with the advice and consent of the I.egis- lature of Qnebec, enacts as follows : — I. The following expressions in this Act, and in all letters patent ami supplementary letters patent issued under the same, have the meanings hereby assigned to them, unless there is something in the subject or con- text repugnant to such construction, that is to say — 1. The expression " the letters patent" means the letters patent incor- porating a Company for any purpose contemplated by this Act ; 2. The e.vpression " the supplementar>' letters patent " means any letters patent granted for increasing or reducing of the capital stock of such Company ; :■(: !: 1!' I 550 JOINT STOCK COMPANIES. Que. Stat. 3. The expression " the Company ' means the Company so incorporated by letters patent ; 4. The expression " the undertaking means the whole of the works and business of every kind which the Company is authorized to carry on ; 3. The expression "real estate" or "land" includes all immoveable property of every kind ; 6. The expression 'shareholder" or "stockholder" means every sub- scriber to or holder of stock in the Company, and extends to and includes the personal representatives of the shareholder. 2. The Lieutenant-Governor in Council may, by letters patent under the great seal, grant a charter to any number of persons, not less than five, who shall petition therefor constituting such persons and others who may become shareholders in the Company thereby created, a body corporate and politic for any of the following purposes : — I. Carrying on any kind of manufacturing, ship building, mechanical printing and publishing, or chemical business ; 2. Mining for gold, silver, copper, or other metals, or ores, or for coaK plumbago or other minerals ; 3. Washing, dressing, smelting, and otherwise preparing for market the ores of all kinds of metals ; 4. Erecting, maintaining, and using dams, sluices and apparatus for excavating and washing auriferous earth in the process of gold mining ; 5. Opening and working quarries of marble, slate or other economic minerals, or mineral substances, and the manufacture, exportation and sale thereof ; 6. Boring for, opening and using petroleum, salt, or other mineral springs ; 7. Erecting and maintaining any building or buildings to be used in whole or part as a Mechanics' Institute, or public reading or lecture room, or gymnasium, or as a public hotel, or as baths or bath, or for skating or curling rinks, or for agriculii.ral or horticultural fairs or exhibitions, or for libraries or for educational, library, scientific or religious purposes, or as houses to be leased. 8. Carrying on any fishery or fisheries in this Province, or in the waters thereto adjacent, or in the Gulf of St. Lawrence, and building and equip- ping vessels for such fishery or fisheries. 31 v., C. 25. ACT RESPECTING INCORPORATION. >51 9. Carrj-ing on any fu.;;i.-T for anv dividend or m mey payable in respect of such shares, and •w jviiitr or ncjt notice of such trust shall not have been given to the Com pa.tn . laii the Company shall not be bound to sae to the application of the manw paid upon such receipt. I Tifs wh.it is said at p. 232 concerning the power of the Court to compel tht fcniaction of the books and papers of the Company or corporation. maj iii.iiliied the decision of the Court of Appeal, Nlontreal in the case erf Cirjsnp 'J. The Mayor ct al. of Montreal (21 L. C. Jur., 249) which re- ject** a> motii.n for leave to appeal from a judgment lefusing a rule to ■cwirgiiil; the City Clerk to bring up some of the papers in his charge under a BBi^iRna duces tecum. Sanborn, J., in deliveriag the judgment of the Cyan,, laid : " Under the City Charter, 14 & 5 V., c. 12S, s. 50, it is pro- ridt!^ diiic copies of any documents of the records or archives of the city mar It larhenticated by the signature of the proper officers and become frriiuD fijuli evidence in all Courts of Justice. By the same section it is pronu^f that any elector may have access to all the records on payment , and in no cas* ■shall it be necessary to have the seal of the Company affixed to any sucL . ntract, agret nient, engagement, bar- gain, bill of exchange, promissory note, or cheque, or to prove that the same was made, drawn, accepted, or eml^rsed, as the case may be, in pur- suance of any by-law or special vole, or order, nor shall the party so acting as agent, officer, or servant of the Company, be thereby subjected indi- vidually to any liability whatever to any third party therefor, provided always that nothing in this section shall l)e construed to authorize the (Company t(-< issue any note intended to be i:ir( ulated as money or as the note of a bank. 41. No Company shall use any at its funds in the purchase of stock in any other corporation. 42. Each shareholder, until the whole amountof his stock has been paid up shall be individually liable to the creditors of the Company to an amount equal to that not paid up thereon ; but shall not be liable to an action therefor by any creditor before an executi(3n against the Company has been returned unsatisfied in whole or in part, and the amount due on such execution shall be the amount recoverable with co.>ts against such snareholder. 43. The shareholders of the Company shall not as such he held responsible for any act, default, or liability whatever of the Company, or for any engagement, claim, pa>"nient. loss, injury, transaction, matter or thing whatever, relating to or connected with the Company, beyond the amount of their respective shares m the capital stock thereof. 44. No person holding stock in the Company as an executor, adminis- trator, tutor, curator, guardian, or trustee, shall be personally subject to liability as a shareholder, but the estates and funds in the hands of such person shall be liable in like manrer and to the same extent as the testator, or intestate, or the minor, ward, or interdicted person, or the person interested in such trust fund would be if living and competent to act, and holding such stock in his own name ; and no person holding such stock as collateral security shall be personally subject to such liability, but the person pledging such stock shall be considered as holding the same, anrl shall be liable as a shareholder accordingly, 48. Every such executor, administrator, tutor, curator, guardian, or trustee shall represent the stock in his hands at all meetings of the Com- pany, and may vote accordingly as a shareholder. 46. If the directors of the Company declare and pay any dividend when the Company is insolvent or any dividend the payment of which );. ill ■ 1 i i , xl m iiM (;;«, r itawit! Pilf Hi 1 1 1 * i U' i i:;'l ^0 JOINT STOCK COMPANIES. Que. Stat. renders the Company insolvent, or diminishes the capital stock thereof, they shall be jointly and severally liable as well to the Company as to the individual shareholders and creditors thereof, for all the debts of the Com- pany then existing, and for all thereafter contracted during their continu- ance in office respectively ; but if any director present when such dividend is declared do forthwith, or if any director then absent, do within twenty- f jur hours after he shall have become aware thereof and able so to do, enter on the minutes of the board of directors his protest agr.inst the same, and do within eight days thereafter publish such protest m at least one paper published at or as near as may be possible to the office or chief place of business of the Company, such director may thereby, and not otherwise, exonerate himself from such liability. 4-7 . No loan shall be made by the Company to any shareholder, and if such be made, all directors and other officers of the Company making the same, or in anywise assenting thereto, shall be jointly and severally liable to the Company for the amount of such loan, with legal interest — for all debt;- of the Company contracted from the time of making such loan tu hat of the repayment thereof. 48. The directors of the Company shall be jointly and severally li;il)le to the labourers, servants and apprentices thereof for all debts not exceed- ing one year's wages due for services performed for the Company whilst they are such directors respectively ; but no director shall be liable to an action therefor, unless the Company has been sued therefor within one year after the debt became due, nor yet unless such director is sued there- for within one year from the time when he ceased to be such director, nor bef)re an execution against the Company has been returned unsatisfied, in whole or in part; and the amount due on such execution shall be the amount recoverable with costs against the directors. 49. Any description of action may be prosecuted and maintained be- tween the Company and any shareholder thereof, and no shareholder, not being himself a party to such suit, shall be incompetent as a witness therein. 60. Service of all manner of summons or writ whatever upon the Com- pany may be made by leaving a copy thereof at the office or chief place of businesF of the Company with any grown person in charge thereof or else- where V. I the president or secretary thereof; or if the Company have no known office or chief place of business, and have no known president or secretary, then upon return to that effect duly made, the Court may order such publication as it may deem requisite to be made in the premises, for ^ least one month, in at least one newspaper ; and such publication shall he held to be due service upon the Company. 61. In any action or other legal proceeding, it shall not be requisite to set forth the mode of incorporation of the Company, otherwise than by mention of it under its corporate name, as incorporated by virtue of letters Stat. 31 v., c. 25. ACT RESPECTINO INCORPORATION. 561 thereof, as to the the Com- ■ continu- dividenfl 1 twenty - so to do, the same, least one hief place otherwise, der, and if naking the rally liable 2st — for all ich loan tu ;rally liable not exceed- jany whilst iable to an 1 within one ued there- irector, nor satisfied, in all be the itained be- holder, not a witness the Com- ief place of ;of or else- ly have no resident or may order lemises, for lation shall [equisite to le than by |e of letters patent — or of letters patent and supplementary letters patent, as the case may be, — under this Act ; and the notice in the Quebec Official Gazette, ^( the issue thereof shall be prima facie proof of all things thereby de- clared ; and on production of the letters patent or supplementary letters patent themselves, or of any exemplification or copy thereof under the great seal, the fact of such notice shall be presumed : and save only in any proceeding hy scire facias or otherwise for direct imj>;achment thereof, the letters patent or suppl :mentary letters patent themselves, or any exempli- fication or copy thereof under the great seal, shall be conclusive proof oE every matter and thing therein set forth. 52. The charter of the Company shall be forfeited by non-user ilaring three consecutive years at any one time, — or if the Company do not go into actual operation within three years after it is granted ; and no declar- ation of such forfeiture by any Act of Parliament shall be deemed an infringement of such charter. 63. The Company shall be subject to such further and other provisions as the Legislature may hereafter deem expedient. 84. The Go\-ernor in Council may, from time to time, establish, alter and regulate the tariff of the fees to be paid on application for Ktteis patent and supplementary letters patent uniler this .\ct, may designate the department or departments through which the issue thereof sliall take place, and may prescribe the forms of proceeding and record in respect thereof, and all other matters requisite for carrying out the object of this Act : 2. Such fees may be made to vary in amount, under any rule or rules, — as to nature of Company, amount of capital, and otherwise, — that may be deemed expedient ; 3. No step shall be taken in any ilepartmont towar)ck of any such Company, shall be introduced or proceede.l witii either in the l-egislative Council or in the Legislative .\s.seuibly until there has been paid in to the credit of the Treasurer, for the public usj of the 1 lovince — over and above what- ever may be reipiired to be paid by way of fei or for printing such bill sh ill be presentable for sanction to the Lieutenant lijvernor unless thsre is e:ilj;sed thereon a Cc;rti(icate by the Clerks of the Legislative Council and Assembly, respectively, that they are officially assured of the fact, th.it all payment hereby exigible has been duly made upon the bill. S6. The Act, chapter sixty-three of the Consolidated Statutes of Cina la, intituled 'An .\.ct respecting Joint Stock Companies for manu- facturiii.;, mining, mechanical, chemical, (jr other purpose-, or for thr erection of public hotels, or baths, and bath houses, or for the opening an 1 using of salt, or miner, il springs, or for carrying on fishing," — the Act, cha[)tei" thirty-one of the Statutes of Canada, passed in the tweiit\ -third year of Her Majesty's re;t,'n, ,md intituled " .\n .\ct respecting the judicial i icorp )r,uion of Joint Stock C".o:iipanies for certain purposes, —and th A^t, chapter twenty-three of the St,itiites of Canada, passed in the Sessic n of the Parliament of Cana In, hel 1 in the twenty-revenlh and twenty-eigiith years of Her ALijesty s rei;,^ii, ,111 1 intituled " .\n Act to authorize the granting of charters of incor|i )ratioa to manufacturing, mining, and other Com.iinies," and all Act-. u\t ruling or ainending the same or any of them - are heiejy repealed s ) fir ,is regirds the formation or incorporation here- a ter, in virtue of an, of thj provisions thereof of any Company what- ever, the incorporation of waieh is subject to the control of this legisla- ture. 2. i^'iit every sueh (' oaipauy heret,)f,)re incorporated in virtue of any of such })rovisions shall so reiuain, ;ind no provision of such Acts, as touch- ing any such Company, be in any wise affected by this .\ct ; 3. And every application for incorporation of any C'oinpany, the incor- poration of which is subject to the control of this Legislature, now pending under the said Statute, prissed in the twenty-third year of Her Majesty's •.eig;'. or under the said Act, chapter twenty-three, of the said Statutes, passed in the Session held in the twenty-seventh and twenty-eighth years of Her ilajesty's reign, may be proceeded with, and incor[)oration, by judicial decree or letters patent (as the case may be) may be obtained in virtue thereof, as though this .\i t hail not been ]iassed. 4. And no letters patent granted, or which may be granted, by the Lieutenaut-Ciovernor in Council upiii any such application, under the sa J Act, chapter twenty-three, of the said Session, held in the twenty- leventh and twenty-eighth years of Her Majesty's reign, which was pendi.i,', or for which notice hal been given, or was in procesj of beinj giv,in, 01 the firs: ai>IWMMIHiiiiwwin<.w }ue. Stat. aid to the nt payable introducuti, ;r payment I.ieiitenant le Clerks of ire oflicially , dulv made Statutes of ; for inanu- or for till' he (ipenin;; ■ — the Act, went) -third the judicial ,'■— and th the Sessi( n enty-eighth thori/.e the ;, and other >()f them — ration here- lany vvhat- this legisla- 3lV,c.25 July las \vhate\er of any depart ACT RKSPECTINO INCORPORATION. day ofjuly last, shall be deemed irre 5(ja - . ~ tment or ofli^oH^he d""°" °' '"•^' P^^»-'P^tic>n '^-' "PO" snch application or in an^herelf °" '" ''' P'-°--li"«« ^^STjhis Act may be cited as ..the Joint Stock Companie. les Incorpora- SCHEDULE A. Ptibli '^^--'^l^^^^AcUlci!!^,^^^^^ Joint Stock Companies' the Province of g„ebec, bearing da^thr" '""' ""'^^^ ^''^'«-^' '-' <^ incorporating (/„,-,• o/^/ , f' "-'dte ttie day of ''"'"^'^ n> .. .L ;:::;, z'z ';^z "'nr'"" -^ '-" -'^-- """"■ 'i/ //- Con,pany as in the UttlTu n ,' """' "^ '^"•'''- ■''"'^- Z^"' ^''■■'-■s, divided into share.; :f^^^^ "ollarstc."'''''''' '''''' " ^•-\-.- of.ce Of the secretary of theZll ,,,._,,. SCHEDULE B. I'ublic notice i< ha,- >i I"corporat,on Ac, s ^^ I^::;:;^" ""^^ ^'^^ !<-- Stock Con.pani.V under the great seal of\he P -See ror^"^ '^ '"^" '''' "'''>'— ^^-^ °'" u-herebv hi f. " '' ^'^""g '^^'^ '^e ^/ ;/'<• CW,.,,.) .3 increied ^^^^^^^^^^^^^^^ ^'^'/'^'^ ^^ (^"- --<' ^/. .... ^'^^'^"-^ '» dollars. Dated! etc. " ' "'"' '""•'■ ^'^ ^^^"^ e of any of i, as touch- , the incor- low pending ■r Majesty's ;d Statutes, lighth years loration, by obtained in ted, by tlu- der thj sa 1 snty-ieventh idi.if, or for o 1 the lirs; fif' :! r-'i K.d; CHAPTER 41. AN ACT TO AMEND THE JOINT STOCK COMPANIES' INCOR- PORATION ACT. (j2 Vic, Cai-. 41.) [Assented to 5/// April i86g. TTER MAJESTY by and with the advice and consent of the Legis- lature of Quebec enacts as follows : — I. The eighth sub-section of the second section of the Joint Stock Com- panies' Incorporation Act is hereby amended so as to read in the following words : I "Carrying on any fishery or fisheries and building and equipping ves- sels for such fishery or fisheries. " 2. This Act shall be held to all intents as forming part of the said Act, and the expression " The Joint Stock Companies' Incorporation Act " shall be a siifiicient citation as well of this Act as of the Act hereby amended. CHAPTER 25. AN ACT RESPECTING CERTAIN JOINT STOCK COMPANIES. (36 Vic, Cm-. 25.) lAsse)itid to Dcciiiibir 24.. i^jz. T T ER MAJESTY, by and with the advice and consent of tLe Le^j-slalare ■*■ ^ of Quebec, enacts as follows ; — I. It shall be lawful for the directors of any corporation, the amoaat of each share in the capital stock of which shall be a multiple of one hoodred, to pass a by-law, declaring that the capital stock of such corporation shall be divided into shares of one hundred dollars each, and from and after the passing of such by-law, such capital r,'ock shall be divided into shares of ome hundred dollars each. 2 Any corporation uicorporated and existing in Great Britain, or in ?he United States of America, shall hereafter have the right to acquire and hold any lands and real estate in this I'rovince for their uccn^adoa, or the prosecution of their business only, any law to the contrary, not- withstanding ; providing, that no such corporation formed for the purpose of promoting art, science, religion, charity, or any other like object not involving the acquisition of gain by the corporation or by the individual nicn-ibers thereof, shall without the sanction of the Lieutenant-^>vemor jnCooncil, hold more than ten acres of land ; but the Lieutenan:-^>ovemor in CoEncil may by license under the hand of the Provincial Secretary empower any such corporation to hold lands in such quantity aci iabject to sach conditions as he shall think fit. 3 Nuthing in this Act contained shall affect any case pending whtn it aiiall come into force, but such case shall be decided as if this Act had not &««! passed. 1 1 . i h\ !: U hi ; i I i^:H ■: !• CHAPTER 31. AN ACT RESPECTING THE VOLUNTARY WINDING UP OF JOINT STOCK COMPANIES. (42-43 Vic, Cap. ji.) [Assiiitfd to October ^ist, 1879. CoiHpiJtties may he jcuiiiid up, s. 1. (reiieni nectinc; respect'ii!^, i I'otc of two-thirds iiccess.u', Corporate poivers coittiiuicd, ... ^. Appointment of lijuidators. s. 5. Removal of liquidators, s. t>. Appointment by the Court, s. /. R- solution to be reiristered, s. 8. Duties, etc., of liquidators, s. g. J'ayment of debts of eonipaiy, s. 11. Collection of claims, s. 12. Remuneration of liquidators, s. 13. Liquidators to report every year, .5.14. Statement after !cindinff up, s. 15. Notice to Provincial Secretary, s. 16. Notice by Provincial Secretary, s. 17. r'i~!.'rnds, etc., unclaimed, s. 18. Luiiitt of hooks, etc., s. 19. Penalty for neirlect, s. 20. Accounts to be rendered, s. 21 . Articles of code affected, s. 22. Proniul<^ation of Act. s. 23. FT ER MAJESTY, by and with the advice and consent of the Legis- ^ -*■ lature of (Juebec, enacts as follows : — 1. Any Joint Stock Company incorporated by letters patent issued under "the Joint Stock Companies' Incorporation Act (31 \'ic., cap. 2^) (jr to which " the Joint Stock Companies' (General Clauses Act " (31 Vic, cap. 24.) applies, may be wound up voluntarily whenever the directors may deem it expedient that the Company sliall be dissolved. 2. The directors shall thereupon convene a general meeting of the share- holders, mentioning in the notice that the dissolution of the ."ompany will be proposed at such meeting, 3. The resolution of the directors declaring it to be e.xpedient that the Company should be wound up voluntarily shall be submitted to the gen- eral meeting of the shareholders and if such meeting pass by a majority representing iKJt less than tw.) thirds of the stock, a resolution that the Company shill be wound uji voluntarily and dissolved, then the Company shall forthwith subsist and carry on business for the purpose only of w ind- ing up its affairs. 4. The corporate state and corporate powers of the Company shall cf)n- tinue until its affairs are wound up. 42-48 V.,C'.;U. VOLUNTARY WINDlXd IP 567 6. At the f,'eneral meetin their rights and interest in the Company. 12. The liquidator or liquidators shall recover and collect unpaid calls in full or proporti )nably as the casj may require, from shareholders in default, should he or they deem it necessary ; but in case of the non- collection in whole or in part of such unpaid calls, the shareholders in default shall only rank in the distribution when those who have paid nioie have been ranked for the excess so paid by them. ' 13. The shareholders shall determine the remuneration of the liquida- tor or liquidators and also whether or not he or they shall give security for his or their administration, specifying when security is to be given and the amount thereof. iiii^ 1 l|i :i ii ■Ll' The latest expression of the law of the State of New York maintains the right of a Receiver to recover the balance unpaid upon subscriptions to the capital stock of such Corporation without any previous call for the payment of sujh subscription having been made. Winans v. The McKean R.R. &- Navigation Co., C. C, U. S., N. Y. 104. " An official liquidator is not entitled to receive anything out of the Company by way of remuneration until all the costs of the winding up. including the bill of costs of the solicitor employed by him have been paid in full. Freehold [.and Co. /;/ re L. R. 9, Eq. 376. 1870. 42-43 v., C. 31. VOLUNTARY WINDING IP. 5G1» !♦. Ill the event of the winclinR up continuing for more than one year, the liquidator or liciuidators shall call a Rcneral meetinj; of the sharehold- ers at the end of the first year and at the end of each succeeding vear, or as soon thereafter as may he c )nvenient, and he or they shall lay before such meeting an account showing his or their acts and dealings and the manner in which the operations for the winding up have been conducted during the preceding year. 15. As sf)on as the affairs of the Company ar.j fully woun 1 up the liqui- dator or liquidators shall make up an ace )unt showing the cash on hand at the date on which the Company was placed in liquidation, the property of the Company disposed of, the amounts re dized. the sums paid, and generally the manner in which such winding up has been con lucted and shall attest the same before a Justice of the Peace; and thereupon he or they shall call a general meeting of the Company for the purpo.se of lay- ing such account before the shareholders and of having the same confirmed. 16. The liquidator or liquidators shall make a return to the Provincial Secretary of such meeting having been held and also of such meeting having confirmed the account showing the manner in which the winding up has been conducted. The Provincial Secretary shall cause such return to be registered in the registers of the Province, and forthwith on the regis- tration thereof the Company shall be dissoKe 1. 17. The Provincial Secretary shall without delay publish a notice of the dissolution of the Company in the Qiifbcc Ofiiiiiil Gnzcttc. nnd \he liqui- dator, or liquidators, shall also forthwith register a notice of the dissolu- tion in the office of the Prothonotary of the Superior Court for the dis- trict, and in the Registry Office for the registration division in which the Company had its chief office or principal place of business. liquida- security liven and laintauis Icriptions ]1 for the McKiaii It of the Iding up. leen paid 18. Within thirty days after the date of the dissolution of the Company the liquidator, or liquidators, shall deposit with the Treasurer of the Pro- vince the amount of all debts, and all dividends which may then be un- claimed and unpaid with a statement tliereof attested before a Justice of the Peace, and the money so deposited shall be treated as a deposit under the Act respecting judicial and other deposits, (35 Vic, cap. 5.) and when claimed shall be paid over to the person or persons entitled thereto. 19 Within the same perijd of thirty days the liciuidator or liquidators shall deposit the books, accounts and documents of the Company, and also the sworn account submitted to the shareholders and confirmed by them showing the manner in which the winding up has been conducted, and a duplicate of the sworn statement of the moneys deposited with the Trea- surer of the Province in the office of the Prothonotary of the Superior fl ■','" 570 JOINT STOCK COMI'ANIEH. Que. Stat. Court for the district in which the Company had its chiiif ()ffi(,j or princi- pal place of business. 20. If the liquidator or li^piidators np^lcct to deposit the mr)ney with liio Treasurer of the Province or to deposit the books, accounts and docu- ments as provided in section i8 and ly, he or they severally shall be liable to a penalty not exceedint^ ten dollars for every day duriiif,' \\hichheor th<'y arc in default. 21. Liquidators shall be bound to rcnrhr their accounts and tli.,'atiou and ptMialties as a curator to the property of a. dissolve. 1 corporation luider the Civil Code and the Code of Civil I'roceilure. 22. Articles 368, 372 and 373 of the Civil Codi: are mo litied in the particulars contained in this Act. ' 23. This .Act shall have force and tffec ( fr( m the d:,\ of its sanction Viilc Tr'jface. W • ■ ;2 mi H V\ le. Stat, or piiuci- f)iicy with and (locu- 1 be liable tiich he or D pay over Ration aiul :i()n under led in the sanction. 1 Acceptance — Of charter. 122. may be presumed, i 'i, cannot^be affected by withdrawal of s .ne of the corporators. A ceo I. XT — -Must be ren lere 1 to company by pro:noter,., 73. ACCOLXTS — Company liable for. 2fig. to be rendered by liquidator.s, 5 u. S7o disposed of when company wound up, 5^5. AcyUItvJEXCE — A wa.v.-ir of ri-ht to avji J sabsjription, 6j, .,,, Act— ' ' Of ,S7- citation of, 81. interpretation of, S2. Of 1^9 repealed. 424. canarJa clauses, ^zij. to facilitate transmission of timber ^7 amending Acts, 45 J 453 "*■'' Ont^cfS2r4Sr''" ^""^Pf"'^^ '" '-^'' '-->• i" ^-na ,a, 454. letters patent. 466. transmission of timber, 48J, gas and water companies, 4<,y. to change name of companies 51 ^ winding up of comi)anies 51s' amending Act, 537. Quebec Clauses Act, 538. amending, 548. genera! Act, 549, amending, 564. foreign companies may hoi 1 land 56s winding up of com,)aiiies, 566. Actions— S^-t' Shares. Institute in Province of Quebec, 132. ' " "" in England, 132.' i h ■ 'i! W i m 572 INDEX. fitoilinir. hnw affecteil by amalgamation, 142 Foe call.-.. 314, 4JJ. piea nf cfjmp'nsation, 315. what is ciimponsation of, .315, when shareholder estopped from pleading, 315. fc'-j or ,i;;ainst I'ompany, j6(j, 436, 449, 465, 480. Ukaifinu in, 372. rile in ['nited States, 372. rule n ['pper ('aiiada, 372. A£m.'.M.4iond of officers in, 372. Riufet of. suspended by windiiif^ up order, 373. PTitiuiins? in, after recorjioration, 3S4. Apiinnt directors for wa^es, 369, tevulence reipiired in, ^(n). prescription of, ,](>g. Ihp-jof of incorporation, 369. j^urehrjldernot incompetent as witness in action a;;ainst company, jf.ij. Jfc.-idmsj in, 369, lOt' members against each other, 37 lOt' lie f acta directors valid, 175. Ot ifirectors subject to approval, 216. "fMasjent.s, company liable for, 331. •Otf managers, directors not liable for, 327. Aii-M3-'».:^liB.tT0R — Liability of, on shares, 300. ADWitv«;.jr«.i — By officers of the Company may be used as evidence in action as^ainst it, 372. AinrASicu.! — Liaibility of directors for, 32S. •Old Eunited partnerships, 17. AuTEKirc-ia."WENT — (fjiff cfcangi of constitution, etc., 148, 151, 424. Ai^ni'ft'XTrH — Winft application for letters patent, 481. Pninutfticit: ca.se must be made by, to obtain writ of quo .\ iirraiitv, 197. A'jESiCTai.--— Hower of company to establish, 109, 346, 3SS. Sitrwice at, 347. 348. Ag£SCT Asaocr.vTioN — Lijuat Company may act as, 416. Agesjc^ — Oi promoters, 70. eTsonal iiabtlttv, 330 t roper mode in which should contract r^a Contracts of, may inure to Company, 3^,0 Agreement — Of Amalgamation of Loan Companies 1 > . Lftect of, wluii ultra virts, 145. Allotment OF PiiAKEs—S,, .SAar«. Of increased capital stock. 153. Of decreased capital stock. 155. In order to qualificatjon, i6*>. Amalgamation — Power of company to enter imo, 137 Cannot transfer members agatnst their will, i j., hffect of, on debts of companv. 141. Effect of, generallv. 141. vZT ^ Pfr'''"^''^^ l.y creditors of s.,Ivent compa.>v, .. , LHect of, with regard to prr-r-v 142 with regard to ■-..-.: :.. :,-nd'ing. 142. r^c T A^"^ regard to Imiitti^s of comoanv 14 ? Of Loan Companies, 422. - ■ t.5 agreement of. to be sul -.•;•:.• ( to shareholders. .,22. Amoints — • Paid in to be entered in books 224. AxoNVMOUS PAKTNEKhHIl'.S— KV. Ari'MCANTS — Majority of, to be resident Jn Canada, 114. Al'I'I.ICATION — For letters patent. 102. For shares, 242. may be withdrawn, 243 Of Canada Clau.ses' Act, 43.'. Of Ontario Clauses' Act. 4 = 7 Of Ontario Joint Stock Companies \ct Af.j Of gnebec Clauses Act, 53S. Joint Stock Companies Act. 550. Al'i'OINTMENT — Of officery, 352. Of subordinate agents. 353, 360. Hy (if Jitcto directors, 354" Of litpiidators, 520, 500. AKiilTRATlON — Compensation of propeny owners by, 443. 4,59. Articles — Of Quebec case affected by winding np act, 570. /573 tWBSi 574 INDKX. '•' !(! *; r !'!■ • ' . ■ t i Akkears oe' Calls — Power of company to mortgage, 386, Ainu; A us OF Wages — Right (if clerks to, under Quebec Code, 369. AuKEAKs OF Interest — F.oan Company must not impose penalty in regard to, 421. Assig.\i:e in Bankrci'tcv — Rights of, with regard to shares of bankrupt, 290. 'J'ransfer of shares by, 291. Atten;)ance — Book of, should be kept by directors, 2ig. Ai:timi!Ization — ( )f directors, persons dealing with, should inquire iiiln, 2i.i), < )f othcers, servants, etc, 352. (Jfofiiccrs to vote must be special, 354. Award — Of arbitrators in cases where land taken by companies fnrmc-d to facilitate the transmission of timber. 444, 491. IjAII.U F — Writs of quo ^'nrnuitc to be addressed to. in Quebec, M7. H.M.I.i_)T — Election of directors to be by, 184, 431. JiVNKINf. .\CT~- J. lability of shareholders under, 400. I ) A N K Ri • I'Tc V — Sfc Insolvency . Of director, effect of, 174. Banks — Not subject to incorporation under general Act, 430. Bearer — Certificates to, 266. Share warrants to, 2OG. BU-LS OF I'^XCIIANGE — Right of company to issue. 352. Board — Meetings of, when informal, 219. Applications to register transfers should be considered by, 275. Board of Trad^e— Companies regulated by, in England, 376. Bouv Cori'oratk and Politic — Meaning of term, 83. Bonds — Power of Company to issue, 386. What are, 3S7. Rule illustrated, 387. Loan Company may purchase, 417. 4-1- 2l(,, cs ftirmcil to V17. INDEX. Bon IS — Sonietiiiies made to directors, i65, Ijonuses— Nature of, 343. Difference between, and dividends, 344 Rules witn regard to, 344, ^ iJiiOKs OF COMPANV — What to contain, jji -.-.a o?- . :i , ., , lobe kept open for inspection; 224 434 46, .4. \\ ho mav make extracts from ^.4 ^^^' *^'"' ^•♦'^■ enalty for neglect to keep, 224 "434 575 d by, 275. Impoitance of keeping, ;^24. Effect of, as evidence,"22j"' 22() 4:14 Penalty f.r false entries in ^m 4^4 .fir Ki.^'hts of nu-mbers and otlierruith rcRard to — Contents of. „ndor Knglish Act •.-,/^ ' "^' As evKlcace of jniwers of company ^226 As affecting' contracts ukh third persons. 226 Object of share list in, 22ej Hours during which to be- kept open -T, rule under English Act "C ' " ' Are property of shareholders""-7 Information obtained fn.m, not to be diNulgod — V ti.mgers have no right to inspect "'8 J xcept on .special application. 23^' A andamus tu cmipc 1 inspection of, 2-8 -^i^ l-.Mdeiice of, against Company 220 Regularity „f, assumed -29 ' Evidenreof, as against shareholders 2^0 As against strangers, 231 ' Production of, as evidence, 2 j> Kight to c.mipel coaip.mv to pr'uducc m- r-s rule in Cniied states, 233 m4 ' rule under English Act, 234 case of Cuu-ir v. Tnidcau, 214 \\ hat are part of bouks, etc o ,-^ Secretary cannot retain. 236 " PenaltN- for refusing inspection, 2V' Other penalties lelating to, 2^0,4:4' Mandamus will he t.. compel surrender of, ,;,. liOKkOWlNG — Power of company in relation to, 2.5, 3S6. liKllISH XoHTii A.MEKKA Ac 1 — Interpretation of, Sy, ,j,,. liKinsH ro.MPAW— May lend money in Canada, 434. likiriSH SCUJECT.-,— Majority of directors to be, 82, 114, 430. I3R0KEKS — Status of, zf)-j. Liability of. 2G7, Rights of, where calls unpiid, 284. ' l-u.e'ii,::sJd:'S^ ''-''''' '' ^^•'"'^'"^ "p -J-' 407. 4J4 576 INDEX. M i ! i : !■■ 1 |i I ''■I '■ liiib Kit ' i :i Brokers — Rights of, on contracts to buy or sell, 413. Where money advanced by, 414. Brokers and Jobbers — Respective positions of, 267. Biii.niNG Societies — To be distinguished from Loan Companies, 417. Description of, 418. Bt KDEN OF Proof — On company to show that property was purchased on its account, 74. On defendant in cases of iinu -icarrauto, iq-j. On directors to show that dividend was properly declared, 337. BrsiNESs— Of company, when commenced, 162. Of first general meeting, 164. Chief place of, 102, 1(15, 345. notices to he served at, 345. Of Company stopped by winding up, 395. BV-I.AWS — To change number of directors, 150. To change chief place of business, 151. To divide shares, 152. To increase capital stock, 153. To decrease capital stock, 155. When necessary, 214, 217, 220, Power of ccinpany to make, 215. Must not be unreasonable or oppressive, 215. rule illustrated, 215. Where enacted, 215. Must not be i:oiurary to common law, 215. F..\: post fditit, void, 2ifi. To regulate the allotment of stock, 216, 431. To regulate the m.iking (if calls, 216, 431. When made by directors subject to approval, 216, 432. rule under the English Act, 217. Effect of as evidence, 222, 432, 400. Shareholders lu'ld to be cfmversant with, 222. May be contested in action tti account, 222. Strangers not bound to examine into regularity < f, 22^. Nor affected by irregularities in, 223. A trans .ript of, to be kept, 22]. California — Law of, in cases oi quo iiuu-rointi7- CHAiSIFEC.VTION' Of partnerships in Middle Ages, 13. Clacses Act — Of Canada, 429. Of Ontario, 456. Of Quebec, 538. Clekks — Fc>wers of, 358. Liability of directors towards, 367. Right of, to arrears under Quebec Code, 369. Right of action against directors where company w mni up. 36>. Evidence necessary in such case, 369. C>JDE DE COM.MERC.'i; — 39. Collate R.«. — Agreements with subscription, 247. cannot be proved by parole, 255. CoTiEcnox — Of claims of company in liquidation, 521. 568. CoifMAXDE DE BestIAUX — 17. COMMEXCEMENT — Of business, ifir, 162. Of proceedmg to remove name prior t) a winduig u. (|i>es not relieve shareholder, 401. Iff 580 Commerce INDKX. i ' : I 1^ li V^ m I I ■■ -?i n „ Definition of, 15. In the twelfth century, 10. Commercial Associations - Differt'nt kinds of, in Rome, 6. After death of Justini m, (j. Revival of, 11. DistinRiiished from civil, 14. Stimulated by the discovery of the New World. 20. History of, in Knijlish law, 22. Under the Trench Republic, 39. Under the Consulate, yj. Commercial an-d Non-Commercial— 35, 5S. Commercial 1'artnekshii'> — Definition of, 15. Commission — Loan Company may charge, 421. Company — Origin of term, 1 1. Meaning of term, S2. 421J, Objects of, 83. With provincial objects, 85. Rights of, and powers of, 87. Powers of, 91, 430, 458, 470. Name of, 102. Cannot have exclusive right to use of a general t_T.n, 10 j Powers of, to sue gene-ally, 112. Power of State with regard to, 124. What is, 125. General powers of company, 126, 210, 430, 540. to hold lands, 126, 430, powers of common law corporations, 1 26. restricted by statutes of mortmain, 126. how license to hold lands granted, 12O, disabilities under Quebec Civil Code, 127 applies also to trading companies, 127. decision in Chuiidii-rf Gold Mining Company v. Dcsbarats, 127. rule in United States. 129. under Canadian Act, restricted to that acquired for purposes of company, i2y. rule illustrated, 129. Power to mortgage, 130. Power to acquire other property, 131. Transfer (if property to, 131. To acquire rights in actions instituted before incorporation, 132. procedure in Province of Quebec, 132. Power of, to transact business, 133 Power to contract, 134, Power of, to amalgamate, 137. must pnrchase interest of dissenting members in cases of amalgamation, 139. debts of, not effected by amalgamation, 141. Power of, to e'nploy agents, 143. to deal in stock, 143, 435, 478, 463. to sue and be sued, 144. INDI-.X. 581 127. rposes J-- ises of COMTANV — Right of, to name. 147. Charged with interference in use of name, must have notice, 147. Cannot change name without special authority, 14M 4()i). Change of name of, in (Ontario, 515, 516. Powers of, may be extended, 14S. Power of, to issue preference shares, 154. Powers of, to be subject to Act, 160, 471. When business of, miy be commenced, idi. Completion of organization of, at first generrd meeting, 1O4. Bound by acts of director;;, 203. Failure of, no excuse for breach of contract with servants, 204. Persons held to have notice of instrument of incorporation of, 20(). Power of, to make by-laws, 215. Books of, what to contain, 225. Penalty for neglecting to keep books, 224. Books y>/'/»)/(f fiicii' evidence against, 224. Cannot be compelled to bring up books, 232. Secretary cannot retain books of, 236. Cannot be summoned as witness, 235. May be summoned to answer interrogatories. 237 Liable for fraudulent representations of agents. 231 rule illustrated, 251, rule in United States, 252. Liable in damages for deceit, 252. rule in Upper Canada, 232. but cannot be proved by parole, 252. Liability of, for acts of directors, 268, 271. for reports and accounts, 209. for registering improper transfer. 273. for refusing to register, 273. must show proper grounds for refusing. 273. may be ordered to register, 273. but do not guarantee vendor's title by registerini.', 281. Lien on shares when shareholder indebted. 283. debt must be due and payable, 286. When shares transmitted by law, 286. May refuse to register transfer to infant, 287, To married woman, 287. Liability of, on shares transmitted by death, etc . 2'58. Death of member of, 288. Rights with respect to shares on death of a memher, 289. When insolvent, 283. Power, of, to accept surrender of shares, 295. Power to deal in shares, 296. Transfer of shares to, by trustee, 297. Transfer to directors for, 298. Liability of, in respect of trusts, 301. ^ft^ 478. May be restrained from declaring shares forfeit, (i i. May be liable in damages when forfeiture illegal, ^ii. Liability of, generally. 330 for frauds and wrong. 331. for trespass, 331. for libel, 331. for malirious prosecution, 331. for acts of agents, 251, 331, 361. May be the subject of libel, 331. May maintain action for libel, 331. Liability of, for torts ot officials, 332. for false reports. 332. rule illustrated, 332. i.il 1 » ^;!l 582 rNi)KX. Company — I ial)ilii> of, for nc),'lif,'t'nce of servants, ^^5 i.iablc to exemplary t! images, 334. ti) indielinent, 33}. for misfeasance, 334. ' lability for felonies, 334, Lien of, end videmls, 340. Offices of, 343. Service of notices upon, 345, 347. May establish a^'encies, 346. Service of foreign companies, 348. rule in this countr\ , 34(j, Constructive notice to. 350 Cannot discharj^e servants without cause, 355, Liable for acts of servants and a,t;ents, 361. rule in United States, 3()i. in Province of Quebec, 361. in Ontario, ^bz. in New J^runswick, 3(13. Right of action by and against its own members. 369. 436, 449, 465 Difference between partnership and comjninv. 370. Subject to future legislation, 375, 43(). Charter of, a contract in the Unitetl States, 375. Powers of Legislature with regard to, 376. Power of, ti) borrow on bonds, etc., 38O. to mortgage arrears of calls, 38(1. proceeds of call not actually made, 386. May have agencies, 3n to com- })lete transfer, 409. To transfer shares void, wh re company refuses to accept trans- feree, 413. Entered into in ignorance of winding up, 414. CONTRIBUTORIES — Meaning of term under Knglish Act, 400. Who are liable to contribute, 400, 524. Rights of, where suit has been begun to remove name previous to winding up order, 400. Not released by commencement of proceedings to have name re- moved prior to winding up, 401, Nor by defeating an action for calls, 401. Liability of, before and after a winding up, 401. rule illustrated, 402, 414. under Ontario Act, 524. But proceedings may be continued, 403. Where contract of, absolutely void, 404. Where voidable, 405. rule in United States, 405. List of, to distinguish between members and representatives, 524. Where representative makes default, 525. Calls on, 525. Meetings of, 527. Liquidators to summon, 527. Five contributories may order, 527. Where held, 528. Notices of, 528. Voting at, 528. Conveyance — Of property to Company, after incorporation, 131. Corporate Powers — Of company continued during winding up of, 520, 566. Corporations — And families compared, 2. History of, 24. Definition of, 53 Disabilities to which they are subject in Province of Quebec, 127. Rights of, 371. I emedies of, 371. Costs — Foreign Companies to give security for, 116. Of adjudication of transmitted stock, 2S8. Courts — Interference of, in removal of directors, 183. in registration of transfers, 281. INDEX. 585 CofRTS Discretionary power of, wh.Me claim of creditor applying for wind ing up order is disputed, 398. rule illustrated, jyS. Assistance of, in winding,' up, 5^8. (rKEDITORS — Of solvent company cannot prcveut amalgamation, 141. Position of, where capital reduced, 158. Entitled to inspect books, 224. And to make extracts from books, 224. Rights of, against shareholders, 292. when company insolvent, 293. Forfeiture of charter no answer to action bv, 205. Rights of, when directors make fraudulent payments, 330. \vi;'.i regard to dividends, 335. Right of, to obtain order for compulsory winding up, 397, Claim of, must not be disputed, yjj. Proceeding in such case, 398. rule illustrated, 398. Rights of, on issue of winding up order, 414. Criminal Indictment — For misrepresentation in prospectus, 65. Crown — Cannot incorporate without consent, 123. Curator — Liability of, on shares, 300. D. DaMA'JES — Right to, for loss occasioned by misrepresentation in prospectus, 65 Company liable to action of, for deceit, 252. for ille.^''.! forfeiture of shares, 311. for illegal dividend, 341. Date— Of rescission of contract to take shares, 251. Death — Of member, effect of, 288. Liability for debts attaching to shares after, 290. Eflfect of, as to dividends, 339. Of special partner in L-"rance does not dissolve a limited partner- ship, 50. Of testator, liability of legatees upon, 290. Debenture Capital — Dividends may be paid out of, 344. Debentures — Power of company to issue, 386. Not to be for less than one hundred dollars, 386. Do not carry a preference if they transgress the prescribed limit, 387. May be issued at a discount, 387. Loan Company may purchase, 417. Rights of holders of, 420. ! . Mi t 11 KM! 5b*i DEin ' INDEX. :i ! ; ;: I it j. Olf Lyiiiends, effect of, 337. Maybe aealed with seal of person signing 352, j66. W&ua retjuire to be sealed, 364. HiHCijry of English law respecting, 3G5. Det>\ I" — M-ta.-.ingot term, 410. ^''ii;r:'i vendor in, to transfer, 410 Wfiitta purchaser in, to accept, 410. %VliiU. company in, to register, 41.!. DEn5nnni>:» — <^^ KTva ■• Partnership," 3. <jiKTj:«EE»T OF Secretary of State — IjttasMra Patent to be issued through, 42S. DeratBres — 0>[i! shares cannot be held liable for preliminary exp)enses, 78. Manr fae recovered back if company prove abortive, 78. OanvAniio? Of term •Ot' term Partnership," 3. Company," 11. Ij)i37Eaff5<:E— EetTMeen English and French law, 26. B«ttwa±n partnership and c mpany, 42. Between limited p.irtnership and sncietc en commanditi i 1 France, 51 Between d^rporations and companies, 53. fiJietween public and private companies, 59. Between ri'.4hts and powers, 87. Between authority and duty, 220. B»ttwce n due and payable, 286. B«ttween dividends and interest, 344. Between power to lend and power to borrow, 423. INOEX. 58' S.78. 1 France, 50. DlFFliKENT — Kinds of pirtnership in Kornan lau, f,. Kinds 01 lompanies in Rome, t>. Difficulties — Under Confederation Act in the iiicorpdratioii ol Coinpaiiies, «j Diligence— f )f directors in registering transfer, 27f> What constitutes. 2-6 Necessary in claiming rescission of contract to take sliares (',<> - • 405. -"''- Directors — Number of, how rejjubteJ, 151. 163, 430, 471, Majority to lie British subjects, resident in Canada, 8j, 114, 167 4 to Change of number of. 151,471. Provisional, 163, 430. 554. duties and poweis of, 163. must crill a genersl meeting, 163. Regular Hoard, number of, 164. 430 471, 540, 554. remuneration of. 64, 2>i. remuneration of. «n United States, 165. cannot recover forser\-icts on a quantum meruit 165. position of, 165. pavment of. under English system, if>6, sometimes civ.-n a bonus. i6ti. not paid out • f :r --rs r,nly. r66. are entitled tu ■,:. :r:;.:uty for losses, 166, 319. promise of, to stne gratuitously, i5(). Qualification of. 167. 430. 45S. 471,540, 554. meaning of tenu. 1167. of provisif)na] directors. 16.S. allotment of shares in order to, 168, liability of directors on shares allotted for purpose of, 168. liability after w^ndins: up ordered, 170. liability on acceptance ..f 171. not affected by uareiistcred transfer of shares, 172. Disqualification of. f^r holding office of profit in the company, 17 < .ind by bankruptcy of 174. and by pariicipaj'an^ in ihe profits of anv contract with the company. 174 but not by making a purchase of stock in the company from a shareholder. 175. Company has right 10 entire services of, 173. Acts o{dc fiuto d rectors valid. 175. Effect of irregularities it election' of, 175. Retirement of. J7O. Resignation of. 177. Election of, 177. 431 45S. 471, 540, 554 in general meeting of company. 178. at some place m the Dominion. 178. rule in England. 17S. rule in the United States, 179. lerm for which eSected, 177. 180, 430 system in England with regard to, 180. formalities at election meetings, 181. irregularities in, iSi. Quo warranto, 181. 588 INDEX. , " tli 1*1 D I HECTORS — Mandamus, 182. Meetiiif^s ftir election, when held and how, 1S3, 554. Election to be by ballot, 184, 554. failure ot, 184, 541. Removal of, 182. interference of Courts in, 183. Vacancies in Hcwrd of, 184, 431. To elect a President, etc., 184. 431. Acts (if. not to be affected by irregularities in elcjtion of 194. When election disputed, K),, Vacancies in Hoard of, how filled, igy, 43 1. Powers of. kjq, 431, 459, 473,541, 555. in general, 200. limited to cowers of company, 200. Status of. 201. are agents, 201. are agents of cw money, 205. borrowing power should be defined, 205. and for the purpose of settling antecedent debts, 206. but may borrow on mortgage, 207. by a vote of two-thirds, 207. may issue negotiable instruments, 207. may take legal ptoceedings, 209. Contracts with which are ultra vires, 209. Persons dealing with, should see they are properly authorized, 209. But have a rii^ht to assume are pro|)erly appointed, 210, No presumption in favour of, with legard to ir lalities. 213. Conditional powers of, 214, 431. Exercised by means of by-laws, 214. to allot stock, 216, 431. to make calls. 216, 431. .\cts of, subject to approval of shareholders, 216. 432. rule umler the linglish Act, 2', 7. -Meetings of, jk). ,'-ster, 275. How, may protect themselves,'274. Applications to register, should be considered bv the Board "7;' Kights of minority in cases of, 273. ' ' " Liability of, for transfers obtaincv. bv n.istcpresentation 27s rule dlustrated, 27f). ' ■ /J- Must use dilijjence, 276. VVhat constitutes diligence. 27f). What constitutes misreprcentation, 276. rule illustrated, 277. Power of, to refuse to register transfer must be exercised reason ably, 27S. rule in United Stale.-, 27S. Reasons for refusing, 278, Not bound to give reasons, 2H0. When Court will not interefere with, 281. Not obliged to give notice of refusal, 281. Power of. in dealing with their own shares, 281. to refuse transfer when transferer is indebted -8=: Debt must be due and payable, 286. ' " •'' W'hen shares transmitted by law, 286. Dissatisfaction with managJment'of, no ground for repudiating lia- Transfer ( f shares to, in trust for company, 298 Discretionary power of, to make calls, 305. ' Fiduciary power of, jck). Trustees for shareholders onlv, 309 Power of, to forfeit shares, 309. Nature of such power, -510. May be indemnified, 319. Personal liability of, 321. When acting as agents, 321. rule illustrated, 321. When acting as trustees, 324. rule illustrated, 324, Liability of, for negligence or deceit, 325. for making false repoits 325 Not responsible apart from frau.l except to the company 06 Not liable for mere error of judgment, 526 '^"'l-'"^. <-o Not liable for tiie acts of managers, 327' May be restrained if acting improperly' 127 rule in United States, ^27. -' • J / Cannot plead ignorance, 328. Application of rule, 328 Liability foi advancing i.ioney, 328, for payment of dividends, 329. for raisappropriati(.>n of money, 329. for contracts itUni vires, 329. !hi i. m 590 Directors — INDEX. May brt restrained from making payments at suit of a single shareholder, 3^0. Payments by, may be set aside, 330. Right to imleinnity, j2(j, 330. rule illustrated, 330. Liable to indictment for conspiracy for publishing illegal dividend. 337' I^urden of proof on to show that dividend was properly declared. Liability of, for paying dividends improperly, 341, 435, 464, 479, 55'). How may protect themselves, 341, 435. May be compelled to rejiay money received under a fraudulent dividend, 341. May be sued personally, 342. rule dlustrated, 342. Amounts to misfeasance, 342. Service upon, 350. rule with regard to, 350. Appointments by de fuctu, 354. Are primary agents, 356. Liability of, for loans to sharehoklers, 366, 43r), 464, 479. for wages. 367, 436, 479, 51)0. Qualification cf such liability, 3I1S. Action of clerks against, for wages. 3()ij. To submit statement of affairs of company to general meeting, 388. Powers of, when company insolvent, 31J2. JustiCc'd in suspending registration of transfer after issue of winding up order, 414. DiRHCTORs OF Loan Comtanies. — Powers of, 418. may borrow money, 418. may receive money on deposit, 419. to lend without consent of company, 420. to amalgamate with other companies, 422. Disabilities — Attaching to corporations, etc., i2r). Discoi NT- Loan company may charge, 421. DlsyKAllFICATION — Of Directors, 173. Dissatisfaction — With management of Company, no ground for repudiating liability. 294. Dls.SoLHTION — Of limite•;•;( r Of irregiil-irities i;! election of di rectors, 175 ■m hi 11 't li M I, ■.I I ll i I:! ' ;;).i |1; I 592 INDEX. Effect — Of issue of Letters Fntent, 125. Uf issue of windinfi up order, t>9, 253, 405. under (Ontario Act, 520. under Ouebec Act, Of reduction of capital, 157 Of unregistered transfer 01 shares on qualification ot director, 172. Election — Of agents, etc., informalities in, 353. Of directors, 177, 193, 431, Irregularities in, not to invalid. ite acts ilone by them, 194. Kngi.isii Act — Prohibits uninccjrporated Comp:inies. 82. Mnglish and Canadian Acts coinj)ared, 155. English Statutes on partnership, 32. English system of voting at meetings, 189 English and Fkench Law — Difference between, 2O. Equity — Company may be liable in, for contracts of promoters, 72. Erroks of Judgment — Directors not liable for, 326. Estate of Deceased Member — Liability of, 289. Evidence— >S<-f Proof. Of company's books, 224, 229. Not admitteil to vary subscription, 230. Of petition, 120, On which licenses to form loan companies shall issue, 454. Of bye-laws, 222,432, 460. Exaggeration — Does not constitute misrepresentation, ■')•;. In estimation of profits n(jt necessarily fraudulent, 337. Exception of Clauses' Act from special Act., 430. Execution — Against company before suit by creditor against member, 292. Executors — Of deceased members, position of, 289. Liability of shares, 300. Rights of, with regard to shares, 301. Executrix — Rights of, with regard to shares of bankrupt. 291. Exemplary Damages — Company may be liable to, 334. Expenses — Si'f Preliminary Expenses. Of winding up — Sec Winding up. Expiration of Term — Servants cannot be discharged before. 335. INDKX. r/.ta l-.'i Pijsr F-'acii) liv-LAW.s — Void, 21 6. l■.^rK^sIo^• of Powers— Petition for, cnnnot he presenferl until six months :,ifjer raN»'nB of r^'soliition, 149. t-x,.n^ 01 I),inL;urs of. i^i), Miist be approved ,f by vote of two-tliinls in valuf u. Injunction to restrain, 150. h \ r kACT.s — From books, shareholder entitled to make 2i^ Kxtraoni'uary meeting's of company. uS, Kact — Misrepresentation must be of. 67. I' MURE — Of F%L.st R company, no excuse for bleach of contiatt \mi} 1 smivaici*. je4. EP )Krs — Liability of directors for Liahilitv of J 23. company for, 35. False Sr Fhe-s — VTK.MK.NTs— .S.v Fnilldul 'uli'iil KtpiiStiildliiiii Mr. rff'reumlat.m. Of directors, not paid out of pnifits onl\ Payable on ajipli. -ition for 1 i6r. To be rt-j,Miiated bv ( li'tteiH pattMit, 376. 4-. 1 ivernor in Council, 376 Must l)e paid before issue of cliarter, .^7 fn Kn^la Tariff of. 42,S. und er control of Hoard of Trad. , p. Payable by foreign loan companies, 455. Flil^ME-S Liability of company f ^"■. .534- FiCTITIOt'S DlVinKNPS- Publication of. an indictable off Fi ence, j^7 XKs To he re>,'ulated by directors, 4;{i. I'llIJI N'AMt UTi en first used. 11. FoKCIO.M C Togi OMt'ASIK.S- ve sejurity for costs, ii( er vie of, 34,^, 434 \\a\- lend III iiiev in ( May hold land in I l"«»Kl.If,N- CokrORATlONS — ki^ht to sue outside th annda, 434. roviiice ol yuebec, 434. Power to d > b eir own jurisdiction, hft. Power to sue in thi usiness in this country, loS Posit :ion of, in this count Formalities to be obs s countrv, i ir rv, 1 1((. crved bv bef ;vj 454' ore «.f, »'i 594 INDKX. l"nKi:i(.Ni:Rs — Company of, cannot Ik' inciirporatccl under tin: Ai t i t4 l>ut may be in En;,'lan(l and Initcd States [15. I (>kn:iTt:KK of Chakter — Hy non-user, iC)j, 37^, 573, .(So.' Cannot he set up in answer to calls. .;-'.}.'; I'or neK'l'^'-'t '" l :>-• 375- I'okn.i rfki-: oi" Sii.\ki;s— ^97, 30^, tJ.<. .S4.V May be restrained. 31 1. When void for informality, 311. ("oinpany liable to damages when illeg.il. 31 1. .\fter surrender, 312. !vight of reilress may be lost li\ lapse ot time, 31 j rule illustrated, 313. Remission of, 313 Holder still liable on, 313. I'oKMM.i ri I'.S — To obtain increase of capital,' 134 Ke(piired for change of capital, 1 -,i). ,\t electioti meetings, 181. Public have a right to assume an; obser\ed, 210 Cannot take advantage of neglect of. _'io. N.itiire of, Ji r. Tvhen discretiijiiaiy, illustrated, 211 .' 1 \. when dinctory, dlustrated, 211. wiien imperative, dlustr.ited, jir. When pi"<'sumed to have been observtd -Mj. rule in riiileft. I'o b(' observed by ft)reign compan> bel'ore iiiinmiM ciii;; I 'isines-. in Canada, 454. I'oR^! of [)rospectus, 62, 426. ( )f notice of issue of letteis pati-nt 4.!-, Of tlotice r)f issue of supi)lenienlar\ letters |iatt'nt (25, ( )f notice of allotment, 427. Of pioxy. 427. ( )f certilicate of shares, 487. ( )f transfer of sMaros. 428. I.VKKX. Ik \\| I; l"k\i I) — Law cf partnorship u, .s, , /,;/,. /, ,■ 1.3' •->2'>'lityofcompanyfor, 3 5 ' 'inccrs char"onl)Ii> ^.•.■f^ r i-iahility of-lirectors fur, 3J5 I'^xn..;,.KxrHK,.KKsKvrATi.,N- hffect of, 63, 251. I'ki-i-dom — Of voting' a, meetings of shareholders. ,.,., '■"'■n-Kli r.EGISI..^TIO\ — <-"mpanv s„hj...,., ,„, ,_. , ^,. (i. fills A. In (rAICS— ' ■'' ■ His statonuMU Of lau Of partnership , '■A-^ AM, Watkk Compamks- Act respectiiifj, 4^0. nterpretation,,,. 4 'IV-l.iusof, 5,,, ^'^-' l'i'ect..r.san;i„r,,ce,-sof .„ , ^IH'aal meetings of. :;o3. "' HomKs of, --05 • ■' ■^'''ires.etc.of, 5„,. ;'7;'"!. to borrou- so,, ^' "^ ''■"'"'"»"'"« and pcn.Vlt.cs, 5,,, ^^-be.:a,h.d,,.,h..,,.ov,siona,di,...,.,..r. ,6. or c-oinpanv, i..(, <^ni.]iiKlat(n-s, 5^, Sh •S"'!' Mtnliaiidis •lies not. J40. <.K OWI II <•'■ lau of patinersh f.fj "int Slock ( f .S' <• /iitni,/iiit "iiipanics in Ij^dish I, toil m :>'.){* inukx. 7i -«!»■;> Ir ■::*t« iff' 4'!' I ■ 'Mid ^ (JiiAKAN I i;k-- • of (li\ idciid, ( {(' Of \c'ii(lor s titlr iu)t alR'ctuil liy ii.:t,'iMii','itinii, jSi (i'i\KI)l\N - Liability nf mi shariis, jdo. ir J I ANsnAi h !.(■: \f Jniiit St"ck Cniiipaiiirs it! Criiiadian lff,'is!alii )ii, 611, !■' ( Of iianu's may hu rustiaiiioii, 147. Of company not unpaired l)y i"t!-cor|-oiation, iS). l(.N(»KAN(.:i;- Dircctors cannct plead, 3^S ti.i.iii.Ai, Si:kki;\iii;u I'l Siiaiu^s-— >S(i' Slirdi.'ied l)v iiiandaniiis (71. iNniRl'OKAriON 111' Ct>Ml'ANIIiS — Under Confederation Act, Sj, ('ertificate of, under ICnglisli Act. i^j. Cannot be conferred without consent of corporators, 12 \ nde in the United States, 123. I'lfli;ct of, with regard to property held previous to, iji. ICffect of, with rej,'ard to obligations incurred previous to, 1 (t Of companies, to facilitate transmission of timber 457. 4s 1. 43 ( in (Jntario, 4K3. Ihckkask, — Of ca[)itrd stock, 134 f NMI'.MNIl'lCATION — of directors, 3,20, Imu'.mni rv — Uight of ilirectors to, lOf), 311). y^l), 330. Imiman Lands — Provision concerning, in .\ct relating to companies loi tlif ti an>- mission of timber, 4^,4. Ir.lMCrMICN r — • Promoters m.iy be liable to, for misrepiesentalioii. (<^ C'ompany may l)e liable to, 334, J Ml ANCV — Plea o'', in action for calls, ^SJ. Ml INl'KX. i)'.l< I SI \ N I - 'I'ransl'er of sliarcs ti>. 2S7 inav l)c rc'iiiiili:Ue I, 2H- aiu' iiiav riftisi; tu ri'.,'isti'r 2.S7 Ciiiiipn NI-ORMAl.iriKS — Niit to avoiii Irtiors pitciu .(70. I \JIINf TION — Will bo i^rante 1 to restrain a srjon 1 company from usiii.i; nam:' of first, 147. To restrain extension of powers. 150. May be srante 1 to restrain voting' on shares colorahlv transterred ■^74- Ki^'lit of minority t(j. v Wil lie to nstr-iin forfeiture of sliares. ^i i. nirectors m iv be restiaineil bv. uhen ai ti lU: I 'nited States, iprojiL-rly. (27, < v Hut not t)y siiif^le stockliolder. jjj. Scr\ ice of. ^27. Will not lie at suit of sin>,'le e mtract creditor to re-,train paynu ui of dividend, 344. W dl lie to restrain majority from proceedinj; with uinoin^,' up, ^>u. rule in I''nj,dand, i,i)2 ule in rnitel States, jijj. le illustrated, J92. I Nsorvi.M-V Of comnanv, effect of, on transfer of shares, 28j powers of (hrectors m ease o f, 222, 392, 20.1 :"s not e'flect eom[ilete dissoluti n. 30J. Of meinbei', eftect of, 21 )0- I NSOI.VMNT — Transfer of shares to, 27; I ssi'i;i: ri(:)N — Of books, right of, 224. IvsrKr.MICNl OF I\c:OKI'OK.\TION — I'ldilir li Id to h.ive notice of. 20ij IssIK.ANCI-. ('oMl'.\NIKS — Not subject t 1 ;4eneral .\cl, 429. Intkkest-- On calls \\lien runs, J07, 452. Dilferenci: betwei 11 dividends and, m Loan company may c:h;'.rpc, 421. I.v rEKKsr-iti:.\i;iNii Sic ri;rrn-;s [ oan coinpau'i imv i.ivtst m. 41; IsrKKFEKICSi 1; — of courts in the removal of directors, iS< in the registraticm of transfers. 2S1 Is IKKI'KKT.XIION — Of .\ct of, 1.S77, ,^2. Of Canada flauses .\ct, 42(j. ( )f Ontario Clauses' Act, 430. Of Ontario .loint Stock Companies .\ct, 4t) Windintr up ( iiig up t oinpanies ( Uieber Clauses .\ct, 538. Act. si''^. i 'if? 1, 1* i i{ ■i-. i l»H I \\ i;si MIS I- iNi>i;\. ( )f money l)\ Iji.im ( Diupaiiii's .S(c I.ihiii Ciiiiifleiiicntary letters piitfiit. Si, Sn/'pl, m, iit.!> I utitnliu tii j(iiiiii;i(>~. )oi.NT .\Ni) Skvkk.m. Li.Mwr.i I -, (IF Diki.i iokn. j;.). \:^|. h' t")- loiNT Sl()( K CoMlvwil-.s Sir Ciiiiif'iinirs. l-'or ioreif,'!! trade, 2>>. Deliiiiiion of, 51. liiiiiicori)orate(i, 5 j. 'rerineil (jiinsi iiir/'unitinin 5 |. Ill tlie United Slates, 3.}. . I'roinotion of. 6.!. I I l>lsl)lc 1 loN - Of I'odefal and Lueal L(r,i,'islatnrt>s lesiicctinK tin.' incorpor.ilioii of cMnipanies, S(. (>f Courts, to compel rp^istration of liansfcrs .:,Si. .1 1 1 s 1 1 N 1 .\ N -- Law of partiieisliip itiei de.tili of. ij. Know I.KDi.l-: < )f diicctoi or ai,'ent, not always Unowlcd);c ol ironipanx. {30. L,\( lii-.s - liiciiiedy for sulisi.ription induced by frauil lost h\ , 1 <). illej;al foifeilure of shares lost by. jij. of transfert;e(jf paid-up shares may he lost by jhi. L.\ Co.Mi'AdNiic St. CuKisroi'iii;. 2 o. Land- Meanint" of term, S.-, 429. I'ower of conip.mies to hoM, 1211, .j.'i INDKX. 5{M> l.\Mi... I-»\v — n nnglauil, i.-o. in Queln-'c, ri;. in the United States, i.'S. un'ler the ( anailian Acts, 55. ' ^ • -*w Merchant, 35. Of partnorshi,, after the death of Justinian, .,. '-»WOF SociliT.AS — I'nder Roman liiiii.onus, H. 'uv s Hank, 3;. I'"V> Ml.SSISSII'IT SCHKMK, 30. I- ';.\(. f'NOCEIilUNOS — L>irector.s may institute, j,„,. I-KGATEES OF SlIAKKs— Liability of. on death of Testator, j,,o. '-';<.i-sr-ATio.\ - Company subject to future, 375. •-KfMsr.ATL'RE — ' ovvers of uah re-^ard to charter of co.nnanv s-6 l-KoxiXK Partnkkshii- ■ Meanin{,' f)f. 5. l.hr.'ER — -Notice of allotM,ent by, .,. Al/olw.nl. .LHrTERsPATKNT-«,V< C"A„r/,r. Variance between prospectus and, 07. J low granted, 82. ' ' ontents of, uo. ■ Must not varv from application, ,.,. May be annulled on scir, facias. . ■.- lobe subject to Act, i(,o. I ubir: held ,0 have notice of .on lo be entered in books 223 mt^^^Jh'ni" f ";'"■ ''>" "■" '^«^'"^' company, ,,^ imfieachment of, 3(19. - ■ ^ Not void for irre^'ularitv, 37S, 4;.,. Issue of, covers defects,' 378. rule m Kn^dand, 370. rule m New Hrunswick, 370. liut may be void „/, /,,,7/c ,79' lo companies already e.xistuiK ^Si lees payable on application for,' 4.8 lo be issued through Departmont of Secretary of < t;,t ■ .^ I ..rms of proceeding,' on issue of, 42S. " ' '^' ' ■>-^- I -EX Mexcatokia— 31. I lABILITiES— Of company, how affected by amalgamation, ,43. «. fir loans to shaichohUis, ]hi), 43(1. 47(). for ;idv,mcniK inoii'v, 3JS. Of members first Ii1nit1.1l by, i Vic, cap. 73, 56. €)f memljers under the early llnflish Acts, 511. Offsh.irehol lers, when capital dcurtased, 155. Oc '*haxt»holders, contineil to amount unjiaidon share*, j-i^. Lana. — Liabdity f,f company for, 331, «'jmpany m.iy m.iintain action for 331. fLy i). T«m must he used in connection with n.iuie of Lonipanv. ^>i> (\i. psn.ilty for neglect of, 380, .J64 rule under Knglish Act, 3.S1). secretary may l)e held i)ers(Mi,illy iialde, 381. 0«ffWintiiD Partnerships — Or'irin of. kl DifS-rence between, and snciiti' I'lt iomiiuiiiilttt in I'rance. v Po-.ver of special partners in, 4(). DiSHi.Kition ot, 50. LoiiiiniBATioN — Sfc' M'iniling up. L»a»rnitt*TO R s — Ptowers of directors cense on .'ippointnif nt 1 f. j.?j. Status of, m compulsory w-ndiiig up. 3<(i>, 3..i.. in volimtary winding up, 3()o. Sanctii'n ot, rerpiired to transfer siiares, 3(1!'. E'owers of, under (Ontario .\ct,32i. " Quebec Duties of, '■ " Quebec .\ct To report every year, =,(q. tiOVtX (•"OMPANIES — Meanintr of term, 8j, 413. r.ipital stock of, 415. Objects and powers of. 416 M/i- lend money. 41(1. .1"/- "■fT^ INDKX. liOl l.<'^^ Co»v\siE> — May acquire securities, 416. May act as an agency association, 4r6. May j'urchi>e l»n. Mkhtn may born.w, 411^ amount they may borrow, 411). (difference betwten po\v» rs to lend ami |io\vi rs to borrow 4J11. Must n 43^), 465. Liability of directors making, ^66. 436, 403. I-OCAL LE(i]sLATlKE — I'owers o{. ion. LossKS — of one year not replaced bv profits of am lini (fS, LiTNATics, Etc. — To vote at mee'tncs bv curator bonis. 100. >I. MAji'Kirv— Of applicants, to be residi-nt in Caiiad,i. 1 1.). To f;ovem. except I'therwise provided. 194. Fi wer of, ji^. May be resirainei I at instance of niin>>rit\-. 305. I'ower of. to diaSoUe company, yjz. Mai. HE — Liability o: company for, 334. Malicious I'KosEn.Tio.x — Lial>i!ity of Company for, 331. Management <«f Comiaxv — Dissatisfaction with, no ground for rtpndiatint; liability, .'o.) Mana(.kk— Meaning of term, S». I >ireciors not liable f i- I),rMA(ii:s Due vfViil )r wlvrc puii:liaser is in (iofaiill to acirpi tr.iii-^7- SiiCMiuUii .S.v Shdit-liulilers. C.imiot be tr.iiisf.ire 1 1 > .iiii.il^: 1 ''-uic;;; a^;aiiist their wil". 1 ^tj. Caniiol vole if in aireais, kji. joi, 5^3, lllfeci of d. .ith of, 2S,S. I 1 diilit\ of, on iiiipai d sil, iruv Ji>i. ■■HI INDKX. (508 Ml "il[);iiiy, j.^j. N"t II. bio l,.vu;..l am.,u„t unp,„l on shaivs -q • -i-'"Hv..f, always 0x1,11,10. ..,., '-'••''"I'ty of, how incmrr.l .,,, f.ro,m.ls,,f r.-i.,.,iiation o|- il,,l.ilitv .\- snl.-and transfer, j<,<,. ' ' .\i'tic(?,S to, hnw S 111. 531. I>■ iiiaiirl.uniis, 5-1. Cannot snc In name of .■i;;aiiist (• ich oth(.T, y illtisi raU'i J7' I' 'mu.iiiy ^^it||ollt |)ct„, l-.SI()tl \- 1 , Mi:Kc:ii,\.Ni)r/i;- MKRri|.\.NT- Loaii company cannot invest 111 .}i Hv-rinltlon of II t-ailv Jintilish law <; Mii'iu.i- .\',i;s M I SoKI I V ('las^i^K■atl.>n of p.irtiuMsIni i< wins o| ill c.is:'s of Miititlcd to n.'str •s 111 i,j. ipplicatioii to If I' )\\frs of, where wind iin inajoriiv. <, :i:'l<-r II in i»^i'o( s!:,>r Mi up d, ■iii'iinlcd ), MTI.S Of .\ loiiipany aH^uiiic- I t 1 l,c con eccssty ol sif^iiing. j, «ci -•jg. MiSM'll.ol'KI A rio.N Ol- MoNl.' i.iahiiliy of directors I 'J- Ml^l'KMKANoU-,- or. .Jjy. I.iablllty of cotnp.iny t. M "■ !JI- ISI i:'.s\Nf|.; iai>ility of lomp my f,i|- j j , Diiwt'./is 1 1.1 Me |.)r i Ml-.KI.I'KKSHN I.-. I |,iN In prosp-ctus. iij. >y payiii;; iiiipr..) Iui.|rndr ( may siihjoci to criminal iii'd >cs not inchidt; inoi« ICilllfllt ft- Must !)«• of fuel, r,; liiirdeii of i)i()of in cases .ii;(,'L ration, od Not Kround for seitm.r ..,^1. 'f, (' third Kec oiiist; f Applicali..!! to avoid del person, '>7. I-. cir ;,nly I,,, had i,,„| le a conir.u I j>li:i hasc -ii.iK llc)li| ilela\ . (1 cuiiiract f. I, I er certain coiidiii. IHI'-; lie made with III I <• ISOII.llll liffect of, j()M. What coiistitiit 'S, _>- When used to oht nil re^'istration ot transfers of sh lies ;5- (i'l-l iM«i;\. MlsKl;rKl.sLN 1 A 1 luN- What constitutes, 2.jik nilf illustiatpd. J77. Mn\i:\ — I )e|i(isit< I with li>;ui ciiiii))a'iv (Utiiici to be 111 >iu\ Ijoiinwid )io Kcicive'l iiiiL'i' tr iii'liili'iit iliviliMul iiiay l)i; iin'ovi-rurl, ^|i. I>(t|ii)site(l oil siibsci iiHioii to al)orti\f cciupatn imist bi; iccovt-rc I 7.S. \\< Not to Kt'''i'<'i <^\teiit than 73 per cent. o| actual |'aiiH'btM-. I J7 lliitdl Mates I jS MlIltMlSi. HooKs. Mtc — Tenaltv for. ^ \h. Mt 1 f.M, <',\\\ — .\s»oci.itioiis for, at in eailv peiiod 1 N. NaMH of (.'oMI'.VW- loj ("haii^je of. i^i, i.jd, .}()0. 51 ). 515. I.\cliisi\e nulil to. 1.(7. r.) claim exclusive use of the vcinpaii) oifjani/uiioii inusi If r >ih |)lel( (I. 10.}. I'se of, liv sei mill coin|i.iny will br icstiained 1.(7 N ^\ii;s ' )f applicants, to be niveii iti noiice, 102 114. ( )f ilirectois, to be ciiiiirft.l in books, jn^. Of provisional diiectors to i)e t,'uen in application io.' ( )f sh.irchoMers to be eniereil in houks .; ■( N A\ h. \i;i 1; \\'.\ I i;iis Not to be ob^tniiteil b\ coiiipanies formed f. .r ili,- iraii'^inission of timber. .}.p>, .\i)i. Ni-i.i !•.( r- Of --onie powers not (jrounil of forfeiture o( ihui.r. < s < )f ("rinnlities at election, when known cann<'i le takeii ,d\ant.i).r- c( bv the public. J 10. To re!,iister contiaLts co!ic«'iiiinv; sli.iie- iti( 1 t o| •,, \ I'.'.l K.K.M K- Liability ot direi tors for. ^^5. <>lser\;ints li,ibi!itv of conipam (• -i > ;. iM»i:\. ♦ »()i) Nl..,oriAlll.K 1\S1 Kl MhN IS Towt-r of ci'iiip.'iiiy to issiip, j(j7 Tower of ollit'cr.^ with respect to Jo^. NciMINAI. ("aI'ITAI. — • Mcaiiiui,' of tftiii, 156, NoVNAl. AMI 1<1;AI. lAI 1 I Al. Diflorence luaween. iii- No^-l'^.l•;l< I'h.vner foi fiilr.l by, \6i 37.^ .^75 N Mi'.b- .Set' l'ioini:.sor\ S'uiti- Norii li- nt .([iiilnatioii for Ifticrs iMtcni, loj. 117. .s.ii. ( )f (alls M>'' Of uraiitiiin ifticrs patent, li-'. Of issue of letteis pa'eiU to bo jniblislu'd ni Cuiuulii f;ri-,r/,-, \^-'^. Of meutiiiK for ainalnaiiiatioh of Loan Coiiipanics. ^•.•. Of issue of litters patent, etc., f'>rn! "f ( 'S- Uf all'tinelll of sliaies. 4^7. Of ineetinus. .131. ( '' li^solution of conipmy, 5'><». NoTiiKs 10 Mi.MiiKKs -351. lU whom si>,:n(cl, (si ■ Ni-inI not lie uniler seal, ( 1 . \' w; R - Of person,-^ le-piiiol to obtain < barter, ^J, S j. Of (lirettors, .(30. ( )f (Hrcitors may bi' cliaii.ml. 131 < )f shares to be entt red in bo'>ks, J.'4. {). ( )iijE( Ts 01 (^lrl^A^^ , ^3. in notice of aiiplicaiion 1 o,j and powirs n it identical. 133 when mas be eiiteivd upon. i><:, of rediicmi! capital, 150. tt si'i t)Friii' C'onipanv inr.st have, 3.(7 and must jiive notice of. 3 \j. and of all cha-Jnes of, 347. Notice i»f - hainje of, lo be «iveii, 1 15 ^(trvice> III be tn ide al, 3ti J lea 1 .-inre. 340 rnle nnd r Lti^lisli .Xc.t. i )' I'eii.ilty imp. ised for iieK''"'^'' "' U' • I >I'Hi I. Kb Appointmeiu of, ^04. I'owcr of, to issue iie>ioiial>lp in^lruiii' nt- Mxteiit i^f pou. 1% o( .'lo Authority of, illusiralid, jio I'eii.iliy on for inakinu fal>e entries in books, Ma\ be apiviiut d b> i 431. mipianiim ()iii; INI>K\. hi* I ( )i ri( RKS SuhjiHi \n apiHoval at ^,'cni'ial nicirtins. -•-••> riilt' iimlci Pji^iisl) Act, jj>. < 'haij;''.'.!)!!' with I'riii.l for accoj>ti;ii, iir.)ii';r!\ at a'l i ■ ti ,t\aj;aiit valiiatioi! in paviiiiMit nf shares, -'i) Powers ot, ?5i. ti) sij^n !i(itii;t's, etc , j^i. to soal iloc Is, 35J. to eiitor into contracts, 53,; \ppoii)tiiuiit of, 53^. VSI. <•'->• wlK'ii l>v e U'Ct di( >li>i:ti if 1011 iiitonn.ii, jv^ Vets of (/(■ fiutii, 5^ V \!ay be nppointc I iiiiilci seal. <3.( Status of, _VS5- l'o\ser to bin. I company, T,y^ I'o\v(!r to (Iflr^'aie aiithoiity, .35s, but soal iiinicccssary, ^^4. ("vtMi writinji unnecessary. Ji-j « )firici,ii I h.iracter of, may be prov.^i by p.irolc ^^4 l!>it spociai .iiitliori/.itioii rcpiiri-l to vote, SIi)N — 'I'o re''istt;r sh iri'-!, ni iv b; rojii'i" 1 m -. n t >MiKK - m Winilint; up, liow obtaine.j, j.jy ()ni>iN\KV Mi;i: riN'is of (^omi'.s.sy — iS- Oui) )\\ANOK oi' ifi7 i --.SVi" liitrodniti DUIIKK — l"or winiluin up, cflecl of, issue of, y,^. Status of mcinbtjr cannot be channel after j.j-i •• ()K(..\Ni;'K ANP (>K(i \M/.\rioN Meaning t)f. ku. (),f Imiiti'it pirtiici ships, 10 < >f shares, ig. < if uriii Stock jol)bini4. -■• ilh I'); Sh I'XII' M SlIAl'l S Issue of, iy) Transft;" ol, .05. I ' VRi •! I-. t"oN 1 K.\iJ r — Kespectitiu shares .•4c (scriptinn •.,, b.iriicuMU to prove ,.(ticial cliarai.t.-r „i cmy^m . ^•^... . -. , ^ I \RT ret PAT ION — By director m c nitra t with companv, 17^ f'^wrNERSHIP — In the rarly Hmiiaii piMind, 4. riassilicatinn of, in Mi.ldle Agfs. n t'omtnaiiditr- ( irij^in of, ic. In oarly i;iij,;lisli l.,i\v, 22. I-aw of, ill Si-ntlaml, 4_> l-aw of, in (anad.i. ^\. Krj:: St ration nf, ji^. Of calls. ,S,v.,i//.. mti»t ho ill cash niav l)tj fiifon -mI hs ai.tum, 43./. « )f chart's, I JO imist he ill ( a>li. ."i^. • )f . For refiisini' iiispcciion of, >^,, For nr),'l „i interest. 4_'i For malich.iis injury to propertv. 44S 41,5 F.-rimpelinu; operations of .■.Mnp.un' fo," t,,,,,^,,,,....,^ ,t ,„,i^. For niK'I'^tt to de|H)sit bo;ei|, 1,1 N'otiee of ihaiine of, in br j,'iven. 54s Ot meetings > f i:im]..iiiy, i^.s |,s-" I'l ► »— Hi mfaticv I n action |oi calls F».r.«Dijin In action against compan--, jfiy. 4,'5r I'm In actions b f.iahilit\ of. 01 .lijainst re-corj.oiatei! K.in; ai'v. ^%^ •-tr.ires |j|e.|>,'ed joo Ft'DGOR Kii{his of, ^l To sue and be iist;refereiK'e shares, 15.1 To be subject to Act, ido, 4^ ATid ol)jects not identical, ijj. Of Doihinion and Local l.enislatures lespectueU, im Of forei);n corpoiatii-iis to sue in this 1 rovince 113 01 I. Deal Legislature, cjo, yj, ^5, 10.S. ( )| officers and aKenls, .mo. Of Sial( . to ;uitliorize a co!n|)any, loS. 01 -tale with n'^ird to co:np.inies .;enir,di\ ij.| (iiwul)> Sprci.il Act, to be siiliject t'l ( i.'Urr.;! \i{ ) ^. I'kki'eki'Nck SiiAin-s L5-b 1'ii1)>;n I —See Clin.'tfut't. Lower of, tu bin! coin])an\ , ^57 Directors to elect. 431. I'KKSKMI'IION — 111 f.iviiiir i>f thinl parties \miIi lef^.ird to toi inaliii'^, m ihe uppomi ineni .if directors, jiu. Init not ill favour ot direlcors, 11 \ I'KIMARV AviESrh — What are, 353. I'cle>,'ation of aiithority by, 358. I'KIVAI': C >MI'ANV What is, 39. I'li'CEI'l'Kl'; 'l"o obtain incorp.iiMtKin, 4»->7 I iNftux. C09 Hkoceeds — Of call not ,-i ,tii,,lly ma.lf. may he mort^agud, ^Hx ^'|^>cliur)I^■c;.s — To remove name may he continued after issue r.f vviudiuK-up order. Taken on hel.a'f of several sharehol iers ^ood f„r ail 40, lulrt illustrate 1, 4)3. • t .»• Unnec ssary where c.mra-t ahsnintelv vm,] 4,,, A-amst cnniMuv suspende.l hy a winciiUR ui'. order, 4.,. rule diustiited, ^05. ' ♦ •'■ To he adopted on i.s.,uu of letters patent, 428 Process — Service of, upon company. Sfe Service. PRODucria.v — Of company's hooks in Court, 2^2. pKoi-ns — Wh'^l^lr.' ""' •■'""'''''' '" "'''^''- ''' ^-"l"^'-^*^ of cotnpany 74 How to arrive at st.it. "rneiit of, ^37 l)o n .t deprnd on debts of previous years ^7 Not li d.le lor losses of previous years < ,e..i,. >.i iMch other, 70. not nK.nts of ccinp.my. 70. Are lii!)l>' for ;ill confacts entered nUo hv them -i C. 'iiip my cannot ratifv aKieements made'hv, vi. ' (^>ntr,i.ls inr.de 1 v, to he sj e< ifie I in prospel tus, 72. ( omi^.-ins iiahip in irpiity for c:oinracfs hy, 7J. Promises I)\. '• i 1 n t hi id c >mpinv. 72. ' '" ride in the United States with reMrd to contracts hv 71 Are tinsiees fo; <-ompan\ fnrn-e ! hv then, 7V Bonn I to .nccoun-t t > companv f,>r contracts' nnh.- in its hehalf -i Cannot make pr fits nf < xp. nse of ro-np-ini. s, 74 ' Mav sol! <<■) companv prr>perty h. louKiiiK to liiin, 74. UnrdeM iif proof m such cis. s, 74. Mav ta' <' ri'iiiMni'r.ition, 7(1. Hfte.toi .;i.. in -nt uiin, concerning- sul)scription of siinres as* Promuig.iiion of Act, 570. ' ^ 40 8.C. ll^ 610 INDKX. Proof, ate Kiideiue, liitrdiit nj Priof, etc. - Of niakii)).; of c.ll. jod. Service ol notice of, 307. Of de.:lar;iti(iii of divuleiul in action for, 1,^1). Required in action aKainst directors f(jr w.im's, _\fi') 01 iiicoriioratioii of companv, <("». Of niatiL-rs conncctrd uiili coiiiii,uiy, .177 Of I'.v partr- m.ittiis, ^77 Of cuiicniioiis iii'iturs, J7S. Of l.y laws.54^, 355, Property - of coiiiji.iny, how affcctt'd by am,ilKaniatinn. 142. ' 'onvc, ,iim! of, to coiiijKiiiy .ificr iacoi |)oiati()ii, i\\ Of coMipaiiy, cannot ho traiislcric I l>s iiiajnritN , VM pROSPECTU.-i - l'"(jrni of, etc , .(2(>. Men; si^^nmt,' of. does not make (Jiie lialile .1.-, ^llaIellolde|•, 6(. Misicpresciit.itioii in, i>\. l•'al^io statiint'iits in. nci' I not 1)l' .ictu illy icnown to be false, i,j. Siilisi ri|)iions iiidiiced by iiiisiepreseiiialion m. may be .set nsidf;, (15 Misrcpres niaiiMii in, may nivc n.^jlit to dama;;es, 63. Vniiance iutueen, and Ictteis patent, (17. To specify Loiuracls, -ji. jhj. l'i,'v'5 I'RGTEST — To be m.ide by directors ;in;unsi ilhf^al .icts 4(15. pKOVtSIUNAI. 'DlKl^CToKS — .\aines of, to be n'ven in application, loj. l\r.^oiis named 111 letters patent to act as, i()3 (.)ii;ililic.iti.m of, iiiS Proxv — Voting by, lyi, 4J1 Ie notice ()f instr'imont of incorporation, 2c<) ilase a ri.nht to assume that lormalnies necessaiy to appoiiiimeut 1 f directors have been otserveij 210. ^ji. { • , Hut cannot take ailvanta^e of neglect of when known 211 PUBLIt ANI, 7. PUBLICAri IM — of illegal dividend, .537, ()( notice of chun^e of place of business, 345 Of inntest of ilirectors, 4()5. Of license of fo^ei^;n loan company ha\ in^ (eased. ^55 Pdblic COMI'ANV — What is,''5H. INDKX. (ilJ Puiii.u l. g. QtlAI.IFIfATION — of nircctors. ibj. Qt-ANTIM MkkUII — Directors cannot recover for servic.s on, Mis. yiASI 'I'KlsrKKS — Directors are in position of, jo^. yi;i;srioN — Of retntineration of directors ustiallv settl.-d at (usl general meet in;,', If)/. yfoRTM — At ineetin^s of c;on)]iany. 1S7. directors, 18.S. Necessity of, Ji8, 219. yi;o W'akkan id, i,si. In Mn),dand, i()5. In L'nited States. 1(15. Ki^lit of ("oiirt in cases of, k^i,, kjJs In Province of y leiu'c, kjI). Should he addressed to a bailiff, 107. Prima facie case must be made out by affidavit f.,r writ lo issur 197. Hnt need not recite details, 1(17. Hnrden of proof (n\ defeiulant, 197. My law of Massachusetts, 19S. My Cod.' of California, kjS I'orfcituie of charter obtained by. in l.nited States, 375. R. KaILWAV Co.Ml'ANIKS — Not subject to general Act, 429. Ratification — Of contracts made before incorporation. 71. ■' 4 012 Real Ksiatu .Sc^ Lnmls. iNi)i;x. Moaning' of tonn, .).;c). Of ukmiiIk rs liaMi! for (lu!)t!) .ittachiiijr to shares after doatli, 2in> Of foreign CDinpaiiy to lie s ild, 454. RECt^IIMS — Company nnt lioiind by, wliun granted without authnrity. jio. FiKCOKiis -Scf Minutes. Apj.oiiitinent of servants, etc., need not Iju entiTod in, ^04. Kecoki'oka iKJN oi' Companies —j8i, 4S0. I'roccfMiinj^s to obtain, jSt. To effect no clian^'o in liability, 381 Motives f(.r, 3S3. May bi^ obtaiiuid with different constitution, 383 Effect of, on rights, 1 tc , ( f comp.iny, 383. iJoes not ini[)aii' iiliMtity of, 3S4. ManiiiT of plcidiii},' after, 3S4. Kffect of, as to liability of shareholders, 3S3 I'ormalities nece:.sary to, 385. Recovery — Of money deposited with subscriptinii, y.S. Of money received under fraudulent dividend. 341. RECTiriiATIOH — Of re;^ister, m;iy be ordereil in some cases, z(^i Reduction of Cati iai„ 155 l'",ffect of, 157. Not t.) atlejt li.i^hts of creditors, 136. M .nni-r of effiH'tini;, 137. Under luis,dish Act, 15H. Consent of ciediti)rs required, 15S. Relieves company />ru ((//(J fro. 11 li.ibility t(j future creditors, i5f). RlCCISTEK — Loan conijianv must l-.eej\ 4J1. What must show, 4^1. Registrmion — Of coMipanies, under luiRlish system. 57. Of sli.ires, when nccess.iry, 259. ()inission of, may be rectilied, ifti. Of improper fransfc/, ^73. 1. lability < f directors in cases of, 274. Of property of company, 3S), Keuewal of, after recorpor,iti.>n, 3^.}. Of transfer when oStaine 1 by misrepresentation, .^73 Of tr.iiisfc r of shares, J73, 411, RiKJits of |)arlics cxmceriiiiiK, 4 1 1 ■ \ViK!re conip.iny in defiiult to co-nplete before winding-up, 41J Vendor's naiii'^ may Ne rem 'ved. .(i.;. Directors justified in suspendiii;^ .after issui; of wiiuliii^'-up order, 41 4. , 2C)l) lO. rs, lyj. r.lfi", -II 4- INDKX. 013 Rfgllaritv — Of by-laws may be assuiin d !)y tliiid parties, ay Regulatki) Companies, 27. Kemedv of Vendor — When directors refuse to register a transfer, 273. When buyer ivfuses to aci t-pt, j; j. Wneie purchaser is in dt-fault "to t.ike transfer of shares before \sin iin;,'-up order intervenes, 410. Remedy or Hivek — When directors to refuse transfer, 279. Spo itic perforinance, 271). For illof^al foif.iture of shares may be loM l.y lapse of time, 312. Remission — Of forfLiture of shares, 31J Removal — f)f directors, iSj. Of \vn lor's n.une from n-^ister inav be ordered in certain cases 41;!. Remtnekation — Of directors, iCt^, 221. Of o.licers an i servants, 220. Repeal ok Ai:r of iSdrj, 424. Not to affect applications pending, 424. Reports and Accounts — Liability of company for, 26j. Rrpresicntativus — Of deceased member, iij,'hts of. 28y. Transfer of .-hares by, 290. Liability of, 291. Repldiauon — Ot subscription, 2()4, Of cut: acts with a'^ents, j6i. to take shares, 21J4. Of trans^'er. by infant, 2S7. Ol liability on shaivs, groumls of, 294. Rescission — Of contract, to take shares, does not date fiom th.- making of the contract, 251. I*, esignaiion — Of directors, 177. Retirement — of directors, In midium officio. 176. IMAGE EVALUATION TEST TARGET (MT-3) /. 1.0 I.I 11.25 1^ |M 125 ^ 1^ — 6" 120 16 V] <^ //y. /a el / '/ /A Photografdiic Sciences Corporation ^ ^ « <> s \ O^ 23 WCST MUM STMET WaSTBtNY 14SM (716) tn-iva '^"^ \v ^"^ i Ux h >ii m I 614 INDEX. .Retukns — Tu bo made to I'inance Minister, .\2\. Rights — And powers, difference between, 87, i' 8. la actions instituted previous to incorporation, 132 Roman Emperors — Law of partnership under, 8. ' Royal"— Use of word in name of company, 103 s. Sai.akv— Stv R ■ • ■■.iiitifii, Wdi^L-s, etc. Rii^ht of clerk. ' • sue for, 309. Liability of di > . ir- ~ for, 360, 436, 464. 471) Sale — Of stock, 203. JJy inisreprcsentaiion, 26S. Sanction — Of liquidators required to transfer shares, 396. Scire I'acia- - The pro.:eeding to obtain, forfeiture ol charter in En-land. 375 SC0TLAM> — Law of partnership in, 42 Seal — Of persiiis si-ning on behalf of company, may be u.ed. 352. 361'. Necessity of. 360. Secret i'KOFiTs- vSf^ Promoters, Profits, ftc. Rule with re-j;ar.l to, 74. What are, 7b. Secretarv — Cannot refam books, 236. May be held p.rsoaally liable, for neglecting to use word ( liinitedi. 3S1. of State, letters patent to be issued through department of, 42S. May grant license tJ fore.yn Loan company to carry on business in Canada, 454. Skcuritiics — Bearing interest. Loan com} any may invest in. ji,- INDEX. 615 SitctjKir\ — Of ere litors, as ^'overneil bv the niiiitil, 1 1 j. Of creiHti rs of roni| ;nii(S rrniipised ■ f forc-p'iers. ii6. For costs to be given, by foi-ei:,n company, i ■ < Seizure^— Shares liable to, under Ji fn de bonis. 241. Servants— Siv Officers, etc. May be appe^nted by directors, J04. And without (iitry in the records, 20^. Failure of company no excuse for breach of contract witb. 24 Mav be appdinted by chrectors, 2iq Subject to approval at general meeting, 220. Cannot be discharp;e 1 without cause Ijefore expiration of term. 355. Xot personally liable on their contracts, 352, 434. Shkvice- Of notice of call, 307. Of injunction, 327. Upon com])any, how made, 345, 347, 43^), 449. 4^5, 4S(j. rule illustrated, 347. Of foiei^'n companies 3)S, 454. rule under En<;lish law, 348. in I'niteJ btatts, 3^8. in Canada, 34 ). Constructi\e notice, 350. Upon directois, 350. Upon c nim()n<'tiici,-ds, 350. Of members, 351. When presumed to have been made, 351. bEKVICES- .^75 Of directc'rs, 165. Cii president, remuneration of, 163. Set-oi F- :. 360. Of shares taken in payment of a debt. 2-;q Of calls, 31 s. Of dividends, 340. r^HAKKHOI.DER- liinited), isiness io Meaning of term, S2, 4^9 Entitled to rank ecpia ly in respect of dividend, it-j Liability of, wlien ca{ ita Xot agents (. f ccmpaiiy, 177. Right of t>> vote, ig >, hji, 4()I, 475. Names of etc., to be entered in books, 223 Fntit ed to inspect iiool-s, 224. And to make extracts from, 224. HooVs prima fa, ir evidence agninst, 224. KeineJy in cases of mi-.ri presentation, 2G8. Must act without ckliy, 272. Effect of di'ath of, 288". Liability of, 291, 4 \^, 463, 478, how incui retl, 2C14. luiw terminated, 295. filO INDKX. Si:arehoi.der — Entitkd to protection ajipinrt illegnl acts nf majc rily. 303, Dr.ty i.f. when directors are aciiiif; illcgailv, 3. g. Kipht of, to clivi. lends, '34. May he compelled to repay money recelvcil umltr frruuiuleni dividend, 341. Rislits » f preferential, 343. Loiu-E to. -.id. LiaLiity of liirectors makin^j loans to, 2i^f>. Competent as v.itncss, in acti nsa^j;ainst companv, 3'! i. hut must be ni<. ml er at time of hriiigin^ action, 370. Intenviin:: shareholilors cannot briiij^ action as uiernb(.rs. 370 Rif^ht c'f a. t;on of, ajjainst f.>lluw shareholders, 371. Lia'Lility cf, afti.r rcci rporatlon, 385. Cannot ivail themselves of diULrences between Acts, to es-xape lia- bility. 355. Maj..ritv of, may torniinato the affairs of the companv, 392. ijtatns <:f. cannot he change I after wiiuiiiv^ up conini' nccs. 396. Must show grounds for windin;,' up, in order to obtain order, 397 Intt-rest i>f. on windiiij; ■ ji, 3.17. Liability of, under Bankin;^ Act, 400. Shake List — » Object cf. in books of company, 226. Shares — First division of joint fund into, 19, Numb; r i f. to be j^lven in application, 102. Division of capital int.>, 113, Am. unt of each, 113. Taken by applicants, to be bona fuh\ 118. Paynur.t of, 119. May be snbdivi.le 1, 152, 470. Cancelling; of, \vl en unissueJ, 156. Not nece-sarv to be all tak>n up b'fore cominencinf; business, itz. AUotmint cf, in order to t]ualilication, i( 8. Number or, to be entered in bo ks, 2J4. All tranf fjrs of, to I e entered in books, 224, Meani c of term, 239. in Knglanii, 239. in United States, 240. Not interests \n lands, 240. Not goods and chattels, 240. Parole contract respecting, 240, 255. Do not confer right to vole, 241. But liable to seizure, undery(/(t di bonis, 241. Allotment of, 224. 241, 432, 474. powtr of directors, 241, 432, 474. method of taking, 242. application for. 242. must be accepted, 242. sufficient adotmei.t i InstriUcd, 243. application may le witlidrawn, 243. respiins" of company need not be in writin^v. ij^\. notice of, 244. Time from whi -h allotment runs, 245. Eff ct o'' '.vinling-np order on, 245. Eff>.ct ot conditional subscription, 246. Condition must also be accepted, 247. rule in the United States, 247. INDKX. 017 Shares- lulem ipe lia- 397 ss. ]62. rule where there is onlv n collnteral a),rotm'.r.t J4-. Hut ma. ! 'J set-oit ,-,),'a;nst debt due, ^49. Rule as to conditional allotii.ent, 249. 230. And as to inpliecl acceptance of conv.ition. 250. Applicant may be freed bv dciav, 251'. rill illustrate I, .^n. ' Effect of. \\h n conditi. n is uHm lircs. 250. 1 ower of direjtois to cancel, 251. Condiiiou that sub.-,crii ers n.ay cane, l.void, 251. Tt> be , ad in cash, 253. Contract.s c n ernin,!; u) bo rc^i-tered, 253. EiTect of ne!:,'!ect to retfistcr, 254, 2jj. ru e illustrattd, 2^4. Eff ct of ajjrcement with pr. m ter, 254. C( llateral tigre.mient cannot be pn.vcd bv parole, 255. Payiiient in cash illustrated, 236. Is.iue of jiai l-up, 239. What is an issue of, 2O2. Omission of nuistration may be rectified in some cases, 263. Transler of paid-up, -63. Repudiation of :66. Effect of unro^'i^tcre 1 trans^'er of, 27^, 434, 474. Cannot Le translei red by deiivtrv, 27?. Remedy of veii.Jor when buver refuses to accept, 27'. 1 lansfer of, when ni t lullv paid i.p, 2,-3. Tiansmis.-ion of, net a tran.-,fer, 274. Kiglit of trustee of, 274. Transfer ol, wnen v.dul, 277. I'ormalities relating,' to, 2^1. Effect of f, aud 011 transier of 2S2. I.iaoil.ty on, wl-.eie cads unpaid, ^85. Lenuf com]"!any on, 2S5. Transfer of, to infant. 2.^7. to married -voman, 2S7. Transmission of, 288. Ki.^ht to, on death of a member, 289. rule under tlie En.,d.sa biw, 28 j. Acceptance of, by repr^sjutatives nf deceased membe-, 280. Rij^htscjl assignee in b aikru) tcv with regard to, 29 ■. Transfer of, by ie|iresent,itive. 290. Rights of eAeciitr.x uitn le ar.l to, 291, i.iaiiility of me bjts with regard tr., 292. Payment of must be in cash, 293. Surrender 1 f 293. Power of company to accept sarrender.d. 29-1- Po\\er (if cumj)any to deal in, 29(1. Transfer of in trust for conipanv, 29S. rule, illn.-tr,(ted, 29S. May be surrendered for new on> s, 299. Liability of terminated by sale, etc., 299. Liability of e.'vecutors, etc. ( n, 300. Rights of executois, 301. Rights of pledgor, 301. Forfeiture of 309, 433. Power of directt)rs to ileclare, 309. 433. Elfect of forfeiture of, 309, 43^. Liability of holder to c.'iuitnie, 309. Diftere .C(,' between suriender and forfeiture, 310. Power to declare f rfeit regarc'ed as ftriitissimi jiiri. Company may be restrained for irre,.^ularity, 311. 310, irr M 618 INDEX. i«il'i Shares — And even where oppressive simpl>', 311. Company liahlitD damages for illegal fnifeitme, 311. Formalities in reg;ird to, jii. When void for informality, 311. Forfeiture of, after snrrcnder, 312. remedy ot creditors in cas ■ of, 31J. redress of shareliilders lust by lapse of time 31 i. rule illustrated, 313. hoi ler still liable, 313. Payment of, must be in cash, 3S5. Transfirr of, slopped by winding; up, yjh. Contracts to sell or pnrch.-ise, stopped i)y winding np, 41-7. rights of broker in such cases, qoy. rule illustrated, 40S. rights of [uiroharier, 4 ^g. Consent of company necessary to transfer of, 413. Form of certificate of, 427. " " transfer of, 428. Share Warrants — 265. May pass by delivery, 206 Signing — Of contracls, 35J, 3^6. SociETE — See Parthcrship. Anonyme, ir. Cominerciales, under the Code, 30- modern I-"rench law, 40 " Er.glish law. 41. For actions, 43. Ex Commandite , 44. South Sea Company, 38. Special Act — Meaning of term, 429. Forfeiture of charter where incorporate! by, 374. Speciai, AcENrs — When directors in position of, 201. Special Autiiorizatkjn — Of oflicars required to vote, 354. Special Mektings— What are, 1S5, 460, 474, =42, 555. How calle 1, 185. Specific Performance — Right to on refusal to register transfer of shares, 2 71). Right of vendor to, where purchaser is in default t(j accept trans- fer, 411. ^)l ATE — I'ower of, to authorize companies, kiS. " with ie,,'ird to companies g-'ncra ly, 124. Ri,:^ht t ) proceed in cases of forfeiture of c haru;r l)elongs to. 374. 1 WM JNDKX. 619 Statements- Of affiirs of company, to be submittoa, 38S, 476, 569. Of affiirs of r.nan coinpaiiios, to be; siiiit to Fiiiniico .Minister, 4-2J Status — Of l>ruk IS, 207. Of cii recti us, 201. Of jobbers, iO/. Of in^'inbors cannot be clian;j;e, 401. after coimnfiicemeiU i>f wiiuinig-up. ept trans- t'^ i74- Statutes of Mortmain — 12G. In force in (,_)iic:bec with r.;<,' ml to tr,iJing companies, lz-/. In force in tne United Status, 12S. 'v rocK — Sci- shares. I'ower of companv t:i de'il in, 143. Allotment of, when capital injre ised, 153. Allotment of, when decrease 1. 155. Nature of, 239, 43^. Meaninj; of term, 240. Shall be lieeme i personal estate, 240. Allotment of, 241, 431, 460, 474. Payment in casa illustrated, 257. Contracts concerning', wiien to be registered, 257. Paid-up shares without r.;gistr:ition, 2S9. Where property is taker in payment of, at an extrava,'ant valuation, EITe^i of transfer on pai 1-up shares, 259. Ri.ght of traasferee m iv hi lost by lajh s, 261. •Cjatra ;t mist bj b;tv ;ja thj saareholdjr an 1 an in lividual, 262. S de and transfer of 2^3. Ri,ght of trmsfer, natu. j if, 264. Form of trmsfer, 26;, Power of direjtois to refuse, 265. Transfer of, at the e\[iense, etc., of transfer^-e, znu. Brokers and jobjers, habilitv of, 267. Repudi ition of contract, 26S. Remedy of buver in cases of mis:epresjntation, 2(>8, 270, Contract not void but voida.de, 26.S, An 1 must be rcpu liated promptly, 2(JS. Measure of d ima:^ei in c is.'s of, 208. Where purchase is iro n in l:vi la il, z^ti. 270. Where purchase is from conpmy, 208, Liabi'iitv of company for misrjpiesjnt.itio.i of a.ijents, 2 > >, 271. f T reports and accounts. 269. What constitutes iTiisropre.:eiit.iti m in, 272. Colorable transi'er of, to control ele-tion, 274. Transinission of, not transfer, 274, Transfer ot, to iiif.uit 2S7. Transmission of, 2i<\ Idabihty of memi.ers on, 2cji. Confine I to amount unpaid, 292. Liability on, always exigible, 293, 304. h jw incurre I, 294. on wtiat grouiMs repudiated, 294. c innot be repudi tte i on gr )und of ilirectors' maaag • iient, 294. i'ayment of, must be in cash, 295. V . i 620 INDKX Stock Mx(Han(;i; — Br.ikeis, etc., afr'clcd In lult's nf, 267. St-;c!< JoiiiuNc — ()i'ij,'iii of ti'im, 2l^ SUB-OIVI,- I IN cl- SlIAKllS — IS-', Sfnoi.DiNAn-; AoiiN'Ts- ^7(J. niffererice betwet'ii tluiii ;md ilirtct )rs, 53;. App. intinent of, 355. ■ t.'itus of, j-,5. RiMiidval of, 355. rowtr ( f, to iiiiiil ci):iiii.'iiiv, 356, rule illustiateJ, 357. ft S'.'Dscuirii )Ns — Induced by inisrcpri'soiit.ntion, mnv be sot nsido, 6^. Inducwl by mis!L'iircst.'nt;iti<'n, are voidable cnily, (17. Kight to avoi<\, fnifeitcd by a winding up, Tg. Ri (It t ) avoi 1 for in s.c 1 cicit uio:i, \v live.l in certain cas.'s, 69 Subject to general law of contracts, 2.\2. Must cf)ntruu terms iif com| K'K; coutr.-ict, 2.\:. Not void from formal iriegubiri.ics, 242. Accept.nice of, 240. Kffect if, when conditional, 2.(6, Effect of collateral a;;rre:iient, 247. K'ule as to set-nft by dijht due, 24'j, Effect ot con litional acceptance, 249. EU'ect of ultra vins agree [lent, 250, Contlition that subsciil)er may cancel, veid, 251. Inilnced by fraud, 251. Rule as to fraudulent repres'Mitations ilustvattd, 251. When loinjianv 1 able f( r, 251, 232. rule in United -itite-;, 232. Mi represent.iiinn (-;inn()t be proved by jiarole, 252. Effect of winding up order, 233. To be p.'iid in cash, 253. Contracts concerning, to he registered, 253. What is payment in cash illiistr.ite.l, 250. Suit— Stv Acliuu. :i II '.'H Stjpi'i.KMK.vTAuv Letters Patent- How obtained, 14S, 553. rorin dities concerning, 159. Tariff of fees payable on applicritien ffir, 42,S, 353. Sl'RKr.NPEK — Of shares, 295. Power of comp.any to accept, 296. Surrender an -. forfeiture, 297, 310. Of old shares for new, 299. Of charter, power of co;npinv with respect to, 391. noes not effect a cianplete dissolutio , 394. Of books may be compelled by mandamus, 371. INDKX. 021 T. Tariff — Of fi:es payable on apjilicaiion ioi letters patent, etc, ^^S. Term • I'or which directors are elocteJ, iS... Termination — Of members' liability. 295. (^f officers' authority, j^-,^. Testator — Liability of legatees on death of, ji)o. TlTLIi — Of Acts, Si, 429, 456, 4f)f). Tolls — To be collected by companies fjr transmission of timber, 4.)(), 493, Torts — Of agents, liability of company for, 332. Traue— In money in thirteenth century, 11, Trauinc, (."orpokations — R( fercnc s to. in English la^v. 23. Effect of Statutes of Mortmain with respect to, 127 TRAVSFinj — Of business of rompany. 130. 393 ■ Of menbershiii bv amii-;ain ition, 139. Of s'lrues, to be eatere 1 in i)ook.s. 224, 433, 474. Of paid up shites. effect of, .'39. with )Ut n nic -. 219. with n tic , ^G ). but ri,'ht of trans'eree may be lost by laches. 261 Nature of lisht of, 2114. Manner of, zb^. Under Eii,'lisli system, 263. Power of dire tort; to refuse, 2^3, 433, 474. 542. 553. Evi ence of, 263. At the expense, etc., of trinsf 'ree, 26c. Cannot be marie by delivery, 273. Directors liable for c.inseatiTi^ to improper transfer, 27^ 274. fEffect of unrejisti.r.'d transfer, 273, 434, 474, 622 tNDKX. TraN!-iki - .lii 'i I. Remedy where directors refuse transter, 27^. Heme ly of vendor when buyer rcfiis s ui aicept, 273. Ciimpany must liave pro|.iT {^lonnd for rtitutes dilij,'eiice, 270. wh.'it c. nstilutes misrepresentation, .;;0. rule ilbiNirated, 277. To ins iK'cnt in tiic United States, 277. Muht be m.'Kle without reservation, J77. rule illustrated, 277. When cclorabltt, 27S, I'ower (f directors must be exercised was. na!'i\ 27.'-. rule in the I'nited States, 27S. Reas 'US for refusing', 27S. \Vi:en complete, 278, 271). Kemidy of Inner on reins, il to refjister, 27(1. Deuiand for spccitic performance, 279. rule in United states, 27(1. opiniiui of Mdler, J., 2S0. Directors no' bound to give reasons for rclusinj,' to ic.^ister, 2.S( Nor to give notice of refusal, 281. Duty of transferer to see that it is allowed, 2^1 Formal. ties witii respect to, 2X1. Docs not constitu ea guarantee, 2S1. Eftj.;t of when obtainjd by fraud, 2-12. Af'.er insolvency of com] any, 2iS2. Eilict o! issue of windiiig-uii order, 2.Sj. r lie illustrite 1, 2S2. Transferer must have paid calls, 283. Rights of brokers where calls un])riid, 2S^. Liability of parties to, 2S5. Power of ilirectors where transferer is indebted, 283. Debt must be due and payable, 280. rule under the luigli h Acts, 286. To infant effect of, 287. Company mav refuse to register. 287. Plea of infancy, 287. To marrietl woman, 2S7. By representative, 2'ji. By executrix, 291. To company, 297. In trust for companv, 29S Mtindauiits will not lie to compel, 371. Of shares stopped by winding-up, 39O. but not illegal, 39t'). anil raises rights between parties, 39(). Lncoinpleted, stopped by winding i;p, 4()»). Right of vendor of, ;o specific perform r-.icv. .( 1 1 Registration of, 41 1. Liability to obtain, 411. INDKX. 628 Tkansker — Where eninpany in default to complete, ji. Consent ot company n'cess.irs- to. 41 <. Voiil \. here company letiiscs. 41 ^ Form ot'. 42S. Transfkkkk ok Shakes — Should see tint it is alli'wed, ^.Si, Must have paid calls. jSj. Tkansmission- 4vp Of stock not a transfer. J74. By df.ith of ni'-mbor, ^S5. Liability uf company on, j88. Of tiinlvr. c impanies to f.wilitate, 43-, 43 ^. Coinpmies ina\ be fornud for, 4,17, 4>iv Amount of shares in, 4J7, 4^^. Conditions as toother propel ty, 437, 4S4, lustMiinent to b;' executed, 437. 4S4. Ke^'istrativ.n oi instrument, 4 -,S, 4.S4. Recourse of pers >ns piyin^' six per cent. f( r others, 4j>S, 484 Report to be nn le beroie co.iunencinf,' wurk, .| (S, 4S4. Works when commence t. 4,8, 4S5, Company when chai ter^il. 435, 48^. Bydavvs, when toc.nne into lorce. 43c), ,^^-,. Penalties not to be i npvsed. 439. 480. Mana^jement fur liist year, 4J9, 4S6. l)y-la\\s. 4J9. 480. Elections, 430. 4S6. Directois, qiialihc itioti of. 440, 48(1. President to be elected, 440, 487. 'V^'lcancies in board. 440, 487. Directors to report > .-..rly, 440, 48-. BoOrS to be kept. 441. 4S7. Change of constitution if. 441. 488. New shares to ie re.;istered. 441, 48S. Rigiits, etc.. of new suuscribers. 441, 488. Calls. 44,;, 4S8. Power of forfeiture > f shares. 442. 48(». Effect of forfeiture, 442, 489. Action for calls, 44J, 481). Proof in actions for calls, 443, 489. Compensation rs. 443, 490. Appointment I'f arb:tniiL>rs, 443, 4gc. Procedure in case of ab.^en tcs. 444, ^go Award to be registered, 444, 491. Indian lands piovideti for, 444. Compensatirn f> r timber shies, 445, 492. 8th and 9th sections may be disregarded, 445, 41)2. Provision in regard to mill sites, 445, 492. Navigable waters not to be obstructed, 44*), 44)2. Tolls to be collected, 44D, 493. Annual account to be rendered, 447, 493. Company may deaiand statement, 447, 494. Company may sue f i r toil. 447, 494. Seizure ot timber for ti 11, 447, 4<)4. Penalty for malicious injury, 448. 495. for impeding company, 448, 4(15, Fine^, how recovered, 448. 496. I ; ^'■-^1 INDKX. TKANSMIShluN — To Iw pnid to trensiirnr of company. 4 ,s 4,,.. bciv.mis, etc.. iii.t:.' he uitiu,s ies, .u / ' Lim tatioii of actiiui:,, 4.)!), .(,,6. Works, when to Ix; coin|il,:tixl' 4.^,; 4 ,., Works to l)L' kept in «o,.,| r pair. 44 , 4 ,;. Atii ill,'.-! 11 ition of coiiprinies. 4 ,u. 49-. L"Ki.sl,itnro may alte, Act, 450, 4.,;. ' J)is.s ilution of comp.un- ,^o^ 4V'-' I'ro..o.ime in l,oner Ca.Kala'in c'.ses of duuhtlul titl.- t.. Ian. Is 451 Schedule, 451. ^yy. • ^-^ Trespass — Liability of company to action for, 3J1. TRUSTKIiS— Of shares, rights of, 274. 47S. Liability of, on shares, joo, 43;. under English Act. joo. Liability cf riirectois when .actinR as, 324 rule illustrated, 324. Trusts — ' Liability of company in r^spejt of, 301, 434, 4.,j, ^t^. Tutor — Li ibility of, on shares, 300, 435. TWO-TIIIKDS VoTK — Required to sanction extension of powers, 149 u. Ulpian — His statement of law of partnership, 0. Ui-TRA ViKi-s— Sli,v If name not removed before winding up order, 40? ^ VoLUNTARv Winding Ui'—S.v U'imlin^ Up. \'oi E — Of two thirds required to change constitution, 194. Of w-o hirds require,! to borrow money on mortgage 207 Of two thuds required to wind up, 566. ^ Votes — How determined, 193, 431. At meetings of directors how determined, 109 At meetings of company. 183, 189, 4.11, 461, 475. \\ hen poll may be demanded, 193. May be by proxy, 193, 431. At meetings of directors, 199 On shares colorably transferred may be restrained 274 41 I' B.C. l}4 e2«> Votes — E5DEX- By ofiBcer on behalf of coipontiiM neqaiirvs special authorization. 354- At meeting for amalganaaticn of L/aam Compaiuvs. 422. w Wages— Liabilitv of directors for. 567. Right of clerks to arrears cf, Trader "^oiefcec Code, ^i g. Waiver — Of right to avoid sabscriptJoa, 6* iWu West Ixdi.\ Co. — so. WlXDtXG-UP — Ri^ht to avoid s-ibsrriptiaa t m Sr iaa m t ht, ^o. Eftect of order for, fn transfer cC" jJfranes-. .:>j. 52 . rule illustrated. .:>2. Companies to be subject to Acts for. jSig^. 436. 4S1. Order susfjcnds actions by or ag^iiKst csMaipaay , J73. When to be wound-up. 3S9. 5191, 56*61. When voluntarv", 390. When involuntary. 300. Mt^ie of. under English Ac: ^j: Difference between diQeren: :i..iif^ :t ji^. By Court. 39.^. Under superviaon of Conrt ^cio. Advantages cf voir.ntan,-. 3CI Power to wind-up volantarily. ^^s, Rule under English law. 391. Power of majority with lespeci tix 3**.: May be stopped by injm>rt)ain. jjgLn. When complete. 304. Power of Court alter 304- Under Dommion .\ct. 394- When may take place. 305. When commences. 395. rule under English Act. 395. Effect cf. on business c>f cmnpiLET 3^alf . 52 3. OH transfer of shares, 306 520. Compulsc>rT under I>oininian Act., jafe. under English Act. 307. Who may appiy for. 397. Shareholder tnast show giuuzxis Snr. 597- I 1 ization. INDEX. Riiifats of croJitors ti obtain order fcr 397^ Kiile where creditors claim in dispute. 33s. Ehscretion ..f Court in such cases. 39S. rale illustrated. 398. Pri.icee legal proceedings. 405. 627 rule under English Act. 405- rule illustrated. 405. Ktiect of an uncompleed taansfer, 406 spa ^ '" ; ntracrs to sell or purchase, 407. vVhere vendor in default to deliver. 410. WccpiN'i UP Order — WTtere purchaser in default. 410. UTiere company in default to register, 4:^. Coatract made in ignorance of. 414. Role where both parties were aware of it. 404. WmcE.s« — »rompany cannot he summoned as. 233. Shareholder competent as, in actions apamKi ir.rn-rtz" -tiy. WoMEx— .S.?^ Marriid Women. WirriNfi — Response of company to application for siiaref 3i~J! «« fc in 244 • ontracts to pay for shares other^vise than re laen: 3taat fcc in' X' Appointment of servants need not be in. 354, liability of Company for. 331. y. YcAK-'i Statements — To be rendered by company, 3?8, 476. «^^«E & C.x, Law Printers, Cor. .\d( li o and \-ict jrii ;^T"'»!^ • ;r mnj.